Churchill Downs Incorporated Reports 2012 Third-Quarter Results

Churchill Downs Incorporated Reports 2012 Third-Quarter Results

  *Revenues of $164.9 million declined 1% compared to 2011's third-quarter
    record high due to fewer live race days at Churchill Downs Racetrack
  *EBITDA was $21.3 million, the second highest all-time third-quarter EBITDA

LOUISVILLE, Ky., Nov. 5, 2012 (GLOBE NEWSWIRE) -- Churchill Downs Incorporated
("CDI" or the "Company") ( Nasdaq:CHDN) today, Nov. 5, 2012, reported results
for the third quarter and nine months ended Sept. 30, 2012.

Net revenues from continuing operations for the third quarter of 2012 declined
1%, or $1.5 million, to $164.9 million compared to the same period of the
prior year. Third quarter EBITDA (earnings before interest, taxes,
depreciation and amortization) declined to $21.3 million, from $43.0 million,
during the third quarter of 2011. Net earnings from continued operations for
the period were $6.0 million, or $0.34 per diluted common share, a decrease of
70% from net earnings from continued operations of $19.7 million, or $1.16 per
diluted common share, during the third quarter of 2011.The decline in EBITDA
and net earnings was predominately the result of the $19.3 million in Illinois
Horse Racing Equity Trust Fund payments that were received in the third
quarter of 2011.

Online Business (consisting of Twinspires.com, Luckity.com, Velocity and the
Company's equity investment in HRTV) net revenues for the third quarter
increased 9% over the same period of the prior year to $45.6 million. CDI's
online wagering company, TwinSpires.com, reported a handle increase of 10.6%,
or $20.5 million, compared to 2.2% growth of total U.S. thoroughbred industry
wagering for the same period, according to Equibase.com.

Despite growth in TwinSpires.com revenue and handle, third-quarter Online
Business EBITDA declined $0.8 million, or 8%, primarily due to $1.0 million of
expenditures related to the launch of the Company's new real money gaming
site, Luckity.com, and the continuation of spending on the development of an
exchange wagering platform; increased losses of $0.4 million from our equity
investment in horseracing television network HRTV; and severance and other
non-recurring costs of $0.6 million.

Racing Operations revenues decreased 6%, or $3.9 million, due to three fewer
racing days at Churchill Downs Racetrack and weather-related cancellations at
Calder Race Course. Racing Operations EBITDA decreased $19.5 million, due to
the impact of recognizing $19.3 million from the Illinois Horse Racing Equity
Trust Fund along with recognition of insurance proceeds net of losses of $0.6
million during 2011's third quarter.Partially offsetting these prior year
items were EBITDA improvements as operating efficiencies from cost control
measures more than offset the fewer live race days and weather-related
cancellations.

Gaming revenues decreased $2.4 million, or 5%, during the quarter largely due
to continued competition in the South Florida market and the closure of the
Company's casino and video poker operations in New Orleans for five days in
September as the result of Hurricane Isaac. Gaming EBITDA decreased $1.1
million driven primarily by revenue losses at Calder Casino.

CDI Chairman and Chief Executive Officer Robert L. Evans said the Company made
a lot of progress building its portfolio of growth opportunities in the third
quarter and in the few weeks since.

"We hope to see the revenue and EBITDA growth impact of these new
opportunities starting in the fourth quarter of this year, and into 2013 and
2014, including our decision to proceed with construction of our joint venture
casino project near Lebanon, Ohio; the completion of the acquisition of
Riverwalk Casino Hotel; the launch of the real-money gaming site, Luckity.com;
and significant progress on the $15 million renovation and rebuilding of
Harlow's following the 2011 Mississippi River flood which we expect to
complete by year-end."

"We are also pleased with the construction progress at Churchill Downs
Racetrack including the new ultra-luxury area known as The Mansion, which is
93% sold or committed under 3 to 7 year contracts, and the new Paddock Plaza
area that will add over 200 upper-price-range seats to our inventory for
various big events next year including the Kentucky Derby, the Kentucky Oaks
and our night racing and other events," Evans said.

A conference call regarding this news release is scheduled for Tuesday, Nov.
6, 2012, at 9 a.m. ET. 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 (877) 372-0878 and entering the pass code 59454442 at least 10 minutes
before the appointed time. International callers should dial (253) 237-1169. 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.

ABOUT CHURCHILL DOWNS INCORPORATED

Churchill Downs Incorporated (CDI) (Nasdaq:CHDN), headquartered in Louisville,
Ky., owns and operates the world-renowned Churchill Downs Racetrack, home of
the Kentucky Derby and Kentucky Oaks, as well as racetrack and casino
operations and a poker room in Miami Gardens, Fla.; racetrack, casino and
video poker operations in New Orleans, La.; racetrack operations in Arlington
Heights, Ill.; a casino resort in Greenville, Miss.; as well as a casino hotel
in Vicksburg, Miss.; CDI also owns the country's premier advance-deposit
wagering company, TwinSpires.com; the totalisator company, United Tote;
Luckity.com, where people can legally play fun games online for a chance to
win cash prizes; Bluff Media, an Atlanta-based multimedia poker content, brand
and publishing company; and a collection of racing-related telecommunications
and data companies. Information about CDI can be found online 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, including any disruptions in the credit
markets; a decrease in consumers' discretionary income; the effect (including
possible increases in the cost of doing business) resulting from future war
and terrorist activities or political uncertainties;the impact of increasing
insurance costs; the impact of interest rate fluctuations; the financial
performance of our racing operations; the impact of gaming competition
(including lotteries, online gaming and riverboat, cruise ship and land-based
casinos) and other sports and entertainment options in the markets in which we
operate; our ability to maintain racing and gaming licenses to conduct our
businesses; the impact of live racing day competition with other Florida,
Illinois and Louisiana racetracks within those respective markets; the impact
of higher purses and other incentives in states that compete with our
racetracks; 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 Kentucky, Florida, Illinois or Louisiana law or regulations that
impact revenues or costs of racing operations in those states; the presence of
wagering and gaming operations at other states' racetracks and casinos near
our operations; our continued ability to effectively compete for the country's
horses and trainers necessary to achieve full field horse races; 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 enter
into agreements with other industry constituents for the purchase and sale of
racing content for wagering purposes; our ability to execute our acquisition
strategy and to complete or successfully operate planned expansion projects;
our ability to successfully complete any divestiture transaction; market
reaction to our expansion projects; the inability of our totalisator company,
United Tote, to maintain its processes accurately or keep its technology
current; our accountability for environmental contamination; the inability of
our Online Business to prevent security breaches within its online
technologies; the loss of key personnel; the impact of natural and other
disasters on our operations and our ability to obtain insurance recoveries in
respect of such losses (including losses related to business interruption);
our ability to integrate any businesses we acquire into our existing
operations, 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
outcome of pending or threatened litigation; changes in our relationships with
horsemen's groups and their memberships; our ability to reach agreement with
horsemen's groups on future purse and other agreements (including, without
limiting, agreements on sharing of revenues from gaming and advance deposit
wagering); 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, 2011 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, "Risk
Factors" of this Quarterly Report on Form 10-Q.

CHURCHILL DOWNS INCORPORATED
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
for the three months ended Sept. 30, 2012 and 2011
(Unaudited) (In thousands, except per share data)
                                                                   
                                                 Three Months Ended
                                                 Sept. 30,
                                                 2012      2011      % Change
Net revenues                                                        
Racing                                            $62,919 $66,776 (6)
Gaming                                            49,493   51,922   (5)
Online                                            45,593   42,015   9
Other                                             6,872    5,636    22
                                                 164,877  166,349  (1)
Operating expenses                                                  
Racing                                            61,953   65,154   (5)
Gaming                                            37,891   39,051   (3)
Online                                            32,190   30,584   5
Other                                             6,793    5,335    27
Selling, general and administrative expenses      18,237   16,753   9
Insurance recoveries, net of losses               --       (615)    U
Operating income                                 7,813    10,087   (23)
                                                                   
Other income (expense):                                             
Interest income                                   31       116      (73)
Interest expense                                  (873)    (1,576)  (45)
Equity in losses of unconsolidated investments    (471)    (467)    1
Miscellaneous, net                                569      19,934   (97)
                                                 (744)    18,007   U
Earnings from continuing operations before        7,069    28,094   (75)
provision for income taxes
Income tax provision                              (1,096)  (8,374)  (87)
Earningsfrom continuing operations               5,973    19,720   (70)
Discontinued operations, net of income taxes:                       
Earnings from operations                          --       60       U
Net earnings and comprehensive income             $5,973  $19,780 (70)
                                                                   
Net earnings per common share data:                                 
Basic                                                               
Earnings from continuing operations              $0.34   $1.17   (71)
Discontinued operations                          --       --       --
Net earnings                                     $0.34   $1.17   (71)
                                                                   
Diluted                                                             
Earnings from continuing operations              $0.34   $1.16   (71)
Discontinued operations                          --       0.01     U
Net earnings                                     $0.34   $1.17   (71)
                                                                   
Weighted average shares outstanding:                                
Basic                                             17,130   16,858   
Diluted                                           17,575   16,974   
                                                                   
U: >100% unfavorable F: >100% favorable                        


CHURCHILL DOWNS INCORPORATED
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
for the nine months ended Sept. 30, 2012 and 2011
(Unaudited) (In thousands, except per share data)
                                                                   
                                               NineMonths Ended
                                               Sept. 30,
                                               2012       2011       % Change
Net revenues                                                        
Racing                                          $253,541 $246,858 3
Gaming                                          160,200   160,468   --
Online                                          142,330   125,344   14
Other                                           17,818    14,919    19
                                               573,889   547,589   5
Operating expenses                                                  
Racing                                          200,425   202,755   (1)
Gaming                                          117,122   118,690   (1)
Online                                          95,266    85,800    11
Other                                           19,368    15,192    27
Selling, general and administrative expenses    54,506    51,453    6
Insurance recoveries, net of losses             (6,514)   (1,010)   F
Operating income                               93,716    74,709    25
                                                                   
Other income (expense):                                             
Interest income                                 84        240       (65)
Interest expense                                (3,078)   (7,497)   (59)
Equity in losses of unconsolidated investments  (1,255)   (423)     U
Miscellaneous, net                              639       23,549    (97)
                                               (3,610)   15,869    U
Earnings from continuing operations before      90,106    90,578    (1)
provision for income taxes
Income tax provision                            (34,203)  (34,054)  --
Earningsfrom continuing operations             55,903    56,524    (1)
Discontinued operations, net of income taxes:                       
(Loss) earnings from operations                 (1)       61        U
Gain on sale of assets                          --        157       U
Net earnings and comprehensive income           $55,902  $56,742  (1)
                                                                   
Net earnings per common share data:                                 
Basic                                                               
Earnings from continuing operations            $3.24    $3.36    (4)
Discontinued operations                        --        0.01      U
Net earnings                                   $3.24    $3.37    (4)
                                                                   
Diluted                                                             
Earnings from continuing operations            $3.20    $3.34    (4)
Discontinued operations                        --        0.01      U
Net earnings                                   $3.20    $3.35    (4)
                                                                   
Weighted average shares outstanding:                                
Basic                                           17,004    16,555    
Diluted                                         17,465    16,939    
                                                                   
U: >100% unfavorable F: >100% favorable                       


CHURCHILL DOWNS INCORPORATED
SUPPLEMENTAL INFORMATION BY OPERATING UNIT
for the three months ended Sept. 30, 2012 and 2011
(Unaudited) (In thousands)
                                                                   
                                               Three Months Ended
                                               Sept. 30,
                                               2012       2011       % Change
                                                                   
Net revenues from external customers:                               
Churchill Downs                                $3,873   $6,148   (37)
Arlington                                      30,578    30,875    (1)
Calder                                         22,633    23,673    (4)
Fair Grounds                                   5,835     6,080     (4)
Total Racing Operations                        62,919    66,776    (6)
Calder Casino                                  17,841    20,251    (12)
Fair Ground Slots                              10,109    9,880     2
VSI                                            8,089     8,350     (3)
Harlow's Casino                                13,454    13,441    --
Total Gaming                                   49,493    51,922    (5)
Online Business                                45,593    42,015    9
Other Investments                              6,543     5,583     17
Corporate                                      329       53        F
Net revenues from external customers           $164,877 $166,349 (1)
                                                                   
Intercompany net revenues:                                          
Churchill Downs                                $151     $381     (60)
Arlington                                     1,758     1,468     20
Calder                                         554       582       (5)
Fair Grounds                                   11        21        (48)
Total Racing Operations                        2,474     2,452     1
Online Business                                233       186       25
Other Investments                              824       638       29
Eliminations                                   (3,531)   (3,276)   (8)
Intercompany net revenues                      $--      $--      --
                                                                   
Reconciliation of Segment EBITDA to net                             
earnings :
Racing Operations                              $1,243   $20,789  (94)
Gaming                                         12,029    13,148    (9)
Online Business                                8,986     9,818     (8)
Other Investments                              421       782       (46)
Corporate                                      (1,398)   (1,540)   (9)
Total EBITDA                                  21,281    42,997    (51)
Depreciation and amortization                  (13,370)  (13,443)  (1)
Interest income (expense), net                 (842)     (1,460)   (42)
Income tax provision                           (1,096)   (8,374)   (87)
Earnings from continuing operations            5,973     19,720    (70)
Discontinued operations, net of income taxes   --       60        (100)
Net earnings and comprehensive income          $5,973   $19,780  (70)
                                                                   
U: >100% unfavorable F: >100% favorable                        


CHURCHILL DOWNS INCORPORATED
SUPPLEMENTAL INFORMATION BY OPERATING UNIT
for the nine months ended Sept. 30, 2012 and 2011
(Unaudited) (In thousands)
                                             NineMonths Ended
                                             Sept. 30,
                                             2012       2011       % Change
                                                                 
Net revenues from external customers:                             
Churchill Downs                              $109,297 $104,558 5
Arlington                                    62,802    62,273    1
Calder                                       47,374    45,753    4
Fair Grounds                                 34,068    34,274    (1)
Total Racing Operations                      253,541   246,858   3
Calder Casino                                58,908    62,574    (6)
Fair Ground Slots                            31,726    31,510    1
VSI                                          26,466    26,566    --
Harlow's Casino                              43,100    39,818    8
Total Gaming                                 160,200   160,468   --
Online Business                              142,330   125,344   14
Other Investments                            17,012    14,657    16
Corporate                                    806       262       F
Net revenues from external customers         $573,889 $547,589 5
                                                                 
Intercompany net revenues:                                        
Churchill Downs                              $4,419   $3,993   11
Arlington                                   3,810     3,160     21
Calder                                       1,150     1,129     2
Fair Grounds                                 833       799       4
Total Racing Operations                      10,212    9,081     12
Online Business                              669       601       11
Other Investments                            2,646     1,397     89
Eliminations                                 (13,527)  (11,079)  (22)
Intercompany net revenues                    $--      $--      --
                                                                 
Reconciliation of Segment EBITDA to net earnings:                  
Racing Operations                            $55,094  $67,116  (18)
Gaming                                       51,856    43,479    19
Online Business                              31,946    28,671    11
Other Investments                            (13)      1,217     U
Corporate                                    (4,968)   (1,329)   U
Total EBITDA                                133,915   139,154   (4)
Depreciation and amortization                (40,815)  (41,319)  (1)
Interest income (expense), net               (2,994)   (7,257)   59
Income tax provision                         (34,203)  (34,054)  --
Earnings from continuing operations          55,903    56,524    (1)
Discontinued operations, net of income taxes (1)       218       (100)
Net earnings and comprehensive income        $55,902  $56,742  (1)
                                                                 
U: >100% unfavorable F: >100% favorable                      


CHURCHILL DOWNS INCORPORATED
SUPPLEMENTAL INFORMATION BY OPERATING UNIT
for the three and nine months ended Sept. 30, 2012 and 2011
(Unaudited) (In thousands)
                                                            
                                Three Months Ended    Change
                                 Sept. 30,
Management fee (expense) income: 2012       2011       $        %
Racing Operations                $(2,935) $(2,830) $105   4
Gaming                           (2,116)   (2,053)   63      3
Online Business                  (1,929)   (1,659)   270     16
Other Investments                (280)     (595)     (315)   (53)
Corporate                        7,260     7,137     (123)   2
Total management fees            $--      $--      $--    --
                                                            
                                Nine Months Ended     Change
                                 Sept. 30,
Management fee (expense) income: 2012       2011       $        %
Racing Operations                $(9,543) $(8,820) $723   8
Gaming                           (5,804)   (5,540)   264     5
Online Business                  (5,159)   (4,349)   810     19
Other Investments                (658)     (951)     (293)   (31)
Corporate                        21,164    19,660    (1,504) 8
Total management fees            $--      $--      $--    --


CHURCHILL DOWNS INCORPORATED
CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS
for the nine months ended Sept. 30, 2012 and 2011
(Unaudited) (In thousands)
                                                                  
                                                         2012      2011
Cash flows from operating activities:                               
Net earnings and comprehensive income                     $55,902 $56,742
Adjustments to reconcile net earnings and comprehensive            
income to net cash provided by operating activities:
Depreciation and amortization                             40,815    41,319
Asset impairment loss                                     25       299
Gain on sale of business                                  --       (271)
Gain on derivative instruments                            --       (3,096)
Equity in loss of unconsolidated investments              1,255     423
Share-based compensation                                 6,083     4,332
Other                                                     668       2,139
Increase (decrease) in cash resulting from changes in
operating assets andliabilities, net of business                  
acquisition:
Restricted cash                                          2,938     11,536
Accounts receivable                                      (12,500)  1,825
Other current assets                                     (1,895)   (3,865)
Accounts payable                                         395       229
Purses payable                                          (3,497)   11,051
Accrued expenses                                         5,732     3,099
Deferred revenue                                         (7,689)   2,121
Deferred riverboat subsidy                               --       (40,492)
Income taxes receivable and payable                     12,149    27,560
Other assets and liabilities                             1,728     16,498
Net cash provided by operating activities                102,109   131,449
Cash flows from investing activities:                              
Additions to property and equipment                       (25,456)  (16,802)
Acquisition of business, net of cash                      (6,728)   --
Acquisition of gaming license                             (2,250)  (2,250)
Investment in joint venture                               (6,525)   --
Purchases of minority investments                         (2,092)   (158)
Proceeds on sale of property and equipment                88        50
Proceeds from insurance recoveries                        10,413    183
Change in deposit wagering asset                          (3,364)   (117)
Net cash used in investing activities                    (35,914)  (19,094)
Cash flows from financing activities:                               
Borrowings on bank line of credit                         291,574   230,311
Repayments on bank line of credit                         (349,139) (339,158)
Change in bank overdraft                                  (3,034)   4,618
Payment of dividends                                      (10,110)  (8,165)
Repurchase of common stock                               (2,846)   (732)
Common stock issued                                       6,160     635
Windfall tax benefit from share-based compensation        819       --
Change in deposit wagering liability                      3,055     118
Net cash used in financing activities                    (63,521)  (112,373)
Net increase (decrease) in cash and cash equivalents      2,674     (18)
Cash and cash equivalents, beginning of period            27,325    26,901
Cash and cash equivalents, end of period                  $29,999 $26,883


CHURCHILL DOWNS INCORPORATED
CONDENSED CONSOLIDATED BALANCE SHEETS
As of Sept. 30, 2012, and Dec. 31, 2011
(Unaudited) (In thousands)
                                                        Sep. 30,   Dec. 31,
                                                        2012       2011
ASSETS                                                             
Current assets:                                                    
Cash and cash equivalents                                $29,999  $27,325
Restricted cash                                          44,985    44,559
Accounts receivable, net                                 38,210    49,773
Deferred income taxes                                    8,057     8,727
Income taxes receivable                                  --        3,679
Other current assets                                     11,959    10,399
Total current assets                                     133,210   144,462
                                                                  
Property and equipment, net                              469,520   477,356
Goodwill                                                 217,741   213,712
Other intangible assets, net                             102,907   103,827
Other assets                                             15,812    8,665
Total assets                                             $939,190 $948,022
                                                                  
LIABILITIES AND SHAREHOLDERS' EQUITY                               
Current liabilities:                                               
Accounts payable                                         $59,000  $56,514
Bank overdraft                                           2,439     5,473
Purses payable                                           25,169    20,066
Accrued expenses                                         51,336    47,816
Income taxes payable                                     8,470     --
Dividends payable                                        --        10,110
Deferred revenue                                         12,231    33,472
Total current liabilities                                158,645   173,451
                                                                  
Long-term debt                                           69,998    127,563
Other liabilities                                        22,458    29,542
Deferred revenue                                         17,151    17,884
Deferred income taxes                                    16,583    15,552
Total liabilities                                        284,835   363,992
                                                                  
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;
17,461 shares issued at September 30, 2012 and 17,178    274,622   260,199
shares issued at December 31, 2011
Retained earnings                                        379,733   323,831
Total shareholders' equity                               654,355   584,030
Total liabilities and shareholders' equity               $939,190 $948,022

CONTACT: Courtney Yopp Norris
         (502) 636-4564
         Courtney.Norris@kyderby.com
 
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