**U.S. SECURITIES AND EXCHANGE COMMISSION**

**Washington, D.C.  20549**

 

**FORM 10-Q**

 

**(Mark One)**
| **ý**                                                                                                                                                                                                | ** ** | **QUARTERLY  REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934**  |
|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|------------|-----------------------------------------------------------------------------------------|
|                                                                                                                                                                                                      |       |                                                                                    |
| **FOR THE QUARTERLY PERIOD ENDED JUNE 30,  2004.**                                                                                                                                                        |
|                                                                                                                                                                                                      |       |                                                                                    |
| **o**                                                                                                                                                                                                     | ** ** | **TRANSITION  REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934** |
|                                                                                                                                                                                                      |       |                                                                                    |
| **FOR THE TRANSITION PERIOD FROM                 TO                 .** |
|                                                                                                                                                                                                      |       |                                                                                    |
| **Commission File Number 001-31569**                                                                                                                                                                      |
| ** **                                                                                                                                                                                                |
|                                                                                                                                                                                                           |

 

**Canterbury Park Holding Corporation**(Exact name of business issuer as specified in its charter)

 
| **Minnesota**                                                   | ** ** | **41-1775532**                     |
|-----------------------------------------------------------------|------------|------------------------------------|
| (State or other jurisdiction of  incorporation or organization) |       | (IRS Employer  Identification No.) |
|                                                            |       |                               |
| **1100 Canterbury Road, Shakopee, Minnesota**                   | ** ** | **55379**                          |
| (Address of principal executive offices)                        |       | (Zip Code)                         |
|                                                            |       |                               |
| **(952) 445-7223**                                              |
| (Issuer’s Telephone Number)                                |

 

Indicate by check mark whether the Registrant (1) filed all reportsrequired to be filed by Section 13 or 15(d) of the Exchange Act during the past12 months (or for such shorter period that the registrant was required to filesuch reports), and (2) has been subject to such filing requirements for thepast 90 days.   YES  ý   NO  o

 

Indicate by check mark whetherthe registrant is an accelerated filer (as defined in Rule 12b-2 of theExchange Act.  YES  o   NO   ý

 

The Company had 3,788,517 shares of common stock, $.01 par value pershare, outstanding as of August 9, 2004.

 

 

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Canterbury Park Holding Corporation

 

#### **INDEX**

 
| **PART I.**  | **FINANCIAL INFORMATION** | ** **                                                                                   |
|--------------|---------------------------|----------------------------------------------------------------------------------------------|
|         | ** **                | ** **                                                                                   |   |
|         | Item 1.                   | Financial Statements                                                                         |   |
|         |                      |                                                                                         |   |
|         |                      | Consolidated Balance Sheets as of  June 30, 2004 and December 31, 2003                       |   |
|         |                      |                                                                                         |   |
|         |                      | Consolidated Statements of Operations for  the periods ended  June 30, 2004 and 2003         |   |
|         |                      |                                                                                         |   |
|         |                      | Consolidated Statements of Cash Flows for  the periods ended  June 30, 2004 and 2003         |   |
|         |                      |                                                                                         |   |
|         |                      | Notes to Consolidated Financial Statements                                                   |   |
|         |                      |                                                                                         |   |
|         | Item 2.                   | Management’s  Discussion and Analysis of Financial Condition and  Results of Operations |   |
|         |                      |                                                                                         |   |
|         | Item 3.                   | Quantitative  and Qualitative Disclosures about Market Risk                                  |   |
|         |                      |                                                                                         |   |
|         | Item 4.                   | Controls  and Procedures                                                                     |   |
|         |                      |                                                                                         |   |
| **PART II.** | **OTHER INFORMATION**     |                                                                                         |
|         |                      |                                                                                         |   |
|         | Item 1.                   | Legal Proceedings                                                                            |   |
|         |                      |                                                                                         |   |
|         | Item 2.                   | Changes in Securities, Use of Proceeds and  Issuer Purchase of  Equity Securities            |   |
|         |                      |                                                                                         |   |
|         | Item 3.                   | Defaults Upon Senior Securities                                                              |   |
|         |                      |                                                                                         |   |
|         | Item 4.                   | Submission of Matters to a Vote of Security  Holders                                         |   |
|         |                      |                                                                                         |   |
|         | Item 5.                   | Other Information                                                                            |   |
|         |                      |                                                                                         |   |
|         | Item 6.                   | Exhibits and Report on Form 8-K                                                              |   |
|         |                      |                                                                                         |   |
|         | Signatures                |                                                                                         |
|         |                      |                                                                                         |   |
|         | Exhibits                  |                                                                                         |

 

2

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**CANTERBURYPARK HOLDING CORPORATION AND SUBSIDIARIES**

 

**CONSOLIDATEDBALANCE SHEETS****JUNE 30, 2004 AND DECEMBER 31, 2003**

 
| ** **                                                                                                                         | ** ** | **June 30,  2004** | ** ** | **December 31,  2003** | ** ** |
|------------------------------------------------------------------------------------------------------------------------------------|------------|--------------------|------------|------------------------|------------|
| **ASSETS**                                                                                                                         |       |               |       |                   |       |
|                                                                                                                               |       |               |       |                   |       |
| CURRENT ASSETS                                                                                                                     |       |               |       |                   |       |
| Cash                                                                                                                               |       | $                  | 3,216,579  |                   | $          | 2,523,560 |   |
| Restricted Cash                                                                                                                    |       | 3,753,974          |       | 1,286,738              |       |
| Accounts receivable                                                                                                                |       | 497,464            |       | 369,976                |       |
| Inventory                                                                                                                          |       | 241,318            |       | 135,298                |       |
| Deposits                                                                                                                           |       | 20,000             |       | 20,000                 |       |
| Prepaid expenses                                                                                                                   |       | 1,045,354          |       | 848,959                |       |
| Total current assets                                                                                                               |       | 8,774,689          |       | 5,184,531              |       |
|                                                                                                                               |       |               |       |                   |       |
| LAND, BUILDING AND EQUIPMENT, net of  accumulated depreciation of $9,316,930 and $8,725,300, respectively                          |       | 19,466,245         |       | 17,112,933             |       |
|                                                                                                                               |       | $                  | 28,240,934 |                   | $          | 22,297,464 |   |
|                                                                                                                               |       |               |       |                   |       |
| **LIABILITIES AND STOCKHOLDERS’ EQUITY**                                                                                      |       |               |       |                   |       |
|                                                                                                                               |       |               |       |                   |       |
| CURRENT LIABILITIES                                                                                                                |       |               |       |                   |       |
| Accounts payable                                                                                                                   |       | $                  | 4,803,826  |                   | $          | 1,584,145 |   |
| Card club accruals                                                                                                                 |       | 1,490,821          |       | 1,294,826              |       |
| Accrued wages and payroll taxes                                                                                                    |       | 1,583,977          |       | 1,434,295              |       |
| Accrued interest                                                                                                                   |       | 6,088              |       | 2,158                  |       |
| Due to MHBPA                                                                                                                       |       | 99,405             |       | 103,194                |       |
| Accrued property taxes                                                                                                             |       | 220,254            |       | 223,907                |       |
| Cash dividend payable                                                                                                              |       | 947,129            |       |                   |       |
| Income taxes payable                                                                                                               |       | 74,180             |       | 95,499                 |       |
| Payable to horsepersons                                                                                                            |       | 411,887            |       | 344,343                |       |
| Deferred tax liability                                                                                                             |       | 282,000            |       | 389,000                |       |
| Total current liabilities                                                                                                          |       | 9,919,567          |       | 5,471,367              |       |
|                                                                                                                               |       |               |       |                   |       |
| COMMITMENTS AND CONTINGENCIES (Note 4)                                                                                             |       |               |       |                   |       |
|                                                                                                                               |       |               |       |                   |       |
| STOCKHOLDERS’ EQUITY                                                                                                          |       |               |       |                   |       |
| Common stock, $.01 par value, 10,000,000  shares authorized, 3,788,517 and 3,714,369, respectively, shares issued and  outstanding |       | 37,885             |       | 37,144                 |       |
| Additional paid-in capital                                                                                                         |       | 12,111,270         |       | 11,510,650             |       |
| Accumulated earnings                                                                                                               |       | 6,172,212          |       | 5,278,303              |       |
| Total stockholders’ equity                                                                                                    |       | 18,321,367         |       | 16,826,097             |       |
|                                                                                                                               |       | $                  | 28,240,934 |                   | $          | 22,297,464 |   |

 

See notes to consolidatedfinancial statements.

 

3

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**CANTERBURYPARK HOLDING CORPORATION AND SUBSIDIARIES**

 

**CONSOLIDATEDSTATEMENTS OF OPERATIONS****PERIODS ENDED JUNE 30, 2004 AND 2003**

 
| ** **                                       | ** ** | **Three Months Ended June 30,** | ** ** | **Six Months Ended June 30,** | ** ** |
|--------------------------------------------------|------------|---------------------------------|------------|-------------------------------|------------|
| ** **                                       | ** ** | **2004**                        | ** ** | **2003**                      | ** ** | **2004** | ** ** | **2003** | ** ** |
| OPERATING REVENUES:                              |       |                            |       |                          |       |   |   |   |   |
| Pari-mutuel                                      |       | $                               | 5,128,225  |                          | $          | 5,127,669 |   | $ | 8,307,954 |   | $ | 8,253,296 |   |
| Card Club                                        |       | 6,788,541                       |       | 5,730,588                     |       | 13,676,742 |   | 10,649,050 |   |
| Concessions                                      |       | 1,612,092                       |       | 1,459,847                     |       | 2,439,014 |   | 2,186,898 |   |
| Admissions and parking                           |       | 189,379                         |       | 217,621                       |       | 228,097 |   | 242,807 |   |
| Publications                                     |       | 196,799                         |       | 201,496                       |       | 304,840 |   | 332,005 |   |
| Other operating revenue                          |       | 507,613                         |       | 391,162                       |       | 851,967 |   | 693,577 |   |
|                                             |       | 14,422,649                      |       | 13,128,383                    |       | 25,808,614 |   | 22,357,633 |   |
|                                             |       |                            |       |                          |       |   |   |   |   |
| OPERATING EXPENSES:                              |       |                            |       |                          |       |   |   |   |   |
| Statutory purses                                 |       | 2,472,686                       |       | 2,294,137                     |       | 3,687,256 |   | 3,191,124 |   |
| Minnesota breeders’ fund                    |       | 356,735                         |       | 335,367                       |       | 626,172 |   | 567,531 |   |
| Host track fees                                  |       | 695,307                         |       | 643,664                       |       | 1,215,145 |   | 1,163,975 |   |
| Pari-mutuel taxes                                |       | 73,615                          |       | 68,308                        |       | 124,597 |   | 110,905 |   |
| Salaries and benefits                            |       | 5,380,013                       |       | 4,698,374                     |       | 9,557,866 |   | 8,265,250 |   |
| Cost of concessions and publication sales        |       | 890,707                         |       | 803,045                       |       | 1,461,935 |   | 1,299,081 |   |
| Depreciation and amortization                    |       | 311,000                         |       | 291,172                       |       | 596,000 |   | 579,340 |   |
| Utilities                                        |       | 274,442                         |       | 298,027                       |       | 518,026 |   | 545,783 |   |
| Repairs, maintenance and supplies                |       | 527,300                         |       | 464,983                       |       | 814,583 |   | 665,692 |   |
| License fees and property taxes                  |       | 154,492                         |       | 67,390                        |       | 295,186 |   | 132,087 |   |
| Advertising and marketing                        |       | 844,510                         |       | 791,082                       |       | 1,212,818 |   | 1,156,668 |   |
| Insurance                                        |       | 306,047                         |       | 228,624                       |       | 555,356 |   | 404,722 |   |
| Other operating expenses                         |       | 1,107,858                       |       | 1,120,936                     |       | 1,835,509 |   | 1,794,873 |   |
|                                             |       | 13,394,712                      |       | 12,105,109                    |       | 22,500,449 |   | 19,877,031 |   |
| NONOPERATING (EXPENSES) REVENUES:                |       |                            |       |                          |       |   |   |   |   |
| Interest expense                                 |       | (5,078                          | )          | (2,423                        | )          | (6,433 | ) | (4,585 | ) |
| Other, net                                       |       | 12,229                          |       | 11,437                        |       | 22,834 |   | 20,358 |   |
|                                             |       | 7,151                           |       | 9,014                         |       | 16,401 |   | 15,773 |   |
|                                             |       |                            |       |                          |       |   |   |   |   |
| INCOME BEFORE INCOME TAX EXPENSE                 |       | 1,035,088                       |       | 1,032,288                     |       | 3,324,566 |   | 2,496,375 |   |
|                                             |       |                            |       |                          |       |   |   |   |   |
| INCOME TAX EXPENSE (Note 1)                      |       | (454,228                        | )          | (438,736                      | )          | (1,483,528 | ) | (1,063,736 | ) |
|                                             |       |                            |       |                          |       |   |   |   |   |
| NET INCOME                                       |       | $                               | 580,860    |                          | $          | 593,552 |   | $ | 1,841,038 |   | $ | 1,432,639 |   |
|                                             |       |                            |       |                          |       |   |   |   |   |
| BASIC NET INCOME PER COMMON SHARE  (Note 1) |       | $                               | .15        |                          | $          | .16 |   | $ | .49 |   | $ | .39 |   |
|                                             |       |                            |       |                          |       |   |   |   |   |
| DILUTED NET INCOME PER COMMON SHARE (Note  1)    |       | $                               | .14        |                          | $          | .15 |   | $ | .44 |   | $ | .36 |   |

 

See notes to consolidated financial statements.

 

4

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**CANTERBURYPARK HOLDING CORPORATION AND SUBSIDIARIES**

 

**CONSOLIDATEDSTATEMENTS OF CASH FLOWS****PERIODS ENDED JUNE 30, 2004 AND 2003**

 
| ** **                                                               | ** ** | **Six Months Ended June 30,** | ** ** |
|--------------------------------------------------------------------------|------------|-------------------------------|------------|
| ** **                                                               | ** ** | **2004**                      | ** ** | **2003** | ** ** |
|                                                                     |       |                          |       |   |   |
| CASH FLOWS FROM OPERATING ACTIVITIES:                                    |       |                          |       |   |   |
| Net Income                                                               |       | $                             | 1,841,038  |   | $ | 1,432,639 |   |
| Adjustments to reconcile net income to net  cash provided by operations: |       |                          |       |   |   |
| Depreciation and amortization                                            |       | 596,000                       |       | 579,340 |   |
| Deferred income taxes                                                    |       | (107,000                      | )          | 76,136 |   |
| Increase in restricted cash                                              |       | (2,467,236                    | )          | (1,167,631 | ) |
| (Increase) decrease in accounts receivable                               |       | (127,488                      | )          | 75,032 |   |
| Increase in other current assets                                         |       | (302,415                      | )          | (638,200 | ) |
| Increase in income taxes payable                                         |       | 314,581                       |       | 489,119 |   |
| Increase in accounts payable and accrued  wages &payroll taxes       |       | 3,369,363                     |       | 2,299,967 |   |
| Increase (decrease) in card club accruals                                |       | 195,995                       |       | (404,724 | ) |
| Increase in accrued interest                                             |       | 3,930                         |       | 3,748 |   |
| Decrease in accrued property taxes                                       |       | (3,653                        | )          | (2,723 | ) |
| Increase in payable to horsepersons                                      |       | 67,544                        |       | 1,032 |   |
| Decrease in due to MHBPA                                                 |       | (3,789                        | )          | — |   |
| Net cash provided by operations                                          |       | 3,376,870                     |       | 2,743,735 |   |
|                                                                     |       |                          |       |   |   |
| CASH FLOWS FROM INVESTING ACTIVITIES:                                    |       |                          |       |   |   |
| Additions to land, building and equipment                                |       | (2,949,312                    | )          | (1,038,436 | ) |
| Net cash used in investing activities                                    |       | (2,949,312                    | )          | (1,038,436 | ) |
|                                                                     |       |                          |       |   |   |
| CASH FLOWS FROM FINANCING ACTIVITIES:                                    |       |                          |       |   |   |
| Proceeds from issuance of common stock                                   |       | 265,461                       |       | 172,746 |   |
| Decrease in due to MHBPA                                                 |       | —                        |       | (46,808 | ) |
| Net cash provided by financing activities                                |       | 265,461                       |       | 125,938 |   |
|                                                                     |       |                          |       |   |   |
| NET INCREASE IN CASH                                                     |       | 693,019                       |       | 1,831,237 |   |
|                                                                     |       |                          |       |   |   |
| CASH AT BEGINNING OF PERIOD                                              |       | 2,523,560                     |       | 1,654,038 |   |
|                                                                     |       |                          |       |   |   |
| CASH AT END OF PERIOD                                                    |       | $                             | 3,216,579  |   | $ | 3,485,275 |   |
|                                                                     |       |                          |       |   |   |
| INTEREST PAID                                                            |       | $                             | 0          |   | $ | 0 |   |
|                                                                     |       |                          |       |   |   |
| INCOME TAXES PAID                                                        |       | $                             | 1,265,000  |   | $ | 510,000 |   |
|                                                                     |       |                          |       |   |   |
| DIVIDEND DECLARED                                                        |       | $                             | 947,129    |   | $ | 551,696 |   |

 

See notes to consolidatedfinancial statements.

 

5

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**CANTERBURYPARK HOLDING CORPORATION AND SUBSIDIARIES**

 

**NOTESTO CONSOLIDATED FINANCIAL STATEMENTS****PERIODS ENDED JUNE 30, 2004 AND 2003**

 

1.     SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

 

The summary of significant accounting policies is included in the notesto consolidated financial statements in the 2003 Annual Report on form 10-K.

 

*Unaudited Financial Statements*- The consolidated balance sheet as of June 30, 2004, the consolidatedstatements of operations for the three and six months ended June 30, 2004 and2003, the consolidated statements of cash flows for the six months ended June30, 2004 and 2003, and the related information contained in these notes havebeen prepared by management without audit. In the opinion of management, all accruals (consisting only of normalrecurring accruals) which are necessary for a fair presentation of financialposition and results of operations for such periods have been made.  Results for an interim period should not beconsidered as indicative of results for a full year.

 

*Restricted Cash* –Restricted cash represents refundable deposits and amounts due to horsemen forpurses, stakes and awards, and amounts accumulated in the Player Pool andjackpot pools to be used to repay card club players in the form of promotions,giveaways, prizes, or by other means.

 

*Income Taxes*-Income tax expense is computed by applying the estimated annual effective taxrate to the year-to-date income.

 

*Reclassifications* –Certain prior period numbers have been restated to be consistent with currentperiod presentation.  Thesereclassifications had no effect on net earnings or stockholders’ equity.

 

*Fair values of Financial Instruments –* Due to the current classification of allfinancial instruments of the Company, given the short-term nature of therelated account balances, carrying amounts reported in the consolidated balancesheets approximates fair value.

 

*Net Income Per Share*- Basic net income per common shareis based on the weighted average number of common shares outstanding duringeach year.  The weighted average number of common shares outstanding for the three and six-monthperiods ended June 30, 2004 were 3,764,585 and 3,746,289,respectively.  The weighted average number of common shares outstanding for the three and six-monthperiods ended June 30, 2003 were 3,669,973 and 3,654,597,respectively.  Diluted net income percommon share takes into effect the dilutive effect of potential common sharesoutstanding.  The Company’s onlypotential common shares outstanding are stock options.  After considering the dilutive effect ofstock options outstanding, the weighted average shares used to calculatediluted earnings per share for the three and six month periods ended June 30,2004 were 4,177,286 and 4,162,752, respectively.  The weighted average shares used to calculatediluted earnings per share for the three and six-month periods ended June 30,2003 were 4,046,696 and 4,034,935, respectively.

 

*Stock Based Employee Compensation*-At June 30, 2004, the Company has a stock option plan which provides for thegranting of awards in the form of stock options, restricted stock, stockappreciation rights, and deferred stock to key employees and non-employees,including directors of and consultants to the Company and any subsidiary, topurchase up to a maximum of 1,450,000 shares of common stock.  The Company accounts for that plan under therecognition and measurement principles of APB Opinion No. 25, *Accounting for Stock Issued to Employees,*and related interpretations.  Nostock-based employee compensation cost is reflected in net income, as alloptions granted under the plan had an exercise price equal to the market valueof the underlying common stock on the date of grant.  The following table illustrates the effect onnet income and

 

6

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earnings pershare if the Company had applied the fair value recognition provisions of FASBStatement No. 123, *Accounting forStock-Based Compensation,*to stock-based employee compensation.

 

***Stock Based EmployeeCompensation Table****:*

 
| ** **                                                                                                                                          | ** ** | **Three Months Ended June 30,** | ** ** | **Six Months Ended June 30,** | ** ** |
|-----------------------------------------------------------------------------------------------------------------------------------------------------|------------|---------------------------------|------------|-------------------------------|------------|
| ** **                                                                                                                                          | ** ** | **2004**                        | ** ** | **2003**                      | ** ** | **2004** | ** ** | **2003** | ** ** |
| Net Income:                                                                                                                                         |       |                            |       |                          |       |   |   |   |   |
| As reported                                                                                                                                         |       | $                               | 580,860    |                          | $          | 593,552 |   | $ | 1,841,038 |   | $ | 1,432,639 |   |
| Deduct:   Total stock-based employee compensation expense determined under fair  value based method for all awards, net of related tax effects |       | (134,082                        | )          | (122,124                      | )          | (249,864 | ) | (186,777 | ) |
|                                                                                                                                                |       |                            |       |                          |       |   |   |   |   |
| Pro forma net income                                                                                                                                |       | $                               | 446,778    |                          | $          | 471,428 |   | $ | 1,591,174 |   | $ | 1,245,862 |   |
|                                                                                                                                                |       |                            |       |                          |       |   |   |   |   |
| Earnings Per Share:                                                                                                                                 |       |                            |       |                          |       |   |   |   |   |
| Basic - as reported                                                                                                                                 |       | $                               | .15        |                          | $          | .16 |   | $ | .49 |   | $ | .39 |   |
|                                                                                                                                                |       |                            |       |                          |       |   |   |   |   |
| Basic - pro forma                                                                                                                                   |       | $                               | .12        |                          | $          | .13 |   | $ | .43 |   | $ | .34 |   |
|                                                                                                                                                |       |                            |       |                          |       |   |   |   |   |
| Diluted - as reported                                                                                                                               |       | $                               | .14        |                          | $          | .15 |   | $ | .44 |   | $ | .36 |   |
|                                                                                                                                                |       |                            |       |                          |       |   |   |   |   |
| Diluted - pro forma                                                                                                                                 |       | $                               | .11        |                          | $          | .12 |   | $ | .38 |   | $ | .31 |   |

 

2.     BORROWINGS UNDER CREDIT AGREEMENT

 

Borrowings under the Company’s credit agreement with Bremer Bank includea commercial revolving credit line, which provides for maximum advances of$2,250,000 with interest at the prime rate until April 20, 2005.  The Company had no borrowings under thiscredit line at June 30, 2004.  The creditagreement contains certain covenants requiring the Company to maintain certainfinancial ratios.  The Company was incompliance with these requirements as of June 30, 2004.  Management believes that funds availableunder this line of credit, along with funds generated from card club andsimulcast operations, will be sufficient to satisfy its liquidity and capitalresource requirements during 2004.

 

3.     OPERATING SEGMENTS

 

During the first six months of 2004 and 2003, the Company had threereportable operating segments:  horseracing, card club and concessions.  Thecard club segment primarily represents operations of the Canterbury CardClub.  The horseracing segment primarilyrepresents simulcast and live horse racing operations, and the concessionssegment primarily represents concessions provided during simulcast and liveracing, in the card club, and during special events.  The Company’s reportable operating segmentsare strategic business units that offer different products and services.  They are managed separately because the segmentsdiffer in the nature of the products and services provided aswell as processes to produce those products and services.  The horse racing and card club segments areregulated by the State of Minnesota Racing Commission.

 

The accounting policies of the operating segments are the same as thosedescribed in the summary of significant accounting policies in the 2003 AnnualReport on Form 10-K.

 

7

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Depreciation, interest expense and income taxes are allocated to thesegments but no allocation is made to concessions for shared facilities.  However, the concessions segment paysapproximately 25% of gross revenues earned on live racing and special eventdays to the horse racing segment for use of the facilities.

 

The following tables provide information about the Company’s operatingsegments (in 000’s):

 
| ** **                         | ** ** | **Six Months Ended June 30, 2004** | ** ** |
|------------------------------------|------------|------------------------------------|------------|
| ** **                         | ** ** | **Card Club**                      | ** ** | **Horse Racing** | ** ** | **Concessions** | ** ** | **Total** | ** ** |
| Revenues from external customers   |       | $                                  | 13,677     |   | $ | 9,678 |   | $ | 2,454 |   | $ | 25,809 |   |
|                               |       |                               |       |   |   |   |   |   |   |
| Intersegment revenues              |       |                               |       | 151 |   | 905 |   | 1,056 |   |
|                               |       |                               |       |   |   |   |   |   |   |
| Net interest income                |       |                               |       | 16 |   |   |   | 16 |   |
|                               |       |                               |       |   |   |   |   |   |   |
| Depreciation and amortization      |       | 242                                |       | 354 |   |   |   | 596 |   |
|                               |       |                               |       |   |   |   |   |   |   |
| Segment income before income taxes |       | 2,848                              |       | 423 |   | 473 |   | 3,744 |   |
|                               |       |                               |       |   |   |   |   |   |   |
| Segment Assets                     |       | $                                  | 3,941      |   | $ | 24,106 |   | $ | 2,476 |   | $ | 30,523 |   |

 
| ** **                         | ** ** | **Six Months Ended June 30, 2003** | ** ** |
|------------------------------------|------------|------------------------------------|------------|
| ** **                         | ** ** | **Card Club**                      | ** ** | **Horse Racing** | ** ** | **Concessions** | ** ** | **Total** | ** ** |
| Revenues from external customers   |       | $                                  | 10,649     |   | $ | 9,518 |   | $ | 2,191 |   | $ | 22,358 |   |
|                               |       |                               |       |   |   |   |   |   |   |
| Intersegment revenues              |       |                               |       | 143 |   | 718 |   | 861 |   |
|                               |       |                               |       |   |   |   |   |   |   |
| Net interest income                |       |                               |       | 16 |   |   |   | 16 |   |
|                               |       |                               |       |   |   |   |   |   |   |
| Depreciation and amortization      |       | 250                                |       | 329 |   |   |   | 579 |   |
|                               |       |                               |       |   |   |   |   |   |   |
| Segment income before income taxes |       | 1,968                              |       | 528 |   | 367 |   | 2,863 |   |
|                                    |            |                                    |            |  |  |  |  |  |  |  |  |  |  |

 
|           |   | **Twelve Months Ended December 31, 2003** |   |
|----------------|--------|-------------------------------------------|--------|
|           |   |                                      |   |   |   |   |   |   |   |
| Segment Assets |   | $                                         | 3,727  |   | $ | 18,459 |   | $ | 1,905 |   | $ | 24,092 |   |
|                |        |                                           |        |  |  |  |  |  |  |  |  |  |  |

 

8

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The following are reconciliations of reportable segment revenue, income before income taxes, and assets, to theCompany’s consolidated totals (in 000’s):

 
| ** **                                              | ** ** | **Six Months Ended June 30,** | ** ** |
|---------------------------------------------------------|------------|-------------------------------|------------|
| Revenues                                                | ** ** | **2004**                      | ** ** | **2003** | ** ** |
| Total revenue for reportable segments                   |       | $                             | 26,865     |   | $ | 23,219 |   |
| Elimination of intersegment revenues                    |       | (1,056                        | )          | (861 | ) |
| Total consolidated revenues                             |       | $                             | 25,809     |   | $ | 22,358 |   |
|                                                    |       |                          |       |   |   |
| Income before income taxes                              |       |                          |       |   |   |
| Total segment income before income taxes                |       | $                             | 3,744      |   | $ | 2,863 |   |
| Elimination of intersegment income before  income taxes |       | (419                          | )          | (367 | ) |
| Total consolidated income before income  taxes          |       | $                             | 3,325      |   | $ | 2,496 |   |

 
| ** **                              | ** ** | **June 30,  2004** | ** ** | **December 31,  2003** | ** ** |
|-----------------------------------------|------------|--------------------|------------|------------------------|------------|
| Assets                                  | ** ** | ** **         | ** ** | ** **             | ** ** |
| Total assets for reportable segments    |       | $                  | 30,523     |                   | $          | 24,092 |   |
| Elimination of intercompany receivables |       | (2,282             | )          | (1,795                 | )          |
| Total consolidated assets               |       | $                  | 28,241     |                   | $          | 22,297 |   |

 

4.     CONTINGENCIES

 

In accordance with an Earn Out Note, given to the prior owner of theracetrack as part of the consideration paid by the Company to acquire theracetrack in 1994, if (i) off-track betting becomes legally permissible in theState of Minnesota and (ii) the Company begins to conduct off-track bettingwith respect to or in connection with its operations, the Company will berequired to pay to the IMR Fund, L.P. the greater of $700,000 per operatingyear, as defined, or 20% of the net pretax profit, as defined, for each of thenext five operating years.  At this time,management believes that the likelihood that these two conditions will be met,and that the Company will be required to pay these amounts, is remote. In theevent these conditions are met and the subsequent payments made, they will becapitalized as part of the purchase price in accordance with generally acceptedaccounting principles.

 

The Company is periodically involved in various legal actions arisingin the normal course of business.  AtJune 30, 2004, management believes that the resolution of any legal actionsoutstanding will not have a material impact on the consolidated financialstatements.

 

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| **ITEM 2:** | ** ** | **MANAGEMENT’S DISCUSSION AND ANALYSIS OF  FINANCIAL  CONDITION AND RESULTS OF OPERATIONS** |
|-------------|------------|--------------------------------------------------------------------------------------------------|

 

**General**

 

CanterburyPark Holding Corporation (the “Company”) owns and operates the Canterbury ParkRacetrack and Card Club in Shakopee, Minnesota. The primary businesses of the Company are simulcast and live pari-mutuelhorse racing, hosting unbanked card games, and food and beverage operations.

 

The Racetrackis the only pari-mutuel horse racing facility in the State of Minnesota.  The Racetrack earns revenues from pari-mutueltake-out on races simulcast year-round to Canterbury Park from racetracksthroughout the country and from live race meets featuring thoroughbred andquarter horse racing.  The Companyconducts live horse racing at its facility generally from mid-May until earlySeptember each year.  During live racemeets, the Company televises its races to out-of-state racetracks around thecountry, and earns additional pari-mutuel revenue on wagers placed at theout-of-state racetracks.

 

CanterburyPark’s Card Club (the “Card Club”) is authorized under Minnesota law to host“unbanked” card games in which players compete against each other and notagainst the house.  The Company receivesa percentage of the wagers from the players as compensation for providing theCard Club facility and services.  TheCard Club is open twenty-four hours a day, seven days a week.  The Minnesota Racing Commission is authorized by Minnesota law toregulate Card Club and horse racing operations. The law requires that up to 14% of the gross revenue generated by theCard Club be paid to the Racetrack’s purse fund and the State of MinnesotaBreeders’ Fund.  However, the Company hasagreed with the MHBPA to pay 15% of Card Club revenue into the purse fund for2004.

 

The Company also generates revenues from other activities such as fromthe sale of food and beverage, programs and other racing publications, andadmissions and parking fees. The Company also offers advertising signage spacesimilar to that appearing at many sports stadiums.  Finally, additional revenues are derived froma RV park and the use of the Racetrack facilities for special events such asconcerts, craft shows and snowmobile racing.

 

**Results of Operations for the****Three and****Six MonthsEnded June 30, 2004 and June 30, 2003**

 

Totaloperating revenues increased approximately $3.4 million or 15.4% during the sixmonths ended June 30, 2004 compared to the six months ended June 30, 2003, andincreased approximately $1.3 million or 9.9% for the three months ended June30, 2004 compared to the three months ended June 30, 2003.

 

Pari-mutuelrevenues increased approximately $55,000 or .7% in the six-month period endedJune 30, 2004 compared to the same period in 2003, and increased approximately$1,000 or 0.0% for the three-month period ended June 30, 2004 compared to thesame period in 2003. Total handle for the six months ended June 30, 2004 was up$403,000 or .9% compared to total handle during the six-month period in 2003.Total handle wagered on simulcast races year-to-date in 2004 is up $759,000 or2.3% primarily due to favorable weather conditions in 2004, compared to thecancellation of nearly 100 racing programs in 2003 caused

 

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bysevere weather at other racetracks. However, on-track live handle decreased by $612,000 or 8.9% compared tothe same period in 2003 primarily due to inclement weather, which led to lowerattendance, fewer races and smaller field sizes.  Finally, out-of-state handle on live racesincreased $256,000 or 6.3% compared to the same period last year due to anincrease in the number of simulcast outlets. See the “Summary of Pari-mutuel Data” below.

 
| ** **                        | ** ** | **Six Months Ended June 30,** | ** ** |
|-----------------------------------|------------|-------------------------------|------------|
| **Summary of Pari-mutuel Data:**  | ** ** | **2004**                      | ** ** | **2003** | ** ** |
|                              |       |                          |       |   |   |
| **Racing Days**                   |       |                          |       |   |   |
| Simulcast only days               |       | 156                           |       | 155 |   |
| Live and simulcast days           |       | 26                            |       | 26 |   |
| Total Racing Days                 |       | 182                           |       | 181 |   |
|                              |       |                          |       |   |   |
| **On-Track Handle**               |       |                          |       |   |   |
| Simulcast only days               |       | $                             | 25,591,000 |   | $ | 25,476,000 |   |
| Live and simulcast days           |       |                          |       |   |   |
| Live racing                       |       | 6,288,000                     |       | 6,900,000 |   |
| Simulcast racing                  |       | 7,494,000                     |       | 6,850,000 |   |
| **Out-of-state Live Handle**      |       | 4,334,000                     |       | 4,078,000 |   |
| Total Handle                      |       | $                             | 43,707,000 |   | $ | 43,304,000 |   |
|                              |       |                          |       |   |   |
| **On-Track Average Daily Handle** |       |                          |       |   |   |
| Simulcast only days               |       | $                             | 164,045    |   | $ | 164,361 |   |
| Live and simulcast days           |       | 530,077                       |       | 528,846 |   |

 

The Companyreceives a percentage of the wagers from the players as compensation forproviding the Card Club facility and service, referred to as the “collectionrevenue”, which totaled $13.3 million for the six-month period ended June 30,2004, an increase of 29.6% compared to $10.3 million in 2003. Collectionrevenue totaled $6.6 million for the three-month period ended June 30, 2004, anincrease of 19.4% compared to $5.5 million in 2003. The year to date increaseis primarily due to the rapidly growing interest in the Card Club poker gamescaused by the popularity of televised poker tournaments, and the steady growthin the Card Club casino games. The Company also receives a specified percentageof the jackpot fund collection as reimbursement for administrative costs ofmaintaining the jackpot funds, and collects fees for administering tournaments,which represents “other revenue”.  CardClub revenues represented 53.0% and 47.6% of total revenues for the six-monthand three-month periods ended June 30, 2004, respectively.  See the “Summary of Card Club Data” below.

 

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| ** **                     | ** ** | **Six Months Ended June 30,** | ** ** |
|--------------------------------|------------|-------------------------------|------------|
| **Summary of Card Club Data:** | ** ** | **2004**                      | ** ** | **2003** | ** ** |
|                           |       |                          |       |   |   |
| Poker Games                    |       | $                             | 7,653,093  |   | $ | 5,103,227 |   |
| Casino Games                   |       | 5,669,408                     |       | 5,175,986 |   |
| Total Collection Revenue       |       | 13,322,501                    |       | 10,279,213 |   |
|                           |       |                          |       |   |   |
| Other Revenue                  |       | 354,241                       |       | 369,837 |   |
| Total Card Club Revenue        |       | $                             | 13,676,742 |   | $ | 10,649,050 |   |
|                           |       |                          |       |   |   |
| Number of Days Offered         |       | 182                           |       | 181 |   |
| Average Revenue per Day        |       | $                             | 75,147     |   | $ | 58,835 |   |

 

Concession sales for the six-month and three-month periods ended June30, 2004 increased 11.5% and 10.4%, respectively, compared to the same periodsin 2003.  The increase is primarily dueto the increased patronage in the Card Club.

 

Otheroperating revenues for the six-month and three-month periods ended June 30,2004 increased approximately $158,000 or 22.8% and $116,000 or 29.8%,respectively, compared to the same periods in 2003.  The increase is primarily due to increasedcash services fees and revenues from in-house photography related to liveracing.

 

Operating expenses increased $2.6 million or 13.2% during the six monthperiod ended June 30, 2004 compared to the six month period ended June 30,2003, and $1.3 million or 10.7% during the three months ended June 30, 2004compared to the three month period ended June 30, 2003.  However, total operating expenses as apercentage of total operating revenues were 87.2% for the six-month periodended June 30, 2004 compared to 88.9% for 2003 as the increase in variableoperating expenses was outpaced by the increase in operating revenues,particularly card club revenue from higher wagering taking place in the cardclub.

 

Purse and Breeders’ fund expenses have increased approximately $555,000or 14.8% and $200,000 or 7.6%, respectively, during the six and three monthperiods of 2004 compared to 2003, due primarily to increased payments to thepurse fund from Card Club revenues. Effective January 1, 2004, the Company agreed with the MinnesotaHorseman’s Benevolent and Protective Association (the “MHBPA”) to pay 15% ofall Card Club gross revenues as purse monies compared to 14% in 2003. Inaddition, the increased volume of Card Club revenues has contributed to theincrease in the related purse expense. Salaries and benefits increased approximately $1.3 million or 15.6% inthe six-month period and approximately $682,000 or 14.5% in the three-monthperiod compared to the same periods last year primarily due to an increase ofapproximately 11% in total hours worked caused by higher levels of operationsin the Card Club and concessions, an overall increase in salary and wage rates,and a nearly 43% increase in group medical costs caused by increases in thenumber of participants and premiums rates. Cost of sales expense increased approximately $163,000 or 12.5% in thesix-month period and $88,000 or 10.9% in the three-month period compared to thesame periods last year primarily due to the increase in associated revenues forconcessions.  Repairs, maintenance andsupplies increased approximately $149,000 or 22.4% in the six-month period and$62,000 or 13.4% in the three-month period compared to the same periods lastyear primarily due to software purchases and additional chip expenses relatedto the Card Club. License fees and property taxes increased approximately$163,000 or 123% in the six-month

 

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period and approximately $87,000 or 129% inthe three-month period compared to the same periods in 2003 due to increasedcosts related to license fees assessed to the Company by the Minnesota RacingCommission. Insurance expense increased approximately $151,000 or 37.2% in thesix-month period and $77,000 or 33.9% in the three-month period compared to thesame periods in 2003 due to increased premiums for worker’s compensation andgeneral liability insurance.

 

Income beforeincome taxes was $3,324,566 for the six months ended June 30, 2004 compared to$2,496,375 for the six months ended June 30, 2003.  After income tax expense of $1,483,528 forthe six months ended June 30, 2004, net income was $1,841,038 in 2004 comparedto $1,432,639 in 2003.  Income beforeincome taxes for the quarter ended June 30, 2004 was $1,035,088 compared to$1,032,288 for the quarter ended June 30, 2003. After income tax expense of $454,228 in the second quarter of 2004 netincome was $580,860 compared to $593,552 for the second quarter of 2003.

 

##### **Commitmentsand Contingencies**

 

On June 3,2004 the Company’s Board of Directors declared a special cash dividend of $.25per share of common stock payable on July 9, 2004 to shareholders of record onJune 25, 2004.  The Company has notadopted any policies regarding dividend payments and there can be no assurancethat any dividend will be paid in the future.

 

There have been no additional material changes in our outstandingcommitments and contingencies since those reported at December 31, 2003.

 

**Liquidity and Capital Resources**

 

                During theperiod January 1, 2004 through June 30, 2004, cash provided by operatingactivities was $3,376,870, which resulted primarily from net income of$1,841,038; depreciation and amortization of $596,000; an increase in accountspayable and accrued wages and payroll taxes of $3,369,363, caused by a seasonalincrease of $2.3 million in horsemen payables, a $231,000 increase in deferredrevenues for corporate sponsorships, and $150,000 in accrued wages; and anincrease in income taxes payable of $314,581 caused by timing of payments.These items were partially offset by an increase in restricted cash of$2,467,236 due to a $2.0 million seasonal increase in purses payable forhorsemen, and a $476,000 increase in the card club’s jackpot pools and playerpool caused by timing differences due to jackpots, prizes and giveaways paid tothe players; and an increase in other current assets of $302,415 due to anincrease in prepaid expenses including rising insurance premiums and licensefees assessed by the Minnesota Racing Commission.  Pursuant to an agreement with the MHBPA,during the six months ended June 30, 2004 and 2003, the Company transferredinto a trust account for these purposes or paid directly to the MHBPAapproximately $3,275,000 and $2,875,000, respectively.  At June 30, 2004, the Company had anadditional liability to the MHBPA of $99,405. This liability will be paid in 2004, including interest earned at theprime-lending rate.

 

Net cash usedin investing activities for the first six months of 2004 of $2,949,312 resultedprimarily from building improvements related to the renovation of the club-levelof the Racetrack’s grandstand facility for approximately $1.5 million, and theacquisition of equipment.  During thesix-month period ended June 30, 2003, net cash used for investing activitieswas $1,038,436 related primarily to building improvements.

 

During theperiod January 1, 2004 through June 30, 2004, cash provided by financingactivities was $265,461 from the exercise of stock options.  During the period January 1, 2003 throughJune 30, 2003, cash provided by financing activities was $125,938 representing$172,746 from the exercise of stock options, which were partially offset bypayments to the

 

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MHBPA of$46,808.

 

The Companyhas renewed a general credit agreement with Bremer Bank, which provides arevolving credit line of up to $2,250,000 with interest at the prime rate untilApril 20, 2005.  The Company had noborrowings under the line of credit at June 30, 2004 or December 31, 2003.  The credit agreement contains certaincovenants requiring the Company to maintain certain financial ratios.  The Company was in compliance with theserequirements at all times throughout the quarter ended June 30, 2004.

 

Unrestrictedcash balances at June 30, 2004 were $3,216,579 compared to $2,523,560 at December31, 2003. The Company believes that the funds available in its cash accounts,amounts available under the general credit and security agreement, along withfunds generated from operations, will be sufficient to satisfy its liquidityand capital resource requirements during 2004 for regular operations.

 

##### **CriticalAccounting Policies**

 

Thepreparation of consolidated financial statements in conformity with generallyaccepted accounting principles requires management to make estimates thateffect the amounts reported and disclosed in the consolidated financialstatements. By their nature, these estimates are subject to an inherent degreeof uncertainty. These estimates are based on our experience and various otherassumptions that are believed to be reasonable in the circumstances, theresults of which form the basis for making judgments about the carrying valuesof assets and liabilities. On an ongoing basis, we evaluate our estimates.However, actual results could differ from those estimates.

 

Our significantaccounting policies are included in Note 1 to our consolidated financialstatements in our 2003 Annual Report on Form 10-K. We believe the followingcritical accounting policies affect our more significant judgments andestimates used in the preparation of our consolidated financial statements.

 

*Land, Buildings andEquipment* -We have significant capital invested in our property and equipment, whichrepresents approximately 69% of our total assets. We utilize our judgment invarious ways including: determining whether an expenditureis considered a maintenance expense or a capital asset; determining theestimated useful lives of assets; and determining if or when an asset has beenimpaired. Our property and equipment is evaluated for impairment whenevercircumstances indicate that the carrying value of an asset may not berecoverable from the estimated future cash flows expected to result from itsuse. If the sum of the expected future cash flows (undiscounted and withoutinterest charges) is less than the carrying amount, we recognize an impairmentloss. The impairment loss recognized is the amount by which the carrying amountexceeds the fair value and is charged to operations in the period in which suchimpairment is determined by management. We do not believe that any impairmenthas occurred or is likely to occur in the near future.

 

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*Regulation -*Our business can be materially impacted bothpositively and negatively by legislative and regulatory changes, such as thosepreviously described. Significant negative changes resulting from theseactivities could result in an impairment of our property and equipment inaccordance with generally accepted accounting standards. Additional informationregarding how our business can be impacted by legislative and regulatorychanges are included in Item 1 (vi), and Item 1 (vii), respectively, in our2003 Annual Report on Form 10-K.

 

**Legislation:**

 

On February18, 2003, a bill was introduced in the Minnesota Legislature, to allowelectronic gaming devices to be operated by the Minnesota State Lottery at theRacetrack.  This concept often referredto as a “Racino”, as proposed for Canterbury Park would include 2,000 gamingdevices, a 250-room hotel, an Olympic scale horse park and additionalrestaurant venues.  The bill was approvedin May 2003 by a 71 to 60 margin by the Minnesota House of Representatives, butno further action was taken on this legislation by the Minnesota Legislature in2003. The Minnesota Legislature reconvened for the second year of its regularsession in February 2004, with the Racino legislation pending in the MinnesotaSenate.  In addition, other legislationwas introduced in the 2004 session to remove the 50-table limit in the CardClub imposed by current Minnesota Law. Finally, the Minnesota House ofRepresentatives Omnibus Tax bill included a 5% franchise fee on Card Club grossrevenues. Both of these 2004 bills passed theMinnesota House and were also pending in the Minnesota Senate. However, on May16, 2004 the Minnesota Legislature adjourned without taking further action onany of these bills.

 

The Minnesota Legislature will begin a new biannual session in January2005, and the Racino legislation will be reintroduced at that time. Based onthe success of several Racinos in other states, the Company believes that ifthis legislation becomes law, it will enhance horse racing with increasedpurses, provide growth and development opportunities for the Company, andproduce significant new tax revenues for state and local governments.  The effort to obtain legislative authorityfor these initiatives has required, and will continue to require, substantialexpenditures and there can be no assurance that any bill favorable to theCompany’s interests will be enacted into law.

 

**Factors Affecting Future Performance:**

 

From time totime, in reports filed with the Securities and Exchange Commission, in pressreleases, and in other communications to shareholders or the investing public,the Company may make forward-looking statements concerning possible oranticipated future financial performance, business activities or plans whichare typically preceded by the words “believes,” “expects,” “anticipates,”“intends” or similar expressions.  Forsuch forward-looking statements, the Company claims the protection of the safeharbor for forward-looking statements contained in federal securitieslaws.  Shareholders and the investingpublic should understand that such forward-looking statements are subject torisks and uncertainties which could cause actual performance, activities orplans to differ significantly from those indicated in the forward-lookingstatements.  Such risks and uncertaintiesinclude, but are not limited to: fluctuations in attendance at the Racetrack,material changes in the level of wagering by patrons, decline in interest inthe unbanked card games offered at the Card Club, legislative

 

15

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and regulatory changes, theimpact of wagering products and technologies introduced by competitors;increases in the percentage of revenues allocated for purse fund payments;increase in compensation and employee benefit costs; the general health of thegaming sector; higher than expected expense related to new marketinginitiatives; and other factors discussed from time to time in the Company’sfilings with the Securities and Exchange Commission.

 

**ITEM3:****                 QUANTITATIVE ANDQUALITATIVE DISCLOSURES ABOUT MARKET RISK**

 

We are exposedto market risk from changes in interest rates on borrowings under ourcommercial revolving credit line that bears interest at the prime rate.  At June 30, 2004 we have no debt borrowingsunder our credit facility.

 

We have noderivative financial instruments or derivative commodity instruments in ourcash and cash equivalents and marketable securities.  We invest cash and cash equivalents ininvestment grade, highly liquid investments, consisting of money marketinstruments, bank certificates of deposit, and short-term government andcorporate bonds.

 

**ITEM4:****                 CONTROLS ANDPROCEDURES**

 

(a)           Evaluation of Disclosure Controls andProcedures:

 

The Company’s Chief Executive Officer, Randall D. Sampson, and ChiefFinancial Officer, David C. Hansen, have evaluated the Company’s disclosurecontrols and procedures as of the end of the period covered by thisreport.  Based upon that review, theyhave concluded that these controls and procedures are effective in ensuringthat material information related to the Company is made known to them byothers within the Company.

 

(b)           Changes in Internal Control Over Financial Reporting:

 

There havebeen no significant changes in internal control over financial reporting thatoccurred during the fiscal quarter covered by this report that have materiallyaffected, or are reasonably likely to materially affect, the registrant’sinternal control over financial reporting.

 

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**PART II****OTHER INFORMATION**

 

Item 1.                    **LegalProceedings**

 

Not Applicable

 

Item 2.                    **Changesin Securities****,Use of Proceeds and Issuer Purchase of Equity Securities**

 

Not Applicable

 

Item 3.                    **Defaults****Upon****Senior Securities**

 

Not Applicable

 

Item 4.                    **Submissionof Matters to a Vote of Security Holders**

 

The Company held its Annual Meeting ofShareholders on June 3, 2004. Shareholders elected or reelected the following directors for a one yearterm:  Brian C. Barenscheer, Patrick R.Cruzen, Burton F. Dahlberg, Carin J. Offerman, Curtis A. Sampson, Randall D.Sampson, and Dale H. Schenian.  Not lessthan 3,406,382 shares were voted in favor of each of the directors(approximately 91% of all outstanding shares) and holders of no more than73,432 shares withheld authority to vote for such directors.

 

Item 5.                    **OtherInformation**

 

Not Applicable

 

Item 6.                    **Exhibitsand Reports on Form 8-K**

 

(a)           The following exhibits are included herein:

 

31.1         Certification of Chief Executive Officerpursuant to Section 302 of the Sarbanes-Oxley Act of 2002 (rules 13a-14 and15d-14 of the Exchange Act).

 

31.2         Certification of Chief Financial Officerpursuant to Section 302 of the Sarbanes-Oxley Act of 2002 (rules 13a-14 and15d-14 of the Exchange Act).

 

32            Certfications pursuant to Section 906 of theSarbanes-Oxley Act of 2002 (18 U.S.C. 1350).

 

(b)           Reports on Form 8-K

 

On May 14, 2004 the Company filed a currentreport on Form 8-K with the Securities and Exchange Commission, reporting underItem 12 the results for the first quarter ended March 31, 2004.

 

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**SIGNATURES**

 

Pursuant to the requirements of the Securities Exchange Act of 1934,the Registrant has duly caused this report to be signed on its behalf by theundersigned thereunto duly authorized.

 
|                         | **Canterbury  Park Holding Corporation**     |   |
|------------------------------|----------------------------------------------|--------|
|                         |                                         |   |
| Dated:  August 16, 2004 | /s/ Randall D. Sampson                       |   |
|                         | Randall D. Sampson,                          |
|                         | President, and Chief Executive  Officer      |
|                         |                                         |
|                         | /s/ David C. Hansen                          |   |
| Dated:  August 16, 2004 | David C. Hansen,                             |
|                         | Vice President, and Chief  Financial Officer |

 

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