Edgar Filing: INTERNATIONAL SPEEDWAY CORP

10-Q

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

_________________________________

FORM 10-Q

_________________________________

(Mark One)



ý	Quarterly Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

For the quarterly period ended February 29, 2016



¨	Transition Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

For the transition period from to

Commission file number: 000-02384

_________________________________

INTERNATIONAL SPEEDWAY CORPORATION

(Exact name of registrant as specified in its charter)

_________________________________



FLORIDA		59-0709342
(State or other jurisdiction of incorporation)		(I.R.S. Employer Identification No.)



ONE DAYTONA BOULEVARD, DAYTONA BEACH, FLORIDA		32114
(Address of principal executive offices)		(Zip code)

Registrant’s telephone number, including area code: (386) 254-2700

_________________________________

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. YES ý NO ¨

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).

YES ý NO ¨

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See definition of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.



Large accelerated filer	ý		Accelerated filer	o
Non-accelerated filer	o	(Do not check if a smaller reporting company)	Smaller reporting company	o

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). YES ¨ NO ý

Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practical date:



Class A Common Stock	26,527,922 shares	as of February 29, 2016
Class B Common Stock	19,937,655 shares	as of February 29, 2016

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INTERNATIONAL SPEEDWAY CORPORATION

FORM 10-Q

FOR THE QUARTER ENDED FEBRUARY 29, 2016



TABLE OF CONTENTS

PART I. FINANCIAL INFORMATION		3
	ITEM 1. FINANCIAL STATEMENTS	3
	ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS	17
	ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK	35
	ITEM 4. CONTROLS AND PROCEDURES	35
PART II—OTHER INFORMATION		35
	ITEM 1. LEGAL PROCEEDINGS	35
	ITEM 1A. RISK FACTORS	35
	ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS	36
	ITEM 3. DEFAULTS UPON SENIOR SECURITIES	36
	ITEM 4. MINE SAFETY DISCLOSURES	36
	ITEM 5. OTHER INFORMATION	36
	ITEM 6. EXHIBITS	37
SIGNATURE		38

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PART I.	FINANCIAL INFORMATION



ITEM 1.	FINANCIAL STATEMENTS

INTERNATIONAL SPEEDWAY CORPORATION

Consolidated Balance Sheets



	November 30, 2015			February 29, 2016
	(Unaudited)
	(In Thousands, Except Share and Per Share Amounts)
ASSETS
Current Assets:
Cash and cash equivalents	$	160,548		$	190,092
Receivables, less allowance of $1,000 in 2015 and 2016, respectively	42,112			107,183
Inventories	1,639			1,694
Income taxes receivable	572			—
Prepaid expenses and other current assets	60,673			69,568
Total Current Assets	265,544			368,537
Property and Equipment, net of accumulated depreciation of $839,039 and $862,795 respectively	1,448,964			1,464,586
Other Assets:
Equity investments	103,249			102,719
Intangible assets, net	178,626			178,625
Goodwill	118,791			118,791
Other	4,489			4,697
	405,155			404,832
Total Assets	$	2,119,663		$	2,237,955
LIABILITIES AND SHAREHOLDERS’ EQUITY
Current Liabilities:
Current portion of long-term debt	$	3,074		$	3,088
Accounts payable	56,968			40,792
Deferred income	38,243			100,354
Income taxes payable	—			7,945
Other current liabilities	20,344			18,817
Total Current Liabilities	118,629			170,996
Long-Term Debt	262,762			262,640
Deferred Income Taxes	336,232			387,416
Long-Term Deferred Income	6,969			7,122
Other Long-Term Liabilities	1,856			2,042
Commitments and Contingencies	—			—
Shareholders’ Equity:
Class A Common Stock, $.01 par value, 80,000,000 shares authorized; 26,348,051 and 26,168,232 issued and outstanding in 2015 and 2016, respectively	263			262
Class B Common Stock, $.01 par value, 40,000,000 shares authorized; 19,942,136 and 19,937,655 issued and outstanding in 2015 and 2016, respectively	199			199
Additional paid-in capital	449,136			448,110
Retained earnings	946,940			962,326
Accumulated other comprehensive loss	(3,323		)	(3,158		)
Total Shareholders’ Equity	1,393,215			1,407,739
Total Liabilities and Shareholders’ Equity	$	2,119,663		$	2,237,955

See accompanying notes

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INTERNATIONAL SPEEDWAY CORPORATION

Consolidated Statements of Operations



	Three Months Ended
	February 28, 2015			February 29, 2016
	(Unaudited)
	(In Thousands, Except Share and Per Share Amounts)
REVENUES:
Admissions, net	$	30,544		$	31,855
Motorsports and other event related	87,431			98,723
Food, beverage and merchandise	14,735			8,316
Other	3,842			3,736
	136,552			142,630
EXPENSES:
Direct:
NASCAR event management fees	27,296			28,080
Motorsports and other event related	23,498			24,880
Food, beverage and merchandise	12,443			6,246
General and administrative	26,136			26,292
Depreciation and amortization	24,009			25,046
Losses on asset retirements	1,579			920
	114,961			111,464
Operating income	21,591			31,166
Interest income	19			30
Interest expense	(1,468		)	(3,089		)
Equity in net income from equity investments	3,244			3,970
Other	26			64
Income before income taxes	23,412			32,141
Income taxes	8,459			12,310
Net income	$	14,953		$	19,831

Earnings per share:
Basic and diluted	$	0.32		$	0.43

Basic weighted average shares outstanding	46,583,832			46,620,549

Diluted weighted average shares outstanding	46,596,605			46,634,970

See accompanying notes

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INTERNATIONAL SPEEDWAY CORPORATION

Consolidated Statements of Comprehensive Income



	Three Months Ended
	February 28, 2015		February 29, 2016
	(Unaudited)
	(In Thousands)
Net income	$	14,953	$	19,831
Other comprehensive income:
Amortization of terminated interest rate swap, net of tax benefit of $106 and $105, respectively	164		165
Comprehensive income	$	15,117	$	19,996

See accompanying notes

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INTERNATIONAL SPEEDWAY CORPORATION

Consolidated Statement of Shareholders’ Equity



	Class A Common Stock $.01 Par Value			Class B Common Stock $.01 Par Value		Additional Paid-in Capital			Retained Earnings			Accumulated Other Comprehensive Loss			Total Shareholders’ Equity
	(Unaudited) (In Thousands)
Balance at November 30, 2015	$	263		$	199	$	449,136		$	946,940		$	(3,323	)	$	1,393,215
Activity 12/1/15 — 2/29/16:
Net income	—			—		—			19,831			—			19,831
Comprehensive income	—			—		—			—			165			165
Reacquisition of previously issued common stock	(1		)	—		(1,775		)	(4,445		)	—			(6,221		)
Stock-based compensation	—			—		749			—			—			749
Balance at February 29, 2016	$	262		$	199	$	448,110		$	962,326		$	(3,158	)	$	1,407,739

See accompanying notes

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INTERNATIONAL SPEEDWAY CORPORATION

Consolidated Statements of Cash Flows



	Three Months Ended
	February 28, 2015			February 29, 2016
	(Unaudited)
	(In Thousands)
OPERATING ACTIVITIES
Net income	$	14,953		$	19,831
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization	24,009			25,046
Stock-based compensation	706			749
Amortization of financing costs	445			442
Interest received on Staten Island note receivable	1,162			1,162
Deferred income taxes	3,032			51,078
Income from equity investments	(3,244		)	(3,970		)
Distribution from equity investee	3,520			4,257
Loss on retirements of long-lived assets, non-cash	379			911
Other, net	(6		)	(20		)
Changes in operating assets and liabilities:
Receivables, net	(55,683		)	(65,071		)
Inventories, prepaid expenses and other assets	(3,748		)	(10,438		)
Accounts payable and other liabilities	2,237			(4,489		)
Deferred income	51,629			62,264
Income taxes	5,339			8,518
Net cash provided by operating activities	44,730			90,270
INVESTING ACTIVITIES
Capital expenditures	(43,418		)	(54,589		)
Distribution from equity investee and affiliate	1,980			243
Other, net	3			48
Net cash used in investing activities	(41,435		)	(54,298		)
FINANCING ACTIVITIES
Payment of long-term debt	(278		)	(207		)
Reacquisition of previously issued common stock	—			(6,221		)
Net cash used in financing activities	(278		)	(6,428		)
Net increase in cash and cash equivalents	3,017			29,544
Cash and cash equivalents at beginning of period	158,847			160,548
Cash and cash equivalents at end of period	$	161,864		$	190,092

See accompanying notes

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International Speedway Corporation

Notes to Consolidated Financial Statements

February 29, 2016

(Unaudited)

1. Basis of Presentation

The accompanying consolidated financial statements have been prepared in compliance with Rule 10-01 of Regulation S-X and accounting principles generally accepted in the United States for interim financial information but do not include all of the information and disclosures required for complete financial statements. The balance sheet at November 30, 2015, has been derived from the audited financial statements at that date but does not include all of the information and footnotes required by accounting principles generally accepted in the United States for complete financial statements. The statements should be read in conjunction with the consolidated financial statements and notes thereto included in the latest annual report on Form 10-K for International Speedway Corporation and its wholly-owned subsidiaries (the “Company” or “ISC”). In management’s opinion, the statements include all adjustments which are necessary for a fair presentation of the results for the interim periods. All such adjustments are of a normal recurring nature.

Because of the seasonal concentration of racing events, the results of operations for the three months ended February 28, 2015 and February 29, 2016, respectively, are not indicative of the results to be expected for the year.

2. New Accounting Pronouncements

In May 2014, the Financial Accounting Standards Board ("FASB"), in conjunction with the International Accounting Standards Board ("IASB"), issued Accounting Standards Update ("ASU" or "Update") No. 2014-09, "Revenue from Contracts with Customers". The objective of this Update is to significantly enhance comparability and clarify principles of revenue recognition practices across entities, industries, jurisdictions, and capital markets. On July 9, 2015, the FASB approved a one-year deferral of the effective date, while permitting entities to elect to adopt one year earlier on the original effective date. As a result, for a public entity, the amendments in this Update are effective for annual reporting periods beginning after December 15, 2017, including interim periods within that reporting period. The standard can be adopted either retrospectively to each prior reporting period presented or as a cumulative effect adjustment as of the date of adoption. The Company is currently evaluating the impact of adopting this new guidance on its financial position, results of operations, and cash flows, and will adopt the provisions of this statement in the first quarter of fiscal 2019.

In April 2015, the FASB, in conjunction with the IASB, issued ASU No. 2015-03, "Interest - Imputation of Interest". The objective of this Update is to simplify the presentation of debt issuance costs. The amendments in this Update require that debt issuance costs related to a recognized debt liability be presented in the balance sheet as a direct reduction from the carrying amount of that debt liability, consistent with debt discounts. The recognition and measurement guidance for debt issuance costs are not affected by the amendments in this Update. The Company has adopted the provisions of this statement in the first quarter of fiscal 2016 and prior periods have been retrospectively adjusted (see "Note 6. Long-Term Debt").

In August 2015, the FASB issued ASU No. 2015-15, "Interest - Imputation of Interest (Sub-Topic 835-30): Presentation and Subsequent Measurement of Debt Issuance Costs Associated with Line-of-Credit Arrangements". Given the absence of authoritative guidance within Update 2015-03 for debt issuance costs related to line-of-credit arrangements, the SEC staff would not object to an entity deferring and presenting debt issuance costs as an asset and subsequently amortizing the deferred debt issuance costs ratably over the term of the line-of-credit arrangement, regardless of whether there are any outstanding borrowings on the line-of-credit arrangement. The Company has adopted the provisions of this statement in the first quarter of fiscal 2016 and prior periods have been retrospectively adjusted.

In November 2015, the FASB issued ASU No. 2015-17, "Income Taxes (Topic 740): Balance Sheet Classification of Deferred Taxes". The objective of this Update is to simplify the presentation of deferred income taxes. The amendments in this Update require that deferred assets and liabilities be classified as long-term on the balance sheet instead of separating the deferred taxes into current and noncurrent amounts. The Company believes that this treatment of deferred taxes reduces the complexity of financial reporting while improving the usefulness of the information provided to users of the financial statements. As a result the Company elected to early adopt this Update prospectively as of November 30, 2015 and prior periods have not been retrospectively adjusted.

In February 2016, the FASB issued ASU No. 2016-02, "Leases (Topic 842): "Leases". The objective of this Update is to increase transparency and comparability among organizations by recognizing lease assets and lease liabilities on the balance sheet and disclosing key information about leasing arrangements. To meet that objective, the FASB is amending the FASB Accounting Standards Codification and creating Topic 842, Leases. This Update, along with IFRS 16, Leases, are the results of the FASB’s and the International Accounting Standards Board’s (IASB’s) efforts to meet that objective and improve financial

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reporting. For a public entity, the amendments in this Update are effective for fiscal years beginning after December 15, 2018, including interim periods within those fiscal years. Early application of the amendments in this Update is permitted for all entities. In transition, lessees and lessors are required to recognize and measure leases at the beginning of the earliest period presented using a modified retrospective approach. The Company is currently evaluating the impact of adopting this new guidance on its financial position, results of operations, and cash flows, and will adopt the provisions of this statement in the first quarter of fiscal 2020.

3. Earnings Per Share

Basic earnings per share is calculated using the Company's weighted-average outstanding common shares. Diluted earnings per share is calculated using the Company's weighted-average outstanding common shares including the dilutive effect of stock awards as determined under the treasury stock method. In periods when the Company recognizes a net loss, it excludes the impact of outstanding stock awards from the diluted loss per share calculation as their inclusion would have an anti-dilutive effect.

The following table sets forth the computation of basic and diluted earnings per share for the three months ended February 28, 2015 and February 29, 2016 (in thousands, except share and per share amounts):



	Three Months Ended
	February 28, 2015		February 29, 2016
Numerator:
Net income	$	14,953	$	19,831
Denominator:
Weighted average shares outstanding	46,583,832		46,620,549
Effect of dilutive securities	12,773		14,421
Diluted weighted average shares outstanding	46,596,605		46,634,970

Basic and diluted earnings per share	$	0.32	$	0.43

Anti-dilutive shares excluded in the computation of diluted earnings per share	104,909		91,379

4. Equity and Other Investments

Hollywood Casino at Kansas Speedway

Kansas Entertainment, LLC, (“Kansas Entertainment”) a 50/50 joint venture of Penn Hollywood Kansas, Inc. (“Penn”), a subsidiary of Penn National Gaming, Inc. and Kansas Speedway Development Corporation (“KSDC”), a wholly owned indirect subsidiary of ISC, operates the Hollywood-themed casino and branded destination entertainment facility, overlooking turn two at Kansas Speedway. Penn, as the managing member of Kansas Entertainment, is responsible for the operations of the casino.

The Company has accounted for Kansas Entertainment as an equity investment in its financial statements as of February 28, 2015 and February 29, 2016. The Company's 50.0 percent portion of Kansas Entertainment’s net income is approximately $3.2 million and $4.0 million for the three months ended February 28, 2015 and February 29, 2016, respectively, and is included in income from equity investments in its consolidated statements of operations.

Distributions from Kansas Entertainment for the three months ended February 29, 2016, totaling approximately $4.5 million, consist of approximately $4.3 million received as a distribution from its profits, included in net cash provided by operating activities on the Company's statement of cash flows, with the remaining approximately $0.2 million received, recognized as a return of capital from investing activities on the Company's statement of cash flows. Distributions from Kansas Entertainment for the three months ended February 28, 2015, totaling $5.5 million, consist of approximately $3.5 million received as a distribution from its profits, is included in net cash provided by operating activities on the Company's statement of cash flows, with the remaining approximate $2.0 million received, recognized as a return of capital from investing activities on the Company's statement of cash flows.

Staten Island Property

On August 5, 2013, the Company announced that it sold its 676 acre parcel of property located in Staten Island, New York, to Staten Island Marine Development, LLC (“Marine Development”). Marine Development purchased 100 percent of the

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outstanding equity membership interests of 380 Development LLC (“380 Development”), a wholly owned indirect subsidiary of ISC and owner of the Staten Island property, for a total sales price of $80.0 million. In addition, the Company previously received approximately $4.2 million for an option provided to the purchaser that is nonrefundable and does not apply to the $80.0 million sales price.

The Company received $7.5 million, less closing and other administrative costs, of the sales price at closing. The remaining sales price was financed by the Company through a secured mortgage interest in 380 Development as well as the underlying property. The mortgage balance bears interest at an annual rate of 7.0 percent. In accordance with the terms of the agreement, the Company received a principal payment of approximately $6.1 million plus interest on the mortgage balance through February 29, 2016, with the remaining purchase price of $66.4 million due in March 2016. The Company has accounted for the transaction using the cost recovery method and has deferred the recognition of profit of approximately $1.9 million, and interest totaling approximately $11.4 million at February 29, 2016, until the carrying amount of the property is recovered, upon final payment .

In March 2016, the Company completed an assignment of all rights, title and interest in the mortgage and underlying promissory note to an affiliate of Matrix Development Group, a New York/New Jersey area developer, and received the remaining principal balance of $66.4 million, plus additional consideration of approximately $0.3 million. The Company has no further commitments or contingencies related to the property or its sale. As a result, in the second quarter of fiscal 2016, the Company will record a gain of approximately $13.6 million, comprised of the aforementioned deferred gain, interest, and other consideration paid.

The net proceeds from the sale, combined with the mortgage interest and related cash tax benefits, will provide the Company with approximately $129.8 million in incremental cash flow through the term of the mortgage.

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5. Goodwill and Intangible Assets

The gross carrying value, accumulated amortization and net carrying value of the major classes of intangible assets relating to the Motorsports Event segment are as follows (in thousands):



	November 30, 2015
	Gross Carrying Amount		Accumulated Amortization		Net Carrying Amount
Amortized intangible assets:
Food, beverage and merchandise contracts	$	10	$	10	$	—
Other	114		94		20
Total amortized intangible assets	124		104		20
Non-amortized intangible assets:
NASCAR — sanction agreements	177,813		—		177,813
Other	793		—		793
Total non-amortized intangible assets	178,606		—		178,606
Total intangible assets	$	178,730	$	104	$	178,626

	February 29, 2016
	Gross Carrying Amount		Accumulated Amortization		Net Carrying Amount
Amortized intangible assets:
Food, beverage and merchandise contracts	$	10	$	10	$	—
Other	114		95		19
Total amortized intangible assets	124		105		19
Non-amortized intangible assets:
NASCAR — sanction agreements	177,813		—		177,813
Other	793		—		793
Total non-amortized intangible assets	178,606		—		178,606
Total intangible assets	$	178,730	$	105	$	178,625

The following table presents current and expected amortization expense of the existing intangible assets as of February 29, 2016 for each of the following periods (in thousands):



Amortization expense for the three months ended February 29, 2016	$	1
Remaining estimated amortization expense for the year ending November 30:
2016	1
2017	1
2018	1
2019	1
2020 and thereafter	14

There were no changes in the carrying value of goodwill during the three months ended February 29, 2016.

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6. Long-Term Debt

Long-term debt consists of the following (in thousands):



	November 30, 2015					February 29, 2016
	Principal		Unamortized Discount and Debt Issuance Costs			Principal		Unamortized Discount and Debt Issuance Costs
4.63 percent Senior Notes	$	65,000	$	(261	)	65,000		(248		)
3.95 percent Senior Notes	100,000		(370		)	100,000		(359		)
6.25 percent Term Loan	48,726		—			48,519		—
TIF bond debt service funding commitment	54,646		(1,905		)	54,662		(1,846		)
Revolving Credit Facility	—		—			—		—
	268,372		(2,536		)	268,181		(2,453		)
Less: current portion	3,408		(334		)	3,422		(334		)
	$	264,964	$	(2,202	)	$	264,759	$	(2,119	)

The Company's $65.0 million principal amount of senior unsecured notes (“4.63 percent Senior Notes”) bear interest at 4.63 percent and are due January 2021. The 4.63 percent Senior Notes require semi-annual interest payments on January 18 and July 18 through their maturity. The 4.63 percent Senior Notes may be redeemed in whole or in part, at the Company’s option, at any time or from time to time at redemption prices as defined in the indenture. Certain of the Company’s wholly owned domestic subsidiaries are guarantors of the 4.63 percent Senior Notes. Certain restrictive covenants of the 4.63 percent Senior Notes require that the Company's ratio of its Consolidated Funded Indebtedness to its Consolidated EBITDA ("leverage ratio") does not exceed 3.50 to 1.0, and its Consolidated EBITDA to Consolidated Interest Expense ("interest coverage ratio") is not less than 2.0 to 1.0. In addition, the Company may not permit the aggregate of certain Priority Debt to exceed 15.0 percent of its Consolidated Net Worth. The 4.63 percent Senior Notes contain various other affirmative and negative restrictive covenants including, among others, limitations on liens, sales of assets, mergers and consolidations and certain transactions with affiliates. As of February 29, 2016, the Company was in compliance with its various restrictive covenants. At February 29, 2016, outstanding principal on the 4.63 percent Senior Notes was approximately $65.0 million.

The Company's $100.0 million principal amount of senior unsecured notes (“3.95 percent Senior Notes”) bear interest at 3.95 percent and are due September 2024. The 3.95 percent Senior Notes require semi-annual interest payments on March 13 and September 13 through their maturity. The 3.95 percent Senior Notes may be redeemed in whole or in part, at the Company's option, at any time or from time to time at redemption prices as defined in the indenture. Certain of the Company's wholly owned domestic subsidiaries are guarantors of the 3.95 percent Senior Notes. Certain restrictive covenants of the 3.95 percent Senior Notes require that the Company's leverage ratio does not exceed 3.50 to 1.0, and its interest coverage ratio is not less than 2.0 to 1.0. In addition the Company may not permit the aggregate of certain Priority Debt to exceed 15.0 percent of its Consolidated Net Worth. The 3.95 percent Senior Notes contain various other affirmative and negative restrictive covenants including, among others, limitations on liens, sales of assets, mergers and consolidations and certain transactions with affiliates. As of February 29, 2016, the Company was in compliance with its various restrictive covenants. At February 29, 2016, outstanding principal on the 3.95 percent Senior Notes was approximately $100.0 million.

The term loan (“6.25 percent Term Loan”), related to the Company’s International Motorsports Center, has a 25 year term due October 2034, an interest rate of 6.25 percent, and a current monthly payment of approximately $323,000. At February 29, 2016, the outstanding principal on the 6.25 percent Term Loan was approximately $48.5 million.

At February 29, 2016, outstanding taxable special obligation revenue (“TIF”) bonds, in connection with the financing of Kansas Speedway, totaled approximately $54.7 million, net of the unamortized discount, which is comprised of a $5.4 million principal amount, 6.15 percent term bond due December 1, 2017 and a $49.7 million principal amount, 6.75 percent term bond due December 1, 2027. The TIF bonds are repaid by the Unified Government of Wyandotte County/Kansas City, Kansas (“Unified Government”) with payments made in lieu of property taxes (“Funding Commitment”) by the Company’s wholly owned subsidiary, Kansas Speedway Corporation (“KSC”). Principal (mandatory redemption) payments per the Funding Commitment are payable by KSC on October 1 of each year. The semi-annual interest component of the Funding Commitment is payable on April 1 and October 1 of each year. KSC granted a mortgage and security interest in the Kansas project for its Funding Commitment obligation.

The Company's $300.0 million revolving credit facility (“2012 Credit Facility”) contains a feature that allows the Company to increase the credit facility to a total of $500.0 million, subject to certain conditions, provides for separate sub-limits of $25.0 million for standby letters of credit and $10.0 million for swing line loans. The 2012 Credit Facility is scheduled to mature in November 2017. Interest accrues, at the Company's option, at either LIBOR plus 100.0 — 162.5 basis points or a

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base rate loan at the highest of i) Wells Fargo Bank's prime lending rate, ii) the Federal Funds rate, as in effect from time to time, plus 0.5 percent, and iii) one month LIBOR plus 1.0 percent. The 2012 Credit Facility also contains a commitment fee ranging from 0.125 percent to 0.225 percent of unused amounts available for borrowing. The interest rate margin on the LIBOR borrowings and commitment fee are variable depending on the better of the Company's debt rating as determined by specified rating agencies or its leverage ratio. Certain of the Company's wholly owned domestic subsidiaries are guarantors on the 2012 Credit Facility. The 2012 Credit Facility requires that the Company's leverage ratio does not exceed 3.50 to 1.0 (4.0 to 1.0 for the four quarters ending after any Permitted Acquisition), and its interest coverage ratio is not less than 2.5 to 1.0. The 2012 Credit Facility also contains various other affirmative and negative restrictive covenants including, among others, limitations on indebtedness, investments, sales of assets, certain transactions with affiliates, entering into certain restrictive agreements and making certain restricted payments as detailed in the agreement. As of February 29, 2016, the Company was in compliance with its various restrictive covenants. At February 29, 2016, the Company had no outstanding borrowings under the 2012 Credit Facility.

Financing costs are being amortized on a straight-line method, which approximates the effective yield method, over the life of the related financing.

Total interest expense incurred by the Company for the three months ended February 28, 2015 and February 29, 2016, are as follows (in thousands):



	Three Months Ended
	February 28, 2015		February 29, 2016
Interest expense	$	4,073	$	4,013
Less: capitalized interest	2,605		924
Net interest expense	$	1,468	$	3,089

7. Financial Instruments

Various inputs are considered when determining the carrying values of cash and cash equivalents, accounts receivable, accounts payable, and accrued liabilities which approximate fair value due to the short-term maturities of these assets and liabilities. These inputs are summarized in the three broad levels listed below:


•	Level 1 — observable market inputs that are unadjusted quoted prices for identical assets or liabilities in active markets


•	Level 2 — other significant observable inputs (including quoted prices for similar securities, interest rates, credit risk, etc.)


•	Level 3 — significant unobservable inputs (including the Company’s own assumptions in determining the fair value of investments)

At February 29, 2016, the Company had money market funds totaling approximately $63.1 million which are included in cash and cash equivalents in its consolidated balance sheets. All inputs used to determine fair value are considered level 1 inputs.

Fair values of long-term debt are based on quoted market prices at the date of measurement. The Company’s credit facilities approximate fair value as they bear interest rates that approximate market. These inputs used to determine fair value are considered level 2 inputs. The fair value of the remaining long-term debt, as determined by quotes from financial institutions, was approximately $284.8 million compared to the carrying amount of approximately $268.4 million and approximately $290.6 million compared to the carrying amount of approximately $268.2 million at November 30, 2015 and February 29, 2016, respectively.

The Company had no financial instruments that used level 3 inputs as of February 29, 2016.

8. Capital Stock

Stock Purchase Plan

The Company has a share repurchase program (“Stock Purchase Plan”), under which it is authorized to purchase up to

$330.0 million of its outstanding Class A common shares. The timing and amount of any shares repurchased under the Stock

Purchase Plan will depend on a variety of factors, including price, corporate and regulatory requirements, capital availability

and other market conditions. The Stock Purchase Plan may be suspended or discontinued at any time without prior notice. No

shares have been or will be knowingly purchased from Company insiders or their affiliates.

Since inception of the Plan through February 29, 2016, the Company has purchased 7,248,262 shares of its Class A common

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shares, for a total of approximately $274.5 million. We purchased 184,300 shares of our Class A common shares during the three month period ended February 29, 2016, at an average cost of approximately $33.74 per share (including commissions), for a total of approximately $6.2 million. These transactions occurred in open market purchases and pursuant to a trading

plan under Rule 10b5-1. At February 29, 2016, the Company had approximately $55.5 million million remaining repurchase authority under the current Stock Purchase Plan.

9. Comprehensive Income

Comprehensive income is the changes in equity of an enterprise except those resulting from shareholder transactions. Accumulated other comprehensive loss consists of the following (in thousands):



	November 30, 2015		February 29, 2016
Terminated interest rate swap, net of tax benefit of $2,176 and $2,070, respectively	$	3,323	$	3,158

10. Income Taxes

Decreases in certain state tax rates are the principal causes of the decreased effective income tax rate, as compared to the statutory income tax rate, for the three months ended February 28, 2015. The effective income tax rate for the three months ended February 29, 2016 approximates the statutory income tax rate.

As a result of these items, the Company's effective income tax rate was approximately 36.1 percent for the three months ended February 28, 2015, and approximately 38.3 percent for the three months ended February 29, 2016.

11. Related Party Disclosures and Transactions

All of the racing events that take place during the Company’s fiscal year are sanctioned by various racing organizations such as National Association for Stock Car Auto Racing (“NASCAR”), the American Historic Racing Motorcycle Association, the American Motorcyclist Association, the Automobile Racing Club of America, the American Sportbike Racing Association — Championship Cup Series, the Federation Internationale de L’Automobile, the Federation Internationale Motocycliste, International Motor Sports Association (“IMSA”) - a wholly owned subsidiary of NASCAR, Historic Sportscar Racing, IndyCar Series, National Hot Rod Association, the Porsche Club of America, the Sports Car Club of America, the Sportscar Vintage Racing Association, the United States Auto Club and the World Karting Association.

NASCAR and IMSA, which sanction many of the Company’s principal racing events, are members of the France Family Group, which controls approximately 72.0 percent of the combined voting power of the outstanding stock of the Company, as of November 30, 2015, and some members of which serve as directors and officers of the Company. Standard NASCAR and IMSA sanction agreements require racetrack operators to pay event management fees (collectively "NASCAR event management or NEM fees"), which include prize and point fund monies for each sanctioned event conducted. The prize and point fund monies are distributed by NASCAR to participants in the events. Total NEM fees paid by the Company were approximately $27.3 million and $28.1 million for the three months ended February 28, 2015 and February 29, 2016, respectively.

Under current agreements, NASCAR contracts directly with certain network providers for television rights to the entire NASCAR Sprint Cup, Xfinity and Camping World Truck series schedules. Under the terms of this arrangement, NASCAR retains 10.0 percent of the gross broadcast rights fees allocated to each NASCAR Sprint Cup, Xfinity and Camping World Truck series event as a component of its sanction fees. The promoter records 90.0 percent of the gross broadcast rights fees as revenue and then records 25.0 percent of the gross broadcast rights fees as part of its awards to the competitors. Ultimately, the promoter retains 65.0 percent of the net cash proceeds from the gross broadcast rights fees allocated to the event. The Company’s television broadcast and ancillary rights fees received from NASCAR for the NASCAR Sprint Cup, Xfinity, and Camping World Truck series events conducted at its wholly owned facilities, and recorded as part of motorsports related revenue, were approximately $58.6 million and $60.3 million for the three months ended February 28, 2015 and February 29, 2016, respectively.

12. Commitments and Contingencies

In October 2002, the Unified Government issued subordinate sales tax special obligation revenue bonds (“2002 STAR Bonds”) totaling approximately $6.3 million to reimburse the Company for certain construction already completed on the second phase of the Kansas Speedway project and to fund certain additional construction. The 2002 STAR Bonds, which require annual debt service payments and are due December 1, 2022, will be retired with state and local taxes generated within the speedway’s boundaries and are not the Company’s obligation. KSC has agreed to guarantee the payment of principal and any required premium and interest on the 2002 STAR Bonds. At February 29, 2016, the Unified Government had approximately $0.9 million

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outstanding on 2002 STAR Bonds. Under a keepwell agreement, the Company has agreed to provide financial assistance to KSC, if necessary, to support KSC’s guarantee of the 2002 STAR Bonds.

In connection with the Company’s automobile and workers’ compensation insurance coverages and certain construction contracts, the Company has standby letter of credit agreements in favor of third parties totaling approximately $4.0 million at February 29, 2016. At February 29, 2016, there were no amounts drawn on the standby letters of credit.

Current Litigation

The Company is from time to time a party to routine litigation incidental to its business. Management does not believe that the resolution of any or all of such litigation will have a material adverse effect on the Company’s financial condition or results of operations.

13. Segment Reporting

The general nature of the Company’s business is a motorsports themed amusement enterprise, furnishing amusement to the public in the form of motorsports themed entertainment. The Company’s motorsports event operations consist principally of racing events at its major motorsports entertainment facilities. The reporting units within the motorsports segment portfolio are reviewed together as the nature of the products and services, the production processes used, the type or class of customer using our products and services, and the methods used to distribute our products or provide their services are consistent in objectives and principles, and predominately uniform and centralized throughout the Company. The Company’s remaining business units, which are comprised of the radio network production and syndication of numerous racing events and programs, certain souvenir merchandising operations not associated with the promotion of motorsports events at the Company’s facilities, construction management services, leasing operations, and financing and licensing operations are included in the “All Other” segment. The Company evaluates financial performance of the business units on operating profit after allocation of corporate general and administrative (“G&A”) expenses. Corporate G&A expenses are allocated to business units based on each business unit’s net revenues to total net revenues.

The accounting policies of the segments are the same as those described in the summary of significant accounting policies. Intersegment sales are accounted for at prices comparable to unaffiliated customers. The following tables provide segment reporting of the Company for the three months ended February 28, 2015 and February 29, 2016 (in thousands):



	Three Months Ended February 28, 2015
	Motorsports Event		All Other			Total
Revenues	$	124,749	$	12,139		$	136,888
Depreciation and amortization	22,688		1,321			24,009
Operating income (loss)	24,366		(2,775		)	21,591
Capital expenditures	40,857		2,561			43,418
Total assets	1,680,351		462,079			2,142,430
Equity investments	—		118,972			118,972
	Three Months Ended February 29, 2016
	Motorsports Event		All Other			Total
Revenues	$	139,111	$	3,870		$	142,981
Depreciation and amortization	23,929		1,117			25,046
Operating income (loss)	32,916		(1,750		)	31,166
Capital expenditures	51,867		2,722			54,589
Total assets	1,737,895		500,060			2,237,955
Equity investments	—		102,719			102,719

Intersegment revenues were approximately $0.3 million and $0.4 million for the three months ended February 28, 2015 and February 29, 2016, respectively.

During the three months ended February 29, 2016, the Company recognized approximately $0.8 million in marketing and consulting costs that is included in general and administrative expense related to DAYTONA Rising. These costs were included in the Motorsports Event segment. During the three months ended February 28, 2015, the Company recognized approximately $0.3 million of similar costs.

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During the three months ended February 29, 2016, the Company did not recognize any accelerated depreciation, due to the shortening the service lives of certain assets, associated with DAYTONA Rising and other projects. During the three months ended February 28, 2015, the Company recognized approximately $3.9 million, respectively, of accelerated depreciation that was recorded due to the shortening the service lives of certain assets associated with DAYTONA Rising and capacity management initiatives.

During the three months ended February 29, 2016, the Company recognized approximately $0.9 million of losses primarily attributable to demolition costs in connection with DAYTONA Rising and other capital improvements. During the three months ended February 28, 2015, the Company recognized approximately $1.6 million of losses associated with asset retirements primarily attributable to the removal of assets not fully depreciated in connection with capacity management initiatives, DAYTONA Rising and other capital improvements.

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PART I.	FINANCIAL INFORMATION



ITEM 2.	MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

Results of Operations

General

The general nature of our business is a motorsports themed amusement enterprise, furnishing amusement to the public in the form of motorsports themed entertainment. We derive revenues primarily from (i) admissions to motorsports events and motorsports themed amusement activities held at our facilities, (ii) revenue generated in conjunction with or as a result of motorsports events and motorsports themed amusement activities conducted at our facilities, and (iii) catering, concession and merchandising services during or as a result of these events and amusement activities.

“Admissions, net” revenue includes ticket sales for all of our racing events and other motorsports activities and amusements, net of any applicable taxes.

“Motorsports and other event related” revenue primarily includes television and ancillary media rights fees, promotion and sponsorship fees, hospitality rentals (including luxury suites, chalets and the hospitality portion of club seating), advertising revenues, royalties from licenses of our trademarks, parking and camping revenues, track rental fees and fees paid by third party promoters for management of non-motorsports events.

“Food, beverage and merchandise” revenue includes revenues from concession stands, direct sales of souvenirs, hospitality catering, programs and other merchandise and fees paid by third party vendors for the right to occupy space to sell souvenirs and concessions at our motorsports entertainment facilities.

Direct expenses include (i) NASCAR event management fees, (ii) motorsports and other event related expenses, which include labor, advertising, costs of competition paid to sanctioning bodies other than NASCAR and other expenses associated with the promotion of all of our motorsports and other events and activities, and (iii) food, beverage and merchandise expenses, consisting primarily of labor and costs of goods sold.

Critical Accounting Policies and Estimates

The preparation of financial statements in conformity with accounting principles generally accepted in the United States requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. While our estimates and assumptions are based on conditions existing at and trends leading up to the time the estimates and assumptions are made, actual results could differ materially from those estimates and assumptions. We continually review our accounting policies, how they are applied and how they are reported and disclosed in the financial statements.

The following is a summary of our critical accounting policies and estimates and how they are applied in the preparation of the financial statements.

Basis of Presentation and Consolidation. We consolidate all entities we control by ownership of a majority voting interest and variable interest entities for which we have the power to direct activities and the obligation to absorb losses. Our judgment in determining if we consolidate a variable interest entity includes assessing which party, if any, has the power and benefits. Therefore, we evaluate which activities most significantly affect the variable interest entities economic performance and determine whether we, or another party, have the power to direct these activities.

We apply the equity method of accounting for our investments in joint ventures and other investees whenever we can exert significant influence on the investee but do not have effective control over the investee. Our consolidated net income includes our share of the net earnings or losses from these investees. Our judgment regarding the level of influence over each equity method investee includes considering factors such as our ownership interest, board representation and policy making decisions. We periodically evaluate these equity investments for potential impairment where a decline in value is determined to be other than temporary. We eliminate all significant intercompany transactions from financial results.

Revenue Recognition. Advance ticket sales and event-related revenues for future events are deferred until earned, which is generally once the events are conducted. The recognition of event-related expenses is matched with the recognition of event-related revenues.

NASCAR contracts directly with certain network providers for television rights to the entire NASCAR Sprint Cup, Xfinity and Camping World Truck series schedules. Event promoters share in the television rights fees in accordance with the provision of the sanction agreement for each NASCAR Sprint Cup, Xfinity and Camping World Truck series event. Under the terms of this

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arrangement, NASCAR retains 10.0 percent of the gross broadcast rights fees allocated to each NASCAR Sprint Cup, Xfinity and Camping World Truck series event as a component of its sanction fees. The promoter records 90.0 percent of the gross broadcast rights fees as revenue and then records 25.0 percent of the gross broadcast rights fees as part of its awards to the competitors. Ultimately, the promoter retains 65.0 percent of the net cash proceeds from the gross broadcast rights fees allocated to the event.

Our revenues from marketing partnerships are paid in accordance with negotiated contracts, with the identities of partners and the terms of sponsorship changing from time to time. Some of our marketing partnership agreements are for multiple facilities and/or events and include multiple specified elements, such as tickets, hospitality chalets, suites, display space and signage for each included event. The allocation of such marketing partnership revenues between the multiple elements, events and facilities is based on relative selling price. The sponsorship revenue allocated to an event is recognized when the event is conducted.

Revenues and related costs from the sale of merchandise to retail customers, internet sales and direct sales to dealers are recognized at the time of sale.

Business Combinations. All business combinations are accounted for under the acquisition method. Whether net assets or common stock is acquired, fair values are determined and assigned to the purchased assets and assumed liabilities of the acquired entity. The excess of the cost of the acquisition over fair value of the net assets acquired (including recognized intangibles) is recorded as goodwill. Business combinations involving existing motorsports entertainment facilities commonly result in a significant portion of the purchase price being allocated to the fair value of the contract-based intangible asset associated with long-term relationships manifest in the sanction agreements with sanctioning bodies, such as NASCAR and the International Motor Sports Association ("IMSA") series. The continuity of sanction agreements with these bodies has historically enabled the facility operator to host motorsports events year after year. While individual sanction agreements may be of terms as short as one year, a significant portion of the purchase price in excess of the fair value of acquired tangible assets is commonly paid to acquire anticipated future cash flows from events promoted pursuant to these agreements which are expected to continue for the foreseeable future and therefore, in accordance with ASC 805-50, “Business Combinations,” are recorded as indefinite-lived intangible assets recognized apart from goodwill.

Capitalization and Depreciation Policies. Property and equipment are stated at cost. Maintenance and repairs that neither materially add to the value of the property nor appreciably prolong its life are charged to expense as incurred. Depreciation and amortization for financial statement purposes are provided on a straight-line basis over the estimated useful lives of the assets. When we construct assets, we capitalize costs of the project, including, but not limited to, certain pre-acquisition costs, permitting costs, fees paid to architects and contractors, certain costs of our design and construction subsidiary, property taxes and interest.

We must make estimates and assumptions when accounting for capital expenditures. Whether an expenditure is considered an operating expense or a capital asset is a matter of judgment. When constructing or purchasing assets, we must determine whether existing assets are being replaced or otherwise impaired, which also is a matter of judgment. Our depreciation expense for financial statement purposes is highly dependent on the assumptions we make about our assets’ estimated useful lives. We determine the estimated useful lives based upon our experience with similar assets, industry, legal and regulatory factors, and our expectations of the usage of the asset. Whenever events or circumstances occur which change the estimated useful life of an asset, we account for the change prospectively.

Interest costs associated with major development and construction projects are capitalized as part of the cost of the project. Interest is typically capitalized on amounts expended using the weighted-average cost of our outstanding borrowings, since we typically do not borrow funds directly related to a development or construction project. We capitalize interest on a project when development or construction activities begin, and cease when such activities are substantially complete or are suspended for more than a brief period.

Impairment of Long-lived Assets, Goodwill and Other Intangible Assets. Our consolidated balance sheets include significant amounts of long-lived assets, goodwill and other intangible assets which could be subject to impairment. During the three months ended February 28, 2015 and February 29, 2016, we recorded before-tax charges as losses on retirements of long-lived assets primarily attributable to costs to remove certain other long-lived assets located at our motorsports facilities totaling approximately $1.6 million and $0.9 million, respectively.

As of February 29, 2016, goodwill and other intangible assets and property and equipment accounts for approximately $1.8 billion, or 78.7 percent of our total assets. We account for our goodwill and other intangible assets in accordance with ASC 350, “Intangibles — Goodwill and Other,” and for our long-lived assets in accordance with ASC 360, “Property, Plant and Equipment.”

We follow applicable authoritative guidance on accounting for goodwill and other intangible assets which specifies, among other things, non-amortization of goodwill and other intangible assets with indefinite useful lives and requires testing for possible impairment, either upon the occurrence of an impairment indicator or at least annually. We complete our annual testing

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in our fiscal fourth quarter, based on assumptions regarding our future business outlook and expected future discounted cash flows attributable to such assets (using the fair value assessment provision of applicable authoritative guidance), supported by quoted market prices or comparable transactions where available or applicable.

While we continue to review and analyze many factors that can impact our business prospects in the future (as further described in “Risk Factors”), our analysis is subjective and is based on conditions existing at, and trends leading up to, the time the estimates and assumptions are made. Different conditions or assumptions, or changes in cash flows or profitability, if significant, could have a material adverse effect on the outcome of the impairment evaluation and our future condition or results of operations.

In connection with our fiscal 2015 assessment of goodwill and intangible assets for possible impairment we used the methodology described above. We believe our methods used to determine fair value and evaluate possible impairment were appropriate, relevant, and represent methods customarily available and used for such purposes. Our latest annual assessment of goodwill and other intangible assets in the fourth quarter of fiscal 2015 indicated there had been no impairment and the fair value substantially exceeded the carrying value for the respective reporting units.

In addition, our growth strategy includes investing in certain joint venture opportunities. In these equity investments, we exert significant influence on the investee but do not have effective control over the investee, which adds an additional element of risk that can adversely impact our financial position and results of operations. The carrying value of our equity investments was $102.7 million at February 29, 2016.

Income Taxes. The tax law requires that certain items be included in our tax return at different times than when these items are reflected in our consolidated financial statements. Some of these differences are permanent, such as expenses not deductible on our tax return. However, some differences reverse over time, such as depreciation expense, and these temporary differences create deferred tax assets and liabilities. Our estimates of deferred income taxes and the significant items giving rise to deferred tax assets and liabilities reflect our assessment of actual future taxes to be paid on items reflected in our financial statements, giving consideration to both timing and probability of realization. Actual income taxes could vary significantly from these estimates due to future changes in income tax law or changes or adjustments resulting from final review of our tax returns by taxing authorities, which could also adversely impact our cash flow.

In the ordinary course of business, there are many transactions and calculations where the ultimate tax outcome is uncertain. Accruals for uncertain tax positions are provided for in accordance with the requirements of ASC 740, “Income Taxes.” Under this guidance, we may recognize the tax benefit from an uncertain tax position only if it is more likely than not that the tax position will be sustained on examination by the taxing authorities, based on the technical merits of the position. The tax benefits recognized in the financial statements from such a position should be measured based on the largest benefit that has a greater than 50.0 percent likelihood of being realized upon the ultimate settlement. This interpretation also provides guidance on de-recognition of income tax assets and liabilities, classification of current and deferred income tax assets and liabilities, accounting for interest and penalties associated with tax positions, and income tax disclosures. Judgment is required in assessing the future tax consequences of events that have been recognized in our financial statements or tax returns. Although we believe the estimates are reasonable, no assurance can be given that the final outcome of these matters will not be different than what is reflected in the historical income tax provisions and accruals. Such differences could have a material impact on the income tax provision and operating results in the period in which such determination is made.

Contingent Liabilities. Our determination of the treatment of contingent liabilities in the financial statements is based on our view of the expected outcome of the applicable contingency. In the ordinary course of business, we consult with legal counsel on matters related to litigation and other experts both within and outside our Company. We accrue a liability if the likelihood of an adverse outcome is probable and the amount of loss is reasonably estimable. We disclose the matter but do not accrue a liability if the likelihood of an adverse outcome is reasonably possible and an estimate of loss is not determinable. Legal and other costs incurred in conjunction with loss contingencies are expensed as incurred.

Equity and Other Investments

Hollywood Casino at Kansas Speedway

Kansas Entertainment, LLC, (“Kansas Entertainment”) a 50/50 joint venture of Penn Hollywood Kansas, Inc. (“Penn”), a subsidiary of Penn National Gaming, Inc. and Kansas Speedway Development Corporation (“KSDC”), a wholly owned indirect subsidiary of ISC, operates the Hollywood-themed casino and branded destination entertainment facility, overlooking turn two at Kansas Speedway. Penn, as managing member of Kansas Entertainment, is responsible for the operations of the casino.

We have accounted for Kansas Entertainment as an equity investment in our financial statements as of February 28, 2015 and February 29, 2016. Our 50.0 percent portion of Kansas Entertainment’s net income is approximately $3.2 million and

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$4.0 million for the three months ended February 28, 2015 and February 29, 2016, respectively, and is included in income from equity investments in our consolidated statements of operations.

Distributions from Kansas Entertainment for the three months ended February 29, 2016, totaling approximately $4.5 million, consist of approximately $4.3 million received as a distribution from its profits, included in net cash provided by operating activities on our statement of cash flows, with the remaining approximately $0.2 million received recognized as a return of capital from investing activities. Distributions from Kansas Entertainment for the three months ended February 28, 2015, totaling $5.5 million, consist of approximately $3.5 million received as a distribution from its profits, included in net cash provided by operating activities on our statement of cash flows, with the remaining approximate $2.0 million received recognized as a return of capital from investing activities.

Staten Island Property

On August 5, 2013, we announced that we sold our 676 acre parcel of property located in Staten Island, New York, to Staten Island Marine Development, LLC (“Marine Development”). Marine Development purchased 100 percent of the outstanding equity membership interests of 380 Development LLC (“380 Development”), a wholly owned indirect subsidiary of ISC and owner of the Staten Island property, for a total sales price of $80.0 million. In addition, we previously received approximately $4.2 million for an option provided to the purchaser that is nonrefundable and does not apply to the $80.0 million sales price.

We received $7.5 million, less closing and other administrative costs, of the sales price at closing. The remaining sales price was financed with us holding a secured mortgage interest in 380 Development as well as the underlying property. The mortgage balance bears interest at an annual rate of 7.0 percent. In accordance with the terms of the agreement, we have received a principal payment of approximately $6.1 million plus interest on the mortgage balance through August 31, 2015. The remaining purchase price of $66.4 million was due in March 2016. We have accounted for the transaction using the cost recovery method and has deferred the recognition of profit of approximately $1.9 million, and interest totaling approximately $11.4 million at February 29, 2016, until the carrying amount of the property is recovered, upon final payment.

In March 2016, we completed an assignment of all rights, title and interest in the mortgage and underlying promissory note to an affiliate of Matrix Development Group, a New York/New Jersey area developer, and received the remaining principal balance of $66.4 million, plus additional consideration of approximately $0.3 million. We have no further commitments or contingencies related to the property or its sale. As a result, in the second quarter of fiscal 2016, we will record a gain of approximately $13.6 million, comprised of the aforementioned deferred gain, interest, and other consideration paid.

The net proceeds from the sale, combined with the mortgage interest and related cash tax benefits, has provided us with approximately $129.8 million in cash through the term of the mortgage.

Income Taxes

As a result of these items, our effective income tax rate was approximately 36.1 percent for the three months ended February 28, 2015, and approximately 38.3 percent for the three months ended February 29, 2016.

Future Trends in Operating Results

International Speedway Corporation is the leading owner of major motorsports entertainment facilities and promoter of motorsports-themed entertainment activities in the United States. We compete for discretionary spending and leisure time with many other entertainment alternatives and are subject to factors that generally affect the recreation, leisure and sports industry, including general economic conditions. Our operations are also sensitive to factors that affect corporate budgets. Such factors include, but are not limited to, general economic conditions, employment levels, business conditions, interest and taxation rates, relative commodity prices, and changes in consumer tastes and spending habits.

The unprecedented global economic crisis that began in 2008, which significantly impacted consumer confidence and disproportionately affected key demographics of our target customers, continues to influence the frequency with which guests attend our live, major motorsports entertainment events. Ongoing global and regional uncertainty, lack of a broad-based middle class economic recovery, and/or further weakening in the domestic economy may continue to adversely impact attendance levels, guest spending levels, and our ability to secure corporate marketing partnerships in the future. Reductions in any of these categories can directly and negatively affect revenues and profitability. Beginning in 2009, we mitigated the decline of certain revenue categories with sustainable cost containment initiatives. Beginning in 2012, we re-instituted regular merit pay increases to more normalized levels. Certain non-controllable costs, such as NASCAR event management fees, increased this year defined in recently executed five-year Sanction Agreements covering 2016 to 2020 that include annual, contracted growth in fees (see further detail in Sanctioning Bodies section). While we are sustaining the significant cost reductions previously

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implemented and continuously seek ways to improve our operating efficiency without negatively impacting the guest experience, we do not expect further significant cost reductions.

Looking ahead, we expect the continuing slow, but uneven, recovery in the broader U.S. economy to provide an environment for improved attendance-related and corporate partnership revenues. Our industry will further benefit from NASCAR securing its broadcast rights through the 2024 season with the largest broadcast rights deal in the sport's 68-year history. Consistent with major sports properties throughout the world, broadcast rights represent our company's largest revenue segment. Expanding and extending this contracted revenue will provide us unparalleled long-term cash flow visibility. We also believe the strategic initiatives and investments we and the motorsports industry have undertaken to grow the sport will continue to strengthen the long-term health of our Company.

The industry and its stakeholders have demonstrated their commitment to growing the sport by aligning with and executing upon growth initiatives supporting NASCAR's industry-wide strategic plan whose objective is to build upon NASCAR's appeal by enhancing the connection with existing fans, as well as attracting and engaging new Gen Y, youth and multicultural consumers in motorsports. Additional areas of focus include building greater product relevance, cultivating driver star power, growing social media activities and enhancing the event experience.

Several recent and successful innovations that resulted from NASCAR initiatives that have improved on-track competition and excitement, include the introduction of refined aerodynamic and downforce specifications providing the driver more control of the car, knockout group qualifying formats, overtime requirements and enhancements to the Chase for the Championship, now in all three national touring series. In January 2014 NASCAR announced a new championship format that puts greater emphasis on winning races all season long, expands the current Chase for the NASCAR Sprint Cup field to 16 drivers. The Chase format has been expanded to both Xfinity and Camping World Truck series events, qualifying 12 drivers and 8 drivers, respectively. The Chase implements a round-by-round advancement format that ultimately rewards a battle-tested, worthy champion. The format makes every race matter even more, diminishes points racing, puts a premium on winning races and concludes with a best-of-the-best, first-to-the-finish line showdown race – all of which is exactly what fans want. The new Chase structure has driven NASCAR Sprint Cup competition to a whole new level with a thrilling, easy to understand format that we believe translates into greater fan interest and revenue opportunities for these events. Results from the 2015 Chase supported this. At the November 2015 Chase finale at Homestead, consumer and corporate participation exceeded 2014, making it the second year in a row this event's results surpassed the prior year. The final two ISC events of the 2015 season in Phoenix and Homestead were both announced as sellouts prior to the event. In addition, for the combined 2015 Chase events ISC hosted, we experienced an overall four percent increase in grandstand attendance over prior year. These are strong indicators that the Chase format along with other strategic initiatives we have implemented are creating favorable momentum that we expect to continue.

We support NASCAR's industry strategy on a number of fronts. As referenced above, we are committed to improving our major motorsports facilities to enhance guest experiences and create stronger fan engagement. Specifically, one of the most ambitious and important projects in our history is the redevelopment of the frontstretch of the Daytona International Speedway, the Company's 58-year-old flagship motorsports facility. The new Daytona International Speedway is the world's first and only motorsports stadium featuring unique experiences for our guests and providing several new marketing platforms for corporate partners, broadcasters and industry stakeholders. The project broke ground in early July, 2013 and after 31 months of construction was completed on budget and in time for the 2016 Rolex 24 At Daytona and the DAYTONA 500 (See "DAYTONA Rising: Reimagining an American Icon"). Fan and stakeholder feedback was overwhelmingly positive and financial results demonstrate that we are well on our way toward meeting our financial expectations from the project to generate an incremental $20.0 million in revenue and $15.0 million in EBITDA. We remain very confident that elevating the experience at the most important and iconic motorsports facility in North America will drive further growth for the DAYTONA 500 brand, our 12 other major motorsports facilities' brands and NASCAR's brand. We are also confident, that this strategic project will positively influence attendance trends, corporate involvement in the sport, and the long-term strength of future broadcast media rights revenues.

Admissions

Driving event sellouts and creating excess demand is key to the optimal performance of our hosted NASCAR Sprint Cup Series events. An important component of our operating strategy continues to be a long-standing focus on supply and demand when evaluating ticket pricing and adjusting capacity at our facilities. By effectively managing both ticket prices and seating capacity, we have historically shown the ability to stimulate ticket renewals and advance ticket sales.

Advance ticket sales provide us many benefits such as earlier cash inflow, and reducing the potential negative impact of actual or forecasted inclement weather. When evaluating ticketing initiatives, we first examine our ticket pricing structure for each segmented seating area and/or offering within our major motorsports entertainment facilities to ensure prices are on target with market demand. When determined necessary, we adjust ticket pricing. We believe our ticket pricing philosophy appropriately factors current demand, and provides attractive price points for all income levels and desired fan experiences.

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It is important that we maintain the integrity of our ticket pricing model by ensuring our customers who purchase tickets during the renewal period get preferential pricing. We do not adjust pricing downward inside of the sales cycle to avoid rewarding last-minute ticket buyers by discounting tickets. Further, we closely monitor and manage the availability of promotional tickets. Encouraging late cycle buying and offering excess promotional tickets could have a detrimental effect on our ticket pricing model and long-term value of our business. We believe it is more important to encourage advance ticket sales and maintain price integrity to achieve long-term growth rather than to capture short-term incremental revenue at the expense of our customers who purchased tickets during the renewal period. We continue to explore and implement innovative ticket pricing strategies to capture incremental admissions revenue including ticket price increases over time as the event nears and adjusting pricing of specific seats within a section or row with desirable attributes and greater demand.

Adjusting seating capacity is another consumer-focused strategy to promote sellouts, create excess demand and in turn increase capacity utilization at our major motorsports facilities. Over the past few years, we have reduced capacity at our major motorsports facilities. A significant portion of the capacity reduction was a result of our goal to provide improved fan amenities such as wider seating, create social zones with greater fan interaction/engagement for our guests, and remove sections that do not provide adequate sight lines. Based on our experience and the continual evolution of modern sports facilities, ticket demand relies strongly on creating a more personal experience for the fans. Enhancing the live event experience to compete with the at-home television experience is a critical strategy for our future growth. Other benefits derived from capacity management include improved pricing power for our events; enticing more customers to renew or purchase tickets earlier in the sales cycle; increasing customer retention; driving greater attendance to our lead-in events, such as NASCAR's Xfinity and Camping World Truck series events; generating stronger interest from corporate sponsors; and creating a more visually compelling event for the television audience.

Other key strategic focus areas designed to build fan engagement and augment the live-event experience include providing enhanced at-track audio and visual experiences, additional and improved concession and merchandise points-of-sale, creating more interactive social zones and offering greater wireless connectivity. We continuously monitor market demand, evaluate customer feedback, and explore next generation live-sports entertainment fan amenities, all of which could further impact how we manage capacity and spend capital at our major motorsports facilities.

Corporate Partnerships

NASCAR is a powerful brand with a loyal fan base that we believe is aware of, appreciates and supports corporate participation to a greater extent than fans of any other sports property. The combination of brand power and fan loyalty provides an attractive platform for robust corporate partnerships. The number of FORTUNE 500 companies invested in NASCAR remains higher than any other sport. More than one-in-four FORTUNE 500 companies, and one-in-two FORTUNE 100 companies, use NASCAR as part of their marketing strategy and the trend is increasing. The number of FORTUNE 500 companies investing in NASCAR increased seven percent in 2015 versus prior year; and is a 20.0 percent improvement versus 2008.

We believe that our presence in key metropolitan statistical areas, year-round event schedule, impressive portfolio of major motorsports events and attractive fan demographics are beneficial as we continue to pursue renewal and expansion of existing corporate marketing partnerships and establish new corporate relationships. Companies are demanding more quantifiable return on investment from their sports marketing strategies and our company is focused on delivering enhanced value through our strategic initiatives. This includes enhanced facilities, more frequent and diverse content at our facilities, and deeper understanding of and integration with our customers' business, among other things.

For fiscal 2015, total actual ISC corporate sales exceeded our 2015 target by 2.8 percent and surpassed prior year by 3.1 percent making this the second successive year of growing corporate revenues since the Great Recession. All NASCAR Sprint Cup and Xfinity and Camping World Truck series event entitlements were secured for the 2015 fiscal year, which allowed the sales team to focus more resources on media advertising, prospecting and growing official status categories. We believe this demonstrates the value proposition for our corporate partners is stronger than ever.

Looking forward to 2016, we are very encouraged by organic growth of corporate sales and new sales boosted by strong corporate demand from the grand opening of DAYTONA Rising. We also continue to see longer deal terms that provide greater long-term income visibility, further allows our sales team to focus on incremental revenue generation, and more time for sponsor activation. As of March 2016, we have sold all but one NASCAR Sprint Cup race entitlement and two Xfinity Series entitlements and have secured 92.0 percent of our total 2016 corporate sales target compared to 88.0 percent at this point in 2015. Not only are we pacing ahead of prior year sales as a percent of our full year target, but the 2016 target is more than eleven percent higher than 2015. For DAYTONA Rising, we have secured four long-term founding partnerships with Toyota, Florida Hospital, Chevrolet, and Sunoco, all of them equal or exceed ten year relationships.

Television Broadcast and Ancillary Media Rights

Domestic broadcast and ancillary media rights fees are ISC's largest revenue segment, accounting for approximately 48.7 percent of 2015 total revenues.

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In August 2013, NASCAR finalized multi-platform broadcast rights agreements with NBCUniversal (“NBC”) and FOX Broadcasting Company ("FOX") for 10 years, beginning in 2015 through the 2024 season, for the broadcast and related rights for NASCAR's three national touring series. Financial terms were not disclosed but leading industry sources estimate the combined agreements value at approximately $8.2 billion over the 10 years. The agreements include Spanish-language rights and 'TV Everywhere rights', which will allow NASCAR content to stream over the broadcasters' affiliated digital platforms.

FOX has exclusive rights to the first 16 NASCAR Sprint Cup Series point races beginning each year with the prestigious DAYTONA 500. In addition, FOX retains the rights to the NASCAR Sprint All-Star Race, The Sprint Unlimited, Can-Am Duel, 14 NASCAR Xfinity Series events and the entire NASCAR Camping World Truck Series. NBC has exclusive rights to the final 20 NASCAR Sprint Cup Series points races including NASCAR’s playoffs - the Chase for the Sprint Cup, final 19 NASCAR Xfinity Series events, select NASCAR Regional & Touring Series events and other live content beginning in 2015. In total, NASCAR will have 17 Sprint Cup races on network television in 2016, the same as 2015.

NASCAR's solid ratings, the strong demand for live sports programming and the proliferation of on-demand content were significant factors for NASCAR signing the largest broadcast rights deal in the sport's 68-year history.

In August 2013, FOX debuted its 24-hour Fox Sports 1 network to compete with ESPN. Fox Sports 1 is available in approximately 85 million television households. In addition to NASCAR, Fox Sports 1 has new or renewed deals for Major League Baseball, college football and basketball, Ultimate Fighting Championship, Major League Soccer ("MLS"), United States Golf Association, as well as other sports. Fox Sports 1 represents the latest in the long migration of marquee sports from broadcast television to cable/satellite, who generally can support a higher investment due to subscriber fees that are not available to traditional networks. In 2015, Fox Sports 1 broadcast seven live NASCAR Sprint Cup events and eleven NASCAR Xfinity events. NASCAR events and content are consistently among the highest rated programming on Fox Sports 1.

NBC Sports Group possesses an unparalleled collection of television rights agreements, and in addition to NASCAR partners with some of the most prestigious sports properties in the world including the International Olympic Committee and United States Olympic Committee, the NFL, NHL, PGA TOUR, The R&A, PGA of America, Churchill Downs, Premier League, Tour de France, French Open, Formula One, IndyCar and many more. The sports media company consists of a unique array of sports assets, including NBC Sports, NBC Olympics, NBC Sports Network ("NBCSN") , Golf Channel, 10 NBC Sports Regional Networks, NBC Sports Radio and NBC Sports Digital (Sports Live Extra). NBC Sports Network is in approximately 84.0 million homes.

For the 2015 broadcast season, NASCAR Sprint Cup was the number one or two sport of the weekend nineteen times during this span. Year over year television ratings comparisons are difficult in 2015 due to changes in the broadcast line-up and impacts of inclement weather for events in the current and/or prior year. Despite the limited comparability of raw television ratings, the sport is experiencing positive trends with both broadcast and digital consumption metrics to date.

During 2015, Sprint Cup averaged 5.1 million viewers per event with approximately 54.0 million total unique television viewers. Viewership on FOX increased 9.0 percent year over year. On Fox Sports 1, five of the top most-viewed telecasts in network history were 2015 Sprint Cup Series events.

Sprint Cup Races on NBC reached a total audience of approximately 31.0 million, an increase of approximately 42.0 percent vs. comparable races in 2014. Five of NBCSN’s top 10 most-watched telecasts in the network’s history are 2015 NASCAR Sprint Cup races, and NASCAR powered NBCSN to its most-watched year on record. Finally, the Sprint Cup Championship race from Miami was the most-watched NASCAR season finale in a decade and set a traffic record for NBC Sports Live Extra with over 4.0 million live minutes consumed.

In early 2016, NASCAR delivers strong audiences in a broadcast environment that continues to evolve as people consume media in different ways. Even with trends toward digital and social media alternatives, NASCAR's television draw is powerful. NASCAR Sprint Cup events ranked as the number one or two sports broadcast of the weekend for five consecutive weeks to start the season through the March 20, 2016 event at Auto Club Speedway, averaging approximately 7.8 million viewers per broadcast.

Domestic broadcast rights fees provide significant cash flow visibility to us, race teams and NASCAR over the contract term. Television broadcast rights fees received from NASCAR for the NASCAR Sprint Cup, Xfinity and Camping World Truck series events conducted at our wholly owned facilities under these agreements, and recorded as part of motorsports related revenue, were approximately $58.5 million and $60.3 million for the three months ended February 28, 2015 and February 29, 2016, respectively. Operating income generated by these media rights were approximately $42.5 million and $43.9 million for the three months ended February 28, 2015 and February 29, 2016, respectively.

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As media rights revenues fluctuate so do the variable costs tied to the percentage of broadcast rights fees required to be paid to competitors as part of NASCAR Sprint Cup, Xfinity and Camping World Truck series sanction agreements. NASCAR event management fees ("NEM" or “NASCAR direct expenses”) are outlined in the sanction agreement for each event and are negotiated in advance of an event. As previously discussed, included in these NASCAR direct expenses are amounts equal to 25.0 percent of the gross domestic television broadcast rights fees allocated to our NASCAR Sprint Cup, Xfinity and Camping World Truck series events, as part of NASCAR event management fees (See “Critical Accounting Policies and Estimates - Revenue Recognition”). The NASCAR event management fees are contracted from 2016 through 2020 under the five-year sanction agreements (see Sanctioning Bodies) and paid to NASCAR to contribute to the support and growth of the sport of NASCAR stock car racing through payments to the teams and sanction fees paid to NASCAR. As such, we do not expect these costs to materially decrease in the future as a percentage of admissions and motorsports related income.

The current dynamic media landscape is diversifying how people consume media content. An internet trends study from June of 2015, reported that internet usage by adults age 18+ had grown an average of 11.0 percent per year from 2008 to 2015 representing an average of over 5 hours a day usage in 2015. Additionally, the study showed that consumption via mobile devices grew from 12.0 percent of that time to more than 50.0 percent of the time spent on-line. Traditional media like television and radio still make up a majority of the average time spent consuming media content per adult day, but digital media consumption whether using a desktop or mobile device now equals more than one-third average daily time consuming audio and video content and projected to continue growing. These statistics skew higher for younger demographics.

A key plank of NASCAR's strategy is to continue to measure and develop all of the potential ways that people consume media, whether through traditional television viewership, dynamic web/mobile content, and/or through social-media channels. NASCAR is continually enhancing NASCAR.com and NASCAR Mobile apps to strengthen the Industry's digital presence and drive fan engagement. And NASCAR continues to gain critical Industry insights from the Fan and Media Engagement Center to better understand digital conversations and optimize engagement with the social community.

Through the first month of the season NASCAR has experienced a "mixed bag" of results with some product offerings experiencing strong growth while others have seen flat or soft demand. Overall, the trend for digital media through five events in 2016 is holding strong measuring at approximately 10.0 million unique visitors to NASCAR.com, NASCAR mobile web and NASCAR Mobile apps.

Two bright spots in the early 2016 season are growth of fans using mobile and the mobile app, which is up approximately 8.0 percent year-over-year; and growth in the all important male 18-34 year old demographic. Both are positive digital metric trends and reflect progress in NASCAR's key strategic focus areas. On the social media front NASCAR's Facebook and Twitter accounts combined to generate over 1.0 billion impressions, representing a double digit increase over the same time period in 2015. Overall, social media showed huge increases this year with Facebook reach growing by more than three times the prior year numbers, and Twitter reach increased by more than 30.0 percent versus prior year. This tremendous growth in engagement is a testament to the broader audience of NASCAR and what can be done with targeted activation. We expect these channels to continue to grow and believe the industry is well positioned to monetize these channels as our fans (mirroring society-at-large) consume more content.

Along with NASCAR, we closely monitor changes in the television and media landscape including announcements in 2015 by Apple, Amazon (Fire TV), DishNetwork (Sling TV), HBO (HBO Now) and others regarding direct to consumer ('a la carte' or 'Over the Top') content offerings. As the landscape continues to evolve we believe we are well positioned to navigate because of our long-term partnerships with FOX and NBC. Collectively we view the shifts in media consumption as positives for consumers and provides our sport the opportunity to develop and deliver compelling content in rich and diverse ways to interact with our fans.

Sanctioning Bodies

Our success has been, and is expected to remain, dependent on maintaining good working relationships with the organizations that sanction events at our facilities, particularly with NASCAR, whose sanctioned events at our wholly owned facilities accounted for approximately 88.8 percent of our revenues in fiscal 2015. NASCAR continues to entertain and discuss proposals from track operators regarding potential realignment of their portfolio of NASCAR Sprint Cup Series dates to more geographically diverse and potentially more desirable markets where there may be greater demand, resulting in an opportunity for increased revenues to the track operators. We believe that realignments have provided, and will continue to provide, incremental net positive revenue and earnings as well as further enhance the sport's exposure in highly desirable markets, which we believe benefits the sport's fans, teams, sponsors and television broadcast partners as well as promoters.

On October 26, 2015, we entered into five year sanction agreements with NEM, an affiliate of NASCAR, for the promotion of the Company’s inventory of NASCAR Sprint Cup, Xfinity and Camping World Truck Series events. In 2016, we will conduct the following events: 21 NASCAR Sprint Cup Series events, 14 NASCAR Xfinity Series events, and 9 NASCAR Camping World Truck Series events. Each Sanction Agreement is for a term of five years. Other than the term, the Sanction Agreements are substantially similar to those entered into in previous years. The Sanction Agreements contain annual increases of between

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three and four percent in media rights fees for each sanctioned event conducted, and provide a specific percentage of media rights fees to be paid to competitors. The Sanction Agreements also provide for annual increases in sanction fees and non-media rights related prize and point fund monies (to be paid to competitors) of approximately four percent annually over the term of the Sanction Agreements. NASCAR and NEM are controlled by members of the France Family Group which controls approximately 72.0 percent of the combined voting power of the outstanding stock of the Company, as of February 29, 2016, and some members of which serve as directors and officers of International Speedway Corporation. The Company strives to ensure, and management believes that, the terms of the Sanction Agreements are no less favorable to the Company than could be obtained in arms-length negotiation. Collectively, the media rights fees, sanction fees and non-media prize and point fund fees that we pay are referred to as NASCAR Event Management fees.

Merchandise Operations

In 2015, NASCAR and NASCAR Team Properties announced a 10-year agreement with Fanatics, to operate NASCAR’s entire at-track merchandise business and deliver fans an enhanced, experiential at-track shopping environment. As part of the agreement, Fanatics became the exclusive retailer of NASCAR and driver merchandise at trackside for all 38 NASCAR Sprint Cup Series events. In addition, Fanatics also contracted with us for 10 years of exclusive retail merchandise rights for our track trademarks and certain other intellectual property at all of our tracks. The new trackside retail model operated by Fanatics has evolved from using solely haulers for each specific team or driver to displaying all merchandise in a superstore retail environment supported by, in instances, smaller satellite retail touch points around the track. The new model provides a more personal and convenient shopping experience for race fans. We believe this improved trackside merchandise model, combined with select brand name merchandise and an upgraded on-line and mobile experience, better positions us and the industry to maximize merchandise sales while delivering top quality experience to our fans. Consequently, our wholly owned subsidiaries, Americrown and MA, no longer provide at track merchandise to fans at motorsports events and therefore no longer recognize related revenues. Instead, we receive a percentage of sales from Fanatics, recorded as part of Food, Beverage and Merchandise Revenue.

For fiscal 2015, we recognized the following non-recurring transactions associated with the transition:


•	sales of merchandise inventory to Fanatics and wholesale transactions by MA totaling approximately $10.4 million recognized in food, beverage and merchandise revenue and associated expenses totaling approximately $11.0 million recognized in food, beverage and merchandise expense;


•	general and administrative expenses associated with the transition totaling approximately $1.3 million.

Going forward, we expect that the new merchandising model will continue to enhance the event experience for our fans and grow the operating margin contribution from the merchandise line of business. Comparable merchandise sales during 2015 utilizing the new superstore shopping model were approximately 10.0 percent greater than sales using the 'hauler' model employed historically, a positive trend we believe will continue as Fanatics further integrates.

Capital Improvements

Enhancing the live event experience for our guests is a key strategic pillar to drive future growth. We compete for the consumers' discretionary dollar with other entertainment options such as concerts and other major sporting events not just motorsports events. In addition, fans continue to demonstrate willingness to pay for more unique, immersive, and segmented experiences that cannot be duplicated at-home. Today's consumer wants improved traffic flow, comfortable and wider seating, clean and available restroom facilities, more points of sale, enhanced audio and visual engagement, social zones and greater connectivity. Providing these enhancements often requires capital reinvestment.

We are confident that our focus on driving incremental earnings by improving the fan experience leads to increased ticket sales and better ticket pricing power, growth in sponsorship and hospitality sales, solidifying prospects for longer-term growth in broadcast media rights fees agreements, and greater potential to capture market share. As such, ISC's Board of Directors endorsed a capital reinvestment plan for fiscal 2013 through fiscal 2017 not to exceed $600.0 million. The five-year capital reinvestment plan encompasses capital expenditures for ISC's 13 major sports facilities, including DAYTONA Rising (see "DAYTONA Rising: Reimagining an American Icon"), and commitments to undertake ONE DAYTONA (see "ONE DAYTONA"). We continue to elevate our Daytona brand to ensure that it remains the pinnacle of motorsports facilities, which will generate enhanced profitability and cash flow to the Company. In our five year reinvestment plan, we also allocate appropriate capital spending on other projects for maintenance, safety and regulatory requirements, and guest experience enhancements. We are confident that by continuing to deliver memorable guest experiences, attractive pricing and fantastic racing, we will generate increased revenues and bottom-line results.

While we focus on allocating our capital to generate returns in excess of our cost of capital, certain of our capital improvement investments may not provide immediate, directly traceable near term positive returns on invested capital but over the longer term will better enable us to effectively compete with other entertainment venues for consumer and corporate spending.

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Growth Strategies

Our growth strategies also include exploring ways to grow our businesses through acquisitions and external developments that offer attractive financial returns. This has been demonstrated through our joint venture to develop and operate a Hollywood-themed casino and branded entertainment destination facility overlooking turn two at Kansas Speedway ("Kansas") (see "Hollywood Casino at Kansas Speedway").

We expect for our 2016 fiscal year that our share of the cash flow from the casino's operations will be approximately $28.0 million to $29.0 million dollars.

Since June 2013, we have pursued development of ONE DAYTONA, a premier mixed use and entertainment destination across from Daytona International Speedway (see “Liquidity and Capital Resources - ONE DAYTONA”).

We remain interested in pursuing further ancillary developments at certain of our other motorsports facilities which enhance our core business, are market-driven, and provide a prudent return on investment.

Postponement and/or Cancellation of Major Motorsports Events

We promote outdoor motorsports entertainment events. Weather conditions affect sales of, among other things, tickets, food, drinks and merchandise at these events. Poor weather conditions prior to an event, or even the forecast of poor weather conditions, could have a negative impact on us, particularly for walk-up ticket sales to events which are not sold out in advance. If an event scheduled for one of our facilities is delayed or postponed because of weather, we could incur increased expenses associated with conducting the rescheduled event, as well as possible decreased revenues from tickets, food, drinks and merchandise at the rescheduled event. Moreover, the forecast of poor weather conditions and/or the delay or postponement of an event due to weather conditions could have a negative impact on renewals for the following year. If such an event is canceled, we would incur the expenses associated with preparing to conduct the event as well as losing the revenues, including any live broadcast revenues, associated with the event.

If a canceled event is part of the NASCAR Sprint Cup, Xfinity or Camping World Truck series, in the year of cancellation we could experience a reduction in the amount of money we expect to receive from television revenues for all of our NASCAR-sanctioned events in the series that experienced the cancellation. This would occur if, as a result of the cancellation, and without regard to whether the canceled event was scheduled for one of our facilities, NASCAR experienced a reduction in television revenues greater than the amount scheduled to be paid to the promoter of the canceled event.

Acts of terrorism or violence at mass gatherings or sporting events, such as the 2015 and 2016 attacks in Paris, France, and Brussels, Belgium, respectively, and any resulting public fears regarding attendance at sporting events or mass gatherings, could negatively impact attendance at our events and could increase our expenses related to insurance, security and other related matters.

In addition, the postponement or cancellation of major motorsports events due to terrorism or fear of terrorism (for example, the general postponement of all major sporting events in the United States following the September 11, 2001 terrorism attacks) could have an adverse impact on us. If an event scheduled for one of our facilities is delayed or postponed due to terrorism or fear of terrorism, we could incur increased expenses associated with conducting the rescheduled event, as well as possible decreased revenues from tickets, food, drinks and merchandise at the rescheduled event. If such an event is canceled, we would incur the expenses associated with preparing to conduct the event as well as losing the revenues, including any live broadcast revenues, associated with the event.

Seasonality and Quarterly Results

We derive most of our income from a limited number of NASCAR-sanctioned races. As a result, our business has been, and is expected to remain, highly seasonal based on the timing of major racing events. Future schedule changes as determined by NASCAR or other sanctioning bodies, as well as the acquisition of additional, or divestiture of existing, motorsports entertainment facilities could impact the timing of our major events in comparison to prior or future periods. Because of the seasonal concentration of racing events, the results of operations for the three month periods ended February 28, 2015 and February 29, 2016, are not indicative of the results to be expected for the year.

GAAP to Non-GAAP Reconciliation

The following financial information is presented below using other than U.S. generally accepted accounting principles (“non-GAAP”), and is reconciled to comparable information presented using GAAP. Non-GAAP net income and diluted earnings per share below are derived by adjusting amounts determined in accordance with GAAP for certain items presented in the accompanying selected operating statement data, net of taxes.

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We believe such non-GAAP information is useful and meaningful, and is used by investors to assess our core operations, which consist of the ongoing promotion of racing events at our major motorsports entertainment facilities. Such non-GAAP information identifies and separately displays and adjusts for items that are not considered to be reflective of our continuing core operations at our motorsports entertainment facilities. We believe that such non-GAAP information improves the comparability of the operating results and provides a better understanding of the performance of our core operations for the periods presented. We use this non-GAAP information to analyze the current performance and trends and make decisions regarding future ongoing operations. This non-GAAP financial information may not be comparable to similarly titled measures used by other entities and should not be considered as an alternative to operating income, net income or diluted earnings per share, which are determined in accordance with GAAP. The presentation of this non-GAAP financial information is not intended to be considered independent of or as a substitute for results prepared in accordance with GAAP. Management uses both GAAP and non-GAAP information in evaluating and operating the business and as such deemed it important to provide such information to investors.

The adjustments for 2015 relate to non-recurring, pre-opening costs incurred associated with DAYTONA Rising, accelerated depreciation, losses associated with the retirements of certain other long-lived assets, DAYTONA Rising project capitalized interest, and net gain on sale of certain assets.

The adjustments for 2016 relate to non-recurring, pre-opening costs incurred associated with DAYTONA Rising, losses associated with the retirements of certain other long-lived assets, DAYTONA Rising project capitalized interest, and net gain on sale of certain assets.



	Three Months Ended
	February 28, 2015			February 29, 2016
	(Unaudited)
	(In Thousands, Except Per Share Amounts)
Net income	$	14,953		$	19,831
Adjustments, net of tax:
DAYTONA Rising project	184			482
Accelerated depreciation	2,372			—
Losses on retirements of long-lived assets	963			565
DAYTONA Rising project capitalized interest	(1,571		)	(385		)
Net gain on sale of certain assets	(16		)	(39		)
Non-GAAP net income	$	16,885		$	20,454
Per share data:
Diluted earnings per share	$	0.32		$	0.43
Adjustments, net of tax:
DAYTONA Rising project	0.00			0.01
Accelerated depreciation	0.05			—
Losses on retirements of long-lived assets	0.02			0.01
DAYTONA Rising project capitalized interest	(0.03		)	(0.01		)
Net gain on sale of certain assets	0.00			0.00
Non-GAAP diluted earnings per share	$	0.36		$	0.44

In addition, during fiscal 2016, we may incur adjustments related to, but not exclusive of, non-capitalized costs or charges that could be recognized related to our ONE DAYTONA development, start up and/or financing costs should our Hollywood Casino at Kansas Speedway joint venture pursue construction of an adjacent hotel, costs related to legal settlements or judgments, the gain on the sale of our Staten Island property, and accelerated depreciation, future losses on retirements or relocation of certain long-lived assets, which could be recorded as part of capital improvements, other than DAYTONA Rising, resulting in removal of assets prior to the end of their actual useful life.

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Comparison of the Results for the Three Months Ended February 29, 2016 to the Results for the Three Months Ended February 28, 2015.

The following table sets forth, for each of the indicated periods, certain selected statement of operations data as a percentage of total revenues:



	Three Months Ended
	February 28, 2015		February 29, 2016
	(Unaudited)
REVENUES:
Admissions, net	22.4	%	22.4	%
Motorsports and other event related	64.0		69.2
Food, beverage and merchandise	10.8		5.8
Other	2.8		2.6
Total revenues	100.0		100.0
EXPENSES:
Direct:
NASCAR event management fees	20.0		19.7
Motorsports and other event related	17.2		17.4
Food, beverage and merchandise	9.1		4.4
General and administrative	19.1		18.4
Depreciation and amortization	17.6		17.6
Losses on asset retirements	1.2		0.6
Total expenses	84.2		78.1
Operating income	15.8		21.9
Interest income	0.0		0.0
Interest expense	(1.1	)	(2.2	)
Equity in net income from equity investments	2.4		2.8
Other	—		—
Income before income taxes	17.1		22.5
Income taxes	6.2		8.6
Net income	10.9	%	13.9	%

Comparability of results for the three months ended February 29, 2016 to the same periods in fiscal 2015 was impacted by the following:


•	Year-over-year increases in operating revenues and expenses are significantly driven by the completion of the DAYTONA Rising project for the first quarter events at Daytona International Speedway (see "DAYTONA Rising: Reimagining an American Icon").

•

For the first quarter of fiscal 2015, we had recognized non-recurring transactions of approximately $4.9 million of inventory sold to Fanatics and $2.9 million of wholesale transactions by MA, which drove a total of $8.3 million in expense including product costs associated with these transactions, costs related to the transition of trackside merchandise operations to Fanatics, as well as partial period operating expenses incurred prior to the transition of Americrown and MA merchandise operations for which there was no related revenue. There were no comparable events in the same period of fiscal 2016 (see "Future Trends in Operating Results, Merchandise Operations");


•	During the three months ended February 29, 2016, we recognized approximately $0.8 million, or $0.01 per diluted share, in non-recurring, pre-opening costs that are included in general and administrative expense related to DAYTONA Rising. During the three months ended February 28, 2015, we recognized approximately $0.3 million, or less than $0.01 per diluted share, of similar costs;


•	During the three months ended February 28, 2015, we recognized approximately $3.9 million, or $0.05 per diluted share, respectively, of accelerated depreciation that was recorded due to shortening the service lives of certain assets associated with DAYTONA Rising and other projects. There were no similar costs during the three months ended February 29, 2016;

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•

During the three months ended February 29, 2016, we recognized approximately $0.9 million, or $0.01 per diluted share, respectively, of losses primarily attributable to demolition and/or asset relocation costs in connection with capacity management initiatives and facility capital improvements. During the three months ended February 28, 2015, we recognized approximately $1.6 million, or $0.02 per diluted share, of similar losses associated in connection with DAYTONA Rising and capacity management initiatives; and


•	During the three months ended February 29, 2016, we capitalized approximately $0.6 million, or $0.01 per diluted share, of interest related to DAYTONA Rising. During the three months ended February 28, 2015, we recognized approximately $2.6 million, or $0.03 per diluted share, respectively, of similar interest capitalization.

Admissions revenue increased by approximately $1.3 million, or 4.3 percent, during the three months ended February 29, 2016, as compared to the same period of the prior year. The increase in the three month period ending February 29, 2016, was largely due to increased average ticket prices for the Daytona 500 and the preceding Speedweeks events. Also contributing to the period increase was higher attendance and average ticket prices for the Rolex 24 at DAYTONA.

Motorsports related revenue increased approximately $11.3 million, or 12.9 percent, during the three months ended February 29, 2016, as compared to the same period of the prior year. The increase in the three month period ending February 29, 2016, is substantially due to increases in sponsorship and hospitality revenues of approximately $9.7 million and television broadcast revenue of approximately $1.8 million for events at Daytona during the three months ended February 29, 2016. Also contributing to the three month period increase were increases in other ancillary motorsports related revenues of approximately $0.4 million. Slightly offsetting the increases were decreases in track rentals of approximately $0.6 million for the three months ended February 29, 2016.

Food, beverage and merchandise revenue decreased approximately $6.4 million, or 43.6 percent, during the three months ended February 29, 2016, as compared to the same period of the prior year. The decrease in the three month periods ending February 29, 2016, is primarily due to the aforementioned transition of merchandise operations. Partially offsetting the decrease in the three month period ended February 29, 2016, were higher motorsports related catering and concessions revenues in fiscal 2016, as compared to fiscal 2015, totaling approximately $1.4 million.

NASCAR event management fees increased approximately $0.8 million, or 2.9 percent, for the three months ended February 29, 2016, as compared to the same period of the prior year. The increase includes approximately $0.5 million attributable to increases in television broadcast rights fees, for the NASCAR Sprint Cup, Xfinity, Camping World Truck, and NASCAR affiliate series events held during the period as standard NASCAR sanctioning agreements require a specific percentage of television broadcast rights fees to be paid to competitors. The remaining increase is attributable to higher contracted NEM fees not tied to broadcast rights.

Motorsports related expenses increased approximately $1.4 million, or 5.9 percent, during the three months ended February 29, 2016, as compared to the same period of the prior year. The increase was predominately related to higher operating costs, of approximately $1.5 million, associated with the opening of the world's first motorsports stadium at Daytona. Also contributing to the increase was approximately $0.3 million of personnel related expenses and other purchased services. Slightly offsetting the increase in the three months ended February 29, 2016 were reduced expenses related to lower track rentals at various facilities of approximately $0.2 million and the timing of other ancillary events of approximately $0.2 million. Motorsports related expenses as a percentage of combined admissions and motorsports related revenue decreased to approximately 19.1 percent for the three months ended February 29, 2016, as compared to approximately 19.9 percent for the same period in the prior year. The margin improvement in the three months ended February 29, 2016 is predominately due to the aforementioned increased revenues associated with sponsorship and hospitality, and to a lesser extent, the increase in television broadcast revenue.

Food, beverage and merchandise expense decreased approximately $6.2 million, or 49.8 percent, during the three months ended February 29, 2016, as compared to the same period of the prior year. The decreases in the three month periods are primarily due to the aforementioned transition of merchandise operations of approximately $7.6 million, as well as non-motorsports event related catering and concessions of approximately $0.1 million. Partially offsetting the decreases in the three month period ending February 29, 2016, were increases in concessions and catering of approximately $1.5 million related to Speedweeks events held at Daytona. Food, beverage and merchandise expense as a percentage of food, beverage and merchandise revenue decreased to approximately 75.1 percent for the three months ended February 29, 2016, compared to approximately 84.4 percent for the same respective period in the prior year. The increase in margin for the three month periods is substantially a result of the aforementioned transition in merchandising operations. Slightly offsetting the increase in margin for the three months ended February 29, 2016 was increased cost of sales related to concessions as compared to the same period in the prior year. Margins related to catering remained comparable to the same period in the prior year.

General and administrative expenses increased $0.2 million, or 0.6 percent, during the three months ended February 29, 2016, as compared to the same period of the prior year. The increase in the three month period ending February 29, 2016 is primarily due to approximately $1.1 million of costs associated with the opening of the world's first motorsports stadium at Daytona and

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$0.3 million of certain administrative costs. Partially offsetting the increase was approximately $0.6 million of costs incurred related to the aforementioned transition in merchandise operations and $0.5 million of costs related to building maintenance that occurred in the three months ending February 28, 2015, for which there were no comparable costs in the same period of fiscal 2016. General and administrative expenses as a percentage of total revenues decreased to approximately 18.4 percent for the three months ended February 29, 2016, as compared to 19.1 percent for the same respective period in the prior year. The margin increase for the three months ended February 29, 2016 is predominately due to higher total revenues in fiscal 2016.

Depreciation and amortization expense increased approximately $1.0 million or 4.3 percent during the three months ended February 29, 2016, as compared to the same respective period of the prior year. Approximately $1.9 million of the increase relates to new assets placed in service associated with DAYTONA Rising for the three months ended February 29, 2016. Partially offsetting the increase is approximately $0.5 million attributable to the shortening of service lives of certain assets associated with the repaving of Watkins Glen, occurring in fiscal 2015 for which there was no comparable event in the same period of fiscal 2016, and $0.4 million related to assets that have been fully depreciated, or removed from service, for the three months ending February 29, 2016 as compared to the same period in the prior year.

Losses on retirements of long-lived assets decreased approximately $0.7 million, or 41.7 percent for the three months ended February 29, 2016. as compared to the same period of the prior year. The decrease in the three month period ending February 29, 2016 is primarily due to approximately $0.9 million of fiscal 2015 demolition costs in connection with Daytona Rising, for which there was no comparable event in the same period of fiscal 2016. Partially offsetting the decrease was an increases in demolition costs attributable to capacity management initiatives and other capital items of approximately $0.7 million.

Interest income during the three months ended February 29, 2016 was comparable to the same period of the prior year.

Interest expense during the three months ended February 29, 2016, increased approximately $1.6 million, or 110.4 percent, as compared to the same period of the prior year. The increase in the three month period ending was predominately due to assets placed in service resulting in lower capitalized interest associated with DAYTONA Rising.

Equity in net income from equity investments represents our 50.0 percent equity investment in Hollywood Casino at Kansas Speedway during the three months ended February 29, 2016 and February 28, 2015, respectively (see “Equity and Other Investments”).

Our effective income tax rate was approximately 38.3 percent for the three months ended February 29, 2016, respectively, as compared to 36.1 percent for the same respective period of the prior year (see “Income Taxes”).

As a result of the foregoing, net income for the three month period ending February 29, 2016, as compared to the same period in prior year, reflected a increase of approximately $4.9 million, or $0.11 per diluted share, respectively.

Liquidity and Capital Resources

General

We have historically generated sufficient cash flow from operations to fund our working capital needs, capital expenditures at existing facilities, and return of capital through payments of an annual cash dividend and repurchase of our shares under our Stock Purchase Plan. In addition, we have used the proceeds from offerings of our Class A Common Stock, the net proceeds from the issuance of long-term debt, borrowings under our credit facilities and state and local mechanisms to fund acquisitions and development projects. The following table sets forth, for each of the indicated periods, certain selected financial information (in thousands):



	November 30, 2015		February 29, 2016
	(Unaudited)
Cash and cash equivalents	$	160,548	$	190,092
Working capital	146,915		197,541
Total debt	265,836		265,728

At February 29, 2016, our working capital was primarily supported by our cash and cash equivalents totaling approximately $190.1 million, an increase of approximately $29.5 million from November 30, 2015. The increase in working capital at February 29, 2016, as compared to the prior period, is predominantly attributable to the refund received in February 2016 of all of the Federal income tax estimated payments made in fiscal year 2015. This was a result of the Protecting Americans from Tax Hikes Act which renewed previously expired tax legislation and was passed by Congress in December 2015 that included a retroactive renewal back to January 1, 2015.

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Significant cash flow items during the three months ended February 28, 2015 and 2016, respectively, are as follows (in thousands):



	February 28, 2015			February 29, 2016
	(Unaudited)
Net cash provided by operating activities ⁽¹⁾	$	44,730		$	90,270
Capital expenditures ⁽²⁾	(43,418		)	(54,589		)
Distribution from equity investee and affiliate ⁽³⁾	5,500			4,500
Net payments related to long-term debt	(278		)	(207		)
Dividends paid and reacquisition of previously issued common stock ⁽⁴⁾	—			(6,221		)

(1) The increase in net cash provided by operating activities, during the three months ended February 29, 2016, as compared to the same period in the prior year, is driven primarily by the aforementioned Federal income tax refund received in February 2016

(2) Capital expenditures are predominately due to DAYTONA Rising (see "Capital Expenditures")

(3) Distributions from equity investee and affiliates, consist of amounts received as distribution from their profits and returns of capital as detailed in our statement of cash flows

(4) Amount relates to reacquisition of previously issued common stock (see "Item 2. Unregistered Sales of Equity Securities and Use of Proceeds")

Our liquidity is primarily generated from our ongoing motorsports operations, and we expect our strong operating cash flow to continue in the future. In addition, as of February 29, 2016, we have approximately $296.0 million available to draw upon under our 2012 Credit Facility, if needed. See “Future Liquidity” for additional disclosures relating certain risks that may affect our near term operating results and liquidity.

Allocation of capital is driven by our long-term strategic planning and initiatives that encompass our mission, vision and values. Our primary uses of capital are to maintain modest debt levels that are consistent with our current investment grade debt rating from Standard and Poor’s. We will invest in our facilities to improve the guest experience and we will make investments in strategic projects that complement our core business and provide value for our shareholders, all of which is balanced with returning capital to our shareholders through share repurchases and dividends.

Capital Allocation

As discussed in “Future Trends in Operating Results,” an important strategy for our future growth will come from investing in our major motorsports facilities to enhance the live event experience to better enable us to effectively compete with other entertainment venues for consumer and corporate spending.

The current capital allocation plan contemplates the following:

•

Capital expenditures remaining under the existing $600.0 million capital expenditure plan adopted by our Board of Directors in June 2013, subsequent to November 30, 2015, total approximately $170.0 million for fiscal 2016 and 2017, consisting of remaining payments to contractors for the completion of DAYTONA Rising and certain planned capital projects at our remaining 12 motorsports facilities (see "Capital Expenditures"). This plan will be evaluated over the next 12 months and refined to include years subsequent to 2017 based on business requirements;

•

Additional capital expenditures related to phase one of the ONE DAYTONA project, should it proceed, will be approximately $120.0 million to $150.0 million in fiscal 2016 through 2017. Sources of funds will include, in addition to between $90.0 million to $100.0 million ultimately financed with borrowings, the public incentives discussed below and land to be contributed to the project. Additional guidance will be provided as costs and returns for the first phase of the project are finalized; and

•

Returning capital to shareholders is an important component of the overall capital allocation strategy. In February 2016, we announced we amended the price parameters of our share repurchase program with intention to make up to $37.0 million in open market repurchases of ISCA shares through fiscal year end November 30, 2016. The Company has authorized its agent to purchase shares under revised parameters, which encompass price, corporate and regulatory requirements, capital availability and other market conditions. The objective of the revised parameters is to buy back shares on an opportunistic, but consistent, basis in 2016. At this time, we are targeting a total payout of approximately $50.0 million in fiscal 2016 through a combination of dividends and share repurchases. Through February 29, 2016, we have purchased 184,300 shares on the open market for a total of $6.2 million (see "Item 2. Unregistered Sales of Equity Securities and Use of Proceeds"). The ISC Board of Directors will vote on the 2016 dividend at its next meeting on April 13, 2016. The objective for the future is to deliver a sustainable return of capital

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program through a balance of dividend yield and share repurchases. We will review our return of capital programs and make adjustments, if necessary, on a quarterly basis.

In addition to sources of working capital and available borrowings, our ability to execute our capital allocation plans are supported by the following:

•

Federal tax legislation passed in December 2015 provides for extension of 7-year depreciation for tax purposes on certain assets placed in service during fiscal 2015 through 2016, and bonus depreciation on capital expenditures placed in service 2015 through 2019. While the tax legislation does not impact the Company’s overall tax liability, it does impact the timing of the annual payment of cash taxes. Cash taxes paid for federal and state taxes in fiscal 2015 were approximately $45.0 million. As a result of this legislation, which was passed subsequent the Company’s fiscal 2015 year-end, but retroactive for all assets placed in service during 2015, we currently estimate a net cash tax refund for fiscal 2016 between approximately $10.0 million to $15.0 million, primarily attributable to depreciation for assets placed in service related to DAYTONA Rising. Cash tax payments for fiscal 2017 are estimated to be between $55.0 million to $60.0 million;

•

Capital Expenditures

As discussed in “Future Trends in Operating Results,” an important strategy for our future growth will come from investing in our major motorsports facilities to enhance the live event experience and better enable us to effectively compete with other entertainment venues for consumer and corporate spending.

In June 2013, ISC's board of directors endorsed a capital allocation plan for fiscal 2013 through fiscal 2017 to not exceed $600.0 million in capital expenditures over that period. The five-year capital expenditure plan encompasses all capital expenditures, excluding capitalized interest, for ISC's 13 major motorsports facilities, including approximately $400.0 million for DAYTONA Rising.

Capital expenditures for projects, including those related to DAYTONA Rising, was approximately $54.6 million for the three months ended February 29, 2016. In comparison, the Company spent approximately $43.4 million on capital expenditures for projects for the same period in fiscal 2015. Remaining capital expenditures associated with the $600.0 million capital expenditure plan will total approximately $115.4 million for the remainder of fiscal 2016 and 2017.

We review the capital expenditure program periodically and modify it as required to meet current business needs.

Future Liquidity

General

As discussed in “Future Trends in Operating Results,” we compete for discretionary spending and leisure time with many other entertainment alternatives and are subject to factors that generally affect the recreation, leisure and sports industry, including general economic conditions. Our operations are also sensitive to factors that affect corporate budgets. Such factors include, but are not limited to, general economic conditions, employment levels, business conditions, interest and taxation rates, relative commodity prices, and changes in consumer tastes and spending habits. These factors may negatively impact year-over-year comparability for our revenue categories for the full year, with the exception of domestic broadcast media rights fees. While we are sustaining the significant cost reductions implemented subsequent to the unprecedented adverse economic conditions that began in 2008, we do not expect further significant cost reductions.

Our cash flow from operations consists primarily of ticket, hospitality, merchandise, catering and concession sales and contracted revenues arising from television broadcast rights and marketing partnerships. We believe that cash flows from operations, along with existing cash, cash equivalents and available borrowings under our credit facility, will be sufficient to fund:


•	operations of our major motorsports facilities for the foreseeable future;


•	the previously discussed five-year capital expenditures plan at our existing facilities, which includes DAYTONA Rising and any other future fan and competitor safety, critical maintenance and regulatory compliance spending;


•	ONE DAYTONA


•	payments required in connection with the funding of the Unified Government's debt service requirements related to the TIF bonds;

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•	payments related to our other existing debt service commitments;


•	contributions in connection with any future expansion of the Hollywood Casino at Kansas Speedway; and


•	our annual dividend payment and share repurchases under our Stock Purchase Plan.

We remain interested in pursuing acquisition and/or development opportunities that would increase shareholder value, of which the timing, size, success and associated potential capital commitments, are unknown at this time. Accordingly, a material acceleration of our growth strategy could require us to obtain additional capital through debt and/or equity financings. Although there can be no assurance, we believe that adequate debt and equity financing will be available on satisfactory terms.

While we expect our strong operating cash flow to continue in the future, our financial results depend significantly on a number of factors. In addition to local, national, and global economic and financial market conditions, consumer and corporate spending could be adversely affected by security and other lifestyle conditions resulting in lower than expected future operating cash flows. General economic conditions may be significantly and negatively impacted by global events such as terrorist attacks, prospects of war, or global economic uncertainty. Any future attacks or wars or related threats could also increase our expenses related to insurance, security or other related matters. Also, our financial results could be adversely impacted by a widespread outbreak of a severe epidemiological crisis. The items discussed above could have a singular or compounded material adverse effect on our financial success and future cash flow.

DAYTONA Rising: Reimagining an American Icon

DAYTONA Rising is the redevelopment of the frontstretch at Daytona, ISC's 58-year-old flagship motorsports facility, to enhance the event experience for our fans, marketing partners, broadcasters and the motorsports industry.

The vision for DAYTONA Rising placed an emphasis on enhancing the complete fan experience, beginning with five expanded and redesigned fan entrances, or injectors. Each injector leads directly to a series of escalators and elevators that transport fans to any of three different concourse levels, each featuring spacious and strategically-placed social "neighborhoods" along the nearly mile-long frontstretch, where, thanks to dozens of strategically-placed video screens in every neighborhood, fans will be able to meet and socialize during events without missing any on-track action. Every seat in Daytona's frontstretch has been replaced with wider, more comfortable seating that provides pristine sight-lines. There is also twice as many restrooms and three times as many concession stands throughout the facility.

The central neighborhood, dubbed the "World Center of Racing," features open sight-lines enabling fans to catch all the on-track action while celebrating the history of Daytona International Speedway and its many unforgettable moments throughout more than 50 years of racing.

On January 12, 2016, we received our temporary certificate of occupancy which allowed us to begin moving into the facility for the upcoming race season. On January 27, 2016, ISC Chairman Jim France and Chief Executive Officer Lesa France Kennedy participated in a special ribbon-cutting ceremony to officially open the world’s first motorsports stadium during the Rolex 24 At DAYTONA Weekend on January 27-31, 2016.

For the 2016 Rolex 24 At DAYTONA Weekend, Speedweeks 2016 and the 58^th annual DAYTONA 500 NASCAR Sprint Cup Series season opener, renovations for the entire facility were complete and open to guests.

We expect that by providing our fans with a better experience as well as an expansive platform for our marketing partners, including an elevated hospitality experience, DAYTONA Rising is expected to provide an immediate incremental lift in Daytona's revenues of approximately $20.0 million, and earnings before interest, taxes, depreciation and amortization ("EBITDA”) lift of approximately $15.0 million, approximately $2.1 million of which was recognized in fiscal 2015, with a mid-single-digit growth rate. We also currently anticipate the project to be accretive to our net income per share within three years of completion. While these forward-looking amounts are management’s projections and we believe they are reasonable, our actual results may vary from these estimates due to unanticipated changes in projected attendance, lower than expected ticket prices, and/or lower than forecasted corporate sponsorships. We do not know whether these expectations will ultimately prove correct and actual revenues and operating results may differ materially from these estimates.

Despite not anticipating the need for additional long-term debt to conclude funding on this project, accounting rules dictate that we capitalize a portion of the interest on existing outstanding debt during the construction period. We recorded approximately $14.6 million of capitalized interest from fiscal 2013 through the opening of the facility in fiscal 2016.

Total spending incurred for DAYTONA Rising was approximately $32.0 million, during the three months ended February 29, 2016. Since inception of the project, we have spent approximately $364.8 million and have approximately $35.2 million remaining to be spent. As part of DAYTONA Rising, we have identified existing assets that are expected to be impacted by the redevelopment and that those assets have required accelerated depreciation or losses on asset retirements. During the three

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months ended February 29, 2016, there were no significant losses on disposal of assets and no accelerated depreciation recorded, with a total of approximately $45.4 million recognized since the inception of the project.

In addition, our depreciation expense related directly to DAYTONA Rising increased incrementally by approximately $11.9 million in fiscal 2015, and is expected to increase by an additional $15.0 million to $16.0 million in fiscal 2016. The incremental increase in depreciation expense for fiscal 2015 is based on the timing of opening approximately forty percent of the new stadium for Budweiser Speedweeks 2015 and an additional approximate 10.0 percent of the new stadium for the 2015 Coke Zero 400.

As a result, our total depreciation expense for fiscal 2016 is estimated to be between approximately $100.0 million and $105.0 million annually, in fiscal 2016, and then decreasing, due to lower capital spending, to approximately $85.0 million to $95.0 million beginning in fiscal 2019.

In June 2014, House Bill 7095 was signed in Florida creating the Florida Sports Development Program, establishing a process for distributing state tax revenue for the construction or improvement of professional sports facilities. The DAYTONA Rising project was among the eligible applicants to receive sales tax incentives based on the project’s capital investment and amount of sales tax generated by the facility. In 2014 and 2015, we filed applications and received approvals from the state's Department of Economic Opportunity. Allocation of funds for the approved applications was not considered during the 2015 or 2016 sessions of the Florida Legislature.

ONE DAYTONA

Since June 2013, we have pursued development of ONE DAYTONA, the proposed premier mixed use and entertainment destination across from Daytona International Speedway.

We have crafted a strategy that will create synergy with DAYTONA Rising, enhance customer and partner experiences, monetize real estate on International Speedway Blvd and leverage our real estate on year-round basis.

We have approved land use entitlements for ONE DAYTONA to allow for up to 1.4 million square feet of retail/dining/entertainment, 2,500 seats in a movie theater, 660 hotel rooms, 1,350 units of residential, 567,000 square feet of additional office space and 500,000 square feet of commercial/industrial space.

A Community Development District ("CDD") has been established for the purpose of installing and maintaining public infrastructure at ONE DAYTONA. The CDD is a local, special purpose government framework authorized by Chapter 190 of the Florida Statutes for managing and financing infrastructure to support community development.

The CDD has negotiated agreements with the City of Daytona Beach and Volusia County for a total of $40.0 million in incentives to finance a portion of the estimated $53.0 million in infrastructure required to move forward with the ONE DAYTONA project. We are currently proceeding with the leasing phase of the project while simultaneously completing the various necessary requirements for the CDD to access the incentives to start infrastructure work.

In March 2015, we announced Legacy Development, a leading national development group, as development consultant for ONE DAYTONA. Intensely focused on innovative destination retail and mixed-use projects, Legacy Development will work closely with ISC’s development resources on the project. The Legacy Development team is a natural fit for the project, having served as the developer for Legends Outlets Kansas City, a mixed-used retail destination across from our Kansas Speedway.

We have completed the conceptual design for the first phase of ONE DAYTONA. This first phase will be comprised of three components: retail, dining and entertainment (“RD&E”); hotels; and residential.

The RD&E component of phase one will be owned and operated 100.0 percent by us. The expected total square footage for the RD&E first phase is approximately 300,000 square feet. We estimate the total cost for developing phase one to be approximately $120.0 million to $150.0 million. Sources of funds will include, in addition to borrowings , the public incentives discussed above and land to be contributed to the project.

Bass Pro Shops, America's most popular outdoor store, and Cobb Theatres, the highly respected Southeastern-based exhibitor, have executed leases to anchor ONE DAYTONA. We are in active discussions with other potential tenants for ONE DAYTONA and have recently announced leases with P.F. Chang's, Hy’s Toggery and Kilwins Confections. Additional leases will be announced in the near future.

Shaner Hotels and Prime Hospitality Group ("PHG") have been selected as hotel partners. They have executed a franchise agreement with Marriott International for an exclusive 145-room full service Autograph Collection hotel at ONE DAYTONA that will be known as The Daytona. They have also decided to move forward with their option to build a Fairfield Inn & Suites

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by Marriott as a flag for one of their approximately 105-room selected service hotel within ONE DAYTONA. As part of the partnership agreement, our portion of equity will be limited to our land contribution and we will share in the profits from the joint venture.

Prime Group has been selected as the partner for ONE DAYTONA’s residential development. Following an extensive request for proposal process, ONE DAYTONA chose the Florida developer based on their command of market demographics, development experience and expert property management systems. Prime Group is proceeding with the development in ONE DAYTONA for an approximately 276 luxury apartment rental units that will add additional critical mass to the overall ONE DAYTONA campus. Similar to the hotel partnership, our portion of equity will be limited to our land contribution and we will share in the profits from the joint venture.

We have commenced site work on the property and began preparations for vertical construction. We are targeting phase one completion in late 2017. Any future phases will be subject to prudent business considerations.

Speedway Developments

In light of NASCAR's publicly announced position regarding additional potential realignment of the NASCAR Sprint Cup Series schedule, we believe there are still potential development opportunities for public/private partnerships in new, underserved markets across the country that would create value for our shareholders. However, we are not currently pursuing any new speedway development opportunities.

Inflation

We do not believe that inflation has had a material impact on our operating costs and earnings.



ITEM 3.	QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.

For quantitative and qualitative disclosures about market risk, see Item 7A, "Quantitative and Qualitative Disclosures About Market Risk," of our annual report on Form 10-K for the year ended November 30, 2015. During the three months ended February 29, 2016, there have been no material changes in our market risk exposures.



ITEM 4.	CONTROLS AND PROCEDURES

Under the supervision of and with the participation of our management, including the Chief Executive Officer and Chief Financial Officer, we conducted an evaluation of the effectiveness of our disclosure controls and procedures as of February 29, 2016. Based on that evaluation, our management, including the Chief Executive Officer and Chief Financial Officer, concluded that our disclosure controls and procedures were effective as of February 29, 2016.

There were no changes in our internal control over financial reporting identified in connection with the evaluation required by paragraph (d) of Exchange Act Rules 13a-15 or 15d-15 that occurred during our first quarter of fiscal 2016, that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

PART II — OTHER INFORMATION



ITEM 1.	LEGAL PROCEEDINGS

From time to time, we are a party to routine litigation incidental to our business. We do not believe that the resolution of any or all of such litigation will have a material adverse effect on our financial condition or results of operations.



ITEM 1A.	RISK FACTORS

This report and the documents incorporated by reference may contain forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. You can identify a forward-looking statement by our use of the words “anticipate,” “estimate,” “expect,” “may,” “believe,” “objective,” “projection,” “forecast,” “goal,” and similar expressions. These forward-looking statements include our statements regarding the timing of future events, our anticipated future operations and our anticipated future financial position and cash requirements. Although we believe that the expectations reflected in our forward-looking statements are reasonable, we do not know whether our expectations will prove correct. We previously disclosed in response to Item 1A to Part I of our report on Form 10-K for the fiscal year ended November 30, 2015 the important factors that could cause our actual results to differ from our expectations. There have been no material changes to those risk factors.

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ITEM 2.	UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS



Period	Total number of shares purchased	Average price paid per share		Total number of shares purchased as part of publicly announced plans or programs	Maximum number of shares (or approximate dollar value of shares) that may yet be purchased under the plans or programs (in thousands)
December 1, 2015— December 31, 2015
Repurchase program (1)	—	—		—	$	61,740
January 1, 2016 — January 31, 2016
Repurchase program (1)	—	—		—	$	61,740
February 1, 2016 — February 29, 2016
Repurchase program (1)	184,300	$	33.74	184,300	$	55,519
	184,300			184,300

(1)

We have a share repurchase program (“Stock Purchase Plan”) under which we are authorized to purchase up to $330.0 million of our outstanding Class A common shares. The timing and amount of any shares repurchased under the Stock Purchase Plan will depend on a variety of factors, including price, corporate and regulatory requirements, capital availability and other market conditions. The Stock Purchase Plan may be suspended or discontinued at any time without prior notice. No shares have been or will be knowingly purchased from Company insiders or their affiliates.

Since inception of the Plan through February 29, 2016, we have purchased 7,248,262 shares of our Class A common shares, for a total of approximately $274.5 million. We purchased 184,300 shares of our Class A common shares during the three month period ended February 29, 2016, at an average cost of approximately $33.74 per share (including commissions), for a total of approximately $6.2 million. These transactions occurred in open market purchases and pursuant to a trading plan under Rule 10b5-1. At February 29, 2016, we had approximately $55.5 million remaining repurchase authority under the current Stock Purchase Plan.



ITEM 3.	DEFAULTS UPON SENIOR SECURITIES

None



ITEM 4.	MINE SAFETY DISCLOSURES

None



ITEM 5.	OTHER INFORMATION

None

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ITEM 6.	EXHIBITS



Exhibit Number		Description of Exhibit
3.1		Articles of Amendment of the Restated and Amended Articles of Incorporation of the Company, as filed with the Florida Department of State on July 26, 1999 (incorporated by reference from exhibit 3.1 of the Company’s Report on Form 8-K dated July 26, 1999)
3.2		Conformed copy of Amended and Restated Articles of Incorporation of the Company, as amended as of July 26, 1999 (incorporated by reference from exhibit 3.2 of the Company’s Report on Form 8-K dated July 26, 1999)
3.3		Conformed copy of Amended and Restated By-Laws of the Company, as amended as of April 9, 2003. (incorporated by reference from exhibit 3.3 of the Company’s Report on Form 10-Q dated April 10, 2003)
31.1		Rule 13a-14(a) / 15d-14(a) Certification of Chief Executive Officer — filed herewith
31.2		Rule 13a-14(a) / 15d-14(a) Certification of Chief Financial Officer — filed herewith
32		Section 1350 Certification — filed herewith
101.INS		XBRL Instance Document
101.SCH		XBRL Taxonomy Extension Schema
101.CAL		XBRL Taxonomy Extension Calculation Linkbase
101.DEF		XBRL Taxonomy Extension Definition Linkbase
101.LAB		XBRL Taxonomy Extension Label Linkbase
101.PRE		XBRL Taxonomy Extension Presentation Linkbase

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SIGNATURE

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.



		INTERNATIONAL SPEEDWAY CORPORATION (Registrant)

Date:	April 6, 2016	/s/ Daniel W. Houser
		Daniel W. Houser, Executive Vice President,
		Chief Financial Officer, Treasurer