Segment Reporting

6 Months Ended

May 31, 2019

The general nature of the Company’s business is a motorsports themed amusement enterprise, furnishing amusement to the public in the form of motorsports themed entertainment. The Company’s motorsports event operations consist principally of racing events at its major motorsports entertainment facilities. The reporting units within the motorsports segment portfolio are reviewed together as the nature of the products and services, the production processes used, the type or class of customer using our products and services, and the methods used to distribute our products or provide their services are consistent in objectives and principles, and predominately uniform and centralized throughout the Company. The consolidated industry domestic media rights contract, which continues through the 2024 NASCAR season, continues to be the single-largest contributor to the Company's earnings. These media rights are allocated to specific events, are not facility based, and are derived through a corporate contract, which affects all of the motorsports event facilities within the motorsports event segment. Similarly, corporate sponsorship partnership revenue is primarily derived from corporate contracts, negotiated by the Company's corporate sales team, and allocated to multiple, or all, motorsports entertainment facilities depending on the specific arrangement. Thus, the disclosure of these revenue streams, as they relate to each reporting unit, is not practical.

The Company’s remaining business units, which are comprised of the radio network production and syndication of numerous racing events and programs, non-motorsports events, certain souvenir merchandising operations not associated with the promotion of motorsports events at the Company’s facilities, construction management services, financing and licensing operations, equity investments and retail and commercial leasing operations are included in the “All Other” segment.

The Company evaluates financial performance of the business units on operating profit after allocation of corporate general and administrative (“G&A”) expenses. Corporate G&A expenses are allocated to business units based on each business unit’s net revenues to total net revenues.

The accounting policies of the segments are the same as those described in the summary of significant accounting policies. Intersegment sales are accounted for at prices comparable to unaffiliated customers. The following tables provide segment reporting of the Company for the three and six months ended May 31, 2018 and 2019, respectively (in thousands):



	Three Months Ended May 31, 2018
	Motorsports Event		All Other			Total
Revenues	$	158,674	$	13,548		$	172,222
Depreciation and amortization	25,062		1,797			26,859
Operating income (loss)	19,562		(2,305		)	17,257
Capital expenditures	46,946		9,791			56,737
Total assets	1,659,942		661,039			2,320,981
Equity investments	—		85,234			85,234
	Three Months Ended May 31, 2019
	Motorsports Event		All Other			Total
Revenues	$	160,469	$	8,211		$	168,680
Depreciation and amortization	26,674		2,135			28,809
Operating income (loss)	16,212		(709		)	15,503
Capital expenditures	14,258		3,295			17,553
Total assets	1,669,376		652,152			2,321,528
Equity investments	—		82,018			82,018
	Six Months Ended May 31, 2018
	Motorsports Event		All Other			Total
Revenues	$	302,452	$	19,010		$	321,462
Depreciation and amortization	50,230		3,368			53,598
Operating income (loss)	53,984		(4,233		)	49,751
Capital expenditures	50,681		14,338			65,019
	Six Months Ended May 31, 2019
	Motorsports Event		All Other			Total
Revenues	$	305,402	$	14,168		$	319,570
Depreciation and amortization	54,066		4,002			58,068
Operating income (loss)	43,677		(2,645		)	41,032
Capital expenditures	32,444		10,118			42,562

Intersegment revenues were approximately $0.5 million and $0.6 million for the three months ended May 31, 2018 and 2019, respectively, and approximately $0.9 million and $0.9 million for the six months ended May 31, 2018 and 2019, respectively.

During the three and six months ended May 31, 2019, revenues in the Motorsports Event segment included approximately $5.0 million and $6.9 million, respectively related to Racing Electronics, for which there was no comparable activity in the same periods of the prior year.

During the three and six months ended May 31, 2019, revenues in the All Other segment have decreased by approximately $5.3 million and $4.8 million, respectively, as compared to the same periods in the prior year. The decrease in the current three and six month periods is predominantly related to the Country 500 music festival at Daytona event not occurring in fiscal 2019 offset by lease revenue from ONE DAYTONA, as new tenants opened during fiscal 2019.

Capital expenditures related to the All Other segment decreased approximately $6.5 million for the three months ended May 31, 2019, and approximately $4.2 million for the six months ended May 31, 2019, as compared to the same periods in the prior year. The decrease is substantially related to the construction activity at The Shoppes at ONE DAYTONA.

During the six months ended May 31, 2019, the Company recognized approximately $0.9 million, of accelerated depreciation, due to shortening the service lives of certain assets associated with the infield project at Talladega. The Company did not recognize any accelerated depreciation during the three months ended May 31, 2019. During the three and six months ended May 31, 2018, the Company recognized approximately $0.3 million and $1.2 million, respectively of accelerated depreciation due to shortening the service lives of certain assets, associated with The ISM Raceway Project and the infield project at Richmond.

During the three and six months ended May 31, 2019, the Company recognized approximately $0.5 million and $0.8 million, respectively, of asset retirement losses attributable to demolition and/or asset relocation costs in connection with the infield project at Talladega. During the three and six months ended May 31, 2018, the Company recognized approximately $0.1 million and $1.2 million, respectively, of similar costs associated with ONE DAYTONA, facility optimization initiatives, and other capital improvements including the infield project at Richmond.