-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, DU5PsVC/OD40YoOWOD0GB5yIrtoGNv5GeBjDq2y0wDK00ZnIx+vj3FU9HX0BxWSR Mbc7mSoPQAefKo2OBNzIwA== 0000898430-95-002319.txt : 19951119 0000898430-95-002319.hdr.sgml : 19951119 ACCESSION NUMBER: 0000898430-95-002319 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 5 CONFORMED PERIOD OF REPORT: 19950930 FILED AS OF DATE: 19951114 SROS: NYSE FILER: COMPANY DATA: COMPANY CONFORMED NAME: SANTA ANITA OPERATING CO CENTRAL INDEX KEY: 0000313749 STANDARD INDUSTRIAL CLASSIFICATION: SERVICES-RACING, INCLUDING TRACK OPERATION [7948] IRS NUMBER: 953419438 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 001-08132 FILM NUMBER: 95591240 BUSINESS ADDRESS: STREET 1: 285 W HUNTINGTON DR STREET 2: PO BOX 808 CITY: ARCADIA STATE: CA ZIP: 91066-0808 BUSINESS PHONE: 8185747223 MAIL ADDRESS: STREET 1: 285 W HUNTINGTON DRIVE STREET 2: P O BOX 808 CITY: ARCADIA STATE: CA ZIP: 91066-0808 FILER: COMPANY DATA: COMPANY CONFORMED NAME: SANTA ANITA REALTY ENTERPRISES INC CENTRAL INDEX KEY: 0000314661 STANDARD INDUSTRIAL CLASSIFICATION: SERVICES-RACING, INCLUDING TRACK OPERATION [7948] IRS NUMBER: 953520818 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 001-08131 FILM NUMBER: 95591241 BUSINESS ADDRESS: STREET 1: 363 SAN MIGUEL DR STE 100 STREET 2: P O BOX 14160 CITY: NEWPORT STATE: CA ZIP: 92660-7803 BUSINESS PHONE: 7147212700 MAIL ADDRESS: STREET 1: 363 SAN MIGUEL DRIVE SUITE 100 STREET 2: PO BOX 14160 CITY: NEW PORT STATE: CA ZIP: 92660-7803 10-Q 1 FORM 10-Q 09/30/95 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, 1995 [ ] 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 0-9109 Commission file number 0-9110 SANTA ANITA REALTY SANTA ANITA OPERATING ENTERPRISES, INC. COMPANY - ------------------------------------ -------------------------------------- (Exact name of registrant as (Exact name of registrant as specified in its charter) specified in its charter) Delaware Delaware - ------------------------------------ -------------------------------------- (State or other jurisdiction (State or other jurisdiction of incorporation or of incorporation or organization) organization) 95-3520818 95-3419438 - ------------------------------------ -------------------------------------- (I.R.S. Employer (I.R.S. Employer Identification No.) Identification No.) 301 West Huntington Drive, Suite 405 285 West Huntington Drive Arcadia, California 91007 Arcadia, California 91007 - ------------------------------------ -------------------------------------- (Address of principal (Address of principal executive executive offices including zip code) offices including zip code) (818) 574-5550 (818) 574-7223 - ------------------------------------ -------------------------------------- (Registrant's telephone number, (Registrant's telephone number, including area code) including area code) Indicate by check mark whether the registrants (1) have 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 registrants were required to file such reports), and (2) have been subject to such filing requirements for the past 90 days. Yes X No ---- The number of shares outstanding of each of the issuers' classes of common stock, as of the close of business on November 3, 1995 were: Santa Anita Realty Enterprises, Inc. 11,383,000 Santa Anita Operating Company 11,270,500 1 SANTA ANITA REALTY ENTERPRISES, INC. AND SANTA ANITA OPERATING COMPANY AND SUBSIDIARIES FORM 10-Q INDEX
Page No. PART I. FINANCIAL INFORMATION 3 THE SANTA ANITA COMPANIES Combined Balance Sheets as of September 30, 1995 and December 31, 1994 4 Combined Statements of Operations for the three months and nine months ended September 30, 1995 and 1994 5 Combined Statements of Cash Flows for the nine months ended September 30, 1995 and 1994 6 SANTA ANITA REALTY ENTERPRISES, INC. Consolidated Balance Sheets as of September 30, 1995 and December 31, 1994 7 Consolidated Statements of Operations for the three months and nine months ended September 30, 1995 and 1994 8 Consolidated Statements of Cash Flows for the nine months ended September 30, 1995 and 1994 9 SANTA ANITA OPERATING COMPANY AND SUBSIDIARIES Consolidated Balance Sheets as of September 30, 1995 and December 31, 1994 10 Consolidated Statements of Operations for the three months and nine months ended September 30, 1995 and 1994 11 Consolidated Statements of Cash Flows for the nine months ended September 30, 1995 and 1994 12 NOTES TO FINANCIAL STATEMENTS 13 MANAGEMENTS' DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS 16 PART II. OTHER INFORMATION 22 SIGNATURES 23
2 SANTA ANITA REALTY ENTERPRISES, INC. AND SANTA ANITA OPERATING COMPANY AND SUBSIDIARIES FORM 10-Q FOR THE NINE MONTHS ENDED SEPTEMBER 30, 1995 PART 1. FINANCIAL INFORMATION ITEM 1. FINANCIAL STATEMENTS The accompanying balance sheets as of September 30, 1995 and December 31, 1994 of The Santa Anita Companies (the "Companies"), Santa Anita Realty Enterprises, Inc. ("Realty") and Santa Anita Operating Company and Subsidiaries ("Operating Company"), the statements of operations for the three months and nine months ended September 30, 1995 and 1994, and the related statements of cash flows for the nine months ended September 30, 1995 and 1994, were prepared by management and, except for the balance sheets as of December 31, 1994, are unaudited. In the opinion of management, the accompanying financial statements include all adjustments, including normal recurring items, considered necessary for a fair presentation. The following financial statements should be read in conjunction with the accompanying notes and the Joint Annual Report on Form 10-K of Realty and Operating Company for the year ended December 31, 1994. 3 THE SANTA ANITA COMPANIES COMBINED BALANCE SHEETS
SEPTEMBER 30, DECEMBER 31, 1995 1994 ------------- ------------- (Unaudited) ASSETS Real estate assets Santa Anita Racetrack, less accumulated depreciation of $20,043,000 and $19,431,000 $ 8,438,000 $ 8,304,000 Commercial properties, less accumulated depreciation of $37,184,000 and $32,247,00 94,489,000 116,780,000 Investments in and advances to unconsolidated joint ventures 3,875,000 10,654,000 Real estate loans receivable 12,068,000 13,635,000 ------------ ------------ 118,870,000 149,373,000 Cash 2,798,000 12,674,000 Short-term investments, at cost (approximates market) 7,487,000 5,600,000 Accounts receivable 4,589,000 4,656,000 Prepaid expenses and other assets 5,084,000 6,054,000 Investment in Pacific Gulf Properties Inc. 12,168,000 12,825,000 Property, plant and equipment, less accumulated depreciation of $25,981,000 and $23,093,000 19,824,000 19,466,000 ----------- ------------ $170,820,000 $210,648,000 ============ ============ LIABILITIES AND SHAREHOLDERS' EQUITY Real estate loans payable $101,490,000 $102,472,000 Bank loans payable 13,640,000 9,829,000 Accounts payable 6,229,000 13,179,000 Other liabilities 15,177,000 12,750,000 Dividends payable 2,277,000 2,251,000 Deferred revenues 801,000 2,427,000 Deferred income taxes 3,565,000 3,565,000 ------------ ------------ 143,179,000 146,473,000 Minority interest in consolidated joint ventures (3,260,000) (3,268,000) Shareholders' equity Preferred stock, $.10 par value; authorized 6,000,000 shares; none issued - - Common stock, $.10 par value; authorized 19,000,000 shares; issued and outstanding 11,270,500 and 11,143,853 shares 2,253,000 2,227,000 Additional paid-in capital 136,552,000 134,615,000 Unearned compensation expense (1,494,000) - Retained earnings (deficit) (106,410,000) (69,399,000) ------------ ------------ 30,901,000 67,443,000 ------------ ------------ $170,820,000 $210,648,000 ============ ============
See accompanying notes. 4 THE SANTA ANITA COMPANIES COMBINED STATEMENT OF OPERATIONS
THREE MONTHS ENDED SEPTEMBER 30, NINE MONTHS ENDED SEPTEMBER 30, ---------------------------------- -------------------------------- 1995 1994 1995 1994 ---------------- --------------- ---------------- ------------- (Unaudited) (Unaudited) Revenues Horse racing $ 6,125,000 $ 5,473,000 $ 56,677,000 $54,853,000 Rental property 5,789,000 5,913,000 15,924,000 19,369,000 Interest and other 669,000 735,000 2,121,000 1,822,000 ------------ ----------- ------------ ----------- 12,583,000 12,121,000 74,722,000 76,044,000 ------------ ----------- ------------ ----------- Costs and expenses Horse racing operating costs 4,944,000 4,970,000 37,976,000 38,597,000 Rental property operating expenses 2,350,000 2,256,000 5,758,000 6,904,000 Depreciation and amortization 1,495,000 1,307,000 7,123,000 6,899,000 General and administrative 1,915,000 1,174,000 7,500,000 7,023,000 Interest and other 2,489,000 2,446,000 7,518,000 7,443,000 Costs of equity offering - - 750,000 - Card club option write-off 2,000,000 - 2,000,000 - Program for disposition of non-core real estate assets 34,500,000 - 34,500,000 - Losses from unconsolidated joint ventures 569,000 445,000 1,760,000 1,340,000 Minority interest in earnings of consolidated joint ventures 76,000 389,000 110,000 1,148,000 ------------ ----------- ------------ ----------- 50,338,000 12,987,000 104,995,000 69,354,000 ------------ ----------- ------------ ----------- Net income (loss) $(37,755,000) $ (866,000) $(30,273,000) $ 6,690,000 ============ =========== ============ =========== Weighted average number of common shares outstanding 11,270,500 11,143,853 11,194,883 11,142,428 ============ =========== ============ =========== Net income (loss) per common share $(3.35) $(.08) $(2.70) $.60 ============ =========== ============ =========== Dividends declared per common share $.20 $.20 $.60 $.74 ============ =========== ============ ===========
See accompanying notes. 5 THE SANTA ANITA COMPANIES COMBINED STATEMENTS OF CASH FLOWS FOR THE NINE MONTHS ENDED SEPTEMBER 30, 1995 AND 1994
1995 1994 -------------- ------------- (Unaudited) Cash flows from operating activities: Net income (loss) $(30,273,000) $ 6,690,000 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation and amortization 7,123,000 6,899,000 Minority interest in earnings of consolidated joint ventures 110,000 1,148,000 Equity in losses of unconsolidated joint ventures 1,760,000 1,340,000 Equity in earnings from investment in Pacific Gulf Properties Inc. (261,000) (86,000) Amortization of unearned compensation expense 469,000 - Card club option write-off 2,000,000 - Program for disposition of non-core real estate assets 34,500,000 Net decrease in certain other assets 1,355,000 4,262,000 Net decrease in certain other liabilities (10,152,000) (13,101,000) ------------ ------------ Net cash provided by operating activities 6,631,000 7,152,000 ------------ ------------ Cash flows from investing activities: Proceeds from disposition of multifamily and industrial operations - 44,425,000 Payments received on loans receivable 94,000 272,000 Origination of loans receivable (27,000) (15,000) Additions and improvements to real estate assets (3,226,000) (11,644,000) Additions to property, plant and equipment (3,246,000) (1,697,000) Additions to certain other assets (4,055,000) - Dividends received from Pacific Gulf Properties Inc. 918,000 86,000 Investments in and advances to unconsolidated joint ventures (1,960,000) (1,287,000) Capital distributions from unconsolidated joint ventures 1,129,000 549,000 ------------ ------------ Net cash (used in) provided by investing activities (10,373,000) 30,689,000 ------------ ------------ Cash flows from financing activities: Proceeds from real estate loans payable - 21,077,000 Proceeds from bank loans payable 4,400,000 - Repayment of real estate loans payable (982,000) (423,000) Repayment of bank loans payable (589,000) (47,572,000) Net decrease in certain other liabilities (275,000) (3,441,000) Dividends paid (6,712,000) (9,765,000) Distributions to minority interest in consolidated joint ventures, net (102,000) (1,013,000) Issuance of stock from restricted stock awards and stock options 13,000 61,000 ------------ ------------ Net cash used in financing activities (4,247,000) (41,076,000) ------------ ------------ Net decrease in cash and cash equivalents (7,989,000) (3,235,000) Cash and cash equivalents at beginning of year 18,274,000 22,021,000 ------------ ------------ Cash and cash equivalents at September 30, $ 10,285,000 $ 18,786,000 ============ ============
See accompanying notes. 6 SANTA ANITA REALTY ENTERPRISES, INC. CONSOLIDATED BALANCE SHEETS
SEPTEMBER 30, DECEMBER 31, 1995 1994 -------------- -------------- (Unaudited) ASSETS Real estate assets Santa Anita Racetrack, less accumulated depreciation of $20,043,000 and $19,431,000 $ 8,438,000 $ 8,304,000 Commercial properties, less accumulated depreciation of $37,605,000 and $33,842,000 97,570,000 121,653,000 Investments in and advances to unconsolidated joint ventures 3,875,000 10,654,000 Real estate loans receivable 12,068,000 13,635,000 ------------ ------------ 121,951,000 154,246,000 Cash 2,787,000 5,431,000 Short-term investments, at cost (approximates market) 2,801,000 - Accounts receivable 3,149,000 2,274,000 Prepaid expenses and other assets 4,737,000 3,357,000 Investment in Pacific Gulf Properties 12,168,000 12,825,000 Inc. ------------ ------------ $147,593,000 $178,133,000 ============ ============ LIABILITIES AND SHAREHOLDERS' EQUITY Real estate loans payable $101,490,000 $102,472,000 Bank loans payable 11,700,000 7,300,000 Accounts payable 2,181,000 2,379,000 Other liabilities 6,099,000 2,159,000 Dividends payable 2,277,000 2,251,000 Due to Operating Company 863,000 1,056,000 ------------ ------------ 124,610,000 117,617,000 Minority interest in consolidated joint ventures (3,260,000) (3,268,000) Shareholders' equity Preferred stock, $.10 par value; authorized 6,000,000 shares; none issued - - Common stock, $.10 par value; authorized 19,000,000 shares; issued and outstanding 11,383,000 and 11,256,353 shares 1,138,000 1,125,000 Additional paid-in capital 118,881,000 117,084,000 Retained earnings (deficit) (93,776,000) (54,425,000) ------------ ------------ 26,243,000 63,784,000 ------------ ------------ $147,593,000 $178,133,000 ============ ============
See accompanying notes. 7 SANTA ANITA REALTY ENTERPRISES, INC. CONSOLIDATED STATEMENT OF OPERATIONS
THREE MONTHS ENDED SEPTEMBER 30, NINE MONTHS ENDED SEPTEMBER 30, ---------------------------------- -------------------------------- 1995 1994 1995 1994 ----------------- -------------- ---------------- ------------- (Unaudited) (Unaudited) Revenues Rent from Racetrack $ 375,000 $ - $ 9,227,000 $10,852,000 Shopping centers 4,739,000 3,958,000 12,628,000 10,927,000 Office buildings 1,050,000 1,107,000 3,075,000 3,237,000 Apartments and industrial - 848,000 - 4,916,000 Interest and other 603,000 631,000 1,699,000 1,417,000 ------------ ----------- ------------ ----------- 6,767,000 6,544,000 26,629,000 31,349,000 ------------ ----------- ------------ ----------- Costs and expenses Shopping centers 1,868,000 1,670,000 4,551,000 3,990,000 Office buildings 482,000 491,000 1,207,000 1,329,000 Apartments and industrial - 95,000 - 1,585,000 Depreciation and amortization 1,305,000 1,192,000 4,364,000 4,672,000 General and administrative 1,229,000 832,000 2,725,000 2,622,000 Interest and other 2,407,000 2,326,000 7,258,000 7,105,000 Costs of equity offering - - 700,000 - Card club option write-off 2,000,000 - 2,000,000 - Program for disposition of non-core real estate assets 34,500,000 - 34,500,000 - Losses from unconsolidated joint ventures 569,000 445,000 1,760,000 1,340,000 Minority interest in earnings of consolidated joint ventures 76,000 389,000 110,000 1,148,000 ------------ ----------- ------------ ----------- 44,436,000 7,440,000 59,175,000 23,791,000 ------------ ----------- ------------ ----------- Net income (loss) $(37,669,000) $ (896,000) $(32,546,000) $ 7,558,000 ============ =========== ============ =========== Weighted average number of common shares outstanding 11,383,000 11,256,353 11,307,383 11,256,353 ============ =========== ============ =========== Net income (loss) per common share $ (3.31) $ (.08) $ (2.88) $ .67 ============ =========== ============ =========== Dividends declared per common share $ .20 $ .20 $ .60 $ .74 ============ =========== ============ ===========
See accompanying notes. 8 SANTA ANITA REALTY ENTERPRISES, INC. CONSOLIDATED STATEMENTS OF CASH FLOWS FOR THE NINE MONTHS ENDED SEPTEMBER 30, 1995 AND 1994
1995 1994 ------------ ------------ (Unaudited) Cash flows from operating activities: Net income (loss) $(32,546,000) $ 7,558,000 Adjustments to reconcile net income to net cash provided by operating activities: 4,364,000 4,672,000 Depreciation and amortization Minority interest in earnings of consolidated joint ventures 110,000 1,148,000 Equity in losses of unconsolidated joint ventures 1,760,000 1,340,000 Equity in earnings from investment in Pacific Gulf Properties Inc. (261,000) (86,000) Card club option write-off 2,000,000 - Program for disposition of non-core real estate assets 34,500,000 - Net (increase) decrease in certain other assets (274,000) 1,712,000 Net decrease in certain other liabilities (248,000) (1,586,000) ------------ ------------ Net cash provided by operating activities 9,405,000 14,758,000 ------------ ------------ Cash flows from investing activities: Proceeds from disposition of multifamily and - 44,425,000 industrial operations Payments received on loans receivable 94,000 272,000 Origination of loans receivable (27,000) (15,000) Additions and improvements to real estate assets (3,226,000) (11,644,000) Additions to certain other assets (4,055,000) - Investments in and advances to unconsolidated joint ventures (1,960,000) (1,287,000) Capital distributions from unconsolidated joint ventures 1,129,000 549,000 Dividends received from Pacific Gulf Properties Inc. 918,000 86,000 ------------ ------------ Net cash (used in) provided by investing activities (7,127,000) 32,386,000 ------------ ------------ Cash flows from financing activities: Proceeds from real estate loans payable - 21,077,000 Proceeds from bank loans payable 4,400,000 - Repayment of real estate loans payable (982,000) (423,000) Repayment of bank loans payable - (47,034,000) Increase (decrease) in due to Operating Company 1,604,000 (842,000) Net decrease in certain other liabilities (275,000) (3,441,000) Dividends paid (6,779,000) (9,866,000) Issuance of common stock from restricted stock awards 13,000 - Distributions to minority interest in consolidated joint ventures, net (102,000) (1,013,000) ------------ ------------ Net cash used in financing activities (2,121,000) (41,542,000) ------------ ------------ Net increase in cash and cash equivalents 157,000 5,602,000 Cash at beginning of year 5,431,000 7,633,000 ------------ ------------ Cash and cash equivalents at September 30, $ 5,588,000 $ 13,235,000 ============ ============
See accompanying notes. 9 SANTA ANITA OPERATING COMPANY AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS
SEPTEMBER 30, DECEMBER 31, 1995 1994 -------------- ------------- (Unaudited) ASSETS Current assets Cash $ 11,000 $ 7,243,000 Short-term investments, at cost (approximates market) 4,686,000 5,600,000 Accounts receivable 1,440,000 2,382,000 Prepaid expenses and other assets 356,000 1,043,000 ------------ ------------ Total current assets 6,493,000 16,268,000 Investment in common stock of Realty 2,122,000 2,122,000 Property, plant and equipment, less accumulated depreciation of $25,981,000 and $23,093,000 19,824,000 19,466,000 Due from Realty 863,000 1,056,000 ------------ ------------ $ 29,302,000 $ 38,912,000 ============ ============ LIABILITIES AND SHAREHOLDERS' EQUITY Current liabilities Accounts payable $ 4,048,000 $ 10,800,000 Other liabilities 9,078,000 10,591,000 Bank loans payable 849,000 794,000 ------------ ------------ Total current liabilities 13,975,000 22,185,000 Bank loans payable 1,091,000 1,735,000 Deferred revenues 801,000 2,427,000 Deferred income taxes 3,565,000 3,565,000 ------------ ------------ 19,432,000 29,912,000 ------------ ------------ Shareholders' equity Preferred stock, $.10 par value; authorized 6,000,000 shares; none issued - - Common stock, $.10 par value; authorized 19,000,000 shares; issued and outstanding 11,270,500 and 11,143,853 shares 1,127,000 1,114,000 Additional paid-in capital 20,736,000 20,596,000 Unearned compensation expense (1,494,000) - Retained earnings (deficit) (10,499,000) (12,710,000) ------------ ------------ 9,870,000 9,000,000 ------------ ------------ $ 29,302,000 $ 38,912,000 ============ ============
See accompanying notes. 10 SANTA ANITA OPERATING COMPANY AND SUBSIDIARIES CONSOLIDATED STATEMENT OF OPERATIONS
THREE MONTHS ENDED SEPTEMBER 30, NINE MONTHS ENDED SEPTEMBER 30, --------------------------------- -------------------------------- 1995 1994 1995 1994 ---------------- -------------- -------------- --------------- (Unaudited) (Unaudited) Revenues Wagering commissions $ 3,003,000 $ 2,301,000 $37,449,000 $34,987,000 Admission related 3,122,000 3,172,000 19,228,000 19,866,000 Interest and other 136,000 126,000 537,000 506,000 ----------- ----------- ----------- ----------- 6,261,000 5,599,000 57,214,000 55,359,000 ----------- ----------- ----------- ----------- Costs and expenses Horse racing operating costs 4,944,000 4,970,000 37,976,000 38,597,000 Depreciation and amortization 233,000 157,000 2,888,000 2,355,000 General and administrative 686,000 342,000 4,775,000 4,401,000 Interest 130,000 120,000 308,000 338,000 Costs of equity offering - - 50,000 - Rental expense to Realty 375,000 - 9,006,000 10,563,000 ----------- ----------- ----------- ----------- 6,368,000 5,589,000 55,003,000 56,254,000 ----------- ----------- ----------- ----------- Net income (loss) $ (107,000) $ 10,000 $ 2,211,000 $ (895,000) =========== =========== =========== =========== Weighted average number of common shares outstanding 11,270,500 11,143,853 11,194,883 11,142,428 =========== =========== =========== =========== Net income (loss) per common share $ (.01) $ - $ .20 $ (.08) =========== =========== =========== ===========
See accompanying notes. 11 SANTA ANITA OPERATING COMPANY AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS FOR THE NINE MONTHS ENDED SEPTEMBER 30, 1995 AND 1994
1995 1994 ------------ ------------- (Unaudited) Cash flows from operating activities: Net income (loss) $ 2,211,000 $ (895,000) Adjustments to reconcile net income (loss) to net cash used in operating activities: 2,888,000 2,355,000 Depreciation and amortization Amortization of unearned compensation expense 469,000 - Net decrease in certain other assets 1,629,000 2,550,000 Net decrease in certain other liabilities (9,904,000) (11,515,000) ----------- ------------ Net cash used in operating activities (2,707,000) (7,505,000) ----------- ------------ Cash flows from investing activities: Additions to property, plant and equipment (3,246,000) (1,697,000) Decrease in investment in common stock of Realty - 57,000 ----------- ------------ Net cash used in investing activities (3,246,000) (1,640,000) ----------- ------------ Cash flows from financing activities: Repayment of bank loans payable (589,000) (538,000) (Increase) decrease in due from Realty (1,604,000) 842,000 Issuance of stock from stock options - 4,000 ----------- ------------ Net cash (used in) provided by financing activities (2,193,000) 308,000 ----------- ------------ Net decrease in cash and cash equivalents (8,146,000) (8,837,000) Cash and cash equivalents at beginning of year 12,843,000 14,388,000 ----------- ------------ Cash and cash equivalents at September 30, $ 4,697,000 $ 5,551,000 =========== ============
See accompanying notes. 12 SANTA ANITA REALTY ENTERPRISES, INC. AND SANTA ANITA OPERATING COMPANY AND SUBSIDIARIES NOTES TO FINANCIAL STATEMENTS NOTE 1 - INTERIM PERIOD ACCOUNTING POLICY Operating Company records daily revenues associated with thoroughbred horse racing at Santa Anita Racetrack as they are received and season admissions are recorded ratably over the racing season. Costs and expenses associated with thoroughbred horse racing revenues are charged against income in those interim periods in which the thoroughbred horse racing revenues are recognized. Other costs and expenses are recognized as they actually occur throughout the year. The rental fee paid by Operating Company to Realty is recognized by both Realty and Operating Company as it is earned. Certain prior period amounts have been reclassified to conform to current period presentation. In the opinion of management, all adjustments (including normal recurring items) considered necessary for the fair presentation of the Companies' financial position, results of operations and cash flows have been included. NOTE 2 - INVESTMENTS IN UNCONSOLIDATED JOINT VENTURES Realty's investments in unconsolidated joint ventures include investments in the following commercial real estate ventures at September 30, 1995:
NAME OWNERSHIP PROJECT ------------------- ----------- ------------- Joppa Associates 33-1/3% Retail H-T Associates 50% Regional Mall
Realty owns a 50% interest in H-T Associates, whose only asset is a 65% ownership interest in a regional mall, effectively giving Realty a 32.5% ownership interest. Combined condensed financial statement information for unconsolidated joint ventures as of September 30, 1995 and December 31, 1994, and for the nine months ended September 30, 1995 and 1994, is as follows:
SEPTEMBER 30, DECEMBER 31, 1995 1994 -------------- ------------- (Unaudited) Real estate assets $203,768,000 $207,775,000 ============ ============ Liabilities Secured real estate loans $181,136,000 $181,136,000 Other 4,561,000 5,548,000 ------------ ------------ $185,697,000 $186,684,000 ============ ============ Partners' equity Realty $ 9,725,000 $ 10,654,000 Others 8,346,000 10,437,000 ------------ ------------ $ 18,071,000 $ 21,091,000 ============ ============
13 NOTES TO FINANCIAL STATEMENTS (CONTINUED) NOTE 2 - INVESTMENTS IN UNCONSOLIDATED JOINT VENTURES (CONTINUED)
NINE MONTHS ENDED SEPTEMBER 30, 1995 1994 --------------- --------------- (Unaudited) Revenues $16,464,000 $15,890,000 =========== =========== Net Loss Realty $(1,760,000) $(1,340,000) Others (2,170,000) (961,000) ----------- ----------- $(3,930,000) $(2,301,000) =========== ===========
NOTE 3 - INVESTMENT IN PACIFIC GULF PROPERTIES INC. In November 1993, Realty entered into a Purchase and Sale Agreement to sell its multifamily and industrial operations to Pacific Gulf Properties Inc. ("Pacific"), in conjunction with Pacific's public offering of common stock and debentures. In February 1994, Realty completed the first part of this transaction by selling to Pacific ten multifamily properties, containing 2,654 apartment units, located in Southern California, the Pacific Northwest and Texas and three industrial properties, containing an aggregate of 185,000 leaseable square feet of industrial space, located in the State of Washington (the "Transferred Properties"). Realty's corporate headquarters building and related assets were also acquired by Pacific. In consideration of the sale of the Transferred Properties, Realty received $44,425,00 in cash and 150,000 shares of the common stock of Pacific. In addition, Realty was relieved of $44,290,000 of mortgage debt on the Transferred Properties. In October 1994, Realty completed the second part of the transaction, the sale of its interest in Baldwin Industrial Park to Pacific and Pacific delivered to Realty an additional 634,419 shares of Pacific common stock as consideration for the second part of the transaction and the corporate headquarters and other net assets. As a result of the sale, Baldwin Industrial Park ceased to be a consolidated joint venture which resulted in a reduction in mortgage debt of $9,415,000. The above transactions resulted in a loss of $10,974,000, which was reflected in the Realty and Combined Realty and Operating Company statements of operations for the year ended December 31, 1993. As of September 30, 1995, Realty owned 16.3% of Pacific's common stock and accounted for its investment by the equity method of accounting. The closing price of Pacific's common stock on the American Stock Exchange, on September 29, 1995 was $16.25 per share. Financial information relating to Pacific, which is a separate public company, is available from the Securities and Exchange Commission (Commission file number 1-12546). 14 NOTE 4 - DISPOSITION OF NON-CORE REAL ESTATE ASSETS During the quarter ended September 30, 1995, Realty adopted a plan to dispose of its non-core real estate assets and, accordingly, reduced the book value of these assets to their estimated realizable values, resulting in a one- time charge of $34,500,000. The disposition plan will be undertaken in an orderly manner and was influenced by Realty's increased focus on the development of its Arcadia property. The assets to be disposed of have an adjusted carrying value of $32,690,000 and consist of six neighborhood shopping centers located in Southern California and Arizona; commercial office buildings in Santa Ana and Upland, California; and an investment in Joppa Associates, a partnership which owns a vacant retail facility and undeveloped land adjacent to the Towson Town Center regional shopping center in Maryland. Also included in the one-time charge was a $1,500,000 reserve against an under collateralized note receivable which was required to state the receivable at net realizable value. Included in the results of operations for the nine months ended September 30, 1995 is a loss of $848,000 relating to the non-core real estate assets. NOTE 5 - CARD CLUB WRITE-OFFS On August 5, 1995, the management of Bell Jackpot Casino, which was not affiliated with Realty, citing intense competition from larger and more established nearby card clubs, closed the Bell Jackpot Casino, in Bell, California. As a result of this action, during the 1995 third quarter, Realty wrote-off the $2,000,000 it paid for an option to acquire a 50% interest in the operation of the casino. Additionally, in the 1995 third quarter, Realty charged $480,000 of development costs for the proposed Irwindale Palace Casino, in Irwindale, California, to general and administrative expense. Realty discontinued its involvement in the card club following the defeat of an October 24, 1995 Irwindale ballot measure to permit card clubs in Irwindale. NOTE 6 - SUBSEQUENT EVENT On November 6, 1995, Realty completed an early and reduced payoff of $11,600,000 of secured debt on the Civic Center Office Building, in Santa Ana, California. The early payoff of $7,500,000 was based on mutual agreement with the lender and will result in an extraordinary gain on the early extingushment of debt in the 1995 fourth quarter of $4,100,000. 15 ITEM 2. MANAGEMENTS' DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS. THE SANTA ANITA COMPANIES The Companies' results of operations for the three months and nine months ended September 30, 1995 reflect several non-recurring charges. Management believes that income before non-recurring items provides a supplemental measure of the results of operations of the Companies during these periods. Income before non-recurring items reconciles to net income as follows:
THREE MONTHS ENDED NINE MONTHS ENDED SEPTEMBER 30, SEPTEMBER 30, --------------------------- --------------------------- 1995 1994 1995 1994 ------------ --------- ------------ ---------- (Unaudited) (Unaudited) Income (loss) before non-recurring items $ (1,255,000) $(866,000) $ 7,409,000 $6,690,000 Non-recurring items: Costs of equity offering - - (750,000) - Card club option write-off (2,000,000) - (2,000,000) - Program for disposition of non-core real estate assets (34,500,000) - (34,500,000) - Write-down of turf course - - (432,000) - ------------ --------- ------------ ---------- Net income (loss) as reported $(37,755,000) $(866,000) $(30,273,000) $6,690,000 ============ ========= ============ ========== Net income (loss) per common share Before non-recurring items $ (.11) $ (.08) $ .66 $ .60 ============ ========= ============ ========== As reported $ (3.35) $ (.08) $ (2.70) $ .60 ============ ========= ============ ==========
SANTA ANITA REALTY ENTERPRISES, INC. Realty is principally engaged in investing and holding real property. The following narrative discusses Realty's results of operations for the third quarter and the nine months ended September 30, 1995 and 1994, together with liquidity and capital resources as of September 30, 1995. RESULTS OF OPERATIONS - THIRD QUARTER 1995 COMPARED WITH THIRD QUARTER 1994 Realty's revenues are derived principally from the rental of real property. Total revenues for the three months ended September 30, 1995 were $6,767,000 compared with $6,544,000 for the three months ended September 30, 1994, an increase of 3.4%. The higher 1995 revenues were due primarily to an increase in Racetrack rental revenues and rental revenues from other properties, partially offset by lower revenues due to Realty selling its multifamily and industrial operations to Pacific Gulf Properties Inc. ("Pacific"), formerly a wholly-owned subsidiary, in 1994. For the full year, the single most significant source of rental revenue is the lease of Santa Anita Racetrack. Racetrack rental revenues for the 1995 third quarter were $375,000, compared with no revenues in 1994. The increase in rental revenues resulted primarily from new lease terms with LATC, whereby Realty now receives rental revenues from satellite wagering on races originating at certain other racetracks. The lease with LATC for the Santa Anita Racetrack expired in December 1994 and was amended and extended for an additional five years. Under the new lease terms, Realty receives 1.5% of on-track wagering on live races at Santa Anita Racetrack and 26.5% of wagering commissions from satellite wagering on races originating at Santa Anita Racetrack and on races originating from certain other racetracks. Under the old 16 ITEM 2. MANAGEMENTS' DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS. (CONTINUED) SANTA ANITA REALTY ENTERPRISES, INC. (Continued) RESULTS OF OPERATIONS - THIRD QUARTER 1995 COMPARED WITH THIRD QUARTER 1994 (Continued) lease, Realty received the same 1.5% of on-track wagering on live races at Santa Anita Racetrack and 40% of wagering commissions from satellite wagering only on races originating at Santa Anita Racetrack. During the 1995 and 1994 third quarters there was no live racing at Santa Anita Racetrack. Rental revenues from other real estate investments for the 1995 third quarter were $5,789,000, a decrease of 2.1% from revenues of $5,913,000 in the 1994 third quarter. The decrease in 1995 was due to the 1994 sale of Realty's multifamily and industrial operations, partially offset by a 14.3% increase in rental revenues from other properties. Costs and expenses for 1995, excluding non-recurring items totaling $36,500,000, were $7,936,000, an increase of 6.7% over costs and expenses of $7,440,000 in 1994. The increase was primarily due to the write-off of card club development costs of $480,000 in 1995 RESULTS OF OPERATIONS - NINE MONTHS ENDED SEPTEMBER 30, 1995 COMPARED WITH NINE MONTHS ENDED SEPTEMBER 30, 1994 Total revenues for the nine months ended September 30, 1995 were $26,629,000, compared with $31,349,000 for the nine months ended September 30, 1994, a decrease of 15.1%. The lower 1995 revenues were due primarily to Realty selling its multifamily and industrial operations to Pacific Gulf Properties Inc., formerly a wholly-owned subsidiary, in 1994 and to a decrease in racetrack rental revenues. Racetrack rental revenues for 1995 were $9,227,000, a decrease of 15.0% from revenues of $10,852,000 in 1994. The decrease in rental revenues resulted primarily from new lease terms with LATC and one fewer racing day in 1995, partially offset by an increase in average daily wagering. Rental revenues from other real estate investments for the 1995 nine months were $15,703,000 a decrease of 17.7% from revenues of $19,080,000 in the 1994 period. The decrease in 1995 was due to the 1994 sale of Realty's multifamily and industrial operations, partially offset by a 10.9% increase in rental revenues from other properties. Costs and expenses for 1995, excluding non-recurring items totaling $37,200,000, were $21,975,000, a decrease of 7.6% from costs and expenses of $23,791,000 in 1994. The decrease resulted primarily from the sale of Realty's multifamily and industrial operations and a decrease in minority interest in earnings of consolidated joint ventures. LIQUIDITY AND CAPITAL RESOURCES Realty has funds available from a combination of short- and long-term sources. Short-term sources included cash and short-term investments of $5,588,000 at September 30, 1995. The net increase in cash and cash equivalents for the nine months ended September 30, 1995 was $157,000 compared with an increase in cash and equivalents of $5,602,000 in the 1994 nine months. The decline in the increase in cash and equivalents of $5,445,000 was attributable to a decrease of $5,353,000 in cash provided by operating activities, and a decrease of $39,513,000 in cash provided by investing activities, offset by a decrease of $39,421,000 in cash used in financing activities. 17 ITEM 2. MANAGEMENTS' DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS. (CONTINUED) SANTA ANITA REALTY ENTERPRISES, INC. (Continued) LIQUIDITY AND CAPITAL RESOURCES (Continued) The decrease in cash provided by operating activities of $5,353,000 in 1995 was primarily due to a decrease in apartment and industrial operating income of $3,331,000, due to the sale of the multifamily and industrial operations in 1994, a decrease in racetrack rental revenues of $1,625,000 in 1995, due to new lease terms with LATC and $700,000 of equity offering costs and $480,000 of Irwindale development costs charged to 1995 operating earnings. These decreases in cash provided were partially offset by an increase in shopping center operating income of $1,140,000 in 1995. The decrease in cash provided by investing activities of $39,513,000 in 1995 is primarily due to proceeds from the disposition of the multifamily and industrial operations of $44,425,000 in 1994 and an increase in additions to other assets of $4,055,000 in 1995, primarily the purchase of the option on the Bell Casino and expenditures associated with the development of the Santa Anita Entertainment Center. These decreases in cash provided were partially offset by a decrease in real estate additions of $8,418,000 in 1995, primarily due to completion of the Fashion Park expansion in the fall of 1994 and to the increase in dividends received from Pacific Gulf Properties Inc., of $832,000 in 1995. The decrease in cash used in financing activities of $39,421,000 in 1995 is primarily due to the repayment of bank loans payable of $47,034,000 in 1994, primarily from proceeds from the disposition of the multifamily and industrial operations. Other decreases in cash used included additional borrowings of $4,400,000 in 1995 under the revolving credit agreement, a decrease in certain other liabilities of $3,166,000 in 1995, primarily the repayment of Fashion Park partnership advances, a decrease in dividends paid of $3,087,000 in 1995 and an increase in intercompany payables of $2,446,000 in 1995. These decreases in cash used were partially offset by proceeds from real estate loans payable of $21,077,000 in 1994 related to the construction loan on the Fashion Park expansion. At September 30, 1995, Realty's investment in Pacific common stock totaled 784,419 shares, was carried at $12,168,000 and had a current annual dividend rate of $1.56 per share. At September 30, 1995, Realty had borrowed $9,200,000 under it s $30,000,000 one-year credit facility with a commercial bank. Borrowings bear interest at Realty's option, at the prime rate, at LIBOR plus 1%, or at the six- month certificate of deposit rate plus 1%. At September 30, 1995, Realty was not in compliance with certain covenants of the credit facility due to the adjustment for the program for disposition of non-core real estate assets. The credit facility, scheduled to expire in November, has been extended one month to December 11, 1995. Realty is currently negotiating a new revolving credit facility. During the quarter ended September 30, 1995, Realty adopted a plan to dispose of non-core real estate assets as part of a long-term program to build shareholder value though the development of its prime Arcadia property. The disposition program, to be undertaken in an orderly manner, is expected to produce improved cash flow and net income, as well as, upon completion, reduce total debt by approximately $37 million. Reflecting the planned sale of these non-core properties, Realty has taken in the third quarter ended September 30, 1995, a one-time non-cash charge of $34,500,000 or $3.06 per share. The charge reduces the book value of these assets, all of which were acquired during the 1980s, to estimated realizable value. Realty's core real estate assets, principally located at Santa Anita Park in Arcadia, are included in its financial statements at historic book values which are significantly below current values. 18 ITEM 2. MANAGEMENTS' DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS. (CONTINUED) SANTA ANITA REALTY ENTERPRISES, INC. (Continued) LIQUIDITY AND CAPITAL RESOURCES (Continued) The non-core properties being disposed include: six neighborhood shopping centers located in Southern California and Arizona; commercial office buildings in Santa Ana and Upland, California; and a partnership interest in Joppa Associates, which owns a vacant retail building and a parcel of undeveloped land adjacent to the Towson Town Center in Maryland. Realty will retain its 32.5% interest in the Towson Town Center regional shopping mall. On November 6, 1995, Realty completed an early and reduced payoff of $11,600,000 of secured debt on the Civic Center Office Building, in Santa Ana, California. The early payoff of $7,500,000 was based on mutual agreement with the lender and will result in an extraordinary gain on the early extingushment of debt in the 1995 fourth quarter of $4,100,000. SANTA ANITA OPERATING COMPANY AND SUBSIDIARIES Operating Company is engaged in thoroughbred horse racing through its wholly-owned subsidiary, Los Angeles Turf Club, Incorporated ("LATC"), which leases the Santa Anita Racetrack ("Santa Anita") from Realty. The following narrative discusses Operating Company's results of operations for the third quarter and nine months ended September 30, 1995 and 1994 together with liquidity and capital resources as of September 30, 1995. RESULTS OF OPERATIONS - THIRD QUARTER 1995 COMPARED WITH THIRD QUARTER 1994 Horse racing revenues increased by 11.9% growing from $5,473,000 in the third quarter of 1994 to $6,125,000 in the third quarter of 1995 due to an increase in the supplemental rent from Oaktree Racing Association for its year ended May 31, 1995. In the third quarter ended September 30, Santa Anita Racetrack operated 20 days in 1995 and 1994 as a satellite wagering facility for Hollywood Park. Total and average daily attendance as a satellite wagering facility were up 1.2%, in the third quarter of 1995 compared with the year ago period. Total and average daily wagering were up 1.4%, for the third quarter of 1995 compared with the year ago period. Also, in the third quarter ended September 30, Santa Anita Racetrack operated 43 days in 1995 and 1994 as a satellite wagering facility for Del Mar. Total and average daily attendance as a satellite wagering facility were down 5.7%, in the third quarter of 1995 compared with the year ago period. Total and average daily wagering were down 1.0%, for the third quarter of 1995 compared with the year ago period. Horse racing operating costs were $4,944,000 (or 80.7% of horse racing revenues) in the third quarter of 1995 versus $4,970,000 (or 90.8% of horse racing revenues) in the comparable period in 1994. Depreciation expense in the third quarter of 1995 was $233,000 up 48.4% from $157,000 in 1994. General and administrative expenses were $686,000 in the third quarter of 1995, up 100% from $342,000 in the comparable year ago period, primarily due to the non cash charge resulting from the amortization of unearned compensation expense. Interest increased to $130,000 in the third quarter of 1995 from $120,000 in 1994. 19 ITEM 2. MANAGEMENTS' DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (CONTINUED) SANTA ANITA OPERATING COMPANY AND SUBSIDIARIES (Continued) RESULTS OF OPERATIONS - THIRD QUARTER 1995 COMPARED WITH THIRD QUARTER 1994 (Continued) Rental expense to Realty was $375,000 for the third quarter of 1995 compared with no expense in 1994. The rental expense increase reflects the new lease terms with Realty. Under the new lease terms, LATC pays to Realty 1.5% of the on-track wagering on live races at Santa Anita Racetrack and 26.5% of its wagering commissions from all satellite wagering. The old lease required LATC to pay Realty the same 1.5% of the on-track wagering on live races at Santa Anita Racetrack but required 40% its wagering commissions from satellite wagering during the live race meets. Due to the revenue and expense items previously discussed, Operating Company reported a net loss of $107,000 or $(.01) per share for the three months ended September 30, 1995, compared with net income of $10,000 or $.00 per share for the comparable period in 1994. RESULTS OF OPERATIONS - NINE MONTHS ENDED SEPTEMBER 30, 1995 COMPARED WITH NINE MONTHS ENDED SEPTEMBER 30, 1994 Horse racing revenues increased by 3.3%, growing from $54,853,000 in the first nine months of 1994 to $56,677,000 in the first nine months of 1995 due to an increase in total wagering, partially offset by revenue declines from fewer race days and lower on-track attendance. Total wagering from all sources in the first nine months of 1995 increased 7.2% and average daily wagering increased 8.9%. Total wagering and average daily wagering from live racing events during the first nine months of 1995 increased 8.3% and 10.9% compared with the same period last year. These increases were attributable to increased wagering at Southern California satellite locations (up 5.9%), at Northern California locations (up 153.0%) and at out-of-state locations (up 8.3%). However, on-track wagering decreased 9.4%, total on-track attendance at live racing events decreased 9.1% and average daily attendance decreased 6.9% during the same period. Management believes that these declines resulted from inclement weather during much of the first quarter, which caused the cancellation of three full race days in January (although the races lost in two of the canceled race days were "made up" by running an additional race on certain other race days) as well as the general trend toward satellite wagering. Live thoroughbred horse racing at Santa Anita Racetrack totaled 83 days in the first nine months of 1995 compared with 85 days in the first nine months of 1994. Also, for the nine months ended September 30, Santa Anita Racetrack operated 110 days in 1995 and 111 days in 1994 as a satellite wagering facility for Hollywood Park and Del Mar. Total and average daily attendance as a satellite wagering facility were down 3.7% and 2.8% in the first nine months of 1995 compared with the year ago period. Total and average daily wagering were up 1.1% and 2.0%, in the first nine months of 1995 compared with the year ago period. Horse racing operating costs were $37,976,000 (or 67.0% of horse racing revenues) in the first nine months of 1995 versus $38,597,000 (or 70.4% of horse racing revenues) in the comparable period in 1994. The decrease in horse racing operating costs, both on an absolute dollar basis and as a percentage of horse racing revenues, resulted from fewer race days in 1995. Depreciation expense in the first nine months of 1995 was $2,888,000 in 1995, up 22.6% from $2,355,000 in 1994. The $533,000 increase in depreciation expense was due primarily to the accelerated depreciation charge on the Santa Anita Racetrack turf course, which was replaced in the second quarter of 1995. General and administrative expenses were $4,775,000 in the first nine months of 1995, up 8.5% from $4,401,000 in the comparable year ago period. Interest expense decreased to $308,000 in the first nine months of 1995 from $338,000 in 1994. 20 ITEM 2. MANAGEMENTS' DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (CONTINUED) SANTA ANITA OPERATING COMPANY AND SUBSIDIARIES (Continued) RESULTS OF OPERATIONS - NINE MONTHS ENDED SEPTEMBER 30, 1995 COMPARED WITH NINE MONTHS ENDED SEPTEMBER 30, 1994 (Continued) Rental expense to Realty was $9,006,000 for the first nine months of 1995 compared with $10,563,000 reported in 1994. The decrease in rental expense of 14.7% reflects the new lease terms with Realty. Under the new lease terms, LATC pays to Realty 1.5% of the on-track wagering on live races at Santa Anita Racetrack and 26.5% of its wagering commissions from all satellite wagering. The old lease required LATC to pay Realty the same 1.5% of the on-track wagering on live races at Santa Anita Racetrack but required 40% of its wagering commissions from satellite wagering during the live race meets. Due to the revenue and expense items previously discussed, Operating Company reported net income of $2,211,000 or $.20 per share for the nine months ended September 30, 1995, compared with a net loss of $895,000 or $.08 per share for the comparable period in 1994. SEASONALITY Operating Company's operations are subject to seasonal fluctuations. Operating Company recognizes the majority of its revenues in the first quarter due to live racing activity at Santa Anita. Therefore, the results of operations for interim periods are not necessarily indicative of the results that may be expected for the full year. LIQUIDITY AND CAPITAL RESOURCES At September 30, 1995, Operating Company's sources of liquidity included cash and short-term investments of $4,697,000 and an unsecured line of credit with Realty of $10,000,000, of which $1,940,000 was utilized in connection with a guarantee of a capital lease. Operating Company's ability to utilize Realty's line of credit is dependent upon Realty's liquidity and capital resources. (See Item 2. "Managements' Discussion and Analysis of Financial Condition and Results of Operations - Santa Anita Realty Enterprises, Inc. - Liquidity and Capital Resources"). For the three and nine months ended September 30, 1995, short-term investments earned interest income of $112,000 and $466,000. The cash balances and related interest income from short-term investments reflect seasonal variations associated with the Santa Anita meet. During the meet, large cash balances and short-term investments are maintained by LATC, including amounts to be disbursed for payment of license fees payable to the state, purses payable to horse owners and uncashed winning pari-mutuel tickets payable to the public. Operating Company generated $4,798,000 more cash from operations for the nine months ended September 30, 1995 than for the comparable period last year. Net cash used in operating activities was $2,707,000 for the first nine months of 1995 versus $7,505,000 in the comparable period in 1994. The increase in cash from operations was primarily due to increased revenues and lower operating expenses associated with horse racing operations and the non cash charge resulting form the amortization of unearned compensation expense. Net cash used in investment activities was $3,246,000 for the first nine months of 1995 versus $1,640,000 in the comparable period in 1994. The $1,606,000 increase in cash used in investment activities was attributable to a higher level of capital improvements at Santa Anita Racetrack. The change from cash provided by financing activities in 1994 of $308,000 to cash used in financing activities in 1995 of $2,193,000 was primarily due to borrowings from Realty to finance common stock purchases used for restricted stock awards. 21 SANTA ANITA REALTY ENTERPRISES, INC. AND SANTA ANITA OPERATING COMPANY AND SUBSIDIARIES FORM 10-Q FOR THE QUARTER ENDING SEPTEMBER 30, 1995 PART II. OTHER INFORMATION ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K. (a) The following documents are filed as part of this report: Exhibit Number ------- 3.3 Bylaws of Santa Anita Realty Enterprises, Inc., as amended through October 1995 3.4 Bylaws of Santa Anita Operating Company, as amended through October 1995 27(a) Financial Data Schedule for Santa Anita Realty Enterprises, Inc. 27(b) Financial Data Schedule for Santa Anita Operating Company (b) Reports on Form 8-K. There were no reports on Form 8-K filed during the quarter ended September 30, 1995. 22 SIGNATURES Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, Realty and Operating Company have duly caused this report to be signed on their behalf by the undersigned, thereunto duly authorized. SANTA ANITA REALTY ENTERPRISES, INC. SANTA ANITA OPERATING COMPANY By: SHERWOOD C. CHILLINGWORTH By: STEPHEN F. KELLER ----------------------------- --------------------------------- Sherwood C. Chillingworth Stephen F. Keller Vice Chairman of the Board Chairman of the Board, President and Chief Executive Officer and Chief Executive Officer (Principal Executive Officer) (Principal Executive Officer) Date: November 9, 1995 Date: November 9, 1995 By: BRIAN L. FLEMING By: RICHARD D. BRUMBAUGH ----------------------------- --------------------------------- Brian L. Fleming Richard D. Brumbaugh Executive Vice President and Vice President-Finance and Chief Financial Officer Chief Financial Officer (Principal Financial and (Principal Financial and Accounting Officer) Accounting Officer) Date: November 9, 1995 Date: November 9, 1995 23 EX-3.3 2 BYLAWS OF SANTA ANITA EXHIBIT 3.3 REVISED 10-24-95 ---------------- BY-LAWS OF SANTA ANITA REALTY ENTERPRISES, INC. (a Delaware corporation) ARTICLE I Offices Section 1.1. Registered Office. The registered office shall be in the ----------------- City of Wilmington, County of New Castle, State of Delaware. Section 1.2. Other Offices. The Corporation may also have offices at such ------------- other places both within and without the State of Delaware as the Board of Directors may from time to time determine or the business of the Corporation may require. ARTICLE II Business Purpose and Investment Policy Section 2.1. Corporation Taxed as Real Estate Investment Trust. The ------------------------------------------------- Corporation shall conduct its business in such a manner as to be qualified to be taxed as 1 a real estate investment trust under Sections 856-858 of the Internal Revenue Code of 1954, as heretofore or hereafter amended. Section 2.2. Investment Policy. It is the general purpose of the ----------------- Corporation that the assets of the Corporation be invested principally in real property and interests in real estate. ARTICLE III Meetings of Stockholders Section 3.1. Place. All meetings of the stock-holders for the election of ----- directors shall be held at such place either within or without the State of Delaware as shall be designated from time to time by the Board of Directors and stated in the notice of the meeting. Meetings of stockholders for any other purpose may be held at such time or place, within or without the State of Delaware, as shall be stated in the notice of the meeting or in a duly executed waiver of notice thereof. Section 3.2. Annual Meetings. The annual meetings of stockholders shall --------------- be held on the third Thursday in May of each year at 10 o'clock A.M. of said day, the first such meeting to be held on the third Thursday in May 2 1981; provided, however, that should said day fall upon a legal holiday, then any such annual meeting of stockholders shall be held at the same time and place on the next day thereafter ensuing which is a full business day. At such meetings directors shall be elected, reports of the affairs of the Corporation shall be considered, and any other business may be transacted which is within the powers of the stockholders. If for any annual meeting the Board of Directors shall fix a different day or hour, such action shall be deemed an amendment of this Section 3.2 effective until the adjournment of that annual meeting sine die. ---- --- Written notice of each annual meeting shall be given to each stockholder entitled to vote, either personally or by mail or other means of written communication, charges prepaid, addressed to such stockholder at his address appearing on the books of the Corporation or given by him to the Corporation for the purpose of notice. If a stockholder gives no address, notice shall be deemed to have been given him if sent by mail or other means of written communication addressed to the place where the principal office of the Corporation is situated, or if published at least once in some newspaper of general circulation in the county in which said office is located. All such notices shall be sent to each stockholder entitled thereto not less than ten nor more than sixty days before each annual meeting. Such notices shall specify the 3 place, the day and the hour of such meeting and shall state such other matters if any, as may be expressly required by statute. Section 3.3. Special Meetings. Special meetings of the stockholders, for ---------------- any purpose or purposes whatsoever, may be called at any time by the Board of Directors. Except in special cases where other express provision is made by statute, notice of such special meetings shall be given in the same manner as for annual meetings of stockholders. Notices of any special meeting shall specify, in addition to the place, day and hour of such meeting, the general nature of the business to be transacted. Section 3.4. Business To Be Brought Before Meetings. In order to be --------------------------------------- properly brought before any meeting of stockholders held pursuant to this Article III, business (including the election of directors) must be (a) specified in the notice of meeting (or any supplement thereto) given by or at the direction of the Board of Directors, (b) otherwise properly brought before the meeting by or at the direction of the Board of Directors, or (c) otherwise properly brought before the meeting by a stockholder. In order for any such business to be properly brought before the meeting by a stockholder, the stockholder must have given timely notice thereof in writing to the Secretary of the Corporation. In order to be timely, a 4 stockholder's notice must be received at the principal executive offices of the Corporation not less than 60 days nor more than 90 days prior to the meeting; provided, however, that in the event that a meeting is called for a date other than that specified in the By-laws, and less than 75 days' prior public disclosure of such date is given, notice by the stockholder in order to be timely must be received by the Secretary of the Corporation not later than the close of business on the fifteenth (15th) calendar day following the day on which such public disclosure of the date of the meeting was made. If a stockholder intends to nominate a candidate or candidates for director at any meeting of stockholders, such stockholder's notice to the Secretary shall set forth the name, age, address and principal occupation of each such nominee and the amount and type of the Corporation's stock held by each such nominee, together with any additional information reasonably necessary to determine the eligibility of each such nominee and any information required to be disclosed in the solicitation of proxies in respect of each such nominee by Schedule 14A, as amended from time to time, or other applicable Rules and Regulations of the Securities and Exchange Commission. The notice to the Secretary shall also set forth the name, address and the amount and type of beneficial ownership of the Corporation's stock by the stockholder intending to nominate the candidate or candidates identified in the notice to the Secretary. Any 5 stockholder desiring to bring any other business before any annual meeting of stockholders shall set forth in such stockholder's notice to the Secretary (i) a brief description of the business desired to be brought before the annual meeting and the reasons for conducting such business at the meeting, (ii) the name and record address of the stockholder proposing such business, (iii) the class and number of shares of the Corporation's stock that are beneficially owned by such stockholder, and (iv) any material interest of such stockholder in such business. In order to be properly brought before any special meeting of stockholders (other than any special meeting held for the purpose of electing directors), business must be specified in the notice of meeting (or any supplement thereto) given by or at the direction of the Board of Directors. Notwithstanding anything in the By-laws to the contrary, no business (including the election of directors) shall be conducted at the meeting except in accordance with the procedures set forth in this Section 3.4; provided however, that nothing in this Section 3.4 shall preclude or be deemed or construed to preclude discussion by any stockholder of any business properly brought before the annual meeting of stockholders. The Chairman of the meeting shall, if the facts warrant, determine and declare to the meeting that business 6 was not properly brought before the meeting in accordance with the provisions of this Section 3.4, and if he should so determine, he shall so declare to the meeting and any such business not properly brought before the meeting shall not be transacted. Section 3.5. List of Stockholders. The officer who has charge of the -------------------- stock ledger of the Corporation shall prepare and make, at least ten days before every meeting of stockholders, a complete list of the stockholders entitled to vote at the meeting, arranged in alphabetical order, and showing the address of each stockholder. Such list shall be open to the examination of any stockholder, for any purpose germane to the meeting, during ordinary business hours, for a period of at least ten days prior to the meeting, either at a place within the city where the meeting is to be held, which place shall be specified in the notice of the meeting, or, if not so specified, at the place where the meeting is to be held. The list shall also be produced and kept at the time and place of the meeting during the whole time thereof, and may be inspected by any stockholder who is present. Section 3.6. Quorum. The holders of a majority of the stock issued and ------ outstanding and entitled to vote thereat, present in person or represented by proxy, shall constitute a quorum at all meetings of the stockholders for the transaction of business except as otherwise provided by 7 statute. If, however, such quorum shall not be present or represented at any meeting of stockholders, the stockholders entitled to vote thereat, present in person or represented by proxy, shall have power to adjourn the meeting from time to time, without notice other than announcement at the meeting, until a quorum shall be present or represented. At such adjourned meeting at which a quorum shall be present or represented any business may be transacted which might have been transacted at the meeting as originally noticed. If the adjournment is for more than thirty days or if after the adjournment a new record date is fixed for the adjourned meeting, a notice of the adjourned meeting shall be given to each stockholder of record entitled to vote at the meeting. Section 3.7. Questions Before Meeting. When a quorum is present at any ------------------------ meeting, the vote of the holders of a majority of the stock having voting power present in person or represented by proxy shall decide any question brought before such meeting unless the question is one upon which by express provision of the statutes, of these By-laws or of the Certificate of Incorporation, a different vote is required, in which case such express provision shall govern and control the decision of such question. Section 3.8. Action Without Meeting. Any action required or permitted to ---------------------- be taken by holders of stock of the 8 Corporation must be taken at a meeting of such holders and may not be taken by consent in writing. Section 3.9. Waiver of Notice. Whenever notice is required to be given ---------------- under the Delaware Corporation Law or the Certificate of Incorporation or the By-laws, a written waiver, signed by the person entitled to notice, whether before or after the time stated therein, shall be deemed equivalent to notice. Attendance of a person at a meeting shall constitute a waiver of notice of such meeting, except when the person attends a meeting for the express purpose of objecting at the beginning of the meeting to the transaction of any business because the meeting is not lawfully called or convened. Neither the business to be transacted at, nor the purpose of, any regular or special meeting of the stockholders, directors, or members of a committee of directors need be specified in any written waiver of notice unless so required by the Certificate of Incorporation. ARTICLE IV Directors Section 4.1. Size of Board. The Board of Directors shall consist of ten ------------- members, or as many as shall be determined from time to time by resolution of the Board. 9 Section 4.2. Election of Directors. The directors shall be divided into --------------------- three classes, designated Class I, Class II, and Class III, such classes to be as nearly equal in number as possible. At the annual meeting of stockholders in 1986, directors of Class I shall be elected to hold office for a term expiring at the next succeeding annual meeting, directors of Class II shall be elected to hold office for a term expiring at the second succeeding annual meeting, and directors of Class III shall be elected to hold office for a term expiring at the third succeeding annual meeting. Thereafter at each annual meeting of stockholders, directors shall be chosen for a term of three years to succeed those whose terms then expire and shall hold office until the third following annual meeting of stockholders and until the election of their respective successors. Directors need not be stockholders. Section 4.3. Vacancies. Vacancies and newly created directorships --------- resulting from any increase in the authorized number of directors may be filled by a majority of the directors then in office, though less than a quorum, or by a sole remaining director, and the directors so chosen shall hold office for the unexpired term of the vacant directorship, or, in the case of any increase in the number of directors, as designated by the directors then in office, consistent with the provisions of Section 4.2. If there are no directors in office, then an election of directors may be 10 held in the manner provided by statute. If, at the time of filling any vacancy or any newly created directorship the directors then in office shall constitute less than a majority of the whole Board (as constituted immediately prior to any such increase), the Court of Chancery may, upon application of any stockholder or stockholders holding at least ten percent of the total number of the shares at the time outstanding having the right to vote for such directors, summarily order an election to be held to fill any such vacancies or newly created directorships, or to replace the directors chosen by the directors then in office. No reduction of the authorized number of directors shall have the effect of removing any director prior to the expiration of his term of office. Section 4.4. Powers. The business of the Corporation shall be managed by ------ its Board of Directors which may exercise all such powers of the Corporation and do all such lawful acts and things as are not by statute or by the Certificate of Incorporation or by these By-laws directed or required to be exercised or done by the stockholders. Section 4.5. Meetings. The Board of Directors of the Corporation may hold -------- meetings, both regular and special, either within or without the State of Delaware. 11 Section 4.6. First Meeting. The first meeting of each newly elected Board ------------- of Directors shall be held immediately following the annual meeting of stockholders at which such directors are elected and no notice of such meeting shall be necessary to the newly elected directors in order legally to constitute the meeting, provided a quorum shall be present; or the meeting may be held at such time and place as shall be specified in a notice given as hereinafter provided for special meetings of the Board of Directors, or as shall be specified in a written waiver signed by all of the directors. Section 4.7. Regular Meetings. Regular meetings of the Board may be held ---------------- without notice at such time and at such place as shall from time to time be determined by the Board. Section 4.8. Special Meetings. Special meetings of the Board may be ---------------- called by the Secretary at the request of the Chairman of the Board or President on two business days' notice to each director, either personally or by mail, by telegram or by telephone; special meetings shall be called by the President or Secretary in like manner and on like notice on the written request of two directors. Section 4.9. Quorum. At all meetings of the Board a majority of the total ------ number of directors shall 12 constitute a quorum for the transaction of business and the act of a majority of the directors present at any meeting at which there is a quorum shall be the act of the Board of Directors, except as may be otherwise specifically provided by statute or by the Certificate of Incorporation. If a quorum shall not be present at any meeting of the Board of Directors, the directors present thereat may adjourn the meeting from time to time, without notice other than announcement at the meeting, until a quorum shall be present. Section 4.10. Conference Telephone. Unless otherwise restricted by the -------------------- Certificate of Incorporation or these By-laws, members of the Board of Directors (or any committee designated by the Board) may participate in a meeting of the Board or committee by means of conference telephone or similar communications equipment by means of which all persons participating in the meeting can hear each other. Section 4.11. Unanimous Consent. Unless otherwise restricted by the ----------------- Certificate of Incorporation or these By-laws, any action required or permitted to be taken at any meeting of the Board of Directors or of any committee thereof may be taken without a meeting, if all members of the Board or committee, as the case may be, consent thereto 13 in writing, and the writing or writings are filed with the minutes of proceedings of the Board or committee. Section 4.12. Committees. The Board of Directors may, by resolution ---------- passed by a majority of the whole Board, designate one or more committees, each committee to consist of two or more of the directors of the Corporation. The Board may designate one or more directors as alternate members of any committee, who may replace any absent or disqualified member at any meeting of the committee. Any such committee, to the extent provided in the resolution, shall have and may exercise the power of the Board of Directors in the management of the business and affairs of the Corporation, and may authorize the seal of the Corporation to be affixed to all papers which may require it; provided, however, that in the absence or disqualification of any member of such committee or committees, the member or members thereof present at any meeting and not disqualified from voting, whether or not he or they constitute a quorum, may unanimously appoint another member of the Board of Directors to act at the meeting in the place of any such absent or disqualified member. Section 4.13. Minutes. Each committee shall keep regular minutes of its ------- meetings and report the same to the Board of Directors when required. 14 Section 4.14. Fees and Compensation. Directors and members of committees --------------------- may receive such compensation, if any, for their services, and such reimbursement for expenses, as may be fixed or determined by resolution of the Board. ARTICLE V Notices Section 5.1. Methods of Notice. Whenever, under the provisions of the ----------------- Laws of the State of Delaware or of the Certificate of Incorporation or of these By-laws, notice is required to be given to any director or stockholder, it shall not be construed to mean personal notice, but notice may be given in writing, by mail, addressed to such director or stockholder, at his address as it appears on the records of the Corporation, with postage thereon prepaid, and such notice shall be deemed to be given at the time when the same shall be deposited in the United States mail. Notice to directors may also be given by telegram or telephone. Section 5.2. Waiver. Whenever any notice is required to be given under ------ the provisions of the statutes or of the Certificates of Incorporation or of these By-laws, a waiver thereof in writing, signed by the person or persons 15 entitled to said notice, whether before or after the time stated therein, shall be deemed equivalent thereto. ARTICLE VI Officers Section 6.1. Officers. The Officers of the Corporation shall be a -------- President, a Vice President, a Secretary and a Treasurer. The Corporation may also have, at the discretion of the Board of Directors, one or more additional Vice Presidents, one or more Assistant Secretaries, one or more Assistant Treasurers, and such other officers as may be appointed in accordance with the provisions of Section 6.3 and Section 6.5 of this Article. The Board of Directors may also choose, in its discretion, a Chairman of the Board and one or more Vice Chairmen of the Board. The positions of Chairman of the Board and Vice Chairman of the Board shall not constitute officers of the Corporation. One person may hold two or more offices. Section 6.2. Election. The officers of the Corporation, except such -------- officers as may be appointed in accordance with the provisions of Section 6.3 or Section 6.5 of this Article, shall be chosen annually by the Board of Directors, and each shall hold his office until he shall 16 resign or shall be removed or otherwise disqualified to serve, or his successor shall be elected and qualified. Section 6.3. Subordinate Officers, etc. The Board of Directors may -------------------------- appoint, and may empower the President to appoint, such other officers as the business of the Corporation may require, each of whom shall hold office for such period, have such authority and perform such duties as are provided in the By- laws or as the Board of Directors may from time to time determine. Section 6.4. Removal and Resignation. Any officer may be removed, either ----------------------- with or without cause, by the Board of Directors, at any regular or special meeting thereof, or, except in the case of an officer chosen by the Board of Directors, by any officer upon whom such power of removal may be conferred by the Board of Directors. Any officer may resign at any time by giving written notice to the Board of Directors or to the President, or to the Secretary of the Corporation. Any such resignation shall take effect at the date of the receipt of such notice or at any later time specified therein; and, unless otherwise specified therein, the acceptance of such resignation shall not be necessary to make it effective. 17 Section 6.5. Vacancies. A vacancy in any office because of death, --------- resignation, removal, disqualification or any other cause shall be filled in the manner prescribed in the By-laws for regular appointments to such office. Section 6.6. Salaries. The salaries and other compensation of all -------- officers of the Corporation shall be fixed by the Board of Directors. Section 6.7. Chairman of the Board. The Chairman of the Board shall, if --------------------- present, preside at all meetings of the Board of Directors. Section 6.7A. Vice Chairman of the Board. In the absence of the Chairman -------------------------- of the Board, the Vice Chairman of the Board designated by the Board of Directors shall preside at all meetings of the Board of Directors. Section 6.8. President. The President shall be the Chief Executive --------- Officer of the Corporation and shall, subject to the control of the Board of Directors, have general supervision, direction and control of the business and officers of the Corporation. He shall preside at all meetings of the stockholders and, in the absence of the Chairman of the Board and the Vice Chairman of the Board, or if there be none, at all meetings of the Board of Directors. He shall be ex-officio a member of all the standing 18 committees, including the Executive Committee, if any, and shall have the general powers and duties of management usually vested in the office of the president of a corporation, and shall have such other powers and duties as may be prescribed by the Board of Directors or the By-laws. Section 6.9. Vice President. In the absence or disability of the -------------- President, the Vice Presidents in order of their rank as fixed by the Board of Directors or, if not ranked, the Vice President designated by the Board of Directors, shall perform all the duties of the President, and when so acting shall have all the powers of, and be subject to all the restrictions upon, the President. The Vice Presidents shall have such other powers and perform such other duties as from time to time may be prescribed for them respectively by the Board of Directors or the By-laws. Section 6.10. Secretary. The Secretary shall keep or cause to be kept, at --------- the principal office or such other place as the Board of Directors may order, a book of minutes of all meetings of directors and stockholders, with the time and place of holding, whether regular or special, and, if special, how authorized, the notice thereof given, the names of those present at directors' meetings, the number of shares present or represented at stockholders meetings, and the proceedings thereof. The Secretary shall keep, or cause to be kept, at the principal office or at the 19 office of the Corporation's transfer agent, a share register, or a duplicate share register, showing the names of the stockholders and their addresses, the number and class of shares held by each, the number and date of certificates issued for the same, and the number and date of cancellation of every certificate surrendered for cancellation. The Secretary shall give, or cause to be given, notice of all the meetings of the stockholders and of the Board of Directors required by the By-laws or bylaw to be given, and he shall keep the seal of the Corporation in safe custody, and shall have such other powers and perform such other duties as may be prescribed by the Board of Directors or by the By-laws. Section 6.11. Treasurer. The Treasurer shall keep and maintain, or cause --------- to be kept and maintained, adequate and correct accounts of the properties and business transactions of the Corporation, including accounts of its assets, liabilities, receipts, disbursements, gains, losses, capital, surplus and shares. Any surplus, including earned surplus, paid-in surplus and surplus arising from a reduction of stated capital, shall be classified according to source and shown in a separate account. The books of account shall at all reasonable times be open to inspection by any director. 20 The Treasurer shall deposit all moneys and other valuables in the name and to the credit of the Corporation with such depositories as may be designated by the Board of Directors. He shall disburse the funds of the Corporation as may be ordered by the Board of Directors, shall render to the President and directors, whenever they request it, an account of all of his transactions as Treasurer and of the financial condition of the Corporation, and shall have such other powers and perform such other duties as may be prescribed by the Board of Directors or the By-laws. ARTICLE VII Stock and Stock Certificates Section 7.1. Right to Certificate. Every holder of stock in the -------------------- Corporation shall be entitled to have a certificate, signed by or in the name of the Corporation, by the Chairman of the Board of Directors or the President or a Vice President, and by the Treasurer or an Assistant Treasurer, or the Secretary or an Assistant Secretary of the Corporation, certifying the number of shares owned by him in the Corporation. Section 7.2. Statements Setting Forth Rights. If the Corporation shall be ------------------------------- authorized to issue more than one class of stock or more than one series of any class, the 21 designations, preferences and relative, participating, optional or other special rights of each class of stock or series thereof and the qualifications, limitations or restrictions of such preferences and rights shall be set forth in full or summarized on the face or back of the certificate which the Corporation shall issue to represent such class or series of stock, provided that, except as otherwise provided in Section 202 of the Corporation Law of Delaware, in lieu of the foregoing requirements, there may be set forth on the face or back of the certificate which the Corporation shall issue to represent such class or series of stock, a statement that the Corporation will furnish without charge to each stockholder who so requests the designations, preferences and relative, participating, optional or other special rights of each class of stock or series thereof and the qualifications, limitations and restrictions of such preferences and rights. Section 7.3. Facsimile Signatures. Any of or all the signatures on the -------------------- certificate may be a facsimile. In case any officer, transfer agent, or registrar who has signed or whose facsimile signature has been placed upon a certificate shall have ceased to be such officer, transfer agent, or registrar before such certificate is issued, it may be issued by the Corporation with the same effect as if he were such officer, transfer agent, or registrar at the date of issue. 22 Section 7.4. Lost Certificates. Except as hereinafter in this section ----------------- provided, no new certificate for shares shall be issued in lieu of an old one unless the latter is surrendered and cancelled at the same time. The Board of Directors may, however, in case any certificate for shares is lost, stolen, mutilated or destroyed, authorize the issuance of a new certificate in lieu thereof, upon such terms and conditions, including reasonable indemnification of the Corporation, as the Board shall determine. Section 7.5. Transfers of Stock. ------------------ (a) Subject to paragraphs (b), (c) and (d) of this Section 7.5, upon surrender to any transfer agent of the Corporation of a certificate for shares of the Corporation duly endorsed or accompanied by proper evidence of succession, assignment or authority to transfer, it shall be the duty of the Corporation to issue a new certificate to the person entitled thereto, cancel the old certificate and record the transaction upon its books. (b) Subject to the provisions of subparagraph (vi) of this paragraph (b), beginning at the time that (A) the merger of Santa Anita Consolidated, Inc. ("Santa Anita") into the Corporation and (B) the payment by the Corporation of the dividend in kind of the shares of Santa Anita Operating Company, a Delaware corporation ("Operating 23 Company"), shall have both occurred (hereinafter called the "effective time of the restriction"), and continuing thereafter until such time as the limitation on transfer provided for in the Pairing Agreement between the Corporation and Operating Company shall be terminated in the manner therein provided: (i) The shares of common stock of the Corporation shall not be transferable, and shall not be transferred on the books of the Corporation, unless (1) a simultaneous transfer is made by the same transferor to the same transferee, or (2) such transferor has previously arranged with Operating Company for the transfer to the transferee, of a like number of common shares of Operating Company and such shares are paired with one another. (ii) Except for certificates representing shares of common stock of this Corporation referred to in subparagraph (vi) below, each certificate evidencing ownership of shares of common stock of this Corporation (including certificates issued by Santa Anita) issued and not cancelled prior to the effective time of the restriction shall be deemed to evidence a like number of shares of common stock of Operating Company. 24 (iii) Except for certificates representing common stock of this Corporation referred to in subparagraph (vi) below, any registered holder of a certificate evidencing ownership of shares of common stock of the Corporation (including certificates issued by Santa Anita) issued prior to the effective time of the restriction may, upon request and presentation of said certificate to the Corporation's transfer agent, obtain in substitution therefor a certificate or certificates registered in such holder's name evidencing the same number of shares of common stock of the Corporation and a like number of common shares of Operating Company. (iv) A conspicuous legend shall be placed on the face of each certificate evidencing ownership of shares of common stock of the Corporation issued after the effective time of the restriction, referring to the restrictions on transfer set forth in the Corporation's By-laws. (v) For purposes of this paragraph (b) only, the terms "common stock" and "common shares" shall include preferred stock which is convertible into shares of common stock. 25 (vi) Notwithstanding the other provisions of this paragraph (b), any stockholder whose ownership of Operating Company common stock at the effective time of the restriction would be deemed, after application of the attribution rules of the Internal Revenue Code of 1954 (the "Code"), to result in the Corporation owning, directly or indirectly, more than 9.25% of the Operating Company common stock will not be subject to the restrictions imposed by this paragraph (b) to the extent that such ownership would cause the Corporation, directly or indirectly, to be deemed to own, after application of the attribution rules of the Code, more than 9.25% of the total number of the outstanding shares of Operating Company, provided that (1) a sufficient amount of Operating Company common stock (or the right to receive such common stock) which would otherwise be paired with common stock of the Corporation is sold to a transferee so that the Corporation, directly or indirectly, after application of the attribution rules of the Code, will not own in excess of 9.25% of the outstanding Operating Company common stock, (2) all holders of the unpaired shares enter into an agreement, satisfactory to the Boards of Directors of the Corporation, Operating Company and Santa Anita, providing that such shares not be transferable by sale or any other means, without arranging for such shares to be paired with an equal 26 number of shares of Operating Company, unless such sale is made to the Corporation or Operating Company, and (3) such stockholder executes a waiver of any claims he or she may have arising out of the close business relationship between the Corporation and Operating Company and claims arising out of conflicts of interest inherent in such business relationship. The other provisions of this paragraph (b) shall apply to all shares of the Corporation otherwise held by any stockholder unless they are specifically exempted by this subparagraph (vi). (c) If the Board of Directors shall at any time and in good faith be of the opinion that direct or indirect ownership of shares of either common stock or preferred stock, or both, of the Corporation has or may become concentrated to an extent which would cause this Corporation to fail to qualify or be disqualified as a real estate investment trust by virtue of Section 856(a)(5) and (6) of the Code, or similar provisions of successor statutes, the Board of Directors shall have the power (i) by lot or other means deemed equitable by them to call for purchase from any stockholder of the Corporation such number of shares sufficient in the opinion of the Board of Directors to maintain or bring the direct or indirect ownership of shares of stock of the Corporation into conformity with the requirements of said Section 856(a)(5) and (6) and (ii) to 27 refuse to register the transfer of shares of stock to any person whose acquisition of such shares would, in the opinion of the Board of Directors, result in the Corporation being unable to conform to the requirements of said Section 856(a)(5) and (6). The purchase price for the shares of stock purchased pursuant hereto shall be equal to the fair market value of such shares as reflected in the closing price for such shares on the principal stock exchange on which such shares are listed or, if such shares are not listed, then the last bid quotation for shares of stock as of the close of business on the date fixed by the Board of Directors for such purchase or, if no quotation for the shares is available, as determined in good faith by the Board of Directors. From and after the date fixed for purchase by the Board of Directors, the holder of any shares so called for purchase shall cease to be entitled to dividends, voting rights and other benefits with respect to such shares, excepting only the right to payment of the purchase price fixed as aforesaid. In order to further assure that ownership of the shares of stock does not become so concentrated, any transfer of shares that would prevent the Corporation from continuing to be qualified as a real estate investment trust by virtue of the application of Section 856(a)(5) and (6) of the Code shall be void ab initio and the intended -- ------ transferee of such shares shall be deemed never to have had an interest therein. If the foregoing provision is determined to be void or invalid by 28 virtue of any legal decision, statute, rule or regulation, then the transferee of such shares shall be deemed to have acted as agent on behalf of the Corporation in acquiring such shares and to hold such shares on behalf of the Corporation. For purposes of determining whether the Corporation is in compliance with Section 856(a)(5) and (6), Section 542(a)2) and Section 544 of the Code, or similar provisions of successor statutes, shall be applied. (d) In addition to the requirements of subparagraph (c) above, if the Board of Directors shall at any time and in good faith be of the opinion that direct or indirect ownership of shares of either common stock or preferred stock, or both, of the Corporation has or may become concentrated to an extent which would cause any rent to be paid to this Corporation to fail to qualify or be disqualified as rent from real property by virtue of Section 856(d)(2)(B) of the Code, or similar provisions of successor statutes, the Board of Directors shall have the power (i) by lot or other means deemed equitable by them to call for purchase from any stockholder of the Corporation such number of shares sufficient in the opinion of the Board of Directors to maintain or bring the direct or indirect ownership of shares of stock of the Corporation into conformity with the requirements of Section 856(d)(2)(B) and (ii) to refuse to register the transfer of shares of stock to any person whose acquisition of such shares would, in the 29 opinion of the Board of Directors, result in this Corporation being unable to conform to the requirements of said Section 856(d)(2)(B). The purchase price for the shares of stock purchased pursuant hereto shall be equal to the fair market value of such shares as reflected in the closing price for such shares on the principal stock exchange on which such shares are listed, or if such shares are not listed, then the last bid quotation for shares of stock, as of the close of business on the date fixed by the Board of Directors for such purchase or, if no quotation for the shares is available, as determined in good faith by the Board of Directors. From and after the date fixed for purchase by the Board of Directors, the holder of any shares so called for purchase shall cease to be entitled to dividends, voting rights and other benefits with respect to such shares, excepting only the right to payment of the purchase price fixed as aforesaid. In order to further assure that ownership of the shares of stock does not become so concentrated, any transfer of shares that would prevent this Corporation from continuing to be qualified as a real estate investment trust by virtue of the application of Section 856(d)(2)(B) of the Code shall be void ab -- initio and the intended transferee of such shares shall be deemed never to have - ------ had an interest therein. If the foregoing provision is determined to be void or invalid by virtue of any legal decision, statute, rule or regulation, then the transferee of such shares shall be deemed to have acted as agent on 30 behalf of the Corporation in acquiring such shares and to hold such shares on behalf of the Corporation. For purposes of determining whether this Corporation is in compliance with Section 856(d)(2)(B), Section 856(d)(5) of the Code, or similar provisions of successor statutes, shall be applied. (e) The stockholders of the Corporation shall upon demand disclose to the Board of Directors in writing such information with respect to their direct and indirect ownership of the stock of the Corporation as the Board of Directors deems necessary to determine whether the Corporation satisfies the provisions of Section 856(a)(5) and (6) and 856(d) of the Code and the regulations thereunder as the same shall be from time to time amended, or to comply with the requirements of any other taxing authority. Section 7.6. Form of Consideration. In purchasing such shares from --------------------- any shareholder in accordance with the foregoing provisions, the Corporation may pay consideration in the form of cash or, at the option of the Board of Directors, in the form of subordinated indebtedness of the Corporation. The principal amount of such subordinated indebtedness shall be equal to the purchase price of the shares (less amounts paid in cash, if any) and it shall have such other terms as may be determined by the Board of Directors at the time of issuance. 31 Section 7.7. Record Date. In order that the Corporation may ----------- determine the stockholders entitled to notice of or to vote at any meeting of stockholders or any adjournment thereto, or entitled to receive payment of any dividend or other distribution or allotment of any rights, or entitled to exercise any rights in respect of any change, conversion or exchange of stock or for the purpose of any other lawful action, the Board of Directors may fix, in advance, a record date, which shall not be more than sixty nor less than ten days before the date of such meeting, nor more than sixty days prior to any other action. A determination of stockholders of record entitled to notice of or to vote at a meeting of stockholders shall apply to any adjournment of the meeting; provided, however, that the Board of Directors may fix a new record date for the adjourned meeting. Section 7.8. Registered Stockholders. The Corporation shall be ----------------------- entitled to recognize the exclusive right of a person registered on its books as the owner of shares to receive dividends, and to vote as such owner, and shall not be bound to recognize any equitable or other claim to or interest in such share or shares on the part of any other person, whether or not it shall have express or other notice thereof, except as otherwise provided by the laws of Delaware. 32 Section 7.9. Transfer Agents and Registrars. The Board of Directors ------------------------------ may appoint one or more corporate transfer agents and registrars. Section 7.10. Dividends. Dividends upon the capital stock of the --------- Corporation may be declared by the Board of Directors at any regular or special meeting, pursuant to law. Dividends may be paid in cash, in property, or in shares of the capital stock. Section 7.11. Reserves. Before payment of any dividend, there may be -------- set aside out of any funds of the Corporation available for dividends such sum or sums as the directors from time to time, in their absolute discretion, think proper as a reserve or reserves to meet contingencies, or for equalizing dividends, or for repairing or maintaining any property of the Corporation, or for such other purpose as the directors shall think conducive to the interest of the Corporation, and the directors may modify or abolish any such reserve in the manner in which it was created. ARTICLE VIII Indemnification and Insurance Section 8.1. Right to Indemnification. Each person who was or is a ------------------------ party or is threatened to be made a party to or is involved in any action, suit or proceeding, 33 whether civil, criminal, administrative or investigative (hereinafter a "proceeding"), by reason of the fact that he or she, or a person of whom he or she is the legal representative, is or was a director or officer of the Corporation or is or was serving at the request of the Corporation as a director, officer, employer or agent of another corporation or of a partnership, joint venture, trust or other enterprise, including service with respect to employee benefit plans, whether the basis of such proceeding is alleged action or inaction in an official capacity or in any other capacity while serving as a director, officer, employee or agent, shall be indemnified and held harmless by the Corporation to the fullest extent permitted by the laws of Delaware, as the same exist or may hereafter be amended, against all costs, charges, expenses, liabilities and losses (including attorneys' fees, judgments, fines, ERISA excise taxes or penalties and amounts paid or to be paid in settlement) reasonably incurred or suffered by such person in connection therewith, and such indemnification shall continue as to a person who has ceased to be a director, officer, employee or agent and shall inure to the benefit of his or her heirs, executors and administrators; provided, however, that, except as provided in Section 8.2 hereof, the Corporation shall indemnify any such person seeking indemnification in connection with a proceeding (or part thereof) initiated by such person only if such proceeding (or part thereof) was authorized by the Board of Directors 34 of the Corporation. The right to indemnification conferred in this Article shall be a contract right and shall include the right to be paid by the Corporation the expenses incurred in defending any such proceeding in advance of its final disposition; provided, however, that, if the Delaware General Corporation Law requires, the payment of such expenses incurred by a director or officer in his or her capacity as a director or officer (and not in any other capacity in which service was or is rendered by such person while a director or officer, including, without limitation, service to an employee benefit plan) in advance of the final disposition of a proceeding, shall be made only upon delivery to the Corporation of an undertaking, by or on behalf of such director or officer, to repay all amounts so advanced if it shall ultimately be determined that such director or officer is not entitled to be indemnified under this Section or otherwise. The Corporation may, by action of its Board of Directors, provide indemnification to employees and agents of the Corporation with the same scope and effect as the foregoing indemnification of directors and officers. Section 8.2. Right of Claimant to Bring Suit. If a claim under ------------------------------- Section 8.1 of this Article is not paid in full by the Corporation within thirty days after a written claim has been received by the Corporation, the claimant may at any time thereafter bring suit against the Corporation to 35 recover the unpaid amount of the claim and, if successful in whole or in part, the claimant shall be entitled to be paid also the expense of prosecuting such claim. It shall be a defense to any such action (other than an action brought to enforce a claim for expenses incurred in defending any proceeding in advance of its final disposition where the required undertaking, if any is required, has been tendered to the Corporation) that the claimant has failed to meet a standard of conduct which makes it permissible under Delaware law for the Corporation to indemnify the claimant for the amount claimed. Neither the failure of the Corporation (including its Board of Directors, independent legal counsel, or its stockholders) to have made a determination prior to the commencement of such action that indemnification of the claimant is permissible in the circumstances because he or she has met such standard of conduct, nor an actual determination by the Corporation (including its Board of Directors, independent legal counsel, or its stockholders) that the claimant has not met such standard of conduct, shall be a defense to the action or create a presumption that the claimant has failed to meet such standard of conduct. Section 8.3. Non-Exclusivity of Rights. The right to indemnification ------------------------- and the payment of expenses incurred in defending a proceeding in advance of its final disposition conferred in this Article shall not be exclusive 36 of any other right which any person may have or hereafter acquire under any statute, provision of the Certificate of Incorporation, by-law, agreement, vote of stockholders or disinterested directors or otherwise. Section 8.4. Insurance. The Corporation may maintain insurance, at --------- its expense, to protect itself and any director, officer, employee or agent of the Corporation or another corporation, partnership, joint venture, trust or other enterprise against any such expense, liability or loss, whether or not the Corporation would have the power to indemnify such person against such expense, liability or loss under Delaware law. Section 8.5. Expenses as a Witness. To the extent that any director, --------------------- officer, employee or agent of the Corporation is by reason of such position, or a position with another entity at the request of the Corporation, a witness in any action, suit or proceeding, he or she shall be indemnified against all costs and expenses actually and reasonably incurred by him or her or on his or her behalf in connection therewith. Section 8.6. Indemnity Agreements. The Corporation may enter into -------------------- agreements with any director, officer, employee or agent of the Corporation providing for 37 indemnification to the full extent permitted by Delaware law. ARTICLE IX General Provisions Section 9.1. Annual Reports. Not later than one hundred twenty -------------- (120) days after the close of each fiscal year of the Corporation, the Board of Directors shall mail a report of the business and operation of the Corporation during such fiscal year to the stockholders. The report shall be in such form and have such content as the Board deems proper. This report shall include a balance sheet and a statement of income and surplus and a statement of changes in financial position of the Corporation. Such financial statements shall be accompanied by the report of an independent certified public accountant thereon. Section 9.2. Quarterly Reports. Within 90 days after the close of ----------------- each of the first three quarters of each fiscal year of the Corporation, the Board of Directors shall send interim reports to the stockholders, having such form and content as the Board of Directors deems proper. 38 Section 9.3. Fiscal Year. The fiscal year of the Corporation shall ----------- be fixed by resolution of the Board of Directors. Section 9.4. Seal. The corporate seal shall have inscribed thereon ---- the name of the Corporation, the year of its organization and the words "Corporate Seal, Delaware". The seal may be used by causing it or a facsimile thereof to be impressed or affixed or reproduced or otherwise. Section 9.5. Checks, Drafts, etc. All checks, drafts or other orders ------------------- for payment of money, notes or other evidences of indebtedness, issued in the name of or payable to the Corporation, shall be signed or endorsed by such person or persons and in such manner as, from time to time, shall be determined by resolution of the Board of Directors. Section 9.6. Representation of Shares of Other Corporations. The ---------------------------------------------- President or any Vice President and the Secretary or Assistant Secretary of this Corporation are authorized to vote, represent and exercise on behalf of this Corporation all rights incident to any and all shares of any other corporation or corporations standing in the name of this Corporation. The authority herein granted to said officers to vote or represent on behalf of this Corporation any and all shares held by this Corporation in any other corporation or corporations may be exercised either by such 39 officers in person or by any other person authorized so to do by proxy or power of attorney duly executed by said officers. Section 9.7. Employee Stock Purchase Plans. The Corporation may, ----------------------------- upon terms and conditions herein authorized, provide and carry out an employee stock purchase plan or plans providing for the issue and sale, or for the granting of options for the purchase, of its unissued shares, or of issued shares purchased or to be purchased or acquired, to employees of the Corporation or of any subsidiary or to a trustee on their behalf. Such plan may provide for such consideration as may be fixed therein, for the payment of such shares in installments or at one time and for aiding any such employees in paying for such shares by compensation for services or by loans from the Corporation or otherwise. Any such plan before becoming effective must be approved or authorized by the Board of Directors of the Corporation. Such plan may include, among other things, provisions determining or providing for the determination by the Board of Directors, or any committee thereof designated by the Board of Directors, of: (a) eligibility of employees (including officers and directors) to participate therein, (b) the number and class of shares which may be subscribed for or for which options may be granted under the plan, 40 (c) the time and method of payment therefor, (d) the price or prices at which such shares shall be issued or sold, (e) whether or not title to the shares shall be reserved to the Corporation until full payment therefor, (f) the effect of the death of an employee participating in the plan or termination of his employment, including whether there shall be any option or obligation on the part of the Corporation to repurchase the shares thereupon, (g) restrictions, if any, upon the transfer of the shares, and the time limits and termination of the plan, (h) termination, continuation or adjustments of the rights of participating employees upon the happening of specified contingencies, including increase or decrease in the number of issued shares of the class covered by the plan without receipt of consideration by the Corporation or any exchange of shares of such class for stock or securities of another corporation pursuant to a reorganization or merger, consolidation or dissolution of the Corporation, (i) amendment, termination, interpretation and administration of such plan by the Board of Directors or any committee thereof designated by the Board of Directors, and (j) any other matters, not repugnant to law, as may be included in the plan as approved or authorized by the Board of Directors or any such committee. 41 ARTICLE X Amendments Section 10.1. Power of Stockholders. New By-laws may be adopted or --------------------- these By-laws may be amended or repealed by the stockholders only by the affirmative vote of at least 80% of the voting power of the Corporation, except as otherwise provided by law. Any proposal to amend or repeal, or adopt any provisions inconsistent with, Article Tenth of the Certificate of Incorporation shall require for approval the affirmative vote of at least 80% of the voting power of the Corporation. Section 10.2. Power of Directors. Subject to the right of ------------------ stockholders as provided in Section 10.1 of this Article X to adopt, amend or repeal By-laws, By-laws may be adopted, amended or repealed by the Board of Directors; provided, however, that Section 7.5 of these By-laws may not be amended or repealed except with approval of the holders of 80% of the outstanding common stock of the Corporation. 42 EX-3.4 3 BYLAWS OF SANTA ANITA EXHIBIT 3.4 REVISED 10-24-95 ---------------- BY-LAWS OF SANTA ANITA OPERATING COMPANY (a Delaware corporation) ARTICLE I Offices Section 1.1. Registered Office. The registered office shall be in the ----------------- City of Wilmington, County of New Castle, State of Delaware. Section 1.2. Other Offices. The Corporation may also have offices at such ------------- other places both within and without the State of Delaware as the Board of Directors may from time to time determine or the business of the Corporation may require. ARTICLE II Meetings of Stockholders Section 2.1. Place. All meetings of the stockholders for the election of ----- directors shall be held at such place either within or without the State of Delaware as 1 shall be designated from time to time by the Board of Directors and stated in the notice of the meeting. Meetings of stockholders for any other purpose may be held at such time or place, within or without the State of Delaware, as shall be stated in the notice of the meeting or in a duly executed waiver of notice thereof. Section 2.2. Annual Meetings. The annual meetings of stockholders shall --------------- be held on the third Thursday in May of each year at 10 o'clock A.M. of said day, the first such meeting to be held on the third Thursday in May 1981; provided, however, that should said day fall upon a legal holiday, then any such annual meeting of stockholders shall be held at the same time and place on the next day thereafter ensuing which is a full business day. At such meetings directors shall be elected, reports of the affairs of the Corporation shall be considered, and any other business may be transacted which is within the powers of the stockholders. If for any annual meeting the Board of Directors shall fix a different day or hour, such action shall be deemed an amendment of this Section 2.2 effective until the adjournment of that annual meeting sine die. ---- --- Written notice of each annual meeting shall be given to each stockholder entitled to vote, either personally or by mail or other means of written communication, charges prepaid, addressed to such stockholder at 2 his address appearing on the books of the Corporation or given by him to the Corporation for the purpose of notice. If a stockholder gives no address, notice shall be deemed to have been given him if sent by mail or other means of written communication addressed to the place where the principal office of the Corporation is situated, or if published at least once in some newspaper of general circulation in the county in which said office is located. All such notices shall be sent to each stockholder entitled thereto not less than ten nor more than sixty days before each annual meeting. Such notices shall specify the place, the day and the hour of such meeting and shall state such other matters if any, as may be expressly required by statute. Section 2.3. Special Meetings. Special meetings of the stockholders, for ---------------- any purpose or purposes whatsoever, may be called at any time by the Board of Directors. Except in special cases where other express provision is made by statute, notice of such special meetings shall be given in the same manner as for annual meetings of stockholders. Notices of any special meeting shall specify, in addition to the place, day and hour of such meeting, the general nature of the business to be transacted. Section 2.4. Business To Be Brought Before Meeting. In order to be ------------------------------------- properly brought before any meeting 3 of stockholders held pursuant to this Article II, business (including the election of directors) must be (a) specified in the notice of meeting (or any supplement thereto) given by or at the direction of the Board of Directors, (b) otherwise properly brought before the meeting by or at the direction of the Board of Directors, or (c) otherwise properly brought before the meeting by a stockholder. In order for any such business to be properly brought before the meeting by a stockholder, the stockholder must have given timely notice thereof in writing to the Secretary of the Corporation. In order to be timely, a stockholder's notice must be received at the principal executive offices of the Corporation not less than 60 days nor more than 90 days prior to the meeting; provided, however, that in the event that a meeting is called for a date other than that specified in the By-laws, and less than 75 days' prior public disclosure of such date is given, notice by the stockholder in order to be timely must be received by the Secretary of the Corporation not later than the close of business on the fifteenth (15) calendar day following the day on which such public disclosure of the date of the meeting was made. If a stockholder intends to nominate a candidate or candidates for director at any meeting of stockholders, such stockholder's notice to the Secretary shall set forth the name, age, address and principal occupation of each such nominee and the amount and type of the Corporation's stock held by each such nominee, together 4 with any additional information reasonably necessary to determine the eligibility of each such nominee and any information required to be disclosed in the solicitation of proxies in respect of each such nominee by Schedule 14A, as amended from time to time, or other applicable Rules and Regulations of the Securities and Exchange Commission. The notice to the Secretary shall also set forth the name, address and the amount and type of beneficial ownership of the Corporation's stock by the stockholder intending to nominate the candidate or candidates identified in the notice to the Secretary. Any stockholder desiring to bring any other business before any annual meeting of stockholders shall set forth in such stockholder's notice to the Secretary (i) a brief description of the business desired to be brought before the annual meeting and the reasons for conducting such business at the meeting, (ii) the name and record address of the stockholder proposing such business, (iii) the class and number of shares of the Corporation's stock that are beneficially owned by such stockholder, and (iv) any material interest of such stockholder in such business. In order to be properly brought before any special meeting of stockholders (other than any special meeting held for the purpose of electing directors), business must be specified in the notice of meeting (or any supplement thereto) given by or at the direction of the Board of Directors. 5 Notwithstanding anything in the By-laws to the contrary, no business (including the election of directors) shall be conducted at the meeting except in accordance with the procedures set forth in this Section 2.4; provided, however, that nothing in this Section 2.4 shall preclude or be deemed or construed to preclude discussion by any stockholder of any business properly brought before the annual meeting of stockholders. The Chairman of the meeting shall, if the facts warrant, determine and declare to the meeting that business was not properly brought before the meeting in accordance with the provisions of this Section 2.4, and if he should so determine, he shall so declare to the meeting and any such business not properly brought before the meeting shall not be transacted. Section 2.5. List of Stockholders. The officer who has charge of the -------------------- stock ledger of the Corporation shall prepare and make, at least ten days before every meeting of stockholders, a complete list of the stockholders entitled to vote at the meeting, arranged in alphabetical order, and showing the address of each stockholder. Such list shall be open to the examination of any stockholder, for any purpose germane to the meeting, during ordinary business hours, for a period of at least ten days prior to the meeting, either at a place within the city where the meeting is to be held, 6 which place shall be specified in the notice of the meeting, or, if not so specified, at the place where the meeting is to be held. The list shall also be produced and kept at the time and place of the meeting during the whole time thereof, and may be inspected by any stockholder who is present. Section 2.6. Quorum. The holders of a majority of the stock issued and ------ outstanding and entitled to vote thereat, present in person or represented by proxy, shall constitute a quorum at all meetings of the stockholders for the transaction of business except as otherwise provided by statute. If, however, such quorum shall not be present or represented at any meeting of stockholders, the stockholders entitled to vote thereat, present in person or represented by proxy, shall have power to adjourn the meeting from time to time, without notice other than announcement at the meeting, until a quorum shall be present or represented. At such adjourned meeting at which a quorum shall be present or represented any business may be transacted which might have been transacted at the meeting as originally noticed. If the adjournment is for more than thirty days or if after the adjournment a new record date is fixed for the adjourned meeting, a notice of the adjourned meeting shall be given to each stockholder of record entitled to vote at the meeting. Section 2.7. Questions Before Meeting. When a quorum is present at any ------------------------ meeting, the vote of the holders of 7 a majority of the stock having voting power present in person or represented by proxy shall decide any question brought before such meeting unless the question is one upon which by express provision of the statutes, of these By-laws or of the Certificate of Incorporation, a different vote is required, in which case such express provision shall govern and control the decision of such question. Section 2.8. Action Without Meeting. Any action required or permitted to ---------------------- be taken by holders of stock of the Corporation must be taken at a meeting of such holders and may not be taken by consent in writing. Section 2.9. Waiver of Notice. Whenever notice is required to be given ---------------- under the Delaware Corporation Law or the Certificate of Incorporation or the By-laws, a written waiver, signed by the person entitled to notice, whether before or after the time stated therein, shall be deemed equivalent to notice. Attendance of a person at a meeting shall constitute a waiver of notice of such meeting, except when the person attends a meeting for the express purpose of objecting at the beginning of the meeting to the transaction of any business because the meeting is not lawfully called or convened. Neither the business to be transacted at, nor the purpose of, any regular or special meeting of the stockholders, directors, or members of a committee of directors need be specified in any written 8 waiver of notice unless so required by the Certificate of Incorporation. ARTICLE III Directors Section 3.1. Size of Board. The Board of Directors shall consist of nine ------------- members, or as many as shall be determined from time to time by resolution of the Board. Section 3.2. Election of Directors. The directors shall be divided into --------------------- three classes, designated Class I, Class II, and Class III, such classes to be as nearly equal in number as possible. At the annual meeting of stockholders in 1986, directors of Class I shall be elected to hold office for a term expiring at the next succeeding annual meeting, directors of Class II shall be elected to hold office for a term expiring at the second succeeding annual meeting, and directors of Class III shall be elected to hold office for a term expiring at the third succeeding annual meeting. Thereafter at each annual meeting of stockholders, directors shall be chosen for a term of three years to succeed those whose terms then expire and shall hold office until the third following annual meeting of stockholders and until the election of their respective successors. Directors need not be stockholders. 9 Section 3.3. Vacancies. Vacancies and newly created directorships --------- resulting from any increase in the authorized number of directors may be filled by a majority of the directors then in office, though less than a quorum, or by a sole remaining director, and the directors so chosen shall hold office for the unexpired term of the vacant directorship, or, in the case of any increase in the number of directors, as designated by the directors then in office, consistent with the provisions of Section 3.2. If there are no directors in office, then an election of directors may be held in the manner provided by statute. If, at the time of filling any vacancy or any newly created directorship, the directors then in office shall constitute less than a majority of the whole Board (as constituted immediately prior to any such increase), the Court of Chancery may, upon application of any stockholder or stockholders holding at least ten percent of the total number of the shares at the time outstanding having the right to vote for such directors, summarily order an election to be held to fill any such vacancies or newly created directorships, or to replace the directors chosen by the directors then in office. No reduction of the authorized number of directors shall have the effect of removing any director prior to the expiration of his term of office. 10 Section 3.4. Powers. The business of the Corporation shall be managed by ------ its Board of Directors which may exercise all such powers of the Corporation and do all such lawful acts and things as are not by statute or by the Certificate of Incorporation or by these By-laws directed or required to be exercised or done by the stockholders. Section 3.5. Meetings. The Board of Directors of the Corporation may hold -------- meetings, both regular and special, either within or without the State of Delaware. Section 3.6. First Meeting. The first meeting of each newly elected Board ------------- of Directors shall be held immediately following the annual meeting of stockholders at which such directors are elected and no notice of such meeting shall be necessary to the newly elected directors in order legally to constitute the meeting, provided a quorum shall be present; or the meeting may be held at such time and place as shall be specified in a notice given as hereinafter provided for special meetings of the Board of Directors, or as shall be specified in a written waiver signed by all of the directors. Section 3.7. Regular Meetings. Regular meetings of the Board may be held ---------------- without notice at such time and at such place as shall from time to time be determined by the Board. 11 Section 3.8. Special Meetings. Special meetings of the Board may be ---------------- called by the Secretary at the request of the Chairman of the Board or President on two business days' notice to each director, either personally or by mail, by telegram or by telephone; special meetings shall be called by the Chairman of the Board or Secretary in like manner and on like notice on the written request of two directors. Section 3.9. Quorum. At all meetings of the Board a majority of the total ------ number of directors shall constitute a quorum for the transaction of business and the act of a majority of the directors present at any meeting at which there is a quorum shall be the act of the Board of Directors, except as may be otherwise specifically provided by statute or by the Certificate of Incorporation. If a quorum shall not be present at any meeting of the Board of Directors, the directors present thereat may adjourn the meeting from time to time, without notice other than announcement at the meeting, until a quorum shall be present. Section 3.10. Conference Telephone. Unless otherwise restricted by the -------------------- Certificate of Incorporation or these By-laws, members of the Board of Directors (or any committee designated by the Board) may participate in a meeting of the Board or committee by means of conference 12 telephone or similar communications equipment by means of which all persons participating in the meeting can hear each other. Section 3.11. Unanimous Consent. Unless otherwise restricted by the ----------------- Certificate of Incorporation or these By-laws, any action required or permitted to be taken at any meeting of the Board of Directors or of any committee thereof may be taken without a meeting, if all members of the Board or committee, as the case may be, consent thereto in writing, and the writing or writings are filed with the minutes of proceedings of the Board or committee. Section 3.12. Committees. The Board of Directors may, by resolution ---------- passed by a majority of the whole Board, designate one or more committees, each committee to consist of two or more of the directors of the Corporation. The Board may designate one or more directors as alternate members of any committee, who may replace any absent or disqualified member at any meeting of the committee. Any such committee, to the extent provided in the resolution, shall have and may exercise the power of the Board of Directors in the management of the business and affairs of the Corporation, and may authorize the seal of the Corporation to be affixed to all papers which may require it; provided, however, that in the absence or disqualification of any member of such committee or committees, the member or 13 members thereof present at any meeting and not disqualified from voting, whether or not he or they constitute a quorum, may unanimously appoint another member of the Board of Directors to act at the meeting in the place of any such absent or disqualified member. Section 3.13. Minutes. Each committee shall keep regular minutes of its ------- meetings and report the same to the Board of Directors when required. Section 3.14. Fees and Compensation. Directors and members of committees --------------------- may receive such compensation, if any, for their services, and such reimbursement for expenses, as may be fixed or determined by resolution of the Board. ARTICLE IV Notices Section 4.1. Methods of Notice. Whenever, under the provisions of the ----------------- Laws of the State of Delaware or of the Certificate of Incorporation or of these By-laws, notice is required to be given to any director or stockholder, it shall not be construed to mean personal notice, but notice may be given in writing, by mail, addressed to such director or stockholder, at his address as it appears on the records 14 of the Corporation, with postage thereon prepaid, and such notice shall be deemed to be given at the time when the same shall be deposited in the United States mail. Notice to directors may also be given by telegram or telephone. Section 4.2. Waiver. Whenever any notice is required to be given under ------ the provisions of the statutes or of the Certificate of Incorporation or of these By-laws, a waiver thereof in writing, signed by the person or persons entitled to said notice, whether before or after the time stated therein, shall be deemed equivalent thereto. ARTICLE V Officers Section 5.1. Officers. The Officers of the Corporation shall be a -------- Chairman of the Board, a President, a Secretary and a Treasurer. The Corporation may also have, at the discretion of the Board of Directors, one or more Vice Presidents, one or more Assistant Secretaries, one or more Assistant Treasurers, and such other officers as may be appointed in accordance with the provisions of Section 5.3 and Section 5.5 of this Article. The Board of Directors may also choose, at its discretion, one or more Vice Chairmen of the Board, who shall not constitute officers of the Corporation. One person may hold two or more offices. 15 Section 5.2. Election. The officers of the Corporation, except such -------- officers as may be appointed in accordance with the provisions of Section 5.3 or Section 5.5 of this Article, shall be chosen annually by the Board of Directors, and each shall hold his office until he shall resign or shall be removed or otherwise disqualified to serve, or his successor shall be elected and qualified. Section 5.3. Subordinate Officers, etc. The Board of Directors may -------------------------- appoint, and may empower the Chairman of the Board to appoint, such other officers as the business of the Corporation may require, each of whom shall hold office for such period, have such authority and perform such duties as are provided in the By-laws or as the Board of Directors may from time to time determine. Section 5.4. Removal and Resignation. Any officer may be removed, either ----------------------- with or without cause, by the Board of Directors, at any regular or special meeting thereof, or, except in the case of an officer chosen by the Board of Directors, by any officer upon whom such power of removal may be conferred by the Board of Directors. Any officer may resign at any time by giving written notice to the Board of Directors or to the Chairman of the Board, or to the Secretary of the Corporation. Any such resignation shall take effect at the date of the receipt of 16 such notice or at any later time specified therein; and, unless otherwise specified therein, the acceptance of such resignation shall not be necessary to make it effective. Section 5.5. Vacancies. A vacancy in any office because of death, --------- resignation, removal, disqualification or any other cause shall be filled in the manner prescribed in the By-laws for regular appointments to such office. Section 5.6. Salaries. The salaries and other compensation of all -------- officers of the Corporation shall be fixed by the Board of Directors. Section 5.7. Chairman of the Board. The Chairman of the Board shall --------------------- preside at all meetings of the stockholders and all meetings of the Board of Directors. He shall be an ex-officio member of all standing committees, including the Executive Committee, if any, and shall have such other powers and duties as may be prescribed by the Board of Directors or the By-laws. Section 5.7A. Vice Chairman of the Board. In the absence of the Chairman -------------------------- of the Board, the Vice Chairman of the Board designated by the Board of Directors shall preside at meetings of the Board of Directors. 17 Section 5.8. President. The President shall be the Chief Executive --------- Officer of the Corporation and shall, subject to the control of the Board of Directors, have general supervision, direction and control of the Corporation. He shall be an ex-officio member of all standing committees, including the Executive Committee, if any, shall have the general powers and duties of management usually vested in the office of the chief executive officer of a corporation, and shall have such other powers and perform such other duties as from time to time may be prescribed for him by the Board of Directors or the By- laws. Section 5.9. Vice President. In the absence or disability of the Chairman -------------- of the Board and the President, the Vice Presidents in order of their rank as fixed by the Board of Directors or, if not ranked, the Vice President designated by the Board of Directors, shall perform all the duties of the Chairman of the Board and the President, and when so acting shall have all the powers of, and be subject to all the restrictions upon, the Chairman of the Board and the President. The Vice Presidents shall have such other powers and perform such other duties as from time to time may be prescribed for them respectively by the Board of Directors or the By-laws. Section 5.10. Secretary. The Secretary shall keep or cause to be kept, at --------- the principal office or such 18 other place as the Board of Directors may order, a book of minutes of all meetings of directors and stockholders, with the time and place of holding, whether regular or special, and, if special, how authorized, the notice thereof given, the names of those present at directors' meetings, the number of shares present or represented at stockholders' meetings, and the proceedings thereof. The Secretary shall keep, or cause to be kept, at the principal office or at the office of the Corporation's transfer agent, a share register, or a duplicate share register, showing the names of the stockholders and their addresses, the number and class of shares held by each, the number and date of certificates issued for the same, and the number and date of cancellation of every certificate surrendered for cancellation. The Secretary shall give, or cause to be given, notice of all the meetings of the stockholders and of the Board of Directors required by the By-laws or by law to be given, and he shall keep the seal of the Corporation in safe custody, and shall have such other powers and perform such other duties as may be prescribed by the Board of Directors or by the By-laws. Section 5.11. Treasurer. The Treasurer shall keep and maintain, or cause --------- to be kept and maintained, adequate and correct accounts of the properties and business transactions of the Corporation, including accounts of its 19 assets, liabilities, receipts, disbursements, gains, losses, capital, surplus and shares. Any surplus, including earned surplus, paid-in surplus and surplus arising from a reduction of stated capital, shall be classified according to source and shown in a separate account. The books of account shall at all reasonable times be open to inspection by any director. The Treasurer shall deposit all moneys and other valuables in the name and to the credit of the Corporation with such depositories as may be designated by the Board of Directors. He shall disburse the funds of the Corporation as may be ordered by the Board of Directors, shall render to the Chairman of the Board and directors, whenever they request it, an account of all of his transactions as Treasurer and of the financial condition of the Corporation, and shall have such other powers and perform such other duties as may be prescribed by the Board of Directors or the By-laws. ARTICLE VI Stock and Stock Certificates Section 6.1. Right to Certificate. Every holder of stock in the -------------------- Corporation shall be entitled to have a certificate, signed by or in the name of the Corporation, by 20 the Chairman of the Board of Directors or the President or a Vice President, and by the Treasurer or an Assistant Treasurer, or the Secretary or an Assistant Secretary of the Corporation, certifying the number of shares owned by him in the Corporation. Section 6.2. Statements Setting Forth Rights. If the Corporation shall be ------------------------------- authorized to issue more than one class of stock or more than one series of any class, the designations, preferences and relative, participating, optional or other special rights of each class of stock or series thereof and the qualifications, limitations or restrictions of such preferences and rights shall be set forth in full or summarized on the face or back of the certificate which the Corporation shall issue to represent such class or series of stock, provided that,except as otherwise provided in Section 202 of the Corporation Law of Delaware, in lieu of the foregoing requirements, there may be set forth on the face or back of the certificate which the Corporation shall issue to represent such class or series of stock, a statement that the Corporation will furnish without charge to each stockholder who so requests the designations, preferences and relative, participating, optional or other special rights of each class of stock or series thereof and the qualifications, limitations and restrictions of such preferences and rights. 21 Section 6.3 Facsimile Signatures. Any of or all the signatures on the -------------------- certificate may be a facsimile. In case any officer, transfer agent, or registrar who has signed or whose facsimile signature has been placed upon a certificate shall have ceased to be such officer, transfer agent, or registrar before such certificate is issued, it may be issued by the Corporation with the same effect as if he were such officer, transfer agent, or registrar at the date of issue. Section 6.4. Lost Certificates. Except as hereinafter in this section ----------------- provided, no new certificate for shares shall be issued in lieu of an old one unless the latter is surrendered and cancelled at the same time. The Board of Directors may, however, in case any certificate for shares is lost, stolen, mutilated or destroyed, authorize the issuance of a new certificate in lieu thereof, upon such terms and conditions, including reasonable indemnification of the Corporation, as the Board shall determine. Section 6.5 Transfers of Stock. ------------------ (a) Subject to paragraphs (b), (c) and (d) of this Section 6.5, upon surrender to any transfer agent of the Corporation of a certificate for shares of the Corporation duly endorsed or accompanied by proper evidence of succession, assignment or authority to transfer, it shall be 22 the duty of the Corporation to issue a new certificate to the person entitled thereto, cancel the old certificate and record the transaction upon its books. (b) Beginning at the time that (A) the merger of Santa Anita Consolidated, Inc. ("Santa Anita") into Santa Anita Realty Enterprises, Inc., a Delaware corporation ("Realty"), and (B) the payment by Realty of the dividend in kind of the shares of the Corporation (the "Distribution") shall have both occurred (hereinafter called the "effective time of the restriction"), and continuing thereafter until such time as the limitation on transfer provided for in the Pairing Agreement between Realty and the Corporation shall be terminated in the manner therein provided: (i) The shares of common stock of the Corporation shall not be transferable, and shall not be transferred on the books of the Corporation, unless (1) a simultaneous transfer is made by the same transferor to the same transferee, or (2) such transferor has previously arranged with Realty for the transfer to the transferee, of a like number of shares of common stock of Realty and such shares are paired with one another. (ii) Except for certificates representing shares of common stock of Realty referred to in subparagraph (vi) below, each certificate evidencing ownership of shares of 23 common stock of Realty (including certificates issued by Santa Anita) issued and not cancelled prior to the effective time of the restriction shall be deemed to evidence a like number of shares of common stock of the Corporation. (iii) Except for certificates representing common stock of Realty referred to in subparagraph (vi) below, any registered holder of a certificate evidencing ownership of shares of common stock of Realty (including certificates issued by Santa Anita) issued prior to the effective time of the restriction may, upon request and presentation of said certificate to the Corporation's transfer agent, obtain in substitution therefor a certificate or certificates registered in such holder's name evidencing the same number of common shares of the Corporation and a like number of shares of common stock of Realty. (iv) A conspicuous legend shall be placed on the face of each certificate evidencing ownership of shares of common stock of the Corporation issued after the effective time of the restrictions, referring to the restrictions on transfer set forth in the Corporation's By-laws. (v) For purposes of this paragraph (b) only, the terms "common stock" and "common shares" shall include preferred stock which is convertible into shares of common stock. 24 (vi) Notwithstanding the other provisions of this paragraph (b), any stockholder whose ownership of the common stock of the Corporation at the effective time of the restriction would be deemed, after application of the attribution rules of the Internal Revenue Code of 1954 (the "Code"), to result in Realty owning, directly or indirectly, more than 9.25% of the common stock of the Corporation will not be subject to the restrictions imposed by this paragraph (b) to the extent that such ownership would cause Realty, directly or indirectly, to be deemed to own, after application of the attribution rules of the Code, more than 9.25% of the total number of the outstanding shares of the Corporation, provided that (1) a sufficient amount of the common stock of the Corporation (or the right to receive such common stock) which would otherwise be paired with stock of Realty is sold to third parties so that Realty, directly or indirectly, after application of the attribution rules of the Code, will not own in excess of 9.25% of the common stock of the Corporation, (2) all holders of the unpaired shares enter into an agreement, satisfactory to the Boards of Directors of Realty, the Corporation and Santa Anita, providing that such shares not be transferable by sale or any other means, without arranging for such shares to be paired with an equal number of shares of Realty, unless such sale is made to the Corporation or Realty and (3) such stockholder and any transferee of such stockholder executes a waiver of any claims he or she may have arising out of the 25 close business relationship between the Corporation and Realty and claims arising out of conflicts of interest inherent in such business relationship. The other provisions of this paragraph (b) shall apply to all shares of the Corporation otherwise held by any stockholder unless they are specifically exempted by this subparagraph (vi). (c) If the Board of Directors shall at any time and in good faith be of the opinion that direct or indirect ownership of shares of either common stock or preferred stock, or both, of the Corporation has or may become concentrated to an extent which would cause Realty to fail to qualify or be disqualified as a real estate investment trust by virtue of Section 856(a)(5) and (6) of the Code, or similar provisions of successor statutes, pertaining to the qualification of Realty as a real estate investment trust, the Board of Directors shall have the power (i) by lot or other means deemed equitable by them to call for purchase from any stockholder of the Corporation such number of shares sufficient in the opinion of the Board of Directors to maintain or bring the direct or indirect ownership of shares of stock of the Corporation into conformity with the requirements of said Section 856(a)(5) and (6) pertaining to Realty and (ii) to refuse to register the transfer of shares of stock to any person whose acquisition of such shares would, in the opinion of the Board of Directors, result in Realty being unable to conform to the requirements of said 26 Section 856(a)(5) and (6). The purchase price for the shares of stock purchased pursuant hereto shall be equal to the fair market value of such shares as reflected in the closing price for such shares on the principal stock exchange on which such shares are listed or, if such shares are not listed, then the last bid quotation for shares of stock as of the close of business on the date fixed by the Board of Directors for such purchase or, if no quotation for the shares is available, as determined in good faith by the Board of Directors. From and after the date fixed for purchase by the Board of Directors, the holder of any shares so called for purchase shall cease to be entitled to dividends, voting rights and other benefits with respect to such shares excepting only the right to payment of the purchase price fixed as aforesaid. In order to further assure that ownership of the shares of stock does not become so concentrated, any transfer of shares that would prevent Realty from continuing to be qualified as a real estate investment trust by virtue of the application of Section 856(a)(5) and (6) of the Code shall be void ab initio and the intended transferee of such -- ------ shares shall be deemed never to have had an interest therein. If the foregoing provision is determined to be void or invalid by virtue of any legal decision, statute, rule or regulation, then the transferee of such shares shall be deemed to have acted as agent on behalf of the Corporation in acquiring such shares and to hold such shares on behalf of the Corporation. For purposes 27 of determining whether the Corporation is in compliance with Section 856(a)(5) and (6), Section 542(a)(2) and Section 544 of the Code, or similar provisions of successor statutes, shall be applied. (d) In addition to the requirements of subparagraph (c) above, if the Board of Directors shall at any time and in good faith be of the opinion that direct or indirect ownership of shares of either common stock or preferred stock, or both, of the Corporation has or may become concentrated to an extent which would cause any rent to be paid to Realty to fail to qualify or be disqualified as rent from real property by virtue of Section 856(d)(2)(B) of the Code, or similar provisions of successor statutes, pertaining to the qualification of Realty as a real estate investment trust, the Board of Directors shall have the power (i) by lot or other means deemed equitable by them to call for purchase from any stockholder of the Corporation such number of shares sufficient in the opinion of the Board of Directors to maintain or bring the direct or indirect ownership of shares of stock of the Corporation into conformity with the requirements of Section 856(d)(2)(B) pertaining to Realty and (ii) to refuse to register the transfer of shares of stock to any person whose acquisition of such shares would, in the opinion of the Board of Directors, result in Realty being unable to conform to the requirements of said Section 856(d)(2)(B). The purchase price for the shares of 28 stock purchased pursuant hereto shall be equal to the fair market value of such shares as reflected in the closing price for such shares on the principal stock exchange on which such shares are listed, or if such shares are not listed, then the last bid quotation for shares of stock, as of the close of business on the date fixed by the Board of Directors for such purchase or, if no quotation for the shares is available, as determined in good faith by the Board of Directors. From and after the date fixed for purchase by the Board of Directors, the holders of any shares so called for purchase shall cease to be entitled to dividends, voting rights and other benefits with respect to such shares, excepting only the right to payment of the purchase price fixed as aforesaid. In order to further assure that ownership of the shares of stock does not become so concentrated, any transfer of shares that would prevent Realty from continuing to be qualified as a real estate investment trust by virtue of the application of Section 856(d)(2)(B) of the Code shall be void ab initio and the -- ------ intended transferee of such shares shall be deemed never to have had an interest therein. If the foregoing provision is determined to be void or invalid by virtue of any legal decision, statute, rule or regulation, then the transferee of such shares shall be deemed to have acted as agent on behalf of the Corporation in acquiring such shares and to hold such shares on behalf of the Corporation. For purposes of determining whether this Corporation is in compliance 29 with Section 856(d)(2)(B), Section 856(d)(5) of the Code, or similar provisions of successor statutes, shall be applied. (e) The stockholders of the Corporation shall upon demand disclose to the Board of Directors in writing such information with respect to their direct and indirect ownership of the stock of the Corporation as the Board of Directors deems necessary to determine whether Realty satisfies the provisions of Section 856(a)(5) and (6) and 856(d) of the Code and the regulations thereunder as the same shall be from time to time amended, or to comply with the requirements of any other taxing authority. Section 6.6. Form of Consideration. In purchasing such shares from any --------------------- shareholder in accordance with the foregoing provisions, the Corporation may pay consideration in the form of cash or, at the option of the Board of Directors, in the form of subordinated indebtedness of the Corporation. The principal amount of such subordinated indebtedness shall be equal to the purchase price of the shares (less amounts paid in cash, if any) and it shall have such other terms as may be determined by the Board of Directors at the time of issuance. Section 6.7. Record Date. In order that the Corporation may determine the ----------- stockholders entitled to notice of or to vote at any meeting of stockholders or any 30 adjournment thereto, or entitled to receive payment of any dividend or other distribution or allotment of any rights, or entitled to exercise any rights in respect of any change, conversion or exchange of stock or for the purpose of any other lawful action, the Board of Directors may fix, in advance, a record date, which shall not be more than sixty nor less than ten days before the date of such meeting, nor more than sixty days prior to any other action. A determination of stockholders of record entitled to notice of or to vote at a meeting of stockholders shall apply to any adjournment of the meeting; provided, however, that the Board of Directors may fix a new record date for the adjourned meeting. Section 6.8. Registered Stockholders. The Corporation shall be entitled ----------------------- to recognize the exclusive right of a person registered on its books as the owner of shares to receive dividends, and to vote as such owner, and shall not be bound to recognize any equitable or other claim to or interest in such share or shares on the part of any other person, whether or not it shall have express or other notice thereof, except as otherwise provided by the laws of Delaware. Section 6.9. Transfer Agents and Registrars. The Board of Directors may ------------------------------ appoint one or more corporate transfer agents and registrars. 31 Section 6.10. Dividends. Dividends upon the capital stock of the --------- Corporation may be declared by the Board of Directors at any regular or special meeting, pursuant to law. Dividends may be paid in cash, in property, or in shares of the capital stock. Section 6.11. Reserves. Before payment of any dividend, there may be set -------- aside out of any funds of the Corporation available for dividends such sum or sums as the directors from time to time, in their absolute discretion, think proper as a reserve or reserves to meet contingencies, or for equalizing dividends, or for repairing or maintaining any property of the Corporation, or for such other purpose as the directors shall think conducive to the interest of the Corporation, and the directors may modify or abolish any such reserve in the manner in which it was created. ARTICLE VII Indemnification and Insurance Section 7.1. Right to Indemnification. Each person who was or is a party ------------------------ or is threatened to be made a party to or is involved in any action, suit or proceeding, whether civil, criminal, administrative or investigative (hereinafter a "proceeding"), by reason of the fact that he or she, or a person of whom he or she is the legal represen- 32 tative, is or was a director or officer of the Corporation or is or was serving at the request of the Corporation as a director, officer, employee or agent of another corporation or of a partnership, joint venture, trust or other enterprise, including service with respect to employee benefit plans, whether the basis of such proceeding is alleged action or inaction in an official capacity or in any other capacity while serving as a director, officer, employee or agent, shall be indemnified and held harmless by the Corporation to the fullest extent permitted by the laws of Delaware, as the same exist or may hereafter be amended, against all costs, charges, expenses, liabilities and losses (including attorneys' fees, judgments, fines, ERISA excise taxes or penalties and amounts paid or to be paid in settlement) reasonably incurred or suffered by such person in connection therewith, and such indemnification shall continue as to a person who has ceased to be a director, officer, employee or agent and shall inure to the benefit of his or her heirs, executors and administrators; provided, however, that, except as provided in Section 7.2 hereof, the Corporation shall indemnify any such person seeking indemnification in connection with a proceeding (or part thereof) initiated by such person only if such proceeding (or part thereof) was authorized by the Board of Directors of the Corporation. The right to indemnification conferred in this Article shall be a contract right and shall include the right to be paid by the Corporation the expenses 33 incurred in defending any such proceeding in advance of its final disposition; provided, however, that, if the Delaware General Corporation Law requires, the payment of such expenses incurred by a director or officer (and not in any other capacity in which service was or is rendered by such person while a director or officer, including, without limitation, service to an employee benefit plan) in advance of the final disposition of a proceeding, shall be made only upon delivery to the Corporation of an undertaking, by or on behalf of such director or officer, to repay all amounts so advanced if it shall ultimately be determined that such director or officer is not entitled to be indemnified under this Section or otherwise. The Corporation may, by action of its Board of Directors, provide indemnification to employees and agents of the Corporation with the same scope and effect as the foregoing indemnification of directors and officers. Section 7.2. Right of Claimant to Bring Suit. If a claim under Section ------------------------------- 7.1 of this Article is not paid in full by the Corporation within thirty days after a written claim has been received by the Corporation, the claimant may at any time thereafter bring suit against the Corporation to recover the unpaid amount of the claim and, if successful in whole or in part, the claimant shall be entitled to be paid also the expense of prosecuting such claim. It shall be a defense to any such action (other than an action brought to 34 enforce a claim for expenses incurred in defending any proceeding in advance of its final disposition where the required undertaking, if any is required, has been tendered to the Corporation) that the claimant has failed to meet a standard of conduct which makes it permissible under Delaware law for the Corporation to indemnify the claimant for the amount claimed. Neither the failure of the Corporation (including its Board of Directors, independent legal counsel, or its stockholders) to have made a determination prior to the commencement of such action that indemnification of the claimant is permissible in the circumstances because he or she has met such standard of conduct, nor an actual determination by the Corporation (including its Board of Directors, independent legal counsel, or its stockholders) that the claimant has not met such standard of conduct, shall be a defense to the action or create a presumption that the claimant has failed to meet such standard of conduct. Section 7.3. Non-Exclusivity of Rights. The right to indemnification and ------------------------- the payment of expenses incurred in defending a proceeding in advance of its final disposition conferred in this Article shall not be exclusive of any other right which any person may have or hereafter acquire under any statute, provision of the Certificate of Incorporation, by-law, agreement, vote of stockholders or disinterested directors or otherwise. 35 Section 7.4. Insurance. The Corporation may maintain insurance, at its --------- expense, to protect itself and any director, officer, employee or agent of the Corporation or another corporation, partnership, joint venture, trust or other enterprise against any such expense, liability or loss, whether or not the Corporation would have the power to indemnify such person against such expense, liability or loss under Delaware law. Section 7.5. Expenses as a Witness. To the extent that any director, --------------------- officer, employee or agent of the Corporation is by reason of such position, or a position with another entity at the request of the Corporation, a witness in any action, suit or proceeding, he or she shall be indemnified against all costs and expenses actually and reasonably incurred by him or her or on his or her behalf in connection therewith. Section 7.6. Indemnity Agreements. The Corporation may enter into -------------------- agreements with any director, officer, employee or agent of the Corporation providing for indemnification to the full extent permitted by Delaware law. 36 ARTICLE VIII General Provisions Section 8.1. Annual Reports. Not later than one hundred twenty (120) days -------------- after the close of each fiscal year of the Corporation, the Board of Directors shall mail a report of the business and operation of the Corporation during such fiscal year to the stockholders. The report shall be in such form and have such content as the Board deems proper. This report shall include a balance sheet and a statement of income and surplus and a statement of changes in financial position of the Corporation. Such financial statements shall be accompanied by the report of an independent certified public accountant thereon. Section 8.2. Quarterly Reports. Within 90 days after the close of each of ----------------- the first three quarters of each fiscal year of the Corporation, the Board of Directors shall send interim reports to the stockholders, having such form and content as the Board of Directors deems proper. Section 8.3. Fiscal Year. The fiscal year of the Corporation shall be ----------- fixed by resolution of the Board of Directors. 37 Section 8.4. Seal. The corporate seal shall have inscribed thereon the ---- name of the Corporation, the year of its organization and the words "Corporate Seal, Delaware". The seal may be used by causing it or a facsimile thereof to be impressed or affixed or reproduced or otherwise. Section 8.5. Checks, Drafts, etc. All checks, drafts or other orders for -------------------- payment of money, notes or other evidences of indebtedness, issued in the name of or payable to the Corporation, shall be signed or endorsed by such person or persons and in such manner as, from time to time, shall be determined by resolution of the Board of Directors. Section 8.6. Representation of Shares of Other Corporations. The Chairman ---------------------------------------------- of the Board, the President or any Vice President and the Secretary or Assistant Secretary of this Corporation are authorized to vote, represent and exercise on behalf of this Corporation all rights incident to any and all shares of any other corporation or corporations standing in the name of this Corporation. The authority herein granted to said officers to vote or represent on behalf of this Corporation any and all shares held by this Corporation in any other corporation or corporations may be exercised either by such officers in person or by any other person authorized so to do by proxy or power of attorney duly executed by said officers. 38 Section 8.7. Employee Stock Purchase Plans. The Corporation may, upon ----------------------------- terms and conditions herein authorized, provide and carry out an employee stock purchase plan or plans providing for the issue and sale, or for the granting of options for the purchase, of its unissued shares, or of issued shares purchased or to be purchased or acquired, to employees of the Corporation or of any subsidiary or to a trustee on their behalf. Such plan may provide for such consideration as may be fixed therein, for the payment of such shares in installments or at one time and for aiding any such employees in paying for such shares by compensation for services or by loans from the Corporation or otherwise. Any such plan before becoming effective must be approved or authorized by the Board of Directors of the Corporation. Such plan may include, among other things, provisions determining or providing for the determination by the Board of Directors, or any committee thereof designated by the Board of Directors, of: (a) eligibility of employees (including officers and directors) to participate therein, (b) the number and class of shares which may be subscribed for or for which options may be granted under the plan, (c) the time and method of payment therefor, (d) the price or prices at which such shares shall be issued or sold, (e) whether or not title to the shares shall be reserved to the Corporation until full payment therefor, (f) the effect of the death of an employee participating in the plan or 39 termination of his employment, including whether there shall be any option or obligation on the part of the Corporation to repurchase the shares thereupon, (g) restrictions, if any, upon the transfer of the shares, and the time limits and termination of the plan, (h) termination, continuation or adjustments of the rights of participating employees upon the happening of specified contingencies, including increase or decrease in the number of issued shares of the class covered by the plan without receipt of consideration by the Corporation or any exchange of shares of such class for stock or securities of another corporation pursuant to a reorganization or merger, consolidation or dissolution of the Corporation, (i) amendment, termination, interpretation and administration of such plan by the Board of Directors or any committee thereof designated by the Board of Directors, and (j) any other matters, not repugnant to law, as may be included in the plan as approved or authorized by the Board of Directors or any such committee. ARTICLE IX Amendments Section 9.1. Power of Stockholders. New By-laws may be adopted or these --------------------- By-laws may be amended or repealed by the stockholders only by the affirmative vote of at least 80% of the voting power of the Corporation, except as 40 otherwise provided by law. Any proposal to amend or repeal, or adopt any provisions inconsistent with, Article Tenth of the Certificate of Incorporation shall require for approval the affirmative vote of at least 80% of the voting power of the Corporation. Section 9.2. Power of Directors. Subject to the right of stockholders as ------------------ provided in Section 9.1 of this Article IX to adopt, amend or repeal By-laws, By-laws may be adopted, amended or repealed by the Board of Directors; provided, however, that Section 6.5 of these By-laws may not be amended or repealed except with the approval of the holders of 80% of the outstanding common stock of the Corporation. 41 EX-27.(A) 4 FINANCIAL DATA SCHEDULE
5 THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM SANTA ANITA REALTY ENTERPRISES, INC. AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS SANTA ANITA REALTY ENTERPRISES, INC. 0000314661 9-MOS DEC-31-1995 SEP-30-1995 2,787,000 2,801,000 2,843,000 0 0 0 163,656,000 (57,648,000) 147,593,000 0 101,490,000 1,138,000 0 0 25,105,000 147,593,000 0 26,629,000 0 5,758,000 46,159,000 0 7,258,000 (32,546,000) 0 (32,546,000) 0 0 0 (32,546,000) (2.88) 0
EX-27.(B) 5 FINANCIAL DATA SCHEDULE
5 THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM SANTA ANITA OPERATING COMPANY AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS SANTA ANITA OPERATING COMPANY 0000313749 9-MOS DEC-31-1995 SEP-30-1995 11,000 4,686,000 1,440,000 0 0 6,493,000 45,805,000 (25,981,000) 29,302,000 13,975,000 1,940,000 1,127,000 0 0 8,743,000 29,302,000 0 57,214,000 0 46,982,000 7,713,000 0 308,000 2,211,000 0 2,211,000 0 0 0 2,211,000 0.20 0
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