out in front of motorsports...

OUT IN FRONT OF MOTORSPORTS ENTERTAINMENT

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06

Driven by a Dream

He was able to break ground with the help of investors, and in 1959,

that dream became a reality with the opening of Daytona International

Speedway. Much has changed since then.

In fiscal 2007, we celebrated the 49th running of The Great American

Race, the Daytona 500. For nearly half a century, we have promoted

racing on the high banks of Daytona International Speedway. Since the

first green flag in 1959, our Company has embarked on a long and

successful path of growth to become a leader in motorsports entertainment.

Complementing the vision of Big Bill was the steady hand of his wife,

Anne B. France, who ensured the company remained on solid financial

footing. Both Big Bill and Anne established the foundation upon which the

following generations of the France family would build the great American

success story. Beginning with a dream of a single superspeedway

in Florida, ISC has evolved into a preeminent leader in motorsports

entertainment with 13 major motorsports facilities in key markets across the

country. The company also boasts significant breadth of assets to provide

fans and corporate partners with a positive experience, and keep them

returning year after year.

INTERNATIONAL SPEEDWAY CORPORATION 1

In 1957, “Big” Bill France’s innovative vision of a superspeedway capable of hosting the country’s most premier auto races began to take shape.

Letter to Shareholders . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3

Selected Financial Data . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25

Management’s Discussion and Analysis of Financial Condition and

Results of Operations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26

Consolidated Financial Statements. . . . . . . . . . . . . . . . . . . . . . . . 42

Notes to Consolidated Financial Statements. . . . . . . . . . . . . . . . . . . 46

Reports of Independent Registered Public Accounting Firm . . . . . . . . . . . 68

Report of Management on Internal Control

Over Financial Reporting . . . . . . . . . . . . . . . . . . . . . . . . . . . 70

Market Price of and Dividends on Registrant’s Common Equity

and Related Stockholder Matters . . . . . . . . . . . . . . . . . . . . . . 71

Other Corporate Officers . . . . . . . . . . . . . . . . . . . . . . . . . . . . 72

Board of Directors . . . . . . . . . . . . . . . . . . . . . . . Inside Back Cover

Table of Contents

Driven by a Dream

He was able to break ground with the help of investors, and in 1959,

that dream became a reality with the opening of Daytona International

Speedway. Much has changed since then.

In fiscal 2007, we celebrated the 49th running of The Great American

Race, the Daytona 500. For nearly half a century, we have promoted

racing on the high banks of Daytona International Speedway. Since the

first green flag in 1959, our Company has embarked on a long and

successful path of growth to become a leader in motorsports entertainment.

Complementing the vision of Big Bill was the steady hand of his wife,

Anne B. France, who ensured the company remained on solid financial

footing. Both Big Bill and Anne established the foundation upon which the

following generations of the France family would build the great American

success story. Beginning with a dream of a single superspeedway

in Florida, ISC has evolved into a preeminent leader in motorsports

entertainment with 13 major motorsports facilities in key markets across the

country. The company also boasts significant breadth of assets to provide

fans and corporate partners with a positive experience, and keep them

returning year after year.

INTERNATIONALSPEEDWAYCORPORATION 1

In 1957, “Big” Bill France’s innovative vision of a superspeedway capable of hosting the country’s most premier auto races began to take shape.

2 | 3 INTERNATIONALSPEEDWAYCORPORATION

William C. France,ChairmanoftheBoardLesa France Kennedy,PresidentJames C. France,ChiefExecutiveOfficer

of NEXTEL Cup sell-outs, demonstrating the broad

popularity of that facility. Other significant highlights

for the year included the earliest sell-out in Darlington

Raceway’s history, which is even more compelling

given the addition of 3,000 grandstand seats for

the 2006 race weekend. In addition, Talladega

Superspeedway hosted a thrilling inaugural NASCAR

Craftsman Truck race on its newly-paved racing

surface, and recorded 63 lead changes among 23

drivers before a near-capacity crowd for the NEXTEL

Cup UAW-Ford 500. Finally, the NEXTEL Cup Ford

400 at Homestead-Miami Speedway sold out nearly

five months in advance. More than 4,000 temporary

seats were added to the facility to help meet demand,

and this additional capacity was also sold. We

expect the solid momentum in consumer demand to

continue into 2007.

In certain markets in 2006, however, regional

economic conditions and weather impacted

short-term results. For example, economic weakness

in Michigan affected Michigan International

Speedway’s events. In addition, challenging weather

trends in recent years impacted Daytona International

Speedway’s summer NEXTEL Cup event weekend

in 2006. We are addressing these issues through

more aggressive consumer marketing to new and

former customers, expanding our marketing reach to

a broader footprint, and continuing to improve the fan

experience at these facilities.

The record results were driven by double-digit increases

in television broadcast rights revenue and corporate

spending for our events, providing further evidence that

ISC is the partner of choice for corporate sponsors.

Also fueling the full year financial results of 2006 was

solid consumer demand for our major races.

From an industry perspective, 2006 was another

strong year for NASCAR racing and we believe

the stage is set for continued future success. While

television results for the NASCAR NEXTEL Cup and

Busch series experienced some softness, it is important

to note that 2006 television results for the NEXTEL Cup

are comparable to 2004, and the Busch Series posted

a 13 percent increase over 2004. The sport remains a

very strong television property and is well positioned

to reach new heights in the coming years. Moreover,

several new developments expected to occur in 2007

will further propel fan and media awareness, including

new television partners such as ABC/ESPN, the entry

of Toyota into the NEXTEL Cup and Busch series, the

introduction of the Car of Tomorrow, the return of top

tier NASCAR racing to Canada, and an expanded

field for the Chase for the NASCAR NEXTEL Cup to

twelve drivers. We remain very bullish for the future of

NASCAR racing in North America.

The 2006 race season kicked off with a highly

successful Speedweeks, featuring the earliest sell-out

for the Daytona 500 in several years. Richmond

International Raceway continued its long track-record

Dear ISC Shareholder,Fiscal 2006 marked a year of significant accomplishments for International Speedway Corporation (“ISC” or the “Company”). We once again posted record full-year financial results, highlighted by an eight percent growth in revenue.

The weekend will feature exciting on-track competition

from the NASCAR Busch Series and Grand-Am Rolex

Sports Car Series presented by Crown Royal Special

Reserve. Montreal has a long and rich racing tradition

and is a key market for major motorsports. We are

very excited to partner with such a proven operator as

GMI, who also successfully promotes the Canadian

Formula One event, and look forward to a long and

fruitful relationship.

Later in 2006, we announced an agreement to

acquire an additional 37.5 percent of Raceway

Associates LLC, owner and operator of Chicagoland

Speedway and Route 66 Raceway, from Indianapolis

Motor Speedway Corp. ISC also initiated its call rights

to acquire the remaining minority stake and take full

ownership of both facilities. Chicagoland Speedway is

a highly attractive asset and will effectively complement

our portfolio of premier motorsports facilities. We

expect to build upon the prior successes of the facility

to enhance the fan experience through prudent

investments, and drive incremental value by leveraging

our corporate relationships.

The Company continued to make progress on its

development efforts in Washington state in fiscal 2006.

ISC representatives met with local and state elected

ISC continued to successfully grow its corporate

sponsorship and hospitality revenue in 2006. The

Company capitalized on major multi-year partnerships

with well known brands such as Anheuser-Busch, Bank

of America and Crown Royal, to name a few. Industry

research shows that the average NASCAR fan is three

times more likely to purchase or try sponsors’ goods

and services than a non-fan. Even more compelling,

race-attending NASCAR fans are twice as likely as

average fans to purchase or try sponsors’ goods and

services. Our nationwide portfolio of premier facilities,

hosting events in nearly every month of the racing

season, provides sponsors with year-long visibility and

access to the “sweet spot” of the NASCAR fan base.

In addition, we incorporate our integrated media

properties, such as MRN Radio, NEXTEL Vision, ISC

Publications and RacingOne.com/RacingUno.com, to

allow our partners to effectively reach consumers with

targeted marketing communications.

During 2006, we continued to position the company

for future growth by capitalizing on several external

opportunities. First, ISC announced its initial entry into

the international market by partnering with Groupe

Motorisé International to host and promote an event

weekend in Montreal, Quebec, beginning in 2007.


consumer and corporate marketing initiatives to

generate long-term revenue growth. In addition, we

will continue our strategy of prudent capital investments

in our existing facilities to further enhance the guest

experience and generate incremental revenue for

the Company. For fiscal 2007, we have announced

significant club and seat additions at Richmond, and

seat enhancements and new specialty vehicle parking

areas at Michigan International Speedway.

Lastly, we will continue to explore external growth

opportunities that complement our business and help

drive additional shareholder value. In addition to our

external development efforts, we look forward to a

successful coming year with Motorsports Authentics,

our licensing and merchandising joint venture with

Speedway Motorsports. We expect the joint venture to

become profitable in 2007 and positively contribute to

our full year results.

From an industry perspective, in addition to the

entry of Toyota into NEXTEL Cup and Busch racing and

introduction of NASCAR’s Car of Tomorrow, the 2007

race season marks the beginning of NASCAR’s eight

year domestic broadcast rights agreement with FOX,

ABC/ESPN and TNT. These significant $4.5 billion

relationships represent a 40 percent increase in the

average annual rights fees, providing long-term revenue

and cash flow visibility. More importantly, 2007 marks

the return of ABC/ESPN to NASCAR racing. ESPN

helped propel the sport into the mainstream throughout

the 1980s and 1990s, and we believe its return will

further establish the sport as an American phenomenon.

We anticipate another strong year for ISC as

we continue to execute our proven business plan to

enhance long-term shareholder value.

officials, and generated significant grassroots support

for the proposed motorsports and multi-use recreational

facility in Kitsap County. Most recently, Washington

State Lt. Governor Brad Owen, a strong supporter of

the project, requested legislation that was introduced

into the 2007 session. We look forward to successfully

proceeding through the hearings and receiving

approval later this year.

In addition to our efforts in the Pacific Northwest,

we recently announced our intention to evaluate the

possibility of a public-private partnership to develop

a motorsports entertainment facility in the Denver

metropolitan area. As a top-20 media market and

home to a significant number of fans, we view the

greater Denver region as a logical location for the sport

to expand, and we look forward to working closely with

the local communities over the coming months.

In New York, while we are disappointed that we

could not proceed with our speedway development

effort on Staten Island, we remain committed to

developing a speedway in the metropolitan New

York area. We believe a premier facility in the nation’s

number one media market, as well as NASCAR’s

second largest television viewing market, is a significant

long-term opportunity for the Company. Therefore, we

will continue our efforts to identify a suitable location

for a future development in the region. Concurrently,

we expect to continue to conduct fill work on our

676 acres on Staten Island, as we explore the best

alternative strategy for the acreage including selling a

portion or all of the property, or potentially developing

the acreage with a third party.

Looking ahead, ISC remains well positioned to

leverage its core assets to help drive the future success

of major motorsports. We have implemented strategic

Thank you for your continued support and we’ll see you at the races!

2007 marks the beginning of NASCAR’s new

combined eight-year domestic television broadcast

rights agreements with FOX, TNT, and ABC/ESPN.

These important $4.5 billion agreements will further

establish NASCAR racing in the American sports

mainstream. From a track operator perspective, the

new agreement provides significant cash flow visibility

and represents a 40 percent increase over the

average annual rights fee of the prior agreements.

At the industry level, the new agreements will help

further drive the sport’s popularity and expand its

reach to new fans across the country.

Strong Industry Momentum2006 was a successful year from an industry perspective and the sport’s momentum remains strong. Looking ahead to 2007, several upcoming developments are expected to help further raise NASCAR racing’s profile to fans and media.


sports, ESPN will support its role through increased

racing-themed programming throughout the week and

broader coverage in its weekly news programming. In

addition, ESPN2 will broadcast substantially all of the

NASCAR Busch Series, providing that growing series

with the continuity and promotional support that will

allow it to flourish.

Other significant developments include NASCAR’s

introduction of the Car of Tomorrow at 16 NASCAR

NEXTEL Cup Series events beginning in 2007, as well

as the return of top tier NASCAR racing to Canada.

The Car of Tomorrow is designed to provide the

most technologically advanced safety enhancements

for competitors. Driver safety is in the forefront of

NASCAR’s initiatives, and the Car of Tomorrow is

the culmination of years of research. In addition, the

Car of Tomorrow is designed to enhance competition

by enabling more passing and side-by-side racing.

Also, the new vehicles are designed in a manner that

will ultimately result in cost efficiencies for race teams,

allowing more teams to effectively compete at the

highest level of motorsports.

Daytona International Speedway is the home of “The Great American Race”—the Daytona 500—NASCAR’s biggest, richest and most

prestigious race in America and NASCAR’s Pepsi 400—the Mid-Summer Spectacular under the lights. Daytona boasts the most diverse schedule

of racing on the globe—from stock cars, sports cars, go karts and motorcycles—earning it the title of “World Center of Racing.”

FOX and TNT have been strong supporters of

NASCAR racing since 2001, and both have played a

major role in the sports’ meteoric climb in popularity.

We expect to see ongoing broadcast innovation

in their coverage as they continue to air NASCAR

racing events.

Even more notable for 2007 is the return of ESPN

to the sport, which it helped build throughout the

1980s and 1990s. Toward the close of the 2006

season, there was a marked increase in coverage

of NASCAR racing on ESPN, including special,

racing-themed programming. It is expected that, as

the network has done with the NFL and other major

The 2007 staging of the NASCAR Busch Series in

Montreal marks the return of top division NASCAR

competition to Canada. This is an important part of

NASCAR’s initiative to grow awareness throughout

North America and further integrates NASCAR into

the Canadian motorsports landscape.

Lastly, several new entries into the sport will surely

have an immediate positive impact on its profile.

First, Toyota will make its debut in the NASCAR

NEXTEL Cup and Busch series in 2007. Toyota

Racing Development has a long history of successfully

competing among the world’s top tiers of motorsports,

having recently completed its third year competing

in the NASCAR Craftsman Truck Series by

collecting 12 wins, 15 pole positions and the series


Located just 45 miles east of downtown Los Angeles, California Speedway hosts two NASCAR NEXTEL Cup events annually and offers the ultimate fan experience with the new, multi-million dollar Opportunity, California FanZone featuring the Apex restaurant by Wolfgang Puck, the Impulse retail store, an entertainment stage and the Motorola Town Center.

championship with Todd Bodine. Toyota will bring that

expertise and track-record to the most popular form of

motorsports in the U.S. Toyota has aligned itself with

some popular drivers and teams in the NEXTEL Cup

and Busch series, and will support its role through

significant promotion and advertising, further raising

awareness among fans and media.

In addition, several well-known drivers from other

major racing series will now compete at the highest

level of stock car racing, including Formula One star

and former Indy 500 Champion Juan Pablo Montoya

and former open wheel star A. J. Almendinger. These

drivers have a significant fan following, and their

progress will be closely watched over the coming year.

Corporate sponsorship and hospitality revenues

achieved a double-digit increase in 2006, driven by

major multi-year partnerships with such well known

names as Anheuser-Busch, Bank of America, Crown

Royal, Elizabeth Arden and Tissot.

ISC has become the partner of choice for corporate

sponsors looking to enter or further capitalize on the

business-building opportunities and properties in the

motorsports industry. We deliver premier facilities and

events all year long, from the season-opening Daytona

500 to season finale Ford 400 at Homestead-Miami

Speedway. We host more than half of the NASCAR

NEXTEL Cup schedule, including five of the ten races

in the NEXTEL Cup Chase for the Championship. ISC

also boasts a nationwide reach, providing partners

Continued Strength in Corporate MarketingCorporate sponsorship and hospitality are expected to be among our fastest growing revenue streams over the next few years.We intend to continue maximizing these revenues by leveraging our assets, facilities, media properties, business operations and intellectual property to further drive corporate sales.


In six short years of existence, this state-of-the-art facility is already home to some of the most exciting moments in motorsports history. Chicagoland Speedway continues to transform into a place where the energy is powerful and the power is unforgettable—fueling the ride of a lifetime.

sponsorship and hospitality revenue by providing

customized marketing platforms designed to meet the

objectives of our individual marketing partners. Official

status relationships will remain as an area of significant

growth in the coming years. In 2006, approximately

50 percent of our total gross sponsorship revenue was

driven from multi-year official status agreements, and

this is expected to continue growing as businesses

look to establish a broader presence in the industry.

In addition, we will continue to identify and leverage

marketing opportunities across our physical assets,

including newly renovated or constructed amenities, to

provide innovative and unique marketing platforms, such

as the Opportunity, California FanZone at California

Speedway and the NEXTEL FanZone at Daytona.

with access to 13 major facilities across the country,

including five of the top 11 media markets. In fact,

80 percent of the U.S. population resides within a

400-mile radius of our facilities.

In addition to events and facilities, ISC possesses

significant breadth of assets including various media

assets, intellectual property and operational support

services to deliver a full suite of turn-key solutions for

fully-integrated media and marketing platforms. We

help our partners effectively reach potential consumers

and generate tangible returns on their investment.

Also, our assets afford us the flexibility to tailor

sponsorship programs for any size company, from

regional businesses to Fortune 500 corporations.

For 2007 and beyond, we will continue to grow

In addition to identifying new areas for promotion,

we place significant resources in working closely with

our existing partners. Our partnership management

group is a leader in the industry. They not only provide

the critical account support necessary to maintain good

client relationships, but they also provide significant

strategic value by identifying potential opportunities

for more effective promotion to better meet our clients’

objectives. Partnership management representatives are

integral members of our partners’ marketing teams, and

we will continue to build upon their success.

As mentioned earlier, ISC possesses significant media

properties including MRN Radio, ISC Publications,

NEXTEL Vision, RacingOne.com/RacingUno.com

and others. Collectively, these properties can be

incorporated into sponsor relationships to provide

targeted advertising and marketing communications

leading up to and during an event. Sponsors can

leverage these assets to complement their position

through production services, media activation and

promotion. Over the past few years, we have taken


Having sold out 30 (and counting) consecutive NASCAR NEXTEL Cup Series races, Richmond International Raceway—America’s Premier Short Track—is perhaps the most universally loved track among fans, drivers, team owners and the media. Richmond is the only track to hold all of its major events “under the lights.”

a more integrated solutions approach to consolidate

and continue to build our media channels and

syndication of content to further expand the sport’s

reach, while building various ISC brands and those of

our partners.

Corporate sponsors view ISC as an efficient and

effective marketing tool for their business. Boasting

the largest base of corporate marketing partners in

the sport, we also facilitate business to business and

cross promotional opportunities between partners to

maximize the reach and efficiency of their programs.

First, we are employing traditional brand

management techniques across all our speedway

properties and businesses. Each of our facilities

is unique geographically as well as in the style of

racing, its placement on the race schedule, and

whether it is a night or day race. They deliver a

one-of-a-kind experience for guests and competitors,

We expect this momentum to continue into fiscal

2007 and beyond, as the sport enters new markets

and attracts additional fans.

As the fan base continues to grow, its needs and

expectations become more diversified. Therefore, we

continually invest capital and resources to meet these

changing expectations. We want guests to have a

positive and memorable experience from the moment

they purchase their ticket to the time they return home.

Doing so will increase renewals, help drive advanced

sales and increase attendance-related revenue for our

non-sold-out events. As such, we have implemented

innovative and integrated consumer marketing

strategies that span several results-oriented initiatives.

Innovative Consumer MarketingRace fans are the foundation of our business. Consumer demand remained strong during fiscal 2006, beginning with the earliest sell-out of the Daytona 500 in several years and ending with a five-month advanced sell-out for the Ford 400 NASCAR NEXTEL Cup Series finale at Homestead-Miami Speedway.


Over the last several years, we have made

significant investments in proprietary technology

designed to improve consumer communication and

interaction, and enhance the sales process. These

investments have generated solid results. For example,

our contact center and internet ticket sales account for

nearly half of all ticket sales for 2006, compared to

only 25 percent in 2003, the first year the call center

was placed in service. In addition, during the past

year we implemented new technologies, including

speech recognition capabilities and targeted out-

bound calling featuring the voice of popular drivers,

which have resulted in up- and cross-sell opportunities.

Looking ahead, we will continue to maximize the

utilization of our existing assets and technology, while

continuing to solicit consumer feedback and conduct

market research to further understand and meet the

needs of fans.

and we expect to leverage that uniqueness to build

a connection with fans and further drive consumer

demand. In addition, we will continue to incorporate

our collective media properties to help further

establish a sense of community within our fan base.

These media channels and their content provide

consumers with easily accessible, up-to-date facility

and event information as well as the latest news and

developments in the sport.

Since 1969, Talladega Superspeedway has set the standard among race fans as the destination that delivers entertainment value rivaled by none, on and off the track. Thousands of loyal fans return each year to witness the most competitive racing on the NASCAR circuit.

In addition, multi-cultural marketing initiatives are

critical for us to gain a greater share of the rapidly

growing segments of our fan base. ISC facilities are

located in or near key markets such as Los Angeles,

Miami, Phoenix, Chicago and Washington, D.C.,

and we have initiated programs to reach out to

diverse race fans in these communities. Our efforts

complement NASCAR’s Drive for Diversity initiatives,

helping bring the sport of NASCAR racing to a

broader audience and to ultimately have its fan base

more closely resemble the overall U.S. population.

We also continue to leverage cross-promotional

programs and opportunities with our marketing

partners to reach consumers through non-traditional

channels. In 2006, we partnered with UPS for a ticket

promotion to five ISC facilities, which was sent to their

employee base of more than 340,000 people. Over

the coming year we will partner with such well-known

brands as AAA, Checkers/Rally’s, and Pepsi for

promotional programs designed to reach a broader

universe of consumers and build event awareness.


Ongoing investment of capital into our existing

facilities to enhance fan amenities is critical to

meeting the needs of our guests, and also generates

incremental revenue growth. Projects for 2006

included renovated suites and seats at Phoenix

International Raceway, with a very successful high-end

club that caters to fans desiring a more exclusive

and premium race experience. We also redesigned

the midway area at California Speedway, called

Opportunity, California FanZone, which includes

a high-end bistro, Apex by Wolfgang Puck. Fan

response was overwhelmingly positive, as guests

enjoyed the celebrity chef’s signature cuisine. Lastly,

we constructed additional grandstand seating at

Darlington Raceway, including better sight lines

and more comfortable seats. The facility posted

its earliest sell-out in history including the

increased capacity.

The spectacle of an event at Michigan International Speedway creates indelible

images and memories that will last a lifetime. Located in the automotive manufacturing capital of the world, Michigan embodies

America’s love for cars, speed, and competition.

For the coming year, we are building a new

grandstand and club seat section at Richmond

International Raceway that will result in a net addition

of nearly 5,000 seats. Construction is also currently

underway at Michigan International Speedway to

improve seating and add a new specialty vehicle

parking area near pit road, and at California

Speedway to improve sight lines of the back stretch

for race fans.

In addition to facility upgrades, we continue to

improve the experience for fans departing our events.

We have partnered with Gameday Management,

a national transportation specialist, and with local

transportation officials to improve ingress and egress

at a number of our facilities around the country.

In 2006, travel time for fans exiting our NASCAR

NEXTEL Cup event in Michigan decreased nearly

30 percent from the facility’s June event. In addition,

at California Speedway’s SONY HD 500,

post-race traffic cleared and returned to normal in

just slightly over two hours, significantly quicker than

prior events. We continue to work more closely with

our local communities and external resources to

explore additional opportunities to enhance the

fan experience.

The NASCAR NEXTEL Cup Series will enter its 20th year of navigating the tricky backstretch dogleg of Phoenix

International Raceway in 2007. Since 1988, drivers have called the one-mile oval in the desert a great track for the challenge it presents to all cars that take the green flag.

Indianapolis Motor Speedway Corp. and exercising

its option to call the minority partners’ 25 percent

share. Located in the nation’s third largest media

market, Chicagoland Speedway will make a significant

immediate and long-term contribution to our portfolio.

We believe there are potential opportunities for

increased revenue through the addition of enhanced

fan amenities, club seating, fan zones, and other unique

experiences. Also, as has occurred with other facilities,

we will leverage our relationships with corporate

partners to drive incremental value to that facility.

Our development efforts continue to make progress

in the state of Washington. During the past year we

have conducted outreach to build awareness and

generate support both at the state and local levels.

These efforts have generated significant results as over

350 local business and 50 community organizations

have endorsed the project. In addition, we boast a

database of over 35,000 resident supporters in favor

In 2006, ISC entered into a limited partnership

with Groupe Motorisé International to market and

host certain events at the Circuit Gilles Villeneuve

in Montreal, Quebec, beginning in 2007. The race

weekend is scheduled for early August 2007 and

includes the NASCAR Busch Series and the Grand-Am

Rolex Sports Car Series Presented by Crown Royal.

With nearly six million adult NASCAR fans throughout

Canada, this opportunity complements our strategy

of positioning our events in key markets. In addition,

we are very proud to have partnered with such an

experienced promoter as GMI. They have successfully

hosted many racing events over the years, and have

owned the exclusive promotion rights to the Formula

One Canadian Grand Prix since 1996.

In February 2007, ISC closed on the purchase

of Raceway Associates LLC, owner and operator of

Chicagoland Speedway and Route 66 Raceway, by

purchasing an additional 37.5 percent interest from

Expanding the Fan BaseNew market penetration further expands the sport’s following and creates opportunities for future growth.


further discussion with the various local communities

concerning this important opportunity during the

coming year.

We continue our search for a potential speedway

development site in the metropolitan New York City

area. While we were disappointed we could not

proceed with the Staten Island location, we continue

to believe that a premier motorsports facility in the

nation’s top media market is an important strategic and

operational opportunity for ISC.

Fill work on the 676 acres the Company owns on

Staten Island will continue through 2008 and we

have begun to research and develop market demand

studies to assist in our evaluation of various alternative

strategies. These alternatives include selling the property

in whole or in parts, or potentially developing the

property with a third party for a non-speedway use.

As the property is the largest tract of undeveloped

acreage in the five boroughs of New York City, we

believe the property will be attractive to a number of

developers and users in the market.

Located in the heartland of the country, Kansas Speedway has become a fan

favorite for outstanding competition and a fan-friendly atmosphere. On a NASCAR

NEXTEL Cup Series weekend, Kansas Speedway is the fourth largest city in the

state of Kansas.

With its friendly staff and South Florida’s sunny weather, Homestead-Miami Speedway is the perfect destination for fast-paced fun. Excitement begins at Homestead-Miami each year with the first race of the IndyCar Series season and culminates with the season finales for all three national NASCAR series.

of a motorsports and multi-use recreational facility

in Kitsap County, Washington. The necessary

legislation to create the financing vehicle has been

introduced into the state legislature as a request bill

from Lt. Governor Brad Owen. We look forward to

successfully completing the legislative process with an

eye toward racing in 2011.

In addition, we are evaluating two separate sites for

the development of a motorsports entertainment facility

near Denver International Airport. Many racing fans live

in metropolitan Denver, and its media market rank of

18th largest in the country makes it attractive to potential

corporate partners. Similar to our effort in the Pacific

Northwest, we believe a public-private partnership will

result in a win-win for all involved, and look forward to

Several ISC subsidiaries were primarily established

to enhance the fan experience during racing events.

However, as these business units have evolved and

grown, so have the potential opportunities to drive

additional revenue and earnings growth for ISC. In

addition, the Company possesses significant assets,

which can be leveraged to drive additional value for

shareholders and contribute to our overall success.

MRN Radio had another successful year in 2006.

The country’s largest independent sports radio

network continued to expand its presence and bring

motorsports to new fans throughout the country. As part

of its agreement to become the Official Satellite Radio

of NASCAR beginning in 2007, Sirius Satellite Radio

has partnered with MRN Radio for race content and

production services. In addition, MRN Radio signed a

major five year agreement with ESPN Deportes Radio

Growth of Ancillary BusinessesWe continue to leverage our core expertise and significant assets to capitalize on additional growth opportunities for the Company.


for the production of certain programming beginning

in the 2007 race season. This groundbreaking

partnership complements our multi-cultural marketing

initiatives by expanding NASCAR racing’s reach into

the U.S. Hispanic community.

Americrown, our catering, concessions and

merchandising subsidiary, continues to contribute to the

overall success of the Company. This was particularly

true in 2006 as a result of Americrown’s initiatives to

streamline operations, thereby increasing revenues and

lowering costs. The subsidiary will continue to explore

opportunities to leverage its existing assets to drive

revenue and profitability. Americrown remains focused

on providing fans with the highest quality products,

both in concessions and merchandise, in a fan-friendly

shopping environment. In addition, Americrown is

committed to providing top-notch quality catering

service and offering a flexible and high-end line of

cuisine options for our club level and luxury suite guests.

The overall fan experience is paramount to our success,

and Americrown is a key contributor to that goal.

Martinsville Speedway celebrates its 60th anniversary this season, but the years haven’t slowed the track that brings new meaning to

“contact sports.” It remains one of the toughest tracks for drivers to navigate, making it a fan

favorite year after year.

2006 marked an important first year for Motorsports

Authentics, our 50/50 joint venture with Speedway

Motorsports, as the company made significant progress

in its strategy to create an environment that drives future

profitability. Moving forward, Motorsports Authentics

plans to further improve and expand distribution

channels and enhance its product offering, including

more differentiated lines of merchandise to increase

consumer appeal. We believe significant opportunities

exist in licensed merchandise and apparel sales for

NASCAR racing, and expect Motorsports Authentics to

be a long-term contributor to ISC’s bottom line.


Watkins Glen International, considered

‘The Soul of American Road Racing’, is a

permanent road course that hosted the United

States Grand Prix from 1961-1980 and for the 21st year continues to

host the NASCAR NEXTEL Cup Series each August.

Finally, we continue to evaluate opportunities to

maximize the value of our significant land assets. In

Daytona Beach, we are pursuing a potential mixed-

use development on the approximately 71 acres

we currently own across from Daytona International

Speedway. In addition to replacing our corporate

headquarters, we believe an entertainment and

destination-style development will successfully

complement the speedway and offer visitors a unique

and exciting experience unlike any in the area. We

will also continue to acquire land in and around our

facilities to capitalize on future capital projects such as

facility expansion or amenity enhancements.

2007 will mark NASCAR’s 58th consecutive year of competition at the legendary Darlington Raceway, best-known for her unique configuration. A last-minute change during the construction process resulted in a track that is egg-shaped rather than oval, eventually giving birth to her famous nickname—the track “Too Tough To Tame.”

Seattle

New York City

The Company continues to have a strong financial

position and enjoys significant visibility of its future

operating results. We will continue to evaluate our

capital allocation strategy and, as appropriate, return

capital to shareholders. Combined with the successful

execution of our sound business plan, we believe

this strategy reflects a balanced approach that will

enhance shareholder value and further position the

Company for long-term success.

Looking toward the future, we will continue to build

upon those same principles to maximize revenue

from our existing businesses, while leveraging our

expertise to identify additional growth opportunities.

We continue to be bullish on the future of major

motorsports in North America, particularly NASCAR

racing, and we are uniquely positioned to help

the industry move forward and capitalize on its

continued success.

Poised for Successful Future ISC’s outstanding track record of growth has resulted from successful execution of our sound business plan, which was built upon strong fundamentals and financial acumen.


Denver

External Expansion Opportunities

(1) ReflectstheaccountingfordiscontinuedoperationsofNorthCarolinaSpeedway(“NorthCarolina”),whichwassoldonJuly1,2004,andNazarethSpeedway(“Nazareth”)whichiscurrentlyheldforsale.Thelossfromdiscontinuedoperationsinfiscal2002includestheadoptionofStatementofFinancialAccountingStandard(“SFAS”)No.142,whichresultedinanon-cashafter-taxchargeofapproximately$64.0million.Thelossfromdiscontinuedoperationsinfiscal2004includesthenon-cashafter-taximpairmentofNazareth’slong-livedassetsofapproximately$8.6million.Thediscontinuedoperationsinfiscal2005includesthesubsequentnon-cashafter-taxwrite-upofcertaingrandstandassetsatNazareth,whichwererelocatedtoandusedatDarlingtonRaceway(“Darlington”)infiscal2006,ofapproximately$471,000.

(2) ReflectstheadoptionofSFASNo.142,whichresultedinanon-cashafter-taxchargeofapproximately$453.2millioninthefirstquarteroffiscal2002.Includedinthischargeisapproximately$3.4millionassociatedwithourequityinvestmentinRacewayAssociates,LLC(“RacewayAssociates”).

FortheYearEndedNovember30, 2002 2003 2004 2005 2006 (InThousands,ExceptPerShareData)

SelectedFinancialDataThefollowingtablesetsforthourselectedfinancialdataasofandforeachofthelastfivefiscalyearsintheperiodendedNovember30,2006.Youshouldreadtheselectedfinancialdatasetforthbelowinconjunctionwith“Management’sDiscussionandAnalysisofFinancialConditionandResultsofOperations”andourconsolidatedfinancialstatementsandtheaccompanyingnotesincludedelsewhereinthisreport.

IncomeStatementData: Revenues: Admissions,net $ 205,754 $ 203,699 $ 222,545 $ 234,768 $ 235,251 Motorsportsrelated 241,666 265,209 334,943 408,514 466,095 Food,beverageandmerchandise 69,516 74,075 83,236 87,269 87,288 Other 7,230 6,072 7,124 9,578 9,735 Totalrevenues 524,166 549,055 647,848 740,129 798,369 Expenses: Direct: PrizeandpointfundmoniesandNASCARsanctionfees 87,388 96,882 119,322 136,816 151,203 Motorsportsrelated 94,375 97,771 113,073 134,395 144,445 Food,beverageandmerchandise 37,614 41,467 52,285 56,773 53,141 Generalandadministrative 76,266 82,403 90,307 95,987 106,497 Depreciationandamortization 38,184 40,860 44,443 50,893 56,833 Impairmentoflong-livedassets - - - - 87,084 Homestead-MiamiSpeedwaytrackreconfiguration - 2,829 - - - Totalexpenses 333,827 362,212 419,430 474,864 599,203 Operatingincome 190,339 186,843 228,418 265,265 199,166 Interestincome 1,187 1,789 4,053 4,860 5,312 Interestexpense (24,276) (23,179) (21,723) (12,693) (12,349) Equityinnetincomefromequityinvestments 1,907 2,553 2,754 3,516 318 Lossonearlyredemptionofdebt - - (4,988) - -

Incomefromcontinuingoperationsbeforeincometaxes andcumulativeeffectofaccountingchange 169,157 168,006 208,514 260,948 192,447 Incometaxes 65,945 66,041 82,218 101,876 75,467

Incomefromcontinuingoperationsbefore cumulativeeffectofaccountingchange 103,212 101,965 126,296 159,072 116,980 (Loss)incomefromdiscontinuedoperations(1) (60,962) 3,483 (6,315) 289 (176) Gainonsaleofdiscontinuedoperations - - 36,337 - - Cumulativeeffectofaccountingchange(2) (453,228) - - - - Net(loss)income $ (410,978) $ 105,448 $ 156,318 $ 159,361 $ 116,804

BasicEarningspershare: Incomefromcontinuingoperationsbefore cumulativeeffectofaccountingchange $ 1.95 $ 1.92 $ 2.38 $ 2.99 $ 2.20 (Loss)incomefromdiscontinuedoperations(1) (1.15) 0.07 (0.12) 0.01 - Gainonsaleofdiscontinuedoperations - - 0.68 - - Cumulativeeffectofaccountingchange(2) (8.55) - - - - Net(loss)income $ (7.75) $ 1.99 $ 2.94 $ 3.00 $ 2.20Dilutedearningspershare: Incomefromcontinuingoperationsbefore cumulativeeffectofaccountingchange $ 1.94 $ 1.92 $ 2.37 $ 2.99 $ 2.20 (Loss)incomefromdiscontinuedoperations(1) (1.14) 0.06 (0.11) - (0.01) Gainonsaleofdiscontinuedoperations - - 0.68 - - Cumulativeeffectofaccountingchange(2) (8.54) - - - - Net(loss)income $ (7.74) $ 1.98 $ 2.94 $ 2.99 $ 2.19 Dividendspershare $ 0.06 $ 0.06 $ 0.06 $ 0.06 $ 0.08 Weightedaveragesharesoutstanding: Basic 53,036,552 53,057,077 53,084,437 53,128,533 53,166,458 Diluted 53,101,535 53,133,282 53,182,776 53,240,183 53,270,623BalanceSheetData(atendofperiod): Cashandcashequivalents $ 109,263 $ 223,973 $ 160,978 $ 130,758 $ 59,681 Workingcapital(deficit) 12,100 (104,761) 149,879 14,887 7,298 Totalassets 1,155,971 1,303,792 1,619,510 1,797,069 1,922,059 Long-termdebt 309,606 75,168 369,315 368,387 367,324 Totaldebt 315,381 308,131 376,820 369,022 368,094 Totalshareholders’equity 622,325 726,465 881,738 1,039,955 1,155,115

Management’sDiscussionandAnalysisofFinancialConditionandResultsofOperations


GeneralThegeneralnatureofourbusinessisamotorsportsthemedamusemententerprise;furnishingamusementtothepublicintheformofmotorsportsthemedentertainment.Wederiverevenuesprimarilyfrom(i)admissionstomotorsportseventsandmotorsportsthemedamusementactivitiesheldatourfacilities,(ii)revenuegeneratedinconjunctionwithorasaresultofmotorsportseventsandmotorsportsthemedamusementactivitiesconductedatourfacilities,and(iii)catering,concessionandmerchandisingservicesduringorasaresultoftheseeventsandamusementactivities.

“Admissions,net”revenueincludesticketsalesforallofourracingevents,activitiesatDAYTONAUSAandothermotorsportsactivitiesandamusements,netofanyapplicabletaxes.

“Motorsportsrelated”revenueprimarilyincludestelevision,radioandancillaryrightsfees,marketingpartnershipfees,hospitalityrentals(includingluxurysuites,chaletsandthehospitalityportionofclubseating),advertising,trackrentalsandroyaltiesfromlicensesofourtrademarks.

“Food,beverageandmerchandise”revenueincludesrevenuesfromconcessionstands,directsalesofsouvenirs,hospitalitycatering,programsandothermerchandiseandfeespaidbythirdpartyvendorsfortherighttooccupyspacetosellsouvenirsandconcessionsatourfacilities.

Directexpensesinclude(i)prizeandpointfundmoniesandNASCARsanctionfees,(ii)motorsportsrelatedexpenses,whichincludelabor,advertising,costsofcompetitionpaidtosanctioningbodiesotherthanNASCARandotherexpensesassociatedwiththepromotionofallofourmotorsportseventsandactivities,and(iii)food,beverageandmerchandiseexpenses,consistingprimarilyoflaborandcostsofgoodssold.

CriticalAccountingPoliciesandEstimatesThepreparationoffinancialstatementsinconformitywithaccountingprinciplesgenerallyacceptedintheUnitedStatesrequiresmanagementtomakeestimatesandassumptionsthataffectthereportedamountsofassetsandliabilities,disclosureofcontingentassetsandliabilitiesatthedateofthefinancialstatementsandthereportedamountsofrevenuesandexpensesduringthereportingperiod.Whileourestimatesandassumptionsarebasedonconditionsexistingatandtrendsleadinguptothetimetheestimatesandassumptionsaremade,actualresultscoulddiffermateriallyfromthoseestimatesandassumptions.Wecontinuallyreviewouraccountingpolicies,howtheyareappliedandhowtheyarereportedanddisclosedinthefinancialstatements.

Thefollowingisasummaryofourcriticalaccountingpoliciesandestimatesandhowtheyareappliedinthepreparationofthefinancialstatements.

Basis of Presentation and Consolidation.Weconsolidateallentitieswecontrolbyownershipofamajorityvotinginterest.Also,ifweeverhavevariableinterestentitiesforwhichwearetheprimarybeneficiary,wewillconsolidatethoseentities.Wedonotcurrentlyhavevariableinterestentitiesforwhichwearetheprimarybeneficiary.Ourjudgmentindeterminingifwearetheprimarybeneficiaryofavariableinterestentityincludesassessingourlevelofinvolvementinestablishingtheentity,determiningwhetherweprovidemorethanhalfofanymanagement,operationalorfinancialsupporttotheentity,anddeterminingifweabsorbthemajorityof

theentity’sexpectedlossesorreturns.

Weapplytheequitymethodofaccountingforourinvestmentsinjointventuresandotherinvesteeswheneverwecanexertsignificantinfluenceontheinvesteebutdonothaveeffectivecontrolovertheinvestee.Ourconsolidatednetincomeincludesourshareofthenetearningsorlossesfromtheseinvestees.Ourjudgmentregardingthelevelofinfluenceovereachequitymethodinvesteeincludesconsideringfactorssuchasourownershipinterest,boardrepresentationandpolicy-makingdecisions.Weperiodicallyevaluatetheseequityinvestmentsforpotentialimpairmentwhereadeclineinvalueisdeterminedtobeotherthantemporary.

Weusethecostmethodtoaccountforinvestmentsinentitiesthatwedonotcontrolandforwhichwedonothavetheabilitytoexercisesignificantinfluenceoveroperatingandfinancialpolicies.Weeliminateallsignificantintercompanytransactionsfromfinancialresults.

Revenue Recognition.Advanceticketsalesandevent-relatedrevenuesforfutureeventsaredeferreduntilearned,whichisgenerallyoncetheeventsareconducted.Therecognitionofevent-relatedexpensesismatchedwiththerecognitionofevent-relatedrevenues.

NASCARcontractsdirectlywithcertainnetworkprovidersfortelevisionrightstotheentireNASCARNEXTELCupandNASCARBuschseriesschedules.EventpromotersshareinthetelevisionrightsfeesinaccordancewiththeprovisionofthesanctionagreementforeachNASCARNEXTELCupandNASCARBuschseriesevent.Underthetermsofthisarrangement,NASCARretains10.0percentofthegrossbroadcastrightsfeesallocatedtoeachNASCARNEXTELCuporNASCARBuschserieseventasacomponentofitssanctionfeesandremitstheremaining90.0percenttotheeventpromoter.Theeventpromoterpays25.0percentofthegrossbroadcastrightsfeesallocatedtotheeventaspartofawardstothecompetitors.

Ourrevenuesfrommarketingpartnershipsarepaidinaccordancewithnegotiatedcontracts,withtheidentitiesofpartnersandthetermsofsponsorshipchangingfromtimetotime.Someofourmarketingpartnershipagreementsareformultiplefacilitiesand/oreventsandincludemultiplespecifiedelements,suchastickets,hospitalitychalets,suites,displayspaceandsignageforeachincludedevent.Theallocationofsuchmarketingpartnershiprevenuesbetweenthemultipleelements,eventsandfacilitiesisbasedonrelativefairvalue.Thesponsorshiprevenueallocatedtoaneventisrecognizedwhentheeventisconducted.

Revenuesandrelatedcostsfromthesaleofmerchandisetoretailcustomers,internetsalesanddirectsalestodealersarerecognizedatthetimeofsale.

Accounts Receivable.Weregularlyreviewthecollectibilityofouraccountsreceivable.Anallowancefordoubtfulaccountsisestimatedbasedonhistoricalexperienceofwrite-offsandfutureexpectationsofconditionsthatmightimpactthecollectibilityofaccounts.

Business Combinations.Allbusinesscombinationsareaccountedforunderthepurchasemethod.Whethernetassetsorcommonstockisacquired,fairvaluesaredeterminedandassignedtothepurchasedassetsandassumedliabilitiesoftheacquiredentity.Theexcessofthecostoftheacquisitionoverfairvalueofthenetassetsacquired(includingrecognizedintangibles)isrecordedasgoodwill.Businesscombinationsinvolvingexistingmotorsports

entertainmentfacilitiescommonlyresultinasignificantportionofthepurchasepricebeingallocatedtothefairvalueofthecontract-basedintangibleassetassociatedwithlong-termrelationshipsmanifestinthesanctionagreementswithsanctioningbodies,suchasNASCAR,GrandAmericanRoadRacingAssociation(“GrandAmerican”)and/orIndyRacingLeague(“IRL”).Thecontinuityofsanctionagreementswiththesebodieshashistoricallyenabledthefacilityoperatortohostmotorsportseventsyearafteryear.Whileindividualsanctionagreementsmaybeoftermsasshortasoneyear,asignificantportionofthepurchasepriceinexcessofthefairvalueofacquiredtangibleassetsiscommonlypaidtoacquireanticipatedfuturecashflowsfromeventspromotedpursuanttotheseagreementswhichareexpectedtocontinuefortheforeseeablefutureandtherefore,inaccordancewithSFASNo.141,arerecordedasindefinite-livedintangibleassetsrecognizedapartfromgoodwill.

Capitalization and Depreciation Policies.Propertyandequipmentarestatedatcost.Maintenanceandrepairsthatneithermateriallyaddtothevalueofthepropertynorappreciablyprolongitslifearechargedtoexpenseasincurred.Depreciationandamortizationforfinancialstatementpurposesareprovidedonastraight-linebasisovertheestimatedusefullivesoftheassets.Whenweconstructassets,wecapitalizecostsoftheproject,including,butnotlimitedto,certainpreacquisitioncosts,permittingcosts,feespaidtoarchitectsandcontractors,certaincostsofourdesignandconstructionsubsidiary,propertytaxesandinterest.

Wemustmakeestimatesandassumptionswhenaccountingforcapitalexpenditures.Whetheranexpenditureisconsideredanoperatingexpenseoracapitalassetisamatterofjudgment.Whenconstructingorpurchasingassets,wemustdeterminewhetherexistingassetsarebeingreplacedorotherwiseimpaired,whichalsoisamatterofjudgment.Ourdepreciationexpenseforfinancialstatementpurposesishighlydependentontheassumptionswemakeaboutourassets’estimatedusefullives.Wedeterminetheestimatedusefullivesbaseduponourexperiencewithsimilarassets,industry,legalandregulatoryfactors,andourexpectationsoftheusageoftheasset.Whenevereventsorcircumstancesoccurwhichchangetheestimatedusefullifeofanasset,weaccountforthechangeprospectively.

Interestcostsassociatedwithmajordevelopmentandconstructionprojectsarecapitalizedaspartofthecostoftheproject.Interestistypicallycapitalizedonamountsexpendedusingtheweighted-averagecostofouroutstandingborrowings,sincewetypicallydonotborrowfundsdirectlyrelatedtoadevelopmentorconstructionproject.Wecapitalizeinterestonaprojectwhendevelopmentorconstructionactivitiesbeginandceasewhensuchactivitiesaresubstantiallycompleteoraresuspendedformorethanabriefperiod.

Impairment of Long-lived Assets, Goodwill and Other Intangible Assets.Ourconsolidatedbalancesheetsincludesignificantamountsoflong-livedassets,goodwillandotherintangibleassets.Ourintangibleassetsarecomprisedofassetshavingfiniteusefullives,whichareamortizedoverthatperiod,andgoodwillandothernon-amortizableintangibleassetswithindefiniteusefullives.Currentaccountingstandardsrequiretestingtheseassetsforimpairment,eitherupontheoccurrenceofanimpairmentindicatororannually,basedonassumptionsregardingourfuturebusinessoutlook.Whilewecontinuetoreviewandanalyzemanyfactorsthatcanimpactourbusinessprospectsin

thefuture,ouranalysesaresubjectiveandarebasedonconditionsexistingatandtrendsleadinguptothetimetheestimatesandassumptionsaremade.Actualresultscoulddiffermateriallyfromtheseestimatesandassumptions.Ourjudgmentswithregardtoourfuturebusinessprospectscouldimpactwhetherornotanimpairmentisdeemedtohaveoccurred,aswellasthetimingoftherecognitionofsuchanimpairmentcharge.Ourequitymethodinvesteesalsoperformsuchtestsforimpairmentoflong-livedassets,goodwillandotherintangibleassets.

Self-Insurance Reserves.Weuseacombinationofinsuranceandself-insuranceforanumberofrisksincludinggeneralliability,workers’compensation,vehicleliabilityandemployee-relatedhealthcarebenefits.Liabilitiesassociatedwiththerisksthatweretainareestimatedbyconsideringvarioushistoricaltrendsandforward-lookingassumptionsrelatedtocosts,claimcountsandpayments.Theestimatedaccrualsfortheseliabilitiescouldbesignificantlyaffectediffutureoccurrencesandclaimsdifferfromtheseassumptionsandhistoricaltrends.

Income Taxes.Thetaxlawrequiresthatcertainitemsbeincludedinourtaxreturnatdifferenttimesthanwhentheseitemsarereflectedinourconsolidatedfinancialstatements.Someofthesedifferencesarepermanent,suchasexpensesnotdeductibleonourtaxreturn.However,somedifferencesreverseovertime,suchasdepreciationexpense,andthesetemporarydifferencescreatedeferredtaxassetsandliabilities.Ourestimatesofdeferredincometaxesandthesignificantitemsgivingrisetodeferredtaxassetsandliabilitiesreflectourassessmentofactualfuturetaxestobepaidonitemsreflectedinourfinancialstatements,givingconsiderationtobothtimingandprobabilityofrealization.Actualincometaxescouldvarysignificantlyfromtheseestimatesduetofuturechangesinincometaxlaworchangesoradjustmentsresultingfromfinalreviewofourtaxreturnsbytaxingauthorities,whichcouldalsoadverselyimpactourcashflow.

Intheordinarycourseofbusiness,therearemanytransactionsandcalculationswheretheultimatetaxoutcomeisuncertain.Thecalculationoftaxliabilitiesinvolvesdealingwithuncertaintiesintheapplicationofcomplextaxlaws.Werecognizeprobableliabilitiesfortaxauditissues,includinginterestandpenalties,basedonanestimateoftheultimateresolutionofwhether,andtheextenttowhich,additionaltaxeswillbedue.Althoughwebelievetheestimatesarereasonable,noassurancecanbegiventhatthefinaloutcomeofthesematterswillnotbedifferentthanwhatisreflectedinthehistoricalincometaxprovisionsandaccruals.Suchdifferencescouldhaveanimpactontheincometaxprovisionandoperatingresultsintheperiodinwhichsuchdeterminationismade.

Contingent Liabilities.Ourdeterminationofthetreatmentofcontingentliabilitiesinthefinancialstatementsisbasedonourviewoftheexpectedoutcomeoftheapplicablecontingency.Intheordinarycourseofbusinessweconsultwithlegalcounselonmattersrelatedtolitigationandotherexpertsbothwithinandoutsideourcompany.Weaccruealiabilityifthelikelihoodofanadverseoutcomeisprobableandtheamountoflossisreasonablyestimable.Wedisclosethematterbutdonotaccruealiabilityifeitherthelikelihoodofanadverseoutcomeisonlyreasonablypossibleoranestimateoflossisnotdeterminable.Legalandothercostsincurredinconjunctionwithlosscontingenciesareexpensedasincurred.


AcquisitionandDivestituresMartinsville Speedway and North Carolina Speedway

OnJuly13,2004,weacquiredtheassetsofMartinsvilleSpeedway(“Martinsville”),andassumedtheoperationsaswellascertainliabilitiesofMartinsvilleforapproximately$194.8million,includingacquisitioncosts.Martinsvillewasprivatelyowned,withcertainmembersoftheFranceFamilyGroup,whichcontrolsinexcessof60.0percentofthecombinedvotinginterestofISC,owning50.0percentofMartinsville.Theacquisitionwasfundedby$100.4millioninproceedsfromthesaleoftheassetsofNorthCarolinaandapproximately$94.4millionincash.Martinsville’soperationsareincludedinourconsolidatedoperationssubsequenttothedateofacquisition.

AsrequiredbythesettlementagreementintheFerko/Vaughnlitigation(“SettlementAgreement”)datedApril8,2004,ourNorthCarolinaSpeedway,Inc.subsidiaryenteredintoanAssetPurchaseAgreementwithSpeedwayMotorsports,Incorporated(“SMI”)forthesaleofthetangibleandintangibleassetsandoperationsofNorthCarolina.UnderthetermsoftheSettlementAgreement,SMI’ssubsidiarypurchasedNorthCarolina’sassetsandassumeditsoperationsforapproximately$100.4millionincash.ThesaleofNorthCarolina’sassetsclosedonJuly1,2004,andwerecordedanafter-taxgaininourthirdquarteroffiscal2004ofapproximately$36.3million.

Forallperiodspresented,theresultsofoperationsofNorthCarolina,includingthegainonsale,arepresentedasdiscontinuedoperations.

Nazareth Speedway

AfterthecompletionofNazareth’sfiscal2004eventswesuspendedindefinitelyitsmajormotorsportseventoperations.TheNASCARBuschSeriesandIRLIndyCarSeriesevents,thenconductedatNazareth,wererealignedtoothermotorsportsentertainmentfacilitieswithinourportfolio.

InJanuary2006,weenteredintoanagreementwithNZSW,LLC(“NZSW”)forthesaleof158acres,onwhichNazarethSpeedwayislocated,forapproximately$18.8million.Underthetermsofthecontractthesaletransactionisexpectedtocloseduringfiscal2007.Uponclosingthetransaction,weexpecttorecordanafter-taxgainfromdiscontinuedoperationsofapproximately$6.0to$7.0million,or$0.11to$0.13perdilutedshare.

Forallperiodspresented,theresultsofoperationsofNazaretharepresentedasdiscontinuedoperations.

Pikes Peak International Raceway

OnOctober7,2005,weacquiredtheassetsandassumedcertainliabilitiesofPikesPeakInternationalRaceway(“PikesPeak”)forapproximately$12.0million.Subsequenttothepurchase,theNASCARBuschSeriesevent,thenconductedatPikesPeak,wasrealignedtoanothermotorsportsentertainmentfacilitywithinourportfolioforthefiscal2006racingseasonandwesuspendedindefinitelymajormotorsportseventoperationsatthefacilityonOctober31,2005.WeintendtorelocatecertainPikesPeakfixedassetstootherfacilitieswithinourportfolio.Theseassetsincludegrandstandseatingandotherstructuresthatcanbeutilizedforfuturespeedwayexpansionprojects.WearecurrentlypursuingthesaleofthelandonwhichPikesPeakislocated.

Raceway Associates

AtNovember30,2006,weindirectlyowned37.5percentofRacewayAssociates,whichownsChicagolandSpeedway(“Chicagoland”)andRoute66Raceway,bothofwhicharelocatedinJoliet,Illinois.Route66RacewayhostseventsincludingNationalHotRodAssociationPOWERadedragracingseriesevents,dirtovalracingandconcertsandhasgrandstandsthatseatapproximately30,000spectators.Chicagolandisa1.5-milemoderatelybanked,asphalt,ovalsuperspeedway.Themotorsportsentertainmentfacilityhasgrandstands,whichseatapproximately75,000spectators,and24luxurysuitescontainingapproximately1,000additionalseats.ChicagolandpromotesaNASCARNEXTELCupSeries,NASCARBuschSeries,IRLIndyCarSeriesandAutomobileRacingClubofAmericaRE/MAXSeriesevent.

InNovember2006,weannouncedthat,throughawholly-ownedsubsidiary,wehadenteredintoapurchaseagreementwithIndianapolisMotorSpeedwayCorporation(“IMS”)toindirectlyacquireanadditional37.5percentinterestinRacewayAssociates.Asaresultofthetransaction,wewillown100.0percentofMotorsportsAlliance,LLC(“MotorsportsAlliance”),whichowns75.0percentofRacewayAssociates.ConcurrentwiththeIMStransaction,wealsoexercisedourrighttopurchasetheminoritypartners’remaining25.0percentinterestinRacewayAssociatespursuanttothe1999RacewayAssociatesformationagreement.

AlltheabovetransactionsclosedonFebruary2,2007,foratotalpurchasepriceofapproximately$102.4million.Thesetransactionswillbeaccountedforasabusinesscombination.

WebelievethatChicagolandSpeedwayandRoute66areuniquelyattractiveassetswell-positionedinthenation’sthirdlargestmediamarket.Theregionboastsastrongmotorsportsfanbase,demonstratedbysixconsecutiveyearsofseasonticketsell-outsatChicagolandSpeedwaysinceopeningin2001.WebelieveouractiverepresentationonRacewayAssociates’managementcommitteesince2001andextensiveknowledgeofthemotorsportsbusinesswillhelpensureaseamlessintegrationintoISC.

ImpairmentofLong-LivedAssetsDuringfiscal1999,weannouncedourintentiontosearchforasiteforamajormotorsportsentertainmentfacilityintheNewYorkmetropolitanarea(see“FutureLiquidity”).ThedecisiontodiscontinueourspeedwaydevelopmenteffortsonStatenIsland,inourfiscal2006fourthquarter,resultedinanon-cash,pre-taxchargeinourresultsofapproximately$84.7million,or$1.01perdilutedshareafter-tax.AccountingprinciplesgenerallyacceptedintheUnitedStatesrequirethatthepropertybevaluedatitscurrentfairvalue,whichisestimatedbyanindependentappraisalatapproximately$65.0million.Priortothewrite-off,wehadcapitalizedspendingofapproximately$150.0millionthroughNovember30,2006,including:(1)$123.0millionforlandandrelatedimprovements,(2)$11.0millionforcostsrelatedsolelytothedevelopmentofthespeedway,and(3)$16.0millionforcapitalizedinterestandpropertytaxes.Thevalueofthepropertyisexpectedtobeinexcessof$100.0milliononceitisfilledandreadyforsale.

EquityandOtherInvestmentsMotorsports Authentics

OnAugust30,2005,wepartneredwithSMIina50/50jointventure,SMISC,LLC(“SMISC”),which,throughawholly-ownedsubsidiary

MotorsportsAuthentics,LLC,conductsbusinessunderthenameMotorsportsAuthentics.MotorsportsAuthenticsoperatesasanindependentcompanywithusandSMIasequalowners.AlsoonAugust30,2005,weannouncedthatSMISChadenteredintoadefinitiveagreementdatedAugust29,2005,topurchasethestockofActionPerformanceCompanies,Inc.(“Action”).Theacquisitionwasstructuredasamergerofawholly-ownedsubsidiaryofMotorsportsAuthentics,LLCintoAction.

TheacquisitionofActionwascompletedonDecember9,2005,whichresultedinaninvestmentofapproximately$124.6millionandwascombinedwiththenetassetsandmerchandisingoperationsofTeamCaliber,whichMotorsportsAuthenticsacquiredonSeptember8,2005.Asaresultoftheseacquisitions,MotorsportsAuthenticsisnowaleaderindesign,promotion,marketinganddistributionofmotorsportslicensedmerchandise.MotorsportsAuthenticshaslicensesforexclusiveandnon-exclusivedistributionwithteamscompetinginNASCARandothermajormotorsportsseries.Itsproductsincludeabroadrangeofmotorsports-relateddie-castreplicacollectibles,apparel,giftsandothermemorabilia,whicharemarketedthroughacombinationofmassretail,domesticwholesale,trackside,internationalandcollector’sclubdistributionchannels.

Proximities, Inc.

Weacquiredanapproximately24.5percentinterestinProximities,Inc.(“Proximities”)inNovember2004throughthepurchaseofProximities’SeriesBPreferredStockforapproximately$2.0million.ProximitiesisdevelopingproductswhicharetobemarketedassecureRadioFrequencyIdentificationcashlesspayment,accesscontrolandageverificationsystems.ProximitiesisavariableinterestentityasdeterminedinaccordancewithFASBInterpretationNo.46,“ConsolidationofVariableInterestEntities.”WedonotconsolidatetheoperationsofProximitiesaswearenottheprimarybeneficiary.ThemaximumexposuretolossasaresultofourinvolvementwithProximitiesatNovember30,2006isapproximately$243,000.

LimitedPartnershipAgreementInOctober2006weenteredintoalimitedpartnershipagreementwithGroupMotoriséInternational(“GMI”)toorganize,promoteandholdcertainracingeventsatCircuitGillesVilleneuve,includingaNASCARBuschSeriesandGrandAmericanRolexSportsCarSeriespresentedbyCrownRoyalSpecialReserveraceweekendinthethirdquarteroffiscal2007.CircuitGillesVilleneuveisaroadcourselocatedinMontréal,Quebec,atwhichGMIcurrentlypromotesasuccessfulF1CanadianGrandPrixevent.Theagreementisnotexpectedtohaveamaterialeffectonourfinancialconditionorresultsofoperationsinfiscal2007.

FutureTrendsinOperatingResultsOursuccesshasbeen,andisexpectedtoremain,dependentonmaintaininggoodworkingrelationshipswiththeorganizationsthatsanctioneventsatourfacilities,particularlywithNASCAR,whosesanctionedeventsatourwholly-ownedfacilitiesaccountedforapproximately87.6percentofourrevenuesinfiscal2006.InJanuary2003,NASCARannounceditwouldentertainanddiscussproposalsfromtrackoperatorsregardingpotentialrealignmentofNASCARNEXTELCupSeriesdatestomoregeographicallydiverseandpotentiallymoredesirablemarketswheretheremaybegreaterdemand,resultinginanopportunityforincreasedrevenuestothetrackoperators.

NASCARapprovedrealignmentsofcertainNASCARNEXTELCupandothereventsatourfacilitiesforthe2004,2005and2006seasons.Webelievethattherealignmentshaveprovided,andwillcontinuetoprovide,additionalnetpositiverevenueandearningsaswellasfurtherenhancethesport’sexposureinhighlydesirablemarkets,whichwebelievebenefitsthesport’sfans,teams,sponsorsandtelevisionbroadcastpartnersaswellaspromoters.NASCARhasindicatedthatitisopentodiscussionregardingadditionaldaterealignments.Webelievewearewellpositionedtocapitalizeonthesefutureopportunities.

Fiscal2006wasourlastyearunderNASCAR’smulti-yearconsolidatedtelevisionbroadcastrightsagreementswithNBCSports,TurnerSports,FOXandFX.TheseagreementscoverthedomesticbroadcastofNASCAR’sNEXTELCupandBuschseriesracingseasonsfrom2001through2006.Undertheseagreements,televisionrightsfeesincreasedapproximately15.7percentfortheindustryinfiscal2006.TelevisionbroadcastandancillaryrightsfeesfromcontinuingoperationsreceivedfromNASCARfortheNASCARNEXTELCupandNASCARBuschserieseventsconductedatourwholly-ownedfacilitiesforfiscal2006,2005and2004wereapproximately$273.4million,$235.9millionand$188.9million,respectively.

NASCARhasenteredintonewcombinedeight-yearagreementswithFOX,ABC/ESPN,TNTandSPEEDbeginningin2007forthedomesticbroadcastandrelatedrightsforitsNEXTELCup,BuschandCraftsmanTruckseries.Theagreementsareexpectedtototalapproximately$4.5billionovertheeightyearperiodfrom2007through2014.Thisresultsinanapproximate$560.0milliongrossaverageannualrightsfeefortheindustry,amorethan40.0percentincreaseoverthecurrentcontractaverageof$400.0millionannually.Theindustryrightsfeesareexpectedtoapproximate$505.0millionfor2007,withincreases,onaverage,ofapproximatelythreepercentperyearthroughthe2014season.Theannualincreaseisexpectedtovarybetweentwoandfourpercentperyearovertheperiod.Whilethe2007rightsfeeswillbelessthanthe2006rightsfeesofapproximately$576.0million,inouropinionthisshouldnotovershadowthestrategicimportanceandexpectedlong-termbenefitsofthenewcontracts.Overthepastseveralyears,therehasbeenashiftofmajorsportsprogrammingfromnetworktocable.Thecablebroadcasterscansupportahigherinvestmentthroughsubscriberfeesnotavailabletonetworks,whichhasresultedinincreasedrightsfeesforthesesportsproperties.Cable,however,reachesfarfewerhouseholdsthannetworkbroadcasts.WeviewNASCAR’sdecisiontokeepapproximatelytwo-thirdsofitseventscheduleonnetworktelevisionasimportanttothesport’sfuturegrowth.Thestructureshouldcontinuetodriveincreasedfanandmediaawarenessforallthreeracingseries,whichwillhelpfuelourlong-termattendanceandcorporate-relatedrevenues.Wealsowelcomethechancetore-establishthesport’sbroadcastrelationshipwithESPN,whichwebelievewillresultinfurtherexposureforNASCARracing.First,webelievetheNASCARBuschSerieswillsignificantlybenefitfromtheimprovedcontinuityofitsseason-longpresenceonESPN.Inaddition,webelievethesportasawholewillbenefitfromtheincreasedancillaryprogrammingandnightlyandweeklyNASCAR-brandedprogrammingandpromotions,similartowhatESPNdoeswiththeothermajorsports.Themostsignificantbenefitofthenewcontractsisthesubstantialincreaseinearningsandcashflowvisibilityfortheentireindustryoverthecontractperiod.


AsmediarightsrevenuesfluctuatesodothevariablecoststiedtothepercentageofbroadcastrightsfeesrequiredtobepaidtocompetitorsaspartofNASCARNEXTELCup,BuschandCraftsmanTruckseriessanctionagreements.NASCARprizeandpointfundmonies,aswellassanctionfees(“NASCARdirectexpenses”),areoutlinedinthesanctionagreementforeacheventandarenegotiatedinadvanceofanevent.Aspreviouslydiscussed,includedintheseNASCARdirectexpensesare25.0percentofthegrossdomestictelevisionbroadcastrightsfeesallocatedtoourNASCARNEXTELCup,BuschandCraftsmanTruckserieseventsaspartofprizeandpointfundmoney.TheseannuallynegotiatedcontractualamountspaidtoNASCARcontributetothesupportandgrowthofthesportofNASCARstockcarracingthroughpaymentstotheteamsandsanctionfeespaidtoNASCAR.Assuch,wedonotexpectthesecoststodecreaseinthefutureasapercentageofadmissionsandmotorsportsrelatedincome.Weanticipateanyoperatingmarginimprovementtocomeprimarilyfromeconomiesofscaleandcontrollingcostsinareassuchasmotorsportsrelatedandgeneralandadministrativeexpenses.

Economicconditionsmayimpactourabilitytosecurerevenuesfromcorporatemarketingpartnerships.However,webelievethatourpresenceinkeymarketsandimpressiveportfolioofeventsarebeneficialaswecontinuetopursuerenewalandexpansionofexistingmarketingpartnershipsandestablishnewcorporatemarketingpartners.Webelievethatrevenuesfromourcorporatemarketingpartnershipswillcontinuetogrowoverthelongterm.

Animportantcomponentofouroperatingstrategyhasbeenourlong-standingpracticeoffocusingcloselyonsupplyanddemandregardingadditionalcapacityatourfacilities.Wecontinuallyevaluatethedemandforourmostpopularracingeventsinordertoaddcapacitythatwebelievewillprovideanacceptablerateofreturnoninvestedcapital.Throughprudentexpansion,weattempttokeepdemandatahigherlevelthansupply,whichstimulatesticketrenewalsandadvancesales.Advanceticketsalesresultinearliercashflowandreducethepotentialnegativeimpactofactualandforecastedinclementweatheronticketsales.Whilewewilljoinwithsponsorstoofferpromotionstogenerateadditionalticketsales,weavoidrewardinglast-minuteticketbuyersbydiscountingtickets.Webelieveitismoreimportanttoencourageadvanceticketsalesandmaintainpriceintegritytoachievelong-termgrowththantocaptureshort-termincrementalrevenue.Werecognizethatanumberoffactorsrelatingtodiscretionaryconsumerspending,includingeconomicconditionsaffectingdisposableconsumerincomesuchasemploymentandotherlifestyleandbusinessconditions,cannegativelyimpactattendanceatourevents.Accordingly,wehaveinstitutedonlymodestincreasesinourweightedaverageticketpricesforfiscal2007.Inaddition,wearelimitingtheexpansionofourfacilitiesinfiscal2007toprojectsatourRichmondInternationalRaceway(“Richmond”)whichwillbecompletedintimeforitsNASCARNEXTELCupandBuschseriesspringevents.Richmondwillberemovingapproximately2,900obstructedviewgrandstandseatsfromTurns3and4andareaddingapproximately7,800grandstandseatsinanew,state-of-the-art,18-storystructurelocatedinTurn1.Thenew,three-tieredgrandstandwillalsoincludea700-person,members-onlyClubforindividualfanslookingtoenjoyaraceweekendinstyleorbusinessesseekingtoentertainclients.TheClubwillalsoserveasauniquesiteforspecialeventsonnon-raceweekendsthroughouttheyear.Wewill

continuetoevaluateexpansionopportunities,aswellasthepricingandpackagingofourticketsandotherproducts,onanongoingbasis.Overthelongterm,weplantocontinuetoexpandcapacityatourspeedways.

Sincewecompetewithnewerentertainmentvenuesforpatronsandsponsors,wewillcontinuetoevaluateopportunitiestoenhanceourfacilities,therebyproducingadditionalrevenuegeneratingopportunitiesforusandimprovingtheexperienceforourguests.OnemajorexampleoftheseeffortsistheinfieldrenovationatDaytonaInternationalSpeedway(“Daytona”)thatwascompletedforthestartofthe2005racingseason.Theinfieldrenovationfeaturesnumerousfanamenitiesanduniquerevenuegeneratingopportunities,includinggaragewalk-throughareas,additionalmerchandiseandconcessionsvendingareas,waterfrontluxuryrecreationalvehicleparkingareas,alargetunneltoaccommodateteamhaulersandguestrecreationalvehiclesinandoutoftheinfieldandotherspecialamenitiessuchastheinfield’ssignaturestructure,theDaytona500Club.ThefanandguestresponsetoourrenovationeffortsatDaytonahasbeenoverwhelminglypositiveandhasresultedinincrementaldirectand,webelieve,indirectrevenuegeneration.Anotherexampleofoureffortstoenhancethefanexperienceincludesthefiscal2005renovationofMichiganInternationalSpeedway’s(“Michigan”)frontstretch,includingnewticketgates,newvendoranddisplayareas,andseveralnewconcessionstands,aswellastheadditionofclubseatsandluxurysuites.Forfiscal2006,wecompletedadditionalrenovationprojectsatCaliforniaSpeedway(“California”)andTalladegaSuperspeedway(“Talladega”).AtCalifornia,werenovatedandexpandedthefacility’sfrontmidwayarea.Thenewplazafeaturesafull-serviceoutdoorcaféwithcuisinebycelebritychefWolfgangPuck,inadditiontoatowncenter,retailstoreandconcertstage.Otherhighlightsincludeshadefeatures,modifiedentrygates,expandedhospitalityareas,radiobroadcastlocations,giantvideowalls,leisureareasandgrassandwateraccents.Thisprojectwasthedirectresultoffanfeedback,andfurtherdemonstratesourcommitmenttoprovidingapremiumentertainmentenvironmentforourguests.WealsorepavedTalladega’s2.6mileovalintimeforthatfacility’sfallNASCARNEXTELCupweekend.Talladega’sracingsurfacehadnotbeenrepavedsince1979,andwebelievethenewlypavedracingsurfaceenhancedthethrillingon-trackcompetition.

DaytonaInternationalSpeedway LeaseExtensionOnMarch29,2006,DaytonaamendeditsleaseagreementwiththeDaytonaBeachRacingandRecreationalFacilitiesDistrict(the“District”).TheamendedleaseextendstherelationshipbetweenDaytonaandtheDistrictthroughNovember7,2054.

Thenewleaserequiredaninitialannualpayment,excludingapplicablesalestaxes,of$500,000andincludesscheduledrentincreaseseveryfiveyears.AccountingprinciplesgenerallyacceptedintheUnitedStatesrequirethetotalleasecostovertherevisedleasetermtoberecognizedonastraight-linebasis.Asaresult,thisleaseexpenseinfiscal2006,includingsalestaxes,totaledapproximately$500,000.Forfiscalyears2007through2054,weanticipatethisleaseexpense,includingsalestaxes,toapproximate$800,000peryear.

Thefollowingtablesetsforth,foreachoftheindicatedperiods,certainselectedstatementofoperationsdataasapercentageoftotalrevenues:

Revenues: Admissions,net 34.4% 31.7% 29.5% Motorsportsrelated 51.7 55.2 58.4 Food,beverageandmerchandise 12.8 11.8 10.9 Other 1.1 1.3 1.2 Totalrevenues 100.0 100.0 100.0Expenses: Direct: PrizeandpointfundmoniesandNASCARsanctionfees 18.4 18.5 18.9 Motorsportsrelated 17.4 18.1 18.1 Food,beverageandmerchandise 8.1 7.7 6.7 Generalandadministrative 13.9 13.0 13.4 Depreciationandamortization 6.9 6.9 7.1 Impairmentoflong-livedassets - - 10.9 Totalexpenses 64.7 64.2 75.1Operatingincome 35.3 35.8 24.9Interestexpense,net (2.7) (1.0) (0.9)Equityinnetincomefromequityinvestments 0.4 0.5 0.1Lossonearlyredemptionofdebt (0.8) - -Incomefromcontinuingoperationsbeforeincometaxes 32.2 35.3 24.1Incometaxes 12.7 13.8 9.5Incomefromcontinuingoperations 19.5 21.5 14.6(Loss)incomefromdiscontinuedoperations (1.0) - -Gainonsaleofdiscontinuedoperations 5.6 - - Netincome 24.1% 21.5% 14.6%

FortheYearEndedNovember30, 2004 2005 2006

CurrentLitigationFromtimetotime,weareapartytoroutinelitigationincidentaltoourbusiness.Wedonotbelievethattheresolutionofanyorallofsuchlitigationwillhaveamaterialadverseeffectonourfinancialconditionorresultsofoperations.

Inadditiontosuchroutinelitigationincidenttoourbusiness,weareapartytothelitigationdescribedbelow.

InJuly2005,KentuckySpeedway,LLCfiledacivilactionintheEasternDistrictofKentuckyagainstNASCARandusallegingthat“NASCARandISChaveacted,andcontinuetoact,individuallyandincombinationandcollusionwitheachotherandothercompaniesthatcontrolmotorsportsentertainmentfacilitieshostingNASCARNEXTELCupSeries,toillegallyrestricttheawardof…NASCARNEXTELCupSeries[races].”ThecomplaintseeksdamagesandaninjunctionrequiringNASCARtoestablishacompetitivebiddingprocessforNEXTELCupeventsandprohibitingfurtherviolationsoftheantitrustlaws.Otherthansomevaguelyconclusoryallegations,thecomplaintfailstospecifyanyconductbyInternationalSpeedwayCorporation(“ISC”)otherthanconductingandgrowingitsmotorsportsentertainmentbusinessforthebenefitofitsshareholders.Webelievetheallegationstobewithoutmeritandintendtodefendourselfvigorously.Wehaveretainedcounselandarepursuingdefensestothesuitwhilemaintainingpotentialcounterclaimremediesavailabletoustorecoverthedamagescausedbythefilingofthesuit.ThecourthasestablishedaFebruary1,2007,deadlineforthecompletionofpre-trialdiscoveryfactualmatterswhichistobefollowedbydiscoveryofexpertopinionmatters.Based

uponthecurrenttimelineatrialonthemeritsofthecaseisscheduledfornoearlierthanFall2007.Whileitisprematuretoquantifyeitherthelikelihoodorthepotentialmagnitudeofanadversedecision,thefeesandexpensesassociatedwiththedefenseofthissuitarenotcoveredbyinsuranceandcouldadverselyimpactourfinancialconditionorresultsofoperationsandcashflows,evenifweultimatelyprevail.Further,thetimedevotedtothismatterbymanagementandthepossibleimpactoflitigationonbusinessnegotiationsoccurringpriortoresolutionofthismattercouldalsoadverselyimpactourfinancialconditionorresultsofoperationsandcashflows.Finally,evenifthedirecteffectoftheresolutionofthiscasedoesnotresultinamaterialadverseimpactonus,itispossiblethattheresolutionofthiscasecouldresultinindustrywidechangesinthewayraceschedulesaredeterminedbysanctioningbodies,whichcouldindirectlyhaveamaterialadverseimpactonus.

Postponementand/orCancellationof MajorMotorsportsEventsThepostponementorcancellationofoneormoremajormotorsportseventscouldadverselyimpactourfutureoperatingresults.Apostponementorcancellationcouldbecausedbyanumberoffactors,including,butnotlimitedto,inclementweather,awidespreadoutbreakofasevereepidemiologicalcrisis,ageneralpostponementorcancellationofallmajorsportingeventsinthiscountry(asoccurredfollowingtheSeptember11,2001terroristattacks),aterroristattackatanymassgatheringorfearofsuchanattack,conditionsresultingfromthewarinIraqorotheractsorprospectsofwar.


ComparisonofFiscal2006toFiscal2005Thecomparisonoffiscal2006tofiscal2005isimpactedbythe followingfactors:

• IRLeventswereconductedatCaliforniaandPhoenixInternationalRaceway(“Phoenix”)duringfiscal2005whilenocorrespondingeventswereconductedinfiscal2006;

• ANASCARBuschserieseventwasconductedatMartinsvilleinfiscal2006whilenocorrespondingeventwasconductedbyusinfiscal2005;

• ANASCARCraftsmanTruckserieseventwasrealignedfromRichmondinfiscal2005toTalladegainfiscal2006resultinginasignificantattendanceincreasefortheevent;and

• Infiscal2005,wereachedsettlementwiththeCARTLiquidationTrustthatallowedaclaiminourfavorofapproximately$1.8millionintheChampionshipAutoRacingTeams(“CART”)bankruptcy.

Admissionsrevenueincreasedapproximately$483,000,or0.2percent,infiscal2006comparedtofiscal2005.IncreasedadmissionsrevenueresultedfromanincreaseintheweightedaveragepriceofticketssoldforthemajorityofoureventsandincreasesinattendanceforeventsatHomestead-MiamiSpeedway(“Miami”),Darlington,TalladegaandcertainNASCAReventsconductedduringSpeedweeksatDaytonasupportingoursoldoutDaytona500arelargelyoffsetbythepreviouslydiscussedabsenceofIRLeventsinthefiscal2006eventschedulesforCaliforniaandPhoenixaswellasdecreasedattendanceforthePepsi400weekendatDaytonaandeventsatMichigan.

Motorsportsrelatedrevenueincreasedapproximately$57.6million,or14.1percent,infiscal2006comparedtofiscal2005.TheincreaseisprimarilyduetotelevisionbroadcastrightsfeesforourNASCARNEXTELCupandBuschserieseventsand,toalesserextent,increasedsponsorship,hospitality,advertisingandotherracerelatedrevenues.Theseincreasesarepartiallyoffsetbythenetdecreaseinrevenuesfromnon-comparableeventsandactivitiesdescribedabove.

Food,beverageandmerchandiserevenueinfiscal2006isconsistentwithfiscal2005.Increasesincateringandconcessionsrevenuesforfiscal2006arelargelyoffsetbyanetdecreaseinrevenuesfromnon-comparableeventsandactivitiesdescribedabove.

PrizeandpointfundmoniesandNASCARsanctionfeesincreasedapproximately$14.4million,or10.5percent,infiscal2006,ascomparedtofiscal2005.TheincreaseisprimarilyattributabletotheincreaseintelevisionbroadcastrightsfeesforcomparableNASCARNEXTELCupandBuschserieseventsheldatourfacilitiesasstandardNASCARsanctioningagreementsrequirethataspecifiedpercentageoftelevisionbroadcastrightsfeesbepaidtocompetitors.TheadditionoftheNASCARBuschSerieseventatMartinsvilleinfiscal2006alsocontributedtothecurrentyearincrease.

Motorsportsrelatedexpensesincreasedapproximately$10.1million,or7.5percent,infiscal2006comparedtofiscal2005.Theincreaseisprimarilyrelatedtoincreasedoperatingexpensesforcomparableevents,MRN

operatingexpensessupportingadditionalrevenuegrowth,certainconsumermarketingandsalesinitiatives,andanetincreaseinavarietyofothercosts.TheseincreasesarepartiallyoffsetbyeventexpensesrelatedtothePhoenixandCaliforniaIRLeventsthatwereheldin2005,butnotin2006,andothernon-comparableeventsandactivitiesyearoveryear.Motorsportsrelatedexpensesasapercentageofcombinedadmissionsandmotorsportsrelatedrevenuedecreasedfromapproximately20.9percentinfiscal2005toapproximately20.6percentforfiscal2006.Thedecreaseisprimarilyattributabletoincreasedtelevisionbroadcastrightsfeespartiallyoffsetbythepreviouslydiscussedexpenseincreases.

Food,beverageandmerchandiseexpensedecreased$3.6million,or6.4percent,duringfiscal2006ascomparedtofiscal2005.Thedecreaseisprimarilyattributabletomarginimprovementoncertaincateringandconcessionsales,operationalcostcontainment,variablecostsassociatedwithdecreasedattendanceatcertainevents,adecreaseinmerchandiseinventorywrite-downsin2006ascomparedto2005andinventorydonatedtohurricanereliefeffortsin2005.Food,beverageandmerchandiseexpenseasapercentageoffood,beverageandmerchandiserevenuedecreasedfromapproximately65.1percentinfiscal2005toapproximately60.9percentfor2006.Thisdecreaseisattributabletothepreviouslydiscussedmarginimprovementandcostcontainment.

Generalandadministrativeexpensesincreasedapproximately$10.5million,or10.9percent,duringfiscal2006ascomparedtofiscal2005.Theseincreasesareprimarilyrelatedtolegalfees,certainexpensespaidinconnectionwithourdevelopmentofacommercialmixed-useentertainmentandshoppingcomplexinDaytonaBeach,Florida,andanetincreaseincertaincostsrelatedtothegrowthofourcorebusiness,partiallyoffsetbycertainstatetaxesandnon-recurringchargesintheprioryear.Thecomparisonoffiscal2006tofiscal2005generalandadministrativeexpensesisalsoimpactedbythefiscal2005recoveryof$1.8millionofpreviouslyrecordedbaddebtexpenserelatedtoourclaimagainstCART(seethediscussionofgeneralandadministrativeexpensesunder“ComparisonofFiscal2005toFiscal2004”).Generalandadministrativeexpensesasapercentageoftotalrevenuesincreasedslightlyfromapproximately13.0percentinfiscal2005to13.3percentforfiscal2006primarilyduetothepreviouslynotednetincreaseingeneralandadministrativeexpenseslargelyoffsetbytheincreaseintelevisionbroadcastrightsfees.

Depreciationandamortizationexpenseincreasedapproximately$5.9million,or11.7percent,duringfiscal2006ascomparedtofiscal2005.Theincreasewasprimarilyattributabletocertainretailtechnologyprojects,theMiamiandPhoenixsuiteandgrandstandadditions,theMichiganandDaytonarenovations,andavarietyofotherongoingcapitalimprovements.

WerecentlyannouncedourintentiontodiscontinueourspeedwaydevelopmenteffortsonStatenIslandwhichresultedinanon-cash,pre-taxchargefortheimpairmentoflong-livedassetsofapproximately$84.7million,or$1.01perdilutedshare,inthefourthquarteroffiscal2006(see“FutureLiquidity”).Toamuchlesserextent,certainotherassetimpairmentsalsocontributedtothecharge.

Interestincomeincreasedbyapproximately$452,000,or9.3percent,duringfiscal2006ascomparedtofiscal2005.Theincreasewasprimarilyduetohigheryieldonshort-terminvestmentsinthecurrentperiodspartiallyoffsetbyloweroutstandingcashandshortterminvestmentbalances.

Interestexpensedecreasedapproximately$344,000,or2.7percent,duringfiscal2006comparedtofiscal2005.Thedecreaseisprimarilyduetoanincreaseincapitalizedinterest,primarilyrelatedtoland,landimprovementanddevelopmentcostsfortheStatenIslandprojectand,toalesserextent,certainotherconstructionprojectsaswellaslowerfeesrelatedtoournewcreditfacility.

Equityinnetincomefromequityinvestmentsrepresentsourproratashareofthecurrentincomeandlossesfromour37.5percentequityinvestmentinRacewayAssociatesandour50.0percentequityinvestmentinSMISC.RacewayAssociatesownsandoperatesChicagolandSpeedwayandRoute66raceway.SMISCownsandoperateMotorsportsAuthentics,whichisaleaderindesign,promotion,marketing,anddistributionofmotorsportslicensedmerchandise.

Oureffectivetaxrateincreasedfrom39.0percentto39.2percentduringfiscal2006comparedtofiscal2005.Thisincreaseisprimarilyaresultofcertainstatetaximplicationsrelatingtotheaforementionedimpairmentoflong-livedassets.Theincreaseispartiallyoffsetbyonetimebenefitsrelatingtodiscreteitemsinthesecondfiscalquarterof2006,includingtheimplementationofcertainrestructuringinitiatives,thefinalizationofcertainstatetaxmattersanddepositsmadeduringfiscal2005and2006withtheInternalRevenueService(the“Service”)tostoptheaccrualofinterestoncontesteditemsinourongoingfederaltaxexamination.See“FutureLiquidity”forfurtherdiscussionregardingtheexaminationofourfederalincometaxreturns.

Asaresultoftheforegoing,ourincomefromcontinuingoperationsdecreasedfromapproximately$159.1milliontoapproximately$117.0million,or26.5percent,duringfiscal2006,ascomparedtothesameperiodoftheprioryear.

TheoperationsofNazaretharepresentedasdiscontinuedoperations,netoftax,forallperiodspresentedinaccordancewithSFASNo.144.Infiscal2005,discontinuedoperationsincludea$471,000after-taxnon-cashgainrelatedtothedecisionmadeinthefourthquartertorelocateandusecertaingrandstandassetsfromNazarethtoDarlington,whichhadpreviouslybeenwrittenoff.

Asaresultoftheforegoing,ournetincomedecreasedapproximately$42.6million,or$0.80perdilutedshare,forfiscal2006comparedtofiscal2005.

ComparisonofFiscal2005toFiscal2004Thecomparisonoffiscal2005tofiscal2004isimpactedbythe followingfactors:

• InJuly2004,weacquiredtheassetsandassumedtheoperationsandcertainliabilitiesofMartinsville.Thetimingoftheacquisitioninfiscal2004resultedinanincrementalNASCARNEXTELCupandCraftsmanTruckserieseventduringfiscal2005;

• Duringfiscal2004,wesoldtheassetsandoperationsofNorthCarolinaandmadeadecisiontopursuethesaleofNazarethduetotherealignmentofNazareth’seventstoourWatkinsGlenfacilitystartingwiththe2005eventseason.Accordingly,theresultsofoperationsforNorthCarolinaandNazaretharerecordedasdiscontinuedoperationsforallperiodspresentedinaccordancewithSFASNo.144“AccountingfortheImpairmentorDisposalofLong-LivedAssets”.WatkinsGlenhostedaNASCARBuschSerieseventandanIRLeventincludedinourcontinuingoperationsduringfiscalyear2005,whilethecorrespondingeventsheldatNazarethduringthepriorfiscalyeararerecordedaspartofdiscontinuedoperations;

• AspartofNASCAR’sfiscal2005eventdaterealignments,aNASCARNEXTELCupandBuschseriesweekendhistoricallyhostedbyDarlingtonwasrealignedtoPhoenix;

• SpeedweeksatDaytonawashighlightedbythedebutofthefacility’spreviouslydiscussednewlyrenovatedinfield;

• Infiscal2005,wereachedsettlementwiththeCARTLiquidationTrustthatallowedaclaiminourfavorof$1.8millionintheCARTbankruptcy;and

• Infiscal2004,werefinancedouroutstanding$225.0millionseniornotesoriginallydueinOctober2004andpaidaredemptionpremiumonthepreviouslyoutstandingseniornotes.

Admissionsrevenueincreasedapproximately$12.2million,or5.5percent,infiscal2005comparedtofiscal2004.Theincreaseisprimarilydueto:

• ThepreviouslydiscussedtimingoftheacquisitionofMartinsville;

• RealignmentofeventstoWatkinsGlen;

• ThenetimpactoftherealignmentofeventstoPhoenixfromDarlington;

• IncreasedattendancefortheNASCAReventsconductedduringSpeedweeksatDaytonasupportingoursoldoutDaytona500;

• ReschedulingoftheNASCARCraftsmanTruckSerieseventatMichiganfromtheIRLweekendinfiscal2004totheJuneNASCARNEXTELCupweekendinfiscal2005,resultinginincreasedattendanceandweightedaverageticketprice;and

• IncreasedattendancefortheremainingDarlingtonNASCARweekend.

TheseincreasesarepartiallyoffsetbycertainadmissionsdecreasesincludingattendancefortheCaliforniaNASCARNEXTELCupandBuschserieseventsconductedinthefirstquarteroffiscal2005.

Motorsportsrelatedrevenueincreasedapproximately$73.6million,or22.0percent,infiscal2005comparedtofiscal2004.Theincreaseisprimarilyduetoincreasedtelevisionbroadcastrightsfees,sponsorship,hospitalityandotherracerelatedrevenuesforcomparableNASCARNEXTELCupweekendshostedatourfacilitiesaswellthetimingoftheacquisitionofMartinsvilleandtherealignmentofeventstoWatkinsGlen.ThenetimpactofrealignmentofeventstoPhoenixfromDarlingtonalsocontributedtothecurrentyearincrease.


Food,beverageandmerchandiserevenueincreasedapproximately$4.0million,or4.8percent,infiscal2005comparedtofiscal2004.Theincreaseisprimarilyduetocatering,merchandiseandconcessionoperationsforcomparableNASCARNEXTELCupweekends,thenetimpactofrealignmentofeventstoPhoenixfromDarlington,thetimingoftheacquisitionofMartinsvilleandhigherrevenuesresultingfromincreasedattendance,hospitalityunitsandadditionalpointsofsaleinthenewlyrenovatedinfieldforeventsduringSpeedweeksatDaytona.TheseincreasesarepartiallyoffsetbydecreasesprimarilyrelatedtoourAmericrownsubsidiaryperformingservicesatnon-ISCvenuesinfiscal2004.

PrizeandpointfundmoniesandNASCARsanctionfeesincreasedapproximately$17.5million,or14.7percent,infiscal2005,ascomparedtofiscal2004.TheincreaseisprimarilyattributabletotheincreaseintelevisionbroadcastrightsfeesforcomparableNASCARNEXTELCupandBuschserieseventsheldatourfacilitiesasstandardNASCARsanctioningagreementsrequirethataspecifiedpercentageoftelevisionbroadcastrightsfeesbepaidtocompetitors.ThepreviouslydiscussedrealignmentoftheNASCARBuschSerieseventtoWatkinsGlenalsocontributedtotheincrease,aswellasthetimingoftheacquisitionofMartinsville.

Motorsportsrelatedexpensesincreasedapproximately$21.3million,or18.9percent,infiscal2005comparedtofiscal2004.Theincreaseisprimarilyrelatedtoincreasedoperatingexpensesforcomparableeventsduringtheperiods,includingoperatingexpensesassociatedwiththepreviouslydiscussedDaytonainfieldrenovation,certainstrategicconsumerandcorporatemarketinginitiativesandservicesdonatedtohurricanereliefefforts.Increasesduringfiscal2005alsoincludedtherealignmentofeventstoWatkinsGlen,thenetimpactofrealignmentofeventstoPhoenixfromDarlingtonandthetimingoftheacquisitionofMartinsville.Motorsportsrelatedexpensesasapercentageofcombinedadmissionsandmotorsportsrelatedrevenueincreasedtoapproximately20.9percentforfiscal2005,ascomparedto20.3percentforfiscal2004,primarilyduetothepreviouslydiscussedexpensesaswellastheexpensesandthesanctionfeefortherealignedWatkinsGlenIRLevent.TheseincreasesarepartiallyoffsetbyincreasedrevenuesfromthetelevisionbroadcastrightsfeesandthetimingoftheMartinsvilleacquisition.

Food,beverageandmerchandiseexpenseincreased$4.5million,or8.6percent,duringfiscal2005ascomparedtofiscal2004.Theincreaseisprimarilyattributabletoeventrelatedcosts,includingincreasesassociatedwiththeadditionaleventsatMartinsvilleandtherealignmentofeventstoPhoenixfromDarlington,certainmerchandiseinventorywritedownsandinventorydonatedtohurricanereliefefforts.Theseincreasesarepartiallyoffsetbyservicesatnon-ISCvenuesinfiscal2004.Food,beverageandmerchandiseexpenseasapercentageoffood,beveragemerchandiserevenueincreasedtoapproximately65.1percentforfiscal2005ascomparedto62.8percentforfiscal2004.Theincreasesareprimarilyrelatedtopreviouslydiscussedinventorywritedowns,increasedoperatingandsellingcostsassociatedwithanexpandedmerchandisingstrategyimplementedinlate-fiscal2004anddonatedmerchandise.Alsocontributingtotheincreaseforfiscal2005isthelowermarginupscalecateringcuisineofferedinthenewNEXTELFANZONEandDaytona500Clubduring

Speedweeks.TheseincreasesarepartiallyoffsetbyourAmericrownsubsidiaryperforminglowermarginservicesatnon-ISCvenuesinfiscalyear2004andtherealignmentofeventstoPhoenixfromDarlington.

Generalandadministrativeexpensesincreasedapproximately$5.7million,or6.3percent,duringfiscal2005ascomparedtofiscal2004.Theincreasesareprimarilyrelatedtoanetincreaseincertaincostsrelatedtothegrowthofourcorebusiness,expensesassociatedwiththetimingoftheacquisitionofMartinsville,hurricanerepaircostsassociatedwithstormsinlatefiscal2004andanon-cashchargeassociatedwithcertainassetreplacementsatRichmond.TheseincreasesarepartiallyoffsetbytherecoveryofaportionofthepreviouslyrecordedbaddebtexpenserelatedtoourclaimagainstCART,non-cashchargesassociatedwiththenetbookvalueofcertainundepreciatedassetsremovedduringtherenovationofDaytona’sinfieldandMichigan’sfrontstretchduringfiscal2004,andadecreaseinprofessionalfeesandstrategicdevelopmentexpenses.Duringfiscal2005,wereachedsettlementwiththeCARTLiquidationTrustthatallowedaclaiminourfavorof$1.8millionintheCARTbankruptcy.TheclaimwasbasedonthefailuretoreturnthesanctionfeepaidtoCART,lessallowableexpenses,forthe2003eventscheduledinCaliforniathatwascanceledbecauseofthestateofemergencyduetowildfiresinSouthernCaliforniaatthetime.TheU.S.BankruptcyCourt,SouthernDistrictofIndiana,approvedthegoodfaithsettlementatahearinginMay,andwerecoveredthefull$1.8millionoftheallowedclaim.Accordingly,werecordedthe$1.8millionrecoveryasareductionofbaddebtexpenseduringfiscal2005.Generalandadministrativeexpensesasapercentageoftotalrevenuesdecreasedfromapproximately13.9percentto13.0percentprimarilyduetoincreasedtelevisionbroadcastrevenues,therecoveryintheCARTsettlement,decreasesinprofessionalandstrategicdevelopmentexpenses,increasesinrevenuesforSpeedweeksatDaytonaandthepreviouslydiscussedincrementalMartinsvilleevents.Thedecreasesarepartiallyoffsetbypreviouslynotednetincreasesingeneralandadministrativeexpenses.

Depreciationandamortizationexpenseincreasedapproximately$6.5million,or14.5percent,duringfiscal2005ascomparedtofiscal2004.TheincreasewasprimarilyattributabletotheDaytonainfieldrenovationproject,certainretailtechnologyprojects,theMichiganfrontstretchreconfigurationproject,theacquisitionofMartinsville,andotherongoingcapitalspending.

Interestincomeincreasedbyapproximately$807,000,or19.9percent,duringfiscal2005ascomparedtofiscal2004.Theseincreaseswereprimarilyduetohigheryieldonshort-terminvestmentsinthecurrentperiodspartiallyoffsetbyloweroutstandingcashandshortterminvestmentbalances.

Interestexpensedecreasedapproximately$9.0million,or41.6percent,duringfiscal2005comparedtofiscal2004.Anincreaseincapitalizedinterest,primarilyrelatedtolandpurchasedfortheproposedconstructionofaspeedwayinStatenIsland,NewYorkand,toalesserextent,certainotherconstructionprojectscontributedtothedecreaseininterestexpense.Alsocontributingtothedecreaseinfiscal2005isourMay28,2004,refinancingof$225.0million7.9percentseniornotesissuedinOctober1999anddueOctober15,2004,(“1999SeniorNotes”)with$150.0million4.2percentseniornotesdue2009,and$150.0million5.4percentseniornotesdue

2014(collectivelythe“2004SeniorNotes”)issuedonApril23,2004.Toalesserextent,theincrementalinterestonthe1999SeniorNotesfromApril23,2004toMay28,2004,contributedtolowerinterestexpenseinfiscal2005.

Equityinnetincomefromequityinvestmentsrepresentsourproratashareofthecurrentincomefromour37.5percentequityinvestmentinRacewayAssociatesandour50.0percentequityinvestmentinMotorsportsAuthentics.RacewayAssociatesownsandoperatesChicagolandSpeedwayandRoute66Raceway.MotorsportsAuthenticsistheleaderindesign,promotion,marketinganddistributionofmotorsportslicensedmerchandise.

Oureffectivetaxratedecreasedfrom39.4percentto39.0percentduringfiscal2005comparedtofiscal2004.Thisdecreaseisprimarilyaresultofdepositsmadeduringfiscal2005withtheServicetostoptheaccrualofinterestoncontesteditemsinourongoingfederaltaxexaminationcombinedwiththeincreaseinpretaxincomeinfiscal2005comparedtofiscal2004.See“FutureLiquidity”forfurtherdiscussionregardingtheexaminationofourfederalincometaxreturns.

Asaresultoftheforegoing,ourincomefromcontinuingoperationsincreasedfromapproximately$126.3milliontoapproximately$159.1million,or26.0percent,duringfiscal2005,ascomparedtothesameperiodoftheprioryear.

TheoperationsofNorthCarolinaandNazaretharepresentedasdiscontinuedoperations,netoftax,forallperiodspresentedinaccordancewithSFASNo.144.Thefiscal2004periodsincludeanapproximately$36.3millionafter-taxgainrelatedtothesaleofNorthCarolina’sassets.Alsoincludedinfiscal2004isan$8.6millionafter-tax,non-cashchargeforimpairmentoflong-livedassetsrelatedtotherealignmentoftheNASCARandIRLraceeventdatesfromNazarethtootherfacilitieswithinourportfoliobeginninginfiscal2005.Infiscal2005,discontinuedoperationsincludea$471,000after-taxnon-cashgainrelatedtothedecisionmadeinthefourthquartertorelocateandusecertaingrandstandassetsfromNazarethtoDarlington,whichhadpreviouslybeenwrittenoff.

Asaresultoftheforegoing,ournetincomeincreasedapproximately$3.0million,or$0.05perdilutedshare,forfiscal2005comparedtofiscal2004.

LiquidityandCapitalResourcesGeneral

Wehavehistoricallygeneratedsufficientcashflowfromoperationstofundourworkingcapitalneedsandcapitalexpendituresatexistingfacilities,aswellastopayanannualcashdividend.Inaddition,wehaveusedtheproceedsfromofferingsofourClassACommonStock,thenetproceedsfromtheissuanceoflong-termdebt,borrowingsunderourcreditfacilitiesandstateandlocalmechanismstofundacquisitionsanddevelopmentprojects.AtNovember30,2006,wehadcash,cashequivalentsandshort-terminvestmentstotalingapproximately$137.7million,$300.0millionprincipalamountofseniornotesoutstandingandadebtservicefundingcommitmentofapproximately$68.4millionprincipalamountrelatedtothetaxablespecialobligationrevenue(“TIF”)bondsissuedbytheUnifiedGovernmentofWyandotteCounty/KansasCity,Kansas(“UnifiedGovernment”).

Wehadworkingcapitalofapproximately$7.3millionatNovember30,2006,comparedto$14.9millionatNovember30,2005.

Ourliquidityisprimarilygeneratedfromourongoingmotorsportsoperations,andweexpectourstrongoperatingcashflowtocontinueinthefuture.Inaddition,asofNovember30,2006,wehaveapproximately$300.0millionavailabletodrawuponunderourrevolvingcreditfacility,ifneeded.See“FutureLiquidity”foradditionaldisclosuresrelatingtoourcreditfacilityandcertainrisksthatmayaffectourneartermoperatingresultsandliquidity.

CashFlows

Netcashprovidedbyoperatingactivitieswasapproximately$241.4millionforfiscal2006,comparedtoapproximately$146.8millionforfiscal2005.Thedifferencebetweenournetincomeofapproximately$116.8millionandtheapproximately$241.4millionofoperatingcashflowwasprimarilyattributableto:

• impairmentsonlong-livedassetsofapproximately$87.1million;• depreciationandamortizationexpenseofapproximately$56.8million;• stock-basedcompensationofapproximately$2.7million;and• anincreaseinincometaxespayableofapproximately$2.6million;

ThesedifferenceswerepartiallyoffsetbydepositswiththeInternalRevenueServiceofapproximately$13.9million,anincreaseinaccountsreceivableofapproximately$7.1millionanddeferredincometaxesofapproximately$4.2million.

Netcashusedininvestingactivitieswasapproximately$307.1millionforfiscal2006,comparedtoapproximately$166.2millionforfiscal2005.Ouruseofcashforinvestingactivitiesreflectspurchasesofshort-terminvestmentsofapproximately$150.7million,approximately$124.6millionforourequityinvestmentinSMISCinconnectionwithitsacquisitionofAction,approximately$110.4millionincapitalexpendituresandapproximately$3.0millioninadvancestoaffiliates.Thisuseofcashispartiallyoffsetbyapproximately$80.9millioninproceedsfromthesaleofshort-terminvestments.

Netcashusedinfinancingactivitieswasapproximately$5.4millionforfiscal2006,comparedtoapproximately$10.8millionforfiscal2005.Cashusedinfinancingactivitiesconsistsprimarilyofcashdividendspaidtotalingapproximately$4.3million.Wealsoborrowedandrepaidapproximately$80.0millionunderourcreditfacilityduringthisperiod.

CapitalExpenditures

Capitalexpenditurestotaledapproximately$110.4millionforfiscal2006,comparedtoapproximately$248.9millionforfiscal2005.Thecapitalexpendituresforfiscal2006,consistedprimarilyofseat,suiteandclubadditionsatPhoenix,seatadditionsatDarlington,capitalexpendituresrelatedtothepotentialmajorspeedwaydevelopmentintheNewYorkCityBoroughofStatenIsland(see“FutureLiquidity”),repavingofTalladega’sracingsurfaceandtherenovationandexpansionofCalifornia’sMidwayarea.Theremainingcapitalexpenditureswererelatedtoavarietyofotherimprovementsandrenovationstoourfacilities.


AtNovember30,2006,wehaveapproximately$62.5millionincapitalprojectscurrentlyapprovedforourexistingfacilities.Theseprojectsincludetheacquisitionoflandandlandimprovementsatvariousfacilitiesforexpansionofparking,campingcapacityandotheruses,seatandclubadditionsatRichmondandavarietyofotherimprovementsandrenovationstoourfacilitiesthatenableustoeffectivelycompetewithothersportsvenuesforconsumerandcorporatespending.

Asaresultofthesecurrentlyapprovedprojectsandestimatedadditionalapprovalsinfiscal2007,weexpectourtotalfiscal2007capitalexpendituresatourexistingfacilitieswillbeapproximately$80.0millionto$90.0million,dependingonthetimingofcertainprojects.

Wereviewthecapitalexpenditureprogramperiodicallyandmodifyitasrequiredtomeetcurrentbusinessneeds.

FutureLiquidityLong-TermObligationsandCommitments

OnApril23,2004,wecompletedanofferingof$300.0millionprincipalamountofunsecuredseniornotesinaprivateplacement.OnSeptember27,2004,wecompletedanoffertoexchangetheseniornotesforregisteredseniornoteswithsubstantiallyidenticalterms(“2004SeniorNotes”).AtNovember30,2006,outstanding2004SeniorNotestotaledapproximately$300.8million,netofunamortizeddiscountsandpremium,whichiscomprisedof$150.0millionprincipalamountunsecuredseniornotes,whichbearinterestat4.2percentandaredueApril2009,and$150.0millionprincipalamountunsecuredseniornotes,whichbearinterestat5.4percentandaredueApril2014.The2004SeniorNotesrequiresemi-annualinterestpaymentsonApril15andOctober15throughtheirmaturity.The2004SeniorNotesmayberedeemedinwholeorinpart,atouroption,atanytimeorfromtimetotimeatredemptionpricesasdefinedintheindenture.Oursubsidiariesareguarantorsofthe2004SeniorNotes.

InJanuary1999,theUnifiedGovernmentissuedapproximately$71.3millioninTIFbondsinconnectionwiththefinancingofconstructionofKansasSpeedway.AtNovember30,2006,outstandingTIFbondstotaledapproximately$67.3million,netoftheunamortizeddiscount,whichiscomprisedofa$18.7millionprincipalamount,6.2percenttermbonddueDecember1,2017anda$49.7millionprincipalamount,6.8percenttermbonddueDecember1,2027.TheTIFbondsarerepaidbytheUnifiedGovernmentwithpaymentsmadeinlieuofpropertytaxes(“FundingCommitment”)byourwholly-ownedsubsidiary,KansasSpeedwayCorporation.Principal(mandatoryredemption)paymentspertheFundingCommitmentarepayablebyKansasSpeedwayCorporationonOctober1ofeachyear.Thesemi-annualinterestcomponentoftheFundingCommitmentispayableonApril1andOctober1ofeachyear.KansasSpeedway

CorporationgrantedamortgageandsecurityinterestintheKansasprojectforitsFundingCommitmentobligation.

InOctober2002,theUnifiedGovernmentissuedsubordinatesalestaxspecialobligationrevenuebonds(“2002STARBonds”)totalingapproximately$6.3milliontoreimburseusforcertainconstructionalreadycompletedonthesecondphaseoftheKansasSpeedwayprojectandtofundcertainadditionalconstruction.The2002STARBonds,whichrequireannualdebtservicepaymentsandaredueDecember1,2022,willberetiredwithstateandlocaltaxesgeneratedwithintheKansasSpeedway’sboundariesandarenotourobligation.KansasSpeedwayCorporationhasagreedtoguaranteethepaymentofprincipal,anyrequiredpremiumandinterestonthe2002STARBonds.AtNovember30,2006,theUnifiedGovernmenthadapproximately$4.3millionin2002STARBondsoutstanding.Underakeepwellagreement,wehaveagreedtoprovidefinancialassistancetoKansasSpeedwayCorporation,ifnecessary,tosupportitsguaranteeofthe2002STARBonds.

OnJune16,2006,weenteredintoa$300.0millionrevolvingcreditfacility(“2006CreditFacility”).The2006CreditFacilitycontainsafeaturethatallowsustoincreasethecreditfacilitytoatotalof$500.0million,subjecttocertainconditions.Uponexecutionofthe2006CreditFacility,weterminatedourthenexisting$300.0millioncreditfacility.The2006CreditFacilityisscheduledtomatureinJune2011,andaccruesinterestatLIBORplus30.0-80.0basispoints,basedonourhighestdebtratingasdeterminedbyspecifiedratingagencies.AtNovember30,2006,wedidnothaveanyborrowingsoutstandingundertheCreditFacility.

WeareamemberofMotorsportsAlliance(owned50.0percentbyusand50.0percentbyIMS),whichowns75.0percentofRacewayAssociates.RacewayAssociatesownsandoperatesChicagolandSpeedwayandRoute66Raceway.RacewayAssociateshasatermloanarrangement,whichrequiresquarterlyprincipalandinterestpaymentsandmaturesNovember15,2012,anda$15.0millionsecuredrevolvingcreditfacility,whichmaturesinSeptember2008.AtNovember30,2006,RacewayAssociateshadapproximately$28.4millionoutstandingunderitstermloanandnoborrowingsoutstandingunderitsexistingcreditfacility.Underakeepwellagreement,themembersofMotorsportsAlliancehaveagreedtoprovidefinancialassistancetoRacewayAssociates,ifnecessary,onaproratabasistosupportperformanceunderitstermloanandcreditfacility.

WehaveguaranteedminimumroyaltypaymentsundercertainagreementsthroughDecember2015,witharemainingmaximumexposureatNovember30,2006,ofapproximately$12.5million.

AtNovember30,2006wehadcontractualcashobligationstorepaydebtandtomakepaymentsunderoperatingagreements,leasesandcommercialcommitmentsintheformofguaranteesandunusedlinesofcredit.

Raceway Associates Acquistion

InNovember2006,weannouncedthat,throughawholly-ownedsubsidiary,wehadenteredintoapurchaseagreementwithIMStoindirectlyacquireanadditional37.5percentinterestinRacewayAssociates.Asaresultofthetransactionwewillown100.0percentofMotorsportsAlliance,whichowns75.0percentofRacewayAssociates.ConcurrentwiththeIMStransaction,wealsoexercisedourrighttopurchasetheminoritypartners’remaining25.0percentinterestinRacewayAssociatespursuanttothe1999RacewayAssociatesformationagreement.

AlloftheabovetransactionsclosedonFebruary2,2007,foratotalpurchasepriceofapproximately$102.4millionwhichwaspaidutilizingexistingcashonhandandapproximately$62.0millioninborrowingsonour2006CreditFacility.Inconnectionwiththesetransactions,weacquiredRacewayAssociatesnetassets,includingapproximately$39.7millioninthirdpartydebt.Thesetransactionswillbeaccountedforasabusinesscombination.

Northwest US Speedway Development

InlightofNASCAR’spubliclyannouncedpositionregardingadditionalpotentialrealignmentoftheNASCARNEXTELCupSeriesschedule,we

alsobelievetherearepotentialdevelopmentopportunitiesinothernew,underservedmarketsacrossthecountry.Assuch,wehavebeenandareexploringopportunitiesforpublic/privatepartnershipstargetedtodeveloponeormoremotorsportsentertainmentfacilitiesinnewmarkets,includingtheNorthwestUS.InJune2005,weannouncedwehadidentifiedapreferredsiteforthedevelopmentofamotorsportsentertainmentfacilityinKitsapCounty,Washington,approximately20milesoutsideofSeattle,Washington,thecountry’s13thlargestmediamarket.Wehavesecuredanoptiontopurchaseapproximately950acresforthepotentialfuturehomeofaprofessionalmotorsportsandentertainmentandfamilyrecreationfacilityincludingaclosed-coursespeedway,grandstandsandotherseatingwithcapacityforatleast83,000attendees,whichcouldopenin2011.Weareconductingongoingprojectduediligencetoreviewenvironmentalimpactsincludingtraffic,noise,airquality,andothers,ifany.

StatelegislationisrequiredtocreateaPublicSpeedwayAuthority(“PSA”)andauthorizetheissuanceofgeneralobligationbondstohelpfinancetheproject.ThesebondswouldberepaidthroughasalestaxcreditissuedbythestatetothePSA,andfromalocaltaxonthefacility.Thelegislationwouldrequireustoinvestaminimumofapproximately$180.0millionintheproject,amongotherobligations.Weexpecttointroducetherequired

Paymentsdueundertheselong-termobligationsareasfollowsasofNovember30,2006(inthousands):

Long-termdebt $368,355 $ 770 $ 151,990 $ 2,675 $ 212,920Motorsportsentertainmentfacilityoperatingagreement 38,100 2,220 4,440 4,440 27,000Otheroperatingleases 47,233 3,945 4,453 2,465 36,370

TotalContractualCashObligations $453,688 $ 6,935 $160,883 $ 9,580 $ 276,290

ObligationsDuebyPeriod LessThan After Total OneYear 2-3Years 4-5Years 5Years

CommercialcommitmentexpirationsareasfollowsasofNovember30,2006(inthousands):

Guarantees $ 16,770 $ 515 $ 905 $ 595 $ 14,755Keepwellagreements 14,200 2,400 4,800 4,800 2,200Unusedcreditfacilities 302,082 2,082 - 300,000 -

TotalCommercialCommitments $333,052 $ 4,997 $ 5,705 $305,395 $ 16,955

CommitmentExpirationbyPeriod LessThan After Total OneYear 2-3Years 4-5Years 5Years


legislationintothe2007SessionoftheWashingtonLegislatureinhopesofsuccessfullycompletingthisstageoftheprocess.Whileweremainoptimisticaboutourabilitytoconstructamotorsportsandmulti-userecreationalfacilityinthisregionofthecountry,itistooearlytotellifthenecessarypublicparticipationwillmaterializeorifitwillbesufficienttoallowforthedevelopmentofsuchafacility.

New York Metropolitan Speedway Development

Duringfiscal1999,weannouncedourintentiontosearchforasiteforamajormotorsportsentertainmentfacilityintheNewYorkmetropolitanarea.Oureffortsincludedtheevaluationofmanydifferentlocations.Mostrecently,weidentifiedacombinationoflandparcelsintheNewYorkCityboroughofStatenIslandaggregatingapproximately676acresthatwetargetedforthedevelopmentofamajormotorsportsentertainmentandretaildevelopmentproject.Ourmajority-ownedsubsidiary,380Development,LLC(“380Development”),purchasedthetotal676acresforapproximately$110.4millioninearlyfiscal2005.

InDecember2006,weannouncedourdecisiontodiscontinuepursuitofaspeedwaydevelopmentonStatenIsland.Thedecisionwasdrivenbyavarietyoffactors,including:(1)theinabilitytosecurethecriticallocalpoliticalsupportthatisnecessarytosecuretherequiredland-usechangeapprovalsforaspeedwaydevelopment;(2)evenifwehadsecuredthenecessarypoliticalsupport,itbecameapparentthatwewouldhavebeenfacedwithunacceptableapprovalrequirements,includingoperationalrestrictionsthatwouldhavemadethefacilitydifficulttooperateandasignificantchallengetomarket;and(3)theincreasedriskthattheseunacceptableapprovalrequirementscouldresultinhigherconstructionspendingandannualoperatingcosts,whichwouldhaveasignificantnegativeimpactonthefinancialmodelforthespeedwaydevelopment.

OuroperatinganddevelopmentagreementswithTheRelatedCompanieshavebeenterminated,thenotepayabletousfromRelatedwhichwassecuredbyapledgeofRelated’s12.4percentproportionateminorityinterestin380Developmenthasbeencancelledandtheminorityinterestsurrenderedtous.

ThedecisiontodiscontinueourspeedwaydevelopmenteffortsonStatenIsland,inourfiscal2006fourthquarter,resultedinanon-cash,pre-taxchargeinourresultsofapproximately$84.7million,or$1.01perdilutedshareafter-tax.AccountingrulesgenerallyacceptedintheUSrequirethatthepropertybevaluedatitscurrentfairvalue,whichisestimatedbyanindependentappraisalatapproximately$65.0million.Priortothewrite-off,wehadcapitalizedspendingofapproximately$150.0millionthroughNovember30,2006,including:(1)$123.0millionforlandandrelatedimprovements,(2)$11.0millionforcostsrelatedsolelytothedevelopmentofthespeedway,and(3)$16.0millionforcapitalizedinterestandpropertytaxes.Thevalueofthepropertyisexpectedtobeinexcessof$100.0milliononceitisfilledandreadyforsale.InSeptember2006,asaresultofcommunicationsfromtheNewYorkStateDepartmentofEnvironmental

Conservation(“DEC”)andtheNewYorkCityDepartmentofSanitation(“DOS”),whichprovideoversightforthefilloperationsatthesite,weceasedfilloperationswhileweaddresscertainissuestheyraised.Wecontinuetoworkwiththeseagenciestoresolvetheseissuesandanticipatebeingabletoresumefilloperationsinthecomingmonths.

WehavebeguntoresearchanddevelopmarketdemandstudiestoassistintheevaluationofvariousalternativestrategiesfortheStatenIslandacreage,includingpotentiallysellingthepropertyinwholeorinparts,ordevelopingthepropertywithathirdpartyforsomeotheruse.GiventhatthepropertyisthelargestundevelopedacreageoflandinthefiveboroughsofNewYorkCity,webelieveitwillbeattractivetoawiderangeofdevelopersandusers.Thesiteiscurrentlyzonedas-of-rightforindustrialuseandcouldprovideeaseofaccessthroughadeep-waterdocklocatedonsite.Also,thepropertycanbeeasilyaccessedfromthelocalhighwaysystem.

AlthoughwearedisappointedthatourspeedwaydevelopmenteffortswereunsuccessfulonStatenIsland,weremaincommittedtopursuingthedevelopmentofamotorsportsentertainmentfacilityintheregion.DuetotheconsiderableinterestinandsupportforNASCARracinginthemetroNewYorkmarket,webelieveapremiermotorsportsentertainmentfacilitywillhaveasignificantpositiveimpactonthearea’seconomyandprovetobealong-termcommunityasset.

Joint Venture Development

InMay2005,weannouncedwearepursuingajointventureforthedevelopmentofacommercialmixed-useentertainmentshoppingcenterprojectonapproximately71acreswecurrentlyown.LocateddirectlyacrossInternationalSpeedwayBoulevard(U.S.Highway92)fromourDaytonamotorsportsentertainmentfacility,theacreagecurrentlyincludesseveralofficebuildingsthathouseourcorporateheadquartersandcertainrelatedoperationsofoursandNASCAR.Thetotalproject,whichwillbedevelopedbyusandthejointventure,isanticipatedtobecomprisedofretail,entertainment,officeandresidentialcomponentsdesignedtocomplementsurroundingcommercialdevelopments.Wearecurrentlynegotiatingajointventureagreementwithadeveloperandarealsocompletingourdetailedfeasibilitystudyinwhichanumberofkeyissueswillbeaddressed.Providedweareabletoenterintoanagreementwiththisdeveloperandtheresultsofthefeasibilitystudyarefavorableandappropriateleasingconsiderationsareattained,weexpecttomoveforwardwiththeprojectwithinthenextthreemonths.Ifweproceedwiththeprojectitisexpectedthatcertainofourexistingcorporateheadquarterofficesandotherbuildings,whicharenotcurrentlyfullydepreciated,willberazedduringthenext6to24monthsresultinginayettobedetermined,non-cashchargetoearnings.

Internal Revenue Service Examination

TheServiceiscurrentlyperformingaperiodicexaminationofourfederalincometaxreturnsfortheyearsendedNovember30,1999through2005andhaschallengedthetaxdepreciationtreatmentofasignificantportionofourmotorsportsentertainmentfacilityassets.ThroughNovember30,2006,

wehavereceivedreportsfromtheServicerequestingdownwardadjustmentstoourtaxdepreciationexpenseforthefiscalyearsendedNovember30,1999through2004,whichcouldpotentiallyresultinthereclassificationofapproximately$94.5millionofincometaxesfromdeferredtocurrent.Includingrelatedinterest,thecombinedafter-taxcashflowimpactoftheserequestedadjustmentsisapproximately$110.8million.Inordertopreventincurringadditionalinterest,wehavedepositedapproximately$110.8million,withtheService.InDecember2006,wereceivedareportfromtheServicewithrespecttoourfiscalyearendedNovember30,2005,whichcouldpotentiallyresultinthethereclassificationofapproximately$6.6millionofincometaxesfromdeferredtocurrent.Accordingly,inordertopreventincurringadditionalinterest,wedepositedanadditional$7.1millionwiththeServiceinJanuary2007.AdditionaladjustmentstoourtaxdepreciationexpenseareexpectedtoberequestedlaterbytheServiceforthefiscalyearendedNovember30,2006.Includingrelatedinterest,weestimatethecombinedafter-taxcashflowimpactoftheadditionalfederaltaxadjustmentsforfiscal2006,andrelatedstatetaxrevisionsforallperiods,torangebetween$30.0millionand$40.0millionatNovember30,2006.Ourdepositsarenotapaymentoftax,andwewillreceiveaccruedinterestonanyofthesefundsultimatelyreturnedtous.AtNovember30,2006,theapproximately$110.8millionofpreviouslydiscusseddepositswiththeServiceareclassifiedaslong-termassetsinourconsolidatedfinancialstatements.Webelievethatourapplicationofthefederalincometaxregulationsinquestion,whichhavebeenappliedconsistentlysincebeingadoptedin1986andhavebeensubjectedtopreviousIRSaudits,isappropriate,andweintendtovigorouslydefendthemeritsofourposition.OncecommencedbytheService,theadministrativeappealsprocessisexpectedtotakesixtofifteenmonthstocomplete.Ifourappealisnotresolvedsatisfactorily,wewillevaluateallofouroptions,includinglitigation.ItisimportanttonotetheFederalAmericanJobsCreationActof2004legislation,whichwaseffectiveonOctober23,2004,providesownersofmotorsportsentertainmentfacilityassetsaseven-yearrecoveryperiodfortaxdepreciationpurposes.ThemotorsportsprovisionappliesprospectivelyfromthedateofenactmentthroughJanuary1,2008.Weandothersintheindustryarepursuingaseven-yearprospectivetaxdepreciationprovision.InaccordancewithSFASNo.109“AccountingforIncomeTaxes,”wehaveaccruedadeferredtaxliabilitybasedonthedifferencesbetweenourfinancialreportingandtaxbasesofsuchassetsinourconsolidatedbalancesheetasofNovember30,2006.Whileanadverseresolutionofthesematterscouldresultinamaterialnegativeimpactoncashflow,includingpaymentoftaxesfromamountscurrentlyondepositwiththeService,webelievethatwehaveprovidedadequatereservesrelatedtothesemattersincludinginterestchargesthroughNovember30,2006totalingapproximately$12.6million,and,asaresult,donotexpectthatsuchanoutcomewouldhaveamaterialadverseeffectonresultsofoperations.

Future Cash Flows

Ourcashflowfromoperationsconsistsprimarilyofticket,hospitality,merchandise,cateringandconcessionsalesandcontractedrevenuesarisingfromtelevisionbroadcastrightsandmarketingpartnerships.Webelievethat

cashflowsfromoperations,alongwithexistingcash,cashequivalents,short-terminvestmentsandavailableborrowingsunderour2006CreditFacility,willbesufficienttofund:

• operationsandapprovedcapitalprojectsatexistingfacilitiesfortheforeseeablefuture;

• paymentsrequiredinconnectionwiththepurchaseofadditionalinterestsinRacewayAssociates;

• paymentsrequiredinconnectionwiththefundingoftheUnifiedGovernment’sdebtservicerequirementsrelatedtotheTIFbonds;

• paymentsrelatedtoourexistingdebtservicecommitments;

• anypotentialpaymentsassociatedwithourkeepwellagreements;

• anypaymentoftaxthatmayultimatelyoccurasaresultoftheexaminationbytheService;and

• thefeesandexpensesincurredinconnectionwiththecurrentlegalproceedingdiscussedin“FutureTrendsinOperatingResults.”

Weintendtopursuefurtherdevelopmentand/oracquisitionopportunities(includingthepossibledevelopmentofnewmotorsportsentertainmentfacilities,suchastheNewYorkmetropolitanarea,theNorthwestUSandotherareas),thetiming,sizeandsuccess,aswellasassociatedpotentialcapitalcommitments,ofwhichareunknownatthistime.Accordingly,amaterialaccelerationofourgrowthstrategycouldrequireustoobtainadditionalcapitalthroughdebtand/orequityfinancings.Althoughtherecanbenoassurance,webelievethatadequatedebtandequityfinancingwillbeavailableonsatisfactoryterms.

Whileweexpectourstrongoperatingcashflowtocontinueinthefuture,ourfinancialresultsdependsignificantlyonanumberoffactorsrelatingtoconsumerandcorporatespending,includingeconomicconditionsaffectingmarketingdollarsavailablefromthemotorsportsindustry’sprincipalsponsors.Consumerandcorporatespendingcouldbeadverselyaffectedbyeconomic,securityandotherlifestyleconditionsresultinginlowerthanexpectedfutureoperatingcashflows.GeneraleconomicconditionsweresignificantlyandnegativelyimpactedbytheSeptember11,2001terroristattacksandthewarinIraqandcouldbesimilarlyaffectedbyanyfutureattacksorfearofsuchattacks,orbyconditionsresultingfromotheractsorprospectsofwar.Anyfutureattacksorwarsorrelatedthreatscouldalsoincreaseourexpensesrelatedtoinsurance,securityorotherrelatedmatters.Also,ourfinancialresultscouldbeadverselyimpactedbyawidespreadoutbreakofasevereepidemiologicalcrisis.Theitemsdiscussedabovecouldhaveasingularorcompoundedmaterialadverseaffectonourfinancialsuccessandfuturecashflow.

RecentAccountingPronouncementsInDecember2004theFASBissuedrevisedSFASNo.123(R),“Share-BasedPayment.”SFASNo.123(R)setsaccountingrequirementsfor“share-based”compensationtoemployeesandrequirescompaniestorecognizeintheincomestatementthegrant-datefairvalueofstockoptionsandother


Thefollowingtablepresentscertainunauditedfinancialdataforeachquarteroffiscal2005and2006(inthousands,exceptpershareamounts):

Totalrevenue $179,432 $157,447 $166,519 $236,730Operatingincome 71,847 46,866 56,019 90,533Incomefromcontinuingoperations 41,118 26,540 36,804 54,612Netincome 41,065 26,501 36,752 55,044Basicearningspershare 0.77 0.50 0.69 1.04Dilutedearningspershare 0.77 0.50 0.69 1.03

FiscalQuarterEnded February28, May31, August31, November30, 2005 2005 2005 2005

Totalrevenue $193,934 $172,083 $178,892 $253,460Operatingincome 78,463 52,176 51,808 16,719Incomefromcontinuingoperations 44,131 30,727 34,299 7,823Netincome 44,053 30,687 34,272 7,792Basicearningspershare 0.83 0.58 0.64 0.15Dilutedearningspershare 0.83 0.58 0.64 0.15


equity-basedcompensation.SFASNo.123(R)iseffectiveinannualperiodsbeginningafterJune15,2005.WeadoptedSFASNo.123(R)inthefirstquarteroffiscal2006,usingthemodified-prospective-transitionmethodandcurrentlydisclosetheproformaeffectonnetincomeandearningspershareofthefairvaluerecognitionprovisionsofSFASNo.123(R)forperiodspriortoadoption.OuradoptionofSFASNo.123(R)didnothaveamaterialimpactonourfinancialposition,resultsofoperationsorcashflows.

InJune2006theFASBissuedInterpretationNo.48,“AccountingforUncertaintyinIncomeTaxes”,whichclarifiestheaccountingforuncertaintyinincometaxesrecognizedinanenterprise’sfinancialstatementsinaccordancewithSFASNo.109,“AccountingforIncomeTaxes.”Theinterpretationprescribesarecognitionthresholdandmeasurementattributeforthefinancialstatementrecognitionandmeasurementofataxpositiontakenorexpectedtobetakeninataxreturn.Thisinterpretationalsoprovidesguidanceonderecognition,classification,interestandpenalties,accountingininterimperiods,disclosure,andtransition.ThisinterpretationiseffectiveforfiscalyearsbeginningafterDecember15,2006.Wearecurrentlyevaluatingthepotentialimpactthattheadoptionofthisinterpretationwillhaveonitsfinancialpositionandresultsofoperations.

InJune2006theEmergingIssuesTaskForce(“EITF”)reachedaconsensusonIssueNo.06-03,“HowTaxesCollectedfromCustomersandRemittedtoGovernmentalAuthoritiesShouldBePresentedintheIncomeStatement.”EITFNo.06-03addressestheaccountingforexternallyimposedtaxesonrevenue-producingtransactionsthattakeplacebetweenaselleranditscustomer,including,butnotlimitedtosales,use,valueadded,andcertainexcisetaxes.EITFNo.06-03alsoprovidesguidanceonthedisclosureofanentity’saccountingpoliciesforpresentingsuchtaxesonagrossornetbasisandtheamountofsuchtaxesreportedonagrossbasis.EITFNo.06-03is

effectiveforinterimandfiscalyearsbeginningafterDecember15,2006.WearecurrentlyevaluatingthepotentialeffectthattheadoptionofthisEITFwillhaveonourfinancialstatements.

InSeptember2006theFASBissuedSFASNo.157,“FairValueMeasurements”whichestablishesaframeworkformeasuringfairvalueingenerallyacceptedaccountingprinciples(“GAAP”),andexpandsdisclosuresaboutfairvaluemeasurements.SFASNo157appliesunderotheraccountingpronouncementsthatrequireorpermitfairvaluemeasurementsand,accordingly,SFASNo.157doesnotrequireanynewfairvaluemeasurements.SFASNo.157iseffectiveforfinancialstatementsissuedforfiscalyearsbeginningafterNovember15,2007,andinterimperiodswithinthosefiscalyears.Wearecurrentlyevaluatingthepotentialimpactthattheadoptionofthisstatementwillhaveonourfinancialpositionandresultsofoperations.

Ourquarterlyresultsaresubjecttoseasonalityandvariability

WederivemostofourincomefromalimitednumberofNASCAR-sanctionedraces.Asaresult,ourbusinesshasbeen,andisexpectedtoremain,highlyseasonalbasedonthetimingofmajorracingevents.Forexample,oneofourNASCARNEXTELCupSeriesracesistraditionallyheldontheSundayprecedingLaborDay.Accordingly,therevenuesandexpensesforthatraceand/ortherelatedsupportingeventsmayberecognizedineitherthefiscalquarterendingAugust31orthefiscalquarterendingNovember30.

FutureschedulechangesasdeterminedbyNASCARorothersanctioningbodies,aswellastheacquisitionofadditional,ordivestitureofexisting,motorsportsentertainmentfacilitiescouldimpactthetimingofourmajoreventsincomparisontopriororfutureperiods.

QuantitativeandQualitativeDisclosuresAboutMarketRiskWeareexposedtomarketriskfromchangesininterestratesinthenormalcourseofbusiness.OurinterestincomeandexpensearemostsensitivetochangesinthegenerallevelofU.S.interestratesandtheLIBORrate.Inordertomanagethisexposure,weuseacombinationofdebtinstruments,includingtheuseofderivativesintheformofinterestrateswapagreements.Wedonotenterintoanyderivativesfortradingpurposes.

Theobjectiveofourassetmanagementactivitiesistoprovideanadequatelevelofinterestincomeandliquiditytofundoperationsandcapitalexpansion,whileminimizingmarketrisk.Weutilizeovernightsweepaccountsandshort-terminvestmentstominimizetheinterestraterisk.Wedonotbelievethatourinterestrateriskrelatedtoourcashequivalentsandshort-terminvestmentsismaterialduetothenatureoftheinvestments.

Ourobjectiveinmanagingourinterestrateriskonourdebtistomaintainabalanceoffixedandvariableratedebtthatwilllowerouroverallborrowingcostswithinreasonableriskparameters.Interestrateswapsareusedfromtimetotimetoconvertaportionofourdebtportfoliofromavariableratetoafixedrateorfromafixedratetoavariablerate.

Thefollowinganalysisprovidesquantitativeinformationregardingourexposuretointerestraterisk.Weutilizevaluationmodelstoevaluatethesensitivityofthefairvalueoffinancialinstrumentswithexposuretomarketriskthatassumeinstantaneous,parallelshiftsininterestrateyieldcurves.Therearecertainlimitationsinherentinthesensitivityanalysespresented,primarilyduetotheassumptionthatinterestrateschangeinstantaneously.Inaddition,theanalysesareunabletoreflectthecomplexmarketreactionsthatnormallywouldarisefromthemarketshiftsmodeled.

AsdescribedinNote7totheconsolidatedfinancialstatements,wehavevariousdebtinstrumentsthatareissuedatfixedrates.Thesefinancialinstruments,whichhaveafixedrateofinterest,areexposedtofluctuationsinfairvalueresultingfromchangesinmarketinterestrates.Thefairvaluesoflong-termdebtarebasedonquotedmarketpricesatthedateofmeasurement.Ourcreditfacilitiesapproximatefairvalueastheybearinterestratesthatapproximatemarket.AtNovember30,2006,wedidnothaveanyvariabledebtoutstanding;therefore,ahypotheticalincreaseininterestratesby1.0percentwouldnotresultinanincreaseinourinterestexpense.AtNovember30,2006,thefairvalueofourtotallong-termdebtasdeterminedbyquotesfromfinancialinstitutionswasapproximately$370.5million.Thepotentialdecreaseinfairvalueresultingfromahypothetical10.0percentshift

ininterestrateswouldbeapproximately$8.6millionatNovember30,2006.

Fromtimetotimeweutilizederivativeinvestmentsintheformofinterestrateswapstomanagethefixedandfloatinginterestratemixofourtotaldebtportfolioandrelatedoverallcostofborrowing.Thenotionalamount,interestpaymentandmaturitydatesoftheswapsmatchthetermsofthedebttheyareintendedtomodify.AtNovember30,2006wedidnothaveanyinterestrateswapagreementsinplace.

Creditriskarisesfromthepossibleinabilityofcounterpartiestomeetthetermsoftheircontractsonanetbasis.However,weminimizesuchriskexposuresfortheseinstrumentsbylimitingcounterpartiestolargebanksandfinancialinstitutionsthatmeetestablishedcreditguidelines.Wedonotexpecttoincuranylossesasaresultofcounterpartydefault.

FactorsThatMayAffectOperatingResultsThisreportmaycontainforward-lookingstatementswithinthemeaningofSection27AoftheSecuritiesActof1933,asamended,andSection21EoftheSecuritiesExchangeActof1934,asamended.Youcanidentifyaforward-lookingstatementbyouruseofthewords“anticipate,”“estimate,”“expect,”“may,”“believe,”“objective,”“projection,”“forecast,”“goal,”andsimilarexpressions.Theseforward-lookingstatementsincludeourstatementsregardingthetimingoffutureevents,ouranticipatedfutureoperationsandouranticipatedfuturefinancialpositionandcashrequirements.Althoughwebelievethattheexpectationsreflectedinourforward-lookingstatementsarereasonable,wedonotknowwhetherourexpectationswillprovecorrect.WedisclosetheimportantfactorsthatcouldcauseouractualresultstodifferfromourexpectationsincautionarystatementsmadeinthisreportandinotherfilingswehavemadewiththeSecuritiesandExchangeCommission.Allsubsequentwrittenandoralforward-lookingstatementsattributabletousortopersonsactingonourbehalfareexpresslyqualifiedintheirentiretybythesecautionarystatements.Ouractualresultscoulddiffermateriallyfromthoseanticipatedintheseforward-lookingstatementsasaresultoftheriskfactorsdescribedinfilingswiththeSecuritiesandExchangeCommission.

Manyofthesefactorsarebeyondourabilitytocontrolorpredict.Wecautionyounottoputunduerelianceonforward-lookingstatementsortoprojectanyfutureresultsbasedonsuchstatementsoronpresentorpriorearningslevels.Additionalinformationconcerningthese,orotherfactors,whichcouldcausetheactualresultstodiffermateriallyfromthoseintheforward-lookingstatementsiscontainedfromtimetotimeinourotherSECfilings.Copiesofthosefilingsareavailablefromusand/ortheSEC.


ConsolidatedBalanceSheets

November30, 2005 2006 (InThousands)

ASSETS CurrentAssets: Cashandcashequivalents $ 130,758 $ 59,681 Short-terminvestments 8,200 78,000 Receivables,lessallowanceof$1,500in2005and$1,000in2006 45,557 52,699 Inventories 6,528 3,976 Deferredincometaxes - 995 Prepaidexpensesandothercurrentassets 6,335 8,251TotalCurrentAssets 197,378 203,602 PropertyandEquipment,net 1,178,682 1,157,313

OtherAssets: Equityinvestments 51,160 175,915 Intangibleassets,net 149,464 149,314 Goodwill 99,507 99,507 DepositswithInternalRevenueService 96,913 110,813 Other 23,965 25,595 421,009 561,144 TotalAssets $ 1,797,069 $ 1,922,059

LIABILITIESANDSHAREHOLDERS’EQUITY CurrentLiabilities: Currentportionoflong-termdebt $ 635 $ 770 Accountspayable 19,274 29,577 Deferredincome 123,870 124,254 Incometaxespayable 20,067 22,477 Othercurrentliabilities 18,645 19,226TotalCurrentLiabilities 182,491 196,304 Long-TermDebt 368,387 367,324DeferredIncomeTaxes 194,825 191,642Long-TermDeferredIncome 11,342 10,808OtherLong-TermLiabilities 69 866CommitmentsandContingencies - -Shareholders’Equity: ClassACommonStock,$.01parvalue,80,000,000sharesauthorized; 29,394,344and31,078,307issuedandoutstandingin2005and2006,respectively 295 311 ClassBCommonStock,$.01parvalue,40,000,000sharesauthorized; 23,928,058and22,100,263issuedandoutstandingin2005and2006,respectively 239 221 Additionalpaid-incapital 699,879 698,396 Retainedearnings 343,766 456,187 1,044,179 1,155,115 Lessunearnedcompensation-restrictedstock 4,224 -TotalShareholders’Equity 1,039,955 1,155,115 TotalLiabilitiesandShareholders’Equity $ 1,797,069 $ 1,922,059

Seeaccompanyingnotes

ConsolidatedStatementsofOperations

REVENUES Admissions,net $ 222,545 $ 234,768 $ 235,251 Motorsportsrelated 334,943 408,514 466,095 Food,beverageandmerchandise 83,236 87,269 87,288 Other 7,124 9,578 9,735 647,848 740,129 798,369

EXPENSES Direct: PrizeandpointfundmoniesandNASCARsanctionfees 119,322 136,816 151,203 Motorsportsrelated 113,073 134,395 144,445 Food,beverageandmerchandise 52,285 56,773 53,141 Generalandadministrative 90,307 95,987 106,497 Depreciationandamortization 44,443 50,893 56,833 Impairmentoflong-livedassets - - 87,084 419,430 474,864 599,203 Operatingincome 228,418 265,265 199,166Interestincome 4,053 4,860 5,312Interestexpense (21,723) (12,693) (12,349)Equityinnetincomefromequityinvestments 2,754 3,516 318Lossonearlyredemptionofdebt (4,988) - - Incomefromcontinuingoperationsbeforeincometaxes 208,514 260,948 192,447Incometaxes 82,218 101,876 75,467Incomefromcontinuingoperations 126,296 159,072 116,980(Loss)incomefromdiscontinuedoperations,netofincometaxesof($3.7)million, $0and($268),respectively (6,315) 289 (176)Gainonsaleofdiscontinuedoperations,netofincometaxesof$27.6million 36,337 - - Netincome $ 156,318 $ 159,361 $ 116,804 Basicearningspershare: Incomefromcontinuingoperations $ 2.38 $ 2.99 $ 2.20 (Loss)incomefromdiscontinuedoperations (0.12) 0.01 - Gainonsaleofdiscontinuedoperations 0.68 - - Netincome $ 2.94 $ 3.00 $ 2.20 Dilutedearningspershare: Incomefromcontinuingoperations $ 2.37 $ 2.99 $ 2.20 (Loss)incomefromdiscontinuedoperations (0.11) - (0.01) Gainonsaleofdiscontinuedoperations 0.68 - - Netincome $ 2.94 $ 2.99 $ 2.19

Dividendspershare $ 0.06 $ 0.06 $ 0.08Basicweightedaveragesharesoutstanding 53,084,437 53,128,533 53,166,458Dilutedweightedaveragesharesoutstanding 53,182,776 53,240,183 53,270,623

YearEndedNovember30, 2004 2005 2006 (InThousands,ExceptPerShareAmounts)



ConsolidatedStatementsofChangesinShareholders’Equity

BalanceatNovember30,2003 $ 283 $ 249 $694,719 $ 34,602 $ (333) $ (3,055) $726,465 Comprehensiveincome Netincome - - - 156,318 - - 156,318 Interestrateswap - - - - 311 - 311 Totalcomprehensiveincome 156,629 Cashdividends($.06pershare) - - - (3,196) - - (3,196) Exerciseofstockoptions - - 442 - - - 442 Restrictedstockgrant 1 - 2,022 - - (2,023) - Reacquisitionofpreviouslyissued commonstock - - (361) (35) - - (396) ConversionofClassBCommonStock toClassACommonStock 5 (5) - - - - - Incometaxbenefitrelatedtorestricted stockplan - - 60 - - - 60 Amortizationofunearnedcompensation - - - - - 1,734 1,734 BalanceatNovember30,2004 289 244 696,882 187,689 (22) (3,344) 881,738 Comprehensiveincome Netincome - - - 159,361 - - 159,361 Interestrateswap - - - - 22 - 22 Totalcomprehensiveincome 159,383 Cashdividends($.06pershare) - - - (3,199) - - (3,199) Exerciseofstockoptions - - 444 - - - 444 Restrictedstockgrant 1 - 2,906 - - (2,907) - Reacquisitionofpreviouslyissued commonstock - - (426) (85) - - (511) ConversionofClassBCommonStock toClassACommonStock 5 (5) - - - - - Forfeituresofrestrictedshares - - (74) - - 46 (28) Incometaxbenefitrelatedtorestricted stockplan - - 147 - - - 147 Amortizationofunearnedcompensation - - - - - 1,981 1,981 BalanceatNovember30,2005 295 239 699,879 343,766 - (4,224) 1,039,955 Comprehensiveincome Netincome - - - 116,804 - - 116,804 Cashdividends($.08pershare) - - - (4,270) - - (4,270) Exerciseofstockoptions - - 189 - - - 189 Statement123(R)transitionimpacton restrictedstockplan (3) - (4,221) - - 4,224 - Reacquisitionofpreviouslyissued commonstock - - (347) (113) - - (460) ConversionofClassBCommonStock toClassACommonStock 18 (18) - - - - - Awardofsharesgrantedunderlong-term stockincentiveplan 1 - (1) - - - - Incometaxbenefitrelatedtostock-based compensation - - 197 - - - 197 Stock-basedcompensation - - 2,700 - - - 2,700 BalanceatNovember30,2006 $ 311 $ 221 $698,396 $ 456,187 $ - $ - $1,155,115

ClassA ClassB Accumulated Common Common Other Unearned Stock Stock Additional Comprehensive Compensation- Total $.01Par $.01Par Paid-in Retained (Loss) Restricted Shareholders’ Value Value Capital Earnings Income Stock Equity (InThousands)


ConsolidatedStatementsofCashFlows

OPERATINGACTIVITIES Netincome $ 156,318 $ 159,361 $ 116,804 Adjustmentstoreconcilenetincometonetcashprovidedby operatingactivities: Depreciationandamortization 44,443 50,893 56,833 Discontinuedoperationsdepreciation 1,244 - - Stock-basedcompensation 1,734 1,953 2,700 Amortizationoffinancingcosts 250 569 538 Deferredincometaxes 52,146 29,208 (4,178) Incomefromequityinvestments (2,754) (3,516) (318) Impairmentoflong-livedassets 13,217 - 87,084 Gainonsaleofdiscontinuedoperations (63,926) - - Lossonearlyredemptionofdebt 4,988 - - Excesstaxbenefitsrelatingtostock-basedcompensation - - (185) Other,net 1,028 (248) 23 Changesinoperatingassetsandliabilities Receivables,net (10,959) 7,304 (7,142) Inventories,prepaidexpensesandotherassets (2,569) (644) 336 DepositswithInternalRevenueService - (96,913) (13,900) Accountspayableandotherliabilities 9,215 (5,359) 345 Deferredincome 3,187 9,191 (150) Incometaxes 18,424 (5,027) 2,607 Netcashprovidedbyoperatingactivities 225,986 146,772 241,397 INVESTINGACTIVITIES Capitalexpenditures (135,218) (248,850) (110,374) Proceedsfromassetdisposals 86 31 182 Acquisitionofbusinesses (195,325) (12,660) - Proceedsfromsaleofdiscontinuedoperations 100,391 - - Purchaseofequityinvestments (2,008) (11,642) (124,565) Proceedsfromshort-terminvestments 147,650 430,950 80,855 Purchasesofshort-terminvestments (262,450) (324,150) (150,655) Proceedsfromaffiliate - 487 128 Advancetoaffiliate - - (3,000) Other,net (1,442) (377) 314 Netcashusedininvestingactivities (348,316) (166,211) (307,115) FINANCINGACTIVITIES Proceedsundercreditfacility - - 80,000 Paymentsundercreditfacility - - (80,000) Proceedsfromlong-termdebt 299,570 - - Paymentoflong-termdebt (231,890) (7,505) (635) Paymentoflong-termdebtredemptionpremium (5,340) - - Deferredfinancingfees (2,626) (10) (368) Proceedsfrominterestrateswap 2,771 - - Cashdividendspaid (3,196) (3,199) (4,270) Reacquisitionofpreviouslyissuedcommonstock (396) (511) (460) ExerciseofClassAcommonstockoptions 442 444 189 Excesstaxbenefitsrelatingtostock-basedcompensation - - 185 Netcashprovidedby(usedin)financingactivities 59,335 (10,781) (5,359) Netdecreaseincashandcashequivalents (62,995) (30,220) (71,077)Cashandcashequivalentsatbeginningofyear 223,973 160,978 130,758 Cashandcashequivalentsatendofyear $ 160,978 $ 130,758 $ 59,681

YearEndedNovember30, 2004 2005 2006 (InThousands)



Inaddition,RacewayAssociates,LLC(“RacewayAssociates”),inwhichtheCompanyholdsa37.5percentindirectequityinterest,ownsandoperatesChicagolandSpeedwayandRoute66Raceway,twonationallyrecognizedmajormotorsportsentertainmentfacilitiesinJoliet,Illinois.

In2006,thesemotorsportsentertainmentfacilitiespromotedwellover100stockcar,openwheel,sportscar,truck,motorcycleandotherracingevents,including:

• 21NationalAssociationforStockCarAutoRacing(“NASCAR”)NEXTELCupSeriesevents;

• 16NASCARBuschSeriesevents;

• nineNASCARCraftsmanTrucksSeriesevents;

• sixIndyRacingLeague(“IRL”)IndyCarSeriesevents;

• oneNationalHotRodAssociation(“NHRA”)POWERadedragracingevents;

• thepremiersportscarenduranceeventintheUnitedStates(theRolex24atDaytonasanctionedbytheGrandAmericanRoadRacingAssociation(“GrandAmerican”);and

• anumberofotherprestigiousstockcar,sportscar,openwheelandmotorcycleevents.

ThegeneralnatureoftheCompany’sbusinessisamotorsportsthemedamusemententerprise,furnishingamusementtothepublicintheformofmotorsportsthemedentertainment.TheCompany’smotorsportseventoperationsconsistprincipallyofracingeventsatthesemajormotorsportsentertainmentfacilities,which,intotal,currentlyhavemorethanonemilliongrandstandseats.TheCompanyalsoconducts,eitherthroughoperationsoftheparticularfacilityorthroughcertainwholly-ownedsubsidiariesoperatingunderthename“Americrown,”souvenirmerchandisingoperations,foodandbeverageconcessionoperationsandcateringservices,bothinsuitesandchalets,forcustomersatitsmotorsportsentertainmentfacilities.TheCompanyalsomarketsanddistributesmotorsports-relatedmerchandisesuchasapparel,

souvenirsandcollectiblestoretailcustomers,throughitsRacingOne.cominternetsiteanddirectlytodealers.

MRNRadio,theCompany’sproprietaryradionetwork,producesandsyndicatestoradiostationstheNASCARNEXTELCup,BuschandCraftsmanTruckseriesracesandcertainotherracesconductedattheCompany’smotorsportsentertainmentfacilities,aswellassomeracesfrommotorsportsentertainmentfacilitiestheCompanydoesnotown.Inaddition,MRNRadioprovidesproductionservicesforNEXTELVision,thetracksidelargescreenvideodisplayunits,atallNASCARNEXTELCupSerieseventweekendsexceptatIndianapolisMotorSpeedway,whichisatracknotownedbytheCompany.MRNRadioalsoproducesandsyndicatesdailyandweeklyNASCARracing-themedprograms.

TheCompanyownsandoperatesDAYTONAUSA-TheUltimateMotorsportsAttraction,amotorsports-themedentertainmentcomplexandtheOfficialAttractionofNASCARthatincludesinteractivemedia,theaters,historicalmemorabiliaandexhibits,tours,aswellasridinganddrivingexperiencesofDaytonaInternationalSpeedway.

SIGNIFICANTACCOUNTINGPOLICIES:

PRINCIPLESOFCONSOLIDATION:TheaccompanyingconsolidatedfinancialstatementsincludetheaccountsofInternationalSpeedwayCorporationanditswholly-ownedsubsidiaries.Allmaterialintercompanyaccountsandtransactionshavebeeneliminatedinconsolidation.

CASHANDCASHEQUIVALENTSANDSHORTTERMINVESTMENTS:Forpurposesofreportingcashflows,cashandcashequivalentsincludecashonhand,bankdemanddepositaccountsandovernightsweepaccountsusedintheCompany’scashmanagementprogram.Allhighlyliquidinvestmentswithstatedmaturitiesofthreemonthsorlessfromthedateofpurchaseareclassifiedascashequivalents.

TheCompanymaintaineditscashandcashequivalentsprimarilywithtwofinancialinstitutionsatNovember30,2006.TheCompanybelievesthatit

NotestoConsolidatedFinancialStatements,November30,2006

NOTE1-DESCRIPTIONOFBUSINESSANDSUMMARYOFSIGNIFICANTACCOUNTINGPOLICIES

DESCRIPTIONOFBUSINESS:InternationalSpeedwayCorporation,includingitswhollyownedsubsidiaries(collectivelythe“Company”),isaleadingpromoterofmotorsportsentertainmentactivitiesintheUnitedStates.AsofNovember30,2006,theCompanyownedand/oroperatedelevenofthenation’smajormotorsportsentertainmentfacilitiesasfollows:

TrackName Location TrackLength

DaytonaInternationalSpeedway DaytonaBeach,Florida 2.5Miles

TalladegaSuperspeedway Talladega,Alabama 2.6Miles

MichiganInternationalSpeedway Brooklyn,Michigan 2.0Miles

RichmondInternationalRaceway Richmond,Virginia 0.8Miles

CaliforniaSpeedway Fontana,California 2.0Miles

KansasSpeedway KansasCity,Kansas 1.5Miles

PhoenixInternationalRaceway Phoenix,Arizona 1.0Mile

Homestead-MiamiSpeedway Homestead,Florida 1.5Miles

MartinsvilleSpeedway Martinsville,Virginia 0.5Miles

DarlingtonRaceway Darlington,SouthCarolina 1.3Miles

WatkinsGlenInternational WatkinsGlen,NewYork 3.4Miles

isnotexposedtoanysignificantcreditriskonitscashbalancesduetothestrengthofthefinancialinstitutions.

TheCompany’sshort-terminvestmentsconsistprimarilyofhighlyliquid,variablerateinstruments,whichhavestatedmaturitiesofgreaterthanthreemonthsandhavebeenclassifiedasavailable-for-sale.TheCompanyhasdeterminedthatitsinvestmentsecuritiesareavailableandintendedforuseincurrentoperationsand,accordingly,hasclassifiedsuchinvestmentsecuritiesascurrentassets.

RECEIVABLES:Receivablesarestatedattheirestimatedcollectibleamounts.Theallowancefordoubtfulaccountsisestimatedbasedonhistoricalexperienceofwriteoffsandfutureexpectationsofconditionsthatmightimpactthecollectibilityofaccounts.

INVENTORIES:Inventories,consistingoffinishedgoods,arestatedatthelowerofcost,determinedonthefirstin,firstoutbasis,ormarket.

PROPERTYANDEQUIPMENT:Propertyandequipment,includingimprovementstoexistingfacilities,arestatedatcost.Depreciationisprovidedforfinancialreportingpurposesusingthestraightlinemethodovertheestimatedusefullivesasfollows:

Buildings,grandstandsandmotorsports entertainmentfacilities 10-30years

Furnitureandequipment 3-8years

Thecarryingvaluesofpropertyandequipmentareevaluatedforimpairmentupontheoccurrenceofanimpairmentindicatorbaseduponexpectedfutureundiscountedcashflows.Ifeventsorcircumstancesindicatethatthecarryingvalueofanassetmaynotberecoverable,animpairmentlosswouldberecognizedequaltothedifferencebetweenthecarryingvalueoftheassetanditsfairvalue.

EQUITYINVESTMENTS:TheCompany’sinvestmentsinjointventuresandotherinvesteeswhereitcanexertsignificantinfluenceontheinvestee,butdoesnothaveeffectivecontrolovertheinvestee,areaccountedforusingtheequitymethodofaccounting.TheCompany’sequityinthenetincome(loss)fromequitymethodinvestmentsisrecordedasincome(loss)withacorrespondingincrease(decrease)intheinvestment.Dividendsreceivedreducetheinvestment.TheCompanyrecognizestheeffectsoftransactionsinvolvingthesaleordistributionbyanequityinvesteeofitscommonstockascapitaltransactions.

EquitymethodinvestmentsconsistoftheCompany’sinterestsinMotorsportsAlliance,LLC(“MotorsportsAlliance”)andSMISC,LLC(“SMISC”).

MotorsportsAlliance(owned50.0percentbytheCompanyand50.0percentbyIndianapolisMotorSpeedwayLLC),ownsa75.0percentinterestinRacewayAssociates.RacewayAssociatesownsandoperatesChicagolandSpeedwayandRoute66Raceway.SeeSubsequentEventNote17.

OnAugust30,2005,theCompanypartneredwithSpeedwayMotorsportsIncorporated(“SMI”)ina50/50jointventure,SMISC,LLC(“SMISC”),which,throughawholly-ownedsubsidiaryMotorsportsAuthentics,LLC,conductsbusinessunderthenameMotorsportsAuthentics.Motorsports

AuthenticsoperatesasanindependentcompanywiththeCompanyandSMIasequalowners.AlsoonAugust30,2005,theCompanyannouncedthatSMISChadenteredintoadefinitiveagreementdatedAugust29,2005,topurchasethestockofActionPerformanceCompanies,Inc.(“Action”).OnDecember9,2005,SMISCpurchasedthestockofAction,whichwasstructuredasamergerofawholly-ownedsubsidiaryofMotorsportsAuthentics,LLCintoAction.

TheacquisitionofActionresultedinaninvestmentofapproximately$124.6millionandwascombinedwiththenetassetsandmerchandisingoperationsofTeamCaliber,whichMotorsportsAuthenticsacquiredonSeptember8,2005.Asaresultoftheseacquisitions,MotorsportsAuthenticsisnowaleaderindesign,promotion,marketinganddistributionofmotorsportslicensedmerchandise.MotorsportsAuthenticshaslicensesforexclusiveandnon-exclusivedistributionwithteamscompetinginNASCARandothermajormotorsportsseries.Itsproductsincludeabroadrangeofmotorsports-relateddie-castreplicacollectibles,apparel,giftsandothermemorabilia,whicharemarketedthroughacombinationofmassretail,domesticwholesale,trackside,internationalandcollector’sclubdistributionchannels.

TheCompany’sshareofundistributedequityintheearningsfromequityinvestmentsincludedinretainedearningsatNovember30,2005and2006wasapproximately$8.9millionand$9.0million,respectively.

OTHERINVESTMENTS:OtherinvestmentsconsistoftheCompany’sinvestmentinProximities,Inc.(“Proximities”).ThisinvestmentisaccountedforunderStatementofFinancialAccountingStandard(“SFAS”)No.115“AccountingforCertainInvestmentsinDebtandEquitySecurities.”

Proximitiesisdevelopingproductswhicharetobemarketedassecureradiofrequencyidentification(“RFID”)cashlesspayment,accesscontrolandageverificationsystems.ProximitiesisavariableinterestentityasdeterminedinaccordancewithFinancialAccountingStandardsBoard“FASB”InterpretationNo.46,“ConsolidationofVariableInterestEntities.”TheCompanydoesnotconsolidatetheoperationsofProximitiesasitisnottheprimarybeneficiary.TheCompany’smaximumexposuretolossasaresultofitsinvolvementwithProximitiesatNovember30,2006totaledapproximately$243,000.

GOODWILLANDINTANGIBLEASSETS:TheCompany’sgoodwillandotherintangibleassetsareevaluatedforimpairment,eitherupontheoccurrenceofanimpairmentindicatororannually,initsfiscalfourthquarter,basedonassumptionsregardingtheCompany’sfuturebusinessoutlookandexpectedfuturediscountedcashflowsatthereportingunitlevel.

DEFERREDFINANCINGFEES:Deferredfinancingfeesareamortizedoverthetermoftherelateddebtandareincludedinothernon-currentassets.

DERIVATIVEFINANCIALINSTRUMENTS:FromtimetotimetheCompanyutilizesderivativeinstrumentsintheformofinterestrateswapstoassistinmanagingitsinterestraterisk.TheCompanydoesnotenterintoanyinterestrateswapderivativeinstrumentsfortradingpurposes.WhiletheCompanyisnotcurrentlyutilizinginterestrateswapderivativeinstruments,allhistoricallyhavequalifiedfortheuseofthe“short-cut”methodofaccountingtoassesshedgeeffectivenessinaccordancewithSFASNo.133“AccountingforDerivativeInstrumentsandHedgingActivities,”asamended,andwere

NOTE1-DESCRIPTIONOFBUSINESSANDSUMMARYOFSIGNIFICANTACCOUNTINGPOLICIES(continued)


recognizedinitsconsolidatedbalancesheetattheirfairvalue.Thedifferentialpaidorreceivedoninterestrateswapagreementsisrecognizedasanadjustmenttointerestexpense.Thechangeinthefairvalueoftheinterestrateswap,whichisestablishedasaneffectivehedge,isincludedinothercomprehensiveincome.

INCOMETAXES:Incometaxeshavebeenprovidedusingtheliabilitymethod.UnderthismethodtheCompany’sestimatesofdeferredincometaxesandthesignificantitemsgivingrisetodeferredtaxassetsandliabilitiesreflectitsassessmentofactualfuturetaxestobepaidonitemsreflectedinitsfinancialstatements,givingconsiderationtobothtimingandprobabilityofrealization.

TheCompanyestablishestaxreservesrelatedtocertainmatters,includingpenaltiesandinterest,intheperiodwhenitisdeterminedthatitisprobablethatadditionaltaxes,penaltiesandinterestwillbepaid,andtheamountisreasonablyestimable.Suchtaxreservesareadjusted,asneeded,inlightofchangingcircumstances,suchasstatuteoflimitationsexpirationsandotherdevelopmentsrelatingtouncertaintaxpositionsandcurrenttaxitemsunderexamination,appealorlitigation.

REVENUERECOGNITION:Advanceticketsalesandevent-relatedrevenuesforfutureeventsaredeferreduntilearned,whichisgenerallyoncetheeventsareconducted.Therecognitionofevent-relatedexpensesismatchedwiththerecognitionofevent-relatedrevenues.Revenuesandrelatedexpensesfromthesaleofmerchandisetoretailcustomers,internetsalesanddirectsalestodealersarerecognizedatthetimeofthesale.

KansasSpeedwayCorporation(“KSC”)offersPreferredAccessSpeedwaySeating(“PASS”)agreements,whichgivepurchaserstheexclusiverightandobligationtopurchaseKSCseason-ticketpackagesforcertainsanctionedracingeventsannuallythroughfiscalyear2030,underspecifiedtermsandconditions.Amongtheconditions,licenseesarerequiredtopurchaseallseason-ticketpackageswhenandasofferedeachyear.PASSagreementsautomaticallyterminatewithoutrefundshouldownersnotpurchaseanyofferedseasontickets.

NetfeesreceivedunderPASSagreementsaredeferredandareamortizedintoincomeoverthetermoftheagreementswhichexpireinfiscal2030.Long-termdeferredincomeunderthePASSagreementstotalsapproximately$10.5millionand$10.2millionatNovember30,2005and2006,respectively.

ADVERTISINGEXPENSE:Advertisingcostsareexpensedasincurredor,asinthecaseofracerelatedadvertising,uponthecompletionoftheevent.Race-relatedadvertisingincludedinprepaidexpensesandothercurrentassetsatNovember30,2005and2006wasapproximately$920,000and$868,000,respectively.Advertisingexpensefromcontinuingoperationswasapproximately$12.1million,$14.7millionand$17.2millionfortheyearsendedNovember30,2004,2005and2006,respectively.

LOSSCONTINGENCIES:Legalandothercostsincurredinconjunctionwithlosscontingenciesareexpensedasincurred.

USEOFESTIMATES:ThepreparationoffinancialstatementsinconformitywithU.S.generallyacceptedaccountingprinciplesrequiresmanagementtomakeestimatesandassumptionsthataffectthereportedamountsofassetsandliabilities,disclosureofcontingentassetsandliabilitiesatthedateofthefinancialstatementsandthereportedamountsofrevenuesandexpenses

duringthereportingperiod.Actualresultscoulddifferfromthoseestimates.

NEWACCOUNTINGPRONOUNCEMENTS:InDecember2004theFinancialAccountingStandardsBoardissuedrevisedStatementofFinancialAccountingStandard(“SFAS”)No.123(R),“Share-BasedPayment.”SFASNo.123(R)setsaccountingrequirementsfor“share-based”compensationtoemployeesandrequirescompaniestorecognizeintheincomestatementthegrant-datefairvalueofstockoptionsandotherequity-basedcompensation.SFASNo.123(R)iseffectiveinannualperiodsbeginningafterJune15,2005.TheCompanyadoptedSFASNo.123(R)inthefirstquarterof2006usingthemodified-prospective-transitionmethodandcurrentlydisclosestheproformaeffectonnetincomeandearningspershareofthefairvaluerecognitionprovisionsofSFASNo.123(R)forperiodspriortoadoption.TheCompany’sadoptionofSFASNo.123(R)didnothaveamaterialimpactonitsfinancialposition,resultsofoperationsorcashflows.SeeNote13forfurtherinformationandtherequireddisclosuresunderSFASNo.123(R).

InJune2006theFASBissuedInterpretationNo.48,“AccountingforUncertaintyinIncomeTaxes”,whichclarifiestheaccountingforuncertaintyinincometaxesrecognizedinanenterprise’sfinancialstatementsinaccordancewithSFASNo.109,“AccountingforIncomeTaxes.”Theinterpretationprescribesarecognitionthresholdandmeasurementattributeforthefinancialstatementrecognitionandmeasurementofataxpositiontakenorexpectedtobetakeninataxreturn.Thisinterpretationalsoprovidesguidanceonderecognition,classification,interestandpenalties,accountingininterimperiods,disclosure,andtransition.ThisinterpretationiseffectiveforfiscalyearsbeginningafterDecember15,2006.TheCompanyiscurrentlyevaluatingthepotentialimpactthattheadoptionofthisinterpretationwillhaveonitsfinancialpositionandresultsofoperations.

InJune2006theEmergingIssuesTaskForce(“EITF”)reachedaconsensusonIssueNo.06-03,“HowTaxesCollectedfromCustomersandRemittedtoGovernmentalAuthoritiesShouldBePresentedintheIncomeStatement.”EITFNo.06-03addressestheaccountingforexternallyimposedtaxesonrevenue-producingtransactionsthattakeplacebetweenaselleranditscustomer,including,butnotlimitedtosales,use,valueadded,andcertainexcisetaxes.EITFNo.06-03alsoprovidesguidanceonthedisclosureofanentity’saccountingpoliciesforpresentingsuchtaxesonagrossornetbasisandtheamountofsuchtaxesreportedonagrossbasis.EITFNo.06-03iseffectiveforinterimandfiscalyearsbeginningafterDecember15,2006.TheCompanyiscurrentlyevaluatingthepotentialeffectthattheadoptionofthisEITFwillhaveonitsfinancialstatements.

InSeptember2006theFASBissuedSFASNo.157,“FairValueMeasurements”whichestablishesaframeworkformeasuringfairvalueingenerallyacceptedaccountingprinciples(“GAAP”),andexpandsdisclosuresaboutfairvaluemeasurements.SFASNo157appliesunderotheraccountingpronouncementsthatrequireorpermitfairvaluemeasurementsand,accordingly,SFASNo.157doesnotrequireanynewfairvaluemeasurements.SFASNo.157iseffectiveforfinancialstatementsissuedforfiscalyearsbeginningafterNovember15,2007,andinterimperiodswithinthosefiscalyears.TheCompanyiscurrentlyevaluatingthepotentialimpactthattheadoptionofthisstatementwillhaveonitsfinancialpositionandresultsofoperations.


NOTE1-DESCRIPTIONOFBUSINESSANDSUMMARYOFSIGNIFICANTACCOUNTINGPOLICIES(continued)

NOTE2-EARNINGSPERSHARE

Basicanddiluted: Incomefromcontinuingoperations $ 126,296 $ 159,072 $ 116,980 (Loss)incomefromdiscontinuedoperations (6,315) 289 (176) Gainonsaleofdiscontinuedoperations 36,337 - - Netincome $ 156,318 $ 159,361 $ 116,804 Basicearningspersharedenominator: Weightedaveragesharesoutstanding 53,084,437 53,128,533 53,166,458 Basicearningspershare: Incomefromcontinuingoperations $ 2.38 $ 2.99 $ 2.20 (Loss)incomefromdiscontinuedoperations (0.12) 0.01 Gainonsaleofdiscontinuedoperations 0.68 - - Netincome $ 2.94 $ 3.00 $ 2.20 Dilutedearningspersharedenominator: Weightedaveragesharesoutstanding 53,084,437 53,128,533 53,166,458 Commonstockoptions 12,123 21,293 14,943 Contingentlyissuableshares 86,216 90,357 89,222 Dilutedweightedaveragesharesoutstanding 53,182,776 53,240,183 53,270,623 Dilutedearningspershare: Incomefromcontinuingoperations $ 2.37 $ 2.99 $ 2.20 (Loss)incomefromdiscontinuedoperations (0.11) - (0.01) Gainonsaleofdiscontinuedoperations 0.68 - - Netincome $ 2.94 $ 2.99 $ 2.19 Anti-dilutivesharesexcludedinthecomputation ofdilutedearningspershare 817 7,274 49,068

2004 2005 2006

ThefollowingtablesetsforththecomputationofbasicanddilutedearningspersharefortheyearsendedNovember30,(inthousands,exceptpershareamounts):


Martinsville Speedway

OnJuly13,2004,theCompanyacquiredtheassetsofMartinsvilleSpeedway(“Martinsville”),andassumedtheoperationsaswellascertainliabilitiesofMartinsvilleforapproximately$194.8million,includingacquisitioncosts.Martinsvillewasprivatelyowned,withcertainmembersoftheFranceFamilyGroup,whichcontrolsinexcessof60.0percentofthecombinedvotinginterestoftheCompany,owning50.0percentofMartinsville.Theacquisitionwasfundedby$100.4millioninproceedsfromthesaleoftheassetsofNorthCarolinaSpeedway(“NorthCarolina”)(seeNote4)andapproximately$94.4millionincash.Martinsville’soperationsareincludedintheCompany’sconsolidatedoperationssubsequenttothedateofacquisition.

ThepurchasepricefortheMartinsvilleacquisitionwasallocatedtotheassetsacquiredandliabilitiesassumedbasedupontheirfairmarketvaluesattheacquisitiondate,asdeterminedbyanindependentappraisal.Includedinthisacquisitionwerecertainindefinite-livedintangibleassetsattributabletotheNASCARsanctionagreementsinplaceatthetimeofacquisitionandgoodwill.TheCompanybelievesthatthesesanctionagreementsandtheassociatedcashflowswillcontinuefortheforeseeablefutureandtherefore,inaccordancewithSFASNo.141and142,theirvaluehasbeeclassifiedasindefinite-livedintangibleassetsrecognizedapartfromgoodwill.TheintangibleassetsandgoodwillareincludedintheMotorsportsEventsegment.Allofthegoodwillattributabletotheacquisitionisexpectedtobedeductibleforincometaxpurposes.Asthisacquisitionisnotconsidered

significant,proformafinancialinformationisnotpresented.Thepurchasepriceallocationtothesignificantassetsacquiredisasfollows(inthousands):

Propertyandequipment $ 34,278NASCAR-sanctionagreements 148,000Goodwill 12,614

Pikes Peak International Raceway

OnOctober7,2005,theCompanyacquiredtheassetsandassumedcertainliabilitiesofPikesPeakInternationalRaceway(“PikesPeak”)forapproximately$12.0million.ThepurchasepriceforthePikesPeakacquisitionwasallocatedtotheassetsacquiredbasedupontheirfairmarketvaluesattheacquisitiondateincluding,landofapproximately$6.1millionandfixedassetsofapproximately$5.9million.Asthisacquisitionisnotconsideredsignificant,proformafinancialinformationisnotpresented.

Subsequenttothepurchase,theNASCARBuschSeriesevent,thenconductedatPikesPeak,wasrealignedtoanothermotorsportsentertainmentfacilitywithinitsportfolioforthefiscal2006racingseasonandtheCompanysuspendedindefinitelymajormotorsportseventoperationsatthefacilityonOctober31,2005.TheCompanyintendstorelocatecertainPikesPeakfixedassetstootherfacilitieswithinitsportfolio.Theseassetsincludegrandstandseatingandotherstructuresthatcanbeutilizedforfuturespeedwayexpansionprojects.TheCompanyiscurrentlypursingthesaleofthelandonwhichPikesPeakislocated.


NOTE3-ACQUISITIONOFBUSINESSES

NorthCarolinaSpeedway

AsrequiredbythesettlementagreementintheFerko/Vaughnlitigation(“SettlementAgreement”)datedApril8,2004,theCompany’sNorthCarolinaSpeedway,Inc.subsidiaryenteredintoanAssetPurchaseAgreementwithSMIforthesaleofthetangibleandintangibleassetsandoperationsofNorthCarolina.UnderthetermsoftheSettlementAgreement,SMI’ssubsidiarypurchasedNorthCarolina’sassetsandassumeditsoperationsforapproximately$100.4millionincash.ThesaleofNorthCarolina’sassetsclosedonJuly1,2004andtheCompanyrecordedanafter-taxgaininthethirdquarteroffiscal2004ofapproximately$36.3million.

NazarethSpeedway

AfterthecompletionofNazarethSpeedway’s(“Nazareth”)fiscal2004events,theCompanysuspendedindefinitelymajormotorsportseventoperationsatthefacility.TheNASCARBuschSeriesandIRLIndyCarSeriesevents,thenconductedatNazareth,wererealignedtoothermotorsportsentertainmentfacilitieswithinitsportfolio.

AsaresultofthesechangesinNazareth’soperations,animpairmentanalysiswasperformedinaccordancewithSFASNo.142,whichresultedinthe

identificationandmeasurementofanimpairmentlossofapproximately$13.2million,or$0.16perdilutedshareinthefiscalquarterendedMay31,2004.Inthefourthquarteroffiscal2005,theCompanyidentifiedcertaingrandstandassetswhichwerepreviouslyfullyimpaired,thatitrelocatedtoitsDarlingtonRacewayfacilityinfiscal2006.TheassetsthatwererelocatedtoDarlingtonwereadjustedtotheirnetbookvalueduringthefourthquarteroffiscal2005,resultinginanafter-taxwrite-upofapproximately$471,000,or$0.01perdilutedshare.

InJanuary2006,theCompanyenteredintoanagreementwithNZSW,LLCforthesaleof158acres,onwhichNazarethSpeedwayislocated,forapproximately$18.8million.Underthetermsofthecontractthesaletransactionisexpectedtocloseduringfiscal2007.Uponclosingthetransaction,theCompanyexpectstorecordanafter-taxgainfromdiscontinuedoperationsofapproximately$6.0to$7.0million,or$0.11to$0.13perdilutedshare.

TheoperationsofNorthCarolinaandNazarethwereincludedintheMotorsportsEventsegment.InaccordancewithSFASNo.144theresultsofoperationsofNorthCarolinaandNazareth,includingthegainonsaleofNorthCarolinaandtheimpairmentlossandsubsequentwrite-upofcertain

NOTE4-DISCONTINUEDOPERATIONSANDIMPAIRMENTOFLONG-LIVEDASSETS

grandstandassetsatNazareth,arepresentedasdiscontinuedoperationsinallperiodspresented.DuringtheyearendedNovember30,2004,totalrevenuesrecognizedbyNorthCarolinaandNazarethwereapproximately$17.0million.TherewerenorevenuesrecognizedbyNazarethfortheyearsendedNovember30,2005and2006.Pre-tax(loss)incomeduringtheyearsendedNovember30,2004,2005and2006wasapproximately($10.0)million,$289,000and($444,000),respectively.Nazareth’sassetsheldforsaleincludedinpropertyandequipment,netofaccumulateddepreciation,totaledapproximately$6.8millionatNovember30,2005and2006.Unlessindicatedotherwise,alldisclosuresinthenotestotheconsolidatedfinancialstatementsrelatetocontinuingoperations.

NewYorkMetropolitanSpeedwayDevelopment

Duringfiscal1999,theCompanyannounceditsintentiontosearchforasiteforamajormotorsportsentertainmentfacilityintheNewYorkmetropolitanarea.TheCompany’seffortsincludedtheevaluationofmanydifferentlocations.Mostrecently,theCompanyidentifiedacombinationoflandparcelsintheNewYorkCityboroughofStatenIslandaggregatingapproximately676acresthatittargetedforthedevelopmentofamajormotorsportsentertainmentandretaildevelopmentproject.TheCompany’smajority-ownedsubsidiary,380Development,LLC(“380Development”),purchasedthetotal676acresforapproximately$110.4millioninearlyfiscal2005.

InDecember2006,theCompanyannounceditsdecisiontodiscontinuepursuitofaspeedwaydevelopmentonStatenIsland.Thedecisionwasdrivenbyavarietyoffactors,including:(1)theinabilitytosecurethecriticallocalpoliticalsupportthatisnecessarytosecuretherequiredland-usechangeapprovalsforaspeedwaydevelopment;(2)evenifithadsecuredthenecessarypoliticalsupport,itbecameapparentthatitwouldhavebeenfacedwithunacceptableapprovalrequirements,includingoperationalrestrictionsthatwouldhavemadethefacilitydifficulttooperate

andasignificantchallengetomarket;and(3)theincreasedriskthattheseunacceptableapprovalrequirementscouldresultinhigherconstructionspendingandannualoperatingcosts,whichwouldhaveasignificantnegativeimpactonthefinancialmodelforthespeedwaydevelopment.

TheoperatinganddevelopmentagreementsbetweentheCompanyandTheRelatedCompanies(“Related”)havebeenterminated,thenotepayabletoTheCompanyfromRelatedwhichwassecuredbyapledgeofRelated’s12.4percentproportionateminorityinterestin380DevelopmenthasbeencancelledandtheminorityinterestsurrenderedtotheCompany.

ThedecisiontodiscontinueourspeedwaydevelopmenteffortsonStatenIsland,inthefourthquarteroffiscal2006,resultedinanon-cash,pre-taxchargeintheCompany’sresultsofapproximately$84.7million,or$1.01perdilutedshareafter-tax,whichisincludeintheMotorsportsEventsegment.U.S.generallyacceptedaccountingprinciplesrequirethatthepropertybevaluedatitscurrentfairvalue,whichisestimatedbyanindependentappraisalatapproximately$65.0million.Priortothewrite-off,theCompanyhadcapitalizedspendingofapproximately$150.0millionthroughNovember30,2006,including:(1)$123.0millionforlandandrelatedimprovements,(2)$11.0millionforcostsrelatedsolelytothedevelopmentofthespeedway,and(3)$16.0millionforcapitalizedinterestandpropertytaxes.

TheCompanyhasbeguntoresearchanddevelopmarketdemandstudiestoassistintheevaluationofvariousalternativestrategiesfortheStatenIslandacreage,includingpotentiallysellingthepropertyinwholeorinparts,ordevelopingthepropertywithathirdpartyforsomeotheruse.GiventhatthepropertyisthelargestundevelopedacreageoflandinthefiveboroughsofNewYorkCity,theCompanybelievesitwillbeattractivetoawiderangeofdevelopersandusers.Thesiteiscurrentlyzonedas-of-rightforindustrialuseandcouldprovideeaseofaccessthroughadeep-waterdocklocatedonsite.Also,thepropertycanbeeasilyaccessedfromthelocalhighwaysystem.

NOTE4-DISCONTINUEDOPERATIONSANDIMPAIRMENTOFLONG-LIVEDASSETS(continued)

NOTE5-PROPERTYANDEQUIPMENT

PropertyandequipmentconsistsofthefollowingasofNovember30(inthousands):

2005 2006

Landandleaseholdimprovements $ 284,051 $ 289,731Buildings,grandstandsandmotorsportsentertainmentfacilities 915,425 981,023Furnitureandequipment 130,408 141,134Constructioninprogress 164,111 116,644 1,493,995 1,528,532Lessaccumulateddepreciation 315,313 371,219 $ 1,178,682 $ 1,157,313

Depreciationexpensefromcontinuingoperationswasapproximately$44.4million,$50.7millionand$56.7millionfortheyearsendedNovember30,2004,2005and2006,respectively.



NOTE6-GOODWILLANDINTANGIBLEASSETS

ThegrosscarryingvalueandaccumulatedamortizationofthemajorclassesofintangibleassetsrelatingtotheMotorsportsEventsegmentasofNovember30areasfollows(inthousands):

Amortizedintangibleassets: Customerdatabase $ 500 $ 100 $ 400 Food,beverageandmerchandisecontracts 276 142 134Totalamortizedintangibleassets 776 242 534Non-amortizedintangibleassets: NASCAR-sanctionagreements 148,000 - 148,000 Other 930 - 930Totalnon-amortizedintangibleassets 148,930 - 148,930Totalintangibleassets $ 149,706 $ 242 $149,464

2005 GrossCarrying Accumulated NetCarrying Amount Amortization Amount

Amortizedintangibleassets: Customerdatabase $ 500 $ 200 $ 300 Food,beverageandmerchandisecontracts 276 185 91Totalamortizedintangibleassets 776 385 391Non-amortizedintangibleassets: NASCAR-sanctionagreements 148,000 - 148,000 Other 923 - 923Totalnon-amortizedintangibleassets 148,923 - 148,923Totalintangibleassets $ 149,699 $ 385 $ 149,314

2006 GrossCarrying Accumulated NetCarrying Amount Amortization Amount

ThefollowingtablepresentscurrentandexpectedamortizationexpenseoftheexistingintangibleassetsasofNovember30,foreachofthefollowingperiods(inthousands):

Amortizationexpensefortheyearended November30,2006 $ 143

Estimatedamortizationexpensefortheyearending November30: 2007 143 2008 143 2009 101 2010 1 2011 1

TherewerenochangesinthecarryingvalueofgoodwillduringtheyearendedNovember30,2006.

Long-termdebtconsistsofthefollowingasofNovember30(inthousands):

NOTE7-LONG-TERMDEBT

2005 2006

4.2percentSeniorNotesdue2009 $ 151,297 $ 150,9155.4percentSeniorNotesdue2014 149,905 149,917TIFbonddebtservicefundingcommitment 67,820 67,262 369,022 368,094Less:currentportion 635 770 $ 368,387 $ 367,324

ScheduleofPayments(inthousands)FortheyearendingNovember30: 2007 $ 770 2008 915 2009 151,075 2010 1,245 2011 1,430 Thereafter 212,920 368,355Netpremium (261) Total $ 368,094

OnApril23,2004,theCompanycompletedanofferingof$300.0millionprincipalamountofunsecuredseniornotesinaprivateplacement.OnSeptember27,2004,theCompanycompletedanoffertoexchangetheseunsecuredseniornotesforregisteredseniornoteswithsubstantiallyidenticalterms(“2004SeniorNotes”).AtNovember30,2006,outstanding2004SeniorNotestotaledapproximately$300.8million,netofunamortizeddiscountsandpremium,whichiscomprisedof$150.0millionprincipalamountunsecuredseniornotes,whichbearinterestat4.2percentandaredueApril2009(“4.2percentSeniorNotes”),and$150.0millionprincipalamountunsecuredseniornotes,whichbearinterestat5.4percentandaredueApril2014.The2004SeniorNotesrequiresemi-annualinterestpaymentsonApril15andOctober15throughtheirmaturity.The2004SeniorNotesmayberedeemedinwholeorinpart,attheoptionoftheCompany,atanytimeorfromtimetotimeatredemptionpricesasdefinedintheindenture.TheCompany’ssubsidiariesareguarantorsofthe2004SeniorNotes.The2004SeniorNotesalsocontainvariousrestrictivecovenants.Totalgrossproceedsfromthesaleofthe2004SeniorNoteswere$300.0million,netofdiscountsofapproximately$431,000andapproximately$2.6millionofdeferredfinancingfees.Thedeferredfinancingfeesarebeingtreatedasadditionalinterestexpenseandamortizedoverthelifeofthe2004SeniorNotesonastraight-linemethod,whichapproximatestheeffectiveyieldmethod.InMarch2004,theCompanyenteredintointerest

rateswapagreementstoeffectivelylockintheinterestrateonapproximately$150.0millionofthe4.2percentSeniorNotes.TheCompanyterminatedtheseinterestrateswapagreementsonApril23,2004,andreceivedapproximately$2.2million,whichisbeingamortizedoverthelifeofthe4.2percentSeniorNotes.

InJanuary1999,theUnifiedGovernmentofWyandotteCounty/KansasCity,Kansas(“UnifiedGovernment”),issuedapproximately$71.3millionintaxablespecialobligationrevenue(“TIF”)bondsinconnectionwiththefinancingofconstructionofKansasSpeedway.AtNovember30,2006,outstandingTIFbondstotaledapproximately$67.3million,netoftheunamortizeddiscount,whichiscomprisedofa$18.7millionprincipalamount,6.2percenttermbonddueDecember1,2017and$49.7millionprincipalamount,6.8percenttermbonddueDecember1,2027.TheTIFbondsarerepaidbytheUnifiedGovernmentwithpaymentsmadeinlieuofpropertytaxes(“FundingCommitment”)bytheCompany’swholly-ownedsubsidiary,KansasSpeedwayCorporation(“KSC”).Principal(mandatoryredemption)paymentspertheFundingCommitmentarepayablebyKSConOctober1ofeachyear.Thesemi-annualinterestcomponentoftheFundingCommitmentispayableonApril1andOctober1ofeachyear.KSCgrantedamortgageandsecurityinterestintheKansasprojectforitsFundingCommitmentobligation.Thebondfinancingdocumentscontainvariousrestrictivecovenants.


OnJune16,2006,theCompanyenteredintoa$300.0millionrevolvingcreditfacility(“2006CreditFacility”).The2006CreditFacilitycontainsafeaturethatallowstheCompanytoincreasethecreditfacilitytoatotalof$500.0million,subjecttocertainconditions.Uponexecutionofthe2006CreditFacility,theCompanyterminateditsthenexisting$300.0millioncreditfacility.The2006CreditFacilityisscheduledtomatureinJune2011,andaccruesinterestatLIBORplus30.0-80.0basispoints,basedontheCompany’shighestdebtratingasdeterminedbyspecifiedratingagencies.The2006CreditFacilitycontainsvariousrestrictivecovenants.AtNovember30,2006,theCompanydidnothaveanyborrowingsoutstandingunderthe2006CreditFacility.

TotalinterestexpensefromcontinuingoperationsincurredbytheCompanywasapproximately$21.7million,$12.7millionand$12.3millionfortheyearsendedNovember30,2004,2005and2006,respectively.TotalinterestcapitalizedfortheyearsendedNovember30,2004,2005and2006wasapproximately$1.6million,$7.6millionand$8.4million,respectively.

Financingcostsofapproximately$6.9millionand$6.5million,netofaccumulatedamortization,havebeendeferredandareincludedinotherassetsatNovember30,2005and2006,respectively.Thesecostsarebeingamortizedonastraightlinemethod,whichapproximatestheeffectiveyieldmethod,overthelifeoftherelatedfinancing.


NOTE7-LONG-TERMDEBT(continued)

Deferredincometaxesreflectthenettaxeffectsoftemporarydifferencesbetweenthecarryingamountsofassetsandliabilitiesforfinancialreportingpurposesandtheamountsusedforincometaxpurposes.

SignificantcomponentsoftheprovisionforincometaxesfromcontinuingoperationsfortheyearsendedNovember30,areasfollows(inthousands):

NOTE8-FEDERALANDSTATEINCOMETAXES

Currenttaxexpense: Federal $ 46,839 $ 64,832 $ 73,890 State 6,311 8,091 6,061Deferredtaxexpense(benefit): Federal 26,327 26,122 (5,799) State 2,741 2,831 1,315 Provisionforincometaxes $ 82,218 $ 101,876 $ 75,467

2004 2005 2006

ThereconciliationofincometaxexpensecomputedatthefederalstatutorytaxratestoincometaxexpensefromcontinuingoperationsfortheyearsendedNovember30,isasfollows(percentofpre-taxincome):

Incometaxcomputedatfederalstatutoryrates 35.0% 35.0% 35.0%Stateincometaxes,netoffederaltaxbenefit 3.4 3.2 3.1Other,net 1.0 0.8 1.1 39.4% 39.0% 39.2%

2004 2005 2006

TheCompanyhasrecordeddeferredtaxassetsrelatedtovariousstatenetoperatinglosscarryforwardstotalingapproximately$88.4million,thatexpireinvaryingamountsbeginninginfiscal2020.Thevaluationallowanceincreasedbyapproximately$3.7millionduringthefiscalyearendedNovember30,2006,andisattributabletotheimpairmentoflong-livedassets.Thevaluationallowancehasbeenprovidedduetotheuncertainty

regardingtherealizabilityofstatedeferredtaxassetsassociatedwiththeimpairedlong-livedassets.InevaluatingtheCompany’sabilitytorecoveritsdeferredincometaxassetsitconsidersallavailablepositiveandnegativeevidence,includingoperatingresults,ongoingtaxplanningandforecastsoffuturetaxableincomeonajurisdictionbyjurisdictionbasis.

NOTE8-FEDERALANDSTATEINCOMETAXES(continued)

Thecomponentsofthenetdeferredtaxassets(liabilities)atNovember30areasfollows(inthousands):

2005 2006

Impairedlong-livedassets $ - $ 34,683Amortizationanddepreciation 27,014 21,038Deferredrevenues 4,173 4,076Deferredexpenses 2,663 2,765Losscarryforwards 2,422 2,919Compensationrelated 2,004 2,147Accruals 1,584 1,599Other 103 114

Deferredtaxassets 39,963 69,341Valuationallowance - (3,677)

Deferredtaxassets,netofvaluationallowance 39,963 65,664

Amortizationanddepreciation (224,471) (244,194)Equityinvestment (9,895) (11,786)Other (422) (331)

Deferredtaxliabilities (234,788) (256,311)

Netdeferredtaxliabilities $ (194,825) $ (190,647)

Deferredtaxassets-current $ - $ 995Deferredtaxliabilities-noncurrent (194,825) (191,642) Netdeferredtaxliabilities $ (194,825) $ (190,647)



NOTE9-CAPITALSTOCK

TheCompany’sauthorizedcapitalincludes80.0millionsharesofClassACommonStock,parvalue$.01(“ClassACommonStock”),40.0millionsharesofClassBCommonStock,parvalue$.01(“ClassBCommonStock”),and1.0millionsharesofPreferredStock,parvalue$.01(“PreferredStock”).ThesharesofClassACommonStockandClassBCommonStockareidenticalinallrespects,exceptforvotingrightsandcertaindividendandconversionrightsasdescribedbelow.EachshareofClassACommonStockentitlestheholdertoonefifth(1/5)voteoneachmattersubmittedtoavoteoftheCompany’sshareholdersandeachshareofClassBCommonStockentitlestheholdertoone(1)voteoneachsuchmatter,ineachcaseincludingtheelectionofdirectors.HoldersofClassACommonStockandClassBCommonStockareentitledtoreceivedividendsatthesamerateifandwhendeclaredbytheBoardofDirectorsoutoffundslegallyavailabletherefrom,subjecttothedividendandliquidationrightsofanyPreferredStockthatmaybeissuedandoutstanding.ClassACommonStockhasnoconversionrights.ClassBCommonStockisconvertibleintoClassACommonStock,inwholeorinpart,

atanytimeattheoptionoftheholderonthebasisofoneshareofClassACommonStockforeachshareofClassBCommonStockconverted.EachshareofClassBCommonStockwillalsoautomaticallyconvertintooneshareofClassACommonStockif,ontherecorddateofanymeetingoftheshareholders,thenumberofsharesofClassBCommonStockthenoutstandingislessthan10.0percentoftheaggregatenumberofsharesofClassACommonStockandClassBCommonStockthenoutstanding.

TheBoardofDirectorsoftheCompanyisauthorized,withoutfurthershareholderaction,todivideanyorallsharesoftheauthorizedPreferredStockintoseriesandfixanddeterminethedesignations,preferencesandrelativerightsandqualifications,limitations,orrestrictionsthereonofanyseriessoestablished,includingvotingpowers,dividendrights,liquidationpreferences,redemptionrightsandconversionprivileges.NosharesofPreferredStockareoutstanding.TheBoardofDirectorshasnotauthorizedanyseriesofPreferredStock,andtherearenoplans,agreementsorunderstandingsfortheauthorizationorissuanceofanysharesofPreferredStock.

InternationalSpeedwayCorporationhasasalaryincentiveplan(the“ISCPlan”)designedtoqualifyunderSection401(k)oftheInternalRevenueCode.EmployeesofInternationalSpeedwayCorporationandcertainparticipatingsubsidiarieswhohavecompletedonemonthofcontinuousserviceareeligibletoparticipateintheISCPlan.Aftertwelvemonthsofcontinuousservice,matchingcontributionsaremadetoasavingstrust(subjecttocertainlimits)concurrentwithemployees’contributions.Thelevelofthematchingcontributiondependsupontheamountoftheemployeecontribution.Employeesbecome100percentvesteduponentrancetotheISCPlan.ThecontributionexpensefromcontinuingoperationsfortheISCPlanwasapproximately$1.3million,$1.4millionand$1.5million,fortheyearsendedNovember30,2004,2005,and2006,respectively.

TheestimatedcosttocompleteapprovedprojectsandcurrentconstructioninprogressatNovember30,2006attheCompany’sexistingfacilitiesisapproximately$62.5million.

InOctober2002,theUnifiedGovernmentissuedsubordinatesalestaxspecialobligationrevenuebonds(“2002STARBonds”)totalingapproximately$6.3milliontoreimbursetheCompanyforcertainconstructionalreadycompletedonthesecondphaseoftheKansasSpeedwayprojectandtofundcertainadditionalconstruction.The2002STARBonds,whichrequireannualdebtservicepaymentsandaredueDecember1,2022,willberetiredwithstateandlocaltaxesgeneratedwithinthespeedway’sboundariesandarenottheCompany’sobligation.KSChasagreedto

guaranteethepaymentofprincipal,anyrequiredpremiumandinterestonthe2002STARBonds.AtNovember30,2006,theUnifiedGovernmenthadapproximately$4.3millionoutstandingon2002STARBonds.Underakeepwellagreement,theCompanyhasagreedtoprovidefinancialassistancetoKSC,ifnecessary,tosupportKSC’sguaranteeofthe2002STARBonds.

TheCompanyisamemberofMotorsportsAlliance(owned50.0percentbytheCompanyand50.0percentbyIndianapolisMotorSpeedwayLLC(“IMS”)),whichowns75.0percentofRacewayAssociates.RacewayAssociatesownsandoperatesChicagolandSpeedwayandRoute66Raceway.RacewayAssociateshasatermloanarrangement,whichrequiresquarterlyprincipalandinterestpaymentsandmaturesNovember15,2012,anda$15.0millionsecuredrevolvingcreditfacility,whichmaturesinSeptember2008.AtNovember30,2006,RacewayAssociateshadapproximately$28.4millionoutstandingunderitstermloanandnoborrowingsoutstandingunderitsthenexistingcreditfacility.Underakeepwellagreement,themembersofMotorsportsAlliancehaveagreedtoprovidefinancialassistancetoRacewayAssociates,ifnecessary,onaproratabasistosupportitsperformanceunderitstermloanandcreditfacility.

TheCompanyhasguaranteedminimumroyaltypaymentsundercertainagreementsthroughDecember2015,witharemainingmaximumexposureatNovember30,2006,ofapproximately$12.5million.

NOTE10-COMMITMENTSANDCONTINGENCIES

TheCompanyoperatesMiamiunderanoperatingagreementwhichexpiresDecember31,2032,andprovidesforsubsequentrenewaltermsthroughDecember31,2075.TheCompanyalsohasvariousoperatingleasesforofficespaceandequipment.ThefutureminimumpaymentsundertheoperatingagreementandleasesutilizedbytheCompanyhavinginitialorremainingnoncancellabletermsinexcessofoneyearatNovember30,2006,areasfollows(inthousands):

Operating OperatingFortheyearendingNovember30: Agreement Leases

2007 $ 2,220 $ 3,945

2008 2,220 2,763

2009 2,220 1,690

2010 2,220 1,319

2011 2,220 1,146

Thereafter 27,000 36,370

Total $ 38,100 $ 47,233

NOTE10-COMMITMENTSANDCONTINGENCIES(continued)

Totalexpensesincurredfromcontinuingoperationsunderthetrackoperatingagreement,theseoperatingleasesandallotherrentalsduringtheyearsendedNovember30,2004,2005and2006were$14.9million,$19.0millionand$22.0million,respectively.

InconnectionwiththeCompany’sautomobileandworkers’compensationinsurancecoveragesandcertainconstructioncontracts,theCompanyhasstandbyletterofcreditagreementsinfavorofthirdpartiestotaling$2.1millionatNovember30,2006.AtNovember30,2006,therewerenoamountsdrawnonthestandbylettersofcredit.

TheInternalRevenueService(the“Service”)iscurrentlyperformingaperiodicexaminationoftheCompany’sfederalincometaxreturnsfortheyearsendedNovember30,1999through2005andhaschallengedthetaxdepreciationtreatmentofasignificantportionofitsmotorsportsentertainmentfacilityassets.ThroughNovember30,2006,theCompanyhasreceivedreportsfromtheServicerequestingdownwardadjustmentstoitstaxdepreciationexpenseforthefiscalyearsendedNovember30,1999through2004,whichcouldpotentiallyresultinthereclassificationofapproximately$94.5millionofincometaxesfromdeferredtocurrent.Includingrelatedinterest,thecombinedafter-taxcashflowimpactoftheserequestedadjustmentsisapproximately$110.8million.Inordertoprevent

incurringadditionalinterest,theCompanydepositedapproximately$110.8millionwiththeService.InDecember2006,theCompanyreceivedareportfromtheServicewithrespecttoourfiscalyearendedNovember30,2005,whichcouldpotentiallyresultinthereclassificationofapproximately$6.6millionofincometaxesfromdeferredtocurrent.Accordingly,inordertopreventincurringadditionalinterest,theCompanydepositedanadditional$7.1millionwiththeServiceinJanuary2007.AdditionaladjustmentstotheCompany’staxdepreciationexpenseareexpectedtoberequestedlaterbytheServiceforfiscalyearendedNovember30,2006.Includingrelatedinterest,theCompanyestimatesthecombinedafter-taxcashflowimpactoftheadditionalfederaltaxadjustmentsexpectedforfiscal2006,andrelatedstatetaxrevisionsforallperiods,torangebetween$30.0millionand$40.0millionatNovember30,2006.TheCompany’sdepositsarenotapaymentoftax,anditwillreceiveaccruedinterestonanyofthesefundsultimatelyreturnedtoit.AtNovember30,2006,theapproximately$110.8millionofdepositswiththeServiceareclassifiedaslong-termassetsintheCompany’sconsolidatedfinancialstatements.TheCompanybelievesthatitsapplicationofthefederalincometaxregulationsinquestion,whichhavebeenappliedconsistentlysincebeingadoptedin1986andhavebeensubjectedtopreviousIRSaudits,isappropriate,anditintendstovigorouslydefendthemeritsofitsposition.OncecommencedbytheService,theadministrative



NOTE10-COMMITMENTSANDCONTINGENCIES(continued)

appealsprocessisexpectedtotakesixtofifteenmonthstocomplete.IftheCompany’sappealisnotresolvedsatisfactorily,itwillevaluateallofitsoptions,includinglitigation.InaccordancewithSFASNo.109“AccountingforIncomeTaxes,”theCompanyhasaccruedadeferredtaxliabilitybasedonthedifferencesbetweenitsfinancialreportingandtaxbasesofsuchassetsinitsconsolidatedbalancesheetasofNovember30,2006.Whileanadverseresolutionofthesematterscouldresultinamaterialnegativeimpactoncashflow,includingpaymentoftaxesfromamountscurrentlyondepositwiththeService,theCompanybelievesthatithasprovidedadequatereservesrelatedtothesemattersincludinginterestchargesthroughNovember30,2006,totalingapproximately$12.6million,and,asaresult,doesnotexpectthatsuchanoutcomewouldhaveamaterialadverseeffectonresultsofoperations.

CurrentLitigation

TheCompanyisfromtimetotimeapartytoroutinelitigationincidentaltoitsbusiness.ManagementdoesnotbelievethattheresolutionofanyorallofsuchlitigationwillhaveamaterialadverseeffectontheCompany’sfinancialconditionorresultsofoperations.

Inadditiontosuchroutinelitigationincidenttoitsbusiness,theCompanyisapartytolitigationdescribedbelow.

OnJuly13,2005,KentuckySpeedway,LLCfiledacivilactionintheEasternDistrictofKentuckyagainstNASCARandtheCompanyallegingthat“NASCARandISChaveacted,andcontinuetoact,individuallyandincombinationandcollusionwitheachotherandothercompaniesthatcontrolmotorsportsentertainmentfacilitieshostingNASCARNEXTELCupSeries,toillegallyrestricttheawardof…NASCARNEXTELCup

Series[races].”ThecomplaintseeksdamagesandaninjunctionrequiringNASCARtoestablishacompetitivebiddingprocessforNEXTELCupeventsandprohibitingfurtherviolationsoftheantitrustlaws.Otherthansomevaguelyconclusoryallegations,thecomplaintfailstospecifyanyconductbyInternationalSpeedwayCorporation(“ISC”)otherthanconductingandgrowingitsmotorsportsentertainmentbusinessforthebenefitofitsshareholders.TheCompanybelievestheallegationstobewithoutmeritandintendstodefenditselfvigorously.TheCompanyhasretainedcounselandispursuingdefensestothesuitwhilemaintainingpotentialcounterclaimremediesavailabletoittorecoverthedamagescausedbythefilingofthesuit.ThecourthasestablishedaFebruary1,2007,deadlineforthecompletionofpre-trialdiscoveryfactualmatterswhichistobefollowedbydiscoveryofexpertopinionmatters.BaseduponthecurrenttimelineatrialonthemeritsofthecaseisscheduledfornoearlierthanFall2007.Whileitisprematuretoquantifyeitherthelikelihoodorthepotentialmagnitudeofanadversedecision,thefeesandexpensesassociatedwiththedefenseofthissuitarenotcoveredbyinsuranceandcouldadverselyimpacttheCompany’sfinancialconditionorresultsofoperationsandcashflows,eveniftheCompanyultimatelyprevails.Further,thetimedevotedtothismatterbymanagementandthepossibleimpactoflitigationonbusinessnegotiationsoccurringpriortoresolutionofthismattercouldalsoadverselyimpactourfinancialconditionorresultsofoperationsandcashflows.Finally,evenifthedirecteffectoftheresolutionofthiscasedoesnotresultinamaterialadverseimpactonus,itispossiblethattheresolutionofthiscasecouldresultinindustrywidechangesinthewayraceschedulesaredeterminedbysanctioningbodies,whichcouldindirectlyhaveamaterialadverseimpactontheCompany.

AlloftheracingeventsthattakeplaceduringtheCompany’sfiscalyeararesanctionedbyvariousracingorganizationssuchastheAmericanHistoricRacingMotorcycleAssociation,theAmericanMotorcyclistAssociation,theAutomobileRacingClubofAmerica,theAmericanSportbikeRacingAssociation-ChampionshipCupSeries,GrandAmerican,HistoricSportscarRacing,theInternationalRaceofChampions,IRL,NASCAR,NHRA,thePorscheClubofAmerica,theSportsCarClubofAmerica,theSportscarVintageRacingAssociation,theUnitedStatesAutoClubandtheWorldKartingAssociation.NASCAR,whichsanctionssomeoftheCompany’sprincipalracingevents,isamemberoftheFranceFamilyGroupwhichcontrolsinexcessof60.0percentofthecombinedvotingpoweroftheoutstandingstockoftheCompany,andsomemembersofwhichserveasdirectorsandofficersoftheCompany.StandardNASCARsanction

agreementsrequireracetrackoperatorstopaysanctionfeesandprizeandpointfundmoniesforeachsanctionedeventconducted.TheprizeandpointfundmoniesaredistributedbyNASCARtoparticipantsintheevents.PrizeandpointfundmoniespaidbytheCompanytoNASCARfromcontinuingoperationsfordisbursementtocompetitors,whichareexclusiveofNASCARsanctionfees,totaledapproximately$102.5million,$118.5millionand$131.3millionfortheyearsendedNovember30,2004,2005and2006,respectively.PrizeandpointfundmoniespaidbytheCompanytoNASCARfordisbursementtocompetitorsforeventsatNorthCarolinaandNazarethincludedindiscontinuedoperationstotaledapproximately$5.4millionfortheyearendedNovember30,2004.TherewerenoprizeandpointfundmoniespaidtoNASCARrelatedtodiscontinuedoperationsfortheyearsendedNovember30,2005and2006,respectively.

NOTE11-RELATEDPARTYDISCLOSURESANDTRANSACTIONS

Undercurrentagreements,NASCARcontractsdirectlywithcertainnetworkprovidersfortelevisionrightstotheentireNASCARNEXTELCupandBuschseriesschedules.EventpromotersshareinthetelevisionrightsfeesinaccordancewiththeprovisionofthesanctionagreementforeachNASCARNEXTELCupandBuschseriesevent.Underthetermsofthisarrangement,NASCARretains10.0percentofthegrossbroadcastrightsfeesallocatedtoeachNASCARNEXTELCuporBuschserieseventasacomponentofitssanctionfeesandremitstheremaining90.0percenttotheeventpromoter.Theeventpromoterpays25.0percentofthegrossbroadcastrightsfeesallocatedtotheeventaspartofthepreviouslydiscussedprizemoneypaidtoNASCARfordisbursementtocompetitors.TheCompany’stelevisionbroadcastandancillaryrightsfeesfromcontinuingoperationsreceivedfromNASCARfortheNASCARNEXTELCupandBuschserieseventsconductedatitswholly-ownedfacilitieswere$188.9million,$235.9millionand$273.4millioninfiscalyears2004,2005and2006,respectively.TelevisionbroadcastandancillaryrightsfeesreceivedfromNASCARfortheNASCARNEXTELCupandBuschserieseventsheldatNorthCarolinaandtheNASCARBuschSerieseventheldatNazarethandincludedindiscontinuedoperationstotaledapproximately$9.3millionfortheyearendedNovember30,2004.TherewerenotelevisionbroadcastandancillaryrightsfeesreceivedfromNASCARrelatedtodiscontinuedoperationsduringtheyearsendedNovember30,2005and2006,respectively.

Inaddition,NASCARandtheCompanyshareavarietyofexpensesintheordinarycourseofbusiness.NASCARpaysrent,aswellasarelatedmaintenancefee(allocatedbasedonsquarefootage),totheCompanyforofficespaceintheCompany’scorporateofficecomplexinDaytonaBeach,Florida.TheCompanypaidrenttoNASCARforofficespaceinLosAngeles,CaliforniabeginningOctober2005.Theserentsarebaseduponestimatedfairmarketleaseratesforcomparablefacilities.NASCARpaystheCompanyforradio,programandstrategicinitiativeadvertising,hospitalityandsuiterentals,variousticketsandcredentials,cateringservices,participationinaNASCARracingeventbanquet,andtrackandotherequipmentrentalsbasedonsimilarpricespaidbyunrelated,thirdpartypurchasersofsimilaritems.TheCompanypaysNASCARforcertainadvertising,participationinNASCARracingseriesbanquets,theuseofNASCARtrademarksandintellectualimagesandproductionspaceforNEXTELVisionbasedonsimilarpricespaidbyunrelated,thirdpartypurchasersofsimilaritems.TheCompany’spaymentstoNASCARforMRNRadio’sbroadcastrightstoNASCARCraftsmanTruckracesrepresentsanagreed-uponpercentageoftheCompany’sadvertisingrevenuesattributabletosuchracebroadcasts.Infiscal2005and2006NASCARisreimbursingtheCompanyforthebuyoutoftheremainingrightsassociatedwithacertainsponsorship

agreement.NASCARalsoreimbursestheCompanyfor50.0percentofthecompensationpaidtocertainpersonnelworkingintheCompany’slegal,riskmanagementandtransportationdepartments,aswellas50.0percentofthecompensationexpenseassociatedwithcertainreceptionists.TheCompanyreimbursesNASCARfor50.0percentofthecompensationpaidtocertainpersonnelworkinginNASCAR’slegaldepartment.NASCAR’sreimbursementforuseoftheCompany’smailroom,janitorialservices,securityservices,catering,graphicarts,photoandpublishingservices,telephonesystemandtheCompany’sreimbursementofNASCARforuseofcorporateaircraft,isbasedonactualusageoranallocationoftotalactualusage.TheaggregateamountreceivedfromNASCARbytheCompanyforsharedexpenses,netofamountspaidbytheCompanyforsharedexpenses,totaledapproximately$2.8million,$3.6millionand$3.6millionduringfiscal2004,2005and2006,respectively.

GrandAmericansanctionsvariouseventsatcertainoftheCompany’sfacilities.WhilecertainofficersanddirectorsoftheCompanyareequityinvestorsinGrandAmerican,noofficerordirectorhasmorethana10.0percentequityinterest.Inaddition,certainofficersanddirectorsoftheCompany,representinganon-controllinginterest,serveonGrandAmerican’sBoardofManagers.StandardGrandAmericansanctionagreementsrequireracetrackoperatorstopaysanctionfeesandprizeandpointfundmoniesforeachsanctionedeventconducted.TheprizeandpointfundmoniesaredistributedbyGrandAmericantoparticipantsintheevents.SanctionfeespaidbytheCompanytoGrandAmericantotaledapproximately$924,000,$1.1millionand$1.2millionfortheyearsendedNovember30,2004,2005and2006,respectively.

Inaddition,GrandAmericanandtheCompanyshareavarietyofexpensesintheordinarycourseofbusiness.GrandAmericanpaysrenttotheCompanyforofficespaceintheCompany’scorporateofficecomplexinDaytonaBeach,Florida.Theserentsarebaseduponestimatedfairmarketleaseratesforcomparablefacilities.GrandAmericanpurchasesvariousadvertising,cateringservices,suitesandhospitalityandtrackandequipmentrentalsfromtheCompanybasedonsimilarpricespaidbyunrelated,thirdpartypurchasersofsimilaritems.TheCompanypaysGrandAmericanfortheuseofGrandAmerican’strademarksbasedonsimilarpricespaidbyunrelated,thirdpartypurchasersofsimilaritems.GrandAmerican’sreimbursementforuseoftheCompany’smailroom,telephonesystem,security,graphicarts,photoandpublishingservicesisbasedonactualusageoranallocationoftotalactualusage.TheaggregateamountreceivedfromGrandAmericanbytheCompanyforsharedexpenses,netofamountspaidbytheCompanyforsharedexpenses,totaledapproximately$226,000,$223,000and$510,000duringfiscal2004,2005and2006,respectively.

NOTE11-RELATEDPARTYDISCLOSURESANDTRANSACTIONS(continued)



TheCompanystrivestoensure,andmanagementbelievesthat,thetermsoftheCompany’stransactionswithNASCARandGrandAmericanarenolessfavorabletotheCompanythancouldbeobtainedinarms-lengthnegotiations.

CertainmembersoftheFranceFamilyGrouppaidtheCompanyfortheutilizationofsecurityservices,eventplanning,eventtickets,purchaseofcateringservices,maintenanceservices,andcertainequipment.Duringthelastquarteroffiscal2004andalloffiscal2005,theCompanyprovidedpublishinganddistributionservicesforGameChangeMarketing,LLC,andinfiscal2004ticketstoBrandSenseMarketing,whicharecompaniesownedbyaFranceFamilyGroupmemberandleasedcertainparcelsoflandfromWCFandJCF,LLC,whichisownedbyFranceFamilyGroupmembers.ThelandparcelsareusedprimarilyforparkingduringtheeventsheldatMartinsvilleSpeedway.Theamountspaidfortheseitemswerebasedonactualcostsincurred,similarpricespaidbyunrelatedthirdpartypurchasersofsimilaritemsorestimatedfairmarketvalues.TheaggregateamountreceivedbytheCompanyfortheseitems,netofamountspaid,totaledapproximately$266,000,$3.3millionand$2.4millionduringfiscal2004,2005and2006,respectively.

TheCompanyhascollateralassignmentsplitdollarinsuranceagreementscoveringthelivesofWilliamC.FranceandJamesC.Franceandtheirrespectivespouses.Uponsurrenderofthepoliciesorpaymentofthedeathbenefitsthereunder,theCompanyisentitledtorepaymentofanamountequaltothecumulativepremiumspreviouslypaidbytheCompany.TheCompanymaycausetheagreementstobeterminatedandthepoliciessurrenderedatanytimeafterthecashsurrendervalueofthepoliciesequalsthecumulativepremiumsadvancedundertheagreements.TheCompanyrecordedtheinsuranceexpensenetoftheincreaseincashsurrendervalueofthepoliciesassociatedwiththeseagreements.

Crotty&Bartlett,P.A.,alawfirmcontrolledbysiblingsofW.GarrettCrotty,oneoftheCompany’sexecutiveofficers,leasedofficespacelocatedintheCompany’scorporateofficecomplexinDaytonaBeach,Florida.TheCompanyengagesCrotty&Bartlettforcertainlegalandconsultingservices.TheaggregateamountpaidtoCrotty&BartlettbytheCompanyforlegalandconsultingservices,netofamountsreceivedbytheCompanyforleasedofficespace,totaledapproximately$119,000,$180,000and$150,000duringfiscal2004,2005and2006,respectively.

J.HyattBrown,oneoftheCompany’sdirectors,servesasPresidentandChiefExecutiveOfficerofBrown&Brown,Inc.(“Brown&Brown”).Brown&BrownhasreceivedcommissionsforservingastheCompany’sinsurancebrokerforseveraloftheCompany’sinsurancepolicies,includingtheCompany’spropertyandcasualtypolicy,certainemployeebenefitprogramsandthesplit-dollararrangementsestablishedforthebenefitofWilliamC.France,JamesC.Franceandtheirrespectivespouses.Theaggregatecommissions

receivedbyBrown&BrowninconnectionwiththeCompany’spolicieswereapproximately$390,000,$507,000and$565,000,duringfiscal2004,2005and2006,respectively.

Kinsey,VincentPyle,L.C.,alawfirmwhichChristyF.Harris,oneoftheCompany’sdirectors,joinedinfiscal2004,providedlegalservicestotheCompanyduringfiscal2004,2005and2006.TheCompanypaidapproximately$301,000,$359,000and$169,000fortheseservicesinfiscal2004,2005and2006,whichwerechargedtotheCompanyonthesamebasisasthoseprovidedotherclients.

Mr.GregoryW.Penske,oneoftheCompany’sdirectors,isalsoanofficeranddirectorofPenskePerformance,Inc.andotherPenskeCorporationaffiliates,aswellasthesonofRogerS.Penske.RogerS.PenskebeneficiallyownsamajorityofthevotingstockofandcontrolsPenskeCorporationanditsaffiliates.TheCompanyrentedPenskeCorporationanditsaffiliatescertainfacilitiesforadrivingschoolandsoldhospitalitysuiteoccupancyandrelatedservices,merchandiseandaccessoriestoPenskeCorporation,itsaffiliatesandotherrelatedcompanies.Inaspecialpromotionalarrangementdesignedtogrowdemandwhilemaintainingpriceintegrity,theCompanysoldapproximately8,000ticketsforcertaineventsduringfiscal2004and2005atdiscountsgreaterthanthoseaffordedanyotherticketpurchasertoPenskeAutomotiveGroup,oneofthelargestautomobileretailersinSouthernCalifornia,whicheffecteddistributionofthosetickets.PenskeTruckLeasingrentedcertainvehiclesandsoldrelatedsuppliesandservicestotheCompany.Also,theCompanypaidPenskeCorporationfortheuseofcertaintrademarks.Infiscal2004,2005and2006,theaggregateamountreceivedfromPenskeCorporation,itsaffiliatesandotherrelatedcompanies,netofamountspaidbytheCompany,totaledapproximately$2.4million,$1.5millionand$1.9million,respectively,fortheaforementionedgoodsandservices.

RacewayAssociatesisowned75.0percentbyMotorsportsAllianceand25.0percentbytheformerownersoftheRoute66Raceway,LLC.EdwardH.Rensi,adirectoroftheCompany,soldhisapproximately1.3percentownershipinterestinRacewayAssociatestounrelatedthirdpartiesinfiscal2005.TheCompanyownsanindirectequityinvestmentinChicagolandSpeedwaythroughtheCompany’sequityinvestmentinMotorsportsAlliance.TheCompanypaysChicagolandSpeedwayfeestosellmerchandiseandprogramsonitspropertyandconductradiobroadcastsofitsevents.ChicagolandpaystheCompanyforthepurchaseofprogramsandforcostsrelatedtotheuseoftheCompany’sjetdryersandothereventsupportatitsevents.ThenetamountspaidbytheCompanywereapproximately$621,000,$572,000and$636,000,duringfiscal2004,2005and2006,respectively.

NOTE11-RELATEDPARTYDISCLOSURESANDTRANSACTIONS(continued)

CashpaidforincometaxesandinterestfortheyearsendedNovember30,issummarizedasfollows(inthousands):

NOTE12-SUPPLEMENTALDISCLOSURESOFCASHFLOWINFORMATION

Incometaxespaid $ 35,962 $ 84,093 $ 79,228 Interestpaid $ 23,414 $ 19,679 $ 20,380

2004 2005 2006

TheCompany’s1996Long-TermStockIncentivePlan(the“1996Plan”)authorizedthegrantofstockoptions(incentiveandnonqualified),stockappreciationrightsandrestrictedstock.TheCompanyreservedanaggregateof1,000,000shares(subjecttoadjustmentforstocksplitsandsimilarcapitalchanges)oftheCompany’sClassACommonStockforgrantsunderthe1996Plan.The1996PlanterminatedinSeptember2006.Allunvestedstockoptionsandrestrictedstockgrantedpriortotheterminationwillcontinuetovestandwillcontinuetobeexercisableinaccordancewiththeiroriginalterms.

InApril,2006,theCompany’sshareholders’approvedthe2006Long-TermIncentivePlan(the“2006Plan”)whichauthorizesthegrantofstockoptions(incentiveandnon-qualified),stockappreciationrights,restrictedandunrestrictedstock,cashawardsandPerformanceUnits(asdefinedinthe2006Plan)toemployees,consultantsandadvisorsoftheCompanycapableofcontributingtotheCompany’sperformance.TheCompanyhasreservedanaggregateof1,000,000shares(subjecttoadjustmentforstocksplitsandsimilarcapitalchanges)oftheCompany’sClassACommonStockforgrantsunderthe2006Plan.IncentiveStockOptionsmaybegrantedonlytoemployeeseligibletoreceivethemundertheInternalRevenueCodeof1996,asamended.The2006PlanapprovedbytheshareholdersappointstheCompensationCommittee(the“Committee”)toadministerthe2006Plan.Awardsunderthe2006Planwillcontainsuchtermsandconditionsnotinconsistentwiththe2006PlanastheCommitteeinitsdiscretionapproves.TheCommitteehasdiscretiontoadministerthe2006Planinthemannerwhichitdetermines,fromtimetotime,isinthebestinterestoftheCompany.

Therehavebeennoawardsgrantedunderthe2006Plan.

PriortoDecember1,2005theCompanyaccountedforthe1996PlanundertherecognitionandmeasurementprinciplesofAccountingPrinciplesBoard(“APB”)OpinionNo.25,“AccountingforStockIssuedtoEmployees,”andrelatedinterpretationsaspermittedbySFASNo.123,“AccountingforStock-BasedCompensation.”TheCompanyrecognizedstock-basedcompensationcostonitsrestrictedsharesawardedontheacceleratedmethodovertheirvestingperiodsequaltothefairmarketvalueofthesesharesonthedateofaward.Nostock-basedemployeecompensationcostwasreflectedintheConsolidatedStatementofOperationsrelatingtostockoptionsforthefiscalyearsendedNovember30,2004and2005,asalloptionsgrantedunderthe1996Planhadanexercisepriceequaltothemarketvalueoftheunderlyingcommonstockonthedateofgrant.

EffectiveDecember1,2005,theCompanyadoptedthefairvaluerecognitionprovisionsofSFASNo.123(R),“Share-BasedPayment,”usingthemodified-prospective-transitionmethodandaccordinglypriorperiodshavenotbeenrestatedtoreflecttheimpactofSFAS123(R).Underthattransitionmethod,compensationcostrecognizedduringthefiscalyearendedNovember30,2006includes:(a)compensationcostforallshare-basedpaymentsgrantedpriorto,butnotyetvestedasofDecember1,2005,basedonthegrantdatefairvalueestimatedinaccordancewiththeoriginalprovisionsofSFASNo.123,and(b)compensationcostforallshare-basedpaymentsgrantedsubsequenttoDecember1,2005,basedonthegrant-datefairvalueestimatedinaccordancewiththeprovisionsofSFASNo.123(R).Stock-basedcompensationexpenseforthefiscalyearended

NOTE13-LONG-TERMSTOCKINCENTIVEPLAN



ThefollowingtableillustratestheeffectonnetincomeandearningspershareiftheCompanyhadappliedthefairvaluerecognitionprovisionsof SFASNo.123(R)tostock-basedemployeecompensationaftergivingconsiderationtopotentialforfeituresfortheyearsendedNovember30.Forpurposesofthisproformadisclosure,thefairvalueoftheoptionsisestimatedusingaBlack-Scholes-Mertonoption-pricingformulaandamortizedtoexpenseovertheoptions’vestingperiods(inthousands,exceptpershareamounts):

2004 2005

Netincome,asreported $ 156,318 $ 159,361

Add:Stock-basedemployeecompensationexpenseincludedinreportednetincome, netofrelatedtaxeffects 1,051 1,190Deduct:Stock-basedemployeecompensationexpensedeterminedunder fairvaluebasedmethodforallawards,netofrelatedtaxeffects (1,242) (1,380) Proformanetincome $ 156,127 $ 159,171

Earningspershare: Basic-asreported $ 2.94 $ 3.00 Basic-proforma $ 2.94 $ 3.00 Diluted-asreported $ 2.94 $ 2.99 Diluted-proforma $ 2.94 $ 2.99

NOTE13-LONG-TERMSTOCKINCENTIVEPLAN(continued)

November30,2006,totaledapproximately$2.7million.Stock-basedcompensationexpenseforthefiscalyearsendedNovember30,2004and2005,totaledapproximately$1.7millionand$2.0million,respectively,undertheintrinsicvaluemethodinaccordancewithAPBNo.25.

AsaresultofadoptingSFASNo.123(R)onDecember1,2005,theCompany’sincomebeforeincometaxesandnetincomeareapproximately$459,000and$283,000lower,respectively,forthefiscalyearendedNovember30,2006,thanifithadcontinuedtoaccountforshare-basedcompensationunderAPBOpinionNo.25.BasicanddilutedearningspershareforthefiscalyearendedNovember30,2006are$0.01lower,respectively,thaniftheCompanyhadcontinuedtoaccountforshare-basedcompensationunderAPBNo.25.

PriortotheadoptionofSFASNo.123(R),theCompanypresentedalltaxbenefitsofdeductionsresultingfromthevestingofrestrictedstockawardsandexerciseofstockoptionsasoperatingcashflowsintheStatementofCashFlows.SFASNo.123(R)requiresthecashflowsresultingfromthetaxbenefitsfromtaxdeductionsinexcessofthecompensationcostrecognizedforrestrictedstockawardsandoptions(“excesstaxbenefits”)tobeclassifiedasfinancingcashflows.The$185,000excesstaxbenefitsrelatingtostock-basedcompensationclassifiedasafinancingcashinflowwouldhavebeenclassifiedasanoperatingcashinflowpriortotheadoptionofSFASNo.123(R).


AsummaryofthestatusoftheCompany’srestrictedstockasofNovember30,2006,andchangesduringthefiscalyearendedNovember30,2006,ispresentedbelow:

RestrictedStockAwards

Restrictedstockawardedunderthe1996Plangenerallyissubjecttoforfeitureintheeventofterminationofemploymentpriortovestingdates.Priortovesting,the1996Planparticipantsownthesharesandmayvoteandreceivedividends,butaresubjecttocertainrestrictions.Restrictionsincludetheprohibitionofthesaleortransferofthesharesduringtheperiodpriortovestingoftheshares.TheCompanyalsohastherightoffirstrefusaltopurchaseanysharesofstockissuedunderthe1996Planwhichareofferedforsalesubsequenttovesting.TheCompanyrecordsstock-basedcompensationcostonitsrestrictedsharesawardedontheacceleratedmethodovertherequisiteserviceperiod.

RestrictedstockoftheCompany’sClassACommonStockawardedunderthe1996Plangenerallyvestattherateof50.0percentofeachawardonthethirdanniversaryoftheawarddateandtheremaining50.0percentonthefifthanniversaryoftheawarddate.

ThefairvalueofnonvestedrestrictedstockisdeterminedbasedontheopeningtradingpriceoftheCompany’sClassACommonStockonthegrantdate.TheCompanygranted47,832,53,599and60,015sharesofrestrictedstockawardsoftheCompany’sClassACommonStockduringthefiscalyearsendedNovember30,2004,2005and2006,respectively,tocertainofficersandmanagersunderthe1996Plan.Theweightedaveragegrantdatefairvalueoftheserestrictedstockawardswas$42.28,$54.23and$50.90pershare,respectively.

UnvestedatNovember30,2005 178,566 $45.2 Granted 60,015 50.9 Vested (39,104) 38.6 Forfeited (4,997) 48.5 UnvestedatNovember30,2006 194,480 $48.2 2.9 $10,080

Weighted- Weighted- Average Average Aggregate Grant-Date Remaining Intrinsic Restricted FairValue Contractual Value Shares (PerShare) Term(Years) (InThousands)

AsofNovember30,2006,therewasapproximately$4.8millionoftotalunrecognizedcompensationcostrelatedtounvestedrestrictedstockawardsgrantedunderthe1996Plan.Thiscostisexpectedtoberecognizedoveraweighted-averageperiodof2.9years.ThetotalfairvalueofrestrictedstockawardsvestedduringthefiscalyearsendedNovember30,2004,2005and2006,wasapproximately$1.4million,$2.3millionand$2.0million,respectively.

NonqualifiedandIncentiveStockOptions

Aportionofeachnon-employeedirector’scompensationfortheirserviceasadirectoristhroughawardsofoptionstoacquiresharesoftheCompany’sClassACommonStockunderthe1996Plan.Theseoptionsbecomeexercisableoneyearafterthedateofgrantandexpireonthetenthanniversaryofthedateofgrant.TheCompanyalsograntsoptionstocertainnon-officermanagerstopurchasetheCompany’sClassACommonStockunderthe1996Plan.Theseoptionsgenerallyvestoveratwoandone-

halfyearperiodandexpireonthetenthanniversaryofthedateofgrant.TheCompanyrecordsstock-basedcompensationcostonitsstockoptionsawardedonthestraight-linemethodovertherequisiteserviceperiod.

ThefairvalueofeachoptiongrantedisestimatedonthegrantdateusingtheBlack-Scholes-Mertonoption-pricingvaluationmodelthatusestheassumptionsnotedinthefollowingtable.ExpectedvolatilitiesarebasedonimpliedvolatilitiesfromhistoricalvolatilityoftheCompany’sstockandotherfactors.TheCompanyuseshistoricaldatatoestimateoptionexercisesandemployeeterminationswithinthevaluationmodel.Separategroupsofemployeesthathavesimilarhistoricalexercisebehaviorareconsideredseparatelyforvaluationpurposes.Theexpectedtermofoptionsgrantedisestimatedbasedonhistoricalexercisebehaviorandrepresentstheperiodoftimethatoptionsgrantedareexpectedtobeoutstanding.Therisk-freerateforperiodswithinthecontractuallifeoftheoptionisbasedontheU.S.Treasuryyieldcurveineffectatthetimeofgrant.




Expectedvolatility 30.4% 25.3% 24.8%-32.8%Weightedaveragevolatility 30.4% 25.3% 27.3%Expecteddividends 0.14% 0.11% 0.16%Expectedterm(inyears) 5.0 5.0 5.1-6.8Risk-freerate 3.2%-3.9% 3.2% 5.0%-5.1%

2004 2005 2006

Asummaryofoptionactivityunderthe1996PlanasofNovember30,2006,andchangesduringtheyearthenendedispresentedbelow:

OutstandingatNovember30,2005 126,622 $46.3 Granted 33,417 46.4 Exercised (4,666) 40.4 Forfeited (12,334) 46.9 OutstandingatNovember30,2006 143,039 $46.4 7.2 $901 Vestedandexpectedtovestat November30,2006 141,161 $46.4 7.2 $893 ExercisableatNovember30,2006 98,950 $45.3 6.2 $719

Weighted- Average Aggregate Weighted- Remaining Intrinsic Average Contractual Value Options Shares ExercisePrice Term(Years) (InThousands)

Theweightedaveragegrant-datefairvalueofoptionsgrantedduringthefiscalyearsendedNovember30,2004,2005and2006was$14.3,$16.2and$16.6,respectively.ThetotalintrinsicvalueofoptionsexercisedduringthefiscalyearsendedNovember30,2004,2005and2006wasapproximately$158,000,$181,000and$39,000,respectively.Theactualtaxbenefitrealizedforthetaxdeductionsfromexerciseofthestockoptions

totaledapproximately$62,000,$70,000and$15,000forthefiscalyearsendedNovember30,2004,2005and2006,respectively.

AsofNovember30,2006,therewasapproximately$455,000oftotalunrecognizedcompensationcostrelatedtounvestedstockoptionsgrantedunderthe1996Plan.Thatcostisexpectedtoberecognizedoveraweighted-averageperiodof1.1years.

Thecarryingvaluesofcashandcashequivalents,accountsreceivable,short-terminvestments,accountspayable,andaccruedliabilitiesapproximatefairvalueduetotheshort-termmaturitiesoftheseassetsandliabilities.

Fairvaluesoflong-termdebtandinterestrateswapsarebasedonquotedmarketpricesatthedateofmeasurement.TheCompany’screditfacilities

approximatefairvalueastheybearinterestratesthatapproximatemarket.AtNovember30,2006,thefairvalueoftheremaininglong-termdebt,whichincludesthe2004SeniorNotesandTIFbondFundingCommitment,asdeterminedbyquotesfromfinancialinstitutions,was$370.5millioncomparedtothecarryingamountof$368.1million.

NOTE14-FINANCIALINSTRUMENTS

TheCompanyderivesmostofitsincomefromalimitednumberofNASCAR-sanctionedraces.Asaresult,theCompany’sbusinesshasbeen,andisexpectedtoremain,highlyseasonalbasedonthetimingofmajorevents.Forexample,oneoftheCompany’sNASCARNEXTELCupSeriesevents

istraditionallyheldontheSundayprecedingLaborDay.Accordingly,therevenueandexpensesforthatraceand/ortherelatedsupportingeventsmayberecognizedineitherthefiscalquarterendingAugust31orthefiscalquarterendingNovember30.

NOTE15-QUARTERLYDATA(UNAUDITED)

Thefollowingtablepresentscertainunauditedfinancialdataforeachquarteroffiscal2005and2006(inthousands,exceptpershareamounts):

Totalrevenue $179,432 $ 157,447 $ 166,519 $236,730Operatingincome 71,847 46,866 56,019 90,533Incomefromcontinuingoperations 41,118 26,540 36,804 54,612Netincome 41,065 26,501 36,752 55,044Basicearningspershare 0.77 0.50 0.69 1.04Dilutedearningspershare 0.77 0.50 0.69 1.03


Totalrevenue $193,934 $172,083 $ 178,892 $253,460Operatingincome 78,463 52,176 51,808 16,719Incomefromcontinuingoperations 44,131 30,727 34,299 7,823Netincome 44,053 30,687 34,272 7,792Basicearningspershare 0.83 0.58 0.64 0.15Dilutedearningspershare 0.83 0.58 0.64 0.15

FiscalQuarterEnded February28, May31, August31, November30, 2006 2006 2006 2006(1)

(1)Thefourthquarteroffiscal2006includestheimpairmentoflong-livedassetstotalingapproximately$87.1million,or$1.04perbasicanddilutedshareafter-tax.



NOTE16-SEGMENTREPORTING

ThegeneralnatureoftheCompany’sbusinessisamotorsportsthemedamusemententerprise,furnishingamusementtothepublicintheformofmotorsportsthemedentertainment.TheCompany’smotorsportseventoperationsconsistprincipallyofracingeventsatitsmajormotorsportsentertainmentfacilities.TheCompany’sremainingbusinessunits,whicharecomprisedoftheradionetworkproductionandsyndicationofnumerousracingeventsandprograms,theoperationofamotorsports-themedamusementandentertainmentcomplex,certainsouvenirmerchandising

operationsnotassociatedwiththepromotionofmotorsportseventsattheCompany’sfacilities,constructionmanagementservices,leasingoperations,financingandlicensingoperationsandagriculturaloperationsareincludedinthe“AllOther”segment.TheCompanyevaluatesfinancialperformanceofthebusinessunitsonoperatingprofitafterallocationofcorporategeneralandadministrative(“G&A”)expenses.CorporateG&Aexpensesareallocatedtobusinessunitsbasedoneachbusinessunit’snetrevenuestototalnetrevenues.

Theaccountingpoliciesofthesegmentsarethesameasthosedescribedinthesummaryofsignificantaccountingpolicies.Intersegmentsalesareaccountedforatpricescomparabletounaffiliatedcustomers.Intersegmentrevenueswereapproximately$9.0million,$12.2millionand$8.5millionfortheyearsendedNovember30,2004,2005,and2006,respectively(inthousands).

Revenues $ 609,086 $ 47,774 $ 656,860Depreciationandamortization 38,788 5,655 44,443Operatingincome 217,067 11,351 228,418Capitalexpenditures 113,098 22,120 135,218Totalassets 1,343,303 276,207 1,619,510Equityinvestments 36,489 - 36,489

ForTheYearEndedNovember30,2004 Motorsports All Event Other Total





NOTE17-SUBSEQUENTEVENT-PURCHASEOFRACEWAYASSOCIATES

InNovember2006,theCompanyannouncedthat,throughawholly-ownedsubsidiary,ithadenteredintoapurchaseagreementwithIMStoindirectlyacquireanadditional37.5percentinterestinRacewayAssociates.Asaresultofthetransaction,theCompanywillown100.0percentofMotorsportsAlliance,whichowns75.0percentofRacewayAssociates.ConcurrentwiththeIMStransaction,theCompanyalsoexerciseditsrighttopurchasetheminoritypartners’remaining25.0percentinterestinRacewayAssociatespursuanttothe1999RacewayAssociatesformationagreement.

AlltheabovetransactionsclosedonFebruary2,2007,foratotalpurchasepriceofapproximately$102.4millionwhichwaspaidforutilizingexistingcashonhandandapproximately$62.0millioninborrowingsontheCompany’s2006CreditFacility.Inconnectionwiththesetransactions,theCompanyacquiredRacewayAssociatesnetassets,includingapproximately$39.7millioninthirdpartydebt.Thesetransactionswillbeaccountedforasabusinesscombination.

TheCompanybelievesthatChicagolandSpeedwayandRoute66areuniquelyattractiveassetswell-positionedinthenation’sthirdlargestmediamarket.Theregionboastsastrongmotorsportsfanbase,demonstratedbysixconsecutiveyearsofseasonticketsell-outsatChicagolandSpeedwaysinceopeningin2001.TheCompanybelievesitsactiverepresentationonRacewayAssociates’managementcommitteesince2001andextensiveknowledgeofthemotorsportsbusinesswillhelpensureaseamlessintegrationintoISC.

ThepurchasepricefortheRacewayAssociatesacquisitionwillbeallocatedtotheassetsacquiredandliabilitiesassumedbasedontheirfairmarketvaluesattheacquisitiondate.Includedinthisacquisitionarecertainindefinite-livedintangibleassetsattributabletotheNASCARsanctionagreementsinplaceatthetimeofacquisitionandgoodwill.TheCompanywillengageanindependentappraisalfirmtoassistinthedeterminationofthefairmarketvalueofsuchassetsandliabilities.


TheBoardofDirectorsandShareholdersInternationalSpeedwayCorporation

WehaveauditedtheaccompanyingconsolidatedbalancesheetsofInternationalSpeedwayCorporationandsubsidiariesasofNovember30,2005and2006,andtherelatedconsolidatedstatementsofoperations,shareholders’equityandcashflowsforeachofthethreeyearsintheperiodendedNovember30,2006.ThesefinancialstatementsaretheresponsibilityoftheCompany’smanagement.Ourresponsibilityistoexpressanopiniononthesefinancialstatementsbasedonouraudits.

WeconductedourauditsinaccordancewiththestandardsofthePublicCompanyAccountingOversightBoard(UnitedStates).Thosestandardsrequirethatweplanandperformtheaudittoobtainreasonableassuranceaboutwhetherthefinancialstatementsarefreeofmaterialmisstatement.Anauditincludesexamining,onatestbasis,evidencesupportingtheamountsanddisclosuresinthefinancialstatements.Anauditalsoincludesassessingtheaccountingprinciplesusedandsignificantestimatesmadebymanagement,aswellasevaluatingtheoverallfinancialstatementpresentation.Webelievethatourauditsprovideareasonablebasisforouropinion.

Inouropinion,theconsolidatedfinancialstatementsreferredtoabovepresentfairly,inallmaterialrespects,theconsolidatedfinancialpositionofInternationalSpeedwayCorporationandsubsidiariesatNovember30,2005and2006,andtheconsolidatedresultsoftheiroperationsandtheircashflowsforeachofthethreeyearsintheperiodendedNovember30,2006,inconformitywithU.S.generallyacceptedaccountingprinciples.

Wealsohaveaudited,inaccordancewiththestandardsofthePublicCompanyAccountingOversightBoard(UnitedStates),theeffectivenessofInternationalSpeedwayCorporation’sinternalcontroloverfinancialreportingasofNovember30,2006,basedoncriteriaestablishedinInternalControl—IntegratedFrameworkissuedbytheCommitteeofSponsoringOrganizationsoftheTreadwayCommissionandourreportdatedFebruary6,2007,expressedanunqualifiedopinionthereon.

CertifiedPublicAccountants

Jacksonville,FloridaFebruary6,2007

ReportofIndependentRegisteredPublicAccountingFirm

TheBoardofDirectorsandShareholdersInternationalSpeedwayCorporation

Wehaveauditedmanagement’sassessment,includedintheaccompanyingReportofManagementonInternalControlOverFinancialReporting,thatInternationalSpeedwayCorporationmaintainedeffectiveinternalcontroloverfinancialreportingasofNovember30,2006,basedoncriteriaestablishedinInternalControl—IntegratedFrameworkissuedbytheCommitteeofSponsoringOrganizationsoftheTreadwayCommission(theCOSOcriteria).InternationalSpeedwayCorporation’smanagementisresponsibleformaintainingeffectiveinternalcontroloverfinancialreportingandforitsassessmentoftheeffectivenessofinternalcontroloverfinancialreporting.Ourresponsibilityistoexpressanopiniononmanagement’sassessmentandanopinionontheeffectivenessofthecompany’sinternalcontroloverfinancialreportingbasedonouraudit.

WeconductedourauditinaccordancewiththestandardsofthePublicCompanyAccountingOversightBoard(UnitedStates).Thosestandardsrequirethatweplanandperformtheaudittoobtainreasonableassuranceaboutwhethereffectiveinternalcontroloverfinancialreportingwasmaintainedinallmaterialrespects.Ourauditincludedobtaininganunderstandingofinternalcontroloverfinancialreporting,evaluatingmanagement’sassessment,testingandevaluatingthedesignandoperatingeffectivenessofinternalcontrol,andperformingsuchotherproceduresasweconsiderednecessaryinthecircumstances.Webelievethatourauditprovidesareasonablebasisforouropinion.

Acompany’sinternalcontroloverfinancialreportingisaprocessdesignedtoprovidereasonableassuranceregardingthereliabilityoffinancialreportingandthepreparationoffinancialstatementsforexternalpurposesinaccordancewithgenerallyacceptedaccountingprinciples.Acompany’sinternalcontroloverfinancialreportingincludesthosepoliciesandproceduresthat(1)pertaintothemaintenanceofrecordsthat,inreasonabledetail,accuratelyandfairlyreflectthetransactionsanddispositionsoftheassetsofthecompany;(2)providereasonableassurancethattransactionsarerecordedasnecessarytopermitpreparationoffinancialstatementsinaccordancewithgenerallyacceptedaccountingprinciples,andthatreceiptsandexpendituresofthecompanyarebeingmadeonlyinaccordancewithauthorizationsofmanagementanddirectorsofthecompany;and(3)providereasonableassuranceregardingpreventionortimelydetectionofunauthorizedacquisition,use,ordispositionofthecompany’sassetsthatcouldhaveamaterialeffectonthefinancialstatements.

Becauseofitsinherentlimitations,internalcontroloverfinancialreportingmaynotpreventordetectmisstatements.Also,projectionsofanyevaluationofeffectivenesstofutureperiodsaresubjecttotheriskthatcontrolsmaybecomeinadequatebecauseofchangesinconditions,orthatthedegreeofcompliancewiththepoliciesorproceduresmaydeteriorate.

Inouropinion,management’sassessmentthatInternationalSpeedwayCorporationmaintainedeffectiveinternalcontroloverfinancialreportingasofNovember30,2006,isfairlystated,inallmaterialrespects,basedontheCOSOcriteria.Also,inouropinion,InternationalSpeedwayCorporationmaintained,inallmaterialrespects,effectiveinternalcontroloverfinancialreportingasofNovember30,2006,basedontheCOSOcriteria.

Wealsohaveaudited,inaccordancewiththestandardsofthePublicCompanyAccountingOversightBoard(UnitedStates),theconsolidatedbalancesheetsofInternationalSpeedwayCorporationandsubsidiariesasofNovember30,2005and2006,andtherelatedconsolidatedstatementsofoperations,shareholders’equityandcashflowsforeachofthethreeyearsintheperiodendedNovember30,2006,andourreportdatedFebruary6,2007,expressedanunqualifiedopinionthereon.

CertifiedPublicAccountants

Jacksonville,FloridaFebruary6,2007

ReportofIndependentRegisteredPublicAccountingFirm


February6,2007

We,asmembersofmanagementofInternationalSpeedwayCorporation,areresponsibleforestablishingandmaintainingadequateinternalcontroloverfinancialreporting,assuchtermisdefinedinExchangeActRules13a-15(f).Internalcontroloverfinancialreportingisaprocessdesignedtoprovidereasonableassuranceregardingthereliabilityoffinancialreportingandthepreparationoffinancialstatementsforexternalpurposesinaccordancewithgenerallyacceptedaccountingprinciples.Internalcontroloverfinancialreportingincludesthosepoliciesandproceduresthat(1)pertaintothemaintenanceofrecordsthat,inreasonabledetail,accuratelyandfairlyreflectthetransactionsanddispositionsofourassets;(2)providereasonableassurancethattransactionsarerecordedasnecessarytopermitpreparationoffinancialstatementsinaccordancewithgenerallyacceptedaccountingprinciples,andthatourreceiptsandexpendituresarebeingmadeonlyinaccordancewithauthorizationsofourmanagementanddirectors;and(3)providereasonableassuranceregardingpreventionortimelydetectionofunauthorizedacquisition,use,ordispositionofourassetsthatcouldhaveamaterialeffectonthefinancialstatements.

Becauseofitsinherentlimitations,ourdisclosurecontrolsandproceduresmaynotpreventordetectmisstatements.Acontrolsystem,nomatterhowwellconceivedandoperated,canprovideonlyreasonable,notabsolute,assurancethattheobjectivesofthecontrolsystemaremet.Becauseoftheinherentlimitationsinallcontrolsystems,noevaluationofcontrolscanprovideabsoluteassurancethatallcontrolissuesandinstancesoffraud,ifany,havebeendetected.Also,projectionsofanyevaluationofeffectivenesstofutureperiodsaresubjecttotheriskthatcontrolsmaybecomeinadequatebecauseofchangesinconditions,orthatthedegreeofcompliancewiththepoliciesandproceduresmaydeteriorate.

We,underthesupervisionofandwiththeparticipationofourmanagement,includingtheChiefExecutiveOfficer,ChiefFinancialOfficerandChiefAccountingOfficer,assessedtheCompany’sinternalcontroloverfinancialreportingasofNovember30,2006,basedoncriteriaforeffectiveinternalcontroloverfinancialreportingdescribedin“InternalControl—IntegratedFramework”issuedbytheCommitteeofSponsoringOrganizationsoftheTreadwayCommission.Basedonthisassessment,weconcludedthatwemaintainedeffectiveinternalcontroloverfinancialreportingasofNovember30,2006,basedonthespecifiedcriteria.

Management’sassessmentoftheeffectivenessofourinternalcontroloverfinancialreportinghasbeenauditedbyErnst&YoungLLP,anindependentregisteredpublicaccountingfirm,asstatedintheirreportwhichisincludedherein.

ReportofManagementonInternalControlOverFinancialReporting

AtNovember30,2006,InternationalSpeedwayCorporationhadtwoissuedclassesofcapitalstock:classAcommonstock,$.01parvaluepershare,andclassBcommonstock,$.01parvaluepershare.TheclassAcommonstockistradedontheNASDAQNationalMarketSystemunderthesymbol“ISCA.”TheclassBcommonstockistradedontheOver-The-Counter

BulletinBoardunderthesymbol“ISCB.OB”and,attheoptionoftheholder,isconvertibletoclassAcommonstockatanytime.AsofNovember30,2006,therewereapproximately2,662recordholdersofclassAcommonstockandapproximately506recordholdersofclassBcommonstock.

MarketPriceofandDividendsonRegistrant’sCommonEquityandRelatedStockholderMatters

Thereportedhighandlowsalespricesorhighandlowbidinformation,asapplicable,foreachquarterindicatedareasfollows:

Fiscal2005: FirstQuarter $56.50 $48.80 $56.00 $49.00 SecondQuarter 60.59 51.50 58.50 51.50 ThirdQuarter 60.15 53.60 59.25 53.50 FourthQuarter 56.35 50.45 55.00 50.00 Fiscal2006: FirstQuarter 55.00 43.60 54.50 42.94 SecondQuarter 51.86 47.25 51.15 47.35 ThirdQuarter 48.85 43.48 48.75 43.34 FourthQuarter 54.33 47.85 54.25 47.88

ISCA ISCB.OB(1) High Low High Low

(1)ISCBquotationswereobtainedfromtheOTCBulletinBoardandrepresentpricesbetweendealersanddonotincludemarkup,markdownorcommission.Suchquotationsdonotnecessarilyrepresentactualtransactions.

Dividends

AnnualdividendsweredeclaredinthequarterendedinMayandpaidinJuneinfiscalyears2002through2005of$0.06pershareand$0.08pershareinfiscal2006onallcommonstockthatwasissuedatthetime.

72 INTERNATIONALSPEEDWAYCORPORATION

Investor Inquiries and 10-K

For more information about International Speedway Corporation, contact:

Corporate & Investor CommunicationsInternational Speedway CorporationPost Office Box 2801Daytona Beach, Florida • 32120-2801

Phone: (386) 947-6465www.iscmotorsports.com

Corporate Address

International Speedway Corporation Post Office Box 2801 • Daytona Beach, Florida • 32120-2801

Transfer Agent and RegistrarComputershareP.O. Box 43078Providence, RI • 02940-3078Phone: (800) 568-3476

Independent Auditors for 2006Ernst & Young LLP • Jacksonville, Florida

John R. SaundersExecutive Vice President and Chief Operating Officer

H. Lee CombsSenior Vice President–Corporate Development

W. Garrett CrottySenior Vice President, Secretary and General Counsel

Susan G. SchandelSenior Vice President, Chief Financial Officer and Treasurer

John E. Graham, Jr.Vice President, Business Affairs

Daniel W. HouserVice President, Controller, Chief Accounting Officer and Assistant Treasurer

W. Grant Lynch, Jr.Vice President of International Speedway Corporation,President of Talladega Superspeedway, LLC

Glenn R. PadgettVice President, Chief Counsel–Operations, Assistant Secretary and Chief Compliance Officer

Roger R. VanDerSnickVice President, Chief Marketing Officer

Brian K. WilsonVice President, Corporate Development

Daryl Q. WolfeVice President, Sales and Media

OTHER CORPORATE OFFICERS

Board of Directors

William C. FranceChairman of the Board

International Speedway Corporation

James C. FranceVice Chairman of the Board and Chief Executive Officer


Lesa France KennedyPresident


Larry Aiello, Jr.1

President and Chief Executive OfficerCorning Cable Systems

J. Hyatt Brown1

Chairman and Chief Executive OfficerBrown & Brown, Inc.

John R. Cooper2

Retired as Vice PresidentInternational Speedway Corporation

Brian Z. FranceChairman and Chief Executive Officer

NASCAR, Inc.

William P. Graves1

President and Chief Executive OfficerAmerican Trucking Associations

Christy F. HarrisAttorney in private practice of business and commercial law

Raymond K. Mason, Jr.1

Chairman and PresidentCenterbank of Jacksonville, N.A.

Gregory W. Penske1

PresidentPenske Automotive Group, Inc.

Edward H. Rensi1Retired as President andChief Executive Officer

McDonald’s USAChairman and Chief Executive Officer

Team Rensi Motorsports

Lloyd E. Reuss1

Retired as President General Motors Corporation

Thomas W. Staed1

ChairmanStaed Family Associates, Ltd.

1 Independent Board Member 2 Advisory Board Member


Post Office Box 2801Daytona Beach, Florida 32120-2801

386-254-2700www.iscmotorsports.com

For tickets, merchandise and information888-4RACTIX (888-472-2849)

www.racetickets.com

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