SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-K

(Mark One)

ý		ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
		SECURITIES EXCHANGE ACT OF 1934

For the fiscal year ended December 31, 2004

o		TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
		SECURITIES EXCHANGE ACT OF 1934

For the transition period from to

Commission File Number 333-88679

Hollywood Casino Shreveport
Shreveport Capital Corporation

(Exact name of registrant as specified in its charter)

Louisiana Louisiana		72-1225563 75-2830167
(State or other jurisdiction of Incorporation or Organization)		(I.R.S. Employer Identification No.)

5601 Bridge St., Suite 300 Fort Worth, Texas		76112-2355
(Address of principal executive offices)		(Zip Code)

Registrant’s telephone number, including area code: (817) 492-7065

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

$150,000,000 of 13% First Mortgage Notes with Contingent Interest due August 1, 2006

$39,000,000 of 13% Senior Secured Notes with Contingent Interest due August 1, 2006

Securities registered pursuant to Section 12(g) of the Act: None

(Title of Class)

Indicate by check mark whether the registrant (1) has filed all reports to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports) and (2) has been subject to such filing requirements for the past 90 days. Yes ý No o.

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 the 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. ý

Indicate by check mark whether the registrant is an accelerated filer (as defined in Rule 12b-2 of the Act). Yes o No ý

As of March 28, 2005, HCS I, Inc. holds an effective 99% partnership interest and HCS II, Inc. holds an effective 1% partnership interest in Hollywood Casino Shreveport. As of March 28, 2005, 1,000 shares of common stock of Shreveport Capital Corporation, $1.00 par value, are outstanding, all of which are owned by Hollywood Casino Shreveport.

DOCUMENTS INCORPORATED BY REFERENCE

Portions of the following documents are incorporated by reference into the indicated parts hereof: None.

TABLE OF CONTENTS

	PART I

ITEM 1.	BUSINESS
ITEM 2.	PROPERTY
ITEM 3.	LEGAL PROCEEDINGS
ITEM 4.	SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

	PART II

ITEM 5.	MARKET FOR THE REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES
ITEM 6.	SELECTED CONSOLIDATED FINANCIAL DATA
ITEM 7.	MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
ITEM 7A.	QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
ITEM 8.	FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
ITEM 9.	CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE
ITEM 9A	CONTROLS & PROCEDURES

	PART III

ITEM 10.	DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
ITEM 11.	EXECUTIVE COMPENSATION
ITEM 12.	SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
ITEM 13.	CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
ITEM 14.	PRINCIPAL ACCOUNTANING FEES AND SERVICES

	PART IV

ITEM 15.	EXHIBITS AND FINANCIAL STATEMENT SCHEDULES

This document includes “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act, as amended. These statements are included throughout the document, including the section entitled “Risk Factors,” and relate to our business strategy, our prospects and our financial position. These statements can be identified by the use of forward-looking terminology such as “believes,” “estimates,” “expects,” “intends,” “may,” “will,” “should” or “anticipates” or the negative or other variation of these or similar words, or by discussions of strategy or risks and uncertainties. Specifically, forward-looking statements may include, among others, statements concerning:

• our expectations of future results of operations or financial condition;

• our expectations concerning the bankruptcy proceedings and the potential sale or disposition of the property;

• the timing, cost and expected impact on our market share and results of operations of our planned capital expenditures;

• the outcome and financial impact of the litigation in which we are involved;

• the effect of legislative, regulatory, executive or judicial decisions at the federal, state or local level with regard to our business and the impact of any such decisions; and

• our expectations regarding the availability of capital resources.

PART I

ITEM 1. BUSINESS

Overview

Hollywood Casino Shreveport is located in Shreveport, Louisiana, which is 190 miles east of Dallas, Texas. Our principal target markets are the Dallas-Ft. Worth Metroplex and communities in East Texas.

The Hollywood Casino Shreveport resort consists of a 403-room, all-suite, art deco-style hotel, and a three-level riverboat dockside casino. The casino contains approximately 59,000 square feet of space with approximately 1,400 slot machines, 61 table games and ten poker tables.

The centerpiece of the resort is a 170,000 square foot land-based pavilion housing numerous restaurants and entertainment amenities. An 85-foot wide seamless entrance connects the casino to the land-based pavilion on all three levels resulting in the feel of a land-based casino. Amenities include the Fairbanks® gourmet steakhouse, the Hollywood Epic Buffet®, the Hollywood Diner, the Hollywood Director’s Club and the Hollywood Celebrity Lounge, a spa and the Hollywood Casino Studio Store®, which features themed and logo merchandise. Hollywood Casino Shreveport also features the Hollywood Casino Corporation’s unique Hollywood theme throughout its gaming, dining and entertainment facilities that has been successfully applied at its other properties.

Hollywood Casino Shreveport is owned by the Hollywood Casino Shreveport general partnership which, through HCS I, Inc. and HCS II, Inc., is in turn owned by HWCC-Louisiana, Inc., a Louisiana corporation organized in April 1993, which is wholly-owned by Hollywood Casino Corporation. The Hollywood Casino Shreveport general partnership was originally formed in May 1992 and operates Hollywood Casino Shreveport under a management agreement with HWCC-Shreveport, Inc., a wholly-owned subsidiary of Hollywood Casino Corporation. The management agreement provides that the Hollywood Casino Shreveport general partnership pay a management fee of 2% of net revenues plus an increasing percentage (5-10%) of Hollywood Casino Shreveport’s annual earnings before interest, taxes, depreciation and amortization above $25.0 million with payment subject to certain restrictions provided in the indentures and related documents governing the Shreveport Notes. No management fees have been paid since the opening of the facility.

The Hollywood Casino Shreveport general partnership and Shreveport Capital Corporation are co-issuers of $150 million aggregate principal amount of 13% first mortgage notes due 2006, or the First Mortgage Notes, and $39 million aggregate principal amount of 13% senior secured notes due 2006, or the Senior Secured Notes, which we refer to collectively in this document as the Shreveport Notes. Shreveport Capital Corporation is a wholly-owned subsidiary of Hollywood Casino Shreveport formed in July 1999 solely for the purpose of being a co-issuer of the Shreveport Notes. The Shreveport Notes are secured by substantially all of the assets of Hollywood Casino Shreveport and the First Mortgage Notes are further secured by the guarantees of HWCC-Louisiana, Inc., HCS I, Inc. and HCS II, Inc.; the pledge by HCS I, Inc. and HCS II, Inc. of their partnership interests in the Hollywood Casino Shreveport general partnership; and the pledge by HWCC-Louisiana, Inc. of its stock in HCS I, Inc. and HCS II, Inc.

Acquisition of Hollywood Casino Shreveport

Effective with the close of business on February 28, 2003, we were indirectly acquired by Penn National Gaming, Inc., or Penn National, as part of its acquisition of Hollywood Casino Corporation and its subsidiaries. As a result of certain accounting requirements, we adjusted our assets and liabilities to reflect fair values as of the date of acquisition. The purchase price adjustments reflected in our consolidated financial statements include the fair values of property and equipment based on independent appraisals obtained by Penn National and a bond valuation allowance that reduces the value of the Shreveport Notes to their estimated fair value. No goodwill was recorded in connection with the acquisition.

Shreveport Notes

The indentures governing the Shreveport Notes require the issuers to make an offer to purchase the Shreveport Notes at 101% of the principal amount thereof within ten days of the occurrence of a “Change of Control” as defined in the indentures. A “Change of Control” was deemed to have occurred under the indentures on March 3, 2003 as a result of the consummation of the merger of a wholly-owned subsidiary of Penn National with and into Hollywood Casino Corporation. We determined that we did not have the liquidity to repurchase the Shreveport Notes at 101% of their principal amount and, accordingly, could not make an offer to purchase the Shreveport Notes as required under the indentures. A valuation allowance in the amount of $70.3 million was established to reduce the carrying amount to management’s estimate of the fair value of the Shreveport Notes, which was based on the fair value of the underlying collateral.

On March 14, 2003, we were notified by an ad hoc committee of holders of the Shreveport Notes that we had 60 days from receipt of the notice to cure the failure to offer to purchase the Shreveport Notes or an event of default would occur under the indentures. Neither the Hollywood Casino Shreveport general partnership nor Shreveport Capital Corporation made a Change of Control offer to purchase the Shreveport Notes within the 60 days and, accordingly, the ad hoc committee notified us in May 2003 that a default had occurred under the indentures. In addition, we did not make the August 1, 2003, February 1, 2004, August 1, 2004 and February 1, 2005 interest payments of approximately $12.3 million each, which were due on the Shreveport Notes. During the period subsequent to May 2003, we entered into negotiations with an ad hoc committee of holders of the Shreveport Notes regarding the possible restructure of the outstanding indebtedness. In November 2003, we retained Libra Securities, LLC as our exclusive financial advisor in connection with a possible sale or debt restructuring transaction.

On February 3, 2004, HCS I, Inc., our managing general partner, announced that its Board of Directors had authorized the initiation of a process that it hoped would result in the sale or other disposition of Hollywood Casino Shreveport. The Board further authorized our financial advisor, Libra Securities LLC, to begin contacting potential acquirers. In addition, the Board authorized the creation of an independent committee of the Board, consisting of two directors not employed directly by Penn National, to oversee this process. The independent committee was established in the event that Penn National elected to participate as a bidder in the process. Penn National decided not to participate in the bid process. The Board took action after consultation with the ad hoc committee of holders of the Shreveport Notes.

Bankruptcy Filings

On August 27, 2004, acting by and through our managing general partner, HCS I, Inc., we entered into an agreement with Eldorado Resorts, LLC (“Eldorado”) providing for our acquisition by certain affiliates of Eldorado. On October 18, 2004, acting by and through HCS I, Inc., we entered into a definitive Investment Agreement with Eldorado, Eldorado Shreveport #1, LLC and Eldorado Shreveport #2, LLC (together with Eldorado Shreveport #1, LLC, the “Investors”) providing for the acquisition of the reorganized Hollywood Casino Shreveport by the Investors. The Agreement contemplates a financial restructuring of Hollywood Casino Shreveport that will significantly reduce our outstanding secured debt obligations and annual cash interest payments. Under the proposed restructuring, holders of our existing secured notes are to receive (1) $140 million of new first mortgage notes, (2) interest in a corporation that will hold a $20 million preferred equity interest and a 25% non-voting equity interest in the reorganized Hollywood Casino Shreveport and (3) cash in an amount to be determined, in exchange for existing secured notes in the principal face amount of $189 million plus accrued interest. The Investors would acquire a 75% voting equity interest in the reorganized Hollywood Casino Shreveport. We had intended to effectuate the sale and related financial restructuring transaction through a prepackaged Chapter 11 bankruptcy reorganization, but as described below, an involuntary bankruptcy petition interrupted the process. On October 28, 2004, we filed a joint plan and disclosure statement that incorporated the Eldorado transaction. The Agreement, which has been extended by amendment to June 30, 2005, remains subject to subsequent noteholder solicitation and acceptance, approval by the Bankruptcy Court of the Agreement, approval by the Louisiana Gaming Control Board and certain other conditions.

On September 10, 2004, certain of our creditors filed an involuntary petition against us for relief under Chapter 11 of the U.S. Bankruptcy Code with the U. S. Bankruptcy Court, Western District of Louisiana, located in Shreveport, Louisiana. The petition was filed by Black Diamond Capital Management, LLC (“Black Diamond”), a holder of our notes, who had previously participated in meetings with the ad hoc committee and who had later submitted an unsuccessful bid to acquire us, and by two of our construction contractors, who have been in litigation with us over amounts owing on our 1999 construction contract (see Item 3, Legal Proceedings). A hearing on the petition was held on October 29 and 30, 2004. A Consensual Order for Relief was issued on October 30, 2004, and we became a “debtor-in-possession”. We will continue to manage our assets and business subject to the powers and supervision of the Bankruptcy Court. On November 19, 2004, the Bankruptcy Court entered an order appointing David S. Rubin as mediator for the limited purposes of reviewing the pre-petition bid process to determine whether it was performed in a proper and competent fashion and that the scope of solicitations for bids was sufficient and performed in a timely fashion; reviewing the bids submitted and the process for evaluating the bids; determining the value of the bids submitted and recommending to the Court whether additional bid processes should be undertaken. The United States Trustee has appointed a Non-Bondholder Unsecured Creditors Committee and a Bondholder Committee.

On October 30, 2004, HCS I, Inc. and HCS II, Inc., the general partners of the Hollywood Casino Shreveport partnership, HWCC-Louisiana, Inc. and Shreveport Capital Corporation commenced voluntary cases under Chapter 11 in the Bankruptcy Court, which cases are pending.

On February 14, 2005, the court-appointed mediator, David S. Rubin, filed his report in our Chapter 11 case, which remains confidential. The report concluded, among other things, that:

• The pre-petition bid process conducted by HCS and the Ad Hoc Committee of Noteholders of HCS was performed in a proper and competent fashion.

• The scope of the solicitations for bids was sufficient and adequate.

• Bids submitted during the period of the formal process were appropriately ranked based on both quantitative and qualitative facts existing at the time the bids were made and evaluated.

• The decision to select the bid submitted by Eldorado to pursue closure was appropriate.

• As of August 27, 2004, the Eldorado bid offered the highest economic return to creditors.

• Although a subsequent bid made by Black Diamond on October 25, 2004, on a purely quantitative economic basis, was higher and offered more total value than the amount of the already accepted Eldorado proposal, the economic difference between the face amounts of the Eldorado offer and the October 25, 2004 Black Diamond offer, based on all of the circumstances existing as of October 25, 2004, was not demonstrably material in terms of the scope of the proposed transaction.

• The attendant delay of a re-offering or other auction process to again expose the assets to the market (including possible litigation in and out of the Court) may diminish interest in and offers for the HCS assets, may drive value down, and may have an effect on the Eldorado offer.

• A new formal auction process is not in the best interest of HCS and its creditors.

We subsequently filed a revised reorganization Plan and Disclosure Statement with the Bankruptcy Court on March 3, 2005. The Plan continues to provide for the acquisition of our hotel and casino by Eldorado under the agreement announced last year. The Bondholder Committee in the Chapter 11 cases has joined us as a proponent of the Plan. The Bankruptcy Court has set a hearing on the approval of the Disclosure Statement for April 11, 2005. Black Diamond and KOAR International continue to express an interest in jointly acquiring the hotel and casino and have asked the Bankruptcy Court for permission to file their own competing plan. We intend to oppose that request. The Bankruptcy Court has set a hearing for April 4, 2005 on Black Diamond’s motion to terminate our period of exclusivity for filing a reorganization plan.

Although the sale and restructuring process, including the Chapter 11 cases, has had a negative impact on our day-to-day operations, we believe that our significant cash on hand and cash from operations will continue to be sufficient to timely fulfill ordinary course obligations to employees, customers and trade vendors in full as they come due, pending completion of the transaction. The Agreement contemplates payment of such obligations in the ordinary course both during and after the restructuring process. Because the sale process has been unduly prolonged, management believes that it has had and may continue to have an adverse effect on employee morale and turnover and on our competitive position with our customers.

There can be no assurance that the process will result in the sale or other disposition of the riverboat casino/hotel complex. If it does, the sale proceeds will not likely be adequate to pay the Shreveport Notes in full. We currently anticipate that any transaction will be effected through the pending Chapter 11 cases. If the efforts to achieve a sale or other restructuring transaction are unsuccessful and the Chapter 11 cases are dismissed or relief from the automatic stay is granted, the holders of the Shreveport Notes might pursue all rights and remedies they may have under the indentures. We did not make the August 1, 2003, February 1, 2004, August 1, 2004 and February 1, 2005 interest payments of approximately $12.3 million each due on the Shreveport Notes. As previously noted, the Shreveport Notes have been in default under the terms of their respective note indentures since March 2003.

Liquidity

As previously described, after consultation with the ad hoc committee of holders of the Shreveport Notes, we commenced a process to solicit bids from potential acquirers of Hollywood Casino Shreveport and entered into the Agreement with Eldorado. The uncertainties regarding the ultimate success of the sales process, our existing defaults on the Shreveport Notes and our inability to cure such defaults other than through a successful sale or other restructuring transaction raises substantial doubt about our ability to continue as a going concern.

Under Chapter 11, actions to collect certain claims against us in existence prior to the filing of the petitions for relief are stayed while we continue business operations as debtor-in-possession. These claims are reflected in the December 31, 2004 consolidated balance sheet as “liabilities subject to compromise”. Additional claims may arise subsequent to the filing date resulting from the rejection of executory contracts such as leases and from the determination by the Bankruptcy Court of allowed claims for contingencies and other disputed amounts. We received approval from the Bankruptcy Court to pay certain of our pre-petition obligations, including employee wages and customer obligations. We have determined that there is insufficient collateral to cover the amounts owing on the Shreveport Notes and have discontinued accruing interest on these obligations effective with the close of business on September 10, 2004. Cash flows from operations continue to be insufficient to fund interest accrued on the Shreveport Notes and we did not make the August 1, 2003, February 1, 2004, August 1, 2004 and February 1, 2005 payments of approximately $12.3 million each due on such notes.

Trademarks

We have entered into a trademark license agreement with Hollywood Casino Corporation, pursuant to which Hollywood Casino Corporation has granted us the right to use the service mark “Hollywood Casino” which is registered with the U.S. Patent and Trademark Office. Pursuant to the license agreement, we may also use other trademarks owned or applied for by Hollywood Casino Corporation. The use of the Hollywood Casino trademark is of substantial value to us. Upon termination of the management services agreement between a subsidiary of Hollywood Casino Corporation and us for the management of Hollywood Casino Shreveport, the trademark license agreement will terminate and we shall only be entitled to the use of the Hollywood Casino trademarks for six months following such termination.

Competition

The gaming industry is highly fragmented and characterized by a high degree of competition among a large number of participants, many of which have financial and other resources that are greater than our resources. Competitive gaming activities include casinos, video lottery terminals and other forms of legalized gaming in the United States and other jurisdictions.

Legalized gaming is currently permitted in various forms throughout the United States and in several Canadian provinces and on various lands taken into trust for the benefit of certain Native Americans in the United States and Canada. Other jurisdictions may legalize gaming in the near future. In addition, established gaming jurisdictions could award additional gaming licenses or permit the expansion of existing gaming operations. New or expanded operations by other persons will increase competition for our gaming operations and could have a material adverse impact on us.

The Shreveport/Bossier City gaming market is characterized by intense competition and the market has not grown since we opened. We compete directly with four casinos, three of which have operated in the Shreveport/Bossier City market for several years and have established customer bases. In May 2003, an existing race track, which had been acquired by one of the existing casinos in the market, opened a temporary gaming facility with approximately 900 slot machines. That race track completed construction and opened a new permanent facility accommodating 1,400 slot machines in April 2004. Casino gaming is currently prohibited in several jurisdictions from which the Shreveport/Bossier City market draws customers, primarily Texas. Although casino gaming is currently not permitted in Texas, the Texas legislature has from time to time considered proposals to authorize casino gaming. In July 2003, the Chickasaw Nation announced the opening of WinStar Casinos, a Las Vegas-style, 110,000-square-foot gaming facility located in Oklahoma approximately 60 miles north of the Dallas/Fort Worth area. Although gaming in Oklahoma is limited by law to Class II-type games, which games have previously been technologically incapable of offering a similar entertainment experience to our Class III-type games, recent innovations have allowed the Class II-type product to compete much more effectively than in the past. In November 2004, voters in Oklahoma approved several ballot initiatives which, when fully implemented, will (1) allow Class II-type games at three Oklahoma racetracks, the closest of which is approximately 200 miles from the Dallas/Fort Worth area; (2) allow several new electronic gaming devices, including video poker, that are defined as “games of skill” at native-American casinos; and (3) allow certain “player-pooled” table games such as poker and blackjack at native-American casinos. Since we draw a significant amount of our customers from the Dallas/Fort Worth area, but are located approximately 190 miles from that area, we believe we will face increased competition from the WinStar Casinos, racetracks and similar types of facilities.

Regulations

General

We are subject to federal, state, and local regulations, related to our current casino operations. The following description of the regulatory environment in which we operate is only a summary and not a complete recitation of all applicable regulatory laws. Moreover, our current and proposed operations could be subjected at any time to additional or more restrictive regulations, or banned entirely.

Louisiana Regulation

We and our Louisiana affiliates that are involved in the ownership and operation of the Hollywood Casino Shreveport, referred to as the “Louisiana Licensees,” are subject to regulation by the State of Louisiana.

In July 1991, the Louisiana legislature adopted legislation permitting certain types of gaming activity on certain rivers and waterways in Louisiana. Since May 1, 1999, the Louisiana Gaming Control Board, or the Louisiana Board, has regulated such gaming activities.

The Louisiana Riverboat Economic Development and Gaming Control Act (the “Louisiana Act”) authorized the issuance of up to fifteen licenses to conduct gaming activities on a riverboat of new construction in accordance with applicable law. However, no more than six licenses may be granted to riverboats operating from any one parish. Of the fifteen available licenses, fourteen are currently in operation. The final license has been awarded to a subsidiary of Pinnacle Entertainment for a facility to be located in Lake Charles, Louisiana and expected to commence operations in the spring of 2005.

Riverboat gaming licenses in Louisiana are issued for an initial five-year term with five year renewals thereafter. In issuing or renewing a license, the Louisiana Board must find that the applicant is a person of good character, honesty and integrity and that the applicant is a person whose prior activities, criminal record, if any, reputation, habits and associations do not pose a threat to the public interest of the State of Louisiana or to the effective regulation and control of gaming, or create or enhance the dangers of unsuitable, unfair or illegal practices, methods and activities in the conduct of gaming or the carrying on of business and financial arrangements in connection therewith. The Louisiana Board will grant or renew a license if it finds that: (i) the applicant can demonstrate the capability, either through training, education, business experience, or a combination of the above, to operate a gaming casino; (ii) the proposed financing of the riverboat and the gaming operation is adequate for the nature of the proposed operation and from a source suitable and acceptable to the Louisiana Board; (iii) the applicant demonstrates a proven ability to operate a vessel of comparable size, capacity and complexity to a riverboat so as to ensure the safety of its passengers, with relevant employees being appropriately United States Coast Guard certified; (iv) the applicant submits a detailed plan of design of the riverboat in its application for a license; (v) the applicant designates the docking facilities to be used by the riverboat; (vi) the applicant shows adequate financial ability to construct and maintain a riverboat; and (vii) the applicant has a good faith plan to recruit, train and upgrade minorities in all employment classifications.

On September 14, 2004, the Louisiana Board conditionally renewed the license of Hollywood Casino Shreveport, subject to (1) the full execution by us and Eldorado of a definitive agreement governing Eldorado’s proposed acquisition of us not later than October 19, 2004; (2) our submission to the Louisiana Board of a Petition to Approve Transfer of Interest, together with such definitive agreement, not later than October 19, 2004; and (3) upon the submission of such Petition to Approve Transfer of Interest, the making by all appropriate persons and entities of the proper applications for findings of suitability and the submission by such persons or entities to such background and suitability investigations as may be required by Louisiana gaming law and may be conducted by the Louisiana State Police, Casino Section and Audit Section. These requirements for the conditional renewal of our Louisiana gaming license were timely satisfied on or before October 19, 2004 and the investigation of the suitability of Eldorado was commenced thereafter.

Other regulations imposed by the Louisiana Act or rules adopted pursuant thereto include, but are not limited to, the following: (i) we must periodically submit financial and operating reports to the Louisiana Board for ourselves and our subsidiaries; (ii) owners holding greater than a 5% interest or who are officers or directors of us or subsidiaries related to the Louisiana Licensees must be found suitable by the Louisiana Board; (iii) any individual who is found to have a material relationship to, or involvement with the Louisiana Licensees may be required to be investigated for suitability; (iv) if a director, officer, or key employee were found to be unsuitable, we and our subsidiaries would have to sever all relationships with that person; (v) the transfer of a license or permit or an interest in a license or permit is prohibited without prior approval; (vi) the Louisiana Licensees must notify the Louisiana Board of any withdrawals of capital, loans, advances, or distributions in excess of 5% of retained earnings upon completion of such transaction; and (vii) each of the Louisiana Licensees must give prior notification to the Louisiana Board if it applies or receives, accepts or modifies the terms of any loan or other financing transaction or a parent of the Louisiana Licensees receives, accepts or modifies the terms of a loan or other financing transaction on behalf of or for the benefit of any of the Louisiana Licensees. In some cases, the Louisiana Board will be required to investigate the reported transaction and to either approve or disapprove the transaction.

The Louisiana Act or rules adopted pursuant thereto contain certain restrictions and conditions relating to the operation of riverboat gaming, including the following: (i) agents of the Louisiana Board are permitted on board at any time during gaming operations; (ii) gaming devices, equipment and supplies may only be purchased or leased from permitted suppliers; (iii) gaming may only take place in the designated gaming area while the riverboat is upon a designated river or waterway; (iv) gaming equipment may not be possessed, maintained or exhibited by any person on a riverboat except in the specifically designated gaming area, or a secure area used for inspection, repair or storage of such equipment; (v) wagers may be received only from a person present on a licensed riverboat; (vi) persons under 21 are not permitted on gaming vessels; (vii) except for slot machine play, wagers may be made only with tokens, chips or electronic cards purchased from the licensee aboard a riverboat; (viii) licensees may only use docking facilities for which they are licensed and may only board and discharge passengers at the riverboat’s licensed berth; (ix) licensees must have adequate protection and indemnity insurance; (x) licensees must have all necessary federal and state licenses, certificates and other regulatory approvals prior to operating a riverboat; and (xi) gaming may only be conducted in accordance with the terms of the license, the Louisiana Act and the rules and regulations adopted by the Louisiana Board.

Fees for conducting gaming activities on a riverboat pursuant to the Louisiana Act include (i) $50,000 per riverboat for the first year of operation and $100,000 per year per riverboat thereafter plus (ii) a percentage of net gaming proceeds (gross revenue). In March 2001, Louisiana passed Act 3 of the 1st Extraordinary Legislative Session, which allows riverboat gaming licensees to operate dockside. In consideration of this change, the tax on our gaming revenues was increased one percent per annum beginning in April 2001 and continuing until April 2003 to a total of 21.5%.

The Louisiana Act also authorizes the City of Shreveport to assess a boarding fee, up to $3.00. In lieu of the boarding fee, we have negotiated a payment in an amount equal to 3.225% of the net gaming proceeds (gross revenues) of the Hollywood Casino Shreveport riverboat to be paid to the City of Shreveport and ..5375% of the net gaming proceeds (gross revenues) of the Hollywood Casino Shreveport riverboat to be paid to the Bossier Parish School Board. We are currently involved in litigation regarding these payments. See Item 3, Legal Proceedings.

Proposals to amend or supplement the Louisiana Act are frequently introduced in the Louisiana State legislature. In addition, the state legislature from time to time considers proposals to repeal the Louisiana Act, which would effectively prohibit riverboat gaming in the State of Louisiana. Although we do not believe that a prohibition of riverboat gaming in Louisiana is likely, no assurance can be given that changes in the Louisiana gaming law will not occur or that such changes will not have a material adverse effect on the business of the Louisiana Licensees.

Taxation

Gaming companies are typically subject to significant taxes and fees in addition to normal federal, state and local income taxes, and such taxes and fees are subject to increase at any time. We pay substantial taxes and fees with respect to our operations. From time to time, federal, state, local and provincial legislators and officials have proposed changes in tax laws, or in the administration of such laws, affecting the gaming industry. It is not possible to determine with certainty the likelihood of changes in tax laws or in the administration of such laws.

IRS Regulations, Currency Transaction Reporting and Suspicious Activity Reporting

The Internal Revenue Service, or IRS, requires operators of casinos located in the United States to file information returns for United States citizens, including names and addresses of winners, for all winnings in excess of stipulated amounts. The IRS also requires operators to withhold taxes on certain winnings.

Regulations adopted by the Financial Crimes Enforcement Network of the Treasury Department and the gaming regulatory authorities require the reporting of currency transactions in excess of $10,000 occurring within a gaming day, including identification of the patron by name and social security number. This reporting obligation commenced in May 1985 and may have resulted in the loss of casino revenues to jurisdictions outside the United States that are exempt from the ambit of such regulations.

Regulations adopted by the Financial Crimes Enforcement Network of the Treasury Department require the filing of suspicious activity reports by casinos on all transactions of at least $5,000 that the casino knows, suspects, or has reason to suspect fall into specific categories that are deemed to be suspicious. This reporting obligation commenced on March 25, 2003 and may have resulted in the loss of casino revenues to jurisdictions outside the United States that are exempt from the ambit of such regulations.

Compliance with Other Laws

Our operations are also subject to a variety of other rules and regulations, including zoning, environmental, construction and land-use laws and regulations governing the serving of alcoholic beverages.

Employees and Labor Relations

As of March 15, 2005 we had 1,623 employees, of which 1,336 are full-time, none of whom are represented under collective bargaining agreements.

Risks Related to Our Business

We are currently under the supervision of the Bankruptcy Court.

On August 27, 2004, we entered into an agreement with Eldorado providing for our acquisition by certain affiliates of Eldorado. On October 18, 2004, we entered into a definitive Investment Agreement with Eldorado providing for the acquisition of the reorganized Hollywood Casino Shreveport by Eldorado’s affiliates. The Agreement contemplates a financial restructuring of Hollywood Casino Shreveport that will significantly reduce our outstanding secured debt obligations and annual cash interest payments. Under the proposed restructuring, holders of our existing secured notes are to receive (1) $140 million of new first mortgage notes, (2) interest in a corporation that will hold a $20 million preferred equity interest and a 25% non-voting equity interest in the reorganized Hollywood Casino Shreveport and (3) cash in an amount to be determined, in exchange for existing secured notes in the principal face amount of $189 million plus accrued interest. Eldorado’s affiliates would acquire a 75% voting equity interest in the reorganized Hollywood Casino Shreveport. We had intended to effectuate the sale and related financial restructuring transaction through a prepackaged Chapter 11 bankruptcy reorganization, but as described below, an involuntary bankruptcy petition interrupted the process. On October 28, 2004, we filed a joint plan and disclosure statement that incorporated the Eldorado transaction. The Agreement, which has been extended by amendment to June 30, 2005, remains subject to subsequent noteholder solicitation and acceptance, approval by the Bankruptcy Court of the Agreement, approval by the Louisiana Gaming Control Board and certain other conditions.

On September 10, 2004, certain of our creditors filed an involuntary petition against us for relief under Chapter 11 of the U.S. Bankruptcy Code with the U. S. Bankruptcy Court, Western District of Louisiana, located in Shreveport, Louisiana. The petition was filed by Black Diamond, a holder of our notes, who had previously participated in meetings with the ad hoc committee and who had later submitted an unsuccessful bid to acquire us, and by two of our construction contractors, who have been in litigation with us over amounts owing on our 1999 construction contract (see Item 3, Legal Proceedings). A hearing on the petition was held on October 29 and 30, 2004. A Consensual Order for Relief was issued on October 30, 2004, and we became a “debtor-in-possession”. We will continue to manage our assets and business subject to the powers and supervision of the Bankruptcy Court. On November 19, 2004, the Bankruptcy Court entered an order appointing David S. Rubin as mediator for the limited purposes of reviewing the pre-petition bid process to determine whether it was performed in a proper and competent fashion and that the scope of solicitations for bids was sufficient and performed in a timely fashion; reviewing the bids submitted and the process for evaluating the bids; determining the value of the bids submitted and recommending to the Court whether additional bid processes should be undertaken. The United States Trustee has appointed a Non-Bondholder Unsecured Creditors Committee and a Bondholder Committee.

On February 14, 2005, the court-appointed mediator, David S. Rubin, filed his report in our Chapter 11 case, which remains confidential. The report concluded, among other things, that:

• The pre-petition bid process conducted by HCS and the Ad Hoc Committee of Noteholders of HCS was performed in a proper and competent fashion.

• The scope of the solicitations for bids was sufficient and adequate.

• Bids submitted during the period of the formal process were appropriately ranked based on both quantitative and qualitative facts existing at the time the bids were made and evaluated.

• The decision to select the bid submitted by Eldorado to pursue closure was appropriate.

• As of August 27, 2004, the Eldorado bid offered the highest economic return to creditors.

• A new formal auction process is not in the best interest of HCS and its creditors.

Other risk factors associated with the Chapter 11 proceedings include, among other things:

• our ability to obtain Court approval with respect to motions in the Chapter 11 proceedings from time to time,

• risks associated with third parties seeking and obtaining Court approval to terminate or shorten the exclusivity period that we have to propose and confirm one or more plans of reorganization, for the appointment of a Chapter 11 trustee or to convert the cases to Chapter 7 cases,

• our ability to offset the negative effects that the filing for reorganization under Chapter 11 has had on our business, including the loss in customer traffic, the impairment of vendor relations and the constraints placed on available capital,

• our ability to maintain contracts, including leases, that are critical to our operations, and

• the potential adverse impact of the Chapter 11 cases and the resulting delays on our liquidity or results of operations.

We are in default on our notes.

We are in default under the indentures governing the Shreveport Notes and have not made interest payments on the Shreveport Notes since February 2003. After consultation with an ad hoc committee of holders of the Shreveport Notes, we have begun a process which we hope will result in the sale or other disposition of the riverboat casino/hotel complex. There can be no assurance, however, that the process will result in the sale or other disposition of the riverboat casino/hotel complex. If it does, the sale proceeds will not likely be adequate to repay the Shreveport Notes in full. We currently anticipate that any such sale or other disposition would be effected through the pending Chapter 11 cases.

We have a history of losses.

Our substantial indebtedness could adversely affect our operations and financial health.

We continue to have a significant amount of indebtedness. Our substantial indebtedness could have important consequences to our operations and financial health. For example, it could:

• increase our vulnerability to general adverse economic and industry conditions;

• limit our flexibility in planning for, or reacting to, changes in our business and the industry in which we operate; and

• place us at a competitive disadvantage compared to our competitors that have a more favorable capital structure.

Any of the above-listed factors could have a material adverse effect on our business, financial condition and results of operations.

We face risks related to the maintenance of our property.

We expect to use a portion of our limited cash for capital expenditures. These capital expenditures could involve risks, including cost overruns, delays and failure to obtain applicable permits and authorizations. In addition, due to our operating losses, substantial maintenance capital expenditures have been deferred.

We face significant competition from other gaming operations.

We are or may become involved in legal proceedings that, if adversely adjudicated or settled, could impact our financial condition.

We are defendants in various lawsuits relating to matters incidental to our business. The nature of our business subjects us to the risk of lawsuits filed by customers, past and present employees, competitors and others in the ordinary course. Litigation, in general, can be expensive and time consuming and, as with all litigation, we cannot provide any assurance as to the outcome. We believe that we have defenses to these lawsuits and are contesting them vigorously; however, we cannot be sure that we will be successful in defending these claims. If we are not successful, these lawsuits could result in settlements or liability for damages that could significantly impact our business, financial condition and results of operations.

We face extensive regulation from gaming and other regulatory authorities.

Licensing Requirements. As owners and operators of a gaming facility, we are subject to extensive state and local regulation. State and local authorities require us to demonstrate suitability to obtain and retain various licenses and require that we have registrations, permits and approvals to conduct gaming operations. Various regulatory authorities may, for any reason set forth in the applicable legislation, rules and regulations, limit, condition, suspend or revoke a license or registration to conduct gaming operations. Like all gaming operators in the jurisdiction in which we operate, we must periodically apply to renew our gaming licenses or registrations and have the suitability of certain of our directors, officers and employees approved. We cannot assure you that we will be able to obtain such renewals or approvals. Regulatory authorities may also levy substantial fines against us or seize our assets or the assets of our subsidiaries or the people involved in violating gaming laws or regulations. Any of these events could have a material adverse effect on our business, financial condition and results of operations.

We have demonstrated suitability to obtain and have obtained all governmental licenses, registrations, permits and approvals necessary for us to operate our existing gaming facility. We cannot assure you that we will be able to retain them or demonstrate suitability to obtain any new licenses, registrations, permits or approvals. The approval process can be time consuming and costly and we cannot be sure that we will be successful.

Gaming authorities in Louisiana generally can require that any beneficial owner or holder of our equity or debt securities file an application for a finding of suitability. If a gaming authority requires a record or beneficial owner or holder of our securities to file a suitability application, the owner or holder must apply for a finding of suitability within 30 days or at an earlier time prescribed by the gaming authority. The gaming authority has the power to investigate an owner’s or holder’s suitability and the owner or holder must pay all costs of the investigation. If the owner or holder is found unsuitable, then the owner may be required by law to dispose of our securities.

Potential changes in regulatory environment. From time to time, legislators and special interest groups have proposed legislation that would expand, restrict or prevent gaming operations or which may otherwise adversely impact our operations in the jurisdiction in which we operate. Any expansion of gaming or restriction on or prohibition of our gaming operations could have a material adverse effect on our operating results.

Taxation. We believe that the prospect of significant revenue is one of the primary reasons that jurisdictions permit legalized gaming. As a result, gaming companies are typically subject to significant taxes and fees in addition to normal federal, state and local income taxes, and such taxes and fees are subject to increase at any time. We pay substantial taxes and fees with respect to our operations. From time to time, federal, state and local legislators and officials have proposed changes in tax laws, or in the administration of such laws, affecting the gaming industry.

In addition, worsening economic conditions could intensify the efforts of state and local governments to raise revenues through increases in gaming taxes. It is not possible to determine with certainty the likelihood of changes in tax laws or in the administration of such laws. Such changes, if adopted, could have a material adverse effect on our business, financial condition and results of operations

Compliance with other laws. We are also subject to a variety of other rules and regulations, including zoning, environmental, construction and land-use laws and regulations governing the serving of alcoholic beverages. If we are not in compliance with these laws, it could have a material adverse effect on our business, financial condition and results of operations.

Compliance with changing regulation of corporate governance and public disclosure may result in additional expenses and compliance risks. New or changing laws and regulations relating to corporate governance and public disclosure, including the Sarbanes-Oxley Act of 2002 and new SEC regulations, are creating uncertainty and higher compliance costs for companies. If our gaming authorities, the SEC or our independent auditors were to conclude that our compliance with the regulations was unsatisfactory, it might lead to a negative public perception of us, subject us to increased regulatory scrutiny and penalties or otherwise adversely affect us.

We depend on our key personnel.

We are highly dependent on the services of our General Manager, Melvyn Thomas, and our senior management team. Our ability to retain key personnel is affected by the competitiveness of our compensation packages and other terms and conditions of employment. Our inability to retain our senior management team could adversely affect our business, financial condition and results of operations. Because the sale process has been unduly prolonged, management believes that it has had and may continue to have an adverse effect on employee morale and turnover.

Inclement weather and other conditions could seriously disrupt our operations.

The operation of our facility is subject to disruptions or reduced patronage as a result of severe weather conditions. Our facility is subject to risks including loss of service due to casualty, mechanical failure, extended or extraordinary maintenance, flood, hurricane or other severe weather conditions. Reduced patronage or the loss of service at our casino for any period of time due to severe weather could adversely affect our business, financial condition and results of operations.

We are subject to environmental laws and potential exposure to environmental liabilities.

We are subject to various federal, state and local environmental laws and regulations that govern our operations, including emissions and discharges into the environment, and the handling and disposal of hazardous and non-hazardous substances and waste. Failure to comply with such laws and regulations could result in costs for corrective action, penalties or the imposition of other liabilities or restrictions. From time to time, we have incurred and are incurring costs and obligations for correcting environmental noncompliance matters. To date, none of these matters have had a material adverse effect on our business, financial condition or results of operations; however, we can make no assurances that such matters will not have such an effect in the future.

Energy and fuel price increases may adversely affect our costs of operations and our revenues.

Our casino property uses significant amounts of electricity, natural gas and other forms of energy. While no shortages of energy have been experienced, recent substantial increases in the cost of electricity in the United States may negatively affect our results of operations. The extent of the impact is subject to the magnitude and duration of the energy and fuel price increases. Dramatic increases in fuel prices may also affect customer visits.

Available Information

For more information about us, visit our web site at www.hollywoodcasinoshreveport.com. Our electronic filings with the Securities and Exchange Commission (including all Forms 10-K, 10-Q, 8-K and any amendments to these reports) are available free of charge at the Securities and Exchange Commission website www.sec.gov.

ITEM 2. PROPERTY

The following describes our principal real estate property:

We lease approximately nine acres of land in Shreveport, Louisiana, which contains a dockside casino with approximately 59,000 square feet along with a hotel and land-based pavilion with approximately 170,000 square feet that includes various entertainment amenities.

ITEM 3. LEGAL PROCEEDINGS

We are subject to various legal and administrative proceedings relating to personal injuries, employment matters, commercial transactions and other matters arising in the normal course of business. We do not believe that the final outcome of these matters will have a material adverse effect on our consolidated financial position or results of operations. In addition, we maintain what we believe is adequate insurance coverage to further mitigate the risks of such proceedings. However, such proceedings can be costly, time consuming and unpredictable and, therefore, we can give no assurance that the final outcome of such proceedings may not materially impact our consolidated financial condition or results of operations. Further, we can give no assurance that the amount or scope of existing insurance coverage will be sufficient to cover losses arising from such matters.

The following proceedings could result in costs, settlements or damages that materially impact our consolidated financial condition or operating results. In each instance, we believe that we have meritorious defenses and/or counter-claims and intend to vigorously defend ourselves.

On April 23, 2000, the construction site for our facility suffered tornado damage that contributed to the delay in our opening. We filed damage claims and received reimbursements from our insurance carriers during 2000 in the amount of approximately $1.5 million to cover substantially all of the cost of repairing the damage incurred. We also filed a lawsuit in the U.S. District Court for the Western District of Louisiana against our insurance carriers seeking to recover lost profits and related claims under our business interruption insurance coverage. On June 16, 2003, a judgment was entered in that court awarding us approximately $3.9 million (including interest but excluding attorney fees). Subsequently, an order staying enforcement of judgment was entered by the court to allow the defendant insurance companies time to file certain post-trial motions. Following the disposition of such motions, we and the defendants entered into a settlement of this lawsuit in December 2003, whereby we received $4.0 million in settlement of the June 16, 2003 judgment and the defendant insurance companies paid $.8 million to our outside legal counsel in full satisfaction of our attorneys’ fees relating to the claims in the lawsuit.

In a set of related matters, we are also seeking to recover damages from the general contractor, the architect and certain other parties involved in the construction of the casino. For this and other reasons, we withheld payment of certain retainage amounts that the general contractor is currently seeking. The general contractor has also submitted additional change orders that we are disputing. We previously recorded a liability in the amount of approximately $3.6 million in connection with the construction project. These matters were the subject of various state and federal court proceedings as well as arbitrations. In May 2003, we entered into an agreement to arbitrate the various claims with the general contractor and the architect. An initial arbitration hearing was conducted during June 2004 on our claims for liquidated damages, on our offset claims for delay damages and costs to repair defective work, and on the general contractor’s payment claims for unpaid contract balance, retainage, unapproved change orders, and increased general conditions and extended overhead. On July 27, 2004, the arbitration panel issued an Interim Award on the parties’ respective claims. The arbitration panel found that the general contractor was entitled to an award of $6.1 million with interest offset by an award to us of $1.2 million with interest. The award provides that interest is to accrue at the contractual rate of 12% from different periods and will be calculated in the final award. The general contractor also claims it is entitled to an additional $.6 million plus interest for unapproved change orders. We recorded an additional $3.1 million liability during the third quarter of 2004 with respect to the Interim Award issued by the arbitration panel. We intend to vigorously contest the general contractor’s claims and to seek to modify the Interim Award. An arbitration hearing on our claims against the architect had tentatively been scheduled during January 2005, but as a result of certain proceedings in the Chapter 11 case, has been postponed until June 2005.

In October 2003, the Bossier Parish Police Jury filed an action against us and the City of Shreveport in the 26th Judicial District Court of Bossier Parish, Louisiana seeking to overturn the agreement between us and the City of Shreveport, which provides for an annual fee in lieu of the $3.00/head admission fee, in order to collect boarding fees for itself. In late February 2004, we filed Exceptions of No Right and No

Cause of Action seeking dismissal of the suit together with the City of Shreveport. A hearing was set on the Exceptions for April 8, 2004, but was postponed and has not yet been rescheduled. We have vigorously contested all the allegations set forth in the suit and will continue to do so. During the session of the Louisiana Legislature which ended on June 21, 2004, at least two bills were proposed seeking to impose prospectively a boarding fee assessment to be levied by the Bossier Parish Police Jury as a percentage of our monthly net gaming proceeds, but such bills were not enacted into law. Additionally, on April 21, 2004, the Bossier Parish Police Jury notified us that it will conduct a sales and use tax audit covering the period August 2000 forward directed principally at the tax that is alleged to be due on complimentary

services provided by us to our customers. We have vigorously contested the claims set forth in the audit request and will continue to do so. We are currently in negotiations with the Bossier Parish Police Jury in an effort to settle the pending lawsuit, the effect of any potential future legislation and the sales and use tax audit.

A number of individual employees have brought similar gender-based employment claims against us under Title VII in Federal Court in Louisiana. We are vigorously contesting all the allegations. The claims are in various stages of discovery.

As previously discussed in Item 1, on September 10, 2004, certain of our creditors filed an involuntary petition against us for relief under Chapter 11 of the U.S. Bankruptcy Code. In addition, on October 30, 2004, HCS I, Inc., HCS II, Inc., HWCC-Louisiana, Inc. and Shreveport Capital Corporation commenced voluntary cases under Chapter 11, which cases are pending.

All of the proceedings in which we are a defendant have been automatically stayed as a result of the involuntary petition for relief under Chapter 11 filed on September 10, 2004. We are or may become a party in various legal proceedings with respect to the conduct of casino and hotel operations. Although a possible range of loss cannot be estimated, in the opinion of management, based upon the advice of counsel, settlement or resolution of these proceedings should not have a material adverse impact on our consolidated financial position or results of our operations.

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

None.

PART II

ITEM 5. MARKET FOR THE REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES

As of March 28, 2005, HCS I, Inc. holds an effective 99% partnership interest and HCS II, Inc. holds an effective 1% partnership interest in the Hollywood Casino Shreveport general partnership.

As of March 28, 2005, 1,000 shares of common stock of Shreveport Capital Corporation, $1.00 par value, are outstanding, all of which are owned by the Hollywood Casino Shreveport general partnership.

ITEM 6. SELECTED CONSOLIDATED FINANCIAL DATA

The following selected consolidated financial and operating data are derived from our consolidated financial statements that have been audited by Deloitte & Touche LLP, our former independent registered public accounting firm, for the years ended December 31, 2000, 2001 and 2002, and for the period from January 1, 2003 through February 28, 2003 and by BDO Seidman, LLP, our current independent registered public accounting firm, for the period from March 1, 2003 through December 31, 2003 and for the year ended December 31, 2004. The selected consolidated financial and operating data should be read in conjunction with our consolidated financial statements and Notes thereto, “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and the other financial information included herein.

As a result of the acquisition of Hollywood Casino Corporation and its subsidiaries, including us, by Penn National, we adopted a new basis of accounting which included, among other items, adjusting the carrying value of certain assets, including property and equipment, and certain liabilities, including long-term debt. The differences in financial presentation from the Predecessor Basis to the Successor Basis includes the reclassification of cash awards from promotional allowances to a reduction of casino revenue and a reclassification of marketing giveaways and coupons from promotional allowances to marketing expense. These reclassifications had the effect for the year 2002 of decreasing casino revenues by $4.5 million, decreasing promotional allowances by $11.5 million and increasing operating expenses by $7.0 million. The effect for the predecessor period from January 1, 2003 to February 28, 2003 was a decrease in casino revenues of $.7 million, a decrease in promotional allowances of $1.6 million and an increase in operating expenses of $.9 million.

	Predecessor Basis												Successor Basis
	Year Ended December 31, 2000			Year Ended December 31, 2001			Year Ended December 31, 2002			Period from Jan. 1, 2003 Through Feb. 28, 2003			Period from March 1, 2003 Through Dec. 31, 2003			Year Ended December 31, 2004
	(In thousands)
Hollywood Casino Shreveport and Subsidiaries
Income statement data:
Net revenues	$	7,754		$	143,868		$	146,356		$	22,981		$	113,924		$	134,150
Total operating expenses	21,458			164,181			144,989			22,705			112,056			136,643
(Loss) income from operations	(13,704		)	(20,313		)	1,367			276			1,868			(2,493		)
Other non-operating income (expenses), net	(4,196		)	(24,698		)	(26,857		)	(4,439		)	(23,177		)	(26,903		)
Net loss	$	(17,900	)	$	(45,011	)	$	(25,490	)	$	(4,163	)	$	(21,309	)	$	(29,396	)

Other data:
Net cash (used in) provided by operating activities	$	(6,967	)	$	(28,200	)	$	(3,990	)	$	(9,688	)	$	13,250		$	3,157
Net cash provided by (used in) investing activities	21,615			4,272			(1,465		)	(224		)	(369		)	(1,488		)
Net cash provided by (used in) financing activities	3,690			13,039			617			561			(345		)	(7		)
Depreciation and amortization	506			15,866			16,157			2,715			8,104			9,660
Interest expense (contractual interest of $24,715 in 2004)	9,991			25,350			26,744			4,456			20,870			17,237
Capital expenditures	116,117			4,993			1,497			224			369			1,488

Balance sheet data:
Cash and cash equivalents	$	37,352		$	26,463		$	21,625		$	12,274		$	24,810		$	26,472
Total assets	242,384			212,034			191,868			179,449			141,711			135,444
Total debt*	181,946			190,105			189,911			189,877			119,345			119,176
Partners’ capital (deficiency)	29,174			(8,699		)	(33,572		)	(37,165		)	(22,386		)	(53,053		)

* For periods subsequent to March 1, 2003, total debt is net of a valuation allowance of $70,348.

	Predecessor Basis												Successor Basis
	Year Ended December 31, 2000			Year Ended December 31, 2001			Year Ended December 31, 2002			Period from Jan. 1, 2003 Through Feb. 28, 2003			Period from March 1, 2003 Through Dec. 31, 2003			Year Ended December 31, 2004
	(In thousands)
HWCC-Louisiana, Inc. and Subsidiaries
Income statement data:
Net revenues	$	7,754		$	143,868		$	146,356		$	22,981		$	113,924		$	134,150
Total operating expenses	21,724			163,533			144,989			22,705			112,056			136,674
(Loss) income from operations	(13,970		)	(19,665		)	1,367			276			1,868			(2,524		)
Other non-operating income (expenses), net and minority interest	(4,062		)	(26,851		)	(28,272		)	(4,663		)	(24,228		)	(28,131		)
Net loss	$	(18,032	)	$	(46,516	)	$	(26,905	)	$	(4,387	)	$	(22,360	)	$	(30,655	)

Other data:
Net cash (used in) provided by operating activities	$	(7,217	)	$	(28,258	)	$	(3,941	)	$	(9,693	)	$	13,259		$	3,122
Net cash provided by (used in) investing activities	21,615			4,272			(1,465		)	(224		)	(369		)	(1,488		)
Net cash provided by (used in) financing activities	3,978			10,639			617			569			(345		)	(7		)
Depreciation and amortization	506			15,866			16,157			2,715			8,104			9,660
Interest expense (contractual interest of $24,715 in 2004)	9,991			25,350			26,744			4,456			20,870			17,237
Capital expenditures	116,117			4,993			1,497			224			369			1,488

Balance sheet data:
Cash and cash equivalents	$	39,956		$	26,609		$	21,820		$	12,472		$	25,017		$	26,644
Total assets	252,017			219,802			199,787			187,363			142,842			136,679
Total debt*	184,445			190,105			189,911			189,877			119,345			119,176
Shareholders’ equity (deficiency)	34,293			(3,548		)	(28,372		)	(31,959		)	21,158			(51,813		)

* For periods subsequent to March 1, 2003, total debt is net of a valuation allowance of $70,348.

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

Our Operations

We are a highly themed hotel and casino destination resort in Shreveport, Louisiana. We enjoy high visibility and convenient access from Interstate 20, the major highway that connects the Shreveport/Bossier City market with its feeder markets of Dallas/Ft. Worth and East Texas. Our casino was built next to an existing riverboat gaming and hotel facility formerly operated by Harrah’s Entertainment and now operated by Sam’s Town. There are currently five casinos and a racino operating in the Shreveport/Bossier City market, which is the largest gaming market in Louisiana. The Shreveport/Bossier City gaming market permits continuous dockside gaming without cruising requirements or simulated cruising schedules, allowing us to operate 24 hours a day with uninterrupted access.

Our marketing strategy is designed to take advantage of our proximity to the large population base of the greater Dallas/Ft. Worth metropolitan area and other major markets by targeting the local day-trip market and by utilizing our hotel rooms to expand our patron mix to include overnight visitors. We have also coordinated our restaurant and entertainment promotions to encourage overnight stays. By utilizing the data in our casino information systems, we are able to identify our premium patrons, encourage their participation in our casino player’s card program and design promotions and special events to this target market.

Key performance indicators related to revenues are:

• Gaming revenue indicators – slot handle, table game drop (volume indicators) and “win” or “hold” percentages, which are not fully controllable by us. Our normal slot win percentage is in the range of 6% to 7% of slot handle and our normal table games win percentage is in the range of 15% to 21% of table game drop; and

• Hotel revenue indicators – hotel occupancy (volume indicator); average daily rate (“ADR,” price indicator); revenue per available room (“REVPAR”), a summary measure of hotel results, combining ADR and occupancy rate.

Our property generates significant operating cash flow since most of our revenue is cash-based through customers wagering with cash on slot machines and table games. Non-gaming services are generally paid for with cash or credit cards. Our business is capital intensive and we rely on our operations to generate sufficient cash to repay debt, fund maintenance capital expenditures and fund new capital projects.

The Shreveport/Bossier City gaming market is characterized by intense competition and the market has not grown since we opened. We compete directly with four casinos, all of which have operated in the Shreveport/Bossier City market for several years and have established customer bases. In May 2003, an existing race track, which had been acquired by one of the existing casinos in the market, opened a temporary gaming facility with approximately 900 slot machines. That race track completed construction and opened a new permanent facility accommodating 1,400 slot machines in April 2004. Casino gaming is currently prohibited in several jurisdictions from which the Shreveport/Bossier City market draws customers, primarily Texas. Although casino gaming is currently not permitted in Texas, the Texas legislature has from time to time considered proposals to authorize casino gaming. In July 2003, the Chickasaw Nation announced the opening of WinStar Casinos, a Las Vegas-style, 110,000-square-foot gaming facility located in Oklahoma approximately 60 miles north of the Dallas/Fort Worth area. Although gaming in Oklahoma is limited by law to Class II-type games, which games have previously been technologically incapable of offering a similar entertainment experience to our Class III-type games, recent innovations have allowed the Class II-type product to compete much more effectively than in the past. Since we draw a significant amount of our customers from the Dallas/Fort Worth area, but are located approximately 190 miles from that area, we believe we will face increased competition from the WinStar Casinos and similar types of facilities.

The most important factors and trends contributing to our operating performance have been:

• The negative aspects of the Chapter 11 proceedings on our operations.

• Intense competition in the Shreveport/Bossier City market.

• The general economic conditions in our principal market areas.

• The lack of significant revenue growth in the Shreveport/Bossier City gaming market since 2001.

• The introduction of slot machines at Louisiana Downs, the opening of WinStar Casinos in Southern Oklahoma in 2003 and the recent expansion of the slot machine facility at Louisiana Downs in 2004.

Overall Outlook

We have experienced net losses since our opening on December 20, 2000 and operating losses in five out of the last six quarters. There can be no assurance that we will not experience operating losses in the future. Because of our current capital structure and current levels of operations and revenue, we anticipate that we will continue to experience net losses. We are also in default under the terms of the indentures governing our Shreveport Notes and have a deficiency in our partners’ capital account. Accordingly, our existing cash and cash flow from operations have not been sufficient to fund our capital needs and debt service under our current capital structure and we do not believe that it will be sufficient for the foreseeable future. Penn National has no obligation or current plans to provide any additional financial support to us. All of these matters continue to raise substantial doubt about our ability to continue as a going concern.

We are in default under the indentures governing the Shreveport Notes and have not made interest payments on the Shreveport Notes since February 2003. After consultation with an ad hoc committee of holders of the Shreveport Notes, we began a process which we hoped would result in the sale or other disposition of the riverboat casino/hotel complex. There can be no assurance, however, that the process will result in the sale or other disposition of the riverboat casino/hotel complex. If it does, the sale proceeds will not likely be adequate to repay the Shreveport Notes in full. We currently anticipate that any such sale or other disposition would be effected through the pending Chapter 11 cases.

On August 27, 2004, acting by and through our managing general partner, HCS I, Inc., we entered into an agreement with Eldorado providing for our acquisition by certain affiliates of Eldorado. On October 18, 2004, acting by and through HCS I, Inc., we entered into a definitive Investment Agreement with Eldorado and certain of its affiliates providing for the acquisition of the reorganized Hollywood Casino Shreveport by Eldorado’s affiliates. The Agreement contemplates a financial restructuring of Hollywood Casino Shreveport that will significantly reduce our outstanding secured debt obligations and annual cash interest payments. Under the proposed restructuring, holders of our existing secured notes are to receive (1) $140 million of new first mortgage notes, (2) interest in a corporation that will hold a $20 million preferred equity interest and a 25% non-voting equity interest in the reorganized Hollywood Casino Shreveport and (3) cash in an amount to be determined, in exchange for existing secured notes in the principal face amount of $189 million plus accrued interest. Eldorado’s affiliates would acquire a 75% voting equity interest in the reorganized Hollywood Casino Shreveport. We had intended to effectuate the sale and related financial restructuring transaction through a prepackaged Chapter 11 bankruptcy reorganization, but as described below, an involuntary petition interrupted the process. On October 28, 2004, we filed a joint plan and disclosure statement that incorporated the Eldorado transaction. The Agreement, which has been extended by amendment to June 30, 2005, remains subject to subsequent noteholder solicitation and acceptance, approval by the Bankruptcy Court of the Agreement, approval by the Louisiana Gaming Control Board and certain other conditions.