UNITED STATES
SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

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

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

INTERNATIONAL SPEEDWAY CORPORATION

(Exact name of registrant as specified in its charter)

FLORIDA (State or other jurisdiction of incorporation)		O-2384 (Commission File Number)		59-0709342 (I.R.S. Employer Identification No.)

1801 WEST INTERNATIONAL SPEEDWAY BOULEVARD, DAYTONA BEACH, FLORIDA (Address of principal executive offices)		32114 (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  þ NO o

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 the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act. (Check one):

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).

YES  o NO þ

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		27,548,564 shares		as of August 31, 2008
Class B Common Stock		21,344,727 shares		as of August 31, 2008

 

 

TABLE OF CONTENTS

PART I. FINANCIAL INFORMATION
		ITEM 1. FINANCIAL STATEMENTS
PART I. FINANCIAL INFORMATION
		ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
		ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
		ITEM 4. DISCLOSURE CONTROLS AND PROCEDURES
PART II — OTHER INFORMATION
		ITEM 1A. RISK FACTORS
		ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS
		ITEM 6. EXHIBITS
SIGNATURES
EX-31.1 CERTIFICATION OF JAMES C. FRANCE
EX-31.2 CERTIFICATION OF DANIEL W. HOUSER
EX-32 CERTIFICATION

PART I.		FINANCIAL INFORMATION

ITEM 1.		FINANCIAL STATEMENTS

INTERNATIONAL SPEEDWAY CORPORATION
Consolidated Balance Sheets

		November 30, 2007				August 31, 2008
		(Unaudited)
		(In Thousands)
ASSETS
Current Assets:
Cash and cash equivalents		$	57,316			$	51,610
Short-term investments			39,250				200
Restricted cash			—				3,206
Receivables, less allowance of $1,200 in 2007 and 2008, respectively			46,860				60,685
Inventories			4,508				5,454
Deferred income taxes			1,345				5,155
Prepaid expenses and other current assets			10,547				23,342
Total Current Assets			159,826				149,652
Property and Equipment, net of accumulated depreciation of $410,192 and $456,479, respectively			1,303,178				1,323,773
Other Assets:
Long-term restricted cash and investments			—				43,379
Equity investments			76,839				80,983
Intangible assets, net			178,984				178,876
Goodwill			118,791				118,791
Deposits with Internal Revenue Service			117,936				117,936
Other			26,563				34,675
			519,113				574,640
Total Assets		$	1,982,117			$	2,048,065
LIABILITIES AND SHAREHOLDERS’ EQUITY
Current Liabilities:
Current portion of long-term debt		$	2,538			$	152,875
Accounts payable			37,508				27,270
Deferred income			128,631				151,700
Income taxes payable			22,179				7,884
Other current liabilities			21,447				23,904
Total Current Liabilities			212,303				363,633
Long-Term Debt			375,009				273,381
Deferred Income Taxes			214,109				92,914
Long-Term Tax Liabilities			—				160,884
Long-Term Deferred Income			15,531				14,890
Other Long-Term Liabilities			6,077				9,338
Commitments and Contingencies			—				—
Shareholders’ Equity:
Class A Common Stock, $.01 par value, 80,000,000 shares authorized; 30,010,422 and 27,385,472 issued and outstanding in 2007 and 2008, respectively			300				274
Class B Common Stock, $.01 par value, 40,000,000 shares authorized; 21,593,025 and 21,344,727 issued and outstanding in 2007 and 2008, respectively			216				213
Additional paid-in capital			621,528				503,784
Retained earnings			537,044				631,978
Accumulated other comprehensive loss			—				(3,224	)
Total Shareholders’ Equity			1,159,088				1,133,025
Total Liabilities and Shareholders’ Equity		$	1,982,117			$	2,048,065

     See accompanying notes

INTERNATIONAL SPEEDWAY CORPORATION
Consolidated Statements of Operations

		Three Months Ended
		August 31, 2007				August 31, 2008
		(Unaudited)
		(In Thousands, Except Per Share Amounts)
REVENUES:
Admissions, net		$	62,970			$	62,697
Motorsports related			112,954				129,572
Food, beverage and merchandise			17,663				18,393
Other			1,978				2,546
			195,565				213,208
EXPENSES:
Direct:
Prize and point fund monies and NASCAR sanction fees			35,067				44,076
Motorsports related			46,364				50,888
Food, beverage and merchandise			10,605				11,670
General and administrative			31,383				27,651
Depreciation and amortization			23,825				17,865
Impairment of long-lived assets			108				33
			147,352				152,183
Operating income			48,213				61,025
Interest income and other			1,402				398
Interest expense			(4,041	)			(4,012	)
Equity in net loss from equity investments			(17,145	)			(140	)
Minority interest			—				130
Income from continuing operations before income taxes			28,429				57,401
Income taxes			18,882				18,559
Income from continuing operations			9,547				38,842
Loss from discontinued operations, net of income tax benefits of $40 and $41			(30	)			(51	)
Net income		$	9,517			$	38,791
Basic earnings per share:
Income from continuing operations		$	0.18			$	0.79
Loss from discontinued operations			—				—
Net income		$	0.18			$	0.79
Diluted earnings per share:
Income from continuing operations		$	0.18			$	0.79
Loss from discontinued operations			—				—
Net income		$	0.18			$	0.79
Dividends per share		$	—			$	—
Basic weighted average shares outstanding			52,473,146				49,035,405
Diluted weighted average shares outstanding			52,583,820				49,123,363

     See accompanying notes.

INTERNATIONAL SPEEDWAY CORPORATION
Consolidated Statements of Operations

		Nine Months Ended
		August 31, 2007				August 31, 2008
		(Unaudited)
		(In Thousands, Except Per Share Amounts)
REVENUES:
Admissions, net		$	175,518			$	172,242
Motorsports related			322,453				343,657
Food, beverage and merchandise			57,028				58,821
Other			6,380				7,284
			561,379				582,004
EXPENSES:
Direct:
Prize and point fund monies and NASCAR sanction fees			101,341				111,857
Motorsports related			115,244				124,912
Food, beverage and merchandise			33,506				36,201
General and administrative			90,127				83,631
Depreciation and amortization			62,973				52,618
Impairment of long-lived assets			9,184				1,914
			412,375				411,133
Operating income			149,004				170,871
Interest income and other			3,699				(2,278	)
Interest expense			(11,781	)			(10,899	)
Equity in net (loss) income from equity investments			(21,756	)			4,614
Minority interest			—				130
Income from continuing operations before income taxes			119,166				162,438
Income taxes			55,384				61,346
Income from continuing operations			63,782				101,092
Loss from discontinued operations, net of income tax benefits of $126 and $107			(56	)			(118	)
Net income		$	63,726			$	100,974
Basic earnings per share:
Income from continuing operations		$	1.21			$	2.02
Loss from discontinued operations			—				—
Net income		$	1.21			$	2.02
Diluted earnings per share:
Income from continuing operations		$	1.20			$	2.02
Loss from discontinued operations			—				—
Net income		$	1.20			$	2.02
Dividends per share		$	0.10			$	0.12
Basic weighted average shares outstanding			52,791,267				49,929,943
Diluted weighted average shares outstanding			52,905,851				50,025,969

     See accompanying notes.

INTERNATIONAL SPEEDWAY CORPORATION
Consolidated Statement of Shareholders’ Equity

		Class A				Class B
		Common				Common												Accumulated
		Stock				Stock				Additional								Other				Total
		$.01 Par				$.01 Par				Paid-in				Retained				Comprehensive				Shareholders'
		Value				Value				Capital				Earnings				Loss				Equity
		(Unaudited)
		(In Thousands)
Balance at November 30, 2007		$	300			$	216			$	621,528			$	537,044			$	—			$	1,159,088
Activity 12/1/07 - 8/31/08:
Comprehensive income
Net income			—				—				—				100,974				—				100,974
Interest rate swap			—				—				—				—				(3,224	)			(3,224	)
Total comprehensive income																							97,750
Cash dividends ($.12 per share)			—				—				—				(5,960	)			—				(5,960	)
Reacquisition of previously issued common stock			(29	)			—				(119,934	)			50				—				(119,913	)
Minority interest			—				—				—				(130	)			—				(130	)
Conversion of Class B Common Stock to Class A Common Stock			3				(3	)			—				—				—				—
Income tax benefit related to restricted stock plan			—				—				(101	)			—				—				(101	)
Stock-based compensation			—				—				2,291				—				—				2,291
Balance at August 31, 2008		$	274			$	213			$	503,784			$	631,978			$	(3,224	)		$	1,133,025

     See accompanying notes.

INTERNATIONAL SPEEDWAY CORPORATION
Consolidated Statements of Cash Flows

		Nine Months Ended
		August 31, 2007				August 31, 2008
		(Unaudited)
		(In Thousands)
OPERATING ACTIVITIES
Net income		$	63,726			$	100,974
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization			62,973				52,618
Minority interest			—				(130	)
Stock-based compensation			3,233				2,291
Amortization of financing costs			388				387
Deferred income taxes			16,004				15,845
Loss (income) from equity investments			21,756				(4,614	)
Excess tax benefits relating to stock-based compensation			(169	)			(7	)
Impairment of long-lived assets, non-cash			6,143				308
Other, net			1,314				3,826
Changes in operating assets and liabilities:
Receivables, net			(3,315	)			(13,825	)
Inventories, prepaid expenses and other assets			(28,737	)			(13,540	)
Deposits with Internal Revenue Service			(7,123	)			—
Accounts payable and other liabilities			9,465				5,090
Deferred income			58,515				22,428
Income taxes			(2,576	)			5,638
Net cash provided by operating activities			201,597				177,289
INVESTING ACTIVITIES
Capital expenditures			(70,439	)			(87,422	)
Acquisition of business, net of cash acquired			(87,111	)			—
Proceeds from affiliate			67				4,700
Advance to affiliate			—				(16,572	)
Increase in restricted cash			—				(46,585	)
Proceeds from short-term investments			105,120				41,500
Purchases of short-term investments			(66,370	)			(2,450	)
Purchases of equity investments			—				(81	)
Other, net			58				850
Net cash used in investing activities			(118,675	)			(106,060	)
FINANCING ACTIVITIES
Proceeds under credit facility			65,000				20,000
Payments under credit facility			(65,000	)			(20,000	)
Proceeds of long-term debt			—				51,300
Payment of long-term debt			(29,311	)			(2,369	)
Exercise of Class A common stock options			357				—
Cash dividends paid			(5,292	)			(5,960	)
Excess tax benefits relating to stock-based compensation			169				7
Reacquisition of previously issued common stock			(51,517	)			(119,913	)
Net cash used in financing activities			(85,594	)			(76,935	)
Net decrease in cash and cash equivalents			(2,672	)			(5,706	)
Cash and cash equivalents at beginning of period			59,681				57,316
Cash and cash equivalents at end of period		$	57,009			$	51,610

     See accompanying notes.

International Speedway Corporation
Notes to Consolidated Financial Statements
August 31, 2008
(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 but do not include all of the information and disclosures required for complete financial statements. The balance sheet at November 30, 2007, 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”). 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.

Unless indicated otherwise, all disclosures in the notes to the consolidated financial statements relate to continuing operations.

Starting in fiscal 2008, branding of two of the National Association for Stock Car Auto Racing’s (“NASCAR”) premiere series changed. The NASCAR NEXTEL Cup Series became the NASCAR Sprint Cup Series and the NASCAR Busch Series became the NASCAR Nationwide Series. Throughout the interim financial statements, the naming convention for these series is consistent with the branding in fiscal 2008.

Reclassifications. Certain prior year amounts in the Consolidated Statements of Operations have been reclassified to conform to the current year presentation.

Because of the seasonal concentration of racing events, the results of operations for the three and nine months ended August 31, 2007 and 2008 are not indicative of the results to be expected for the year.

Restricted Cash and Investments: Restricted cash and investments at August 31, 2008 include approximately $46.6 million deposited in trustee administered accounts, consisting of cash and certificates of deposit, for the construction of our new headquarters building (see Note 6).

2. New Accounting Pronouncements

In June 2006, the Financial Accounting Standards Board (“FASB”) issued Interpretation No. 48 (“FIN 48”), “Accounting for Uncertainty in Income Taxes — An Interpretation of FASB Statement No. 109”. FIN 48 clarifies the accounting for uncertainty in income taxes recognized in an entity’s financial statements in accordance with FASB Statement No. 109, “Accounting for Income Taxes”, and prescribes a recognition threshold and measurement attributes for financial statement disclosure of income tax positions taken or expected to be taken on a tax return. Also, FIN 48 provides guidance on de-recognition, classification, interest and penalties, disclosure, and transition. See Note 11 for a discussion of the Company’s adoption of this interpretation in the first quarter of fiscal 2008.

In September 2006 the FASB issued Statement of Financial Accounting Standard (“SFAS”) No. 157, “Fair Value Measurements” which establishes a framework for measuring fair value in generally accepted accounting principles (“GAAP”), and expands disclosures about fair value measurements. SFAS No 157 applies under other accounting pronouncements that require or permit fair value measurements and, accordingly, SFAS No. 157 does not require any new fair value measurements. SFAS No. 157 is effective for financial statements issued for fiscal years beginning after November 15, 2007, and interim periods within those fiscal years. The Company’s adoption of this statement in the first quarter of fiscal 2008 did not have an impact on its financial position and results of operations.

In February 2007 the FASB issued SFAS No. 159, “The Fair Value Option for Financial Assets and Financial Liabilities.” SFAS No. 159 gives companies the irrevocable option to carry many financial assets and liabilities at fair values, with changes in fair value recognized in earnings. SFAS No. 159 is effective for financial statements issued for fiscal years beginning after November 15, 2007, and interim periods within those fiscal years. The Company has elected not to measure eligible items at fair value and, as such, the adoption of this statement in the first quarter of fiscal 2008 did not have an impact on its financial position and results of operations.

In December 2007 the FASB issued SFAS No. 141 (Revised 2007), “Business Combinations”, which replaces SFAS No. 141. SFAS No. 141R retains the purchase method of accounting for acquisitions, but requires a number of changes, including changes in the way assets and liabilities are recognized in the purchase accounting. It also changes the recognition of assets acquired and liabilities assumed arising from contingencies, requires the capitalization of in-process research and development at fair value, and requires the expensing of acquisition-related costs as incurred. SFAS No. 141R is effective for business combinations for which the acquisition

date is on or after the beginning of the first annual reporting period beginning on or after December 15, 2008. The Company will adopt the provisions of this statement in fiscal 2010.

In December 2007 the FASB issued SFAS No. 160, “Noncontrolling Interests in Consolidated Financial Statements, an amendment of ARB 51.” SFAS No. 160 changes the accounting and reporting for minority interests. Minority interests will be recharacterized as noncontrolling interests and will be reported as a component of equity separate from the parent’s equity, and purchases or sales of equity interests that do not result in a change in control will be accounted for as equity transactions. In addition, net income attributable to the noncontrolling interest will be included in consolidated net income on the face of the income statement and upon a loss of control, the interest sold, as well as any interest retained, will be recorded at fair value with any gain or loss recognized in earnings. SFAS No. 160 is effective for financial statements issued for fiscal years beginning after December 15, 2008, and interim periods within those fiscal years, except for the presentation and disclosure requirements, which will apply retrospectively. The Company is currently evaluating the potential impact that the adoption of this statement will have on its financial position and results of operations and will adopt the provisions of this statement in fiscal 2010.

In March 2008, the FASB issued SFAS No. 161, “Disclosures about Derivative Instruments and Hedging Activities.” SFAS No. 161 amends and expands the disclosure requirements of SFAS No. 133, “Accounting for Derivative Instruments and Hedging Activities.” SFAS No. 161 requires qualitative disclosures about objectives and strategies for using derivatives, quantitative disclosures about fair value amounts of gains and losses on derivative instruments and disclosures about credit-risk-related contingent features in derivative agreements. This statement is effective for financial statements issued for fiscal years beginning after November 15, 2008. The Company is currently evaluating the potential impact that the adoption of this statement will have on its financial position and results of operations and will adopt the provisions of this statement in fiscal 2009.

In April 2008, the FASB issued Staff Position (“FSP”) 142-3 “Determination of the Useful Life of Intangible Assets.” FSP 142-3 amends the factors that should be considered in developing renewal or extension assumptions used to determine the useful life of a recognized intangible asset under SFAS No. 142 “Goodwill and Other Intangible Assets”. FSP 142-3 also requires additional disclosures on information that can be used to assess the extent to which future cash flows associated with intangible assets are affected by an entity’s intent or ability to renew or extend such arrangements and on associated accounting policies. FSP 142-3 is effective for financial statements issued for fiscal years and interim periods beginning after November 15, 2008. The Company is currently evaluating the potential impact that the adoption of this statement will have on its financial position and results of operations and will adopt the provisions of this statement in fiscal 2009.

3. Accounting Adjustment

During the quarter ended February 29, 2008, the Company recorded a non-cash charge totaling approximately $3.8 million, or $0.07 per diluted share, to correct the carrying value amount of certain other assets. This adjustment was recorded as a reduction of interest income in the consolidated statement of operations. The Company believes the adjustment is not material to its consolidated financial statements for the years ended November 30, 2005, 2006 and 2007. The Company does not expect it to be material to its consolidated financial statements as of and for the year ended November 30, 2008. In accordance with Staff Accounting Bulletin 108, the Company considered qualitative and quantitative factors, including the income from continuing operations it reported in each of the prior years and expects to report for the current year, the non-cash nature of the adjustment and its substantial shareholders’ equity at the end of each of the prior years.

4. Earnings Per Share

The following table sets forth the computation of basic and diluted earnings per share for the three and nine months ended August 31 (in thousands, except share amounts):

		Three Months Ended								Nine Months Ended
		August 31,				August 31,				August 31,				August 31,
		2007				2008				2007				2008
Basic and diluted:
Income from continuing operations		$	9,547			$	38,842			$	63,782			$	101,092
Loss from discontinued operations			(30	)			(51	)			(56	)			(118	)
Net income		$	9,517			$	38,791			$	63,726			$	100,974
Basic earnings per share denominator:
Weighted average shares outstanding			52,473,146				49,035,405				52,791,267				49,929,943
Basic earnings per share:
Income from continuing operations		$	0.18			$	0.79			$	1.21			$	2.02
Loss from discontinued operations			—				—				—				—
Net income		$	0.18			$	0.79			$	1.21			$	2.02
Diluted earnings per share denominator:
Weighted average shares outstanding			52,473,146				49,035,405				52,791,267				49,929,943
Common stock options			17,956				357				18,184				1,736
Contingently issuable shares			92,718				87,601				96,400				94,290
Diluted weighted average shares outstanding			52,583,820				49,123,363				52,905,851				50,025,969
Diluted earnings per share:
Income from continuing operations		$	0.18			$	0.79			$	1.20			$	2.02
Loss from discontinued operations			—				—				—				—
Net income		$	0.18			$	0.79			$	1.20			$	2.02
Anti-dilutive shares excluded in the computation of diluted earnings per share			65,540				201,522				45,467				183,619

5. Discontinued Operations and Impairment of Long-Lived Assets

Nazareth Speedway

After the completion of Nazareth Speedway’s (“Nazareth”) fiscal 2004 events the Company suspended that facility’s major motorsports event operations. The NASCAR Nationwide Series and Indy Racing League (“IRL”) IndyCar Series events, then conducted at Nazareth, were realigned to other motorsports entertainment facilities within the Company’s portfolio. The property on which the former Nazareth Speedway was located continues to be marketed for sale and discussions are underway with multiple parties. For all periods presented, the results of operations of Nazareth are presented as discontinued operations.

Staten Island Property

In connection with the Company’s search for a site for a major motorsports entertainment facility in the New York metropolitan area its then majority-owned subsidiary, 380 Development, LLC, purchased a total 676 acres located in the New York City borough of Staten Island in early fiscal 2005. Land improvements including fill operations were subsequently commenced. In December 2006, the Company announced its decision to discontinue pursuit of the speedway development on Staten Island. The Company ceased fill operations while it addressed certain issues raised by the New York Department of Environmental Conservation (“DEC”) and the New York City Department of Sanitation (“DOS”), including the presence of, and need to remediate, fill containing constituents above regulatory thresholds. In May 2007, the Company entered into a Consent Order with DEC to resolve the issues surrounding these fill operations and the prior placement of fill at the site that contained constituents above regulatory thresholds. The Consent Order required the Company to remove non-compliant fill pursuant to the comprehensive fill removal plan. The Company completed fill removal activities in the second quarter of fiscal 2008. The Consent Order required the Company to pay a penalty to DEC of $562,500, half of which was paid in May 2007 and the other half of which has been suspended so long as the Company has complied with the terms of the Consent Order. During the nine month period ended August 31, 2008, the Company incurred an additional

approximately $1.4 million, attributable to the fill removal process, which has been recognized as an Impairment of Long-lived Assets in the consolidated statements of operations. The property is currently marketed for sale and the Company has received significant interest from multiple parties.

6. Equity and Other Investments

Daytona Live! Development

In May 2007, the Company announced that it entered into a 50/50 joint venture (the “DLJV”) with The Cordish Company (“Cordish”), one of the largest and most respected developers in the country, to explore a potential mixed-use entertainment destination development to be named Daytona Live!, on 71 acres it already owns. Located directly across International Speedway Boulevard from the Company’s Daytona International Speedway motorsports entertainment facility, the acreage currently includes an existing office building which houses the Company’s present corporate headquarters and certain offices of NASCAR. Preliminary conceptual designs call for a 200,000 square foot mixed-use retail/dining/entertainment area as well as a movie theater with up to 2,500-seats, a residential component and a 160-room hotel. The initial development will also include approximately 188,000 square feet of office space to house the new headquarters of ISC, NASCAR, Grand American and their related businesses, and additional space for other tenants. Construction of the office building is underway and is expected to be complete by the fourth quarter of 2009. Final design plans for the development of the retail/dining/entertainment components are expected to be completed by the end of 2008 and will incorporate the results of local market studies and further project analysis. The DLJV is hopeful it will receive all necessary permitting and other approvals for the initial development during 2008. The current estimated cost for the initial development is approximately $250.0 million. The new headquarters office building was financed in July 2008 through a $51.3 million construction term loan obtained by Daytona Beach Live! Headquarters Building, LLC (“DBLHB”) a wholly owned subsidiary of the DLJV which was created to own and operate the office building once it is completed. Both ISC and Cordish anticipate contributing an equal amount to the DLJV for the remaining equity necessary for the project. The Company expects its contribution to range between $10.0 million and $15.0 million, plus land it currently owns. The remainder of the project is expected to be primarily privately financed by the DLJV. Specific financing considerations for the DLJV are dependent on several factors, including lease arrangements, availability of project financing and overall market conditions. Lastly, when the new headquarters building is completed the Company will relocate from its existing office building, which is not fully depreciated, and is expected to be subsequently razed. The Company expects to recognize approximately $2.1 million, or $0.03 per diluted share, of additional depreciation on this existing office building during fiscal 2008.

In accordance with FASB Interpretation No. 46(R), “Consolidation of Variable Interest Entities”, the Company has determined that DBLHB is a variable interest entity for which it is considered to be the primary beneficiary. As the primary beneficiary the Company has consolidated this entity in its financial statements as of August 31, 2008. As discussed above, in July 2008, DBLHB entered into a construction term loan agreement to finance the completion of the building. The construction loan agreement is collateralized by the underlying assets of DBLHB, including cash and real property of the new headquarters building which have a carrying value of approximately $54.2 million, at August 31, 2008, and is included in the Restricted Cash, Long-Term Restricted Cash and Investments, and Property and Equipment amounts recorded on the Consolidated Balance Sheets and Minority Interest amount recorded on the Consolidated Statements of Operations. As a master tenant of the building the Company has entered into a 25-year lease arrangement with DBLHB whereby such lease payments are consistent with the terms of the construction term loan funding requirements.The headquarters building financing is non-recourse to the Company and is secured by the lease between the Company and DBLHB.

In addition, the Company has evaluated the existing arrangements of DLJV and its remaining projects and has determined them to be variable interest entities as of August 31, 2008. The Company is presently not considered to be the primary beneficiary of these entities and accordingly it has accounted for them as equity investments in its financial statements at August 31, 2008. The maximum exposure of loss to the Company, as a result of its involvement with the DLJV, is approximately $2.5 million at August 31, 2008. The Company does not expect this determination to change during the course of the development of the project.

Kansas Hotel and Casino Development

In September 2007, The Company’s wholly owned subsidiary Kansas Speedway Development Corporation (“KSDC”) and The Cordish Company, with whom the Company has formed a joint venture (“KJV”), submitted a joint proposal to the Unified Government of Wyandotte County/Kansas City, Kansas (“Unified Government”) for the development of a casino, hotel, retail and entertainment project in Wyandotte County, on property adjacent to Kansas Speedway. The Unified Government has approved rezoning of 102 acres at Kansas Speedway to allow development of the proposed project. In December 2007, the KJV negotiated a memorandum of understanding with Hard Rock Hotel Holdings to brand the entertainment destination development as a Hard Rock Hotel & Casino. The Kansas Lottery Commission will act as the state’s casino owner. The 1.5 million-square-foot, Hard Rock Hotel & Casino is expected to include a 300-room luxury hotel; a state-of-the-art casino with 3,000 slot machines and 140 gaming tables; 275,000 square-feet of destination retail, dining and entertainment including a live music venue; first-class resort amenities; and extensive meeting and convention facilities. In September 2008, the Kansas Lottery Gaming Facility Review Board awarded the casino management contract for Wyandotte County, Kansas to the KJV. Included in KJV’s proposal was ISC’s commitment to petition NASCAR to realign a second NASCAR Sprint Cup Series race to Kansas Speedway by no later than 2011. The source of the race, which will come from one of ISC’s other facilities, has not been determined.

The initial development is expected to cost approximately $705.0 million to construct and is scheduled for completion in fiscal 2011. Depending upon market conditions, the Company and Cordish anticipate contributing between 20.0 and 40.0 percent of the total cost to the KJV. The remaining portion is expected to be funded by non-recourse, secured debt financing obtained by the KJV. During construction of the hotel and casino entertainment development, the KJV will operate an initial phase casino with approximately 2,000 slot machines and 75 gaming tables.  The estimated construction cost for the initial phase casino is between $80.0 million and $90.0 million, with construction beginning in the first quarter of 2009 and opening in late fiscal 2009.  The Company’s 50.0 percent cash contribution to construct the initial phase casino will be between $40.0 million and $45.0 million, and will be part of the total Company contribution for the project.  As of August 31, 2008, the Company's maximum exposure to loss, as a result of its involvement with the KJV, is approximately $12.7 million. The Company has evaluated the existing arrangements of the KJV and has determined it to be a variable interest entity at August 31, 2008, in accordance with the FASB Interpretation No. 46(R); however it has been determined that the Company is not the primary beneficiary and accordingly it has been accounted for as an equity investment in the Company’s financial statements at August 31, 2008. The Company does not expect this determination to change during the course of the development of the project.

Including the aforementioned equity investments, the Company’s equity investments include a 50/50 joint venture with Speedway Motorsports, Inc. in, SMISC, LLC, which, through its wholly-owned subsidiary Motorsports Authentics, LLC conducts business under the name Motorsports Authentics, the Company’s 50.0 percent limited partnership investment in Stock-Car Montreal L.P. and the Company’s pro rata share of its 37.5 percent equity investment in Raceway Associates prior to the acquisition of the remaining interest in February 2007.

Summarized financial information on the Company’s equity investments for the three and nine months ended August 31, 2007 and 2008, are as follows (in thousands):

		Three Months Ended
		August 31,				August 31,
		2007				2008
Net sales		$	64,243			$	56,356
Gross profit			(8,938	)			16,646
Operating (loss) income			(34,097	)			101
Net (loss) income			(34,291	)			(280	)

		Nine Months Ended
		August 31,				August 31,
		2007				2008
Net sales		$	160,997			$	174,054
Gross profit			24,309				58,346
Operating (loss) income			(43,653	)			7,275
Net (loss) income			(44,121	)			9,268

7. 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, 2007
		Gross Carrying				Accumulated				Net Carrying
		Amount				Amortization				Amount
Amortized intangible assets:
Customer database		$	500			$	300			$	200
Food, beverage and merchandise contracts			251				203				48
Total amortized intangible assets			751				503				248
Non-amortized intangible assets:
NASCAR — sanction agreements			177,813				—				177,813
Other			923				—				923
Total non-amortized intangible assets			178,736				—				178,736
Total intangible assets		$	179,487			$	503			$	178,984

		August 31, 2008
		Gross Carrying				Accumulated				Net Carrying
		Amount				Amortization				Amount
Amortized intangible assets:
Customer database		$	500			$	375			$	125
Food, beverage and merchandise contracts			251				236				15
Total amortized intangible assets			751				611				140
Non-amortized intangible assets:
NASCAR — sanction agreements			177,813				—				177,813
Other			923				—				923
Total non-amortized intangible assets			178,736				—				178,736
Total intangible assets		$	179,487			$	611			$	178,876

The following table presents current and expected amortization expense of the existing intangible assets as of August 31, 2008 for each of the following periods (in thousands):

Amortization expense for the nine months ended August 31, 2008		$	108

Estimated amortization expense for the year ending November 30:

	2008			$	143
	2009				101
	2010				1
	2011				1
	2012				1

There were no changes in the carrying value of goodwill during the nine months ended August 31, 2008.

8. Long-Term Debt

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

		November 30,				August 31,
		2007				2008
4.2 percent Senior Notes		$	150,534			$	150,247
5.4 percent Senior Notes			149,928				149,936
5.8 percent Bank Loan			2,973				2,686
6.3 percent Bank Loan			54				—
4.8 percent Revenue Bonds			2,289				2,141
6.8 percent Revenue Bonds			5,200				3,320
6.25 percent Construction Term Loan			—				51,300
TIF bond debt service funding commitment			66,569				66,626
2006 Credit facility			—				—
			377,547				426,256
Less: current portion			2,538				152,875
		$	375,009			$	273,381

On April 23, 2004, the Company completed an offering of $300.0 million principal amount of unsecured senior notes in a private placement. On September 27, 2004, the Company completed an offer to exchange these unsecured senior notes for registered senior notes with substantially identical terms (“2004 Senior Notes”). At August 31, 2008, outstanding 2004 Senior Notes totaled approximately $300.2 million, net of unamortized discounts and premium, which is comprised of $150.0 million principal amount unsecured senior notes, which bear interest at 4.2 percent and are due April 2009 (“4.2 percent Senior Notes”), and $150.0 million principal amount unsecured senior notes, which bear interest at 5.4 percent and are due April 2014. The 2004 Senior Notes require semi-annual interest payments on April 15 and October 15 through their maturity. The 2004 Senior Notes may be redeemed in whole or in part, at the option of the Company, at any time or from time to time at redemption prices as defined in the indenture. The Company’s subsidiaries are guarantors of the 2004 Senior Notes. The 2004 Senior Notes also contain various restrictive covenants. Total gross proceeds from the sale of the 2004 Senior Notes were $300.0 million, net of discounts of approximately $431,000 and approximately $2.6 million of deferred financing fees. The deferred financing fees are being treated as additional interest expense and amortized over the life of the 2004 Senior Notes on a straight-line method, which approximates the effective yield method. In March 2004, the Company entered into interest rate swap agreements to effectively lock in the interest rate on approximately

$150.0 million of the 4.2 percent Senior Notes. The Company terminated these interest rate swap agreements on April 23, 2004 and received approximately $2.2 million, which is being amortized over the life of the 4.2 percent Senior Notes.

In June 2008, the Company entered into an interest rate swap agreement to effectively lock in a substantial portion of the interest rate on approximately $150.0 million notional amount in anticipation of refinancing the $150.0 million 4.2% Senior Notes that mature in April 2009. Under this agreement, the Company receives floating rate amounts in exchange for fixed rate interest payments over the life of the agreement without an exchange of the underlying principal amount. This agreement, with a principal notional amount of $150.0 million and an estimated fair value of a liability totaling $3.2 million at August 31, 2008, expires in February 2009.

In connection with the Company’s February 2, 2007, acquisition of the 62.5 percent ownership interest in Raceway Associates, LLC (“Raceway Associates”) it did not previously own, it assumed approximately $39.7 million in third party debt, consisting of three bank term loans and two revenue bonds payable.

	•		The first bank term loan (“Chicagoland Term Loan”) was a construction loan for the development of Chicagoland Speedway (“Chicagoland”) with principal outstanding at the date of acquisition of approximately $28.4 million. The Company paid the remaining principal and accrued interest on the Chicagoland Term Loan subsequent to the acquisition in February 2007.
	•		The second bank term loan (“5.8 percent Bank Loan”) consists of a construction and mortgage note with principal outstanding at the date of acquisition of approximately $3.3 million, original 20 year term due June 2018, with a current interest rate of 5.8 percent and a monthly payment of $48,000 principal and interest. The interest rate and monthly payments will be adjusted on June 1, 2013. At August 31, 2008, outstanding principal on the 5.8 percent Bank Loan was approximately $2.7 million.
	•		The third bank term loan (“6.3 percent Bank Loan”) consists of a mortgage note with principal outstanding at the date of acquisition of approximately $271,000, original five year term due which matured and was fully paid in February, 2008.
	•		The first revenue bonds payable (“4.8 percent Revenue Bonds”) consist of economic development revenue bonds issued by the City of Joliet, Illinois to finance certain land improvements with principal outstanding at the date of acquisition of approximately $2.5 million. The 4.8 percent Revenue Bonds have an initial interest rate of 4.8 percent and a monthly payment of $29,000 principal and interest. At August 31, 2008, outstanding principal on the 4.8 percent Revenue Bonds was approximately $2.1 million.
	•		The second revenue bonds payable (“6.8 percent Revenue Bonds”) are special service area revenue bonds issued by the City of Joliet, Illinois to finance certain land improvements with principal outstanding at the date of acquisition of approximately $5.2 million. The 6.8 percent Revenue Bonds are billed and paid as a special assessment on real estate taxes. Interest payments are due on a semi-annual basis at 6.8 percent with principal payments due annually. Final maturity of the 6.8 percent Revenue Bonds is January 2012. At August 31, 2008, outstanding principal on the 6.8 percent Revenue Bonds was approximately $3.3 million.

In July 2008, DBLHB entered into a construction term loan agreement to finance the construction of the Company’s new headquarters building (see Note 6). The loan is comprised of a $51.3 million principal amount with an interest rate of 6.25 percent which matures 25 years after the completion of the headquarters building.

In January 1999, the Unified Government, issued approximately $71.3 million in taxable special obligation revenue (“TIF”) bonds in connection with the financing of construction of Kansas Speedway. At August 31, 2008, outstanding TIF bonds totaled approximately $66.6 million, net of the unamortized discount, which is comprised of a $17.9 million principal amount, 6.2 percent term bond due December 1, 2017 and $49.7 million principal amount, 6.8 percent term bond due December 1, 2027. The TIF bonds are repaid by the 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 bond financing documents contain various restrictive covenants.

The Company currently has a $300.0 million revolving credit facility (“2006 Credit Facility”) which contains a feature that allows the Company to increase the credit facility to a total of $500.0 million, subject to certain conditions. The 2006 Credit Facility is scheduled to mature in June 2011, and accrues interest at LIBOR plus 30.0-80.0 basis points, based on the Company’s highest debt rating as determined by specified rating agencies. The 2006 Credit Facility contains various restrictive covenants. At August 31, 2008 there were no outstanding borrowings under the 2006 Credit Facility. On October 1, 2008, the Company borrowed $150.0 million from the 2006 Credit Facility.

Total interest expense from continuing operations incurred by the Company was approximately $4.0 million for the three months ended August 31, 2007 and 2008, respectively, and $11.8 million and $10.9 million for the nine months ended August 31, 2007 and 2008, respectively. Total interest capitalized for the three months ended August 31, 2007 and 2008, was approximately $1.1 million and $1.6 million, respectively, and approximately $3.8 million and $4.9 million for the nine months ended August 31, 2007 and 2008, respectively.

Financing costs of approximately $5.7 million and $5.1 million, net of accumulated amortization, have been deferred and are included in other assets at November 30, 2007 and August 31, 2008, respectively. These costs are being amortized on a straight line method, which approximates the effective yield method, over the life of the related financing.

9. Capital Stock

Stock Purchase Plans

In fiscal 2007 the Company implemented a share repurchase program under which it is authorized to purchase up to $150.0 million of its outstanding Class A common shares. In February 2008, the Company announced that its Board of Directors had authorized an incremental $100.0 million share repurchase program. Collectively these programs are described as the “Stock Purchase Plans.” The Stock Purchase Plans allow the Company to purchase up to $250.0 million of its outstanding Class A common shares. The timing and amount of any shares repurchased under the Stock Purchase Plans will depend on a variety of factors, including price, corporate and regulatory requirements, capital availability and other market conditions. The Stock Purchase Plans 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 Stock Purchase Plans through August 31, 2008, the Company has purchased 4,548,675 shares of its Class A common shares, for a total of approximately $200.5 million. Included in these totals are the purchases of 2,906,561 shares of its Class A common shares during the nine months ended August 31, 2008, at an average cost of approximately $41.12 per share (including commissions), for a total of approximately $119.5 million. These transactions occurred in open market purchases and pursuant to a trading plan under Rule 10b5-1. At August 31, 2008, the Company has approximately $49.5 million remaining under the current Stock Purchase Plans.

10. Long-Term Stock Incentive Plan

In April 2008, the Company awarded and issued a total of 26,277 restricted shares of the Company’s Class A common shares to certain officers and managers under the Company’s Long-Term Stock Incentive Plan (the “2006 Plan”). The shares of restricted stock awarded in April 2008, vest at the rate of 50.0 percent on the third anniversary of the award date and the remaining 50.0 percent on the fifth anniversary of the award date. The weighted average grant date fair value of these restricted share awards was $41.20 per share. In accordance with SFAS 123(R) “Share-Based Payment” the Company is recognizing stock-based compensation on its restricted shares awarded on the accelerated method over the requisite service period.

In July 2008, the Company granted a total of 20,288 options to the non-employee directors and 30,000 options to certain non-officer managers to purchase the Company’s Class A Common Stock. The exercise price for both groups of options is $39.03 per share. The non-employee director’s options become exercisable one year after the date of grant and expire on the tenth anniversary of the date of grant. The non-officer manager’s options vest over a two and one-half year period and expire on the tenth anniversary of the date of grant. In accordance with SFAS 123(R) the Company is recognizing stock-based compensation on its stock options granted on the straight-line method over the requisite service period. The fair value of each option granted is estimated on the grant date using the Black-Scholes-Merton option-pricing valuation model that uses the assumptions in the following table.

	Expected volatility			21.2%-24.2	%
	Weighted average volatility			22.4	%
	Expected dividends			0.3	%
	Expected term (in years)			5.0-7.3
	Risk-free rate			3.3%-3.6	%

11. Income Taxes

In June 2006, the FASB issued FIN 48 which clarifies the accounting for uncertainty in income taxes recognized in an entity’s financial statements in accordance with SFAS No. 109 and prescribes a recognition threshold and measurement attributes for financial statement disclosure of income tax positions taken or expected to be taken on a tax return. Also, FIN 48 provides guidance on de-recognition, classification, interest and penalties, disclosure, and transition. Effective December 1, 2007, the Company has adopted the provisions of FIN 48 and there was no material effect on the financial statements. As a result, there was no cumulative effect related to adopting FIN 48. However, certain amounts have been reclassified in the statement of financial position in order to comply with the requirements of the statement.

As of December 1, 2007, the Company has a total liability of approximately $156.3 million for uncertain tax positions, inclusive of tax, interest, and penalties. Of this amount, approximately $130.0 million represents income tax liability for uncertain tax positions related to various federal and state income tax matters, primarily the tax depreciation issue currently under examination. If the accrued

liability was de-recognized, approximately $2.5 million of taxes would impact the Company’s consolidated statement of operations as a reduction to its effective tax rate. Included in the balance sheet at December 1, 2007 are approximately $127.5 million of items of which, under existing tax laws, the ultimate deductibility is certain but for which the timing of the deduction is uncertain. Because of the impact of deferred income tax accounting, a deduction in a subsequent period would result in a deferred tax asset. Accordingly, upon de-recognition, the tax benefits associated with the reversal of these timing differences would have no impact, except for related interest and penalties, on the Company’s effective income tax rate. For the nine months ended August 31, 2008, the accrued tax liability for uncertain tax positions increased by approximately $2.7 million, of which approximately $0.2 million impacted the effective rate.

The Company recognizes interest and penalties related to uncertain tax positions as part of its provision for federal and state income taxes. As of December 1, 2007, the Company has accrued approximately $25.7 million of interest and $0.6 million of penalties related to uncertain tax positions. As of August 31, 2008, the total amounts for accrued interest and penalties were approximately $27.5 million and $0.6 million, respectively. As of December 1, 2007 and August 31, 2008, if the accrued interest was de-recognized, approximately $15.6 million and $16.7 million, respectively, would impact the Company’s consolidated statement of operations as a reduction to its effective tax rate.

The Company is subject to taxation in the US and various state jurisdictions and subject to examination by those authorities for the tax years ending November 30, 1999 and forward. The Company is currently under the appeal process of the examination by the Internal Revenue Service (the “Service”) for the tax years ending November 30, 1999 to November 30, 2005. It is possible that this appeal process will conclude in the next three to 12 months (see Note 13). Therefore, it is possible a reduction in the accrued liabilities for uncertain tax positions may occur; however, quantification of an estimated range cannot be made at this time.

The tax treatment of providing a valuation allowance related to the losses incurred in the Company’s equity investments, as well as changes in the Michigan tax law during the third quarter of fiscal 2007 are the principal causes of the increased effective income tax rate during the three and nine months ended August 31, 2007.

The tax treatment of certain restructuring initiatives is the principal cause of the decreased effective income tax rate during the three and nine months ended August 31, 2008. The decrease was partially offset during the nine month period ended August 31, 2008, by the tax exempt nature of the previously discussed non-cash charge to interest income during the first quarter of fiscal 2008.

As a result of the above items the Company’s effective income tax rate increased from the statutory income rate to approximately 66.4 percent and 46.5 percent, respectively, for the three and nine months ended August 31, 2007, and decreased from the statutory income rate to approximately 32.3 percent and 37.8 percent for the three and nine months ended August 31, 2008.

12. 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 the American Historic Racing Motorcycle Association, the American Motorcyclist Association, the Automobile Racing Club of America, the American Sportbike Racing Association — Championship Cup Series, Grand American Road Racing Association, Historic Sportscar Racing, IRL, NASCAR, the 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, which sanctions some of the Company’s principal racing events, is controlled by members of the France Family Group which, in turn, controls in excess of 68.0 percent of the combined voting power of the outstanding stock of the Company. Additionally, some members of the France Family Group serve as directors and officers of the Company. Standard NASCAR sanction agreements require racetrack operators to pay sanction fees and 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. Prize and point fund monies paid by the Company to NASCAR from continuing operations for disbursement to competitors, which are exclusive of NASCAR sanction fees, totaled approximately $29.7 million and $37.1 million for the three months ended August 31, 2007 and 2008, respectively, and approximately $87.1 million and $95.5 million for the nine months ended August 31, 2007 and 2008, respectively. There were no prize and point fund monies paid by the Company to NASCAR related to the discontinued operations for the three and nine months ended August 31, 2007 and 2008, respectively.

Under current agreements, NASCAR contracts directly with certain network providers for television rights to the entire NASCAR Sprint Cup, Nationwide and Craftsman 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, Nationwide and Craftsman Truck series event. Under the terms of this arrangement, NASCAR retains 10.0 percent of the gross broadcast rights fees allocated to each NASCAR Sprint Cup, Nationwide and Craftsman Truck series event as a component of its sanction fees and remits the remaining 90.0 percent to the event promoter. The event promoter pays 25.0 percent of the gross broadcast rights fees allocated to the event as part of the previously discussed prize money paid to NASCAR for disbursement to competitors. The Company’s television broadcast and ancillary rights fees from continuing operations received from NASCAR for the NASCAR Sprint Cup, Nationwide and Craftsman Truck series events conducted at its wholly-owned facilities, and recorded as part of motorsports related revenue, were approximately $56.9 million and $69.6 million for the three months ended August 31, 2007 and 2008, respectively, and $176.4 million and $191.8 million for the nine months ended August 31, 2007 and 2008, respectively. There were no television broadcast and ancillary rights fees received from NASCAR related to discontinued operations during the three and nine months ended August 31, 2007 and 2008, respectively.

13. 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 August 31, 2008, the Unified Government had approximately $3.2 million 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.

The Company has guaranteed minimum royalty payments under certain agreements through December 2015, with a remaining maximum exposure at August 31, 2008, of approximately $12.2 million.

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 $3.3 million at August 31, 2008. At August 31, 2008, there were no amounts drawn on the standby letters of credit.

As previously discussed, the Service is currently performing a periodic examination of the Company’s federal income tax returns for the years ended November 30, 1999 through 2005 and has challenged the tax depreciation treatment of a significant portion of its motorsports entertainment facility assets. In order to prevent incurring additional interest related to years through fiscal 2005, the Company has approximately $117.9 million on deposit with the Service as of August 31, 2008, which is classified as long-term assets in its consolidated financial statements. The Company’s deposits are not a payment of tax, and it will receive accrued interest on any of these funds ultimately returned to it. In June 2007 the Service commenced the administrative appeals process which is currently expected to take an additional three to twelve months to complete. If the Company’s appeal is not resolved satisfactorily, it will evaluate all of its options, including litigation. The Company believes that its application of the federal income tax regulations in question, which have been applied consistently since their enactment and have been subjected to previous IRS audits, is appropriate, and it intends to vigorously defend the merits of its position. While an adverse resolution of these matters could result in a material negative impact on cash flow, including payment of taxes from amounts currently on deposit with the Service, the Company believes that it has provided adequate reserves related to these matters including interest charges through August 31, 2008, and, as a result, does not expect that such an outcome would have a material adverse effect on results of operations.

A small portion of the Company’s property in Daytona Beach, near its corporate headquarters is in the process of having certain contaminants remediated by a prior occupant of the property who has admitted causing the contamination and has assumed full liability for the remediation of the site. As previously reported, on January 25, 2008 the Company was notified that certain testing being performed in connection with this remediation indicated the possible presence of other contaminants that appeared to be unrelated to the ongoing remediation activities. The Company has since investigated, performed additional tests and determined that the other contaminants are not present on the subject property.

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.

In addition to such routine litigation incident to its business, the Company remains a party to the Kentucky Speedway litigation described in its annual report on Form 10-K for the fiscal year ended November 30, 2007. There have been no material changes in the status of that litigation.

14. Segment Reporting

The following tables provide segment reporting of the Company for the three and nine months ended August 31, 2007 and 2008 (in thousands):

		Three Months Ended August 31, 2007
		Motorsports				All
		Event				Other				Total
Revenues		$	183,336			$	13,200			$	196,536
Depreciation and amortization			15,732				8,093				23,825
Operating income			46,217				1,996				48,213
Capital expenditures			7,134				7,193				14,327
Total assets			1,756,542				277,363				2,033,905
Equity investments			112,201				—				112,201

		Three Months Ended August 31, 2008
		Motorsports				All
		Event				Other				Total
Revenues		$	200,999			$	13,260			$	214,259
Depreciation and amortization			15,788				2,077				17,865
Operating income			58,758				2,267				61,025
Capital expenditures			38,237				11,204				49,441
Total assets			1,744,052				304,013				2,048,065
Equity investments			80,983				—				80,983

		Nine Months Ended August 31, 2007
		Motorsports				All
		Event				Other				Total
Revenues		$	530,089			$	34,300			$	564,389
Depreciation and amortization			45,143				17,830				62,973
Operating income			148,027				977				149,004
Capital expenditures			45,739				24,700				70,439

		Nine Months Ended August 31, 2008
		Motorsports				All
		Event				Other				Total
Revenues		$	549,259			$	35,765			$	585,024
Depreciation and amortization			46,230				6,388				52,618
Operating income			167,210				3,661				170,871
Capital expenditures			66,266				21,156				87,422

Intersegment revenues were approximately $1.0 million and $1.1 million for the three months ended August 31, 2007 and 2008, respectively, and approximately $3.0 million for the nine months ended August 31, 2007 and 2008, respectively.

15. Condensed Consolidating Financial Statements

In connection with the 2004 Senior Notes, the Company is required to provide condensed consolidating financial information for its subsidiary guarantors. All of the Company’s wholly-owned domestic subsidiaries have, jointly and severally, fully and unconditionally guaranteed, to each holder of 2004 Senior Notes and the trustee under the Indenture for the 2004 Senior Notes, the full and prompt performance of the Company’s obligations under the indenture and the 2004 Senior Notes, including the payment of principal (or premium, if any) and interest on the 2004 Senior Notes, on an equal and ratable basis.

The subsidiary guarantees are unsecured obligations of each subsidiary guarantor and rank equally in right of payment with all senior indebtedness of that subsidiary guarantor and senior in right of payment to all subordinated indebtedness of that subsidiary guarantor. The subsidiary guarantees are effectively subordinated to any secured indebtedness of the subsidiary guarantor with respect to the assets securing the indebtedness.

In the absence of both default and notice, there are no restrictions imposed by the Company’s 2006 Credit Facility, 2004 Senior Notes, or guarantees on the Company’s ability to obtain funds from its subsidiaries by dividend or loan. The Company has not presented

separate financial statements for each of the guarantors, because it has deemed that such financial statements would not provide the investors with any material additional information.

Included in the tables below, are condensed consolidating balance sheets as of November 30, 2007 and August 31, 2008, condensed consolidating statements of operations for the three and nine months ended August 31, 2007 and 2008, and condensed consolidating statements of cash flows for the nine months ended August 31, 2007 and 2008, of: (a) the Parent; (b) the guarantor subsidiaries; (c) the non-guarantor subsidiary, consisting of the consolidated DBLHB variable interest entity; (d) elimination entries necessary to consolidate Parent with guarantor and non-guarantor subsidiary(ies); and (e) the Company on a consolidated basis (in thousands).

		Condensed Consolidating Balance Sheet at November 30, 2007
						Combined
		Parent				Guarantor				Non-Guarantor
		Company				Subsidiaries				Subsidiary				Eliminations				Consolidated
Current assets		$	17,882			$	163,062			$	—			$	(21,118	)		$	159,826
Property and equipment, net			184,188				1,118,990				—				—				1,303,178
Advances to and investments in subsidiaries			2,971,213				1,011,557				—				(3,982,770	)			—
Other assets			133,919				385,194				—				—				519,113
Total Assets		$	3,307,202			$	2,678,803			$	—			$	(4,003,888	)		$	1,982,117
Current liabilities		$	39,877			$	166,992			$	—			$	5,434			$	212,303
Long-term debt			1,312,018				43,383				—				(980,392	)			375,009
Deferred income taxes			58,633				155,476				—				—				214,109
Other liabilities			—				21,608				—				—				21,608
Total shareholders’ equity			1,896,674				2,291,344				—				(3,028,930	)			1,159,088
Total Liabilities and Shareholders’ Equity		$	3,307,202			$	2,678,803			$	—			$	(4,003,888	)		$	1,982,117

		Condensed Consolidating Balance Sheet at August 31, 2008
						Combined
		Parent				Guarantor				Non-Guarantor
		Company				Subsidiaries				Subsidiary				Eliminations				Consolidated
Current assets		$	23,481			$	136,687			$	3,206			$	(13,722	)		$	149,652
Property and equipment, net			31,889				1,285,244				6,640				—				1,323,773
Advances to and investments in subsidiaries			2,877,409				944,826				—				(3,822,235	)			—
Other assets			142,779				388,539				43,322				—				574,640
Total Assets		$	3,075,558			$	2,755,296			$	53,168			$	(3,835,957	)		$	2,048,065
Current liabilities		$	182,620			$	177,724			$	2,128			$	1,161			$	363,633
Long-term debt			1,094,762				(60,874	)			51,300				(811,807	)			273,381
Deferred income taxes			(62,561	)			155,475				—				—				92,914
Other liabilities			164,108				21,004				—				—				185,112
Total shareholders’ equity			1,696,629				2,461,967				(260	)			(3,025,311	)			1,133,025
Total Liabilities and Shareholders’ Equity		$	3,075,558			$	2,755,296			$	53,168			$	(3,835,957	)		$	2,048,065

		Condensed Consolidating Statement of Operations
		For The Three Months Ended August 31, 2007
						Combined
		Parent				Guarantor				Non-Guarantor
		Company				Subsidiaries				Subsidiary				Eliminations				Consolidated
Total revenues		$	46			$	222,518			$	—			$	(26,999	)		$	195,565
Total expenses			17,358				156,993				—				(26,999	)			147,352
Operating (loss) income			(17,312	)			65,525				—				—				48,213
Interest and other (expense) income, net			(10,352	)			(5,111	)			—				(4,321	)			(19,784	)
(Loss) income from continuing operations			(38,463	)			52,331				—				(4,321	)			9,547
Net (loss) income			(38,463	)			52,301				—				(4,321	)			9,517

		Condensed Consolidating Statement of Operations
		For The Three Months Ended August 31, 2008
						Combined
		Parent				Guarantor				Non-Guarantor
		Company				Subsidiaries				Subsidiary				Eliminations				Consolidated
Total revenues		$	355			$	237,633			$	—			$	(24,780	)		$	213,208
Total expenses			8,824				168,139				—				(24,780	)			152,183
Operating (loss) income			(8,469	)			69,494				—				—				61,025
Interest and other (expense) income, net			3,733				4,525				(130	)			(11,752	)			(3,624	)
(Loss) income from continuing operations			(18,773	)			69,497				(130	)			(11,752	)			38,842
Net (loss) income			(18,773	)			69,446				(130	)			(11,752	)			38,791

		Condensed Consolidating Statement of Operations
		For The Nine Months Ended August 31, 2007
						Combined
		Parent				Guarantor				Non-Guarantor
		Company				Subsidiaries				Subsidiary				Eliminations				Consolidated
Total revenues		$	608			$	672,154			$	—			$	(111,383	)		$	561,379
Total expenses			42,296				481,462				—				(111,383	)			412,375
Operating (loss) income			(41,688	)			190,692				—				—				149,004
Interest and other (expense) income, net			(18,081	)			11,127				—				(22,884	)			(29,838	)
(Loss) income from continuing operations			(88,891	)			175,557				—				(22,884	)			63,782
Net (loss) income			(88,891	)			175,501				—				(22,884	)			63,726

		Condensed Consolidating Statement of Operations
		For The Nine Months Ended August 31, 2008
						Combined
		Parent				Guarantor				Non-Guarantor
		Company				Subsidiaries				Subsidiary				Eliminations				Consolidated
Total revenues		$	1,264			$	689,774			$	—			$	(109,034	)		$	582,004
Total expenses			27,349				492,818				—				(109,034	)			411,133
Operating (loss) income			(26,085	)			196,956				—				—				170,871
Interest and other (expense) income, net			(5,806	)			22,063				(130	)			(24,560	)			(8,433	)
(Loss) income from continuing operations			(73,138	)			198,920				(130	)			(24,560	)			101,092
Net (loss) income			(73,138	)			198,802				(130	)			(24,560	)			100,974

		Condensed Consolidating Statement of Cash Flows
		For The Nine Months Ended August 31, 2007
						Combined
		Parent				Guarantor				Non-Guarantor
		Company				Subsidiaries				Subsidiary				Eliminations				Consolidated
Net cash (used in) provided by operating activities		$	(56,169	)		$	283,075			$	—			$	(25,309	)		$	201,597
Net cash provided by (used in) investing activities			112,493				(256,477	)			—				25,309				(118,675	)
Net cash used in financing activities			(56,283	)			(29,311	)			—				—				(85,594	)

		Condensed Consolidating Statement of Cash Flows
		For The Nine Months Ended August 31, 2008
						Combined
		Parent				Guarantor				Non-Guarantor
		Company				Subsidiaries				Subsidiary				Eliminations				Consolidated
Net cash (used in) provided by operating activities		$	(38,837	)		$	250,430			$	1,925			$	(36,229	)		$	177,289
Net cash provided by (used in) investing activities			162,119				(251,183	)			(53,225	)			36,229				(106,060	)
Net cash (used in) provided in financing activities			(125,866	)			(2,369	)			51,300				—				(76,935	)

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, activities at Daytona 500 EXperience and other motorsports activities and amusements, net of any applicable taxes.

“Motorsports related” revenue primarily includes television, radio and ancillary rights fees, marketing partnership fees, hospitality rentals (including luxury suites, chalets and the hospitality portion of club seating), advertising, track rentals and royalties from licenses of our trademarks.

“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 facilities.

Direct expenses include (i) prize and point fund monies and National Association for Stock Car Auto Racing (“NASCAR”) sanction fees, (ii) motorsports 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 events and activities, and (iii) food, beverage and merchandise expenses, consisting primarily of labor and costs of goods sold.

Starting in fiscal 2008, branding of two of NASCAR’s premiere series changed. The NASCAR NEXTEL Cup Series became the NASCAR Sprint Cup Series and the NASCAR Busch Series became the NASCAR Nationwide Series. Throughout this document, the naming convention for these series is consistent with the branding in fiscal 2008.

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. Also, if we have variable interest entities for which we are the primary beneficiary, we consolidate those entities. Our judgment in determining if we are the primary beneficiary of a variable interest entity includes assessing our level of involvement in establishing the entity, determining whether we provide more than half of any management, operational or financial support to the entity, and determining if we absorb the majority of the entity’s expected losses or returns.

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. MRN Radio’s revenue from the sale of advertising and audio/video production services are recognized

at the time the advertisements are broadcast or services are performed. 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, Nationwide and Craftsman 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, Nationwide and Craftsman Truck series event. Under the terms of this arrangement, NASCAR retains 10.0 percent of the gross broadcast rights fees allocated to each NASCAR Sprint Cup, Nationwide and Craftsman Truck series event as a component of its sanction fees and remits the remaining 90.0 percent to the event promoter. The event promoter pays 25.0 percent of the gross broadcast rights fees allocated to the event as part of awards to the competitors.

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 fair value. 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.

Accounts Receivable. We regularly review the collectability of our accounts receivable. An allowance for doubtful accounts is estimated based on historical experience of write-offs and future expectations of conditions that might impact the collectability of accounts.

Business Combinations. All business combinations are accounted for under the purchase 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, Grand American Road Racing Association (“Grand American”) and/or Indy Racing League (“IRL”). 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 Statement of Financial Accounting Standards (“SFAS”) No. 141, 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. Our intangible assets are comprised of assets having finite useful lives, which are amortized over that period, and goodwill and other non-amortizable intangible assets with indefinite useful lives. Current accounting standards require testing these assets for impairment, either upon the occurrence of an impairment indicator or annually, based on assumptions regarding our future business outlook. While we continue to review and analyze many factors that can impact our business prospects in the future, our analyses are subjective and 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 these estimates and assumptions. Our

judgments with regard to our future business prospects could impact whether or not an impairment is deemed to have occurred, as well as the timing of the recognition of such an impairment charge. Our equity method investees also perform such tests for impairment of long-lived assets, goodwill and other intangible assets.

Self-Insurance Reserves. We use a combination of insurance and self-insurance for a number of risks including general liability, workers’ compensation, vehicle liability and employee-related health care benefits. Liabilities associated with the risks that we retain are estimated by considering various historical trends and forward-looking assumptions related to costs, claim counts and payments. The estimated accruals for these liabilities could be significantly affected if future occurrences and claims differ from these assumptions and historical trends.

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. The calculation of tax liabilities involves dealing with uncertainties in the application of complex tax laws. We recognize probable liabilities for tax audit issues, including interest and penalties, based on an estimate of the ultimate resolution of whether, and the extent to which, additional taxes will be due. 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 an 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 either the likelihood of an adverse outcome is only reasonably possible or an estimate of loss is not determinable. Legal and other costs incurred in conjunction with loss contingencies are expensed as incurred.

Discontinued Operations

Nazareth Speedway

After the completion of Nazareth Speedway’s (“Nazareth”) fiscal 2004 events we suspended its major motorsports event operations. The NASCAR Nationwide Series and IRL IndyCar Series events, then conducted at Nazareth, were realigned to other motorsports entertainment facilities within our portfolio. The property on which the former Nazareth Speedway was located continues to be marketed for sale and discussions are underway with multiple parties. For all periods presented, the results of operations of Nazareth are presented as discontinued operations.

Impairment of Long-Lived Assets

Staten Island Property

In connection with the our search for a site for a major motorsports entertainment facility in the New York metropolitan area our then majority-owned subsidiary, 380 Development, LLC, purchased a total 676 acres located in the New York City borough of Staten Island in early fiscal 2005. Land improvements including fill operations were subsequently commenced. In December 2006, we announced our decision to discontinue pursuit of the speedway development on Staten Island. We ceased ongoing fill operations while we addressed certain issues raised by the New York Department of Environmental Conservation (“DEC”) and the New York City Department of Sanitation (“DOS”), including the presence of, and need to remediate, fill containing constituents above regulatory thresholds. In May 2007, we entered into a Consent Order with DEC to resolve the issues surrounding these fill operations and the prior placement of fill at the site that contained constituents above regulatory thresholds. The Consent Order required us to remove non-compliant fill pursuant to the comprehensive fill removal plan. We completed fill removal activities in the second quarter of fiscal 2008. The Consent Order required us to pay a penalty to DEC of $562,500, half of which was paid in May 2007 and the other half of which has been suspended so long as we have complied with the terms of the Consent Order. During the nine month period ended August 31, 2008, we incurred an additional approximately $1.4 million, attributable to the fill removal process, which has been recognized as an Impairment of Long-lived Assets in the consolidated statements of operations. The property is currently marketed for sale and we have received significant interest from multiple parties.

Although we are disappointed that our speedway development efforts were unsuccessful on Staten Island, we remain committed to pursuing the development of a motorsports entertainment facility in the region. Due to the considerable interest in and support for NASCAR racing in the metro New York market, we believe a premier motorsports entertainment facility will have a significant positive impact on the area’s economy and prove to be a long-term community asset.

Equity and Other Investments

Motorsports Authentics

In the fourth quarter of fiscal 2005 we partnered with Speedway Motorsports, Inc. in a 50/50 joint venture, SMISC, LLC, which, through its wholly-owned subsidiary Motorsports Authentics, LLC conducts business under the name Motorsports Authentics. During the fourth quarter of fiscal 2005 and the first quarter of fiscal 2006, Motorsports Authentics acquired Team Caliber and Action Performance, Inc., respectively, and became a leader in design, promotion, marketing and distribution of motorsports licensed merchandise. Subsequent to the acquisitions, Motorsports Authentics made significant progress towards improving the acquired business operations. To accelerate this improvement and more effectively position itself for long-term success in June 2007 it hired a new President and Chief Executive Officer. Under this new leadership, Motorsports Authentics is making important changes to the business and is executing well against its plans for fiscal 2008.

As a result of certain significant driver and team changes and excess merchandise on-hand, Motorsports Authentics recognized a write-down of certain inventory and related assets in the third quarter of fiscal 2007. In addition, during the fourth quarter of fiscal 2007 Motorsports Authentics completed forward looking strategic financial planning. The resulting financial projections were utilized in its annual valuation analysis of goodwill, certain intangible assets and other long-lived assets which resulted in an impairment charge on such assets.

We continue to believe the sale of licensed merchandise represents a significant opportunity in the sport and are optimistic that the current management at Motorsports Authentics has developed a solid plan for the future. Our 50.0 percent portion of Motorsports Authentics’ results was equity in net income of approximately $196,000 for the third fiscal quarter of 2008 as compared to equity in net loss of approximately $16.9 million for the same period of the prior year and equity in net income of approximately $5.0 million for the nine months ending August 31, 2008 as compared to equity in net loss of approximately $20.6 million for the same period of the prior year. While we are encouraged with the fiscal 2008 year-to-date results, this trend may not be indicative of the results for future periods as the sale of licensed merchandise, like other areas of our business, is vulnerable to multiple risks including inclement weather and economic trends impacting consumer discretionary spending.

Stock Purchase Plans

In fiscal 2007 we implemented a share repurchase program under which we are authorized to purchase up to $150.0 million of our outstanding Class A common shares. In February 2008 we announced that our Board of Directors had authorized an incremental $100.0 million share repurchase program. Collectively these programs are described as the “Stock Purchase Plans.” The Stock Purchase Plans allow us to purchase up to $250.0 million of our outstanding Class A common shares. The timing and amount of any shares repurchased under the Stock Purchase Plans will depend on a variety of factors, including price, corporate and regulatory requirements, capital availability and other market conditions. The Stock Purchase Plans 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 Stock Purchase Plans through August 31, 2008, we have purchased 4,548,675 shares of our Class A common shares, for a total of approximately $200.5 million. Included in these totals are the purchases of 2,906,561 shares of our Class A common shares during the nine months ended August 31, 2008, at an average cost of approximately $41.12 per share (including commissions), for a total of approximately $119.5 million. These transactions occurred in open market purchases and pursuant to a trading plan under Rule 10b5-1. At August 31, 2008, we have approximately $49.5 million remaining under the current Stock Purchase Plans.

Accounting Adjustment

During the quarter ended February 29, 2008, we recorded a non-cash charge totaling approximately $3.8 million, or $0.07 per diluted share, to correct the carrying value amount of certain other assets. This adjustment was recorded as a reduction of interest income in the consolidated statement of operations. We believe the adjustment is not material to our consolidated financial statements for the years ended November 30, 2005, 2006 and 2007. We do not expect it to be material to our consolidated financial statements as of and for the year ended November 30, 2008. In accordance with Staff Accounting Bulletin 108, we considered qualitative and quantitative factors, including the income from continuing operations it reported in each of the prior years and expect to report for the current year, the non-cash nature of the adjustment and our substantial shareholders’ equity at the end of each of the prior years.

Income Taxes

The tax treatment of providing a valuation allowance related to the losses incurred in our equity investments, as well as changes in the Michigan tax law during the third quarter of fiscal 2007 are the principal causes of the increased effective income tax rate during the three and nine months ended August 31, 2007.

The tax treatment of certain restructuring initiatives is the principal cause of the decreased effective income tax rate during the three and nine months ended August 31, 2008. The decrease was partially offset during the nine month period ended August 31, 2008, by the tax exempt nature of the previously discussed non-cash charge to interest income during the first quarter of fiscal 2008.

As a result of the above items our effective income tax rate increased from the statutory income rate to approximately 66.4 percent and 46.5 percent, respectively, for the three and nine months ended August 31, 2007, and decreased from the statutory income rate to approximately 32.3 percent and 37.8 percent for the three and nine months ended August 31, 2008.

Future Trends in Operating Results

Economic conditions, including those affecting disposable consumer income and corporate budgets such as employment, business conditions, interest rates and taxation rates, may impact our ability to sell tickets to our events and to secure revenues from corporate marketing partnerships. We believe that adverse economic trends, particularly credit availability, the decline in consumer confidence, the rise in unemployment and increased fuel and food costs, have significantly contributed to the decrease in attendance for certain of our motorsports entertainment events during fiscal 2008. The persistence of these trends could continue to adversely impact event attendance-related revenues. With regard to corporate marketing partner relationships, we believe that our presence in key markets, impressive portfolio of events and attractive fan demographics are beneficial and help to mitigate adverse economic trends as we continue to pursue renewal and expansion of existing marketing partnerships and establish new corporate relationships. This has most recently been demonstrated by our multi-year, multi- facility official status agreement with Coca Cola and our first multi-year facility naming rights agreement between Auto Club of Southern California and our California facility. As the economic outlook has further deteriorated over the past months, however, we have begun to see a slow down in corporate spending for hospitality. In addition, the process of securing sponsorship deals has become more time consuming as corporations are more closely scrutinizing their marketing budgets. Despite these current economic conditions, we continue to believe that revenues from our corporate marketing relationships will grow over the long term, contributing to strong earnings and cash flow stability and predictability.

An important component of our operating strategy has been our long-standing practice of focusing closely on supply and demand regarding additional capacity at our facilities. We continually evaluate the demand for our most popular racing events in order to only add capacity that we believe will provide an acceptable rate of return on invested capital. Through prudent expansion, we attempt to keep demand at a higher level than supply, which stimulates ticket renewals and advance sales. Advance ticket sales result in earlier cash flow and reduce the potential negative impact of actual and forecasted inclement weather on ticket sales. While we will adjust pricing outside of the sales cycle as needed as well as join with sponsors to offer promotions to generate additional ticket sales, we avoid rewarding last-minute ticket buyers by discounting tickets. We believe it is more important to encourage advance ticket sales and maintain price integrity to achieve long-term growth than to capture short-term incremental revenue. In addition to weather, there are a number of factors that impact attendance at our events and related admissions and food, beverage and merchandise revenues, including demand in the marketplace and discretionary consumer spending trends affected by employment and other lifestyle and economic conditions. Accordingly, we have instituted only modest increases in our weighted average ticket prices for fiscal 2008 and expect this positioning to continue into 2009. Over the long term, we will continue to optimize capacity, as well as the pricing and packaging of our tickets and other products.

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 85.8 percent of our revenues in fiscal 2007. In January 2003, NASCAR announced it would entertain and discuss proposals from track operators regarding potential realignment 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. NASCAR approved realignments of certain NASCAR Sprint Cup and other events at our facilities for the 2004 through 2007 seasons. We believe that the 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. NASCAR has indicated that it is open to discussion regarding additional date realignments, and we plan to petition NASCAR for additional realignments of events in connection with our recently announced hotel and casino project at Kansas Speedway (see “Kansas Hotel and Casino Development”). We believe we are well positioned to capitalize on these future opportunities.

Starting in 2007, NASCAR entered into new combined eight-year agreements with FOX, ABC/ESPN, TNT and SPEED for the domestic broadcast and related rights for its Sprint Cup, Nationwide and Craftsman Truck series. The agreements total approximately $4.5 billion over the eight year period from 2007 through 2014. This results in an approximate $560.0 million gross average annual rights fee for the industry, a more than 40.0 percent increase over the previous contract average of $400.0 million annually. The industry rights fees were approximately $505.0 million for 2007, and will increase, on average, by approximately three percent per year through the 2014 season. The annual increase is expected to vary between two and four percent per year over the period. While the 2007 industry rights fees were less than the 2006 industry rights fees of approximately $576.0 million, in our opinion this should not overshadow the strategic importance and expected long-term benefits of the new contracts. NASCAR viewership is growing in

2008 and remains strong, with NASCAR Sprint Cup events consistently the highest rated televised sporting events, second only to the National Football League. Over the past several years, there has been a shift of major sports programming from network to cable. The cable broadcasters can support a higher investment through subscriber fees not available to networks, which has resulted in increased rights fees for these sports properties. Cable, however, reaches far fewer households than network broadcasts. We view NASCAR’s decision to keep approximately two-thirds of its Sprint Cup Series event schedule on network television as important to the sport’s future growth. The structure should continue to drive increased fan and media awareness for all three racing series, which will help fuel our long-term attendance and corporate-related revenues. We also welcomed the re-establishment of the sport’s broadcast relationship with ESPN, which we believe results in further exposure for NASCAR racing. First, we believe the NASCAR Nationwide Series has and will continue to significantly benefit from the improved continuity of its season-long presence on ESPN. In addition, we believe the sport as a whole benefits from the increased ancillary programming and nightly and weekly NASCAR-branded programming and promotions, similar to what ESPN does with the other major sports. The most significant benefit of the new contracts is the substantial increase in earnings and cash flow visibility for the entire industry over the contract period. Television broadcast and ancillary rights fees from continuing operations received from NASCAR for the NASCAR Sprint Cup, Nationwide and Craftsman Truck series events conducted at our wholly-owned facilities under these agreements, and recorded as part of motorsports related revenue, were approximately $56.9 million and $69.6 million for the three months ended August 31, 2007 and 2008, respectively, and approximately $176.4 million and $191.8 million for the nine months ended August 31, 2007 and 2008, respectively.

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, Nationwide and Craftsman Truck series sanction agreements. NASCAR prize and point fund monies, as well as sanction fees (“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 25.0 percent of the gross domestic television broadcast rights fees allocated to our NASCAR Sprint Cup, Nationwide and Craftsman Truck series events, as part of prize and point fund money. These annually negotiated contractual amounts paid to NASCAR 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 decrease in the future as a percentage of admissions and motorsports related income. We anticipate any operating margin improvement to come primarily from economies of scale and controlling costs in areas such as motorsports related and general and administrative expenses.

Since we compete with newer entertainment venues for patrons and sponsors, we will continue to evaluate opportunities to enhance our facilities, thereby producing additional revenue opportunities and improving the event experience for our guests. Major examples of these efforts include:

	•		The infield renovation at Daytona International Speedway (“Daytona”) that was completed for the start of the 2005 racing season. The Sprint FANZONE features numerous fan amenities and unique revenue generating opportunities, including garage walk-through areas, additional merchandise and concessions vending areas, waterfront luxury recreational vehicle parking areas, a large tunnel to accommodate team haulers and guest recreational vehicles in and out of the infield and other special amenities such as the infield’s signature structure, the Daytona 500 Club. In fiscal 2008 we have completed additions to the Sprint FANZONE as well as improvements to Daytona’s infield road course;
	•		The fiscal 2005 renovation of Michigan International Speedway’s (“Michigan”) front stretch, including new ticket gates, new vendor and display areas, and several new concession stands, as well as the addition of club seats and luxury suites. In fiscal 2008 we are upgrading seating and sight lines in turn one;
	•		The fiscal 2006 renovations and expansions at the Auto Club Speedway (formerly The California Speedway), where we renovated and expanded the facility’s front midway area. The new plaza features a full-service outdoor café with cuisine by celebrity chef Wolfgang Puck, in addition to a town center, retail store and concert stage. Other highlights include shade features, modified entry gates, expanded hospitality areas, radio broadcast locations, giant video walls, leisure areas and grass and water accents. This project was the direct result of fan feedback, and further demonstrates our commitment to providing a premium entertainment environment for our guests. In fiscal 2008, we are adding escalators to improve traffic flow to suites and tower seats as well as adding other fan amenities;
	•		In fiscal 2006 we replaced approximately 14,000 grandstand seats behind turns three and four at Phoenix International Raceway (“Phoenix”) with upgraded grandstands and luxury suites behind turn one which provided improved sightlines and a more premium seating and suite experience for our fans. We also added a 100-person premier club called Octane atop the turn one grandstands, which provided guests with an elite setting to experience racing in style;
	•		We repaved Talladega Superspeedway’s (“Talladega”) 2.6 mile oval in fiscal 2006. Talladega’s racing surface had not been repaved since 1979, and we believe the newly paved racing surface enhanced the thrilling on-track competition;
	•		In fiscal 2007, in connection with the construction of the three-tiered grandstand at Richmond International Raceway (“Richmond”), we completed a 700-person, members only Torque Club for individual fans looking to enjoy a race weekend in style or businesses seeking to entertain clients. The Torque Club also serves as a unique site for special events on non-race weekends throughout the year. Escalators to improve traffic flow to the new Torque Club and grandstand are being added in fiscal 2008;

	•		In fiscal 2008, we installed track lighting at Chicagoland Speedway (“Chicagoland”) as well as improving certain electrical infrastructure in certain camping areas;
	•		In fiscal 2008, we repaved Darlington Raceway (“Darlington”) and constructed a tunnel which will give improved access to the infield;
	•		In fiscal 2008, we constructed a new media center at Watkins Glen International (“Watkins Glen”) which is expected to increase appeal to media content providers, sports journalists, racing team owners and drivers and others involved in the motorsports industry; and
	•		In fiscal 2008, we are constructing a new media center at Homestead-Miami Speedway (“Homestead”) which is expected to increase appeal to media content providers, sports journalists, racing team owners and drivers and others involved in the motorsports industry.

Our growth strategies include exploring ways to grow our businesses through acquisitions, developments and joint ventures. This has most recently been demonstrated through the acquisitions of the additional interests in Raceway Associates, LLC, owner and operator of Chicagoland and Route 66 Raceway, our Motorsports Authentics joint venture (see previous discussion of “Equity and Other Investments”) and our planned real estate development joint ventures with the Cordish Company (see “Daytona Live! Development” and “Kansas Hotel and Casino Development”).

Current Litigation

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.

In addition to such routine litigation incident to our business, we remain a party to the Kentucky Speedway litigation described in our annual report on Form 10-K for the fiscal year ended November 27, 2007. There have been no material changes from the information previously reported.

Postponement and/or Cancellation of Major Motorsports Events

The postponement or cancellation of one or more major motorsports events could adversely impact our future operating results. A postponement or cancellation could be caused by a number of factors, including, but not limited to, inclement weather, a widespread outbreak of a severe epidemiological crisis, a general postponement or cancellation of all major sporting events in this country (as occurred following the September 11, 2001 terrorist attacks), a terrorist attack at any mass gathering or fear of such an attack, conditions resulting from the war in Iraq or other acts or prospects of war.

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. For example, one of our NASCAR Sprint Cup races is traditionally held on the Sunday preceding Labor Day. Accordingly, the revenues and expenses for that race and/or the related supporting events may be recognized in either the fiscal quarter ending August 31 or the fiscal quarter ending November 30.

Future schedule changes as determined by NASCAR or other sanctioning bodies, as well as our request for event realignment or the acquisition of additional, or divestiture of existing, motorsports 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 and nine month periods ended August 31, 2007 and 2008 are not indicative of the results to be expected for the year.

Comparison of the Results for the Three and Nine Months Ended August 31, 2008 to the Results for the Three and Nine Months Ended August 31, 2007.

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								Nine Months Ended
		August 31,				August 31,				August 31,				August 31,
		2007				2008				2007				2008
		(Unaudited)
Revenues:
Admissions, net			32.2	%			29.4	%			31.3	%			29.6	%
Motorsports related			57.8				60.8				57.4				59.1
Food, beverage and merchandise			9.0				8.6				10.2				10.1
Other			1.0				1.2				1.1				1.2
Total revenues			100.0				100.0				100.0				100.0
Expenses:
Direct expenses:
Prize and point fund monies and NASCAR sanction fees			17.9				20.7				18.1				19.2
Motorsports related			23.7				23.9				20.5				21.5
Food, beverage and merchandise			5.4				5.4				6.0				6.2
General and administrative			16.0				13.0				16.1				14.4
Depreciation and amortization			12.2				8.4				11.2				9.0
Impairment on long-lived assets			0.1				0.0				1.6				0.3
Total expenses			75.3				71.4				73.5				70.6
Operating income			24.7				28.6				26.5				29.4
Interest income and other			0.7				0.2				0.7				(0.4	)
Interest expense			(2.1	)			(1.9	)			(2.1	)			(1.9	)
Equity in net (loss) income from equity investments			(8.8	)			(0.1	)			(3.9	)			0.8
Minority interest			0.0				0.1				0.0				0.0
Income from continuing operations before income taxes			14.5				26.9				21.2				27.9
Income taxes			9.6				8.7				9.9				10.5
Income from continuing operations			4.9				18.2				11.3				17.4
Loss from discontinued operations			0.0				0.0				0.0				0.0
Net income			4.9	%			18.2	%			11.3	%			17.4	%