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Intersegment revenues were approximately $3.3 million and $2.3 million for the three months ended February 29, 2004 and February 28, 2005, respectively.

10. Condensed Consolidating Financial Statements

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

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

In the absence of both default and notice, there are no restrictions imposed by the Company's Credit Facility, 2004 Senior Notes, or guarantees on the Company's ability to obtain funds from its subsidiaries by dividend or loan. The Company has not presented separate financial statements for each of the guarantors, because it has deemed that such financial statements would not provide the investors with any material additional information.

Included in the tables below, are condensed consolidating balance sheets as of November 30, 2004 and February 28, 2005, and the condensed consolidating statements of operations for the three-month periods ended February 29, 2004 and February 28, 2005, and the condensed consolidating statements of cash flows for the three-month periods ended February 29, 2004 and February 28, 2005, of: (a) the Parent; (b) the guarantor subsidiaries; (c) elimination entries necessary to consolidate Parent with guarantor subsidiaries; and (d) the Company on a consolidated basis (in thousands).

PART I. FINANCIAL INFORMATION

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

Results of Operations

General

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

"Admissions" revenue includes ticket sales for all of our racing events, activities at DAYTONA USA and other motorsports activities and amusements.

"Motorsports related income" primarily includes television, radio and ancillary rights fees, promotion and sponsorship fees, hospitality rentals (including luxury suites, chalets and the hospitality portion of club seating), advertising revenues, royalties from licenses of our trademarks and track rentals. Our revenues from corporate sponsorships are paid in accordance with negotiated contracts, with the identities of sponsors and the terms of sponsorship changing from time to time. NASCAR contracts directly with certain network providers for television rights to the entire NASCAR NEXTEL Cup and NASCAR Busch series schedules. NASCAR's current broadcast contracts with NBC Sports and Turner Sports extend through 2006 and through 2008 with FOX and its FX cable network (with the final two years at NASCAR's option). Event promoters share in the television rights fees in accordance with the provision of the sanction agreement for each NASCAR NEXTEL Cup and NASCAR Busch series event. Under the terms of this arrangement, NASCAR retains 10% of the gross broadcast rights fees allocated to each NASCAR NEXTEL Cup or NASCAR Busch series event as a component of its sanction fees and remits the remaining 90% to the event promoter. The event promoter pays 25% of the gross broadcast rights fees allocated to the event as part of awards to the competitors.

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

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

Critical Accounting Estimates

The preparation of financial statements in conformity with accounting principles generally accepted in the United States requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. Management continually reviews its accounting policies, how they are applied and how they are reported and disclosed in the financial statements. The following is a summary of our more significant accounting estimates and how they are applied in the preparation of the financial statements.

Revenue Recognition. Advance ticket sales and event-related revenues for future events are deferred until earned, which is generally once the events are conducted. The recognition of event-related expenses is matched with the recognition of event-related revenues. Revenues and related expenses from the sale of merchandise to retail customers, catalog and internet sales and direct sales to dealers are recognized at the time of sale. We believe that our revenue recognition policies follow guidance issued by the SEC in Staff Accounting Bulletin No. 104, "Revenue Recognition in Financial Statements."

Accounts Receivable. We review the valuation of our accounts receivable on a monthly basis. The allowance for doubtful accounts is estimated based on historical experience of write-offs and future expectations of conditions that might impact the collectibility of accounts.

Long-lived Assets, Goodwill and Other Intangible Assets. Our consolidated balance sheets include significant amounts of long-lived assets, goodwill and other intangible assets. Current accounting standards require testing these assets for impairment based on assumptions regarding our future business outlook. While we continue to review and analyze many factors that can impact our business prospects in the future, our analyses are subjective and are based on conditions existing at and trends leading up to the time the assumptions are made. Actual results could differ materially from these assumptions. Our judgments with regard to our future business prospects could impact whether or not an impairment is deemed to have occurred, as well as the timing of the recognition of such an impairment charge.

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

Derivative Instruments. From time to time, we utilize derivative instruments in the form of interest rate swaps to assist in managing our interest rate risk. We do not enter into any interest rate swap derivative instruments for trading purposes. All of our interest rate swap derivative instruments qualify, or have qualified, for the use of the "short-cut" method of accounting to assess hedge effectiveness in accordance with SFAS No. 133, as amended, and are recognized in our consolidated balance sheet at their fair value. Our investment in Proximities, Inc. Series B Preferred Stock includes an option to convert said stock into common stock. This conversion feature represents an embedded derivative which is carried at its estimated fair value with the change in fair value being recognized in earnings in accordance with SFAS No. 133, as amended.

Income Taxes. Our estimates of deferred income taxes and the significant items giving rise to deferred tax assets and liabilities reflect our assessment of actual future taxes to be paid on items reflected in our financial statements, giving consideration to both timing and probability of realization. Actual income taxes could vary significantly from these estimates due to future changes in income tax law or changes or adjustments resulting from final review of our tax returns by taxing authorities, which could also adversely impact our cash flow.

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

Future Trends in Operating Results

Our success has been, and is expected to remain, dependent on maintaining good working relationships with the organizations that sanction events at our facilities, particularly with NASCAR, whose sanctioned events at our wholly-owned facilities accounted for approximately 84.9% of our revenues in fiscal 2004. In January 2003, NASCAR announced it would entertain and discuss proposals from track operators regarding potential realignment of NASCAR NEXTEL Cup Series dates to more geographically diverse and potentially more desirable markets where there may be greater demand, resulting in an opportunity for increased revenues to the track operators. In June 2003, we announced that NASCAR approved our proposal for realignment of NASCAR NEXTEL Cup Series events among certain of our facilities for the 2004 season. In May 2004 we received NASCAR's approval for the realignment of additional NASCAR NEXTEL Cup events in our portfolio beginning in fiscal 2005. The net results of the 2005 realignments is the addition o f a second NEXTEL Cup weekend for Phoenix International Raceway ("Phoenix") beginning in 2005 and the reduction of Darlington Raceway's event schedule by one NEXTEL Cup weekend. We believe that the 2005 realignments will provide us additional net positive revenue and earnings as well as further enhance the sport's exposure in highly desirable markets, which we believe benefits the sport's fans, teams, sponsors and television broadcast partners as well as promoters. NASCAR has indicated that it is open to discussion regarding additional date realignments. We believe we are well positioned to capitalize on these future opportunities.

Fiscal 2001 was our first year under NASCAR's multi-year consolidated television broadcast rights agreements with NBC Sports, Turner Sports, FOX and FX. These agreements cover the domestic broadcast of NASCAR's NEXTEL Cup and Busch series racing seasons from 2001 through 2006. NASCAR has previously announced that over the term of the current contracts for domestic television rights the annual increase in the fees for those rights will range between 15% and 21% from 2001 through 2006. The expected industry increase for fiscal 2005 is 18%. As media rights revenues increase so do the variable costs tied to the percentage of broadcast rights fees required to be paid to competitors as part of NASCAR NEXTEL Cup and NASCAR Busch series sanction agreements. Television broadcast and ancillary rights fees from continuing operations received from NASCAR for the NASCAR NEXTEL Cup and NASCAR Busch series events conducted at our wholly-owned facilities during the three months ended February 28, 2005 were approximately $59.5 million as compared to approximately $39.8 million during the same period of the prior year.

NASCAR prize and point fund monies, as well as sanction fees ("NASCAR direct expenses"), are outlined in the sanction agreement for each event and are negotiated in advance of an event. As previously discussed, included in these NASCAR direct expenses are 25% of the gross domestic television broadcast rights fees allocated to our NASCAR NEXTEL Cup and NASCAR Busch series events as part of prize and point fund money. These annually negotiated contractual amounts paid to NASCAR contribute to the support and growth of the sport of NASCAR stock car racing through payments to the teams and sanction fees paid to NASCAR. As such, we do not expect these costs to decrease in the future as a percentage of admissions and motorsports related income. We anticipate any operating margin improvement to come primarily from economies of scale and controlling costs in areas such as motorsports related and general and administrative expenses.

Economic conditions may impact our ability to secure revenues from corporate marketing partnerships. However, we believe that our presence in key markets and impressive portfolio of events are beneficial as we continue to pursue renewal and expansion of existing marketing partnerships and establish new corporate marketing partners. We believe that revenues from our corporate marketing partnerships will continue to grow over the long term.

An important component of our operating strategy has been our long-standing practice of focusing closely on supply and demand regarding additional capacity at our facilities. We continually evaluate the demand for our most popular racing events in order to add capacity that we believe will provide an acceptable rate of return on invested capital. Through prudent expansion, we attempt to keep demand at a higher level than supply, which stimulates ticket renewals and advance sales. Advance ticket sales result in earlier cash flow and reduce the potential negative impact of actual and forecasted inclement weather on ticket sales. While we will join with sponsors and offer promotions to generate additional ticket sales, we avoid rewarding last-minute ticket buyers by discounting tickets. We believe it is more important to encourage advance ticket sales and maintain price integrity to achieve long-term growth than to capture short-term incremental revenue. We recognize that a number of factors relating to disc retionary consumer spending, including economic conditions affecting disposable consumer income such as employment and other lifestyle and business conditions, can negatively impact attendance at our events. Accordingly, we instituted only modest increases in our weighted average ticket prices for fiscal 2005. To date we have limited the expansion of capacity at our facilities in fiscal 2005 to approximately 1,600 additional seats at Kansas Speedway ("Kansas") and 900 club seats along with six incremental suites at Michigan International Speedway ("Michigan"). We will continue to evaluate expansion opportunities, as well as the pricing and packaging of our tickets and other products, on an ongoing basis. Over the long term, we plan to continue to expand capacity at our speedways.

Since we compete with newer entertainment venues for patrons and sponsors, we will continue to evaluate opportunities to enhance our facilities, thereby producing additional revenue generating opportunities for us and improving the experience for our guests. One major example of these efforts is the infield renovation at Daytona International Speedway ("Daytona") that was completed for the start of the 2005 racing season. The new infield boasts numerous fan amenities and unique revenue generating opportunities, including garage walk-through areas, additional merchandise and concessions vending areas, waterfront luxury recreational vehicle parking areas and other special amenities such as the infield's signature structure, the Daytona 500 Club. Overlooking Gatorade Victory Lane, the Daytona 500 Club provides an unparalleled hospitality and entertainment experience, including banquet and bar facilities with full service, world-class cuisine, NEXTEL FANZONE and pre-race access and a reserved seat i n Gatorade Victory Lane with a post-race party. Finally, a key component of the infield renovation was the construction of a large tunnel in turn one to accommodate team haulers and guest recreational vehicles and to better facilitate traffic flow in and out of the infield. Daytona's garage area and infield was one of the oldest on the race circuit. The new modernized infield area is befitting of the premier status of the Daytona 500, and helps teams prepare for competition while allowing more fans to experience the pre-race excitement first-hand. Importantly, the fan and guest response to our renovation efforts at Daytona has been overwhelmingly positive and have resulted in incremental direct and, we believe, indirect revenue generation. Another significant example of our efforts to enhance the fan experience includes the renovation of Michigan's front stretch, including new ticket gates, new vendor and display areas, and several new concession stands, as well as the aforementioned addition of 900 new club seats and six incremental luxury suites.

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

The postponement or cancellation of one or more major motorsports events could adversely impact our future operating results. A postponement or cancellation could be caused by a number of factors, including inclement weather, a general postponement or cancellation of all major sporting events in this country (as occurred following the September 11, 2001 terrorist attacks), a terrorist attack at any mass gathering or fear of such an attack, conditions resulting from the war with Iraq or other acts or prospects of war.

Seasonality and Quarterly Results

We derive most of our income from a limited number of NASCAR-sanctioned races. As a result, our business has been, and is expected to remain, highly seasonal based on the timing of major racing events. For example, one of our NASCAR NEXTEL Cup races is traditionally held on the Sunday preceding Labor Day. Accordingly, the revenues and expenses for that race and/or the related supporting events may be recognized in either the fiscal quarter ending August 31 or the fiscal quarter ending November 30.

Future schedule changes as determined by NASCAR or other sanctioning bodies, as well as the acquisition of additional, or divestiture of existing, motorsports facilities could impact the timing of our major events in comparison to prior or future periods.

Because of the seasonal concentration of racing events, the results of operations for the three-month periods ended February 29, 2004 and February 28, 2005 are not indicative of the results to be expected for the year.

Comparison of the Results for the Three Months Ended February 28, 2005 to the Results for the Three Months Ended February 29, 2004.

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

The comparison of the three months ended February 28, 2005 to the same period of the prior year is impacted by the following factors:

• As part of the fiscal 2005 event date realignments, The California Speedway ("California") hosted a triple header NASCAR weekend including a NASCAR NEXTEL Cup, Busch and Craftsman Truck series event during our first fiscal quarter. In the prior year, California hosted the corresponding NASCAR NEXTEL Cup and Busch series events in the second fiscal quarter and the NASCAR Craftsman Truck Series event in the fourth fiscal quarter;
• Speedweeks at Daytona was highlighted by the debut of the facility's renovated infield featuring the new Daytona 500 Club, the new Gatorade Victory Lane and numerous fan friendly amenities in the NEXTEL FANZONE, which features various forms of entertainment, live national television and radio broadcasts, opportunities for fans to view garage and inspection areas first hand and specialty cuisine at the upscale "Bistro"; and
• The Indy Racing League ("IRL") event hosted at Homestead-Miami Speedway ("Miami") in the first fiscal quarter of 2004 was held in the second fiscal quarter of 2005.

Admissions revenue increased approximately $11.4 million, or 25.5%, during the three months ended February 28, 2005, as compared to the same period of the prior year. The increase is primarily due to the previously discussed realignment of events at California and to increased attendance for the NASCAR events conducted during Speedweeks at Daytona supporting our sold out Daytona 500. These increases were partially offset by the previously discussed timing of the IRL event at Miami.

Motorsports related income increased approximately $31.8 million, or 46.4%, during the three months ended February 28, 2005, as compared to the same period of the prior year. Over one-half of the increase was attributable to the previously discussed realignment of events at California. Increased television broadcast rights fees, sponsorship, hospitality, NEXTEL FANZONE passes, parking and other service revenues for Speedweeks at Daytona also significantly contributed to the increase, with many of these increases being driven directly or indirectly by the previously discussed infield renovations. These increases were partially offset by the previously discussed timing of the IRL event at Miami.

Food, beverage and merchandise income increased approximately $4.7 million, or 28.6%, during the three months ended February 28, 2005, as compared to the same period of the prior year. Over three-quarters of the increase was attributable to the previously discussed realignment of events at California. Higher revenues resulting from increased attendance and hospitality units and additional points of sale in the newly renovated infield for events during Speedweeks at Daytona also contributed to the increase. These increases were partially offset by our Americrown subsidiary's merchandising, concession and catering revenues from the NASCAR weekend hosted in the first fiscal quarter of 2004 at North Carolina Speedway ("North Carolina"), a facility which we sold in July 2004 and whose operations are recorded as discontinued operations in all periods presented, as well as the previously discussed timing of the IRL event at Miami.

Other income increased approximately $1.0 million, or 72.0%, during the three months ended February 28, 2005, as compared to the same period of the prior year. The increase was primarily attributable to agricultural operations and non-motorsports related rentals.

Prize and point fund monies and NASCAR sanction fees increased approximately $10.7 million, or 51.5%, during the three months ended February 28, 2005, as compared to the same period of the prior year. Over three-quarters of the increase was attributable to the previously discussed realignment of events at California. The remaining increase was primarily attributable to the increased television broadcast rights fees for the NASCAR NEXTEL Cup and Busch series events at Daytona as standard NASCAR sanctioning agreements require that a specified percentage of television broadcast rights fees be paid to competitors.

Motorsports related expenses increased approximately $7.2 million, or 34.0%, during the three months ended February 28, 2005, as compared to the same period of the prior year. Over three-quarters of the increase was attributable to event related expenses associated with the previously discussed realignment of events at California and to Speedweeks at Daytona, which included operating expenses associated with the previously discussed infield renovation. Certain consumer and corporate marketing sales initiatives and expenses related to Martinsville Speedway ("Martinsville"), which was purchased in July 2004, also contributed to the increase. These increases are partially offset by the previously discussed timing of the IRL event at Miami. Motorsports related expenses as a percentage of combined admissions and motorsports related income decreased from approximately 18.8% in the first fiscal quarter of 2004 to approximately 18.2% in first fiscal quarter of 2005, primaril y due to the timing of the IRL event at Miami, which included non-NASCAR event sanction costs, the increase in television broadcast rights fees and the realignment of events at California. These positive margin factors were partially offset by the previously noted expense increases.

Food, beverage and merchandise expense increased approximately $3.0 million, or 31.8%, during the three months ended February 28, 2005 as compared to the same period of the prior year. The increase was primarily attributable to the previously discussed realignment of events at California and variable and other event costs associated with increased sales during the Speedweeks events at Daytona. These increases were partially offset by our Americrown subsidiary's variable and other event costs for the NASCAR weekend hosted in the first fiscal quarter of 2004 at North Carolina, as well as the previously discussed timing of the IRL event at Miami. Food, beverage and merchandise expense as a percentage of food, beverage and merchandise income increased from approximately 58.8% in the first fiscal quarter of 2004 to approximately 60.3% in the first fiscal quarter of 2005. Factors contributing to the margin decrease include costs of an expanded merchandising strategy implemented in l ate-fiscal 2004, which included certain personnel related costs, inventory management programs, enhancements of the fan shopping experience and improvements in point of sale systems, as well as lower margin upscale catering cuisine offered in the new NEXTEL FANZONE and Daytona 500 Club. The North Carolina NASCAR and Miami IRL events included in the fiscal 2004 period also contributed to the decrease. These decreases were partially offset by the realignment of the California events to the first quarter in fiscal 2005.

General and administrative expenses increased approximately $1.9 million, or 9.2%, during the three months ended February 28, 2005 as compared to the same period of the prior year. The increase is primarily related to a net increase in certain costs related to the growth of our core business, hurricane repair costs associated with storms in late fiscal 2004 and general and administrative expenses associated with Martinsville Speedway, which was purchased in July 2004. These increases were partially offset by a decrease in legal fees and strategic development expenses. General and administrative expenses as a percentage of total revenues decreased from approximately 16.3% in the first fiscal quarter of 2004 to approximately 12.9% in the first fiscal quarter of 2005. The decrease is primarily due to increased revenues associated with the realignment of events at California, television broadcast rights fees and other Speedweeks revenues as well as the decrease in legal and strate gic development expenses in the fiscal 2005 period, partially offset by the previously noted net increases in other general and administrative expenses.

Depreciation and amortization expense increased approximately $1.1 million, or 10.4%, during the three months ended February 28, 2005, as compared to the same period of the prior year. The increase was primarily attributable to the acquisition of Martinsville, the Daytona infield reconfiguration project as well as other ongoing capital spending.

Interest income increased by approximately $316,000, or 48.3%, during the three months ended February 28, 2005, as compared to the same period of the prior year. This increase was primarily due to higher yield on short-term investments in the current period.

Interest expense decreased approximately $2.4 million, or 44.2%, during the three months ended February 28, 2005, as compared to the same period of the prior year. On April 23, 2004, we closed on a private placement of $150 million 4.20 percent senior notes due 2009, and $150 million 5.40 percent senior notes due 2014 (collectively the "2004 Senior Notes"). We used a substantial majority of the net proceeds from the transaction to redeem our then existing $225 million 7.875 percent senior notes issued in October 1999 and due October 15, 2004 ("1999 Senior Notes"). The decrease in interest expense is primarily due to the lower interest rates on the 2004 Senior Notes outstanding during the current period as compared to the interest rates on the 1999 Senior Notes outstanding during the same period of the prior year. An increase in capitalized interest also contributed to the overall decrease in interest expense.

Equity in net loss from equity investments represents our pro rata share of the current loss from our 37.5% equity investment in Raceway Associates, LLC ("Raceway Associates"). Raceway Associates owns and operates Chicagoland Speedway and Route 66 Raceway. Because of the seasonal concentration of racing events, the results of operations for the three-month periods ended February 28, 2005 and February 29, 2004 are not indicative of the results to be expected for the year.

Our effective income tax rate remained relatively consistent during the three months ended February 28, 2005 as compared to the same period of the prior year.

As a result of the foregoing, our income from continuing operations increased from approximately $24.5 million to approximately $41.1 million, or 68.2%, during the three months ended February 28, 2005, as compared to the same period of the prior year.

The operations of North Carolina and Nazareth Speedway are presented as discontinued operations, net of tax, for all periods presented in accordance with SFAS No. 144.

As a result of the foregoing, our net income increased from approximately $27.8 million to approximately $41.1 million, or 47.8%, during the three months ended February 28, 2005 as compared to the same period of the prior year.

Liquidity and Capital Resources

General

We have historically generated sufficient cash flow from operations to fund our working capital needs and capital expenditures at existing facilities, as well as to pay an annual cash dividend. In addition, we have used the proceeds from offerings of our Class A Common Stock, the net proceeds from the issuance of long-term debt, borrowings under our credit facilities and state and local mechanisms to fund acquisitions and development projects. At February 28, 2005, we had cash, cash equivalents and short-term investments totaling approximately $190.7 million, $300.0 million principal amount of senior notes outstanding and a debt service funding commitment of approximately $69.5 million principal amount related to the taxable special obligation revenue ("TIF") bonds issued by the Unified Government of Wyandotte County/Kansas City, Kansas ("Unified Government"). We had working capital of approximately $83.1 million and $149.9 million at February 28, 2005 and November 30, 2004, respectively.

Our current liquidity is primarily generated from our ongoing motorsports operations, and we expect our strong operating cash flow to continue in the future. In addition, we have the full amount available to draw upon under our $300.0 million revolving credit facility ("Credit Facility"), if needed. See "Future Liquidity" for additional disclosures relating to our Credit Facility and certain risks that may affect our near term operating results and liquidity.

Cash Flows

Net cash provided by operating activities was approximately $52.1 million for the three months ended February 28, 2005, compared to approximately $55.6 million for the three months ended February 29, 2004. The difference between our net income of approximately $41.1 million and the approximately $52.1 million of operating cash flow was primarily attributable to:

• an increase in deferred income of approximately $48.6 million;
• depreciation and amortization of approximately $11.9 million;
• deferred income taxes of approximately $9.7 million; and
• an increase in accounts payable and other liabilities of approximately $4.7 million;

These differences were partially offset by an approximately $54.4 million increase in receivables and an increase in inventories, prepaid expenses and other assets of approximately $12.5 million.

Net cash used in investing activities was approximately $100.1 million for the three months ended February 28, 2005, compared to approximately $22.5 million for the three months ended February 29, 2004. Our use of cash for investing activities reflects approximately $130.2 million in capital expenditures and approximately $68.7 million for the purchase of short-term investments. This use of cash is partially offset by approximately $99.0 million in proceeds from the sale of short-term investments.

Net cash used in financing activities was approximately $6.9 million for the three months ended February 28, 2005, compared to approximately $6.0 million for the three months ended February 29, 2004. Our use of cash for financing activities reflects approximately $7.0 million for the payment of long-term debt.

Capital Expenditures

Capital expenditures totaled approximately $130.2 million for the three months ended February 28, 2005, compared to approximately $22.2 million for the three months ended February 29, 2004. Approximately $109.8 million of the capital expenditures during the three months ended February 28, 2005 were related to the purchase of land parcels in the New York City Borough of Staten Island for a potential major speedway development and other costs related to due diligence and feasibility studies for this project (see "Future Liquidity"). The remaining capital expenditures were primarily related to the completion of our multi-faceted infield renovation project at Daytona, the purchase of equipment and other assets associated with our food, beverage and merchandising operations, acquisition of land and land improvements for expansion of parking, camping capacity and other uses, a track lighting project at Phoenix, improvements at Michigan including club seating and suite additions and a variety of other improvements and renovations to our facilities.

Based on capital projects currently approved for our existing facilities, we plan to make capital expenditures totaling approximately $91.5 million subsequent to February 28, 2005, which are expected to be completed within the next 24 months. This includes the acquisition of land and land improvements at various facilities for expansion of parking, camping capacity and other uses, completion of the previously discussed renovations and improvements at Michigan including the club seating and suite additions, the installation and/or completion of track lighting projects at Miami, Phoenix and Darlington, the purchase of equipment and other assets associated with our food, beverage and merchandising operations, increased grandstand seating capacity at Kansas, and a variety of other improvements and renovations to our facilities.

As a result of these currently approved projects and estimated additional approvals in fiscal 2005, we expect our total fiscal 2005 capital expenditures at our existing facilities will be approximately $100 million.

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

Future Liquidity

On April 23, 2004, we completed an offering of $300.0 million principal amount of unsecured senior notes in a private placement. On September 27, 2004, we completed an offer to exchange the 2004 Senior Notes for registered senior notes with substantially identical terms. At February 28, 2005, outstanding 2004 Senior Notes totaled approximately $301.5 million, net of unamortized discounts and premium, which is comprised of $150.0 million principal amount unsecured senior notes, which bear interest at 4.2% and are due April 2009, and $150.0 million principal amount unsecured senior notes, which bear interest at 5.4% and are due April 2014. The 2004 Senior Notes require semi-annual interest payments on April 15 and October 15 through their maturity. The 2004 Senior Notes may be redeemed in whole or in part, at our option, at any time or from time to time at redemption prices as defined in the indenture. Our subsidiaries are guarantors of the 2004 Senior Notes.

In January 1999, the Unified Government issued approximately $71.3 million in TIF bonds in connection with the financing of construction of Kansas Speedway. At February 28, 2005 outstanding TIF bonds totaled approximately $68.3 million, net of the unamortized discount, which is comprised of a $19.8 million principal amount, 6.15% term bond due December 1, 2017 and a $49.7 million principal amount, 6.75% term bond due December 1, 2027. The TIF bonds are repaid by the Unified Government with payments made in lieu of property taxes ("Funding Commitment") by our wholly-owned subsidiary, Kansas Speedway Corporation. Principal (mandatory redemption) payments per the Funding Commitment are payable by Kansas Speedway Corporation on October 1 of each year. The semi-annual interest component of the Funding Commitment is payable on April 1 and October 1 of each year. Kansas Speedway Corporation granted a mortgage and security interest in the Kansas project for its Funding Commi tment obligation.

In October 2002, the Unified Government issued subordinate sales tax special obligation revenue bonds ("2002 STAR Bonds") totaling approximately $6.3 million to reimburse us for certain construction already completed on the second phase of the Kansas Speedway project and to fund certain additional construction. The 2002 STAR Bonds, which require annual debt service payments and are due December 1, 2022, will be retired with state and local taxes generated within the Kansas Speedway's boundaries and are not our obligation. Kansas Speedway Corporation has agreed to guarantee the payment of principal, any required premium and interest on the 2002 STAR Bonds. At February 28, 2005, the Unified Government had $5.1 million in 2002 STAR Bonds outstanding. Under a keepwell agreement, we have agreed to provide financial assistance to Kansas Speedway Corporation, if necessary, to support its guarantee of the 2002 STAR Bonds.

Our $300.0 million Credit Facility is scheduled to mature in September 2008, and accrues interest at LIBOR plus 62.5 - 150 basis points, based on our highest debt rating as determined by specified rating agencies. At February 28, 2005, we did not have any borrowings outstanding under the Credit Facility.

We are a member of Motorsports Alliance, LLC ("Motorsports Alliance") (owned 50% by us and 50% by Indianapolis Motor Speedway LLC), which owns 75% of Raceway Associates. Raceway Associates owns and operates Chicagoland Speedway and Route 66 Raceway. Raceway Associates has a term loan arrangement, which requires quarterly principal and interest payments and matures November 15, 2012, and a $15 million secured revolving credit facility, which matures September 15, 2005. At February 28, 2005, Raceway Associates had approximately $36.8 million outstanding under its term loan and no borrowings outstanding under its credit facility. Under a keepwell agreement, the members of Motorsports Alliance have agreed to provide financial assistance to Raceway Associates, if necessary, on a pro rata basis to support performance under its term loan and credit facility.

At February 28, 2005, we had contractual cash obligations to repay debt and to make payments under operating agreements, leases and commercial commitments in the form of guarantees and unused lines of credit.

Payments due under these long-term obligations are as follows as of February 28, 2005 (in thousands):

Commercial commitment expirations are as follows as of February 28, 2005 (in thousands):

During fiscal 1999, we announced our intention to search for a site for a major motorsports entertainment facility in the New York metropolitan area. Our efforts included the evaluation of many different locations. Ultimately we identified a combination of land parcels in the New York City borough of Staten Island aggregating approximately 667 acres that could potentially be utilized for the development of a major motorsports entertainment and retail development project. In the aggregate these parcels represent the largest block of undeveloped land in the five boroughs of New York City. Recently our majority-owned subsidiary, 380 Development, LLC ("380 Development"), purchased the total 677 acres for approximately $110.4 million. The minority member of 380 Development is a subsidiary of Related Retail Corporation ("Related"), a retail development specialist whose developments include the Time Warner Center in Manhattan and the Gateway Retail Center in Brooklyn. There are operating and development agreements between us and Related which will govern the development and operation of the planned project and impose mutual and reciprocal obligations on the parties with respect to the project. In addition, Related's approximately 12.4% membership interest in 380 Development is pledged to secure a note to us for Related's proportionate share of the agreed project development expenses until such time as the status of project approval is ultimately determined. The proposed project is expected to consist of a three-quarter-mile, high-banked motorsports facility with approximately 80,000 grandstand seats and 64 luxury suites, complemented by a 50-acre retail center featuring nationally known stores offering year-round shopping opportunities. We currently expect the speedway portion of the development will cost between $550 and $600 million, including the aforementioned land purchases, and could open in late 2009 or 2010. While we believe a facility in New York provides significant long - -term strategic value for us, these property acquisitions are only small steps in a long and complex process. In addition to working closely with the appropriate governmental agencies responsible for approval and permitting, we are conducting a detailed feasibility study to further analyze construction costs, determine the level of public incentives, and review environmental impacts including traffic, noise, air quality and remediation required, if any. Whether we ultimately construct a track or pursue alternative options for the development of this prime New York real estate will largely depend on the results of this study.

In light of NASCAR's publicly announced position regarding additional potential realignment of the NASCAR NEXTEL Cup Series schedule, we also believe there are potential development opportunities in new, underserved markets across the country. As such, we have been and are exploring opportunities for public/private partnerships targeted to develop one or more motorsports facilities in new markets, including the Pacific Northwest. In late fiscal 2004 we announced that after preliminary due diligence on a site proposed by Snohomish County and the City of Marysville, Washington, it was determined the site-specific costs of such a project were beyond what was originally anticipated. As a result, Snohomish County and Marysville withdrew their proposal, which has allowed us to resume exploration of other potential locations. While we remain optimistic in our ability to construct a motorsports facility in this region of the country, it is too early to tell if the necessary public participation will materialize o r if it will be sufficient to allow for the development of such a facility.

Our cash flow from operations consists primarily of ticket, hospitality, merchandise, catering and concession sales and contracted revenues arising from television broadcast rights and marketing partnerships. While we expect our strong operating cash flow to continue in the future, our financial results depend significantly on a number of factors relating to consumer and corporate spending, including economic conditions affecting marketing dollars available from the motorsports industry's principal sponsors. Consumer and corporate spending could be adversely affected by economic, security and other lifestyle conditions, resulting in lower than expected future operating cash flows. General economic conditions were significantly and negatively impacted by the September 11, 2001 terrorist attacks and the war with Iraq and could be similarly affected by any future attacks or fear of such attacks, or by conditions resulting from other acts or prospects of war. Any future attacks or wars or related threats could also increase our expenses related to insurance, security or other related matters. In addition, the Internal Revenue Service (the "Service") is currently performing a periodic examination of our federal income tax returns for the years ended November 30, 1999 through 2003 and is examining the tax depreciation treatment for a significant portion of our motorsports entertainment facility assets. In accordance with SFAS No. 109 "Accounting for Income Taxes," we have accrued a deferred tax liability based on the differences between our financial reporting and tax bases of such assets in our consolidated balance sheet as of November 30, 2004. We believe that our application of the federal income tax regulations in question, which have been applied consistently since being adopted in 1986 and have been subjected to previous Service audits, is appropriate and we intend to vigorously defend the merits of our position, if necessary. While an adverse resolution of th ese matters could result in a material negative impact on cash flow, we believe that we have provided adequate reserves in our consolidated financial statements as of November 30, 2004, and, as a result, do not expect that such an outcome would have a material adverse effect on results of operations.

While the items discussed above could adversely affect our financial success and future cash flow, we believe that cash flows from operations, along with existing cash, cash equivalents, short-term investments and available borrowings under our Credit Facility, will be sufficient to fund:

• operations and approved capital projects at existing facilities for the foreseeable future;
• payments required in connection with the funding of the Unified Government's debt service requirements related to the TIF bonds;
• payments related to our existing debt service commitments;
• any potential payments associated with our keepwell agreements; and
• any adjustment that may ultimately occur as a result of the examination by the Service.

We intend to pursue further development and/or acquisition opportunities (including the possible development of new motorsports facilities, such as the New York metropolitan area, the Pacific Northwest and other areas), the timing, size and success, as well as associated potential capital commitments of which, are unknown at this time. Accordingly, a material acceleration in our growth strategy could require us to obtain additional capital through debt and/or equity financings. Although there can be no assurance, we believe that adequate debt and equity financing will be available on satisfactory terms.

Inflation

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

Factors That May Affect Operating Results

This report contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. You can identify a forward-looking statement by our use of the words "anticipate," "estimate," "expect," "may," "believe," "objective," "projection," "forecast," "goal," and similar expressions. These forward-looking statements include our statements regarding the timing of future events, our anticipated future operations and our anticipated future financial position and cash requirements. Although we believe that the expectations reflected in our forward-looking statements are reasonable, we do not know whether our expectations will prove correct. We disclose the important factors that could cause our actual results to differ from our expectations in cautionary statements made in this report and in other filings we have made w ith the Securities and Exchange Commission. All subsequent written and oral forward-looking statements attributable to us or to persons acting on our behalf are expressly qualified in their entirety by these cautionary statements. Our actual results could differ materially from those anticipated in these forward-looking statements as a result of the risk factors described in this report and other factors set forth in or incorporated by reference in this report.

Many of these factors are beyond our ability to control or predict. We caution you not to put undue reliance on forward-looking statements or to project any future results based on such statements or on present or prior earnings levels. Some of the factors that could cause the actual results to differ materially are attached to this report as an exhibit. Additional information concerning these or other factors that could cause the actual results to differ materially from those in the forward-looking statements is contained from time to time in the Company's annual report on form 10-K and other Securities and Exchange Commission filings. Copies of those filings are available from us and/or the Securities and Exchange Commission.

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.

During the three months ended February 28, 2005, there have been no material changes in our market risk exposures.

ITEM 4. DISCLOSURE CONTROLS AND PROCEDURES

Subsequent to February 28, 2005 and prior to the filing of this report, we conducted an evaluation of the effectiveness of the design and operation of our disclosure controls and procedures under the supervision of and with the participation of our management, including the Chief Executive Officer and Chief Financial Officer. Based on that evaluation, our management, including the Chief Executive Officer and Chief Financial Officer, concluded that our disclosure controls and procedures, subject to limitations as noted below, were effective at February 28, 2005, and during the period prior to the filing of this report.

As a result of our acquisition of Martinsville in the third quarter of fiscal 2004, we have expanded our internal controls over financial reporting to include its operations. There were no other changes in our internal control over financial reporting identified in connection with the evaluation required by paragraph (d) of Exchange Act Rules 13a-15 or 15d-15 that occurred during our last fiscal quarter that has materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

Our management, including the Chief Executive Officer and Chief Financial Officer, does not expect that our disclosure control procedures or our internal controls will prevent all error and all fraud. A control system, no matter how well conceived and operated, can provide only reasonable, not absolute, assurance that the objectives of the control system are met. Because of the inherent limitations in all control systems, no evaluation of controls can provide absolute assurance that all control issues and instances of fraud, if any, have been detected.

PART II - OTHER INFORMATION

ITEM 1. Legal Proceedings

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

ITEM 6. Exhibits and Reports on Form 8-K

(a) Exhibits:

(b) Reports on Form 8-K

On December 15, 2004 we filed a report on Form 8-K that reported under Items 7.01 and 8.01 the issuance of a press release on December 15, 2004 which initiated 2005 financial guidance and reported the acquisition by a majority owned subsidiary of the Company of approximately 450 acres of waterfront property in the New York City borough of Staten Island.

On January 27, 2005 we filed a report on Form 8-K that reported under Items 2.02 and 7.01 the issuance of a press release on January 27, 2005 which reported earnings results for the fourth quarter and fiscal year ended November 30, 2004. The release also reiterated previously issued guidance for the first quarter of 2005.

On January 28, 2005 we filed a report on Form 8-K that filed under Item 9.01 the Unaudited Consolidated Statements of Operations for Fiscal 2002, 2003, 2004 which had been restated to reflect the discontinuation of operations at Nazareth Speedway and North Carolina Speedway. 

On February 2, 2005 we filed a report on Form 8-K that reported under Item 8.01 the fact that we supplement our consolidated financial statements under accounting principles generally accepted in the United States ("GAAP") with the presentation of EBITDA, a non-GAAP financial measure and that we consider EBITDA to be an important indicator of our operating margin. A reconciliation of GAAP reporting to EBITDA was included in the report.

On February 8, 2005 we filed a report on Form 8-K that reported under Item 8.01 the issuance of a press release that reported we had signed a multi-year, multi-million dollar official status agreement with Checkers Drive-In Restaurants, Inc. (NASDAQ: CHKR) ("Checkers^(R)/Rally's^(R)").

On April 5, 2005 we filed a report on Form 8-K that reported under Items 2.02, 7.01 and 9.01 the issuance of a press release that reported earnings results for the first quarter and three months ended February 28, 2005, announced the settlement of our claims in bankruptcy against CART, and updated earnings guidance.

SIGNATURES

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

		INTERNATIONAL SPEEDWAY CORPORATION (Registrant)
Date:	4/5/2005	/s/ Susan G. Schandel
		Susan G. Schandel, Senior Vice President & Chief Financial Officer