NATURAL DISASTERS

Kentucky Hailstorm

On April 28, 2012, a hailstorm caused damage to portions of Louisville, Kentucky including Churchill Downs Racetrack ("Churchill Downs") and its separate training facility known as Trackside Louisville. Both locations sustained damage to their stable areas as well as damages to administrative offices and several other structures. The Company carries property and casualty insurance, subject to a $0.5 million deductible. The Company filed a preliminary claim for damages with its insurance carrier which remains under review to determine to what extent insurance proceeds will offset any impairment losses. During the three months ended September 30, 2012, the Company received $0.6 million in insurance proceeds as a partial payment for damages which has been recorded as a reduction of property and equipment in the Company's Condensed Consolidated Balance Sheet. As of September 30, 2012, the Company has not recorded an impairment of its assets and does not believe that any future impairment will be material or have an adverse impact on the business, financial condition or results of operations.

Mississippi River Flooding

As a result of the Mississippi River flooding during 2011, the Company temporarily ceased operations at Harlow’s Casino Resort & Hotel (“Harlow’s”) on May 6, 2011, and the Board of Mississippi Levee Commissioners ordered the closure of the Mainline Mississippi River Levee on May 7, 2011. On May 12, 2011, the property sustained damage to its 2,600-seat entertainment center and a portion of its dining facilities. On June 1, 2011, Harlow’s resumed casino operations with temporary dining facilities. During December 2011, the Company announced a renovation and improvement project which is expected to be completed by early 2013, including a new buffet area, steakhouse, business center, spa facility, fitness center, pool and a multi-purpose event center.

The Company carries flood, property and casualty insurance as well as business interruption insurance subject to a $1.3 million deductible for damages. As of September 30, 2012, the Company has recorded a reduction of property and equipment of $8.5 million and incurred $2.0 million in repair expenditures. During the year ended December 31, 2011, the Company received $3.5 million from its insurance carriers in partial settlement of its claim. This amount has been included as insurance recoveries, summarized below, for the nine months ended September 30, 2012. In addition, the Company finalized its claim with its insurance carriers and received $12.0 million during the nine months ended September 30, 2012. The Company recognized insurance recoveries, net of losses, of $5.0 million during the nine months ended September 30, 2012. The insurance claims for this event have been finalized with the Company's insurance carriers, and we do not expect to receive additional funds or recognize additional income from the claim.

Mississippi Wind Damage

On February 24, 2011, severe storms caused damage to portions of Mississippi, including Greenville, Mississippi, the location of Harlow’s. The Harlow’s property sustained damage to a portion of the hotel, including its roof, furniture and fixtures in approximately 61 hotel rooms and fixtures in other areas of the hotel. The hotel was closed to customers for renovations following the storm damage and reopened during June 2011. The Company carries property and casualty insurance as well as business interruption insurance subject to a $0.1 million deductible for damages. As of September 30, 2012, the Company has recorded a reduction of property and equipment of $1.4 million and incurred $0.4 million in repair expenditures. The Company filed a preliminary claim with its insurance carriers for $1.0 million in damages, which it received during the second quarter of 2011. Approximately $0.4 million of insurance recoveries received were recorded as a reduction of selling, general and administrative expenses against losses related to the interruption of business caused by the wind damage during the year ended December 31, 2011. The Company received an additional $3.4 million from its insurance carriers during the nine months ended September 30, 2012. The Company recognized insurance recoveries, net of losses, of $1.5 million during the nine months ending September 30, 2012. The insurance claims for this event have been finalized with the Company's insurance carriers, and we do not expect to receive additional funds or recognize additional income from the claim.

The casualty losses and related insurance proceeds have been included as components of operating income in the Company’s Condensed Consolidated Statements of Comprehensive Income. There was no impact from natural disasters on the results of operations of the Company for the three months ended September 30, 2012. Set forth below is a summary of the impact of the natural disasters on the results of operations of the Company for the nine months ended September 30, 2012 (in thousands):



Nine Months Ended 9/30/2012
Casualty Losses		Insurance Recoveries			Insurance Recoveries, Net of Losses
$	12,342	$	(18,856	)	$	(6,514	)

There were no losses or recoveries during the three months ended September 30, 2012.