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 23, 2000
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
incorporation or No.)
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 February 23, 2000.
ITEMS 8-9. Not Applicable.
Exhibit 99.1
Contact: Chantelle Kammerdiener
(502) 636-4415/(502) 266-8731
[email protected]
CHURCHILL DOWNS REPORTS 42 PERCENT GAIN IN 1999 NET EARNINGS
NET REVENUES INCREASE TO $258 MILLION
LOUISVILLE, Ky. (Feb. 23, 2000) - Churchill Downs Incorporated (Nasdaq/NM: CHDN)
("CDI") today reported record results for the fourth quarter and fiscal year
ended Dec. 31, 1999.
Net revenues for the year totaled $258.4 million, a 75 percent increase
over $147.3 million in 1998. Net earnings were $15.0 million, a 42 percent
increase over $10.5 million in 1998. Earnings per share for the year were $1.72
diluted on 8.7 million average diluted shares outstanding, compared with $1.40
diluted on 7.5 million average diluted shares outstanding in 1998.
During the fourth quarter of 1999, the Company reported net revenues of
$93.5 million, up 200 percent compared with $31.2 million in the year-earlier
period. Net earnings during the quarter were $3.1 million, compared with a net
loss of $0.8 million during the fourth quarter of 1998. Earnings per share were
31 cents diluted on 10 million average diluted shares outstanding, compared with
a loss of 10 cents diluted on 7.5 million average diluted shares outstanding
during the same period in 1998.
The increases of 16 percent and 32 percent in average diluted shares
outstanding for the year and the fourth quarter, respectively, were due
principally to the public offering of 2.3 million common shares in July 1999.
The results represented the seventh consecutive year of record earnings
for the Company. Thomas H. Meeker, CDI's president and chief executive officer,
said the increases reflected a dynamic year.
"The gains for the fourth quarter and full year exceeded analysts'
estimates and further validated the strength of our ongoing growth strategy,"
Meeker said. "The results for the fourth quarter reflected the initial
contribution from Hollywood Park, which we acquired in September 1999, and the
impact of Calder Race Course, which we acquired in April 1999. We historically
have either operated at a loss or been only marginally profitable during this
quarter, so we are especially pleased with the level of earnings we achieved
during this period in 1999.
"Accumulating additional live racing signals is key to our goal of
building our year-round simulcast product, which also will reduce the
seasonality of our results. As we have integrated our acquisitions, the need for
additional support and services at the corporate level has resulted in increased
expenses for our Churchill Downs business unit. Even with these incremental
costs, we achieved solid growth for the year, aided particularly by the
inclusion of Calder Race Course. We are starting to realize meaningful synergies
with our two newest acquisitions as well as among our live racing operations in
Kentucky and Indiana."
Meeker continued, "By capitalizing on our core resources and strong
financial position, we significantly enhanced CDI's leadership in the racing
industry during 1999. We recognize that there is still a distinct seasonality to
our results, which is especially evident in the first quarter when we do not
have a track offering live racing. Additionally, we do have risks associated
with higher interest rates, but we are confident that we can continue to
effectively manage these risks. With well-established racetracks in key markets,
we are excited about the opportunity to extend the Company's long-term record of
growth.
"Earlier this month, we announced the first phase of the national
branding program that will encompass our current and future network of
racetracks and off-track betting facilities. Under this new program, we have a
single logo tangibly unifying our operations and symbolically representing the
work underway to maximize the value of our combined assets. This combined
profile is helping us to increase our share in the simulcast market and to build
the Churchill Downs Simulcast Network, or CDSN."
3
<PAGE>
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 owns additional racetracks in Kentucky, California and Florida
and has interests in an Indiana pari-mutuel operation as well as various racing
services companies. Churchill Downs Incorporated can be found on the Internet at
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: 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; the
impact of interest rate fluctuations; 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 and riverboat, cruise ship and land-based 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;
and the Company's success in its pursuit of strategic initiatives designed to
generate additional revenues.
4
<PAGE>
<TABLE>
CHURCHILL DOWNS INCORPORATED
CONSOLIDATED STATEMENTS OF EARNINGS
Years and Quarters ended December 31, 1999 and 1998
(Unaudited)
<CAPTION>
Years Quarters
Ended December 31, Ended December 31,
(In thousands, except per share data) 1999 1998 1999 1998
---- ---- ---- ----
<S> <C> <C> <C> <C>
Net revenues $258,427 $147,300 $93,548 $31,242
Operating expenses:
Purses 97,585 50,193 38,844 11,502
Other direct expenses 109,783 68,788 39,736 18,702
-------- -------- ------- -------
207,368 118,981 78,580 30,204
-------- -------- ------- -------
Gross profit 51,059 28,319 14,968 1,038
Selling, general and
administrative expenses 18,546 11,176 6,184 2,328
-------- -------- ------- -------
Operating income (loss) 32,513 17,143 8,784 (1,290)
-------- -------- ------- -------
Other income (expense):
Interest income 847 680 281 230
Interest expense (7,839) (896) (3,677) (250)
Miscellaneous, net 334 342 40 81
-------- -------- ------- -------
(6,658) 126 (3,356) 61
-------- -------- ------- -------
Earnings (loss) before provision
for income taxes 25,855 17,269 5,428 (1,229)
-------- -------- ------- -------
Provision (benefit) for income taxes 10,879 6,751 2,300 (449)
-------- -------- ------- -------
Net earnings (loss) $14,976 $10,518 $3,128 $(780)
-------- -------- ------- -------
Earnings (loss) per common share data:
Basic $1.74 $1.41 $.32 $(.10)
Diluted $1.72 $1.40 $.31 $(.10)
Weighted average shares outstanding:
Basic 8,598 7,460 9,854 7,525
Diluted 8,718 7,539 9,967 7,525
</TABLE>
5
<PAGE>
<TABLE>
CHURCHILL DOWNS INCORPORATED
SUPPLEMENTAL INFORMATION BY OPERATING UNIT
Years and Quarters ended December 31, 1999 and 1998
(Unaudited)
<CAPTION>
(In thousands)
Years Quarters
Ended December 31, Ended December 31,
1999 1998 1999 1998
<S> <C> <C> <C> <C>
Net revenues:
Churchill Downs including
corporate expenses $ 82,429 $ 80,925 $15,776 $16,213
Hollywood Park 30,494 - 29,377 -
Calder Race Course 72,418 - 33,365 -
Hoosier Park 51,280 47,744 13,766 13,204
Ellis Park 19,653 17,386 1,162 1,347
Other operations 6,151 2,497 1,773 821
-------- -------- ------- -------
262,425 148,552 95,219 31,585
Eliminations (3,998) (1,252) (1,671) (343)
$258,427 $147,300 $93,548 $31,242
-------- -------- ------- -------
EBITDA:
Churchill Downs including
corporate expenses $12,110 $14,417 $(1,942) $ (321)
Hollywood Park 3,842 - 4,384 -
Calder Race Course 17,946 - 9,081 -
Hoosier Park 6,423 5,599 1,292 1,208
Ellis Park 2,071 2,305 (763) (585)
Other operations 1,314 909 199 260
-------- -------- ------- -------
$43,706 $23,230 $12,251 $ 562
-------- -------- ------- -------
Operating income (loss):
Churchill Downs including
corporate expenses $ 8,561 $10,700 $(2,818) $(1,252)
Hollywood Park 2,574 - 3,369 -
Calder Race Course 15,564 - 8,200 -
Hoosier Park 5,246 4,499 1,063 934
Ellis Park 721 1,422 (1,121) (1,095)
Other operations (153) 522 91 123
-------- -------- ------- -------
$32,513 $17,143 $8,784 $(1,290)
-------- -------- ------- -------
</TABLE>
6
<PAGE>
CHURCHILL DOWNS INCORPORATED
CONSOLIDATED BALANCE SHEETS
December 31, 1999
(Unaudited)
(in thousands)
ASSETS 1999 1998
Current assets:
Cash and cash equivalents $ 29,060 $ 6,380
Accounts receivable 24,279 11,968
Other current assets 2,751 1,049
---------- ---------
Total current assets 56,090 19,397
Other assets 4,740 3,796
Plant and equipment, net 274,882 83,088
Intangible assets, net 62,334 8,370
---------- ---------
$398,046 $114,651
---------- ---------
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Accounts payable $ 14,794 $ 6,381
Accrued expenses 23,821 8,248
Dividends payable 4,927 3,762
Income taxes payable 336 258
Deferred revenue 10,860 8,412
Long-term debt, current portion 552 127
---------- ---------
Total current liabilities 55,290 27,188
Long-term debt 180,898 13,538
Other liabilities 8,263 1,756
Deferred income taxes 15,474 6,938
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 in 1999
7,525 shares in 1998; and 7,317 shares in 1997 71,634 8,927
Retained earnings 66,667 56,599
Deferred compensation costs (115) (230)
Note receivable for common stock (65) (65)
---------- ----------
138,121 65,231
---------- ----------
$398,046 $114,651
---------- ----------
7
<PAGE>
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
February 23, 2000 \s\ Robert L. Decker
-------------------------------------
Robert L. Decker
Executive Vice President and Chief
Financial Officer
(Principal Financial Officer)
February 23, 2000 \s\Vicki L. Baumgardner
-------------------------------------
Vicki L. Baumgardner
Vice President, Finance and Treasurer
(Principal Accounting Officer)
