##### Table of Contents



UNITED STATES
SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549




---

FORM 10-Q


(Mark One)

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


For the quarterly period ended
    
    September 30, 2003


OR

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


For the transition period from  to


Commission file number
    
    333-0214


HORSESHOE GAMING HOLDING CORP.




(Exact name of registrant as specified in its charter)


Delaware
    
    88-0425131(State or other jurisdiction
of incorporation or organization)
    
    (I.R.S. Employer Identification No.)9921 Covington Cross Drive, Las Vegas, NV
    
    89144-6835(Address of principal executive office)
    
    (Zip Code)


(702) 932-7800




(Registrants telephone number, including area code)




---

(Former name, former address and former fiscal year, if changed since last report)


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 whether the registrant is an accelerated filer (as
defined in Rule 12b-2 of the Exchange Act).

Yes
    
    
    
    
    
    No
    
    X


As of November 7, 2003, the
registrant had 13,336 shares of Class A Common
Stock and 9,779 of Class B Common Stock outstanding.





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TABLE OF CONTENTS



|                             |                                                                                               |                                                      |  |  |  |  |  | 
|---------------------------- | --------------------------------------------------------------------------------------------- | ---------------------------------------------------- |  |  |  |  |  | 
|PART I FINANCIAL INFORMATION
|                             | Item 1. FINANCIAL STATEMENTS                                                                 
|                             |                                                                                               | CONSOLIDATED CONDENSED BALANCE SHEETS               
|                             |                                                                                               | CONSOLIDATED CONDENSED STATEMENTS OF OPERATIONS     
|                             |                                                                                               | CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS     
|                             |                                                                                               | NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
|                             | Item 2. MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
|                             | Item 3. Quantitative and Qualitative Disclosure About Market Risk                            
|                             | Item 4. Controls and Procedures                                                              
|PART II OTHER INFORMATION   
|                             | Item 1. Legal Proceedings                                                                    
|                             | Item 6. EXHIBITS AND REPORTS ON FORM 8-K                                                     
|SIGNATURE                   
|Exhibit Index               
|Exhibit 31.1                
|Exhibit 31.2                
|Exhibit 32.1                
|Exhibit 32.2                



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##### Table of Contents



HORSESHOE GAMING HOLDING CORP. AND SUBSIDIARIES
CONSOLIDATED CONDENSED FINANCIAL STATEMENTS

PART I
    
    FINANCIAL INFORMATIONItem 1.
    
    Financial StatementsConsolidated Condensed Balance Sheets as of
September 30, 2003 and December 31, 2002
    
    
    3Consolidated Condensed Statements of Operations for the
three and nine months ended September 30, 2003 and 2002
    
    
    4Consolidated Condensed Statements of Cash Flows for the
nine months ended September 30, 2003 and 2002
    
    
    5Notes to Consolidated Condensed Financial Statements
    
    
    6Item 2.
    
    Managements Discussion and Analysis of Financial Condition
and Results of Operations
    
    
    9Item 3.
    
    Quantitative and Qualitative Disclosures About Market Risk
    
    
    16Item 4.
    
    Controls and Procedures
    
    
    16PART II
    
    OTHER INFORMATIONItem 1.
    
    Legal Proceedings
    
    
    16Item 6.
    
    Exhibits and Reports on Form 8-K
    
    
    17SIGNATURE
    
    
    
    
    18


2



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##### Table of Contents












PART I
    
    FINANCIAL INFORMATIONItem 1.
    
    FINANCIAL STATEMENTS


HORSESHOE GAMING HOLDING CORP. AND SUBSIDIARIES
CONSOLIDATED CONDENSED BALANCE SHEETS
(unaudited)
(in thousands, except for share data)

September 30,
    
    December 31,2003
    
    2002ASSETSCurrent assetsCash and cash equivalents
    
    $
    106,544
    
    
    $
    87,373Restricted cash
    
    
    1,005
    
    
    
    14,286Accounts receivable, net of allowance for doubtful
accounts of $6,122 and $6,779, respectively
    
    
    13,131
    
    
    
    12,555Inventories
    
    
    4,772
    
    
    
    5,418Prepaid expenses and other
    
    
    9,530
    
    
    
    7,825Total current assets
    
    
    134,982
    
    
    
    127,457Property and equipment, net
    
    
    479,107
    
    
    
    471,003Goodwill
    
    
    252,242
    
    
    
    252,242Intangibles, net
    
    
    10,862
    
    
    
    12,970Other, net
    
    
    36,133
    
    
    
    37,887$
    913,326
    
    
    $
    901,559LIABILITIES AND STOCKHOLDERS EQUITYCurrent liabilitiesAccounts payable
    
    $
    7,983
    
    
    $
    8,860Accrued expenses and other
    
    
    89,862
    
    
    
    99,492Total current liabilities
    
    
    97,845
    
    
    
    108,352Long-term liabilitiesLong-term debt
    
    
    533,919
    
    
    
    556,773Other long-term liabilities
    
    
    5,886
    
    
    
    6,923Total long-term liabilities
    
    
    539,805
    
    
    
    563,696Commitments and contingenciesStockholders equityCommon stock, $.01 par value, 50,000 shares authorized, 25,000 shares issued,
23,115 and 23,077 shares outstanding, respectively
    
    
    
    
    
    
    Additional paid-in capital
    
    
    59,090
    
    
    
    59,808Retained earnings
    
    
    270,784
    
    
    
    225,001329,874
    
    
    
    284,809Treasury stock, at cost, 1,885 and 1,923 shares, respectively
    
    
    (54,198
    )
    
    
    (55,298
    )Total stockholders equity
    
    
    275,676
    
    
    
    229,511$
    913,326
    
    
    $
    901,559


The accompanying notes are an integral part of these
consolidated condensed financial statements.

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HORSESHOE GAMING HOLDING CORP. AND SUBSIDIARIES
CONSOLIDATED CONDENSED STATEMENTS OF OPERATIONS
(unaudited)
(in thousands)

Three months ended September 30,
    
    
    
    Nine months ended September 30,2003
    
    2002
    
    
    
    2003
    
    2002RevenuesCasino
    
    $
    214,511
    
    
    $
    207,905
    
    
    
    
    
    
    $
    642,094
    
    
    $
    625,369Food and beverage
    
    
    20,594
    
    
    
    19,891
    
    
    
    
    
    
    
    61,250
    
    
    
    60,138Hotel
    
    
    7,722
    
    
    
    7,122
    
    
    
    
    
    
    
    22,740
    
    
    
    21,579Retail and other
    
    
    4,937
    
    
    
    4,663
    
    
    
    
    
    
    
    13,997
    
    
    
    14,443247,764
    
    
    
    239,581
    
    
    
    
    
    
    
    740,081
    
    
    
    721,529Promotional allowances and other
    
    
    (37,853
    )
    
    
    (34,587
    )
    
    
    
    
    
    
    (114,076
    )
    
    
    (105,587
    )Net revenues
    
    
    209,911
    
    
    
    204,994
    
    
    
    
    
    
    
    626,005
    
    
    
    615,942ExpensesCasino
    
    
    119,163
    
    
    
    110,499
    
    
    
    
    
    
    
    363,511
    
    
    
    321,883Food and beverage
    
    
    7,913
    
    
    
    6,151
    
    
    
    
    
    
    
    20,430
    
    
    
    18,295Hotel
    
    
    503
    
    
    
    663
    
    
    
    
    
    
    
    1,486
    
    
    
    1,885Retail and other
    
    
    2,023
    
    
    
    1,556
    
    
    
    
    
    
    
    4,740
    
    
    
    5,793General and administrative
    
    
    26,627
    
    
    
    28,364
    
    
    
    
    
    
    
    83,025
    
    
    
    85,151Corporate expenses
    
    
    5,526
    
    
    
    5,579
    
    
    
    
    
    
    
    17,108
    
    
    
    18,979Deferred compensation
    
    
    173
    
    
    
    325
    
    
    
    
    
    
    
    (319
    )
    
    
    8,086Loss on early retirement of debt
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    9,683Net loss on disposal of assets
    
    
    1,543
    
    
    
    397
    
    
    
    
    
    
    
    2,771
    
    
    
    4,257Depreciation and amortization
    
    
    13,241
    
    
    
    14,008
    
    
    
    
    
    
    
    40,014
    
    
    
    41,794Total expenses
    
    
    176,712
    
    
    
    167,542
    
    
    
    
    
    
    
    532,766
    
    
    
    515,806Operating income
    
    
    33,199
    
    
    
    37,452
    
    
    
    
    
    
    
    93,239
    
    
    
    100,136Other income (expense)Interest expense
    
    
    (12,419
    )
    
    
    (12,869
    )
    
    
    
    
    
    
    (37,857
    )
    
    
    (48,132
    )Interest income
    
    
    180
    
    
    
    216
    
    
    
    
    
    
    
    560
    
    
    
    2,015Other, net
    
    
    1
    
    
    
    
    
    
    
    
    
    
    
    67
    
    
    
    (615
    )Total other income (expense)
    
    
    (12,238
    )
    
    
    (12,653
    )
    
    
    
    
    
    
    (37,230
    )
    
    
    (46,732
    )Net income
    
    $
    20,961
    
    
    $
    24,799
    
    
    
    
    
    
    $
    56,009
    
    
    $
    53,404


The accompanying notes are an integral part of these
consolidated condensed financial statements.

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HORSESHOE GAMING HOLDING CORP. AND SUBSIDIARIES
CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS
FOR THE NINE MONTHS ENDED SEPTEMBER 30,
(unaudited)
(in thousands)

2003
    
    2002Cash flows from operating activitiesNet income
    
    $
    56,009
    
    
    $
    53,404Adjustments to reconcile net income to
net cash provided by operating activities:Depreciation and amortization
    
    
    40,014
    
    
    
    41,794Amortization of debt discounts,
deferred finance charges and other
    
    
    2,036
    
    
    
    2,240Extraordinary loss on early retirement of debt
    
    
    
    
    
    
    9,683Net loss on disposal of assets
    
    
    2,771
    
    
    
    4,257Provision for doubtful accounts
    
    
    2,046
    
    
    
    2,525Deferred compensation
    
    
    (319
    )
    
    
    8,086Decrease/(increase) in restricted cash
    
    
    9,831
    
    
    
    (10,658
    )Net change in current assets and liabilities
    
    
    (3,483
    )
    
    
    1,835Net cash provided by operating activities
    
    
    108,905
    
    
    
    113,166Cash flows from investing activitiesPurchases of property and equipment
    
    
    (48,993
    )
    
    
    (29,419
    )Proceeds from sale of property and equipment
    
    
    715
    
    
    
    235Indemnification escrow related to Joliet sale
    
    
    3,450
    
    
    
    Net increase in other assets
    
    
    646
    
    
    
    (3,315
    )Net cash used in investing activities
    
    
    (44,182
    )
    
    
    (32,499
    )Cash flows from financing activitiesProceeds from long-term debt
    
    
    20,000
    
    
    
    60,000Repayments on long-term debt
    
    
    (43,000
    )
    
    
    (236,031
    )Exercise of stock options
    
    
    189
    
    
    
    Call premium to retire debt
    
    
    
    
    
    
    (7,457
    )Purchase of treasury stock
    
    
    
    
    
    
    (2,513
    )Capital dividends
    
    
    (22,741
    )
    
    
    (27,041
    )Net cash used in financing activities
    
    
    (45,552
    )
    
    
    (213,042
    )Net change in cash and cash equivalents
    
    
    19,171
    
    
    
    (132,375
    )Cash and cash equivalents, beginning of period
    
    
    87,373
    
    
    
    220,817Cash and cash equivalents, end of period
    
    $
    106,544
    
    
    $
    88,442Supplemental cash flow disclosureInterest paid, net of amounts capitalized
    
    $
    24,693
    
    
    $
    36,525


The accompanying notes are an integral part of these
consolidated condensed financial statements.

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HORSESHOE GAMING HOLDING CORP. AND SUBSIDIARIES
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
(Unaudited)

Note 1  Basis of Presentation

The accompanying unaudited consolidated condensed financial statements of
Horseshoe Gaming Holding Corp., a Delaware corporation, and its subsidiaries
(the Company) have been prepared pursuant to the rules and regulations of the
Securities and Exchange Commission. Certain information and note disclosures
normally included in annual financial statements prepared in accordance with
generally accepted accounting principles have been condensed or omitted
pursuant to those rules and regulations. It is suggested that these
consolidated condensed financial statements be read in conjunction with the
financial statements and the notes thereto included in the Companys Form 10-K
for the year ended December 31, 2002. In the opinion of management, all
adjustments (which include normal recurring adjustments) necessary to present
fairly the financial position, results of operations and cash flows of all
periods presented have been made. The results of operations for the nine months
ended September 30, 2003, are not necessarily indicative of the operating
results for the full year. Certain reclassifications have been made to the
financial statements as previously presented to conform to current
classifications.

Note 2  Stock Purchase Agreement

On September 10, 2003, the Company entered into a definitive Stock
Purchase Agreement (the Agreement) with Harrahs Entertainment, Inc.
(Harrahs). Under the terms of the Agreement, the stockholders of the
Company agreed to sell all of the outstanding capital stock of the Company to
Harrahs, subject to customary conditions, for $1.45 billion, including the
assumption of debt. The transaction is subject to regulatory approvals and is
expected to be completed in the first half of 2004.

Note 3  Recently Issued Accounting Pronouncements

In June 2001, the Financial Accounting Standards Board (FASB) issued
Statement of Financial Accounting Standards (SFAS) No. 143 Accounting for
Asset Retirement Obligations (SFAS 143). SFAS 143 requires the recognition
of legal obligations associated with the retirement of long-lived assets that
result from the acquisition, construction, development and/or the normal
operation of the long-lived asset, as well as the disclosure of certain
information related to asset retirement obligations. The Company adopted SFAS
143 in the first quarter of 2003. Adoption of SFAS 143 did not have a material
impact on the Companys results of operations or financial position.

6



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In April 2002, the FASB issued SFAS No. 145 Rescission of FASB Statements
No. 4, 44, and 64, Amendments of FASB Statement No. 13, and Technical
Corrections (SFAS 145). SFAS 145 rescinds SFAS No. 4, Reporting Gains and
Losses from Extinguishment of Debt, and an amendment of that statement, SFAS
No. 64, Extinguishments of Debt Made to Satisfy Sinking-Fund Requirements.
SFAS 145 also rescinds SFAS No. 44, Accounting for Intangible Assets of Motor
Carriers. SFAS 145 amends SFAS No. 13, Accounting for Leases, to eliminate
an inconsistency between the required accounting for sale-leaseback
transactions and the required accounting for certain lease modifications that
have economic effects that are similar to sale-leaseback transactions. SFAS
145 also amends other existing authoritative pronouncements to make various
technical corrections, clarify meanings, or describe their applicability under
changed conditions. The provisions of this statement related to the
rescission of SFAS No. 4 are effective for fiscal years beginning after May 15,
2002. Extraordinary losses of $9.7 million recognized by the Company in the
nine months ended September 30, 2002 have been reclassified to income from
operations to conform to the provisions of SFAS No. 145. The provisions of
this statement related to SFAS No. 13 are effective for financial statements
issued on or after May 15, 2002. The implementation of these remaining
provisions did not have a material effect on the Companys results of
operations or financial position.

In June 2002, the FASB issued SFAS No. 146, Accounting for Costs
Associated with Exit or Disposal Activities (SFAS 146). SFAS 146 generally
requires companies to recognize costs associated with exit or disposal
activities when they are incurred rather than at the date of a commitment to an
exit or disposal plan, as previously required under EITF Issue 94-3. Examples
of costs covered by the standard include lease termination costs and certain
employee severance costs that are associated with a restructuring, discontinued
operation, plant closing, or other exit or disposal activity. SFAS 146 is to
be applied prospectively to exit or disposal activities initiated after
December 31, 2002. The Company adopted SFAS 146 in the first quarter of 2003.
Adoption of SFAS 146 did not have a material impact on the Companys results of
operations or financial position.

In May 2003, the FASB issued SFAS No. 150, Accounting for Certain
Financial Instruments with Characteristics of Both Liabilities and Equity
(SFAS 150). The statement changes the accounting for certain financial
instruments that, under previous guidance, issuers could account for as equity.
The new statement requires that those instruments be classified as liabilities
in statements of financial position. The statement is effective for interim
periods beginning after June 15, 2003. Adoption of SFAS 150 is not expected to
have a material impact on the Companys results of operations or financial
position.

Note 4  Intangibles, Net

As of September 30, 2003, the Company had the following intangible assets
recorded on its balance sheet (in thousands):

GrossCarrying
    
    AccumulatedAmount
    
    Amortization
    
    BalanceDeferred licensing fees
    
    $
    11,131
    
    
    $
    3,503
    
    
    $
    7,628Other
    
    
    6,380
    
    
    
    3,146
    
    
    
    3,234$
    17,511
    
    
    $
    6,649
    
    
    $
    10,862


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All of the Companys intangible assets are being accounted for under the
provisions of SFAS No. 142, Goodwill and Other Intangible Assets.
Amortization expense on intangible assets for the three and nine months ended
September 30, 2003 was $0.3 million and $2.5 million, respectively. Estimated
annual amortization expense on intangible assets for the years ending December
31, 2003, 2004, 2005, 2006 and 2007 is $2.8 million, $1.3 million, $0.8
million, $0.8 million and $0.8 million, respectively.

Note 5  Contingencies

The Company and its subsidiaries, from time to time, are party to legal
proceedings arising in the ordinary course of business. Except as discussed in
the Companys Form 10-K for the year ended December 31, 2002 and the Form 10-Q
for the quarterly period ended June 30, 2003, the Company is unaware of any
legal proceedings which, even if the outcome were unfavorable to the Company,
would have a material adverse impact on either its financial condition or
results of operations.

8



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Item 2.
    
    MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS


The following discussion and analysis provides information which
management believes is relevant to an assessment and understanding of the
consolidated financial condition and results of operations of Horseshoe Gaming
Holding Corp. (the Company) and its subsidiaries. References to Bossier
City, Tunica, and Hammond (or Horseshoe Hammond) refer to the Companys wholly
owned subsidiaries in Bossier City, Louisiana; Tunica, Mississippi; and
Hammond, Indiana, respectively. This discussion should be read in conjunction
with the Companys consolidated condensed financial statements and notes
thereto.

This Quarterly Report on Form 10-Q contains certain forward looking
statements, express or implied, which are made pursuant to the safe harbor
provisions of the Private Securities Litigation Reform Act of 1995 and, as
such, speak only as of the date made. The Company undertakes no obligation to
publicly update any forward-looking statements, whether as a result of new
information, future events or otherwise. These forward-looking statements
generally can be identified by phrases such as the Company or its management
believes, anticipates, expects, forecasts, estimates, foresees, or
the negative or other variations thereof or comparable terminology. In
particular, they include statements relating to, among other things, future
actions, new projects, strategies, future performance, the outcome of
contingencies such as legal proceedings and future financial results. These
forward-looking statements are based on the beliefs of management, as well as
assumptions made based on information currently available to management. The
reader is cautioned that forward-looking statements involve risks and
uncertainties, which could cause actual results or events to differ materially
from those expressed or implied therein, including, but not limited to risks
associated with substantial indebtedness, debt service and liquidity;
construction delays or disruption; risks of competition in the Companys
existing and future markets; failure to obtain or retain licenses or regulatory
approvals; and changes in gaming laws and regulations. Further information on
these and other applicable risks are included in the Companys filings with the
Securities and Exchange Commission.

On September 10, 2003, the Company entered into a definitive Stock
Purchase Agreement (the Agreement) with Harrahs Entertainment, Inc.
(Harrahs). Under the terms of the Agreement, the stockholders of the
Company agreed to sell all of the outstanding capital stock of the Company to
Harrahs, subject to customary conditions, for $1.45 billion, including the
assumption of debt. The transaction is subject to regulatory approvals and is
expected to be completed in the first half of 2004.

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Results of OperationsFinancial Highlights

Three months ended September 30,
    
    
    
    % Increase/(Decrease)2003
    
    2002
    
    
    
    
    
    2003 vs. 2002(dollars in thousands)Casino revenuesBossier City
    
    $
    65,048
    
    
    $
    63,609
    
    
    
    
    
    
    
    2
    %Tunica
    
    
    60,984
    
    
    
    61,736
    
    
    
    
    
    
    
    -1
    %Hammond
    
    
    88,479
    
    
    
    82,560
    
    
    
    
    
    
    
    7
    %$
    214,511
    
    
    $
    207,905
    
    
    
    
    
    
    
    3
    %Net revenuesBossier City
    
    $
    64,460
    
    
    $
    64,297
    
    
    
    
    
    
    
    0
    %Tunica
    
    
    59,202
    
    
    
    60,231
    
    
    
    
    
    
    
    -2
    %Hammond
    
    
    86,249
    
    
    
    80,466
    
    
    
    
    
    
    
    7
    %$
    209,911
    
    
    $
    204,994
    
    
    
    
    
    
    
    2
    %Operating income (loss)Bossier City (a)
    
    $
    11,125
    
    
    $
    10,865
    
    
    
    
    
    
    
    2
    %Tunica (a)
    
    
    13,439
    
    
    
    14,924
    
    
    
    
    
    
    
    -10
    %Hammond (a)
    
    
    14,438
    
    
    
    17,487
    
    
    
    
    
    
    
    -17
    %Corporate expenses
    
    
    (5,526
    )
    
    
    (5,579
    )
    
    
    
    
    
    
    1
    %Deferred compensation
    
    
    (174
    )
    
    
    (325
    )
    
    
    
    
    
    
    (b
    )Other
    
    
    (103
    )
    
    
    80
    
    
    
    
    
    
    
    -229
    %$
    33,199
    
    
    $
    37,452
    
    
    
    
    
    
    
    -11
    %Other informationInterest expense, net
    
    $
    12,239
    
    
    $
    12,653
    
    
    
    
    
    
    
    -3
    %Net income
    
    $
    20,961
    
    
    $
    24,799
    
    
    
    
    
    
    
    -15
    %Operating margin (operating
income/net revenue)(c)Bossier City (a)
    
    
    17
    %
    
    
    17
    %
    
    
    
    
    
    0 pts.Tunica (a)
    
    
    23
    %
    
    
    25
    %
    
    
    
    
    
    -2 pts.Hammond (a)
    
    
    17
    %
    
    
    22
    %
    
    
    
    
    
    -5 pts.Consolidated
    
    
    16
    %
    
    
    18
    %
    
    
    
    
    
    -2 pts.




---

|(a) |  | Before corporate allocations and deferred compensation.                                                                                 
|--- |  | ----------------------------------------------------------------------------------------------------------------------------------------
|   
|(b) |  | Not meaningful.                                                                                                                         
|   
|(c) |  | The % Increase/(Decrease) for operating margin represents the absolute
difference in percentage points (pts.) between the two periods.

10



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##### Table of Contents



Three months ended September 30, 2003 and 2002

Consolidated net revenues for the quarter ended September 30, 2003
increased 2% as compared to the prior year period primarily as the result of
the conversion to dockside gaming in Hammond in August 2002. Tax increases in
Hammond and Bossier City along with competitive pressures in Tunica impacted
operating income at our three properties in the third quarter of 2003.

Casino revenues in Bossier City increased 2% in the third quarter of 2003
as compared to the prior year period while the Shreveport/Bossier City market
was flat between the two periods. Included in the 2003 numbers for the
Shreveport/Bossier City market were the results from a nearby horse racetrack
facility that opened in May 2003 with approximately 900 slots. Casino revenue
increases in Bossier City in the third quarter of 2003 are largely attributable
to volume increases in both slots and table games. These increases were the
result of an increase in promotional spending during the 2003 quarter resulting
in net revenues being basically flat in the third quarter of 2003 as compared
to the prior year period. The 1% gaming tax increase between the two periods
in Bossier City was more than offset by the reduction in amortization expense
on a non-compete agreement in the 2003 period, leaving operating margins flat
between the two periods.

Tunica experienced an approximate 2% increase in coin-in during the
quarter ended September 30, 2003 as compared to the same quarter in the prior
year which was more than offset by a reduction in their slot hold percentage of
approximately .3 percentage points as compared to the prior year period. Also
impacting Tunicas operating income and operating margins were increases in
workers compensation and health insurance in the quarter ended September 30,
2003 as compared to the prior year period.

Casino revenues in Hammond increased 7% in the third quarter of 2003 as
compared to the same period in the prior year as a result of the August 2002
conversion to dockside gaming. While Hammond has experienced revenue increases
from dockside gaming, operating income and margins still fell significantly
short of prior year primarily due to the increase in state gaming taxes.
During the quarter ended September 30, 2002, state gaming taxes were calculated
at 22.5% of casino revenue for the month of July and, effective upon the
conversion to dockside gaming on August 1, 2002, a graduated state gaming tax
rate ranging from 15% to 35% was implemented. The rate used for August and
September 2002 was based on the estimated tax to be paid by year-end under the
new graduated rate structure. This resulted in a rate for the third quarter of
2002 that was approximately seven percentage points lower than the current rate
of 30.5%. Also, during the third quarter of 2003, Hammond reported an increase
of $1.1 million in disposal costs primarily related to assets being replaced as
a result of the expansion projects at that facility. This was partially offset
by a $0.8 million reduction in personal property tax expense, net of consulting
fees, related to prior periods that was recorded in the third quarter of 2003.

11



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##### Table of Contents



Results of OperationsFinancial Highlights

Nine months ended September 30,
    
    
    
    % Increase/(Decrease)2003
    
    2002
    
    
    
    
    
    2003 vs. 2002(dollars in thousands)Casino revenuesBossier City
    
    $
    194,561
    
    
    $
    194,076
    
    
    
    
    
    
    
    0
    %Tunica
    
    
    185,457
    
    
    
    198,356
    
    
    
    
    
    
    
    -7
    %Hammond
    
    
    262,076
    
    
    
    232,937
    
    
    
    
    
    
    
    13
    %$
    642,094
    
    
    $
    625,369
    
    
    
    
    
    
    
    3
    %Net revenuesBossier City
    
    $
    193,137
    
    
    $
    194,992
    
    
    
    
    
    
    
    -1
    %Tunica
    
    
    177,950
    
    
    
    192,922
    
    
    
    
    
    
    
    -8
    %Hammond
    
    
    254,918
    
    
    
    228,028
    
    
    
    
    
    
    
    12
    %$
    626,005
    
    
    $
    615,942
    
    
    
    
    
    
    
    2
    %Operating income (loss)Bossier City (a)
    
    $
    32,302
    
    
    $
    33,168
    
    
    
    
    
    
    
    -3
    %Tunica (a)
    
    
    40,478
    
    
    
    56,511
    
    
    
    
    
    
    
    -28
    %Hammond (a)
    
    
    37,440
    
    
    
    46,946
    
    
    
    
    
    
    
    -20
    %Corporate expenses
    
    
    (17,108
    )
    
    
    (18,979
    )
    
    
    
    
    
    
    10
    %Deferred compensation
    
    
    318
    
    
    
    (8,086
    )
    
    
    
    
    
    
    (b
    )Loss on early retirement of debt
    
    
    
    
    
    
    (9,683
    )
    
    
    
    
    
    
    (b
    )Other
    
    
    (191
    )
    
    
    259
    
    
    
    
    
    
    
    -174
    %$
    93,239
    
    
    $
    100,136
    
    
    
    
    
    
    
    -7
    %Other informationInterest expense, net
    
    $
    37,297
    
    
    $
    46,117
    
    
    
    
    
    
    
    -19
    %Net income
    
    $
    56,009
    
    
    $
    53,404
    
    
    
    
    
    
    
    5
    %Operating margin (operating income/net revenue)(c)Bossier City (a)
    
    
    17
    %
    
    
    17
    %
    
    
    
    
    
    0 pts.Tunica (a)
    
    
    23
    %
    
    
    29
    %
    
    
    
    
    
    -6 pts.Hammond (a)
    
    
    15
    %
    
    
    21
    %
    
    
    
    
    
    -6 pts.Consolidated
    
    
    15
    %
    
    
    16
    %
    
    
    
    
    
    -1 pt.




---

|(a) |  | Before corporate allocations and deferred compensation.                                                                                 
|--- |  | ----------------------------------------------------------------------------------------------------------------------------------------
|   
|(b) |  | Not meaningful.                                                                                                                         
|   
|(c) |  | The % Increase/(Decrease) for operating margin represents the absolute
difference in percentage points (pts.) between the two periods.

12



---



##### Table of Contents



Nine months ended September 30, 2003 and 2002

Consolidated net revenues for the nine months ended September 30, 2003
increased 2% as compared to the prior year period. Revenue improvements in
Hammond as the result of the conversion to dockside gaming in August 2002, were
partially offset by year-over-year revenue decreases experienced in Tunica.
Tax increases in Bossier City and Hammond, along with decreases in revenue in
Tunica, were the primary reasons that each of the three properties experienced
decreases in operating income in the first nine months of 2003.

Casino revenues in Bossier City were flat in the nine months ended
September 30, 2003 as compared to the prior year period while the
Shreveport/Bossier City market decreased approximately 1% between the two
periods. Contributing to the market results was the May 21, 2003 opening of
approximately 900 slots at a nearby horse racetrack facility. Increased slot
and table hold percentages in Bossier City in the nine months ended September
30, 2003 were partially offset by decreases in slot and table volumes as
compared to the nine months ended September 30, 2002.

While Tunicas coin-in increased 1% during the nine months ended September
30, 2003 as compared to the prior year period, their slot hold percentage
dropped approximately .4 percentage points as compared to the prior year period
which caused a decline in slot revenue of approximately $10.7 million. Also
contributing to the 2003 decrease was a 4% decrease in table drop, coupled with
a 1.0 percentage point decrease in the table hold percentage as compared to the
prior year. Stiff competition in the Tunica market continues to erode
operating margins.

Casino revenues in Hammond increased 13% in the nine months ended
September 30, 2003 as compared to the same period in the prior year as a result
of the August 2002 conversion to dockside gaming. While Hammond has
experienced revenue increases from dockside gaming, operating income and
margins still fell significantly short of prior year primarily due to the
increase in state gaming taxes. In addition to the higher effective tax rate
that Hammond is now experiencing, an additional $5.1 million in gaming taxes
was recorded in the nine months ended September 30, 2003 as the result of a
retroactive tax increase imposed by the Indiana legislature during the period.

Corporate expenses decreased by $1.9 million in the nine months ended
September 30, 2003 as compared to the prior year period. The prior year period
includes a $2.3 million payment for franchise taxes related to a Louisiana
franchise tax audit. During the nine months ended September 30, 2003, $2.4
million was recorded related to the relocation of the corporate headquarters
from Illinois to Nevada.

Deferred compensation decreased $8.4 million in the nine months ended
September 30, 2003 as compared to the prior year period due primarily to a
reduction in the valuation used to calculate the value of vested stock
appreciation rights.

Interest expense, net decreased 19% in the first nine months of 2003 as
compared to the prior year period due primarily to lower outstanding debt
balances during the 2003 period. In June 2002, the Company redeemed all of
its outstanding 9.375% Senior Subordinated Notes for $166.5 million, including
call premium. As a result of this redemption, the Company recorded a loss on
early retirement of debt of $9.7 million in the nine months ended September 30,
2002.

13



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##### Table of Contents



Liquidity and Capital Resources

As of September 30, 2003, the Company had cash and cash equivalents of
$106.5 million. During the first nine months of 2003, cash provided by
operating activities was $108.9 million, net cash used in investing activities
was $44.2 million and net cash used in financing activities was $45.6 million.

As of November 1, 2003, there were no amounts outstanding on the Companys
$150.0 million Credit Facility. The Credit Facility is permanently reduced by
$28.1 million on December 31, 2003 and $40.6 million per quarter beginning
March 31, 2004. The Company is currently evaluating its alternatives regarding
the Credit Facility and its other outstanding debt. The Company has no off
balance sheet financing.

Horseshoe Hammond substantially completed its $15.7 million interim
expansion of its boat and pavilion, including the addition of approximately 400
slot machines, in the third quarter of 2003. The construction of a $50.0
million parking garage at Horseshoe Hammond is underway with an estimated
completion date of March 2004. As of October 31, 2003, the Company had
expended approximately $15.0 million related to the parking garage. Other than
normal, routine maintenance capital expenditures, no other material capital
expenditures are currently planned in Bossier City or Tunica during the next
twelve months.

The Company believes that the Companys cash and cash equivalents on hand,
cash flow from operations and available borrowing capacity will be adequate to
meet the Companys existing debt service obligations and capital expenditure
commitments for the next twelve months.

Contingencies

The Company and its subsidiaries, from time to time, are party to legal
proceedings arising in the ordinary course of business. Except as discussed in
the Companys Form 10-K for the year ended December 31, 2002 and the Form 10-Q
for the quarterly period ended June 30, 2003, the Company is unaware of any
legal proceedings which, even if the outcome were unfavorable to the Company,
would have a material adverse impact on either its financial condition or
results of operations.

Recently Issued Accounting Pronouncements

In June 2001, the Financial Accounting Standards Board (FASB) issued
Statement of Financial Accounting Standards (SFAS) No. 143 Accounting for
Asset Retirement Obligations (SFAS 143). SFAS 143 requires the recognition
of legal obligations associated with the retirement of long-lived assets that
result from the acquisition, construction, development and/or the normal
operation of the long-lived asset, as well as the disclosure of certain
information related to asset retirement obligations. The Company adopted SFAS
143 in the first quarter of 2003. Adoption of SFAS 143 did not have a material
impact on the Companys results of operations or financial position.

14



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##### Table of Contents



In April 2002, the FASB issued SFAS No. 145 Rescission of FASB Statements
No. 4, 44, and 64, Amendments of FASB Statement No. 13, and Technical
Corrections (SFAS 145). SFAS 145 rescinds SFAS No. 4, Reporting Gains and
Losses from Extinguishment of Debt, and an amendment of that statement, SFAS
No. 64, Extinguishments of Debt Made to Satisfy Sinking-Fund Requirements.
SFAS 145 also rescinds SFAS No. 44, Accounting for Intangible Assets of Motor
Carriers. SFAS 145 amends SFAS No. 13, Accounting for Leases, to eliminate
an inconsistency between the required accounting for sale-leaseback
transactions and the required accounting for certain lease modifications that
have economic effects that are similar to sale-leaseback transactions. SFAS
145 also amends other existing authoritative pronouncements to make various
technical corrections, clarify meanings, or describe their applicability under
changed conditions. The provisions of this statement related to the
rescission of SFAS No. 4 are effective for fiscal years beginning after May 15,
2002. Extraordinary losses of $9.7 million recognized by the Company in the
nine months ended September 30, 2002 have been reclassified to income from
operations to conform to the provisions of SFAS No. 145. The provisions of
this statement related to SFAS No. 13 are effective for financial statements
issued on or after May 15, 2002. The implementation of these remaining
provisions did not have a material effect on the Companys results of
operations or financial position.

In June 2002, the FASB issued SFAS No. 146, Accounting for Costs
Associated with Exit or Disposal Activities (SFAS 146). SFAS 146 generally
requires companies to recognize costs associated with exit or disposal
activities when they are incurred rather than at the date of a commitment to an
exit or disposal plan, as previously required under EITF Issue 94-3. Examples
of costs covered by the standard include lease termination costs and certain
employee severance costs that are associated with a restructuring, discontinued
operation, plant closing, or other exit or disposal activity. SFAS 146 is to
be applied prospectively to exit or disposal activities initiated after
December 31, 2002. The Company adopted SFAS 146 in the first quarter of 2003.
Adoption of SFAS 146 did not have a material impact on the Companys results of
operations or financial position.

In May 2003, the FASB issued SFAS No. 150, Accounting for Certain
Financial Instruments with Characteristics of Both Liabilities and Equity
(SFAS 150). The statement changes the accounting for certain financial
instruments that, under previous guidance, issuers could account for as equity.
The new statement requires that those instruments be classified as liabilities
in statements of financial position. The statement is effective for interim
periods beginning after June 15, 2003. Adoption of SFAS 150 is not expected to
have a material impact on the Companys results of operations or financial
position.

15



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##### Table of Contents






Item 3.
    
    Quantitative and Qualitative Disclosure About Market Risk


As of September 30, 2003 there were no material changes to the information
presented in Item 7A of the Companys Annual Report on Form 10-K for the fiscal
year ended December 31, 2002.




Item 4.
    
    Controls and Procedures


The Company maintains disclosure controls and procedures that are designed
to ensure that information required to be disclosed in the Companys Exchange
Act reports is recorded, processed, summarized and reported within the time
periods specified in the Securities and Exchange Commissions rules and forms,
and that such information is accumulated and communicated to the Companys
management, including its Chief Executive Officer and Chief Financial Officer,
as appropriate, to allow timely decisions regarding required disclosure. In
designing and evaluating the disclosure controls and procedures, management
recognizes that any controls and procedures, no matter how well designed and
operated, can provide only reasonable assurance of achieving the desired
control objectives, and management necessarily is required to apply its
judgment in evaluating the cost-benefit relationship of possible controls and
procedures.

The Company carried out an evaluation, under the supervision and with the
participation of the Companys management, including the Companys Chief
Executive Officer and Chief Financial Officer, of the effectiveness of the
Companys disclosure controls and procedures as of the end of the period
covered by this report. Based on the foregoing, the Companys Chief Executive
Officer and Chief Financial Officer concluded that the Companys disclosure
controls and procedures were effective.

There have been no significant changes in the Companys internal controls
or in other factors that could significantly affect the internal controls
subsequent to the date the Company completed its evaluation.







PART II
    
    OTHER INFORMATIONItem 1.
    
    Legal Proceedings


Reference is made to the Companys Form 10-Q for the quarterly period
ended June 30, 2003.

16



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##### Table of Contents






Item 6.
    
    EXHIBITS AND REPORTS ON FORM 8-K


ExhibitNumber
    
    Description2.1 (a)
    
    Stock Purchase Agreement by and among Harrahs Entertainment,
Inc., Horseshoe Gaming Holding Corp. and each of the
Stockholders of Horseshoe Gaming Holding Corp., dated as of
September 10, 2003.3.1 (b)
    
    Certificate of Incorporation of Horseshoe Gaming Holding Corp.3.2 (b)
    
    By-laws of Horseshoe Gaming Holding Corp.31.1 (c)
    
    Certification of Jack B. Binion, Chief Executive Officer, as
adopted pursuant to Section 302 of the Sarbanes-Oxley Act of
2002.31.2 (c)
    
    Certification of Kirk C. Saylor, Chief Financial Officer, as
adopted pursuant to Section 302 of the Sarbanes-Oxley Act of
2002.32.1 (c)
    
    Certification of Jack B. Binion, Chief Executive Officer,
pursuant to 18 United States Code Section 1350, as adopted
pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.32.2 (c)
    
    Certification of Kirk C. Saylor, Chief Financial Officer,
pursuant to 18 United States Code Section 1350, as adopted
pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.




| |    
| | ---
| | (a)
|
| | (b)
|
| | (c)



| |  | Reports onForm 8-Kfiled during the quarter:
| |  | -------------------------------------------



| |  | On September 16, 2003, a Form 8-K was filed to announce that the Company
and its stockholders entered into a definitive Stock Purchase Agreement
with Harrahs Entertainment, Inc.
| |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

17



---



##### Table of Contents






SIGNATURE

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 the
undersigned thereunto duly authorized.

HORSESHOE GAMING HOLDING CORP.
a Delaware corporationDate: November 10, 2003By:
    
    /s/ Kirk C. Saylor                                                                                    .Kirk C. Saylor
Chief Financial Officer and Treasurer
(Principal Financial and Accounting Officer)


18



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##### Table of Contents






Exhibit Index

ExhibitNumber
    
    Description2.1 (a)
    
    Stock Purchase Agreement by and among Harrahs Entertainment,
Inc., Horseshoe Gaming Holding Corp. and each of the
Stockholders of Horseshoe Gaming Holding Corp., dated as of
September 10, 2003.3.1 (b)
    
    Certificate of Incorporation of Horseshoe Gaming Holding Corp.3.2 (b)
    
    By-laws of Horseshoe Gaming Holding Corp.31.1 (c)
    
    Certification of Jack B. Binion, Chief Executive Officer, as
adopted pursuant to Section 302 of the Sarbanes-Oxley Act of
2002.31.2 (c)
    
    Certification of Kirk C. Saylor, Chief Financial Officer, as
adopted pursuant to Section 302 of the Sarbanes-Oxley Act of
2002.32.1 (c)
    
    Certification of Jack B. Binion, Chief Executive Officer,
pursuant to 18 United States Code Section 1350, as adopted
pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.32.2 (c)
    
    Certification of Kirk C. Saylor, Chief Financial Officer,
pursuant to 18 United States Code Section 1350, as adopted
pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.




---

|(a) |  | Filed as an Exhibit to Horseshoe Gaming Holding Corp.s Form
8-K filed on September 16, 2003.                  
|--- |  | ---------------------------------------------------------------------------------------------------------------
|   
|(b) |  | Filed as an Exhibit to Horseshoe Gaming Holding Corp.s Form
S-4 Registration Statement filed on June 15, 1999.
|   
|(c) |  | Included herein.                                                                                               

19