SPEEDWAY MOTORSPORTS INC, 10-Q filed on 8/1/2019
Quarterly Report
v3.19.2
Document And Entity Information - shares
6 Months Ended
Jun. 30, 2019
Jul. 31, 2019
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 Emerging Growth Company false  
Entity Small Business false  
Entity Common Stock, Shares Outstanding (in shares)   40,853,902
Entity Shell Company false  
Document Type 10-Q  
Document Period End Date Jun. 30, 2019  
Document Fiscal Year Focus 2019  
Document Fiscal Period Focus Q2  
Amendment Flag false  
Title of 12(b) Security Common Stock  
v3.19.2
Consolidated Balance Sheets (Current Period Unaudited) - USD ($)
Jun. 30, 2019
Dec. 31, 2018
Assets    
Cash and cash equivalents $ 104,710,000 $ 80,568,000
Accounts receivable, net 39,181,000 19,497,000
Prepaid and refundable income taxes 5,949,000 960,000
Inventories, net 9,870,000 8,018,000
Prepaid expenses and other current assets (Note 2) 16,392,000 11,911,000
Total Current Assets 176,102,000 120,954,000
Note Receivable 517,000 613,000
Other Assets 25,938,000 23,634,000
Property and Equipment, Net (Note 2) 921,658,000 936,551,000
Other Intangible Assets 298,383,000 298,383,000
Goodwill 46,225,000 46,225,000
Total 1,468,823,000 1,426,360,000
Liabilities and Stockholders’ Equity    
Current maturities of long-term debt 172,000 167,000
Accounts payable 15,868,000 10,376,000
Deferred race event and other income 58,064,000 33,868,000
Accrued income taxes 386,000 689,000
Accrued interest 4,280,000 4,295,000
Accrued expenses and other current liabilities 20,581,000 21,601,000
Total Current Liabilities 99,351,000 70,996,000
Long-term Debt 198,438,000 198,002,000
Deferred Income 3,010,000 2,357,000
Deferred Income Taxes, Net 199,066,000 201,486,000
Other Liabilities 20,449,000 18,764,000
Total Liabilities 520,314,000 491,605,000
Commitments and Contingencies
Stockholders’ Equity:    
Preferred Stock, $.10 par value, shares authorized – 3,000,000, no shares issued
Common Stock, $.01 par value, shares authorized – 200,000,000, outstanding – 40,854,000 in 2019 and 40,854,000 in 2018 464,000 463,000
Additional Paid-in Capital 268,253,000 266,366,000
Retained Earnings 798,857,000 785,251,000
Treasury Stock at cost, shares – 5,543,000 in 2019 and 5,436,000 in 2018 (119,065,000) (117,325,000)
Total Stockholders’ Equity 948,509,000 934,755,000
Total $ 1,468,823,000 $ 1,426,360,000
v3.19.2
Consolidated Balance Sheets (Current Period Unaudited) (Parentheticals) - $ / shares
Jun. 30, 2019
Dec. 31, 2018
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) 0 0
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) 40,854,000 40,854,000
Common Stock, shares outstanding (in shares) 40,854,000 40,854,000
Treasury Stock at cost, shares (in shares) 5,543,000 5,436,000
v3.19.2
Consolidated Statements of Operations (Unaudited) - USD ($)
shares in Thousands, $ in Thousands
3 Months Ended 6 Months Ended
Jun. 30, 2019
Jun. 30, 2018
Jun. 30, 2019
Jun. 30, 2018
Revenues:        
Revenues $ 141,868 $ 166,855 $ 249,756 $ 242,818
Expenses and Other:        
General and administrative 27,126 27,255 52,403 51,648
Depreciation and amortization (Note 2) 13,852 13,138 27,376 26,228
Interest expense, net 2,731 2,953 5,499 5,910
Other expense (income), net 77 (2,297) 23 (2,246)
Total Expenses and Other 118,462 127,472 214,757 206,720
Income Before Income Taxes 23,406 39,383 34,999 36,098
Provision for Income Taxes (6,031) (8,677) (9,070) (7,712)
Net Income $ 17,375 $ 30,706 $ 25,929 $ 28,386
Basic Earnings Per Share (in dollars per share) $ 0.43 $ 0.75 $ 0.63 $ 0.69
Weighted Average Shares Outstanding (in shares) 40,850 40,946 40,848 40,964
Diluted Earnings Per Share (in dollars per share) $ 0.43 $ 0.75 $ 0.63 $ 0.69
Weighted Average Shares Outstanding (in shares) 40,854 40,956 40,851 40,979
Admissions [Member]        
Revenues:        
Revenues $ 19,223 $ 25,412 $ 33,573 $ 36,275
Event Related [Member]        
Revenues:        
Revenues 44,830 48,600 73,307 69,589
NASCAR Broadcasting Revenue [Member]        
Revenues:        
Revenues 70,905 86,131 128,550 122,872
Other Operating Revneues [Member]        
Revenues:        
Revenues 6,910 6,712 14,326 14,082
Direct Expense of Events [Member]        
Expenses and Other:        
Cost of goods and services sold 32,482 35,581 49,152 48,914
NASCAR Event Management Fees [Member]        
Expenses and Other:        
Cost of goods and services sold 37,327 46,276 70,192 66,828
Other Direct Operating Expense [Member]        
Expenses and Other:        
Cost of goods and services sold $ 4,867 $ 4,566 $ 10,112 $ 9,438
v3.19.2
Consolidated Statement of Stockholders' Equity (Unaudited) - USD ($)
$ in Thousands
Common Stock Outstanding [Member]
Additional Paid-in Capital [Member]
Retained Earnings [Member]
Treasury Stock [Member]
Total
Balance (in shares) at Dec. 31, 2017 40,992,000        
Balance at Dec. 31, 2017 $ 461 $ 262,885 $ 769,426 $ (111,982) $ 920,790
Net income (2,320) (2,320)
Share-based compensation (in shares) 60,000        
Share-based compensation $ 1 846     847
Quarterly cash dividends of $0.15 per share of common stock (6,224) (6,224)
Repurchases of common stock (in shares) (87,000)        
Repurchases of common stock (1,689) (1,689)
Balance (in shares) at Mar. 31, 2018 40,965,000        
Balance at Mar. 31, 2018 $ 462 263,731 760,882 (113,671) 911,404
Balance (in shares) at Dec. 31, 2017 40,992,000        
Balance at Dec. 31, 2017 $ 461 262,885 769,426 (111,982) 920,790
Net income         $ 28,386
Exercise of stock options (in shares)         0
Balance (in shares) at Jun. 30, 2018 40,919,000        
Balance at Jun. 30, 2018 $ 462 264,596 785,446 (114,779) $ 935,725
Balance (in shares) at Mar. 31, 2018 40,965,000        
Balance at Mar. 31, 2018 $ 462 263,731 760,882 (113,671) 911,404
Net income 30,706 30,706
Share-based compensation (in shares) 17,000        
Share-based compensation $ 0 865 865
Quarterly cash dividends of $0.15 per share of common stock (6,142) (6,142)
Repurchases of common stock (in shares) (63,000)        
Repurchases of common stock (1,108) (1,108)
Balance (in shares) at Jun. 30, 2018 40,919,000        
Balance at Jun. 30, 2018 $ 462 264,596 785,446 (114,779) 935,725
Balance (in shares) at Dec. 31, 2018 40,854,000        
Balance at Dec. 31, 2018 $ 463 266,366 785,251 (117,325) 934,755
Net income 8,554 8,554
Share-based compensation (in shares) 63,000        
Share-based compensation $ 1 788     789
Quarterly cash dividends of $0.15 per share of common stock (6,198) (6,198)
Repurchases of common stock (in shares) (88,000)        
Repurchases of common stock (1,482) (1,482)
Balance (in shares) at Mar. 31, 2019 40,829,000        
Balance at Mar. 31, 2019 $ 464 267,154 787,607 (118,807) 936,418
Balance (in shares) at Dec. 31, 2018 40,854,000        
Balance at Dec. 31, 2018 $ 463 266,366 785,251 (117,325) 934,755
Net income         25,929
Balance (in shares) at Jun. 30, 2019 40,854,000        
Balance at Jun. 30, 2019 $ 464 268,253 798,857 (119,065) 948,509
Balance (in shares) at Mar. 31, 2019 40,829,000        
Balance at Mar. 31, 2019 $ 464 267,154 787,607 (118,807) 936,418
Net income 17,375 17,375
Share-based compensation (in shares) 27,000        
Share-based compensation $ 0 838 838
Quarterly cash dividends of $0.15 per share of common stock (6,125) (6,125)
Repurchases of common stock (in shares) (19,000)        
Repurchases of common stock (258) (258)
Exercise of stock options (in shares) 17,000        
Exercise of stock options 261 261
Balance (in shares) at Jun. 30, 2019 40,854,000        
Balance at Jun. 30, 2019 $ 464 $ 268,253 $ 798,857 $ (119,065) $ 948,509
v3.19.2
Consolidated Statement of Stockholders' Equity (Unaudited) (Parentheticals) - $ / shares
3 Months Ended
Apr. 23, 2019
Feb. 12, 2019
Jun. 30, 2019
Mar. 31, 2019
Jun. 30, 2018
Mar. 31, 2018
Cash dividends, per share of common stock (in dollars per share) $ 0.15 $ 0.15 $ 0.15 $ 0.15 $ 0.15 $ 0.15
v3.19.2
Consolidated Statements of Cash Flows (Unaudited) - USD ($)
$ in Thousands
6 Months Ended
Jun. 30, 2019
Jun. 30, 2018
Cash Flows from Operating Activities:    
Net income $ 25,929 $ 28,386
Adjustments to reconcile net income to net cash provided by operating activities:    
Deferred loan cost amortization 786 752
Gain on disposals of property and equipment and other assets (18) (2,352)
Depreciation and amortization 27,376 26,228
Amortization of deferred income (1,618) (455)
Deferred income tax provision (2,049) (394)
Share-based compensation 1,627 1,712
Changes in operating assets and liabilities:    
Accounts receivable (19,680) (7,680)
Prepaid, refundable and accrued income taxes (5,292) 7,637
Inventories (1,852) (1,357)
Prepaid expenses and other current assets (4,481) (4,971)
Accounts payable 5,338 3,191
Deferred race event and other income 23,413 14,509
Accrued interest (15) (24)
Accrued expenses and other liabilities (1,898) (3,400)
Deferred income 3,054 73
Other assets and liabilities (350) (313)
Net Cash Provided By Operating Activities 50,270 61,542
Cash Flows from Financing Activities:    
Principal payments on long-term debt (167) (23,162)
Exercise of common stock options 261
Dividend payments on common stock (12,323) (12,366)
Repurchases of common stock (1,740) (2,797)
Net Cash Used By Financing Activities (13,969) (38,325)
Cash Flows from Investing Activities:    
Payments for capital expenditures (12,355) (19,072)
Proceeds from sales of property and equipment 50 2,375
Repayment of note receivable 92 87
Net Cash Used By Investing Activities (12,213) (16,610)
Net Increase in Cash and Cash Equivalents 24,088 6,607
Cash and Cash Equivalents at Beginning of Period 80,903 82,200
Cash and Cash Equivalents at End of Period 104,991 88,807
Supplemental Cash Flow Information:    
Cash paid for interest, net of amounts capitalized 5,875 6,138
Supplemental Non-Cash Investing and Financing Activities Information:    
Increase in accounts payable for capital expenditures $ 154 $ 929
v3.19.2
Note 1 - Description of Business
6 Months Ended
Jun. 30, 2019
Notes to Financial Statements  
Nature of Operations [Text Block]
1.
DESCRIPTION OF BUSINESS
 
Basis of Presentation
– The consolidated financial statements include the accounts of Speedway Motorsports, Inc. and all of its wholly-owned and 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. See Notes
1
and
2
to the Consolidated Financial Statements in our Annual Report on Form
10
-K for the year ended
December 31, 2018 (
the
2018
Annual Report) for further description of our business operations, properties and scheduled events.

Recent Developments
– On
July 24, 2019,
we announced that Sonic Financial Corporation, and a wholly owned acquisition subsidiary of Sonic Financial, entered into a definitive merger agreement for that subsidiary to acquire all of the outstanding shares of Company common stock for cash consideration of
$19.75
per share as further described in Note
11.
 
Racing Events
– In
2019,
we plan to hold
24
major annual racing events sanctioned by the National Association for Stock Car Auto Racing, Inc. (NASCAR), including
13
Monster Energy Cup and
11
Xfinity Series racing events. We also plan to hold
eight
NASCAR Gander Outdoors Truck Series,
six
NASCAR K&N Pro Series,
two
NASCAR Whelen Modified Tour,
one
IndyCar Series,
six
major National Hot Rod Association (NHRA),
one
NASCAR Automobile Racing Club of America (ARCA) and
three
World of Outlaws (WOO) racing events. In
2018,
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 Gander Outdoors Truck Series,
five
NASCAR K&N Pro Series,
three
NASCAR Whelen Modified Tour,
two
IndyCar Series,
six
major NHRA,
one
NASCAR ARCA and
three
WOO racing events.
 
Seasonality
and Quarterly Reporting
Our business has been, and is expected to remain, somewhat seasonal. We recognize revenues and operating expenses for all events in the calendar quarter in which conducted. Racing schedule changes, particularly for NASCAR Cup racing events, can lessen the comparability of operating results between quarters of successive years and increase or decrease the seasonal nature of our motorsports business, corresponding with the move of race dates between quarters. Such changes can also significantly impact our annual cash flow cycles because we sell many tickets and event related revenues in advance and certain NASCAR broadcasting revenue payments are received after events are held.
 
The more significant races affected by poor weather and other racing schedule changes for the
three
and
six
months ended
June 30, 2019
as compared to
2018
include:
TMS held
one
NASCAR Monster Energy Cup and
one
Xfinity Series racing event in the
first
quarter
2019
that were held in the
second
quarter
2018,
and
one
Gander Outdoors Truck Series racing event in the
first
quarter
2019
that was held in the
fourth
quarter
2018
 
Poor weather surrounded Monster Energy NASCAR Cup weekends at AMS, LVMS and TMS in the
first
quarter
2019,
at AMS and LVMS in the
first
quarter
2018,
and at BMS, CMS, SR and TMS in the
second
quarter
2018
Poor weather also surrounded major NHRA racing events at CMS in the
second
quarter
2019,
and certain smaller non-NASCAR events at CMS and TMS in the
second
quarters of
2019
and
2018
v3.19.2
Note 2 - Significant Accounting Policies and Other Disclosures
6 Months Ended
Jun. 30, 2019
Notes to Financial Statements  
Significant Accounting Policies [Text Block]
 
2.
SIGNIFICANT ACCOUNTING POLICIES AND OTHER DISCLOSURES
 
These unaudited consolidated financial statements should be read in conjunction with our consolidated financial statements included in our
2018
Annual Report. In management's opinion, these unaudited consolidated financial statements contain all adjustments necessary for their fair statement at interim periods in accordance with accounting principles generally accepted in the United States. All such adjustments are of a normal recurring nature unless otherwise noted. The results of operations for interim periods are
not
necessarily indicative of operating results that
may
be expected for the entire year due to the seasonal nature of the Company's motorsports business. See Note
2
to the Consolidated Financial Statements in our
2018
Annual Report for further discussion of significant accounting policies.
 
Customer Revenues
– As further described in Note 2 to the Consolidated Financial Statements in our 2018 Annual Report, we adopted Accounting Standards Update No. 2014-09 "Revenue from Contracts with Customers (Topic 606)” and associated amendments, using the modified retrospective method of adoption as of January 1, 2018 (descriptions of disaggregated revenues, contract balances and performance obligations, and associated required annual disclosures are not repeated here).
 
Under the adopted guidance, certain event related revenue under contract should be recognized quarterly as performance obligations are satisfied, whereas under prior guidance revenue was recognized when fixed and determinable. While preparing our 2018 annual financial statements, we determined that the impact of adoption should have increased accounts receivable by $2,081,000 and retained earnings by $1,567,000 and increased deferred taxes by $398,000 and taxes payable by $116,000, as of January 1, 2018. We also determined that contracted direct expenses for track rentals and certain other events that are rebilled to customers should be presented gross rather than netted against revenues. These revisions to previously issued interim financial statements were reflected in our 2018 Annual Report, and increased event related revenues by $1,007,000 and $2,606,000 and direct expense of events by $2,568,000 and $3,647,000, and decreased the net income by $1,177,000 and $783,000, and basic and diluted loss per share by $0.03 and $0.02, respectively, for the three and six months ended June 30, 2018. The revisions were not material to any prior interim financial statements.
 
Disaggregated Revenues
– Our disaggregated admission, NASCAR broadcasting, sponsorship and other event related revenues are reported in our Motorsports Event Related segment, and our souvenir and other merchandise and other revenues are reported in that segment and our All Other segment (see Note 10), and are comprised of the following (in thousands):
 
 
 
Three Months Ended
June 30:
 
 
Six Months Ended
June 30:
 
 
 
2019
 
 
2018
 
 
2019
 
 
2018
 
Admissions
 
$
19,223
 
 
$
25,412
 
 
$
33,573
 
 
$
36,275
 
NASCAR broadcasting
 
 
70,905
 
 
 
86,131
 
 
 
128,550
 
 
 
122,872
 
Sponsorships and other event related
 
 
40,690
 
 
 
46,007
 
 
 
65,367
 
 
 
65,553
 
Souvenir and other merchandise
 
 
8,350
 
 
 
6,346
 
 
 
16,686
 
 
 
12,369
 
Other
 
 
2,700
 
 
 
2,959
 
 
 
5,580
 
 
 
5,749
 
Total Revenue
 
$
141,868
 
 
$
166,855
 
 
$
249,756
 
 
$
242,818
 
 
Unsatisfied Performance Obligations
- We have contracted revenues representing unsatisfied performance obligations that are expected to be recognized in the future. These contracts contain initial terms typically ranging from one to five years, with some for ten-year periods, excluding renewal options. We anticipate recognizing unsatisfied performance obligations for the calendar year ending 2020 and beyond of approximately $114,046,000 at June 30, 2019. Such amount excludes NASCAR broadcasting revenues through 2024, with estimated total revenues approximating
$225.6
million in 2019 and
$234.6
million in 2020 (the last year of the current five-year NASCAR Event Management Agreements).
 
Deferred Event Expenses
– Deferred event expenses pertain to scheduled events to be held in upcoming periods and are recognized, along with associated deferred event income, in the calendar quarter in which conducted. Deferred event expenses are reflected in other current assets, and amounted to $12,279,000 and $6,978,000 as of June 30, 2019 and December 31, 2018.
 
Contract Balances
– Our contract assets are comprised of accounts receivable and deferred event expenses, and our contract liabilities are comprised of deferred event income and noncurrent deferred income. Costs to obtain and fulfill contracts (performance obligations) are comprised principally of such deferred event expenses. Changes in contract assets and liabilities result principally from recognition upon holding associated motorsport and non-motorsports events during the period. At June 30, 2019 and December 31, 2018, contract assets aggregated $12,279,000 and $6,978,000, and contract liabilities aggregated $61,074,000 and $36,225,000. For the six months ended June 30, 2019 and 2018, we recognized revenue associated with contract liabilities amounting to $20,969,000 and $28,150,000. At June 30, 2019 and December 31, 2018, our contract liabilities consist of current deferred revenue of $58,064,000 and $33,868,000, and noncurrent deferred revenue of $3,010,000 and $2,357,000, and we anticipate recognizing current amounts in the upcoming twelve-month period and noncurrent amounts thereafter.
 
Taxes
Collected from Customers
– We have elected to report sales, admission and other taxes collected from customers based on our applicable jurisdiction tax reporting requirements. As such, taxes are reported on both a gross and net basis in our operations, and those reported on a gross basis amounted to $1,525,000 and $2,094,000 in the three months ended June 30, 2019 and 2018, and $2,186,000 and $2,388,000 in the six months ended June 30, 2019 and 2018.
SMI Weather Guarantee
- Effective August 2018, we announced “The SMI Weather Guarantee” for all NASCAR-sanctioned races held at our eight speedways. If inclement weather postpones a NASCAR race, and ticketholders are unable to attend on a rescheduled date, fans can obtain a credit toward future NASCAR races held at any SMI speedway. Unused paid race tickets may be exchanged for tickets of equal or lesser value within one calendar year of the original event date or for the same race in the following year, subject to certain restrictions and requirements. Cash refunds are not available and the guarantee does not apply to delayed or shortened races. Tickets honored under this program were not significant in the three or six months ended June 30, 2019.
 
Income Taxes
– We provide for income taxes at the end of each interim period based on management’s best estimate of the annual estimated effective income tax rate. Cumulative adjustments to our annual estimated effective income tax rate are recorded in the interim period in which a change in the annual estimated effective income tax rate is determined. 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. See Notes 2 and 8 to the Consolidated Financial Statements in our 2018 Annual Report for additional information on our accounting for income taxes.
 
Our effective income tax rate for the three months ended June 30, 2019 and 2018 was 25.8% and 22.0%, and for the six months ended June 30, 2019 and 2018 was 25.9% and 21.4%, respectively. The 2018 tax rates reflect a second quarter non-recurring tax benefit of $1,110,000 resulting from certain state income tax law changes. We paid cash of $16,410,000 and $500,000 for income taxes in the six months ended June 30, 2019 and 2018.
 
Accounting for Uncertainty in Income Taxes
– Income tax liabilities for unrecognized tax benefits approximate $11,711,000 at both June 30, 2019 and December 31, 2018, all of which relates to our previously discontinued operation. Of those amounts, $11,534,000 is included in noncurrent other liabilities, all of which would favorably impact our effective tax rate if recognized, and $177,000 is included in deferred tax liabilities at both June 30, 2019 and December 31, 2018. As of June 30, 2019 and December 31, 2018, management believes $201,000 of unrecognized tax benefits will be recognized within the next twelve months. Interest and penalties associated with unrecognized tax benefits were insignificant for the three and six months ended June 30, 2019 and 2018. As of June 30, 2019 and December 31, 2018, we had $1,161,000 and $789,000 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 2017 by the Internal Revenue Service, and 2012 through 2017 by other state taxing jurisdictions to which we are subject. 
 
Income Tax Benefits
– Applicable accounting guidance may require establishing valuation allowances for certain deferred tax assets or income tax liabilities for unrecognized tax benefits, notwithstanding management believes associated tax filing positions are sustainable and are or will be reflected in its tax filings. At June 30, 2019 and December 31, 2018, liabilities for unrecognized tax benefits totaled $11.7 million. 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.
 
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 $3,215,000 and $4,695,000 for the three months ended June 30, 2019 and 2018, and $5,425,000 and $6,430,000 for the six months ended June 30, 2019 and 2018. There were no deferred direct-response advertising costs at June 30, 2019 or December 31, 2018.
 
TMS Mineral Rights Lease Receipts
– We recognized royalty revenue of $246,000 and $347,000 in the three months ended June 30, 2019 and 2018, and $636,000 and $743,000 in the six months ended June 30, 2019 and 2018, under a natural gas mineral rights lease agreement and a joint exploration agreement entitling TMS to stipulated stand-alone and shared royalties. 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, remain steady or adequate. The long-term lease remains enforceable as long as drilling or extraction related activities continue or certain price levels are met. 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 2018, up to specified cumulative amounts. At this time, management believes that our infrastructure spending will continue to exceed anticipated future royalties similar to 2018. As of June 30, 2019 and December 31, 2018, there was no deferred income associated with these agreements.
 
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 following table presents estimated fair values and categorization levels of our financial instruments as of June 30, 2019 and December 31, 2018 (in thousands):
 
 
 
 
 
 
 
 
2019
 
 
2018
 
 
 
Level
 
Class
 
Carrying
Value
 
 
Fair Value
 
 
Carrying
Value
 
 
Fair Value
 
Assets
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Cash and cash equivalents
 
 
1
 
R
 
$
104,710
 
 
$
104,710
 
 
$
80,568
 
 
$
80,568
 
Note receivable
 
 
2
 
NR
 
 
517
 
 
 
517
 
 
 
613
 
 
 
613
 
Cash surrender values
 
 
2
 
NR
 
 
10,870
 
 
 
10,870
 
 
 
10,061
 
 
 
10,061
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Liabilities
(principal)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
5.125% Senior Notes Payable due 2023
 
 
2
 
NR
 
 
200,000
 
 
 
200,500
 
 
 
200,000
 
 
 
195,000
 
Other long-term debt
 
 
2
 
NR
 
 
720
 
 
 
720
 
 
 
887
 
 
 
887
 
 
Level 1:
Quoted market prices in active markets for identical assets or liabilities.
Level 2:
Observable market-based inputs or unobservable inputs that are corroborated by market data.
Level 3:
Unobservable inputs that are not corroborated by market data.
Class R:
Measured at fair value on recurring basis, subsequent to initial recognition.
Class NR:
Measured at fair value on nonrecurring basis, subsequent to initial recognition.
 
Property and Equipment
– From time to time, we may decide to renovate 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 on renovation and removal, accelerated depreciation is 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”.
 
In 2019, we contracted and began removing certain seating at CMS, NHMS and LVMS for replacing every other seating row with drink rails in certain areas, offering our fans more legroom, easier mobility and expanded comfort for consuming food and beverages. As such, we recorded non-cash pre-tax charges for accelerated depreciation of $552,000 and $912,000, before income tax benefits of $143,000 and $237,000, in the three and six months ended June 30, 2019, respectively. These charges are included in our "motorsports event related" reporting segment (see Note 10).
  
Consolidated Statements of Cash Flows – 
We revised the consolidated statements of cash flows for the six months ended June 30, 2018 to comport with full year classifications in our 2018 Annual Report. These revisions resulted in an immaterial decrease in net cash provided by operating activities and a corresponding decrease in net cash used by investing activities.
 
Recently Issued Accounting Standards 
 – The Financial Accounting Standards Board (FASB) issued ASU No. 2016-02 “Leases (Subtopic 842)” which replaces all current US GAAP guidance on this topic, and ASU No. 2018-10 “Codification Improvements to Topic 842, Leases” which clarifies certain transitional and application guidance. Leases that meet the guidance criteria are to be recognized on an entity’s balance sheet as right-of-use assets and lease liabilities, and expanded disclosures are required. The accounting to be applied by lessors is largely unchanged from previous guidance. The FASB also issued ASU No. 2018-20 “Narrow-Scope Improvements for Lessors - Leases (Topic 842)” which, among other things, requires lessors to exclude certain lessor costs paid by lessees directly to third parties from revenue and variable payments in lease contract consideration. Costs paid by lessors and reimbursed by lessees will be recorded as costs and revenue, respectively. We implemented processes, internal controls and technology solutions to help enable proper accounting and accurate reporting of our leasing activities.
 
We adopted this new guidance as of January 1, 2019 using the modified retrospective transition method, with no restatement of prior periods. No cumulative-effect adjustment was recognized as the amount was not material, and adoption had an insignificant impact on our statement of operations and cash flows. All of our leases are operating leases under the new guidance. Adoption resulted in recording right-of-use assets and lease liabilities of $1,935,000 as of January 1, 2019. Our evaluation under the new lease accounting guidance, practical expedients and associated required disclosures are set forth below. All amounts and disclosures for our leasing activities before January 1, 2019 are based on previous accounting guidance.
 
The FASB issued ASU No. 2018-01 "Leases (Topic 842): Land Easement Practical Expedient for Transition to Topic 842" which, among other things, provides an optional transition practical expedient to not evaluate existing or expired land easements that were not accounted for as leases under previous 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. We elected this practical expedient, including not reassessing existing land easements as lease contracts, and adoption of this new guidance as of January 1, 2019 had no significant impact on our financial statements.
 
Operating Leases –
As lessee, our lease agreements are principally for office and warehouse space used in operations and equipment used in conducting racing and other events. As lessor, we lease various office, warehouse and industrial park space and certain other speedway facilities under operating leases to various entities largely involved in motorsports, and leases typically contain initial terms of one year or more and are noncancelable. Certain property and building lease agreements obligate us to pay real estate taxes, insurance and certain maintenance costs (non-lease components). Our lease agreements do not contain any significant residual value guarantees, buy-out options or variable costs, no significant lease costs are capitalized, and our sub-leases are not significant. Operating lease expense is generally recognized on a straight-line basis over the lease term, and recorded in our various expense categories based on the nature of the associated lease.
 
We elected the following practical expedients:
Lease agreements with lease and non-lease components are generally accounted for as a single lease component.
No reassessment of whether any expired or existing contracts are or contain leases or their previous classification.
Our initial direct costs are immaterial for all leases.
 
We also used the following considerations in applying the new lease accounting guidance:
Because our operations consist largely of weekend, single day or other short-period seasonal events, most equipment and other personal property lease agreements typically have initial terms of one year or less, involve right-to-use assets with actual use of less than 30 consecutive days or are cancelable with minimal notice, and have lessor substitution and control rights throughout periods of use. As such, our short-term lease costs as defined under the new guidance are not significant.
Most of our various office and warehouse non-speedway facilities are leased from an affiliate, which are cancelable with minimal notice.
Actual use, right-to-use or ability to cancel with minimal notice was considered. Contracted renewal options did not significantly impact adoption.
Such considerations under the new lease guidance significantly reduced the impact of adoption and quantitative disclosures.
 
We determined the present value of lease payments over the respective lease terms using an estimated weighted average incremental borrowing rate of 4% based on available information, and a weighted-average lease term of 2.5 years. Total lease cost amounted to $344,000 and $687,000 for the three and six months ended June 30, 2019. Operating lease right-of-use assets and associated lease liabilities as of June 30, 2019 are as follows (in thousands):
 
 
 
June 30, 2019
 
Operating lease right-of-use assets (reflected in non-current Other Assets)
 
$
1,759
 
 
 
 
 
 
Current operating lease liabilities (reflected in Accrued Expenses and Other Current Liabilities)
 
 
877
 
Noncurrent operating lease liabilities (reflected in non-current Other Liabilities)
 
 
894
 
Total present value of lease liabilities
 
 
1,771
 
Imputed interest
 
 
66
 
Total gross lease payments
 
$
1,837
 
 
Lease revenue for operating leases, excluding TMS oil and gas mineral rights lease receipts that are not subject to the new lease guidance, amounted to $2,446,000 and $4,910,000 in the three and six months ended June 30, 2019. Future contracted annual lease payments, and minimum lease revenues, under operating leases with terms in excess of twelve months at June 30, 2019 were as follows (in thousands):
 
 
 
Lease
Payments
 
 
Lease
Revenues
 
2019 (remainder of the year)
 
$
536
 
 
$
4,941
 
2020
 
 
740
 
 
 
7,371
 
2021
 
 
462
 
 
 
6,479
 
2022
 
 
59
 
 
 
3,000
 
2023
 
 
40
 
 
 
2,229
 
Thereafter
 
 
 
 
 
5,781
 
Total
 
$
1,837
 
 
$
29,801
 
 
Disclosures under Previous Lease Accounting Guidance
– The following disclosures are based on accounting guidance in effect prior to our January 1, 2019 adoption of the new lease accounting standards. At December 31, 2018, future annual minimum lease payments under operating leases amounted to $1,152,000 in 2019, $855,000 in 2020, $504,000 in 2021, $156,000 in 2022, $145,000 in 2023, and $200,000 thereafter. At December 31, 2018, future annual minimum lease revenues under operating leases amounted to $5,142,000 in 2019, $2,561,000 in 2020, $1,778,000 in 2021, $1,250,000 in 2022, $888,000 in 2023, and $37,000 thereafter.
v3.19.2
Note 3 - Inventories
6 Months Ended
Jun. 30, 2019
Notes to Financial Statements  
Inventory Disclosure [Text Block]
3.
INVENTORIES
 
Inventories, net consist of the following components (in thousands):
 
   
June 30,
   
December 31,
 
   
2019
   
2018
 
Finished race cars, parts and accessories
  $
5,215
    $
5,162
 
Souvenirs and apparel
   
3,791
     
2,319
 
Micro-lubricant
®
and other
   
864
     
537
 
Total
  $
9,870
    $
8,018
 
v3.19.2
Note 4 - Goodwill and Other Intangible Assets
6 Months Ended
Jun. 30, 2019
Notes to Financial Statements  
Goodwill and Intangible Assets Disclosure [Text Block]
4.
GOODWILL AND OTHER INTANGIBLE ASSETS
 
Annual Impairment Assessment –
We evaluate goodwill and other intangible assets for possible impairment annually in the
second
quarter, or when events or circumstances indicate possible impairment
may
have occurred. Other intangible assets are comprised of nonamortizable race event sanctioning and renewal agreements. See Notes
2
and
5
to the Consolidated Financial Statements in our
2018
Annual Report for additional information on our goodwill and other intangible assets, and the methods, assumptions and business factors used in our annual impairment assessment.
 
Management's latest annual assessment in the
second
quarter
2019
was based predominately on management's best estimate of future discounted operating cash flows and profitability attributable to such assets for all individual reporting units. The impairment evaluation considered NASCAR’s approved realignment of
one
annual Monster Energy Cup Series and
one
annual Gander Outdoors Truck Series racing event from NHMS, and an annual Xfinity Series racing event from KyS, to LVMS beginning in
September 2018,
and anticipated associated net increases in future long-term cash flows and operating profits. Among other factors, the latest assessment assumes projected cash flow and profitability using minimal or modest annual 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. The assessment also reflects anticipated lower cash federal income taxes under the Tax Cuts and Jobs Act. 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 current 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.
 
Management also considered that the estimated market value for comparable NASCAR race event sanction and renewal agreements (we had agreements with NASCAR to annually conduct
thirteen
Monster Energy Cup,
eleven
Xfinity and
eight
Gander Outdoors Truck Series races as of the evaluation date), combined with the estimated fair value for all other Company net assets, substantially exceeds its current market capitalization. Management also considered the proposed financial terms of the definitive merger agreement described in Note
11,
and control premiums and other market information related to our common stock from historical and forward-looking perspectives. The inputs for measuring fair value are considered "Level
3"
or unobservable inputs that are
not
corroborated by market data under applicable fair value authoritative guidance, as quoted market prices are
not
available. Management believes the methods used to determine fair value and evaluate impairment were appropriate, relevant, and represent methods customarily available and used for such purposes and are the best available estimate of fair value.
 
Management's assessment found the estimated fair value of each reporting unit and each indefinite-lived race date intangible asset exceeded its associated carrying value except for
three
race date agreements. We recorded sizable impairment charges in
2015
and earlier years to reduce the carrying values for
two
of those race date agreements to then estimated fair values. These charges resulted in nominal excess fair value over adjusted carrying values for future impairment assessments and are reflected in our current evaluation. As of
June 30, 2019
and
December 31, 2018,
the aggregate carrying value for those non-amortizable race date event sanctioning and renewal agreements was approximately
$298.4
million. The estimated excess of fair value of these identified intangible assets 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. The evaluation 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 race driver “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 those
three
race date intangible assets.
 
There have been
no
triggering events that indicate possible impairment, and management believes our operational and cash flow forecasts support our conclusions that
no
unrecognized impairment exists as of
June 30, 2019.
Our future profitability or success associated with any current or future NASCAR race realignments 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.
 
Other Information
– There were
no
changes in the gross carrying value of other intangible assets or goodwill during the
six
months ended
June 30, 2019.
Those carrying amounts include accumulated impairments of
$100.0
million for other intangible assets and
$149.7
million for goodwill at both
June 30, 2019
and
December 31, 2018.
There is
no
accumulated amortization for either asset class.
v3.19.2
Note 5 - Long-term Debt
6 Months Ended
Jun. 30, 2019
Notes to Financial Statements  
Long-term Debt [Text Block]
5.
LONG-TERM DEBT
 
Bank Credit Facility
– Our Amended and Restated Credit Agreement, dated
December 29, 2014 (
the 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 and repaid) and a
five
-year delayed draw term loan of up to
$50,000,000
(which was fully drawn and repaid) (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.
 
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.
 
At
June 30, 2019
and
December 31, 2018,
there were
no
outstanding borrowings under the Credit Facility, and outstanding letters of credit amounted to
$587,000
at both dates. During the
three
and
six
months ended
June 30, 2018,
the Company repaid
$20,000,000
and
$23,000,000
of Term Loan borrowings. As of
June 30, 2019,
we had availability for borrowing up to an additional
$99,413,000,
including up to an additional
$49,413,000
in letters of credit, under the revolving Credit Facility.
 
2023
Senior Notes
– We completed a private placement of
5.125%
Senior Notes due
2023
in aggregate principal amount of
$200.0
million 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 were used to redeem a portion of our former
2019
Senior Notes as further described in Note
6
to the Consolidated Financial Statements in our
2018
Annual Report. The
2023
Senior Notes mature in
February 2023
and interest payments are due semi-annually on
February 
1
and
August 
1.
 
Other Notes Payable
– At
June 30, 2019
and
December 31, 2018,
long-term debt includes a
3%
interest bearing debt obligation of
$720,000
and
$887,000
associated with the
2016
purchase of real property at BMS, payable in
eight
annual installments of
$194,000.
 
Deferred Financing Costs
– Deferred financing costs associated with our revolving Credit Facility are reported in other noncurrent assets, and those associated with our
2023
Senior Notes and bank Term Loan are reflected as a reduction of long-term debt. As of
June 30, 2019
and
December 31, 2018,
long-term debt reflects deferred financing costs, net of accumulated amortization, of
$2,110,000
and
$2,718,000.
 
 
Other General Terms and Conditions
– The Credit Facility and
2023
Senior Notes contain specific requirements and restrictive financial covenants and limits or prohibits various financial and transactional activities, and also contain cross-default and change of control provisions. We were in compliance with all applicable covenants under these debt agreements as of
June 30, 2019.
See Note
6
to the Consolidated Financial Statements included in our
2018
Annual Report for additional information on these debt agreements, including dividend, redemption, and right of payment provisions, pledged security and financial and restrictive covenants. 
 
Subsidiary Guarantees
Amounts outstanding under our 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 our subsidiaries’ ability to pay dividends or advance funds to the parent company.
 
Interest Expense, Net
Interest expense, interest income and capitalized interest costs are summarized as follows (in thousands):
 
 
   
Three Months Ended
June 30:
   
Six Months Ended
June 30:
 
   
2019
   
2018
   
2019
   
2018
 
Gross interest costs
  $
2,962
    $
3,185
    $
5,924
    $
6,362
 
Less: capitalized interest costs
   
(35
)
   
(119
)
   
(64
)
   
(248
)
Interest expense
   
2,927
     
3,066
     
5,860
     
6,114
 
Interest income
   
(196
)
   
(113
)    
(361
)    
(204
)
Interest expense, net
  $
2,731
    $
2,953
    $
5,499
    $
5,910
 
Weighted-average interest rate on Credit Facility borrowings
   
     
3.2
%
   
     
3.0
%
v3.19.2
Note 6 - Per Share and Other Equity Information
6 Months Ended
Jun. 30, 2019
Notes to Financial Statements  
Stockholders Equity and Earnings Per Share [Text Block]
6.
PER SHARE AND OTHER EQUITY INFORMATION 
 
The following schedule reconciles basic and diluted earnings per share (where computations are anti-dilutive, reported basic and diluted per share amounts are the same) (in thousands except per share amounts):
  
   
Three Months Ended
June 30:
   
Six Months Ended
June 30:
 
   
2019
   
2018
   
2019
   
2018
 
Net income applicable to common stockholders and assumed conversions
  $
17,375
    $
30,706
    $
25,929
    $
28,386
 
                                 
Weighted average common shares outstanding
   
40,850
     
40,946
     
40,848
     
40,964
 
Dilution effect of assumed conversions:
                               
Common stock equivalents—stock awards
   
4
     
10
     
3
     
15
 
Weighted average common shares outstanding and assumed conversions
   
40,854
     
40,956
     
40,851
     
40,979
 
                                 
Basic earnings per share
  $
0.43
    $
0.75
    $
0.63
    $
0.69
 
Diluted earnings per share
  $
0.43
    $
0.75
    $
0.63
    $
0.69
 
Anti-dilutive common stock equivalents excluded in computing diluted earnings per share
   
     
13
     
     
11
 
 
Stock Repurchase Program 
– Our Board of Directors previously approved a stock repurchase program authorizing SMI to repurchase up to an aggregate of
6,000,000
shares 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 has been funded using available cash and cash equivalents. We suspended our stock repurchase program on
April 24, 2019 (
see Note
11
). There can be
no
assurance that we will resume repurchases under the program.
 
During the
three
and
six
months ended
June 30, 2019,
we repurchased
18,000
and
79,000
shares of common stock for
$258,000
and
$1,272,000.
During the
three
and
six
months ended
June 30, 2018,
we repurchased
63,000
and
122,000
shares of common stock for
$1,109,000
and
$2,257,000.
As of
June 30, 2019,
we could repurchase up to an additional
866,000
shares under the current authorization. During the
six
months ended
June 30, 2019,
we also repurchased
28,000
shares of common stock for
$468,000
from management employees to settle income taxes on
62,000
restricted shares that vested during the period. As of and through
June 30, 2019,
treasury stock includes
409,000
shares of common stock delivered to the Company for such purposes.
 
Declaration of Cash Dividends
– On
February 
12,
2019,
our Board of Directors declared a quarterly cash dividend of
$0.15
per share of common stock aggregating
$6,198,000,
which was paid on
March 
15,
2019
to shareholders of record as of
March 1, 2019.
On
April 23, 2019,
our Board of Directors declared a quarterly cash dividend of
$0.15
per share of common stock aggregating
$6,125,000,
which was paid on
June 5, 2019
to shareholders of record as of
May 15, 2019.
On
July 23, 2019,
our Board of Directors declared a quarterly cash dividend of
$0.15
per share of common stock aggregating approximately
$6.1
million payable on
September 6, 2019
to shareholders of record as of
August 15, 2019.
These quarterly cash dividends are being paid using available cash and cash equivalents on hand.
v3.19.2
Note 7 - Related Party Transactions
6 Months Ended
Jun. 30, 2019
Notes to Financial Statements  
Related Party Transactions Disclosure [Text Block]
7.
RELATED PARTY TRANSACTIONS
  
The Company and Sonic Financial Corporation (Sonic Financial), a Company affiliate through common ownership by our Executive Chairman and our Chief Executive Officer, and by a member of our Board of Directors, share various expenses in the ordinary course of business under a shared services agreement. We incurred expenses of
$329,000
and
$460,000
in the
three
months ended
June 30, 2019
and
2018,
and
$736,000
and
$735,000
in the
six
months ended
June 30, 2019
and
2018
under the shared services agreement.
No
amounts were due from or payable to Sonic Financial at
June 30, 2019
and
December 31, 2018.
 
The Company and certain SMI subsidiaries lease office and warehouse facilities from companies affiliated through common ownership by our Executive Chairman and Chief Executive Officer, and by a member of our Board of Directors, under annually renewable lease agreements. Rent expense amounted to
$181,000
and
$180,000
in the
three
months ended
June 30, 2019
and
2018,
and
$364,000
and
$362,000
in the
six
months ended
June 30, 2019
and
2018.
Amounts owed to these affiliated companies at
June 30, 2019
or
December 
31,
2018
were
not
significant.
 
Various SMI subsidiaries purchased new and used vehicles for operations and employee use from certain subsidiary dealerships of Sonic Automotive, Inc., an entity in which our Executive Chairman is a controlling stockholder, and our Chief Executive Officer and a member of our Board of Directors are affiliated through common ownership, for an aggregate of
$19,000
and
$26,000
in the
three
months ended
June 30, 2019
and
2018,
and
$184,000
and
$185,000
in the
six
months ended
June 30, 2019
and
2018.
There were
no
vehicles sold to SAI in the
three
or
six
months ended
June 30, 2019
and
2018.
Also, SMI sold through certain speedways and its SMIP merchandising subsidiary various event related inventory and merchandise to SAI totaling
$167,000
and
$231,000
in the
three
months ended
June 30, 2019
and
2018,
and
$451,000
and
$452,000
in the
six
months ended
June 30, 2019
and
2018.
At
June 30, 2019
and
December 
31,
2018,
approximately
$167,000
and
$142,000
was due from SAI and is reflected in current assets.
 
Oil-Chem sold zMAX micro-lubricant
®
product to certain SAI dealerships for resale to service customers of the dealerships in the ordinary course of business. Total purchases from Oil-Chem by SAI dealerships were
$422,000
and
$392,000
in the
three
months ended
June 30, 2019
and
2018,
and
$769,000
and
$830,000
in the
six
months ended
June 30, 2019
and
2018.
At
June 30, 2019
and
December 
31,
2018,
approximately
$123,000
and
$217,000
was due from SAI and is reflected in current assets.
 
The foregoing related party balances as of
June 30, 2019
and
December 31, 2018,
and transactions for the
three
months ended
June 30, 2019
and
2018,
are summarized below (in thousands):
 
   
June 30,
2019
   
December 31,
2018
 
Accounts receivable
  $
290
    $
359
 
 
   
Three Months Ended
June 30:
   
Six Months Ended
June 30:
 
   
2019
   
2018
   
2019
   
2018
 
Merchandise and vehicle purchases
  $
19
    $
26
    $
184
    $
185
 
Shared services expense
   
329
     
460
     
736
     
735
 
Merchandise sales
   
638
     
623
     
1,220
     
1,282
 
Rent expense
   
181
     
180
     
364
     
362
 
v3.19.2
Note 8 - Legal Proceedings and Contingencies
6 Months Ended
Jun. 30, 2019
Notes to Financial Statements  
Commitments and Contingencies Disclosure [Text Block]
8.
LEGAL PROCEEDINGS AND CONTINGENCIES
 
From time to time, we are party to routine litigation incidental to our business. We believe that the resolution of any or all of such litigation will
not
have a material effect on our financial condition, results of operations or cash flows.
v3.19.2
Note 9 - Stock Compensation Plans
6 Months Ended
Jun. 30, 2019
Notes to Financial Statements  
Share-based Payment Arrangement [Text Block]
9.
STOCK COMPENSATION PLANS
 
 
 
See Note
11
to the Consolidated Financial Statements in our
2018
Annual Report for additional information and terms of the Company’s stock compensation plans.
 
2013
Stock Incentive Plan, Amended and Restated as of
April 19, 2017
– The Compensation Committee of the Company’s Board of Directors approved grants of
35,000
restricted stock units to the Company’s Chief Executive Officer and President and
35,000
shares of restricted stock to the Company’s Vice Chairman and Chief Financial Officer in each of the
six
months ended
June 30, 2019
and
2018.
These grants are to be settled in shares of common stock, vest in equal installments over
three
years and are subject to reaching certain defined full year earnings targets established at the beginning of each year by the Compensation Committee. Forfeitures in any given year result from differences between the Company’s actual results for the previous year as compared to the defined full year earnings target.
 
The following is a summary of restricted stock and restricted stock units granted, vested and forfeited under the
2013
Stock Incentive Plan for the indicated periods (shares in thousands):
 
   
Six Months Ended June 30:
 
   
2019
   
2018
 
   
Restricted
Stock
   
Restricted
Stock
Units
   
Restricted
Stock
   
Restricted
Stock
Units
 
Outstanding, beginning of period
   
65
     
126
     
66
     
127
 
Granted
   
35
     
35
     
35
     
35
 
Vested
   
(31
)
   
(31
)
   
(31
)
   
(31
)
Forfeited
   
(3
)
   
(3
)
   
(5
)
   
(5
)
Outstanding, end of period
   
66
     
127
     
65
     
126
 
 
During each of the
six
months ended
June 30, 2019
and
2018,
the Company repurchased
28,000
shares of common stock for
$468,000
and
$540,000,
respectively, from executive management employees to settle income taxes on
62,000
shares that vested in each respective period.
 
2018
Formula Restricted Stock Plan
– In
March 2018,
our Board of Directors adopted the
2018
Formula Restricted Stock Plan which was approved by our stockholders at the
2018
Annual Meeting. The Company awarded
5,286
shares of restricted stock to each of the Company’s
five
non-employee directors in
April 2019
under this plan. The Company awarded an aggregate of
16,904
shares of restricted stock to the Company’s non-employee directors in
April 2018,
all of which vested in
April 2019,
and
4,459
shares of restricted stock to a non-employee director appointed to the Board of Directors in
October 2018,
under this plan. All restricted stock awards were granted and vested in accordance with plan provisions.
 
2008
Formula Restricted Stock Plan, Amended and Restated as of
April 17, 2012
– The
2008
Formula Restricted Stock Plan expired by its terms in
February 2018 (
see the
2018
Formula Restricted Stock Plan above). An aggregate of
15,572
shares granted under this plan in
April 2017
vested in
April 2018.
No
further shares can be granted under this plan.
 
Share-Based Payments
– There were
no
significant changes in the characteristics of restricted stock or restricted stock units granted in
2019
or
2018
as compared to prior grants and
no
modifications of the terms of any share-based payment arrangements. There were
no
significant changes in estimates, assumptions or valuation methods used to estimate the fair value of share-based payment awards.
No
stock options were granted under any of the Company’s stock compensation plans during the
six
months ended
June 30, 2019
or
2018.
A total of
16,500
stock options previously granted under the
2004
Plan were exercised in the
six
months ended
June 30, 2019
at an exercise price of
$15.83.
No
stock options were exercised in the
six
months ended
June 30, 2018.
  
Share-based compensation cost for the
three
months ended
June 30, 2019
and
2018
totaled
$838,000
and
$865,000,
before income taxes of
$216,000
and
$191,000,
and for the
six
months ended
June 30, 2019
and
2018
totaled
$1,627,000
and
$1,712,000,
before income taxes of
$421,000
and
$368,000,
respectively, and is included in general and administrative expense. There were
no
capitalized share-based compensation costs at
June 30, 2019
or
December 31, 2018.
As of
June 30, 2019,
there was approximately
$3,300,000
of total unrecognized compensation cost related to non-vested restricted stock and restricted stock units granted under the Company's stock compensation plans that is expected to be recognized over a weighted average period of
0.8
year. As of
June 30, 2019,
all stock options were vested and there was
no
unrecognized compensation cost related to stock options granted under any of the Company’s stock compensation plans.
v3.19.2
Note 10 - Segment Disclosures
6 Months Ended
Jun. 30, 2019
Notes to Financial Statements  
Segment Reporting Disclosure [Text Block]
10.
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
to the Consolidated Financial Statements in our
2018
Annual Report. 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.
 
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):  
 
   
Three Months Ended June 30:
 
   
2019
   
2018
 
   
Motorsports
Event
Related
   
 
All
Other
   
 
Consolidated
   
Motorsports
Event
Related
   
All
Other
   
 
Consolidated
 
Revenues
  $
137,096
    $
4,772
    $
141,868
    $
162,817
    $
4,038
    $
166,855
 
Depreciation and amortization (Note 2)
   
13,796
     
56
     
13,852
     
13,104
     
34
     
13,138
 
Segment operating income
   
25,647
     
567
     
26,214
     
39,345
     
694
     
40,039
 
 
   
Six Months Ended June 30:
 
   
2019
   
2018
 
   
Motorsports
Event
Related
   
 
All
Other
   
 
Consolidated
   
Motorsports
Event
Related
   
All
Other
   
 
Consolidated
 
Revenues
  $
239,754
    $
10,002
    $
249,756
    $
234,210
    $
8,608
    $
242,818
 
Depreciation and amortization (Note 2)
   
27,265
     
111
     
27,376
     
26,157
     
71
     
26,228
 
Segment operating income
   
39,212
     
1,309
     
40,521
     
38,384
     
1,378
     
39,762
 
Capital expenditures
   
12,310
     
45
     
12,355
     
18,809
     
263
     
19,072
 
 
   
June 30, 2019
   
December 31, 2018
 
Other intangibles
  $
298,383
     
    $
298,383
    $
298,383
     
    $
298,383
 
Goodwill
   
46,225
     
     
46,225
     
46,225
     
     
46,225
 
Total assets
   
1,443,865
    $
24,958
     
1,468,823
     
1,402,474
    $
23,886
     
1,426,360
 
 
The following table reconciles segment operating income above to consolidated income before income taxes for the periods indicated (in thousands):
 
   
Three Months Ended
June 30:
   
Six Months Ended
June 30:
 
   
2019
   
2018
   
2019
   
2018
 
Total segment operating income
  $
26,214
    $
40,039
    $
40,521
    $
39,762
 
Adjusted for:
                               
Interest expense, net
   
(2,731
)
   
(2,953
)
   
(5,499
)
   
(5,910
)
Other income (expense), net
   
(77
)
   
2,297
     
(23
)
   
2,246
 
Consolidated income before income taxes
  $
23,406
    $
39,383
    $
34,999
    $
36,098
 
v3.19.2
Note 11 - Subsequent Event
6 Months Ended
Jun. 30, 2019
Notes to Financial Statements  
Subsequent Events [Text Block]
11.
SUBSEQUENT EVENT
 
On
July 24, 2019,
we announced that Sonic Financial Corporation, and a wholly owned acquisition subsidiary of Sonic Financial, entered into a definitive merger agreement (the Merger Agreement) for that subsidiary to acquire all of the outstanding shares of Company common stock for cash consideration of
$19.75
per share. Sonic Financial, O. Bruton Smith, his family and related entities (the "Smith Group") beneficially own, directly or indirectly, approximately
29
million shares of the Company, and control over
71%
of the voting power of the Company. The Merger Agreement was unanimously approved by the Company’s Board of Directors upon the unanimous recommendation of the Special Committee comprised solely of independent and disinterested members of the Company’s Board of Directors. Sonic Financial’s subsidiary will, pursuant to the terms of the Merger Agreement, commence a tender offer to acquire all of the outstanding shares of the Company’s common stock at a price of
$19.75
per share in cash. The closing of the tender offer will be subject to several conditions, including tender by more than
50%
of the outstanding shares
not
held by the Smith Group and certain other related parties and other customary conditions.
 
After completion of the tender offer, Sonic Financial will acquire all remaining shares of Company stock
not
held by Sonic Financial or its subsidiary for
$19.75
per share through a statutory merger of Sonic Financial’s subsidiary and the Company in which the Company will be the surviving corporation and will become a wholly owned subsidiary of Sonic Financial. Under Delaware law, stockholders are
not
required to approve this statutory merger. The closing of the tender offer and merger transaction is expected to take place in the
third
quarter
2019.
As further described in the Merger Agreement, if that agreement is terminated or abandoned (i) by Sonic Financial, the Company could be required to pay Sonic Financial a termination fee of
$24,000,000,
or (ii) by the Company, Sonic Financial could be required to pay the Company a termination fee of
$40,000,000.
There can be
no
assurance that the tender offer or merger will be consummated. The foregoing description of the Merger Agreement is
not
complete and is qualified in its entirety by reference to the Merger Agreement, which was filed
July 24, 2019
as Exhibit
2.1
to the Company’s Current Report on Form
8
-K.
v3.19.2
Significant Accounting Policies (Policies)
6 Months Ended
Jun. 30, 2019
Accounting Policies [Abstract]  
Revenue from Contract with Customer [Policy Text Block]
Customer Revenues
– As further described in Note 2 to the Consolidated Financial Statements in our 2018 Annual Report, we adopted Accounting Standards Update No. 2014-09 "Revenue from Contracts with Customers (Topic 606)” and associated amendments, using the modified retrospective method of adoption as of January 1, 2018 (descriptions of disaggregated revenues, contract balances and performance obligations, and associated required annual disclosures are not repeated here).
 
Under the adopted guidance, certain event related revenue under contract should be recognized quarterly as performance obligations are satisfied, whereas under prior guidance revenue was recognized when fixed and determinable. While preparing our 2018 annual financial statements, we determined that the impact of adoption should have increased accounts receivable by $2,081,000 and retained earnings by $1,567,000 and increased deferred taxes by $398,000 and taxes payable by $116,000, as of January 1, 2018. We also determined that contracted direct expenses for track rentals and certain other events that are rebilled to customers should be presented gross rather than netted against revenues. These revisions to previously issued interim financial statements were reflected in our 2018 Annual Report, and increased event related revenues by $1,007,000 and $2,606,000 and direct expense of events by $2,568,000 and $3,647,000, and decreased the net income by $1,177,000 and $783,000, and basic and diluted loss per share by $0.03 and $0.02, respectively, for the three and six months ended June 30, 2018. The revisions were not material to any prior interim financial statements.
 
Disaggregated Revenues
– Our disaggregated admission, NASCAR broadcasting, sponsorship and other event related revenues are reported in our Motorsports Event Related segment, and our souvenir and other merchandise and other revenues are reported in that segment and our All Other segment (see Note 10), and are comprised of the following (in thousands):
 
   
Three Months Ended
June 30:
   
Six Months Ended
June 30:
 
   
2019
   
2018
   
2019
   
2018
 
Admissions
  $ 19,223     $ 25,412     $ 33,573     $ 36,275  
NASCAR broadcasting
    70,905       86,131       128,550       122,872  
Sponsorships and other event related
    40,690       46,007       65,367       65,553  
Souvenir and other merchandise
    8,350       6,346       16,686       12,369  
Other
    2,700       2,959       5,580       5,749  
Total Revenue
  $ 141,868     $ 166,855     $ 249,756     $ 242,818  
 
Unsatisfied Performance Obligations
- We have contracted revenues representing unsatisfied performance obligations that are expected to be recognized in the future. These contracts contain initial terms typically ranging from one to five years, with some for ten-year periods, excluding renewal options. We anticipate recognizing unsatisfied performance obligations for the calendar year ending 2020 and beyond of approximately $114,046,000 at June 30, 2019. Such amount excludes NASCAR broadcasting revenues through 2024, with estimated total revenues approximating
$225.6
million in 2019 and
$234.6
million in 2020 (the last year of the current five-year NASCAR Event Management Agreements).
 
Deferred Event Expenses
– Deferred event expenses pertain to scheduled events to be held in upcoming periods and are recognized, along with associated deferred event income, in the calendar quarter in which conducted. Deferred event expenses are reflected in other current assets, and amounted to $12,279,000 and $6,978,000 as of June 30, 2019 and December 31, 2018.
 
Contract Balances
– Our contract assets are comprised of accounts receivable and deferred event expenses, and our contract liabilities are comprised of deferred event income and noncurrent deferred income. Costs to obtain and fulfill contracts (performance obligations) are comprised principally of such deferred event expenses. Changes in contract assets and liabilities result principally from recognition upon holding associated motorsport and non-motorsports events during the period. At June 30, 2019 and December 31, 2018, contract assets aggregated $12,279,000 and $6,978,000, and contract liabilities aggregated $61,074,000 and $36,225,000. For the six months ended June 30, 2019 and 2018, we recognized revenue associated with contract liabilities amounting to $20,969,000 and $28,150,000. At June 30, 2019 and December 31, 2018, our contract liabilities consist of current deferred revenue of $58,064,000 and $33,868,000, and noncurrent deferred revenue of $3,010,000 and $2,357,000, and we anticipate recognizing current amounts in the upcoming twelve-month period and noncurrent amounts thereafter.
 
Taxes
Collected from Customers
– We have elected to report sales, admission and other taxes collected from customers based on our applicable jurisdiction tax reporting requirements. As such, taxes are reported on both a gross and net basis in our operations, and those reported on a gross basis amounted to $1,525,000 and $2,094,000 in the three months ended June 30, 2019 and 2018, and $2,186,000 and $2,388,000 in the six months ended June 30, 2019 and 2018.
Weather Guarantee [Policy Text Block]
SMI Weather Guarantee
- Effective August 2018, we announced “The SMI Weather Guarantee” for all NASCAR-sanctioned races held at our eight speedways. If inclement weather postpones a NASCAR race, and ticketholders are unable to attend on a rescheduled date, fans can obtain a credit toward future NASCAR races held at any SMI speedway. Unused paid race tickets may be exchanged for tickets of equal or lesser value within one calendar year of the original event date or for the same race in the following year, subject to certain restrictions and requirements. Cash refunds are not available and the guarantee does not apply to delayed or shortened races. Tickets honored under this program were not significant in the three or six months ended June 30, 2019.
Income Tax, Policy [Policy Text Block]
Income Taxes
– We provide for income taxes at the end of each interim period based on management’s best estimate of the annual estimated effective income tax rate. Cumulative adjustments to our annual estimated effective income tax rate are recorded in the interim period in which a change in the annual estimated effective income tax rate is determined. 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. See Notes 2 and 8 to the Consolidated Financial Statements in our 2018 Annual Report for additional information on our accounting for income taxes.
 
Our effective income tax rate for the three months ended June 30, 2019 and 2018 was 25.8% and 22.0%, and for the six months ended June 30, 2019 and 2018 was 25.9% and 21.4%, respectively. The 2018 tax rates reflect a second quarter non-recurring tax benefit of $1,110,000 resulting from certain state income tax law changes. We paid cash of $16,410,000 and $500,000 for income taxes in the six months ended June 30, 2019 and 2018.
 
Accounting for Uncertainty in Income Taxes
– Income tax liabilities for unrecognized tax benefits approximate $11,711,000 at both June 30, 2019 and December 31, 2018, all of which relates to our previously discontinued operation. Of those amounts, $11,534,000 is included in noncurrent other liabilities, all of which would favorably impact our effective tax rate if recognized, and $177,000 is included in deferred tax liabilities at both June 30, 2019 and December 31, 2018. As of June 30, 2019 and December 31, 2018, management believes $201,000 of unrecognized tax benefits will be recognized within the next twelve months. Interest and penalties associated with unrecognized tax benefits were insignificant for the three and six months ended June 30, 2019 and 2018. As of June 30, 2019 and December 31, 2018, we had $1,161,000 and $789,000 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 2017 by the Internal Revenue Service, and 2012 through 2017 by other state taxing jurisdictions to which we are subject. 
 
Income Tax Benefits
– Applicable accounting guidance may require establishing valuation allowances for certain deferred tax assets or income tax liabilities for unrecognized tax benefits, notwithstanding management believes associated tax filing positions are sustainable and are or will be reflected in its tax filings. At June 30, 2019 and December 31, 2018, liabilities for unrecognized tax benefits totaled $11.7 million. 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.
Advertising Cost [Policy Text Block]
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 $3,215,000 and $4,695,000 for the three months ended June 30, 2019 and 2018, and $5,425,000 and $6,430,000 for the six months ended June 30, 2019 and 2018. There were no deferred direct-response advertising costs at June 30, 2019 or December 31, 2018.
TMS Mineral Rights Lease Receipts, Policy [Policy Text Block]
TMS Mineral Rights Lease Receipts
– We recognized royalty revenue of $246,000 and $347,000 in the three months ended June 30, 2019 and 2018, and $636,000 and $743,000 in the six months ended June 30, 2019 and 2018, under a natural gas mineral rights lease agreement and a joint exploration agreement entitling TMS to stipulated stand-alone and shared royalties. 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, remain steady or adequate. The long-term lease remains enforceable as long as drilling or extraction related activities continue or certain price levels are met. 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 2018, up to specified cumulative amounts. At this time, management believes that our infrastructure spending will continue to exceed anticipated future royalties similar to 2018. As of June 30, 2019 and December 31, 2018, there was no deferred income associated with these agreements.
Fair Value of Financial Instruments, Policy [Policy Text Block]
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 following table presents estimated fair values and categorization levels of our financial instruments as of June 30, 2019 and December 31, 2018 (in thousands):
 
             
2019
   
2018
 
   
Level
 
Class
 
Carrying
Value
   
Fair Value
   
Carrying
Value
   
Fair Value
 
Assets
 
 
 
 
   
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Cash and cash equivalents
    1  
R
  $ 104,710     $ 104,710     $ 80,568     $ 80,568  
Note receivable
    2  
NR
    517       517       613       613  
Cash surrender values
    2  
NR
    10,870       10,870       10,061       10,061  
                                           
Liabilities
(principal)
 
 
 
 
   
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
5.125% Senior Notes Payable due 2023
    2  
NR
    200,000       200,500       200,000       195,000  
Other long-term debt
    2  
NR
    720       720       887       887  
 
Level 1:
Quoted market prices in active markets for identical assets or liabilities.
Level 2:
Observable market-based inputs or unobservable inputs that are corroborated by market data.
Level 3:
Unobservable inputs that are not corroborated by market data.
Class R:
Measured at fair value on recurring basis, subsequent to initial recognition.
Class NR:
Measured at fair value on nonrecurring basis, subsequent to initial recognition.
Property, Plant and Equipment, Policy [Policy Text Block]
Property and Equipment
– From time to time, we may decide to renovate 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 on renovation and removal, accelerated depreciation is 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”.
 
In 2019, we contracted and began removing certain seating at CMS, NHMS and LVMS for replacing every other seating row with drink rails in certain areas, offering our fans more legroom, easier mobility and expanded comfort for consuming food and beverages. As such, we recorded non-cash pre-tax charges for accelerated depreciation of $552,000 and $912,000, before income tax benefits of $143,000 and $237,000, in the three and six months ended June 30, 2019, respectively. These charges are included in our "motorsports event related" reporting segment (see Note 10).
Cash and Cash Equivalents, Policy [Policy Text Block]
Consolidated Statements of Cash Flows – 
We revised the consolidated statements of cash flows for the six months ended June 30, 2018 to comport with full year classifications in our 2018 Annual Report. These revisions resulted in an immaterial decrease in net cash provided by operating activities and a corresponding decrease in net cash used by investing activities.
New Accounting Pronouncements, Policy [Policy Text Block]
Recently Issued Accounting Standards 
 – The Financial Accounting Standards Board (FASB) issued ASU No. 2016-02 “Leases (Subtopic 842)” which replaces all current US GAAP guidance on this topic, and ASU No. 2018-10 “Codification Improvements to Topic 842, Leases” which clarifies certain transitional and application guidance. Leases that meet the guidance criteria are to be recognized on an entity’s balance sheet as right-of-use assets and lease liabilities, and expanded disclosures are required. The accounting to be applied by lessors is largely unchanged from previous guidance. The FASB also issued ASU No. 2018-20 “Narrow-Scope Improvements for Lessors - Leases (Topic 842)” which, among other things, requires lessors to exclude certain lessor costs paid by lessees directly to third parties from revenue and variable payments in lease contract consideration. Costs paid by lessors and reimbursed by lessees will be recorded as costs and revenue, respectively. We implemented processes, internal controls and technology solutions to help enable proper accounting and accurate reporting of our leasing activities.
 
We adopted this new guidance as of January 1, 2019 using the modified retrospective transition method, with no restatement of prior periods. No cumulative-effect adjustment was recognized as the amount was not material, and adoption had an insignificant impact on our statement of operations and cash flows. All of our leases are operating leases under the new guidance. Adoption resulted in recording right-of-use assets and lease liabilities of $1,935,000 as of January 1, 2019. Our evaluation under the new lease accounting guidance, practical expedients and associated required disclosures are set forth below. All amounts and disclosures for our leasing activities before January 1, 2019 are based on previous accounting guidance.
 
The FASB issued ASU No. 2018-01 "Leases (Topic 842): Land Easement Practical Expedient for Transition to Topic 842" which, among other things, provides an optional transition practical expedient to not evaluate existing or expired land easements that were not accounted for as leases under previous 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. We elected this practical expedient, including not reassessing existing land easements as lease contracts, and adoption of this new guidance as of January 1, 2019 had no significant impact on our financial statements.
Operating Leases [Policy Text Block]
Operating Leases –
As lessee, our lease agreements are principally for office and warehouse space used in operations and equipment used in conducting racing and other events. As lessor, we lease various office, warehouse and industrial park space and certain other speedway facilities under operating leases to various entities largely involved in motorsports, and leases typically contain initial terms of one year or more and are noncancelable. Certain property and building lease agreements obligate us to pay real estate taxes, insurance and certain maintenance costs (non-lease components). Our lease agreements do not contain any significant residual value guarantees, buy-out options or variable costs, no significant lease costs are capitalized, and our sub-leases are not significant. Operating lease expense is generally recognized on a straight-line basis over the lease term, and recorded in our various expense categories based on the nature of the associated lease.
 
We elected the following practical expedients:
Lease agreements with lease and non-lease components are generally accounted for as a single lease component.
No reassessment of whether any expired or existing contracts are or contain leases or their previous classification.
Our initial direct costs are immaterial for all leases.
 
We also used the following considerations in applying the new lease accounting guidance:
Because our operations consist largely of weekend, single day or other short-period seasonal events, most equipment and other personal property lease agreements typically have initial terms of one year or less, involve right-to-use assets with actual use of less than 30 consecutive days or are cancelable with minimal notice, and have lessor substitution and control rights throughout periods of use. As such, our short-term lease costs as defined under the new guidance are not significant.
Most of our various office and warehouse non-speedway facilities are leased from an affiliate, which are cancelable with minimal notice.
Actual use, right-to-use or ability to cancel with minimal notice was considered. Contracted renewal options did not significantly impact adoption.
Such considerations under the new lease guidance significantly reduced the impact of adoption and quantitative disclosures.
 
We determined the present value of lease payments over the respective lease terms using an estimated weighted average incremental borrowing rate of 4% based on available information, and a weighted-average lease term of 2.5 years. Total lease cost amounted to $344,000 and $687,000 for the three and six months ended June 30, 2019. Operating lease right-of-use assets and associated lease liabilities as of June 30, 2019 are as follows (in thousands):
 
   
June 30, 2019
 
Operating lease right-of-use assets (reflected in non-current Other Assets)
  $ 1,759  
         
Current operating lease liabilities (reflected in Accrued Expenses and Other Current Liabilities)
    877  
Noncurrent operating lease liabilities (reflected in non-current Other Liabilities)
    894  
Total present value of lease liabilities
    1,771  
Imputed interest
    66  
Total gross lease payments
  $ 1,837  
 
Lease revenue for operating leases, excluding TMS oil and gas mineral rights lease receipts that are not subject to the new lease guidance, amounted to $2,446,000 and $4,910,000 in the three and six months ended June 30, 2019. Future contracted annual lease payments, and minimum lease revenues, under operating leases with terms in excess of twelve months at June 30, 2019 were as follows (in thousands):
 
   
Lease
Payments
   
Lease
Revenues
 
2019 (remainder of the year)
  $ 536     $ 4,941  
2020
    740       7,371  
2021
    462       6,479  
2022
    59       3,000  
2023
    40       2,229  
Thereafter
          5,781  
Total
  $ 1,837     $ 29,801  
 
Disclosures under Previous Lease Accounting Guidance
– The following disclosures are based on accounting guidance in effect prior to our January 1, 2019 adoption of the new lease accounting standards. At December 31, 2018, future annual minimum lease payments under operating leases amounted to $1,152,000 in 2019, $855,000 in 2020, $504,000 in 2021, $156,000 in 2022, $145,000 in 2023, and $200,000 thereafter. At December 31, 2018, future annual minimum lease revenues under operating leases amounted to $5,142,000 in 2019, $2,561,000 in 2020, $1,778,000 in 2021, $1,250,000 in 2022, $888,000 in 2023, and $37,000 thereafter.
v3.19.2
Note 2 - Significant Accounting Policies and Other Disclosures (Tables)
6 Months Ended
Jun. 30, 2019
Notes Tables  
Disaggregation of Revenue [Table Text Block]
   
Three Months Ended
June 30:
   
Six Months Ended
June 30:
 
   
2019
   
2018
   
2019
   
2018
 
Admissions
  $
19,223
    $
25,412
    $
33,573
    $
36,275
 
NASCAR broadcasting
   
70,905
     
86,131
     
128,550
     
122,872
 
Sponsorships and other event related
   
40,690
     
46,007
     
65,367
     
65,553
 
Souvenir and other merchandise
   
8,350
     
6,346
     
16,686
     
12,369
 
Other
   
2,700
     
2,959
     
5,580
     
5,749
 
Total Revenue
  $
141,868
    $
166,855
    $
249,756
    $
242,818
 
Fair Value Measurements, Recurring and Nonrecurring [Table Text Block]
             
2019
   
2018
 
   
Level
 
Class
 
Carrying
Value
   
Fair Value
   
Carrying
Value
   
Fair Value
 
Assets
 
 
 
 
   
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Cash and cash equivalents
   
1
 
R
  $
104,710
    $
104,710
    $
80,568
    $
80,568
 
Note receivable
   
2
 
NR
   
517
     
517
     
613
     
613
 
Cash surrender values
   
2
 
NR
   
10,870
     
10,870
     
10,061
     
10,061
 
                                           
Liabilities
(principal)
 
 
 
 
   
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
5.125% Senior Notes Payable due 2023
   
2
 
NR
   
200,000
     
200,500
     
200,000
     
195,000
 
Other long-term debt
   
2
 
NR
   
720
     
720
     
887
     
887
 
Operating Lease Right-of-use Assets and Associate Lease Liabilities [Table Text Block]
   
June 30, 2019
 
Operating lease right-of-use assets (reflected in non-current Other Assets)
  $
1,759
 
         
Current operating lease liabilities (reflected in Accrued Expenses and Other Current Liabilities)
   
877
 
Noncurrent operating lease liabilities (reflected in non-current Other Liabilities)
   
894
 
Total present value of lease liabilities
   
1,771
 
Imputed interest
   
66
 
Total gross lease payments
  $
1,837
 
Future Maturities of Lease liabilties, Annual Lease Payments, and Contracted Future Lease Revenues [Table Text Block]
   
Lease
Payments
   
Lease
Revenues
 
2019 (remainder of the year)
  $
536
    $
4,941
 
2020
   
740
     
7,371
 
2021
   
462
     
6,479
 
2022
   
59
     
3,000
 
2023
   
40
     
2,229
 
Thereafter
   
     
5,781
 
Total
  $
1,837
    $
29,801
 
v3.19.2
Note 3 - Inventories (Tables)
6 Months Ended
Jun. 30, 2019
Notes Tables  
Schedule of Inventory, Current [Table Text Block]
   
June 30,
   
December 31,
 
   
2019
   
2018
 
Finished race cars, parts and accessories
  $
5,215
    $
5,162
 
Souvenirs and apparel
   
3,791
     
2,319
 
Micro-lubricant
®
and other
   
864
     
537
 
Total
  $
9,870
    $
8,018
 
v3.19.2
Note 5 - Long-term Debt (Tables)
6 Months Ended
Jun. 30, 2019
Notes Tables  
Interest Income and Interest Expense Disclosure [Table Text Block]
   
Three Months Ended
June 30:
   
Six Months Ended
June 30:
 
   
2019
   
2018
   
2019
   
2018
 
Gross interest costs
  $
2,962
    $
3,185
    $
5,924