Churchill Downs' Revenues, Earnings Improve

Edited release from Churchill Downs
Churchill Downs Inc. reported Tuesday that net revenues for the third quarter ending Sept. 30 totaled $125.6 million, an increase of 3.6 percent, compared with $121.2 million for the same period last year.

Net earnings for the quarter were $7.9 million, compared with $7.1 million in 2001. Diluted earnings per share totaled $0.59, compared with $0.54 for the third quarter of 2001.

Churchill Downs Inc. president and chief executive officer Thomas H. Meeker credited the solid quarter, that included earnings within the range previously estimated by the company, to positive performances at most of CDI's operating units, cost controls and a sound cash management strategy.

"As has been our experience for 2002, on-track revenues for the third quarter were flat for most of our racetracks. We were able to substantially offset this impact through the continued strong performance of our simulcast operations and a diligent approach to managing costs. We also benefited from a significant
drop in interest expense as a result of lower interest rates and continued debt reduction through our positive cash flow and balance sheet management."

Meeker added, "Looking ahead, we are confident that our fourth quarter will generate earnings consistent with our full-year estimate of $1.77 to $1.80 per diluted share. That confidence in earnings -- and in our business in general - was validated by our board of directors' recent approval of the $121 million master plan to modernize Churchill Downs racetrack.

"The master plan to renovate our flagship facility and preserve its signature event, the Kentucky Derby, represents an unprecedented investment in our future and an unparalleled commitment to our business model," Meeker continued. "We believe this initiative will have a positive impact on our Company following its planned completion in 2006. Our ability this year to show fundamental progress against the backdrop of a formal business recession encourages us about our prospects for 2003. Gains next year will depend on our continuing efforts to operate as efficiently as possible while delivering the customer satisfaction that we know is paramount to our longer term success."

Meeker said one challenge facing the company in 2003 is the addition of another racetrack in Indiana.

"One specific development that we will have to surmount in 2003 is the split of Hoosier Park's racing subsidy with Indiana Downs," Meeker said. "Although we further lessened our ownership in Hoosier Park a year ago, this factor will reduce our EBITDA by approximately $3 million in the year ahead. On balance, we expect to show gains in earnings for 2003, extending our long-term record of growth."

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