SPEEDWAY MOTORSPORTS INC, 10-Q filed on 7/31/2014
Quarterly Report
Document And Entity Information
6 Months Ended
Jun. 30, 2014
Jul. 30, 2014
Document and Entity Information [Abstract]
 
 
Entity Registrant Name
SPEEDWAY MOTORSPORTS INC 
 
Document Type
10-Q 
 
Current Fiscal Year End Date
--12-31 
 
Entity Common Stock, Shares Outstanding
 
41,387,602 
Amendment Flag
false 
 
Entity Central Index Key
0000934648 
 
Entity Current Reporting Status
Yes 
 
Entity Voluntary Filers
No 
 
Entity Filer Category
Accelerated Filer 
 
Entity Well-known Seasoned Issuer
No 
 
Document Period End Date
Jun. 30, 2014 
 
Document Fiscal Year Focus
2014 
 
Document Fiscal Period Focus
Q2 
 
Consolidated Balance Sheets (Unaudited) (USD $)
In Thousands, unless otherwise specified
Jun. 30, 2014
Dec. 31, 2013
Current Assets:
 
 
Cash and cash equivalents
$ 95,364 
$ 97,343 
Accounts and notes receivable, net
57,250 
34,594 
Prepaid and refundable income taxes
9,671 
8,891 
Inventories, net
9,474 
8,605 
Prepaid expenses
4,018 
3,594 
Deferred income taxes (Note 2)
27,828 
49,181 
Total Current Assets
203,605 
202,208 
Notes and Other Receivables:
 
 
Affiliates
2,890 
3,294 
Other
1,729 
1,800 
Other Assets
28,333 
29,146 
Property and Equipment, Net
1,093,077 
1,105,177 
Other Intangible Assets, Net
394,950 
394,955 
Goodwill
49,680 
49,680 
Total
1,774,264 
1,786,260 
Current Liabilities:
 
 
Current maturities of long-term debt
13,895 
13,847 
Accounts payable
21,511 
10,519 
Deferred race event and other income, net
64,519 
57,888 
Accrued interest
7,041 
7,044 
Accrued expenses and other current liabilities
23,119 
21,656 
Total Current Liabilities
130,085 
110,954 
Long-term Debt
412,019 
453,142 
Payable to Affiliate
2,594 
2,594 
Deferred Income, Net
5,572 
6,932 
Deferred Income Taxes
377,356 
381,756 
Other Liabilities
4,359 
4,892 
Total Liabilities
931,985 
960,270 
Stockholders’ Equity:
 
 
Common Stock, $.01 par value, shares authorized – 200,000,000, issued and outstanding – 41,398,000 in 2014 and 41,404,000 in 2013
455 
454 
Additional Paid-in Capital
250,860 
249,505 
Retained Earnings
682,005 
665,394 
Treasury Stock at cost, shares – 4,087,000 in 2014 and 3,999,000 in 2013
(91,041)
(89,363)
Total Stockholders’ Equity
842,279 
825,990 
Total
$ 1,774,264 
$ 1,786,260 
Consolidated Balance Sheets (Unaudited) (Parentheticals) (USD $)
Jun. 30, 2014
Dec. 31, 2013
Preferred stock par value (in Dollars per share)
$ 0.10 
$ 0.10 
Preferred stock, shares authorized
3,000,000 
3,000,000 
Preferred stock, shares issued
Common Stock, par value (in Dollars per share)
$ 0.01 
$ 0.01 
Common Stock, shares authorized
200,000,000 
200,000,000 
Common Stock, shares issued
41,398,000 
41,404,000 
Common Stock, shares outstanding
41,398,000 
41,404,000 
Treasury Stock at cost, shares
4,087,000 
3,999,000 
Consolidated Statements of Operations (Unaudited) (USD $)
Share data in Thousands, except Per Share data, unless otherwise specified
3 Months Ended 6 Months Ended
Jun. 30, 2014
Jun. 30, 2013
Jun. 30, 2014
Jun. 30, 2013
Revenues:
 
 
 
 
Admissions
$ 31,084,000 
$ 34,194,000 
$ 52,335,000 
$ 55,950,000 
Event related revenue
52,965,000 
53,495,000 
76,972,000 
77,284,000 
NASCAR broadcasting revenue
84,049,000 
80,712,000 
115,746,000 
111,151,000 
Other operating revenue
7,779,000 
8,362,000 
15,366,000 
16,600,000 
Total Revenues
175,877,000 
176,763,000 
260,419,000 
260,985,000 
Expenses and Other:
 
 
 
 
Direct expense of events
33,498,000 
33,739,000 
49,692,000 
48,948,000 
NASCAR event management fees
49,453,000 
48,432,000 
69,176,000 
67,718,000 
Other direct operating expense
5,150,000 
5,286,000 
9,879,000 
10,267,000 
General and administrative
25,615,000 
23,882,000 
48,651,000 
45,999,000 
Depreciation and amortization (Note 2)
15,359,000 
13,822,000 
28,911,000 
27,563,000 
Interest expense, net
5,326,000 
9,241,000 
10,927,000 
20,151,000 
Impairment of goodwill (Note 4)
 
89,037,000 
 
89,037,000 
Loss on early debt redemption and refinancing (Note 5)
 
18,467,000 
 
18,467,000 
Other (income) expense, net
(1,097,000)
160,000 
(2,358,000)
305,000 
Total Expenses and Other
133,304,000 
242,066,000 
214,878,000 
328,455,000 
Income (Loss) Before Income Taxes
42,573,000 
(65,303,000)
45,541,000 
(67,470,000)
Provision for Income Taxes
(15,374,000)
(2,508,000)
(16,475,000)
(1,709,000)
Net Income (Loss)
$ 27,199,000 
$ (67,811,000)
$ 29,066,000 
$ (69,179,000)
Basic Earnings (Loss) Per Share (in Dollars per share)
$ 0.66 
$ (1.64)
$ 0.70 
$ (1.67)
Weighted Average Shares Outstanding (in Shares)
41,411 
41,424 
41,407 
41,426 
Diluted Earnings (Loss) Per Share (in Dollars per share)
$ 0.66 
$ (1.64)
$ 0.70 
$ (1.67)
Weighted Average Shares Outstanding (in Shares)
41,431 
41,441 
41,430 
41,439 
Consolidated Statement of Stockholders' Equity (Unaudited) (USD $)
In Thousands, except Share data
Common Stock [Member]
Additional Paid-in Capital [Member]
Retained Earnings [Member]
Treasury Stock [Member]
Total
Balance, January 1, 2014 at Dec. 31, 2013
$ 454 
$ 249,505 
$ 665,394 
$ (89,363)
$ 825,990 
Balance, January 1, 2014 (in Shares) at Dec. 31, 2013
41,404,000 
 
 
 
 
Net income
 
 
29,066 
 
29,066 
Share-based compensation
1,308 
 
 
1,309 
Share-based compensation (in Shares)
79,000 
 
 
 
 
Exercise of stock options
 
47 
 
 
47 
Exercise of stock options (in Shares)
3,000 
 
 
 
 
Quarterly cash dividends of $0.15 per share of common stock
 
 
(12,455)
 
(12,455)
Repurchases of common stock
 
 
 
(1,678)
(1,678)
Repurchases of common stock (in Shares)
(88,000)
 
 
 
 
Balance, June 30, 2014 at Jun. 30, 2014
$ 455 
$ 250,860 
$ 682,005 
$ (91,041)
$ 842,279 
Balance, June 30, 2014 (in Shares) at Jun. 30, 2014
41,398,000 
 
 
 
 
Consolidated Statement of Stockholders' Equity (Unaudited) (Parentheticals)
6 Months Ended
Jun. 30, 2014
Quarterly cash dividends, per share of common stock
$ 0.15 
Consolidated Statements of Cash Flows (Unaudited) (USD $)
6 Months Ended
Jun. 30, 2014
Jun. 30, 2013
Cash Flows from Operating Activities:
 
 
Net income (loss)
$ 29,066,000 
$ (69,179,000)
Adjustments to reconcile net income (loss) to net cash provided by operating activities:
 
 
Impairment of goodwill
 
89,037,000 
Loss on early debt redemption and refinancing, non-cash
 
6,386,000 
Deferred loan cost amortization
801,000 
1,361,000 
Gain on insurance recovery and disposal of property and equipment
(2,346,000)
 
Interest expense accretion of debt discount and premium, net
(325,000)
294,000 
Depreciation and amortization
28,911,000 
27,563,000 
Amortization of deferred income
(1,427,000)
(3,094,000)
Deferred income tax provision
16,470,000 
(8,275,000)
Share-based compensation
1,309,000 
1,080,000 
Changes in operating assets and liabilities:
 
 
Accounts and notes receivable
(22,842,000)
(22,889,000)
Prepaid, refundable and accrued income taxes
(780,000)
10,633,000 
Inventories
(869,000)
(649,000)
Prepaid expenses
(424,000)
(389,000)
Accounts payable
4,678,000 
8,042,000 
Deferred race event and other income
6,435,000 
13,226,000 
Accrued interest
(3,000)
1,227,000 
Accrued expenses and other liabilities
1,463,000 
515,000 
Deferred income
195,000 
138,000 
Other assets and liabilities
158,000 
(12,000)
Net Cash Provided By Operating Activities
60,470,000 
55,015,000 
Cash Flows from Financing Activities:
 
 
Borrowings under long-term debt
 
355,000,000 
Principal payments on long-term debt
(40,750,000)
(371,500,000)
Payment of debt refinancing and amendment costs
 
(5,779,000)
Dividend payments on common stock
(12,455,000)
(12,460,000)
Exercise of common stock options
47,000 
56,000 
Repurchases of common stock
(1,678,000)
(1,515,000)
Net Cash Used By Financing Activities
(54,836,000)
(36,198,000)
Cash Flows from Investing Activities:
 
 
Payments for capital expenditures
(14,219,000)
(5,118,000)
Proceeds from insurance recovery and sales of property and equipment
1,397,000 
64,000 
Repayment of notes and other receivables
173,000 
298,000 
Net Cash Used By Investing Activities
(12,649,000)
(4,756,000)
Net (Decrease) Increase in Cash and Cash Equivalents
(7,015,000)
14,061,000 
Change in cash collected for and payable to third party, cash not provided or used by operating activities (Note 2)
5,036,000 
(180,000)
Cash and Cash Equivalents at Beginning of Period
97,343,000 
106,408,000 
Cash and Cash Equivalents at End of Period
95,364,000 
120,289,000 
Supplemental Cash Flow Information:
 
 
Cash paid for interest, net of amounts capitalized
11,018,000 
19,185,000 
Cash paid for income taxes
553,000 
600,000 
Supplemental Non-Cash Investing and Financing Activities Information:
 
 
Increase in accounts payable for capital expenditures
$ 1,362,000 
$ 244,000 
Note 1 - Description of Business
Nature of Operations [Text Block]

1. DESCRIPTION OF BUSINESS


Basis of Presentation – The consolidated financial statements include the accounts of Speedway Motorsports, Inc. and all of its wholly-owned and operated 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), Speedway Sonoma LLC (Sonoma Raceway or SR), New Hampshire Motor Speedway, Inc. (NHMS), North Wilkesboro Speedway, Inc. (NWS), 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. See Notes 1 and 2 to the Consolidated Financial Statements in the Company’s 2013 Annual Report on Form 10-K (2013 Annual Report) for further description of its business operations, properties and scheduled events.


Racing Events In 2014, we plan to hold 24 major annual racing events sanctioned by the National Association for Stock Car Auto Racing, Inc. (NASCAR), including 13 Sprint Cup and 11 Nationwide Series racing events. We also plan to hold seven 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 (NHRA), one Automobile Racing Club of America (ARCA) and three World of Outlaws (WOO) racing events. In 2013, we held 24 major annual racing events sanctioned by NASCAR, including 13 Sprint Cup and 11 Nationwide 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.


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. Management believes associated activities for 2013, to-date in 2014 and future periods, if any, are not significant for continued presentation as discontinued operations. We had no continuing involvement or ownership interest in these discontinued operations, and there were no assets, liabilities or outstanding standby letters of credit associated with discontinued operations for any period presented herein. Remaining activities are now included in other income or expense in the Consolidated Statement of Operations, and all note disclosures pertain to continuing operations unless otherwise indicated. We incurred legal fees and other costs of $26,000 and $27,000 in the three months ended June 30, 2014 and 2013, and $66,000 and $62,000 in the six months ended June 30, 2014 and 2013, associated with efforts to recover previously reserved receivables, representing all activities during these periods (see Note 8 for information on legal proceedings associated with oil and gas activities). While we plan to continue litigation of the matter to maximize potential recovery value, future legal costs are expected to be insignificant.


Note 2 - Significant Accounting Policies and Other Disclosures
Significant Accounting Policies And Other Disclosures [Text Block]

2. SIGNIFICANT ACCOUNTING POLICIES AND OTHER DISCLOSURES


These unaudited consolidated financial statements should be read in conjunction with the Company's consolidated financial statements included in its 2013 Annual Report. In management's opinion, these unaudited consolidated financial statements contain all adjustments necessary for their fair presentation at interim periods in accordance with accounting principles generally accepted in the United States. All such adjustments are of a normal recurring nature unless otherwise noted. The results of operations for interim periods are not necessarily indicative of operating results that may be expected for the entire year due to the seasonal nature of the Company's motorsports business. See Note 2 to the Consolidated Financial Statements in our 2013 Annual Report for further discussion of significant accounting policies.


Quarterly Reporting The Company recognizes revenues and operating expenses for all events in the calendar quarter in which conducted. Changes in race schedules at the Company's speedways from time to time, including speedway acquisitions, can lessen the comparability of operating results between quarterly financial statements of successive years and increase or decrease the seasonal nature of its motorsports business. The more significant racing schedule changes for the three and six months ended June 30, 2014 as compared to 2013 include:  


 

LVMS held one major NHRA racing event in the first quarter 2014 that was held in the second quarter 2013

 

Poor weather resulted in delays in starting and completing one NASCAR Sprint Cup race held at BMS in the first quarter 2014

 

 

Poor weather resulted in postponing and rescheduling one NASCAR Sprint Cup race held at TMS in the second quarter 2014

 

Consolidated Statements of Cash Flows The Company infrequently collects and temporarily holds cash on behalf of its 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.


NASCAR Event Management Fees – Beginning in 2014, NASCAR renamed “purse and sanction” fees as “event management” fees in our annual race event sanctioning and renewal agreements. The change had no other impact on our consolidated financial statements or disclosures.


Joint Venture Equity Investment – Before February 2014, the Company and International Speedway Corporation equally owned a joint venture (50% non-controlling interest) operating independently under the name Motorsports Authentics (MA). MA’s operations consist principally of trackside and, to a lesser extent, wholesale and retail, event souvenir merchandising as licensed and regulated under NASCAR Teams Licensing Trust agreements. The NASCAR Trust significantly influences MA’s operations and results. On January 31, 2014, the Company abandoned its interest and rights in MA to focus management resources in areas that may be profitable and more productive. As further described below, and in Notes 2 and 8 to the Consolidated Financial Statements in our 2013 Annual Report, the Company recognized an anticipated material tax benefit related to abandonment as of December 31, 2013. There was no other impact on the Company’s December 31, 2013 or year-to-date 2014 Consolidated Financial Statements. The carrying value of the Company’s equity investment in MA was reduced to $0 as of December 31, 2009. Under equity method accounting, the Company no longer recorded its 50% share of MA operating losses, if any, unless and until this carrying value was increased to the extent of future MA operating profits, if any. As such, the Company’s 2014 and 2013 results were not impacted by MA’s operations under the equity method.


Income Taxes – The Company provides for income taxes at the end of each interim period based on management’s best estimate of the annual estimated effective income tax rate. Cumulative adjustments to the Company’s annual estimated effective income tax rate are recorded in the interim period in which a change in the annual estimated effective income tax rate is determined. See Notes 2 and 8 to the Consolidated Financial Statements in our 2013 Annual Report for additional information on our accounting for income taxes.


The effective income tax rate for the three and six months ended June 30, 2014 was 36.1% and 36.2%, including derecognition of accrued interest and penalties as described below. The effective income tax rate for the three and six months ended June 30, 2013 was 37.1%, excluding the negative impact of recording tax benefits of approximately $2.3 million related to the 2013 goodwill impairment charge of $89.0 million (a significant portion had no tax benefit) as further described in Note 4 and a one-time benefit of state income tax restructuring. In the three and six months ended June 30, 2014, current income taxes payable of approximately $21.4 million were reduced by utilization of current deferred income tax assets described below.The Company’s consolidated financial statements for the three and six months ended June 30, 2014 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. Although various previous reporting periods were over accrued, the Company believes the impact was not material to prior or current periods.


Income tax liabilities for unrecognized tax benefits approximate $1,004,000 as of June 30, 2014 and December 31, 2013, and are included in other noncurrent liabilities, all of which would favorably impact the Company’s effective tax rate if recognized. As of June 30, 2014, management was not aware of any significant tax positions where it appeared reasonably possible that unrecognized tax benefits might significantly increase within the next twelve months. There was no change or activity for unrecognized tax benefits during the three or six months ended June 30, 2014 or 2013. Interest and penalties on uncertain tax positions of $483,000 were derecognized in the three and six months ended June 30, 2014, and $19,000 and $37,000 were recognized in the three and six months ended June 30, 2013. As of June 30, 2014 and December 31, 2013, the Company had $361,000 and $844,000 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 2013 by the California Franchise Tax Board, and 2010 through 2013 by all other taxing jurisdictions to which the Company is subject. The Kentucky Department of Revenue has completed examining the Company’s 2009, 2010, 2011 and 2012 state tax returns with no material adjustments.


Anticipated Income Tax Benefit From Equity Interest Abandonment – On January 31, 2014, the Company abandoned its interest and rights in MA as previously described above. 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 intends to recognize tax losses that will be 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 to fully utilize these tax losses. As such, the Company recognized a material income tax benefit of $49.3 million at December 31, 2013 for the reversal of previously recorded valuation allowances under applicable accounting guidance.


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 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, a valuation allowance would be required to reduce or eliminate the associated deferred tax assets. 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.


Taxes Collected from Customers – The Company reports sales, admission and other taxes collected from customers on both a gross and net basis in operations. Such taxes reported on a gross basis for the three months ended June 30, 2014 and 2013 were $1,373,000 and $1,521,000, and for the six months ended June 30, 2014 and 2013 were $2,338,000 and $2,523,000.


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 $5,914,000 and $5,996,000 for the three months ended June 30, 2014 and 2013, and $8,354,000 and $8,595,000 for the six months ended June 30, 2014 and 2013. There were no deferred direct-response advertising costs at June 30, 2014 or December 31, 2013.


Fair Value of Financial Instruments – The Company follows 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 is non-interest bearing and discounted based on estimated current cost of borrowings and, 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 the Company’s financial instruments as of June 30, 2014 and December 31, 2013 (in thousands):


             

June 30, 2014

   

December 31, 2013

 
   

Level

 

Class

 

Carrying Value

   

Fair Value

   

Carrying Value

   

Fair Value

 

Assets

                                         

Cash and cash equivalents

    1  

R

  $ 95,364     $ 95,364     $ 97,343     $ 97,343  

Floating rate notes receivable

    2  

NR

    1,615       1,615       2,005       2,005  

Cash surrender values

    2  

NR

    5,087       5,087       4,937       4,937  
                                           

Liabilities

                                         

Floating rate revolving Credit Facility, including Term Loan

    2  

NR

    170,000       170,000       210,000       210,000  

6.75% Senior Notes Payable due 2019

    1  

NR

    253,784       265,000       254,197       265,000  

Other long-term debt

    2  

NR

    2,130       2,130       2,792       2,792  

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.


Property and Equipment – In the three and six months ended June 30, 2014, the Company recorded accelerated depreciation on certain damaged BMS assets of $651,000 and certain retired NHMS assets of $1,131,000. NHMS removed approximately 7,000 low demand seats and is using the area for premium hospitality and advertising. The Company’s consolidated financial statements for the three and six months ended June 30, 2014 reflect a gain from involuntary conversion of certain TMS property, increasing property and equipment and other income, net by approximately $985,000. Although this gain should have been recorded in an earlier period, the Company believes the impact was not material to prior or current periods.


Deferred Income – TMS, in conjunction with the Fort Worth Sports Authority (FWSA), has an oil and gas mineral rights lease agreement and a joint exploration agreement with the FWSA, which among other things, provides the lessee various defined property access and right-of-ways, exclusive exploration and extraction rights, and non-interference by TMS as extraction infrastructure construction and operations commence. TMS is required to coordinate directly with the lessee on roadway and pipeline logistics to prevent interference of TMS or lessee activities, and monitor regulatory and other contract compliance. An upfront cash payment received in December 2011 was accreted into other operating revenue over an associated two-year agreement term on a straight-line basis, with $803,000 and $1,605,000 recognized in the three and six months ended June 30, 2013 ($0 in the three and six months ended June 30, 2014).


Although the initial agreement term expired in December 2013, the lessee had initiated drilling activities prior to expiration, resulting in the long-term lease remaining enforceable as long as drilling or extraction related activities continue or certain prices levels are met. This lease agreement was extended and oil and gas extraction has commenced in 2014, which entitles TMS to stipulated stand-alone and shared royalties. During the three and six months ended June 30, 2014, TMS received and recognized royalty payments of $400,000 under the extended lease agreement. The lessee has expanded production capacity, including an increased number of extraction wells. At this time, while extraction activities continue, management is unable to determine possible ongoing volumes of production if any or for how long, or if stipulated natural gas price levels will be maintained or adequate. The lease agreement stipulates the sharing of production revenues, and requires TMS to spend a portion of shared royalties on TMS facility and road infrastructure improvements, up to specified amounts. Any future production revenues or royalties are subject to production levels and market prices that can fluctuate significantly and rapidly, as well as other factors outside of TMS’s control. As such, management is unable to determine the amounts if any, or timing, of possible future royalty payments to TMS. As of June 30, 2014 and December 31, 2013, there was no deferred income associated with the expired or extended agreements.


In late 2013, BMS announced plans to host a collegiate football game in September 2016. As of June 30, 2014 and December 31, 2013, advance revenues and associated direct expenses were not significant. Under the similar accounting policy for event revenues and expenses described above, the Company plans to continue to defer advance revenues and direct expenses pertaining to this event until held.


Other Contingencies – 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 the Company’s financial position, future results of operations or cash flows.


Recently Issued Accounting Standards – The FASB issued Accounting Standards Update No. 2013-11 “Income Taxes (Topic 740): Presentation of an Unrecognized Tax Benefit When a Net Operating Loss Carryforward, a Similar Tax Loss, or a Tax Credit Carryforward Exists” whereby an unrecognized tax benefit, or a portion of an unrecognized tax benefit, should be presented in the financial statements as a reduction to a deferred tax asset for a net operating loss carryforward, a similar tax loss, or a tax credit carryforward, except as follows. To the extent those three items are not available at the reporting date under tax law of applicable jurisdictions to settle additional income taxes that would result from the disallowance of a tax position or such tax law does not require the entity to use, and the entity does not intend to use, the deferred tax asset for such purpose, the unrecognized tax benefit should be presented in the financial statements as a liability and not combined with deferred tax assets. The assessment of whether deferred tax assets are available is based on unrecognized tax benefits and deferred tax assets existing at the reporting date, and should be made presuming disallowance of associated tax positions at that date. The guidance is effective for fiscal years and interim periods beginning after December 15, 2013, applies prospectively to all unrecognized tax benefits existing at the effective date, and does not require new recurring disclosures. The Company’s adoption had no impact on its financial statements or disclosures, and the Company will apply this guidance where applicable in the future.


The FASB issued Accounting Standards Update No. 2014-08 “Reporting Discontinued Operations and Disclosures of Disposals of Components of an Entity: Presentation of Financial Statements (Topic 205) and Property, Plant, and Equipment (Topic 360)” which improves the definition of discontinued operations, changes the requirements for reporting discontinued operations and includes several new disclosures. Some of the new required disclosures include: (i) presentation of assets and liabilities of disposal groups that include a discontinued operation separately in assets and liabilities within the statement of financial position or reconciliation to total amounts presented; (ii) statement of cash flow presentation or note disclosure of total operating and investing cash flows for discontinued operations, or depreciation, amortization, capital expenditures, and significant operating and investing noncash items related to discontinued operations; and (iii) major classes of line items constituting pretax profit or loss of discontinued operations for periods in which results of discontinued operations are presented where net income is reported. Other disclosures are required when entities retain significant continuing involvement with a discontinued operation after disposal, including cash flows to and from a discontinued operation, and for disposals of individually significant entity components not qualifying for discontinued operations presentation, including noncontrolling interests and retained equity method investments after disposal transactions. For disposals of individually significant components that do not qualify as discontinued operations, entities must disclose pre-tax earnings of the disposed component. Disposals of an entity component or group of entity components are required to be reported in discontinued operations if disposal represents a strategic shift that has or will have a major effect on an entity’s operations and financial results when certain defined activities occur, including disposals by sale, abandonments and distributions. The guidance is effective for disposals (or classifications as held for sale) of entity components, and activities upon acquisition classified as held for sale, that occur within annual periods beginning on or after December 15, 2014, and interim periods within those years. Entities should not apply this guidance to entity components or business activities classified as held for sale before the effective date even if components or activities are disposed after the effective date. Early adoption is permitted only for disposals (or classifications as held for sale) that have not been reported in previously issued financial statements. At this time, the Company believes adoption will have no impact on its financial statements or disclosures, and the Company will apply such guidance where applicable in the future.


The FASB issued Accounting Standards Update No. 2014-09 "Revenue from Contracts with Customers: Section A—Summary and Amendments That Create Revenue from Contracts with Customers (Topic 606) 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. The guidance is effective for annual reporting periods beginning after December 15, 2016, including interim periods within that reporting period. Early application is not permitted. 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.


Note 3 - Inventories
Inventory Disclosure [Text Block]

3. INVENTORIES


Inventories, net consist of the following components (in thousands):


   

June 30,

2014

   

December 31,

2013

 

Finished race cars, parts and accessories

  $ 5,477     $ 5,372  

Souvenirs and apparel

    3,204       2,409  

Micro-lubricant® and other

    793       824  

Total

  $ 9,474     $ 8,605  

Note 4 - Goodwill and Other Intangible Assets
Goodwill and Intangible Assets Disclosure [Text Block]

4. GOODWILL AND OTHER INTANGIBLE ASSETS


Goodwill and Other Intangible Assets represent the excess of business acquisition costs over the fair value of net assets acquired, and are all associated with the Company’s 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. The Company’s race event sanctioning and renewal agreements for each NASCAR-sanctioned racing event are awarded annually. The Company has evaluated each of its intangible assets for these agreements and determined that each will extend into the foreseeable future. The Company has 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.


Annual Assessment The Company evaluates goodwill and other intangible assets for possible impairment annually in the second quarter, or when events or circumstances indicate possible impairment may have occurred. See Notes 2 and 5 to the Consolidated Financial Statements in our 2013 Annual Report for additional information on the Company’s goodwill and other intangible assets and assessment methodology and evaluation. 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. Management's latest annual assessment in the second quarter 2014 was based predominately on management's best estimate of future discounted operating cash flows and profitability attributable to such assets for all individual reporting units.


The 2014 annual assessment indicated the estimated fair value of each reporting unit and each indefinite-lived intangible asset substantially exceeded its associated carrying value except for race date event sanctioning and renewal agreements associated with NHMS acquired in 2008. The excess of estimated fair value over associated carrying values for those material nonamortizable agreements was found to be less than those associated with other reporting units, resulting in heightened sensitivity to management’s assumptions used in estimating future discounted cash flows and profitability and associated risk of failing impairment testing. Among other factors, the latest assessment assumes economic and industry condition improvements, and 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 assumed that increases in contracted NASCAR broadcasting rights revenues after 2014 would approximate those reflected in the recently negotiated multi-year contracts beginning in 2015, and that future annual increases in such revenues and associated NASCAR event management (purse and sanction) fees would approximate historical rates similar to the current eight-year broadcasting agreements. As such, no goodwill or other indefinite-lived intangible asset impairment charges were found necessary at this time. The current eight-year broadcasting agreements have provided the Company with annual contracted revenue increases averaging 3% per year, and associated annual increases in NASCAR event management fees averaging slightly less than 3% per year. NASCAR has not yet announced annual broadcasting revenues under the new broadcasting agreement through 2024, and annual NASCAR event management fees are under negotiation. Annual or total finalized NASCAR broadcasting revenues and event management fees could differ substantially from those assumed in management’s impairment assessment. Should this reporting unit or associated indefinite-lived intangible assets not achieve projected cash flows or profitability, or should actual capital expenditures exceed current plans, estimated fair values could be reduced to below carrying values resulting in material non-cash impairment charges.


Management also considered that the estimated market value for comparable NASCAR race event sanction and renewal agreements based on historical sales transactions (the Company has agreements to annually conduct thirteen NASCAR Sprint Cup, eleven NASCAR Nationwide and seven NASCAR 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 the Company’s common stock from historical and forward-looking perspectives. Such information was also compared to available market information for certain motorsports industry peers.


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. Management also believes the Company’s operational and cash flow forecasts support its conclusions that no unrecognized impairment exists as of June 30, 2014. 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 the Company’s 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 Management's second quarter 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 has been 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 the second quarter 2013 to reduce goodwill related to NHMS and KyS to estimated fair value of $0.


Of that charge, goodwill for NHMS of $82,725,000 originated upon recording deferred tax liabilities associated with race date intangibles of $127.4 million established under purchase method accounting rules over and above NHMS’s net cash purchase price of $330.1 million paid 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. Those accounting rules prohibit elimination or adjustment notwithstanding such ultimate payment of taxes was, and still is, believed unlikely and that no sale is being contemplated. The impairment did not pertain to or affect the underlying value of the Company’s race date intangibles. The 2013 charge and associated operations are included in the Company’s "motorsports event related" reporting segment (see Note 10).


Other Information - There were no changes in the gross carrying value of goodwill or other intangible assets during the six months ended June 30, 2014. At June 30, 2014, the carrying amounts for goodwill and other intangible assets include accumulated impairments of $146.2 million. As of June 30, 2014 and December 31, 2013, gross carrying values and accumulated amortization by class of intangible asset are as follows (dollars in thousands):


   

June 30, 2014

   

December 31, 2013

         
   

Gross

Carrying

Value

   

Accumulated Amortization

   

Net

   

Gross

Carrying

Value

   

Accumulated

Amortization

   

Net

   

Estimated

Amortization

Period

(Years)

 

Nonamortizable race event sanctioning and renewal agreements

  $ 394,913           $ 394,913     $ 394,913           $ 394,913        

Amortizable race event sanctioning and renewal agreements

    100     $ (63

)

    37       100     $ (58

)

    42       5-6  

Total

  $ 395,013     $ (63

)

  $ 394,950     $ 395,013     $ (58

)

  $ 394,955          

Note 5 - Long-term Debt
Long-term Debt [Text Block]

5. LONG-TERM DEBT


Bank Credit Facility The Company’s Credit Facility, as amended in February 2013, (the 2013 Credit Facility or Credit Facility) 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 $250,000,000 senior secured term loan (the Term Loan); (iii) matures in February 2018; (iv) allows the Company to increase revolving commitments or establish a term loan (or a combination of the two) up to an aggregate additional $100,000,000 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. The Term Loan requires minimum quarterly principal payments of at least 5% of the initial amount drawn on an annualized basis (or $12,500,000 each twelve-month period based on an initial draw of $250,000,000).


During the three and six months ended June 30, 2014, the Company repaid $30,000,000 and $40,000,000 of Term Loan borrowings. At June 30, 2014 and December 31, 2013, outstanding borrowings under the Credit Facility were $170,000,000 and $210,000,000 (all Term Loan borrowings). At June 30, 2014 and December 31, 2013, outstanding letters of credit amounted to $882,000 and $887,000. Interest is based, at the Company’s option, upon LIBOR plus 1.25% to 2.00% or Bank of America’s base rate plus 0.25% to 1.00%. The 2013 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 2013 Credit Facility requires that the Company maintain certain ratios of funded debt to earnings before interest, taxes, depreciation and amortization (EBITDA) and earnings before interest and taxes (EBIT) to interest expense, contains other affirmative and negative financial covenants and restrictions, and is secured by a pledge of all capital stock and limited liability company interests of the Guarantors.


2019 Senior Notes –The Company’s 6¾% senior notes consist of aggregate principal of $150,000,000 issued at par in 2011 and $100,000,000 issued at 105% of par in an add-on offering in 2013, with interest payments due semi-annually on February 1 and August 1, maturing in February 2019, and governed by the same indenture (the 2019 Senior Notes). All notes were initially issued in private placement offerings and subsequently exchanged for substantially identical notes registered under the Securities Act. As of June 30, 2014 and December 31, 2013, the 2019 Senior Notes carrying value of $253,784,000 and $254,197,000 includes unamortized issuance premium of $3,784,000 and $4,197,000, respectively.


Other Notes Payable – Long-term debt includes a non-interest bearing debt obligation, payable in 60 monthly installments of $125,000, associated with the Company's acquisition of KyS. As of June 30, 2014 and December 31, 2013, their combined carrying values of $2,130,000 and $2,792,000 reflect discounts of $120,000 and $208,000, respectively, based on an effective interest rate of 7%.


2013 Early Redemption of 2016 Senior Notes – As described above, the Company issued $100.0 million of additional 6¾% Senior Notes due in 2019 and amended its Credit Facility in 2013. Effective June 1, 2013, the Company redeemed all outstanding 8¾% senior notes (the 2016 Senior Notes) in aggregate principal amount of $275,000,000 at 104.375% of par plus accrued interest. The 2016 Senior Notes originally issued at 96.8% of par were scheduled to mature in June 2016, with interest payments due June 1 and December 1. The Company 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. The second quarter 2013 loss on early debt redemption and refinancing represents a charge to earnings of $18,467,000, before income taxes of approximately $6.8 million, for associated redemption premium, unamortized net deferred loan costs and issuance discount, and transaction costs.


Other Terms and Conditions– The 2013 Credit Facility and 2019 Senior Notes contain specific requirements and restrictive financial covenants and limits or prohibits various financial and transactional activities. The 2013 Credit Facility and 2019 Senior Notes Indenture also contain cross-default provisions. The Company was in compliance with all applicable covenants under these debt agreements as of June 30, 2014. See Note 6 to the Consolidated Financial Statements included in the Company’s 2013 Annual Report for additional information on these debt agreements, including dividend, redemption, right of payment provisions, and financial and restrictive covenants.


Subsidiary Guarantees Amounts outstanding under the 2013 Credit Facility and 2019 Senior Notes are guaranteed by all of SMI’s material operative subsidiaries except for Oil-Chem and its subsidiaries (which are presently non-material). These guarantees are full and unconditional and joint and several, with the 2019 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):


   

Three Months Ended

June 30:

   

Six Months Ended

June 30:

 
   

2014

   

2013

   

2014

   

2013

 

Gross interest costs

  $ 5,483     $ 9,409     $ 11,214     $ 20,501  

Less: capitalized interest costs

    (114

)

    (53

)

    (199

)

    (89

)

Interest expense

    5,369       9,356       11,015       20,412  

Interest income

    (43

)

    (115

)

    (88

)

    (261

)

Interest expense, net

  $ 5,326     $ 9,241     $ 10,927     $ 20,151  

Weighted-average interest rate on Credit Facility borrowings

    2.2

%

    2.2

%

    2.2

%

    2.3

%


Note 6 - Per Share and Other Equity Information
Stockholders Equity And Earnings Per Share [Text Block]

6. PER SHARE AND OTHER EQUITY INFORMATION 


The following schedule reconciles basic and diluted income (loss) per share (where computations are anti-dilutive, reported basic and diluted per share amounts are the same) (in thousands except per share amounts):


   

Three Months Ended

June 30:

   

Six Months Ended

June 30:

 
    2014     2013     2014     2013  

Income (loss) applicable to common stockholders and assumed conversions

  $ 27,199     $ (67,811

)

  $ 29,066     $ (69,179

)

                                 

Weighted average common shares outstanding

    41,411       41,424       41,407       41,426  

Dilution effect of assumed conversions:

                               

Common stock equivalents—stock awards

    20       17       23       13  

Weighted average common shares outstanding and assumed conversions

    41,431       41,441       41,430       41,439  
                                 
                                 

Basic earnings (loss) per share

  $ 0.66     $ (1.64

)

  $ 0.70     $ (1.67

)

Diluted earnings (loss) per share

  $ 0.66     $ (1.64

)

  $ 0.70     $ (1.67

)

Anti-dilutive common stock equivalents excluded in computing diluted earnings (loss) per share

    643       840       612       891  

Stock Repurchase Program – The Company’s Board of Directors has approved a stock repurchase program authorizing SMI to repurchase up to an aggregate of 5,000,000 shares (increased from 4,000,000 shares with Board of Director approval on February 12, 2014) of the Company’s outstanding common stock from time to time, depending on market conditions, share price, applicable limitations under the Company’s debt agreements, 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. During the three and six months ended June 30, 2014, the Company repurchased 32,000 and 62,000 shares of common stock for $574,000 and $1,154,000. As of June 30, 2014, the Company could repurchase up to an additional 1,056,000 shares under the current authorization.


During the three and six months ended June 30, 2014, approximately 26,000 shares of common stock were delivered to the Company at an average price per share of $20.07 in satisfaction of tax withholding obligations of holders of restricted shares issued under our equity compensation plans that vested during the periods. As of and through June 30, 2014, treasury stock includes 143,000 shares of common stock delivered to the Company for such purposes.


Declaration of Cash Dividends – To date in 2014, the Company’s Board of Directors has approved the following quarterly cash dividends on common stock, which are being paid using available cash and cash equivalents on hand (in thousands except per share amounts):


Declaration date

 

February 12, 2014

   

April 15, 2014

   

July 17, 2014

 

Record date

 

February 28, 2014

   

May 16, 2014

   

August 15, 2014

 

Paid or payable to shareholders

 

March 14, 2014

   

June 6, 2014

   

September 5, 2014

 

Aggregate quarterly cash dividend

  $ 6,240     $ 6,216    

Approximately $6,200

 

Dividend per common share

  $ 0.15     $ 0.15     $ 0.15  

Note 9 - Stock Compensation Plans
Disclosure of Compensation Related Costs, Share-based Payments [Text Block]

9. STOCK COMPENSATION PLANS   


2013 Stock Incentive Plan – In February 2013, the Company’s Board of Directors adopted the 2013 Stock Incentive Plan (the 2013 Plan) which was approved by stockholders at the 2013 Annual Meeting. The 2013 Plan allows the Company, among other things, to continue 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. Approval of the 2013 Plan did not amend or modify the 2004 Plan described below.


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.


2004 Stock Incentive Plan, Amended and Restated as of February 10, 2009  – The 2004 Stock Incentive Plan (the 2004 Plan) terminated in February 2014 and no awards were granted under this plan in the six months ended June 30, 2014. 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.


Under the Company’s performance-based Incentive Compensation Plan, the Compensation Committee of the Company’s Board of Directors approved grants of restricted stock to the Company’s Vice Chairman and Chief Financial Officer and restricted stock units to the Company’s President and Chief Operating Officer in each of the six months ended June 30, 2014 and 2013. The 2014 grants were awarded under the 2013 Plan and the 2013 grants were awarded under the 2004 Plan which is now terminated. All grants under both plans 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. Forfeitures in any given year result from differences between the Company’s actual results for the previous year as compared to the defined full year earnings target. The following is a summary of restricted stock and restricted stock units granted, vested and forfeited under the Incentive Compensation Plan for the indicated periods (shares in thousands):


   

Six Months Ended June 30:

 
   

2014

   

2013

 
   

Restricted Stock

   

Restricted

Stock

Units

   

Restricted Stock

   

Restricted

Stock

Units

 

Outstanding, beginning of period

    59       59       60       60  

Granted

    35       35       35       35  

Vested

    (27

)

    (27

)

    (24

)

    (24

)

Forfeited

    (3

)

    (3

)

    (12

)

    (12

)

Outstanding, end of period

    64       64       59       59  

In the six months ended June 30, 2014 and 2013, the Company repurchased 26,000 and 25,000 shares of common stock for $523,000 and $418,000 from executive management employees to settle income taxes on 54,000 and 48,000 shares that vested during the period, respectively. Additionally, the Company awarded 4,500 shares of restricted stock to a non-executive management employee during the six months ended June 30, 2014 under the 2013 Plan.


2008 Formula Restricted Stock Plan, Amended and Restated as of April 17, 2012 – The 2008 Formula Restricted Stock Plan (the 2008 Formula Plan) is for the benefit of the Company’s outside directors, and is scheduled to terminate in February 2018. On the first business day following each annual meeting, each non-employee director who is then a member of the Board 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 the Company’s next annual meeting following the grant date. Vesting is subject to continued service as a director through scheduled vesting dates. The Company awarded 4,028 shares of restricted stock to each of the Company’s four non-employee directors on April 16, 2014. An aggregate of 16,668 shares granted to non-employee directors on April 17, 2013 vested on April 14, 2014, and 17,200 shares granted in 2012 vested on April 15, 2013. All restricted stock awards were granted and vested in accordance with plan provisions.


Employee Stock Purchase Plan – No shares were granted to employees under the Employee Stock Purchase Plan for calendar years 2014 or 2013.


Share-Based Payments – The Company generally records 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. The Company’s practice has been to issue new shares upon option exercise; however, repurchases of shares in the open market are permitted. There were no significant changes in the characteristics of restricted stock or restricted stock units granted in 2014 or 2013 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. No stock options were granted under any of the Company’s stock compensation plans during the six months ended June 30, 2014 or 2013. A total of 3,000 and 3,500 stock options previously granted under the 2004 Plan were exercised in the six months ended June 30, 2014 and 2013, respectively, at an exercise price of $15.83.


Share-based compensation cost for the three months ended June 30, 2014 and 2013 totaled $670,000 and $555,000, before income taxes of $249,000 and $206,000, and for the six months ended June 30, 2014 and 2013 totaled $1,309,000 and $1,080,000, before income taxes of $486,000 and $400,000, respectively, and is included in general and administrative expense. There were no capitalized share-based compensation costs at June 30, 2014 or December 31, 2013. As of June 30, 2014, there was approximately $2,879,000 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 0.9 year. As of June 30, 2014, all stock options were vested and there was no unrecognized compensation cost related to stock options granted under any of the Company’s stock compensation plans.


See Note 11 to the Consolidated Financial Statements in our 2013 Annual Report for additional information and terms of the Company’s stock compensation plans.


Note 10 - Segment Disclosures
Segment Reporting Disclosure [Text Block]

10. SEGMENT DISCLOSURES


The Company’s operations are predominately comprised of promoting, marketing and sponsoring motorsports racing events, merchandising and other related activities conducted at its various major speedway facilities located in the United States. The Company’s business activities, including those of its subsidiaries, are further described in Notes 1 and 2 to the Consolidated Financial Statements in our 2013 Annual Report. The Company’s “motorsports event related” segment consists of revenues and expenses associated with all admissions, event related, NASCAR broadcasting and event motorsports merchandising activities. The segment includes motorsports related events and operations for all Company speedways, NASCAR broadcasting and ancillary media rights, PRN and RCU motorsports radio programming, and SMI Properties and SMI Trackside motorsports merchandising at Company and non-Company speedways. These operating segments have been aggregated into the motorsports related reporting segment as each share similar types and classes of customers, similar methods for providing or distributing motorsports related services, souvenirs and other merchandise, and other similar economic characteristics. The Company’s “all other” operations consist of SMIP subsidiary non-event motorsports and non-motorsports merchandising, Legend Cars non-event merchandising and sanctioning body activities, Oil-Chem micro-lubricant activities, TMS oil and gas mineral rights lease and related revenues, and office rentals at certain Company speedways. All segment information below pertains to continuing operations and excludes discontinued oil and gas operations for all periods presented.


Segment information as presented below comports with information the Company’s chief operating decision maker and management use and focus on when assessing segment performance and allocating resources. Segment operating income or loss excludes interest, taxes, other income or expense and specified non-recurring items, if any, and corporate general and administrative and depreciation costs are allocated to operating segments based on their respective revenues relative to consolidated revenues. Segment information on continuing operations for the three and six months ended June 30, 2014 and 2013, and as of June 30, 2014 and December 31, 2013 is as follows (in thousands):


   

Three Months Ended June 30:

 
   

2014

   

2013

 
   

Motorsports

Event

Related

   

All

Other

   

Consolidated

   

Motorsports

Event

Related

   

All

Other

   

Consolidated

 

Revenues

  $ 171,037     $ 4,840     $ 175,877     $ 171,592     $ 5,171     $ 176,763  

Depreciation and amortization

    15,312       47       15,359       13,766       56       13,822  

Impairment of goodwill (Note 4)

 

   

   

      89,037    

      89,037  

Segment operating income (loss)

    45,912       890       46,802       (38,440

)

    1,005       (37,435

)

Capital expenditures

 

   

   

   

   

   

 

   

Six Months Ended June 30:

 
   

2014

   

2013

 
   

Motorsports

Event

Related

   

All

Other

   

Consolidated

   

Motorsports

Event

Related

   

All

Other

   

Consolidated

 

Revenues

  $ 251,141     $ 9,278     $ 260,419     $ 250,616     $ 10,369     $ 260,985  

Depreciation and amortization

    28,814       97       28,911       27,446       117       27,563  

Impairment of goodwill (Note 4)

 

   

   

      89,037    

      89,037  

Segment operating income (loss)

    52,927       1,183       54,110       (30,317

)

    1,770       (28,547

)

Capital expenditures

    14,187       32       14,219       5,100       18       5,118  

   

June 30, 2014

   

December 31, 2013

 

Other intangibles

  $ 394,950    

    $ 394,950     $ 394,955    

    $ 394,955  

Goodwill

    49,680    

      49,680       49,680    

      49,680  

Total assets

    1,748,922       25,342       1,774,264       1,761,698       24,562       1,786,260  

The following table reconciles segment operating income or loss above to consolidated income or loss before income taxes for the periods indicated (in thousands):


   

Three Months Ended

June 30:

   

Six Months Ended

June 30:

 
   

2014

   

2013

   

2014

   

2013

 

Total segment operating income (loss)

  $ 46,802     $ (37,435

)

  $ 54,110     $ (28,547

)

Adjusted for:

                               

Interest expense, net

    (5,326

)

    (9,241

)

    (10,927

)

    (20,151

)

Loss on early debt redemption and refinancing (Note 5)

 

      (18,467

)

 

      (18,467

)

Other income (expense), net

    1,097       (160

)

    2,358       (305

)

Consolidated income (loss) before income taxes

  $ 42,573     $ (65,303

)

  $ 45,541     $ (67,470

)


Accounting Policies, by Policy (Policies)

Quarterly Reporting The Company recognizes revenues and operating expenses for all events in the calendar quarter in which conducted. Changes in race schedules at the Company's speedways from time to time, including speedway acquisitions, can lessen the comparability of operating results between quarterly financial statements of successive years and increase or decrease the seasonal nature of its motorsports business. The more significant racing schedule changes for the three and six months ended June 30, 2014 as compared to 2013 include:  


 

LVMS held one major NHRA racing event in the first quarter 2014 that was held in the second quarter 2013

 

Poor weather resulted in delays in starting and completing one NASCAR Sprint Cup race held at BMS in the first quarter 2014

 

 

Poor weather resulted in postponing and rescheduling one NASCAR Sprint Cup race held at TMS in the second quarter 2014

Joint Venture Equity Investment – Before February 2014, the Company and International Speedway Corporation equally owned a joint venture (50% non-controlling interest) operating independently under the name Motorsports Authentics (MA). MA’s operations consist principally of trackside and, to a lesser extent, wholesale and retail, event souvenir merchandising as licensed and regulated under NASCAR Teams Licensing Trust agreements. The NASCAR Trust significantly influences MA’s operations and results. On January 31, 2014, the Company abandoned its interest and rights in MA to focus management resources in areas that may be profitable and more productive. As further described below, and in Notes 2 and 8 to the Consolidated Financial Statements in our 2013 Annual Report, the Company recognized an anticipated material tax benefit related to abandonment as of December 31, 2013. There was no other impact on the Company’s December 31, 2013 or year-to-date 2014 Consolidated Financial Statements. The carrying value of the Company’s equity investment in MA was reduced to $0 as of December 31, 2009. Under equity method accounting, the Company no longer recorded its 50% share of MA operating losses, if any, unless and until this carrying value was increased to the extent of future MA operating profits, if any. As such, the Company’s 2014 and 2013 results were not impacted by MA’s operations under the equity method.

Income Taxes – The Company provides for income taxes at the end of each interim period based on management’s best estimate of the annual estimated effective income tax rate. Cumulative adjustments to the Company’s annual estimated effective income tax rate are recorded in the interim period in which a change in the annual estimated effective income tax rate is determined. See Notes 2 and 8 to the Consolidated Financial Statements in our 2013 Annual Report for additional information on our accounting for income taxes.


The effective income tax rate for the three and six months ended June 30, 2014 was 36.1% and 36.2%, including derecognition of accrued interest and penalties as described below. The effective income tax rate for the three and six months ended June 30, 2013 was 37.1%, excluding the negative impact of recording tax benefits of approximately $2.3 million related to the 2013 goodwill impairment charge of $89.0 million (a significant portion had no tax benefit) as further described in Note 4 and a one-time benefit of state income tax restructuring. In the three and six months ended June 30, 2014, current income taxes payable of approximately $21.4 million were reduced by utilization of current deferred income tax assets described below.The Company’s consolidated financial statements for the three and six months ended June 30, 2014 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. Although various previous reporting periods were over accrued, the Company believes the impact was not material to prior or current periods.


Income tax liabilities for unrecognized tax benefits approximate $1,004,000 as of June 30, 2014 and December 31, 2013, and are included in other noncurrent liabilities, all of which would favorably impact the Company’s effective tax rate if recognized. As of June 30, 2014, management was not aware of any significant tax positions where it appeared reasonably possible that unrecognized tax benefits might significantly increase within the next twelve months. There was no change or activity for unrecognized tax benefits during the three or six months ended June 30, 2014 or 2013. Interest and penalties on uncertain tax positions of $483,000 were derecognized in the three and six months ended June 30, 2014, and $19,000 and $37,000 were recognized in the three and six months ended June 30, 2013. As of June 30, 2014 and December 31, 2013, the Company had $361,000 and $844,000 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 2013 by the California Franchise Tax Board, and 2010 through 2013 by all other taxing jurisdictions to which the Company is subject. The Kentucky Department of Revenue has completed examining the Company’s 2009, 2010, 2011 and 2012 state tax returns with no material adjustments.


Anticipated Income Tax Benefit From Equity Interest Abandonment – On January 31, 2014, the Company abandoned its interest and rights in MA as previously described above. 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 intends to recognize tax losses that will be 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 to fully utilize these tax losses. As such, the Company recognized a material income tax benefit of $49.3 million at December 31, 2013 for the reversal of previously recorded valuation allowances under applicable accounting guidance.


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 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, a valuation allowance would be required to reduce or eliminate the associated deferred tax assets. 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.

Taxes Collected from Customers – The Company reports sales, admission and other taxes collected from customers on both a gross and net basis in operations. Such taxes reported on a gross basis for the three months ended June 30, 2014 and 2013 were $1,373,000 and $1,521,000, and for the six months ended June 30, 2014 and 2013 were $2,338,000 and $2,523,000.

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 $5,914,000 and $5,996,000 for the three months ended June 30, 2014 and 2013, and $8,354,000 and $8,595,000 for the six months ended June 30, 2014 and 2013. There were no deferred direct-response advertising costs at June 30, 2014 or December 31, 2013.

Fair Value of Financial Instruments – The Company follows 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 is non-interest bearing and discounted based on estimated current cost of borrowings and, 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 the Company’s financial instruments as of June 30, 2014 and December 31, 2013 (in thousands):


             

June 30, 2014

   

December 31, 2013

 
   

Level

 

Class

 

Carrying Value

   

Fair Value

   

Carrying Value

   

Fair Value

 

Assets

                                         

Cash and cash equivalents

    1  

R

  $ 95,364     $ 95,364     $ 97,343     $ 97,343  

Floating rate notes receivable

    2  

NR

    1,615       1,615       2,005       2,005  

Cash surrender values

    2  

NR

    5,087       5,087       4,937       4,937  
                                           

Liabilities

                                         

Floating rate revolving Credit Facility, including Term Loan

    2  

NR

    170,000       170,000       210,000       210,000  

6.75% Senior Notes Payable due 2019

    1  

NR

    253,784       265,000       254,197       265,000  

Other long-term debt

    2  

NR

    2,130       2,130       2,792       2,792  

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.

Property and Equipment – In the three and six months ended June 30, 2014, the Company recorded accelerated depreciation on certain damaged BMS assets of $651,000 and certain retired NHMS assets of $1,131,000. NHMS removed approximately 7,000 low demand seats and is using the area for premium hospitality and advertising. The Company’s consolidated financial statements for the three and six months ended June 30, 2014 reflect a gain from involuntary conversion of certain TMS property, increasing property and equipment and other income, net by approximately $985,000. Although this gain should have been recorded in an earlier period, the Company believes the impact was not material to prior or current periods.

Deferred Income – TMS, in conjunction with the Fort Worth Sports Authority (FWSA), has an oil and gas mineral rights lease agreement and a joint exploration agreement with the FWSA, which among other things, provides the lessee various defined property access and right-of-ways, exclusive exploration and extraction rights, and non-interference by TMS as extraction infrastructure construction and operations commence. TMS is required to coordinate directly with the lessee on roadway and pipeline logistics to prevent interference of TMS or lessee activities, and monitor regulatory and other contract compliance. An upfront cash payment received in December 2011 was accreted into other operating revenue over an associated two-year agreement term on a straight-line basis, with $803,000 and $1,605,000 recognized in the three and six months ended June 30, 2013 ($0 in the three and six months ended June 30, 2014).


Although the initial agreement term expired in December 2013, the lessee had initiated drilling activities prior to expiration, resulting in the long-term lease remaining enforceable as long as drilling or extraction related activities continue or certain prices levels are met. This lease agreement was extended and oil and gas extraction has commenced in 2014, which entitles TMS to stipulated stand-alone and shared royalties. During the three and six months ended June 30, 2014, TMS received and recognized royalty payments of $400,000 under the extended lease agreement. The lessee has expanded production capacity, including an increased number of extraction wells. At this time, while extraction activities continue, management is unable to determine possible ongoing volumes of production if any or for how long, or if stipulated natural gas price levels will be maintained or adequate. The lease agreement stipulates the sharing of production revenues, and requires TMS to spend a portion of shared royalties on TMS facility and road infrastructure improvements, up to specified amounts. Any future production revenues or royalties are subject to production levels and market prices that can fluctuate significantly and rapidly, as well as other factors outside of TMS’s control. As such, management is unable to determine the amounts if any, or timing, of possible future royalty payments to TMS. As of June 30, 2014 and December 31, 2013, there was no deferred income associated with the expired or extended agreements.


In late 2013, BMS announced plans to host a collegiate football game in September 2016. As of June 30, 2014 and December 31, 2013, advance revenues and associated direct expenses were not significant. Under the similar accounting policy for event revenues and expenses described above, the Company plans to continue to defer advance revenues and direct expenses pertaining to this event until held.

Other Contingencies – 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 the Company’s financial position, future results of operations or cash flows.

Recently Issued Accounting Standards – The FASB issued Accounting Standards Update No. 2013-11 “Income Taxes (Topic 740): Presentation of an Unrecognized Tax Benefit When a Net Operating Loss Carryforward, a Similar Tax Loss, or a Tax Credit Carryforward Exists” whereby an unrecognized tax benefit, or a portion of an unrecognized tax benefit, should be presented in the financial statements as a reduction to a deferred tax asset for a net operating loss carryforward, a similar tax loss, or a tax credit carryforward, except as follows. To the extent those three items are not available at the reporting date under tax law of applicable jurisdictions to settle additional income taxes that would result from the disallowance of a tax position or such tax law does not require the entity to use, and the entity does not intend to use, the deferred tax asset for such purpose, the unrecognized tax benefit should be presented in the financial statements as a liability and not combined with deferred tax assets. The assessment of whether deferred tax assets are available is based on unrecognized tax benefits and deferred tax assets existing at the reporting date, and should be made presuming disallowance of associated tax positions at that date. The guidance is effective for fiscal years and interim periods beginning after December 15, 2013, applies prospectively to all unrecognized tax benefits existing at the effective date, and does not require new recurring disclosures. The Company’s adoption had no impact on its financial statements or disclosures, and the Company will apply this guidance where applicable in the future.


The FASB issued Accounting Standards Update No. 2014-08 “Reporting Discontinued Operations and Disclosures of Disposals of Components of an Entity: Presentation of Financial Statements (Topic 205) and Property, Plant, and Equipment (Topic 360)” which improves the definition of discontinued operations, changes the requirements for reporting discontinued operations and includes several new disclosures. Some of the new required disclosures include: (i) presentation of assets and liabilities of disposal groups that include a discontinued operation separately in assets and liabilities within the statement of financial position or reconciliation to total amounts presented; (ii) statement of cash flow presentation or note disclosure of total operating and investing cash flows for discontinued operations, or depreciation, amortization, capital expenditures, and significant operating and investing noncash items related to discontinued operations; and (iii) major classes of line items constituting pretax profit or loss of discontinued operations for periods in which results of discontinued operations are presented where net income is reported. Other disclosures are required when entities retain significant continuing involvement with a discontinued operation after disposal, including cash flows to and from a discontinued operation, and for disposals of individually significant entity components not qualifying for discontinued operations presentation, including noncontrolling interests and retained equity method investments after disposal transactions. For disposals of individually significant components that do not qualify as discontinued operations, entities must disclose pre-tax earnings of the disposed component. Disposals of an entity component or group of entity components are required to be reported in discontinued operations if disposal represents a strategic shift that has or will have a major effect on an entity’s operations and financial results when certain defined activities occur, including disposals by sale, abandonments and distributions. The guidance is effective for disposals (or classifications as held for sale) of entity components, and activities upon acquisition classified as held for sale, that occur within annual periods beginning on or after December 15, 2014, and interim periods within those years. Entities should not apply this guidance to entity components or business activities classified as held for sale before the effective date even if components or activities are disposed after the effective date. Early adoption is permitted only for disposals (or classifications as held for sale) that have not been reported in previously issued financial statements. At this time, the Company believes adoption will have no impact on its financial statements or disclosures, and the Company will apply such guidance where applicable in the future.


The FASB issued Accounting Standards Update No. 2014-09 "Revenue from Contracts with Customers: Section A—Summary and Amendments That Create Revenue from Contracts with Customers (Topic 606) 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. The guidance is effective for annual reporting periods beginning after December 15, 2016, including interim periods within that reporting period. Early application is not permitted. 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.

Note 2 - Significant Accounting Policies and Other Disclosures (Tables)
Fair Value Measurements, Recurring and Nonrecurring [Table Text Block]
             

June 30, 2014

   

December 31, 2013

 
   

Level

 

Class

 

Carrying Value

   

Fair Value

   

Carrying Value

   

Fair Value

 

Assets

                                         

Cash and cash equivalents

    1  

R

  $ 95,364     $ 95,364     $ 97,343     $ 97,343  

Floating rate notes receivable

    2  

NR

    1,615       1,615       2,005       2,005  

Cash surrender values

    2  

NR

    5,087       5,087       4,937       4,937  
                                           

Liabilities

                                         

Floating rate revolving Credit Facility, including Term Loan

    2  

NR

    170,000       170,000       210,000       210,000  

6.75% Senior Notes Payable due 2019

    1  

NR

    253,784       265,000       254,197       265,000  

Other long-term debt

    2  

NR

    2,130       2,130       2,792       2,792  
Note 3 - Inventories (Tables)
Schedule of Inventory, Current [Table Text Block]
   

June 30,

2014

   

December 31,

2013

 

Finished race cars, parts and accessories

  $ 5,477     $ 5,372  

Souvenirs and apparel

    3,204       2,409  

Micro-lubricant® and other

    793       824  

Total

  $ 9,474     $ 8,605  
Note 4 - Goodwill and Other Intangible Assets (Tables)
Schedule of Finite Lived and Indefinite Lived Intangible Assets [Table Text Block]
   

June 30, 2014

   

December 31, 2013

         
   

Gross

Carrying

Value

   

Accumulated Amortization

   

Net

   

Gross

Carrying

Value

   

Accumulated

Amortization

   

Net

   

Estimated

Amortization

Period

(Years)

 

Nonamortizable race event sanctioning and renewal agreements

  $ 394,913           $ 394,913     $ 394,913           $ 394,913        

Amortizable race event sanctioning and renewal agreements

    100     $ (63

)

    37       100     $ (58

)

    42       5-6  

Total

  $ 395,013     $ (63

)

  $ 394,950     $ 395,013     $ (58

)

  $ 394,955          
Note 5 - Long-term Debt (Tables)
Interest Income and Interest Expense Disclosure [Table Text Block]
   

Three Months Ended

June 30:

   

Six Months Ended

June 30:

 
   

2014

   

2013

   

2014

   

2013

 

Gross interest costs

  $ 5,483     $ 9,409     $ 11,214     $ 20,501  

Less: capitalized interest costs

    (114

)

    (53

)

    (199

)

    (89

)

Interest expense

    5,369       9,356       11,015       20,412  

Interest income

    (43

)

    (115

)

    (88

)

    (261

)

Interest expense, net

  $ 5,326     $ 9,241     $ 10,927     $ 20,151  

Weighted-average interest rate on Credit Facility borrowings

    2.2

%

    2.2

%

    2.2

%

    2.3

%

Note 6 - Per Share and Other Equity Information (Tables)
Schedule of Earnings Per Share, Basic and Diluted [Table Text Block]
   

Three Months Ended

June 30:

   

Six Months Ended

June 30:

 
    2014     2013     2014     2013  

Income (loss) applicable to common stockholders and assumed conversions

  $ 27,199     $ (67,811

)

  $ 29,066     $ (69,179

)

                                 

Weighted average common shares outstanding

    41,411       41,424       41,407       41,426  

Dilution effect of assumed conversions:

                               

Common stock equivalents—stock awards

    20       17       23       13  

Weighted average common shares outstanding and assumed conversions

    41,431       41,441       41,430       41,439  
                                 
                                 

Basic earnings (loss) per share

  $ 0.66     $ (1.64

)

  $ 0.70     $ (1.67

)

Diluted earnings (loss) per share

  $ 0.66     $ (1.64

)

  $ 0.70     $ (1.67

)

Anti-dilutive common stock equivalents excluded in computing diluted earnings (loss) per share

    643       840       612       891  
Note 9 - Stock Compensation Plans (Tables)
Schedule of Share-based Compensation, Restricted Stock and Restricted Stock Units Activity [Table Text Block]
   

Six Months Ended June 30:

 
   

2014

   

2013

 
   

Restricted Stock

   

Restricted

Stock

Units

   

Restricted Stock

   

Restricted

Stock

Units

 

Outstanding, beginning of period

    59       59       60       60  

Granted

    35       35       35       35  

Vested

    (27

)

    (27

)

    (24

)

    (24

)

Forfeited

    (3

)

    (3

)

    (12

)

    (12

)

Outstanding, end of period

    64       64       59       59  
Note 10 - Segment Disclosures (Tables)
   

Three Months Ended June 30:

 
   

2014

   

2013

 
   

Motorsports

Event

Related

   

All

Other

   

Consolidated

   

Motorsports

Event

Related

   

All

Other

   

Consolidated

 

Revenues

  $ 171,037     $ 4,840     $ 175,877     $ 171,592     $ 5,171     $ 176,763  

Depreciation and amortization

    15,312       47       15,359       13,766       56       13,822  

Impairment of goodwill (Note 4)