Churchill Downs Inc. reported net earnings of $29.3 million in the second quarter, a decrease of 12% compared with net earnings of $33.4 million over the same period last year. Those figures break down to $2.11 per share and $2.46 per share, respectively.
The Louisville, Ky.,-based racetrack company recognized $10.1 million of pre-tax insurance recoveries, net of impairment losses, related to storm damage that occurred at Fair Grounds Race Course and Calder Race Course in 2005. The company also recorded share-based executive compensation costs of about $2.6 million, attributable to equity awards to CEO and president Robert Evans at the time of hiring and approved during the annual meeting of CDI shareholders.
Second quarter net revenue increased to $169.9 million from $163.3 million during the same period last year, a 4.1% rise.
During the second quarter, CDI reached an agreement to purchase America TAB and Bloodstock Research Information Systems and launched its account-wagering platform, www.twinspires.com. CDI also attributed the net revenue increase to additional seating and corporate hospitality revenues during the Kentucky Derby Presented by Yum! Brands (gr. I) and the Kentucky Oaks (gr. I), and to increased handle revenue from Arlington Park due to larger field sizes running on the Polytrack.
"During the quarter, we witnessed the positive impact of our entry into the account-wagering business and made progress on two alternative gaming initiatives," Evans said. "Calder Race Course and its pari-mutuel partners in South Florida successfully placed a local voter referendum on slot machine gaming for existing pari-mutuel facilities in Miami-Dade County on the ballot for Jan. 29. Additionally, Fair Grounds Race Course is constructing its temporary slot machine gaming facility and is on schedule to open that operation later this fall. Fair Grounds is also moving forward with the construction of its permanent facility, which is scheduled to open in the fall of 2008."
Handle for the company's tracks during the second quarter dropped 1.8% to $1.09 billion from $1.11 billion a year ago with TVG and Youbet.com not accepting wagers on races originating from CDI's flagship track in Louisville.
"Total second-quarter handle was lower year over year due to the fact that we had five fewer race days during the quarter and two account-wagering providers, a major rebate operator, and wagering outlets affiliated with the Choctaw Nation were not accepting wagers on races at Churchill Downs racetrack," Evans said. "However, our net pari-mutuel revenues from continuing operations were still up 2.6%. That increase is due to higher host fees charged to account-wagering companies for our racing products by TrackNet Media Group. the end result has been higher revenues through account-wagering channels for horsemen and our tracks, which together create the horse racing contest our customers enjoy." -- Leslie Deckard
