Kentucky (State of incorporation) | 001-33998 (Commission file number) | 61-0156015 (IRS Employer Identification No.) |
600 North Hurstbourne Parkway, Suite 400, Louisville, Kentucky 40222 (Address of principal executive offices) (Zip Code) | ||
(502) 636-4400 (Registrant's telephone number, including area code) |
[ ] | Written communications pursuant to Rule 425 under the Securities Act (18 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)) |
(d) | Exhibits |
99.1 | Press Release dated August 3, 2016 issued by Churchill Downs Incorporated | |
Exhibit No. | Description | |
Exhibit 99.1 | Press Release dated August 3, 2016 issued by Churchill Downs Incorporated |
CHURCHILL DOWNS INCORPORATED | ||
August 3, 2016 | /s/ Marcia A. Dall | |
By: Marcia A. Dall | ||
Title: Executive Vice President and Chief Financial Officer | ||
(Principal Financial and Accounting Officer) |
• | Record net revenue of $438.5 million, up 7% over the prior year |
• | Record Adjusted EBITDA of $162.9 million, 3% higher than the prior year |
• | Record net income of $69.8 million, a 27% increase over the prior year |
• | Record diluted net income per share of $4.11, 33% higher than the prior year |
• | Record breaking Kentucky Derby and Oaks week Adjusted EBITDA within the Racing segment, up $5.2 million over prior year |
CONSOLIDATED RESULTS | Second Quarter | ||||||
(in millions, except per share data): | 2016 | 2015 | |||||
Net revenue | $ | 438.5 | $ | 409.2 | |||
Adjusted EBITDA-a) | 162.9 | 158.9 | |||||
Net income | 69.8 | 55.1 | |||||
Diluted net income per share | $ | 4.11 | $ | 3.10 | |||
(a- Non-GAAP measure. See explanation of non-GAAP measures below. |
• | $6.1 million increase from Racing |
• | $3.8 million increase from Casinos |
• | $2.3 million increase from TwinSpires |
• | Partially offsetting these increases was a $7.8 million decrease from Big Fish Games |
• | $11.5 million increase in operating income |
• | $1.9 million increase in income from our equity investments related to Saratoga Casino Holdings LLC (“SCH”) and Miami Valley Gaming (“MVG”) |
• | $4.9 million reduction in our income tax provision primarily from a decrease in our effective tax rate from lower non-deductible acquisition-related charges in the current year |
• | Partially offsetting these increases was a $4.0 million increase in net interest expense associated with higher outstanding debt balances |
RACING | Second Quarter | ||||||
(in millions): | 2016 | 2015 | |||||
Net revenue | $ | 164.7 | $ | 162.2 | |||
Adjusted EBITDA | 91.3 | 85.2 |
• | A successful Kentucky Derby and Oaks week which benefited from increased ticket sales revenue associated with its new premium indoor seating and Turf Club venues, increased media revenue and record attendance |
• | Partially offset by decreases at Churchill Downs and Arlington from a shift in the racing calendar which resulted in five fewer race days |
• | $5.2 million increase from the Kentucky Derby and Oaks week |
• | $1.5 million decrease in corporate allocated expense |
• | Partially offset by a racing calendar shift that resulted in a $1.3 million decrease at Churchill Downs and Arlington from five fewer race days |
• | 7th consecutive record year for Adjusted EBITDA growth |
• | Record total Derby week attendance - up 3% over 2015’s record |
• | Record all sources Derby week handle - up 1% over 2015’s record |
CASINOS | Second Quarter | ||||||
(in millions): | 2016 | 2015 | |||||
Net revenue | $ | 84.4 | $ | 83.8 | |||
Adjusted EBITDA | 33.3 | 29.5 |
• | $1.4 million increase in SCH management fee and equity income |
• | $1.1 million increase at our Mississippi properties from operational expense improvements |
• | $1.0 million increase in MVG equity income driven by successful promotional activities driving market share growth |
• | $0.5 million increase at Calder primarily from the implementation of successful marketing and promotional campaigns |
• | Partially offset by a $0.7 million increase in corporate allocated expense |
TWINSPIRES | Second Quarter | ||||||
(in millions): | 2016 | 2015 | |||||
Net revenue | $ | 68.5 | $ | 61.0 | |||
Adjusted EBITDA | 18.4 | 16.1 |
• | $3.3 million favorable impact of increased wagering, net of content costs, from handle growth and an increase in active players |
• | $0.7 million decrease in taxes and purses due to a $1.7 million Pennsylvania tax refund partially offset by increased taxes in certain other jurisdictions |
• | Partially offsetting these increases were: |
• | $1.2 million increase in marketing and advertising expense efforts associated with the Kentucky Derby and Oaks week |
• | $0.5 million increase in corporate allocated expense |
BIG FISH GAMES | Second Quarter | ||||||
(in millions): | 2016 | 2015 | |||||
Bookings | |||||||
Social casino | $ | 46.3 | $ | 48.2 | |||
Casual and mid-core free-to-play | 57.6 | 36.5 | |||||
Premium | 24.0 | 28.0 | |||||
Total bookings -a) | 127.9 | 112.7 | |||||
Net revenue | $ | 125.2 | $ | 104.5 | |||
Adjusted EBITDA | 20.5 | 28.3 | |||||
(a- Bookings is a non-GAAP financial measure equal to the revenue recognized plus the change in deferred revenue for the periods presented. This non-GAAP measure may differ from other companies’ definition of this measure, and it should not be considered a substitute for, or superior to, any other measure provided in accordance with GAAP. |
• | Social casino bookings declined by $1.9 million compared to the second quarter of 2015 reflecting a 6% increase in average paying users and a 9% decline in average bookings per paying user |
• | Casual and mid-core free-to-play bookings’ growth of $21.1 million was driven by a 45% increase in average paying users and a 9% increase in average bookings per paying user. |
• | Premium bookings declined $4.0 million, or 14%, primarily driven by customers continuing to shift from paid PC games to free-to-play mobile games. |
• | $23.6 million increase in casual and mid-core free-to-play revenue |
• | The fair value adjustment to Big Fish Games deferred revenue assumed as part of the acquisition was $2.7 million lower than the prior year quarter |
• | Partially offsetting these increases was a $3.7 million decline in premium games revenue and a $1.9 million decrease in social casino revenue driven by a decrease in bookings |
• | $11.5 million increase in user acquisition spending |
• | $6.5 million increase in platform fees on higher bookings |
• | $2.3 million increase in developer fees |
• | $3.0 million benefit associated with business combination accounting rules that was higher in the prior year than the second quarter of 2016 |
• | $1.2 million increase in other expenses |
• | Partially offsetting these decreases were: |
• | $15.2 million of increased bookings |
• | $1.5 million decrease of amortization expense related to the timing of game launches |
• | Changes in Big Fish Games deferred revenue; |
• | 50% of EBITDA of our joint venture, MVG; |
• | 25% of EBITDA of our SCH equity investment; and |
• | Intercompany revenue and expense totals that are eliminated in the Condensed Consolidated Statements of Comprehensive Income |
• | Big Fish Games adjustments which include: |
• | Acquisition-related charges, including the change in fair value of the Big Fish Games earnout and deferred consideration liability recorded each reporting period |
• | Stock-based compensation expense; |
• | Calder exit costs; and |
• | Other charges and recoveries |
Three Months Ended June 30, | Six Months Ended June 30, | ||||||||||||||
(in millions, except per common share data) | 2016 | 2015 | 2016 | 2015 | |||||||||||
Net revenue: | |||||||||||||||
Racing | $ | 156.1 | $ | 155.4 | $ | 182.3 | $ | 179.2 | |||||||
Casinos | 84.4 | 83.8 | 170.9 | 169.8 | |||||||||||
TwinSpires | 68.2 | 60.7 | 117.6 | 106.1 | |||||||||||
Big Fish Games | 125.2 | 104.5 | 247.3 | 196.4 | |||||||||||
Other Investments | 4.4 | 4.5 | 8.4 | 8.1 | |||||||||||
Corporate | 0.2 | 0.3 | 0.4 | 0.5 | |||||||||||
Total net revenue | 438.5 | 409.2 | 726.9 | 660.1 | |||||||||||
Operating expense: | |||||||||||||||
Racing | 72.3 | 75.1 | 107.9 | 111.3 | |||||||||||
Casinos | 60.4 | 61.0 | 121.4 | 122.1 | |||||||||||
TwinSpires | 41.4 | 38.1 | 76.0 | 70.7 | |||||||||||
Big Fish Games | 105.6 | 83.4 | 215.0 | 165.6 | |||||||||||
Other Investments | 4.1 | 3.9 | 8.0 | 7.7 | |||||||||||
Corporate | 0.4 | 0.8 | 1.0 | 1.8 | |||||||||||
Selling, general and administrative expense | 24.6 | 22.1 | 47.7 | 43.6 | |||||||||||
Research and development | 9.7 | 9.9 | 20.5 | 20.1 | |||||||||||
Calder exit costs | 1.5 | 0.8 | 1.9 | 0.8 | |||||||||||
Acquisition-related charges | 1.1 | 8.2 | 3.8 | 14.6 | |||||||||||
Total operating expense | 321.1 | 303.3 | 603.2 | 558.3 | |||||||||||
Operating income | 117.4 | 105.9 | 123.7 | 101.8 | |||||||||||
Other income (expense): | |||||||||||||||
Interest income | — | — | — | 0.2 | |||||||||||
Interest expense | (11.1 | ) | (7.1 | ) | (21.7 | ) | (14.6 | ) | |||||||
Equity in income of unconsolidated investments | 4.8 | 2.9 | 8.6 | 5.9 | |||||||||||
Miscellaneous, net | 0.4 | — | (0.1 | ) | 5.6 | ||||||||||
Total other income (expense) | (5.9 | ) | (4.2 | ) | (13.2 | ) | (2.9 | ) | |||||||
Income before income tax provision | 111.5 | 101.7 | 110.5 | 98.9 | |||||||||||
Income tax provision | (41.7 | ) | (46.6 | ) | (37.9 | ) | (45.4 | ) | |||||||
Net income | $ | 69.8 | $ | 55.1 | $ | 72.6 | $ | 53.5 | |||||||
Net income per common share data: | |||||||||||||||
Basic net income | $ | 4.16 | $ | 3.12 | $ | 4.32 | $ | 3.04 | |||||||
Diluted net income | $ | 4.11 | $ | 3.10 | $ | 4.27 | $ | 3.02 | |||||||
Weighted average shares outstanding: | |||||||||||||||
Basic | 16.5 | 17.3 | 16.5 | 17.3 | |||||||||||
Diluted | 17.0 | 17.7 | 17.0 | 17.7 | |||||||||||
Other comprehensive income (loss): | |||||||||||||||
Foreign currency translation, net of tax | 0.2 | (0.1 | ) | 0.2 | (0.4 | ) | |||||||||
Other comprehensive income (loss) | 0.2 | (0.1 | ) | 0.2 | (0.4 | ) | |||||||||
Comprehensive income | $ | 70.0 | $ | 55.0 | $ | 72.8 | $ | 53.1 |
(in millions) | June 30, 2016 | December 31, 2015 | |||||
ASSETS | |||||||
Current assets: | |||||||
Cash and cash equivalents | $ | 55.1 | $ | 74.5 | |||
Restricted cash | 31.5 | 29.7 | |||||
Accounts receivable, net | 61.5 | 67.8 | |||||
Income taxes receivable | — | 1.0 | |||||
Software development, net | 10.0 | 7.1 | |||||
Other current assets | 51.5 | 39.5 | |||||
Total current assets | 209.6 | 219.6 | |||||
Property and equipment, net | 577.9 | 573.2 | |||||
Software development, net | 3.8 | 3.2 | |||||
Investment in and advances to unconsolidated affiliates | 130.4 | 129.7 | |||||
Goodwill | 841.7 | 841.7 | |||||
Other intangible assets, net | 471.7 | 496.2 | |||||
Other assets | 13.0 | 13.8 | |||||
Total assets | $ | 2,248.1 | $ | 2,277.4 | |||
LIABILITIES AND SHAREHOLDERS’ EQUITY | |||||||
Current liabilities: | |||||||
Accounts payable | $ | 74.4 | $ | 39.1 | |||
Purses payable | 22.8 | 12.1 | |||||
Account wagering deposit liabilities | 23.5 | 20.4 | |||||
Accrued expenses | 97.5 | 97.9 | |||||
Income tax payable | 36.8 | — | |||||
Tax refund due to Big Fish Games former equity holders | 0.4 | 0.4 | |||||
Deferred revenue - Big Fish Games | 90.1 | 81.3 | |||||
Deferred revenue - all other | 12.3 | 46.0 | |||||
Big Fish Games deferred payment, current | 28.3 | 28.1 | |||||
Big Fish Games earnout liability, current | 33.7 | 279.5 | |||||
Current maturities of long-term debt | 11.8 | 16.2 | |||||
Dividends payable | — | 19.1 | |||||
Total current liabilities | 431.6 | 640.1 | |||||
Long-term debt, net of current maturities and loan origination fees | 319.7 | 171.9 | |||||
Notes payable, including premium and net of debt issuance costs | 594.2 | 593.7 | |||||
Big Fish Games deferred payment, net of current amount due | 27.3 | 26.7 | |||||
Big Fish Games earnout liability, net of current amount due | 32.9 | 65.7 | |||||
Deferred revenue - all other | 21.4 | 16.1 | |||||
Deferred income taxes | 126.0 | 127.9 | |||||
Other liabilities | 15.2 | 18.1 | |||||
Total liabilities | 1,568.3 | 1,660.2 | |||||
Commitments and contingencies | — | — | |||||
Preferred stock, no par value; 0.3 shares authorized; no shares issued | — | — | |||||
Common stock, no par value; 50.0 shares authorized; 16.6 shares issued at June 30, 2016 and 16.6 shares issued at December 31, 2015 | 123.8 | 134.0 | |||||
Retained earnings | 556.4 | 483.8 | |||||
Accumulated other comprehensive loss | (0.4 | ) | (0.6 | ) | |||
Total shareholders' equity | 679.8 | 617.2 | |||||
Total liabilities and shareholders' equity | $ | 2,248.1 | $ | 2,277.4 |
CHURCHILL DOWNS INCORPORATED CONSOLIDATED STATEMENTS OF CASH FLOW (unaudited) | |||||||
Six Months Ended June 30, | |||||||
(in millions) | 2016 | 2015 | |||||
Cash flows from operating activities: | |||||||
Net income | $ | 72.6 | $ | 53.5 | |||
Adjustments to reconcile net income to net cash provided by operating activities: | |||||||
Depreciation and amortization | 53.9 | 54.7 | |||||
Software development amortization | 7.5 | 3.1 | |||||
Acquisition-related charges | 3.8 | 14.6 | |||||
Gain on sale of equity investment | — | (5.8 | ) | ||||
Dividend from investment in unconsolidated affiliates | 8.2 | 7.5 | |||||
Big Fish Games earnout payment | (19.7 | ) | — | ||||
Equity in income of unconsolidated investments | (8.6 | ) | (5.9 | ) | |||
Stock-based compensation | 9.4 | 6.1 | |||||
Other | 1.1 | 1.5 | |||||
Increase (decrease) in cash resulting from changes in operating assets and liabilities, net of business acquisitions and dispositions: | |||||||
Other current assets and liabilities | 20.2 | 11.6 | |||||
Software development | (10.1 | ) | (11.2 | ) | |||
Income taxes | 35.8 | 62.1 | |||||
Deferred revenue | (4.2 | ) | 0.4 | ||||
Other assets and liabilities | (3.1 | ) | 2.0 | ||||
Net cash provided by operating activities | 166.8 | 194.2 | |||||
Cash flows from investing activities: | |||||||
Additions to property and equipment | (34.5 | ) | (22.7 | ) | |||
Deferred payments to Big Fish Games former equity holders | — | (1.0 | ) | ||||
Acquisition of gaming licenses | (2.5 | ) | — | ||||
Proceeds from sale of equity investment | 1.4 | 6.0 | |||||
Other | — | (0.3 | ) | ||||
Net cash used in investing activities | (35.6 | ) | (18.0 | ) | |||
Cash flows from financing activities: | |||||||
Borrowings on bank line of credit | 442.1 | 189.9 | |||||
Repayments of bank line of credit | (298.8 | ) | (346.5 | ) | |||
Big Fish Games earnout payment | (261.9 | ) | — | ||||
Tax refund payments to Big Fish Games equity holders | — | (11.8 | ) | ||||
Payment of dividends | (19.1 | ) | (17.4 | ) | |||
Repurchase of common stock | (17.6 | ) | (5.9 | ) | |||
Windfall tax provision from stock-based compensation | — | 3.1 | |||||
Loan origination fees and debt issuance costs | (1.4 | ) | — | ||||
Other | 5.8 | 5.3 | |||||
Net cash used in financing activities | (150.9 | ) | (183.3 | ) | |||
Net decrease in cash and cash equivalents | (19.7 | ) | (7.1 | ) | |||
Effect of exchange rate changes on cash flows | 0.3 | (1.6 | ) | ||||
Cash and cash equivalents, beginning of period | 74.5 | 67.9 | |||||
Cash and cash equivalents, end of period | $ | 55.1 | $ | 59.2 |
Three Months Ended June 30, | Six Months Ended June 30, | ||||||||||||||
(in millions) | 2016 | 2015 | 2016 | 2015 | |||||||||||
Net revenue from external customers: | |||||||||||||||
Racing: | |||||||||||||||
Churchill Downs | $ | 129.1 | $ | 126.8 | $ | 131.4 | $ | 128.8 | |||||||
Arlington | 16.8 | 18.1 | 25.8 | 23.9 | |||||||||||
Fair Grounds | 9.5 | 9.8 | 23.8 | 25.1 | |||||||||||
Calder | 0.7 | 0.7 | 1.3 | 1.4 | |||||||||||
Total Racing | 156.1 | 155.4 | 182.3 | 179.2 | |||||||||||
Casinos: | |||||||||||||||
Oxford Casino | 21.1 | 21.0 | 41.0 | 38.5 | |||||||||||
Riverwalk Casino | 12.4 | 12.5 | 25.1 | 25.7 | |||||||||||
Harlow’s Casino | 11.9 | 12.0 | 24.9 | 25.7 | |||||||||||
Calder Casino | 20.5 | 19.9 | 40.8 | 40.2 | |||||||||||
Fair Grounds Slots | 8.8 | 9.0 | 19.4 | 21.1 | |||||||||||
VSI | 9.5 | 9.4 | 19.3 | 18.6 | |||||||||||
Saratoga | 0.2 | — | 0.4 | — | |||||||||||
Total Casinos | 84.4 | 83.8 | 170.9 | 169.8 | |||||||||||
TwinSpires | 68.2 | 60.7 | 117.6 | 106.1 | |||||||||||
Big Fish Games: | |||||||||||||||
Social casino | 46.5 | 48.4 | 94.0 | 98.0 | |||||||||||
Casual and mid-core free-to-play | 56.0 | 32.4 | 106.4 | 53.9 | |||||||||||
Premium | 24.6 | 28.3 | 51.3 | 58.3 | |||||||||||
Fair value adjustments | (1.9 | ) | (4.6 | ) | (4.4 | ) | (13.8 | ) | |||||||
Total Big Fish Games | 125.2 | 104.5 | 247.3 | 196.4 | |||||||||||
Other Investments | 4.4 | 4.5 | 8.4 | 8.1 | |||||||||||
Corporate | 0.2 | 0.3 | 0.4 | 0.5 | |||||||||||
Net revenue from external customers | $ | 438.5 | $ | 409.2 | $ | 726.9 | $ | 660.1 | |||||||
Intercompany net revenue: | |||||||||||||||
Racing: | |||||||||||||||
Churchill Downs | $ | 7.0 | $ | 5.4 | $ | 7.3 | $ | 5.6 | |||||||
Arlington | 1.6 | 1.4 | 2.6 | 2.4 | |||||||||||
Fair Grounds | — | — | 1.0 | 0.9 | |||||||||||
Total Racing | 8.6 | 6.8 | 10.9 | 8.9 | |||||||||||
TwinSpires | 0.3 | 0.3 | 0.6 | 0.5 | |||||||||||
Other Investments | 1.4 | 1.1 | 2.3 | 1.9 | |||||||||||
Eliminations | (10.3 | ) | (8.2 | ) | (13.8 | ) | (11.3 | ) | |||||||
Intercompany net revenue | $ | — | $ | — | $ | — | $ | — |
Three Months Ended June 30, 2016 | |||||||||||||||||||||||||||||||
(in millions) | Racing | Casinos | TwinSpires | Big Fish Games | Other Investments | Corporate | Eliminations | Total | |||||||||||||||||||||||
Net revenue | $ | 164.7 | $ | 84.4 | $ | 68.5 | $ | 125.2 | $ | 5.8 | $ | 0.2 | (10.3 | ) | $ | 438.5 | |||||||||||||||
Taxes & purses | (30.3 | ) | (28.0 | ) | (2.0 | ) | — | — | — | — | (60.3 | ) | |||||||||||||||||||
Platform & development fees | — | — | — | (45.9 | ) | — | — | — | (45.9 | ) | |||||||||||||||||||||
Marketing & advertising | (1.9 | ) | (3.1 | ) | (3.3 | ) | (37.1 | ) | — | — | 0.2 | (45.2 | ) | ||||||||||||||||||
Salaries & benefits | (12.7 | ) | (12.7 | ) | (2.3 | ) | (6.2 | ) | (2.8 | ) | — | — | (36.7 | ) | |||||||||||||||||
Content expense | (4.8 | ) | — | (33.5 | ) | — | — | — | 9.7 | (28.6 | ) | ||||||||||||||||||||
Selling, general & administrative expenses | (4.0 | ) | (5.4 | ) | (2.8 | ) | (4.3 | ) | (0.9 | ) | (2.0 | ) | 0.4 | (19.0 | ) | ||||||||||||||||
Research & development | — | — | — | (9.7 | ) | — | — | — | (9.7 | ) | |||||||||||||||||||||
Other operating expense | (19.9 | ) | (9.7 | ) | (6.2 | ) | (3.8 | ) | (1.0 | ) | (0.1 | ) | 0.1 | (40.6 | ) | ||||||||||||||||
Other income (expenses) | 0.2 | 7.8 | — | (0.4 | ) | 0.2 | — | (0.1 | ) | 7.7 | |||||||||||||||||||||
Change in deferred revenue(1) | n/a | n/a | n/a | 2.7 | n/a | n/a | n/a | 2.7 | |||||||||||||||||||||||
Total segment Adjusted EBITDA | $ | 91.3 | $ | 33.3 | $ | 18.4 | $ | 20.5 | $ | 1.3 | $ | (1.9 | ) | $ | — | $ | 162.9 |
Three Months Ended June 30, 2015 | |||||||||||||||||||||||||||||||
(in millions) | Racing | Casinos | TwinSpires | Big Fish Games | Other Investments | Corporate | Eliminations | Total | |||||||||||||||||||||||
Net revenue | $ | 162.2 | $ | 83.8 | $ | 61.0 | $ | 104.5 | $ | 5.6 | $ | 0.3 | (8.2 | ) | $ | 409.2 | |||||||||||||||
Taxes & purses | (31.6 | ) | (27.9 | ) | (2.7 | ) | — | — | — | — | (62.2 | ) | |||||||||||||||||||
Platform & development fees | — | — | — | (35.6 | ) | — | — | — | (35.6 | ) | |||||||||||||||||||||
Marketing & advertising | (3.5 | ) | (3.1 | ) | (2.1 | ) | (25.6 | ) | — | — | — | (34.3 | ) | ||||||||||||||||||
Salaries & benefits | (12.4 | ) | (12.8 | ) | (2.4 | ) | (5.8 | ) | (2.8 | ) | — | — | (36.2 | ) | |||||||||||||||||
Content expense | (4.5 | ) | — | (29.7 | ) | — | — | — | 7.8 | (26.4 | ) | ||||||||||||||||||||
Selling, general & administrative expenses | (5.6 | ) | (4.8 | ) | (2.6 | ) | (3.6 | ) | (0.7 | ) | (1.6 | ) | 0.2 | (18.7 | ) | ||||||||||||||||
Research & development | — | — | — | (9.9 | ) | — | — | — | (9.9 | ) | |||||||||||||||||||||
Other operating expense | (19.6 | ) | (10.6 | ) | (5.4 | ) | (3.6 | ) | (0.7 | ) | (0.5 | ) | 0.1 | (40.3 | ) | ||||||||||||||||
Other income (expenses) | 0.2 | 4.9 | — | (0.3 | ) | 0.1 | 0.1 | 0.1 | 5.1 | ||||||||||||||||||||||
Change in deferred revenue(1) | n/a | n/a | n/a | 8.2 | n/a | n/a | n/a | 8.2 | |||||||||||||||||||||||
Total segment Adjusted EBITDA | $ | 85.2 | $ | 29.5 | $ | 16.1 | $ | 28.3 | $ | 1.5 | $ | (1.7 | ) | $ | — | $ | 158.9 | ||||||||||||||
(1) Change in deferred revenue is included in Adjusted EBITDA only for Big Fish Games. |
Six Months Ended June 30, 2016 | |||||||||||||||||||||||||||||||
(in millions) | Racing | Casinos | TwinSpires | Big Fish Games | Other Investments | Corporate | Eliminations | Total | |||||||||||||||||||||||
Net revenue | $ | 193.2 | $ | 170.9 | $ | 118.2 | $ | 247.3 | $ | 10.7 | $ | 0.4 | (13.8 | ) | $ | 726.9 | |||||||||||||||
Taxes & purses | (41.5 | ) | (56.5 | ) | (4.8 | ) | — | — | — | — | (102.8 | ) | |||||||||||||||||||
Platform & development fees | — | — | — | (90.0 | ) | — | — | — | (90.0 | ) | |||||||||||||||||||||
Marketing & advertising | (2.7 | ) | (6.5 | ) | (4.2 | ) | (79.9 | ) | — | — | 0.3 | (93.0 | ) | ||||||||||||||||||
Salaries & benefits | (21.1 | ) | (24.8 | ) | (4.6 | ) | (12.2 | ) | (5.5 | ) | — | (0.1 | ) | (68.3 | ) | ||||||||||||||||
Content expense | (8.1 | ) | — | (57.4 | ) | — | — | — | 12.7 | (52.8 | ) | ||||||||||||||||||||
Selling, general & administrative expenses | (7.9 | ) | (10.4 | ) | (5.6 | ) | (9.2 | ) | (1.6 | ) | (4.0 | ) | 0.2 | (38.5 | ) | ||||||||||||||||
Research & development | — | — | — | (20.5 | ) | — | — | — | (20.5 | ) | |||||||||||||||||||||
Other operating expense | (28.3 | ) | (19.4 | ) | (11.1 | ) | (7.9 | ) | (1.7 | ) | (0.3 | ) | 0.7 | (68.0 | ) | ||||||||||||||||
Other income (expenses) | 0.3 | 14.3 | — | (0.9 | ) | 0.2 | — | — | 13.9 | ||||||||||||||||||||||
Change in deferred revenue(1) | n/a | n/a | n/a | 8.8 | n/a | n/a | n/a | 8.8 | |||||||||||||||||||||||
Total segment Adjusted EBITDA | $ | 83.9 | $ | 67.6 | $ | 30.5 | $ | 35.5 | $ | 2.1 | $ | (3.9 | ) | $ | — | $ | 215.7 |
Six Months Ended June 30, 2015 | |||||||||||||||||||||||||||||||
(in millions) | Racing | Casinos | TwinSpires | Big Fish Games | Other Investments | Corporate | Eliminations | Total | |||||||||||||||||||||||
Net revenue | $ | 188.1 | $ | 169.8 | $ | 106.6 | $ | 196.4 | $ | 10.0 | $ | 0.5 | $ | (11.3 | ) | $ | 660.1 | ||||||||||||||
Taxes & purses | (41.1 | ) | (55.9 | ) | (4.6 | ) | — | — | — | — | (101.6 | ) | |||||||||||||||||||
Platform & development fees | — | — | — | (66.9 | ) | — | — | — | (66.9 | ) | |||||||||||||||||||||
Marketing & advertising | (4.3 | ) | (6.2 | ) | (3.0 | ) | (54.8 | ) | — | — | 0.2 | (68.1 | ) | ||||||||||||||||||
Salaries & benefits | (20.8 | ) | (25.4 | ) | (4.9 | ) | (11.1 | ) | (5.5 | ) | — | — | (67.7 | ) | |||||||||||||||||
Content expense | (7.7 | ) | — | (52.3 | ) | — | — | — | 10.5 | (49.5 | ) | ||||||||||||||||||||
Selling, general & administrative expenses | (8.7 | ) | (11.0 | ) | (5.5 | ) | (8.8 | ) | (1.1 | ) | (2.8 | ) | 0.2 | (37.7 | ) | ||||||||||||||||
Research & development | — | — | — | (20.1 | ) | — | — | — | (20.1 | ) | |||||||||||||||||||||
Other operating expense | (29.8 | ) | (21.3 | ) | (9.9 | ) | (7.0 | ) | (1.6 | ) | (1.3 | ) | 0.4 | (70.5 | ) | ||||||||||||||||
Other income (expenses) | 0.3 | 9.9 | (0.2 | ) | (0.5 | ) | 0.1 | — | — | 9.6 | |||||||||||||||||||||
Change in deferred revenue(1) | n/a | n/a | n/a | 21.1 | n/a | n/a | n/a | 21.1 | |||||||||||||||||||||||
Total segment Adjusted EBITDA | $ | 76.0 | $ | 59.9 | $ | 26.2 | $ | 48.3 | $ | 1.9 | $ | (3.6 | ) | $ | — | $ | 208.7 | ||||||||||||||
(1) Change in deferred revenue is included in Adjusted EBITDA only for Big Fish Games. |
Three Months Ended June 30, | Six Months Ended June 30, | ||||||||||||||
(in millions) | 2016 | 2015 | 2016 | 2015 | |||||||||||
Reconciliation of segment Adjusted EBITDA to comprehensive income: | |||||||||||||||
Racing | $ | 91.3 | $ | 85.2 | $ | 83.9 | $ | 76.0 | |||||||
Casinos | 33.3 | 29.5 | 67.6 | 59.9 | |||||||||||
TwinSpires | 18.4 | 16.1 | 30.5 | 26.2 | |||||||||||
Big Fish Games | 20.5 | 28.3 | 35.5 | 48.3 | |||||||||||
Other Investments | 1.3 | 1.5 | 2.1 | 1.9 | |||||||||||
Corporate | (1.9 | ) | (1.7 | ) | (3.9 | ) | (3.6 | ) | |||||||
Total segment Adjusted EBITDA | 162.9 | 158.9 | 215.7 | 208.7 | |||||||||||
Change in Big Fish Games deferred revenue 1 | (2.7 | ) | (8.2 | ) | (8.8 | ) | (21.1 | ) | |||||||
Selling, general and administrative: | |||||||||||||||
Stock-based compensation expense 2 | (5.3 | ) | (3.4 | ) | (9.4 | ) | (6.1 | ) | |||||||
Other charges 3 | (0.3 | ) | — | (0.3 | ) | — | |||||||||
Other income, expense: | |||||||||||||||
Equity investments - interest, depreciation and amortization expense 4 | (2.5 | ) | (2.2 | ) | (5.0 | ) | (4.2 | ) | |||||||
Other (charges) and recoveries, net 5 | — | — | (0.4 | ) | 6.1 | ||||||||||
Big Fish Games adjustments 6 | (1.1 | ) | (8.2 | ) | (3.8 | ) | (14.6 | ) | |||||||
Calder exit costs 7 | (1.5 | ) | (0.8 | ) | (1.9 | ) | (0.8 | ) | |||||||
Depreciation and amortization | (26.9 | ) | (27.3 | ) | (53.9 | ) | (54.7 | ) | |||||||
Interest (expense) income, net | (11.1 | ) | (7.1 | ) | (21.7 | ) | (14.4 | ) | |||||||
Income before income tax provision | 111.5 | 101.7 | 110.5 | 98.9 | |||||||||||
Income tax provision | (41.7 | ) | (46.6 | ) | (37.9 | ) | (45.4 | ) | |||||||
Net income | 69.8 | 55.1 | 72.6 | 53.5 | |||||||||||
Foreign currency translation, net of tax | 0.2 | (0.1 | ) | 0.2 | (0.4 | ) | |||||||||
Comprehensive income | $ | 70.0 | $ | 55.0 | $ | 72.8 | $ | 53.1 |
1. | Value of deferred revenue balances assumed as part of acquisitions that are adjusted down to fair value |
2. | Value of compensation expense to named executive officers and other key executives based upon restricted stock awards and other awards based on achieving certain key performance metrics |
3. | Severance and relocation expenses related to TwinSpires |
4. | Interest, depreciation and amortization expense from equity investments |
5. | Proceeds from sale of HRTV and other expenses |
6. | Acquisition-related charges, including the change in fair value of the Big Fish Games earnout and deferred consideration liability recorded each reporting period |
7. | Demolition costs related to the removal of the Calder grandstand |
Three Months Ended June 30, | Six Months Ended June 30, | ||||||||||||||
(in millions) | 2016 | 2015 | 2016 | 2015 | |||||||||||
Corporate allocated expense: | |||||||||||||||
Racing | $ | (1.5 | ) | $ | (3.0 | ) | $ | (2.8 | ) | $ | (3.7 | ) | |||
Casinos | (1.7 | ) | (1.0 | ) | (3.2 | ) | (3.3 | ) | |||||||
TwinSpires | (1.4 | ) | (0.9 | ) | (2.6 | ) | (2.1 | ) | |||||||
Big Fish Games | (0.6 | ) | (0.7 | ) | (1.3 | ) | (1.5 | ) | |||||||
Other Investments | (0.4 | ) | (0.1 | ) | (0.7 | ) | (0.2 | ) | |||||||
Corporate allocated expense | 5.6 | 5.7 | 10.6 | 10.8 | |||||||||||
Total Corporate allocated expense | $ | — | $ | — | $ | — | $ | — |
Three Months Ended June 30, | Six Months Ended June 30, | ||||||||||||||
(in millions) | 2016 | 2015 | 2016 | 2015 | |||||||||||
Casino revenue | $ | 36.6 | $ | 33.2 | $ | 72.6 | $ | 65.1 | |||||||
Non-casino revenue | 2.0 | 1.8 | 4.0 | 3.8 | |||||||||||
Net revenue | 38.6 | 35.0 | 76.6 | 68.9 | |||||||||||
Operating and SG&A expense | 26.5 | 25.0 | 53.3 | 49.6 | |||||||||||
Adjusted EBITDA | 12.1 | 10.0 | 23.3 | 19.3 | |||||||||||
Depreciation & amortization expense | 3.3 | 3.2 | 6.5 | 6.3 | |||||||||||
Operating income | 8.8 | 6.8 | 16.8 | 13.0 | |||||||||||
Interest and other expense, net | (0.9 | ) | (1.1 | ) | (1.8 | ) | (2.2 | ) | |||||||
Net income | $ | 7.9 | $ | 5.7 | $ | 15.0 | $ | 10.8 |
(in millions) | June 30, 2016 | December 31, 2015 | |||||
Assets | |||||||
Current assets | $ | 14.3 | $ | 24.5 | |||
Property and equipment, net | 114.5 | 119.7 | |||||
Other assets, net | 107.2 | 106.6 | |||||
Total assets | $ | 236.0 | $ | 250.8 | |||
Liabilities and Members' Equity | |||||||
Current liabilities | $ | 10.5 | $ | 21.6 | |||
Current portion of long-term debt | 8.3 | 8.3 | |||||
Long-term debt, excluding current portion | 17.3 | 20.5 | |||||
Other liabilities | 0.1 | 0.1 | |||||
Members' equity | 199.8 | 200.3 | |||||
Total liabilities and members' equity | $ | 236.0 | $ | 250.8 |