SPEEDWAY MOTORSPORTS INC, 10-K filed on 3/12/2018
Annual Report
Document And Entity Information (USD $)
12 Months Ended
Dec. 31, 2017
Mar. 12, 2018
Jun. 30, 2017
Document Information [Line Items]
 
 
 
Entity Registrant Name
SPEEDWAY MOTORSPORTS INC 
 
 
Entity Central Index Key
0000934648 
 
 
Trading Symbol
trk 
 
 
Current Fiscal Year End Date
--12-31 
 
 
Entity Filer Category
Accelerated Filer 
 
 
Entity Current Reporting Status
Yes 
 
 
Entity Voluntary Filers
No 
 
 
Entity Well-known Seasoned Issuer
No 
 
 
Entity Common Stock, Shares Outstanding (in shares)
 
40,977,076 
 
Entity Public Float
 
 
$ 207,689,743 
Document Type
10-K 
 
 
Document Period End Date
Dec. 31, 2017 
 
 
Document Fiscal Year Focus
2017 
 
 
Document Fiscal Period Focus
FY 
 
 
Amendment Flag
false 
 
 
Consolidated Balance Sheets (USD $)
In Thousands, unless otherwise specified
Dec. 31, 2017
Dec. 31, 2016
Current Assets:
 
 
Cash and cash equivalents
$ 81,924 
$ 79,342 
Accounts receivable, net
28,459 
29,444 
Prepaid and refundable income taxes
2,135 
7,384 
Inventories, net
7,283 
8,212 
Prepaid expenses
3,533 
3,527 
Total Current Assets
123,334 
127,909 
Note Receivable
799 
1,143 
Other Assets
23,724 
23,142 
Property and Equipment, Net (Note 4)
958,215 
1,000,230 
Other Intangible Assets, Net
298,383 
298,383 
Goodwill (Note 2)
46,225 
47,342 
Total
1,450,680 
1,498,149 
Current Liabilities:
 
 
Current maturities of long-term debt
7,662 
7,657 
Accounts payable
12,017 
13,497 
Deferred race event and other income, net
40,779 
44,782 
Accrued income taxes
383 
   
Accrued interest
4,307 
4,311 
Accrued expenses and other current liabilities
23,585 
24,424 
Total Current Liabilities
88,733 
94,671 
Long-term Debt
219,452 
254,398 
Deferred Income, Net
3,054 
3,742 
Deferred Income Taxes, Net (Note 8)
201,760 
329,398 
Other Liabilities
18,458 
18,157 
Total Liabilities
531,457 
700,366 
Commitments and Contingencies
   
   
Stockholders’ Equity:
 
 
Preferred Stock, $.10 par value, shares authorized – 3,000,000, no shares issued
   
   
Common Stock, $.01 par value, shares authorized – 200,000,000, issued and outstanding – 40,992,000 in 2017 and 41,098,000 in 2016
461 
459 
Additional Paid-in Capital
262,885 
258,880 
Retained Earnings
767,859 
644,308 
Treasury Stock at cost, shares – 5,137,000 in 2017 and 4,830,000 in 2016
(111,982)
(105,864)
Total Stockholders’ Equity
919,223 
797,783 
Total
$ 1,450,680 
$ 1,498,149 
Consolidated Balance Sheets (Parentheticals) (USD $)
Dec. 31, 2017
Dec. 31, 2016
Preferred stock par value (in dollars per share)
$ 0.10 
$ 0.10 
Preferred stock, shares authorized (in shares)
3,000,000 
3,000,000 
Preferred stock, shares issued (in shares)
Common Stock, par value (in dollars per share)
$ 0.01 
$ 0.01 
Common Stock, shares authorized (in shares)
200,000,000 
200,000,000 
Common Stock, shares issued (in shares)
40,992,000 
41,098,000 
Common Stock, shares outstanding (in shares)
40,992,000 
41,098,000 
Treasury Stock at cost, shares (in shares)
5,137,000 
4,830,000 
Consolidated Statements of Operations (USD $)
In Thousands, except Per Share data, unless otherwise specified
12 Months Ended
Dec. 31, 2017
Dec. 31, 2016
Dec. 31, 2015
Revenues:
 
 
 
Admissions
$ 86,949 
$ 90,639 
$ 100,694 
Event related revenue
128,863 
136,900 
146,980 
NASCAR broadcasting revenue (Note 2)
209,155 
201,804 
195,722 
Other operating revenue (Note 1)
28,622 
60,390 
31,320 
Total Revenues
453,589 
489,733 
474,716 
Expenses and Other:
 
 
 
Direct expense of events
94,204 
102,786 
104,303 
NASCAR event management fees (Note 2)
119,101 
115,304 
111,935 
Other direct operating expense (Note 1)
18,782 
43,784 
19,541 
General and administrative
97,602 
100,144 
98,289 
Depreciation and amortization (Note 4)
64,831 
54,368 
61,964 
Interest expense, net
12,241 
13,148 
16,811 
Impairment of goodwill and other intangible assets (Note 2)
1,117 
   
98,868 
Loss on early debt redemption and refinancing (Note 6)
   
   
8,372 
Other expense (income), net
1,341 
(997)
875 
Total Expenses and Other
409,219 
428,537 
520,958 
Consolidated income (loss) before income taxes
44,370 
61,196 
(46,242)
Benefit (Provision) For Income Taxes (Note 8)
103,875 
(21,651)
11,879 
Net Income (Loss)
$ 148,245 
$ 39,545 
$ (34,363)
Basic Earnings (Loss) Per Share (in dollars per share)
$ 3.61 
$ 0.96 
$ (0.83)
Weighted Average Shares Outstanding (in shares)
41,025 
41,152 
41,284 
Diluted Earnings (Loss) Per Share (in dollars per share)
$ 3.61 
$ 0.96 
$ (0.83)
Weighted Average Shares Outstanding (in shares)
41,041 
41,167 
41,312 
Consolidated Statements of Stockholders' Equity (USD $)
Common Stock [Member]
Additional Paid-in Capital [Member]
Retained Earnings [Member]
Treasury Stock [Member]
Total
Balance at Dec. 31, 2014
$ 456,000 
$ 252,571,000 
$ 688,285,000 
$ (93,530,000)
$ 847,782,000 
Balance (in shares) at Dec. 31, 2014
41,340,000 
 
 
 
 
Net income (loss)
   
   
(34,363,000)
   
(34,363,000)
Share-based compensation, net of windfall tax benefits adjustment (in shares)
144,000 
 
 
 
 
Share-based compensation, net of windfall tax benefits adjustment
1,000 
1,845,000 
   
   
1,846,000 
Exercise of stock options (in shares)
56,000 
 
 
 
55,500 
Exercise of stock options
1,000 
878,000 
   
   
879,000 
Cash dividends of $0.60 per share of common stock
   
   
(24,807,000)
   
(24,807,000)
Repurchases of common stock at cost (in shares)
(305,000)
 
 
 
 
Repurchases of common stock at cost
   
   
   
(6,497,000)
(6,497,000)
Balance at Dec. 31, 2015
458,000 
255,294,000 
629,115,000 
(100,027,000)
784,840,000 
Balance (in shares) at Dec. 31, 2015
41,235,000 
 
 
 
 
Net income (loss)
 
 
39,545,000 
 
39,545,000 
Share-based compensation, net of windfall tax benefits adjustment (in shares)
162,000 
 
 
 
 
Share-based compensation, net of windfall tax benefits adjustment
1,000 
3,404,000 
407,000 
   
3,812,000 
Exercise of stock options (in shares)
11,000 
 
 
 
11,500 
Exercise of stock options
   
182,000 
   
   
182,000 
Cash dividends of $0.60 per share of common stock
   
   
(24,759,000)
   
(24,759,000)
Repurchases of common stock at cost (in shares)
(310,000)
 
 
 
 
Repurchases of common stock at cost
   
   
   
(5,837,000)
(5,837,000)
Balance at Dec. 31, 2016
459,000 
258,880,000 
644,308,000 
(105,864,000)
797,783,000 
Balance (in shares) at Dec. 31, 2016
41,098,000 
 
 
 
 
Net income (loss)
   
   
148,245,000 
   
148,245,000 
Share-based compensation, net of windfall tax benefits adjustment (in shares)
160,000 
 
 
 
 
Exercise of stock options (in shares)
41,000 
 
 
 
40,500 
Exercise of stock options
   
641,000 
   
   
641,000 
Cash dividends of $0.60 per share of common stock
   
   
(24,694,000)
   
(24,694,000)
Repurchases of common stock at cost (in shares)
(307,000)
 
 
 
 
Repurchases of common stock at cost
   
   
   
(6,118,000)
(6,118,000)
Share-based compensation
2,000 
3,364,000 
 
 
3,366,000 
Balance at Dec. 31, 2017
$ 461,000 
$ 262,885,000 
$ 767,859,000 
$ (111,982,000)
$ 919,223,000 
Balance (in shares) at Dec. 31, 2017
40,992,000 
 
 
 
 
Consolidated Statements of Stockholders' Equity (Parentheticals)
12 Months Ended
Dec. 31, 2017
Dec. 31, 2016
Dec. 31, 2015
Cash dividends, per share of common stock (in dollars per share)
$ 0.60 
$ 0.60 
$ 0.60 
Retained Earnings [Member]
 
 
 
Cash dividends, per share of common stock (in dollars per share)
$ 0.60 
$ 0.60 
$ 0.60 
Consolidated Statements of Cash Flows (USD $)
In Thousands, unless otherwise specified
12 Months Ended
Dec. 31, 2017
Dec. 31, 2016
Dec. 31, 2015
Cash Flows from Operating Activities:
 
 
 
Net income (loss)
$ 148,245 
$ 39,545 
$ (34,363)
Adjustments to reconcile net income (loss) to net cash provided by operating activities:
 
 
 
Impairment of goodwill and other intangible assets
1,117 
   
98,868 
Loss (gain) on disposals of property and equipment and other assets and insurance recovery
1,094 
(1,353)
653 
Deferred loan cost amortization
1,540 
1,520 
1,676 
Depreciation and amortization
64,831 
54,368 
61,964 
Amortization of deferred income
(905)
(944)
(2,458)
Deferred income tax provision (Note 8)
(127,722)
19,543 
(12,516)
Share-based compensation
3,366 
3,405 
3,383 
Changes in operating assets and liabilities:
 
 
 
Accounts receivable
881 
10,256 
(5,314)
Prepaid, refundable and accrued income taxes
4,597 
1,543 
(214)
Inventories
929 
499 
(361)
Prepaid expenses
516 
335 
19 
Accounts payable
(1,506)
242 
1,735 
Deferred race event and other income
(4,003)
(12,800)
3,405 
Accrued interest
(4)
20 
(2,764)
Accrued expenses and other liabilities
(1,021)
(2,316)
1,817 
Deferred income
217 
138 
1,042 
Other assets and liabilities
(569)
(228)
(132)
Net Cash Provided By Operating Activities
91,603 
113,773 
116,440 
Cash Flows from Financing Activities:
 
 
 
Borrowings under long-term debt
   
   
251,383 
Principal payments on long-term debt
(36,157)
(54,177)
(331,500)
Payments of debt refinancing and issuance costs
   
   
(3,975)
Exercise of common stock options
641 
182 
879 
Dividend payments on common stock
(24,694)
(24,759)
(24,807)
Repurchases of common stock
(6,118)
(5,837)
(6,497)
Net Cash Used By Financing Activities
(66,328)
(84,591)
(114,517)
Cash Flows from Investing Activities:
 
 
 
Payments for capital expenditures
(25,668)
(34,635)
(30,733)
Proceeds from sales of property and equipment and insurance recovery
2,527 
2,542 
136 
Repayment of note receivable
448 
243 
638 
Net Cash Used By Investing Activities
(22,693)
(31,850)
(29,959)
Net Increase (Decrease) In Cash and Cash Equivalents
2,582 
(2,668)
(28,036)
Cash and Cash Equivalents at Beginning of Year
79,342 
82,010 
110,046 
Cash and Cash Equivalents at End of Year
81,924 
79,342 
82,010 
Supplemental Cash Flow Information:
 
 
 
Cash paid for interest, net of amounts capitalized
12,773 
13,322 
19,982 
Cash paid for income taxes
18,957 
867 
1,015 
Supplemental Non-cash Investing and Financing Activities Information:
 
 
 
(Decrease) increase in accounts payable for capital expenditures
(224)
1,284 
(930)
Increase in deferred income for exchange of property and equipment
    
    
$ 250 
Note 1 - Basis of Presentation and Description of Business
Nature of Operations [Text Block]
1.
BASIS OF PRESENTATION AND DESCRIPTION OF BUSINESS
 
Basis of Presentation
– The consolidated financial statements include the accounts of Speedway Motorsports, Inc. and all of its wholly-owned and operating subsidiaries: Atlanta Motor Speedway LLC (AMS), Bristol Motor Speedway LLC (BMS), Charlotte Motor Speedway LLC (CMS), Kentucky Raceway LLC d/b/a Kentucky Speedway (KyS), Nevada Speedway LLC d/b/a Las Vegas Motor Speedway (LVMS), New Hampshire Motor Speedway, Inc. (NHMS), North Wilkesboro Speedway, Inc. (NWS), Speedway Sonoma LLC (Sonoma Raceway or SR), Texas Motor Speedway, Inc. (TMS), SMISC Holdings LLC d/b/a SMI Properties (SMI Properties or SMIP), US Legend Cars International, Inc. (Legend Cars), Oil-Chem Research Corporation (Oil-Chem), SMI Trackside LLC (SMI Trackside), Speedway Funding LLC, Speedway Properties Company LLC a/k/a Performance Racing Network (PRN), Speedway Media LLC a/k/a Racing Country USA (RCU), and TSI Management Company LLC d/b/a The Source International LLC (TSI) (collectively, the Company, SMI, we, our or us). Hereafter, references to “the Company’s” or “eight” speedways exclude NWS, which presently has
no
significant operations and assets consist primarily of real estate which has
no
significant fair value.
 
Description of Business
– We are a promoter, marketer and sponsor of motorsports activities in the United States. We principally own and operate the following motorsports facilities: Atlanta Motor Speedway, Bristol Motor Speedway, Charlotte Motor Speedway, Kentucky Speedway, Las Vegas Motor Speedway, New Hampshire Motor Speedway, Sonoma Raceway, and Texas Motor Speedway. We also provide event and non-event souvenir merchandising and distribution services, and food, beverage and hospitality catering services under an outside management contract through our SMI Properties subsidiaries; provide radio programming, production and distribution through PRN and RCU; manufacture and distribute smaller-scale, modified racing cars and parts through Legend Cars, and sell an environmentally-friendly micro-lubricant® through Oil-Chem.
 
In early
2017,
the NASCAR
Sprint Cup Series became the Monster Energy NASCAR Cup Series and that naming convention is used throughout this document.
 
 
Racing Events
– As further described in Note
2,
we derive a substantial portion of our total revenues from admissions, event related and NASCAR broadcasting revenue. In
2017,
we held
24
major annual racing events sanctioned by NASCAR, including
13
Monster Energy Cup and
11
Xfinity Series racing events. We also held
eight
NASCAR Camping World Truck Series,
three
NASCAR K&N Pro Series,
four
NASCAR Whelen Modified Tour,
two
IndyCar Series,
six
major National Hot Rod Association,
one
Automobile Racing Club of America and
three
World of Outlaws racing events. In
2016,
we held
24
major annual racing events sanctioned by NASCAR, including
13
Monster Energy Cup and
11
Xfinity Series racing events. We also held
eight
NASCAR Camping World Truck Series,
three
NASCAR K&N Pro Series,
four
NASCAR Whelen Modified Tour,
two
IndyCar Series,
six
major NHRA,
one
ARCA and
three
WOO racing events. In
2015,
we held
24
major annual racing events sanctioned by NASCAR, including
13
Monster Energy Cup and
11
Xfinity Series racing events. We also held
eight
NASCAR Camping World Truck Series,
three
NASCAR K&N Pro Series,
four
NASCAR Whelen Modified Tour,
two
IndyCar Series,
six
major NHRA,
one
ARCA and
three
WOO events.
 
Our
2017
and
2016
race seasons experienced an unusually high number of event weekends with significant poor weather. For example, of our
13
annual NASCAR Cup weekends,
7
events in
2017
and
8
event
s in
2016
were negatively impacted by poor weather. The more significant races affected by poor weather and other racing schedule changes during the last
three
years include:
 
In
2017,
poor weather resulted in:
 
postponing and next-day rescheduling
one
Monster Energy NASCAR Cup race, and delaying the completion of
one
NASCAR Xfinity race, held at BMS
 
delaying the start of
one
NASCAR Camping World Truck race held at BMS
 
delaying the start of
one
NASCAR Xfinity race held at NHMS
 
delaying the completion of
one
Monster Energy NASCAR Cup race held at CMS
 
delaying the start of
one
Xfinity Series race, and negative impact on
one
Monster Energy NASCAR Cup race and concert, held at CMS because of Hurricane Nate
In
2016,
poor weather resulted in:
 
postponing and rescheduling
one
Monster Energy NASCAR Cup race held at BMS
 
delays in starting and completing the NASCAR All-Star race and next day rescheduling of
one
NASCAR Camping World Truck Series race held at CMS
 
delaying the start of the Monster Energy NASCAR Cup race held at LVMS, and delays in starting or completing or shortening
two
Monster Energy NASCAR Cup races held at TMS
 
postponing and rescheduling
one
Monster Energy NASCAR Cup and
one
Xfinity Series race held at CMS because of Hurricane Matthew
 
cancellation of a portion of
one
major NHRA weekend racing event held at CMS
 
delays in starting and completing
one
IndyCar race held at TMS (see Note
2
below)
TMS held
one
Red Bull Air Race in
2015
that was
not
held in
2017
or
2016
In
2015,
poor weather resulted in delays in starting and completing
one
Monster Energy NASCAR Cup race held at AMS and BMS, and postponing and rescheduling
one
Monster Energy NASCAR Cup race held at CMS
 
The Battle at Bristol in
2016
 
In
2016,
BMS hosted
two
collegiate football games,
one
of which (the “Battle at Bristol” - including a large preceding concert) was substantially larger than the other due to team standings and public interest. Under the same accounting policy for our racing events, we deferred advance revenues and direct expenses pertaining to these events in “deferred race event and other income, net”, all of which were recognized when held in
2016.
These events had a material positive effect on our
2016
operating results, and associated revenues and direct expenses are reflected in “other operating revenue” and “other direct operating expense”, and our “all other” reporting segment (see Note
13
). Management believes reporting these results separate from our core business of motorsports operations is appropriate as we do
not
have additional football games scheduled at this time (nor have any been held before). Those results are
not
indicative of future results that can be expected or forecast. 
 
2018
Monster Energy NASCAR Cup, Xfinity and Camping World Truck Series Race Date Realignments to Las Vegas Motor Speedway
 –
We obtained approval from NASCAR to realign
one
annual Monster Energy Cup Series and
one
annual Camping World Truck Series racing event from NHMS, and an annual Xfinity Series racing event from KyS, to LVMS beginning in
2018.
 We considered many factors, including the popularity, demand, alternative uses and revenues, and potential net increase in long-term future profitability from conducting additional annual NASCAR racing events in the LVMS market. 
Note 2 - Significant Accounting Policies
Significant Accounting Policies [Text Block]
2.
SIGNIFICANT ACCOUNTING POLICIES
 
Principles of Consolidation
– All significant intercompany accounts and transactions have been eliminated in consolidation.
 
Revenue and Expense
Classification
– We classify our revenues as admissions, event related revenue, NASCAR broadcasting revenue, and other operating revenue. “Admissions” includes ticket sales for all Company events. “Event related revenue” includes amounts received from sponsorships, luxury suite rentals, souvenir sales, commissions from food and beverage sales, advertising and other promotional revenues, hospitality revenues, track rentals, driving school revenues, camping and other non-admission access revenues, broadcasting rights other than NASCAR broadcasting revenue, and other event and speedway related revenues. “NASCAR broadcasting revenue” includes rights fees obtained for domestic television broadcasts of NASCAR-sanctioned events held at our speedways. “Other operating revenue” includes non-event merchandising revenues and Legend Cars and parts sales, The Speedway Club at CMS and The Speedway Club at TMS (together the “Speedway Clubs”) revenues, Oil-Chem revenues, TMS oil and gas mineral rights lease and related revenues, industrial park and office tower rentals, and revenues associated with the
2016
“Battle at Bristol”.
 
We classify our expenses to include direct expense of events, NASCAR event management (formerly purse and sanction) fees, and other direct operating
expense, among other categories. “Direct expense of events” principally includes cost of souvenir sales, non-NASCAR race purses and sanctioning fees, property and event insurance, compensation of certain employees, advertising, sales and admission taxes, outside event support services, cost of driving school revenues, and event settlement payments to non-NASCAR sanctioning bodies. “NASCAR event management fees” includes payments to, and portions of broadcasting revenues retained by, NASCAR for associated events held at the Company’s speedways. “Other direct operating expense” includes the cost of certain SMI Properties and subsidiaries, Legend Cars, Speedway Clubs, Oil-Chem, industrial park and office tower rental revenues, and expenses associated with the
2016
“Battle at Bristol”.
 
Event Revenues and Deferred Event Income, Net
– We recognize admissions, NASCAR broadcasting and event related revenues when an event is held. Event souvenir merchandise sales and commissions from food and beverage sales are recognized at time of sale. Advance revenues and certain related direct expenses pertaining to specific events are deferred until the event is held. Deferred expenses can include race purses and sanction fees remitted to or retained by NASCAR or other sanctioning bodies and sales and admission taxes and credit card processing fees on advance revenues. Deferred race event income relates to scheduled events to be held in upcoming periods. If circumstances prevent a race from being held during the racing season: (i) generally advance revenue is refundable and (ii) all deferred direct event expenses would be immediately recognized except for race event management fees which would be refundable from NASCAR or other sanctioning bodies, and for sales and admission taxes which would be refundable from taxing authorities. Management believes this accounting policy results in appropriate matching of revenues and expenses associated with our racing events and helps ensure comparability and consistency between our financial statements. Advance revenues, and certain related direct expenses, if any, for track rentals, driving schools and similar activities are deferred and recognized when the activities take place. Management believes its revenue recognition policies follow applicable authoritative guidance.
 
Poor weather resulted in postponing and rescheduling
 an IndyCar race at TMS from the
second
quarter
2016
to the
third
quarter
2016.
The Company offered to honor unused tickets through exchange for race tickets to TMS’s Monster Energy NASCAR Cup race in
April 2017
or IndyCar race in
June 2017.
The exchange offer expired in
June 2017,
and cash refunds were
not
offered. Tickets exchanged for race events held in
2017
were
not
significant. As of
December 31, 2016,
we had deferred race event income of
$524,000
for unredeemed tickets associated with TMS’s
2016
IndyCar race, all of which was recognized in
2017.
 
NASCAR Broadcasting Revenues and NASCAR Event Management (formerly
p
urse and
s
anction) Fees
– NASCAR contracts directly with certain television networks on broadcasting rights for all NASCAR-sanctioned Monster Energy Cup, Xfinity and Camping World Truck Series racing events. We receive television broadcasting revenues under contractual sanction agreements for each NASCAR-sanctioned race. The Company periodically negotiates its sanction fees for individual races with NASCAR. SMI has separate
five
-year Event Management Agreements with NASCAR under which our speedways will conduct Monster Energy NASCAR Cup, Xfinity and Camping World Truck Series and the All-Star Race events in
2016
and through
2020,
and include annual increases in broadcast rights revenue and event management fees of
three
to
four
percent annually. Under the agreements, NASCAR typically retains
10%
of gross broadcasting revenues as a component of their sanction fees. NASCAR also retains
25%
of gross broadcasting revenues for purses awarded to race participants for each race. The remainder represents additional annually negotiated event management fees paid to NASCAR by the Company for each race.
 
We historically presented the
10%
portion of broadcast rights fees retained by NASCAR as both broadcasting revenues and related event management fees. We have now determined that such amounts should be presented net, and have revised the presentation of o
ur previously issued financial statements. We concluded the effect on our previously reported interim and annual financial statements was
not
material. In addition, management believes the revised presentation provides consistency with that used by other companies that promote NASCAR racing events. We revised NASCAR broadcasting revenue and NASCAR event management fees by
$22,423,000
in
2016
and
$21,747,000
in
2015.
The revision had
no
impact on our net income or loss, earnings or loss per share, balance sheet or cash flows.
 
Marketing Agreements
– We have various marketing agreements for sponsorships, on-site advertising, hospitality and other promotional activities. Sponsorships generally consist of event and official sponsorship agreements. These various marketing agreements can be event, speedway or period specific, or pertain to multiple events, speedways or years. Marketing agreements that are
not
event specific typically contain stated fiscal year periods. We receive payments based on contracted terms. Marketing customers and agreement terms change from time to time. We recognize contracted fee revenues, and associated expenses, as events or activities are conducted each year in accordance with the respective agreement terms. Our marketing agreements sometimes include multiple specified elements such as sponsorships, tickets, hospitality, suites or on-site advertising in varying combinations for
one
or more events or contract periods, although there is typically a predominant element. Contracted revenues are allocated between admissions and event related revenue financial statement categories based on the relative fair or retail value of the respective multiple elements as such events or activities are conducted each year in accordance with the respective agreement terms.
 
Certain marketing agreements contain elements of purchased property and equipment exchanged for multi-year marketing and
other promotional activities at
one
or more of our facilities. The associated assets and deferred revenue are initially recorded based on their estimated fair or retail values, with assets then depreciated over estimated useful lives and deferred revenue recognized into income on a straight-line basis as events are conducted each year in accordance with the respective agreement terms. Deferred revenues recognizable in each upcoming fiscal year are reflected as current liabilities in deferred race event and other income.
 
Long-Term Food and Beverage Management Contract
– Levy Premium Foodservice Limited Partnership, wholly-owned by Compass Group USA, Inc., has exclusive rights to provide on-site food, beverage and hospitality catering services for essentially all Company speedway events and operations under a long-term food and beverage management contract through
2021.
The long-term agreement provides for, among other items, specified annual fixed and periodic gross revenue based commission payments to the Company over the contract period. Our commission-based net revenues associated with activities provided by Levy are recognized at time of sale, and reported in event related revenue and at times, to a lesser extent, other operating revenue depending on the venue.
 
 
Non-Event Souvenir Merchandise and Other Revenues
– We recognize revenue when products are shipped, title transfers to customers, right of return or cancellation provisions expire, sales prices are final and collection is probable. We use these same methods and timing of revenue recognition for products sold through e-commerce or our websites, which has
not
been significant. Product sold on consignment with right of return or cancellation provisions has
not
been significant.
 
 
Revenue Composit
ion
– Our revenues are comprised of the following (in thousands):
 
   
2017
   
2016
   
2015
 
Admissions
  $
86,949
    $
90,639
    $
100,694
 
NASCAR broadcasting
   
209,155
     
201,804
     
195,722
 
Sponsorships and other event related
   
120,688
     
126,046
     
132,928
 
Souvenir and other merchandise
   
24,831
     
27,742
     
31,781
 
Other (Note 1)
   
11,966
     
43,502
     
13,591
 
Total revenue
  $
453,589
    $
489,733
    $
474,716
 
 
Revenues described as “
other event related” consist principally of commissions from food, beverage and souvenir sales, luxury suite rentals, advertising and other promotional revenues, hospitality revenues, track rentals, driving school revenues, camping and other non-admission access revenues, broadcasting rights other than NASCAR broadcasting revenue, and other event and speedway related revenues. “Souvenir and other merchandise revenue” consists of SMI Properties and SMI Trackside sales of owned souvenir merchandise during racing and non-racing events and in speedway gift shops (motorsports event related merchandise), certain SMI Properties sales of racing and other sports related souvenir merchandise and Legend Cars operations (non-event motorsports related merchandise), and Oil-Chem product sales (non-motorsports related merchandise). “Other revenue” consists principally of revenues from the Speedway Clubs, industrial park and office tower rentals, Legend Cars as the sanctioning body for Legend Cars circuit races, and TMS oil and gas mineral rights lease and related revenues, and also includes all revenues associated with the
2016
“Battle at Bristol”.
 
 
Use of Estimates
– The preparation of financial statements in conformity with generally accepted accounting principles requires extensive use of management estimates and assumptions that affect reported amounts of assets and liabilities, disclosure of contingent assets and liabilities at financial statement dates, and reported amounts of revenues and expenses. Actual future results could differ from those estimates. Such significant estimates include (i) recoverability of property and equipment, goodwill and other intangible assets, (ii) depreciable lives for property and equipment and amortization periods for intangible assets, (iii) accounting for income taxes, (iv) realization of receivables and inventories, (v) accruals for certain business taxes, uninsured business risks, litigation, and other contingencies, and (vi) deferred compensation obligations and accounting and disclosures of stock-based compensation.
 
Consolidated Statements of Cash Flows
We classify as cash equivalents all highly liquid investments with original maturities of
three
months or less. Cash equivalents principally consist of variable rate, overnight sweep accounts of commercial paper, repurchase agreements, municipal bond and United States Treasury securities.
 
Accounts Receivable
are reported net of allowance for doubtful accounts summarized as follows (in thousands):
 
   
2017
   
2016
   
2015
 
Balance, beginning of year
  $
1,178
    $
1,287
    $
1,271
 
Bad debt
expense
   
258
     
126
     
605
 
Actual write-offs, net of specific accounts recovered
   
(366
)
   
(235
)
   
(589
)
Balance, end of year
  $
1,070
    $
1,178
    $
1,287
 
 
Deferred Financing Costs
are amortized into interest expense over the associated debt terms or remaining terms for loan amendment costs. Deferred financing costs reflected in other noncurrent assets below are associated with our revolving Credit Facility, and are reported net of accumulated amortization of
$3,525,000
and
$3,167,000
at
December 31, 2017
and
2016.
Deferred financing costs associated with our
2023
Senior Notes and bank Term Loan are reflected as a reduction of long-term debt, and are reported net of accumulated amortization of
$8,491,000
and
$7,275,000
at
December 31, 2017
and
2016.
 See Note
6
for information on
2015
charges associated with previously deferred financing costs.
 
Other Noncurrent Assets
as of
December 31, 2017
and
2016
consist of (in thousands):
 
   
2017
   
2016
 
Deferred financing costs, net (Note 6)
  $
726
    $
1,084
 
Land held for development
   
12,265
     
12,265
 
Cash surrender values of life insurance and o
ther
   
10,733
     
9,793
 
Total
  $
23,724
    $
23,142
 
 
Noncurrent assets are
generally reported at cost except for cash surrender values of life insurance policies which are reported at fair value (see Note
12
). Management evaluates these assets for recovery when events or circumstances indicate possible impairment
may
have occurred. As of
December 31, 2017,
there have been
no
events or circumstances which might indicate possible recoverability concerns or impairment.
 
Land Held for Development
represents property adjacent to a regional outlet mall in the Charlotte metropolitan area which management plans to develop and market or possibly sell in suitable market conditions.
 
Property and Equipment (Note
4
)
are recorded at cost less accumulated depreciation. Depreciation is provided using the straight-line method over the estimated useful lives of the respective assets. Leasehold improvements pertain primarily to industrial park, office and warehouse facilities, and are amortized using the straight-line method over the lesser of associated lease terms or estimated useful lives. Constructed assets, including construction in progress, include all direct costs and capitalized interest until placed into service. Expenditures for repairs and maintenance are charged to expense when incurred, unless useful asset lives are extended or assets improved. Associated cost and accumulated depreciation of fully depreciated repurposed or removed assets are eliminated.
 
From time to time, we
may
decide to repurpose various seating, suites and other
 areas at our speedways for modernizing our facilities, alternative marketing or development purposes such as offering expanded premium hospitality, RV camping and advertising areas, or wider seating and improved sight lines. When management decides to repurpose and remove grandstand seating and suites as part of managing facility capacity or other speedway facility assets, depreciation is accelerated and recorded prospectively over shortened estimated remaining useful lives of the assets, and accounted for as a change in estimate, beginning when management contracts and begins removal. Associated estimated costs of removal and disposal are also recorded at that time in “other expense”.
 
When events or circumstances indicate possible impairment
may
have occurred, the Company evaluates long-lived assets, includ
ing tangible assets and intangible assets subject to amortization, for possible impairment based on expected future undiscounted operating cash flows attributable to such assets using applicable authoritative guidance. Assets are grouped at the lowest level for which identifiable cash flows are largely independent of other assets and liabilities when assessing impairment. Gains or losses on property and equipment disposals are recognized when disposed. Recording accelerated depreciation, gain or loss on disposal or impairment losses related to property and equipment is based on assessment of the associated facts and circumstances. Also, assets are classified as held for sale when management determines that sale is probable within
one
year.
 
In connection
with the development and completed construction of TMS in
1997,
the Company entered into arrangements with the Fort Worth Sports Authority (FWSA), a non-profit corporate instrumentality of the City of Fort Worth, Texas, whereby the Company conveyed the speedway facility, excluding its on-site condominiums and office and entertainment complex, to the FWSA. The Company, which has the right to reacquire the facility, operates the speedway facility under a
30
-year arrangement with the FWSA. Because of the Company’s responsibilities, including associated risks, rewards and obligations, under these arrangements, the speedway facility and related liabilities are included in the accompanying consolidated balance sheets.
 
Other Intangible Assets
and
Goodwill (Note
5
)
represent the excess of business acquisition costs over the fair value of net assets acquired, and are all associated with our motorsports related activities and reporting units. Intangible assets consist predominately of goodwill and nonamortizable intangible assets for NASCAR race event sanctioning and renewal agreements (Event Management Agreements) and, to a lesser extent, goodwill associated with event related motorsports activities. Acquired intangible assets are valued using the direct value method. We have evaluated each of our intangible assets for these agreements and determined that each will extend into the foreseeable future. We have never been unable to renew these race date agreements for any subsequent year and
no
such agreement has ever been cancelled. Based on these and other factors, such race date agreements are expected to be awarded to the Company in perpetuity. As such, these nonamortizable intangible assets for race event sanctioning and renewal agreements are considered to have indefinite useful lives because their renewal and cash flow generation are expected to continue indefinitely.
No
direct costs for agreement renewal or extension have been incurred or capitalized. However, we are obligated to conduct events in the manner stipulated under the terms and conditions of the annual sanctioning agreements. We follow applicable authoritative guidance on accounting for goodwill and other intangible assets which specifies, among other things, nonamortization of goodwill and requires testing of intangible assets with indefinite useful lives for possible impairment at least annually.
 
Impairment Assessment Methodology.
We evaluate goodwill and other intangible assets for possible impairment annually in the
second
quarter, or when events or circumstances indicate possible impairment
may
have occurred. Management considers each speedway and motorsports and non-motorsports merchandising subsidiary a separate reporting unit principally because that is the lowest level for which discrete financial information is available to our managers and chief operating decision maker.
No
reporting units are aggregated, and
no
intangible assets are allocated or transferred between reporting units, for purposes of evaluating intangible assets for possible impairment. We evaluate intangible assets for possible impairment based predominately on management’s best estimate of future discounted operating cash flows for all individual reporting units and identified intangible assets (using the fair value assessment provisions of applicable authoritative guidance). 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.
 
Except for the
2018
realignment described below, our annual impairment assessment did
not
consider the possibility that management
may
realign
one
or more other Monster Energy NASCAR Cup Series racing events among its speedway facilities, whi
ch could result in net higher or improved future projected cash flows. Such information was also compared to available market information for certain motorsports industry peers. Management considered recent market trading ranges of price to earnings and sales multiples, cash flow and other traditional valuation methods, control premiums, and other market information related to our common stock from historical and forward-looking perspectives.
No
weighting of evaluation results was believed necessary. Management also considered that the estimated aggregate market value for NASCAR race event sanction and renewal agreements comparable to our Monster Energy Cup, Xfinity and Camping World Truck Series races, combined with the estimated fair value for all other Company net assets, substantially exceeds its current market capitalization. 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. Impairment charges and associated operations are included in our "motorsports event related" reportable segment (see Note
13
).
 
2017
Annual Impairment Assessment
, and Impairment of Goodwill
. Management's latest annual assessment was performed in the
second
quarter
2017.
The impairment evaluation considered NASCAR’s approved realignment of
one
annual Monster Energy Cup Series and
one
annual Camping World Truck Series racing event from NHMS, and an annual Xfinity Series racing event from KyS, to LVMS beginning in
2018,
and anticipated associated net increases in our future long-term cash flows and operating profits. Among other factors, the latest assessment assumes projected cash flow and profitability recovery, using modest annual inflationary growth rates for projected revenue streams and operating costs (other than NASCAR broadcasting revenues and event management fees), and strategic amounts of planned capital expenditures. Management projected annual increases in contracted NASCAR broadcasting rights revenues, and associated NASCAR event management fees, based on historical and anticipated rates which are supported by recently negotiated multi-year contracts. NASCAR event management fees for years after
2020
have
not
been negotiated, and future annual fees could differ substantially from those assumed in management’s impairment assessment.
 
Our
2017
annual assessment found the estimated fair value of each reporting unit and each indefinite-lived race date intangible asset substantially exceeded its associated carrying value except for NHMS and TMS race date agreements and SMIP
’s reporting unit. As of
December 31, 2017
and
2016,
the carrying values of non-amortizable race date event sanctioning and renewal agreements associated with NHMS and TMS were approximately
$199.6
million and
$98.8
million. We recognized an impairment for NHMS race date intangible assets in
2015
reducing carrying values to estimated fair value at that time resulting in nominal excess fair value in future impairment assessments. The estimated excess of fair value of identified intangible assets associated with NHMS and TMS is relatively nominal at this time, heightening sensitivity to management’s assumptions used in estimating future discounted cash flows and profitability and associated risk of failing impairment testing. Management’s assumptions considered the following factors and conditions. NHMS was acquired in
2008,
largely before the severe economic recession, which we believe has resulted in long-term operating challenges for many major sports. Our
2017
(and
2016
) evaluation reflects continuing lowered estimated future cash flows because the economic recovery has been slower and weaker than previous forecasts (although improving), and ongoing lower than anticipated revenues for various major racing events. The evaluation also reflects, similar to challenges faced by many major sports, reduced visibility on profit recovery due to factors such as changing demographics, evolving entertainment choices for fans, appealing “at-home viewing” experiences and retirement of popular long-standing “megastars”. We have lowered our expectations for forecasted growth rates for certain revenues and profit recovery. However, those expectations and forecasts are based on many factors out of our control, and could be found unachievable. Such ultimate outcome could adversely impact our estimates of fair values, particularly for NHMS and TMS race date intangible assets.
 
Our
2017
annual assessment indicated that the carrying value of goodwill associated with SMIP, which conducts event and non-event souvenir merchandising, exceeded its estimated fair value
because of potentially unfavorable merchandising business model developments. As such, a non-cash impairment charge of
$1,117,000,
before income tax benefits of
$419,000,
was reflected in
2017
to reduce associated goodwill to
$0.
 
There have since been
no
other events or circumstances that indicate possible impairment
, and management believes our operational and cash flow forecasts support our conclusions that
no
unrecognized impairment exists as of
December 31, 2017.
Our future profitability or success associated with the NASCAR race realignments described above could significantly differ from management expectations and estimates, and are subject to numerous factors, conditions and assumptions, many of which are beyond our control. Different economic or industry conditions or assumptions, and changes in projected cash flows or profitability, if significantly negative or unfavorable, could have a material adverse effect on the impairment evaluation and our future financial condition or results of operations. The evaluations are subjective and based on conditions, trends and assumptions existing at the time of evaluation.
 
2015
Impairment of Other Intangible Assets
and Goodwill. 
In
2015,
we recorded sizable non-cash impairment charges to reduce the carrying value of non-amortizable race date event sanctioning and renewal agreements associated with NHMS, and goodwill associated with certain event souvenir merchandising activities, to their estimated fair values. The various factors considered in our
2015
annual assessment resulted in lowering our expectations for forecasted growth rates for certain revenues and profit recovery. As such, a non-cash impairment charge of
$96,530,000,
before income tax benefits of
$34,569,000,
was reflected to reduce the race date intangible assets to estimated fair value. Our
2015
annual assessment also indicated that goodwill associated with SMI Trackside, which conducts event souvenir merchandising at our and other
third
-party speedways, was impaired because of potentially unfavorable developments associated with NASCAR’s announced industry changes to the trackside merchandising business model. As such, a non-cash impairment charge of
$2,338,000,
before income tax benefits of
$885,000,
was reflected to reduce associated goodwill to an estimated fair value of
$0.
 
Deferred Income, Net
(noncurrent) as of
December 31, 2017
and
2016
consists of (in thousands):
 
   
2017
   
2016
 
Preferred seat license fees, net
  $
2,185
    $
2,512
 
Multi-year marketing and other arrangements, and deferred membership income
   
869
     
1,230
 
Total
  $
3,054
    $
3,742
 
 
Preferred Seat License Fees, Net.
KyS and TMS offer Preferred Seat License (PSL) agreements whereby licensees are entitled to purchase annual season-ticket packages for sanctioned racing events under specified terms and conditions. Among other items, licensees are required to purchase all season ticket packages as offered each year. License agreements automatically terminate without refund should licensees
not
purchase any offered ticket and are transferable once each year subject to certain terms and conditions. Also, licensees are
not
entitled to refunds for postponement or cancellation of events due to weather or certain other conditions. Net PSL fees are deferred when received and amortized into income over the estimated useful life of those facilities or recognized upon license agreement termination.
 
Deferred Speedway Club Membership Income.
The CMS and TMS Speedway Clubs sell memberships that entitle members to certain dining, other club and racing event seating privileges, and require upfront fees and monthly assessments. Net membership revenues are deferred when billed and amortized into income over an estimated average membership term of
ten
years.
 
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
$13,324,000
in
2017,
$17,321,000
in
2016
(includes “the Battle at Bristol”), and
$16,660,000
in
2015.
There were
no
deferred direct-response advertising costs at
December 31, 2017
or
2016.
 
Operating Leases
– We have various operating leases principally for office and warehouse space and for equipment used in conducting racing events and other operations. These operating leases typically have initial terms of less than
one
year or are cancelable with minimal notice, although certain operating equipment leases include multi-year terms. Rent expense for operating leases amounted to
$6,411,000
in
2017,
$8,730,000
in
2016
and
$6,233,000
in
2015.
Various office and warehouse facilities leased from an affiliate (see Note
9
) are cancelable with minimal notice; however, such lease arrangements will likely be renewed annually through specific contract periods. We lease various office, warehouse and industrial park space under operating leases to various entities largely involved in motorsports. These operating leases typically have initial terms of
one
year or more and are noncancelable. Lease revenue for operating leases, excluding the TMS oil and gas mineral rights lease receipts discussed below, amounted to
$5,676,000
in
2017,
$5,625,000
in
2016
and
$5,343,000
in
2015.
 
Future annual minimum lease payments (where initial terms are
one
year or more and assuming renewal through contracted periods), and contracted future annual minimum lease revenues, under operating le
ases at
December 31, 2017
are as follows (in thousands):
 
   
Lease
Payments
   
Lease
Revenues
 
2018
  $
890
    $
4,928
 
2019
   
357
     
3,542
 
2020
   
233
     
1,770
 
2021
   
162
     
1,023
 
2022
   
105
     
691
 
Thereafter
   
300
     
340
 
Total
  $
2,047
    $
12,294
 
 
Other
Expense (Income), Net
consists of (in thousands):
 
   
2017
   
2016
   
2015
 
Removal costs for retired assets (Note 4)
  $
1,350
    $
44
    $
552
 
Net (gain) loss on disposals of property and
equipment and other assets, including write-off of certain development costs
   
(256
)
   
(1,397
)
   
101
 
Other
   
247
     
356
     
222
 
Total
  $
1,341
    $
(997
)
  $
875
 
 
We recorded gains from disposal of certain TMS property in
2017
and AMS property in
2016,
and losses on the
write-off of certain development costs in
2017
and
2016.
 
Income Taxes (Note
8
)
– We recognize deferred tax assets and liabilities for the future income tax effect of temporary differences between financial and income tax bases of assets and liabilities. Income taxes are provided using the liability method whereby estimated deferred income taxes, and significant items giving rise to deferred tax assets and liabilities, reflect management’s assessment of future taxes likely to be paid, including timing, probability of realization and other relevant factors. Our accounting for income taxes reflects management’s assessment of future tax liabilities based on assumptions and estimates for timing, likelihood of realization, and tax laws existing at the time of evaluation. We assess the need for valuation allowances for deferred tax assets based on the sufficiency of estimated future taxable income and other relevant factors. We report interest expense and penalties related to income tax liabilities, when applicable, in income tax expense. Cash paid for income taxes excludes any previous overpayments the Company
may
have elected to apply to income tax liabilities. The Company has
no
undistributed foreign earnings or cash or cash equivalents held outside of the US.
 
We follow applicable authoritative guidance on accounting for uncertainty in income taxes which, among other things, prescribes a recognition thresh
old and measurement attribute for financial statement recognition and measurement of tax positions taken or expected to be taken in a tax return, and provides guidance on derecognition, classification, interest and penalties, and disclosures. Evaluation of a tax position includes determining whether it is more likely than
not
a tax position will be sustained upon examination, including resolution of any related appeals or litigation processes, based on the technical merits of the position. In evaluating whether a tax position meets the more-likely-than-
not
recognition threshold, it is presumed the position will be examined by appropriate taxing authorities having full knowledge of all relevant information. A tax position that meets the more-likely-than-
not
recognition threshold is measured to determine the amount of benefit to be recognized in the financial statements. The tax position is measured at the largest amount of benefit that is greater than
50
percent likely of being realized upon ultimate settlement.
 
TMS Mineral Rights Lease Receipts
– TMS, in conjunction with the Fort Worth Sports Authority, has a natural gas mineral rights lease agreement and a joint exploration agreement 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. The long-term lease remains enforceable as long as drilling or extraction related activities continue or certain prices levels are met. Under the lease agreement, TMS recognized royalty revenue of
$1,916,000
in
2017,
$2,139,000
in
2016
and
$4,265,000
in
2015.
 
Such revenues can vary from associated volatility in natural gas price levels and common diminishing well production,
as well as other factors outside of TMS’s control. At this time, while extraction activities continue,
no
new wells are being explored, and management is unable to determine ongoing volumes of production if any or for how long (including common diminishing well production over time), or if natural gas price levels will further decline or remain steady or adequate. The agreements stipulate that TMS distribute
25%
of production royalty revenues to the lessee, and obligate TMS to spend amounts equal to royalties received on TMS facility and road infrastructure improvements beginning in
2017,
up to specified cumulative amounts. However, at this time, management believes
2018
revenues will
not
differ significantly from
2017,
and that our infrastructure spending will continue to exceed anticipated future royalties similar to
2017.
As of
December 31, 2017
and
2016,
there was
no
deferred income associated with these agreements.
 
Taxes Collected from Customers
– We report sales, admission and other taxes collected from customers on both a gross and net basis in operations. Such taxes reported on a gross basis amounted to
$5,372,000
in
2017,
$7,642,000
in
2016
and
$6,024,000
in
2015.
 
Fair Value of Financial Instruments
– We follow applicable authoritative guidance which requires that financial and non-financial assets and liabilities measured and reported on a fair value basis be classified, disclosed and categorized as further described below. Fair value estimates are based on relevant market information and single broker quoted market prices where available at a specific point in time, and changes in assumptions or market conditions could significantly affect estimates. The carrying values of cash and cash equivalents, accounts 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 receivable and bank revolving credit facility and term loan borrowings are variable interest rate financial instruments and, therefore, carrying values approximate fair value. The fixed rate senior notes payable are publicly traded and estimated fair values are based on single broker quoted market prices. Other long-term debt bears interest approximating market rates; therefore, carrying values approximate market value. There have been
no
changes or transfers between category levels or classes.
 
The follo
wing table presents estimated fair values and categorization levels of our financial instruments as of
December 31, 2017
and
2016
(in thousands):
 
             
2017
   
2016
 
   
Level
 
Class
 
Carrying
Value
   
Fair Value
   
Carrying
Value
   
Fair
Value
 
Assets
 
 
 
 
   
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Cash and cash equivalents
   
1
 
R
  $
81,924
    $
81,924
    $
79,342
    $
79,342
 
Note receivable
   
2
 
NR
   
799
     
799
     
1,143
     
1,143
 
Cash surrender values
   
2
 
NR
   
9,822
     
9,822
     
8,919
     
8,919
 
                                           
Liabilities
(principal)
 
 
 
 
   
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Floating rate revolving Credit Facility, including Term Loan
   
2
 
NR
   
30,000
     
30,000
     
66,000
     
66,000
 
5.125% Senior Notes Payable due 2023
   
2
 
NR
   
200,000
     
205,000
     
200,000
     
202,500
 
Other long-term debt
   
2
 
NR
   
1,049
     
1,049
     
1,206
     
1,206
 
 
Level
1
 
:
Quoted market prices in
active markets for identical assets or liabilities.
Level
2:
Observable market-based inputs or unobservable inputs that are corroborated by market data.
Level
3:
Unobservable inputs that are
not
corroborated by market data.
Class
R:
Measured at fair
value on recurring basis, subsequent to initial recognition.
Class
NR:
Measured at fair value on nonrecurring basis, subsequent to initial recognition.
 
Concentrations of Credit Risk
– Financial instruments that potentially subject the Company to concentrations of credit risk consist principally of cash and cash equivalents, accounts and notes receivable, and cash surrender values. Concentration of credit risk with respect to cash and cash equivalents and cash surrender values is limited through placement with major high-credit qualified financial institutions and insurance carriers, respectively. However, amounts placed often significantly exceed available insured limits. Concentrations of credit risk with respect to accounts receivable are limited due to the large numbers and wide variety of customers and customer industries and their broad geographical dispersion. Also, a significant portion of our accounts receivable typically pertain to advance revenues for specific events which are deferred until the event is held. As such, exposure to credit risk on such receivables that could adversely affect operating results is limited until recognition of the associated deferred race event income. We generally require sufficient collateral equal to or exceeding note amounts, or accept notes from high-credit quality entities or high net-worth individuals, limiting our exposure to credit risk. Amounts due from affiliates typically can be offset to the extent of amounts payable to affiliates, limiting our exposure to credit risk.
 
Loss and Other Contingencies and Financial Guarantees
– We accrue a liability for contingencies if the likelihood of an adverse outcome is probable and the amount is estimable. Legal and other costs associated with loss contingencies are expensed as incurred. We account for financial guarantees using applicable authoritative guidance which requires, among other things, that guarantors recognize a liability for the fair value of obligations undertaken by issuing a guarantee.
 
CMS
’s property includes areas used as solid waste landfills for many years. Landfilling of general categories of municipal solid waste on the CMS property ceased in
1992,
but CMS currently allows certain property to be used for land clearing and inert debris landfilling. Landfilling for construction and demolition debris has ceased on the CMS property. Management believes the Company’s operations, including the landfills on its property, comply with all applicable federal, state and local environmental laws and regulations. Management is
not
aware of any situation related to landfill operations which would have a material adverse effect on our financial position, future results of operations or cash flows.
 
Recently Issued Accounting Standards
– The Financial Accounting Standards Board (FASB) issued Accounting Standards Update
No.
 
2014
-
09
"Revenue from Contracts with Customers (Topic
606
): Section A - Summary and Amendments That Create Revenue from Contracts with Customers and Other Assets and Deferred Costs - Contracts with Customers (Subtopic
340
-
40
)" which enhances comparability and clarifies principles of revenue recognition arising from contracts with customers that supersedes most current revenue recognition guidance. 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, and expands required financial statement disclosures regarding revenue recognition. The FASB has issued several amendments to the new standard, including Update
No.
2016
-
08
"Revenue from Contracts with Customers (Topic
606
) - Principal versus Agent Considerations" clarifying implementation guidance for those considerations in Update
No.
2014
-
09,
and Update
No.
2016
-
10
"Revenue from Contracts with Customers (Topic 
606
) - Identifying Performance Obligations and Licensing" amending the guidance in Update
No.
2014
-
09
related to those items. The FASB issued Update
No.
2015
-
14
approving deferral of Update
No.
2014
-
09
for
one
year, with such guidance now effective for annual reporting periods beginning after
December 15, 2017,
including interim periods within that reporting period. The guidance
may
be applied retrospectively to each prior period presented or retrospectively with cumulative effects recognized as of the date of adoption. The Company has completed its evaluation of the potential impact that adoption
may
have on its financial statements, including associated accounting policies, processes, and system requirements, and believes those now in place will enable timely and accurate reporting. The Company has completed analyzing its revenue streams and associated contracts using the
five
-step model provided in the new revenue standard, and continues to gather information for required presentation and disclosures. The Company plans to adopt this new guidance as of
January 1, 2018
using the modified retrospective method of adoption. We believe adoption will
not
result in a significant initial cumulative adjustment or materially impact our future timing or classification of revenue recognition.
 
The FASB issued Accounting Standards Update
No.
2015
-
11
"Inventory (Topic
330
): Simplifying the Measurement of Inventory” which requires measuring inventory at the lower of cost and net realizable value based on estimated selling prices in the ordinary course of business, less reasonably predictable costs of completion, disposal and transportation (changed from the previous guidance of lower of cost or market). This update also clarified various other inventory measurement and disclosure requirements. The update does
not
apply to inventory measured using the LIFO or retail inventory methods. The guidance is effective for annual reporting periods beginning after
December 15, 2016,
including interim periods within that reporting period, and applied prospectively. The Company
’s adoption of this guidance as of
January 1, 2017
had
no
significant impact on its financial statements or disclosures.
 
The FASB issued Accounting Standards Update
No.
2016
-
02
“Leases (Subtopic
842
)” which replaces all current US GAAP guidance on this topic, and requires lessees to recognize assets and liabilities arising from leases as well as extensive quantitative and qualitative disclosures. Lessees will need to recognize on their balance sheets right-of-use assets and lease liabilities for the majority of their leases (other than leases meeting the definition of a short-term lease). Right-of-use assets will be measured at lease liability amounts, adjusted for lease prepayments, lease incentives received and lessee
’s initial direct costs. Lease liabilities will equal the present value of lease payments. Assets will be based on the liability, subject to adjustment, such as for initial direct costs. Operating leases
may
typically result in straight-line expense, while finance leases similar to front-loaded expense pattern. Classification will be based on criteria largely similar to those applied in current lease accounting. The guidance is effective for fiscal years beginning after
December 15, 2018,
and interim periods within those fiscal years. Early adoption is permitted. The guidance is required to be applied using the modified retrospective approach for all leases existing as of the effective date, requires application at the beginning of the earliest comparative period presented, and provides for certain practical expedients. The Company is currently evaluating the potential impact that adoption
may
have on its financial statements.
 
The FASB issued Accounting Standards Update
No.
2016
-
15
“Statement of Cash Flows (Topic
23
) - Classification of Certain Cash Receipts and Cash Payments” which provides specific guidance on
eight
cash flow classification issues. The guidance is effective for fiscal years beginning
 after
December 15, 2017,
and interim periods within those fiscal years, and should be applied using a retrospective transition method to each period presented. Early adoption is permitted, and any amendments must be adopted in the same period. At this time, the Company believes adoption will have
no
significant impact on its financial statements, and plans to apply this guidance to future classifications when applicable.
 
The FASB issued Accounting Standards Update
No.
2017
-
04
“Intangibles
– Goodwill and Other (Topic
350
): Simplifying the Test of Goodwill Impairment” which simplifies how an entity is required to test goodwill for impairment by eliminating Step
2
(measuring goodwill impairment loss by comparing implied fair value of a reporting unit’s goodwill to the carrying amount of that goodwill) from the impairment test. Under this update, entities should perform goodwill impairment testing by comparing the fair value of a reporting unit with its carrying amount, and recognize an impairment charge for the amount by which the carrying amount exceeds the reporting unit’s fair value. The same impairment assessment applies to all reporting units, and entities still have the option to perform qualitative assessment for a reporting unit to determine if quantitative impairment testing is necessary. This update modifies the concept of impairment from the condition that exists when the carrying amount of goodwill exceeds its implied fair value to the condition that exists when the carrying amount of a reporting unit exceeds its fair value. Entities will
no
longer determine goodwill impairment by calculating the implied fair value of goodwill by assigning the fair value of a reporting unit to all of its assets and liabilities as if that reporting unit had been acquired in a business combination. The Company is required to adopt this guidance for its annual or any interim goodwill impairment tests in fiscal years beginning after
December 15, 2019,
and should be applied on a prospective basis. Early adoption is permitted for interim or annual goodwill impairment tests performed on testing dates after
January 1, 2017.
The Company early adopted this guidance for its annual impairment testing performed in the
second
quarter
2017.
 
In
December 2017,
the SEC issued Staff Accounting Bulletin
No.
118
(SAB
No.
118
) which provides supplemental accounting and reporting guidance on the Tax Cuts and Jobs Act enacted into United States tax law on
December 22, 2017.
SAB
No.
118
provides for a
provisional
one
-year measurement period for entities to finalize their accounting for certain income tax effects of the Tax Act. Under SAB
No.
118,
the Tax Act’s income tax effects for which: (i) the accounting is complete are reported in the Tax Act’s enactment period, (ii) the accounting is incomplete are reported as provisional amounts based on reasonable estimates (to the extent determinable) subject to adjustment during a limited measurement period until completed, and (iii) are
not
reasonably estimable (
no
related provisional amounts are reported in the enactment period) and entities would continue to apply accounting based on tax law provisions in effect prior to Tax Act enactment until provisional amounts are reasonably estimable. SAB
No.
118
requires disclosure of the reasons for incomplete accounting, additional information or analysis needed, among other relevant information. We plan to finalize the accounting for our provisional amounts upon filing of our federal income tax returns within our
2018
fourth
quarter or in earlier periods if additional guidance is issued. See Note
8
for the Company’s accounting and reporting of the recognized effects of the Tax Act.
 
The FASB issued Accounting Standards Update
No.
2018
-
01
“Leases (Topic
842
): Land Easement Practical Expedient for Transition to Topic
842”
which
provides an optional transition practical expedient to
not
evaluate existing or expired land easements that were
not
previously accounted for as leases under current lease guidance. Entities that elect this practical expedient should evaluate new or modified land easements at the date of adoption, and which should be applied consistently to all existing or expired land easements
not
previously accounted for as leases. Entities that do
not
elect this practical expedient should evaluate all existing or expired land easements to assess whether they meet the definition of a lease. This Update affects entities with land easements that exist or expired before adoption, provided the entity does
not
account for those land easements as leases under current guidance. Once adopted, this Update should be applied prospectively to all new or modified land easements to determine whether any arrangements should be accounted for as a lease. Entities should continue to apply its current accounting policy for accounting for land easements that existed before adoption of this Update. The Company is currently evaluating the potential impact that adoption
may
have on its financial statements.
 
Note 3 - Inventories
Inventory Disclosure [Text Block]
3.
INVENTORIES
 
Inventory costs consist of: (i) souvenirs and apparel,
5/8
-scale and similar small-scale finished race cars and parts and accessories determined on a
first
-in,
first
-out basis; and (ii) micro-lubricant®
product costs determined on an average current cost basis.
No
general and administrative costs are included in inventory costs. Cost of sales are charged using the same inventory cost bases. Inventories as of
December 31, 2017
and
2016
consist of (in thousands):
 
   
2017
   
2016
 
Finished race cars,
parts and accessories
  $
4,507
    $
5,263
 
Souvenirs and apparel
   
2,014
     
2,131
 
Micro-lubricant®
and other
   
762
     
818
 
Total
  $
7,283
    $
8,212
 
 
All inventories are stated at the lower of cost or
realizable value with provisions for differences between cost and estimated market value based on assumptions about current and future demand, market conditions and trends that might adversely impact realization. Inventories are reflected net of lower of cost or realizable value provisions summarized as follows (in thousands):
 
   
2017
   
2016
   
2015
 
Balance, beginning of year
  $
3,076
    $
2,756
    $
4,407
 
Current year provision
   
48
     
1,024
     
310
 
Current year sales and write-offs
   
(747
)
   
(704
)
   
(1,961
)
Balance, end of year
  $
2,377
    $
3,076
    $
2,756
 
Note 4 - Property and Equipment
Property, Plant and Equipment Disclosure [Text Block]
4.
PROPERTY AND EQUIPMENT
 
Property and equipment as of
December 31, 2017
and
2016
is summarized as follows (dollars in thousands):
 
   
Estimated
Useful Lives
   
2017
   
2016
 
Land and land improvements
 
 5
-
25
    $
463,031
    $
465,194
 
Racetracks and grandstands
 
 5
-
45
     
720,989
     
738,302
 
Buildings and luxury suites
 
 5
-
40
     
463,942
     
468,627
 
Machinery and equipment
 
 3
-
20
     
43,628
     
46,285
 
Furniture and fixtures
 
 5
-
20
     
39,842
     
46,973
 
Autos and trucks
 
 3
-
10
     
12,755
     
13,292
 
Construction in progress
 
 
 
 
     
3,915
     
1,465
 
Total
 
 
 
 
     
1,748,102
     
1,780,138
 
Less
accumulated depreciation
 
 
 
 
     
(789,887
)
   
(779,908
)
Net
 
 
 
 
    $
958,215
    $
1,000,230
 
 
Other Information
(Note
2
)
– Depreciation expense amounted to
$64,817,000
in
2017,
$54,344,000
in
2016
and
$61,933,000
in
2015.
From time to time, we
may
decide to repurpose various seating, suites and other areas at our speedways for modernizing our facilities, and alternative marketing or development purposes such as offering expanded premium hospitality, RV camping and advertising areas, or wider seating and improved sight lines. In
2017,
we recorded non-cash pre-tax accelerated depreciation aggregating
$11,055,000
associated with removal of certain seating at AMS, CMS, KyS, LVMS and NHMS, and expansion of LVMS’s dragway. We have repurposed, or are repurposing, various seating and other areas into unique fan zones and modern hospitality areas, some similar to high end “taverns” or “pubs” and sports bars, and close to restart areas at certain speedways. CMS now has an outdoor “Sun Deck” with solar panels as part of our “green initiatives". We also are expanding and modernizing “The Strip at Las Vegas Motor Speedway” into a distinctive, lighted “four lane” racing configuration.
 
W
e recorded non-cash pre-tax accelerated depreciation aggregating
$313,000
associated with removal of certain TMS assets in
2016,
and
$9,111,000
associated with removal of certain seating at CMS and LVMS, retired leaderboard assets at certain speedways, and a decline in estimated fair value of certain real property in
2015.
Costs of removal are included in “other expense, net” (see Note
2
). These charges are included in our "motorsports event related" reporting segment (see Note
13
).
 
Note 5 - Other Intangible Assets and Goodwill
Goodwill and Intangible Assets Disclosure [Text Block]
5.
OTHER INTANGIBLE ASSETS AND GOODWILL
 
The composition and accounting for intangible assets are further described in Note
2.
As of Decemb
er
31,
2017
and
2016,
gross carrying values and accumulated amortization by class of intangible asset are as follows (dollars in thousands):
 
   
2017
   
2016
         
   
Gross
Carrying
Value
   
Accumulated
Amortization
   
Net
   
Gross
Carrying
Value
   
Accumulated
Amortization
   
Net
   
Estimated
Amortization
Period
(Years)
 
Nonamortizable race event sanctioning and renewal agreements
  $
298,383
          $
298,383
    $
298,383
     
    $
298,383
     
 
Amortizable race event
sanctioning and renewal agreements
   
           
     
100
    $
(100
)
   
     
5
 
Total
  $
298,383
          $
298,383
    $
298,483
    $
(100
)
  $
298,383
     
 
 
 
Changes in the carrying value of other intangible assets and goodwill are as follows (in thousands):
 
   
Other Intangible Assets
   
Goodwill
 
   
2017
   
2016
   
2017
   
2016
 
Balance, beginning of year
  $
298,383
    $
298,483
    $
47,342
    $
47,342
 
Increase from acquisitions
   
     
     
     
 
Decrease from impairment charges
(Note 2)
   
     
     
(1,117
)
   
 
Balance, end of period
  $
298,383
    $
298,483
    $
46,225
    $
47,342
 
 
The
2017
decrease reflects an impairment charge to reduce
goodwill associated with certain SMIP merchandising to estimated fair value because of potentially unfavorable merchandising business model developments. The carrying amounts for goodwill and other intangible assets include accumulated impairments of
$149.7
million and
$148.6
million at
December 31, 2017
and
2016.
Amortization expense on other intangible assets amounted to
$0
in
2017,
$11,000
in
2016
and
$17,000
in
2015.
Estimated annual amortization expense for each of the next
five
years is
not
significant.
Note 6 - Long-term Debt
Long-term Debt [Text Block]
6.
LONG-TERM DEBT
 
Long-term debt at
December 31, 2017
and
2016
consists of (in thousands):
 
   
2017
   
2016
 
Credit Facility, all Term Loan
  $
30,000
    $
66,000
 
2023 Senior Notes
   
200,000
     
200,000
 
Other notes payable
   
1,049
     
1,206
 
Total
   
231,049
     
267,206
 
Less current maturities
   
(7,662
)
   
(7,657
)
Less deferred financing costs, net of accumulated amortization (Note 2)
   
(3,935
)
   
(5,151
)
Long-term debt, excluding current maturities
  $
219,452
    $
254,398
 
 
Annual principal maturities of long-term debt at
December 31, 2017
are as follows (in thousands):
 
2018
  $
7,662
 
2019
   
22,667
 
2020
   
172
 
2021
   
177
 
2022
   
183
 
Thereafter
   
200,188
 
Total
  $
231,049
 
 
Bank Credit Facility
– Our 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
$150,000,000
senior secured term loan (which was fully drawn in
December 2015)
and a
five
-year delayed draw term loan of up to
$50,000,000
(which was fully drawn in
March 2015
and repaid in the
second
quarter
2015
) (the Term Loan or Term Loans); (iii) matures in
December 2019; (
iv) contains an accordion feature allowing the Company to increase revolving commitments or establish a term loan up to an aggregate additional
$100,000,000
or
$200,000,000,
respectively (or a combined aggregate additional amount of up to
$250,000,000
) with certain lender commitment conditions; (v) allows for annual aggregate payments of dividends and repurchases of SMI securities of up to
$50,000,000,
increasing up to
$75,000,000
subject to maintaining certain financial covenants; and (vi) limits annual capital expenditures to
$75,000,000
and provides for motor speedway acquisitions and related businesses. Term Loans require equal minimum quarterly principal payments of at least
5%
of initial amounts drawn on an annualized basis (
$7,500,000
for fiscal
2018
).
 
In
2017
and
2016,
we repaid Term Loan borrowings of
$36,000,000
and
$54,000,000.
There were
no
borrowings under the Credit Facility during those periods.
In
2015,
we borrowed
$50,000,000
under the Term Loan (for partial funding of the
2019
Senior Notes redemption as further described below), and repaid Term Loan borrowings of
$80,000,000.
At
December 31, 2017
and
2016,
outstanding letters of credit amounted to
$698,000
and
$605,000.
As of
December 31, 2017,
we had availability for borrowing up to an additional
$99,302,000,
including up to an additional
$49,302,000
in letters of credit, under the revolving Credit Facility.
 
Interest is based, at the Company
’s option, upon the Eurodollar Rate plus
1.25%
to
2.00%
or a base rate defined as the higher of Bank of America’s prime rate, the Federal Funds Rate plus
0.5%
or the Eurodollar Rate plus
1%,
plus
0.25%
to
1.00%.
The Credit Facility also contains a commitment fee ranging from
0.25%
to
0.40%
of unused amounts available for borrowing. The interest rate margins on borrowings and the commitment fee are adjustable periodically based upon certain consolidated total leverage ratios. The Credit Facility contains a number of affirmative and negative financial covenants, including requirements that we maintain certain consolidated total leverage ratios and consolidated interest coverage ratios.
 
2023
Senior Notes
– We completed a private placement of new
5.125%
Senior Notes due
2023
in aggregate principal amount of
$200,000,000
in
January 2015 (
the
2023
Senior Notes), and an exchange offer for substantially identical
2023
Senior Notes registered under the Securities Act in the
second
quarter
2015.
The
2023
Senior Notes were issued at par, and net proceeds after commissions and fees of approximately
$196,816,000
were used to fund a portion of the
March 2015
redemption of
2019
Senior Notes as described below. The
2023
Senior Notes mature in
February 2023
and interest payments are due semi-annually on
February 
1
and
August 
1.
The
2023
Senior Notes rank equally in right of payment with all other Company existing and future unsubordinated debt, are senior in right of payment to any future subordinated debt and are effectively subordinated to all existing and future secured debt, including the Credit Facility. The Indenture governing the
2023
Senior Notes permits dividend payments each year of up to approximately
$0.80
per share of common stock, increasable subject to meeting certain financial covenants.
 
2015
Early Redemption of
2019
Senior Notes
– We redeemed all outstanding
6.75%
Senior Notes due in
2019
in aggregate principal of
$250,000,000
(the
2019
Senior Notes) at
103.375%
of par plus accrued interest in
March 2015.
The
2019
Senior Notes were scheduled to mature in
February 2019.
We used net proceeds of the
2023
Senior Notes,
$50,000,000
of delayed draw Term Loan borrowings under the Credit Facility and cash on hand to fund the redemption, including redemption premium and transaction costs. We recognized a
2015
charge to earnings of
$8,372,000,
before income taxes of
$3,106,000,
for associated redemption premium, unamortized net deferred loan costs and transaction costs of
$3,134,000,
net of issuance premium of
$3,200,000.
 
Other Notes Payable
– At
December 31, 2017
and
2016,
long-term debt includes a
3%
interest bearing debt obligation of
$1,049,000
and
$1,206,000
associated with the purchase of real property at BMS, payable in
eight
annual installments of
$194,000
beginning
January 2016.
 
Other General Terms and Conditions
– The Credit Facility and
2023
Senior Notes contain specific requirements and restrictive financial covenants and limitations on capital expenditures, speedway or other acquisitions, dividends, repurchase or issuance of SMI securities, restricted payments, equity and debt security repurchases, limitations or prohibitions on incurring other indebtedness, liens or pledging assets to
third
parties, consolidation, mergers, transactions with affiliates, guarantees, asset sales, specific types of investments, distributions, disposition of property, entering into new lines of business, and contain redemption and change of control provisions and premiums. The Credit Facility and
2023
Senior Notes Indenture also contain cross-default provisions. We were in compliance with all applicable financial covenants under these debt agreements as of
December 31, 2017.
 
Subsidiary Guarantees
Amounts outstanding under the Credit Facility and
2023
Senior Notes are guaranteed by all of SMI’s material operative subsidiaries except for Oil-Chem and its subsidiaries (which are presently minor). These guarantees are full and unconditional and joint and several, with the
2023
Senior Notes on a senior unsecured basis. The parent company has
no
independent assets or operations. There are
no
restrictions on the subsidiaries’ ability to pay dividends or advance funds to the parent company.
 
Interest Expense, Net
– Interest expense, interest income and capitalized interest costs are summarized as follows (in thousands): 
 
   
2017
   
2016
   
2015
 
Gross interest costs
  $
13,050
    $
13,818
    $
17,469
 
Less capitalized interest costs
   
(281
)
   
(476
)
   
(251
)
Interest expense
   
12,769
     
13,342
     
17,218
 
Interest income
   
(528
)
   
(194
)
   
(407
)
Interest expense, net
  $
12,241
    $
13,148
    $
16,811
 
Weighted average interest rate on Credit Facility borrowings
   
2.3
%
   
1.9
%
   
1.9
%
 
During the
first
quarter
2015,
we incurred net interest expense of
$1,688,000
on the former
2019
Senior Notes between
January 27, 2015 (
issuance date of the new
2023
Senior Notes) and
March 13, 2015 (
redemption date of the
2019
Senior Notes). The
new notes were issued before redemption of the former notes because of a favorable interest rate environment and required notice of redemption to
2019
Senior Note holders by the Company.
 
Note 7 - Capital Structure, Per Share Data and Other Equity Information
Stockholders Equity and Earnings Per Share [Text Block]
7.
CAPITAL STRUCTURE, PER SHARE DATA AND OTHER EQUITY INFORMATION
 
Preferred Stock
– At
December 31, 2017,
SMI has authorized
3,000,000
shares of preferred stock with a par value of
$.10
per share. Shares of preferred stock
may
be issued in
one
or more series with rights and restrictions as
may
be determined by our Board of Directors.
No
preferred shares were issued or outstanding at
December 31, 2017
or
2016.
 
Per Share Data
– The following schedule reconciles basic and diluted earnings or loss per share (where computations are anti-dilutive, reported basic and diluted per share amounts are the same) (in thousands except per share amounts):
 
   
2017
   
2016
   
2015
 
Net income (loss) applicable to common stockholders and assumed conversions
  $
148,245
    $
39,545
    $
(34,350
)
Weighted average common shares
outstanding
   
41,025
     
41,152
     
41,284
 
Dilution effect of assumed conversions, common stock equivalents
– stock awards
   
16
     
15
     
28
 
Weighted average common shares outstanding and assumed conversions
   
41,041
     
41,167
     
41,312
 
                         
Basic earnings (loss) per share
  $
3.61
    $
0.96
    $
(0.83
)
Diluted earnings (loss) per share
  $
3.61
    $
0.96
    $
(0.83
)
Anti-dilutive common stock equivalents excluded in computing diluted earnings
(loss) per share
   
7
     
120
     
174
 
 
Declaration of Cash Dividends
– Our Board of Directors approved aggregate dividends on common stock as follows (in thousands except per share amounts):
 
   
2017
   
2016
   
2015
 
Cash dividends paid
  $
24,694
    $
24,759
    $
24,807
 
Dividends per common share
  $
0.60
    $
0.60
    $
0.60
 
 
Quarterly dividends were declared in each period and all declaration, record and payment dates were in the same fiscal periods. See Note
6
for annual
limitations on dividend payments under our debt agreements. On
February 
12,
2018,
our Board of Directors declared a quarterly cash dividend of
$0.15
per share of common stock aggregating approximately
$6.1
million payable on
March 
15,
2018
to shareholders of record as of
March 1, 2018.
These quarterly cash dividends are being paid using available cash and cash equivalents on hand.
 
Stock Repurchase Program
– Our Board of Directors has approved a stock repurchase program authorizing SMI to repurchase up to an aggregate of
6,000,000
shares (increased from
5,000,000
shares with Board of Director approval on
February 12, 2018)
of our outstanding common stock from time to time, depending on market conditions, share price, applicable limitations under our 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.
 
We repurchased
251,000,
252,000
and
252,000
shares of common stock for
$5,015,
000
in
2017,
$4,667,000
in
2016
and
$5,375,000
in
2015,
respectively. As of
December 31, 2017,
we could repurchase up to an additional
191,000
shares (
1,162,000
shares as of
February 12, 2018)
under authorization then in effect. In
2017,
2016
and
2015,
we repurchased approximately
56,000,
58,000
and
53,000
shares of common stock for
$1,103,000,
$1,169,000
and
$1,122,000
from management employees to settle income taxes on
139,000,
136,000
and
125,000
restricted shares that vested during the periods, respectively.
As of and through
December 31, 2017
and
2016,
treasury stock includes
328,000
and
272,000
shares of common stock delivered to the Company for such purposes.
Note 8 - Income Taxes
Income Tax Disclosure [Text Block]
8.
INCOME TAXES
 
 
Components of the provision (benefit) for income taxes are as follows (in thousands):
 
   
2017
   
2016
   
2015
 
Current:
                       
Federal
  $
23,327
    $
12,630
    $
11,710
 
State
   
436
     
262
     
606
 
     
23,763
     
12,892
     
12,316
 
Deferred:
                       
Federal
   
(127,310
)
   
8,604
     
(26,440
)
State
   
(328
)
   
155
     
2,245
 
     
(127,638
)
   
8,759
     
(24,195
)
Total
  $
(103,875
)
  $
21,651
    $
(11,879
)
 
 
The reconciliation of statutory federal and effective income tax rates is as follows:
 
   
2017
   
2016
   
2015
 
Statutory federal tax rate
   
35.0
%
   
35.0
%
   
35.0
%
State
and local income taxes, net of federal income tax effect
   
2.2
     
1.8
     
3.4
 
Non-
deductible executive compensation
   
1.6
     
     
 
Change in valuation allowances
   
0.1
     
0.6
     
22.6
 
Change in uncertain tax positions, including
income tax liabilities for settlements with taxing authorities
   
0.1
     
(0.2
)
   
(24.4
)
Change in federal tax rate
   
(270.8
)
   
     
 
Change in state tax rates
   
(3.7
)
   
(0.9
)
   
(7.6
)
Other, net
   
1.4
     
(0.9
)
   
(3.3
)
Total
   
(234.1
%)
   
35.4
%
   
25.7
%
 
 
Tax effects of temporary differences resulting in deferred income taxes are as follows (in thousands):
 
   
2017
   
2016
 
Deferred tax liabilities:
               
Property and equipment
  $
140,463
    $
232,565
 
Goodwill and other intangible assets
   
68,752
     
107,927
 
Expenses deducted for tax purposes and other
   
1,707
     
2,866
 
Subtotal
   
210,922
     
343,358
 
Deferred tax assets:
               
Income previously recognized for tax
purposes
   
2,449
 
   
4,658
 
Stock option and other deferred compensation expense
   
1,838
 
   
3,581
 
PSL and other deferred income recognized for tax purposes
   
627
 
   
1,072
 
State and federal net operating loss carryforwards
   
6,188
 
   
6,397
 
Subtotal
   
11,102
 
   
15,708
 
Less: valuation allowance
   
(1,940
)    
(1,748
)
Net deferred tax assets
   
9,162
 
   
13,960
 
Total net deferred tax liabilities
  $
201,760
    $
329,398
 
 
December 2017
Tax Cuts and Jobs Act Enactment (Note
2
)
On
December 22, 2017,
the Tax Cuts and Jobs Act was enacted into United States tax law substantially amending the Internal Revenue Code. Effective
January 1, 2018,
the Act permanently reduces US corporate federal tax rates from
35%
to
21%,
provides for
100%
expensing of certain qualified capital investments through
2022,
repeals the Alternative Minimum Tax, eliminates loss carrybacks, limits using future losses, and further limits the deductibility of certain executive compensation, among other provisions. Many effects of the Act are international in nature, and therefore do
not
apply us. Under current accounting guidance, we are recognizing the effects of the changed tax rates and laws as of the enactment date, subject to SAB
No.
118
which provides for a provisional
one
-year measurement period for entities to finalize their accounting for certain income tax effects of the Tax Act. As further described in Note
2,
SAB
No.118
addresses the application of US GAAP where entities do
not
have the necessary information available, prepared or analyzed (including computations) in reasonable detail to complete such accounting.
 
As such, under SAB
No.
118,
we recorded a provisional
one
-time material reduction of our net deferred income tax liabilities, and corresponding income tax
benefit, of
$119,449,000
in the
fourth
quarter
2017,
resulting from re-measuring our deferred tax assets and liabilities using the new lower tax rate and certain tax expense. The associated effects on our gross deferred tax assets, deferred tax liabilities and valuation allowances, including changes in timing differences, are reflected in the above disclosures. The reduction consists of
: (i) tax benefits of
$120,172,000
using the new lower federal tax rates and (ii) provisional tax expense of
$723,000
related to non-deductible executive compensation as we anticipate the performance-based exception on our cash compensation plans will
no
longer be applicable. 
We anticipate the Internal Revenue Service will be providing additional guidance on the accounting for non-deductible executive compensation. We plan to finalize the accounting for those provisional amounts upon filing of our federal income tax returns within our
2018
fourth
quarter
 or in earlier periods if additional guidance is issued
. Final amounts
may
differ from provisional amounts after further analysis, changes in interpretation and assumptions, or additional regulatory guidance that
may
be issued, among other things.
 
Effective Tax Rate Comparison for
2015
through
2017
– Our effective income tax rate for
2017
was
234.1%
(benefit), for
2016
was
35.4%
(expense) and for
2015
was
25.7%
(expense). Our
2017
effective tax rate reflects the
one
-time material tax benefit associated with re-measuring our deferred tax assets and liabilities using the new lower US corporate federal tax rate of
21%,
and tax expense of related to non-deductible executive compensation as further described above. The
2017
rate also reflects non-recurring tax benefits of
$575,000
resulting from certain state income tax law changes, and non-recurring tax benefits of
$1,070,000
for lower state income tax rates associated with
2018
race date realignments. Our
2016
effective tax rate reflects non-recurring tax benefits of
$546,000
resulting from certain state income tax law changes. Our
2015
tax rate reflects reductions of valuation allowances on deferred tax assets associated with our discontinued operation. Our
2015
tax rate also reflects lower effective state income tax rates, adjustments associated with the
2015
intangible asset and goodwill impairment charges and certain deferred tax assets, and a non-recurring tax benefit of
$610,000
resulting from certain state income tax law changes enacted in
2015.
 
At
December 31, 2017,
the Company has approximately $
205,082,000
of state net operating loss carryforwards expiring in
2018
through
2037.
At
December 31, 2017
and
2016,
valuation allowances of
$1,940,000
and
$1,748,000
have been provided against deferred tax assets because management has determined that ultimate realization is
not
more likely than
not
for certain deferred tax assets and state net operating loss carryforwards. The valuation allowances for deferred tax assets increased by
$192,000
in
2017,
increased by
$326,000
in
2016,
and decreased by
$10,771,000
in
2015.
 
Accounting for Uncertainty in Income Taxes
– Income tax liabilities for unrecognized tax benefits approximate
$11,711,000
and
$12,006,000
at
December 31, 2017
and
2016,
$11,711,000
and
$11,746,000
of which relates to our discontinued operation. Of those amounts,
$11,534,000
and
$11,794,000
is included in noncurrent other liabilities, all of which would favorably impact our effective tax rate if recognized, and
$177,000
and
$212,000
is included in deferred tax liabilities, at
December 31, 2017
and
2016,
respectively. As of
December 31, 2017
and
2016,
management believes
$0
and
$260,000
of unrecognized tax benefits will be recognized within the next
twelve
months. Interest and penalties associated with uncertain tax benefits amounted to
$188,000
in
2017,
$61,000
in
2016
and
$15,000
in
2015,
and derecognized amounts were
$86,000
in
2017,
$90,000
in
2016
and
$174,000
in
2015.
As of
December 31, 2017
and
2016,
we had
$241,000
and
$140,000
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
2015
through
2016
by the Internal Revenue Service, and
2013
 through
2016
by other state taxing jurisdictions to which we are subject. 
 
A reconciliation of the change in the total unrecognized tax benefits and other information for the
three
years ended
December 31, 2017
is as follows (in thousands):
 
   
2017
   
2016
   
2015
 
Beginning of period
  $
12,006
    $
12,280
    $
885
 
Increases (decreases) for tax positions of current year
   
     
     
11,781
 
Increases for tax positions of prior years
   
     
     
 
Decreases for tax positions of prior years
   
(295
)
   
(274
)
   
(386
)
Reductions for lapse of
applicable statute of limitations
   
     
     
 
Increases (decreases) for settlements with taxing authorities
   
     
     
 
End of period
  $
11,711
    $
12,006
    $
12,280
 
 
Income Tax Benefits
– Applicable accounting guidance
may
require establishing valuation allowances for certain deferred tax assets or income tax liabilities for unrecognized tax benefits, although management believes associated tax filing positions are sustainable and properly reflected in its tax filings. Our liabilities for unrecognized tax benefits are reflected in the table above. Should those tax positions
not
be fully sustained if examined, an acceleration of material income taxes payable could occur. Where
no
net income tax benefit had been previously reflected because of providing a valuation allowance on related deferred tax assets, our future results of operations might
not
be significantly impacted. However, resulting cash required for payments of income taxes could be material in the period in which such determination is made.
Note 11 - Stock Compensation Plans
Disclosure of Compensation Related Costs, Share-based Payments [Text Block]
11.
STOCK COMPENSATION PLANS
 
2013
Stock Incentive Plan, Amended and Restated as of
April 19, 2017
– The
2013
Stock Incentive Plan (the
2013
Plan) allows the Company, among other things, to provide equity-based incentives to, and continue to attract and retain, key employees, directors and other individuals providing services to the Company. Awards under the
2013
Plan
may
be in the form of incentive stock options, nonqualified stock options, stock appreciation rights (SARs), restricted stock, restricted stock units or stock awards. In
February 2017,
our Board of Directors adopted an amended and restated
2013
Stock Incentive Plan which was approved by the stockholders on
April 19, 2017
at the
2017
Annual Meeting. The amendment and restatement did
not
increase the number of shares reserved for issuance or any of the award limits under the
2013
Plan. The primary changes included: (i) additions to the permissible criteria upon which performance goals for performance-based compensation can be based; and (ii) revisions and additions to the types of items and events that
may
be used for adjustments in determining whether an objective performance goal for performance-based compensation has been met. To date, we have awarded restricted stock and restricted stock units under the
2013
Plan.
 
The
2013
Plan is administered by the Compensation Committee of the Board of
Directors who has full authority to determine recipients, types, purchase prices, and amounts of awards granted and amend the terms, restrictions and conditions of awards. Factors considered, among others, include achievement of financial, business and performance objectives, the occurrence of specific events, time periods of continued service or other time-based restrictions. Under the
2013
Plan,
3,500,000
shares of SMI’s common stock are reserved for issuance, subject to various restrictions and adjustments including the following: (i) if shares subject to award under the
2013
Plan are forfeited, or the award otherwise terminates or is canceled for any reason without the issuance of such shares, those shares will be available for future awards; (ii) 
no
individual
may
be granted options or SARs aggregating more than
300,000
shares of common stock during any calendar year; (iii) in the case of awards other than options or SARs that are intended to be “performance-based compensation”,
no
individual
may
be granted an aggregate of more than
100,000
shares of common stock during any calendar year; and (iv) with respect to any cash-based stock award that is intended to be a performance award, the maximum cash payment that
may
be paid during any
one
calendar year to an individual is
$10,000,000.
Exercise prices for awarded stock options generally
may
not
be less than the fair or trading value of the Company’s common stock at, and exercise periods
may
not
exceed
ten
years from, the option grant date. At
December 31, 2017,
approximately
2,867,000
shares were available for future grant.
 
All restricted stock and restricted stock units issued to date vest in equal installments over
three
years or cliff vest after
five
years. Once applicable restrictions lapse or have bee
n satisfied, restricted stock units
may
be payable in cash, shares of common stock or a combination, as specified in the award agreement. Awards of restricted stock or restricted stock units are generally subject to forfeiture and restrictions on transferability until vested. If restricted stock and restricted stock unit award recipients cease to perform services for the Company, all shares of common stock and restricted stock units still subject to restrictions generally will be forfeited unless waived by the Compensation Committee. Recipients of restricted stock generally will have certain rights and privileges of a stockholder, including the right to vote such shares and receive dividends, if any. Recipients of restricted stock units generally will
not
have the rights and privileges of a stockholder, except they
may
be entitled to receive dividend equivalents, if so specified in the award agreements and dividends are declared.
 
The Compensation Committee of our Board of Directors approved grants of
35,000
restricted stock units to our Chief Executive Officer and President (former Chief Operating Officer until
February 2015)
and
35,000
shares of restricted stock to our Vice Chairman and Chief Financial Officer in
2017.
Both grants are under the
2013
Plan, are to be settled in shares of common stock, vest in equal installments over
three
years and are subject to reaching certain defined full year earnings targets established at the beginning of each year by the Compensation Committee. In
2017,
31,924
shares of both performance-based restricted stock and restricted stock units vested, and
4,455
of both restricted stock shares and restricted stock units were forfeited. Forfeitures in any given year result from differences between our actual results for the previous year as compared to the defined full year earnings target. Once the vesting period expires, common stock is issued in settlement of the restricted stock units and all vested shares are
no
longer subject to forfeiture or restrictions on transferability. As of
December 31, 2017,
66,288
restricted stock shares and
127,152
restricted stock units (both performance-based) were outstanding.
 
In
2017,
we also granted to non-executive management employees
83,800
shares of restricted stock that vest in equal installments over
three
years, and repurchased
25,156
shares of common stock from such employees for
$506,000
related to settlement of inco
me taxes on
75,197
shares that vested under the
2013
Plan. In
2017,
we also repurchased
30,699
shares of common stock for
$597,000
from executive management employees to settle income taxes on
63,848
performance-based shares that vested under the 
2013
Plan
.
Repurchases of common stock related to settlement of income taxes upon restricted stock vesting are reflected as financing activities in the statement of cash flows.
 
2008
Formula Restricted Stock Plan, Amended and Restated as of
April 17, 2012
– The
2008
Formula Restricted Stock Plan (the
2008
Formula Plan) expired by its terms in
February 2018 (
see the proposed New
2018
Formula Restricted Stock Plan below).
The
2008
Formula Plan constituted a “formula plan” within the meaning of SEC Rule
16b
-
3
of the Exchange Act. Approval of the
2008
Formula Plan, and termination of the Formula Stock Option Plan, did
not
adversely affect the rights of any outstanding stock options previously granted under the Formula Stock Option Plan. The
2008
Formula Plan was administered by the Board of Directors, excluding non-employee directors.
 
2004
Stock Incentive Plan, Amended and Restated as of
February 10, 2009
The
2004
Stock Incentive Plan (the
2004
Plan), which provided equity-based incentives for attracting and retaining key employees, directors and others providing services to the Company, terminated by its terms in
February 2014
and
no
further awards can be granted under the plan. Previously granted awards under the
2004
Plan consisted of incentive stock options, non-statutory stock options, restricted stock units or restricted stock. All stock options granted under the
2004
Plan had an exercise price equal to the market value of the underlying common stock at grant date, expire
ten
years from grant date and vested immediately or in equal installments over
three
years, and restricted stock and restricted stock units vested
three
years from grant date or in equal installments over
three
years. Once applicable restrictions lapsed or were satisfied, restricted stock units were payable in cash, shares of common stock or a combination, as specified in the award agreement. Termination of the
2004
Plan did
not
adversely affect rights under any outstanding awards previously granted under the plan and all awards granted under the
2004
Plan have now vested.
 
Formula Stock Option Plan for Directors
– The Formula Stock Option Plan was suspended in
December 2007
and terminated in
February 2008,
and the
2008
Formula Plan described above was approved by stockholders at the
2008
Annual Meeting. Prior to plan suspension and termination, before
February 
1
each year, individual outside directors were awarded an option to purchase
10,000
shares of common stock at an exercise price equal to the average fair market value per share for the
ten
-day period prior to award. Termination of the Formula Stock Option Plan did
not
adversely affect rights under any outstanding stock options previously granted. All options granted under this plan generally vested in
six
months, and expired
ten
years, from grant date.
 
Employee Stock Purchase Plan
– The SMI Employee Stock Purchase Plan (the ESPP) is intended to provide employees the opportunity to acquire stock ownership in the Company. The authorized number of shares of common stock issuable under the ESPP is
800,000.
At
December 31, 2017,
approximately
439,000
shares were available for future grant. Prior to each
January 
1,
the Compensation Committee of the Board of Directors determines whether participating eligible employees will be granted the right to purchase shares of common stock for the upcoming calendar year and the number of shares available for purchase. All employee grants contain the same number of shares and grant date.
No
participant can be granted the right to purchase more than
500
shares in any calendar year. The stock purchase price is
90%
of the lesser of fair market value at grant date or exercise date. Unexercised grants expire at each calendar year end.
No
shares were granted to employees under the ESPP for calendar years
2017,
2016
or
2015.
 
Share-Based Payment
– We follow applicable authoritative guidance which generally requires recognizing compensation cost for the estimated grant-date fair value of stock options and other equity-based compensation over the requisite service period, and applies to all awards granted, modified, vesting, repurchased or cancelled after
January 
1,
2006.
We generally record share-based compensation cost for stock option, restricted stock and restricted stock unit awards on either the accelerated method using a graded vesting schedule or the straight-line method over the requisite service period, depending on the vesting schedule of the awards. Our practice has been to issue new shares upon option exercise; however, repurchases of shares in the open market are permitted.
 
 
Share-based compensation cost totaled
$3,366,000
in
2017,
$3,405,000
in
2016
and
$3,383,000
in
2015,
before
income taxes of
$1,251,000,
$1,205,000
and
$1,272,000,
respectively, and is included in general and administrative expense. There were
no
capitalized share-based compensation costs at
December 31, 2017
or
2016.
As of
December 31, 2017,
there was approximately
$3,889,000
of total unrecognized compensation cost related to non-vested restricted stock and restricted stock units granted under the
2013
Plan and the
2008
Formula Plan that is expected to be recognized over a weighted average period of
1.0
year.
 
No
stock option
s were granted under any of our stock compensation plans in
2017,
2016
or
2015.
When stock options are granted, we estimate the fair value of stock option grants on grant date using the Black-Scholes option-pricing model based on the following factors and assumptions. Expected volatility is based on implied volatilities from historical volatility of our stock and other factors. We use historical data to estimate option exercises, forfeitures and employee terminations within the pricing model. Employee groups have similar historical exercise experience and are combined for valuation purposes. The expected term of granted options is estimated based on historical exercise experience and represents the time period that granted options are expected to be outstanding. Risk-free interest rates for periods within the expected life of options are based on the US Treasury yield curve in effect at the time of grant.
 
 
There were
no
significant changes in the characteristics of restricted stock or restricted stock unit
s granted during
2015
through
2017
as compared to prior grants and
no
modifications of the terms of any share-based payment arrangements. There were
no
significant changes in estimates, assumptions or valuation methods used to estimate the fair value of share-based payment awards. We believe the pricing model and approach utilized to develop the underlying assumptions are appropriate for estimating the fair values of share-based awards. These fair value and other estimates are
not
intended to predict future events or value ultimately realizable by employees who receive equity awards, and subsequent events are
not
indicative of the reasonableness of original estimates.
 
No
stock options have been granted under the
2013
Plan. The following is a summary of stoc
k option activity regarding the
2004
Plan and Formula Stock Option Plan for
2017
(shares and aggregate intrinsic value in thousands):
 
   
2004 Stock Incentive Plan
   
Formula Stock Option Plan
 
Stock Options
 
Shares
   
Weighted
Average
Exercise
Price
Per
Share
   
Weighted
Average
Remaining
Contractual
Term (Yrs)
   
Aggregate
Intrinsic
Value
   
Shares
   
Weighted
Average
Exercise
Price Per
Share
   
Weighted
Average
Remaining
Contractual
Term (Yrs)
   
Aggregate
Intrinsic
Value
 
Outstanding,
January 1, 2017
   
148
    $
17.07
     
 
     
 
     
30
    $
38.45
                 
Granted
   
     
     
 
     
 
     
     
                 
Exercised
   
(41
)
   
15.83
     
 
     
 
     
     
                 
Forfeited
   
(10
)
   
38.11
     
 
     
 
     
     
                 
Expired
   
     
     
 
     
 
     
(30
)
   
38.45
                 
Outstanding, December 31, 2017
   
97
    $
15.31
     
1.6
    $
345
     
     
             
Exercisabl
e, December 31, 2017
   
97
    $
15.31
     
1.6
    $
345
     
     
             
 
As of
December 31, 2017,
all stock options were vested and there was
no
unrecognized compensation cost related to non-vested stock options granted under any of our stock compensation plans. Outstanding and exercisable stock options with
no
intrinsic value as of
December 31, 2017
are excluded from the aggregate intrinsic values presented above.
No
stock options vested in
2017,
2016
or
2015.
In
2017,
2016
and
2015,
40,500,
11,500
and
55,500
stock options were exercised with an intrinsic value of
$199,000,
$48,000
and
$327,000,
respectively.
 
The following is a summary of non-vested restricted stock and restricted stock unit activity regarding the
2013
Plan and
2008
Formula Plan for
2017,
and grant activity for
2016
and
2015
(shares and aggregate intrinsic value in
thousands):
 
    2013 Stock Incentive Pla
n
    2008 Formula Restricted Stock Pla
n
 
Non-veste
d
Restricted Stock an
d
Restricted Stock Units
 
Shares
   
Weighte
d
Averag
e
Grant
-
date Fai
r
Valu
e
Per Share
   
Weighte
d
Averag
e
Remainin
g
Contractua
l
Term (Yrs)
   
Aggregat
e
Intrinsi
c
Value
   
Shares
   
Weighte
d
Averag
e
Grant
-
date Fai
r
Valu
e
Per Share
   
Weighte
d
Averag
e
Remainin
g
Contractua
l
Term (Yrs)
   
Aggregat
e
Intrinsi
c
Value
 
                                                                 
Outstanding, January 1, 2017
   
351
    $
21.08
     
 
     
 
     
16
    $
18.17
     
 
     
 
 
Granted
   
154
     
20.48
     
 
     
 
     
16
     
19.47
     
 
     
 
 
Vested
   
(139
)    
20.83
     
 
     
 
     
(16
)    
18.17
     
 
     
 
 
Forfeited
   
(11
)    
19.28
     
 
     
 
     
-
     
-
     
 
     
 
 
Outstanding, December 31, 2017
   
355
    $
20.97
     
1.4
    $
6,703
     
16
    $
19.47
     
0.3
    $
294
 
Granted, 2016
   
151
     
20.27
     
 
     
 
     
16
     
18.17
     
 
     
 
 
Granted, 2015
   
211
     
21.82
     
 
     
 
     
13
     
25.46
     
 
     
 
 
 
As of
December 31, 2017,
outstanding restricted stock and restricted stock units above for the
2013
Plan include approximately
127,000
restricted stock units with an aggregate intrinsic
value of
$2,399,000
and a weighted-average remaining contractual term of
1.5
years, all of which are expected to fully vest (subject to forfeiture as described above). The following is a summary of restricted stock and restricted stock units and their associated fair values on date vested for the
2013
Plan, the
2004
Plan and the
2008
Formula Plan for
2017,
2016
and
2015
(in thousands):
 
   
2013 Stock
Incentive Plan
   
2004 Stock
Incentive Plan
   
2008 Formula
Restricted Stock Plan
 
   
Number
Vested
   
Fair Value
   
Number
Vested
   
Fair Value
   
Number
Vested
   
Fair Value
 
Year Ended December 31, 2017:
                                               
Restricted Stock
   
107
    $
2,157
     
     
     
16
    $
311
 
Restricted Stock
Units
   
32
     
627
     
     
     
     
 
Total
   
139
    $
2,784
     
     
     
16
    $
311
 
Year Ended December 31, 2016:
                                               
Restricted Stock
   
71
    $
1,471
     
33
    $
683
     
13
    $
233
 
Restricted Stock Units
   
22
     
412
     
10
     
199
     
     
 
Total
   
93
    $
1,883
     
43
    $
882
     
13
    $
233
 
Year Ended December 31, 2015:
                                               
Restricted
Stock
   
35
    $
721
     
62
    $
1,257
     
12
    $
303
 
Restricted Stock Units
   
11
     
248
     
18
     
406
     
     
 
Total
   
46
    $
969
     
80
    $
1,663
     
12
    $
303
 
 
New
2018
Formula Restricted Stock Plan
– The
2008
Formula Plan expired by its terms in
February 2018.
In
March 2018,
our Board of Directors adopted a new
2018
Formula Restricted Stock Plan (the
2018
Formula Plan) subject to stockholder approval at our
2018
Annual Meeting. The proposed
2018
Formula Plan is intended to promote the interests of the Company and its stockholders by providing non-employee directors with Company ownership interests to more closely align their interests with our stockholders and enhance our ability to attract and retain highly qualified non-employee directors. The
2018
Formula Plan is intended to constitute a “formula plan” within the meaning of SEC Rule
16b
-
3
of the Exchange Act. Approval of the
2018
Formula Plan, and expiration of the
2008
Formula Plan, will
not
adversely affect the rights of any outstanding awards previously granted under the
2008
Formula Plan. The
2018
Formula Plan will be administered by the Board of Directors, excluding non-employee directors, who can amend, suspend or terminate the plan in whole or in part, provided that
no
such amendment, suspension or termination adversely affects previously granted awards without the consent of the award recipient. Any such amendment, suspension or termination
may
be subject to stockholder approval.
 
Under the
proposed
2018
Formula Plan,
250,000
shares of SMI’s common stock will be reserved for issuance and awards will be in the form of restricted stock. On the
first
business day following each annual meeting, each standing non-employee director will receive 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. Grants of restricted stock fully vest on the earlier of (i) the
first
grant date anniversary or (ii) the day before our next annual meeting following the grant date. Vesting is subject to continued service as a director through scheduled vesting dates. These terms and conditions are similar to those of the expired
2008
Formula Plan.
Note 12 - Employee Benefit Plans
Compensation and Employee Benefit Plans [Text Block]
12.
EMPLOYEE BENEFIT PLANS
 
The Speedway Motorsports, Inc.
401
(k) Plan and Trust is available to our employees who meet certain eligibility requirements. The Plan allows participants to elect contributions of up to
75%
of their annual compensation within certain prescribed limits, o
f which the Company will match
25%
of the
first
4%
of employee contributions. Participants become fully vested in Company matching contributions over
six
years. Our contributions for the Plan were
$423,000
in
2017,
$406,000
in
2016
and
$379,000
in
2015.
 
T
he Speedway Motorsports, Inc. Deferred Compensation Plan is available to all our employees who meet eligibility requirements. This plan allows participants to elect to defer up to
75%
of their base salary and
100%
of their annual bonus and other cash compensation, if any, as permitted by the Plan Administrator. Participants can designate
one
or more investments as the measure of investment return on their participant account, and can elect distributions in lump sum or specified periodic installments. We hold assets consisting principally of Company-owned life insurance (COLI) policies on certain plan participants for funding future participant distributions. Those are general assets of the Company subject to claims of creditors or unsecured claims. Our obligation to pay amounts deferred under this plan is impacted by rates of returns on investments selected by plan participants, is an unsecured obligation and
not
subject to forfeiture. Our common stock is
not
an investment option or plan asset. The COLI’s carrying value of
$4,008,000
and
$3,336,000
is reflected in non-current Other Assets and the associated deferred compensation liability of
$3,912,000
and
$3,241,000
 is reflected in non-current Other Liabilities at
December 31, 2017
and
2016,
respectively, and associated earnings, losses or other changes are reflected in general and administrative expense. Participants are fully vested in their contributions and associated earnings or losses credited to their individual accounts. We
may
make discretionary contributions for any
one
or all eligible employees which, if any, shall be
100%
vested following
three
years of service once
first
eligible to participate in this plan. There were
no
Company contributions in
2015
through
2017.
Note 13 - Segment Disclosures
Segment Reporting Disclosure [Text Block]
13.
SEGMENT DISCLOSURES
 
Our operations are predominately comprised of promoting, marketing and sponsoring motorsports racing events, merchandising and other related activities conducted at our various major
speedway facilities located in the United States. Our business activities, including those of our subsidiaries, are further described in Notes 
1
and
2.
All Company assets are located in the United States. Our “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 reportable 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. Our “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 natural gas mineral rights lease and related revenues, and office rentals at certain Company speedways. Our “all other” operations for
2016
also consists of revenues and direct expenses associated with “the Battle at Bristol” and a large preceding concert as further discussed in Note
1.
Management believes reporting these results separate from our core business of “motorsports event related” operations is appropriate as
no
additional football games are scheduled at this time (nor have any been held before).
 
Of our total revenues, approximately
80%
in
2017,
75%
in
2016
and
80%
in
2015
were derived from NASCAR-sanctioned events. Of our total revenues, approx
imately
46%
or
$209,155,000
for
2017,
41%
or
$201,804,000
for
2016,
and
41%
or
$195,722,000
for
2015
pertain to NASCAR broadcasting rights fees for domestic television broadcasts of NASCAR-sanctioned events held at our speedways. Segment information as presented below comports with information our chief operating decision maker and management use and focus on when assessing segment performance and allocating resources. Segment operating income or loss excludes interest, income 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. The following tables present our segment information (in thousands):
 
   
2017
   
2016
   
2015
 
   
Motorsports
Event
Related
   
All
Other
   
Consolidated
Total
   
Motorsports
Event
Related
   
All
Other
   
Consolidated
Total
   
Motorsports
Event
Related
   
All
Other
   
Consolidated
Total
 
Revenues
  $
434,887
    $
18,702
    $