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Churchill Downs Results Up for 2001

Net revenues for the year totaled $427.0 million, a 17.6 percent increase over $363.0 million in 2000. Net earnings were $22.0 million, a 15.2 percent increase over $19.2 million in the prior year. Earnings per share for the year were $1.67 diluted on 13.2 million average diluted shares outstanding, compared with $1.75 on 10.9 million average shares outstanding in 2000.

For the fourth quarter of 2001, the Company reported net revenues of $110.8 million, up 9.6 percent over the $101.1 million reported during the same period in 2000. Net earnings for the quarter were $4.0 million, an increase of 77.2 percent from the $2.3 million earned during the last quarter of 2000. Earnings per share were $0.31 diluted on 13.3 million average shares outstanding, compared with $0.17 on 13.2 million shares outstanding from the same period in 2000, an increase of 82.4 percent year-over-year.

The increase of 20.8 percent in the number of average diluted shares outstanding for the year ended Dec. 31, 2001, was due principally to the issuance of 3.15 million common shares for the September 2000 merger with Arlington International Racecourse, now doing business as Arlington Park.

Thomas H. Meeker, CDI's president and chief executive officer, said, ``While we generated record net revenues and net earnings in 2001, we were unable to deliver another record year in earnings per share. Against the unprecedented challenges of 2001, however, we believe the Company's overall performance speaks well to the underlying demand for our racing product, the resilience of our organization and the soundness of our strategies. We had recognized early in the year that achieving a gain in earnings per share for 2001 was going to be difficult.

``The energy crisis in California and the subsequent downturn of the California economy had an adverse effect on Hollywood Park's performance, and the nationwide recession that followed negatively impacted all of our racetracks. We were successful in mitigating the consequences of these factors through cost reductions, and our year-over- year gains in revenues and net earnings were aided significantly by the inclusion of Arlington Park for a full year.

``Our performance for the fourth quarter was consistent with the guidance we provided in connection with our release of third-quarter results. The year- over-year earnings gain was primarily due to additional racing dates at Arlington Park in the fourth quarter of 2001. We concluded successful fall meets at Calder Race Course and Churchill Downs in the fourth quarter that give us a strong foundation and positive momentum going into 2002.

``We are facing steadily increasing competition in other gaming and entertainment offerings, but our overall financial performance for 2001 validates our strategic focus. The cornerstone of our strategy remains to build and promote the industry's strongest live racing product. Our success in reaching this objective is being advanced by the growth of our simulcast vehicle, the Churchill Downs Simulcast Network (''CDSN``). CDSN unites the signals of our tracks under a common brand that we are supporting through an aggressive marketing effort.''

Meeker concluded, ``In looking at 2002, we face the well-publicized uncertainty about the direction of the general economy. We believe we have an advantage, however, based upon our historical experience, that confirms the relative stability of demand for our racing-related products and services. We expect that our loss for the first quarter of 2002, which occurs because of the absence of live racing scheduled at our tracks during that period, will be in the $0.94 to $0.97 range, compared to the loss of $0.84 per diluted share reported a year ago.

This projection reflects significant increases in insurance and other operating expenses that we will not be able to begin to offset until our live racing resumes. However, we expect earnings in each of the subsequent quarters to make up that first-quarter shortfall, leading to earnings for the full year of $1.77 to $1.87 per share diluted, compared to $1.67 per share in 2001. The forecasted earnings for 2002 include the benefit of approximately $0.09 per diluted share in after tax reduction of amortization expense related to the adoption of Statement of Financial Accounting Standards No. 142 concerning goodwill.

``We are planning capital expenditures, including the first phase of our Master Plan for the renovation of our flagship Churchill Downs property, of approximately $20 million for 2002, up from $14 million for 2001. Our free cash flow for 2001 of approximately $21 million was used to pay down the Company's revolving line of credit.''

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