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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 NOVEMBER 30, 1998
 
                                       OR
 
  / /    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 1-12802
 
                            ------------------------
 
                             HARVEYS CASINO RESORTS
 
             (Exact name of registrant as specified in its charter)
 
                   NEVADA                              88-0066882
      (State or other jurisdiction of        (I.R.S. Employer Identification
       incorporation or organization)                     No.)
 
       HIGHWAY 50 & STATELINE AVENUE
      P.O. BOX 128 LAKE TAHOE, NEVADA                     89449
  (Address of principal executive offices)             (Zip Code)
 
       Registrant's telephone number, including area code (775) 588-2411
 
                            ------------------------
 
        Securities registered pursuant to Section 12(b) of the Act: None
 
          Securities registered pursuant to Section 12(g) of the Act:
 
                Class A Common Stock; par value $0.01 per share
 
                            ------------------------
 
    Indicate by check mark whether the 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 (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 /X/  No / /
 
    Indicate by check mark if the 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.  /X/
 
    As of February 25, 1999 all common equity of the registrant was held by
affiliates of the registrant.
 
    The number of shares outstanding of the registrant's Class A Common Stock,
$0.01 par value was 40,000 and the number of shares outstanding of the
registrant's Class B Common Stock, $0.01 par value was 4,000,000, each as of
February 25, 1999.
 
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                                     PART I
 
ITEM 1. BUSINESS
 
    Harveys Casino Resorts ( the "Company" or the "Registrant") is an
established owner, operator and developer of high-quality hotel/casinos in
Nevada , Colorado and Iowa. The Company, through its wholly-owned subsidiary
Harveys Tahoe Management Company, Inc. ("HTMC") owns and operates Harveys Resort
Hotel/Casino ("Harveys Resort"), the Lake Tahoe area's largest hotel/casino.
Harveys Resort, in operation since 1944, is situated on the south shore of
scenic Lake Tahoe on the Nevada/California state line. The Company, through its
wholly-owned subsidiary Harveys C. C. Management Company, Inc. ("HCCMC") owns
and operates Harveys Wagon Wheel Hotel/Casino ("Harveys Wagon Wheel") which
opened in December 1994 in Central City, Colorado, as the first major
hotel/casino serving the greater Denver area. The Company, through its
wholly-owned subsidiary Harveys Iowa Mangement Company, Inc. ("HIMC") owns and
operates a riverboat casino and hotel/convention center in Council Bluffs, Iowa
across the Missouri River from Omaha, Nebraska. The Harveys Casino Hotel
riverboat casino opened on January 1, 1996 and is one of only three operators in
the Omaha/Council Bluffs gaming market, which includes one other riverboat
casino and a slot machine operator at the local dogtrack. The adjacent land-
based hotel and convention center facilities opened in May 1996.
 
    Harveys Resort was originally founded on the south shore of Lake Tahoe by
Harvey and Llewellyn Gross in 1944 as a one-room saloon, cafe and casino. The
Company has developed the property into a major hotel/casino consisting of 740
hotel rooms, an 82,000-square foot casino, 23,000 square feet of convention
space, 2,946 parking spaces, the 280-seat Emerald Theater and Cabaret, a wedding
chapel, restaurants and retail shops, a pool, a health club and a video arcade.
Harveys Resort offers its customers high-quality hotel rooms, excellent dining
facilities, an exciting location, entertaining events and a lively gaming
atmosphere.
 
    Through Harveys Wagon Wheel, the Company established the first major
hotel/casino serving the greater Denver area, Colorado's major population center
of more than 2 million people. Harveys Wagon Wheel includes 1,043 slot machines,
14 table games and a six-table poker area, a 118-room hotel and 730 on-site
parking spaces. Other amenities include a Tony Roma's Famous for Ribs restaurant
and a Tony Roma's Express, an entertainment lounge and a video game arcade.
 
    The Harveys Casino Hotel riverboat casino accommodates 2,352 passengers and
is berthed on the Missouri River directly across from Omaha, in Council Bluffs,
Iowa. The riverboat casino has 28,250 square feet of casino space on three decks
and contains 1,088 slot machines, 51 table games and a seven-table poker area.
The land-based amenities, which opened in May 1996, include surface parking for
approximately 2,300 cars and a 14-story, 251-room hotel with a 21,000-square
foot convention center.
 
RECENT DEVELOPMENT
 
    On February 2, 1999, Harveys Acquisition Corporation, a Nevada corporation
("HAC") which was formed at the direction of Colony Investors III, L.P., a
Delaware limited partnership ("Colony III") and an affiliate of Colony Capital,
Inc. ("Colony Capital") of Los Angeles, California, merged with and into the
Company (the "Merger").
 
    The Merger occurred pursuant to an Agreement and Plan of Merger dated as of
February 1, 1998 (the "Merger Agreement") between the Company and HAC. In the
Merger, each share of common stock of the Company outstanding at the time the
Merger became effective (the "Effective Time") (other than shares of common
stock held in the Company's treasury) was converted into the right to receive
$28.7343 in cash as provided in the Merger Agreement. At the Effective Time,
shareholders of the Company had a right to receive an aggregate amount equal to
approximately $289.3 million and certain members of management received an
aggregate of $10.0 million in consideration of the cancellation of stock
options. The capital stock of HAC prior to the Merger became the capital stock
of the Company after the Merger. The
 
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Company was the surviving corporation in the Merger and is continuing its
business operations as conducted prior to the Merger.
 
    Prior to the Merger, the Company was a publicly held company. Following the
Merger, Colony III owns 97% of the outstanding non-voting common stock, which
together with its voting common stock represents approximately 96% of the common
equity interest in the Company. Colony HCR Voteco, LLC, a Delaware limited
liability company ("Voteco") whose sole members are Thomas J. Barrack, Jr., the
Chairman and Chief Executive Officer of the indirect general partner of Colony
III, and Kelvin L. Davis, the President and Chief Operating Officer of the
indirect general partner of Colony III, owns 97% of the voting power in the
Company through the ownership of 97% of the outstanding voting common stock. As
a result, Voteco is able to govern all matters of the Company that are subject
to the vote of stockholders, including the appointment of directors and the
amendment of the Company's Articles of Incorporation and Bylaws. In addition,
Colony III owns 99.99% of the outstanding shares of the Company's preferred
stock and Voteco owns 0.01% of the outstanding shares of preferred stock.
 
    Prior to the Merger, HAC voluntarily registered its voting common stock
(which became the Company's voting common stock pursuant to the Merger) with the
Securities and Exchange Commission (the "SEC") under Section 12(g) of the
Securities Exchange Act of 1934, as amended (the "Exchange Act"). The Company is
required to file annual, quarterly and current reports, and other information
with the SEC. You may read and copy any reports, statements or other information
filed by the Company at the SEC's public reference facilities at Room 1024,
Judiciary Plaza, 450 Fifth Street, N.W., Washington, D.C. 20549, and at the
regional offices of the SEC located at 7 World Trade Center, Suite 1300, New
York, New York 10048 and Citicorp Center, Suite 1400, 500 West Madison Street,
Chicago, Illinois 60661. Please call the SEC at 1-800-SEC-0330 for further
information on the public reference rooms. The Company's filings are also
available to the public from commercial document retrieval services and at the
world wide web site maintained by the SEC at http://www.sec.gov.
 
BUSINESS STRATEGY
 
    The Company's business strategy is to develop premium hotel/casino
facilities in markets in which the Company believes it can establish and
maintain a prominent position or niche. Each of the Company's properties offers
casino gaming and a full range of amenities in a friendly atmosphere that caters
to middle- and upper middle-income customers. This strategy emphasizes the
following elements:
 
    HIGH-QUALITY FACILITIES AND SUPERIOR CUSTOMER SERVICE
 
    As part of its commitment to providing a quality entertainment experience
for its patrons, the Company is dedicated to ensuring a high level of customer
satisfaction and loyalty by providing distinctive and modern accommodations and
attentive customer service in a friendly atmosphere. Management recognizes that
consistent quality and a comfortable atmosphere can differentiate its facilities
from the competition in all of its markets. The Company strives to meet customer
demand by furnishing each of its properties with a variety of restaurants and
non-gaming amenities. To foster a high level of customer satisfaction through
attentive customer service, management plays an active role in the training of
all of its employees at all levels. The Company's goal of becoming a truly
customer-focused organization has been achieved at all the Company's properties
through training programs, role playing and simulations. Management believes
that these programs have evolved to provide the Company's customers with a truly
unique experience. The Company has implemented attractive employee benefit
programs at all of its facilities to recruit and retain friendly, professional
employees.
 
    STRATEGIC LOCATIONS
 
    Management believes that location is the key to attracting customers. South
Lake Tahoe, which draws approximately 2 million visitors per year, is a unique
gaming location because of its natural surroundings
 
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and variety of outdoor attractions and activities. Harveys Resort is
strategically placed on a site adjacent to the California border in proximity to
more than 6,500 hotel and motel rooms in non-gaming facilities. Harveys Wagon
Wheel is located on a highly visible site in Central City, Colorado, a
picturesque mountain town approximately 35 miles west of Denver. Harveys Casino
Hotel is within a ten-minute drive of the Omaha/Council Bluffs metropolitan
regional airport and is located directly off of Interstates 29, 80 and 480.
 
    TARGETED CUSTOMER BASE
 
    The Company targets middle- to upper middle-income customers who tend to
have more disposable income for gaming and entertainment. Harveys Resort seeks
to attract these customers by offering well-appointed rooms and a "party"
atmosphere for those seeking nightlife and entertainment. The Company also has
established extensive customer databases and uses sophisticated player tracking
systems to award cash rebates or promotional allowances, such as complimentary
rooms, food, beverage and entertainment, when gaming play warrants. Management
believes that by continuing to promote the Company's image, it will increase its
share of higher-income customers attracted to the south Lake Tahoe market.
Harveys Wagon Wheel targets middle- to upper middle-income customers from the
greater Denver area who seek a quality gaming experience, convenient parking and
overnight accommodations. The Company's management believes it has successfully
built a loyal customer base at Harveys Wagon Wheel by being the first full-
service casino with overnight accommodations and full amenities in the Central
City/Black Hawk market. Harveys Wagon Wheel opened a 530-space parking garage in
June 1997, providing a new level of parking convenience for customers. Harveys
Casino Hotel targets frequent, middle income players from Omaha, Council Bluffs
and the surrounding areas. The Company believes that the hotel and convention
facilities, opened in May 1996, attract new players by capturing overnight
guests as well as meetings and small conventions business.
 
    EFFECTIVE MARKETING
 
    The Company aggressively promotes all of its properties through television,
radio, billboard and print advertising. In February 1997, the Company announced
that Bill Cosby agreed to become a spokesperson for the Company. Under a
contractual relationship with the Company, Mr. Cosby is actively involved in
promoting Harveys Casino Resorts through entertainment appearances at the
Company's properties and through advertising messages on television, radio and
billboards. The Company believes that this association has been and will
continue to be helpful in enhancing the national visibility of Harveys Casino
Resorts.
 
    Since 1995, the Company has increased its share of gaming revenues in south
Lake Tahoe from approximately 25.1% to approximately 28.2% in 1998, due largely
to its targeted marketing strategy. The Company attracts customers to Harveys
Wagon Wheel by aggressively promoting the facility's hotel rooms, on-site
parking, quality dining facilities and varied entertainment activities in a
market in which such amenities are a distinct competitive advantage. Harveys
Casino Hotel is marketed as "Harveys, You Can Have It All!" in the Omaha/Council
Bluffs market through the extensive use of television and newspaper
advertisement, billboards, regular promotions and sweepstakes as well as
point-of-sale materials located in local hotels, restaurants and other visitor
attractions.
 
    EMPHASIS ON SLOT PLAY
 
    Responding to the increased popularity of slot machines over the past
several years, the Company has shifted its gaming mix toward slot machines. The
mix of slot machines is closely matched to the demand of the customer base at
each property. Harveys Resort, for instance, now includes a greater percentage
of $1 and higher denominated machines to appeal to the higher-income gaming
clientele of Harveys Resort, including $5, $25 and $100 slot machines offered
within a premium player section. This increase in higher denominated machines
increased win per unit at Harveys Resort by approximately 31.8% between fiscal
years 1988 and 1998. Harveys Wagon Wheel offers 1,043 slot machines, the second
largest selection of slot
 
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machines currently offered by any gaming facility in the area, and Harveys
Casino Hotel offers 1,088 slot machines. Slot machines, which are less labor
intensive and require less square footage than table games, also generate higher
profit margins compared to table games. The Company monitors payout percentages
closely and ensures that its slot machine payouts are competitive.
 
THE PROPERTIES
 
    HARVEYS RESORT
 
    Harveys Resort, the largest hotel/casino in the Lake Tahoe area, is located
on approximately 19.8 acres on U.S. Highway 50, the main route through south
Lake Tahoe. The hotel/casino, situated on the south shore of Lake Tahoe with a
panoramic view of the lake and surrounding mountains, is among Lake Tahoe's most
modern facilities. The main structure is a 17-story glass-faced tower completed
in 1991, connected to a 12-story tower which was completely rebuilt in 1982.
Harveys Resort features 740 rooms, 36 of which are luxury suites, and an
82,000-square foot casino containing approximately 2,060 slot machines, 95 table
games, a 13-table poker area, a race and sports book and a keno lounge. Other
amenities include 23,000 square feet of convention space, 2,946 parking spaces,
the 280-seat Emerald Theater and Cabaret, a wedding chapel, restaurants, retail
shops, a pool, a health club and a video arcade. Harveys Resort's eight
restaurants offer a wide variety of high quality food and consist of a coffee
shop, a Mexican restaurant, a seafood and pasta restaurant, a premier
steakhouse, a buffet, a snack bar, Llewellyn's, Harveys Resort's upscale
award-winning restaurant featuring top quality food and a spectacular view of
Lake Tahoe, and a Hard Rock Cafe, located on the casino floor, which is owned
and operated by Hard Rock Cafe International (USA), Inc. In recognition of the
outstanding quality of the facility and its excellent service, Harveys Resort
has received the AAA Four Diamond Award every year for the last 17 years. The
Company has expended approximately $15.9 million on capital improvements at
Harveys Resort in fiscal years 1997 and 1998, and plans to expend approximately
$4.7 million more in fiscal 1999 to increase the Company's market share and to
position the Company to benefit from the ongoing South Lake Tahoe Redevelopment
Project. In 1984, the City of South Lake Tahoe, California, adopted a
redevelopment plan and created the South Tahoe Redevelopment Agency. The
redevelopment plan has resulted in the removal of numerous older motel and
retail properties along Highway 50 through the City of South Lake Tahoe. The
properties were demolished, creating a scenic open space corridor containing
public facilities and wetlands. The redevelopment plan resulted in a 400-room
Embassy Suites hotel on the California-Nevada state line, completed in 1991. It
is anticipated that the next phase of redevelopment will involve the
condemnation of certain older motels and retail establishments located within
one mile of Harveys Resort and the replacement thereof with a regional transit
center including an aerial tram to the Heavenly ski area, parking facilities, a
theater complex, retail space, upscale hotels and vacation interval units. It is
anticipated that the third phase, also to be located immediately adjacent to the
California-Nevada state line, will result in a regional convention facility,
hotel, retail space, regional parking facilities and various public amenities.
 
    The Lake Tahoe area is a unique gaming location because of its natural
surroundings and variety of year-round outdoor recreational activities,
including skiing, boating, fishing and golfing. The south Lake Tahoe area draws
tourists primarily from nearby Reno and Northern California. There are four
major casinos in this market to serve the approximately 2 million annual
visitors. The Tahoe Regional Planning Compact, a compact between the states of
Nevada and California approved by the U.S. Congress, prohibits the addition of
new gaming facilities and limits the expansion of existing casinos in the Lake
Tahoe basin.
 
    HARVEYS WAGON WHEEL
 
    Through Harveys Wagon Wheel, which opened in December 1994, the Company
established the first major hotel/casino serving the greater Denver area.
Harveys Wagon Wheel is located on a highly visible site in Central City,
Colorado, a picturesque mountain town approximately 35 miles west of Denver.
Harveys Wagon Wheel includes approximately 40,000 square feet of casino space,
1,043 slot machines,
 
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14 table games, a six-table poker area, a 118-room hotel and 730 on-site parking
spaces, including 530 spaces in the market's first self-parking garage which was
completed in June of 1997. Other amenities include a Tony Roma's Famous for Ribs
restaurant and a Tony Roma's Express, an entertainment lounge and a video game
arcade. Harveys Wagon Wheel was the first casino in Central City/Black Hawk area
to offer all of these amenities.
 
    HCCMC also owns approximately 40 acres of undeveloped land adjacent to the
Harveys Wagon Wheel facility.
 
    HARVEYS CASINO HOTEL
 
    On January 1, 1996, the Company opened, as the first phase of Harveys Casino
Hotel, a 2,352-passenger riverboat casino berthed on the Missouri River directly
across from Omaha in Council Bluffs, Iowa. The riverboat has 28,250 square feet
of casino space on three decks and contains 1,088 slot machines, 51 table games
and a seven-table poker area. On May 24, 1996, the Company opened the second
phase of Harveys Casino Hotel, including surface parking for approximately 2,300
cars, and a 14-story, 251-room hotel with a 21,000-square foot convention
center. In fiscal year 1999 the Company recently commenced construction of a
1,630-space parking structure that will feature climate-controlled access to the
adjacent casino.
 
    Harveys Casino Hotel is located on a 61-acre parcel of land which is located
within a ten-minute drive of the Omaha/Council Bluffs regional airport and is
located directly off of Interstates 29, 80 and 480. Approximately 20 acres of
the site are occupied by a municipal nine-hole golf course, which is leased to
the City of Council Bluffs for a nominal fee. This arrangement allows the
Company the option of using this land for future expansion needs. In addition,
the Company has acquired an adjacent 42.5-acre site to accommodate future
expansion or support facilities.
 
    Harveys Casino Hotel's target market is the approximately 760,000 residents
in the greater Omaha/ Council Bluffs metropolitan area and the nearly 3 million
residents within a three-hour drive of the facility. In addition, the casino,
hotel and convention facilities are marketed to the estimated 2.7 million
visitors and tourists who visit the Omaha metropolitan area annually. Harveys
Casino Hotel markets itself as "Harveys, You Can Have It All!" in the
Omaha/Council Bluffs market through the extensive use of television and
newspaper advertisement, billboards, regular promotions and sweepstakes as well
as point-of-sale materials located in local motels, hotels, restaurants and
other visitor attractions. Harveys Casino Hotel targets frequent, middle-income
players from Omaha, Council Bluffs and the surrounding area. The Company
believes that the hotel and convention facilities attract new players by
capturing overnight guests and individuals attending meetings and small
conventions. Management believes its aggressive advertising and targeted
marketing has contributed to making Harveys Casino Hotel the number one
performing riverboat casino (based on gaming revenues) in Iowa for 30
consecutive months, through November 30, 1998.
 
    LAS VEGAS AND OTHER DEVELOPMENT OPPORTUNITIES
 
    In December 1997, the Company entered into an option agreement, subsequently
extended to April 15, 1999, to acquire approximately 33.3 acres of land located
at the intersection of Harmon Avenue and Koval Lane in Las Vegas, which is one
block from the Las Vegas Strip. The option price is $2.36 million per acre. The
Company is currently considering the feasibility of developing a hotel/casino
project on the site. There can be no assurances that the Company will exercise
its option or, if it exercises the option, will successfully develop a project
on the site. Any such development would require substantial financing, which the
Company may not be able to obtain or service. Any development would also require
significant management resources, which could limit the availability of the
Company's existing management for the operation of the Company's current
hotel/casino operations.
 
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    The Company from time to time considers strategic acquisition opportunities
which come to its attention, both in jurisdictions in which it currently
conducts business and in other jurisdictions. There can be no assurance that any
acquisition or other development agreements will be reached.
 
COMPETITION
 
    The gaming industry is highly competitive. The Company competes for
customers primarily on the basis of location, range and pricing of amenities and
overall atmosphere. Several of the competitors of the Company have substantially
greater name recognition and financial and marketing resources.
 
    LAKE TAHOE
 
    Harveys Resort competes with a number of other hotel/casinos at Lake Tahoe
and, to a lesser extent, with hotel/casino operations located in Reno, Las Vegas
and Laughlin, Nevada and casinos on Native American lands in California. In
south Lake Tahoe, Harveys Resort competes primarily with three other major
casino operations: Harrah's Lake Tahoe, Caesars Tahoe and the Horizon Casino
Resort.
 
    In 1987, the Tahoe Regional Planning Agency, an entity established under a
bi-state compact reached between the states of California and Nevada, placed
restrictions on additional commercial, residential and tourist accommodation
construction at Lake Tahoe in an effort to curb development and to preserve the
local environment. Under the Tahoe Regional Planning Compact and community plan
constraints, future tourist accommodation units added to the market will be
required to mitigate environmental impacts. Such measures may include replacing
an imposed multiple of older tourist accommodation units. The limited number of
rooms available at Lake Tahoe, however, allows Lake Tahoe hotel/casino operators
to achieve much higher nightly room rates than those in most other gaming
jurisdictions. The occupancy rate for the 2,250 upscale rooms in the four major
south Lake Tahoe casinos has historically been between 75% and 80%, while the
occupancy rate in the motels is typically between 40% and 50%. It is estimated
that the average day room rate for the Lake Tahoe hotel/casinos is approximately
$100, compared to average estimated rates of $25-$65 for Las Vegas, Reno and
Laughlin. The Tahoe Regional Planning Agency has imposed significant
restrictions on construction and the Tahoe Regional Planning Compact limits the
expansion of gaming facilities in the Lake Tahoe Basin. These restrictions
prohibit existing casinos from expanding cubic volume of structures housing
gaming and limit expansion of the gaming areas within such structures. The
Company believes that because of such restrictions, it is unlikely that any new
hotel/casinos will commence operations at Lake Tahoe or that any of the smaller
existing casinos will expand to a size that could make them competitive with the
four major casinos; however, the Company expects that the four major
hotel/casinos will continue to compete intensely.
 
    In addition, as a result of the approval of state proposition 5, the
California Indian Self-Reliance Initiative, in California in November 1998,
additional competition could result from an increase in the number of casinos on
Native American lands in California, including on lands that are between Harveys
Resort and major population centers, such as the San Francisco Bay area, and
proximate to Highway 50, the primary road route to south Lake Tahoe.
 
    CENTRAL CITY/BLACK HAWK
 
    Harveys Wagon Wheel competes primarily with the five casinos with the
largest number of gaming devices in Central City and Black Hawk as well as the
25 smaller gaming establishments in operation as of February 1, 1999, in Central
City and Black Hawk. The six largest casinos, including Harveys Wagon Wheel, as
of February 1, 1999 had more than 58% of all gaming devices in the Central
City/Black Hawk area. The adjacent cities of Central City and Black Hawk form
Colorado's primary gaming market. In this market the majority of the existing
gaming establishments lack on-site parking, overnight accommodations and
non-gaming amenities. The Lodge Casino, offering 700 on-site parking spaces
(including 300 spaces shared with the adjacent Gilpin Hotel Casino) and
overnight accommodations in 50 hotel rooms, opened
 
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in Black Hawk in June 1998. The Isle of Capri opened in Black Hawk on December
30, 1998, with 1,100 parking spaces. A number of other projects are either under
construction, including a casino proposed to have 520 covered self-park spaces
being developed by Riviera Holdings Corporation, or in the planning stages. Some
or all of these projects may include on-site parking spaces and overnight
accommodations or other amenities that would increase competition with Harveys
Wagon Wheel. Substantially all recent casino development in the Central
City/Black Hawk area has occurred in Black Hawk, which visitors from the Denver
area must drive through in order to reach Central City. In addition, from time
to time, the towns of Central City and Black Hawk undertake roadway and other
infrastructure improvements. Because the towns are generally accessible only by
a single road, such infrastructure projects may deter gaming customers from
visiting the Central City/Black Hawk area or traveling through Black Hawk to
Central City. There can be no assurances that the development or concentration
of casinos or infrastructure improvements in Black Hawk will not adversely
affect the number of gaming customers visiting Harveys Wagon Wheel in Central
City. In addition, the municipal governments of Central City and Black Hawk
compete to attract gaming patrons and gaming development to their respective
towns, including by improving road access. Black Hawk's financial resources are
currently substantially greater that Central City's and there can be no
assurance that Black Hawk will not make improvements or provide other
inducements that would result in reduction of the number of gaming patrons
visiting Harveys Wagon Wheel in Central City. Currently, limited stakes gaming
in Colorado is legal in Central City, Black Hawk, Cripple Creek and two Native
American reservations in southwest Colorado. However, there can be no assurances
that limited stakes gaming will not be approved in other Colorado communities in
the future, or in the state generally. For instance, state legislation
permitting video lottery terminals has been proposed from time to time; although
such legislation has failed, there can be no assurance that video lottery
terminals will not be legalized in Colorado. The legalization of gaming in areas
closer than Central City/ Black Hawk to Denver, the major population center of
Colorado, would likely have a material adverse effect on the Company's operation
in Central City.
 
    OMAHA/COUNCIL BLUFFS
 
    Harveys Casino Hotel, with its riverboat casino and the adjacent 251-room
hotel and 21,000-square foot convention center, provided the first of only three
major hotel products in the city. The Company's target markets are the
residential population base (approximately 760,000) of the greater Omaha/Council
Bluffs area, and the nearly 3 million residents within a three-hour drive of the
facility. Additionally, the Company's hotel and convention facilities are
marketed to an estimated 2.7 million visitors and tourists who visit the Omaha
metropolitan area annually, which now offers approximately 7,000 hotel and motel
units and is home to major tourist attractions such as the Henry Doorley Zoo,
museums, a pari-mutuel track and historic monuments. The Company's casino
competes with Ameristar Casino Inc.'s riverboat casino in Council Bluffs, which
opened on January 19, 1996, as well as with the slot machines installed at a
dogtrack in the Council Bluffs area and other amusement attractions.
 
    In Iowa, gaming is subject to approval by county referendum. While gaming is
approved in Pottawattamie County, where Harveys Casino Hotel is located, another
referendum may be held at any time upon satisfactory petition, and another
referendum is required to be held in 2002. There can be no assurance that gaming
would be approved again in any referendum in Pottawattamie County. In addition,
should casino-style gaming be permitted in Nebraska, or should gaming facilities
be opened in Omaha, Harveys Casino Hotel could be materially adversely affected.
 
EMPLOYEES
 
    As of February 16, 1999 the Company had approximately 4,090 employees.
Management believes that employee relations are good. The Company has entered
into a collective bargaining agreement that covers approximately ten employees.
This agreement relates to stage-hand employees who provide support to
 
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entertainment facilities at Harveys Resort. None of the Company's other
employees are represented by labor unions.
 
REGULATORY MATTERS
 
    NEVADA GAMING LAWS AND RELATIONS
 
    The ownership and operation of casino gaming facilities in Nevada are
subject to the Nevada Gaming Control Act and the regulations promulgated
thereunder (collectively, "Nevada Act") and various local regulations. The
Company's gaming operations are subject to the licensing and regulatory control
of the Nevada State Gaming Control Board (the "Nevada Board"), the Nevada Gaming
Commission (the "Nevada Commission" and together with the Nevada Board, the
"Nevada Gaming Authorities").
 
    The laws, regulations and supervisory procedures of the Nevada Gaming
Authorities are based upon declarations of public policy which are concerned
with, among other things: (i) the prevention of unsavory or unsuitable persons
from having a direct or indirect involvement with gaming at any time or in any
capacity; (ii) the establishment and maintenance of responsible accounting
practices and procedures; (iii) the maintenance of effective controls over the
financial practices of licensees, including the establishment of minimum
procedures for internal fiscal affairs and the safeguarding of assets and
revenues, providing reliable record keeping and requiring the filing of periodic
reports with the Nevada Gaming Authorities; (iv) the prevention of cheating and
fraudulent practices; and (v) to provide a source of state and local revenues
through taxation and licensing fees. Change in such laws, regulations and
procedures could have an adverse effect on the Company's gaming operations.
 
    Any company that operates a Nevada gaming casino is required to be licensed
by the Nevada Gaming Authorities. The gaming license requires the periodic
payment of fees and taxes and is not transferable. The Company is registered by
the Nevada Commission as a publicly traded corporation ("Registered
Corporation") and as such, it is required periodically to submit detailed
financial and operating reports to the Nevada Commission and furnish any other
information which the Nevada Commission may require. The Company has obtained
from the Nevada Gaming Authorities the various registrations, approvals, permits
and licenses required in order to engage in gaming activities in Nevada.
 
    The Nevada Gaming Authorities may investigate any individual who has a
material relationship to, or material involvement with, the Company in order to
determine whether such individual is suitable or should be licensed as a
business associate of a gaming licensee. Officers, directors and certain key
employees of the Company must file applications with the Nevada Gaming
Authorities and may be required to be licensed or found suitable by the Nevada
Gaming Authorities. The Nevada Gaming Authorities may deny an application for
licensing for any cause which they deem reasonable. A finding of suitability is
comparable to licensing, and both require submission of detailed personal and
financial information followed by a thorough investigation. The applicant for
licensing or a finding of suitability must pay all the costs of the
investigation. Changes in licensed positions must be reported to the Nevada
Gaming Authorities and in addition to their authority to deny an application for
a finding of suitability or licensure, the Nevada Gaming Authorities have
jurisdiction to disapprove a change in a corporate position.
 
    If the Nevada Gaming Authorities were to find an officer, director or key
employee unsuitable for licensing or unsuitable to continue having a
relationship with the Company, the companies involved would have to sever all
relationships with such person. In addition, the Nevada Commission may require
the Company to terminate the employment of any person who refuses to file
appropriate applications. Determinations of suitability or of questions
pertaining to licensing are not subject to judicial review in Nevada.
 
    The Company is required to submit detailed financial and operating reports
to the Nevada Commission. Substantially all material loans, leases, sales of
securities and similar financing transactions by the Company must be reported
to, or approved by, the Nevada Commission.
 
                                       9
<PAGE>
    If it were determined that the Nevada Act was violated by the Company, the
gaming licenses it holds could be limited, conditioned, suspended or revoked,
subject to compliance with certain statutory and regulatory procedures. In
addition, the Company, and the persons involved, could be subject to substantial
fines of up to $250,000 for each separate violation of the Nevada Act at the
discretion of the Nevada Commission. Further, a supervisor could be appointed by
the Nevada Commission to operate the Company's gaming properties and, under
certain circumstances, earnings generated during the supervisor's appointment
(except for the reasonable rental value of the Company's gaming properties)
could be forfeited to the State of Nevada. Limitation, conditioning or
suspension of any gaming license or the appointment of a supervisor could (and
revocation of any gaming license would) materially adversely affect the
Company's gaming operations.
 
    Any beneficial holder of the Company 's voting securities, regardless of the
number of shares owned, may be required to file an application, be investigated,
and have such holder's suitability as a beneficial holder of the Company's
voting securities determined if the Nevada Commission has reason to believe that
such ownership would otherwise be inconsistent with the declared policies of the
State of Nevada. The applicant must pay all costs of investigation incurred by
the Nevada Gaming Authorities in conducting any such investigation.
 
    The Nevada Act requires any person who acquires more than 5% of the
Company's voting securities to report the acquisition to the Nevada Commission
and may be required to be found suitable. The Nevada Act requires that
beneficial owners of more than 10% of the Company's voting securities apply to
the Nevada Commission for a finding of suitability within thirty days after the
Chairman of the Nevada Board mails the written notice requiring such filing.
Under certain circumstances, an "institutional investor," as defined in the
Nevada Act, which acquires more than 10%, but not more than 15%, of the
Company's voting securities may apply to the Nevada Commission for a waiver of
such finding of suitability if such institutional investor holds the voting
securities for investment purposes only. An institutional investor shall not be
deemed to hold voting securities for investment purposes unless the voting
securities were acquired and are held in the ordinary course of business as an
institutional investor and not for the purpose of causing, directly or
indirectly, the election of a majority of the members of the board of directors
of the Company, any change in the Company's corporate charter, bylaws,
management, policies or operations of the Company, or any of its gaming
affiliates, or any other action which the Nevada Commission finds to be
inconsistent with holding the Company's voting securities for investment
purposes only. Activities which are not deemed to be inconsistent with holding
voting securities for investment purposes only include: (i) voting on all
matters voted on by stockholders; (ii) making financial and other inquiries of
management of the type normally made by securities analysts for informational
purposes and not to cause a change in its management, policies or operations;
and (iii) such other activities as the Nevada Commission may determine to be
consistent with such investment intent. If the beneficial holder of voting
securities who must be found suitable is a corporation, partnership or trust, it
must submit detailed business and financial information including a list of
beneficial owners. The applicant is required to pay all costs of investigation.
 
    Any person who fails or refuses to apply for a finding of suitability or a
license within thirty days after being ordered to do so by the Nevada Commission
or the Chairman of the Nevada Board, may be found unsuitable. The same
restrictions apply to a record owner if the record owner, after request, fails
to identify the beneficial owner. Any stockholder found unsuitable and who
holds, directly or indirectly, any beneficial ownership of the common stock of a
Registered Corporation beyond such period of time as may be prescribed by the
Nevada Commission may be guilty of a criminal offense. The Company is subject to
disciplinary action if, after it receives notice that a person is unsuitable to
be a stockholder or to have any other relationship with the Company, the Company
(i) pays that person any dividend or interest upon voting securities of the
Company, (ii) allows that person to exercise, directly or indirectly, any voting
right conferred through securities held by that person, (iii) pays remuneration
in any form to that person for services rendered or otherwise, or (iv) fails to
pursue all lawful efforts to require such unsuitable person to relinquish his
voting securities for cash at fair market value.
 
                                       10
<PAGE>
    The Nevada Commission may, in its discretion, require the holder of any debt
security of a Registered Corporation to file applications, be investigated and
be found suitable to own the debt security of a Registered Corporation. If the
Nevada Commission determines that a person is unsuitable to own such security,
then pursuant to the Nevada Act, the Registered Corporation can be sanctioned,
including the loss of its approvals, if without the prior approval of the Nevada
Commission, it: (i) pays to the unsuitable person any dividend, interest, or any
distribution whatsoever; (ii) recognizes any voting right by such unsuitable
person in connection with such securities; (iii) pays the unsuitable person
remuneration in any form; or (iv) makes any payment to the unsuitable person by
way of principal, redemption, conversion, exchange, liquidation, or similar
transaction.
 
    The Company is required to maintain a current stock ledger in Nevada which
may be examined by the Nevada Gaming Authorities at any time. If any securities
are held in trust by an agent or by a nominee, the record holder may be required
to disclose the identity of the beneficial owner to the Nevada Gaming
Authorities. A failure to make such disclosure may be grounds for finding the
record holder unsuitable. The Company is also required to render maximum
assistance in determining the identity of the beneficial owner. The Nevada
Commission has the power to require the Company's stock certificates to bear a
legend indicating that the securities are subject to the Nevada Act. However, to
date, the Nevada Commission has not imposed such a requirement on the Company.
 
    The Company may not make a public offering of its securities without the
prior approval of the Nevada Commission if the securities or the proceeds
therefrom are intended to be used to construct, acquire or finance gaming
facilities in Nevada, or to retire or extend obligations incurred for such
purposes. Such approval, if given, does not constitute a finding, recommendation
or approval by the Nevada Commission or the Nevada Board as to the accuracy or
adequacy of the prospectus or the investment merits of the securities. Any
representation to the contrary is unlawful.
 
    Changes in control of the Company through merger, consolidation, stock or
asset acquisitions, management or consulting agreements, or any act or conduct
by a person whereby the person obtains control, may not occur without the prior
approval of the Nevada Gaming Authorities. Entities seeking to acquire control
of a Registered Corporation must satisfy the Nevada Board and Nevada Commission
in a variety of stringent standards prior to assuming control of such Registered
Corporation. The Nevada Commission may also require controlling stockholders,
officers, directors and other persons having a material relationship or
involvement with the entity proposing to acquire control to be investigated and
licensed as part of the approval process relating to the transaction.
 
    The Nevada legislature has declared that some corporate acquisitions opposed
by management, repurchases of voting securities and corporate defense tactics
affecting Nevada gaming licensees, and Registered Corporations that are
affiliated with those operations, may be injurious to stable and productive
corporate gaming. The Nevada Commission has established a regulatory scheme to
ameliorate the potentially adverse effects of these business practices upon
Nevada's gaming industry and to further Nevada's policy to: (i) assure the
financial stability of corporate gaming operators and their affiliates; (ii)
preserve the beneficial aspects of conducting business in the corporate form;
and (iii) promote a neutral environment for the orderly governance of corporate
affairs. Approvals are, in certain circumstances, required from the Nevada
Commission before the Company can make exceptional repurchases of voting
securities above the current market price thereof and before a corporate
acquisition opposed by management can be consummated. The Nevada Act also
requires prior approval of a plan of recapitalization proposed by the Company's
Board of Directors in response to a tender offer made directly to the Registered
Corporation's stockholders for the purposes of acquiring control of the
Registered Corporation.
 
                                       11
<PAGE>
    License fees and taxes, computed in various ways depending on the type of
gaming or activity involved, are payable to the State of Nevada and to the
counties and cities in which the Nevada licensee's respective operations are
conducted. Depending upon the particular fee or tax involved, these fees and
taxes are payable either monthly, quarterly or annually and are based upon
either: (i) a percentage of the gross revenues received; (ii) the number of
gaming devices operated; or (iii) the number of table games operated. A casino
entertainment tax is also paid by casino operations where entertainment is
furnished in connection with the selling of food or refreshments. Nevada
licensees that hold a license as an operator of a slot route, or a
manufacturer's or distributor's license, also pay certain fees and taxes to the
State of Nevada.
 
    Any person who is licensed, required to be licensed, registered, required to
be registered, or is under common control with such persons (collectively,
"Licensees"), and who proposes to become involved in a gaming venture outside of
Nevada is required to deposit with the Nevada Board, and thereafter maintain, a
revolving fund in the amount of $10,000 to pay the expenses of investigation of
the Nevada Board of their participation in such foreign gaming. The revolving
fund is subject to increase or decrease in the discretion of the Nevada
Commission. Thereafter, Licensees are required to comply with certain reporting
requirements imposed by the Nevada Act. A licensee is also subject to
disciplinary action by the Nevada Commission if it knowingly violates any laws
of the foreign jurisdiction pertaining to the foreign gaming operation, fails to
conduct the foreign gaming operation in accordance with the standards of honesty
and integrity required of Nevada gaming operations, engages in activities that
are harmful to the State of Nevada or its ability to collect gaming taxes and
fees, or employs a person in the foreign operation who has been denied a license
or finding of suitability in Nevada on the ground of personal unsuitability.
 
    COLORADO GAMING LAWS AND REGULATIONS
 
    The State of Colorado created the Division of Gaming (the "Division") within
the Department of Revenue to license, implement, regulate and supervise the
conduct of limited gaming under the Colorado Limited Gaming Act. The Director of
the Division, under the supervision of a five-member Colorado Limited Gaming
Control Commission (the "Colorado Commission"), has been granted broad power to
ensure compliance with the Colorado gaming regulations (the "Colorado
Regulations"). The Director may inspect, without notice, impound or remove any
gaming device. He may examine and copy any licensee's records, may investigate
the background and conduct of licensees and their employees, and may bring
disciplinary actions against licensees and their employees. He may also conduct
detailed background investigations of persons who loan money to the Company.
 
    The Colorado Commission is empowered to issue five types of gaming and
gaming-related licenses. The licenses are revocable and non-transferable. The
failure or inability of the Company, HCCMC, Harveys Wagon Wheel or others
associated with Harveys Wagon Wheel, to maintain necessary gaming licenses will
have a material adverse effect on the operations of the Company. All persons
employed by the Company, HCCMC or Harveys Wagon Wheel and involved, directly or
indirectly, in gaming operations in Colorado also are required to obtain a
Colorado gaming license. All licenses must be renewed annually.
 
    As a general rule, under the Colorado Regulations, it is a criminal
violation for any person to have a legal, beneficial, voting or equitable
interest, or right to receive profits, in more than three retail gaming licenses
in Colorado. The Colorado Commission has ruled that a person does not have an
interest in a licensee for purposes of the multiple license prohibition if: (i)
such person has less than a five percent (5%) interest in an institutional
investor which has an interest in a publicly traded licensee or publicly traded
company affiliated with a licensee (such as the Company); (ii) a person has a
five percent (5%) or more financial interest in an institutional investor, but
the institutional investor has less than a five percent (5%) interest in a
publicly traded licensee or publicly traded company affiliated with a licensee;
(iii) an institutional investor has less than a five percent (5%) financial
interest in a publicly traded licensee or publicly traded company affiliated
with a licensee; (iv) an institutional investor possesses securities in a
fiduciary capacity for another person, and does not exercise voting control over
five percent (5%) or more
 
                                       12
<PAGE>
of the outstanding voting securities of a publicly traded licensee or of a
publicly traded company affiliated with a licensee; (v) a registered broker or
dealer retains possession of securities of a publicly traded licensee or of a
publicly traded company affiliated with a licensee for its customers in street
name or otherwise, and exercises voting rights for less than five percent (5%)
of the publicly traded licensee's voting securities or of a publicly traded
company affiliated with a licensee; (vi) a registered broker or dealer acts as a
market maker for the stock of a publicly traded licensee or of a publicly traded
company affiliated with a licensee and possesses a voting interest in less than
five percent (5%) of the stock of the publicly traded licensee or of a publicly
traded company affiliated with a licensee; (vii) an underwriter is holding
securities of a publicly traded licensee or of a publicly traded company
affiliated with a licensee as part of an underwriting for no more than 90 days
if it exercises voting rights of less than five percent (5%) of the outstanding
securities of a publicly traded licensee or of a publicly traded company
affiliated with a licensee; (viii) a stock clearinghouse holds voting securities
for third parties, if it exercises voting rights with respect to less than five
percent (5%) of the outstanding securities of a publicly traded licensee or of a
publicly traded company affiliated with a licensee; or (ix) a person owns less
than five percent (5%) of the voting securities of the publicly traded licensee
or publicly traded company affiliated with a licensee. Hence, the Company's and
its stockholders' business opportunities in Colorado are limited to such
interests that comply with the statute and the Colorado Commission's rule.
 
    Although attorneys for the Colorado legislature initially expressed concern
that the promulgation of the above-described regulation was beyond the Colorado
Commission's statutory delegated authority, they appear to have retreated from
this position. Therefore, unless the Colorado legislature repeals the
regulation, it is likely that it will continue in effect.
 
    In addition, pursuant to the Colorado Regulations, no manufacturer or
distributor of slot machines may have an interest in any casino operator, allow
any of its officers to have such an interest, employ any person if such person
is employed by a casino operator, or allow any casino operator or person with a
substantial interest therein to have an interest in a manufacturer's or
distributor's business. The Colorado Commission has ruled that a person does not
have a "substantial interest" if it directly or indirectly has less than five
percent (5%) of such voting securities of a licensee.
 
    Under the Colorado Regulations, any person or entity having any direct or
indirect interest in a gaming licensee or an applicant for a gaming license,
including, but not limited to, the Company and stockholders of the Company, may
be required to supply the Colorado Commission with substantial information,
including, but not limited to, background information, source of funding
information, a sworn statement that such person or entity is not holding his
interest for any other party, and fingerprints. Such information, investigation
and licensing as an "associated person" automatically will be required of all
persons (other than certain institutional investors discussed below) which
directly or indirectly own ten percent (10%) or more of a direct or indirect
legal, beneficial or voting interest in Harveys Wagon Wheel, through their
ownership in the Company. Such persons must report their interest and file
appropriate applications within 45 days after acquiring such interest. Persons
directly or indirectly having a five percent (5%) or more interest (but less
than 10%) in Harveys Wagon Wheel, through their ownership in the Company, must
report their interest to the Colorado Commission within ten (10) days after
acquiring such interest and may be required to provide additional information
and to be found suitable. If certain institutional investors provide certain
information to the Colorado Commission, such investors, at the Colorado
Commission's discretion, may be permitted to own up to 14.99% of Harveys Wagon
Wheel, through their ownership in the Company, before being required to be found
suitable. All licensing and investigation fees will have to be paid by the
person in question. The associated person investigation fee currently is $53 per
hour.
 
    The Colorado Commission also has the right to request information from any
person directly or indirectly interested in, or employed by, a licensee, and to
investigate the moral character, honesty, integrity, prior activities, criminal
record, reputation, habits and associations of (i) all persons licensed pursuant
to the Colorado Limited Gaming Act, (ii) all officers, directors and
stockholders of a licensed
 
                                       13
<PAGE>
privately held corporation, (iii) all officers, directors and stockholders
holding either a five percent (5%) or greater interest or a controlling interest
in a licensed publicly traded corporation, (iv) all general partners and all
limited partners of a licensed partnership, (v) all persons which have a
relationship similar to that of an officer, director or stockholder of a
corporation (such as members and managers of a limited liability company), (vi)
all persons supplying financing or loaning money to any licensee connected with
the establishment or operation of limited gaming, and (vii) all persons having a
contract, lease or ongoing financial or business arrangement with any licensee,
where such contract, lease or arrangement relates to limited gaming operations,
equipment, devices or premises.
 
    In addition, under the Colorado Regulations, every person who is a party to
a "gaming contract" with an applicant for a license, or with a licensee, upon
the request of the Colorado Commission or the Director, must promptly provide to
the Colorado Commission or Director all information which may be requested
concerning financial history, financial holdings, real and personal property
ownership, interests in other companies, criminal history, personal history and
associations, character, reputation in the community, and all other information
which might be relevant to a determination whether a person would be suitable to
be licensed by the Colorado Commission. Failure to provide all information
requested constitutes sufficient grounds for the Director or the Colorado
Commission to require a licensee or applicant to terminate its "gaming contract"
(as defined below) with any person who failed to provide the information
requested. In addition, the Director or the Colorado Commission may require
changes in "gaming contracts" before an application is approved or participation
in the contract is allowed. A "gaming contract" is defined as an agreement in
which a person does business with or on the premises of a licensed entity.
 
    An application for licensure or suitability may be denied for any cause
deemed reasonable by the Colorado Commission or the Director, as appropriate.
Specifically, the Colorado Commission and the Director must deny a license to
any applicant who (i) fails to prove by clear and convincing evidence that the
applicant is qualified; (ii) fails to provide information and documentation
requested; (iii) fails to reveal any fact material to qualification, or supplies
information which is untrue or misleading as to a material fact pertaining to
qualification; (iv) has been, or is any director, officer, general partner,
stockholder, limited partner or other person who has a financial or equity
interest in the applicant who has been, convicted of certain crimes, including
the service of a sentence upon conviction of a felony in a correctional
facility, city or county jail, or community correctional facility or under the
state board of parole or any probation department within ten years prior to the
date of the application, gambling-related offenses, theft by deception or crimes
involving fraud or misrepresentation, is under current prosecution for such
crimes (during the pendency of which license determination may be deferred), is
a career offender or a member or associate of a career offender cartel, or is a
professional gambler; or (v) has refused to cooperate with any state or federal
body investigating organized crime, official corruption or gaming offenses.
 
    If the Colorado Commission determines that a person or entity is unsuitable
to own interests in the Company, then the Company, HCCMC or Harveys Wagon Wheel
may be sanctioned, which may include the loss by the Company, HCCMC or Harveys
Wagon Wheel of their respective approvals and licenses.
 
    The Colorado Commission does not need to approve in advance a public
offering of securities but rather requires a filing of notice and additional
documents with regard to such public offering prior to such public offering.
Under the regulations, the Colorado Commission may, in its discretion, require
additional information and prior approval of such public offering.
 
    In addition, the Colorado Regulations prohibit a licensee or affiliated
company thereof, such as the Company, from paying dividends, interest or other
remuneration to any unsuitable person, or recognizing the exercise of any voting
rights by any unsuitable person. Further, the Company may repurchase the shares
of anyone found unsuitable at the lesser of the cash equivalent to the original
investment in the Company or the current market price. Further, the regulations
require anyone with a material involvement
 
                                       14
<PAGE>
with a licensee, including a director or officer of a holding company, such as
the Company, to file for a finding of suitability if required by the Colorado
Commission.
 
    In addition to its authority to deny an application for a license or
suitability, the Colorado Commission has jurisdiction to disapprove a change in
corporate position of a licensee and may have such authority with respect to any
entity which is required to be found suitable by the Colorado Commission. The
Colorado Commission has the power to require the Company, HCCMC and Harveys
Wagon Wheel to suspend or dismiss managers, officers, directors and other key
employees or sever relationships with other persons who refuse to file
appropriate applications or whom the authorities find unsuitable to act in such
capacities; and may have such power with respect to any entity which is required
to be found suitable.
 
    A person or entity may not sell, lease, purchase, convey or acquire a
controlling interest in the Company without the prior approval of the Colorado
Commission. The Company may not sell any interest in HCCMC or Harveys Wagon
Wheel without the prior approval of the Colorado Commission.
 
    Harveys Wagon Wheel must meet certain architectural requirements, fire
safety standards and standards for access for disabled persons. Harveys Wagon
Wheel also must not exceed certain gaming square footage limits as a total of
each floor and the full building. The casino at Harveys Wagon Wheel may operate
only between 8:00 a.m. and 2:00 a.m., and may permit only individuals 21 years
or older to gamble in the casino. It may permit slot machines, blackjack and
poker, with a maximum single bet of $5.00. Harveys Wagon Wheel may not provide
credit to its gaming patrons.
 
    The Colorado Regulations permit gaming only in a limited number of cities
and certain commercial districts.
 
    The Colorado Constitution permits a gaming tax of up to 40% on adjusted
gross gaming proceeds. The Colorado Commission has set a gaming tax rate of 2%
on adjusted gross gaming proceeds of up to and including $2 million, 4% over $2
million up to and including $4 million, 14% over $4 million up to and including
$5 million, 18% over $5 million up to and including $10 million and 20% on
adjusted gross gaming proceeds in excess of $10 million. The Colorado Commission
also has imposed an annual device fee of $75 per gaming device. The Colorado
Commission may revise the gaming tax rate and device fee from time to time.
Central City has imposed an annual device fee of $1,265 per gaming device and
may revise the same from time to time.
 
    The sale of alcoholic beverages is subject to licensing, control and
regulation by the Colorado Liquor Agencies. All persons who directly or
indirectly own 10% or more of Harveys Wagon Wheel, through their ownership of
the Company, must file applications and possibly be investigated by the Colorado
Liquor Agencies. The Colorado Liquor Agencies also may investigate those persons
who, directly or indirectly, loan money to or have any financial interest in
liquor licensees. All licenses are revocable and not transferable. The Colorado
Liquor Agencies have the full power to limit, condition, suspend or revoke any
such license and any such disciplinary action could (and revocation would) have
a material adverse effect upon the operations of the Company. Harveys Wagon
Wheel holds a hotel and restaurant liquor license for its casino, hotel and
restaurant operations, rather than a gaming tavern license. Accordingly, no
person with an interest in the Company can have an interest in a liquor licensee
which holds anything other than a hotel and restaurant liquor license, and
specifically cannot have an interest in an entity which holds a gaming tavern
license.
 
    IOWA GAMING LAWS AND REGULATIONS
 
    The State of Iowa first authorized excursion gambling boat activities in
1989. The Iowa Racing and Gaming Commission (the "Iowa Commission") has the
authority to grant and review licenses to owners and operators of excursion
gambling boats and has the further authority to adopt and enforce rules
governing a broad range of subjects dealing with excursion gambling boat
facilities and operations. The Iowa
 
                                       15
<PAGE>
Commission consists of five members who are appointed by the governor and
confirmed by the state senate. Members serve a term not to exceed three years at
the pleasure of the governor.
 
    Under Iowa law, only non-profit organizations may receive a license to own
gambling game operations; for profit organizations may receive a license for
their management and operation. The Company, through HIMC, together with Iowa
West, a qualified non-profit organization, have been granted the necessary
licenses to own and operate the current gambling facilities and activities on
the riverboat casino at Harveys Casino Hotel. The present licenses have a term
expiring March 31, 1999. The licenses are granted upon the condition that the
license holders accept, observe and enforce all applicable laws, regulations,
ordinances, rules and orders. Any violation by a license holder, including
violations by its officers, employees or agents, may result in disciplinary
action, including the suspension or revocation of the license.
 
    HIMC and Iowa West have entered into an excursion sponsorship and operating
agreement dated August 22, 1994 (the "Operating Agreement") pursuant to which
Iowa West authorizes HIMC to operate the excursion gambling boat activities on
the riverboat casino under Iowa West's gaming license. The Operating Agreement's
initial term continues through December 31, 2002 and during such term HIMC has
agreed to pay Iowa West a fee equal to $1.50 for each adult passenger embarking
upon the excursion gambling boat. HIMC further agrees to pay, and hold Iowa West
harmless from, the admission fees payable to the Iowa Commission and the local
municipality and the wagering tax imposed by Iowa law. Following the expiration
of the initial term of the Operating Agreement, HIMC may extend its provisions
for five successive three-year periods, except that the admission fees payable
by HIMC to Iowa West for each such period shall be adjusted to reflect increases
in the consumer price index.
 
    Excursion boat gambling licenses may be granted by the Iowa Commission only
in those counties that have approved the conduct of gambling games in a
county-wide referendum. Gambling has been approved by the county electorate in
Pottawattamie County, Iowa, the location of Harveys Casino Hotel, but another
referendum requested by petition can be held and there can be no assurance that
gambling would again be approved. If licenses to conduct gambling games and to
operate an excursion gambling boat are in effect at the time gambling is
disapproved by a referendum of the county electorate, the licenses remain valid
and may, at the discretion of the Iowa Commission, be renewed for a total of
nine years from the date of the original issue.
 
    Following the issuance of a gaming license, the Iowa Commission monitors and
supervises the activities of the excursion gambling boat and its licenses.
Material contracts to be entered into by the licensee, changes in ownership of
the licensee and acquisitions of interests in other gambling activities by the
licensee or its owners must all be reported to, and approved by, the Iowa
Commission. Further, the Iowa Commission has the authority to determine the
payouts from the gambling games, to set the payout rate for all slot machines,
to establish minimum charges for admission to excursion gambling boats and
regulate the number of free admissions and to define the excursion season and
the duration of an excursion.
 
    Iowa law authorizes the imposition of an admission fee, set by and payable
to the Iowa State Treasurer, on each person embarking on an excursion gambling
boat. An additional admission fee may be imposed by the municipality in which
the gambling operation is located. In practice, the Iowa Commission has not
imposed a per-person admission fee, but rather imposed a fee on each excursion
gambling boat based upon the estimated costs of supervision and enforcement to
be incurred by the Iowa Commission for the ensuing fiscal year. For the fiscal
year beginning July 1, 1998, the fee is $303,680, payable in weekly installments
of $5,840. A $0.50 per person admission fee is also payable to the City of
Council Bluffs, Iowa. Further, Iowa law imposes an annual wagering tax ranging
from five percent on the first million of adjusted gross receipts from gambling
games to 20 percent on adjusted gross receipts in excess of $3 million.
 
    The Company's excursion gambling boat activities are also subject to safety
and inspection requirements of the State of Iowa and the U.S. Coast Guard. These
requirements set limits on the operation of
 
                                       16
<PAGE>
the vessel; mandate that it must be operated by a minimum complement of licensed
personnel; establish periodic inspections, including the physical inspection of
the outside hull requiring the vessel to be drydocked every five years; and
establish other mechanical and operational rules.
 
ENVIRONMENTAL MATTERS
 
    The Company is subject to various Federal, state and local laws, ordinances
and regulations which (i) govern activities or operations that may have adverse
environmental effects, such as discharges to air and water, as well as handling
and disposal of solid and hazardous toxic wastes, or (ii) may impose liability
on property owners and operators for the costs of removal or remediation of
certain hazardous substances released on their property. The Company's
management believes it is in material compliance with these laws.
 
    Harveys Wagon Wheel is in the vicinity of the Central City/Clear Creek
Superfund Site (the "Superfund Site") as designated by the Environmental
Protection Agency (the "EPA") pursuant to the Comprehensive Environmental
Response, Compensation, and Liability Act of 1980, as amended ("CERCLA" or
"Superfund"). The Superfund Site, the overall boundaries of which have not been
explicitly defined, includes numerous specifically identified areas of mine
tailings and other waste piles from former gold mine operations that are the
subject of ongoing investigation and cleanup by the EPA and the State of
Colorado. CERCLA requires cleanup of sites from which there has been a release
or threatened release of hazardous substances and authorizes the EPA to take any
necessary response actions at Superfund sites, including ordering potentially
responsible parties ("PRPs") to clean up or contribute to the cleanup of a
Superfund site. PRPs are broadly defined under CERCLA, and include past and
present owners and operators of a site. Courts have interpreted CERCLA to impose
strict, joint and several liability upon all persons liable for response costs.
 
    In the course of developing Harveys Wagon Wheel, investigations at the site
were conducted in accordance with requirements of governmental authorities as a
prerequisite to obtaining necessary development permits. The investigations have
been completed and the requisite permits issued. Currently, the EPA has not
identified any mine tailings or other waste piles at Harveys Wagon Wheel.
Nonetheless, there is the potential that the EPA or other governmental
authorities could broaden their investigations and identify additional areas,
including the Harveys Wagon Wheel site, for cleanup as part of the Superfund
Site. If the Harveys Wagon Wheel site were included in the EPA's investigation
and designated as an additional area within the Superfund Site, the Company may
be identified as a PRP and any liability of the Company related to the Superfund
Site could have a material adverse effect on the Company.
 
ITEM 2. PROPERTIES
 
    Harveys Resort comprises approximately 1,020,000 square feet on
approximately 19.8 acres, of which the Company owns approximately 5.4 acres and
leases approximately 14.4 acres pursuant to several ground leases that expire in
2045. A 973,000-square foot parking garage and certain other amenities are
located on the leased property.
 
    The Harveys Wagon Wheel hotel and casino facility encompasses approximately
200,000 square feet on approximately 1.1 acres and a 530-space self-parking
garage on a contiguous 8 acre parcel. Additionally, HCCMC owns approximately 40
acres of undeveloped land adjacent to the Harveys Wagon Wheel facility.
 
    Harveys Casino Hotel is located on approximately 36 acres of land owned by
the Company. The land-based amenities, including a covered "skywalk" to the
riverboat casino, are comprised of a hotel, convention center, and passenger
staging area, totaling nearly 300,000 square feet. Contiguous thereto is a
24-acre leasehold parcel which contains the boat docking facility and additional
parking. This parcel is subject to a long term lease with the City of Council
Bluffs for a nominal annual sum. In fiscal 1999, the Company commenced
construction of a 1,630 space parking structure that will feature
climate-controlled
 
                                       17
<PAGE>
access to the adjacent casino. Additionally, the Company owns an adjacent
44-acre parcel suitable for expansion or support facilities.
 
ITEM 3. LEGAL PROCEEDINGS
 
    The Company is a defendant in various lawsuits relating to routine matters
incidental to its business. Management does not believe that the outcome of any
such litigation, in the aggregate, will have a material adverse effect on the
Company.
 
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
 
    There were no matters submitted to a vote of security holders during the
fourth quarter of fiscal 1998.
 
                                       18
<PAGE>
                                    PART II
 
ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS
 
    Prior to the Merger the Company was a publicly held company and the $0.01
par value per share common stock of the Company (the "Common Stock") was traded
on the New York Stock Exchange (the "NYSE") under the symbol "HVY." Following
the Merger, there is no public market for the Company's common equity
securities.
 
    As of February 25, 1999, there were ten holders of the Company's Class A
Common Stock and ten holders of the Company's Class B Common Stock.
 
    For the two fiscal years prior to the Merger the Company paid regular
quarterly dividends of $0.05 per share of Common Stock. Following the Merger,
the leverage and fixed charge obligations of the Company were substantially
increased. In addition, the certificates of designation (the "Certificates of
Designation") of the Company's 13 1/2% Series A Senior Redeemable Convertible
Cumulative Preferred Stock and 13 1/2% Series B Senior Redeemable Convertible
Cumulative Preferred Stock collectively, the "Preferred Stock" prohibit the
Company from paying cash dividends on its Common Stock unless full cumulative
dividends on all outstanding Preferred Stock due for past periods have been
declared and paid in cash, or a sufficent sum for the payment thereof
irrevocably set apart in trust. Consequently, it is unlikely that the Company
will pay any cash dividends on its Common Stock before 2011, the mandatory
redemption date for the Preferred Stock. See "ITEM 7. MANAGEMENT'S DISCUSSION
AND ANALYSIS OF THE COMPANY'S FINANCIAL CONDITIONS AND RESULTS OF
OPERATIONS--Liquidity and Capital Resources".
 
ITEM 6. SELECTED CONSOLIDATED FINANCIAL DATA
 
    The following table sets forth selected consolidated financial data of the
Company for the years ended November 30, 1994 through November 30, 1998. The
statement of income and balance sheet data are derived from the Company's
audited Consolidated Financial Statements for the years ended November 30, 1994
through November 30, 1998. Deloitte & Touche LLP's report with respect to the
financial statements for the fiscal years ended November 30, 1996, 1997 and 1998
is included elsewhere in this report. The Selected Consolidated Financial Data
is not necessarily indicative of the Company's future results of operations or
financial condition, and should be read in conjunction with "Management's
Discussion and
 
                                       19
<PAGE>
Analysis of the Company's Financial Condition and Results of Operations" and the
Company's Consolidated Financial Statements, including the Notes thereto, and
the other financial and statistical information appearing elsewhere in this
report.
 
SELECTED CONSOLIDATED FINANCIAL DATA
 
<TABLE>
<CAPTION>
                                                                      YEARS ENDED NOVEMBER 30,
                                                       ------------------------------------------------------
                                                          1998       1997       1996       1995       1994
                                                       ----------  ---------  ---------  ---------  ---------
                                                           (DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA)
<S>                                                    <C>         <C>        <C>        <C>        <C>
CONSOLIDATED STATEMENT OF INCOME DATA
Revenues
  Casino.............................................  $  244,784  $ 216,564  $ 186,369  $ 121,369  $  83,991
  Lodging............................................      34,273     32,175     28,746     25,499     21,870
  Food and beverage..................................      47,079     44,406     39,852     33,970     29,768
  Other..............................................       7,111      7,277      6,402      6,287      5,599
  Management fees and joint venture..................      --          4,507      5,023      1,669     --
  Less casino promotional allowances.................     (23,738)   (21,366)   (18,643)   (15,594)   (12,942)
                                                       ----------  ---------  ---------  ---------  ---------
    Total net revenues...............................     309,509    283,563    247,749    173,200    128,286
                                                       ----------  ---------  ---------  ---------  ---------
 
Costs and expenses
  Casino.............................................     115,837    100,500     86,732     57,520     40,999
  Lodging............................................      13,710     13,374     11,677      9,458      7,429
  Food and beverage..................................      30,143     29,886     24,797     20,280     17,401
  Other operating....................................       2,885      2,811      2,813      2,838      2,557
  Selling, general and administrative................      78,987     73,945     67,128     50,270     39,813
  Depreciation and amortization......................      20,796     19,077     16,482     12,333      9,704
  Business development costs.........................          96      2,690     --         --         --
  Pre-opening expenses...............................      --         --          4,099      2,147     --
  Merger related costs...............................       1,218     --         --         --         --
                                                       ----------  ---------  ---------  ---------  ---------
    Total costs and expenses.........................     263,672    242,283    213,728    154,846    117,903
                                                       ----------  ---------  ---------  ---------  ---------
Operating income.....................................      45,837     41,280     34,021     18,354     10,382
Interest expense, net(1).............................      15,576     18,892     14,195      7,960      2,886
Gain on sale of interests in unconsolidated
  affiliate..........................................      --         27,422     --         --         --
Life insurance benefits..............................      --         --         --          2,246        371
Other income (expense), net..........................        (142)      (137)      (221)       605       (230)
                                                       ----------  ---------  ---------  ---------  ---------
Income before income taxes and extraordinary item....      30,119     49,673     19,605     13,245      7,638
Income tax provision.................................     (11,417)   (18,898)    (7,791)    (3,900)    (2,500)
                                                       ----------  ---------  ---------  ---------  ---------
Income before extraordinary item.....................      18,702     30,775     11,814     9 ,345      5,138
Loss on early retirement of debt, net of taxes.......      --         --            522     --         --
                                                       ----------  ---------  ---------  ---------  ---------
Net income...........................................  $   18,702  $  30,775  $  11,292  $   9,345  $   5,138
                                                       ----------  ---------  ---------  ---------  ---------
                                                       ----------  ---------  ---------  ---------  ---------
 
Net income per common share--Basic
  Income before extraordinary item...................  $     1.87  $    3.13  $    1.22  $    1.00  $    0.58
  Extraordinary item.................................      --         --          (0.06)    --         --
                                                       ----------  ---------  ---------  ---------  ---------
  Net income.........................................  $     1.87  $    3.13  $    1.16  $    1.00  $    0.58
                                                       ----------  ---------  ---------  ---------  ---------
                                                       ----------  ---------  ---------  ---------  ---------
Net income per common share--Diluted
  Income before extraordinary item...................  $     1.83  $    3.13  $    1.22  $    0.99  $    0.58
  Extraordinary item.................................      --         --          (0.06)    --         --
                                                       ----------  ---------  ---------  ---------  ---------
  Net income.........................................  $     1.83  $    3.13  $    1.16  $    0.99  $    0.58
                                                       ----------  ---------  ---------  ---------  ---------
                                                       ----------  ---------  ---------  ---------  ---------
  Dividend on common stock...........................  $     0.20  $    0.20  $    0.18  $    0.16  $    0.13
  Weighted average common shares used in calculating
    income per common share
  Basic..............................................  10,023,113  9,826,636  9,645,708  9,364,520  8,885,496
  Diluted............................................  10,220,476  9,843,871  9,698,500  9,456,051  8,885,525
 
OTHER OPERATING DATA
  EBITDA(2)..........................................  $   67,947  $  63,047  $  54,602  $  35,080  $  20,458
  Net cash provided by operating activities..........      38,388     44,637     39,768     19,594     14,106
  Net cash provided by (used in) investing
    activities.......................................     (27,590)    24,428    (55,502)   (70,433)   (33,505)
  Net cash provided by (used in) financing
    activities.......................................       1,467    (35,151)    26,363     53,886     15,506
  Capital expenditures(3)............................      17,681     22,532     72,395     74,418     35,593
</TABLE>
 
                                       20
<PAGE>
<TABLE>
<CAPTION>
                                                                      YEARS ENDED NOVEMBER 30,
                                                       ------------------------------------------------------
                                                          1998       1997       1996       1995       1994
                                                       ----------  ---------  ---------  ---------  ---------
                                                           (DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA)
<S>                                                    <C>         <C>        <C>        <C>        <C>
CONSOLIDATED BALANCE SHEET DATA:
  Cash and cash equivalents..........................  $   67,299  $  55,035  $  21,121  $  10,493  $   7,446
  Total assets.......................................     424,158    403,465    393,768    313,244    238,544
  Long-term debt, net................................     150,000    150,220    181,354    126,676     64,896
  Stockholders' equity...............................     200,454    179,358    149,763    132,301    123,611
</TABLE>
 
------------------------------
 
Notes to Selected Consolidated Financial Data:
 
(1) Net of amounts capitalized and interest income.
 
(2) EBITDA (operating income plus depreciation and amortization and adjusted for
    certain non-recurring items) should not be construed as an indicator of the
    Company's operating performance, or as an alternative to cash flows from
    operating activities as a measure of liquidity. The Company has presented
    EBITDA solely as supplemental disclosure because the Company believes that
    it allows for a more complete analysis of results of operations. Because
    companies do not calculate EBITDA identically, the presentation of EBITDA
    herein is not necessarily comparable to similarly entitled measures of other
    companies. EBITDA is not intended to represent and should not be considered
    more meaningful than, or an alternative to, measures of operating
    performance as determined in accordance with generally accepted accounting
    prinicples. For fiscal 1998, EBITDA has been adjusted to exclude
    approximately $96,000 of business development costs and $1.2 million of
    expensed merger related costs; for fiscal 1997, EBITDA has been adjusted to
    exclude approximately $2.7 million of business development costs; for fiscal
    1996 and fiscal 1995, EBITDA has been adjusted to exclude approximately $4.1
    million and $2.1 million of pre-opening expenses, respectively; for fiscal
    1995 and fiscal 1994, EBITDA has been adjusted to include approximately $2.2
    million and $371, 000 of life insurance benefits, respectively.
 
(3) Of amounts shown, approximately $8.1 million for fiscal 1998, $11.6 million
    in fiscal 1997, $7.2 million in fiscal 1996, $4.6 million in fiscal 1995 and
    $4.4 million in fiscal 1994 related to recurring capital expenditures for
    maintenance of the current facilities.
 
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF THE COMPANY'S FINANCIAL
  CONDITION AND RESULTS OF OPERATIONS
 
OVERVIEW
 
    The Company currently owns and operates (i) Harveys Resort on the south
shore of Lake Tahoe, Nevada, (ii) Harveys Wagon Wheel in Central City, Colorado,
and (iii) Harveys Casino Hotel in Council Bluffs, Iowa. Until October 24, 1997,
the Company, through its wholly-owned subsidiary, Harveys L. V. Management
Company, Inc. ("HLVMC"), owned 40% of the equity interest in Hard Rock Hotel,
Inc. ("HRHC") which owns the Hard Rock Hotel and Casino in Las Vegas, Nevada.
HLVMC managed the Las Vegas hotel and casino pursuant to a contract with HRHC.
On October 24, 1997, the Company sold its 40% equity interest and its interest
in the management contract to HRHC (the "Hard Rock Sale").
 
    The following table presents certain operating results for the Company's
properties. The operating results for Harveys Resort, which, since June 1, 1997,
has been owned and operated by HTMC, have been presented, for all periods,
excluding the effects of corporate and future business development expenses.
Those expenses have been presented under the caption "Corporate and
Development." On April 30, 1996, the Company acquired all of the 30% minority
interest in Harveys Wagon Wheel Casino Limited Liability Company ("HWW") which
owned Harveys Wagon Wheel. Since that time Harveys Wagon Wheel has been wholly
owned by the Company. The riverboat casino portion of Harveys Casino Hotel
opened on January 1, 1996 and the land-based facilities opened on May 24, 1996.
The operating results of HLVMC include the fees earned by such entity for
managing the operations of Hard Rock Hotel and Casino and the
 
                                       21
<PAGE>
40% equity interest in the income of the Hard Rock Hotel and Casino from the
date that property opened, March 9, 1995, through the Hard Rock Sale.
 
RESULTS OF OPERATIONS
 
<TABLE>
<CAPTION>
                                                                                  1998        1997        1996
                                                                               ----------  ----------  ----------
<S>                                                                            <C>         <C>         <C>
Net Revenues
  Harveys Resort.............................................................  $  133,454  $  129,970  $  130,535
  Harveys Wagon Wheel........................................................      62,514      49,445      43,128
  Harveys Casino Hotel.......................................................     113,541      99,641      69,063
  Harveys Las Vegas Management Co............................................      --           4,507       5,023
                                                                               ----------  ----------  ----------
    Total Net Revenues.......................................................  $  309,509  $  283,563  $  247,749
                                                                               ----------  ----------  ----------
                                                                               ----------  ----------  ----------
Operating Income (Loss)(1)
  Harveys Resort.............................................................  $   23,768  $   23,674  $   23,585
  Harveys Wagon Wheel........................................................      14,107       9,848       8,652
  Harveys Casino Hotel.......................................................      21,824      17,630       8,016
  Harveys Las Vegas Management Co............................................      --           4,308       4,800
  Corporate and Development..................................................     (13,862)    (14,180)    (11,032)
                                                                               ----------  ----------  ----------
    Total Operating Income...................................................  $   45,837  $   41,280  $   34,021
                                                                               ----------  ----------  ----------
                                                                               ----------  ----------  ----------
EBITDA(2)
  Harveys Resort.............................................................  $   33,160  $   32,125  $   32,127
  Harveys Wagon Wheel........................................................      17,731      13,114      11,564
  Harveys Casino Hotel.......................................................      29,065      24,285      16,849
  Harveys Las Vegas Management Co............................................      --           4,507       5,021
  Corporate and Development..................................................     (12,009)    (10,984)    (10,959)
                                                                               ----------  ----------  ----------
    Total EBITDA.............................................................  $   67,947  $   63,047  $   54,602
                                                                               ----------  ----------  ----------
                                                                               ----------  ----------  ----------
</TABLE>
 
------------------------
 
(1) For fiscal year 1998 and 1997 the operating loss for Corporate and
    Development includes a write-off of business development costs of
    approximately $96,000 and $2.7 million, respectively. For fiscal year 1998
    the operating loss for Corporate and Development includes merger related
    costs of approximately $1.2 million. For fiscal year 1996 operating income
    includes approximately $4.1 million of pre-opening expenses related to
    Harveys Casino Hotel.
 
(2) EBITDA (operating income plus depreciation and amortization) should not be
    construed as an indicator of the Company's operating performance, or as an
    alternative to cash flows from operating activities as a measure of
    liquidity. The Company has presented EBITDA solely as supplemental
    disclosure because the Company believes that it allows for a more complete
    analysis of results of operations. Because companies do not calcuate EBITDA
    identically, the presentation of EBITDA herein is not necessarily comparable
    to similarly entitled measures of other companies. EBITDA is not intended to
    represent and should not be considered more meaningful than, or an
    alternative to, measures of operating performance as determined in
    accordance with generally accepted accounting principles. For fiscal year
    1998 and 1997, EBITDA for Corporate and Development excludes the write-off
    of approximately $96,000 and $2.7 million of business development costs,
    respectively. For fiscal year 1998, EBITDA for Corporate and Development
    excludes approximately $1.2 million of merger related costs. For fiscal year
    1996, Harveys Casino Hotel's EBITDA excludes approximately $4.1 million of
    pre-opening expenses.
 
FISCAL YEAR ENDED NOVEMBER 30, 1998 COMPARED TO FISCAL YEAR ENDED NOVEMBER 30,
  1997
 
    The Company's consolidated net revenues for fiscal 1998 were $309.5 million,
an increase of $25.9 million, or 9.1%, from the $283.6 million recorded in
fiscal 1997. The improvement was attributable to an increase in net revenues at
all of the Company's properties. Net revenues at Harveys Casino Hotel in Iowa
improved by $13.9 million due, in part, to the casino expansion which opened
near the end of the first
 
                                       22
<PAGE>
quarter of fiscal 1998. Harveys Wagon Wheel Hotel/Casino experienced an increase
in net revenues of $13.1 million. The increased net revenues from the Colorado
property demonstrated the value of a full year of availability of additional
on-site parking added by the opening of the 530-space parking garage in June
1997. Net revenues from the Company's Lake Tahoe property increased by
approximately $3.5 million due, in part, to a decrease in weather-related road
closures or controls in the first quarter of 1998 compared to 1997. The revenue
contribution from the management fees and equity in earnings from the Hard Rock
Hotel and Casino decreased approximately $4.5 million, as a result of the Hard
Rock Sale.
 
    CASINO.  Fiscal 1998 casino revenues increased $28.2 million, up 13.0% from
fiscal 1997 casino revenues of $216.6 million to $244.8 million. Gaming activity
in Iowa produced an increase of approximately $13.4 million in casino revenues.
Harveys Wagon Wheel produced an increase of approximately $13.2 million in
casino revenues. The Company's Lake Tahoe casino revenues improved by
approximately $1.6 million. Casino costs and expenses also increased, up $15.3
million to $115.8 million for the 1998 fiscal year. The Council Bluffs casino
accounted for $8.8 million of the increase in costs and expenses while the
Colorado operations accounted for approximately $6.0 million of the increase.
The Lake Tahoe operations increased $0.5 million. The increase in casino costs
and expenses at Iowa and Colorado properties was attributable to increases in
payroll and related costs, gaming taxes and license fees and an increase in
promotional expenses at both of the properties (a consequence of increased
casino revenues).
 
    LODGING.  Lodging revenues of $34.3 million for fiscal 1998 increased $2.1
million, or 6.5%, from fiscal 1997. The hotel facility at Lake Tahoe contributed
$1.6 million of the lodging revenues improvement and the Council Bluffs hotel
contributed approximately $0.5 million of the lodging revenues improvement.
Lodging profits improved by approximately $1.8 million. The improvement in
lodging profit margins was the result of an increase in revenue per available
room at all properties.
 
    FOOD AND BEVERAGE.  Food and beverage revenues improved by 6.0% , up $2.7
million to $47.1 million. Food and beverage revenues from the Council Bluffs
property contributed an increase of approximately $1.4 million, and the Lake
Tahoe property contributed an increase of approximately $1.2 million. The
Central City property contributed an increase of $0.1 million in beverage
revenues. Food and beverage profits and margins improved for the year-to-year
comparison due to increased revenues at all operating properties and the
controlling of related costs.
 
    OTHER REVENUES.  The combination of other revenues and the contribution from
management fees and equity in the earnings from the Hard Rock Hotel and Casino
amounted to $7.1 million, a decrease of $4.7 million, or 39.7%, primarily as a
result of the Hard Rock Sale.
 
    SG&A, DEPRECIATION AND AMORTIZATION, NET INTEREST EXPENSE.  Consolidated
selling, general and administrative expense increased 6.8%, up $5.1 million to
$79.0 million for fiscal 1998. The operations in Council Bluffs experienced an
increase of approximately $0.8 million in selling, general and administrative
expenses. The Lake Tahoe operations recognized an increase in overall selling,
general and administrative expenses of approximately $0.7 million from fiscal
1997 to fiscal 1998. Selling, general and administrative expenses increased by
$2.6 million at the Central City property as a result of an increase in
promotional costs. Depreciation and amortization expenses increased by $1.7
million, or 9.0%. The increase in depreciation expense at the Lake Tahoe
property included a charge of approximately $0.4 million related to the disposal
of assets necessary to facilitate the construction of a Hard Rock Cafe on the
casino floor, which opened early in the third quarter of fiscal 1998. The
balance of the increase in depreciation was attributable to the completion of
the parking garage in Central City and replacements and improvements at the
operating properties. Interest expense, net of interest income and interest
capitalized, decreased by approximately $3.3 million to $15.6 million for fiscal
1998. The decrease was attributable to the use of a portion of the proceeds from
the Hard Rock Sale to pay the outstanding balance under the Company's credit
facility, thereby reducing interest expenses. The balance of the proceeds was
invested in cash equivalents, resulting in an increase in interest income.
Approximately $0.4 million of interest expense was capitalized during the first
nine months of fiscal 1997 in connection with the construction of the parking
facility in Central City. No interest was capitalized during fiscal 1998.
 
                                       23
<PAGE>
    BUSINESS DEVELOPMENT COSTS.  In the fourth quarter of fiscal 1998, the
Company reviewed and evaluated certain capitalized costs relative to business
development efforts in specific geographic areas where there was a potential for
approval of casino gaming. As a result of the review process approximately
$96,000 of amounts previously capitalized was written off. The amount expensed
for fiscal 1997 was $2.7 million. The amount of such costs that continued to be
deferred at November 30, 1998 was approximately $3.1 million.
 
    SALE OF INTERESTS IN UNCONSOLIDATED AFFILIATE.  In the fourth quarter of
fiscal 1997, as a result of the Hard Rock Sale, the Company received $45.0
million cash and an additional $1.2 million cash in satisfaction of a note and
other amounts due the Company at the time of the sale. The Company recognized a
gain of approximately $27.4 million on the transaction.
 
    NET INCOME.  Net income for fiscal 1998 amounted to approximately $18.7
million including after-tax write downs of approximately $0.8 million relative
to business development costs and merger related costs. Net income for fiscal
1997 amounted to approximately $30.8 million, including the after-tax gain of
approximately $17.4 million attributable to the Hard Rock Sale and the after-tax
write-down of approximately $1.7 million related to certain business development
costs.
 
FISCAL YEAR ENDED NOVEMBER 30, 1997 COMPARED TO FISCAL YEAR ENDED NOVEMBER 30,
  1996
 
    The Company's consolidated net revenues for fiscal 1997 were $283.6 million,
an increase of $35.9 million, or 14.5%, from the $247.7 million recorded in
fiscal 1996. The improvement was substantially attributable to the $30.6 million
increase in net revenues produced by Harveys Casino Hotel. Net revenues for
fiscal 1997 from the Council Bluffs, Iowa property included a full twelve months
of operations of the complete facility while fiscal 1996 included only eleven
months of revenues from the riverboat casino and six full months of revenues
from the land-based facilities. Net revenues from the Company's Lake Tahoe
property declined by approximately $0.5 million, the result of adverse first
quarter weather conditions and severe flooding in northern Nevada and in many of
the northern California communities that provide many of the Lake Tahoe
property's customers. Mud slides triggered by the inclement weather closed U. S.
Highway 50, the major link between the south shore of Lake Tahoe and northern
California, for 42 days of the first quarter. Harveys Wagon Wheel experienced an
increase in net revenues of $6.3 million, a substantial portion of which was
recognized in the third and fourth quarters, after the opening of that
property's new parking garage. The revenue contribution from the management fees
and equity in earnings from the Hard Rock Hotel and Casino decreased
approximately $0.5 million, as a result of the Hard Rock Sale.
 
    CASINO.  Fiscal 1997 casino revenues increased $30.2 million, up 16.2% from
fiscal 1996 casino revenues of $186.4 million to $216.6 million. The twelve
months of gaming activity in Iowa produced an increase of approximately $23.6
million in casino revenues compared to those produced at the Council Bluffs
property during the initial eleven months of operations in fiscal 1996. The
Company's Lake Tahoe property suffered a decline in casino revenues of
approximately $0.8 million as a result of the adverse weather and road
conditions experienced in the first quarter. Harveys Wagon Wheel produced an
increase of approximately $7.4 million in casino revenues over the prior year
comparable period. Casino costs and expenses increased for the comparable
periods, up $13.8 million to $100.5 million for the current year period. The
Council Bluffs casino accounted for $10.6 million of the increase while the
Colorado operations accounted for approximately $4.3 million of the increase.
The Lake Tahoe operations produced a $1.1 million improvement in casino costs
due to lower payroll and related costs and the reduction of other operating
costs in reaction to the lower casino volume resulting from the impact of the
first quarter's adverse weather conditions.
 
                                       24
<PAGE>
    LODGING.  Lodging revenues of $32.2 million for fiscal 1997 were up $3.5
million, or 11.9%, from fiscal 1996. The hotel facility in Council Bluffs, which
opened at the end of May 1996, contributed an increase of $2.8 million in
lodging revenues during 1997, accounting for the majority of the lodging
revenues improvement. Lodging profits improved by approximately $1.7 million.
The decline in lodging profit margins was the result of the contribution from
the Council Bluffs hotel, which has a lower profit margin than the Lake Tahoe
hotel, becoming a more significant part of lodging profits and of the increase
in promotional costs at the Lake Tahoe hotel.
 
    FOOD AND BEVERAGE.  Food and beverage revenues improved by 11.4%, up $4.5
million to $44.4 million. Food and beverage revenues from the Council Bluffs
property, which included revenues from the land-based facilities for all of
1997, compared to six full months of the 1996 period, contributed an increase of
approximately $6.3 million. That increase was offset by declines at Lake Tahoe,
precipitated by the effects of adverse weather, and declines at Central City as
the result of outsourcing, commencing the second quarter of fiscal 1996, the
food service and a portion of the beverage service. Food and beverage profits
and margins declined for the period-to-period comparison primarily as a result
of the decision to attractively price the food and beverage offerings at the
Council Bluffs property to attract local customers.
 
    OTHER REVENUES.  Other revenues amounted to $11.8 million in fiscal 1997,
including $4.5 million in management fees and the Company's 40% equity interest
in the earnings from the Hard Rock Hotel and Casino, an improvement of $0.4
million from fiscal 1996. The improvement in other revenues was achieved despite
the fact that the contribution from the Hard Rock Hotel and Casino was
recognized for approximately 11 months of fiscal 1997 compared to a full year's
contribution in fiscal 1996.
 
    SG&A, DEPRECIATION AND AMORTIZATION, NET INTEREST EXPENSE.  Consolidated
selling, general and administrative expense increased 10.2%, up $6.8 million to
$73.9 million for fiscal 1997. The operations in Council Bluffs experienced an
increase of approximately $5.0 million in selling, general and administrative
expenses. The increase was attributable, in part, to the fact that the entire
Council Bluffs facility was in operation for all of fiscal 1997 compared to
eleven months and approximately six months of operations for the riverboat
casino and land based facilities, respectively, in fiscal 1996. Additionally,
the assessed value of the property was increased resulting in an increase in
property taxes of approximately $0.9 million. Certain fees required to be paid
on the basis of customer headcounts increased by approximately $1.8 million as
the result of increases in the number of customers visiting the Council Bluffs
property. The Lake Tahoe operations recognized an improvement in overall
selling, general and administrative expenses of approximately $0.1 million from
the fiscal 1996 period to the fiscal 1997 period. Selling, general and
administrative expenses increased by $1.8 million at the Central City property
as a result of an increase in promotional costs and a grand opening event
promoting the new parking garage. Depreciation and amortization expenses
increased by $2.6 million. The increase in depreciation was associated with the
expanded facilities in Council Bluffs and the opening of the Central City
parking garage. Interest expense, net of interest income and interest
capitalized, increased by approximately $4.7 million to $18.9 million for fiscal
1997. The increase was attributable to the senior subordinated notes which were
issued in May 1996, and to the effect of capitalizing approximately $2.6 million
of interest in fiscal 1996 in connection with the construction of the Council
Bluffs facilities compared to the effect of capitalizing approximately $0.4
million of interest in the current year in connection with the construction of
the parking facility in Central City.
 
    BUSINESS DEVELOPMENT COSTS.  In the fourth quarter of fiscal 1997, the
Company reviewed and evaluated certain capitalized costs relative to business
development efforts in specific geographical areas where there was a potential
for approval of casino gaming. As a result of the review process, amounts
previously capitalized with respect to real estate options, joint ventures,
legal and other costs were written off or revalued. The amount expensed in the
fourth quarter was approximately $2.7 million. The amount of such costs that
continued to be deferred at November 30, 1997 was approximately $0.9 million.
 
    SALE OF INTERESTS IN UNCONSOLIDATED AFFILIATE.  In the fourth quarter of
fiscal 1997, the Company sold its 40% equity interest in HRHC and all of the
Company's rights under a management agreement to manage
 
                                       25
<PAGE>
the operations of the Hard Rock Hotel and Casino. The Company received $45.0
million cash for its equity interest and the rights under the management
agreement and an additional $1.2 million cash in satisfaction of a note and
other amounts due the Company at the time of the sale. The Company recognized a
gain of approximately $27.4 million on the transaction.
 
    NET INCOME.  Net income for fiscal 1997 amounted to approximately $30.8
million, including the after-tax gain of approximately $17.4 million
attributable to the sale of the Company's interests in the Hard Rock Hotel and
Casino and the after-tax write-down of approximately $1.7 million related to
certain business development costs, compared to $11.3 million of net income for
fiscal 1996.
 
LIQUIDITY AND CAPITAL RESOURCES
 
    EFFECTS OF THE MERGER FINANCING.  At the Effective Time the leverage and
fixed charge obligations of the Company substantially increased. HAC financed
the Merger with (i) proceeds of approximately $75 million from the issuance of
its Class A Common to Voteco and its Class B Common to Colony III, (ii) proceeds
of approximately $55 million from the issuance of its 13 1/2% Series A Senior
Redeemable Convertible Cumulative Preferred Stock (the "Series A Preferred") to
Voteco and its 13 1/2% Series B Senior Redeemable Convertible Cumulative
Preferred Stock (the "Series B Preferred" and, together with the Series A
Preferred, the "Preferred Stock") to Colony III, (iii) borrowings of $172
million by the Company under a $185 million credit facility (the "Amended and
Restated Credit Facility"), and (iv) the Company's available cash (collectively,
the "Merger Financing").
 
    A portion of the Merger Financing was initially provided pursuant to a loan
(the "Loan") from a group of banks led by Wells Fargo Bank, National Association
("Wells Fargo") to HAC. Upon consummation of the Merger, the Loan was refinanced
principally through the Amended and Restated Credit Facility pursuant to an
Amended and Restated Credit Agreement among the Company, HCCMC, HIMC, HTMC and
HCR Services Company Inc. ("HCRSC"), as borrowers (the "Borrowers"), Wells
Fargo, as swingline lender, letter of credit issuer and agent and the lenders
party thereto. The Amended and Restated Credit Facility replaced the Company's
existing credit facility upon consummation of the Merger.
 
    The Amended and Restated Credit Facililty is secured by substantially all of
the Company's and the other Borrowers' assets including, subject to applicable
gaming approvals, a pledge of all of the capital stock of each of the Borrowers
(other than the Company's), mortgages on all material real property owned or
leased by the Borrowers and the accounts receivable, inventory, equipment and
intangibles of the Borrowers. The Amended and Restated Credit Facillity will
mature and be fully due and payable five years from the date of the Merger. The
permitted principal balance of the Amended and Restated Credit Facility will
reduce on a quarterly basis, commencing on the last day of the seventh fiscal
quarter following the date of the Merger. Interest on borrowings outstanding
under the Amended and Restated Credit Facility will be payable, at the Company's
option, at either the London Inter-Bank Offering Rate ("LIBOR") or an
alternative base rate, in each case plus an applicable margin. In the future,
the applicable margins may be changed, based on the ratio of the Borrowers'
total funded debt to EBITDA. The Amended and Restated Credit Facility contains a
number of covenants that, among other things, subject to applicable gaming
approvals, restrict the ability of the Company and the other Borrowers to
dispose of assets, incur additional indebtedness, prepay any of the Company's
$150 million, 10 5/8% Senior Subordinated Notes, due 2006 (the "Senior
Subordinated Notes"), pay dividends, create liens on assets, make investments,
loans or advances, engage in mergers or consolidations, change the business
conducted by the Company or the other Borrowers or engage in certain
transactions with affiliates and otherwise restrict certain corporate
activities. In addition, under the Amended and Restated Credit Facility, the
Company and the other Borrowers are required to maintain specified financial
ratios and net worth requirements, satisfy specified financial tests, including
interest coverage tests, and maintain certain levels of annual capital
expenditures. The Amended and Restated Credit Facility contains events of
default customary for facilities of this nature. Specifically, the Amended and
Restated Credit Facility prohibits the payment of cash dividends on the
Preferred Stock, unless the Leverage Ratio is less than or equal to 3 to 1.
"Leverage Ratio" is
 
                                       26
<PAGE>
calculated by reference to the Company, HCCMC, HIMC, HLVMC and HTMC and any
other subsidiaries of the Company subsequently designated under the Amended and
Restated Credit Facility and refers to the ratio of total indebtedness to
EBITDA.
 
    The Senior Subordinated Notes are governed by an indenture (the "Indenture")
and are general unsecured obligations of the Company, subordinated in right of
payment to all existing and future Senior Debt of the Company (as defined in the
Indenture). The Senior Subordinated Notes are guaranteed by each of the
Restricted Subsidiaries of the Company (as defined in the Indenture). Each
guarantee is a general unsecured obligation of the guaranteeing Restricted
Subsidiary, subordinated in right of payment to all existing and future Senior
Debt of each guaranteeing Restricted Subsidiary. The guaranteeing Restricted
Subsidiaries are HCCMC, HIMC, HLVMC and HTMC.
 
    Interest on the Senior Subordinated Notes is payable semi-annually on June 1
and December 1 of each year. The Senior Subordinated Notes will mature on June
1, 2006. The Senior Subordinated Notes are redeemable at the option of the
Company, in whole or in part, at any time on or after June 1, 2001 at prices
ranging from 105.313% of the principal amount plus accrued and unpaid interest,
to 100% of the principal amount plus accrued and unpaid interest beginning June
1, 2004 and thereafter.
 
    The Company recently amended the Indenture with the changes becoming
operative at the Effective Time. The Company sought and received the consent of
the holders of its Senior Subordinated Notes to: (i) the one-time waiver of the
applicability of the Indenture to the Merger, including the waivers of (a) the
change of control covenant in the Indenture and (b) the "Merger, Consolidation
or Sale of Assets" provision in the Indenture that might have restricted the
financing of the Merger and related transactions, and (ii) the amendment of the
definition of "Consolidated Cash Flow" in the Indenture to add back certain
costs related to the Merger. The Company paid a consent fee to consenting
holders of the Senior Subordinated Notes equal to 9% of the principal amount of
the holders' Senior Subordinated Notes.
 
    The Indenture contains certain covenants that impose limitations on, among
other things, (i) the incurrence of additional indebtedness by the Company or
any Restricted Subsidiary, (ii) the payment of dividends, (iii) the repurchase
of capital stock and the making of certain other Restricted Payments and
Restricted Investments (as defined in the Indenture) by the Company or any
Restricted Subsidiary, (iv) mergers, consolidations and sales of assets by the
Company or any Restricted Subsidiary, (v) the creation or incurrence of liens on
the assets of the Company or any Restricted Subsidiary, and (vi) transactions by
the Company or any of its subsidiaries with Affiliates (as defined in the
Indenture). These limitations are subject to a number of qualifications and
exceptions as described in the Indenture.
 
    The Series A Preferred and Series B Preferred are entitled to quarterly
dividends at an annual rate of 13 1/2% of the $550 per share liquidation value
(the "Liquidation Value"). To the extent not paid in cash, dividends will
cumulate and compound quarterly at an annual rate of 13 1/2% of the Liquidation
Value. The Series A Preferred and Series B Preferred are subject to mandatory
redemption on February 1, 2011 for cash at the Liquidation Value plus any
accrued and unpaid dividends, out of any funds legally available therefor. The
Company has the right to redeem the Series A Preferred and the Series B
Preferred at any time for cash at the Liquidation Value plus any accrued and
unpaid dividends. If a Change of Control (as defined in the Certificates of
Designation for the Preferred Stock) of the Company occurs, the Company will be
required to offer to purchase all outstanding shares of the Series A Preferred
and Series B Preferred (the "Change of Control Offer") for cash at a price of
101% of the Liquidation Value plus any accrued and unpaid dividends. However,
the Company will not be required to make the Change of Control Offer on or prior
to the earlier of (i) the date on which all of the Company's Senior Subordinated
Notes have been repaid, repurchased or redeemed in full, and (ii) June 1, 2006,
the date the Senior Subordinated Notes mature. The Certificates of Designation
contain covenants which limit restricted payments or investments; limit
consolidation, merger and the sale of assets; mandate the provision of financial
reports; and limit business activities. In the event of a sale or other
disposition of all but not less than all of the Series A Preferred and Series B
Preferred by the original holders and/or certain related parties (but not
 
                                       27
<PAGE>
any other transferees) to one or more persons other than the original holders
and certain related parties, the dividend rate and other rights, preferences and
privileges of the Series A Preferred and Series B Preferred may, at the election
of the holders of a majority of the Series A Preferred, be amended so that the
Series A Preferred and Series B Preferred would, in the opinion of an
independent financial advisor chosen by the electing holders, have a market
value of 100% of the Liquidation Value thereof plus any accrued and unpaid
dividends; PROVIDED that in no event shall the reset dividend rate exceed
15 1/2% per annum. Alternatively, the electing holders may effectuate the
foregoing by exchanging all of the Series A Preferred and Series B Preferred for
a new class of preferred stock having terms to which the Series A Preferred and
Series B Preferred would have been reset as aforesaid. Upon the receipt of all
applicable gaming approvals the Series A Preferred and Series B Preferred are
convertible, at the per share rate of 28.7309164 shares of the Class A Common
and Class B Common, respectively, subject to customary anti-dilution
adjustments. Any accrued and unpaid dividends at the time of a conversion will
be required to be paid in cash or, at the Company's election, may be satisfied
with additional shares of the New Common Stock in an amount to be determined in
accordance with the conversion rate.
 
    Immediately following the Effective Time, the Company used $22.0 million of
its available cash to pay down the outstanding balance under the Amended and
Restated Credit Facility. After that payment, the Company had $300.0 million in
long-term debt consisting of $150.0 million of Senior Subordinated Notes and
$150.0 million outstanding under the Amended and Restated Credit Facility. After
the payment, the Company had approximately $27.0 million in cash and cash
equivalents and approximately $34.2 million available under the Amended and
Restated Credit Facility, net of an outstanding letter of credit and subject to
compliance with certain financial covenants.
 
    As of the Effective Time, the Company was in compliance with the covenants
under the Amended and Restated Credit Facility, the Indenture and the
Certificates of Designation.
 
    The Company has budgeted $18.6 million for maintenance capital expenditures
and property improvements and approximately $15.0 million for the construction
of a parking garage at the Council Bluffs property in fiscal 1999. The Company
believes that its existing cash and cash equivalents, cash flows from operations
and its borrowing capacity under the Amended and Restated Credit Facility will
be sufficient to meet the cash requirements of its existing operations during at
the least the next twelve months, including capital improvements and
replacements at the operating properties and debt service requirements. The
Company currently believes that its capital expenditures beyond the next twelve
months will consist of debt service requirements and capital improvements and
replacements in the ordinary course, which the Company expects to be met by
then-existing cash, cash flows from operations and borrowing capacity under the
Amended and Restated Credit Facility. The Company does not currently anticipate
incurring material capital expenditures, balloon or other extraordinary payments
on long-term obligations or any other extraordinary demands or commitments
beyond the next twelve months. The Company does not expect that cash dividends
will be paid on the Preferred Stock prior to 2004 because of, among other
reasons, restrictions in the Amended and Restated Credit Facility and the
Indenture on the payment of cash dividends.
 
    Set forth below is a description of the Company's historical liquidity and
capital resources.
 
    YEAR ENDED NOVEMBER 30, 1998.  The Company's primary sources of liquidity
and capital resources during fiscal 1998 were cash flow from operations of
approximately $38.4 million and the proceeds of approximately $4.3 million from
the exercise of options to purchase shares of the Common Stock.
 
    During fiscal 1998, the Company expended approximately $17.7 million in cash
for income taxes. Additionally, the Company made cash payments for dividends of
approximately $2.0 million during the year and incurred additional cash
expenditures of approximately $17.1 million in connection with capital
improvements and replacements, approximately $5.0 million of which was related
to casino expansion and remodeling in Council Bluffs, which was completed near
the end of the first quarter of fiscal 1998.
 
                                       28
<PAGE>
    YEAR ENDED NOVEMBER 30, 1997.  In addition to cash flows from operations and
borrowings under a $115 million reducing, revolving credit agreement (the
"Credit Facility"), in fiscal 1997, the Company received $46.2 million when it
sold its interests in HRHC and approximately $3.7 million form the sale of other
assets.
 
    Cash flow from operations for fiscal year 1997 was approximately $44.6
million. On October 24, 1997 the Company received $45.0 million cash when it
sold: (i) all of the capital stock of HRHC held by the Company, representing 40%
of the then outstanding capital stock of HRHC, and (ii) all of the Company's
rights under a management agreement between HRHC and HLVMC relating to the
management and operations of the Hard Rock Hotel and Casino. The Company also
received approximately $1.2 million cash in satisfaction of a note and other
amounts due the Company from HRHC as of October 24, 1997. Additionally, the
Company sold, in separate transactions in fiscal year 1997, a note receivable
from an unrelated party and the Company's airplane, realizing net proceeds of
approximately $3.7 million from these transactions.
 
    During fiscal year 1997, the Company expended approximately $1.5 million in
cash relative to construction payables and retentions associated with the
construction of the hotel and convention center portion of Harveys Casino Hotel
in Council Bluffs and expended approximately $7.6 million in cash relative to
the construction of a parking garage at Harveys Wagon Wheel in Central City,
Colorado. Additionally, the Company made cash payments for dividends of
approximately $2.0 million during the period, incurred additional cash
expenditures of approximately $16.9 million in connection with capital
improvements and replacements and made net cash payments of approximately $33.3
million reducing the Company's outstanding borrowings.
 
    YEAR ENDED NOVEMBER 30, 1996.  During fiscal year 1996, the Company
completed the construction of the Council Bluffs project, expending $36.8
million in cash and financing the acquisition of the riverboat and equipment
through a $20 million riverboat financing agreement. Additionally, the Company
made cash payments for dividends of approximately $1.7 million during the year
and incurred additional cash expenditures of approximately $11.6 million in
connection with capital improvements and replacements at the operating
properties and corporate offices.
 
    On April 30, 1996, the Company paid the holders of approximately $11.9
million of 12% subordinated notes payable by HWW (the "HWW Notes") $6 million in
cash and issued an aggregate of $8 million in subordinated notes in exchange for
all of the outstanding HWW Notes and unpaid interest accrued thereon (the "Debt
Exchange"). On such date, the Company also exchanged 382,500 shares of the
Company's common stock for: (i) 30% of the equity interests of HWW, (ii) the
rights to an approximately $3 million priority return from HWW, and (iii) an
option to acquire an additional 5% of the equity interests in HWW (the "Equity
Exchange").
 
    On May 22, 1996, the Company completed its public debt offering of $150
million of Senior Subordinated Notes. The proceeds, $145.5 million net of
underwriting discounts and commissions, were used to: (i) pay off a $10 million
note payable to a private investor, (ii) retire the $19 million principal
balance of the note payable under a riverboat financing agreement, (iii) redeem,
for $7.8 million plus accrued and unpaid interest, the $8 million aggregate
principal amount of subordinated notes issued in the Debt Exchange, and (iv)
reduce the outstanding principal balance under the Credit Facility.
 
YEAR 2000
 
    Many technological systems (including those that employ embedded technology
such as microcontrollers) rely on hardware, software and components that were
originally designed to recognize a date by using the last two digits of a four
digit year. Tasks performed using these truncated fields may not work properly
for dates from 2000 and beyond. This could result in system failures or
miscalculations causing disruptions of, or the inability to engage in, normal
business operations. This is generally known as the "Year 2000 Problem".
 
                                       29
<PAGE>
    The Company has established a task force to coordinate its response to the
Year 2000 Problem. This task force includes the Company's Chief Executive
Officer, Chief Financial Officer, Corporate Director of Internal Audit, and the
Director of Information Services as well as support staff. An outside consultant
was also engaged who assisted in establishing a Year 2000 compliance program for
the Company.
 
    The Year 2000 compliance programs developed for the Company consist of the
following phases: (i) compilation of an inventory of systems and equipment that
may cause a Year 2000 Disruption ("Critical Systems and Equipment"), (ii)
identification and priorization of the Critical Systems and Equipment from the
inventory compiled and inquiries of third parties with whom the Company does
significant business (i.e., vendors and suppliers) as to the state of their Year
2000 readiness, (iii) analysis of the identified Critical Systems and Equipment
to determine which systems and equipment are not Year 2000 compliant and
evaluation of the costs to repair or replace those systems, and (iv) repair or
replacement and testing of noncompliant Critical Systems and Equipment and the
testing of Critical Systems and Equipment for which representation as to Year
2000 compliance has not been received or for which representation has been
received but has not been confirmed.
 
    The Company is not currently planning to use any independent verification
and validation process to assure the reliability of their risk and cost
estimates. However, this position will continue to be reevaluated as the Year
2000 compliance programs proceed at the Company's facilities.
 
    The Company also initiated a more limited review of the Year 2000 Problem as
it relates to business associates of the Company, including material vendors,
suppliers, financial institutions and utility and communications providers. The
scope of the review was generally limited to inquiries of such business
associates. Based on the responses received, the Company is not aware of any
Year 2000 Problem impact on a material business associate that would have a
material adverse affect of the Company's business operations. However, there can
be no assurances that all of the Company's material business associates will be
Year 2000 compliant in a timely manner.
 
    The Company relies on systems in many areas of its business operations
("Systems") including casino operations, retail outlets, hotel operations,
accounting and finance, facilities and environmental, communications and
administration. The Company has not developed a comprehensive contingency plan,
although a number of Systems are "backed up" by manual procedures that have been
employed during times Systems have been unavailable. The Company will continue
to assess the need for a comprehensive contingency plan as implementation of the
corrective action plan continues and as the review of business associates'
readiness progresses.
 
    The Company is in the process of implementing its corrective action plan.
The Company is utilizing internal resources and external resources to achieve
the plan objectives. The Company anticipates that the required modifications,
upgrades and replacements of Systems will most likely be completed in the second
quarter of fiscal year 1999, allowing for additional testing and revisions, if
necessary, before the year 2000. The Company believes that its corrective action
plan, including the timelines, is adequate and realistic. Nevertheless, if one
or more of the Company's Systems has been overlooked or if implementation of the
corrective action plan fails to achieve Year 2000 compliance for one or more
Systems, or if a key business associate fails to provide necessary products or
services due to Year 2000 Problem business disruptions, there could be a
material adverse impact on the Company's business operations or financial
performance. With respect to the Company's Systems, the most reasonable likely
worst case scenario if a Year 2000 Problem occurred would be the necessity to
perform manually those procedures customarily performed by a noncompliant
System. This could result in a slowdown of normal business operations and would
likely be more costly. The performing of procedures manually would continue
until such time as the noncompliant System could be made complaint or a suitable
alternative could be found and installed. With respect to a key business
associate, the most reasonable likely worst case scenario if a Year 2000 Problem
occurred would be the failure to deliver to the Company essential utilities,
which could result in the inability of one
 
                                       30
<PAGE>
or more of the Company's hotel/casinos to operate and require the affected
property or properties to close until such utilities could be restored.
 
    The Company estimates that the costs to achieve Year 2000 compliance,
including those costs that are capitalizable, will be approximately $4.4 million
and will be expended through 2000. The Company incurred costs of approximately
$1.0 million in fiscal year 1998, including approximately $0.7 million that was
capitalized. The Company expects to incur an additional cost of approximately
$3.4 million in fiscal 1999, approximately $3.0 million of which will be for
capital acquisitions. The Company believes that its expenditures in fiscal 2000
will not be material. These estimates are based on the Company's evaluation and
experience to date and are subject to modification as implementation of the
corrective action plan progresses. There can be no assurances that the estimated
costs are adequate or achievable, and actual costs could materially differ from
the estimate.
 
ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
 
    The Company is exposed to market risk from changes in interest rates. The
Company had no variable rate debt at November 30, 1998 and 1997. However, the
fair value of its fixed rate long-term debt is sensitive to differences between
market interest rates and rates at the inception of the debt obligation. A
hypothetical immediate 100 basis point increase in interest rates at November
30, 1998 and 1997 would have decreased the market value of the Company's fixed
rate long-term debt by approximately $12.1 million at each of those dates.
Conversely, a 100 basis point decrease in interest rates would be have increased
the market value of the Company's outstanding long-term debt at both November
30, 1998 and 1997 by approximately $15.6 million.
 
    The Company did not enter into any derivative financial contracts in fiscal
1998 or 1997. The Company may use derivative financial instruments in the future
as a risk management tool. The Company does not use derivative financial
instruments for speculative or trading purposes.
 
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
 
    The consolidated financial statements and supplementary data are as set
forth in the "INDEX TO CONSOLIDATED FINANCIAL STATEMENTS" on page 47.
 
ITEM 9. CHANGES AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL
  DISCLOSURE
 
    Not applicable
 
                                       31
<PAGE>
                                    PART III
 
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS
 
    The table below sets forth the directors and executive officers of the
Company as of the date hereof:
 
<TABLE>
<CAPTION>
NAME                                        AGE                                    POSITION
--------------------------------------      ---      --------------------------------------------------------------------
<S>                                     <C>          <C>
Thomas J. Barrack, Jr.................          51   Chairman of the Board of Directors
Charles W. Scharer....................          43   President and Chief Executive Officer; Director
Stephen L. Cavallaro..................          41   Executive Vice President and Chief Operating Officer
John J. McLaughlin....................          43   Senior Vice President, Chief Financial Officer, Secretary and
                                                       Treasurer
Gary D. Armentrout....................          51   Senior Vice President--Business Development and Government Relations
James J. Rafferty.....................          43   Senior Vice President--Corporate Marketing
Edward B. Barraco.....................          54   Senior Vice President and General Manager--Harveys Wagon Wheel
Kevin O. Servatius....................          46   Senior Vice President and General Manager--Harveys Resort
Verne H. Welch, Jr....................          61   Senior Vice President and General Manager--Harveys Casino Hotel
John R. Bellotti......................          41   Corporate Vice President of Human Resources
Kelvin L. Davis.......................          35   Director
</TABLE>
 
    THOMAS J. BARRACK, JR. serves as Chairman of the Board of Directors of the
Company. Mr. Barrack became a director at the Effective Time pursuant to the
Merger Agreement and was appointed Chairman of the Board at the Effective Time.
Mr. Barrack also holds a minority membership interest in Voteco. Mr. Barrack has
served as Chairman and Chief Executive Officer of each of Colony Capital and
Colony Advisors, Inc. ("Colony Advisors") since August 1997. Colony Capital and
Colony Advisors are international real estate investment and management firms.
Mr. Barrack served as President of Colony Capital and Colony Advisors from
August 1992 and September 1991, respectively, until August 1997. Mr. Barrack is
a Director of Continental Airlines, Inc., a commercial airline, Public Storage,
Inc., a developer, owner and operator of self-storage facilities, and
Kennedy-Wilson, Inc., a worldwide real estate marketing, brokerage and
investment services company.
 
    CHARLES W. SCHARER serves as a Director and President and Chief Executive
Officer of the Company. He was appointed President and Chief Executive Officer
of the Company effective December 1, 1995. He has served as a director of the
company since April 1995 and served as Chairman of the Board of Directors from
May 1, 1997 to the Effective Time. Prior to becoming President and Chief
Executive Officer of the company, Mr. Scharer served as Executive Vice President
from August 1995. He was appointed Chief Financial Officer in July 1993 and
Treasurer in September 1993.
 
    STEPHEN L. CAVALLARO serves as Executive Vice President and Chief Operating
Officer and as a non-voting observer on the Board of Directors of the Company.
Prior to the Effective Time, he served as Chief Operating Officer of Subsidiary
Operations of the Company since February 1996. In this position he has had
operational responsibility for Harveys Wagon Wheel in Central City Colorado and
Harveys Casino Hotel in Council Bluffs, Iowa. Until October 24, 1997, when the
Hard Rock Sale was consummated, Mr. Cavallaro also had operational
responsibility for the Hard Rock Hotel and Casino in Las Vegas, Nevada. Mr.
Cavallaro joined the Company in February 1994 to direct and develop the Hard
Rock Hotel and Casino as Senior Vice President and General Manager--Hard Rock
Hotel. From 1992 to 1994, he served as Vice President and General Manager of the
Palace Station.
 
    JOHN J. MCLAUGHLIN serves as Senior Vice President, Chief Financial Officer,
Secretary and Treasurer. He was appointed Senior Vice President, Chief Financial
Officer and Treasurer of the Company in
 
                                       32
<PAGE>
March 1996. Mr. McLaughlin became Secretary of the Company as of the Effective
Time. He joined the Company in September 1995 as Chief Financial Officer. From
January 1993 until September 1995, he was Chief Financial Officer of President
Riverboat Casino, Inc. Mr. McLaughlin is a Certified Public Accountant.
 
    GARY D. ARMENTROUT serves as Senior Vice President--Business Development and
Government Relations. He has served as Senior Vice President--Business
Development and Government Relations of the Company since May 1995. In this
position he has been responsible for identifying and pursuing the development of
new projects for the Company. Prior to joining the Company, Mr. Armentrout was
employed by President Riverboat Casinos, Inc. where he served as Vice
President--Gaming from May 1990 until June 1994 when he was appointed Vice
President--Gaming Development.
 
    JAMES J. RAFFERTY serves as Senior Vice President--Corporate Marketing. He
was appointed Corporate Vice President of Marketing of the Company in December
1995 and was promoted to Senior Vice President of Corporate Marketing in 1997.
Mr. Rafferty served as Vice President, Marketing--Lake Tahoe from 1992 to 1995.
 
    EDWARD B. BARRACO serves as Senior Vice President and General
Manager--Harveys Wagon Wheel. He has served as the Company's Senior Vice
President and General Manager--Harveys Wagon Wheel since July 1995. From 1985 to
1995, Mr. Barraco served as Assistant General Manager--Lake Tahoe, where he was
responsible for overseeing all aspects of the operation on an assigned shift.
 
    KEVIN O. SERVATIUS serves as Senior Vice President and General
Manager--Harveys Resort. He was appointed Senior Vice President and General
Manager--Harveys Resort in August 1995. From March 1993 to August 1995, Mr.
Servatius was Senior Vice President and General Manager of Harrah's--Lake Tahoe.
He serves as Vice Chairman of the Board of the Tahoe Douglas Visitors Authority
and serves as President and board member of the Lake Tahoe Gaming Alliance.
 
    VERNE H. WELCH, JR. serves as Senior Vice President and General
Manager--Harveys Casino Hotel. He has served as Senior Vice President and
General Manager--Harveys Casino Hotel since September 1995. Prior to moving to
the Council Bluffs property, Mr. Welch served as Senior Vice President and
General Manager--Lake Tahoe from December 1993 to September 1995. From 1988 to
December 1993, he served as Vice President--Casino Operations.
 
    JOHN R. BELLOTTI serves as Corporate Vice President of Human Resources. He
was appointed Corporate Vice President of Human Resources of the Company in
August 1997. Prior to joining the Company in August 1997, Mr. Bellotti was
employed by Hyatt Hotels Corporation, serving most recently as Assistant Vice
President of Human Resources from 1993 to 1997.
 
    KELVIN L. DAVIS serves as a Director. Mr. Davis became a director at the
Effective Time pursuant to the Merger Agreement. Mr. Davis also holds a majority
membership interest in Voteco. Mr. Davis has served as President and Chief
Operating Officer of each of Colony Capital and Colony Advisors since August
1997. He served as Executive Vice President of Colony Capital and Colony
Advisors from August 1992 and September 1991, respectively, to August 1997. Mr.
Davis is a director of Franchise Finance Corporation of America, a specialty
real estate financing company.
 
    Mark Hedstrom, Chief Financial Officer of Colony Capital, serves as a
non-voting observer on the Board of Directors.
 
COMPLIANCE WITH SECTION 16(A) OF THE SECURITIES AND EXCHANGE ACT
 
    Section 16(a) of the Exchange Act requires the Company's executive officers
and directors and persons who own more than 10% of the Company's Common Stock to
file reports of ownership on Forms 3, 4 and 5 with the Commission. Executive
officers, directors and 10% stockholders are required by the SEC to furnish the
Company with copies of all Forms 3, 4 and 5 they file.
 
                                       33
<PAGE>
    Based solely on the Company's review of the copies of such forms it has
received, the Company believes that all its executive officers, directors and
greater than 10% beneficial owners complied with all the filing requirements
applicable to them with respect to transactions during fiscal 1998.
 
LEGAL PROCEEDINGS INVOLVING DIRECTORS, OFFICERS, AFFILIATES OR BENEFICIAL OWNERS
 
    No director, officer or affiliate of the Company or beneficial owner of more
than 5% of the outstanding shares of Common Stock, or any associate thereof, is
a party adverse to the Company or any of its subsidiaries in any lawsuit nor has
a material adverse interest thereto.
 
ITEM 11. EXECUTIVE COMPENSATION
  SUMMARY COMPENSATION TABLE
 
    The following table sets forth the compensation paid by the Company during
the three fiscal years ended November 30, 1998 to the Chief Executive Officer of
the Company and each of the four other most highly compensated executive
officers of the Company (the "Named Executive Officers"). Messrs. Scharer,
Cavallaro, McLaughlin, Armentrout and Servatius continued to serve in identical
positions with the Company as of the Effective Time, in certain cases pursuant
to new employment agreements and new benefit plans, except that Mr. Scharer
serves as a director of the Company, but not as Chairman of the Board following
the Effective Time and Mr. McLaughlin also serves as Secretary following the
Effective Time. See "ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS".
 
                           SUMMARY COMPENSATION TABLE
 
<TABLE>
<CAPTION>
                                                                                         LONG-TERM AWARDS
                                                                ANNUAL COMPENSATION   ----------------------
                                                                                      SECURITIES
                                                    YEAR        --------------------  UNDERLYING     LTIP       ALL OTHER
                                                    ENDED        SALARY      BONUS      OPTIONS     PAYOUTS   COMPENSATION
NAME AND PRINCIPAL POSITION                     NOVEMBER 30,       ($)        ($)         (#)         ($)        ($)(1)
---------------------------------------------  ---------------  ---------  ---------  -----------  ---------  -------------
<S>                                            <C>              <C>        <C>        <C>          <C>        <C>
Charles W. Scharer(2)........................          1998       467,500    448,800      --         118,034       17,400
Chairman of the Board, President                       1997       428,462    360,000     183,500      81,384       11,067
and Chief Executive Officer                            1996       347,400    168,000     135,000      --            8,845
 
Stephen L. Cavallaro(3)......................          1998       351,346    263,630      --          80,964       12,905
Chief Operating Officer of                             1997       333,462    240,000      48,800      61,718        9,115
Subsidiary Operations                                  1996       267,785    120,000      28,000      --            3,873
 
John J. McLaughlin(4)........................          1998       250,000    179,250      --          --            4,800
Senior Vice President, Chief                           1997       221,346    165,000      41,000      --            6,735
Financial Officer and Treasurer                        1996       175,000     70,000      10,000      --              808
 
Gary D. Armentrout...........................          1998       236,359    128,510      --          --            4,800
Senior Vice President--Business                        1997       234,598    130,000      41,000      --            5,512
Development and Government Relations                   1996       210,384     67,735      10,000      --            3,081
 
Kevin O. Servatius...........................          1998       280,000     80,460      --          --            6,045
Senior Vice President and General                      1997       268,846    105,000      51,000      --            8,037
Manager--Harveys Resort                                1996       231,538    100,000      10,000      --            1,828
</TABLE>
 
------------------------
 
(1) Amounts include the Company's 401(k) Plan contributions, payments of term
    life insurance premiums and above-market rate interest earned on deferred
    compensation. In fiscal 1998 the Company's 401(k) Plan contributions were
    $4,800 for each of the Named Executive Officers. In fiscal 1998, the Company
    paid a premium of $1,130 on a term life insurance policy insuring the life
    of Mr. Scharer. In
 
                                       34
<PAGE>
    fiscal 1998, the above-market rate interest earned by Mr. Scharer, Mr.
    Cavallaro and Mr. Servatius on deferred compensation amounted to $11,470,
    $8,105 and $1,245, respectively.
 
(2) On December 1, 1995, Mr. Scharer became the Company's President and Chief
    Executive Officer and on May 1, 1997 was elected Chairman of the Board of
    Directors.
 
(3) On February 1, 1996, Mr. Cavallaro became Chief Operating Officer of
    Subsidiary Properties.
 
(4) Mr. McLaughlin was appointed Chief Financial Officer on September 18, 1995,
    and was elected Senior Vice President, Chief Financial Officer and Treasurer
    in March 1996.
 
OPTION GRANTS
 
    There were no options granted to the Named Executive Officers during fiscal
year 1998.
 
OPTION EXERCISES AND HOLDINGS
 
    The table below sets forth information concerning the exercise of options
during the fiscal year ended November 30, 1998 and unexercised options held at
the end of such year by the Named Executive Officers.
 
               AGGREGATE OPTION EXERCISES IN LAST FISCAL YEAR AND
                          FISCAL YEAR-END OPTION VALUE
 
<TABLE>
<CAPTION>
                                                                        NUMBER OF SHARES         VALUE OF UNEXERCISED
                                                                     UNDERLYING UNEXERCISED     IN-THE-MONEY OPTIONS AT
                                                                   OPTIONS AT FISCAL YEAR END    FISCAL YEAR END($)(1)
                           SHARES ACQUIRED ON    AGGREGATE VALUE   --------------------------  -------------------------
NAME                           EXERCISE(#)          REALIZED       EXERCISABLE  UNEXERCISABLE  EXERCISABLE UNEXERCISABLE
-------------------------  -------------------  -----------------  -----------  -------------  ----------  -------------
<S>                        <C>                  <C>                <C>          <C>            <C>         <C>
Charles W. Scharer.......          --                  --              56,500        159,000    1,509,612     4,248,289
 
Stephen L. Cavallaro.....          --                  --              46,265         32,535    1,236,145       869,296
 
John J. McLaughlin.......          --                  --              13,665         27,335      365,112       730,358
 
Gary D. Armentrout.......          --                  --              13,665         27,335      365,112       730,358
 
Kevin O. Servatius.......          --                                  17,000         34,000      454,220       908,439
</TABLE>
 
------------------------
 
(1) Options are in-the-money if the fair market value of the underlying
    securities exceeds the exercise price of the options.
 
    The Merger Agreement provided that each outstanding option to acquire the
Common Stock be cancelled immediately prior to the Effective Time in exchange
for a cash payment equal to the product of the number of shares of Common Stock
subject to such option and the excess of the consideration payable per share of
Common Stock in the Merger over the per share exercise price of such option. See
"ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS".
 
                                       35
<PAGE>
LONG-TERM INCENTIVE PLAN
 
    In fiscal year 1994, the Company adopted a Long-Term Incentive Plan. The
table below sets forth awards made to Named Executive Officers in the last
fiscal year under the Company's Long-Term Incentive Plan.
 
              LONG-TERM INCENTIVE PLANS-AWARDS IN FISCAL YEAR 1998
 
<TABLE>
<CAPTION>
                                                                                          ESTIMATED FUTURE PAYOUTS UNDER
                          NUMBER OF SHARES                                                  NON-STOCK PRICE-BASED PLANS
                           UNITS OR OTHER        PERFORMANCE OR OTHER PERIOD UNTIL      -----------------------------------
NAME                           RIGHTS                   MATURATION OR PAYOUT             THRESHOLD    TARGET      MAXIMUM
-----------------------  -------------------  ----------------------------------------  -----------  ---------  -----------
<S>                      <C>                  <C>                                       <C>          <C>        <C>
Charles W. Scharer.....          --           Three years ending November 30, 1998       $  35,063   $  70,125   $ 105,188
                                 --           Three years ending November 30, 1999       $  35,063   $  70,125   $ 105,188
                                 --           Three years ending November 30, 2000       $  58,438   $  85,708   $ 120,771
 
Stephen L. Cavallaro...          --           Three years ending November 30, 1998       $  20,505   $  41,009   $  61,514
                                 --           Three years ending November 30, 1999       $  20,505   $  41,009   $  61,514
                                 --           Three years ending November 30, 2000       $  20,505   $  41,009   $  61,514
 
John J. McLaughlin.....          --           Three years ending November 30, 1998       $  12,500   $  25,000   $  37,500
                                 --           Three years ending November 30, 1999       $  12,500   $  25,000   $  37,500
                                 --           Three years ending November 30, 2000       $  12,500   $  25,000   $  37,500
 
Gary D. Armentrout.....          --           Three years ending November 30, 1998       $  11,804   $  23,608   $  35,412
                                 --           Three years ending November 30, 1999       $  11,804   $  23,608   $  35,412
                                 --           Three years ending November 30, 2000       $  11,804   $  23,608   $  35,412
 
Kevin O. Servatius.....          --           Three years ending November 30, 1998       $  14,000   $  28,000   $  42,000
                                 --           Three years ending November 30, 1999       $  14,000   $  28,000   $  42,000
                                 --           Three years ending November 30, 2000       $  14,000   $  28,000   $  42,000
</TABLE>
 
    Upon consummation of the Merger, the Long-Term Incentive Plan was
terminated, and Messrs. Scharer, Cavallaro and McLaughlin each received lump sum
payments at maximum in connection therewith. See "ITEM 13. CERTAIN RELATIONSHIPS
AND RELATED TRANSACTIONS". Pursuant to the Company's Change of Control Plan (the
"Change of Control Plan"), Messrs. Armentrout and Servatius similarly received
lump sum payments at maximum.
 
                                       36
<PAGE>
SUPPLEMENTAL EXECUTIVE RETIREMENT PLAN
 
    The tables below set forth total benefits payable to executive employees,
including the Named Executive Officers, who participate in the Company's
Supplemental Executive Retirement Plan (the "SERP"). Amounts shown represent the
aggregate amounts to which such employees are entitled under the SERP.
 
                  SUPPLEMENTAL EXECUTIVE RETIREMENT PLAN TABLE
                              (SEVEN YEAR VESTING)
 
<TABLE>
<CAPTION>
                                                                     ESTIMATED ANNUAL BENEFITS AT AGE 65 FOR
                                                                       REPRESENTATIVE YEARS OF SERVICE($)
                                                              -----------------------------------------------------
AVERAGE BASE COMPENSATION FOR FINAL FIVE YEARS($)                 3          4          5          6          7
------------------------------------------------------------  ---------  ---------  ---------  ---------  ---------
<S>                                                           <C>        <C>        <C>        <C>        <C>
125,000.....................................................     12,500     25,000     37,500     50,000     62,500
150,000.....................................................     15,000     30,000     45,000     60,000     75,000
175,000.....................................................     17,500     35,000     52,500     70,000     87,500
200,000.....................................................     20,000     40,000     60,000     80,000    100,000
225,000.....................................................     22,500     45,000     67,500     90,000    112,500
250,000.....................................................     25,000     50,000     75,000    100,000    125,000
300,000.....................................................     30,000     60,000     90,000    120,000    150,000
400,000.....................................................     40,000     80,000    120,000    160,000    200,000
450,000.....................................................     45,000     90,000    135,000    180,000    225,000
500,000.....................................................     50,000    100,000    150,000    200,000    250,000
</TABLE>
 
                  SUPPLEMENTAL EXECUTIVE RETIREMENT PLAN TABLE
                               (20 YEAR VESTING)
 
<TABLE>
<CAPTION>
                                                                          ESTIMATED ANNUAL BENEFITS AT AGE 65 FOR
                                                                             REPRESENTATIVE YEARS OF SERVICE($)
                                                                         ------------------------------------------
AVERAGE BASE COMPENSATION FOR FINAL FIVE YEARS($)                            5         10         15         20
-----------------------------------------------------------------------  ---------  ---------  ---------  ---------
<S>                                                                      <C>        <C>        <C>        <C>
125,000................................................................     15,625     31,250     46,875     62,500
150,000................................................................     18,750     37,500     56,250     75,000
175,000................................................................     21,875     43,750     65,625     87,500
200,000................................................................     25,000     50,000     75,000    100,000
225,000................................................................     28,125     56,250     84,375    112,500
250,000................................................................     31,250     62,500     93,750    125,000
300,000................................................................     37,500     75,000    112,500    150,000
400,000................................................................     50,000    100,000    150,000    200,000
450,000................................................................     56,250    112,500    168,750    225,000
500,000................................................................     62,500    125,000    187,500    250,000
</TABLE>
 
    On November 20, 1997 the SERP was amended by the Board of Directors to,
among other things, limit participation to employees (i) whose positions are
classified as members of the Executive Committee of the Company, (ii) whose
participation has been recommended by the President and Chief Executive Officer,
(iii) whose participation has been approved and confirmed by the Committee, and
(iv) who do not participate in the Senior Supplemental Retirement Plan. Those
employees who were participating in the SERP prior to November 20, 1997 and had
partially or fully vested but do not meet the amended participation requirements
after November 20, 1997 will continue to participate in the SERP.
 
                                       37
<PAGE>
    The seven year vesting SERP presently covers approximately 19 current or
former executive employees. The 20 year vesting SERP, for those who began
participation after October 1, 1994, covers approximately 7 executive employees.
SERP benefits are based on a percentage of average base compensation earned
during the participant's last five years of service. Base compensation is the
participant's annual salary (but not bonuses or incentive compensation), which
is the same as compensation depicted as salary in the Summary Compensation
Table. Benefits are generally computed as a straight-line annuity, and are not
subject to any deduction for social security benefits. Participants are entitled
to receive SERP benefits upon attaining age 65 and having become vested in the
SERP. Participants in the seven year vesting SERP become 20% vested after having
accumulated at least three years of service with the Company and vesting
continues in 20% increments each year thereafter, with 100% vesting occurring
upon completion of seven years of service. Participants in the 20 year vesting
SERP become 25% vested after having accumulated at least five years of service
with the Company and vesting continues in 5% increments each year thereafter,
with 100% vesting occurring upon completion of 20 years service. Amounts shown
for seven years or 20 years of service in the respective tables above represent
the maximum annual payments a participant may receive under the SERP. Benefits
under the SERP are payable for a period of 15 years.
 
    Prior to the Effective Time, Mr. Scharer was fully vested under the terms of
the seven year vesting plan. Mr. Cavallaro had approximately five years of
credited service under the terms of the seven year vesting plan and Mr.
McLaughlin had approximately three years of credited service under the terms of
the twenty year vesting plan. Mr. Armentrout has approximately three and
one-half years of credited service and Mr. Servatius has approximately three
years of credited service, each under the terms of the twenty year vesting plan.
 
    Upon consummation of the Merger, the rights of Mr. Scharer, Mr. Cavallaro
and Mr. McLaughlin to participate in the SERP were terminated, and they received
lump sum payments in connection therewith. See "ITEM 13. CERTAIN RELATIONSHIPS
AND RELATED TRANSACTIONS." In accordance with the Change of Control Plan, upon
consummation of the Merger, Messrs. Armentrout and Servatius received two
additional years of vesting credit under the SERP.
 
COMPENSATION OF DIRECTORS
 
    In fiscal 1998, non-employee directors received an annual retainer of
$30,000 and an additional $1,000 for each board meeting attended. During such
period, non-employee committee members received $1,000 for each committee
meeting attended, and the non-employee chairs of each of the Audit Committee and
the Compensation Committee received $1,200 for each meeting attended.
Non-employee directors are reimbursed expenses incurred in connection with
attending meetings of the Board of Directors and Committees thereof.
 
    The Company established an Outside Directors' Retirement Plan pursuant to
which each outside director and any employee-director who was not covered under
the Company's Supplemental Executive Retirement Plan or Senior Supplemental
Executive Retirement Plan and who had served five or more years, or his or her
beneficiaries as applicable, was entitled to receive $25,000 per year for up to
ten years upon such director's retirement, death or disability. The plan also
provided for continuing medical insurance coverage under the Company's executive
health plan for a period of up to ten years.
 
    Pursuant to the Change of Control Plan (i) all options granted to directors
under the 1993 Non-Employee Director Stock Option Plan vested upon consummation
of the Merger, and (ii) members of the Board who were asked to resign as a
result of the Merger were paid their annual compensation for the balance of the
term for which they were elected and were paid a lump sum payment of the
compensation due under the Outside Directors' Retirement Plan.
 
    Directors who are also employees may be eligible to participate in the
Company's employee incentive plans.
 
                                       38
<PAGE>
EMPLOYMENT CONTRACTS AND CHANGE OF CONTROL AGREEMENTS
 
    Prior to the Effective Time, Charles W. Scharer served as Chairman of the
Board, President and Chief Executive Officer under an employment contract with
the Company. At the Effective Time the existing contract was terminated and Mr.
Scharer and the Company entered into a new employment contract. See "ITEM
13.  CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS." Mr. Sharer serves as
President and Chief Executive Officer under the new employment contract with the
Company. The term of the contract began on February 2, 1999 and ends on February
2, 2004. The contract provides that Mr. Scharer's salary during the term will be
$520,000 per year. The contract also provides that Mr. Scharer is eligibile to
participate in the Company's Management Incentive Plan (the "MIP") or an
equivalent annual bonus plan providing for payment of an annual bonus with
thresholds and triggering events for payment based on the achievements of the
Company's annual budget and other business plan targets determined by the Board
of Directors. Under the contract, Mr. Scharer's maximum annual bonus will not be
less than $360,000. Concurrent with the execution of the contract, Mr. Scharer
also received an advance cash payment equal to 25% of his maximum bonus for
fiscal 1999, which amount the Company and Mr. Scharer agreed to be $130,000.
Following the end of fiscal 1999, the Board of Directors will determine Mr.
Scharer's annual bonus in the ordinary course using the financial targets
established by the Board of Directors; any such bonus deemed payable will be
reduced by the advance. Also concurrent with the execution of the contract, Mr.
Scharer received a restricted stock award consisting of 270 shares of Class A
Common and 27,000 shares of Class B Common and a stock option to purchase 360
additional shares of Class A Common and 36,000 additional shares of Class B
Common, each at a price of $20.06 per share, subject in all respects to the
Company's 1999 Omnibus Incentive Plan (the "Plan"), a Stock Option and
Restricted Stock Agreement between Mr. Scharer and the Company dated February 2,
1999 and a Stockholders Agreement dated as of February 2, 1999 (the
"Stockholders Agreement") among the Company, Voteco, Colony III and certain
other security holders of the Company. The employment contract is terminable at
any time (upon 30 days prior written notice) by Mr. Scharer or the Company. If
the contract is terminated by the Company for reason other than cause, Mr.
Scharer is entitled to receive a lump sum payment in an amount equal to the sum
of his then base salary and his annual target bonus increased by a multiplier as
well as certain other benefits for a period following termination. The contract
provides that if Mr. Scharer's employment with the Company is terminated as a
result of or in connection with a change of control of the Company, Mr. Scharer
is entitled to a lump sum payout at a maximum of the bonus otherwise payable to
him with respect to the then current fiscal year under the Company's annual
bonus plan, prorated through the effective date of such termination of
employment. Under the contract, Mr. Scharer is also entitled to a lump sum
payout at a maximum of the otherwise payable bonus should the Company's annual
bonus plan be terminated or amended so as to materially adversely affect him.
 
    Prior to the Effective Time, Stephen L. Cavallaro served as Chief Operating
Officer of Subsidiary Operations under an employment contract with the Company.
At the Effective Time the existing contract was terminated and Mr. Cavallaro and
the Company entered into a new employment contract. See "ITEM 13.  CERTAIN
RELATIONSHIPS AND RELATED TRANSACTIONS." Mr. Cavallaro serves as Executive Vice
President and Chief Operating Officer under the new employment contract with the
Company. The term of the contract began as of February 2, 1999 and terminates on
February 2, 2004. Mr. Cavallaro's annual salary established by the contract is
$400,000 per year. The contract also provides that Mr. Cavallaro is eligibile to
participate in the Company's MIP or an equivalent annual bonus plan providing
for payment of an annual bonus with thresholds and triggering events for payment
based on the achievement of the Company's annual budget and other business plan
targets determined by the Board of Directors. Mr. Cavallaro's maximum annual
bonus will not be less than $240,000. Concurrent with the execution of the
contract, Mr. Cavallaro also received an advance cash payment equal to 25% of
his maximum bonus for fiscal 1999, which amount the Company and Mr. Cavallaro
agreed to be $73,750. Following the end of fiscal 1999, the Board of Directors
will determine Mr. Cavallaro's annual bonus in the ordinary course using the
financial targets established by the Board of Directors; any such bonus deemed
 
                                       39
<PAGE>
payable will be reduced by the advance. Also concurrent with the execution of
the contract, Mr. Cavallaro received a restricted stock award consisting of 210
shares of Class A Common and 21,000 shares of Class B Common and a stock option
to purchase 280 additional shares of Class A Common and 28,000 shares of Class B
Common each at a price of $20.06 per share, subject in all respects to the Plan,
a Stock Option and Restricted Stock Agreement between Mr. Cavallaro and the
Company dated February 2, 1999 and the Stockholders Agreement. The contract is
terminable at any time (upon 30 days prior written notice) by Mr. Cavallaro or
the Company. If the contract is terminated by the Company for reason other than
cause, Mr. Cavallaro is entitled to receive a lump sum payment in an amount
equal to the sum of his then base salary and his annual target bonus increased
by a multiplier as well as certain other benefits for a period following
termination. The contract provides that if Mr. Cavallaro's employment with the
Company is terminated as a result of or in connection with a change of control
of the Company, Mr. Cavallaro is entitled to a lump sum payout at a maximum of
the bonus otherwise payable to him with respect to the then current fiscal year
under the Company's annual bonus plan, prorated through the effective date of
such termination of employment. Under the contract Mr. Cavallaro is also
entitled to a lump sum payout at a maximum of the otherwise payable bonus should
the Company's annual bonus plan be terminated or amended so as to materially
adversely affect him.
 
    Prior to the Effective Time, John J. McLaughlin served as Senior Vice
President, Chief Financial Officer and Treasurer under an employment contract
with the Company. At the Effective Time the existing contract was terminated and
Mr. McLaughlin and the Company entered into a new employment contract. See "ITEM
13.  CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS." Mr. McLaughlin serves as
Senior Vice President, Chief Financial Officer and Treasurer under the new
employment contract with the Company. As of the Effective Time, Mr. McLaughlin
was also appointed Secretary of the Company. The term of the contract began as
of February 2, 1999 and terminates on February 2, 2004. Mr. McLaughlin's annual
salary established by the contract is $300,000 per year. The contract also
provides Mr. McLaughlin eligibility to participate in the Company's MIP or an
equivalent annual bonus plan providing for payment of an annual bonus with
thresholds and triggering events for payment based on the achievement of the
Company's annual budget and other business plan targets determined by the Board
of Directors. Mr. McLaughlin's maximum annual bonus will not be less than
$165,000. Concurrent with the execution of the contract, Mr. McLaughlin also
received an advance cash payment equal to 25% of his maximum bonus for fiscal
1999, which amount the Company and Mr. McLaughlin agreed to be $55,625.
Following the end of fiscal 1999, the Board of Directors will determine Mr.
McLaughlin's annual bonus in the ordinary course using the financial targets
established by the Board of Directors; any such bonus deemed payable will be
reduced by the advance. Also concurrent with the execution of the contract, Mr.
McLaughlin received a restricted stock award consisting of 180 shares of Class A
Common and 18,000 shares of Class B Common and a stock option to purchase 240
additional shares of Class A Common and 24,000 shares of Class B Common each at
a price of $20.06 per share, subject in all respects to the Plan, a Stock Option
and Restricted Stock Agreement between Mr. McLaughlin and the Company dated
February 2, 1999 and the Stockholders Agreement. The contract is terminable at
any time (upon 30 days prior written notice) by Mr. McLaughlin or the Company.
If the contract is terminated by the Company for reason other than cause, Mr.
McLaughlin is entitled to receive a lump sum payment in an amount equal to the
sum of his then base salary and his annual target bonus increased by a
multiplier as well as certain other benefits for a period following termination.
The contract provides that if Mr. McLaughlin's employment with the Company is
terminated as a result of or in connection with a change of control of the
Company, Mr. McLaughlin is entitled to a lump sum payout at a maximum of the
bonus otherwise payable to him with respect to the then current fiscal year
under the Company's annual bonus plan, prorated through the effective date of
such termination of employment. Under the contract Mr. McLaughlin is also
entitled to a lump sum payout at a maximum of the otherwise payable bonus should
the Company's annual bonus plan be terminated or amended so as to materially
adversely affect him.
 
                                       40
<PAGE>
    Gary D. Armentrout serves as Senior Vice President, Business Development and
Government
Relations under an employment agreement with the Company effective as of May 9,
1995. Said employment agreement was extended for additional one year periods on
August 23, 1996, September 8, 1997 and October 26, 1998. The term of the
agreement, as extended, runs through and includes May 8, 2000. Mr. Armentrout's
current salary under the agreement is $240,000 annually. The agreement is
terminable at any time (upon 90 days notice) by Mr. Armentrout or the Company.
If the agreement is terminated by the Company for reasons other than for cause,
Mr. Armentrout is entitled to receive the full value of his salary and other
benefits for the remainder of the agreement term. The Company has also granted
to Mr. Armentrout a restricted stock award consisting of 90 shares of Class A
Common and 9,000 shares of Class B Common and a stock option to purchase 90
additional shares of Class A Common and 9,000 additional shares of Class B
Common, each at a price of $20.06 per share.
 
    Kevin O. Servatius serves as Senior Vice President and General Manager of
Harveys Resort under an employment agreement with the Company effective as of
August 14, 1995. The term of the agreement runs for five years, terminating
August 14, 2000. Mr. Servatius' current salary under the agreement is $280,000
annually. The agreement is terminable at any time (upon 90 days notice) by Mr.
Servatius or the Company. If the agreement is terminated by the Company for
reasons other than for cause, Mr. Servatius is entitled to receive the full
value of his salary and other benefits for the remainder of the agreement term.
The Company has also granted to Mr. Servatius a restricted stock award
consisting of 90 shares of Class A Common and 9,000 shares of Class B Common and
a stock option to purchase 90 additional shares of Class A Common and 9,000
additional shares of Class B Common, each at a price of $20.06 per share.
 
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
 
    The following individuals, all members of the Company's Board of Directors
prior to the Effective Time, served on the Compensation Committee during fiscal
year 1998: Eugene R. White (Chair), Jessica L. Ledbetter, Luther Mack, Jr.,
William B. Ledbetter and Franklin K. Rahbeck. Charles W. Scharer and John J.
McLaughlin participated as non-voting members. During fiscal year 1998, Charles
W. Scharer served as the Company's Chairman of the Board, President and Chief
Executive Officer. John J. McLaughlin served as Senior Vice President, Chief
Financial Officer and Treasurer of the Company during fiscal year 1998.
 
ITEM 12.  SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
 
    The following table sets forth as of February 25, 1999, beneficial ownership
of the Company's Class A Common (the only class of voting securities of the
Company) by (i) all persons who are beneficial owners of more than five percent
of the Class A Common, (ii) each director, (iii) the Company's Chief Executive
Officer and four most highly compensated executive officers other that the Chief
Executive Officer, in each case who were serving in such capacity on behalf of
the Company at the end of the last fiscal year and (iv) all directors and
executive officers, as a group. Except as otherwise indicated, the Company
believes that the beneficial owners of the Class A Common listed below, based on
information furnished by such owners, have sole investment and voting power with
respect to such shares, subject to community property laws where applicable.
Unless otherwise indicated the business address of such persons is Highway 50
and Stateline Avenue, P. O. Box 128, Lake Tahoe, Nevada 89449. As of February
25, 1999 40,000 shares of Class A Common were outstanding. All holders of Class
A Common hold a number of shares of Class B
 
                                       41
<PAGE>
Common such that their holdings of Class A Common and Class B Common each bear
the same proportion to the total outstanding shares of each such class.
 
<TABLE>
<CAPTION>
                                                                       SHARES
                                                                     BENEFICIALLY  PERCENT OF
NAME OF BENEFICIAL OWNER                                              OWNED(1)       CLASS
-------------------------------------------------------------------  -----------  ------------
<S>                                                                  <C>          <C>
Colony HCR Voteco, LLC
  1999 Avenue of the Stars, Suite 1200
  Los Angeles, California 90067....................................      38,800         97.0%
 
Thomas J. Barrack, Jr. (2).........................................      38,800         97.0
 
Kelvin L. Davis (2)................................................      38,800         97.0
 
Charles W. Scharer.................................................       *            *
 
Stephen L. Cavallaro...............................................       *            *
 
John J. McLaughlin.................................................       *            *
 
Gary D. Armentrout.................................................       *            *
 
Kevin O. Servatius.................................................       *            *
 
All directors and executive officers as a group (11 persons) (2)...      40,000        100.0%
</TABLE>
 
------------------------
 
 *  Less than one percent
 
(1) Beneficial ownership is determined in accordance with the rules of the SEC
    and excludes grants of phantom stock and options that are not exercisable
    currently or within 60 days.
 
(2) Messrs. Barrack and Davis are the Managers of Voteco, and thereby each may
    be deemed to have beneficial ownership of the Class A Common owned of record
    by Voteco. Messrs. Barrack and Davis each disclaim beneficial ownership of
    such shares of Class A Common.
 
ITEM 13.  CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
 
    At the time HAC and the Company entered into the Merger Agreement, HAC also
entered into a memorandum of understanding (the "MOU") with Messrs. Scharer,
Cavallaro and McLaughlin (the "Executives"). At the Effective Time, pursuant to
the MOU, each of the Executives remained in the offices they held in the Company
before the Effective Time. Mr. Scharer continued to serve as a director, and Mr.
Cavallaro was appointed a non-voting observer to the Company's Board of
Directors. In addition, purusant to the MOU, the Company entered into the
following agreements and other arrangements immediately following the Effective
Time:
 
    - The Company granted to Mr. Scharer, Mr. McLaughlin and Mr. Cavallaro 270,
      210 and 180 shares of Class A Common and 27,000, 21,000 and 18,000 shares
      of Class B Common, respectively, and the Company committed to grant to
      each of Mr. Armentrout, Mr. Rafferty, Mr. Barraco, Mr. Servatius, Mr.
      Welch and Mr. Bellotti (collectively, the "Qualified Executives") 90
      shares of Class A Common and 9,000 shares of Class B Common. Such shares
      represent in the aggregate three precent of the Class A Common and Class B
      Common outstanding at the Effective Time.
 
    - The Company reserved 800 shares of Class A Common and 80,000 shares of
      Class B Common for grant to the Executives, the Qualified Executives and
      such others as are mutually determined by the Chief Executive Officer and
      the Board of Directors, if the Company achieves certain performance goals
      in connection with the opening or acquisition of new gaming facilities
      before February 2, 2004.
 
    - The Company granted to Mr. Scharer, Mr McLaughlin and Mr. Cavallaro
      options to acquire, at a price of $20.06 per share, 360, 280 and 240
      shares of Class A Common and 36,000, 28,000 and
 
                                       42
<PAGE>
      24,000 shares of Class B Common, respectively, and the Company committed
      to grant to each of the Qualified Executives options to acquire, at a
      price of $20.06 per share, 90 shares of Class A Common and 9,000 shares of
      Class B Common. In addition, the Company reserved for grant to the
      Qualified Executives options to acquire, at a price of $20.06 per share,
      180 shares of Class A Common and 18,000 shares of Class B Common, and
      reserved for grant to members of senior management of the Company (other
      than the Executives and the Qualified Executives) options to acquire, at a
      price of $20.06 per share, 400 shares of Class A Common and 40,000 shares
      of Class B Common. The shares underlying the foregoing options represent
      in the aggregate five percent of the Class A Common and Class B Common
      outstanding at the Effective Time.
 
      Pursuant to the MOU, the Executives received payments at the Effective
Time as follows:
 
    - Each option to purchase the Common Stock held by the Executives prior to
      the Merger was cancelled in exchange for payments equal to the product of
      (i) the number of shares of Common Stock subject to such option and (ii)
      the excess, if any, of (a) the price per share of the Common Stock paid in
      the Merger for a share of the Company's Common Stock over (b) the exercise
      price per share of Common Stock of such option. Messrs. Scharer, Cavallaro
      and McLaughlin received payments of $2,727,960, $1,042,113 and $504,169,
      respectively, in consideration for cancellation of such options.
 
    - The Long-Term Incentive Plan and the rights of Messrs. Scharer, Cavallaro
      and McLaughlin to participate therein were terminated in exchange for lump
      sum payments of $965,373, $479,270 and $311,195, respectively.
 
    - The rights of the Executives to participate in the SERP were terminated,
      and the accrued SERP benefits for Messrs. Scharer, Cavallaro and
      McLaughlin as of the consummation of the Merger were $1,399,435, $781,878
      and $450,000, respectively. One-half of each such amount was paid in a
      lump sum to Messrs. Scharer, Cavallaro and McLaughlin, and the remaining
      amounts were deemed to be distributed to each Executive and invested
      pursuant to certain deferred compensation agreements entered into between
      the Company and each of the Executives.
 
    - The Company permitted the Executives to remain eligible to participate in
      the MIP, and in respect of fiscal year 1999, Messrs Scharer, Cavallaro and
      McLaughlin received advances of amounts payable to them pursuant to the
      MIP of $130,000, $73,750 and $55,625, respectively.
 
    At the Effective Time, the employment contracts in effect immediately prior
to the Effective Time between the Company and each of the Executives were
terminated, and each of the Executives entered into a new employment contract
with the Company. The new employment contracts have terms of five years from the
Effective Time and provide for, among other benefits, (i) annual base salaries
of $520,000, $400,000 and $300,000 for Messrs. Scharer, Cavallaro and
McLaughlin, respectively, (ii) annual year-end incentive payments under the MIP
or other equivalent plan, (iii) the continuation of perquisites in effect with
respect to Messrs. Scharer, Cavallaro and McLaughlin prior to the Merger, (iv)
the immediate vesting of all options and restricted stock grants upon a change
of control, and (v) the vesting of that portion of options and restricted stock
grants due to vest over the lesser of (a) (1) eighteen months (with respect to
Messrs. Cavallaro and McLaughlin) or (2) two years (with respect to Mr. Scharer)
or (b) the remainder of the employment agreement term (in each case, the
"Period"), and the provision of severance for the applicable Period (in each
case consisting of the terminated Executive's then applicable base salary, bonus
and benefits, which serverance is the exclusive serverance payable to such
Executive and shall supersede and replace any severance that might otherwise be
due under the Company's Change of Control Plan) upon a termination of the
Executives other than for cause.
 
    At the Effective Time, members of the Board who were asked to resign as a
result of the Merger were paid their annual compensation for the balance of the
term for which they were elected and were paid a lump sum payment of the
compensation due under the Outside Directors' Retirement Plan. Payments for
 
                                       43
<PAGE>
annual compensation were made to Richard Kudrna, Jessica Ledbetter and Franklin
Rahbeck in the amount of $75,000 each. Payments for benefits due under the
Outside Directors' Retirement Plan were made to Jessica Ledbetter, Kirk
Ledbetter and Franklin Rahbeck in the amount of $250,000 each.
 
    At the time the Merger Agreement was signed HAC, William Ledbetter, Jessica
Ledbetter and Kirk Ledbetter, who together with a trust affiliated with the
Ledbetter family owned approximately 41% of the Company's equity prior to the
Effective Time, entered into a Noncompetition and Trade Secret Agreement. This
agreement provides that for a period of three years following the Merger, none
of the Ledbetters shall compete with the Company (except for certain permitted
activities). The agreement also (i) provides that William Ledbetter is entitled
to participate in the Company's Senior Supplemental Executive Retirement Plan
and to receive the perquisites provided for in his employment agreement dated
November 12, 1993 until he reaches age 80; (ii) designates Jessica Ledbetter a
Director Emerita of the Company and entitles her to complimentary services of up
to $8,000 per year at Company facilities; and (iii) provides that Kirk Ledbetter
will receive a payment of $195,000 and will have a life insurance policy
maintained by the Company until the tenth anniversary of the closing of the
Merger, and entitles him and his immediate family to complimentary services of
up to $8,000 per year at Company facilities.
 
    Wells Fargo, Jessica L. Ledbetter, Kirk B. Ledbetter and Franklin K.
Rahbeck, a director of the Company prior to the Effective Time, are the
co-trustees of the William B. Ledbetter and Beverlee A. Ledbetter Irrevocable
Trust (the "Trust"). The Trust owns survivorship life insurance policies on the
lives of William B. Ledbetter and Beverlee A. Ledbetter, deceased. Prior to
fiscal 1995 the Company paid the premiums on the life insurance policies. The
Company has no further obligation to pay such premiums. On November 15, 1993 the
Trust issued a note payable to the Company for the amounts of the premiums
previously paid by the Company. On January 31, 1994, the Trust issued a note
payable to the Company for the amount of a premium paid by the Company in 1994.
The notes are in the principal amounts of $1,376,995 and $455,275 and earn
interest at the rate of 5.84% and 6.30%, respectively. Interest on the notes is
payable on December 31 of each year and the entire unpaid principal amount
becomes due on the earlier of November 15, 2001 or the death of William B.
Ledbetter. On February 3, 1999, the Trust retired the notes by paying the
Company the principal amounts plus all accrued and unpaid interest to the date
of payment.
 
    The Merger Agreement provides that directors and officers liability
insurance coverage will be provided to those directors and officers of the
Company prior to the Effective Time for a term of six years following the
Effective Time.
 
                                       44
<PAGE>
                                    PART IV
 
ITEM 14.  EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K
 
    (a) The following documents are filed as part of this report:
 
    (1) Financial Statements.
 
    The consolidated financial statements of the Company are set forth in the
"INDEX TO CONSOLIDATED FINANCIAL STATEMENTS" on page 47.
 
    (2) Financial Statement Schedules.
 
    Schedules have been omitted because they are not applicable, are not
required or because the information is included elsewhere in the Consolidated
Financial Statements or the notes thereto.
 
    (3) Exhibits are set forth in the "EXHIBIT INDEX" on page 75.
 
    (b) Reports on Form 8-K filed during the last quarter of fiscal 1998.
 
       None
 
CAUTIONARY STATEMENT FOR PURPOSES OF THE "SAFE HARBOR" PROVISIONS OF THE PRIVATE
SECURITIES LITIGATION REFORM ACT OF 1995
 
    This document includes various "forward-looking statements" within the
meaning of Section 27A of the Securities Act of 1933, as amended, and Sections
21E of the Securities Exchange Act of 1934, as amended, which represent the
Company's expectations or beliefs concerning future events. Statements
containing expressions such as "believes", "anticipates" or "expects" used in
the Company's press releases and periodic reports on Forms 10-K and 10-Q filed
with the Securities and Exchange Commission are intended to identify
forward-looking statements. All forward-looking statements involve risks and
uncertainties. Although the Company believes its expectations are based upon
reasonable assumptions within the bounds of its knowledge of its business and
operations, there can be no assurances that actual results will not materially
differ from expected results. The Company cautions that these and similar
statements included in this report and in previously filed periodic reports,
including reports filed on Forms 10-K and 10-Q, are further qualified by
important factors that could cause actual results to differ materially from
those in the forward-looking statements. Such factors include, without
limitation, the following: increased competition in existing markets or the
opening of new gaming jurisdictions; a decline in the public acceptance of
gaming; the limitation, conditioning or suspension of any of the Company's
gaming licenses; increases in or new taxes imposed on gaming revenues or gaming
devices; a finding of unsuitability by regulatory authorities with respect to
the Company's officers, directors or key employees; loss or retirement of key
executives; significant increases in fuel or transportation prices; adverse
economic conditions in the Company's key markets; severe and unusual weather in
the Company's key markets; adverse results of significant litigation matters.
Readers are cautioned not to place undue reliance on forward-looking statements,
which speak only as of the date thereof. The Company undertakes no obligation to
publicly release any revisions to such forward-looking statements to reflect
events or circumstances after the date hereof.
 
                                       45
<PAGE>
                                   SIGNATURES
 
    Pursuant to the requirements of Section 13 or 15(d) of the Securities Act of
1934, as amended, the registrant has duly caused this report to be signed on its
behalf by the undersigned, thereunto duly authorized this 26th day of February,
1999.
 
<TABLE>
<S>                             <C>  <C>
                                HARVEYS CASINO RESORTS
 
                                By:            /s/ CHARLES W. SCHARER
                                     -----------------------------------------
                                                 Charles W. Scharer
                                       PRESIDENT AND CHIEF EXECUTIVE OFFICER
</TABLE>
 
    Pursuant to the requirements of the Securities Exchange Act of 1934, as
amended, this report has been signed by the following persons on behalf of the
registrant in the capacities and on the dates indicated.
 
<TABLE>
<CAPTION>
          SIGNATURE                       TITLE                    DATE
------------------------------  --------------------------  -------------------
 
<C>                             <S>                         <C>
  /s/ THOMAS J. BARRACK, JR.
------------------------------  Chairman of the Board and    February 26, 1999
    Thomas J. Barrack, Jr.        Director
 
                                President, Chief Executive
    /s/ CHARLES W. SCHARER        Officer and Director
------------------------------    (Principal Executive       February 26, 1999
      Charles W. Scharer          Officer)
 
     /s/ KELVIN L. DAVIS
------------------------------  Director                     February 26, 1999
       Kelvin L. Davis
 
                                Senior Vice President,
    /s/ JOHN J. MCLAUGHLIN        Chief Financial Officer,
------------------------------    Secretary and Treasurer    February 26, 1999
      John J. McLaughlin          (Principal Financial
                                  Officer)
 
      /s/ JOHN P. HEWITT        Corporate Controller
------------------------------    (Principal Accounting      February 26, 1999
        John P. Hewitt            Officer)
</TABLE>
 
                                       46
<PAGE>
                   INDEX TO CONSOLIDATED FINANCIAL STATEMENTS
 
<TABLE>
<CAPTION>
<S>                                                                         <C>
Report of Deloitte & Touche LLP, Independent Auditors.....................    48
Consolidated Balance Sheets as of November 30, 1998 and 1997..............    49
Consolidated Statements of Income for the Years Ended November 30, 1998,
  1997 and 1996...........................................................    50
Consolidated Statements of Stockholders' Equity for the Years Ended
  November 30, 1998, 1997 and 1996........................................    51
Consolidated Statements of Cash Flows for the Years Ended November 30,
  1998, 1997 and 1996.....................................................    52
Notes to Consolidated Financial Statements................................    53
</TABLE>
 
                                       47
<PAGE>
                          INDEPENDENT AUDITORS' REPORT
 
To the Board of Directors and Stockholders of
 
Harveys Casino Resorts:
 
    We have audited the accompanying consolidated balance sheets of Harveys
Casino Resorts and subsidiaries (the "Company") as of November 30, 1998 and
1997, and the related consolidated statements of income, stockholders' equity
and cash flows for each of the three years in the period ended November 30,
1998. 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 audits.
 
    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, such consolidated financial statements present fairly, in
all material respects, the financial position of the Company as of November 30,
1998 and 1997, and the results of its operations and its cash flows for the
three years in the period ended November 30, 1998 in conformity with generally
accepted accounting principles.
 
DELOITTE & TOUCHE LLP
 
Reno, Nevada
January 5, 1999
 
                                       48
<PAGE>
                             HARVEYS CASINO RESORTS
                          CONSOLIDATED BALANCE SHEETS
 
<TABLE>
<CAPTION>
                                                                                  NOVEMBER 30,
                                                                          ----------------------------
                                                                              1998           1997
                                                                          -------------  -------------
<S>                                                                       <C>            <C>
                                                ASSETS
Current assets
  Cash and cash equivalents.............................................  $  67,299,230  $  55,034,861
  Marketable securities.................................................     10,657,245       --
  Accounts receivable, net of allowances for doubtful accounts of
    $127,410 and $100,724...............................................      4,566,169      5,263,837
  Inventories...........................................................      3,621,568      3,658,746
  Prepaid expenses and other current assets.............................      3,677,022      3,446,870
  Deferred income taxes.................................................        525,416        651,965
                                                                          -------------  -------------
    Total current assets................................................     90,346,650     68,056,279
                                                                          -------------  -------------
Property and equipment
  Land..................................................................     20,717,873     20,717,863
  Buildings and improvements............................................    263,522,463    260,327,007
  Leasehold improvements................................................     21,151,757     21,191,721
  Equipment, furniture and fixtures.....................................    153,559,283    144,126,256
  Construction in progress..............................................      2,607,324         16,791
                                                                          -------------  -------------
                                                                            461,558,700    446,379,638
  Less: Accumulated depreciation and amortization.......................   (146,207,321)  (128,109,637)
                                                                          -------------  -------------
                                                                            315,351,379    318,270,001
                                                                          -------------  -------------
Notes receivable-related parties........................................      1,874,831      1,875,765
Other assets............................................................     16,585,545     15,263,376
                                                                          -------------  -------------
    Total assets........................................................  $ 424,158,405  $ 403,465,421
                                                                          -------------  -------------
                                                                          -------------  -------------
 
                                 LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities
  Current portion of long-term debt.....................................  $     220,304  $     633,354
  Accounts and contracts payable........................................      5,031,996      5,990,363
  Income taxes payable..................................................       --            7,056,237
  Accrued expenses......................................................     24,892,096     20,945,046
                                                                          -------------  -------------
    Total current liabilities...........................................     30,144,396     34,625,000
Long-term debt, net of current portion..................................    150,000,000    150,220,304
Deferred income taxes...................................................     24,948,131     23,022,615
Other liabilities.......................................................     18,612,243     16,239,952
                                                                          -------------  -------------
    Total liabilities...................................................    223,704,770    224,107,871
                                                                          -------------  -------------
Commitments and contingencies (see note 8)
Stockholders' equity
  Preferred stock, $.01 par value; 5,000,000 shares authorized; none
    issued..............................................................       --             --
  Common stock, $.01 par value; 30,000,000 shares authorized; issued
    10,079,671 and 9,853,488............................................        100,797         98,535
Additional paid-in capital and other....................................     43,501,375     39,191,390
Treasury stock, at cost; 14,560 shares and 12,516 shares................       (253,532)      (199,672)
Deferred compensation...................................................         (5,725)      (148,069)
Retained earnings.......................................................    157,110,720    140,415,366
                                                                          -------------  -------------
    Total stockholders' equity..........................................    200,453,635    179,357,550
                                                                          -------------  -------------
    Total liabilities and stockholders' equity..........................  $ 424,158,405  $ 403,465,421
                                                                          -------------  -------------
                                                                          -------------  -------------
</TABLE>
 
        The accompanying notes are an integral part of these statements.
 
                                       49
<PAGE>
                             HARVEYS CASINO RESORTS
                       CONSOLIDATED STATEMENTS OF INCOME
 
<TABLE>
<CAPTION>
                                                                                YEARS ENDED NOVEMBER 30,
                                                                          -------------------------------------
                                                                             1998         1997         1996
                                                                          -----------  -----------  -----------
<S>                                                                       <C>          <C>          <C>
Revenues
  Casino................................................................  $244,784,494 $216,564,140 $186,368,776
  Lodging...............................................................   34,272,546   32,175,206   28,745,686
  Food and beverage.....................................................   47,078,908   44,405,880   39,851,616
  Other.................................................................    7,111,072    7,276,772    6,402,770
  Management fees and joint venture.....................................      --         4,507,159    5,023,381
  Less: Casino promotional allowances...................................  (23,738,316) (21,365,746) (18,643,497)
                                                                          -----------  -----------  -----------
    Total net revenues..................................................  309,508,704  283,563,411  247,748,732
                                                                          -----------  -----------  -----------
 
Costs and expenses
  Casino................................................................  115,836,815  100,500,468   86,732,228
  Lodging...............................................................   13,710,144   13,373,681   11,677,166
  Food and beverage.....................................................   30,142,182   29,886,093   24,796,962
  Other operating.......................................................    2,885,443    2,811,332    2,812,983
  Selling, general and administrative...................................   78,986,651   73,945,020   67,126,744
  Depreciation and amortization.........................................   20,796,922   19,077,058   16,482,145
  Business development costs............................................       95,961    2,689,875      --
  Merger related costs..................................................    1,217,720      --           --
  Pre-opening expenses..................................................      --           --         4,099,490
                                                                          -----------  -----------  -----------
    Total costs and expenses............................................  263,671,838  242,283,527  213,727,718
                                                                          -----------  -----------  -----------
 
Operating income........................................................   45,836 866   41,279,884   34,021,014
                                                                          -----------  -----------  -----------
 
Other income (expense)
  Interest income.......................................................    2,258,771      509,620      903,975
  Interest expense......................................................  (17,835,647) (19,401,110) (15,098,509)
  Gain on sale of interests in unconsolidated affiliate.................      --        27,422,228      --
  Other, net............................................................     (141,059)    (137,448)    (221,048)
                                                                          -----------  -----------  -----------
    Total other income (expense)........................................  (15,717,935)   8,393,290  (14,415,582)
                                                                          -----------  -----------  -----------
 
Income before income taxes and extraordinary item.......................   30,118,931   49,673,174   19,605,432
Income tax provision....................................................  (11,417,279) (18,898,553)  (7,791,497)
                                                                          -----------  -----------  -----------
 
Income before extraordinary item........................................   18,701,652   30,774,621   11,813,935
Loss on early retirement of debt, net of taxes..........................      --           --          (521,705)
                                                                          -----------  -----------  -----------
Net income..............................................................  $18,701,652  $30,774,621  $11,292,230
                                                                          -----------  -----------  -----------
                                                                          -----------  -----------  -----------
Net income per common share--Basic
  Income before extraordinary item......................................  $      1.87  $      3.13  $      1.22
  Extraordinary item....................................................      --           --             (0.06)
                                                                          -----------  -----------  -----------
  Net income............................................................  $      1.87  $      3.13  $      1.16
                                                                          -----------  -----------  -----------
                                                                          -----------  -----------  -----------
 
Net income per common share--Diluted
  Income before extraordinary item......................................  $      1.83  $      3.13  $      1.22
  Extraordinary item....................................................      --           --             (0.06)
                                                                          -----------  -----------  -----------
  Net income............................................................  $      1.83  $      3.13  $      1.16
                                                                          -----------  -----------  -----------
                                                                          -----------  -----------  -----------
 
Weighted average common shares used in calculating income per common
  share:
  Basic.................................................................   10,023,113    9,826,636    9,645,708
                                                                          -----------  -----------  -----------
                                                                          -----------  -----------  -----------
  Diluted...............................................................   10,220,476    9,843,871    9,698,500
                                                                          -----------  -----------  -----------
                                                                          -----------  -----------  -----------
</TABLE>
 
        The accompanying notes are an integral part of these statements.
 
                                       50
<PAGE>
                             HARVEYS CASINO RESORTS
 
                CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
 
<TABLE>
<CAPTION>
                                                      YEARS ENDED NOVEMBER 30,
                                          ------------------------------------------------
                                               1998             1997             1996
                                          --------------   --------------   --------------
<S>                                       <C>              <C>              <C>
Common stock
  Balance at beginning of year
    Shares: 9,853,488 in 1998, 9,818,322
      in 1997, and 9,402,657 in 1996....  $       98,535   $       98,183   $       94,026
  Issuance of restricted stock, Shares:
    1,500 in 1996.......................        --               --                     15
  Issuance of stock in acquisition of
    minority interest of subsidiary
    Shares: 382,500 in 1996.............        --               --                  3,825
  Stock options exercised, Shares:
    226,183 in 1998, 35,166 in 1997 and
    31,665 in 1996......................           2,262              352              317
                                          --------------   --------------   --------------
  Balance at end of year, Shares:
    10,079,671 in 1998, 9,853,488 in
    1997 and 9,818,322 in 1996..........         100,797           98,535           98,183
                                          --------------   --------------   --------------
 
Additional paid-in capital and other
  Balance at beginning of year..........      39,191,390       38,634,439       31,419,882
  Issuance of restricted stock..........                                            26,798
  Issuance of stock in acquisition of
    minority interest of subsidiary, net
    of issuance costs of $507,098.......        --               --              6,660,952
  Stock options exercised...............       4,309,985          531,920          447,568
  Other.................................        --                 25,031           79,239
                                          --------------   --------------   --------------
  Balance at end of year................      43,501,375       39,191,390       38,634,439
                                          --------------   --------------   --------------
Treasury stock
  Balance at beginning of year..........        (199,672)        (151,276)         (79,733)
  Forfeiture of restricted stock........               -          (40,250)         (49,000)
  Acquisition of treasury stock.........         (53,860)          (8,146)         (22,543)
                                          --------------   --------------   --------------
  Balance at end of year................        (253,532)        (199,672)        (151,276)
                                          --------------   --------------   --------------
 
Deferred compensation
  Balance at beginning of year..........        (148,069)        (425,187)      (1,196,828)
  Issuance of restricted stock..........        --               --                (26,814)
  Amortization of deferred
    compensation........................         142,344          236,868          749,455
  Forfeiture of restricted stock........        --                 40,250           49,000
                                          --------------   --------------   --------------
  Balance at end of year................          (5,725)        (148,069)        (425,187)
                                          --------------   --------------   --------------
 
Retained earnings
  Balance at beginning of year..........     140,415,366      111,606,913      102,063,739
  Net income............................      18,701,652       30,774,621       11,292,230
  Cash dividends declared...............      (2,006,298)      (1,966,168)      (1,749,056)
                                          --------------   --------------   --------------
  Balance at end of year................     157,110,720      140,415,366      111,606,913
                                          --------------   --------------   --------------
  Total Stockholders' Equity............  $  200,453,635   $  179,357,550   $  149,763,072
                                          --------------   --------------   --------------
                                          --------------   --------------   --------------
</TABLE>
 
        The accompanying notes are an integral part of these statements.
 
                                       51
<PAGE>
                             HARVEYS CASINO RESORTS
 
                     CONSOLIDATED STATEMENTS OF CASH FLOWS
 
<TABLE>
<CAPTION>
                                                      YEARS ENDED NOVEMBER 30,
                                          -------------------------------------------------
                                               1998             1997             1996
                                          --------------   --------------   ---------------
<S>                                       <C>              <C>              <C>
Cash flows from operating activities
Net income..............................  $   18,701,652   $   30,774,621   $    11,292,230
Adjustments to reconcile net income to
  net cash provided by operating
  activities
  Depreciation and amortization.........      20,796,922       19,077,058        16,482,145
  Gain on sale of interests in
    unconsolidated affiliate............        --            (27,422,228)        --
  Equity in income of unconsolidated
    affiliate...........................        --             (1,665,880)       (1,720,710)
  Amortization of deferred
    compensation........................         142,344          236,868           749,455
  Amortization of debt issuance costs...       1,078,423        1,042,668         1,719,218
  Deferred income taxes.................       2,052,065        6,515,243         2,439,759
  Other.................................          98,808          162,369           126,726
  (Increase) decrease in assets
    Accounts receivable, net............         697,668        2,984,090        (1,020,290)
    Inventories.........................          37,178         (369,346)         (750,456)
    Prepaid expenses and other current
      assets............................        (265,162)        (235,227)        1,388,880
    Other assets........................      (2,648,391)          74,573          (315,760)
  Increase (decrease) in liabilities
    Accounts and contracts payable......      (1,567,028)         236,936         2,897,695
    Accrued expenses....................       3,970,058        4,433,595         5,285,369
    Income taxes payable................      (7,056,237)       7,056,237         --
    Other liabilities...................       2,349,282        1,734,973         1,193,685
                                          --------------   --------------   ---------------
      Net cash provided by operating
        activities......................      38,387,582       44,636,550        39,767,946
                                          --------------   --------------   ---------------
Cash flows from investing activities
  Proceeds from disposition of assets...         138,463        3,716,157           198,920
  Capital expenditures..................     (17,680,546)     (22,531,641)      (51,395,297)
  Proceeds from sale of marketable
    securities..........................        --                498,032         1,833,202
  Purchase of marketable securities.....     (10,657,245)         (27,751)         (132,592)
  Purchase of notes and accrued interest
    of consolidated subsidiary..........        --               --              (6,000,000)
  Loan to unconsolidated affiliate......        --               --                (200,000)
  Advances to employees.................         (78,796)        (173,510)        --
  Proceeds from notes receivable........          79,730          168,910           193,608
  Proceeds from sale of interests in
    unconsolidated affiliate............        --             46,226,920         --
  Increase (decrease) in construction
    payables............................         608,660       (3,448,828)        --
                                          --------------   --------------   ---------------
      Net cash provided by (used in)
        investing activities............     (27,589,734)      24,428,289       (55,502,159)
                                          --------------   --------------   ---------------
Cash flows from financing activities
  Net borrowings under short-term credit
    agreements..........................        --               (340,335)         (335,019)
  Proceeds from long-term debt..........        --             11,013,876       245,900,000
  Principal payments on long-term
    debt................................        (633,354)     (44,266,675)     (210,835,153)
  Dividends paid........................      (2,006,298)      (1,966,168)       (1,749,056)
  Debt issuance costs...................        (152,214)        (116,178)       (7,043,342)
  Stock options exercised...............       4,312,247          532,272           447,885
  Acquisition of treasury stock.........         (53,860)          (8,146)          (22,543)
                                          --------------   --------------   ---------------
      Net cash provided by (used in)
        financing activities............       1,466,521      (35,151,354)       26,362,772
                                          --------------   --------------   ---------------
Increase in cash and cash equivalents...      12,264,369       33,913,485        10,628,559
Cash and cash equivalents at beginning
  of year...............................      55,034,861       21,121,376        10,492,817
                                          --------------   --------------   ---------------
Cash and cash equivalents at end of
  year..................................  $   67,299,230   $   55,034,861   $    21,121,376
                                          --------------   --------------   ---------------
                                          --------------   --------------   ---------------
Supplemental disclosure of cash flows
  information
  Cash paid for interest, net of amounts
    capitalized.........................  $   16,631,889   $   18,426,216   $    15,775,000
  Cash paid for income taxes............      17,705,000        3,429,087         6,068,000
Supplemental schedule of non-cash
  investing and financing activities
  Property and equipment acquired on
    contracts...........................        --               --              22,303,908
  Acquisition of minority interest in
    subsidiary
    Fair value of net assets acquired...        --               --               5,480,971
    Minority interest...................        --               --               1,690,904
    Common stock issued.................        --               --              (7,171,875)
  Subordinated notes issued in
    acquisition of notes and accrued
    interest of subsidiary..............        --               --               8,000,000
</TABLE>
 
        The accompanying notes are an integral part of these statements.
 
                                       52
<PAGE>
                             HARVEYS CASINO RESORTS
 
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
 
    BASIS OF PRESENTATION AND CONSOLIDATION
 
    Harveys Casino Resorts and subsidiaries (the "Company") is engaged in the
casino entertainment industry. In 1996, the Company formed a wholly-owned
subsidiary, Harveys Tahoe Management Company, Inc. ("HTMC"), to own and operate
the Company's resort on the south shore of Lake Tahoe, Nevada. On May 22, 1997,
HTMC was licensed by the Nevada gaming authorities and, on June 1, 1997, the
Company transferred the ownership of Harveys Resort Hotel/Casino to HTMC. The
Company, through its wholly-owned subsidiary, Harveys C. C. Management Company,
Inc. ("HCCMC"), owns and operates Harveys Wagon Wheel Hotel/Casino in Central
City, Colorado. Until April 30, 1996, the Company, through HCCMC, owned 70% of
the equity interest in Harveys Wagon Wheel Casino Limited Liability Company
("HWW") which owned Harveys Wagon Wheel Hotel/Casino. On April 30, 1996, the
Company acquired all of the 30% minority interest in HWW in exchange for common
stock of the Company. On June 1, 1997, the Company contributed its 30% interest
in HWW to HCCMC. Subsequently, HWW was liquidated and HCCMC became the sole
owner and operator of Harveys Wagon Wheel Hotel/Casino. Until October 24, 1997,
the Company, through its wholly-owned subsidiary, Harveys L.V. Management
Company, Inc. ("HLVMC"), owned 40% of the equity interest in Hard Rock Hotel,
Inc. ("HRHC"), which owns the Hard Rock Hotel and Casino in Las Vegas, Nevada.
HLVMC had a contract to manage the Las Vegas hotel and casino. On October 24,
1997 the Company sold its 40% equity interest and its interest in the management
contract to HRHC (see Note 11). Additionally, the Company's wholly-owned
subsidiary, Harveys Iowa Management Company, Inc. ("HIMC"), is the owner and
operator of Harveys Casino Hotel, a riverboat casino, hotel and convention
center complex in Council Bluffs, Iowa. The riverboat casino portion of the
complex opened for business on January 1, 1996 and the land-based hotel opened
for business on May 24, 1996.
 
    The consolidated financial statements include the accounts of Harveys Casino
Resorts and its majority and wholly-owned subsidiaries. In consolidating, all
significant intercompany accounts and transactions have been eliminated.
 
    USE OF ESTIMATES
 
    The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the amounts reported in the financial statements and
accompanying notes. Actual results could differ from those estimates.
 
    CASH AND CASH EQUIVALENTS
 
    Cash and cash equivalents consist of cash on hand and in banks, interest
bearing deposits and highly liquid debt instruments purchased with initial
maturities of three months or less. Cash equivalents are carried at cost which
approximates market value.
 
    MARKETABLE SECURITIES
 
    The Company has classified all of its marketable securities as
available-for-sale. Securities that are available-for-sale are stated at market
value, with any unrealized gains or losses excluded from income and reported as
a separate component of stockholders' equity. Market value is determined by the
closing price of the security as of the balance sheet date. Net realized gains
or losses are determined on the average cost method. There were no unrealized
gains or losses as of November 30, 1998.
 
                                       53
<PAGE>
                             HARVEYS CASINO RESORTS
 
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
 
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
    INVENTORIES
 
    Inventories consist primarily of operating supplies and food and beverage
stock and are stated at the lower of weighted-average cost or market.
 
    PROPERTY, EQUIPMENT AND DEPRECIATION
 
    Property and equipment are stated at cost. Interest incurred during
construction is capitalized and amortized over the life of the asset. Costs of
improvements are capitalized. Costs of normal repairs and maintenance are
charged to expense as incurred. Upon the sale or retirement of property and
equipment, the cost and related accumulated depreciation are removed from the
respective accounts, and the resulting gain or loss, if any, is included in
income. Depreciation of property and equipment is provided on the straight-line
method over the estimated useful lives of the respective assets. Leasehold
improvements are amortized over the shorter of the asset life or lease term.
Depreciable lives are as follows:
 
<TABLE>
<CAPTION>
<S>                                                                           <C>
Buildings and improvements..................................................    15 to 45 years
Riverboat...................................................................          20 years
Leasehold improvements......................................................     5 to 30 years
Equipment, furniture and fixtures...........................................     5 to 10 years
</TABLE>
 
    UNAMORTIZED LOAN COSTS AND DEBT ISSUANCE COSTS
 
    Loan costs incurred in connection with a reducing revolving credit agreement
are amortized to interest expense over the term of the loan on a straight-line
method. Debt issuance costs associated with the Company's senior subordinated
notes are amortized to interest expense over the term of the notes on the
interest method.
 
    FUTURE DEVELOPMENT COSTS
 
    The Company capitalizes costs associated with new gaming projects until (i)
the project is no longer considered viable and the costs are expensed, or (ii)
the likelihood of the project is relatively certain and the costs are
reclassified to pre-opening and expensed when operations commence. Capitalized
future development costs, relating to potential new gaming projects, of
approximately $3.1 million and $907,000 as of November 30, 1998 and 1997,
respectively, are included on the accompanying balance sheet as other assets.
For fiscal 1998 and 1997, the Company expensed approximately $96,000 and $2.7
million, respectively, of future business development costs.
 
    PRE-OPENING EXPENSES
 
    Pre-opening expenses are associated with the acquisition, development and
opening of the Company's new casino resorts. These amounts are expensed when the
casino commences operations and include items that were capitalized as incurred
prior to opening and items that are directly related to the opening of the
property and are nonrecurring in nature. In 1996, approximately $4.1 million was
expensed in conjunction with the Company's opening of the Harveys Casino Hotel
project in Council Bluffs, Iowa.
 
                                       54
<PAGE>
                             HARVEYS CASINO RESORTS
 
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
 
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
    CASINO REVENUES AND PROMOTIONAL ALLOWANCES
 
    In accordance with industry practice, the Company recognizes as casino
revenues the net win from gaming activities, which is the difference between
gaming wins and losses. Promotional allowances consist principally of the retail
value of complimentary rooms, food, beverage, and other promotional allowances
provided to customers without charge. The estimated costs of providing such
complimentary services have been classified as casino operating expenses through
interdepartmental allocations as follows:
 
<TABLE>
<CAPTION>
                                                           YEARS ENDED NOVEMBER 30,
                                                  -------------------------------------------
                                                      1998           1997           1996
                                                  -------------  -------------  -------------
<S>                                               <C>            <C>            <C>
Hotel...........................................  $   3,247,715  $   2,743,124  $   2,454,401
Food and beverage...............................     11,845,611     10,871,776      9,805,175
Other...........................................         80,594         63,505         51,782
                                                  -------------  -------------  -------------
                                                  $  15,173,920  $  13,678,405  $  12,311,358
                                                  -------------  -------------  -------------
                                                  -------------  -------------  -------------
</TABLE>
 
    INCOME TAXES
 
    The Company and its subsidiaries file a consolidated federal income tax
return. Income taxes are recorded in accordance with the liability method
specified by Statement of Financial Accounting Standards ("SFAS") No.
109--ACCOUNTING FOR INCOME TAXES. The following basic principles are applied in
accounting for income taxes: (i) a current liability or asset is recognized for
the estimated taxes payable or refundable for the current year; (ii) a deferred
tax liability or asset is recognized for the estimated future tax effects
attributable to temporary differences and carryforwards; (iii) the measurement
of current and deferred tax liabilities and assets is based on the provisions of
the enacted tax law, the effects of future changes in tax laws or rates are not
anticipated; and (iv) the measurement of deferred taxes is reduced, if
necessary, by the amount of any tax benefits that, based upon available
evidence, are not expected to be realized.
 
    NET INCOME PER COMMON SHARE
 
    Basic net income per common share is calculated by dividing net income by
the weighted average number of common shares outstanding during the period.
Diluted net income per common share is calculated by dividing net income by the
weighted average number of common and common equivalent shares outstanding
during the period.
 
    FAIR VALUE OF FINANCIAL INSTRUMENTS
 
    SFAS No. 107--DISCLOSURES ABOUT FAIR VALUE OF FINANCIAL INSTRUMENTS requires
the determination of fair value for certain of the Company's assets, liabilities
and contingent liabilities. When practicable, the following methods and
assumptions were used to estimate the fair value of those financial instruments
included in the following categories:
 
    Notes receivable: The fair value of notes receivable is based upon projected
cash flows discounted at estimated current market rates of interest. It is not
practicable to estimate the fair value of notes receivable-related parties due
to the related party nature of those instruments.
 
    Long-term debt: The fair value of long-term debt is estimated based on the
current borrowing rates offered to the Company for debt of the same remaining
maturities.
 
                                       55
<PAGE>
                             HARVEYS CASINO RESORTS
 
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
 
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
    It is estimated that the carrying amounts of the Company's financial
instruments approximate fair value at November 30, 1998.
 
    CONCENTRATIONS OF CREDIT RISK
 
    The Company maintains its cash in bank deposit accounts which, at times, may
exceed federally insured limits. The Company has not experienced any losses in
such accounts. The Company believes it is not exposed to any significant credit
risk on cash and cash equivalents.
 
    FINANCIAL INSTRUMENTS WITH OFF-BALANCE-SHEET RISK
 
    The Company is a party to financial instruments with off-balance-sheet risk
in the normal course of business. These financial instruments consist of standby
letters of credit.
 
    The Company's exposure to credit loss in the event of nonperformance by the
other party to the standby letters of credit is represented by the contractual
amount of those instruments. The Company uses the same credit policies in making
commitments and conditional obligations as it does for on-balance-sheet
instruments. The Company does not have collateral or other security to support
financial instruments with off-balance-sheet credit risk.
 
    LONG-LIVED ASSETS
 
    In accordance with the provisions of SFAS No. 121--ACCOUNTING FOR THE
IMPAIRMENT OF LONG-LIVED ASSETS AND FOR LONG-LIVED ASSETS TO BE DISPOSED OF, the
Company reviews the carrying amount of long-lived assets and certain
identifiable intangibles whenever events or changes in circumstances indicate
that the carrying amount of an asset may not be recoverable. Such reviews have
not had a material effect on the Company's results of operations or financial
position.
 
    RECENTLY ISSUED ACCOUNTING STANDARDS
 
    The FASB has issued SFAS No. 130--REPORTING COMPREHENSIVE INCOME, which
establishes standards for reporting and display of comprehensive income and its
components. SFAS No. 130 requires that an enterprise classify items of other
comprehensive income by their nature in a financial statement and display the
accumulated balance of other comprehensive income separately from retained
earnings and additional paid-in capital in the equity section of a statement of
financial position. SFAS No. 130 will be effective for the Company beginning
December 1, 1998. Management intends to comply with the disclosure requirements
of SFAS No. 130.
 
    The FASB has issued SFAS No. 131--DISCLOSURES ABOUT SEGMENTS OF AN
ENTERPRISE AND RELATED INFORMATION, which establishes new standards for
determining a reportable segment and for disclosing information regarding each
such segment. A reportable segment is an operating segment: (i) that engages in
business activities from which it earns revenues and incurs expenses, (ii) whose
operating results are regularly reviewed by the enterprise's chief operating
decision maker in deciding how to allocate resources and in assessing
performance, (iii) for which discrete financial information is available, and
(iv) that exceeds specific quantitative thresholds. SFAS No. 131 will be
effective for the Company beginning December 1, 1998. On adoption, and to the
extent practicable, segment information for earlier comparative years will be
restated. The Company anticipates, with the adoption of SFAS No. 131, it will
expand its segment disclosures relative to its Nevada, Colorado and Iowa
operations. The Company believes the
 
                                       56
<PAGE>
                             HARVEYS CASINO RESORTS
 
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
 
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
segment information required to be disclosed under SFAS No. 131 will have no
effect on the Company's consolidated results of operations, financial position
or cash flows, but will be more comprehensive than previously provided,
including expanded disclosure of income statement and balance sheet items for
each of its reportable operating segments.
 
    The FASB has issued SFAS No. 132--EMPLOYERS' DISCLOSURES ABOUT PENSIONS AND
OTHER POSTRETIREMENT BENEFITS, which revises employers' disclosures about
pensions and other postretirement benefit plans. It does not change the
measurement or recognition of those plans. SFAS No. 132 standardizes the
disclosure requirements for pensions and other postretirement benefits to the
extent practicable, requires additional information on changes in the benefit
obligations and fair value of plan assets that will facilitate financial
analysis, and eliminates certain disclosures that are no longer as useful as
they once were. SFAS No. 132 suggests combined formats for presentation of
pension and other postretirement benefit disclosures. SFAS No. 132 will be
effective for the Company's fiscal year ending November 30, 1999. Management
intends to comply with the disclosure requirements of SFAS No. 132.
 
    The FASB has issued SFAS No. 133--ACCOUNTING FOR DERIVATIVE INSTRUMENTS AND
HEDGING ACITIVITIES, which establishes accounting and reporting standards for
derivative instruments and hedging activities. SFAS No. 133 will be effective
for the Company's fiscal year beginning December 1, 1999. Management believes
that the adoption of this statement will not have a material impact on the
Company's financial condition or results of operations.
 
    The Accounting Standards Executive Committee of the American Institute of
Certified Public Accountants has issued Statement of Position ("SOP") REPORTING
ON THE COSTS OF START-UP ACTIVITIES. SOP 98-5 requires costs of start-up
activities (commonly referred to as pre-opening costs in the gaming industry) to
be expensed as incurred. The Company will be required to adopt SOP 98-5
beginning December 1, 1999, although earlier adoption is encouraged. On
adoption, restatement of previously issued financial statements will not be
permitted. The initial effect of adopting SOP 98-5 will be reported as the
cumulative effect of a change in accounting principle. The Company has not yet
determined if it will elect to adopt SOP 98-5 early nor has it determined what
effect, if any, the adoption of SOP 98-5 will have on the financial position or
results of operations of the Company.
 
    RECLASSIFICATIONS
 
    Certain reclassifications have been made to the prior years' consolidated
financial statements to conform to the current year presentation. These
reclassifications have no effect on net income.
 
                                       57
<PAGE>
                             HARVEYS CASINO RESORTS
 
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
 
2. ACCRUED EXPENSES
 
    Accrued expenses consist of the following as of:
 
<TABLE>
<CAPTION>
                                                                         NOVEMBER 30,
                                                                 ----------------------------
                                                                     1998           1997
                                                                 -------------  -------------
<S>                                                              <C>            <C>
Provision for progressive jackpot payouts......................  $   1,676,510  $   1,458,571
Accrued interest...............................................        167,202        174,706
Accrued salaries, wages and other employee benefits............     10,204,932      8,301,094
Accrued taxes other than income taxes..........................      4,947,385      4,462,947
Self-funded workers' compensation and medical claims accrual...      2,395,703      2,368,755
Outstanding gaming chips and tokens............................        807,936        870,159
Race and sports book futures and unclaimed winners.............      1,087,665        808,903
Other accrued liabilities......................................      3,604,763      2,499,911
                                                                 -------------  -------------
                                                                 $  24,892,096  $  20,945,046
                                                                 -------------  -------------
                                                                 -------------  -------------
</TABLE>
 
3. LONG-TERM DEBT
 
    Long-term debt consists of the following as of:
 
<TABLE>
<CAPTION>
                                                                        NOVEMBER 30,
                                                               ------------------------------
                                                                    1998            1997
                                                               --------------  --------------
<S>                                                            <C>             <C>
10 5/8% senior subordinated notes, due 2006                    $  150,000,000  $  150,000,000
Notes payable to financing company...........................        --               623,387
Other........................................................         220,304         230,271
                                                               --------------  --------------
                                                                  150,220,304     150,853,658
Less current portion.........................................         220,304         633,354
                                                               --------------  --------------
                                                               $  150,000,000  $  150,220,304
                                                               --------------  --------------
                                                               --------------  --------------
</TABLE>
 
    Aggregate annual maturities of long-term debt, based on amounts borrowed as
of November 30, 1998 are as follows:
 
<TABLE>
<CAPTION>
YEARS ENDING NOVEMBER 30,
------------------------------------------------------------------------------
<S>                                                                             <C>
1999..........................................................................  $      220,304
2000..........................................................................        --
2001..........................................................................        --
2002..........................................................................        --
2003..........................................................................        --
2004 and thereafter...........................................................     150,000,000
                                                                                --------------
                                                                                $  150,220,304
                                                                                --------------
                                                                                --------------
</TABLE>
 
                                       58
<PAGE>
                             HARVEYS CASINO RESORTS
 
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
 
3. LONG-TERM DEBT (CONTINUED)
    10 5/8% SENIOR SUBORDINATED NOTES, DUE 2006
 
    On May 22, 1996 the Company issued and sold, pursuant to an underwritten
public offering, $150 million in aggregate principal amount of 10 5/8% senior
subordinated notes due 2006 (the "Senior Subordinated Notes").
 
    The Senior Subordinated Notes are governed by an indenture (the "Indenture")
and are general unsecured obligations of the Company, subordinated in right of
payment to all existing and future Senior Debt of the Company (as defined in the
Indenture). The Senior Subordinated Notes are guaranteed by each of the
Restricted Subsidiaries of the Company ( as defined in the Indenture). Each
guarantee is a general unsecured obligation of the guaranteeing Restricted
Subsidiary, subordinated in right of payment to all existing and future Senior
Debt of each guaranteeing Restricted Subsidiary. The guaranteeing Restricted
Subsidiaries are HCCMC, HIMC, HLVMC and HTMC. Separate financial statements of
the guaranteeing Restricted Subsidiaries have not been included because
management has determined that they are not material to investors.
 
    Interest on the Senior Subordinated Notes is payable semi-annually on June 1
and December 1 of each year. The Senior Subordinated Notes will mature on June
1, 2006. The Senior Subordinated Notes are redeemable at the option of the
Company, in whole or in part, at any time on or after June 1, 2001 at prices
ranging from 105.313% of the principal amount plus accrued and unpaid interest
to 100% of the principal amount plus accrued and unpaid interest beginning June
1, 2004 and thereafter. Upon a Change of Control (as defined in the Indenture)
each holder of the Senior Subordinated Notes will have the right to require the
Company to repurchase such holder's Senior Subordinated Notes at 101% of the
principal amount plus accrued and unpaid interest to the repurchase date.
 
    The Indenture contains certain covenants that impose limitations on, among
other things: (i) the incurrence of additional indebtedness by the Company or
any Restricted Subsidiary, (ii) the payment of dividends in excess of regular
quarterly dividends which are not to exceed $500,000 per quarter, (iii) the
repurchase of capital stock and the making of certain other Restricted Payments
and Restricted Investments (each as defined in the Indenture) by the Company or
any Restricted Subsidiary, (iv) mergers, consolidations and sales of assets by
the Company or any Restricted Subsidiary, (v) the creation or incurrence of
liens on the assets of the Company or any Restricted Subsidiary, and (vi)
transactions by the Company or any of its subsidiaries with Affiliates ( as
defined in the Indenture). These limitations are subject to a number of
qualifications and exceptions as described in the Indenture. The Company was in
compliance with these covenants at November 30, 1998.
 
    NOTE PAYABLE TO BANKS
 
    At November 30, 1998 the Company was party to a reducing revolving credit
agreement with a consortium of banks (the "Credit Facility"). As of November 30,
1998, under the Credit Facility, the Company could borrow up to a maximum
available principal balance of $103.5 million. The maximum available under the
Credit Facility is reduced by the advanced but unpaid principal balance and by
any letter of credit exposure. There were no advances outstanding at November
30, 1998 and 1997. Outstanding letters of credit amounted to approximately $1.2
million at November 30, 1998. The note payable under
 
                                       59
<PAGE>
                             HARVEYS CASINO RESORTS
 
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
 
3. LONG-TERM DEBT (CONTINUED)
the Credit Facility matures in February 2002. Until then, the annual year-end
maximum principal balances are as follows:
 
<TABLE>
<CAPTION>
NOVEMBER 30,
-------------------------------------------------------------------------------
<S>                                                                              <C>
1999...........................................................................  $  92,000,000
2000...........................................................................     74,750,000
2001...........................................................................     57,500,000
</TABLE>
 
    The Company pays quarterly fees at an annual rate varying from three-eights
of one percent (0.375%) to one-half of one percent (0.5%) on the unborrowed
maximum principal balance depending on the Company's ratio of funded debt to
earnings before interest, taxes, depreciation and amortization. The rate in
effect at November 30, 1998 was 0.375%.
 
    Interest is due and payable monthly and is provided at the higher of the
prime rate or the Federal Funds Rate plus one-half of one percent (0.5%), plus
an applicable margin. However, in accordance with the terms of the Credit
Facility, the Company has the option to cause a portion, or all, of the
outstanding principal balance to accrue interest at a rate equal to the London
Inter-Bank Offering Rate ("LIBOR") plus an applicable margin. In each case, the
applicable margin is determined by reference to the Company's ratio of funded
debt to earnings before interest, taxes, depreciation and amortization. The
applicable margins at November 30, 1998 were 1.5%, with respect to LIBOR-based
borrowings, and 0.0%, with respect to prime rate borrowings.
 
    The Credit Facility is secured by all of the real and personal property of:
(i) HTMC, (ii) HIMC, (iii) HCCMC, and (iv) HCR Services Company, Inc. ("HCRSC"),
a Nevada corporation, which is wholly owned by the Company, as well as all of
the contracts the Company has entered into in connection with its ownership and
operation of: (a) HTMC, (b) HIMC, (c) HCCMC, and (d) HCRSC. Additional security
is provided by a pledge of the stock of the following subsidiaries of the
Company: HLVMC, HCCMC, HIMC, HTMC, HCRSC, and Reno Projects, Inc., a Nevada
corporation, which is wholly owned by the Company.
 
    The Credit Facility contains certain financial and other covenants. The
financial covenants prevent the Company from making any investments in or
advances to affiliates without the prior written consent of the lenders under
the Credit Facility. The covenants allow the declaration and payment of
dividends without the prior written consent of the lenders if certain fixed
charge coverage ratios are maintained. The covenants require the Company to
maintain certain set standards with respect to: (i) minimum tangible net worth,
(ii) fixed charge coverage ratios, and (iii) minimum annual capital
expenditures. The financial covenants also limit the Company's ability to incur
additional indebtedness. The Company was in compliance with these covenants at
November 30, 1998.
 
                                       60
<PAGE>
                             HARVEYS CASINO RESORTS
 
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
 
4. OPERATING LEASE COMMITMENTS
 
    The Company's future minimum lease commitments under noncancellable
operating leases (principally for land) as of November 30, 1998 are as follows:
 
<TABLE>
<CAPTION>
YEARS ENDING NOVEMBER 30,
-------------------------------------------------------------------------------
<S>                                                                              <C>
1999...........................................................................  $   2,807,281
2000...........................................................................      2,788,281
2001...........................................................................      2,610,276
2002...........................................................................      2,523,776
2003...........................................................................      2,442,276
2004 and thereafter............................................................     94,453,959
</TABLE>
 
    Certain leases included above have provisions which require periodic
increases in the rental payments based upon the consumer price index as of
certain dates. In addition, annual lease payments under an obligation on a land
lease are based upon an escalating percentage of gross gaming revenues or all
net revenues, whichever calculation is greater, of Harveys Resort Hotel/Casino.
The percentages applicable to gross gaming revenues and all net revenues in
fiscal 1999 will be 3.35% and 2.25%, respectively. In fiscal 2000 and years
thereafter the percentages are 3.5% and 2.35%, respectively. The actual rent
paid is the greater of the rent calculated as a percentage or a minimum rent, as
adjusted for the consumer price index. In 1997, the expiration of this land
lease was extended to the year 2045. For 1998, 1997 and 1996, the Company
recognized rental expense in connection with the land lease of approximately
$3.5 million, $3.0 million and $3.1 million, respectively, which includes
approximately $863,957, $789,000 and $665,000, respectively, above the minimum
rental amounts. Total rental expense recognized for 1998, 1997 and 1996 amounted
to approximately $3.9 million, $3.7 million and $3.7 million, respectively.
 
    The Company is also a lessor on several noncancellable lease agreements. Of
the rental income recognized for the years ended November 30, 1998, 1997 and
1996, approximately $380,000, $118,000 and $77,000, respectively, represents
rents received as a percentage of gross receipts. The remaining amounts are
attributable to specified minimum rent. Future minimum payments due to the
Company under these noncancellable lease agreements are as follows:
 
<TABLE>
<CAPTION>
YEARS ENDING NOVEMBER 30,
----------------------------------------------------------------------------------
<S>                                                                                 <C>
1999..............................................................................  $  460,836
2000..............................................................................     276,975
2001..............................................................................     184,933
2002..............................................................................       9,000
2003..............................................................................       3,000
</TABLE>
 
                                       61
<PAGE>
                             HARVEYS CASINO RESORTS
 
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
 
5. INCOME TAXES
 
    The provision for income taxes consists of the following:
 
<TABLE>
<CAPTION>
                                                            YEARS ENDED NOVEMBER 30,
                                                   ------------------------------------------
                                                       1998           1997           1996
                                                   -------------  -------------  ------------
<S>                                                <C>            <C>            <C>
Current..........................................  $   9,365,214  $  12,383,310  $  5,484,923
Deferred.........................................      2,052,065      6,515,243     2,306,574
                                                   -------------  -------------  ------------
Income tax provision before extraordinary item...     11,417,279     18,898,553     7,791,497
Income tax benefit of extraordinary item.........       --             --            (334,497)
                                                   -------------  -------------  ------------
Income tax provision.............................  $  11,417,279  $  18,898,553  $  7,457,000
                                                   -------------  -------------  ------------
                                                   -------------  -------------  ------------
</TABLE>
 
    The difference between the Company's provision for income taxes as presented
in the accompanying consolidated statements of income, and the provision for
income taxes computed at the statutory rate is comprised of the items shown in
the following table as a percent of pre-tax earnings.
 
<TABLE>
<CAPTION>
                                                                       YEARS ENDED NOVEMBER 30,
                                                                    -------------------------------
                                                                      1998       1997       1996
                                                                    ---------  ---------  ---------
<S>                                                                 <C>        <C>        <C>
Federal income tax at the statutory rate..........................       35.0%      35.0%      35.0%
Non-deductible expenses...........................................        2.3        1.2        0.8
Tax credits.......................................................       (0.3)      (0.5)      (1.1)
Tax exempt income.................................................       (0.5)    --         --
State income tax, net of federal benefit..........................        1.9        1.7        1.9
Other, net........................................................       (0.5)       0.6        3.1
                                                                          ---        ---        ---
                                                                         37.9%      38.0%      39.7%
                                                                          ---        ---        ---
                                                                          ---        ---        ---
</TABLE>
 
                                       62
<PAGE>
                             HARVEYS CASINO RESORTS
 
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
 
5. INCOME TAXES (CONTINUED)
    The components of the deferred income tax assets and liabilities as
presented in the consolidated balance sheets, are as follows at November 30:
 
<TABLE>
<CAPTION>
                                                                     1998            1997
                                                                --------------  --------------
<S>                                                             <C>             <C>
Deferred Tax Asset
Accrued compensation..........................................  $    6,166,766  $    5,025,651
Other accrued expenses........................................       2,259,119       1,861,103
                                                                --------------  --------------
                                                                     8,425,885       6,886,754
 
Deferred Tax Liability
Prepaid expenses..............................................      (1,587,996)     (1,158,799)
Property and equipment........................................     (31,260,604)    (28,098,605)
                                                                --------------  --------------
Net deferred tax liability....................................     (32,848,600)    (29,257,404)
                                                                --------------  --------------
                                                                $  (24,422,715) $  (22,370,650)
                                                                --------------  --------------
                                                                --------------  --------------
Current deferred asset........................................  $      525,416  $      651,965
Noncurrent deferred liability.................................     (24,948,131)    (23,022,615)
                                                                --------------  --------------
Net deferred tax liability....................................  $  (24,422,715) $  (22,370,650)
                                                                --------------  --------------
                                                                --------------  --------------
</TABLE>
 
    HWW is currently under examination by the Internal Revenue Service for the
years ended November 30, 1995 and 1996 and the six month period ended May 31,
1997. Although a number of issues for these periods have been resolved, certain
issues still remain in dispute and are being contested by the Company.
Management believes that adequate provision has been made for any adjustments
that may result from tax examinations.
 
6. STOCK-BASED COMPENSATION
 
    OMNIBUS INCENTIVE PLANS
 
    In November 1993, the Company adopted the 1993 Omnibus Incentive Plan (the
"1993 Plan") and in March 1996, the Company adopted the 1996 Omnibus Incentive
Plan (the "1996 Plan" and together with the 1993 Plan, collectively referred to
as the "Plans"). Under the Plans, shares of the Company's common stock may be
granted to employees or prospective employees of the Company and/or its
subsidiaries who are responsible for the management, growth and protection of
the business of the Company. Issuance of shares of common stock under the Plans
may consist of stock options, stock appreciation rights, restricted stock
grants, performance units and dividend equivalents. The Plans are administered
by a committee of the Board of Directors (the "Committee") whose members
determine who will be awarded stock options, stock appreciation rights,
restricted stock grants, performance units and dividend equivalents.
 
    Under the 1993 Plan, 915,219 shares of the Company's common stock were
reserved for potential awards and under the 1996 Plan, an additional 500,000
shares of the Company's common stock were reserved.
 
    Stock options may be granted alone or in addition to other awards or in
tandem with stock appreciation rights. The exercise price of stock options
granted under the Plans is established by the Committee, but the exercise price
may not be less than the market price of the Company's common stock
 
                                       63
<PAGE>
                             HARVEYS CASINO RESORTS
 
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
 
6. STOCK-BASED COMPENSATION (CONTINUED)
on the date the option is granted. The term of each stock option will be fixed
by the Committee. However, the term of any stock option may not exceed ten
years. Stock options granted under the Plans generally vest ratably over a three
year period from the date of grant.
 
    Stock appreciation rights entitle the holder to receive in cash an amount
equal to the excess of the fair market value of common stock on the date of
exercise over the fair market value of common stock on the date of grant. A
stock appreciation right may be exercised at any time following the date which
is six months after the date of grant, but not prior to the exercisability of
any stock option with which it is granted in tandem. As of November 30, 1998, no
stock appreciation rights had been granted.
 
    Restricted stock grants are awards of shares of common stock granted subject
to such restrictions, terms and conditions as the Committee deems appropriate.
The Committee determines the number of restricted shares to be granted and may
impose different terms and conditions on any particular restricted share grant
made to any employee. The Company has granted a total of 228,500 shares of
restricted common stock. Of the restricted shares granted, in each case, 25% of
the shares vested immediately as of the date of the grant and vest an additional
25% on each of the next three anniversaries of the grant. As of November 30,
1998, grantees of the restricted shares had forfeited 8,375 shares pursuant to
terms of the Plans. The Company has recognized approximately $142,000, $237,000,
and $750,000 as compensation expense in fiscal 1998, 1997, and 1996,
respectively.
 
    At November 30, 1998, 208,859 shares of the Company's common stock were
available for grant under the Plans.
 
    1993 NON-EMPLOYEE DIRECTORS' STOCK OPTION PROGRAM
 
    In November 1993, the Company adopted the 1993 Non-Employee Directors' Stock
Option Program (the "Program") whereby each currently serving non-employee
director was granted an option to purchase 4,500 shares of the Company's common
stock, and will be granted an option to purchase 1,500 shares of common stock
immediately following each annual meeting. Each new non-employee director
receives a grant of an option to purchase 4,500 shares of the Company's common
stock immediately after the first annual meeting of shareholders after any such
director is elected or appointed to the Board of Directors and will receive an
option to purchase 1,500 shares of common stock immediately following each
subsequent annual meeting. Of the options granted, in each case, 33 1/3% vested
immediately on the date of grant and vest an additional 33 1/3% on each of the
next two anniversaries of grant. The exercise price is the fair market value of
the common stock on the date of grant. A total of 60,000 shares have been
reserved for issuance under the Program.
 
    STOCK OPTIONS PURSUANT TO EMPLOYMENT CONTRACTS
 
    Two of the Company's directors, who are also employees, have been granted
options, outside of the Plans or the Program, to purchase 15,000 and 12,500
shares of the Company's common stock, respectively. The stock options were
granted in November 1993 pursuant to employment contracts and in anticipation of
the Company's initial public offering in February 1994. The stock options have
an exercise price of $14.00 per share. None of the stock options have been
exercised. All of the stock options are currently exercisable and expire ten
years from the date of grant.
 
                                       64
<PAGE>
                             HARVEYS CASINO RESORTS
 
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
 
6. STOCK-BASED COMPENSATION (CONTINUED)
    The following table summarizes information relative to stock options
granted, exercised, canceled, outstanding and exercisable under the various
plans discussed above:
 
<TABLE>
<CAPTION>
                                                                                                 WEIGHTED-AVERAGE
                                                                                      OPTIONS     EXERCISE PRICE
                                                                                     ----------  -----------------
<S>                                                                                  <C>         <C>
Options outstanding at December 1, 1995............................................     519,432      $   15.32
Options granted....................................................................     413,580          18.90
Options canceled...................................................................     (21,834)         13.81
Options exercised..................................................................     (31,665)         14.14
                                                                                     ----------
Options outstanding at November 30, 1996...........................................     879,513          16.96
Options granted....................................................................     684,193          16.48
Options canceled...................................................................    (513,080)         19.04
Options exercised..................................................................     (35,166)         13.77
                                                                                     ----------
Options outstanding at November 30, 1997...........................................   1,015,460          15.69
Options granted....................................................................      17,500          27.16
Options canceled...................................................................     (19,515)         17.19
Options exercised..................................................................    (226,183)         14.95
                                                                                     ----------
Options outstanding at November 30, 1998...........................................     787,262          16.02
                                                                                     ----------
                                                                                     ----------
 
Options exercisable at November 30, 1996...........................................     476,042      $   15.13
Options exercisable at November 30, 1997...........................................     377,583          14.35
Options exercisable at November 30, 1998...........................................     347,992          15.25
</TABLE>
 
    The following table provides additional information relative to stock
options outstanding at November 30, 1998:
 
<TABLE>
<CAPTION>
                                                        OPTIONS OUTSTANDING
                                         --------------------------------------------------       OPTIONS EXERCISABLE
                                                       WEIGHTED-AVERAGE                      -----------------------------
                                                           REMAINING       WEIGHTED-AVERAGE               WEIGHTED-AVERAGE
                                           NUMBER     CONTRACTUAL LIFE IN    EXERCISABLE       NUMBER       EXERCISABLE
RANGE OF EXERCISE PRICES                 OUTSTANDING         YEARS              PRICE        EXERCISABLE       PRICE
---------------------------------------  -----------  -------------------  ----------------  -----------  ----------------
<S>                                      <C>          <C>                  <C>               <C>          <C>
$13.0000-$16.2500......................     203,000             5.29         $    14.1103       198,500     $    14.0807
$16.4375-$16.4375......................     536,762             8.52         $    16.4375       126,327     $    16.4375
$17.1563-$27.1563......................      47,500             8.42         $    19.4010        23,165     $    18.7588
                                         -----------             ---             --------    -----------        --------
$13.0000-$27.1563......................     787,262             7.68         $    16.0162       347,992     $    15.2477
                                         -----------                                         -----------
                                         -----------                                         -----------
</TABLE>
 
    The FASB has issued SFAS No. 123--ACCOUNTING FOR STOCK-BASED COMPENSATION.
SFAS No. 123 provides, among other things, that companies may elect to either
record expense based on the fair value of stock-based compensation upon issuance
or continue to apply the methods prescribed by Accounting Principles Board
Opinion No. 25 ("APB No. 25") whereby no compensation cost is recognized upon
grant if certain requirements are met. The Company has elected to continue to
account for stock-based compensation in accordance with APB No. 25.
 
    Had the Company recorded stock-based compensation cost consistent with the
provisions of SFAS No. 123, the Company's net income and earnings per share
would have been reduced to the pro forma
 
                                       65
<PAGE>
                             HARVEYS CASINO RESORTS
 
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
 
6. STOCK-BASED COMPENSATION (CONTINUED)
amounts included in the table below. The table also discloses the
weighted-average assumptions used in estimating the fair value of stock options
using the Black-Scholes option pricing model and the weighted-average fair value
of the stock options granted. The Black-Scholes option valuation model was
developed for use in estimating the fair value of traded options, which have no
vesting restrictions and are fully transferable. Additionally, option valuation
models require the input of highly subjective assumptions including the expected
stock price volatility. Because the Company's stock-based compensation has
characteristics significantly different from those of traded options, and
because changes in the subjective input assumptions can materially affect the
fair value estimate, in management's opinion, the existing models do not
necessarily provide a reliable single measure of the fair value of the Company's
stock-based compensation.
 
<TABLE>
<CAPTION>
                                                                                      YEARS ENDED NOVEMBER 30,
                                                                                   -------------------------------
DOLLARS IN THOUSANDS, EXCEPT PER SHARE AMOUNTS                                       1998       1997       1996
---------------------------------------------------------------------------------  ---------  ---------  ---------
<S>                                                                                <C>        <C>        <C>
Income before extraordinary item
  As reported....................................................................  $  18,702  $  30,775  $  11,814
  Pro forma......................................................................     17,938     30,406     11,465
Net income
  As reported....................................................................  $  18,702  $  30,775  $  11,292
  Pro forma......................................................................     17,938     30,406     10,943
Income per share before extraordinary item--basic
  As reported....................................................................  $    1.87  $    3.13  $    1.22
  Pro forma......................................................................  $    1.79  $    3.09  $    1.19
Net income per share--basic
  As reported....................................................................  $    1.87  $    3.13  $    1.16
  Pro forma......................................................................  $    1.79  $    3.09  $    1.13
Income per share before extraordinary item--diluted
  As reported....................................................................  $    1.83  $    3.13  $    1.22
  Pro forma......................................................................  $    1.76  $    3.09  $    1.18
Net income per share--diluted
  As reported....................................................................  $    1.83  $    3.13  $    1.16
  Pro forma......................................................................  $    1.77  $    3.09  $    1.13
Weighted-average assumptions
  Expected stock price volatility................................................      31.24%     31.70%     32.64%
  Risk-free interest rate........................................................       5.07%      5.20%      5.81%
  Expected option lives (years)..................................................       3.44       2.84       3.06
  Expected dividend yield........................................................       0.80%      1.00%      1.00%
  Estimated fair value of options granted........................................  $    6.53  $    4.05  $    3.97
</TABLE>
 
                                       66
<PAGE>
                             HARVEYS CASINO RESORTS
 
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
 
7. EMPLOYEE BENEFIT PLANS
 
    401(k) PLAN
 
    The Company maintains a defined contribution retirement savings plan for all
full-time employees who have at least one year of continuous employment and
1,000 hours of service. The Company contributes amounts equal to 50% of each
eligible employee's voluntary contributions. For purposes of determining the
Company's required contribution to the plan, the employee's voluntary
contributions cannot exceed 6% of the employee's qualified compensation. The
Company's contribution to the plan for the years ended November 30, 1998, 1997
and 1996 amounted to approximately $1.4 million, $1.6 million and $1.0 million,
respectively.
 
    LONG-TERM INCENTIVE PLAN
 
    In 1994, the Company adopted a long-term incentive plan for key employees.
Under the plan, incentives are accrued based upon annual operating results;
however, ultimate payment of these incentives is contingent upon the Company
attaining certain financial objectives over consecutive and concurrent
three-year periods. As of November 30, 1998 and 1997, the amount due to plan
participants was approximately $1.6 million and $1.0 million, respectively.
 
    DEFERRED COMPENSATION PLAN
 
    In 1990, the Company established a non-qualified deferred compensation plan
for designated executives and outside directors. Individuals electing to
participate in this plan may voluntarily defer receipt of up to twenty-five
percent (25%) of the participant's annual compensation. The deferred
compensation is credited to each participant's account, and interest on such
amounts is added to the participant's account each quarter. The interest rate
paid on amounts deferred prior to calendar year 1995 is the prime rate at the
beginning of each quarter plus five percent (12.75% at November 30,1998). The
interest rate paid on amounts deferred subsequent to December 31, 1994 is the
prime rate plus two and one-half percent (10.25% at November 30, 1998). The
Company is under no obligation to fund amounts under this plan, and such amounts
are unsecured and treated as general obligations of the Company. As of November
30, 1998 and 1997, the amount due participants in this plan was approximately
$2.9 million and $2.3 million, respectively.
 
    POSTRETIREMENT BENEFITS
 
    The Company provides postretirement medical benefits for certain key
executives and members of the Company's Board of Directors. These plans have
been accounted for in accordance with the provisions of SFAS No. 106--EMPLOYERS'
ACCOUNTING FOR POSTRETIREMENT BENEFITS OTHER THAN PENSIONS. This statement
requires that the cost of these postretirement medical benefits be recognized
under the accrual method of accounting. As permitted by SFAS No. 106, the
Company has elected to amortize over a period of 20 years
 
                                       67
<PAGE>
                             HARVEYS CASINO RESORTS
 
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
 
7. EMPLOYEE BENEFIT PLANS (CONTINUED)
the accumulated postretirement benefit obligation (transition obligation)
related to prior service costs. The components of the periodic expense for
postretirement benefits were as follows:
 
<TABLE>
<CAPTION>
                                                                                    YEARS ENDED NOVEMBER 30,
                                                                               ----------------------------------
                                                                                  1998        1997        1996
                                                                               ----------  ----------  ----------
<S>                                                                            <C>         <C>         <C>
Service cost of benefits earned..............................................  $   78,782  $   75,219  $   94,414
Interest cost on liability...................................................      67,884      56,907      55,338
Amortization of transition obligation........................................      12,197      12,197      12,197
Prior service cost...........................................................       6,683       6,683       6,683
Loss.........................................................................      --          --           3,136
                                                                               ----------  ----------  ----------
Net periodic postretirement benefit cost.....................................  $  165,546  $  151,006  $  171,768
                                                                               ----------  ----------  ----------
                                                                               ----------  ----------  ----------
</TABLE>
 
    The Company's current policy is to fund the plan as covered benefits are
paid. The actuarial and recorded liabilities for postretirement benefits, none
of which have been funded, were as follows:
 
<TABLE>
<CAPTION>
                                                                                               NOVEMBER 30,
                                                                                        --------------------------
                                                                                            1998          1997
                                                                                        ------------  ------------
<S>                                                                                     <C>           <C>
Accumulated postretirement benefit obligation:
  Retirees............................................................................  $    131,906  $     71,761
  Fully eligible active plan participants.............................................       164,218       104,182
  Other active plan participants......................................................       847,656       739,129
                                                                                        ------------  ------------
                                                                                           1,143,780       915,072
Plan assets at fair value.............................................................       --            --
                                                                                        ------------  ------------
Accumulated postretirement benefit obligation in excess of plan assets................     1,143,780       915,072
Prior service cost not recognized in net periodic postretirement benefit cost.........       (89,181)      (95,864)
Unrecognized net gain (loss)..........................................................       (73,418)       13,589
Unrecognized transition obligation....................................................      (170,746)     (182,943)
                                                                                        ------------  ------------
Postretirement benefit liability recognized in the consolidated balance sheets........  $    810,435  $    649,854
                                                                                        ------------  ------------
                                                                                        ------------  ------------
</TABLE>
 
    A 6% annual rate of increase in the per capita cost of covered health care
benefits was assumed for 1998 and 1997. Increasing the assumed health care cost
trend rates by one percentage point in each year would increase the accumulated
postretirement benefit obligation as of November 30, 1998 and 1997 by
approximately $166,000 and $142,000 , respectively, and increase the service and
interest cost components of net periodic postretirement benefit cost by
approximately $23,000 and $23,000, respectively. The weighted-average discount
rate used to estimate the accumulated postretirement benefit obligation at
November 30, 1998 and 1997 was 6.75% and 7.25%, respectively.
 
                                       68
<PAGE>
                             HARVEYS CASINO RESORTS
 
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
 
7. EMPLOYEE BENEFIT PLANS (CONTINUED)
    SUPPLEMENTAL RETIREMENT PLANS
 
    The Company provides noncontributory supplemental executive retirement plans
for certain key executives. Normal retirement under the supplemental executive
retirement plans is age 65, and participants receive benefits based on years of
service and compensation. The Company provides a noncontributory plan for
members of the Company's Board of Directors. Participants in the Board of
Directors plan receive benefits based on years of service, as a non-employee
director, upon retirement from the Board.
 
    The following table sets forth the plan's funded status and amounts
recognized in the Company's balance sheet as of November 30, 1998 and 1997:
 
                 ACTUARIAL PRESENT VALUE OF BENEFIT OBLIGATION
 
<TABLE>
<CAPTION>
                                                                                             NOVEMBER 30,
                                                                                     -----------------------------
                                                                                          1998           1997
                                                                                     --------------  -------------
<S>                                                                                  <C>             <C>
Accumulated benefit obligation, including vested benefits of $12,927,244 and
  $11,556,484, respectively........................................................  $   13,853,907  $  12,038,065
                                                                                     --------------  -------------
                                                                                     --------------  -------------
Projected benefit obligation for service rendered to date..........................  $   17,841,348  $  15,133,038
Plan assets at fair value..........................................................        --             --
                                                                                     --------------  -------------
Projected benefit obligation in excess of plan assets..............................      17,841,348     15,133,038
Unrecognized net loss..............................................................      (3,763,138)    (2,639,993)
Prior service cost not yet recognized in net periodic pension cost.................      (1,436,155)    (1,649,152)
Unrecognized net obligation at adoption date.......................................      (1,542,423)    (1,714,122)
                                                                                     --------------  -------------
Accrued pension cost recognized....................................................  $   11,099,632  $   9,129,771
                                                                                     --------------  -------------
                                                                                     --------------  -------------
 
Additional liability and intangible asset:
Accumulated benefit obligation.....................................................  $   13,853,907  $  12,038,065
Less: Plan assets at fair value....................................................        --             --
                                                                                     --------------  -------------
Unfunded accumulated benefit obligation............................................      13,853,907     12,038,065
Less: Accrued pension cost.........................................................     (11,099,632)    (9,129,771)
                                                                                     --------------  -------------
Additional liability...............................................................  $    2,754,275  $   2,908,294
                                                                                     --------------  -------------
                                                                                     --------------  -------------
Intangible asset--limited to unrecognized net obligation plus prior service cost...  $    2,754,272  $   2,908,294
                                                                                     --------------  -------------
                                                                                     --------------  -------------
</TABLE>
 
                                       69
<PAGE>
                             HARVEYS CASINO RESORTS
 
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
 
7. EMPLOYEE BENEFIT PLANS (CONTINUED)
    Pension cost consists of the following components:
 
<TABLE>
<CAPTION>
                                                                                  YEARS ENDED NOVEMBER 30,
                                                                          ----------------------------------------
                                                                              1998          1997          1996
                                                                          ------------  ------------  ------------
<S>                                                                       <C>           <C>           <C>
Service cost--benefits earned during the period.........................  $    649,139  $    502,946  $    425,334
Interest cost on projected benefit obligation...........................     1,096,557       987,746       907,147
Return on plan assets...................................................       --            --            --
Net amortization and deferral...........................................       507,739       496,173       517,165
                                                                          ------------  ------------  ------------
Net periodic pension cost...............................................  $  2,253,435  $  1,986,865  $  1,849,646
                                                                          ------------  ------------  ------------
                                                                          ------------  ------------  ------------
</TABLE>
 
    The projected benefit obligation for November 30, 1998 and 1997 was
determined using an assumed discount rate of 6.75% and 7.25%, respectively, and
in each case, an assumed salary increase rate of 5%. The Company has recorded
additional liabilities of approximately $2.8 and $2.9, and intangible assets of
approximately $2.8 million and $2.9 million as of November 30, 1998 and 1997,
respectively. As of November 30, 1998 and 1997, a liability of approximately
$13.9 and $12.0 million, respectively, is included in the consolidated balance
sheets under the caption "Other liabilities" for the above plan.
 
    SELF INSURED PLANS
 
    The Company is self insured for employee medical coverage and workers'
compensation for the benefit of its employees. Estimated accrued obligations for
claims under these self-insured plans as of November 30, 1998 and 1997 were
approximately $2.4 million and $2.4 million, respectively. The Company's maximum
liability under both plans is limited by stop-loss agreements with insurance
companies.
 
8. NET INCOME PER COMMON SHARE
 
    As of December 1, 1997, the Company adopted the provisions of SFAS No.
128--EARNINGS PER SHARE. The Company has restated the prior periods net income
per common share to conform with the provisions of SFAS No. 128. Basic net
income per common share is calculated by dividing net income by the weighted
average number of common shares outstanding during the period. Diluted net
income per common share is calculated by dividing net income by the weighted
average number of common and common equivalent shares outstanding during the
period. Common equivalent shares include restricted stock and stock options
outstanding and exercisable for the purpose of calculating diluted net income
per common share. The Company has no other potentially dilutive securities.
 
                                       70
<PAGE>
                             HARVEYS CASINO RESORTS
 
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
 
8. NET INCOME PER COMMON SHARE (CONTINUED)
    A reconciliation of net income and shares for basic and diluted net income
per common share follows:
 
<TABLE>
<CAPTION>
                                                                                 YEAR ENDED NOVEMBER 30, 1998
                                                                           ----------------------------------------
                                                                                                         PER SHARE
                                                                              INCOME         SHARES       AMOUNT
                                                                           -------------  ------------  -----------
<S>                                                                        <C>            <C>           <C>
Basic net income per common share........................................  $  18,701,652    10,023,113   $    1.87
                                                                                                             -----
                                                                                                             -----
Effect of dilutive securities............................................                      197,363
                                                                           -------------  ------------
Diluted net income per common share......................................  $  18,701,652    10,220,476   $    1.83
                                                                           -------------  ------------       -----
                                                                           -------------  ------------       -----
</TABLE>
 
<TABLE>
<CAPTION>
                                                                                 YEAR ENDED NOVEMBER 30, 1997
                                                                            --------------------------------------
                                                                                                        PER SHARE
                                                                               INCOME        SHARES      AMOUNT
                                                                            -------------  ----------  -----------
<S>                                                                         <C>            <C>         <C>
Basic net income per common share.........................................  $  30,774,621   9,826,636   $    3.13
                                                                                                            -----
                                                                                                            -----
Effect of dilutive securities.............................................                     17,235
                                                                            -------------  ----------
Diluted net income per common share.......................................  $  30,774,621   9,843,871   $    3.13
                                                                            -------------  ----------       -----
                                                                            -------------  ----------       -----
</TABLE>
 
<TABLE>
<CAPTION>
                                                                                 YEAR ENDED NOVEMBER 30, 1996
                                                                            --------------------------------------
                                                                                                        PER SHARE
                                                                               INCOME        SHARES      AMOUNT
                                                                            -------------  ----------  -----------
<S>                                                                         <C>            <C>         <C>
Basic income before extraordinary item per common share...................  $  11,813,935   9,645,708   $    1.22
                                                                                                       -----------
                                                                                                       -----------
Effect of dilutive securities.............................................                     52,792
                                                                            -------------  ----------
Diluted income before extraordinary item per common share.................  $  11,813,935   9,698,500   $    1.22
                                                                            -------------  ----------  -----------
                                                                            -------------  ----------  -----------
Extraordinary item, basic.................................................  $    (521,705)  9,645,708   $   (0.06)
                                                                                                       -----------
                                                                                                       -----------
Effect of dilutive securities.............................................                     52,792
                                                                            -------------  ----------
Extraordinary item, diluted...............................................  $    (521,705)  9,698,500   $   (0.06)
                                                                            -------------  ----------  -----------
                                                                            -------------  ----------  -----------
Basic net income per common share.........................................  $  11,292,230   9,645,708   $    1.16
                                                                                                       -----------
                                                                                                       -----------
Effect of dilutive securities.............................................                     52,792
                                                                            -------------  ----------
Diluted net income per common share.......................................  $  11,292,230   9,698,500        1.16
                                                                            -------------  ----------  -----------
                                                                            -------------  ----------  -----------
</TABLE>
 
9. COMMITMENTS AND CONTINGENCIES
 
    LETTERS OF CREDIT
 
    In connection with regulatory requirements, the Company was required to
issue irrevocable standby letters of credit to guarantee the Company's
obligation to satisfy a progressive slot machine jackpot payout
 
                                       71
<PAGE>
                             HARVEYS CASINO RESORTS
 
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
 
9. COMMITMENTS AND CONTINGENCIES (CONTINUED)
and guarantee payment of workers' compensation benefits. Outstanding standby
letters of credit as of November 30, 1998 were as follows:
 
<TABLE>
<CAPTION>
                                                                                     AMOUNT      EXPIRATION DATE
                                                                                  ------------  -----------------
<S>                                                                               <C>           <C>
Gaming Patron...................................................................  $    394,603     March 31, 1999
St. Paul Fire and Marine (workers' compensation)................................       812,500     April 15, 1999
                                                                                  ------------
                                                                                  $  1,207,103
                                                                                  ------------
                                                                                  ------------
</TABLE>
 
    EMPLOYMENT CONTRACTS
 
    The Company has entered into employment agreements, each of which expires
prior to November 30, 2002, with certain key executives. The employment
agreements provide for, among other things, annual base compensation,
participation in bonus plans, certain stock grants and stock option provisions.
 
    CLAIMS AND LEGAL ACTIONS
 
    The Company is involved in various claims and legal actions arising in the
ordinary course of business. In the opinion of management, all pending matters
are either adequately covered by insurance or if not covered by insurance, will
not have a material adverse effect on the Company's financial statements taken
as a whole.
 
10. RELATED PARTY TRANSACTIONS
 
    NOTES RECEIVABLE FROM RELATED PARTY TRUST
 
    Jessica L. Ledbetter, Kirk B. Ledbetter and Franklin K. Rahbeck, all
directors of the Company, and Wells Fargo Bank, National Association are the
co-trustees of the William B. Ledbetter and Beverlee A. Ledbetter Irrevocable
Trust ("the Trust"). The Trust owns survivorship life insurance policies on the
lives of William B. Ledbetter and Beverlee A. Ledbetter, deceased. William B.
Ledbetter is an officer and director of the Company and until her death on
September 12, 1995, Beverlee A. Ledbetter was the largest shareholder of the
Company. Prior to fiscal 1995, the Company had paid premiums on the life
insurance policies owned by the Trust. The Company has no further obligation to
pay such premiums. The Trust has issued two notes payable to the Company for the
amounts of the premiums previously paid by the Company. The notes are in the
principal amounts of $1,376,995 and $455,272 and bear interest at the rate of
5.84% and 6.30%, respectively. Interest on the notes is payable on December 31
of each year and the entire unpaid principal amount becomes due on the earlier
of November 15, 2001 or the death of William B. Ledbetter.
 
11. SALE OF INTERESTS IN UNCONSOLIDATED AFFILIATE
 
    Until October 24, 1997, the Company owned a 40% equity interest in HRHC. The
Company accounted for this investment on the equity method. Pursuant to a
management agreement between HRHC and HLVMC, relating to the management and
operations of the Hard Rock Hotel and Casino owned by HRHC (the "Management
Agreement"), the Company earned a base management fee from HRHC of 4% of
adjusted gross revenue, as defined in the Management Agreement, and up to an
additional 2% of adjusted gross revenue if certain financial targets were met.
 
                                       72
<PAGE>
                             HARVEYS CASINO RESORTS
 
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
 
11. SALE OF INTERESTS IN UNCONSOLIDATED AFFILIATE (CONTINUED)
    On October 24, 1997, the Company sold all of the capital stock of HRHC held
by the Company, representing 40% of the then outstanding capital stock of HRHC,
and all of the Company's rights under the Management Agreement. The capital
stock and the rights under the Management Agreement were sold to HRHC. The sale
closed pursuant to the terms of a Stock Purchase and Management Buyout Agreement
entered into on July 1, 1997 by and among the Company, HLVMC, Lily Pond
Investments, Inc., a Nevada corporation ("Lily Pond") and HRHC. Upon closing,
the Management Agreement terminated and a stockholders' agreement among the
Company, HRHC and Lily Pond was canceled.
 
    The Company received $45.0 million cash for the capital stock and the
Company's rights under the Management Agreement. The Company received, in
addition, approximately $1.2 million cash in satisfaction of a note and other
amounts due the Company from HRHC as of October 24, 1997.
 
    Summarized statement of income information for HRHC for the year ended
November 30, 1996 and for the period from December 1, 1996 through October 24,
1997 were as follows:
 
<TABLE>
<CAPTION>
                                                                   PERIOD ENDED   YEAR ENDED
                                                                   OCTOBER 24,   NOVEMBER 30,
                                                                       1997          1996
                                                                   ------------  ------------
                                                                         (IN THOUSANDS)
<S>                                                                <C>           <C>
Summarized Statement of Income Information
  Revenues.......................................................   $   68,699    $   77,289
  Operating income...............................................       11,323        12,663
  Net income.....................................................        4,295         4,467
</TABLE>
 
12. SUBSEQUENT EVENT (UNAUDITED)
 
    On February 2, 1999, Harveys Acquisition Corporation, a Nevada corporation
("HAC"), which was formed at the direction of Colony Investors III, L.P., a
Delaware limited partnership ("Colony III") and an affiliate of Colony Capital,
Inc. ("Colony Capital") of Los Angeles, California, merged with and into the
Company (the "Merger").
 
    The Merger occurred pursuant to an agreement and Plan of Merger dated as of
February 1, 1998 (the "Merger Agreement") between the Company and HAC. In the
Merger, each share of common stock ("Common Stock") of the Company outstanding
at the time the Merger became effective (the "Effective Time") (other than
shares of Common Stock held in the Company's treasury) was converted into the
right to receive $28.7343 in cash as provided in the Merger Agreement. At the
Effective Time, shareholders of the Company received an aggregate amount equal
to approximately $289.3 million and certain members of management received
compensation in the approximate amount of $10 million as buyout and/or
termination of various stock options. The capital stock of HAC prior to the
Merger became the capital stock of the Company after the Merger. The Company was
the surviving corporation in the Merger and is continuing its business
operations as conducted prior to the Merger. The Merger will be accounted for
using purchase method accounting.
 
    Prior to the Merger, the Company was a publicly held company. Following the
Merger, Colony III owns 97% of the outstanding non-voting common stock, which
together with its voting common stock represents approximately 96% of the common
equity interest in the Company. Colony HCR Voteco, LLC, a Delaware limited
liability company ("Voteco") whose sole members are Thomas J. Barrack, Jr., the
Chairman and Chief Executive Officer of the indirect general partner of Colony
III, and Kelvin L. Davis,
 
                                       73
<PAGE>
                             HARVEYS CASINO RESORTS
 
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
 
12. SUBSEQUENT EVENT (UNAUDITED) (CONTINUED)
the President and Chief Operating Officer of the indirect general partner of
Colony III, owns 97% of the voting power in the Company through the ownership of
97% of the outstanding voting common stock. As a result, Voteco is able to
govern all matters of the Company that are subject to the vote of stockholders,
including the appointment of directors and the amendment of the Company's
Articles of Incorporation and Bylaws. In addition, Colony III owns 99.99% of the
outstanding shares of the Company's preferred stock and Voteco owns 0.01% of the
outstanding shares of preferred stock.
 
    In connection with the Merger, HAC issued shares of its Class A Common Stock
(the "Class A Common") and shares of its 13 1/2% Series A Senior Redeemable
Convertible Cumulative Preferred Stock (the "Series A Preferred") to Voteco, and
shares of its Class B Common Stock (the "Class B Common") and shares of its
13 1/2% Series B Senior Redeemable Cumulative Convertible Preferred Stock (the
"Series B Preferred") to Colony III. Holders of Class A Common are entitled to
one vote per share in all matters to be voted on by stockholders of the Company.
Holders of Class B Common have no voting rights except as required by law. The
Series A Preferred and Series B Preferred are convertible into Class A Common
and Class B Common, respectively, at a conversion rate of 28.7309164 shares of
Class A Common or Class B Common for each share of Series A Preferred or Series
B Preferred, subject to adjustment in customary circumstances to prevent
dilution. The Series A Preferred and Series B Preferred are subject to mandatory
redemption on February 1, 2011 for cash at the $550 per share liquidation value
(the "Liquidation Value") plus any accrued and unpaid dividends, out of any
funds legally available therefor. The Company has the right to redeem the Series
A Preferred and the Series B Preferred at any time for cash at the Liquidation
Value plus any accrued and unpaid dividends.
 
    At the Effective Time, Charles W. Scharer, Chairman of the Board of
Directors, President and Chief Executive Officer of the Company, prior to the
Merger, was appointed a director of the Company. Additionally, at the Effective
Time, the Company granted to certain executive officers of the Company 660
shares of Class A Common and 66,000 shares of Class B Common in the aggregate,
and committed to granting shares to certain other executive officers.
 
    HAC financed the Merger and paid related fees and expenses with (i) proceeds
of approximately $75 million from the issuance of its Class A Common and Class B
Common to Voteco and Colony III, respectively, (ii) proceeds of $55 million from
the issuance of Series A Preferred and Series B Preferred to Voteco and Colony
III, respectively, (iii) borrowings in the amount of $172 million under a loan
agreement dated as of January 28, 1999 (the "HAC Loan") between HAC as borrower
and Wells Fargo Bank, National Association ("Wells Fargo") as lender, and (iv)
the Company's available cash.
 
    Immediately following the Merger, the Company used an initial disbursement
of $172 million under an Amended and Restated Credit Agreement dated December 9,
1998 among the Company and certain of its subsidiaries as borrowers, Wells Fargo
as swingline lender, letter of credit issuer and agent and the lenders party
thereto to repay the $172 million outstanding under the HAC Loan, made for the
purpose of financing a portion of the merger consideration. Interest on the
outstanding principal balance accrues at a base rate equal to the higher of (i)
the prime rate, and (ii) the Federal Funds Rate (as defined in the Amended and
Restated Credit Agreement) plus one-half of one percent; plus an applicable
margin which is initially 1.75%. The Company may under certain circumstances
elect to have interest accrue at LIBOR plus an applicable margin. The $185
million credit facility amends and restates the Company's previously existing
Credit Facility and provides for a revolving loan facility under which the
Company may repay and reborrow amounts outstanding, and a swingline facility and
letter of credit facility under each of which the Company may borrow up to $5
million.
 
                                       74
<PAGE>
                             HARVEYS CASINO RESORTS
 
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
 
12. SUBSEQUENT EVENT (UNAUDITED) (CONTINUED)
    Prior to the Effective Time, the Company received the consent of the holders
of the Senior Subordinated Notes to the waiver of provisions of the Indenture
that would have given each holder the right upon consummation of the Merger to
require the Company to repurchase such holder's Senior Subordinated Notes at
101% of the principal amount plus accrued and unpaid interest to the repurchase
date and that may have restricted the financing of the Merger. The Company paid
a consent fee to consenting holders of the Senior Subordinated Notes equal to 9%
of the principal amount of the holders' Senior Subordinated Notes.
 
13. SELECTED QUARTERLY FINANCIAL INFORMATION (UNAUDITED)
 
    The following table sets forth unaudited selected quarterly financial
information for each quarter of fiscal 1998 and 1997. This information, in the
opinion of management, includes only normal recurring adjustments necessary for
a fair representation of the information set forth therein. The operating
results for any quarter are not indicative of results for any future period.
Quarterly results may not be comparative due to the seasonal nature of
operations.
 
<TABLE>
<CAPTION>
(IN THOUSANDS, EXCEPT PER SHARE DATA)                                     FIRST     SECOND      THIRD     FOURTH
----------------------------------------------------------------------  ---------  ---------  ---------  ---------
<S>                                                                     <C>        <C>        <C>        <C>
Fiscal 1998
  Revenue(a)..........................................................  $  68,772  $  76,552  $  87,632  $  76,553
  Operating income....................................................      6,583     12,191     17,169      9,893
  Income before income taxes..........................................      2,551      8,155     13,220      6,193
  Net income..........................................................      1,531      4,892      7,932      4,347
  Net income per common share(b)--basic...............................  $    0.15  $    0.49  $    0.79  $    0.43
  Net income per common share(b)--diluted.............................       0.15       0.48       0.77       0.42
Fiscal 1997
  Revenue.............................................................  $  58,554  $  71,709  $  83,676  $  69,624
  Operating income....................................................      4,599     11,560     17,995      7,126
  Income before income taxes(c).......................................          7      6,683     12,981     30,002
  Net income(c).......................................................          4      3,978      7,724     19,068
  Net income per common share(b)(c)--basic............................  $    0.00  $    0.41  $    0.79  $    1.94
  Net income per common share(b)(c)--diluted..........................  $    0.00  $    0.40  $    0.78  $    1.93
</TABLE>
 
------------------------
 
(a) Revenues for the second and third quarters of fiscal 1998 differ from the
    amount originally reported in the Company's Quarterly Reports on Form 10-Q
    for the quarters ended May 31, 1998 and August 31, 1998 due to the
    reclassification of telephone commission income at Harveys Casino Hotel.
 
(b) Net income per share calculations for each quarter are based on the weighted
    average number of common stock and common stock equivalents outstanding
    during the respective quarters; accordingly, the sum of the quarters does
    not equal the full-year income per share.
 
(c) Income before income taxes, net income and net income per common share for
    the fourth quarter of fiscal 1997 include the effect of the gain recognized
    on the sale of the Company's interests in the Hard Rock Hotel and Casino.
    The gain on the transaction was approximately $27.4 million, before income
    taxes, and approximately $17.4 million on an after-tax basis.
 
                                       75
<PAGE>
                                 EXHIBIT INDEX
 
<TABLE>
<CAPTION>
  EXHIBIT
  NUMBER                                                   DESCRIPTION
-----------  --------------------------------------------------------------------------------------------------------
<C>          <S>
       2.1   Stock Purchase Agreement, dated July 2, 1997(9)
 
       2.2   Agreement and Plan of Merger, dated February 1, 1998,(12)
 
       3.1   Amendments to Articles of Incorporation of Harveys Casino Resorts as Surviving Constituent Entity(filed
               as Exhibit A to Articles of Merger of Harveys Acquisition Corporation into Harveys Casino
               Resorts).(13) (Articles of Incorporation are incorporated herein by reference to Harveys Acquisition
               Corporations's Registration Statement of Form 10 (File No. 0-25093), filed November 20, 1998).
 
       3.2   Certificate of Designation of the 13 1/2% Series A Senior Redeemable Convertible Cumulative Preferred
               Stock. ($0.01 per value per share) and the 13 1/2% Series B Redeemable Convertible Cumulative
               Preferred Stock ($0.01 par value per share) of Harveys Casino Resorts(13)
 
       3.3   Eighth Amended and Restated Bylaws of the Registrant(17)
 
       4.1   Form of Stock Certificate of the Registrant(17)
 
       4.2   Indenture, dated as of May 15, 1996 (the "Original Indenture") by and among the Registrant, Harveys
               Wagon Wheel Casino Limited Liability Company, Harveys C. C. Management Company, Inc., Harveys Iowa
               Management Company, Inc. and Harveys L. V. Management Company, Inc. (the "Guarantors") and IBJ
               Schroder Bank & Trust Company as Trustee (including form of Note)(6)
 
       4.3   First Supplemental Indenture, dated as of June 5, 1996, supplementing the Original Indenture(7)
 
       4.4   Second Supplemental Indenture, dated as of May 22, 1997, supplementing the Original Indenture(11)
 
       4.5   Third Supplemental Indenture, dated as of December 24, 1998, among the Registrant, Harveys Tahoe
               Management Company, Inc., Harveys C. C. Management Company, Inc., Harveys Iowa Management Company,
               Inc., Harveys L. V. Management Company, Inc. and IBJ Schroder Bank and Trust Company, supplementing
               the Original Indenture(17)
 
       4.6   Fourth Supplemental Indenture, dated as of December 24, 1998, among the Registrant, Harveys Tahoe
               Management Company, Inc., Harveys C. C. Management Company, Inc., Harveys Iowa Management Company,
               Inc., Harveys L. V. Management Company, Inc. and IBJ Schroder Bank and Trust Company, supplementing
               the Original Indenture(17)
 
      10.1   Net Lease Agreement, dated February 28, 1985, between Park Cattle Co. and the Registrant(1)
 
      10.2   Lease, dated July 9, 1973, between Park Cattle Co. and the Registrant(1)
 
      10.3   Supplemental Executive Retirement Plan(1)
 
      10.4   Senior Supplemental Executive Retirement Plan(1)
 
      10.5   Honorary Director Resolution--Vera Gross(1)
 
      10.6   1998 Deferred Compensation Plan Participants(14)
 
      10.7   Form of Indemnification Agreement for Directors and Officers and Schedule of Indemnities(16)
 
      10.8   Excursion Boat Sponsorship and Operations Agreement, dated August 22, 1994, by and between Iowa West
               Racing Association and Harveys Iowa Management Company, Inc.(2)
</TABLE>
 
                                       76
<PAGE>
<TABLE>
<CAPTION>
  EXHIBIT
  NUMBER                                                   DESCRIPTION
-----------  --------------------------------------------------------------------------------------------------------
<C>          <S>
      10.9   Employment Agreement dated May 9, 1995 by and between the Registrant and Gary Armentrout(3)
 
      10.10  Employment Agreement dated August 14, 1995, by and between the Registrant and Kevin Servatius(4)
 
      10.11  Employment Agreement dated August 24, 1995, by and between the Registrant and Edward B. Barraco(4)
 
      10.12  Harveys Casino Resorts Management Incentive Plan, approved August 8, 1995.(5)
 
      10.13  1997 Deferred Compensation Participants and Form of Agreement(8)
 
      10.14  Extension to Employment Agreement, dated January 30, 1997 between Edward B. Barraco and the
               Registrant(10)
 
      10.15  Employment Agreement, dated June 23, 1997 between James J. Rafferty and the Registrant(11)
 
      10.16  Employment Agreement, dated July 1, 1997 between Verne Welch and the Registrant(11)
 
      10.17  Employment Agreement, dated July 21, 1997 between John R. Bellotti and the Registrant(11)
 
      10.18  Assignment of Leases, effective June 1, 1997, by and between Harveys Casino Resorts, formerly known as
               Harvey's Wagon Wheel, Inc., a Nevada corporation, Harveys Tahoe Management Company, Inc., a Nevada
               corporation, and Park Cattle Co., a Nevada corporation(11)
 
      10.19  Third Amendment to Lease Agreement, dated June 1, 1997, by and between Park Cattle Co., a Nevada
               corporation and Harveys Casino Resorts, formerly known as Harvey's Wagon Wheel, Inc., a Nevada
               corporation(11)
 
      10.20  First Amendment to Lease Agreement, dated June 1, 1997, between Park Cattle Co., a Nevada corporation
               and Harveys Casino Resorts, formerly known as Harveys Wagon Wheel, Inc., a Nevada corporation (Douglas
               County, Nevada property)(11)
 
      10.21  First Amendment to Lease Agreement, dated June 1, 1997, between Park Cattle Co., a Nevada corporation
               and Harveys Casino Resorts, formerly known as Harveys Wagon Wheel, Inc., a Nevada corporation (El
               Dorado County, California property)(11)
 
      10.22  Asset Transfer Agreement between Harveys Casino Resorts and Harveys Tahoe Management Company, Inc.,
               effective June 1, 1997(11)
 
      10.23  Harveys Casino Resorts Change of Control Plan, effective June 1, 1997(16)
 
      10.24  Supplemental Executive Retirement Plan, effective as of November 20, 1997(16)
 
      10.25  Extension of Employment Agreement dated September 8, 1997 between Gary Armentrout and the Registrant(16)
 
      10.26  Amended and Restated Credit Facility dated as of December 9, 1998 among Harveys Casino Resorts, Harveys
               C. C. Management Company, Inc., Harveys Iowa Management Company, Inc., Harveys Tahoe Management
               Company, Inc., HCR Services Company, Inc., as borrowers, and Wells Fargo Bank, The First National Bank
               of Chicago, First Security Bank, N. A., U.S. Bank National Association, Credit Lyonnais Los Angeles
               Branch, Societe Generale, Imperial Bank, Hibernia Bank, Bank of the West and First Hawaiian Bank, as
               lenders, and Wells Fargo Bank, as swingline lender, L/C issuer and agent bank.(17)
 
      10.27  Employment Agreement made and entered into February 2, 1999 by and between Harveys Casino Resorts and
               Charles W. Scharer.(17)
</TABLE>
 
                                       77
<PAGE>
<TABLE>
<CAPTION>
  EXHIBIT
  NUMBER                                                   DESCRIPTION
-----------  --------------------------------------------------------------------------------------------------------
<C>          <S>
      10.28  Employment Agreement made and entered into February 2, 1999 by and between Harveys Casino Resorts and
               Stephen L. Cavallaro.(17)
 
      10.29  Employment Agreement made and entered into February 2, 1999 by and between Harveys Casino Resorts and
               John J. McLaughlin.(17)
 
      10.30  Deferred Compensation Agreement dated as of February 2, 1999 by and between Harveys Casino Resorts and
               Charles W. Scharer.(17)
 
      10.31  Deferred Compensation Agreement dated as of February 2, 1999 by and between Harveys Casino Resorts and
               Stephen L. Cavallaro.(17)
 
      10.32  Deferred Compensation Agreement dated as of February 2, 1999 by and between Harveys Casino Resorts and
               John J. McLaughlin.(17)
 
      10.33  1999 Omnibus Stock Incentive Plan.(17)
 
      10.34  Stockholders Agreement entered into as of February 2, 1999 by and among Harveys Casino Resorts (the
               "Company"), Colony HCR Voteco LLC, Colony Investors III, L. P. And the securityholders of the Company
               as identified from time to time on Schedule A thereto.(17)
 
      10.35  Real Estate Option Agreement dated January 8, 1998 by and between the Registrant and Grand Plaza Limited
               Partnership.(14)
 
      10.36  Amendment, dated as of September 15, 1998, to Option Agreement dated as of January 8, 1998 by and
               between the Registrant and Grand Plaza Limited Partnership.(17)
 
      10.37  Extension of Employment Agreement dated as of October 19, 1998, by and between the Registrant and James
               J. Rafferty.(17)
 
      10.38  Extension of Employment Agreement dated as of October 26, 1998, by and between the Registrant and Gary
               Armentrout.(17)
 
      10.39  1999 Deferred Compensation Plan Participants.(17)
 
      10.40  Memorandum of Understanding dated February 1, 1998 among Harveys Acquisition Corporation, a Nevada
               corporation, Charles W. Scharer, Stephen L. Cavallaro and John J. McLaughlin.(15)
 
      10.41  Voting and Profit Sharing Agreement dated as of February 1, 1998 by and among Harveys Acquisition
               Corporation and the individuals and entities signatory thereto.(15)
 
      10.42  Noncompetition and Trade Secret Agreement dated as of February 1, 1998 by and among Harveys Acquisition
               Corporation and the individuals signatory thereto. (15)
 
      10.43  Stock Option and Restricted Stock Agreement dated as of February 2, 1999 by and between Harveys Casino
               Resorts and Charles W. Scharer.(17)
 
      10.44  Stock Option and Restricted Stock Agreement dated as of February 2, 1999 by and between Harveys Casino
               Resorts and Steven L. Cavallaro.(17)
 
      10.45  Stock Option and Restricted Stock Agreement dated as of February 2, 1999 by and between Harveys Casino
               Resorts and John J. McLaughlin.(17)
 
      10.46  Stock Option and Restricted Stock Agreement dated as of February 2, 1999 by and between Harveys Casino
               Resorts and Gary Armentrout.(17)
 
      10.47  Deferred Compensation Agreement dated as of February 2, 1999 by and between Harveys Casino Resorts and
               Gary Armentrout.(17)
 
      10.48  Indemnification Agreement between Harveys Acquisition Corporation and Kelvin L. Davis.(17)
</TABLE>
 
                                       78
<PAGE>
<TABLE>
<CAPTION>
  EXHIBIT
  NUMBER                                                   DESCRIPTION
-----------  --------------------------------------------------------------------------------------------------------
<C>          <S>
      21.1   List of Subsidiaries of the Registrant(16)
 
      27     Financial Data Schedule(17)
</TABLE>
 
------------------------
 
(1) Incorporated herein by reference to Registration Statement No. 33-70670
 
(2) Incorporated herein by reference to Registrant's Annual Report on Form 10-K
    for the period ended November 30, 1994
 
(3) Incorporated herein by reference to Registrant's Quarterly Report on Form
    10-Q for the period ended May 31, 1995
 
(4) Incorporated herein by reference to Registrant's Quarterly Report on Form
    10-Q for the period ended August 31 1995
 
(5) Incorporated herein by reference to Registrant's Annual Report on Form 10-K
    for the period ended November 30, 1995
 
(6) Incorporated herein by reference to Registration Statement No. 333-3576
 
(7) Incorporated herein by reference to Registrant's Current Report on Form 8-K
    filed June 14, 1996
 
(8) Incorporated herein by reference to Registrant's Quarterly Report on Form
    10-Q for the period ended February 28, 1997
 
(9) Incorporated herein by reference to Registrant's Current Report on Form 8-K
    filed July 2, 1997
 
(10) Incorporated herein by reference to Registrant's Quarterly Report on Form
    10-Q for the period ended May 31, 1997
 
(11) Incorporated herein by reference to Registrant's Quarterly Report on Form
    10-Q for the period ended August 31, 1997
 
(12) Incorporated herein by reference to Registrant's Quarterly Report on Form
    8-K filed February 3, 1998
 
(13) Incorporated herein by reference to Registrant's Current Report on Form 8-K
    filed February 12, 1999
 
(14) Incorporated herein by reference to Registrant's Quarterly Report on Form
    10-Q for the period ended February 28, 1998
 
(15) Incorporated herein by reference to Registration Statement on Form 10 of
    Harveys Acquisition Corporation, File No. 0-25093, filed November 20, 1998
 
(16) Incorporated herein by reference to the Registrant's Annual Report on Form
    10-K for the period ended November 30, 1998
 
(17) Filed herewith
 
                                       79