Churchill Downs Incorporated reports Q1 results

7 May 2008

LOUISVILLE, Kentucky -- (PRESS RELEASE) -- Churchill Downs Incorporated (NASDAQ: CHDN) today reported results for the first quarter ended March 31, 2008.

Net revenues from continuing operations for the first quarter of 2008 totaled $65.7 million, an increase of 37.4 percent over net revenues from continuing operations of $47.8 million recorded during the first quarter of 2007. Net revenues from continuing operations for the quarter were positively affected by the continued strong performance of the Company's gaming operations in Louisiana and the growth of the Company's advance-deposit wagering ("ADW") business.

Net earnings from continuing operations for the period were $0.8 million, or $0.06 per diluted common share, compared to a net loss from continuing operations of $8.4 million, or $0.63 per diluted common share, during the first quarter of 2007. Factors impacting net earnings from continuing operations for the quarter included a pre-tax gain of $17.2 million in insurance recoveries related to Hurricane Katrina and the growth of the Company's ADW business. These gains were partially offset by increased corporate expenses related to higher marketing and compensation costs. The Company has historically recorded a first-quarter net loss due to the fact its racetracks conduct few live racing dates during the quarter.

Churchill Downs Incorporated President and Chief Executive Officer Robert L. Evans said, "Before we discuss the just-completed business quarter, I want to personally reemphasize the tremendous sadness everyone at Churchill Downs feels about Eight Belles' tragic accident following her gutsy performance in Kentucky Derby 134. With all of the advancements made by our industry to improve the overall health and welfare of Thoroughbred racehorses, losing a competitor like Eight Belles will never be easy or acceptable. We extend our deepest sympathy to her owners, trainer and jockey for their loss, and we join the entire horse racing industry in looking for ways to prevent catastrophic injuries in the racehorses that are the very heart of our sport."

Evans continued, "During the first quarter of 2008, we saw our strategic investments in gaming and ADW operations produce a positive return, while also managing our expenses and growing our margins. During the period, TwinSpires.com handled $61.7 million, and our combined ADW and data services businesses generated $14.1 million in net revenue. While the insurance recoveries recorded by our Louisiana Operations were the primary driver for our 2008 first-quarter earnings, our slot machine gaming operations in Louisiana continue to exceed our expectations, with our average net win per unit climbing to $250 for the quarter. During the quarter, we also used cash generated from operations to pay down long-term debt.

"By now we had hoped to share with you more concrete plans for a slot machine gaming facility at Calder Race Course. However, given Florida horsemen's current refusal to work with us on a purse agreement, on realistic terms to share slots revenues and allocate ADW host fees – and given horsemen's decision to prevent Calder from simulcasting its races out of state – we see little reason to advance our plans until we reach some resolution. To the extent handle continues to be negatively affected by the horsemen's decision, we will monitor and manage our purse expenses accordingly. The same can be said in Kentucky where horsemen have shutout TwinSpires.com and Xpressbet.com customers from wagering on Churchill Downs' races.

"Despite the unfortunate turn of events following Kentucky Derby 134, we made good progress this year in introducing the Kentucky Derby brand to new customers through unique marketing innovations, including our expanded celebrity red carpet program; our Kentucky Derby Party program with its celebrity host Bobby Flay; our chief party officer promotion, which was a hit with young fans and mainstream media; our Derby Hi-5 wager; and other initiatives designed to drive general admission attendance. We achieved the second highest on-track attendance in Kentucky Derby history and saw only slight declines in off-track wagering, an impressive feat considering tens of thousands of Florida residents and ADW customers were prevented from wagering on the full Kentucky Derby Day card due to the horsemen's decisions previously outlined. I am extremely proud of the Churchill Downs team's performance during Kentucky Derby week and look forward to discussing the financial impact of our marquee racing event during our second-quarter report."

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	Churchill Downs Incorporated reports Q1 results 7 May 2008 <a href='https://ad.casinocity.com/adclick.php?n=a21efcd1'><img src='https://ad.casinocity.com/adview.php?what=-site:vendors/width:250/RON&n=a21efcd1' border='0' alt='' /></a> LOUISVILLE, Kentucky -- (PRESS RELEASE) -- Churchill Downs Incorporated (NASDAQ: CHDN) today reported results for the first quarter ended March 31, 2008. Net revenues from continuing operations for the first quarter of 2008 totaled $65.7 million, an increase of 37.4 percent over net revenues from continuing operations of $47.8 million recorded during the first quarter of 2007. Net revenues from continuing operations for the quarter were positively affected by the continued strong performance of the Company's gaming operations in Louisiana and the growth of the Company's advance-deposit wagering ("ADW") business. Net earnings from continuing operations for the period were $0.8 million, or $0.06 per diluted common share, compared to a net loss from continuing operations of $8.4 million, or $0.63 per diluted common share, during the first quarter of 2007. Factors impacting net earnings from continuing operations for the quarter included a pre-tax gain of $17.2 million in insurance recoveries related to Hurricane Katrina and the growth of the Company's ADW business. These gains were partially offset by increased corporate expenses related to higher marketing and compensation costs. The Company has historically recorded a first-quarter net loss due to the fact its racetracks conduct few live racing dates during the quarter. Churchill Downs Incorporated President and Chief Executive Officer Robert L. Evans said, "Before we discuss the just-completed business quarter, I want to personally reemphasize the tremendous sadness everyone at Churchill Downs feels about Eight Belles' tragic accident following her gutsy performance in Kentucky Derby 134. With all of the advancements made by our industry to improve the overall health and welfare of Thoroughbred racehorses, losing a competitor like Eight Belles will never be easy or acceptable. We extend our deepest sympathy to her owners, trainer and jockey for their loss, and we join the entire horse racing industry in looking for ways to prevent catastrophic injuries in the racehorses that are the very heart of our sport." Evans continued, "During the first quarter of 2008, we saw our strategic investments in gaming and ADW operations produce a positive return, while also managing our expenses and growing our margins. During the period, TwinSpires.com handled $61.7 million, and our combined ADW and data services businesses generated $14.1 million in net revenue. While the insurance recoveries recorded by our Louisiana Operations were the primary driver for our 2008 first-quarter earnings, our slot machine gaming operations in Louisiana continue to exceed our expectations, with our average net win per unit climbing to $250 for the quarter. During the quarter, we also used cash generated from operations to pay down long-term debt. "By now we had hoped to share with you more concrete plans for a slot machine gaming facility at Calder Race Course. However, given Florida horsemen's current refusal to work with us on a purse agreement, on realistic terms to share slots revenues and allocate ADW host fees – and given horsemen's decision to prevent Calder from simulcasting its races out of state – we see little reason to advance our plans until we reach some resolution. To the extent handle continues to be negatively affected by the horsemen's decision, we will monitor and manage our purse expenses accordingly. The same can be said in Kentucky where horsemen have shutout TwinSpires.com and Xpressbet.com customers from wagering on Churchill Downs' races. "Despite the unfortunate turn of events following Kentucky Derby 134, we made good progress this year in introducing the Kentucky Derby brand to new customers through unique marketing innovations, including our expanded celebrity red carpet program; our Kentucky Derby Party program with its celebrity host Bobby Flay; our chief party officer promotion, which was a hit with young fans and mainstream media; our Derby Hi-5 wager; and other initiatives designed to drive general admission attendance. We achieved the second highest on-track attendance in Kentucky Derby history and saw only slight declines in off-track wagering, an impressive feat considering tens of thousands of Florida residents and ADW customers were prevented from wagering on the full Kentucky Derby Day card due to the horsemen's decisions previously outlined. I am extremely proud of the Churchill Downs team's performance during Kentucky Derby week and look forward to discussing the financial impact of our marquee racing event during our second-quarter report."