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Churchill Downs Reports Record Q2 Revenues, Higher Earnings Per Share

Net revenues for the second quarter reached $172.6 million, an increase of 5.7 percent, compared with $163.3 million for the same period last year. Net earnings for the quarter were $23.1 million, a 5.5-percent increase over $21.9 million in 2001. Diluted earnings per share totaled $1.73, compared with $1.66 for the second quarter of 2001. Results for the first half of 2002 are outlined in the accompanying tables.

"Thomas H. Meeker, CDI's president and chief executive officer, attributed the Company's revenue growth for the quarter primarily to a favorable racing calendar, record-wagering results on the Kentucky Derby and Oaks, and a strong showing by the Churchill Downs Simulcast Network ("CDSN"). CDI racetracks had 16 additional live race days in the second quarter of 2002 compared to the same period in 2001. Wagering on Derby and Oaks Days increased 14.5 and 15.4 percent, respectively, and CDSN net revenues increased 17.2 percent over the same period a year ago.

"We are especially encouraged by the vitality of our premier racing event, the Kentucky Derby," Meeker said. "That event is the cornerstone for our strategy of continuing to enhance our brand leadership and develop new outlets for our live racing product. Although we are facing challenges in building revenues in the higher-margin, on-track portion of our business, our results clearly show the continuing success of actions we are taking to increase the contribution from simulcasting and other new distribution outlets.

"We are being aided, for example, by the start of account wagering in California that has shown impressive growth since its start in the first half of the year. While a very small factor at present, account wagering represents a promising, new market for our live racing product. We also believe the second-quarter results validate the decision made earlier in the year to create a separate operating unit for CDSN, and we are already benefiting from the added focus being brought to this growing segment of our business."

Meeker added, "Our earnings per share for the quarter exceeded the range previously estimated by the Company. During the first six months of 2002, we were able to absorb a total of approximately $2.2 million of incremental insurance and lobbying costs, most of which were incurred in the second quarter. Although we will continue to incur higher costs compared to a year ago, we are optimistic that we will be able to meet our forecasts for the second half of 2002. For the third quarter, we estimate earnings per share of $0.57 to $0.60, up from $0.54 per share in the year-earlier period. Our full- year estimate of earnings at this time is $1.77 to $1.80 per share, compared with $1.67 per share in 2001."

Churchill Downs Incorporated ("CDI"), headquartered in Louisville, Ky., owns and operates world-renowned horse racing venues throughout the United States. The Company's racetracks in California, Florida, Illinois, Indiana and Kentucky host 112 graded-stakes events and many of North America's most prestigious races, including the Kentucky Derby and Kentucky Oaks, Hollywood Gold Cup and Arlington Million. CDI also owns off-track betting facilities and has interests in various television production, telecommunications and racing services companies that support CDI's network of simulcasting and racing operations.

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