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<SEC-DOCUMENT>0000020212-05-000004.txt : 20050322
<SEC-HEADER>0000020212-05-000004.hdr.sgml : 20050322
<ACCEPTANCE-DATETIME>20050322134546
ACCESSION NUMBER:		0000020212-05-000004
CONFORMED SUBMISSION TYPE:	8-K
PUBLIC DOCUMENT COUNT:		3
CONFORMED PERIOD OF REPORT:	20050317
ITEM INFORMATION:		Results of Operations and Financial Condition
FILED AS OF DATE:		20050322
DATE AS OF CHANGE:		20050322

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:		05696317

	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>t8k4q04.htm
<DESCRIPTION>CONFERENCE CALL TRANSCRIPT MARCH 17, 2005
<TEXT>
<HTML>
<HEAD>
<TITLE>8-K Conference Call Transcript March 17, 2005</TITLE>
</HEAD>
<BODY>
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<P ALIGN=CENTER><FONT FACE="Times New Roman, Times, Serif" SIZE=2>
UNITED STATES<BR>SECURITIES AND EXCHANGE COMMISSION<BR>WASHINGTON, D.C. 20549 </FONT></P>

<!-- MARKER FORMAT-SHEET="Head Major Center Bold" FSL="Default" -->
<H1 ALIGN=CENTER><FONT FACE="Times New Roman, Times, Serif" SIZE=2>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): March 17, 2005 </FONT></H1>



<p align=center> <IMG SRC="smalllogo.gif"> </P>


<TABLE CELLPADDING=0 CELLSPACING=0 BORDER=0 ALIGN=Center WIDTH=100%>
<TR VALIGN=Bottom>
     <TD ALIGN=CENTER><FONT FACE="Times New Roman, Times, Serif" SIZE=2>(Exact name of registrant as specified in its charter)<BR><BR></FONT></TD></TR>

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

<TABLE CELLPADDING=0 CELLSPACING=0 BORDER=0 ALIGN=Center WIDTH=100%>
<TR VALIGN="Top" ALIGN="Center">
<TD COLSPAN="3" ALIGN="Center"><FONT FACE="Times New Roman, Times, Serif" SIZE=2><U>700 Central Avenue, Louisville, Kentucky 40208 </U><BR>
         (Address of principal executive offices)<BR>
        (Zip Code)<BR><BR>
        <U>(502)-636-4400</U><BR>
        (Registrant&#146;s telephone number, including area code)<BR><BR>
        <U>Not Applicable</U><BR>
        (Former name or former address, if changed since last report) </FONT></td></TR>
</TABLE>
<!-- MARKER FORMAT-SHEET="Head Sub 2 Left" FSL="Default" -->
<P ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Check the appropriate box below if the Form 8-K is intended to simultaneously satisfy the filing obligation of the registrant under any of
the following provisions:<BR><BR>

[ ]&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;     Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)<BR><BR>

[ ]&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;      Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)<BR><BR>

[ ]&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;      Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))<BR><BR>

[ ]&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;      Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))<BR><BR>
</FONT></P>




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        <TD COLSPAN=3 ALIGN="center"><FONT FACE="Times New Roman, Times, Serif" size=2>
               Page 1</FONT></TD>
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        <TD COLSPAN=3 ALIGN="center"><HR SIZE=5 NOSHADE></TD>
</TR>
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<H1 ALIGN=center><FONT FACE="Times New Roman, Times, Serif" SIZE=2>CHURCHILL DOWNS INCORPORATED<BR><BR>
        INDEX<BR><BR> </FONT></H1>


<TABLE CELLPADDING=0 CELLSPACING=0 BORDER=0 ALIGN=Center WIDTH=100%>
<TR VALIGN=top>
     <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2><B>Item 2.02</B></FONT></TD>
     <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD>
     <TD colspan=2 ALIGN=LEFT><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 colspan=2 ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2> &nbsp;</FONT></TD>
     <TD colspan=2 ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Attached and incorporated herein by reference as
 Exhibit 99.1 is a copy of the earnings release conference call transcript, dated March 17, 2005, reporting the Registrant's financial
                  results for the fourth quarter and year-end of 2004.<BR><BR></FONT></TD></TR>
<TR VALIGN=top>
     <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2><B>Item 9.01</B></FONT></TD>
     <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD>
     <TD colspan=2 ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2><B>Financial Statements and Exhibits</B><BR><BR></FONT></TD></TR>
<TR VALIGN=Bottom>
     <TD WIDTH=10% ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>.</FONT></TD>
     <TD WIDTH=5% ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD>
     <TD WIDTH=5% ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>(c)<BR><BR></FONT></TD>
     <TD WIDTH=80% ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2> Exhibits<BR><BR></FONT></TD></TR>
<TR VALIGN=top>
     <TD colspan=2 ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2> &nbsp;</FONT></TD>
     <TD colspan=2 ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Exhibit 99.1&nbsp;&nbsp;&nbsp;Earnings release conference call transcript
        dated March 17, 2005.<BR><BR></FONT></TD></TR>
</TABLE>
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        <TD COLSPAN=3 ALIGN="center"><FONT FACE="Times New Roman, Times, Serif" size=2>
               Page 2</FONT></TD>
</TR>
<TR VALIGN=TOP>
        <TD COLSPAN=3 ALIGN="center"><HR SIZE=5 NOSHADE></TD>
</TR>
<!-- BLANK LINE--><TR><TD>&nbsp;</TD></TR>
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</TABLE>
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<TABLE CELLPADDING="0" CELLSPACING="0">
<TR VALIGN="BOTTOM">
     <TH COLSPAN="2"><FONT SIZE="2">SIGNATURES<BR><BR></FONT></TH></TR>
<TR VALIGN="TOP">
     <TD COLSPAN="2"><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 hereunto duly authorized.<BR><BR><BR></FONT></TD></TR>
<TR VALIGN="TOP">
     <TD WIDTH="50%"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"></FONT></TD>
     <TD WIDTH="50%"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"><B>CHURCHILL DOWNS INCORPORATED</B><BR><BR><BR><BR><BR></FONT></TD></TR>
<TR VALIGN="TOP">
     <TD><FONT FACE="Times New Roman, Times, Serif" SIZE="2">March 22, 2005 </FONT></TD>
     <TD><FONT FACE="Times New Roman, Times, Serif" SIZE="2"><U>/s/Thomas H. Meeker</U></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">__________________________________<BR>
                                                    President and Chief Executive Officer<BR>
                                                    (Director and Principal Executive Officer)</FONT></TD></TR>
</TABLE>
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        <TD COLSPAN=3 ALIGN="center"><FONT FACE="Times New Roman, Times, Serif" size=2>
               Page 3</FONT></TD>
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        <TD COLSPAN=3 ALIGN="center"><HR SIZE=5 NOSHADE></TD>
</TR>
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<DESCRIPTION>CONFERENCE CALL TRANSCRIPT MARCH 17, 2005
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<TITLE>Conference Call Transcript March 17, 2005</TITLE>
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<BODY><P ALIGN=RIGHT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>CHURCHILL DOWNS <BR>
Moderator: Mike Ogburn<BR>03-17-05/8:00 a.m. CT <BR>Confirmation # 5620447
<BR>Page 1 </FONT></P>

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<A NAME=A004></A>
<H1 ALIGN=CENTER><FONT FACE="Times New Roman, Times, Serif" SIZE=2>CHURCHILL DOWNS </FONT></H1>

<!-- MARKER FORMAT-SHEET="Head Major Center Bold 1-TNR" FSL="Project" -->
<A NAME=A005></A>
<H1 ALIGN=CENTER><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Moderator: Mike Ogburn
<BR>March 17, 2005 <BR>8:00 a.m. CT </FONT></H1>

<TABLE cellSpacing=0 cellPadding=0 width="100%">
<TR vAlign=top>
<TD width="15%"><FONT face="Times New Roman, Times, Serif" size=2>Operator:</FONT></TD>
<TD width="85%"><FONT face="Times New Roman, Times, Serif" size=2>Good day, everyone, and welcome to the Churchill Downs Incorporated conference call.  Today's call is being recorded.  At
         this time for opening remarks and introductions, I'd like to turn the call over to Mike Ogburn.  Please go ahead, sir.<BR><BR></FONT></TD></TR>
</TABLE>

<TABLE cellSpacing=0 cellPadding=0 width="100%">
<TR vAlign=top>
<TD width="15%"><FONT face="Times New Roman, Times, Serif" size=2>Mike Ogburn:</FONT></TD>
<TD width="85%"><FONT face="Times New Roman, Times, Serif" size=2>Good morning and welcome to this Churchill Downs Incorporated conference call to review the Company's results for the
         fourth quarter and year-end 2004.<BR><BR></FONT></TD></TR>
</TABLE>




<TABLE cellSpacing=0 cellPadding=0 width="100%">
<TR vAlign=top>
<TD width="15%"><FONT face="Times New Roman, Times, Serif" size=2>&nbsp;</FONT></TD>
<TD width="85%"><FONT face="Times New Roman, Times, Serif" size=2>The results were released yesterday afternoon in a press release that has been covered by the financial media.  A copy
         of this release announcing earnings and any other financial and statistical information about the period to be presented in
         this conference call, including any information required by Regulation G, is available at the section of the company's Web
         site entitled "Investor Relations" located at ChurchillDownsIncorporated.com.  Let me also note a release has been issued
         advising of the accessibility of this conference call on a listen-only basis over the Internet.<BR><BR></FONT></TD></TR>
</TABLE>

<TABLE cellSpacing=0 cellPadding=0 width="100%">
<TR vAlign=top>
<TD width="15%"><FONT face="Times New Roman, Times, Serif" size=2>&nbsp;</FONT></TD>
<TD width="85%"><FONT face="Times New Roman, Times, Serif" size=2>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 not statements of historical fact.  Actual
         performance of the company may differ materially from that projected in such statements.<BR><BR></FONT></TD></TR>
</TABLE>

<TABLE cellSpacing=0 cellPadding=0 width="100%">
<TR vAlign=top>
<TD width="15%"><FONT face="Times New Roman, Times, Serif" size=2>&nbsp;</FONT></TD>
<TD width="85%"><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></FONT></TD></TR>
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<TD width="15%"><FONT face="Times New Roman, Times, Serif" size=2>&nbsp;</FONT></TD>
<TD width="85%"><FONT face="Times New Roman, Times, Serif" size=2>I'll now turn the call to Tom Meeker, president and chief executive officer.<BR><BR></FONT></TD></TR>
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<TD width="15%"><FONT face="Times New Roman, Times, Serif" size=2>Tom Meeker:  </FONT></TD>
<TD width="85%"><FONT face="Times New Roman, Times, Serif" size=2>Good morning and thanks for joining us this morning to discuss the year-end results of operation of the Company.  As
         reflected in the press release issued yesterday and the warning we gave to the market several days ago, there are a number
         of topics that deserve discussion this morning.  I propose to cover a number of these topics.<BR><BR></FONT></TD></TR>
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<TD width="15%"><FONT face="Times New Roman, Times, Serif" size=2>&nbsp;</FONT></TD>
<TD width="85%"><FONT face="Times New Roman, Times, Serif" size=2>I'll review the 2004 accomplishments, including some comments about our financial results.  Mike Miller will give you a
         more detailed report on these results following my comments.  I'll also give you some general comments about the slot
         initiatives in California and South Florida and give you my thoughts on where we're going to go from here.  Finally, I want
         to make a few general comments about Hollywood Park, and following my comments, Mike will go over the detailed financial
         results.<BR><BR></FONT></TD></TR>
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<TD width="85%"><FONT face="Times New Roman, Times, Serif" size=2>On balance, 2004 was a very good year for Churchill Downs.  In terms of our core operations, we performed better than I
         actually expected.  As indicated at the beginning of the year, this was the year where we intended to shift our focus from
         day-to-day operational issues to strategic issues that in the end will strengthen our long-term growth potential.<BR><BR></FONT></TD></TR>
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<TD width="15%"><FONT face="Times New Roman, Times, Serif" size=2>&nbsp;</FONT></TD>
<TD width="85%"><FONT face="Times New Roman, Times, Serif" size=2>Toward that end, we accomplished much in 2004.  The CRM effort reached full maturity at the end of 2004 and we are now
         ready for full deployment in 2005.  The technology components related to the accumulation of necessary customer intelligence
         are fully developed.  Call centers are in place, extensive training has been undertaken, and new customer interface
         technologies are being deployed at Churchill Downs racetrack.<BR><BR></FONT></TD></TR>
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<TD width="15%"><FONT face="Times New Roman, Times, Serif" size=2>&nbsp;</FONT></TD>
<TD width="85%"><FONT face="Times New Roman, Times, Serif" size=2>I remind you that CRM is not a pure technology play.  Technology is a critical component of the overall program since it
         allows us to identify customer demand, measure customer satisfaction, and most important, better communicate with our
         customers.  However, CRM is more than a technology play.  Fundamentally, CRM is a process that involves changing the way we
         interrelate with our customers.  In short, it involves a commitment to change - a dynamic process where we change our
         products, services and behaviors in response to customer expectations and demands.<BR><BR></FONT></TD></TR>
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<TD width="15%"><FONT face="Times New Roman, Times, Serif" size=2>&nbsp;</FONT></TD>
<TD width="85%"><FONT face="Times New Roman, Times, Serif" size=2>In recognition of the fact that change is a critical component of the process, we have been involved in a company-wide
         Business Change Management program over the last several months.  This program is designed to train every member of the team
         in the art of embracing and executing on change.  What we have learned over the last several months will be put into play
         over the coming weeks as we open our race meets across the country.<BR><BR></FONT></TD></TR>
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<TD width="15%"><FONT face="Times New Roman, Times, Serif" size=2>&nbsp;</FONT></TD>
<TD width="85%"><FONT face="Times New Roman, Times, Serif" size=2>2004 also saw us successfully complete the acquisition of the Fair Grounds, and as reflected in the record-setting
         Louisiana Derby Weekend, the Fair Grounds is a very good addition to our racetrack portfolio not only from the standpoint of
         providing us a first-quarter racing product, but just as important, allowing us to own and develop a new racino operation.
         Within the coming weeks, we will commence the process of obtaining the necessary conditional use permit that will allow us
         to commence construction of the new Fair Grounds casino, and we anticipate opening slot operations in 2006.<BR><BR></FONT></TD></TR>
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<TD width="15%"><FONT face="Times New Roman, Times, Serif" size=2>&nbsp;</FONT></TD>
<TD width="85%"><FONT face="Times New Roman, Times, Serif" size=2> The Master Plan development of Churchill Downs racetrack continued in 2004, and despite the construction, we held a very
         successful Kentucky Derby and Kentucky Derby Week, including the Kentucky Oaks.  For the past two years, the Churchill Downs
         racetrack team has conducted race meets in the midst of major construction.  The team has performed well above expectations,
         and the results demonstrate that.  The new facility will be completed before this year's Derby, and from all reports and
         from our observations, it is going to be well received by our customers.<BR><BR></FONT></TD></TR>
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<TD width="15%"><FONT face="Times New Roman, Times, Serif" size=2>&nbsp;</FONT></TD>
<TD width="85%"><FONT face="Times New Roman, Times, Serif" size=2>Just as important - and as a critical component of the financing for the Master Plan development - we successfully sold
         the 63 suites in the grandstand suite facility, as well as the 16 new Finish Line suites in the new clubhouse facility.  In
         addition, we sold $20 million of PSLs, and that was completed in 2004.
         This is based against an initial estimate of some $15 million in sales, so we outsold our estimate in that area.  None of
         these revenues - that is, the PSL revenues and the Finish Line suite revenues - were recognized in 2004 and the PSL revenues
         will be amortized over the lease arrangements and/or the life of the PSL.<BR><BR></FONT></TD></TR>
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<TD width="15%"><FONT face="Times New Roman, Times, Serif" size=2>&nbsp;</FONT></TD>
<TD width="85%"><FONT face="Times New Roman, Times, Serif" size=2>We increased our risk tolerance in 2004, as evidenced by the expenditures we made in Florida, California and Louisiana,
         and we are becoming much more aggressive in pursuit of what we deem to be key strategic initiatives.  Finally, in 2004 we
         identified critical skill weaknesses in our management organization, and we successfully recruited and hired qualified
         executives and managers in the areas of CRM, information technology, marketing, and human resources.  And in the end, we
         have a much stronger team.<BR><BR></FONT></TD></TR>
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<TD width="15%"><FONT face="Times New Roman, Times, Serif" size=2>&nbsp;</FONT></TD>
<TD width="85%"><FONT face="Times New Roman, Times, Serif" size=2>Despite the CRM expenditures, despite unanticipated legislative expenditures, despite other developmental cost, and
         despite the problems associated with the construction at Churchill Downs Race Track - revenues increased year-over-year by
         4.3 percent, and in fact, with the exception of Hoosier Park, all of the operating units produced positive top-line growth.
         And just as important, the company generated over $51 million in EBITDA during 2004.<BR><BR></FONT></TD></TR>
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<TD width="15%"><FONT face="Times New Roman, Times, Serif" size=2>&nbsp;</FONT></TD>
<TD width="85%"><FONT face="Times New Roman, Times, Serif" size=2>Now let me make a few comments about the referendums we, and the coalition of partners, ran in California and Florida.
         With the proliferation of tribal casinos and the overall business environment in California, CDI, Magna, and other partners
         pursued a statewide referendum in California.  This was and will continue to be an important initiative for California
         racing.<BR><BR></FONT></TD></TR>
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<TD width="85%"><FONT face="Times New Roman, Times, Serif" size=2>Obviously, it failed.  It failed for two reasons.  First, the tribal casinos, with their access to tax-free money, outspent
         our effort; and second, the Governor actively opposed our effort.  And when these two things became evident to the coalition
         members, we ceased spending and withdrew from the campaign.  We will continue to explore alternatives that will provide
         racing a level, competitive playing field in California and, just as important, we will continue to pursue efforts that will
         ultimately grow tax revenues for the State of California.<BR><BR></FONT></TD></TR>
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<TD width="15%"><FONT face="Times New Roman, Times, Serif" size=2>&nbsp;</FONT></TD>
<TD width="85%"><FONT face="Times New Roman, Times, Serif" size=2>The import of alternative gaming is equally important to the State of Florida and to Florida racing.  Last year, CDI
         joined a group of pari-mutuel operators in pursuit of a statewide referendum that provided for a local election in Broward
         and Miami-Dade Counties.  Late in that process, Magna joined the coalition and together with the other members of the
         coalition, we successfully passed the statewide referendum.<BR><BR></FONT></TD></TR>
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<TD width="15%"><FONT face="Times New Roman, Times, Serif" size=2>&nbsp;</FONT></TD>
<TD width="85%"><FONT face="Times New Roman, Times, Serif" size=2>On March 8, local elections were held in Broward and Miami-Dade Counties.  The referendum passed in Broward and failed in
         Miami-Dade.  Clearly, I'm disappointed about the failure in Miami-Dade, and indeed, all members of the coalition are
         disappointed in the failure of the referendum in Miami-Dade.<BR><BR></FONT></TD></TR>
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<TD width="15%"><FONT face="Times New Roman, Times, Serif" size=2>&nbsp;</FONT></TD>
<TD width="85%"><FONT face="Times New Roman, Times, Serif" size=2>The coalition commenced the local campaigns in Broward and Dade Counties early in the year.  All parties collectively
         funded the referendums in both counties.  Early on, the coalition leaders recognized the demographic differences between the
         two counties and, most important, recognized that the Broward referendum was to be a much easier task than the Miami-Dade
         referendum.  Accordingly, over 60 percent of the aggregate money raised by the coalition members was expended, and energy
         was expended, in Miami-Dade.<BR><BR></FONT></TD></TR>
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<TD width="15%"><FONT face="Times New Roman, Times, Serif" size=2>&nbsp;</FONT></TD>
<TD width="85%"><FONT face="Times New Roman, Times, Serif" size=2>The contrast in the counties is striking.  Broward is one of the last Democratic strongholds in Florida, and its voters
         strongly supported our effort as a means to create jobs and generate funds for education.  In contrast, Miami-Dade is
         strongly Republican, particularly in south Miami-Dade, where there is a large Cuban-American community.  In the end, it was
         the south Miami-Dade turnout that hurt the effort.<BR><BR></FONT></TD></TR>
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<TD width="15%"><FONT face="Times New Roman, Times, Serif" size=2>&nbsp;</FONT></TD>
<TD width="85%"><FONT face="Times New Roman, Times, Serif" size=2>This turnout was directly traced to the opposition led by Governor Bush and other members of the Cuban-American community.
         In north Miami-Dade, particularly in the areas proximate to Calder and Gulfstream, such as Aventura and Miami Gardens, the
         referendum passed by significant margins.  Increased jobs and more education dollars seemed to resonate in these communities.<BR><BR></FONT></TD></TR>
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<TD width="15%"><FONT face="Times New Roman, Times, Serif" size=2>&nbsp;</FONT></TD>
<TD width="85%"><FONT face="Times New Roman, Times, Serif" size=2>So where do we go from here?  First, the Florida legislature must pass enabling legislation.  There are a number of
         critical issues that must be addressed in the legislation, including the hours and days of operation, the gaming tax rate,
         and the types of machines that will be deployed.  The coalition remains in place and is working to pass favorable
         legislation.  CDI is working with the coalition towards that end, and we're doing that for two reasons.  First, it is
         important to Florida racing that we establish racino operations in the South Florida market.  And secondly, CDI believes
         that we will be able to pass, together with the coalition members, a referendum in 2007.<BR><BR></FONT></TD></TR>
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<TD width="15%"><FONT face="Times New Roman, Times, Serif" size=2>&nbsp;</FONT></TD>
<TD width="85%"><FONT face="Times New Roman, Times, Serif" size=2>Similarly, the entire coalition of racetrack and pari-mutuel operators remains focused on 2007, where it will seek
         passage of a referendum in Miami-Dade.
         By that time, we'll be in a much better position to address many of the questions advanced by the opposition, in particular,
         how gaming taxes will be allocated as a result of the legislation, and most important, how much of the money will go to
         education.<BR><BR></FONT></TD></TR>
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<TD width="15%"><FONT face="Times New Roman, Times, Serif" size=2>&nbsp;</FONT></TD>
<TD width="85%"><FONT face="Times New Roman, Times, Serif" size=2>Am I disappointed?  Yes.  Does the failure to pass the referendum in Miami-Dade make it more difficult in Tallahassee?
         Yes.  Have we given up on Florida?  Absolutely not.  We missed by a small margin of about 5,000 votes, and we will be able
         to correct that in 2007.<BR><BR></FONT></TD></TR>
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<TD width="15%"><FONT face="Times New Roman, Times, Serif" size=2>&nbsp;</FONT></TD>
<TD width="85%"><FONT face="Times New Roman, Times, Serif" size=2>In recent days, rumors abound concerning Hollywood Park.  Ordinarily, we do not respond to rumors, but given the
         concerns raised by horsemen, patrons, and our overriding concerns for our employees, let me make a few general comments
         about our plans for Hollywood Park.  As with all of our assets, we continually evaluate each asset in light of two
         overriding objectives - increasing shareholder value and improving the sport of racing.<BR><BR></FONT></TD></TR>
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<TD width="15%"><FONT face="Times New Roman, Times, Serif" size=2>&nbsp;</FONT></TD>
<TD width="85%"><FONT face="Times New Roman, Times, Serif" size=2>In the case of Hollywood Park, we are in the process of undertaking such an evaluation in light of these stated objectives.
         We anticipate that the deliberative process will be completed in a few months, and at that time, we will be in a much better
         position to comment on any specific plans we may have or may develop with respect to Hollywood Park.<BR><BR></FONT></TD></TR>
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<TD width="15%"><FONT face="Times New Roman, Times, Serif" size=2>&nbsp;</FONT></TD>
<TD width="85%"><FONT face="Times New Roman, Times, Serif" size=2>During 2005, you'll see Churchill Downs and others taking a very aggressive lead in reshaping the industry's tote
         system.  As reflected in our Section 404 Review contained in our 10-K, the industry must address the issue of the tote.
         Magna, Woodbine, the New Jersey tracks, NYRA and CDI are working to develop a plan that in the end will transform our
         central tote system.  Increased security, increased efficiency and improved customer interfaces will be the hallmarks of the
         new system.  CDI has been pushing this effort for over 10 years, and I'm pleased to report that we can see some light at the
         end of the tunnel.  Churchill Downs Incorporated will continue to take a lead in this area, and we are determined to make
         something transformational occur in 2005.<BR><BR></FONT></TD></TR>
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<TD width="15%"><FONT face="Times New Roman, Times, Serif" size=2>&nbsp;</FONT></TD>
<TD width="85%"><FONT face="Times New Roman, Times, Serif" size=2>2005 will also be a year in which we will continue to pursue slot legislation in each jurisdiction in which we do
         business.  We continue to believe that alternative gaming provides the racing industry the opportunity to improve and better
         utilize its racing facilities, strengthen its purse programs, and introduce new customers to our products.<BR><BR></FONT></TD></TR>
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<TD width="15%"><FONT face="Times New Roman, Times, Serif" size=2>&nbsp;</FONT></TD>
<TD width="85%"><FONT face="Times New Roman, Times, Serif" size=2>Finally, we will continue to pursue development opportunities in the racing and larger gaming industry.  In that regard,
         we will continue to monitor the situation in New York to ensure that New York racing continues to be a critical component of
         the overall U.S. racing industry.  Our support for Friends of New York will continue, as Tim Smith and his team attempts to
         rationalize various issues relating to the relationship between the State of New York and the prospective franchisee, New
         York City OTB, and the racino operation that was approved under New York law.<BR><BR></FONT></TD></TR>
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<TD width="15%"><FONT face="Times New Roman, Times, Serif" size=2>&nbsp;</FONT></TD>
<TD width="85%"><FONT face="Times New Roman, Times, Serif" size=2>In conclusion, 2005 provides Churchill Downs Incorporated a number of challenges that, if met, will change our
         industry.  More important, 2005 will provide CDI with a number of opportunities for long-term growth.  We are prepared to
         meet the challenges and will aggressively pursue the opportunities for growth as they come available.<BR><BR></FONT></TD></TR>
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<TD width="15%"><FONT face="Times New Roman, Times, Serif" size=2>&nbsp;</FONT></TD>
<TD width="85%"><FONT face="Times New Roman, Times, Serif" size=2>I'll now turn the call over to Mike Miller, who will fill you in on all the details.  Thanks.<BR><BR></FONT></TD></TR>
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<TD width="15%"><FONT face="Times New Roman, Times, Serif" size=2>Mike Miller: </FONT></TD>
<TD width="85%"><FONT face="Times New Roman, Times, Serif" size=2>Thank you, Tom, and good morning, everyone.  We do have a lot to cover this morning, so my goal will be to hit the
         highlights at an appropriate level, and then Tom and I will respond to your questions on any areas that may require more
         explanation.<BR><BR></FONT></TD></TR>
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<TD width="15%"><FONT face="Times New Roman, Times, Serif" size=2>&nbsp;</FONT></TD>
<TD width="85%"><FONT face="Times New Roman, Times, Serif" size=2>Turning first to the consolidated balance sheet, I'll speak to the more significant fluctuations from December '03 to
         December '04.  The overall growth in assets of approximately $139 million is primarily attributable to our acquisition of
         the Fair Grounds in October as well as our capital expenditures for the year, with the bulk of these expenditures being
         related to the Churchill Downs Master Plan.<BR><BR></FONT></TD></TR>
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<TD width="15%"><FONT face="Times New Roman, Times, Serif" size=2>&nbsp;</FONT></TD>
<TD width="85%"><FONT face="Times New Roman, Times, Serif" size=2>In 2004, our total cap ex was approximately $77 million, including nearly $58 million for the Master Plan.  In 2005, we
         expect these amounts to be $49 million and $24 million respectively.  In addition, our accounts receivable also increased by
         approximately $7 million, which is the result of our successful PSL program at Churchill, which Tom referred to.  As he
         stated, we've sold approximately $20 million in personal seat licenses, well above our initial estimates of $15 million.<BR><BR></FONT></TD></TR>
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<TD width="15%"><FONT face="Times New Roman, Times, Serif" size=2>&nbsp;</FONT></TD>
<TD width="85%"><FONT face="Times New Roman, Times, Serif" size=2>Moving now to the liability and equity section, once again, significant reason for the growth in our total liabilities
         of $152 million can be attributed to our capital expenditures in the Fair Grounds acquisition.  In addition, included in
         those payable at year-end is a $12.5 million convertible note issued in conjunction with the redemption of approximately
         450,000 shares of the Company's stock in October which was a transaction entered into with a shareholder in conjunction with
         the suitability process for obtaining a gaming license in Louisiana.  We entered into this transaction due to the necessity
         of reducing this shareholder's interest below the five percent control threshold mandated by Louisiana statute.<BR><BR></FONT></TD></TR>
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<TD width="15%"><FONT face="Times New Roman, Times, Serif" size=2>&nbsp;</FONT></TD>
<TD width="85%"><FONT face="Times New Roman, Times, Serif" size=2>We explored many options with both the shareholder as well as the regulators, and this was deemed to be the best alternative
         to accomplish the necessary objective.  Given the illiquidity of our stock, we believed then and continue to believe that an
         attempt to dispose of this number of shares on the open market would only have served to depress the share value for all
         shareholders. And furthermore, we chose a note rather than a cash redemption in order to not limit access to our debt
         capital.<BR><BR></FONT></TD></TR>
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<TD width="15%"><FONT face="Times New Roman, Times, Serif" size=2>&nbsp;</FONT></TD>
<TD width="85%"><FONT face="Times New Roman, Times, Serif" size=2>Our actual funded debt, a term I will use to refer to our conventional debt facilities, increased by only $103 million, in
         spite of growing our asset base by $139 million.<BR><BR></FONT></TD></TR>
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<TR vAlign=top>
<TD width="15%"><FONT face="Times New Roman, Times, Serif" size=2>&nbsp;</FONT></TD>
<TD width="85%"><FONT face="Times New Roman, Times, Serif" size=2>The increase in total deferred revenues of nearly $27 million is primarily the result of the sale of the PSL program as
         well as the leasing of the new Finish Line suites at Churchill Downs.  As Tom referenced, no revenues were recorded in 2004
         either for the new suites or the PSLs, as they begin in 2005.  We did record revenues for the sale of the Jockey Club suites
         in 2004.<BR><BR></FONT></TD></TR>
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<TR vAlign=top>
<TD width="15%"><FONT face="Times New Roman, Times, Serif" size=2>&nbsp;</FONT></TD>
<TD width="85%"><FONT face="Times New Roman, Times, Serif" size=2>That concludes my remarks on the balance sheet, so next, I'll move to the consolidated earnings statements as well as
         the segment information.  Our total revenues increased by $19 million, or slightly over four percent from 2003 - $11.6
         million of this increase is due to the acquisition of the Fair Grounds, that acquisition being completed prior to
         commencement of its race meet on Thanksgiving Day.  All of our operating units experienced revenue growth except Hoosier
         Park, and the decline of that unit is primarily due to the reduction in riverboat subsidies of approximately $850,000 from
         '03 to '04.<BR><BR></FONT></TD></TR>
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<TD width="15%"><FONT face="Times New Roman, Times, Serif" size=2>&nbsp;</FONT></TD>
<TD width="85%"><FONT face="Times New Roman, Times, Serif" size=2>We were able to maintain gross profit margins at our operating units of approximately 17 percent in spite of the fact
         the operations at the Fair Grounds produced gross profit of only three percent for the short time that it was with our
         family in 2004.  You should know that this was fully anticipated and is not indicative of our view of operations going
         forward.  In recent history, this asset actually produced negative EBITDA, so we were fully aware at the time of acquisition
         that a turnaround was necessary.  We are very pleased with our operations to date, as well as the reception that we have
         received in Louisiana over the past several months.  In 2005, we actually expect to produce a pre-tax profit in spite of now
         anticipating no slot operations until 2006.<BR><BR></FONT></TD></TR>
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<TD width="15%"><FONT face="Times New Roman, Times, Serif" size=2>&nbsp;</FONT></TD>
<TD width="85%"><FONT face="Times New Roman, Times, Serif" size=2>The increase in our SG&amp;A expenses of $8.7 million is primarily the result of the $5.9 we expended in Florida and
         California on the referendums as well as approximately $800,000 in operating costs for our CRM initiative.  It is too soon
         to tell what the level of legislative costs may be in the future, but I will reiterate that we will continue to pursue
         alternative gaming vigorously and will not hesitate to make outlays as necessary.<BR><BR></FONT></TD></TR>
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<TD width="15%"><FONT face="Times New Roman, Times, Serif" size=2>&nbsp;</FONT></TD>
<TD width="85%"><FONT face="Times New Roman, Times, Serif" size=2>With respect to CRM, we expect this to become a profit center in '05 as these systems come online, as Tom mentioned.
         The asset impairment loss of $6.2 million at Ellis Park follows a similar charge of $4.5 million in 2002.  We are now
         confident that the current carrying value is fully supported by anticipated future cash flows from that unit, and you should
         also know that there is no longer any goodwill recorded on the books related to this operation.<BR><BR></FONT></TD></TR>
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<TD width="15%"><FONT face="Times New Roman, Times, Serif" size=2>&nbsp;</FONT></TD>
<TD width="85%"><FONT face="Times New Roman, Times, Serif" size=2>Moving on down the page, the unrealized loss on derivative instruments relates to the non-cash mark-to-market loss on
         the convertible promissory note previously discussed, necessitated by the terms of this note not complying with the
         requirements for conventional accounting treatment.  Subject to year-end, the terms were modified such that after the first
         quarter of 2005, there will no longer be a requirement for mark-to-market accounting and the cumulative loss recorded at
         that time which we currently estimate will be slightly in excess of $4 million, will be amortized into income over the
         remaining life of the note or approximately nine-and-a-half years.<BR><BR></FONT></TD></TR>
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<TD width="15%"><FONT face="Times New Roman, Times, Serif" size=2>&nbsp;</FONT></TD>
<TD width="85%"><FONT face="Times New Roman, Times, Serif" size=2>Included in the miscellaneous category in the P&amp;L is a $1.6 million gain realized from the sale of 19 of our 24 percent
         interest in Kentucky Downs, an asset that has lost money since its inception.  We continue to retain a five percent direct
         interest as well as an additional economic interest in this asset, should alternative gaming be allowed at Kentucky Downs in
         the next two years.<BR><BR></FONT></TD></TR>
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<TD width="15%"><FONT face="Times New Roman, Times, Serif" size=2>&nbsp;</FONT></TD>
<TD width="85%"><FONT face="Times New Roman, Times, Serif" size=2>Our effective tax rate of 61 percent is occasioned by the non-deductibility of various expenses, including the
         legislative costs, the unrealized derivatives loss, and a significant portion of the asset impairment.  At this point, it is
         difficult to accurately predict our effective tax rate for the future given the uncertainty of the level of legislative
         spending, but we should see a reduction back toward our historical rate of approximately 40 to 41 percent.<BR><BR></FONT></TD></TR>
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<TD width="15%"><FONT face="Times New Roman, Times, Serif" size=2>&nbsp;</FONT></TD>
<TD width="85%"><FONT face="Times New Roman, Times, Serif" size=2>Interest expense was up slightly from 2003, which stems from the increase in pricing related to our leverage levels,
         which increased to accommodate the purchase of the Fair Grounds as well as the continued Master Plan spending.  Our weighted
         average cost of borrowing at 12/31/04 on our revolving credit facility and our senior notes was four-and-a-half percent.<BR><BR></FONT></TD></TR>
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<TD width="15%"><FONT face="Times New Roman, Times, Serif" size=2>&nbsp;</FONT></TD>
<TD width="85%"><FONT face="Times New Roman, Times, Serif" size=2>Looking at our full-year results, comparing 2004 to 2003 is somewhat problematic as a result of the unusual items which
         we had in 2004.  As stated in the release, we estimate that the aggregate impact of these unusual items is 98 cents.  And in
         way of reminder, we began the year providing earnings guidance of $1.70.  I'll let you do the math, but we feel that given
         the accomplishments that Tom referenced, it is important to look beyond reported EPS in judging our performance for 2004 and
         in assessing what lies ahead.<BR><BR></FONT></TD></TR>
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<TD width="15%"><FONT face="Times New Roman, Times, Serif" size=2>&nbsp;</FONT></TD>
<TD width="85%"><FONT face="Times New Roman, Times, Serif" size=2>As further evidence of the strength of our financial performance, we produced in excess of $51 million of EBITDA for the
         year after absorbing a total of almost $15 million in what we are referring to as unusual items.  And I would also refer you
         to the segment information that's included in the release for reconciliation of EBITDA to net income.<BR><BR></FONT></TD></TR>
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<TD width="15%"><FONT face="Times New Roman, Times, Serif" size=2>&nbsp;</FONT></TD>
<TD width="85%"><FONT face="Times New Roman, Times, Serif" size=2>That concludes my remarks on the 2004 financials.  Next, I would like to address the two material weaknesses in internal
         controls, which we reported.  In no way do I diminish the importance of this or the degree of seriousness that we are
         attaching to it, but I do feel it is important to put them in context.<BR><BR></FONT></TD></TR>
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<TD width="15%"><FONT face="Times New Roman, Times, Serif" size=2>&nbsp;</FONT></TD>
<TD width="85%"><FONT face="Times New Roman, Times, Serif" size=2>First, as to the error in properly recording the liability for the supplemental benefit plan, this account itself is
         somewhat unique to Churchill.  We have very few accounts where such elements as actuarial data and assumed interest rates
         play a role in the calculation of a balance.  This liability has existed with the Company for many years, and we erroneously
         made the assumption that if the calculation had been consistently applied, which it had, and that if it was properly
         accounted for in the previous year, it must still be proper for the current year.<BR><BR></FONT></TD></TR>
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<TD width="15%"><FONT face="Times New Roman, Times, Serif" size=2>&nbsp;</FONT></TD>
<TD width="85%"><FONT face="Times New Roman, Times, Serif" size=2>Our failure was in making such an assumption, and you can rest assured that we now challenge the basis for all of our
         accounting assumptions currently.  Fortunately, the restatement from this error had no impact on the P&amp;Ls for 2002, 2003, or
         2004, and the liability is now such that normal accruals from this point forward will keep it in synch.  With our change in
         our internal procedures, we have eliminated this reported weakness.<BR><BR></FONT></TD></TR>
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<TD width="15%"><FONT face="Times New Roman, Times, Serif" size=2>&nbsp;</FONT></TD>
<TD width="85%"><FONT face="Times New Roman, Times, Serif" size=2>The second weakness related to our failure to obtain the proper assurances in the form of a Level 2 SAS 70 Report from
         the three tote companies with which we do business.  We have historically applied mitigating internal controls, and I have
         every confidence that our pari-mutuel revenues are properly stated for all periods presented.  That having been said,
         however, since tote information is the source data for the recording of the bulk of our revenues, not having this level of
         assurance is deemed to be a material weakness.<BR><BR></FONT></TD></TR>
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<TD width="15%"><FONT face="Times New Roman, Times, Serif" size=2>&nbsp;</FONT></TD>
<TD width="85%"><FONT face="Times New Roman, Times, Serif" size=2>All the tote companies have committed to providing the requisite assurances for 2005, which should eliminate this
         weakness.  And I would also remind you at this point, as Tom referenced, that CDI is the leader of a group of industry
         participants that is seeking a new tote solution for the industry, having recognized in the past that significant
         improvements are necessary both for security as well as for operational efficiency.<BR><BR></FONT></TD></TR>
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<TD width="15%"><FONT face="Times New Roman, Times, Serif" size=2>&nbsp;</FONT></TD>
<TD width="85%"><FONT face="Times New Roman, Times, Serif" size=2>The final area to be addressed this morning relates to our suspension of providing earnings guidance.  As you have just
         heard, we have just spent several minutes going over the various reasons that we revised guidance during 2004 and then still
         missed even that revised guidance at year-end.  We are operating under a strategic plan that calls for an aggressive
         approach to development activities, legislative and other strategic initiatives.  We are committed to taking a long-term
         view in returning the maximum value to our shareholders.<BR><BR></FONT></TD></TR>
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<TD width="15%"><FONT face="Times New Roman, Times, Serif" size=2>&nbsp;</FONT></TD>
<TD width="85%"><FONT face="Times New Roman, Times, Serif" size=2>Such an approach necessitates decision-making that is somewhat reactive to opportunities as they are presented, both the
         timing and impact of which is not readily determinable.  Giving guidance under such a fluid scenario is not only impractical
         but also potentially misleading as well as probably not being the best use of management's time.  We will continue to
         provide you with our racing calendar, changes in the statutory and regulatory front, development activities as they become
         tangible, and other significant changes in business trends.  We will also provide you with estimated levels of capital
         spending for our ongoing operations.  Beyond that, no guidance will be provided.<BR><BR></FONT></TD></TR>
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<TD width="15%"><FONT face="Times New Roman, Times, Serif" size=2>&nbsp;</FONT></TD>
<TD width="85%"><FONT face="Times New Roman, Times, Serif" size=2>That concludes my remarks, and I will now turn it back to the operator for your questions.<BR><BR></FONT></TD></TR>
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<TD width="15%"><FONT face="Times New Roman, Times, Serif" size=2>Operator:</FONT></TD>
<TD width="85%"><FONT face="Times New Roman, Times, Serif" size=2>Thank you, sir.  The question-and-answer session will be held electronically today.  If you'd like to ask a question,
         please do so by pressing the "star" key, followed by the digit "one" on your touch-tone telephone.  If you are joining us
         today using a speakerphone, please make sure that your mute function is turned off to allow your signal to reach our
         equipment.  Once again, that is "star," "one" on your touch-tone telephone if you do have any questions.  We'll pause for
         just one moment to allow everyone to signal for questions.<BR><BR></FONT></TD></TR>
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<TD width="15%"><FONT face="Times New Roman, Times, Serif" size=2>&nbsp;</FONT></TD>
<TD width="85%"><FONT face="Times New Roman, Times, Serif" size=2>From Davenport &amp; Co., we'll hear from George Smith.<BR><BR></FONT></TD></TR>
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<TD width="15%"><FONT face="Times New Roman, Times, Serif" size=2>George Smith:</FONT></TD>
<TD width="85%"><FONT face="Times New Roman, Times, Serif" size=2>Good morning.  I had a quick question pertaining to Florida.  With Broward and your peers there potentially having
         slot machines in the not too distant future, would you have to in any way tweak your operating strategy at Calder as to
         compete more effectively against that?<BR><BR></FONT></TD></TR>
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<TD width="15%"><FONT face="Times New Roman, Times, Serif" size=2>Tom Meeker:  </FONT></TD>
<TD width="85%"><FONT face="Times New Roman, Times, Serif" size=2>Well, the short answer is, "yes."  There is a cooperative spirit down there among the pari-mutuel operators that exists
         today as a result of our mutual efforts to pass these referendums, and I'm very hopeful that a number of things will be
         worked out in the short term and then ultimately in the long term.  But it is a new dynamic down there, as you've
         identified, that needs to be addressed.  And my hope is we'll be able to resolve that fairly quickly.<BR><BR></FONT></TD></TR>
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<TD width="15%"><FONT face="Times New Roman, Times, Serif" size=2>George Smith:  </FONT></TD>
<TD width="85%"><FONT face="Times New Roman, Times, Serif" size=2>It sounds like you're speaking more towards arrangements with peers that could offset the impact as, I guess, compared
         to things you could do from a property-specific standpoint, whether cost-containment efforts or adjustments to the racing
         schedule.  Or is it a combination thereof?<BR><BR></FONT></TD></TR>
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<TD width="15%"><FONT face="Times New Roman, Times, Serif" size=2>Tom Meeker:  </FONT></TD>
<TD width="85%"><FONT face="Times New Roman, Times, Serif" size=2>Well, I think we'll look at everything.  But you start off at the top line, and what we're going to try to do is in
         light of the current circumstances, there are a number of things we have to do - seek favorable legislation, ensure that the
         South Florida market is adequately served by racing venues that are synergistic, and clearly the operations at Calder help
         Gulfstream and vice versa in terms of horse population and a number of other factors.<BR><BR></FONT></TD></TR>
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<TD width="15%"><FONT face="Times New Roman, Times, Serif" size=2>&nbsp;</FONT></TD>
<TD width="85%"><FONT face="Times New Roman, Times, Serif" size=2>So I can't talk in any specifics, but I'm very confident that over the next two years, we will be able to rationalize
         the South Florida market among the pari-mutuel operators and accomplish something to our mutual benefit.<BR><BR></FONT></TD></TR>
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<TD width="15%"><FONT face="Times New Roman, Times, Serif" size=2>George Smith:  </FONT></TD>
<TD width="85%"><FONT face="Times New Roman, Times, Serif" size=2>OK.  And next, New York - do you have any - I know you have an interest in seeing New York prosper, but do you have an
         interest in being an owner or operator of facilities up there?  I know one of your peers has been pretty outspoken on that
         front, and I guess I'm wondering if your interest parallels theirs.<BR><BR></FONT></TD></TR>
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<TD width="15%"><FONT face="Times New Roman, Times, Serif" size=2>Tom Meeker:  </FONT></TD>
<TD width="85%"><FONT face="Times New Roman, Times, Serif" size=2>We don't make comments about our intent in terms of acquisitions.  Back up, though, we are concerned about the long-term
         - the longevity of New York racing - and we are actively involved with Friends of New York, we're funding Friends of New
         York, and we will continue to do so with a view towards rationalizing all of the issues that I identified earlier and making
         sure that New York racing still is on the map.<BR><BR></FONT></TD></TR>
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<TD width="15%"><FONT face="Times New Roman, Times, Serif" size=2>&nbsp;</FONT></TD>
<TD width="85%"><FONT face="Times New Roman, Times, Serif" size=2>It is a critical component for all of racing.  It is a primary market for our simulcast products. It is a primary market
         for breeding.  There are a number of things that make it an imperative for all of racing to be concerned about what's going
         on in the State of New York.  Whether or not we would ultimately be prepared to take an equity position or some sort of
         ownership position in a prospective franchise, I can't state.<BR><BR></FONT></TD></TR>
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<TD width="15%"><FONT face="Times New Roman, Times, Serif" size=2>George Smith:  </FONT></TD>
<TD width="85%"><FONT face="Times New Roman, Times, Serif" size=2>OK.  Last thing - I guess strategically longer-term, do you see yourself as a - as a buyer of additional tracks or
         would you prefer to work with and build out your current asset base?<BR><BR></FONT></TD></TR>
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<TD width="15%"><FONT face="Times New Roman, Times, Serif" size=2>Tom Meeker:  </FONT></TD>
<TD width="85%"><FONT face="Times New Roman, Times, Serif" size=2>Well, number one, we don't comment on what we're about to do in terms of acquisitions.  We are a racing company, racino
         kind of company.  We will continue to look at acquisitions with a view towards becoming more involved in racino operations
         and to fill out our portfolio of racing products for distribution into the simulcast market both domestically and
         internationally.  Our acquisition strategy will continue to be to absorb assets as we acquire them, get them within the
         bounds of our cost structure, make sure that they operate efficiently and effectively.  And that has been and will continue
         to be our focus in addition to targeting new assets.<BR><BR></FONT></TD></TR>
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<TD width="15%"><FONT face="Times New Roman, Times, Serif" size=2>George Smith:  </FONT></TD>
<TD width="85%"><FONT face="Times New Roman, Times, Serif" size=2>Well, all right.  Well, I guess - and this has nothing to do with your intentions but just a fact-based question -
         what historically in the industry has been sort of a normal multiple one pays for tracks?  You know, if you guys look back...<BR><BR></FONT></TD></TR>
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<TD width="15%"><FONT face="Times New Roman, Times, Serif" size=2>Tom Meeker:  </FONT></TD>
<TD width="85%"><FONT face="Times New Roman, Times, Serif" size=2>There is no such thing - there has been an element of irrationality over the last, let's say, five years in the market
         place as it relates to acquisitions of race tracks.  We have typically been at a seven to eight-and-a-half multiple range.
         That's where we have purchased.  But I would encourage you to go and look at some historical data, and you will see that
         there have been double-digit multiple acquisitions in the market.<BR><BR></FONT></TD></TR>
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<TD width="15%"><FONT face="Times New Roman, Times, Serif" size=2>George Smith:  </FONT></TD>
<TD width="85%"><FONT face="Times New Roman, Times, Serif" size=2>Thanks a lot.  Have a great day.<BR><BR></FONT></TD></TR>
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<TD width="15%"><FONT face="Times New Roman, Times, Serif" size=2>Tom Meeker:  </FONT></TD>
<TD width="85%"><FONT face="Times New Roman, Times, Serif" size=2>Sure.  Thank you.<BR><BR></FONT></TD></TR>
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<TD width="15%"><FONT face="Times New Roman, Times, Serif" size=2>Operator:  </FONT></TD>
<TD width="85%"><FONT face="Times New Roman, Times, Serif" size=2>Up next we'll hear from Tim Rice with Rice Voelker.<BR><BR></FONT></TD></TR>
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<TD width="15%"><FONT face="Times New Roman, Times, Serif" size=2>Tim Rice:  </FONT></TD>
<TD width="85%"><FONT face="Times New Roman, Times, Serif" size=2>Good morning.<BR><BR></FONT></TD></TR>
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<TD width="15%"><FONT face="Times New Roman, Times, Serif" size=2>Tom Meeker:  </FONT></TD>
<TD width="85%"><FONT face="Times New Roman, Times, Serif" size=2>How are you, Tim?<BR><BR></FONT></TD></TR>
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<TD width="15%"><FONT face="Times New Roman, Times, Serif" size=2>Tim Rice:  </FONT></TD>
<TD width="85%"><FONT face="Times New Roman, Times, Serif" size=2>First question relates to Hollywood.  I know you don't want to comment on what your alternatives are, but just ...<BR><BR></FONT></TD></TR>
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<TD width="15%"><FONT face="Times New Roman, Times, Serif" size=2>Tom Meeker:  </FONT></TD>
<TD width="85%"><FONT face="Times New Roman, Times, Serif" size=2>You're a smart guy.<BR><BR></FONT></TD></TR>
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<TD width="15%"><FONT face="Times New Roman, Times, Serif" size=2>Tim Rice: </FONT></TD>
<TD width="85%"><FONT face="Times New Roman, Times, Serif" size=2>...but just a technical or legal question, I guess.  Are those dates your property to - should you elect to - could you use
         those dates at another location and/or could you actually sell those dates?  Are they yours - are they your property -is my
         question.<BR><BR></FONT></TD></TR>
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<TD width="15%"><FONT face="Times New Roman, Times, Serif" size=2>Tom Meeker:  </FONT></TD>
<TD width="85%"><FONT face="Times New Roman, Times, Serif" size=2>Dates in most jurisdictions are granted on a year-to-year basis.<BR><BR></FONT></TD></TR>
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<TD width="15%"><FONT face="Times New Roman, Times, Serif" size=2>Tim Rice:  </FONT></TD>
<TD width="85%"><FONT face="Times New Roman, Times, Serif" size=2>OK.  Second question relates to the international distribution.  I know you struck an agreement to begin sending the
         Churchill signal some Western European locations.  Can you talk at all about what the distribution level of that is right
         now?  I mean whom you're reaching?  Or ...<BR><BR></FONT></TD></TR>
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<TD width="15%"><FONT face="Times New Roman, Times, Serif" size=2>Tom Meeker:  </FONT></TD>
<TD width="85%"><FONT face="Times New Roman, Times, Serif" size=2>No, we've entered into a joint venture agreement with Magna for distributions in the U.K. as well as on the continent,
         and we really haven't gotten much done as of yet.  But the potential lies that we will get some fairly good distribution,
         hopefully in 2005.  The joint venture with Magna is an important tactic that we have undertaken as well as Magna because we
         believe and we will continue to believe that scaling up of the portfolio is an imperative to get into the international
         marketplace.  It is much more efficient.  It provides a much more attractive product throughout the calendar year.<BR><BR></FONT></TD></TR>
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<TD width="15%"><FONT face="Times New Roman, Times, Serif" size=2>&nbsp;</FONT></TD>
<TD width="85%"><FONT face="Times New Roman, Times, Serif" size=2>And the other critical component is that there is product not only throughout the year day-to-day, but just as
         important, within various time zones.  As you well know, there are changes in legislation in the U.K., which will allow the
         bet shops to be open, I think, until 10:30 or 11:00 at night, which opens up an entirely new market in the U.K.  And, it is
         imperative that U.S. racing access that market.  It is a great opportunity for U.S. racing.  And our arrangement with Magna,
         our joint venture, is aimed towards doing just that.<BR><BR></FONT></TD></TR>
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<TD width="15%"><FONT face="Times New Roman, Times, Serif" size=2>Tim Rice:  </FONT></TD>
<TD width="85%"><FONT face="Times New Roman, Times, Serif" size=2>And one question - in your Fair Grounds acquisition, you also acquired an online betting and telephone betting service.
         Is it your intention to grow that, to close it down, to keep it the way it is?  Can you - can you comment about your
         intentions there?<BR><BR></FONT></TD></TR>
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<TD width="15%"><FONT face="Times New Roman, Times, Serif" size=2>Tom Meeker: </FONT></TD>
<TD width="85%"><FONT face="Times New Roman, Times, Serif" size=2>We're going to leave that the way it is.<BR><BR></FONT></TD></TR>
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<TD width="15%"><FONT face="Times New Roman, Times, Serif" size=2>Tim Rice: </FONT></TD>
<TD width="85%"><FONT face="Times New Roman, Times, Serif" size=2>OK, thanks very much.<BR><BR></FONT></TD></TR>
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<TD width="15%"><FONT face="Times New Roman, Times, Serif" size=2>Operator:  </FONT></TD>
<TD width="85%"><FONT face="Times New Roman, Times, Serif" size=2>And as a reminder to the audience, it is "star," "one" on your touch-tone telephone if you do have any questions.  From CL
         King, we'll hear from Ryan Worst.<BR><BR></FONT></TD></TR>
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<TD width="15%"><FONT face="Times New Roman, Times, Serif" size=2>Ryan Worst: </FONT></TD>
<TD width="85%"><FONT face="Times New Roman, Times, Serif" size=2>Good morning.<BR><BR></FONT></TD></TR>
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<TD width="15%"><FONT face="Times New Roman, Times, Serif" size=2>Tom Meeker:  </FONT></TD>
<TD width="85%"><FONT face="Times New Roman, Times, Serif" size=2>Good morning, Ryan.<BR><BR></FONT></TD></TR>
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<TD width="15%"><FONT face="Times New Roman, Times, Serif" size=2>Mike Miller:  </FONT></TD>
<TD width="85%"><FONT face="Times New Roman, Times, Serif" size=2>Good morning, Ryan.<BR><BR></FONT></TD></TR>
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<TD width="15%"><FONT face="Times New Roman, Times, Serif" size=2>Ryan Worst:  </FONT></TD>
<TD width="85%"><FONT face="Times New Roman, Times, Serif" size=2>Mike, could you talk about the spending that you guys did in '04 at both - for legislative purposes at both Hollywood
         and Calder, just so we know what that is?<BR><BR></FONT></TD></TR>
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<TD width="15%"><FONT face="Times New Roman, Times, Serif" size=2>Mike Miller:  </FONT></TD>
<TD width="85%"><FONT face="Times New Roman, Times, Serif" size=2>Well, the total was $5.9 million.  The breakdown, I believe, was about $2.4 million in California and the balance being
         in Florida.<BR><BR></FONT></TD></TR>
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<TD width="15%"><FONT face="Times New Roman, Times, Serif" size=2>Ryan Worst:  </FONT></TD>
<TD width="85%"><FONT face="Times New Roman, Times, Serif" size=2>OK.  And what about your CRM initiatives?  Do you have a number for that, as well?  I'm sorry if I missed that.<BR><BR></FONT></TD></TR>
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<TD width="15%"><FONT face="Times New Roman, Times, Serif" size=2>Mike Miller:  </FONT></TD>
<TD width="85%"><FONT face="Times New Roman, Times, Serif" size=2>No, we didn't provide a number.  We've spoken in the past that we expect the total capital spend for CRM to range
         between $6 and $8 million.  And during the year of 2004, our operating expenses related to that - non-capital - were about
         $800,000.<BR><BR></FONT></TD></TR>
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<TD width="15%"><FONT face="Times New Roman, Times, Serif" size=2>Ryan Worst:  </FONT></TD>
<TD width="85%"><FONT face="Times New Roman, Times, Serif" size=2>OK.  And ...<BR><BR></FONT></TD></TR>
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<TD width="15%"><FONT face="Times New Roman, Times, Serif" size=2>Mike Miller:  </FONT></TD>
<TD width="85%"><FONT face="Times New Roman, Times, Serif" size=2>That capital has been spent over the past, let's say, 24 months.<BR><BR></FONT></TD></TR>
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<TD width="15%"><FONT face="Times New Roman, Times, Serif" size=2>Ryan Worst:  </FONT></TD>
<TD width="85%"><FONT face="Times New Roman, Times, Serif" size=2>OK.  And then, also, in regards to your CRM initiatives, you spoke about new customer interface technology.  Could you
         provide some more details on that as far as, you know, what that exactly is, the supplier of that technology, and what the
         rollout looks like?<BR><BR></FONT></TD></TR>
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<TD width="15%"><FONT face="Times New Roman, Times, Serif" size=2>Tom Meeker: </FONT></TD>
<TD width="85%"><FONT face="Times New Roman, Times, Serif" size=2>We've got Andy Skehan, our chief operating officer, who can address that generally.<BR><BR></FONT></TD></TR>
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<TD width="15%"><FONT face="Times New Roman, Times, Serif" size=2>Andy Skehan:  </FONT></TD>
<TD width="85%"><FONT face="Times New Roman, Times, Serif" size=2>Sure, Ryan.  We are calling it our IWP - Interactive Wagering Platform.  And I don't know if you've been to any, I'll
         say, sport arenas recently.  Opera Glass - that was the name of the system that had been used, I think, in Madison Square
         Garden and had been demonstrated at some Super Bowls. It's a touch-screen sort of platform where you'll be able to wager
         through, access the Internet through, order food and beverage from.<BR><BR></FONT></TD></TR>
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<TD width="15%"><FONT face="Times New Roman, Times, Serif" size=2>&nbsp;</FONT></TD>
<TD width="85%"><FONT face="Times New Roman, Times, Serif" size=2>We'll have it tied into our real-time advisor analytics platform that will be able to do suggestive selling with respect
         to all sorts of products, everything from wagering to food and beverage to merchandise.  It's just an all-in-one type
         platform that initially will be in the premium boxes here in some of the suites, and then we'll also have a wireless version
         of it, as well.<BR><BR></FONT></TD></TR>
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<TD width="15%"><FONT face="Times New Roman, Times, Serif" size=2>Ryan Worst:  </FONT></TD>
<TD width="85%"><FONT face="Times New Roman, Times, Serif" size=2>OK, and is it going to be rolled out to other tracks as well as Churchill?<BR><BR></FONT></TD></TR>
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<TD width="15%"><FONT face="Times New Roman, Times, Serif" size=2>Andy Skehan:  </FONT></TD>
<TD width="85%"><FONT face="Times New Roman, Times, Serif" size=2>That's our intent.  Just like every new technology, we're going to go ahead and implement it on a limited basis, and
         then once we get the kinks worked out, we'll go ahead and expand it.<BR><BR></FONT></TD></TR>
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<TD width="15%"><FONT face="Times New Roman, Times, Serif" size=2>Ryan Worst:  </FONT></TD>
<TD width="85%"><FONT face="Times New Roman, Times, Serif" size=2>And is that technology that you guys came up with yourselves or are you buying that from someone?<BR><BR></FONT></TD></TR>
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<TD width="15%"><FONT face="Times New Roman, Times, Serif" size=2>Andy Skehan:  </FONT></TD>
<TD width="85%"><FONT face="Times New Roman, Times, Serif" size=2>It's actually technology we're developing in concert with a couple of partners, so we've initiated the effort.  It's
         proprietary, and obviously our tote provider is involved in it because of the wagering interface.<BR><BR></FONT></TD></TR>
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<TD width="15%"><FONT face="Times New Roman, Times, Serif" size=2>Ryan Worst:  </FONT></TD>
<TD width="85%"><FONT face="Times New Roman, Times, Serif" size=2>Right.  Also, on a different topic, you talked about aggressively reshaping the tote.  Is there any opportunity that you
         see as far as the account wagering segment of the industry?<BR><BR></FONT></TD></TR>
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<TD width="15%"><FONT face="Times New Roman, Times, Serif" size=2>Tom Meeker:  </FONT></TD>
<TD width="85%"><FONT face="Times New Roman, Times, Serif" size=2>Yes, there are a couple of things. Number one, and I won't make a big long speech about this, but the tote is archaic.
It's dinosauric.  We have some 48 hubs operating within the United States.  Visa, for instance, probably in one nanosecond processes
as many track transactions as we do for the whole year.  We have a system that has a dedicated customer interface.<BR><BR></FONT></TD></TR>
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<TD width="15%"><FONT face="Times New Roman, Times, Serif" size=2>&nbsp;</FONT></TD>
<TD width="85%"><FONT face="Times New Roman, Times, Serif" size=2>That is to say if you have a United tote system, the customer interface, be it an attended machine, self-serve machine,
         or some other device, has to be a United tote or interface with the peculiarities of the United tote.  Unlike a casino, you
         can't go on the floor and see multiple vendors producing customer interfaces.  If you go on a casino floor, there may be 10
         different vendors with machines there that are connected to the central processing unit.  So that's number one.<BR><BR></FONT></TD></TR>
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<TD width="15%"><FONT face="Times New Roman, Times, Serif" size=2>&nbsp;</FONT></TD>
<TD width="85%"><FONT face="Times New Roman, Times, Serif" size=2>Number two is the issue of security, which abounds in our business.  The tote is a key component to our overall
         business, and we have to make sure, not only for our internal controls, but more important for the integrity of our product
         to make sure that we have a secure system.<BR><BR></FONT></TD></TR>
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<TD width="15%"><FONT face="Times New Roman, Times, Serif" size=2>&nbsp;</FONT></TD>
<TD width="85%"><FONT face="Times New Roman, Times, Serif" size=2>The third thing is improving customer satisfaction and customer service. We need to get systems where we can retrieve
         customer information from our tote to develop products and services that are responsive to the customer needs.  And
         additionally, we need a system that will allow the customer to maintain a single account - and this is direct to your
         specific question - a single account.  While he or she may choose to wager over various platforms, there is no need for a
         customer to have to maintain three or four accounts because he or she is betting across YOUBET, TVG, New York Racing - you
         know, all of these accounts.  And a new system has to be capable of doing that.<BR><BR></FONT></TD></TR>
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<TD width="15%"><FONT face="Times New Roman, Times, Serif" size=2>&nbsp;</FONT></TD>
<TD width="85%"><FONT face="Times New Roman, Times, Serif" size=2>And among the group that we have formed with Magna, New Jersey, New York, and Woodbine, we have designed some general
         specifications and are prepared to go out into the industry and see if we can get a system that is much more efficient, much
         more responsive to our customers' needs, and finally, is secure.  And with that in mind, hopefully, as I mentioned earlier,
         we will be able to get something done in 2005 which will be the platform for a major transformational change within the
         industry.<BR><BR></FONT></TD></TR>
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<TD width="15%"><FONT face="Times New Roman, Times, Serif" size=2>Ryan Worst:  </FONT></TD>
<TD width="85%"><FONT face="Times New Roman, Times, Serif" size=2>OK, my other part of that question also had to do with account wagering.  And, you know, do you see any opportunity to,
         you know, gain more control and possibly improve the profitability on that side of the business?<BR><BR></FONT></TD></TR>
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<TD width="15%"><FONT face="Times New Roman, Times, Serif" size=2>Tom Meeker:  </FONT></TD>
<TD width="85%"><FONT face="Times New Roman, Times, Serif" size=2>Well, absolutely.  For instance, if we can take on the output side of the tote -we can identify customers and then be
         able to communicate to those customers. Given the fact that some 85 percent of our total handle comes from a simulcast
         operation, be it account wagering or point-to-point simulcasting, 85 percent - let's assume that it's just a general number
         - 85 percent of your customers you don't see.<BR><BR></FONT></TD></TR>
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<TD width="15%"><FONT face="Times New Roman, Times, Serif" size=2>&nbsp;</FONT></TD>
<TD width="85%"><FONT face="Times New Roman, Times, Serif" size=2>And so we have to develop systems and products that are responsive to a group of customers that ordinarily we don't
         see.  And the tote system today doesn't allow us to do that.  And in many respects, as it relates to both security and
         customer interface, we have trouble identifying who's on the system, and that is a very, very difficult, difficult
         proposition.<BR><BR></FONT></TD></TR>
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<TD width="15%"><FONT face="Times New Roman, Times, Serif" size=2>Ryan Worst:  </FONT></TD>
<TD width="85%"><FONT face="Times New Roman, Times, Serif" size=2>OK.  And then, Tom, just another question on the performance of Calder, revenues were up pretty strong in the fourth
         quarter.  You know, what do you attribute that to?  Was there any one-time issues there?  And the same question concerning
         Hollywood Park and the margins at that property.  Seems to - seemed to improve a lot in the fourth quarter.  Were there any
         one-time issues?<BR><BR></FONT></TD></TR>
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<TD width="15%"><FONT face="Times New Roman, Times, Serif" size=2>Tom Meeker:  </FONT></TD>
<TD width="85%"><FONT face="Times New Roman, Times, Serif" size=2>Well, again, I think there is nothing significant, but I think it manifests a couple of things.  Again, as we have
         acquired these tracks, we've put a lot of effort into our cost structure and maintaining our cost structure - managing that
         properly.<BR><BR></FONT></TD></TR>
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<TD width="15%"><FONT face="Times New Roman, Times, Serif" size=2>&nbsp;</FONT></TD>
<TD width="85%"><FONT face="Times New Roman, Times, Serif" size=2> Number two, we've executed on a number of initiatives at the operational unit level, including the marquis event days.
         And a good example of that is just recently down in Louisiana where we consolidate stakes races on a major day, which we've
         done out in California, we've done at Calder.  Calder has actually taken the lead in that.  But, you know, this weekend we
         had, I think, it was four stakes races down at Louisiana.  We set every record there was to set down there.  Terrific
         attendance, and both on-track and simulcast handles were up significantly.<BR><BR></FONT></TD></TR>
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<TD width="15%"><FONT face="Times New Roman, Times, Serif" size=2>&nbsp;</FONT></TD>
<TD width="85%"><FONT face="Times New Roman, Times, Serif" size=2>And it reflects, I think, a conclusion that all of racing has to make - and that is if you develop a fun day at the
         track that showcases quality racing, the fans will respond.  And so that strategy, which has been in place both at Calder
         and at Hollywood Park for the last two years, I think helped spur top-line growth.<BR><BR></FONT></TD></TR>
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<TD width="15%"><FONT face="Times New Roman, Times, Serif" size=2>Mike Miller:  </FONT></TD>
<TD width="85%"><FONT face="Times New Roman, Times, Serif" size=2>Ryan, I would point out that at Hollywood, we had six more race days in '04 than we had in '03, and they all occurred
         in the fourth quarter, and that obviously has an impact on revenues as well as operating margins.<BR><BR></FONT></TD></TR>
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<TD width="15%"><FONT face="Times New Roman, Times, Serif" size=2>Ryan Worst:  </FONT></TD>
<TD width="85%"><FONT face="Times New Roman, Times, Serif" size=2>OK, great.  Thank you.<BR><BR></FONT></TD></TR>
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<TD width="15%"><FONT face="Times New Roman, Times, Serif" size=2>Operator:  </FONT></TD>
<TD width="85%"><FONT face="Times New Roman, Times, Serif" size=2>As a final reminder to the audience, it is star, one on your touch-tone telephone if you do have any questions.  And we'll
         pause for just a moment.<BR><BR></FONT></TD></TR>
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<TD width="15%"><FONT face="Times New Roman, Times, Serif" size=2>&nbsp;</FONT></TD>
<TD width="85%"><FONT face="Times New Roman, Times, Serif" size=2>From Hilliard Lyons, we'll hear from Jeffrey Thomison.<BR><BR></FONT></TD></TR>
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<TD width="15%"><FONT face="Times New Roman, Times, Serif" size=2>Jeffrey Thomison:  </FONT></TD>
<TD width="85%"><FONT face="Times New Roman, Times, Serif" size=2>Good morning.<BR><BR></FONT></TD></TR>
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<TD width="15%"><FONT face="Times New Roman, Times, Serif" size=2>Tom Meeker:  </FONT></TD>
<TD width="85%"><FONT face="Times New Roman, Times, Serif" size=2>Hi, Jeff.<BR><BR></FONT></TD></TR>
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<TD width="15%"><FONT face="Times New Roman, Times, Serif" size=2>Mike Miller:  </FONT></TD>
<TD width="85%"><FONT face="Times New Roman, Times, Serif" size=2>Hi, Jeff.<BR><BR></FONT></TD></TR>
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<TD width="15%"><FONT face="Times New Roman, Times, Serif" size=2>Jeffrey Thomison:  </FONT></TD>
<TD width="85%"><FONT face="Times New Roman, Times, Serif" size=2>Mike, just a quick confirmation of a comment that you made earlier - I believe you made.  Your company has a lot
         on its plate for '05.  Was your basic comment was that you expected on an annual basis a pre-tax profit for the company?<BR><BR></FONT></TD></TR>
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<TD width="15%"><FONT face="Times New Roman, Times, Serif" size=2>Mike Miller:  </FONT></TD>
<TD width="85%"><FONT face="Times New Roman, Times, Serif" size=2>No, I was talking about the Fair Grounds track.<BR><BR></FONT></TD></TR>
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<TD width="15%"><FONT face="Times New Roman, Times, Serif" size=2>Jeffrey Thomison:  </FONT></TD>
<TD width="85%"><FONT face="Times New Roman, Times, Serif" size=2>OK.<BR><BR></FONT></TD></TR>
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<TD width="15%"><FONT face="Times New Roman, Times, Serif" size=2>Mike Miller:  </FONT></TD>
<TD width="85%"><FONT face="Times New Roman, Times, Serif" size=2>That was what it had done historically and what we expected in '05.<BR><BR></FONT></TD></TR>
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<TD width="15%"><FONT face="Times New Roman, Times, Serif" size=2>Jeffrey Thomison:  </FONT></TD>
<TD width="85%"><FONT face="Times New Roman, Times, Serif" size=2>OK.  And you did not make a qualitative comment about the company's profitability in '05?<BR><BR></FONT></TD></TR>
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<TD width="15%"><FONT face="Times New Roman, Times, Serif" size=2>Mike Miller:  </FONT></TD>
<TD width="85%"><FONT face="Times New Roman, Times, Serif" size=2>Did not.<BR><BR></FONT></TD></TR>
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<TD width="15%"><FONT face="Times New Roman, Times, Serif" size=2>Jeffrey Thomison:  </FONT></TD>
<TD width="85%"><FONT face="Times New Roman, Times, Serif" size=2>OK.  And then secondly, on your Churchill Downs facility, as you prepare for a very key race meet for your
         company, would you consider the track to be 100 percent done in terms of Master Plan or will there be something for the
         Spring '06 meet that will not be in the Spring '05 meet?<BR><BR></FONT></TD></TR>
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<TD width="15%"><FONT face="Times New Roman, Times, Serif" size=2>Tom Meeker:  </FONT></TD>
<TD width="85%"><FONT face="Times New Roman, Times, Serif" size=2>No, we have some minor work to be done in renovating some of the existing box areas - not significant at all - that will
         be completed following the spring race meet.<BR><BR></FONT></TD></TR>
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<TD width="15%"><FONT face="Times New Roman, Times, Serif" size=2>Jeffrey Thomison:  </FONT></TD>
<TD width="85%"><FONT face="Times New Roman, Times, Serif" size=2>OK, so you would ...<BR><BR></FONT></TD></TR>
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<TD width="15%"><FONT face="Times New Roman, Times, Serif" size=2>Tom Meeker:  </FONT></TD>
<TD width="85%"><FONT face="Times New Roman, Times, Serif" size=2>But it will be substantially complete.  The new areas, approximately 400,000 square feet of new facility, will be opened
         in all respects for this year's Derby, complemented by the Jockey Club suites over the grandstand, which we actually had in
         use one floor two years ago, the whole facility last year, and then it, together with the new facility, will be open this
         year.<BR><BR></FONT></TD></TR>
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<TD width="15%"><FONT face="Times New Roman, Times, Serif" size=2>Jeffrey Thomison:  </FONT></TD>
<TD width="85%"><FONT face="Times New Roman, Times, Serif" size=2>And then, just lastly, with the, you know, Wednesday, Thursday, and Friday before Derby seemingly getting bigger
         each year, are you allocating more resources in terms of, you know, marketing and advertising or is it just happening by
         itself with local interest?<BR><BR></FONT></TD></TR>
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<TD width="15%"><FONT face="Times New Roman, Times, Serif" size=2>Tom Meeker: </FONT></TD>
<TD width="85%"><FONT face="Times New Roman, Times, Serif" size=2>No, it hasn't happened by itself, and this has been a long-term strategy and you can see it in the way we have developed
         our racing program, first, by aggregating stakes - and this goes back maybe 15 years - by aggregating stakes on Derby Day.
         And then subsequently about 10 years ago, we started with the Oaks - started to develop that day to a point where now
         there's a 105,000 people that come out for the Oaks.<BR><BR></FONT></TD></TR>
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<TD width="15%"><FONT face="Times New Roman, Times, Serif" size=2>&nbsp;</FONT></TD>
<TD width="85%"><FONT face="Times New Roman, Times, Serif" size=2>We're now concentrating on Thursday - bolstering that stakes schedule, booking more events on that day, opening the
         infield and all of those things that provide us growth opportunities.  And our focus will continue with the ultimate
         objective of having a racing week - Derby Week - which is second to none.  Right now we have the two top days in racing with
         the Derby and the Oaks.  Thursday is going very well.  We're growing that.  And hopefully over time - maybe beyond the time
         I'm here - but over time, we'll grow into Wednesday.<BR><BR></FONT></TD></TR>
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<TD width="15%"><FONT face="Times New Roman, Times, Serif" size=2>Jeffrey Thomison:  </FONT></TD>
<TD width="85%"><FONT face="Times New Roman, Times, Serif" size=2>And what type of televised coverage would you expect for any of those days in terms of your race product?<BR><BR></FONT></TD></TR>
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<TD width="15%"><FONT face="Times New Roman, Times, Serif" size=2>Tom Meeker:  </FONT></TD>
<TD width="85%"><FONT face="Times New Roman, Times, Serif" size=2>hat's to be determined.  I mean Oaks Day, we've got a full television schedule on Oaks Day.  Thursday, I would hope in
         the next couple years, we'll pick up -more likely than not - it'll be ESPN coverage cable coverage.<BR><BR></FONT></TD></TR>
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T
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<TD width="15%"><FONT face="Times New Roman, Times, Serif" size=2>Jeffrey Thomison:  </FONT></TD>
<TD width="85%"><FONT face="Times New Roman, Times, Serif" size=2>OK.  Well, let's hope for good weather this year.<BR><BR></FONT></TD></TR>
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<TD width="15%"><FONT face="Times New Roman, Times, Serif" size=2>Tom Meeker:  </FONT></TD>
<TD width="85%"><FONT face="Times New Roman, Times, Serif" size=2>Please.<BR><BR></FONT></TD></TR>
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<TD width="15%"><FONT face="Times New Roman, Times, Serif" size=2>Mike Miller:  </FONT></TD>
<TD width="85%"><FONT face="Times New Roman, Times, Serif" size=2>Jeff, I want to just add something to what Tom said about the Master Plan.  In terms of the facilities and the capital
         spend, I mean everything will be done.  But given the fact that we're about to occupy 400,000 feet of new space, I have to
         believe  we won't be as efficient this year as we will in  2006 and subsequently.<BR><BR></FONT></TD></TR>
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<TD width="15%"><FONT face="Times New Roman, Times, Serif" size=2>Jeffrey Thomison:  </FONT></TD>
<TD width="85%"><FONT face="Times New Roman, Times, Serif" size=2>Right.  Good point.  Thanks.<BR><BR></FONT></TD></TR>
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<TD width="15%"><FONT face="Times New Roman, Times, Serif" size=2>Operator:  </FONT></TD>
<TD width="85%"><FONT face="Times New Roman, Times, Serif" size=2>And at this time, gentlemen, there appear to be no further questions.  I'll turn the conference back over to you, Mr.
         Meeker, for any closing remarks.<BR><BR></FONT></TD></TR>
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<TD width="15%"><FONT face="Times New Roman, Times, Serif" size=2>Tom Meeker:  </FONT></TD>
<TD width="85%"><FONT face="Times New Roman, Times, Serif" size=2>Well, again, thank you very much for joining us this morning.  We appreciate your attention, and more important, I can
         assure you we're looking forward to a terrific year in 2005 with the events that are occurring here at Churchill Downs, as
         well as at our other facilities, and look forward to chatting with you in about three months.  Thank you.<BR><BR></FONT></TD></TR>
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<TD width="15%"><FONT face="Times New Roman, Times, Serif" size=2>Operator: </FONT></TD>
<TD width="85%"><FONT face="Times New Roman, Times, Serif" size=2>That does conclude our teleconference for today.  We'd like to thank you all for your participation.  You may now all
         disconnect.<BR><BR></FONT></TD></TR>
</TABLE>



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