##### Table of Contents



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 1934For the quarterly period ended
    June 30, 2006oro

TRANSITION REPORT PURSUANT TO SECTION 13 OR
    15 (d)
    OF THE SECURITIES EXCHANGE ACT OF 1934For the transition period
    from          to   Commission file
    number 333-110484
  Atlantic Coast
    Entertainment
 Holdings, Inc.
 (Exact name of registrant as
    specified in its charter)
  DELAWARE

54-2131349(State or other jurisdiction
    of
    incorporation or organization)

(I.R.S. Employer
    Identification No.)C/o Sands Hotel &
    Casino
    Indiana Avenue & Brighton Park
    Atlantic City, New Jersey

08401(Zip Code)(Address of registrants
    principal executive offices)   (609) 441-4633
 (Registrants telephone
    number, including area code)
   (Former name, former address and
    former fiscal year, if changed since last report)
  þ o
  Rule 12b-2
 o o þ
  Rule 12b-2 o þ
    Registrant

Class

Outstanding at August 5, 2006Atlantic Coast Entertainment
    Holdings, Inc.

Common stock, $
0.01 par value



6,916,914 shares




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##### 



TABLE OF
    CONTENTS
  
  PagePart I


FINANCIAL
    INFORMATIONItem 1.


Unaudited Condensed
    Consolidated Financial Statements


2Condensed
    Consolidated Balance Sheets as of June 30, 2006 (unaudited)
    and December 31, 2005


2Condensed
    Consolidated Statements of Income for the three months ended
    June 30, 2006 and June 30, 2005 (unaudited)


3Condensed
    Consolidated Statements of Income for the six months ended
    June 30, 2006 and June 30, 2005 (unaudited)


4Condensed
    Consolidated Statements of Cash Flows for the six months ended
    June 30, 2006 and June 30, 2005 (unaudited)


5Notes to Condensed
    Consolidated Financial Statements (unaudited)


6Item 2.


Managements
    Discussion and Analysis of Financial Condition and Results of
    Operations


9Item 3.


Quantitative and
    Qualitative Disclosures About Market Risk


15Item 4.


Controls and
    Procedures


15Part II


OTHER
    INFORMATIONItem 1.


Legal
    Proceedings


16Item 1A.


Risk
    Factors


16Item 6.


Exhibits


16EX-31.1: CERTIFICATIONEX-31.2: CERTIFICATIONEX-32.1: CERTIFICATIONEX-32.2: CERTIFICATION   1




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PART I.
    FINANCIAL INFORMATION  Item 1.
    UNAUDITED
    CONDENSED CONSOLIDATED FINANCIAL STATEMENTS  ATLANTIC
    COAST ENTERTAINMENT HOLDINGS, INC.CONDENSED CONSOLIDATED BALANCE SHEETS
  As of


As ofJune 30, 2006


December 31, 2005(Unaudited)(In thousands, except share data)ASSETSCurrent Assets:Cash and cash equivalents

$
16,910


$
13,711Accounts receivable, net


4,660



3,745Other current assets


8,904



10,170Total Current Assets


30,474



27,626Property and equipment, net


156,211



160,603Obligatory investments, net


13,289



12,929Deferred financing costs and other
    assets


3,002



3,510Total Other Assets


16,291



16,439TOTAL ASSETS

$
202,976


$
204,668LIABILITIES AND
    SHAREHOLDERS EQUITYCurrent Liabilities:Line of credit

$



$
1,500Accounts payable


3,601



3,746Related party payable


123



559Accrued expenses


8,730



7,940Accrued payroll and related
    expenses


7,732



6,798Note payable


683



2,048Current portion of capital lease
    obligation


305



310Total Current Liabilities


21,174



22,901Long-Term Liabilities:Long-term debt, less current
    portion


37,459



37,459Capital lease obligations, less
    current portion


89



251Other


6,591



5,965Total Long-Term Liabilities


44,139



43,675Total Liabilities


65,313



66,576Commitments and ContingenciesShareholders Equity:Common stock; $0.01 par
    value; 20,000,000 shares authorized; 6,916,914 shares
    outstanding


69



69Additional paid-in capital


187,304



187,304Warrants outstanding


9,735



9,735Accumulated deficit


(59,445
)


(59,016
)Total Shareholders Equity


137,663



138,092TOTAL LIABILITIES AND
    SHAREHOLDERS EQUITY

$
202,976


$
204,668    2




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ATLANTIC
    COAST ENTERTAINMENT HOLDINGS, INC.CONDENSED CONSOLIDATED STATEMENTS OF INCOME
  Three Months EndedJune 30, 2006


June 30, 2005(Unaudited)(In thousands, except share data)REVENUES:Casino

$
37,604


$
37,377Hotel


3,397



2,890Food and beverage


4,746



5,415Other income


600



886Gross Revenues


46,347



46,568Less promotional allowances


4,691



5,645Net Revenues


41,656



40,923COSTS AND EXPENSES:Casino


11,736



12,195Hotel


1,353



1,189Food and beverage


2,379



1,884Other operating expenses


170



250Selling, general and administrative


21,665



22,224Depreciation and amortization


3,802



3,881Provision for obligatory
    investments


265



(25
)Gain on sale of assets


(49
)


(1
)Total Costs and Expenses


41,321



41,597INCOME (LOSS) FROM OPERATIONS


335



(674
)OTHER INCOME (EXPENSE):Interest income


265



147Interest expense


(644
)


(3,333
)Total other expense, net


(379
)


(3,186
)LOSS BEFORE INCOME TAXES


(44
)


(3,860
)Provision for income taxes


254



251NET LOSS

$
(298
)

$
(4,111
)Basic/diluted loss per common share

$
(0.04
)

$
(0.85
)Weighted average common shares
    outstanding


6,916,914



4,831,853    3




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ATLANTIC
    COAST ENTERTAINMENT HOLDINGS, INC.CONDENSED CONSOLIDATED STATEMENTS OF INCOME
  Six Months EndedJune 30, 2006


June 30, 2005(Unaudited)(In thousands, except share data)REVENUES:Casino

$
74,954


$
74,718Hotel


6,285



5,184Food and beverage


9,151



10,281Other income


1,138



1,693Gross Revenues


91,528



91,876Less promotional allowances


9,099



10,988Net Revenues


82,429



80,888COSTS AND EXPENSES:Casino


23,094



24,022Hotel


2,581



1,892Food and beverage


4,456



3,450Other operating expenses


401



459Selling, general and administrative


42,777



45,088Depreciation and amortization


7,625



7,907Provision for obligatory
    investments


633



213Gain on sale of assets


(49
)


(5
)Total Costs and Expenses


81,518



83,026INCOME (LOSS) FROM OPERATIONS


911



(2,138
)OTHER INCOME (EXPENSE):Interest income


468



254Interest expense


(1,302
)


(4,526
)Debt restructuring costs






(23
)Total other expense, net


(834
)


(4,295
)INCOME (LOSS) BEFORE INCOME TAXES


77



(6,433
)Provision for income taxes


506



498NET LOSS

$
(429
)

$
(6,931
)Basic/diluted loss per common share

$
(0.06
)

$
(1.79
)Weighted average common shares
    outstanding


6,916,914



3,862,779    4




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ATLANTIC
    COAST ENTERTAINMENT HOLDINGS, INC.CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
  Six Months EndedJune 30, 2006


June 30, 2005(Unaudited)(In thousands)CASH FLOWS FROM OPERATING
    ACTIVITIES:Net loss

$
(429
)

$
(6,931
)Adjustments to reconcile net loss
    to net cash provided by operating activities:Depreciation and amortization


7,625



7,907Gain on sale of assets


(49
)


(5
)Provision for obligatory
    investments


633



213Changes in operating assets and
    liabilities:Accounts receivable, net


(915
)


729Other assets


1,585



297Accounts payable and accrued
    expenses


1,579



(149
)Other liabilities


651



1,047Net Cash Provided By Operating
    Activities


10,680



3,108CASH FLOWS FROM INVESTING
    ACTIVITIES:Acquisition of property and
    equipment


(3,129
)


(1,473
)Purchase of obligatory investments


(1,020
)


(1,094
)Proceeds from sale of obligatory
    investments


87



137Proceeds from sale of property and
    equipment


49



5Net Cash Used In Investing
    Activities


(4,013
)


(2,425
)CASH FLOWS FROM FINANCING
    ACTIVITIES:Proceeds from borrowing on line of
    credit


1,000



3,000Payments on line of credit


(2,500
)


Increase (decrease) in related
    party payables


(436
)


442Payments on note payable


(1,365
)


Payments on capital lease
    obligation


(167
)


(97
)Proceeds from exercised warrants






21Return of capital of GB Holdings,
    Inc.






(2,598
)Net Cash (Used In) Provided By
    Financing Activities


(3,468
)


768Net increase in cash and cash
    equivalents


3,199



1,451Cash and cash
    equivalents  beginning of period


13,711



12,756Cash And Cash
    Equivalents  end of period

$
16,910


$
14,207SUPPLEMENTAL DISCLOSURES OF CASH
    FLOW INFORMATION:Cash paid during the period for
    interest, net of amounts capitalized

$
61


$
219Cash paid during the period for
    income taxes

$
339


$
517NON-CASH INVESTING AND FINANCING
    ACTIVITIES:Interest capitalized

$



$
5Exercise of warrants

$



$
33,774Purchase of equipment with capital
    lease

$



$
145Conversion of notes payable and
    accrued interest to common stock

$



$
29,519    5




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##### Table of Contents



ATLANTIC
    COAST ENTERTAINMENT HOLDINGS, INC.NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)
  Note 1.
    The
    Company      Note 2.
    Basis of
    Presentation  Form 10-K No. 333-110484).
    Principles
    of Consolidation
    Recently
    Issued Accounting Pronouncements
  FIN 46R-6, FIN 46R-6
   6




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ATLANTIC
    COAST ENTERTAINMENT HOLDINGS, INC.
  NOTES TO
    CONDENSED CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
    Note 3.
    Related
    Party Transactions  out-of-pocket
           7




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ATLANTIC
    COAST ENTERTAINMENT HOLDINGS, INC.
  NOTES TO
    CONDENSED CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
   Note 4.
    Line of
    Credit    Note 5.
    Commitments
    and Contingencies      Legal
    Proceedings
      Note 6.
    Income
    Taxes   8




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##### Table of Contents



Item 2.
    Managements
    Discussion and Analysis of Financial Condition and Results of
    Operations  Form 10-K
  Overview
      Number ofCasino

Hotel

Number of

Number ofSquare Footage

Rooms

Slots

Table Games80,000


620



2,004



84    9




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Results
    of Operations
  Three
    Months Ended June 30, 2006 Compared to Three Months Ended
    June 30, 2005
  Three Months EndedJune 30,2006


2005


% Change(in millions)INCOME STATEMENT
    DATA:Revenues:Casino

$
37.6


$
37.4



0.5
%Hotel


3.4



2.9



17.2
%Food and beverage


4.7



5.4



(13.0
)%Other


0.6



0.9



(33.3
)%Gross revenues


46.3



46.6



(0.6
)%Less promotional allowances


4.7



5.7



(17.5
)%Net revenues


41.6



40.9



1.7
%Costs and expenses:Casino


11.7



12.2



(4.1
)%Hotel


1.4



1.2



16.7
%Food and beverage


2.4



1.9



26.3
%Other operating expenses


0.2



0.2



0.0
%Selling, general and administrative


21.6



22.2



(2.7
)%Depreciation and amortization


3.8



3.9



(2.6
)%Provision for obligatory
    investments


0.2



Total costs and expenses


41.3



41.6



(0.7
)%Income (loss) from operations

$
0.3


$
(0.7
)


142.9
%   Gross
    Revenues
    Casino
    Revenues
   10




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Non-Casino
    Revenues
        Promotional
    Allowances
    Operating
    Expenses
            Interest
    Expense
   11




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Six
    Months Ended June 30, 2006 Compared to Six Months Ended
    June 30, 2005
  Six Months EndedJune 30,2006


2005


% Change(in millions)INCOME STATEMENT
    DATA:Revenues:Casino

$
75.0


$
74.7



0.4
%Hotel


6.3



5.2



21.2
%Food and beverage


9.1



10.3



(11.7
)%Other


1.1



1.7



(35.3
)%Gross revenues


91.5



91.9



(0.4
)%Less promotional allowances


9.1



11.0



(17.3
)%Net revenues


82.4



80.9



1.9
%Costs and expenses:Casino


23.1



24.0



(3.7
)%Hotel


2.6



1.9



36.8
%Food and beverage


4.5



3.4



32.4
%Other operating expenses


0.4



0.5



(20.0
)%Selling, general and administrative


42.7



45.1



(5.3
)%Depreciation and amortization


7.6



7.9



(3.8
)%Provision for obligatory
    investments


0.6



0.2



200.0
%Total costs and expenses


81.5



83.0



(1.8
)%Income (loss) from operations

$
0.9


$
(2.1
)


142.9
%   Gross
    Revenues
    Casino
    Revenues
   12




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Non-Casino
    Revenues
        Promotional
    Allowances
    Operating
    Expenses
            Interest
    Expense
    Financial
    Condition
  Liquidity
    and Capital Resources
   13




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Recently
    Issued Accounting Pronouncements
  FIN 46R-6,
 14




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##### Table of Contents



FIN 46R-6
    Forward
    Looking Statements
  Form 10-K
  We warn you that forward-looking statements are only
    predictions. Actual events or results may differ as a result of
    risks that we face. Forward-looking statements speak only as of
    the date they were made and we undertake no obligation to update
    them.
  Item 3.
    Quantitative
    and Qualitative Disclosures About Market Risk        Item 4.
    Controls
    and Procedures  Rule 13a-15(e) 15d-15(e).
   15




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Part II. OTHER
    INFORMATION  Item 1.
    Legal
    Proceedings      Item 1A.
    Risk
    Factors  Form 10-K
  Item 6.
    Exhibits  Regulation S-K
 16




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SIGNATURES
    
  
       17




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##### Table of Contents



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
    2002.32
.2

Certification of Chief Financial
    Officer, pursuant to Section 906 of the Sarbanes-Oxley Act
    2002.