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Elsinore Corp – ‘10-Q’ for 3/31/96

As of: Wednesday, 5/15/96 · For: 3/31/96 · Accession #: 311049-96-9 · File #: 1-07831

  As Of                Filer                Filing    For·On·As Docs:Size

 5/15/96  Elsinore Corp                     10-Q        3/31/96    2:56K

Quarterly Report — Form 10-Q
Filing Table of Contents

Document/Exhibit                   Description                      Pages   Size 

 1: 10-Q        Quarterly Report                                      22±   102K 
 2: EX-27       Financial Data Schedule (Pre-XBRL)                     1      7K

10-Q — Quarterly Report
Document Table of Contents

Page	(sequential)	\|	(alphabetic)	Top
			Alternative Formats (Word, et al.) Consolidated Financial Statements: Contract Exhibits and Reports of Form 8-K Legal Proceedings Management's Discussion and Analysis of Financial Condition and Results of Operations Other Information
1	1st Page - Filing Submission
2	Item 1. Consolidated Financial Statements:
"	Contract
3	Item 2:. Management's Discussion and Analysis of Financial Condition and Results of Operations
4	Item 1. Legal Proceedings
"	Item 5. Other Information
"	Item 6. Exhibits and Reports of Form 8-K

10-Q 1st “Page” of 4 TOC ↑Top Previous Next ↓Bottom Just 1st
 
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 March 31, 1996
or                                                                

[ ] 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 1-7831                       

ELSINORE CORPORATION                    
(Exact name of registrant as specified in its charter)                    

Nevada                                        88 0117544
(State or Other Jurisdiction                        (IRS Employer         
of Incorporation or Organization)                Identification No.)    

202 FREMONT STREET, LAS VEGAS, NEVADA          89101  
(Address of Principal Executive Offices)      (Zip Code)  

Registrant's Telephone Number (Including Area Code): 702/385-4011         

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         
ninety (90) days.                                                         

YES X          NO                 

Indicate the number of shares outstanding of each of the issuer's         
classes of common stock, as of the latest practicable date.               

TITLE OF STOCK                                       NUMBER OF SHARES     
CLASS                      DATE                     OUTSTANDING   

Common                  May 15, 1996                  15,891,793  

10-Q 2nd “Page” of 4 TOC 1st Previous Next ↓Bottom Just 2nd
Elsinore Corporation and Subsidiaries (Debtor-in-Possession)                
Form 10-Q                 
For the Quarter Ended March 31, 1996                

INDEX               

PART I.  FINANCIAL INFORMATION:                                 PAGE            

Item 1.     Consolidated Financial Statements:                        

Balance Sheets at March 31, 1996 and          
         December 31, 1995                                 3 - 4

Statements of Operations for the Three        
     Months Ended March 31, 1996 and 1995              5

Statements of Cash Flows for the Three        
     Months Ended March 31, 1996 and 1995              6

        Notes to Financial Statements                     7-18

Item 2.     Management's Discussion and Analysis of                   
Financial Condition and Results of            
     Operations                                       19

PART II.  OTHER INFORMATION                                                     

Item 1.     Legal Proceedings                                23       

Item 5.     Other Information                                23       

Item 6.     Exhibits and Reports of Form 8-K                 23       

SIGNATURES                                                        24            

PART 1.  FINANCIAL INFORMATION                                                  
Item 1.  Consolidated Financial Statements:                                     

Elsinore Corporation and Subsidiaries (Debtor-In-Possession)              
Consolidated Balance Sheets               
March 31, 1996 and December 31, 1995              
(Dollars in Thousands)              

                                                    March 31,   December 31,
                                                     1996           1995
                                     (UNAUDITED)

Assets                

Current Assets:                                                                 
Cash and cash equivalents                            $ 5,623        $ 3,572 
Accounts receivable, less allowance for                                     
doubtful accounts of $208 and $201,                                     
 respectively                                           637            729
Inventories                                              242            248 
Prepaid expenses                                       1,470          1,029 
    Total current assets                              7,972          5,578

Property and equipment, net                             25,033         25,473   

Leasehold acquisition costs, net of accumulated                                 
amortization of $4,743 and $4,691,                                          
respectively                                           2,096          2,148 

Investment in Fremont Street Experience LLC, net                                
of accumulated amortization of $150                                       
and $0, respectively                                  2,850          3,000

Other assets                                               836            902   

                                                   $ 38,787       $ 37,101

See accompanying notes to consolidated financial statements.

Elsinore Corporation and Subsidiaries (Debtor-In-Possession)              
Consolidated Balance Sheets               
March 31, 1996 and December 31, 1995              
(Dollars in Thousands)              

                                                  March 31,   December 31,
                                                     1996           1995
                                   (UNAUDITED)
Liabilities and Shareholders' Deficit               

Current liabilities:                                                            
Accounts payable                                    $    927       $    676 
Accrued interest                                         250            100 
Accrued expenses                                       6,709          5,352 
Current portion of capital                                                  
 Lease obligations                                       55             54
    Total current liabilities                         7,941          6,182

Prepetition liabilities not subject to compromise:                              
Long-term debt, subject to demand for                                       
 acceleration, net of unaccreted discount             2,955          2,902
Capital lease obligations, net of current                                   
 portion                                              1,517          1,531
                                                      4,472          4,433
Prepetition liabilities subject to compromise:                                  
Accounts payable                                       3,606          4,070 
Prior period income taxes and related                                       
interest                                              2,985          2,985
Accrued interest                                       4,419          4,419 
Accrued expenses                                          28             28 
Long-term debt subject to                                                   
 demand for acceleration                             58,425         58,425
                                                     69,471         69,927

   Total liabilities                                 81,884         80,542

Shareholders' deficit(note 1):                                                  
Common stock, $.001 par value per share.                                    
Authorized 100,000,000 shares.  Issued                                  
 and outstanding 15,891,793 shares                       16             16
Additional paid-in capital                            65,315         65,315 
Accumulated deficit                                 (108,428)      (108,772)
     Total shareholders' deficit                     (43,097)       (43,441)

Commitments and contingencies(notes 4 and 6).                                   
                                                   $ 38,787       $ 37,101

See accompanying notes to consolidated financial statements.

Elsinore Corporation and Subsidiaries (Debtor-In-Possession)              
Consolidated Statements of Operations               
Three Month Periods Ended March 31, 1996 and 1995               
(Dollars in Thousands, Except Per Share Amounts)              
(UNAUDITED)               

                                 1996               1995
Revenues:                                                                       
Casino                               $    11,174        $    10,758           
Hotel                                      2,996              2,442           
Food and beverage                          3,501              3,259           
Other                                        171                694           
Promotional allowances                    (1,956)            (1,892)          
                               15,886             15,261

Costs and Expenses:                                                             
Casino                                     4,862              5,438           
Hotel                                      1,878              1,881           
Food and beverage                          1,756              1,592           
Taxes and licenses                         1,811              1,820           
Selling, general and administrative        2,450              2,889           
Rents                                      1,017                966           
Casino development costs                     -                1,037           
Depreciation and amortization                970              1,019           
Interest (Contractual interest                                                
for 1996 of $2,116)                        264              2,293         
Interest, prior period income tax                                             
obligation                                 -                  458         
                               15,008             19,393
Income (loss) before                                                  
Reorganization items                   878             (4,132)    
Reorganization items                         534                -             
Income (loss) before income taxes        344             (4,132)      

Income taxes                                 -                  -             
Net income (loss)                $       344        $    (4,132)      

Income (loss) per common                                                        
and common equivalent share                                                   
(note 5)                           $      0.02        $     (0.28)        

Weighted average number of common                                               
shares outstanding                    15,891,793         14,801,884           

See accompanying notes to consolidated financial statements.              

Elsinore Corporation and Subsidiaries (Debtor-In-Possession)              
Consolidated Statements of Cash Flows               
Three Month Periods Ended March 31, 1996 and 1995               
(Dollars in Thousands)              
(UNAUDITED)               

                                     1996         1995

Cash flows from operating activities:                                           
Net income (loss)                           $    344     $ (4,132)          
Adjustments to reconcile net income (loss)                                      
to net cash provided by (used in)                                             
operating activities:                                                       
Depreciation and amortization                  970        1,019         
Accretion of discount on long-term debt         53          308         
Write-off of casino development costs           -         1,037         
Reorganization items                           534          -           
Accrued expenses                             1,365          -           
Change in other assets and liabilities,                                 
net                                         (481)        (374)      
Liabilities subject to compromise:                                      
Accounts payable                            (464)         (95)      
Prior period income taxes                                           
and related interest                         -        (1,275)     
Accrued interest and other                                          
expenses                                     -         3,732      
Total adjustments                        1,977        4,352     
Cash provided by                                            
operating activities                 2,321          220 

Cash flows from investing activities:                                           
Notes and loans receivable from Native                                      
American Tribes                                 -        (5,729)        
Capital expenditures                            (257)         (54)          
Cash used in investing                                      
activities                            (257)      (5,783)

Cash flows from financing activities:                                           
Issuance of long-term debt                        -         1,706           
Principal repayments of long-term debt           (13)         (22)          
Proceeds from issuance of common stock,                                     
net of underwriting discounts and                                       
commissions and other direct costs              -         3,742         
Debt issuance costs                               -           (62)          
Modification of capital lease obligation          -           -             
Cash (used in) provided by                                  
financing activities                   (13)       5,364 

Increase (decrease) in cash and                                                 
cash equivalents                               2,051         (199)          

Cash and cash equivalents at beginning of                                       
period (including restricted amounts of                                     
$0 and $3,685 at December 31, 1995                                          
and 1994, respectively)                        3,572        7,092           

Cash and cash equivalents at end of period     $ 5,623      $ 6,893             

See accompanying notes to consolidated financial statements.              

Elsinore Corporation and Subsidiaries (Debtor-In-Possession)              
Notes to Consolidated Financial Statements              
March 31, 1996 and December 31, 1995              
(Unaudited)               

1.   Reorganization Under Chapter 11, Liquidity and Financial                   
Condition                                                           

On October 31, 1995, Elsinore Corporation and certain subsidiaries filed        
voluntary petitions (the "Chapter 11 filing") in the United States Bankruptcy   
Court for the District of Nevada (the "Bankruptcy Court") seeking to            
reorganize under Chapter 11 of the United States Bankruptcy Code (the           
"Bankruptcy Code").  On November 10, 1995, Olympia Gaming Corporation, a        
wholly-owned subsidiary, filed a voluntary Chapter 11 petition in the same      
court.  The Company is operating as a debtor-in-possession under the            
supervision of the Bankruptcy Court.  As a debtor-in-possession, the Company    
is authorized to operate its business but may not engage in transactions        
outside its ordinary course of business without the approval of the Bankruptcy  
Court.                                                                          

Subject to certain exceptions under the Bankruptcy Code, the Company's filing   
for reorganization automatically enjoined the continuation of any judicial or   
administrative proceedings against the Company.  Any creditor actions to        
obtain possession of property from the Company or to create, perfect or         
enforce any lien against the property of the Company are also enjoined.  As a   
result, the creditors of the Company are precluded from collecting              
pre-petition debts without the approval of the Bankruptcy Court.                

On February 28, 1996, the last day of the 120 day period within which the       
Company had the exclusive right to do so, the Company filed a plan of           
reorganization (the "Plan") and accompanying disclosure statements (see         
below).  The Company has 60 days to obtain necessary acceptances of the Plan.   
However, such period may be extended at the discretion of the Bankruptcy        
Court, but only on a showing of good cause.  On May 13, 1996, the court set     
the plan confirmation hearing date for July 16, 1996. The disclosure statement  
was approved on May 13, 1996 subject to the insertion of certain language       
acceptable to the 1993 bondholders. Subject to certain exceptions set forth in  
the Bankruptcy Code, acceptance of the Plan requires approval of the            
Bankruptcy Court and affirmative vote (i.e. 50% of the number and 66-2/3% of    
the dollar amount) of each class of creditors and equity holders whose claims   
are impaired by the Plan.  Alternatively, absent the requisite approvals, the   
Company may seek Bankruptcy Court approval of the Plan under "cramdown"         
provisions of the Bankruptcy Code, assuming certain tests are met.  If the      
Company fails to achieve acceptance of the Plan within the exclusivity period   
prescribed or any extensions thereof, any creditor or equity holder will be     
free to file a plan of reorganization with the Court and solicit acceptances    
thereof.                                                                        

There can be no assurance that the plan of reorganization submitted by the      
Company will be confirmed.  There also can be no assurance that, with or        
without a plan of reorganization, the Company can generate sufficient cash to   
sustain operations.  If at any time the Creditors' or Equity Committees or any  
creditor or equity holder of the Company believes that the Company is or will   
not be in a position to sustain operations, such party can move the Bankruptcy  
Court to compel liquidation of the Company's estate by conversion to Chapter 7  
bankruptcy proceedings or otherwise.  In the event that liquidation is forced   
upon the Company, it is likely that the Company's unsecured creditors and       
equity holders will receive nothing from the net proceeds generated by          
liquidation.                                                                    

Elsinore Corporation and Subsidiaries (Debtor-In-Possession)              
Notes to Consolidated Financial Statements              
March 31, 1996 and December 31, 1995              
(Unaudited)               

Proposed Corporate Reorganization                                               

The Plan provides for the continuation of the Company as a going concern.       
Specifically, the old common stock interests in Elsinore Corporation would be   
canceled pursuant to the Plan and Elsinore, as reorganized, would issue new     
common stock (the "New Common Stock").  On the effective date of the Plan, 80%  
of the New Common Stock would be distributed to the following creditors and     
equity holders:                                                                 

Interest                             Percentage                       

12.5% First Mortgage noteholders             87.5%                    
7.5% Convertible Subordinated noteholders          2.5%               
Old common stockholders                       10.0%                   
              100.0%

The remaining 20% of the New Common Stock would be issued through a rights      
offering to raise $5,000,000 to assist in funding the Plan.  Initially, the     
entire amount of the rights offering would be made available for subscription   
to the 12.5% First Mortgage noteholders, 7.5% Convertible Subordinated          
noteholders and old common stockholders in the percentages enumerated above as  
part of the balloting process for the Plan.                                     

The effective date would occur after all regulatory approvals required by the   
State of Nevada, including approvals by the gaming authorities, have been       
obtained and Elsinore has sufficient cash to fund all distributions.            

Proposed Treatment of Creditors and Equity Interests                            

The Plan is expected to be funded principally from cash generated from          
operations and the $5,000,000 proceeds from the rights offering.                
Specifically, the proposed treatment of each of the creditor and equity         
interests is as follows:                                                        

The 20% Mortgage noteholders will have an allowed secured claim equal to the    
$3,000,000 principal amount of the notes plus accrued interest thereon at 20%   
through the date on which the confirmation order is entered by the Bankruptcy   
Court.  On the effective date of the Plan, each noteholder will receive its     
prorata share of restated mortgage notes (the "Restated Mortgage Notes"), due   
four years from the confirmation date, in exchange for its allowed claim.       
Interest on the Restated Mortgage Notes will accrue at an annual rate of 10%    
or other appropriate interest rate approved by the Bankruptcy Court and will    
be payable quarterly.                                                           

The 12.5% First Mortgage noteholders will have an allowed claim equal to the    
$57,000,000 principal amount of the notes plus accrued interest thereon         
through the date of petition.  On the effective date of the Plan, each          
noteholder will receive its prorata share of $30,000,000 face amount of         
restated first mortgage notes (the "Restated First Mortgage Notes"), due five   
years from the confirmation date, and New Common Stock (see above) in exchange  
for its allowed claim.  Interest on the Restated First Mortgage Notes will      
accrue at an annual rate of 13.5% and will be payable semi-annually.            

Elsinore Corporation and Subsidiaries (Debtor-In-Possession)              
Notes to Consolidated Financial Statements              
March 31, 1996 and December 31, 1995              
(Unaudited)               

The 7.5% convertible subordinated noteholders will have an allowed claim equal  
to the $1,425,000 principal amount of the notes plus accrued interest thereon   
through the date of petition.  On the effective date of the Plan, each          
noteholder will receive its prorata share of New Common Stock (see above) in    
exchange for its allowed claim.                                                 

The unsecured creditors, other than the 7.5% convertible subordinated           
noteholders, will receive payments which, in the aggregate, amount to           
$1,500,000 and will be paid over a two-year period.                             

The claim of the Internal Revenue Service of approximately $2,985,000 (as and   
when it is an allowed claim) will be paid in accordance with the Bankruptcy     
Code or in such manner as is otherwise agreed to by the Internal Revenue        
Service.                                                                        

Other Reorganization Matters                                                    

Certain pre-petition liabilities have been paid after obtaining the approval    
of the Bankruptcy Court, including certain wages and employee benefits, gaming  
related liabilities and hotel room and other customer deposits.  Subsequent to  
filing and with the approval of the Bankruptcy Court, the Company assumed       
executory contracts for all real estate and equipment leases.                   

Parties to executory contracts may, under certain circumstances, file motions   
with the bankruptcy Court to require the Company to assume or reject such       
contracts.  Unless otherwise agreed, the assumption of a contract will require  
the Company to cure all prior defaults under the related contract, including    
all pre-petition liabilities.  Unless otherwise agreed, the rejection of a      
contract is deemed to constitute a breach of the agreement as of the moment     
immediately preceding Chapter 11 filing, giving the other party to the          
contract a right to assert a general unsecured claim for damages arising out    
of the breach.  The Company is actively engaged in the process of reviewing     
its executory contracts and, except for the assumption of executory contracts   
for real estate and equipment leases, final decisions with respect to assuming  
or rejecting the contracts and the approval of the Bankruptcy Court are still   
pending.                                                                        

May 10, 1996 was set as the last date for the filing of proof of claims under   
the Bankruptcy Code and the Company's creditors have/will be submitting claims  
for liabilities not paid and for damages incurred.  There may be differences    
between the amounts at which any such liabilities are recorded in the           
financial statements and the amount claimed by the Company's creditors.         
Significant litigation may be required to resolve any such disputes.            

The Company will incur significant costs associated with the reorganization.    
The amount of these expenses, which are being expensed as incurred, is          
expected to significantly affect future operating results.                      

As a result of its filing for protection under Chapter 11 of the Bankruptcy     
Code, the Company is in default of substantially all of its debt agreements.    
All outstanding unsecured and undersecured debt of the Company has been         
presented in these financial statements within the caption "Pre-petition        
liabilities subject to compromise: Long-term debt subject to demand for         
acceleration."                                                                  

Elsinore Corporation and Subsidiaries (Debtor-In-Possession)              
Notes to Consolidated Financial Statements              
March 31, 1996 and December 31, 1995              
(Unaudited)               

Additional liabilities subject to the proceedings may arise in the future as a  
result of the rejection of executory contracts and from the determination by    
the Bankruptcy Court (or agreement by parties in interest) of allowed claims    
for contingencies and other disputed amounts.  Conversely, the assumption of    
executory contracts may convert pre-petition liabilities shown as subject to    
compromise to not subject to compromise.                                        

2.   Reorganization Items                                                       

Reorganization expense is comprised of items incurred by the Company as a       
result of reorganization under Chapter 11 of the Bankruptcy Code.               
Reorganization expenses consisted primarily of accrued professional fees and    
totaled $534,000 for the three month period ended March 31, 1996.               

3.   Summary of Significant Accounting Policies                                 

In the opinion of management, the accompanying financial statements include     
all adjustments (of a normal recurring nature) which are necessary for a fair   
presentation of the results for the interim periods presented.  Certain         
information and footnote disclosures normally included in financial statements  
have been condensed or omitted pursuant to such rules and regulations of the    
Securities and Exchange Commission.  Although the Company believes that the     
disclosures are adequate to make the information presented not misleading, it   
is suggested that these condensed consolidated financial statements be read in  
conjunction with the consolidated financial statements and the notes thereto    
included in the Company's Report on Form 10-K for the fiscal year ended         
December 31, 1995.                                                              

Certain items in the March 31, 1995 financial statements have been              
reclassified for comparability with the March 31, 1996 presentation.            

(a)  Financial Reporting for Bankruptcy Proceedings                             

The accompanying financial statements have been prepared on a going concern     
basis which assumes continuity of operations and realization of assets and      
liquidation of liabilities in the ordinary course of business.  As a result of  
the reorganization proceedings, there are significant uncertainties relating    
to the ability of the Company to continue as a going concern.  The financial    
statements do not include any adjustments that might be necessary as a result   
of the outcome of the uncertainties discussed herein including the effect of    
any plan of reorganization.                                                     

The American Institute of Certified Public Accountant's Statement of Position   
90-7, "Financial Reporting by Entities in Reorganization Under the Bankruptcy   
Code" ("SOP 90-7") provides guidance for financial reporting by entities that   
have filed petitions with the Bankruptcy Court and expect to reorganize under   
Chapter 11 of the Bankruptcy Code.                                              

Under SOP 90-7, the financial statements of an entity in a Chapter 11           
reorganization proceeding should distinguish transactions and events that are   
directly associated with the reorganization from those of the operations of     
the ongoing business as it evolves. Accordingly, SOP 90-7 requires the          
following financial reporting or accounting treatments in respect to each of    
the financial statements.                                                       

Elsinore Corporation and Subsidiaries (Debtor-In-Possession)          
Notes to Consolidated Financial Statements              
March 31, 1996 and December 31, 1995              
(Unaudited)               

Balance Sheet                                                                   

The balance sheet separately classifies pre-petition and post-petition          
liabilities.  A further distinction is made between pre-petition liabilities    
subject to compromise (generally unsecured and undersecured claims) and those   
not subject to compromise (fully secured claims).  Pre-petition liabilities     
are reported on the basis of the expected amount of such allowed claims, as     
opposed to the amounts for which those allowed claims may be settled.  Under    
an approved final plan of reorganization, those claims may be settled at        
amounts substantially less than their allowed amounts.                          

When debt subject to compromise has become an allowed claim and that claim      
differs from the net carrying amount of the debt (defined as the face amount    
of the debt less unamortized debt issuance costs and unaccreted discount), the  
net carrying amount is adjusted to the amount of the allowed claim.  The        
resulting gain or loss is classified as a reorganization item.                  

Statement of Operations                                               

Pursuant to SOP 90-7, revenues and expenses, realized gains and losses, and     
provisions for losses resulting from the reorganization and restructuring of    
the business are reported in the statement of operations separately as          
reorganization items.  Professional fees are expensed as incurred.  Interest    
expense is reported only to the extent that it will be paid during the          
proceeding or that it is probable that it will be an allowed claim.             

Statement of Cash Flows                                               

Reorganization items are reported separately within the operating, investing    
and financing categories of the statement of cash flows.                        

(b)  Principles of Consolidation                                                

The consolidated financial statements include the accounts of Elsinore          
Corporation and its wholly and majority-owned subsidiaries.  All material       
intercompany balances and transactions have been eliminated in consolidation.   

(c)  Accounting for Casino Revenue and Promotional Allowances                   

In accordance with industry practice, the Company recognizes as casino revenue  
the net win from gaming activities, which is the difference between gaming      
wins and losses.  The retail value of complimentary food, beverages and hotel   
services furnished to customers is included in the respective revenue           
classifications and then deducted as promotional allowances.                    

The estimated costs of providing such promotional allowances are included in    
casino costs and expenses and consist of the following:                         

         Three Month Periods Ended
                     March 31,
                      1996            1995
    (Dollars in Thousands)

Hotel                             $  390           $  482             
Food & Beverage                    1,180            1,324             
Total                           $1,570           $1,806           

Elsinore Corporation and Subsidiaries (Debtor-In-Possession)              
Notes to Consolidated Financial Statements              
March 31, 1996 and December 31, 1995              
(Unaudited)               

(d)  Investment in Fremont Street Experience                                    

The Company and seven other downtown Las Vegas property owners, who together    
operate ten casinos, have formed the Fremont Street Experience LLC (FSELLC), a  
limited liability company of which the Company is a one-sixth owner, to         
develop the Fremont Street Experience attraction.  The Fremont Street           
Experience has transformed four blocks of Fremont Street into a covered         
pedestrian mall featuring a 10-story celestial vault, sound effects and a high  
tech light show which add to the neon signs and marquees for which the          
downtown area is already famous.  The Company's $3,000,000 capital              
contribution for its one-sixth ownership of FSELLC was paid in full by January  
1994.  The project was completed at the end of November 1995 and the grand      
opening ceremonies held on December 13, 1995.  As FSELLC is expected to         
operate at a loss for the foreseeable future, the $3,000,000 capital            
contribution is being amortized over five years using the straight-line         
method.  The Company's allocated share of the operating costs of the Fremont    
Street Experience are expensed as incurred.                                     

(e)  Earnings (Loss) Per Share                                                  

Earnings (loss) per share has been computed by dividing net income (loss) by    
the weighted average common shares outstanding during the period.               

(f)  Use of Estimates                                                           

Management of the Company has made estimates and assumptions relating to the    
reporting of assets and liabilities and the disclosure of contingent assets     
and liabilities to prepare these financial statements in conformity with        
generally accepted accounting principles.  Actual results could differ from     
those estimates.                                                                

4.   Native American Casino Operations                                          

Spotlight 29 Casino                                                             

Since March 1995, Elsinore Corporation, its wholly owned subsidiary, Elsub      
Management Corporation and Palm Springs East Limited Partnership, of which      
Elsub is the general partner (collectively the "Company"), and the Twenty-Nine  
Palms Band of Mission Indians (the "Band") have been involved in a dispute      
regarding, among other things, the terms of a management contract (the          
"contract") under which the Company had the exclusive right to manage and       
operate the Spotlight 29 Casino (the "Spotlight 29"), owned by the Band,        
located near Palm Springs, California.                                          

On April 17, 1995, the Company was ousted as manager of Spotlight 29 and on     
April 19, 1995, the Company issued a demand letter to the Band declaring a      
breach of the Contract and a related loan agreement under which the Company     
had lent approximately $12,500,000 to the Band for construction of Spotlight    
29 and for working capital Contributions.  The demand letter claimed damages    
in the full amount of the funds which had been advanced to the Band.            

In light of the Company's disassociation with the operations of  Spotlight 29,  
management determined to write off, during the quarter ended March 31, 1995,    
the unamortized balance of casino development costs incurred for the project    
of $1,037,000 and ceased the accrual of interest on the project note and loans  
evidencing working capital advances.                                            

Elsinore Corporation and Subsidiaries (Debtor-In-Possession)              
Notes to Consolidated Financial Statements              
March 31, 1996 and December 31, 1995              
(Unaudited)               

On May 16, 1995, in response to the Company's demand, the Band delivered to     
the Company a "Notice to Terminate Management Agreement."  The notice asserted  
material breaches of the Contract and requested payment of approximately        
$1,500,000 million by June 16, 1995 to cover working capital shortfalls or the  
Contract would be terminated.                                                   

On October 31, 1995, the Company filed a voluntary petition for reorganization  
under Chapter 11 of the Bankruptcy Code with the United States Bankruptcy       
Court for the District of Nevada (Las Vegas, Nevada).                           

The Company has been involved in protracted negotiations with the Band for a    
settlement of the respective claims asserted by the parties since the events    
described above.  Based upon the progress of the aforementioned negotiations    
at the time, in September 1995 the Company wrote-down to $9,000,000 the         
aggregate amount advanced to the Band and accrued interest thereon.             

As of March 29, 1996, the Company has reached a settlement with the Band,       
subject to approval by the Bankruptcy court and by the National Indian Gaming   
Commission (the "NIGC"). The Company would receive a promissory note from the   
Band in the principal amount of $9,000,000. While the note would have a         
36-month amortization schedule, monthly payments would be limited to 20% of     
Spotlight 29's monthly net income.  In the event that net income is             
insufficient to fully pay the note at the end of 36 months, the note would be   
automatically extended for up to an additional two years.  If still not fully   
paid at the end of the extension period, it may be extended up to an            
additional two years upon the approval of the NIGC.  If not paid at the end of  
the final extension period, the note will be forgiven.  Interest on the note    
is at an annual rate equal to the greater of 10% or the maximum rate allowed    
under California law, not to exceed 12%.  Given that the $9 million recovery    
is limited to 20% of the net income generated by Spotlight 29 and because       
there can be no assurance that the settlement agreement reached with the Band   
will be approved by the Bankruptcy Court and by the NIGC, management            
determined not to reduce the allowance for loss in the amount of $9,000,000     
against the aggregate receivable, which was provided during the quarter ended   
December 31, 1995.                                                              

7 Cedars Casino                                                                 
Elsinore Corporation, through its wholly-owned subsidiary, Olympia Gaming       
Corporation (collectively the "Company"), has a Gaming Project Development and  
Management Agreement (the "Contract") to operate the 7 Cedars Casino (the "7    
Cedars") which is located on the Olympic Peninsula in the state of Washington   
and is owned by the Jamestown S'Klallam Tribe (the "Tribe").  In addition,      
pursuant to a loan agreement, the Company lent $9,000,000 to the Tribe for the  
construction of 7 Cedars.                                                       

Under the terms of the Contract, the Company is obligated to establish a        
reserve fund for "working capital", which is not defined in the Contract, in    
the amount of $500,000 for the operation of 7 Cedars.  The Company believes     
that in negotiating the contract the parties did not intend to apply a          
"working capital" definition based upon generally accepted accounting           
principles which, in the Company's view, would be impracticable in the context  
of the Contract and which, in practice, has never been followed.  Since its     
opening on February 3, 1995, the Casino has incurred a substantial cumulative   
net loss and an attendant decrease in working capital.                          

On November 1, 1995, the Tribe asserted that the Company had defaulted on the   
June, July, August and September 1995 minimum guaranteed payments to the        
Tribe, as defined by the Contract, in the aggregate amount of $100,000 and      
requested immediate payment.                                                    

Elsinore Corporation and Subsidiaries (Debtor-In-Possession)              
Notes to Consolidated Financial Statements              
March 31, 1996 and December 31, 1995              
(Unaudited)               

In addition, the Tribe demanded that sufficient monies be paid to enable all    
current gaming project expenses to be paid and working capital reserve to be    
maintained at the required funding level.  The Tribe demanded that a minimum    
of $2,540,000 be paid immediately and also contended that the working capital   
shortfall could be as high as approximately $5,390,000 according to their       
interpretation of the Contract.  On November 13, 1995, the Company received a   
letter from the Tribe dated November 9, 1995 asserting that the Contract had    
been terminated as a result of the Company's failure to make the payments       
which has been demanded.                                                        

On November 10, Olympia Gaming filed a voluntary petition for reorganization    
under Chapter 11 of the Bankruptcy Code with the United States Bankruptcy       
Court for the District of Nevada (Las Vegas, Nevada).                           

Pursuant to the terms of the Contract, the Company receives a management fee    
equal to 30% of the net distributable profits of 7 Cedars (subject to the       
Tribe receiving a $25,000 per month guaranteed payment) and the Tribe 70%.      
The Contract has an initial term of five years (expires February 2, 2000),      
subject to renewal for an additional two years in the event that the project    
loan is not paid in full by the end of the initial term.  The project loan to   
finance the development and construction of 7 Cedars is payable solely from     
the Tribe's share of the net distributable profits of 7 Cedars, and will        
amortize over the five-year term of the contract at an annual interest rate of  
10.9%.                                                                          

As a result of significantly lower than projected gaming revenues, 7 Cedars     
has incurred substantial operating losses since its opening.  Management        
believes the following are the principal factors contributing to the lower      
gaming revenues.                                                                

  A significantly lower than anticipated propensity for the 3,000,000 plus
tourists visiting the Olympic Peninsula in the summer to gamble.  This
includes both the numbers of tourist customers and their level of play
in the casino.                                                        

A significantly higher than anticipated impact of competition for the 
  locals market.  Native American casino openings in May 1995 (Muckleshoot
near Auburn, Washington) and January 1996 (Suquamish, north of        
  Bremerton, Washington) have resulted in substantially reduced visitation
from Kitsap County residents.  While Kitsap County, approximately 50  
 miles to the east of 7 Cedars, was originally identified as a secondary
market, its larger, younger, population proved to be a significant    
market in the first several months following the opening of 7 Cedars. 

A substantially lower than expected average table games wager.        

In response to declining revenues following the first several months of         
operations, management undertook certain cost-cutting measures in the late      
spring and summer 1995 and increased marketing activities in an effort to       
achieve profitability. In November 1995 and January 1996, more substantial      
expense reductions were effected through reductions in the hours of operation   
of 7 Cedars and deeper, "across the board" cost cutting.  While management      
believes the operation will show a modest profit in March 1996 and gaming       
revenues will continue to improve through the spring and summer months, in      
light of the existing competition in the Puget Sound area, the demographics of  
7 Cedars primary locals' markets and the apparent low propensity for            
destination tourists to the Olympic Peninsula to gamble, there exists           
substantial uncertainty as to whether, during the remaining term of the         
management and loan agreements, 7 Cedars can achieve the level                  

Elsinore Corporation and Subsidiaries (Debtor-In-Possession)              
Notes to Consolidated Financial Statements              
March 31, 1996 and December 31, 1995              
(Unaudited)               

of profitability required to obtain full recovery of the loan principal and     
accrued interest thereon. The outlook for 7 Cedars could change dramatically,   
however, if an initiative was passed in the State of Washington to allow        
electronic gaming machines at Native American casinos. A number of tribes have  
recently formed an apparently well-funded coalition for the purpose of a        
petition drive to place an initiative on the fall 1996 ballot to allow limited  
numbers of electronic gaming machines at Native American casinos.  While the    
tribes and others are optimistic about the passage of such an initiative, if    
and when gaming machines will ultimately be allowed is uncertain at this time.  

Based upon the foregoing, management determined during the quarter ended        
December 31, 1995 to provide an allowance for loss against the $9,000,000       
outstanding balance of the project loan plus accrued interest thereon.          

Previously, as of September 1, 1995, as the summer 1995 Olympic Peninsula       
tourist season came to a close, the Company ceased accruing interest on the     
project loan and wrote-off the remaining unamortized balance of capitalized     
casino development costs of approximately $242,000.                             

5.   Earnings (Loss) Per Share                                                  

Because of the Chapter 11 proceedings, certain contractual interest             
obligations, debt discount and debt issue costs were not expensed during the    
quarter ended March 31, 1996. In addition, bankruptcy related reorganization    
items of approximately $534,000 were incurred and expensed during the period    
ended March 31, 1996.  Without the chapter 11 proceedings, the effect on        
earnings and earnings per share of such items for the three month periods       
ended March 31, 1996 and 1995 follow:                                           
                   Three Month Periods Ended
                                   March 31,
                                   1996         1995
                                  (Dollars in thousands,
                                   except per share amounts)
Net income (loss) per consolidated                                              
statements of operations                    $   344      $(4,132)           
Subtract:                                                               
Interest                                 (1,883)         -          
Debt discount and                                                   
debt issuance costs                      (421)         -        
Add:                                                                    
Reorganization items                        534          -          

Net income (loss) as adjusted                 $(1,570)     $(4,132)             

Per Share:                                                                      
Income (loss) per common share reflected                                      
on consolidated statements of operations   $  0.02     $ (0.28)           

Per share effect of such items             (0.11)        -            

Loss per common and common equivalent                                         
share, adjusted for such items             $ (0.09)    $ (0.28)           

Elsinore Corporation and Subsidiaries (Debtor-In-Possession)              
Notes to Consolidated Financial Statements              
March 31, 1996 and December 31, 1995              
(Unaudited)               

6.   Commitments and Contingencies                                              

Chapter 11 Reorganization                                                       

  On October 31, 1995, the Company and certain of its subsidiaries filed a
voluntary petition in the United States Bankruptcy Court for the District of    
Nevada seeking to reorganize under Chapter 11 of the United States Bankruptcy   
Code.  On November 10, 1995, Olympia Gaming Corporation filed a voluntary       
petition in the same Court.  Since the Bankruptcy filing, several entities      
have filed administrative claims requesting the Bankruptcy Court order the      
Company to reimburse or compensate such entities for goods, taxes and services  
they allege the Company has received or collected, but for which they claim     
the Company has not paid.                                                       

The Company currently estimates that the administrative claims will be          
approximately $1.5 million; however, there can be no assurance that additional  
amounts will not be claimed or the extent to which administrative claims may    
be allowed by the Bankruptcy Court.  The Bankruptcy Code requires that all      
administrative claims be paid on the effective date of a plan of                
reorganization unless the respective claimants agree to different treatment.    
Depending on the ultimate amount of administrative claims allowed by the        
Bankruptcy Court, the ability of the Company to confirm and consummate a plan   
of reorganization may be impacted negatively.  The Company is actively          
negotiating with claimants to achieve mutually acceptable dispositions          
of these claims.                                                                

Hyland Litigation                                                               

Thomas Hyland, a professional card counter and blackjack player, filed a        
complaint on August 23, 1995 in Federal District Court in Camden, New Jersey,   
No. 95CV2236 (JEI), against the Company and virtually every other casino        
company in the United States.  The complaint alleges violations of the          
antitrust, consumer fraud and fair credit reporting laws by the defendants in   
illegally conspiring to prevent Mr. Hyland and other professional card          
counters from playing blackjack at their respective casinos.  The complaint     
alleges that the defendants share information concerning card counters and      
then act in concert to implement industry wide policy in banning them at the    
blackjack tables.                                                               

Management believes that the claims are without merit and does not    
believe that the lawsuit will have a material adverse effect on the Company's   
operating results.                                                              

WARN Act Litigation                                                             

The Company is a defendant in two consolidated lawsuits pending in the          
federal court for the District of New Jersey, alleging violation by the         
Company and certain of its subsidiaries and affiliates of the Worker            
Adjustment and Retraining Notification Act ("WARN Act") and breach of           

Elsinore Corporation and Subsidiaries (Debtor-In-Possession)              
Notes to Consolidated Financial Statements              
March 31, 1996 and December 31, 1995              
(Unaudited)               

contract.  The plaintiffs in the two consolidated cases are (i) former          
employees of a casino/hotel in New Jersey formerly affiliated with the Company  
bringing suit on behalf of a class of all employees laid off as a result of     
the casino's closing and (ii) a union local seeking to represent its members    
who were laid off at that time.  Plaintiffs claim that there are approximately  
1,300 such employees within the class who seek damages under the WARN Act       
providing for up to 60 days' pay and lost benefits and payments for deferred    
compensation allegedly due under a contract with certain employees.  Damages    
payable, if any, would be calculated on the basis of the number of days'        
notice determined by the court to have been required under the WARN Act and     
the wages, benefits and deferred compensation applicable to each such           
employee.                                                                       

The Company has vigorously defended the action on the basis that even if the    
WARN Act does apply as a matter of law to a regulatory-forced closing, the      
closing was due to unforeseeable circumstances and, accordingly, the notice     
given was as timely as practicable, among other grounds.  The liability phase   
of the trial of the two consolidated lawsuits concluded in August 1993.         

On June 30, 1995, the presiding judge entered an Order for Verdict Upon         
Liability Issues in which he ruled that: (i) the plaintiffs had failed to       
prove any liability under the WARN Act; and (ii) that Elsinore and certain of   
its subsidiaries are jointly liable for certain retroactive wages due to        
former employees of Elsinore Shore Associates under a collective bargaining     
agreement, plus prejudgment interest on such wages.  The total amount of        
judgment the plaintiffs would be entitled to under this ruling has not yet      
been determined.  The plaintiffs' attorney asserts that the amount due as of    
October 1, 1995, taking into account interest on that date, was approximately   
$676,000. On March 4, 1996, the plaintiffs' attorney submitted a proof of       
claim for retroactive wages in the amount of $800,000 to the Bankruptcy court.  
The Order is stayed until the Findings of Fact and Conclusions of Law are       
entered by the Court, which could be forthcoming at any time.  Until such       
Findings of Fact and Conclusions of Law are entered, the Company is not able    
to make a determination concerning the extent of its ultimate exposure or       
whether an appeal of the decision is appropriate.  Because of the filing of     
the bankruptcy petitions, the WARN Act litigation has also been stayed by       
operation of Bankruptcy Code Section 362(a).                                    

Action Against Twenty-Nine Palms Band                                           

On March 16, 1995, Elsinore Corporation, its wholly owned subsidiary, Elsub     
Management Corporation, and Palm Springs East Limited Partnership, of which     
Elsub Management is the General Partner, filed a complaint against the Band in  
the United States District Court for the Central District of California, case   
no. CV 95-1669-RG(MCx).  The complaint sought injunctive and declaratory        
relief based upon alleged breaches by the Band of the Spotlight 29 Contract     
when it installed Class III electronic gaming machines at the casino without    
the Company's consent and without any involvement whatsoever by the Company in  
the operation of the machines.   The suit was dismissed without prejudice on    
April 21, 1995.  As described in note 4, the Company has reached a settlement   
with the Band subject to certain regulatory and court approvals.                

Poulos/Ahern Class Actions                                                      

In April and May 1993, two class action lawsuits were filed in the United       
States District Court, Middle District of Florida, against 41 manufacturers,    
distributors and casino operators of video poker and electronic slot machines,  
including the Company.  The suits allege that the defendants have engaged in a  
course of fraudulent and misleading conduct intended to induce persons to play  

        Elsinore Corporation and Subsidiaries (Debtor-In-Possession)
Notes to Consolidated Financial Statements              
March 31, 1996 and December 31, 1995              
(Unaudited)               

such games by collectively misrepresenting how the game machines operate, as    
well as the extent to which there is an opportunity to win.  It also alleges    
violations of the Racketeer Influenced and Corrupt Organizations Act, as well   
as claims of common law fraud, unjust enrichment and negligent                  
misrepresentation, and seeks damages in excess of $6 billion.  On December 9,   
1994, the Florida Court ordered that the consolidated cases be transferred to   
the United States District Court for the District of Nevada.  That transfer     
has occurred and the Nevada Court has assumed control of the cases.  The new    
case number is CV-S-94-1126-LDG(RJJ).  Numerous defendants (including the       
Company) have moved to dismiss the complaint for failure to state a claim.  No  
hearing has been set on this motion.  The plaintiffs have filed a motion        
seeking to certify the consolidated actions as a class action.  The defendants  
(including the Company) have opposed certification of the class.  During        
April, 1996, U.S District Judge Lloyd George approved  defense motions to       
dismiss such lawsuits saying plaintiffs had failed to state a claim or prove    
their case. The plaintiffs have until May 31, 1996 to file an amended           
complaint. Management believes the claims are wholly without merit and does     
not expect that the lawsuit will have a material adverse effect on the          
Company's financial statements taken as a whole.                                

Other                                                                           

At March 31, 1996, the Company and its subsidiaries were parties to             
various other claims and lawsuits arising in the normal course of business.     
Management is of the opinion that all pending legal matters are either covered  
by insurance or, if not insured, will not have a material adverse effect on     
the financial position or the results of operations of the Company.             

10-Q 3rd “Page” of 4 TOC 1st Previous Next ↓Bottom Just 3rd
Elsinore Corporation and Subsidiaries (Debtor-In-Possession)              
Management's Discussion and Analysis of Financial                 
Condition and Results of Operations                 

Item 2:    Management's Discussion and Analysis of Financial Condition and      
Results of Operations                               

This discussion and analysis should be read in conjunction with the             
consolidated financial statements and notes thereto.                            

OVERVIEW                                                                        

Chapter 11 Proceedings: On October 31, 1995, the Company and certain of its     
subsidiaries filed a voluntary petition in the United States Bankruptcy Court   
for the District of Nevada to reorganize under chapter 11 of Title 11 of the    
United States Bankruptcy Code. On November 10, 1995 an additional subsidiary    
of the Company also filed a voluntary petition to reorganize under Chapter 11   
in the same court. The Company is continuing to manage its business affairs as  
a debtor-in-possession under the supervision of the Bankruptcy Court.           

On February 28, 1996, Elsinore and its subsidiaries filed a plan of             
reorganization (the "Plan") with the Bankruptcy Court. The reorganization       
process is expected to result in the cancellation and/or restructuring of       
substantial debt obligations of the Company. The Company anticipates that the   
reorganization process will not result in the elimination of the interests of   
its common stockholders; however, it is anticipated that the interest of the    
current common stockholders in the Company will be substantially reduced.       

There can be no assurance that the plan of reorganization submitted by the      
Company will be confirmed. There also can be no assurance that, with or         
without a plan of reorganization, the Company can generate sufficient cash to   
sustain operations.                                                             

Going Concern Basis: The accompanying financial statements have been prepared   
on a going concern basis which assumes continuity of operations and             
realization of assets and liquidation of liabilities in the ordinary course of  
business. The consolidated financial statements do not include all of the       
consequences of the proceedings under Chapter 11 nor all adjustments that       
might be necessary should the Company be unable to continue as a going          
concern. The Company's ability to continue as a going concern is dependent      
upon, among other things, its obtaining the required regulatory approvals from  
the State of Nevada, including approvals by the gaming authorities, obtaining   
sufficient cash to fund all distributions and cash reserves required at the     
time the Plan becomes effective and achieving profitable operations and         
sufficient cash flows to meet future obligations required by the plan. The      
outcome of these matters is not presently determinable.                         

Elsinore Corporation and Subsidiaries (Debtor-In-Possession)              
Management's Discussion and Analysis of Financial                 
Condition and Results of Operations                 

FINANCIAL CONDITION                                                             

Liquidity and Capital Resources               

Cash and cash equivalents                                                       

Cash and cash equivalents increased $2,051,000 during the three month period    
ended March 31, 1996. Uses of cash during the period included capital           
expenditures of $257,000.                                                       

Liquidity                                                                       

Currently, the Company's primary sources of liquidity are cash flows from the   
operations of the Four Queens Hotel and Casino.  Four Queens revenues,          
operating results and cash flows increased during the quarter ended March 31,   
1996, primarily because of an increase in Four Queens hotel guests and casino   
visitors, which apparently occurred due to an overall increase in the number    
of visitors to Las Vegas and related visitor (and local residents) interest in  
the Fremont Street Experience attraction in downtown Las Vegas.                 

During the three month period ended March 31, 1996, the Company experienced     
less liquidity pressure because of the protection afforded by the bankruptcy    
laws in the payment of obligations incurred prior to the filing and arising     
under certain executory contracts entered into prior to the filing of the       
bankruptcy petition and because of the increased visitors to Las Vegas and the  
opening of the Fremont Street Experience.                                       

RESULTS OF OPERATIONS                                                           

Three months ended March 31, 1996 and 1995                                      

Revenues                                                                        

During the three month period ended March 31, 1996, total revenues, net of      
promotional allowances, increased $625,000 (4.1%) primarily because of an       
increase in the number of Four Queens hotel guests and casino visitors, which   
apparently resulted from an overall increase in the number of visitors to Las   
Vegas and related visitor (and local residents) interest in the Fremont Street  
Experience attraction in downtown Las Vegas. Other income decreased $523,000,   
primarily as a result of the nonaccrual of interest income related to the       
Native American loans, which were fully reserved at December 31, 1995. Casino   
revenues increased $416,000 (3.9%). Promotional allowances, which are           
subtracted from gross revenues, increased $64,000 (3.4%) which was comparable   
with the casino revenue increase.                                               

The increase in Casino revenues of $416,000 from the comparable prior period,   
consisted of an $880,000 (13.1%) increase in slot revenues, which was           
partially offset by a $464,000 (11.5%) decrease in table game revenues. The     
decrease in table game revenues was primarily attributable to a lower win       
percentage in craps during the 1996 quarter. The increase in slot revenues      
resulted both from an                                                           

Elsinore Corporation and Subsidiaries (Debtor-In-Possession)              
Management's Discussion and Analysis of Financial                 
Condition and Results of Operations                 

increase in volume and an improved win percentage.                              

Hotel revenue increased $554,000 (22.7%) primarily because of an increase in    
room rates and also because of a slight increase in the number of rooms         
occupied. Food and beverage revenues increased by $242,000 (7.4%) primarily     
due to an increase in the number of visitors.                                   

Costs and Expenses                                                              

Total costs and expenses, excluding interest, depreciation, casino development  
costs and reorganization items decreased $867,000 (5.9%) during the three       
month period ended March 31, 1996.                                              

Casino costs and expenses decreased $576,000 (10.6%) primarily due to (1) a     
decrease in French Quarter Lounge entertainment expenses and (2) a decrease in  
costs allocated to the casino for promotional allowances (which was lower, as   
a result of a reduction in the ratio of complimentary sales to total sales of   
rooms, food and beverages during the three month period ended March 31, 1996).  
Hotel expenses were comparable to the 1995 quarter. Food and beverage expenses  
increased $164,000 (10.3%) primarily due to decreased allocations of the costs  
of promotional allowances to the casino, as explained above.                    

Taxes and licenses, other than gaming and payroll related, were slightly lower  
during the quarter. Selling, general and administrative expenses decreased      
$439,000 (15.2%) from 1995 primarily due to reductions in payroll costs of      
corporate administrative and development staff.                                 

Rent expenses increased $51,000 (5.3%) primarily because of scheduled           
increases under existing leases.                                                

Depreciation and amortization decreased $49,000 (4.8%), primarily because of    
decreased amortization of debt issue costs (unamortized debt issue costs,       
incurred in connection with the 12.5% First Mortgage notes, were charged to     
expense as reorganization items at October 31, 1995) and slightly lower         
depreciation of property and equipment, which  was mostly offset by the         
start-up on January 1, 1996 of amortization (over 60-months) of the $3,000,000  
Investment in the Fremont Street Experience.                                    

Because of the Chapter 11 proceedings, there has been no accrual of interest    
on the $57,000,000, 12.5% First Mortgage notes since October 31, 1995. If       
accrued, the quarterly interest expense on the 12.5% notes would have totaled   
approximately $1,781,000 for the three month period ended March 31, 1996. (In   
addition, the remaining unaccreted discount balance related to the 12.5% first  
mortgage notes was charged to expense as a reorganization item at October 31,   
1995). There also has been no accrual of interest on the $1,425,000, 7.5%       
Convertible Subordinated Notes since October 31, 1995. If accrued, the          
quarterly  interest expense on the 7.5% notes would have totaled approximately  
$27,000 for the three month period ended March 31, 1996. In addition,  there    
has been no accrual of interest on the $2,950,000 of prior period tax           
obligations since October 31, 1995. If accrued, the estimated interest expense  
on prior period tax obligations would have totaled approximately $75,000 for    
the three month period ended March 31, 1996.                                    

Elsinore Corporation and Subsidiaries (Debtor-In-Possession)              
Management's Discussion and Analysis of Financial                 
Condition and Results of Operations                 

Reorganization expense is comprised of items incurred by the Company as a       
result of reorganization under Chapter 11 of the Bankruptcy Code. Such items    
totaled $534,000 and consisted primarily of accrued professional fees, for the  
three month period ended March 31, 1996.                                        

10-Q Last “Page” of 4 TOC 1st Previous Next ↓Bottom Just 4th
Elsinore Corporation and Subsidiaries (Debtor-In-Possession)
Other Information               

PART II.  OTHER INFORMATION                                                     

Item 1.     Legal Proceedings:                                        

         Disclosed in Note 6 of the Condensed Consolidated
                 Financial Statements in Part 1 and is incorporated by
reference herein.               

Item 5.     Other Information:                                        

 Described in Notes 1 and 6 of the Condensed
            Consolidated Financial Statements in Part 1 and is
incorporated by reference herein.   

Item 6.     Exhibits and Reports of Form 8-K:                         

Form 8-K - dated February 29, 1996,       
announcing filing of plan.            

SIGNATURES              

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

                            ELSINORE CORPORATION
                            (Registrant)

                      By:   /s/ Thomas E. Martin
                               THOMAS E. MARTIN, President
                               and Chief Executive Officer

                   By:   /s/ John J. James
                            JOHN J. JAMES, Treasurer
                                    and Principal Accounting Officer

Dated:      May 15, 1996

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Elsinore Corp – ‘10-Q’ for 3/31/96

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