03/13/2008 12:00AM

Churchill's net income drops

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Churchill Downs Inc., the owner of Churchill Downs, Arlington Park, Calder Race Course, and Fair Grounds, had net income of $15.7 million in 2007, or $1.14 per share, according to financial documents released late Thursday.

The 2007 result is nearly half of the net income Churchill posted in 2006, when insurance payments from damage sustained by Fair Grounds in New Orleans because of Hurricane Katrina in 2005 generated nearly $20 million to the bottom line.

According to the financial documents, revenue for the company in 2007 was $410.7 million, up 9 percent compared with $376.7 million in revenue in 2006, in large part because of $16.1 million in additional revenue from the opening of a slot-machine operation at Fair Grounds.

Operating expenses, including selling, general, and administrative expenses, increased 9.1 percent to $377.9 million in 2007, from $346.3 million in 2006. Churchill also took a $3.4 million equity loss for the year on its investments, which include a partnership with Magna Entertainment Corp. on a horse racing television channel and simulcast marketing company. Churchill entered the partnership in early 2007.

In a release accompanying the financial documents, Churchill officials said that the company spent $2.6 million on lobbying efforts in Florida in 2007. The efforts paid off when voters approved slot machines for the company's Calder Race Course in Miami. Churchill's chief executive, Bob Evans, said in the release that the company is still weighing its options for Calder's slot-machine operation and will not announce any construction or investment plans until the proposals are finalized.

During 2007, in addition to its partnership with Magna, Churchill purchased three account-wagering platforms and folded those operations under its own in-home betting brand, Twinspires.com. The acquisitions, which also included a data company, were financed with $50 million in debt and $30 million in cash.

On its balance sheet for 2007, Churchill had $68 million in long-term debt, compared with no long-term debt at the end of 2006. Interest expense in 2007 increased from $839,000 in 2006 to $3.4 million in 2007.

Churchill's stock closed on Thursday at $47.43, up $2.13, or 4.7 percent.