##### Table of Contents



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
   o
    
    TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
 
 Commission File Number: 000-52975
 American Casino & Entertainment Properties LLC
  Delaware
    
    20-0573058(State or other jurisdiction ofincorporation or organization)
    
    (I.R.S. EmployerIdentification No.)2000 Las Vegas Boulevard SouthLas Vegas, NV
    
    89104(Address of principal executive offices)
    
    (Zip code)
 (702) 380-7777
 
 þ o
  Large accelerated filer o
    
    Accelerated filer oNon-accelerated filer þ (Do not check if a smaller reporting company)
    
    Smaller reporting company o
 o þ




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##### 



TABLE OF CONTENTS
 PagePart I
    
    
    
    Financial InformationItem 1.
    
    Unaudited Condensed Consolidated Financial StatementsCondensed Consolidated Balance Sheets  March 31, 2008 (Successor) (unaudited) and December 31, 2007 (Predecessor)
    
    3Condensed Consolidated Statements of Income (Loss) (unaudited)  The Period February 21, 2008 Through March 31, 2008 (Successor), The Period January 1, 2008 Through February 20, 2008 and the Three Months Ended March 31, 2007 (Predecessor)
    
    4Condensed Consolidated Statements of Cash Flows (unaudited) The Period February 21, 2008 Through March 31, 2008 (Successor), The Period January 1, 2008 Through February 20, 2008 and the Three Months Ended March 31, 2007 (Predecessor)
    
    5Condensed Consolidated Statements of Members Equity (unaudited)  The Period December 31, 2007 Through February 20, 2008 (Predecessor) and The Period February 21, 2008 Through March 31, 2008 (Successor)
    
    6Notes to Condensed Consolidated Financial Statements (unaudited)
    
    7Item 2.
    
    Managements Discussion and Analysis of Financial Condition and Results of Operations
    
    12Item 3.
    
    Quantitative and Qualitative Disclosures About Market Risk
    
    18Item 4.
    
    Controls and Procedures
    
    18Part II
    
    
    
    Other InformationItem 1A.
    
    Risk Factors
    
    19Item 6.
    
    Exhibits
    
    19EX-31.1: CERTIFICATIONEX-31.2: CERTFICATIONEX-32.1: CERTIFICATIONEX-32.2: CERTIFICATION
  2




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##### Table of Contents



PART I-FINANCIAL INFORMATION
 
 Item 1. Unaudited Condensed Consolidated Financial Statements.
 
 AMERICAN CASINO & ENTERTAINMENT PROPERTIES LLC
CONDENSED CONSOLIDATED BALANCE SHEETS
 Successor
    
    
    PredecessorAs of
    
    
    As ofMarch 31, 2008
    
    
    December 31, 2007(Unaudited)(In thousands)AssetsCurrent Assets:Cash and cash equivalents
    
    $
    38,263
    
    
    $
    107,265Cash and cash equivalents-restricted
    
    
    45,494
    
    
    
    Investments-restricted
    
    
    2,858
    
    
    
    2,858Accounts receivable, net
    
    
    6,551
    
    
    
    5,615Deferred income taxes
    
    
    
    
    
    
    4,309Other current assets
    
    
    16,925
    
    
    
    11,999Total Current Assets
    
    
    110,091
    
    
    
    132,046Property and equipment, net
    
    
    1,169,778
    
    
    
    431,970Debt issuance and deferred financing costs, net
    
    
    15,473
    
    
    
    4,555Deferred income taxes
    
    
    
    
    
    
    34,503Intangible assets, net
    
    
    44,441
    
    
    
    1,939Other assets
    
    
    
    
    
    
    85Total Other Assets
    
    
    59,914
    
    
    
    41,082Total Assets
    
    $
    1,339,783
    
    
    $
    605,098Liabilities and Members EquityCurrent Liabilities:Accounts payable
    
    $
    422
    
    
    $
    4,730Accrued expenses
    
    
    32,505
    
    
    
    27,347Accrued payroll and related expenses
    
    
    11,439
    
    
    
    16,936Current portion of capital lease obligations
    
    
    526
    
    
    
    520Total Current Liabilities
    
    
    44,892
    
    
    
    49,533Long-Term Liabilities:Long-term debt
    
    
    1,108,000
    
    
    
    255,000Capital lease obligations, less current portion
    
    
    1,676
    
    
    
    1,810Other
    
    
    
    
    
    
    2,386Total Long-Term Liabilities
    
    
    1,109,676
    
    
    
    259,196Total Liabilities
    
    
    1,154,568
    
    
    
    308,729Commitments and ContingenciesMembers Equity:Members equity
    
    
    185,215
    
    
    
    296,369Total Members Equity
    
    
    185,215
    
    
    
    296,369Total Liabilitites and Members Equity
    
    $
    1,339,783
    
    
    $
    605,098
  3




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AMERICAN CASINO & ENTERTAINMENT PROPERTIES LLC
CONDENSED CONSOLIDATED STATEMENTS OF INCOME (LOSS)
 Successor
    
    
    PredecessorPeriod from
    
    
    Period fromFebruary 21, 2008
    
    
    January 1, 2008
    
    
    Three MonthsThrough
    
    
    Through
    
    
    EndedMarch 31, 2008
    
    
    February 20, 2008
    
    
    March 31, 2007(Unaudited)(In thousands)Revenues:Casino
    
    $
    32,577
    
    
    $
    36,539
    
    
    $
    67,370Hotel
    
    
    11,566
    
    
    
    11,683
    
    
    
    22,616Food and beverage
    
    
    11,146
    
    
    
    12,354
    
    
    
    23,109Tower, retail and other
    
    
    4,216
    
    
    
    4,651
    
    
    
    9,311Gross Revenues
    
    
    59,505
    
    
    
    65,227
    
    
    
    122,406Less promotional allowances
    
    
    5,054
    
    
    
    5,608
    
    
    
    9,518Net Revenues
    
    
    54,451
    
    
    
    59,619
    
    
    
    112,888Costs and Expenses:Casino
    
    
    9,826
    
    
    
    12,363
    
    
    
    22,566Hotel
    
    
    3,818
    
    
    
    4,682
    
    
    
    9,063Food and beverage
    
    
    7,541
    
    
    
    9,183
    
    
    
    15,975Other operating expenses
    
    
    1,897
    
    
    
    2,341
    
    
    
    4,236Selling, general and administrative
    
    
    14,589
    
    
    
    18,511
    
    
    
    29,472Depreciation and amortization
    
    
    3,265
    
    
    
    5,062
    
    
    
    8,591Loss on sale of assets
    
    
    41
    
    
    
    
    
    
    
    8Total Costs and Expenses
    
    
    40,977
    
    
    
    52,142
    
    
    
    89,911Income From Operations
    
    
    13,474
    
    
    
    7,477
    
    
    
    22,977Other Income (Expense):Loss on early extinguishment of
debt
    
    
    
    
    
    
    (13,580
    )
    
    
    Interest income
    
    
    116
    
    
    
    322
    
    
    
    419Interest expense
    
    
    (8,431
    )
    
    
    (2,564
    )
    
    
    (5,436
    )Total Other Expense, net
    
    
    (8,315
    )
    
    
    (15,822
    )
    
    
    (5,017
    )Income (Loss) Before Income Taxes
    
    
    5,159
    
    
    
    (8,345
    )
    
    
    17,960Benefit (provision) for income taxes
    
    
    
    
    
    
    2,920
    
    
    
    (6,192
    )Net Income (Loss)
    
    $
    5,159
    
    
    $
    (5,425
    )
    
    $
    11,768
  4




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AMERICAN CASINO & ENTERTAINMENT PROPERTIES LLC
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
 Successor
    
    
    PredecessorPeriod from
    
    
    Period fromFebruary 21, 2008
    
    
    January 1, 2008
    
    
    Three MonthsThrough
    
    
    Through
    
    
    EndedMarch 31, 2008
    
    
    February 20, 2008
    
    
    March 31, 2007(Unaudited)(In thousands)Cash Flows From Operating Activities:Net income (loss)
    
    $
    5,159
    
    
    $
    (5,425
    )
    
    $
    11,768Adjustments
to reconcile net income (loss) to net cash provided
by (used in) operating activities:Depreciation and amortization
    
    
    3,265
    
    
    
    5,062
    
    
    
    8,591Tax Benefit
    
    
    
    
    
    
    (2,920
    )
    
    
    Write-off of
deferred financing costs
    
    
    
    
    
    
    4,405
    
    
    
    Loss on sale of assets
    
    
    41
    
    
    
    
    
    
    
    8Provision for deferred income taxes
    
    
    
    
    
    
    
    
    
    
    48Changes in operating assets and liabilities:Restricted cash
    
    
    (3,934
    )
    
    
    
    
    
    
    (2
    )Accounts receivable, net
    
    
    (1,031
    )
    
    
    95
    
    
    
    404Other assets
    
    
    4,028
    
    
    
    55
    
    
    
    1,719Accounts payable and accrued expenses
    
    
    (2,965
    )
    
    
    (9,543
    )
    
    
    (4,155
    )Other
    
    
    
    
    
    
    
    
    
    
    151Net Cash Provided By (Used In) Operating Activities
    
    
    4,563
    
    
    
    (8,271
    )
    
    
    18,532Cash Flows From Investing Activities:Decrease in investments  restricted
    
    
    
    
    
    
    
    
    
    
    298Acquisition of property and equipment
    
    
    (4,469
    )
    
    
    (5,265
    )
    
    
    (3,821
    )Acquisition of American Casino & Entertainment
Properties LLC
    
    
    (1,299,066
    )
    
    
    
    
    
    
    Decrease in related party receivables
    
    
    
    
    
    
    
    
    
    
    375Proceeds from sale of property and equipment
    
    
    
    
    
    
    
    
    
    
    353Net Cash Used In Investing Activities
    
    
    (1,303,535
    )
    
    
    (5,265
    )
    
    
    (2,795
    )Cash Flows From Financing Activities:Debt issuance and deferred financing costs
    
    
    (16,366
    )
    
    
    
    
    
    
    Payments on line of credit
    
    
    
    
    
    
    (40,000
    )
    
    
    Capital Distribution
    
    
    
    
    
    
    (15,439
    )
    
    
    Payments on capital lease obligation
    
    
    (43
    )
    
    
    (85
    )
    
    
    (121
    )Due to Seller
    
    
    7,379
    
    
    
    
    
    
    
    Proceeds on notes payable
    
    
    1,108,000
    
    
    
    
    
    
    
    Equity Contribution
    
    
    200,060
    
    
    
    
    
    
    
    Net Cash Provided By (Used In) Financing Activities
    
    
    1,299,030
    
    
    
    (55,524
    )
    
    
    (121
    )Net increase (decrease) in cash and cash equivalents
    
    
    58
    
    
    
    (69,060
    )
    
    
    15,616Cash and cash equivalents  beginning of period
    
    
    38,205
    
    
    
    107,265
    
    
    
    54,912Cash and Cash Equivalents  end of period
    
    $
    38,263
    
    
    $
    38,205
    
    
    $
    70,528Supplemental Disclosure of Cash Flow Information:Cash paid during the period for interest
    
    $
    13
    
    
    $
    9,455
    
    
    $
    9,229Supplemental Disclosure of Non-cash Items:Long-term debt paid by parent
    
    $
    
    
    
    $
    215,000
    
    
    $
    
  5




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AMERICAN CASINO & ENTERTAINMENT PROPERTIES LLC
CONDENSED CONSOLIDATED STATEMENTS OF MEMBERS EQUITY
 Class A
    
    
    Class B
    
    
    TotalEquity
    
    
    Equity
    
    
    EquitySuccessor:Balance at February 20, 2008
    
    $
    
    
    
    $
    
    
    
    $
    Equity contribution
    
    
    
    
    
    
    200,060
    
    
    
    200,060Acqusition costs
paid by parent
    
    
    
    
    
    
    (20,004
    )
    
    
    (20,004
    )Net income
    
    
    
    
    
    
    5,159
    
    
    
    5,159Balance at March 31, 2008
    
    $
    
    
    
    $
    185,215
    
    
    $
    185,215
  6




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AMERICAN CASINO & ENTERTAINMENT PROPERTIES LLC
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
 Note 1. The Company
         7




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
    
    Holdings has the right to acquire Class A Interests from Voteco on each occasion that
Class B Interests held by Holdings would be transferred to a proposed purchaser who, in
connection with such proposed sale, has obtained all licenses, permits, registrations,
authorizations, consents, waivers, orders, findings of suitability or other approvals
required to be obtained from, and has made all findings, notices or declarations required
to be made with, all gaming authorities under all applicable gaming laws,
    
    A specific purchase price, as determined in accordance with the Transfer Restriction
Agreement, will be paid to acquire the Class A Interests from Voteco, and
    
    Voteco will not transfer ownership of Class A Interests owned by it except pursuant to
such option of Holdings.
     Note 2. Basis of Presentation
  8




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Principles of Consolidation
   Recently Issued Accounting Pronouncements
   Note 3. Goodwill and Other Intangible Assets
   9




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(in thousands)Gross
    
    
    
    
    
    
    NetAsset
    
    Carrying
    
    
    Accumulated
    
    
    CarryingLife
    
    Amount
    
    
    Amortization
    
    
    AmountAmortizing intangible assets:Advance reservations
    
    2 Months
    
    $
    618
    
    
    $
    (309
    )
    
    $
    309Player loyalty plan
    
    5 Years
    
    
    7,450
    
    
    
    (123
    )
    
    
    7,327$
    8,068
    
    
    $
    (432
    )
    
    
    7,636Non-amortizing intangible assets:Goodwill
    
    
    
    
    
    
    
    
    
    
    
    
    6,939Trade names
    
    
    
    
    
    
    
    
    
    
    
    
    29,866$
    44,441
 Note 4. Long-term Debt
    Note 5. Legal Proceedings
  Note 6. Income Taxes
  Note 7. Acquisition
  10




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Land
    
    $
    718,443Site improvements
    
    
    4,870Building and improvements
    
    
    365,590Machinery and equipment
    
    
    79,237Intangibles
    
    
    37,934Goodwill
    
    
    6,939Capital lease
    
    
    (1,720
    )Debt issuance costs
    
    
    16,366Acquistion costs
    
    
    20,004Reserves and pre-payments
    
    
    49,484Total Purchase Price
    
    $
    1,297,147Cash and cash equivalents
    
    $
    38,205Investment -restricted
    
    
    2,858Accounts receivable, net
    
    
    5,520Other current assets
    
    
    12,179Accounts payable  trade
    
    
    (5,545
    )Accrued expenses
    
    
    (21,048
    )Accrued payroll and related expenses
    
    
    (13,359
    )Current portion of capital lease obligation
    
    
    (525
    )Estimated Working Capital
    
    $
    18,285Total Amount Paid
    
    $
    1,315,432
 11




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Item 2. Managements Discussion and Analysis of Financial Condition and Results of Operations
  Overview
        12




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
    
    Holdings has the right to acquire Class A Interests from Voteco on each occasion that
Class B Interests held by Holdings would be transferred to a proposed purchaser who, in
connection with such proposed sale, has obtained all licenses, permits, registrations,
authorizations, consents, waivers, orders, findings of suitability or other approvals
required to be obtained from, and has made all findings, notices or declarations required
to be made with, all gaming authorities under all applicable gaming laws,
    
    A specific purchase price, as determined in accordance with the Transfer Restriction
Agreement, will be paid to acquire the Class A Interests from Voteco, and
    
    Voteco will not transfer ownership of Class A Interests owned by it except pursuant to
such option of Holdings.
      13




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Casino
    
    Number of
    
    Number
    
    NumberSquare
    
    Hotel
    
    of
    
    ofFootage
    
    Rooms
    
    Slots
    
    Table GamesStratosphere
    
    
    80,000
    
    
    
    2,444
    
    
    
    1,275
    
    
    
    49Arizona Charlies Decatur
    
    
    52,000
    
    
    
    258
    
    
    
    1,323
    
    
    
    15Arizona Charlies Boulder
    
    
    47,000
    
    
    
    303
    
    
    
    1,022
    
    
    
    16Aquarius
    
    
    57,000
    
    
    
    1,907
    
    
    
    1,248
    
    
    
    42
  Results of Operations
  Successor
    
    
    Predecessor
    
    
    Combined (a)
    
    
    PredecessorPeriod from
    
    
    Period fromFebruary 21, 2008
    
    
    January 1, 2008
    
    
    Three Months EndedThrough
    
    
    Through
    
    
    March 31,March 31, 2008
    
    
    February 20, 2008
    
    
    2008
    
    
    2007
    
    
    % ChangeIncome Statement Data:Revenues:Casino
    
    $
    32.6
    
    
    $
    36.5
    
    
    $
    69.1
    
    
    $
    67.4
    
    
    
    2.5
    %Hotel
    
    
    11.6
    
    
    
    11.6
    
    
    
    23.2
    
    
    
    22.6
    
    
    
    2.7
    %Food and beverage
    
    
    11.1
    
    
    
    12.4
    
    
    
    23.5
    
    
    
    23.1
    
    
    
    1.7
    %Tower, retail and other
    
    
    4.2
    
    
    
    4.7
    
    
    
    8.9
    
    
    
    9.3
    
    
    
    -4.3
    %Gross revenues
    
    
    59.5
    
    
    
    65.2
    
    
    
    124.7
    
    
    
    122.4
    
    
    
    1.9
    %Less promotional allowances
    
    
    5.1
    
    
    
    5.6
    
    
    
    10.7
    
    
    
    9.5
    
    
    
    12.6
    %Net revenues
    
    
    54.4
    
    
    
    59.6
    
    
    
    114.0
    
    
    
    112.9
    
    
    
    1.0
    %Costs and expenses:Casino
    
    
    9.8
    
    
    
    12.4
    
    
    
    22.2
    
    
    
    22.6
    
    
    
    -1.8
    %Hotel
    
    
    3.8
    
    
    
    4.7
    
    
    
    8.5
    
    
    
    9.1
    
    
    
    -6.6
    %Food and beverage
    
    
    7.5
    
    
    
    9.2
    
    
    
    16.7
    
    
    
    16.0
    
    
    
    4.4
    %Other operating expenses
    
    
    1.9
    
    
    
    2.3
    
    
    
    4.2
    
    
    
    4.2
    
    
    
    0.0
    %Selling, general and administrative
    
    
    14.6
    
    
    
    18.5
    
    
    
    33.1
    
    
    
    29.5
    
    
    
    12.2
    %Depreciation and amortization
    
    
    3.3
    
    
    
    5.0
    
    
    
    8.3
    
    
    
    8.6
    
    
    
    -3.5
    %Total costs and expenses
    
    
    40.9
    
    
    
    52.1
    
    
    
    93.0
    
    
    
    90.0
    
    
    
    3.3
    %Income from operations
    
    $
    13.5
    
    
    $
    7.5
    
    
    $
    21.0
    
    
    $
    22.9
    
    
    
    -8.3
    %
  14




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Gross Revenues
  Casino Revenues
  Non-Casino Revenues
    Promotional Allowances
  Operating Expenses
     15




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Interest Expense
  Financial
ConditionLiquidity and Capital Resources
 Overview
   Planned Capital Expenditures
   Indebtedness
   16




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Retirement of Debt and Credit Facilities
   Contractual Obligations
   Recently Issued Accounting Pronouncements
   Forward-Looking Statements
  17




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We warn you that forward-looking statements are only predictions. Actual events or results may
differ as a result of risks 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
 Internal
Control-Integrated Framework
    18




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19




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PART II-OTHER INFORMATION
 
 Item 1A. Risk Factors
  
 Item 6. Exhibits
  20




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SIGNATURES
  AMERICAN CASINO & ENTERTAINMENT PROPERTIES LLCBy:
    /s/ DENISE BARTONDenise BartonSenior Vice President, Chief Financial Officer,
Treasurer and Secretary
(Principal Financial Accounting Officer)  21




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##### Table of Contents



Exhibits Index
 Exhibit No.
    
    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.
 22