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): July 26, 2000
CHURCHILL DOWNS INCORPORATED
-----------------------------
(Exact name of registrant as specified in its charter)
Kentucky 0-1469 61-0156015
(State or other (Commission File Number) (IRS Employer Identification
jurisdiction of No.)
incorporation or
organization)
700 Central Avenue, Louisville, KY 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)
CHURCHILL DOWNS INCORPORATED
I N D E X
ITEM 1-4. Not Applicable
ITEM 5. OTHER EVENTS
A copy of a press release is set forth in Exhibit 99.1 to this
filing and is incorporated herein by reference
ITEM 6. Not Applicable
ITEM 7. Financial Statements and Exhibits
(a) Financial statements of business acquired
Not Applicable
(b) Pro forma financial information
Not Applicable
(c) Exhibits
Exhibit 99.1 Press Release dated July 26, 2000
ITEM 8-9. Not Applicable
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Contact: Chantelle Kammerdiener
(502) 636-4415 or (502) 266-8731
chantellek@kyderby.com
CHURCHILL DOWNS INCORPORATED REPORTS
RECORD QUARTERLY RESULTS
Net revenues increased 57 percent to $131.9 million.
Net earnings rose 34 percent to $18.3 million.
Earnings per share increased to a new quarterly high of $1.85.
LOUISVILLE, Ky. (July 26, 2000) - Churchill Downs Incorporated (Nasdaq: CHDN)
("CDI") today reported second-quarter and half-year results for the period ended
June 30, 2000.
Net revenues for the second quarter were a record $131.9 million, 57 percent
more than the $84.1 million generated in the same period in 1999. Net earnings
for the quarter were a record $18.3 million, a 34 percent increase over $13.7
million in 1999. Diluted earnings per share were a record $1.85, compared with
$1.79 for the second quarter of 1999. Half-year results are outlined in the
accompanying tables.
The increases of 30 percent and 29 percent in the number of diluted
weighted average shares outstanding for the second quarter and six months,
respectively, were due principally to the public offering of 2.3 million common
shares in July 1999. At the end of the second quarter of 2000, diluted weighted
average shares outstanding were 9.9 million, compared with 7.6 million in 1999.
Thomas H. Meeker, CDI's president and chief executive officer, said the
Company's strong financial performance for the quarter was highlighted by the
addition of Hollywood Park, which CDI acquired in September 1999, and a record
Spring Meet at Churchill Downs.
"The second quarter of 2000 was the best period in our Company's
126-year history," Meeker said. "This year is the first in which we have had the
benefit of Hollywood Park's Spring/Summer Meet. Additionally, four of our
racetracks were running during the second quarter, and we were able to launch
the Churchill Downs Simulcast Network, or CDSN, in conjunction with our business
strategy. We were especially pleased with the performance of Churchill Downs,
where better-than- expected handle numbers allowed us to increase purses during
the race meet. Our flagship racetrack also hosted the most successful Kentucky
Derby/Kentucky Oaks weekend in history, further solidifying the position of
these two days as the premier events in Thoroughbred racing."
Total wagering on the Kentucky Derby race card reached a North American
record of $101.4 million with Churchill Downs' second largest on-track
attendance of 153,000. The Kentucky Oaks race card, which is run the day before
the Derby, brought in a record $24.7 million in total wagering and a record
on-track attendance of 106,000.
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Meeker noted that CDI's results for the first half of 2000 were affected
by the timing of the Calder Race Course and Hollywood Park acquisitions in 1999.
As expected, the inclusion of those tracks in the first quarter of 2000, when
only two racing days were scheduled, had a predictable impact on the
year-to-year comparisons that was not indicative of any change in their
operating progress.
"This year already has witnessed some exciting developments for our
Company, including the proposed merger with Arlington International Racecourse,"
Meeker said. "We are gratified by the enthusiasm the industry has expressed
regarding this agreement, and we are excited about the opportunities it will
create for our Company and for the Midwest racing circuit. The proposed merger
is progressing as planned, and we anticipate that closing of the transaction
will take place in September. The timing of that closing will likely have a
material impact on our quarterly per-share results over the remainder of this
year. During the third quarter, we expect a significant contribution to earnings
from the management contract we have with Arlington, which is currently in
effect. That expected increment to per-share earnings, however, will be largely
offset in the fourth quarter because we will be integrating Arlington at a time
when the racetrack will not be racing and, after shareholder approval, we will
have significantly more shares outstanding. Our earnings for the third quarter
should also reflect a gain from the anticipated closing of our sale of 26
percent of Hoosier Park."
Meeker continued, "As we embark upon the second half of 2000 and look
forward to completing the Arlington merger, we are continuing our development of
CDSN as the industry's premier simulcast product. We have also launched a
Company- wide best practices program, which will strengthen the quality of the
services we offer our patrons when they visit one of our properties or wager on
CDSN at an off-track betting facility."
A conference call regarding this release is scheduled for Thursday, July
27, at 9 a.m. EDT. Interested parties can access the call in listen-only mode by
calling (719) 457-2617 or using the Internet at www.kentuckyderby.com.
Churchill Downs Incorporated - headquartered in Louisville, Ky. - is one
of the world's leading horse racing companies. Its flagship operation, Churchill
Downs, is home of the Kentucky Derby and will host the race's 127th running on
May 5, 2001. The Company owns additional racetracks in Kentucky, California and
Florida and has interests in a pari-mutuel operation in Indiana as well as
various racing services companies. CDI trades on the Nasdaq National Market
under the symbol CHDN and can be found on the Internet at www.kentuckyderby.com.
This news release contains forward-looking statements made pursuant to
the "safe harbor" provisions of the Private Securities Litigation Reform Act of
1995. The reader is cautioned that such forward-looking statements involve risks
and uncertainties that could cause our actual operating results and financial
condition to differ materially. Forward-looking statements are typically
identified by the use of terms such as "may," "will," "expect," "anticipate,"
"estimate," 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 our expectations include: the financial
performance of Arlington International Racecourse; litigation surrounding the
Rosemont, Ill., riverboat casino; market reaction to our merger agreement with
Arlington; changes in Illinois law that impact revenues of the racing operations
in Illinois; the impact of gaming competition (including lotteries and
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riverboat, cruise ship and land-based casinos) and other sports and
entertainment options in those markets in which we operate; a substantial change
in law or regulations affecting our pari-mutuel activities; a substantial change
in allocation of live racing days; a decrease in riverboat admissions revenue
from our Indiana operations; the impact of an additional racetrack near our
Indiana 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; the
impact of interest rate fluctuations; our ability to execute our acquisition
strategy and to complete or successfully operate planned expansion projects; our
ability to adequately integrate acquired businesses; the loss of our totalisator
companies or their inability to keep their technology current; our
accountability for environmental contamination; the loss of key personnel and
the volatility of our stock price.
A proxy statement will be filed by Churchill Downs Incorporated ("CDI")
with the Securities and Exchange Commission ("Commission") as soon as
practicable. As customary, a preliminary statement has already been filed with
the Commission. CDI URGES INVESTORS TO READ THE PROXY STATEMENT AND ANY OTHER
RELEVANT DOCUMENTS TO BE FILED WITH THE COMMISSION BECAUSE THEY CONTAIN
IMPORTANT INFORMATION. Investors and security holders may obtain a free copy of
the proxy statement (when available) and other documents filed by CDI with the
Commission at the Commission's Web site at www.sec.gov. The proxy statement and
other documents filed with the Commission by CDI may also be obtained for free
from CDI by directing a request to Churchill Downs Incorporated, 700 Central
Avenue, Louisville, Kentucky, 40208, (502) 636-4400.
CDI and its officers and directors may be deemed to be participants in
the solicitation of proxies from CDI's stockholders with respect to the
transactions contemplated by the merger agreement. Information regarding such
officers and directors is included in CDI's proxy statement for its 2000 annual
meeting of stockholders filed with the Commission on May 15, 2000. This document
is available free of charge at the Commission's Web site at www.sec.gov and from
CDI at the address set forth above.
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CHURCHILL DOWNS INCORPORATED
CONSOLIDATED STATEMENTS OF EARNINGS
for the six and three months ended June 30,
(Unaudited)
Six Months Ended June 30, Three Months Ended June 30,
------------------------ ---------------------------
(In thousands, except per share data) 2000 1999 2000 1999
---- ---- ---- ----
Net revenues $157,583 $101,803 $131,938 $84,140
Operating expenses 120,672 74,820 89,668 55,663
--------- --------- --------- --------
Gross profit 36,911 26,983 42,270 28,477
Selling, general and
administrative expenses 12,963 6,889 6,782 3,586
--------- --------- --------- --------
Operating income 23,948 20,094 35,488 24,891
--------- --------- --------- --------
Other income (expense):
Interest income 506 362 240 215
Interest expense (7,671) (2,209) (3,919) (1,774)
Miscellaneous, net (416) 125 (459) 81
--------- --------- --------- --------
(7,581) (1,722) (4,138) (1,478)
--------- --------- --------- --------
Earnings before income tax provision 16,367 18,372 31,350 23,413
--------- --------- --------- --------
Federal and state income tax provision (6,792) (7,716) (13,010) (9,747)
--------- --------- --------- --------
Net earnings $ 9,575 $ 10,656 $ 18,340 $ 13,666
========= ========= ========= ========
Earnings per common share data:
Basic $0.97 $1.42 $1.86 $1.82
Diluted $0.97 $1.39 $1.85 $1.79
Weighted average shares outstanding:
Basic 9,854 7,525 9,854 7,525
Diluted 9,908 7,671 9,906 7,649
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CHURCHILL DOWNS INCORPORATED
SUPPLEMENTAL INFORMATION BY OPERATING UNIT
for the six and three months ended June 30,
(Unaudited)
(In thousands)
Six Months Ended June 30, Three Months Ended June 30,
------------------------ ---------------------------
2000 1999 2000 1999
---- ---- ---- ----
Net revenues:
Churchill Downs $ 64,678 $ 61,133 $ 60,121 $56,490
Hollywood Park 50,879 - 45,120 -
Calder Race Course 13,669 11,701 11,792 11,701
Hoosier Park 24,217 24,258 13,032 13,310
Ellis Park 2,682 2,963 1,370 1,797
Other investments 3,514 2,711 2,207 1,497
--------- --------- --------- --------
159,639 102,766 133,642 84,795
Corporate revenues* 605 - 592 -
Eliminations (2,661) (963) (2,296) (655)
--------- --------- --------- --------
$157,583 $101,803 $131,938 $84,140
========= ========= ========= ========
EBITDA:
Churchill Downs $ 23,863 $22,014 $ 27,393 $25,297
Hollywood Park 9,472 - 11,093 -
Calder Race Course (745) 1,888 1,284 1,888
Hoosier Park 3,442 3,387 1,555 1,709
Ellis Park (1,047) (803) (656) (421)
Other investments 700 661 565 332
--------- --------- --------- --------
35,685 27,147 41,234 28,805
Corporate expenses* (4,189) (2,545) (2,181) (1,353)
--------- --------- --------- --------
$ 31,496 $24,602 $ 39,053 $27,452
========= ========= ========= ========
Operating income (loss):
Churchill Downs $ 22,003 $20,211 $ 26,456 $24,409
Hollywood Park 7,315 - 9,995 -
Calder Race Course (2,527) 1,302 392 1,302
Hoosier Park 2,778 2,766 1,222 1,389
Ellis Park (1,769) (1,450) (1,018) (748)
Other investments (24) (190) 261 (108)
--------- --------- --------- --------
27,776 22,639 37,308 26,244
Corporate expenses* (3,828) (2,545) (1,820) (1,353)
--------- --------- --------- --------
$ 23,948 $ 20,094 $ 35,488 $24,891
========= ========= ========= ========
* As a result of a reorganization for internal reporting during 2000, the
Company's segment disclosures are presented on a new basis to correspond with
internal reporting for corporate revenues and expenses. Corporate revenues and
expenses for the six and three months ended June 30, 2000 and 1999 are reported
separately.
Certain financial statement amounts have been reclassified in the prior periods
to conform to current period presentation.
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CHURCHILL DOWNS INCORPORATED
CONSOLIDATED BALANCE SHEETS
(Unaudited)
(in thousands)
June 30, December 31, June 30,
ASSETS 2000 1999 1999
---- ---- ----
Current assets:
Cash and cash equivalents $ 52,369 $ 29,060 $ 21,927
Accounts receivable 23,032 24,279 14,653
Other current assets 3,741 2,751 1,670
--------- --------- ---------
Total current assets 79,142 56,090 38,250
Other assets 6,988 4,740 8,947
Plant and equipment, net 276,341 274,882 133,461
Intangible assets, net 61,216 62,334 62,269
--------- --------- ---------
$423,687 $398,046 $242,927
========= ========= =========
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Accounts payable $ 33,979 $ 14,794 $ 15,190
Accrued expenses 42,360 23,821 18,510
Dividends payable - 4,927 -
Income taxes payable 5,904 336 7,679
Deferred revenue 2,334 10,860 1,318
Long-term debt, current portion 2,904 552 479
--------- --------- ---------
Total current liabilities 87,481 55,290 43,176
Long-term debt 166,658 180,898 103,271
Other liabilities 9,737 8,263 4,554
Deferred income taxes 15,569 15,474 15,982
Shareholders' equity:
Preferred stock, no par value;
250 shares authorized; no shares issued - - -
Common stock, no par value; 50,000 shares
authorized;issued: 9,854 shares June 30,
2000 and December 31, 1999, and 7,525
shares June 30, 1999 71,634 71,634 8,927
Retained earnings 72,731 66,667 67,255
Deferred compensation costs (58) (115) (173)
Note receivable for common stock (65) (65) (65)
--------- --------- ---------
144,242 138,121 75,944
--------- --------- ---------
$423,687 $398,046 $242,927
========= ========= =========
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SIGNATURES
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 thereunto duly authorized.
CHURCHILL DOWNS INCORPORATED
July 28, 2000 /s/Robert L. Decker
------------------------------------
Robert L. Decker
Executive Vice President and Chief
Financial Officer
(Principal Financial Officer)
July 28, 2000 /s/Michael E. Miller
------------------------------------
Michael E. Miller
Senior Vice President, Finance
(Principal Accounting Officer)
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