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): October 22, 2002
CHURCHILL DOWNS INCORPORATED
(Exact name of registrant as specified in its charter)
|
Kentucky (State or other jurisdiction of incorporation or organization) |
0-1469 Commission file number |
61-0156015 (IRS Employer Identification No.) |
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)
| 1 | ||
CHURCHILL DOWNS INCORPORATED
I N D E X
| ITEM 1-4. | Not applicable | ||
|
ITEM 5. |
Other Events | ||
| Copy of press release is set forth in Exhibit 99 to this filing and 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 Press release dated October 22, 2002 | |||
| ITEM 8-9. | Not applicable | ||
| 2 | ||
| 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 | ||
| October 23, 2002 | \s\Robert L. Decker | |
| Robert L. Decker | ||
| Executive Vice President and Chief Financial Officer | ||
| (Principal Financial Officer) | ||
| October 23, 2002 | \s\Michael E. Miller | |
| Michael E. Miller | ||
| Senior Vice President, Finance | ||
| (Principal Accounting Officer) | ||
| 3 | ||
| FOR IMMEDIATE RELEASE | Contact: Mike Ogburn |
| (502) 636-4515, office | |
| (502) 262-0224, cellular | |
| mogburn@kyderby.com |
DOWNS INCORPORATED REPORTS THIRD QUARTER RESULTS
LOUISVILLE, Ky. (Oct. 22, 2002) - Churchill Downs Incorporated ("CDI") (Nasdaq: CHDN) today reported results for the third quarter ended Sept. 30, 2002, which included record third-quarter revenues and net earnings and higher earnings per share versus a year ago.
Net revenues for the third quarter totaled $125.6 million, an increase of 3.6 percent, compared with $121.2 million for the same period last year. Net earnings for the quarter were $7.9 million, compared with $7.1 million in 2001. Diluted earnings per share totaled $0.59, compared with $0.54 for the third quarter of 2001. Results for the first nine months of 2002 are outlined in the accompanying tables.
Thomas H. Meeker, CDI’s president and chief executive officer, credited the solid quarter, that included earnings within the range previously estimated by the Company, to positive performances at most of the Company’s operating units, cost controls and a sound cash management strategy. “As has been our experience for 2002, on-track revenues for the third quarter were flat for most of our racetracks. We were able to substantially offset this impact through the continued strong performance of our simulcast operations and a diligent approach to managing costs. We also benefited from a significant drop in interest expense as a result of lower interest rates and continued debt reduction through our positive cash flow and balance sheet management.”
Meeker added, “Looking ahead, we are confident that our fourth quarter will generate earnings consistent with our full-year estimate of $1.77 to $1.80 per diluted share. That confidence in earnings – and in our business in general – was validated by our board of directors’ recent approval of the $121 million Master Plan to modernize Churchill Downs racetrack. The Master Plan to renovate our flagship facility and preserve its signature event, the Kentucky Derby, represents an unprecedented investment in our future and an unparalleled commitment to our business model. We believe this initiative will have a positive impact on our Company following its planned completion in 2006.
Our ability this year to show fundamental progress against the backdrop of a formal business recession encourages us about our prospects for 2003. Gains next year will depend on our continuing efforts to operate as efficiently as possible while delivering the customer satisfaction that we know is paramount to our longer term success. One specific development that we will have to surmount in 2003 is the split of Hoosier Park’s racing subsidy with Indiana Downs. Although we further lessened our ownership in Hoosier Park a year ago, this factor will reduce our EBITDA by approximately $3 million in the year ahead. On balance, we expect to show gains in earnings for 2003, extending our long-term record of growth.”
| 4 | ||
A conference call regarding this release is scheduled for Wednesday, Oct. 23, at 9 a.m. (EDT). Investors and other interested parties may listen to the teleconference by accessing the online, real-time Web cast and broadcast of the call at www.churchilldownsincorporated.com orwww.companyboardroom.com or by calling (913) 981-5508 at least 10 minutes before the appointed time. The online replay will be available at approximately 12 p.m. (ET) 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 558288 when prompted for the access code.
Churchill Downs Incorporated (“CDI”), headquartered in Louisville, Ky., owns and operates world-renowned horse racing venues throughout the United States. The Company’s racetracks in California, Florida, Illinois, Indiana and Kentucky host 112 graded-stakes events and many of North America’s most prestigious races, including the Kentucky Derby and Kentucky Oaks, Hollywood Gold Cup and Arlington Million. CDI also owns off-track betting facilities and has interests in various television production, telecommunications and racing services companies that support CDI’s network of simulcasting and racing operations. CDI trades on the Nasdaq National Market under the symbol CHDN and can be found on the Internet at www.churchilldownsincorporated.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 “anticipate,” “believe,” “could,” “estimate,” “expect,” “intend,” “may,” “might,” “plan,” “predict,” “project,” “should,” “will,” 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 effect of global economic conditions; the effect (including possible increases in the cost of doing business) resulting from war and terrorist activities or political uncertainties; the impact of increasing insurance costs; the financial performance of our racing operations; 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; litigation surrounding the Rosemont, Illinois, riverboat casino; changes in Illinois law that impact revenues of racing operations in Illinois; a decrease in riverboat admissions subsidy 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; the economic environment; 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.
| 5 | ||
|
CHURCHILL DOWNS INCORPORATED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS for the nine and three months ended September 30, 2002 and 2001 (Unaudited) (In thousands, except per share data) |
|
Nine Months Ended September 30, |
Three Months Ended September 30, | |||||||||||
| 2002 | 2001 | 2002 | 2001 | |||||||||
| Net revenues | $329,186 | $316,219 | $125,587 | $121,247 | ||||||||
| Operating Expenses |
263,994 |
|
253,210 |
|
101,564 |
|
99,145 |
|
||||
| Gross profit | 65,192 | 63,009 | 24,023 | 22,102 | ||||||||
| Selling, general and administrative expenses |
25,580 |
|
23,084 |
|
8,312 |
|
7,278 |
|
|
|||
| Operating income |
39,612 |
|
39,925 |
|
15,711 |
|
14,824 |
|
||||
| Other income (expense): | ||||||||||||
| Interest income | 254 | 471 | 80 | 139 | ||||||||
| Interest expense | (6,946 | ) | (9,864 | ) | (1,979 | ) | (2,908 | ) | ||||
| Miscellaneous, net |
(1,177 |
) |
(240 |
) |
(586 |
) |
(141 |
) |
||||
|
(7,869 |
) |
(9,633 |
) |
(2,485 |
) |
(2,910 |
) |
|||||
| Earnings before provision for income taxes | 31,743 | 30,292 | 13,226 | 11,914 | ||||||||
| Provision for income taxes |
(12,761 |
) |
(12,266 |
) |
(5,317 |
) |
(4,823 |
) |
||||
| Net earnings |
$ 18,982 |
|
$ 18,026 |
|
$ 7,909 |
|
$ 7,091 |
|
||||
| Earnings per common share data: | ||||||||||||
| Basic | $1.45 | $1.38 | $0.60 | $0.54 | ||||||||
| Diluted | $1.42 | $1.37 | $0.59 | $0.54 | ||||||||
| Weighted average shares outstanding: | ||||||||||||
| Basic | 13,115 | 13,075 | 13,126 | 13,093 | ||||||||
| Diluted | 13,342 | 13,198 | 13,351 | 13,223 | ||||||||
Certain financial statement amounts have been reclassified in the prior periods to conform to current period presentation.
| 6 | ||
|
CHURCHILL DOWNS INCORPORATED SUPPLEMENTAL INFORMATION BY OPERATING UNIT for the nine and three months ended September 30, 2002 and 2001 (Unaudited) (In thousands) |
| Nine Months Ended September 30, | Three Months Ended September 30, | |||||||||||
| 2002 | 2001 | 2002 | 2001 | |||||||||
| Net revenues: | ||||||||||||
| Kentucky Operations | $ 87,746 | $ 87,025 | $ 18,395 | $ 19,339 | ||||||||
| Hollywood Park | 67,161 | 68,913 | 18,674 | 16,527 | ||||||||
| Calder Race Course | 50,692 | 41,854 | 27,867 | 28,303 | ||||||||
| Arlington Park | 68,676 | 65,789 | 41,042 | 38,320 | ||||||||
| Hoosier Park | 41,287 | 40,569 | 14,624 | 14,251 | ||||||||
| CDSN |
50,373 |
|
43,506 |
|
19,631 |
|
17,612 |
|
||||
| Total racing operations | 365,935 | 347,656 | 140,233 | 134,352 | ||||||||
| Other investments | 4,666 | 4,752 | 2,086 | 2,069 | ||||||||
| Corporate revenues | 1,116 | 786 | 105 | 81 | ||||||||
| Eliminations |
(42,531 |
) |
(36,975 |
) |
(16,837 |
) |
(15,255 |
) |
||||
|
$329,186 |
|
$316,219 |
|
$125,587 |
|
$121,247 |
|
|||||
| EBITDA: | ||||||||||||
| Kentucky Operations | $ 17,754 | $ 20,650 | $ (1,946 | ) | $ (1,015 | ) | ||||||
| Hollywood Park | 8,577 | 9,931 | 1,771 | 1,165 | ||||||||
| Calder Race Course | 7,137 | 4,866 | 6,318 | 6,276 | ||||||||
| Arlington Park | 6,552 | 8,085 | 9,040 | 8,365 | ||||||||
| Hoosier Park | 5,854 | 4,695 | 1,976 | 1,544 | ||||||||
| CDSN |
12,036 |
|
10,229 |
|
4,531 |
|
4,108 |
|
||||
| Total racing operations | 57,910 | 58,456 | 21,690 | 20,443 | ||||||||
| Other investments | 544 | 1,535 | 296 | 687 | ||||||||
| Corporate expenses | (5,344 | ) | (5,457 | ) | (1,909 | ) | (1,393 | ) | ||||
| Eliminations |
(62 |
) |
- |
|
- |
|
- |
|
||||
|
$ 53,048 |
|
$ 54,534 |
|
$ 20,077 |
|
$ 19,737 |
|
|||||
| Operating income (loss): | ||||||||||||
| Kentucky Operations | $ 13,370 | $ 16,311 | $ (3,396 | ) | $ (2,513 | ) | ||||||
| Hollywood Park | 4,518 | 6,032 | 382 | (165 | ) | |||||||
| Calder Race Course | 5,398 | 2,238 | 5,725 | 5,395 | ||||||||
| Arlington Park | 4,375 | 6,363 | 8,269 | 7,752 | ||||||||
| Hoosier Park | 4,698 | 3,539 | 1,589 | 1,179 | ||||||||
| CDSN |
12,036 |
|
10,229 |
|
4,531 |
|
4,108 |
|
||||
| Total racing operations | 44,395 | 44,712 | 17,100 | 15,756 | ||||||||
| Other investments | 536 | 770 | 508 | 561 | ||||||||
| Corporate expenses | (5,327 | ) | (5,557 | ) | (1,921 | ) | (1,493 | ) | ||||
| Eliminations |
8 |
|
- |
|
24 |
|
- |
|
||||
|
$ 39,612 |
|
$ 39,925 |
|
$ 15,711 |
|
$ 14,824 |
|
|||||
Certain financial statement amounts have been reclassified in the prior periods to conform to current period presentation.
| 7 | ||
|
CHURCHILL DOWNS INCORPORATED CONDENSED CONSOLIDATED BALANCE SHEETS (In thousands) |
| September 30, | December 31, | September 30, | ||||||||
| 2002 | 2001 | 2001 | ||||||||
| ASSETS | (unaudited) | (unaudited) | ||||||||
| Current assets: | ||||||||||
| Cash and cash equivalents | $ 16,335 | $ 15,732 | $ 14,436 | |||||||
| Restricted cash | 3,755 | 10,535 | 8,389 | |||||||
| Accounts receivable, net | 23,953 | 28,472 | 29,034 | |||||||
| Deferred income tax assets | 1,734 | 2,806 | 1,721 | |||||||
| Other current assets |
6,256 |
|
2,177 |
|
4,304 |
|
||||
| Total current assets | 52,033 | 59,722 | 57,884 | |||||||
| Other assets | 11,307 | 11,475 | 11,180 | |||||||
| Plant and equipment, net | 341,127 | 339,419 | 341,920 | |||||||
| Goodwill, net | 52,239 | 52,239 | 52,588 | |||||||
| Intangible assets, net |
7,587 |
|
7,860 |
|
7,952 |
|
||||
|
$464,293 |
|
$470,715 |
|
$471,524 |
|
|||||
| LIABILITIES AND SHAREHOLDERS' EQUITY | ||||||||||
| Current liabilities: | ||||||||||
| Accounts payable | $ 34,890 | $ 40,493 | $ 37,242 | |||||||
| Accrued expenses | 33,335 | 31,452 | 34,694 | |||||||
| Dividends payable | - | 6,549 | - | |||||||
| Income taxes payable | 972 | 971 | 11,362 | |||||||
| Deferred revenue | 3,149 | 14,241 | 4,423 | |||||||
| Long-term debt, current portion |
471 |
|
561 |
|
2,308 |
|
||||
| Total current liabilities | 72,817 | 94,267 | 90,029 | |||||||
| Long-term debt, due after one year | 123,922 | 132,787 | 134,128 | |||||||
| Other liabilities | 13,748 | 11,302 | 13,255 | |||||||
| Deferred income taxes | 15,115 | 15,124 | 14,761 | |||||||
| 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: 13,135 shares September 30, 2002, 13,098 shares | ||||||||||
| December 31, 2001, and 13,098 shares September 30, 2001 | 125,532 | 124,750 | 124,750 | |||||||
| Retained earnings | 113,832 | 94,850 | 97,349 | |||||||
| Accumulated other comprehensive loss | (608 | ) | (2,300 | ) | (2,683 | ) | ||||
| Note receivable for common stock |
(65 |
) |
(65 |
) |
(65 |
) |
||||
|
238,691 |
|
217,235 |
|
219,351 |
|
|||||
|
$464,293 |
|
$470,715 |
|
$471,524 |
|
|||||
Certain financial statement amounts have been reclassified in the prior periods to conform to current period presentation.
| 8 | ||