Delaware
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20-0573058
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(State or other jurisdiction of
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(I.R.S. Employer
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incorporation or organization)
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Identification No.)
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2000 Las Vegas Boulevard South
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Las Vegas, NV
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89104
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(Address of principal executive offices)
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(Zip code)
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Large accelerated filer ¨
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Accelerated filer ¨
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Non-accelerated filer x (Do not check if a smaller reporting company)
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Smaller reporting company ¨
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Page
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Part I
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Financial Information
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1
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Item 1.
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Unaudited Condensed Consolidated Financial Statements
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1
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Condensed Consolidated Balance Sheets –September 30, 2011 (unaudited) and December 31, 2010
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1
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||
Condensed Consolidated Statements of Operations (unaudited) – the three months ended September 30, 2011 and September 30, 2010
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2
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Condensed Consolidated Statements of Operations (unaudited) – the nine months ended September 30, 2011 and September 30, 2010
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3
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Condensed Consolidated Statements of Cash Flows (unaudited) – the nine months ended September 30, 2011 and September 30, 2010
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4
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Condensed Consolidated Statement of Members’ Equity (unaudited) – the nine months ended September 30, 2011
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5
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Notes to Condensed Consolidated Financial Statements (unaudited)
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6
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Item 2.
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Management's Discussion and Analysis of Financial Condition and Results of Operations
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12
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Item 3.
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Quantitative and Qualitative Disclosures About Market Risk
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21
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Item 4.
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Controls and Procedures
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21
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Part II
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Other Information
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22
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Item 6.
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Exhibits
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22
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As of
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As of
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|||||||
September 30, 2011
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December 31, 2010
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|||||||
(Unaudited)
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||||||||
(In thousands)
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||||||||
Assets
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||||||||
Current Assets:
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||||||||
Cash and cash equivalents
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$ | 87,293 | $ | 85,311 | ||||
Investments-restricted
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211 | 1,171 | ||||||
Accounts receivable, net
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3,542 | 3,290 | ||||||
Accounts receivable, net - related party
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199 | 93 | ||||||
Other current assets
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11,716 | 9,935 | ||||||
Total Current Assets
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102,961 | 99,800 | ||||||
Property and equipment, net
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1,114,955 | 1,133,848 | ||||||
Debt issuance costs, net
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2,230 | 2,866 | ||||||
Intangible and other assets
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18,564 | 19,889 | ||||||
Total Assets
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$ | 1,238,710 | $ | 1,256,403 | ||||
Liabilities and Members' Equity
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||||||||
Current Liabilities:
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||||||||
Accounts payable
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$ | 5,071 | $ | 4,828 | ||||
Accrued expenses
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26,105 | 17,870 | ||||||
Accounts payable and accrued expenses - related party
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21 | 12 | ||||||
Accrued payroll and related expenses
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12,169 | 10,462 | ||||||
Current portion of capital lease obligations
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286 | 276 | ||||||
Total Current Liabilities
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43,652 | 33,448 | ||||||
Long-Term Liabilities:
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||||||||
Long-term debt, net of unamortized discount
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341,169 | 355,618 | ||||||
Capital lease obligations, less current portion
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1,703 | 1,919 | ||||||
Total Long-Term Liabilities
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342,872 | 357,537 | ||||||
Total Liabilities
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386,524 | 390,985 | ||||||
Commitments and Contingencies
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||||||||
Members' Equity:
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||||||||
Members' Equity
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852,186 | 865,418 | ||||||
Total Members' Equity
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852,186 | 865,418 | ||||||
Total Liabilities and Members' Equity
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$ | 1,238,710 | $ | 1,256,403 |
Three months ended
September 30, 2011
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Three months ended
September 30, 2010
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|||||||
(Unaudited)
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||||||||
(In thousands)
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||||||||
Revenues:
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||||||||
Casino
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$ | 49,238 | $ | 48,907 | ||||
Hotel
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17,184 | 14,283 | ||||||
Food and beverage
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17,505 | 16,702 | ||||||
Tower, retail, entertainment and other
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8,950 | 9,596 | ||||||
Gross revenues
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92,877 | 89,488 | ||||||
Less promotional allowances
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6,205 | 5,922 | ||||||
Net revenues
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86,672 | 83,566 | ||||||
Costs And Expenses:
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||||||||
Casino
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16,430 | 16,320 | ||||||
Hotel
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9,124 | 8,879 | ||||||
Food and beverage
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13,052 | 12,678 | ||||||
Other operating expenses
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3,041 | 3,460 | ||||||
Selling, general and administrative
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28,508 | 28,148 | ||||||
Depreciation and amortization
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9,403 | 11,208 | ||||||
(Gain) loss on disposal of assets
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32 | (10 | ) | |||||
Management fee - related party
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250 | 375 | ||||||
Total costs and expenses
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79,840 | 81,058 | ||||||
Income From Operations
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6,832 | 2,508 | ||||||
Other Income (Expense):
|
||||||||
Interest income
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1 | - | ||||||
Interest expense
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(11,062 | ) | (11,385 | ) | ||||
Total other expense, net
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(11,061 | ) | (11,385 | ) | ||||
Net Loss
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$ | (4,229 | ) | $ | (8,877 | ) |
Nine months ended
September 30, 2011
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Nine months ended
September 30, 2010
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|||||||
(Unaudited)
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||||||||
(In thousands)
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||||||||
Revenues:
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||||||||
Casino
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$ | 153,166 | $ | 156,129 | ||||
Hotel
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49,288 | 43,435 | ||||||
Food and beverage
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51,812 | 51,210 | ||||||
Tower, retail, entertainment and other
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24,593 | 25,433 | ||||||
Gross revenues
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278,859 | 276,207 | ||||||
Less promotional allowances
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18,288 | 18,339 | ||||||
Net revenues
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260,571 | 257,868 | ||||||
Costs And Expenses:
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||||||||
Casino
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49,915 | 50,117 | ||||||
Hotel
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26,439 | 25,668 | ||||||
Food and beverage
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38,658 | 38,533 | ||||||
Other operating expenses
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9,209 | 9,876 | ||||||
Selling, general and administrative
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83,188 | 82,640 | ||||||
Depreciation and amortization
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30,062 | 32,742 | ||||||
Pre-opening costs
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- | 283 | ||||||
(Gain) loss on disposal of assets
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65 | (6 | ) | |||||
Management fee - related party
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819 | 1,125 | ||||||
Impairment of assets
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- | 2,000 | ||||||
Total costs and expenses
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238,355 | 242,978 | ||||||
Income From Operations
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22,216 | 14,890 | ||||||
Other Income (Expense):
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||||||||
Loss on debt redemption
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(1,378 | ) | - | |||||
Interest income
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2 | 8 | ||||||
Interest expense
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(34,072 | ) | (34,162 | ) | ||||
Total other expense, net
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(35,448 | ) | (34,154 | ) | ||||
Net Loss
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$ | (13,232 | ) | $ | (19,264 | ) |
Nine months ended
September 30, 2011
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Nine months ended
September 30, 2010
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|||||||
(Unaudited)
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||||||||
(In thousands)
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||||||||
Cash Flows From Operating Activities:
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||||||||
Net loss
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$ | (13,232 | ) | $ | (19,264 | ) | ||
Adjustments to reconcile net loss to net cash provided by operating activities:
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||||||||
Depreciation and amortization
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30,062 | 32,742 | ||||||
Amortization of debt issuance and debt discount costs
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3,934 | 3,578 | ||||||
Loss on debt redemption
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1,378 | - | ||||||
(Gain) loss on disposal of assets
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65 | (6 | ) | |||||
Loss on asset impairment
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- | 2,000 | ||||||
Changes in operating assets and liabilities:
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||||||||
Accounts receivable, net
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(159 | ) | (93 | ) | ||||
Other assets
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(1,821 | ) | (984 | ) | ||||
Accounts payable and accrued expenses
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10,185 | 10,278 | ||||||
Related party activity, net
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(190 | ) | (183 | ) | ||||
Net Cash Provided by Operating Activities
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30,222 | 28,068 | ||||||
Cash Flows From Investing Activities:
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||||||||
Decrease in investments - restricted
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960 | 686 | ||||||
Acquisition of property and equipment
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(9,965 | ) | (22,636 | ) | ||||
Increase in intangible assets
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- | (645 | ) | |||||
Proceeds from sale of property and equipment
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96 | 169 | ||||||
Net Cash Used in Investing Activities
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(8,909 | ) | (22,426 | ) | ||||
Cash Flows From Financing Activities:
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||||||||
Debt issuance costs
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- | (581 | ) | |||||
Payments on note payable
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(19,125 | ) | - | |||||
Payments on capital lease obligation
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(206 | ) | (196 | ) | ||||
Net Cash Used in Financing Activities
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(19,331 | ) | (777 | ) | ||||
Net increase in cash and cash equivalents
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1,982 | 4,865 | ||||||
Cash and cash equivalents - beginning of period
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85,311 | 101,092 | ||||||
Cash and cash equivalents - end of period
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$ | 87,293 | $ | 105,957 | ||||
Supplemental Disclosures of Cash Flow Information:
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||||||||
Cash paid during the period for interest, net of amounts capitalized
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$ | 20,420 | $ | 20,271 | ||||
Supplemental Disclosures of Non-Cash Items:
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||||||||
Accrued intangible assets
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$ | - | $ | 400 | ||||
Accrued capital expenditures
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$ | - | $ | 2,356 |
Class A
Equity
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Class B
Equity
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Total Equity
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||||||||||
Balances at December 31, 2010
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$ | - | $ | 865,418 | $ | 865,418 | ||||||
Net loss
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- | (13,232 | ) | (13,232 | ) | |||||||
Balances at September 30, 2011
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$ | - | $ | 852,186 | $ | 852,186 |
(in thousands)
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|||||||||||||||||||||||||
September 30, 2011
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December 31, 2010
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||||||||||||||||||||||||
Gross
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Net
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Gross
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Net
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||||||||||||||||||||||
Asset
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Carrying
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Accumulated
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Carrying
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Carrying
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Accumulated
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Carrying
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|||||||||||||||||||
Amortizing intangible assets:
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Life
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Amount
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Amortization
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Amount
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Amount
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Amortization
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Amount
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||||||||||||||||||
Player Loyalty Plan
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5 Years
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7,450 | (5,338 | ) | 2,112 | 7,450 | (4,221 | ) | 3,229 | ||||||||||||||||
Non-Compete Agreement
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38 Months
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1,045 | (578 | ) | 467 | 1,045 | (330 | ) | 715 | ||||||||||||||||
$ | 8,495 | $ | (5,916 | ) | $ | 2,579 | $ | 8,495 | $ | (4,551 | ) | $ | 3,944 | ||||||||||||
Non-amortizing intangible assets:
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|||||||||||||||||||||||||
Trade Name
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$ | 15,797 | $ | 15,797 | |||||||||||||||||||||
$ | 18,376 | $ | 19,741 |
As of
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As of
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|||||||
September 30, 2011
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December 31, 2010
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|||||||
(In thousands)
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||||||||
11% Senior Secured Notes due June 15, 2014
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$ | 356,250 | $ | 375,000 | ||||
Unamortized discount
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(15,081 | ) | (19,382 | ) | ||||
Capital lease obligations
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1,989 | 2,195 | ||||||
Total long-term debt and capital lease obligations
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343,158 | 357,813 | ||||||
Current portion of capital lease obligations
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286 | 276 | ||||||
Total long-term debt and capital lease obligations, net
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$ | 342,872 | $ | 357,537 |
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•
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declare or pay dividends and distributions on our equity interests, purchase, redeem, or otherwise retire for value any equity interest, make payments on debt, or make investments;
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•
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incur indebtedness or issue preferred stock;
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•
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sell, create liens, or otherwise encumber our assets or equity interests; and
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•
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enter into transactions with affiliates.
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Three months ended
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Three months ended
|
|||||||
September 30, 2011
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September 30, 2010
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|||||||
(in millions)
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||||||||
Income Statement Data:
|
||||||||
Revenues:
|
||||||||
Casino
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$ | 49.2 | $ | 48.9 | ||||
Hotel
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17.2 | 14.3 | ||||||
Food and beverage
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17.5 | 16.7 | ||||||
Tower, retail, entertainment and other
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9.0 | 9.6 | ||||||
Gross revenues
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92.9 | 89.5 | ||||||
Less promotional allowances
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6.2 | 5.9 | ||||||
Net revenues
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86.7 | 83.6 | ||||||
Costs and expenses:
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||||||||
Casino
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16.4 | 16.3 | ||||||
Hotel
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9.1 | 8.9 | ||||||
Food and beverage
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13.1 | 12.7 | ||||||
Other operating expenses
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3.0 | 3.5 | ||||||
Selling, general and administrative
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28.8 | 28.5 | ||||||
Depreciation and amortization
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9.4 | 11.2 | ||||||
Total costs and expenses
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79.8 | 81.1 | ||||||
Income from operations
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$ | 6.9 | $ | 2.5 | ||||
EBITDA Reconciliation:
|
||||||||
Net loss
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$ | (4.2 | ) | $ | (8.9 | ) | ||
Interest income
|
- | - | ||||||
Interest expense
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11.0 | 11.4 | ||||||
Depreciation and amortization
|
9.4 | 11.2 | ||||||
EBITDA
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$ | 16.2 | $ | 13.7 |
Nine months ended | Nine months ended | |||||||
September 30, 2011
|
September 30, 2010
|
|||||||
(in millions)
|
||||||||
Income Statement Data:
|
||||||||
Revenues:
|
||||||||
Casino
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$ | 153.2 | $ | 156.1 | ||||
Hotel
|
49.3 | 43.5 | ||||||
Food and beverage
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51.8 | 51.2 | ||||||
Tower, retail, entertainment and other
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24.6 | 25.4 | ||||||
Gross revenues
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278.9 | 276.2 | ||||||
Less promotional allowances
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18.3 | 18.3 | ||||||
Net revenues
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260.6 | 257.9 | ||||||
Costs and expenses:
|
||||||||
Casino
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49.9 | 50.1 | ||||||
Hotel
|
26.4 | 25.7 | ||||||
Food and beverage
|
38.7 | 38.5 | ||||||
Other operating expenses
|
9.2 | 9.9 | ||||||
Selling, general and administrative
|
84.1 | 83.8 | ||||||
Pre-opening costs
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- | 0.3 | ||||||
Depreciation and amortization
|
30.1 | 32.7 | ||||||
Impairment of assets
|
- | 2.0 | ||||||
Total costs and expenses
|
238.4 | 243.0 | ||||||
Income from operations
|
$ | 22.2 | $ | 14.9 | ||||
EBITDA Reconciliation:
|
||||||||
Net loss
|
$ | (13.2 | ) | $ | (19.3 | ) | ||
Interest income
|
- | - | ||||||
Interest expense
|
34.0 | 34.2 | ||||||
Depreciation and amortization
|
30.1 | 32.7 | ||||||
EBITDA
|
$ | 50.9 | $ | 47.6 |
By:
|
/s/ EDWARD W. MARTIN, III
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Edward W. Martin, III
|
|
Authorized Officer, Chief Financial Officer and Treasurer
(Principal Financial and Accounting Officer)
|
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Date:
|
November 10, 2011
|
EXHIBIT NO.
|
DESCRIPTION
|
|
31.1
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Certification of Principal Executive Officer pursuant to Section 302(a) of the Sarbanes-Oxley Act of 2002.
|
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31.2
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Certification of Principal Financial Officer pursuant to Section 302(a) of the Sarbanes-Oxley Act of 2002.
|
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32.1
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Certification of Chief Executive Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
|
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32.2
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Certification of Chief Financial Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
|
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a)
|
designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the Registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this Report is being prepared;
|
|
b)
|
designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
|
|
c)
|
evaluated the effectiveness of the Registrant’s disclosure controls and procedures and presented in this Report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this Report based on such evaluation; and
|
|
d)
|
disclosed in this Report any change in the Registrant’s internal control over financial reporting that occurred during the Registrant’s most recent fiscal quarter (the Registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the Registrant’s internal control over financial reporting; and
|
|
a)
|
all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the Registrant’s ability to record, process, summarize and report financial information; and
|
|
b)
|
any fraud, whether or not material, that involves management or other employees who have a significant role in the Registrant’s internal control over financial reporting.
|
By:
|
/s/ Frank V. Riolo
|
|
Frank V. Riolo
|
||
Chief Executive Officer of
|
||
American Casino & Entertainment Properties LLC
|
Date:
|
November 10, 2011
|
|
a)
|
designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the Registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this Report is being prepared;
|
|
b)
|
designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
|
|
c)
|
evaluated the effectiveness of the Registrant’s disclosure controls and procedures and presented in this Report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this Report based on such evaluation; and
|
|
d)
|
disclosed in this Report any change in the Registrant’s internal control over financial reporting that occurred during the Registrant’s most recent fiscal quarter (the Registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the Registrant’s internal control over financial reporting; and
|
|
a)
|
all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the Registrant’s ability to record, process, summarize and report financial information; and
|
|
b)
|
any fraud, whether or not material, that involves management or other employees who have a significant role in the Registrant’s internal control over financial reporting.
|
By:
|
/s/ Edward W. Martin, III
|
|
Edward W. Martin, III
|
||
Chief Financial Officer and Treasurer of
|
||
American Casino & Entertainment Properties LLC
|
Date:
|
November 10, 2011
|
|
(a)
|
the Quarterly Report on Form 10-Q of the Company for the three months ended September 30, 2011 filed on the date hereof with the Securities and Exchange Commission (the “Report”) fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and
|
|
(b)
|
the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.
|
By:
|
/s/ FRANK V. RIOLO
|
|
Frank V. Riolo
|
||
Chief Executive Officer of
|
||
American Casino & Entertainment Properties LLC
|
||
Date: November 10, 2011
|
|
(a)
|
the Quarterly Report on Form 10-Q of the Company for the three months ended September 30, 2011 filed on the date hereof with the Securities and Exchange Commission (the “Report”) fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and
|
|
(b)
|
the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.
|
By:
|
/s/ EDWARD W. MARTIN, III
|
|
Edward W. Martin, III
|
||
Chief Financial Officer and Treasurer of
|
||
American Casino & Entertainment Properties LLC
|
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED) (USD $) In Thousands | 3 Months Ended | 9 Months Ended | ||
---|---|---|---|---|
Sep. 30, 2011 | Sep. 30, 2010 | Sep. 30, 2011 | Sep. 30, 2010 | |
Revenues: | ||||
Casino | $ 49,238 | $ 48,907 | $ 153,166 | $ 156,129 |
Hotel | 17,184 | 14,283 | 49,288 | 43,435 |
Food and beverage | 17,505 | 16,702 | 51,812 | 51,210 |
Tower, retail, entertainment and other | 8,950 | 9,596 | 24,593 | 25,433 |
Gross revenues | 92,877 | 89,488 | 278,859 | 276,207 |
Less promotional allowances | 6,205 | 5,922 | 18,288 | 18,339 |
Net revenues | 86,672 | 83,566 | 260,571 | 257,868 |
Costs And Expenses: | ||||
Casino | 16,430 | 16,320 | 49,915 | 50,117 |
Hotel | 9,124 | 8,879 | 26,439 | 25,668 |
Food and beverage | 13,052 | 12,678 | 38,658 | 38,533 |
Other operating expenses | 3,041 | 3,460 | 9,209 | 9,876 |
Selling, general and administrative | 28,508 | 28,148 | 83,188 | 82,640 |
Depreciation and amortization | 9,403 | 11,208 | 30,062 | 32,742 |
Pre-opening costs | 0 | 283 | ||
(Gain) loss on disposal of assets | 32 | (10) | 65 | (6) |
Management fee - related party | 250 | 375 | 819 | 1,125 |
Impairment of assets | 0 | 2,000 | ||
Total costs and expenses | 79,840 | 81,058 | 238,355 | 242,978 |
Income From Operations | 6,832 | 2,508 | 22,216 | 14,890 |
Other Income (Expense): | ||||
Loss on debt redemption | (1,378) | 0 | ||
Interest income | 1 | 0 | 2 | 8 |
Interest expense | (11,062) | (11,385) | (34,072) | (34,162) |
Total other expense, net | (11,061) | (11,385) | (35,448) | (34,154) |
Net Loss | $ (4,229) | $ (8,877) | $ (13,232) | $ (19,264) |
DOCUMENT AND ENTITY INFORMATION | 9 Months Ended |
---|---|
Sep. 30, 2011 | |
Entity Registrant Name | American Casino & Entertainment Properties LLC |
Entity Central Index Key | 0001297735 |
Current Fiscal Year End Date | --12-31 |
Entity Filer Category | Non-accelerated Filer |
Trading Symbol | acep |
Entity Common stock, Shares Outstanding | 0 |
Document Type | 10-Q |
Amendment Flag | false |
Document Period End Date | Sep. 30, 2011 |
Document Fiscal Period Focus | Q3 |
Document Fiscal Year Focus | 2011 |
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Related Party Transactions (Unaudited) | 9 Months Ended |
---|---|
Sep. 30, 2011 | |
Related Party Transactions [Abstract] | |
Related Party Transactions Disclosure [Text Block] | Note 3. Related Party Transactions
On February 20, 2008, we entered into a consulting agreement with Highgate Hotels, L.P., or Highgate, pursuant to which Highgate provides asset management consulting services to us.
Highgate owns a less than 5% membership interest in Holdings. The agreement was amended to reduce fees payable thereunder on June 25, 2009 and Highgate converted amounts due them from ACEP to contributed capital in Holdings.
The consulting agreement expires on June 20, 2013. Highgate is entitled to receive a $1.5 million per year base consulting fee for the periods through February 20, 2011 and a $1.0 million per year consulting fee for the periods after February 20, 2011, additional consulting fees up to $500,000 per year for periods after February 20, 2011 based on EBITDA results at the properties and development fees at 4% of the aggregate costs of any agreed upon development projects. We incurred Highgate fees of approximately $250,000 and $375,000 for the three months ended September 30, 2011 and September 30, 2010, respectively. We incurred Highgate fees of approximately $819,000 and $1.1 million for the nine months ended September 30, 2011 and September 30, 2010, respectively. As of September 30, 2011 and December 31, 2010, we owed Highgate $0. For the three months and nine months ended September 30, 2011, we provided IT consulting services to Highgate of approximately $0 and $14,000, respectively. As of September 30, 2011 and December 31, 2010, Highgate owed us approximately $0 and $4,000, respectively.
On June 16, 2008, we entered into an agreement with Travel Tripper LLC, or TTL, to utilize their technology for online hotel reservations. TTL is owned by an affiliate of Goldman Sachs (9%), an affiliate of Highgate (9%) and an employee of Highgate (40%). From June 16, 2008 to July 31, 2010, TTL was paid 4% of room revenues booked utilizing its system. As of August 1, 2010, the fee paid to TTL was reduced to 2%. We expensed fees of approximately $54,000 and $70,000 for the three months ended September 30, 2011 and September 30, 2010, respectively. We expensed fees of approximately $157,000 and $279,000 for the nine months ended September 30, 2011 and September 30, 2010, respectively. As of September 30, 2011 and December 31, 2010, we owed TTL approximately $16,000 and $10,000, respectively.
Archon Group, LP, or Archon, an affiliate of Goldman Sachs, provides various services to us such as construction management, cash management and insurance brokers. We expensed fees of approximately $18,000 and $46,000 for the three months ended September 30, 2011 and September 30, 2010, respectively. We expensed fees of approximately $40,000 and $70,000 for the nine months ended September 30, 2011 and September 30, 2010, respectively. In addition, we provided construction management services to Archon for hotels managed by them. We recorded the services as a reduction of general and administrative expenses of approximately $246,000 and $86,000 for the three months ended September 30, 2011 and September 30, 2010, respectively, and $484,000 and $176,000 for the nine months ended September 30, 2011 and September 30, 2010, respectively. As of September 30, 2011 and December 31, 2010, we owed Archon $0. As of September 30, 2011 and December 31, 2010, Archon owed us approximately $199,000 and $89,000, respectively.
On October 3, 2008, we entered into a participation agreement with Nor1, Inc., or Nor1, to utilize their technology to help sell perishable suite and room inventories. Nor1 gives the guest who books on-line the opportunity to book a non-guaranteed suite or upgraded rooms at a discounted rate if such is available at check-in. If the suite or upgraded room is awarded, Nor1 is paid 25% of the upgrade fee. Goldman Sachs owns less than 5% of Nor1. We expensed fees of approximately $12,000 and $5,000 for the three months ended September 30, 2011 and September 30, 2010, respectively. We expensed fees of approximately $35,000 and $29,000 for the nine months ended September 30, 2011 and September 30, 2010, respectively. As of September 30, 2011 and December 31, 2010, we owed Nor1 approximately $5,000 and $2,000, respectively.
We follow a related party transaction approval policy for reviewing related person transactions. These procedures are intended to ensure that transactions with related persons are fair to us and in our best interests. If a proposed transaction appears to or does involve a related person, the transaction is presented to our audit committee for review. The audit committee is authorized to retain and pay such independent advisors as it deems necessary to properly evaluate the proposed transaction, including, without limitation, outside legal counsel and financial advisors to determine the fair value of the transaction.
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The Company (Unaudited) | 9 Months Ended |
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Sep. 30, 2011 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Nature of Operations [Text Block] | Note
1. The Company
American Casino & Entertainment Properties LLC, or ACEP, was formed in Delaware on December 29, 2003. As used in this Quarterly Report on Form 10-Q, the terms “ACEP”, “company”, “we”, “our”, “ours”, and “us” refer to American Casino & Entertainment Properties LLC and its subsidiaries, unless the context suggests otherwise. ACEP owns and operates the Stratosphere Casino Hotel & Tower, or the Stratosphere, Arizona Charlie’s Decatur and Arizona Charlie’s Boulder in Las Vegas, Nevada, and the Aquarius Casino Resort, or the Aquarius, in Laughlin, Nevada.
On April 22, 2007, American Entertainment Properties Corp., or AEP, our former direct parent, entered into a Membership Interest Purchase Agreement, or the Agreement, with W2007/ACEP Holdings, LLC, or Holdings, an affiliate of Whitehall Street Real Estate Funds, or Whitehall, a series of real estate investment funds affiliated with Goldman, Sachs & Co., to sell all of our issued and outstanding membership interests to Holdings, for approximately $1.3 billion. Pursuant to the Assignment and Assumption Agreement, dated December 4, 2007, between Holdings and W2007/ACEP Managers Voteco, LLC, or Voteco, Holdings assigned all of its rights, obligations and interests under the Agreement to Voteco. Voteco’s acquisition of ACEP, or the Acquisition, closed at a purchase price of $1.2 billion on February 20, 2008.
On February 23, 2010, ACEP and ACEP Finance Corp., or ACEP Finance and, together with ACEP, the Issuers, completed an exchange offer registered with the Securities and Exchange Commission, or SEC, in which the Issuers issued approximately $374.9 million aggregate principal amount of their 11% Senior Secured Notes due 2014, or SEC-Registered Notes, in exchange for $374.9 million of their outstanding, 11% Senior Secured Notes due 2014, or the Unregistered Notes, issued in a transaction pursuant to Rule 144A and Regulation S under the Securities Act of 1933, as amended, or the Securities Act. The SEC-Registered Notes have substantially identical terms to the Unregistered Notes, except that the SEC-Registered Notes were issued in a transaction registered under the Securities Act. The SEC-Registered Notes and the Unregistered Notes are collectively referred to herein as the 11% Senior Secured Notes.
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Goodwill and Intangible Assets Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Intangible Assets Disclosure [Text Block] | Note 4. Intangible Assets
Pursuant to authoritative guidance, indefinite-lived intangible assets are subject to an annual assessment for impairment during the fourth quarter, or more frequently if there are indications of possible impairment, by applying a fair-value-based test.
Our finite-lived acquired intangible assets include our player loyalty plan and a non-compete agreement. Our infinite-lived acquired intangible assets include trade names. Acquired assets are recorded at fair value on the date of acquisition and finite-lived assets are amortized over the estimated period to be benefited.
As of September 30, 2011 and December 31, 2010, we had the following intangible assets.
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Debt (Unaudited) | 9 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Sep. 30, 2011 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Debt Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Debt Disclosure [Text Block] | Note 5. Debt
Long-term debt and capital lease obligations consist of the following:
11% Senior Secured Notes
On August 14, 2009, the Issuers issued the Unregistered Notes pursuant to the Indenture among the Issuers, certain subsidiary guarantors and The Bank of New York Mellon, as trustee, or the Indenture.
The 11% Senior Secured Notes mature on June 15, 2014 and bear interest at a rate of 11% per annum. Interest is computed on the basis of a 360-day year composed of twelve 30-day months and is payable semi-annually on June 15 and December 15 of each year, beginning on December 15, 2009. The obligations are jointly, severally and unconditionally guaranteed by all of the subsidiaries of ACEP other than ACEP Finance and will be so guaranteed by any future domestic subsidiaries of ACEP, subject to certain exceptions. The 11% Senior Secured Notes are collateralized by substantially all fee and leasehold real property comprising the Stratosphere, the Aquarius, Arizona Charlie’s Decatur and Arizona Charlie’s Boulder.
On February 23, 2010, the Issuers completed an exchange offer registered with the SEC in which the Issuers issued approximately $374.9 million aggregate principal amount of their SEC-Registered Notes in exchange for $374.9 million of their Unregistered Notes. The SEC-Registered Notes have substantially identical terms to the Unregistered Notes, except that the SEC-Registered Notes were issued in a transaction registered under the Securities Act.
On May 31, 2011, the Issuers completed a redemption of five percent (5%) of aggregate principal amount of the 11% Senior Secured Notes pursuant to paragraph 5(b) of the 11% Senior Secured Notes and the redemption provisions of the Indenture (Section 3.07(b)). The redemption price for the 11% Senior Secured Notes was 102% of the principal amount of the 11% Senior Secured Notes redeemed, or $19.1 million, plus accrued interest to the redemption date of approximately $951,000. Interest on the 11% Senior Secured Notes called for redemption ceased to accrue on and after the redemption date. As a result of the redemption, a loss of $1.4 million was recognized. The loss is comprised of the redemption premium of $375,000 and a proportionate write-off of debt issuance and debt discount costs of $1.0 million.
In accordance with positions established by the SEC, separate financial information with respect to the parent, co-issuer, guarantor subsidiaries and non-guarantor subsidiaries is not required as the parent and co-issuer have no independent assets or operations, the guarantees are full and unconditional and joint and several, and the total assets, stockholders’ equity, revenues, income from operations before income taxes and cash flows from operating activities of the non-guarantor subsidiaries is less than 3% of ACEP’s consolidated amounts.
The fair value of our debt is estimated based on market prices for the same or similar issues. We issued the Unregistered Notes on August 14, 2009. The estimated fair value of the 11% Senior Secured Notes was approximately $356.3 million as of September 30, 2011.
On or after June 15, 2012, the Issuers may redeem all or a part of the 11% Senior Secured Notes at the redemption prices set forth in the Indenture, plus accrued and unpaid interest to the applicable redemption date. In addition, at any time prior to June 15, 2012, the Issuers
may, on one or more than one occasion, redeem some or all of the 11% Senior Secured Notes at a redemption price equal to 100% of the principal amount of the 11% Senior Secured Notes redeemed, plus a “make-whole” premium, and accrued and unpaid interest to the applicable redemption date. At any time prior to June 15, 2012, we may also redeem up to 35% of the aggregate principal amount of the 11% Senior Secured Notes, using the proceeds of certain qualified equity offerings, at a redemption price of 111% of the principal amount thereof, plus accrued and unpaid interest to the applicable redemption date. We may, not more than once in any 12-month period ending on June 15, 2010, 2011 and 2012, redeem up to 5% of the original aggregate principal amount of the 11% Senior Secured Notes at a redemption price equal to 102% of the principal amount of the 11% Senior Secured Notes redeemed plus accrued and unpaid interest to the applicable redemption date. As described above, on May 31, 2011 the Issuers elected to redeem 5% of the aggregate principal amount of the 11% Senior Secured Notes.
If certain change of control events occur as specified in the Indenture, we must offer to repurchase the 11% Senior Secured Notes at a repurchase price equal to 101% of the principal amount of the 11% Senior Secured Notes repurchased, plus accrued and unpaid interest to the applicable repurchase date.
If ACEP or its subsidiaries sell assets under certain circumstances or experience certain events of loss, we must offer to repurchase the 11% Senior Secured Notes at a repurchase price equal to 100% of the principal amount of the Notes repurchased, plus accrued and unpaid interest to the date of purchase, prepayment or redemption, as the case may be.
We are bound by certain covenants contained and defined in the Indenture that requires us to file quarterly and annual reports, and among other things, restricts our ability to:
These covenants contained in the Indenture are subject to a number of important limitations and exceptions.
The Indenture provides for events of default, including, but not limited to, cross defaults to certain other debt of ACEP and its subsidiaries. In the case of an event of default arising from specified events of bankruptcy or insolvency, all outstanding 11% Senior Secured Notes will become due and payable immediately without
further action or notice. Management believes that we are in compliance with the provisions of the Indenture as of quarter end and the date of this filing.
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Legal Proceedings (Unaudited) | 9 Months Ended |
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Sep. 30, 2011 | |
Commitments and Contingencies Disclosure [Abstract] | |
Legal Matters and Contingencies [Text Block] | Note 6. Legal Proceedings
We are, from time to time, a party to various legal proceedings arising out of our businesses. We believe, however, there are no proceedings pending or threatened against us, which, if determined adversely, would have a material adverse effect upon our financial condition, results of operations or liquidity.
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CONDENSED CONSOLIDATED STATEMENT OF MEMBERS EQUITY (UNAUDITED) (USD $) In Thousands | Class A Equity | Class B Equity | Total |
---|---|---|---|
Balance at Dec. 31, 2010 | $ 0 | $ 865,418 | $ 865,418 |
Net Loss | 0 | (13,232) | (13,232) |
Balance at Sep. 30, 2011 | $ 0 | $ 852,186 | $ 852,186 |
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Basis of Presentation (Unaudited) | 9 Months Ended |
---|---|
Sep. 30, 2011 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Basis Of Presentation [Text Block] | Note
2. Basis of Presentation
The accompanying condensed consolidated financial statements included herein have been prepared by ACEP, without audit, in accordance with the accounting policies described in our 2010 audited consolidated financial statements and pursuant to the rules and regulations of the SEC. Certain information and footnote disclosures normally included in financial statements, prepared in accordance with accounting principles generally accepted in the United States, have been condensed or omitted pursuant to such rules and regulations. We believe that the disclosures are adequate to make the information presented not misleading. In the opinion of management, the accompanying condensed consolidated financial statements include all adjustments (consisting only of those of a normal recurring nature), which are necessary for a fair presentation of the results for the interim periods presented. Interim results are not necessarily indicative of results to be expected for any future interim period or for the entire fiscal year.
These condensed consolidated financial statements should be read in conjunction with the notes to the 2010 consolidated audited financial statements presented in our annual report on Form 10-K for the year ended December 31, 2010, filed with the SEC on March 21, 2011 (SEC File No. 000-52975). Our reports are available electronically by visiting the SEC website at http://www.sec.gov
. You may also visit the investor relations section of the American Casino & Entertainment Properties LLC website at http://www.acepllc.com
.
Principles of Consolidation
The condensed consolidated financial statements include the accounts of ACEP and its wholly-owned subsidiaries. All material intercompany balances and transactions have been eliminated in consolidation.
Recently Issued Accounting Pronouncements
In June 2011, the Financial Accounting Standards Board, or FASB, issued Accounting Standards Update 2011-05, Presentation of Comprehensive Income.
This update requires an entity to present the total of comprehensive income, the components of net income and the components of other comprehensive income in either a single continuous statement of comprehensive income or in two separate but consecutive statements. Presentation of the components of other comprehensive income as part of the statements of changes in members’ equity is no longer permitted. The new guidance requirements are effective for the fiscal years beginning after December 15, 2011 and for interim periods within those years, with early adoption permitted. We expect there to be no impact to our statement of operations or statement of members’ equity upon adoption.
In September 2011, FASB issued Accounting Standards Update 2011-08, Testing Goodwill for Impairment
. This update amends prior guidance to allow an entity to first evaluate qualitative factors to determine whether it is more likely than not that the fair value of a reporting unit is less than its carrying amount as a basis for determining whether it is necessary to perform the two-step goodwill impairment test. The amended guidance is effective for annual and interim goodwill impairment tests performed for the fiscal years beginning after December 15, 2011. Adoption of this guidance is not expected to have a material impact on our financial statements.
In September 2011, FASB issued Accounting Standards Update 2011-09, Disclosures about an Employer’s Participation in a Multiemployer Plan
. This update applies to employers that participate in multiemployer pension plans and requires employers to disclose the following regarding their involvement in multiemployer pension plans: 1) the significant multiemployer plans in which an employer participates, 2) the level of an employer’s contributions made to the plans and an indication of whether the employer’s contributions are more than five percent (5%) of the total contributions made to the plan by all contributing employers, 3) the financial health of the
significant multiemployer plans and 4) the nature of the employer commitments to the plan, including when the collective-bargaining agreements that require contributions to the significant plans are set to expire and whether those agreements require minimum contributions to be made to the plans. In addition, for plans where financial statement users are not able to obtain details from outside sources, an employer is required to provide additional disclosures. These disclosures include: 1) a description of the nature of the plan benefits, 2) a qualitative description of the extent to which the employer could be responsible for the obligations of the plan and 3) other qualitative information, to the extent available, such as total plan assets, actuarial present value of accumulated plan benefits and total contributions received by the plan. These new disclosure requirements are effective for annual periods for the fiscal years ending after December 15, 2011. Accordingly, we will include the expanded disclosures beginning with our December 31, 2011 financial statements.
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