Hollywood Park Sale Gives CDI Big Quarter

Edited press release

Churchill Downs Inc. reported net earnings of $71.6 million for the third quarter of 2005, up from a loss of $3.8 million for the same period last year, thanks to the sale of Hollywood Park in Southern California.

The sale of the track did wonders for the CDI bottom line, company president Tom Meeker indicated in a statement that accompanied the earnings release.

"Through the sale of Hollywood Park, we strengthened our balance sheet by virtually eliminating our long-term debt," Meeker said. "We also negotiated an amended credit facility at favorable rates. As a result, the company now enjoys access to capital and the freedom to execute on strategic opportunities as they develop."

Net earnings for the first nine months of 2005 were $81.9 million, up from $12.1 million for the same period in 2004. From Jan. 1-Sept. 30 of this year, CDI produced net revenue of $397.1 million from what it calls "external customers"--Kentucky operations led the way with $83.4 million in net revenue, followed by Arlington Park in Illinois at $67.3 million, Calder Race Course in Florida at $53 million, and the Churchill Downs Simulcast Network at $52.3 million.

Hollywood Park was sold to Bay Meadows Land Co. for $257.5 million in September. CDI reported it recognized a gain, net of income taxes, of $69.9 million on the sale of the assets of Hollywood Park in the third quarter of this year.

Net revenues from continuing operations for the third quarter reached $112 million, up 9.3%, compared with $102.5 million for the same period last year. Net earnings from continuing operations were $3.8 million during the third quarter, compared with loss from continuing operations of $396,000 during the year-earlier period.

"During the (third) quarter, hurricanes disrupted our operations in Louisiana and Florida," Meeker said in the statement. "Hurricane Katrina closed Fair Grounds Race Course and its off-track betting and video poker operations, while Hurricanes Dennis, Katrina, and Rita caused lost race days and simulcast-only days at Calder Race Course."

Still, Louisiana operations produced net revenue of $38.8 million for the first nine months of 2005, up from zero last year because CDI didn't take control of Fair Grounds until just before its 2004-05 meet.

"Severe weather also affected our operations in October and November, as Calder sustained damage during Hurricane Wilma on Oct. 24, and Ellis Park sustained damage during a tornado that struck western Kentucky Nov. 6," Meeker said. "We are working with our insurance providers to assess the extent of the damage to Calder, Ellis Park, and our Louisiana operations. We are also in discussions with federal, state and local officials overseeing the restoration of southeast Louisiana following Hurricane Katrina.

"One year ago, we made a long-term investment in New Orleans because we believe in the community and appreciate its deep connection to Fair Grounds as a racetrack and as home to the world-famous Jazz and Heritage Festival. We want Fair Grounds and Jazz Fest to remain part of a revitalized New Orleans. As we move forward, we believe there will be opportunities to reposition our operations within the community in ways that will benefit the community and the company."