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 27, 1999
CHURCHILL DOWNS INCORPORATED
(Exact name of registrant as specified in its charter)
Kentucky 0-01469 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.)
<PAGE>
ITEMS 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 October27, 1999.
ITEMS 8-9. Not Applicable.
Exhibit99.1
Contact: Karl F. Schmitt Jr.
(502) 636-4594
WWW.KENTUCKYDERBY.COM
CHURCHILL DOWNS REPORTS RECORD THIRD QUARTER EARNINGS
NET REVENUES UP 89% TO NEW THIRD QUARTER HIGH
LOUISVILLE, Ky. (Oct. 27, 1999) Churchill Downs Incorporated (Nasdaq/NM: CHDN)
today reported third quarter and nine months results for the period ended
September 30, 1999.
Net revenues of $63.1 million marked a new third-quarter record, up 89
percent compared with $33.3 million for the same period a year ago. Net earnings
for the quarter totaled $1.2 million, or $0.12 per share diluted, compared with
a net loss of $655,000, or $0.09 per share diluted, a year ago.
Net revenues for the first nine months of 1999 were $164.9 million, a 42
percent increase over $116.1 million reported for the same period for 1998. Net
earnings for the nine months were $11.8 million, up 5 percent compared with
$11.3 million in the year-earlier period. Earnings per share for the nine months
were $1.43 diluted on 8.3 million average shares outstanding compared with $1.51
diluted in 1998 on 7.5 million average shares outstanding.
The increases of 27 percent and 11 percent in the number of average
diluted shares outstanding for the third quarter and nine months, respectively,
are due principally to the public offering of 2.3 million common shares in July
1999.
"The net earnings for the third quarter, which exceeded analysts'
estimates, highlight the value of our acquisition initiative," remarked Thomas
H. Meeker, president and chief executive officer of Churchill Downs
Incorporated. "We historically have not been profitable during this period due
to the lack of live racing at our flagship Churchill Downs operation. A key
element of our growth strategy is to reduce the seasonality in our results by
building a year-round simulcast product that is integrated with live racing at
our various race tracks. The third quarter marked the first full quarter in
which we have benefitted from a contribution from Calder Race Course which we
acquired in April 1999. Calder's racing season this year spanned the entire
third quarter and will
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extend through the fourth period as well. This was the second year for the
inclusion of Ellis Park, which we acquired in April 1998, and it positively
contributed to earnings for the third quarter in both years. The timing of the
Ellis Park acquisition resulted in a decrease in operating income for Ellis Park
in the nine months in 1999 due to the loss experienced in the first quarter when
the racetrack was not running."
Meeker added, "We believe our financial performance in the fourth
quarter will also show significant improvement compared with the year-earlier
results. Last month we completed the acquisition of Hollywood Park Race Track
which will conduct live racing from mid-November through late December. We
believe the initial contribution from Hollywood Park, combined with the results
of Churchill Downs' Fall meet, and a continued strong performance by Calder,
will help us offset the increased expenses we are incurring as a result of our
development activities and overall corporate expansion. As in the third period,
we will have a significantly higher number of shares outstanding in the fourth
quarter as a result of our public offering earlier this year, which will
continue to affect our per share comparisons through the first two quarters of
2000.
"Although there are a number of challenges, we are excited about our
opportunities for building on this strong momentum. The seasonality of our live
racing will continue to affect the pace of our quarterly results; and although
we have taken steps to mitigate the impact on earnings of increases in
short-term interest rates, we do have a more leveraged capital structure that
will be impacted by rising interest rates. We have broadened our operating scope
considerably this year and an immediate priority is to continue to integrate our
various racing operations into a cohesive unit that benefits from the
distinctive strengths of each facility. As a result of our acquisitions, we are
now able to offer 217 days of live racing programming each year. We intend to
enhance this sound foundation by adding racing programs and to capitalize on the
growing, worldwide simulcast wagering market."
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 its 126th running on May 6,
2000. The Company has additional racing and simulcast- wagering operations in
Kentucky, Indiana , Florida and California and interests in various racing
services companies. Churchill Downs Incorporated can be found on the Internet at
WWW.KENTUCKYDERBY.COM.
This press 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 actual results to differ materially from the
presently estimated amounts. These risks and uncertainties include:
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the continued ability of the Company to effectively compete for the country's
top horses and trainers necessary to field high-quality horse racing; the
continued ability of the Company to grow its share of the interstate simulcast
market; a substantial change in regulations affecting our gaming activities;
a substantial change in allocation of live racing days; the impact of
competition from alternative gaming (including lotteries, land-based , riverboat
and cruise ship casinos) and other sports and entertainment options in those
markets in which the Company operates; a decrease in riverboat admissions
revenue from the Company's Indiana operations; Year 2000 computer issues; and
the Company's success in its pursuit of strategic initiatives designed to
generate additional revenues.
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CHURCHILL DOWNS INCORPORATED
CONDENSED CONSOLIDATED STATEMENTS OF EARNINGS
for the nine and three months ended September 30, 1999 and 1998
(Unaudited)
<TABLE>
<CAPTION>
Nine Months Ended September 30, Three Months Ended September 30,
1999 1998 1999 1998
<S> <C> <C> <C> <C>
Net revenues $164,878,881 $116,058,759 $63,076,130 $33,299,256
Operating expenses 128,787,641 88,884,904 53,967,962 30,548,256
------------ ------------ ----------- -----------
Gross profit 36,091,240 27,173,855 9,108,168 2,751,000
Selling, general and
administrative expenses 12,362,704 8,739,883 5,473,203 3,767,288
------------ ------------ ----------- -----------
Operating income (loss) 23,728,536 18,433,972 3,634,965 (1,016,288)
------------ ------------ ----------- -----------
Other income (expense):
Interest income 566,410 449,543 204,177 87,238
Interest expense (4,162,041) (646,521) (1,953,209) (241,224)
Miscellaneous, net 293,742 261,545 168,717 95,359
------------ ------------ ----------- -----------
(3,301,889) 64,567 (1,580,315) (58,627)
------------ ------------ ----------- -----------
Earnings (loss) before
income tax provision 20,426,647 18,498,539 2,054,650 (1,074,915)
------------ ------------ ----------- -----------
Federal and state income
tax (provision) benefit (8,579,192) (7,200,000) (862,953) 420,000
------------ ------------ ----------- -----------
Net earnings (loss) $ 11,847,455 $ 11,298,539 $ 1,191,697 $ (654,915)
============ ============ =========== ===========
Net earnings (loss) per share:
Basic $1.45 $1.52 $.13 $(.09)
Diluted $1.43 $1.51 $.12 $(.09)
Weighted average shares
outstanding:
Basic 8,175,473 7,438,159 9,455,127 7,522,309
Diluted 8,296,761 7,496,524 9,552,088 7,522,309
</TABLE>
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CHURCHILL DOWNS INCORPORATED
CONDENSED SUPPLEMENTAL INFORMATION BY OPERATING UNIT
for the nine and three months ended September 30, 1999 and 1998
(Unaudited)
<TABLE>
<CAPTION>
Nine Months Ended September 30, Three Months Ended September 30,
1999 1998 1999 1998
<S> <C> <C> <C> <C>
Net revenues:
Churchill Downs $ 66,652,774 $64,711,639 $ 5,519,530 $ 5,482,627
including corporate
expenses
Hollywood Park 1,117,105 - 1,117,105 -
Calder Race Course 39,052,563 - 27,351,508 -
Hoosier Park 37,514,350 34,539,958 13,256,799 12,647,820
Ellis Park 18,491,338 16,038,980 15,528,844 14,741,456
Other operations 4,377,962 1,676,735 1,666,659 729,903
------------ ------------ ------------ -----------
167,206,092 116,967,312 64,440,445 33,601,806
Eliminations (2,327,211) (908,553) (1,364,315) (302,550)
------------ ------------ ------------ -----------
$164,878,881 $116,058,759 $ 63,076,130 $33,299,256
============ ============ ============ ===========
EBITDA:
Churchill Downs $14,052,039 $14,737,642 $(5,417,054) $(4,425,311)
including corporate
expenses
Hollywood Park (541,693) - (541,693) -
Calder Race Course 8,865,400 - 6,977,571 -
Hoosier Park 5,131,259 4,390,653 1,744,482 1,383,711
Ellis Park 2,833,654 2,890,024 3,636,724 3,318,564
Other operations 1,114,714 649,557 453,027 222,893
------------ ------------ ------------ -----------
$31,455,373 $22,667,876 $ 6,853,057 $ 499,857
============ ============ ============ ===========
Operating income (loss):
Churchill Downs $11,378,418 $11,952,131 $(6,287,079) $(5,344,420)
including corporate
expenses
Hollywood Park (794,693) - (794,693) -
Calder Race Course 7,364,230 - 6,062,235 -
Hoosier Park 4,182,522 3,565,578 1,416,692 1,108,686
Ellis Park 1,842,130 2,516,812 3,292,118 3,145,516
Other operations (244,071) 399,451 (54,306) 73,930
------------ ------------ ------------ -----------
$23,728,536 $18,433,972 $ 3,634,967 $(1,016,288)
============ ============ ============ ===========
</TABLE>
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<PAGE>
CHURCHILL DOWNS INCORPORATED
CONDENSED CONSOLIDATED BALANCE SHEETS
(Unaudited)
<TABLE>
<CAPTION>
September 30, December 31, September 30,
ASSETS 1999 1998 1998
---- ---- ----
<S> <C> <C> <C>
Current assets:
Cash and cash equivalents $ 27,935,299 $ 6,379,686 $ 8,130,380
Accounts receivable 14,812,135 11,968,114 10,925,891
Other current assets 3,110,220 1,049,084 564,286
------------ ------------ ------------
Total current assets 45,857,654 19,396,884 19,620,557
Other assets 6,167,279 3,796,292 4,202,289
Plant and equipment, net 275,630,759 83,088,204 83,949,445
Intangible assets, net 61,899,268 8,369,395 9,636,961
------------ ------------ ------------
$389,554,960 $114,650,775 $117,409,252
============ ============ ============
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Accounts payable $ 14,671,367 $ 6,380,785 $ 10,312,702
Accrued expenses 21,172,818 8,247,945 8,596,301
Dividends payable - 3,762,521 -
Income taxes payable 1,529,022 257,588 2,310,085
Deferred revenue 3,093,814 8,412,552 5,647,027
Long-term debt, current portion 465,321 126,812 128,404
------------ ------------ ------------
Total current liabilities 40,932,342 27,188,203 26,994,519
Long-term debt, due after one year 186,103,789 13,538,027 9,543,201
Other liabilities 6,709,702 1,755,760 3,126,132
Deferred income taxes 15,937,932 6,937,797 8,000,643
Shareholders' equity:
Preferred stock, no par
value; authorized, 250,000
shares; issued, none - -
Common stock, no par value;
authorized, 50,000,000
shares, issued 9,853,627
shares, September 30, 1999,
7,525,041 shares,
December 31, 1998 and
September 30, 1998 71,633,498 8,926,975 8,926,975
Retained earnings 68,446,412 56,598,957 61,141,469
Deferred compensation costs (143,715) (229,944) (258,687)
Note receivable for common stock (65,000) (65,000) (65,000)
------------ ------------ ------------
139,871,195 65,230,988 69,744,757
------------ ------------ ------------
$389,554,960 $114,650,775 $117,409,252
============ ============ ============
</TABLE>
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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 hereunto duly authorized.
CHURCHILL DOWNS INCORPORATED
October 27, 1999 \s\ Robert L. Decker
---------------------------------------
Robert L. Decker
Executive Vice President and Chief
Financial Officer
(Principal Financial Officer)
October 27, 1999 \s\Vicki L. Baumgardner
----------------------------------------
Vicki L. Baumgardner
Vice President, Finance and Treasurer
(Principal Accounting Officer)
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