EX-99.1 2 ex9914-23x19segmentrealign.htm EXHIBIT 99.1 Exhibit


CHURCHILL DOWNS INCORPORATED
Recast Segment Operating Results
(unaudited)
 
Three Months Ended
 
Year Ended December 31,
(in millions)
March 31,
2018
 
June 30,
2018
 
September 30,
2018
 
December 31, 2018
 
2018
 
2017
Net revenue:
 
 
 
 
 
 
 
 
 
 
 
Churchill Downs
$
2.0

 
$
154.9

 
$
10.8

 
$
28.1

 
$
195.8

 
$
161.3

Online Wagering
63.2

 
93.7

 
71.8

 
61.5

 
290.2

 
255.6

Gaming
111.5

 
108.1

 
110.4

 
119.5

 
449.5

 
389.3

All Other
12.6

 
22.7

 
28.3

 
9.9

 
73.5

 
76.4

Total net revenue
189.3

 
379.4

 
221.3

 
219.0

 
1,009.0

 
882.6

Operating expense:
 
 
 
 
 
 
 
 
 
 
 
Churchill Downs
9.9

 
58.0

 
19.5

 
28.9

 
116.3

 
89.5

Online Wagering
44.0

 
59.4

 
49.2

 
43.5

 
196.1

 
170.2

Gaming
79.6

 
78.1

 
81.2

 
92.1

 
331.0

 
293.8

All Other
16.3

 
22.0

 
23.7

 
13.9

 
75.9

 
75.9

Selling, general and administrative expense
18.4

 
23.2

 
21.8

 
27.2

 
90.6

 
83.5

Impairment of tangible and other intangible assets
—

 
—

 
—

 
—

 
—

 
21.7

Transaction expense, net
1.4

 
2.1

 
5.4

 
1.4

 
10.3

 
2.3

Total operating expense
169.6

 
242.8

 
200.8

 
207.0

 
820.2

 
736.9

Operating income
$
19.7

 
$
136.6

 
$
20.5

 
$
12.0

 
$
188.8

 
$
145.7


NOTE: There were no changes to line items in our consolidated statements of comprehensive income below operating income for any annual or interim period.

1


CHURCHILL DOWNS INCORPORATED
Recast Segment Revenue
(unaudited)
 
Three Months Ended
 
Year Ended December 31,
(in millions)
March 31,
2018
 
June 30,
2018
 
September 30,
2018
 
December 31, 2018
 
2018
 
2017
Net revenue from external customers:
 
 
 
 
 
 
 
 
 
 
 
Churchill Downs:
 
 
 
 
 
 
 
 
 
 
 
Churchill Downs Racetrack
$
2.0

 
$
154.9

 
$
8.5

 
$
15.6

 
$
181.0

 
$
161.3

Derby City Gaming
—

 
—

 
2.3

 
12.5

 
14.8

 
—

Total Churchill Downs
2.0

 
154.9

 
10.8

 
28.1

 
195.8

 
161.3

Online Wagering:
 
 
 
 
 
 
 
 
 
 
 
TwinSpires
63.2

 
93.7

 
71.8

 
61.5

 
290.2

 
255.6

Online Sports Betting and iGaming
—

 
—

 
—

 
—

 
—

 
—

Total Online Wagering
63.2

 
93.7

 
71.8

 
61.5

 
290.2

 
255.6

Gaming:
 
 
 
 
 
 
 
 
 
 
 
Oxford
24.2

 
26.2

 
28.9

 
22.7

 
102.0

 
90.8

Riverwalk
14.4

 
13.6

 
12.8

 
13.7

 
54.5

 
48.2

Harlow’s
13.3

 
12.5

 
12.1

 
12.3

 
50.2

 
50.0

Calder
24.9

 
26.0

 
24.0

 
23.7

 
98.6

 
87.9

Fair Grounds and VSI
34.4

 
29.5

 
24.5

 
29.3

 
117.7

 
111.1

Ocean Downs
—

 
—

 
8.1

 
17.8

 
25.9

 
—

Presque Isle
—

 
—

 
—

 
—

 
—

 
—

Lady Luck Nemacolin
—

 
—

 
—

 
—

 
—

 
—

Saratoga
0.3

 
0.3

 
—

 
—

 
0.6

 
1.3

Total Gaming
111.5

 
108.1

 
110.4

 
119.5

 
449.5

 
389.3

All Other
12.6

 
22.7

 
28.3

 
9.9

 
73.5

 
76.4

Net revenue from external customers
$
189.3

 
$
379.4

 
$
221.3

 
$
219.0

 
$
1,009.0

 
$
882.6

 
Three Months Ended
 
Year Ended December 31,
(in millions)
March 31,
2018
 
June 30,
2018
 
September 30,
2018
 
December 31, 2018
 
2018
 
2017
Intercompany net revenue:
 
 
 
 
 
 
 
 
 
 
 
Churchill Downs
$
0.3

 
$
9.4

 
$
1.0

 
$
2.0

 
$
12.7

 
$
11.4

Online Wagering
0.4

 
0.4

 
0.3

 
0.2

 
1.3

 
1.1

Gaming
1.0

 
0.1

 
0.1

 
0.5

 
1.7

 
1.6

All Other
2.4

 
3.6

 
3.2

 
2.0

 
11.2

 
10.8

Eliminations
(4.1
)
 
(13.5
)
 
(4.6
)
 
(4.7
)
 
(26.9
)
 
(24.9
)
Intercompany net revenue
$
—

 
$
—

 
$
—

 
$
—

 
$
—

 
$
—


2


CHURCHILL DOWNS INCORPORATED
Recast Adjusted EBITDA by Segment
(unaudited)

 
Year Ended December 31, 2018
(in millions)
Churchill Downs
 
Online Wagering
 
Gaming
 
Total Segments
 
All Other
 
Eliminations
 
Total
Net revenue
$
208.5

 
$
291.5

 
$
451.2

 
$
951.2

 
$
84.7

 
$
(26.9
)
 
$
1,009.0

 
 
 
 
 
 
 
 
 
 
 
 
 
 
Taxes & purses
(41.3
)
 
(15.2
)
 
(153.4
)
 
(209.9
)
 
(16.9
)
 
—

 
(226.8
)
Marketing & advertising
(5.7
)
 
(6.0
)
 
(15.5
)
 
(27.2
)
 
(1.2
)
 
0.3

 
(28.1
)
Salaries & benefits
(23.7
)
 
(9.2
)
 
(68.9
)
 
(101.8
)
 
(24.9
)
 
—

 
(126.7
)
Content expense
(2.2
)
 
(152.0
)
 
(4.1
)
 
(158.3
)
 
(8.4
)
 
24.6

 
(142.1
)
Selling, general & administrative expense
(5.3
)
 
(5.9
)
 
(18.6
)
 
(29.8
)
 
(42.0
)
 
1.1

 
(70.7
)
Other operating expense
(28.0
)
 
(24.2
)
 
(60.0
)
 
(112.2
)
 
(18.5
)
 
0.9

 
(129.8
)
Other income
0.1

 
—

 
43.3

 
43.4

 
0.6

 
—

 
44.0

Adjusted EBITDA
$
102.4

 
$
79.0

 
$
174.0

 
$
355.4

 
$
(26.6
)
 
$
—

 
$
328.8


 
Year Ended December 31, 2017
(in millions)
Churchill Downs
 
Online Wagering
 
Gaming
 
Total Segments
 
All Other
 
Eliminations
 
Total
Net revenue
$
172.7

 
$
256.7

 
$
390.9

 
$
820.3

 
$
87.2

 
$
(24.9
)
 
$
882.6

 
 
 
 
 
 
 
 
 
 
 
 
 
 
Taxes & purses
(34.1
)
 
(14.7
)
 
(130.7
)
 
(179.5
)
 
(17.6
)
 
—

 
(197.1
)
Marketing & advertising
(2.7
)
 
(8.2
)
 
(13.0
)
 
(23.9
)
 
(1.3
)
 
0.4

 
(24.8
)
Salaries & benefits
(19.3
)
 
(9.9
)
 
(63.4
)
 
(92.6
)
 
(24.2
)
 
—

 
(116.8
)
Content expense
(2.4
)
 
(125.0
)
 
(4.0
)
 
(131.4
)
 
(8.8
)
 
22.4

 
(117.8
)
Selling, general & administrative expense
(4.0
)
 
(6.9
)
 
(17.1
)
 
(28.0
)
 
(39.7
)
 
1.2

 
(66.5
)
Other operating expense
(21.3
)
 
(22.1
)
 
(56.1
)
 
(99.5
)
 
(18.3
)
 
0.9

 
(116.9
)
Other income
0.1

 
—

 
42.0

 
42.1

 
1.4

 
—

 
43.5

Adjusted EBITDA
$
89.0

 
$
69.9

 
$
148.6

 
$
307.5

 
$
(21.3
)
 
$
—

 
$
286.2


3


CHURCHILL DOWNS INCORPORATED
Recast Adjusted EBITDA by Segment
(unaudited)

 
Three Months Ended March 31, 2018
(in millions)
Churchill Downs
 
Online Wagering
 
Gaming
 
Total Segments
 
All Other
 
Eliminations
 
Total
Net revenue
$
2.3

 
$
63.6

 
$
112.5

 
$
178.4

 
$
15.0

 
$
(4.1
)
 
$
189.3

 
 
 
 
 
 
 
 
 
 
 
 
 
 
Taxes & purses
(0.7
)
 
(3.4
)
 
(38.0
)
 
(42.1
)
 
(4.0
)
 
—

 
(46.1
)
Marketing & advertising
(0.3
)
 
(0.8
)
 
(3.6
)
 
(4.7
)
 
(0.1
)
 
0.1

 
(4.7
)
Salaries & benefits
(3.1
)
 
(2.1
)
 
(16.9
)
 
(22.1
)
 
(5.3
)
 
—

 
(27.4
)
Content expense
(0.4
)
 
(32.2
)
 
(0.9
)
 
(33.5
)
 
(1.8
)
 
3.3

 
(32.0
)
Selling, general & administrative expense
(1.0
)
 
(1.4
)
 
(3.8
)
 
(6.2
)
 
(9.1
)
 
0.3

 
(15.0
)
Other operating expense
(2.8
)
 
(5.8
)
 
(13.7
)
 
(22.3
)
 
(3.9
)
 
0.4

 
(25.8
)
Other income
—

 
—

 
10.8

 
10.8

 
0.1

 
—

 
10.9

Adjusted EBITDA
$
(6.0
)
 
$
17.9

 
$
46.4

 
$
58.3

 
$
(9.1
)
 
$
—

 
$
49.2


 
Three Months Ended June 30, 2018
(in millions)
Churchill Downs
 
Online Wagering
 
Gaming
 
Total Segments
 
All Other
 
Eliminations
 
Total
Net revenue
$
164.3

 
$
94.1

 
$
108.2

 
$
366.6

 
$
26.3

 
$
(13.5
)
 
$
379.4

 
 
 
 
 
 
 
 
 
 
 
 
 
 
Taxes & purses
(27.3
)
 
(4.6
)
 
(35.5
)
 
(67.4
)
 
(5.0
)
 
—

 
(72.4
)
Marketing & advertising
(3.2
)
 
(3.1
)
 
(3.5
)
 
(9.8
)
 
(0.5
)
 
0.1

 
(10.2
)
Salaries & benefits
(9.7
)
 
(2.4
)
 
(15.6
)
 
(27.7
)
 
(7.2
)
 
—

 
(34.9
)
Content expense
(0.9
)
 
(49.8
)
 
(1.1
)
 
(51.8
)
 
(2.7
)
 
12.8

 
(41.7
)
Selling, general & administrative expense
(1.2
)
 
(1.6
)
 
(4.0
)
 
(6.8
)
 
(9.6
)
 
0.4

 
(16.0
)
Other operating expense
(14.2
)
 
(8.2
)
 
(15.7
)
 
(38.1
)
 
(5.2
)
 
0.2

 
(43.1
)
Other income
0.1

 
—

 
12.9

 
13.0

 
0.4

 
—

 
13.4

Adjusted EBITDA
$
107.9

 
$
24.4

 
$
45.7

 
$
178.0

 
$
(3.5
)
 
$
—

 
$
174.5


4


CHURCHILL DOWNS INCORPORATED
Recast Adjusted EBITDA by Segment
(unaudited)

 
Three Months Ended September 30, 2018
(in millions)
Churchill Downs
 
Online Wagering
 
Gaming
 
Total Segments
 
All Other
 
Eliminations
 
Total
Net revenue
$
11.8

 
$
72.1

 
$
110.5

 
$
194.4

 
$
31.5

 
$
(4.6
)
 
$
221.3

 
 
 
 
 
 
 
 
 
 
 
 
 
 
Taxes & purses
(3.6
)
 
(4.2
)
 
(37.9
)
 
(45.7
)
 
(6.2
)
 
—

 
(51.9
)
Marketing & advertising
(0.6
)
 
(0.6
)
 
(3.6
)
 
(4.8
)
 
(0.6
)
 
0.1

 
(5.3
)
Salaries & benefits
(4.5
)
 
(2.1
)
 
(16.8
)
 
(23.4
)
 
(7.6
)
 
—

 
(31.0
)
Content expense
(0.5
)
 
(37.3
)
 
(0.9
)
 
(38.7
)
 
(2.0
)
 
4.2

 
(36.5
)
Selling, general & administrative expense
(0.8
)
 
(1.4
)
 
(4.5
)
 
(6.7
)
 
(10.0
)
 
0.2

 
(16.5
)
Other operating expense
(4.6
)
 
(5.7
)
 
(14.8
)
 
(25.1
)
 
(5.7
)
 
0.1

 
(30.7
)
Other income
—

 
—

 
12.7

 
12.7

 
—

 
—

 
12.7

Adjusted EBITDA
$
(2.8
)
 
$
20.8

 
$
44.7

 
$
62.7

 
$
(0.6
)
 
$
—

 
$
62.1


 
Three Months Ended December 31, 2018
(in millions)
Churchill Downs
 
Online Wagering
 
Gaming
 
Total Segments
 
All Other
 
Eliminations
 
Total
Net revenue
$
30.1

 
$
61.7

 
$
120.0

 
$
211.8

 
$
11.9

 
$
(4.7
)
 
$
219.0

 
 
 
 
 
 
 
 
 
 
 
 
 
 
Taxes & purses
(9.7
)
 
(3.0
)
 
(42.0
)
 
(54.7
)
 
(1.7
)
 
—

 
(56.4
)
Marketing & advertising
(1.6
)
 
(1.5
)
 
(4.8
)
 
(7.9
)
 
—

 
—

 
(7.9
)
Salaries & benefits
(6.4
)
 
(2.6
)
 
(19.6
)
 
(28.6
)
 
(4.8
)
 
—

 
(33.4
)
Content expense
(0.4
)
 
(32.7
)
 
(1.2
)
 
(34.3
)
 
(1.9
)
 
4.3

 
(31.9
)
Selling, general & administrative expense
(2.3
)
 
(1.5
)
 
(6.3
)
 
(10.1
)
 
(13.3
)
 
0.2

 
(23.2
)
Other operating expense
(6.4
)
 
(4.5
)
 
(15.8
)
 
(26.7
)
 
(3.7
)
 
0.2

 
(30.2
)
Other income
—

 
—

 
6.9

 
6.9

 
0.1

 
—

 
7.0

Adjusted EBITDA
$
3.3

 
$
15.9

 
$
37.2

 
$
56.4

 
$
(13.4
)
 
$
—

 
$
43.0


5


CHURCHILL DOWNS INCORPORATED
Reconciliation of Comprehensive Income to Adjusted EBITDA
(unaudited)

 
Three Months Ended
 
Year Ended December 31,
(in millions)
March 31,
2018
 
June 30,
2018
 
September 30,
2018
 
December 31, 2018
 
2018
 
2017
Comprehensive income
$
182.4

 
$
102.9

 
$
56.5

 
$
11.4

 
$
353.2

 
$
140.4

Foreign currency translation, net of tax
(0.6
)
 
—

 
0.2

 
(0.2
)
 
(0.6
)
 
0.1

Net change in pension benefits, net of tax
0.2

 
0.2

 
(0.4
)
 
0.2

 
0.2

 
—

Net income
182.0

 
103.1

 
56.3

 
11.4

 
352.8

 
140.5

Income from discontinued operations, net of tax
(167.9
)
 
0.1

 
1.7

 
(4.1
)
 
(170.2
)
 
(18.1
)
Income from continuing operations, net of tax
14.1

 
103.2

 
58.0

 
7.3

 
182.6

 
122.4

Additions:
 
 
 
 
 
 
 
 
 
 
 
Depreciation and amortization
13.8

 
15.3

 
16.7

 
17.8

 
63.6

 
56.0

Net interest expense
9.6

 
9.7

 
9.9

 
10.9

 
40.1

 
49.3

Loss on extinguishment of debt
—

 
—

 
—

 
—

 
—

 
20.7

Income tax provision
2.6

 
32.8

 
16.7

 
(0.8
)
 
51.3

 
(19.9
)
EBITDA
$
40.1

 
$
161.0

 
$
101.3

 
$
35.2

 
$
337.6

 
$
228.5

 
 
 
 
 
 
 
 
 
 
 
 
Adjustments to EBITDA:
 
 
 
 
 
 
 
 
 
 
 
Selling, general and administrative:
 
 
 
 
 
 
 
 
 
 
 
Stock-based compensation expense
$
2.8

 
$
6.4

 
$
3.9

 
$
4.6

 
17.7

 
$
16.0

Other, net
—

 
—

 
0.2

 
(0.8
)
 
(0.6
)
 
0.5

Pre-opening expense
0.6

 
0.7

 
2.6

 
0.9

 
4.8

 
0.5

Other income, expense:
 
 
 
 
 
 
 
 
 
 
 
Interest, depreciation and amortization expense related to equity investments
4.3

 
4.3

 
3.6

 
1.7

 
13.9

 
16.7

Gain on Ocean Downs/Saratoga transaction
—

 
—

 
(54.9
)
 
—

 
(54.9
)
 
—

Transaction expense, net
1.4

 
2.1

 
5.4

 
1.4

 
10.3

 
2.3

Impairment of tangible and intangible assets
—

 
—

 
—

 
—

 
—

 
21.7

Total adjustments to EBITDA
9.1

 
13.5

 
(39.2
)
 
7.8

 
(8.8
)
 
57.7

Total Adjusted EBITDA
$
49.2

 
$
174.5

 
$
62.1

 
$
43.0

 
$
328.8

 
$
286.2

 
 
 
 
 
 
 
 
 
 
 
 
Adjusted EBITDA by segment:
 
 
 
 
 
 
 
 
 
 
 
Churchill Downs
$
(6.0
)
 
$
107.9

 
$
(3.0
)
 
$
3.4

 
$
102.3

 
$
89.0

Online Wagering
17.9

 
24.4

 
20.8

 
15.9

 
79.0

 
69.9

Gaming
46.4

 
45.7

 
44.9

 
37.1

 
174.1

 
148.6

Total Segments
58.3

 
178.0

 
62.7

 
56.4

 
355.4

 
307.5

All Other
(9.1
)
 
(3.5
)
 
(0.6
)
 
(13.4
)
 
(26.6
)
 
(21.3
)
Adjusted EBITDA
$
49.2

 
$
174.5

 
$
62.1

 
$
43.0

 
$
328.8

 
$
286.2



6