CDI Benefits From Insurance Recoveries

Churchill Downs Inc. posted net earnings of about $800,000 in the first quarter of 2008, compared with a net loss of $8.4 million for the same period a year ago, the company announced May 6.

Net revenue from continuing operations for the first quarter of 2008 totaled $65.7 million, up 37.4% from net revenue of $47.8 million during the first quarter of 2007.  Net revenue from continuing operations for the quarter was 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 business, CDI said in a earnings release.

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 ADW business. The gains were partially offset by increased corporate expenses related to higher marketing and compensation costs.

CDI historically has recorded a first-quarter net loss due to the fact its racetracks conduct few live racing dates during the quarter.

“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,” CDI president and chief executive officer Robert Evans said. “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 revenue 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.”

Evans also discussed the death of Eight Belles after her second-place finish in the Kentucky Derby Presented by Yum! Brands (gr. I) at Churchill Downs in Louisville, Ky.

“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,” Evans said. 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 horseracing industry in looking for ways to prevent catastrophic injuries in the racehorses that are the very heart of our sport.”

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