SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K/A
Current Report Pursuant
to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Date of report (Date of earliest event reported): November 17, 1995
HOLLYWOOD PARK, INC.
(Exact Name of Registrant as Specified in Its Charter)
Delaware
(State or Other Jurisdiction of Incorporation)
0-10619 95-3667491
(Commission File Number) (I.R.S. Employer Identification No.)
1050 South Prairie Avenue Inglewood, California 90301
(Address of Principal Executive Offices) (Zip Code)
(310) 419 - 1500
(Registrant's Telephone Number, Including Area Code)
ITEM 2. ACQUISITION OR DISPOSITION OF ASSETS
- ------- ------------------------------------
On November 17, 1995, pursuant to an Agreement of Plan and Reorganization (the
"Agreement"), dated as of November 17, 1995, Hollywood Park, Inc., ("Hollywood
Park") acquired substantially all the assets, properties and business of Pacific
Casino Management, Inc., ("PCM"), and assumed substantially all of PCM's
liabilities (the "Acquisition"). Prior to the Acquisition, PCM operated the
gaming floor activities of the Hollywood Park Casino under a lease of the Casino
from Hollywood Park. Immediately following the Acquisition Hollywood Park
commenced its operation of the Casino.
The purchase price of PCM's assets is an aggregate $2,640,000, payable solely in
shares of Hollywood Park common stock, payable to PCM in three installments as
follows:
(a) Shares of Hollywood Park common stock, having a value of $1,600,000,
(135,164 shares) issued on November 17, 1995;
(b) Shares of Hollywood Park common stock, having a value of $540,000 on the
first anniversary of the execution of the Agreement;
(c) Shares of Hollywood Park common stock, having a value of $500,000 on the
second anniversary of the execution of the Agreement;
provided, that at any time after the execution date of the Agreement, Hollywood
Park may elect to accelerate the payment of the installments described in (b)
and (c) above. Shares to be issued in the installments described in (b) and (c)
above will be valued at the average market price of Hollywood Park common stock
for the ten trading days immediately preceding the payment date.
ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS
- ------- ---------------------------------
(a) Financial statements of business acquired:
Consent to be filed seprately upon receipt from Ernst & Young LLP.
Audited Financial Statements
Pacific Casino Management, Inc.
For the period July 1, 1994 (inception) through December 31, 1994
with Report of Independent Auditors
Report of Independent Auditors
The Board of Directors
Pacific Casino Management, Inc.
We have audited the accompanying balance sheet of Pacific Casino Management,
Inc. as of December 31, 1994 and the related statements of operations,
accumulated deficit, and cash flows for the period July 1, 1994 (inception)
through December 31, 1994. These financial statements are the responsibility of
the Company's management. Our responsibility is to express an opinion on these
financial statements based on our audit.
1
We conducted our audit in accordance with generally accepted auditing standards.
Those standards require that we plan and perform the audit to obtain reasonable
assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audit provides a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of Pacific Casino Management, Inc.
at December 31, 1994, and the results of its operations and its cash flows for
the period July 1, 1994 (inception) through December 31, 1994 in conformity with
generally accepted accounting principles.
As discussed more fully in Notes 1 and 3 to the financial statements, the
Company's ability to operate the Hollywood Park Casino is contingent upon the
continuation and renewal of its gaming registration by the California Department
of Justice when it expires on June 30, 1995, and the continuation of the lease
agreement with Hollywood Park, Inc.
March 3, 1995 /s/ Ernst & Young LLP
---------------------
Pacific Casino Management, Inc.
Balance Sheet
December 31, 1994
ASSET
Cash and cash equivalents $ 9,193,004
Accounts receivable 1,348,100
Amounts due from shareholders (non
interest bearing) 399,998
Other assets 132,936
------------
Total assets $ 11,074,038
============
LIABILITIES AND SHAREHOLDERS' DEFICIENCY
Liabilities:
Accrued rent $ 18,000,000
Accounts payable 3,361,017
Accrued liabilities - employee related 957,653
Gaming liabilities 1,774,624
Note payable to bank 10,000
------------
Total liabilities 24,103,294
Shareholders' deficiency:
Common stock, no par
Authorized - 1,000 shares
Issued and outstanding - 200 shares 400,000
Accumulated deficit (13,429,256)
------------
Total shareholders' deficiency (13,029,256)
------------
Total liabilities and shareholders'
deficiency $ 11,074,038
============
See accompanying notes.
2
Pacific Casino Management, Inc.
Statement of Operations and Accumulated Deficit
For the period July 1, 1994 (inception) through December 31, 1994
Revenues:
Casino revenue $ 20,218,856
Interest income 25,238
------------
20,244,094
Costs and expenses:
Rent 18,000,000
Salaries and related benefits 9,112,248
Gaming license fees 2,221,621
Other operating expenses 4,339,480
------------
33,673,349
------------
Net loss (13,429,256)
Accumulated deficit:
Beginning of period -
------------
End of period $(13,429,256)
============
See accompanying notes.
Pacific Casino Management, Inc.
Statement of Cash Flows
For the period July 1, 1994 (inception) through December 31, 1994
OPERATING ACTIVITIES
Net loss $(13,429,256)
Increase in accounts receivable and
other assets (1,481,036)
Increase in amounts due from
shareholders (399,998)
Increase in accounts payable and
accrued liabilities 24,093,294
------------
Net cash provided by operating
activities 8,783,004
FINANCING ACTIVITIES
Capital contributions 400,000
Proceeds from bank loan 3,000,000
Repayment of bank loan (2,990,000)
------------
Net cash provided by financing
activities 410,000
Net increase in cash and cash
equivalents 9,193,004
Cash and cash equivalents at beginning
of period -
------------
Cash and cash equivalents at end of
period $ 9,193,004
============
See accompanying notes.
3
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
The accounting and reporting policies of Pacific Casino Management, Inc. (the
"Company") conform with generally accepted accounting principles and general
practice within the gaming industry. The following are descriptions of the more
significant of those policies.
CASINO OPERATIONS
The Company was organized on June 30, 1994 as a Subchapter S corporation under
the laws of the State of California. The Company operates the Hollywood Park
Casino (the "Casino") under a license granted by the City of Inglewood,
California and a conditional registration issued by the State of California,
Department of Justice. The Casino was constructed by Hollywood Park, Inc.
exclusively for gaming operations managed by the Company. The building and all
related furniture and equipment are owned by Hollywood Park, Inc. and leased to
the Company under a 3-year lease (Note 3).
The Company's ability to operate the Casino requires it hold a valid license
from the City of Inglewood and that its shareholders and certain managers be
duly registered under the Gaming Registration Program by the California
Department of Justice. The registration of the shareholders is conditional and
expires June 30, 1995. The Department of Justice has no obligation to extend
such registration and there can be no assurance that it will do so. In the event
the Department of Justice determines that any of the conditions to the current
registration are not met, it may be able to terminate that registration prior to
June 30, 1995 without notice.
The Company is required to pay a gross revenue license fee to the City of
Inglewood. This fee, payable monthly, is based upon the Casino's level of gross
revenue payable according to a graduated schedule as defined by the City of
Inglewood.
CASH EQUIVALENTS
The Company considers cash equivalents to mean financial instruments with
maturities of three months or less. Cash is pledged as security for a bank
credit agreement (Note 2).
ACCOUNTS RECEIVABLE
Accounts receivable consists solely of credit extended to Casino customers, and
is stated at net realizable value. The Company adopted the direct write-off
approach for casino credit exceeding 60 days past due because the Company lacks
the experience used in determining an allowance for doubtful accounts based on
statistical experience or other practices commonly employed to establish such an
allowance.
The Company extends credit to employees under the same terms and conditions as
that of its customers. Casino credit due from employees amounted to $77,000 at
December 31, 1994.
CASINO REVENUE
Casino revenue is the amount of cash collected for the supervision of gaming
activities conducted at the Casino.
4
INCOME TAXES
The Company was organized as a Subchapter S corporation. The shareholders
include their respective share of Company income or loss in their income tax
returns.
JACKPOT LIABILITY
A jackpot liability is computed equal to the total potential jackpots payable at
the close of business on the last day of the period.
2. BANK CREDIT AGREEMENT
The Company has entered into a bank credit agreement (the "Agreement") which
includes two revolving credit facilities both of which are secured by bank
deposit accounts, receivables and other personal property. Facility A, with a
$1,000,000 credit limit, is available for general working capital purposes.
Facility B, with a $1,000,000 credit limit, is available to fund credit lines to
Company customers, to fund day to day change fund requirements and to otherwise
provide cash for Casino related activities. The Agreement calls for a variable
interest rate with portions of the outstanding advances subject to a fixed
interest rate at the option of the Company. The Agreement expires on July 1,
1995 and is guaranteed by the Company's shareholders. Interest paid for the
period July 1, 1994 (inception) through December 31, 1994 on outstandings during
that period amounted to approximately $20,000.
3. AGREEMENT WITH HOLLYWOOD PARK, INC.
The Company leases its premises and all other operating equipment from Hollywood
Park, Inc. under a 3-year lease agreement. The lease agreement may be terminated
at any time by Hollywood Park, Inc. should they receive or be granted a gaming
license by the State of California to operate the Casino. The lease agreement
requires no payments until the Company accumulates cash exceeding the
outstanding balances on bank working capital loans plus an estimated six months
of operating expenses excluding rent. As of December 31, 1994, the required cash
reserve level was approximately $14,000,000. If the aggregate amount of rent not
paid exceeds $27,000,000, Hollywood Park, Inc. may terminate the lease upon
thirty days written notice to the Company. No lease payments have been made
during the period July 1, 1994 (inception) through December 31, 1994. The
aggregate future minimum annual rental commitment is $36,000,000 for 1995 and
1996 and $18,000,000 for 1997.
Included in other operating expenses are certain service fees paid to Hollywood
Park, Inc. These services are, for the most part, included within the terms of
the 3-year lease agreement. Among the services provided are food and beverage
services, security and other employee costs and data processing. Expenses for
these services for the period July 1, 1994 (inception) through December 31, 1994
amounted to approximately $2,369,000, $146,000 and $93,000, respectively.
(b) Pro forma financial information:
HOLLYWOOD PARK, INC.
INTRODUCTION TO UNAUDITED PRO FORMA COMBINED FINANCIAL DATA
UNAUDITED PRO FORMA COMBINED BALANCE SHEET The following unaudited pro forma
combined balance sheet has been prepared by combining the unaudited consolidated
balance sheets of Hollywood
5
Park, Inc. and Pacific Casino Management, Inc. as of September 30, 1995. The
acquisition of PCM was accounted for using the purchase method of accounting for
business combinations. The unaudited pro forma combined balance sheet should be
read in conjunction with the accompanying notes.
UNAUDITED PRO FORMA COMBINED STATEMENTS OF OPERATIONS The following unaudited
pro forma combined statements of operations have been prepared by combining the
consolidated statements of operations of Hollywood Park and PCM for the year
ended December 31, 1994, and for the nine months ended September 30, 1995. (PCM
began operations on July 1, 1994.) The pro forma combination of Hollywood Park
and PCM was accounted for using the purchase method of accounting. These pro
forma financial statements should be read in conjunction with the accompanying
notes.
NOTES TO THE UNAUDITED PRO FORMA COMBINED BALANCE SHEET
ASSUMPTION The recorded values of the assets and liabilities Hollywood Park
acquired from PCM have been combined with Hollywood Park at their estimated fair
market value as of September 30, 1995.
PRO FORMA ADJUSTMENTS The following adjustments and eliminations have been made
to the unaudited pro forma combined balance sheet:
(a) Before the Acquisition, PCM operated the gaming floor activities of the
Hollywood Park Casino under a lease with Hollywood Park. As provided for in the
lease, fixed lease rent was allowed to accrue for up to nine months, with the
execution of the first Amended and Restated Lease Agreement $18,690,000 of
unpaid lease rent was converted to a note receivable to Hollywood Park from
PCM.
(b) In addition to fixed lease rent, Hollywood Park charged PCM for various
additional goods and services, as provided for in the lease.
(c) Hollywood Park capitalized all costs associated with negotiating and
executing the lease with PCM, and amortized the costs over the original three
year term of the lease.
(d) To record the cost in excess of the net assets acquired from PCM, which
will be amortized on a straight line basis over 40 years.
(e) The stockholders' equity accounts have been adjusted to reflect the
approximately 237,000 shares of Hollywood Park common stock expected to be
issued to acquire PCM. Adjustments have also been made to eliminate the PCM
common stock and to reflect the write-off of the unamortized capitalized lease
costs (see (c) above), and to reflect the cost in excess of the net assets
acquired (see (d) above).
COMBINATION CONSIDERATION The actual number of shares of Hollywood Park common
stock issued for PCM will be determined by adding 135,164 common shares issued
on November 17, 1995, to the shares to be issued on the first and second
anniversaries of the acquisition. The number of shares of Hollywood Park common
stock issued on the first and second anniversaries of the acquisition will be
based on the average market price of Hollywood Park common stock for the ten
trading days immediately preceding the first and the second anniversaries of the
acquisition.
6
NOTES TO THE UNAUDITED PRO FORMA COMBINED STATEMENTS OF OPERATIONS
ASSUMPTIONS The unaudited pro forma combined statements of operations for the
year ended December 31, 1994, and the nine months ended September 30, 1995, are
presented as if the Acquisition had taken place on July 1, 1994. (PCM began
operations on July 1, 1994.)
PRO FORMA ADJUSTMENTS The following adjustments and eliminations have been made
to the unaudited pro forma combined statements of operations:
(a) Before the Acquisition, PCM operated the gaming floor activities of the
Hollywood Park Casino under a lease of the Casino from Hollywood Park. Under
the terms of the original lease (in place from July 1994 through March 1995) the
fixed monthly rent was $3,000,000. Recognizing that there was a maturing
process to the business the lease allowed unpaid rent to accrue for up to nine
months; subject to interest due on any unpaid amounts. Upon the April 1995,
execution of the First Amended and Restated Lease the fixed monthly rent was
retroactively lowered, from July 1994 forward, to $2,000,000. In August 1995,
the Second Amended and Restated Lease was executed which lowered the fixed
monthly rent to $1,500,000 as of July 1, 1995, forward.
For the year ended December 31, 1994, Hollywood Park recorded lease rent revenue
of $11,745,000, representing $18,000,000 of rent and $245,000 of related
interest, less a valuation allowance of $6,500,000. For the same period, PCM
recorded lease rent expense of $18,000,000. The Hollywood Park lease rent
revenue and the PCM lease rent expense were eliminated.
For the nine months ended September 30, 1995, Hollywood Park recognized
$18,064,000 of lease rent revenue, representing $12,000,000 of rent, accounted
for under the First Amended and Restated Lease, $1,064,000 of other
miscellaneous rent and interest, as provided for in the lease, and $4,500,000 of
lease rent revenue for the three months ended September 30, 1995, under the
Second Amended and Restated Lease. Also recorded was $500,000 of lease rent
related to the July 1994 valuation allowance. Lease rent of $3,000,000 less a
valuation allowance of $1,500,000, was recorded for July 1994, but with the
April 1995 signing of the First Amended and Restated Lease monthly lease rent
was retroactively lowered to $2,000,000, generating $500,000 of excess valuation
allowance. For the same period PCM recorded lease rent expense of $16,500,000.
The Hollywood Park lease rent revenue and PCM lease rent expense were
eliminated.
(b) Under the terms of the original lease Hollywood Park charged PCM for
complimentary food and beverage and discounted food and beverage sales on the
gaming floors, and with the execution of the First Amended and Restated Lease
such charges were eliminated as of March 31, 1995. The Hollywood Park gaming
floor food and beverage revenues and the PCM gaming floor food and beverage
expenses have been eliminated.
(c) Both Hollywood Park and PCM incurred legal and other professional expenses
related to the lease negotiations. PCM hired several consultants, computer,
financial and gaming, whom Hollywood Park would not have retained. (Hollywood
Park had qualified staff for the various tasks PCM hired outside consultants to
perform.) Professional costs related to negotiations between Hollywood Park and
PCM and consultant fees have been eliminated.
(d) PCM incurred costs of $46,000 and $48,000 for the year ended December 31,
1994, for the nine months ended September 30, 1995, respectively, related to
travel and entertainment for the former PCM shareholders.
7
(e) Hollywood Park amortized the costs associated with the initial PCM lease
over the three year life of the lease. The amount amortized for the year ended
December 31, 1994, was $94,000, and the amount amortized for the nine months
ended September 30, 1995, was $124,000.
(f) The amortization of the cost in excess of the net assets acquired in the
Acquisition has been included in the combined statements. The cost in excess of
the net assets was allocated to goodwill and will be amortized on a straight
line basis over 40 years.
(g) For the nine months ended September 30, 1995, PCM recorded interest on
unpaid rent of $1,036,000. Hollywood Park recorded interest on unpaid rent as
Casino - Lease revenue. The interest on unpaid rent has been eliminated. PCM
did not record any interest expense for the year ended December 31, 1994.
(h) Income tax expense (benefit) associated with the pro forma adjustments was
calculated at 40% of pre-tax income (loss), and then added to the income tax
benefit (calculated at 40%) associated with the historical PCM loss. PCM was an
S-Corporation, for income tax purposes, before the Acquisition.
PRO FORMA PER SHARE DATA The pro forma earnings per share amounts, as presented
in the unaudited pro forma combined statements of operations, were based on the
weighted average number of common shares outstanding during the period.
Included in the weighted average number of common shares are the 135,164 common
shares issued to the former PCM shareholders as of the date of Acquisition and
an estimated additional common shares of 102,295 (based on the current market
value of Hollywood Park's common stock). The Agreement calls for two additional
common stock transfers to the former PCM shareholders, to be valued at $540,000
on the first anniversary of the Agreement and $500,000 on the second anniversary
of the Agreement.
8
Hollywood Park, Inc.
Unaudited Pro Forma Combined
Balance Sheet
As of September 30, 1995
-------------------------------------------------------------
Hollywood Pacific Casino Pro Forma Pro Forma
Park, Inc. Management, Inc. Adjustments Combined
------------ ---------------- ----------- ------------
ASSETS
Current Assets:
Cash and cash equivalents $20,789,000 $5,742,000 $0 $26,531,000
Restricted cash 872,000 0 0 872,000
Short term investments 6,210,000 0 0 6,210,000
Casino lease and related interest
receivable, net 18,690,000 0 (18,690,000)(a) 0
Other receivables, net of allowance
for doubtful accounts 3,807,000 2,400,000 (301,000)(b) 5,906,000
Prepaid expenses and other assets 9,630,000 260,000 (152,000)(c) 9,738,000
Deferred tax assets 4,612,000 0 0 4,612,000
Current portion of notes receivable 33,000 0 0 33,000
------------ ---------- ----------- ------------
Total current assets 64,643,000 8,402,000 (19,143,000) 53,902,000
Notes receivable 866,000 0 0 866,000
Property, plant and equipment, net 164,154,000 0 0 164,154,000
Lease with TRAK East, net 1,212,000 0 0 1,212,000
Goodwill, net 5,713,000 0 21,985,000 (d) 27,698,000
Deferred tax assets 851,000 0 0 851,000
Other assets 9,572,000 0 (117,000)(c) 9,455,000
------------ ---------- ---------- ------------
$247,011,000 $8,402,000 $2,725,000 $258,138,000
============ ========== ========== ============
- ----------------------------------------------------------------------------------------------------------------------------
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities:
Accounts payable $7,425,000 $1,269,000 ($117,000)(b) $8,577,000
Accrued lawsuit settlement 5,200,000 0 0 5,200,000
Accrued liabilities 9,530,000 5,720,000 (184,000)(b) 15,066,000
Accrued workers' compensation 2,211,000 0 0 2,211,000
Accrued slip and fall claims 1,411,000 0 0 1,411,000
Amount due to horsemen for purses,
stakes and awards 37,000 0 0 37,000
Amounts payable to charities 271,000 0 0 271,000
Outstanding pari-mutuel tickets 1,021,000 0 0 1,021,000
Current portion of notes payable 28,945,000 18,690,000 (18,690,000)(a) 28,945,000
Deferred tax liabilities 671,000 0 0 671,000
------------ ---------- ----------- ------------
Total current liabilities 56,722,000 25,679,000 (18,991,000) 63,410,000
Notes payable 15,629,000 0 0 15,629,000
Deferred tax liabilities 10,218,000 0 0 10,218,000
------------ ---------- ----------- ------------
82,569,000 25,679,000 (18,991,000) 89,257,000
Commitments and contingencies
Stockholders' Equity:
Capital stock --
Preferred 28,000 0 0 28,000
Common 1,837,000 400,000 (376,000)(e) 1,861,000
Capital in excess of par value 166,896,000 0 2,616,000 (e) 169,512,000
Accumulated deficit (4,319,000) (17,677,000) 19,476,000 (c)(e) (2,520,000)
------------ ----------- ----------- ------------
Total stockholders' equity 164,442,000 (17,277,000) 21,716,000 168,881,000
------------ ----------- ----------- ------------
$247,011,000 $8,402,000 $2,725,000 $258,138,000
============ =========== =========== ============
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Hollywood Park, Inc.
Unaudited Pro Forma Combined
Statement of Operations
For the nine months ended September 30, 1995
-----------------------------------------------------------------
Hollywood Pacific Casino Pro Forma Pro Forma
Park, Inc. Management, Inc. Adjustments Combined
----------- ---------------- ----------- ------------
REVENUES:
Pari-mutuel commissions $37,745,000 $0 $0 $37,745,000
Lease and management fee - Sunflower 4,344,000 0 0 4,344,000
Lease - Casino 18,064,000 0 (18,064,000)(a) 0
Casino - card club 0 34,969,000 0 34,969,000
Admissions, programs, and other racing income 13,026,000 0 0 13,026,000
Concession sales 15,359,000 0 (1,319,000)(b) 14,040,000
Other income 5,341,000 213,000 0 5,554,000
----------- ----------- ----------- -----------
93,879,000 35,182,000 (19,383,000) 109,678,000
----------- ----------- ----------- -----------
EXPENSES:
Salaries, wages and employee benefits 29,718,000 15,442,000 0 45,160,000
Operations of facilities 8,268,000 131,000 0 8,399,000
Cost of concession sales 19,504,000 0 0 19,504,000
Professional services 5,657,000 1,429,000 (338,000)(c) 6,748,000
Rent 901,000 16,516,000 (16,500,000)(a) 917,000
Utilities 3,642,000 0 0 3,642,000
Marketing 3,728,000 948,000 0 4,676,000
Administrative 6,486,000 8,815,000 (1,491,000)(b)(d)(e) 13,810,000
----------- ----------- ----------- -----------
77,904,000 43,281,000 (18,329,000) 102,856,000
----------- ----------- ----------- -----------
Operating income (loss) 15,975,000 (8,099,000) (1,054,000) 6,822,000
Lawsuit settlement 5,627,000 0 0 5,627,000
----------- ----------- ----------- -----------
Income (loss) before interest, income taxes,
depreciation and amortization 10,348,000 (8,099,000) (1,054,000) 1,195,000
Depreciation and amortization 8,478,000 1,000 413,000 (f) 8,892,000
Interest expense 2,886,000 1,037,000 (1,036,000)(g) 2,887,000
----------- ----------- ----------- -----------
Income (loss) before income tax expense (1,016,000) (9,137,000) (431,000) (10,584,000)
Income tax expense (benefit) 358,000 0 (3,827,000)(h) (3,469,000)
----------- ----------- ----------- -----------
Net income (loss) ($1,374,000) ($9,137,000) $3,396,000 ($7,115,000)
=========== =========== =========== ===========
Dividend requirements on convertible preferred stock $1,443,000
Net loss allocated to common shareholders ($8,558,000)
Per common share:
Net loss - primary ($0.46)
Net loss - fully diluted ($0.46)
Number of shares - primary 18,607,093
Number of shares - fully diluted 20,898,585
- ------------------
See Notes to Unaudited Pro Forma Combined Statements of Operations
10
Hollywood Park, Inc.
Unaudited Pro Forma Combined
Statement of Operations
For the year ended December 31, 1994
--------------------------------------------------------------
Hollywood Pacific Casino Pro Forma Pro Forma
Park, Inc. Management, Inc. Adjustments Combined
---------- ---------------- ----------- ------------
REVENUES:
Pari-mutuel commissions $51,732,000 $0 $0 $51,732,000
Lease and management fee - Sunflower 7,860,000 0 0 7,860,000
Lease - Casino 11,745,000 0 (11,745,000)(a) 0
Casino - card club 0 20,215,000 0 20,215,000
Admissions, programs, and other racing income 19,127,000 0 0 19,127,000
Concession sales 20,540,000 0 (2,369,000)(b) 18,171,000
Other income 6,320,000 29,000 0 6,349,000
----------- ------------ ----------- -----------
117,324,000 20,244,000 (14,114,000) 123,454,000
----------- ------------ ----------- -----------
EXPENSES:
Salaries, wages and employee benefits 36,850,000 9,112,000 0 45,962,000
Operations of facilities 10,095,000 90,000 0 10,185,000
Cost of concession sales 21,852,000 0 0 21,852,000
Professional services 8,047,000 763,000 (182,000)(c) 8,628,000
Rent 1,823,000 18,011,000 (18,000,000)(a) 1,834,000
Utilities 4,639,000 0 0 4,639,000
Marketing 6,062,000 433,000 0 6,495,000
Administrative 7,028,000 5,245,000 (2,511,000)(b)(d)(e) 9,762,000
----------- ------------ ----------- -----------
96,396,000 33,654,000 (20,693,000) 109,357,000
----------- ------------ ----------- -----------
Operating income (loss) 20,928,000 (13,410,000) 6,579,000 14,097,000
Casino pre-opening and training costs 2,337,000 0 0 2,337,000
Turf Paradise acquisition costs 627,000 0 0 627,000
----------- ------------ ----------- -----------
Income (loss) before interest, income taxes,
depreciation and amortization 17,964,000 (13,410,000) 6,579,000 11,133,000
----------- ------------ ----------- -----------
Depreciation and amortization 9,563,000 0 275,000 (f) 9,838,000
Interest expense 3,061,000 20,000 0 3,081,000
----------- ------------ ----------- -----------
Income (loss) before income tax expense 5,340,000 (13,430,000) 6,304,000 (1,786,000)
Income tax expense (benefit) 1,568,000 0 (2,850,000)(h) (1,282,000)
----------- ------------ ----------- -----------
Net income (loss) $3,772,000 ($13,430,000) $9,154,000 ($504,000)
=========== ============ =========== ===========
Dividend requirements on convertible preferred stock $1,443,000
Net loss allocated to common shareholders ($1,947,000)
Per common share:
Net loss - primary ($0.10)
Net loss - fully diluted ($0.10)
Number of shares - primary 18,607,093
Number of shares - fully diluted 20,898,585
- ---------------
See Notes to Unaudited Pro Forma Combined Statements of Operations
11
SIGNATURES
Pursuant to the requirements of the Securities and Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
HOLLYWOOD PARK, INC.
Date: January 25, 1996 By: /s/ G. Michael Finnigan
-----------------------
G. Michael Finnigan
Executive Vice President and
Chief Financial Officer
12