XML 37 R14.htm IDEA: XBRL DOCUMENT v2.4.0.8
Segment Information
9 Months Ended
Sep. 30, 2013
Segment Reporting [Abstract]  
Segment Information
NOTE 9 — SEGMENT INFORMATION
The Company operates in the following four segments: (1) Racing Operations, which includes Churchill Downs, Arlington International Race Course ("Arlington") and its eleven off-track betting facilities ("OTBs"), Calder Race Course ("Calder") and Fair Grounds Race Course ("Fair Grounds") and the pari-mutuel activity generated at its twelve OTBs; (2) Gaming, which includes video poker and gaming operations at Calder Casino, Fair Grounds Slots, Harlow’s Casino Resort & Spa ("Harlow's"), Riverwalk, Oxford and Video Services, LLC (“VSI”); (3) Online Business, which includes TwinSpires, our Advance Deposit Wagering (“ADW”) business, Fair Grounds Account Wagering, Bloodstock Research Information Services, Velocity, a business focused on high wagering-volume international customers and Luckity, an ADW business that offers real-money Bingo online with outcomes based on and determined by pari-mutuel wagers on live horseraces, as well as the Company's equity investment in HRTV, LLC; and (4) Other Investments, which includes United Tote, MVG, Bluff and the Company's other minor investments. Eliminations include the elimination of intersegment transactions.
In order to evaluate the performance of these operating segments internally, the Company uses Adjusted EBITDA (defined as earnings before interest, taxes, depreciation, amortization, insurance recoveries net of losses, HRE Trust Fund proceeds, share based compensation expenses, pre-opening expenses, including those of its equity investments, the impairment of assets and other charges or recoveries) as a key performance measure of our results of operations. During the nine months ended September 30, 2013, the Company implemented the Adjusted EBITDA metric because it believes the inclusion or exclusion of certain recurring and non-recurring items is necessary to provide a more accurate measure of its core operating results and enables management and investors to evaluate and compare from period to period our operating performance in a meaningful and consistent manner. Adjusted EBITDA should not be considered as an alternative to operating income as an indicator of performance, as an alternative to cash flows from operating activities as a measure of liquidity, or as an alternative to any other measure provided in accordance with GAAP. The Company's calculation of Adjusted EBITDA may be different from the calculation used by other companies and, therefore, comparability may be limited.
The table below presents information about the reported segments for the three and nine months ended September 30, 2013 and 2012 (in thousands):
 
Three Months Ended September 30,
 
Nine Months Ended September 30,
 
2013
 
2012
 
2013
 
2012
Net revenues from external customers:
 
 
 
 
 
 
 
Churchill Downs
$
7,956

 
$
3,873

 
$
118,534

 
$
109,297

Arlington
28,473

 
30,578

 
57,720

 
62,802

Calder
8,597

 
22,633

 
27,908

 
47,374

Fair Grounds
5,661

 
5,835

 
31,725

 
34,068

Total Racing Operations
50,687

 
62,919

 
235,887

 
253,541

Calder Casino
19,157

 
17,841

 
60,109

 
58,908

Fair Grounds Slots
9,781

 
10,109

 
32,123

 
31,726

VSI
8,443

 
8,089

 
27,449

 
26,466

Harlow's Casino
12,082

 
13,454

 
40,533

 
43,100

Oxford Casino
17,730

 

 
17,730

 

Riverwalk Casino
12,639

 

 
40,864

 

Total Gaming
79,832

 
49,493

 
218,808

 
160,200

Online Business
48,522

 
45,593

 
143,969

 
142,330

Other Investments
6,285

 
6,543

 
17,934

 
17,012

Corporate
320

 
329

 
894

 
806

Net revenues from external customers
$
185,646

 
$
164,877

 
$
617,492

 
$
573,889

Intercompany net revenues:
 
 
 
 
 
 
 
Churchill Downs
$
689

 
$
151

 
$
5,485

 
$
4,419

Arlington
2,070

 
1,758

 
3,110

 
3,810

Calder
412

 
554

 
917

 
1,150

Fair Grounds
22

 
11

 
855

 
833

Total Racing Operations
3,193

 
2,474

 
10,367

 
10,212

Online Business
211

 
233

 
657

 
669

Other Investments
938

 
824

 
3,188

 
2,646

Eliminations
(4,342
)
 
(3,531
)
 
(14,212
)
 
(13,527
)
Net revenues
$

 
$

 
$

 
$

Reconciliation of Adjusted EBITDA to net earnings:
 
 
 
 
 
 
 
Racing Operations
$
(907
)
 
$
2,049

 
$
58,353

 
$
58,419

Gaming
20,569

 
12,672

 
61,942

 
47,437

Online Business
12,998

 
9,917

 
38,424

 
35,351

Other Investments
316

 
516

 
1,399

 
243

Total segment Adjusted EBITDA
32,976

 
25,154

 
160,118

 
141,450

Corporate Adjusted EBITDA
(1,215
)
 
(905
)
 
(3,380
)
 
(3,182
)
Insurance recoveries, net of losses

 

 
375

 
6,514

HRE Trust Fund proceeds
4,249

 

 
4,541

 

Share based compensation expense
(5,990
)
 
(2,968
)
 
(15,567
)
 
(10,867
)
Pre-opening costs
(500
)
 

 
(1,211
)
 

Depreciation and amortization
(15,796
)
 
(13,370
)
 
(45,822
)
 
(40,815
)
Interest income (expense), net
(1,401
)
 
(842
)
 
(4,034
)
 
(2,994
)
Income tax provision
(3,165
)
 
(1,096
)
 
(34,505
)
 
(34,203
)
Earnings from continuing operations
9,158

 
5,973

 
60,515

 
55,903

Discontinued operations, net of income taxes
91

 

 
90

 
(1
)
Net earnings and comprehensive income
$
9,249

 
$
5,973

 
$
60,605

 
$
55,902


  
The table below presents information about equity in losses of unconsolidated investments included in the Company’s reported segments for the three and nine months ended September 30, 2013 and 2012 (in thousands):
 
Three Months Ended September 30,
 
Nine Months Ended September 30,
 
2013
 
2012
 
2013
 
2012
Online Business
$
(393
)
 
$
(490
)
 
$
(523
)
 
$
(1,044
)
Other Investments
(494
)
 
19

 
(1,159
)
 
(211
)
 
$
(887
)
 
$
(471
)
 
$
(1,682
)
 
$
(1,255
)


The table below presents total asset information for the reported segments (in thousands):
 
September 30, 2013
 
December 31, 2012
Total assets:
 
 
 
Racing Operations
$
490,901

 
$
502,993

Gaming
535,225

 
382,054

Online Business
190,603

 
184,638

Other Investments
71,084

 
44,652

 
$
1,287,813

 
$
1,114,337



The table below presents total capital expenditure information for the reported segments for the nine months ended September 30, 2013 and 2012 (in thousands):
 
Nine Months Ended September 30,
 
2013
 
2012
Capital expenditures:
 
 
 
Racing Operations
$
11,801

 
$
7,800

Gaming
11,528

 
6,846

Online Business
4,857

 
3,407

Other Investments
1,672

 
7,403

 
$
29,858

 
$
25,456