CDI reports record revenues, earnings

Churchill Downs Inc. (CDI) on Monday reported business results for the fourth

quarter and year ended December 31, 2011.

During the fourth quarter of 2011, CDI grew net revenues from continuing

operations to $149.3 million, an increase of 9 percent from net revenues of

$137.2 million recorded during the prior year's period. CDI's fourth-quarter

EBITDA (earnings before interest, taxes, depreciation and amortization) more

than doubled to $19.6 million. The year-over-year growth in EBITDA during the

quarter was driven by the performance of the company's Gaming and Online

Business segments. Revenues of the Gaming Business segment increased 37 percent

while EBITDA increased 52 percent. Revenues of the Online Business segment

increased 18 percent while EBITDA more than tripled to $9.1 million from $2.8

million in the prior year's fourth quarter. EBITDA of the company's Racing

Business showed a loss of $3.3 million compared to a loss of $2.7 million in the

fourth quarter of 2010.

Net earnings from continuing operations set a fourth-quarter record of $4.3

million, or $0.25 per diluted common share, versus a net loss from continuing

operations of $4.3 million, or a net loss of $0.26 per diluted common share,

during the final quarter of 2010.

Net revenues from continuing operations for 2011 climbed to $696.9 million, a

19 percent increase from prior-year. The growth in net revenues was due

principally to the continued expansion of the company's Gaming and Online

Businesses, including the effects of the 2010 acquisitions of Youbet.com LLC (Youbet)

and Harlow's Casino Resort & Hotel (Harlow's).

Calder Casino, which opened on January 20, 2010, increased total revenues by

$17.6 million compared to its 2010 results. Calder Casino's improved performance

was due, in part, to a new marketing strategy executed during 2011 along with

the effect of having a full year of operations in 2011.

Revenues generated by CDI's Online Business increased $44.0 million in 2011

compared to the previous year, primarily reflecting the acquisition of Youbet

during the second quarter of 2010, and the five additional months of Youbet

operations that were included in CDI's 2011 results.

Revenues from the company's Racing Business segment declined 3 percent in

2011.

EBITDA for the year nearly doubled to $158.7 million from the $80.4 million

recorded in 2010. Gaming EBITDA increased $28.5 million as CDI benefited from

the acquisition of Harlow's during December 2010. Harlow's generated $17.5

million of EBITDA during 2011, despite closing for 25 days in May due to the

Mississippi River flooding, compared to $1.2 million in the prior year.

Additionally, Calder Casino generated EBITDA of $13.7 million, versus $3.7

million of EBITDA in the prior year. Fair Grounds Slots and VSI EBITDA increased

$2.2 million to $25.8 million during 2011 primarily reflecting operating

efficiencies at our video poker locations compared to the same period of 2010.

Online Business EBITDA increased $20.5 million primarily due to

merger-related cost synergies realized by the company during 2011 as well as an

additional five months of Youbet operations during 2011.

Racing Operations EBITDA increased $27.8 million over the previous year,

primarily reflecting the release of Illinois Horse Racing Equity Trust Fund

proceeds with a net favorable impact of $19.3 million on EBITDA during 2011. In

addition, Racing Operations benefited from the increased profitability of

Kentucky Oaks and Derby week, which contributed an additional $6.4 million in

EBITDA during 2011.

Net earnings from continuing operations for 2011 were $60.8 million, or $3.55

per diluted common share, compared to net earnings from continuing operations of

$19.6 million, or $1.26 per diluted common share, in 2010.

Finally, the company benefited from favorable comparisons to the prior year,

which included legal and development expenses of $4.2 million and reorganization

charges of $3.4 million during 2010 related to our acquisitions of Harlow's and

Youbet.

"All of us at CDI are proud of the company's performance in 2011," CDI

Chairman and Chief Executive Officer Robert L. Evans said. "The record financial

results in the fourth quarter and for the entire year; our strong cash flows

that enabled us to reduce long-term debt by $137.5 million, from $265.1 million

at year-end 2010 to $127.6 million at year-end 2011; the 20 percent increase in

our annual dividend to shareholders, from $0.50 per share to $0.60 per share;

and the 20.1 percent increase in our stock price, from $43.40 at year-end 2010

to $52.13 at year-end 2011, all reflect the strategy we have developed and

executed over the last several years. As we look toward 2012, we hope to put in

place the growth drivers that will enable the company to continue its success in

the future."

A copy of the CDI news release announcing quarterly results and relevant

financial and statistical information abut the period will be accessible at

www.churchilldownsincorporated.com.