##### Table of Contents



UNITED STATES SECURITIES AND EXCHANGE COMMISSION
 WASHINGTON, D.C. 20549
 Form 10-K
 (Mark One)
 þ
    
    ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
 FOR THE FISCAL YEAR ENDED DECEMBER 31, 2006
 OR
 o
    
    TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
 FOR THE TRANSITION PERIOD FROM  TO
 
 Commission file number: 333-118149
 
 American Casino & Entertainment Properties LLC
  
 Delaware
    
    20-0573058(State or other jurisdiction of 
incorporation or organization)
    
    (I.R.S. Employer
Identification No.)2000 Las Vegas Boulevard South 
Las Vegas, NV
    
    89104(Address of registrants principal executive offices)
    
    (Zip Code)
 (702) 380-7777
 
 
 
 o þ
 þ o
 þ o
 o
  o o þ
 o þ




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##### 



AMERICAN CASINO & ENTERTAINMENT PROPERTIES LLC
ANNUAL REPORT ON FORM 10-K FOR THE FISCAL
YEAR ENDED DECEMBER 31, 2006
  
 TABLE OF CONTENTS
 PagePART IItem 1. Business
    
    
    3Item 1A. Risk Factors
    
    
    15Item 1B. Unresolved Staff Comments
    
    
    19Item 2. Properties
    
    
    19Item 3. Legal Proceedings
    
    
    19Item 4. Submission of Matters to a Vote of
Security Holders
    
    
    19PART IIItem 5. Market For Registrants Common Equity,
Related Stockholder Matters and Issuer
Purchases of Equity Securities
    
    
    20Item 6. Selected Financial Data
    
    
    20Item 7. Managements Discussion and Analysis of
Financial Condition and Results of
Operations
    
    
    22Item 7A. Quantitative and Qualitative Disclosures
About Market Risk
    
    
    29Item 8. Financial Statements and Supplementary
Data
    
    
    30Item 9. Changes in and Disagreements with
Accountants on Accounting and Financial
Disclosure
    
    
    46Item 9A. Controls and Procedures
    
    
    46Item 9B. Other Information
    
    
    46PART IIIItem 10. Directors, Executive Officers and
Corporate Governance
    
    
    47Item 11. Executive Compensation
    
    
    50Item 12. Security Ownership of Certain Beneficial
Owners and Management and Related
Stockholder Matters
    
    
    53Item 13. Certain Relationships and Related
Transactions and Director Independence
    
    
    53Item 14. Principal Accountant Fees and Services
    
    
    55PART IVItem 15. Exhibits and Financial Statement
Schedules
    
    
    56EX-21.1: SUBSIDIARIESEX-31.1: CERTIFICATIONEX-31.2: CERTIFICATIONEX-32.1: CERTIFICATIONEX-32.2: CERTIFICATION
  2




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##### Table of Contents



PART I
 
 ITEM 1. BUSINESS
 General
        Our Business Strategy and Competitive Strengths
  Value-Oriented Experience
  3




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##### Table of Contents



Customer Service
  Stratosphere as a Destination Property for Visitors to Las Vegas
   Repositioned Properties to Better Target Market
  Emphasis on Slot Play
  Experienced Management Team
  4




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##### Table of Contents



Our Gaming and Entertainment Properties
 Stratosphere
   Casino
   Hotel, Food and Beverage
 th
 th
 The Tower
   
    
    Big Shot, which catapults up to 16 riders, in harnessed seats, from the 921-foot level
of the Tower Pod, 160 feet straight up the mast of the Tower and allows for a controlled
free-fall back to the landing platform;
    
    X Scream, which opened in October 2003, is shaped like a giant teeter-totter and
launches up to eight riders approximately 30 feet over the edge of the Tower and then
dangles them weightlessly above the Las Vegas Strip; and
    
    Insanity, which opened in March 2005, holds ten passengers in escape proof seats in an
arm that extends out 64 feet over the edge of the Tower and spins passengers at up to three
Gs. As the ride spins faster and faster, the riders are propelled up to an angle of 70
degrees, overlooking the City of Las Vegas more than 900 feet below.
  
    
    event space and wedding chapels, at levels 103 and 104;
    
    Romance at Top of the World, a 156-seat lounge, at level 107; and
    
    indoor/outdoor observation decks, at levels 108 and 109, containing a gift shop,
Starbucks®, snack bar, free-standing vending machines featuring snacks and souvenirs
designed to capitalize on the unique nature of the Tower.
 5




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##### Table of Contents



Retail and Entertainment
  Arizona Charlies Decatur
  Casino
    Hotel, Food and Beverage
   Retail and Entertainment
   Arizona Charlies Boulder
  Casino
 , ,
 6




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##### Table of Contents



Hotel, Food and Beverage
  Retail and Entertainment
    Aquarius Casino Resort
    Casino
   7




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##### Table of Contents



Hotel, Food and Beverage
  Retail and Entertainment
  Marketing Strategy
       8




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##### Table of Contents



Trademarks
  Seasonality
  Casino Credit
  Competition
    The Las Vegas Market
  9




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##### Table of Contents



Tourist Market
     Local Market
  The Laughlin Market
  Regulation and Licensing
 Introduction
  Policy Concerns of Gaming Laws
  
    
    preventing unsavory or unsuitable persons from being directly or indirectly involved
with gaming at any time or in any capacity;
    
    establishing and maintaining responsible accounting practices and procedures;
    
    maintaining effective controls over the financial practices of licensees, including
establishing minimum procedures for internal fiscal affairs, and safeguarding assets and
revenue, providing reliable recordkeeping and requiring the filing of periodic reports with
the Nevada Gaming Authorities;
    
    preventing cheating and fraudulent practices; and
    
    providing a source of state and local revenue through taxation and licensing fees.
  10




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##### Table of Contents



Owner and Operator Licensing Requirements
   Our Registration Requirements
   Individual Licensing Requirements
   Consequences of Violating Gaming Laws
  Requirements of Beneficial Securities Holders
  11




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##### Table of Contents




    
    voting on all matters voted on by stockholders or interest holders;
    
    making financial and other inquiries of management of the type normally made by
securities analysts for informational purposes and not to cause a change in its management,
policies or operations; and
    
    other activities that the Nevada Gaming Commission may determine to be consistent with
such investment intent.
 Consequences of Being Found Unsuitable
  
    
    pay that person any dividend or interest upon any voting securities;
    
    allow that person to exercise, directly or indirectly, any voting right held by that person;
    
    pay remuneration in any form to that person for services rendered or otherwise; or
    
    fail to pursue all lawful efforts to require the unsuitable person to relinquish such
persons voting securities including, if necessary, the immediate purchase of the voting
securities for cash at fair market value.
 Gaming Laws Relating to Securities Ownership
  
    
    pays to the unsuitable person any dividend, interest or any distribution whatsoever;
    
    recognizes any voting right by the unsuitable person in connection with the securities;
    
    pays the unsuitable person remuneration in any form; or
    
    makes any payment to the unsuitable person by way of principal, redemption, conversion,
exchange, liquidation or similar transaction.
 12




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##### Table of Contents



Approval of Public Offerings
  Approval of Changes in Control
  
    
    merger;
    
    consolidation;
    
    stock or asset acquisitions;
    
    management or consulting agreements; or
    
    any act or conduct by a person by which the person obtains control of us.
  Approval of Defensive Tactics
  
    
    assure the financial stability of corporate gaming operators and their affiliates;
    
    preserve the beneficial aspects of conducting business in the corporate form; and
    
    promote a neutral environment for the orderly governance of corporate affairs.
  Fees and Taxes
  13




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##### Table of Contents




    
    a percentage of gross revenues received;
    
    the number of gaming devices operated; or
    
    the number of table games operated.
  Foreign Gaming Investigations
  
    
    knowingly violates any laws of the foreign jurisdiction pertaining to the foreign gaming
operation;
    
    fails to conduct the foreign gaming operation in accordance with the standards of
honesty and integrity required of Nevada gaming operations;
    
    engages in any activity or enters into any association that is unsuitable because it
poses an unreasonable threat to the control of gaming in Nevada, reflects or tends to
reflect, discredit or disrepute upon the State of Nevada or gaming in Nevada, or is
contrary to the gaming policies of Nevada;
    
    engages in activities or enters into associations that are harmful to the State of
Nevada or its ability to collect gaming taxes and fees; or
    
    employs, contracts with or associates with a person in the foreign operation who has
been denied a license or finding of suitability in Nevada on the ground of unsuitability.
 License for Conduct of Gaming and Sale of Alcoholic Beverages
  Environmental Matters
  Employees
  Available Information
  14




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##### Table of Contents



Item 1A. RISK FACTORS
 We cannot guarantee that we will be able to recover our investment made in connection with the
acquisition of the Aquarius.
      Our operating results for the year ended December 31, 2006 have been adversely affected by a number
of factors that have affected and may continue to affect results in 2007.
  The gaming industry is highly regulated. We are subject to extensive governmental gaming
regulation and taxation policies, which may harm our business.
   15




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Rising operating costs for our gaming properties could have a negative impact on our
profitability.
  
    
    potential changes in the tax or regulatory environment which impose additional
restrictions or increase operating costs;
    
    our properties use significant amounts of electricity, natural gas and other forms of
energy, and energy price increases may reduce our profitability;
    
    our properties use significant amounts of water and a water shortage may adversely
affect our operations;
    
    an increase in the cost of health care benefits for our employees could have a negative
impact on our profitability;
    
    approximately 39% of our employees are members of various unions and covered by
union-sponsored collective bargaining agreements and we may incur higher costs or work
slow-downs or stoppages due to union activities;
    
    our reliance on slot machine revenues and the concentration of manufacturing of slot
machines in certain companies could impose additional costs on us; and
    
    our insurance coverage may not be adequate to cover all possible losses and our
insurance costs may increase.
 We face substantial competition in the hotel and casino industry.
  
    
    we compete with many world class destination resorts with greater name recognition,
different attractions, amenities and entertainment options;
    
    we compete with the continued growth of gaming on Native American tribal lands;
    
    the existence of legalized gambling in other jurisdictions may reduce the number of
visitors to our properties;
    
    certain states have legalized, and others may legalize, casino gaming in specific
venues, including race tracks and/or in specific areas, including metropolitan areas from
which we traditionally attract customers; and
    
    our properties also compete and will in the future compete with all forms of legalized
gambling.
  Economic downturns, terrorism and the uncertainty of war, as well as other factors affecting
discretionary consumer spending, could reduce the number of our visitors or the amount of money
visitors spend at our casinos.
   16




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##### Table of Contents



Our hotels and casinos may need to increase capital expenditures to compete effectively.
  Our hotels and casinos may incur substantial costs as a result of our growth and expansion
strategy.
  The loss of management and other key personnel could significantly harm our business, and the
quality of individuals hired for positions in the hotel and gaming operations will be critical to
the success of our business.
   Because we are currently dependent upon four properties for all our cash flow, we will be
subject to greater risks than a gaming company with more operating properties or that operates in
more markets.
  
    
    local economic and competitive conditions;
    
    inaccessibility due to inclement weather, road construction or closure of primary access routes;
    
    decline in air passenger traffic due to higher ticket costs or fears concerning air travel;
    
    natural and other disasters;
    
    reduced land travel due to the increase in gas prices;
 17




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
    
    a decline in the number of visitors to Las Vegas and Laughlin, Nevada; and
    
    a decrease in gaming and non-gaming activities.
  We are an indirect subsidiary of American Real Estate Partners, L.P., which will be able to
make all decisions concerning us.
  We may be subject to the pension liabilities of our affiliates.
     18




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##### Table of Contents



Item 1B. UNRESOLVED STAFF COMMENTS
  
 ITEM 2. PROPERTIES
 Stratosphere
  Arizona Charlies Decatur
  Arizona Charlies Boulder
  Aquarius Casino Resort
  
 ITEM 3. LEGAL PROCEEDINGS
  
 ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
  19




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##### Table of Contents



PART II
 
 ITEM 5. MARKET FOR REGISTRANTS COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF
EQUITY SECURITIES
  
 ITEM 6. SELECTED FINANCIAL DATA
    20




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##### Table of Contents



Years Ended December 31,2006
    
    
    2005
    
    
    2004
    
    
    2003
    
    
    2002(in thousands, except ratios)Income Statement Data:Revenues:Casino
    
    $
    220,814
    
    
    $
    182,939
    
    
    $
    167,972
    
    
    $
    147,888
    
    
    $
    143,057Hotel
    
    
    75,587
    
    
    
    61,861
    
    
    
    54,653
    
    
    
    47,259
    
    
    
    44,263Food and beverage
    
    
    83,667
    
    
    
    70,060
    
    
    
    66,953
    
    
    
    59,583
    
    
    
    56,349Tower, retail and other
    
    
    35,912
    
    
    
    35,413
    
    
    
    33,778
    
    
    
    30,336
    
    
    
    28,247Gross revenues
    
    
    415,980
    
    
    
    350,273
    
    
    
    323,356
    
    
    
    285,066
    
    
    
    271,916Less promotional allowances
    
    
    30,281
    
    
    
    22,291
    
    
    
    23,375
    
    
    
    22,255
    
    
    
    21,893Net revenues
    
    
    385,699
    
    
    
    327,982
    
    
    
    299,981
    
    
    
    262,811
    
    
    
    250,023Cost and expenses:Casino
    
    
    80,060
    
    
    
    63,216
    
    
    
    61,985
    
    
    
    61,284
    
    
    
    59,879Hotel
    
    
    33,419
    
    
    
    26,957
    
    
    
    24,272
    
    
    
    22,074
    
    
    
    20,142Food and beverage
    
    
    60,052
    
    
    
    51,784
    
    
    
    48,495
    
    
    
    44,990
    
    
    
    43,393Other operating expenses
    
    
    16,856
    
    
    
    15,372
    
    
    
    14,035
    
    
    
    14,008
    
    
    
    14,934Selling, general and
administrative
    
    
    107,073
    
    
    
    81,321
    
    
    
    78,720
    
    
    
    74,985
    
    
    
    80,019Depreciation and amortization
    
    
    28,620
    
    
    
    23,305
    
    
    
    23,516
    
    
    
    20,222
    
    
    
    20,209Pre-opening costs
    
    
    1,904
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (Gain) loss on sale of assets
    
    
    239
    
    
    
    (25
    )
    
    
    96
    
    
    
    1,401
    
    
    
    354Total costs and expenses
    
    
    328,223
    
    
    
    261,930
    
    
    
    251,119
    
    
    
    238,964
    
    
    
    238,930Income from operations
    
    
    57,476
    
    
    
    66,052
    
    
    
    48,862
    
    
    
    23,847
    
    
    
    11,093Other income (expense):Interest income
    
    
    2,239
    
    
    
    1,617
    
    
    
    1,049
    
    
    
    426
    
    
    
    667Interest expense
    
    
    (21,314
    )
    
    
    (18,846
    )
    
    
    (18,939
    )
    
    
    (5,389
    )
    
    
    (5,990
    )Total other expense
    
    
    (19,075
    )
    
    
    (17,229
    )
    
    
    (17,890
    )
    
    
    (4,963
    )
    
    
    (5,323
    )Income before income taxes
    
    
    38,401
    
    
    
    48,823
    
    
    
    30,972
    
    
    
    18,884
    
    
    
    5,770Provision (benefit) for
income taxes
    
    
    12,758
    
    
    
    16,789
    
    
    
    10,100
    
    
    
    (1,798
    )
    
    
    4,907Net income
    
    $
    25,643
    
    
    $
    32,034
    
    
    $
    20,872
    
    
    $
    20,682
    
    
    $
    863OTHER FINANCIAL DATA:Capital expenditures
    
    $
    46,851
    
    
    $
    28,219
    
    
    $
    14,009
    
    
    $
    33,465
    
    
    $
    22,878
 As of December 31,2006
    
    2005
    
    2004
    
    2003
    
    2002(in thousands)Balance Sheet Data:Cash and cash
equivalents
    
    $
    54,912
    
    
    $
    108,316
    
    
    $
    75,161
    
    
    $
    77,258
    
    
    $
    59,343Total assets
    
    
    575,826
    
    
    
    494,257
    
    
    
    464,341
    
    
    
    480,738
    
    
    
    397,835Total debt (1)
    
    
    257,825
    
    
    
    218,298
    
    
    
    218,748
    
    
    
    105,243
    
    
    
    101,655Members equity
    
    
    257,741
    
    
    
    232,098
    
    
    
    200,996
    
    
    
    330,345
    
    
    
    259,953
 
 (1)
    
    Total debt, including current portion, consists of the current and long-term portions of
capital lease obligations and notes payable, including for 2003 and 2002 notes payable to related
parties. 21




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##### Table of Contents



ITEM 7. MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
  Transaction
  Overview
  Patron Gaming Volume
  Years Ending December 31,2006
    
    2005
    
    2004Total gaming revenue
    
    $
    10,643,824,000
    
    
    $
    9,716,860,000
    
    
    $
    8,711,244,000Number of slot machines
    
    
    131,430
    
    
    
    130,945
    
    
    
    131,197Number of table games
    
    
    4,511
    
    
    
    4,450
    
    
    
    4,347Number of visitors
    
    
    38,914,889
    
    
    
    38,566,717
    
    
    
    37,388,781
  22




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##### Table of Contents



Results of Operations
 Years Ended December 31,IncludingAquarius
    
    
    
    Excluding Aquarius2006 to 2005
    
    
    2005 to 20042006
    
    
    
    2006
    
    
    2005
    
    
    2004
    
    
    % Change
    
    
    % Change(in millions)Income Statement Data:Revenues:Casino
    
    $
    220.8
    
    
    
    $
    179.6
    
    
    $
    182.9
    
    
    $
    168.0
    
    
    
    -1.8
    %
    
    
    8.9
    %Hotel
    
    
    75.6
    
    
    
    
    65.4
    
    
    
    61.9
    
    
    
    54.7
    
    
    
    5.7
    %
    
    
    13.2
    %Food and beverage
    
    
    83.7
    
    
    
    
    72.3
    
    
    
    70.1
    
    
    
    67.0
    
    
    
    3.1
    %
    
    
    4.6
    %Tower, retail and other
    
    
    35.9
    
    
    
    
    33.7
    
    
    
    35.4
    
    
    
    33.8
    
    
    
    -4.8
    %
    
    
    4.7
    %Gross revenues
    
    
    416.0
    
    
    
    
    351.0
    
    
    
    350.3
    
    
    
    323.5
    
    
    
    0.2
    %
    
    
    8.3
    %Less promotional allowances
    
    
    30.3
    
    
    
    
    22.9
    
    
    
    22.3
    
    
    
    23.4
    
    
    
    2.7
    %
    
    
    -4.7
    %Net revenues
    
    
    385.7
    
    
    
    
    328.1
    
    
    
    328.0
    
    
    
    300.1
    
    
    
    0.0
    %
    
    
    9.3
    %Costs and expenses:Casino
    
    
    80.1
    
    
    
    
    65.1
    
    
    
    63.2
    
    
    
    62.0
    
    
    
    3.0
    %
    
    
    1.9
    %Hotel
    
    
    33.4
    
    
    
    
    27.8
    
    
    
    27.0
    
    
    
    24.3
    
    
    
    3.0
    %
    
    
    11.1
    %Food and beverage
    
    
    60.1
    
    
    
    
    52.3
    
    
    
    51.8
    
    
    
    48.5
    
    
    
    1.0
    %
    
    
    6.8
    %Other operating expenses
    
    
    16.9
    
    
    
    
    15.4
    
    
    
    15.4
    
    
    
    14.0
    
    
    
    0.0
    %
    
    
    10.0
    %Selling, general and administrative
    
    
    107.2
    
    
    
    
    85.1
    
    
    
    81.3
    
    
    
    78.8
    
    
    
    4.7
    %
    
    
    3.2
    %Pre-opening costs
    
    
    1.9
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    0.0
    %
    
    
    0.0
    %Depreciation and amortization
    
    
    28.6
    
    
    
    
    24.6
    
    
    
    23.3
    
    
    
    23.5
    
    
    
    5.6
    %
    
    
    -0.9
    %Total costs and expenses
    
    
    328.2
    
    
    
    
    270.3
    
    
    
    262.0
    
    
    
    251.1
    
    
    
    3.2
    %
    
    
    4.3
    %Income from operations
    
    $
    57.5
    
    
    
    $
    57.8
    
    
    $
    66.0
    
    
    $
    49.0
    
    
    
    -12.4
    %
    
    
    34.7
    %
   Year Ended December 31, 2006 Compared to Year Ended December 31, 2005
  Casino Revenues
  23




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##### Table of Contents



Non-Casino Revenues
    Promotional Allowances
  Operating Expenses
      Interest Expense
  Year Ended December 31, 2005 Compared to Year Ended December 31, 2004
  Casino Revenues
  24




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##### Table of Contents



Non-Casino Revenues
    Promotional Allowances
  Operating Expenses
      Interest Expense
  Financial Condition
 Liquidity and Capital Resources
  25




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26




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##### Table of Contents



Off Balance Sheet Arrangements
  Contractual Obligations
  Payments due by PeriodLess than
    
    
    1-3
    
    
    4-5
    
    
    AfterContractual Obligations
    
    Total
    
    
    1 Year
    
    
    Years
    
    
    Years
    
    
    5 Years(in thousands)Long-term debt
    
    $
    255,000
    
    
    $
    
    
    
    $
    
    
    
    $
    40,000
    
    
    $
    215,000Interest on long-term debt
    
    
    102,258
    
    
    
    19,618
    
    
    
    39,235
    
    
    
    34,897
    
    
    
    8,508Capital leases, including
interest
    
    
    9,686
    
    
    
    660
    
    
    
    1,623
    
    
    
    170
    
    
    
    7,233Other contractual obligations
    
    
    7,042
    
    
    
    6,861
    
    
    
    150
    
    
    
    31
    
    
    
    Total
    
    $
    373,986
    
    
    $
    27,139
    
    
    $
    41,008
    
    
    $
    75,098
    
    
    $
    230,741
 Critical Accounting Policies
  Revenue Recognition
  Slot Club Liability
 Self-Insurance
 Income Taxes
  27




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##### Table of Contents



Commitments and Contingencies
 Recently Issued Accounting Pronouncements
     Forward Looking Statements
  28




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##### Table of Contents



We warn you that forward-looking statements are only predictions. Actual events or results may
differ as a result of risks that we face. Forward-looking statements speak only as of the date they
were made and we undertake no obligation to update them.
 Trends and Other Uncertainties
  
 Item 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURE ABOUT MARKET RISK
    29




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##### Table of Contents



ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
 INDEX TO CONSOLIDATED FINANCIAL STATEMENTS
 PageReport of Independent Registered Public Accounting Firm
    
    
    31Consolidated Balance Sheets as of December 31, 2006 and 2005
    
    
    32Consolidated Statements of Income for the years ended December 31, 2006, 2005 and 2004
    
    
    33Consolidated Statements of Cash Flows for the years ended December 31, 2006, 2005 and
2004
    
    
    34Consolidated Statements of Members/Stockholders Equity for the years ended December
31, 2006, 2005 and 2004
    
    
    35Notes to Consolidated Financial Statements
    
    
    36
 30




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##### Table of Contents



REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
 The Board of Directors and the Member
American Casino & Entertainment Properties LLC
     
 31




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##### Table of Contents



AMERICAN CASINO & ENTERTAINMENT PROPERTIES LLC
 
 CONSOLIDATED BALANCE SHEETS
 AS OF DECEMBER 31,2006
    
    
    2005(in thousands)ASSETSCurrent Assets:Cash and cash equivalents
    
    $
    54,912
    
    
    $
    108,316Cash and cash equivalents-restricted
    
    
    269
    
    
    
    504Investments-restricted
    
    
    3,457
    
    
    
    2,828Accounts receivable, net
    
    
    6,752
    
    
    
    4,167Related party receivables
    
    
    472
    
    
    
    971Deferred income taxes
    
    
    2,948
    
    
    
    2,305Other current assets
    
    
    16,773
    
    
    
    12,092Total Current Assets
    
    
    85,583
    
    
    
    131,183Property and equipment, net
    
    
    445,788
    
    
    
    319,505Debt issuance and deferred financing costs, net
    
    
    5,729
    
    
    
    6,397Deferred income taxes
    
    
    36,212
    
    
    
    37,172Customer List, net
    
    
    2,514
    
    
    
    Total Other Assets
    
    
    44,455
    
    
    
    43,569TOTAL ASSETS
    
    $
    575,826
    
    
    $
    494,257LIABILITIES AND MEMBERS EQUITYCurrent Liabilities:Accounts payable
    
    
    6,708
    
    
    
    3,547Accrued expenses
    
    
    33,168
    
    
    
    23,387Accrued payroll and related expenses
    
    
    14,391
    
    
    
    11,042Current portion of capital lease obligation
    
    
    496
    
    
    
    473Total Current Liabilities
    
    
    54,763
    
    
    
    38,449Long-Term Liabilities:Long-term debt
    
    
    255,000
    
    
    
    215,000Capital lease obligations, less current portion
    
    
    2,329
    
    
    
    2,825Other
    
    
    5,993
    
    
    
    5,885Total Long-Term Liabilities
    
    
    263,322
    
    
    
    223,710Total Liabilities
    
    
    318,085
    
    
    
    262,159Commitments and ContingenciesMembers Equity:Members Equity
    
    
    257,741
    
    
    
    232,098Total Members Equity
    
    
    257,741
    
    
    
    232,098TOTAL LIABILITIES AND MEMBERS EQUITY
    
    $
    575,826
    
    
    $
    494,257
  32




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AMERICAN CASINO & ENTERTAINMENT PROPERTIES LLC
 
 CONSOLIDATED STATEMENTS OF INCOME
 YEARS ENDED DECEMBER 31,2006
    
    
    2005
    
    
    2004(in thousands)REVENUES:Casino
    
    $
    220,814
    
    
    $
    182,939
    
    
    $
    167,972Hotel
    
    
    75,587
    
    
    
    61,861
    
    
    
    54,653Food and beverage
    
    
    83,667
    
    
    
    70,060
    
    
    
    66,953Tower, retail and other
    
    
    35,912
    
    
    
    35,413
    
    
    
    33,778Gross revenues
    
    
    415,980
    
    
    
    350,273
    
    
    
    323,356Less promotional allowances
    
    
    30,281
    
    
    
    22,291
    
    
    
    23,375Net revenues
    
    
    385,699
    
    
    
    327,982
    
    
    
    299,981COSTS AND EXPENSES:Casino
    
    
    80,060
    
    
    
    63,216
    
    
    
    61,985Hotel
    
    
    33,419
    
    
    
    26,957
    
    
    
    24,272Food and beverage
    
    
    60,052
    
    
    
    51,784
    
    
    
    48,495Other operating expenses
    
    
    16,856
    
    
    
    15,372
    
    
    
    14,035Selling, general and administrative
    
    
    107,073
    
    
    
    81,321
    
    
    
    78,720Depreciation and amortization
    
    
    28,620
    
    
    
    23,305
    
    
    
    23,516Pre-opening costs
    
    
    1,904
    
    
    
    
    
    
    
    (Gain) loss on sale of assets
    
    
    239
    
    
    
    (25
    )
    
    
    96Total costs and expenses
    
    
    328,223
    
    
    
    261,930
    
    
    
    251,119INCOME FROM OPERATIONS
    
    
    57,476
    
    
    
    66,052
    
    
    
    48,862OTHER INCOME (EXPENSE):Interest income
    
    
    2,239
    
    
    
    1,617
    
    
    
    1,049Interest expense
    
    
    (21,314
    )
    
    
    (18,846
    )
    
    
    (18,939
    )Total other expense, net
    
    
    (19,075
    )
    
    
    (17,229
    )
    
    
    (17,890
    )INCOME BEFORE INCOME TAXES
    
    
    38,401
    
    
    
    48,823
    
    
    
    30,972Provision for income taxes
    
    
    12,758
    
    
    
    16,789
    
    
    
    10,100NET INCOME
    
    $
    25,643
    
    
    $
    32,034
    
    
    $
    20,872
  33




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##### Table of Contents



AMERICAN CASINO & ENTERTAINMENT PROPERTIES LLC
 
 CONSOLIDATED STATEMENTS OF CASH FLOWS
 YEARS ENDED DECEMBER 31,2006
    
    
    2005
    
    
    2004(in thousands)CASH FLOWS FROM OPERATING ACTIVITIES:Net income
    
    $
    25,643
    
    
    $
    32,034
    
    
    $
    20,872Adjustments to reconcile net income to net cash provided
by operating activities:Depreciation and amortization
    
    
    28,620
    
    
    
    23,305
    
    
    
    23,516(Gain) loss on sale of assets
    
    
    239
    
    
    
    (25
    )
    
    
    96Provision (benefit) for deferred income taxes
    
    
    317
    
    
    
    9,645
    
    
    
    7,431Changes in operating assets and liabilities:Restricted cash
    
    
    235
    
    
    
    (56
    )
    
    
    (448
    )Accounts receivable, net
    
    
    (686
    )
    
    
    (225
    )
    
    
    109Other current assets
    
    
    (2,459
    )
    
    
    (715
    )
    
    
    338Accounts payable and accrued expenses
    
    
    11,452
    
    
    
    (2,296
    )
    
    
    2,723Other
    
    
    108
    
    
    
    628
    
    
    
    Net Cash Provided By Operating Activities
    
    
    63,469
    
    
    
    62,295
    
    
    
    54,637CASH FLOWS FROM INVESTING ACTIVITIES:Decrease (increase) in investments  restricted
    
    
    (629
    )
    
    
    (282
    )
    
    
    427Sale of marketable securities
    
    
    
    
    
    
    
    
    
    
    4,200Acquisition of property and equipment
    
    
    (46,851
    )
    
    
    (28,219
    )
    
    
    (14,009
    )Acquisition of Flamingo Laughlin, net of cash acquired
    
    
    (109,439
    )
    
    
    
    
    
    
    Decrease (increase) in related party receivables
    
    
    499
    
    
    
    (232
    )
    
    
    (155
    )Proceeds from sale of property and equipment
    
    
    468
    
    
    
    43
    
    
    
    420Net Cash Used In Investing Activities
    
    
    (155,952
    )
    
    
    (28,690
    )
    
    
    (9,117
    )CASH FLOWS FROM FINANCING ACTIVITIES:Debt issuance and deferred financing costs
    
    
    (448
    )
    
    
    
    
    
    
    (1,525
    )Proceeds from notes payable
    
    
    
    
    
    
    
    
    
    
    215,000Proceeds from line of credit
    
    
    60,000
    
    
    
    
    
    
    
    Payments on line of credit
    
    
    (20,000
    )
    
    
    
    
    
    
    Member contribution
    
    
    
    
    
    
    
    
    
    
    28,219Capital distribution
    
    
    
    
    
    
    
    
    
    
    (61,916
    )Acquisition of Arizona Charlies
    
    
    
    
    
    
    
    
    
    
    (125,900
    )Payments on related party notes payable
    
    
    
    
    
    
    
    
    
    
    (101,252
    )Payments on capital lease obligation
    
    
    (473
    )
    
    
    (450
    )
    
    
    (243
    )Net Cash Provided By (Used In) Financing Activities
    
    
    39,079
    
    
    
    (450
    )
    
    
    (47,617
    )Net increase (decrease) in cash and cash equivalents
    
    
    (53,404
    )
    
    
    33,155
    
    
    
    (2,097
    )Cash and cash equivalents  beginning of period
    
    
    108,316
    
    
    
    75,161
    
    
    
    77,258Cash And
Cash Equivalents  end of period
    
    $
    54,912
    
    
    $
    108,316
    
    
    $
    75,161SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION:Cash paid during the period for interest, net of amounts capitalized
    
    $
    19,248
    
    
    $
    17,188
    
    
    $
    11,047Cash paid for income taxes, net of refunds
    
    $
    14,750
    
    
    $
    9,200
    
    
    $
    1,811NON-CASH INVESTING AND FINANCING ACTIVITIES:Utilization of tax losses by a related party
    
    $
    
    
    
    $
    932
    
    
    $
    Assets contributed by parent
    
    $
    
    
    
    $
    
    
    
    $
    6,886Change in deferred tax asset related to acquisition
    
    $
    
    
    
    $
    
    
    
    $
    2,490Cancellation of common stock shares
    
    $
    
    
    
    $
    
    
    
    $
    10
  34




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##### Table of Contents



AMERICAN CASINO & ENTERTAINMENT PROPERTIES LLC
 
 CONSOLIDATED STATEMENTS OF MEMBERS/STOCKHOLDERS EQUITY
 AdditionalCommon
    
    
    Paid-In-
    
    
    Members
    
    
    RetainedStock
    
    
    Capital
    
    
    Equity
    
    
    Earnings
    
    
    TotalBalances at December 31, 2003
    
    $
    10
    
    
    $
    293,460
    
    
    $
    
    
    
    $
    36,875
    
    
    $
    330,345Cancellation of common shares
    
    
    (10
    )
    
    
    10
    
    
    
    
    
    
    
    
    
    
    
    Change in deferred tax asset
related to acquisition
    
    
    
    
    
    
    2,490
    
    
    
    
    
    
    
    
    
    
    
    2,490Contributions
    
    
    
    
    
    
    35,105
    
    
    
    
    
    
    
    
    
    
    
    35,105Distributions
    
    
    
    
    
    
    (44,000
    )
    
    
    
    
    
    
    (17,916
    )
    
    
    (61,916
    )Acquisition of Arizona
Charlies
    
    
    
    
    
    
    (125,900
    )
    
    
    
    
    
    
    
    
    
    
    (125,900
    )Net Income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    20,872
    
    
    
    20,872Reclassification of equity as
a result of reorganization
    
    
    
    
    
    
    (161,165
    )
    
    
    200,996
    
    
    
    (39,831
    )
    
    
    Balances at December 31, 2004
    
    
    
    
    
    
    
    
    
    
    200,996
    
    
    
    
    
    
    
    200,996Distribution
    
    
    
    
    
    
    
    
    
    
    (932
    )
    
    
    
    
    
    
    (932
    )Net Income
    
    
    
    
    
    
    
    
    
    
    32,034
    
    
    
    
    
    
    
    32,034Balances at December 31, 2005
    
    
    
    
    
    
    
    
    
    
    232,098
    
    
    
    
    
    
    
    232,098Net Income
    
    
    
    
    
    
    
    
    
    
    25,643
    
    
    
    
    
    
    
    25,643Balances at December 31, 2006
    
    $
    
    
    
    $
    
    
    
    $
    257,741
    
    
    $
    
    
    
    $
    257,741
  35




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##### Table of Contents



AMERICAN CASINO & ENTERTAINMENT PROPERTIES LLC
 
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 DECEMBER 31, 2006, 2005 AND 2004
 Note 1. Description of Business and Summary of Significant Accounting Policies
 The Company
     Principles of Consolidation and Combination
  Casino Revenues and Promotional Allowances
  36




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##### Table of Contents



December 31,2006
    
    
    2005
    
    
    2004(in thousands)Food and Beverage
    
    $
    8,723
    
    
    $
    7,101
    
    
    $
    7,239Rooms
    
    
    157
    
    
    
    41
    
    
    
    41Other
    
    
    36
    
    
    
    33
    
    
    
    34Total
    
    $
    8,916
    
    
    $
    7,175
    
    
    $
    7,314
 Cash and Cash Equivalents
  Investments Restricted
  Concentrations of Credit Risk
  Inventories
  Property and Equipment
   Buildings and improvements
    
    36-39 yearsFurniture, fixtures and equipment
    
    3-15 yearsLand improvements
    
    15 years
  37




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##### Table of Contents



Long-Lived Assets
   Unamortized Debt Issue Costs
  Slot Club Liability
  Long-Term Debt
  Sales, Advertising and Promotion
  Income Taxes
   38




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##### Table of Contents



Use of Estimates
  Reclassifications
  Recently Issued Accounting Pronouncements
     39




---



##### Table of Contents



Note 2. Accounts Receivable
  December 31,2006
    
    
    2005(in thousands)Hotel and related
    
    $
    3,282
    
    
    $
    2,584Gaming
    
    
    1,181
    
    
    
    562Other
    
    
    2,608
    
    
    
    1,1567,071
    
    
    
    4,302Less allowance for doubtful accounts
    
    
    (319
    )
    
    
    (135
    )$
    6,752
    
    
    $
    4,167
  December 31,2006
    
    
    2005
    
    
    2004(in thousands)Balance at beginning of period
    
    $
    135
    
    
    $
    240
    
    
    $
    473Bad debt expense
    
    
    359
    
    
    
    85
    
    
    
    418Deductions and write-offs
    
    
    (175
    )
    
    
    (190
    )
    
    
    (651
    )Balance at end of period
    
    $
    319
    
    
    $
    135
    
    
    $
    240
 Note 3. Other Current Assets
  December 31,2006
    
    
    2005(in thousands)Inventories
    
    $
    2,944
    
    
    $
    2,394Prepaid expenses
    
    
    11,487
    
    
    
    7,660Other
    
    
    2,342
    
    
    
    2,038$
    16,773
    
    
    $
    12,092
 Note 4. Property and Equipment, Net
  December 31,2006
    
    
    2005(in thousands)Land and improvements
    
    $
    75,100
    
    
    $
    61,493Building and improvements
    
    
    336,449
    
    
    
    236,946Furniture, fixtures and equipment
    
    
    174,463
    
    
    
    136,643Construction in progress
    
    
    2,082
    
    
    
    1,935588,094
    
    
    
    437,017Less accumulated depreciation and amortization
    
    
    142,306
    
    
    
    117,512$
    445,788
    
    
    $
    319,505
  40




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##### Table of Contents



Note 5. Accrued Expenses
  December 31,2006
    
    
    2005(in thousands)Accrued interest
    
    $
    7,089
    
    
    $
    7,033Accrued liabilities
    
    
    10,657
    
    
    
    5,071Accrued taxes
    
    
    3,123
    
    
    
    2,038Vacation packages
    
    
    969
    
    
    
    1,698Accrued gaming liability
    
    
    5,666
    
    
    
    2,718Other
    
    
    5,664
    
    
    
    4,829$
    33,168
    
    
    $
    23,387
 Note 6. Leases
  Years ending December 31,
    
    (in thousands)2007
    
    $
    5,9912008
    
    
    5,5932009
    
    
    4,2952010
    
    
    3,2862011
    
    
    2,578Thereafter
    
    
    4,906Total
    
    $
    26,649
    Years ending December 31,
    
    (in thousands)2007
    
    $
    6602008
    
    
    6602009
    
    
    9632010
    
    
    852011
    
    
    85Thereafter
    
    
    7,233Total minimum lease payments
    
    
    9,686Less: amount representing interest ranging from 5% to 10%
    
    
    6,861Present value of net minimum lease payments
    
    
    2,825Less: current portion
    
    
    496Long-term capital lease obligation
    
    $
    2,329
  41




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##### Table of Contents



Note 7. Income Taxes
  December 31,2006
    
    
    2005
    
    
    2004(in thousands)Current
    
    $
    12,441
    
    
    $
    7,144
    
    
    $
    2,669Deferred
    
    
    317
    
    
    
    9,645
    
    
    
    7,431$
    12,758
    
    
    $
    16,789
    
    
    $
    10,100
 Deferred Tax Assets and Liabilities
  December 31,2006
    
    
    2005(in thousands)Deferred Tax AssetsProperty, plant and equipment
    
    $
    35,492
    
    
    $
    36,358Accrued vacation and employee related
    
    
    2,111
    
    
    
    1,643Gaming related
    
    
    1,866
    
    
    
    1,049Other
    
    
    (309
    )
    
    
    427Total net deferred tax assets
    
    
    39,160
    
    
    
    39,477Less: Current portion
    
    
    (2,948
    )
    
    
    (2,305
    )Net long term deferred tax assets
    
    $
    36,212
    
    
    $
    37,172
   December 31,2006
    
    
    2005
    
    
    2004Federal statutory rate
    
    
    35.0
    %
    
    
    35.0
    %
    
    
    35.0
    %Other
    
    
    -0.9
    %
    
    
    0.0
    %
    
    
    5.0
    %Permanent differences
    
    
    0.3
    %
    
    
    0.3
    %
    
    
    0.4
    %Federal income tax credits
    
    
    -1.2
    %
    
    
    -0.9
    %
    
    
    -0.7
    %Valuation allowance
    
    
    0.0
    %
    
    
    0.0
    %
    
    
    -6.0
    %Amount not subject to tax expense/benefit
    
    
    0.0
    %
    
    
    0.0
    %
    
    
    -1.1
    %33.2
    %
    
    
    34.4
    %
    
    
    32.6
    %
 42




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##### Table of Contents



Note 8. Long-Term Debt
    Note 9. Related Party Transactions
      43




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##### Table of Contents



Note 10. Employee Benefit Plans
    Note 11. Commitments & Contingencies
   Legal Proceedings
  44




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##### Table of Contents



Note 12. Acquisitions
  Land
    
    $
    13,000Building
    
    
    92,615Equipment
    
    
    2,685Customer list
    
    
    2,939Deposits
    
    
    18Accrued vacation expense
    
    
    (1,809
    )Total Purchase Price
    
    
    109,448Cash
    
    
    6,028Accounts receivable
    
    
    5Other current assets
    
    
    1,121Equipment
    
    
    36Accrued liabilities
    
    
    (2,598
    )Total Working Capital
    
    
    4,592Total Amount Paid
    
    $
    114,040
   Year EndedDecember 31,(in thousands)2006
    
    2005Net revenues
    
    $
    429,580
    
    
    $
    438,384Net income
    
    $
    29,128
    
    
    $
    38,463
  45




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##### Table of Contents



ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE
  
 ITEM 9A. CONTROLS AND PROCEDURES
    
 ITEM 9B. OTHER INFORMATION
  46




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##### Table of Contents



PART III
 
 ITEM 10. DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE
 Directors and Officers
  NAME
    
    AGE
    
    POSITIONJack G. Wasserman
    
    
    70
    
    
    DirectorWilliam A. Leidesdorf
    
    
    61
    
    
    DirectorJames L. Nelson
    
    
    57
    
    
    DirectorKeith A. Meister
    
    
    33
    
    
    DirectorRichard P. Brown
    
    
    59
    
    
    President, Chief Executive Officer and DirectorDenise Barton
    
    
    49
    
    
    Senior Vice President, Chief Financial
Officer, Treasurer and Secretary
  NAME
    
    AGE
    
    POSITIONRonald P. Lurie
    
    
    65
    
    
    Executive Vice President, General Manager  Arizona Charlies DecaturMark Majetich
    
    
    56
    
    
    Senior Vice President, General Manager  Arizona Charlies BoulderJohn Lind
    
    
    53
    
    
    Senior Vice President, General Manager  Aquarius Casino Resort
 Jack G. Wasserman
 William A. Leidesdorf
 James L. Nelson
 47




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##### Table of Contents



Keith A. Meister
 Richard P. Brown
 Denise Barton
 Ronald P. Lurie
 48




---



##### Table of Contents



Mark Majetich
  Audit Committee
     Audit Committee Report
   
 Code of Ethics
  Corporate Governance Guidelines
  49




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##### Table of Contents



Section 16(a) Beneficial Ownership Reporting Compliance
  
 ITEM 11. EXECUTIVE COMPENSATION
 Compensation Committee Report
  
 Compensation Committee Interlocks and Insider Participation
  Compensation Discussion and Analysis
 Overview
  Compensation Philosophy and Objectives
    50




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##### Table of Contents



Base Salary
    Management Incentive Bonus Plan
   Benefits
   Perquisites
  Executive Compensation
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Summary of Compensation Table
 ANNUAL COMPENSATION (1)Non-EquityIncentive Plan
    
    All OtherCompensation
    
    CompensationName and Principal Position
    
    Year
    
    Salary ($)
    
    Bonus ($)
    
    ($) (2)
    
    ($) (3)
    
    TotalRichard P. Brown
    
    
    2006
    
    
    
    588,942
    
    
    
    
    
    
    
    
    
    
    
    18,443
    
    
    
    607,385Denise Barton
    
    
    2006
    
    
    
    357,471
    
    
    
    
    
    
    
    14,624
    
    
    
    11,615
    
    
    
    383,710Steven Overly (4)
    
    
    2006
    
    
    
    259,354
    
    
    
    
    
    
    
    
    
    
    
    55,437
    
    
    
    314,791Ronald Lurie
    
    
    2006
    
    
    
    231,354
    
    
    
    
    
    
    
    12,630
    
    
    
    16,234
    
    
    
    260,218Mark Majetich
    
    
    2006
    
    
    
    192,367
    
    
    
    
    
    
    
    16,008
    
    
    
    9,330
    
    
    
    217,705
 
 (1)
    
    Pursuant to applicable regulations, certain columns of the Summary Compensation Table and
each of the remaining tables required by applicable SEC regulations have been omitted, as
there has been no compensation awarded to, or earned by or paid to any of the named executive
officers by us.Other annual compensation was less than $50,000 or 10% of the total annual salary and bonus
reported for each of the named executive officers above.(2)
    
    Represents the portion of the bonus awarded in 2005 under the Management Incentive Bonus Plan
that vested in 2006 and was paid in 2007, plus interest on the amounts of the awards paid
which accrues at the rate of approximately 4% per annum. Under the Management Incentive Bonus
Plan, awards vest over a four year period. In 2005, Ms Barton, Mr. Lurie and Mr. Majetich
were awarded $56,000, $48,364 and $61,298, respectively, under the Management Incentive Bonus
Plan.(3)
    
    Includes contributions by ACEP to 401(k) plans, dollar value of insurance premiums and other
compensation related to health insurance payments. It also includes relocation reimbursement
of $40,945 for Mr. Overly and auto allowances for Mr. Overly and Mr. Brown during 2006.(4)
    
    Mr. Overly terminated his employment with the Company on January 19, 2007. Potential Payments Upon Termination Or Change In Control
  Stock Award, Option and Non-Equity Incentive Plans
  Option Grants in Last Fiscal Year
  Employment Agreements
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Compensation of Directors
  All OtherFees Earned or
    
    CompensationName
    
    Paid in Cash ($)
    
    ($)
    
    Total ($)Keith A. Meister
    
    
    
    
    
    
    
    
    
    
    William A. Leidesdorf
    
    
    15,000
    
    
    
    
    
    
    
    15,000James L. Nelson
    
    
    15,000
    
    
    
    
    
    
    
    15,000Jack G. Wasserman
    
    
    15,000
    
    
    
    4,500
    
    
    
    19,500
  
 ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER
MATTERS
    
 ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDANCE
  Related Party Transaction Policy
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Tax Allocation Agreement
  Other Transactions
    54




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##### Table of Contents



Director Independence
  
 ITEM 14. PRINCIPAL ACCOUNTANT FEES AND SERVICES
  Grant Thornton
    
    
    Grant Thornton2006
    
    
    2005Audit fees (1)
    
    $
    564,000
    
    
    $
    421,000Other (2)
    
    
    16,000
    
    
    
    Total fees
    
    $
    580,000
    
    
    $
    421,000
 Grant Thornton did not provide any services related to financial information systems design and
implementation during 2006 or 2005.
 
 (1)
    
    Audit fees also include fees for work associated with Sarbanes-Oxley.(2)
    
    Other fees include fees for work related to compliance with Nevada Gaming Regulations. It is the policy of the Audit Committee to pre-approve all engagements and fees of the independent
public accountant and during 2006 and 2005 all such engagements and fees were pre-approved.
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PART IV
 
 ITEM 15. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES
 (a) 1. and 2. Financial Statements and Schedules
 PageReport of Independent Registered Public Accounting Firm
    
    
    31Consolidated Balance Sheets as of December 31, 2006 and 2005
    
    
    32Consolidated Statements of Income for the years ended December
31, 2006, 2005 and 2004
    
    
    33Consolidated Statements of Cash Flows for the years ended
December 31, 2006, 2005 and 2004
    
    
    34Consolidated Statements of Members/Stockholders Equity for the
years ended December 31, 2006, 2005 and 2004
    
    
    35Notes to Consolidated Financial Statements
    
    
    36
 3. List of Exhibits
 
 EXHIBITS INDEX
 EXHIBIT NO.
    
    DESCRIPTION3.1
    
    Second Amended and Restated Certificate of Formation of
American Casino & Entertainment Properties LLC (ACEP)
(incorporated by reference to Exhibit 3.1 to ACEPs Form S-4
(SEC File No. 333-118149), filed on August 12, 2004).3.2
    
    Limited Liability Company Agreement of ACEP (incorporated by
reference to Exhibit 3.2 to ACEPs Form S-4 (SEC File No.
333-118149), filed on August 12, 2004).3.3
    
    Amended and Restated Certificate of Incorporation of American
Casino & Entertainment Properties Finance Corp. (incorporated
by reference to Exhibit 3.3 to ACEPs Form S-4 (SEC File No.
333-118149), filed on August 12, 2004).3.4
    
    By-Laws of American Casino & Entertainment Properties Finance
Corp. (incorporated by reference to Exhibit 3.4 to ACEPs Form
S-4 (SEC File No. 333-118149), filed on August 12, 2004).4.1
    
    Indenture, dated as of January 29, 2004, among ACEP, American
Casino & Entertainment Properties Finance Corp., the guarantors
from time to time party thereto and Wilmington Trust Company,
as Trustee (incorporated by reference to Exhibit 4.1 to ACEPs
Form S-4 (SEC File No. 333-118149), filed on August 12, 2004).4.2
    
    Supplemental Indenture, dated as of May 26, 2004, among ACEP,
American Casino & Entertainment Properties Finance Corp.,
certain subsidiaries of ACEP and Wilmington Trust Company, as
Trustee (incorporated by reference to Exhibit 4.2 to ACEPs
Form S-4 (SEC File No. 333-118149), filed on August 12, 2004).4.3
    
    Form of 7.85% Senior Secured Note due 2012 (incorporated by
reference to Exhibit 4.1 to ACEPs Form S-4 (SEC File No.
333-118149), filed on August 12, 2004).10.1
    
    Amended and Restated Credit Agreement, dated as of May 9, 2006,
among ACEP, as the Borrower, Certain Subsidiaries of the
Borrower from time to time party thereto, as Guarantors, the
Several Lenders from time to time parties thereto, Wells Fargo
Bank N.A., as Syndication Agent, CIT Lending Services
Corporation, U.S. Bank, NA and Comerica West Incorporated, as
Co-Documentation Agents, Bear Stearns Corporate Lending Inc.,
as Administrative Agent, and Bear Stearns & Co. Inc., as Sole
Lead Arranger and Sole Bookrunner (incorporated by reference to
Exhibit 10.1 to ACEPs Form 8-K (SEC File No. 333-118149),
filed on May 17, 2006).10.2
    
    Pledge and Security Agreement, dated as of May 26, 2004, among
ACEP, American Casino &
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EXHIBIT NO.
    
    DESCRIPTIONEntertainment Properties Finance Corp.,
certain subsidiaries of ACEP and Bear Stearns Corporate Lending
Inc. (incorporated by reference to Exhibit 10.2 to ACEPs Form
S-4 (SEC File No. 333-118149), filed on August 12, 2004).10.3
    
    Deed of Trust, Assignment of Rents and Leases, Security
Agreement and Fixture Filing, dated as of May 26, 2004, made by
Stratosphere Corporation, as Trustor, to Lawyers Title of
Nevada, as Trustee, for the benefit of Wilmington Trust
Company, in its capacity as Indenture Trustee, for the benefit
of the Secured Parties, as Beneficiary (incorporated by
reference to Exhibit 10.7 to ACEPs Amendment No. 1 to Form S-4
(SEC File No. 333-118149), filed on October 12, 2004).10.4
    
    First Modification to Deed of Trust, Assignment of Rents and
Leases, Security Agreement and Fixture Filing made by
Stratosphere Corporation, as Trustor, to Lawyers Title of
Nevada, as Trustee, for the benefit of Wilmington Trust
Company, in its capacity as Indenture Trustee, for the benefit
of the Secured Parties, as Beneficiary, dated as of May 9, 2006
(incorporated by reference to Exhibit 10.3 to ACEPs Form 8-K
(SEC File No. 333-118149), filed on May 17, 2006).10.5
    
    First Modification to Deed of Trust, Assignment of Rents and
Leases, Security Agreement and Fixture Filing made by
Stratosphere Corporation, as Trustor, to Lawyers Title of
Nevada, as Trustee, for the benefit of Bear Stearns Corporate
Lending Inc., in its capacity as Administrative Agent, for the
benefit of the Secured Parties, as Beneficiary, dated as of May
9, 2006 (incorporated by reference to Exhibit 10.4 to ACEPs
Form 8-K (SEC File No. 333-118149), filed on May 17, 2006).10.6
    
    Deed of Trust, Assignment of Rents and Leases, Security
Agreement and Fixture Filing, dated as of May 26, 2004, made by
Stratosphere Land Corporation, as Trustor, to Lawyers Title of
Nevada, as Trustee, for the benefit of Wilmington Trust
Company, in its capacity as Indenture Trustee, for the benefit
of the Secured Parties, as Beneficiary (incorporated by
reference to Exhibit 10.3 to ACEPs Form S-4 (SEC File No.
333-118149), filed on August 12, 2004).10.7
    
    First Modification to Deed of Trust, Assignment of Rents and
Leases, Security Agreement and Fixture Filing made by
Stratosphere Land Corporation, as Trustor, to Lawyers Title of
Nevada, as Trustee, for the benefit of Bear Stearns Corporate
Lending Inc., in its capacity as Administrative Agent, for the
benefit of the Secured Parties, as Beneficiary, dated as of May
9, 2006 (incorporated by reference to Exhibit 10.5 to ACEPs
Form 8-K (SEC File No. 333-118149), filed on May 17, 2006).10.8
    
    Deed of Trust, Assignment of Rents and Leases, Security
Agreement and Fixture Filing, dated as of May 26, 2004, made by
Arizona Charlies, LLC, as Trustor, to Lawyers Title of Nevada,
as Trustee, for the benefit of Wilmington Trust Company, in its
capacity as Indenture Trustee, for the benefit of the Secured
Parties, as Beneficiary (incorporated by reference to Exhibit
10.8 to ACEPs Amendment No. 1 to Form S-4 (SEC File No.
333-118149), filed on October 12, 2004).10.9
    
    First Modification to Deed of Trust, Assignment of Rents and
Leases, Security Agreement and Fixture Filing made by Arizona
Charlies, LLC, as Trustor, to Lawyers Title of Nevada, as
Trustee, for the benefit of Bear Stearns Corporate Lending
Inc., in its capacity as Administrative Agent, for the benefit
of the Secured Parties, as Beneficiary, dated as of May 9, 2006
(incorporated by reference to Exhibit 10.7 to ACEPs Form 8-K
(SEC File No. 333-118149), filed on May 17, 2006).10.10
    
    Deed of Trust, Assignment of Rents and Leases, Security
Agreement and Fixture Filing, dated as of May 26, 2004, made by
Fresca, LLC, as Trustor, to Lawyers Title of Nevada, as
Trustee, for the benefit of Wilmington Trust Company, in its
capacity as Indenture Trustee, for the benefit of the Secured
Parties, as Beneficiary (incorporated by reference to Exhibit
10.9 to ACEPs Amendment No. 1 to Form S-4 (SEC File No.
333-118149), filed on October 12, 2004).10.11
    
    First Modification to Deed of Trust, Assignment of Rents and
Leases, Security Agreement and Fixture Filing made by Fresca,
LLC, as Trustor, to Lawyers Title of Nevada, as Trustee, for
the benefit of Bear Stearns Corporate Lending Inc., in its
capacity as Administrative Agent, for the benefit of the
Secured Parties, as Beneficiary, dated as of May 9, 2006
(incorporated by reference to Exhibit 10.6 to ACEPs Form 8-K
(SEC File No. 333-118149), filed on May 17, 2006).
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EXHIBIT NO.
    
    DESCRIPTION10.12
    
    Reaffirmation Agreement, dated as of May 9, 2006, among the
Grantors thereto with Bear Sterns Corporate Lending Inc., as
Administrative Agent (incorporated by reference to Exhibit 10.2
to ACEPs Form 8-K (SEC File No. 333-118149), filed on May 17,
2006).10.13
    
    Service Mark License Agreement, by and between Becker Gaming,
Inc. and Arizona Charlies, Inc., dated as of August 1, 2000
(incorporated by reference to Exhibit 10.10 to ACEPs Form 10-K
(SEC File No. 333-118149), filed on March 16, 2006).10.14
    
    Asset Purchase Agreement, dated as of November 28, 2005, by and
among Harrahs Operating Company, Inc., Flamingo-Laughlin,
Inc., Boardwalk Regency Corporation, Martial Development
Corporation, AREP Boardwalk LLC and AREP Laughlin Corporation
(incorporated by reference to Exhibit 10.1 to ACEPs Form 8-K
(SEC File No. 333-118149), filed on May 25, 2006).10.15
    
    Employment Agreement, dated as of January 16, 2006, between
ACEP and Denise Barton (incorporated by reference to Exhibit
10.11 to ACEPs Form 8-K (SEC File No. 333-118149), filed on
January 20, 2006).10.16
    
    Employment Agreement, dated as of February 21, 2006, between
Stratosphere Gaming Corp. and Bobby Ray Harris (incorporated by
reference to Exhibit 10.13 to ACEPs Form 8-K (SEC File No.
333-118149), filed on February 23, 2006).10.17
    
    Employment Agreement, effective as of April 1, 2004, by and
between ACEP and Richard P. Brown (incorporated by reference to
Exhibit 10.4 to ACEPs Form S-4 (SEC File No. 333-118149),
filed on August 12, 2004).10.18
    
    Management Incentive Plan, effective January 1, 2005, of ACEP
and Atlantic Coast Entertainment Holdings, Inc. (incorporated
by reference to Exhibit 10.12 to ACEPs Form 8-K (SEC File No.
333-118149), filed on January 20, 2006).14.1
    
    Code of Business Conduct and Ethics (incorporated by reference
to Exhibit 99.2 to AREPs Form 10-Q (SEC File No. 1-9516),
filed on November 9, 2004).21.1
    
    Subsidiaries31.1
    
    Certification of Principal Executive Officer pursuant to
Section 302(a) of the Sarbanes-Oxley Act of 2002.31.2
    
    Certification of Principal Financial Officer pursuant to
Section 302(a) of the Sarbanes-Oxley Act of 2002.32.1
    
    Certification of Chief Executive Officer pursuant to Section
906 of the Sarbanes-Oxley Act of 2002.32.2
    
    Certification of Chief Financial Officer pursuant to Section
906 of the Sarbanes-Oxley Act of 2002.
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SIGNATURES
  AMERICAN CASINO & ENTERTAINMENT PROPERTIES LLCBy:
    
    /s/ Richard P. BrownRichard P. BrownPresident and Chief Executive OfficerDate:
    
    March 6, 2007
  /s/ Richard P. BrownRichard P. Brown
    
    President,
Chief Executive Officer and Director

(Principal Executive Officer)
    
    March 6, 2007/s/ Denise BartonDenise Barton
    
    Senior
Vice President, Chief Financial
Officer, Treasurer and Secretary (Principal
Financial and Accounting Officer)
    
    March 6, 2007/s/ Jack G. WassermanJack G. Wasserman
    
    Director
    
    March 6, 2007/s/ William A. LeidesdorfWilliam A. Leidesdorf
    
    Director
    
    March 6, 2007/s/ James L. NelsonJames L. Nelson
    
    Director
    
    March 6, 2007/s/ Keith A. MeisterKeith A. Meister
    
    Director
    
    March 6, 2007
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SUPPLEMENTAL INFORMATION TO BE FURNISHED WITH REPORTS FILED
PURSUANT TO SECTION 15(d) OF THE ACT BY REGISTRANTS WHICH HAVE NOT
REGISTERED SECURITIES PURSUANT TO SECTION 12 OF THE ACT
  60