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ACEP reports financial results for first quarter

13 May 2014

LAS VEGAS -- (PRESS RELEASE) -- American Casino & Entertainment Properties, LLC (ACEP) Consolidated Net revenue was $89.0 million for the first quarter of 2014 compared to $86.3 million for the first quarter of 2013, an increase of 3.1%. ACEP reported first quarter Net Income of $4.5 million for 2014 compared to a Net Loss of $3.0 million for the first quarter of 2013. Adjusted EBITDA increased 12.7% to $18.7 million for the first quarter of 2014 compared to $16.6 million for the first quarter of 2013. Adjusted EBITDA Margin also increased to 21.0% compared to 19.2% in 2013.

The increase in consolidated Net revenue for the first quarter of 2014 was driven by the hotel, food and beverage, and the tower at the Stratosphere. Consolidated casino revenue decreased 0.7%. The decrease in casino revenue was the result of lower volume in slots and tables and a 3.3% percentage point decrease in bingo hold percentage. The decrease in those areas was offset by a 4.9% percentage point increase in sports hold percentage. For the three months ended March 31, 2014 and 2013, certain expenses had an impact on income from operations and EBITDA. For the three months ended March 31, 2014, our repair and maintenance expense decreased by $672,000 and sales tax decreased by $226,000 compared to the same period in 2013. The decrease in repairs is due to the completion of various projects at Aquarius. The decrease in sales tax is related to complimentary and employee meals. The company began accruing sales tax on complimentary and employee meals in February 2012 based on a decision by the Nevada Tax Commission, which was subsequently rescinded in 2013.

The collective bargaining agreement at the Stratosphere with the Culinary Workers Union, Local 226 and Bartenders Union, Local 165 expired on May 31, 2012 and was extended by the parties until May 31, 2013. We reached a verbal agreement with the union on March 15, 2014. It is our expectation that the membership will ratify the agreement and the terms will become final. As a result, we expensed approximately $443,000 in the quarter ended March 31, 2014 to cover certain benefits from the period June 1, 2013 through March 31, 2014.

The Stratosphere Casino Hotel and Tower – Stratosphere’s Net revenue increased 8.3% in the first quarter of 2014 as compared to the first quarter of 2013. Hotel revenue increased 19.9% in the first quarter of 2014 compared to the first quarter of 2013, due to a 2.4 percentage point increase in occupancy and a 5.1% increase in average daily room rates. Casino revenues increased 2.3% due primarily to increased table games and race and sports hold. Tower revenue increased 8.4% due primarily to increased ride and Sky Jump patronage. Stratosphere increased both Adjusted EBITDA and Adjusted EBITDA margin during the first quarter of 2014.

Arizona Charlie’s – The Arizona Charlie’s Net revenue increased 0.4% in the first quarter as compared to the first quarter of 2013. Slot headcounts, occupancy and food and beverage covers all rose in the first quarter of 2014 compared to the first quarter of 2013. Hotel and food and beverage revenues increased at both Arizona Charlie’s properties. The increase in hotel revenue was due to increased occupancy at Arizona Charlie’s Decatur and higher average daily room rates at both properties. Casino revenues decreased 0.8%. Slot revenue increased 1.1%. Table games revenue decreased 7.0% on relatively flat drop. Bingo revenue decreased 40.8% due to a 3.3 percentage point decrease in hold percentage. Race and sports, keno and poker revenues all increased. The increase in Net revenue, however, was not enough to offset the expense associated with driving the increased volume. As a result, Adjusted EBITDA and Adjusted EBITDA margin both decreased at the Arizona Charlie’s properties during the first quarter of 2014.

The Aquarius – The Aquarius Casino Resort’s Net revenue decreased 2.0% in the first quarter of 2014 compared to the first quarter of 2013. Occupancy increased to 51.4% in the first quarter of 2014 compared to 49.5% in the first quarter of 2013, while ADR decreased slightly. Casino revenue decreased 3.1% on a 0.3 percentage point decrease in slot hold percentage, and a 2.4 percentage point decrease in the tables games hold percentage. Adjusted EBITDA and Adjusted EBITDA Margin both increased in the first quarter of 2014. Adjusted EBITDA and Adjusted EBITDA margin for the first quarter of 2013 were negatively impacted by approximately $882,000 in expenses for repair and maintenance projects.

Financial Statistics as of March 31, 2014:

Cash
$62.4 million

Unrestricted Cash
$54.1 million

Consolidated Total Debt
$334.6 million

Consolidated Capital Expenditures for the four Fiscal Quarters ended March 31, 2014
$13.3 million

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