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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549



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Form 10-Q



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



FOR THE QUARTERLY PERIOD ENDED September 30, 2004.



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 333-87202



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CIRCUS AND ELDORADO JOINT VENTURE

SILVER LEGACY CAPITAL CORP.

(Exact
names of registrants as specified in their charters)



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|                                                               |  |                                     
|-------------------------------------------------------------- |  | ------------------------------------
|Nevada                                                         |  | 88-0310787                          
|Nevada                                                         |  | 71-0868362                          
|(State or other jurisdiction of incorporation or organization) |  | (I.R.S. Employer Identification No.)



407 North Virginia
Street, Reno, Nevada 89501

(Address of principal executive offices, including zip code)



(800) 687-7733

(Registrants telephone number, including area code)



Not Applicable

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



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



Indicate by check mark whether either of the registrants is an accelerated filer (as defined
in Rule 12b-2 of the Exchange Act).    Yes ̈No  x



The number of shares of Silver Legacy Capital
Corp.s Common Stock outstanding at November 12, 2004 was 2,500. All of these shares are owned by Circus and Eldorado Joint Venture.



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CIRCUS AND ELDORADO JOINT VENTURE

SILVER LEGACY CAPITAL CORP.



FORM 10-Q



INDEX



|                              |  |         |  |                                                                                                                    |  |         
|----------------------------- |  | ------- |  | ------------------------------------------------------------------------------------------------------------------ |  | --------
|                              |  |         |  |                                                                                                                    |  | Page No.
|PART I.
FINANCIAL INFORMATION |  |        
|                              |  |         | 
|                              |  | Item 1. |  | Financial Statements:                                                                                              |  |         
|                              |  |         | 
|                              |  |         |  | Unaudited Condensed Consolidated Balance Sheets as of September 30, 2004 and December 31, 2003                     |  | 3       
|                              |  |         | 
|                              |  |         |  | Unaudited Condensed Consolidated Income Statements for the Three and Nine Months Ended September 30, 2004 and 2003 |  | 4       
|                              |  |         | 
|                              |  |         |  | Unaudited Condensed Consolidated Statements of Partners Equity for the Nine Months Ended September 30, 2004       |  | 5       
|                              |  |         | 
|                              |  |         |  | Unaudited Condensed Consolidated Statements of Cash Flows for the Nine Months Ended September 30, 2004 and 2003    |  | 6       
|                              |  |         | 
|                              |  |         |  | Notes to Unaudited Condensed Consolidated Financial Statements                                                     |  | 7       
|                              |  |         | 
|                              |  | Item 2. |  | Managements Discussion and Analysis of Financial Condition and Results of Operations                              |  | 9       
|                              |  |         | 
|                              |  | Item 3. |  | Quantitative and Qualitative Disclosures About Market Risk                                                         |  | 15      
|                              |  |         | 
|                              |  | Item 4. |  | Controls and Procedures                                                                                            |  | 15      
|                              | 
|PART II.
OTHER INFORMATION    |  |        
|                              |  |         | 
|                              |  | Item 6. |  | Exhibits                                                                                                           |  | 16      
|                              | 
|SIGNATURES                    |  | 17     



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PART I. FINANCIAL INFORMATION



Item 1. Financial Statements



CIRCUS AND ELDORADO JOINT VENTURE



(doing business as Silver Legacy Resort Casino)



UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS



(In
thousands)



|                                       |  |                   |         |                  |   |        
|-------------------------------------- |  | ----------------- | ------- | ---------------- | - | -------
|                                       |  | September 30,2004 |         | December 31,2003
|ASSETS                                 |  |                   |         |                  |   |        
|                                       |  |                  
|CURRENT ASSETS:                        |  |                   |         |                  |   |        
|Cash and cash equivalents              |  | $                 | 26,106  |                  | $ | 19,405 
|Accounts receivable, net               |  |                   | 3,772   |                  |   | 3,476  
|Inventories                            |  |                   | 1,920   |                  |   | 1,757  
|Prepaid expenses and other             |  |                   | 4,222   |                  |   | 3,720  
|                                       |  |                   |         |                  |   |        
|Total current assets                   |  |                   | 36,020  |                  |   | 28,358 
|                                       |  |                  
|PROPERTY AND EQUIPMENT, NET            |  |                   | 261,386 |                  |   | 265,852
|OTHER ASSETS, NET                      |  |                   | 8,298   |                  |   | 8,176  
|                                       |  |                   |         |                  |   |        
|Total Assets                           |  | $                 | 305,704 |                  | $ | 302,386
|                                       |  |                   |         |                  |   |        
|LIABILITIES AND PARTNERS EQUITY       |  |                   |         |                  |   |        
|                                       |  |                  
|CURRENT LIABILITIES:                   |  |                   |         |                  |   |        
|Accounts payable                       |  | $                 | 5,112   |                  | $ | 4,260  
|Accrued interest                       |  |                   | 1,350   |                  |   | 5,400  
|Accrued and other liabilities          |  |                   | 8,548   |                  |   | 8,168  
|                                       |  |                   |         |                  |   |        
|Total current liabilities              |  |                   | 15,010  |                  |   | 17,828 
|                                       |  |                  
|LONG-TERM DEBT                         |  |                   | 159,539 |                  |   | 159,492
|OTHER LONG-TERM LIABILITIES            |  |                   | 3,209   |                  |   | 2,554  
|                                       |  |                   |         |                  |   |        
|Total liabilities                      |  |                   | 177,758 |                  |   | 179,874
|                                       |  |                  
|PARTNERS EQUITY                       |  |                   | 127,946 |                  |   | 122,512
|                                       |  |                   |         |                  |   |        
|Total Liabilities and Partners Equity |  | $                 | 305,704 |                  | $ | 302,386
|                                       |  |                   |         |                  |   |        



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



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CIRCUS AND ELDORADO JOINT VENTURE

(doing business as Silver Legacy Resort Casino)



UNAUDITED CONDENSED CONSOLIDATED INCOME STATEMENTS

(In thousands)



|                                    |  |                                 |        |   |                                |   |        |      |  |   |         |   |  |   |         |  
|----------------------------------- |  | ------------------------------- | ------ | - | ------------------------------ | - | ------ | ---- |  | - | ------- | - |  | - | ------- | -
|                                    |  | Three Months EndedSeptember 30, |        |   | Nine Months EndedSeptember 30, |  
|                                    |  | 2004                            |        |   | 2003                           |   |        | 2004 |  |   | 2003    |  
|OPERATING REVENUES:                 |  |                                 |        |   |                                |   |        |      |  |   |         |   |  |   |         |  
|Casino                              |  | $                               | 22,749 |   |                                | $ | 25,207 |      |  | $ | 65,810  |   |  | $ | 68,809  |  
|Rooms                               |  |                                 | 11,138 |   |                                |   | 10,592 |      |  |   | 30,790  |   |  |   | 27,860  |  
|Food and beverage                   |  |                                 | 9,777  |   |                                |   | 9,653  |      |  |   | 27,566  |   |  |   | 26,466  |  
|Other                               |  |                                 | 2,719  |   |                                |   | 2,147  |      |  |   | 6,751   |   |  |   | 5,795   |  
|                                    |  |                                 |        |   |                                |   |        |      |  |   |         |   |  |   |         |  
|                                    |  |                                 | 46,383 |   |                                |   | 47,599 |      |  |   | 130,917 |   |  |   | 128,930 |  
|Less: promotional allowances        |  |                                 | (4,025 | ) |                                |   | (4,413 | )    |  |   | (11,094 | ) |  |   | (11,435 | )
|                                    |  |                                 |        |   |                                |   |        |      |  |   |         |   |  |   |         |  
|Net operating revenues              |  |                                 | 42,358 |   |                                |   | 43,186 |      |  |   | 119,823 |   |  |   | 117,495 |  
|                                    |  |                                 |        |   |                                |   |        |      |  |   |         |   |  |   |         |  
|OPERATING EXPENSES:                 |  |                                 |        |   |                                |   |        |      |  |   |         |   |  |   |         |  
|Casino                              |  |                                 | 11,417 |   |                                |   | 13,001 |      |  |   | 32,162  |   |  |   | 34,150  |  
|Rooms                               |  |                                 | 3,093  |   |                                |   | 3,087  |      |  |   | 9,148   |   |  |   | 8,810   |  
|Food and beverage                   |  |                                 | 6,601  |   |                                |   | 6,470  |      |  |   | 18,623  |   |  |   | 18,024  |  
|Other                               |  |                                 | 2,076  |   |                                |   | 1,659  |      |  |   | 5,213   |   |  |   | 4,527   |  
|Selling, general and administrative |  |                                 | 8,076  |   |                                |   | 7,615  |      |  |   | 23,002  |   |  |   | 22,372  |  
|Depreciation                        |  |                                 | 2,664  |   |                                |   | 2,715  |      |  |   | 7,974   |   |  |   | 8,013   |  
|Loss on disposition of assets       |  |                                 |       |   |                                |   | 277    |      |  |   | 14      |   |  |   | 533     |  
|                                    |  |                                 |        |   |                                |   |        |      |  |   |         |   |  |   |         |  
|Total operating expenses            |  |                                 | 33,927 |   |                                |   | 34,824 |      |  |   | 96,136  |   |  |   | 96,429  |  
|                                    |  |                                 |        |   |                                |   |        |      |  |   |         |   |  |   |         |  
|OPERATING INCOME                    |  |                                 | 8,431  |   |                                |   | 8,362  |      |  |   | 23,687  |   |  |   | 21,066  |  
|                                    |  |                                 |        |   |                                |   |        |      |  |   |         |   |  |   |         |  
|OTHER (INCOME) EXPENSE:             |  |                                 |        |   |                                |   |        |      |  |   |         |   |  |   |         |  
|Interest expense                    |  |                                 | 4,243  |   |                                |   | 4,258  |      |  |   | 12,745  |   |  |   | 12,922  |  
|Interest rate swap income           |  |                                 |       |   |                                |   |       |      |  |   |        |   |  |   | (1,014  | )
|Other, net                          |  |                                 | 78     |   |                                |   | (12    | )    |  |   | 74      |   |  |   | (46     | )
|                                    |  |                                 |        |   |                                |   |        |      |  |   |         |   |  |   |         |  
|Total other (income) expense        |  |                                 | 4,321  |   |                                |   | 4,246  |      |  |   | 12,819  |   |  |   | 11,862  |  
|                                    |  |                                 |        |   |                                |   |        |      |  |   |         |   |  |   |         |  
|NET INCOME                          |  | $                               | 4,110  |   |                                | $ | 4,116  |      |  | $ | 10,868  |   |  | $ | 9,204   |  
|                                    |  |                                 |        |   |                                |   |        |      |  |   |         |   |  |   |         |  



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



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CIRCUS AND ELDORADO JOINT VENTURE

(doing business as Silver Legacy Resort Casino)



UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF PARTNERS EQUITY

(In thousands)



|                            |  |               |        |   |                       |   |        |       |  |   |         |  
|--------------------------- |  | ------------- | ------ | - | --------------------- | - | ------ | ----- |  | - | ------- | -
|                            |  | Galleon, Inc. |        |   | Eldorado Resorts, LLC |   |        | Total | 
|BALANCE, January 1, 2004    |  | $             | 56,256 |   |                       | $ | 66,256 |       |  | $ | 122,512 |  
|Net income                  |  |               | 5,434  |   |                       |   | 5,434  |       |  |   | 10,868  |  
|Partners distributions     |  |               | (2,717 | ) |                       |   | (2,717 | )     |  |   | (5,434  | )
|                            |  |               |        |   |                       |   |        |       |  |   |         |  
|BALANCE, September 30, 2004 |  | $             | 58,973 |   |                       | $ | 68,973 |       |  | $ | 127,946 |  
|                            |  |               |        |   |                       |   |        |       |  |   |         |  



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



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CIRCUS AND ELDORADO JOINT VENTURE

(doing business as Silver Legacy Resort Casino)



UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(In thousands)



|                                                                                            |  |                                |        |   |      |   |         |  
|------------------------------------------------------------------------------------------- |  | ------------------------------ | ------ | - | ---- | - | ------- | -
|                                                                                            |  | Nine Months EndedSeptember 30, |       
|                                                                                            |  | 2004                           |        |   | 2003 |  
|CASH FLOWS FROM OPERATING ACTIVITIES:                                                       |  |                                |        |   |      |   |         |  
|Net income                                                                                  |  | $                              | 10,868 |   |      | $ | 9,204   |  
|                                                                                            |  |                                |        |   |      |   |         |  
|Adjustments to reconcile net income to net cash provided by operating operating activities: |  |                                |        |   |      |   |         |  
|Depreciation and amortization                                                               |  |                                | 8,516  |   |      |   | 8,555   |  
|Loss on disposition of assets                                                               |  |                                | 14     |   |      |   | 533     |  
|Increase in accrued pension cost                                                            |  |                                | 655    |   |      |   | 612     |  
|Changes in current assets and current liabilities:                                          |  |                                |        |   |      |   |         |  
|Accounts receivable, net                                                                    |  |                                | (296   | ) |      |   | (347    | )
|Inventories                                                                                 |  |                                | (163   | ) |      |   | 138     |  
|Prepaid expenses and other                                                                  |  |                                | (520   | ) |      |   | (1,170  | )
|Accounts payable                                                                            |  |                                | 852    |   |      |   | 1,032   |  
|Accrued interest                                                                            |  |                                | (4,050 | ) |      |   | (4,075  | )
|Accrued and other liabilities                                                               |  |                                | 380    |   |      |   | 873     |  
|                                                                                            |  |                                |        |   |      |   |         |  
|Total adjustments                                                                           |  |                                | 5,388  |   |      |   | 6,151   |  
|                                                                                            |  |                                |        |   |      |   |         |  
|Net cash provided by operating activities                                                   |  |                                | 16,256 |   |      |   | 15,355  |  
|                                                                                            |  |                                |        |   |      |   |         |  
|CASH FLOWS FROM INVESTING ACTIVITIES:                                                       |  |                                |        |   |      |   |         |  
|Proceeds from sale of assets                                                                |  |                                | 4      |   |      |   | 115     |  
|Increase in other assets                                                                    |  |                                | (617   | ) |      |   | (851    | )
|Purchase of property and equipment                                                          |  |                                | (3,508 | ) |      |   | (3,226  | )
|                                                                                            |  |                                |        |   |      |   |         |  
|Net cash used in investing activities                                                       |  |                                | (4,121 | ) |      |   | (3,962  | )
|                                                                                            |  |                                |        |   |      |   |         |  
|CASH FLOWS FROM FINANCING ACTIVITIES:                                                       |  |                                |        |   |      |   |         |  
|Proceeds from bank credit facility                                                          |  |                                |       |   |      |   | 4,500   |  
|Debt issuance costs                                                                         |  |                                |       |   |      |   | (1      | )
|Distributions to partners                                                                   |  |                                | (5,434 | ) |      |   | (4,050  | )
|Payments on bank credit facility                                                            |  |                                |       |   |      |   | (13,500 | )
|                                                                                            |  |                                |        |   |      |   |         |  
|Net cash used in financing activities                                                       |  |                                | (5,434 | ) |      |   | (13,051 | )
|                                                                                            |  |                                |        |   |      |   |         |  
|Net increase (decrease) in cash and cash equivalents                                        |  |                                | 6,701  |   |      |   | (1,658  | )
|                                                                                            |  |                               
|Cash and cash equivalents at beginning of period                                            |  |                                | 19,405 |   |      |   | 14,913  |  
|                                                                                            |  |                                |        |   |      |   |         |  
|Cash and cash equivalents at end of period                                                  |  | $                              | 26,106 |   |      | $ | 13,255  |  
|                                                                                            |  |                                |        |   |      |   |         |  
|SUPPLEMENTAL CASH FLOW INFORMATION:                                                         |  |                                |        |   |      |   |         |  
|                                                                                            |  |                               
|Cash paid during period for interest                                                        |  | $                              | 16,255 |   |      | $ | 15,439  |  
|                                                                                            |  |                                |        |   |      |   |         |  



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



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CIRCUS AND ELDORADO JOINT VENTURE

(doing business as Silver Legacy Resort Casino)



NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS



Note 1. Summary of Significant Accounting Policies and Basis of Presentation



Principles of Consolidation/Operations



Effective March 1, 1994, Eldorado Limited Liability Company (a Nevada
limited liability company owned and controlled by Eldorado Resorts, LLC) (ELLC) and Galleon, Inc. (a Nevada corporation owned and controlled by Mandalay Resort Group) (Galleon and, collectively with ELLC, the
Partners), entered into a joint venture agreement to establish Circus and Eldorado Joint Venture (the Partnership), a Nevada general partnership. The Partnership owns and operates a casino and hotel located in Reno, Nevada
(Silver Legacy), which began operations on July 28, 1995. ELLC contributed land to the Partnership with a fair value of $25,000,000 and cash of $26,900,000 for a total equity investment of $51,900,000. Galleon contributed cash to the
Partnership of $51,900,000 to comprise their total equity investment. Each partner has a 50% interest in the Partnership.



The condensed consolidated financial statements include the accounts of the Partnership and its wholly owned subsidiary, Silver Legacy Capital Corp.
(Capital). Capital was established solely for the purpose of serving as a co-issuer of $160,000,000 principal amount of 101/8% mortgage notes due 2012 issued by the Partnership and Capital and, as such, Capital does not have any operations, assets, or revenues. All significant intercompany accounts and transactions have been eliminated in
consolidation.



In the opinion of Management, the
accompanying unaudited condensed consolidated financial statements contain all adjustments, all of which are normal and recurring, necessary to present fairly the financial position of the Partnership as of September 30, 2004, and the results of
operations for the three and nine months ended September 30, 2004 and 2003 and cash flows for the nine months ended September 30, 2004 and 2003. The results of operations for such periods are not necessarily indicative of the results to be expected
for a full year.



Certain information and footnote disclosures
normally included in financial statements prepared in accordance with accounting principles generally accepted in the United States of America have been condensed or omitted. These condensed consolidated financial statements should be read in
conjunction with the consolidated financial statements and notes thereto included in the Partnerships annual report on Form 10-K for the year ended December 31, 2003.



Use of Estimates



The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to
make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the
reporting period. Actual results could differ from these estimates.



Note 2.
Certain Risks and Uncertainties



A significant portion of
the Partnerships revenues and operating income are generated from patrons who are residents of northern California. A change in general economic conditions or the extent and nature of casino gaming in California, Washington or Oregon could
adversely affect the Partnerships operating results. In March 2000, California voters approved a constitutional amendment which legalized Nevada-style gaming on Native American reservations. Many existing Native American gaming
facilities in northern California are modest compared to Silver Legacy. However, some native American tribes have established large-scale gaming facilities in California and numerous Native American tribes have announced that they are in the process
of expanding, developing, or are considering establishing large-scale hotel and gaming facilities in northern California. In particular, a significant new Native American casino located approximately 21 miles northeast of Sacramento opened in June
2003. While this new casino does not currently have hotel rooms, its gaming facilities are comparable in size to Silver Legacy with approximately 1,900 slot machines and 100 table games.



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Most Native American tribes in California currently may operate up to 2,000 slot machines, and up to two
gaming facilities may be operated on any one reservation. The number of machines the tribes are allowed to operate may increase as a result of any new or amended compacts the tribes may enter into with the State of California that receive the
requisite approvals, such as has been the case with respect to a number of new or amended compacts recently executed and approved. On September 2, 2004, the aforementioned Sacramento-area casino received approval of amendments to its compact
allowing for approximately 800 additional machines which are expected to be placed in operation during the fourth quarter of 2004 and will increase the number of machines at this property to approximately 2,700.



We believe the continued growth of Native American gaming establishments
could continue to place additional competitive pressure on our operations. While we cannot predict the extent of any future impact, it could be significant.



Note 3. Long-Term Debt



Long-term debt consisted of the following (in thousands):



|                                                                                            |  |                   |         |                  |   |        
|------------------------------------------------------------------------------------------- |  | ----------------- | ------- | ---------------- | - | -------
|                                                                                            |  | September 30,2004 |         | December 31,2003
|101/8% Mortgage Notes due 2012 (net of unamortized discount of $461 and $508, respectively) |  | $                 | 159,539 |                  | $ | 159,492



On March 5, 2002, the
Partnership and Capital (the Issuers) issued $160,000,000 principal amount of senior secured mortgage notes due 2012 (Notes). Concurrent with issuing the Notes, the Partnership entered into a new senior secured credit
facility (the New Credit Facility) for $40,000,000. The proceeds from the Notes, together with $26,000,000 in borrowings under the New Credit Facility, were used to repay $150,200,000 representing all of the indebtedness outstanding
under the prior bank credit facility (the Bank Credit Facility) and to fund $30,000,000 of distributions to the Partners. In addition, the remaining proceeds along with operating cash flows were used to pay $6,300,000 in related fees and
expenses of the transactions. These fees were capitalized and are included in other assets.



The Notes are senior secured obligations which rank equally with all of the Partnerships outstanding senior debt and senior to any subordinated debt. The Notes are secured by a security interest in the
Issuers existing and future assets, which is junior to a security interest in such assets securing the Partnerships obligations on the New Credit Facility and any refinancings of such facility that are permitted pursuant to the terms of
the Notes. Each of the Partners executed a pledge of all of its partnership interests in the Partnership to secure the Notes, which is junior to a pledge of such partnership interests to secure the Partnerships obligations on the New Credit
Facility and any refinancings of such facility that are permitted pursuant to the terms of the Notes. The Notes mature on March 1, 2012 and bear interest at the rate of 101/8% per annum, payable semi-annually in arrears on March 1 and September 1 of each year, commencing on September 1, 2002.



The New Credit Facility originally provided for a $20,000,000 senior secured
revolving credit facility and a $20,000,000 five-year term loan facility, each of which provided for the payment of interest at floating rates based on LIBOR plus a spread. The commitment under the term loan facility originally provided for periodic
reductions with the then remaining balance due March 31, 2007. The term loan was paid in full as of December 31, 2003.



The Notes and New Credit Facility contain various restrictive covenants including the maintenance of certain financial ratios and limitations on
additional debt, disposition of property, mergers and similar transactions. On November 4, 2003, the Partnership executed an amendment to the New Credit Facility (as amended, the Amended Credit Facility) which reduced the revolving
facility to $10,000,000, and revised certain covenant ratios with retroactive effect to September 30, 2003, including the maximum total debt to EBITDA ratio which the Partnership had exceeded as of September 30, 2003. At September 30, 2004, there
was no indebtedness outstanding under the Amended Credit Facility. As of such date, the Partnership was in compliance with all of the covenants in the Amended Credit Facility and had the ability to borrow on a revolving basis all of the $10,000,000
available under the Amended Credit Facility. The entire principal amount then outstanding under the Amended Credit Facility becomes due and payable on March 31, 2007 unless the maturity date is extended with the consent of the lenders. As of
September 30, 2004, the Partnership was in compliance with the covenants in the indenture relating to the Notes.



Note 4. Related Parties



Each of our Partners operates a casino attached and adjacent to Silver Legacy. Our Partners may be deemed to be in a conflict of interest position with
respect to decisions they make relating to the Partnership, the Eldorado Hotel & Casino and Circus Circus Hotel & Casino-Reno.



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Note 5. Supplemental Executive Retirement Plan



Effective January 1, 2002, the Partnership adopted a Supplemental Executive Retirement Plan (SERP) for a select
group of highly compensated management employees. The SERP provides for a lifetime benefit at age 65, based on a formula which takes into account a participants highest annual compensation, years of service, and executive level. The SERP also
provides an early retirement benefit at age 55 with at least four years of service, a disability provision, and a lump sum death benefit. While the SERP is an unfunded plan, the Partnership is informally funding the plan through life insurance
contracts on the participants. The Partnership anticipates that its periodic pension cost for the year ending December 31, 2004 will be approximately $885,800, of which $655,300 had been accrued as of September 30, 2004.



Note 6. Partnership Agreement



Concurrent with the issuance of the Notes on March 5, 2002, the
Partnerships partnership agreement was amended and restated in its entirety and was further amended in April 2002 (the Partnership Agreement). The Partnership Agreement provides for, among other things, profits and losses to be
allocated to the Partners in proportion to their percentage interests, separate capital accounts to be maintained for each Partner, provisions for management of the Partnership and payment of distributions and bankruptcy and/or dissolution of the
Partnership. The April 2002 amendments were principally (i) to provide equal voting rights for ELLC and Galleon with respect to approval of the Partnerships annual business plan and the appointment and compensation of the general manager, and
(ii) to give each Partner the right to terminate the general manager.



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



Overview



Effective March 1, 1994, Eldorado Limited Liability Company (ELLC), a Nevada limited liability company owned and controlled by Eldorado
Resorts LLC, and Galleon, Inc. (Galleon), a Nevada corporation owned and controlled by Mandalay Resort Group, formerly known as Circus Circus Enterprises, Inc., entered into a joint venture agreement to establish Circus and Eldorado
Joint Venture (the Partnership) for the purpose of constructing, owning and operating Silver Legacy. Silver Legacy Capital Corp. (Capital), a wholly owned subsidiary of the Partnership, was incorporated for the sole purpose
of serving as a co-issuer of the $160 million principal amount of 101/8% mortgage notes due 2012 issued by the
Partnership and Capital (the Notes), and does not have any operations, assets or revenues.



On July 28, 1995, Silver Legacy commenced operations as a hotel-casino in downtown Reno, Nevada. Silver Legacy is a leader within the Reno market,
offering the largest number of table games and slot machines and the second largest number of hotel rooms of any property in the Reno market. Silver Legacys net operating revenues and income are derived largely from our gaming activities. In
an effort to enhance our gaming revenues, we attempt to maximize the use of our gaming facilities at Silver Legacy by providing a well-balanced casino environment that contains a mix of games attractive to multiple market segments. Rooms, food and
beverage also contribute a large portion of our net revenues.



Our operating results are highly dependent on the volume of customers visiting and staying at our resort. Key volume indicators include table games drop and slot handle, which refer to amounts wagered by our customers. The amount of volume
we retain, which is not fully controllable by us, is recognized as casino revenues and is referred to as our win or hold. In addition, hotel occupancy and price per room designated by average daily rate (ADR) are key indicators for our
hotel business.



Significant Factors Affecting Results of Operations



A significant portion of Silver Legacys revenues
and operating income are generated from patrons who are residents of northern California, and as such, our results of operations have been adversely impacted by the growth in Native American gaming in northern California over the past few years.
Many existing Native American gaming facilities in northern California are modest compared to Silver Legacy. However, some native American tribes have established large-scale gaming facilities in California and numerous Native American tribes have
announced that they are in the process of expanding, developing, or are considering establishing, large-scale hotel and gaming facilities in northern California. In particular, a significant new Native American casino located approximately 21 miles
northeast of Sacramento opened in June 2003. While this new casino does not currently have hotel rooms, its gaming facilities are comparable in size to Silver Legacy with approximately 1,900 slot machines and 100 table games. During the six months
following its opening date in June 2003, we experienced a moderate decrease in our weekend casino volume resulting in a negative impact on our operating results during that period. Despite this increased competition, we were able to achieve higher
casino volume during the first quarter in 2004 compared to the same prior year period when this facility was not operating. However, our casino volume declined during the second and third quarters in 2004 compared to the same prior year periods.
These declines in casino volume were partially attributed to competition generated by this new facility which we believe has negatively impacted drive-in, day-trip visitor traffic from our main feeder markets in northern California.



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Most Native American tribes in California currently may operate up to 2,000 slot machines, and up to two
gaming facilities may be operated on any one reservation. The number of machines the tribes are allowed to operate may increase as a result of any new or amended compacts the tribes may enter into with the State of California that receive the
requisite approvals, such as has been the case with respect to a number of new or amended compacts recently executed and approved. On September 2, 2004, the aforementioned Sacramento-area casino received approval of amendments to its compact
allowing for approximately 800 additional machines which are expected to be placed in operation during the fourth quarter of 2004 and will increase the number of machines at this property to approximately 2,700.



We believe the continued growth of Native American gaming establishments
could continue to place additional competitive pressure on our operations. While we cannot predict the extent of any future impact, it could be significant.



Other Factors Affecting Results of Operations



Two public works projects are underway in the downtown area of Reno. The first project will lower the train tracks that traverse Renos downtown
district and separate the Silver Legacy and the two adjoining properties from the rest of the downtown gaming facilities. Construction on this project is expected to be completed in 2006. The second project involves the construction of a downtown
special events center next to the National Bowling Stadium. Construction of this project began in January 2004 with an expected completion date in December 2004. To date, the impact of these projects on our operations has been minimal; however, we
cannot determine the effect of either of the projects on our future operations.



Summary Financial Results



The following table
highlights the results of our operations (dollars in thousands):



|                   |  |                                    |        |                                    |   |               |  |      |                                   |  |                                   |         |               |   |         |  |      |  
|------------------ |  | ---------------------------------- | ------ | ---------------------------------- | - | ------------- |  | ---- | --------------------------------- |  | --------------------------------- | ------- | ------------- | - | ------- |  | ---- | -
|                   |  | Three monthsendedSeptember 30,2004 |        | Three monthsendedSeptember 30,2003 |   | PercentChange |  |      | Nine monthsendedSeptember 30,2004 |  | Nine monthsendedSeptember 30,2003 |         | PercentChange |  
|Net revenues       |  | $                                  | 42,358 |                                    | $ | 43,186        |  | (1.9 | )%                                |  | $                                 | 119,823 |               | $ | 117,495 |  | 2.0  | %
|Operating expenses |  |                                    | 33,927 |                                    |   | 34,824        |  | (2.6 | )                                 |  |                                   | 96,136  |               |   | 96,429  |  | 0.0  |  
|Operating income   |  |                                    | 8,431  |                                    |   | 8,362         |  | 0.1  |                                   |  |                                   | 23,687  |               |   | 21,066  |  | 12.4 |  
|Net income         |  |                                    | 4,110  |                                    |   | 4,116         |  | 0.0  |                                   |  |                                   | 10,868  |               |   | 9,204   |  | 18.1 |  



Net Revenues.
Net revenues decreased during the third quarter compared to the same prior year period due to a decrease in casino revenues, which was partially offset by increases in room, food and beverage and other revenues. We believe this decline in casino
revenues was primarily attributable to the aforementioned increase in competition resulting from the expansion of Native American gaming in northern California.



For the nine months ended September 30, 2004 compared to the nine months ended September 30, 2003, net revenues grew due to increases in room, food and
beverage, and other revenues. We believe the drivers of our current year revenues were improvements in the national economy, increased spending by our customers in non-gaming areas, and traffic generated by the American Bowling Congress Tournament
(ABC Tournament), which attracted men bowlers to the Reno market in mid-February through June 2004. The Womens International Bowling Congress Tournament held in 2003 did not commence until mid-March, and brought approximately
20,000 fewer bowlers to the Reno market than the ABC Tournament did in 2004. A national championship bowling tournament is not scheduled to be held in Reno in 2005, but is scheduled to be held two out of every three years through 2018. Finally, the
war with Iraq, including the events leading up to its onset, was a negative factor affecting tourism in general during the first quarter of 2003.



Operating Income. Although net revenues decreased during the third quarter, operating income increased slightly compared to the same prior year
period. For the nine months ended September 30, 2004 compared to the nine months ended September 30, 2003, operating income increased significantly. These increases in operating income were attributable to decreases in overall operating expenses, as
a percentage of revenues, resulting from cost control efforts. Savings in payroll, casino bad debt expense and various other variable expenses were partially offset by increases in state gaming taxes, utilities and building repairs and maintenance.



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Net Income. During the three months ended September 30, 2004 compared to the three months ended
September 30, 2003, net income remained flat. For the nine months ended September 30, 2004 compared to the same prior year period, net income increased by a higher percentage than the net revenues increase. The aforementioned factors affecting net
revenues and operating income, combined with a decrease in loss on disposition of assets and interest expense, also benefited net income during both periods. However, the percentage increase in net income for the nine months ended September 30, 2004
compared to the same prior year period was adversely impacted by interest rate swap income of $1.0 million recorded in June 2003.



Revenues



The following table highlights our sources of net operating revenues (dollars in thousands):



|                       |  |                                    |        |                                    |   |               |  |      |                                   |  |                                   |        |               |   |        |  |      |   
|---------------------- |  | ---------------------------------- | ------ | ---------------------------------- | - | ------------- |  | ---- | --------------------------------- |  | --------------------------------- | ------ | ------------- | - | ------ |  | ---- | --
|                       |  | Three monthsendedSeptember 30,2004 |        | Three monthsendedSeptember 30,2003 |   | PercentChange |  |      | Nine monthsendedSeptember 30,2004 |  | Nine monthsendedSeptember 30,2003 |        | PercentChange |  
|Casino                 |  | $                                  | 22,749 |                                    | $ | 25,207        |  | (9.8 | )%                                |  | $                                 | 65,810 |               | $ | 68,809 |  | (4.4 | )%
|Rooms                  |  |                                    | 11,138 |                                    |   | 10,592        |  | 5.2  |                                   |  |                                   | 30,790 |               |   | 27,860 |  | 10.5 |   
|Food and beverage      |  |                                    | 9,777  |                                    |   | 9,653         |  | 1.3  |                                   |  |                                   | 27,566 |               |   | 26,466 |  | 4.2  |   
|Other                  |  |                                    | 2,719  |                                    |   | 2,147         |  | 26.6 |                                   |  |                                   | 6,751  |               |   | 5,795  |  | 16.5 |   
|Promotional allowances |  |                                    | 4,025  |                                    |   | 4,413         |  | (8.8 | )                                 |  |                                   | 11,094 |               |   | 11,435 |  | (3.0 | ) 



Casino Revenues.During the three months ended September 30, 2004 compared to the same prior year period, casino revenues declined primarily due to decreases in slot handle and table games drop. We believe these decreases were associated with increasingly
greater competition from Native American gaming combined with rising gasoline prices throughout 2004. Both of these factors have negatively impacted drive-in visitor volume from our main feeder markets in northern California. In addition, the
declines in table games and slot volume were partially attributable to the discontinuation of an Asian non-negotiable chip (chips which are not redeemable for cash and can only be played on Silver Legacy table games) marketing promotion in effect
during August and September 2003 which generated table games drop during the quarter ended September 30, 2003, and a reduction in promotional offers associated with a casino marketing direct mail program initiated in July 2003.



Casino revenues declined during the nine months ended September 30, 2004
compared to the nine months ended September 30, 2003. Increased casino revenues during our 2004 first quarter were offset by declines in the second (with the exception of April) and third quarters of 2004 in comparison to the same prior year
periods. While the second and third quarters in 2004 were impacted by the factors referred to above, our prior year casino volume was adversely affected by the disruption caused by carpet replacement and other remodeling in the casino area during
the months of January and February 2003 along with poor weather conditions in April 2003.



Room Revenues. For the three months ended September 30, 2004, room occupancy declined to 87.5% as compared to 91.1% for the three months ended September 30, 2003. However, room revenues increased during the
third quarter compared to the same prior year period resulting from an increase in our ADR to $74.47 in 2004 from $67.55 in 2003. This increase in ADR was primarily due to a 27.8% increase in convention room nights which enabled the hotel department
to attain a higher ADR across all room segments during the third quarter in 2004 compared to the same prior year period.



During the nine months ended September 30, 2004, room revenues increased significantly in comparison to the same prior year period. Our ADR and occupancy
percentages were $69.82 and 86.2%, respectively, for the nine months ended September 30, 2004 compared to $64.73 and 84.2%, respectively, for the nine months ended September 30, 2003. The principal contributors to the increases in ADR and occupancy
were increased convention and wholesale room nights generated by the aforementioned ABC Tournament combined with greater convention business throughout the Reno market.



Food and Beverage Revenues. During the three and nine months ended September 30, 2004 compared to the same prior year
periods, food and beverage revenues increased primarily due to an increase in cash beverage sales guest counts along with selective menu price increases throughout our food and beverage outlets.



Other Revenues. Other revenues are comprised of revenues generated by
our retail outlets, arcade, entertainment, events pavilion, and other miscellaneous items. Other revenues increased during the three and nine months ended September 30, 2004 compared to the same prior year periods primarily due to increased retail
and entertainment revenues. In addition, several large convention functions held in our events pavilion during the three months ended September 30, 2004 contributed to the increase during the third quarter.



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Promotional Allowances. Promotional allowances, expressed as a percentage of gross revenues,
declined to 8.7% for the three months ended September 30, 2004 compared to 9.3% for the three months ended September 30, 2003, and declined to 8.5% for the nine months ended September 30, 2004 compared to 8.9% for the nine months ended September 30,
2003. These decreases were primarily due to declines in rooms, food and beverage promotional allowances extended to casino customers during both periods.



Operating Expenses



The following table highlights our operating expenses (dollars in thousands):



|                                    |  |                                    |        |                                    |   |               |  |       |                                   |  |                                   |        |               |   |        |  |      |   
|----------------------------------- |  | ---------------------------------- | ------ | ---------------------------------- | - | ------------- |  | ----- | --------------------------------- |  | --------------------------------- | ------ | ------------- | - | ------ |  | ---- | --
|                                    |  | Three monthsendedSeptember 30,2004 |        | Three monthsendedSeptember 30,2003 |   | PercentChange |  |       | Nine monthsendedSeptember 30,2004 |  | Nine monthsendedSeptember 30,2003 |        | PercentChange |  
|Casino                              |  | $                                  | 11,417 |                                    | $ | 13,001        |  | (12.2 | )%                                |  | $                                 | 32,162 |               | $ | 34,150 |  | (5.8 | )%
|Rooms                               |  |                                    | 3,093  |                                    |   | 3,087         |  | 0.0   |                                   |  |                                   | 9,148  |               |   | 8,810  |  | 3.8  |   
|Food and beverage                   |  |                                    | 6,601  |                                    |   | 6,470         |  | 2.0   |                                   |  |                                   | 18,623 |               |   | 18,024 |  | 3.3  |   
|Other                               |  |                                    | 2,076  |                                    |   | 1,659         |  | 25.1  |                                   |  |                                   | 5,213  |               |   | 4,527  |  | 15.2 |   
|Selling, general and administrative |  |                                    | 8,076  |                                    |   | 7,615         |  | 6.1   |                                   |  |                                   | 23,002 |               |   | 22,372 |  | 2.8  |   
|Depreciation                        |  |                                    | 2,664  |                                    |   | 2,715         |  | (1.9  | )                                 |  |                                   | 7,974  |               |   | 8,013  |  | 0.0  |   



Casino Expenses.Casino expenses during the three and nine months ended September 30, 2004 compared to the same prior year periods declined due in part to the aforementioned casino revenue decreases. Significant savings in casino payroll related expenses and
other variable expenses, including casino bad debt expense and casino marketing promotional expenses, were partially offset by increases in the amount of state gaming taxes, as a percentage of revenues, and slot license fees paid.



Room Expenses. During the three and nine months ended September 30,
2004, room expenses, including supplies, travel agent commissions and professional services, increased over the same prior year periods. However, the increases in our ADR during both current year periods combined with reductions in certain specific
room expenses, including departmental payroll and laundry expense, as a percentage of room revenues, resulted in increased departmental profit during both periods.



Food and Beverage Expenses. During the three and nine months ended September 30, 2004 compared to the same prior year
periods, food and beverage expenses grew due to increased beverage cost of sales, both as a percentage of revenues and absolute dollars. Despite the rise in beverage cost of sales, declines in departmental payrolls combined with the previously
discussed increases in cash beverage sales and food and beverage menu prices, produced a steady profit margin for the three months ended September 30, 2004, and an increased profit margin for the nine months ended September 30, 2004 compared to the
same prior year periods.



Other Operating Expenses.
Other operating expenses are comprised of expenses associated with the operation of our retail outlets, arcade, events pavilion and entertainment department, including production costs and professional fees. Other expenses increased during the three
months and nine months ended September 30, 2004 primarily due to an increase in entertainment expenses, principally for professional entertainer fees, associated with a more aggressive concert schedule, both in terms of quality and the number of
dates, during both periods. In addition, expenses associated with retail and our events pavilion increased in conjunction with the aforementioned revenue increases.



Selling, General and Administrative Expenses. During the three months ended September 30, 2004 compared to the same
prior year period, selling, general and administrative expenses rose due to increased credit card discounts associated with hotel sales volume, building repairs and maintenance, utilities, and computer hardware and software maintenance contracts. In
addition, sales marketing and advertising expenses rose slightly during the third quarter compared to the same prior year period. These increases were partially offset by a decline in real property taxes resulting from a reduction in our assessed
taxes effective July 1, 2004. In addition, our general liability and property insurance premiums were renegotiated in July 2004 and leveled out during the third quarter in comparison to the same prior year period.



For the nine months ended September 30, 2004 compared to the nine months
ended September 30, 2003, selling, general and administrative expenses increased as a result of higher credit card discounts, and increased expenses for building repairs and maintenance, utilities, computer hardware and software maintenance
contracts, and general liability insurance premiums. However, these increases were partially offset by declines in advertising media expenditures during the nine months ended September 30, 2004.



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Depreciation Expense. Depreciation expense decreased during the three months ended September 30,
2004 compared to the three months ended September 30, 2003 primarily due to the full depreciation of certain assets during the current quarter.



During the nine months ended September 30, 2004 compared to the same prior year period, depreciation expense remained flat due to the increased
depreciation associated with new capital purchases that was offset by several assets becoming fully depreciated during the current year.



Other (Income) Expense



Other (income) expense is comprised of interest expense, interest rate swap income, and other, net. During the three months ended September 30, 2004
compared to the same prior year period, interest expense remained flat. For the nine months ended September 30, 2004 compared to the nine months ended September 30, 2003, interest expense decreased $0.2 million as a result of lower average
outstanding borrowings. Other, net in both periods was related to the change in market value of the insurance contracts associated with our supplemental executive retirement plan. In addition, an interest rate swap agreement was terminated prior to
its scheduled termination date and a cash receipt of $1.0 million was recorded as interest rate swap income in June 2003.



Liquidity and Capital Resources



During the nine months ended September 30, 2004, we generated cash flows from operating activities of $16.3 million compared to $15.4 million during the
same prior year period. The $0.9 million increase in cash provided by operations was primarily due to the $1.7 million increase in net income and various changes in balance sheet accounts. The changes in these balance sheet accounts represented
changes which occurred in the normal course of business. As of September 30, 2004, cash and cash equivalents were $26.1 million, sufficient for normal operating requirements.



Cash used in investing activities for the nine months ended September 30, 2004 was $4.1 million compared to $4.0 million for
the nine months ended September 30, 2003, and related primarily to capital expenditures for various renovation projects and equipment purchases. During the third quarter of 2004, we began a hotel room renovation project. The budget for this project
is approximately $7.2 million, of which approximately $1.5 million is expected to be incurred in 2004, with the remainder to be incurred in 2005. Including $1.5 million for the aforementioned room renovation project, we expect to spend approximately
$5.0 million in capital expenditures in 2004.



Cash used in
financing activities during the nine months ended September 30, 2004 was $5.4 million representing tax distributions to our partners for the current year in addition to taxes owed related to our fiscal 1995 and 1996 Internal Revenue Service audits.
During the nine months ended September 30, 2003, tax distributions of $4.1 million were made to our partners. In addition, during the nine months ended September 30, 2003, prepayments in the aggregate principal amount of $9.0 million were made on
the term portion of our credit facility, permanently reducing the amount of the term loan by the amount of such payments. During the same period, $4.5 million was borrowed and subsequently paid on the revolving portion of our credit facility.



In July 2004, we renewed our general and liability insurance
policies. Under the new policies, the Partnership and the owner of the adjacent property, Eldorado Resorts LLC (which is an affiliate of ELLC), have combined earthquake coverage of $320 million and combined flood coverage of $245 million. In the
event that an earthquake causes damage only to the Partnerships property, the Partnership is eligible to receive up to $320 million in coverage depending on the replacement cost. However, in the event that both properties are damaged, the
Partnership is entitled to receive, to the extent of any replacement cost incurred, up to $220 million of the coverage amount (based on our percentage of the earthquake coverage) and up to the portion of the other $100 million, if any, remaining
after satisfaction of a claim of Eldorado Resorts LLC. In the event that a flood causes damage only to the Partnerships property, the Partnership is eligible to receive up to $245 million in coverage depending on the replacement cost. However,
in the event that both properties are damaged, the Partnership is entitled to receive, to the extent of any replacement cost incurred, up to $220 million of the coverage amount (based on our percentage of the earthquake coverage) and up to the
portion of the other $25 million, if any, remaining after satisfaction of a claim of Eldorado Resorts LLC.



Our new insurance policy also includes combined terrorism coverage up to $425 million for a certified act of terrorism and up to $250 million for a
non-certified act of terrorism. In the event that a certified, or non-certified act, of terrorism causes damage only to the Partnerships property, the Partnership is eligible to receive up to $425 million, or $250 million, respectively, in
coverage depending on the replacement cost. However, in the event that both properties are damaged, the Partnership is entitled to receive, to the extent of any replacement cost incurred, up to $235 million for a certified act, or up to $138 million
for a non-certified act, of the coverage amount (based on our percentage of the total property value) and up to the portion of the other $190 million, or $112 million, respectively, if any, remaining after satisfaction of a claim of Eldorado Resorts
LLC.



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The Partnerships partnership agreement, as currently in effect, provides that, subject to any
contractual restrictions to which the Partnership is subject, including the indenture relating to the Notes, and prior to the occurrence of a Liquidating Event, the Partnership will be required to make distributions to its partners as
follows:



(i) The estimated taxable income of
the Partnership allocable to each partner multiplied by the greater of the maximum marginal federal income tax rate applicable to individuals for such period or the maximum marginal federal income tax rate applicable to corporations for such period
(as of the date hereof both rates were 35%); provided, however, that if the State of Nevada enacts an income tax (including any franchise tax based on income), the applicable tax rate for any tax distributions subsequent to the effective date of
such income tax shall be increased by the higher of the maximum marginal individual tax rate or corporate income tax rate imposed by such tax (after reduction for the federal tax benefit for the deduction of state taxes, using the maximum marginal
federal individual or corporate rate, respectively).



(ii) Annual distributions of remaining Net Cash From Operations in proportion to the percentage interests of the partners.



(iii) Distributions of Net Cash From Operations in amounts or at times that differ from those described in (i) and (ii) above,
provided in each case that both partners agree in writing to the distribution in advance thereof.



As defined in the partnership agreement, the term Net Cash From Operations means the gross cash proceeds received by the Partnership, less the
following amounts: (i) cash operating expenses and payments of other expenses and obligations of the Partnership, including interest and scheduled principal payments on Partnership indebtedness, including indebtedness owed to the partners, if any,
(ii) all capital expenditures made by the Partnership, and (iii) such reasonable reserves as the partners deem necessary in good faith and in the best interests of the Partnership to meet its anticipated future obligations and liabilities (less any
release of reserves previously established, as similarly determined).



The Partnerships partnership agreement provides that the partners shall not be permitted or required to contribute additional capital to the Partnership without the consent of the partners, which consent may be given or withheld in
each partners sole and absolute discretion.



We believe
we have sufficient capital resources to meet all of our obligations. These obligations include existing cash obligations, funding of capital commitments and servicing our debt. Our future sources of liquidity are anticipated to be from our operating
cash flow and borrowings available under our senior secured credit facility. See Senior Secured Credit Facility below.



Senior Secured Credit Facility



On November 4, 2003, we executed an amendment to our credit facility (as amended, the Credit Facility) which originally included a term
facility (which was paid in full in 2003) and a revolving facility. The amendment reduced the revolving facility to $10.0 million, none of which was outstanding at September 30, 2004, and revised certain covenant ratios with retroactive effect to
September 30, 2003, including the maximum total debt to EBITDA ratio which we had exceeded as of September 30, 2003. Under the Credit Facility, we must maintain a maximum ratio of total debt to EBITDA of 5.00 to 1.00 for the quarters ending
September 30, 2003 through March 31, 2006 and 4.75 to 1.00 for the quarter ending June 30, 2006 and thereafter. Under the Credit Facility, we are also required to maintain a minimum ratio of EBITDA to fixed charges of 1.20 to 1.00 at all times. The
Credit Facility is secured by a first priority security interest in substantially all of our existing and future assets, other than certain licenses which may not be pledged under applicable law, and a first priority pledge of and security interest
in all of the partnership interests in the Partnership held by its partners. The Credit Facility ranks equal in right of payment to our existing and future senior indebtedness, including the Notes, but the security interests securing our obligations
under the Credit Facility are senior to the security interests securing our obligations on the Notes. The Credit Facility contains customary events of default and covenants, including covenants that limit or restrict our ability to incur additional
debt, create liens or other encumbrances, pay dividends or make other restricted payments, prepay subordinated indebtedness, make investments, loans or other guarantees, sell or otherwise dispose of a portion of our assets, or make acquisitions or
merge or consolidate with another entity.



At September 30,
2004, there was no indebtedness outstanding under the Credit Facility. As of such date, we were in compliance with all of the covenants in the Credit Facility and we had the ability to borrow all of the $10.0 million available under the Credit
Facility. The entire principal amount then outstanding under the Credit Facility becomes due and payable on March 31, 2007 unless the maturity date is extended with the consent of the lenders. At September 30, 2004, we were also in compliance with
all of the covenants in the indenture relating to the Notes.



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Critical Accounting Policies



A description of our critical accounting policies can be found in Item 7 of our Annual Report on Form 10-K for the year
ended December 31, 2003. There were no material changes to these policies as of September 30, 2004.



Forward-Looking Statements



Certain information included in this report and other materials filed or to be filed by the Issuers with the Securities and Exchange Commission (as well as information included in oral statements or written statements made or to be made by
the Issuers) contains statements that are forward-looking within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. These statements can be identified by the fact
that they do not relate strictly to historical or current facts. We have based these forward-looking statements on our current expectations about future events. These forward-looking statements include statements with respect to our beliefs, plans,
objectives, goals, expectations, anticipations, intentions, financial condition, results of operations, future performance and business, including, current and future operations and statements that include the words may,
could, should, would, believe, expect, anticipate, estimate, intend, plan or similar expressions. Such statements include information
relating to capital spending, financing sources and the effects of regulation (including gaming and tax regulation) and competition. Such forward-looking information involves important risks and uncertainties that could significantly affect
anticipated results in the future and, accordingly, such results may differ from those expressed in any forward-looking statements made by us or on our behalf. These risks and uncertainties include, but are not limited to dependence on existing
management, leverage and debt service (including sensitivity to fluctuations in interest rates), domestic or global economic conditions, changes in Federal or state tax laws or the administration of such laws, changes in gaming laws or regulations
(including the legalization of gaming in certain jurisdictions), expansion of gaming on Native American lands (including such lands in California), risks and uncertainties relating to any applications for licenses and approvals under applicable laws
and regulations (including gaming laws and regulations) and any further terrorist attacks similar to those that occurred September 11, 2001. Additional information concerning potential factors that we think could cause our actual results to differ
materially from expected and historical results is included under the caption Factors that May Affect Our Future Results in Item 1 of our annual report on Form 10-K for the fiscal year ended December 31, 2003. If one or more of the
assumptions underlying our forward-looking statements proves incorrect, then our actual results, performance or achievements could differ materially from those expressed in, or implied by, the forward-looking statements contained in this report.
Therefore, we caution you not to place undue reliance on our forward-looking statements. This statement is provided as permitted by the Private Securities Litigation Reform Act of 1995.



Item 3. Quantitative and Qualitative Disclosures About Market Risks



We are potentially exposed to
market risk in the form of fluctuations in interest rates and their potential impact upon our variable rate debt outstanding, if any. We evaluate our exposure to this market risk by monitoring interest rates in the marketplace and we have, on
occasion, utilized derivative financial instruments to help manage this risk. To manage our exposure to counterparty credit risk in interest rate swaps, we enter into agreements with highly rated institutions. As of September 30, 2004, we had no
variable rate debt outstanding. However, under our $10.0 million revolving credit facility, we may have outstanding from time to time up to $10.0 million of variable rate debt.



Item 4. Controls and Procedures



An evaluation was performed by management, with the participation of our Chief Executive Officer and Chief Financial Officer, of the effectiveness of the design and operation of our disclosure controls and procedures. Based on this
evaluation, the Chief Executive Officer and Chief Financial Officer have concluded that, as of September 30, 2004, our disclosure controls and procedures are effective to ensure that information required to be disclosed in the reports that we file
or submit under the Securities Exchange Act of 1934 is recorded, processed, summarized and reported within the time periods specified in applicable rules and forms of the Securities and Exchange Commission.



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



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##### Table of Contents

Part II. OTHER INFORMATION



Item 6. Exhibits



|31.1 | Certification of Gary L. Carano
|---- | -------------------------------



|31.2 | Certification of Bruce C. Sexton
|---- | --------------------------------



|32.1 | Certification of Gary L. Carano pursuant to 18 U.S.C. Section 1350
|---- | ------------------------------------------------------------------



|32.2 | Certification of Bruce C. Sexton pursuant to 18 U.S.C. Section 1350
|---- | -------------------------------------------------------------------



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##### Table of Contents

SIGNATURES



Pursuant to the requirements of the
Securities Exchange Act of 1934, the registrants have duly caused this report to be signed on their behalf by the undersigned thereunto duly authorized.



|                        |  |                                   |  |                                                      
|----------------------- |  | --------------------------------- |  | -----------------------------------------------------
|                        |  | CIRCUS AND ELDORADO JOINT VENTURE
|                        |  |                                  
|Date: November 12, 2004 |  | By:                               |  | /s/ Gary L. Carano                                   
|                        |  |                                   |  | Gary L. Carano                                       
|                        |  |                                   |  | Chief Executive Officer (Principal Executive Officer)
|                        |  |                                  
|Date: November 12, 2004 |  | By:                               |  | /s/ Bruce C. Sexton                                  
|                        |  |                                   |  | Bruce C. Sexton                                      
|                        |  |                                   |  | Chief Accounting and Financial Officer (Principal    
|                        |  |                                   |  | Financial and Accounting Officer)                    
|                        | 
|                        |  | SILVER LEGACY CAPITAL CORP.      
|                        |  |                                  
|Date: November 12, 2004 |  | By:                               |  | /s/ Gary L. Carano                                   
|                        |  |                                   |  | Gary L. Carano                                       
|                        |  |                                   |  | Chief Executive Officer (Principal Executive Officer)
|                        |  |                                  
|Date: November 12, 2004 |  | By:                               |  | /s/ Bruce C. Sexton                                  
|                        |  |                                   |  | Bruce C. Sexton                                      
|                        |  |                                   |  | Treasurer (Principal Financial and                   
|                        |  |                                   |  | Accounting Officer)                                  



17