Churchill Downs Reports 2005 Results

15 March 2006

LOUISVILLE, Kentucky -- (PRESS RELEASE) -- Churchill Downs Incorporated (NASDAQ: CHDN) today reported results for the fourth quarter and year ended Dec. 31, 2005.

Net earnings for 2005, which included the Company's third-quarter gain on the sale of the assets of Hollywood Park, totaled $78.9 million, compared to net earnings of $8.9 million during 2004. Results from Hollywood Park are treated as discontinued operations and detailed as such in the accompanying tables.

Net earnings per diluted share for 2005 totaled $5.86, which included net earnings per diluted share from continuing operations of $0.96 and net earnings per diluted share from discontinued operations of $4.90. In 2004, net earnings per diluted share equaled $0.67, which was comprised of net earnings per diluted share from continuing operations of $0.73 and a net loss per diluted share from discontinued operations of $0.06.

Net revenues from continuing operations, which included a full-year of revenues from the Company's Louisiana operations, totaled $408.8 million in 2005, a 13.2-percent increase over net revenues from continuing operations of $361.2 million generated during 2004. Net revenues from continuing operations during the fourth quarter of 2005 totaled $81.7 million, a 4.9-percent decrease from the net revenues of $85.9 million generated by the Company's continuing operations during the fourth quarter of 2004.

During the fourth quarter of 2005, the Company had a net loss per diluted share of $0.23, which was comprised of a net loss per diluted share of $0.30 from continuing operations and net earnings per diluted share of $0.07 from discontinued operations. During the fourth quarter of 2004, the Company had a net loss per diluted shared of $0.25, which was comprised of a net loss per diluted share of $0.35 from continuing operations and net earnings per diluted share of $0.10 from discontinued operations. Results for the fourth quarter and full year ended Dec. 31, 2005, are outlined in the accompanying tables.

CDI President and Chief Executive Officer Thomas H. Meeker said, "2005 was a dynamic year during which we achieved double-digit growth in net revenues and EBITDA from our continuing operations, reduced our long-term debt, and advanced strategic growth initiatives while managing business challenges that included three natural disasters that disrupted our operations in Florida, Louisiana and Western Kentucky.

"Highlights for 2005 include the completion of Churchill Downs' $121 million renovation, which contributed to another record-setting Kentucky Derby and Oaks weekend. Incremental revenues generated through personal seat licenses, luxury suite rentals and increased group sales at our flagship facility have exceeded expectations, and customers' response to our site improvements has been outstanding.

"In 2005 we sold our Hollywood Park asset for $254.6 million. The transaction enabled us to virtually eliminate our long-term debt and exit a difficult business environment while retaining the right to reinvest in Hollywood Park should state government authorize alternative gaming at California tracks. We completed the infrastructure build out of our Customer Relationship Management platform, played a leadership role in advancing industry initiatives to upgrade wagering systems, and strengthened our management team with the addition of a chief development officer.

"We begin 2006 with a strong balance sheet, access to capital and the ability to execute on strategic opportunities as they develop. We are actively pursuing alternative gaming legislation in the states where we operate and are working towards a voter referendum to allow slots at our Florida track. We will continue to identify opportunities to leverage our strong brand while pursuing new distribution channels for our racing products in domestic and international markets. We will work to rationalize the current economics of our sport to ensure horse racing continues to adapt and evolve within a competitive and ever-changing business environment. Additionally, we anticipate having the answers necessary to chart a course for Fair Grounds Race Course and our other hurricane-damaged Louisiana operations."