UNITED
STATES
SECURITIES
AND EXCHANGE COMMISSION
Washington,
D.C. 20549
FORM
8-K
CURRENT
REPORT
Pursuant
to Section 13 or 15(d) of the Securities Exchange Act of
1934
Date
of Report (Date of earliest event reported): November 7,
2005
(Exact
name of registrant as specified in its charter)
|
KENTUCKY
|
0-1469
|
61-0156015
|
|
(State
or other jurisdiction of incorporation)
|
(Commission
File Number)
|
(IRS
Employer Identification No.)
|
700
Central Avenue Louisville, Kentucky 40208
(Address
of principal executive offices)
(Zip
Code)
502-636-4400
Registrant’s
telephone number, including area code
Not
Applicable
(Former
name or former address, if changed since last
report)
Check
the
appropriate box below if the Form 8-K filing is intended to simultaneously
satisfy the filing obligation of the registrant under any of the following
provisions (see General Instruction A.2. below):
|
[
]
|
Written
communications pursuant to Rule 425 under the Securities Act (17
CFR
230.425)
|
|
[
]
|
Soliciting
material pursuant to Rule 14a-12 under the Exchange Act (17 CFR
240.14a-12)
|
|
[
]
|
Pre-commencement
communications pursuant to Rule 14d-2(b) under the Exchange Act
(17 CFR
240.14d-2(b))
|
|
[
]
|
Pre-commencement
communications pursuant to Rule 13e-4(c) under the Exchange Act
(17 CFR
240.13e-4(c))
|
|
Item
2.02
|
RESULTS
OF OPERATIONS AND FINANCIAL CONDITION.
|
|
A copy
of the news release issued by Churchill Downs Incorporated
(the "Company")
on November 7, 2005 announcing the results of
operations and
financial condition for the third quarter ended September 30,
2005, is
attached hereto as Exhibit 99.1 and incorporated by reference
herein.
|
|
|
Item
9.01
|
Financial
Statements and Exhibits.
|
|
(a) Exhibit
99.1 Press
release dated November 7, 2005 issued by Churchill Downs
Incorporated.
|
|
|
Exhibit
No.
|
Description
|
|
|
Exhibit
99.1
|
Press
release dated November 7, 2005 issued by Churchill Downs
Incorporated.
|
|
2
SIGNATURE
Pursuant
to the requirements of the Securities Exchange Act of 1934, the registrant
has
duly caused this report to be signed on its behalf by the undersigned hereunto
duly authorized.
|
CHURCHILL
DOWNS INCORPORATED
|
|
|
Date:
November 7, 2005
|
By:/s/
Michael W. Anderson
|
|
Michael
W. Anderson
|
|
|
Vice
President Finance and Treasurer
|
|
3
| FOR IMMEDIATE RELEASE |
Contact:
Julie Koenig
Loignon
|
|
(502)
636-4502 (office)
|
|
|
(502)
262-5461 (mobile)
|
|
|
juliek@kyderby.com
|
CHURCHILL
DOWNS INCORPORATED REPORTS THIRD QUARTER EARNINGS
LOUISVILLE,
Ky. (Nov. 7, 2005) - Churchill
Downs Incorporated (“CDI” or “Company”) (NASDAQ: CHDN) today reported results
for the third quarter and nine months ended Sept. 30, 2005.
Net
earnings for the third quarter were $71.6 million or $5.30 per diluted
share,
compared to a loss of $3.8 million or $0.29 per diluted share for the same
period in 2004. During the third quarter of 2005, CDI recognized a gain,
net of
income taxes, of $69.9 million on the sale of the assets of Hollywood Park.
Results from Hollywood Park are treated as discontinued operations and
detailed
as such in the accompanying tables. During the third quarter of 2004, the
Company recognized $6.2 million of impairment losses on the assets of Ellis
Park.
Net
revenues from continuing operations for the third quarter reached $112.0
million, an increase of 9.3 percent, compared with $102.5 million for the
same
period last year. Net earnings from continuing operations were $3.8 million
during the third quarter, compared to a loss from continuing operations
of
$396,000 during the year-earlier period. Diluted net earnings per share
from
continuing operations totaled $0.28, compared to a loss of $0.03 per share
from
continuing operations during the third quarter of 2004. Results for the
third
quarter and first nine months of 2005 are outlined in the accompanying
tables.
CDI’s
President and Chief Executive Thomas H. Meeker said, “Our financial results
during the third quarter and first nine months of the year demonstrate
our
ability to grow top-line revenues, EBITDA and net earnings in the face
of
significant challenges. Our continuing operations delivered positive growth
while racing 12 fewer days and confronting short fields sizes, equine illnesses
and hurricanes in two states where we operate.
“Through
the sale of Hollywood Park, we strengthened our balance sheet by virtually
eliminating our long-term debt. We also negotiated an amended credit facility
at
favorable rates. As a result, the Company now enjoys access to capital
and the
freedom to execute on strategic opportunities as they develop. While CDI
no
longer owns or manages Hollywood Park, per the amended Asset Purchase Agreement,
we have the right to reinvest in the asset should the California legislative
environment improve and alternative gaming activities become available
at the
property.
“During
the quarter, hurricanes disrupted our operations in Louisiana and Florida.
Hurricane Katrina closed Fair Grounds Race Course and its off-track betting
and
video poker operations, while Hurricanes Dennis, Katrina and Rita caused
lost
race days and simulcast-only days at Calder Race Course. Severe weather
also
affected our operations in October and November, as Calder sustained damage
during Hurricane Wilma on Oct. 24, and Ellis Park sustained damage during
a
tornado that struck Western Kentucky Nov. 6. We are working with our insurance
providers to assess the
extent
of
the damage to Calder, Ellis Park and our Louisiana operations. We are also
in
discussions with federal, state and local officials overseeing the restoration
of southeast Louisiana following Hurricane Katrina.
“One
year
ago, we made a long-term investment in New Orleans because we believe in
the
community and appreciate its deep connection to Fair Grounds as a racetrack
and
as home to the world-famous Jazz and Heritage Festival. We want Fair Grounds
and
Jazz Fest to remain part of a revitalized New Orleans. As we move forward,
we
believe there will be opportunities to reposition our operations within
the
community in ways that will benefit the community and the Company.
“Despite
the challenges presented by the current closure of Fair Grounds, we are
pleased
to offer a shortened race meet this winter at Harrah’s Louisiana Downs in
Bossier City, La. We appreciate the support and cooperation demonstrated
by our
host site for this season as well as our Louisiana horsemen and state officials
and regulators in allowing Fair Grounds racing to continue. We are also
heartened by the Oct. 26 reopening of five of Fair Grounds’ off-track betting
and video poker locations in the New Orleans area and are progressing with
plans
to reopen additional sites.”
Meeker
concluded, “Churchill Downs Incorporated is part of a dynamic and ever-changing
industry, and our long-term success depends in part on our ability to adapt
to
change. Given the state of the industry, we believe there are several attractive
opportunities for us to redeploy our capital, develop more distribution
channels
for our products, and further leverage our brand.”
A
conference call regarding this release is scheduled for Tuesday, Nov. 8,
2005,
beginning at 9 a.m. EST. 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/investor_relations
or
www.earnings.com,
or by
calling (913) 981-5571 at least 10 minutes before the appointed time. The
online
replay will be available at approximately noon and continue for two weeks.
A
six-day telephonic replay will be available two hours after the call concludes
by dialing (719) 457-0820 and entering 5654108 when prompted for the access
code. A copy of the Company’s news release announcing earnings and relevant
financial and statistical information about the period will be accessible
at www.churchilldownsincorporated.com/investor_relations.
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”). CDI 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, CDI’s operating
performance in a meaningful and consistent manner. This non-GAAP measurement
is
not intended to replace the presentation of CDI’s financial results in
accordance with GAAP.
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 provides certain "safe harbor" provisions for forward-looking
statements. The reader is cautioned that such forward-looking statements
are
based on information available at the time and/or management’s good faith belief
with respect to future events, and are subject to risks and uncertainties
that
could cause actual performance or results to differ materially from those
expressed in the statements. Forward-looking statements speak only as of
the
date the statement was made. We assume no obligation to update forward-looking
information to reflect actual results, changes in assumptions or changes
in
other factors affecting forward-looking information. Forward-looking statements
are typically identified by the use of terms such as "anticipate," "believe,"
"could," "estimate," "expect," "intend," "may," "might," "plan," "predict,"
"project," "should," "will," and similar words, although some forward-looking
statements are expressed differently. Although we believe that the expectations
reflected in such forward-looking statements are reasonable, we can give
no
assurance that such expectations will prove to be correct. Important factors
that could cause actual results to differ materially from expectations
include:
the effect of global economic conditions; the effect (including possible
increases in the cost of doing business) resulting from future war and
terrorist
activities or political uncertainties; the economic environment; the impact
of
increasing insurance costs; the impact of interest rate fluctuations; the
effect
of any change in our accounting policies or practices; the financial performance
of our racing operations; the impact of gaming competition (including lotteries
and riverboat, cruise ship and land-based casinos) and other sports and
entertainment options in those markets in which we operate; the impact
of live
racing day competition with other Florida and Louisiana racetracks within
those
respective markets; costs associated with our efforts in support of alternative
gaming initiatives; costs associated with Customer
2
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; litigation surrounding
the
Rosemont, Illinois riverboat casino; changes in Illinois law that impact
revenues of racing operations in Illinois; a decrease in riverboat admissions
subsidy revenue from our Indiana operations; the impact of an additional
Indiana
racetrack and its wagering facilities near our operations; our continued
ability
to effectively compete for the country’s top horses and trainers necessary to
field high-quality horse racing; our continued ability to grow our share
of the
interstate simulcast market; our ability to execute our acquisition strategy
and
to complete or successfully operate planned expansion projects; our ability
to
successfully complete any divestiture transaction; our ability to adequately
integrate acquired businesses; market reaction to our expansion projects;
any
business disruption associated with our facility renovations; the loss of
our
totalisator companies or their inability to provide us assurance of the
reliability of their internal control processes through Statement on Auditing
Standards No. 70 audits or to keep their technology current; the need for
various alternative gaming approvals in Louisiana; our accountability for
environmental contamination; the loss of key personnel; the impact of natural
disasters, including Hurricanes Katrina, Rita and Wilma on our operations
and
the extent of our property and business interruption insurance coverage for
any
related losses; any business disruption associated with a natural disaster
and/or its aftermath; and the volatility of our stock price.
3
CHURCHILL
DOWNS INCORPORATED
CONDENSED
CONSOLIDATED STATEMENTS OF NET EARNINGS
for
the three and nine months ended September 30, 2005 and
2004
(Unaudited)
(In thousands, except per share data)
|
Three
Months Ended
|
|
Nine
Months Ended
|
|
||||||||||
|
September
30,
|
|
September
30,
|
|||||||||||
|
2005
|
2004
|
2005
|
2004
|
||||||||||
|
Net
revenues
|
$
|
112,016
|
$
|
102,536
|
$
|
327,035
|
$
|
275,325
|
|||||
|
Operating
expenses
|
96,677
|
83,878
|
263,955
|
217,031
|
|||||||||
|
Gross profit
|
15,339
|
18,658
|
63,080
|
58,294
|
|||||||||
|
Selling,
general and administrative expenses
|
9,274
|
10,771
|
34,656
|
26,629
|
|||||||||
|
Asset
impairment loss
|
-
|
4,363
|
-
|
4,363
|
|||||||||
|
Intangible
impairment loss
|
-
|
1,839
|
-
|
1,839
|
|||||||||
|
Operating income
|
6,065
|
1,685
|
28,424
|
25,463
|
|||||||||
|
Other
income (expense):
|
|||||||||||||
|
Interest income
|
135
|
98
|
296
|
289
|
|||||||||
|
Interest expense
|
(265
|
)
|
(100
|
)
|
(950
|
)
|
(485
|
)
|
|||||
|
Unrealized
gain on derivative instruments
|
204
|
-
|
614
|
-
|
|||||||||
|
Miscellaneous, net
|
713
|
299
|
1,330
|
1,136
|
|||||||||
|
787
|
297
|
1,290
|
940
|
||||||||||
| Earnings
from continuing operations before provision
for
income taxes
|
6,852 | 1,982 | 29,714 | 26,403 | |||||||||
|
Provision
for income taxes
|
(3,010
|
)
|
(2,378
|
)
|
(13,052
|
)
|
(12,151
|
)
|
|||||
|
Net
earnings (loss) from continuing operations
|
3,842
|
(396
|
)
|
16,662
|
14,252
|
||||||||
| Discontinued operations, net of income taxes: | |||||||||||||
|
Loss from operations
|
(2,124
|
)
|
(3,444
|
)
|
(4,655
|
)
|
(2,143
|
)
|
|||||
|
Gain
on sale of assets
|
69,917
|
-
|
69,917
|
-
|
|||||||||
|
Net
earnings (loss)
|
$
|
71,635
|
$
|
(3,840
|
)
|
$
|
81,924
|
$
|
12,109
|
||||
|
Net
earnings (loss) per common share:
|
|||||||||||||
|
Basic
|
|||||||||||||
|
Earnings
(loss) from continuing operations
|
$
|
0.29
|
($0.03
|
)
|
$
|
1.25
|
$
|
1.07
|
|||||
|
Discontinued
operations
|
5.07
|
(0.26
|
)
|
4.89
|
(0.16
|
)
|
|||||||
|
Net
earnings (loss)
|
$
|
5.36
|
($0.29
|
)
|
$
|
6.14
|
$
|
0.91
|
|||||
|
Diluted
|
|||||||||||||
|
Earnings
(loss) from continuing operations
|
$
|
0.28
|
($0.03
|
)
|
$
|
1.23
|
$
|
1.06
|
|||||
|
Discontinued
operations
|
5.02
|
(0.26
|
)
|
4.84
|
(0.16
|
)
|
|||||||
|
Net
earnings (loss)
|
$
|
5.30
|
($0.29
|
)
|
$
|
6.07
|
$
|
0.90
|
|||||
|
Weighted
average shares outstanding:
|
|||||||||||||
|
Basic
|
12,913
|
13,310
|
12,893
|
13,285
|
|||||||||
|
Diluted
|
13,511
|
13,310
|
13,507
|
13,467
|
4
CHURCHILL
DOWNS INCORPORATED
SUPPLEMENTAL
INFORMATION BY OPERATING UNIT
for
the three and nine months ended September 30, 2005 and
2004
(Unaudited)
(In thousands)
|
Three
Months Ended
|
Nine
Months Ended
|
||||||||||||
|
September
30,
|
September
30,
|
||||||||||||
|
2005
|
|
2004
|
|
2005
|
|
2004
|
|||||||
|
Net
revenues from external customers:
|
|||||||||||||
|
Kentucky Operations
|
$
|
13,834
|
$
|
14,648
|
$
|
83,455
|
$
|
76,575
|
|||||
|
Arlington Park
|
33,465
|
32,615
|
67,382
|
71,280
|
|||||||||
|
Calder Race Course
|
28,593
|
26,585
|
53,023
|
50,270
|
|||||||||
|
Hoosier Park
|
9,700
|
10,062
|
30,138
|
30,665
|
|||||||||
|
Louisiana Operations
|
7,462
|
-
|
38,849
|
-
|
|||||||||
|
CDSN
|
18,090
|
18,035
|
52,379
|
45,046
|
|||||||||
|
Total racing operations
|
111,144
|
101,945
|
325,226
|
273,836
|
|||||||||
|
Other investments
|
663
|
637
|
869
|
875
|
|||||||||
|
Corporate revenues
|
343
|
65
|
1,495
|
1,089
|
|||||||||
| Net revenues from continuing operations |
112,150
|
102,647 | 327,590 | 275,800 | |||||||||
|
Discontinued operations
|
16,179
|
17,036
|
69,562
|
71,247
|
|||||||||
|
$
|
128,329
|
$
|
119,683
|
$
|
397,152
|
$
|
347,047
|
||||||
|
Intercompany
net revenues:
|
|||||||||||||
|
Kentucky Operations
|
$
|
4,453
|
$
|
4,593
|
$
|
19,205
|
$
|
19,850
|
|||||
|
Arlington Park
|
6,145
|
6,007
|
8,768
|
8,171
|
|||||||||
|
Calder Race Course
|
3,683
|
3,613
|
6,674
|
6,879
|
|||||||||
|
Hoosier Park
|
31
|
36
|
107
|
86
|
|||||||||
|
Louisiana Operations
|
-
|
-
|
6,335
|
-
|
|||||||||
|
Total racing operations
|
14,312
|
14,249
|
41,089
|
34,986
|
|||||||||
|
Other investments
|
571
|
681
|
1,388
|
1,526
|
|||||||||
|
Corporate expenses
|
206
|
214
|
731
|
758
|
|||||||||
|
Eliminations
|
(15,223
|
)
|
(15,255
|
)
|
(43,763
|
)
|
(37,745
|
)
|
|||||
|
(134
|
)
|
(111
|
)
|
(555
|
)
|
(475
|
)
|
||||||
|
Discontinued operations
|
134
|
111
|
555
|
475
|
|||||||||
|
|
$ | - |
$
|
-
|
$
|
-
|
$
|
-
|
|||||
|
EBITDA:
|
|||||||||||||
|
Kentucky Operations
|
$
|
(4,136
|
)
|
$
|
(9,008
|
)
|
$
|
27,440
|
$
|
15,148
|
|||
|
Arlington Park
|
9,115
|
9,933
|
9,554
|
13,255
|
|||||||||
|
Calder Race Course
|
5,532
|
1,670
|
2,809
|
2,373
|
|||||||||
|
Hoosier Park
|
(57
|
)
|
174
|
767
|
1,341
|
||||||||
|
Louisiana Operations
|
(1,081
|
)
|
-
|
756
|
-
|
||||||||
|
CDSN
|
4,486
|
4,224
|
12,803
|
10,356
|
|||||||||
|
Total racing operations
|
13,859
|
6,993
|
54,129
|
42,473
|
|||||||||
|
Other investments
|
1,139
|
952
|
1,689
|
1,599
|
|||||||||
|
Corporate expenses
|
(2,696
|
)
|
(2,130
|
)
|
(9,743
|
)
|
(5,924
|
)
|
|||||
| Total EBITDA from continuing operations | 12,302 | 5,815 | 46,075 | 38,148 | |||||||||
|
Eliminations
|
-
|
-
|
-
|
(6
|
)
|
||||||||
| Depreciation and amortization | (5,320 |
)
|
(3,831 |
)
|
(15,707 |
)
|
(11,543 |
)
|
|||||
| Interest income (expense), net | (130 | ) | (2 |
)
|
(654 | ) | (196 | ) | |||||
|
Provision for income taxes
|
(3,010
|
)
|
(2,378
|
)
|
(13,052
|
)
|
(12,151
|
)
|
|||||
| Net earnings from continuing operations | 3,842 | (396 | ) | 16,662 | 14,252 | ||||||||
| Discontinued operations, net of income taxes | 67,793 | (3,444 | ) | 65,262 | (2,143 | ) | |||||||
|
Net earnings
|
$
|
71,635
|
$
|
(3,840
|
)
|
$
|
81,924
|
$
|
12,109
|
||||
5
CHURCHILL
DOWNS INCORPORATED
CONDENSED
CONSOLIDATED BALANCE SHEETS
(Unaudited)
(in thousands)
|
September
30,
|
December
31,
|
||||||
|
2005
|
2004
|
||||||
|
ASSETS
|
|
||||||
|
Current
assets:
|
|||||||
|
Cash and cash equivalents
|
$
|
38,244
|
$
|
24,968
|
|||
|
Restricted cash
|
16,097
|
7,267
|
|||||
|
Accounts receivable, net
|
31,444
|
45,229
|
|||||
|
Deferred income taxes
|
2,274
|
3,940
|
|||||
|
Other current assets
|
5,907
|
3,589
|
|||||
|
Assets held for sale
|
-
|
142,445
|
|||||
|
Total current assets
|
93,966
|
227,438
|
|||||
|
Other
assets
|
14,095
|
17,105
|
|||||
|
Plant
and equipment, net
|
348,790
|
324,738
|
|||||
|
Goodwill
|
53,528
|
53,528
|
|||||
|
Other
intangible assets, net
|
18,395
|
19,149
|
|||||
| Total assets |
$
|
528,774
|
$
|
641,958
|
|||
|
LIABILITIES
AND SHAREHOLDERS' EQUITY
|
|||||||
|
Current
liabilities:
|
|||||||
|
Accounts payable
|
$
|
30,580
|
$
|
30,749
|
|||
|
Purses payable
|
14,397
|
8,464
|
|||||
|
Accrued expenses and other liabilities
|
44,227
|
31,739
|
|||||
|
Dividends payable
|
-
|
6,430
|
|||||
|
Income taxes payable
|
40,836
|
96
|
|||||
|
Deferred revenue
|
8,387
|
25,880
|
|||||
|
Liabilities associated with assets held for sale
|
-
|
9,221
|
|||||
|
Total current liabilities
|
138,427
|
112,579
|
|||||
|
Long-term
debt, due after one year
|
18,086
|
242,770
|
|||||
|
Other
liabilities
|
21,544
|
20,424
|
|||||
|
Deferred
revenue
|
18,792
|
19,071
|
|||||
|
Deferred
income taxes
|
8,318
|
8,686
|
|||||
|
Total liabilities
|
205,167
|
403,530
|
|||||
|
Commitments
and contingencies
|
|||||||
|
Shareholders'
equity:
|
|||||||
|
Preferred stock, no par value;
|
|||||||
|
250 shares authorized; no shares issued
|
-
|
-
|
|||||
|
Common stock, no par value; 50,000 shares
|
|||||||
|
authorized; issued: 13,011 shares September 30,
|
|||||||
|
2005
and 12,904 shares December 31, 2004
|
117,824
|
114,930
|
|||||
|
Retained earnings
|
207,537
|
125,613
|
|||||
|
Unearned stock compensation
|
(1,754
|
)
|
(1,935
|
)
|
|||
|
Accumulated other comprehensive (loss)
|
-
|
(180
|
)
|
||||
| Total shareholders' equity |
323,607
|
238,428
|
|||||
| Total liabilities and shareholders' equity |
$
|
528,774
|
$
|
641,958
|
|||
6