Alan Marzelli: Thank you, Dinny. Good morning.

Every year it gets a little more difficult to deliver this report in our traditional 10 minutes that we like to keep it to. The scope of our businesses continues to grow and, in addition, the amount of work that we do beyond our borders helping the industry both domestically and internationally continues to grow as well. But I will keep to tradition and try to keep it to 10 minutes. For additional information, this little brochure [The Jockey Club Fact Sheet] can be found at your desk.

So with that we'll begin our report with the Registry, as we always do, because maintaining the integrity of the Stud Book is our primary mission.

The first thing we like to do is report on the foal crop. We got our estimate for the 2005 foal crop yesterday and released that information...and in fact the 2005 foal crop is expected to be 37,200, which is the same as our 2004 foal crop estimate.

You've heard a lot about the technological advances we've instituted throughout our enterprise in recent years and none are more visible to owners and breeders than those in our Registry.

Starting with the 2002 foal crop, all identification photographs of foals to be registered have been electronically stored. Although we encourage owners and breeders to submit digital photos, we also scan every printed photo we receive. To date, the database contains photographs of nearly 100,000 Thoroughbred foals, allowing instantaneous access to their identification photographs.

The use of digital photos is just one feature of our Internet-based Interactive Registration system, known as IR, that we unveiled in 1995. Over the years, IR has increasingly become the preferred medium for conducting business with the Registry.

Today, more than half of all name claims, Reports of Mares Bred and Live Foal Reports are submitted through IR.

The Jockey Club Information Systems continues to be one of our most successful commercial entities and one whose profits allow us to provide meaningful funding to so many industry initiatives -- the most recent examples being the NTRA's Wagering Integrity Alliance and the Racing Medication and Testing Consortium.

"equineline reports," which offers pedigree information, race records and sales reports, continues to be our flagship service, and in the past year we've added a number of new products and enhancements.

As one example, through an agreement we recently reached with racereplays.com, equineline customers will soon be able to watch video replays of races that have a hyperlink next to the past performance line we provide on individual race records. racereplays.com has current videos from every major racing circuit in the U.S., with archives for many tracks going back to 2002.

Equibase Company, meanwhile, continues to host one of racing's most popular Internet sites, with traffic on equibase.com consistently enjoying double-digit growth year after year.

Interest in our two permission marketing-based programs, Virtual Stable and the Race Series Notification Service, also continue to experience double-digit growth, with subscriber lists that now total 98,000 and 51,000 respectively.

That's 98,000 fans who want to be notified immediately when the horses they are following have worked out, are entered to run in a race or have run a race…and 51,000 fans who want to follow the progress of the leading contenders on the Triple Crown trail or the Road to the Breeders' Cup World Thoroughbred Championships.

Earlier this year, when the Daily Racing Form changed ownership for the fourth time in the past 15 years, we were reminded of the importance of the decision we made in 1990: namely the creation an industry-owned database of racing information.

But rather than cause the TRA and its member racetracks to worry about the impact of a change in ownership on their ability to use their own information in support of their business, the sale of the Daily Racing Form to The Wicks Group was simply viewed by Equibase and its partners as an opportunity.

That's because, in 1998, the previous owners and management team recognized that the industry should be the rightful owner of its racing data, and that a strong collaborative working relationship between Equibase and Daily Racing Form was not only in the best interests of the two entities, but of the industry itself. The result was the license agreement that created, for the first time, a single, uniform, industry-owned database of racing information.

No one could have predicted a better outcome than the one we realized, best evidenced by the prominent placement of the Daily Racing Form logo on equibase.com, where fans can purchase electronic copies of "America's Turf Authority" tailored specifically to the tracks they are following.

A year ago, at this venue, we introduced the story of InCompass and the re-design of its legacy racing office systems into a suite of software applications that reside in a secure central server environment.

We began a gradual rollout of the new product line in the spring of 2003 and estimated that it would take a full three years to install the system across our entire customer base.

But the centralization approach was widely and quickly embraced and I'm happy to report that we now expect to complete the installation in just under two years, not three.

Meanwhile, our foundations continue to quietly serve the industry. The Jockey Club Foundation will provide approximately $650,000 to assist the needy this year, and the Grayson-Jockey Club Research Foundation has approved more than $850,000 to fund necessary ongoing research in 2004.

As always, The Jockey Club continues to be actively involved in a number of important industry initiatives. You'll hear presentations regarding two of them, the Racing Medication and Testing Consortium and the National Animal ID system, following this report. But I want to briefly mention two others.

In 1996, The Jockey Club was one of the leading organizations that helped to underwrite the cost of a National Economic Impact Study. The study estimated the total impact of the horse industry at $112 billion annually and it has been a valuable tool in demonstrating the impact of the industry to our elected officials at both the state and federal level since then.

But that study is now severely outdated and an update is long overdue. So together with the American Horse Council, the NTRA, the American Quarter Horse Association and other organizations, we have recently commissioned Deloitte Consulting to do an even more in-depth study, including a breakout of the number of horses in each of the 50 states. The study will be released in February of 2005, and as with the previous study, we expect that the 2005 edition will prove to be a valuable resource for all industry stakeholders.

The Jockey Club has committed $100,000 to the project and we are calling on others in the industry to step forward and join us. If you haven't done so already, we ask that you contact Jay Hickey at the American Horse Council and pledge your support.

The final industry initiative that I would like to briefly address was the focal point of last year's Round Table Conference. You may recall that in summarizing our views concerning the state of our wagering system, we said "the time has come for the industry to apply true virtual enterprise behavior using a centralized database methodology to racing's entire technology infrastructure, including our wagering systems."

Following that premise, a team of industry stakeholders, including representatives from Churchill Downs, Magna Entertainment, the New York Racing Association, The Jockey Club, the TRA, NTRA, AmTote, Scientific Games and United Tote have been working on this issue and have outlined a migration path toward a next-generation wagering system consisting of three basic concepts:

First, the live host should control the wagering event;

Second, simulcast receiving sites should transmit wager details in real time to the live host, as opposed to the current practice of transmitting pool totals only on a cycled delay; and finally

Wagering transactions should be transmitted to -- and stored in -- a central database to provide the source data for real-time monitoring of suspicious activity and historical review.

As you can imagine, progress with issues this complex and a group this large comes slowly, as we strive to reach consensus on how best to achieve each of the three objectives outlined above.

While I am happy to report that every organization represented in our working group is committed to this project, I have to say personally that I'm disappointed, for the sake of this industry, that progress has been slower than expected.

Yet the changing landscape in racing's overall business model that has caused us to experience the phenomenon of increasing revenues but decreasing contributions being paid back to the primary stakeholders - our horsemen and racetracks - has at its roots the same fundamental problem that surfaced on October 26, 2002: an aged technology infrastructure that, quite frankly, prevents us from properly controlling and managing our business.

You will hear more about this subject in the second half of our program, but the message here is that the two issues - wagering security and the changing landscape of our business -- are inextricably linked and they must be solved together.

If designed properly, the wagering system I outlined above would not only provide enhanced security for the racing industry, it would also provide the necessary transparency that would ensure that host tracks know the source of all wagers being bet into their pools.

We do appreciate the efforts extended thus far by each of the organizations working on this project, and we ask them to re-dedicate themselves in the months ahead to make our shared vision a reality.

Thank you.

Ogden Mills Phipps: Thank you, Alan.