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Segment Information | 6 Months Ended
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Jun. 30, 2014
Segment Reporting [Abstract] |
Segment Information | NOTE 11 — SEGMENT INFORMATION The Company operates in the following four segments: (1) Racing Operations, which includes Churchill Downs, Arlington International Race Course ("Arlington") and its eleven off-track betting facilities ("OTBs"), Calder Race Course ("Calder") and Fair Grounds Race Course ("Fair Grounds") and the pari-mutuel activity generated at its twelve OTBs; (2) Gaming, which includes video poker and gaming operations at Calder Casino, Fair Grounds Slots, Harlow’s Casino Resort & Spa ("Harlow's"), the Company's equity investment in MVG, Oxford, Riverwalk Casino Hotel ("Riverwalk") and Video Services, LLC (“VSI”); (3) Online Business, which includes TwinSpires, our Advance Deposit Wagering (“ADW”) business, Fair Grounds Account Wagering, Bloodstock Research Information Services, Velocity, a business focused on high wagering-volume international customers and Luckity, an ADW business that offers real-money Bingo online with outcomes based on and determined by pari-mutuel wagers on live horseraces, as well as the Company's equity investment in HRTV, LLC; and (4) Other Investments, which includes United Tote, Bluff Media and the Company's other minor investments. Eliminations include the elimination of intersegment transactions. On January 1, 2014, the Company reclassified its equity investment in MVG from Other Investments to Gaming, to coincide with the first full period of operations for the venture, which opened on December 12, 2013. MVG's results of operations for the three and six months ended June 30, 2013 have been reclassified to the Gaming segment. In order to evaluate the performance of these operating segments internally, the Company uses Adjusted EBITDA (defined as earnings before interest, taxes, depreciation, amortization, insurance recoveries net of losses, HRE Trust Fund proceeds, share-based compensation expenses, pre-opening expenses, the impairment of assets and other charges or recoveries). Adjusted EBITDA also includes 50% of the operating income or loss of our joint venture, MVG. The Company utilizes the Adjusted EBITDA metric because it believes the inclusion or exclusion of certain recurring and non-recurring items is necessary to provide a more accurate measure of its core operating results and enables management and investors to evaluate and compare from period to period our operating performance in a meaningful and consistent manner. Adjusted EBITDA should not be considered as an alternative to operating income as an indicator of performance, as an alternative to cash flows from operating activities as a measure of liquidity, or as an alternative to any other measure provided in accordance with GAAP. The Company's calculation of Adjusted EBITDA may be different from the calculation used by other companies and, therefore, comparability may be limited. The Company implemented the Adjusted EBITDA measure during the second quarter of 2013. The table below presents information about the reported segments for the three and six months ended June 30, 2014 and 2013 (in thousands):
| Three Months Ended June 30, |  | Six Months Ended June 30,
| 2014 |  | 2013 |  | 2014 |  | 2013
Net revenues from external customers: |  |  |  |  |  |  |
Churchill Downs | $ | 118,348 |  |  | $ | 108,278 |  |  | $ | 120,490 |  |  | $ | 110,578 |
Arlington | 21,193 |  |  | 22,006 |  |  | 27,315 |  |  | 29,247 |
Calder | 9,714 |  |  | 17,031 |  |  | 17,738 |  |  | 19,311 |
Fair Grounds | 10,180 |  |  | 10,072 |  |  | 24,471 |  |  | 26,064 |
Total Racing Operations | 159,435 |  |  | 157,387 |  |  | 190,014 |  |  | 185,200 |
Calder Casino | 19,873 |  |  | 20,466 |  |  | 40,456 |  |  | 40,952 |
Fair Grounds Slots | 9,586 |  |  | 9,978 |  |  | 21,370 |  |  | 22,342 |
VSI | 8,658 |  |  | 9,245 |  |  | 17,581 |  |  | 19,006 |
Harlow's Casino | 11,777 |  |  | 13,097 |  |  | 26,228 |  |  | 28,451 |
Oxford Casino | 19,402 |  |  | — |  |  | 36,921 |  |  | — |
Riverwalk Casino | 12,662 |  |  | 14,101 |  |  | 25,957 |  |  | 28,225 |
Total Gaming | 81,958 |  |  | 66,887 |  |  | 168,513 |  |  | 138,976 |
Online Business | 57,076 |  |  | 52,531 |  |  | 103,160 |  |  | 95,447 |
Other Investments | 4,778 |  |  | 6,371 |  |  | 8,615 |  |  | 11,273 |
Corporate | 404 |  |  | 418 |  |  | 659 |  |  | 574 |
Net revenues from external customers | $ | 303,651 |  |  | $ | 283,594 |  |  | $ | 470,961 |  |  | $ | 431,470 |
Intercompany net revenues: |  |  |  |  |  |  |
Churchill Downs | $ | 4,945 |  |  | $ | 4,607 |  |  | $ | 5,173 |  |  | $ | 4,796 |
Arlington | 1,777 |  |  | 903 |  |  | 2,794 |  |  | 1,040 |
Calder | 351 |  |  | 492 |  |  | 707 |  |  | 505 |
Fair Grounds | (3 | ) |  | — |  |  | 729 |  |  | 833 |
Total Racing Operations | 7,070 |  |  | 6,002 |  |  | 9,403 |  |  | 7,174 |
Online Business | 244 |  |  | 233 |  |  | 474 |  |  | 446 |
Other Investments | 1,210 |  |  | 1,348 |  |  | 2,108 |  |  | 2,250 |
Eliminations | (8,524 | ) |  | (7,583 | ) |  | (11,985 | ) |  | (9,870 | )
Net revenues | $ | — |  |  | $ | — |  |  | $ | — |  |  | $ | — |
Reconciliation of segment Adjusted EBITDA to net earnings: |  |  |  |  |  |  |
Racing Operations | $ | 78,079 |  |  | $ | 70,517 |  |  | $ | 67,829 |  |  | $ | 59,260 |
Gaming | 26,174 |  |  | 19,365 |  |  | 53,425 |  |  | 41,292 |
Online Business | 14,087 |  |  | 14,091 |  |  | 24,037 |  |  | 25,426 |
Other Investments | (673 | ) |  | 920 |  |  | (2,026 | ) |  | 1,229 |
Total segment Adjusted EBITDA | 117,667 |  |  | 104,893 |  |  | 143,265 |  |  | 127,207 |
Corporate Adjusted EBITDA | (1,141 | ) |  | (988 | ) |  | (2,247 | ) |  | (2,165 | )
Insurance recoveries, net of losses | — |  |  | — |  |  | 431 |  |  | 375 |
HRE Trust Fund proceeds | — |  |  | 292 |  |  | — |  |  | 292 |
Share-based compensation expense | (3,113 | ) |  | (6,214 | ) |  | (8,354 | ) |  | (9,577 | )
Pre-opening expenses | — |  |  | (481 | ) |  | (27 | ) |  | (711 | )
MVG interest expense, net | (597 | ) |  | — |  |  | (1,137 | ) |  | — |
Depreciation and amortization | (15,760 | ) |  | (14,991 | ) |  | (31,044 | ) |  | (30,026 | )
Interest income (expense), net | (4,956 | ) |  | (1,167 | ) |  | (9,925 | ) |  | (2,633 | )
Income tax provision | (34,767 | ) |  | (31,035 | ) |  | (34,329 | ) |  | (31,364 | )
Earnings from continuing operations | 57,333 |  |  | 50,309 |  |  | 56,633 |  |  | 51,398 |
Discontinued operations, net of income taxes | — |  |  | (11 | ) |  | — |  |  | (42 | )
Net earnings and comprehensive income | $ | 57,333 |  |  | $ | 50,298 |  |  | $ | 56,633 |  |  | $ | 51,356 |
The table below presents equity in earnings (losses) of unconsolidated investments included in the Company’s reported segments for the three and six months ended June 30, 2014 and 2013 (in thousands):
| Three Months Ended June 30, |  | Six Months Ended June 30,
| 2014 |  | 2013 |  | 2014 |  | 2013
Gaming | $ | 2,796 |  |  | $ | (495 | ) |  | $ | 4,837 |  |  | $ | (793 | )
Online Business | 28 |  |  | (239 | ) |  | 248 |  |  | (130 | )
Other Investments | (318 | ) |  | 103 |  |  | (289 | ) |  | 128 |
| $ | 2,506 |  |  | $ | (631 | ) |  | $ | 4,796 |  |  | $ | (795 | )
The table below presents total assets for the reported segments (in thousands):
| June 30, 2014 |  | December 31, 2013
Total assets: |  |  |
Racing Operations | $ | 521,657 |  |  | $ | 513,345 |
Gaming | 617,792 |  |  | 622,038 |
Online Business | 191,450 |  |  | 186,621 |
Other Investments | 32,240 |  |  | 30,257 |
| $ | 1,363,139 |  |  | $ | 1,352,261 |
The table below presents total capital expenditures for the reported segments for the six months ended June 30, 2014 and 2013 (in thousands):
| Six Months Ended June 30,
| 2014 |  | 2013
Capital expenditures: |  |  |
Racing Operations | $ | 27,915 |  |  | $ | 10,210 |
Gaming | 4,119 |  |  | 9,048 |
Online Business | 3,174 |  |  | 3,528 |
Other Investments | 3,267 |  |  | 986 |
| $ | 38,475 |  |  | $ | 23,772 |

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- Definition The entire disclosure for reporting segments including data and tables. Reportable segments include those that meet any of the following quantitative thresholds a) it's reported revenue, including sales to external customers and intersegment sales or transfers is 10 percent or more of the combined revenue, internal and external, of all operating segments b) the absolute amount of its reported profit or loss is 10 percent or more of the greater, in absolute amount of 1) the combined reported profit of all operating segments that did not report a loss or 2) the combined reported loss of all operating segments that did report a loss c) its assets are 10 percent or more of the combined assets of all operating segments. + References Reference 1: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 280 -SubTopic 10 -Section 50 -Paragraph 29 -URI http://asc.fasb.org/extlink&oid=6534315&loc=d3e8864-108599 Reference 2: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 280 -SubTopic 10 -Section 50 -Paragraph 32 -URI http://asc.fasb.org/extlink&oid=6534315&loc=d3e8933-108599 Reference 3: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 280 -SubTopic 10 -Section 50 -Paragraph 26 -URI http://asc.fasb.org/extlink&oid=6534315&loc=d3e8844-108599 Reference 4: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 280 -SubTopic 10 -Section 50 -Paragraph 10 -URI http://asc.fasb.org/extlink&oid=6534315&loc=d3e8538-108599 Reference 5: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 280 -SubTopic 10 -Section 50 -Paragraph 1 -URI http://asc.fasb.org/extlink&oid=6534315&loc=d3e8380-108599 Reference 6: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 280 -SubTopic 10 -Section 50 -Paragraph 34 -URI http://asc.fasb.org/extlink&oid=6534315&loc=d3e8981-108599 Reference 7: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 280 -SubTopic 10 -Section 50 -Paragraph 35 -URI http://asc.fasb.org/extlink&oid=6534315&loc=d3e8984-108599 Reference 8: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 280 -SubTopic 10 -Section 50 -Paragraph 41 -URI http://asc.fasb.org/extlink&oid=6534315&loc=d3e9038-108599 Reference 9: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 280 -SubTopic 10 -Section 50 -Paragraph 30 -URI http://asc.fasb.org/extlink&oid=6534315&loc=d3e8906-108599 Reference 10: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 280 -SubTopic 10 -Section 50 -Paragraph 42 -URI http://asc.fasb.org/extlink&oid=6534315&loc=d3e9054-108599 Reference 11: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 280 -SubTopic 10 -Section 50 -Paragraph 31 -URI http://asc.fasb.org/extlink&oid=6534315&loc=d3e8924-108599 Reference 12: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 280 -SubTopic 10 -Section 50 -Paragraph 40 -URI http://asc.fasb.org/extlink&oid=6534315&loc=d3e9031-108599 Reference 13: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 280 -SubTopic 10 -Section 50 -Paragraph 33 -URI http://asc.fasb.org/extlink&oid=6534315&loc=d3e8971-108599 Reference 14: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 280 -SubTopic 10 -Section 50 -Paragraph 12 -URI http://asc.fasb.org/extlink&oid=6534315&loc=d3e8595-108599 + Details
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