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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 September 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(State or other jurisdiction of 
incorporation or organization)
    
    20-0573058(I.R.S. Employer
Identification No.)2000 Las Vegas Boulevard South 
Las Vegas, NV(Address of principal executive offices)
    
    89104(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 InformationItem 1.
    
    Unaudited Condensed Consolidated Financial Statements
    
    3Condensed Consolidated Balance Sheets as of September 30, 2007 (unaudited) and December 31, 2006
    
    3Condensed Consolidated Statements of Income for the three months ended September 30, 2007 and September 30, 2006 (unaudited)
    
    4Condensed Consolidated Statements of Income for the nine months ended September 30, 2007 and September 30, 2006 (unaudited)
    
    5Condensed Consolidated Statements of Cash Flows for the nine months ended September 30, 2007 and September 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
    
    18Part 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 ofSeptember 30, 2007
    
    
    December 31, 2006(Unaudited)(In thousands)AssetsCurrent Assets:Cash and cash equivalents
    
    $
    87,911
    
    
    $
    54,912Cash and cash equivalents-restricted
    
    
    
    
    
    
    269Investments-restricted
    
    
    2,908
    
    
    
    3,457Accounts receivable, net
    
    
    6,725
    
    
    
    6,752Related party receivables
    
    
    15
    
    
    
    472Deferred income taxes
    
    
    2,948
    
    
    
    2,948Other current assets
    
    
    13,322
    
    
    
    16,773Total Current Assets
    
    
    113,829
    
    
    
    85,583Property and equipment, net
    
    
    437,296
    
    
    
    445,788Debt issuance and deferred financing costs, net
    
    
    4,848
    
    
    
    5,729Deferred income taxes
    
    
    35,464
    
    
    
    36,212Other assets
    
    
    2,239
    
    
    
    2,514Total Other Assets
    
    
    42,551
    
    
    
    44,455Total Assets
    
    $
    593,676
    
    
    $
    575,826Liabilities and Members EquityCurrent Liabilities:Accounts payable
    
    $
    5,269
    
    
    $
    6,708Accrued expenses
    
    
    25,170
    
    
    
    33,168Accrued payroll and related expenses
    
    
    12,476
    
    
    
    14,391Current portion of capital lease obligations
    
    
    514
    
    
    
    496Total Current Liabilities
    
    
    43,429
    
    
    
    54,763Long-Term Liabilities:Long-term debt
    
    
    255,000
    
    
    
    255,000Capital lease obligations, less current portion
    
    
    1,941
    
    
    
    2,329Other
    
    
    2,328
    
    
    
    5,993Total Long-Term Liabilities
    
    
    259,269
    
    
    
    263,322Total Liabilities
    
    
    302,698
    
    
    
    318,085Commitments and ContingenciesMembers Equity:Members equity
    
    
    290,978
    
    
    
    257,741Total Members Equity
    
    
    290,978
    
    
    
    257,741Total Liabilitites and Members Equity
    
    $
    593,676
    
    
    $
    575,826
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AMERICAN CASINO & ENTERTAINMENT PROPERTIES LLC
 
 CONDENSED CONSOLIDATED STATEMENTS OF INCOME
 Three Months EndedSeptember 30, 2007
    
    
    September 30, 2006(Unaudited)(In thousands)Revenues:Casino
    
    $
    64,941
    
    
    $
    56,466Hotel
    
    
    21,872
    
    
    
    19,698Food and beverage
    
    
    22,501
    
    
    
    22,166Tower, retail and other
    
    
    10,511
    
    
    
    9,689Gross Revenues
    
    
    119,825
    
    
    
    108,019Less promotional allowances
    
    
    10,458
    
    
    
    8,287Net Revenues
    
    
    109,367
    
    
    
    99,732Costs and Expenses:Casino
    
    
    21,765
    
    
    
    21,738Hotel
    
    
    8,885
    
    
    
    9,591Food and beverage
    
    
    18,407
    
    
    
    16,211Other operating expenses
    
    
    4,561
    
    
    
    4,663Selling, general and administrative
    
    
    32,302
    
    
    
    30,232Depreciation and amortization
    
    
    9,228
    
    
    
    7,692Pre-opening costs
    
    
    
    
    
    
    455Loss on sale of assets
    
    
    17
    
    
    
    246Total Costs and Expenses
    
    
    95,165
    
    
    
    90,828Income From Operations
    
    
    14,202
    
    
    
    8,904Other Income (Expense):Interest income
    
    
    660
    
    
    
    400Interest expense
    
    
    (4,386
    )
    
    
    (5,536
    )Total Other Expense, net
    
    
    (3,726
    )
    
    
    (5,136
    )Income Before Income Taxes
    
    
    10,476
    
    
    
    3,768Provision for income taxes
    
    
    536
    
    
    
    862Net Income
    
    $
    9,940
    
    
    $
    2,906
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AMERICAN CASINO & ENTERTAINMENT PROPERTIES LLC
 
 CONDENSED CONSOLIDATED STATEMENTS OF INCOME
 Nine Months EndedSeptember 30, 2007
    
    
    September 30, 2006(Unaudited)(In thousands)Revenues:Casino
    
    $
    200,124
    
    
    $
    156,074Hotel
    
    
    67,584
    
    
    
    55,759Food and beverage
    
    
    69,024
    
    
    
    60,514Tower, retail and other
    
    
    30,082
    
    
    
    27,308Gross Revenues
    
    
    366,814
    
    
    
    299,655Less promotional allowances
    
    
    30,421
    
    
    
    20,854Net Revenues
    
    
    336,393
    
    
    
    278,801Costs and Expenses:Casino
    
    
    66,353
    
    
    
    57,261Hotel
    
    
    27,105
    
    
    
    24,342Food and beverage
    
    
    51,469
    
    
    
    44,276Other operating expenses
    
    
    13,480
    
    
    
    12,676Selling, general and administrative
    
    
    91,492
    
    
    
    75,838Depreciation and amortization
    
    
    26,807
    
    
    
    20,550Pre-opening costs
    
    
    
    
    
    
    1,904Loss on sale of assets
    
    
    3
    
    
    
    246Total Costs and Expenses
    
    
    276,709
    
    
    
    237,093Income From Operations
    
    
    59,684
    
    
    
    41,708Other Income (Expense):Interest income
    
    
    1,643
    
    
    
    1,967Interest expense
    
    
    (15,285
    )
    
    
    (15,382
    )Total Other Expense, net
    
    
    (13,642
    )
    
    
    (13,415
    )Income Before Income Taxes
    
    
    46,042
    
    
    
    28,293Provision for income taxes
    
    
    12,805
    
    
    
    9,383Net Income
    
    $
    33,237
    
    
    $
    18,910
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AMERICAN CASINO & ENTERTAINMENT PROPERTIES LLC
 
 CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
 Nine Months EndedSeptember 30, 2007
    
    
    September 30, 2006(Unaudited)(In thousands)Cash Flows From Operating Activities:Net income
    
    $
    33,237
    
    
    $
    18,910Adjustments to reconcile net income to net cash provided
by operating activities:Depreciation and amortization
    
    
    26,807
    
    
    
    20,550Loss on sale of assets
    
    
    3
    
    
    
    246Provision for deferred income taxes
    
    
    748
    
    
    
    632Changes in operating assets and liabilities:Restricted cash
    
    
    269
    
    
    
    236Accounts receivable, net
    
    
    27
    
    
    
    442Other assets
    
    
    4,176
    
    
    
    63Accounts payable and accrued expenses
    
    
    (11,352
    )
    
    
    809Other
    
    
    (3,665
    )
    
    
    (54
    )Net Cash Provided By Operating Activities
    
    
    50,250
    
    
    
    41,834Cash Flows From Investing Activities:(Increase) decrease in investments  restricted
    
    
    549
    
    
    
    (580
    )Acquisition of property and equipment
    
    
    (18,517
    )
    
    
    (28,681
    )Acquisition of Flamingo Laughlin, net of cash acquired
    
    
    
    
    
    
    (109,906
    )Decrease in related party receivables
    
    
    457
    
    
    
    755Proceeds from sale of property and equipment
    
    
    630
    
    
    
    105Net Cash Used In Investing Activities
    
    
    (16,881
    )
    
    
    (138,307
    )Cash Flows From Financing Activities:Debt issuance and deferred financing costs
    
    
    
    
    
    
    (480
    )Proceeds from notes payable
    
    
    
    
    
    
    60,000Payments on notes payable
    
    
    
    
    
    
    (15,000
    )Payments on capital lease obligation
    
    
    (370
    )
    
    
    (354
    )Net Cash Provided By (Used In) Financing Activities
    
    
    (370
    )
    
    
    44,166Net increase (decrease) in cash and cash equivalents
    
    
    32,999
    
    
    
    (52,307
    )Cash and cash equivalents  beginning of period
    
    
    54,912
    
    
    
    108,316Cash and Cash Equivalents  end of period
    
    $
    87,911
    
    
    $
    56,009Supplemental Disclosure of Cash Flow Information:Cash paid during the period for interest
    
    $
    19,174
    
    
    $
    18,433Cash paid during the period for income taxes
    
    $
    14,573
    
    
    $
    11,650
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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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Note 2. Basis of Presentation
   Principles of Consolidation
  Recently Issued Accounting Pronouncements
      8




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




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Item 2.
    
    Managements Discussion and Analysis of Financial Condition and Results of Operations
  Overview
       10




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Casino
    
    Number of
    
    Number
    
    NumberSquare
    
    Hotel
    
    of
    
    ofFootage
    
    Rooms
    
    Slots
    
    Table GamesStratosphere
    
    
    80,000
    
    
    
    2,444
    
    
    
    1,268
    
    
    
    49Arizona Charlies Decatur
    
    
    52,000
    
    
    
    258
    
    
    
    1,363
    
    
    
    15Arizona Charlies Boulder
    
    
    47,000
    
    
    
    303
    
    
    
    1,059
    
    
    
    16Aquarius
    
    
    57,000
    
    
    
    1,907
    
    
    
    1,239
    
    
    
    42
  Results of Operations
 Three Months Ended September 30, 2007 Compared to Three Months Ended September 30, 2006
 Three Months EndedSeptember 30,(in millions)2007
    
    
    2006
    
    
    % ChangeIncome Statement Data:Revenues:Casino
    
    $
    64.9
    
    
    $
    56.5
    
    
    
    14.9
    %Hotel
    
    
    21.9
    
    
    
    19.7
    
    
    
    11.2
    %Food and beverage
    
    
    22.5
    
    
    
    22.1
    
    
    
    1.8
    %Tower, retail and other
    
    
    10.6
    
    
    
    9.7
    
    
    
    9.3
    %Gross revenues
    
    
    119.9
    
    
    
    108.0
    
    
    
    11.0
    %Less promotional allowances
    
    
    10.5
    
    
    
    8.3
    
    
    
    26.5
    %Net revenues
    
    
    109.4
    
    
    
    99.7
    
    
    
    9.7
    %Costs and expenses:Casino
    
    
    21.8
    
    
    
    21.7
    
    
    
    0.5
    %Hotel
    
    
    8.9
    
    
    
    9.6
    
    
    
    -7.3
    %Food and beverage
    
    
    18.4
    
    
    
    16.2
    
    
    
    13.6
    %Other operating expenses
    
    
    4.6
    
    
    
    4.7
    
    
    
    -2.1
    %Selling, general and administrative
    
    
    32.3
    
    
    
    30.4
    
    
    
    6.3
    %Pre-opening costs
    
    
    
    
    
    
    0.5
    
    
    
    -100.0
    %Depreciation and amortization
    
    
    9.2
    
    
    
    7.7
    
    
    
    19.5
    %Total costs and expenses
    
    
    95.2
    
    
    
    90.8
    
    
    
    4.8
    %Income from operations
    
    $
    14.2
    
    
    $
    8.9
    
    
    
    59.6
    %
 Gross Revenues
  11




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Casino Revenues
  Non-Casino Revenues
  ®
 Turn a Twenty
 Promotional Allowances
  Operating Expenses
    Viva Las Vegas
 12




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Interest Expense
  Nine months Ended September 30, 2007 Compared to Nine months Ended September 30, 2006
 Nine Months EndedSeptember 30,(in millions)IncludingAquarius
    
    
    
    Excluding Aquarius2007
    
    
    
    2007
    
    
    2006
    
    
    % ChangeIncome Statement Data:Revenues:Casino
    
    $
    200.1
    
    
    
    $
    138.7
    
    
    $
    134.2
    
    
    
    3.4
    %Hotel
    
    
    67.6
    
    
    
    
    53.0
    
    
    
    49.2
    
    
    
    7.7
    %Food and beverage
    
    
    69.0
    
    
    
    
    54.9
    
    
    
    54.0
    
    
    
    1.7
    %Tower, retail and other
    
    
    30.1
    
    
    
    
    25.9
    
    
    
    25.8
    
    
    
    0.4
    %Gross revenues
    
    
    366.8
    
    
    
    
    272.5
    
    
    
    263.2
    
    
    
    3.5
    %Less promotional allowances
    
    
    30.4
    
    
    
    
    19.4
    
    
    
    16.8
    
    
    
    15.5
    %Net revenues
    
    
    336.4
    
    
    
    
    253.1
    
    
    
    246.4
    
    
    
    2.7
    %Costs and expenses:Casino
    
    
    66.4
    
    
    
    
    47.6
    
    
    
    48.7
    
    
    
    -2.3
    %Hotel
    
    
    27.1
    
    
    
    
    20.9
    
    
    
    21.0
    
    
    
    -0.5
    %Food and beverage
    
    
    51.5
    
    
    
    
    42.9
    
    
    
    39.3
    
    
    
    9.2
    %Other operating expenses
    
    
    13.5
    
    
    
    
    10.9
    
    
    
    11.4
    
    
    
    -4.4
    %Selling, general and administrative
    
    
    91.5
    
    
    
    
    63.3
    
    
    
    63.9
    
    
    
    -0.9
    %Depreciation and amortization
    
    
    26.8
    
    
    
    
    20.3
    
    
    
    18.3
    
    
    
    10.9
    %Total costs and expenses
    
    
    276.8
    
    
    
    
    205.9
    
    
    
    202.6
    
    
    
    1.6
    %Income from operations
    
    $
    59.6
    
    
    
    $
    47.2
    
    
    $
    43.8
    
    
    
    7.8
    %
   Gross Revenues
  13




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Casino Revenues
  Non-Casino Revenues
  ®
  Promotional Allowances
  Operating Expenses
    14




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Viva Las Vegas
  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
    17




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Item 4.
    
    Controls and Procedures
    18




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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 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