SECURITIES and EXCHANGE COMMISSION
Washington, D.C. 20549
Form 10-Q
[ X ] Quarterly report pursuant to Section 13 or 15(d) of the
Securites Exchange Act of 1934
For the quarterly period ended March 31, 1995
Commission file number 0-10619
Hollywood Park, Inc.
(Exact Name of Registrant as Specified in Its Charter)
Delaware
(State or Other Jurisdiction of Incorporation or Organization)
1050 South Prairie Avenue Inglewood, California 90301
(Address of Principal Executive Offices) (Zip Code)
(310) 419 - 1500
(Registrant's Telephone Number, Including Area Code)
Indicate by check mark whether the registrant: (a) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months, and (2) has been subject to such filing
requirements for the past 90 days. Yes [ X ] No [ ]
The number of outstanding shares of the registrant's common stock, as of the
date of the close of business on May 11, 1995: 18,369,634.
Hollywood Park, Inc.
Table of Contents
Part I
Item 1. Financial Information
Consolidated Balance Sheets as of March 31, 1995
and December 31,1994................................... 1
Consolidated Statements of Operations for the three
months ended March 31, 1995 and 1994................... 2
Consolidated Statements of Cash Flows for the three
months ended March 31, 1995 and 1994................... 3
Notes to Consolidated Financial Statements............... 4
Item 2. Management's Discussion and Analysis of Financial Condition
and Results of Operations.............................. 9
Part II
Item 1. Legal Proceedings......................................... 13
Item 3. Default Upon Senior Securities............................ 14
Item 5. Other Information......................................... 14
Item 6.a. Exhibits.................................................. 15
Other Financial Information............................... 17
Signatures................................................ 24
Hollywood Park, Inc.
Consolidated Balance Sheets
March 31, December 31,
1995 1994
------------ ------------
Assets (unaudited)
Current Assets:
Cash and cash equivalents $ 24,177,000 $ 37,122,000
Restricted cash 742,000 699,000
Short term investments 1,007,000 0
Casino lease and related interest receivable, net 0 11,745,000
Other receivables, net of allowance for doubtful
accounts of $158,000 in 1995 and $159,000 in 1994 8,500,000 8,224,000
Prepaid expenses and other assets 3,996,000 3,348,000
Deferred tax assets 4,755,000 4,827,000
Current portion of notes receivable 32,000 31,000
------------ ------------
Total current assets 43,209,000 65,996,000
Notes receivable 883,000 891,000
Casino lease and related interest receivable, net 18,690,000 0
Property, plant and equipment, net 159,632,000 160,264,000
Lease with TRAK East, net 1,245,000 1,110,000
Goodwill, net 5,781,000 5,813,000
Deferred tax assets 1,415,000 1,103,000
Other assets 11,250,000 11,396,000
------------ ------------
$242,105,000 $246,573,000
============ ============
- - - - ------------------------------------------------------------------------------------------------------------
Liabilities and Stockholders' Equity
Current Liabilities:
Accounts payable $ 5,793,000 $ 6,833,000
Accrued liabilities 9,275,000 7,703,000
Accrued workers' compensation 1,993,000 2,117,000
Accrued slip and fall claims 1,175,000 1,273,000
Amounts due to horsemen for purses, stakes and
awards 348,000 516,000
Amounts payable to charities 492,000 501,000
Outstanding pari-mutuel tickets 649,000 1,546,000
Current portion of notes payable 29,811,000 5,299,000
Deferred tax liabilities 370,000 288,000
------------ ------------
Total current liabilities 49,906,000 26,076,000
Notes payable 15,776,000 42,800,000
Deferred tax liabilities 10,243,000 10,442,000
------------ ------------
Total liabilities 75,925,000 79,318,000
Commitments and contingencies -- --
Stockholders' Equity:
Capital stock --
Preferred - $1.00 par value, authorized 250,000
shares; 27,499 issued and outstanding 28,000 28,000
Common - $.10 par value, authorized 40,000,000
shares: 18,369,634 issued and outstanding in
1995 and 1994 1,837,000 1,837,000
Capital in excess of par value 166,892,000 166,892,000
Accumulated deficit (2,577,000) (1,502,000)
------------ ------------
Total stockholders' equity 166,180,000 167,255,000
------------ ------------
$242,105,000 $246,573,000
============ ============
- - - - --------
See accompanying notes to consolidated financial statements.
1
Hollywood Park, Inc.
Consolidated Statements of Operations
For the three months ended
March 31,
----------------------------
1995 1994
------------- -------------
(unaudited)
Revenues:
Pari-mutuel commissions $ 6,308,000 $ 6,367,000
Lease and management fee - Sunflower 1,507,000 0
Lease - Casino 6,382,000 0
Admissions, programs, and other racing income 3,473,000 3,316,000
Concession sales 4,858,000 1,998,000
Other income 1,928,000 1,225,000
------------ -----------
24,456,000 12,906,000
------------ -----------
Expenses:
Salaries, wages and employee benefits 7,764,000 5,365,000
Operations of facilities 2,580,000 1,822,000
Cost of concession sales 5,873,000 1,850,000
Professional services 2,078,000 1,645,000
Rent 269,000 432,000
Utilities 959,000 616,000
Marketing 563,000 194,000
Administrative 1,538,000 923,000
------------ -----------
21,624,000 12,847,000
------------ -----------
Operating income 2,832,000 59,000
Casino pre-opening and training expenses 0 715,000
------------ -----------
Income (loss) before interest, income taxes,
depreciation and amortization 2,832,000 (656,000)
Depreciation and amortization 2,792,000 1,621,000
Interest expense 954,000 46,000
------------ -----------
Loss before income tax benefit (914,000) (2,323,000)
Income tax benefit 320,000 902,000
------------ -----------
Net loss $ (594,000) $ (1,421,000)
============ =============
- - - - -------------------------------------------------------------------------------------
Dividend requirements on convertible preferred stock $ 481,000 $ 481,000
Net loss allocated to common shareholders $ (1,075,000) $ (1,902,000)
Per common share:
Net loss - primary $ (0.06) $ (0.11)
Net loss - fully diluted $ (0.06) $ (0.11)
Cash dividend per common share $ 0.00 $ 0.00
Number of shares - primary 18,369,634 17,780,101
Number of shares - fully diluted 20,661,126 20,071,593
- - - - --------
See accompanying notes to consolidated financial statements.
2
Hollywood Park, Inc.
Consolidated Statements of Cash Flows
For the three months ended
March 31,
----------------------------
1995 1994
----------- ------------
(unaudited)
Cash flows from operating activities:
Net loss $ (594,000) $ (1,421,000)
Adjustment to reconcile net loss to net cash
used for operating activities:
Depreciation and amortization 2,792,000 2,236,000
Changes in assets and liabilities, net of the effects of the
purchase of a business:
Increase in restricted cash (43,000) (864,000)
Increase in casino lease and related interest receivable, net (6,945,000) 0
(Increase) decrease in other receivables, net (276,000) 1,818,000
Increase in prepaid expenses and other assets (650,000) (1,798,000)
Increase in deferred tax assets (240,000) (1,737,000)
Decrease in accounts payable (1,040,000) (1,576,000)
Increase in accrued liabilities 1,415,000 490,000
Decrease in accrued workers' compensation (124,000) (26,000)
Decrease in slip and fall claims (98,000) 0
(Decrease) increase in amounts due to horsemen for purses,
stakes and awards (168,000) 176,000
Decrease in amounts payable to charities (9,000) 0
Decrease in outstanding pari-mutuel tickets (897,000) (238,000)
(Decrease) increase in deferred tax liabilities (117,000) 863,000
Loss on sale or disposal of property, plant and equipment 67,000 7,000
----------- ------------
Net cash used for operating activities (6,927,000) (2,070,000)
----------- ------------
Cash flows from investing activities:
Additions to property, plant and equipment (2,122,000) (13,699,000)
Receipts from sale of property, plant and equipment 96,000 68,000
Principal collected on notes receivable 8,000 7,000
Purchase of short term investments (5,914,000) (51,007,000)
Proceeds from short term investments 4,907,000 59,016,000
Cash acquired in the purchase of a business, net of
transaction and other costs 0 429,000
----------- ------------
Net cash used in investing activities (3,025,000) (5,186,000)
----------- ------------
Cash flows from financing activities:
Proceeds from unsecured notes payable 1,404,000 8,000
Payment of unsecured notes payable (3,196,000) (5,000,000)
Payment of secured notes payable (667,000) (1,609,000)
Payments under capital lease obligations (53,000) (42,000)
Turf Paradise equity transactions 0 (66,000)
Turf Paradise net income charged to retained earnings 0 198,000
Dividends paid to preferred stockholders (481,000) (481,000)
----------- ------------
Net cash used for financing activities (2,993,000) (6,992,000)
----------- ------------
Decrease in cash and cash equivalents (12,945,000) (14,248,000)
Cash and cash equivalents at the beginning of the period 37,122,000 60,617,000
----------- ------------
Cash and cash equivalents at the end of the period $24,177,000 $ 46,369,000
=========== ============
- - - - --------
See accompanying notes to consolidated financial statements.
3
Hollywood Park, Inc.
Notes to Consolidated Financial Statements
Note 1 -- Summary of Significant Accounting Policies
- - - - ----------------------------------------------------
The financial information included herein has been prepared in conformity with
generally accepted accounting principles as reflected in the financial
statements included in the consolidated annual report on Form 10-K of Hollywood
Park, Inc. (the "Company" or "Hollywood Park") filed with the Securities and
Exchange Commission for the year ended December 31, 1994. This financial
information does not include certain footnotes and financial presentations
normally presented annually, and therefore, should be read in conjunction with
the 1994 Form 10-K.
The information furnished herein is unaudited; however, in the opinion of
management, it reflects all normal recurring adjustments that are necessary to
present a fair statement of the results for the interim periods. It should be
understood that accounting measurements at the interim dates inherently involve
greater reliance on estimates than at year end. The interim racing results of
operations are not indicative of the results for the full year due to the
seasonality of the racing business.
Acquisition of Sunflower Racing, Inc.
- - - - -------------------------------------
On March 23, 1994, the Company finalized the transaction to acquire Sunflower
Racing, Inc. ("Sunflower"), a greyhound and thoroughbred racing facility located
in Kansas City, Kansas. Sunflower, operating as the Woodlands, became a wholly
owned subsidiary of Hollywood Park, with the transaction accounted for under the
purchase method of accounting. The acquisition price was $15,000,000; paid for
with 591,715 shares of Hollywood Park common stock, with a then market price of
$25.35 per share. For financial reporting purposes, the transaction was valued
at $19.00 per Hollywood Park common share, based on the size of the block of
shares issued in the acquisition relative to the current trading volume.
Immediately following the acquisition, the Company contributed $5,000,000 in
cash to Sunflower to repay a portion of the subordinated debt Sunflower owed to
Mr. Hubbard, Chief Executive Officer of the Company, in return for more
favorable terms on the balance of the subordinated debt. In December 1994,
Sunflower received notice that it was to receive a refund of property taxes paid
during periods prior to the acquisition of approximately $1,484,000 (at December
31, 1994, the estimated refund was $1,641,000). The Sunflower financial
statements as of the date of acquisition were restated to include receipt of the
$1,484,000. Of the approximately $6,782,000 of restated excess acquisition cost
over the recorded value of the assets acquired, $1,310,000 was allocated to the
racing facility lease and management agreement Sunflower has with The Racing
Association of Kansas East ("TRAK East") and will be amortized over the
remaining 20 years of the lease, with the balance of $5,472,000 allocated to
goodwill to be amortized over 40 years.
An additional 55,574 shares of Hollywood Park common stock were issued to Mr.
Richard Boushka, a former Sunflower shareholder, as required by the agreement of
4
merger, because the market price of Hollywood Park's common stock 180 days after
the close of the acquisition, was more than 10% less than the market price on
the closing date of the acquisition. The agreement of merger also provided that
under certain circumstances the former Sunflower shareholders were entitled to
receive additional shares of Hollywood Park common stock. As of March 23, 1995,
the former Sunflower shareholders transferred their rights to such additional
consideration to Hollywood Park for nominal consideration, and have no further
entitlements to additional consideration.
Acquisition of Turf Paradise, Inc.
- - - - ----------------------------------
On August 11, 1994, the shareholders of Turf Paradise, Inc. ("Turf Paradise")
approved the Agreement of Merger, entered into on March 30, 1994, by Hollywood
Park and Turf Paradise and as amended on May 27, 1994, pursuant to which Turf
Paradise became a wholly owned subsidiary of Hollywood Park. Turf Paradise owns
and operates a thoroughbred race track in Phoenix, Arizona. The transaction was
accounted for under the pooling of interests method of accounting, with
approximately $627,000 of merger related costs incurred in total and expensed by
both the Company and Turf Paradise. In connection with the merger, the Company
paid a total of 1,498,016 newly issued shares of Hollywood Park common stock,
valued as of the date of issuance at approximately $33,800,000. Each share of
Turf Paradise common stock was valued at $13.00 and was converted to
approximately 0.577 shares of Hollywood Park common stock, which had a then fair
market value of $22.53 based on the weighted average of all trades on the NASDAQ
National Market System for the twenty trading days up to and including August
10, 1994.
As required under the pooling of interests method of accounting, the
consolidated financial statements for the periods prior to the acquisition have
been restated to include the accounts and results of operations of Turf
Paradise.
Pro Forma Results of Operations
- - - - -------------------------------
The following pro forma results of operations were prepared under the assumption
that the acquisition of Sunflower had occurred at the beginning of each of the
periods shown. The historical results of operations for both Sunflower and Turf
Paradise were combined with the Company's operating results and pro forma
adjustments were made for the following: amortization of the excess purchase
price allocated to the lease with TRAK East and to goodwill; interest expense
reduction related to the reduction in both the principal and interest rate on
Sunflower's subordinated debt; the termination of the management agreement
Sunflower had with a former shareholder; the wages and payroll taxes paid to a
former Sunflower shareholder; directors fees and income taxes.
5
Hollywood Park, Inc.
Unaudited Pro Forma Combined Consolidated
Results of Operations
For the three months
ended March 31,
---------------------------------
1995(a) 1994
--------------- ------------
Revenues $24,456,000 $18,133,000
Operating income 2,832,000 1,611,000
Income before interest, income taxes
depreciation and amortization 2,832,000 896,000
Net loss $ (594,000) $(1,248,000)
============ ===========
Dividend requirements on convertible
preferred stock 481,000 481,000
Net loss attributable to common
shareholders $(1,075,000) $(1,729,000)
Per common share:
Net loss - primary ($0.06) ($0.09)
Net loss - fully diluted ($0.06) ($0.09)
_____
(a) The results for the three months ended March 31, 1995 are actual.
Pre-Opening Expenses
- - - - --------------------
The Company expensed pre-opening costs associated with the Hollywood Park Casino
(the "Casino") which opened on July 1, 1994, under a third party leasing
agreement with Pacific Casino Management, Inc. ("PCM"), as incurred. These
costs included such items as project salaries, hiring costs and other pre-
opening services.
Earnings Per Share
- - - - ------------------
Primary earnings per share were computed by dividing income allocated to or loss
attributable to common shareholders (net income (loss) less preferred dividend
requirements) by the weighted average number of common shares outstanding during
the period. Fully diluted per share amounts were similarly computed, but
include the effect, when dilutive, of the conversion of the convertible
preferred stock and stock options.
The Company issued 1,498,016 shares of common stock to acquire Turf Paradise.
Earnings per share have been restated for prior periods as if these shares had
been outstanding during each period presented.
Cash Flows
- - - - ----------
Cash and cash equivalents consisted of certificates of deposit and short term
investments with maturities of 90 days or less.
6
Reclassifications
- - - - -----------------
Certain reclassifications have been made to the 1994 balances to be consistent
with the 1995 financial statement presentation.
Note 2 -- Short Term Investments
- - - - --------------------------------
Short term investments as of March 31, 1995 consisted of the following:
Commercial paper $1,000,000
Accrued interest 7,000
----------
$1,007,000
==========
The Company holds short term investments as available for sale as needed. The
average maturity of the short term investments was 145 days from March 31, 1995,
with each investment having a rating of AA or better. On the basis of the short
term nature of the assets and their relative liquidity, market value
approximated cost.
Note 3 -- Casino Lease and Related Interest Receivable, Net
- - - - -----------------------------------------------------------
The Casino opened on July 1, 1994, under a third party leasing arrangement
between Hollywood Park and PCM. Under current California law the lease rent
must be at a fixed amount. Recognizing that there was a maturing process for
the business, the lease allows unpaid rent to accrue for up to nine months, or
$27,000,000, and for PCM to retain cash equivalent to six months of operating
expenses. PCM has elected to defer all $27,000,000 of the lease rent due during
the Casino's first nine months of operations. In April 1995, the Company and
PCM executed an Amended and Restated Lease Agreement, subject to approval by the
California Attorney General (there can be no assurance that approval will be
given) which retroactively lowers the monthly fixed lease payment from
$3,000,000 to $2,000,000. For the nine months ended March 31, 1995, the Company
recorded Casino lease revenue of $17,500,000, representing the $27,000,000 of
rent due less a valuation allowance of $9,500,000. In addition, PCM executed a
promissory note to Hollywood Park for $18,690,000, representing nine months of
revised fixed monthly rent of $18,000,000 with related interest at 8.0%, and
approximately $197,000 of additional rent. Principal and accrued interest are
due and payable the earlier of September 30, 1996, or the termination of the
lease, and may be repaid sooner without penalty. On April 17, 1995, PCM paid
Hollywood Park $3,000,000 for additional rent related to PCM's use of food and
beverage services from Hollywood Park for the nine months ended March 31, 1995.
On May 1, 1995, PCM paid Hollywood Park rent of $2,000,000 for the month of
April 1995.
For the three months ended March 31, 1995, $6,382,000 of lease revenue was
recognized representing $9,000,000 of rent, accounted for under the original
lease and $382,000 of related interest due, less a valuation allowance of
$3,000,000.
7
Note 4 -- Property, Plant and Equipment
- - - - ---------------------------------------
Property, plant and equipment held at March 31, 1995, and December 31, 1994,
consisted of the following:
March 31, December 31,
1995 1994
----------- -----------
Land and land improvements $ 30,464,000 $ 29,621,000
Buildings and building
improvements 174,449,000 166,516,000
Equipment 34,058,000 31,286,000
Construction in progress 921,000 983,000
------------ ------------
239,892,000 228,406,000
Less accumulated
depreciation 80,260,000 68,142,000
------------ ------------
$159,632,000 $160,264,000
============ ============
Note 5 -- Secured and Unsecured Notes Payable
- - - - ---------------------------------------------
March 31, December 31,
1995 1994
------------ ------------
Secured notes payable (a) $ 29,344,000 $ 30,011,000
Unsecured notes payable (a) 15,700,000 15,825,000
Unsecured notes payable 175,000 1,850,000
Capital lease obligations 0 52,000
Unsecured note payable -
Gold Cup 368,000 361,000
------------ ------------
45,587,000 48,099,000
Less current maturities 29,811,000 5,299,000
------------ ------------
$ 15,776,000 $ 42,800,000
============ ============
_____
(a) These notes relate to Sunflower and are non-recourse to Hollywood Park.
8
Item 2. Management's Discussion and Analysis of Financial Condition
- - - - ----------------------------------------------------------------------
and Results of Operations
- - - - -------------------------
Results of Operations
---------------------
Three months ended March 31, 1995 compared to the three months ended
- - - - --------------------------------------------------------------------
March 31, 1994
- - - - --------------
The 1995 consolidated financial statements include the results of operations at
Hollywood Park, Sunflower, Turf Paradise and the Casino. Sunflower was a newly
acquired subsidiary as of March 23, 1994, accounted for under the purchase
method of accounting, and there are no comparable results of operations in the
1994 results of operations. Turf Paradise was a newly acquired subsidiary as of
August 11, 1994, accounted for under the pooling of interests method of
accounting, and as required, the 1994 results of operations have been restated
to include the operating results of Turf Paradise. The Casino began operations
on July 1, 1994, thus there are no comparable results of operations in the 1994
first quarter results. The following discussion and analysis is presented net of
the results of operations at Sunflower and the Casino, but is inclusive of the
results of operations at Turf Paradise.
Total Hollywood Park race track and Turf Paradise revenues of $12,229,000
declined by $677,000, or 5.2%, during the three months ended March 31, 1995,
when compared to the three months ended March 31, 1994. Pari-mutuel commissions
decreased by $59,000, or 0.9%. The decline was associated with Turf Paradise
and was primarily a result of there being eight fewer live race days in 1995.
Admissions, programs and other racing income decreased by $234,000, or 7.1%,
with the majority of the decrease attributable to Hollywood Park. In 1995,
simulcasting of races from Santa Anita were broadcast in the Casino (which was
not open during the three months ended March 31, 1994) and no admission fee was
charged to view and wager on races at the Casino. Concession sales decreased by
$322,000, or 16.1%, with the majority of the decline attributable to Hollywood
Park. With the shift of racing patrons to the Casino to view the simulcast from
Santa Anita, some food and beverage sales were shifted to the Casino. In
addition, there was one less day of simulcast racing from Santa Anita in 1995.
Other income decreased by $62,000, or 5.1%, due primarily to a decline in
interest income, because of declines in cash available for investing.
Total operating expenses, exclusive of Casino pre-opening and training expenses,
increased by $200,000, or 1.6%. Salaries, wages and employee benefits increased
by $144,000, or 2.7%. The increase was primarily associated with Hollywood
Park, due principally to additional permanent staffing and a shift in the
allocation of health costs. Operations of facilities decreased by $66,000, or
3.6%, primarily a result of property tax expense reductions at Turf Paradise.
Cost of concession sales decreased by $163,000, or 8.8%, primarily associated
with the decrease in concession sales at Hollywood Park. Professional services
increased by $174,000, or 10.6%, primarily because of increased legal costs
associated with the class action law suits pending against Hollywood Park (see
Item 1. Legal Proceedings), and increased video costs at Turf Paradise resulting
from additional off-track
9
wagering sites. Rent expense decreased by $179,000, or 41.4%, primarily due to
the conclusion of Hollywood Park's lease on the infield message board.
Marketing costs increased by $151,000, or 77.8%, primarily due to the launch of
a new marketing program at Turf Paradise, where there was a limited marketing
program under the former management. Administrative costs increased by
$151,000, or 16.4%, primarily because of a loss on the sale of the infield
message board and travel costs.
The Sunflower acquisition was accounted for under the purchase method of
accounting and Hollywood Park's historical results of operations were not
restated to include Sunflower's operating results; therefore, there can be no
comparison between the three months ended March 31, 1995, and 1994. However,
the mid-1994 introduction of riverboat gaming, complete with slot machines, on
the nearby Missouri River, has had a very significant negative impact on
Sunflower's operating results. For the three months ended March 31, 1995,
compared to the three months ended March 31, 1994, Sunflower's total handle,
including live greyhound racing and simulcasting of both greyhounds and horses,
declined by $17,435,000, or 42.9%. On April 29, 1995, the Kansas Legislature
adjourned, leaving Senate Bill 27 ("SB 27"), which would have permitted slot
machines at race tracks in conjunction with the Kansas Lottery, in the Senate
Federal and State Affairs Committee. SB 27 passed the House of Representatives
and carries over to 1996 in the Senate committee. The Company is currently
conducting a rigorous examination of its legislative, legal and operational
options with the goal of enabling Sunflower to sustain itself through the next
legislative session and compete with riverboat gaming in the longer term. This
will require the co-operation of employees, horsemen, dogmen, regulators,
bankers and creditors.
The Hollywood Park Casino opened on July 1, 1994, under a third party leasing
arrangement, whereby the lessee operates the gaming floor and related
activities, and the Company manages all other functions including security, food
and beverage services, maintenance and other such functions. The Casino's
income before income tax expense, for the three months ended March 31, 1995, was
$2,786,000. Casino lease revenue of $6,382,000 was recorded in the current
period. This amount represents the $9,000,000 of lease rent due under the terms
of the original lease, less a valuation allowance of $3,000,000, and accrued
interest of $382,000 on the unpaid balance of the lease rent. Under the terms
of the lease PCM deferred all of the lease payments for the first nine months of
operations, and until they had cash on hand to cover a minimum of six months of
operating expenses. In April 1995, the Company and PCM executed an Amended and
Restated Lease Agreement, subject to the approval by the California Attorney
General (there can be no assurance that approval will be given) which
retroactively lowers the monthly fixed lease rent payment from $3,000,000 to
$2,000,000. In addition, PCM executed a promissory note to Hollywood Park for
$18,690,000, representing nine months of revised fixed monthly rent of
$18,000,000 with related interest at 8.0%, and approximately $197,000 of
additional rent. On April 17, 1995, PCM paid Hollywood Park $3,000,000 for
additional rent related to PCM's use of food and beverage services from
Hollywood Park for the nine months ended March 31, 1995. On May 1, 1995,
Hollywood Park received $2,000,000 from PCM for April 1995's rent.
The 1994 Casino pre-opening and training costs of $715,000 were primarily
related to wages and benefits for senior management hired during the fourth
quarter of 1993
10
and miscellaneous operating costs. There were no similar expenses in 1995.
Depreciation and amortization increased by $59,000, or 3.6%, due to normal
capital expenditures and the amortization of the excess purchase price
associated with the Sunflower acquisition.
In 1995, an income tax benefit of $320,000 associated with the first quarter's
operating loss was recorded as required by the Statement of Financial Accounting
Standards 109 "Accounting for Income Taxes".
The net loss of $594,000 for the three months ended March 31, 1995, was
$827,000, or 58.2%, less than the net loss of $1,421,000 for the corresponding
period in 1994.
Liquidity and Capital Resources
-------------------------------
During the three months ended March 31, 1995, when compared to the three months
ended March 31, 1994, cash and cash equivalents decreased by $12,945,000. The
decline in cash and cash equivalents was primarily attributable to debt service
payments for secured and unsecured notes payable, capital expenditures and
dividends paid on the Company's convertible preferred stock. In addition, the
Company did not receive any lease payments in connection with the Casino lease,
because PCM exercised its option under the lease to defer up to nine months of
lease rent. During the three months ended March 31, 1994, when compared to the
three months ended March 31, 1993, cash and cash equivalents decreased by
$14,248,000, principally due to capital expenditures for the Casino and the
acquisition of Sunflower.
During the three months ended March 31, 1995, Hollywood Park did not draw any
funds from its $20,000,000 revolving line of credit. On April 14, 1995, the
Company executed an unsecured credit facility for up to $75,000,000 with Bank of
America National Trust and Savings Association ("Bank of America"). The loan
facility consists of a $60,000,000 line of credit (the "Line of Credit") and a
$15,000,000 revolver (the "Revolver").
The Line of Credit is an interest only, one year revolving facility, under which
the Company may borrow, pay and reborrow principal amounts without penalty. On
or before April 14, 1996, the Company has the option to convert the Line of
Credit to a term repayment line of credit, at a maximum amount of $60,000,000,
with a seven year term period from the date of conversion, which would require
payment of eighty-four successive equal monthly installments. The Line of
Credit has an interest rate equal to Bank of America's prime rate plus 0.25%.
The $15,000,000 Revolver, inclusive of a within line facility for standby
letters of credit of up to a maximum of $5,000,000, is available for two years
during which the Company can borrow, pay and reborrow principal amounts without
penalty. The Revolver has an interest rate equal to Bank of America's prime
rate.
During the three months ended March 31, 1995, the net activity in Turf
Paradise's unsecured revolving loan facility with Bank One of Arizona (the "Turf
Revolver"),
11
was payment of $1,667,000. On April 13, 1995, Turf Paradise repaid the
outstanding balance on the Turf Revolver and terminated the $2,500,000 facility.
Turf Paradise's future cash flow needs will be accommodated through a working
capital arrangement with Hollywood Park.
During the three months ended March 31, 1995, Sunflower continued to experience
intense competition from riverboat gaming in Missouri, which has had a
significant negative impact on Sunflower's earnings, and therefore its ability
to meet its obligations on its Senior Credit (as defined below). On December
19, 1994, in anticipation of insufficient cash flow from daily operations,
Sunflower executed a Promissory Note (the "Promissory Note") for $3,000,000 to
Hollywood Park. The purpose of the Promissory Note is to provide sufficient
cash flow for the payment of Senior Credit obligations of Sunflower. On January
3, 1995, and again on March 31, 1995, Hollywood Park advanced $1,250,000 to
Sunflower against the Promissory Note, for a total advancement of $2,500,000.
In 1991, Sunflower converted a $40,000,000 construction loan to a term note
payable with a group of five local and national banks (the "Banks"). On March
24, 1994, an Amended and Restated Credit and Security Agreement (the "Senior
Credit") was executed due to the change in ownership of Sunflower. The Senior
Credit has been amended twice, most recently on December 19, 1994, to allow for
the Promissory Note and for a waiver of default or event of default resulting
from the failure by Sunflower to maintain the required fixed charge coverage
ratio covenant as of December 31, 1994. The Senior Credit is non-recourse to
Hollywood Park.
As of March 31, 1995, the outstanding balance of the Senior Credit was
$29,333,000, and as of such date, Sunflower was in technical default of the
fixed charge coverage ratio covenant. Sunflower notified the Banks of the event
of default, and requested a waiver for the fixed charge coverage ratio covenant.
To date the Banks have not indicated if a waiver will or will not be granted.
There can be no assurance that the Banks will issue Sunflower a waiver. Even if
such a waiver is granted, in the absence of legislative reform expanding gaming
at Sunflower, Sunflower will need to restructure its Senior Credit agreement
with the Banks. On April 29, 1995, the Kansas Legislature adjourned, leaving SB
27, which would have permitted slot machines at race tracks in conjunction with
the Kansas Lottery, in the Senate Federal and State Affairs Committee. SB 27
passed the House of Representatives and carries over to 1996 in the Senate
committee.
The Casino opened on July 1, 1994, under a third party leasing agreement with
PCM. Consistent with the terms of the lease, PCM has deferred all the original
fixed lease rent due of $27,000,000 through March 31, 1995. On April 17, 1995,
PCM made a payment of $3,000,000 to Hollywood Park, for additional rent related
to PCM's use of food and beverage services from Hollywood Park for the nine
months ended March 31, 1995. In April 1995, the Company and PCM executed the
Amended and Restated Lease Agreement, subject to approval by the California
Attorney General, which retroactively lowers the monthly fixed lease payment
from $3,000,000 to $2,000,000. In addition, PCM executed a promissory note to
Hollywood Park for $18,690,000 representing nine months of revised fixed monthly
rent of $18,000,000 with related interest at 8.0%, and approximately $197,000 of
additional rent. Principal and
12
accrued interest are due and payable the earlier of September 30, 1996, or the
termination of the lease, and may be repaid earlier without penalty. On May 1,
1995, Hollywood Park received $2,000,000 from PCM for April 1995's rent.
Capital expenditures of $2,122,000 for the three months ended March 31, 1995,
were for normal and necessary improvements at Hollywood Park race track and
Casino, Sunflower and Turf Paradise.
On February 15, 1995, the Company paid dividends of $481,000, or $17.50 per
share, on its convertible preferred stock ($0.175 per depositary share). On
April 1, 1995, the Company declared the second quarter 1995 dividends at the
same rate as the February 15, 1995 dividends, payable on May 15, 1995, to
holders of record on April 15, 1995. Dividends of $481,000 were paid in the
first quarter of 1994.
On April 20, 1995, Hollywood Park Operating Company purchased a U.S. Treasury
Security, with a par value of $2,401,000, as security for its self insurance
workers' compensation program with the state of California.
Hollywood Park is continually evaluating future growth opportunities in the
gaming and entertainment industry. The Company expects that funding for growth
opportunities, dividend requirements on the convertible preferred stock,
payments on notes payable or capital expenditure needs will come from existing
cash balances, cash generated from operating activities and borrowings from the
credit facilities. In the opinion of management these resources will be
sufficient to meet the Company's future cash requirements.
Part II
Other Information
Item 1. Legal Proceedings
- - - - -------------------------
Since filing the Annual Report on Form 10-K for the year ended December 31,
1994, the Company has not become a party to any new material legal proceedings
nor, except as set forth below, have there been any material developments with
respect to any of the material legal proceedings reported therein.
There currently are six purported class actions (collectively the "Actions")
pending against the Company in the United States District Court for the Central
District of California (the "Court"). The Actions are entitled: (1) "William R.
Barney, Jr., et al. v. Randall D. Hubbard, et al.", filed September 28, 1994;
(2) "Larry David, IRA v. Hollywood Park, Inc., et al., Randall D. Hubbard, et
al.", filed September 29, 1994; (3) "Edward L. Loev, et al. v. Randall D.
Hubbard, et al.", filed September 30, 1994; (4) "Harold R. Farrow v. Hollywood
Park, Inc., et al.", filed October 11, 1994; (5) "Mary Rosen, et al. v. Randall
D. Hubbard, et al.", filed October 17, 1994; and (6) "Mary Boyajian, et al. v.
Randall D. Hubbard, et al.", filed October 18, 1994. All of the Actions are
substantively similar and have been ordered to be consolidated into a single
action.
The Court has ordered the parties to the Actions to engage in mediation to
explore
13
the possibility of settlement at these early stages of the Actions. If a
resolution of the Actions on terms acceptable and not materially adverse to the
Company cannot be achieved, then the Company will assert various defenses and
vigorously defend the Actions.
Item 2. Change in Securities
- - - - ----------------------------
None
Item 3. Default Upon Senior Securities
- - - - --------------------------------------
As of March 31, 1995, the outstanding balance of the Senior Credit was
$29,333,000, and as of such date, Sunflower was in technical default of the
fixed charge coverage ratio covenant. Sunflower notified the Banks of the event
of default, and requested a waiver for the fixed charge coverage ratio covenant.
To date the Banks have not indicated if a waiver will or will not be granted.
There can be no assurance that the Banks will issue Sunflower a waiver. Even if
such a waiver is granted, in the absence of legislative reform expanding gaming
at Sunflower, Sunflower will need to restructure its Senior Credit agreement
with the Banks. On April 29, 1995, the Kansas Legislature adjourned, leaving SB
27, which would have permitted slot machines at race tracks in conjunction with
the Kansas Lottery, in the Senate Federal and State Affairs Committee. SB 27
passed the House of Representatives and carries over to 1996 in the Senate
committee.
Item 4. Submission of Matters to a Vote of Security Holders
- - - - -----------------------------------------------------------
None
Item 5. Other Information
- - - - -------------------------
In April 1995, the Company and PCM executed an Amended and Restated Lease
Agreement (the "Agreement"), subject to approval by the California Attorney
General, which retroactively lowers the fixed monthly lease rent payment from
$3,000,000 to $2,000,000. The Agreement is scheduled to terminate on September
30, 1996, while the terminmation date for the original lease was June 30, 1997,
although under both the Agreement and the original lease, the Company may
terminate the lease if the Company is able to hold the gaming registration for
the Casino. In addition, PCM executed a promissory note to Hollywood Park for
$18,690,000, representing nine months of revised fixed monthly lease rent of
$18,000,000 with related interest, at 8.0%, and approximately $197,000 of
additional rent. Principal and accrued interest are due and payable the earlier
of September 30, 1996, or the termination of the lease, and may be repaid sooner
without penalty. On April 17, 1995, PCM paid Hollywood Park $3,000,000 for
additional rent related to PCM's use of food and beverage services from
Hollywood Park for the nine months ended March 31, 1995. On May 1, 1995,
Hollywood Park received $2,000,000 from PCM for April 1995's rent.
On April 29, 1995, the Kansas Legislature adjourned, leaving SB 27, which would
have allowed slot machines at race tracks in conjunction with the Kansas
Lottery, in the Senate Federal and State Affairs Committee. SB 27 passed the
House of Representatives and carries over to 1996 in the Senate committee. The
Company is currently conducting a rigorous examination of its legislative, legal
and operational options with the goal of enabling Sunflower to sustain itself
through the next legislative session and compete with riverboat gaming in the
longer term. This will require the co-operation of employees, horsemen, dogmen,
regulators, bankers and creditors.
14
Item 6.a Exhibits
Exhibit
Number Description of Exhibit
- - - - ------ ----------------------
2.1 Agreement of Merger by and among Hollywood Park, Inc., HP
Acquisition, Inc., Sunflower Racing, Inc., R.D. Hubbard and Richard
J. Boushka,dated February 24, 1994, executed on March 23, 1994,
is hereby incorporated by reference to the Company's Annual Report
on Form 10-K for the year ended December 31, 1993.
2.2 Agreement of Merger by and among Hollywood Park, Inc., HP
Acquisition, Inc., and Turf Paradise, Inc., dated March 30, 1994,
is hereby incorporated by reference to the Company's Quarterly
Report on Form 10-Q for the quarter ended March 31, 1994.
3.1 Certificate of Incorporation of Hollywood Park, Inc., is hereby
incorporated by reference to the Company's Registration Statement
on Form S-1 dated January 29, 1993.
3.2 Amended By-laws of Hollywood Park, Inc., are hereby incorporated by
reference to the Company's Registration Statement on Form S-1
dated January 29, 1993.
4.5 Convertible Preferred Stock Depository Stock Agreement between
Hollywood Park, Inc. and Chemical Trust Company of California, dated
February 9, 1993, is hereby incorporated by reference to the
Company's Registration Statement on Form S-1 dated January 29, 1993.
4.6 Hollywood Park Stock Option Plan is hereby incorporated by reference
to Exhibit A to the Notice of Annual Meeting of Stockholders and
Proxy Statement relating to the Annual Meeting of Stockholders of
Hollywood Park, Inc., held on May 17, 1993.
10.1 Directors Deferred Compensation Plan for Hollywood Park, Inc. is
hereby incorporated by reference to the Company's Annual Report on
Form 10-K for the year ended December 31, 1991.
10.2 Lease Agreement dated as of January 1, 1989, by and between Hollywood
Park Realty Enterprises, Inc. and Hollywood Park Operating Company,
as amended, is hereby incorporated by reference to the Joint Annual
Report on Form 10-K for the fiscal year ended December 31, 1989, of
Hollywood Park Operating Company and Hollywood Park Realty
Enterprises, Inc.
10.3 Forum Parking License Agreement dated as of July 1, 1991, by and
among Hollywood Park Operating Company, Hollywood Park Realty
Enterprises, Inc. and California Forum, a California limited
partnership, is hereby incorporated by reference to the Company's
Annual Report on Form 10-K for the year ended December 31, 1991.
10.4 Aircraft rental agreement dated November 1, 1993, by and between
Hollywood Park, Inc., and R.D. Hubbard Enterprises, Inc., is hereby
incorporated by reference to the Company's Annual Report on Form
10-K for the year ended December 31, 1993.
10.5 Hollywood Park Casino lease agreement dated June 15, 1994, by and
between Hollywood Park, Inc. and Pacific Casino Management, Inc.,
is hereby incorporated by reference to the Current Report on Form
8-K dated June 15, 1994.
15
10.6 Amended and Restated Credit Agreement dated March 23, 1994, by and
between Sunflower Racing, Inc. and First Union National Bank of
North Carolina, Bank One Lexington, Texas Commerce Bank, Home State
Bank of Kansas City and Intrust Bank, N.A., is hereby incorporated
by reference to the Company's Quarterly Report on Form 10-Q for the
quarter ended June 30, 1994.
10.7 Pledge Agreement dated March 23, 1994, by and between Hollywood Park,
Inc., First Union National Bank of North Carolina, (as agent for the
ratable benefit of itself and the Banks named in the Amended and
Restated Credit Agreement included as Exhibit 10.6) is hereby
incorporated by reference to the Company's Quarterly Report on Form
10-Q for quarter ended June 30, 1994.
10.8 Subordination and Amendment Agreement dated March 23, 1994, by and
between R.D. Hubbard and Sunflower Racing, Inc., is hereby
incorporated by reference to the Company's Quarterly Report on
Form 10-Q for the quarter ended June 30, 1994.
10.9 Ground Lease Agreement dated August 4, 1994, by and between Hollywood
Park, Inc. and QBM Investment Corporation, is hereby incorporated by
reference to the Company's Annual Report on Form 10-K for the year
ended December 31, 1994.
10.10 Agreement Respecting Pyramid Casino dated December 3, 1994, by and
between Hollywood Park, Inc. and Compton Entertainment, Inc., is
hereby incorporated by reference to the Company's Annual Report on
Form 10-K for the year ended December 31, 1994.
10.11 Amendment of Oil and Gas Lease dated January 10, 1995, by and among
Hollywood Park, Inc., and Casex Co., Nunn Ltd., and Votex Energy &
Mineral is hereby incorporated by reference to the Company's Annual
Report on Form 10-K for the year ended December 31, 1994.
10.12 Agreement to sell contingent rights to additional consideration
payable by Hollywood Park, Inc. related to the Agreement of Merger
by and among Hollywood Park, Inc., HP Acquisition Inc., Sunflower
Racing, Inc., R.D. Hubbard and Richard J. Boushka, dated February
24, 1994, executed on March 23 1994, by and among Hollywood Park,
Inc., R.D. Hubbard and Richard J. Boushka, dated March 23, 1995, is
hereby incorporated by reference to the Company's Annual Report on
Form 10-K for the year ended December 31, 1994.
10.13 Business Loan Agreement dated April 14, 1995, by and between
Hollywood Park, Inc., and Bank of America National Trust and Savings
Association.
10.14 Amendment to Agreement Respecting Pyramid Casino dated April 14,
1995, by and between Hollywood Park, Inc., and Compton Entertainment,
Inc.
22.1 Subsidiaries of Hollywood Park, Inc.: Hollywood Park Operating
Company, a Delaware corporation (and its subsidiaries: Hollywood
Park Fall Operating Company, a Delaware corporation and Hollywood
Park Food Services, Inc., a California corporation): Sunflower
Racing, Inc., a Kansas corporation (and its subsidiary Sunflower
Food and Beverage, Inc., a Kansas corporation): and Turf Paradise,
Inc., an Arizona corporation.
27.1 Financial Data Schedule
16
(b) Reports on Form 8-K
There were no Reports on Form 8-K filed during the quarter.
Hollywood Park, Inc.
Racing Data
Hollywood Park Race Track
- - - - -------------------------
1995 1994
----------------- -----------------
Live racing dates:
Spring/Summer meeting ("S/S") April 28 through July 24 April 27 through July 25
Autumn meeting ("A") Nov. 15 through Dec. 24 Nov. 9 through Dec. 24
Live race days including
charity days (a):
Spring/Summer meeting 67 68
Autumn meeting 30 34
--- ---
97 102
=== ===
Live race days by quarter:
First quarter 0 0
Second quarter (S/S) 48 48
Third quarter (S/S) 19 20
Fourth quarter (A) 30 34
--- ---
97 102
=== ===
Simulcast race days:
Santa Anita thoroughbred 90 90
Del Mar thoroughbred 43 43
Fairplex Pomona thoroughbred 19 19
Oak Tree from Santa Anita
thoroughbred 32 27
Los Alamitos Harness -
night races 36 40
Los Alamitos Quarter Horse -
night races 151 141
Cal Expo Harness - night races 47 0
Bay Meadows - northern 111 --
California (b)
Golden Gate Fields -
northern California (b) 102 --
Fairs - northern California (b) 88 --
______
(a) There are three charity days in both the Spring/Summer and Autumn meetings,
for a total of six charity days per year.
(b) Simulcasting from northern California runs year round and is simulcast
concurrently with either live on-track racing or with southern California
simulcasting.
17
Sunflower Racing -- operating as the Woodlands
- - - - ----------------------------------------------
Sunflower, operating as the Woodlands race track, under Kansas racing law is not
granted any race days and does not generate any pari-mutuel commissions. The
Kansas Racing Commission granted Sunflower the facility ownership and manager
licenses, with all race days until 2014 granted to TRAK East, a Kansas not-for-
profit corporation. Sunflower has an agreement with TRAK East to provide the
physical race tracks along with management and consulting services for twenty-
five years with options to renew for one or more successive five year terms.
The Agreement and Restatement of Lease and Management Agreement was entered into
as of September 14, 1989. Sunflower had guaranteed that the minimum net
revenues to be retained by TRAK East, which are for distribution to charities,
would not be less than $500,000, but in the absence of legislative relief (see
Part II, Item 5) Sunflower will be having discussions with TRAK East to reduce
the amount retained for charities.
1995 Race days and performances by quarter:
Live On-track Simulcast
----------------------- ---------
Race Days Performances Race Days
--------- ------------ ---------
Greyhounds
First quarter 73 103 44
Second quarter 78 104 78
Third quarter 78 107 78
Fourth quarter 71 96 71
---- ---- ----
300 410 271
==== ==== ====
Thoroughbreds
First quarter 0 -- 63
Second quarter 0 -- 65
Third quarter 34 -- 65
Fourth quarter 26 -- 65
---- ---- ----
60 -- 258
==== ==== ====
18
1994 Race days and performances by quarter:
Live On-track Simulcast
----------------------- ---------
Race Days Performances Race Days
-------- ----------- ---------
Greyhounds
First quarter 69 104 68
Second quarter 82 123 80
Third quarter 78 107 71
Fourth quarter 71 102 69
--- --- ---
300 436 288
=== === ===
Thoroughbreds
First quarter 0 -- 60
Second quarter 0 -- 76
Third quarter 36 -- 77
Fourth quarter 26 -- 65
--- --- ---
62 -- 278
=== === ===
The following pari-mutuel wagering data is related to TRAK East at Sunflower.
Sunflower does not generate any pari-mutuel wagering related revenue, but
instead receives a lease and managment fee from TRAK East.
TRAK East - at Sunflower For the three months ended March 31,
-----------------------------------------------------
1995 1994 1995 1994
---------- ---------- ---------- -----------
Greyhounds Horses
------------------------- -------------------------
Pari-mutuel handle:
On-track $14,107,000 $29,419,000 $ 0 $ 0
Off-track 0 0 0 0
Simulcast 1,563,000 2,689,000 7,536,000 8,533,000
----------- ---------- ---------- ----------
$15,670,000 $32,108,000 $7,536,000 $8,533,000
=========== =========== ========== ==========
Pari-mutuel commissions:
On-track $ 1,804,000 $ 3,628,000 $ 0 $ 0
Off-track 0 0 0 0
Simulcast 161,000 259,000 786,000 899,000
----------- ---------- ---------- ----------
$ 1,965,000 $ 3,887,000 $ 786,000 $ 899,000
=========== =========== ========== ==========
Turf Paradise
- - - - -------------
Turf Paradise has one continuous live thoroughbred race meet that starts in
September and runs through May. During 1995 Turf Paradise will race live for
the period January 1 through May 22 and will resume live racing on September 23
and run
19
through December 31. Turf Paradise will operate as a simulcast facility for
Arizona's Prescott Downs during the period May 26 through September 4. In 1994,
Turf Paradise raced live from January 1 through May 23 and resumed live racing
on September 23 running through December 31. Turf Paradise operated as a
simulcast facility for the period May 27 through September 5, in 1994. In
addition to running live thoroughbred races, Turf Paradise offers two quarter
horse races a day during the first three months of the live meet (September
through November) and a limited number of arabian races each spring. Turf
Paradise also accepts simulcast signals during live racing on Fridays, Saturdays
and Sundays. As of September 1994, Turf Paradise began operating as a simulcast
facility during the two dark days (days without live racing during the live race
meet) of each week during the live on-track racing season.
Live On-track Dark Day Simulcasting -
Race Days Simulcasting Prescott
---------------- ---------------- ----------------
1995 1994 1995 1994 1995 1994
---- ---- ---- ---- ---- ----
First quarter 67 75 23 0 0 0
Second quarter 37 40 15 0 30 29
Third quarter 3 4 13 11 53 56
Fourth quarter 66 65 24 25 0 0
--- --- --- --- --- ---
173 184 75 36 83 85
=== === === === === ===
20
Hollywood Park, Inc.
Selected Financial Data by Operational Location
For the three months ended
March 31,
------------------------------
1995 1994
----------- -----------
(unaudited)
Revenues:
Hollywood Park, Inc. and Race Track $ 5,786,000 $ 6,237,000
Sunflower Racing, Inc. 2,638,000 0
Turf Paradise, Inc. 6,443,000 6,669,000
Hollywood Park, Inc. - Casino Division 9,589,000 0
----------- -----------
24,456,000 12,906,000
----------- -----------
Expenses:
Hollywood Park, Inc. and Race Track 8,517,000 8,522,000
Casino pre-opening and training costs 0 715,000
Sunflower Racing, Inc. 2,265,000 0
Turf Paradise, Inc. 4,530,000 4,325,000
Hollywood Park, Inc. - Casino Division 6,312,000 0
----------- -----------
21,624,000 13,562,000
----------- -----------
Income (loss) before interest, income taxes,
depreciation and amortization:
Hollywood Park, Inc. and Race Track (2,731,000) (2,285,000)
Casino pre-opening and training costs 0 (715,000)
Sunflower Racing, Inc. 373,000 0
Turf Paradise, Inc. 1,913,000 2,344,000
Hollywood Park, Inc. - Casino Division 3,277,000 0
----------- -----------
2,832,000 (656,000)
----------- -----------
Depreciation and amortization:
Hollywood Park, Inc. and Race Track 1,351,000 1,308,000
Sunflower Racing, Inc. 621,000 0
Turf Paradise, Inc. 329,000 313,000
Hollywood Park, Inc. - Casino Division 491,000 0
----------- -----------
2,792,000 1,621,000
----------- -----------
Interest expense:
Hollywood Park, Inc. and Race Track 49,000 38,000
Sunflower Racing, Inc. 888,000 0
Turf Paradise, Inc. 17,000 8,000
Hollywood Park, Inc. - Casino Division 0 0
----------- -----------
954,000 46,000
----------- -----------
Income (loss) before income tax expense:
Hollywood Park, Inc. and Race Track (4,131,000) (3,631,000)
Casino pre-opening and training costs 0 (715,000)
Sunflower Racing, Inc. (1,136,000) 0
Turf Paradise, Inc. 1,567,000 2,023,000
Hollywood Park, Inc. - Casino Division 2,786,000 0
----------- -----------
(914,000) (2,323,000)
Income tax benefit 320,000 902,000
----------- -----------
Net loss $ (594,000) $(1,421,000)
=========== ===========
Dividend requirements on convertible preferred stock $ 481,000 $ 481,000
----------- -----------
Net loss allocated to common shareholders $(1,075,000) $(1,902,000)
=========== ===========
Per common share:
Net loss - primary $ (0.06) $ (0.11)
Net loss - fully diluted $ (0.06) $ (0.11)
Number of shares - primary 18,369,634 17,780,101
Number of shares - fully diluted 20,661,126 20,071,593
21
Hollywood Park, Inc.
Pari-mutuel Wagering Data
For the three months ended
March 31,
--------------------------------
1995 1994
------------ ------------
Hollywood Park
- - - - ----------------------------------------
Pari-mutuel handle:
On-track $ 0 $ 0
Off-track - shared handle wagering 0 0
Simulcast 82,406,000 77,405,000
------------ ------------
Total $ 82,406,000 $ 77,405,000
============ ============
Pari-mutuel commissions:
On-track $ 0 $ 0
Off-track - shared handle wagering 0 0
Off-track - independent handle 0 0
Simulcast 1,602,000 1,530,000
------------ ------------
Total $ 1,602,000 $ 1,530,000
============ ============
Turf Paradise
- - - - ----------------------------------------
Pari-mutuel handle:
On-track $ 11,977,000 $ 15,942,000
Off-track - shared handle wagering 30,513,000 23,951,000
Simulcast 16,840,000 12,934,000
------------ ------------
Total $ 59,330,000 $ 52,827,000
============ ============
Pari-mutuel commissions:
On-track $ 1,352,000 $ 1,893,000
Off-track - shared handle wagering 1,653,000 1,863,000
Off-track - independent handle 368,000 155,000
Simulcast 1,333,000 926,000
------------ ------------
Total $ 4,706,000 $ 4,837,000
============ ============
Combined
- - - - ----------------------------------------
Pari-mutuel handle:
On-track $ 11,977,000 $ 15,942,000
Off-track - shared handle wagering 30,513,000 23,951,000
Simulcast 99,246,000 90,339,000
------------ ------------
Total $141,736,000 $130,232,000
============ ============
Pari-mutuel commissions:
On-track $ 1,352,000 $ 1,893,000
Off-track - shared handle wagering 1,653,000 1,863,000
Off-track - independent handle 368,000 155,000
Simulcast 2,935,000 2,456,000
------------ ------------
Total $ 6,308,000 $ 6,367,000
============ ============
22
Hollywood Park, Inc.
Calculation of Earnings Per Share
For the three months ended March 31,
----------------------------------------------------------------
Primary Assuming full dilution (a)
---------------------------- ---------------------------
1995 1994 1995 1994
----------- ------------ ------------ -----------
Average number of common shares outstanding 18,369,634 17,780,101 18,369,634 17,780,101
Average common shares due to assumed conversion
of convertible preferred shares 0 0 2,291,492 2,291,492
----------- ----------- ----------- -----------
Total shares 18,369,634 17,780,101 20,661,126 20,071,593
=========== =========== =========== ===========
Net loss $ (594,000) $(1,421,000) $ (594,000) $(1,421,000)
Less dividend requirements on convertible
preferred shares 481,000 481,000 0 0
----------- ----------- ----------- -----------
Loss allocated to common shareholders $(1,075,000) $(1,902,000) $ (594,000) $(1,421,000)
=========== =========== =========== ===========
Net loss per share $ (0.06) $ (0.11) $ (0.03) $ (0.07)
=========== =========== =========== ===========
- - - - ---------------
(a) The computed values assuming full dilution are anti-dilutive; therefore, the
primary share values are presented on the face of the consolidated statements of
operations.
23
Signatures
----------
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange
Act of 1934, the Registrant has duly caused this report to be signed on its
behalf by the undersigned, thereunto duly authorized.
Hollywood Park, Inc.
(Registrant)
By: \s\ R.D. Hubbard Dated: May 12, 1995
-------------------------------
R.D. Hubbard
Chairman of the Board and
Chief Executive Officer
(Principal Executive Officer)
By: \s\ G. Michael Finnigan Dated: May 12, 1995
--------------------------------
G. Michael Finnigan
Executive Vice President and
Chief Financial Officer
(Principal Financial and
Accounting Officer)
24
Hollywood Park, Inc.
Exhibit Index
Exhibit Description Page
- - - - ------- ----------- ----
10.13 Business Loan Agreement dated April 14,
1995, by and between Hollywood Park,
Inc., and Bank of America National Trust
and Savings Association
10.14 Amendment to Agreement Respecting Pyramid
Casino dated April 14, 1995, by and
between Hollywood Park, Inc., and Compton
Entertainment, Inc.
27.1 Financial Data Schedule, Article 5