8-K/A 1 y23909e8vkza.htm AMENDMENT TO FORM 8-K 8-K/A
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UNITED STATES SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K/A
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Date of Report (Date of Earliest Event Reported): August 4, 2006 (May 19, 2006)
American Casino & Entertainment Properties LLC
(Exact name of registrant as specified in its charter)
         
Delaware   333-118149   20-0573058
 
(State or other   (Commission File Number)   (IRS Employer
jurisdiction of       Identification No.)
incorporation)        
         
2000 Las Vegas Boulevard South, Las Vegas, NV       89104
 
(Address of principal executive offices)       (Zip Code)
Registrant’s telephone number, including area code: (702) 383-5242
N/A
(Former name or former address, if changed since last report)
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
o Written communication pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
o Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
o Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
o Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))
 
 

 

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Item 9.01 Financial Statements and Exhibits
SIGNATURES

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Explanatory Note
On May 25, 2006, American Casino & Entertainment Properties LLC (which may be referred to as the “Company,” “we,” “our,” and “us”) filed a Current Report on Form 8-K under Item 2.01 to report the completion of our acquisition of the Flamingo Laughlin Hotel and Casino, in Laughlin, Nevada from Harrah’s Operating Company, Inc. In response to parts (a) and (b) of Item 9.01 of such Form 8-K, we stated that we would file the required financial information by amendment, as permitted by Item 9.01. This Form 8-K amendment is being filed to provide the financial statements of the Flamingo Laughlin, Inc. and pro forma financial data for the Company.
Section 9 — Financial Statements and Exhibits
Item 9.01 Financial Statements and Exhibits
  (a)   Financial statements of businesses acquired.
The following financial statements of Flamingo Laughlin, Inc. are filed on the pages listed below.
         
Report of Deloitte & Touche LLP, Independent Auditor
     F-1    
Flamingo Laughlin, Inc. (A wholly owned subsidiary of Harrah’s Entertainment, Inc.) Financial Statements as of December 31, 2005 (Successor) and for the periods from January 1, 2005 to June 13, 2005 (Predecessor) and June 14, 2005 to December 31, 2005 (Successor)
        
Balance Sheet as of December 31, 2005 (Successor)
     F-2    
Statements of Operations for the periods from January 1, 2005 to June 13, 2005 (Predecessor) and June 14, 2005 to December 31, 2005 (Successor)
     F-3    
Statement of Stockholder’s Equity for the periods from January 1, 2005 to June 13, 2005 (Predecessor) and June 14, 2005 to December 31, 2005 (Successor)
     F-4    
Statements of Cash Flows for the periods from January 1, 2005 to June 13, 2005 (Predecessor) and June 14, 2005 to December 31, 2005 (Successor)
     F-5    
Notes to Financial Statements
     F-6    
The following unaudited condensed financial statements as of and for the period ending March 31, 2006 have been prepared by management of the Company from the historical records of Flamingo Laughlin, Inc. and have not been reviewed by any independent auditor.
         
Condensed Balance Sheet as of March 31, 2006
     F-15  
Condensed Statement of Income for the three months ended March 31, 2006
     F-16  
Condensed Statement of Cash Flows for the three months ended March 31, 2006
     F-17  
Notes to Unaudited Condensed Financial Statements
     F-18  
  (b)   Unaudited pro forma financial information.
The following required unaudited pro forma financial data are filed on the pages listed below.
         
Unaudited Pro Forma Condensed Combined Financial Statements for American Casino & Entertainment Properties LLC and Subsidiaries
     F-20  
Pro Forma Condensed Combined Balance Sheets as of March 31, 2006
     F-21  
Pro Forma Condensed Combined Income Statements for the year ended December 31, 2005
     F-22  
Pro Forma Condensed Combined Income Statements for the three months ended March 31, 2006
     F-23  
Notes to Unaudited Pro Forma Condensed Combined Financial Statements
     F-24  
[remainder of page intentionally left blank; signature page follows]

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INDEPENDENT AUDITORS’ REPORT
To Flamingo Laughlin, Inc.:
We have audited the accompanying balance sheet of Flamingo Laughlin, Inc. (a wholly owned subsidiary of Harrah’s Entertainment, Inc.) (the “Company”) as of December 31, 2005 (Successor), and the related statements of operations, stockholder’s equity and of cash flows for the periods from January 1, 2005 to June 13, 2005 (Predecessor) and June 14, 2005 to December 31, 2005 (Successor). These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on these financial statements based on our audit.
We conducted our audit in accordance with generally accepted auditing standards as established by the Auditing Standards Board (United States) and in accordance with the auditing standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. Our audit included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion. An audit also includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion.
In our opinion, such financial statements present fairly, in all material respects, the financial position of Flamingo Laughlin, Inc. as of December 31, 2005 (Successor), and the results of its operations and its cash flows for the periods from January 1, 2005 to June 13, 2005 (Predecessor) and June 14, 2005 to December 31, 2005 (Successor) in conformity with accounting principles generally accepted in the United States of America.
The accompanying financial statements have been prepared from the separate records maintained by the Company and may not necessarily be indicative of the conditions that would have existed or the results of operations if the Company had been operated as an unaffiliated company. Portions of certain expenses represent charges and allocations made from home-office items applicable to Harrah’s Entertainment, Inc. (Successor) or Caesar’s Entertainment, Inc. (Predecessor) as a whole or transactions with other wholly owned subsidiaries of Harrah’s Entertainment, Inc. (Successor) or Caesar’s Entertainment, Inc. (Predecessor), most of which are transacted at amounts that approximate “cost” rather than market rates for similar transactions with companies outside the controlled group.
         
     
 
     /s/ Deloitte & Touche LLP   
 
Las Vegas, Nevada
March 31, 2006 (August 3, 2006 as to the effects of the purchase accounting adjustments and closing date discussed in Note 1.)

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FLAMINGO LAUGH LIN, INC.
(A Wholly Owned Subsidiary of Harrah’s Entertainment, Inc.)
BALANCE SHEET
         
    As of
DECEMBER 31, 2005 (SUCCESSOR)		  
    (In thousands, except share amounts)  
ASSETS
        
 
        
CURRENT ASSETS:
        
Cash and equivalents
   $ 219  
Accounts receivable—net
     1,001  
Prepaid expenses and other current assets
     2,429  
Deferred income taxes
     2,662  
Assets held for sale
     123,395  
 
      
 
        
Total current assets
     129,706  
 
        
DUE FROM AFFILIATED COMPANIES
     24,347  
 
        
DEFERRED INCOME TAXES
     19,100  
 
      
 
        
TOTAL
   $ 173,153  
 
      
 
        
LIABILITIES AND STOCKHOLDER’S EQUITY
        
 
        
CURRENT LIABILITIES:
        
Accounts payable
   $ 3,502  
Income taxes payable
     20,511  
Accrued expenses
     4,956  
Liabilities related to assets held for sale
     5,263  
 
      
 
        
Total current liabilities
     34,232  
 
      
 
        
COMMITMENTS AND CONTINGENCIES
        
 
        
STOCKHOLDER’S EQUITY:
        
Common stock, $1.00 par value—25,000 shares authorized; 1,000 shares issued and outstanding
     1  
Additional paid-in capital
     136,115  
Retained earnings
     2,805  
 
      
 
        
Total stockholder’s equity
     138,921  
 
      
 
        
TOTAL
   $ 173,153  
 
      
See notes to financial statements.

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FLAMINGO LAUGHLIN, INC.
(A Wholly Owned Subsidiary of Harrah’s Entertainment, Inc.)
STATEMENTS OF OPERATIONS
FOR THE PERIODS FROM JANUARY 1, 2005 TO JUNE 13, 2005 (PREDECESSOR) AND
JUNE 14, 2005 TO DECEMBER 31, 2005 (SUCCESSOR)
                 
    January 1     June 14 to  
    to June 13,     December 31,  
    2005     2005  
    (Predecessor)     (Successor)  
    (In thousands)  
REVENUES:
                
Casino
   $ 34,305     $ 40,036  
Rooms
     8,877       9,908  
Food and beverage
     10,209       11,517  
Other revenue
     3,223       3,463  
 
            
Gross revenues
     56,614       64,924  
 
                
Less promotional allowances
     6,697       7,822  
 
            
 
                
Net revenues
     49,917       57,102  
 
            
 
                
EXPENSES:
                
Casino
     17,844       22,264  
Rooms
     4,051       4,614  
Food and beverage
     6,637       8,068  
Other expense
     13,135       16,205  
Management fees
     1,520       1,736  
Depreciation and amortization
     1,177       —  
 
            
 
                
Total expenses
     44,364       52,887  
 
            
 
                
INCOME BEFORE PROVISION FOR INCOME TAXES
     5,553       4,215  
 
                
PROVISION FOR INCOME TAXES
     1,900       1,410  
 
            
 
                
NET INCOME
   $ 3,653     $ 2,805  
 
            
See notes to financial statements.

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FLAMINGO LAUGHLIN, INC.
(A Wholly Owned Subsidiary of Harrah’s Entertainment, Inc.)
STATEMENT OF STOCKHOLDER’S EQUITY
FOR THE PERIODS FROM JANUARY 1, 2005 TO JUNE 13, 2005 (PREDECESSOR) AND
JUNE 14, 2005 TO DECEMBER 31, 2005 (SUCCESSOR)
(In thousands)
                                 
            Additional Paid-   Retained    
    Common Stock   In Capital   Earnings   Total
January 1, 2005 (Predecessor)
   $ 1     $ 26,999     $ 56,973     $ 83,973  
 
                        
Net Income
     —       —       3,653       3,653  
 
                            
 
                              
June 13, 2005 (Predecessor)
     1       26,999       60,626       87,626  
 
                              
Purchase Accounting Effects
     —       109,116       (60,626 )     48,490  
 
                            
 
                              
June 14, 2005 (Successor)
     1       136,115       —       136,116  
 
                              
Net Income
     —       —       2,805       2,805  
 
                            
 
                              
December 31, 2005 (Successor)
   $ 1     $ 136,115     $ 2,805     $ 138,921  
 
                            
See notes to financial statements.

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FLAMINGO LAUGHLIN, INC.
(A Wholly Owned Subsidiary of Harrah’s Entertainment, Inc.)
STATEMENTS OF CASH FLOWS
FOR THE PERIODS FROM JANUARY 1, 2005 TO JUNE 13, 2005 (PREDECESSOR) AND
JUNE 14, 2005 TO DECEMBER 31, 2005 (SUCCESSOR)
                 
    January 1     June 14 to  
    to June 13,     December 31,  
    2005     2005  
    (Predecessor)     (Successor)  
    (In thousands)  
CASH FLOWS FROM OPERATING ACTIVITIES:
                
Net income
   $ 3,653     $ 2,805  
Adjustments to reconcile net income to net cash provided by operating activities:
                
Provision for doubtful accounts
     (26 )     (6 )
Depreciation and amortization
     1,177       —  
Change in operating assets and liabilities:
                
Accounts receivable
     (134 )     (298 )
Inventories, prepaid expenses, and other current assets
     963       (706 )
Accounts payable and book overdrafts and accrued expenses
     (2,270 )     3,683  
Other assets
     128       (118 )
Deferred income taxes
     835       1,871  
Income taxes payable
     1,064       (460 )
 
            
 
                
Net cash provided by operating activities
     5,390       6,771  
 
                
CASH FLOWS USED IN INVESTING ACTIVITIES—Additions to property and equipment
     (305 )     (1,769 )
 
                
CASH FLOWS USED IN FINANCING ACTIVITIES—Change in due from affiliated companies
     (9,737 )     (11,464 )
 
            
 
                
NET DECREASE IN CASH AND EQUIVALENTS
     (4,652 )     (6,462 )
 
                
CASH AND EQUIVALENTS—Beginning of period
     11,333       6,681  
 
            
 
                
CASH AND EQUIVALENTS—End of period
   $ 6,681     $ 219  
 
            
See notes to financial statements.

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FLAMINGO LAUGHLIN, INC.
(A Wholly Owned Subsidiary of Harrah’s Entertainment, Inc.)
NOTES TO FINANCIAL STATEMENTS
1.   BASIS OF PRESENTATION AND OPERATIONS
The accompanying financial statements present the accounts of Flamingo Laughlin, Inc. (the “Property”). The Property was a division of Caesars Entertainment, Inc. (“Caesars”), whose ultimate parent became Harrah’s Entertainment, Inc. (“Harrah’s”) on June 13, 2005. The accompanying financial statements have been prepared from the separate records maintained by the Property and may not necessarily be indicative of the conditions that would have existed or the results of operations if the Property had been operated as an unaffiliated business. The accompanying financial statements have been adjusted to reflect the estimated purchase accounting adjustments resulting from Harrah’s acquisition of Caesars pursuant to Statement of Financial Accounting Standards (“SFAS”) No. 141, Business Combinations. The impact of the adjustments was to increase goodwill and equity by $48,490,000. Goodwill is included in assets held for sale (see Note 3). The purchase accounting adjustments were estimated since the property was sold prior to Harrah’s completion of the purchase accounting analysis. Harrah’s estimated the purchase accounting adjustments primarily based on consideration of the sale transaction with AREP Laughlin Corporation (“AREP”).
Harrah’s owned and operated the Property, which is located on 18 acres on the west bank of the Colorado River, south of Las Vegas. This property offers 1,907 guest rooms and suites, approximately 57,000 square feet of gaming space, seven restaurants, a 300-seat showroom, 35,000 square feet of flexible meeting and convention space, including 20,000 square feet of Flamingo Ballroom, a swimming pool, and lighted tennis courts.
On November 28, 2005, Harrah’s entered into an agreement to sell the Property to AREP (see Note 3). Under the terms of the agreement, AREP purchased most of the assets of the Property and assumed certain current liabilities. The transaction closed on May 18, 2006.
2.   SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Substantial portions of assets and liabilities are reported as assets held for sale and liabilities related to assets held for sale as of December 31, 2005. See Note 3 for further discussion of accounting and reporting considerations related to assets held for sale and liabilities related to assets held for sale.
Cash and Equivalents—The Property considers all highly liquid investments with maturities of three months or less, at date of purchase, to be cash equivalents. The carrying amount of cash and equivalents approximates its fair value.
Accounts Receivable—Accounts receivable from customers are stated net of an allowance for doubtful accounts as of December 31, 2005. The Property reserves an estimated amount for receivables that may not be collected. Methodologies for estimating the allowance for doubtful accounts range from specific reserves to various percentages applied to aged receivables. Historical collection rates are considered, as are customer relationships, in determining specific reserves.
Concentrations of Credit Risk—Financial instruments that potentially subject the Property to concentration of credit risk consist principally of accounts receivable.

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The Property extends credit to certain customers following an evaluation of the creditworthiness of the individual or entity. The Property maintains an allowance for doubtful accounts to reduce the accounts receivable to their estimated collectible amount. As of December 31, 2005, management believes that there are no concentrations of credit risk for which an allowance has not been established and recorded. The collectibility of foreign and domestic accounts receivable could be affected by future economic or other significant events in the United States of America or in the countries in which such foreign customers reside.
Inventories—Inventories consist primarily of food and beverage items and operating supplies and are stated at the lower of cost or market.
Property and Equipment—Property and equipment are stated at cost. Costs of improvements are capitalized, while normal repairs and maintenance are charged to expense as incurred. Upon the sale or retirement of property and equipment, the cost and related accumulated depreciation are removed from the respective accounts, and the resulting gain or loss, if any, is included in the statement of operations.
Depreciation is provided on a straight-line basis over the estimated useful life of the assets. Leasehold improvements are amortized over the shorter of the asset life or lease term. The service lives of assets are generally 30 to 40 years for buildings and 3 to 10 years for furniture and equipment.
The Property reviews the carrying value of land, buildings, and equipment for impairment whenever events and circumstances indicate that the carrying value of an asset may not be recoverable from the estimated future cash flows expected to result from its use and eventual disposition. If undiscounted expected future cash flows were less than the carrying value, an impairment loss would be recognized equal to an amount by which the carrying value exceeds the fair value of the asset. The factors considered by management in performing this assessment include current operating results, trends, and prospects, as well as the effect of obsolescence, demand, competition, and other economic factors.
Book Overdrafts—Book overdrafts are included on the balance sheet in accounts payable and totaled $1,958,000 as of December 31, 2005.
Self-Insurance—The Property is self-insured for various levels of general liability, workers’ compensation, and nonunion-employee dental and life insurance coverage. Self-insurance reserves are estimated based on the Property’s claims experience. At December 31, 2005, the Property’s reserves for general liability and workers’ compensation are included in due to/from affiliates since the Property began reimbursing Harrah’s in 2005.
Revenue Recognition—Casino revenue is derived primarily from patrons wagering on slot machines, table games, and other gaming activities. Table games generally include Blackjack or Twenty-One, Craps, Baccarat, and Roulette. Other gaming activities include Keno and Race and Sports. Casino revenue is defined as the win from gaming activities, computed as the difference between gaming wins and losses, not the total amounts wagered. Casino revenue is recognized at the end of each gaming day.
Room revenue is derived from rooms and suites rented to guests. Room revenue is recognized at the time the room is provided to the guest.
Food and beverage revenues are derived from food and beverage sales in the food outlets of the hotel, including restaurants, room service, and banquets. Food and beverage revenue is recognized at the time the food and/or beverage is provided to the guest.

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Other revenue includes retail sales, entertainment sales, telephone, and other miscellaneous income at the hotel and is recognized when the service is provided to the guests.
The revenue components presented in the statements of operations include the retail value of rooms, food and beverage, and other goods or services provided to customers on a complimentary basis. Complimentary revenues which have been included in the accompanying statements of operations are as follows (in thousands):
                 
    January 1     June 14 to  
    to June 13,     December 31,  
    2005     2005  
    (Predecessor)     (Successor)  
Rooms
   $ 2,026     $ 2,517  
Food and beverage
     4,078       4,675  
Other revenue
     593       630  
 
            
 
                
Total complimentary revenues
   $ 6,697     $ 7,822  
 
            
The estimated costs of providing these complimentaries are classified in the statements of operations as an expense of the department issuing the complimentary, primarily casino, and are as follows (in thousands):
                 
    January 1     June 14 to  
    to June 13,     December 31,  
    2005     2005  
    (Predecessor)     (Successor)  
Rooms
   $ 1,199     $ 1,564  
Food and beverage
     3,646       4,529  
Other expense
     533       639  
 
            
 
                
Total complimentary costs
   $ 5,378     $ 6,732  
 
            
Income Taxes—The Property is included in the consolidated federal income tax return of Harrah’s. The Property computes its income tax expense based on its separate stand-alone operating results using the asset and liability method. Taxes calculated as currently owed are payable to Harrah’s and are due upon demand. Deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of assets and liabilities and their respective tax bases. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. Valuation allowances are recorded as deemed necessary based upon the uncertainty surrounding the realization of deferred tax assets.
Use of Estimates—The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenue and expenses during the reporting period. Actual results could differ from those estimates.

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    Recently Issued Accounting Standards—In March 2005, the Financial Accounting Standards Board (“FASB”) issued FASB Interpretation No. (“FIN”) 47, Accounting for Conditional Asset Retirement Obligations—an interpretation of FASB Statement No. 143, to address diverse accounting practices with respect to the timing of liability recognition for legal obligations associated with the retirement of a tangible long-lived asset when the timing or method of settlement of the obligation are conditional on a future event. FIN 47 was effective no later than December 31, 2005, for calendar-year companies and had no effect on our financial statements.
 
    In May 2005, the FASB issued Statement of Financial Accounting Standards (“SFAS”) No. 154, Accounting Changes and Error Corrections—a replacement of APB Opinion No. 20 and FASB Statement No. 3, which changes the requirements for the accounting and reporting of a change in accounting principle. SFAS No. 154 applies to all voluntary changes in accounting principle, as well as to changes required by an accounting pronouncement if the pronouncement does not include specific transition provisions. This statement requires retrospective application to prior periods’ financial statements of changes in accounting principle. SFAS No. 154 is effective for accounting changes and corrections of errors made in fiscal years beginning after December 15, 2005.
 
    Reclassification—The retail value of rooms, food and beverages, and other goods or services provided to customers on a complimentary basis has been reclassified to gross revenue in the accompanying Statement of Operations. The total amount is then shown as a deduction for “Promotional Allowances” to arrive at Net Revenues.
 
3.   ASSETS AND LIABILITIES HELD FOR SALE
 
    On November 28, 2005, Harrah’s entered into a definitive agreement to sell most of the net assets of the Property and certain related liabilities of the Property to AREP. The assets and liabilities are classified as assets held for sale and liabilities related to assets held for sale, respectively, in the accompanying balance sheet as of December 31, 2005. In accordance with accounting principles generally accepted in the United States of America, the assets held for sale were not depreciated after June 13, 2005, due to Harrah’s designation of the Property as assets held for sale in connection with Harrah’s purchase of Caesars.
 
    Assets and liabilities related to assets held for sale at December 31, 2005, are as follows (in thousands):
         
Cash and equivalents
   $ 13,183  
Accounts receivable
     13  
Inventories
     789  
Prepaid expenses and other current assets
     64  
Property and equipment
     60,712  
Other assets
     144  
Goodwill
     48,490  
 
      
 
        
Assets held for sale
   $ 123,395  
 
      
 
        
Accounts payable
   $ 12  
Accrued expenses
     5,183  
Other liabilities
     68  
 
      
 
        
Liabilities related to assets held for sale
   $ 5,263  
 
      

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4.   ACCOUNTS RECEIVABLE
 
    Accounts receivable as of December 31, 2005, are as follows (in thousands):
         
Casino
   $ 630  
Hotel and other
     608  
 
      
 
        
Total
     1,238  
 
        
Less allowance for doubtful amounts
     (237 )
 
      
 
        
Total
   $ 1,001  
 
      
5.   PROPERTY AND EQUIPMENT
 
    All property and equipment as of December 31, 2005, is classified as assets held for sale (see Note 3).
 
6.   ACCRUED EXPENSES
 
    Accrued expenses as of December 31, 2005, are as follows (in thousands):
         
Compensation and benefits
   $ 2,285  
Gaming and other taxes
     872  
Loyalty club programs
     216  
Other
     1,583  
 
      
 
        
Total
   $ 4,956  
 
      
    Liabilities related to assets held for sale are not reflected in the amounts shown above (see Note 3).
 
7.   INCOME TAXES
 
    The Property is included in the consolidated federal income tax return of Harrah’s. Accordingly, the current federal tax liability or benefit resulting from the taxable income or loss generated by the Property is recognized by Harrah’s in its consolidated federal tax return. The income taxes payable balance consists of the Property’s cumulative taxable income from 1999 (the first year in which the Property operated after its tax-free spinoff from Hilton Hotels Corporation (“Hilton”)) through the applicable current year multiplied by the federal statutory rate of 35%.

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    The income tax provision for the periods from January 1, 2005 to June 13, 2005 (Predecessor) and June 14, 2005 to December 31, 2005 (Successor), are as follows (in thousands):
                 
    January 1     June 14 to  
    to June 13,     December 31,  
    2005     2005  
    (Predecessor)     (Successor)  
Current federal expense (benefit)
   $ 1,065     $ (461 )
Deferred federal expense
     835       1,871  
 
            
 
                
Total
   $ 1,900     $ 1,410  
 
            
A reconciliation of the Property’s income tax provision as compared to the provision calculated by applying the federal statutory rate to the income before income taxes for the periods from January 1, 2005 to June 13, 2005 (Predecessor) and June 14, 2005 to December 31, 2005 (Successor), are as follows:
                 
    January 1   June 14 to
    to June 13,   December 31,
    2005   2005
    (Predecessor)   (Successor)
Statutory tax rate
     35.0 %     35.0 %
General business credits
     (1.1 )     (1.5 )
Officer’s life insurance
     0.3       0.0  
Other
     0.0       0.2  
 
                
 
                
Effective tax rate
     34.2 %     33.7 %
 
                

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The income tax effects of temporary differences between financial and income tax reporting that give rise to deferred tax assets and liabilities as of December 31, 2005, are as follows (in thousands):
         
Deferred tax assets:
        
Allowance for doubtful accounts
   $ 83  
Insurance and other reserves
     1,897  
Benefit plans
     811  
Fixed assets
     19,100  
Other
     449  
 
      
 
        
Total deferred tax assets
     22,340  
 
Deferred tax liabilities—other
     (578 )
 
      
 
        
Net deferred tax assets
   $ 21,762  
 
      
8.   RELATED-PARTY TRANSACTIONS
 
    The Property has ongoing related-party transactions with Harrah’s and certain other wholly owned subsidiaries of Harrah’s and previously with Caesars Entertainment, Inc., most of which are transacted at amounts which approximate “cost” rather than market rates for similar transactions with companies outside the controlled group. A description of the primary related-party transactions that have been accounted for in the books and records of the Property, is presented below. Company, as used herein, refers to Caesar’s Entertainment, Inc. for the period January 1, 2005 to June 13, 2005 (Predecessor) and Harrah’s for the period June 14, 2005 to December 31, 2005 (Successor).
 
    The Property leases gaming devices from a wholly owned subsidiary of the company. Lease expense for such gaming devices pursuant to these lease agreements totaled approximately $707,000 and $936,000 for the periods January 1, 2005 through June 13, 2005 and June 14, 2005 through December 31, 2005, respectively.
 
    Employees of the Property are eligible to participate in a 401(k) savings plan sponsored by the company (the “Plan”) after meeting certain age and length-of-employment requirements. The company remits all payroll deductions, employer matching, and administrative expenses to the trustee of the Plan. These charges totaled approximately $285,000 and $279,000 for the periods January 1, 2005 through June 13, 2005 and June 14, 2005 through December 31, 2005, respectively.
 
    Certain executive-level employees of the Property are eligible to participate in a deferred compensation plan sponsored by the company. The company remits all payroll deductions, employer matching, and administrative expenses to the trustee of the deferred compensation plan. These charges totaled approximately $35,000 and $16,000 for the periods January 1, 2005 through June 13, 2005 and June 14, 2005 through December 31, 2005, respectively.
 
    Medical benefits for employees of the Property as well certain other employee-related benefits, such as a wellness center, employee assistance program, and health fairs, are provided and funded by the company. Charges for these items totaled approximately $4,275,000 and $5,186,000 for the periods January 1, 2005 through June 13, 2005 and June 14, 2005 through December 31, 2005, respectively.

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    The Property is included with the company and its other domestic subsidiaries for general liability, workers’ compensation, theft, errors and omissions, and other insurance purposes. Costs for the self-insured general liability and workers’ compensation programs are allocated to the company’s subsidiaries based upon actual claims data and costs for the other coverages are allocated to the company’s subsidiaries based on relative premium by subsidiary. Insurance costs allocated to the Property totaled approximately $426,000 and $434,000 for the periods January 1, 2005 through June 13, 2005 and June 14, 2005 through December 31, 2005, respectively.
 
    The company provides marketing and advertising services for the Property. Included in these costs are the costs of direct marketing efforts to certain patrons. Marketing and advertising costs allocated to the Property totaled approximately $101,523 and $112,580 for the periods January 1, 2005 through June 13, 2005 and June 14, 2005 through December 31, 2005, respectively.
 
    The company and other wholly owned subsidiaries of the company provide various support services for the Property. Included in these services are accounts payable, internal audit, call center, collections, human resources, payroll, public relations, purchasing, centralized information technology, risk management, legal, race and sports book administration, and other administrative functions. Support services costs allocated to the Property totaled approximately $359,000 and $3,067,000 for the periods January 1, 2005 through June 13, 2005 and June 14, 2005 through December 31, 2005, respectively.
 
    The company and other wholly owned subsidiaries of the company provide various support services and products for sale in the Property’s retail outlets. The costs for such products and support services allocated to the Property totaled approximately $612,000 and $684,000 for the periods January 1, 2005 through June 13, 2005 and June 14, 2005 through December 31, 2005, respectively.
 
    The company receives a management fee for services provided to the Property that is based upon certain operating results. The fee charged totaled approximately $1,520,000 and $1,736,000 for the periods January 1, 2005 through June 13, 2005 and June 14, 2005 through December 31, 2005, respectively.
 
    The charges discussed above are offset by cash remittances by the property to Harrah’s. The net amounts due from Harrah’s and certain other wholly owned subsidiaries of Harrah’s as a result of related-party transactions totaled $24,347,000 as of December 31, 2005. Such amounts are noninterest-bearing and due upon demand.
 
9.   COMMITMENTS AND CONTINGENCIES
 
    Litigation—The Property is involved in various legal proceedings relating to its business. The Property believes that all the actions brought against it are without merit and will continue to vigorously defend against them. While any proceeding or litigation has an element of uncertainty, the Property believes that the final outcome of these matters is not likely to have a material adverse effect upon its results of operations or financial position.
******

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The following unaudited condensed financial statements as of and for the period ending March 31, 2006 have been prepared by management of the Company from the historical records of Flamingo Laughlin, Inc. and have not been reviewed by any independent auditor.

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FLAMINGO LAUGHLIN, INC.
(A Wholly Owned Subsidiary of Harrah’s Entertainment, Inc.)
UNAUDITED CONDENSED BALANCE SHEET
         
    As of  
    March 31,2006  
    (In thousands)  
Assets
        
Current Assets:
        
Cash and cash equivalents
   $ 11  
Accounts receivable, net
     622  
Deferred income taxes
     2,662  
Assets held for sale
     118,379  
Other current assets
     2,245  
 
      
Total Current Assets
     123,919  
 
      
 
        
Property and equipment, net
     —  
 
      
 
        
Related party receivables
     32,868  
Deferred tax asset - non-current
     19,100  
 
      
Total Other Assets
     51,968  
 
      
Total Assets
   $ 175,887  
 
      
 
        
Liabilities and Stockholder’s Equity
        
Current Liabilities:
        
Accounts payable
   $ 1,949  
Accrued expenses
     1,615  
Income taxes payable
     21,954  
Liabilities related to assets held for sale
     8,768  
 
      
Total Current Liabilities
     34,286  
 
      
 
        
Long-Term Liabilities:
        
Total Long-Term Liabilities
     —  
 
      
 
        
Total Liabilities
     34,286  
 
      
 
        
Commitments and Contingencies
        
 
        
Stockholder’s equity
        
Common stock, $1 par value-25,000 shares authorized; 1,000 shares issued and outstanding
     1  
Additional paid-in-capital
     136,115  
Retained earnings
     5,485  
 
      
Total Stockholder’s Equity
     141,601  
 
      
Total Liabilities and Stockholder’s Equity
   $ 175,887  
 
      
See notes to unaudited condensed financial statements.

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FLAMINGO LAUGHLIN, INC.
(A Wholly Owned Subsidiary of Harrah’s Entertainment, Inc.)
UNAUDITED CONDENSED STATEMENT OF INCOME
         
    Three Months Ended  
    March 31, 2006  
    (In thousands)  
Revenues:
        
Casino
   $ 19,882  
Hotel
     4,695  
Food and beverage
     5,646  
Other
     1,352  
 
      
Gross Revenues
     31,575  
Less promotional allowances
     3,759  
 
      
Net Revenues
     27,816  
 
      
 
        
Costs and Expenses:
        
Casino
     6,697  
Hotel
     2,441  
Food and beverage
     3,768  
Other operating expenses
     884  
Selling, general and administrative
     9,903  
 
      
Total Costs and Expenses
     23,693  
 
      
 
        
Income From Operations
     4,123  
 
      
 
        
Other Income (Expense):
        
Interest income
     —  
Interest expense
     —  
 
      
Total Other Expense, net
     —  
 
      
 
        
Income Before Income Taxes
     4,123  
 
        
Provision for income taxes
     1,443  
 
      
 
        
Net Income
   $ 2,680  
 
      
See notes to unaudited condensed financial statements.

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FLAMINGO LAUGHLIN, INC.
(A Wholly Owned Subsidiary of Harrah’s Entertainment, Inc.)
UNAUDITED CONDENSED STATEMENT OF CASH FLOWS
         
    Three Months Ended  
    March 31, 2006  
    (In thousands)  
Cash Flows From Operating Activities:
        
Net income
   $ 2,680  
Adjustments to reconcile net income to net cash provided by operating activities:
        
Changes in operating assets and liabilities:
        
Restricted cash
     —  
Accounts receivable, net
     379  
Other assets
     184  
Accounts payable and accrued expenses
     (3,451 )
 
      
Net Cash Used in Operating Activities
     (208 )
 
      
 
 
      
Cash Flows From Investing Activities:
     —  
 
      
 
        
Cash Flows From Financing Activities:
        
Decrease in assets held for sale
     5,016  
Increase in liabilities related to assets held for sale
     3,505  
Increase in related party receivable
     (8,521 )
 
      
Net Cash Used in Financing Activities:
     —  
 
      
 
        
Net decrease in cash and cash equivalents
     (208 )
Cash and cash equivalents – beginning of period
     219  
 
      
Cash and Cash Equivalents – end of period
   $ 11  
 
      
 
        
Supplemental Disclosure of Cash Flow Information:
        
Cash paid during the period for interest
   $ —  
 
      
Cash paid during the period for income taxes
   $ —  
 
      
See notes to unaudited condensed financial statements.

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FLAMINGO LAUGHLIN, INC.
(A Wholly Owned Subsidiary of Harrah’s Entertainment, Inc.)
NOTES TO UNAUDITED CONDENSED FINANCIAL STATEMENTS
Note 1. The Company and Basis of Presentation
     The accompanying financial statements present the accounts of Flamingo Laughlin, Inc. (the “Property”). The Property was a division of Caesars Entertainment, Inc. (“Caesars”), whose ultimate parent became Harrah’s Entertainment, Inc. (“Harrah’s”) on June 13, 2005. The accompanying financial statements have been prepared from the separate records maintained by the Property and may not necessarily be indicative of the conditions that would have existed or the results of operations if the Property had been operated as an unaffiliated business. The accompanying financial statements do not reflect any adjustments Harrah’s may have recorded to the basis of the Property’s net assets.
     Harrah’s owns and operates the Property, which is located on 18 acres on the west bank of the Colorado River, south of Las Vegas. This property offers 1,907 guest rooms and suites, approximately 57,000 square feet of gaming space, seven restaurants, a 300-seat showroom, 35,000 square-feet of flexible meeting and convention space, including the 20,000 square-feet of Flamingo Ballroom, a swimming pool, and lighted tennis courts.
     On November 28, 2005, Harrah’s entered into an agreement to sell the Property to AREP Laughlin Corporation (“AREP”). Under the terms of the agreement, AREP will purchase most of the assets of the Property and assume certain liabilities. The transaction was approved by the Nevada Gaming Authorities and closed on May 19, 2006.
Note 2. Related Party Transactions
     The Property has ongoing related party transactions with Harrah’s and certain other wholly owned subsidiaries of Harrah’s, most of which are transacted at amounts which approximate “cost” rather than market rates for similar transactions with companies outside the controlled group. A description of the primary related party transactions that have been accounted for in the books and records of the Property is as follows:
     The Property leases gaming devices from a wholly owned subsidiary of Harrah’s. Lease expense for such gaming devices pursuant to these lease agreements totaled $386,000 for the three months ended March 31, 2006.
     Employees of the Property are eligible to participate in a 401(k) savings plan sponsored by Harrah’s (the “Plan”) after meeting certain age and length-of-employment requirements. Harrah’s remits all payroll deductions, employer matching, and administrative expenses to the trustee of the Plan. These charges totaled approximately $145,000 for the three months ended March 31, 2006.
     Certain executive-level employees of the Property are eligible to participate in a deferred compensation plan sponsored by Harrah’s. Harrah’s remits all payroll deductions, employer matching, and administrative expenses to the trustee of the deferred compensation plan. These charges totaled approximately $12,000 for the three months ended March 31, 2006.
     Medical benefits for employees of the Property as well as certain other employee-related benefits, such as a wellness center, employee assistance program, and health fairs, are provided and funded by Harrah’s. Charges for these items totaled approximately $2,284,000 for the three months ended March 31, 2006.
     The Property is included with Harrah’s and its other domestic subsidiaries for general liability, workers’ compensation, theft, errors and omissions, and other insurance purposes. Costs for the self-insured general liability and workers’ compensation programs are allocated to Harrah’s subsidiaries based upon actual claims data and costs for the other coverages are allocated to Harrah’s subsidiaries based on relative premium by subsidiary. Insurance costs allocated to the Property totaled $237,000 for the three months ended March 31, 2006.

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     Harrah’s and other wholly owned subsidiaries of Harrah’s provide various support services for the Property. Included in these services are accounts payable, internal audit, call center, collections, human resources, payroll, public relations, purchasing, centralized information technology, risk management, legal, race and sports book administration, and other administrative functions. Support services costs allocated to the Property totaled approximately $1,020,000 for the three months ended March 31, 2006.
     Harrah’s and other wholly owned subsidiaries of Harrah’s provide various support services and products for sale in the Property’s retail outlets. The costs for such products and support services allocated to the Property totaled $298,000 for the three months ended March 31, 2006.
     The net amounts due from Harrah’s and certain other wholly owned subsidiaries of Harrah’s as a result of related party transactions totaled $32,868,000 as of March 31, 2006. Such amounts are noninterest-bearing and due upon demand.
Note 3. Legal Proceedings
     The property is involved in various legal proceedings relating to its business. The property believes that all the actions brought against it are without merit and will continue to vigorously defend against them. While any proceeding or litigation has an element of uncertainty, the property believes that the final outcome of these matters is not likely to have a material adverse effect upon its results of operations or financial position.

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AMERICAN CASINO & ENTERTAINMENT PROPERTIES LLC
UNAUDITED PRO FORMA CONDENSED COMBINED FINANCIAL STATEMENTS
     The following unaudited pro forma condensed combined financial statements have been prepared to give effect to the acquisition on May 19, 2006, by American Casino & Entertainment Properties LLC, or ACEP, of substantially all of the assets and certain liabilities of Flamingo Laughlin, Inc. (A wholly-owned subsidiary of Harrah’s Entertainment, Inc.), or Flamingo, and are derived from our historical financial statements and the historical financial statements of Flamingo. The historical financial statements have been adjusted as described in the notes to the unaudited pro forma condensed combined financial statements.
     For purposes of the unaudited pro forma condensed combined balance sheet, we assumed the acquisition occurred on March 31, 2006. For purposes of the unaudited pro forma condensed combined statements of income, we assumed the acquisition occurred on January 1, 2005. We applied the purchase method of accounting, which requires an allocation of the purchase price to the assets acquired and liabilities assumed, at fair value.
     The unaudited pro forma condensed combined financial statements have been prepared based upon currently available information and assumptions that are deemed appropriate by management. The pro forma information is for informational purposes only and is not intended to be indicative of the actual consolidated financial position or consolidated result that would have been reported had the transactions occurred on the dates indicated, nor does the information represent a forecast of the consolidated financial position at any future date of the combined financial results of ACEP and Flamingo for any future period.

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AMERICAN CASINO & ENTERTAINMENT PROPERTIES LLC
UNAUDITED PRO FORMA CONDENSED COMBINED BALANCE SHEETS
AS OF MARCH 31, 2006
                                     
                                American  
    American Casino                         Casino &  
    & Entertainment     Flamingo                 Entertainment  
    Properties LLC     Laughlin     Pro Forma     (See   Properties LLC  
    Historical     Historical     Adjustments     Note 3)   Pro Forma  
    (in thousands)  
Assets
                                    
Current Assets
                                    
Cash and cash equivalents
   $ 118,552     $ 11     $ (50,179 )   a,b,c,d   $ 68,384  
Cash and cash equivalents – restricted
     265       —       —           265  
Investments – restricted
     2,852       —       —           2,852  
Accounts receivable, net
     4,146       622       (617 )   c,d     4,151  
Related party receivables
     3,882       —       —           3,882  
Deferred income taxes
     2,305       2,662       (2,662 )   d     2,305  
Assets held for sale
     —       118,379       (118,379 )   d     —  
Other current assets
     11,136       2,245       788     c,d     14,169  
 
                          
Total current assets
     143,138       123,919       (171,049 )         96,008  
 
                                    
Property and equipment, net
     315,644       —       108,336     b,c     423,980  
 
                                    
Debt issuance and deferred financing costs, net
     6,134       —       271     a     6,405  
Related Party Receivables
     —       32,868       (32,868 )   d     —  
Customer list
     —       —       3,397     b     3,397  
Deferred tax asset – non-current
     37,344       19,100       (19,100 )   d     37,344  
 
                          
Total Other assets
     43,478       51,968       (48,300 )         47,146  
 
                          
 
                                    
Total Assets
   $ 502,260     $ 175,887     $ (111,013 )       $ 567,134  
 
                          
 
                                    
Liabilities and Member’s Equity
                                    
Current liabilities
                                    
Accounts payable
   $ 4,295     $ 1,949     $ (1,949 )   d   $ 4,295  
Accrued expenses
     22,541       1,615       3,259     c,d     27,415  
Accrued payroll and related expenses
     9,280       —       —           9,280  
Income taxes payable
     —       21,954       (21,954 )   d     —  
Liabilities related to assets held for sale
     —       8,768       (8,768 )   d     —  
Current portion of capital lease obligation
     478       —       —           478  
 
                          
Total Current Liabilities
     36,594       34,286       (29,412 )         41,468  
 
                                    
Long term liabilities
                                    
Capital lease obligations, less current portion
     2,704       —       —           2,704  
Long term debt, less current portion
     215,000       —       —           215,000  
Line of credit
     —       —       60,000     a     60,000  
Other
     6,017       —       —           6,017  
 
                          
Total Long Term Liabilities
     223,721       —       60,000           283,721  
 
                          
 
                                    
Total Liabilities
     260,315       34,286       30,588           325,189  
 
                                    
Member’s equity
                                    
Common stock, $1.00 par value; 25,000 shares authorized; 1,000 shares issued and outstanding
     —       1       (1 )   d     —  
Additional paid-in-capital
     —       136,115       (136,115 )   d     —  
Member’s equity
     241,945       —       —           241,945  
Retained earnings
     —       5,485       (5,485 )   d     —  
 
                          
Total member’s equity
     241,945       141,601       (141,601 )         241,945  
 
                          
 
                                    
Total Liabilities and Member’s Equity
   $ 502,260     $ 175,887     $ (111,013 )       $ 567,134  
 
                          
See accompanying notes to unaudited pro forma condensed combined financial statement

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AMERICAN CASINO & ENTERTAINMENT PROPERTIES LLC
UNAUDITED PRO FORMA CONDENSED COMBINED INCOME STATEMENTS
FOR THE YEAR ENDED DECEMBER 31, 2005
                                             
    American                          
    Casino &     Flamingo Laughlin Historical                 American Casino  
    Entertainment     January 1 to     June 14 to                 & Entertainment  
    Properties LLC     June 13, 2005     December 31, 2005     Pro Forma     (See   Properties LLC  
    Historical         (Predecessor)             (Successor)             Adjustments               Note 3)         Pro Forma  
    (in thousands)  
Revenues:
                                            
Casino
   $ 182,939     $ 34,305     $ 40,036     $ —         $ 257,280  
Hotel
     61,861       8,877       9,908       21     f     80,667  
Food and beverage
     70,060       10,209       11,517       —           91,785  
Tower, retail and other income
     35,413       3,223       3,463       (21 )   f     42,078  
 
                                
Gross Revenues
     350,273       56,614       64,924       —           471,811  
Less promotional allowances
     22,291       6,697       7,822       —           36,810  
 
                                
Net Revenues
     327,982       49,917       57,102       —           435,001  
 
                                
 
                                            
Operating Expenses:
                                            
Casino
     63,216       17,844       22,264       (15,960 )   f     87,364  
Hotel
     26,957       4,051       4,614       424     f     36,046  
Food and beverage
     51,784       6,637       8,068       —     f     66,489  
Tower, retail and other
     15,372       13,135       16,205       (26,423 )   f     18,289  
General and administrative
     81,321       —       —       43,687     f,g     125,008  
Depreciation and amortization
     23,305       1,177       —       3,134     h     27,616  
Management fees
     —       1,520       1,736       (3,256 )   f     —  
(Gain) loss on disposal of equipment
     (25 )     —               —           (25 )
 
                                
Total operating expenses
     261,930       44,364       52,887       1,606           360,787  
 
                                
 
                                            
Income from operations
     66,052       5,553       4,215       (1,606 )         74,214  
 
                                
 
                                            
Other income (expenses):
                                            
Interest income
     1,617       —       —       —           1,617  
Interest expense
     (18,846 )     —       —       (4,132 )   e     (22,978 )
 
                                
Total other expenses, net
     (17,229 )     —       —       (4,132 )         (21,361 )
 
                                
 
                                            
Earnings Before Income Taxes
     48,823       5,553       4,215       (5,738 )         52,853  
 
                                            
Provision (benefit) for income taxes
     16,789       1,900       1,410       (1,974 )   i     18,125  
 
                                
 
                                            
Net Income
   $ 32,034     $ 3,653     $ 2,805     $ (3,764 )       $ 34,728  
 
                                
See accompanying notes to unaudited pro forma condensed combined financial statement

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AMERICAN CASINO & ENTERTAINMENT PROPERTIES LLC
UNAUDITED PRO FORMA CONDENSED COMBINED INCOME STATEMENTS
FOR THE THREE MONTHS ENDED MARCH 31, 2006
                                     
                                American  
    American Casino                         Casino &  
    & Entertainment     Flamingo                 Entertainment  
    Properties LLC     Laughlin     Pro Forma     (See   Properties LLC  
    Historical     Historical     Adjustments     Note 3)   Pro Forma  
            (in thousands)              
Revenues:
                                    
Casino
   $ 48,022     $ 19,882     $ —         $ 67,904  
Hotel
     17,433       4,695       —           22,128  
Food and beverage
     18,070       5,646       —           23,716  
Tower, retail and other income
     8,219       1,352       —           9,571  
 
                          
Gross Revenues
     91,744       31,575       —           123,319  
Less promotional allowances
     5,799       3,759       —           9,558  
 
                          
Net Revenues
     85,945       27,816       —           113,761  
 
                          
 
                                    
Operating Expenses:
                                    
Casino
     16,488       6,697       —           23,185  
Hotel
     6,843       2,441       —           9,284  
Food and beverage
     13,201       3,768       —           16,969  
Tower, retail and other
     3,730       884       —           4,614  
Selling, general and administrative
     20,786       9,903       (386 )   g     30,303  
Depreciation and amortization
     6,010       —       1,078     h     7,088  
Management fees
     —       —       —           —  
(Gain) loss on disposal of equipment
     (2 )     —       —           (2 )
 
                          
Total operating expenses
     67,056       23,693       692           91,441  
 
                          
 
                                    
Income from operations
     18,889       4,123       (692 )         22,320  
 
                          
 
                                    
Other income (expenses)
                                    
Interest income
     850       —       —           850  
Interest expense
     (4,682 )     —       (1,034 )   e     (5,716 )
 
                          
Total other income (expenses)
     (3,832 )     —       (1,034 )         (4,866 )
 
                          
 
                                    
Income before income taxes
     15,057       4,123       (1,726 )         17,454  
 
                                    
Provision for income taxes
     5,210       1,443       (597 )   i     6,056  
 
                          
 
                                    
Net income
   $ 9,847     $ 2,680     $ (1,129 )       $ 11,398  
 
                          
See accompanying notes to unaudited pro forma condensed combined financial statement

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AMERICAN ENTERTAINMENT PROPERTIES
NOTES TO PRO FORMA CONDENSED COMBINED FINANCIAL STATEMENTS
1. Basis of presentation
The accompanying unaudited pro forma condensed combined financial statements present the pro forma results of operations and financial position of American Casino & Entertainment Properties LLC, or ACEP, and Flamingo Laughlin, Inc. (a wholly owned subsidiary of Harrah’s Entertainment, Inc.), or Flamingo, on a combined basis based on the historical financial information of each company and after giving effect to the acquisition of Flamingo by ACEP. The acquisition will be recorded using the purchase method of accounting, with ACEP as the acquirer.
For purposes of the unaudited pro forma condensed combined balance sheet, we assumed the acquisition occurred on March 31, 2006. For purposes of the unaudited pro forma condensed combined statements of income, we assumed the acquisition occurred on January 1, 2005.
2. Acquisition of Flamingo
The following table sets forth the amount paid for Flamingo as if the acquisition occurred on March 31, 2006 (in thousands):
         
Cash
   $ 109,000  
Estimated transaction costs
     906  
 
      
 
        
 
   $ 109,906  
 
      
The following table sets forth the final allocation of the purchase price (in thousands):
         
Land
   $ 13,000  
Building
     92,615  
Equipment
     2,685  
Customer List
     3,397  
Deposits
     18  
Vacation liability
     (1,809 )
 
      
 
        
 
   $ 109,906  
 
      
The purchase price allocation is based on an independent appraisal and management estimates and may be adjusted up to one year following the closing of the transaction.
In addition to the purchase price ACEP was required to purchase certain working capital amounts which were paid to Harrahs. These amounts are as follows (in thousands):
         
Cash
   $ 6,028  
Accounts receivable
     5  
Other current assets
     1,121  
Equipment
     36  
Accrued liabilities
     (3,065 )
 
      
 
   $ 4,125  
 
      

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AMERICAN CASINO & ENTERTAINMENT PROPERTIES
NOTES TO PRO FORMA CONDENSED COMBINED FINANCIAL STATEMENTS
3. Pro Forma Adjustments
     The following are brief descriptions of each of the pro forma adjustments included in the unaudited pro forma condensed combined financial statements:
  (a)   To reflect the increase to and the draw down of the credit line including additional deferred financing costs.
 
  (b)   To reflect the acquisition and purchase price allocation of Flamingo.
 
  (c)   To reflect the purchase of Flamingo working capital amounts.
 
  (d)   To eliminate the historical balances of Flamingo.
 
  (e)   To reflect pro forma interest expense and amortization of deferred financing costs related to (a) above.
 
  (f)   To reclassify marketing and other expenses to be consistent with the ACEP presentation.
 
  (g)   To eliminate slot lease expense due to purchase of slot machines.
 
  (h)   To reverse existing depreciation expense and record pro forma depreciation and amortization expense.
 
  (i)   To record income tax adjustment
4. Cost Savings and Merger –related Charges
     The unaudited pro forma condensed combined financial statements do not reflect any cost savings of duplicative departments and redundant infrastructure, the benefit of operational efficiencies, or the benefit of revenue enhancements which may be achieved after the Flamingo Laughlin acquisition.
     The unaudited pro forma condensed combined financial statements do not reflect any restructuring or other merger-related charges and liabilities resulting from possible actions taken as a result of the integration of Flamingo Laughlin, such as contract terminations or severance. We have not finalized such plans and any charges related to such actions may be material.

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SIGNATURES
     Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
         
  AMERICAN CASINO &
ENTERTAINMENT PROPERTIES LLC  		  
 
  By:   /s/ Denise Barton    
    Denise Barton   
    Senior Vice President, Chief Financial
Officer Secretary and Treasurer 		  
 
Date: August 4, 2006