Churchill Downs Incorporated
Q4 2007 Earnings Call Transcript

Published: 14 Mar 2008

[Operator:]

Good day, ladies and gentlemen, and welcome to the fourth quarter 2007 Churchill Downs, Inc., earnings conference call. My name is Kitena (sp) and I will be your coordinator for today. At this time all participants are in a listen-only mode. We will conduct a question and answer session towards the end of this conference. (Operator Instructions). I would now like to turn the presentation over to your host for today’s call, Ms. Julie Koenig, Vice President of Communications.

[Julie Koenig Loignon:]

Thank you, Kitena. Good morning and welcome to this Churchill Downs, Inc., conference call to review the company’s results for the fourth quarter and full year of 2007. The results were released yesterday afternoon in a news release that has been covered by the financial media. A copy of this release announcing results 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 website titled “Company News” located at churchilldownsincorporated.com. Let me also note that a news release was issued advising of the accessibility of this conference call on a listen-only basis via the phone and over the Internet. As we begin, let me express that some statements made during 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 are otherwise not statements of historical fact. The actual performance of the company may differ materially from what is projected in such forward-looking statements. Investors should refer to statements included in the reports filed by the company with the Securities and Exchange Commission for discussion for 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. Churchill Downs, Inc., expressly disclaims any obligation to release publicly any updates or revisions to these forward-looking statements to reflect any changes in expectations. President and CEO Bob Evans and Chief Financial Officer Bill Mudd will begin our call with some formal remarks and then respond to your questions. All of our executive officers are on the call today and Bill Carstanjen, our chief development officer, Vernon Niven, President of Twinspires.com, and Steve Sexton, President of Churchill Downs Racetrack, will also be available during the Q&A session. With that, I will turn the call over to our CEO, Bob Evans. Bob?

[Robert L. Evans:]

Thanks, Julie. Good morning, everyone. I feel pretty good about our performance in 2007. We’ve put in place two new growth drivers for our business. First we entered the advance deposit wagering, or ADW business, with the launch of Twinspires.com and the subsequent acquisitions of the America Tab and Bloodstock Research Companies. Related to our ADW entry was the creation of Tracknet Media Group to manage our content rights and our acquisition of a 50% ownership stake and horseracing TV, or HRTV. Next we entered the alternative gaming business with our temporary 245-machine slots operation in New Orleans and we started construction of the permanent slots facility there that will initially house 600 machines. We also put in place the groundwork to win the January 2008 election in Miami-Dade County that will enable us to operate a slots business at our Calder racetrack. We managed to do this while still producing growth in revenue and EBIDTA of $55 million. While lower than 2006’s reported EBIDTA, remember that 2006 included $19.2 million in insurance settlements related to Hurricanes Wilma and Katrina; 2007 included only $800,000 in insurance settlements and 2007’s EBIDTA was negatively affected by the $2.6 million we spent on our successful political campaign for slots at Calder. This all got done for a simple reason. We’ve made considerable progress in putting in place an organization with the capabilities to transform Churchill Downs, Inc., into a growth-driven company. This is no easy feat in the US thoroughbred industry. Let me turn this over to our CFO, Bill Mudd, who will take you through our financials. I’ll then return with a few comments about 2008 and then we’ll be happy to take your questions. Bill?

[William E. Mudd:]

Thank you, Bob. Good morning, everyone. I will be reviewing the information as set forth in the tables of the press release that can be found under our company’s section that Julie referred to earlier, which is at our website www.churchilldownsincorporated.com. Following my comments I’ll turn it back over to Bob for some final comments before we open the call to Q&A, in which Bob, Bill Carstanjen, Steve Sexton, Vernon Niven and I will be able to address your questions. Let’s begin by reviewing the segment information which is contained on the schedule titled “Supplemental Information by Operating Unit” in the release. As a reminder from our previous calls, the discontinued operations section of our financial statements and tables contain the operations of Hoosier Park, which we sold during the first quarter of 2007, and Ellis Park, which we sold during the third quarter of 2006, and Hollywood Park, which we sold in the third quarter of 2005. My comments will focus on our operational performance from continuing operations for the fourth quarter and the full year. At the net revenues from external customers’ line, Churchill Downs Racetrack is down $5.2 million year over year, primarily as a result of four fewer race days. These headwinds were partially offset by a stronger derby week performance in the second quarter. At Arlington net revenues from external customers increased $5.5 million, primarily as a result of an increase in para-mutual business. We experienced an increase in average starters per race, which we believe is partially attributable to the installation of a new poly-track racing surface. In addition, during January and February, when there is no live racing in Illinois the IRB designates a thoroughbred racetrack as the host track. The IRB appointed Arlington Park as the host track for Illinois for 45 days during portions of January and February of 2007 compared to 37 days during January and February of 2006, which resulted in additional revenues of $1.2 million during the year. Our Calder facility had a $4.7 million reduction in total net revenues from external customers for the year and a $2.4 million reduction for the fourth quarter. We conducted our first full quarter of simulcasting with Gulfstream, cross-simulcasting with Gulfstream Park during the fourth quarter while we conducted a live racing and Gulfstream Park was dark. We believe this lead to a decline in attendance and on-track wagering during our live meet. During the first quarter of 2008 our customers will be given the chance to wager from our facility while we are dark. I will also remind you that total year results were also impacted by the rain weather we experienced in the third quarter, which took approximately one-third of our races off the turf. Our Louisiana operation’s net revenues from external customers increased by $16.2 million for the year as we experienced growth in all parts of the business. We conducted 35 more live racing days year over year, which lead to an increase in para-mutual as well as associated ancillary revenues. We conducted our first full quarter of slot operations during the fourth quarter and the results to date have exceeded our expectations with gross win per unit of $204, which continues to grow each month as our live race meet helps (sic) drive more customer traffic to our location. Our January and February 2008 year-to-date average gross win per unit per day climbed to $314. Other investments include our ADW business, which is branded as Twinspires.com, and includes our second quarter purchase of America Tab and our information services business, Bloodstock Research. Additionally, this segment includes our equity interest in Tracknet Media and HRTV. The revenue increases for the year and for the quarter are driven by the acquisitions of America Tab and BRIS during the second quarter. Now let’s look at the EBIDTA performance by segment at the bottom of the page. As a note, the company modified its method of allocating management fees to the operating segments. As a result, management fees included in the EBIDTA of the operating segments fluctuated significantly for the three months ending December 31st, 2007, as well as the year ending December 31st, 2007. I will talk to the changes in profitability excluding the managing fee impact, which you can find in the tables in the press release. Churchill Downs Racetrack EBIDTA is down for the year, largely driven by the revenue items previously mentioned. In addition, we recognized severance cost in the fourth quarter associated with the outsourcing of our security department. Arlington Parks EBIDTA improvement is driven primarily by the increase in para-mutual revenue, as we discussed earlier. In addition, the year-over-year change in purse recoveries versus purse overpayments added $2.3 million, which we discussed in the third quarter conference call. We also had a gain on the sale of a piece of land for $1.7 million earlier in the year. The Calder EBIDTA decline is the result of a number of activities this year. We spent $2.6 million in the fourth quarter on campaign spending for the successful referendum to conduct slots gaming, which passed at the end of January. We had $1.9 million less insurance recoveries in prior year related to Hurricane Wilma. We also experienced a decline in para-mutual revenues which is partly driven by the cross-simulcasting swap agreement with Gulfstream Park when Calder was conducting live racing and Gulfstream Park was dark. In addition, pot limits were increased for card rooms in July creating more competition, which we believe impacted our para-mutual activity. Louisiana operations EBIDTA was down $11.5 million. This reduction in profit is attributable to the $16.6 million of insurance recoveries in 2006. The reduction is partially offset by an increase in business attributable to 48 additional live race days as we ran a full year of racing in addition to improvements in our video poker business and the opening of our temporary slots facility. In the other investments, the EBIDTA generated by our ADW business for the year and for the fourth quarter was offset by equity losses in HRTV, Tracknet Media, as well as the allocation of management fees previously discussed. Overall EBIDTA dropped by $14.5 million for the year from $69.7 million in 2006 to $55.2 million in 2007. I will remind you that we recognized $19.2 million of insurance recoveries in 2006 versus $800,000 during 2007. Additionally, we spent $2.6 million on campaign costs in Florida this year. Now turning to the consolidated statement of net earnings. As Bob mentioned, we grew total net revenues from continuing operations by 9% or roughly $34 million for the full year and 10.9% for the fourth quarter. We believe this is driven by a number of things across our business as I just highlighted

[Robert L. Evans:]

Thanks, Bill. You know I was optimistic that I was about done with the task of explaining the impact of hurricane insurance settlements on our reported financials, but given the $17.2 million insurance transaction Bill just described, I’m obviously going to be doing that now through 2009. There was a moment here when I thought that we’d be in real trouble, both numbers would be the same. Fortunately they’re not. Last year was $19.2 million; this year $17.2 million. Well, there are 50 days to go until the Kentucky Derby, so let’s talk about racing for just a minute. We believe there is upside in our core racing business. Granted, the industry has been a near-zero handle growth business on an inflation adjusted basis for a decade, so just where is the opportunity? Well, clearly the industry is consolidating and as it does so we believe we can be increasingly successful if we do five things. One, improve our margins. We made some progress on this in 2007, but not nearly as much as I had hoped. This is a core area of my and the company’s attention in 2008. Two, increase our share of handle. Here we are interested in two things

[Operator:]

Thank you, gentlemen. (Operator Instructions). Your first question will come from the line of Steve Wieczynski representing Stifel, Nicolaus. Please proceed.

[Steven Wieczynski:]

Good morning, guys. First, can I get, what were the total live race days for the fourth quarter this year versus fourth quarter last year?

[Robert L. Evans:]

Give us just a second to look that one up.

[Steven Wieczynski:]

Sure.

[Robert L. Evans:]

We’ve only got 10 people in the room here, so somebody should be able to find that number.

[Steven P. Sexton:]

Yeah, we’ve got it. It’ll just take a second to ...

[Robert L. Evans:]

It’s actually a math problem.

[Steven P. Sexton:]

It’s a math problem. Sure.

[Steven Wieczynski:]

Do you want me to move on and ask something else?

[Steven P. Sexton:]

No. There’s actually a three, current year live race days there were three tracks that were live, so 115 race days. And in the prior year, if the math works here, 112 race days.

[Steven Wieczynski:]

Okay. Great. Thanks. And then would you possibly have a capex forecast for 2008?

[William E. Mudd:]

Yes. This excludes the amounts that we’ll spend on the Florida campaign. As Bob said, we’re in the process of evaluating what we’re going to do there.

[Robert L. Evans:]

Just so we’re clear. That we would spend on building a slot operation.

[William E. Mudd:]

Exactly. Related to the slot operation, to be clear. Right now it looks like $44 million and of that roughly $25 million remains from the slots project at Fair Grounds.

[Steven Wieczynski:]

Okay. Great. And then finally, Bob, you touched on this just briefly, but going back to Kentucky, there’s been multiple, the governor’s thrown out, a couple different ways in terms of how gaming would get in there. I think the last one, one of the legislators there basically said they would like to do it just at racetracks. Can you just dive a little bit more into, you know, have you had discussions with the legislators there and kind of what’s going on from your side?

[Robert L. Evans:]

Yeah, we’ve had extensive discussions with legislators and others. I think there are so many issues in the mix here, many of which have nothing to do with gaming whatsoever. Other issues of governance in the commonwealth of Kentucky. Those other issues are, in my view, getting in the way of getting a gaming bill done. Until all that gets resolved, budget issues, etcetera, I don’t think we’re going to make any progress. But I’m hopeful here that people will come to deal with issue sometime yet during this legislative session. I think the most important thing to tell you is the issue being discussed and debated isn’t whether we should have gaming or not, it’s a whole bunch of other issues of a political nature that are affecting progress on the gaming bill.

[Steven Wieczynski:]

Okay. Great. Thanks, guys.

[Operator:]

Your next question will come from the line of Ryan Worst representing Brean Murray. Please proceed.

[Ryan Worst:]

Thanks. Good morning. Just a couple questions. First, on the ADW front, it looks like, and the joint venture, it looks like revenues were up in the fourth quarter versus the third quarter, but EBIDTA was down. Could you just kind of explain a little bit more about that and that dynamic?

[Robert L. Evans:]

Well, I guess first of all let me point out that EBIDTA as represented in the table of the press release, if you look at the management fee table you’ll see that in the fourth quarter we changed our management fee allocations. So to include revenues associated with our ADW business. So if you look at that, the fourth quarter results include a $1.1 million management fee allocation. So if you look in the third quarter we had heavy management fees associated with the other investments line in the EBIDTA section. So you need to take that into consideration.

[William E. Mudd:]

Ryan, the other thing I’d add to this is just to put it in a slightly longer historical context – although that’s only a year – you know, we launched Twinspires.com in May last year. Obviously now it’s clear that we were also in discussions to acquire the America Tab and Bloodstock Research companies. But when we launched Twinspires.com we didn’t know if those were going to get done or not. There was no way to know. And then in June we acquired those businesses. And via Tracknet Media, we’ve been in the process of trying to acquire additional content for our ADW platforms. At the time they were multiple back in June, July, and August. Because we didn’t have some California tracks and because we didn’t have the New York tracks during the second half of last year we were in a pretty tough position in terms of content availability for our customers. We then put all of the platforms together under the Twinspires.com brand in November of 2007 and effective the 1st of this year – I won’t go through every sequence of events, but we also at that point at the beginning of January 2008 had access to New York content and the California track content. So the quarter to quarter numbers are kind of helter-skelter in 2007 simply because so many different things were going on and changing. So where we are right now is we have one platform, Twinspires.com, out there, we’ve got the most sought-after content in the industry, and the business is doing quite well.

[Ryan Worst:]

Okay. Now that you have the New York content, is there any major content providers that you’re missing from your ADW platforms? Are you pretty much set with the infrastructure or would you look at other acquisitions in the space?

[Robert L. Evans:]

Well, I can answer the second one simply by saying obviously we don’t want to comment on what we may or may not do with respect to acquisitions.

[Ryan Worst:]

Fair enough.

[Robert L. Evans:]

On the former issue, there are two, sort of, boutique bits of very premium content on not a lot of racing days, but good quality product. Keeneland, who runs for 15 days in the spring and the fall, and Del Mar, who runs during the summer. So we’re optimistic that we’ll be able to secure access to those as we go forward.

[Ryan Worst:]

Okay. And then, Bill, do you have a capex number for the fourth quarter?

[William E. Mudd:]

Capex number for the fourth quarter only?

[Ryan Worst:]

Yeah. ---Interjection

[Ryan Worst:]

Okay. And also I think it would be helpful if you guys kind of restated the quarters with the new corporate allocations so that we could kind of compare ’08 to ’07 when we get there.

[William E. Mudd:]

Yes, we’ll do that as we get closer to 2008.

[Ryan Worst:]

And then how many days is Arlington Park designated as the host track in ’08?

[Steven P. Sexton:]

Number of days in ’08?

[Ryan Worst:]

Yeah.

[Robert L. Evans:]

Boy, you guys are doing a good job of playing stump the executives today.

[Steven P. Sexton:]

Exactly. I know it’s more in ’08, but I don’t know exactly.

[Ryan Worst:]

It’s more in ’08 than ’07?

[Steven P. Sexton:]

Yes. I think it’s 11 more, but I’m not exactly, I gotta go back and double check that.

[Ryan Worst:]

And then another question pertaining to fourth quarter. You mentioned some kind of severance expense at Churchill Downs in the fourth quarter.

[Steven P. Sexton:]

Sorry. It’s 16 incremental days. I apologize for stopping you. It’s 16 incremental days for ’08 as disclosed in the 10K.

[Ryan Worst:]

Okay. And then is the severance amount significant at Churchill Downs in the fourth quarter? I was wondering what that was?

[William E. Mudd:]

It’s $0.3 million, roughly.

[Ryan Worst:]

Okay. And then could you guys talk about the difference you’re seeing in the level of slot play at the Fair Grounds on race days versus non-race days? Is there a significant fall off there? Is traffic building on the non-race days as well as the race days? And then –

[Robert L. Evans:]

I’m sorry. Go ahead.

[Ryan Worst:]

And then my final question was going to be on Calder and whether or not you guys were going to be able to offer poker when you get the slot machines there.

[Robert L. Evans:]

Well, I’ll take the former. The former is, we’ve only been in operation on slots, as you know, since early or late third quarter. I would say that we don’t have enough data points at this point to say what the cross-over is between, you know, what the difference is between a live race day versus a dark day. So that’s something we’ll look at as we go forward. On the latter, I’ll have to defer.

[Steven P. Sexton:]

Yeah, we can and plan to do poker at Calder.

[Ryan Worst:]

Okay. Great. Thanks.

[Operator:]

Your next question will come from the line of Steve Altebrando representing Sidoti & Company. Please proceed.

[Steve Altebrando:]

Thank you. Hi, guys. I just want to make sure, because some of this segment data was skewed a bit. Is it on an apples-to-apples basis? Is Louisiana basically up about $1.5 million in EBIDTA in the fourth quarter?

[Robert L. Evans:]

Louisiana meaning racing, video poker?

[Steve Altebrando:]

Everything.

[William E. Mudd:]

Well, I guess if you adjust for, I can give you the numbers. We did have hurricane recoveries in Louisiana of $6.3 million in the prior year which we did not have in the current year. And then management fee changed for Louisiana. Louisiana had a favourable impact as a result of the management fee change of $3.8 million.

[Steve Altebrando:]

In this year’s quarter?

[William E. Mudd:]

In this year’s quarter. Correct.

[Steve Altebrando:]

Okay, so basically, and now you’re saying a ramp of slot revenue of about 30% from there?

[William E. Mudd:]

I don’t know what you’re using as your enumerator or denominator.

[Steve Altebrando:]

Okay. My next question really is about the ADW and HRTV segment. I guess the return to me is pretty concerning. You’ve basically spent $80 million on this investment. I realize the ADW is probably addings earnings, but to me they kind of go hand in hand, the HRTV and ADW. As of right now these are basically not contributing anything to EBIDTA.

[Robert L. Evans:]

Have some patience. I don’t mean to be cute, but the second half of last year there was a lot of stuff going on and the business is doing quite well. I think as we go forward we’ll see that.

[Steve Altebrando:]

Okay. Is there a way that you could give some sense of what the breakout is between how HRTV is impacting ADW? You know, that sense of what the dilution is there?

[Robert L. Evans:]

No. Well, with getting into the ADW business last year and getting into the slots business at Fair Grounds we’ve created some challenges in how we do our segment reporting. We’re working diligently on that with the advice of outside counsel, auditors, etcetera. So I think this will become, I think the performance of the business and its various segments will be increasingly clear as we go forward. But I don’t want to start breaking out historical data that we haven’t reported publicly.

[Steve Altebrando:]

Well, how about, I’ll put it this way. Are you committed to HRTV indefinitely in its current form? That seems like it’s really eating into any profits from the ADW. Is this something you plan on addressing?

[Robert L. Evans:]

The arrangement we have on HRTV is a three-year deal. We’re about one year into that at this point. So there’s a lot going on in the technology of delivering live video to consumers. There are many new options of doing that via the internet, many of which are lower cost, and we’re going to look at all of those opportunities to figure out what’s the best way to do it. So without getting into a whole lot more detail hopefully that answer at least addresses what I think is underlying your question.

[Steve Altebrando:]

So, does that mean you can’t walk away for another two years from now?

[Robert L. Evans:]

That’s correct. I will say, and I think we’ve disclosed this, is that our share of the losses in that arrangement are capped during the term of the deal. So it’s a fixed number that we know in advance.

[Steve Altebrando:]

Okay. And who’s playing the biggest part in managing this? You or Magna or split? Hopefully you guys, but ...

[Robert L. Evans:]

It’s split. We each own half.

[Steve Altebrando:]

But as far as managing the day to day, I mean, is there anyone more influential?

[Robert L. Evans:]

Not really.

[Steve Altebrando:]

Okay. And then I guess the last question, well, two more questions. You mentioned that you’re improving economics for the tracks from the ADW wagering. I guess I’m slightly confused about this strategy given that you’ve just spent $80 million to get into the wagering business. It seems to me this could be, your market share in this business will ultimately be bigger than the four tracks that you operate. I don’t know, could you address this or are you mostly just referring to the really elimination of TVG?

[Robert L. Evans:]

I’m not referring to that in any way, shape, or form. There’s two businesses here. There’s the business of producing races and, in effect, selling wagers on those races in the US market. Then there’s also the business of being a distributor in the sense of taking wagers, whether that’s on our race or somebody else’s race. The ADW business, Twinspires.com, is basically a distributor business. We take wagers on our own races and on other tracks races. So what we’re trying to do is improve the performance of both. We’re trying to grow our business as a distributor, Twinspires.com, and we’re also trying to improve the race product so that it captures more handle whether the bet is placed via one of our channels or via somebody else’s.

[Steve Altebrando:]

Okay. But it seems, you know, just when you look at the numbers it might make sense for the economics to be improving for the ADW. This is the space where you plan on growing.

[Robert L. Evans:]

Yeah. I believe you’ll see improved economics in the ADW business as we go through 2008. Just remember, 2007 there was a lot going on. Just for example, we didn’t have access to our own Arlington Park signal for Twinspires.com until mid-August. We didn’t have access to our Calder racetrack signal at all in 2007. So it’s just a year of many, many transitions and that is sorted out in ways that we believe are quite favourable to us and I think you’ll see the economic performance that results as we go through this year.

[Steve Altebrando:]

Okay. And I was under the impression that in the fourth quarter you guys were going to see a benefit in content as compared to the third quarter. It looks like the handle is up slightly sequentially, but year over year, if you look at America Tap’s handle and ‘06’s fourth quarter it appears that it’s down year over year. And I know Magna had reported that their handle on line was up, I think, around 15% year over year. Do you guys have a sense that you’re possibly losing some share in this segment? Are you seeing the defection of any counts?

[Robert L. Evans:]

No, actually, quite the opposite. Without getting into disclosing Q1 numbers, etcetera, we’re quite confident that we’re growing the number of active customers pretty substantially and that the amount of business that’s being done via Twinspires.com is growing considerably. The content advantage that we have really didn’t kick in until the first of the year because that’s when we picked up the New York tracks as well. Of course, we also have all the Tracknet tracks. Sort of most importantly right now, we have uniquely Gulfstream and Fair Grounds. So we’re pretty happy with where we are in the content side of business. Like I said, a little patience here I think you’ll see some numbers that confirm your expectations.

[Steve Altebrando:]

Okay. All right. Thanks, you guys.

[Steven P. Sexton:]

Just for the benefit of those on the call, there was a question earlier on the change in host days for Arlington Park in 2008. The number we provided was only for the month of February. If you look at the total for the year, it’s only up two days from 47 days in 2007 to 49 days in 2008. I apologize for that clarification.

[Operator:]

Thank you. (Operator Instructions). Your next question will come from the line of Tim Rice representing Rice and Voelker. Please proceed.

[Tim Rice:]

Good morning. I had two questions. The first related to HRTV. Can you give any update on any progress on improved or greater distribution, specifically DIRECTV?

[Robert L. Evans:]

There aren’t any changes at the moment. There’s sort of nothing new to say there.

[Tim Rice:]

And the second question related to your comments about your expectation of getting Keeneland and Del Mar for ADW. Do you also expect to be getting Keeneland and Del Mar for HRTV?

[Robert L. Evans:]

I don’t really know. I don’t think I said I expected to get them. I just said that I hope that we’d be, those signals would be made available to us. And it really depends on what Keeneland and Del Mar want to do. So we could just take the signal for wagering purposes. We could take it for television and wagering purposes. Or whatever arrangement they might be interested in doing.

[Tim Rice:]

Are they restricted under any contractual agreements with TBG now?

[Robert L. Evans:]

I don’t, obviously I don’t have all the contracts that they may have signed, but I believe they are under contractual commitment for some time to TBG.

[Tim Rice:]

Okay. Thank you very much.

[Operator:]

Your next question will come as a follow up from the line of Steve Altebrando representing Sidoti & Company. Please proceed.

[Steve Altebrando:]

Hi, guys. Just one real quick follow up. It looks like the EBIDTA margin in New Orleans slot wise, if I back out some of the numbers, it looks like it was over 30%. I’m talking about the slots side only. Is that a number that you think is maintainable for ’08?

[William E. Mudd:]

Well, I would say looking at 2007, the win per unit, as we discussed, was in the $204 average range. And if you look at February quarter to date it’s much higher than that. I would say that we do have some seasonality as it relates to the slots business. We don’t really understand what that means yet, but looking at some of other folks that are in that business we would say that you tend to see a little bit higher win per units in the winter months and a little bit smaller in the summer months. We also see that on the video poker side of the business as well.

[Steve Altebrando:]

Okay. All right. Thank you.

[Operator:]

Gentlemen, there are no further questions at this time. I would now like to turn the call back to Mr. Bob Evans for closing remarks.

[Robert L. Evans:]

Thanks. Well, that’s all I’ve got. I guess the next time we’ll talk will be after the Oaks and the Derby, so hopefully we’ll have a great next few months and I look forward to speaking with all of you again. Thanks for joining us today.

[Operator:]

Ladies and gentlemen, thank you for your participation in today’s conference. This concludes your presentation. You may now disconnect. Good day.