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Churchill Downs Profits Down

LOUISVILLE, Kentucky – (PRESS RELEASE) -- Churchill Downs Incorporated ("CDI" or the "Company") (Nasdaq: CHDN) today reported results for the second quarter and six months ended June 30, 2004.

Net revenues for the second quarter reached $191.1 million, an increase of 1.1 percent compared with $189.0 million for the same period last year. Net earnings for the quarter were $27.4 million, a 2.1 percent decline from net earnings of $28.0 million for the same period a year ago. Diluted earnings per share totaled $2.04, compared with $2.09 for the second quarter of 2003. Results for the first half of 2004 are outlined in the accompanying tables.

Thomas H. Meeker, CDI's president and chief executive officer, attributed the Company's slight decline in quarterly earnings year-over-year primarily to significant investment in two key long-term growth initiatives -- legislative efforts to attain alternative gaming and CDI's Customer Relationship Management ("CRM") program. "Alternative gaming initiatives in California and Florida necessitated, and may continue to require, higher levels of investment," he said. "Our CRM effort also called for additional spending during the quarter. As we mentioned when we announced revised earnings expectations three weeks ago, the costs of these strategic initiatives, so essential to our future growth, could not be offset totally due to business levels at three of our racetracks."

Meeker added, "The uncertain nature of our alternative gaming efforts will continue into the third quarter, with the level of spending contingent upon the prospects of the California and Florida ballot initiatives. Based on the information available to us today, we estimate earnings for the third quarter to be approximately $0.33 to $0.38 per share, with the full-year estimate remaining at approximately $1.44 to $1.53 per share."

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