Form 10-Q

10-Q 1 d10q.htm FORM 10-Q Form 10-Q

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, 2008

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

For the transition period to

Commission File No. 0-52734

NGA HOLDCO, LLC

(Exact name of registrant as specified in its charter)

Nevada

20-8349236

(State or other jurisdiction of

incorporation or organization)

(I.R.S. Employer

Identification No.)

22 Waterway Avenue, Suite 150

The Woodlands, TX 77380

(Address of principal executive offices)

Telephone: (713) 559-7400

(Registrant’s telephone number, including area code)

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

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer,” and “smaller reporting company” in Rule 12b-2 of the Exchange Act. (Check one):


Large accelerated filer ¨		Accelerated filer ¨
Non-accelerated filer ¨ (Do not check if a smaller reporting company)		Smaller reporting company x

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ¨ No x

FORWARD LOOKING STATEMENTS MAY PROVE INACCURATE

Certain statements in this report contain or may contain information that is forward-looking. Actual results may differ materially from those described in the forward-looking statements and will be affected by a variety of risks and factors including but not limited to the following: the inability of regulated entities and certain managers, officers, key employees and other affiliates of the Company to obtain gaming licenses or permits in jurisdictions where the current or planned business of the Company or an entity in which the Company invests requires such licenses or permits; the limitation, conditioning, revocation or suspension of any such gaming licenses or permits; a finding of unsuitability or denial of licenses or permits by regulatory authorities with respect to any manager, officer, or key employee required to be found suitable; loss or retirement of managers, officers or key employees; increased competition in existing markets or the opening of new gaming jurisdictions (including on Native American lands); the inability to maintain and improve existing gaming facilities; the inability of the Company or an entity in which the Company invests to consummate the planned acquisition of a gaming opportunity; the costs and delays associated with constructing and opening new gaming facilities; the inability to retain key leases; a decline in the public acceptance or popularity of gaming; increases in or new taxes or fees imposed on gaming revenues or gaming devices; significant increases in fuel or transportation prices; adverse economic conditions; and severe or unusual weather in key markets. In addition, any financings consummated by Eldorado Resorts, LLC (“Resorts”), the entity in which the Company holds an equity investment, or its subsidiaries may substantially increase the leverage and other fixed charge obligations of those entities. The level of indebtedness and other fixed charge obligations of Resorts and its subsidiaries could have important consequences, including but not limited to the following: (1) a substantial portion of Resorts’ and its subsidiaries’ cash flow from operations could be dedicated to debt service and other fixed charge obligations and thus not be available for other purposes; (2) Resorts’ and its subsidiaries’ ability to obtain additional financing in the future for working capital, capital expenditures or acquisitions may be limited; and (3) Resorts’ and its subsidiaries’ level of indebtedness could limit their flexibility in reacting to changes in the gaming industry, their respective jurisdictions and economic conditions generally. Readers should carefully review this report in its entirety, including but not limited to the Company’s financial statements and the notes thereto. This report should also be read in conjunction with the Company’s annual report on Form 10-KSB for the year ended December 31, 2007.

NGA HOLDCO, LLC

FORM 10-Q

INDEX


		Page No.
PART I. FINANCIAL INFORMATION

Item 1.	Financial Statements:	1

	Unaudited Condensed Consolidated Balance Sheets as of September 30, 2008 and December 31, 2007	1

	Unaudited Condensed Consolidated Statements of Operations for the Three and Nine Months Ended September 30, 2008 and 2007	2

	Unaudited Condensed Consolidated Statement of Changes in Members’ Equity for the Nine Months Ended September 30, 2008	3

	Unaudited Condensed Consolidated Statements of Cash Flows for the Nine Months Ended September 30, 2008 and 2007	4

	Notes to Unaudited Condensed Consolidated Financial Statements	5

Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	11

Item 3.	Quantitative and Qualitative Disclosures About Market Risk	13

Item 4.	Controls and Procedures	13

PART II. OTHER INFORMATION

Item 6.	Exhibits	14

SIGNATURES		15

PART I

FINANCIAL INFORMATION

Item 1.

Financial Statements.

NGA HOLDCO, LLC

UNAUDITED CONDENSED

CONSOLIDATED BALANCE SHEETS


	September 30, 2008		December 31, 2007
ASSETS
Current Assets:
Cash and cash equivalents	$	262,808	$	—

Total current assets		262,808		—
Deferred federal tax asset		70,000		—
Investment in Resorts		38,317,744		38,256,039
Due from related party		5,179,772		5,183,574

Total Assets	$	43,830,324	$	43,439,613

LIABILITIES AND MEMBERS’ EQUITY
Current Liabilities:
Accounts payable and accrued liabilities	$	13,875	$	243,318
Federal tax liability		13,592		222,300

Total current liabilities		27,467		465,618
Due to related party		1,657,607		1,083,927
Deferred federal tax liability		359,497		446,097

Total Liabilities		2,044,571		1,995,642

Members’ Equity:
Class A unit (1 Unit issued and outstanding)		3,806		3,806
Class B units (9,999 Units issued and outstanding)		36,322,652		36,322,652
Retained earnings		5,459,295		5,117,513

Total Members’ equity		41,785,753		41,443,971

Total Liabilities & Members’ equity	$	43,830,324	$	43,439,613

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

NGA HOLDCO, LLC

UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS


	Three Months Ended September 30,					Nine Months Ended September 30,
	2008			2007		2008		2007
Income:
Unrealized gain on marketable securities	$	—		$	1,849,541	$	—	$	1,992,211
Interest income		—			951,133		—		2,853,401
Equity earnings on Resorts		750,261			—		320,616		—

Total income		750,261			2,800,674		320,616		4,845,612

Expenses:
Legal, licensing, and other expenses		(210,533	)		290,626		109,132		898,399

Net income before income taxes		960,794			2,510,048		211,484		3,947,213
Income tax benefit		49,929			—		130,298		—

Net income	$	1,010,723		$	2,510,048	$	341,782	$	3,947,213

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

NGA HOLDCO, LLC

UNAUDITED CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN MEMBERS’ EQUITY


	Subscribed Class A Unit		Class B Units		Retained Earnings		Total Members’ Equity
December 31, 2007	$	3,806	$	36,322,652	$	5,117,513	$	41,443,971
Net Income		—		—		341,782		341,782

September 30, 2008	$	3,806	$	36,322,652	$	5,459,295	$	41,785,753

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

NGA HOLDCO, LLC

UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS


	Nine Months Ended September 30,
	2008			2007
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income	$	341,782		$	3,947,213
Adjustments to reconcile income from continuing operations to net cash (used in) provided by operating activities:
Unrealized gain on marketable securities		—			(1,992,211	)
Equity earnings on Resorts		(320,616	)		—
Increase in federal tax asset		(70,000	)		—
Decrease in due from related parties		3,802			—
Increase in accrued interest receivable		—			(2,853,401	)
(Decrease) Increase in accounts payable and accrued liabilities		(229,443	)		100,000
Increase in due to related parties		573,680			798,399
(Decrease) in federal tax liability		(295,308	)		—
Distributions from equity investment in Resorts		258,911			—

Net cash (used in) provided by operating activities:	$	262,808		$	—

CASH FLOWS FROM INVESTING ACTIVITIES:
Net cash (used in) provided by investing activities:	$	—		$	—

CASH FLOWS FROM FINANCING ACTIVITIES:
Net cash (used in) provided by financing activities:	$	—		$	—

Net increase (decrease) in cash	$	262,808		$	—

Cash at beginning of period	$	—		$	—

Cash at end of period	$	262,808		$	—

NON CASH TRANSACTIONS:
Reversal of 2006 and 2007 Texas Franchise Tax accrual; reflected as decrease in accounts payable and accrued liabilities	$	200,000		$	—
Payment of expenses including tax payment of $235,010 by Newport on behalf of Company; reflected as increase in related party payable	$	573,680		$	798,399
Collection of interest by Newport on behalf of Company is reflected as increase in related party receivable		—		$	3,804,536

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

NGA HoldCo, LLC

Notes to Unaudited Condensed Consolidated Financial Statements

1. Organization

NGA HoldCo, LLC, a Nevada limited liability company (the “Company”), was formed on January 8, 2007 at the direction of Newport Global Opportunities Fund LP (“Newport”), a Delaware limited partnership, for the purpose of holding equity, either directly or indirectly through affiliates, in one or more entities related to the gaming industry. The unaudited condensed consolidated financial statements represent the financial position and results of operations of the Company and its two wholly owned subsidiaries; NGA Blocker, LLC (“Blocker”) and NGA Acquisition Co. LLC (“Acquisition Co”).

On December 14, 2007, the date of the closing of its acquisition of a 17.0359% interest in Eldorado Resorts, LLC, a Nevada Limited Liability Company (“Resorts”), the Company transferred in part to Resorts and in part to Donald L. Carano (“Carano”), respectively, free and clear of any liens, ownership of a total of $38,045,363 original principal amount of First Mortgage Bonds due 2012, co-issued by Eldorado Casino Shreveport Joint Venture (the “Louisiana Partnership”), and Shreveport Capital Corporation, a wholly owned subsidiary of the Louisiana Partnership (the “New Shreveport Notes”), together with 11,000 preferred shares in exchange for a 17.0359% interest in Resorts. In May 2007, Newport contributed 100% of the New Shreveport Notes held by Newport since August 2006 and 11% of the preferred shares held since August 2006 (collectively, the “Eldorado Shreveport Investments”) to the Company. These Eldorado Shreveport Investments were transferred to the Company at the fair value as of the transfer date. The related unaudited condensed consolidated income statements reflect the interest and dividend income earned from the Eldorado Shreveport Investments since August 2006 and gains on these investments recognized by Newport from the date of the Letter of Intent between Resorts and Newport in November 2006 and the date of acquisition of the interest in Resorts on December 14, 2007. Additionally, certain direct expenses incurred by Newport related to the Eldorado Shreveport Investments, are reflected within the unaudited condensed consolidated income statements.

Aside from the interest and dividend income earned on the Eldorado Shreveport Investments and gain on marketable securities, the Company has had no revenue generating business since inception. Its current business plan consists primarily of its holding of its 17.0359% equity interest in Resorts. Resorts owns and operates the Eldorado Hotel and Casino (the “Eldorado-Reno”) located in Reno, Nevada. Through two wholly owned subsidiaries, Resorts also owns all of the partnership interest of the Louisiana Partnership, and operates, pursuant to a management agreement, the Eldorado Shreveport Hotel and Casino in Shreveport, Louisiana (the “Eldorado-Shreveport”), which is owned by the Louisiana Partnership. Eldorado Limited Liability Company (“ELLC”), a Nevada limited liability company 96.1858% owned by Resorts, is a 50% joint venture partner in a general partnership that owns and operates the Silver Legacy Resort Casino (“Silver Legacy”), a hotel and casino property adjacent to Eldorado-Reno. Resorts also owns a 21.25% interest in Tamarack Junction, a small casino in South Reno.

The Company’s one issued and outstanding Class A Unit, representing all of its voting equity, is held by NGA VoteCo, LLC, a Nevada limited liability company (“VoteCo”). All of the Company’s issued and outstanding Class B Units, representing all of its non-voting equity, are held by NGA No VoteCo, LLC, a Nevada limited liability company (“InvestCo”). VoteCo is owned by Thomas R. Reeg, Timothy T. Janszen and Ryan L. Langdon, each of whom owns a 30% interest, and Roger A. May, who owns a 10% interest. Messrs. Reeg, Janszen, Langdon and May collectively are referred to as the “VoteCo Equityholders”. InvestCo is owned by Newport, a Delaware limited partnership formed primarily for the purpose of seeking long-term capital appreciation and current income by acquiring, holding and disposing of investments made in distressed debt securities and equities. Newport holds all of InvestCo’s issued and outstanding voting securities. At present, the Company has no plans to issue any additional Class A Units or Class B Units.

The VoteCo Equityholders, through VoteCo, control all matters of the Company that are subject to the vote of members, including the appointment and removal of managers. Messrs. Reeg, Janszen, Langdon and May are the Company’s managers and Mr. Reeg is also the Company’s operating manager. The Class B Units issued to InvestCo allow it and its investors to invest in the Company without having any voting power or power to control the operations or affairs of the Company, except as otherwise required by law. If InvestCo and its investors had any of the power to control the operations or affairs of the Company afforded to the holders of the Class A Units, they and their respective constituent equityholders would generally be required, in connection with the Company’s investment in Resorts, to be licensed or found suitable under the gaming laws and regulations of the States of Nevada and Louisiana as well as various local regulations in those states.

NGA HoldCo, LLC

Notes to Unaudited Condensed Consolidated Financial Statements—(Continued)

VoteCo, InvestCo, the Company and each of the Company’s wholly owned subsidiaries are managed by Thomas R. Reeg, the operating manager of each entity. NGA Blocker, LLC, a Nevada limited liability company (“Blocker”), is a holding company that has elected to be taxed as a corporation. Because Blocker is a separately taxed, non-flow through entity, Blocker will be taxed on its share of the income relating to the Company’s investment in Resorts rather than the Company’s investors.

The Company’s acquisition in December 2007 of a 17.0359% interest in Resorts was pursuant to the terms and conditions of a Purchase Agreement, dated July 20, 2007 (the “Purchase Agreement”). The parties to the Purchase Agreement were Resorts, AcquisitionCo, which is the subsidiary through which the Company acquired its interest in Resorts, and Carano, the presiding member of Resorts’ Board of Managers and the Chief Executive Officer of Resorts from whom a portion of the 17.0359% interest was acquired. The closing of this transaction occurred on December 14, 2007 (“Closing”) after necessary gaming licenses were obtained from Nevada and Louisiana, respectively. The Company owns indirectly through its subsidiaries 17.0359% of Resorts, and Carano or members of his family own directly or indirectly approximately 51% of Resorts. Carano continues in the roles in the management of Resorts in which he served prior to Closing.

At closing, the Company, through its subsidiaries, acquired a 17.0359% equity interest in Resorts, including a new 14.47% membership interest acquired directly from Resorts (the “14.47% Interest”) and a previously outstanding 3% membership interest (that, as a result of the issuance of the 14.47% Interest, was reduced to a 2.5659% interest) acquired from Carano (the “2.5659% Interest”). Subject to the closing adjustment described below, in consideration for its equity interest, AcquisitionCo:

•

transferred to Resorts, free and clear of any liens, ownership of $31,133,250 original principal amount of First Mortgage Bonds due 2012 co-issued by Eldorado Shreveport Joint Venture, a Louisiana general partnership that owns Eldorado-Shreveport (the “Louisiana Partnership”), and Shreveport Capital Corporation, a wholly owned subsidiary of the Louisiana Partnership (“Shreveport Bonds”) together with the right to all interest paid with respect thereto after the closing date, and

•

transferred to Carano, free and clear of any liens, $6,912,113 original principal amount of Shreveport Bonds together with the right to all interest paid with respect thereto after the closing date and a preferred stock equity interest representing a capital contribution amount of $286,889 issued by Shreveport Gaming Holdings, Inc. (“SGH”), then a partner of the Louisiana Partnership that is not affiliated with Resorts or the Company.

At closing, Resorts and Carano paid Newport in cash the respective amounts owed to AcquisitionCo for interest on the respective amounts of Shreveport Bonds received at closing that was accrued and unpaid through the date of closing.

Under the terms of the Purchase Agreement, Resorts was entitled, prior to or immediately following the Company’s acquisition of its interest in Resorts, to make a distribution to the members of Resorts other that AcquisitionCo of up to $10 million. On July 25, 2007 Resorts made the $10 million distribution to its members which was funded through borrowings under Resorts’ credit facility as permitted by the Purchase Agreement.

2. Basis of Presentation and Summary of Significant Accounting Policies

Basis of Presentation

The Company prepares its financial statements on the accrual basis of accounting in conformity with accounting principles generally accepted in the United States of America (U.S. GAAP).

Cash and Cash Equivalents

All highly liquid investments with an original maturity of three months or less are classified as cash equivalents.

Accounts Payable and Accrued Liabilities

Certain franchise tax expenses were inappropriately accrued for during the years ended December 31, 2007 and 2006. The net impact of correcting this immaterial error was an increase to net income of $120,000 for the three and nine months ended September 30, 2008, as the Company reversed the previously accrued amount of $200,000 resulting in a decrease to other expenses of $200,000. Management has concluded that the impact of the error was not material to the prior year financial statements or to any current period interim financial statements.

Principles of Consolidation

The unaudited condensed consolidated financial statements include the accounts of the Company and its wholly-owned subsidiaries, Blocker and AcquisitionCo. All significant intercompany transactions have been eliminated in consolidation.

In the opinion of Management, the accompanying unaudited condensed consolidated financial statements contain all adjustments, all of which are normal and recurring, necessary to present fairly the financial position of the Company as of September 30, 2008, and the results of its operations for the three and nine months ended September 30, 2008 and 2007, and its cash flows for the nine months ended September 30, 2008 and 2007. The results of operations for such periods are not necessarily indicative of the results to be expected for a full year.

NGA HoldCo, LLC

Notes to Unaudited Condensed Consolidated Financial Statements—(Continued)

Certain information and footnote disclosures normally included in financial statements prepared in accordance with generally accepted accounting principles in the United States of America have been condensed or omitted. These condensed consolidated financial statements should be read in conjunction with the consolidated financial statements and notes thereto included in the Company’s Form 10-KSB for the year ended December 31, 2007 filed with the Securities and Exchange Commission on April 15, 2008.

Fair Value Measurements

Effective January 1, 2008, the Company adopted the provisions of Statement of Financial Accounting Standards (“SFAS”) No. 157, “ Fair Value Measurements ” and SFAS No. 159, “ The Fair Value Option for Financial Assets and Financial Liabilities—including an amendment to FASB Statement No. 115. ” SFAS No. 157, which defines fair value, establishes a framework for measuring fair value in accordance with generally accepted accounting principles, and expands disclosures about fair value measurements. SFAS No. 157 clarifies that fair value is an exit price, representing the amount that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants. The Company’s adoption of SFAS No. 157 did not have a material impact on our consolidated financial statements.

SFAS No. 159 permits an entity to measure certain financial assets and financial liabilities at fair value with changes in fair value recognized in earnings each period. During the nine months ended September 30, 2008, the Company has not elected to use the fair value option permitted under SFAS No. 159.

3. Membership Units and Related Rights

The Company’s Operating Agreement has created two classes of membership units, the Class A Units and the Class B Units. VoteCo holds one Class A Unit of the Company, representing the Company’s only outstanding voting equity. InvestCo holds 9,999 Class B Units of the Company, representing all of the Company’s outstanding non-voting equity. With the exception of voting rights, the rights of a Class A Unit and a Class B Unit are identical.

Each of the Company’s membership units, both Class A and Class B, represent a percentage interest in the Company equal to the quotient determined by dividing one by the aggregate number of units, both Class A and Class B, held by all members as of the date of the determination. The economic rights, risks and rewards are all shared by the members ratably according to their respective percentage interests.

Distributions

Subject to all applicable gaming approvals, distributions by the Company will be to its members at such times and in such amounts as approved by the Operating Manager in good faith in accordance with the provisions of the Company’s operating agreement and, if and when made, will be distributed by the Company to its members in proportion to their respective percentage interests in the Company. There is no formal agreement between Newport and the Company regarding the settlement of the due to/from related parties, however, it is expected to be settled upon sale of the Company’s investment in Resorts.

Restrictions on Transfer

Unless approved in advance by the Operating Manager and by applicable gaming authorities, no member of the Company may transfer all or any portion of its membership units. In addition, transfers or issuances of any membership units to any person who was required to be, and has not been, found suitable to be licensed or to hold such membership units by applicable gaming authorities, are prohibited and will be null and void and of no force or effect as of the inception of the attempted transfer or issuance.

NGA HoldCo, LLC

Notes to Unaudited Condensed Consolidated Financial Statements—(Continued)

Furthermore, as of the date the Company receives notice from any applicable gaming authority that a member of the Company or a transferee of any membership interest in the Company (1) is required to be licensed but is unsuitable to be licensed or (2) is unsuitable to hold a membership interest in the Company, then the unsuitable member or transferee may not, for so long as the unsuitability determination remains in force and effect,

•

receive any share of any cash distribution, or any other property or payments upon the dissolution of the Company,

•

exercise directly or through a trustee or nominee any voting rights conferred by any membership interest in the Company,

•

participate in the management of the business or affairs of the Company, or

•

receive any remuneration in any form from the Company for services rendered or otherwise.

Member and Company Manager Compensation

No member or manager of the Company is entitled to receive any compensation from the Company for any services rendered to or on behalf of the Company, or otherwise, in his, her or its capacity as a member or manager of the Company. A manager of the Company is entitled to reimbursement from the first available funds of the Company for direct out-of-pocket costs and expenses incurred by the manager on behalf of the Company that directly related to the business and affairs of the Company.

4. Investments in Marketable Securities

In February 2007 and August 2007, Newport received identical interest payments of $1,902,268, totaling $3,804,536, which is reflected in due from related party in the consolidated balance sheet at September 30, 2008 and December 31, 2007, as well as, $1,142,974 of interest received from Resorts and $170,658 of interest received from Donald L. Carano, both representing interest accrued through the date of the closing. Also included in due from related party is a $61,600 preferred dividend received by Newport in October 2007, representing the dividend earned on the 11,000 shares of preferred securities previously owned by the Company. There is no formal agreement between Newport and the Company regarding the settlement of this receivable, however, it is expected to be settled upon sale of the Company’s investment in Resorts.

5. Investment in Resorts

In accordance with the Purchase Agreement with Resorts Carano, the Company, through is wholly owned subsidiary, AcquisitionCo LLC (“AcquisitionCo”) transferred to Resorts and Carano, respectively, free and clear of any liens, ownership of $31,133,250 and $6,912,113 original principal amount of Shreveport Bonds, respectively, together with the right to all interest paid with respect thereto after the closing date in exchange for the 14.47% Interest and the 2.5659% Interest in Resorts. The Company, through AcquisitionCo, also transferred an equity interest of $286,889 related to SGH to Carano. The equity interest in Resorts was recorded at fair value in accordance with the guidance provided in SFAS No. 140 “Accounting for Transfer and Servicing of Financial Assets and Extinguishment of Liabilities,” (“SFAS No. 140”). Accordingly, the assets received by AcquisitionCo from the exchange were recorded at fair value based on the quoted market price of the investments given up by AcquisitionCo. This accounting treatment is consistent with the guidance provided in SFAS No. 140 which indicates that quoted market prices are the best evidence of fair value. It was determined that the quoted market prices of AcquisitionCo’s investments were more indicative of fair value as compared to the equity value of a privately held company like Resorts. At the date of the transaction, the fair value of the 17.0359% equity interest exceeded the related percentage of Resorts’ equity book value by approximately $14.8 million, which the Company has preliminarily determined is an intangible asset. This determination is subject to change as the Company finalizes its analysis.

At closing, Resorts paid Newport $1,142,974 in cash, representing interest accrued and unpaid through the date of closing on the Shreveport Bonds acquired by Resorts. Carano paid Newport $170,658 in cash, representing interest accrued and unpaid through October 31, 2007 on the Shreveport Bonds acquired by Carano. Upon completion of the Resorts transaction, which occurred on December 14, 2007, Carano or members of his family continued to own 51% of Resorts and Carano continued in his roles in the management of Resorts. Also, at closing, pursuant to the terms of the Purchase Agreement, the Company and the then current members of Resorts entered into an amendment and restatement of Resorts’ operating agreement (the “New Operating Agreement”). Resorts’ board of managers is currently composed of four managers, including the Company, Donald L. Carano, Recreational Enterprises, Inc. (“REI”), and Hotel-Casino Management, Inc. (“HCM”). Under the terms of the New Operating Agreement, REI is entitled to designate a fifth member of Resorts’ board of managers but, as of the date hereof, has not done so. Under the terms of the New Operating Agreement, the Company designated Thomas R. Reeg, the Company’s operating manager, as its initial representative for all determinations to be made by the Resorts’ board and REI and HCM designated Gary L. Carano and Raymond J. Poncia, Jr., respectively, to continue as their representatives on the Resorts board. Under the terms of the New Operating Agreement, so long as they remain managers of Resorts, the Company, REI and HCM may change their respective representatives from time to time by notice to Resorts.

NGA HoldCo, LLC

Notes to Unaudited Condensed Consolidated Financial Statements—(Continued)

Under the terms of the New Operating Agreement, at any time after the occurrence of a “Material Event” (as defined) or at any time after June 14, 2015 (the “Trigger Date”) AcquisitionCo or its permitted assignee(s) (the “Interest Holder”) will have the right to sell (“Put”) all but not less than all the 14.47% Interest to Resorts and Resorts will have the right to purchase (“Call”) all but not less than all of the 14.47% Interest and the 2.5659% Interest (collectively, the “17.0359% Interest”), at a price equal to the fair market value of the interest being acquired without discounts for minority ownership and lack of marketability, as determined by mutual agreement of the Interest Holder and Resorts or, in the event that after 30 days the Interest Holder and Resorts have not mutually agreed on a purchase price, then at the purchase price determined by the average of two appraisals by nationally recognized appraisers of private companies, provided the two appraisals are within a 5% range of value based upon the lowest of the two appraisals. If the two appraisals are not within the 5% range, the purchase price will be determined by the average of a third mutually acceptable, independent, nationally recognized appraiser of private companies and the next nearest of the first two appraisals unless the third appraisal is at the mid-point of the first two appraisals, in which event the third appraisal will be used to established the fair market value. So long as a Material Event has not occurred, the Interest Holder will have the right to unilaterally extend the Trigger Date for up to two one-year extension periods. Upon exercise of either the Call or the Put, the New Operating Agreement provides that the transaction close within one year of the exercise of the right unless delayed for necessary approvals from applicable gaming authorities.

These put and call rights have been evaluated from an accounting perspective and Company management has determined that neither the Put or Call meet the definition of a derivative pursuant to the guidance SFAS No. 133 “Accounting for Derivatives Instruments and Hedging Activities” (“SFAS No. 133”)., and therefore have no immediate accounting considerations. Accordingly, the put and call rights are not reflected on the Company’s consolidated balance sheet.

As defined in the New Operating Agreement, a “Material Event” for the purpose of allowing Resorts to exercise the right to Call the 17.0359% Interest means the loss, forfeiture, surrender or termination of a material license or finding of unsuitability issued by one or more of the applicable gaming authorities with respect to Thomas R. Reeg, AcquisitionCo or any transferee of AcquisitionCo or any affiliate of AcquisitionCo. In the event a Material Event occurs that permits Resorts to exercise its Call right prior to the Trigger Date, the Interest Holder will be obligated to provide carry back financing to Resorts on terms and conditions reasonably acceptable to it. If a Call is required or ordered by any applicable gaming authority, the Call will be on the terms provided for in the New Operating Agreement, unless other terms are required by any of the applicable gaming authorities, in which event the Call will be on those terms.

As defined in the Resorts Operating Agreement, a “Material Event” for the purpose of allowing the Interest Holder to exercise the right to Put the 14.43% interest to Resorts means the loss, forfeiture, surrender or termination of a material license or finding of unsuitability by any applicable gaming authority with respect to Resorts, any affiliate of Resorts (other than AcquisitionCo or its affiliates), including, but not limited to, the Eldorado-Reno, the Eldorado-Shreveport and Silver Legacy.

In the event of an initial public offering of Resorts’ equity securities, the Put and Call provisions described above will terminate and be of no further force and effect. In the event of a public offering of equity securities by Resorts in which any member of Resorts is allowed to participate, the Interest Holder will have rights under the New Operating Agreement equivalent to those of the other members of Resorts to sell the equity securities of Resorts held by the Interest Holder on a pro rata basis with the other members. At closing under the Purchase Agreement, AcquisitionCo and Resorts entered into a registration rights agreement that also granted to AcquisitionCo and its permitted assigns certain registration rights relating to their equity interest in Resorts following any initial public offering of the equity securities of Resorts.

As a limited liability company, Resorts is not subject to Federal income tax liability. Because holders of membership interests in Resorts are required to include their respective shares of Resorts’ taxable income in their individual income tax returns, Resorts has made distributions to its members to cover such tax liabilities. Distributions for 2007 were, and distributions for subsequent years will be, limited in accordance with the provisions of the New Operating Agreement of Resorts. The New Operating Agreement provides that the Board of Managers will distribute each year to each member an amount equal to such member’s allocable share of taxable income multiplied by the highest marginal combined Federal, state, and local income tax rate applicable to individuals for that year; provided that such distributions will not be made after any event that causes Resorts to thereafter be taxed under the Internal Revenue Code of 1986, as amended, as a corporation.

The Company’s investment in Resorts is accounted for using the equity method of accounting. The Company’s allocated income and loss related to Resorts for the nine months ending September 30, 2008 and year ended December 31, 2007, respectively, is included as a component of income.

A rollforward of the Company’s equity in Eldorado Resorts LLC is as follows:


	Total
Ending balance at December 31, 2007	$	38,256,039
Equity earnings on Resorts		320,616
Distributions from Resorts		(258,911	)

Ending balance at September 30, 2008	$	38,317,744

NGA HoldCo, LLC

Notes to Unaudited Condensed Consolidated Financial Statements—(Continued)

Summarized balance sheet information for Resorts is as follows (in thousands):


	September 30, 2008		December 31, 2007
Current assets	$	44,373	$	50,947
Escrow deposit		10,000		—
Investment in joint ventures		68,984		76,381
Investment in subsidiaries		—		—
Property and equipment, net		242,283		247,725
Intangible assets, net		21,433		21,725
Other assets, net		3,524		2,185

Total assets	$	390,597	$	398,963

Current liabilities	$	33,307	$	31,412
Long-term liabilities		204,186		204,354
13% Preferred Equity Interest		19,289		19,289
Minority Interest		5,799		6,069
Partners’ equity		128,016		137,839

Total liabilities and partners’ equity	$	390,597	$	398,963

Summarized results of operations for Resorts are as follows (in thousands):


	Three months ended September 30, 2008			Nine months ended September 30, 2008
Net revenues	$	78,506		$	218,726
Operating expenses		(69,067	)		199,223
Loss on sale/disposition of long-lived assets		—			(282	)
Equity in Net Income (loss) of Unconsolidated Affiliates		564			(1,313	)

Operating income		10,003			17,908
Other expense		(5,588	)		(16,106	)

Income (loss) before minority interest		4,415			1,802
Minority interest		(12	)		80

Net income (loss)	$	4,403		$	1,882

Effective March 1, 1994, ELLC (96% owned by Resorts and 4% minority interest collectively owned by Recreational Enterprises, Inc. and Hotel Casino Management) and Galleon, Inc. (a Nevada corporation and now an indirect wholly owned subsidiary of MGM MIRAGE) entered into a joint venture (the “Silver Legacy Joint Venture”) pursuant to a joint venture agreement to develop the Silver Legacy Resort Casino (the “Silver Legacy”). The Silver Legacy consists of a casino and hotel located in Reno, Nevada, which began operations on July 28, 1995. Each partner owns a 50% interest in the Silver Legacy Joint Venture.

NGA HoldCo, LLC

Notes to Unaudited Condensed Consolidated Financial Statements—(Continued)

Summarized balance sheet information for the Silver Legacy Joint Venture is as follows (in thousands):


	September 30, 2008		December 31, 2007
Current assets	$	49,085	$	63,080
Property and equipment, net		250,181		256,212
Other assets, net		7,979		8,524

Total assets	$	307,245	$	327,816

Current liabilities	$	16,003	$	23,191
Long-term liabilities		166,664		165,875
Partners’ equity		124,578		138,750

Total liabilities and partners’ equity	$	307,245	$	327,816

Summarized results of operations for the Silver Legacy Joint Venture are as follows (in thousands):


	Three months ended September 30, 2008			Nine months ended September 30, 2008
Net revenues	$	38,727		$	108,639
Operating expenses		(33,474	)		(99,844	)

Operating income		5,253			8,795
Other expense		(4,611	)		(12,967	)

Net income (loss)	$	642		$	(4,172	)

On March 31, 2008, Resorts and a newly formed, wholly owned subsidiary of Resorts (“Resorts Indiana”), entered into a definitive agreement (the “Evansville Agreement”) pursuant to which Resorts Indiana agreed to purchase from Aztar Riverboat Holding Company, LLC (the “Seller”) all of the membership interests in Aztar Indiana Gaming Company, LLC (“Aztar Indiana”), an indirect subsidiary of Tropicana Casinos and Resorts. Aztar Indiana owns the Casino Aztar riverboat gaming and hotel property in Evansville, Indiana (the “Indiana Property”). The agreement provided for a purchase price, subject to certain adjustments, of $245 million, consisting of $190 million of cash, a $30 million note to be issued by a new holding company of Resorts and up to $25 million that would be dependent on the performance of the Indiana Property during the 12 months following closing. At the time it entered into the Evansville Agreement, Resorts placed in escrow a $10 million deposit that was to be credited against the purchase price and released and paid to the Seller upon the closing of the transaction. The purchase was subject to customary conditions including the receipt of requisite gaming approvals and the expiration or early termination of any waiting period under the Hart-Scott-Rodino Improvements Act of 1976. Beginning August 1, 2008, Resorts began incurring a minimum of $196,000 per month in connection with the financing commitment for the Evansville transaction for a total of $392,000 in the third quarter of 2008, and this amount increased to a minimum of $245,000 per month after September 30, 2008 and was to continue until the earlier of the initial funding under the commitment or the termination of the commitment, which would have continued in effect until December 31, 2008 if not earlier terminated. As of September 30, 2008, Resorts had capitalized approximately $1,247,000 relating to the proposed Evansville transaction. Resorts’ proposed acquisition of Aztar Indiana was originally to be consummated utilizing a new term loan facility together with the $10 million escrowed deposit to fund the $190 million cash portion of the purchase price payable at closing and other fees and expenses related to the acquisition. A new revolving credit facility was to be utilized by Resorts at closing to repay in full the then outstanding indebtedness under its current credit facility, which was $11.5 million at September 30, 2008, and provide Resorts with available borrowing capacity provided under its current facility.

On May 5, 2008, Tropicana Entertainment, LLC and certain of its affiliated entities, including Aztar Indiana and the Seller, filed for bankruptcy relief under Chapter 11 of the Bankruptcy Code. As a result of the filing, the Seller became entitled, at its option, to assume or reject prepetition executory contracts such as the Evansville Agreement, subject to approval of the bankruptcy court. As of September 30, 2008, the Seller had not made an election to either assume or reject the Evansville Agreement. On September 22, 2008, the bankruptcy court approved bidding procedures to allow Tropicana to seek higher and better bids to purchase Aztar Indiana. As a result of the process, no higher or better bids were received. Accordingly, a sale hearing was scheduled before the bankruptcy court where Tropicana was to seek the entry of an order approving and authorizing the sale of Aztar Indiana to Resorts Indiana pursuant to the Evansville Agreement.

On November 20, 2008, in light of uncertainty regarding whether the acquisition of Casino Aztar would close, Resorts and the Seller agreed to terminate the Evansville Agreement with the following terms of settlement: (i) payment of $5 million of the escrowed deposit to the Seller with the balance, including any accrued interest less escrow costs, being distributed to Resorts, (ii) the right of Resorts to a $5 million credit against any consideration otherwise owed by Resorts in the event of any future agreement of Resorts to acquire Aztar Indiana or an interest therein, and (iii) mutual releases of the parties from any further obligation under the Evansville Agreement. On November 26, 2008 the bankruptcy court approved the terms of settlement and Resorts gave notice of its termination of the commitment for the financing related to the proposed acquisition of Aztar Indiana.

6. Related Parties

InvestCo owns 99.99% of the Company which is a non-voting interest. The other .01% of the Company, which is the only voting interest of the Company, is owned by VoteCo. InvestCo is solely owned by Newport. In May 2007, Newport contributed 100% of the New Shreveport Notes held by Newport since August 2006 and 11% of the preferred shares held since August 2006 that comprise the Eldorado Shreveport Investments. These Eldorado Shreveport Investments were transferred at fair market value at date of transfer. The related consolidated income statements reflect the interest and dividend income earned from the Eldorado Shreveport Investments since August 2006 and gains on these investments recognized by Newport from the date of the Letter of Intent between Resorts and Newport in November 2006 and the date of acquisition of the interest in Resorts on December 14, 2007. Additionally, certain direct expenses incurred by Newport related to the Eldorado Shreveport Investments are reflected within the consolidated income statements. VoteCo is responsible for the operations of the Company and is solely owned by the managers of Newport.

At September 30, 2008 and December 31, 2007, the Company is owed $5,179,772 from Newport representing $5,118,168 interest earned and received on the Eldorado Shreveport Investments and $61,600 representing the preferred dividend earned and received on 11,000 of Preferred Shreveport shares. There is no formal agreement outlining the settlement of this receivable between Newport and the Company. Accordingly, this receivable is reflected as a non current asset at September 30, 2008 and December 31, 2007, respectively.

7. Subsequent Event

Item 2.

Management’s Discussion and Analysis of Financial Condition and Results of Operations.

Overview

The following management discussion and analysis relates to the Company’s unaudited condensed consolidated financial statements and notes thereto included in Part I, Item 1 of this report.

The Company and its subsidiaries were formed as legal entities in January 2007 for the primary purpose of holding equity, directly or indirectly through affiliates, in one or more entities related to the gaming industry, and to exercise the rights, and manage the distributions received, in connection with those holdings. On December 14, 2007, our affiliate, Acquisition Co, acquired a 17.0359% interest in Resorts (see note 1 of the notes to the Company’s unaudited condensed consolidated financial statements included in this report).

From the date the investments were first acquired by Newport Global in August 2006 until the acquisition of the 17.0359% interest in Resorts, the unaudited condensed consolidated financial statements presented reflect the activity of the Company’s investments associated with Eldorado Shreveport, which consisted principally of bonds and preferred shares (which we refer to as the “Eldorado Shreveport Investments”). The related statements of operations reflect the interest earned by Newport Global associated with the Eldorado Shreveport Investments from August 2006 and any other direct expenses associated with the acquisition of the 17.0359% interest in Resorts.

Resorts owns and operates the Eldorado Hotel & Casino (the “Eldorado-Reno”), a premier hotel/casino and entertainment facility in Reno, Nevada and owns and operates the Eldorado Casino Shreveport, an all suite art deco-style hotel and a tri-level riverboat dockside casino complex situated on the Red River in Shreveport, Louisiana (the “Eldorado-Shreveport”). Resorts’ 96% owned subsidiary, Eldorado Limited Liability Company, a Nevada limited liability company (“ELLC”), owns a 50% interest in a general partnership (the “Silver Legacy Joint Venture”) which owns the Silver Legacy Resort Casino (the “Silver Legacy”), a major, themed hotel/casino located adjacent to Eldorado-Reno. In addition, Resorts owns a 21.25% interest in Tamarack, a small casino in south Reno.

Operational highlights for Resorts for the three months ended September 30, 2008 included net revenues of $78.5 million and operating expenses of $69.1 million. Interest expense for the quarter was approximately $5.8 million. The net result for the quarter was net income of approximated $4.4 million.

For the nine months ended September 30, 2008, operational highlights for Resorts included net revenues of $218.7 million and operating expenses of $199.2 million. In addition, Resorts experienced net income of $0.6 million in equity of unconsolidated affiliates and interest expense of $16.7 million. The net result for the first nine months of 2008 was net income of approximately $1.9 million.

Three months ended September 30, 2008 versus three months ended September 30, 2007

The three months ended September 30, 2008 reflect the Company’s share of the net income of Resorts for the period of $750,261. The Company experienced no such income during the same period a year ago since the 17.0359% interest in Resorts was not acquired until December 14, 2007. The Company had minimal interest income for the three months ended September 30, 2008 compared with interest income of $951,133 for the same 2007 period as a result of the exchange of the Eldorado Shreveport Investments for the 17.0359% interest in Resorts that occurred during the fourth calendar quarter of 2007.

Expenses during the quarter declined approximately $0.5 million when compared to the same period last year as a result of a combination of lower gaming license application fees, a refund of previously expensed gaming application deposits realized during the 2008 period and a reversal in the Texas Franchise Tax for 2006 and 2007. During the third quarter of 2008, the Company determined it was not liable for the Texas Franchise accrued for in the years 2007 and 2006. Accordingly, the Company reversed the previously accrued amount of $200,000 resulting in a decrease to other expenses of $200,000 for the three months ended September 30, 2008. As the effect of the reversal of this accrual is immaterial, it has been recorded in the third quarter of 2008 and prior period financial information has not been restated.

The income tax benefit for the third quarter was a function of adjustments in the allocation of expenses reported on the NGA HoldCo and NGA Blocker tax returns. For third quarter of 2007, the Company did not recognize any income tax expense as a result of the combination of its limited liability company status and because the assets were held by NGA HoldCo, LLC for the period in question. Specifically, as a limited liability company, the Company is treated as a partnership under applicable federal tax rules. Thus, its income, losses and other tax attributes pass through to its owners (the members). For state income tax purposes, limited liability companies are also generally treated as partnerships with the respective tax attributes passed through to its owners (the members). Moreover, the Company’s two wholly owned subsidiaries are also limited liability companies, although Blocker has elected to be taxed as a corporation. At January 1, 2007 and September 30, 2007, all of the assets of the Company were held by NGA HoldCo, LLC and not by Blocker or AcquisitionCo. Accordingly, none of the Company’s earnings for the periods January 1, 2007 to September 30, 2007 or from July 1, 2007 to September 30, 2007 are subject to income tax at the Blocker entity level and, therefore, there is no liability for federal income taxes recorded on the Company’s statements of operations for those periods.

Nine months ended September 30, 2008 versus nine months ended September 30, 2007

The nine months ended September 30, 2008 reflect the Company’s share of the net income of Resorts for the period which is $320,616. The Company experienced no such income during the same period a year ago since the 17.0359% interest in Resorts was not acquired until December 14, 2007. The Company had no interest income for the nine months ended September 30, 2008 compared with interest income of $2,853,401 for the same 2007 period as a result of the exchange of the Eldorado Shreveport Investments for the 17.0359% interest in Resorts that occurred during the fourth calendar quarter of 2007. Similarly, the Company had no unrealized gains for the nine months ended September 30, 2008 compared to $1,992,211 for the same period a year ago as a result of the aforementioned exchange of Eldorado Shreveport Investments for the 17.0359% interest in Resorts.

Expenses during the first nine months declined approximately $0.8 million when compared to the same period last year as a result of lower gaming license application fees, deposit refunds during 2008 and a reversal in the Texas Franchise tax for 2006 and 2007. During the third quarter of 2008, the Company determined it was not liable for the Texas Franchise accrued for in the years 2007 and 2006. Accordingly, the Company reversed the previously accrued amount of $200,000 resulting in a decrease to other expenses of $200,000 for the three months ended September 30, 2008. As the effect of the reversal of this accrual is immaterial, it has been recorded in the third quarter of 2008 and prior period financial information has not been restated.

The income tax benefit for the first nine months of 2008 was a function of adjustments in the allocation of expenses reported on the NGA HoldCo and NGA Blocker tax returns. For the nine months ended September 30, 2007, the Company did not recognize any income tax expense as a result of the combination of its limited liability company status and because the assets were held by NGA HoldCo, LLC for the period in question.

Liquidity and Capital Resources

During the nine month period ended September 30, 2007 the Company incurred approximately $0.9 million of costs associated with its investment in Resorts. The primary component was related to the Company’s efforts in obtaining gaming and related licenses in Nevada and Louisiana.

In contrast, the Company incurred approximately $0.3 million of costs associated with its investment in Resorts during the nine month period ended September 30, 2008. Expenses incurred related primarily to legal and accounting fees for preparation of regulatory filings. For the remainder of 2008 the Company expects to incur additional costs of $0.1 million. These costs will be financed by Member contributions. In addition, the Company received a distribution from Resorts in the amount of $0.3 million to fund its portion of related tax obligations.

Critical Accounting Estimates and Policies

A description of our critical accounting policies can be found in Item 6 of our Annual Report on Form 10-KSB for the year ended December 31, 2007. There have been no material changes to those policies during the nine months ended September 30, 2008.

Item 3.

Quantative and Qualitative Disclosures About Market Risk.

Not Applicable.

Item 4.

Controls and Procedures.

An evaluation was performed by management, with the participation of our Chief Executive Officer and Chief Financial Officer, of the effectiveness of the design and operation of our disclosure controls and procedures. Based on this evaluation, the Chief Executive Officer and Chief Financial Officer have concluded that, as of September 30, 2008, our disclosure controls and procedures are effective to ensure that information required to be disclosed in the reports that we file or submit under the Securities Exchange Act of 1934 is recorded, processed, summarized and reported within the time periods specified in applicable rules and forms of the Securities and Exchange Commission.

There have been no changes in our controls over financial reporting that occurred during the period covered by this report that have materially affected, or are reasonably likely to materially affect, these internal controls over financial reporting.

PART II

OTHER INFORMATION

Item 6.

Exhibits.

The following exhibits are filed or furnished with this report:


31.1		Certification of Principal Executive Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

31.2		Certification of Principal Financial Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

32.1		Certification of Principal Executive Officer furnished as required by Section 906 of the Sarbanes-Oxley Act of 2002.

32.2		Certification of Principal Financial Officer furnished as required by Section 906 of the Sarbanes-Oxley Act of 2002.

SIGNATURES

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


	NGA HOLDCO, LLC

Date: November 26, 2008	By:	/s/ Thomas R. Reeg
		Thomas R. Reeg
		Operating Manager
		(Principal Executive Officer)

Date: November 26, 2008	By:	/s/ Roger A. May
		Roger A. May
		Manager
		(Principal Financial Officer)

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