Brean Murray, Carret & Co. Brean Murray, Carret & Co. Small Cap Institutional Investor Conference 2006 Small Cap Institutional Investor Conference 2006 Churchill Downs Incorporated Churchill Downs Incorporated (NASDAQ: CHDN) (NASDAQ: CHDN) Michael E. Miller Michael E. Miller Executive Vice President and Chief Financial Officer Executive Vice President and Chief Financial Officer
Safe Harbor Safe Harbor Some statements made in this presentation will be forward-looking statements as Some statements made in this presentation will be forward-looking statements as defined by the Private Securities Litigation Reform Act of 1995. Forward-looking defined by the Private Securities Litigation Reform Act of 1995. Forward-looking statements are statements that include projections, expectations or beliefs about future statements are statements that include projections, expectations or beliefs about future events or results, or otherwise are not statements of historical fact. Actual performance events or results, or otherwise are not statements of historical fact. Actual performance of the Company may differ materially from that projected in such statements. of the Company may differ materially from that projected in such statements. Investors should refer to statements filed by the Company with the Securities and Investors should refer to statements filed by the Company with the Securities and Exchange Commission for a discussion of those factors that could affect Churchill Exchange Commission for a discussion of those factors that could affect Churchill Downs Incorporated’s operations and the forward-looking statements made today. The Downs Incorporated’s operations and the forward-looking statements made today. The information being provided is of this date only, and Churchill Downs Incorporated information being provided is of this date only, and Churchill Downs Incorporated expressly disclaims any obligation to release publicly any updates of revisions to these expressly disclaims any obligation to release publicly any updates of revisions to these forward-looking statements to reflect any changes in expectations. forward-looking statements to reflect any changes in expectations.
Churchill Downs Incorporated (CDI) Churchill Downs Incorporated (CDI) Presentation Overview Presentation Overview •Our brands and properties •Our brands and properties •Key facts about the pari-mutuel industry •Key facts about the pari-mutuel industry •CDI: Horse racing’s industry leader •CDI: Horse racing’s industry leader •Our growth strategy •Our growth strategy •Key metrics •Key metrics •Key takeaways •Key takeaways
Churchill Downs Incorporated (CDI) Churchill Downs Incorporated (CDI) Our Brands and Properties Our Brands and Properties •Six racetracks in five states •Six racetracks in five states -Florida, Illinois, Indiana, Kentucky, Louisiana -Florida, Illinois, Indiana, Kentucky, Louisiana -Year-round racing -Year-round racing •Twin Spires mark •Twin Spires mark - Kentucky Derby - Kentucky Derby -Churchill Downs -Churchill Downs
Churchill Downs Incorporated (CDI) Churchill Downs Incorporated (CDI) Our Brands and Properties Our Brands and Properties •Churchill Downs Simulcast Network •Churchill Downs Simulcast Network Market share for CDI tracks Market share for CDI tracks -11.5 percent of U.S. racing (6000 races) -11.5 percent of U.S. racing (6000 races) -15.5 percent of U.S. wagering -15.5 percent of U.S. wagering
Churchill Downs Incorporated (CDI) Churchill Downs Incorporated (CDI) Key Facts About the Pari-Mutuel Key Facts About the Pari-Mutuel Industry Industry •Controlled by “Big Three” (CDI, MEC, NYRA ) •Controlled by “Big Three” (CDI, MEC, NYRA ) •Revenue base shifting to “off-track” sources •Revenue base shifting to “off-track” sources •Currently improving technology backbone (tote) •Currently improving technology backbone (tote) •Additional consolidation needed •Additional consolidation needed
Churchill Downs Incorporated (CDI) Churchill Downs Incorporated (CDI) CDI: Horse Racing’s Industry Leader CDI: Horse Racing’s Industry Leader •Dominant brands in horse racing •Dominant brands in horse racing •Proven management team with operations •Proven management team with operations expertise and record of success expertise and record of success -Our greatest asset = our team members -Our greatest asset = our team members -Continual learning/development for all team members -Continual learning/development for all team members
Churchill Downs Incorporated (CDI) Churchill Downs Incorporated (CDI) CDI: Horse Racing’s Industry Leader CDI: Horse Racing’s Industry Leader •Proven M&A capabilities •Proven M&A capabilities •History of innovation •History of innovation •Strong balance sheet •Strong balance sheet
Churchill Downs Incorporated (CDI) Churchill Downs Incorporated (CDI) Our Growth Strategy Our Growth Strategy •Develop existing racetrack/simulcast-wagering •Develop existing racetrack/simulcast-wagering properties properties •Content and brand development •Content and brand development •Alternative and internet gaming •Alternative and internet gaming - Casino-style gaming at racetracks - Casino-style gaming at racetracks -Rationalize advance-depositing wagering (ADW) -Rationalize advance-depositing wagering (ADW) -Technology focus -Technology focus
Churchill Downs Incorporated (CDI) Churchill Downs Incorporated (CDI) Growth Categories Growth Categories Category 1 Category 2 Category 3 Develop Existing Content and Brand Alternative and Properties Development Internet Gaming •Capital investments •Churchill Downs •Casino-style gaming at Simulcast Network racetracks (Churchill Downs Racetrack Renovation ) (CDSN) •Rationalize ADW •Kentucky Derby, marquee •Customer Relationship events Management initiative •Technology focus •M&A activity •International distribution
Churchill Downs Incorporated (CDI) Churchill Downs Incorporated (CDI) Key Metrics – Revenues* Key Metrics – Revenues* 2004 2003 2004 2003 Kentucky Operations (CDRT & Ellis Park) $87.3 $84.0 Kentucky Operations (CDRT & Ellis Park) $87.3 $84.0 Arlington Park 79.6 78.3 Arlington Park 79.6 78.3 Calder Race Course 79.5 78.5 Calder Race Course 79.5 78.5 Hoosier Park 41.5 42.8 Hoosier Park 41.5 42.8 Louisiana Operations 11.6 ---- Louisiana Operations 11.6 ---- CDSN 77.8 77.4 CDSN 77.8 77.4 Other/Corporate 2.3 4.2 Other/Corporate 2.3 4.2 Net Revenues $463.1 $444.1 Net Revenues $463.1 $444.1 *In millions *In millions
Churchill Downs Incorporated (CDI) Churchill Downs Incorporated (CDI) Key Metrics – EBITDA* Key Metrics – EBITDA* 2004 2003 2004 2003 Kentucky Operations (CDRT & Ellis Park) $12.2 $18.1 Kentucky Operations (CDRT & Ellis Park) $12.2 $18.1 Arlington Park 11.0 8.7 Arlington Park 11.0 8.7 Calder Race Course 9.5 14.3 Calder Race Course 9.5 14.3 Hoosier Park 1.9 2.4 Hoosier Park 1.9 2.4 Louisiana Operations 0.02 ---- Louisiana Operations 0.02 ---- CDSN 18.8 18.9 CDSN 18.8 18.9 Total Racing Operations $60.7 $69.6 Total Racing Operations $60.7 $69.6 *In millions *In millions
Churchill Downs Incorporated (CDI) Churchill Downs Incorporated (CDI) Key Metrics – Balance Sheet* Key Metrics – Balance Sheet* Sept. 30, 2005 Sept. 30, 2005 Current assets $ 93,966 Current assets $ 93,966 Plant and equipment, net 348,790 Plant and equipment, net 348,790 Other assets 14,095 Other assets 14,095 Current liabilities 138,427 Current liabilities 138,427 Long-term debt 18,086 Long-term debt 18,086 Other liabilities 21,544 Other liabilities 21,544 Shareholders’ equity 207,537 Shareholders’ equity 207,537 *In thousands *In thousands
Churchill Downs Incorporated (CDI) Churchill Downs Incorporated (CDI) Key Metrics – Ownership/Trading Key Metrics – Ownership/Trading •13.0 million TSO, 7.2 million float •13.0 million TSO, 7.2 million float •45 percent held by insiders •45 percent held by insiders •27 percent held by institutions •27 percent held by institutions •26,000 average daily trading volume •26,000 average daily trading volume
Churchill Downs Incorporated (CDI) Churchill Downs Incorporated (CDI) Key Metrics – Ownership/Trading Key Metrics – Ownership/Trading •11.3 short ratio (as of Jan. 15, 2005) •11.3 short ratio (as of Jan. 15, 2005) •500+ million market cap •500+ million market cap •EV/Revenue = .97 •EV/Revenue = .97 •EV/EBITDA = 8.79 •EV/EBITDA = 8.79
Churchill Downs Incorporated (CDI) Churchill Downs Incorporated (CDI) Key Takeaways Key Takeaways •Horse racing remains competitive •Horse racing remains competitive •CHDN shares fairly valued based on •CHDN shares fairly valued based on performance performance •CDI well positioned for growth •CDI well positioned for growth -Strong balance sheet with access to capital -Strong balance sheet with access to capital -Best-known brands in racing -Best-known brands in racing -Three-part growth strategy -Three-part growth strategy -Proven management team -Proven management team -Record of success (operations/M&A) -Record of success (operations/M&A)
Churchill Downs Incorporated (CDI) Churchill Downs Incorporated (CDI) Questions? Questions?
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