10-Q/A
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
(X) QUARTERLY REPORT PURSUANT TO SECTION 13 OF 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended: March 31, 1995
OR
( ) TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
for the transition period from _________________________to______________________
Commission file number 0-1469
CHURCHILL DOWNS INCORPORATED
(Exact name of registrant as specified in its charter)
KENTUCKY 61-0156015
(State or other jurisdiction of (I.R.S Employer
incorporation or organization) 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)
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days.
Yes X No______
The number of shares outstanding of registrant's common stock at May 10, 1995
was 3,783,318 shares.
<PAGE>
CHURCHILL DOWNS INCORPORATED
I N D E X
PAGES
PART I. FINANCIAL INFORMATION
ITEM 1. Condensed Consolidated Financial Statements (Unaudited)
Condensed Consolidated Balance Sheets, March 31, 1995,
December 31, 1994 and March 31, 1994 3
Condensed Consolidated Statements of Operations and
Retained Earnings for the three months ended
March 31, 1995 and 1994 4
Condensed Consolidated Statements of Cash Flows for the
three months ended March 31, 1995 and 1994 5
Condensed Notes to Consolidated Financial Statements 6-7
ITEM 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations 8-14
PART II. OTHER INFORMATION AND SIGNATURES
ITEM 6.Exhibits and Reports on Form 8-K 15
Signatures 16
<PAGE>
<TABLE>
CHURCHILL DOWNS INCORPORATED
CONDENSED CONSOLIDATED BALANCE SHEETS
(UNAUDITED)
<CAPTION>
MARCH 31, DECEMBER 31, MARCH 31,
ASSETS 1995 1994 1994
------------- ------------- ------------
<S> <C> <C>
Current assets:
Cash and cash equivalents $ 4,347,999 $ 2,521,033 $ 4,273,381
Refundable income taxes 1,189,992 -- 1,598,260
Accounts receivable 1,014,082 2,277,218 1,188,532
Other current assets 948,899 741,560 975,054
------------ ------------ ------------
Total current assets 7,500,972 5,539,811 8,035,227
Other assets 5,002,391 5,058,524 5,138,612
Racing plant and equipment 92,466,674 89,537,701 68,621,292
Less accumulated depreciation (30,984,865) (29,960,196) (27,724,439)
----------- ----------- -----------
61,481,809 59,577,505 40,896,853
----------- ----------- -----------
$73,985,172 $70,175,840 $54,070,692
=========== =========== ===========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Notes payable $ 9,343,121 $ 722,235 $ 679,465
Accounts payable 7,202,391 4,567,292 3,421,565
Accrued expenses 1,189,927 2,347,668 1,417,278
Dividends payable -- 1,891,759 --
Deferred revenue 9,769,565 6,142,111 9,368,132
------------ ------------ -----------
Total current liabilities 27,505,004 15,671,065 14,886,440
Notes payable 1,198,059 7,961,079 1,164,431
Outstanding mutuel tickets (payable to Common-
wealth of Kentucky after one year) 1,522,658 1,523,600 939,140
Deferred compensation 1,041,929 690,178 687,444
Deferred income taxes 2,248,000 2,248,000 1,534,000
Minority interest 104,000 78,771 --
Stockholders' equity:
Preferred stock, no par value;
authorized, 250,000 shares; issued, none
Common stock, no par value; authorized, 10MM
shares, issued 3,784,605 shares, March 31, 1995
and 3,783,318 shares, December 31, 1994 and
3,773,930 shares, March 31, 1994 3,504,388 3,437,911 2,977,911
Retained earnings 37,403,350 39,175,627 32,696,242
Deferred compensation costs (477,216) (545,391) (749,916)
Note receivable for common stock (65,000) (65,000) (65,000)
------------ ------------ ------------
40,365,522 42,003,147 34,859,237
----------- ----------- -----------
$73,985,172 $70,175,840 $54,070,692
=========== =========== ===========
<FN>
The accompanying notes are an integral part of the financial statements.
</FN>
</TABLE>
<PAGE>
<TABLE>
CHURCHILL DOWNS INCORPORATED
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
for the three months ended March 31, 1995 and 1994
(Unaudited)
<CAPTION>
THREE MONTHS ENDED MARCH 31
1995 1994
<S> <C> <C>
Gross meeting revenue $ 8,612,607 $ 2,426,032
Direct meeting expenses 7,391,158 2,588,415
------------ ------------
Gross profit from meetings 1,221,449 (162,383)
Selling, general and administrative 4,084,323 3,565,437
------------ -----------
Operating loss (2,862,874) (3,727,820)
------------ -----------
Other income and expense:
Interest income 29,976 55,426
Interest expense (154,594) (8,424)
Miscellaneous, net 69,215 50,027
------------ ------------
(55,403) 97,029
------------ ------------
Loss before income taxes (2,918,277) (3,630,791)
Federal and state income taxes 1,146,000 1,426,000
----------- ------------
Net loss (1,772,277) (2,204,791)
Retained earnings, beginning of period 39,175,627 34,901,033
------------ ------------
Retained earnings, end of period $ 37,403,350 $ 32,696,242
============ ============
Net loss per share (based on weighted $ (.47) $ (.58)
====== ======
average shares outstanding of
3,784,832 and 3,778,691,
respectively)
<FN>
The accompanying notes are an integral part of the financial statements.
</FN>
</TABLE>
<PAGE>
<TABLE>
CHURCHILL DOWNS INCORPORATED
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
for the three months ended March 31, 1995 and 1994
(Unaudited)
<CAPTION>
1995 1994
------------ -----------
<S> <C> <C>
Cash flows from operating activities:
Net loss $( 1,772,277) $( 2,204,791)
Adjustments to reconcile net loss to
net cash provided by operating activities:
Depreciation and amortization 1,100,444 902,400
Increase (decrease) in cash resulting
from changes in operating assets and
liabilities, net of effects from acquisitions:
Refundable income taxes (1,189,992) (3,091,000)
Accounts receivable 1,263,137 2,527,670
Other current assets (207,339) (292,300)
Deferred revenue 3,979,205 1,233,395
Accounts payable and accrued expenses 1,476,316 279,323
Other (238,876) (1,068,272)
----------- -----------
Net cash provided(used) by
operating activities 4,410,618 (1,713,575)
----------- ------------
Cash flows from investing activities:
Acquisitions of Anderson Park, net
of note payable of $1.1 MM -- (850,000)
Additions to racing plant and equipment, net (2,928,973) (2,393,795)
Net cash used in investing activities (2,928,973) (3,243,795)
---------- -----------
Cash flows from financing activities:
Increase in bank note payable, net 2,236,980 --
Dividend paid (1,891,659) (1,886,965)
----------- -----------
Net cash provided (used) in financing
activities 345,321 (1,886,965)
---------- -----------
Net increase (decrease) in cash and
cash equivalents 1,826,966 (6,844,335)
Cash and cash equivalents, beginning of period 2,521,033 11,117,716
----------- -----------
Cash and cash equivalents, end of period $ 4,347,999 $ 4,273,381
=========== ===========
Supplemental Disclosures of cash flow information:
Cash paid during the period for:
Interest $ 121,965 $ --
Income taxes $ -- $ 1,550,000
<FN>
The accompanying notes are an integral part of the financial statements.
</FN>
</TABLE>
<PAGE>
CHURCHILL DOWNS INCORPORATED
CONDENSED NOTES TO FINANCIAL STATEMENTS
for the three months ended March 31, 1995 and 1994
(Unaudited)
1. Because of the seasonal nature of the Company's business, revenues
and operating results for any interim quarter are not indicative of the revenues
and operating results for the year and are not necessarily comparable with
results for the corresponding period of the previous year.
The Company normally earns a substantial portion of its net income in
the second quarter of each year during which the Kentucky Derby is run. The
Kentucky Derby is run on the first Saturday in May. The Company was licensed to
conduct a 50 day spring race meeting for the period April 29, 1995 through July
4, 1995. This is comparable to the 49 day race meeting for the period of April
30, 1994 through July 4, 1994. In addition, the Company is licensed to conduct a
24 day fall race meeting beginning October 29, 1995 which compares to a 24 day
fall race meeting which began October 30, 1994. Accordingly, operations for the
three months ended March 31, 1995 and 1994 included no live racing days.
During the three months ended March 31, 1994 the Company conducted
simulcast receiving wagering for 202 days. The Company operated simulcast
wagering at its Sports Spectrum site for 68 days during the quarter, compared to
53 days in 1994. Through its subsidiary, Hoosier Park L.P., which opened
September 1, 1994, and an off-track wagering facility which opened January 25,
1995, the Company conducted simulcast wagering for 134 days.
On July 22, 1994 the Company commenced wagering on full race cards
simulcast from tracks outside Kentucky, commonly referred to as whole card
simulcasting. Previously, this activity was not allowed under Kentucky law. The
company anticipates continuing whole card simulcasting in the future.
2. The accompanying financial statements are presented in accordance
with the requirements of Form 10-Q and consequently do not include all of the
disclosures normally required by generally accepted accounting principles or
those normally made in the Company's annual report on Form 10-K. Accordingly,
the reader of this Form 10-Q should refer to the Company's Form 10-K for the
period ended December 31, 1994 for further information. The accompanying
financial statements have been prepared in accordance with the registrant's
customary accounting practices and have not been audited. In the opinion of
management, all adjustments necessary for a fair presentation of this
information have been made and all such adjustments are of a normal recurring
nature.
3. On January 26, 1994 the Company purchased Anderson Park, Inc. (API")
for approximately $1,950,000. API owned an Indiana Standardbed racing license
and was in the process of constructing a racing facility in Anderson, Indiana.
Subsequently, the facility was completed and, contemporaneously with the
commencement of operations on September 1, 1994 the net assets of API were
contributed to a newly formed partnership, Hoosier Park, L.P. in return for an
87% general partnership interest.
<PAGE>
CHURCHILL DOWNS INCORPORATED
CONDENSED NOTES TO FINANCIAL STATEMENTS
for the three months ended March 31, 1995 and 1994 (cont'd)
(Unaudited)
4. The Company has an unsecured $20,000,000 bank line of credit with
various options for the interest rate, none of which are greater than the banks
prime rate. The rate in effect at March 31, 1995 was 7.3875%. Borrowings are
payable on January 31, 1996. There was $9.0 million outstanding at March 31,
1995. No borrowings were outstanding at March 31, 1994.
The Company also has two non-interest bearing notes payable in the
aggregate face amount of $900,000 relating to the purchase of an intertrack
wagering license from the former owners of the Sports Spectrum property.
Interest has been imputed at 8%. At March 31, 1995, the balance of these notes
was $481,000 net of an unamortized discount of $199,000. The notes require
aggregate annual payments of $110,000 from September, 1993. As described in the
footnote (Note 5) any remediation costs for environmental cleanup can be offset
against any amounts due under these notes payable.
5. On January 22, 1992, the Company acquired certain assets of
Louisville Downs, Incorporated for $5,000,000. In conjunction with this
purchase, the Company withheld $1,000,000 from the amount due to the sellers to
offset certain costs related to the remediation of environmental contamination
associated with underground storage tanks at the site. Substantially all of the
$1,000,000 hold back has been utilized as of December 31, 1994.
It is not anticipated that the Company will have any liability as a
result of compliance with environmental laws with respect to the property.
Compliance with environmental laws has not otherwise affected development and
operation the property and the Company is not otherwise subject to any material
compliance costs in connection with federal or state environmental laws.
6. Certain balance sheet and statement of operations items have been
reclassified to conform to current period presentation.
<PAGE>
CHURCHILL DOWNS INCORPORATED
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATION
RESULTS OF OPERATIONS
For many years, the Company has conducted live Spring and Fall
race meetings for Thoroughbred horses in Kentucky. In November 1988, the Company
began to participate in intertrack simulcasting as a host track for all of its
live races except those run on Kentucky Derby Day. In November 1989, the Company
commenced operations as a receiving track for intertrack simulcasting. During
November 1991, the Company began interstate simulcasting for all of the live
races with the receiving locations participating in the company's mutuel pool.
The Kentucky Derby and Kentucky Oaks, which are run on the first weekend in May
of each year, continue to be the Company's outstanding attractions. In 1994,
Derby weekend accounted for approximately 19% of total on-track pari-mutuel
wagering and 22% of total on-track attendance. In July 1994, the Company began
to participate in whole card simulcasting, whereby the Company began importing
whole race cards or programs from host tracks located outside the state for
pari-mutual wagering purposes. Whole card simulcasting has created a major new
wagering opportunity for patrons at Churchill Downs Sports Spectrum.
The Company's principal sources of income are commissions from
on-track pari-mutuel wagers, commissions from intertrack and fees from
interstate simulcast wagers, admissions and seating, concession commissions
(primarily for the sale of food and beverages), and license, rights, broadcast
and sponsorship fees. The Company's primary source of income is pari-mutuel
wagering. The Company retains the following amounts on specific revenue streams
as a percentage of handle:
<TABLE>
KENTUCKY INDIANA
<S> <C> <C>
On-track pari-mutuel wagers 15% 19%
Intertrack host 9% --
Interstate/simulcast host 5% --
Intertrack/simulcast receiving 7% 18%
</TABLE>
In Kentucky, licenses to conduct Thoroughbred race meetings and
to participate in intertrack simulcasting are approved annually by the Kentucky
Racing Commission based upon applications submitted by the racetracks in
Kentucky, including the Company. Based on gross figures for on-track pari-mutuel
wagering and attendance, the company is the leading thoroughbred racetrack in
Kentucky.
In Indiana, licenses to conduct live Standardbred and
Thoroughbred race meeting and to participate in simulcasting are approved
annually by the Indiana Horse Racing Commission based upon applications
submitted by the Company. Currently, the Company is the only facility in Indiana
licensed to conduct live Standardbred or Thoroughbred race meetings and to
participate in simulcasting.
In Kentucky, the company has been granted a license to conduct
live racing during the period from April 29, 1995, through July 4, 1995, and
from October 29, 1995, through November 25, 1995, for a total of 74 racing days.
In Indiana, the Company commenced live racing on September 1, 1994 and conducted
live racing 54 days during the year ended December 31, 1994. For 1995, the
Company has received a license to conduct live racing for a total of 146 racing
days, including 104 days of Standardbred racing from April 1, 1995 through
August 20, 1995, and 42 days of Thoroughbred racing thru September 1, 1995
through October 28, 1995.
<PAGE>
CHURCHILL DOWNS INCORPORATED
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATION
The company operated as a receiving track for intertrack/simulcasting as
follows:
<TABLE>
INTERTRACK/SIMULCAST RECEIVING
<CAPTION>
Three Months Three Months
Ended March 31, Ended March 31,
1995 1994
------------------ -----------------
<S> <C> <C> <C>
INCREASE
KENTUCKY 68 RACING DAYS 53 RACING DAYS 15 DAYS
- -------- -------------- -------------- -------
Attendance 167,010 125,875 41,135
Handle $38,371,523 $22,788,419 $15,583,104
Average daily attendance 2,456 2,375 81
Average daily handle $564,287 $429,970 $134,317
Per capita handle $229.76 $181.04 $48.72
INDIANA 134 RACING DAYS -0- RACING DAYS 134 DAYS
- ------- --------------- --------------- --------
Attendance 75,733 -- 75,733
Handle $22,059,377 -- $22,059,377
Average daily attendance 565 -- 565
Average daily handle $164,622 -- $164,622
Per capita handle $291.28 -- $291.28
</TABLE>
The number of receiving days is increasing because of increasing
acceptance of simulcasting by the horse industry and patrons. For 1995, the
Company has been granted a license as a receiving track for any and all possible
dates from January 1 through December 31 and intends to receive simulcasting on
all possible days except when racing live. With the advent of whole card
simulcasting, the Company conducts interstate simulcasting virtually year
around, except when racing live, on multiple racing programs each day from
around the nation. An increase in the number of days is expected to enhance
operating results. Hoosier Park will ultimately be supported by four simulcast
facilities operating year around showing races originating from Hoosier Park's
facility in Anderson, Indiana and conducting whole card simulcasting similar to
that conducted at the Churchill Downs Sports Spectrum in Louisville.
Because the business of the Company is seasonal, the number of
persons employed will vary throughout the year. Approximately 225 individuals
are employed on a permanent year-round basis. During the live race meetings, as
many as 2,100 persons are employed.
<PAGE>
CHURCHILL DOWNS INCORPORATED
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATION (continued)
COMPARISON OF THREE MONTHS ENDED MARCH 31, 1995 TO 1994
Gross meeting revenue during the three months ended March 31,
1995 increased $5,606,449. The Company's new subsidiary Hoosier Park L.P.
generated 51 percent, or $3,868,197 of the increase in pari-mutuel revenue which
combined with admissions, concessions, programs, and other revenue totalled $4.1
million in revenues. This facility opened September 1, 1994 with live
Standardbred racing for 54 days. Beginning January 1, 1995 at Hoosier Park and
January 25th in Merrillville, Indiana whole card simulcasting was conducted for
134 days.
The advent of whole card simulcasting in the state of Kentucky
helped increase intertrack/simulcast receiving revenue by 31%. Whole card
simulcasting was also largely responsible for the increase in program revenue
due to 2 or more programs and racing forms being sold per day, coupled with 15
additional simulcast receiving days and higher average attendance. Other income
increased primarily due to income from stall rental. The backside of Churchill
Downs racetrack facility was closed during the first quarter of 1994 for
maintenance and repair for the first time in several years.
<TABLE>
OPERATING REVENUE SUMMARY
Three Months Three Months 1995 VS 1994
Ended % To Ended % To $ %
March 31, Total March 31, Total
1995 Revenue 1994 Revenue Change Change
-------------- ------- ----------- ------- ------ ------
<S> <C> <C> <C> <C> <C> <C>
Pari-Mutuel Revenue:
Intertrack/Simulcast-Receiving $3,676,207 88% $1,937,955 80% $1,738,252 90%
Indiana Operations 3,868,197 45% -- 0% 3,868,197 100%
----------- ---- ----------- ---- --------- ----
7,544,404 88% 1,937,955 80% 5,606,449 289%
Admission & Seat Revenue 308,763 4% 221,533 9% 87,230 39%
License, Rights, Broadcast
& Sponsorship Fees 106,068 1% 13,882 1% 92,186 664%
Concession Commission 128,825 1% 112,132 5% 16,693 15%
Program Revenue 368,080 4% 126,941 5% 241,139 190%
Other 156,467 2% 13,589 1% 142,878 1051%
----------- ----- ----------- ----- ---------- -----
$8,612,607 100% $2,426,032 100% $6,186,575 255%
========== ==== ========== ==== ========== ======
</TABLE>
<PAGE>
CHURCHILL DOWNS INCORPORATED
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATION (continued)
Direct meeting expenses increased $5,002,743 during the quarter. This increase
is primarily due to the operations of Hoosier Park and the Merrillville
off-track wagering facility and due to the higher purses which are a direct
result of increased handle from whole card simulcasting. In Kentucky and Indiana
purse expense varies directly with pari-mutuel revenues and is calculated as a
percentage of the related revenue and may change from year to year pursuant to
contract or statute. Whole card simulcasting and Hoosier Park operations were
also primarily responsible for increased wages, advertising and marketing,
audio, video and signal distribution, program sales and other. Wages and
contract labor increased due to additional days and hours of operation related
to whole card simulcasting at Sports Spectrum and Hoosier Park. The simulcast
host fee is the amount paid to the host track in exchange for receiving the
tracks races. This new expense is based on handle, and is directly related to
the $5.6 million increase in simulcasting revenue.
<TABLE>
<CAPTION>
MEETING EXPENSE SUMMARY
Three Months Three Months
Ended % To Ended % To 1995 VS. 1994
March 31, Total March 31, Total $ %
1995 Expense 1994 Expense Change Change
------------ ------- ---------- ------- --------- ------
<S> <C> <C> <C> <C> <C> <C>
Purses:
Intertrack/Simulcast-
Receiving $ 1,399,511 34% $ 867,495 34% $ 532,016 61%
Indiana Operations 1,102,969 15% -- -- 1,102,969 100%
--------- --- ---------- ------ ---------- ----
2,502,480 34% 867,495 34% 1,634,985 188%
Wages and Contract Labor 2,100,447 28% 1,028,054 40% 1,072,393 104%
Advertising, Marketing
& Publicity 165,467 2% 120,253 5% 45,214 38%
Racing Relations
& Services 68,579 1% 35,502 1% 33,077 93%
Totalisator Expense 135,141 2% 39,190 2% 95,951 245%
Simulcast Host Fee 1,499,635 20% -- -- 1,499,635 100%
Audio/Video & Signal
Distribution Expense 215,531 3% 62,374 2% 153,157 246%
Program Expense 292,244 4% 60,420 2% 231,824 384%
Derby expansion area 172,224 2% 148,460 6% 23,764 16%
Other meeting expense 239,410 3% 226,667 8% 12,743 6%
------------ ----- ------------ ----- ----------- ----
$ 7,391,158 100% $ 2,588,415 100% $4,802,743 186%
=========== ==== =========== ==== ========== ====
</TABLE>
<PAGE>
CHURCHILL DOWNS INCORPORATED
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATION (continued)
Selling, general and administrative expenses rose $318,886.
Wages, benefits, payroll taxes and contract labor were higher primarily due to
Hoosier Park, the opening of the Sports Spectrum training facility and personnel
additions principally related to the growth in simulcast operations.
Depreciation and insurance increases are due to the addition of the Hoosier Park
facility. Taxes and license fees have increased primarily due to property taxes
at Hoosier Park. Professional fees are up $126,507 of which $112,108 is
attributable to legal and accounting expenses incurred at Hoosier Park. In 1994,
business development expenses were principally related to the Company's was
unsuccessful efforts to obtain a racing license in Virginia.
<TABLE>
SELLING, GENERAL AND ADMINISTRATIVE
<CAPTION>
Three Months Three Months
Ended % To Ended % To 1995 VS. 1994
March 31, Total March 31, Total $ %
1995 EXPENSE 1994 EXPENSE CHANGE CHANGE
---------------- ------- --------------- ------- ------ ------
<S> <C> <C> <C> <C> <C> <C>
Wages, Benefits,
Payroll, Taxes and
Contract Labor $ 1,327,550 33% $ 1,137,160 32% $ 190,390 17%
Depreciation and
Amortization 1,100,444 27% 902,400 25% 198,044 22%
Insurance 438,279 11% 359,359 10% 78,920 22%
Maintenance 220,985 5% 325,581 9% (104,595) -32%
Utilities 429,614 11% 300,955 8% 128,659 43%
Marketing & Community
Relations 230,874 5% 90,556 3% 140,318 155%
Taxes and License Fees 97,203 2% 8,386 -- 88,817 1059%
Professional Fees 197,457 5% 70,949 2% 126,507 178%
Business Development 31,173 1% 299,769 8% (268,596) -90%
Other 10,744 0% 70,322 2% (59,578) -85%
----------- ----- ------------ ----- ----------- -----
$ 4,084,323 100% $ 3,565,437 100% $ 518,886 15%
=========== ==== =========== ==== =========== ====
</TABLE>
<PAGE>
CHURCHILL DOWNS INCORPORATED
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATION (continued)
Other income decreased by $6,262 due primarily to reduced income
on investments resulting from lower average invested cash requirements
associated with the construction of Hoosier Park and the Sports Spectrum
training facility. Interest expense increased in 1995 as a result of borrowing
against the Company's line of credit after normal cash reserves were used for
the Hoosier Park facility and the Sports Spectrum training facility.
<TABLE>
<CAPTION>
OTHER INCOME AND EXPENSE
Three Months Three Months
Ended % To Ended % To 1995 VS. 1994
March 31, Total March 31, Total $ %
1995 EXPENSE 1994 EXPENSE CHANGE CHANGE
------------ ------- ------------ ------- ------ ------
<S> <C> <C> <C> <C> <C> <C>
Interest Income $ 29,976 30% $ 55,426 53% $( 25,450) -46%
Miscellaneous, net 69,215 70% 50,027 47% 19,188 -36%
---------- ---- ---------- ---- --------- -----
$ 99,191 100% $ 105,453 100% $( 6,262) -6%
=========== ==== ========= ==== ========== ======
Interest Expense $(154,594) 100% $(8,424) 100% $146,170 1735%
========== ==== ======== ==== ======== =====
</TABLE>
SIGNIFICANT CHANGES IN THE BALANCE SHEET DECEMBER 31, 1994 TO MARCH 31, 1995
The increase in cash balances reflect the collection of advance
ticket sales for the Kentucky Derby and Oaks, as well as cash balances
maintained for operations at the Company's Indiana locations.
Accounts receivable at December 31, 1994 were $1,263,136 higher
than of March 31, 1995 due to the Fall meeting purse supplement due from the
State and intertrack horse settlements which were received in early January,
1995, partially offset by collection of advance ticket sales for the Kentucky
Derby.
Racing plant & equipment increased during the quarter, primarily
due to continued investment at Hoosier Park in preparation for the 1995
thoroughbred meet. Hoosier Park began its 1994 harness meet on April 1, 1995 and
will run Indiana's first thoroughbred meet beginning in September 1995.
Accounts payable and accrued expenses were $1,477,358 higher at
March 31, 1995, due primarily to the settlement liability related to whole card
simulcasting.
Deferred revenue is higher at March 31, due to the significant
amount of admission and seat revenue that has been received in advance for the
May 1995 Kentucky Derby and Oaks.
<PAGE>
CHURCHILL DOWNS INCORPORATED
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATION (continued)
SIGNIFICANT CHANGES IN THE BALANCE SHEET MARCH 31, 1994 TO MARCH 31, 1995
Racing plant & equipment increased during the year by
$20,584,956, net of depreciation. The Company's Indiana facilities accounted for
more than $16 million, the majority at the Hoosier Park race track. In addition,
capital improvements at the Sports Spectrum including new barns and a backside
stabling and training operation were responsible for over $3.5 million.
Accounts payable and accrued expenses increased by $3,553,475
primarily due to the amount payable related to the Hoosier Park construction,
and the settlement liability related to whole card simulcasting.
LIQUIDITY AND CAPITAL RESOURCES
Working capital for the three months ended March 31, 1995 and
March 31, 1994 is as follows:
MARCH 31
1995 1994
Working capital deficit $(20,004,032) $(6,851,213)
Working capital ratio .27 to 1 .54 to 1
Working capital is primarily a result of the nature and
seasonality of the Company's business. Cash flows provided (used) by operations
were $4,410,618 for the three months ended March 31, 1995; $11,399,973 for the
twelve months ended December 31, 1994; and $(1,713,575) for the three months
ended March 31, 1994. Management believes cash flows from operations during 1995
and funds available under the Company's unsecured line of credit will be
sufficient to fund dividend payments and additions and improvements to the
racing plant and equipment which are expected to be between $6,000,000 and
$11,000,000. The primary capital improvement planned for 1995 is the addition of
Thoroughbred racing facilities at Hoosier Park. Hoosier Park will host its first
Thoroughbred race meet for 42 days from September 1, 1995 and October 28, 1995.
Cash flow from operations funded $850,000 of the Anderson Park,
Inc. stock purchase in January 1994. Similarly, cash flow from operations and,
as necessary, funds available under the unsecured line of credit were used to
fund up to $14 million for construction of the Hoosier Park racing facility in
Anderson, Indiana. Churchill Downs expects to fund up to an additional $6
million to construct four satellite wagering facility sites approved by the
Indiana Horse Racing Commission and $3.1 million to construct improvements to
allow for Thoroughbred racing at Hoosier Park.
The Company has a $20,000,000 unsecured line-of-credit available with
$11 million available at March 31, 1995 to meet working capital and other
short-term requirements. Management believes that the Company has the ability to
obtain additional long-term financing should the need arise.
<PAGE>
CHURCHILL DOWNS INCORPORATED
PART II. OTHER INFORMATION
Item 6. EXHIBITS AND REPORTS ON FORM 8-K.
A. Not applicable
B. During the quarter ending March 31, 1995, no Form 8-K's
were filed by the Company.
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934 the
registrant has duly caused this amendment to be signed on its behalf by the
undersigned hereunto duly authorized.
May 31, 1995 /S/Thomas H. Meeker
------------------------------------
Thomas H. Meeker
President
May 31, 1995 /S/Vicki L. Baumgardner
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Vicki L. Baumgardner, Treasurer
(Principal Financial and
Accounting Officer)
