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): February 27, 2001
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)
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CHURCHILL DOWNS INCORPORATED
I N D E X
ITEM 1-4. Not Applicable
ITEM 5. OTHER EVENTS
A Copy of 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 February 27, 2001
ITEM 8-9. Not Applicable
2
Contact: Karl Schmitt
(502) 636-4594, office
(502) 836-1454, cellular
karls@kyderby.com
CHURCHILL DOWNS INCORPORATED REPORTS EIGHTH CONSECUTIVE YEAR
OF RECORD EARNINGS
Net revenues rose 40 percent to $362.0 million.
Net earnings for 2000 increased to new high of $19.2 million.
Earnings per share reached $1.75.
LOUISVILLE, Ky. (Feb. 27, 2001) -- Churchill Downs Incorporated (Nasdaq: CHDN)
("CDI") today reported record revenues and earnings for the year ended December
31, 2000.
Net revenues for the year totaled $362.0 million, a 40 percent increase
over $258.4 million in 1999. Net earnings were $19.2 million, a 28 percent
increase over $15.0 million last year. Earnings per share for the year were
$1.75 diluted on 10.9 million average diluted shares outstanding, compared with
$1.72 diluted on 8.7 million average diluted shares outstanding in 1999.
During the fourth quarter of 2000, the Company reported net revenues of
$100.9 million, up 8 percent over the $93.5 million reported during the same
period in 1999. Net earnings for the quarter were $2.3 million, a decrease of 27
percent from $3.1 million earned during the last quarter of 1999. Earnings per
share were 17 cents diluted on 13.2 million average diluted shares outstanding,
compared with 31 cents on 10.0 million diluted shares outstanding from the same
period last year.
The increases of 33 percent and 25 percent in the number of average
diluted shares outstanding for the fourth quarter and year ended December 31,
2000, respectively, were due principally to the issuance of 3.15 million common
shares for the September 2000 merger with Arlington International Racecourse,
now doing business as Arlington Park. Our July 1999 public offering of 2.3
million common shares also had an effect on the full-year comparison of average
shares outstanding.
Thomas H. Meeker, CDI's president and chief executive officer, said that
2000 was the Company's eighth consecutive year of record earnings.
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"Our ability to achieve this sustained record of progress clearly
validates the growth strategy we are following to capitalize on the outstanding
opportunities for CDI. The last several years have been particularly eventful
within our Company's 127-year history," Meeker said. "We have substantially
broadened the geographic and operating scope of our live racing, implemented a
comprehensive branding program and begun to pursue the exciting potential
available to us through our simulcast operations. One of the important
highlights of 2000 was blending our operations into a branded product, a first
for our industry and an integral component of our plans to expand our simulcast
operations through the Churchill Downs Simulcast Network ("CDSN"). During 2000,
we also continued our plan of aggregating premier racing content when we merged
with Arlington Park in September 2000. This merger is one of our largest
transactions to date and, with the inclusion of the management fees that we
earned prior to closing, was modestly accretive to our year-end earnings. The
first full-year inclusion of Calder Race Course and Hollywood Park, both
acquired during 1999, had a significant impact on the comparison with our 1999
results. We completed our acquisition of Calder in April 1999, just a few weeks
before the start of its racing season. So in 2000, we had to absorb losses from
four months of the year when Calder conducts no live racing. With Hollywood
Park, which we did not acquire until September 1999, our earnings benefited from
having that racetrack's Spring Meet in our 2000 calendar.
"Our earnings for the full year and the fourth quarter were in line with our
expectations. Our fourth-quarter results were impacted by having significantly
more shares outstanding and including Arlington Park for the first time during a
period in which it is not conducting any live racing."
Meeker continued, "2001 should mark another year of record revenues and
earnings for our Company. We are optimistic about the current year given the
inclusion of Arlington Park under the CDSN brand and the synergies we are
already realizing from our six racetracks. We have completed our assimilation of
Arlington Park, and consistent with the results we achieved with our prior
acquisitions, we are confident that Arlington Park will positively impact our
operating results."
"We are proud of how we have grown our business and our profit over the last
several years, which was a period of strong economic growth. Today, the economic
environment is, at best, uncertain, which presents a new challenge for our
Company as well as most American businesses. During the course of developing our
business through internal growth and acquisitions, we have also been effective
in managing our cost structure and improving our operating margins. This
discipline allows us to continue to manage our expenses and effectively meet the
challenge of a slowing economy.
"For the first quarter, we will have to absorb for the first time the
results of Arlington Park, which hosts no live racing during this period, but
the impact of that factor on our per-share results will be mitigated by the
higher number of shares outstanding. We expect to report a loss of 86 to 88
cents per share diluted for the first quarter, compared to a loss of 89 cents in
2000. It is important to note that we do not host live racing during the first
quarter with the exception of
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two days of Thoroughbred racing at Calder and 19 days of Standardbred racing at
Hoosier Park at Anderson. Therefore, we have historically reported a loss during
this period.
"For 2001 as a whole, we expect an approximate 20 percent increase in
net earnings over the record $19.2 million in 2000. As a result of the
substantial increase in our average shares outstanding, we expect a much more
moderate gain in earnings per share. This improvement would be in line with the
percentage increase we realized in 2000. Finally, we expect our balance sheet in
2001 to continue benefiting from a positive cash flow. Internally generated
funds in 2000 enabled us to reduce our long-term debt by $25 million, from $181
million to $156 million."
A conference call regarding this release is scheduled for Wednesday, Feb.
28, at 9 a.m. EST. Investors and other interested parties may listen to the
teleconference by accessing the online, real-time webcast and broadcast of the
call at www.kentuckyderby.com or www.streetevents.com or by calling (913)
981-5571 at least 10 minutes before the appointed time. The online replay will
be available at approximately 11 a.m. (EST) and continue for two weeks. An
eight-day telephonic replay will be available two hours after the call ends by
dialing (719) 457-0820 and entering 620324 when prompted for the access code.
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, Illinois,
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," "believe," "could,"
"intend," "might," "plan," "predict," "project," "should," "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 our racing operations; litigation
surrounding the Rosemont, Ill., riverboat casino; the impact of gaming
competition (including lotteries and riverboat, cruise ship and land-based
casinos) and other sports and entertainment options in those markets in which we
operate; 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; market reaction to our expansion projects; 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.
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CHURCHILL DOWNS INCORPORATED
CONSOLIDATED STATEMENTS OF EARNINGS
for the years and three months ended December 31,
(Unaudited)
(In thousands, except per share data)
Years Ended Three Months Ended
December 31, December 31,
-------------------- --------------------
2000 1999 2000 1999
---- ---- ---- ----
Net revenues $362,016 $258,427 $100,897 $93,548
Operating expenses
Purses 128,982 97,585 39,567 38,844
Other direct expenses 158,624 109,783 47,085 39,736
--------- --------- --------- --------
287,606 207,368 86,652 78,580
--------- --------- --------- --------
Gross profit 74,410 51,059 14,245 14,968
Selling, general and
administrative expenses 27,832 18,546 7,439 6,184
--------- --------- --------- --------
Operating income 46,578 32,513 6,806 8,784
--------- --------- --------- --------
Other income (expense):
Interest income 1,023 847 248 281
Interest expense (14,848) (7,839) (3,495) (3,677)
Miscellaneous, net (166) 334 348 40
--------- --------- --------- --------
(13,991) (6,658) (2,899) (3,356)
--------- --------- --------- --------
Earnings before income
tax provision 32,587 25,855 3,907 5,428
--------- --------- --------- -------
Federal and state income
tax provision (13,423) (10,879) (1,621) (2,300)
--------- --------- --------- --------
Net earnings $ 19,164 $14,976 $ 2,286 $ 3,128
========= ========= ========= ========
Earnings per common
share data:
Basic $1.77 $1.74 $0.18 $0.32
Diluted $1.75 $1.72 $0.17 $0.31
Weighted average
shares outstanding:
Basic 10,849 8,598 13,016 9,854
Diluted 10,940 8,718 13,219 9,967
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CHURCHILL DOWNS INCORPORATED
SUPPLEMENTAL INFORMATION BY OPERATING UNIT
for the year and three months ended December 31,
(Unaudited)
(In thousands) Years Ended Three Months Ended
December 31, December 31,
----------------------- ---------------------
2000 1999 2000 1999
---- ---- ---- ----
Net revenues:
Churchill Downs $ 89,547 $ 82,429 $ 15,909 $15,776
Hollywood Park 105,628 30,494 30,626 29,377
Calder Race Course 77,552 72,418 34,995 33,365
Arlington Park 14,781 - 5,609 -
Hoosier Park 51,250 51,280 13,161 13,766
Ellis Park 16,119 19,653 1,171 1,162
Other investment 13,069 6,151 1,546 1,773
--------- --------- --------- --------
367,946 262,425 103,017 95,219
Corporate revenues* 778 - 126 -
Eliminations (6,708) (3,998) (2,246) (1,671)
--------- --------- --------- --------
$362,016 $258,427 $100,897 $93,548
========= ========= ========= =======
EBITDA:
Churchill Downs $21,715 $17,789 $ 213 $ (212)
Hollywood Park 18,898 3,842 5,518 4,384
Calder Race Course 16,718 17,946 9,717 9,081
Arlington Park (427) - (2,520) -
Hoosier Park 5,920 6,423 980 1,292
Ellis Park 936 2,071 (598) (763)
Other investments 7,815 1,314 678 199
-------- -------- -------- --------
71,575 49,385 13,988 13,981
Corporate expenses* (8,486) (5,679) (2,357) (1,730)
-------- -------- -------- --------
$63,089 $43,706 $11,631 $12,251
======== ======== ======== ========
Operating income (loss):
Churchill Downs $17,857 $14,240 $ (864) $(1,088)
Hollywood Park 14,407 2,574 4,325 3,369
Calder Race Course 13,397 15,564 9,090 8,200
Arlington Park (1,133) - (3,093) -
Hoosier Park 4,538 5,246 596 1,063
Ellis Park (481) 721 (923) (1,121)
Other investments 6,252 (153) 107 91
-------- -------- ------- --------
54,837 38,192 9,238 10,514
Corporate expenses* (8,259) (5,679) (2,432) (1,730)
-------- -------- ------- --------
$46,578 $32,513 $6,806 $8,784
======== ======== ======= ========
* 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 year and three months ended December 31,
2000 and 1999 are reported separately.
Certain financial statement amounts have been reclassified in the prior
periods to conform to current period presentation. In addition, one week
of live racing was shifted from Ellis Park to Churchill Downs for 2000.
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CHURCHILL DOWNS INCORPORATED
CONDENSED CONSOLIDATED BALANCE SHEETS
December 31,
(Unaudited)
(in thousands)
ASSETS 2000 1999 1998
---- ---- ----
Current assets:
Cash and cash equivalents $ 19,814 $ 29,060 $ 6,380
Accounts receivable 32,535 24,279 11,968
Other current assets 2,799 2,751 1,049
--------- --------- ---------
Total current assets 55,148 56,090 19,397
Other assets 8,117 4,740 3,796
Plant and equipment, net 342,935 274,882 83,088
Intangible assets, net 63,851 62,334 8,370
--------- --------- ---------
$470,051 $398,046 $114,651
========= ========= =========
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Accounts payable $ 38,576 $ 14,794 $ 6,381
Accrued expenses 27,115 23,821 8,248
Dividends payable 6,508 4,927 3,762
Other current liabilities 13,885 11,748 8,797
--------- --------- ---------
Total current liabilities 86,084 55,290 27,188
Long-term debt 155,716 180,898 13,538
Other liabilities 25,766 23,737 8,694
Shareholders' equity:
Preferred stock, no par value;
250 shares authorized; no
shares issued - - -
Common stock, no par value; 50,000
shares authorized; issued:
13,019 shares in 2000, 9,854
shares in 1999; and 7,525
shares in 1998. 123,227 71,634 8,927
Retained earnings 79,323 66,667 56,599
Deferred compensation costs - (115) (230)
Note receivable for common stock (65) (65) (65)
--------- --------- ---------
202,485 138,121 65,231
--------- --------- ---------
$470,051 $398,046 $114,651
========= ========= =========
Certain financial statement amounts have been reclassified in the prior
years to conform to current year presentation.
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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
February 28, 2001 /s/Robert L. Decker
---------------------------------------
Robert L. Decker
Executive Vice President and Chief
Financial Officer
(Principal Financial Officer)
February 28, 2001 /s/Michael E. Miller
---------------------------------------
Michael E. Miller
Senior Vice President, Finance
(Principal Accounting Officer)