Churchill Downs Incorporated Reports 2013 Q1 Results

Churchill Downs Incorporated Reports 2013 Q1 Results

  *Record revenue of $148.1 million, up 7% vs. prior-year period; record
    EBITDA of $17.9 million, up 3%
  *Amended credit facility increases borrowing capacity
  *Up to $100 million stock repurchase program announced

LOUISVILLE, Ky., April 24, 2013 (GLOBE NEWSWIRE) -- Churchill Downs
Incorporated (Nasdaq:CHDN) (CDI or the Company) today reported results for the
first-quarter ended March 31, 2013.


Robert L. Evans, Chairman and CEO: "While we set revenue and EBITDA records
for the first quarter, our Gaming revenues were below our expectations,
primarily due to the higher payroll taxes that became effective January 1, and
delays in issuing federal and state income tax refunds. In addition, our
Online Business revenues underperformed due to our decision to stop taking wagers in Illinois effective January 18, as the bill
authorizing such wagering was allowed to expire by the state legislature.

"Looking forward, the pre-event metrics for Kentucky Oaks and Derby Week look
strong. Our joint venture with Delaware North Companies Gaming & Entertainment
to build a racing and gaming property north of Cincinnati is progressing ahead
of schedule and below budget. And, we are working our way through the
licensing process in Maine that we hope will enable us to close on our
announced Oxford Casino acquisition in Oxford, Maine, later this year.

"Finally, the Board of Directors approved two important matters this week.
First, a five-year amendment to our bank revolver that increases the loan
commitment from $375 million to $500 million and provides for additional
capacity, the 'accordion feature,' of up to an additional $225 million. This
amendment, which is subject to state regulatory approval, provides additional
financing capacity, reduces the costs of that funding and provides greater
flexibility in our future capital structure.

"The Board also approved a stock repurchase plan that authorizes the
repurchase of up to $100 million in Churchill Downs Incorporated common stock
through the end of 2015. This provides a tax-effective way to return capital
to shareholders and to offset some of the dilutive effect of equity used in
the Company's compensation plans."


The Company's net revenues from continuing operations for the first-quarter of
2013 increased 7 percent to $148.1 from $138.2 million during the same period
of the prior year due primarily to revenue growth of 21 percent of CDI's
Gaming segment.

CDI's Gaming net revenues increased from $59.3 million to $72.1 million during
the same period in 2012, reflecting the contribution of Riverwalk Casino Hotel
(Riverwalk) which was acquired in October of last year. Racing Operations net
revenues declined 8 percent to $27.8 million from $30.2 million in 2012,
primarily due to Arlington International Racecourse (Arlington) receiving 18
fewer host days than during the same period of 2012. Online Business net
revenues decreased 3 percent to $42.9 million from $44.0 million, reflecting a
2.6 percent decline in pari-mutuel handle compared to the first-quarter of
2012. According to amounts reported by Equibase, total U.S. thoroughbred
industry handle declined 2.8 percent during the first-quarter of 2013.

Net earnings from continuing operations for the period were $1.1 million, or
$0.06 per diluted common share, compared to $1.4 million, or $0.08 per diluted
common share, during the first-quarter of 2012.

EBITDA (earnings before interest, taxes, depreciation, and amortization) for
this year's first-quarter grew to $17.9 million, compared to EBITDA of $17.3
million during the first-quarter of 2012.

Our Gaming segment EBITDA increased to $20.8 million from $20.4 million during
the first-quarter 2012, driven by the addition of Riverwalk EBITDA of $4.5
million. Partially offsetting Riverwalk's EBITDA were favorable items recorded
in 2012, which did not recur in 2013, including insurance recoveries of $1.5
million related to wind damage at Harlow's Casino Resort and Spa (Harlow's)
and a reimbursement of Florida gaming referendum expenses of $0.8 million. In
addition, the Company believes that higher payroll taxes and delayed income
tax refunds negatively impacted results.

EBITDA from our Online Business remained relatively flat compared to the same
period of the previous year, reflecting a 2.6 percent decrease in pari-mutuel
handle. The expiration of legislation that allows Illinois residents to wager
online and our continuing investment in, our online gaming
offering, offset the improvements from continued organic customer growth at

Racing Operations EBITDA increased $0.1 million, which reflects insurance
proceeds of $0.4 million from a partial settlement claim related to hail
damage sustained at Churchill Downs Racetrack during April 2012. Partially
offsetting this recovery were declines in EBITDA associated with eighteen
fewer host days at Arlington.


On April 23, 2013, the Company's Board of Directors authorized the repurchase
of up to $100 million of the Company's stock in a stock repurchase program.
The Company may repurchase shares in open market purchases or through
privately negotiated transactions in compliance with Securities and Exchange
Commission Rule 10b-18, subject to market conditions, applicable legal
requirements and other relevant factors. The Company expects to fund
repurchases using available cash and borrowings under the Company's current
revolving credit facility or the amended credit facility. The Company is not
obligated to purchase any shares under the stock repurchase program, and
purchases may be discontinued, or the stock repurchase program may be modified
or suspended at any time prior to the termination of the repurchase program on
December 31, 2015.


A conference call regarding this news release is scheduled for Thursday, April
25, 2013, 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 or by dialing (877)
372-0878 and entering the conference ID number 43482124 at least 10 minutes
before the appointed time. International callers should dial (253) 237-1169.
An online replay of the call will be available at by noon ET on Thursday,
April 25.

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 (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 online wagering
company,; the totalisator company, United Tote;,
offering fun games online for a chance to win cash prizes; Bluff Media, an
Atlanta-based multimedia poker company; and a collection of racing-related
telecommunications and data companies. In addition, CDI's 50 percent owned
joint venture, Miami Valley Gaming and Racing LLC, is currently constructing a
video lottery terminal and harness racing facility in southwest Ohio.
Additional information about CDI can be found online at

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 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 Kentucky, 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 acquisitions and planned
expansion projects including the effect of required payments in the event we
are unable to complete acquisitions; 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 limitation, 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, 2012 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.

for the three months ended March 31, 2013 and 2012
(In thousands, except per share data)

                                                   2013     2012     % Change
Net revenues:                                                       
Racing                                              $ 27,813 $ 30,182 (8)
Gaming                                              72,089   59,336   21
Online                                              42,916   44,035   (3)
Other                                               5,255    4,643    13
                                                   148,073  138,196  7
Operating expenses:                                                 
Racing                                              41,120   42,988   (4)
Gaming                                              50,988   40,940   25
Online                                              30,362   30,151   1
Other                                               5,427    5,709    (5)
Selling, general and administrative expenses        17,558   16,199   8
Insurance recoveries, net of losses                 (375)    (1,511)  (75)
Operating income                                    2,993    3,720    (20)
Other income (expense):                                             
Interest income                                     10       18       (44)
Interest expense                                    (1,476)  (1,223)  (21)
Equity in losses of unconsolidated investments      (164)    (220)    25
Miscellaneous, net                                  7        33       (79)
                                                   (1,623)  (1,392)  (17)
Earnings from continuing operations before          1,370    2,328    (41)
provision for income taxes
Income tax provision                                (311)    (974)    68
Earnings from continuing operations                 1,059    1,354    (22)
Discontinued operations, net of income taxes:                       
Loss from operations                                (1)      (1)      —
Net earnings and comprehensive income               $ 1,058  $ 1,353  (22)
Net earnings per common share data:                                 
Basic                                               $ 0.06   $ 0.08   (25)
Diluted                                             0.06     0.08     (25)
Weighted average shares outstanding:                                
Basic                                               17,209   16,903   
Diluted                                             17,828   17,433   

for the three months ended March 31, 2013 and 2012
(in thousands, except per common share data)

                                               2013       2012       % Change
Net revenues from external customers:                               
Churchill Downs                                 $ 2,300    $ 2,550    (10)
Arlington Park                                  7,241      9,417      (23)
Calder                                          2,280      1,868      22
Fair Grounds                                    15,992     16,347     (2)
Total Racing Operations                         27,813     30,182     (8)
Calder Casino                                   20,486     21,879     (6)
Fair Grounds Slots                              12,364     12,031     3
VSI                                             9,761      9,563      2
Harlow's Casino                                 15,354     15,863     (3)
Riverwalk Casino                                14,124     —          100
Total Gaming                                    72,089     59,336     21
Online Business                                 42,916     44,035     (3)
Other Investments                               5,099      4,502      13
Corporate                                       156        141        11
Net revenues from external customers            $ 148,073  $ 138,196  7
Intercompany net revenues:                                          
Churchill Downs                                 $ 189      $ 186      2
Arlington Park                                  137        556        (75)
Calder                                          13         10         30
Fair Grounds                                    833        747        12
Total Racing Operations                         1,172      1,499      (22)
Online Business                                 213        206        3
Other Investments                               902        750        20
Eliminations                                    (2,287)    (2,455)    (7)
Net revenues                                    $—         $—         —
Reconciliation of Segment EBITDA to net                             
Racing Operations                               $ (11,411) $ (11,539) 1
Gaming                                          20,780     20,389     2
Online Business                                 10,444     10,421     —
Other Investments                               (158)      (330)      52
Corporate                                       (1,784)    (1,601)    (11)
Total EBITDA                                    17,871     17,340     3
Depreciation and amortization                   (15,035)   (13,807)   (9)
Interest expense, net                           (1,466)    (1,205)    (22)
Income tax provision                            (311)      (974)      68
Earnings from continuing operations             1,059      1,354      (22)
Discontinued operations, net of income taxes    (1)        (1)        —
Net earnings and comprehensive income           $ 1,058    $ 1,353    (22)

For the three months ended March 31, 2013 and 2012
(In thousands)

                     Three Months Ended Change    
                      March 31,
                     2013      2012      $     %   
Racing Operations     $ (1,313) $ (1,406) $ 93  (7) 
Gaming                (3,265)   (2,633)   (632) 24  
Online Business       (1,923)   (1,963)   40    (2) 
Other Investments     (254)     (227)     (27)  12  
Corporate Income      6,755     6,229     526   8   
Total management fees $ —       $ —       $ —      

Three months ended March 31, 2013 and 2012
(In thousands)

                                                           2013      2012
Cash flows from operating activities:                                
Net earnings and comprehensive income                       $ 1,058   $ 1,353
Adjustments to reconcile net earnings and comprehensive              
income to net cash provided by operating activities:
Depreciation and amortization                               15,035    13,807
Gain on asset disposition                                   (1)       (21)
Equity in losses of unconsolidated investments              164       220
Share-based compensation                                    3,363     1,924
Other                                                       244       228
Increase (decrease) in cash resulting from changes in
operating assets and liabilities, net of business                    
acquisitions and dispositions:
Restricted cash                                             6,758     4,327
Accounts receivable                                         4,413     8,529
Other current assets                                        (8,970)   (7,280)
Accounts payable                                            (203)     (2,399)
Purses payable                                              (3,318)   209
Accrued expenses                                            (8,980)   (5,462)
Deferred revenue                                            37,378    38,782
Income taxes receivable and payable                         (460)     110
Other assets and liabilities                                234       782
Net cash provided by operating activities                   46,715    55,109
Cash flows from investing activities:                                
Additions to property and equipment                         (13,694)  (9,120)
Acquisition of businesses, net of cash                      —         (6,630)
Investment in joint venture                                 (3,500)   (4,275)
Purchases of minority investments                           (365)     (1,482)
Assumption of note receivable                               —         (1,100)
Proceeds on sale of property and equipment                  —         65
Proceeds from insurance recoveries                          —         1,369
Change in deposit wagering asset                            (2,244)   (1,675)
Net cash used in investing activities                       (19,803)  (22,848)
Cash flows from financing activities:                                
Borrowings on bank line of credit                           103,387   79,135
Repayments of bank line of credit                           (125,796) (98,936)
Change in bank overdraft                                    (3,633)   (3,241)
Payments of dividends                                       —         (10,110)
Repurchase of common stock                                  (1,007)   (268)
Common stock issued                                         53        391
Windfall tax benefit from share-based compensation          —         443
Loan origination fees                                       (49)      —
Change in deposit wagering liability                        2,244     1,882
Net cash provided by (used in) financing activities         (24,801)  (30,704)
Net increase in cash and cash equivalents                   2,111     1,557
Cash and cash equivalents, beginning of year                37,177    27,325
Cash and cash equivalents, end of year                      $ 39,288  $ 28,882

As of March 31, 2013, and December 31, 2012
(in thousands)

                                             March 31, 2013 December 31, 2012
Current assets:                                             
Cash and cash equivalents                     $ 39,288       $ 37,177
Restricted cash                               33,727         38,241
Accounts receivable, net                      26,630         47,152
Deferred income taxes                         8,227          8,227
Income taxes receivable                       3,375          2,915
Other current assets                          22,127         13,352
Total current assets                          133,374        147,064
Property and equipment, net                   539,238        542,882
Goodwill                                      250,414        250,414
Other intangible assets, net                  140,131        143,141
Other assets                                  33,983         30,836
Total assets                                  $ 1,097,140    $ 1,114,337
Current liabilities:                                        
Accounts payable                              $ 63,516       $ 62,278
Bank overdraft                                2,394          6,027
Purses payable                                15,766         19,084
Accrued expenses                              44,925         65,537
Current maturities of long-term debt          187,318        209,728
Deferred revenue                              64,333         43,916
Total current liabilities                     378,252        406,570
Other liabilities                             21,513         21,030
Deferred revenue                              18,587         17,794
Deferred income taxes                         24,648         24,648
Total liabilities                             443,000        470,042
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; 17,964 shares issued at March 31, 283,496        274,709
2013 and 17,448 shares issued at December 31,
Retained earnings                             370,644        369,586
Total shareholders' equity                    654,140        644,295
Total liabilities and shareholders' equity    $ 1,097,140    $ 1,114,337

CONTACT: Courtney Yopp Norris
         (502) 636-4564
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