SPEEDWAY MOTORSPORTS INC, 10-K filed on 3/18/2016
Annual Report
Document And Entity Information (USD $)
12 Months Ended
Dec. 31, 2015
Mar. 15, 2016
Jun. 30, 2015
Entity Registrant Name
SPEEDWAY MOTORSPORTS INC 
 
 
Entity Central Index Key
0000934648 
 
 
Trading Symbol
trk 
 
 
Current Fiscal Year End Date
--12-31 
 
 
Entity Filer Category
Accelerated Filer 
 
 
Entity Current Reporting Status
Yes 
 
 
Entity Voluntary Filers
No 
 
 
Entity Well-known Seasoned Issuer
No 
 
 
Entity Common Stock, Shares Outstanding (in shares)
 
41,219,067 
 
Entity Public Float
 
 
$ 267,767,621 
Document Type
10-K 
 
 
Document Period End Date
Dec. 31, 2015 
 
 
Document Fiscal Year Focus
2015 
 
 
Document Fiscal Period Focus
FY 
 
 
Amendment Flag
false 
 
 
Consolidated Balance Sheets (USD $)
Dec. 31, 2015
Dec. 31, 2014
Current Assets:
 
 
Cash and cash equivalents
$ 82,010,000 
$ 110,046,000 
Accounts and notes receivable, net
39,783,000 
 
Prepaid and refundable income taxes
8,520,000 
 
Inventories, net
8,711,000 
8,350,000 
Prepaid expenses
3,862,000 
 
Total Current Assets
142,886,000 
 
Notes and Other Receivables
1,303,000 
 
Other Assets
29,622,000 
30,714,000 
Property and Equipment, Net (Note 4)
1,019,650,000 
1,052,153,000 
Other Intangible Assets, Net (Note 2)
298,394,000 
394,941,000 
Goodwill (Note 2)
47,342,000 
49,680,000 
Total
1,539,197,000 
1,694,481,000 
Current Liabilities:
 
 
Current maturities of long-term debt
7,677,000 
7,070,000 
Accounts payable
12,112,000 
 
Deferred race event and other income, net
57,549,000 
 
Accrued interest
4,291,000 
 
Accrued expenses and other current liabilities
26,740,000 
 
Total Current Liabilities
108,369,000 
 
Long-term Debt (Note 6)
313,706,000 
397,747,000 
Deferred Income, Net
4,581,000 
4,822,000 
Deferred Income Taxes, Net (Note 8)
321,046,000 
 
Other Liabilities
6,655,000 
 
Total Liabilities
754,357,000 
 
Commitments and Contingencies
   
 
Stockholders’ Equity:
 
 
Preferred Stock, $.10 par value, shares authorized – 3,000,000, no shares issued
   
 
Common Stock, $.01 par value, shares authorized – 200,000,000, issued and outstanding – 41,235,000 in 2015 and 41,340,000 in 2014
458,000 
 
Additional Paid-in Capital
255,294,000 
 
Retained Earnings
629,115,000 
 
Treasury Stock at cost, shares – 4,520,000 in 2015 and 4,216,000 in 2014
(100,027,000)
 
Total Stockholders’ Equity
784,840,000 
 
Total
1,539,197,000 
 
As Revised [Member]
 
 
Current Assets:
 
 
Cash and cash equivalents
 
110,046,000 
Accounts and notes receivable, net
 
34,855,000 
Prepaid and refundable income taxes
 
8,306,000 
Inventories, net
 
8,350,000 
Prepaid expenses
 
3,881,000 
Total Current Assets
 
165,438,000 
Notes and Other Receivables
 
1,555,000 
Other Assets
 
30,714,000 
Property and Equipment, Net (Note 4)
 
1,052,153,000 
Other Intangible Assets, Net (Note 2)
 
394,941,000 
Goodwill (Note 2)
 
49,680,000 
Total
 
1,694,481,000 
Current Liabilities:
 
 
Current maturities of long-term debt
 
7,070,000 
Accounts payable
 
11,166,000 
Deferred race event and other income, net
 
55,209,000 
Accrued interest
 
7,055,000 
Accrued expenses and other current liabilities
 
25,131,000 
Total Current Liabilities
 
105,631,000 
Long-term Debt (Note 6)
 
397,747,000 
Deferred Income, Net
 
4,822,000 
Deferred Income Taxes, Net (Note 8)
 
331,480,000 
Other Liabilities
 
7,019,000 
Total Liabilities
 
846,699,000 
Commitments and Contingencies
 
   
Stockholders’ Equity:
 
 
Preferred Stock, $.10 par value, shares authorized – 3,000,000, no shares issued
 
   
Common Stock, $.01 par value, shares authorized – 200,000,000, issued and outstanding – 41,235,000 in 2015 and 41,340,000 in 2014
 
456,000 
Additional Paid-in Capital
 
252,571,000 
Retained Earnings
 
688,285,000 
Treasury Stock at cost, shares – 4,520,000 in 2015 and 4,216,000 in 2014
 
(93,530,000)
Total Stockholders’ Equity
784,840,000 
847,782,000 
Total
 
$ 1,694,481,000 
Consolidated Balance Sheets (Parentheticals) (USD $)
Dec. 31, 2015
Dec. 31, 2014
As Revised [Member]
Preferred stock par value (in dollars per share)
$ 0.10 
$ 0.10 
Preferred stock, shares authorized (in shares)
3,000,000 
3,000,000 
Preferred stock, shares issued (in shares)
Common Stock, par value (in dollars per share)
$ 0.01 
$ 0.01 
Common Stock, shares authorized (in shares)
200,000,000 
200,000,000 
Common Stock, shares issued (in shares)
41,235,000 
41,340,000 
Common Stock, shares outstanding (in shares)
41,235,000 
41,340,000 
Treasury Stock at cost, shares (in shares)
4,520,000 
4,216,000 
Consolidated Statements of Operations (USD $)
Share data in Thousands, except Per Share data, unless otherwise specified
12 Months Ended
Dec. 31, 2015
Dec. 31, 2014
Dec. 31, 2013
Admissions
$ 100,694,000 
$ 100,798,000 
$ 106,050,000 
Event related revenue
146,980,000 
 
 
NASCAR broadcasting revenue
217,469,000 
207,369,000 
199,014,000 
Other operating revenue
31,320,000 
 
 
Total Revenues
496,463,000 
484,309,000 
480,649,000 
Direct expense of events
104,303,000 
 
 
NASCAR event management fees
133,682,000 
 
 
Other direct operating expense
19,541,000 
 
 
General and administrative
98,289,000 
 
 
Depreciation and amortization (Note 4)
61,964,000 
78,426,000 
54,725,000 
Interest expense, net
16,811,000 
21,237,000 
31,871,000 
Impairment of other intangible assets and goodwill (Note 2)
98,868,000 
   
89,037,000 
Loss on early debt redemption and refinancing, non-cash
8,372,000 
 
 
Other expense (income), net
862,000 
(2,305,000)
293,000 
Total Expenses and Other
542,692,000 
 
 
(Loss) Income from Continuing Operations Before Income Taxes
(46,229,000)
41,226,000 
(48,563,000)
Benefit (Provision) For Income Taxes
11,879,000 
 
 
(Loss) Income from Continuing Operations
(34,350,000)
 
 
Income from Discontinued Operations
(13,000)
 
 
Net (Loss) Income
(34,363,000)
 
 
Basic (loss) earnings per share (in dollars per share)
$ (0.83)
$ 0.61 
$ (0.18)
Discontinued Operation, Basic (in dollars per share)
$ 0 
 
 
Net (Loss) Income (in dollars per share)
$ (0.83)
 
 
Weighted Average Shares Outstanding (in shares)
41,284 
41,377 
41,405 
Continuing Operations, Diluted (in dollars per share)
$ (0.83)
$ 0.61 
$ (0.18)
Discontinued Operation, Diluted (in dollars per share)
$ 0 
 
 
Net (Loss) Income (in dollars per share)
$ (0.83)
 
 
Weighted average common shares outstanding and assumed conversions (in shares)
41,312 
41,400 
41,423 
As Revised [Member]
 
 
 
Admissions
 
100,798,000 
106,050,000 
Event related revenue
 
146,849,000 
145,749,000 
NASCAR broadcasting revenue
 
207,369,000 
199,014,000 
Other operating revenue
 
29,293,000 
29,836,000 
Total Revenues
 
484,309,000 
480,649,000 
Direct expense of events
 
102,196,000 
99,500,000 
NASCAR event management fees
 
128,254,000 
125,003,000 
Other direct operating expense
 
18,513,000 
18,640,000 
General and administrative
 
96,762,000 
91,676,000 
Depreciation and amortization (Note 4)
 
78,426,000 
54,725,000 
Interest expense, net
 
21,237,000 
31,871,000 
Impairment of other intangible assets and goodwill (Note 2)
 
   
89,037,000 
Loss on early debt redemption and refinancing, non-cash
 
   
18,467,000 
Other expense (income), net
 
(2,305,000)
293,000 
Total Expenses and Other
 
443,083,000 
529,212,000 
(Loss) Income from Continuing Operations Before Income Taxes
 
41,226,000 
(48,563,000)
Benefit (Provision) For Income Taxes
 
(15,789,000)
40,932,000 
(Loss) Income from Continuing Operations
 
25,437,000 
(7,631,000)
Income from Discontinued Operations
 
5,710,000 
(246,000)
Net (Loss) Income
$ (34,363,000)
$ 31,147,000 
$ (7,877,000)
Basic (loss) earnings per share (in dollars per share)
 
$ 0.61 
$ (0.18)
Discontinued Operation, Basic (in dollars per share)
 
$ 0.14 
$ (0.01)
Net (Loss) Income (in dollars per share)
 
$ 0.75 
$ (0.19)
Weighted Average Shares Outstanding (in shares)
 
41,377 
41,405 
Continuing Operations, Diluted (in dollars per share)
 
$ 0.61 
$ (0.18)
Discontinued Operation, Diluted (in dollars per share)
 
$ 0.14 
$ (0.01)
Net (Loss) Income (in dollars per share)
 
$ 0.75 
$ (0.19)
Weighted average common shares outstanding and assumed conversions (in shares)
 
41,400 
41,423 
Consolidated Statement of Stockholders' Equity (USD $)
As Revised [Member]
Retained Earnings [Member]
As Revised [Member]
Common Stock [Member]
Additional Paid-in Capital [Member]
Treasury Stock [Member]
Total
Balance at Dec. 31, 2012
$ 714,750,000 
$ 875,899,000 
$ 453,000 
$ 246,978,000 
$ (86,282,000)
 
Balance (in shares) at Dec. 31, 2012
 
 
41,433,000 
 
 
 
Net (loss) income
(7,877,000)
(7,877,000)
 
 
 
 
Share-based compensation (in shares)
 
 
132,000 
 
 
 
Share-based compensation
 
2,369,000 
1,000 
2,368,000 
 
 
Exercise of stock options (in shares)
 
 
8,000 
 
 
7,500 
Exercise of stock options
 
159,000 
 
159,000 
 
 
Cash dividends of $0.60 per share of common stock
(24,875,000)
(24,875,000)
 
 
 
(24,875,000)
Repurchases of common stock at cost (in shares)
 
 
(169,000)
 
 
126,000 
Repurchases of common stock at cost
 
(3,081,000)
 
 
(3,081,000)
(2,291,000)
Balance at Dec. 31, 2013
681,998,000 
842,594,000 
454,000 
249,505,000 
(89,363,000)
 
Balance (in shares) at Dec. 31, 2013
 
 
41,404,000 
 
 
 
Net (loss) income
31,147,000 
31,147,000 
 
 
 
 
Share-based compensation (in shares)
 
 
146,000 
 
 
 
Share-based compensation
 
2,896,000 
2,000 
2,894,000 
 
 
Exercise of stock options (in shares)
 
 
7,000 
 
 
7,500 
Exercise of stock options
 
172,000 
 
172,000 
 
 
Cash dividends of $0.60 per share of common stock
(24,860,000)
(24,860,000)
 
 
 
(24,860,000)
Repurchases of common stock at cost (in shares)
 
 
(217,000)
 
 
172,000 
Repurchases of common stock at cost
 
(4,167,000)
 
 
(4,167,000)
(3,236,000)
Balance at Dec. 31, 2014
688,285,000 
847,782,000 
456,000 
252,571,000 
(93,530,000)
 
Balance (in shares) at Dec. 31, 2014
 
 
41,340,000 
 
 
 
Net (loss) income
(34,363,000)
(34,363,000)
 
 
 
(34,363,000)
Share-based compensation (in shares)
 
 
144,000 
 
 
 
Exercise of stock options (in shares)
 
 
56,000 
 
 
55,500 
Exercise of stock options
 
879,000 
1,000 
878,000 
 
 
Cash dividends of $0.60 per share of common stock
(24,807,000)
(24,807,000)
 
 
 
(24,807,000)
Repurchases of common stock at cost (in shares)
 
 
(305,000)
 
 
252,000 
Repurchases of common stock at cost
 
(6,497,000)
 
 
(6,497,000)
(5,375,000)
Share-based compensation, net of windfall tax benefits adjustment (Note 11)
 
1,846,000 
1,000 
1,845,000 
 
 
Balance at Dec. 31, 2015
$ 629,115,000 
$ 784,840,000 
$ 458,000 
$ 255,294,000 
$ (100,027,000)
$ 784,840,000 
Balance (in shares) at Dec. 31, 2015
 
 
41,235,000 
 
 
 
Consolidated Statement of Stockholders' Equity (Parentheticals)
12 Months Ended
Dec. 31, 2015
Dec. 31, 2014
Dec. 31, 2013
Cash dividends, per share of common stock (in dollars per share)
$ 0.60 
$ 0.60 
$ 0.60 
As Revised [Member] |
Retained Earnings [Member]
 
 
 
Cash dividends, per share of common stock (in dollars per share)
$ 0.60 
$ 0.60 
$ 0.60 
Consolidated Statements of Cash Flows (USD $)
12 Months Ended
Dec. 31, 2015
Dec. 31, 2014
Dec. 31, 2013
Cash Flows from Operating Activities:
 
 
 
Net (loss) income
$ (34,363,000)
 
 
Loss (income) from discontinued operation
13,000 
 
 
Cash (used) provided by activities of discontinued operation
(13,000)
 
 
Adjustments to reconcile (loss) income from continuing operations to net cash provided by operating activities:
 
 
 
Impairment of other intangible assets and goodwill
98,868,000 
 
 
Loss on early debt redemption and refinancing, non-cash
8,372,000 
 
 
Loss (gain) loss on disposals of property and equipment and other assets and insurance recovery
653,000 
 
 
Deferred loan cost amortization
1,676,000 
 
 
Interest expense accretion of debt discount and premium, net
(117,000)
 
 
Depreciation and amortization
61,964,000 
 
 
Amortization of deferred income
(2,458,000)
 
 
Deferred income tax provision
(24,195,000)
 
 
Share-based compensation
3,383,000 
2,610,000 
2,224,000 
Changes in operating assets and liabilities:
 
 
 
Accounts and notes receivable
(5,314,000)
 
 
Prepaid, refundable and accrued income taxes
(214,000)
 
 
Inventories
(361,000)
 
 
Prepaid expenses
19,000 
 
 
Accounts payable
1,876,000 
 
 
Deferred race event and other income
3,405,000 
 
 
Accrued interest
(2,764,000)
 
 
Accrued expenses and other liabilities
1,817,000 
 
 
Deferred income
1,042,000 
 
 
Other assets and liabilities
(15,000)
 
 
Net Cash Provided By Operating Activities
116,581,000 
 
 
Cash Flows from Financing Activities:
 
 
 
Borrowings under long-term debt
251,383,000 
 
 
Principal payments on long-term debt
(331,500,000)
 
 
Payments of debt refinancing, issuance and amendment costs
(3,975,000)
 
 
Exercise of common stock options
879,000 
 
 
Dividend payments on common stock
(24,807,000)
 
 
Repurchases of common stock
(6,497,000)
 
 
Net Cash Used By Financing Activities
(114,517,000)
 
 
Cash Flows from Investing Activities:
 
 
 
Payments for capital expenditures
(30,733,000)
(22,036,000)
(12,036,000)
Proceeds from sales of property and equipment and insurance recovery
136,000 
 
 
Repayment of notes and other receivables
638,000 
 
 
Net Cash Used By Investing Activities
(29,959,000)
 
 
Net (Decrease) Increase In Cash and Cash Equivalents
(27,895,000)
 
 
Change in cash collected for and payable to third party, cash not provided or used by operating activities (Note 2)
(141,000)
 
 
Cash and Cash Equivalents at Beginning of Year
110,046,000 
 
 
Cash and Cash Equivalents at End of Year
82,010,000 
110,046,000 
 
Supplemental Cash Flow Information:
 
 
 
Cash paid for interest, net of amounts capitalized
19,982,000 
 
 
Cash paid for income taxes
1,015,000 
 
 
Supplemental Non-cash Investing and Financing Activities Information:
 
 
 
(Decrease) increase in accounts payable for capital expenditures
(930,000)
 
 
Increase in deferred income for exchange of property and equipment
250,000 
 
 
As Revised [Member] |
Non-Cash Portion [Member]
 
 
 
Adjustments to reconcile (loss) income from continuing operations to net cash provided by operating activities:
 
 
 
Loss on early debt redemption and refinancing, non-cash
 
   
6,386,000 
As Revised [Member]
 
 
 
Cash Flows from Operating Activities:
 
 
 
Net (loss) income
(34,363,000)
31,147,000 
(7,877,000)
Loss (income) from discontinued operation
 
(5,710,000)
246,000 
Cash (used) provided by activities of discontinued operation
 
5,710,000 
(246,000)
Adjustments to reconcile (loss) income from continuing operations to net cash provided by operating activities:
 
 
 
Impairment of other intangible assets and goodwill
 
   
89,037,000 
Loss on early debt redemption and refinancing, non-cash
 
   
18,467,000 
Loss (gain) loss on disposals of property and equipment and other assets and insurance recovery
 
(2,205,000)
62,000 
Deferred loan cost amortization
 
2,014,000 
2,386,000 
Interest expense accretion of debt discount and premium, net
 
(672,000)
5,000 
Depreciation and amortization
 
78,426,000 
54,725,000 
Amortization of deferred income
 
(2,345,000)
(5,895,000)
Deferred income tax provision
 
15,665,000 
(50,915,000)
Share-based compensation
 
2,610,000 
2,224,000 
Changes in operating assets and liabilities:
 
 
 
Accounts and notes receivable
 
(741,000)
797,000 
Prepaid, refundable and accrued income taxes
 
585,000 
(2,766,000)
Inventories
 
255,000 
189,000 
Prepaid expenses
 
(287,000)
144,000 
Accounts payable
 
(821,000)
(294,000)
Deferred race event and other income
 
(2,843,000)
2,545,000 
Accrued interest
 
11,000 
813,000 
Accrued expenses and other liabilities
 
3,224,000 
1,595,000 
Deferred income
 
331,000 
393,000 
Other assets and liabilities
 
1,388,000 
(276,000)
Net Cash Provided By Operating Activities
 
125,278,000 
93,411,000 
Cash Flows from Financing Activities:
 
 
 
Borrowings under long-term debt
 
150,000,000 
355,000,000 
Principal payments on long-term debt
 
(211,500,000)
(413,000,000)
Payments of debt refinancing, issuance and amendment costs
 
(1,608,000)
(5,899,000)
Exercise of common stock options
 
131,000 
159,000 
Dividend payments on common stock
 
(24,860,000)
(24,875,000)
Repurchases of common stock
 
(4,167,000)
(3,081,000)
Net Cash Used By Financing Activities
 
(92,004,000)
(91,696,000)
Cash Flows from Investing Activities:
 
 
 
Payments for capital expenditures
 
(22,036,000)
(12,036,000)
Proceeds from sales of property and equipment and insurance recovery
 
1,263,000 
160,000 
Repayment of notes and other receivables
 
814,000 
684,000 
Net Cash Used By Investing Activities
 
(19,959,000)
(11,192,000)
Net (Decrease) Increase In Cash and Cash Equivalents
 
13,315,000 
(9,477,000)
Change in cash collected for and payable to third party, cash not provided or used by operating activities (Note 2)
 
(612,000)
412,000 
Cash and Cash Equivalents at Beginning of Year
110,046,000 
97,343,000 
106,408,000 
Cash and Cash Equivalents at End of Year
 
110,046,000 
97,343,000 
Supplemental Cash Flow Information:
 
 
 
Cash paid for interest, net of amounts capitalized
 
21,760,000 
31,426,000 
Cash paid for income taxes
 
557,000 
14,302,000 
Supplemental Non-cash Investing and Financing Activities Information:
 
 
 
(Decrease) increase in accounts payable for capital expenditures
 
2,115,000 
(486,000)
Increase in deferred income for exchange of property and equipment
 
250,000 
110,000 
Non-Cash Portion [Member]
 
 
 
Adjustments to reconcile (loss) income from continuing operations to net cash provided by operating activities:
 
 
 
Loss on early debt redemption and refinancing, non-cash
   
 
 
Note 1 - Basis of Presentation and Description of Business
Nature of Operations [Text Block]
1.
BASIS OF PRESENTATION AND DESCRIPTION OF BUSINESS
 
Basis of Presentation
– The consolidated financial statements include the accounts of Speedway Motorsports, Inc. and all of its wholly-owned and operating subsidiaries: Atlanta Motor Speedway LLC (AMS), Bristol Motor Speedway LLC (BMS), Charlotte Motor Speedway LLC (CMS), Kentucky Raceway LLC d/b/a Kentucky Speedway (KyS), Nevada Speedway LLC d/b/a Las Vegas Motor Speedway (LVMS), New Hampshire Motor Speedway, Inc. (NHMS), North Wilkesboro Speedway, Inc. (NWS), Speedway Sonoma LLC (Sonoma Raceway or SR), Texas Motor Speedway, Inc. (TMS), SMISC Holdings, Inc. d/b/a SMI Properties (SMI Properties), US Legend Cars International, Inc. (Legend Cars), Oil-Chem Research Corporation (Oil-Chem), SMI Trackside LLC (SMI Trackside), Speedway Funding LLC, Speedway Motorsports International Limited (BVI) and consolidated foreign entity (SMIL), Speedway Properties Company LLC a/k/a Performance Racing Network (PRN), Speedway Media LLC a/k/a Racing Country USA (RCU), and TSI Management Company LLC d/b/a The Source International LLC (TSI) (collectively, the Company, SMI, we, our or us). Hereafter, references to “the Company’s” or “eight” speedways exclude NWS, which presently has no significant operations and assets consist primarily of real estate which has no significant fair value.
 
Description of Business
– We are a promoter, marketer and sponsor of motorsports activities in the United States. We principally own and operate the following motorsports facilities: Atlanta Motor Speedway, Bristol Motor Speedway, Charlotte Motor Speedway, Kentucky Speedway, Las Vegas Motor Speedway, New Hampshire Motor Speedway, Sonoma Raceway, and Texas Motor Speedway. We also provide event and non-event souvenir merchandising and distribution services, and food, beverage and hospitality catering services under an outside management contract through our SMI Properties subsidiaries; provide radio programming, production and distribution through PRN and RCU; manufacture and distribute smaller-scale, modified racing cars and parts through Legend Cars, and sell an environmentally-friendly micro-lubricant
®
through Oil-Chem.
 
Discontinued Oil and Gas Activities
– In 2008, we discontinued our oil and gas operations primarily because of ongoing challenges and business risks in conducting these activities in foreign countries. We have no continuing involvement or ownership interest, and there are no assets, liabilities, revenues or expenses (other than as described below), associated with discontinued operations for any period presented herein. All note disclosures pertain to continuing operations unless otherwise indicated. We incurred insignificant legal fees and other costs in 2013 through 2015 associated with efforts to recover previously reserved receivables. In 2014, we recovered approximately $6.0 million of previously reserved receivables through favorable settlements. In 2013, we finalized dissolution of one fully impaired foreign interest with no resulting financial statement impact, and recognized a gain from favorable settlement of certain insurance claims. In 2015, we pursued a claim associated with our discontinued operation, but decided to cease such efforts in late 2015. There were no associated income tax benefits reflected in discontinued operations for any period presented (see Note 8).
 
Racing Events
– As further described in Note 2, we derive a substantial portion of our total revenues from admissions, event related and NASCAR broadcasting revenue. In 2015, we held 24 major annual racing events sanctioned by NASCAR, including 13 Sprint Cup and 11 Xfinity Series racing events. We also held eight NASCAR Camping World Truck Series, three NASCAR K&N Pro Series, four NASCAR Whelen Modified Tour, two IndyCar Series, six major National Hot Rod Association, one Automobile Racing Club of America and three World of Outlaws racing events. In 2014, we held 24 major annual racing events sanctioned by NASCAR, including 13 Sprint Cup and 11 Xfinity Series racing events. We also held seven NASCAR Camping World Truck Series, three NASCAR K&N Pro Series, four NASCAR Whelen Modified Tour, two IndyCar Series, six major NHRA, one ARCA and three WOO racing events. In 2013, we held 24 major annual racing events sanctioned by NASCAR, including 13 Sprint Cup and 11 Xfinity Series racing events. We also held six NASCAR Camping World Truck Series, three NASCAR K&N Pro Series, four NASCAR Whelen Modified Tour, two IndyCar Series, six major NHRA, one ARCA and three WOO racing events.
 
The more significant racing schedule changes during the last three years include:
 
In 2015, poor weather resulted in delays in starting and completing one NASCAR Sprint Cup race at AMS and BMS, and postponing and rescheduling one NASCAR Sprint Cup race at CMS
 
In 2014, poor weather resulted in delays in starting and completing one NASCAR Sprint Cup race at BMS and postponing and rescheduling one NASCAR Sprint Cup race at TMS
 
In 2013, one NASCAR Sprint Cup and one Xfinity Series race at both CMS and KyS, and one NASCAR Sprint Cup Series race at SR, was delayed, rescheduled or shortened due to poor weather
 
AMS held one NASCAR Camping World Truck Series race in 2015 that was not held in 2014 or 2013
 
LVMS and TMS each held one Red Bull Air Race World Championship event in 2015 and 2014 that was not held in 2013
 
NHMS held one NASCAR Camping World Truck Series racing event in 2015 and 2014 that was not held in 2013
Note 2 - Significant Accounting Policies
Significant Accounting Policies [Text Block]
2.
SIGNIFICANT ACCOUNTING POLICIES
 
Principles of Consolidation
– All significant intercompany accounts and transactions have been eliminated in consolidation.
 
Revenue and Expense Classification
– We classify our revenues as admissions, event related revenue, NASCAR broadcasting revenue, and other operating revenue. “Admissions” includes ticket sales for all Company events. “Event related revenue” includes amounts received from sponsorships, luxury suite rentals, souvenir sales, commissions from food and beverage sales, advertising and other promotional revenues, hospitality revenues, track rentals, driving school revenues, camping and other non-admission access revenues, broadcasting rights other than NASCAR broadcasting revenue, and other event and speedway related revenues. “NASCAR broadcasting revenue” includes rights fees obtained for domestic television broadcasts of NASCAR-sanctioned events held at our speedways. “Other operating revenue” includes non-event merchandising revenues and Legend Cars and parts sales, The Speedway Club at CMS and The Speedway Club at TMS (together the “Speedway Clubs”) revenues, Oil-Chem revenues, TMS oil and gas mineral rights lease and related revenues, and industrial park and office tower rentals.
 
We classify our expenses to include direct expense of events, NASCAR event management (formerly purse and sanction) fees, and other direct operating expense, among other categories. “Direct expense of events” principally includes cost of souvenir sales, non-NASCAR race purses and sanctioning fees, property and event insurance, compensation of certain employees, advertising, sales and admission taxes, outside event support services, cost of driving school revenues, and event settlement payments to non-NASCAR sanctioning bodies. “NASCAR event management fees” includes payments to, and portions of broadcasting revenues retained by, NASCAR for associated events held at the Company’s speedways. “Other direct operating expense” includes the cost of certain SMI Properties and subsidiaries, Legend Cars, Speedway Clubs, Oil-Chem, and industrial park and office tower rental revenues.
 
Event Revenues and Deferred Event Income, Net
– We recognize admissions, NASCAR broadcasting and event related revenues when an event is held. Event souvenir merchandise sales and commissions from food and beverage sales are recognized at time of sale. Advance revenues and certain related direct expenses pertaining to specific events are deferred until the event is held. Deferred expenses can include race purses and sanction fees remitted to or retained by NASCAR or other sanctioning bodies and sales and admission taxes and credit card processing fees on advance revenues. Deferred race event income relates to scheduled events to be held in upcoming periods. If circumstances prevent a race from being held during the racing season: (i) generally advance revenue is refundable and (ii) all deferred direct event expenses would be immediately recognized except for race event management fees which would be refundable from NASCAR or other sanctioning bodies, and for sales and admission taxes which would be refundable from taxing authorities. Management believes this accounting policy results in appropriate matching of revenues and expenses associated with our racing events and helps ensure comparability and consistency between our financial statements. Advance revenues, and certain related direct expenses, if any, for track rentals, driving schools and similar activities are deferred and recognized when the activities take place. Management believes its revenue recognition policies follow applicable authoritative guidance. Sales of gift cards or gift certificates for tickets, merchandise or other redemption use have not been significant.
 
NASCAR Broadcasting Revenues and NASCAR Event Management (formerly Purse and Sanction) Fees
– NASCAR contracts directly with certain television networks on broadcasting rights for all NASCAR-sanctioned Sprint Cup, Xfinity and Camping World Truck Series racing events. We receive television broadcasting revenues under contractual sanction agreements for each NASCAR-sanctioned race. The Company periodically negotiates its sanction fees for individual races with NASCAR. In 2015, SMI entered into separate five-year Event Management Agreements with NASCAR, under which our speedways will conduct NASCAR Sprint Cup, Xfinity and Camping World Truck Series and the Sprint All-Star Race events beginning in 2016 and through 2020. These agreements are substantially similar in form, substance and relative allocation of broadcast rights revenue to previous sanction agreements between SMI and NASCAR, except agreement duration increased from one to five years and annual increases in broadcast rights revenue and event management fees of three to four percent annually over the new five-year agreement term were established. Under the sanction agreements, NASCAR typically retains 10% of gross broadcasting revenues as a component of their sanction fees. NASCAR also retains 25% of gross broadcasting revenues for purses awarded to race participants for each race. The remainder represents additional annually negotiated event management fees paid to NASCAR by the Company for each race. These amounts retained by and paid to NASCAR are reflected in NASCAR event management fee expense.
 
Marketing Agreements
– We have various marketing agreements for sponsorships, on-site advertising, hospitality and other promotional activities. Sponsorships generally consist of event and official sponsorship agreements. These various marketing agreements can be event, speedway or period specific, or pertain to multiple events, speedways or years. Marketing agreements that are not event specific typically contain stated fiscal year periods. We receive payments based on contracted terms. Marketing customers and agreement terms change from time to time. We recognize contracted fee revenues, and associated expenses, as events or activities are conducted each year in accordance with the respective agreement terms. Our marketing agreements sometimes include multiple specified elements such as sponsorships, tickets, hospitality, suites or on-site advertising in varying combinations for one or more events or contract periods, although there is typically a predominant element. Contracted revenues are allocated between admissions and event related revenue financial statement categories based on the relative fair or retail value of the respective multiple elements as such events or activities are conducted each year in accordance with the respective agreement terms.
 
Certain marketing agreements contain elements of purchased property and equipment exchanged for multi-year marketing and other promotional activities at one or more of our facilities. The associated assets and deferred revenue are initially recorded based on their estimated fair or retail values, with assets then depreciated over estimated useful lives and deferred revenue recognized into income on a straight-line basis as events are conducted each year in accordance with the respective agreement terms. Deferred revenue recognizable in each upcoming fiscal year is reflected as current liabilities in deferred race event and other income.
 
Long-Term Food and Beverage Management Contract
– Levy Premium Foodservice Limited Partnership, wholly-owned by Compass Group USA, Inc., has exclusive rights to provide on-site food, beverage and hospitality catering services for essentially all Company speedway events and operations under a long-term food and beverage management contract through 2021. The long-term agreement provides for, among other items, specified annual fixed and periodic gross revenue based commission payments to the Company over the contract period. Our commission-based net revenues associated with activities provided by Levy are reported in event related revenue and at times, to a lesser extent, other operating revenue depending on the venue.
  
Non-Event Souvenir Merchandise and Other Revenues
– We recognize revenue when products are shipped, title transfers to customers, right of return or cancellation provisions expire, sales prices are final and collection is probable. For products sold on consignment through various promotional activities, revenues are recognized upon product shipment by promoters to customers, or purchase by reseller customers, and expiration of any right of return or cancellation provisions. Product sold on consignment with right of return or cancellation provisions has not been significant.
 
Revenue Composition (Note 13)
– Our revenues are comprised of the following (in thousands):
 
   
2015
   
2014
   
2013
 
Admissions
  $ 100,694     $ 100,798     $ 106,050  
NASCAR broadcasting
    217,469       207,369       199,014  
Sponsorships
    51,059       51,578       54,832  
Other event related
    81,869       81,493       78,106  
Souvenir and other merchandise
    31,781       31,058       31,005  
Other
    13,591       12,013       11,642  
Total revenue
  $ 496,463     $ 484,309     $ 480,649  
 
Revenues described as “other event related” consist principally of commissions from food, beverage and souvenir sales, luxury suite rentals, advertising and other promotional revenues, hospitality revenues, track rentals, driving school revenues, camping and other non-admission access revenues, broadcasting rights other than NASCAR broadcasting revenue, and other event and speedway related revenues. “Souvenir and other merchandise revenue” consists of SMI Properties and SMI Trackside sales of owned souvenir merchandise during racing and non-racing events and in speedway gift shops (motorsports event related merchandise), certain SMI Properties sales of racing and other sports related souvenir merchandise and Legend Cars operations (non-event motorsports related merchandise), and Oil-Chem product sales (non-motorsports related merchandise). “Other revenue” consists principally of revenues from the Speedway Clubs, industrial park and office tower rentals, Legend Cars as the sanctioning body for Legend Cars circuit races, and TMS oil and gas mineral rights lease and related revenues.
  
Use of Estimates
– The preparation of financial statements in conformity with generally accepted accounting principles requires extensive use of management estimates and assumptions that affect reported amounts of assets and liabilities, disclosure of contingent assets and liabilities at financial statement dates, and reported amounts of revenues and expenses. Actual future results could differ from those estimates. Such significant estimates include (i) recoverability of property and equipment, goodwill and other intangible assets, (ii) depreciable lives for property and equipment and amortization periods for intangible assets, (iii) accounting for income taxes, (iv) realization of receivables and inventories, (v) accruals for certain business taxes, uninsured business risks, litigation, and other contingencies, and (vi) deferred compensation obligations and disclosures of stock-based compensation.
 
Consolidated Statements of Cash Flows –
We classify as cash equivalents all highly liquid investments with original maturities of three months or less. Cash equivalents principally consist of variable rate, overnight sweep accounts of commercial paper, repurchase agreements, municipal bond and United States Treasury securities.
 
At times, we collect and temporarily hold cash on behalf of our third-party food and beverage concessionaire which is not remitted until after period end and is presented separately from cash flows from operating activities on the Consolidated Statements of Cash Flows. There are no specific limitations, restrictions or other holding requirements for such cash.
 
Accounts and Notes Receivable
are reported net of allowance for doubtful accounts summarized as follows (in thousands):
 
   
2015
   
2014
   
2013
 
Balance, beginning of year
  $ 1,271     $ 1,273     $ 1,270  
Bad debt expense
    605       261       253  
Actual write-offs, net of specific accounts recovered
    (589
)
    (263
)
    (250
)
Balance, end of year
  $ 1,287     $ 1,271     $ 1,273  
 
Other Noncurrent Assets
as of December 31, 2015 and 2014 consist of (in thousands):
 
   
2015
   
2014
 
Deferred financing costs, net
  $ 7,809     $ 8,943  
Land held for development
    12,265       12,265  
Other
    9,548       9,506  
Total
  $ 29,622     $ 30,714  
 
Noncurrent assets are generally reported at cost except for cash surrender values of life insurance policies which are reported at fair value (See Note 12). Management evaluates these assets for recovery when events or circumstances indicate possible impairment may have occurred. As of December 31, 2015, there have been no events or circumstances which might indicate possible recoverability concerns or impairment.
 
Deferred Financing Costs
are amortized into interest expense over the associated debt terms or remaining terms for loan amendment costs, and are reported net of accumulated amortization of $8,868,000 and $9,802,000 at December 31, 2015 and 2014. See Note 6 for information on 2013 and 2015 charges associated with previously deferred financing costs.
 
Original
Debt Issuance Discount or Premium
is amortized into interest expense over the associated debt terms using the effective interest method.
 
Land Held For Development
represents property adjacent to a regional outlet mall in the Charlotte metropolitan area which management plans to develop and market or possibly sell in suitable market conditions.
 
Property and Equipment (Note 4)
are recorded at cost less accumulated depreciation. Depreciation is provided using the straight-line method over the estimated useful lives of the respective assets. Leasehold improvements pertain primarily to industrial park, office and warehouse facilities, and are amortized using the straight-line method over the lesser of associated lease terms or estimated useful lives. Constructed assets, including construction in progress, include all direct costs and capitalized interest until placed into service. Expenditures for repairs and maintenance are charged to expense when incurred, unless useful asset lives are extended or assets improved.
 
When events or circumstances indicate possible impairment may have occurred, the Company evaluates long-lived assets, including tangible assets and intangible assets subject to amortization, for possible impairment based on expected future undiscounted operating cash flows attributable to such assets using applicable authoritative guidance. Assets are grouped at the lowest level for which identifiable cash flows are largely independent of other assets and liabilities when assessing impairment. When management decides to remove grandstand seating and suites as part of managing facility capacity or other speedway facility assets, depreciation is accelerated and recorded prospectively over shortened estimated remaining useful lives of the assets, beginning when management both commits to and begins removal. Gains or losses on property and equipment disposals are recognized when disposed. Recording accelerated depreciation, gain or loss on disposal or impairment losses related to property and equipment is based on assessment of the associated facts and circumstances. Also, assets are classified as held for sale when management determines that sale is probable within one year. Management believes no unrecognized impairment of long-lived assets exists at December 31, 2015.
 
In connection with the development and completed construction of TMS in 1997, the Company entered into arrangements with the Fort Worth Sports Authority (FWSA), a non-profit corporate instrumentality of the City of Fort Worth, Texas, whereby the Company conveyed the speedway facility, excluding its on-site condominiums and office and entertainment complex, to the FWSA. The Company, which has the right to reacquire the facility, operates the speedway facility under a 30-year arrangement with the FWSA. Because of the Company’s responsibilities, including associated risks, rewards and obligations, under these arrangements, the speedway facility and related liabilities are included in the accompanying consolidated balance sheets.
 
Other Intangible Assets
and
Goodwill (Note 5)
represent the excess of business acquisition costs over the fair value of net assets acquired, and are all associated with our motorsports related activities and reporting units. Intangible assets consist predominately of goodwill and nonamortizable intangible assets for race event sanctioning and renewal agreements and, to a lesser extent, goodwill associated with event related motorsports merchandising. Acquired intangible assets are valued using the direct value method. Our race event sanctioning and renewal agreements for each NASCAR-sanctioned racing event are awarded annually. We have evaluated each of our intangible assets for these agreements and determined that each will extend into the foreseeable future. We have never been unable to renew these race date agreements for any subsequent year and no such agreement has ever been cancelled. Based on these and other factors, such race date agreements are expected to be awarded to the Company in perpetuity. As such, these nonamortizable intangible assets for race event sanctioning and renewal agreements are considered to have indefinite useful lives because their renewal and cash flow generation are expected to continue indefinitely. No direct costs for agreement renewal or extension have been incurred or capitalized. However, we are obligated to conduct events in the manner stipulated under the terms and conditions of the annual sanctioning agreements. We follow applicable authoritative guidance on accounting for goodwill and other intangible assets which specifies, among other things, nonamortization of goodwill and requires testing of intangible assets with indefinite useful lives for possible impairment at least annually.
 
Annual Impairment Assessment
. We evaluate goodwill and other intangible assets for possible impairment annually in the second quarter, or when events or circumstances indicate possible impairment may have occurred. Management considers each speedway and motorsports and non-motorsports merchandising subsidiary a separate reporting unit principally because that is the lowest level for which discrete financial information is available to our managers and chief operating decision maker. No reporting units are aggregated, and no intangible assets are allocated or transferred between reporting units, for purposes of evaluating intangible assets for possible impairment. We evaluate intangible assets for possible impairment based predominately on management’s best estimate of future discounted operating cash flows and profitability attributable to such assets (using the fair value assessment provisions of applicable authoritative guidance) for all individual reporting units. The inputs for measuring fair value are considered "Level 3" or unobservable inputs that are not corroborated by market data under applicable fair value authoritative guidance, as quoted market prices are not available. Impairment charges and associated operations are included in our "motorsports event related" reportable segment (see Note 13).
 
Among other factors, the latest assessment assumes projected cash flow and profitability recovery, using modest annual inflationary growth rates for projected revenue streams and operating costs (other than NASCAR broadcasting revenues and event management fees),
and strategic amounts of planned capital expenditures. Management projected annual increases in contracted NASCAR broadcasting rights revenues, and associated NASCAR event management (purse and sanction) fees, based on historical and anticipated rates which are supported by recently negotiated multi-year contracts as previously described above. NASCAR event management fees for years after 2020 have not been negotiated, and future annual fees could differ substantially from those assumed in management’s impairment assessment. Management also considered that the estimated market value for comparable NASCAR race event sanction and renewal agreements (the Company had agreements with NASCAR to annually conduct thirteen Sprint Cup, eleven Xfinity and eight Camping World Truck Series races as of the evaluation date), combined with the estimated fair value for all other Company net assets, exceeds its current market capitalization. Management also considered recent market trading ranges of price to earnings and sales multiples, cash flow and other traditional valuation methods, control premiums, and other market information related to our common stock from historical and forward-looking perspectives.
 
NASCAR has announced it would consider potential track realignment of Sprint Cup Series racing events to desirable, potentially more profitable market venues of speedway operators. Our annual impairment assessment did not consider the possibility that management may realign one or more other NASCAR Sprint Cup Series racing events among its speedway facilities, which could result in net higher or improved future projected cash flows. Such information was also compared to available market information for certain motorsports industry peers. Weighting of evaluation results was not required as none of the methods, individually or collectively, indicated possible impairment. Despite ongoing domestic and global economic challenges, management believes there has been no fundamental change in our core motorsports business.
 
2015 Impairment of Other Intangible Assets
. Management’s latest annual impairment assessment was performed in the second quarter 2015. As previously reported in our 2014 Annual Report, management’s 2014 annual assessment found that the excess of estimated fair value over associated aggregate carrying values for material non-amortizable race date event sanctioning and renewal agreements associated with NHMS was relatively nominal, resulting in heightened sensitivity to management’s assumptions used in estimating future discounted cash flows and profitability and associated risk of failing impairment testing. Our 2015 annual assessment found the estimated fair value of each reporting unit and each indefinite-lived intangible asset substantially exceeded its associated carrying value except for those NHMS race date agreements. NHMS was acquired in 2008 largely before the severe economic recession, which has resulted in long-term operating challenges for many major sports. The 2015 evaluation reflects continuing lowered estimated future cash flows because the economic recovery has been slower and weaker than previous forecasts, and ongoing lower than anticipated revenues for various major racing events held at NHMS. The evaluation also reflects, similar to challenges faced by many major sports, reduced visibility on profit recovery due to factors such as changing demographics, evolving entertainment choices for fans and appealing “at-home viewing” experiences. As a result, the Company lowered its expectations for forecasted growth rates for certain revenues and profit recovery. As such, a non-cash impairment charge of $96,530,000, before income tax benefits of $34,569,000, was reflected in 2015 to reduce the race date intangible assets to estimated fair value.
 
2015 Impairment of Goodwill
. Our 2015 annual assessment indicated that goodwill associated with SMI Trackside, which conducts event souvenir merchandising at our and other third-party speedways, was impaired because of potentially unfavorable developments associated with NASCAR’s announced industry changes to the trackside merchandising business model. As such, a non-cash impairment charge of $2,338,000, before income tax benefits of $885,000, was reflected in 2015 to reduce associated goodwill to an estimated fair value of $0.
 
Management believes the methods used to determine fair value and evaluate impairment were appropriate, relevant, and represent methods customarily available and used for such purposes and are the best available estimate of fair value. There have since been no other events or circumstances that indicate possible impairment, and management believes the Company’s operational and cash flow forecasts support its conclusions that no unrecognized impairment exists as of December 31, 2015. Different economic or industry conditions or assumptions, and changes in projected cash flows or profitability, if significantly negative or unfavorable, could have a material adverse effect on the impairment evaluation and our future financial condition or results of operations. The evaluations are subjective and based on conditions, trends and assumptions existing at the time of evaluation.
 
2013 Impairment of
Goodwill (Note 8).
Management's 2013 annual impairment assessment indicated the estimated fair value of each reporting unit and each indefinite-lived intangible asset substantially exceeded its associated carrying value except for two reporting units. The 2013 annual evaluation found the carrying values for NHMS and KyS exceeded estimated fair value reflecting lowered estimated future cash flows because the economic recovery was slower and weaker than previous forecasts, and lower than anticipated revenues for certain 2013 major racing events at NHMS and KyS, further reducing visibility on profitability recovery. As such, a non-cash impairment charge of $89,037,000, before income tax benefits of $2,341,000, was reflected in 2013 to reduce goodwill related to NHMS and KyS to estimated fair value of $0.
  
Deferred Income, Net
(noncurrent) as of December 31, 2015 and 2014 consists of (in thousands):
 
   
2015
   
2014
 
Preferred seat license fees, net
  $ 2,871     $ 3,518  
Multi-year marketing and other arrangements, and deferred membership income
    1,710       1,304  
Total
  $ 4,581     $ 4,822  
 
Preferred Seat License Fees, Net.
KyS and TMS offer Preferred Seat License (PSL) agreements whereby licensees are entitled to purchase annual season-ticket packages for sanctioned racing events under specified terms and conditions. Among other items, licensees are required to purchase all season ticket packages when and as offered each year. License agreements automatically terminate without refund should licensees not purchase any offered ticket and are transferable once each year subject to certain terms and conditions. Also, licensees are not entitled to refunds for postponement or cancellation of events due to weather or certain other conditions. Net PSL fees are deferred when received and amortized into income over the estimated useful life of those facilities or recognized upon license agreement termination.
 
Deferred Speedway Club Membership Income.
The CMS and TMS Speedway Clubs sell memberships that entitle members to certain dining, other club and racing event seating privileges, and require upfront fees and monthly assessments. Net membership revenues are deferred when billed and amortized into income over an estimated average membership term of ten years.
 
Deferred
Income, Other Arrangements.
BMS plans to host two collegiate football games in September 2016, one of which is expected to be substantially larger due to team standings and public interest. Under the similar accounting policy for our racing events described above, we plan to continue to defer advance revenues and direct expenses pertaining to this event until held. Advance revenues and associated direct expenses are reflected in current “Deferred Race Event and Other Income, Net” as of December 31, 2015, and in noncurrent “Deferred Income, Net” as of December 31, 2014 based on the scheduled event date.
 
Advertising Expenses
– Event specific advertising costs are expensed when an associated event is held and included principally in direct expense of events. Non-event related advertising costs are expensed as incurred and included principally in other direct operating expense. Advertising expense amounted to $16,126,000 in 2015, $16,398,000 in 2014 and $17,461,000 in 2013. There were no deferred direct-response advertising costs at December 31, 2015 or 2014.
 
Operating Leases
– We have various operating leases principally for office and warehouse space and for equipment used in conducting racing events and other operations. These operating leases typically have initial terms of less than one year or are cancelable with minimal notice, although certain operating equipment leases include multi-year terms. Rent expense for operating leases amounted to $6,233,000 in 2015, $6,023,000 in 2014 and $5,923,000 in 2013. Various office and warehouse facilities leased from an affiliate (see Note 9) are cancelable with minimal notice; however, such lease arrangements will likely be renewed annually through specific contract periods. We lease various office, warehouse and industrial park space under operating leases to various entities largely involved in motorsports. These operating leases typically have initial terms of one year or more and are noncancelable. Lease revenue for operating leases, excluding the TMS oil and gas mineral rights lease receipts discussed above, amounted to $5,343,000 in 2015, $4,927,000 in 2014 and $4,835,000 in 2013.
 
Future annual minimum lease payments (where initial terms are one year or more and assuming renewal through contracted periods), and contracted future annual minimum lease revenues, under operating leases at December 31, 2015 are as follows (in thousands):
 
   
Lease
Payments
   
Lease
Revenues
 
2016
  $ 1,332     $ 4,982  
2017
    1,128       4,066  
2018
    611       2,962  
2019
    204       1,877  
2020
    112       557  
Thereafter
    601       308  
Total
  $ 3,988     $ 14,752  
 
Other
Expense
(Income), Net
consists of (in thousands):
 
   
2015
   
2014
   
2013
 
Removal costs for retired assets, and net gain associated with insurance recovery and involuntary conversion of property (2014) (Note 4)
  $ 552     $ (2,235
)
     
Net loss on disposals of property and equipment and other assets
    101       30     $ 62  
Other
    209       (100
)
    231  
Total
  $ 862     $ (2,305
)
  $ 293  
 
Income Taxes (See Note 8 for revision in income taxes)
– We recognize deferred tax assets and liabilities for the future income tax effect of temporary differences between financial and income tax bases of assets and liabilities. Income taxes are provided using the liability method whereby estimated deferred income taxes, and significant items giving rise to deferred tax assets and liabilities, reflect management’s assessment of future taxes likely to be paid, including timing, probability of realization and other relevant factors. Our accounting for income taxes reflects management’s assessment of future tax liabilities based on assumptions and estimates for timing, likelihood of realization, and tax laws existing at the time of evaluation. We assess the need for valuation allowances for deferred tax assets based on the sufficiency of estimated future taxable income and other relevant factors. We report interest expense and penalties related to income tax liabilities, when applicable, in income tax expense. Cash Paid for Income Taxes excludes any previous overpayments the Company may have elected to apply to income tax liabilities. The Company has no undistributed foreign earnings or cash or cash equivalents held outside of the US.
 
We follow applicable authoritative guidance on accounting for uncertainty in income taxes which, among other things, prescribes a recognition threshold and measurement attribute for financial statement recognition and measurement of tax positions taken or expected to be taken in a tax return, and provides guidance on derecognition, classification, interest and penalties, and disclosures. Evaluation of a tax position includes determining whether it is more likely than not a tax position will be sustained upon examination, including resolution of any related appeals or litigation processes, based on the technical merits of the position. In evaluating whether a tax position meets the more-likely-than-not recognition threshold, it is presumed the position will be examined by appropriate taxing authorities having full knowledge of all relevant information. A tax position that meets the more-likely-than-not recognition threshold is measured to determine the amount of benefit to be recognized in the financial statements. The tax position is measured at the largest amount of benefit that is greater than 50 percent likely of being realized upon ultimate settlement.
 
Taxes Collected from Customers
– We report sales, admission and other taxes collected from customers on both a gross and net basis in operations. Such taxes reported on a gross basis amounted to $6,024,000 in 2015, $5,340,000 in 2014 and $5,455,000 in 2013.
 
Fair Value of Financial Instruments
– We follow applicable authoritative guidance which requires that financial and non-financial assets and liabilities measured and reported on a fair value basis be classified, disclosed and categorized as further described below. Fair value estimates are based on relevant market information and single broker quoted market prices where available at a specific point in time, and changes in assumptions or market conditions could significantly affect estimates. The carrying values of cash and cash equivalents, accounts and notes receivable, certain other assets and accounts payable approximate fair value because of the short maturity of these financial instruments. Cash surrender values are carried at fair value based on binding broker quoted market prices. Notes and other receivables and bank revolving credit facility and term loan borrowings are variable interest rate financial instruments and, therefore, carrying values approximate fair value. The fixed rate senior notes payable are publicly traded and estimated fair values are based on single broker quoted market prices. Other long-term debt bears interest approximating market rates or where non-interest bearing is discounted based on estimated current cost of borrowings; therefore, carrying values approximate market value. There have been no changes or transfers between category levels or classes. The following table presents estimated fair values and categorization levels of our financial instruments as of December 31, 2015 and 2014 (in thousands):
 
             
2015
   
2014
 
   
Level
 
Class
 
Carrying
Value
   
Fair Value
   
Carrying
Value
   
Fair Value
 
Assets
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Cash and cash equivalents
    1  
R
  $ 82,010     $ 82,010     $ 110,046     $ 110,046  
Cash surrender values
    2  
NR
    8,551       8,551       8,177       8,177  
                                           
Liabilities
(Note 6)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Floating rate revolving Credit Facility, including Term Loan
    2  
NR
    120,000       120,000       150,000       150,000  
5.125% Senior Notes Payable due 2023
    2  
NR
    200,000       199,000              
6.75% Senior Notes Payable previously due 2019
    2  
NR
                253,372       257,500  
Other long-term debt
    2  
NR
    1,383       1,383       1,445       1,445  
 
Level 1:
Quoted market prices in active markets for identical assets or liabilities.
Level 2:
Observable market-based inputs or unobservable inputs that are corroborated by market data.
Level 3:
Unobservable inputs that are not corroborated by market data.
Class R:
Measured at fair value on recurring basis, subsequent to initial recognition.
Class NR:
Measured at fair value on nonrecurring basis, subsequent to initial recognition.
 
Concentrations of Credit Risk
– Financial instruments that potentially subject the Company to concentrations of credit risk consist principally of cash and cash equivalents, accounts and notes receivable, and cash surrender values. Concentration of credit risk with respect to cash and cash equivalents and cash surrender values is limited through placement with major high-credit qualified financial institutions and insurance carriers, respectively. However, amounts placed often significantly exceed available insured limits. Concentrations of credit risk with respect to accounts receivable are limited due to the large numbers and wide variety of customers and customer industries and their broad geographical dispersion. Also, a significant portion of our accounts receivable typically pertain to advance revenues for specific events which are deferred until the event is held. As such, exposure to credit risk on such receivables that could adversely affect operating results is limited until recognition of the associated deferred race event income. We generally require sufficient collateral equal to or exceeding note amounts, or accept notes from high-credit quality entities or high net-worth individuals, limiting our exposure to credit risk. Amounts due from affiliates typically can be offset to the extent of amounts payable to affiliates, limiting our exposure to credit risk.
 
Loss and Other Contingencies and Financial Guarantees
– We accrue a liability for contingencies if the likelihood of an adverse outcome is probable and the amount is estimable. Legal and other costs associated with loss contingencies are expensed as incurred. We account for financial guarantees using applicable authoritative guidance which requires, among other things, that guarantors recognize a liability for the fair value of obligations undertaken by issuing a guarantee.
 
CMS’s property includes areas used as solid waste landfills for many years. Landfilling of general categories of municipal solid waste on the CMS property ceased in 1992, but CMS currently allows certain property to be used for land clearing and inert debris landfilling. Landfilling for construction and demolition debris has ceased on the CMS property. Management believes the Company’s operations, including the landfills on its property, comply with all applicable federal, state and local environmental laws and regulations. Management is not aware of any situation related to landfill operations which would have a material adverse effect on our financial position, future results of operations or cash flows.
 
Recently Issued Accounting Standards
– The Financial Accounting Standards Board (FASB) issued Accounting Standards Update No. 2014-09 "Revenue from Contracts with Customers (Topic 606): Section A - Summary and Amendments That Create Revenue from Contracts with Customers and Other Assets and Deferred Costs - Contracts with Customers (Subtopic 340-40)” which enhances comparability and clarifies principles of revenue recognition. The guidance includes the core principle that entities recognize revenue to depict transfers of promised goods or services to customers in amounts that reflect the consideration entities expect to be entitled in exchange for those goods or services. In August 2015, the FASB issued Update No. 2015-14 approving deferral of Update No. 2014-09 for one year, with such guidance now effective for annual reporting periods beginning after December 15, 2017, including interim periods within that reporting period. Early application is permitted as of annual reporting periods beginning after December 15, 2016, including interim reporting periods within that reporting period. The Company is currently evaluating the potential impact that adoption may have on its financial statements.
 
The FASB issued Accounting Standards Update No. 2014-12 "Compensation—Stock Compensation (Topic 718): Accounting for Share-Based Payments When the Terms of an Award Provide That a Performance Target Could Be Achieved after the Requisite Service Period” which requires performance targets that affect vesting and could be achieved after requisite service periods be treated as performance conditions and reflected in estimating grant-date fair values of awards. Compensation cost should be recognized in the periods when achieving performance targets becomes probable, and should represent the compensation cost attributable to periods for which requisite services have already been rendered. If achieving performance targets becomes probable before the end of the requisite service periods, any remaining unrecognized compensation cost should be recognized prospectively over the remaining requisite service period. Among other things, the guidance applies to entities that grant employees share-based payments in which award terms provide that performance targets that affect vesting could be achieved after the requisite service periods. The guidance is effective for annual periods and interim periods beginning after December 15, 2015. Earlier adoption is permitted. Entities may apply the guidance either (a) prospectively to all awards granted or modified after the effective date or (b) retrospectively to all awards with performance targets that are outstanding as of the beginning of the earliest annual period presented in the financial statements and to all new or modified awards thereafter. The Company is currently evaluating the potential impact that adoption may have on its financial statements.
 
The FASB issued Accounting Standards Update No. 2015-03 "Interest – Imputation of Interest (Subtopic 835-30): Simplifying the Presentation of Debt Issuance Costs” which requires that debt issuance costs related to debt liabilities be presented in the balance sheet as a direct deduction from the associated carrying amount, similar to debt discounts. In August 2015, the FASB issued Update No. 2015-15 “Imputation of Interest (Subtopic 835-30): Presentation and Subsequent Measurement of Debt Issuance Costs Associated with Line-of-Credit Arrangements” which provides guidance on presentation and subsequent measurement of debt issuance costs associated with line-of-credit arrangements, and indicating the SEC staff would not object to entities deferring and presenting debt issuance costs as an asset and subsequently amortizing deferred debt issuance costs ratably over line-of-credit arrangement terms even if there are no outstanding borrowings. The guidance is effective for annual reporting periods beginning after December 15, 2015, including interim periods within that reporting period. The Company believes adoption will have no significant impact on its financial statements.
 
The FASB issued Accounting Standards Update No. 2015-11 "Inventory (Topic 330): Simplifying the Measurement of Inventory” which requires measuring inventory at the lower of cost and net realizable value based on estimated selling prices in the ordinary course of business, less reasonably predictable costs of completion, disposal and transportation (changed from the previous guidance of lower of cost or market). This update also clarified various other inventory measurement and disclosure requirements. The update does not apply to inventory measured using the LIFO or retail inventory methods. The guidance is effective for annual reporting periods beginning after December 15, 2016, including interim periods within that reporting period, and should be applied prospectively. Early application is permitted. The Company is currently evaluating the potential impact that adoption may have on its financial statements.
 
The FASB issued Accounting Standards Update No. 2015-16 "Business Combinations (Topic 805): Simplifying the Accounting for Measurement-Period Adjustments” which requires that acquirers in business combinations recognize adjustments to provisional amounts identified during measurement periods in the reporting periods in which adjusted amounts are determined. The update requires that acquirers record, in the same period’s financial statements, the effect on earnings of changes in depreciation, amortization or other income effects, if any, resulting from changes in provisional amounts, calculated as if the accounting had been completed at acquisition date. The update also requires separate income statement presentation or note disclosure of amounts recorded in current period earnings by line item that would have been recorded in previous reporting periods if the provisional amount adjustments had been recognized at acquisition date (requirements to retrospectively account for those adjustments have been eliminated). This update applies to all entities that reported provisional amounts in a business combination for which the accounting is incomplete by reporting period end, and in which the combination occurs and during the measurement period have an adjustment to provisional amounts recognized. Entities should disclose the nature and reason for changes in accounting principle in the first annual period of adoption, and in interim periods within the first annual period if there are measurement-period adjustments during the first annual period in which the changes are effective. The guidance is effective for annual reporting periods beginning after December 15, 2015, including interim periods within that reporting period. Amendments in this update should be applied prospectively to adjustments to provisional amounts that occur after its effective date, with earlier application permitted for financial statements that have not been issued. The Company plans to apply this guidance where applicable in any future business combinations.
 
The FASB issued Accounting Standards Update No. 2015-17 "Income Taxes (Topic 740): Balance Sheet Classification of Deferred Taxes” which requires classification of deferred tax liabilities and assets as noncurrent in the balance sheet. Previous guidance required separate presentation of current and noncurrent amounts where applicable. The guidance is effective for annual reporting periods beginning after December 15, 2016, including interim periods within that reporting period. Early application is permitted, and the Company has retroactively applied the Update guidance in its financial statements and note disclosures (see Note 8) for all periods presented. Retroactive application resulted in reclassifying (netting) current deferred income tax assets of $23,786,000 and $49,181,000 to noncurrent deferred income tax liabilities as of December 31, 2014 and 2013. Adoption had no impact on our operating results or cash flows. Management believes application of the guidance simplifies and improves the usefulness of deferred tax information for users of the Company’s financial statements.
 
The FASB issued Accounting Standards Update No. 2016-02 “Leases (Subtopic 842)” which requires lessees to recognize assets and liabilities arising from leases as well as extensive quantitative and qualitative disclosures. Lessees will need to recognize on their balance sheets right-of-use assets and lease liabilities for the majority of their leases (other than leases meeting the definition of a short-term lease). Right-of-use assets will be measured at lease liability amounts, adjusted for lease prepayments, lease incentives received and lessee’s initial direct costs. Lease liabilities will equal the present value of lease payments. The guidance is effective for fiscal years beginning after December 15, 2018, and interim periods within those fiscal years. Early adoption is permitted. The guidance is required to be applied using the modified retrospective approach for all leases existing as of the effective date, and provides for certain practical expedients. The Company is currently evaluating the potential impact that adoption may have on its financial statements.
Note 3 - Inventories
Inventory Disclosure [Text Block]
3.
INVENTORIES
 
Inventory costs consist of: (i) souvenirs and apparel, 5/8-scale and similar small-scale finished race cars and parts and accessories determined on a first-in, first-out basis; and (ii) micro-lubricant
®
product costs determined on an average current cost basis. No general and administrative costs are included in inventory costs. Cost of sales are charged using the same inventory cost bases. Inventories as of December 31, 2015 and 2014 consist of (in thousands):
 
   
2015
   
2014
 
Finished race cars, parts and accessories
  $ 5,542     $ 5,186  
Souvenirs and apparel
    2,550       2,472  
Micro-lubricant
®
and other
    619       692  
Total
  $ 8,711     $ 8,350  
 
All inventories are stated at the lower of cost or market value with provisions for differences between cost and estimated market value based on assumptions about current and future demand, market conditions and trends that might adversely impact realization. Inventories are reflected net of provisions summarized as follows (in thousands):
 
   
2015
   
2014
   
2013
 
Balance, beginning of year
  $ 4,407     $ 4,083     $ 4,757  
Current year provision
    310       711       53  
Current year sales and write-offs
    (1,961
)
    (387
)
    (727
)
Balance, end of year
  $ 2,756     $ 4,407     $ 4,083  
Note 4 - Property and Equipment
Property, Plant and Equipment Disclosure [Text Block]
4. PROPERTY AND EQUIPMENT
 
Property and equipment as of December 31, 2015 and 2014 is summarized as follows (dollars in thousands):
 
 
 
Estimated
Useful Lives
 
 
2015
 
 
2014
 
Land and land improvements
 
5
-
25
 
 
$
464,057
 
 
$
460,847
 
Racetracks and grandstands
 
5
-
45
 
 
 
722,939
 
 
 
721,108
 
Buildings and luxury suites
 
5
-
40
 
 
 
454,762
 
 
 
451,243
 
Machinery and equipment
 
3
-
20
 
 
 
45,192
 
 
 
44,696
 
Furniture and fixtures
 
5
-
20
 
 
 
38,025
 
 
 
36,411
 
Autos and trucks
 
3
-
10
 
 
 
13,073
 
 
 
12,258
 
Construction in progress
 
 
 
 
 
 
 
8,456
 
 
 
3,784
 
Total
 
 
 
 
 
 
 
1,746,504
 
 
 
1,730,347
 
Less accumulated depreciation
 
 
 
 
 
 
 
(726,854
)
 
 
(678,194
)
Net
 
 
 
 
 
 
$
1,019,650
 
 
$
1,052,153
 
 
Other Information
– From time to time, we may reduce the number of permanent seats to offer wider seating and improved sight lines for managing facility capacity or other marketing or alternative development purposes such as premium hospitality, RV camping and advertising areas. In 2015, we recorded non-cash, pre-tax charges for accelerated depreciation aggregating $9,111,000 associated with removal of certain low demand seating at CMS (3,000 seats) and LVMS (19,000 seats), retired leaderboard assets at certain speedways, and a decline in estimated fair value of certain real property. These removal and retirement activities were completed in 2015 or will be completed
in the first half 2016. In 2014, we recorded non-cash, pre-tax charges for accelerated depreciation aggregating $25,118,000 associated with removal of certain low demand seating and suites at AMS (17,000 seats), CMS (41,000 seats) and NHMS (7,000 seats), and certain damaged speedway assets. Costs of removal are included in Other Expense, Net (see Note 2).These charges are included in our "motorsports event related" reporting segment (see Note 13).
 
Depreciation expense amounted to $61,933,000 in 2015, $78,375,000 in 2014 and $54,671,000 in 2013. As of December 31, 2015, we had contractual obligations for capital expenditures of approximately $13,430,000 for facility improvements at our various speedways. In 2014, we reflected a gain from involuntary conversion of certain TMS property, increasing property and equipment and other income, net by approximately $985,000.
Note 5 - Goodwill and Other Intangible Assets
Goodwill and Intangible Assets Disclosure [Text Block]
5. OTHER INTANGIBLE ASSETS AND GOODWILL
 
The composition and accounting for intangible assets are further described in Note 2. As of December 31, 2015 and 2014, gross carrying values and accumulated amortization by class of intangible asset are as follows (dollars in thousands):
 
   
2015
   
2014
         
   
Gross
Carrying
Value
   
Accumulated
Amortization
   
Net
   
Gross
Carrying
Value
   
Accumulated
Amortization
   
Net
   
Estimated
Amortization
Period
(Years)
 
Nonamortizable race event sanctioning and renewal agreements
  $ 298,383           $ 298,383     $ 394,913           $ 394,913        
Amortizable race event sanctioning and renewal agreements
    100     $ (89
)
    11       100     $ (72
)
    28       5 - 6  
Total
  $ 298,483     $ (89
)
  $ 298,394     $ 395,013     $ (72
)
  $ 394,941          
 
 Changes in the gross carrying value of other intangible assets and goodwill are as follows (in thousands):
 
   
Other Intangible Assets
   
Goodwill
 
   
2015
   
2014
   
2015
   
2014
 
Balance, beginning of year
  $ 395,013     $ 395,013     $ 49,680     $ 49,680  
Increase from acquisitions
                       
Decrease from impairment charges (Note 2)
    (96,530
)
          (2,338
)
     
Balance, end of year
  $ 298,483     $ 395,013     $ 47,342     $ 49,680  
 
The 2015 decreases reflect impairment charges to reduce other intangible assets associated with NHMS, and goodwill associated with certain event souvenir merchandising, to estimated fair value. The carrying amounts for goodwill and other intangible assets include accumulated impairments of $148.6 million and $99.9 million at December 31, 2015, and $146.2 million and $3.3 million at December 31, 2014. Amortization expense on other intangible assets amounted to $17,000 in 2015, $14,000 in 2014 and $18,000 in 2013. Estimated annual amortization expense for each of the next five years is not significant.
Note 6 - Long-term Debt
Long-term Debt [Text Block]
6.
LONG-TERM DEBT
 
Long-term debt at December 31, 2015 and 2014 consists of (in thousands):
 
   
2015
   
2014
 
Credit Facility, all Term Loan
  $ 120,000     $ 150,000  
2023 Senior Notes
    200,000        
2019 Senior Notes
          253,372  
Other notes payable
    1,383       1,445  
Total
    321,383       404,817  
Less current maturities
    (7,677
)
    (7,070
)
Long-term debt, excluding current maturities
  $ 313,706     $ 397,747  
 
Annual maturities of long-term debt at December 31, 2015 are as follows (in thousands):
 
2016
  $ 7,677  
2017
    7,657  
2018
    7,662  
2019
    97,667  
2020
    172  
Thereafter
    200,548  
Total
  $ 321,383  
 
Bank Credit Facility
- Our Credit Facility, as amended in December 2014, among other things: (i) provides for a five-year $100,000,000 senior secured revolving credit facility, with separate sub-limits of $50,000,000 for standby letters of credit and $10,000,000 for swing line loans; (ii) provides for a five-year $150,000,000 senior secured term loan (which was fully drawn in December 2014) and a five-year delayed draw term loan of up to $50,000,000 (which was fully drawn in March 2015 and repaid in the second quarter 2015) (the Term Loan or Term Loans); (iii) matures in December 2019; (iv) contains an accordion feature allowing the Company to increase revolving commitments or establish a term loan up to an aggregate additional $100,000,000 or $200,000,000, respectively (or a combined aggregate additional amount of up to $250,000,000) with certain lender commitment conditions; (v) allows for annual aggregate payments of dividends and repurchases of SMI securities of up to $50,000,000, increasing up to $75,000,000 subject to maintaining certain financial covenants; and (vi) limits annual capital expenditures to $75,000,000 and provides for motor speedway acquisitions and related businesses. Term Loans require equal minimum quarterly principal payments of at least 5% of initial amounts drawn on an annualized basis ($7,500,000 for fiscal 2016).
 
Interest is based, at the Company’s option, upon the Eurodollar Rate plus 1.25% to 2.00% or a base rate defined as the higher of Bank of America’s prime rate, the Federal Funds Rate plus 0.5% or the Eurodollar Rate plus 1%, plus 0.25% to 1.00%. The Credit Facility also contains a commitment fee ranging from 0.25% to 0.40% of unused amounts available for borrowing. The interest rate margins on borrowings and the commitment fee are adjustable periodically based upon certain consolidated total leverage ratios. The Credit Facility contains a number of affirmative and negative financial covenants, including requirements that the Company maintain certain consolidated total leverage ratios and consolidated interest coverage ratios.
 
In 2015, we borrowed $50,000,000 under the Term Loan (for partial funding of the 2019 Senior Notes redemption as further described below), and repaid Term Loan borrowings of $80,000,000. At December 31, 2015 and 2014, outstanding borrowings under the Credit Facility were $120,000,000 and $150,000,000 (all Term Loan borrowings), and outstanding letters of credit amounted to $845,000 and $1,152,000. As of December 31, 2015, the Company had availability for borrowing up to an additional $99,155,000, including up to an additional $49,155,000 in letters of credit, under the revolving Credit Facility, and $50,000,000 under the delayed draw term loan provision. In 2014, we repaid $210,000,000 and borrowed $150,000,000 under the Term Loan (including $150,000,000 repayment and borrowing in amending the Credit Facility), for a net repayment of $60,000,000. In 2013, we repaid $95,000,000 of Term Loan borrowings with proceeds from the add-on offering of 2019 Senior Notes, and borrowed $250,000,000 under the then existing Term Loan to fund redemption of the 2016 Senior Notes as further discussed below. In 2013, we also repaid an additional $40,000,000 of Term Loan borrowings.
 
2015 Issuance of New Senior Notes
– In January 2015, we completed a private placement of new 5.125% Senior Notes due 2023 in aggregate principal amount of $200,000,000 issued at par, and net proceeds after commissions and fees approximated $196,816,000. We used net offering proceeds, Term Loan borrowings under the Credit Facility and cash on hand to fund the redemption of the Company’s 6.75% Senior Notes due in 2019 in March 2015 as further described below. We completed an exchange offer for substantially identical 2023 Senior Notes registered under the Securities Act in the second quarter 2015. The 2023 Senior Notes mature in February 2023 and interest payments are due semi-annually on February 1 and August 1.
 
These 2023 Senior Notes contain various specified redemption and change of control provisions. The 2023 Senior Notes rank equally in right of payment with all other Company existing and future unsubordinated debt, are senior in right of payment to any future subordinated debt and are effectively subordinated to all existing and future secured debt, including the Credit Facility. The Indenture governing the 2023 Senior Notes permits dividend payments each year of up to approximately $0.80 per share of common stock, increasable subject to meeting certain financial covenants. The 2023 Senior Notes contain specific requirements and restrictive financial covenants and limitations, guarantees and cross-default provisions generally similar to those of the 2019 Senior Notes.
 
2015 Early Redemption of 2019 Senior Notes
– In March 2015, we redeemed all outstanding 2019 Senior Notes in aggregate principal of $250,000,000 at 103.375% of par plus accrued interest. The notes consisted of $150,000,000 issued at par in 2011 and $100,000,000 issued at 105% of par in an add-on offering in January 2013. The notes were scheduled to mature in February 2019, and had unamortized issuance premium of $3,372,000 at December 31, 2014. Net proceeds of the 2023 Senior Notes, $50,000,000 of delayed draw Term Loan borrowings under the Credit Facility and cash on hand were used to fund the redemption, including redemption premium and transaction costs. We recognized a 2015 charge to earnings of $8,372,000, before income taxes of approximately $3,106,000, for associated redemption premium, unamortized net deferred loan costs of $3,134,000 and transaction costs, net of issuance premium of $3,200,000.
 
2013 Add-on Offering of 2019 Senior Notes and Early Redemption of 2016 Senior Notes
In 2013, we completed a $100,000,000 add-on offering of 6.75% Senior Notes issued at 105% of par and amended our Credit Facility in connection with redeeming our 2016 Senior Notes. Net proceeds from the 2013 add-on offering were used to repay $95,000,000 of Credit Facility borrowings. In June 2013, we redeemed all outstanding 8.75% Senior Notes of $275,000,000 at 104.375% of par. The 2016 Senior Notes were issued at 96.8% of par, were scheduled to mature in June 2016, and had unamortized issuance discount of $4,242,000 at redemption. We used Term Loan borrowings of $250,000,000 and cash on hand of $37,081,000 to fund the redemption, including redemption premium and transaction costs. We recognized a 2013 charge to earnings of $18,467,000, before income taxes of approximately $6,848,000, for associated redemption premium, unamortized net deferred loan costs and issuance discount, and transaction costs.
 
Other Notes Payable
– At December 31, 2015, long-term debt includes a 3% interest bearing debt obligation of $1,383,000 associated with the purchase of real property at BMS, payable in eight annual installments of $194,000 beginning January 2016. At December 31, 2014, long-term debt included a non-interest bearing debt obligation associated with our acquisition of KyS of $1,445,000, net of discount of $55,000 based on an effective interest rate of 7%, and payable in 60 monthly installments of $125,000 through December 2015.
 
Other General Terms and Conditions
– The Credit Facility and 2023 Senior Notes contain specific requirements and restrictive financial covenants and limitations on capital expenditures, speedway or other acquisitions, dividends, repurchase or issuance of SMI securities, restricted payments, equity and debt security repurchases, limitations or prohibitions on incurring other indebtedness, liens or pledging assets to third parties, consolidation, mergers, transactions with affiliates, guarantees, asset sales, specific types of investments, distributions, redemptions and disposition of property, and entering into new lines of business. The Credit Facility and 2023 Senior Notes Indenture also contain cross-default provisions. We were in compliance with all applicable financial covenants under these debt agreements as of December 31, 2015.
 
Subsidiary Guarantees
Amounts outstanding under the Credit Facility and 2023 Senior Notes are guaranteed by all of SMI’s material operative subsidiaries except for Oil-Chem and its subsidiaries (which are presently minor). These guarantees are full and unconditional and joint and several, with the 2023 Senior Notes on a senior unsecured basis. The parent company has no independent assets or operations. There are no restrictions on the subsidiaries’ ability to pay dividends or advance funds to the parent company.
 
Interest Expense, Net
– Interest expense, interest income and capitalized interest costs are summarized as follows (in thousands): 
 
   
2015
   
2014
   
2013
 
Gross interest costs
  $ 17,469     $ 22,092     $ 32,408  
Less capitalized interest costs
    (251
)
    (321
)
    (168
)
Interest expense
    17,218       21,771       32,240  
Interest income
    (407
)
    (534
)
    (369
)
Interest expense, net
  $ 16,811     $ 21,237     $ 31,871  
Weighted average interest rate on Credit Facility borrowings
    1.9
%
    2.1
%
    2.2
%
 
During the first quarter 2015, we incurred net interest expense of $1,688,000 on the former 2019 Senior Notes between January 27, 2015 (issuance date of the new 2023 Senior Notes) and March 13, 2015 (redemption date of the 2019 Senior Notes). The new notes were issued before redemption of the former notes because of a favorable interest rate environment and required notice of redemption to 2019 Senior Note holders by the Company.
Note 7 - Capital Structure, Per Share Data and Other Equity Information
Stockholders Equity and Earnings Per Share [Text Block]
7.
CAPITAL STRUCTURE, PER SHARE DATA AND OTHER EQUITY INFORMATION
 
Preferred Stock
– At December 31, 2015, SMI has authorized 3,000,000 shares of preferred stock with a par value of $.10 per share. Shares of preferred stock may be issued in one or more series with rights and restrictions as may be determined by our Board of Directors. No preferred shares were issued or outstanding at December 31, 2015 or 2014.
 
Per Share Data
– The following schedule reconciles basic and diluted earnings or loss per share from continuing operations (where computations are anti-dilutive, reported basic and diluted per share amounts are the same) (in thousands except per share amounts):
       
          (As Revised - Note 8)  
   
2015
   
2014
   
2013
 
(Loss) income from continuing operations applicable to common stockholders and assumed conversions
  $ (34,350
)
  $ 25,437     $ (7,631
)
Weighted average common shares outstanding
    41,284       41,377       41,405  
Dilution effect of assumed conversions, common stock equivalents – stock awards
    28       23       18  
Weighted average common shares outstanding and assumed conversions
    41,312       41,400       41,423  
                         
Basic (loss) earnings per share
  $ (0.83
)
  $ 0.61     $ (0.18
)
Diluted (loss) earnings per share
  $ (0.83
)
  $ 0.61     $ (0.18
)
Anti-dilutive common stock equivalents excluded in computing diluted (loss) earnings per share
    174       531       794  
 
Declaration of Cash Dividends
– Our Board of Directors approved aggregate dividends on common stock as follows (in thousands except per share amounts):
 
   
2015
   
2014
   
2013
 
Cash dividends paid
  $ 24,807     $ 24,860     $ 24,875  
Dividends per common share
  $ 0.60     $ 0.60     $ 0.60  
 
Quarterly dividends were declared in each period and all declaration, record and payment dates were in the same fiscal periods. See Note 6 for annual limitations on dividend payments under our debt agreements. On February 17, 2016, our Board of Directors declared a quarterly cash dividend of $0.15 per share of common stock aggregating approximately $6.2 million payable on March 18, 2016 to shareholders of record as of March 1, 2016. These quarterly cash dividends are being paid using available cash and cash equivalents on hand.
 
Stock Repurchase Program
– Our Board of Directors has approved a stock repurchase program authorizing SMI to repurchase up to an aggregate of 5,000,000 shares of our outstanding common stock from time to time, depending on market conditions, share price, applicable limitations under our debt agreements (see Note 6), and other factors the Board of Directors or its designees, in their sole discretion, may consider relevant. The purchases can be in the open market or private transactions. The stock repurchase program is presently funded using available cash and cash equivalents and may be suspended or discontinued at any time.
 
We repurchased 252,000, 172,000 and 126,000 shares of common stock for $5,375,000 in 2015, $3,236,000 in 2014 and $2,291,000 in 2013, respectively. As of December 31, 2015, we could repurchase up to an additional 694,000 shares under the current authorization. In 2015 and 2014, we repurchased approximately 53,000 and 45,000 shares of common stock for $1,122,000 and $931,000 from management employees to settle income taxes on 125,000 and 119,000 restricted shares that vested during the period, respectively. As of and through December 31, 2015 and 2014, treasury stock includes 215,000 and 162,000 shares of common stock delivered to the Company for such purposes.
Note 8 - Income Taxes
Income Tax Disclosure [Text Block]
8.
INCOME TAXES
  
Components of the provision (benefit) for income taxes are as follows (in thousands):
  
       
          (As Revised)  
   
2015
   
2014
   
2013
 
Current:
                       
Federal
  $ 11,710     $ 226     $ 9,756  
State
    606       (102
)
    227  
      12,316       124       9,983  
Deferred:
                       
Federal
    (26,440
)
    13,357       (41,303
)
State
    2,245       2,308       (9,612
)
      (24,195
)
    15,665       (50,915
)
Total
  $ (11,879
)
  $ 15,789     $ (40,932
)
  
The reconciliation of statutory federal and effective income tax rates is as follows:
     
 
          (As Revised)  
   
2015
   
2014
   
2013
 
Statutory federal tax rate
    35.0
%
    35.0
%
    35.0
%
State and local income taxes, net of federal income tax effect
    3.4
 
    4.4       8.3  
Non-deductible impairment of goodwill
                (59.5
)
Change in valuation allowances, primarily related to losses on equity investments
    22.6       (4.9
)
    99.0  
Change in uncertain tax positions, including income tax liabilities for settlements with taxing authorities
    (24.4
)
    (1.2
)
    (0.1
)
Change in state tax rates
    (7.6 )     4.5        
Other, net
    (3.3 )     0.5       1.6  
Total
    25.7
%
    38.3
%
    84.3
%
 
Tax effects of temporary differences resulting in deferred income taxes are as follows (in thousands):
 
 
 
2015
 
 
(
As Revised)
2014
 
Deferred tax liabilities:
               
Property and equipment
  $ 233,855     $ 239,257  
Goodwill and other intangible assets
    107,653       140,638  
Expenses deducted for tax purposes and other
    3,661       3,563  
Subtotal
    345,169       383,458  
Deferred tax assets:
               
Income previously recognized for tax purposes
    (418
)
    (13,647
)
Stock option and other deferred compensation expense
    (3,770
)
    (4,784
)
PSL and other deferred income recognized for tax purposes
    (1,272
)
    (1,438
)
State and federal net operating loss carryforwards
    (20,085
)
    (33,832
)
Basis difference for equity investments and subsidiary
          (10,470
)
Subtotal
    (25,545
)
    (64,171
)
Less: valuation allowance
    1,422       12,193  
Net deferred tax assets
    (24,123
)
    (51,978
)
Total net deferred tax liabilities (Note 2)
  $ 321,046     $ 331,480  
 
Deferred tax liabilities related to goodwill for NHMS originated upon recording deferred tax liabilities associated primarily with race date intangibles of $127.4 million ($119.2 million as revised below) established under purchase method accounting rules in 2008. Those accounting rules required establishing such deferred tax liabilities assuming the Company would ultimately sell NHMS assets, and not stock, for tax reporting purposes. Notwithstanding the revision further described below, those accounting rules prohibit elimination or adjustment even though such ultimate payment of taxes was, and still is, believed unlikely and that no sale is being contemplated.
 
Revision of Financial Statements
As reflected below, certain prior year amounts were revised to properly reflect deferred tax liabilities established under purchase accounting for NHMS in 2008 as further described above, and the associated impact on our provision for income taxes, including transactions with associated tax benefits, in later years. The deferred taxes were established based on a complexity of accounting rule applications to various assumptions, including estimates of future state income tax rates, tax apportionment factors and tax filing methods. Appropriate state tax rates, apportionment factors and tax filing methods should have been used which would have decreased established deferred income taxes (and associated goodwill) in 2008. Also as reflected below, the ensuing use of such appropriate tax computational factors corrected our previous reported effective state income tax rates as applied to taxable income for financial reporting purposes and our provision for income taxes, including transactions with associated tax benefits. The appropriate tax rates and apportionment factors are properly reflected in our full year 2015 provision for income taxes. Also, our 2014 provision for income taxes as revised reflects elimination of previously recorded income tax expense of $2.3 million associated with the $6.0 million favorable settlement for our discontinued operation (see Note 1). Such income tax was previously reflected in continuing operations under applicable autheritative guidance. Our 2013 provision for income taxes as revised reflects a $1.4 million reduction of the anticipated tax benefit related to abandonment of our MA equity investment as further described below.
 
In 2011, we reflected an impairment charge of $48.6 million with no tax benefit to reduce goodwill related to NHMS to then estimated fair value. In 2013, we reflected an impairment charge of $82.7 million with no tax benefit reducing NHMS goodwill to estimated fair value of $0 as further described in Note 2. The reduction in deferred tax liabilities under revised 2008 purchase accounting would have reduced the 2011 impairment charge by $8.2 million (with no tax benefit). Because NHMS goodwill was reduced to $0 in 2013, and appropriately no tax benefit was reflected in 2011 and 2013, the revision has no impact on our 2013 impairment charge. The revisions did not affect net cash provided by operating activities in our consolidated statements of cash flows, and all applicable disclosures have been adjusted to conform to the revised financial statements, and management does not believe the revisions to any prior period were material. Our 2014 and 2013 Annual Reports on Form 10-K (or for earlier years) have not been amended. Deferred income taxes and total liabilities “as reported” below have been adjusted for retroactive application of FASB Accounting Standards Update No. 2015-17 "Income Taxes (Topic 740): Balance Sheet Classification of Deferred Taxes” as further described in Note 2. The following tables present the revisions reflected in this Form 10-K (in thousands, except per share amounts):
 
   
Deferred
Income Taxes,
Net
   
Total Liabilities
   
Retained
Earnings
   
Total
Stockholders’
Equity
 
January 1, 2013, as reported
  $ 384,995     $ 1,018,496     $ 696,727     $ 857,876  
Revision adjustment
    (18,023
)
    (18,023
)
    18,023       18,023  
January 1, 2013, as adjusted
  $ 366,972     $ 1,000,473     $ 714,750     $ 875,899  
                                 
December 31, 2013, as reported
  $ 332,575     $ 911,089     $ 665,394     $ 825,990  
Revision adjustment
    (16,604
)
    (16,604
)
    16,604       16,604  
December 31, 2013, as adjusted
  $ 315,971     $ 894,485     $ 681,998     $ 842,594  
                                 
December 31, 2014, as reported
  $ 348,117     $ 863,336     $ 671,648     $ 831,145  
Revision adjustment
    (16,637
)
    (16,637
)
    16,637       16,637  
December 31, 2014, as adjusted
  $ 331,480     $ 846,699     $ 688,285     $ 847,782  
 
   
(Benefit)
Provision fo
r
Income Taxes
   
Net (Loss)
Income
   
Basic and Diluted
(Loss) Earnings
Per Share
 
Year ended December 31, 2013, as reported
  $ (42,351
)
  $ (6,458
)
  $ (0.16
)
Revision adjustment
    1,419       (1,419
)
    (0.03
)
Year ended December 31, 2013, as adjusted
  $ (40,932
)
  $ (7,877
)
  $ (0.19
)
                         
Year ended December 31, 2014, as reported
  $ 15,822     $ 31,114     $ 0.75  
Revision adjustment
    (33     33
 
    0.00
 
Year ended December 31, 2014, as adjusted
  $ 15,789     $ 31,147     $ 0.75  
 
Effective Tax Rate Comparison for 201
3
through 201
5 (as revised)
 – The Company’s effective income tax rate for 2015 was 25.7%, for 2014 was 38.3% and for 2013 was 84.3%. The 2015 tax rate reflects reductions of valuation allowances on deferred tax assets associated with the Company’s discontinued operation. This reduction was largely offset by an increase in tax reserves for deferred tax assets, resulting in a net tax impact of $1.3 million associated with the discontinued operation (see Note 1). The 2015 tax rate also reflects lower effective state income tax rates, adjustments to certain other deferred tax assets and a non-recurring tax benefit of $610,000 resulting from certain state income tax law changes enacted in 2015.
 
The effective tax rates for 2014 and 2013 were revised for use of appropriate state income tax rates and apportionment factors in computing the provision for income taxes as further described above. The 2014 tax rate reflects the positive impact of net decreases in uncertain tax position liabilities of prior years and lower effective state income tax rates. The Company’s 2014 consolidated financial statements reflect a reduction of accrued interest and penalties for estimated income tax liabilities, which decreased income tax expense and deferred income taxes, of approximately $397,000. The higher 2013 tax rate results primarily from the tax benefit related to the equity interest abandonment discussed below, which was partially offset by a goodwill impairment charge for which a significant portion had no tax benefit as further discussed in Note 2. The 2013 rate also reflects tax benefits of $5,547,000 resulting from certain state income tax law changes and strategic state tax restructuring. Excluding those items, the 2013 effective income tax rate would have been 37.2%.
 
At December 31, 2015, the Company has approximately $58,646,000 of federal net operating loss carryforwards expiring in 2026 through 2034, and $256,760,000 of state net operating loss carryforwards expiring in 2016 through 2035.
The Company recorded net excess tax benefits attributable to share-based compensation of $417,000
in stockholders’ equity. The Company was unable to recognize additional excess tax benefits of share-based compensation deductions generated because the deductions did not reduce income tax payable after considering net operating loss carryforwards. Although not recognized for financial reporting purposes, this unrecognized tax benefit is available to reduce future taxable income.
At December 31, 2015 and 2014, valuation allowances of $1,422,000 and $12,193,000 have been provided against deferred tax assets because management has determined that ultimate realization is not more likely than not for certain deferred tax assets and state net operating loss carryforwards. The valuation allowances for deferred tax assets decreased by $10,771,000 in 2015, $2,000,000 in 2014 and $48,294,000 in 2013.
 
Anticipated Income Tax Benefit
From Equity Investment Abandonment
– On January 31, 2014, the Company abandoned its interest and rights in Motorsports Authentics (former 50% owned, non-controlling interest, merchandising equity investment joint venture) (MA) to focus management resources in areas that may be profitable and more productive. The Company’s carrying value of the investment was reduced to $0 through sizable impairment charges prior to 2010 and MA’s historical operating results. The Company recognized no concurrent tax benefits as valuation allowances were provided against associated deferred tax assets. As a result of abandonment, the Company recognized a material income tax benefit of $49.3 million ($48.1 million as revised) at December 31, 2013 for the reversal of previously recorded valuation allowances under applicable accounting guidance, and recognized tax losses reported on its 2014 income tax returns. Management believes there is or will be sufficient taxable income in carryback or carryforward periods under tax law for full utilization of these tax losses.
 
The Company believes it is more likely than not that its filing position would be sustained based on its technical merits upon examination with taxing authorities that have full knowledge of all relevant information. The Company reached this conclusion based on the use of outside legal counsel and other tax consultants and the potential to utilize tax losses. Under applicable accounting guidance, tax positions are measured at the largest amount of benefit that is greater than 50 percent likely (or more likely than not) of being ultimately realized. As such, the full anticipated tax benefit was recognized because the Company believes that partial sustaining of its tax position by taxing authorities would be an unlikely outcome given the nature of the position. The Company believes it will fully utilize the associated tax losses. Should the Company’s tax position not be fully sustained if examined, an acceleration of material cash income taxes payable could occur. Any differences between the final tax outcome and amounts recorded would affect the Company’s income tax provision in the period in which such determination was made. There was no other impact on our financial statements for 2013 through 2015, and no income tax benefits were recognized in these years other than related to aforementioned Company abandonment.
 
Other Income Tax Benefits
- As reflected above, applicable accounting guidance may require establishing valuation allowances for certain deferred tax assets, notwithstanding management believes associated tax filing positions are sustainable and are or will be reflected in its tax filings. Should those tax positions not be fully sustained if examined, an acceleration of material income taxes payable could occur. Because no net income tax benefit had been previously reflected because of providing a valuation allowance on related deferred tax assets, the Company’s future results of operations might not be significantly impacted. However, resulting cash required for payments of income taxes could be material in the period in which such determination is made.
 
Accounting for Uncertainty in Income Taxes
– Income tax liabilities for unrecognized tax benefits approximate $12,280,000 and $885,000 at December 31, 2015 and 2014. The 2015 increase relates primarily to deferred tax assets associated with the Company’s discontinued operation. Of those amounts, $499,000 and $885,000 is included in noncurrent other liabilities, all of which would favorably impact the Company’s effective tax rate if recognized, and $11,781,000 and $0 is included in deferred tax liabilities, at December 31, 2015 and 2014, respectively. As of December 31, 2015 and 2014, management believes $239,000 and $386,000 of unrecognized tax benefits will be recognized within the next twelve months. Interest and penalties recognized on uncertain tax positions amounted to $15,000 in 2015, $8,000 in 2014 and $73,000 in 2013, and derecognized amounts were $174,000 in 2015 and $524,000 in 2014. As of December 31, 2015 and 2014, the Company had $169,000 and $328,000 accrued for the payment of interest and penalties on uncertain tax positions, which is included in other noncurrent liabilities. The tax years that remain open to examination include 2006 through 2015 by the California Franchise Tax Board, and 2012 through 2015 by all other taxing jurisdictions to which the Company is subject. In 2015 and 2014, current income taxes payable of approximately $4.4 million and $20.0 million, respectively, were reduced by utilization of deferred income tax assets, including net operating losses, described above.
 
A reconciliation of the change in the total unrecognized tax benefits and other information for the three years ended December 31, 2015 is as follows (in thousands):
 
   
2015
   
2014
   
2013
 
Beginning of period
  $ 885     $ 1,004     $ 1,004  
Increases (decreases) for tax positions of current year
    11,781              
Increases for tax positions of prior years
                 
Decreases for tax positions of prior years
    (386
)
    (119
)
     
Reductions for lapse of applicable statute of limitations
                 
Increases (decreases) for settlements with taxing authorities
                 
End of period
  $ 12,280     $ 885     $ 1,004  
Note 11 - Stock Compensation Plans
Disclosure of Compensation Related Costs, Share-based Payments [Text Block]
11.
STOCK COMPENSATION PLANS
 
2013 Stock Incentive Plan
–The 2013 Stock Incentive Plan (the 2013 Plan) allows the Company, among other things, to provide equity-based incentives to, and continue to attract and retain, key employees, directors and other individuals providing services to the Company. Awards under the 2013 Plan may be in the form of incentive stock options, nonqualified stock options, stock appreciation rights (SARs), restricted stock, restricted stock units or stock awards. To date, we have awarded restricted stock and restricted stock units under the 2013 Plan.
 
The 2013 Plan is administered by the Compensation Committee of the Board of Directors who has full authority to determine recipients, types, purchase prices, and amounts of awards granted and amend the terms, restrictions and conditions of awards. Factors considered, among others, include achievement of financial, business and performance objectives, the occurrence of specific events, time periods of continued service or other time-based restrictions. Under the 2013 Plan, 3,500,000 shares of SMI’s common stock are reserved for issuance, subject to various restrictions and adjustments including the following: (i) if shares subject to award under the 2013 Plan are forfeited, or the award otherwise terminates or is canceled for any reason without the issuance of such shares, those shares will be available for future awards; (ii) no individual may be granted options or SARs aggregating more than 300,000 shares of common stock during any calendar year; (iii) in the case of awards other than options or SARs that are intended to be “performance-based compensation”, no individual may be granted an aggregate of more than 100,000 shares of common stock during any calendar year; and (iv) with respect to any cash-based stock award that is intended to be a performance award, the maximum cash payment that may be paid during any one calendar year to an individual is $10,000,000. Exercise prices for awarded stock options generally may not be less than the fair or trading value of the Company’s common stock at, and exercise periods may not exceed ten years from, the option grant date. At December 31, 2015, approximately 3,152,000 shares were available for future grant.
 
All restricted stock and restricted stock units issued to date vest in equal installments over three years or cliff vest after five years. Once applicable restrictions lapse or have been satisfied, restricted stock units may be payable in cash, shares of common stock or a combination, as specified in the award agreement. Awards of restricted stock or restricted stock units are generally subject to forfeiture and restrictions on transferability until vested. If restricted stock and restricted stock unit award recipients cease to perform services for the Company, all shares of common stock and restricted stock units still subject to restrictions generally will be forfeited unless waived by the Compensation Committee. Recipients of restricted stock generally will have certain rights and privileges of a stockholder, including the right to vote such shares and receive dividends, if any. Recipients of restricted stock units generally will not have the rights and privileges of a stockholder, except they may be entitled to receive dividend equivalents, if so specified in the award agreements and dividends are declared.
  
The Compensation Committee of our Board of Directors approved grants of 35,000 restricted stock units to our Chief Executive Officer and President (former Chief Operating Officer until February 2015) and 35,000 shares of restricted stock to our Vice Chairman and Chief Financial Officer in 2015. Both grants are under the 2013 Plan, are to be settled in shares of common stock, vest in equal installments over three years and are subject to reaching certain defined full year earnings targets established at the beginning of each year by the Compensation Committee. An additional 65,000 restricted stock units were granted to our Chief Executive Officer and President in 2015 under the same conditions as described above except with a vesting period of five years. In 2015, 29,097 shares of both performance-based restricted stock and restricted stock units vested, and 2,545 of both shares and units were forfeited. Forfeitures in any given year result from differences between our actual results for the previous year as compared to the defined full year earnings target. Once the vesting period expires, common stock is issued in settlement of the restricted stock units and all vested shares are no longer subject to forfeiture or restrictions on transferability. As of December 31, 2015, 67,136 restricted stock shares and 132,136 restricted stock units (both performance-based) were outstanding under the Incentive Compensation Plan.
 
In 2015, we also granted to non-executive management employees 75,600 shares of restricted stock that vest in equal installments over three years, and repurchased 24,754 shares of common stock from such employees for $493,000 related to settlement of income taxes on 67,132 shares that vested under the 2004 Plan and the 2013 Plan. In 2015, we also repurchased 27,910 shares of common stock for $630,000 from executive management employees to settle income taxes on 58,194 performance-based shares that vested under the 2004 Plan and the 2013 Plan
.
Repurchases of common stock related to settlement of income taxes upon restricted stock vesting are reflected as financing activities in the statement of cash flows.
 
2008 Formula Restricted Stock Plan
, Amended and Restated as of April 17, 2012
– The 2008 Formula Restricted Stock Plan (the 2008 Formula Plan) is intended to promote the interests of the Company and its stockholders by providing non-employee directors with Company ownership interests to more closely align their interests with our stockholders and to enhance our ability to attract and retain highly qualified non-employee directors. The 2008 Formula Plan is intended to constitute a “formula plan” within the meaning of SEC Rule 16b-3 of the Exchange Act. Approval of the 2008 Formula Plan, and termination of the Formula Stock Option Plan, did not adversely affect the rights of any outstanding stock options previously granted under the Formula Stock Option Plan. The 2008 Formula Plan is administered by the Board of Directors, excluding non-employee directors, and expires by its terms in February 2018. The Board of Directors, excluding non-employee directors, may amend, suspend or terminate the 2008 Formula Plan in whole or in part, provided that no such amendment, suspension or termination adversely affects previously granted awards without the consent of the award recipient. Any such amendment, suspension or termination may be subject to stockholder approval.
 
Under the 2008 Formula Plan, 250,000 shares of SMI’s common stock are reserved for issuance and awards are in the form of restricted stock. On the first business day following each annual meeting, each standing non-employee director receives a grant of restricted stock consisting of the number of shares equaling $75,000 divided by the average closing sale price for the twenty days immediately preceding the grant date, rounded up to the nearest whole share. Grants of restricted stock fully vest on the earlier of (i) the first grant date anniversary or (ii) the day before our next annual meeting following the grant date. Vesting is subject to continued service as a director through scheduled vesting dates. In 2015, restricted stock awards granted to non-employee directors totaled 12,816 and 12,084 restricted stock awards vested during the year. All restricted stock awards were granted and vested in accordance with plan provisions. At December 31, 2015, approximately 132,000 shares were available for future grant.
 
2004 Stock Incentive Plan, Amended and Restated as of February 10, 2009
The 2004 Stock Incentive Plan (the 2004 Plan), which provided equity-based incentives for attracting and retaining key employees, directors and others providing services to the Company, terminated by its terms in February 2014 and no further awards can be granted under the plan. Previously granted awards under the 2004 Plan consisted of incentive stock options, non-statutory stock options, restricted stock units or restricted stock. All stock options granted under the 2004 Plan had an exercise price equal to the market value of the underlying common stock at grant date, expire ten years from grant date and vested immediately or in equal installments over three years, and restricted stock and restricted stock units vest three years from grant date or in equal installments over three years. Once applicable restrictions lapse or have been satisfied, restricted stock units may be payable in cash, shares of common stock or a combination, as specified in the award agreement. Termination of the 2004 Plan did not adversely affect rights under any outstanding awards previously granted under the plan.
 
Formula Stock Option Plan for Directors
– The Formula Stock Option Plan was suspended in December 2007 and terminated in February 2008, and the 2008 Formula Plan described above was approved by stockholders at the 2008 Annual Meeting. Prior to plan suspension and termination, before February 1 each year, individual outside directors were awarded an option to purchase 10,000 shares of common stock at an exercise price equal to the average fair market value per share for the ten-day period prior to award. Termination of the Formula Stock Option Plan did not adversely affect rights under any outstanding stock options previously granted. All options granted under this plan generally vested in six months, and expired ten years, from grant date.
 
Employee Stock Purchase Plan
– The SMI Employee Stock Purchase Plan (the ESPP) is intended to provide employees the opportunity to acquire stock ownership in the Company. The authorized number of shares of common stock issuable under the ESPP is 800,000. At December 31, 2015, approximately 439,000 shares were available for future grant. Prior to each January 1, the Compensation Committee of the Board of Directors determines whether participating eligible employees will be granted the right to purchase shares of common stock for the upcoming calendar year and the number of shares available for purchase. All employee grants contain the same number of shares and grant date. No participant can be granted the right to purchase more than 500 shares in any calendar year. The stock purchase price is 90% of the lesser of fair market value at grant date or exercise date. Unexercised grants expire at each calendar year end. No shares were granted to employees under the ESPP for calendar years 2015, 2014 or 2013.
 
Share-Based Payment
– We follow applicable authoritative guidance which generally requires recognizing compensation cost for the estimated grant-date fair value of stock options and other equity-based compensation over the requisite service period, and applies to all awards granted, modified, vesting, repurchased or cancelled after January 1, 2006. We generally record share-based compensation cost for stock option, restricted stock and restricted stock unit awards on either the accelerated method using a graded vesting schedule or the straight-line method over the requisite service period, depending on the vesting schedule of the awards. Our practice has been to issue new shares upon option exercise; however, repurchases of shares in the open market are permitted.
 
Share-based compensation cost totaled $3,383,000 in 2015, $2,610,000 in 2014 and $2,224,000 in 2013, before income taxes of $1,272,000, $1,002,000 and $818,000, respectively, and is included in general and administrative expense. For 2014, compensation cost excludes associated tax benefits of $327,000 which are reflected separately in operating activities on the Consolidated Statements of Cash Flows. Similar amounts for 2015 and 2013 were insignificant. There were no capitalized share-based compensation costs at December 31, 2015 or 2014. Our consolidated financial statements for the year ended December 31, 2015 reflect a reduction of additional paid-in capital of $1,537,000 and deferred tax assets of approximately $1,874,000 and an increase in income tax expense of $337,000 for windfall tax benefits associated with share-based compensation. Although the adjustment pertains to previous reporting periods, we believe the impact was not material to prior or current periods. As of December 31, 2015, there was approximately $4,373,000 of total unrecognized compensation cost related to non-vested restricted stock and restricted stock units granted under the 2013 Plan, the 2004 Plan and the 2008 Formula Plan that is expected to be recognized over a weighted average period of 1.3 years.
 
No stock options were granted under any of our stock compensation plans in 2015, 2014 or 2013. When stock options are granted, we estimate the fair value of stock option grants on grant date using the Black-Scholes option-pricing model based on the following factors and assumptions. Expected volatility is based on implied volatilities from historical volatility of our stock and other factors. We use historical data to estimate option exercises, forfeitures and employee terminations within the pricing model. Employee groups have similar historical exercise experience and are combined for valuation purposes. The expected term of granted options is estimated based on historical exercise experience and represents the time period that granted options are expected to be outstanding. Risk-free interest rates for periods within the expected life of options are based on the US Treasury yield curve in effect at the time of grant.
  
There were no significant changes in the characteristics of restricted stock or restricted stock units granted during 2013 through 2015 as compared to prior grants and no modifications of the terms of any share-based payment arrangements. There were no significant changes in estimates, assumptions or valuation methods used to estimate the fair value of share-based payment awards. We believe the pricing model and approach utilized to develop the underlying assumptions are appropriate for estimating the fair values of share-based awards. These fair value and other estimates are not intended to predict future events or value ultimately realizable by employees who receive equity awards, and subsequent events are not indicative of the reasonableness of original estimates.
 
No stock options have been granted under the 2013 Plan. The following is a summary of stock option activity regarding the 2004 Plan and Formula Stock Option Plan for 2015 (shares and aggregate intrinsic value in thousands):
 
   
2004 Stock Incentive Plan
   
Formula Stock Option Plan
 
Stock Options
 
Shares
   
Weighted
Average
Exercise
Price Per
Share
   
Weighted
Average
Remaining
Contractual
Term (Yrs)
   
Aggregate
Intrinsic
Value
   
Shares
   
Weighted
Average
Exercise
Price Per
Share
   
Weighted
Average
Remaining
Contractual
Term (Yrs)
   
Aggregate
Intrinsic
Value
 
Outstanding, January 1, 2015
    345