Churchill Downs reports 2006 results

13 Mar 2007

LOUISVILLE, Kentucky – (PRESS RELEASE) -- Churchill Downs Incorporated (NASDAQ: CHDN) today reported results for the fourth quarter and year ended Dec. 31, 2006.

Net revenues from continuing operations in 2006 totaled $376.67 million, up 5.71 percent from net revenues from continuing operations of $356.34 million in 2005. Net revenues from continuing operations during the fourth quarter of 2006 were $80.27 million, an increase of 13.65 percent over net revenues from continuing operations of $70.63 million during the fourth quarter of 2005. The growth in net revenues from continuing operations for the year and fourth quarter of 2006 is due principally to the strong performance of the Company's Louisiana Operations and Churchill Downs Racetrack, which during 2006 hosted another record-setting Kentucky Derby weekend as well as its sixth successful Breeders' Cup World Championships.

Net earnings for 2006 were $29.81 million, or $2.19 per diluted share, compared to net earnings of $78.91 million, or $5.86 per diluted share, in 2005. Churchill Downs' 2005 full-year results included the Company's one-time gain on the sale of the assets of Hollywood Park of $69.90 million. The Company recorded insurance recoveries, net of losses, of $19.23 million in 2006 and $2.20 million in 2005 related to hurricane damage sustained by its racing operations in Louisiana and Florida during 2005.

During the fourth quarter of 2006, Churchill Downs had a net loss of $2.02 million, or $0.15 per diluted share, which was comprised of a net loss per diluted share from discontinued operations of $0.33 and net earnings per diluted share from continuing operations of $0.18. The Company's 2006 fourth-quarter performance was an improvement over the similar period in 2005 when Churchill Downs reported a net loss of $3.02 million, or $0.23 per diluted share, which was comprised of a net loss per diluted share from discontinued operations of $0.01 and a net loss per diluted share from continuing operations of $0.22.

The Company recorded an impairment charge of $7.87 million, included in discontinued operations, during the fourth quarter of 2006 to write down the long-lived assets of Hoosier Park at Anderson to their estimated fair value in connection with the pending sale of the Company's majority interest in the track and its three Indiana OTBs to Centaur Inc. The sale has received the necessary regulatory approvals and is expected to close during the first quarter of 2007.

Churchill Downs President and Chief Executive Officer Robert L. Evans said the Company is well positioned to move forward with a number of growth initiatives. "With the sale of two racetracks, the restoration of our Louisiana Operations, and the appointment of a new CEO, the previous year was certainly a transitional one for our Company. Nonetheless, we are pleased with the EBITDA growth we experienced year-over-year at our continuing operations and with the continued strength of our balance sheet.

"As we look ahead to our growth objectives for the coming year and beyond, we believe it is critical for the horse racing industry to embrace innovation and find new ways to grow business levels domestically and internationally while giving our customers more opportunities to watch and wager on horse racing content in ways that are convenient for them," Evans continued. "To accomplish these objectives, we must foster an open and competitive business environment that rewards the horsemen and racetracks who invest the capital to create racing content as well as the distributors of racing content who are the most successful in competing for and serving the needs of customers.

"This month, Churchill Downs and Magna Entertainment Corp. announced TrackNet Media Group LLC, a venture through which our companies will buy and sell racing content from third parties. Additionally, our companies have entered into a reciprocal content swap agreement through which we will buy and sell racing content from each other. We believe these agreements will promote the optimal distribution of horse racing content across a broader spectrum of platforms - including racetracks, simulcast-wagering facilities, account-wagering providers and outlets that offer rebates - while pursuing wagering integrity and security objectives that will generate revenue for the horsemen and racetracks that create content.

"Churchill Downs has also invested in the national horse racing network HRTV(TM), which is available in 13 million U.S. households via certain cable and satellite television services, and this spring is planning to launch its own advance deposit wagering platform. We believe these initiatives will benefit the key stakeholders in our industry, including our customers, by creating better racing content for both the on-track and television audience, more interesting wagering products, and more compelling online and interactive experiences.

"In the year ahead, we also look forward to beginning construction on a permanent slot machine gaming facility at Fair Grounds Race Course and are currently seeking the approval of New Orleans City officials to operate a temporary facility while the permanent structure is being built to begin the flow of revenues to state and local governments, to horsemen's purses and to our Louisiana Operations during the fourth quarter of 2007. We hope to break ground on the permanent building, which will be adjacent to the racetrack grandstand, this summer with a target opening date of November 2008."

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	Churchill Downs reports 2006 results 13 Mar 2007 LOUISVILLE, Kentucky – (PRESS RELEASE) -- Churchill Downs Incorporated (NASDAQ: CHDN) today reported results for the fourth quarter and year ended Dec. 31, 2006. Net revenues from continuing operations in 2006 totaled $376.67 million, up 5.71 percent from net revenues from continuing operations of $356.34 million in 2005. Net revenues from continuing operations during the fourth quarter of 2006 were $80.27 million, an increase of 13.65 percent over net revenues from continuing operations of $70.63 million during the fourth quarter of 2005. The growth in net revenues from continuing operations for the year and fourth quarter of 2006 is due principally to the strong performance of the Company's Louisiana Operations and Churchill Downs Racetrack, which during 2006 hosted another record-setting Kentucky Derby weekend as well as its sixth successful Breeders' Cup World Championships. Net earnings for 2006 were $29.81 million, or $2.19 per diluted share, compared to net earnings of $78.91 million, or $5.86 per diluted share, in 2005. Churchill Downs' 2005 full-year results included the Company's one-time gain on the sale of the assets of Hollywood Park of $69.90 million. The Company recorded insurance recoveries, net of losses, of $19.23 million in 2006 and $2.20 million in 2005 related to hurricane damage sustained by its racing operations in Louisiana and Florida during 2005. During the fourth quarter of 2006, Churchill Downs had a net loss of $2.02 million, or $0.15 per diluted share, which was comprised of a net loss per diluted share from discontinued operations of $0.33 and net earnings per diluted share from continuing operations of $0.18. The Company's 2006 fourth-quarter performance was an improvement over the similar period in 2005 when Churchill Downs reported a net loss of $3.02 million, or $0.23 per diluted share, which was comprised of a net loss per diluted share from discontinued operations of $0.01 and a net loss per diluted share from continuing operations of $0.22. The Company recorded an impairment charge of $7.87 million, included in discontinued operations, during the fourth quarter of 2006 to write down the long-lived assets of Hoosier Park at Anderson to their estimated fair value in connection with the pending sale of the Company's majority interest in the track and its three Indiana OTBs to Centaur Inc. The sale has received the necessary regulatory approvals and is expected to close during the first quarter of 2007. Churchill Downs President and Chief Executive Officer Robert L. Evans said the Company is well positioned to move forward with a number of growth initiatives. "With the sale of two racetracks, the restoration of our Louisiana Operations, and the appointment of a new CEO, the previous year was certainly a transitional one for our Company. Nonetheless, we are pleased with the EBITDA growth we experienced year-over-year at our continuing operations and with the continued strength of our balance sheet. "As we look ahead to our growth objectives for the coming year and beyond, we believe it is critical for the horse racing industry to embrace innovation and find new ways to grow business levels domestically and internationally while giving our customers more opportunities to watch and wager on horse racing content in ways that are convenient for them," Evans continued. "To accomplish these objectives, we must foster an open and competitive business environment that rewards the horsemen and racetracks who invest the capital to create racing content as well as the distributors of racing content who are the most successful in competing for and serving the needs of customers. "This month, Churchill Downs and Magna Entertainment Corp. announced TrackNet Media Group LLC, a venture through which our companies will buy and sell racing content from third parties. Additionally, our companies have entered into a reciprocal content swap agreement through which we will buy and sell racing content from each other. We believe these agreements will promote the optimal distribution of horse racing content across a broader spectrum of platforms - including racetracks, simulcast-wagering facilities, account-wagering providers and outlets that offer rebates - while pursuing wagering integrity and security objectives that will generate revenue for the horsemen and racetracks that create content. "Churchill Downs has also invested in the national horse racing network HRTV(TM), which is available in 13 million U.S. households via certain cable and satellite television services, and this spring is planning to launch its own advance deposit wagering platform. We believe these initiatives will benefit the key stakeholders in our industry, including our customers, by creating better racing content for both the on-track and television audience, more interesting wagering products, and more compelling online and interactive experiences. "In the year ahead, we also look forward to beginning construction on a permanent slot machine gaming facility at Fair Grounds Race Course and are currently seeking the approval of New Orleans City officials to operate a temporary facility while the permanent structure is being built to begin the flow of revenues to state and local governments, to horsemen's purses and to our Louisiana Operations during the fourth quarter of 2007. We hope to break ground on the permanent building, which will be adjacent to the racetrack grandstand, this summer with a target opening date of November 2008."