Kentucky
|
61-0156015
|
(State
or other jurisdiction of incorporation or organization)
|
(IRS
Employer Identification No.)
|
Page
|
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Item
1.
|
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||
3 | |||
4 | |||
5
|
|||
6
|
|||
Item
2.
|
1
|
9 | |
Item
3.
|
3
|
4 | |
Item
4.
|
3
|
4 | |
Item
1.
|
3
|
5 | |
Item
1A.
|
3
|
5 | |
Item
2.
|
3
|
7 | |
Item
3.
|
3
|
7 | |
Item
4.
|
3
|
7 | |
Item
5.
|
3
|
7 | |
Item
6.
|
3
|
7 | |
3
|
8 | ||
3
|
9 |
PART
I.
|
|
ITEM
1.
|
June
30, 2006
|
December
31, 2005
|
||||||||
ASSETS
|
|||||||||
Current
assets:
|
|||||||||
Cash
and cash equivalents
|
$
|
39,986
|
$
|
22,488
|
|||||
Restricted
cash
|
10,682
|
4,946
|
|||||||
Accounts
receivable, net of allowance for doubtful accounts of $503 at June
30,
2006 and $786 at December 31, 2005
|
40,357
|
42,823
|
|||||||
Deferred
income taxes
|
4,054
|
3,949
|
|||||||
Income
taxes receivable
|
-
|
697
|
|||||||
Other
current assets
|
15,574
|
9,085
|
|||||||
Total
current assets
|
110,653
|
83,988
|
|||||||
Other
assets
|
13,690
|
13,020
|
|||||||
Plant
and equipment, net
|
348,740
|
346,530
|
|||||||
Goodwill
|
53,528
|
53,528
|
|||||||
Other
intangible assets, net
|
17,717
|
18,130
|
|||||||
Total
assets
|
$
|
544,328
|
$
|
515,196
|
|||||
LIABILITIES
AND SHAREHOLDERS' EQUITY
|
|||||||||
Current
liabilities:
|
|||||||||
Accounts
payable
|
$
|
37,552
|
$
|
27,957
|
|||||
Purses
payable
|
27,327
|
14,564
|
|||||||
Accrued
expenses
|
46,256
|
44,003
|
|||||||
Dividends
payable
|
-
|
6,520
|
|||||||
Income
taxes payable
|
9,117
|
-
|
|||||||
Deferred
revenue
|
11,381
|
26,219
|
|||||||
Total
current liabilities
|
131,633
|
119,263
|
|||||||
Long-term
debt
|
22,614
|
33,793
|
|||||||
Other
liabilities
|
23,388
|
21,625
|
|||||||
Deferred
revenue
|
18,443
|
18,614
|
|||||||
Deferred
income taxes
|
5,670
|
5,670
|
|||||||
Total
liabilities
|
201,748
|
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 13,231 shares
June
30, 2006 and 13,132 shares December 31, 2005
|
121,499
|
121,270
|
|||||||
Retained
earnings
|
221,081
|
198,001
|
|||||||
Unearned
stock compensation
|
-
|
(3,040
|
)
|
||||||
Total
shareholders’ equity
|
342,580
|
316,231
|
|||||||
Total
liabilities and shareholders’ equity
|
$
|
544,328
|
$
|
515,196
|
Three
Months
Ended
June
30,
|
Six
Months Ended
June
30,
|
||||||||||||||||
2006
|
2005
|
2006
|
2005
|
||||||||||||||
Net
revenues
|
$
|
175,025
|
$
|
163,207
|
$
|
220,053
|
$
|
215,089
|
|||||||||
Operating
expenses
|
115,937
|
110,599
|
167,808
|
167,752
|
|||||||||||||
Gross
profit
|
59,088
|
52,608
|
52,245
|
47,337
|
|||||||||||||
Selling,
general and administrative expenses
|
11,921
|
12,271
|
23,649
|
25,026
|
|||||||||||||
Insurance
recoveries, net of losses
|
(9,614
|
)
|
-
|
(10,880
|
)
|
-
|
|||||||||||
Operating
income
|
56,781
|
40,337
|
39,476
|
22,311
|
|||||||||||||
Other
income (expense):
|
|||||||||||||||||
Interest
income
|
243
|
76
|
362
|
161
|
|||||||||||||
Interest
expense
|
(579
|
)
|
(390
|
) |
|
(1,182
|
)
|
(685
|
)
|
||||||||
Unrealized
gain on derivative instruments
|
204
|
204
|
408
|
410
|
|||||||||||||
Miscellaneous,
net
|
14
|
132
|
665
|
665
|
|||||||||||||
(118
|
)
|
22
|
253
|
551
|
|||||||||||||
Earnings
from continuing operations before provision for income
taxes
|
56,663
|
40,359
|
39,729
|
22,862
|
|||||||||||||
Provision
for income taxes
|
(23,310
|
)
|
(17,681
|
) |
|
(16,649
|
)
|
(10,042
|
)
|
||||||||
Net
earnings from continuing operations
|
33,353
|
22,678
|
23,080
|
12,820
|
|||||||||||||
Discontinued
operations, net of income taxes:
|
|||||||||||||||||
Earnings
(loss) from operations
|
-
|
1,508
|
-
|
(2,531
|
)
|
||||||||||||
Net
earnings
|
33,353
|
24,186
|
23,080
|
10,289
|
|||||||||||||
Other
comprehensive (loss) income, net of income taxes:
|
|||||||||||||||||
Change
in fair value of cash flow hedges
|
-
|
(674
|
) |
|
-
|
395
|
|||||||||||
Comprehensive
earnings
|
$
|
33,353
|
$
|
23,512
|
$
|
23,080
|
$
|
10,684
|
|||||||||
Net
earnings (loss) per common share data:
|
|||||||||||||||||
Basic
|
|||||||||||||||||
Net
earnings from continuing operations
|
$
|
2.46
|
$
|
1.70
|
$
|
1.70
|
$
|
0.96
|
|||||||||
Discontinued
operations
|
-
|
0.11
|
-
|
(0.19
|
)
|
||||||||||||
Net
earnings
|
$
|
2.46
|
$
|
1.81
|
$
|
1.70
|
$
|
0.77
|
|||||||||
Diluted
|
|||||||||||||||||
Net
earnings from continuing operations
|
$
|
2.45
|
$
|
1.69
|
$
|
1.69
|
$
|
0.95
|
|||||||||
Discontinued
operations
|
-
|
0.11
|
-
|
(0.19
|
)
|
||||||||||||
Net
earnings
|
$
|
2.45
|
$
|
1.80
|
$
|
1.69
|
$
|
0.76
|
|||||||||
Weighted
average shares outstanding:
|
|||||||||||||||||
Basic
|
13,124
|
12,884
|
13,099
|
12,882
|
|||||||||||||
Diluted
|
13,623
|
13,457
|
13,624
|
13,506
|
2006
|
2005
|
||||||||
Cash
flows from operating activities:
|
|||||||||
Net
earnings
|
$
|
23,080
|
$
|
10,289
|
|||||
Adjustments
to reconcile net earnings to net cash provided by operating
activities:
|
|||||||||
Depreciation
and amortization
|
10,573
|
13,563
|
|||||||
Unrealized
gain on derivative instruments
|
(408
|
)
|
(410
|
)
|
|||||
Other
|
880
|
480
|
|||||||
Increase
(decrease) in cash resulting from changes in operating assets and
liabilities:
|
|||||||||
Restricted
cash
|
(5,736
|
)
|
(17,125
|
)
|
|||||
Accounts
receivable
|
(10,767
|
)
|
(14,436
|
)
|
|||||
Other
current assets
|
(6,489
|
)
|
(4,254
|
)
|
|||||
Accounts
payable
|
13,756
|
25,883
|
|||||||
Purses
payable
|
12,763
|
6,145
|
|||||||
Accrued
expenses and other liabilities
|
4,556
|
6,090
|
|||||||
Income
taxes payable
|
9,814
|
4,763
|
|||||||
Deferred
revenue
|
(1,776
|
)
|
3,636
|
||||||
Other
assets and liabilities
|
1,397
|
2,054
|
|||||||
Net
cash provided by operating activities
|
51,643
|
36,678
|
|||||||
Cash
flows from investing activities:
|
|||||||||
Additions
to plant and equipment
|
(14,180
|
)
|
(32,913
|
)
|
|||||
Proceeds
on sale of fixed assets
|
7
|
2
|
|||||||
Net
cash used in investing activities
|
(14,173
|
)
|
(32,911
|
)
|
|||||
Cash
flows from financing activities:
|
|||||||||
Borrowings
on bank line of credit
|
159,885
|
217,423
|
|||||||
Repayments
of bank line of credit
|
(171,772
|
)
|
(222,942
|
)
|
|||||
Change
in book overdraft
|
(4,161
|
)
|
1,285
|
||||||
Payment
of dividends
|
(6,520
|
)
|
(6,430
|
)
|
|||||
Windfall
tax benefit from share-based compensation
|
573
|
-
|
|||||||
Common
stock issued
|
2,023
|
670
|
|||||||
Net
cash used in financing activities
|
(19,972
|
)
|
(9,994
|
)
|
|||||
Net
increase (decrease) in cash and cash equivalents
|
17,498
|
(6,227
|
)
|
||||||
Cash
and cash equivalents, beginning of period
|
22,488
|
27,694
|
|||||||
Cash
and cash equivalents, end of period
|
39,986
|
21,467
|
|||||||
Cash
and cash equivalents included in assets held for sale
|
-
|
(11,587
|
)
|
||||||
Cash
and cash equivalents in continuing operations
|
$
|
39,986
|
$
|
9,880
|
|||||
Cash
paid during the period for:
|
|||||||||
Interest
|
$
|
519
|
$ |
6,909
|
|||||
Income
taxes
|
$ |
6,019
|
$ |
5,511
|
|||||
Schedule
of non-cash activities:
|
|||||||||
Plant
and equipment additions included in accounts payable/accrued
expenses
|
1,453
|
4,004
|
|||||||
Issuance
of common stock in connection with restricted stock plan
|
216
|
30
|
|||||||
1.
|
Basis
of Presentation
|
2.
|
Discontinued
Operations
|
Three
Months Ended
|
Six
Months
Ended
|
||||||||
June
30, 2005
|
June
30, 2005
|
||||||||
Net
revenues
|
$
|
49,369
|
$
|
53,804
|
|||||
Operating
expenses
|
38,553
|
47,016
|
|||||||
Gross
profit
|
10,816
|
6,788
|
|||||||
Selling,
general and administrative expenses
|
2,134
|
3,355
|
|||||||
Operating
income
|
8,682
|
3,433
|
|||||||
Other
income (expense):
|
|||||||||
Interest
income
|
13
|
14
|
|||||||
Interest
expense
|
(3,281
|
)
|
(5,633
|
)
|
|||||
Miscellaneous,
net
|
2
|
2
|
|||||||
Other
income (expense)
|
(3,266
|
)
|
(5,617
|
)
|
|||||
Income
(loss) before provision for income taxes
|
5,416
|
(2,184
|
)
|
||||||
Provision
for income taxes
|
(3,908
|
)
|
(347
|
)
|
|||||
Net
earnings (loss)
|
$
|
1,508
|
$
|
(2,531
|
)
|
3.
|
Natural
Disasters
|
|
Three
Months ended June 30, 2006
|
||||||||||||
|
Casualty
Losses
|
|
|
Insurance
Recoveries
|
|
|
Insurance
Recoveries,
Net
of Losses
|
||||||
Louisiana
Operations
|
$
|
(5,543
|
)
|
$
|
14,830
|
$
|
9,287
|
||||||
Calder
Race Course
|
(1,162
|
)
|
1,813
|
651
|
|||||||||
Ellis
Park Race Course
|
(2,678
|
)
|
2,354
|
(324
|
)
|
||||||||
Total
|
$
|
(9,383
|
)
|
$
|
18,997
|
$
|
9,614
|
||||||
|
Six
Months ended June 30, 2006
|
||||||||||||
|
Casualty
Losses
|
|
|
Insurance
Recoveries
|
|
|
Insurance
Recoveries,
Net
of Losses
|
||||||
Louisiana
Operations
|
$
|
(5,543
|
)
|
$
|
15,827
|
$
|
10,284
|
||||||
Calder
Race Course
|
(1,162
|
)
|
1,813
|
651
|
|||||||||
Ellis
Park Race Course
|
(3,280
|
)
|
3,225
|
(55
|
)
|
||||||||
Total
|
$
|
(9,985
|
)
|
$
|
20,865
|
$
|
10,880
|
4.
|
Earnings
Per Share
|
Three
Months Ended
June
30,
|
Six
Months Ended
June
30,
|
||||||||||||||||
2006
|
2005
|
2006
|
2005
|
||||||||||||||
Numerator
for basic net earnings from continuing operations per common
share:
|
|||||||||||||||||
Net
earnings from continuing operations
|
$
|
33,353
|
$
|
22,678
|
$
|
23,080
|
$
|
12,820
|
|||||||||
Net
earnings from continuing operations allocated to participating
securities
|
(1,112
|
)
|
(770
|
)
|
(770
|
)
|
(435
|
)
|
|||||||||
Numerator
for basic net earnings from continuing operations per common
share
|
$
|
32,241
|
$
|
21,908
|
$
|
22,310
|
$
|
12,385
|
|||||||||
Numerator
for basic net earnings per common share:
|
|||||||||||||||||
Net
earnings
|
$
|
33,353
|
$
|
24,186
|
$
|
23,080
|
$
|
10,289
|
|||||||||
Net
earnings allocated to participating securities
|
(1,112
|
)
|
(821
|
)
|
(770
|
)
|
(349
|
)
|
|||||||||
Numerator
for basic net earnings per common share
|
$
|
32,241
|
$
|
23,365
|
$
|
22,310
|
$
|
9,940
|
|||||||||
Numerator
for diluted net earnings per common share:
|
|||||||||||||||||
Net
earnings from continuing operations
|
$
|
33,353
|
$
|
22,678
|
$
|
23,080
|
$
|
12,820
|
|||||||||
Discontinued
operations, net of income taxes
|
-
|
1,508
|
-
|
(2,531
|
)
|
||||||||||||
Net
earnings
|
$
|
33,353
|
$
|
24,186
|
$
|
23,080
|
$
|
10,289
|
|||||||||
Denominator
for net earnings per common share:
|
|||||||||||||||||
Basic
|
13,124
|
12,884
|
13,099
|
12,882
|
|||||||||||||
Plus
dilutive effect of stock options
|
46
|
120
|
72
|
171
|
|||||||||||||
Plus
dilutive effect of convertible note
|
453
|
453
|
453
|
453
|
|||||||||||||
Diluted
|
13,623
|
13,457
|
13,624
|
13,506
|
|||||||||||||
Earnings
per common share:
|
|||||||||||||||||
Basic
|
|||||||||||||||||
Net
earnings from continuing operations
|
$
|
2.46
|
$
|
1.70
|
$
|
1.70
|
$
|
0.96
|
|||||||||
Discontinued
operations
|
-
|
0.11
|
-
|
(0.19
|
)
|
||||||||||||
Net
earnings
|
$
|
2.46
|
$
|
1.81
|
$
|
1.70
|
$
|
0.77
|
|||||||||
Diluted
|
|||||||||||||||||
Net
earnings from continuing operations
|
$
|
2.45
|
$
|
1.69
|
$
|
1.69
|
$
|
0.95
|
|||||||||
Discontinued
operations
|
-
|
0.11
|
-
|
(0.19
|
)
|
||||||||||||
Net
earnings
|
$
|
2.45
|
$
|
1.80
|
$
|
1.69
|
$
|
0.76
|
5.
|
Share-Based
Compensation
|
(in
thousands, except per share data)
|
Three
Months Ended
June
30, 2005
|
Six
Months
Ended
June
30, 2005
|
|||||||
Net
earnings from continuing operations, as reported
|
$
|
22,678
|
$
|
12,820
|
|||||
Add:
Stock based compensation expense included in reported net earnings
from
continuing operations
|
56
|
111
|
|||||||
Deduct:
Pro forma stock-based compensation expense, net of tax
benefit
|
(313
|
)
|
(625
|
)
|
|||||
Pro
forma net earnings from continuing operations
|
$
|
22,421
|
$
|
12,306
|
|||||
Net
earnings from continuing operations per common share:
|
|||||||||
As
reported
|
|||||||||
Basic
|
$
|
1.70
|
$
|
0.96
|
|||||
Diluted
|
$
|
1.69
|
$
|
0.95
|
|||||
Pro
forma
|
|||||||||
Basic
|
$
|
1.68
|
$
|
0.92
|
|||||
Diluted
|
$
|
1.67
|
$
|
0.91
|
Number
of
Shares
Under
Option
|
Weighted
Average
Exercise
Price
|
|||||||
Balance,
December 31, 2005
|
525
|
$28.30
|
||||||
Granted
|
-
|
-
|
||||||
Exercised
|
(59)
|
$19.01
|
||||||
Cancelled/Forfeited
|
(10)
|
$34.64
|
||||||
|
||||||||
Balance,
March 31, 2006
|
456
|
|
$29.37
|
|||||
Granted
|
-
|
-
|
||||||
Exercised
|
(36)
|
$24.75
|
||||||
Cancelled/Forfeited
|
(1)
|
$38.92
|
||||||
Balance,
June 30, 2006
|
419
|
$29.72
|
Shares
Under
Option
|
Weighted
Average
Remaining
Contractual
Life
|
Weighted
Average
Exercise
Price
|
Aggregate
Intrinsic
Value
per
Share (1)
|
Aggregate
Intrinsic
Value
(1)
|
|||||
Options
outstanding, exercisable and vested at June 30, 2006
|
419
|
|
4.5
|
|
$29.72
|
|
$7.73
|
|
$3,239
|
Number
of
Shares
|
Weighted
Average
Grant
Date
Fair Value
|
|||||||
Balance,
December 31, 2005
|
88
|
$39.47
|
||||||
Granted
|
-
|
-
|
||||||
Vested
|
-
|
-
|
||||||
Cancelled/Forfeited
|
-
|
-
|
||||||
Balance,
March 31, 2006
|
88
|
$39.47
|
||||||
Granted
|
5
|
$43.20
|
||||||
Vested
|
-
|
-
|
||||||
Cancelled/Forfeited
|
(1
|
)
|
$44.02
|
|||||
Balance,
June 30, 2006
|
92
|
$39.61
|
6.
|
Segment
Information
|
Three
Months Ended
June
30,
|
Six
Months Ended
June
30,
|
||||||||||||||||
2006
|
2005
|
2006
|
2005
|
||||||||||||||
Net
revenues from external customers:
|
|||||||||||||||||
Kentucky
Operations
|
$
|
69,658
|
$
|
65,976
|
$
|
73,651
|
$
|
70,353
|
|||||||||
Arlington
Park
|
23,204
|
22,472
|
35,631
|
33,917
|
|||||||||||||
Calder
Race Course
|
23,209
|
22,812
|
25,146
|
24,430
|
|||||||||||||
Hoosier
Park
|
11,086
|
11,527
|
19,339
|
20,438
|
|||||||||||||
Louisiana
Operations
|
18,679
|
14,825
|
33,913
|
31,457
|
|||||||||||||
CDSN
|
28,904
|
25,523
|
31,468
|
34,289
|
|||||||||||||
Total
racing operations
|
174,740
|
163,135
|
219,148
|
214,884
|
|||||||||||||
Other
investments
|
288
|
206
|
743
|
206
|
|||||||||||||
Corporate
|
(3
|
)
|
287
|
162
|
420
|
||||||||||||
Net
revenues from continuing operations
|
175,025
|
163,628
|
220,053
|
215,510
|
|||||||||||||
Discontinued
operations
|
-
|
48,948
|
-
|
53,383
|
|||||||||||||
$
|
175,025
|
$
|
212,576
|
$
|
220,053
|
$
|
268,893
|
||||||||||
Intercompany
net revenues:
|
|||||||||||||||||
Kentucky
Operations
|
$
|
17,160
|
$
|
14,734
|
$
|
17,160
|
$
|
14,752
|
|||||||||
Arlington
Park
|
3,011
|
2,623
|
3,011
|
2,623
|
|||||||||||||
Calder
Race Course
|
2,776
|
2,699
|
3,031
|
2,991
|
|||||||||||||
Hoosier
Park
|
100
|
76
|
100
|
76
|
|||||||||||||
Louisiana
Operations
|
-
|
-
|
1,407
|
6,335
|
|||||||||||||
Total
racing operations
|
23,047
|
20,132
|
24,709
|
26,777
|
|||||||||||||
Other
investments
|
738
|
680
|
838
|
817
|
|||||||||||||
Eliminations
|
(23,785
|
)
|
(21,233
|
)
|
(25,547
|
)
|
(28,015
|
)
|
|||||||||
|
- |
(421
|
)
|
-
|
(421
|
)
|
|||||||||||
Discontinued
operations
|
-
|
421
|
-
|
421
|
|||||||||||||
|
$
|
- |
$
|
-
|
$
|
-
|
$
|
-
|
|||||||||
Segment
EBITDA and net earnings:
|
|||||||||||||||||
Kentucky
Operations
|
$
|
37,732
|
$
|
36,887
|
$
|
30,923
|
$
|
30,251
|
|||||||||
Arlington
Park
|
756
|
1,604
|
(1,196
|
)
|
(47
|
)
|
|||||||||||
Calder
Race Course
|
2,856
|
2,534
|
(549
|
)
|
(3,320
|
)
|
|||||||||||
Hoosier
Park
|
147
|
410
|
274
|
824
|
|||||||||||||
Louisiana
Operations
|
14,222
|
772
|
14,361
|
(406
|
)
|
||||||||||||
CDSN
|
7,005
|
6,184
|
7,564
|
8,317
|
|||||||||||||
Total
racing operations
|
62,718
|
48,391
|
51,377
|
35,619
|
|||||||||||||
Other
investments
|
397
|
372
|
996
|
550
|
|||||||||||||
Corporate
|
(841
|
)
|
(2,116
|
)
|
(1,251
|
)
|
(2,396
|
)
|
|||||||||
Total
|
62,274
|
46,647
|
51,122
|
33,773
|
|||||||||||||
Depreciation
and amortization
|
(5,275
|
)
|
(5,974
|
)
|
(10,573
|
)
|
(10,387
|
)
|
|||||||||
Interest
income (expense), net
|
(336
|
)
|
(314
|
)
|
(820
|
)
|
(524
|
)
|
|||||||||
Provision
for income taxes
|
(23,310
|
)
|
(17,681
|
)
|
(16,649
|
)
|
(10,042
|
)
|
|||||||||
Net
earnings from continuing operations
|
33,353
|
22,678
|
23,080
|
12,820
|
|||||||||||||
Discontinued
operations, net of income taxes
|
-
|
1,508
|
-
|
(2,531
|
)
|
||||||||||||
Net
earnings
|
$
|
33,353
|
$
|
24,186
|
$
|
23,080
|
$
|
10,289
|
June
30, 2006
|
December
31,2005
|
|||||||
Total
assets:
|
||||||||
Kentucky
Operations
|
$
|
456,837
|
$
|
440,953
|
||||
Arlington
Park
|
88,829
|
84,796
|
||||||
Calder
Race Course
|
95,197
|
92,552
|
||||||
Hoosier
Park
|
36,274
|
33,318
|
||||||
Louisiana
Operations
|
87,834
|
74,157
|
||||||
CDSN
|
11,018
|
11,018
|
||||||
Other
investments
|
154,312
|
143,003
|
||||||
930,301
|
879,797
|
|||||||
Eliminations
|
(385,973
|
)
|
(364,601
|
)
|
||||
$
|
544,328
|
$
|
515,196
|
Six
Months Ended June 30,
|
||||||||
2006
|
2005
|
|||||||
Capital
expenditures, net:
|
||||||||
Kentucky
Operations
|
$
|
4,814
|
$
|
22,489
|
||||
Hollywood
Park
|
-
|
1,135
|
||||||
Calder
Race Course
|
5,857
|
1,474
|
||||||
Arlington
Park
|
1,305
|
4,540
|
||||||
Hoosier
Park
|
261
|
124
|
||||||
Louisiana
Operations
|
1,705
|
3,045
|
||||||
Other
Investments
|
238
|
106
|
||||||
$
|
14,180
|
$
|
32,913
|
7.
|
Recently
Issued Accounting
Pronouncements
|
8.
|
Subsequent
Event
|
(In thousands, except per share data and live race days) |
Three
Months Ended June 30,
|
Change
|
||||||||||||||
2006
|
2005
|
Amount
|
%
|
|||||||||||||
Total
pari-mutuel handle
|
$
|
1,269,571
|
$
|
1,182,752
|
$
|
86,819
|
7
|
%
|
||||||||
Number
of live race days
|
192
|
187
|
5
|
3
|
%
|
|||||||||||
Net
pari-mutuel revenues
|
$
|
105,307
|
$
|
100,295
|
$
|
5,012
|
5
|
%
|
||||||||
Other
operating revenues
|
69,718
|
62,912
|
6,806
|
11
|
%
|
|||||||||||
Total
net revenues
|
$
|
175,025
|
$
|
163,207
|
$
|
11,818
|
7
|
%
|
||||||||
Gross
profit
|
$
|
59,088
|
$
|
52,608
|
$
|
6,480
|
12
|
%
|
||||||||
Gross
margin percentage
|
34
|
%
|
32
|
%
|
||||||||||||
Operating
income
|
$
|
56,781
|
$
|
40,337
|
$
|
16,444
|
41
|
%
|
||||||||
Net
earnings from continuing operations
|
$
|
33,353
|
$
|
22,678
|
$
|
10,675
|
47
|
%
|
||||||||
Diluted
net earnings from continuing operations per common share
|
$
|
2.45
|
$
|
1.69
|
·
|
During
the three months ended June 30, 2006, we recorded insurance recoveries,
net of losses of $9.6 million related to damages sustained from natural
disasters that occurred during 2005 by the Louisiana Operations,
Calder
Race Course and Ellis Park.
|
·
|
Our
effective tax rate decreased from 44% to 41% resulting primarily
from the
non-deductibility of legislative initiative costs recognized during
2005.
|
(In
thousands)
|
Three
Months Ended June 30,
|
Change
|
|||||||||||||
|
|
2006
|
|
|
2005
|
$
|
%
|
||||||||
Purse
expenses
|
$
|
48,830
|
$
|
45,216
|
$
|
3,614
|
8
|
%
|
|||||||
Depreciation/amortization
|
5,275
|
5,974
|
(699
|
)
|
(12
|
)%
|
|||||||||
Other
operating expenses
|
61,832
|
59,409
|
2,423
|
4
|
%
|
||||||||||
SG&A
expenses
|
11,921
|
12,271
|
(350
|
)
|
(3
|
)%
|
|||||||||
Insurance
recoveries, net of losses
|
(9,614
|
)
|
-
|
(9,614
|
)
|
(100
|
)%
|
||||||||
Total
expenses from continuing operations
|
$
|
118,244
|
$
|
122,870
|
$
|
(4,626
|
)
|
(4
|
)%
|
||||||
Percent
of revenue
|
68
|
%
|
75
|
%
|
(In thousands) |
Three
Months Ended June 30,
|
Change
|
||||||||||||||
|
|
|
2006
|
|
|
|
2005
|
|
|
|
$
|
%
|
||||
Interest
income
|
$
|
243
|
$
|
76
|
$
|
167
|
220
|
%
|
||||||||
Interest
expense
|
(579
|
)
|
(390
|
)
|
(189
|
)
|
(48
|
)%
|
||||||||
Unrealized
gain on derivative instruments
|
204
|
204
|
-
|
-
|
||||||||||||
Miscellaneous,
net
|
14
|
132
|
(118
|
)
|
(89
|
)%
|
||||||||||
Other
income (expense)
|
$
|
(118
|
)
|
$
|
22
|
$
|
(140
|
)
|
(636
|
)%
|
||||||
Provision
for income taxes
|
$
|
(23,310
|
)
|
$
|
(17,681
|
)
|
$
|
(5,629
|
)
|
(32
|
)%
|
|||||
Effective
tax rate
|
41
|
%
|
44
|
%
|
·
|
Our
effective tax rate decreased from 44% to 41% resulting primarily
from the
non-deductibility of legislative initiative costs recognized during
2005.
|
(In thousands) |
Three
Months Ended June 30,
|
Change
|
|||||||||||||
|
|
2006
|
|
|
2005
|
|
|
$
|
|
%
|
|||||
Kentucky
Operations
|
$
|
86,818
|
$
|
80,710
|
$
|
6,108
|
8
|
%
|
|||||||
Arlington
Park
|
26,215
|
25,095
|
1,120
|
4
|
%
|
||||||||||
Calder
Race Course
|
25,985
|
25,511
|
474
|
2
|
%
|
||||||||||
Hoosier
Park
|
11,186
|
11,603
|
(417
|
)
|
(4
|
)%
|
|||||||||
Louisiana
Operations
|
18,679
|
14,825
|
3,854
|
26
|
%
|
||||||||||
CDSN
|
28,904
|
25,523
|
3,381
|
13
|
%
|
||||||||||
Total
Racing Operations
|
197,787
|
183,267
|
14,520
|
8
|
%
|
||||||||||
Other
Investments
|
1,026
|
886
|
140
|
16
|
%
|
||||||||||
Corporate
|
(3
|
)
|
287
|
(290
|
)
|
(101
|
)%
|
||||||||
Eliminations
|
(23,785
|
)
|
(21,233
|
)
|
(2,552
|
)
|
(12
|
)%
|
|||||||
Net
revenues from continuing operations
|
$
|
175,025
|
$
|
163,207
|
$
|
11,818
|
7
|
%
|
·
|
Net
revenues from the Kentucky Operations and CDSN increased primarily
as a
result of a successful Kentucky Derby week, including continued benefits
realized from the newly renovated Churchill Downs racetrack facility
as
well as higher non-wagering revenues associated with the Kentucky
Derby.
|
·
|
Net
revenues from the Louisiana Operations also increased significantly
primarily as a result of increased wagering at our video poker operations
as well as an increase in import simulasting pari-mutuel revenues.
Since
the reopening of our OTBs in Louisiana after Hurricane Katrina, we
experienced a significant rise in business levels that we believe
is
attributable to the limited entertainment options available in the
Gulf
Coast region.
|
·
|
Net
revenues from Arlington Park increased primarily as a result of five
more
live racing days during the three months ended June 30, 2006 compared
to
the same period of 2005. The live racing meet of Arlington Park began
on
the weekend of the Kentucky Derby during 2006.
|
(In
thousands)
|
Three
Months Ended June 30,
|
Change
|
|||||||||||||
|
|
|
2006
|
|
|
2005
|
|
|
$
|
% | |||||
Kentucky
Operations
|
$
|
51,863
|
$
|
47,013
|
$
|
4,850
|
10
|
%
|
|||||||
Arlington
Park
|
26,166
|
24,395
|
1,771
|
7
|
%
|
||||||||||
Calder
Race Course
|
23,926
|
23,596
|
330
|
1
|
%
|
||||||||||
Hoosier
Park
|
11,425
|
11,525
|
(100
|
)
|
(1
|
)%
|
|||||||||
Louisiana
Operations
|
5,088
|
14,739
|
(9,651
|
)
|
(65
|
)%
|
|||||||||
CDSN
|
21,898
|
19,339
|
2,559
|
13
|
%
|
||||||||||
Total
Racing Operations
|
140,366
|
140,607
|
(241
|
)
|
-
|
||||||||||
Other
Investments
|
622
|
784
|
(162
|
)
|
(21
|
)%
|
|||||||||
Corporate
|
4,985
|
5,461
|
(476
|
)
|
(9
|
)%
|
|||||||||
Eliminations
|
(27,729
|
)
|
(23,982
|
)
|
(3,747
|
)
|
(16
|
)%
|
|||||||
Total
expenses from continuing operations
|
$
|
118,244
|
$
|
122,870
|
$
|
(4,626
|
)
|
(4
|
)%
|
·
|
Expenses
from the Louisiana Operations decreased primarily as a result of
the
recognition of insurance recoveries, net of losses of $9.3 million
related
to damages from Hurricane Katrina.
|
·
|
Expenses
from the Kentucky Operations and CDSN increased primarily as a result
of
increased expenses related to the Kentucky Derby, including higher
expenses associated with fulfilling sponsorships related to the Kentucky
Derby.
|
·
|
Expenses
from Arlington Park increased primarily as a result of five more
live
racing days during the three months ended June 30, 2006 compared
to the
same period of 2005. The live racing meet of Arlington Park began
on the
weekend of the Kentucky Derby during
2006.
|
(In
thousands, except
per share data and live race days)
|
Six
Months Ended June 30,
|
Change
|
|||||||||||||
|
|
2006
|
|
|
2005
|
|
|
Amount
|
|
%
|
|||||
Total
pari-mutuel handle
|
$
|
1,558,730
|
$
|
1,676,639
|
$
|
(117,909
|
)
|
(7
|
)%
|
||||||
Number
of live race days
|
206
|
250
|
(44
|
)
|
(18
|
)%
|
|||||||||
Net
pari-mutuel revenues
|
$
|
136,803
|
$
|
139,983
|
$
|
(3,180
|
)
|
(2
|
)%
|
||||||
Other
operating revenues
|
83,250
|
75,106
|
8,144
|
11
|
%
|
||||||||||
Total
net revenues
|
$
|
220,053
|
$
|
215,089
|
$
|
4,964
|
2
|
%
|
|||||||
Gross
profit
|
$
|
52,245
|
$
|
47,337
|
$
|
4,908
|
10
|
%
|
|||||||
Gross
margin percentage
|
24
|
%
|
22
|
%
|
|||||||||||
Operating
income
|
$
|
39,476
|
$
|
22,311
|
$
|
17,165
|
77
|
%
|
|||||||
Net
earnings from continuing operations
|
$
|
23,080
|
$
|
12,820
|
$
|
10,260
|
80
|
%
|
|||||||
Diluted
net earnings from continuing operations per common share
|
$
|
1.69
|
$
|
0.95
|
·
|
During
the six months ended June 30, 2006, we recorded a net gain of $10.9
million related to insurance recoveries, net of losses associated
with
damages sustained from natural disasters that occurred during 2005
by the
Louisiana Operations, Calder Race Course and Ellis
Park.
|
·
|
We
incurred $2.8 million of expenses related to alternative gaming
initiatives in Florida during the six months ended June 30,
2005.
|
·
|
Our
effective tax rate decreased from 44% to 42% resulting primarily
from the
non-deductibility of legislative initiative costs recognized during
2005.
|
(In
thousands)
|
Six
Months Ended June 30,
|
Change
|
|||||||||||||
|
|
|
2006
|
|
|
2005
|
|
|
$
|
%
|
|||||
Purse
expenses
|
$
|
63,069
|
$
|
62,805
|
$
|
264
|
-
|
||||||||
Depreciation/amortization
|
10,573
|
10,387
|
186
|
2
|
%
|
||||||||||
Other
operating expenses
|
94,166
|
94,560
|
(394
|
)
|
-
|
||||||||||
SG&A
expenses
|
23,649
|
25,026
|
(1,377
|
)
|
(6
|
)%
|
|||||||||
Insurance
recoveries, net of losses
|
(10,880
|
)
|
-
|
(10,880
|
)
|
(100
|
)%
|
||||||||
Total
expenses from continuing operations
|
$
|
180,577
|
$
|
192,778
|
$
|
(12,201
|
)
|
(6
|
)%
|
||||||
Percent
of revenue
|
82
|
%
|
90
|
%
|
(In thousands) |
Six
Months Ended June 30,
|
Change
|
|||||||||||||
|
2006
|
2005
|
$
|
%
|
|||||||||||
Interest
income
|
$
|
362
|
$
|
161
|
$
|
201
|
125
|
%
|
|||||||
Interest
expense
|
(1,182
|
)
|
(685
|
)
|
(497
|
)
|
(73
|
)%
|
|||||||
Unrealized
gain on derivative instruments
|
408
|
410
|
(2
|
)
|
-
|
||||||||||
Miscellaneous,
net
|
665
|
665
|
-
|
-
|
|||||||||||
Other
income (expense)
|
$
|
253
|
$
|
551
|
$
|
(298
|
)
|
(54
|
)%
|
||||||
Provision
for income taxes
|
$
|
(16,649
|
)
|
$
|
(10,042
|
)
|
$
|
(6,607
|
)
|
(66
|
)%
|
||||
Effective
tax rate
|
42
|
%
|
44
|
%
|
·
|
Our
effective tax rate decreased from 44% to 42% resulting primarily
from the
non-deductibility of legislative initiative costs recognized during
2005.
|
(In
thousands)
|
Six
Months Ended June 30,
|
Change
|
||||||||||||||
|
|
|
2006
|
|
|
|
2005
|
|
|
|
$
|
%
|
||||
Kentucky
Operations
|
$
|
90,811
|
$
|
85,105
|
$
|
5,706
|
7
|
%
|
||||||||
Arlington
Park
|
38,642
|
36,540
|
2,102
|
6
|
%
|
|||||||||||
Calder
Race Course
|
28,177
|
27,421
|
756
|
3
|
%
|
|||||||||||
Hoosier
Park
|
19,439
|
20,514
|
(1,075
|
)
|
(5
|
)%
|
||||||||||
Louisiana
Operations
|
35,320
|
37,792
|
(2,472
|
)
|
(7
|
)%
|
||||||||||
CDSN
|
31,468
|
34,289
|
(2,821
|
)
|
(8
|
)%
|
||||||||||
Total
Racing Operations
|
243,857
|
241,661
|
2,196
|
1
|
%
|
|||||||||||
Other
Investments
|
1,581
|
1,023
|
558
|
55
|
%
|
|||||||||||
Corporate
|
162
|
420
|
(258
|
)
|
(61
|
)%
|
||||||||||
Eliminations
|
(25,547
|
)
|
(28,015
|
)
|
2,468
|
9
|
%
|
|||||||||
Net
revenues from continuing operations
|
$
|
220,053
|
$
|
215,089
|
$
|
4,964
|
2
|
%
|
·
|
Net
revenues from Kentucky Operations increased primarily as a result
of a
successful Kentucky Derby, including continued benefits realized
from the
newly renovated Churchill Downs racetrack facility as well as higher
non-wagering revenues associated with the Kentucky
Derby.
|
·
|
Net
revenues from Arlington Park increased primarily as a result of five
more
live racing days during the six months ended June 30, 2006 compared
to the
same period of 2005 as well as the fact that Arlington Park was designated
host track in Illinois for eight more days during 2006 compared to
2005.
|
·
|
Net
revenues from the Louisiana Operations and CDSN decreased primarily
as a
result of 49 fewer live racing days at Fair Grounds due to the business
interruption caused by Hurricane Katrina. A shortened race meet was
conducted at Harrah’s Louisiana Downs from November 19, 2005 through
January 22, 2006 resulting in 12 racing days during the six months
ended
June 30, 2006 as compared to 61 days during the six months ended
June 30,
2005.
|
(In thousands) |
Six
Months Ended June 30,
|
Change
|
||||||||||||||
2006
|
2005
|
$
|
%
|
|||||||||||||
Kentucky
Operations
|
$
|
65,414
|
$
|
59,724
|
$
|
5,690
|
10
|
%
|
||||||||
Arlington
Park
|
41,351
|
38,581
|
2,770
|
7
|
%
|
|||||||||||
Calder
Race Course
|
30,222
|
32,013
|
(1,791
|
)
|
(6
|
)%
|
||||||||||
Hoosier
Park
|
19,932
|
20,440
|
(508
|
)
|
(2
|
)%
|
||||||||||
Louisiana
Operations
|
22,337
|
39,616
|
(17,279
|
)
|
(44
|
)%
|
||||||||||
CDSN
|
23,904
|
25,972
|
(2,068
|
)
|
(8
|
)%
|
||||||||||
Total
Racing Operations
|
203,160
|
216,346
|
(13,186
|
)
|
(6
|
)%
|
||||||||||
Other
Investments
|
1,140
|
1,211
|
(71
|
)
|
(6
|
)%
|
||||||||||
Corporate
|
10,415
|
8,426
|
1,989
|
24
|
%
|
|||||||||||
Eliminations
|
(34,138
|
)
|
(33,205
|
)
|
(933
|
)
|
(3
|
)%
|
||||||||
Total
expenses from continuing operations
|
$
|
180,577
|
$
|
192,778
|
$
|
(12,201
|
)
|
(6
|
)%
|
·
|
During
the six months ended June 30, 2006, we recorded insurance recoveries,
net
of losses of $10.3 million related to damages sustained from Hurricane
Katrina that occurred during 2005 by the Louisiana Operations. Expenses
from the Louisiana Operations and CDSN also decreased as a result
of 49
fewer live racing days at Fair Grounds due to the business interruption
caused by Hurricane Katrina. A shortened race meet was conducted
at
Harrah’s Louisiana Downs from November 19, 2005 through January 22, 2006
resulting in 12 racing days during the six months ended June 30,
2006 as
compared to 61 days during the six months ended June 30, 2005. Increased
purse expenses and pari-mutuel related expenses as a result of increased
business levels partially offset these declines.
|
·
|
We
incurred $2.8 million of expenses related to the alternative gaming
initiatives in Florida during the six months ended June 30, 2005.
Higher
property insurance expense partially offset this decrease, which
was
caused by the occurrence of significant natural disasters during
2005
|
·
|
Kentucky
Operations expenses increased primarily as a result of increased
expenses
related to the Kentucky Derby, including higher expenses associated
with
fulfilling sponsorships related to the Kentucky Derby. Also, depreciation
expense increased due to the recognition of a full six months of
depreciation expense related to the newly renovated Churchill Downs
racetrack facility that was completed during
2005.
|
·
|
Arlington
Park expenses increased primarily as result of five more live racing
days
during the six months ended June 30, 2006 compared to the same period
of
2005 as well as the fact that Arlington Park was appointed host track
in
Illinois for eight more days during 2006 compared to
2005.
|
·
|
Corporate
expenses increased during the six months ended June 30, 2006 compared
to
the six months ended June 30, 2005 primarily as a result of increased
costs associated with the retirement and replacement of the chief
executive officer and increased payroll
costs.
|
(In thousands) |
June
30, 2006
|
December
31, 2005
|
Change
|
||||||||||||
$
|
%
|
||||||||||||||
Total
assets
|
$
|
544,328
|
$
|
515,196
|
$
|
29,132
|
6
|
%
|
|||||||
Total
liabilities
|
$
|
201,748
|
$
|
198,965
|
$
|
2,783
|
1
|
%
|
|||||||
Total
shareholders' equity
|
$
|
342,580
|
$
|
316,231
|
$
|
26,349
|
8
|
%
|
·
|
Total
assets increased primarily as a result of increased cash balances
generated by the collection of insurance proceeds related to damages
sustained from natural disasters that occurred during
2005.
|
(In thousands) |
Six
months ended June 30,
|
Change
|
|||||||||||||
2006
|
2005
|
$
|
%
|
||||||||||||
Operating
activities
|
$
|
51,643
|
$
|
36,678
|
$
|
14,965
|
41
|
%
|
|||||||
Investing
activities
|
$
|
(14,173
|
)
|
$
|
(32,911
|
)
|
$
|
18,738
|
57
|
%
|
|||||
Financing
activities
|
$
|
(19,972
|
)
|
$
|
(9,994
|
)
|
$
|
(9,978
|
)
|
(100
|
)%
|
·
|
The
increase in operating activities is primarily the result of cash
generated
by the collection of insurance proceeds related to damages sustained
from
natural disasters that occurred during
2005.
|
·
|
Capital
expenditures decreased primarily as a result of reduced expenditures
related to the Churchill Downs racetrack facility renovation project
referred to as the “Master Plan” offset by capital improvements at Calder
Race Course, Ellis Park and Fair Grounds to repair damages sustained
by
natural disasters during 2005.
|
·
|
We
made repayments in excess of our borrowings on our revolving loan
facilities of $11.9 million during the six months ended June 30,
2006
compared to $5.5 million during the six months ended June 30, 2005
due to
the fact that funding was needed for the facility renovation at Churchill
Downs racetrack during the first quarter of
2005.
|
·
|
We
anticipate that cash flows from operations over the next twelve months
will be adequate to fund our business operations and capital
expenditures.
|
ITEM
4.
|
(a)
|
Evaluation
of Disclosure Controls and
Procedures
|
(b)
|
Changes
in Internal Control over Financial
Reporting
|
PART
II.
|
|
ITEM
1.
|
|
Not
applicable.
|
|
ITEM
1A.
|
|
ITEM
3.
|
Class
I Director
|
Votes
For
|
Votes
Withheld
|
||||
Leonard
S. Coleman, Jr.
|
11,039,397
|
442,374
|
||||
Craig
J. Duchossois
|
10,605,485
|
876,285
|
||||
G.
Watts Humphrey, Jr.
|
11,095,680
|
386,090
|
||||
Thomas
H. Meeker
|
11,128,768
|
353,002
|
ITEM
5.
|
OTHER
INFORMATION
|
ITEM
6.
|
CHURCHILL
DOWNS INCORPORATED
|
|
August
8, 2006
|
/s/ Thomas H. Meeker |
Thomas
H. Meeker
President
and Chief Executive Officer
(Principal
Executive Officer)
|
|
August
8, 2006
|
/s/ Michael E. Miller |
Michael
E. Miller
Executive
Vice President and
Chief
Financial Officer
(Principal
Financial and Accounting Officer)
|
Numbers
|
Description
|
By
Reference To
|
10(a)
|
Performance
Goals for Certain Executive Officers
|
|
10(b)
|
Amendment
to Churchill Downs Incorporated 2005 Deferred Compensation
Plan
|
|
10(c)
|
Churchill
Downs Incorporated 2004 Restricted Stock Plan, as Amended
|
|
31(i)(a)
|
Certification
of Chief Executive Officer Pursuant to Section 302 of the Sarbanes-Oxley
Act of 2002
|
|
31(i)(b)
|
Certification
of Chief Financial Officer Pursuant to Section 302 of the Sarbanes-Oxley
Act of 2002
|
|
32
|
Certification
of CEO and CFO Pursuant to 18 U.S.C. Section 1350, As Adopted Pursuant
to
Section 906 of the Sarbanes-Oxley Act of 2002 (furnished pursuant
to Rule
13a - 14(b))
|
|
1. |
I
have reviewed this Quarterly Report on Form 10-Q of Churchill Downs
Incorporated;
|
2. |
Based
on my knowledge, this report does not contain any untrue statement
of a
material fact or omit to state a material fact necessary to make
the
statements made, in light of the circumstances under which such statements
were made, not misleading with respect to the period covered by this
report;
|
3. |
Based
on my knowledge, the financial statements, and other financial information
included in this report, fairly present in all material respects
the
financial condition, results of operations and cash flows of the
registrant as of, and for, the periods presented in this
report;
|
4. |
The
registrant’s other certifying officer(s) and I are responsible for
establishing and maintaining disclosure controls and procedures (as
defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal
control over financial reporting (as defined in Exchange Act Rules
13a-15(f) and 15d-15(f)) for the registrant and
have:
|
a. |
Designed
such disclosure controls and procedures, or caused such disclosure
controls and procedures to be designed under our supervision, to
ensure
that material information relating to the registrant, including its
consolidated subsidiaries, is made known to us by others within those
entities, particularly during the period in which this report is
being
prepared;
|
b. |
Designed
such internal control over financial reporting, or caused such internal
control over financial reporting to be designed under our supervision,
to
provide reasonable assurance regarding the reliability of financial
reporting and the preparation of financial statements for external
purposes in accordance with generally accepted accounting
principles;
|
c. |
Evaluated
the effectiveness of the registrant’s disclosure controls and procedures
and presented in this report our conclusions about the effectiveness
of
the disclosure controls and procedures, as of the end of the period
covered by this report based on such evaluation;
and
|
d. |
Disclosed
in this report any change in the registrant’s internal control over
financial reporting that occurred during the registrant’s most recent
fiscal quarter (the registrant’s fourth fiscal quarter in the case of an
annual report) that has materially affected, or is reasonably likely
to
materially affect, the registrant’s internal control over financial
reporting; and
|
5. |
The
registrant’s other certifying officer(s) and I have disclosed, based on
our most recent evaluation of internal control over financial reporting,
to the registrant’s auditors and the audit committee of the registrant’s
board of directors (or persons performing the equivalent
functions):
|
a. |
All
significant deficiencies and material weaknesses in the design or
operation of internal control over financial reporting which are
reasonably likely to adversely affect the registrant’s ability to record,
process, summarize and report financial information;
and
|
b. |
Any
fraud, whether or not material, that involves management or other
employees who have a significant role in the registrant’s internal control
over financial reporting.
|
Date: August 8, 2006 | /s/ Thomas H. Meeker |
Thomas H. Meeker
President and Chief Executive
Officer
|
1. |
I
have reviewed this Quarterly Report on Form 10-Q of Churchill Downs
Incorporated;
|
2. |
Based
on my knowledge, this report does not contain any untrue statement
of a
material fact or omit to state a material fact necessary to make
the
statements made, in light of the circumstances under which such statements
were made, not misleading with respect to the period covered by this
report;
|
3. |
Based
on my knowledge, the financial statements, and other financial information
included in this report, fairly present in all material respects
the
financial condition, results of operations and cash flows of the
registrant as of, and for, the periods presented in this
report;
|
4. |
The
registrant’s other certifying officer(s) and I are responsible for
establishing and maintaining disclosure controls and procedures (as
defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal
control over financial reporting (as defined in Exchange Act Rules
13a-15(f) and 15d-15(f)) for the registrant and
have:
|
a. |
Designed
such disclosure controls and procedures, or caused such disclosure
controls and procedures to be designed under our supervision, to
ensure
that material information relating to the registrant, including its
consolidated subsidiaries, is made known to us by others within those
entities, particularly during the period in which this report is
being
prepared;
|
b. |
Designed
such internal control over financial reporting, or caused such internal
control over financial reporting to be designed under our supervision,
to
provide reasonable assurance regarding the reliability of financial
reporting and the preparation of financial statements for external
purposes in accordance with generally accepted accounting
principles;
|
c. |
Evaluated
the effectiveness of the registrant’s disclosure controls and procedures
and presented in this report our conclusions about the effectiveness
of
the disclosure controls and procedures, as of the end of the period
covered by this report based on such evaluation;
and
|
d. |
Disclosed
in this report any change in the registrant’s internal control over
financial reporting that occurred during the registrant’s most recent
fiscal quarter (the registrant’s fourth fiscal quarter in the case of an
annual report) that has materially affected, or is reasonably likely
to
materially affect, the registrant’s internal control over financial
reporting; and
|
5. |
The
registrant’s other certifying officer(s) and I have disclosed, based on
our most recent evaluation of internal control over financial reporting,
to the registrant’s auditors and the audit committee of the registrant’s
board of directors (or persons performing the equivalent
functions):
|
a. |
All
significant deficiencies and material weaknesses in the design or
operation of internal control over financial reporting which are
reasonably likely to adversely affect the registrant’s ability to record,
process, summarize and report financial information;
and
|
b. |
Any
fraud, whether or not material, that involves management or other
employees who have a significant role in the registrant’s internal control
over financial reporting.
|
Date: August 8, 2006 | /s/ Michael E. Miller ___ |
Michael E. Miller | |
Executive Vice President and Chief Financial Officer |