Oct 28, 2015
<< Back

Churchill Downs Incorporated Reports 2015 Third-Quarter Results

LOUISVILLE, Ky., Oct. 28, 2015 (GLOBE NEWSWIRE) -- Churchill Downs Incorporated (NASDAQ:CHDN) (CDI or Company) today reported business results for the third quarter ended September 30, 2015.

  • Record net revenues of $279.8 million, up 61% over third-quarter 2014
  • Record Adjusted EBITDA of $70.6 million, more than double prior year third quarter
  • Record net cash flows from operating activities for the nine months ended September 30, 2015 of $223.2 million, up 95% over prior year
  • $1.15 per share dividend and $150 million stock repurchase plan approved by board of directors

"We delivered record revenues and record Adjusted EBITDA largely driven by the contribution from our Big Fish Games division," says Bill Carstanjen, CDI's Chief Executive Officer. "In addition, we were also encouraged by the growth in Adjusted EBITDA during the quarter for our TwinSpires and Racing segments."

"In October our board approved an increase in the annual dividend along with a new $150 million share repurchase plan.  While our primary focus remains on driving shareholder value through organic growth and other strategic acquisitions and investment opportunities, we are pleased that the company's free cash flow generation and strong balance sheet allow us to create value for our shareholders through numerous ways."

(in millions, except per share data): 2015  2014 % Change
Net revenues$279.8 $173.5 61
Adjusted EBITDA —a)$70.6 $32.5 F
Net earnings  4.2   3.5 19
Diluted net earnings per share$0.24 $0.20 20

(a-     Non-GAAP measure. See explanation of non-GAAP measures below.

During the third quarter of 2015, CDI net revenues increased $106.3 million, or 61%, from the prior year, primarily due to additional revenues from Big Fish Games, which the Company acquired in December 2014.  In addition, TwinSpires revenues grew 9% on strong organic online wagering growth.

Total Adjusted EBITDA increased $38.1 million, more than doubling the third quarter of 2014, driven primarily by the addition of Big Fish Games' Adjusted EBITDA of $33.3 million. TwinSpires Adjusted EBITDA increased $2.7 million driven by handle growth that continued to outpace industry performance. Racing Adjusted EBITDA improved $1.5 million primarily due to the elimination of racing related expenses from the cessation of pari-mutuel operations at Calder during July 2014. Finally, Casino Adjusted EBITDA increased $0.1 million as softness at our Fair Grounds Slots property as a result of the New Orleans smoking ban and weaker results at our Harlow's property were more than offset by growth at our other properties.

Net earnings and diluted net earnings per share grew 19% and 20%, respectively, to $4.2 million and $0.24 per diluted share compared to the prior year driven by our improvement in Adjusted EBITDA. Our net earnings, which reflect the strong Adjusted EBITDA growth, were partially offset by expenses related to the 2014 acquisition of Big Fish Games and a non-cash impairment charge of $12.7 million related to planned demolition of the Calder grandstand.  The Big Fish expenses include $13.0 million of depreciation and amortization, $2.8 million in non-cash fair value adjustments of the earn-out and deferred founder's consideration and $10.9 million in deferred revenue adjustments related to business combination accounting rules and adjustments for bookings that exceeded revenues during the quarter.

(in millions): 2015 2014 (1) % Change 
Casino$47.4 $43.9 8 
Free-to-Play Casual 40.3  9.2 F 
Premium 26.7  32.2 (17)
Total Bookings$114.4 $85.3 34 
Net revenues$103.5   F 
Adjusted EBITDA 33.3   F 
(1) Big Fish Games bookings for period ended September 30, 2014 not included in the consolidated financial results for CDI.  Included for comparative purposes only.

The chart above includes third-quarter bookings for 2015 as well as pre-acquisition results for third-quarter 2014. Bookings are a non-GAAP financial measure equal to the revenue recognized plus the change in deferred revenue for the period.

During the third quarter, Big Fish Games contributed revenues of $103.5 million and Adjusted EBITDA of $33.3 million. Comparing results to Big Fish Games before CDI's acquisition, total bookings for the quarter increased $29.1 million, or 34%, driven by growth in both the Casino and Free-to-Play Casual segments.  Casino bookings grew by $3.5 million, driven by a 9% increase in average bookings per paying user compared to the third quarter of 2014, offset partially by a 1% decline in average paying users.  Free-to-Play Casual bookings' growth of $31.1 million was driven by a 158% increase in quarterly average paying users and a 71% increase in average bookings per paying user.  Our growth in Free-to-Play Casual bookings was driven by the continued success of Gummy Drop!, as well as the successful launch of Dungeon Boss in part due to being selected as an Editor's Choice game on both the Apple iTunes and Google Play stores. Premium bookings declined $5.5 million, or 17%, primarily driven by customers continuing to shift from paid PC games to free-to-play mobile games.  In addition, the strengthening U.S. dollar (USD) as compared to other currencies where our Premium segment operates resulted in conversion to lower USD bookings of approximately $1.0 million.

Big Fish Games Adjusted EBITDA results exceeded those of both the first and second quarters of 2015, due, in part, to Free-to-Play product revenues more greatly exceeding user acquisition spending and a maturing social casino market.

(in millions): 2015   2014  % Change
Net revenues$82.7  $81.6  1 
Adjusted EBITDA 25.0   24.9   

During the third quarter of 2015, Casino revenues improved $1.1 million, or 1%, from the prior year. VSI revenues grew $1.0 million from the addition of new and upgraded video poker machines throughout our Louisiana properties. Oxford revenues increased $0.5 million driven by total gaming market growth and an increase in our market share. In addition, Calder Casino revenues grew $0.5 million resulting from an incremental focus on free play marketing offerings to our higher-tier players. Partially offsetting the overall growth was a decline in revenues of $0.7 million at Fair Grounds Slots as this facility continued to be negatively impacted by a smoking ban in Orleans Parish which was enacted during the second quarter of 2015.

Casino Adjusted EBITDA remained relatively unchanged compared to the prior year. Adjusted EBITDA growth at Oxford, Calder, Miami Valley Gaming and VSI was muted by a $0.7 million decline at Fair Grounds Slots impacted by the smoking ban.  Additionally, our Mississippi properties declined $0.4 million as aggressive local competition negatively impacted our Harlow's operation.

(in millions): 2015   2014  % Change
Net revenues$50.3  $46.3  9 
Adjusted EBITDA  13.8     11.1  24 
Total handle   245.5     224.4  9 

During the third quarter of 2015, TwinSpires revenues improved $4.1 million, or 9% on a 23% increase in unique players and a 67% increase in new player registrations. Wagering volume, or handle, increased 9.4% and out-paced the industry growth rate by 5.7 percentage points in the quarter.

TwinSpires Adjusted EBITDA increased $2.7 million on revenue growth and resulting efficiencies more than offsetting higher pari-mutuel tax rates in certain states and a one-time tax reduction of $1.1 million during the comparable quarter in 2014.

(in millions): 2015   2014  % Change
Net revenues$38.9  $41.1  (5)
Adjusted EBITDA  0.3   (1.2) F 
Total handle  238.0   283.5  (16)

During the third quarter of 2015, revenues generated by our Racing segment decreased $2.2 million, primarily as a result of declines at our Arlington International racetrack. Arlington's revenue decline was primarily the result of four fewer live race days, smaller field sizes, and fewer races per day driven by the depletion of purse monies related to final payments from the Illinois Horse Racing Equity Trust funds in the prior year meet.

Racing Adjusted EBITDA increased $1.5 million, driven by a $1.0 million improvement at Calder due to the elimination of racing-related expenses from the cessation of pari-mutuel operations during July 2014.  In addition, Fair Grounds improved $0.6 million during the quarter due to operational expense reductions.

In October 2015, the board of directors approved an annual cash dividend of $1.15 per outstanding share, a 15 percent increase over prior year, on CDI's common stock, payable January 6, 2016, to shareholders of record on December 4, 2015.  This year's dividend announcement represents the fifth consecutive year of increased dividends.

In October 2015, the board of directors also authorized the repurchase of up to $150 million of the Company's stock in a share repurchase program. This amount includes and is not in addition to any unspent amounts remaining under the prior authorization which would have expired at the end of 2015. Repurchases may be made at management's discretion from time to time on the open market (either with or without a 10b5-1 plan) or through privately negotiated transactions.  The repurchase program has no time limit and may be suspended for periods or discontinued at any time.

A conference call regarding this news release is scheduled for Thursday, October 29, 2015, 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 66486697 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.

Churchill Downs Incorporated (CDI) (NASDAQ:CHDN), headquartered in Louisville, Ky., owns the world-renowned Churchill Downs Racetrack, home of the Kentucky Derby and Kentucky Oaks, as well as casino operations 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 LLC, in Lebanon, Ohio. CDI also owns Big Fish Games, Inc., one of the world's largest producers and distributors of casual games; the country's premier online wagering company, TwinSpires.com; the totalisator company, United Tote; 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 discussion and analysis 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 press 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; maintaining favorable relationships we have with third-party mobile platforms, the inability to secure new content from third-party developers on favorable terms, keeping our games free from programming errors or flaws, the effect if smart phone and tablet usage does not continue to increase; the financial performance of our racing operations; the impact of casino 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, Illinois, Louisiana and Ohio 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 or casino activities; a substantial change in allocation of live racing days; changes in Kentucky, Illinois, Louisiana or Ohio law or regulations that impact revenues or costs of racing in those states; the presence of wagering and casino 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, keep its technology current or maintain its significant customers; our accountability for environmental contamination; the ability of Big Fish Games or TwinSpires to prevent security breaches within their 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 or anticipated 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 casinos 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 the Company's Quarterly Reports on Form 10-Q and our Annual Report on Form 10-K for the year ended December 31, 2014 for further information, including Part I - Item 1A, "Risk Factors" of our Form 10-K for a discussion regarding some of the reasons that actual results may be materially different from those we anticipate.


(Unaudited)  (in thousands, except per common share data)
 Three Months Ended  
 September 30,  
 2015 2014 % Change
Net revenues:     
Big Fish Games$103,540  $   F 
Casinos82,679  81,623   1 
TwinSpires50,346  46,266   9 
Racing38,867  41,055   (5)
Other4,333  4,539   (5)
 279,765  173,483   61 
Operating expenses:     
Big Fish Games80,005     U 
Casinos60,821  60,436   1 
TwinSpires33,475  31,872   5 
Racing40,918  46,492   (12)
Other4,924  5,837   (16)
Selling, general and administrative expenses24,643  18,175   36 
Calder exit costs12,737  2,298   U 
Research and development9,950     U 
Acquisition related charges2,810     U 
Operating income9,482  8,373   13 
Other income (expense):     
Interest income8  6   33 
Interest expense(6,740) (5,173)  30 
Equity in gains of unconsolidated investments2,389  1,057   F 
Miscellaneous, net(186) 114   U 
 (4,529) (3,996)  13 
Earnings from continuing operations before provision for income taxes4,953  4,377   13 
Income tax provision(750) (846)  (11)
Net earnings$4,203  $3,531   19 
Net earnings per common share data:     
Net earnings$0.24  $0.21   14 
Net earnings$0.24  $0.20   20 
Weighted average shares outstanding:     
Basic17,347  17,020   
Diluted17,769  17,303   
Other comprehensive earnings:     
Foreign currency translation, net of tax effect58     F 
Other comprehensive earnings58     F 
Comprehensive earnings$4,261  $3,531   21 

(in thousands, except per common share data)
 Nine Months Ended  
 September 30,  
 2015 2014 % Change
Net revenues:     
Big Fish Games$299,969  $   F 
Casinos251,864  249,788   1 
TwinSpires156,409  149,426   5 
Racing218,741  231,069   (5)
Other12,931  13,813   (6)
 939,914  644,096   46 
Operating expenses:     
Big Fish Games245,610     U 
Casinos182,664  184,487   (1)
TwinSpires102,863  102,260   1 
Racing152,525  175,195   (13)
Other15,830  17,885   (11)
Selling, general and administrative expenses68,250  58,306   17 
Calder exit costs13,490  2,298   U 
Research and development30,029     U 
Acquisition related charges17,410     U 
Insurance recoveries, net of losses  (431)  (100)
Operating income111,243  104,096   7 
Other income (expense):     
Interest income232  15   F 
Interest expense(21,336) (15,107)  41 
Equity in gains of unconsolidated investments8,244  5,853   41 
Gain on sale of equity investment5,817     F 
Miscellaneous, net(346) 482   U 
 (7,389) (8,757)  (16)
Earnings from continuing operations before provision for income taxes103,854  95,339   9 
Income tax provision(46,165) (35,175)  31 
Net earnings57,689  60,164   (4)
Net earnings per common share data:     
Net earnings$3.28  $3.44   (5)
Net earnings$3.26  $3.40   (4)
Weighted average shares outstanding:     
Basic17,316  17,322   
Diluted17,715  17,670   
Other comprehensive loss:     
Foreign currency translation, net of tax effect(357)    U 
Other comprehensive loss(357)    U 
Comprehensive earnings$57,332  $60,164   (5)

for the three months ended September 30,
(Unaudited) (in thousands, except per common share data)
 2015 2014 % Change
Net revenues from external customers:     
Big Fish Games$103,540  $   F 
Calder Casino18,561  18,104   3 
Fair Grounds Slots8,789  9,453   (7)
VSI9,011  8,008   13 
Harlow's Casino11,741  12,197   (4)
Oxford Casino22,338  21,887   2 
Riverwalk Casino12,003  11,974    
Saratoga236     F 
Total Casinos82,679  81,623   1 
TwinSpires50,346  46,266   9 
Churchill Downs7,863  8,021   (2)
Arlington24,978  26,974   (7)
Calder638  786   (19)
Fair Grounds5,388  5,274   2 
Total Racing38,867  41,055   (5)
Other Investments4,093  4,249   (4)
Corporate240  290   (17)
Net revenues from external customers$279,765  $173,483   61 
Intercompany net revenues:     
TwinSpires$234  $240   (3)
Churchill Downs685  678   1 
Arlington1,665  2,001   (17)
Fair Grounds11  15   (27)
Total Racing2,361  2,694   (12)
Other Investments792  829   (4)
Eliminations(3,387) (3,763)  (10)
Net revenues$  $   
Reconciliation of Adjusted EBITDA to net earnings:     
Big Fish Games$33,295  $   F 
Casinos25,037  24,937    
TwinSpires13,759  11,098   24 
Racing283  (1,229)  F 
Other Investments(78) (899)  91 
Corporate(1,685) (1,398)  (21)
Total segment Adjusted EBITDA70,611  32,509   F 
Big Fish Games acquisition charges(2,810)    U 
Big Fish Games changes in deferred revenue(10,907)    U 
Share-based compensation(4,485) (2,213)  U 
Calder exit costs(12,737) (2,298)  U 
MVG interest expense, net(535) (819)  35 
Other charges and recoveries, net  (355)  100 
Depreciation and amortization(27,452) (17,280)  (59)
Interest (expense) income, net(6,732) (5,167)  (30)
Income tax provision(750) (846)  11 
Net earnings4,203  3,531   19 
Foreign currency translation, net of tax effect58     F 
Comprehensive earnings$4,261  $3,531   21 

for the nine months ended September 30, 2015
(Unaudited) (in thousands, except per common share data)
 2015 2014 % Change
Net revenues from external customers:     
Big Fish Games$299,969  $   F 
Calder Casino58,726  58,560    
Fair Grounds Slots29,324  30,823   (5)
VSI27,584  25,241   9 
Harlow's Casino37,471  38,425   (2)
Oxford Casino60,799  58,808   3 
Riverwalk Casino37,724  37,931   (1)
Saratoga236     F 
Total Casinos251,864  249,788   1 
TwinSpires156,409  149,426   5 
Churchill Downs136,663  128,511   6 
Arlington48,909  54,289   (10)
Calder2,029  18,524   (89)
Fair Grounds31,140  29,745   5 
Total Racing218,741  231,069   (5)
Other Investments12,200  12,864   (5)
Corporate731  949   (23)
Net revenues from external customers$939,914  $644,096   46 
Intercompany net revenues:     
TwinSpires$781  $714   9 
Churchill Downs6,302  5,851   8 
Arlington4,109  4,795   (14)
Calder  707   (100)
Fair Grounds869  744   17 
Total Racing11,280  12,097   (7)
Other Investments2,680  2,937   (9)
Eliminations(14,741) (15,748)  (6)
Net revenues$  $   
Reconciliation of Adjusted EBITDA to net earnings:     
Big Fish Games$81,559  $   F 
Casinos81,779  78,362   4 
TwinSpires41,666  35,135   19 
Racing76,281  66,600   15 
Other Investments35  (2,475)  F 
Corporate(5,239) (3,645)  (44)
Total segment Adjusted EBITDA276,081  173,977   59 
Insurance recoveries, net of losses  431   (100)
Big Fish Games acquisition charges(17,410)    U 
Big Fish Games changes in deferred revenue(32,003)    U 
Share-based compensation(10,580) (10,567)   
Calder exit costs(13,490) (2,298)  U 
MVG interest expense, net(1,625) (1,956)  17 
Other charges and recoveries, net6,114  (832)  F 
Depreciation and amortization(82,129) (48,324)  (70)
Interest (expense) income, net(21,104) (15,092)  (40)
Income tax provision(46,165) (35,175)  (31)
Net earnings57,689  60,164   (4)
Foreign currency translation, net of tax effect(357)    U 
Comprehensive earnings$57,332  $60,164   (5)

for the three and nine months ended September 30,
(unaudited)  (in thousands)
  Three Months Ended September 30, Change
  2015 2014 $ %
Intercompany management fee (expense) income:        
Big Fish Games $(750) $  $(750)  U 
Casinos (2,655) (2,319) (336)  (14)
TwinSpires (1,628) (1,340) (288)  (21)
Racing (1,749) (1,505) (244)  (16)
Other Investments (147) (134) (13)  (10)
Corporate income 6,929  5,298  1,631   31 
Total management fees $  $  $   


  Nine Months Ended September 30, Change
  2015 2014 $ %
Intercompany management fee (expense) income:        
Big Fish Games $(2,250) $  $(2,250)  U 
Casinos (5,987) (5,850) (137)  (2)
TwinSpires (3,726) (3,573) (153)  (4)
Racing (5,442) (5,683) 241   4 
Other Investments (335) (347) 12   3 
Corporate income 17,740  15,453  2,287   15 
Total management fees $  $  $   



Nine Months Ended September 30,
(unaudited)  (in thousands)
 2015 2014
Cash flows from operating activities:   
Net earnings$57,689  $60,164 
Adjustments to reconcile net earnings to net cash provided by operating activities:   
Depreciation and amortization82,129  48,324 
Game technology and rights amortization5,846   
Acquisition related charges17,410   
Asset impairment loss12,948   
Loss (gain) on asset disposals368  (405)
Gain on sale of equity investment(5,817)  
Equity in gains of unconsolidated investments(8,244) (5,853)
Dividend from investment in unconsolidated affiliate11,000   
Share-based compensation10,580  10,567 
Other1,207  458 
Increase (decrease) in cash resulting from changes in operating assets and liabilities, net of business acquisition:   
Restricted cash(1,863) 8,525 
Accounts receivable(9,555) (1,455)
Other current assets(11,696) (3,346)
Game technology and rights(16,247)  
Accounts payable8,611  2,872 
Purses payable7,080  (6,336)
Accrued expenses4,733  2,707 
Deferred revenue13,329  (24,797)
Income taxes receivable and payable38,067  20,482 
Other assets and liabilities5,621  2,338 
Net cash provided by operating activities223,196  114,245 
Cash flows from investing activities:   
Additions to property and equipment(30,838) (48,854)
Deferred payments to Big Fish Games former equity holders(959)  
Acquisition of gaming license(2,250) (2,250)
Investment in joint ventures(350) (9,375)
Proceeds from sale of equity investment6,000   
Purchases of minority investments(81) (273)
Proceeds on sale of property and equipment124  925 
Net cash used in investing activities(28,354) (59,827)
Cash flows from financing activities:   
Borrowings on bank line of credit382,412  317,379 
Repayments on bank line of credit(565,631) (303,179)
Tax refund payments to Big Fish Games equity holders(11,773)  
Change in bank overdraft3,838  1,580 
Payment of dividends(17,419) (15,186)
Repurchase of common stock  (61,561)
Repurchase of common stock from share-based compensation(7,183) (9,298)
Common stock issued1,213  7,475 
Windfall tax benefit from share-based compensation4,218  6,904 
Loan origination fees(31) (170)
Debt issuance costs  (1,029)
Net cash used in financing activities(210,356) (57,085)
Net decrease in cash and cash equivalents(15,514) (2,667)
Effect of exchange rate changes on cash(1,310)  
Cash and cash equivalents, beginning of year67,936  44,708 
Cash and cash equivalents, end of year$51,112  $42,041 

(unaudited)  (in thousands)
 September 30, 2015 December 31, 2014
Current assets:   
Cash and cash equivalents$51,112  $67,936 
Restricted cash27,928  26,065 
Accounts receivable, net61,659  75,890 
Deferred income taxes18,989  18,519 
Income taxes receivable  29,455 
Game technology and rights, net10,556  530 
Other current assets38,807  24,135 
Total current assets209,051  242,530 
Property and equipment, net571,457  595,315 
Investment in and advances to unconsolidated affiliate106,302  109,548 
Goodwill841,360  840,947 
Other intangible assets, net509,971  549,972 
Other assets22,174  24,192 
Total assets$2,260,315  $2,362,504 
Current liabilities:   
Accounts payable$52,159  $45,597 
Bank overdraft4,382  544 
Purses payable18,249  11,169 
Account wagering deposit liabilities20,291  18,137 
Accrued expenses99,894  93,286 
Income taxes payable8,938   
Tax refund due to Big Fish Games former equity holders6,342  18,087 
Deferred revenue9,719  51,833 
Deferred revenue - Big Fish Games73,750  41,747 
Big Fish Games deferred payment, current28,280  27,180 
Big Fish Games earnout liability, current276,570   
Current maturities of long-term debt15,000  11,250 
Dividends payable  17,419 
Total current liabilities613,574  336,249 
Long-term debt, net of current maturities272,136  459,105 
Notes payable300,000  300,000 
Big Fish Games deferred payment, net of current amount due54,520  51,620 
Big Fish Games earnout liability, net of current amount due64,640  327,800 
Other liabilities23,779  21,718 
Deferred revenue15,684  16,489 
Deferred income taxes149,813  149,522 
Total liabilities1,494,146  1,662,503 
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; 17,569 shares issued at September 30, 2015 and 17,472 shares issued at December 31, 2014271,116  262,280 
Accumulated other comprehensive loss(482) (125)
Retained earnings495,535  437,846 
Total shareholders' equity766,169  700,001 
Total liabilities and shareholders' equity$2,260,315  $2,362,504 


for the three and nine months ended September 30,

Summarized financial information for Miami Valley Gaming, LLC is comprised of the following (in thousands):

 Three Months Ended September 30, Nine Months Ended September 30,
 2015 2014 % Change 2015 2014 % Change
Casino revenue$32,199  $32,479   (1)% $97,362  $96,766   1%
Non-casino revenue1,468  1,289   14% 5,304  4,833   10%
Net revenues33,667  33,768   % 102,666  101,599   1%
Operating and SG&A expenses24,645  25,237   (2)% 74,331  74,225   %
Adjusted EBITDA9,022  8,531   6% 28,335  27,374   4%
Depreciation & amortization expenses3,279  3,474   (6)% 9,577  10,315   (7)%
Pre-opening expenses     N/A    54   (100)%
Operating income5,743  5,057   14% 18,758  17,005   10%
Interest (expense) income, net(1,069) (1,380)  (23)% (3,250) (3,654)  (11)%
Net income$4,674  $3,677   27% $15,508  $13,351   16%


Reconciliation of operating income to Churchill Downs' Adjusted EBITDAThree Months Ended September 30, Nine Months Ended September 30,
2015 2014 % Change 2015 2014 % Change
Operating income$5,743  $5,057   14% $18,758  $17,005   10%
Pre-opening expenses     N/A    54   (100)%
 5,743  5,057   14% 18,758  17,059   10%
Churchill Downs' Adjusted EBITDA$2,872  $2,529   14% $9,379  $8,530   10%


 September 30, 2015 December 31, 2014
Current assets$23,303  $24,943 
Property and equipment, net122,371  130,868 
Other assets, net105,058  105,059 
Total assets$250,732  $260,870 
Liabilities and Members' Equity   
Current liabilities$17,636  $16,775 
Current portion of long-term debt8,332  8,332 
Long-term debt, excluding current portion22,085  26,584 
Other liabilities75  83 
Members' equity202,604  209,096 
Total liabilities and members' equity$250,732  $260,870 


Contact: Lauren DePaso
(502) 636-4506