Churchill Downs Incorporated Reports 2006 Second-Quarter Results.LOUISVILLE, Ky. -- Churchill Downs Incorporated Churchill Downs Incorporated (NASDAQ: CHDN) is the parent company of Churchill Downs. The company owns several other thoroughbred and standardbred racetracks. History (NASDAQ NASDAQ in full National Association of Securities Dealers Automated Quotations U.S. market for over-the-counter securities. Established in 1971 by the National Association of Securities Dealers (NASD), NASDAQ is an automated quotation system that reports on :CHDN) ("CDI CDI compact disc interactive: a system for storing a mix of software, data, audio, and compressed video for interactive use under processor control " or "Company") today reported results for the second quarter and six months ended June 30, 2006. Net earnings from continuing operations continuing operations Parts of a business that are expected to be maintained as an ongoing segment of an overall business operation. Income and losses from continuing operations are reported separately if any segments have been discontinued during the for the second quarter were $33.4 million, or $2.45 per diluted di·lute tr.v. di·lut·ed, di·lut·ing, di·lutes 1. To make thinner or less concentrated by adding a liquid such as water. 2. To lessen the force, strength, purity, or brilliance of, especially by admixture. share, significantly higher than the $22.7 million, or $1.69 per diluted share, earned during the same period in 2005. Net revenues from continuing operations during the quarter totaled $175.0 million, an increase of 7.2 percent from net revenues of $163.2 million one year earlier. A record-breaking Kentucky Derby Kentucky Derby One of the classic U.S. Thoroughbred horse races. It was established in 1875 and run annually on the first Saturday in May at Churchill Downs track in Louisville, Ky. With the Preakness and the Belmont Stakes, it makes up U.S. racing's coveted Triple Crown. weekend at Churchill Downs Churchill Downs, Ky.: see Louisville. racetrack, which also led to higher Churchill Downs Simulcast Network ("CDSN CDSN Churchill Downs Simulcast Network CDSN Conservation District of Southern Nevada (Las Vegas, NV) CDSN Chinese Digital Seismic Network ") revenues; strong business levels at the Company's Louisiana simulcast-wagering and video poker Video poker is a casino game based on five-card draw poker. It is played on a computerized console which is a similar size to a slot machine. History Video poker first became commercially viable when it became economical to combine a television-like monitor with a operations; and five additional days of live racing during the quarter contributed to the quarterly gains. During the quarter, the Company also recorded $9.6 million of pre-tax net insurance recoveries stemming from storm-related damages sustained in 2005 at the Company's Louisiana Operations, Calder Race Course Calder Race Course is a horse racetrack in Miami Gardens, Florida in the United States. History In the mid-1960's, real estate developer Stephen A. Calder envisioned summertime racing in Florida; in 1965, on the advice of Mr. and Ellis Park Ellis Park may refer to:
Thomas H. Meeker Meeker may refer to: Places
The track was initially opened as the "Union Race Course" in 1852. , which reopens for live racing in November. Also, we recently negotiated a sales agreement for Ellis Park that allows the track to benefit from an independent operator while keeping the Ellis Park signal in our CDSN portfolio. "While we are not changing our policy with respect to earnings guidance, we are heartened by our current year performance, particularly from the Kentucky Derby and in Louisiana. At this time, we expect that our earnings from continuing operations will equal or exceed the current average analyst estimate, even without the impact of our insurance recoveries." A conference call regarding this release is scheduled for Wednesday, Aug. 9, 2006, at 9 a.m. EDT EDT abbr. Eastern Daylight Time EDT Eastern Daylight Time EDT n abbr (US) (= Eastern Daylight Time) → hora de verano de Nueva York EDT . Investors and other interested parties may listen to the teleconference by accessing the online, real-time webcast and broadcast of the call at www.churchilldownsincorporated.com or www.earnings.com, or by dialing (719) 457-2625 at least 10 minutes before the appointed time. The online replay will be available at approximately noon EDT and continue for two weeks. A two-week telephonic replay will be available two hours after the call ends by dialing (719) 457-0820 and entering 4261782 when prompted for the access code. A copy of this news release announcing quarterly results and relevant financial and statistical information about the period will be accessible at www.churchilldownsincorporated.com. In addition to the results provided in accordance Accordance is Bible Study Software for Macintosh developed by OakTree Software, Inc.[] As well as a standalone program, it is the base software packaged by Zondervan in their Bible Study suites for Macintosh. with U.S. Generally Accepted Accounting Principles The standard accounting rules, regulations, and procedures used by companies in maintaining their financial records. Generally accepted accounting principles (GAAP) provide companies and accountants with a consistent set of guidelines that cover both broad accounting ("GAAP GAAP See: Generally Accepted Accounting Principles GAAP See generally accepted accounting principles (GAAP). "), the Company has provided a non-GAAP measurement, which presents a financial measure of Earnings before Interest, Taxes, Depreciation and Amortization Earnings before interest, taxes, depreciation and amortization (EBITDA) is a non-GAAP metric that can be used to evaluate a company's profitability.
Churchill Downs Incorporated, headquartered in Louisville, Ky., owns and operates world-renowned horse racing venues This is a list of horse racing venues, sorted by country. In the United States they are usually called horse racing tracks, and in most other English speaking countries they are usually called racecourses. throughout the United States United States, officially United States of America, republic (2005 est. pop. 295,734,000), 3,539,227 sq mi (9,166,598 sq km), North America. The United States is the world's third largest country in population and the fourth largest country in area. . CDI's six racetracks in Florida, Illinois, Indiana, Kentucky and Louisiana host many of North America's most prestigious races, including the Kentucky Derby and Kentucky Oaks The Kentucky Oaks is a Grade I stakes race for three-year-old Thoroughbred fillies staged annually in Louisville, Kentucky. The race currently covers 1⅛ miles (1811 metres) at Churchill Downs; carry 121 pounds (55 kg). , Arlington Million The Arlington Million is a Grade 1 flat horse race in the United States for thoroughbred horses aged three years and upward. It is raced over a distance of 1¼ miles (approximately 2,000 metres) on the turf at Arlington Park, Arlington Heights, Illinois (a suburb of Chicago) in , Princess Rooney Handicap The Princess Rooney Handicap is a Thoroughbred horse race run annually at Calder Race Course in Miami Gardens, Florida. Named for the U.S. Hall of Fame filly, Princess Rooney, the race is for fillies and mares three-years-old or older. , Louisiana Derby The Louisiana Derby is a race for Thoroughbred horses run at the Fair Grounds Race Course in New Orleans each year, usually in early March. The race is open to horses, age three, willing to race one and one-sixteenth miles on the dirt. A Grade II, it offers a purse of $600,000. and Indiana Derby The Indiana Derby is Anderson, Indiana's Hoosier Park's signature event and its highest paying thoroughbred horse race. A Grade II evet in its 12th running in 2006, the Derby is for three-year-olds of either gender set at a distance of 8 and one half furlongs on the dirt. . CDI racetracks have hosted six Breeders' Cup The Breeders' Cup World Championships is an annual series of Grade I thoroughbred horse races operated by Breeders' Cup Limited, a company formed in 1982 by a consortium of North American racing organizations, led by the National Thoroughbred Racing Association. World Thoroughbred Thoroughbred Light breed of racing and jumping horse descended from three desert stallions brought to England between 1689 and 1724. Thoroughbreds have a delicate head, slim body, broad chest, and short back. Most are bay, chestnut, brown, black, or gray. Championships. CDI also owns off-track betting off-track betting n. Abbr. OTB A system of placing bets away from a racetrack. facilities and has interests in various television production, telecommunications Communicating information, including data, text, pictures, voice and video over long distance. See communications. and racing services companies that support CDI's network of simulcasting and racing operations. CDI trades on the NASDAQ Global Select Market under the symbol CHDN and can be found on the Internet at www.churchilldownsincorporated.com. Information set forth in this news release contains various "forward-looking statements forward-looking statement A projected financial statement based on management expectations. A forward-looking statement involves risks with regard to the accuracy of assumptions underlying the projections. " within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. The Private Securities Litigation Reform Act The Private Securities Litigation Reform Act of 1995 (PSLRA) implemented several significant substantive changes affecting certain cases brought under the federal securities laws, including changes related to pleading, discovery, liability, class representation and awards fees and of 1995 (the "Act") provides certain "safe harbor Safe Harbor 1. A legal provision to reduce or eliminate liability as long as good faith is demonstrated. 2. A form of shark repellent implemented by a target company acquiring a business that is so poorly regulated that the target itself is less attractive. " provisions for forward-looking statements. All forward-looking statements made in this Quarterly Report on Form 10-Q Form 10-Q See 10-Q. are made pursuant to the Act. The reader is cautioned that such forward-looking statements are based on information available at the time and/or management's good faith belief with respect to future events, and are subject to risks and uncertainties that could cause actual performance or results to differ materially from those expressed in the statements. Forward-looking statements speak only as of the date the statement was made. We assume no obligation to update forward-looking information to reflect actual results, changes in assumptions or changes in other factors affecting forward-looking information. Forward-looking statements are typically identified by the use of terms such as "anticipate," "believe," "could," "estimate," "expect," "intend," "may," "might," "plan," "predict," "project," "should," "will," and similar words, although some forward-looking statements are expressed differently. Although we believe that the expectations reflected in such forward-looking statements are reasonable, we can give no assurance that such expectations will prove to be correct. Important factors that could cause actual results to differ materially from expectations include: the effect of global economic conditions; the effect (including possible increases in the cost of doing business) resulting from future war and terrorist activities or political uncertainties; the economic environment; the impact of increasing insurance costs; the impact of interest rate fluctuations; the effect of any change in our accounting policies or practices; the financial performance of our racing operations; the impact of gaming competition (including lotteries and riverboat riv·er·boat n. A boat suitable for use on a river. , cruise ship and land-based casinos) and other sports and entertainment options in those markets in which we operate; the impact of live racing day competition with other Florida and Louisiana racetracks within those respective markets; costs associated with our efforts in support of alternative gaming initiatives; costs associated with Customer Relationship Management initiatives; a substantial change in law or regulations affecting pari-mutuel and gaming activities; a substantial change in allocation of live racing days; litigation An action brought in court to enforce a particular right. The act or process of bringing a lawsuit in and of itself; a judicial contest; any dispute. When a person begins a civil lawsuit, the person enters into a process called litigation. surrounding the Rosemont, Illinois Rosemont is a village in Cook County, Illinois, founded in 1956. The population was 4,224 at the 2000 census. Geography Rosemont is located at (41.990730, -87.873816)GR1. , riverboat casino A Riverboat casino is a type of casino unique to several areas of the United States which use a riverboat as a casino. Several states authorized this type of casino to limit the areas where casinos could be constructed. ; changes in Illinois law that impact revenues of racing operations in Illinois; a decrease in riverboat admissions subsidy revenue from our Indiana operations; the impact of an additional Indiana racetrack and its wagering wa·ger n. 1. a. An agreement under which each bettor pledges a certain amount to the other depending on the outcome of an unsettled matter. b. A matter bet on; a gamble. 2. facilities near our operations; our continued ability to effectively compete for the country's top horses and trainers necessary to field high-quality horse racing horse racing, trials of speed involving two or more horses. It includes races among harnessed horses with one of two particular gaits, among saddled Thoroughbreds (or, less frequently, quarterhorses) on a flat track, or among saddled horses over a turf course with ; our continued ability to grow our share of the interstate in·ter·state adj. Involving, existing between, or connecting two or more states. n. One of a system of highways extending between the major cities of the 48 contiguous United States. Noun 1. simulcast market; our ability to execute our acquisition strategy and to complete or successfully operate planned expansion projects; our ability to successfully complete any divestiture The breakup of AT&T. By federal court order, AT&T divested itself on January 1, 1984 of its 23 operating companies, which became known as the Regional Bell Operating Companies (RBOCs). transaction; our ability to adequately integrate acquired businesses; market reaction to our expansion projects; the loss of our totalisator totalizator, totalisator a computer-driven, machine-operated betting system which eliminates the bookmaker in the betting industry which surrounds horse and dog racing. Called also parimutuel. companies or their inability to provide us assurance of the reliability of their internal control processes through Statement on Auditing Standards No. 70 audits or to keep their technology current; the need for various alternative gaming approvals in Louisiana; our accountability for environmental contamination; the loss of key personnel; the impact of natural disasters, including Hurricanes Katrina, Rita and Wilma on our operations and our ability to adjust the casualty losses through our property and business interruption insurance Noun 1. business interruption insurance - insurance that provides protection for the loss of profits and continuing fixed expenses resulting from a break in commercial activities due to the occurrence of a peril coverage; any business disruption associated with a natural disaster and/or its aftermath; and the volatility of our stock price.
CHURCHILL DOWNS INCORPORATED
CONDENSED CONSOLIDATED STATEMENTS OF NET EARNINGS
for the three and six months ended June 30, 2006 and 2005
(Unaudited)
(In thousands, except per share data)
Three Months Ended Six Months Ended
June 30, June 30,
-------------------- --------------------
2006 2005 2006 2005
--------- --------- --------- ---------
Net revenues $ 175,025 $ 163,207 $ 220,053 $ 215,089
Operating expenses 115,937 110,599 167,808 167,752
--------- --------- --------- ---------
Gross profit 59,088 52,608 52,245 47,337
Selling, general and
administrative expenses 11,921 12,271 23,649 25,026
Insurance recoveries, net
of losses (9,614) - (10,880) -
--------- --------- --------- ---------
Operating income 56,781 40,337 39,476 22,311
Other income (expense):
Interest income 243 76 362 161
Interest expense (579) (390) (1,182) (685)
Unrealized gain on
derivative
instruments 204 204 408 410
Miscellaneous, net 14 132 665 665
--------- --------- --------- ---------
(118) 22 253 551
--------- --------- --------- ---------
Earnings from continuing
operations before
provision for income
taxes 56,663 40,359 39,729 22,862
Provision for income taxes (23,310) (17,681) (16,649) (10,042)
--------- --------- --------- ---------
Net earnings from
continuing operations 33,353 22,678 23,080 12,820
Discontinued operations,
net of income taxes:
Earnings (loss) from
operations - 1,508 - (2,531)
--------- --------- --------- ---------
Net earnings $ 33,353 $ 24,186 $ 23,080 $ 10,289
========= ========= ========= =========
Net earnings (loss) per
common share:
Basic
Earnings from
continuing
operations $ 2.46 $ 1.70 $ 1.70 $ 0.96
Discontinued
operations - 0.11 - (0.19)
--------- --------- --------- ---------
Net earnings $ 2.46 $ 1.81 $ 1.70 $ 0.77
========= ========= ========= =========
Diluted
Earnings from
continuing
operations $ 2.45 $ 1.69 $ 1.69 $ 0.95
Discontinued
operations - 0.11 - (0.19)
--------- --------- --------- ---------
Net earnings $ 2.45 $ 1.80 $ 1.69 $ 0.76
========= ========= ========= =========
Weighted average shares
outstanding:
Basic 13,124 12,884 13,099 12,882
Diluted 13,623 13,457 13,624 13,506
Certain financial statement amounts have been reclassified in the
prior periods to conform to current period presentation.
CHURCHILL DOWNS INCORPORATED
SUPPLEMENTAL INFORMATION BY OPERATING UNIT
for the three and six months ended June 30, 2006 and 2005
(Unaudited)
(In thousands)
Three Months Ended Six Months Ended
June 30, June 30,
------------------ ------------------
2006 2005 2006 2005
-------- -------- -------- --------
Net revenues from external
customers:
Kentucky Operations $ 69,658 $ 65,976 $ 73,651 $ 70,353
Arlington Park 23,204 22,472 35,631 33,917
Calder Race Course 23,209 22,812 25,146 24,430
Hoosier Park 11,086 11,527 19,339 20,438
Louisiana Operations 18,679 14,825 33,913 31,457
CDSN 28,904 25,523 31,468 34,289
-------- -------- -------- --------
Total racing operations 174,740 163,135 219,148 214,884
Other investments 288 206 743 206
Corporate revenues (3) 287 162 420
-------- -------- -------- --------
Net revenues from continuing
operations 175,025 163,628 220,053 215,510
Discontinued operations - 48,948 - 53,383
-------- -------- -------- --------
$175,025 $212,576 $220,053 $268,893
======== ======== ======== ========
Inter-company net revenues:
Kentucky Operations $ 17,160 $ 14,734 $ 17,160 $ 14,752
Arlington Park 3,011 2,623 3,011 2,623
Calder Race Course 2,776 2,699 3,031 2,991
Hoosier Park 100 76 100 76
Louisiana Operations - - 1,407 6,335
-------- -------- -------- --------
Total racing operations 23,047 20,132 24,709 26,777
Other investments 738 680 838 817
Eliminations (23,785) (21,233) (25,547) (28,015)
-------- -------- -------- --------
- (421) - (421)
Discontinued operations - 421 - 421
-------- -------- -------- --------
$ - $ - $ - $ -
======== ======== ======== ========
EBITDA:
Kentucky Operations $ 37,732 $ 36,887 $ 30,923 $ 30,251
Arlington Park 756 1,604 (1,196) (47)
Calder Race Course 2,856 2,534 (549) (3,320)
Hoosier Park 147 410 274 824
Louisiana Operations 14,222 772 14,361 (406)
CDSN 7,005 6,184 7,564 8,317
-------- -------- -------- --------
Total racing operations 62,718 48,391 51,377 35,619
Other investments 397 372 996 550
Corporate expenses (841) (2,116) (1,251) (2,396)
-------- -------- -------- --------
Total EBITDA from continuing
operations 62,274 46,647 51,122 33,773
Depreciation and
amortization (5,275) (5,974) (10,573) (10,387)
Interest income (expense),
net (336) (314) (820) (524)
Provision for income taxes (23,310) (17,681) (16,649) (10,042)
-------- -------- -------- --------
Net earnings from continuing
operations 33,353 22,678 23,080 12,820
Discontinued operations, net
of income taxes - 1,508 - (2,531)
-------- -------- -------- --------
Net earnings $ 33,353 $ 24,186 $ 23,080 $ 10,289
======== ======== ======== ========
Certain financial statement amounts have been reclassified in the
prior periods to conform to current period presentation.
CHURCHILL DOWNS INCORPORATED
CONDENSED CONSOLIDATED BALANCE SHEETS
(in thousands, except share data)
June 30, December 31,
2006 2005
----------- -----------
ASSETS (unaudited)
Current assets:
Cash and cash equivalents $ 39,986 $ 22,488
Restricted cash 10,682 4,946
Accounts receivable, net 40,357 42,823
Deferred income taxes 4,054 3,949
Income taxes receivable - 697
Other current assets 15,574 9,085
----------- -----------
Total current assets 110,653 83,988
Other assets 13,690 13,020
Plant and equipment, net 348,740 346,530
Goodwill 53,528 53,528
Other intangible assets, net 17,717 18,130
----------- -----------
Total assets $ 544,328 $ 515,196
=========== ===========
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Accounts payable $ 37,552 $ 27,957
Purses payable 27,327 14,564
Accrued expenses 46,256 44,003
Dividends payable - 6,520
Income taxes payable 9,117 -
Deferred revenue 11,381 26,219
----------- -----------
Total current liabilities 131,633 119,263
Long-term debt 22,614 33,793
Other liabilities 23,388 21,625
Deferred revenue 18,443 18,614
Deferred income taxes 5,670 5,670
----------- -----------
Total liabilities 201,748 198,965
Commitments and contingencies
Shareholders' equity:
Preferred stock, no par value; 250
shares authorized; no shares issued - -
Common stock, no par value; 50,000
shares authorized; issued: 13,231
shares June 30, 2006 and 13,132 shares
December 31, 2005 121,499 121,270
Retained earnings 221,081 198,001
Unearned compensation - (3,040)
----------- -----------
Total shareholders' equity 342,580 316,231
----------- -----------
Total liabilities and shareholders'
equity $ 544,328 $ 515,196
=========== ===========
Certain financial statement amounts have been reclassified in the
prior periods to conform to current period presentation.
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