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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
 Washington, D.C. 20549
 Form 10-Q
  þ
    
    QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT
OF 1934
 For the quarterly period ended June 30, 2007
 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
    
    (I.R.S. Employerincorporation or organization)
    
    Identification No.)2000 Las Vegas Boulevard SouthLas Vegas, NV
    
    89104(Address of principal executive offices)
    
    (Zip Code)
 (702) 380-7777
(Registrants telephone number, including area code)
 
  þ o
  o o þ
 o þ




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TABLE OF CONTENTS
 PagePart I Financial Information
    
    
    3Item 1. Unaudited Condensed Consolidated Financial Statements
    
    
    3Condensed Consolidated Balance Sheets as of June 30, 2007 (unaudited) and December 31, 2006
    
    
    3Condensed Consolidated Statements of Income for the three months ended June 30, 2007 and June 30, 2006 (unaudited)
    
    
    4Condensed Consolidated Statements of Income for the six months ended June 30, 2007 and June 30, 2006 (unaudited)
    
    
    5Condensed Consolidated Statements of Cash Flows for the six months ended June 30, 2007 and June 30, 2006 (unaudited)
    
    
    6Notes to Condensed Consolidated Financial Statements (unaudited)
    
    
    7Item 2. Managements Discussion and Analysis of Financial Condition and Results of Operations
    
    
    10Item 3. Quantitative and Qualitative Disclosures About Market Risk
    
    
    17Item 4. Controls and Procedures
    
    
    17Part II Other Information
    
    
    19Item 1A. Risk Factors
    
    
    19Item 6. Exhibits
    
    
    19EX-31.1: CERTIFICATIONEX-31.2: CERTIFICATIONEX-32.1: CERTIFICATIONEX-32.2: CERTIFICATION
  2




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PART I. FINANCIAL INFORMATION
 
 ITEM 1. UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
 AMERICAN CASINO & ENTERTAINMENT PROPERTIES LLC
 
 CONDENSED CONSOLIDATED BALANCE SHEETS
 As of
    
    
    As ofJune 30, 2007
    
    
    December 31, 2006(Unaudited)(In thousands)AssetsCurrent Assets:Cash and cash equivalents
    
    $
    83,995
    
    
    $
    54,912Cash and cash equivalents-restricted
    
    
    272
    
    
    
    269Investments-restricted
    
    
    3,159
    
    
    
    3,457Accounts receivable, net
    
    
    5,594
    
    
    
    6,752Related party receivables
    
    
    69
    
    
    
    472Deferred income taxes
    
    
    2,948
    
    
    
    2,948Other current assets
    
    
    13,935
    
    
    
    16,773Total Current Assets
    
    
    109,972
    
    
    
    85,583Property and equipment, net
    
    
    443,119
    
    
    
    445,788Debt issuance and deferred financing costs, net
    
    
    5,141
    
    
    
    5,729Deferred income taxes
    
    
    36,356
    
    
    
    36,212Other assets
    
    
    2,338
    
    
    
    2,514Total Other Assets
    
    
    43,835
    
    
    
    44,455Total Assets
    
    $
    596,926
    
    
    $
    575,826Liabilities and Members EquityCurrent Liabilities:Accounts payable
    
    $
    6,244
    
    
    $
    6,708Accrued expenses
    
    
    33,650
    
    
    
    33,168Accrued payroll and related expenses
    
    
    12,115
    
    
    
    14,391Current portion of capital lease obligations
    
    
    508
    
    
    
    496Total Current Liabilities
    
    
    52,517
    
    
    
    54,763Long-Term Liabilities:Long-term debt
    
    
    255,000
    
    
    
    255,000Capital lease obligations, less current portion
    
    
    2,072
    
    
    
    2,329Other
    
    
    6,299
    
    
    
    5,993Total Long-Term Liabilities
    
    
    263,371
    
    
    
    263,322Total Liabilities
    
    
    315,888
    
    
    
    318,085Commitments and ContingenciesMembers Equity:Members equity
    
    
    281,038
    
    
    
    257,741Total Members Equity
    
    
    281,038
    
    
    
    257,741Total Liabilitites and Members Equity
    
    $
    596,926
    
    
    $
    575,826
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AMERICAN CASINO & ENTERTAINMENT PROPERTIES LLC
 
 CONDENSED CONSOLIDATED STATEMENTS OF INCOME
 Three Months EndedJune 30, 2007
    
    
    June 30, 2006(Unaudited)(In thousands)Revenues:Casino
    
    $
    67,813
    
    
    $
    51,586Hotel
    
    
    23,096
    
    
    
    18,628Food and beverage
    
    
    23,414
    
    
    
    20,278Tower, retail and other
    
    
    10,260
    
    
    
    9,400Gross Revenues
    
    
    124,583
    
    
    
    99,892Less promotional allowances
    
    
    10,445
    
    
    
    6,768Net Revenues
    
    
    114,138
    
    
    
    93,124Costs and Expenses:Casino
    
    
    22,022
    
    
    
    19,035Hotel
    
    
    9,157
    
    
    
    7,908Food and beverage
    
    
    17,087
    
    
    
    14,864Other operating expenses
    
    
    4,683
    
    
    
    4,283Selling, general and administrative
    
    
    29,718
    
    
    
    24,820Depreciation and amortization
    
    
    8,988
    
    
    
    6,848Pre-opening costs
    
    
    
    
    
    
    931Loss (gain) on sale of assets
    
    
    (22
    )
    
    
    2Total Costs and Expenses
    
    
    91,633
    
    
    
    78,691Income From Operations
    
    
    22,505
    
    
    
    14,433Other Income (Expense):Interest income
    
    
    564
    
    
    
    717Interest expense
    
    
    (5,463
    )
    
    
    (5,164
    )Total Other Expense, net
    
    
    (4,899
    )
    
    
    (4,447
    )Income Before Income Taxes
    
    
    17,606
    
    
    
    9,986Provision for income taxes
    
    
    6,077
    
    
    
    3,311Net Income
    
    $
    11,529
    
    
    $
    6,675
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AMERICAN CASINO & ENTERTAINMENT PROPERTIES LLC
 
 CONDENSED CONSOLIDATED STATEMENTS OF INCOME
 Six Months EndedJune 30, 2007
    
    
    June 30, 2006(Unaudited)(In thousands)Revenues:Casino
    
    $
    135,183
    
    
    $
    99,608Hotel
    
    
    45,712
    
    
    
    36,061Food and beverage
    
    
    46,523
    
    
    
    38,348Tower, retail and other
    
    
    19,571
    
    
    
    17,619Gross Revenues
    
    
    246,989
    
    
    
    191,636Less promotional allowances
    
    
    19,963
    
    
    
    12,567Net Revenues
    
    
    227,026
    
    
    
    179,069Costs and Expenses:Casino
    
    
    44,588
    
    
    
    35,523Hotel
    
    
    18,220
    
    
    
    14,751Food and beverage
    
    
    33,062
    
    
    
    28,065Other operating expenses
    
    
    8,919
    
    
    
    8,013Selling, general and administrative
    
    
    59,190
    
    
    
    45,606Depreciation and amortization
    
    
    17,579
    
    
    
    12,858Pre-opening costs
    
    
    
    
    
    
    1,449Gain on sale of assets
    
    
    (14
    )
    
    
    Total Costs and Expenses
    
    
    181,544
    
    
    
    146,265Income From Operations
    
    
    45,482
    
    
    
    32,804Other Income (Expense):Interest income
    
    
    983
    
    
    
    1,567Interest expense
    
    
    (10,899
    )
    
    
    (9,846
    )Total Other Expense, net
    
    
    (9,916
    )
    
    
    (8,279
    )Income Before Income Taxes
    
    
    35,566
    
    
    
    24,525Provision for income taxes
    
    
    12,269
    
    
    
    8,521Net Income
    
    $
    23,297
    
    
    $
    16,004
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AMERICAN CASINO & ENTERTAINMENT PROPERTIES LLC
 
 CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
 Six Months EndedJune 30, 2007
    
    
    June 30, 2006(Unaudited)(In thousands)Cash Flows From Operating Activities:Net income
    
    $
    23,297
    
    
    $
    16,004Adjustments to reconcile net income to net cash provided
by operating activities:Depreciation and amortization
    
    
    17,579
    
    
    
    12,858Gain on sale of assets
    
    
    (14
    )
    
    
    Provision for deferred income taxes
    
    
    (144
    )
    
    
    159Changes in operating assets and liabilities:Restricted cash
    
    
    (3
    )
    
    
    237Accounts receivable, net
    
    
    1,158
    
    
    
    103Other assets
    
    
    3,314
    
    
    
    (1,132
    )Accounts payable and accrued expenses
    
    
    (2,257
    )
    
    
    8,057Other
    
    
    306
    
    
    
    267Net Cash Provided By Operating Activities
    
    
    43,236
    
    
    
    36,553Cash Flows From Investing Activities:(Increase) decrease in investments  restricted
    
    
    298
    
    
    
    (602
    )Acquisition of property and equipment
    
    
    (15,238
    )
    
    
    (16,558
    )Acquisition of Flamingo Laughlin, net of cash acquired
    
    
    
    
    
    
    (109,897
    )Decrease in related party receivables
    
    
    403
    
    
    
    832Proceeds from sale of property and equipment
    
    
    629
    
    
    
    6Net Cash Used In Investing Activities
    
    
    (13,908
    )
    
    
    (126,219
    )Cash Flows From Financing Activities:Debt issuance and deferred financing costs
    
    
    
    
    
    
    (464
    )Proceeds from notes payable
    
    
    
    
    
    
    60,000Payments on capital lease obligation
    
    
    (245
    )
    
    
    (233
    )Net Cash Provided By (Used In) Financing Activities
    
    
    (245
    )
    
    
    59,303Net increase (decrease) in cash and cash equivalents
    
    
    29,083
    
    
    
    (30,363
    )Cash and cash equivalents  beginning of period
    
    
    54,912
    
    
    
    108,316Cash and Cash Equivalents  end of period
    
    $
    83,995
    
    
    $
    77,953Supplemental Disclosure of Cash Flow Information:Cash paid during the period for interest
    
    $
    9,978
    
    
    $
    8,939Cash paid during the period for income taxes
    
    $
    8,350
    
    
    $
    8,050
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AMERICAN CASINO & ENTERTAINMENT PROPERTIES LLC
 
 NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
 (Unaudited)
 Note 1. The Company
        Note 2. Basis of Presentation
  7




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Principles of Consolidation
  Recently Issued Accounting Pronouncements
      8




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Note 3. Related Party Transactions
    Note 4. Long-term Debt
  Note 5. Non-guarantor Subsidiaries
  Note 6. Legal Proceedings
  Note 7. Income Taxes
    9




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Item 2. Managements Discussion and Analysis of Financial Condition and Results of Operations
  Overview
        Casino
    
    Number of
    
    Number
    
    NumberSquare
    
    Hotel
    
    of
    
    ofFootage
    
    Rooms
    
    Slots
    
    Table GamesStratosphere
    
    
    80,000
    
    
    
    2,444
    
    
    
    1,266
    
    
    
    49Arizona Charlies Decatur
    
    
    52,000
    
    
    
    258
    
    
    
    1,373
    
    
    
    15Arizona Charlies Boulder
    
    
    47,000
    
    
    
    303
    
    
    
    1,054
    
    
    
    16Aquarius
    
    
    57,000
    
    
    
    1,907
    
    
    
    1,230
    
    
    
    42
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Results of Operations
 Three Months Ended June 30, 2007 Compared to Three Months Ended June 30, 2006
 Three Months EndedJune 30,(in millions)IncludingAquarius
    
    
    
    Excluding Aquarius2007
    
    
    
    2007
    
    
    2006
    
    
    % ChangeIncome Statement Data:Revenues:Casino
    
    $
    67.8
    
    
    
    $
    46.9
    
    
    $
    44.0
    
    
    
    6.6
    %Hotel
    
    
    23.1
    
    
    
    
    17.7
    
    
    
    16.4
    
    
    
    7.9
    %Food and beverage
    
    
    23.4
    
    
    
    
    18.6
    
    
    
    18.0
    
    
    
    3.3
    %Tower, retail and other
    
    
    10.3
    
    
    
    
    8.6
    
    
    
    8.8
    
    
    
    -2.3
    %Gross revenues
    
    
    124.6
    
    
    
    
    91.8
    
    
    
    87.2
    
    
    
    5.3
    %Less promotional allowances
    
    
    10.4
    
    
    
    
    6.5
    
    
    
    5.4
    
    
    
    20.4
    %Net revenues
    
    
    114.2
    
    
    
    
    85.3
    
    
    
    81.8
    
    
    
    4.3
    %Costs and expenses:Casino
    
    
    22.0
    
    
    
    
    15.6
    
    
    
    16.0
    
    
    
    -2.5
    %Hotel
    
    
    9.2
    
    
    
    
    6.9
    
    
    
    7.0
    
    
    
    -1.4
    %Food and beverage
    
    
    17.1
    
    
    
    
    14.2
    
    
    
    13.1
    
    
    
    8.4
    %Other operating expenses
    
    
    4.7
    
    
    
    
    3.6
    
    
    
    3.8
    
    
    
    -5.3
    %Selling, general and administrative
    
    
    29.7
    
    
    
    
    20.8
    
    
    
    21.0
    
    
    
    -1.0
    %Depreciation and amortization
    
    
    9.0
    
    
    
    
    6.8
    
    
    
    6.0
    
    
    
    13.3
    %Total costs and expenses
    
    
    91.7
    
    
    
    
    67.9
    
    
    
    66.9
    
    
    
    1.5
    %Income from operations
    
    $
    22.5
    
    
    
    $
    17.4
    
    
    $
    14.9
    
    
    
    16.8
    %
  Gross Revenues
  11




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Casino Revenues
  Non-Casino Revenues
    Promotional Allowances
  Operating Expenses
      12




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Interest Expense
  Six Months Ended June 30, 2007 Compared to Six Months Ended June 30, 2006
 Six Months EndedJune 30,(in millions)IncludingAquarius
    
    
    
    Excluding Aquarius2007
    
    
    
    2007
    
    
    2006
    
    
    % ChangeIncome Statement Data:Revenues:Casino
    
    $
    135.2
    
    
    
    $
    93.0
    
    
    $
    92.0
    
    
    
    1.1
    %Hotel
    
    
    45.7
    
    
    
    
    35.8
    
    
    
    33.9
    
    
    
    5.6
    %Food and beverage
    
    
    46.5
    
    
    
    
    36.9
    
    
    
    36.1
    
    
    
    2.2
    %Tower, retail and other
    
    
    19.6
    
    
    
    
    16.6
    
    
    
    17.0
    
    
    
    -2.4
    %Gross revenues
    
    
    247.0
    
    
    
    
    182.3
    
    
    
    179.0
    
    
    
    1.8
    %Less promotional allowances
    
    
    20.0
    
    
    
    
    12.9
    
    
    
    11.2
    
    
    
    15.2
    %Net revenues
    
    
    227.0
    
    
    
    
    169.4
    
    
    
    167.8
    
    
    
    1.0
    %Costs and expenses:Casino
    
    
    44.6
    
    
    
    
    31.8
    
    
    
    32.5
    
    
    
    -2.2
    %Hotel
    
    
    18.2
    
    
    
    
    13.6
    
    
    
    13.9
    
    
    
    -2.2
    %Food and beverage
    
    
    33.1
    
    
    
    
    27.5
    
    
    
    26.3
    
    
    
    4.6
    %Other operating expenses
    
    
    8.9
    
    
    
    
    7.2
    
    
    
    7.5
    
    
    
    -4.0
    %Selling, general and administrative
    
    
    59.2
    
    
    
    
    41.1
    
    
    
    41.8
    
    
    
    -1.7
    %Depreciation and amortization
    
    
    17.6
    
    
    
    
    13.3
    
    
    
    12.1
    
    
    
    9.9
    %Total costs and expenses
    
    
    181.6
    
    
    
    
    134.5
    
    
    
    134.1
    
    
    
    0.3
    %Income from operations
    
    $
    45.4
    
    
    
    $
    34.9
    
    
    $
    33.7
    
    
    
    3.6
    %
  Gross Revenues
  13




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Casino Revenues
  Non-Casino Revenues
    Promotional Allowances
  Operating Expenses
     14




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Interest Expense
  Financial Condition
 Liquidity and Capital Resources
     15




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Recently Issued Accounting Pronouncements
     16




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Forward-Looking Statements
  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.
 
 Item 3. Quantitative and Qualitative Disclosures About Market Risk
    
 Item 4. Controls and Procedures
  17




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PART II. OTHER INFORMATION
 
 Item 1A. Risk Factors
  
 Item 6. Exhibits
  19




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SIGNATURES
  AMERICAN CASINO & ENTERTAINMENT PROPERTIES LLCBy:
    /s/    DENISE BARTONDenise BartonSenior Vice President, Chief Financial Officer,
Treasurer and Secretary
(Principal Financial and Accounting Officer)  20




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Exhibits Index
 ExhibitNo.
    
    Description31.1
    
    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.
 21