SPEEDWAY MOTORSPORTS INC, 10-K filed on 3/10/2017
Annual Report
Document And Entity Information (USD $)
12 Months Ended
Dec. 31, 2016
Mar. 8, 2017
Jun. 30, 2016
Document Information [Line Items]
 
 
 
Entity Registrant Name
SPEEDWAY MOTORSPORTS INC 
 
 
Entity Central Index Key
0000934648 
 
 
Trading Symbol
trk 
 
 
Current Fiscal Year End Date
--12-31 
 
 
Entity Filer Category
Accelerated Filer 
 
 
Entity Current Reporting Status
Yes 
 
 
Entity Voluntary Filers
No 
 
 
Entity Well-known Seasoned Issuer
No 
 
 
Entity Common Stock, Shares Outstanding (in shares)
 
41,083,038 
 
Entity Public Float
 
 
$ 204,321,013 
Document Type
10-K 
 
 
Document Period End Date
Dec. 31, 2016 
 
 
Document Fiscal Year Focus
2016 
 
 
Document Fiscal Period Focus
FY 
 
 
Amendment Flag
false 
 
 
Consolidated Balance Sheets (USD $)
In Thousands, unless otherwise specified
Dec. 31, 2016
Dec. 31, 2015
Current Assets:
 
 
Cash and cash equivalents
$ 79,342 
$ 82,010 
Accounts receivable, net
29,444 
39,783 
Prepaid and refundable income taxes
7,384 
8,520 
Inventories, net
8,212 
8,711 
Prepaid expenses
3,527 
3,862 
Total Current Assets
127,909 
142,886 
Notes Receivable
1,143 
1,303 
Other Assets (Note 2)
23,142 
23,258 
Net
1,000,230 
1,019,650 
Other intangibles
298,393 
298,394 
Goodwill
47,342 
47,342 
Total
1,498,149 
1,532,833 
Current Liabilities:
 
 
Current maturities of long-term debt
7,657 
7,677 
Accounts payable
13,497 
12,112 
Deferred race event and other income, net
44,782 
57,549 
Accrued interest
4,311 
4,291 
Accrued expenses and other current liabilities
24,424 
26,740 
Total Current Liabilities
94,671 
108,369 
Long-term debt, excluding current maturities
254,398 
307,342 
Preferred seat license fees, net
3,742 
4,581 
Deferred Income Taxes, Net
329,398 
321,046 
Other Liabilities
18,157 
6,655 
Total Liabilities
700,366 
747,993 
Commitments and Contingencies
   
   
Stockholders’ Equity:
 
 
Preferred Stock, $.10 par value, shares authorized – 3,000,000, no shares issued
   
   
Common Stock, $.01 par value, shares authorized – 200,000,000, issued and outstanding – 41,098,000 in 2016 and 41,235,000 in 2015
459 
458 
Additional Paid-in Capital
258,880 
255,294 
Retained Earnings
644,308 
629,115 
Treasury Stock at cost, shares – 4,830,000 in 2016 and 4,520,000 in 2015
(105,864)
(100,027)
Total Stockholders’ Equity
797,783 
784,840 
Total
$ 1,498,149 
$ 1,532,833 
Consolidated Balance Sheets (Parentheticals) (USD $)
Dec. 31, 2016
Dec. 31, 2015
Preferred stock par value (in dollars per share)
$ 0.10 
$ 0.10 
Preferred stock, shares authorized (in shares)
3,000,000 
3,000,000 
Preferred stock, shares issued (in shares)
Common Stock, par value (in dollars per share)
$ 0.01 
$ 0.01 
Common Stock, shares authorized (in shares)
200,000,000 
200,000,000 
Common Stock, shares issued (in shares)
41,098,000 
41,235,000 
Common Stock, shares outstanding (in shares)
41,098,000 
41,235,000 
Treasury Stock at cost, shares (in shares)
4,830,000 
4,520,000 
Consolidated Statements of Operations (USD $)
In Thousands, except Per Share data, unless otherwise specified
12 Months Ended
Dec. 31, 2016
Dec. 31, 2015
Dec. 31, 2014
Admissions
$ 90,639 
$ 100,694 
$ 100,798 
Event related revenue
136,900 
146,980 
146,849 
NASCAR broadcasting revenue
224,227 
217,469 
207,369 
Other operating revenue (Note 1)
60,390 
31,320 
29,293 
Total Revenues
512,156 
496,463 
484,309 
Direct expense of events
102,786 
104,303 
102,196 
NASCAR event management fees
137,727 
133,682 
128,254 
Other direct operating expense (Note 1)
43,784 
19,541 
18,513 
General and administrative
100,144 
98,289 
96,762 
Depreciation and amortization (Note 4)
54,368 
61,964 
78,426 
Interest expense, net
13,148 
16,811 
21,237 
Impairment of other intangible assets and goodwill (Note 2)
   
98,868 
   
Loss on early debt redemption and refinancing (Note 6)
   
8,372 
   
Other (income) expense, net
(997)
862 
(2,305)
Total Expenses and Other
450,960 
542,692 
443,083 
Income (Loss) from Continuing Operations Before Income Taxes
61,196 
(46,229)
41,226 
(Provision) Benefit For Income Taxes
(21,651)
11,879 
(15,789)
Income (Loss) from Continuing Operations
39,545 
(34,350)
25,437 
Income (Loss) from Discontinued Operation (Note 1)
   
(13)
5,710 
Net Income (Loss)
$ 39,545 
$ (34,363)
$ 31,147 
Continuing Operations (in dollars per share)
$ 0.96 
$ (0.83)
$ 0.61 
Discontinued Operation (in dollars per share)
   
$ 0 
$ 0.14 
Net Income (Loss) (in dollars per share)
$ 0.96 
$ (0.83)
$ 0.75 
Weighted Average Shares Outstanding (in shares)
41,152 
41,284 
41,377 
Continuing Operations (in dollars per share)
$ 0.96 
$ (0.83)
$ 0.61 
Discontinued Operation (in dollars per share)
   
$ 0 
$ 0.14 
Net Income (Loss) (in dollars per share)
$ 0.96 
$ (0.83)
$ 0.75 
Weighted Average Shares Outstanding (in shares)
41,167 
41,312 
41,400 
Consolidated Statements of Stockholders' Equity (USD $)
Common Stock [Member]
Additional Paid-in Capital [Member]
Retained Earnings [Member]
Treasury Stock [Member]
Total
Balance at Dec. 31, 2013
$ 454,000 
$ 249,505,000 
$ 681,998,000 
$ (89,363,000)
$ 842,594,000 
Balance (in shares) at Dec. 31, 2013
41,404,000 
 
 
 
 
Net income
 
 
31,147,000 
 
31,147,000 
Share-based compensation (in shares)
146,000 
 
 
 
 
Share-based compensation
2,000 
2,894,000 
 
 
2,896,000 
Exercise of stock options (in shares)
7,000 
 
 
 
7,500 
Exercise of stock options
 
172,000 
 
 
172,000 
Cash dividends of $0.60 per share of common stock
 
 
(24,860,000)
 
(24,860,000)
Repurchases of common stock at cost (in shares)
(217,000)
 
 
 
 
Repurchases of common stock at cost
 
 
 
(4,167,000)
(4,167,000)
Net income (loss)
 
 
31,147,000 
 
31,147,000 
Balance at Dec. 31, 2014
456,000 
252,571,000 
688,285,000 
(93,530,000)
847,782,000 
Balance (in shares) at Dec. 31, 2014
41,340,000 
 
 
 
 
Net income
 
 
(34,363,000)
 
(34,363,000)
Share-based compensation (in shares)
144,000 
 
 
 
 
Exercise of stock options (in shares)
56,000 
 
 
 
55,500 
Exercise of stock options
1,000 
878,000 
 
 
879,000 
Cash dividends of $0.60 per share of common stock
 
 
(24,807,000)
 
(24,807,000)
Repurchases of common stock at cost (in shares)
(305,000)
 
 
 
 
Repurchases of common stock at cost
 
 
 
(6,497,000)
(6,497,000)
Net income (loss)
 
 
(34,363,000)
 
(34,363,000)
Share-based compensation, net of windfall tax benefits adjustment (Note 11)
1,000 
1,845,000 
 
 
1,846,000 
Balance at Dec. 31, 2015
458,000 
255,294,000 
629,115,000 
(100,027,000)
784,840,000 
Balance (in shares) at Dec. 31, 2015
41,235,000 
 
 
 
 
Net income
 
 
39,545,000 
 
39,545,000 
Share-based compensation (in shares)
162,000 
 
 
 
 
Exercise of stock options (in shares)
11,000 
 
 
 
11,500 
Exercise of stock options
 
182,000 
 
 
182,000 
Cash dividends of $0.60 per share of common stock
 
 
(24,759,000)
 
(24,759,000)
Repurchases of common stock at cost (in shares)
(310,000)
 
 
 
 
Repurchases of common stock at cost
 
 
 
(5,837,000)
(5,837,000)
Net income (loss)
 
 
39,545,000 
 
39,545,000 
Share-based compensation, net of windfall tax benefits adjustment (Note 11)
1,000 
3,404,000 
407,000 
 
3,812,000 
Balance at Dec. 31, 2016
$ 459,000 
$ 258,880,000 
$ 644,308,000 
$ (105,864,000)
$ 797,783,000 
Balance (in shares) at Dec. 31, 2016
41,098,000 
 
 
 
 
Consolidated Statements of Stockholders' Equity (Parentheticals)
12 Months Ended
Dec. 31, 2016
Dec. 31, 2015
Dec. 31, 2014
Cash dividends, per share of common stock (in dollars per share)
$ 0.60 
$ 0.60 
$ 0.60 
Retained Earnings [Member] |
As Revised [Member]
 
 
 
Cash dividends, per share of common stock (in dollars per share)
$ 0.60 
$ 0.60 
$ 0.60 
Consolidated Statements of Cash Flows (USD $)
12 Months Ended
Dec. 31, 2016
Dec. 31, 2015
Dec. 31, 2014
Cash Flows from Operating Activities:
 
 
 
Net income (loss)
$ 39,545,000 
$ (34,363,000)
$ 31,147,000 
Loss (income) from discontinued operation
   
13,000 
(5,710,000)
Cash (used) provided by activities of discontinued operation
   
(13,000)
5,710,000 
Adjustments to reconcile income (loss) from continuing operations to net cash provided by operating activities:
 
 
 
Impairment of other intangible assets and goodwill
   
98,868,000 
   
(Gain) loss on disposals of property and equipment and other assets and insurance recovery
(1,353,000)
653,000 
(2,205,000)
Deferred loan cost amortization
1,520,000 
1,676,000 
2,014,000 
Interest expense accretion of debt discount and premium, net
   
(117,000)
(672,000)
Depreciation and amortization
54,368,000 
61,964,000 
78,426,000 
Amortization of deferred income
(944,000)
(2,458,000)
(2,345,000)
Deferred income tax provision
19,543,000 
(12,516,000)
15,201,000 
Share-based compensation
3,405,000 
3,383,000 
2,610,000 
Changes in operating assets and liabilities:
 
 
 
Accounts receivable
10,256,000 
(5,314,000)
(741,000)
Prepaid, refundable and accrued income taxes
1,543,000 
(214,000)
585,000 
Inventories
499,000 
(361,000)
255,000 
Prepaid expenses
335,000 
19,000 
(287,000)
Increase (Decrease) in Accounts Payable
242,000 
1,735,000 
(1,433,000)
Deferred race event and other income
(12,800,000)
3,405,000 
(2,843,000)
Accrued interest
20,000 
(2,764,000)
11,000 
Accrued expenses and other liabilities
(2,316,000)
1,817,000 
3,224,000 
Deferred income
138,000 
1,042,000 
331,000 
Other assets and liabilities
(228,000)
(15,000)
1,388,000 
Net Cash Provided By Operating Activities
113,773,000 
116,440,000 
124,666,000 
Cash Flows from Financing Activities:
 
 
 
Borrowings under long-term debt
   
251,383,000 
150,000,000 
Principal payments on long-term debt
(54,177,000)
(331,500,000)
(211,500,000)
Payments of debt refinancing, issuance and amendment costs
   
(3,975,000)
(1,608,000)
Exercise of common stock options
182,000 
879,000 
131,000 
Dividend payments on common stock
(24,759,000)
(24,807,000)
(24,860,000)
Repurchases of common stock
(5,837,000)
(6,497,000)
(4,167,000)
Net Cash Used By Financing Activities
(84,591,000)
(114,517,000)
(92,004,000)
Cash Flows from Investing Activities:
 
 
 
Payments for capital expenditures
(34,635,000)
(30,733,000)
(22,036,000)
Proceeds from sales of property and equipment and insurance recovery
2,542,000 
136,000 
1,263,000 
Repayment of notes and other receivables
243,000 
638,000 
814,000 
Net Cash Used By Investing Activities
(31,850,000)
(29,959,000)
(19,959,000)
Net (Decrease) Increase In Cash and Cash Equivalents
(2,668,000)
(28,036,000)
12,703,000 
Cash and Cash Equivalents at Beginning of Year
82,010,000 
110,046,000 
97,343,000 
Cash and Cash Equivalents at End of Year
79,342,000 
82,010,000 
110,046,000 
Supplemental Cash Flow Information:
 
 
 
Cash paid for interest, net of amounts capitalized
13,322,000 
19,982,000 
21,760,000 
Cash paid for income taxes
867,000 
1,015,000 
557,000 
Supplemental Non-cash Investing and Financing Activities Information:
 
 
 
Increase (decrease) in accounts payable for capital expenditures
1,284,000 
(930,000)
2,115,000 
Increase in deferred income for exchange of property and equipment
    
$ 250,000 
$ 250,000 
Note 1 - Basis of Presenation and Description of Business
Nature of Operations [Text Block]
1.
BASIS OF PRESENTATION AND DESCRIPTION OF BUSINESS
 
Basis of Presentation
– The consolidated financial statements include the accounts of Speedway Motorsports, Inc. and all of its wholly-owned and operating subsidiaries: Atlanta Motor Speedway LLC (AMS), Bristol Motor Speedway LLC (BMS), Charlotte Motor Speedway LLC (CMS), Kentucky Raceway LLC d/b/a Kentucky Speedway (KyS), Nevada Speedway LLC d/b/a Las Vegas Motor Speedway (LVMS), New Hampshire Motor Speedway, Inc. (NHMS), North Wilkesboro Speedway, Inc. (NWS), Speedway Sonoma LLC (Sonoma Raceway or SR), Texas Motor Speedway, Inc. (TMS), SMISC Holdings, Inc. d/b/a SMI Properties (SMI Properties), US Legend Cars International, Inc. (Legend Cars), Oil-Chem Research Corporation (Oil-Chem), SMI Trackside LLC (SMI Trackside), Speedway Funding LLC, Speedway Properties Company LLC a/k/a Performance Racing Network (PRN), Speedway Media LLC a/k/a Racing Country USA (RCU), and TSI Management Company LLC d/b/a The Source International LLC (TSI) (collectively, the Company, SMI, we, our or us). Hereafter, references to “the Company’s” or
“eight”
speedways exclude NWS, which presently has no significant operations and assets consist primarily of real estate which has no significant fair value.
 
Description of Business
– We are a promoter, marketer and sponsor of motorsports activities in the United States. We principally own and operate the following motorsports facilities: Atlanta Motor Speedway, Bristol Motor Speedway, Charlotte Motor Speedway, Kentucky Speedway, Las Vegas Motor Speedway, New Hampshire Motor Speedway, Sonoma Raceway, and Texas Motor Speedway. We also provide event and non-event souvenir merchandising and distribution services, and food, beverage and hospitality catering services under an outside management contract through our SMI Properties subsidiaries; provide radio programming, production and distribution through PRN and RCU; manufacture and distribute smaller-scale, modified racing cars and parts through Legend Cars, and sell an environmentally-friendly micro-lubricant
®
through Oil-Chem.
 
In early
2017,
the NASCAR Sprint Cu
p Series became the Monster Energy NASCAR Cup Series
and that naming convention is used throughout this document.
 
Discontinued Oil and Gas Activities
– In
2008,
we discontinued our oil and gas operations primarily because of ongoing challenges and business risks in conducting these activities in foreign countries. We have no remaining involvement or ownership interest, and there are no assets, liabilities, revenues or expenses (other than as described below), associated with the discontinued operation for any period presented herein. All note disclosures pertain to continuing operations unless otherwise indicated. We incurred insignificant legal fees and other costs in
2014
and
2015
associated with efforts to recover previously reserved receivables. In
2014,
we recovered approximately
$6.0
million of previously reserved receivables through favorable settlements. There were no associated income tax benefits reflected in discontinued operations for any period presented (see Note
8).
 
Racing Events
– As further described in Note
2,
we derive a substantial portion of our total revenues from admissions, event related and NASCAR broadcasting revenue. In
2016
, we held
24
major annual racing events sanctioned by NASCAR, including
13
Monster Energy Cup and
11
Xfinity Series racing events. We also held
eight
NASCAR Camping World Truck Series,
three
NASCAR K&N Pro Series,
four
NASCAR Whelen Modified Tour,
two
IndyCar Series,
six
major National Hot Rod Association,
one
Automobile Racing Club of America and
three
World of Outlaws racing events.
In
2015,
we held
24
major annual racing events sanctioned by NASCAR, including
13
Monster Energy Cup and
11
Xfinity Series racing events. We also held
eight
NASCAR Camping World Truck Series,
three
NASCAR K&N Pro Series,
four
NASCAR Whelen Modified Tour,
two
IndyCar Series,
six
major NHRA,
one
ARCA and
three
WOO events. In
2014,
we held
24
major annual racing events sanctioned by NASCAR, including
13
Monster Energy Cup and
11
Xfinity Series racing events. We also held
seven
NASCAR Camping World Truck Series,
three
NASCAR K&N Pro Series,
four
NASCAR Whelen Modified Tour,
two
IndyCar Series,
six
major NHRA,
one
ARCA and
three
WOO racing events.
 
The Battle at Bristol
In
2016,
BMS hosted
two
collegiate football games,
one
of which (the “Battle at Bristol”, including a large preceding concert) was substantially larger than the other due to team standings and public interest. Under the same accounting policy for our racing events described below, we previously deferred advance revenues and direct expenses pertaining to these events in current “deferred race event and other income, net”, all of which were recognized when held in
2016.
These events had a material positive effect on our
2016
operating results, and associated revenues and direct expenses have been reflected in “other operating revenue” and “other direct operating expense” in our Consolidated Statements of Operations, and in our “all other” reporting segment (see Note
13).
Management believes reporting these results separate from our core business of motorsports operations is appropriate as we do not have additional football games scheduled at this time (nor have any been held before), and these results are not indicative of future results that can be expected or forecast.
 
The more significant racing schedule changes during the last
three
years include:
 
Our
2016
race season experienced an unusually high number of event weekends with significant poor weather. For example,
8
events held during our
13
NASCAR Cup weekends were negatively impacted by poor weather. 
In
2016,
poor weather resulted in: (i) postponing and res
cheduling
one
Monster Energy NASCAR Cup race held at BMS, (ii) starting and completing the NASCAR All-Star race and next day rescheduling of
one
NASCAR Camping World Truck Series race held at CMS, (iii) delaying the start of the Monster Energy NASCAR Cup race held at LVMS, and (iv) delays in starting or completing or shortening
two
Monster Energy NASCAR Cup races held at TMS 
 
In
2016,
 Hurricane Matthew
resulted in postponing and rescheduling
one
Monster Energy NASCAR Cup and
one
Xfinity Series race held at CMS
 
In
2016,
poor weather resulted in cancellation of a portion of
one
major NHRA weekend racing event held at CMS, and
delays in starting and completing
one
IndyCar race held at TMS, which was rescheduled from the
second
quarter
2016
to the
third
quarter
2016
(see
Note
2)
TMS held
one
Red Bull Air Race in
2015
and
2014
that was not held in
2016
In
2015,
poor weather resulted in delays in starting and completing
one
Monster Energy NASCAR Cup race at AMS and BMS, and postponing and
rescheduling
one
Monster Energy NASCAR Cup race held at CMS
In
2014,
poor weather resulted in delays in starting and completing
one
Monster Energy NASCAR Cup race held at BMS and postponing and rescheduling
one
Monster Energy NASCAR Cup race held at
TMS
AMS held
one
NASCAR Camping World Truck Series race in
2016
and
2015
that was not held in
2014
 
2018
Monster Energy NASCAR Cup, Xfinity and Camping World Truck Series Race Date Realignments to Las Vegas Motor Speedway –
 
We recently obtained approval from NASCAR to realign
one
annual Monster Energy Cup Series and
one
annual Camping World Truck Series racing event from NHMS, and an annual Xfinity Series racing event from KyS, to LVMS beginning in
2018.
 
We considered many factors, including the popularity, demand, alternative uses and revenues, and potential net increase in long-term future profitability from conducting additional annual NASCAR racing events in the LVMS market. 
Note 2 - Significant Accounting Policies
Significant Accounting Policies [Text Block]
2.
SIGNIFICANT ACCOUNTING POLICIES
 
Principles of Consolidation
– All significant intercompany accounts and transactions have been eliminated in consolidation.
 
Revenue and Expense Classification
– We classify our revenues as admissions, event related revenue, NASCAR broadcasting revenue, and other operating revenue. “Admissions” includes ticket sales for all Company events. “Event related revenue” includes amounts received from sponsorships, luxury suite rentals, souvenir sales, commissions from food and beverage sales, advertising and other promotional revenues, hospitality revenues, track rentals, driving school revenues, camping and other non-admission access revenues, broadcasting rights other than NASCAR broadcasting revenue, and other event and speedway related revenues. “NASCAR broadcasting revenue” includes rights fees obtained for domestic television broadcasts of NASCAR-sanctioned events held at our speedways. “Other operating revenue” includes non-event merchandising revenues and Legend Cars and parts sales, The Speedway Club at CMS and The Speedway Club at TMS (together the “Speedway Clubs”) revenues, Oil-Chem revenues, TMS oil and gas mineral rights lease and related revenues, industrial park and office tower rentals, and for
2016
also includes revenues associated with the “Battle at Bristol” as further described in Note
1.
 
We classify our expenses to include direct expense of events, NASCAR event management (formerly purse and sanction) fees, and other direct operating expense, among other categories. “
Direct expense of events” principally includes cost of souvenir sales, non-NASCAR race purses and sanctioning fees, property and event insurance, compensation of certain employees, advertising, sales and admission taxes, outside event support services, cost of driving school revenues, and event settlement payments to non-NASCAR sanctioning bodies. “NASCAR event management fees” includes payments to, and portions of broadcasting revenues retained by, NASCAR for associated events held at the Company’s speedways. “Other direct operating expense” includes the cost of certain SMI Properties and subsidiaries, Legend Cars, Speedway Clubs, Oil-Chem, industrial park and office tower rental revenues, and for
2016
also includes expenses associated with the “Battle at Bristol” as further described in Note
1.
 
Event
Revenues and Deferred Event Income, Net
– We recognize admissions, NASCAR broadcasting and event related revenues when an event is held. Event souvenir merchandise sales and commissions from food and beverage sales are recognized at time of sale. Advance revenues and certain related direct expenses pertaining to specific events are deferred until the event is held. Deferred expenses can include race purses and sanction fees remitted to or retained by NASCAR or other sanctioning bodies and sales and admission taxes and credit card processing fees on advance revenues. Deferred race event income relates to scheduled events to be held in upcoming periods. If circumstances prevent a race from being held during the racing season: (i) generally advance revenue is refundable and (ii) all deferred direct event expenses would be immediately recognized except for race event management fees which would be refundable from NASCAR or other sanctioning bodies, and for sales and admission taxes which would be refundable from taxing authorities. Management believes this accounting policy results in appropriate matching of revenues and expenses associated with our racing events and helps ensure comparability and consistency between our financial statements. Advance revenues, and certain related direct expenses, if any, for track rentals, driving schools and similar activities are deferred and recognized when the activities take place. Management believes its revenue recognition policies follow applicable authoritative guidance. Sales of gift cards or gift certificates for tickets, merchandise or other redemption use have not been significant.
 
An IndyCar race scheduled at TMS in the
second
quarter
2016
was postponed due to poor weather, rescheduled for the next day and started and stopped due to poor weather, and rescheduled again and held in the
third
quarter
2016.
The Company has offered to honor unused tickets through exchange for race tickets to TMS’s upcoming Monster Energy NASCAR Cup race in
April
2017
or IndyCar race in
June
2017.
The exchange offer expires in
June
2017,
and cash refunds were not offered. We are presently unable to determine the ultimate number of tickets or which race events or future reporting periods that
may
be affected by ticket exchanges or redemption. As of
December
31,
2016,
we have deferred race event income of
$524,000
for unredeemed tickets associated with TMS’s
2016
IndyCar race. Management believes the matter will not materially affect our future financial condition, results of operations or cash flows.
 
NASCAR Broadcasting Revenues and NASCAR Event Management (formerly Purse and San
ction) Fees
– NASCAR contracts directly with certain television networks on broadcasting rights for all NASCAR-sanctioned Monster Energy Cup, Xfinity and Camping World Truck Series racing events. We receive television broadcasting revenues under contractual sanction agreements for each NASCAR-sanctioned race. The Company periodically negotiates its sanction fees for individual races with NASCAR. In
2015,
SMI entered into separate
five
-year Event Management Agreements with NASCAR, under which our speedways will conduct Monster Energy NASCAR Cup, Xfinity and Camping World Truck Series and the All-Star Race events beginning in
2016
and through
2020.
These agreements are substantially similar in form, substance and relative allocation of broadcast rights revenue to previous sanction agreements between SMI and NASCAR, except agreement duration increased from
one
to
five
years and annual increases in broadcast rights revenue and event management fees of
three
to
four
percent annually over the new
five
-year agreement term were established. Under the sanction agreements, NASCAR typically retains
10%
of gross broadcasting revenues as a component of their sanction fees. NASCAR also retains
25%
of gross broadcasting revenues for purses awarded to race participants for each race. The remainder represents additional annually negotiated event management fees paid to NASCAR by the Company for each race. These amounts retained by and paid to NASCAR are reflected in NASCAR event management fee expense.
 
Marketing Agreem
ents
– We have various marketing agreements for sponsorships, on-site advertising, hospitality and other promotional activities. Sponsorships generally consist of event and official sponsorship agreements. These various marketing agreements can be event, speedway or period specific, or pertain to multiple events, speedways or years. Marketing agreements that are not event specific typically contain stated fiscal year periods. We receive payments based on contracted terms. Marketing customers and agreement terms change from time to time. We recognize contracted fee revenues, and associated expenses, as events or activities are conducted each year in accordance with the respective agreement terms. Our marketing agreements sometimes include multiple specified elements such as sponsorships, tickets, hospitality, suites or on-site advertising in varying combinations for
one
or more events or contract periods, although there is typically a predominant element. Contracted revenues are allocated between admissions and event related revenue financial statement categories based on the relative fair or retail value of the respective multiple elements as such events or activities are conducted each year in accordance with the respective agreement terms.
 
Certain marketin
g agreements contain elements of purchased property and equipment exchanged for multi-year marketing and other promotional activities at
one
or more of our facilities. The associated assets and deferred revenue are initially recorded based on their estimated fair or retail values, with assets then depreciated over estimated useful lives and deferred revenue recognized into income on a straight-line basis as events are conducted each year in accordance with the respective agreement terms. Deferred revenues recognizable in each upcoming fiscal year are reflected as current liabilities in deferred race event and other income.
 
Long-Term Food and Beverage Management Contract
– Levy Premium Foodservice Limited Partnership, wholly-owned by Compass Group USA, Inc., has exclusive rights to provide on-site food, beverage and hospitality catering services for essentially all Company speedway events and operations under a long-term food and beverage management contract through
2021.
The long-term agreement provides for, among other items, specified annual fixed and periodic gross revenue based commission payments to the Company over the contract period. Our commission-based net revenues associated with activities provided by Levy are reported in event related revenue and at times, to a lesser extent, other operating revenue depending on the venue.
 
 
Non-Event Souvenir Merchandise and Other Revenues
– We recognize revenue when products are shipped, title transfers to customers, right of return or cancellation provisions expire, sales prices are final and collection is probable. We use these same methods and timing of revenue recognition for products sold through e-commerce or our websites, which has not been significant. For products sold on consignment through various promotional activities, revenues are recognized upon product shipment by promoters to customers, or purchase by reseller customers, and expiration of any right of return or cancellation provisions. Product sold on consignment with right of return or cancellation provisions has not been significant.
 
 
Revenue Composition
 – Our revenues are comprised of the following (in thousands):
 
   
2016
   
2015
   
2014
 
Admissions
  $
90,639
    $
100,694
    $
100,798
 
NASCAR broadcasting
   
224,227
     
217,469
     
207,369
 
Sponsorships
and other event related
   
126,046
     
132,928
     
133,071
 
Souvenir and other merchandise
   
27,742
     
31,781
     
31,058
 
Other
(Note 1)
   
43,502
     
13,591
     
12,013
 
Total revenue
  $
512,156
    $
496,463
    $
484,309
 
 
Revenues described as “
other event related” consist principally of commissions from food, beverage and souvenir sales, luxury suite rentals, advertising and other promotional revenues, hospitality revenues, track rentals, driving school revenues, camping and other non-admission access revenues, broadcasting rights other than NASCAR broadcasting revenue, and other event and speedway related revenues. “Souvenir and other merchandise revenue” consists of SMI Properties and SMI Trackside sales of owned souvenir merchandise during racing and non-racing events and in speedway gift shops (motorsports event related merchandise), certain SMI Properties sales of racing and other sports related souvenir merchandise and Legend Cars operations (non-event motorsports related merchandise), and Oil-Chem product sales (non-motorsports related merchandise). “Other revenue” consists principally of revenues from the Speedway Clubs, industrial park and office tower rentals, Legend Cars as the sanctioning body for Legend Cars circuit races, and TMS oil and gas mineral rights lease and related revenues, and for
2016
also includes all revenues associated with the “Battle at Bristol”.
 
 
Use of Estimates
– The preparation of financial statements in conformity with generally accepted accounting principles requires extensive use of management estimates and assumptions that affect reported amounts of assets and liabilities, disclosure of contingent assets and liabilities at financial statement dates, and reported amounts of revenues and expenses. Actual future results could differ from those estimates. Such significant estimates include (i) recoverability of property and equipment, goodwill and other intangible assets, (ii) depreciable lives for property and equipment and amortization periods for intangible assets, (iii) accounting for income taxes, (iv) realization of receivables and inventories, (v) accruals for certain business taxes, uninsured business risks, litigation, and other contingencies, and (vi) deferred compensation obligations and disclosures of stock-based compensation.
 
Consolidated Statements of Cash Flows
We classify as cash equivalents all highly liquid investments with original maturities of
three
months or less. Cash equivalents principally consist of variable rate, overnight sweep accounts of commercial paper, repurchase agreements, municipal bond and United States Treasury securities.
 
Before
December
31,
2016,
cash we collected and temporarily held on behalf of our
third
-party food and beverage concessionaire, and not remitted until after period end, was presented separately from cash flows from operating activities on the Consolidated Statements of Cash Flows. At
December
31,
2016,
such amounts are now included in c
ash flows from operating activities on the Consolidated Statements of Cash Flows. The change decreased cash flow from operations, and the change in accounts payable,
$141,000
for
2015
and
$612,000
for
2014,
which management believes is not significant. There was no impact on the Consolidated Balance Sheets or Statements of Operations.
 
Accounts Receivable
are reported net of allowance for doubtful accounts summarized as follows (in thousands):
 
   
2016
   
2015
   
2014
 
Balance, beginning of year
  $
1,287
    $
1,271
    $
1,273
 
Bad debt expense
   
126
     
605
     
261
 
Actual write-offs, net of specific accounts recovered
   
(235
)
   
(589
)
   
(263
)
Balance, end of year
  $
1,178
    $
1,287
    $
1,271
 
 
Deferred Financing Costs
are amortized into interest expense over the associated debt terms or remaining terms for loan amendment costs. Deferred financing costs reflected in other noncurrent assets below are associated with our revolving Credit Facility, and are reported net of accumulated amortization of
$3,167,000
and
$2,806,000
at
December
31,
2016
and
2015.
Deferred financing costs associated with our
2023
Senior Notes and bank Term Loan are reflected as a reduction of long-term debt, and are reported net of accumulated amortization of
$7,275,000
and
$6,062,000
at
December
31,
2016
and
2015.
 See "Recently Issued Accounting Standards" for related guidance adopted in
2016,
and Note
6
for information on
2015
charges associated with previously deferred financing costs.
 
Other Noncurrent Assets
as of
December
31,
2016
and
2015
consist of (in thousands):
 
   
2016
   
2015
 
Deferred financing costs, net (Note 6)
  $
1,084
    $
1,445
 
Land held for development
   
12,265
     
12,265
 
Other
   
9,793
     
9,548
 
Total
  $
23,142
    $
23,258
 
 
Noncurrent assets are generally reported at cost except for cash surrender values of life insurance policies which are reported at fair value (see Note
12).
Management
evaluates these assets for recovery when events or circumstances indicate possible impairment
may
have occurred. As of
December
31,
2016,
there have been no events or circumstances which might indicate possible recoverability concerns or impairment.
 
Original
Debt Issuance Discount or Premium
is amortized into interest expense over the associated debt terms using the effective interest method.
 
Land Held For Development
represents property adjacent to a regional outlet mall in the Charlotte metropolitan area which management plans to develop and market or possibly sell in suitable market conditions.
 
Property and Equipment (Note
4)
are recorded at cost less accumulated depreciation. Depreciation is provided using the straight-line method over the estimated useful lives of the respective assets. Leasehold improvements pertain primarily to industrial park, office and warehouse facilities, and are amortized using the straight-line method over the lesser of associated lease terms or estimated useful lives. Constructed assets, including construction in progress, include all direct costs and capitalized interest until placed into service. Expenditures for repairs and maintenance are charged to expense when incurred, unless useful asset lives are extended or assets improved.
 
When events or circumstances indicate possible impairment
may
have occu
rred, the Company evaluates long-lived assets, including tangible assets and intangible assets subject to amortization, for possible impairment based on expected future undiscounted operating cash flows attributable to such assets using applicable authoritative guidance. Assets are grouped at the lowest level for which identifiable cash flows are largely independent of other assets and liabilities when assessing impairment. When management decides to repurpose and remove grandstand seating and suites as part of managing facility capacity or other speedway facility assets, depreciation is accelerated and recorded prospectively over shortened estimated remaining useful lives of the assets, and accounted for as a change in estimate, beginning when management contracts and begins removal. Gains or losses on property and equipment disposals are recognized when disposed. Recording accelerated depreciation, gain or loss on disposal or impairment losses related to property and equipment is based on assessment of the associated facts and circumstances. Also, assets are classified as held for sale when management determines that sale is probable within
one
year.
 
In connection with the development and completed construction of TMS in
1997,
the Company entered into arra
ngements with the Fort Worth Sports Authority (FWSA), a non-profit corporate instrumentality of the City of Fort Worth, Texas, whereby the Company conveyed the speedway facility, excluding its on-site condominiums and office and entertainment complex, to the FWSA. The Company, which has the right to reacquire the facility, operates the speedway facility under a
30
-year arrangement with the FWSA. Because of the Company’s responsibilities, including associated risks, rewards and obligations, under these arrangements, the speedway facility and related liabilities are included in the accompanying consolidated balance sheets.
 
Other Intangible Assets
and
Goodwill (Note
5)
represent the excess of business acquisition costs over the fair value of net assets acquired, and are all associated with our motorsports related activities and reporting units. Intangible assets consist predominately of goodwill and nonamortizable intangible assets for race event sanctioning and renewal agreements and, to a lesser extent, goodwill associated with event related motorsports merchandising. Acquired intangible assets are valued using the direct value method. Our race event sanctioning and renewal agreements for each NASCAR-sanctioned racing event are awarded annually. We have evaluated each of our intangible assets for these agreements and determined that each will extend into the foreseeable future. We have never been unable to renew these race date agreements for any subsequent year and no such agreement has ever been cancelled. Based on these and other factors, such race date agreements are expected to be awarded to the Company in perpetuity. As such, these nonamortizable intangible assets for race event sanctioning and renewal agreements are considered to have indefinite useful lives because their renewal and cash flow generation are expected to continue indefinitely. No direct costs for agreement renewal or extension have been incurred or capitalized. However, we are obligated to conduct events in the manner stipulated under the terms and conditions of the annual sanctioning agreements. We follow applicable authoritative guidance on accounting for goodwill and other intangible assets which specifies, among other things, nonamortization of goodwill and requires testing of intangible assets with indefinite useful lives for possible impairment at least annually.
 
Impairment Assessment Methodology.
We evaluate goodwill and other intangible assets for possible impairment annually in the
second
quarter, or when events or circumstances indicate possible impairment
may
have occurred. Management considers each speedway and motorsports and non-motorsports merchandising subsidiary a separate reporting unit principally because that is the lowest level for which discrete financial information is available to our managers and chief operating decision maker. No reporting units are aggregated, and no intangible assets are allocated or transferred between reporting units, for purposes of evaluating intangible assets for possible impairment. We evaluate intangible assets for possible impairment based predominately on management’s best estimate of future discounted operating cash flows and profitability attributable to such assets (using the fair value assessment provisions of applicable authoritative guidance). The inputs for measuring fair value are considered "Level
3"
or unobservable inputs that are not corroborated by market data under applicable fair value authoritative guidance, as quoted market prices are not available. Our annual impairment assessment did not consider the possibility that management
may
realign
one
or more other Monster Energy NASCAR Cup Series racing events among its speedway facilities, which could result in net higher or improved future projected cash flows. 
Such information was also compared to available market information for certain motorsports industry peers. Management also considered recent market trading ranges of price to earnings and sales multiples, cash flow and other traditional valuation methods, control premiums, and other market information related to our common stock from historical and forward-looking perspectives. No weighting of evaluation results was believed necessary. Despite ongoing domestic and global economic and market challenges, management believes there has been no fundamental change in our core motorsports business. Impairment charges and associated operations are included in our "motorsports event related" reportable segment (see Note
13).
 
2016
Annual Impairment Assessment
. Management's latest annual assessment in the
second
quarter
2016
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. 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
Camping World 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 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. Among other factors, the latest assessment assumes projected cash flow and profitability recovery, using modest annual inflationary growth rates for projected revenue streams and operating costs (other than NASCAR broadcasting revenues and event management fees),
and strategic amounts of planned capital expenditures. Management projected annual increases in contracted NASCAR broadcasting rights revenues, and associated NASCAR event management fees, based on historical and anticipated rates which are supported by recently negotiated multi-year contracts. NASCAR event management fees for years after
2020
have not been negotiated, and future annual fees could differ substantially from those assumed in management’s impairment assessment.
 
Our
2016
annual assessment found the estimated fair value of each reporting unit and each indefinite-lived race-date intangible asset substantially exceeded its associated carrying value except for NHMS and TMS race date agreements. As of
December
31,
2016,
the carrying values of non-amortizable race date event sanctioning and renewal agreements associated with NHMS and TMS were approximately
$199.6
million and
$98.8
million. The estimated excess of fair value of identified intangible assets associated with NHMS and TMS, while more than nominal at this time, have heightened sensitivity to management’s assumptions used in estimating future discounted cash flows and profitability and associated risk of failing impairment testing. Management’s assumptions considered the following factors and conditions, the majority of which also contributed to our
2015
impairment charge described below. NHMS was acquired in
2008,
largely before the severe economic recession, which has resulted in long-term operating challenges for many major sports. The
2016
(and
2015)
evaluation reflects continuing lowered estimated future cash flows because the economic recovery has been slower and weaker than previous forecasts, and ongoing lower than anticipated revenues for various major racing events. The evaluation also reflects, similar to challenges faced by many major sports, reduced visibility on profit recovery due to factors such as changing demographics, evolving entertainment choices for fans, appealing “at-home viewing” experiences and retirement of popular long-standing “megastars”. We have lowered our expectations for forecasted growth rates for certain revenues and profit recovery. However, those expectations and forecasts are based on many factors out of our control, and could be found unachievable. Such ultimate outcome could adversely impact our estimates of fair values, particularly for NHMS and TMS race date intangible assets.
 
There have since been no other events or circumstances that indicate possible impairment, and management believes our operational and cash flow forecasts support our conclusions that no unrecognized impairment exists as of
December
31,
2016.
 
Different economic or industry conditions or assumptions, and changes in projected cash flows or profitability, if significantly negative or unfavorable, could have a material adverse effect on the impairment evaluation and our future financial condition or results of operations. The evaluations are subjective and based on conditions, trends and assumptions existing at the time of evaluation.
2015
Impairment of Other Intangible Assets
and Goodwill. 
In
2015,
we recorded sizable non-cash impairment charges to reduce the carrying value of non-amortizable race date event sanctioning and renewal agreements associated with NHMS, and goodwill associated with certain event souvenir merchandising activities. These charges resulted from our
2015
annual impairment assessment which found the carrying values for these sanctioning and renewal agreements associated with NHMS exceeded their estimated fair value. The various factors considered in this assessment (described above and not repeated here) resulted in lowering our expectations for forecasted growth rates for certain revenues and profit recovery. As such, a non-cash impairment charge of
$96,530,000,
before income tax benefits of
$34,569,000,
was reflected in
2015
to reduce the race date intangible assets to estimated fair value. Our
2015
annual assessment also indicated that goodwill associated with SMI Trackside, which conducts event souvenir merchandising at our and other
third
-party speedways, was impaired because of potentially unfavorable developments associated with NASCAR’s announced industry changes to the trackside merchandising business model. As such, a non-cash impairment charge of
$2,338,000,
before income tax benefits of
$885,000,
was reflected in
2015
to reduce associated goodwill to an estimated fair value of
$0.
Deferred Income, Net
(noncurrent) as of
December
31,
2016
and
2015
consists of (in thousands):
 
   
2016
   
2015
 
Preferred seat license fees, net
  $
2,512
    $
2,871
 
Multi-year marketing and other arrangements, and deferred membership income
   
1,230
     
1,710
 
Total
  $
3,742
    $
4,581
 
 
Preferred Seat License Fees, Net.
KyS and TMS offer Preferred Seat License (PSL) agreements whereby licensees are entitled to purchase annual season-ticket packages for sanctioned racing events under specified terms and conditions. Among other items, licensees are required to purchase all season ticket packages when and as offered each year. License agreements automatically terminate without refund should licensees not purchase any offered ticket and are transferable once each year subject to certain terms and conditions. Also, licensees are not entitled to refunds for postponement or cancellation of events due to weather or certain other conditions. Net PSL fees are deferred when received and amortized into income over the estimated useful life of those facilities or recognized upon license agreement termination.
 
Deferred Speedway Club Membership Income.
The CMS and TMS Speedway Clubs sell memberships that entitle members to certain dining, other club and racing event seating privileges, and require upfront fees and monthly assessments. Net membership revenues are deferred when billed and amortized into income over an estimated average membership term of
ten
years.
 
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
$17,321,000
in
2016,
$16,660,000
in
2015
and
$16,833,000
in
2014.
There were no deferred direct-response advertising costs at
December
31,
2016
or
2015.
 
Operating Leases
– We have various operating leases principally for office and warehouse space and for equipment used in conducting racing events and other operations. These operating leases typically have initial terms of less than
one
year or are cancelable with minimal notice, although certain operating equipment leases include multi-year terms. Rent expense for operating leases amounted to
$8,730,000
in
2016,
$6,233,000
in
2015
and
$6,023,000
in
2014.
Various office and warehouse facilities leased from an affiliate (see Note
9)
are cancelable with minimal notice; however, such lease arrangements will likely be renewed annually through specific contract periods. We lease various office, warehouse and industrial park space under operating leases to various entities largely involved in motorsports. These operating leases typically have initial terms of
one
year or more and are noncancelable. Lease revenue for operating leases, excluding the TMS oil and gas mineral rights lease receipts discussed above, amounted to
$5,625,000
in
2016,
$5,343,000
in
2015
and
$4,927,000
in
2014.
 
Future annual minimum lease payments (where initial terms are
one
year or more and assuming
renewal through contracted periods), and contracted future annual minimum lease revenues, under operating leases at
December
31,
2016
are as follows (in thousands):
 
   
Lease
Payments
   
Lease
Revenues
 
2017
  $
1,231
    $
4,983
 
2018
   
722
     
3,848
 
2019
   
304
     
2,560
 
2020
   
200
     
1,078
 
2021
   
154
     
410
 
Thereafter
   
505
     
221
 
Total
  $
3,116
    $
13,100
 
 
Other
(Income)
Expense, Net
consists of (in thousands):
 
   
2016
   
2015
   
2014
 
Removal
costs for retired assets, and net gain associated with insurance recovery and involuntary conversion of property (2014) (Note 4)
  $
44
    $
552
    $
(2,235
)
Net (gain) loss on disposals of property and equipment and other assets
   
(1,397
)
   
101
     
30
 
Other
   
356
     
209
     
(100
)
Total
  $
(997
)
  $
862
    $
(2,305
)
 
 
Income Taxes (Note
8)
– We recognize deferred tax assets and liabilities for the future income tax effect of temporary differences between financial and income tax bases of assets and liabilities. Income taxes are provided using the liability method whereby estimated deferred income taxes, and significant items giving rise to deferred tax assets and liabilities, reflect management’s assessment of future taxes likely to be paid, including timing, probability of realization and other relevant factors. Our accounting for income taxes reflects management’s assessment of future tax liabilities based on assumptions and estimates for timing, likelihood of realization, and tax laws existing at the time of evaluation. We assess the need for valuation allowances for deferred tax assets based on the sufficiency of estimated future taxable income and other relevant factors. We report interest expense and penalties related to income tax liabilities, when applicable, in income tax expense. Cash Paid for Income Taxes excludes any previous overpayments the Company
may
have elected to apply to income tax liabilities. The Company has no undistributed foreign earnings or cash or cash equivalents held outside of the US.
 
We follow applicable authoritative guidance on accounting for uncertainty in income taxes which, among other things, prescribes a recognition threshold and measurement attribute for financial statement recognition and
measurement of tax positions taken or expected to be taken in a tax return, and provides guidance on derecognition, classification, interest and penalties, and disclosures. Evaluation of a tax position includes determining whether it is more likely than not a tax position will be sustained upon examination, including resolution of any related appeals or litigation processes, based on the technical merits of the position. In evaluating whether a tax position meets the more-likely-than-not recognition threshold, it is presumed the position will be examined by appropriate taxing authorities having full knowledge of all relevant information. A tax position that meets the more-likely-than-not recognition threshold is measured to determine the amount of benefit to be recognized in the financial statements. The tax position is measured at the largest amount of benefit that is greater than
50
percent likely of being realized upon ultimate settlement.
 
TMS Mineral Rights Lease Receipts
TMS, in conjunction with the Fort Worth Sports Authority, has a natural gas mineral rights lease agreement and a joint exploration agreement which, among other things, provides the lessee various defined property access and right-of-ways, exclusive exploration and extraction rights, and non-interference by TMS as extraction infrastructure construction and operations commence. TMS is required to coordinate directly with the lessee on roadway and pipeline logistics to prevent interference of TMS or lessee activities, and monitor regulatory and other contract compliance. The long-term lease remains enforceable as long as drilling or extraction related activities continue or certain prices levels are met. Under the lease agreement, TMS received and recognized royalty payments of
$2,139,000
in
2016,
$4,265,000
in
2015
and
$3,208,000
in
2014.
 
An initial lease agreement was extended and natural gas extraction commenced in
2014,
entitling TMS to stipulated stand-alone and shared royalties
. The lessee expanded production capacity in
2014,
including an increased number of extraction wells. Such revenues have declined from associated market declines and volatility in natural gas price levels. 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 agreements stipulate the sharing of production revenues, and obligate TMS to spend amounts equal to royalties received on TMS facility and road infrastructure improvements beginning in
2017,
up to specified cumulative amounts. There are no stipulated annual or specific period spending requirements, and TMS will continue to receive royalties, and is not obligated to return or refund such royalties, should infrastructure spending not exceed amounts received. TMS infrastructure spending has historically exceeded royalties received each year and on a cumulative basis, which management believes will continue throughout the remaining terms of the agreements. Any future production revenues or royalties are subject to production levels and market prices that can deteriorate or fluctuate significantly and rapidly, as well as other factors outside of TMS’s control. As such, management is unable to determine the amounts, if any, or timing of possible future royalty payments to TMS or obligated spending on infrastructure by TMS.
However, at this time, management believes
2017
revenues will not differ significantly from
2016,
and that our infrastructure spending will continue to exceed anticipated future royalties. 
As of
December
31,
2016
and
2015,
there were no receivables (not since collected) or deferred income associated with the expired or extended agreements.
 
Taxes Collected from Customers
– We report sales, admission and other taxes collected from customers on both a gross and net basis in operations. Such taxes reported on a gross basis amounted to
$7,642,000
in
2016,
$6,024,000
in
2015
and
$5,340,000
in
2014.
 
Fair Value of Financial In
struments
– 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 or where non-interest bearing is discounted based on estimated current cost of borrowings; therefore, carrying values approximate market value. There have been no changes or transfers between category levels or classes. The following table presents estimated fair values and categorization levels of our financial instruments as of
December
31,
2016
and
2015
(in thousands):
 
             
2016
   
2015
 
   
Level
 
Class
 
Carrying
Value
   
Fair Value
   
Carrying
Value
   
Fair Value
 
Assets
 
 
 
 
   
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Cash and cash equivalents
   
1
 
R
  $
79,342
    $
79,342
    $
82,010
    $
82,010
 
Notes receivable    
2
 
NR
   
1,143
     
1,143
     
1,303
     
1,303
 
Cash surrender values
   
2
 
NR
   
8,919
     
8,919
     
8,551
     
8,551
 
                                           
Liabilities 
(principal)
 
 
 
 
   
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Floating rate revolving Credit Facility, including Term Loan
   
2
 
NR
   
66,000
     
66,000
     
120,000
     
120,000
 
5.125% Senior Notes Payable due 2023
   
2
 
 NR
   
200,000
     
202,500
     
200,000
     
199,000
 
Other long-term debt
   
2
 
NR
   
1,206
     
1,206
     
1,383
     
1,383
 
 
Level
 
1:
Quoted market prices in active markets for identical assets or liabilities.
Level
2:
Observable market-based inputs or unobservable inputs that are corroborated by market data.
Level
3:
Unobservable inputs that are not
corroborated by market data.
Class
 R:
Measured at fair value on recurring basis, subsequent to initial recognition.
Class
 NR:
Measured at fair value on nonrecurring basis, subsequent to initial recognition.
 
Concentrations of Credit Risk
– Financial instruments that potentially subject the Company to concentrations of credit risk consist principally of cash and cash equivalents, accounts and notes receivable, and cash surrender values. Concentration of credit risk with respect to cash and cash equivalents and cash surrender values is limited through placement with major high-credit qualified financial institutions and insurance carriers, respectively. However, amounts placed often significantly exceed available insured limits. Concentrations of credit risk with respect to accounts receivable are limited due to the large numbers and wide variety of customers and customer industries and their broad geographical dispersion. Also, a significant portion of our accounts receivable typically pertain to advance revenues for specific events which are deferred until the event is held. As such, exposure to credit risk on such receivables that could adversely affect operating results is limited until recognition of the associated deferred race event income. We generally require sufficient collateral equal to or exceeding note amounts, or accept notes from high-credit quality entities or high net-worth individuals, limiting our exposure to credit risk. Amounts due from affiliates typically can be offset to the extent of amounts payable to affiliates, limiting our exposure to credit risk.
 
Loss and Other Contingencies and Financial Guarantees
– We accrue a liability for contingencies if the likelihood of an adverse outcome is probable and the amount is estimable. Legal and other costs associated with loss contingencies are expensed as incurred. We account for financial guarantees using applicable authoritative guidance which requires, among other things, that guarantors recognize a liability for the fair value of obligations undertaken by issuing a guarantee.
 
CMS
’s property includes areas used as solid waste landfills for many years. Landfilling of general categories of municipal solid waste on the CMS property ceased in
1992,
but CMS currently allows certain property to be used for land clearing and inert debris landfilling. Landfilling for construction and demolition debris has ceased on the CMS property. Management believes the Company’s operations, including the landfills on its property, comply with all applicable federal, state and local environmental laws and regulations. Management is not aware of any situation related to landfill operations which would have a material adverse effect on our financial position, future results of operations or cash flows.
 
Recently Issued Accounting Standards
– The Financial Accounting Standards Board (FASB) issued Accounting Standards Update No. 
2014
-
09
"Revenue from Contracts with Customers (Topic
606):
Section A - Summary and Amendments That Create Revenue from Contracts with Customers and Other Assets and Deferred Costs - Contracts with Customers (Subtopic
340
-
40)"
which enhances comparability and clarifies principles of revenue recognition arising from contracts with customers that supersedes most current revenue recognition guidance. The guidance includes the core principle that entities recognize revenue to depict transfers of promised goods or services to customers in amounts that reflect the consideration entities expect to be entitled in exchange for those goods or services, and expands required financial statement disclosures regarding revenue recognition. The FASB has recently issued several amendments to the new standard, including Update No.
2016
-
08
"Revenue from Contracts with Customers (Topic
606)
- Principal versus Agent Considerations" clarifying implementation guidance for those considerations in Update No.
2014
-
09,
and Update No.
2016
-
10
"Revenue from Contracts with Customers (Topic 
606)
- Identifying Performance Obligations and Licensing" amending the guidance in Update No.
2014
-
09
related to those items. The FASB issued Update No.
2015
-
14
approving deferral of Update No.
2014
-
09
for
one
year, with such guidance now effective for annual reporting periods beginning after
December
15,
2017,
including interim periods within that reporting period. Early application is permitted as of annual reporting periods beginning after
December
15,
2016,
including interim reporting periods within that reporting period. The guidance
may
be applied retrospectively to each prior period presented or retrospectively with cumulative effects recognized as of the date of adoption. The Company plans to adopt this new guidance in the
first
quarter
2018.
The Company has begun preliminary evaluation of the potential impact that adoption
may
have on its financial statements, as well as expected method of adoption, including associated accounting policies, processes, and system requirements to enable timely and accurate reporting.  
 
The FASB issued Accounting Standards Update No.
2015
-
03
"Interest
– Imputation of Interest (Subtopic
835
-
30):
Simplifying the Presentation of Debt Issuance Costs” which requires that debt issuance costs related to debt liabilities be presented in the balance sheet as a direct deduction from the associated carrying amount, similar to debt discounts. In
August
2015,
the FASB issued Update No.
2015
-
15
“Imputation of Interest (Subtopic
835
-
30):
Presentation and Subsequent Measurement of Debt Issuance Costs Associated with Line-of-Credit Arrangements” which provides guidance on presentation and subsequent measurement of debt issuance costs associated with line-of-credit arrangements, and indicating the SEC staff would not object to entities deferring and presenting debt issuance costs as an asset and subsequently amortizing deferred debt issuance costs ratably over line-of-credit arrangement terms even if there are no outstanding borrowings.
The Company adopted this guidance as a change in accounting principle as stipulated, chose to continue amortizing deferred debt issuance costs ratably over line-of-credit arrangement terms, and has applied the guidance retrospectively to its financial statements and note disclosures for all p
eriods presented (see Note
6).
Deferred financing costs associated with the Company's revolving Credit Facility are reported in other noncurrent assets, and those associated with the
2023
Senior Notes and bank Term Loan are reflected as a reduction of long-term debt. Retroactive application resulted in reclassifying deferred financing costs of
$6,364,000,
net of accumulated amortization of
$6,062,000,
from other non-current assets to a reduction in long-term debt as of
December
31,
2015.
Adoption had no impact on the Company's operating results or cash flows. 
The FASB issued Accounting Standards Update No.
2015
-
11
"Inventory (Topic
330):
Simplifying the Measurement of Inventory” which requires measuring inventory at the lower of cost and net realizable value based on estimated selling prices in the ordinary course of business, less reasonably predictable costs of completion, disposal and transportation (changed from the previous guidance of lower of cost or market). This update also clarified various other inventory measurement and disclosure requirements. The update does not apply to inventory measured using the LIFO or retail inventory methods. The guidance is effective for annual reporting periods beginning after
December
15,
2016,
including interim periods within that reporting period, and should be applied prospectively. Early application is permitted. The Company believes adoption will have no significant impact on its financial statements.
The FASB issued Accounting Standards Update No.
2016
-
02
“Leases (Subtopic
842)”
which replaces all current US GAAP guidance on this topic, and requires lessees to recognize assets and liabilities arising from leases as well as extensive quantitative and qualitative disclosures. Lessees will need to recognize on their balance sheets right-of-use assets and lease liabilities for the majority of their leases (other than leases meeting the definition of a short-term lease). Right-of-use assets will be measured at lease liability amounts, adjusted for lease prepayments, lease incentives received and lessee
’s initial direct costs. Lease liabilities will equal the present value of lease payments. Assets will be based on the liability, subject to adjustment, such as for initial direct costs. Operating leases
may
typically result in straight-line expense, while finance leases similar to front-loaded expense pattern. Classification will be based on criteria largely similar to those applied in current lease accounting. The guidance is effective for fiscal years beginning after
December
15,
2018,
and interim periods within those fiscal years. Early adoption is permitted. The guidance is required to be applied using the modified retrospective approach for all leases existing as of the effective date, requires application at the beginning of the earliest comparative period presented, and provides for certain practical expedients. The Company is currently evaluating the potential impact that adoption
may
have on its financial statements.
 
The FASB issued Accounting Standards Update
2016
-
09
Compensation - Stock Compensation (Topic
718):
Improvements to Employee Share-Based Payment Accounting” which changes how companies account for certain aspects of share-based payment awards to employees, including the accounting for income taxes, forfeitures, and statutory tax withholding requirements, as well as the classification of related matters in the statement of cash flows. Under previous guidance, excess tax benefits and deficiencies from stock-based compensation arrangements were reflected in equity when awards vested or were settled. The new guidance requires prospective recognition of excess tax benefits and deficiencies in income tax expense, among other things. Also i
n recording share-based compensation cost, the guidance allows entities to elect whether they will include an estimate of awards expected to be forfeited or account for forfeitures as they occur. The Company elected to include an estimate of forfeitures in computing its share-based compensation cost, which is consistent with its treatment under previous guidance.
 
The new guidance is effective for years beginning after
December
15,
2016,
with early adoption permitted. The Company elected to adopt this new guidance early as of
January
1,
2016,
and applied it prospectively to its financial statements and note disclosures (see Note
11).
Adoption had an insignificant impact on the Company's financial statements.
 
The FASB issued Accounting Standards Update
2016
-
15
“Statement of Cash Flows (Topic
23)
- Classification of Certain Cash Receipts and Cash Payments
” which provides specific guidance on
eight
cash flow classification issues. The guidance is effective for fiscal years beginning after
December
15,
2017,
and interim periods within those fiscal years, and should be applied using a retrospective transition method to each period presented. Early adoption is permitted, and any amendments must be adopted in the same period. At this time, the Company believes adoption will have no significant impact on its financial statements, and plans to apply this guidance to future classifications when applicable.
 
The FASB issued Accounting Standards Update No.
2017
-
04
“Intangibles
– Goodwill and Other (Topic
350):
Simplifying the Test of Goodwill Impairment” which simplifies
how an entity is required to test goodwill for impairment by eliminating Step
2
(measuring goodwill impairment loss by comparing implied fair value of a reporting unit’s goodwill to the carrying amount of that goodwill) from the impairment test. Under this update, entities should perform goodwill impairment testing by comparing the fair value of a reporting unit with its carrying amount, and recognize an impairment charge for the amount by which the carrying amount exceeds the reporting unit’s fair value. The same impairment assessment applies to all reporting units, and entities still have the option to perform qualitative assessment for a reporting unit to determine if quantitative impairment testing is necessary. This update modifies the concept of impairment from the condition that exists when the carrying amount of goodwill exceeds its implied fair value to the condition that exists when the carrying amount of a reporting unit exceeds its fair value. Entities will no longer determine goodwill impairment by calculating the implied fair value of goodwill by assigning the fair value of a reporting unit to all of its assets and liabilities as if that reporting unit had been acquired in a business combination. The Company is to adopt this guidance for its annual or any interim goodwill impairment tests in fiscal years beginning after
December
15,
2019,
and should be applied on a prospective basis. Early adoption is permitted for interim or annual goodwill impairment tests performed on testing dates after
January
1,
2017.
The Company is currently evaluating the potential impact that adoption
may
have on its impairment testing and financial statements.
Note 3 - Inventories
Inventory Disclosure [Text Block]
3.
INVENTORIES
 
Inventory costs consist of: (i)
 souvenirs and apparel,
5/8
-scale and similar small-scale finished race cars and parts and accessories determined on a
first
-in,
first
-out basis; and (ii) micro-lubricant
®
product costs determined on an average current cost basis. No general and administrative costs are included in inventory costs. Cost of sales are charged using the same inventory cost bases. Inventories as of
December
31,
2016
and
2015
consist of (in thousands):
 
   
2016
   
2015
 
Finished race cars, parts and accessories
  $
5,263
    $
5,542
 
Souvenirs and apparel
   
2,131
     
2,550
 
Micro-lubricant
®
and other
   
818
     
619
 
Total
  $
8,212
    $
8,711
 
 
All inventories are stated at the lower of cost or market value with provisions for differences between cost and estimated market value based on assumptions about current and future demand, market conditions and trends that might adversely impact realizat
ion. Inventories are reflected net of lower of cost or market value provisions summarized as follows (in thousands):
 
   
2016
   
2015
   
2014
 
Balance, beginning of year
  $
2,756
    $
4,407
    $
4,083
 
Current year provision
   
1,024
     
310
     
711
 
Current year sales and write-offs
   
(704
)
   
(1,961
)
   
(387
)
Balance, end of year
  $
3,076
    $
2,756
    $
4,407
 
Note 4 - Property and Equipment
Property, Plant and Equipment Disclosure [Text Block]
4.
PROPERTY AND EQUIPMENT
 
Property and equipment as of
December
31,
2016
and
2015
is summarized as follows
(dollars in thousands):
 
 
 
Estimated
Useful Lives
 
 
2016
 
 
2015
 
Land and land improvements
 
5
-
25
 
 
$
465,19
4
 
 
$
464,057
 
Racetracks and grandstands
 
5
-
45
 
 
 
738,302
 
 
 
722,939
 
Buildings and luxury suites
 
5
-
40
 
 
 
468,627
 
 
 
454,762
 
Machinery and equipment
 
3
-
20
 
 
 
46,285
 
 
 
45,192
 
Furniture and fixtures
 
5
-
20
 
 
 
46,973
 
 
 
38,025
 
Autos and trucks
 
3
-
10
 
 
 
13,292
 
 
 
13,073
 
Construction in progress
 
 
 
 
 
 
 
1,465
 
 
 
8,456
 
Total
 
 
 
 
 
 
 
1,780,138
 
 
 
1,746,504
 
Less accumulated depreciation
 
 
 
 
 
 
 
(779,908
)
 
 
(726,854
)
Net
 
 
 
 
 
 
$
1,000,230
 
 
$
1,019,650
 
 
Other Information
– From time to time, we
may
remove or reduce certain low demand seating areas or suites for managing facility capacity, offering wider seating and improved sight lines or other marketing or alternative development purposes such as premium hospitality, RV camping and advertising areas. In
2015,
we recorded non-cash, pre-tax charges for accelerated depreciation aggregating
$9,111,000
associated with removal of certain low demand seating at CMS and LVMS, retired leaderboard assets at certain speedways, and a decline in estimated fair value of certain real property. In
2014,
we recorded non-cash, pre-tax charges for accelerated depreciation aggregating
$25,118,000
associated with removal of certain low demand seating and suites at AMS, CMS and NHMS, and certain damaged speedway assets. In
2016,
we recorded pre-tax accelerated depreciation of
$313,000
associated with removal of certain TMS assets.
Costs of removal are included in Other Expense, Net (see Note
2).These
charges are included in our "motorsports event related" reporting segment (see Note
13).
 
Depreciation expense amounted to $
54,344,000
in
2016,
$61,933,000
in
2015
and
$78,375,000
in
2014.
As of
December
31,
2016,
we had no significant contractual obligations for capital expenditures. In
2014,
we reflected a gain from involuntary conversion of certain TMS property, increasing property and equipment and other income, net by approximately
$985,000.
Note 5 - Other Intangible Assets and Goodwill
Goodwill and Intangible Assets Disclosure [Text Block]
5.
OTHER INTANGIBLE ASSETS AND GOODWILL
 
The composition and accounting for intangible assets ar
e further described in Note
2.
As of
December
31,
2016
and
2015,
gross carrying values and accumulated amortization by class of intangible asset are as follows (dollars in thousands):
 
   
2016
   
2015
         
   
Gross
Carrying
Value
   
Accumulated
Amortization
   
Net
   
Gross
Carrying
Value
   
Accumulated
Amortization
   
Net
   
Estimated
Amortization
Period
(Years)
 
Nonamortizable race event sanctioning and renewal agreements
  $
298,383
     
    $
298,383
    $
298,383
     
    $
298,383
     
 
Amortizable race event sanctioning and renewal agreements
   
100
    $
(100
)
   
     
100
    $
(89
)
   
11
     
5
 
Total
  $
298,483
    $
(100
)
  $
298,383
    $
298,483
    $
(89
)
  $
298,394
     
 
 
 
 
Changes in the gross carrying value of other intangible assets and goodwill are as follows (in thousands):
 
   
Other Intangible Assets
   
Goodwill
 
   
2016
   
2015
   
2016
   
2015
 
Balance, beginning of year
  $
298,483
    $
395,013
    $
47,342
    $
49,680
 
Increase from acquisitions
   
     
     
     
 
Decrease from impairment charges (Note 2)
   
     
(96,530
)
   
     
(2,338
)
Balance, end of year
  $
298,483
    $
298,483
    $
47,342
    $
47,342
 
 
The
2015
decreases reflect impairment charges to reduce other intangible assets associated with NHMS, and goodwill associated with certain event souvenir merchandising, to estimated fair value. The
carrying amounts for goodwill and other intangible assets include accumulated impairments of
$148.6
million and
$99.9
million at
December
31,
2016
and
2015.
Amortization expense on other intangible assets amounted to
$11,000
in
2016,
$17,000
in
2015
and
$14,000
in
2014.
Estimated annual amortization expense for each of the next
five
years is not significant.
Note 6 - Long-term Debt
Long-term Debt [Text Block]
6.
LONG-TERM DEBT
 
Long-term debt at
December
31,
2016
and
2015
consists of (in thousands):
 
   
2016
   
2015
 
Credit Facility, all Term Loan
  $
66,000
    $
120,000
 
2023 Senior Notes
   
200,000
     
200,000
 
Other notes payable
   
1,206
     
1,383
 
Total
   
267,206
     
321,383
 
Less current maturities
   
(7,657
)
   
(7,677
)
Less deferred financing costs, net of accumulated amortization (Note 2)    
(5,151
)    
(6,364
)
Long-term debt, excluding current maturities
  $
254,398
    $
307,342
 
 
Annual principal maturities of long-term debt at
December
31,
2016
are as follows (in thousands):
 
2017
  $
7,657
 
2018
   
7,662
 
2019
   
51,167
 
2020
   
172
 
2021
   
177
 
Thereafter
   
200,371
 
Total
  $
267,206
 
 
Bank Credit Facility
– Our Credit Facility, as amended in
December
2014,
among other things: (i) provides for a
five
-year
$100,000,000
senior secured revolving credit facility, with separate sub-limits of
$50,000,000
for standby letters of credit and
$10,000,000
for swing line loans; (ii) provides for a
five
-year
$150,000,000
senior secured term loan (which was fully drawn in
December
2014)
and a
five
-year delayed draw term loan of up to
$50,000,000
(which was fully drawn in
March
2015
and repaid in the
second
quarter
2015)
(the Term Loan or Term Loans); (iii) matures in
December
2019;
(iv) contains an accordion feature allowing the Company to increase revolving commitments or establish a term loan up to an aggregate additional
$100,000,000
or
$200,000,000,
respectively (or a combined aggregate additional amount of up to
$250,000,000)
with certain lender commitment conditions; (v) allows for annual aggregate payments of dividends and repurchases of SMI securities of up to
$50,000,000,
increasing up to
$75,000,000
subject to maintaining certain financial covenants; and (vi) limits annual capital expenditures to
$75,000,000
and provides for motor speedway acquisitions and related businesses. Term Loans require equal minimum quarterly principal payments of at least
5%
of initial amounts drawn on an annualized basis
($7,500,000
for fiscal
2017).
 
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.
 
In
2016,
we repaid Term Loan borrowings of
$54,000,000.
In
2015,
we borrowed
$50,000,000
under the Term Loan (for partial funding of the
2019
Senior Notes redemption as further described below), and repaid Term Loan borrowings of
$80,000,000.
In
2014,
we repaid
$210,000,000
and borrowed
$150,000,000
under the Term Loan (including
$150,000,000
repayment and borrowing in amending the Credit Facility), for a net repayment of
$60,000,000.
At
December
31,
2016
and
2015,
outstanding borrowings under the Credit Facility were
$66,000,000
and
$120,000,000
(all Term Loan borrowings), and outstanding letters of credit amounted to
$605,000
and
$845,000.
As of
December
31,
2016,
we had availability for borrowing up to an additional
$99,395,000,
including up to an additional
$49,395,000
in letters of credit, under the revolving Credit Facility, and
$50,000,000
under the delayed draw term loan provision.
 
2023
Senior Notes
– We completed a private placement of new
5.125%
Senior Notes due
2023
in aggregate principal amount of
$200,000,000
in
January
2015
(the
2023
Senior Notes). The
2023
Senior Notes were issued at par, and net proceeds after commissions and fees of approximately
$196,816,000
were used to fund a portion of the
March
2015
redemption of
2019
Senior Notes as described below. We completed an exchange offer for substantially identical
2023
Senior Notes registered under the Securities Act in the
second
quarter
2015.
The
2023
Senior Notes mature in
February
2023
and interest payments are due semi-annually on
February
 
1
and
August
 
1.
These
2023
Senior Notes contain various specified redemption and change of control provisions. The
2023
Senior Notes rank equally in right of payment with all other Company existing and future unsubordinated debt, are senior in right of payment to any future subordinated debt and are effectively subordinated to all existing and future secured debt, including the Credit Facility. The Indenture governing the
2023
Senior Notes permits dividend payments each year of up to approximately
$0.80
per share of common stock, increasable subject to meeting certain financial covenants. The
2023
Senior Notes contain specific requirements and restrictive financial covenants and limitations, redemption and change of control provisions and premiums, guarantees and cross-default provisions.
 
2015
Early Redemption of
2019
Senior Notes
– We redeemed all outstanding
6.75%
Senior Notes due in
2019
in aggregate principal of
$250,000,000
(the
2019
Senior Notes) at
103.375%
of par plus accrued interest in
March
2015.
The
2019
Senior Notes were scheduled to mature in
February
2019.
We used net proceeds of the
2023
Senior Notes,
$50,000,000
of delayed draw Term Loan borrowings under the Credit Facility and cash on hand to fund the redemption, including redemption premium and transaction costs. We recognized a
2015
charge to earnings of
$8,372,000,
before income taxes of
$3,106,000,
for associated redemption premium, unamortized net deferred loan costs and transaction costs of
$3,134,000,
net of issuance premium of
$3,200,000.
 
Other Notes Payable
– At
December
31,
2016
and
2015,
long-term debt includes a
3%
interest bearing debt obligation of
$1,206,000
and
$1,383,000
associated with the purchase of real property at BMS, payable in
eight
annual installments of
$194,000
beginning
January
2016.
 
O
ther General Terms and Conditions
– The Credit Facility and
2023
Senior Notes contain specific requirements and restrictive financial covenants and limitations on capital expenditures, speedway or other acquisitions, dividends, repurchase or issuance of SMI securities, restricted payments, equity and debt security repurchases, limitations or prohibitions on incurring other indebtedness, liens or pledging assets to
third
parties, consolidation, mergers, transactions with affiliates, guarantees, asset sales, specific types of investments, distributions, redemptions and disposition of property, and entering into new lines of business. The Credit Facility and
2023
Senior Notes Indenture also contain cross-default provisions. We were in compliance with all applicable financial covenants under these debt agreements as of
December
31,
2016.
 
Subsidiary Guarantees
Amounts outstanding under the Credit Facility and
2023
Senior Notes are guaranteed by all of SMI’s material operative subsidiaries except for Oil-Chem and its subsidiaries (which are presently minor). These guarantees are full and unconditional and joint and several, with the
2023
Senior Notes on a senior unsecured basis. The parent company has no independent assets or operations. There are no restrictions on the subsidiaries’ ability to pay dividends or advance funds to the parent company.
 
Interest Expen
se, Net
– Interest expense, interest income and capitalized interest costs are summarized as follows (in thousands): 
 
   
2016
   
2015
   
2014
 
Gross interest costs
  $
13,818
    $
17,469
    $
22,092
 
Less capitalized interest costs
   
(476
)
   
(251
)
   
(321
)
Interest expense
   
13,342
     
17,218
     
21,771
 
Interest income
   
(194
)
   
(407
)
   
(534
)
Interest expense, net
  $
13,148
    $
16,811
    $
21,237
 
Weighted average interest rate on Credit Facility borrowings
   
1.9
%
   
1.9
%
   
2.1
%
 
During the
first
quarter
2015,
we incurred net interest expense of
$1,688,000
on the former
2019
Senior Notes between
January
27,
2015
(issuance date of the new
2023
Senior Notes) and
March
13,
2015
(redemption date of the
2019
Senior Notes). The new notes were issued before redemption of the former notes because of a favorable interest rate environment and required notice of redemption to
2019
Senior Note holders by the Company.
Note 7 - Capital Structure, Per Share Data and Other Equity Information
Stockholders Equity and Earnings Per Share [Text Block]
7.
CAPITAL STRUCTURE, PER SHARE DATA AND OTHER EQUITY INFORMATION
 
Preferred Stock
– At
December
31,
2016,
SMI has authorized
3,000,000
shares of preferred stock with a par value of
$.10
per share. Shares of preferred stock
may
be issued in
one
or more series with rights and restrictions as
may
be determined by our Board of Directors.
No
preferred shares were issued or outstanding at
December
31,
2016
or
2015.
 
Per Share Data
– The following schedule reconciles basic and diluted earnings or loss per share from continuing operations (where computations are anti-dilutive, reported basic and diluted per share amounts are the same) (in thousands except per share amounts):
 
   
2016
   
2015
   
2014
 
Income (loss) from continuing operations applicable to common stockholders and assumed conversions
  $
39,545
    $
(34,350
)
  $
25,437
 
Weighted average common shares outstanding
   
41,152
     
41,284
     
41,377
 
Dilution effect of assumed conversions, common stock equivalents
– stock awards
   
15
     
28
     
23
 
Weighted average common shares outstanding and assumed
conversions
   
41,167
     
41,312
     
41,400
 
                         
Basic earnings (loss) per share
  $
0.96
    $
(0.83
)
  $
0.61
 
Diluted earnings (loss) per share
  $
0.96
    $
(0.83
)
  $
0.61
 
Anti-dilutive common stock equivalents
excluded in computing diluted earnings (loss) per share
   
120
     
174
     
531
 
 
Declaration of Cash Dividends
– Our Board of Directors approved aggregate dividends on common stock as follows (in thousands except per share amounts):
 
   
2016
   
2015
   
2014
 
Cash dividends paid
  $
24,759
    $
24,807
    $
24,860
 
Dividends per common share
  $
0.60
    $
0.60
    $
0.60
 
 
Quarterly dividends were declared in each period and all declaration, record and payment dates were in the same
fiscal periods. See Note
6
for annual limitations on dividend payments under our debt agreements. On
February
 
15,
2017,
our Board of Directors declared a quarterly cash dividend of
$0.15
per share of common stock aggregating approximately
$6.2
million payable on
March
 
17,
2017
to shareholders of record as of
March
1,
2017.
These quarterly cash dividends are being paid using available cash and cash equivalents on hand.
 
Stock Repurchase Program
– Our Board of Directors has approved a stock repurchase program authorizing SMI to repurchase up to an aggregate of
5,000,000
shares of our outstanding common stock from time to time, depending on market conditions, share price, applicable limitations under our debt agreements (see Note
6),
and other factors the Board of Directors or its designees, in their sole discretion,
may
consider relevant. The purchases can be in the open market or private transactions. The stock repurchase program is presently funded using available cash and cash equivalents and
may
be suspended or discontinued at any time.
 
We repurchased
252,000,
252,000
and
172,000
shares of common stock for
$4,667,000
in
2016,
$5,375,000
in
2015
and
$3,236,000
in
2014,
respectively. As of
December
31,
2016,
we could repurchase up to an additional
442,000
s
hares under the current authorization. In
2016
and
2015,
we repurchased approximately
58,000
and
53,000
shares of common stock for
$1,169,000
and
$1,122,000
from management employees to settle income taxes on
136,000
and
125,000
restricted shares that vested during the period, respectively. As of and through
December
31,
2016
and
2015,
treasury stock includes
272,000
and
215,000
shares of common stock delivered to the Company for such purposes.
Note 8 - Income Taxes
Income Tax Disclosure [Text Block]
8.
INCOME TAXES
 
 
Components of the provision (benefit)
 for income taxes are as follows (in thousands):
   
2016
   
2015
   
2014
 
Current:
                       
Federal
  $
12,630
    $
11,710
    $
226
 
State
   
262
     
606
     
(102
)
     
12,892
     
12,316
     
124
 
Deferred:
                       
Federal
   
8,604
     
(26,440
)
   
13,357
 
State
   
155
     
2,245
     
2,308
 
     
8,759
     
(24,195
)
   
15,665
 
Total
  $
21,651
    $
(11,879
)
  $
15,789
 
 
 
The reconciliation of statutory federal and effective
income tax rates is as follows:
 
   
2016
   
2015
   
2014
 
Statutory federal tax rate
   
35.0
%
   
35.0
%
   
35.0
%
State and local income taxes, net of federal income tax effect
   
1.8
     
3.4
     
4.4
 
Change in valuation allowances
   
0.6
     
22.6
     
(4.9
)
Change in uncertain tax positions, including income tax liabilities for settlements with taxing authorities
   
(0.2
)
   
(24.4
)
   
(1.2
)
Change in state tax rates
   
(0.9
)
   
(7.6
)
   
4.5
 
Other, net
   
(0.9
)
   
(3.3
)
   
0.5
 
Total
   
35.4
%
   
25.7
%
   
38.3
%
 
Tax effects of temporary differences resulting in deferred income taxes are as
follows (in thousands):
 
   
2016
   
2015
 
Deferred tax liabilities:
               
Property and equipment
  $
232,565
    $
233,855
 
Goodwill and other intangible assets
   
107,927
     
107,653
 
Expenses deducted for tax purposes and other
   
2,866
     
3,661
 
Subtotal
   
343,358
     
345,169
 
Deferred tax assets:
               
Income previously recognized for tax purposes
   
(4,658
)
   
(418
)
Stock option and other deferred compensation expense
   
(3,581
)
   
(3,770
)
PSL and
other deferred income recognized for tax purposes
   
(1,072
)
   
(1,272
)
State and federal net operating loss carryforwards
   
(6,397
)
   
(20,085
)
Basis difference for equity investments and subsidiary
   
     
 
Subtotal
   
(15,708
)
   
(25,545
)
Less: valuation allowance
   
1,748
     
1,422
 
Net deferred tax assets
   
(13,960
)
   
(24,123
)
Total net deferred tax liabilities 
  $
329,398
    $
321,046
 
 
Effective Tax Rate Comparison for
2014
through
2016
– The Company’s effective income tax rate for
2016
was
35.4%,
for
2015
was
25.7%
and for
2014
was
38.3%.
Our
2016
effective tax rate reflects non-recurring tax benefits of
$546,000
resulting from certain state income tax law changes. Our
2015
tax rate reflects reductions of valuation allowances on deferred tax assets associated with our discontinued operation. This reduction was largely offset by an increase in tax reserves for deferred tax assets, resulting in a net tax impact of
$1.3
million associated with the discontinued operation (see Note
1).
Our
2015
tax rate also reflects lower effective state income tax rates, adjustments associated with the
2015
intangible asset and goodwill impairment charges and certain deferred tax assets, and a non-recurring tax benefit of
$610,000
resulting from certain state income tax law changes enacted in
2015.
Our
2014
provision for income taxes reflects elimination of previously recorded income tax expense of
$2.3
million associated with the
$6.0
million favorable settlement for our discontinued operation. Such income tax was previously reflected in continuing operations under applicable authoritative guidance. Our
2014
tax rate also reflects the positive impact of net decreases in uncertain tax position liabilities of prior years and lower effective state income tax rates.
 
At
December
31,
2016,
the Company has approximately
$217,827,000
of state net operating loss carryforwards expiring in
2017
through
2036.
At
December
31,
2016
and
2015,
valuation allowances of
$1,748,000
and
$1,422,000
have been provided against deferred tax assets because management has determined that ultimate realization is not more likely than not for certain deferred tax assets and state net operating loss carryforwards. The valuation allowances for deferred tax assets increased by
$326,000
in
2016,
decreased by
$10,771,000
in
2015,
and decreased by
$2,000,000
in
2014.
 
Income Tax Benefit From Equity Interest Abandonment
– On
January
31,
2014,
the Company abandoned its interest and rights in Motorsports Authentics (former
50%
owned, non-controlling interest, merchandising equity investment joint venture) (MA) to focus management resources in areas that
may
be profitable and more productive. The Company’s carrying value of the investment was reduced to
$0
through sizable impairment charges prior to
2010
and MA’s historical operating results. The Company recognized no concurrent tax benefits as valuation allowances were provided against associated deferred tax assets. As a result of abandonment, the Company recognized a material income tax benefit of
$48.1
million at
December
31,
2013
for the reversal of previously recorded valuation allowances under applicable accounting guidance, and recognized tax losses reported on its
2014
income tax returns. Management believes there is or will be sufficient taxable income in carryback or carryforward periods under tax law for full utilization of these tax losses.
 The Company has reduced income taxes payable by amounts approximating that tax benefit
 through
December
31,
2016
by utilization of deferred income tax assets, including net operating losses, related to abandonment.
 
The Company believes it is more likely than not that its filing position would be sustained based on its technical merits upon examination with taxing authorities that have full knowledge of all relevant information. The Company reached this conclusion based on the use of outside legal counsel and other tax consultants and the potential to utilize tax losses.
Under applicable accounting guidance, tax positions are measured at the largest amount of benefit that is greater than
50
percent likely (or more likely than not) of being ultimately realized. As such, the full tax benefit was recognized because the Company believes that partial sustaining of its tax position by taxing authorities would be an unlikely outcome given the nature of the position. The Company believes it will fully utilize the associated tax losses. Should the Company’s tax position not be fully sustained upon examination,
reestablishment of material income tax liabilities
and acceleration of cash income taxes payable could occur. Any differences between the final tax outcome and amounts recorded would affect the Company’s income tax provision in the period in which such determination was made.
 
Other Income Tax Benefits
– As reflected above, 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. Should those tax positions not be fully sustained if examined, an acceleration of material income taxes payable could occur. Because no net income tax benefit had been previously reflected because of providing a valuation allowance on related deferred tax assets, 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.
 
Accounting for Uncertainty in Income Taxes
– Income tax liabilities for
unrecognized tax benefits approximate
$12,006,000
and
$12,280,000
at
December
31,
2016
and
2015,
$11,746,000
of which relates to the Company’s discontinued operation. Of those amounts,
$11,794,000
and
$499,000
is included in noncurrent other liabilities, all of which would favorably impact the Company’s effective tax rate if recognized
,
and
$212,000
and
$11,781,000
is included in deferred tax liabilities, at
December
31,
2016
and
2015,
respectively. The reclassification of amounts from deferred tax liabilities at
December
31,
2015
to noncurrent other liabilities at
December
31,
2016
is due to current period utilization of net operating loss carryforwards that were previously available to offset any unfavorable adjustments related to the Company’s discontinued operation.
As of
December
31,
2016
and
2015,
management believes
$260,000
and
$239,000
of unrecognized tax benefits will be recognized within the next
twelve
months. Interest and penalties associated with uncertain tax positions amounted to
$61,000
in
2016,
$15,000
in
2015
and
$8,000
in
2014,
and derecognized amounts were
$90,000
in
2016,
$174,000
in
2015
and
$524,000
in
2014.
As of
December
31,
2016
and
2015,
the Company had
$140,000
and
$169,000
accrued for the payment of interest and penalties on uncertain tax positions, which is included in other noncurrent liabilities. The tax years that remain open to examination include
2006
through
2008,
and
2012
through
2016,
by the California Franchise Tax Board,
2013
through
2016
by the Internal Revenue Service, and
2013
through
2016
by most, and
2012
through
2016
 by other, state taxing jurisdictions to which the Company is subject. The Company’s
2014
federal income tax return is under examination by the Internal Revenue Service, which began in
July
2016.
 
A reconciliation of the change in the total unrecognized tax benefits and other information for the
three
years ended
December
31,
2016
is as follows (in thousands):
 
   
2016
   
2015
   
2014
 
Beginning of period
  $
12,280
    $
885
    $
1,004
 
Increases (decreases) for tax positions of current year
   
     
11,781
     
 
Increases for tax positions of prior years
   
     
     
 
Decreases for tax positions of prior years
   
(274
)
   
(386
)
   
(119
)
Reductions for lapse of applicable statute of limitations
   
     
     
 
Increases (decreases) for settlements with taxing authorities
   
     
     
 
End of period
  $
12,006
    $
12,280
    $
885
 
Note 11 - Stock Compensation Plans
Disclosure of Compensation Related Costs, Share-based Payments [Text Block]
11.
STOCK COMPENSATION PLANS
 
2013
Stock Incentive Plan
– The
2013
Stock Incentive Plan (the
2013
Plan) allows the Company, among other things, to provide equity-based incentives to, and continue to attract and retain, key employees, directors and other individuals providing services to the Company. Awards under the
2013
Plan
may
be in the form of incentive stock options, nonqualified stock options, stock appreciation rights (SARs), restricted stock, restricted stock units or stock awards. To date, we have awarded restricted stock and restricted stock units under the
2013
Plan.
 
The
2013
Plan is administered by the Compensation Committee of the Board of Directors who has full authority to determine recipients, types, purchase prices, and amounts of awards granted and amend the terms, restrictions and conditions
of awards. Factors considered, among others, include achievement of financial, business and performance objectives, the occurrence of specific events, time periods of continued service or other time-based restrictions. Under the
2013
Plan,
3,500,000
shares of SMI’s common stock are reserved for issuance, subject to various restrictions and adjustments including the following: (i) if shares subject to award under the
2013
Plan are forfeited, or the award otherwise terminates or is canceled for any reason without the issuance of such shares, those shares will be available for future awards; (ii) no individual
may
be granted options or SARs aggregating more than
300,000
shares of common stock during any calendar year; (iii) in the case of awards other than options or SARs that are intended to be “performance-based compensation”, no individual
may
be granted an aggregate of more than
100,000
shares of common stock during any calendar year; and (iv) with respect to any cash-based stock award that is intended to be a performance award, the maximum cash payment that
may
be paid during any
one
calendar year to an individual is
$10,000,000.
Exercise prices for awarded stock options generally
may
not be less than the fair or trading value of the Company’s common stock at, and exercise periods
may
not exceed
ten
years from, the option grant date. At
December
31,
2016,
approximately
3,010,000
shares were available for future grant.
 
All restricted stock and restricted stock units issued to date vest in equal installments
over
three
years or cliff vest after
five
years. Once applicable restrictions lapse or have been satisfied, restricted stock units
may
be payable in cash, shares of common stock or a combination, as specified in the award agreement. Awards of restricted stock or restricted stock units are generally subject to forfeiture and restrictions on transferability until vested. If restricted stock and restricted stock unit award recipients cease to perform services for the Company, all shares of common stock and restricted stock units still subject to restrictions generally will be forfeited unless waived by the Compensation Committee. Recipients of restricted stock generally will have certain rights and privileges of a stockholder, including the right to vote such shares and receive dividends, if any. Recipients of restricted stock units generally will not have the rights and privileges of a stockholder, except they
may
be entitled to receive dividend equivalents, if so specified in the award agreements and dividends are declared.
 
 
The Compensation Committee of our Board of Directors approved grants of
35,000
restricted stock units to our Chief Executive Officer and President (former Chief Operating Officer until
February
2015)
and
35,000
shares of restricted stock
to our Vice Chairman and Chief Financial Officer in
2016.
Both grants are under the
2013
Plan, are to be settled in shares of common stock, vest in equal installments over
three
years and are subject to reaching certain defined full year earnings targets established at the beginning of each year by the Compensation Committee. In
2016,
32,242
shares of both performance-based restricted stock and restricted stock units vested, and
2,227
restricted stock shares and
6,363
restricted stock units were forfeited. Forfeitures in any given year result from differences between our actual results for the previous year as compared to the defined full year earnings target. Once the vesting period expires, common stock is issued in settlement of the restricted stock units and all vested shares are no longer subject to forfeiture or restrictions on transferability. As of
December
31,
2016,
67,667
restricted stock shares and
128,531
restricted stock units (both performance-based) were outstanding.
 
In
2016,
we also granted
to non-executive management employees
80,700
shares of restricted stock that vest in equal installments over
three
years, and repurchased
26,976
shares of common stock from such employees for
$581,000
related to settlement of income taxes on
71,566
shares that vested under the
2004
Plan and the
2013
Plan. In
2016,
we also repurchased
30,944
shares of common stock for
$588,000
from executive management employees to settle income taxes on
64,484
performance-based shares that vested under the 
2004
Plan and the
2013
Plan
.
Repurchases of common stock related to settlement of income taxes upon restricted stock vesting are reflected as financing activities in the statement of cash flows.
 
In
February
2017,
our Board of Directors adopted an amended and restated
2013
Stock Incentive Plan subject to stockholder approval at the
2017
Annual Meeting. We are not seeking an increase in the number of shares reserved for issuance o
r in any of the award limits under the
2013
Stock Incentive Plan at this time. The primary changes reflected in the amended and restated
2013
Stock Incentive Plan include: (a) additions to the permissible criteria upon which performance goals for performance-based compensation can be based, including various cash flow and profit measures and objective measures of personal targets, goals or completion of projects; and (b) revisions and additions to the types of items and events that
may
be used for adjustments in determining whether an objective performance goal for performance-based compensation has been met. The amendment and restatement also includes additional changes in connection with updates to relevant accounting rules and other minor revisions.
 
2008
Formula Restricted Stock Plan, Amended and Restated as of
April
17,
20
12
– The
2008
Formula Restricted Stock Plan (the
2008
Formula Plan) is intended to promote the interests of the Company and its stockholders by providing non-employee directors with Company ownership interests to more closely align their interests with our stockholders and to enhance our ability to attract and retain highly qualified non-employee directors. The
2008
Formula Plan is intended to constitute a “formula plan” within the meaning of SEC Rule
16b
-
3
of the Exchange Act. Approval of the
2008
Formula Plan, and termination of the Formula Stock Option Plan, did not adversely affect the rights of any outstanding stock options previously granted under the Formula Stock Option Plan. The
2008
Formula Plan is administered by the Board of Directors, excluding non-employee directors, and expires by its terms in
February
2018.
The Board of Directors, excluding non-employee directors,
may
amend, suspend or terminate the
2008
Formula Plan in whole or in part, provided that no such amendment, suspension or termination adversely affects previously granted awards without the consent of the award recipient. Any such amendment, suspension or termination
may
be subject to stockholder approval.
 
Under the
2008
Formula Plan,
250,000
shares of SMI
’s common stock are reserved for issuance and awards are in the form of restricted stock. On the
first
business day following each annual meeting, each standing non-employee director receives a grant of restricted stock consisting of the number of shares equaling
$75,000
divided by the average closing sale price for the
twenty
days immediately preceding the grant date, rounded up to the nearest whole share. Grants of restricted stock fully vest on the earlier of (i) the
first
grant date anniversary or (ii) the day before our next annual meeting following the grant date. Vesting is subject to continued service as a director through scheduled vesting dates. In
2016,
restricted stock awards granted to non-employee directors totaled
15,976
and
12,816
restricted stock awards vested during the year. All restricted stock awards were granted and vested in accordance with plan provisions. At
December
31,
2016,
approximately
116,000
shares were available for future grant.
 
2004
Stock Incentive Plan, Amended and Restated as of
February
10,
2009
The
2004
Stock Incentive Plan (the
2004
Plan), which provided equity-based incentives for attracting and retaining key employees, directors and others providing services to the Company, terminated by its terms in
February
2014
and no further awards can be granted under the plan. Previously granted awards under the
2004
Plan consisted of incentive stock options, non-statutory stock options, restricted stock units or restricted stock. All stock options granted under the
2004
Plan had an exercise price equal to the market value of the underlying common stock at grant date, expire
ten
years from grant date and vested immediately or in equal installments over
three
years, and restricted stock and restricted stock units vested
three
years from grant date or in equal installments over
three
years. Once applicable restrictions lapsed or were satisfied, restricted stock units were payable in cash, shares of common stock or a combination, as specified in the award agreement. Termination of the
2004
Plan did not adversely affect rights under any outstanding awards previously granted under the plan and all awards granted under the
2004
Plan have now vested.
 
Formula Stock Option Plan for Directors
– The Formula Stock Option Plan was suspended in
December
2007
and terminated in
February
2008,
and the
2008
Formula Plan described above was approved by stockholders at the
2008
Annual Meeting. Prior to plan suspension and termination, before
February
 
1
each year, individual outside directors were awarded an option to purchase
10,000
shares of common stock at an exercise price equal to the average fair market value per share for the
ten
-day period prior to award. Termination of the Formula Stock Option Plan did not adversely affect rights under any outstanding stock options previously granted. All options granted under this plan generally vested in
six
months, and expired
ten
years, from grant date.
 
Employee Stock Purchase Plan
– The SMI Employee Stock Purchase Plan (the ESPP) is intended to provide employees the opportunity to acquire stock ownership in the Company. The authorized number of shares of common stock issuable under the ESPP is
800,000.
At
December
31,
2016,
approximately
439,000
shares were available for future grant. Prior to each
January
 
1,
the Compensation Committee of the Board of Directors determines whether participating eligible employees will be granted the right to purchase shares of common stock for the upcoming calendar year and the number of shares available for purchase. All employee grants contain the same number of shares and grant date. No participant can be granted the right to purchase more than
500
shares in any calendar year. The stock purchase price is
90%
of the lesser of fair market value at grant date or exercise date. Unexercised grants expire at each calendar year end. No shares were granted to employees under the ESPP for calendar years
2016,
2015
or
2014.
 
Share-Based Payment
– We follow applicable authoritative guidance which generally requires recognizing compensation cost for the estimated grant-date fair value of stock options and other equity-based compensation over the requisite service period, and applies to all awards granted, modified, vesting, repurchased or cancelled after
January
 
1,
2006.
We generally record share-based compensation cost for stock option, restricted stock and restricted stock unit awards on either the accelerated method using a graded vesting schedule or the straight-line method over the requisite service period, depending on the vesting schedule of the awards. Our practice has been to issue new shares upon option exercise; however, repurchases of shares in the open market are permitted.
 
 
Share-based compensation cost totaled
$3,405,000
in
2016,
$3,383,000
in
2015
and
$2,610,000
in
2014,
before income taxes
of
$1,205,000,
$1,272,000
and
$1,002,000,
respectively, and is included in general and administrative expense. For
2014,
compensation cost excludes associated tax benefits of
$327,000
which are reflected separately in operating activities on the Consolidated Statements of Cash Flows. Similar amounts for
2016
and
2015
were insignificant. There were no capitalized share-based compensation costs at
December
31,
2016
or
2015.
We believe our year-end taxable income position will ultimately benefit from additional paid-in capital net operating losses accumulated in
2015
and
2014
that relate to share-based compensation.
 As such, our
2016
consolidated financial statements reflect reduced income taxes payable, and increased retained earnings, of
$407,000
for windfall tax benefits associated with share-based compensation. 
Our consolidated financial statements for the year ended
December
31,
2015
reflect a reduction of additional paid-in capital of
$1,537,000
and deferred tax assets of approximately
$1,874,000
and an increase in income tax expense of
$337,000
for windfall tax benefits associated with share-based compensation. As of
December
31,
2016,
there was approximately
$4,229,000
of total unrecognized compensation cost related to non-vested restricted stock and restricted stock units granted under the
2013
Plan and the
2008
Formula Plan that is expected to be recognized over a weighted average period of
1.1
years.
 
No stock options were granted under any of our stock compensation plans in
2016,
2015
or
2014.
When stock o
ptions are granted, we estimate the fair value of stock option grants on grant date using the Black-Scholes option-pricing model based on the following factors and assumptions. Expected volatility is based on implied volatilities from historical volatility of our stock and other factors. We use historical data to estimate option exercises, forfeitures and employee terminations within the pricing model. Employee groups have similar historical exercise experience and are combined for valuation purposes. The expected term of granted options is estimated based on historical exercise experience and represents the time period that granted options are expected to be outstanding. Risk-free interest rates for periods within the expected life of options are based on the US Treasury yield curve in effect at the time of grant.
 
 
There were no significant changes in the characteristics of restricted stock or restricted stock units granted during
2014
through
2016
as compared to prior grants and no modifications of the te
rms of any share-based payment arrangements. There were no significant changes in estimates, assumptions or valuation methods used to estimate the fair value of share-based payment awards. We believe the pricing model and approach utilized to develop the underlying assumptions are appropriate for estimating the fair values of share-based awards. These fair value and other estimates are not intended to predict future events or value ultimately realizable by employees who receive equity awards, and subsequent events are not indicative of the reasonableness of original estimates.
 
No stock options have been granted under the
201
3
Plan. The following is a summary of stock option activity regarding the
2004
Plan and Formula Stock Option Plan for
2016
(shares and aggregate intrinsic value in thousands):
 
   
2004 Stock Incentive Plan
   
Formula Stock Option Plan
 
Stock Options
 
Shares
   
Weighted
Average
Exercise
Price Per
Share
   
Weighted
Average
Remaining
Contractual
Term (Yrs)
   
Aggregate
Intrinsic
Value
   
Shares
   
Weighted
Average
Exercise
Price Per
Share
   
Weighted
Average
Remaining
Contractual
Term (Yrs)
   
Aggregate
Intrinsic
Value
 
Outstanding, January 1, 2016
   
215
    $
22.42
     
 
     
 
     
60
    $
36.71
     
 
         
Granted
   
     
     
 
     
 
     
     
     
 
         
Exercised
   
(12
)
   
15.83
     
 
     
 
     
     
     
 
         
Forfeited
   
     
     
 
     
 
     
     
     
 
         
Expired
   
(55
)
   
38.19
     
 
     
 
     
(30
)
   
34.97
     
 
         
Outstanding, December 31, 2016
   
148
    $
17.07
     
2.5
    $
856
     
30
    $
38.45
     
0.0
       
Exercisable, December 31, 2016
   
148
    $
17.07
     
2.5
    $
856
     
30
    $
38.45
     
0.0
       
 
As of
December
31,
2016,
all stock options were vested and there was no unrecognized compensation cost related to non-ves
ted stock options granted under any of our stock compensation plans. Outstanding and exercisable stock options with no intrinsic value as of
December
31,
2016
are excluded from the aggregate intrinsic values presented above. No stock options vested in
2016,
2015
or
2014.
In
2016,
2015
and
2014,
11,500,
55,500
and
7,500
stock options were exercised with an intrinsic value of
$48,000,
$327,000
and
$32,000,
respectively.
 
The following is a summary of non-vested restricted stock and restricted stock unit activ
ity regarding the
2013
Plan,
2004
Plan and
2008
Formula Plan for
2016,
and grant activity for
2015
and
2014
(shares and aggregate intrinsic value in thousands):
 
   
201
3 Stock Incentive Plan
   
2004 Stock Incentive Plan
   
2008 Formula Restricted Stock
Plan
 
Non-vested
Restricted Stock and
Restricted Stock Units
 
Shares
   
Weighted
Average
Grant-
date Fair
Value
Per Share
   
Weighted
Average
Remaining
Contractual
Term (Yrs)
   
Aggregate
Intrinsic
Value
   
Shares
   
Weighted
Average
Grant-
date
Fair
Value
Per Share
   
Weighted
Average
Remaining
Contractual
Term (Yrs)
   
Aggregate
Intrinsic
Value
   
Shares
   
Weighted
Average
Grant-
date Fair
Value
Per Share
   
Weighted
Average
Remaining
Contractual
Term (Yrs)
   
Aggregate
Intrinsic
Value
 
Outstanding, January 1, 2016
   
302
    $
21.53
     
 
     
 
     
43
    $
18.57
                     
13
    $
25.46
     
 
     
 
 
Granted
   
151
     
20.27
     
 
     
 
     
     
                     
16
     
18.17
     
 
     
 
 
Vested
   
(93
)
   
21.08
     
 
     
 
     
(43
)
   
18.57
                     
(13
)
   
25.46
     
 
     
 
 
Forfeited
   
(9
)
   
22.91
     
 
     
 
     
     
                     
     
     
 
     
 
 
Outstanding, December 31, 2016
   
351
    $
21.08
     
1.6
    $
7,614
     
     
                     
16
    $
18.17
     
0.3
    $
346
 
Granted, 2015
   
211
     
21.82
     
 
     
 
     
     
                     
13
     
25.46
     
 
     
 
 
Granted, 2014
   
145
     
20.86