Kentucky
|
61-0156015
|
(State
or other jurisdiction of incorporation or organization)
|
(IRS
Employer Identification No.)
|
Part
I - FINANCIAL INFORMATION
|
Page
|
|
Item
1.
|
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|
3
|
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4
|
||
5
|
||
7
|
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Item
2.
|
18
|
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Item
3.
|
35
|
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Item
4.
|
36
|
|
Item
1.
|
37
|
|
Item
2.
|
37
|
|
Item
3.
|
37
|
|
Item
4.
|
37
|
|
Item
5.
|
37
|
|
Item
6.
|
37
|
|
38
|
||
39
|
PART
I.
|
FINANCIAL
INFORMATION
|
ITEM
1.
|
September
30, 2005
|
December
31, 2004
|
||||||
ASSETS
|
|||||||
Current
assets:
|
|||||||
Cash
and cash equivalents
|
$
|
38,244
|
$
|
24,968
|
|||
Restricted
cash
|
16,097
|
7,267
|
|||||
Accounts
receivable, net of allowance for doubtful accounts of $1,031 at
September
30, 2005 and $881 at December 31, 2004
|
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
|
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
|
Three
Months Ended
September
30,
|
Nine
Months Ended
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
|
|||||
Other
comprehensive loss, net of income taxes:
|
|||||||||||||
Change
in fair value of cash flow hedges
|
(215
|
)
|
(844
|
)
|
180
|
(234
|
)
|
||||||
Comprehensive
earnings (loss)
|
$
|
71,420
|
$
|
(4,684
|
)
|
$
|
82,104
|
$
|
11,875
|
||||
Net
earnings (loss) per common share data:
|
|||||||||||||
Basic
|
|||||||||||||
Net
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
|
|||||||||||||
Net
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
|
2005
|
2004
|
||||||
Cash
flows from operating activities:
|
|||||||
Net
earnings
|
$
|
81,924
|
$
|
12,109
|
|||
Adjustments
to reconcile net earnings to net cash provided by operating
activities:
|
|||||||
Depreciation
and amortization
|
18,883
|
16,245
|
|||||
Unrealized
gain on derivative instruments
|
(614
|
)
|
-
|
||||
Gain
on sale of assets of Hollywood Park
|
(112,370
|
)
|
-
|
||||
Asset
impairment
|
-
|
4,363
|
|||||
Intangible
impairment
|
-
|
1,839
|
|||||
Other
|
870
|
-
|
|||||
Increase
(decrease) in cash resulting from changes in operating assets and
liabilities, net of
assets
and liabilities sold:
|
|||||||
Restricted
cash
|
(5,477
|
)
|
(3,432
|
)
|
|||
Accounts
receivable
|
1,869
|
(5,118
|
)
|
||||
Other
current assets
|
(2,576
|
)
|
(5,616
|
)
|
|||
Accounts
payable
|
(1,298
|
)
|
123
|
||||
Purses
payable
|
5,933
|
6,294
|
|||||
Accrued
expenses and other liabilities
|
1,630
|
5,744
|
|||||
Income
taxes payable
|
40,740
|
2,305
|
|||||
Deferred
revenue
|
(2,949
|
)
|
6,744
|
||||
Other
assets and liabilities
|
5,943
|
(329
|
)
|
||||
Net
cash provided by operating activities
|
32,508
|
41,271
|
|||||
Cash
flows from investing activities:
|
|||||||
Additions
to plant and equipment, net
|
(40,591
|
)
|
(63,562
|
)
|
|||
Net
cash proceeds from sale of assets of Hollywood Park
|
248,323
|
-
|
|||||
Net
cash provided by (used in) investing activities
|
207,732
|
(63,562
|
)
|
||||
Cash
flows from financing activities:
|
|||||||
Borrowings
on bank line of credit
|
445,202
|
318,403
|
|||||
Repayments
of bank line of credit
|
(570,202
|
)
|
(290,072
|
)
|
|||
Repayments
of Senior Notes
|
(100,000
|
)
|
-
|
||||
Repayments
of long-term debt
|
-
|
(1,618
|
)
|
||||
Change
in book overdraft
|
(901
|
)
|
(2,826
|
)
|
|||
Payment
of dividends
|
(6,430
|
)
|
(6,625
|
)
|
|||
Common
stock issued
|
2,623
|
1,958
|
|||||
Net
cash (used in) provided by financing activities
|
(229,708
|
)
|
19,220
|
||||
Net
increase (decrease) in cash and cash equivalents
|
10,532
|
(3,071
|
)
|
||||
Cash
and cash equivalents, beginning of period
|
27,712
|
16,440
|
|||||
Cash
and cash equivalents, end of period
|
38,244
|
13,369
|
|||||
Cash
and cash equivalents included in assets held for sale
|
-
|
(2,217
|
)
|
||||
Cash
and cash equivalents in continuing operations
|
$
|
38,244
|
$
|
11,152
|
Cash
paid during the period for:
|
|||||||
Interest
|
10,082
|
5,037
|
|||||
Income
taxes
|
12,678
|
12,928
|
|||||
Schedule
of non-cash activities:
|
|||||||
Plant
and equipment additions included in accounts payable/accrued
expenses
|
2,621
|
2,934
|
|||||
Issuance
of common stock in connection with restricted stock plan
|
277
|
-
|
|||||
The
accompanying notes are an integral part of the Condensed Consolidated
Financial Statements.
|
1.
|
Basis
of Presentation
|
Three
Months Ended
September
30,
|
Nine
Months Ended
September
30,
|
||||||||||||
2005
|
2004
|
2005
|
2004
|
||||||||||
Net
earnings (loss), as reported
|
$
|
71,635
|
$
|
(3,840
|
)
|
$
|
81,924
|
$
|
12,109
|
||||
Add:
Stock based compensation expense included in
reported net earnings (loss), net of tax benefit
|
63
|
-
|
178
|
-
|
|||||||||
Deduct:
Pro forma stock-based compensation expense,
net of tax benefit
|
(180
|
)
|
(328
|
)
|
(815
|
)
|
(1,198
|
)
|
|||||
Pro
forma net earnings (loss)
|
$
|
71,518
|
$
|
(4,168
|
)
|
$
|
81,287
|
$
|
10,911
|
||||
Pro
forma net earnings (loss) per common share:
|
|||||||||||||
Basic
|
$
|
5.35
|
$
|
(0.31
|
)
|
$
|
6.09
|
$
|
0.82
|
||||
Diluted
|
$
|
5.29
|
$
|
(0.31
|
)
|
$
|
6.02
|
$
|
0.81
|
2.
|
Discontinued
Operations
|
Three
Months Ended
September
30,
|
Nine
Months Ended
September
30,
|
||||||||||||
2005
|
2004
|
2005
|
2004
|
||||||||||
Net
revenues
|
$
|
16,313
|
$
|
17,147
|
$
|
70,117
|
$
|
71,722
|
|||||
Operating
expenses
|
16,577
|
17,468
|
63,593
|
63,515
|
|||||||||
Gross
(loss) profit
|
(264
|
)
|
(321
|
)
|
6,524
|
8,207
|
|||||||
Selling,
general and administrative expenses
|
(108
|
)
|
2,478
|
3,247
|
5,783
|
||||||||
Operating
income (loss)
|
(156
|
)
|
(2,799
|
)
|
3,277
|
2,424
|
|||||||
Other
income (expense):
|
|||||||||||||
Interest
income
|
6
|
4
|
20
|
14
|
|||||||||
Interest
expense
|
(3,173
|
)
|
(1,426
|
)
|
(8,806
|
)
|
(3,599
|
)
|
|||||
Miscellaneous,
net
|
1
|
-
|
3
|
3
|
|||||||||
Other income (expense)
|
(3,166
|
)
|
(1,422
|
)
|
(8,783
|
)
|
(3,582
|
)
|
|||||
Loss
before provision for income taxes
|
(3,322
|
)
|
(4,221
|
)
|
(5,506
|
)
|
(1,158
|
)
|
|||||
Benefit
(provision) for income taxes
|
1,198
|
777
|
851
|
(985
|
)
|
||||||||
Loss
from operations
|
(2,124
|
)
|
(3,444
|
)
|
(4,655
|
)
|
(2,143
|
)
|
|||||
Gain
on sale of assets, net of income taxes
|
69,917
|
-
|
69,917
|
-
|
|||||||||
Net
earnings (loss)
|
$
|
67,793
|
$
|
(3,444
|
)
|
$
|
65,262
|
$
|
(2,143
|
)
|
December
31, 2004
|
||||
Current
assets:
|
||||
Cash
and cash equivalents
|
$
|
2,744
|
||
Accounts
receivable
|
5,294
|
|||
Other
current assets
|
501
|
|||
Plant
and equipment, net
|
133,906
|
|||
Assets
held for sale
|
142,445
|
|||
Current
liabilities:
|
||||
Accounts
payable
|
3,388
|
|||
Accrued
expenses
|
5,772
|
|||
Deferred
revenue
|
61
|
|||
Liabilities
associated with assets held for sale
|
9,221
|
|||
Net
assets held for sale
|
$
|
133,224
|
3.
|
Hurricane
Katrina
|
4.
|
Borrowing
Arrangements
|
December
31, 2004
|
March
7, 2005
|
Change
|
||||||||
Long
put option
|
$
|
3,413
|
$
|
3,408
|
$
|
(5
|
)
|
|||
Short
call option
|
(11,410
|
)
|
(11,233
|
)
|
177
|
|||||
Net
derivative financial instrument
|
$
|
(7,997
|
)
|
$
|
(7,825
|
)
|
$
|
172
|
5.
|
Earnings
Per Share
|
Three
Months Ended
September
30,
|
Nine
Months Ended
September
30,
|
||||||||||||
2005
|
2004
|
2005
|
2004
|
||||||||||
Numerator
for basic earnings (loss) from continuing
operations per common share:
|
|||||||||||||
Net
earnings (loss) from continuing operations
|
$
|
3,842
|
$
|
(396
|
)
|
$
|
16,662
|
$
|
14,252
|
||||
Net
earnings from continuing operations allocated to
participating securities
|
(130
|
)
|
-
|
(565
|
)
|
-
|
|||||||
Numerator
for basic earnings (loss) from continuing
operations per common share
|
$
|
3,712
|
$
|
(396
|
)
|
$
|
16,097
|
$
|
14,252
|
||||
Numerator
for basic earnings (loss) per common share:
|
|||||||||||||
Net
earnings (loss)
|
$
|
71,635
|
$
|
(3,840
|
)
|
$
|
81,924
|
$
|
12,109
|
||||
Net
earnings allocated to participating securities
|
(2,426
|
)
|
-
|
(2,779
|
)
|
-
|
|||||||
Numerator
for basic earnings (loss) per common share
|
$
|
69,209
|
$
|
(3,840
|
)
|
$
|
79,145
|
$
|
12,109
|
||||
Numerator
for diluted earnings (loss) per common share:
|
|||||||||||||
Net
earnings (loss) 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 (loss)
|
$
|
71,635
|
$
|
(3,840
|
)
|
$
|
81,924
|
$
|
12,109
|
||||
Denominator
for earnings (loss) per common share:
|
|||||||||||||
Basic
|
12,913
|
13,310
|
12,893
|
13,285
|
|||||||||
Plus
dilutive effect of stock options
|
145
|
-
|
161
|
182
|
|||||||||
Plus
dilutive effect of convertible note
|
453
|
-
|
453
|
-
|
|||||||||
Diluted
|
13,511
|
13,310
|
13,507
|
13,467
|
|||||||||
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
|
6.
|
Segement
Information
|
Three
Months Ended
September
30,
|
Nine
Months Ended
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
|
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
|
||||||
Inter-company
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
|
206
|
214
|
731
|
758
|
|||||||||
Eliminations
|
(15,223
|
)
|
(15,255
|
)
|
(43,763
|
)
|
(37,745
|
)
|
|||||
(134
|
)
|
(111
|
)
|
(555
|
)
|
(475
|
)
|
||||||
Discontinued
operations
|
134
|
111
|
555
|
475
|
|||||||||
|
$
|
- |
$
|
-
|
$
|
-
|
$
|
-
|
|||||
Segment
EBITDA and net earnings:
|
|||||||||||||
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
|
(2,696
|
)
|
(2,130
|
)
|
(9,743
|
)
|
(5,924
|
)
|
|||||
Total
|
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 (loss) 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 (loss)
|
$
|
71,635
|
$
|
(3,840
|
)
|
$
|
81,924
|
$
|
12,109
|
September
30,
2005
|
December
31,
2004
|
|||||||
Total
assets:
|
||||||||
Kentucky
Operations
|
$
|
592,434
|
$
|
572,039
|
||||
Arlington
Park
|
91,072
|
83,047
|
||||||
Calder
Race Course
|
87,804
|
89,393
|
||||||
Hollywood
Park
|
95,916
|
2,589
|
||||||
Hoosier
Park
|
38,854
|
33,073
|
||||||
Louisiana
Operations
|
75,161
|
74,971
|
||||||
CDSN
|
11,018
|
11,018
|
||||||
Other
investments
|
136,151
|
114,945
|
||||||
Assets
held for sale
|
-
|
142,445
|
||||||
1,128,410
|
1,123,520
|
|||||||
Eliminations
|
(599,636
|
)
|
(481,562
|
)
|
||||
$
|
528,774
|
$
|
641,958
|
|||||
|
||||||||
|
|
Nine
Months Ended September 30,
|
||||||
2005
|
2004
|
|||||||
Capital
expenditures, net:
|
||||||||
Kentucky
Operations
|
$
|
27,096
|
$
|
54,875
|
||||
Hollywood
Park
|
2,161
|
3,509
|
||||||
Calder
Race Course
|
1,688
|
2,656
|
||||||
Arlington
Park
|
4,800
|
2,013
|
||||||
Hoosier
Park
|
392
|
502
|
||||||
Louisiana
Operations
|
4,337
|
-
|
||||||
Other
Investments
|
117
|
7
|
||||||
$
|
40,591
|
$
|
63,562
|
7.
|
Recently
Issued Accounting
Pronouncements
|
8.
|
Subsequent
Events - Natural
Disasters
|
ITEM 2. | MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS |
(In thousands, except per share data and live race days) |
Three
months ended September
30,
|
Change
|
|||||||||||
2005
|
2004
|
$
|
%
|
||||||||||
Total
pari-mutuel handle
|
$
|
1,094,619
|
$
|
1,091,283
|
$
|
3,336
|
-
|
||||||
Number
of live race days
|
189
|
201
|
(12
|
)
|
(6
|
)%
|
|||||||
Net
pari-mutuel revenues
|
$
|
92,117
|
$
|
87,197
|
$
|
4,920
|
6
|
%
|
|||||
Riverboat
subsidy
|
2,700
|
2,708
|
(8
|
)
|
-
|
||||||||
Other
operating revenues
|
17,199
|
12,631
|
4,568
|
36
|
%
|
||||||||
Total
net revenues
|
$
|
112,016
|
$
|
102,536
|
$
|
9,480
|
9
|
%
|
|||||
Gross
profit
|
$
|
15,339
|
$
|
18,658
|
$
|
(3,319
|
)
|
(18
|
)%
|
||||
Gross
margin percentage
|
14
|
%
|
18
|
%
|
|||||||||
Operating
income
|
$
|
6,065
|
$
|
1,685
|
$
|
4,380
|
260
|
%
|
|||||
Net
earnings (loss) from continuing operations
|
$
|
3,842
|
$
|
(396
|
)
|
$
|
4,238
|
1070
|
%
|
||||
Diluted
earnings (loss) from continuing operations per
share
|
$
|
0.28
|
$ |
(0.03
|
)
|
·
|
During
the three months ended September 30, 2004, we recorded a $4.4 million
plant and equipment impairment loss and a $1.8 million intangible
asset
impairment loss at Ellis Park based on management’s consideration of the
historical and forecasted operating results of the
facility.
|
·
|
During
the three months ended September 30, 2005, we recognized a reduction
of
selling, general and administrative expenses of $1.4 million related
to an
estimate of insurance proceeds that management determined are probable
of
recovery in connection with losses recognized from Hurricane Katrina
by
the Louisiana Operations.
|
·
|
Our
effective tax rate decreased from 120% to 44% resulting primarily
from
lower non-deductible legislative spending during the three months
ended
September 30, 2005 as well as the impairment loss recognized during
the
three months ended September 30,
2004.
|
(In thousands) |
Three
months ended September
30,
|
Change
|
|||||||||||
2005
|
2004
|
$
|
%
|
||||||||||
Purse
expenses
|
$
|
37,167
|
$
|
34,310
|
$
|
2,857
|
8
|
%
|
|||||
Riverboat
purse expenses
|
1,336
|
1,344
|
(8
|
)
|
(1
|
)%
|
|||||||
Depreciation/amortization
|
5,321
|
3,831
|
1,490
|
39
|
%
|
||||||||
Other
operating expenses
|
52,853
|
44,393
|
8,460
|
19
|
%
|
||||||||
SG&A
expenses
|
9,274
|
10,771
|
(1,497
|
)
|
(14
|
)%
|
|||||||
Asset
impairment loss
|
-
|
4,363
|
(4,363
|
)
|
(100
|
)%
|
|||||||
Intangible
impairment loss
|
-
|
1,839
|
(1,839
|
)
|
(100
|
)%
|
|||||||
Total
expenses from continuing operations
|
$
|
105,951
|
$
|
100,851
|
$
|
5,100
|
5
|
%
|
|||||
Percent
of revenue
|
95
|
%
|
98
|
%
|
(In thousands) |
Three
months ended
September
30,
|
Change
|
|||||||||||
2005
|
2004
|
$
|
%
|
||||||||||
Interest
income
|
$
|
135
|
$
|
98
|
$
|
37
|
38
|
%
|
|||||
Interest
expense
|
(265
|
)
|
(100
|
)
|
(165
|
)
|
(165
|
)%
|
|||||
Unrealized
gain on derivative instruments
|
204
|
-
|
204
|
100
|
%
|
||||||||
Miscellaneous,
net
|
713
|
299
|
414
|
138
|
%
|
||||||||
Other
income (expense)
|
$
|
787
|
$
|
297
|
$
|
490
|
165
|
%
|
|||||
Provision
for income taxes
|
$
|
(3,010
|
)
|
$
|
(2,378
|
)
|
$
|
(632
|
)
|
(27
|
)%
|
||
Effective
tax rate
|
44
|
%
|
120
|
%
|
·
|
During
the three months ended September 30, 2005, we recognized $0.3 million
of
miscellaneous income related to consideration received for the extension
of an option to purchase an interest in Hoosier
Park.
|
·
|
During
the three months ended September 30, 2005, we recognized an unrealized
gain on derivative instruments of $0.2 million related to changes
in the
fair market value of embedded derivatives within a convertible promissory
note issued during the fourth quarter of
2004.
|
·
|
Our
effective tax rate decreased from 120% to 44% resulting primarily
from
lower non-deductible legislative spending during the three months
ended
September 30, 2005 as well as the impairment loss recognized during
the
three months ended September 30,
2004.
|
Three months ended September 30, |
Change
|
||||||||||||
2005
|
2004
|
$
|
%
|
||||||||||
Kentucky
Operations
|
$
|
18,287
|
$
|
19,241
|
$
|
(954
|
)
|
(5
|
)%
|
||||
Arlington
Park
|
39,610
|
38,622
|
988
|
3
|
%
|
||||||||
Calder
Race Course
|
32,276
|
30,198
|
2,078
|
7
|
%
|
||||||||
Hoosier
Park
|
9,731
|
10,098
|
(367
|
)
|
(4
|
)%
|
|||||||
Louisiana
Operations
|
7,462
|
-
|
7,462
|
100
|
%
|
||||||||
CDSN
|
18,090
|
18,035
|
55
|
-
|
|||||||||
Total
Racing Operations
|
125,456
|
116,194
|
9,262
|
8
|
%
|
||||||||
Other
Investments
|
1,234
|
1,318
|
(84
|
)
|
(6
|
)%
|
|||||||
Corporate
|
549
|
279
|
270
|
97
|
%
|
||||||||
Eliminations
|
(15,223
|
)
|
(15,255
|
)
|
32
|
-
|
|||||||
Net
revenues from continuing operations
|
$
|
112,016
|
$
|
102,536
|
$
|
9,480
|
9
|
%
|
·
|
During
the fourth quarter of 2004, we completed our acquisition of the Louisiana
Operations, which contributed $7.5 million to the overall increase
in
revenues.
|
·
|
Net
revenues from Calder Race Course increased $2.1 million primarily
as a
result of increased revenue generated from incremental intrastate
export
handle, partially caused by several weather-related events that occurred
during the three months ended September 30, 2004 resulting in closures
of
simulcast sites throughout the state of
Florida.
|
(In thousands) |
Three
months ended September
30,
|
Change
|
||||||||||||
2005
|
|
2004
|
$
|
%
|
||||||||||
Kentucky
Operations
|
$
|
24,899
|
$
|
30,049
|
$
|
(5,150
|
)
|
(17
|
)%
|
|||||
Arlington
Park
|
31,777
|
29,954
|
1,823
|
6
|
%
|
|||||||||
Calder
Race Course
|
27,777
|
29,751
|
(1,974
|
)
|
(7
|
)%
|
||||||||
Hoosier
Park
|
10,144
|
10,321
|
(177
|
)
|
(2
|
)%
|
||||||||
Louisiana
Operations
|
9,460
|
-
|
9,460
|
100
|
%
|
|||||||||
CDSN
|
13,604
|
13,810
|
(206
|
)
|
(1
|
)%
|
||||||||
Total
Racing Operations
|
$
|
117,661
|
$
|
113,885
|
$
|
3,776
|
3
|
%
|
||||||
Other
Investments
|
937
|
759
|
178
|
23
|
%
|
|||||||||
Corporate
|
3,449
|
2,408
|
1,041
|
43
|
%
|
|||||||||
Eliminations
|
(16,096
|
)
|
(16,201
|
)
|
105
|
1
|
%
|
|||||||
Total
expenses from continuing operations
|
$
|
105,951
|
$
|
100,851
|
$
|
5,100
|
5
|
%
|
·
|
During
the fourth quarter of 2004, we completed our acquisition of the Louisiana
Operations, which contributed $9.5 million to the overall increase
in
expenses.
|
·
|
Expenses
from Arlington Park increased as a result of less purse overpayments
that
were recovered during the three months ended September 30, 2005 in
addition to increased costs associated with our relationship marketing
initiative.
|
·
|
Expenses
from Calder Race Course decreased primarily as a result of costs
incurred
during the three months ended September 30, 2004 related to the
alternative gaming initiative in Florida, which was partially offset
by
increased expenses associated with incremental intrastate export
pari-mutuel commissions.
|
·
|
Expenses
from the Kentucky Operations decreased primarily as a result of impairment
losses of $6.2 million recognized at Ellis Park during the three
months
ended September 30, 2004, which was partially offset by additional
depreciation expense of $0.8 million due to the completion of the
Churchill Downs racetrack facility renovation project during the
second
quarter of 2005.
|
·
|
Corporate
expenses increased primarily as a result of increased costs associated
with our initiative to attract and retain appropriate personnel to
achieve
our business objectives.
|
(In
thousands)
|
Three
months ended September
30,
|
Change
|
|||||||||||
2005
|
2004
|
$
|
%
|
||||||||||
Net
revenues
|
$
|
16,313
|
$
|
17,147
|
$
|
(834
|
)
|
(5
|
)%
|
||||
Operating
expenses
|
16,577
|
17,468
|
(891
|
)
|
(5
|
)%
|
|||||||
Gross
profit
|
(264
|
)
|
(321
|
)
|
57
|
18
|
%
|
||||||
Selling,
general and administrative expenses
|
(108
|
)
|
2,478
|
(2,586
|
)
|
(104
|
)%
|
||||||
Operating
loss
|
(156
|
)
|
(2,799
|
)
|
2,643
|
94
|
%
|
||||||
Other
income (expense):
|
|||||||||||||
Interest
income
|
6
|
4
|
2
|
50
|
%
|
||||||||
Interest
expense
|
(3,173
|
)
|
(1,426
|
)
|
(1,747
|
)
|
(123
|
)%
|
|||||
Miscellaneous,
net
|
1
|
-
|
1
|
100
|
%
|
||||||||
(3,166
|
)
|
(1,422
|
)
|
(1,744
|
)
|
(123
|
)%
|
||||||
Loss
before provision for income taxes
|
(3,322
|
)
|
(4,221
|
)
|
899
|
21
|
%
|
||||||
Benefit
for income taxes
|
1,198
|
777
|
421
|
54
|
%
|
||||||||
Loss
from operations
|
(2,124
|
)
|
(3,444
|
)
|