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): May 9, 2006
(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 Instructions 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 OPERATION AND FINANCIAL
CONDITION.
|
A
copy of
the news release issued by Churchill Downs Incorporated (the “Company”) on May
9, 2006 announcing the results of operations and financial condition for the
first quarter ended March 31, 2006, 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 May 9, 2006 issued by Churchill Downs
Incorporated
|
|
Exhibit
No.
|
Description
|
|
Exhibit
99.1
|
Press
Release dated May 9, 2006 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:
May 9, 2006
|
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 2006 FIRST-QUARTER RESULTS
Record-Setting
Kentucky Derby Weekend Provides Strong Start for Second
Quarter
LOUISVILLE,
Ky. (May 9, 2006) - Churchill
Downs Incorporated (“CDI” or “Company”) (NASDAQ: CHDN) today reported results
for the first quarter ended March 31, 2006.
Net
revenues from continuing operations for the quarter were $45.0 million versus
$51.9 million during the first quarter of 2005. The Company’s net loss during
the first quarter of 2006 was $10.3 million, or $0.79 per diluted share, versus
a net loss of $13.9 million, or $1.08 per diluted share, during the same period
in 2005. The Company reported a net loss from continuing operations of $10.3
million during the quarter, or $0.79 per diluted share, compared to a net loss
from continuing operations of $9.9 million, or $0.77 per diluted share, during
the year-earlier period.
CDI
historically records a net loss for the first quarter of the year as it conducts
minimal live racing events during that period. As the result of damage caused
to
its home site by Hurricane Katrina, Fair Grounds Race Course conducted a
shortened 2005-2006 race meet at Harrah’s Louisiana Downs that offered only 12
days of live racing during the quarter versus 61 days of live racing during
the
same period in 2005, which resulted in a significant decrease in simulcast
revenues for the Churchill Downs Simulcast Network. Meanwhile, the Company’s
year-to-date effective tax rate decreased from 44 percent to 39 percent,
resulting primarily from the non-deductibility of Florida legislative costs
recognized during the first quarter of 2005. The reduction of the tax rate
is
the primary reason for
the
year-over-year increase in net loss from continuing operations per diluted
share.
During
the quarter, the Company benefited from increased
profitability at
its
Louisiana off-track betting (“OTB”) and video poker operations, which topped
their 2005 first-quarter
performance even though only seven of 11 OTB locations were in service during
the quarter. Those gains were partially offset by soft business levels at
Arlington Park, Ellis Park, Hoosier Park and Trackside at Churchill
Downs.
CDI
President and Chief Executive Officer Thomas H. Meeker said the
Company’s second quarter got off to a strong start with a very successful
Kentucky Derby and Oaks weekend at Churchill Downs racetrack. “Total wagering on
the three-day Kentucky Derby weekend comprising May 4-6 equaled $219.4 million,
an increase of 11.1 percent over the $197.6 million wagered on those three
race
days last year,” said Meeker. “The Derby race eclipsed its own North American
record for betting on a single race as fans worldwide wagered $118.4 million
on
the 2006 ‘Run for the Roses,’ a 14-percent increase over last year’s total of
$104.0 million. Total wagering on the 2006 Kentucky Oaks soared to a record
$9.9
million, a 43-percent increase over the $6.9 million set in 2005.
“On-track
attendance totals of 157,536 and 108,065 for Derby and Oaks, respectively,
were
the second highest in Churchill Downs history for both events, while Thursday’s
attendance of 25,386 set a new record for that race day and points to our
success in building the Thursday before Derby into another marquee race day
for
the Company. Overall, these outstanding results demonstrate the high quality
and
mass appeal of our Company’s signature events as well as the continued strength
of our Kentucky Derby brand.”
Meeker
continued, “We are also pleased with the results from this year’s New Orleans
Jazz and Heritage Festival, which we again hosted over two weekends at our
Fair
Grounds Race Course in Louisiana. While final attendance and revenue numbers
are
not yet available, preliminary evidence suggests that the event was a great
success and an indicator of the rebirth of the New Orleans community. With
the
festival now behind us, our Fair Grounds team will turn its full attention
to
readying the track and facilities for an 81-day race meet scheduled to begin
Thanksgiving Day.
“We
are
encouraged by recent events in Illinois, where lawmakers passed legislation
in
the form of a riverboat gambling tax that for a two-year period would provide
Arlington Park with an estimated $10 million in annual supplemental revenues.
Of
that amount, 60 percent would go into the track’s purse program and 40 percent
would go to improve, maintain and operate racetrack facilities and market the
live racing product. We commend Illinois lawmakers for taking action to provide
a more level playing field for the Illinois horse racing industry and hope
Gov.
Rod Blagojevich will soon sign the bill into law.
“Looking
ahead, our management team will continue
to focus on rationalizing the economics of account-wagering and
offshore-wagering platforms, while advancing our international distribution
strategy. Towards that end, we have purchased an ownership interest in
Racing
World,
a new
subscription television channel that delivers CDI racing signals, along with
those of other top North American and international racetracks, to customers
in
the United Kingdom and Ireland. We will also continue to examine our
non-strategic assets and realign our cost structure to ensure our fiscal and
human capital is fully engaged in maximizing the Company’s primary growth
channels.”
A
conference call regarding this release is scheduled for Wednesday, May 10,
2006,
at 9 a.m. EDT. 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
www.earnings.com,
or by
calling (719) 457-2661 at least 10 minutes before the appointed time. The online
replay will be available at approximately noon EDT and continue for two weeks.
A
two-week telephonic replay will be available two hours after the call ends
by
dialing (719) 457-0820 and entering 4800890 when prompted for the access code.
A
copy of this 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 (“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.
Churchill
Downs Incorporated, headquartered in Louisville, Ky., owns and operates
world-renowned horse racing venues throughout the United States. CDI’s six
racetracks in Florida, Illinois, Indiana, Kentucky and Louisiana host many
of
North America’s most prestigious races, including the Kentucky Derby and
Kentucky Oaks, Arlington Million, Princess Rooney Handicap, Louisiana Derby
and
Indiana Derby. CDI racetracks have hosted six Breeders’ Cup World Thoroughbred
Championships. CDI also owns off-track betting facilities and has interests
in
various television production, telecommunications and racing services companies
that support CDI’s network of simulcasting and racing operations. CDI trades on
the NASDAQ National Market under the symbol CHDN and can be found on the
Internet 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 made in this news
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; 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 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; 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
our ability to adjust the casualty losses through our property and business
interruption insurance coverage; any business disruption associated with a
natural disaster and/or its aftermath; and the volatility of our stock price
and
risk factors disclosed in our filings with the Securities and Exchange
Commission.
2
CHURCHILL
DOWNS INCORPORATED
CONDENSED
CONSOLIDATED STATEMENTS OF NET LOSS
for
the three months ended March 31,
(Unaudited)
(In
thousands, except per share data)
|
2006
|
2005
|
||||||||
|
Net
revenues
|
$
|
45,028
|
$
|
51,882
|
|||||
|
Operating
expenses
|
51,872
|
57,153
|
|||||||
|
Gross loss
|
(6,844
|
)
|
(5,271
|
)
|
|||||
|
Selling,
general and administrative expenses
|
10,462
|
12,755
|
|||||||
|
Operating loss
|
(17,306
|
)
|
(18,026
|
)
|
|||||
|
Other
income (expense):
|
|||||||||
|
Interest income
|
119
|
85
|
|||||||
|
Interest
expense
|
(603
|
)
|
(295
|
)
|
|||||
|
Unrealized gain on derivative instruments
|
204
|
206
|
|||||||
|
Miscellaneous, net
|
653
|
533
|
|||||||
|
373
|
529
|
||||||||
|
Loss
from continuing operations before income tax benefit
|
(16,933
|
)
|
(17,497
|
)
|
|||||
|
Income
tax benefit
|
6,660
|
7,639
|
|||||||
|
Net
loss from continuing operations
|
(10,273
|
)
|
(9,858
|
)
|
|||||
|
Discontinued
operations, net of income taxes
|
-
|
(4,039
|
)
|
||||||
|
Net
loss
|
$
|
(10,273
|
)
|
$
|
(13,897
|
)
|
|||
|
Basic
and diluted net loss per common share:
|
|||||||||
|
Net loss from continuing operations
|
$
|
(0.79
|
)
|
$
|
(0.77
|
)
|
|||
|
Discontinued operations
|
-
|
(0.31
|
)
|
||||||
|
Net loss
|
$
|
(0.79
|
)
|
$
|
(1.08
|
)
|
|||
|
Basic and diluted weighted average shares outstanding
|
13,074
|
12,881
|
Certain
financial statement amounts
have been reclassified in the prior periods to conform to current period
presentation.
3
CHURCHILL
DOWNS INCORPORATED
SUPPLEMENTAL
INFORMATION BY OPERATING UNIT
for
the three months ended March 31,
(Unaudited)
(In
thousands)
|
2006
|
2005
|
|||||||
|
Net
revenues from external customers:
|
||||||||
|
Kentucky Operations
|
$
|
3,993
|
$
|
4,377
|
||||
|
Arlington Park
|
12,427
|
11,445
|
||||||
|
Calder Race Course
|
1,937
|
1,618
|
||||||
|
Hoosier Park
|
8,253
|
8,911
|
||||||
|
Louisiana
Operations
|
15,234
|
16,633
|
||||||
|
CDSN
|
2,564
|
8,765
|
||||||
|
Total racing operations
|
44,408
|
51,749
|
||||||
|
Other investments
|
455
|
-
|
||||||
|
Corporate
|
165
|
133
|
||||||
|
Net revenues from continuing operations
|
45,028
|
51,882
|
||||||
|
Discontinued operations
|
-
|
4,435
|
||||||
|
$
|
45,028
|
$
|
56,317
|
|||||
|
Intercompany
net revenues:
|
||||||||
|
Kentucky Operations
|
$
|
-
|
$
|
18
|
||||
|
Arlington Park
|
-
|
-
|
||||||
|
Calder Race Course
|
255
|
292
|
||||||
|
Hoosier Park
|
-
|
-
|
||||||
|
Louisiana Operations
|
1,407
|
6,335
|
||||||
|
Total racing operations
|
1,662
|
6,645
|
||||||
|
Other investments
|
100
|
137
|
||||||
|
Eliminations
|
(1,762
|
)
|
(6,782
|
)
|
||||
|
|
$ | - |
$
|
-
|
||||
|
EBITDA:
|
||||||||
|
Kentucky Operations
|
$
|
(6,807
|
)
|
$
|
(6,636
|
)
|
||
|
Arlington Park
|
(1,952
|
)
|
(1,651
|
)
|
||||
|
Calder Race Course
|
(3,405
|
)
|
(5,854
|
)
|
||||
|
Hoosier Park
|
127
|
414
|
||||||
|
Louisiana Operations
|
140
|
(1,178
|
)
|
|||||
|
CDSN
|
559
|
2,133
|
||||||
|
Total racing operations (EBITDA)
|
(11,338
|
)
|
(12,772
|
)
|
||||
|
Other investments
|
598
|
178
|
||||||
|
Corporate
|
(411
|
)
|
(280
|
)
|
||||
|
Total
EBITDA
|
(11,151
|
)
|
(12,874
|
)
|
||||
|
Depreciation and amortization
|
(5,298
|
)
|
(4,413
|
)
|
||||
|
Interest income (expense), net
|
(484
|
)
|
(210
|
)
|
||||
|
Income tax benefit
|
6,660
|
7,639
|
||||||
|
Net loss from continuing operations
|
(10,273
|
)
|
(9,858
|
)
|
||||
|
Discontinued operations, net of income taxes
|
-
|
(4,039
|
)
|
|||||
|
Net loss
|
$
|
(10,273
|
)
|
$
|
(13,897
|
)
|
Certain financial statement amounts have been reclassified in the prior periods
to conform to current period presentation.
4
CHURCHILL
DOWNS INCORPORATED
CONDENSED
CONSOLIDATED BALANCE SHEETS
(in
thousands)
|
March
31,
|
December
31,
|
||||||||
|
2006
|
2005
|
||||||||
|
|
(unaudited)
|
||||||||
|
ASSETS
|
|||||||||
|
Current
assets:
|
|||||||||
|
Cash and cash equivalents
|
$
|
14,659
|
$
|
22,488
|
|||||
|
Restricted cash
|
7,323
|
4,946
|
|||||||
|
Accounts receivable, net
|
20,238
|
42,823
|
|||||||
|
Deferred income taxes
|
3,949
|
3,949
|
|||||||
|
Income taxes receivable
|
9,911
|
697
|
|||||||
|
Other current assets
|
19,181
|
9,085
|
|||||||
|
Total current assets
|
75,261
|
83,988
|
|||||||
|
Other
assets
|
13,709
|
13,020
|
|||||||
|
Plant
and equipment, net
|
350,399
|
346,530
|
|||||||
|
Goodwill
|
53,528
|
53,528
|
|||||||
|
Other
intangible assets, net
|
17,864
|
18,130
|
|||||||
|
Total assets
|
$
|
510,761
|
$
|
515,196
|
|||||
|
LIABILITIES
AND SHAREHOLDERS' EQUITY
|
|||||||||
|
Current
liabilities:
|
|||||||||
|
Accounts payable
|
$
|
23,410
|
$
|
27,957
|
|||||
|
Purses payable
|
19,921
|
14,564
|
|||||||
|
Accrued expenses
|
40,943
|
44,003
|
|||||||
|
Dividends payable
|
-
|
6,520
|
|||||||
|
Deferred revenue
|
40,420
|
26,219
|
|||||||
|
Total current liabilities
|
124,694
|
119,263
|
|||||||
|
Long-term
debt
|
32,019
|
33,793
|
|||||||
|
Other
liabilities
|
21,989
|
21,625
|
|||||||
|
Deferred
revenue
|
18,973
|
18,614
|
|||||||
|
Deferred
income taxes
|
5,670
|
5,670
|
|||||||
|
Total liabilities
|
203,345
|
198,965
|
|||||||
|
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: 13,191 shares March 31,
|
|||||||||
|
2006 and 13,132 shares December 31, 2005
|
119,688
|
121,270
|
|||||||
|
Retained earnings
|
187,728
|
198,001
|
|||||||
|
Unearned compensation
|
-
|
(3,040
|
)
|
||||||
|
Total shareholders’ equity
|
307,416
|
316,231
|
|||||||
|
Total liabilities and shareholders’ equity
|
$
|
510,761
|
$
|
515,196
|
|||||
Certain financial statement amounts have been reclassified in the prior periods
to conform to current period presentation.
5