Churchill Downs Incorporated Reports 2010 Fourth-Quarter and Year-End Results

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Churchill Downs Incorporated ("CDI" or "the Company") (NASDAQ: CHDN) today reported business results for the fourth quarter and year ended Dec. 31, 2010.

2010 Year-End Results of Operations:
Net revenues from continuing operations for the full year 2010 were $585.3 million, an increase of $114.8 million, or 24 percent, over the prior year's net revenues from continuing operations of $470.5 million. The growth in net revenues from continuing operations was due primarily to the operation of Calder Casino, which opened on Jan. 22, 2010, the Company's acquisition of the Youbet.com business and the continuing growth of CDI's Online business segment, including its branded account-wagering platform, TwinSpires.com.

EBITDA (earnings before interest, taxes, depreciation and amortization) grew to $80.4 million in 2010, an increase of 23 percent, from 2009's total of $65.5 million. Gaming EBITDA increased by $10.2 million year over year due to the opening of the Calder Casino, improved results from Fair Grounds' slot machine gaming facility and the addition of Harlow's Casino Resort & Hotel ("Harlow's"), which the Company acquired in December 2010. Additionally, EBITDA from CDI's Online business increased $3.3 million as the Company benefited from the June 2010 acquisition of Youbet.com, which was operationally integrated with TwinSpires.com in November 2010.

Net earnings from continuing operations for 2010 were $19.6 million, or $1.26 per diluted common share, compared to net earnings from continuing operations of $17.7 million, or $1.27 per diluted common share, for the prior year.

2010 Fourth-Quarter Results of Operations:
During the fourth quarter of 2010, CDI grew net revenues from continuing operations to $137.2 million, a 47-percent increase over net revenues from continuing operations of $93.6 million recorded during the fourth quarter of 2009. The year-over-year growth in net revenues from continuing operations during the quarter was due primarily to the operation of the Calder Casino, the acquisitions of Youbet and Harlow's, and the positive impact of hosting the Breeders' Cup World Championships at Churchill Downs Racetrack in November 2010. EBITDA during the quarter increased to $8.0 million from negative EBITDA of $1.9 million in the fourth quarter of 2009, due principally to the growth of the Company's Gaming business. The Company's net loss from continuing operations during the fourth quarter of 2010 decreased by 38 percent, improving to a net loss of $4.3 million, or $0.26 per diluted common share, compared to a net loss from continuing operations of $6.9 million, or $0.51 per diluted common share, during the same period in 2009.

CDI President and Chief Executive Officer Robert L. Evans said the Company continued to take important steps in 2010 to diversify its business holdings and revenue streams. "The significant capital we invested to expand our Gaming business and grow our Online business during 2010 contributed to the record net revenues from continuing operations and record EBITDA for the year," Evans said. "We look forward to an even stronger performance in 2011 as we record the full year results from the combined TwinSpires.com-Youbet.com account-wagering platform, from Harlow's, and from the Calder Casino, which has been subject to a lower gaming tax rate since July 2010. Additionally, we incurred higher expenses last year related to our acquisitions, many of which are costs that should not impact our results going forward. Overall, we are very pleased to see the positive impact these strategic investments have had on CDI's profitability.

"We still face a number of challenges as we work to improve the results of our Racing Operations, including nationwide declines in handle and intense competition for racehorses with tracks that are able to subsidize their purses with alternative gaming revenues," Evans continued. "The results from last year's Kentucky Derby, Kentucky Oaks and the Breeders' Cup World Thoroughbred Championships at Churchill Downs Racetrack demonstrate to us that racing fans will support a high-quality racing product that is packaged with an exceptional entertainment experience, and we continue to focus on producing racing that customers want. Our sales of reserved seats for this year's Derby and Oaks are trending ahead of last year, as are sales of premium seats to Churchill Downs' Opening Night event on April 30. Starting the 2011 Kentucky Derby Week with a night racing event under the lights will be another first for our flagship venue, and we hope it becomes a lasting part of the Derby tradition."

NOTE: During 2010, the Company revised its Consolidated Statements of Net Earnings and Comprehensive Earnings for the periods ended Dec. 31, 2009, and 2008, to reflect the classification of pari-mutuel and gaming taxes as operating expenses and free play administered at our gaming facilities as a reduction to revenues. Previously, pari-mutuel and gaming taxes were presented as a reduction to revenues. Conversely, free play costs were presented as an operating expense. For the years ended Dec. 31, 2009, and 2008, the net impact of the revision was an increase in net revenue of $30.8 million and $35.6 million, respectively. The revision, which the Company determined is not material, had no impact on operating income, results of operations or cash flows. Additional information regarding these revisions can be found in this news release on page 9 and within the Company's Annual Report on Form 10-K, which can be accessed online at http://ir.churchilldownsincorporated.com/financials.cfm or www.sec.gov.

A conference call regarding this news release is scheduled for Tuesday, March 15, 2011, at 9 a.m. EDT. Investors and other interested parties may listen to the teleconference by accessing the online, real-time webcast of the call at http://ir.churchilldownsincorporated.com/financials.cfm or by dialing (877) 372-0878 and entering the conference ID number 47767906 at least 10 minutes before the appointed time. International callers should dial (253) 237-1169. An online replay of the webcast will be available by noon EDT in the "Investors" section the Company's website at http://ir.churchilldownsincorporated.com/events.cfm. 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.

In addition to the results provided in accordance with U.S. Generally Accepted Accounting Principles ("GAAP"), CDI has provided a non-GAAP measurement, which presents a financial measure of earnings before interest, taxes, depreciation and amortization ("EBITDA"). CDI uses EBITDA as a key performance measure of results of operations for purposes of evaluating performance internally. CDI believes the use of this measure enables management and investors to evaluate and compare, from period to period, CDI's operating performance in a meaningful and consistent manner. This non-GAAP measurement is not intended to replace the presentation of CDI's financial results in accordance with GAAP. A reconciliation of EBITDA to net earnings is included in the Supplemental Information by Operating Unit table within this news release.

Information set forth in this press release contains various "forward-looking statements" within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. The Private Securities Litigation Reform Act of 1995 (the "Act") provides certain "safe harbor" provisions for forward-looking statements. All forward-looking statements made in this press release are made pursuant to the Act. The reader is cautioned that such forward-looking statements are based on information available at the time and/or management's good faith belief with respect to future events, and are subject to risks and uncertainties that could cause actual performance or results to differ materially from those expressed in the statements. Forward-looking statements speak only as of the date the statement was made. We assume no obligation to update forward-looking information to reflect actual results, changes in assumptions or changes in other factors affecting forward-looking information. Forward-looking statements are typically identified by the use of terms such as "anticipate," "believe," "could," "estimate," "expect," "intend," "may," "might," "plan," "predict," "project," "should," "will," and similar words, although some forward-looking statements are expressed differently. Although we believe that the expectations reflected in such forward-looking statements are reasonable, we can give no assurance that such expectations will prove to be correct. Important factors that could cause actual results to differ materially from expectations include: the effect of global economic conditions, including any disruptions in the credit markets; a decrease in consumers' discretionary income; the effect (including possible increases in the cost of doing business) resulting from future war and terrorist activities or political uncertainties; the overall economic environment; the impact of increasing insurance costs; the impact of interest rate fluctuations; the effect of any change in our accounting policies or practices; the financial performance of our racing operations; the impact of gaming competition (including lotteries, online gaming and riverboat, cruise ship and land-based casinos) and other sports and entertainment options in the markets in which we operate; the impact of live racing day competition with other Florida, Illinois and Louisiana racetracks within those relevant markets; the impact of higher purses and other incentives in states that compete with our racetracks; costs associated with our efforts in support of alternative gaming initiatives; costs associated with customer relationship management initiatives; a substantial change in law or regulations affecting pari-mutuel and gaming activities; a substantial change in allocation of live racing days; changes in Kentucky, Florida, Illinois or Louisiana law or regulations that impact revenues or costs of racing operations in those states; the presence of wagering and gaming operations at Indiana and other states' racetracks and casinos near our operations; our continued ability to effectively compete for the country's horses and trainers necessary to achieve full field horse races; our continued ability to grow our share of the interstate simulcast market and obtain the consents of horsemen's groups to interstate simulcasting; our ability to enter into agreements with other industry constituents for the purchase and sale of racing content for wagering purposes; our ability to execute our acquisition strategy and to complete or successfully operate planned expansion projects; our ability to successfully complete any divestiture transaction; market reaction to our expansion projects; the loss of our totalisator companies or their inability to provide us assurance of the reliability of their internal control processes through Statement on Auditing Standards No. 70 audits or to keep their technology current; the need for various alternative gaming approvals in Florida and Louisiana; our accountability for environmental contamination; the loss of key personnel; the impact of natural and other disasters on our operations and our ability to adjust the casualty losses through our property and business interruption insurance coverage; our ability to integrate Youbet, Harlow's Casino Resort & Hotel and other businesses we acquire, including our ability to maintain revenues at historic levels and achieve anticipated cost savings; the impact of wagering laws, including changes in laws or enforcement of those laws by regulatory agencies; the outcome of pending or threatened litigation; changes in our relationships with horsemen's groups and their memberships; our ability to reach agreement with horsemen's groups on future purse and other agreements (including, without limiting, agreements on sharing of revenues from gaming and advance deposit wagering); the effect of claims of third parties to intellectual property rights; and the volatility of our stock price.