HOLLYWOOD PARK INC/NEW/ - 10-K Annual Report

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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549

FORM 10-K

[X] Annual Report Pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934

For the fiscal year ended December 31, 1995

Commission file number 0-10619

HOLLYWOOD PARK, INC.
(Exact Name of Registrant as Specified in Its Charter)

Delaware 95-3667491
(State or Other Jurisdiction of (I.R.S. Employer
Incorporation or Organization) 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)

Securities registered pursuant to Section 12(g) of the Act:

Title of each class and name of each exchange on which registered

Hollywood Park, Inc.
Common Stock, $.10 par value
Depositary Shares

NASDAQ National Market Issues

Indicate by check mark whether registrant: (1) 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 [_]

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405
of Regulation S-K is not contained herein, and will not be contained, to the
best of registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to this
Form 10-K. [_]

The aggregate market value of the voting stock held by non-affiliates of the
registrant at March 26, 1996 was $206,889,568 based on a closing price of $9.75
per common share and $9.625 per depositary share (convertible preferred).

The number of outstanding shares of the registrant's common stock, as of the
close of business on March 26, 1996: 18,504,798.

Hollywood Park, Inc.

Table of Contents

Part I

Item 1. Description of Business............................... 1
General..................................... 1
Casino Operations........................... 3
Racing Operations........................... 4
Attendance and Pari-mutuel Handle........... 7
Expansion Plans............................. 9
Other Uses of Property...................... 10
Government Regulation....................... 10
Casino Operations...................... 11
Racing Operations...................... 12
Competition................................. 13
Federal Income Tax Matters.................. 15
Employees................................... 16
Other....................................... 17
Item 2. Properties............................................ 17
Item 3. Legal Proceedings..................................... 18
Item 4. Submission of Matters to a Vote of Security Holders... 18

Part II

Item 5. Market for the Registrant's Common Equity and Related
Stockholder Matters.......................... 19
Dividend History............................. 19
Item 6. Selected Financial Data................................ 20
Item 7. Management's Discussion and Analysis of Financial
Condition and Results of Operations.......... 22
Item 8. Financial Statements................................... 27
Item 9. Changes in and Disagreements with Accountants on
Accounting and Financial Disclosure.......... 28

Part III

Item 10. Directors and Executive Officers of the Registrant.... 28
Directors Deferred Compensation Plan......... 31
Compensation Committee Interlocks and Insider
Participation............................... 32
Item 11. Executive Compensation................................ 32
Report on Repricing of Options/SAR's......... 33
Pension Plan................................. 33
Item 12. Security Ownership of Certain Beneficial Owners and
Management............................................ 34
Item 13. Certain Relationships and Related Transactions........ 35

Part IV

Item 14. Exhibits, Financial Statement Schedules and Reports
on Form 8-K.......................................... 32
Signatures............................................ 36

PART I

ITEM 1. DESCRIPTION OF BUSINESS
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GENERAL Hollywood Park, Inc. (the "Company" or "Hollywood Park") is a gaming,
sports and entertainment company engaged in the operation of thoroughbred and
greyhound racing facilities, the ownership, and as of November 17, 1995, the
operation of a card club casino, and the development of other gaming, sports and
entertainment opportunities. The Company is the successor to the Hollywood Park
Turf Club, organized in 1938, incorporated in 1981 under the name Hollywood Park
Realty Enterprises, Inc., and in 1992, as part of a restructuring, renamed
Hollywood Park, Inc. The Company owns and operates the Hollywood Park race
track, a premier thoroughbred racing facility located in California. In 1994,
the Company acquired Sunflower Racing, Inc. ("Sunflower") a greyhound and
thoroughbred racing facility located in Kansas, and Turf Paradise, Inc. ("Turf
Paradise") a thoroughbred racing facility located in Arizona. The Hollywood
Park Casino ("Casino") located at the Hollywood Park race track, was opened on
July 1, 1994. The Crystal Park Hotel and Casino ("Crystal Park"), located in
California is currently under construction and is anticipated to open in the
fourth quarter of 1996, under a third party lease (see Expansion Plans, Crystal
Park Hotel and Casino).

Management's strategic plan is to build on the reputation of the Hollywood Park
name, to grow its core horse racing business, and to broaden the scope of its
activities to include other gaming, sports and entertainment attractions. The
Hollywood Park race track is located in the Los Angeles metropolitan area, which
is home to approximately 14 million people. The Company intends to capitalize
on this strategic advantage by more fully utilizing its 378 acres of land in
Inglewood, to provide a multi-faceted entertainment experience. The Company
intends to identify and pursue opportunities in other types of gaming by taking
advantage of its experience and contacts in the horse racing business, and by
building a strong gaming oriented management team. The Company is evaluating
potential acquisitions of additional card clubs and properties in California and
other jurisdictions that the Company believes have a favorable gaming
environment.

On March 19, 1996, the Company and Boomtown, Inc. ("Boomtown") (a publicly held
company) signed a letter of intent (the "Letter of Intent") to enter into a
merger agreement, whereby each share of Boomtown's common stock would be
converted into 0.625 shares of Hollywood Park's common stock. A wholly owned
subsidiary of Hollywood Park would be merged with and into Boomtown, as a result
of which Boomtown would become a wholly owned subsidiary of Hollywood Park. An
estimated 5,774,000 shares of Hollywood Park common stock would be issued.
Boomtown owns and operates land-based dockside and riverboat gaming operations
in Verdi and Las Vegas, Nevada; Biloxi, Mississippi and Harvey, Louisiana,
together with offering a total of 130,000 square feet of casino space,
approximately 4,500 slot machines and 175 gaming tables, associated hotel
accommodations and other entertainment amenities. Before this merger can be
consummated, the following conditions, among others, must be met: the
negotiation and execution of a definitive merger agreement; procurement of all
required governmental and regulatory consents or approvals, and the licensing of
Hollywood Park's executive officers with the Gaming Commissions in Nevada,
Mississippi, Louisiana, and any other jurisdictions; the availability of
sufficient financing to fund the repurchase of Boomtown's outstanding debentures
if put to Boomtown; and no material adverse changes in business, financial
condition, results of operations or properties of either party after the
execution of a definitive agreement. (Also see Expansion Plans Boomtown, Inc.)

The Hollywood Park Casino was opened in mid-1994 under a third party leasing
arrangement with Pacific Casino Management ("PCM"). In 1994, under the
California Gaming Registration Act, it was the position of the California
Attorney General (the "Attorney General") that, as a publicly traded company
Hollywood Park was not eligible to register as an operator of a card club, but
could lease the site to a registered operator unaffiliated with the Company. On
August 3, 1995, Senate Bill ("SB") 100 was enacted into law, allowing Hollywood
Park (and all other pari-mutuel wagering facilities, which are public companies)
to operate a card club on the same premises as the race track, at least until
January 1, 1999. Thereafter, the provisions of SB 100 are repealed unless prior
to January 1, 1999, the California legislature enacts a comprehensive scheme for
the regulation of gaming under the jurisdiction of a gaming control commission.
With the passage of SB

1

100, as of November 17, 1995, Hollywood Park acquired PCM and now operates the
gaming floor and related activities, previously operated by PCM.

The Hollywood Park Casino is unrivaled in the state of California with a variety
of distinctive characteristics: the only non-Indian facility in California that
offers pari-mutuel wagering complete with bet runners, which allows card players
to place pari-mutuel wagers without interruption of their games, including
wagering on simulcast racing from the Royal Hong Kong Jockey Club; one of the
most advanced closed circuit television systems in the industry; the cleanest
air of any card club due to the installation of a state-of-the-art "CosaTron"
air filtration system; a quiet and elegant VIP player lounge; and a full service
health club with massage therapists. The Casino is topped off with a 30 foot
per letter red neon sign, visible from all aircraft approaching the Los Angeles
International Airport, which is located only three miles from Hollywood Park.
The Casino also sponsors special entertainment events, including live concerts
and championship Thai Kick Boxing.

During its first 18 months of operations, the Hollywood Park Casino has been
able to attract a significant portion of the southern California High End Poker
market ($15 to $30 limit and above), which the Company believes it should be
able to maintain and increase with the planned High End Poker expansion. The
expansion will offer 20 or more gaming tables in a private setting to include: a
sports video wall, private self service and bet runner pari-mutuel wagering,
cage and transaction windows, and a lavish buffet. In 1996, the Casino has
plans for expanded poker tournaments, and already is drawing some of the most
famous championship players. Expansion of the high stakes California games was
recently completed, which doubled the area's playing capacity, and Hollywood
Park management is aggressively working towards expanding the California games'
player base. With the acquisition of the gaming floor operations, under
Hollywood Park's management, plans are in place to introduce several new casual
or user-friendly games, to attract first time players.

The Hollywood Park race track is located in Inglewood, California and for the
past 57 years has been ranked among the country's most distinguished
thoroughbred racing facilities. Pari-mutuel commissions for 1995 were
comparable to 1994's results even with five fewer live race days in 1995.
Simulcast racing (Hollywood Park receives live transmission of races from other
race tracks) continues to grow, though it generates lower commissions for the
track than does live on-track racing. The growth in off-track (Hollywood Park's
live race signal sent to other sites) and simulcast commissions in 1995,
exceeded declines in on-track pari-mutuel commissions. Pari-mutuel wagering is
offered at the Casino, with 44 wagering windows and bet runners allowing for
uninterrupted card play. Although an accurate count of the number of patrons
who wager on races in the Casino is not possible, the Company believes there is
a direct relationship between daily Casino gaming revenues and racing, with an
even stronger relationship between live on-track racing and Casino gaming
revenues.

On November 17, 1995, Hollywood Park acquired PCM and assumed operations of the
gaming floors and related activities at the Casino. PCM was dissolved upon the
Company acquiring substantially all of its assets, property, business and
liabilities. The acquisition was accounted for under the purchase method of
accounting. The purchase price of PCM's net assets was $2,640,000 payable
solely in shares of Hollywood Park common stock, payable in three installments
as follows: (i) 135,164 shares of Hollywood Park common stock, having a value of
$1,600,000, issued on November 17, 1995; (ii) shares of Hollywood Park common
stock, having a value of $540,000 to be issued on November 17, 1996; and (iii)
shares of Hollywood Park common stock, having a value of $500,000 to be issued
on November 17, 1997, provided that Hollywood Park may elect to accelerate the
payments. The shares still to be issued will be valued at the average market
price of the Company's common stock for the ten trading days immediately
preceding the payment date. Virtually all of the approximately $21,592,000 of
excess acquisition cost over the recorded value of the net assets acquired, was
allocated to goodwill to be amortized on a straight line basis over 40 years.

On March 23, 1994, the Company finalized the transaction to acquire 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

2

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. Of the approximately
$6,625,000 of restated excess acquisition cost over the recorded value of the
net assets acquired, $1,153,000 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 lease period of 20 years,
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
merger, because the market price of Hollywood Park common stock 180 days after
closing, 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.

On June 22, 1994, riverboat gaming officially opened in Missouri, with the
largest boat located within 10 miles of Sunflower. On November 8, 1994,
Missouri voters authorized the use of games of chance on riverboats, including
slot machines, which were placed into play on December 9, 1994. Riverboat
gaming continued to have a very significant negative impact on Sunflower's 1995
financial results and is expected to continue to have such impact.

If the Kansas Legislature does not approve other forms of gaming at Sunflower
including slot machines, it is probable that Sunflower's assets will suffer an
impairment that will require a significant asset write-down that will have a
materially adverse effect on the Company's consolidated financial statements.

Kansas Senate Concurrent Resolution 1621 was introduced on February 15, 1996.
After amendment, the final bill would have required a change to the state of
Kansas' constitution to allow for casino gaming in Kansas. Senate Concurrent
Resolution 1621 was defeated on March 21, 1996.

Kansas Senate Bill 712 was introduced into the Senate Federal and State Affairs
committee on February 15, 1996. This legislation would allow electronic games of
chance at race tracks. As of the date of this filing it remains in committee.

Kansas Senate Bill 754 was introduced into the Senate Federal and State Affairs
committee on March 15, 1996 and would authorize race tracks to operate certain
games, including bingo, keno, pull tabs, and on-line lottery games utilizing a
horse or greyhound racing theme. On March 29, 1996, Senate Bill 754 passed out
of committee with a favorable recommendation. As of the date of this filing, a
Senate floor debate has not been scheduled.

Kansas House Concurrent Resolution 5056 ("Resolution 5056") was introduced on
the floor of the House of Representatives on March 28, 1996, to amend the
constitution of the state of Kansas through a statewide election in November to
allow for electronic games of chance to be operated at licensed pari-mutuel
facilities, including Sunflower. Resolution 5056 has been referred to the House
Federal and State Affairs committee where it remains as of the date of this
filing. Resolution 5056 would require a 2/3rds majority of both houses to go to
ballot.

The current Kansas State Legislative session ends on April 5, 1996. The veto
session commences on April 24, 1996, and continues until all scheduled business
is concluded.

On August 11, 1994, the shareholders of 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 expensed, in total, by both the Company and Turf
Paradise. In connection with the merger, the Company issued a total of
1,498,016 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.

Hollywood Park has three active wholly owned subsidiaries: (i) Hollywood Park
Operating Company, which has two wholly owned subsidiaries, Hollywood Park Food
Services, Inc. and Hollywood Park Fall Operating Company; (ii) Sunflower Racing,
Inc., which has one wholly owned subsidiary, Sunflower Food and Beverage, Inc.;
and (iii) Turf Paradise, Inc. The Hollywood Park Casino is a division of
Hollywood Park, Inc.

CASINO OPERATIONS Patrons in the Casino pay a fee for seats at gaming tables,
or for each hand played. Approximate per hour collection rates per table for
conventional poker are, $75 for low limit and $240 for high limit, and for the
California games, $140 for low limit and $700 for high limit. Players bet
solely against each other; the operator of the card club does not participate in
the wagers made nor in the outcome of any of the games played. Revenues are
also derived from food and beverage sales, gift shop sales and health club
operations.

The Hollywood Park Casino was opened in mid-1994 under a third party leasing
arrangement with PCM. In 1994 under the California Gaming Registration Act, it
was the position of the California Attorney General that as a publicly traded
company, Hollywood Park was not eligible to register as an operator of a card
club, but could lease the site to a registered operator unaffiliated with the
Company. On August 3, 1995, SB 100 was

3

enacted into law. SB 100 does the following: (a) allows for a publicly traded
racing association, or a subsidiary thereof, (hereafter the "Racing
Association") to operate a gaming club on the premises of its race track; (b)
requires the officers, directors and 5.0% or more shareholders of a Racing
Association (excluding institutional investors) to be licensed by the Attorney
General; (c) provisionally licenses a Racing Association and its officers,
directors, and 5.0% shareholders to operate a gaming club on the premises of its
race track pending licenses pursuant to sub-paragraph (b) above; (d) allows a
Racing Association and its officers, directors and 5.0% or more shareholders to
have an interest in gaming activities located outside of California that are not
legal in California. Pursuant to the authority provided by SB 100, the Company
acquired PCM and commenced operating the Hollywood Park Casino effective
November 17, 1995. The provisions of SB 100 are repealed effective January 1,
1999, unless prior thereto the California legislature enacts a comprehensive
scheme for the regulation of gaming under the jurisdiction of a gaming control
commission.

RACING OPERATIONS With pari-mutuel wagering, patrons bet against each other in
a pool rather than against the operator of the facility or with pre-set odds.
At the Hollywood Park and Turf Paradise race tracks, the Company operates all
aspects of racing, while under Kansas State racing laws Sunflower 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 the year 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.

Hollywood Park Race Track Hollywood Park conducts two live on-track
- -------------------------
thoroughbred horse race meets per year. Race dates must be applied for on an
annual basis from the California Horse Racing Board (the "CHRB"). The 1995
Spring/Summer Meet ran for 13 weeks, for a total of 67 race days. The Autumn
Meeting ran for six weeks, for a total of 30 race days (race days include three
charity days per meet). Live races run Wednesday through Sunday, usually with
nine live races a day. The Company also sends the signal of its live races off-
track to other locations including: fairgrounds, other race tracks, hotels and
casinos. In total, the Company simulcasts its live races to 79 sites in 36
states and three countries. The Company also accepts the simulcast signal from
live races conducted at other race tracks, including the four other local
southern California tracks, which has helped to mitigate the seasonality of the
Company's horse racing business by allowing for year round operations. In
addition, the July 1994, passage of Assembly Bill ("AB") 1418 allowed for
unrestricted simulcasting between northern and southern California. Previous
legislation limited such simulcasting to races with purses of at least $20,000.
With the passage of AB 1418, Hollywood Park's 1994 Autumn Meeting was the first
meet with concurrent simulcasting of races from northern California, allowing
patrons pari-mutuel wagering opportunities approximately every 15 minutes.
Although the Company has seen a shift from pari-mutuel wagers placed on its live
races, both on-track and off-track, to wagers placed on northern California
simulcast races, for which the Company receives a lower commission rate, the net
effect of expanded simulcasting upon pari-mutuel commissions has to date been
positive. With the Company's limited operating experience under AB 1418, there
can be no assurance that this effect will continue to be positive.

As of March 1, 1996, there were numerous bills relating to horse racing and
pari-mutuel wagering pending in the California Legislature. The majority of
these bills are "spot" bills at the present time and are not sufficiently
detailed to allow for meaningful analysis. The Company intends during the 1996
legislative session however, to pursue and support legislation that would reduce
state license fees as well as expand off-track sites within California, although
it is too early in the legislative session to assess the prospects of these
bills.

Hollywood Park derives revenues from a share of the pari-mutuel handle at rates
fixed by the state of California, admission fees and concession sales. The
approximate pari-mutuel commission rates are fixed as follows:

-On-track - 6.4% of wagers placed at Hollywood Park on its live races

-Off-track - 4.4% of wagers placed on live Hollywood Park races simulcast
to California locations other

4

than northern California

-Off-track - 1.25% of wagers placed on live Hollywood Park races simulcast
to northern California

-Off-track - 1.7% of wagers placed on live Hollywood Park races simulcast
out-of-state

-Simulcast - 2.0% of wagers placed at Hollywood Park on races simulcast
from live races conducted at other sites, except northern California

-Simulcast - 5.6% of wagers placed at Hollywood Park on races simulcast
from live races conducted in northern California

-Simulcast - 3.9% of wagers placed on races simulcast from northern
California, when Hollywood Park is conducting a live meet, and
simulcasting the northern California signal to its off-track sites

Sunflower operating as the Woodlands TRAK East conducts live greyhound and
- ------------------------------------
horse racing and accepts simulcasts of both. Live greyhound racing runs from
January 1 through December 31, with a brief seven day period without racing from
December 18 through 26. Greyhounds generally run Wednesday through Monday, with
evening performances every day except Sunday and matinee performances on
Wednesday, Friday, Saturday and Sunday. During 1995, TRAK East conducted 398
live greyhound performances over 292 race days. Usually there are 13 races per
performance, except for Sunday when there are 15 races. Horses ran live from
August 11, 1995 through October 15, 1995, racing Wednesday through Sunday, for a
total of 45 race days. TRAK East accepts greyhound simulcasting year round from
Southland Greyhound Park, Derby Land and Jacksonville Greyhound, Wednesday
through Sunday. Simulcasts from various other horse race tracks are also
accepted year round. The pari-mutuel commissions earned by TRAK East are set by
the state of Kansas. The following percentages represent the final net
commission retained by TRAK East:

Live greyhounds and horses 12.76%
Greyhound simulcasts 10.75%
Horse simulcasts 10.44%

Sunflower does not directly earn pari-mutuel commissions, but instead TRAK East
pays Sunflower a lease and management fee equal to earnings, net of not less
than $450,000 in 1994 and $500,000 thereafter. Amounts retained by TRAK East
are for distribution to charities. Presently, the charity payments have been
suspended pending the outcome of current Kansas legislative gaming issues
relating to Sunflower's ability to offer slot machine gaming. If legislation is
passed which allows Sunflower to operate slot machines then, as of May 1996, the
charity payments are to resume. If such legislation is not passed, Sunflower's
charity agreement with TRAK East will be re-evaluated.

If the Kansas Legislature does not approve other forms of gaming at Sunflower
including slot machines, it is probable that Sunflower's assets will suffer an
impairment that will require a significant asset write-down that will have a
materially adverse effect on the Company's consolidated financial statements.

Kansas Senate Concurrent Resolution 1621 was introduced on February 15, 1996.
After amendment, the final bill would have required a change to the state of
Kansas' constitution to allow for casino gaming in Kansas. Senate Concurrent
Resolution 1621 was defeated on March 21, 1996.

Kansas Senate Bill 712 was introduced into the Senate Federal and State Affairs
committee on February 15, 1996. This legislation would allow electronic games
of chance at race tracks. As of the date of this filing it remains in
committee.

Kansas Senate Bill 754 was introduced into the Senate Federal and State Affairs
committee on March 15, 1996 and would authorize race tracks to operate certain
games, including bingo, keno, pull tabs, and on-line lottery games utilizing a
horse or greyhound racing theme. On March 29, 1996, Senate Bill 754 passed out
of committee with a favorable recommendation. As of the date of this filing, a
Senate floor debate has not been scheduled.

Kansas House Concurrent Resolution 5056 ("Resolution 5056") was introduced on
the floor of the House of Representatives on March 28, 1996, to amend the
constitution of the state of Kansas through a statewide election in November to
allow for electronic games of chance to be operated at licensed pari-mutuel
facilities, including Sunflower. Resolution 5056 has been referred to the House
Federal and State Affairs committee where it remains as of the date of this
filing. Resolution 5056 would require a 2/3rds majority of both houses to go to
ballot.

The current Kansas State Legislative session ends on April 5, 1996. The veto
session commences on April 24, 1996, and continues until all scheduled business
is concluded.

Turf Paradise Turf Paradise has one continuous live thoroughbred meet that
- -------------
starts in September and runs through May. In 1995, Turf Paradise raced live for
the period January 1 through May 23, operated as a simulcast facility starting
September 8, and resumed live racing on September 30, running through December
31. Along with running live thoroughbreds, Turf Paradise also offers two
quarter horse races a day during the first two months of the live meet, and a
limited number of arabian races in the spring. Live racing is primarily
conducted Friday through Tuesday, with live races sent to 32 off-track sites in
Arizona. The live racing signal is also transmitted to 33 out of state hubs,
from which the signal is further disseminated to sites including: New York, New
Jersey, Pennsylvania, Nevada and Canada. On Monday and Tuesday, Turf Paradise
generally conducts 12 live races and does not accept simulcasts from other race
tracks. Friday through Sunday, Turf Paradise generally conducts 9 to 10 live
races and accepts simulcasts from other race tracks, for a total of
approximately 17 to 20 races per day. Wednesday and Thursday Turf Paradise
generally operates as a simulcast facility, usually accepting 16 to 18 races
from northern and southern California. During the period from late May to early
September, Turf Paradise operates as a simulcast facility for Arizona's Prescott
Downs and Coconino County Fair.

At Turf Paradise, the state of Arizona fixes the pari-mutuel commissions for on-
track, and within the state, off-track racing as follows:

5

Win, Place, Two-Horse Three or More
Show Pool Horse Pool
----------- --------- -------------

On-track daily handle up to $1 million 9.0% 9.5% 11.5%
On-track daily handle above $1 million 7.5% 8.0% 10.0%
Off-track in state handle up to $175,000 12.0% 13.0% 17.0%
Off-track in state handle above $175,000 9.0% 9.5% 11.5%

Turf Paradise also receives approximately 2.0% to 3.5% of the out of state off-
track pari-mutuel handle wagered on its live races. When operating as a
simulcast facility for the smaller northern Arizona race tracks, Turf Paradise
receives approximately 2.0% to 3.8% of the pari-mutuel handle generated at Turf
Paradise. Turf Paradise also receives any unclaimed pari-mutuel winnings, which
totaled approximately $346,000 in 1995 while at Hollywood Park, the unclaimed
pari-mutuel winnings are turned over to the state of California. Along with the
pari-mutuel commission rates earned, Turf Paradise presently receives an
additional 1% of all in-state handle as reimbursement for capital improvements
made to the track in prior years. In 1995, Turf Paradise was reimbursed
approximately $851,000 for such capital improvements. The capital improvement
credit is scheduled to expire in 1997. In 1995, Turf Paradise also received a
hardship tax credit of $119,000 to offset the cost of pari-mutuel commissions
paid to the state of Arizona, based on the reduction of in-state handle caused
by the advent of Indian gaming.

ATTENDANCE AND PARI-MUTUEL HANDLE The following tables summarize key operating
statistics for the period 1991 through 1995. The acquisition of Turf Paradise
was accounted for under the pooling of interests method of accounting with the
historical results for Turf Paradise presented for the periods before the
acquisition. Before the acquisition, Turf Paradise had a fiscal year end of
June 30, and the 1991 through 1993 statistics are for the years ended June 30.

LIVE THOROUGHBRED AND GREYHOUND MEETS BY RACE TRACK, (in thousands, except race
days, performances, and per capita)

HOLLYWOOD PARK 1995 1994 1993 1992 1991
-------- --------- --------- ---------- -----------

Race days 97 102 99 101(a) 99
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Attendance
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On-track 1,056 1,191 1,175 1,094 1,701
Off-track (b) 1,431 1,642 1,695 1,672 1,029(c)
-------- -------- -------- -------- --------
2,487 2,833 2,870 2,766 2,730
======== ======== ======== ======== ========
Average daily attendance
- ------------------------
On-track 10.9 11.7 11.9 10.8 17.2
Off-track 14.8 16.1 17.1 16.6 10.4
-------- -------- -------- -------- --------
25.7 27.8 29.0 27.4 27.6
======== ======== ======== ======== ========
Pari-mutuel handle
- ------------------
On-track $185,218 $229,667 $245,383 $245,337 $402,310
Off-track 252,959 309,465 340,756 346,480 219,362
Off-track (out of state) 223,856 181,072 127,257 67,238 49,722
-------- -------- -------- -------- --------
$662,033 $720,204 $713,396 $659,055 $671,394
======== ======== ========= ======== ========
Pari-mutuel handle per capita
- -----------------------------
On-track $ 175 $ 193 $ 209 $ 224 $ 237
Off-track (b) 177 188 201 207 213
-------- -------- -------- -------- --------
$ 352 $ 381 $ 410 $ 431 $ 450
======== ======== ========= ======== ========
===================================================================================================================================

TRAK EAST AT SUNFLOWER Greyhound Thoroughbred
----------------------------- ---------------------------
1995 1994 (d) 1995 1994 (d)
------- -------- ------ --------

Race days 294 231 49 62
Performances 424 332 -- --
Attendance 533 621 47 86
Average daily attendance 1.8 2.7 1.0 1.4
Pari-mutuel handle - on-track $47,406 $74,941 $2,844 $6,274
Pari-mutuel handle per capita $ 89 $ 121 $ 61 $ 73
Pari-mutuel handle - off-track $ 0 $ 0 $ 807 $ 0

6

==============================================================================================================

TURF PARADISE (e) 1995 1994 1993 1992 1991
-------- -------- -------- -------- ---------

Race days 171 185 177 169 166
- ---------
Attendance
- ----------
On-track 426 419 424 462 521
Off-track 208 253 233 159 0
-------- ------- ------- ------- -------
634 672 657 621 521
======== ======= ======= ======= =======
Average daily attendance
- ------------------------
On-track 2.5 2.3 2.4 2.7 3.1
Off-track 1.2 1.4 1.3 0.9 0.0
-------- ------- ------- ------- -------
3.7 3.7 3.7 3.6 3.1
======== ======= ======= ======= =======
Pari-mutuel handle
- ------------------
On-track $ 28,524 $35,046 $42,065 $58,634 $70,958
Off-track 26,078 31,945 33,995 27,012 0
Off-track (out of state) 56,905 29,503 14,611 6,726 0
-------- ------- ------- ------- -------
$111,507 $96,494 $90,671 $92,372 $70,958
======== ======= ======= ======= =======
Pari-mutuel handle per capita
- -----------------------------
On-track $ 67 $ 84 $ 99 $ 127 $ 136
Off-track 125 126 146 170 0
-------- ------- ------- ------- -------
$ 192 $ 210 $ 245 $ 297 $ 136
======== ======= ======= ======= =======

SIMULCAST THOROUGHBRED AND GREYHOUND MEETS BY RACE TRACK (in thousands, except
race days and per capita)

HOLLYWOOD PARK 1995 1994 1993 1992 1991(f)
-------- -------- -------- -------- ---------

- ----------
Race days
- ---------
Thoroughbred meets -
southern California 183 179 176 18 0

Quarter Horse meets 152 141 138 90 71
Harness meets 41 40 103 12 0

Attendance
- ------------------------------
Thoroughbred meets - southern 948 931 833 850 462
California
Quarter Horse meets 61 58 63 43 40
Harness meets 16 16 36 47 0
1,025 1,005 932 940 502
Average daily attendance
- ------------------------------
Thoroughbred meets - southern 5.2 5.2 4.7 4.6 5.1
California
Quarter Horse meets 0.4 0.4 0.5 0.5 0.6
Harness meets 0.4 0.4 0.3 0.4 0.0
-------- ------- ------- ------- -------
6.0 6.0 5.5 5.5 5.7
======== ======= ======= ======= =======
Pari-mutuel handle
- -----------------------------
Thoroughbred meets - southern $218,625 $209,837 $183,303 $194,770 $105,055
California
Thoroughbred meets - northern 141,065 63,480 6,765 0 0
California (g)
Quarter Horse meets 22,793 18,754 14,349 9,978 8,350
Harness meets 4,391 3,948 7,630 10,524 0
-------- ------- ------- ------- -------
$386,874 $296,019 $212,047 $215,272 $113,405
======== ======= ======= ======= =======

Pari-mutuel handle per capita
- -----------------------------
Thoroughbred meets - southern $ 231 $ 225 $ 220 $ 229 $ 227
California
Quarter Horse meets 374 323 228 232 209
Harness meets 274 247 212 224 0
-------- ------- ------- ------- -------
$ 879 $ 795 $ 660 $ 685 $ 436
======== ======= ======= ======= =======

TRAK EAST AT SUNFLOWER (H) Greyhound Thoroughbred
---------------------------------- ----------------------------------
1995 1994 1995 1994
----------- ------------ ----------- ------------

Race days -- -- 278 218
Performances 284 220 -- --
Pari-mutuel handle $ 10,871 $ 7,162 $ 29,600 $ 24,010

7

================================================================================================
TURF PARADISE (i) 1995 1994 1993
----------- ------------ -----------

Pari-mutuel handle $55,093 $46,549 $22,766

_____
(a) Hollywood Park was closed for four of the historically highest revenue
producing days due to civil unrest.
(b) Off-track attendance is for sites within California only. Attendance figures
are not available for sites located out of state. Per capita off-track figures
are based on handle within California only.
(c) AB 944 was enacted in September 1991, allowing for the simulcasting of live
races from Hollywood Park to local southern California racing facilities of
Santa Anita, Fairplex Park and Los Alamitos.
(d) The 1994 results are as of the date of acquisition, March 23, 1994.
(e) Turf Paradise simulcasts races from other tracks concurrently with live on-
track racing. Prior to 1993 Turf Paradise did not maintain separate pari-mutuel
data for live racing and simulcast racing.
(f) There were fewer simulcast days in 1991 because AB 944, allowing for
simulcasting between local area tracks was not enacted until mid-September 1991.
(g) In July 1994, AB 1418 was enacted allowing for unrestricted simulcasting
between northern and southern California. The previous law, AB 854, passed in
September 1993, allowed for northern and southern California simulcasting with
purses of at least $20,000. Northern California simulcasts run concurrently with
Hollywood Park's live race meets; therefore, there is no attendance data.
(h) TRAK East conducts concurrent live on-track greyhound and horse racing, and
simulcasts both greyhounds and horses; therefore, attendance figures are not
available for simulcast racing.
(i) Turf Paradise conducts concurrent live on-track racing and simulcast racing;
therefore, attendance figures are not available for simulcast racing. Turf
Paradise did not maintain separate live on-track and simulcast pari-mutuel data
prior to 1993.

EXPANSION PLANS During 1995, the Company continued to pursue its expansion
strategy, including examining California card club opportunities, a state-of-
the-art football stadium and other gaming, sports and entertainment
opportunities.

Boomtown, Inc. On March 19, 1996, the Company and Boomtown, (a publicly held
- --------------
company) executed a letter of intent relating to the strategic combination of
the Company with Boomtown by way of a merger with a wholly owned subsidiary of
the Company (the "Merger"), with Boomtown becoming a wholly owned subsidiary of
the Company. The Letter of Intent contemplates the conversion of all
outstanding shares of common stock of Boomtown into shares of common stock of
the Company, based upon an exchange ratio of 0.625 shares of the Company's
common stock for each share of Boomtown's common stock. An estimated 5,774,000
shares of Hollywood Park common stock would be issued in the Merger.

The Letter of Intent contemplates that four members of Boomtown's Board of
Directors would be added to the Company's Board of Directors, and that such
former Boomtown directors would be nominated by the Company for re-election to
the Board for at least the first three annual stockholders meetings following
the Merger. The Company's Board would have no more than eleven members during
such three-year period, and the Executive Committee of the Company's Board of
Directors would be comprised of five persons, two of whom would be nominated by
Boomtown.

Boomtown owns and operates land-based, dockside and riverboat gaming operations
in Verdi, Nevada ("Boomtown Reno"), Las Vegas, Nevada ("Boomtown Las Vegas"),
Biloxi, Mississippi ("Boomtown Biloxi") and Harvey, Louisiana ("Boomtown New
Orleans"). Boomtown's properties offer hotel accommodations, gaming and other
entertainment amenities to primarily middle income, value oriented customers.
The Boomtown properties incorporate an "old west" theme through the use of
western memorabilia in their interior decor, country/western music and western
dress of their employees.

Boomtown Reno has been operating for over a quarter century and is located seven
miles west of Reno on Interstate 80, the major highway connecting northern
California and Reno. Boomtown Reno's customer base is primarily drawn from
Interstate 80 traffic. Boomtown Reno offers its guests a 40,000 square foot
casino, including 1,433 slot machines and 43 table games, a 122-room hotel, a
16-acre truck stop, a full-service recreational vehicle park, a service station,
a mini-mart and other related amenities. In addition, Boomtown Reno offers a
35,000 square foot family entertainment center featuring a dynamic motion
theater, an indoor 18-hole western-themed miniature golf course, a restaurant
and a replica of an 1800's Ferris Wheel.

8

Boomtown Las Vegas commenced operations in May 1994 on a 56-acre site at the
interchange of Blue Diamond Road and Interstate 15, the principal thoroughfare
connecting southern California to Las Vegas. Boomtown Las Vegas is four miles
from the exit for Circus, Circus' Excalibur and Luxor sites and MGM. Boomtown
Las Vegas includes a 30,000 square foot casino with 1,100 slot machines and 28
gaming tables, 300 hotel rooms, a full-service recreational vehicle park, a 600-
seat Opera House Dinner Theater and a replica of an old mine where customers can
pan for real gold.

Boomtown Biloxi, a limited partnership majority owned and controlled by
Boomtown, occupies nine acres on Biloxi, Mississippi's back bay. Boomtown
Biloxi is located one-half mile from Interstate 110, the main highway connecting
Interstate 10 (the main thoroughfare connecting New Orleans and Mobile, Alabama)
and the Gulf of Mexico. The facility, which commenced operations in July 1994,
consists of a land-based facility which houses non-gaming operating space and a
33,000 square foot casino constructed on a 400 x 100 foot barge permanently
moored to the land-based building. The casino offers 985 slot machines, 42
table games and other gaming amenities including restaurants, a western dance
hall/cabaret and a 20,000 square foot family entertainment center.

Boomtown New Orleans, a limited partnership majority owned and controlled by
Boomtown, commenced operations in August 1994 on a 50 acre site in Harvey,
Louisiana, approximately ten miles form the French Quarter of New Orleans.
Gaming operations are conducted from a 250 foot replica of a paddle wheel
riverboat, offering 865 slot machines and 51 table games in a 30,000 square foot
casino. The land-based facility adjacent to the riverboat dock is composed of a
western-themed 88,000 square foot entertainment center and a western
saloon/dance hall.

Boomtown is actively seeking to expand its operations into jurisdictions that
have legalized casino gaming at sites that are near interstate highways or major
thoroughfares near major population or tourist centers. Boomtown is currently
exploring a project in Switzerland, Indiana through a joint venture with Hilton
Gaming Corporation. The gaming license application for this project is pending.

The Letter of Intent further contemplates that the parties will negotiate and
execute a definitive merger agreement which will contain customary
representations and warranties, and which will provide for reciprocal "no-shop"
obligations (subject to each Board's fiduciary duties) and for a break up fee of
$5,000,000 payable by either party under certain conditions.

The consummation of the Merger is subject to, among other things, (i)
negotiation and execution of the definitive merger agreement, (ii) approval by
the respective stockholders and Boards of Directors of the Company and Boomtown,
(iii) receipt of "fairness opinions" from the respective investment bankers
representing the Company and Boomtown, (iv) receipt of requisite regulatory
approvals and gaming licenses, (v) availability of sufficient financing to fund
future gaming projects and to fund the repurchase of Boomtown's outstanding
notes if "put" to Boomtown by the holders as a consequence of the Merger, and
(vi) the execution of certain employment agreements with the officers of
Boomtown. Subject to satisfaction or waiver of such conditions, the parties
currently anticipate working towards a consummation of the Merger by December
31, 1996, but in no event later than June 30, 1997.

Crystal Park Hotel and Casino Construction has begun on the Crystal Park Hotel
- -----------------------------
and Casino, California's first hotel and casino, with an expected opening during
fourth quarter 1996. Crystal Park is expected to open with 100 gaming tables,
with no limits on the number of gaming tables that can be added. It is expected
that the hotel will open with approximately 150 rooms with additional rooms
available if needed. The Casino and hotel will also include a gift shop, a full
service health club complete with a pool, state-of-the-art air filtration
system, and a family-style restaurant.

On July 14, 1995, the Company and Compton Entertainment, Inc. ("CEI") executed
an Amended and Restated Agreement Respecting Pyramid Casino (the "Crystal Park
Agreement") (subsequently changed to Crystal Park Hotel and Casino), finalizing
the terms concerning the development, ownership and operation of a card club in
the City of Compton (the "City"). CEI and each of its officers, directors and
shareholders have been licensed

9

by the City to own and operate a card club. CEI entered into an Amended and
Restated Disposition and Development Agreement (the "DDA") with the City to
lease or purchase land located within the City as the card club site. Under the
terms of the Crystal Park Agreement, on August 3, 1995, the Company paid CEI
$2,000,000 for the real property rights or assignment of the DDA to Hollywood
Park. On August 3, 1995 the Company paid CEI an additional $500,000 to exercise
the five year right to purchase CEI's City gaming license. If at the end of the
five year term of the option to purchase the City gaming license, Hollywood Park
is not able to own and operate a card club at the Compton site, CEI can elect to
either negotiate a new lease, or acquire Hollywood Park's rights to the card
club site for a purchase price as determined by the Agreement. Upon opening the
card club, Hollywood Park will pay CEI up to an additional $2,500,000, under
certain conditions detailed in the Agreement. As required by the DDA, on August
2, 1995, Hollywood Park paid approximately $2,006,000 to the City to purchase
the Convention Center located at the Compton site to house the card club
operations and entered into a 50 year lease with the City for the hotel and
parking parcels at the same site. Initial improvements made by Hollywood Park to
construct, install and equip the Hotel and Casino will be credited against the
annual base rent. No cash rent payments are expected to be made until after the
nineteenth year of the lease.

If the Crystal Park Hotel and Casino opens under current California law, which
does not allow publicly traded companies, such as Hollywood Park, to operate a
card club (other than on the same property as the race track), the Company will
enter into a 60 month lease with CEI. Under the terms of the lease, as the
landlord, Hollywood Park would build and furnish a card club suitable for CEI to
operate. Hollywood Park would not be responsible for any segment of the daily
operations. CEI would pay the Company monthly rent of 2.65% of Hollywood Park's
total investment in the card club. If there is a change in California law,
allowing the Company to operate card clubs at sites other than its race track
property, Hollywood Park would operate the card club in partnership with CEI,
with Hollywood Park owning 67% of the business, which will be subject to the
partnership described below.

CEI has received all of the required City gaming licenses necessary for
operation of Crystal Park, and has filed the required documents with the
California Attorney General, who is currently reviewing the application for a
state of California gaming registration.

Hollywood Park, DeBartolo Entertainment and Leo Chu have formed a 40%/40%/20%,
respectively, partnership to build and operate (per the terms and conditions
outlined above) the Crystal Park Hotel and Casino.

Hollywood Park Stadium The Company is currently in negotiations concerning the
- ----------------------
building and operation of a state-of-the-art football stadium on its Inglewood
property. The Company has not entered into any definitive agreements concerning
this project. Discussions are under way with potential tenants, including
various football franchises of the National Football League, local college
sports departments and Major League Soccer. The current plans call for a 65,000
seat stadium, expandable to 83,000 seats for Superbowls and other special
events, with approximately 200 luxury suites, with the potential to open in
September 1998. Any decisions to begin construction on the stadium would be
dependent upon, among other things, the execution of definitive agreements with
a National Football League team and the National Football League, the
availability of project financing with acceptable terms and the attainment of
the necessary permits and certifications, for which there can be no assurance.

Acting on behalf of the City of Inglewood, the City of Inglewood Planning
Commission approved the development of a football stadium at Hollywood Park on
December 6, 1995. Two petitions for writs of mandamus were filed in Los Angeles
County Superior Court against the City of Inglewood to challenge the stadium
approval. The Company has been named as the Real Party in Interest in both
actions. The first, The Coalition For Responsible Development In Inglewood, et
----------------------------------------------------------
al. v. City of Inglewood (Case No. BS 037268), contends that the stadium
- ------------------------
approval should be voided for the City of Inglewood's alleged failure to comply
with requirements of the California Environmental Quality Act. The first action
is tentatively set for hearing on May 22, 1996. The second, which has been
dismissed, Nzinga Owolo, et al. v. City of Inglewood (Case No. BS 037286) was
-----------------------------------------
filed by various petitioners in propria persona, and also contends the stadium
approval should

10

be voided for the City of Inglewood's alleged failure to comply with
requirements of the California Environmental Quality Act. While it is still
early in the proceedings the Company believes that there are meritorious
defenses to the claims raised in the remaining lawsuit.

The environmental impact report for the Hollywood Park Stadium was certified by
the City of Inglewood Planning Commission on December 6, 1995.

Hollywood Park Arena The Company is in the initial stages of evaluating a
- --------------------
proposed arena, where the Los Angeles Lakers basketball and the Los Angeles
Kings hockey teams would play. Presently, these teams play across the street
from the Inglewood property. Hollywood Park would supply the land for the
proposed arena and receive lease payments and net parking revenues. The
proposed arena would be financed and built by the lessee.

Other related retail and entertainment facilities may be included with
development of either the arena or stadium.

Palm Springs Card Club The Company is a 50% partner with DeBartolo
- ----------------------
Entertainment, in a 30 table Casino and Night Club to be located in Palm
Springs, California. Hollywood Park and DeBartolo Entertainment will be
landlord in a third party leasing arrangement. The Palm Springs site is
expected to open late fourth quarter 1996. The partnership is expected to incur
costs of approximately $1,000,000, with the bulk of the construction costs to be
the responsibility of the site's restaurateur (still to be determined).

Without legislation to expand the types of gaming which could be offered at the
Palm Springs casino, the Palm Springs site is not expected to generate material
income, due to the nearby Indian Reservation with full casino gaming.

Other Expansion On October 27, 1995, Hollywood Park finalized the purchase of
- ---------------
approximately 38 acres, adjacent to the Inglewood property from Texaco
Exploration and Production, Inc. The total purchase price was approximately
$7,500,000, with $3,359,000 paid on October 27, 1995, and the balance is due on
September 1, 1996.

On August 15, 1995, the Company purchased approximately six acres with a hotel,
adjacent to the Inglewood property, for $3,400,000. The hotel was subsequently
demolished to clear the site for the proposed stadium or other development
projects.

OTHER USES OF PROPERTY On October 24, 1995, the Forum Parking Agreement was
executed, covering the one year period from October 1, 1995 through September
30, 1996. For a minimum annual rent of $1,200,000, compared to $1,800,000 per
the prior agreement, patrons attending events at the Forum can park at Hollywood
Park. The October 24, 1995, Forum Parking Agreement is for a shorter time
period than the prior Forum Agreement, which covered twelve years, to provide
flexibility regarding the proposed stadium development and other cross marketing
benefits.

An oil and gas well has been located on the Hollywood Park property since 1981,
and had been operated under a lease between the Company and the well operator,
Casex Co. (the "Operator"). As of January 10, 1995, the Company amended the oil
and gas lease, such that the lessee now utilizes approximately 2.0 acres of
land, with a base rent of 4.0% of net profits from oil and gas production, or a
minimum $30,000 per annum. The Operator performed various redrilling activities
throughout 1995 and as of March 21, 1996, was producing approximately 160
barrels of oil per day. The amended lease stipulates that the Operator must
produce a minimum of 100 barrels of oil or gas equivalent per day for 180
consecutive days over a 270 consecutive day period beginning April 15, 1996, or
operations will be terminated, and the site will be cleaned up to the Company's
specifications, with the Operator responsible for all clean-up costs. Drilling
for new reserves is a highly speculative activity and there can be no assurance
of finding such a reserve.

11

The Company is subject to state and local laws and regulations, ordinances and
similar provisions relating to zoning and other matters that may have the effect
of restricting the uses to which the Company's land and other assets may be put
to use. Any additional development of the Company's land, including the
expansion plans described above, would require approval of such items as
environmental impact reports and similar certifications. There can be no
assurance that other requisite approvals will be obtained.

GOVERNMENT REGULATION The ownership and operation of gaming establishments and
horse racing facilities are subject to extensive state and local regulation.
The Hollywood Park Casino is subject to the registration and regulatory control
of the California Attorney General and the City of Inglewood. Hollywood Park,
Sunflower and Turf Paradise race tracks are subject to licensing and regulatory
control by the California Horse Racing Board, the Kansas Racing Commission and
the Arizona Racing Commission, respectively.

Casino Operations Pursuant to the California Gaming Registration Act (the
- -----------------
"Gaming Registration Act"), the operator of a card club is required to be
registered by the Attorney General and licensed by the City of Inglewood.
Gaming registrations issued by the Attorney General are not transferable. To
obtain a state gaming registration, operators of a card club, their directors,
officers, and certain of their stockholders, are required to submit detailed
information including personal and financial data, to the Attorney General.
With the August 3, 1995, passage and implementation of SB 100, pari-mutuel
wagering facilities that are public companies, including Hollywood Park, were
allowed to own and operate a card club on the same premises as the race track,
at least until January 1, 1999. Thereafter the provisions of SB 100 are
repealed unless prior to January 1, 1999, the California legislature enacts a
comprehensive scheme for the regulation of gaming under the jurisdiction of a
gaming control commission. On September 15, 1995, the Attorney General granted
Hollywood Park a provisional registration under SB 100. A permanent
registration will not be granted until the California Department of Justice
completes the background investigations of Hollywood Park's corporate officers
and directors (the Attorney General is unable to provide an estimated date of
completion of the investigations). Currently annual gaming registration
renewals are required.

The Attorney General has broad discretion to deny gaming registration and may
impose reasonably necessary conditions upon the granting of a gaming
registration. Grounds for denial include: felony convictions, criminal acts,
convictions involving dishonesty, illegal gambling activities, false statements
on a gaming application, and having a financial interest in businesses or
organizations that engage in gaming activities that are illegal under California
law, unless the investor has held a California gaming registration for five
consecutive years before the investment, or unless the investor is a publicly
traded racing association, a wholly owned subsidiary thereof, or an officer,
director, or 5% shareholder of either. In addition, the Attorney General
possesses broad authority to suspend or revoke a gaming registration on several
grounds, including the commission of any act that would constitute grounds for
denial of a gaming application. Other grounds for suspension or revocation of a
gaming registration include violation of any federal, state or local gambling
law, failure to take reasonable steps to prevent dishonest acts or illegal
activities on the premises of the card club, failure to cooperate with the
Attorney General in its oversight of the card club and failure to comply with
any condition of registration. Any owner, operator or manager of a card club
may also be subject to significant fines for violations of the Gaming
Registration Act or any regulation thereunder.

Changes of information in a registration application must be promptly reported
to the Attorney General. In addition, transfer of any ownership interest in a
gaming establishment must be reported to the Attorney General within ten days.
The Attorney General may refuse to allow a change in ownership for any reason
that would constitute grounds for suspension, revocation or denial of a gaming
registration. The Gaming Registration Act also grants municipalities the right
to require employees of gaming establishments to be licensed. The City of
Inglewood has exercised this right.

On March 16, 1993, the City of Inglewood adopted Ordinance No. 93-05 (the
"Inglewood Ordinance") to establish the necessary regulatory framework to
implement the card club initiative approved by Inglewood voters in 1992. The
Inglewood Ordinance provides for a single card club located at Hollywood Park
and allows a publicly-traded corporation to be the owner and operator thereof.
In order to operate the card club, the operator must be licensed by the City of
Inglewood and obtain a card club operations certificate. The

12

application for the license must include detailed information, including
personal and financial data, concerning the operator of the card club, its
officers, directors and certain key employees and beneficial owners of at least
10% of such operator's voting securities. The City of Inglewood will conduct a
background suitability check on all applicants for a license to own and operate
the card club, and a license will be issued only upon a finding that such
issuance will best protect the public health, safety, morals, good order and
welfare of the residents of the City of Inglewood. The City of Inglewood has
complete discretion to determine the suitability of a prospective licensee and
to grant the license. On September 12, 1995, the Inglewood City Council approved
Hollywood Park's application for a gaming license, subject to certain conditions
which were met on November 17, 1995. On March 1, 1996, the City of Inglewood
notified Hollywood Park that the preliminary Operations Certificate
authorization was extended through May 4, 1996. This initial city gaming license
will be valid for five years unless revoked, suspended or surrendered, and is
renewable annually thereafter. The card club operating certificate is valid so
long as the license is valid and no physical or procedural changes are made with
respect to the card club, card club site or operations of the card club.

In addition to requiring the licensing of the card club operator, the Inglewood
Ordinance also requires all employees of a card club to have a valid
registration card from the City of Inglewood. The Inglewood Ordinance also
provides that each (i) "pointholder" (defined in the Inglewood Ordinance as an
individual having an interest in the ownership, division of profits or revenue
of a card club, whether directly, or indirectly through a partnership, joint
venture, closely held corporation or as a beneficial owner of at least 10% of
the voting stock of a publicly-traded corporation), and (ii) "key management
employee" (defined in the Inglewood Ordinance as every individual with the power
to direct operations and employees, or with apparent or actual authority to
direct the counting of the revenue, of a card club) must obtain a permit from
the City of Inglewood. The pointholders and key management employees are also
subject to a background suitability check by the City of Inglewood before a
permit will be issued. The license to operate the card club may be suspended or
revoked if a pointholder or key management employee fails to obtain a permit.
Without the prior consent and permission of the City of Inglewood, a pointholder
may not transfer or sell an interest, or allow an investment, in the ownership,
division of profits or revenue of the card club to any person who is, or by
reason of such transaction would become, a pointholder. However, a purchase of
capital stock by the operator of a card club would not constitute such a
transfer, unless such purchase was by a pointholder. The licensing requirements
of the Inglewood Ordinance apply to all stockholders of a card club operator,
including the Company (if licensed as a card club operator by the City of
Inglewood) and no waiver from such suitability requirement or transfer
restrictions are provided for institutional or other investors who purchase for
investment purposes only.

Racing Operations The California Horse Racing Board has jurisdiction and
- -----------------
supervision over all horse race meets in the state of California. Licenses
granted by the CHRB to conduct horse race meets are of material importance to
the business of the Company. Such licenses must be applied for and obtained
annually by the Company to conduct both the Spring/Summer and Autumn Meeting
race meets. The CHRB has the authority, when granting each license, to vary the
number of weeks allotted and the time of the year in which such allocation
falls. The CHRB may, at its discretion, refuse to issue a license to a race
track operator such as Hollywood Park with a financial interest in another
licensed race track operation or in the conduct of horse racing meets by any
other person at any other race track in the state of California. Although no
future assurance can be given, the Company has applied for and received a
license to conduct thoroughbred horse race meets every year since 1938, except
for 1942 and 1943 due to wartime activities.

As the recipient of a California racing license, Hollywood Park is required to
pay the net proceeds of three designated charity days held during each of its
live race meets up to and including the 1994 Spring/Summer Meet to a charitable
distributing agent approved by the CHRB. As of the 1994 Autumn Meeting, the
charity day payments were changed to the net proceeds from the charity days not
to exceed 2/10 of 1% of the total live on-track handle for the respective race
meet. For 1995, the Company was required to have a total of six charity days,
and will pay approximately $370,000 to the distributing agent.

The Kansas Racing Commission granted Sunflower the facility ownership and
manager licenses; with all race days until the year 2014 granted to TRAK East, a
Kansas not-for-profit corporation. Sunflower has an

13

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 has guaranteed that the minimum net revenues to be retained by TRAK
East, from operations of the race track facilities, will not be less than
$450,000 in 1994, and not less than $500,000 from 1995 forward. Net revenues
retained by TRAK East are for distribution to charities. Presently, the charity
payments have been suspended pending the outcome of current Kansas legislative
gaming issues relating to Sunflower's ability to offer slot machine gaming. If
legislation is passed which allows Sunflower to operate slot machines then, as
of May 1996 the charity payments are to resume. If such legislation is not
passed Sunflower's charity day agreement with TRAK East will be re-evaluated.

If the Kansas Legislature does not approve other forms of gaming at Sunflower
including slot machines, it is probable that Sunflower's assets will suffer an
impairment that will require a significant asset write-down that will have a
materially adverse effect on the Company's consolidated financial statements.

Kansas Senate Concurrent Resolution 1621 was introduced on February 15, 1996.
After amendment, the final bill would have required a change to the state of
Kansas' constitution to allow for casino gaming in Kansas. Senate Concurrent
Resolution 1621 was defeated on March 21, 1996.

Kansas Senate Bill 712 was introduced into the Senate Federal and State Affairs
committee on February 15, 1996. This legislation would allow electronic games of
chance at race tracks. As of the date of this filing it remains in committee.

Kansas Senate Bill 754 was introduced into the Senate Federal and State Affairs
committee on March 15, 1996 and would authorize race tracks to operate certain
games, including bingo, keno, pull tabs, and on-line lottery games utilizing a
horse or greyhound racing theme. On March 29, 1996, Senate Bill 754 passed out
of committee with a favorable recommendation. As of the date of this filing, a
Senate floor debate has not scheduled.

Kansas House Concurrent Resolution 5056 ("Resolution 5056") was introduced on
the floor of the House of Representatives on March 28, 1996, to amend the
constitution of the state of Kansas through a statewide election in November to
allow for electronic games of chance to be operated at licensed pari-mutuel
facilities, including Sunflower. Resolution 5056 has been referred to the House
Federal and State Affairs committee where it remains as of the date of this
filing. Resolution 5056 would require a 2/3rds majority of both houses to go to
ballot.

The current Kansas State Legislature session ends on April 5, 1996. The veto
session commences on April 24, 1996, and continues until all scheduled business
is concluded.

The Arizona Racing Commission issues live racing permits that are valid for
three years, and off-track permits are granted on a year to year basis. In May
1994, Turf Paradise received a three year live racing permit from the Arizona
Racing Commission. The permit covers the race years of 1994/1995, 1995/1996,
1996/1997. The permit does not specify the number of race days, but does
specify that live racing may be conducted between the first week of September
through the third week of May. The management of Turf Paradise determines the
number of race days; however, for Turf Paradise to qualify for simulcasting on
days when there is no live racing, there must be live racing at least five days
a week.

COMPETITION The Hollywood Park Casino competes for players directly with card
clubs in neighboring cities, including three card clubs within approximately 12
miles of the Inglewood property, as well as card clubs located on Native
American reservations, where such card clubs are authorized by federal gaming
regulations. These include several reservations in San Bernardino County,
approximately 100 miles from Hollywood Park. The Casino also faces competition
from casinos in Las Vegas and other gaming venues. Other municipalities may, in
the future, propose ballot initiatives similar to the card club initiative
passed in Inglewood which, if approved by voters, could lead to the
establishment of additional card clubs in direct competition with Hollywood
Park. Currently, under SB 100, as of January 1, 1996, there is a three year
moratorium on public votes or referendums to approve the enactment of any city
ordinance to allow additional card clubs, and prohibits the amendment of any
existing ordinances.

Horse racing at Hollywood Park competes for patrons with a wide variety of live
sporting events and cultural activities. There are numerous professional and
collegiate sporting events available in southern California. The race track
also competes with Las Vegas casinos and other gaming venues. The state of
California sponsors a lottery, which the Company believes has had a negative
impact on racing revenues. Although no local race tracks operate live
thoroughbred meets concurrently with Hollywood Park, the Company believes its
operations have been adversely impacted by the proliferation of additional
racing opportunities both in California and outside the state. These
opportunities have made it more difficult for Hollywood Park to attract quality
thoroughbreds, particularly during the spring and summer months when demand for
such horses is greatest. The Company believes that the simulcast legislation,
which since September 1991 has allowed southern California race tracks to accept
pari-mutuel wagers on each others' simulcasts, and the July 1994 passage of AB
1418 removing all restrictions on simulcasts between northern and southern
California, have had a positive impact on the Company's overall revenues,
primarily as the result of a significant increase in off-track and simulcast
racing revenues, although on-track attendance and pari-mutuel handle have
declined. No assurance can be given that such a decline in on-track attendance
and pari-mutuel wagering will not continue or that the Company will continue to
benefit from simulcast wagering in the future.

Sunflower is confronted with intense competition for patrons from riverboat
gaming, complete with slot machines, on the nearby Missouri River. On June 22,
1994, riverboat gaming officially opened on the Missouri River, with the largest
boat located within 10 miles of Sunflower. On November 8, 1994, Missouri voters
authorized the use of games of chance on riverboats, including slot machines,
which were placed into play on December 9, 1994. The introduction of riverboat
gaming in Missouri has had a very significant negative impact on Sunflower's
financial results and is expected to continue to have such an impact.

14

Turf Paradise's primary competition is from local Indian Casinos with Las Vegas-
style gaming. Twenty of the twenty-one tribes in Arizona are either already
involved in gaming or in the planning stages. Currently, there are eleven
operating casinos with a combined total of approximately 3,500 slot machines,
and a total of 38 additional authorized gaming sites. There are three
functioning casinos within 60 miles of Turf Paradise; with the closest
approximately 28 miles away. The proposed Salt River Indian Casino, near
Scottsdale, would be located approximately 20 miles from Turf Paradise, although
the proposed opening date for this casino has yet to be determined due to a
decision by the Governor of Arizona and the State Department of Gaming which
would not allow for the installation of slot machines and video lottery
terminals at the future Salt River facility. The Governor's decision also
applies to any other tribal casinos which are operated by a tribe, that was not
in possession of a signed gaming compact by May 1995. The Salt River tribe has
entered into litigation with the State of Arizona regarding the Governor's
decision. The outcome of this litigation is yet to be decided, and there is no
certainty as to when the case will come under review. To date, the Company
believes that the present level of casino gaming in Arizona has been a material
and significant deterrent to future growth of in-state pari-mutuel handle.

Along with casino gaming, Turf Paradise also competes with a state run lottery,
year round greyhound pari-mutuel racing and simulcasts from Prescott Downs to
the same off-track sites Turf Paradise sends its live races.

Presently the Company is not aware of any pending legislation related to gaming
on behalf of race tracks or the state lottery for the 1996 Arizona legislative
session.

FEDERAL INCOME TAX MATTERS Effective January 1, 1993, the Company adopted
Statement of Financial Accounting Standards ("SFAS") 109 Accounting for Income
---------------------
Taxes, whereby deferred tax assets and liabilities are recognized for the future
- -----
tax consequences attributable to differences between the financial statement
carrying amounts of existing assets and liabilities and their respective tax
bases.

As of December 31, 1995, the Company had a federal regular net operating loss
carryforward of approximately $2,600,000 that, in general, is available to
offset future taxable income and will not expire until 2010. In addition, as of
December 31, 1995, the Company had approximately $468,000 of general business
tax credits and $585,000 of alternative minimum tax credits available to reduce
future federal income taxes, although in either case, the tax credits generally
cannot reduce federal taxes paid below the calculated amount of alternative
minimum tax. The general business tax credits expire as follows: 1999 -
$425,000; 2000 - $43,000. The alternative minimum tax credits do not expire.
The Company's use of its tax credit carryforwards is subject to certain
limitations imposed by Section 383 of the Internal Revenue Code and by the
separate return limitation year rules of the consolidated return regulations.
Although Management currently expects that such limitations will not prevent the
Company from fully utilizing the benefits of its tax credits, it is possible
that such limitations could defer or reduce the Company's use of its general
business tax credit and alternative minimum tax credit carryforwards.

EMPLOYEES The Hollywood Park Casino employs approximately 1,500 employees.
Presently, all Casino employees are non-union, with the exception of the
approximately 500 culinary employees working in the Casino, who are represented
by Hotel Employees & Restaurant Employees, Local 11. Negotiations for a
collective bargaining agreement between the Company and those employees have
commenced, however it is too soon to predict the outcome of those negotiations.
If negotiations reach an impasse the Casino food and beverage employees have the
right to engage in a strike or other job action.

The Hollywood Park race track and corporate office employs approximately 575
full-time employees. The number of seasonal employees varies by race meet due
to differences in staffing needs during live on-track racing as compared to
simulcast racing. In 1995, the number of seasonal employees ranged from
approximately 400 to approximately 1,500. Most race track seasonal employees
are covered by collective bargaining agreements, as are approximately 400 of the
full-time employees.

15

The Company's collective bargaining agreement with Hotel Employees & Restaurant
Employees, Local 11 covering the race track employees expires in April 1996. As
of the filing date negotiations on a new agreement have not yet commenced.

Sunflower has a permanent staff of 41 and a non-union seasonal staff that
fluctuates between approximately 375 and 500.

Turf Paradise has a permanent staff of approximately 150 and a non-union
seasonal staff that fluctuates between approximately 425 and 475.

OTHER Information concerning backlog, sources and availability of raw materials
is not essential to an understanding of the Company's business.

The Company does not engage in material research activities relating to
development of new products or services or improvement of existing products or
services.

Compliance with federal, state and local provisions which have been enacted or
adopted regulating the discharge of materials into the environment or otherwise
relating to the protection of the environment have not had a material effect
upon capital expenditures, earnings or the competitive position of the Company.

The Company does not engage in material operations in any foreign country, nor
is a material portion of its sales or revenues derived from customers in any
foreign country.

ITEM 2. PROPERTIES
- ------- ----------

Hollywood Park owns approximately 378 acres in Inglewood, California, which is
located in the heart of the Los Angeles metropolitan area, with a population
base of approximately 14 million; making it the second most populous area in the
United States. The 60,000 square foot Casino is located next to the race track.
The Casino has approximately 140 to 150 tables available for play at any given
time, with ample expansion space in the building that houses the Casino. The
race track consists of the grandstand, clubhouse and Turf Club areas, which can
accommodate 25,000, 6,000 and 2,000 patrons, respectively. The stable area can
accommodate approximately 2,150 horses. There is abundant parking with spaces
for approximately 17,500 vehicles. The race track also houses the executive
offices of the Company.

The proposed Hollywood Park Stadium would be located at the Inglewood property
and along with parking requirements (stadium patrons would have access to race
track parking, though stadium events may fall on the same day as a live on-track
race day) would require 46 acres. Currently the Golf and Sports Center covers
14 acres, two acres are under lease to the Casex Co., Forum parking covers
twelve acres, with the Casino, race track and all other parking covering 245
acres. Presently there are 105 acres available for immediate development.

Sunflower's property, located in Kansas City, Kansas, covers 393 acres, of which
222 acres are currently developed, leaving 171 undeveloped acres. There are 1.6
million people living within 60 miles of Sunflower. The facility has two
separate grandstands, one for greyhound racing and one for live horse racing.
The horse grandstand is closed except for the 49 days of live horse racing each
fall. Both grandstands contain a clubhouse and Turf Club section. The
greyhound grandstand has capacity for 7,832 patrons (both seating and standing)
and the horse grandstand has capacity for 7,157 patrons (both seating and
standing). The facility has 18 greyhound kennels and 26 barns. There is
combined parking available for approximately 6,500 vehicles.

Turf Paradise, located in Phoenix, Arizona, covers approximately 275 acres, with
approximately 100 undeveloped acres, with a surrounding area population of
approximately 2.5 million. The race track contains a grandstand, clubhouse and
Turf Club section; with a combined seating capacity of approximately 7,400.
Overall capacity including both standing and seating is estimated at 16,000.
The stable area has a capacity

16

to board approximately 1,940 horses. Parking is available for 4,200 vehicles.
The Paradise Market opened on March 4, 1995, and is located on 9.5 acres. The
Paradise Market is leased to a third party operator.

ITEM 3. LEGAL PROCEEDINGS
- ------- -----------------

As previously reported by the Company, and described in the Company's Form 10-Q
for the quarter ended September 30, 1995, six purported class actions (the
"Class Actions") are presently pending against the Company and certain of its
directors and officers in the United States District Court, Central District of
California (the "District Court") and consolidated in a single action entitled
In re Hollywood Park Securities Litigation, Master File No. CV-94-6551-ABC
- ------------------------------------------
(GHKx). The plaintiffs in the Class Actions purport to assert violations of the
federal securities laws based upon, among other things, the allegation that the
defendants made overly optimistic statements and projections concerning the
Company.

Counsel for certain plaintiffs in the Class Actions also advised the Company of
such plaintiffs' intention to add or pursue purported derivative claims against
certain of the Company's directors and officers in connection with, among other
things, the matters alleged in the Class Actions. The Company denied all
liability and advised the plaintiffs of its intent to assert various defenses
and to contest vigorously all purported claims and allegations. By order of the
District Court, dated February 27, 1995, the parties engaged in an extensive
mediation process in an effort to settle the Class Actions and all related
potential and threatened claims. After engaging in the court-ordered mediation
process, the parties reached an agreement in principle to settle all pending and
threatened claims, including the Class Actions and the threatened derivative
claims.

On September 15, 1995, the previously threatened derivative action entitled
William R. Barney, Jr. v. Randall D. Hubbard, et al., Case No. 692583 (the
- ----------------------------------------------------
"Derivative Action"), was commenced in the Superior Court of the State of
California for the County of San Diego. The Derivative Action is a purported
stockholder derivative action allegedly brought on behalf of the Company against
certain of the Company's directors and officers, and based, in part, on the
allegation that such directors and officers breached their fiduciary duties in
connection with matters alleged in or relating to the Class Actions.

Under the proposed settlement of the Class Actions, a settlement fund of
$5,800,000 will be created for the benefit of the alleged class of shareholders,
with contributions from the Company and the insurance carrier for the Company's
directors and officers. After giving consideration to an additional cash
payment to be made to the Company from the insurance carrier for the Company's
directors and officers in the settlement of the Derivative Action, the Company's
net settlement payment in the Class Actions is expected to be less than
$2,500,000. The proposed settlement of the Derivative Action provides for a
$2,000,000 payment to the Company from the insurance carrier for the Company's
directors and officers. With $1,000,000 of that amount paid to the plaintiffs'
attorneys as fees, costs and expenses; the remaining $1,000,000 will defray the
Company's payment in the settlement of the Class Actions. The proposed
settlement of the Derivative Action includes provisions enhancing the Company's
financial controls and modifying certain terms to its acquisition of Sunflower.

The Company and all parties have executed definitive settlement agreements. The
proposed settlements have been approved by the Company's Board of Directors, but
remain conditioned upon, among other things, approval by each of the courts in
the Class Actions and in the Derivative Action. On February 26, 1996, the
District Court approved the settlement of the Class Actions and entered its
judgment dismissing the Class Actions. The parties' application for approval of
the settlement of the Derivative Action remains pending. If the settlements are
not approved and consummated for any reason, the Company will assert various
defenses and vigorously defend any and all claims against it relating to such
matters.

The Company also has executed a separate settlement as to all purported claims
against the Company and its directors and officers by the former controlling
shareholder of Turf Paradise. Other former Turf Paradise shareholders will be
entitled to participate in the settlement of the Class Actions, but the former
controlling shareholder of Turf Paradise has agreed to be excluded from that
settlement. The Company does not believe that the settlement amounts to be paid
to the former controlling shareholder of Turf Paradise ($2,750,000) is

17

preferential to the amounts being paid to other Turf Paradise shareholders under
the Class Action. This settlement is conditional on final approval and
consummation of the settlements of the Class and Derivative Actions.

ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
- ------- ---------------------------------------------------

During the fourth quarter of 1995 no matters were submitted to a vote of
security holders through the solicitation of proxies or otherwise.

PART II

ITEM 5. MARKET FOR THE REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER
- ------- -----------------------------------------------------------------
MATTERS
-------

The Company's common stock is listed on the NASDAQ National Market System and is
traded under the name Hollywood Park, Inc., identified by the symbol "HPRK".

The following table sets forth the high and low sales prices per common share of
the Company's common stock on the NASDAQ National Market System for the periods
listed. All sales prices are rounded to the nearest 1/8. The prices shown are
prices between dealers and do not reflect retail markup, markdown or
commissions, nor do they necessarily represent actual transactions.

Price Range
--------------------
High Low
--------------------

1995
- -----------------
First Quarter $13 1/4 $10 3/8
Second Quarter 14 1/4 11 1/2
Third Quarter 14 3/4 11 1/2
Fourth Quarter 11 3/4 9 1/4

1994
- -----------------
First Quarter $30 3/4 $18 1/2
Second Quarter 26 1/2 15 5/8
Third Quarter 24 1/4 13 3/4
Fourth Quarter 14 3/4 9 1/4

There were approximately 3,741 stockholders of record of the Company's common
stock as of March 15, 1996.

DIVIDENDS The Company did not pay any common stock dividends in 1995 or 1994.
Payments of future common stock dividends, would be at the discretion of the
Company's Board of Directors and would depend upon, among other things, future
earnings, operational and capital requirements, the overall financial condition
of the Company and general business conditions. The Board of Directors believes
that reinvestment of cash in its expansion program is in the best interest of
the Company and its shareholders, and does not anticipate paying any cash
dividends on the Company's common stock in the near future.

Cash dividends on the common stock may not be declared, paid or set aside unless
full cumulative dividends have been paid on the Company's $70.00 convertible
preferred stock.

ITEM 6. SELECTED FINANCIAL DATA
- ------- -----------------------

The following selected financial information for the years 1991 through 1995 was
derived from the consolidated financial statements of the Company, restated to
reflect the results of operations of Turf Paradise, a wholly owned subsidiary,
acquired on August 11, 1994, and accounted for under the pooling of

18

interests method of accounting. Historically, Turf Paradise had a fiscal year
end of June 30, and as such, the selected financial data for the years 1991
through 1993 was restated as a consolidation of Hollywood Park's results for the
year ended December 31, with Turf Paradise's results for the year ended June 30.
The Casino began operations on July 1, 1994, and Sunflower was acquired on March
23, 1994; accounted for under the purchase method of accounting. The information
set forth below should be read in conjunction with "Management's Discussion and
Analysis of Financial Condition and Results of Operations", the financial
statements and related notes thereto.

Hollywood Park, Inc.
Selected Financial Data

For the years ended December 31,
------------------------------------------------------------------
1995 1994 1993 1992 1991
------------------------------------------------------------------

(in thousands, except per share data)

STATEMENT OF OPERATIONS DATA
Revenues:
Racing operations and other income $ 93,349 $ 98,743 $ 78,985 $80,944 $74,057
Casino operations 37,223 18,581 0 0 0
-------- -------- -------- ------- -------
130,572 117,324 78,985 80,944 74,057
-------- -------- -------- ------- -------
Expenses:
Racing operations and other expenses 79,828 80,839 62,798 63,499 61,133
Casino operations 29,819 15,557 0 0 0
-------- -------- -------- ------- -------
109,647 96,396 62,798 63,499 61,133
-------- -------- -------- ------- -------
Operating income 20,925 20,928 16,187 17,445 12,924
Casino pre-opening and training 0 2,337 850 0 0
expenses
Turf Paradise acquisition costs 0 627 0 0 0
Lawsuit settlement 6,088 0 0 0 0
-------- -------- -------- ------- -------
Income before interest, income taxes,
depreciation and amortization 14,837 17,964 15,337 17,445 12,924
Depreciation and amortization 11,384 9,563 6,402 5,899 5,890
Interest expense 3,922 3,061 1,517 4,883 4,973
-------- -------- -------- ------- -------
Income (loss) before income taxes and
extraordinary item (469) 5,340 7,418 6,663 2,061
Income tax expense 693 1,568 1,025 3,135 255
-------- -------- -------- ------- -------
Income (loss) before extraordinary item (1,162) 3,772 6,393 3,528 1,806
Extraordinary item - Utilization of tax
benefit from net operating loss
carryforwards 0 0 0 1,894 73
-------- -------- -------- ------- -------
Net income (loss) ($1,162) $ 3,772 $ 6,393 $ 5,422 $ 1,879
======== ======== ======== ======= =======
==========================================================================================================

Dividends on convertible preferred stock $ 1,925 $ 1,925 $ 1,718 $ 0 $ 0
-------- -------- -------- ------- -------
Net income (loss) available to
(allocated to) common shareholders
($3,087) $ 1,847 $ 4,675 $ 5,422 $ 1,879
======== ======== ======== ======= =======
Per common share:
Income (loss) before extraordinary
item:
Primary ($0.17) $ 0.10 $ 0.30 $ 0.27 $ 0.14
Fully diluted ($0.17) $ 0.10 $ 0.30 $ 0.27 $ 0.14
Net income (loss):
Primary ($0.17) $ 0.10 $ 0.30 $ 0.41 $ 0.14
Fully diluted ($0.17) $ 0.10 $ 0.30 $ 0.41 $ 0.14
Dividends $ 0.00 $ 0.00 $ 0.00 $ 0.04 $ 0.15

BALANCE SHEET DATA:
Total assets $286,706 $246,573 $176,424 $90,219 $89,777
Other liabilities 105,331 36,518 21,876 34,494 16,047
Long term obligations 15,629 42,800 348 45,538 68,400
Stockholders' equity 165,746 167,255 154,200 10,187 5,330

19

ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
-----------------------------------------------------------------------
OF OPERATIONS
-------------

RESULTS OF OPERATIONS

Year ended December 31, 1995 compared to the year ended December 31, 1994
-------------------------------------------------------------------------

The 1995 consolidated financial statements include the results of operations at
Hollywood Park, the Casino, Sunflower, and Turf Paradise. The Casino was opened
on July 1, 1994, under a third party leasing arrangement with PCM, under which
PCM operated the gaming floor business and Hollywood Park operated all other
activities. The gaming floor business was acquired from PCM as of November 17,
1995, accounted for under the purchase method of accounting. The 1995 Casino
operating results included ten and a half months of operations under the lease
with PCM, and one and a half months under the Company's direct ownership and
control; 1994's operating results had just six months of Casino activities under
the lease with PCM. Sunflower was a newly acquired subsidiary as of March 31,
1994, accounted for under the purchase method of accounting; therefore, the 1994
statement of operations does not include Sunflower's first quarter results.
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 under
this method of reporting, the 1994 results have been restated to include the
operating results of Turf Paradise.

Total revenues increased by $13,249,000, or 11.3%, during the year ended
December 31, 1995, as compared to the year ended December 31, 1994. Included in
the 1995 revenues was $20,624,000 of Casino fixed lease rent revenue (of which
PCM paid $12,000,000 in 1995) and $6,032,000 of gaming floor revenue, compared
to $11,745,000 of Casino fixed lease rent revenue in 1994, which covers just six
months of operations, and no gaming floor revenues in 1994. Pari-mutuel
commissions increased by $1,528,000, or 3.0%, primarily due to increased
simulcast racing at both Hollywood Park and Turf Paradise, despite there being
five fewer live race days at Hollywood Park and thirteen fewer live race days at
Turf Paradise. Lease and management fee - Sunflower continued to be severely
negatively impacted by riverboat gaming in Missouri. For the year ended
December 31, 1995, as compared to the year ended December 31, 1994, Sunflower's
total live pari-mutuel handle decreased by $60,385,000, or 54.6%. (See
Government Regulation, Racing Operations.) Casino lease rent revenue of
$20,624,000 was recorded for the year ended December 31, 1995, which included
lease rent of $2,000,000 for each of the six months ended June 30, 1995, per the
First Amended and Restated Lease, which retroactively lowered the monthly lease
rent to $2,000,000 from $3,000,000; and lease rent of $1,500,000 for each month
during the period July 31, 1995 through November 17, 1995, (prorated from
November 1, 1995, through November 17, 1995) per the Second Amended and Restated
Lease, signed in August 1995, which further lowered the monthly rent as of July
1, 1995 to $1,500,000. Also recorded was $500,000 of lease rent related to the
July 1994 valuation allowance. Lease rent recorded for July 1994 was $3,000,000
less a valuation allowance of $1,500,000, 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 year
ended December 31, 1995, PCM made cash payments of $16,377,000, covering lease
rent, accrued interest on unpaid rent, and for food and beverage service
provided by Hollywood Park. On November 17, 1995, Hollywood Park acquired PCM
and assumed operations of the gaming floors, generating $6,032,000 of Casino -
Gaming revenues through December 31, 1995. Admissions, programs and other racing
income decreased by $758,000, or 4.0%, due primarily to a 37.1% decline in on-
track attendance at Sunflower, five fewer live race days at Hollywood Park, and
thirteen fewer live race days at Turf Paradise. Concession sales declined by
$757,000 or 3.7%, mainly due to a 31.9% decrease in Sunflower's concession
sales, and five fewer live race days at Hollywood Park, and thirteen fewer live
race days at Turf Paradise. Other income increased by $777,000, or 12.3%.
Revenue declines at Hollywood Park due to the cancellation of the Forum Parking
Agreement, were offset primarily due to Casino gift shop and health club sales.
A new Forum Parking Agreement was executed on October 24, 1995, covering the one
year from October 1, 1995, through September 30, 1996, with minimum annual rent
of $1,200,000, compared to $1,800,000 per the prior Forum Parking Agreement. The
new Forum Parking Agreement is for a shorter period than the original Forum
Parking Agreement, which covered twelve years, to provide flexibility regarding
the proposed stadium development and other cross marketing benefits.

20

Total operating expenses, inclusive of $29,819,000 of Casino operating expenses
(representing a month and a half of gaming floor operations and twelve months of
other Casino operations, for which there were no gaming floor expenses and just
six months of comparable other Casino operations activity in 1994) increased by
$13,251,000, or 13.7%, during the year ended December 31, 1995, as compared to
the year ended December 31, 1994. Salaries, wages and employee benefits
increased by $5,874,000, or 15.8%, principally because of wages and benefits
associated with the gaming floor staff (hired November 17, 1995) and the six
additional months of other Casino operations wages in 1995 as compared to the
same period in 1994. Operations of facilities increased by $770,000, or 7.6%,
primarily related to increased insurance costs and Casino operations. Cost of
concession sales increased by $3,311,000, or 15.2%, essentially due to Casino
operations. Professional services increased by $213,000, or 2.8%, primarily due
to legal costs incurred related to the Company's expansion projects, including
the proposed stadium. Rent expense decreased by $517,000, or 28.4%, mainly due
to the conclusion of Hollywood Park's lease on the infield message board.
Utilities increased by $215,000, or 4.6%, due to the full year of Casino
operations in 1995 as compared to just six months of activity in 1994.
Marketing costs decreased by $515,000, or 8.5%, due primarily to savings related
to reductions in advertising for Friday night racing and five fewer live race
days at Hollywood Park. Administrative costs increased by $3,902,000, or 55.5%,
principally because of costs incurred related to the South San Francisco and
Pomona card club initiative campaigns, which were defeated in September and
November, respectively, and costs for other expansion endeavors, including the
proposed stadium and other card clubs. All costs associated with projects in
the evaluation stages are expensed as incurred.

As previously reported by the Company, and described in the Company's Form 10-Q
for the quarter ended September 30, 1995, six purported class actions (the
"Class Actions") are presently pending against the Company and certain of its
directors and officers in the United States District Court, Central District of
California (the "District Court") and consolidated in a single action entitled
In re Hollywood Park Securities Litigation, Master File No. CV-94-6551-ABC
- ------------------------------------------
(GHKx). The plaintiffs in the Class Actions purport to assert violations of the
federal securities laws based upon, among other things, the allegation that the
defendants made overly optimistic statements and projections concerning the
Company. In addition, on September 15, 1995, the previously threatened
derivative action entitled William R. Barney, Jr. v. Randall D. Hubbard, et al.,
----------------------------------------------------
Case No. 692583 (the "Derivative Action"), was commenced in the Superior Court
of the State of California for the County of San Diego. The Derivative Action
is a purported stockholder derivative action allegedly brought on behalf of the
Company against certain of the Company's directors and officers, and based, in
part, on the allegation that such directors and officers breached their
fiduciary duties in connection with matters alleged in or relating to the Class
Actions. (See Item 3. Legal Proceedings.) The Company has entered into
settlement agreements with respect to the Class Actions and the Derivative
Action, which are subject to satisfaction of certain conditions.

The 1994 Casino pre-opening and training costs of $2,337,000 were primarily
related to wages paid during the on-the-job training of staff hired to open the
Casino on July 1, 1994. There were no similar costs in 1995. The Turf Paradise
acquisition costs were a result of the August 11, 1994, acquisition of Turf
Paradise by Hollywood Park; there were no similar costs in 1995.

Depreciation and amortization increased by $1,821,000, or 19.0%, for the year
ended December 31, 1995, as compared to the year ended December 31, 1994. The
increase was mainly due to Casino operations, and costs associated with the
first quarter of 1995 at Sunflower with no corresponding amount in 1994.
Interest expense increased by $860,000, or 28.1%, principally due to an
additional three months of Sunflower interest expense in the 1995 results.
Sunflower's 1994 results are exclusive of the first quarter.

Income tax expense decreased by $875,000, due primarily to the decrease in pre-
tax income in the year ended December 31, 1995 as compared to the year ended
December 31, 1994.

Year ended December 31, 1994 compared to the year ended December 31, 1993
-------------------------------------------------------------------------

The 1994 consolidated financial statements include the results of operations at
Hollywood Park, Sunflower, Turf Paradise and the Hollywood Park Casino.
Sunflower was a newly acquired subsidiary, as of March 23,

21

1994, accounted for under the purchase method of accounting and as such, there
are no comparable results of operations in the 1993 figures. Turf Paradise was a
newly acquired subsidiary, as of August 11, 1994, accounted for under the
pooling of interests method of accounting and, accordingly, prior years have
been restated to include the results of operations of Turf Paradise.
Historically, Turf Paradise has reported operations with a fiscal year end of
June 30 and as such, the 1993 results of operations are a consolidation of
Hollywood Park's results for the year ended December 31, 1993, and Turf
Paradise's results for the year ended June 30, 1993. The Casino began operations
on July 1, 1994, and there are no comparable results of operations in 1993. 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 revenues, net of Sunflower's and the Casino's revenues, increased by
$5,506,000, or 7.0%, in 1994 as compared to 1993. Pari-mutuel commissions
increased by 10.3%, or $4,827,000. The majority of the increase was
attributable to simulcast and off-track wagering at the Hollywood Park race
track, due primarily to a change in the California racing law removing all
restrictions on simulcasting between northern and southern California.
Previously, a simulcast race was required to have a purse of $20,000 or more.
The remainder of the increase was attributable to a net of three additional live
race days at Hollywood Park and eight additional race days at Turf Paradise in
1994 compared to 1993. Other income increased by $678,000, or 16.0%, due almost
entirely to interest income earned on short term investments.

Operating expenses, exclusive of Casino pre-opening and training expenses and
acquisition costs associated with Turf Paradise, increased by $7,306,000, or
11.6%, in 1994 as compared to 1993. Salaries, wages and employee benefits were
$3,177,000 more in 1994, an increase of 11.1%. This increase was primarily
associated with a net of three additional live race days at Hollywood Park and
eight additional race days at Turf Paradise, along with increases in permanent
employee wages at both racing facilities. To a lesser extent, a portion of the
increase was attributable to a change in the California racing law related to
charity day expense. As of the 1994 Autumn Meeting the charity day payments
were changed to the net proceeds from charity days not to exceed 2/10 of 1% of
the total live on-track handle; previously, charity day expense was computed by
isolating variable costs related to race days and these costs were then excluded
from the statement of operations; there is no such exclusion with the reporting
method under the new law. Operations of facilities expense decreased by
$444,000, or 5.8%, essentially the result of a one time property tax reduction
at Turf Paradise, a change at Hollywood Park from a self insurance health and
welfare program to a fully insured plan and a decrease in "slip and fall"
claims. Cost of concession sales increased by $231,000, or 2.5%, with the
majority of the increase related to higher food costs at Turf Paradise that were
not passed on to the patrons. Professional services increased by $972,000, or
16.8%, principally related to increased program costs at Hollywood Park due to a
net of three additional race days and increased legal costs. Turf Paradise's
legal expense increased due to costs associated with attempting to eliminate
state sales tax on pari-mutuel commissions. Rent expense increased by $367,000,
or 25.8%, essentially because of higher totalisator rent at both facilities, due
to additional race days in 1994, and the 1994 payment of Las Vegas simulcast
interface fees for both 1994 and 1993. Utilities increased by $266,000, or
9.4%, due in part to higher water costs associated with purchasing additional
water from the City of Inglewood, and the addition of Friday night racing during
the Autumn Meeting. Marketing costs increased by $1,504,000, or 44.4%,
primarily due to an increase in all types of marketing at Hollywood Park, with a
focus on Friday night racing during both live race meets, along with the launch
of a new marketing strategy at Turf Paradise, which had a limited marketing
program under the former management. Administrative costs increased by
$1,233,000, or 33.1%, primarily due to increased costs associated with examining
expansion opportunities.

Casino pre-opening and training expenses increased by $764,000. The Casino
opened on July 1, 1994, and additional management staff was hired over the weeks
just before opening. The majority of the Casino staff was hired within one week
of opening and accordingly, the Company incurred costs associated with an on-
the-job training program; also Casino senior management was in place during the
six months of 1994 before the opening, with most hired during the fourth quarter
of 1993. The acquisition of Turf Paradise was accounted for under the pooling
of interests method of accounting and Hollywood Park expensed the $414,000 of
costs it incurred in connection with the acquisition in the third quarter, while
Turf Paradise expensed such costs as incurred.

22

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 year ended December 31, 1994 and 1993. However, the mid-
1994 introduction of riverboat gaming, complete with slot machines, as of
December 1994 on the nearby Missouri River, had a very significant negative
impact on Sunflower's operating results in 1994. For the twelve months ended
December 31, 1994, compared to the twelve months ended December 31, 1993,
Sunflower's total handle, including both live greyhound and horse racing and
simulcasting of horse racing, declined by $25,823,000, or 15.3%. Sunflower's
total revenues declined by $3,631,000, or 13.4%. Cost savings in essentially
every operating department and interest expense were not enough to offset the
decline in revenues, and loss before income tax expense increased by $910,000.

Depreciation and amortization increased by $225,000, or 3.5%, due to normal
capital expenditures and the amortization of the excess purchase price
associated with the Sunflower acquisition. Interest expense decreased by
$1,041,000, or 68.6%, because as of June 1993 Hollywood Park had retired all of
its outstanding bank debt.

The Hollywood Park Casino opened on July 1, 1994, under a third party leasing
arrangement, whereby the lessee operated the gaming floor and related
activities, and the Company managed all other functions including security, food
and beverage, maintenance and other such functions. The Casino's 1994 income
before income tax expense and training costs was $2,061,000. For the year ended
December 31, 1994, $11,745,000 of lease rent revenue was recognized; (although,
PCM had exercised its right under the Casino lease to defer lease rent payments
for up to nine months) representing the $18,000,000 of rent and $245,000 of
accrued interest due under the lease, less a valuation allowance of $6,500,000.

Income tax expense, including the results of operations at Sunflower and the
Casino, increased by $179,000, or 17.5%, basically related to the inability to
deduct the majority of the pooling costs associated with the acquisition of Turf
Paradise, amortization of the goodwill associated with the Sunflower acquisition
and lobbying costs in Kansas.

LIQUIDITY AND CAPITAL RESOURCES

Cash and cash equivalents decreased by $14,716,000 during the year ended
December 31, 1995, as compared to the year ended December 31, 1994. The
decrease was primarily related to land acquisitions, purchases of short term
investments, debt service payments on the secured and unsecured loan facilities,
capital expenditures and dividends paid on the Company's convertible preferred
stock. Cash and cash equivalents decreased by $23,495,000 during the year ended
December 31, 1994, as compared to the year ended December 31, 1993, primarily
because of capital expenditures for the construction of the Casino and the
acquisition of Sunflower.

HOLLYWOOD PARK On August 2, 1995, the final agreements were signed to begin the
construction phase for development of a card club in an existing hotel and
adjoining convention center in Compton, California. Hollywood Park paid the
City of Compton approximately $2,006,000 to acquire the convention center
parcel, which will be renovated to house the card club. On August 3, 1995, the
Company paid CEI $2,000,000 for the assignment of the DDA CEI had with the city
of Compton and an additional $500,000 for a five year option to purchase CEI's
gaming license.

On September 15, 1995, Hollywood Park paid approximately $3,411,000 to purchase
5.92 acres adjacent to the Inglewood property. On October 27, 1995, Hollywood
Park finalized the acquisition of an additional 37.33 acres, also adjacent to
the Inglewood property, for a total cost of approximately $7,500,000. Upon
consummation of the purchase of the 37.33 acres, Hollywood Park paid the seller
$4,100,000 and signed a non-interest bearing, promissory note, with a single
payment of $3,358,000, due on September 1, 1996. The additional acreage may be
used for development projects currently under evaluation.

23

Other capital expenditures of approximately $17,639,000 for the year ended
December 31, 1995, included initial costs for the Compton card club and normal
and necessary improvements at the Hollywood Park, Sunflower and Turf Paradise
properties.

On October 6, 1995, in anticipation of the proposed settlement of the Class
Actions and Derivative Action (see Item 3. Legal Proceedings), Hollywood Park
deposited $2,450,000 into a restricted cash account.

During the year ended December 31, 1995, Hollywood Park did not draw any funds
from its various credit facilities with Bank of America National Trust and
Savings Association ("Bank of America"). On April 14, 1995, the Company
executed an unsecured loan of up to $75,000,000 with 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 May 1, 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
repayment in eighty-four successive equal monthly installments. The Line of
Credit bears interest at the option of the Company at Bank of America's prime
rate plus 0.25% or the offshore rate plus 2.0%, and the Company may further
elect an agreed upon fixed rate.

The Revolver, inclusive of a within line facility for standby letters of credit
of up to a maximum of $15,000,000, is available for two years, ending May 1,
1997, during which the Company can borrow, pay and reborrow principal amounts
without penalty. The Revolver bears interest at the option of the Company at
Bank of America's prime rate or the offshore rate plus 1.75%, and the Company
may further elect an agreed upon fixed rate.

As of December 31, 1995, Hollywood Park was in breach of the tangible net worth
and quick assets to current liabilities bank covenants contained in the April
14, 1995, Business Loan Agreement between Hollywood Park and Bank of America.
The covenants were breached due to the November 17, 1995, acquisition of PCM, in
which certain tangible current assets were eliminated in the transaction and
goodwill of approximately $21,592,000 was recorded. On March 20, 1996, Bank of
America waived compliance with the breached covenants, through December 31,
1995.

On November 17, 1995, Hollywood Park acquired all of the assets and liabilities
of PCM, the former lessee of the Casino gaming floors. From April 17, 1995
through November 17, 1995, PCM paid the Company $16,377,000 in lease rent and
associated interest, and for food and beverage services provided by Hollywood
Park.

For the year ended December 31, 1995, the Company paid dividends of $1,925,000
on its convertible preferred stock. Dividend payments of approximately $481,000
were made on February 15, 1995, May 15, 1995, August 18, 1995, and November 15,
1995, representing $17.50 per share ($0.175 per depositary share) per payment
date. On January 1, 1996, Hollywood Park declared a quarterly dividend of
$481,000, or $17.50 per share of convertible preferred stock ($0.175 per
depositary share), payable February 15, 1996, to holders of record on January
15, 1996. Dividends of $1,925,000 were also paid during the year ended December
31, 1994.

On or after January 1, 1996, shares of the convertible preferred stock can be
redeemed at the option of the Company, though at no time will the convertible
preferred stock be redeemed for cash. The Company may exercise this option,
only if, among other requirements, for 20 trading days, within any period of 30
consecutive trading days, including the last trading day of such period, the
closing price of the Company's common stock exceeds $15.00, subject to
adjustments in certain circumstances. The conversion price is equal to 83.33
common shares for each convertible preferred share, or 0.8333 for each
depositary share. The Company anticipates converting the convertible preferred
stock at the earliest possible date.

24

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. On June 12, 1995,
the Company began investing in corporate bonds, with approximately $4,504,000
invested as of December 31, 1995, with Moodys ratings of Ba2 to Caa and Standard
& Poors ratings of BB+ to CCC+, though some of the bonds are not rated by either
agency. Investments in corporate bonds carry a greater amount of principal risk
than investments historically made by the Company and yield a correspondingly
higher return.

SUNFLOWER 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 in connection with the Company's acquisition of
Sunflower. The Senior Credit has been amended three times, most recently in
October 1995 by the Standstill Agreement (discussed below); on December 19,
1994, to allow for the Sunflower promissory note (discussed below), and for the
waiver of the default or event of default resulting from the failure to maintain
a fixed charge coverage ratio as of December 31, 1994; and on August 1, 1994, to
amend the definition of fixed charge coverage. The Senior Credit is non-
recourse to Hollywood Park, except with respect to the guarantee under the
Standstill Agreement.

On December 19, 1994, in anticipation of insufficient cash flow from daily
operations, due to intense competition from riverboat gaming in Missouri,
Sunflower executed a promissory note to Hollywood Park, allowing for the
advancement of up to $3,000,000, for the payment of its Senior Credit
obligations. On January 3, 1995, and again on March 31, 1995, Hollywood Park
advanced $1,250,000, to Sunflower, for total advances of $2,500,000.

On March 31, 1995, though current on principal and interest due on the Senior
Credit, Sunflower was in technical default of the fixed charge coverage ratio
covenant; however, Sunflower was unable to pay the July 3, 1995, Senior Credit
principal and interest due of approximately $1,200,000.

As of October 27, 1995, Sunflower and the Banks executed a Standstill Agreement,
which among other things, provides for the extension of the Senior Credit
maturity. The Senior Credit maturity has been extended to the termination date
of the Standstill Agreement, which is the earlier of July 1, 1996; default of
the Standstill Agreement; or the close of the 1996 Kansas Legislative session
without the adoption, and full approval, of legislation permitting slot machines
or other casino gaming at Kansas race tracks, including Sunflower. The
Standstill Agreement also provides for the deferral of 100% of the principal
payments and 50% of the interest payments due under the Senior Credit from April
1995 through the termination date of the Standstill Agreement. Sunflower has
paid approximately $839,000 to cover the 50% interest obligations for the period
April 1, 1995, through December 31, 1995. Hollywood Park has executed a
guarantee of Sunflower's 50% interest obligations, effective only if Sunflower
does not pay the 50% interest obligations, and the Banks do not terminate the
Standstill Agreement prior to July 1, 1996. The Company has not guaranteed any
of Sunflower's principal payment obligations. As of December 31, 1995, the
outstanding balance of the Senior Credit was $28,667,000.

In December 1995, Sunflower notified the Banks that it had not made a $400,000
property tax payment, as required under the Standstill Agreement. As of the
date of filing, the Banks have not declared Sunflower in default under the
Standstill Agreement, which would terminate the Standstill Agreement.

TURF PARADISE On April 13, 1995, Turf Paradise repaid the outstanding balance
of its unsecured revolving loan facility with Bank One of Arizona, and
terminated the $2,500,000 facility. On June 1, 1995, Turf Paradise executed a
$2,500,000 promissory note to Hollywood Park. As of December 31, 1995, Turf
Paradise had paid the promissory note in full.

Hollywood Park is continually evaluating future growth opportunities in the
gaming, sports and entertainment industries. 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

25

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 anticipated cash requirements for the
foreseeable future (and in any event for at least the next 12 months).

ITEM 8. FINANCIAL STATEMENTS
- ------- ---------------------

Financial statements and accompanying footnotes are set forth on pages 41
through 66 of this report.

ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
- ------- ---------------------------------------------------------------
FINANCIAL DISCLOSURE
--------------------
None

PART III

ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
- -------- --------------------------------------------------

The following table sets forth certain information with respect to the Directors
and Executive Officers of the Company:

Name Age Position
- ---------------------------------------------------------------------------------

R. D. Hubbard (a) 61 Chairman of the Board of Directors and
Chief Executive Officer
Harry Ornest (a) 72 Vice Chairman of the Board of Directors
Warren B. Williamson (a) (b) 67 Director, Vice President and Secretary
John J. Brunetti 65 Director
J. R. Johnson (b) (c) 74 Director
Howard W. Koch (a) 80 Director
Robert T. Manfuso (b) 58 Director
John V. Newman (c) 86 Director
Lynn P. Reitnouer (a) (c) 63 Director
Herman Sarkowsky (b)(c) 71 Director
Donald M. Robbins 48 President of Hollywood Park, President of
Racing and Assistant
Secretary
G. Michael Finnigan 47 President, Sports and Entertainment,
Executive Vice President,
Treasurer and Chief Financial Officer
Mark Sterbens 43 President and Chief Operating Officer of
Gaming

____
(a) Member of Executive Committee
(b) Member of Compensation Committee
(c) Member of Audit Committee

Mr. Hubbard has been a Director of the Company since 1990, Chairman of the Board
and Chief Executive Officer of the Company since September 1991; Chairman of the
Board and Chief Executive Officer of Hollywood Park Operating Company since
February 1991 and President of Hollywood Park Operating Company from February to
July 1991; Chairman of AFG Industries, Inc. and its parent company, Clarity
Holdings Corp. (glass manufacturing) and Director of AFG Industries, Inc.'s
subsidiaries from 1978 to July 1993; Chairman of the Board and 60% stockholder
of Sunflower Racing, Inc. (Woodlands Race Tracks - horse racing and greyhound
racing) from 1988 to March 1994; President, Director and sole stockholder of
Ruidoso Downs Racing, Inc. (horse racing) since 1988; Chairman of the Board,
Chief Executive Officer and sole stockholder of Multnomah Kennel Club, Inc.
(greyhound racing) since December 1991; owner and breeder of numerous
thoroughbreds and quarter horses since 1962.

Mr. Ornest has been a Director of the Company since 1991 and Vice Chairman of
the Board of the Company since September 1991; Director, Hollywood Park
Operating Company since 1988; Hollywood Park shareholder since 1962; Vice
Chairman of the Board, Hollywood Park Operating Company since February 1991;
Owner and Chairman of the Toronto Argonauts Football Club (Canadian Football
League club) from 1988 to May 1991.

26

Mr. Williamson has been a Director of the Company since 1988 and Vice President
and Secretary of the Company since September 1991; Chairman of the Board and
Chief Executive Officer of the Company from 1989 to September 1991; Director,
Hollywood Park Operating Company since 1985; Vice President and Secretary,
Hollywood Park Operating Company since February 1991; Secretary and Treasurer,
Hollywood Park Operating Company from 1985 to November 1990; Chairman and Chief
Executive Officer, Chandis Securities Co. (holding company) since 1985;
Director, Times Mirror Company; Trustee, Hospital of the Good Samaritan;
Trustee, California Thoroughbred Breeders Foundation; Trustee, Claremont McKenna
College; Chairman Emeritus, Art Center College of Design; breeder and racer of
thoroughbreds since 1970.

Mr. Brunetti has been a Director of the Company since 1993; Chairman of the
Board and Chief Executive Officer, Joseph J. Brunetti Construction Company (real
estate development, ownership and management) since 1968; Chairman of the Board,
Chief Executive Officer and principal stockholder, Hialeah Park (thoroughbred
horse racing) since 1977; Owner, Red Oak Farm (thoroughbred breeding farm and
racing stable); Member, Board of Trustees, New York Military Academy since 1973
and its President since 1987; Member, New Jersey HBPA, 1967; Florida TOBA, 1969.

Mr. Johnson has been a Director of the Company since 1991 and was a Director of
Hollywood Park Operating Company from February 1991 to January 1992; Chairman,
President and Chief Executive Officer of NEWMAR (marine electronics
manufacturing) from 1980 to the present; and Trustee of Westminster College.

Mr. Koch has been a Director of the Company since 1991 and was a Director of
Hollywood Park Operating Company from February 1991 to January 1992, and its
predecessor from 1977 to 1988; Independent motion picture producer and director
with Paramount Pictures Corp. since 1964.

Mr. Manfuso has been a Director of the Company since 1991 and was a Director of
Hollywood Park Operating Company from February 1991 to January 1992; Co-Chairman
of the Board of Laurel Racing Association (horse race track management) from
1984 to February 1994; Vice Chairman of the Board of The Maryland Jockey Club
(horse racing) from 1986 to February 1994; Executive Vice President, Laurel
Racing Association from 1984 to May 1990; Executive Vice President, The Maryland
Jockey Club from 1986 to June 1990; Director, Maryland Horse Breeders
Association from 1984 to 1992; member, Executive Committee, Maryland Million
since 1991.

Mr. Newman has been a Director of the Company since 1989, served as Treasurer of
the Company from 1989 to September 1991; Director, Hollywood Park Operating
Company from 1977 to January 1992; President and Chief Executive Officer, Newman
Ranch Company (citrus farming) since 1989; Chairman Emeritus of the Board of
Directors, Sunkist Growers, Inc. (citrus marketing) since 1977.

Mr. Reitnouer has been a Director of the Company since 1991 and was a Director
of Hollywood Park Operating Company from September 1991 to January 1992;
Partner, Crowell Weedon & Co. (stock brokerage) since 1969; Corporate Director
and Secretary, COHR, Inc. (subsidiary of Hospital Council of Southern
California) since 1986; Director, President and Regent, Forest Lawn Memorial
Parks Association since 1975; Trustee, University of California Santa Barbara
Foundation since 1992.

Mr. Sarkowsky has been a Director of the Company since 1991 and was a Director
of Hollywood Park Operating Company from February 1991 to January 1992; Owner,
Sarkowsky Investment Corporation (real estate development and investments) since
1980; Owner, SPF Holdings, Inc. (general partner of various limited
partnerships, including Sarkowsky Family Limited Partnership, real estate and
venture capital) since 1980; Director, The Sarkowsky Foundation (charitable
foundation) since 1982; a thoroughbred horse breeder and owner since 1959 since;
Director, Synetics, Inc. (porous plastic manufacturing); Director, Seafirst
Corporation (banking); Director, Eagle Hardware & Garden, since 1990.

Mr. Robbins has been President of Racing since February 1994; President and
Assistant Secretary of the Company since September 1991; General Manager of
Hollywood Park Operating Company from 1986 to February 1994; Executive Vice
President of Hollywood Park Operating Company since 1988; President and
Secretary of Hollywood Park Operating Company since July 1991.

27

Mr. Finnigan has been President of Sports and Entertainment since January 1996,
President of Gaming and Entertainment from February 1994 to December 1995;
Executive Vice President and Chief Financial Officer of the Company since March
1989; Treasurer since March 1992.

Mr. Sterbens has been President and Chief Operating Officer of Gaming since
January 2, 1996; President and Chief Operating Officer, Par-A-Dice Riverboat
Casino, from March 1993 to December 1995; General Manager, Vice President of
Operations, Silver Eagle Casino Riverboat Casino, from September 1992 to March
1993; Chief Operating Officer, Aladdin Casino, May 1992 through September 1992;
and President, Chief Operating Officer & Corporate Officer, Riviera Hotel &
Casino, from 1979 to 1992.

All directors hold office until the next annual meeting of stockholders or until
their successors are duly elected and qualified. The executive officers of the
Company serve at the discretion of the Board of Directors. Directors are
entitled to an $18,000 fee each year, which they can take in cash, or may choose
to participate in the Company's Directors Deferred Compensation Plan (the
"Plan") as outlined below. In addition, members of the Executive Committee,
Audit Committee and Compensation Committee receive $1,000, $500 and $500,
respectively, for each committee meeting attended, and such amounts are also
eligible for the Plan. Furthermore, Directors and guests in their accompaniment
are entitled, without charge, to use the Directors' Room at Hollywood Park,
which is open on weekends and holidays during the racing season. Each director
is elected to a one-year term.

DIRECTOR'S DEFERRED COMPENSATION PLAN

Participation in the Company's Directors Deferred Compensation Plan is limited
to directors of the Company. Pursuant to the Plan, each eligible director may
elect to defer all or a portion of his annual retainer. Any such deferred
compensation is credited to a deferred compensation account, either in cash or
in shares of common stock, at each director's election. As of the date the
director's compensation would otherwise have been paid, and depending on the
director's election, the director's deferred compensation account will be
credited with either (i) cash, (ii) the number of full and/or fractional shares
of common stock obtained by dividing the amount of the director's compensation
for the calendar quarter or month which he elected to defer by the average of
the closing price of the common stock on the NASDAQ/NMS on the last ten business
days of the calendar quarter or month for which such compensation is payable or
(iii) a combination of (i) and (ii). All cash amounts credited to the
director's deferred compensation account bear interest at an amount to be
determined from time to time by the Board of Directors.

If a director has elected to receive shares of common stock in lieu of his
retainer, such director's deferred compensation account is credited at the end
of each calendar quarter with the number of full and/or fractional shares of
common stock obtained by dividing the dividends which would have been paid on
the shares credited to the director's deferred compensation account as of the
dividend record date, if any, occurring during such calendar quarter if such
shares had been shares of issued and outstanding common stock on such date, by
the closing price of the common stock on the NASDAQ/NMS on the date such
dividend(s) was paid. In addition, if the Company declares a dividend payable
in shares of common stock, the director's deferred compensation account is
credited at the end of each calendar quarter with the number of full and/or
fractional shares of the common stock which such shares would have been entitled
to if such shares had been shares of issued and outstanding common stock on the
record date for such stock dividend(s).

Participating directors do not have any interest in the cash and/or common stock
credited to their deferred compensation accounts until distributed in accordance
with the Plan, nor do they have any voting rights with respect to such shares
until shares credited to their deferred compensation accounts are distributed.
The rights of a director to receive payments under the Plan are no greater than
the rights of an unsecured general creditor of the Company. Each participating
director may elect to have the aggregate amount of cash and shares credited to
his deferred compensation account distributed to him in one lump sum payment or
in a number of approximately equal annual installments over a period of time not
to exceed fifteen years. The lump sum payment or the first installment will be
paid as of the first business day of the calendar quarter

28

immediately following the cessation of the director's service as a director of
the Company. Prior to the beginning of any calendar year, a director may elect
to change the method of distribution, but amounts credited to a director's
account prior to the effective date of such change may not be affected, but
rather will be distributed in accordance with the election at the time such
amounts were credited to the director's deferred compensation account.

The maximum number of shares of common stock that can be issued pursuant to the
Plan is 100,000 shares. The Company is not required to reserve or set aside
funds or shares of common stock for the payment of its obligations pursuant to
the Plan. The Company is obligated to make available, as and when required, a
sufficient number of shares of common stock to meet the needs of the Plan. The
shares of common stock to be issued under the Plan may be either authorized and
unissued shares or reacquired shares.

Amendment, modification or termination of the Plan may not (i) adversely affect
any eligible director's rights with respect to amounts then credited to his
account or (ii) accelerate any payments or distributions under the Plan (except
with regard to bona fide financial hardships).

COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION

The members of the Compensation Committee for the 1995 fiscal year were J.R.
Johnson, Robert T. Manfuso, Herman Sarkowsky, and Warren B. Williamson. Warren
B. Williamson served as Secretary of the Company, but did not receive
compensation for his services as an officer of the Company. No other members of
the Compensation Committee were officers or employees or former officers or
employees of the Company or its subsidiaries.

ITEM 11. EXECUTIVE COMPENSATION
- -------- -----------------------

The following tables set forth certain information concerning compensation of
and stock options held by the Company's Chief Executive Officer and the two most
highly paid officers, respectively.

Long Term
Compensation
Awards
------------
Annual Compensation Securities
-------------------- Underlying
Name and Principal Salary Bonus Other Annual Options/ All Other
Position Year ($) ($) Compensation SARs (#) Compensation
- ------------------ ---- ---------- ------ ------------ ------------ ------------

R. D. Hubbard 1995 $400,000 $0 $0 0 $0
Chairman of the Board 1994 400,000 0 0 0 0
and Chief Executive 1993 400,000 0 0 0 0
Officer

G. Michael Finnigan 1995 $262,608 $0 $0 0 $0
President, Sports and 1994 262,608 0 0 20,000 1,308 (a)
Entertainment, Executive 1993 262,608 0 0 30,000 1,308 (a)
Vice President, Treasurer,
Chief Financial Officer

Donald M. Robbins 1995 $255,501 $0 $0 0 $0
President of Hollywood 1994 255,501 0 0 20,000 246,313 (b)
Park Inc., President of 1993 255,501 0 0 30,000 246,313 (b)
Racing and Assistant
Secretary

- ----------
(a) Reflects matching contributions under the Hollywood Park 401(k) Plan.

(b) In April 1992, the Company and Mr. Robbins entered into an agreement
terminating his employment agreement with the Company and providing for the
payment to Mr. Robbins of the change of control benefit under that contract in
three equal annual installments of $245,833 in April 1992, 1993 and 1994. Mr.
Robbins is currently employed by the Company without an employment contract.

29

REPORT ON REPRICING OF OPTIONS/SAR'S

No. of Market Price Length of
Securities of Stock at Exercise Price Original Term
Underlying Time of at Time of New Remaining at
Options/SAR's Repricing or Repricing or Exercise Date of
Repriced or Amendment Amendment Price Repricing or
Name Date Amended, # ($) ($) ($) Amendment
- ------------------------------------------------------------------------------------------------------------------------------

G. Michael Finnigan 5/19/95 30,000 $ 13.00 $ 25.50 $ 13.00 8 years, 1 month
5/19/95 20,000 $ 13.00 $ 22.00 $ 13.00 8 years, 9 months
Donald M. Robbins 5/19/95 30,000 $ 13.00 $ 25.50 $ 13.00 8 years, 1 month
5/19/95 20,000 $ 13.00 $ 22.00 $ 13.00 8 years, 9 months

PENSION PLAN

Years of Qualified Service
-------------------------------------------------------------------------
Final Average Annual Salary 10 15 20 25 30
- ----------------------------------------------------------------------------------------------------------

$100,000 $ 24,815 $37,223 $49,630 $62,038 $ 67,038
$150,000 to $500,000 (a) 38,065 57,098 76,130 95,163 102,663

- ----
(a) Under current provisions of the Internal Revenue Code, the maximum average
salary that may be used in calculating retirement benefits in 1995 is $150,000.
Benefits accrued on April 1, 1994 (based on prior compensation limits) are
grandfathered.

Hollywood Park Operating Company's Pension Plan (the "Pension Plan") is a non-
contributory, defined benefit plan which applies to eligible employees who are
not covered by a collective bargaining agreement and who meet the Pension Plan's
service requirements, including directors who are employees. In general,
pension benefits are based on years of service and eligible earnings. R.D.
Hubbard, Donald M. Robbins and G. Michael Finnigan are the only officers or
directors of the Company who are currently participating in the Pension Plan and
currently have approximately one year, nine years and six years of qualified
service, respectively. Only amounts earned by Messrs. Hubbard, Robbins and
Finnigan as "salary" as shown in the Executive Compensation Table, above, are
considered in determining their benefit levels.

The amounts shown in the Pension Plan table above are estimated annual
retirement benefits under the Pension Plan (assuming payments are made on the
normal life annuity basis and not under the provisions on survivor benefits)
upon normal retirement at age 65 in 1995, after various years of qualified
service and at selected average annual compensation levels. Benefits do not
become vested until an employee has completed five years of employment and are
not subject to deduction for Social Security or other offset amounts.

The amounts required to fund the Pension Plan are determined actuarially and are
paid by Hollywood Park Operating Company to a life insurance company under an
unallocated group annuity contract.

In December 1995 the Board of Director's Compensation Committee approved a non-
qualified Supplementary Employment Retirement Plan ("SERP"), effective April 1,
1996 (therefore no actuarial data is available). The SERP is an unfunded plan,
primarily for the purpose of restoring the retirement benefits for highly
compensated employees. Currently, Messrs. Hubbard, Robbins and Finnigan are
eligible to participate in the SERP. The SERP will restore the retirement
benefit that was eliminated in 1994 by the Internal Revenue Service, when the
maximum annual earnings allowed for qualified pension plans was reduced to
$150,000 from $235,840.

ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
- -------- --------------------------------------------------------------

The following table sets forth the name, address (only provided for persons
listed as beneficial owners of 5% or more of the Common Stock, or Depositary
Shares) and number of shares and percent of the Common Stock or Depositary
Shares, respectively, beneficially owned as of March 16, 1996, by each person
known to

30

the Board of Directors to be the beneficial owner of 5% or more of the
outstanding shares of Common Stock or the Depositary Shares, each Director, each
named Officer and Directors and Executive Officers as a group.

Common Stock (a) Depositary Shares (b)
Amount and
Amount and Nature of
Nature of Beneficial Amount and
Beneficial Ownership Percent of Nature of Percent of
Ownership (Fully Shares Beneficial Shares
Name of Beneficial Owner (Primary) Diluted) Outstanding Ownership Outstanding
- ---------------------------------------------------------------------------------------------------------------------

R.D. Hubbard 2,119,840 2,619,820 (c) 13.8% 600,000 (d) 21.8

Hollywood Park, Inc.
1050 South Prairie Avenue
Inglewood, California 90301
State of Wisconsin 1,752,000 1,752,000 (e) 9.5% -- --
P.O. Box 7842
Madison, Wisconsin 53707
Legg Mason 1,706,250 1,706,250 (f) 9.2% -- --
111 South Calvert Street
Baltimore, Maryland 21202
Harry Ornest 1,186,300 1,236,298 (g) 6.7% 60,000 2.2%
1050 South Prairie Avenue
Inglewood, California 90301
John J. Brunetti 852,980 852,980 (h) 4.6% -- --
J.R. Johnson 189,583 368,743 (i) 2.0% 215,000 7.8%
Warren B. Williamson 125,000 147,916 (j) ** 27,500 1.0%
Lynn P. Reitnouer 35,000 35,000 ** -- --
John V. Newman 28,670 28,670 (k) ** -- --
Robert Manfuso 20,000 28,333 (l) ** 10,000 **
Herman Sarkowsky 10,938 10,938 ** -- --
Howard W. Koch 1,458 1,458 ** -- --
G. Michael Finnigan 25,415 58,749 (m) ** -- --
Donald M. Robbins 12,339 45,673 (n ** -- --
Directors and Executive Officers
as a group (12 persons) 4,607,523 5,434,577 (o) 28.1% 912,500 32.8%

** Less than one percent (1%) of the outstanding Common Stock or Depositary
Shares.
- ----
(a) Fully-diluted amounts assume exercise of stock options or conversion of the
Depositary Shares beneficially owned by the named individual or entity into
shares of Common Stock.

(b) Each Depositary Share may be converted into 0.8333 shares of Common Stock,
subject to adjustment in certain circumstances.

(c) Includes 499,980 shares of Common Stock issuable upon conversion of 600,000
Depositary Shares, including 300,000 Depositary Shares owned by the R.D. and
Joan Dale Hubbard Foundation.

(d) Includes 300,000 Depositary Shares owned by the R.D. and Joan Dale Hubbard
Foundation.

(e) Based upon information provided by the stockholder in Schedule 13G filed
with the Securities and Exchange Commission in February 1996.

(f) Based upon information provided by the stockholder in Schedule 13G filed
with the Securities and Exchange Commission on February 14, 1996.

(g) Includes 49,998 shares of Common Stock issuable upon conversion of his
Depositary Shares. Also includes 50,000 shares of Common Stock held by the
Irving Ornest Foundation, for which Mr. Ornest acts as trustee. (Mr. Ornest
disclaims any pecuniary interest in these shares.) In addition, as trustee of
the Harry and Ruth Ornest Trust, Mr. Ornest and his wife, Ruth, share the power
to vote 60% of the interest in the Ornest Family Partnership (the
"Partnership"), which in turn has the power to dispose of the 1,146,300 shares
of Common Stock held in the name of the Partnership.

(h) All the shares are owned by Elberon Investment Corp., of which Mr. Brunetti
owns all the outstanding common stock.

(i) Includes 179,160 shares of Common Stock issuable upon conversion of his
Depositary Shares.

(j) Includes 22,916 shares of Common Stock issuable upon conversion of his
Depositary Shares.

(k) All the shares are owned by the Newman Family Trust for which Mr. Newman and
his wife serve as trustees.

(l) Includes 8,333 shares of Common Stock issuable upon conversion of his
Depositary Shares.

(m) Includes 33,334 shares of Common Stock which Mr. Finnigan has the right to
acquire pursuant to options granted under Hollywood Park's 1993 Stock Option
Plan, which are exercisable within 60 days of March 16, 1996.

31

(n) Includes 33,334 shares of Common Stock which Mr. Robbins has the right to
acquire pursuant to options granted under Hollywood Park's 1993 Stock Option
Plan, which are exercisable within 60 days of March 16, 1996.

(o) Includes 827,054 shares of Common Stock of which the Directors and Executive
Officers may be deemed to have beneficial ownership following (i) conversion of
912,500 Depositary Shares and (ii) the exercise of options to purchase 66,668
shares of Common Stock, which are exercisable within 60 days of March 16, 1996.
Excluding such shares, the Directors and Executive Officers of the Company have
beneficial ownership of 4,540,855 shares of Common Stock, which represents 24.5%
of the shares of Common Stock outstanding as of March 16, 1996.

ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
- -------- ----------------------------------------------

The Company entered into an aircraft time sharing agreement with R.D. Hubbard
Enterprises, Inc. ("Hubbard Enterprises") which is wholly owned by Mr. Hubbard.
The original agreement covered the period November 1, 1993, through December 31,
1994. Thereafter, the agreement automatically renews for additional terms of
one month each unless written notice of termination is given by one party to the
other at least two weeks before a renewal term. The Company agreed to reimburse
Hubbard Enterprises for expenses incurred as a result of the Company's use of
the aircraft, which totaled approximately $126,000 in 1995, and $139,000 in
1994.

On March 23, 1994, the Company acquired Sunflower, a greyhound and thoroughbred
race track located in Kansas City, Kansas, in which Mr. Hubbard owned a 60%
interest. 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 right to such additional
consideration to Hollywood Park for nominal consideration and have no further
entitlements to additional consideration.

PART IV

ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K
- -------- ----------------------------------------------------------------

(a) Documents filed as a part of this report.

1. The consolidated financial statements are set forth in the index to
Consolidated Financial Statements and appear on pages 41 through 44.

2. 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.

2.3 Agreement and Plan of Reorganization by and among Hollywood Park, Inc.
and Pacific Casino Management, Inc. dated November 17, 1995, is hereby
incorporated by reference to the Company's Current Report on Form 8-K,
filed November 30, 1995 and to the Company's Current Report on Form 8-
K/A, filed January 25, 1996.

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 Depositary Stock Agreement between Chemical
Trust Company of California and Hollywood Park, Inc., dated February 9,
1993, is hereby incorporated by reference to the Form S-1 dated January
29, 1993, of Hollywood Park, Inc.

32

4.6 Hollywood Park 1993 Stock Option Plan is hereby incorporated by
reference to Exhibit A to the Notice of Annual Meeting to Shareholders
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 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.

10.4 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.

10.5 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 10.4) is hereby
incorporated by reference to the Company's Quarterly Report on Form 10-
Q for the quarter ended June 30, 1994.

10.6 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.

10.7 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.

10.8 Amendment of Oil and Gas Lease dated January 10, 1995, by and between
Hollywood Park, Inc. and Casex Co., Nunn Ltd., and Vortex Energy &
Minerals is hereby incorporated by reference to the Company's Annual
Report on Form 10-K for the year ended December 31, 1994.

10.9 Agreement to sell contingent rights to additional consideration payable
by Hollywood Park, related to 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.

10.10 Business Loan Agreement dated April 14, 1995, by and between Hollywood
Park, Inc., and Bank of America National Trust and Savings Association,
is hereby incorporated by reference to the Company's Quarterly Report
on Form 10-Q for the quarter ended March 31, 1995.

10.11 Amendment to Agreement Respecting Pyramid Casino dated April 14, 1995,
by and between Hollywood Park, Inc., and Compton Entertainment, Inc.,
is hereby incorporated by reference to the Company's Quarterly Report
on Form 10-Q for the quarter ended March 31, 1995.

10.12 Amended and Restated Agreement Respecting Pyramid Casino dated July 14,
1995, by and between Hollywood Park, Inc., and Compton Entertainment,
Inc., is hereby incorporated by reference to the Company's Quarterly
Report on Form 10-Q for the quarter ended September 30, 1995.

10.13 Amended and Restated Disposition and Development Agreement of Purchase
and Sale, and Lease with Option to Purchase, dated August 2, 1995, by
and between The Community Redevelopment Agency of the City of Compton
and Compton Entertainment, Inc., is hereby incorporated by reference to
the Company's Quarterly Report on Form 10-Q for the quarter ended
September 30, 1995.

10.14 Guaranty, dated July 31, 1995, by Hollywood Park, Inc., in favor of the
Community Redevelopment Agency of the City of Compton, is hereby
incorporated by reference to the Company's Quarterly Report on Form 10-
Q for the quarter ended September 30, 1995.

10.15 Lease by and between HP Compton, Inc. and Compton Entertainment, Inc.,
dated August 3, 1995, is hereby incorporated by reference to the
Company's Quarterly Report on Form 10-Q for the quarter ended September
30, 1995.

33

10.16 Standstill Agreement, dated October 27, 1995, by and between Sunflower
Racing, Inc., and First Union Bank of Florida, Bank One of Lexington,
N.A., Bank Midwest, N.A., Intrust Bank, N.A., and FCLT Loans, L.P., is
hereby incorporated by reference to the Company's Quarterly Report on
Form 10-Q for the quarter ended September 30, 1995.

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 Delaware 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

28.1 Report of Arthur Andersen LLP, Independent Auditors.

28.2 Report of KPMG Peat Marwick LLP, Independent Auditors.

28.3 Report of Ernst & Young LLP, Independent Auditors.

(b) Reports on Form 8-K

A current report on Form 8-K was filed on March 22, 1996, to report on the March
19, 1996, signing of the letter of intent relating to the strategic combination
of Hollywood Park and Boomtown, and the filing of the press release announcing
the signing of the letter of intent.

A current report on Form 8-K was filed on November 30, 1995, to report that the
Company had acquired Pacific Casino Management, as of November 17, 1995.

A current report on Form 8-K/A was filed on January 25, 1996, to amend the
November 30, 1995, current report on Form 8-K, filed November 30, 1995, to
include the required financial statements.

34

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: March 29, 1996
-----------------------------
R. D. Hubbard
Chairman of the Board and
Chief Executive Officer
(Principal Executive Officer)

By: /s/ G. Michael Finnigan Dated: March 29, 1996
-----------------------------
G. Michael Finnigan
Executive Vice President and
Chief Financial Officer
(Principal Financial and
Accounting Officer)

35

Pursuant to the requirements of the Securities Exchange Act of 1934, this report
has been signed below by the following persons on behalf of the registrant and
in the capacities and on the dates indicated:

HOLLYWOOD PARK, INC.

/s/ R. D. Hubbard Dated: March 29, 1996
- -----------------------------------
R. D. Hubbard - Director

/s/ Harry Ornest Dated: March 29, 1996
- -----------------------------------
Harry Ornest - Director

/s/ Warren B. Williamson Dated: March 29, 1996
- -----------------------------------
Warren B. Williamson - Director

/s J. R. Johnson Dated: March 29, 1996
- -----------------------------------
J. R. Johnson - Director

/s/ Howard W. Koch Dated: March 29, 1996
- -----------------------------------
Howard W. Koch - Director

/s/ Robert T. Manfuso Dated: March 29, 1996
- -----------------------------------
Robert T. Manfuso - Director

/s/ John V. Newman Dated: March 29, 1996
- -----------------------------------
John V. Newman - Director

/s/ Lynn P. Reitnouer Dated: March 29, 1996
- -----------------------------------
Lynn P. Reitnouer - Director

/s/ Herman Sarkowsky Dated: March 29, 1996
- -----------------------------------
Herman Sarkowsky - Director

/s/ John J. Brunetti Dated: March 29, 1996
- -----------------------------------
John J. Brunetti - Director

36

Hollywood Park, Inc.

Index to Consolidated Financial Statements
as of the dates and for the periods indicated below

Independent Auditors' Reports

Consolidated Balance Sheets as of December 31, 1995 and 1994............ 41

Consolidated Statements of Operations for the years
ended December 31, 1995, 1994 and 1993............................. 42

Consolidated Statements of Changes in Stockholders' Equity
for the years ended December 31, 1995, 1994 and 1993............... 43

Consolidated Statements of Cash Flows for the years
ended December 31, 1995, 1994 and 1993............................. 44

Notes to Financial Statements........................................... 45

Schedules not included herewith have been omitted because they are not
applicable or the required information is shown in the financial statements or
notes thereto.

37

REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS

To The Board of Directors and Stockholders of
Hollywood Park, Inc.:

We have audited the accompanying consolidated balance sheets of Hollywood Park,
Inc. (a Delaware corporation) and subsidiaries (the "Company") as of December
31, 1995 and 1994, and the related consolidated statements of operations,
stockholders' equity and cash flows for each of the two years in the period
ended December 31, 1995. 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.

We conducted our audits 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 audits provide 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 Hollywood Park, Inc. and
subsidiaries as of December 31, 1995 and 1994, and the results of their
operations and their cash flows for each of the two years in the period ended
December 31, 1995 in conformity with generally accepted accounting principles.

ARTHUR ANDERSEN LLP

Los Angeles, California
February 14, 1996

38

INDEPENDENT AUDITORS' REPORT

The Board of Directors and Stockholders
Hollywood Park, Inc.:

We have audited the accompanying consolidated statements of operations, changes
in stockholders' equity and cash flows of Hollywood Park, Inc. and Subsidiaries
(the Company) for the year ended December 31, 1993. These financial statements
are the responsibility of the Company's management. Our responsibility is to
express an opinion on these consolidated financial statements based on our
audit. We did not audit the financial statements of Turf Paradise, Inc., a
company acquired during 1994 in a transaction accounted for as a pooling of
interests, as discussed in Note 1, for the year ended June 30, 1993. Such
statements reflect total revenue constituting 19.9% of the related consolidated
total. These statements were audited by other auditors whose report has been
furnished to us and our opinion, insofar as it relates to amounts included for
Turf Paradise, Inc., is based solely upon the report of the other auditors.

We conducted our audit in accordance with generally accepted auditing standards.
Those standards required 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 and the report of the other auditors provide a
reasonable basis for our opinion.

In our opinion, based on our audit and the report of other auditors, the
consolidated financial statements referred to above present fairly, in all
material respects the results of operations and cash flows of Hollywood Park,
Inc. and Subsidiaries for the year ended December 31, 1993, in conformity with
generally accepted accounting principles.

KPMG Peat Marwick LLP
---------------------

Los Angeles, California
February 11, 1994, except for the portion of note 1
dealing with the acquisition of Turf Paradise, Inc.
which is as of August 11, 1994.

39

Hollywood Park, Inc.
Consolidated Balance Sheets

As of December 31,
---------------------------
1995 1994
----------- -----------

ASSETS
Current Assets:
Cash and cash equivalents $22,406,000 $37,122,000
Restricted cash 3,126,000 699,000
Short term investments 6,447,000 0
Casino lease and related interest receivable, net 0 11,745,000
Other receivables, net of allowance for doubtful accounts
of $1,841,000 in 1995 and $159,000 in 1994 8,147,000 8,224,000
Prepaid expenses and other assets 3,342,000 3,348,000
Deferred tax assets 5,139,000 4,827,000
Current portion of notes receivable 34,000 31,000
------------ ------------
Total current assets 48,641,000 65,996,000

Notes receivable 857,000 891,000
Property, plant and equipment, net 174,717,000 160,264,000
Lease with TRAK East, net 1,195,000 1,110,000
Goodwill, net 27,375,000 5,813,000
Deferred tax assets 3,152,000 1,103,000
Long term gaming assets 19,063,000 0
Other assets 11,706,000 11,396,000
------------ ------------
$286,706,000 $246,573,000
============ ============

- -------------------------------------------------------------------------------------------------
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities:
Accounts payable $12,518,000 $6,833,000
Accrued lawsuit settlement 5,232,000 0
Accrued liabilities 13,237,000 7,703,000
Accrued workers' compensation 2,277,000 2,117,000
Accrued slip and fall claims 1,543,000 1,273,000
Gaming liabilities 3,998,000 0
Amounts due to horsemen for purses, stakes and awards 709,000 516,000
Amounts payable to charities 370,000 501,000
Outstanding pari-mutuel tickets 2,757,000 1,546,000
Current portion of notes payable 32,310,000 5,299,000
Deferred tax liabilities 251,000 288,000
------------ ------------
Total current liabilities 75,202,000 26,076,000

Notes payable 15,629,000 42,800,000
Gaming liabilities 16,894,000 0
Deferred tax liabilities 13,235,000 10,442,000
------------ ------------
Total liabilities 120,960,000 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;
18,504,798 issued and outstanding in 1995 and 18,369,634
in 1994 1,850,000 1,837,000
Capital in excess of par value 168,479,000 166,892,000
Accumulated deficit (4,611,000) (1,502,000)
------------ ------------
Total stockholders' equity 165,746,000 167,255,000
------------ ------------
$286,706,000 $246,573,000
============ ============

- ------
See accompanying notes to consolidated financial statements.

40

Hollywood Park, Inc.
Consolidated Statements of Operations

For the years ended December 31,
------------------------------------------
1995 1994 1993
------------ ------------ ------------

Revenues:
Pari-mutuel commissions $ 53,259,000 $ 51,732,000 $ 46,905,000
Lease and management fee - Sunflower 5,408,000 7,860,000 0
Lease - Casino 20,624,000 11,745,000 0
Gaming - Casino 6,032,000 0 0
Admissions, programs, and other racing income 18,369,000 19,127,000 16,945,000
Concession sales 19,783,000 20,540,000 10,908,000
Other income 7,097,000 6,320,000 4,227,000
------------ ------------ ------------
130,572,000 117,324,000 78,985,000
------------ ------------ ------------

Expenses:
Salaries, wages and employee benefits 43,124,000 37,250,000 29,033,000
Operations of facilities 10,865,000 10,095,000 7,628,000
Cost of concession sales 25,162,000 21,852,000 9,400,000
Professional services 7,860,000 7,647,000 5,389,000
Rent 1,306,000 1,823,000 1,423,000
Utilities 4,854,000 4,639,000 2,820,000
Marketing 5,546,000 6,062,000 3,384,000
Administrative 10,930,000 7,028,000 3,721,000
------------ ------------ ------------
109,647,000 96,396,000 62,798,000
------------ ------------ ------------

Operating income 20,925,000 20,928,000 16,187,000
Lawsuit settlement 6,088,000 0 0
Casino pre-opening and training expenses 0 2,337,000 850,000
Turf Paradise acquisition costs 0 627,000 0
------------ ------------ ------------
Income before interest, income taxes, depreciation and
amortization 14,837,000 17,964,000 15,337,000
Depreciation and amortization 11,384,000 9,563,000 6,402,000
Interest expense 3,922,000 3,061,000 1,517,000
------------ ------------ ------------
Income (loss) before income tax expense (469,000) 5,340,000 7,418,000
Income tax expense 693,000 1,568,000 1,025,000
------------ ------------ ------------
Net income (loss) ($1,162,000) $ 3,772,000 $ 6,393,000
============ ============ ============

====================================================================================================
Dividend requirements on convertible preferred stock $1,925,000 $1,925,000 $1,718,000

Net income (loss) available to (allocated to)
common shareholders ($3,087,000) $1,847,000 $4,675,000

Per common share:
Net income (loss) - primary ($0.17) $0.10 $0.30
Net income (loss) - fully diluted ($0.17) $0.10 $0.30
Cash dividend per common share $0.00 $0.00 $0.00

Number of shares - primary 18,399,040 18,224,216 15,418,066
Number of shares - fully diluted 20,690,532 20,515,708 17,464,734

- ------
See accompanying notes to consolidated financial statements.

41

Hollywood Park, Inc.
Consolidated Statements of Changes in Stockholders' Equity
For the years ended December 31, 1995, 1994 and 1993

Capital in Total
Preferred Common Excess of Accumulated Stockholders'
Stock Stock Par Value Deficit Equity
---------- ---------- ------------ ----------- -------------

BALANCE AT YEAR END 1992 $0 $1,080,000 $ 17,103,000 ($7,996,000) $10,187,000
Net income 0 0 0 6,393,000 6,393,000
Issuance of preferred stock 28,000 0 25,749,000 0 25,777,000
Issuance of common stock 0 460,000 112,852,000 0 113,312,000
Stock split 0 232,000 (232,000) 0 0
Net changes related to Turf Paradise equity 0 0 253,000 (246,000) 7,000
Preferred stock dividends - $53.69 per share 0 0 0 (1,476,000) (1,476,000)
---------- ---------- ------------ ----------- -------------
BALANCE AT YEAR END 1993 28,000 1,772,000 155,725,000 (3,325,000) 154,200,000
Net income 0 0 0 3,772,000 3,772,000
Net income - Turf Paradise six months
ended December 31, 1993 0 0 0 198,000 198,000
Issuance of common stock to acquire -
Sunflower Racing, Inc. 0 59,000 11,099,000 0 11,158,000
Issuance of contingent shares related to
Sunflower Racing, Inc. acquisition 0 6,000 (6,000) 0 0
Net changes related to Turf Paradise equity 0 0 74,000 (222,000) (148,000)
Preferred stock dividends - $70.00 per share 0 0 0 (1,925,000) (1,925,000)
---------- ---------- ------------ ----------- -------------
BALANCE AT YEAR END 1994 28,000 1,837,000 166,892,000 (1,502,000) 167,255,000
Net loss 0 0 0 (1,162,000) (1,162,000)
Issuance of common stock to acquire -
Pacific Casino Management, Inc. 0 13,000 1,587,000 0 1,600,000
Investment in bonds - unrealized holding loss 0 0 0 (22,000) (22,000)
Preferred stock dividends - $70.00 per share 0 0 0 (1,925,000) (1,925,000)
---------- ---------- ------------ ----------- -------------
BALANCE AT YEAR END 1995 $28,000 $1,850,000 $168,479,000 ($4,611,000) $165,746,000
========== ========== ============ =========== ============

See accompanying notes to consolidated financial statements.

42

Hollywood Park, Inc.
Consolidated Statements of Cash Flows

For the years ended December 31,
------------------------------------------
1995 1994 1993
------------ ------------ ------------

Cash flows from operating activities:
Net income (loss) ($1,162,000) $3,772,000 $6,393,000
Adjustment to reconcile net income (loss) to net
cash provided (used in) by operating activities:
Depreciation and amortization 10,857,000 10,064,000 6,407,000
Loss on sale or disposal of property, plant and
equipment 64,000 55,000 8,000
Changes in assets and liabilities, net of the
effects of the purchase of a business:
(Increase) decrease in restricted cash (2,427,000) (490,000) 375,000
Increase in casino lease and related interest
receivables, net (9,204,000) (11,745,000)
Decrease (increase) in other receivables, net 77,000 (5,022,000) (1,106,000)
Increase in prepaid expenses and other assets (304,000) (5,488,000) (505,000)
Increase (decrease) in deferred tax assets (2,361,000) (2,208,000) 312,000
Increase (decrease) in accounts payable 5,685,000 (1,596,000) 2,623,000
Increase in accrued lawsuit settlement 5,232,000 0 0
Increase in accrued gaming liabilities 3,998,000 0 0
Increase (decrease) in accrued liabilities 5,377,000 2,716,000 (1,080,000)
Increase in accrued workers' compensation 160,000 505,000 65,000
Increase in slip and fall claims 270,000 284,000 0
Increase (decrease) in amounts due to horsemen
for purses, stakes and awards 193,000 261,000 (258,000)
(Decrease) increase in amounts payable to
charities (131,000) (334,000) 192,000
Increase in outstanding pari-mutuel tickets 1,211,000 765,000 258,000
Increase (decrease) in deferred tax liabilities 2,756,000 1,174,000 (404,000)
------------ ------------ ------------
Net cash provided by (used in) operating
activities 20,291,000 (7,287,000) 13,280,000
------------ ------------ ------------

Cash flows from investing activities:
Additions to property, plant and equipment (25,150,000) (27,584,000) (12,902,000)
Receipts from sale of property, plant and
equipment 98,000 75,000 0
Principal collected on notes receivable 31,000 31,000 28,000
Purchase of short term investments (35,875,000) (96,822,000) (36,233,000)
Proceeds from short term investments 29,428,000 116,625,000 16,430,000
Long term gaming assets (2,169,000) 0 0
Cash acquired in the purchase of a business,
net of transaction and other costs 2,315,000 344,000 0
------------ ------------ ------------
Net cash used in investing activities (31,322,000) (7,331,000) (32,677,000)
------------ ------------ ------------

Cash flows from financing activities:
Proceeds from unsecured notes payable 1,681,000 1,850,000 850,000
Proceeds from secured notes payable 3,358,000 2,300,000 0
Payment of unsecured notes payable (3,813,000) (5,019,000) (61,518,000)
Payment of secured notes payable (1,333,000) (5,998,000) (2,509,000)
Payments under capital lease obligations (53,000) (135,000) (52,000)
Net proceeds from issuance of preferred stock 0 0 25,777,000
Net proceeds from issuance of common stock 0 0 113,312,000
Turf Paradise equity transactions 0 50,000 7,000
Shares issued for Pacific Casino Management, Inc. (1,600,000) 0 0
Dividends paid to preferred stockholders (1,925,000) (1,925,000) (1,476,000)
------------ ------------ ------------
Net cash (used for) provided by financing
activities (3,685,000) (8,877,000) 74,391,000
------------ ------------ ------------
Increase (decrease) in cash and cash equivalents (14,716,000) (23,495,000) 54,994,000
Cash and cash equivalents at the beginning of the
period 37,122,000 60,617,000 5,623,000
------------ ------------ ------------
Cash and cash equivalents at the end of the
period $22,406,000 $37,122,000 $60,617,000
============ ============ ============

- ------
See accompanying notes to consolidated financial statements.

43

HOLLYWOOD PARK,INC.
Notes to Consolidated Financial Statements

NOTE 1--SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

CONSOLIDATION The consolidated financial statements for the year ended December
31, 1995,included the accounts of Hollywood Park, Inc. (the "Company" or
"Hollywood Park") and its wholly owned subsidiaries: Hollywood Park Operating
Company (which has two wholly owned subsidiaries, Hollywood Park Food Services,
Inc. and Hollywood Park Fall Operating Company), Sunflower Racing, Inc.
("Sunflower") (which has one wholly owned subsidiary, Sunflower Food and
Beverage, Inc.), and Turf Paradise, Inc. ("Turf Paradise"). Sunflower was
acquired on March 23, 1994, and was accounted for under the purchase method of
accounting. Turf Paradise was acquired on August 11, 1994, and was accounted for
under the pooling of interests method of accounting. The Hollywood Park Casino
(the "Casino") is a division of Hollywood Park, Inc.

The consolidated financial statements for the year ended December 31, 1993
included the accounts of Hollywood Park, Hollywood Park Operating Company and
its two subsidiaries with a calendar year end of December 31, combined with the
accounts of Turf Paradise, Inc.'s historical fiscal June 30 year end.

ACQUISITION OF PACIFIC CASINO MANAGEMENT, INC. On November 17, 1995, Hollywood
Park acquired substantially all the assets, property and business of Pacific
Casino Management, Inc. ("PCM"), and assumed substantially all of PCM's
liabilities. Prior to the acquisition, under a lease with the Company, PCM
operated the gaming floor activities of the Hollywood Park Casino. Immediately
following the acquisition PCM was dissolved, and the gaming floor operations
were incorporated into the Hollywood Park's, Gaming Division.

The purchase price of PCM's net assets was an aggregate $2,640,000, payable in
shares of Hollywood Park common stock, in three installments: (i) shares of
Hollywood Park common stock, having a value of $1,600,000, or 135,164 common
shares, issued on November 17, 1995; (ii) shares of Hollywood Park common stock,
having a value of $540,000 on the first anniversary of the execution of the
acquisition; and (iii) shares of Hollywood Park common stock, having a value of
$500,000 on the second anniversary of the execution of the acquisition; provided
that at any time after November 17, 1995, Hollywood Park may elect to accelerate
the payment of the installments. Shares to be issued in the remaining two
installments will be valued at the average market price of Hollywood Park common
stock for the ten trading days immediately preceding the payment date.

Virtually all of the approximately $21,592,000 of excess acquisition cost over
the recorded value of the net assets acquired was allocated to goodwill and will
be amortized over 40 years. The amortization of the goodwill is not deductible
for income tax purposes.

ACQUISITION OF SUNFLOWER On March 23, 1994, the Company finalized the
transaction to acquire 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 then 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, 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 approximately $1,641,000 related to property taxes paid in
periods before the date of acquisition, and as such, the financial statements as
of the date of the acquisition were restated to include receipt of the refund.
Of the approximately $6,625,000 of restated excess acquisition cost over
recorded value of the net assets acquired, $1,153,000 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 lease period of 20 years, with the balance of $5,472,000 allocated to
goodwill to be amortized over 40 years. The amortization of the goodwill is not
deductible for income tax purposes.

44

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
merger, because the market price of Hollywood Park common stock 180 days after
closing was more than 10% less than the market price on the closing date of the
acquisition. The agreement of merger 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 On August 11, 1994, the shareholders of 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 issued a total of 1,498,016 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. Historically, Turf Paradise has reported results of operations with a
fiscal year end of June 30, and as such the restated consolidated results of
operations for the year of 1993 included Turf Paradise's results for their
fiscal year with Hollywood Park's results with a December 31 year end. The
consolidated financial statements for the year 1994 include the results of
operations for the twelve months ended December 31, 1994, for both Hollywood
Park and Turf Paradise. The following is a summary of Turf Paradise's results
of operations for the six months ended December 31, 1993, that were recorded as
an adjustment to retained earnings effective January 1, 1994.

Total revenues $ 6,126,000
Total expenses 5,928,000
---------------
Net income $ 198,000
===============

Separate results of the combined entities for the years ended December 31 are as
follows:

1994 1993
-----------------------------

HOLLYWOOD PARK
Total revenues $100,010,000 $63,243,000
Total expenses 97,563,000 58,066,000
--------------- -------------
Net income $ 2,447,000 $ 5,177,000
=============================

TURF PARADISE
Total revenues $ 17,313,000 $15,742,000
Total expenses 15,988,000 14,526,000
--------------- ------------
Net income $ 1,325,000 $ 1,216,000
=============================

HOLLYWOOD PARK & TURF PARADISE COMBINED
Total revenues $117,323,000 $78,985,000
Total expenses 113,551,000 72,592,000
--------------- ------------
Net income $ 3,772,000 $ 6,393,000
=============================

PRO FORMA RESULTS OF OPERATIONS The following pro forma results of operations
were prepared under the assumption that the acquisition of PCM and Sunflower had
occurred at the beginning of each period shown.

45

The historical results of operations for PCM, Sunflower and Turf Paradise were
combined with the Company's results and pro forma adjustments related to the PCM
acquisition were made for the following: lease rent revenue due to Hollywood
Park from PCM and concession sales made to PCM; lease rent expense recorded by
PCM; other operating expenses including consulting fees, legal and audit
services and other miscellaneous duplicate expenses; amortization of the excess
purchase price allocated to goodwill; interest expense on the unpaid lease rent;
and income taxes. Adjustments related to the Sunflower acquisition 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 on Sunflower's subordinated debt;
the termination of the management agreement Sunflower had with a former
shareholder and the wages and payroll taxes paid to a former Sunflower
shareholder; director's fees and income taxes.

The pro forma earnings per share reflect the 135,164 common shares issued to the
former PCM shareholders and an estimated additional 103,354 common shares due to
the former PCM shareholders, based on the market price of Hollywood Park's
common stock on December 31, 1995. The pro forma earnings per share also
reflect the 647,289 shares issued to the former Sunflower shareholders.

Year ended December 31,
-------------------------------
1995 1994
---------------- -------------

(unaudited)
Revenues $149,892,000 $128,651,000
Operating income 15,841,000 18,662,000
Income before interest, income taxes, 9,346,000 12,698,000
depreciation and amortization
Net income (loss) ($1,866,000) $ 196,000
================= ============
Dividend requirements on convertible $ 1,925,000 $ 1,925,000
preferred stock
Net loss allocated to common ($3,791,000) ($1,729,000)
shareholders
Per common share:
Net loss - primary ($0.20) ($0.09)
Net loss - fully diluted ($0.20) ($0.09)

RESTRICTED CASH Restricted cash in 1995 consisted of approximately $2,482,000
related to the Class Actions lawsuit (see Note 18 Commitments and Contingencies)
settlement and approximately $644,000 related to amounts due to horsemen for
purses, stakes and awards. The 1994 balance was for amounts due to horsemen for
purses, stakes and awards.

ALLOWANCE FOR DOUBTFUL ACCOUNTS With the November 17, 1995, acquisition of PCM
the Company assumed the gaming receivable and associated allowance for doubtful
account accounts that were on PCM's balance sheet.

ESTIMATES Financial statements prepared in accordance with generally accepted
accounting principles require the use of management estimates, including
estimates used to evaluate the recoverability of property, plant and equipment,
the estimates used to determine the fair value of financial instruments, the
estimates used to account for the valuation allowance for deferred tax assets,
and the estimates used to determine litigation related obligations.

PROPERTY, PLANT AND EQUIPMENT Property, plant and equipment are depreciated on
the straight line method over their estimated useful life ranges as follows:

Years
-------

Land improvements 3 to 25
Buildings 3 to 40
Equipment 3 to 10

46

Maintenance and repairs were charged to operations of facilities; betterments
were capitalized. The cost of property sold or otherwise disposed of and the
accumulated depreciation were eliminated from both the property and accumulated
depreciation accounts with any gain or loss recorded in the expense accounts.

Property, plant and equipment is carried on the Company's balance sheets at
depreciated cost. Whenever there are recognized events or changes in
circumstances that affect the carrying amount of the property, plant and
equipment, management reviews the assets for possible impairment. In accordance
with current accounting standards, management uses estimated expected future net
cash flows to measure the recoverability of property, plant and equipment. The
estimation of expected future net cash flows is inherently uncertain and relies
to a considerable extent on assumptions regarding current and future economic
and market conditions, and the availability of capital. If, in future periods,
there are changes in the estimates or assumptions incorporated into the
impairment review analysis, the changes could result in an adjustment to the
carrying amount of the property, plant and equipment. (See Note 9, for a
discussion of the Sunflower assets.)

INCOME TAXES Effective January 1, 1993, the Company adopted the Financial
Accounting Standards Board's Statement of Financial Accounting Standards
("SFAS") 109, Accounting for Income Taxes, whereby deferred tax assets and
----------------------------
liabilities are recognized for the future tax consequences attributable to
differences between the financial statement carrying amounts of existing assets
and liabilities and their respective tax bases. Deferred tax assets and
liabilities are measured using enacted tax rates expected to apply to taxable
income in the years in which those temporary differences are expected to be
recovered or settled. Under SFAS 109, the effect on deferred tax assets and
liabilities of a change in tax rates is recognized in income in the period that
included the enactment date. Effective January 1, 1993, the Company adopted
SFAS 109 and has reported the cumulative effect of the change in the method of
accounting for income taxes in the 1993 Consolidated Statement of Operations.

PRE-OPENING EXPENSES The Company expensed pre-opening costs associated with the
Hollywood Park Casino, which opened on July 1, 1994, as incurred. These costs
included, project salaries, hiring costs and other pre-opening services.

POOLING OF INTERESTS EXPENSES Hollywood Park's cost of $414,000 incurred in
connection with the acquisition of Turf Paradise, and Turf Paradise's
acquisition costs of approximately $213,000 were expensed in the year of the
acquisition.

EARNINGS PER SHARE Primary earnings per share are computed by dividing income
(loss) attributable to (allocated to) common shareholders (net income (loss)
less preferred dividend requirements) by the weighted average number of common
shares outstanding during the period, inclusive of the estimated future shares
of the Company's common stock to be issued to the former PCM shareholders.
Fully diluted per share amounts were similarly computed, but include the effect,
when dilutive, of the conversion of the convertible preferred shares and the
exercise of stock options.

CASH FLOWS Cash and cash equivalents consisted of certificates of deposit and
short term investments with remaining maturities of 90 days or less.

RECLASSIFICATIONS Certain reclassifications have been made to the 1994 and 1993
balances to be consistent with the 1995 financial statement presentation.

NOTE 2 -- SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION

For the years ending December 31,
---------------------------------------
1995 1994 1993
-------------- ---------- -----------

Cash paid during the year for:
Interest $2,098,000 $1,513,000 $1,521,000
Income taxes 143,000 2,524,000 1,868,000
------------- ------------ -----------
$2,241,000 $4,037,000 $3,389,000
============= =========== ===========

47

NOTE 3 -- SHORT TERM INVESTMENTS

Short term investments as of December 31, 1995, consisted of the following,
there were no short term investments as of December 31, 1994:

Corporate bonds $4,504,000
Flexible deposit program 1,000,000
U.S. Agency securities 906,000
Accrued interest 37,000
-------------
Total $6,447,000
=============

The corporate bond investments have a weighted average maturity of two years.
The portfolio consisted of bonds rated from Ba2 to Caa by Moodys and from BB+ to
CCC+ by Standard and Poors, with some bonds not rated by either agency.
Investments in corporate bonds typically carry a greater amount of principal
risk than investments previously made by the Company and yield a correspondingly
higher return.

The Flexible deposit program is a discretionary investment vehicle with Bankers
Trust that provides capital preservation, if held to maturity, plus income at a
targeted rate. The program is represented by four individual investment
traunches of $250,000, $250,000, $300,000 and $200,000, that mature on June 15,
1996, July 15, 1996, August 15, 1996 and September 15, 1996, respectively.
These investments are not rated.

The U.S. Agency securities included U.S. Treasury Bills that mature in April
1996 and August 1996. Each security is rated AAA by both Moodys and Standard
and Poors. The Company holds short term investments as available for sale as
needed. On the basis of the short term nature of the assets and their relative
liquidity, market value approximates cost.

NOTE 4 -- CASINO LEASE AND RELATED INTEREST RECEIVABLE, NET

With the November 17, 1995, acquisition of PCM's assets and liabilities the
Casino lease and related interest receivable was eliminated upon consolidation
of the Hollywood Park balance sheet with the PCM balance sheet. As of November
17, 1995 Hollywood Park had a receivable from PCM of approximately $20,950,000
and PCM had a corresponding accrued payable to Hollywood Park for the same
amount.

NOTE 5 -- PROPERTY, PLANT AND EQUIPMENT

Property, plant and equipment held at December 31, 1995, and 1994 consisted of
the following:

December 31,
------------------------------
1995 1994
--------------- -------------

Land and land improvements $ 42,490,000 $ 29,621,000
Buildings 175,960,000 166,516,000
Equipment 36,003,000 31,286,000
Construction in progress 8,394,000 983,000
--------------- ------------

262,847,000 228,406,000
Less accumulated depreciation 88,130,000 68,142,000
--------------- ------------
$174,717,000 $160,264,000
=============== ============

NOTE 6 -- SECURED AND UNSECURED NOTES PAYABLE

Notes payable as of December 31, 1995, and 1994 consisted of the following:

December 31,
------------------------------
1995 1994
--------------- -------------

Secured notes payable (a) $ 28,667,000 $ 30,262,000
Unsecured notes payable (a) 15,574,000 17,424,000
Capital lease obligations (b) 0 52,000
Secured note payable - Texaco 3,358,000 0
Unsecured note payable - Gold Cup 340,000 361,000
---------------- ------------
47,939,000 48,099,000
Less current maturities 32,310,000 5,299,000
--------------- ------------
$ 15,629,000 $ 42,800,000
=============== ============

_____
(a) These notes relate to Sunflower and are non-recourse to Hollywood Park.
(b) Does not include the Crystal Park Hotel and Casino capital lease
obligation discussed in Note 8.

48

HOLLYWOOD PARK During the year ended December 31, 1995, Hollywood Park did not
draw any funds from its various credit facilities with Bank of America National
Trust and Savings Association ("Bank of America"). On April 14, 1995, the
Company executed an unsecured loan of up to $75,000,000 with 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 May 1, 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
repayment in eighty-four successive equal monthly installments. The Line of
Credit bears interest at the option of the Company at Bank of America's prime
rate plus 0.25% or the offshore rate plus 2.0%, and the Company may further
elect an agreed upon fixed rate.

The Revolver, inclusive of a within line facility for standby letters of credit
of up to a maximum of $15,000,000, is available for two years, ending May 1,
1997, during which the Company can borrow, pay and reborrow principal amounts
without penalty. The Revolver bears interest at the option of the Company at
Bank of America's prime rate or the offshore rate plus 1.75%, and the Company
may further elect an agreed upon fixed rate.

As of December 31, 1995, Hollywood Park had breached the tangible net worth and
quick assets to current liabilities bank covenants as described in the April 14,
1995, Business Loan Agreement between Hollywood Park and Bank of America. On
March 20, 1996, Bank of America waived compliance with the breached covenants,
through December 31, 1995. The covenants were breached due to the November 17,
1995, acquisition of PCM, in which certain tangible current assets were
eliminated in the transaction and goodwill of approximately $21,592,000 was
recorded.

Texaco Secured Note Payable On October 27, 1995, the Company finalized the
- ---------------------------
acquisition of approximately 37.33 acres adjacent to the Inglewood property, for
a total cost of approximately $7,500,000. Hollywood Park paid cash of
$4,100,000 and signed a non-interest bearing, promissory note, with a single
payment of $3,358,000, payable on September 1, 1996.

Gold Cup Contest The Company's Gold Cup note payable resulted from the
- ----------------
$1,000,000 Gold Cup Contest on July 20, 1986. The prize money is payable to the
winner in 20 annual installments of $50,000, beginning August 1, 1986. The
remaining liability of $340,000 is net of unamortized discount at 8.5%.

SUNFLOWER 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 Company's acquisition of Sunflower.
The Senior Credit has been amended three times, most recently in October 1995 by
the Standstill Agreement (discussed below); on December 19, 1994, to allow for
the Sunflower promissory note (discussed below), and for the waiver of the
default or event of default resulting from the failure to maintain a fixed
charge coverage ratio as of December 31, 1994; and on August 1, 1994, to amend
the definition of fixed charge coverage. The Senior Credit has an interest rate
of the lesser of the London Interbank Offered Rate plus 1.75% or the Banks'
prime rate plus 0.75%. The Senior Credit is secured by substantially all of the
assets of Sunflower, and is non-recourse to Hollywood Park, except with respect
to the guarantee under the Standstill Agreement. As of December 31, 1995, the
outstanding balance for the Senior Credit was approximately $28,667,000.

49

As of October 27, 1995, Sunflower and the Banks executed a Standstill Agreement,
which among other things, provides for the extension of the Senior Credit
maturity and the waiver of the Senior Credit's associated financial covenants.
The Senior Credit maturity has been extended to the termination date of the
Standstill Agreement, which is the earlier of July 1, 1996; default of the
Standstill Agreement; or the close of the 1996 Kansas Legislative session
without the adoption, and full approval, of legislation permitting slot machines
or other casino gaming at Kansas race tracks, including Sunflower. The
Standstill Agreement also provides for the deferral of 100% of the principal
payments and 50% of the interest payments due under the Senior Credit from April
1995 through the termination date of the Standstill Agreement. Sunflower has
paid approximately $839,000 to cover the 50% interest obligations for the period
April 1, 1995, through December 31, 1995. Hollywood Park has executed a
guarantee of Sunflower's 50% interest obligations, effective only if Sunflower
does not pay the 50% interest obligations, and the Banks do not otherwise
terminate the Standstill Agreement prior to July 1, 1996. The Company has not
guaranteed any of Sunflower's principal payment obligations.

In December 1995, Sunflower notified the Banks that it had not made a $400,000
property tax payment as required by the Standstill Agreement. As of the filing
date the Banks have not declared Sunflower in default under the Standstill
Agreement, which would terminate the Standstill Agreement.

Promissory Note In December 1994, in anticipation of insufficient cash flow
- ---------------
from daily operations, Sunflower executed a promissory note to Hollywood Park,
allowing for the advancement of up to $3,000,000 for the payment of its Senior
Credit obligations. On January 3, 1995, and again on March 31, 1995, Hollywood
Park advanced $1,250,000 to Sunflower, for a total advancement of $2,500,000.
The promissory note has an interest rate of the Banks' prime rate. The
promissory note and any accrued but unpaid interest is payable in full on
January 23, 1997.

Unsecured Credit On March 24, 1994, pursuant to the merger agreement between
- ----------------
Hollywood Park and Sunflower, Sunflower and Mr. Hubbard executed the
Subordination and Amendment Agreement (the "Subordination Agreement"). The
Subordination Agreement was a condition to the consummation of the merger,
whereby all of the indebtedness owed by Sunflower to Mr. Hubbard was
subordinated to the Senior Credit (the "Subordinated Credit"). In addition,
pursuant to the Subordinated Agreement, Hollywood Park contributed $5,000,000 in
cash to Sunflower to pay the accrued interest and a portion of the Subordinated
Credit in exchange for a reduction in the associated interest rate from 14.0% to
9.0%. As of December 31, 1995, the principal balance of the Subordinated Credit
was approximately $13,059,000, all of which is payable on January 1, 2003, with
associated accrued interest payable.

The remaining $2,515,000 of unsecured credit relates to a Special Assessment
note payable levied by Wyandotte County, Kansas for the cost of construction of
certain streets and sewers serving the Sunflower property. The Special
Assessment note payable is a 15 year note, entered into in 1990 with a fixed
interest rate of 6.59%.

TURF PARADISE On April 13, 1995, Turf Paradise repaid the outstanding balance
of its unsecured revolving loan facility with Bank One of Arizona, and
terminated the $2,500,000 facility. On June 1, 1995, Turf Paradise executed a
$2,500,000 promissory note to Hollywood Park. As of December 31, 1995, Turf
Paradise had paid the promissory note in full.

ANNUAL MATURITIES As of December 31, 1995, annual maturities, of total notes
and loans payable are as follows:

Year ending:
- --------------------

December 31, 1996 $32,310,000
December 31, 1997 301,000
December 31, 1998 301,000
December 31, 1999 301,000
December 31, 2000 301,000
Thereafter 14,409,000

50

The fair values of the Company's various debt instruments discussed above
approximate their carrying amounts based on the fact that borrowings bear
interest at variable market based rates.

NOTE 7 -- LONG TERM GAMING ASSETS

The Company purchased the convention center parcel at the Compton Crystal Park
Hotel and Casino site, which is under renovation to house a card club, and
entered into a capital lease with the City of Compton covering the adjoining
hotel, surrounding parking and an expansion parcel. The capital lease was
valued at approximately $13,741,000. The lease was entered into on August 3,
1995, and has a term of up to 50 years. The annual rent payments start at
$600,000 and increase every fifth year until year 46 when they stabilize at
$2,850,000. Hollywood Park will receive a rent payment credit equal to the
costs incurred to renovate the card club and the hotel. No cash rent payments
are expected to be made until year 19 of the lease, or 2014.

The balance of the long term gaming assets related to lease costs incurred for
the operating lease between Hollywood Park and Compton Entertainment, Inc., and
will be amortized over the five year term of the lease.

NOTE 8 -- LONG TERM GAMING LIABILITIES

Long term gaming liabilities consist of the Company's capital lease obligation
associated with the lease of the hotel, surrounding parking and the expansion
parcel from the City of Compton for the Crystal Park Hotel and Casino. This
liability will be reduced as the construction disbursements are made, and upon
submission of any purchase option payment.

NOTE 9 -- SUPPLEMENTAL BALANCE SHEET INFORMATION

In 1995, Statement of Financial Accounting Standards No. 121 ("SFAS" 121) was
issued which established accounting standards for the impairment of long-lived
assets, certain identifiable intangibles, and goodwill related to those assets.
SFAS 121, which will be effective in 1996 for Hollywood Park, addresses when
impairment losses should be recognized and how impairment losses should be
measured. If the Kansas Legislature does not approve other forms of gaming at
Sunflower including slot machines, it is probable that Sunflower's assets will
suffer an impairment that will require a significant asset write-down that will
have a materially adverse effect on the Company's consolidated financial
statements.

Also in 1995, Statement of Financial Accounting Standards No. 123 ("SFAS" 123)
was issued which established accounting standards for stock-based compensation,
and will be effective in 1996 for Hollywood Park. SFAS 123 requires all
companies to disclose additional information about their employee stock-based
compensation plans, recommends that they change how they account for these
plans, and requires those companies which do not change their accounting methods
to disclose what their earnings would have been if they had changed

NOTE 10 -- DEVELOPMENT EXPENSES

Included in Administrative expenses were project development costs of
approximately $2,716,000 in 1995 and $1,275,000 in 1994, and approximately
$167,000 in 1993. The expenses in 1995 consisted primarily of costs related to
the following projects: the environmental impact study for the proposed stadium
at Hollywood Park, and card clubs under consideration in the cities of Stockton,
Pomona and South San Francisco, and the retail center project (since abandoned).
The costs incurred in 1994 were primarily generated by the initial financial and
economic analysis of the proposed stadium, numerous card clubs, and the music
dome.

NOTE 11 -- RACING OPERATIONS

The Company conducts thoroughbred racing at Hollywood Park race track,
Sunflower, operating as the Woodlands race track and Turf Paradise race track,
located in California, Kansas and Arizona, respectively. The Woodlands is also
a greyhound racing facility. Under Kansas racing law, Sunflower is not granted
any race days and does not generate any pari-mutuel commissions. The Kansas
Racing Commission granted Sunflower the facility ownership and management
licenses; with all race days until the year 2014 granted to TRAK East, a Kansas
not-for-profit corporation. Sunflower has an agreement with TRAK East to
provide the

51

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. Historically, Turf Paradise reported results of
operations with a fiscal year end of June 30, and the information presented for
1993 is for the year ended June 30.

LIVE ON-TRACK RACE DAYS 1995 1994 1993
---------------------------------------------

Hollywood Park race track 97 102 99
Turf Paradise race track 171 185 177
Sunflower - Horses 49 62 --
Sunflower - Greyhounds 294 213 --

A summary of the pari-mutuel handle and deductions, by racing facility for the
year ended December 31, are as follows:

HOLLYWOOD PARK - LIVE HORSE RACING 1995 1994 1993
---------------------------------------------

Total pari-mutuel handle $663,118,000 $720,204,000 $713,396,000
Less patrons' winning tickets 536,432,000 582,261,000 577,652,000
---------------------------------------------
126,686,000 137,943,000 135,744,000
Less:
State pari-mutuel tax 21,556,000 27,197,000 29,120,000
City pari-mutuel tax 1,449,000 1,779,000 1,933,000
Racing purses and awards 27,671,000 32,067,000 32,703,000
Satellite wagering fees 14,006,000 17,105,000 19,532,000
Interstate location fees 34,170,000 27,547,000 19,023,000
Other fees 1,136,000 1,331,000 1,477,000
---------------------------------------------
Pari-mutuel commissions 26,698,000 30,917,000 31,956,000
Add off-track independent handle 2,251,000 1,797,000 1,254,000
commissions
---------------------------------------------
Total pari-mutuel commissions 28,949,000 32,714,000 33,210,000
including charity days
Less charity day pari-mutuel 0 739,000 1,491,000
commissions
Total pari-mutuel commissions net of $ 28,949,000 $ 31,975,000 $ 31,719,000
charity days
=============================================

Turf Paradise races live five days a week; on three of these days Turf Paradise
concurrently operates as a simulcast site.

TURF PARADISE - LIVE HORSE RACING 1995 1994 1993
-------------------------------------------

Total pari-mutuel handle $111,507,000 $96,494,000 $90,671,000
Less patrons' winning tickets 86,460,000 74,918,000 70,470,000
-------------------------------------------
25,047,000 21,576,000 20,201,000
Less:
State pari-mutuel tax 345,000 669,000 762,000
Racing purses and awards 4,757,000 5,399,000 6,152,000
State sales tax 415,000 537,000 595,000
Off-track commissions 117,000 137,000 61,000
Interstate location fees 10,943,000 6,006,000 3,255,000
-------------------------------------------
Pari-mutuel commissions 8,470,000 8,828,000 9,376,000
Add off-track independent handle
commissions 699,000 297,000 239,000
-------------------------------------------
Total pari-mutuel commissions
including charity days 9,169,000 9,125,000 9,615,000
Less charity day pari-mutuel
commissions 0 29,000 17,000
-------------------------------------------
Total pari-mutuel commissions net of
charity days $ 9,169,000 $ 9,096,000 $ 9,598,000
===========================================

The acquisition of Sunflower was accounted for under the purchase method of
accounting and as such results of operations prior to the March 23, 1994
acquisition date are not presented.

52

TRAK EAST AT SUNFLOWER - LIVE RACING
1995 Greyhounds Horses
1995 1995
---------------------------

Total pari-mutuel handle $47,406,000 $2,844,000
Less patrons' winning tickets 37,379,000 2,273,000
---------------------------
10,027,000 571,000
Less: State pari-mutuel tax 1,721,000 104,000
Racing purses and awards 2,230,000 190,000
---------------------------
Total pari-mutuel commissions $ 6,076,000 $ 277,000
===========================

TRAK EAST AT SUNFLOWER - LIVE RACING
1994 Greyhounds Horses
1994 1994
---------------------------

Total pari-mutuel handle $74,941,000 $6,274,000
Less patrons' winning tickets 59,778,000 5,012,000
---------------------------
15,163,000 1,262,000
Less: State pari-mutuel tax 2,527,000 210,000
Racing purses and awards 3,372,000 421,000
---------------------------
Total pari-mutuel commissions $ 9,264,000 $ 631,000
===========================

As a stipulation to the granting of race dates the California Horse Racing Board
("CHRB") requires that Hollywood Park designate three days from both the live
Spring/Summer Meet and the Autumn Meeting as charity days. With the start of
the 1994 Autumn Meeting the charity day law was changed such that the Company's
maximum charity day liability will not exceed the net proceeds from the charity
days not to exceed 2/10 of 1% of the total live on-track handle for the
respective race meet. Charity day payments must be made to a distributing agent
approved by the CHRB. The following table summarizes the revenues and expenses
that were excluded from the statements of operations for the period prior to the
1994 Autumn Meeting and the total charity day liability for the past three
years:

1995 1994 1993
-----------------------------------

Racing revenues $ 0 $961,000 $1,861,000
Less: Salaries, wages and employee
benefits 0 285,000 509,000
Other expenses 0 298,000 517,000
-----------------------------------
Net proceeds (old charity day law) 0 378,000 $ 835,000
===================================
Add: 2/10 of 1% of live on track
pari-mutuel handle as
of the Autumn Meeting 1994 (revised
charity day law) 370,000 117,000
----------------------
Total charity day payable $370,000 $495,000
======================

Arizona racing law requires that 1% of the total in-state pari-mutuel handle
(on-track live pari-mutuel handle and off-track within the state pari-mutuel
handle) of three charity days be paid to a distributing agent approved by the
Arizona Racing Commission. The Arizona Department of Racing did not assign any
charity days in 1995, therefore no payments were required. Turf Paradise paid
$29,000 and $16,000 to the distributing agent in 1994, and 1993, respectively.

The Kansas Racing Commission requires that TRAK East, pay not less than $450,000
in 1994, to a designated charity distributing agent and not less than $500,000
in each year thereafter. Presently, charity payments have been suspended
pending the outcome of the current Kansas legislative gaming issues. If
Sunflower is able to operate slot machines, then as of May 1996 the charity
payments are to resume. If Sunflower is not able to operate slot machines
Sunflower's charity agreement with TRAK East will be re-evaluated.

Hollywood Park conducts simulcast meets of live races held at local southern
California race tracks. As of 1993, the Company began to simulcast races from
northern California concurrently with live on-track racing. In July 1994,
Assembly Bill 1418 was enacted allowing for unrestricted simulcasting between
northern and southern California. Previous legislation, enacted in September
1993, limited such simulcasting to races with purses of at least $20,000. A
summary of simulcast pari-mutuel handle and commissions for the years ended
December 31, are as follows:

53

HOLLYWOOD PARK - SIMULCAST RACING 1995 1994 1993
---------------------------------------------

Pari-mutuel handle:
Thoroughbred meets $359,689,000 $273,317,000 $190,068,000
Quarter Horse meets 22,793,000 18,754,000 14,349,000
Harness meets 4,391,000 3,948,000 7,630,000
$386,873,000 $296,019,000 $212,047,000
=============================================
Pari-mutuel commissions:
Thoroughbred meets $ 10,687,000 $ 6,795,000 $ 3,863,000
Quarter Horse meets 457,000 377,000 287,000
Harness meets 86,000 79,000 153,000
$ 11,230,000 $ 7,251,000 $ 4,303,000
=============================================

TRAK East at Sunflower operates year round simulcasting of both greyhounds and
horses. Pari-mutuel handle and commissions earned by TRAK East for the year
ended December 31, 1995 and March 23, 1994 (the date Sunflower was acquired)
through December 31, 1994, are as follows:

TRAK EAST AT SUNFLOWER - SIMULCAST 1995 1994
RACING
----------------------------

Pari-mutuel handle:
Greyhounds $10,871,000 $ 7,162,000
Horses 29,600,000 24,010,000
$40,471,000 $31,172,000
============================
Pari-mutuel commission:
Greyhounds $ 2,342,000 $ 1,361,000
Horses 5,742,000 4,690,000
$ 8,084,000 $ 6,051,000
============================

Turf Paradise accepts simulcasts of live races from other tracks concurrently
with live on-track racing as well as operating as a simulcast site for Prescott
Downs between live meets. Turf Paradise also accepts simulcast signals on the
two dark days (days without live racing) a week during the live on-track meet.

TURF PARADISE - SIMULCAST RACING 1995 1994 1993
------------------------------------------

Pari-mutuel handle all meets $55,093,000 $46,549,000 $22,766,000
Pari-mutuel commissions all meets 3,909,000 3,410,000 1,285,000

NOTE 12 -- INCOME TAXES

As discussed in Note 1, effective January 1, 1993, the Company adopted SFAS 109.
The cumulative effect of the adoption of SFAS 109 of $76,000, as determined as
of January 1, 1993, was included as a reduction of income tax expense in the
accompanying 1993 consolidated statement of operations. On November 17, 1995,
the Company acquired PCM and accounted for the acquisition under the purchase
method of accounting. Before the acquisition, PCM was an S-Corporation for
income tax purposes and under the terms of the merger was dissolved into
Hollywood Park. On March 23, 1994, the Company acquired Sunflower and accounted
for the acquisition under the purchase method of accounting. Before the
acquisition, Sunflower was an S-corporation and under the terms of the merger
became a C-corporation for income tax purposes. Turf Paradise was acquired on
August 11, 1994, and was accounted for under the pooling of interests method of
accounting. There was no impact to Turf Paradise related to the adoption of
SFAS 109.

Current Deferred Total
-------------------------------------------

YEAR ENDED DECEMBER 31, 1995:
U.S. Federal $ 0 $ 473,000 $ 473,000
State 42,000 178,000 220,000
$ 42,000 $ 651,000 $ 693,000
===========================================
YEAR ENDED DECEMBER 31, 1994:
U.S. Federal $ 1,094,000 $ 656,000 $1,750,000
State (1,155,000) 973,000 (182,000)
($61,000) $ 1,629,000 $1,568,000
===========================================
YEAR ENDED DECEMBER 31, 1993:
U.S. Federal $ 720,000 $ 1,217,000 $1,937,000
State 200,000 (1,112,000) (912,000)
$ 920,000 $ 105,000 $1,025,000
===========================================

54

The following table reconciles the Company's income tax expense to the statutory
income tax expense:

1995 1994 1993
---------------- ------------ -----------

Income (loss) before income tax expense ($159,000) $ 1,816,000 $2,522,000
Pooling costs 0 213,000 0
Goodwill 72,000 0 0
Political and lobbying costs 353,000 179,000 71,000
State income taxes 145,000 (120,000) (603,000)
Valuation allowance 0 (465,000) (533,000)
Non-deductible expenses 260,000 0 0
Cumulative effect of SFAS 109 0 0 (249,000)
Other 22,000 (55,000) (183,000)
------------ ----------- -----------
Income tax expense $ 693,000 $ 1,568,000 $1,025,000
=============== ============= ===========

For the years ended December 31, 1995, and 1994, the tax effects of temporary
differences that gave rise to significant portions of the deferred tax assets
and deferred tax liabilities are presented below, along with a summary of
activity in the valuation allowance.

1995 1994
-------------- ----------------

CURRENT DEFERRED TAX ASSETS:
Workers' compensation insurance
reserve $ 905,000 $ 852,000
General liability insurance reserve 619,000 529,000
Legal accrual 76,000 45,000
Construction period interest and taxes 0 60,000
Charitable contributions 0 90,000
Development costs 268,000 0
Lawsuit settlement 2,087,000 0
Vacation and sick pay accrual 377,000 107,000
Bad debt allowance 739,000 2,718,000
Los Angeles revitalization zone credit 0 2,982,000
Other 177,000 375,000
----------------- -------------
Current deferred tax assets 5,248,000 7,758,000
Less valuation allowance (109,000) (2,931,000)
----------------- -------------
Current deferred tax assets 5,139,000 4,827,000
CURRENT DEFERRED TAX LIABILITIES:
Business insurance and other (251,000) (288,000)
----------------- -------------
Net current deferred tax assets $ 4,888,000 $ 4,539,000
================================
NON-CURRENT DEFERRED TAX ASSETS:
Net operating loss carryforwards $ 931,000 $ 0
Investment tax credits 468,000 746,000
Los Angeles revitalization zone tax
credits 6,406,000 0
Other 156,000 0
Alternative minimum tax credit 412,000 412,000
----------------- -------------
Non-current deferred tax assets 8,373,000 1,158,000
Less valuation allowance (5,221,000) (55,000)
----------------- -------------
Non-current deferred tax assets 3,152,000 1,103,000
NON-CURRENT DEFERRED TAX LIABILITIES:
Expansion plans (400,000) 0
Los Angeles revitalization zone (560,000) 0
accelerated write-off
Depreciation and amortization (11,862,000) (10,442,000)
Other (413,000) 0
----------------- -------------
Non-current deferred tax liabilities (13,235,000) (10,442,000)
----------------- -------------
Net non-current deferred tax liabilities ($10,083,000) ($9,339,000)
================= =============

55

The Company is located in the Los Angeles revitalization tax zone and is
entitled to special state of California income tax credits related to sales tax
paid on operating materials and supplies, on construction assets and wages paid
to staff who reside within the zone. With the construction of the Casino the
Company earned substantial tax credits related to sales tax paid on the assets
acquired and on wages paid to construction employees.

December 31,
--------------------------
1995 1994
--------------------------

Valuation allowance at beginning of
period $2,986.000 $ 746,000
Valuation allowance utilized during the
year 0 (465,000)
Valuation allowance established for
California state Los Angeles
revitalization zone tax
credit 2,344,000 2,705,000
------------- ----------
Valuation allowance at end of period $5,330,000 $2,986,000
============= ==========

At December 31, 1995, the Company had approximately $412,000 of alternative
minimum tax credits ("AMT") available to reduce future federal taxes. The AMT
credits do not expire; however, the utilization of the AMT credits cannot reduce
federal taxes paid below the calculated annual amount of AMT. Hollywood Park
recognized investment tax credits ("ITC") using the flow-through method, and
these are a reduction of the provision for deferred taxes on income in the year
in which the credit arises. ITC are not available to offset AMT. The Company
has approximately $468,000 of general business credits available to reduce
future U.S. Federal taxes that would otherwise be payable. The ITC expire as
follows: 1999 - $425,000; and 2000 - $43,000. The Tax Reform Act of 1986
effectively eliminated new ITC from being generated in the future.

The Company has recorded a deferred tax asset of $8,291,000, which includes
$931,000 reflecting the benefit of $3,208,000 in federal and state net operating
loss carryforwards ("NOL's") generated in 1995. These NOL's expire in 2010.
Realization is dependent on generating sufficient taxable income prior to
expiration of the NOL's. Although realization is not assured, management
believes it is more likely than not that all of this deferred tax asset will be
realized. The amount of this deferred tax asset considered realizable, however,
could be reduced in the near term if estimates of future taxable income during
the carryforward period are reduced.

A valuation allowance was established for the full amount of the initial ITC of
$746,000 at December 31, 1993. During the year ended December 31, 1994, the
Company reduced the valuation allowance by $465,000, due to the fact that the
Casino was profitable in the fourth quarter; therefore, the presumption was that
it will continue to have profitable operations that will result in taxable
income in the future. The Company was able to utilize approximately $278,000 of
ITC on 1994's tax return.

NOTE 13 -- STOCKHOLDERS' EQUITY

On November 17, 1995, the Company issued 135,164 shares of Hollywood Park common
stock as the first installment of the purchase price in the acquisition of PCM.
On the first anniversary of the date of acquisition Hollywood Park will issue
additional shares of common stock valued at $540,000, and on the second
anniversary of the date of acquisition Hollywood Park will issue additional
shares of common stock valued at $500,000.

On March 23, 1994, the Company issued 591,715 shares of Hollywood Park common
stock to acquire Sunflower. An additional 55,574 shares of Hollywood Park
common stock were subsequently issued to Mr. Richard Boushka, a former Sunflower
shareholder, as required by the agreement of merger. The acquisition of
Sunflower was accounted for under the purchase method of accounting.

On August 11, 1994, the Company issued 1,498,016 shares of Hollywood Park common
stock to acquire Turf Paradise. The acquisition of Turf Paradise was accounted
for under the pooling of interests method of accounting and the historical per
common share earnings of the Company have been restated as if the acquisition
had occurred at the beginning of each period presented.

56

On February 9, 1993, the Company successfully completed the issuance of
2,750,000 depositary shares at an offering price of $10.00 per share. Each
depositary share represents 1/100 of a share of $70.00 convertible preferred
stock of the Company and entitles the holder to all proportional rights and
preferences of the underlying convertible preferred stock. The proportionate
dividend rate per annum and liquidation preference of the depositary shares are
$0.70 and $10.00, respectively, per depositary share.

Dividends on the convertible preferred stock at an annual rate of $70.00 per
share or $0.70 per depositary share are cumulative from the date of original
issue and are payable quarterly, starting May 15, 1993. Dividends of
approximately $1,925,000 were paid in both 1995 and 1994, and of approximately
$1,476,000 in 1993.

The depositary shares are convertible at the option of the holder at any time,
unless previously converted, into common stock, par value $0.10 per share, of
the Company at a conversion price of $12.00 per share of common stock
(equivalent to a conversion rate of 0.8333 shares of common stock for each
depositary share) subject to adjustment under certain circumstances.

The depositary shares are not convertible before January 1, 1996, and will never
be redeemed for cash. On or after January 1, 1996, the depositary shares will
be convertible at a conversion ratio of 0.8333 shares of common stock for each
depositary share, subject to adjustment in certain circumstances. The Company
may exercise this option only if for 20 trading days within any period of 30
consecutive trading days, including the last day of such period, the closing
price of the common stock on its principal trading market exceeds $15.00 per
share, subject to adjustment in certain circumstances. The convertible
preferred stock will not be entitled to the benefit of a sinking fund.

NOTE 14 -- LEASE OBLIGATIONS

The Company leases certain equipment primarily for use in racing operations and
acquired an immaterial lease of a playing card wash machine in the PCM
acquisition. Minimum lease payments required under operating leases that have
initial terms in excess of one year as of December 31, 1995 are approximately
$1,235,000 in 1996, $1,228,000 in 1997, and $662,000 thereafter. Total rent
expense for these long-term lease obligations for the years ended December 31,
1995, 1994 and 1993 was $1,318,000, $1,437,000 and $1,240,000, respectively.

NOTE 15 -- RETIREMENT PLANS

Hollywood Park Operating Company has a noncontributory group annuity retirement
plan and records pension expense using the projected unit credit cost method.
Eligible employees are those employees not covered by a collective bargaining
agreement and meet the retirement plan's service requirement. The benefits are
based on years of service and the employee's compensation during the last five
years of employment. The Company's funding policy is to contribute amounts to
the fund at least equal to the minimum funding requirements of the Employee
Retirement Income Security Act of 1974 (ERISA), but not in excess of the maximum
deductible limit. The Company contributed $21,930 to the plan in 1995, and the
plan was subject to full funding limitations in 1994; therefore, no contribution
was made in 1994.

RETIREMENT PLANS FUNDED STATUS

Dec. 31, 1995 Dec. 31, 1994
---------------- --------------

Actuarial present value of benefit
obligations:
Accumulated benefit obligation,
including vested benefits of $4,078,000
and $3,803,000 at December 31, 1995
and 1994, respectively $4,190,000 $3,874,000
================ ==============
Projected benefit obligation for
service rendered to date $5,080,000 $4,555,000
Plan assets at fair value 5,754,000 5,296,000
Plan contribution 22,000 0
---------------- --------------
Plan assets in excess of projected
benefit obligation 696,000 741,000
Unrecognized net gain from past
experience different from that assumed
and effects of changes in assumptions
Unrecognized net asset being recognized (323,000) (141,000)
over 15 years (539,000) (626,000)
----------------- --------------
Pension liability ($166,000) ($26,000)
================= ==============
Net pension expense - Service cost $ 314,000 $ 326,000
Net pension expense - Interest cost 354,000 316,000
Actual return on assets (753,000) (88,000)
Net amortization and deferral 247,000 (433,000)
---------------- ---------------
Net periodic pension cost $ 162,000 $ 121,000
================ ===============

57

The weighted average discount rate and rate of increase in future compensation
levels used in determining the actuarial present value of the projected benefit
obligations were 8.0% and 5.0%, respectively, at December 31, 1995 and 1994.
The expected long-term rate of return on assets was 8.0% at December 31, 1995
and 1994.

The Company also contributes to several collectively-bargained multi-employer
pension and retirement plans (covering full and part-time employees) which are
administered by unions, and to a pension plan covering non-union employees which
is administered by an association of race track owners. Amounts charged to
pension cost and contributed to these plans for the years ended December 31,
1995, 1994 and 1993 totaled $1,781,000, $1,846,000 and $1,775,000, respectively.
Contributions to the collectively-bargained plans are determined in accordance
with the provisions of negotiated labor contracts and generally are based on the
number of employee hours or days worked. Contributions to the non-union plans
are based on the covered employees' compensation.

Information from the plans administrators is not available to permit the Company
to determine its share of unfunded vested benefits or prior service liability.
It is the opinion of management that no material liability exists.

There is no defined benefit pension plan for Sunflower or Turf Paradise.

In December 1995 the Board of Director's Compensation Committee approved a non-
qualified Supplementary Employment Retirement Plan ("SERP"), effective April 1,
1996 (therefore no actuarial data is available). The SERP is an unfunded plan,
primarily for the purpose of restoring retirement benefits for highly
compensated employees. Currently, Messrs. Hubbard, Robbins and Finnigan are
eligible to participate in the SERP. The SERP will restore the retirement
benefit that was eliminated in 1994 by the Internal Revenue Service, when the
maximum annual earnings allowed for qualified pension plans was reduced to
$150,000 from $235,840.

NOTE 16 -- RELATED PARTY TRANSACTIONS

The Company entered into an aircraft time sharing agreement with R.D. Hubbard
Enterprises, Inc. ("Hubbard Enterprises"), which is wholly owned by Mr. Hubbard,
with initial terms of November 1, 1993, through December 31, 1994, and
thereafter automatically renews for additional terms of one month each unless
written notice of termination is given by either party at least two weeks before
the start of a renewal term. The Company agreed to reimburse Hubbard
Enterprises for expenses incurred as a result of the Company's use of the
aircraft, which totaled approximately $126,000 in 1995, and approximately
$139,000 in 1994.

On March 23, 1994, the Company acquired Sunflower, a greyhound and thoroughbred
race track located in Kansas City, Kansas, in which Mr. Hubbard was a 60%
shareholder. Sunflower became a wholly owned subsidiary of the Company. The
agreement of merger 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.

NOTE 17 -- STOCK OPTION PLAN

In 1993, the Company adopted a Stock Option Plan (the "Plan"). The Plan is
administered and terms of option grants are established by the Board of
Directors' Compensation Committee. Under the terms of the Plan, options alone
or coupled with stock appreciation rights may be granted to selected key
employees, directors, consultants and advisors of the Company. Options become
exercisable ratably over a vesting period as determined by the Compensation
Committee and expire over terms not exceeding ten years from the date of grant,
one month after termination of employment, or six months after the death or
permanent disability of

58

the optionee. The purchase price for all shares granted under the Plan shall be
determined by the Compensation Committee, but in the case of incentive stock
options, the price will not be less than the fair market value of the common
stock at the date of grant. On May 19, 1995, the Company amended the non-
qualified stock option agreements issued through this date, to reflect the
substantial decline in the fair market value of the common stock, lowering the
per share price of the outstanding options to $13.00. In 1994 Turf Paradise had
approximately 23,000 stock options outstanding, all of which were fully
exercised prior to the acquisition.

The following table summarizes information related to shares under option and
shares available for grant under the Plan.

1995 1994 1993
---------- -------- --------

Options outstanding at beginning of year 235,000 150,000 0
Options granted during the year 15,000 85,000 150,000
Options expired during the year (1,000) 0 0
---------- -------- --------
Options outstanding at end of year 249,000 235,000 150,000
========= ======== ========

Total shares available for issuance
under the plan 625,000 625,000 625,000
Per share price of outstanding options
issued in prior year $ 13.00 $ 25.50 $ 0.00
Per share price of outstanding options
issued in current year $ 13.25 $ 22.00 $ 25.50
Number of shares subject to exercisable
option at end of year 128,000 50,000 0

NOTE 18 -- COMMITMENTS AND CONTINGENCIES

As previously reported by the Company, and described in the Company's Form 10-Q
for the quarter ended September 30, 1995, six purported class actions (the
"Class Actions") are presently pending against the Company and certain of its
directors and officers in the United States District Court, Central District of
California (the "District Court") and consolidated in a single action entitled
In re Hollywood Park Securities Litigation, Master File No. CV-94-6551-ABC
- ------------------------------------------
(GHKx). The plaintiffs in the Class Actions purport to assert violations of the
federal securities laws based upon, among other things, the allegation that the
defendants made overly optimistic statements and projections concerning the
Company.

Counsel for certain plaintiffs in the Class Actions also advised the Company of
such plaintiffs' intention to add or pursue purported derivative claims against
certain of the Company's directors and officers in connection with, among other
things, the matters alleged in the Class Actions. The Company denied all
liability and advised the plaintiffs of its intent to assert various defenses
and to contest vigorously all purported claims and allegations. By order of the
District Court, dated February 27, 1995, the parties engaged in an extensive
mediation process in an effort to settle the Class Actions and all related
potential and threatened claims. After engaging in the court-ordered mediation
process, the parties reached an agreement in principle to settle all pending and
threatened claims, including the Class Actions and the threatened derivative
claims.

On September 15, 1995, the previously threatened derivative action entitled
William R. Barney, Jr. v. Randall D. Hubbard, et al., Case No. 692583 (the
- ----------------------------------------------------
"Derivative Action"), was commenced in the Superior Court of the State of
California for the County of San Diego. The Derivative Action is a purported
stockholder derivative action allegedly brought on behalf of the Company against
certain of the Company's directors and officers, and based, in part, on the
allegation that such directors and officers breached their fiduciary duties in
connection with matters alleged in or relating to the Class Actions.

Under the proposed settlement of the Class Actions, a settlement fund of
$5,800,000 will be created for the benefit of the alleged class of shareholders,
with contributions from the Company and the insurance carrier for the Company's
directors and officers. After giving consideration to an additional cash
payment to be made to the Company from the insurance carrier for the Company's
directors and officers in the settlement of the Derivative Action, the Company's
net settlement payment in the Class Actions is expected to be less than
$2,500,000. The proposed settlement of the Derivative Action provides for a
$2,000,000 payment to the Company from the insurance carrier for the Company's
directors and officers. With $1,000,000 of that amount paid to the plaintiffs'
attorneys as fees, costs and expenses; the remaining $1,000,000 will defray the

59

Company's payment in the settlement of the Class Actions. The proposed
settlement of the Derivative Action includes provisions enhancing the Company's
financial controls and modifying certain terms to its acquisition of Sunflower.

The Company and all parties have executed definitive settlement agreements. The
proposed settlements have been approved by the Company's Board of Directors, but
remain conditioned upon, among other things, approval by each of the courts in
the Class Actions and in the Derivative Action. On February 26, 1996, the
District Court approved the settlement of the Class Actions and entered its
judgment dismissing the Class Actions. The parties' application for approval of
the settlement of the Derivative Action remains pending. If the settlements are
not approved and consummated for any reason, the Company will assert various
defenses and vigorously defend any and all claims against it relating to such
matters. The ultimate resolution of these matters could result in a loss in
excess of the amounts accrued.

The Company also has executed a separate settlement as to all purported claims
against the Company and its directors and officers by the former controlling
shareholder of Turf Paradise. Other former Turf Paradise shareholders will be
entitled to participate in the settlement of the Class Actions, but the former
controlling shareholder of Turf Paradise has agreed to be excluded from that
settlement. The Company does not believe that the settlement amounts to be paid
to the former controlling shareholder of Turf Paradise ($2,750,000) is
preferential to the amounts being paid to other Turf Paradise shareholders under
the Class Action. This settlement is conditional on final approval and
consummation of the settlements of the Class and Derivative Actions.

Sunflower entered into a two year consulting agreement with Mr. Richard Boushka,
a former Sunflower shareholder, as of March 24, 1994. Consulting services
include assisting Sunflower in obtaining all approvals, licenses and permits
necessary for Sunflower to conduct casino gaming and to operate video lottery
terminals at or next to Sunflower's property. Under the terms of the agreement
Mr. Boushka will receive monthly payments totaling $100,000 per year. As of May
1995, given Sunflower's financial results, all payments to Mr. Boushka were
suspended, though Mr. Boushka did continue to provide services per the
agreement.

NOTE 19 -- SUBSEQUENT EVENTS

Boomtown, Inc. On March 19, 1996, the Company and Boomtown, (a publicly held
- --------------
company) executed a letter of intent relating to the strategic combination of
the Company with Boomtown by way of a merger with a wholly owned subsidiary of
the Company (the "Merger"), with Boomtown becoming a wholly owned subsidiary of
the Company. The Letter of Intent contemplates the conversion of all
outstanding shares of common stock of Boomtown into shares of common stock of
the Company, based upon an exchange ratio of 0.625 shares of the Company's
common stock for each share of Boomtown's common stock. An estimated 5,774,000
shares of Hollywood Park common stock would be issued in the Merger.

The Letter of Intent contemplates that four members of Boomtown's Board of
Directors would be added to the Company's Board of Directors, and that such
former Boomtown directors would be nominated by the Company for re-election to
the Board for at least the first three annual stockholders meetings following
the Merger. The Company's Board would have no more than eleven members during
such three-year period, and the Executive Committee of the Company's Board of
Directors would be comprised of five persons, two of whom would be nominated by
Boomtown.

Boomtown owns and operates land-based, dockside and riverboat gaming operations
in Verdi, Nevada ("Boomtown Reno"), Las Vegas, Nevada ("Boomtown Las Vegas"),
Biloxi, Mississippi ("Boomtown Biloxi") and Harvey, Louisiana ("Boomtown New
Orleans"). Boomtown's properties offer hotel accommodations, gaming and other
entertainment amenities to primarily middle income, value oriented customers.
The Boomtown properties incorporate an "old west" theme through the use of
western memorabilia in their interior decor, country/western music and western
dress of their employees.

60

Boomtown Reno has been operating for over a quarter century and is located seven
miles west of Reno on Interstate 80, the major highway connecting northern
California and Reno. Boomtown Reno's customer base is primarily drawn from
Interstate 80 traffic. Boomtown Reno offers its guests a 40,000 square foot
casino, including 1,433 slot machines and 43 table games, a 122-room hotel, a
16-acre truck stop, a full-service recreational vehicle park, a service station,
a mini-mart and other related amenities. In addition, Boomtown Reno offers a
35,000 square foot family entertainment center featuring a dynamic motion
theater, an indoor 18-hole western-themed miniature golf course, a restaurant
and a replica of an 1800's Ferris Wheel.

Boomtown Las Vegas commenced operations in May 1994 on a 56-acre site at the
interchange of Blue Diamond Road and Interstate 15, the principal thoroughfare
connecting southern California to Las Vegas. Boomtown Las Vegas is four miles
from the exit for Circus, Circus' Excalibur and Luxor sites and MGM. Boomtown
Las Vegas includes a 30,000 square foot casino with 1,100 slot machines and 28
gaming tables, 300 hotel rooms, a full-service recreational vehicle park, a 600-
seat Opera House Dinner Theater and a replica of an old mine where customers can
pan for real gold.

Boomtown Biloxi, a limited partnership majority owned and controlled by
Boomtown, occupies nine acres on Biloxi, Mississippi's back bay. Boomtown
Biloxi is located one-half mile from Interstate 110, the main highway connecting
Interstate 10 (the main thoroughfare connecting New Orleans and Mobile, Alabama)
and the Gulf of Mexico. The facility, which commenced operations in July 1994,
consists of a land-based facility which houses non-gaming operating space and a
33,000 square foot casino constructed on a 400 x 100 foot barge permanently
moored to the land-based building. The casino offers 985 slot machines, 42
table games and other gaming amenities including restaurants, a western dance
hall/cabaret and a 20,000 square foot family entertainment center.

Boomtown New Orleans, a limited partnership majority owned and controlled by
Boomtown, commenced operations in August 1994 on a 50 acre site in Harvey,
Louisiana, approximately ten miles form the French Quarter of New Orleans.
Gaming operations are conducted from a 250 foot replica of a paddle wheel
riverboat, offering 865 slot machines and 51 table games in a 30,000 square foot
casino. The land-based facility adjacent to the riverboat dock is composed of a
western-themed 88,000 square foot entertainment center and a western
saloon/dance hall.

Boomtown is actively seeking to expand its operations into jurisdictions that
have legalized casino gaming at sites that are near interstate highways or major
thoroughfares near major population or tourist centers. Boomtown is currently
exploring a project in Switzerland, Indiana through a joint venture with Hilton
Gaming Corporation. The gaming license application for this project is pending.

The Letter of Intent further contemplates that the parties will negotiate and
execute a definitive merger agreement which will contain customary
representations and warranties, and which will provide for reciprocal "no-shop"
obligations (subject to each Board's fiduciary duties) and for a break up fee of
$5,000,000 payable by either party under certain conditions.

The consummation of the Merger is subject to, among other things, (i)
negotiation and execution of the definitive merger agreement, (ii) approval by
the respective stockholders and Boards of Directors of the Company and Boomtown,
(iii) receipt of "fairness opinions" from the respective investment bankers
representing the Company and Boomtown, (iv) receipt of requisite regulatory
approvals and gaming licenses. (v) availability of sufficient financing to fund
future gaming projects and to fund the repurchase of Boomtown's outstanding
notes if "put" to Boomtown by the holders as a consequence of the Merger, and
(vi) the execution of certain employment agreements with the officers of
Boomtown. Subject to satisfaction or waiver of such conditions, the parties
currently anticipate working towards a consummation of the Merger by December
31, 1996, but in no event later than June 30, 1997.

If the Kansas Legislature does not approve other forms of gaming at Sunflower
including slot machines, it is probable that Sunflower's assets will suffer an
impairment that will require a significant asset write-down that will have a
materially adverse effect on the Company's consolidated financial statements.

Kansas Senate Concurrent Resolution 1621 was introduced on February 15, 1996.
After amendment, the final bill would have required a change to the state of
Kansas' constitution to allow for casino gaming in Kansas. Senate Concurrent
Resolution 1621 was defeated on March 21, 1996.

Kansas Senate Bill 712 was introduced into the Senate Federal and State Affairs
committee on February 15, 1996. This legislation would allow electronic games of
chance at race tracks. As of the date of this filing it remains in committee.

Kansas Senate Bill 754 was introduced into the Senate Federal and State Affairs
committee on March 15, 1996 and would authorize race tracks to operate certain
games, including bingo, keno, pull tabs, and on-line lottery games utilizing a
horse or greyhound racing theme. On March 29, 1996, Senate Bill 754 passed out
of committee with a favorable recommendation. As of the date of this filing, a
Senate floor debate has not been scheduled.

Kansas House Concurrent Resolution 5056 ("Resolution 5056") was introduced on
the floor of the House of Representatives on March 28, 1996, to amend the
constitution of the state of Kansas through a statewide election in November to
allow for electronic games of chance to be operated at licensed pari-mutuel
facilities, including Sunflower. Resolution 5056 has been referred to the House
Federal and State Affairs committee where it remains as of the date of this
filing. Resolution 5056 would require a 2/3rds majority of both houses to go to
ballot.

The current Kansas State Legislative session ends on April 5, 1996. The veto
session commences on April 24, 1996, and continues until all scheduled business
is concluded.

NOTE 20 -- UNAUDITED QUARTERLY INFORMATION

The following is a summary of unaudited quarterly financial data for the years
ended December 31, 1995 and 1994:

61

1995
-----------------------------------------------
Dec. 31, Sept. 30, June 30, Mar. 31,
-----------------------------------------------
(in thousands, except per share date)

Revenues $36,693 $ 26,595 $42,828 $ 24,456
Net income (loss) $ 212 ($5,637) $ 4,857 ($594)
===============================================
Net income (loss) available to
(allocated to) common shareholders ($270) ($6,118) $ 4,376 ($1,075)
===============================================

Per common share:
Net income (loss) - primary ($0.01) ($0.33) $ 0.24 ($0.06)

Net income (loss) - fully diluted ($0.01) ($0.33) $ 0.24 ($0.06)
Cash dividends $0.00 $0.00 $ 0.00 $0.00
===============================================

1994
-----------------------------------------------
Dec. 31, Sept. 30, June 30, Mar. 31,
-----------------------------------------------
(in thousands, except per share data)

Revenues $38,339 $ 30,104 $35,975 $ 12,906
Net income (loss) $ 2,736 ($2,398) $ 4,855 ($1,421)
===============================================
Net income (loss) available to
(allocated to) common shareholders $ 2,254 ($2,879) $ 4,374 ($1,902)
===============================================

Per common share:
Net income (loss) - primary $ 0.12 ($0.16) $ 0.24 ($0.10)

Net income (loss) - fully diluted $ 0.12 ($0.16) $ 0.24 ($0.10)
Cash dividends $ 0.00 $0.00 $ 0.00 $0.00
===============================================

62

Hollywood Park, Inc.
Calculation of Earnings Per Share

For the three months ended December 31,
--------------------------------------------------------------------------------
Primary Assuming full Dilution (a)
-------------------------------------- --------------------------------------
1995 1994 1993 1995 1994 1993
---------- ---------- ---------- ---------- ---------- ----------

Average number of common shares
outstanding 18,486,300 18,369,634 17,685,235 18,486,300 18,369,634 17,685,235
Average common shares due to assumed
conversion of convertible preferred
shares 0 0 0 2,291,492 2,291,492 2,291,492
---------- ---------- ---------- ---------- ---------- ----------
Total shares 18,486,300 18,369,634 17,685,235 20,777,792 20,661,126 19,976,727
========== ========== ========== ========== ========== ==========

Net income $212,000 $2,736,000 $1,105,000 $212,000 $2,736,000 $1,105,000
Less dividend requirements on
convertible preferred shares 482,000 481,000 481,000 0 0 0
---------- ---------- ---------- ---------- ---------- ----------
Net income (loss) available to
(allocated to) common shareholders ($270,000) $2,255,000 $624,000 $212,000 $2,736,000 $1,105,000
========== ========== ========== ========== ========== ==========

Net income (loss) per share ($0.01) $0.12 $0.04 $0.01 $0.13 $0.06
========== ========== ========== ========== ========== ==========

For the years ended December 31,
----------------------------------------------------------------------------------
Primary Assuming full Dilution (a)
--------------------------------------- ---------------------------------------
1995 1994 1993 1995 1994 1993
----------- ---------- ---------- ----------- ---------- ----------

Average number of common shares
outstanding 18,399,040 18,224,216 15,418,066 18,399,040 18,224,216 15,418,066
Average common shares due to assumed
conversion of convertible preferred
shares 0 0 0 2,291,492 2,291,492 2,046,668
----------- ---------- ---------- ----------- ---------- ----------
Total shares 18,399,040 18,224,216 15,418,066 20,690,532 20,515,708 17,464,734
=========== ========== ========== =========== ========== ==========

Net income (loss) ($1,162,000) $3,772,000 $6,393,000 ($1,506,000) $3,772,000 $6,393,000
Less dividend requirements on
convertible preferred shares 1,925,000 1,925,000 1,718,000 0 0 0
----------- ---------- ---------- ----------- ---------- ----------
Net income (loss) available to
(allocated to) common shareholders ($3,087,000) $1,847,000 $4,675,000 ($1,506,000) $3,772,000 $6,393,000
=========== ========== ========== =========== ========== ==========
Net income (loss) per share ($0.17) $0.10 $0.30 ($0.07) $0.18 $0.37
=========== ========== ========== =========== ========== ==========

(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.

63

Hollywood Park, Inc.
Selected Financial Data by Operational Location

Three months ended (unaudited)
--------------------------------------------------------- Year ended
December 31, September 30, June 30, March 31, December 31,
1995 1995 1995 1995 1995
----------- ------------ ----------- ----------- ------------

REVENUES:
Hollywood Park, Inc. and Race Track $18,011,000 $14,750,000 $27,542,000 $5,786,000 $66,089,000
Sunflower Racing, Inc. 1,917,000 2,385,000 2,835,000 2,638,000 9,775,000
Turf Paradise, Inc. 5,938,000 1,480,000 3,624,000 6,443,000 17,485,000
Hollywood Park, Inc. - Casino
Division 10,827,000 7,980,000 8,827,000 9,589,000 37,223,000
----------- ----------- ----------- ----------- ------------
36,693,000 26,595,000 42,828,000 24,456,000 130,572,000
----------- ----------- ----------- ----------- ------------

EXPENSES:
Hollywood Park, Inc. and Race Track 15,231,000 13,634,000 19,697,000 8,517,000 57,079,000
Lawsuit settlement 461,000 5,627,000 0 0 6,088,000
Sunflower Racing, Inc. 2,033,000 2,544,000 2,337,000 2,265,000 9,179,000
Turf Paradise, Inc. 4,033,000 1,859,000 3,148,000 4,530,000 13,570,000
Hollywood Park, Inc. - Casino
Division 10,446,000 6,542,000 6,519,000 6,312,000 29,819,000
----------- ----------- ----------- ----------- ------------
32,204,000 30,206,000 31,701,000 21,624,000 115,735,000
----------- ----------- ----------- ----------- ------------

INCOME (LOSS) BEFORE INTEREST, INCOME
TAXES, DEPRECIATION AND AMORTIZATION:
Hollywood Park, Inc. and Race Track 2,780,000 1,116,000 7,845,000 (2,731,000) 9,010,000
Lawsuit settlement (461,000) (5,627,000) 0 0 (6,088,000)
Sunflower Racing, Inc. (116,000) (159,000) 498,000 373,000 596,000
Turf Paradise, Inc. 1,905,000 (379,000) 476,000 1,913,000 3,915,000
Hollywood Park, Inc. - Casino
Division 381,000 1,438,000 2,308,000 3,277,000 7,404,000
----------- ----------- ----------- ----------- ------------
4,489,000 (3,611,000) 11,127,000 2,832,000 14,837,000
----------- ----------- ----------- ----------- ------------

Depreciation and amortization:
Hollywood Park, Inc. and Race Track 1,389,000 1,378,000 1,368,000 1,351,000 5,486,000
Sunflower Racing, Inc. 615,000 616,000 616,000 621,000 2,468,000
Turf Paradise, Inc. 302,000 311,000 369,000 329,000 1,311,000
Hollywood Park, Inc. - Casino
Division 600,000 519,000 509,000 491,000 2,119,000
----------- ----------- ----------- ----------- ------------
2,906,000 2,824,000 2,862,000 2,792,000 11,384,000
----------- ----------- ----------- ----------- ------------

Interest expense:
Hollywood Park, Inc. and Race Track 60,000 44,000 49,000 49,000 202,000
Sunflower Racing, Inc. 967,000 913,000 922,000 888,000 3,690,000
Turf Paradise, Inc. 9,000 1,000 3,000 17,000 30,000
----------- ----------- ----------- ----------- ------------
1,036,000 958,000 974,000 954,000 3,922,000
----------- ----------- ----------- ----------- ------------

INCOME (LOSS) BEFORE INCOME TAX EXPENSE
(BENEFIT):
Hollywood Park, Inc. and Race Track 1,331,000 (306,000) 6,428,000 (4,131,000) 3,322,000
Lawsuit settlement (461,000) (5,627,000) 0 0 (6,088,000)
Sunflower Racing, Inc. (1,698,000) (1,688,000) (1,040,000) (1,136,000) (5,562,000)
Turf Paradise, Inc. 1,594,000 (691,000) 104,000 1,567,000 2,574,000
Hollywood Park, Inc. - Casino
Division (219,000) 919,000 1,799,000 2,786,000 5,285,000
----------- ----------- ----------- ----------- ------------
547,000 (7,393,000) 7,291,000 (914,000) (469,000)
Income tax expense (benefit) 335,000 (1,756,000) 2,434,000 (320,000) 693,000
----------- ----------- ----------- ----------- ------------
Net income (loss) $212,000 ($5,637,000) $4,857,000 ($594,000) ($1,162,000)
=========== =========== =========== =========== ============

Dividend requirements on convertible
preferred stock $482,000 $481,000 $481,000 $481,000 $1,925,000
----------- ----------- ----------- ----------- ------------
Net income (loss) available to
(allocate to) common shareholders ($270,000) ($6,118,000) $4,376,000 ($1,075,000) ($3,087,000)
=========== =========== =========== =========== ============

Per common share:
Net income (loss) - primary ($0.01) ($0.33) $0.24 ($0.06) ($0.17)
Net income (loss) - fully diluted ($0.01) ($0.33) $0.24 ($0.06) ($0.17)

Number of shares - primary 18,486,300 18,369,634 18,369,634 18,369,634 18,399,040
Number of shares - fully diluted 20,777,792 20,661,126 20,661,126 20,661,126 20,690,532

64

Hollywood Park, Inc.
Pari-mutuel Wagering Data

For the years ended December 31,
--------------------------------------------------
1995 1994 1993
-------------- -------------- --------------

Hollywood Park (unaudited)
- -----------------------------------
Pari-mutuel handle:
On-track $185,218,000 $229,667,000 $245,383,000
Off-track - shared handle wagering 476,815,000 490,537,000 468,013,000
Simulcast 386,873,000 296,019,000 212,047,000
-------------- -------------- --------------
Total $1,048,906,000 $1,016,223,000 $925,443,000
============== ============== ==============

Pari-mutuel commissions:
On-track $11,777,000 $13,855,000 $14,559,000
Off-track - shared handle wagering 14,922,000 16,371,000 15,993,000
Off-track - independent handle 2,251,000 1,749,000 1,167,000
Simulcast 11,229,000 7,251,000 4,303,000
-------------- -------------- --------------
Total $40,179,000 $39,226,000 $36,022,000
============== ============== ==============

Turf Paradise
- -----------------------------------
Pari-mutuel handle:
On-track $28,524,000 $35,046,000 $42,065,000
Off-track - shared handle wagering 82,983,000 61,448,000 48,606,000
Simulcast 55,093,000 46,549,000 22,766,000
-------------- -------------- --------------
Total $166,600,000 $143,043,000 $113,437,000
============== ============== ==============

Pari-mutuel commissions:
On-track $3,753,000 $4,289,000 $5,177,000
Off-track - shared handle wagering 4,719,000 4,509,000 4,182,000
Off-track - independent handle 699,000 297,000 239,000
Simulcast 3,909,000 3,410,000 1,285,000
-------------- -------------- --------------
Total $13,080,000 $12,505,000 $10,883,000
============== ============== ==============

Combined
- -----------------------------------
Pari-mutuel handle:
On-track $213,742,000 $264,713,000 $287,448,000
Off-track - shared handle wagering 559,798,000 551,985,000 516,619,000
Simulcast 441,966,000 342,568,000 234,813,000
-------------- -------------- --------------
Total $1,215,506,000 $1,159,266,000 $1,038,880,000
============== ============== ==============

Pari-mutuel commissions:
On-track $15,530,000 $18,144,000 $19,736,000
Off-track - shared handle wagering 19,641,000 20,880,000 20,175,000
Off-track - independent handle 2,950,000 2,046,000 1,406,000
Simulcast 15,138,000 10,661,000 5,588,000
-------------- -------------- --------------
Total $53,259,000 $51,731,000 $46,905,000
============== ============== ==============

65

EXHIBIT INDEX
-------------
Page
Exhibit Number Exhibit Description Number
- -------------- ------------------- ------

23.1 Report of Arthur Andersen LLP, Independent Auditors 1

23.2 Report of KPMG Peat Marwick LLP, Independent Auditors 2

23.3 Report of Ernst & Young LLP, Independent Auditors 3

27 Financial Data Schedule