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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q/A

(Amendment No. 1)

(Mark One)

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

For the quarterly period ended June 30, 2009

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

For the transition period from                to              

Commission file number 0-52042

OCM HOLDCO, LLC

(Exact name of Registrant as specified in its charter)

333 SOUTH GRAND AVENUE

28th FLOOR

LOS ANGELES, CALIFORNIA, 90071

(Address of principal executive offices)

(213) 830-6300

(Registrant’s telephone number)

Check whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Exchange 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  o

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (Section 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes o   No o

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.

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

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OCM HOLDCO, LLC

Index

Form 10-Q

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Forward Looking Statements.

In addition to historical information, this Form 10-Q contains forward-looking statements that involve risks and uncertainties that could cause our actual results to differ materially from those contained in the forward-looking statements. Factors that might cause or contribute to such differences include, but are not limited to, those discussed in the notes to the financial statements of OCM HoldCo, LLC (the “Company”) set forth in the section entitled “Financial Statements.” When used in this report, the words “expects,” “intends,” “anticipates,” “should,” “believes,” “will,” “plans,” “estimates,” “may,” “seeks,” and similar expressions are generally intended to identify forward-looking statements. You should not place undue reliance on these forward-looking statements, which reflect our opinions only as of the date of this Form 10-Q. We undertake no obligation to publicly release any revisions to the forward-looking statements after the date of this document. You should carefully review the information described in this Form 10-Q. You should also carefully review the risk factors described in the previously filed Form 10-K for the year ended December 31, 2008, and those described from time to time in our future reports filed with the Securities and Exchange Commission (the “Commission”).

Explanatory Note

The Company is filing this Amendment No. 1 on Form 10-Q/A (this “Amendment”) to the Company’s Quarterly Report on Form 10-Q for the quarter ended June 30, 2009, originally filed with the Securities and Exchange Commission on August 14, 2009 (the “Original Filing”).

Subsequent to the issuance of our Original Filing, we determined that during the second quarter of 2009 our unconsolidated investee, Cannery Casino Resorts, LLC (“CCR”), elected to abandon a portion of CCR’s temporary casino facilities at The Meadows incurring a non-recurring non-cash loss, which has the effect of decreasing the Registrant’s equity in the earnings of CCR in that quarter.  As a result, the Balance Sheet, Income Statement and Statements of Cash Flows in the Original Filing should no longer be relied upon.

Except as expressly noted herein, this Amendment does not amend any other information set forth in the Original Filing, and we have not updated disclosures contained therein to reflect any events that occurred at a date subsequent to the date of the Original Filing.  However, for the convenience of the reader, this Amendment includes the entirety of the Quarterly Report on Form 10-Q for the three and six months ended June 30, 2009. In addition, in connection with the filing of this Amendment pursuant to Rule 12b-15 of the Securities and Exchange Act of 1934, as amended, the certifications of the Company’s chief executive officer and chief financial officer are attached as exhibits hereto.  Our reassessment of the Evaluation of Disclosure Controls and Procedures as a result of this restatement is reflected in Item 4, with no change to our conclusion of effectiveness.

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PART I—FINANCIAL STATEMENTS

Item 1. Financial Statements.

OCM HoldCo, LLC and Subsidiaries

Consolidated Balance Sheets

See notes to consolidated financial statements.

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OCM HoldCo, LLC and Subsidiaries

Consolidated Statements of Operations (Unaudited)

For the Three and Six Months Ended June 30, 2009 and 2008

See notes to consolidated financial statements.

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OCM HoldCo, LLC and Subsidiaries

Consolidated Statements of Changes in Members’ Equity (Unaudited)

For the Six Months Ended June 30, 2009 and 2008

See notes to consolidated financial statements.

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OCM HoldCo, LLC and Subsidiaries

Consolidated Statements of Cash Flows (Unaudited)

For the Six Months Ended June 30, 2009 and 2008

See notes to consolidated financial statements.

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OCM HoldCo, LLC and Subsidiaries

Notes to Consolidated Financial Statements

NOTE 1— Basis of Presentation and Organization

The consolidated financial statements of OCM HoldCo, LLC (“OCM”), a Delaware limited liability company, as of June 30, 2009 and December 31, 2008, and for the three and six month periods ended June 30, 2009 and 2008, include the accounts of OCM and its wholly-owned subsidiaries (collectively, the “Company”). The interim financial statements presented herein have been prepared by the Company, without audit, pursuant to the rules and regulations of the United States Securities and Exchange Commission (the “Commission”) applicable to interim financial information.  Certain information and disclosures normally included in the annual financial statements prepared in accordance with accounting principles generally accepted in the United States have been condensed or omitted pursuant to such rules and regulations.  In the opinion of management, all adjustments necessary for a fair presentation of the results for the interim periods have been made.  Results of operations for the current interim periods are not necessarily indicative of results to be expected for the full fiscal year.  All significant intercompany accounts and transactions have been eliminated in consolidation.  Management has evaluated the consolidated financial statements for subsequent events through August 14, 2009, which was the date these consolidated financial statements were issued and the Form 10-Q was filed with the Commission.

All of OCM’s issued and outstanding Class A Units are held by OCM VoteCo, LLC, a Delaware limited liability company (“VoteCo”), and all of OCM’s issued and outstanding non-voting Class B Units are held by OCM InvestCo, LLC, a Nevada limited liability company (“InvestCo”).  Neither class has dividend or liquidation preferences, atypical participation rights, or preferred, convertible, or redeemable features.  In general, any sale, assignment or transfer of such units is subject to the prior approval of the gaming regulators of Nevada and Pennsylvania.  VoteCo is responsible for the operations of the Company, including the appointment and removal of managers.  VoteCo has a de minimus economic interest in the Company, less than 0.00015%, and its total equity contributions are limited to $100.

These consolidated financial statements should be read in conjunction with the consolidated audited financial statements and notes thereto included in the Company’s Annual Report on Form 10-K filed with the Commission on March 31, 2009 from which the balance sheet information as of December 31, 2008 was derived.

NOTE 2— Restatement

The accompanying consolidated financial statements have been restated for the following matter.  Subsequent to the issuance of our original filing on Form 10-Q for the second quarter of 2009, we determined that, during the second quarter of 2009, our unconsolidated investee, Cannery Casino Resorts, LLC (“CCR”), elected to abandon a portion of CCR’s temporary casino facilities at The Meadows incurring a non-recurring non-cash loss, which has the effect of decreasing the Company’s equity in the earnings of CCR by $5,040,000 in that quarter and for the six months ended June 30, 2009, decreasing the Company’s investment in CCR and members’ equity by a like amount, with no effect on cash flows.  In addition, in accordance with Financial Accounting Standards Codification 740-270-30-12 and 13, the restatement resulting from this individually significant item also had no effect on the Company’s income tax provision for the periods presented.

NOTE 3—Selected consolidated operating information for Cannery Casino Resorts, LLC and Subsidiaries

Selected unaudited consolidated operating information for Cannery Casino Resorts, LLC and Subsidiaries follows:

The unaudited net income of NP Land, LLC, a Nevada limited liability company (“NP Land”), for the six months ended June 30, 2009 and 2008, was approximately $1,018,000 and $595,000, respectively.

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NOTE 4—Income taxes

OCM is treated as a partnership for federal income tax purposes with the tax effect of its activities recognized in the income tax returns of its members.

OCM owns over 99.99% of the equity interest in OCM Blocker, LLC (“Blocker”), which has elected to be taxed as a corporation and which, in turn, owns 100% of OCM AcquisitionCo, LLC (“AcquisitionCo”) and OCM LandCo, LLC.  The Blocker subsidiaries own the investments in CCR and NP Land, both Nevada limited liability companies that are treated as partnerships for federal income tax purposes.  Accordingly, equity in the earnings of CCR and NP Land are generally taxable to Blocker along with other tax attributes (permanent differences) and business tax credits. The principal exception to this generalization is earnings from the corporate, taxpaying subsidiaries of CCR that own and operate The Meadows, a racetrack and casino in Pennsylvania.

Management believes it is likely that the undistributed earnings from these tax paying subsidiaries of CCR will eventually be realized at a gain through the disposition of the Company’s investment in CCR.  However, because OCM has an option to acquire the investment in CCR from Blocker, a high percentage of such gain is expected to flow directly through to OCM’s members without tax effect to the Company.  In addition, Blocker incurs interest expense on intercompany indebtedness that is deducted for income tax purposes but is eliminated (a permanent difference), along with the related debt, in this consolidation.  OCM also incurs certain other costs, primarily associated with being a reporting company, including professional and other fees, which, for tax reporting purposes, flow through to its members.  OCM also realized substantial income related to a settlement agreement that also flows through to its members.  Because of the circumstances discussed above, the Company’s estimated effective tax rate, for the periods presented, differs from the federal statutory rate of 35%.

Management also believes that a valuation allowance for the Company’s deferred tax assets is not necessary because of the Company’s general business plan of eventually selling its appreciated investment in unconsolidated investees before its net operating loss carryforwards begin to expire in 2021 and, thus, realize the related deferred tax assets.

NOTE 5—Contingencies

The United States is currently experiencing a widespread recession accompanied by, among other things, weakness in the commercial and investment banking systems resulting in reduced credit and capital financing availability, and highly curtailed gaming, other recreational, construction and real estate market activities and general discretionary consumer spending.  It is also engaged in war, all of which are likely to continue to have far-reaching effects on economic conditions in the country for an indeterminate period.  The effects and duration of these developments and related risks and uncertainties on the future operations and cash flows of the Company’s investees and, hence, the Company, cannot be estimated at this time but may likely be significant.

The Company often carries cash and equivalents on deposit with financial institutions substantially in excess of federally-insured limits, and the risk of losses related to such concentrations may be increasing as a result of recent economic developments and uncertainties discussed in the foregoing paragraph.  The extent of any loss that might be incurred as a result of uninsured deposits in the event of a future failure of a bank or other financial institutions, if any, is not subject to estimation at this time.

In March and May 2009, the Company, through a wholly-owned subsidiary, made equity contributions ($5,586,000 and $5,208,000, respectively) to CCR for the purpose of maintaining CCR’s compliance with its debt covenants.

On March 12, 2009, in connection with the termination and settlement of an earlier agreement among the parties (Note 6), the Company and its investees and other affiliates (collectively, the “Seller Parties”) entered into an Option Agreement (the “Option Agreement”) with an Australian company, Crown Limited, and certain of its affiliates (collectively the “Crown Parties”). The Option Agreement grants the Crown Parties the option to purchase all of the direct and indirect interests of the original equityholders in CCR, on terms substantially similar to the terms of an earlier purchase agreement described elsewhere in this filing.  If the Crown Parties exercise their option under the Option Agreement, then upon the consummation of the transactions contemplated thereby, the Crown Parties will collectively own, directly or indirectly, 100% of the issued and outstanding units of CCR for an aggregate purchase price of approximately $1.7 billion (such purchase price includes the Preferred Purchase Price as defined below), subject to adjustment upon the terms and conditions of the Option Agreement.

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On April 15, 2009, the Company was no longer conditionally required in certain limited circumstances previously disclosed to make an additional equity investment in CCR’s subsidiary, PA Meadows.

On April 24, 2009, CCR sold to the Crown Parties 71,614 Series B Preferred Units of CCR (the “Series B Units”) for an aggregate purchase price of $320 million in cash (the “Preferred Purchase Price”) in accordance with the terms and conditions of the Preferred Purchase Agreement by and among the Crown Parties, the Seller Parties and CCR.    The Series B Units have no coupon and are not subject to mandatory redemption.

In May 2009, CCR distributed $26.21 million to the Company.

NOTE 6—Other Income, Settlement Agreement

As stated above, on March 12, 2009, the Seller Parties and the Crown Parties entered into a termination and settlement agreement, whereby the parties agreed to (a) terminate an earlier purchase agreement pursuant to which the Crown Parties were to purchase all of the membership units of CCR from the Seller Parties, and (b) settle and release all possible claims among the parties related to the earlier purchase agreement.  In connection with the termination of the purchase agreement and the settlement of claims, the Crown Parties paid to the Seller Parties $50 million, of which the Company and CCR’s 58%-member received $21 million and $29 million, respectively.  Additionally, CCR incurred legal expenses on behalf of its members of approximately $2.9 million ($1.2 million to the Company) in connection with the termination of the earlier purchase agreement.  The $1.2 million is included in these financial statements as a distribution received from CCR and related professional fees in like amount.

NOTE 7—Financial Instruments

Except for cash and equivalents, the fair value of which equals its carrying value, the only significant financial instruments the Company has is its investment in unconsolidated investees accounted for on the equity method for which fair value disclosure is not required.  Cash equivalents consist of money market funds.

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

Overview

The following management discussion and analysis of the Company’s financial condition and results of operations should be read in conjunction with the unaudited interim financial statements and the notes thereto included in Part I, Item 1 of this Quarterly Report on Form 10-Q.

The Company and its consolidated subsidiaries were formed on July 22, 2005, at the direction of affiliates of Oaktree Capital Management, L.P., a Delaware limited partnership (formerly Oaktree Capital Management, LLC) (“Oaktree”), for the purpose of participating in various activities relating to the gaming industry.

All of the Company’s issued and outstanding Class A Units are held by OCM VoteCo, LLC, a Delaware limited liability company (“VoteCo”), and all of the Company’s issued and outstanding non-voting Class B Units are held by OCM InvestCo, LLC, a Nevada limited liability company (“InvestCo”).  VoteCo and InvestCo are affiliates of Oaktree.  VoteCo is responsible for the operations of the Company, including the appointment and removal of managers.  VoteCo has a de minimus economic interest in the Company, less than 0.00015%, and its total equity contributions are limited to $100.

Background

In 2006, the Company, through a wholly-owned subsidiary, OCM AcquisitionCo, LLC, a Nevada limited liability company (“AcquisitionCo”), acquired a 42% equity interest in CCR, and a 33-1/3% equity interest in NP Land, LLC, a Nevada limited liability company (“NP Land”).  The Company’s current business consists primarily of its ownership of these equity interests.  CCR, through wholly-owned subsidiaries, owns and operates the Cannery Hotel and Casino (“The Cannery”), located in North Las Vegas, Nevada, the Eastside Cannery Casino and Hotel (the “Eastside Cannery”), located in Las Vegas, Nevada, and operates the Rampart Casino (the “Rampart”), located in the Summerlin area of northwest Las Vegas.  In addition, CCR, through a wholly-owned subsidiary, PA Meadows, LLC, a Delaware limited liability company (“PA Meadows”), owns and operates a racetrack and a casino at The Meadows, an operating harness racetrack located in North Strabane Township, Washington County, Pennsylvania.

On May 18, 2007, CCR consummated an $860 million refinancing consisting of a $110 million five-year first lien revolving credit facility, a $350 million six-year first lien term loan, a $285 million six-year delay draw first lien term loan, and a $115 million seven-year second lien term loan (collectively, the “Credit Agreements”).  Portions of the proceeds were used to retire then-existing debt, and to partially fund the completion of the Eastside Cannery and the permanent casino facility at The Meadows.  The Eastside Cannery opened on August 28, 2008 and the 350,000 square-foot permanent casino at The Meadows opened on April 15, 2009.

The primary assets of NP Land are approximately 22 acres of land (the current site of the Eastside Cannery), which land is currently leased to a wholly-owned subsidiary of CCR.

On December 11, 2007, the Company entered into a definitive purchase agreement (the “Original Purchase Agreement”) by and among (i) Crown Limited, an Australian company (“Crown”), (ii) Crown CCR Group Investments One, LLC, a Delaware limited liability company and an indirect wholly owned subsidiary of Crown (“Crown One”), and Crown CCR Group Investments Two, LLC, a Delaware limited liability company and an indirect wholly owned subsidiary of Crown (“Crown Two” and collectively with Crown and Crown One, the “Crown Parties”), (iii) Millennium Gaming, Inc., a Nevada corporation (“Millennium,” and together with the Company, the “Original Equityholders”), (iv) the Company, and (v) CCR (collectively, CCR with Millennium and the Company,  the “Seller Parties”), pursuant to which Crown One and Crown Two (collectively, the “Purchasers”) were to purchase, directly or indirectly, all of the membership units of CCR from the Original Equityholders.

On March 12, 2009, the Seller Parties and the Crown Parties entered into a Termination and Settlement Agreement (the “Termination and Settlement Agreement”), whereby the parties agreed to (a) terminate the Original Purchase Agreement, and (b) settle and release claims among the parties to the Original Purchase Agreement relating to the Original Purchase Agreement, and in connection therewith, Crown One and Crown Two, collectively, paid the Original Equityholders a cash payment of $50 million, of which the Company received $21 million.

Simultaneously with the execution and delivery of the Termination and Settlement Agreement and in accordance with the terms thereof, the Crown Parties, the Original Equityholders and CCR entered into a Preferred Purchase Agreement

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(the “Preferred Purchase Agreement”).  On April 24, 2009, CCR sold to the Purchasers 71,614 Series B Preferred Units of CCR (the “Series B Units”) for an aggregate purchase price of $320 million in cash (the “Preferred Purchase Price”) in accordance with the terms and conditions of the Preferred Purchase Agreement.  Of the Preferred Purchase Price, $20 million represents reimbursement of certain project costs incurred by CCR related to various project costs at The Meadows.   The Series B Units have no coupon and are not subject to mandatory redemption.  The “Option Agreement,” as described below, remains unaffected.

Simultaneously with the execution and delivery of the Termination and Settlement Agreement and in accordance with the terms thereof, the Crown Parties, the Original Equityholders and CCR entered into an Option Agreement (the “Option Agreement”), which grants the Crown Parties, subject to the terms and conditions set forth in the Option Agreement, the option to complete the purchase of all of the direct and indirect interests of the Original Equityholders in CCR on terms substantially similar to the terms of the Original Purchase Agreement.  If the Crown Parties exercise their option under the Option Agreement, then upon the consummation of the transactions contemplated by the Option Agreement, the Crown Parties will collectively own, directly or indirectly, 100% of the issued and outstanding units of CCR for an aggregate purchase price of approximately $1.7 billion (such purchase price includes the Preferred Purchase Price), subject to adjustment upon the terms and conditions of the Option Agreement.

In May 2009, CCR distributed $26.21 million of the Preferred Purchase Price to the Company, and concurrent with such distribution, the Company, through AcquisitionCo, made a $5.21 million equity investment in CCR for the purpose of maintaining CCR’s compliance with its debt covenants.  The additional equity contribution by AcquisitionCo was funded by an equity contribution from OCM Blocker, LLC, which in turn was funded by a loan from the Company.

Each of the foregoing summaries of the Original Purchase Agreement, the Termination and Settlement Agreement, the Preferred Purchase Agreement and the Option Agreement, does not purport to be complete and is qualified in its entirety by reference to the Original Purchase Agreement, the Termination and Settlement Agreement, the Preferred Purchase Agreement or the Option Agreement, as the case may be, filed as Exhibit 10.30, Exhibit 10.31, Exhibit 10.32 and Exhibit 10.33, respectively, to the Company’s Annual Report on From 10-K filed with the Commission on March 31, 2009.

Operations Analysis.

Results of Operation

Material variables and factors effecting the Company’s income before income taxes for the three months ended June 30, 2009 compared to the three months ended June 30, 2008 follows:

·                  CCR’s net income decreased approximately $3.9 million for the three months ended June 30, 2009 compared to the same period for the prior year, as discussed in the operational highlights for CCR below.  This decrease resulted in a $1.6 million decrease in equity in earnings of unconsolidated investees (restated).

·                  The increase in professional fees was the result of increased legal and accounting fees associated with the termination of the Original Purchase Agreement.

Material variables and factors effecting the Company’s income before income taxes for the six months ended June 30, 2009 compared to the six months ended June 30, 2008 follows:

·                  In March 2009, the Company received a payment of $21 million from the Crown Parties as its share of the settlement payment in connection with the termination of the Original Purchase Agreement as discussed above.

·                  CCR’s net income decreased by approximately $20.1 million for the six months ended June 30, 2009 compared to the same period for the prior year, as discussed in the operational highlights for CCR below.  This decrease resulted in a $8.4 million decrease in equity in earnings of unconsolidated investees.

·                  The increase in professional fees was the result of increased legal and accounting fees associated with the termination of the Original Purchase Agreement.

The Company’s provision for income tax benefits does not bear an expected relationship with its income before income tax benefits because of material nonrecurring transactions, including some that flow-through and are taxable to the Company’s members.  In addition, material tax attributes of the Company’s unconsolidated investees, primarily CCR, flow to

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the Company through OCM Blocker, LLC, an entity in which the Company owns 99.99% of the equity interest, that are either nonrecurring or vary significantly.  Further, significant income of CCR is taxable to corporate subsidiaries of CCR and not the Company because management believes that the undistributed earnings from CCR’s tax-paying subsidiaries will be realized at a gain through an eventual sale of the Company’s investment in CCR.  See Note 4 to the consolidated financial statements for additional details.

The Company’s operations are materially affected by its equity in the operations of CCR and, to a much lesser extent, NP Land.  The United States is experiencing a recession accompanied by, among other things, reduced casino gaming and other recreational activity nationwide, instability in the commercial and investment banking systems and reduced credit availability, and is also engaged in war, all of which are likely to have far-reaching effects on economic activity in the country for an indeterminate period. The effects and probable duration of these conditions and related uncertainties on the Company’s unconsolidated investees’ future operations and cash flows cannot be estimated at this time but may be significant.  Operational highlights for CCR for the three and six months ended June 30, 2009 and 2008 are restated as follows:

·                  CCR’s consolidated revenues for the three and six months ended June 30, 2009, increased approximately 23% and 18.4%, respectively, over the comparable prior year periods.  For the three and six months ended June 30, 2009, revenues at The Meadows increased 24.6% and 18.5%, respectively, compared to the same periods of the prior year, primarily due to the opening of the permanent casino facility on April 15, 2009.  The Eastside Cannery opened in August 2008 and its revenues for the three and six months ended June 30, 2009 were $16.8 million and $31.6 million.  The Rampart Casino’s revenues for the three and six months ended June 30, 2009, decreased approximately 12.9% and 13.3%, respectively, primarily due to the weakness in the Las Vegas economy resulting in less customer spending per visit.  Due to this reason, as well as construction on I-15 and the opening of a new competitor in November 2008, The Cannery’s revenues for the three and six months ended June 30, 2009 also decreased approximately 18.9% and 18.2%, respectively compared to the same periods of the prior year.

·                  CCR’s consolidated net income for the three months ended June 30, 2009, decreased approximately $3.9 million over the comparable prior year period, as other income (net) increased $18 million and income tax expense decreased $9.4 million, offset by a decrease in income from operations of $31.2 million.  The $18 million increase in other income (net) was the result of a $20 million non recurring gain related to reimbursement of various project costs at The Meadows, offset by an increase in interest expense.  The decrease in income from operations was primarily the result of approximate $20.5 million partial abandonment of the temporary facility at the Meadows and increased depreciation expense ($8.9 million) associated with the opening of the Eastside Cannery and the permanent casino at The Meadows, loss on abandonment of the temporary casino at the Meadows ($20.5 million), and decreased margins primarily in the Las Vegas casinos caused by less customer spending per visit.

·                  CCR’s consolidated net income for the six months ended June 30, 2009 decreased approximately $20.1 million from the comparable prior year period as a result of approximate $20.5 million partial abandonment of the temporary facility at the Meadows and increased depreciation expense ($14 million) related to the opening of the Eastside Cannery and the permanent casino at The Meadows, offset by net gains associated with the termination of the Original Purchase Agreement and investment banking agreement of $11.0 million and decrease in income tax expense of $7.5 million.

Liquidity and Capital Resources

The United States is currently experiencing a recession accompanied by, among other things, weakness in the commercial and investment banking systems resulting in reduced credit and capital financing availability, and highly curtailed gaming, other recreational, construction and real estate market activities and general discretionary consumer spending.  It is also engaged in war, all of which are likely to continue to have far-reaching effects on economic conditions in the country for an indeterminate period.  The effects and duration of these developments and related risks and uncertainties on the future operations and cash flows of the Company’s investees and, hence, the Company, cannot be estimated at this time but may likely be significant.

As noted above, the Company received $21 million in March 2009 in connection with the termination of the Original Purchase Agreement and subsequently received an additional distribution from CCR totaling $21 million net of the $5.21 million concurrent equity contribution to CCR.  As a result, subject to the economic risks and uncertainties discussed in the foregoing paragraph, management believes the Company has sufficient liquidity to meet its capital resource needs for the foreseeable future.  Moreover, the Company has no current investment or financing plans.

Off Balance Sheet Arrangements

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Credit Agreements.

On May 18 2007, CCR entered into the Credit Agreement.  Portions of the proceeds were used to retire existing debt, including the then-existing $250 million credit facility, and to partially fund the completion of the Eastside Cannery and the permanent casino facility at The Meadows.  For more information about the syndicated credit facilities, see the Company’s periodic filing on Form 8-K filed with the Commission on May 24, 2007.

CCR’s obligations under the Credit Agreements are guaranteed by its subsidiaries and are secured by substantially all of the real and personal property of CCR and its subsidiaries, except that certain gaming-related accounts and assets are not pledged under the Credit Agreements.

Additional Conditional Commitments.

In March 2009, Millennium and the Company, through AcquisitionCo, made equity contributions to CCR for the purpose of maintaining CCR’s compliance with its debt covenants.  The equity contribution by AcquisitionCo was funded by an equity contribution from OCM Blocker, LLC, which in turn was funded by a loan from the Company.

As of April 15, 2009, the Company was no longer conditionally committed in certain limited circumstances previously disclosed to make an additional equity investment in CCR’s subsidiary, PA Meadows.

In May 2009, Millennium and the Company, through AcquisitionCo, made additional equity contributions to CCR for the purpose of maintaining CCR’s compliance with its debt covenants.

Critical Accounting Estimates and Policies.

Although the Company’s consolidated financial statements necessarily make use of certain accounting estimates by management, we believe no matters are the subject of such estimates that are so highly uncertain or susceptible to change as to present a significant risk of a material impact on its financial condition or results of operations as more fully explained in the following paragraph. Moreover, except as discussed below, the Company does not now employ any critical accounting policies that are selected from among available alternatives or require the exercise of significant management judgment to apply. Similarly, except for the selection of depreciable lives and depreciation methods and assumptions used to estimate the fair value of rate swap agreements and investments, consisting of preferred auction rate securities, the accounting policies of the Company’s unconsolidated investees also do not require the exercise of significant management judgment to apply.

The realization of substantially all of the Company’s assets is dependent upon an eventual sale of its investment in the unconsolidated investees at a price sufficient to realize the carrying value of the Company’s assets.  Further, based in part on prior transactions with the Crown Parties, management believes, despite the current economic conditions, that the estimated fair value of the Company’s investment in unconsolidated investees exceeds the carrying value of its investment and all other assets by a substantial amount such that any risk of not realizing the carrying values and having a material impact on the Company’s financial condition or results of operation is remote.  Additionally, it is management’s opinion that the eventual sale of the Company’s appreciated investment in unconsolidated investees makes realization of its deferred tax assets more likely than not.

The Company has elected to continue to use the equity method of accounting for its investment in CCR and NP Land rather than the fair value option available under Financial Accounting Standards Board Statement No. 159, The Fair Value Option for Financial Assets and Financial Liabilities.

Recently Issued Accounting Pronouncements.

In July 2009, the FASB issued SFAS 168, FASB Accounting Standards Codification (“SFAS 168”), as the single source of authoritative non-governmental U.S. generally accepted accounting principles. SFAS 168 is effective for interim and annual periods ending after September 15, 2009. All existing accounting standards will be superseded by the codification. All other accounting literature not included in the codification is non-authoritative. The implementation of this standard is not expected to have a material impact on our future financial position, results of operations or cash flows.

In May 2009, the FASB issued SFAS 165, Subsequent Events (“SFAS 165”), which provides guidance to establish general standards of accounting for and disclosures of events that occur after the balance sheet date but before financial statements are issued or are available to be issued. SFAS 165 is effective for interim or fiscal periods ending after June 15, 2009. The implementation of this standard did not have a material impact on our financial position, results of operations or cash flows.

In April 2009, the FASB issued FASB Staff Position 107-1 and APB 28-1, Interim Disclosures about Fair Value of Financial Instruments (“FSP 107-1”), which requires additional disclosures about fair value of financial instruments for interim reporting periods. FSP 107-1 is effective for interim and annual reporting periods ending after June 15, 2009. The implementation of this standard did not have a material impact on our financial position, results of operations or cash flows.

Item 3.   Quantitative and Qualitative Disclosures About Market Risk.

Not applicable.

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Item 4T. Controls and Procedures.

Disclosure Controls and Procedures.

As of the end of the period covered by this report, the Company carried out an evaluation, under the supervision and with the participation of the Company’s management, including the Company’s principal executive officer and principal financial officer, of the effectiveness of the design and operation of the Company’s disclosure controls and procedures, as such term is defined under Rule 13a-15(e) or Rule 15d-15(e) under the Securities Exchange of 1934, as amended (the “Exchange Act”).  Based upon that evaluation, the principal executive officer and principal financial officer concluded that, as of June 30, 2009, the Company’s disclosure controls and procedures are effective.

Subsequent to the filing of the Form 10-Q and in preparation for the filing of the Form 10-K, the Company became aware that during the second quarter of 2009 its unconsolidated investee, Cannery Casino Resorts, LLC (“CCR”) elected to abandon a portion of CCR’s temporary casino facilities at The Meadows incurring a non-recurring non-cash loss, which had the effect of decreasing the Registrant’s equity in the earnings of CCR in that quarter.

We do not have control over our equity method investee or the investee’s financial reporting.  Per Question No. 2 of “Management’s Report on Internal Control Over Financial Reporting and Certification of Disclosure in Exchange Act Periodic Reports” (revised September 24, 2007), we understand that “the accounts of an equity method investee are not consolidated on a line-by-line basis in the financial statements of the investor, and as such, controls over the recording of transactions into the investee’s accounts are not part of the registrant’s internal control structure.”  While we further understand that we must have controls over such things as the selection of accounting methods for our investments, the recognition of equity method earnings and losses (as reported to us by our investee) and other matters affecting our investment account balance, we lack control over the investee’s financial reporting functions.  However, we believe we have even more safeguards in place than may be reasonably required by interpreting FAQ No. 2.

For example, even recognizing that the error occurred at the investee account level and that we do not have control over the financial reporting functions of the investee, we have implemented the following additional safeguards that we believe are appropriate in the circumstances including:

·              A representative of our management has been assigned to maintain frequent communication with the investee’s executive and financial management.  This representative reports directly to one of our managers who is also a member of the investee’s management committee.

·              The investee operates in the highly regulated gaming industry in Nevada and Pennsylvania and is required to have an annual financial statement audit.  We receive a copy of the annual audited financial statements.  This annual audit process of the investee by its independent audit firm in conjunction with our own annual audit by the same firm led to the discovery of the error.

·              We have requested and received permission from the investee for our auditors to perform certain inquiries and other limited procedures at the investee level in connection with our quarterly reviews, which procedures did not result in the discovery of subject error.

Following discovery of the error, we conducted extensive interviews of the investee’s management related to the circumstances giving rise to the error and have been informed and believe that the error resulted from human failures.  The prudent exercise of diligence and judgment is simply imperfect.  We have strongly encouraged management of the investee to take all necessary steps to prevent a future lapse.

Accordingly, based on the safeguards cited above, the restatement had no affect on our officers’ conclusions regarding the effectiveness of our reporting and disclosure controls.

Changes in internal control over financial reporting.

No change in our internal control over financial reporting (as defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act) occurred during the fiscal quarter ended June 30, 2009 that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

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PART II—OTHER INFORMATION

Item 1. Legal Proceedings.

None.

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds.

None.

Item 3. Defaults Upon Senior Securities.

None.

Item 4. Submission of Matters to a Vote of Security Holders.

No matters were submitted to a vote of security holders during the quarter ended June 30, 2009.

Item 5. Other Information.

None.

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

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SIGNATURES

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

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