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<SEC-DOCUMENT>0001180706-04-000017.txt : 20040708
<SEC-HEADER>0001180706-04-000017.hdr.sgml : 20040708
<ACCEPTANCE-DATETIME>20040708153530
ACCESSION NUMBER:		0001180706-04-000017
CONFORMED SUBMISSION TYPE:	8-K
PUBLIC DOCUMENT COUNT:		3
CONFORMED PERIOD OF REPORT:	20040701
ITEM INFORMATION:		
ITEM INFORMATION:		Financial statements and exhibits
FILED AS OF DATE:		20040708

FILER:

	COMPANY DATA:	
		COMPANY CONFORMED NAME:			CHURCHILL DOWNS INC
		CENTRAL INDEX KEY:			0000020212
		STANDARD INDUSTRIAL CLASSIFICATION:	SERVICES-RACING, INCLUDING TRACK OPERATION [7948]
		IRS NUMBER:				610156015
		STATE OF INCORPORATION:			KY
		FISCAL YEAR END:			1231

	FILING VALUES:
		FORM TYPE:		8-K
		SEC ACT:		1934 Act
		SEC FILE NUMBER:	000-01469
		FILM NUMBER:		04906091

	BUSINESS ADDRESS:	
		STREET 1:		700 CENTRAL AVE
		CITY:			LOUISVILLE
		STATE:			KY
		ZIP:			40208
		BUSINESS PHONE:		5026364400

	MAIL ADDRESS:	
		STREET 1:		700 CENTRAL AVENUE
		STREET 2:		700 CENTRAL AVENUE
		CITY:			LOUIVILLE
		STATE:			KY
		ZIP:			40208
</SEC-HEADER>
<DOCUMENT>
<TYPE>8-K
<SEQUENCE>1
<FILENAME>t8k070104.htm
<DESCRIPTION>TRANSCRIPT OF CONFERENCE CALL DATED JULY 1, 2004
<TEXT>
<HTML>
<HEAD>
<TITLE>8-K Conference call transcript 7/1/04S</TITLE>
</HEAD>
<BODY>
<!-- MARKER FORMAT-SHEET="Head Minor Center-TNR" FSL="Project" -->
<P ALIGN=CENTER><FONT FACE="Times New Roman, Times, Serif" SIZE=2>SECURITIES AND EXCHANGE COMMISSION<BR>
        WASHINGTON, D.C. 20549<BR> <BR>
        <B>FORM 8-K <BR><BR>
        CURRENT REPORT <BR>
        PURSUANT TO SECTION 13 OR 15(d) OF THE <BR>
        SECURITIES EXCHANGE ACT OF 1934 <BR><BR>
        Date of Report (Date of earliest event reported): July 1, 2004</B> </FONT></P>

<P ALIGN="Center"><IMG SRC="smalllogo.gif" ALIGN="MIDDLE"></P>

<P ALIGN=CENTER><FONT FACE="Times New Roman, Times, Serif" SIZE=2>(Exact name of
registrant as specified in its charter)</FONT></P>

<TABLE CELLPADDING=0 CELLSPACING=0 BORDER=0 ALIGN=Center WIDTH=100%>
<TR VALIGN=Bottom>
     <TD WIDTH="37%" ALIGN="Center"><FONT FACE="Times New Roman, Times, Serif" SIZE=2><U>Kentucky</U></FONT></TD>
     <TD WIDTH="28%" ALIGN="Center"><FONT FACE="Times New Roman, Times, Serif" SIZE=2><U>0-1469</U></FONT></TD>
     <TD WIDTH="35%" ALIGN="Center"><FONT FACE="Times New Roman, Times, Serif" SIZE=2><U>61-0156015</U></FONT></TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN="Center"><FONT FACE="Times New Roman, Times, Serif" SIZE=2>(State or other jurisdiction of</FONT></TD>
     <TD ALIGN="Center"><FONT FACE="Times New Roman, Times, Serif" SIZE=2>(Commission File Number)</FONT></TD>
     <TD ALIGN="Center"><FONT FACE="Times New Roman, Times, Serif" SIZE=2>(IRS Employer Identification No.)</FONT></TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN="Center"><FONT FACE="Times New Roman, Times, Serif" SIZE=2>incorporation or organization)</FONT></TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN="Center"><FONT FACE="Times New Roman, Times, Serif" SIZE=2></FONT></TD></TR>
</TABLE>

<!-- MARKER FORMAT-SHEET="Head Center Underline-TNR" FSL="Project" -->
<P ALIGN=CENTER><FONT FACE="Times New Roman, Times, Serif" SIZE=2><U>700 Central Avenue,
Louisville, KY 40208 </U><BR>(Address of principal executive offices)<BR> (Zip Code)<BR><BR> </FONT></P>

<!-- MARKER FORMAT-SHEET="Head Center Underline-TNR" FSL="Project" -->
<P ALIGN=CENTER><FONT FACE="Times New Roman, Times, Serif" SIZE=2><U>(502) 636-4400 </U><BR>
        (Registrant&#146;s telephone number, including area code)<BR><BR> </FONT></P>

<!-- MARKER FORMAT-SHEET="Head Center Underline-TNR" FSL="Project" -->
<P ALIGN=CENTER><FONT FACE="Times New Roman, Times, Serif" SIZE=2><U>Not Applicable</U><BR>
        (Former name or former address, if changed since last report) </FONT></P>




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<BR><BR>



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<H1 ALIGN=CENTER><FONT FACE="Times New Roman, Times, Serif" SIZE=2>CHURCHILL DOWNS INCORPORATED<BR><BR>INDEX </FONT></H1>



<TABLE WIDTH=100% BORDER="0" CELLPADDING="0" CELLSPACING="0">
<TR VALIGN="TOP">
     <TD WIDTH="10%"><FONT FACE="Times New Roman, Times, Serif" SIZE=2><B>Item 7.</B></FONT></TD>
     <TD WIDTH="90%"><FONT FACE="Times New Roman, Times, Serif" SIZE=2><B>Financial Statements and Exhibits</B><BR><BR>
        <B>(c) &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Exhibits (furnished pursuant to Item 12)</B><BR><BR>
        Exhibit 99.1 &nbsp;&nbsp; Press release conference call transcript dated July 1, 2004.<BR><BR></FONT></TD>
</TR>
<TR VALIGN="TOP">
     <TD><FONT FACE="Times New Roman, Times, Serif" SIZE=2><B>Item 12.</B></FONT></TD>
     <TD><FONT FACE="Times New Roman, Times, Serif" SIZE=2><B>Results of Operations and Financial Condition</B><BR><BR></FONT></TD></TR>
<TR VALIGN="TOP">
     <TD><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD>
     <TD><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Attached and incorporated herein by reference as Exhibit 99.1 is a copy of the press
                  release conference call transcript, dated July 1, 2004, reporting the Registrant's
                  revision to 2004 results of operation and financial condition.<BR><BR></FONT></TD></TR>

</TABLE>
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               Page 2</FONT></TD>
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        <TD COLSPAN=3 ALIGN="center"><HR SIZE=5 NOSHADE></TD>
</TR>
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</TABLE>
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<H1 ALIGN=CENTER><FONT FACE="Times New Roman, Times, Serif" SIZE=2>SIGNATURES </FONT></H1>

<!-- MARKER FORMAT-SHEET="Para Flush" FSL="Default" -->
<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Pursuant to the requirements of the
Securities Exchange Act of 1934, the registrant has duly caused this report to be signed
on its behalf by the undersigned thereunto duly authorized. </FONT></P>

<TABLE WIDTH=100% BORDER="0" CELLPADDING="0" CELLSPACING="0">
<TR VALIGN="BOTTOM">
     <TH WIDTH="50%"><FONT SIZE="2"></FONT></TH>
     <TH WIDTH="50%" ALIGN="left"><FONT SIZE="2">CHURCHILL DOWNS INCORPORATED<BR><BR><BR><BR></FONT></TH></TR>
<TR VALIGN="TOP">
     <TD WIDTH="50%"><FONT FACE="Times New Roman, Times, Serif" SIZE=2>July 8, 2004</FONT></TD>
     <TD WIDTH="50%"><FONT FACE="Times New Roman, Times, Serif" SIZE=2><U>/s/Michael E. Miller</U><BR>
                                                     Michael E. Miller<BR>
                                                     Executive Vice President and<BR>
                                                     Chief Financial Officer<BR>
                                                     (Principal Financial and Accounting Officer)</FONT></TD></TR>
</TABLE>
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               Page 3</FONT></TD>
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        <TD COLSPAN=3 ALIGN="center"><HR SIZE=5 NOSHADE></TD>
</TR>
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</TABLE>
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<FILENAME>tex991070104.htm
<DESCRIPTION>TRANSCRIPT: CONFERENCE CALL JULY 1, 2004
<TEXT>
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<TITLE>Conference Call July 1, 2004</TITLE>
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<P ALIGN=RIGHT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>
        CHURCHILL DOWNS INCORPRATED<BR>
        Moderator: Mike Ogburn<BR>
        07-01-04/8:00 a.m. CT<BR>Confirmation # 695122<BR>
        Page 1</FONT></P>

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<H1 ALIGN=CENTER><FONT FACE="Times New Roman, Times, Serif" SIZE=2>CHURCHILL DOWNS
INCORPORATED </FONT></H1>

<!-- MARKER FORMAT-SHEET="Head Major Center Bold 1-TNR" FSL="Project" -->
<H1 ALIGN=CENTER><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Moderator: Mike Ogburn <BR>
        July 1, 2004<BR>
        9:00 a.m. ET <BR><BR><BR></FONT></H1>

<TABLE CELLPADDING="0" CELLSPACING="0">
<TR VALIGN="TOP">
     <TD WIDTH="16%"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">Operator:</FONT></TD>
     <TD WIDTH="84%"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">Good day and welcome to the Churchill Downs Incorporated conference call. At this time for opening remarks and introductions, I would like to turn the call over to the Director
                   of Investor Relations, Mr. Mike Ogburn.  Please go ahead, sir.<BR><BR></FONT></TD></TR>
<TR VALIGN="TOP">
     <TD><FONT FACE="Times New Roman, Times, Serif" SIZE="2">Mike Ogburn:</FONT></TD>
     <TD><FONT FACE="Times New Roman, Times, Serif" SIZE="2">Good morning and welcome to this Churchill Downs Incorporated conference call to discuss our
                   earnings guidance revisions for the second quarter of 2004 and full year.  The revised guidance was
                   released yesterday afternoon in a press release that has been covered by the financial media.<BR><BR>

         A copy of this release is available at the section of the Company's Web site entitled "Investor
         Relations" at www.churchilldownsincorporated.com.  Let me also note that this release advises of the
         accessibility of this conference call on a listen-only basis over the Internet.<BR><BR>
             As we start, let me express that some statements made in this call will be forward-looking
         statements as defined in the Private Securities Litigation Reform Act of 1995.  Forward-looking
         statements are statements that include projections, expectations, or beliefs about future events or
         results, or otherwise are statements not of historical fact.  Actual performance of the Company may
         differ materially from that projected in such statements.<BR><BR></FONT></TD></TR>
</TABLE>
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               Page 1</FONT></TD>
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     <TD WIDTH="16%"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"> &nbsp;</FONT></TD>
    <TD width="84%"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">
        Investors should refer to statements included in reports filed by the Company with the Securities
         and Exchange Commission for a discussion of additional information concerning factors that could cause
         our actual results of operations to differ materially from the forward-looking statements made in this
         call.  The information being provided today is of this date only, and Churchill Downs Incorporated
         expressly disclaims any obligation to release publicly any updates or revisions to these forward-looking
         statements to reflect any changes in expectations.<BR><BR>
         I'll now turn the call to Tom Meeker, president and chief executive officer.<BR><BR>
</FONT></TD></TR>

<TR VALIGN="TOP">
     <TD><FONT FACE="Times New Roman, Times, Serif" SIZE="2">Thomas Meeker:</FONT></TD>
        <TD width="84%"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">
         Thanks for joining us today on such short notice.  The purpose of this call, as Mike indicated,
         is to update you on our previous guidance that we gave to you earlier this year in the year and altered
         as indicated in an announcement we gave to the street last night in the form of a press release.  In
         short, we are advising you that based on information that we have today, we anticipate that our year in
         earnings will be approximately 10 to 15 percent short of our previous guidance of $1.70 per share.<BR><BR>

             The downward revision in our estimate is occasioned by unanticipated development costs associated
         with various strategic opportunities available to the Company in this year.  These opportunities include
         ballot initiatives in both California and Florida, that if successful would allow the Company to operate
         slot machines at its facilities.  These initiatives, coupled with other development costs associated
         with such things as our CRM effort and the Fair Grounds acquisition, will negatively impact short-term
         earnings but provide the Company with the opportunity to accelerate its long-term growth.<BR><BR>

             As reported in the release, we are experiencing some softness in revenue levels at Hollywood Park,
         Arlington Park, Churchill Downs, and the CDSN operation.  These are described as resulting from weather,
         short fields, and a number of other factors, as outlined in the press release.  However, this is not
         what has occasioned the revision in earnings guidance.  In the ordinary course of business, we would
         have been able to adjust our cost structure to cover these revenue shortfalls and achieve our previous
         guidance.<BR><BR></FONT></TD></TR>
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     <TD WIDTH="16%"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
        <TD WIDTH="84%"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">However, based on what we know today, we will not be able to cover these additional development
         costs associated with the strategic opportunities we see available to us this year in addition to any
         revenue shortfalls associated with ongoing operations.<BR><BR>

             With that, now I will take any questions you may have.  With me today is Mike Miller, our chief
         financial officer.  And we'll open it up to questions.<BR><BR>
        </FONT></TD></TR>

<TR VALIGN="TOP">
     <TD><FONT FACE="Times New Roman, Times, Serif" SIZE="2">Operator:</FONT></TD>
     <TD><FONT FACE="Times New Roman, Times, Serif" SIZE="2">Thank you.  Today's question-and-answer session will be conducted electronically.  If you would like
         to ask a question, please press the "star" key followed by the digit "one" on your touch-tone
         telephone.  Once again if you would like to ask a question, please press "star one."<BR><BR>
         And we'll take our first question from Larry Klatzkin with Jefferies &amp; Company.
        <BR><BR>
        </FONT></TD></TR>
<TR VALIGN="TOP">
     <TD><FONT FACE="Times New Roman, Times, Serif" SIZE="2">Larry Klatzkin:</FONT></TD>
     <TD><FONT FACE="Times New Roman, Times, Serif" SIZE="2">Hey, guys.<BR><BR></FONT></TD></TR>
<TR VALIGN="TOP">
     <TD><FONT FACE="Times New Roman, Times, Serif" SIZE="2">Tom Meeker:</FONT></TD>
     <TD><FONT FACE="Times New Roman, Times, Serif" SIZE="2">  Hi, Larry.<BR><BR></FONT></TD></TR>
<TR VALIGN="TOP">
     <TD><FONT FACE="Times New Roman, Times, Serif" SIZE="2">Mike Miller:</FONT></TD>
     <TD><FONT FACE="Times New Roman, Times, Serif" SIZE="2">Morning, Larry.<BR><BR></FONT></TD></TR>
<TR VALIGN="TOP">
     <TD><FONT FACE="Times New Roman, Times, Serif" SIZE="2">Larry Klatzkin: </FONT></TD>
     <TD><FONT FACE="Times New Roman, Times, Serif" SIZE="2">How you doing?  Listen, quick question, could you just go over what's going exactly on in
         Florida, and what the timing is?  And what your take would be if it does go positively?<BR><BR></FONT></TD></TR>

<TR VALIGN="TOP">
     <TD><FONT FACE="Times New Roman, Times, Serif" SIZE="2">Tom Meeker:</FONT></TD>
     <TD><FONT FACE="Times New Roman, Times, Serif" SIZE="2">  Well there is a initiative right now that is ongoing that involves obtaining necessary signatures
         for a state-wide referendum that would allow pari-mutuel operations to operate slot machines in the Dade
         and Broward County areas, subject to a second local referendum.  And we are evaluating our participation
         in that particular effort as we speak.  If we do participate in that effort, it will be a substantial
         expenditure of development funds to promote the initiative.<BR><BR></FONT></TD></TR>
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     <TD WIDTH="16%"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">Larry Klatzkin:</FONT></TD>
        <TD WIDTH="84%"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">
        All right.  Well, and what's your feeling right now?  This looks pretty good at this point?<BR><BR>
        </FONT></TD></TR>
<TR VALIGN="TOP">
     <TD><FONT FACE="Times New Roman, Times, Serif" SIZE="2">Tom Meeker:</FONT></TD>
     <TD><FONT FACE="Times New Roman, Times, Serif" SIZE="2">I think our assessment right now is still open.  But it would appear as though we will probably
         participate in the effort.<BR><BR></FONT></TD></TR>
<TR VALIGN="TOP">
     <TD><FONT FACE="Times New Roman, Times, Serif" SIZE="2">Larry Klatzkin:</FONT></TD>
     <TD><FONT FACE="Times New Roman, Times, Serif" SIZE="2">All right.  Good, thank you very much, guys.<BR><BR></FONT></TD></TR>
<TR VALIGN="TOP">
     <TD><FONT FACE="Times New Roman, Times, Serif" SIZE="2">Operator:</FONT></TD>
     <TD><FONT FACE="Times New Roman, Times, Serif" SIZE="2">And we'll go next to Chip Rini with Addison Clark.<BR><BR></FONT></TD></TR>
<TR VALIGN="TOP">
     <TD><FONT FACE="Times New Roman, Times, Serif" SIZE="2">Chip Rini:</FONT></TD>
     <TD><FONT FACE="Times New Roman, Times, Serif" SIZE="2"> Good morning, guys.<BR><BR></FONT></TD></TR>
<TR VALIGN="TOP">
     <TD><FONT FACE="Times New Roman, Times, Serif" SIZE="2">Mike Miller:</FONT></TD>
     <TD><FONT FACE="Times New Roman, Times, Serif" SIZE="2">  Morning, Chip.<BR><BR></FONT></TD></TR>
<TR VALIGN="TOP">
     <TD><FONT FACE="Times New Roman, Times, Serif" SIZE="2">Tom Meeker:</FONT></TD>
     <TD><FONT FACE="Times New Roman, Times, Serif" SIZE="2">  Good morning.<BR><BR></FONT></TD></TR>
<TR VALIGN="TOP">
     <TD><FONT FACE="Times New Roman, Times, Serif" SIZE="2">Chip Rini:</FONT></TD>
     <TD><FONT FACE="Times New Roman, Times, Serif" SIZE="2">  Quick question, just looking at the release, it says that a revision of 10 to 15 percent, which would
         come to about a five million or so increase in expenses.<BR><BR></FONT></TD></TR>
<TR VALIGN="TOP">
     <TD><FONT FACE="Times New Roman, Times, Serif" SIZE="2">Tom Meeker:</FONT></TD>
     <TD><FONT FACE="Times New Roman, Times, Serif" SIZE="2">  Right.<BR><BR></FONT></TD></TR>
<TR VALIGN="TOP">
     <TD><FONT FACE="Times New Roman, Times, Serif" SIZE="2">Chip Rini: </FONT></TD>
     <TD><FONT FACE="Times New Roman, Times, Serif" SIZE="2">And I was just wondering how that is broken out between ballot initiatives in Florida, California,
         and the CRM program?  And has something changed with the CRM program?  Have you accelerated the
         development into '04 from '05?<BR><BR></FONT></TD></TR>
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     <TD WIDTH="16%"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">Mike Miller:</FONT></TD>
        <TD WIDTH="84%"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">Chip,
        this is Mike, and I'll answer that.<BR><BR></FONT></TD></TR>
<TR VALIGN="TOP">
     <TD><FONT FACE="Times New Roman, Times, Serif" SIZE="2">Chip Rini:</FONT></TD>
     <TD><FONT FACE="Times New Roman, Times, Serif" SIZE="2">  OK.<BR><BR></FONT></TD></TR>
<TR VALIGN="TOP">
     <TD><FONT FACE="Times New Roman, Times, Serif" SIZE="2">Mike Miller:</FONT></TD>
     <TD><FONT FACE="Times New Roman, Times, Serif" SIZE="2">As is our custom, I'm really not going to give a specific number.  I will tell you, though, that
         the vast majority of this guidance revision is due to these legislative efforts and not CRM.  We started
         the CRM project last year when our budget for '04 was being put together, which was the underpinning for
         our guidance that we gave early in the year.  We were still in the process of formulating and scoping
         the CRM project.  Since that has happened, and I think we've reported this in the past, but we've been
         fortunate enough to hire a gentleman, Atique Shah from GSI Commerce, who has come in and literally taken
         over and remolded this CRM project.  And as a result of this effort, and just the education he has
         brought us, it has caused us to revise our estimates.<BR><BR></FONT></TD></TR>
<TR VALIGN="TOP">
     <TD><FONT FACE="Times New Roman, Times, Serif" SIZE="2"></FONT></TD>
     <TD><FONT FACE="Times New Roman, Times, Serif" SIZE="2">But in terms of the timing, et cetera, no, it is still on track - it is being developed as we
         speak.  We just have a much clearer picture now than we did a few months ago.<BR><BR></FONT></TD></TR>
<TR VALIGN="TOP">
     <TD><FONT FACE="Times New Roman, Times, Serif" SIZE="2">Chip Rini:</FONT></TD>
     <TD><FONT FACE="Times New Roman, Times, Serif" SIZE="2">  Okay.  And so you said the vast majority of that five million is going to come from the California
         and Florida, which means over 50 percent?<BR><BR>
</FONT></TD></TR>
<TR VALIGN="TOP">
     <TD><FONT FACE="Times New Roman, Times, Serif" SIZE="2">Mike Miller:</FONT></TD>
     <TD><FONT FACE="Times New Roman, Times, Serif" SIZE="2">Well not to pick, but actually the vast majority of this guidance revision is a
        result of that.  The five million is your number.<BR><BR></FONT></TD></TR>
<TR VALIGN="TOP">
     <TD><FONT FACE="Times New Roman, Times, Serif" SIZE="2">Chip Rini:</FONT></TD>
     <TD><FONT FACE="Times New Roman, Times, Serif" SIZE="2">Okay.  And can you give us an update on the Fair Grounds?  What's kind of going on there?  I read the
         press release - I was a little confused.<BR><BR></FONT></TD></TR>
<TR VALIGN="TOP">
     <TD><FONT FACE="Times New Roman, Times, Serif" SIZE="2">Mike Miller:</FONT></TD>
     <TD><FONT FACE="Times New Roman, Times, Serif" SIZE="2">  Well again our public policy, our Company policy, is not to comment on these things until they are
         at substantial completion.  But it is of record now and filed with the bankruptcy court that the auction
         is scheduled to be held in mid-August.  We have indeed consented to be the stalking horse in that
         auction process.  So, you know, we have at least assured our seat at the table.  But beyond that I think
         it would be premature to comment.<BR><BR>
</FONT></TD></TR>
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     <TD WIDTH="16%"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">Chip Rini:</FONT></TD>
     <TD WIDTH="84%"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">  Okay.<BR><BR>
</FONT></TD></TR>
<TR VALIGN="TOP">
     <TD><FONT FACE="Times New Roman, Times, Serif" SIZE="2">Operator:</FONT></TD>
     <TD><FONT FACE="Times New Roman, Times, Serif" SIZE="2">We'll take our next question from Ryan Worst with C.L. King.<BR><BR>
</FONT></TD></TR>
<TR VALIGN="TOP">
     <TD><FONT FACE="Times New Roman, Times, Serif" SIZE="2">Ryan Worst:</FONT></TD>
     <TD><FONT FACE="Times New Roman, Times, Serif" SIZE="2">  Good morning.  I was just wondering, you know, what has changed as far as your pursuit of these
         initiatives since like a month ago when you provided guidance?  I mean what I've seen in California is
         that since that time the governor has come out basically against the initiatives, and I thought that
         possibly that would mean less expenditures going forward.  So could you just comment on, you know, your
         thoughts on the outlook in California?<BR><BR>
</FONT></TD></TR>
<TR VALIGN="TOP">
     <TD><FONT FACE="Times New Roman, Times, Serif" SIZE="2">Thomas Meeker:</FONT></TD>
     <TD><FONT FACE="Times New Roman, Times, Serif" SIZE="2">  Well let's go to California first of all.  It keeps, you know, ebbing and flowing each day. I
         think two days ago there was a report that the tribes -- several tribes, including a major tribe down in
         the San Diego area - have filed an action to stop the governor's proposal.  So there is a lot of
         fluidity in what is going on out there.  Since our last guidance, we have been able to confirm that we
         are on the ballot, through Proposition 68, which changed the picture completely, and opened the door for
         execution on a major campaign.  That continues to be under way, which would involve substantial
         expenditures of media, et cetera.<BR><BR>

             So that - since our last guidance - that fact has changed the dynamics.  In addition, since our last
         guidance, or phone call, the events have unfolded in Florida, which allows us an opportunity there.  And
         as you well know, there are things going on all around the country right now, various initiatives,
         including prospect of initiatives in the states that we currently do business.  Various changes where I
         think we will have an opportunity in the latter part of this year, and certainly in the first part of
         next year, to execute on alternative gaming strategies in virtually every state in which we do business.<BR><BR>
</FONT></TD></TR>
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     <TD WIDTH="16%"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD WIDTH="84%"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">
             And when you look at the landscape and the dynamics that are going on in the legislative area, as
         well as opportunities such as the Fair Grounds, it becomes difficult for us to really project exactly
         what is going to happen in terms of what expenditures we might make.  But I will tell you and assure you
         that if these opportunities avail themselves, we will make the necessary expenditures, because in each
         instance, it involves a strategic initiative that will provide us a growth platform for the future.<BR><BR></FONT></TD></TR>
<TR VALIGN="TOP">
     <TD><FONT FACE="Times New Roman, Times, Serif" SIZE="2">Ryan Worst:</FONT></TD>
     <TD><FONT FACE="Times New Roman, Times, Serif" SIZE="2">
        Okay, Tom, so is it fair to say in California that as of now you are planning on pursuing this
         ballot initiative kind of full throttle despite the governor's opposition?<BR><BR></FONT></TD></TR>
<TR VALIGN="TOP">
     <TD><FONT FACE="Times New Roman, Times, Serif" SIZE="2">Thomas Meeker:</FONT></TD>
     <TD><FONT FACE="Times New Roman, Times, Serif" SIZE="2">  Yes.<BR><BR></FONT></TD></TR>
<TR VALIGN="TOP">
     <TD><FONT FACE="Times New Roman, Times, Serif" SIZE="2">Ryan Worst: </FONT></TD>
     <TD><FONT FACE="Times New Roman, Times, Serif" SIZE="2"> Okay.  And then could you talk about what is going on in Kentucky, if anything?  And then also, if
         there are any benefits awarded you as the stalking horse in the Fair Grounds pursuit?<BR><BR></FONT></TD></TR>
<TR VALIGN="TOP">
     <TD><FONT FACE="Times New Roman, Times, Serif" SIZE="2">Thomas Meeker:</FONT></TD>
     <TD><FONT FACE="Times New Roman, Times, Serif" SIZE="2">  Well we cannot talk about the stalking horse arrangement, but that is a matter of public record
         down there.  You know, we can go to the record down there and find out what agreements we have, perhaps
         offline we can talk to you specifically because it is a matter of public record.<BR><BR>

             There are two things that you should be aware of in Kentucky.  First of all, we are very pleased
         that a new organization has been formed, led largely by the owners and breeders in Central Kentucky,
         which heretofore have not been heard from in any of the legislative initiatives that we have engaged in
         over the last several years in Kentucky.<BR><BR></FONT></TD></TR>
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     <TD WIDTH="16%"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD WIDTH="84%"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">
             They are proposing - under the banner of Keep, K-E-E-P, led by the former governor of the state of
         Kentucky - and are executing on a grassroots campaign that would involve virtually every county in the
         state.  And the purpose of this campaign is to educate the electorate on the importance of the horse
         industry as part of the overall economic fabric of the state of Kentucky, and the importance of
         providing the horse industry, specifically the racing industry, with the competitive tools to meet the
         challenges of the future, and more important to maintain Kentucky as the number one horse state in the
         country, and indeed the world.  So that is going on.<BR><BR>

             Coincidentally, we are, and have been, engaged in a similar activity, a grassroots campaign on
         behalf of Churchill to promote and educate the electorate statewide with the importance of not only the
         horse industry in general, but in particular the racing industry as an important economic driver for the
         state of Kentucky.  So in 20 words or less, the approach to Kentucky has changed, and the approach to
         Kentucky is directed towards the electorate and not the legislative body.  That is not to say we won't
         continue to have meaningful discussions with our legislators, but at the same time we will now be
         working at the grassroots level, building a coalition of support for initiatives which we see coming
         down the road, in particular during the next session early next year.<BR><BR></FONT></TD></TR>
<TR VALIGN="TOP">
     <TD><FONT FACE="Times New Roman, Times, Serif" SIZE="2">Ryan Worst:</FONT></TD>
     <TD><FONT FACE="Times New Roman, Times, Serif" SIZE="2">  Okay.  And then one last question, I mean is there any way to kind of, you know, project how much
         you would have to spend on this initiative?  Or, better yet, just what you have accounted for thus far
         in this new revised guidance as far as the, you know maybe percent that you might have to spend overall
         in Florida and California?<BR><BR></FONT></TD></TR>
<TR VALIGN="TOP">
     <TD><FONT FACE="Times New Roman, Times, Serif" SIZE="2">Thomas Meeker: </FONT></TD>
     <TD><FONT FACE="Times New Roman, Times, Serif" SIZE="2"> I don't quite understand the question.  I mean it is a significant amount, you can do the math
         and kind of ...<BR><BR></FONT></TD></TR>
<TR VALIGN="TOP">
     <TD><FONT FACE="Times New Roman, Times, Serif" SIZE="2">Ryan Worst:</FONT></TD>
     <TD><FONT FACE="Times New Roman, Times, Serif" SIZE="2">Right, is that most of what you're going to have to spend?  Is it 50 percent of what you're going to
         have to spend?  Or, you know, at this point do you think it's, you know ...<BR><BR>
</FONT></TD></TR>
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     <TD WIDTH="16%"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">Thomas Meeker: </FONT></TD>
     <TD WIDTH="84%"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">In this year -- I think it is in this year, but you have to understand in both Florida and in
         California, if the referendum were successful, there would continue to be additional development costs
         and legislative costs associated with formulating enabling legislation, that is number one.<BR><BR>

             And then two, in Florida the construct of the Florida initiative provides that the statewide
         referendum would authorize the counties of Dade and Broward to have their own local referendum.<BR><BR></FONT></TD></TR>
<TR VALIGN="TOP">
     <TD><FONT FACE="Times New Roman, Times, Serif" SIZE="2">Ryan Worst:</FONT></TD>
     <TD><FONT FACE="Times New Roman, Times, Serif" SIZE="2">Right.<BR><BR></FONT></TD></TR>
<TR VALIGN="TOP">
     <TD><FONT FACE="Times New Roman, Times, Serif" SIZE="2">Thomas Meeker:</FONT></TD>
     <TD><FONT FACE="Times New Roman, Times, Serif" SIZE="2">  Which again would occasion additional development costs, promoting those referendums in those
         counties.  And that would not hit until next year because the November election, you know, would be the
         statewide referendum.<BR><BR>
</FONT></TD></TR>
<TR VALIGN="TOP">
     <TD><FONT FACE="Times New Roman, Times, Serif" SIZE="2">Ryan Worst:</FONT></TD>
     <TD><FONT FACE="Times New Roman, Times, Serif" SIZE="2">Okay.  So, Tom, it sounds like that this is what you need to spend up until the referendum,
         basically, you've ...<BR><BR></FONT></TD></TR>
<TR VALIGN="TOP">
     <TD><FONT FACE="Times New Roman, Times, Serif" SIZE="2">Thomas Meeker:</FONT></TD>
     <TD><FONT FACE="Times New Roman, Times, Serif" SIZE="2">Yes.<BR><BR></FONT></TD></TR>
<TR VALIGN="TOP">
     <TD><FONT FACE="Times New Roman, Times, Serif" SIZE="2">Ryan Worst:</FONT></TD>
     <TD><FONT FACE="Times New Roman, Times, Serif" SIZE="2"> ... account for that with this revision?<BR><BR></FONT></TD></TR>
<TR VALIGN="TOP">
     <TD><FONT FACE="Times New Roman, Times, Serif" SIZE="2">Thomas Meeker: </FONT></TD>
     <TD><FONT FACE="Times New Roman, Times, Serif" SIZE="2">Right.<BR><BR>
</FONT></TD></TR>
<TR VALIGN="TOP">
     <TD><FONT FACE="Times New Roman, Times, Serif" SIZE="2">Ryan Worst:</FONT></TD>
     <TD><FONT FACE="Times New Roman, Times, Serif" SIZE="2">And just one last thing, how many signatures do you need in Florida?  And where are you in that
         process?<BR><BR></FONT></TD></TR>
<TR VALIGN="TOP">
     <TD><FONT FACE="Times New Roman, Times, Serif" SIZE="2">Thomas Meeker: </FONT></TD>
     <TD><FONT FACE="Times New Roman, Times, Serif" SIZE="2">In Florida, I cannot give you the exact amount, we're about 90 percent there.<BR><BR></FONT></TD></TR>
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     <TD WIDTH="16%"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">Ryan Worst:</FONT></TD>
     <TD WIDTH="84%"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">Ninety percent?<BR><BR>
</FONT></TD></TR>
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     <TD><FONT FACE="Times New Roman, Times, Serif" SIZE="2">Thomas Meeker:</FONT></TD>
     <TD><FONT FACE="Times New Roman, Times, Serif" SIZE="2">  Yes.<BR><BR>
</FONT></TD></TR>
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     <TD><FONT FACE="Times New Roman, Times, Serif" SIZE="2">Ryan Worst:</FONT></TD>
     <TD><FONT FACE="Times New Roman, Times, Serif" SIZE="2">Okay.  Great, thanks.<BR><BR></FONT></TD></TR>
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     <TD><FONT FACE="Times New Roman, Times, Serif" SIZE="2">Operator:</FONT></TD>
     <TD><FONT FACE="Times New Roman, Times, Serif" SIZE="2">We'll go next to David Katz with CIBC World Markets.<BR><BR></FONT></TD></TR>
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     <TD><FONT FACE="Times New Roman, Times, Serif" SIZE="2">David Katz:</FONT></TD>
     <TD><FONT FACE="Times New Roman, Times, Serif" SIZE="2">Morning.  Just a quick question on Pennsylvania.  At one point you were involved I believe in a
         development -- a partnership.  Could you sort of update us on that?  And I guess update us on how the
         evolving legislation sort of bodes for that situation?<BR><BR></FONT></TD></TR>
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     <TD><FONT FACE="Times New Roman, Times, Serif" SIZE="2">Mike Miller:</FONT></TD>
     <TD><FONT FACE="Times New Roman, Times, Serif" SIZE="2">Morning, David, this is Mike.  I'm not going to speculate on the legislation, because if it is
         swirling anywhere, it is really swirling in Pennsylvania.  As to whether is going to happen, and then
         again who might be entitled to get this, we still indeed have an agreement with Mr. Betters - who has
         attractive land under option within the city limits of Pittsburgh - that is far more than just a
         racetrack or a racino, it is a huge commercial development as well potentially for the city.<BR><BR>
        And as we've reported before, we have sort of a wait and see approach with this, and a wait and see
         agreement, which allows us to let events unfold, both political in terms of the statute, and then to see
         whether he's going to get the racing license before we have to commit any funds.<BR><BR>

             So there are no speculative monies being spent on our part in Pennsylvania.  And unless Tom would
         like to comment, otherwise I don't really have any speculation on what might happen there politically.<BR><BR></FONT></TD></TR>
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     <TD><FONT FACE="Times New Roman, Times, Serif" SIZE="2">David Katz:</FONT></TD>
     <TD><FONT FACE="Times New Roman, Times, Serif" SIZE="2">Any thoughts in terms of the scale and scope of what kind of project we'd be talking about?<BR><BR></FONT></TD></TR>
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     <TD WIDTH="16%"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">Thomas Meeker:</FONT></TD>
     <TD WIDTH="84%"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">Well it would be a racetrack with a racino operation attached.  The scale will be largely
         determined by what, if any, legislation is passed, and what allocation of slot machines or alternative
         gaming machines would be granted to a particular licensee.  The driver of the racetrack in each instance
         where a racino application has been filed, or is proposed to be filed in the State of Pennsylvania, the
         primary driver obviously is the passage of alternative gaming legislation, number one.  And number two,
         the successful licensing of a particular operator to operate slot machines.  So until all of those<BR><BR>
         dynamics are sorted out, it's hard for us to project.<BR><BR></FONT></TD></TR>
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     <TD><FONT FACE="Times New Roman, Times, Serif" SIZE="2">David Katz:</FONT></TD>
     <TD><FONT FACE="Times New Roman, Times, Serif" SIZE="2">Understood.  And so no sort of dollar amount in terms of size of project?<BR><BR></FONT></TD></TR>
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     <TD><FONT FACE="Times New Roman, Times, Serif" SIZE="2">Thomas Meeker: </FONT></TD>
     <TD><FONT FACE="Times New Roman, Times, Serif" SIZE="2">Not at this juncture.<BR><BR></FONT></TD></TR>
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     <TD><FONT FACE="Times New Roman, Times, Serif" SIZE="2">David Katz:</FONT></TD>
     <TD><FONT FACE="Times New Roman, Times, Serif" SIZE="2">Okay, thanks very much.<BR><BR></FONT></TD></TR>
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     <TD><FONT FACE="Times New Roman, Times, Serif" SIZE="2">Operator:</FONT></TD>
     <TD><FONT FACE="Times New Roman, Times, Serif" SIZE="2">Once again, it is "star one" for questions.  And we'll go next to Jeffrey Thomison with Hilliard Lyons.<BR><BR></FONT></TD></TR>
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     <TD><FONT FACE="Times New Roman, Times, Serif" SIZE="2">
Jeffrey Thomison:</FONT></TD>
     <TD><FONT FACE="Times New Roman, Times, Serif" SIZE="2"> Good morning.  I just unfortunately joined in on the call.  So I apologize if you've already
         answered this question.  But you gave a number of reasons for second quarter earnings to be three
         percent below your guidance, and full-year earnings to be 10 to 15 percent below.  Are you able at this
         time to specify and perhaps rank for us in order of impact which factors are more attributable to the
         second quarter, and which factors perhaps in order of importance for the year?<BR><BR></FONT></TD></TR>
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     <TD><FONT FACE="Times New Roman, Times, Serif" SIZE="2">Male:</FONT></TD>
     <TD><FONT FACE="Times New Roman, Times, Serif" SIZE="2">  Well you are catching up.  What we have reported is the development activities, including the legislative
         initiatives, represent the most significant part of the downward revision.<BR><BR></FONT></TD></TR>
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     <TD WIDTH="16%"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">Jeffrey Thomison:</FONT></TD>
     <TD WIDTH="84%"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">For the quarter and the year?<BR><BR></FONT></TD></TR>
 <TR VALIGN="TOP">
     <TD><FONT FACE="Times New Roman, Times, Serif" SIZE="2">Tom Meeker:</FONT></TD>
     <TD><FONT FACE="Times New Roman, Times, Serif" SIZE="2">Yes, I'd say ...<BR><BR>
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     <TD><FONT FACE="Times New Roman, Times, Serif" SIZE="2">Mike Miller:</FONT></TD>
     <TD><FONT FACE="Times New Roman, Times, Serif" SIZE="2">Yes.<BR><BR></FONT></TD></TR>
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     <TD><FONT FACE="Times New Roman, Times, Serif" SIZE="2">Mike Miller:</FONT></TD>
     <TD><FONT FACE="Times New Roman, Times, Serif" SIZE="2">... that's true for both, Jeff.<BR><BR></FONT></TD></TR>
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     <TD><FONT FACE="Times New Roman, Times, Serif" SIZE="2">Jeffrey Thomison:</FONT></TD>
     <TD><FONT FACE="Times New Roman, Times, Serif" SIZE="2">Okay, and obviously Arlington, we know what period that falls in, and then as well as your
         construction.  So that answers that.<BR><BR></FONT></TD></TR>
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     <TD><FONT FACE="Times New Roman, Times, Serif" SIZE="2">Male:</FONT></TD>
     <TD><FONT FACE="Times New Roman, Times, Serif" SIZE="2"> Yes, Jeff.<BR><BR></FONT></TD></TR>
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     <TD><FONT FACE="Times New Roman, Times, Serif" SIZE="2">Tom Meeker:</FONT></TD>
     <TD><FONT FACE="Times New Roman, Times, Serif" SIZE="2">And I also mentioned that quite honestly the revenue shortfalls that we are experiencing at
         Arlington and Churchill, in particular, have attributed to a wide range of things.  The construction
         here at Churchill has been a difficult exercise.  We have had horrible weather, both in Chicago and here
         in Louisville during the course of these race meets.  But those revenue shortfalls against plan, in the
         ordinary course - we could adjust our cost structure to mitigate those.  But when you add the potential
         of a downward, excuse me, of lower revenues associated with those operations to these additional
         development costs, there is no way we can adjust everything and still meet what guidance we gave to you
         earlier.<BR><BR></FONT></TD></TR>
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     <TD><FONT FACE="Times New Roman, Times, Serif" SIZE="2">Jeffrey Thomison:</FONT></TD>
     <TD><FONT FACE="Times New Roman, Times, Serif" SIZE="2">Right, got it.<BR><BR></FONT></TD></TR>
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     <TD><FONT FACE="Times New Roman, Times, Serif" SIZE="2">Tom Meeker:</FONT></TD>
     <TD><FONT FACE="Times New Roman, Times, Serif" SIZE="2">Okay.<BR><BR></FONT></TD></TR>
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     <TD><FONT FACE="Times New Roman, Times, Serif" SIZE="2">Jeffrey Thomison:</FONT></TD>
     <TD><FONT FACE="Times New Roman, Times, Serif" SIZE="2"> Thanks.<BR><BR></FONT></TD></TR>
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     <TD WIDTH="16%"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">Mike Miller:</FONT></TD>
     <TD WIDTH="84%"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">Thank you, Jeff.<BR><BR>
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     <TD><FONT FACE="Times New Roman, Times, Serif" SIZE="2">Operator:</FONT></TD>
     <TD><FONT FACE="Times New Roman, Times, Serif" SIZE="2">Once again, it is "star one" for questions.  And there appear to be no further questions at this time.<BR><BR></FONT></TD></TR>
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     <TD><FONT FACE="Times New Roman, Times, Serif" SIZE="2">Thomas Meeker:</FONT></TD>
     <TD><FONT FACE="Times New Roman, Times, Serif" SIZE="2"> Well again, thank each of you for joining us today, and we will keep you advised as we are
         required by law, but more importantly, by the course of business that we have established over the last
         several years.  So thank you again for joining us this morning.<BR><BR></FONT></TD></TR>
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     <TD><FONT FACE="Times New Roman, Times, Serif" SIZE="2">Operator: </FONT></TD>
     <TD><FONT FACE="Times New Roman, Times, Serif" SIZE="2">This does conclude today's conference.  Thank you for your participation, you may now disconnect.<BR><BR></FONT></TD></TR>
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