News
Churchill Downs Incorporated Reports 2008 Q1 Results
LOUISVILLE, Ky.-(Business Wire)-May 6, 2008 - Churchill Downs Incorporated (NASDAQ: CHDN) ("Company") today reported results for the first quarter ended March 31, 2008.
Net revenues from continuing operations for the first quarter of 2008 totaled $65.7 million, an increase of 37.4 percent over net revenues from continuing operations of $47.8 million recorded during the first quarter of 2007. Net revenues from continuing operations for the quarter were positively affected by the continued strong performance of the Company's gaming operations in Louisiana and the growth of the Company's advance-deposit wagering ("ADW") business.
Net earnings from continuing operations for the period were $0.8 million, or $0.06 per diluted common share, compared to a net loss from continuing operations of $8.4 million, or $0.63 per diluted common share, during the first quarter of 2007. Factors impacting net earnings from continuing operations for the quarter included a pre-tax gain of $17.2 million in insurance recoveries related to Hurricane Katrina and the growth of the Company's ADW business. These gains were partially offset by increased corporate expenses related to higher marketing and compensation costs. The Company has historically recorded a first-quarter net loss due to the fact its racetracks conduct few live racing dates during the quarter.
Churchill Downs Incorporated President and Chief Executive Officer Robert L. Evans said, "Before we discuss the just-completed business quarter, I want to personally reemphasize the tremendous sadness everyone at Churchill Downs feels about Eight Belles' tragic accident following her gutsy performance in Kentucky Derby 134. With all of the advancements made by our industry to improve the overall health and welfare of Thoroughbred racehorses, losing a competitor like Eight Belles will never be easy or acceptable. We extend our deepest sympathy to her owners, trainer and jockey for their loss, and we join the entire horse racing industry in looking for ways to prevent catastrophic injuries in the racehorses that are the very heart of our sport."
Evans continued, "During the first quarter of 2008, we saw our strategic investments in gaming and ADW operations produce a positive return, while also managing our expenses and growing our margins. During the period, TwinSpires.com handled $61.7 million, and our combined ADW and data services businesses generated $14.1 million in net revenue. While the insurance recoveries recorded by our Louisiana Operations were the primary driver for our 2008 first-quarter earnings, our slot machine gaming operations in Louisiana continue to exceed our expectations, with our average net win per unit climbing to $250 for the quarter. During the quarter, we also used cash generated from operations to pay down long-term debt.
"By now we had hoped to share with you more concrete plans for a slot machine gaming facility at Calder Race Course. However, given Florida horsemen's current refusal to work with us on a purse agreement, on realistic terms to share slots revenues and allocate ADW host fees - and given horsemen's decision to prevent Calder from simulcasting its races out of state - we see little reason to advance our plans until we reach some resolution. To the extent handle continues to be negatively affected by the horsemen's decision, we will monitor and manage our purse expenses accordingly. The same can be said in Kentucky where horsemen have shutout TwinSpires.com and Xpressbet.com customers from wagering on Churchill Downs' races.
"Despite the unfortunate turn of events following Kentucky Derby 134, we made good progress this year in introducing the Kentucky Derby brand to new customers through unique marketing innovations, including our expanded celebrity red carpet program; our Kentucky Derby Party program with its celebrity host Bobby Flay; our chief party officer promotion, which was a hit with young fans and mainstream media; our Derby Hi-5 wager; and other initiatives designed to drive general admission attendance. We achieved the second highest on-track attendance in Kentucky Derby history and saw only slight declines in off-track wagering, an impressive feat considering tens of thousands of Florida residents and ADW customers were prevented from wagering on the full Kentucky Derby Day card due to the horsemen's decisions previously outlined. I am extremely proud of the Churchill Downs team's performance during Kentucky Derby week and look forward to discussing the financial impact of our marquee racing event during our second-quarter report."
A conference call regarding this news release is scheduled for Wednesday, May 7, 2008, at 9 a.m. 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 (617) 213-4859 and entering the pass code 29551691 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 one hour after the call ends by dialing (888) 286-8010 and entering 78792725 when prompted for the access code. A copy of the Company's 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 with U.S. 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 ("EBITDA"). Churchill Downs Incorporated uses EBITDA as a key performance measure of results of operations for purposes of evaluating performance internally. The Company believes the use of this measure enables management and investors to evaluate and compare, from period to period, the Company's operating performance in a meaningful and consistent manner. This non-GAAP measurement is not intended to replace the presentation of the Company's financial results in accordance with GAAP.
Churchill Downs Incorporated ("Churchill Downs"), headquartered in Louisville, Ky., owns and operates world-renowned horse racing venues throughout the United States. Churchill Downs' four racetracks in Florida, Illinois, Kentucky and Louisiana host many of North America's most prestigious races, including the Kentucky Derby and Kentucky Oaks, Arlington Million, Princess Rooney Handicap and Louisiana Derby. Churchill Downs racetracks have hosted seven Breeders' Cup World Championships. Churchill Downs also owns off-track betting facilities and has interests in various advance-deposit wagering, television production, telecommunications and racing services companies, including a 50-percent interest in the national cable and satellite network HorseRacing TV(TM), that support the Company's network of simulcasting and racing operations. Churchill Downs 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" 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 of 1995 (the "Act") provides certain "safe harbor" provisions for forward-looking statements. All forward-looking statements made in this news release 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, 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; changes in Illinois law that impact revenues of racing operations in Illinois; the presence of wagering facilities of Indiana racetracks near our operations; our continued ability to effectively compete for the country's top horses and trainers necessary to field high-quality horse racing; our continued ability to grow our share of the interstate simulcast market and obtain the consents of horsemen's groups to interstate simulcasting; our ability to execute our acquisition strategy and to complete or successfully operate planned expansion projects; our ability to successfully complete any divestiture transaction; our ability to execute on our temporary and permanent slot facilities in Louisiana; market reaction to our expansion projects; the loss of our totalisator 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 coverage; any business disruption associated with a natural disaster and/or its aftermath; our ability to integrate businesses we acquire, including our ability to maintain revenues at historic levels and achieve anticipated cost savings; the impact of wagering laws, including changes in laws or enforcement of those laws by regulatory agencies; the effect of claims of third parties to intellectual property rights; and the volatility of our stock price.
You should read this discussion in conjunction with the Condensed Consolidated Financial Statements included in this Quarterly Report on Form 10-Q and the Company's Annual Report on Form 10-K for the year ended December 31, 2007 for further information, including Part I - Item 1A, "Risk Factors" for a discussion regarding some of the reasons that actual results may be materially different from those we anticipate, as modified by Part II - Item 1A of this Quarterly Report on Form 10-Q. -0- *T CHURCHILL DOWNS INCORPORATED CONDENSED CONSOLIDATED STATEMENTS OF NET EARNINGS (LOSS) for the three months ended March 31, (Unaudited) (In thousands, except per share data) 2008 2007 ————- ————- Net revenues $ 65,721 $ 47,842 Operating expenses 68,184 52,925 Selling, general and administrative expenses 12,157 9,825 Insurance recoveries (17,200) (784) ————- ————- Operating income (loss) 2,580 (14,124) Other income (expense): Interest income 177 272 Interest expense (901) (290) Equity in loss of unconsolidated investments (830) (299) Miscellaneous, net 372 663 ————- ————- (1,182) 346 ————- ————- Earnings (loss) from continuing operations before (provision) benefit for income taxes 1,398 (13,778) Income tax (provision) benefit (563) 5,348 ————- ————- Net earnings (loss) from continuing operations 835 (8,430) Discontinued operations, net of income taxes: (Loss) earnings from operations (93) 421 Loss on sale of business - (182) ————- ————- Net earnings (loss) $ 742 $ (8,191) ========= ========= Basic Net earnings (loss) from continuing operations $ 0.06 $ (0.63) Discontinued operations (0.01) 0.02 ————- ————- Net earnings (loss) $ 0.05 $ (0.61) ========= ========= Diluted Net earnings (loss) from continuing operations $ 0.06 $ (0.63) Discontinued operations (0.01) 0.02 ————- ————- Net earnings (loss) $ 0.05 $ (0.61) ========= ========= Weighted average shares outstanding Basic 13,522 13,371 Diluted 14,010 13,371 *T -0- *T CHURCHILL DOWNS INCORPORATED SUPPLEMENTAL INFORMATION BY OPERATING UNIT (Unaudited) (In thousands) During the year ended Dec. 31, 2007, the Company modified its method of allocating management fees to the operating segments. As a result, management fees included in EBITDA of the operating segments fluctuated significantly between each of the three months ended March 31, 2008, and 2007. The table below presents management fee (expense) income included in the EBITDA of each of the operating segments for each of the three months ended March 31, 2008, and 2007 (in thousands): Three Months Ended March 31, ————————— 2008 2007 ———— ———— Churchill Downs $ (199) - Arlington Park (997) - Calder (222) $ (78) Louisiana Operations (2,545) (3,380) Other Investments (1,101) - Corporate 5,064 3,458 ———— ———— Total $ - $ - ======== ======== *T -0- *T CHURCHILL DOWNS INCORPORATED SUPPLEMENTAL INFORMATION BY OPERATING UNIT for the three months ended March 31, (Unaudited) (In thousands) 2008 2007 ———— ———— Net revenues from external customers: Churchill Downs $ 2,469 $ 3,296 Arlington Park 13,013 13,190 Calder 2,917 1,198 Louisiana Operations 32,910 29,479 ———— ———— Total racing operations 51,309 47,163 Other Investments 14,258 121 Corporate 154 510 ———— ———— Net revenues from continuing operations 65,721 47,794 Discontinued operations - 7,837 ———— ———— $65,721 $55,631 ======== ======== Intercompany net revenues: Churchill Downs $ 173 $ - Arlington Park 210 - Calder 21 7 Louisiana Operations 837 230 ———— ———— Total racing operations 1,241 237 Other Investments 355 96 Eliminations (1,596) (285) ———— ———— - 48 Discontinued Operations - (48) ———— ———— $ - $ - ======== ======== EBITDA: Churchill Downs $(6,170) $(5,726) Arlington Park (2,837) (2,090) Calder (3,292) (2,572) Louisiana Operations 22,476 2,766 ———— ———— Total racing operations EBITDA 10,177 (7,622) Other Investments 1,407 (905) Corporate (2,307) (313) ———— ———— Total EBITDA 9,277 (8,840) Eliminations - 56 Depreciation and amortization (7,155) (4,976) Interest income (expense), net (724) (18) Income tax (expense) benefit (563) 5,348 ———— ———— Net earnings (loss) from continuing operations 835 (8,430) Discontinued operations, net of income taxes (93) 239 ———— ———— Net earnings (loss) $ 742 $(8,191) ======== ======== *T -0- *T CHURCHILL DOWNS INCORPORATED CONDENSED CONSOLIDATED BALANCE SHEETS (in thousands) March 31, December 31, 2008 2007 —————- —————— (unaudited) ASSETS Current assets: Cash and cash equivalents $ 22,128 $ 15,345 Restricted cash 4,506 11,295 Accounts receivable, net 32,588 46,335 Deferred income taxes 6,497 6,497 Income taxes receivable 12,741 13,414 Other current assets 17,422 10,396 —————- —————— Total current assets 95,882 103,282 Plant and equipment, net 364,526 357,986 Goodwill 115,349 108,349 Other intangible assets, net 34,841 39,087 Other assets 15,444 16,112 —————- —————— Total assets $626,042 $624,816 =========== ============ LIABILITIES AND SHAREHOLDERS' EQUITY Current liabilities: Accounts payable $ 31,632 $ 32,032 Purses payable 8,920 12,816 Accrued expenses 48,259 43,788 Dividends payable - 6,750 Deferred revenue 48,730 25,455 —————- —————— Total current liabilities 137,541 120,841 Long-term debt 50,000 67,989 Convertible note payable, related party 14,339 14,234 Other liabilities 20,737 20,452 Deferred revenue 19,680 19,680 Deferred income taxes 14,062 14,062 —————- —————— Total liabilities 256,359 257,258 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: 13,673 shares March 31, 2008 and 13,672 shares December 31, 2007 139,144 137,761 Retained earnings 230,539 229,797 —————- —————— Total shareholders' equity 369,683 367,558 —————- —————— Total liabilities and shareholders' equity $626,042 $624,816 =========== ============ *T
Search Our News Using Google Search
Can't find what you want? Try using Google:
