##### 









UNITED STATES SECURITIES AND EXCHANGE COMMISSION


Washington, D.C. 20549


Form 10-Q


|           |  |                                                                                             
|---------- |  | --------------------------------------------------------------------------------------------
|(Mark One) |  |                                                                                             
|þ          |  | QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
    SECURITIES EXCHANGE ACT OF 1934 
|          
|           |  | For the quarterly period ended June 30, 2005                                                
|          
|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


(Exact name of registrant as specified in its charter)




|                                                                                         |  |                                         
|---------------------------------------------------------------------------------------- |  | ----------------------------------------
|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(Address of principal executive offices) |  | 89104(Zip Code)                         

(702) 380-7777


(Registrants telephone number, including area code)


þ o


o þ

















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TABLE OF CONTENTS


|        |  |                                                                                                                              |  |      |      | 
|------- |  | ---------------------------------------------------------------------------------------------------------------------------- |  | ---- | ---- | 
|        |  |                                                                                                                              |  | Page |     
|        |  |                                                                                                                              |  |      |     
|Part I  |  | FINANCIAL INFORMATION                                                                                                        |  |      |      | 
|        |  | Item 1.  Unaudited
    Condensed Consolidated Financial Statements                                                           |  |      |      | 
|        |  | Condensed Consolidated Balance Sheets as of
    June 30, 2005 (unaudited) and December 31,
    2004                          |  |      | 2    | 
|        |  | Condensed Consolidated Statements of Income
    for the three months ended June 30, 2005 and June 30,
    2004 (unaudited)   |  |      | 3    | 
|        |  | Condensed Consolidated Statements of Income
    for the six months ended June 30, 2005 and June 30,
    2004 (unaudited)     |  |      | 4    | 
|        |  | Condensed Consolidated Statements of Cash
    Flows for the six months ended June 30, 2005 and
    June 30, 2004 (unaudited) |  |      | 5    | 
|        |  | Notes to Condensed Consolidated Financial
    Statements (unaudited)                                                         |  |      | 6    | 
|        |  | Item 2.  Managements Discussion and
    Analysis of Financial Condition and Results of Operations                           |  |      | 8    | 
|        |  | Item 3.  Quantitative and Qualitative
    Disclosures About Market Risk                                                      |  |      | 14   | 
|        |  | Item 4.  Controls and Procedures                                                                                             |  |      | 14   | 
|       
|Part II |  | OTHER INFORMATION                                                                                                            |  |      |      | 
|        |  | Item 6.  Exhibits                                                                                                            |  |      | II-1 | 

1



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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 of             |  
|                                                |                                                 | June 30, 2005  |         |         | December 31, 2004 |  
|                                                |                                                 |                |         |         |                   |  
|                                                |                                                 | (Unaudited)    |         |         |                  
|                                                |                                                 | (In thousands) |        
|ASSETS                                         
|Current Assets:                                 |                                                 |                |         |         |                   |   |         |        
|                                                | Cash and cash equivalents                       |                | $       | 97,071  |                   |   | $       | 75,161  | 
|                                                | Cash and cash equivalents-restricted            |                |         | 501     |                   |   |         | 448     | 
|                                                | Investments-restricted                          |                |         | 2,826   |                   |   |         | 2,546   | 
|                                                | Accounts receivable, net                        |                |         | 3,414   |                   |   |         | 3,942   | 
|                                                | Related party receivables                       |                |         | 858     |                   |   |         | 388     | 
|                                                | Deferred income taxes                           |                |         | 2,685   |                   |   |         | 2,685   | 
|                                                | Other current assets                            |                |         | 10,285  |                   |   |         | 10,311  | 
|                                                |                                                 |                |         |         |                   |  
|Total Current Assets                            |                                                 |                | 117,640 |         |                   |   | 95,481  |        
|                                                |                                                 |                |         |         |                   |  
|Property and Equipment, net                     |                                                 |                | 315,009 |         |                   |   | 314,609 |        
|                                                |                                                 |                |         |         |                   |  
|Debt issuance and deferred financing costs, net |                                                 |                | 6,923   |         |                   |   | 7,447   |        
|Lessee incentive                                |                                                 |                |        |         |                   |   | 367     |        
|Deferred income taxes                           |                                                 |                | 39,827  |         |                   |   | 46,437  |        
|                                                |                                                 |                |         |         |                   |  
|Total Other Assets                              |                                                 |                | 46,750  |         |                   |   | 54,251  |        
|                                                |                                                 |                |         |         |                   |  
|TOTAL ASSETS                                    |                                                 | $              | 479,399 |         |                   | $ | 464,341 |        
|                                                |                                                 |                |         |         |                   |  
|                                               
|LIABILITIES AND MEMBERS EQUITY                
|Current Liabilities:                            |                                                 |                |         |         |                   |   |         |        
|                                                | Accounts payable-trade                          |                | $       | 3,066   |                   |   | $       | 4,429   | 
|                                                | Accounts payable-construction                   |                |         | 805     |                   |   |         | 805     | 
|                                                | Accrued expenses                                |                |         | 22,633  |                   |   |         | 22,759  | 
|                                                | Accrued payroll and related expenses            |                |         | 9,304   |                   |   |         | 10,779  | 
|                                                | Current portion of capital lease obligation     |                |         | 461     |                   |   |         | 450     | 
|                                                |                                                 |                |         |         |                   |  
|Total Current Liabilities                       |                                                 |                | 36,269  |         |                   |   | 39,222  |        
|                                                |                                                 |                |         |         |                   |  
|Long-Term Liabilities:                          |                                                 |                |         |         |                   |   |         |        
|                                                | Notes payable                                   |                |         | 215,000 |                   |   |         | 215,000 | 
|                                                | Accrued lessee incentive                        |                |         | 40      |                   |   |         | 568     | 
|                                                | Capital lease obligations, less current portion |                |         | 3,065   |                   |   |         | 3,298   | 
|                                                | Other                                           |                |         | 5,257   |                   |   |         | 5,257   | 
|                                                |                                                 |                |         |         |                   |  
|Total Long-Term Liabilities                     |                                                 |                | 223,362 |         |                   |   | 224,123 |        
|                                                |                                                 |                |         |         |                   |  
|Total Liabilities                               |                                                 |                | 259,631 |         |                   |   | 263,345 |        
|                                                |                                                 |                |         |         |                   |  
|Commitments and Contingencies                   |                                                 |                |         |         |                   |   |         |        
|Members Equity:                                |                                                 |                |         |         |                   |   |         |        
|Members Equity                                 |                                                 |                | 219,768 |         |                   |   | 200,996 |        
|                                                |                                                 |                |         |         |                   |  
|                                                | Total Members Equity                           |                |         | 219,768 |                   |   |         | 200,996 | 
|                                                |                                                 |                |         |         |                   |  
|Total Liabilities and Members Equity           |                                                 | $              | 479,399 |         |                   | $ | 464,341 |        
|                                                |                                                 |                |         |         |                   |  



2



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AMERICAN CASINO & ENTERTAINMENT PROPERTIES LLC





CONDENSED CONSOLIDATED STATEMENTS OF INCOME


|                           |                                     |                          |        |        |               |   |        |        |        |  
|-------------------------- | ----------------------------------- | ------------------------ | ------ | ------ | ------------- | - | ------ | ------ | ------ | -
|                           |                                     | Three Months             |        |        | Three Months  |  
|                           |                                     | Ended                    |        |        | Ended         |  
|                           |                                     | June 30, 2005            |        |        | June 30, 2004 |  
|                           |                                     |                          |        |        |               |  
|                           |                                     | (Unaudited)              |       
|                           |                                     | (In thousands)           |       
|Revenues:                  |                                     |                          |        |        |               |   |        |       
|                           | Casino                              |                          | $      | 43,791 |               |   | $      | 39,799 |       
|                           | Hotel                               |                          |        | 15,712 |               |   |        | 13,835 |       
|                           | Food and beverage                   |                          |        | 17,892 |               |   |        | 16,719 |       
|                           | Tower, retail and other             |                          |        | 9,219  |               |   |        | 8,604  |       
|                           |                                     |                          |        |        |               |  
|                           |                                     | Gross Revenues           |        |        | 86,614        |   |        |        | 78,957 |  
|                           | Less promotional allowances         |                          |        | 5,105  |               |   |        | 5,597  |       
|                           |                                     |                          |        |        |               |  
|                           |                                     | Net Revenues             |        |        | 81,509        |   |        |        | 73,360 |  
|                           |                                     |                          |        |        |               |  
|Costs and Expenses:        |                                     |                          |        |        |               |   |        |       
|                           | Casino                              |                          |        | 15,400 |               |   |        | 15,486 |       
|                           | Hotel                               |                          |        | 6,844  |               |   |        | 5,940  |       
|                           | Food and beverage                   |                          |        | 12,958 |               |   |        | 12,044 |       
|                           | Other operating expenses            |                          |        | 4,074  |               |   |        | 3,415  |       
|                           | Selling, general and administrative |                          |        | 18,998 |               |   |        | 19,147 |       
|                           | Depreciation and amortization       |                          |        | 5,730  |               |   |        | 6,431  |       
|                           | Gain on sale of assets              |                          |        | (2     | )             |   |        | (148   | )     
|                           |                                     |                          |        |        |               |  
|                           |                                     | Total Costs And Expenses |        |        | 64,002        |   |        |        | 62,315 |  
|                           |                                     |                          |        |        |               |  
|Income From Operations     |                                     |                          | 17,507 |        |               |   | 11,045 |       
|                           |                                     |                          |        |        |               |  
|Other Income (expense):    |                                     |                          |        |        |               |   |        |       
|                           | Interest income                     |                          |        | 356    |               |   |        | 691    |       
|                           | Interest expense                    |                          |        | (4,561 | )             |   |        | (5,376 | )     
|                           |                                     |                          |        |        |               |  
|                           |                                     | Total other expense, net |        |        | (4,205        | ) |        |        | (4,685 | )
|                           |                                     |                          |        |        |               |  
|Income Before Income Taxes |                                     |                          | 13,302 |        |               |   | 6,360  |       
|Provision for income taxes |                                     |                          | 4,621  |        |               |   | 1,390  |       
|                           |                                     |                          |        |        |               |  
|Net Income                 |                                     | $                        | 8,681  |        |               | $ | 4,970  |       
|                           |                                     |                          |        |        |               |  



3



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AMERICAN CASINO & ENTERTAINMENT PROPERTIES LLC





CONDENSED CONSOLIDATED STATEMENTS OF INCOME


|                           |                                     |                          |        |        |               |   |        |        |         |  
|-------------------------- | ----------------------------------- | ------------------------ | ------ | ------ | ------------- | - | ------ | ------ | ------- | -
|                           |                                     | Six Months               |        |        | Six Months    |  
|                           |                                     | Ended                    |        |        | Ended         |  
|                           |                                     | June 30, 2005            |        |        | June 30, 2004 |  
|                           |                                     |                          |        |        |               |  
|                           |                                     | (Unaudited)              |       
|                           |                                     | (In thousands)           |       
|Revenues:                  |                                     |                          |        |        |               |   |        |       
|                           | Casino                              |                          | $      | 91,520 |               |   | $      | 82,391 |        
|                           | Hotel                               |                          |        | 31,505 |               |   |        | 27,723 |        
|                           | Food and beverage                   |                          |        | 34,968 |               |   |        | 33,420 |        
|                           | Tower, retail and other             |                          |        | 17,425 |               |   |        | 16,580 |        
|                           |                                     |                          |        |        |               |  
|                           |                                     | Gross Revenues           |        |        | 175,418       |   |        |        | 160,114 |  
|                           | Less promotional allowances         |                          |        | 11,071 |               |   |        | 11,745 |        
|                           |                                     |                          |        |        |               |  
|                           |                                     | Net Revenues             |        |        | 164,347       |   |        |        | 148,369 |  
|                           |                                     |                          |        |        |               |  
|Costs and Expenses:        |                                     |                          |        |        |               |   |        |       
|                           | Casino                              |                          |        | 31,300 |               |   |        | 31,182 |        
|                           | Hotel                               |                          |        | 12,867 |               |   |        | 11,536 |        
|                           | Food and beverage                   |                          |        | 25,334 |               |   |        | 23,664 |        
|                           | Other operating expenses            |                          |        | 7,712  |               |   |        | 6,566  |        
|                           | Selling, general and administrative |                          |        | 38,685 |               |   |        | 37,327 |        
|                           | Depreciation and amortization       |                          |        | 11,173 |               |   |        | 12,314 |        
|                           | Gain on sale of assets              |                          |        | (21    | )             |   |        | (144   | )      
|                           |                                     |                          |        |        |               |  
|                           |                                     | Total Costs And Expenses |        |        | 127,050       |   |        |        | 122,445 |  
|                           |                                     |                          |        |        |               |  
|Income From Operations     |                                     |                          | 37,297 |        |               |   | 25,924 |       
|                           |                                     |                          |        |        |               |  
|Other Income (expense):    |                                     |                          |        |        |               |   |        |       
|                           | Interest income                     |                          |        | 523    |               |   |        | 955    |        
|                           | Interest expense                    |                          |        | (9,100 | )             |   |        | (9,747 | )      
|                           |                                     |                          |        |        |               |  
|                           |                                     | Total other expense, net |        |        | (8,577        | ) |        |        | (8,792  | )
|                           |                                     |                          |        |        |               |  
|Income Before Income Taxes |                                     |                          | 28,720 |        |               |   | 17,132 |       
|Provision for income taxes |                                     |                          | 9,948  |        |               |   | 5,944  |       
|                           |                                     |                          |        |        |               |  
|Net Income                 |                                     | $                        | 18,772 |        |               | $ | 11,188 |       
|                           |                                     |                          |        |        |               |  



4



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AMERICAN CASINO & ENTERTAINMENT PROPERTIES LLC





CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS


(Unaudited)


|                                                   |                                                                                       |                                              |                          |         |               |        |         |          |        |        |  
|-------------------------------------------------- | ------------------------------------------------------------------------------------- | -------------------------------------------- | ------------------------ | ------- | ------------- | ------ | ------- | -------- | ------ | ------ | -
|                                                   |                                                                                       | Six Months                                   |                          |         | Six Months    |       
|                                                   |                                                                                       | Ended                                        |                          |         | Ended         |       
|                                                   |                                                                                       | June 30, 2005                                |                          |         | June 30, 2004 |       
|                                                   |                                                                                       |                                              |                          |         |               |       
|                                                   |                                                                                       | (In thousands)                               |                         
|Cash Flows From Operating Activities:              |                                                                                       |                                              |                          |         |               |        |         |         
|                                                   | Net Income                                                                            |                                              | $                        | 18,772  |               |        | $       | 11,188   |       
|                                                   | Adjustments to reconcile net income to net cash provided by
    operating activities: |                                              |                          |         |               |        |         |          |       
|                                                   |                                                                                       | Depreciation and amortization                |                          |         | 11,173        |        |         |          | 12,314 |       
|                                                   |                                                                                       | Gain on sale or disposal of assets           |                          |         | (21           | )      |         |          | (144   | )     
|                                                   |                                                                                       | Provision for deferred income taxes          |                          |         | 6,610         |        |         |          | 2,830  |       
|                                                   |                                                                                       | Changes in operating assets and liabilities: |                          |         |               |        |         |          |        |       
|                                                   |                                                                                       |                                              | Restricted cash          |         |               | (53    | )       |          |        | (447   | )
|                                                   |                                                                                       |                                              | Accounts receivable, net |         |               | 528    |         |          |        | (498   | )
|                                                   |                                                                                       |                                              | Other assets             |         |               | 917    |         |          |        | (678   | )
|                                                   |                                                                                       |                                              | Accounts payable  trade |         |               | (1,363 | )       |          |        | (2,882 | )
|                                                   |                                                                                       |                                              | Accrued expenses         |         |               | (2,129 | )       |          |        | 2,455  |  
|                                                   |                                                                                       |                                              |                          |         |               |       
|Net Cash Provided By Operating Activities          |                                                                                       |                                              | 34,434                   |         |               |        | 24,138  |         
|                                                   |                                                                                       |                                              |                          |         |               |       
|Cash Flows From Investing Activities:              |                                                                                       |                                              |                          |         |               |        |         |         
|                                                   | (Increase) decrease in investments  restricted                                       |                                              |                          | (280    | )             |        |         | 52       |       
|                                                   | Sale of marketable securities                                                         |                                              |                          |        |               |        |         | 4,200    |       
|                                                   | Acquisition of property and equipment                                                 |                                              |                          | (11,590 | )             |        |         | (9,925   | )     
|                                                   | Related party receivables                                                             |                                              |                          | (470    | )             |        |         | 44       |       
|                                                   | Cash proceeds from sale of property and equipment                                     |                                              |                          | 38      |               |        |         | 398      |       
|                                                   |                                                                                       |                                              |                          |         |               |       
|Net Cash Used In Investing Activities              |                                                                                       |                                              | (12,302                  | )       |               |        | (5,231  | )       
|                                                   |                                                                                       |                                              |                          |         |               |       
|Cash Flows From Financing Activities:              |                                                                                       |                                              |                          |         |               |        |         |         
|                                                   | Debt issuance and deferred financing costs                                            |                                              |                          |        |               |        |         | (1,060   | )     
|                                                   | Proceeds from related note payable                                                    |                                              |                          |        |               |        |         | 215,000  |       
|                                                   | Member Contribution                                                                   |                                              |                          |        |               |        |         | 28,219   |       
|                                                   | Capital distribution                                                                  |                                              |                          |        |               |        |         | (187,816 | )     
|                                                   | Payments on related party notes payable                                               |                                              |                          |        |               |        |         | (101,252 | )     
|                                                   | Payments on capital lease obligation                                                  |                                              |                          | (222    | )             |        |         | (25      | )     
|                                                   |                                                                                       |                                              |                          |         |               |       
|Net Cash Used In Financing Activities              |                                                                                       |                                              | (222                     | )       |               |        | (46,934 | )       
|                                                   |                                                                                       |                                              |                          |         |               |       
|                                                   | Net increase (decrease) in cash and cash equivalents                                  |                                              |                          | 21,910  |               |        |         | (28,027  | )     
|                                                   | Cash and cash equivalents  beginning of period                                       |                                              |                          | 75,161  |               |        |         | 77,258   |       
|                                                   |                                                                                       |                                              |                          |         |               |       
|Cash and Cash Equivalents  end of period          |                                                                                       | $                                            | 97,071                   |         |               | $      | 49,231  |         
|                                                   |                                                                                       |                                              |                          |         |               |       
|Supplemental Disclosures of Cash Flow Information: |                                                                                       |                                              |                          |         |               |        |         |         
|                                                   | Cash paid during the period for interest                                              |                                              | $                        | 8,596   |               |        | $       | 2,342    |       
|                                                   |                                                                                       |                                              |                          |         |               |       
|                                                   | Cash paid during the period for income taxes                                          |                                              | $                        | 2,500   |               |        | $       |         |       
|                                                   |                                                                                       |                                              |                          |         |               |       
|Non-Cash Investing And Financing Activities        |                                                                                       |                                              |                          |         |               |        |         |         
|                                                   | Net assets contributed by parent                                                      |                                              | $                        |        |               |        | $       | 6,886    |       
|                                                   |                                                                                       |                                              |                          |         |               |       
|                                                   | Change in tax asset related to acquisition                                            |                                              | $                        |        |               |        | $       | 12,721   |       
|                                                   |                                                                                       |                                              |                          |         |               |       



5



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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





Principles of Consolidation




6



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AMERICAN CASINO & ENTERTAINMENT PROPERTIES LLC


NOTES TO CONDENSED CONSOLIDATED
FINANCIAL STATEMENTS  (Continued)


Note 3. Related Party Transactions








7



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##### 








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



Overview








|                          |  |         |        |  |           |  |       |        |  |  |             |  |  |  |    | 
|------------------------- |  | ------- | ------ |  | --------- |  | ----- | ------ |  |  | ----------- |  |  |  | -- | 
|                          |  | Casino  |        |  | Number of |  |       | Number |  |  | Number      | 
|                          |  | Square  |        |  | Hotel     |  |       | of     |  |  | of          | 
|                          |  | Footage |        |  | Rooms     |  |       | Slots  |  |  | Table Games | 
|                          |  |         |        |  |           |  |       |        |  |  |             | 
|Stratosphere              |  |         | 80,000 |  |           |  | 2,444 |        |  |  | 1,408       |  |  |  | 48 | 
|Arizona Charlies Decatur |  |         | 52,000 |  |           |  | 258   |        |  |  | 1,500       |  |  |  | 15 | 
|Arizona Charlies Boulder |  |         | 41,000 |  |           |  | 303   |        |  |  | 849         |  |  |  | 14 | 



8



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##### 



Results of Operations




| |                                                                                  
| | ---------------------------------------------------------------------------------
| | Three Months Ended June 30, 2005 Compared to Three
    Months Ended June 30, 2004

|                            |                                     |                          |      |      |      |   |      |          |      |  |      |       |      |  
|--------------------------- | ----------------------------------- | ------------------------ | ---- | ---- | ---- | - | ---- | -------- | ---- |  | ---- | ----- | ---- | -
|                            |                                     | Three Months Ended       |     
|                            |                                     | June 30,                 |     
|                            |                                     |                          |     
|                            |                                     | 2005                     |      |      | 2004 |   |      | % Change |     
|                            |                                     |                          |      |      |      |   |      |          |     
|                            |                                     | (In millions)            |     
|INCOME STATEMENT DATA:      |                                     |                          |      |      |      |   |      |          |      |  |      |      
|Revenues:                   |                                     |                          |      |      |      |   |      |          |      |  |      |      
|                            | Casino                              |                          | $    | 43.8 |      |   | $    | 39.8     |      |  |      | 10.1  | %   
|                            | Hotel                               |                          |      | 15.7 |      |   |      | 13.8     |      |  |      | 13.8  | %   
|                            | Food and beverage                   |                          |      | 17.9 |      |   |      | 16.7     |      |  |      | 7.2   | %   
|                            | Tower, retail and other             |                          |      | 9.2  |      |   |      | 8.6      |      |  |      | 7.0   | %   
|                            |                                     |                          |      |      |      |   |      |          |     
|                            |                                     | Gross revenues           |      |      | 86.6 |   |      |          | 78.9 |  |      |       | 9.8  | %
|Less promotional allowances |                                     |                          | 5.1  |      |      |   | 5.6  |          |      |  | (8.9 | )%   
|                            |                                     |                          |      |      |      |   |      |          |     
|                            |                                     | Net revenues             |      |      | 81.5 |   |      |          | 73.3 |  |      |       | 11.2 | %
|Costs and expenses:         |                                     |                          |      |      |      |   |      |          |      |  |      |      
|                            | Casino                              |                          |      | 15.4 |      |   |      | 15.5     |      |  |      | (0.6  | )%  
|                            | Hotel                               |                          |      | 6.8  |      |   |      | 5.9      |      |  |      | 15.3  | %   
|                            | Food and beverage                   |                          |      | 13.0 |      |   |      | 12.0     |      |  |      | 8.3   | %   
|Other operating expenses    |                                     |                          | 4.1  |      |      |   | 3.4  |          |      |  | 20.6 | %    
|                            | Selling, general and administrative |                          |      | 19.0 |      |   |      | 19.1     |      |  |      | (0.5  | )%  
|                            | Depreciation and amortization       |                          |      | 5.7  |      |   |      | 6.4      |      |  |      | (10.9 | )%  
|                            |                                     |                          |      |      |      |   |      |          |     
|                            |                                     | Total costs and expenses |      |      | 64.0 |   |      |          | 62.2 |  |      |       | 2.9  | %
|                            |                                     |                          |      |      |      |   |      |          |     
|Income from operations      |                                     | $                        | 17.5 |      |      | $ | 11.1 |          |      |  | 57.7 | %    
|                            |                                     |                          |      |      |      |   |      |          |     



| |               
| | --------------
| | Gross Revenues





| |                
| | ---------------
| | Casino Revenues





| |                    
| | -------------------
| | Non-Casino Revenues



9



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##### 









| |                   
| | ------------------
| | Operating Expenses









| |                 
| | ----------------
| | Interest Expense





| |                                                                              
| | -----------------------------------------------------------------------------
| | Six Months Ended June 30, 2005 Compared to Six Months
    Ended June 30, 2004

|                            |                                     |                          |      |      |       |   |      |          |       |  |      |      |      |  
|--------------------------- | ----------------------------------- | ------------------------ | ---- | ---- | ----- | - | ---- | -------- | ----- |  | ---- | ---- | ---- | -
|                            |                                     | Six Months Ended         |     
|                            |                                     | June 30,                 |     
|                            |                                     |                          |     
|                            |                                     | 2005                     |      |      | 2004  |   |      | % Change |      
|                            |                                     |                          |      |      |       |   |      |          |      
|INCOME STATEMENT DATA:      |                                     |                          |      |      |       |   |      |          |       |  |      |     
|Revenues:                   |                                     |                          |      |      |       |   |      |          |       |  |      |     
|                            | Casino                              |                          | $    | 91.5 |       |   | $    | 82.4     |       |  |      | 11.0 | %   
|                            | Hotel                               |                          |      | 31.5 |       |   |      | 27.7     |       |  |      | 13.7 | %   
|                            | Food and beverage                   |                          |      | 35.0 |       |   |      | 33.4     |       |  |      | 4.8  | %   
|                            | Tower, retail and other             |                          |      | 17.4 |       |   |      | 16.6     |       |  |      | 4.8  | %   
|                            |                                     |                          |      |      |       |   |      |          |      
|                            |                                     | Gross revenues           |      |      | 175.4 |   |      |          | 160.1 |  |      |      | 9.6  | %
|Less promotional allowances |                                     |                          | 11.1 |      |       |   | 11.7 |          |       |  | (5.1 | )%  
|                            |                                     |                          |      |      |       |   |      |          |      
|                            |                                     | Net revenues             |      |      | 164.3 |   |      |          | 148.4 |  |      |      | 10.7 | %
|Costs and expenses:         |                                     |                          |      |      |       |   |      |          |       |  |      |     
|                            | Casino                              |                          |      | 31.3 |       |   |      | 31.2     |       |  |      | 0.3  | %   
|                            | Hotel                               |                          |      | 12.9 |       |   |      | 11.5     |       |  |      | 12.2 | %   
|                            | Food and beverage                   |                          |      | 25.3 |       |   |      | 23.7     |       |  |      | 6.8  | %   
|                            | Other operating expenses            |                          |      | 7.7  |       |   |      | 6.6      |       |  |      | 16.7 | %   
|                            | Selling, general and administrative |                          |      | 38.6 |       |   |      | 37.2     |       |  |      | 3.8  | %   
|                            | Depreciation and amortization       |                          |      | 11.2 |       |   |      | 12.3     |       |  |      | (8.9 | )%  
|                            |                                     |                          |      |      |       |   |      |          |      
|                            |                                     | Total costs and expenses |      |      | 127.0 |   |      |          | 122.5 |  |      |      | 3.8  | %
|                            |                                     |                          |      |      |       |   |      |          |      
|Income from operations      |                                     | $                        | 37.3 |      |       | $ | 25.9 |          |       |  | 43.6 | %   
|                            |                                     |                          |      |      |       |   |      |          |      

10



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##### 





| |               
| | --------------
| | Gross Revenues





| |                
| | ---------------
| | Casino Revenues





| |                    
| | -------------------
| | Non-Casino Revenues





| |                   
| | ------------------
| | Operating Expenses









| |                 
| | ----------------
| | Interest Expense



Financial Condition


Liquidity and Capital Resources




11



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##### 











12



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##### 



Forward-Looking Statements






TRENDS AND OTHER UNCERTAINTIES




| |   |                                                                                                                                                                                                                                                                                                           
| | - | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | We are a holding company and will depend on the business of our
    subsidiaries to satisfy our obligations under the notes.                                                                                                                                                                              
|
| |  | We face substantial competition in the hotel and casino industry.                                                                                                                                                                                                                                         
|
| |  | The existence of legalized gambling in other jurisdictions may
    reduce the number of visitors to Las Vegas.                                                                                                                                                                                            
|
| |  | The gaming industry is highly regulated and the Nevada gaming
    authorities and state and municipal licensing authorities have
    significant control over our operations.                                                                                                                             
|
| |  | Potential changes in the tax or regulatory environment could
    increase our expenses and reduce our cash flow.                                                                                                                                                                                          
|
| |  | 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.                                                                   
|
| |  | We cannot predict the extent to which war, future security
    alerts or additional terrorist attacks may interfere with our
    operations. Our properties rely exclusively on the Las Vegas
    economic market, and changes adversely impacting that market
    could reduce our revenue and cash flow.
|
| |  | 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.                                                                  
|
| |  | We may incur higher costs or work slow-downs or stoppages due to
    union activities in Las Vegas.                                                                                                                                                                                                       
|
| |  | We are heavily dependent on the Stratosphere for a large
    percentage of our operating cash flow.                                                                                                                                                                                                       
|
| |  | Our reliance on slot machine revenues and the concentration of
    manufacturing of slot machines in certain companies could impose
    additional costs on us.                                                                                                                                           
|
| |  | We may be subject to the pension liabilities of our affiliates.                                                                                                                                                                                                                                           
|
| |  | Our insurance coverage may not be adequate to cover all possible
    losses that the Stratosphere, Arizona Charlies Decatur and
    Arizona Charlies Boulder could suffer.                                                                                                                              
|
| |  | Our substantial indebtedness could reduce our cash flow and
    prevent us from fulfilling our obligations under the
    7.85% senior secured notes due 2012.                                                                                                                                             
|
| |  | Despite current indebtedness levels, we and our subsidiaries may
    still be able to incur substantially more debt. This could
    further exacerbate the risks associated with our substantial
    leverage.                                                                                            

13



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##### 





| |   |                                                                                                                                                                                                                                                                                                                                                                                                                                     
| | - | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | The terms of the senior secured revolving credit facility and
    other agreements we may enter into may restrict our current and
    future operations, particularly our ability to respond to
    changes or to take some actions.                                                                                                                                                                                                
|
| |  | Our failure to comply with the covenants contained in the senior
    secured revolving credit facility, the indenture governing the
    7.85% senior secured notes due 2012 or any other agreement
    governing our first-priority lien debt, including our failure as
    a result of events beyond our control, could result in an event
    of default, which would materially and adversely affect our
    financial condition.
|
| |  | To service our indebtedness, we will require a significant
    amount of cash. Our ability to generate cash depends on many
    factors beyond our control.                                                                                                                                                                                                                                                                         
|
| |  | We may not have the ability to raise the funds necessary to
    finance the change of control offer required by the indenture.                                                                                                                                                                                                                                                                                                      






|        |                                                               
|------- | --------------------------------------------------------------
|Item 3. | Quantitative and Qualitative Disclosures About Market
    Risk












|        |                        
|------- | -----------------------
|Item 4. | Controls and Procedures





14



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##### 



SIGNATURES






| |                                                   
| | --------------------------------------------------
| | American Casino &
    Entertainment Properties LLC



| |     |                  
| | --- | -----------------
| | By: | /s/ Denise Barton

| |                                                
| | -----------------------------------------------
| |                                                
| | Denise Barton                                  
| | Senior Vice President, Chief Financial Officer,
| | Treasurer and Secretary                        
| | (Principal Financial and Accounting Officer)   



15



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##### 






PART II. OTHER INFORMATION







|        |         
|------- | --------
|Item 6. | Exhibits

|            |    |             |  |                                                                                                               
|----------- | -- | ----------- |  | --------------------------------------------------------------------------------------------------------------
|Exhibit No. |    | Description
|            |    |            
|            | 31 | .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.

II-1