Kentucky (State of incorporation) | 001-33998 (Commission file number) | 61-0156015 (IRS Employer Identification No.) | ||
• | Churchill Downs |
• | Online Wagering |
• | Gaming |
– | Calder Casino and Racing ("Calder") |
– | Fair Grounds Slots, Fair Grounds Race Course, and Video Services, LLC ("VSI") (collectively, "Fair Grounds and VSI") |
– | Harlow’s Casino Resort and Spa ("Harlow's") |
– | Lady Luck Casino Nemacolin ("Lady Luck Nemacolin") |
– | Ocean Downs Casino and Racetrack ("Ocean Downs") |
– | Oxford Casino and Hotel ("Oxford") |
– | Presque Isle Downs and Casino ("Presque Isle") |
– | Riverwalk Casino Hotel ("Riverwalk") |
– | 61.3% equity investment in Midwest Gaming Holdings, LLC, ("Midwest Gaming"), the parent company of Rivers Casino Des Plaines in Des Plaines, Illinois |
– | 50% equity investment in Miami Valley Gaming and Racing |
• | Arlington International Race Course |
• | United Tote |
– | Acquisition and disposition related charges, including fair value adjustments related to earnouts and deferred payments; |
– | Calder Racing exit costs; and |
– | Other transaction expense, including legal, accounting, and other deal-related expense; |
Item 9.01. | Financial Statements and Exhibits |
(d) | Exhibit |
Exhibit No. | Description |
Recast Segment Information of Churchill Downs Incorporated |
CHURCHILL DOWNS INCORPORATED | ||
Date: April 23, 2019 | ||
By: | /s/ Marcia A. Dall | |
Name: | Marcia A. Dall | |
Title: | Executive Vice President and Chief Financial Officer (Principal Financial and Accounting Officer) | |
Three Months Ended | Year Ended December 31, | ||||||||||||||||||||||
(in millions) | March 31, 2018 | June 30, 2018 | September 30, 2018 | December 31, 2018 | 2018 | 2017 | |||||||||||||||||
Net revenue: | |||||||||||||||||||||||
Churchill Downs | $ | 2.0 | $ | 154.9 | $ | 10.8 | $ | 28.1 | $ | 195.8 | $ | 161.3 | |||||||||||
Online Wagering | 63.2 | 93.7 | 71.8 | 61.5 | 290.2 | 255.6 | |||||||||||||||||
Gaming | 111.5 | 108.1 | 110.4 | 119.5 | 449.5 | 389.3 | |||||||||||||||||
All Other | 12.6 | 22.7 | 28.3 | 9.9 | 73.5 | 76.4 | |||||||||||||||||
Total net revenue | 189.3 | 379.4 | 221.3 | 219.0 | 1,009.0 | 882.6 | |||||||||||||||||
Operating expense: | |||||||||||||||||||||||
Churchill Downs | 9.9 | 58.0 | 19.5 | 28.9 | 116.3 | 89.5 | |||||||||||||||||
Online Wagering | 44.0 | 59.4 | 49.2 | 43.5 | 196.1 | 170.2 | |||||||||||||||||
Gaming | 79.6 | 78.1 | 81.2 | 92.1 | 331.0 | 293.8 | |||||||||||||||||
All Other | 16.3 | 22.0 | 23.7 | 13.9 | 75.9 | 75.9 | |||||||||||||||||
Selling, general and administrative expense | 18.4 | 23.2 | 21.8 | 27.2 | 90.6 | 83.5 | |||||||||||||||||
Impairment of tangible and other intangible assets | — | — | — | — | — | 21.7 | |||||||||||||||||
Transaction expense, net | 1.4 | 2.1 | 5.4 | 1.4 | 10.3 | 2.3 | |||||||||||||||||
Total operating expense | 169.6 | 242.8 | 200.8 | 207.0 | 820.2 | 736.9 | |||||||||||||||||
Operating income | $ | 19.7 | $ | 136.6 | $ | 20.5 | $ | 12.0 | $ | 188.8 | $ | 145.7 |
Three Months Ended | Year Ended December 31, | ||||||||||||||||||||||
(in millions) | March 31, 2018 | June 30, 2018 | September 30, 2018 | December 31, 2018 | 2018 | 2017 | |||||||||||||||||
Net revenue from external customers: | |||||||||||||||||||||||
Churchill Downs: | |||||||||||||||||||||||
Churchill Downs Racetrack | $ | 2.0 | $ | 154.9 | $ | 8.5 | $ | 15.6 | $ | 181.0 | $ | 161.3 | |||||||||||
Derby City Gaming | — | — | 2.3 | 12.5 | 14.8 | — | |||||||||||||||||
Total Churchill Downs | 2.0 | 154.9 | 10.8 | 28.1 | 195.8 | 161.3 | |||||||||||||||||
Online Wagering: | |||||||||||||||||||||||
TwinSpires | 63.2 | 93.7 | 71.8 | 61.5 | 290.2 | 255.6 | |||||||||||||||||
Online Sports Betting and iGaming | — | — | — | — | — | — | |||||||||||||||||
Total Online Wagering | 63.2 | 93.7 | 71.8 | 61.5 | 290.2 | 255.6 | |||||||||||||||||
Gaming: | |||||||||||||||||||||||
Oxford | 24.2 | 26.2 | 28.9 | 22.7 | 102.0 | 90.8 | |||||||||||||||||
Riverwalk | 14.4 | 13.6 | 12.8 | 13.7 | 54.5 | 48.2 | |||||||||||||||||
Harlow’s | 13.3 | 12.5 | 12.1 | 12.3 | 50.2 | 50.0 | |||||||||||||||||
Calder | 24.9 | 26.0 | 24.0 | 23.7 | 98.6 | 87.9 | |||||||||||||||||
Fair Grounds and VSI | 34.4 | 29.5 | 24.5 | 29.3 | 117.7 | 111.1 | |||||||||||||||||
Ocean Downs | — | — | 8.1 | 17.8 | 25.9 | — | |||||||||||||||||
Presque Isle | — | — | — | — | — | — | |||||||||||||||||
Lady Luck Nemacolin | — | — | — | — | — | — | |||||||||||||||||
Saratoga | 0.3 | 0.3 | — | — | 0.6 | 1.3 | |||||||||||||||||
Total Gaming | 111.5 | 108.1 | 110.4 | 119.5 | 449.5 | 389.3 | |||||||||||||||||
All Other | 12.6 | 22.7 | 28.3 | 9.9 | 73.5 | 76.4 | |||||||||||||||||
Net revenue from external customers | $ | 189.3 | $ | 379.4 | $ | 221.3 | $ | 219.0 | $ | 1,009.0 | $ | 882.6 |
Three Months Ended | Year Ended December 31, | ||||||||||||||||||||||
(in millions) | March 31, 2018 | June 30, 2018 | September 30, 2018 | December 31, 2018 | 2018 | 2017 | |||||||||||||||||
Intercompany net revenue: | |||||||||||||||||||||||
Churchill Downs | $ | 0.3 | $ | 9.4 | $ | 1.0 | $ | 2.0 | $ | 12.7 | $ | 11.4 | |||||||||||
Online Wagering | 0.4 | 0.4 | 0.3 | 0.2 | 1.3 | 1.1 | |||||||||||||||||
Gaming | 1.0 | 0.1 | 0.1 | 0.5 | 1.7 | 1.6 | |||||||||||||||||
All Other | 2.4 | 3.6 | 3.2 | 2.0 | 11.2 | 10.8 | |||||||||||||||||
Eliminations | (4.1 | ) | (13.5 | ) | (4.6 | ) | (4.7 | ) | (26.9 | ) | (24.9 | ) | |||||||||||
Intercompany net revenue | $ | — | $ | — | $ | — | $ | — | $ | — | $ | — |
Year Ended December 31, 2018 | |||||||||||||||||||||||||||
(in millions) | Churchill Downs | Online Wagering | Gaming | Total Segments | All Other | Eliminations | Total | ||||||||||||||||||||
Net revenue | $ | 208.5 | $ | 291.5 | $ | 451.2 | $ | 951.2 | $ | 84.7 | $ | (26.9 | ) | $ | 1,009.0 | ||||||||||||
Taxes & purses | (41.3 | ) | (15.2 | ) | (153.4 | ) | (209.9 | ) | (16.9 | ) | — | (226.8 | ) | ||||||||||||||
Marketing & advertising | (5.7 | ) | (6.0 | ) | (15.5 | ) | (27.2 | ) | (1.2 | ) | 0.3 | (28.1 | ) | ||||||||||||||
Salaries & benefits | (23.7 | ) | (9.2 | ) | (68.9 | ) | (101.8 | ) | (24.9 | ) | — | (126.7 | ) | ||||||||||||||
Content expense | (2.2 | ) | (152.0 | ) | (4.1 | ) | (158.3 | ) | (8.4 | ) | 24.6 | (142.1 | ) | ||||||||||||||
Selling, general & administrative expense | (5.3 | ) | (5.9 | ) | (18.6 | ) | (29.8 | ) | (42.0 | ) | 1.1 | (70.7 | ) | ||||||||||||||
Other operating expense | (28.0 | ) | (24.2 | ) | (60.0 | ) | (112.2 | ) | (18.5 | ) | 0.9 | (129.8 | ) | ||||||||||||||
Other income | 0.1 | — | 43.3 | 43.4 | 0.6 | — | 44.0 | ||||||||||||||||||||
Adjusted EBITDA | $ | 102.4 | $ | 79.0 | $ | 174.0 | $ | 355.4 | $ | (26.6 | ) | $ | — | $ | 328.8 |
Year Ended December 31, 2017 | |||||||||||||||||||||||||||
(in millions) | Churchill Downs | Online Wagering | Gaming | Total Segments | All Other | Eliminations | Total | ||||||||||||||||||||
Net revenue | $ | 172.7 | $ | 256.7 | $ | 390.9 | $ | 820.3 | $ | 87.2 | $ | (24.9 | ) | $ | 882.6 | ||||||||||||
Taxes & purses | (34.1 | ) | (14.7 | ) | (130.7 | ) | (179.5 | ) | (17.6 | ) | — | (197.1 | ) | ||||||||||||||
Marketing & advertising | (2.7 | ) | (8.2 | ) | (13.0 | ) | (23.9 | ) | (1.3 | ) | 0.4 | (24.8 | ) | ||||||||||||||
Salaries & benefits | (19.3 | ) | (9.9 | ) | (63.4 | ) | (92.6 | ) | (24.2 | ) | — | (116.8 | ) | ||||||||||||||
Content expense | (2.4 | ) | (125.0 | ) | (4.0 | ) | (131.4 | ) | (8.8 | ) | 22.4 | (117.8 | ) | ||||||||||||||
Selling, general & administrative expense | (4.0 | ) | (6.9 | ) | (17.1 | ) | (28.0 | ) | (39.7 | ) | 1.2 | (66.5 | ) | ||||||||||||||
Other operating expense | (21.3 | ) | (22.1 | ) | (56.1 | ) | (99.5 | ) | (18.3 | ) | 0.9 | (116.9 | ) | ||||||||||||||
Other income | 0.1 | — | 42.0 | 42.1 | 1.4 | — | 43.5 | ||||||||||||||||||||
Adjusted EBITDA | $ | 89.0 | $ | 69.9 | $ | 148.6 | $ | 307.5 | $ | (21.3 | ) | $ | — | $ | 286.2 |
Three Months Ended March 31, 2018 | |||||||||||||||||||||||||||
(in millions) | Churchill Downs | Online Wagering | Gaming | Total Segments | All Other | Eliminations | Total | ||||||||||||||||||||
Net revenue | $ | 2.3 | $ | 63.6 | $ | 112.5 | $ | 178.4 | $ | 15.0 | $ | (4.1 | ) | $ | 189.3 | ||||||||||||
Taxes & purses | (0.7 | ) | (3.4 | ) | (38.0 | ) | (42.1 | ) | (4.0 | ) | — | (46.1 | ) | ||||||||||||||
Marketing & advertising | (0.3 | ) | (0.8 | ) | (3.6 | ) | (4.7 | ) | (0.1 | ) | 0.1 | (4.7 | ) | ||||||||||||||
Salaries & benefits | (3.1 | ) | (2.1 | ) | (16.9 | ) | (22.1 | ) | (5.3 | ) | — | (27.4 | ) | ||||||||||||||
Content expense | (0.4 | ) | (32.2 | ) | (0.9 | ) | (33.5 | ) | (1.8 | ) | 3.3 | (32.0 | ) | ||||||||||||||
Selling, general & administrative expense | (1.0 | ) | (1.4 | ) | (3.8 | ) | (6.2 | ) | (9.1 | ) | 0.3 | (15.0 | ) | ||||||||||||||
Other operating expense | (2.8 | ) | (5.8 | ) | (13.7 | ) | (22.3 | ) | (3.9 | ) | 0.4 | (25.8 | ) | ||||||||||||||
Other income | — | — | 10.8 | 10.8 | 0.1 | — | 10.9 | ||||||||||||||||||||
Adjusted EBITDA | $ | (6.0 | ) | $ | 17.9 | $ | 46.4 | $ | 58.3 | $ | (9.1 | ) | $ | — | $ | 49.2 |
Three Months Ended June 30, 2018 | |||||||||||||||||||||||||||
(in millions) | Churchill Downs | Online Wagering | Gaming | Total Segments | All Other | Eliminations | Total | ||||||||||||||||||||
Net revenue | $ | 164.3 | $ | 94.1 | $ | 108.2 | $ | 366.6 | $ | 26.3 | $ | (13.5 | ) | $ | 379.4 | ||||||||||||
Taxes & purses | (27.3 | ) | (4.6 | ) | (35.5 | ) | (67.4 | ) | (5.0 | ) | — | (72.4 | ) | ||||||||||||||
Marketing & advertising | (3.2 | ) | (3.1 | ) | (3.5 | ) | (9.8 | ) | (0.5 | ) | 0.1 | (10.2 | ) | ||||||||||||||
Salaries & benefits | (9.7 | ) | (2.4 | ) | (15.6 | ) | (27.7 | ) | (7.2 | ) | — | (34.9 | ) | ||||||||||||||
Content expense | (0.9 | ) | (49.8 | ) | (1.1 | ) | (51.8 | ) | (2.7 | ) | 12.8 | (41.7 | ) | ||||||||||||||
Selling, general & administrative expense | (1.2 | ) | (1.6 | ) | (4.0 | ) | (6.8 | ) | (9.6 | ) | 0.4 | (16.0 | ) | ||||||||||||||
Other operating expense | (14.2 | ) | (8.2 | ) | (15.7 | ) | (38.1 | ) | (5.2 | ) | 0.2 | (43.1 | ) | ||||||||||||||
Other income | 0.1 | — | 12.9 | 13.0 | 0.4 | — | 13.4 | ||||||||||||||||||||
Adjusted EBITDA | $ | 107.9 | $ | 24.4 | $ | 45.7 | $ | 178.0 | $ | (3.5 | ) | $ | — | $ | 174.5 |
Three Months Ended September 30, 2018 | |||||||||||||||||||||||||||
(in millions) | Churchill Downs | Online Wagering | Gaming | Total Segments | All Other | Eliminations | Total | ||||||||||||||||||||
Net revenue | $ | 11.8 | $ | 72.1 | $ | 110.5 | $ | 194.4 | $ | 31.5 | $ | (4.6 | ) | $ | 221.3 | ||||||||||||
Taxes & purses | (3.6 | ) | (4.2 | ) | (37.9 | ) | (45.7 | ) | (6.2 | ) | — | (51.9 | ) | ||||||||||||||
Marketing & advertising | (0.6 | ) | (0.6 | ) | (3.6 | ) | (4.8 | ) | (0.6 | ) | 0.1 | (5.3 | ) | ||||||||||||||
Salaries & benefits | (4.5 | ) | (2.1 | ) | (16.8 | ) | (23.4 | ) | (7.6 | ) | — | (31.0 | ) | ||||||||||||||
Content expense | (0.5 | ) | (37.3 | ) | (0.9 | ) | (38.7 | ) | (2.0 | ) | 4.2 | (36.5 | ) | ||||||||||||||
Selling, general & administrative expense | (0.8 | ) | (1.4 | ) | (4.5 | ) | (6.7 | ) | (10.0 | ) | 0.2 | (16.5 | ) | ||||||||||||||
Other operating expense | (4.6 | ) | (5.7 | ) | (14.8 | ) | (25.1 | ) | (5.7 | ) | 0.1 | (30.7 | ) | ||||||||||||||
Other income | — | — | 12.7 | 12.7 | — | — | 12.7 | ||||||||||||||||||||
Adjusted EBITDA | $ | (2.8 | ) | $ | 20.8 | $ | 44.7 | $ | 62.7 | $ | (0.6 | ) | $ | — | $ | 62.1 |
Three Months Ended December 31, 2018 | |||||||||||||||||||||||||||
(in millions) | Churchill Downs | Online Wagering | Gaming | Total Segments | All Other | Eliminations | Total | ||||||||||||||||||||
Net revenue | $ | 30.1 | $ | 61.7 | $ | 120.0 | $ | 211.8 | $ | 11.9 | $ | (4.7 | ) | $ | 219.0 | ||||||||||||
Taxes & purses | (9.7 | ) | (3.0 | ) | (42.0 | ) | (54.7 | ) | (1.7 | ) | — | (56.4 | ) | ||||||||||||||
Marketing & advertising | (1.6 | ) | (1.5 | ) | (4.8 | ) | (7.9 | ) | — | — | (7.9 | ) | |||||||||||||||
Salaries & benefits | (6.4 | ) | (2.6 | ) | (19.6 | ) | (28.6 | ) | (4.8 | ) | — | (33.4 | ) | ||||||||||||||
Content expense | (0.4 | ) | (32.7 | ) | (1.2 | ) | (34.3 | ) | (1.9 | ) | 4.3 | (31.9 | ) | ||||||||||||||
Selling, general & administrative expense | (2.3 | ) | (1.5 | ) | (6.3 | ) | (10.1 | ) | (13.3 | ) | 0.2 | (23.2 | ) | ||||||||||||||
Other operating expense | (6.4 | ) | (4.5 | ) | (15.8 | ) | (26.7 | ) | (3.7 | ) | 0.2 | (30.2 | ) | ||||||||||||||
Other income | — | — | 6.9 | 6.9 | 0.1 | — | 7.0 | ||||||||||||||||||||
Adjusted EBITDA | $ | 3.3 | $ | 15.9 | $ | 37.2 | $ | 56.4 | $ | (13.4 | ) | $ | — | $ | 43.0 |
Three Months Ended | Year Ended December 31, | ||||||||||||||||||||||
(in millions) | March 31, 2018 | June 30, 2018 | September 30, 2018 | December 31, 2018 | 2018 | 2017 | |||||||||||||||||
Comprehensive income | $ | 182.4 | $ | 102.9 | $ | 56.5 | $ | 11.4 | $ | 353.2 | $ | 140.4 | |||||||||||
Foreign currency translation, net of tax | (0.6 | ) | — | 0.2 | (0.2 | ) | (0.6 | ) | 0.1 | ||||||||||||||
Net change in pension benefits, net of tax | 0.2 | 0.2 | (0.4 | ) | 0.2 | 0.2 | — | ||||||||||||||||
Net income | 182.0 | 103.1 | 56.3 | 11.4 | 352.8 | 140.5 | |||||||||||||||||
Income from discontinued operations, net of tax | (167.9 | ) | 0.1 | 1.7 | (4.1 | ) | (170.2 | ) | (18.1 | ) | |||||||||||||
Income from continuing operations, net of tax | 14.1 | 103.2 | 58.0 | 7.3 | 182.6 | 122.4 | |||||||||||||||||
Additions: | |||||||||||||||||||||||
Depreciation and amortization | 13.8 | 15.3 | 16.7 | 17.8 | 63.6 | 56.0 | |||||||||||||||||
Net interest expense | 9.6 | 9.7 | 9.9 | 10.9 | 40.1 | 49.3 | |||||||||||||||||
Loss on extinguishment of debt | — | — | — | — | — | 20.7 | |||||||||||||||||
Income tax provision | 2.6 | 32.8 | 16.7 | (0.8 | ) | 51.3 | (19.9 | ) | |||||||||||||||
EBITDA | $ | 40.1 | $ | 161.0 | $ | 101.3 | $ | 35.2 | $ | 337.6 | $ | 228.5 | |||||||||||
Adjustments to EBITDA: | |||||||||||||||||||||||
Selling, general and administrative: | |||||||||||||||||||||||
Stock-based compensation expense | $ | 2.8 | $ | 6.4 | $ | 3.9 | $ | 4.6 | 17.7 | $ | 16.0 | ||||||||||||
Other, net | — | — | 0.2 | (0.8 | ) | (0.6 | ) | 0.5 | |||||||||||||||
Pre-opening expense | 0.6 | 0.7 | 2.6 | 0.9 | 4.8 | 0.5 | |||||||||||||||||
Other income, expense: | |||||||||||||||||||||||
Interest, depreciation and amortization expense related to equity investments | 4.3 | 4.3 | 3.6 | 1.7 | 13.9 | 16.7 | |||||||||||||||||
Gain on Ocean Downs/Saratoga transaction | — | — | (54.9 | ) | — | (54.9 | ) | — | |||||||||||||||
Transaction expense, net | 1.4 | 2.1 | 5.4 | 1.4 | 10.3 | 2.3 | |||||||||||||||||
Impairment of tangible and intangible assets | — | — | — | — | — | 21.7 | |||||||||||||||||
Total adjustments to EBITDA | 9.1 | 13.5 | (39.2 | ) | 7.8 | (8.8 | ) | 57.7 | |||||||||||||||
Total Adjusted EBITDA | $ | 49.2 | $ | 174.5 | $ | 62.1 | $ | 43.0 | $ | 328.8 | $ | 286.2 | |||||||||||
Adjusted EBITDA by segment: | |||||||||||||||||||||||
Churchill Downs | $ | (6.0 | ) | $ | 107.9 | $ | (3.0 | ) | $ | 3.4 | $ | 102.3 | $ | 89.0 | |||||||||
Online Wagering | 17.9 | 24.4 | 20.8 | 15.9 | 79.0 | 69.9 | |||||||||||||||||
Gaming | 46.4 | 45.7 | 44.9 | 37.1 | 174.1 | 148.6 | |||||||||||||||||
Total Segments | 58.3 | 178.0 | 62.7 | 56.4 | 355.4 | 307.5 | |||||||||||||||||
All Other | (9.1 | ) | (3.5 | ) | (0.6 | ) | (13.4 | ) | (26.6 | ) | (21.3 | ) | |||||||||||
Adjusted EBITDA | $ | 49.2 | $ | 174.5 | $ | 62.1 | $ | 43.0 | $ | 328.8 | $ | 286.2 |