Churchill Downs Incorporated Reports 2013 Fourth-Quarter and Full Year Results

Churchill Downs Incorporated Reports 2013 Fourth-Quarter and Full Year Results

2013 FOURTH-QUARTER

  *Record net revenues of $162.4 million, a 3% increase over fourth-quarter
    2012
  *Adjusted EBITDA declines 4% primarily due to greater Racing Operations
    segment losses
  *Opens joint venture Miami Valley Gaming & Racing in December, ahead of
    schedule, under budget
  *Completes $300 million 5.375% senior unsecured notes offering

2013 FULL YEAR

  *Record net revenues of $779.3 million, a 7% increase over 2012
  *Record Adjusted EBITDA of $176.2 million, up 11% over 2012
  *Record Kentucky Oaks & Derby Week Adjusted EBITDA, a $5.8 million increase
    over 2012
  *Acquires Oxford Casino in Oxford, Maine in July

LOUISVILLE, Ky., Feb. 26, 2014 (GLOBE NEWSWIRE) -- Churchill Downs
Incorporated (Nasdaq:CHDN) (CDI or Company) today, reported business results
for the fourth-quarter and full year-ended Dec. 31, 2013.

MANAGEMENT COMMENTARY

"2013 was a good year, but we had planned to do even better," said CDI
Chairman and CEO Robert L. Evans. "While total year net revenues were up 7% to
a record $779.3 million, Adjusted EBITDA was up 11% to a record $176.2
million, and our common stock price increased 35% during the year, general
economy softness, notably in job growth and personal disposable income growth,
along with state-specific changes in legislation and regulation, and one-time
expenses combined to negatively affect our performance, particularly in the
fourth-quarter.

"Several 2013 developments should favorably affect our results in 2014. We
acquired Oxford Casino in Oxford, Maine, last July and opened our joint
venture project, Miami Valley Gaming & Racing (MVG), north of Cincinnati in
December. Our $26.5 million investment in the new, 2,400-seat Grandstand
Terrace and 15,224 square foot, 4K-resolution 'Big Board' video board at
Churchill Downs Racetrack, combined with a new, 10-year media rights deal with
NBC should be reflected in our 2014 Kentucky Oaks and Derby Week results.

"Finally, we completed a $300 million offering of 5.375% senior unsecured
notes that mature in 2021, increasing our balance sheet capacity and
flexibility to pursue additional growth opportunities in the future."

CONSOLIDATED RESULTS
(in millions, except per share data):

                        Fourth-Quarter             Full Year
                        2013     2012     % Change 2013     2012     % Change
GAAP Measures:                                                   
Net revenues             $162.4 $158.3 3      $779.3 $731.3 7
(Loss) earnings from     (5.6)    2.4      U        55.0     58.2     (5)
continuing operations
Diluted (loss) earnings
from continuing          ($0.32)  $ 0.14   U        $ 3.07   $ 3.33   (8)
operations per share
Net cash provided by                             144.9    144.4    —
operating activities
                                                                
Non-GAAP Measure:                                                
Adjusted EBITDA          $19.3  $20.2  (4)      $176.2 $158.3 11
                                                                
U: > 100% unfavorable; F: > 100% favorable

During the fourth-quarter of 2013, CDI net revenues increased $4.1 million, or
3%, from the prior year, primarily due to the results of Oxford Casino
(Oxford), which was acquired on July 17, 2013.Total Adjusted EBITDA declined
$0.9 million from lower Calder Race Course Adjusted EBITDA of $3.0 million
driven by lost hosting revenues and a 22% decline in the number of live races
conducted, $1.0 million in spending related to the development of a new online
gaming platform and declines in our Louisiana and Harlow's gaming
properties.Partially offsetting these declines was the effect of $3.8 million
in Adjusted EBITDA from the Oxford acquisition. Below the Adjusted EBITDA
line, we reserved a $2.5 million account receivable associated with an earnest
payment to acquire a New Jersey internet gaming license and incurred higher
equity compensation of $2.8 million associated with the new long-term
incentive plan. Furthermore, we incurred $2.4 million in pre-opening
expenditures related to the opening of MVG.These items resulted in an $8.0
million reduction in earnings from continuing operations compared to the prior
year.

During the year-ended December 31, 2013, CDI net revenues increased $48.0
million, or 7%, as incremental revenues of $77.7 million from the acquisitions
of Oxford and Riverwalk and a strong Kentucky Derby and Kentucky Oaks week
were partially offset by Florida racing declines.Total Adjusted EBITDA
increased $17.9 million, or 11%, driven by a $16.2 million improvement in our
Gaming Operations driven by acquisitions, a $5.8 million increase in Kentucky
Oaks and Kentucky Derby week profitability, and an Online Business improvement
of $4.5 million driven by handle growth.Partially offsetting these gains was
a decline of $9.0 million in Florida racing profitability on lost hosting
revenues and fewer race days. Below the Adjusted EBITDA line, share-based
compensation increased by $7.5 million, we incurred $3.6 million of
pre-opening expenses for MVG, reserved a $2.5 million account receivable
associated with an earnest payment to acquire a New Jersey internet gaming
license, and recognized $6.6 million less in insurance recoveries than
2012.Partially offsetting these declines was the recognition of $4.5 million
in Illinois Horse Racing Equity Trust Fund proceeds during 2013. CDI earnings
from continuing operations decreased $3.2 million, or 5%, from the prior
year.

GAMING RESULTS
(in millions):

               Fourth-Quarter           Full Year
               2013    2012    % Change 2013     2012     % Change
                                                     
Net revenues    $78.7 $62.9 25       $297.5 $223.1 33
Adjusted EBITDA 18.5    16.8    10       80.4     64.2     25

During the fourth-quarter of 2013, CDI Gaming revenues increased $15.8
million, or 25%, from the prior year, primarily due to the results of Oxford
and Riverwalk which generated a combined increase of $19.1 million.
Inclement weather, prior year stimulus post-hurricane Isaac, and continued
economic softness pressured revenues at the Company's Louisiana and Harlow's
Casino Resort and Spa (Harlow's) properties.Gaming Adjusted EBITDA increased
$1.7 million, or 10%, primarily due to incremental operating income from the
Riverwalk and Oxford acquisitions.

During the year-ended December 31, 2013, CDI Gaming revenues increased $74.4
million, or 33%, primarily due to the additions of Oxford and Riverwalk, whose
revenues increased $77.7 million compared to the prior period.Harlow's
revenues declined $4.2 million due to continuing regional weakness and
disruptions from renovations to the casino floor.Partially offsetting this
decline, Calder Casino revenues increased $1.1 million due to strategic
marketing efforts and the closure of Florida internet cafes.Gaming Adjusted
EBITDA increased $16.2 million, or 25%, due to the acquisitions of Riverwalk
and Oxford, partially offset by revenue declines at Harlow's and our Louisiana
properties, and the effect of a $0.8 million recovery at Calder Casino in
2012.

ONLINE BUSINESS RESULTS
(in millions):

               Fourth-Quarter           Full Year
               2013    2012    % Change 2013     2012     % Change
                                                     
Net revenues    $40.6 $40.9 (1)      $184.5 $183.3 1
Adjusted EBITDA 10.7    9.3     15       49.1     44.6     10
Total Handle    188.5   193.4   (3)      868.7    859.8    1

During the fourth-quarter of 2013, CDI Online Business revenues decreased $0.3
million, or 1%, from the prior year.The Company ceased accepting wagers from
Texas residents on September 25, 2013, following an unsuccessful challenge to
state law which is currently under appeal. TwinSpires's handle improved 3.7%
from the prior year, when excluding Texas from both periods. Despite the
cessation of Texas operations, Online Business Adjusted EBITDA increased $1.4
million, or 15%, from a reduction in content expenses due to the favorable
settlement of litigation and improvement in the Company's high volume wagering
operation, Velocity.

During the year-ended December 31, 2013, CDI Online Business revenues
increased $1.2 million, or 1% over the prior year. In addition to the partial
year cessation of Texas operations, the Company resumed accepting wagers from
Illinois residents on June 7, 2013, which it had previously ceased on January
18, 2013, due to the temporary expiration of Illinois enabling
legislation.TwinSpires handle increased 1.0% during the year, consistent with
revenue growth.Wagers on TwinSpires grew 6.2%, when excluding Texas and
Illinois from both periods, whereas total industry wagering on thoroughbred
racing was flat to 2012 according to Equibase.com. Online Business Adjusted
EBITDA increased $4.5million, or 10%, reflecting a 1% increase in pari-mutuel
handle, an increase in Velocity wagering and the favorable settlement of
litigation.Partially offsetting these improvements were the challenges in
Texas and Illinois which generated a decline in Adjusted EBITDA of $2.7
million during the year.

RACING OPERATIONS RESULTS
(in millions):

               Fourth-Quarter           Full Year
               2013    2012    % Change 2013     2012     % Change
                                                     
Net revenues    $38.4 $48.5 (21)     $274.3 $302.1 (9)
Adjusted EBITDA (8.1)   (4.1)   (98)     50.3     54.4     (8)
Total Handle    331     414     (20)     1,806    2,026    (11)

During the fourth-quarter of 2013, CDI Racing Operations revenues decreased
$10.1 million, or 21%, primarily due to the reduction of Florida hosting
revenues and 22% fewer live races at Calder.Racing Operations Adjusted EBITDA
decreased $4.0 million primarily from the impact of Calder racing challenges.

During the year-ended December 31, 2013, Racing Operations revenues decreased
$27.8 million, or 9%, from the prior year.Strong Kentucky Oaks and Derby week
results and the revenues from a new 12-day September meet at Churchill Downs
Racetrack were more than offset by weakness at the Company's other racetracks,
particularly Calder.Racing Operations Adjusted EBITDA declined $4.1 million,
or 8%, as a $5.8 million increase generated by Kentucky Oaks and Derby week
was more than offset by a $9.0 million decrease at Calder due to the reduction
of Florida hosting revenue and 19 fewer live race days.

BUSINESS RESULTS CONFERENCE CALL 

A conference call regarding this news release is scheduled for Thursday, Feb.
27, 2014, 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 by dialing (877) 372-0878
and entering the pass code 2042254 at least 10 minutes before the appointed
time. International callers should dial (253) 237-1169. The online replay will
be available at approximately noon EDT and continue for two weeks. 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 and certain other items as described in
the Company's Annual Report on Form 10K ("Adjusted EBITDA"). Churchill Downs
Incorporated uses Adjusted 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.; a casino hotel in
Vicksburg, Miss.; a casino in Oxford, Maine; and a 50 percent owned joint
venture, Miami Valley Gaming and Racing, in Lebanon, Ohio. CDI also owns the
country's premier online wagering company, TwinSpires.com; the totalisator
company, United Tote; Luckity.com, offering real-money Bingo 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. Additional 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 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," "hope," "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 overall 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, 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, keep its technology current
or maintain its significant customers; our accountability for environmental
contamination; the ability 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 consolidated financial
statements included in the Company's Annual Report on Form 10-K for the year
ended December 31, 2013.

CHURCHILL DOWNS INCORPORATED
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
for three months ended December 31,
(in thousands, except per common share data)
                                                2013       2012      % Change
Net revenues:                                                       
Racing                                           $38,382  $48,547 (21)
Gaming                                           78,665     62,912    25
Online                                           40,572     40,949    (1)
Other                                            4,741      5,842     (19)
                                                162,360    158,250   3
Operating expenses:                                                 
Racing                                           47,631     54,980    (13)
Gaming                                           61,181     46,564    31
Online                                           27,642     28,210    (2)
Other                                            8,614      6,621     30
Selling, general and administrative expenses     22,604     19,323    17
Insurance recoveries, net of losses              —          (492)     U
Operating (loss) income                          (5,312)    3,044     U
Other income (expense):                                             
Interest income                                  7          6         17
Interest expense                                 (2,092)    (1,453)   (44)
Equity in losses of unconsolidated investments   (2,460)    (446)     U
Miscellaneous, net                               199        180       11
                                                (4,346)    (1,713)   U
(Loss) earnings from continuing operations       (9,658)    1,331     U
before income taxes
Income tax benefit                               4,085      1,047     F
(Loss) earnings from continuing operations       (5,573)    2,378     U
Discontinued operations, net of income taxes:                       
Loss from operations                             (49)       (4)       U
Loss on sale of assets                           (83)       —         U
Net (loss) earnings and comprehensive (loss)     $(5,705) $2,374  U
income
Net (loss) earnings per common share data:                          
Basic                                                               
(Loss) earnings from continuing operations       $(0.32)  $0.14   U
Discontinued operations                          (0.01)     —         U
Net (loss) earnings                              $(0.33)  $0.14   U
Diluted                                                             
(Loss) earnings from continuing operations       $(0.32)  $0.14   U
Discontinued operations                          (0.01)     —         U
Net (loss) earnings                              $(0.33)  $0.14   U
Weighted average shares outstanding:                                
Basic                                            17,370     17,172    
Diluted                                          17,370     17,590    


CHURCHILL DOWNS INCORPORATED
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
for the years ended December31,
(in thousands, except per common share data)
                                               2013       2012       % Change
Net revenues:                                                       
Racing                                          $274,269 $302,088 (9)
Gaming                                          297,473    223,112    33
Online                                          184,541    183,279    1
Other                                           23,042     22,817     1
                                               779,325    731,296    7
Operating expenses:                                                 
Racing                                          233,286    255,405    (9)
Gaming                                          222,879    163,686    36
Online                                          123,449    123,476    —
Other                                           26,540     25,356     5
Selling, general and administrative expenses    83,446     73,829     13
Insurance recoveries, net of losses             (375)      (7,006)    (95)
Operating income                                90,100     96,550     (7)
Other income (expense):                                             
Interest income                                 112        90         24
Interest expense                                (6,231)    (4,531)    38
Equity in losses of unconsolidated investments  (4,142)    (1,701)    U
Miscellaneous, net                              5,667      819        F
                                               (4,594)    (5,323)    (14)
Earnings from continuing operations before      85,506     91,227     (6)
provision for income taxes
Income tax provision                            (30,473)   (33,075)   (8)
Earnings from continuing operations             55,033     58,152     (5)
Discontinued operations, net of income taxes:                       
(Loss) earnings from operations                 (50)       124        U
Loss on sale of assets                          (83)       —          U
Net earnings and comprehensive income           $54,900  $58,276  (6)
Net earnings per common share data:                                 
Basic                                                               
Earnings from continuing operations             $3.13    $3.38    (7)
Discontinued operations                         (0.01)     0.01       U
Net earnings                                    $3.12    $3.39    (8)
Diluted                                                             
Earnings from continuing operations             $3.07    $3.33    (8)
Discontinued operations                         (0.01)     0.01       U
Net earnings                                    $3.06    $3.34    (8)
Weighted average shares outstanding:                                
Basic                                           17,294     17,047     
Diluted                                         17,938     17,475     

CHURCHILL DOWNS INCORPORATED
SUPPLEMENTAL INFORMATION BY OPERATING UNIT
for the three months ended December 31,
(in thousands, except per common share data)

                                                 2013      2012      % Change
Net revenues from external customers:                               
Churchill Downs                                   $ 14,311  $ 14,958  (4)
Arlington Park                                    6,763     6,275     8
Calder                                            8,356     17,192    (51)
Fair Grounds                                      8,952     10,122    (12)
Total Racing Operations                           38,382    48,547    (21)
Calder Casino                                     18,842    18,956    (1)
Fair Grounds Slots                                10,033    11,155    (10)
VSI                                               8,482     8,967     (5)
Harlow's Casino                                   11,907    13,504    (12)
Oxford Casino                                     16,620    —         F
Riverwalk Casino                                  12,781    10,330    24
Total Gaming                                      78,665    62,912    25
Online Business                                   40,572    40,949    (1)
Other Investments                                 4,492     5,615     (20)
Corporate                                         249       227       10
Net revenues from external customers              $ 162,360 $ 158,250 3
                                                                   
Intercompany net revenues:                                          
Churchill Downs                                   $ 1,201   $ 1,173   2
Arlington Park                                    285       902       (68)
Calder                                            346       433       (20)
Fair Grounds                                      296       437       (32)
Total Racing Operations                           2,128     2,945     (28)
Online Business                                   196       167       17
Other Investments                                 1,221     820       49
Eliminations                                      (3,545)   (3,932)   (10)
Net revenues                                      $ —       $ —       —
                                                                   
Reconciliation of Segment Adjusted EBITDA to net                    
earnings:
Racing Operations                                 $ (8,078) $ (4,062) (99)
Gaming                                            18,487    16,794    10
Online Business                                   10,698    9,267     15
Other Investments                                 (533)     (150)     U
Corporate                                         (1,225)   (1,652)   26
Total Segment Adjusted EBITDA                     19,349    20,197    (4)
Insurance recoveries, net of losses               —         492       (100)
Share based compensation expense                  (5,915)   (3,126)   89
Pre-opening costs                                 (2,409)   —         U
MVG interest expense, net                         (170)     —         U
Other charges and recoveries, net                 (2,500)   —         U
Depreciation and amortization                     (15,928)  (14,785)  8
Interest income (expense), net                    (2,085)   (1,447)   (44)
Income tax benefit                                4,085     1,047     F
(Loss) earnings from continuing operations        (5,573)   2,378     U
Discontinued operations, net of income taxes      (132)     (4)       U
Net (loss) earnings and comprehensive (loss)      $(5,705)  $ 2,374   U
income

                                                                   
CHURCHILL DOWNS INCORPORATED
SUPPLEMENTAL INFORMATION BY OPERATING UNIT
for the years ended December 31,
(in thousands, except per common share data)
                                                                   
                                               2013       2012       % Change
Net revenues from external customers:                               
Churchill Downs                                 $132,845 $124,255 7
Arlington Park                                  64,483     69,077     (7)
Calder                                          36,264     64,566     (44)
Fair Grounds                                    40,677     44,190     (8)
Total Racing Operations                         274,269    302,088    (9)
Calder Casino                                   78,951     77,864     1
Fair Grounds Slots                              42,156     42,881     (2)
VSI                                             35,931     35,433     1
Harlow's Casino                                 52,440     56,604     (7)
Oxford Casino                                   34,350     —          F
Riverwalk Casino                                53,645     10,330     F
Total Gaming                                    297,473    223,112    33
Online Business                                 184,541    183,279    1
Other Investments                               21,899     21,785     1
Corporate                                       1,143      1,032      11
Net revenues from external customers            $779,325 $731,296 7
                                                                   
Intercompany net revenues:                                          
Churchill Downs                                 $6,686   $5,592   20
Arlington Park                                  3,395      4,712      (28)
Calder                                          1,263      1,583      (20)
Fair Grounds                                    1,151      1,270      (9)
Total Racing Operations                         12,495     13,157     (5)
Online Business                                 853        836        2
Other Investments                               4,409      3,466      27
Eliminations                                    (17,757)   (17,459)   2
Net revenues                                    $ —        $ —        —
                                                                   
Reconciliation of Segment Adjusted EBITDA to                        
net earnings:
Racing Operations                               $50,275  $54,357  (8)
Gaming                                          80,429     64,231     25
Online Business                                 49,122     44,618     10
Other Investments                               1,011      (117)      F
Corporate                                       (4,606)    (4,834)    (5)
Total Segment Adjusted EBITDA                   176,231    158,255    11
Insurance Recoveries, Net of losses             375        7,006      (95)
HRE Trust Fund proceeds                         4,541      —          F
Share based compensation expense                (21,482)   (13,993)   54
Pre-opening costs                               (3,620)    —          U
MVG interest expense, net                       (170)      —          U
Other charges and recoveries, net               (2,500)    —          U
Depreciation and amortization                   (61,750)   (55,600)   11
Interest income (expense), net                  (6,119)    (4,441)    38
Income tax benefit (provision)                  (30,473)   (33,075)   (8)
Earnings from continuing operations             55,033     58,152     (5)
Discontinued operations, net of income taxes    (133)      124        U
Net earnings and comprehensive income           $54,900  $58,276  (6)

                                                                      
CHURCHILL DOWNS INCORPORATED
SUPPLEMENTAL INFORMATION BY OPERATING UNIT
for the three months and years ended December 31,
(in thousands)
                                                                      
                                            Three Months Ended Change
                                             December 31,
Intercompany management fee (expense)        2013      2012      $        %
income:
Racing Operations                            $ (1,478) $ (1,745) $ 267    15
Gaming                                       (2,350)   (1,863)   (487)    (26)
Online Business                              (1,254)   (1,264)   10       1
Other Investments                            (160)     (192)     32       17
Corporate Income                             5,242     5,064     178      4
Total management fees                       $ —       $ —       $ —      
                                                                      
                                                                      
                                            Year Ended         Change
                                             December 31,
Intercompany management fee (expense)        2013      2012      $        %
income:
Racing Operations                            $ (6,978) $ (8,063) $1,085 13
Gaming                                       (7,238)   (5,705)   (1,533)  (27)
Online Business                              (4,428)   (4,679)   251      5
Other Investments                            (603)     (627)     24       4
Corporate Income                             19,247    19,074    173      1
Total management fees                       $ —       $ —       $ —      

                                                                   
CHURCHILL DOWNS INCORPORATED
CONSOLIDATED STATEMENTS OF CASH FLOWS
Years Ended December31,
(in thousands)
                                                                   
                                                          2013      2012
Cash flows from operating activities:                               
Net earnings and comprehensive income                      $54,900 $58,276
Adjustments to reconcile net earnings to net cash provided          
by operating activities:
Depreciation and amortization                              61,750    55,600
Asset impairment loss                                      —         25
Loss (gain) on sale of business                            131       —
(Gain) loss on asset disposition                           (497)     (128)
Equity in losses of unconsolidated investments             4,142     1,701
Share-based compensation                                   21,482    7,613
Deferred tax provision                                     5,284     9,659
Other                                                      689       910
Increase (decrease) in cash resulting from changes in
operating assets and liabilities, net of business                   
acquisitions and dispositions:
Restricted cash                                            6,359     9,178
Accounts receivable                                        (495)     (5,396)
Other current assets                                       1,372     (3,075)
Income taxes                                               (11,023)  764
Accounts payable                                           (5,879)   3,459
Purses payable                                             (6,594)   (10,148)
Accrued expenses                                           4,866     9,923
Deferred revenue                                           6,029     8,804
Other assets and liabilities                               2,399     (2,758)
Net cash provided by operating activities                  144,915   144,407
Cash flows from investing activities:                               
Additions to property and equipment                        (48,771)  (41,298)
Acquisition of businesses, net of cash acquired            (154,872) (142,915)
Acquisition of gaming license                              (2,650)   (2,250)
Investment in joint venture                                (70,500)  (19,850)
Purchases of minority investments                          (902)     (2,153)
Proceeds from sale of assets                               15        833
Proceeds from insurance recoveries                         —         10,505
Change in deposit wagering asset                           (4,192)   (2,860)
Net cash used in investing activities                      (281,872) (199,988)
Cash flows from financing activities:                               
Borrowings on bank line of credit                          740,131   554,248
Repayments of bank line of credit                          (880,667) (472,083)
Proceeds from bond issuance                                300,000   —
Change in bank overdraft                                   (5,053)   555
Payments of dividends                                      —         (22,461)
Repurchase of common stock                                 (10,723)  (5,094)
Common stock issued                                        1,135     6,377
Windfall tax benefit from share-based compensation         2,981     1,407
Loan origination fees                                      (2,258)   (67)
Debt issuance costs                                        (5,250)   —
Change in deposit wagering liability                       4,192     2,551
Net cash provided by (used in) financing activities        144,488   65,433
Net increase in cash and cash equivalents                  7,531     9,852
Cash and cash equivalents, beginning of year               37,177    27,325
Cash and cash equivalents, end of year                     $44,708 $37,177

                                                                
CHURCHILL DOWNS INCORPORATED
CONSOLIDATED BALANCE SHEETS
December31,
(in thousands)
                                                                
                                                    2013         2012
ASSETS                                                           
Current assets:                                                  
Cash and cash equivalents                            $44,708    $37,177
Restricted cash                                      36,074       38,241
Accounts receivable, net                             46,572       47,152
Deferred income taxes                                8,927        8,227
Income taxes receivable                              12,398       2,915
Other current assets                                 12,036       13,352
Total current assets                                 160,715      147,064
Property and equipment, net                          585,498      542,882
Investment in and advances to unconsolidated         86,151       19,240
affiliate
Goodwill                                             300,616      250,414
Other intangible assets, net                         198,149      143,141
Other assets                                         21,132       11,596
Total assets                                         $1,352,261 $1,114,337
LIABILITIES AND SHAREHOLDERS' EQUITY                             
Current liabilities:                                             
Accounts payable                                     $43,123    $47,791
Bank overdraft                                       973          6,027
Account wagering deposit liabilities                 18,679       14,487
Purses payable                                       18,839       19,084
Accrued expenses                                     67,328       65,537
Dividends payable                                    15,186       —
Current maturities of long-term debt                 —            209,728
Deferred revenue                                     49,078       43,916
Total current liabilities                            213,206      406,570
Long-term debt, net of current maturities            369,191      —
Other liabilities                                    17,753       21,030
Deferred revenue                                     16,706       17,794
Deferred income taxes                                30,616       24,648
Total liabilities                                    647,472      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; 17,948 shares issued at December 31,     295,955      274,709
2013 and17,448 shares issued at December 31, 2012
Retained earnings                                    408,834      369,586
Total shareholders' equity                           704,789      644,295
Total liabilities and shareholders' equity           $1,352,261 $1,114,337

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