SPEEDWAY MOTORSPORTS INC, 10-Q filed on 5/2/2019
Quarterly Report
v3.19.1
Document And Entity Information - shares
3 Months Ended
Mar. 31, 2019
Apr. 30, 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)   40,837,402
Document Type 10-Q  
Document Period End Date Mar. 31, 2019  
Document Fiscal Year Focus 2019  
Document Fiscal Period Focus Q1  
Amendment Flag false  
v3.19.1
Consolidated Balance Sheets (Current Period Unaudited) - USD ($)
Mar. 31, 2019
Dec. 31, 2018
Current Assets:    
Cash and cash equivalents $ 68,619,000 $ 80,568,000
Accounts receivable, net 56,868,000 19,497,000
Prepaid and refundable income taxes 144,000 960,000
Inventories, net 9,735,000 8,018,000
Prepaid expenses and other current assets (Note 2) 21,987,000 11,911,000
Total Current Assets 157,353,000 120,954,000
Note Receivable 566,000 613,000
Other Assets 25,947,000 23,634,000
Property and Equipment, Net (Note 2) 929,813,000 936,551,000
Other Intangible Assets 298,383,000 298,383,000
Goodwill 46,225,000 46,225,000
Total 1,458,287,000 1,426,360,000
Current Liabilities:    
Current maturities of long-term debt 172,000 167,000
Accounts payable 16,751,000 10,376,000
Deferred race event and other income 61,981,000 33,868,000
Accrued income taxes 3,532,000 689,000
Accrued interest 1,712,000 4,295,000
Accrued expenses and other current liabilities 15,410,000 21,601,000
Total Current Liabilities 99,558,000 70,996,000
Long-term Debt 198,134,000 198,002,000
Deferred Income 3,095,000 2,357,000
Deferred Income Taxes, Net 200,682,000 201,486,000
Other Liabilities 20,400,000 18,764,000
Total Liabilities 521,869,000 491,605,000
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, issued and outstanding – 40,829,000 in 2019 and 40,854,000 in 2018 464,000 463,000
Additional Paid-in Capital 267,154,000 266,366,000
Retained Earnings 787,607,000 785,251,000
Treasury Stock at cost, shares – 5,525,000 in 2019 and 5,436,000 in 2018 (118,807,000) (117,325,000)
Total Stockholders’ Equity 936,418,000 934,755,000
Total $ 1,458,287,000 $ 1,426,360,000
v3.19.1
Consolidated Balance Sheets (Current Period Unaudited) (Parentheticals) - $ / shares
Mar. 31, 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) 40,829,000 40,854,000
Common Stock, shares outstanding (in shares) 40,829,000 40,854,000
Treasury Stock at cost, shares (in shares) 5,525,000 5,436,000
v3.19.1
Consolidated Statements of Operations (Unaudited) - USD ($)
shares in Thousands, $ in Thousands
3 Months Ended
Mar. 31, 2019
Mar. 31, 2018
Revenues:    
Revenues $ 107,888 $ 75,963
Expenses and Other:    
General and administrative 25,277 24,393
Depreciation and amortization (Note 2) 13,524 13,090
Interest expense, net 2,768 2,957
Other (income) expense, net (54) 51
Total Expenses and Other 96,295 79,248
Income (Loss) Before Income Taxes 11,593 (3,285)
Income Tax (Provision) Benefit (3,039) 965
Net Income (Loss) $ 8,554 $ (2,320)
Basic Earnings (Loss) Per Share (in dollars per share) $ 0.21 $ (0.06)
Weighted Average Shares Outstanding (in shares) 40,846 40,982
Diluted Earnings (Loss) Per Share (in dollars per share) $ 0.21 $ (0.06)
Weighted Average Shares Outstanding (in shares) 40,847 40,982
Admissions [Member]    
Revenues:    
Revenues $ 14,350 $ 10,863
Event Related [Member]    
Revenues:    
Revenues 28,477 20,989
NASCAR Broadcasting Revenue [Member]    
Revenues:    
Revenues 57,645 36,741
Other Operating Revneues [Member]    
Revenues:    
Revenues 7,416 7,370
Direct Expense of Events [Member]    
Expenses and Other:    
Cost of goods and services sold 16,670 13,333
NASCAR Event Management Fees [Member]    
Expenses and Other:    
Cost of goods and services sold 32,865 20,552
Other Direct Operating Expense [Member]    
Expenses and Other:    
Cost of goods and services sold $ 5,245 $ 4,872
v3.19.1
Consolidated Statement of Stockholders' Equity (Unaudited) - USD ($)
shares in Thousands, $ in Thousands
Common Stock [Member]
Additional Paid-in Capital [Member]
Retained Earnings [Member]
Treasury Stock [Member]
Total
Balance (in shares) at Dec. 31, 2017 40,992        
Balance at Dec. 31, 2017 $ 461 $ 262,885 $ 769,426 $ (111,982) $ 920,790
Net income (loss) (2,320) (2,320)
Share-based compensation (in shares) 60        
Share-based compensation $ 1 846     847
Quarterly cash dividends of common stock (6,224) (6,224)
Repurchases of common stock (in shares) (87)        
Repurchases of common stock (1,689) (1,689)
Balance (in shares) at Mar. 31, 2018 40,965        
Balance at Mar. 31, 2018 $ 462 263,731 760,882 (113,671) 911,404
Balance (in shares) at Dec. 31, 2018 40,854        
Balance at Dec. 31, 2018 $ 463 266,366 785,251 (117,325) 934,755
Net income (loss) 8,554 8,554
Share-based compensation (in shares) 63        
Share-based compensation $ 1 788     789
Quarterly cash dividends of common stock (6,198) (6,198)
Repurchases of common stock (in shares) (88)        
Repurchases of common stock (1,482) (1,482)
Balance (in shares) at Mar. 31, 2019 40,829        
Balance at Mar. 31, 2019 $ 464 $ 267,154 $ 787,607 $ (118,807) $ 936,418
v3.19.1
Consolidated Statement of Stockholders' Equity (Unaudited) (Parentheticals) - $ / shares
3 Months Ended
Feb. 12, 2019
Mar. 31, 2019
Mar. 31, 2018
Cash dividends, per share of common stock (in dollars per share) $ 0.15 $ 0.15 $ 0.15
v3.19.1
Consolidated Statements of Cash Flows (Unaudited) - USD ($)
$ in Thousands
3 Months Ended
Mar. 31, 2019
Mar. 31, 2018
Cash Flows from Operating Activities:    
Net income (loss) $ 8,554 $ (2,320)
Adjustments to reconcile net income (loss) to net cash provided (used) by operating activities:    
Deferred loan cost amortization 393 377
(Gain) loss on disposals of property and equipment and other assets (22) 12
Depreciation and amortization 13,524 13,090
Amortization of deferred income (569) (167)
Deferred income tax provision (621) 622
Share-based compensation 789 847
Changes in operating assets and liabilities:    
Accounts receivable (Note 2) (37,369) (12,230)
Prepaid, refundable and accrued income taxes 3,659 (1,557)
Inventories (1,717) (829)
Prepaid expenses and other current assets (10,076) (13,901)
Accounts payable 4,681 664
Deferred race event and other income (Note 2) 26,403 26,179
Accrued interest (2,583) (2,587)
Accrued expenses and other liabilities (7,166) (8,583)
Deferred income 3,017 34
Other assets and liabilities (61) (214)
Net Cash Provided (Used) By Operating Activities 836 (563)
Cash Flows from Financing Activities:    
Principal payments on long-term debt (167) (3,162)
Dividend payments on common stock (6,198) (6,224)
Repurchases of common stock (1,482) (1,689)
Net Cash Used By Financing Activities (7,847) (11,075)
Cash Flows from Investing Activities:    
Payments for capital expenditures (5,117) (11,291)
Proceeds from sales of property and equipment 50 9
Repayment of note receivable 45 43
Net Cash Used By Investing Activities (5,022) (11,239)
Net Decrease in Cash and Cash Equivalents (12,033) (22,877)
Cash and Cash Equivalents at Beginning of Period 80,903 82,200
Cash and Cash Equivalents at End of Period 68,870 59,323
Supplemental Cash Flow Information:    
Cash paid for interest, net of amounts capitalized 5,516 5,635
Supplemental Non-Cash Investing and Financing Activities Information:    
Increase in accounts payable for capital expenditures $ 1,694 $ 2,643
v3.19.1
Note 1 - Description of Business
3 Months Ended
Mar. 31, 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 Development
– As previously announced, our Board of Directors received a non-binding proposal on
April 23, 2019
from Sonic Financial Corporation, a company owned and controlled by O. Bruton Smith and his family (“Sonic Financial”), to acquire all of the outstanding shares of common stock of the Company, other than the shares held by Sonic Financial, O. Bruton Smith, his family and entities controlled by Mr. Smith and his family (collectively, the “Smith Group”), for cash consideration of
$18.00
per share. Our Board of Directors has formed a special committee (the “Special Committee”) comprised of independent and disinterested directors to consider the proposal by Sonic Financial and advised by independent legal and financial advisors.
No
decisions have been made by the Special Committee with respect to the Company’s response to the proposal. There can be
no
assurance that any definitive offer will be made, that any agreement will be executed, or that this or any other transaction will be approved or consummated. The proposal by Sonic Financial is expressly subject to (i) a non-waivable condition requiring the approval of the holders of a majority of the shares of common stock that are
not
owned by the Smith Group and (ii) the approval of any transaction by a special committee consisting of independent and disinterested directors. Unless and until the transactions contemplated thereby have been consummated, SMI will continue to operate in the same manner as it operated prior to the receipt of the proposal letter. On
April 24, 2019,
the Company suspended its stock repurchase program. There can be
no
assurance that the Company will resume repurchases under the program.
 
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 Camping World 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 Camping World 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 realigned 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
months ended
March 31, 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 w
ere
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,
and at AMS and LVMS in the
first
quarter
2018
v3.19.1
Note 2 - Significant Accounting Policies and Other Disclosures
3 Months Ended
Mar. 31, 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
$1,599,000
and direct expense of events by
$1,079,000,
and decreased the net loss by
$394,000
and basic and diluted loss per share by
$0.01,
for the
three
months ended
March 31, 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 March 31:
 
   
2019
   
2018
 
Admissions
  $
14,350
    $
10,863
 
NASCAR broadcasting
   
57,645
     
36,741
 
Sponsorships and other event related
   
24,677
     
19,545
 
Souvenir and other merchandise
   
8,336
     
6,023
 
Other
   
2,880
     
2,791
 
Total Revenue
  $
107,888
    $
75,963
 
 
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, excluding future NASCAR broadcasting revenues, for the calendar year en
ding
2020
and beyond of approxi
mately
$109,557,000
at
March 31, 2019. 
 
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
$19,066,000
and
$6,978,000
as of
March 31, 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
March 31, 2019
and
December 31, 2018,
contract assets aggregated
$19,066,000
and
$6,978,000,
and contract liabilities aggregated
$65,076,000
and
$36,225,000.
For the
three
months ended
March 31, 2019
and
2018,
we recognized revenue associated with contract liabilities amounting to
$12,902,000
and
$10,320,000.
At
March 31, 2019
and
December 31, 2018,
our contract liabilities consist of current deferred revenue of
$61,981,000
and
$33,868,000,
and noncurrent deferred revenue of
$3,095,000
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
$661,000
and
$294,000
in the
three
months ended
March 31, 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
first
quarter
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.
 
The effective income tax rate for the
three
months ended
March 31, 2019
and
2018
was
26.2%
and
29.4%
(benefit in
2018
), respectively. There was
no
cash paid for income taxes in the
three
months ended
March 31, 2019
or
2018.
 
Accounting for Uncertainty in Income Taxes
– Income tax liabilities for unrecognized tax benefits approximate
$11,711,000
at both
March 31, 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
March 31, 2019
and
December 31, 2018.
As of
March 31, 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
months ended
March 31, 2019
and
2018.
As of
March 31, 2019
and
December 31, 2018,
we had
$973,000
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
2014
 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
March 31, 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
$2,210,000
and
$1,735,000
in the
three
months ended
March 31, 2019
and
2018.
There were
no
deferred direct-response advertising costs at
March 31, 2019
or
December 31, 2018.
 
TMS Mineral Rights Lease Receipts
– We recognized royalty revenue of
$390,000
and
$396,000
in the
three
months ended
March 31, 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
2019
revenues will
not
differ significantly from
2018,
and that our infrastructure spending will continue to exceed anticipated future royalties similar to
2018.
As of
March 31, 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
March 31, 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
  $
68,619
    $
68,619
    $
80,568
    $
80,568
 
Note receivable
   
2
 
NR
   
566
     
566
     
613
     
613
 
Cash surrender values
   
2
 
NR
   
10,627
     
10,627
     
10,061
     
10,061
 
                                           
Liabilities
(principal)
 
 
 
 
   
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
5.125% Senior Notes Payable due 2023
   
2
 
NR
   
200,000
     
199,000
     
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 the
first
quarter
2019,
we contracted and began removing certain seating at LVMS for replacing every other seating row with drink rails in certain areas, offering our fans more leg room, easier mobility and expanded comfort for consuming food and beverages. As such, we recorded a non-cash pre-tax charge for accelerated depreciation of
$360,000,
before income tax benefits of
$94,000,
in the
first
quarter
2019.
This charge is 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
three
months ended
March 31, 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.
 
The following is additional information on our consolidated statements of cash flows: The changes in cash flows from operating activities in the
three
months ended
March 31, 2019
compared to
2018
reflect an increase in accounts receivable for NASCAR broadcasting revenues associated with events held at TMS in
March 2019
and collected in
April 2019 (
such revenues are scheduled due within approximately
30
days after events are held - similar events were held in
April 2018).
 
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 Januar
y
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 contai
n 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
2.2
years. Total lease cost amounted to
$343,000
for the
three
months ended
March 31, 2019.
Operating lease right-of-use assets and associated lease liabilities as of
March 31, 2019
are as follows (in thousands):
 
 
      March 31, 2019  
Operating lease right-of-use assets (reflected in non-current Other Assets)
  $
1,933
 
         
Current operating lease liabilities (reflected in Accrued Expenses and Other Current Liabilities)
   
975
 
Noncurrent operating lease liabilities (reflected in non-current Other Liabilities)
   
971
 
Total present value of lease liabilities
   
1,946
 
Imputed interest
 
85
 
Total gross lease payments
  $
2,031
 
 
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
$2,464,000
in the
three
months ended
March 31, 2019.
Future contracted annual lease payments, and minimum lease revenues, under operating leases with terms in excess of
twelve
months at
March 31, 2019
were as follows (in thousands):
 
   
Lease
Payments
   
Lease
Revenues
 
2019 (remainder of the year)
  $
833
    $
7,092
 
2020
   
758
     
6,861
 
2021
   
348
     
6,051
 
2022
   
48
     
2,953
 
2023
   
44
     
2,208
 
Thereafter
   
     
5,656
 
Total
  $
2,031
    $
30,821
 
 
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.
v3.19.1
Note 3 - Inventories
3 Months Ended
Mar. 31, 2019
Notes to Financial Statements  
Inventory Disclosure [Text Block]
3.
INVENTORIES
 
Inventories, net consist of the following components (in thousands):
 
   
March 31,
   
December 31,
 
   
2019
   
2018
 
Finished race cars, parts and accessories
  $
5,475
    $
5,162
 
Souvenirs and apparel
   
3,444
     
2,319
 
Micro-lubricant
®
and other
   
816
     
537
 
Total
  $
9,735
    $
8,018
 
v3.19.1
Note 4 - Goodwill and Other Intangible Assets
3 Months Ended
Mar. 31, 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
2018
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's assessment found the estimated fair value of each reporting unit and each indefinite-lived race date intangible asset substantially exceeded its associated carrying value except for
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
March 31, 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
March 31, 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
three
months ended
March 31, 2019.
Those carrying amounts include accumulated impairments of
$100.0
million for other intangible assets and
$149.7
million for goodwill at both
March 31, 2019
and
December 31, 2018.
There is
no
accumulated amortization for either asset class.
v3.19.1
Note 5 - Long-term Debt
3 Months Ended
Mar. 31, 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
March 31, 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
months ended
March 31, 2018,
the Company repaid
$3,000,000
of Term Loan borrowings. As of
March 31, 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
March 31, 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
March 31, 2019
and
December 31, 2018,
long-term debt reflects deferred financing costs, net of accumulated amortization, of
$2,414,000
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
March 31, 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
 
   
March 31:
 
   
2019
   
2018
 
Gross interest costs
  $
2,962
    $
3,177
 
Less: capitalized interest costs
   
(29
)
   
(129
)
Interest expense
   
2,933
     
3,048
 
Interest income
   
(165
)
   
(91
)
Interest expense, net
  $
2,768
    $
2,957
 
Weighted-average interest rate on Credit Facility borrowings
   
     
2.9
%
v3.19.1
Note 6 - Per Share and Other Equity Information
3 Months Ended
Mar. 31, 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 or loss per share (where computations are anti-dilutive, reported basic and diluted per share amounts are the same) (in thousands except per share amounts):
 
   
Three Months Ended
 
   
March 31:
 
   
2019
   
2018
 
Net income (loss) applicable to common stockholders and assumed conversions
  $
8,554
    $
(2,320
)
                 
Weighted average common shares outstanding
   
40,846
     
40,982
 
Dilution effect of assumed conversions:
               
Common stock equivalents—stock awards
   
1
     
 
Weighted average common shares outstanding and assumed conversions
   
40,847
     
40,982
 
                 
Basic earnings (loss) per share
  $
0.21
    $
(0.06
)
Diluted earnings (loss) per share
  $
0.21
    $
(0.06
)
Anti-dilutive common stock equivalents excluded in computing diluted earnings per share
   
     
30
 
 
Stock Repurchase Program 
– Our Board of Directors has approved a stock repurchase program authorizing SMI to repurchase up to an aggregate of
6,000,000
shares (increased from
5,000,000
shares with Board of Director approval on
February 12, 2018)
of our outstanding common stock from time to time, depending on market conditions, share price, applicable limitations under our debt agreements, and other factors
the Board of Directors or its designees, in their sole discretion,
may
consider relevant. The purchases can be in the open market or private transactions. The stock repurchase program has been funded using available cash and cash equivalents and
may
be suspended or discontinued at any time (see Note
1
).
 
 
During the
three
months ended
March 31, 2019
and
2018,
we repurchased
61,000
and
59,000
shares of common stock for
$1,014,000
and
$1,148,000,
respectively. As of
March 31, 2019,
we could repurchase up to an additional
884,000
shares under the current authorization. During the
three
months ended
March 31, 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
March 31, 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 approximately
$6.2
million payable on
June 5, 2019
to shareholders of record as of
May 15, 2019.
These quarterly cash dividends are being paid using available cash and cash equivalents on hand.
v3.19.1
Note 7 - Related Party Transactions
3 Months Ended
Mar. 31, 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. For the
three
months ended
March 31, 2019
and
2018,
we incurred expenses of
$407,000
and
$275,000
under the shared services agreement.
No
amounts were due from or payable to Sonic Financial at
March 31, 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
$183,000
and
$182,000
in the
three
months ended
March 31, 2019
and
2018.
Amounts owed to these affiliated companies at
March 31, 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
$165,000
and
$159,000
in the
three
months ended
March 31, 2019
and
2018.
There were
no
vehicles sold to SAI in the
three
months ended
March 31, 2019
and
2018.
Also, SMI sold through certain speedways and its SMIP merchandising subsidiary various event related inventory and merchandise to SAI totaling
$235,000
and
$221,000
in the
three
months ended
March 31, 2019
and
2018.
At
March 31, 2019
and
December 
31,
2018,
approximately
$94,000
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
$347,000
and
$438,000
in the
three
months ended
March 31, 2019
and
2018.
At
March 31, 2019
and
December 
31,
2018,
approximately
$114,000
and
$217,000
was due from SAI and is reflected in current assets.
 
The foregoing related party balances as of
March 31, 2019
and
December 31, 2018,
and transactions for the
three
months ended
March 31, 2019
and
2018,
are summarized below (in thousands):
 
   
2019
   
2018
 
Accounts receivable
  $
208
    $
359
 
Merchandise and vehicle purchases
   
165
     
159
 
Shared services expense
   
407
     
275
 
Merchandise sales
   
582
     
659
 
Rent expense
   
183
     
182
 
v3.19.1
Note 8 - Legal Proceedings and Contingencies
3 Months Ended
Mar. 31, 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.
v3.19.1
Note 9 - Stock Compensation Plans
3 Months Ended
Mar. 31, 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
three
months ended
March 31, 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):
 
   
Three Months Ended March 31:
 
   
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
three
months ended
March 31, 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 or exercised under any of the Company’s stock compensation plans during the
three
months ended
March 31, 2019
or
2018.
 
Share-based compensation cost for the
three
months ended
March 31, 2019
and
2018
totaled
$789,000
and
$847,000,
before income taxes of
$207,000
and
$249,000,
and is included in general and administrative expense. There were
no
capitalized share-based compensation costs at
March 31, 2019
or
December 31, 2018.
As of
March 31, 2019,
there was approximately
$3,647,000
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
0.9
year. As of
March 31, 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.
v3.19.1
Note 10 - Segment Disclosures
3 Months Ended
Mar. 31, 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 March 31:
 
   
2019
   
2018
 
   
Motorsports
Event
Related
   
 
All
Other
   
 
Consolidated
   
Motorsports
Event
Related
   
All
Other
   
 
Consolidated
 
Revenues
  $
102,658
    $
5,230
    $
107,888
    $
71,393
    $
4,570
    $
75,963
 
Depreciation and amortization (Note 2)
   
13,469
     
55
     
13,524
     
13,053
     
37
     
13,090
 
Segment operating income (loss)
   
13,565
 
   
742
     
14,307
 
   
(961
)
   
684
     
(277
)
Capital expenditures
   
5,086
     
31
     
5,117
     
11,111
     
180
     
11,291
 
 
   
 
March 31, 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
   
1,433,738
    $
24,549
     
1,458,287
     
1,402,474
    $
23,886
     
1,426,360
 
 
The following table reconciles segment operating income or loss above to consolidated income or loss before income taxes (in thousands):
 
   
Three Months Ended
 
   
March 31:
 
   
2019
   
2018
 
Total segment operating income (loss)
  $
14,307
 
  $
(277
)
Adjusted for:
               
Interest expense, net
   
(2,768
)
   
(2,957
)
Other expense, net
   
54
 
   
(51
)
Consolidated income (loss) before income taxes
  $
11,593
 
  $
(3,285
)
 
v3.19.1
Significant Accounting Policies (Policies)
3 Months Ended
Mar. 31, 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
$1,599,000
and direct expense of events by
$1,079,000,
and decreased the net loss by
$394,000
and basic and diluted loss per share by
$0.01,
for the
three
months ended
March 31, 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 March 31:
 
   
2019
   
2018
 
Admissions
  $
14,350
    $
10,863
 
NASCAR broadcasting
   
57,645
     
36,741
 
Sponsorships and other event related
   
24,677
     
19,545
 
Souvenir and other merchandise
   
8,336
     
6,023
 
Other
   
2,880
     
2,791
 
Total Revenue
  $
107,888
    $
75,963
 
 
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, excluding future NASCAR broadcasting revenues, for the calendar year en
ding
2020
and beyond of approxi
mately
$109,557,000
at
March 31, 2019. 
 
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
$19,066,000
and
$6,978,000
as of
March 31, 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
March 31, 2019
and
December 31, 2018,
contract assets aggregated
$19,066,000
and
$6,978,000,
and contract liabilities aggregated
$65,076,000
and
$36,225,000.
For the
three
months ended
March 31, 2019
and
2018,
we recognized revenue associated with contract liabilities amounting to
$12,902,000
and
$10,320,000.
At
March 31, 2019
and
December 31, 2018,
our contract liabilities consist of current deferred revenue of
$61,981,000
and
$33,868,000,
and noncurrent deferred revenue of
$3,095,000
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
$661,000
and
$294,000
in the
three
months ended
March 31, 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
first
quarter
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.
 
The effective income tax rate for the
three
months ended
March 31, 2019
and
2018
was
26.2%
and
29.4%
(benefit in
2018
), respectively. There was
no
cash paid for income taxes in the
three
months ended
March 31, 2019
or
2018.
 
Accounting for Uncertainty in Income Taxes
– Income tax liabilities for unrecognized tax benefits approximate
$11,711,000
at both
March 31, 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
March 31, 2019
and
December 31, 2018.
As of
March 31, 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
months ended
March 31, 2019
and
2018.
As of
March 31, 2019
and
December 31, 2018,
we had
$973,000
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
2014
 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
March 31, 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
$2,210,000
and
$1,735,000
in the
three
months ended
March 31, 2019
and
2018.
There were
no
deferred direct-response advertising costs at
March 31, 2019
or
December 31, 2018.
TMS Mineral Rights Lease Receipts, Policy [Policy Text Block]
TMS Mineral Rights Lease Receipts
– We recognized royalty revenue of
$390,000
and
$396,000
in the
three
months ended
March 31, 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
2019
revenues will
not
differ significantly from
2018,
and that our infrastructure spending will continue to exceed anticipated future royalties similar to
2018.
As of
March 31, 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
March 31, 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
  $
68,619
    $
68,619
    $
80,568
    $
80,568
 
Note receivable
   
2
 
NR
   
566
     
566
     
613
     
613
 
Cash surrender values
   
2
 
NR
   
10,627
     
10,627
     
10,061
     
10,061
 
                                           
Liabilities
(principal)
 
 
 
 
   
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
5.125% Senior Notes Payable due 2023
   
2
 
NR
   
200,000
     
199,000
     
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 the
first
quarter
2019,
we contracted and began removing certain seating at LVMS for replacing every other seating row with drink rails in certain areas, offering our fans more leg room, easier mobility and expanded comfort for consuming food and beverages. As such, we recorded a non-cash pre-tax charge for accelerated depreciation of
$360,000,
before income tax benefits of
$94,000,
in the
first
quarter
2019.
This charge is 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
three
months ended
March 31, 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.
 
The following is additional information on our consolidated statements of cash flows: The changes in cash flows from operating activities in the
three
months ended
March 31, 2019
compared to
2018
reflect an increase in accounts receivable for NASCAR broadcasting revenues associated with events held at TMS in
March 2019
and collected in
April 2019 (
such revenues are scheduled due within approximately
30
days after events are held - similar events were held in
April 2018).
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 Januar
y
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 contai
n 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
2.2
years. Total lease cost amounted to
$343,000
for the
three
months ended
March 31, 2019.
Operating lease right-of-use assets and associated lease liabilities as of
March 31, 2019
are as follows (in thousands):
 
 
      March 31, 2019  
Operating lease right-of-use assets (reflected in non-current Other Assets)
  $
1,933
 
         
Current operating lease liabilities (reflected in Accrued Expenses and Other Current Liabilities)
   
975
 
Noncurrent operating lease liabilities (reflected in non-current Other Liabilities)
   
971
 
Total present value of lease liabilities
   
1,946
 
Imputed interest
 
85
 
Total gross lease payments
  $
2,031
 
 
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
$2,464,000
in the
three
months ended
March 31, 2019.
Future contracted annual lease payments, and minimum lease revenues, under operating leases with terms in excess of
twelve
months at
March 31, 2019
were as follows (in thousands):
 
   
Lease
Payments
   
Lease
Revenues
 
2019 (remainder of the year)
  $
833
    $
7,092
 
2020
   
758
     
6,861
 
2021
   
348
     
6,051
 
2022
   
48
     
2,953
 
2023
   
44
     
2,208
 
Thereafter
   
     
5,656
 
Total
  $
2,031
    $
30,821
 
 
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.
v3.19.1
Note 2 - Significant Accounting Policies and Other Disclosures (Tables)
3 Months Ended
Mar. 31, 2019
Notes Tables  
Disaggregation of Revenue [Table Text Block]
   
Three Months Ended March 31:
 
   
2019
   
2018
 
Admissions
  $
14,350
    $
10,863
 
NASCAR broadcasting
   
57,645
     
36,741
 
Sponsorships and other event related
   
24,677
     
19,545
 
Souvenir and other merchandise
   
8,336
     
6,023
 
Other
   
2,880
     
2,791
 
Total Revenue
  $
107,888
    $
75,963
 
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
  $
68,619
    $
68,619
    $
80,568
    $
80,568
 
Note receivable
   
2
 
NR
   
566
     
566
     
613
     
613
 
Cash surrender values
   
2
 
NR
   
10,627
     
10,627
     
10,061
     
10,061
 
                                           
Liabilities
(principal)
 
 
 
 
   
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
5.125% Senior Notes Payable due 2023
   
2
 
NR
   
200,000
     
199,000
     
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]
      March 31, 2019  
Operating lease right-of-use assets (reflected in non-current Other Assets)
  $
1,933
 
         
Current operating lease liabilities (reflected in Accrued Expenses and Other Current Liabilities)
   
975
 
Noncurrent operating lease liabilities (reflected in non-current Other Liabilities)
   
971
 
Total present value of lease liabilities
   
1,946
 
Imputed interest
 
85
 
Total gross lease payments
  $
2,031
 
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)
  $
833
    $
7,092
 
2020
   
758
     
6,861
 
2021
   
348
     
6,051
 
2022
   
48
     
2,953
 
2023
   
44
     
2,208
 
Thereafter
   
     
5,656
 
Total
  $
2,031
    $
30,821
 
v3.19.1
Note 3 - Inventories (Tables)
3 Months Ended
Mar. 31, 2019
Notes Tables  
Schedule of Inventory, Current [Table Text Block]
   
March 31,
   
December 31,
 
   
2019
   
2018
 
Finished race cars, parts and accessories
  $
5,475
    $
5,162
 
Souvenirs and apparel
   
3,444
     
2,319
 
Micro-lubricant
®
and other
   
816
     
537
 
Total
  $
9,735
    $
8,018
 
v3.19.1
Note 5 - Long-term Debt (Tables)
3 Months Ended
Mar. 31, 2019
Notes Tables  
Interest Income and Interest Expense Disclosure [Table Text Block]
   
Three Months Ended
 
   
March 31:
 
   
2019
   
2018
 
Gross interest costs
  $
2,962
    $
3,177
 
Less: capitalized interest costs
   
(29
)
   
(129
)
Interest expense
   
2,933
     
3,048
 
Interest income
   
(165
)
   
(91
)
Interest expense, net
  $
2,768
    $
2,957
 
Weighted-average interest rate on Credit Facility borrowings
   
     
2.9
%
v3.19.1
Note 6 - Per Share and Other Equity Information (Tables)
3 Months Ended
Mar. 31, 2019
Notes Tables  
Schedule of Earnings Per Share, Basic and Diluted [Table Text Block]
   
Three Months Ended
 
   
March 31:
 
   
2019
   
2018
 
Net income (loss) applicable to common stockholders and assumed conversions
  $
8,554
    $
(2,320
)
                 
Weighted average common shares outstanding
   
40,846
     
40,982
 
Dilution effect of assumed conversions:
               
Common stock equivalents—stock awards
   
1
     
 
Weighted average common shares outstanding and assumed conversions
   
40,847
     
40,982
 
                 
Basic earnings (loss) per share
  $
0.21
    $
(0.06
)
Diluted earnings (loss) per share
  $
0.21
    $
(0.06
)
Anti-dilutive common stock equivalents excluded in computing diluted earnings per share
   
     
30
 
v3.19.1
Note 7 - Related Party Transactions (Tables)
3 Months Ended
Mar. 31, 2019
Related Party Balances [Member]  
Notes Tables  
Schedule of Related Party Transactions [Table Text Block]
   
2019
   
2018
 
Accounts receivable
  $
208
    $
359
 
Merchandise and vehicle purchases
   
165
     
159
 
Shared services expense
   
407
     
275
 
Merchandise sales
   
582
     
659
 
Rent expense
   
183
     
182
 
v3.19.1
Note 9 - Stock Compensation Plans (Tables)
3 Months Ended
Mar. 31, 2019
Notes Tables  
Share-based Payment Arrangement, Option, Activity [Table Text Block]
   
Three Months Ended March 31:
 
   
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
 
v3.19.1
Note 10 - Segment Disclosures (Tables)
3 Months Ended
Mar. 31, 2019
Notes Tables  
Schedule of Segment Reporting Information, by Segment [Table Text Block]
   
Three Months Ended March 31:
 
   
2019
   
2018
 
   
Motorsports
Event
Related
   
 
All
Other
   
 
Consolidated
   
Motorsports
Event
Related
   
All
Other
   
 
Consolidated
 
Revenues
  $
102,658
    $
5,230
    $
107,888
    $
71,393
    $
4,570
    $
75,963
 
Depreciation and amortization (Note 2)
   
13,469
     
55
     
13,524
     
13,053
     
37
     
13,090
 
Segment operating income (loss)
   
13,565
 
   
742
     
14,307
 
   
(961
)
   
684
     
(277
)
Capital expenditures
   
5,086
     
31
     
5,117
     
11,111
     
180
     
11,291
 
Reconciliation of Operating Profit (Loss) from Segments to Consolidated [Table Text Block]
   
Three Months Ended
 
   
March 31:
 
   
2019
   
2018
 
Total segment operating income (loss)
  $
14,307
 
  $
(277
)
Adjusted for: