Segment Information

12 Months Ended

Dec. 31, 2013

Segment Reporting [Abstract]

Segment Information

SEGMENT INFORMATION

The Company operates in the following four segments: (1) Racing Operations, which includes Churchill Downs, Arlington and its eleven OTBs, Calder and 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, Riverwalk, Oxford and VSI; (3) Online Business, which includes TwinSpires, our ADW business, Fair Grounds Account Wagering, Bloodstock Research Information Services, Velocity and Luckity, 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.

Certain financial statement accounts have been reclassified in prior years to conform to current year presentation. There was no impact from these reclassifications on total assets, total liabilities, total net revenues, operating income, Adjusted EBITDA or cash flows.

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, the impairment of assets and other charges or recoveries). Adjusted EBITDA also includes 50% of the operating income or loss of our joint venture, MVG. During the year ended December 31, 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. The 2012 and 2011 financial information has been retrospectively revised to reflect the change in the segment profitability reporting measure. 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 accounting policies of the segments are the same as those described in the “Summary of Significant Accounting Policies” in Note 1. The table below presents information about reported segments for the years ended December 31, 2013, 2012 and 2011 (in thousands):

	Year Ended December 31,
	2013			2012			2011
Net revenues from external customers:
Churchill Downs	$	132,845		$	124,255		$	121,886
Arlington	64,483			69,077			69,694
Calder	36,264			64,566			62,715
Fair Grounds	40,677			44,190			44,625
Total Racing Operations	274,269			302,088			298,920
Calder Casino	78,951			77,864			82,819
Fair Grounds Slots	42,156			42,881			41,553
VSI	35,931			35,433			35,052
Harlow’s Casino	52,440			56,604			53,205
Oxford Casino	34,350			—			—
Riverwalk Casino	53,645			10,330			—
Total Gaming	297,473			223,112			212,629
Online Business	184,541			183,279			165,416
Other Investments	21,899			21,785			19,563
Corporate	1,143			1,032			326
Net revenues from external customers	$	779,325		$	731,296		$	696,854
Intercompany net revenues:
Churchill Downs	$	6,686		$	5,592		$	5,088
Arlington	3,395			4,712			3,725
Calder	1,263			1,583			2,307
Fair Grounds	1,151			1,270			1,164
Total Racing Operations	12,495			13,157			12,284
Online Business	853			836			786
Other Investments	4,409			3,466			2,015
Eliminations	(17,757		)	(17,459		)	(15,085		)
Net revenues	$	—		$	—		$	—

	Year Ended December 31,
	2013			2012			2011
Reconciliation of segment Adjusted EBITDA to net earnings:
Racing Operations	$	50,275		$	54,357		$	47,236
Gaming	80,429			64,231			58,590
Online Business	49,122			44,618			40,918
Other Investments	1,011			(117		)	1,269
Total segment Adjusted EBITDA	180,837			163,089			148,013
Corporate Adjusted EBITDA	(4,606		)	(4,834		)	(2,523		)
Insurance recoveries, net of losses	375			7,006			972
HRE Trust Fund proceeds	4,541			—			19,258
Share-based compensation expense	(21,482		)	(13,993		)	(9,730		)
Pre-opening expenses	(3,620		)	—			—
MVG interest expense, net	(170		)	—			—
Other charges and recoveries, net	(2,500		)	—			2,720
Depreciation and amortization	(61,750		)	(55,600		)	(55,170		)
Interest income (expense), net	(6,119		)	(4,441		)	(8,456		)
Income tax provision	(30,473		)	(33,075		)	(34,289		)
Earnings from continuing operations	55,033			58,152			60,795
Discontinued operations, net of income taxes	(133		)	124			3,560
Net earnings and comprehensive income	$	54,900		$	58,276		$	64,355

The table below presents information about equity in (losses) earnings of unconsolidated investments included in the Company's reported segments for the years ended December 31, 2013, 2012 and 2011 (in thousands):

	Year Ended December 31,
	2013			2012			2011
Online Business	$	(848	)	$	(1,413	)	$	(1,198	)
Other Investments	(3,294		)	(288		)	85
	$	(4,142	)	$	(1,701	)	$	(1,113	)

The tables below present total asset information about reported segments as of December 31, 2013 and 2012 and capital expenditures for the years ended December 31, 2013, 2012 and 2011 (in thousands):

	As of December 31,
	2013		2012
Total assets:
Racing Operations	$	513,345	$	502,993
Gaming	535,887		382,054
Online Business	186,621		184,638
Other Investments	116,408		44,652
	$	1,352,261	$	1,114,337

	Year Ended December 31,
	2013		2012		2011
Capital expenditures, net:
Racing Operations	$	20,184	$	14,027	$	7,484
Gaming	13,643		14,524		7,490
Online Business	5,908		4,427		2,774
Other Investments	9,036		8,320		4,919
	$	48,771	$	41,298	$	22,667