Book Number Issued To

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Confidential Information Memorandum

February 2007

This Confidential Information Memorandum (the “Memorandum”) has been prepared by Bear, Stearns & Co. Inc. (“Bear Stearns”) solely for informational purposes from materials supplied to Bear Stearns by American Casino and Entertainment Properties LLC (“ACEP” or the “Company”). This Memorandum relates to the possible sale of the Company. This Memorandum is being furnished through Bear Stearns as the Company’s exclusive financial advisor, solely for use by prospective purchasers in considering an acquisition of the Company. This Memorandum has been prepared to assist interested parties in making their own evaluation of ACEP and does not purport to contain all of the information that a prospective purchaser may desire. In all cases, interested parties should conduct their own investigation and analysis of ACEP and the data set forth in this Memorandum. Bear Stearns has not independently verified the accuracy and completeness of any of the information, contained in this Memorandum. Neither Bear Stearns, the Company or its subsidiaries, nor their respective affiliates, directors, officers, employees, representatives or agents makes any representation or warranty as to the accuracy or completeness of this Memorandum, or any supplemental information furnished in connection herewith, and none of the foregoing shall have any liability for any representations (express or implied) contained in, or for any omissions from, this Memorandum, any supplemental information furnished in connection herewith or any other written or oral communication transmitted to the recipient in the course of the recipient’s evaluation of ACEP. Neither Bear Stearns, the Company or its subsidiaries, nor their respective affiliates, directors, officers, employees, representatives or agents, undertakes any obligation to provide additional information or to correct or update any of the information set forth in this Memorandum. By accepting this Memorandum, the recipient acknowledges and agrees that all information contained herein and all other information provided by Bear Stearns, or the Company related thereto is subject to the terms of the confidentiality agreement previously executed by the recipient regarding this Memorandum. Without limiting the generality of the foregoing, (i) the recipient will not reproduce this Memorandum, or such other information, in whole or in part, and will use this Memorandum and such other information solely for purposes of evaluating the recipient’s interest in acquiring ACEP and (ii) if the recipient does not wish to pursue this matter, the recipient will promptly return this Memorandum and such other information, if any, to Bear Stearns, together with any other materials relating to ACEP which the recipient may have received from either Bear Stearns, ACEP, the Company or its subsidiaries, or their respective affiliates, directors, officers, employees, representatives or agents, as well as any notes or written materials prepared by the recipient. ACEP reserves the right to negotiate with one or more prospective buyers at any time and to enter into a definitive agreement for the sale of ACEP or any components thereof without prior notice to the recipient of this Memorandum or other prospective purchasers. ACEP also reserves the right to terminate, at any time, solicitation of indications of interest for the acquisition of ACEP or the further participation in the investigation and proposal process by any party. Finally, ACEP reserves the right to modify, at any time, any procedures relating to such process without assigning any reason thereto. The Company intends to conduct business in the ordinary manner during the evaluation period; however, ACEP reserves the right to take any action, whether or not in the ordinary course of business, including but not limited to the sale of any assets of the Company, which it deems necessary or prudent in the conduct of such business.

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Table of Contents
Section 1 2 3
A B C D

Executive Summary Investment Considerations Business History and Description
Stratosphere Arizona Charlie’s Decatur Arizona Charlie’s Boulder Aquarius

4 5 6

Financial Review Management Process Considerations

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Section 1

Executive Summary

Executive Summary
American Casino and Entertainment Properties LLC (“ACEP” or the “Company”), a wholly-owned indirect subsidiary of American Real Estate Partners, L.P. (“AREP”) (NYSE: ACP), currently owns and operates four distinct gaming and entertainment properties in Nevada, one of the most favorable and stable gaming markets in the world. Stratosphere Casino Hotel & Tower. One of the most recognized landmarks on the Las Vegas Strip, the “Must See” resort caters to visitors to Las Vegas. Arizona Charlie’s Decatur and Arizona Charlie’s Boulder. Well-known casinos in their respective marketplaces, the properties are located off-Strip and cater primarily to residents of the fast growing Las Vegas metropolitan market. Aquarius Casino Resort. The largest hotel in the Laughlin market with more than 1,900 rooms, the property (formerly known as the Flamingo Laughlin Hotel and Casino) caters to visitors from Southern California and Arizona and locals from Laughlin, Nevada. Overall, each property offers customers a value-oriented experience by providing quality hotel accommodations, competitive odds in the casinos and a variety of dining facilities. Furthermore, the Stratosphere and Aquarius offer value-oriented, well-regarded entertainment attractions and amenities. Notably, all of the Company’s properties have recently undergone extensive capital improvement programs and are well positioned within their respective markets to benefit from these significant investments. The following table further summarizes the Company’s properties:

Property Summary
Property Stratosphere Arizona Charlie’s Decatur Arizona Charlie’s Boulder(3) Aquarius(4) Total Date Acquired 1998 1999 2000 2006 Completion Date of Recent Renovation March ’07 January ’07 June ’06 October ’06 EBITDA After First Full Yr of Ops $13.6 3.2 (6.0) NA Gaming Square Footage(1) 80,000 52,000 47,000 57,000 236,000 Slot Machines(1) 1,309 1,379 1,061 1,021 4,770 Table Games(1) 49 15 16 42 122 Hotel Rooms(1) 2,444 258 303 1,907 4,912

($ in millions)
2006E PF(2) Net Revenue EBITDA $197.6 $42.3 82.5 48.0 101.6 $429.7 29.1 11.0 9.0 $91.5

(1) (2) (3) (4)

At December 31, 2006, except Aquarius at September 30, 2006. Pro forma for a full year of Laughlin operating results. Opened in 1988 as a standalone hotel and RV park. Hotel room renovation will continue through 2008.

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CONFIDENTIAL

1

1% CAGR ‘06E PF–‘08E $112. led to a modest decline in operating performance in 2006. Inc.1 20 0 2001 % Margin (1) ($ in millions) $89.5% 2002 2003 2004 2005 2003 16.6%. with revenues increasing from $242.9 $429. the Company embarked upon a comprehensive capital improvement program. the properties experienced temporary construction disruptions.0 $250.1 $31. Protected Net Revenue $700 600 500 400 300 200 100 0 2006E PF (2) 2007E ($ in millions) $700 Projected EBITDA $150 125 100 75 11.8 $328.8% CAG $300. which.4 million.8 $450.3 40 20 0 2002 12. Bear. Historical Net Revenue $500 400 300 200 100 0 2001 (1) ($ in millions) $500 Historical EBITDA $100 80 60 40 $28.Summary Financial Information From 2001 to 2005. CONFIDENTIAL 2 .8% and 33.4 $44.5 50 25 0 2006E PF (2) % Margin 21. As a result of this initiative.1% 2005 27.000 room hotel room expansion in June 2001.5 ($ in millions) $150 125 100 75 50 25 0 4.3% 2008E 2007E 23.9% (2) Pro Forma results include Aquarius.1 million to $89. Beginning in 2005 and continuing throughout 2006.4 $100 80 60 $242.6% (1) Stratosphere completed a 1.9% CAGR ‘06E PF–‘08E $472. consolidated net revenue and EBITDA grew at a compounded annual growth rate of 7. Stearns & Co.7 600 500 400 300 200 100 0 $91.0 $262. Virtually all of the Company’s capital improvement programs are now complete.0 400 300 200 100 0 33.3% 11.5 R ‘01–‘05 7. in conjunction with a modest softening in the Las Vegas market overall.0 million and EBITDA increasing from $28.8% 2004 24.6 R ‘0 CAG % 5 1–‘0 $72. respectively. and management believes each of the properties are now poised to capitalize on these improvements going forward. aimed at enhancing the position of each property in its respective market.9 $106.6% 2008E 23.5 million to $328.

3% 3.6% Non-Gaming 46.6 Million Gross Revenue: $465.6% Rooms 18.9% Laughlin 23. Bear.0% Boulder 11.1% Gaming 53. CONFIDENTIAL 3 .5 Million Gross Revenue Breakdown by Segment 2006E PF Gross Revenue by Segment 2006E PF Gross Revenue by Sub-Segment Other Retail Tower 2.9% Gross Revenue: $465.3% Decatur 31.0% Other Gaming 2.0% Boulder 12. Inc. Net Revenue and EBITDA by Property 2006E PF Net Revenue by Property 2006E PF Net EBITDA by Property Laughlin 9.Summary Financial Information The Company’s revenues and EBITDA benefit from both geographic and business mix diversification.4% Tables 7.2% Slots 43.9% Food 15.6 Million Note: Pro Forma results include Aquarius.7 Million EBITDA: $91.8% 2.2% Stratosphere 46. Stearns & Co.6% Stratosphere 46.2% Beverage 4.8% Net Revenue: $429.2% Decatur 19.

Section 2 Investment Considerations .

A recently completed approximately $50 million capital improvement program has positioned all four properties for renewed growth in their respective markets. Emphasis on slot play. Bear. Unique opportunity to exploit the growing Laughlin market. CONFIDENTIAL 4 . with a demonstrated track record for turning around neglected assets. Well-regarded. experienced management team. produces strong. in conjunction with relatively low maintenance capital expenditures. Stearns & Co. Inc.907 hotel rooms. Compelling development opportunity on the Las Vegas Strip on approximately 17 acres of land located adjacent to the Stratosphere. with the recently acquired and newly repositioned Aquarius Resort & Casino (formerly the Flamingo Laughlin). predictable free cash flow. in one of the fastest growing gaming markets in the US.Investment Considerations Strategically located. Las Vegas assets are well-positioned to cater to both Tourists and the Locals Market. diversified portfolio of casino assets in the most stable gaming regulatory jurisdiction in the world. the largest hotel in Laughlin with 1.

• The Stratosphere caters to visitors to the Las Vegas Strip. respectively.Investment Considerations respective Strategically located. Nevada. and to local residents of North and West Las Vegas and its respective surrounding communities. diversified portfolio of casino assets in the most stable gaming regulatory jurisdiction in the world. Inc. • Arizona Charlie’s Boulder and Decatur properties cater to local residents/visitors to the Boulder Strip and its respective surrounding communities. ACEP’s properties operate in four distinct markets that serve different segments of the overall gaming market. in one of the fastest growing gaming markets in the US. NV Laughlin. Stearns & Co.5 Bear. Arizona Charlie’s Decatur Stratosphere Arizona Charlie’s Boulder Don Laughlin’s Riverside Aquarius Las Ve gas. • Aquarius Casino Resort caters to visitors from Southern California and Arizona and locals from Laughlin.5 1 1. NV Edgewater Ramada Express Pioneer Colorado Belle 0 250 miles 500 Golden Nugget Laughlin River Palms Harrah’s Laughlin Avi Resort 0 mi 0.5 2 2. CONFIDENTIAL 5 .

• Trade show attendees increased from 2.6 billion in 2005. Stearns & Co. Occupancy in Las Vegas has increased in recent years to almost 90%. CONFIDENTIAL 6 .6 million in 2005. The Las Vegas Market Visitation to Las Vegas has increased from 29.5% ’01–’05 CA 40 150 127 120 ’01–’05 CAGR: 127 130 1.3% 132 133 93 Visitors (in millions) Visitors (in millions) Occupancy Rate 91 89% 89% 30 30 90 89 20 20 60 85% 30 85% 84% 87 10 10 85 0 83 2001 2002 2003 2004 2005 0 2001 2002 2003 2004 2005 0 Room Supply Occupancy Rate Source: Las Vegas Convention and Visitors Authority.2 million in 2005. The Arizona Charlie’s properties are recognized as successful proven locals casinos. Historical Visitation to Las Vegas 50 50 Las Vegas Room Supply and Occupancy 180 95% 40 35 35 36 37 39 Room Supply (in thousands) GR: 2. The Stratosphere is one of the most recognized and most visited tourist attractions on the Strip.9%. Inc. a CAGR of 2.7%. • Trade show attendees spent approximately $7.9 million in 1995 to 6. Las Vegas has been the US’ top-ranked destination for trade shows for the last ten years. a CAGR of 7.0 million in 1995 to 38. • The market has shown a remarkable resiliency to economic downturns and political events. Bear.Investment Considerations Las Vegas assets are well-positioned to cater to both Tourists and the Locals Market.

CA North Port St. 1.9% 14% 12 10 8 6 4 2 0 Elk Grove. • 2004 National median household income was $44.6% 11. AZ % Growth 10 8 6 4 2 0 % Growth Note: Represents the period of 7/1/04-7/1/05. • 2004 Clark County median household income was $44.821. • Overall US population growth.S. Nevada population growth. according to the Las Vegas Convention and Visitation Authority.2% 4. Nevada has been the fastest-growing state in the United States for the last 19 years. CONFIDENTIAL 7 . Gilbert.9% 9.4% 5. Las Vegas FL AZ Cape Coral.4% 11.Investment Considerations Local Market ACEP’s properties are well positioned to benefit from the growth in the local population.8 million residents at the end of 2005. Rancho FL CA Cucamonga. Inc.2% 7.3% 6.684. Fastest Growing Cities in the US 14% 12 11. Clark County has enjoyed a very strong economy and positive growing demographic including an increasing number of retirees and other active gaming patrons. Census Bureau.Moreno Valley. • Clark County. Source: U. 5. Lucie. FL Chandler. Stearns & Co.1% CAGR.0% 10. Bear.5% CAGR. Clark County population has grown between 1995 and 2005 at a much more aggressive pace than the overall United States to include 1. CA Miramar.

3 miles from the Las Vegas Convention Center. Management is currently considering the development of a 1. Convention attendance accounted for 13. • • • • • 1.6 billion in 2005.Investment Considerations Compelling development opportunity on the Las Vegas Strip on approximately 17 acres of land located adjacent to the Stratosphere. a CAGR of 7.000-room hotel expansion and/or the development of additional convention center space on the adjacent 17 acres. Inc. CONFIDENTIAL 8 . Stratosphere Sahara Circus Circus Stardust Riviera Las Vegas Hilton New Frontier Excalibur Bear.154 conventions held in 2005. 22.7%. Stratosphere The Stratosphere’s close proximity to the Las Vegas Convention Center provides a compelling development opportunity on the Las Vegas Strip.2 million in 2005. Stearns & Co.9 million in 1995 to 6.8 million hotel night stays in 2005. Trade show attendees spent approximately $7. Trade show attendees increased from 2.

and Casino floor improvements. Stearns & Co. New Center bar.g. Inc. New nightclub.000 additional rooms. Bear. which provides potential for a convention center and/or up to 1. • The luxury room product expected to come online over the next 2 to 3 years (e. The property boasts approximately 112. Wynn’s Encore. as the supply of affordable hotel accommodations continues to shrink. including: − − − − New carpet and wall covering. CONFIDENTIAL 9 . New VIP Check-In. “Polly Esters”. Transitioned entire slot floor to Ticket-In/Ticket-Out (“TITO”) slot machines. Romance lounge.) will likely provide the Stratosphere with a “pricing umbrella” under which the Stratosphere will be able to continue to capture a greater than fair share of value-oriented customers who demand quality. Stratosphere Having recently completed the renovation of all of the original 1. Several other recently completed initiatives include: • • • • • Newly refurbished Top of the World restaurant. etc. the Stratosphere now boasts the newest room offerings north of Wynn Las Vegas. New High Limit Slots. Two new thrill rides. MGM’s CityCenter. affordable accommodations. entrance and lobby areas. The Stratosphere’s newly renovated room product is poised to capture an even greater share of its targeted customer base.444 hotel rooms.000 square feet of undeveloped retail space and 17 acres of undeveloped land. • No new comparable room product is scheduled to come online in the Stratosphere’s core market until at least 2010. Redesigned wedding chapels.Investment Considerations A recently completed approximately $50 million capital improvement program has positioned all four properties for renewed growth in their respective markets.

Investment Considerations Arizona Charlie’s Decatur Management has invested approximately $38 million to improve the Decatur property: • • • • Converted 100% of slot machines from coin operated to “TITO” technology. • New slot floor in Laughlin with enhanced new gaming systems and “TITO” technology. Renovated all hotel rooms. • Development of new nationally branded food & beverage options.300 square feet of new gaming space. Opened an Outback Steakhouse on the first floor of the casino. New VIP Check-In. While the extensive renovation of the property resulted in a fair amount of disruption in 2006. Outback Steakhouse. Enhancement of player amenities: − − − − − − − − New High-Limit area. formerly the Flamingo Laughlin Hotel and Casino. New VIP Lounge. the renovation is largely complete and the property is poised for renewed growth in 2007. Redesigned casino floor. • Enhancement of marketing programs to attract walk-in traffic from nearby outdoor River Walk. • Enhancement of entertainment options. − 1. New outdoor River Walk patio lounge. Starbucks® coffee outlet. Converted 100% of slot machines to “TITO” technology. • 235 new slot machines. Re-launched a revitalized tiered player rewards program.000 new slot machines. Introduced a revitalized tiered player rewards program. in May 2006. Arizona Charlie’s Boulder Completed an $8. which included: • 7. CONFIDENTIAL 10 . in June 2006. • • • • Re-branding of property as “Aquarius”. following the closing of the acquisition of the Aquarius. Extensive showroom and lounge renovation. Refurbished Center Bar. Hotel room refurbishment. Stearns & Co. Inc. New front lobby.1 million casino expansion. Bear. Aquarius Implemented a $40 million capital expenditure program.

the Aquarius. the Company has implemented a significant capital investment program of $40 million.3% in 2004 and 2005. The Laughlin Market The Laughlin gaming market targets tourists and visitors from Southern California and Arizona and locals from Laughlin.Investment Considerations Unique opportunity to exploit the growing Laughlin market. • Newest room product in the market.000 new state of the art slot machines. operated as the Flamingo Laughlin and owned by Caesars Entertainment and subsequently Harrah’s Entertainment. • Consistently generated EBITDA of more than $20 million throughout the 1990’s. Bear. • Local residential development is anticipated to nearly double the surrounding customer base. the Aquarius will offer: • Renewed managerial focus. as the market stabilized from the opening of tribal casinos in California. • Laughlin is a value-orientated destination market that offers an alternative to the fast-pace and higher costs of Las Vegas with a broad array of attractions including the Colorado River. CONFIDENTIAL 11 . respectively. − 1.6% and 4. More recently. Since acquisition by ACEP in 2005. Management believes this investment program will enable the property to recapture its position of prominence in the market. The market is expected to continue to create stable revenue growth as: • Limited new gaming supply is expected from California Native American casinos. Historically. • Revamped entertainment program. with the recently acquired and newly repositioned Aquarius Resort & Casino (formerly the Flamingo Laughlin). Inc. the Aquarius has experienced a weakness in operating results given the transition in ownership. • Newest slot product in the market. the largest hotel in Laughlin with 1. The Laughlin gaming market grew 7. • Introduction of new food & beverage options. however. was one of the leading properties in the market. Upon completion in 2007. Nevada. Stearns & Co.907 hotel rooms. related property management turnover and a lack of maintenance capital expenditures.

integrating and operating gaming and entertainment properties. 91%. Stearns & Co.700 slot machines. Arizona Charlie’s Decatur. The senior management team collectively has over 100 years of operating experience in the gaming industry. produces strong. ticket – out (TITO) machines. Management’s continued focus on guest service training for employees has enabled the properties to consistently exceed customer expectation. Brown Denise Barton Ronald P. CONFIDENTIAL 12 . Inc. The executive and property-level management teams have an established record of developing. in conjunction with relatively low maintenance capital expenditures. all of which are ticket – in.Investment Considerations Emphasis on slot play. 70%. experienced management team. ACEP has a seasoned and proven management team with strong expertise in their respective disciplines. 81% Well-regarded. Lurie Mark Majetich John Lind President and CEO. Chief Financial Officer Executive Vice President and General Manager—Decatur Senior Vice President and General Manager—Boulder Senior Vice President and General Manager—Laughlin 7 4 8 6 1 Bear. 91%. Aquarius. Senior Management Executive Officer Position ACEP Tenure (In Years) Richard P. The Company’s four properties offer over 4. Slot revenues account for over 80% of the Company’s gaming revenues: • • • • Stratosphere. with a demonstrated track record for turning around neglected assets. Gaming Senior Vice President. Arizona Charlie’s Boulder. predictable free cash flow.

Section 3 Business History and Description .

Stratosphere Gaming Corporation. ACEP is a holding company that was formed in Delaware on December 29. formerly known as the Flamingo Laughlin Hotel and Casino. Stearns & Co. 2003 for the purpose of acquiring the entities that own and operate the Stratosphere. including working capital amounts. now known as the Aquarius Casino Resort. AREP Laughlin Corporation entered into an agreement to purchase the Flamingo Laughlin Hotel and Casino. LLC. Nevada from Harrah’s Entertainment. at the Stratosphere. or the Aquarius. Stratosphere Corporation and its wholly-owned subsidiaries. LLC. the two Arizona Charlie’s properties are well-known casinos in their respective marketplaces and the Aquarius has the largest hotel in Laughlin. Bear. 2005. award-winning dining facilities and. Nevada. ACEP conducts its operations through direct and indirect wholly-owned subsidiaries. and Charlie’s Holding LLC and its wholly-owned subsidiaries. CONFIDENTIAL 13 . in Laughlin. These subsidiaries are American Casino & Entertainment Properties Finance Corp. which is located on the Las Vegas Strip and caters to visitors to Las Vegas. Arizona Charlie’s Decatur and Arizona Charlie’s Boulder. and the Aquarius Casino Resort. Arizona Charlie’s Decatur and Arizona Charlie’s Boulder. in Laughlin. Each of the Company’s properties offers customers a value-oriented experience by providing competitive odds in their casinos. quality rooms in their hotels. The purchase price was $114. which caters to visitors to Laughlin. two off-Strip casinos.0 million.Business History and Description American Casino & Entertainment Properties. Inc. will enable them to continue to attract customer traffic to their properties. The four properties are the Stratosphere Casino Hotel & Tower. 2006. LLC owns and operates four gaming and entertainment properties in the Las Vegas metropolitan area. The Company believes the value it offers its patrons. Stratosphere Land Corporation. an offering of entertainment attractions found nowhere else in Las Vegas. On November 29. Stratosphere Advertising Agency and Stratosphere Leasing. The Stratosphere is one of the most recognized landmarks in Las Vegas. together with a strong focus on customer service. LLC and Fresca. or the Aquarius.. The transaction was approved by the Nevada Gaming Commission upon recommendation of the Nevada Gaming Control Board and closed on May 19. which cater primarily to residents of Las Vegas and the surrounding communities. Arizona Charlie’s.

Section 3-A Stratosphere .

CONFIDENTIAL 14 . Stearns & Co. Inc.Stratosphere Bear.

The Stratosphere is centered around the Stratosphere Tower. two of which feature live entertainment. respectively. a renovated race and sports book area and a new VIP check-in area. a recently constructed six table poker room. of the Stratosphere’s gaming revenue was generated by slot machine play. which primarily are intended to attract customers for slot machines and table games. including 131 suites.6% and 70. 2004 and 2003. ACEP refurbished approximately 1. completed an approximate $86 million expansion of the Stratosphere. The Stratosphere offers seven themed restaurants. In addition to a newly constructed high-limit slot area. Beach Club 25. In 2004 and 2005. of which approximately 17 acres is undeveloped land. which includes a café. CONFIDENTIAL 15 . The Stratosphere opened in 1996 at a total cost of approximately $409 million. cocktail bar. the Stratosphere has 49 table games.000 square-foot resort pool and recreation area located on the eighth floor. Since the Company acquired the property in 1998.5%.400 of its guest rooms. and the remainder is a touristoriented gaming and entertainment destination property. Bear.000 square foot pool and recreation deck. private cabanas and a fitness center. 2006. 70. approximately 69. The Stratosphere derives its other gaming revenue from the poker room and race and sports book.1%. a 336-seat revolving restaurant located on level 106 in the Tower.4 million Center Bar. a newly renovated $1.000-room hotel tower and a 67. Casino The Stratosphere’s casino contains approximately 80. Stearns & Co. provides a secluded adult pool. 2005. In addition. located on the 25th floor. The Stratosphere’s premier restaurant is the recently refurbished Top of the World Restaurant and Lounge. ACEP acquired the property in 1998 and in 2001. including from McCarran International Airport. For the years ended December 31.Stratosphere The Stratosphere is situated on approximately 34 acres of land located at the northern end of the Las Vegas Strip.7%. it has invested a total of approximately $178 million through December 31.000 square feet of gaming space.444 rooms. the tallest free-standing observation tower in the United States and is visible from all directions. Hotel. with approximately 1. this renovation converted all of the Stratosphere’s video poker and slot machines to “TITO” technology. Inc. which included the addition of a 1. and four lounges. Additional hotel amenities include a 67. 2006. Food and Beverage The hotel has 2. 70.309 slot machines on a newly renovated slot floor layout. Top of the World has been awarded “Best All-Around Restaurant” and “Best Romantic Restaurant” by America Online’s City’s Best 2005 and the “Award of Excellence” in 2004 from Wine Spectator Magazine.

including the removal of the rollercoaster.p. 6 food venues. Inc. which opened on March 10. is the tallest building west of the Mississippi River. is the final major thrill ride attraction to be built atop the Tower. a vampire-themed adult review. Starbucks®. free-standing vending machines featuring snacks and souvenirs designed to capitalize on the unique nature of the Tower. The Tower also includes: Event space and wedding chapels. Retail and Entertainment The retail center. Stearns & Co. Tower visitors have dramatic views of the Las Vegas Strip. X Scream.000 square feet of developed retail space including 37 shops. which catapults up to 16 riders. lounge and restaurant. From the indoor/outdoor observation decks. Polly Esters. at levels 108 and 109. downtown Las Vegas and the surrounding Las Vegas Valley. a celebrity tribute production show and Bite. which are designed to appeal to value-oriented visitors who come to Las Vegas. in harnessed seats. Romance at Top of the World. which will be located just off of the casino. at levels 103 and 104. 160 feet straight up the mast of the Tower and allows for a controlled free-fall back to the landing platform. and Insanity. which have been recently renovated. Adjacent to the retail center is a 640-seat showroom that currently offers evening and late-night shows.000 square foot nightclub/event center. fixtures and kitchen. The Stratosphere’s entertainment includes American Superstars. at level 107. containing a gift shop. is shaped like a giant teeter-totter and launches up to eight riders approximately 30 feet over the edge of the Tower and then dangles them 900 feet above the Las Vegas Strip. at 1. as well as a refurbishment of its furnishings. With these projects completed. in March. which opened in October 2003. Bear. located on the second floor of the base building. Recent construction projects on the Tower. The new ride consists of an arm that extends out 64 feet over the edge of the Tower and spins passengers at up to three ‘G’s. overlooking the City of Las Vegas more than 900 feet below.The Tower The Tower is the tallest freestanding observation tower in the United States and. from the 921-foot level of the Tower. occupies approximately 110. have hindered customer traffic. CONFIDENTIAL 16 . and Indoor/outdoor observation decks. snack bar.149 feet.’ As the ride spins faster and faster. the riders are propelled up to an angle of 70 degrees. The Tower features the three highest thrill rides in the world: Big Shot.h. The Company currently plans to open a new 23. 2005. The new ride holds 10 passengers in “escape proof” seats as it spins at 40 m. 13 merchant kiosks and a full-service salon and spa. management expects significant improvement to EBITDA contribution from these attractions. a 156-seat lounge that underwent re-branding in an effort to attract a more affluent clientele.

a $1.C.E. The property has also recently begun courting a younger. Stearns & Co. In addition.000 square feet nightclub. which provide patrons with odds that are better than the standard odds at other Las Vegas Strip casinos. the Company has approximately 112. Rewards Program at the Stratosphere. The Company has approximately 1.E. approximately 22. Bear. including Single Zero Roulette and Ten Times Odds on Craps. Furthermore. Additionally. These programs permit members to accumulate points. CONFIDENTIAL 17 .E. promotions and events. The Company has been in discussions with several third parties regarding plans to jointly develop additional entertainment amenities within this space. to aggressively target offers to current patrons.085. Polly Esters. and an “upscale lounge” on the 107th floor of the observation tower The Stratosphere participates in the A.170 members registered with its A.C. Within the existing property. Mariposa. The Company uses the most sophisticated database marketing software available. radio and television advertising. Inc. direct mailings to potential and current customers and e-mail promotions to promote the property and target its customers.C. Business and Marketing Strategy The Stratosphere utilizes a combination of capital-efficient attractions and competitive gaming odds/payouts to attract visitors. which can be redeemed for cash at the casino and complimentaries at all of ACEP’s properties. the property offers attractive and often unique table games. providing the Company with the flexibility for additional expansion. on average.3% of the active A. middle-market Las Vegas visitor.000 square feet of undeveloped interior space.4 million center bar. more than four times per month. if warranted. more affluent clientele with the opening of a 23.Expansion Opportunities The property also includes approximately 17 acres of undeveloped land. Rewards and other aggressive marketing programs. Importantly. hotel rooms. the Company uses billboards. Rewards members frequented the property. entertainment and food and beverage products are priced to appeal to the value-conscious.

Inc. Stearns & Co. CONFIDENTIAL 18 .Competitive Landscape Las Vegas Strip Stratosphere Sahara Circus Circus Riviera Stardust Las Vegas Hilton New Frontier Excalibur 0 mi 1 2 3 4 5 Bear.

3 $45.500 1.000 80.309 1. Stearns & Co.388 3.5 $47. Bear.597 1.340 970 1.7% ($ in millions) $250 $204.000 room hotel tower in June 2001. Net Revenue $250 ’01–’08E CAGR: 5.778 1.838 1.330 2.8 EBITDA $50 ’01–’08E CAGR: 17.900 2. Management anticipates very strong profit growth and strong margins to continue in the future. Throughout 2006.7 $196.9 200 40 35 150 30 25 100 100 20 $15.0 $163.250 1.7% (1) Opened 1. north of Wynn Las Vegas. the Stratosphere is poised to exploit its relative competitive position as the only recently renovated property on the Las Vegas Strip.603 1. CONFIDENTIAL 19 .5% 23.225 1.4% 22.7 150 $142.1% 15. the Stratosphere’s extensive renovation program temporarily disrupted traffic flow and visitation to the property.444 1.286 76.5 $50 45 40 35 $27.3% 22. resulting in a temporary decline in the property’s operating results in 2006.745 1.544 1.340 1.000 121.2 $197. Inc. 2006.162 2.000 100.956 1.0% 21.7% 17.720 2.9 $24. Positions = Slots + (6*Tables). Financial Summary The Stratosphere has been able to show very strong and consistent profit throughout its historical period.3 ($ in millions) $45. Through management innovation and focus on profitability.000 102.Selected Competitive Information Property Casino Square Footage Slots Positions Hotel Rooms Stratosphere Sahara Riviera Circus Circus Las Vegas Hilton Stardust New Frontier Excalibur (1) 80.6 30 25 20 200 $156.8 15 15 10 5 0 2001(1) 2002 2003 2004 2005 2006E 2007E 2008E 50 50 10 5 0 2001(1) 2002 2003 2004 2005 2006E 2007E 2008E 0 0 % Margin 11.3% 21.991 Source: Company estimates and Casino City’s North American Gaming Almanac for FY2005. EBITDA has shown a CAGR of 30% over the historical period.4 $208.500 85.254 3.546 2.6 $182. With the renovation program now complete.760 1.7 $42. As of December 31.0% 45 $39.273 2.300 101.

Section 3-B Arizona Charlie’s Decatur .

CONFIDENTIAL 20 . Inc. Stearns & Co.Arizona Charlie’s Decatur Bear.

a major highway in Las Vegas. 2004 and 2003. In addition. Food and Beverage Arizona Charlie’s Decatur currently has 258 rooms. including live bands and musician showcase nights. The Naughty Ladies Saloon features a variety of entertainment. Arizona Charlie’s Decatur has four restaurants. of the property’s gaming revenue was generated by slot machine play.Arizona Charlie’s Decatur Arizona Charlie’s Decatur opened in April 1988 as a full-service casino and hotel geared toward residents of Las Vegas and the surrounding communities. The Company purchased the property in 1998 and subsequently completed a $38 million capital improvement program.0% and 90.8%.379 slot machines. which primarily are intended to attract customers for slot machines and table games. The property is located on approximately 17 acres of land four miles west of the Las Vegas Strip in the heavily populated west Las Vegas area and is easily accessible from Route 95. Casino Arizona Charlie’s Decatur contains approximately 52. 2006. a race and sports book. More recently. a keno lounge and a poker lounge. Hotel.9%. newspapers. candy. Inc. 90. a small gift shop located adjacent to the casino provides a limited range of inexpensive gift items. one of which is a franchised. 15 table games. quick-service restaurant and three bars including a lounge. ACEP opened the new Frisco Market Buffet. poker and the race and sports book. 89. In October 2003. keno. choose not to stay on the Las Vegas Strip or at other hotels in Las Vegas. For the years ended December 31. Arizona Charlie’s Decatur converted 100% of its video poker and slot machines to “TITO” technology. respectively. CONFIDENTIAL 21 . Arizona Charlie’s Decatur also derives other gaming revenue from bingo. magazines and cigarettes. as well as those business and leisure travelers who. Hotel customers include local residents and their out-of-town guests. including nine suites.3%.000 square feet of gaming space with approximately 1. approximately 90. a 24-hour bingo parlor. Stearns & Co. a 260-seat San Francisco-themed eatery and in January 2007. the property completed the conversion of the Yukon Grille on the first floor to an Outback Steakhouse in an effort to increase branded dinning notoriety and attract new customers. In 2001 and 2002. the Company expanded the slot floor and upgraded the interior design of the casino. because of location or cost considerations. Retail and Entertainment Arizona Charlie’s Decatur provides complimentary entertainment as a component of its overall customer appeal. 2005. Bear.

Importantly. These programs permit members to accumulate points. Inc. The Company uses the most sophisticated database marketing software available. Additionally. more than four times per month.000 people live within a five-mile radius. radio and television advertising. Rewards Program at Arizona Charlie’s Decatur. to aggressively target offers to current patrons. promotions and events. The Company believes that the property’s pricing and gaming odds make it one of the best values in the gaming industry and that its gaming products.0% of the active A. including double-deck. which can be redeemed for cash at the casino and complimentaries at all of ACEP’s properties.C. hotel rooms. The Company has approximately 290. the Company uses billboards.Business and Marketing Strategy Arizona Charlie’s Decatur markets its hotel and casino primarily to local residents of Las Vegas and the surrounding communities. Arizona Charlie’s Decatur participates in the A.C.E. including many diverse video poker machines and table games. CONFIDENTIAL 22 . direct mailings to potential and current customers and e-mail promotions to promote the property and target its customers. hand-dealt blackjack. Stearns & Co. Rewards and other aggressive marketing programs. approximately 39. where an estimated 500. Bear. smaller casinos and more attentive service.293 members registered with its A. Mariposa. Arizona Charlie’s Decatur also tailors its selection of slot machines.C.E. on average. Rewards members frequented the property. restaurants and other amenities attract local customers in search of reasonable prices. to appeal to local casino patrons.E.

Stearns & Co. Inc. CONFIDENTIAL 23 .Competitive Landscape West Las Vegas Locals Market Santa Fe Station Fiesta Rancho Rampart Casino Texas Station Suncoast Arizona Charlie’s Decatur Palace Station Palms Gold Coast 0 mi 1 2 3 4 5 Bear.

6 $29. recent capital improvements and external traffic disruption at the Decatur property created temporary visitation disruptions.1 $28. Management does not believe these factors will have a long term effect on the property’s performance.260 2.000 70.600 80. Stearns & Co. As of December 31.7 30 80 $73.763 2.2 20 $17.400 1.000 1.1 30 ($ in millions) $35 $29. as the properties compete for a different segment of casino patrons.000 84.4% 18.000 86.000 50. management believes the impact of Red Rock on Decatur’s operating performance will be minimal.061 2. Financial Summary Management has been able to consistently generate strong returns at the Decatur property.3 $82. 2006.437 95.2% 33. resulted in disrupting access to the property.6 $12.469 3.570 2.000 132.6 EBITDA $35 ’01–’08E CAGR: 8.0% 33.5 $85. CONFIDENTIAL 24 .3% 33.180 1.1% $31.5% 36.1% 26.860 1.827 2.7 $25. as the construction projects will be completed in the near term and the Las Vegas locals markets have a demonstrated history of absorbing new supply growth.0 15 40 40 15 10 10 20 20 5 5 0 2001 2002 2003 2004 2005 2006E 2007E 2008E 0 0 2001 % Margin 0 2002 2003 2004 2005 2006E 2007E 2008E 23.790 1.445 2.379 2. Net Revenue $100 ’01–’08E CAGR: 2. However.8 60 $76.030 100 541 Source: Company estimates and Casino City’s North American Gaming Almanac for FY2005. Construction projects by the Nevada Highway Authority. Inc.7% ($ in millions) $10 $84. the opening of Station Casino’s Red Rock Hotel & Casino presented additional competition in the Decatur market.900 1.762 2. Additionally. Furthermore.640 1.372 258 711 432 200 202 420 1.7 80 25 25 60 20 $17.Selected Competitive Information Property Casino Square Footage (1) Slots Positions Hotel Rooms Arizona Charlie’s Decatur Gold Coast Suncoast Santa Fe Station Texas Station Palms Palace Station Fiesta Rancho Rampart Casino 52.4 $66.3 $67.190 1.5% Bear.670 2.8 $88.9% 35. as well as Nevada Gas. Positions = Slots + (6*Tables).000 77. in close proximity to the Decatur property.

Section 3-C Arizona Charlie’s Boulder .

CONFIDENTIAL 25 . Stearns & Co. Inc.Arizona Charlie’s Boulder Bear.

the Company completed a $5. The RV park offers nightly.8%. Hotel customers include local residents and their out-of-town guests. as well as those business and leisure travelers who.9%. In July 2006. 2005. a race and sports book and a 24-hour bingo parlor.000 square feet of slot floor space. which provided for an additional 18. one of the largest short-term RV parks on the Boulder Strip with 30 to 70-foot pull through stations and over 200 spaces. including laundry facilities.E Rewards center. Since ACEP acquired the property in 2000. Stearns & Co. 2006. Arizona Charlie’s Boulder emphasizes video poker because it is popular with local players and. because of location or cost considerations. a 500-seat bingo hall and a 43-seat race and sports book. Food and Beverage Arizona Charlie’s Boulder hotel currently has 303 rooms. Hotel. near an I-515 interchange in an established retail and residential neighborhood in the eastern metropolitan area of Las Vegas. weekly and monthly rates and a range of services.300 square feet casino expansion. as a result. the Company has invested approximately $37 million to open the casino and upgrade the amenities including a recently completed 7. RV Park.1% and 86. 89.1 million expansion project. a swimming pool. 88. including 221 suites. Most table games at Arizona Charlie’s Boulder are devoted to double-deck. Inc. game and exercise rooms. which primarily serve to attract customers for slot machines and table games.C. Arizona Charlie’s Boulder has four restaurants and three bars.061 slot machines. Bear. Arizona Charlie’s Boulder also derives other gaming revenue from bingo and the race and sports book.1 million expansion added approximately 6. an $8. one of which is the Palace Grand lounge. Arizona Charlie’s Boulder is 100% converted to “TITO” technology. seven miles east of the Las Vegas Strip. generates high volumes of play and casino revenue. hand-dealt blackjack play. For the years ended December 31.Arizona Charlie’s Boulder Arizona Charlie’s Boulder opened in 1988 as a stand-alone hotel and RV park and is located on approximately 24 acres of land. Casino Arizona Charlie’s Boulder contains approximately 47. two new table games and a new A. 16 table games.000 square feet of gaming space with approximately 1. 2004 and 2003. CONFIDENTIAL 26 .1%.000 square feet of gaming space including 250 new slot machines. a whirlpool and shower facilities. In 2002. respectively. of gaming revenue was generated by slot machine play. choose not to stay on the Las Vegas Strip or at other hotels in Las Vegas. approximately 90. Arizona Charlie’s Boulder also has a 12 acre RV park.

Rewards and other aggressive marketing programs. promotions and events. and table games. The Palace Grand. newspapers. Rewards members frequented the property. The Company has approximately 31.Retail and Entertainment Arizona Charlie’s Boulder provides complimentary live entertainment in its lounge. including double-deck. Stearns & Co.000 people live within a five-mile radius.E. Mariposa. CONFIDENTIAL 27 . Inc. The Company believes that its pricing and gaming odds make it one of the best values in the gaming industry and that its gaming products. Additionally. including many diverse video poker machines. smaller casinos and more attentive service. radio and television advertising. more than four times per month. and other amenities attract local customers in search of reasonable prices. Importantly. restaurants.C. Arizona Charlie’s Boulder also participates in the A. to aggressively target offers to current patrons.1% of its active A. candy. hotel rooms. direct mailings to potential and current customers and e-mail promotions to promote the property and target its customers. Business and Marketing Strategy Arizona Charlie’s Boulder markets its hotel and casino primarily to residents of Las Vegas and the surrounding communities. hand-dealt blackjack. approximately 34.E. A small gift shop located adjacent to the casino provides a limited range of inexpensive gift items. to local casino patrons.C. Bear. Arizona Charlie’s Boulder also tailors its selection of slot machines. to attract customers. on average. Rewards Program at Arizona Charlie’s Boulder. where an estimated 423. These programs permit members to accumulate points that can be redeemed for cash at the casino and complimentaries at all of ACEP’s properties. magazines and cigarettes.E.987 members registered with its A. the Company uses billboards. The Company uses the most sophisticated database marketing software available.C.

Competitive Landscape Boulder Strip Locals Market Boulder Station Arizona’s Charlie Boulder Sam’s Town Nevada Palace Longshorn Klondike Sunset Sunset Station Skyline Jokers Wild Fiesta Henderson Eldorado 0 mi 1 2 3 4 5 Bear. CONFIDENTIAL 28 . Stearns & Co. Inc.

4 40 $31.6 12 $11. Net Revenue $60 ’01–’08E CAGR: 10.Selected Competitive Information Property Casino Square Footage Slots Positions Hotel Rooms Arizona Charlie’s Boulder(1) Sam’s Town Boulder Station Sunset Station Fiesta Henderson Nevada Palace 47.7% Bear.6% 50 $40.176 2. With the continued implementation of the various operating initiatives.5 $48.5%) 17.3 30 $27.6) ($5.061 3.0 ($ in millions) $16 $12.5% 23.3 $47.0 ($ in millions) $55. management believes Arizona Charlie’s Boulder will continue to show strong returns in the future.0% 23.587 549 303 646 300 456 227 210 Source: Company estimates and Casino City’s North American Gaming Almanac for FY2005.000 120.4) 0 10 10 (4) ($4.1) (4) 0 2001 2002 2003 2004 2005 2006E 2007E 2008E 0 (8) 2001 2002 2003 2004 2005 2006E 2007E 2008E (8) % Margin (16. which upon acquisition in 2000 was a stand alone hotel and RV park. The property faced challenges similar to those experienced by the Company’s other properties in 2006.050 2.425 495 1.5 $27.8% 26.7%) (18.2 12 40 8 $7. Management believes capital improvements completed at the Boulder property have positioned the property for renewed growth in revenues and EBITDA going forward.000 90.900 2.4 $13.906 1. As of December 31.6% 23. Positions = Slots + (6*Tables). Stearns & Co.000 1.600 1.000 15. Financial Summary Following the opening of the casino at Arizona Charlie’s Boulder. management has been able to deliver strong growth in both revenues and EBITDA. Inc.000 100.5 50 $60 EBITDA $16 ’01–’08E CAGR: NM $12.8 $52. Similarly. the capital improvements initiated at the property created a temporary disruption in traffic flow.6%) (4. Post current expansion projects.000 50.2 8 30 4 4 20 20 0 ($1.350 3. CONFIDENTIAL 29 . 2006.157 3.

Section 3-D Aquarius .

Stearns & Co. Inc.Aquarius Bear. CONFIDENTIAL 30 .

seven dining options. The following improvements have been completed: Redesign of the casino floor layout to include new and expanded amenities. over 35.907 hotel rooms. Nevada and is a tourist-oriented gaming and entertainment destination property. The property features the largest hotel in Laughlin. • 1. Refurbished Center Bar.021 slot machines. • Outback Steakhouse.000 new state-of-the-art slot machines. Enhancement of entertainment options including extensive showroom and lounge renovations.000 square feet of gaming space with approximately 1.000 square feet of meeting space and a 3. Following the closing of the acquisition on May 19th.Aquarius The Aquarius is located on approximately 18 acres of land next to the Colorado River in Laughlin. a 57.300-seat outdoor amphitheater. New VIP Check-In. 2. with 1. Nevada. Re-branding of the property as Aquarius.420 parking spaces. Development of new food & beverage options: • Starbucks® coffee outlet. and a race and sports book. • New outdoor River Walk patio lounge. Inc. New VIP Lounge. New slot machines with enhanced new gaming systems and “TITO” technology. The following improvements will continue through 2008: Hotel room refurbishment. Enhancement of player amenities (including separate VIP check-in and lounge): • • • • New High-Limit area. Enhancement of marketing programs to attract walk-in traffic from nearby outdoor River Walk. The Company recently redesigned the Bear. 2006. New front lobby. The property targets mid to high market visitors from Southern California and Arizona and locals from Laughlin. 42 table games. • Installation of a new marquee.000-square-foot casino. Casino The Aquarius contains approximately 57. Stearns & Co. the Company began making various improvements to the property totaling approximately $40 million. CONFIDENTIAL 31 .

Additionally.000 members registered with Harrah’s. Stearns & Co. Hotel customers include mid. promotions and events.000 new state of the art slot machines and converting to “TITO” technology. 2006.2% and 78. Retail and Entertainment The Aquarius has a 2. For the years ended December 31.907 rooms.to high-market visitors from Southern California and Arizona and locals from Laughlin. These programs permit members to accumulate points. radio and television advertising. Business and Marketing Strategy Aquarius participates in the A. Mariposa. to aggressively target offers to current patrons.6%. which can be redeemed for cash at the casino and complimentaries at all of ACEP’s properties. of gaming revenue was generated by slot machine play. Hotel. Bear. The Company uses the most sophisticated database marketing software available. Food and Beverage Aquarius Hotel and Casino currently has 1. including 90 suites. approximately 80. Nevada.C. The Aquarius derives its other gaming revenue from the race and sports book. Additionally. respectively. the Aquarius is enhancing the amenities offered to its players via the creation of a new high limit area. at the time of acquisition. the Company uses billboards. Rewards and other aggressive marketing programs. The Aquarius has several restaurants. The hotel also has an outdoor pool. direct mailings to potential and current customers and e-mail promotions to promote the property and target its customers.casino floor adding 1.E. a new VIP check in and a new VIP lounge. including a buffet and Outback Steakhouse. at Laughlin. Notably. which primarily serve to attract customers for slot machines and table games. CONFIDENTIAL 32 .0%.2%. Inc.300-seat outdoor amphitheater ideal for holding concerts.000-seat indoor venue regularly featuring sports or concert events and a 3. and lighted tennis courts. 2004 and 2003. fitness center. 79. as well as three bars. 2005. 79. the Company has access to approximately 472.

CONFIDENTIAL 33 . Inc.Competitive Landscape Advantageous position in the Laughlin market. Stearns & Co. Bear.

003 1.000 60.753 1.250 1.000 60.0 130 $123.600 25.7% 11. the Company implemented a $40 million capital improvement plan to reposition the property which resulted in significant disruption at the property. 2006.0 $108.000 32. historical results were inconsistent given the previous owners view of the Aquarius as a non-strategic asset.6 130 20 $19.000 120.530 1.0 10 90 90 5 80 2001 2002 2003 2004 2005 2006E2007E2008E 80 0 2001 % Margin 0 2002 2003 2004 2005 2006E 2007E 2008E 8.464 1. Inc.096 995 872 1. CONFIDENTIAL 34 .5% 18.200 1.8 $120.220 1.125 1.6 100 $9.500 1. Management believes Aquarius is now positioned to regain its former presence as the preeminent casino in the Laughlin market.8% 17.000 25.396 300 455 416 Don Laughlin’s Hotel & Casino Ramada Express Colorado Belle Hotel Casino & Microbrewery Harrah’s Laughlin River Palms Resort Casino Edgewater Hotel and Casino Golden Nugget Laughlin Avi Resort and Casino Pioneer Hotel and Gambling Hall Source: Company estimates and Casino City’s North American Gaming Almanac for FY2005.5 $20.0 20 $17.478 1.1% 13.6 $101.000 60.0% ($ in millions) $140 EBITDA $25 ’01–’08E CAGR: 2.350 1.400 1.525 1.000 47.2 120 15 $107.404 1.8% Bear.2% 14. Financial Summary Prior to ACEP’s purchase of the Aquarius. Net Revenue $140 ’01–’08E CAGR: 1.173 1. Upon acquisition by ACEP in May 2006.4 15 $12.389 1.532 1.4 120 $111.907 1.3% ($ in millions) $25 $22. As of September 30.6 $107. Stearns & Co.000 53.021 1.4 110 $119.1 $13.2 110 10 100 5 $15.1% 11.273 1.Selected Competitive Information Property Casino Square Footage Slots Positions Hotel Rooms Aquarius (1) 57.560 1.9% 18. Positions = Slots + (6*Tables).000 845 776 1.

Section 4 Financial Review .

led to a modest decline in operating performance in 2006.0 400 300 200 100 0 33.0 $262.7 600 500 400 300 200 100 0 $91. CONFIDENTIAL 35 .8 $450.1% CAGR ‘06E PF–‘08E $112. in conjunction with a modest softening in the Las Vegas market overall.5% 2002 2003 2004 2005 2003 16.9% (2) Pro Forma results include Aquarius.1% 2005 27.6% 2008E 23.8% CAG $242. Bear.3% 11.5 $250. aimed at enhancing the position of each property in its respective market.8% 2004 24.3% 2008E 2007E 23.5 50 25 0 2006E PF (2) % Margin 21.6 R ‘0 CAG % 5 1–‘0 $72.4 million. and management believes each of the properties are now poised to capitalize on these improvements going forward.1 $31.9 $429.5 ($ in millions) $150 125 100 75 50 25 0 4. the Company embarked upon a comprehensive capital improvement program. Stearns & Co.8% and 33. respectively. which.5 million to $328. with revenues increasing from $242.1 million to $89.9 $106.9% CAGR ‘06E PF–‘08E $472. Virtually all of the Company’s capital improvement programs are now complete. the properties experienced temporary construction disruptions.8 ‘05 $300. Historical Net Revenue $500 400 300 200 100 0 2001 (1) ($ in millions) $500 Historical EBITDA $100 80 60 40 $28. Protected Net Revenue $700 600 500 400 300 200 100 0 2006E PF (2) 2007E ($ in millions) $700 Projected EBITDA $150 125 100 75 11.3 40 20 0 2002 12.Financial Review From 2001 to 2005.4 $100 80 60 R ‘01– 7.4 $44.6%.0 million and EBITDA increasing from $28. Beginning in 2005 and continuing throughout 2006. As a result of this initiative. Inc.1 20 0 2001 % Margin (1) ($ in millions) $89.000 room hotel room expansion in June 2001.6% (1) Stratosphere completed a 1.0 $328. consolidated net revenue and EBITDA grew at a compounded annual growth rate of 7.

8 12. Stearns & Co.5 – 0.3 – – 232.7 $575.9 $223.4 $6.4 2.8 $5.9 $330.7 33.2 $319.6 5.3 0.2 $4.3 – 215.2 – $43.0 0.4 – 46.3 – 6.1 $263.3 $480.0 2.1 – $232.6 0. 2004 2005 ($ in millions) 2006E(1) ASSETS Current Assets: Cash and cash equivalents Restricted cash Marketable securities Investments .1 0.5 $6. CONFIDENTIAL 36 .3 $108.9 16.0 $263.2 22.8 0.5 – 36.1 $0.7 $75.7 $262.1 3.Balance Sheet Information Consolidated Balance Sheet 2003 As of December 31.2 1.3 – – 257.2 14.6 $494.3 – 3.9 17.8 4.4 – $55.5 $44.5 – $38.6 3.5 3.3 $95.8 (1) Includes Laughlin financials since acquisition.1 54.5 – 2.8 $51.2 3.3 $54.8 $5.0 0.0 9.4 0.2 2.3 $480.4 – – 37. Inc.7 – – 201.0 293.7 – $257.1 $131.8 – 5.9 0.1 $150.2 3.2 $100.3 – 5.3 $318.3 – 4.6 $7.2 – 255.3 12.0 – 2. net Total Other Assets TOTAL ASSETS LIABILITIES AND MEMBER’S EQUITY Current Liabilities: Accounts payable Accrued expenses Accrued payroll and related expenses Current portion of capital lease obligation Current portion of notes payable to related party Total Current Liabilities Long-Term Liabilities Notes payable to related party Notes payable Accrued lessee incentive Capital lease obligations.1 $494.5 – $54.7 – – 36.5 2.4 14.6 11.0 – $201. less current portion Deferred income taxes Other Total Long-Term Liabilities Total Liabilities Member’s/Stockholders’ Equity: Common stock APIC Member’s Equity Retained earnings Total Member’s/Stockholders’ Equity TOTAL LIABILITIES AND MEMBER’S EQUITY $77.4 – 2.4 $99. May 2006.4 0.0 – 2. Bear.5 $314.3 0.4 – $54. net Debt issuance and deferred financing costs.4 0.8 $86.0 $464.5 $575.4 22.9 $324.2 0.3 $5.8 0.5 $0.3 $224.0 4.5 6. net Related party receivables Deferred income taxes Other current assets Total Current Assets Property and equipment.7 10.6 3.6 $445.9 0.restricted Accounts receivable. net Lessee incentive Other receivable Deferred income taxes Customer list.3 $464.8 $85.5 – $39.4 – 215.8 10.

1 44.1 $80. CONFIDENTIAL 37 .0 $23.6 $513.0 $220.3 ) $5.2 $328.9 ($1.5 36.3 ) ($19.9 $11.4 $300.7 $44.4 (5.9 $66.7 $271.4 $12.2 (21.4 $2.2 27.9 70.5 14.9 $72.3 $489.1 $251. retail and other income Gross Revenues Less promotional allowances Net revenues Cost and expenses: Casino Hotel Food and beverage Tower.0 20.4 $1.0 $10.8 $17.9 ) $31.5 $19.8 95.4 $238.0 $89.1 $31.1 22.8 $16.0 33.6 $86.9 61.2 97.0 (18.9 107.8 15.9 – – $380.2 90.9 $0.3 28.8 $168.3 37.9 ) ($17.9 21.2 ) ($21.9 $31.1 43.5 – 0. general and administrative Depreciation and amortization Pre-opening costs (Gain) loss on disposal of assets Total costs and expenses Income from operations Other income (expense): Interest income Interest expense Total other expense Income before income taxes Provision (benefit) from income taxes Net income EBITDA $0.5 $0.5 – – $396.9 47.9 $287.0 $147.1 16.9 0.2 $61.5 $76.1 85.1 35.2 $57.2 $271.3 48.2 39.6 30.4 $350.0 35.2 40.0 54.8 $62. Inc.8 75.8 $32.4 60.0 51.0 $112.8 $4.7 35.1 $20. 2003 2004 2005 2006E(1) ($ in millions) Projected 2007E 2008E Revenues: Casino Hotel Food and beverage Tower.3 $143.3 $262.8 ) $20.4 (22.3 $70.6 (18.2 ) $48.2 – 1.8 (1) Includes Laughlin financials since acquisition.7 23.0 $182. Stearns & Co.Historical Income Statement Income Statement 2002 Year Ended December 31.9 $250.0 24.6 $95.4 14.3 56.3 $0.1 $48.3 – 0.4 (22.6 37.1 33.0 ) ($5.3 $472.3 $328.8 $25.0 $261.7 67.8 $323.9 20.1 $59.1 130.4 23.2 ) ($21.0 75.9 $63.6 38.1 $1.1 28.3 137. May 2006.0 14.7 (6.8 ) $54.4 $239.0 ) $38.6 1.5 $91.3 $285.2 19. Bear.7 67.5 $35.1 45.7 $450.1 $0.9 $416.2 38.0 20.8 ) $48.3 23.0 78. retail and other operations Selling.3 22.7 $106.8 ) ($17.3 59.0 18.4 81.0 ) $18.0 30.8 68.9 0.4 ) ($5.3 22.3 $385.6 83.9 80.

2 ) 0.1 ) 1.5 0.7 ) (2. CONFIDENTIAL 38 .4 (5.2 1.6 ) – (46.9 23.6 – – – (9.6 $10. Bear.8 48.2 (14.6 28. of Flamingo Laughlin.3 $54.5 ) 60.6 ) – (22.2 – 0.7 – $54.2 ) – – – $0.3 ) (0.9 0.7 ) ($0.1 7.5 0.8 (0.2 (0.9 ) – 17.4 0.9 ) (109.1 $63.3 ($0.3 ) – (30.4 0.3 ) 0.3 $77.1 ) ($0.2 0.7 3.5 ) – $39.2 ) 0.2 1.2 ) (0.0 ) – – (0.4 $47.5 ) – – 215.9 59.1 ) – 7.0 ) 9.3 2.Historical Statement of Cash Flows Consolidated Statements of Cash Flows 2002 CASH FLOWS FROM OPERATING ACTIVITIES: Net income Depreciation and amortization (Gain) loss on sale or disposal of assets Provision (benefit) for deferred income taxes Changes in operating assets and liabilities: Restricted cash Accounts receivable.0 28.4 ) $20.1 ($53.9 ) (125.3 Year Ended December 31.4 4.6 0.4 ) 0.5 ($156.6 $25.7 ) (2.3 ) 0.8 5.6 $59.4 ) – – (0.2 1.8 $20.2 ) 0.3 $4.6 ) ($2.4 1.2 – – – – – – – – – – (0.0 ($28.3 ($0.1 0.0 ) – (0.4 ) 108.4 – $30.1 ) (0.1 ) – (0. 2003 2004 2005 ($ in millions) 2006E(1) (1) Includes Laughlin financials since acquisition.1 ) 77.5 ) $33.3 ) – (0.3 ($1.5 ) 11.1 ) ($0.7 20. Stearns & Co.5 $17.3 (0.0 ) – – (0.6 (0.2 (61. May 2006.4 ($9.2 ) – – (0.9 20.4 ) $0.0 0.2 75.8 – – – – – (7.0 ($24.4 $32.9 ($1.7 3.0 23. net Other current assets Accounts payable and accrued expenses Other Net Cash Provided By Operating Activities CASH FLOWS FROM INVESTING ACTIVITIES: (Increase) decrease in investments—restricted Sale of marketable securities Acquisition of property and equipment Acq.3 $75.3 ) – (28.5 $0.3 0.2 ) – ($47.5 ($30.9 ) – (101.0 ) (3.8 ) 0.4 ) 0.6 $62. net of cash acquired Payment for construction-in-progress Related party receivables Cash proceeds from sale of property and equipment Net Cash Used in Investing Activities CASH FLOWS FROM FINANCING ACTIVITIES: Debt issuance and deferred financing costs Proceeds from line of credit Proceeds from related party note payable Proceeds from notes payable Member contribution Capital distribution Acquisition of Arizona Charlie’s Payments on line of credit Payments on related party notes payable Payments on long-term debt Payments on capital lease obligation Cash acquired from subsidiary contributed by parent Net Cash Provided By (Used In) Financing Activities Net increase (decrease) in cash and cash equivalents Cash and cash equivalents—beginning of period Cash And Cash Equivalents—End of Period ($0.2 0.2 $108.5 ) – ($0. Inc.0 – – – – – (20.

Section 5 Management .

Mr. Ron Lurie—Executive Vice President and General Manager of Arizona Charlie’s Decatur Ron Lurie has served as Executive Vice President and General Manager of Arizona Charlie’s Decatur since January 1999. Mr. Brown holds a bachelors degree in Economics from Southern Connecticut State College. In addition. board member and past president of the Boys & Girls Clubs of Las Vegas. Travelers Companies of Hartford. Walter Thompson Company. Inc. Lurie has been involved in the gaming industry for over 25 years. responsible for the operations of all three properties. both publicly and privately held. Ms. he has held positions with New York Racing Association. Brown joined the Company in March 2000 as Executive Vice President of Marketing for the Stratosphere and both Arizona Charlie’s properties. Mr. serves on the Board of Governors at Valley Hospital. Ms. Mr. audit manager and senior accountant serving a variety of gaming and hospitality clients. Barton is a Certified Public Accountant and holds a Bachelor of Science degree in Accounting from Southern Utah University. Lurie is a board member and past president of the West Charleston Lion’s Club. Ms. Lurie has served four years as the Mayor of the Las Vegas and 14 years as a Las Vegas City Councilman. Bear.com. Arizona Charlie’s Decatur and Arizona Charlie’s Boulder. Barton spent nine years at KPMG in Las Vegas as audit senior manager. Mr. In January 2001. He continues to serve in an advisory capacity to many other boards of charitable organizations in Las Vegas. Prior to that time. Prior to joining the Company. he was promoted to COO. Connecticut and J. Mr.Senior Management Biographies Richard P. Brown—President and CEO Richard Brown has served as President and CEO of the Company since June 2002. CONFIDENTIAL 39 . Mr. Denise Barton—Senior Vice President of Support Services and Chief Financial Officer Denise Barton has served as Senior Vice President of Support Services and Chief Financial Officer of the Company since February. 2003. Barton oversees all consolidated support services for the Stratosphere Casino Hotel and Tower. Ms. Barton joined the Company in August 2002 as Vice President of Finance and Chief Financial Officer of the Stratosphere. Board of Directors of Youth Charities of Southern Nevada and Opportunity Village as well as Foundation Board of the Community College of Southern Nevada. Lurie held a number of other positions at the property. Ms. Stearns & Co. Brown held executive positions with Harrah’s Entertainment and Hilton Gaming. Prior to joining the Company. and then to President and CEO in June 2002. most recently as Chief Financial Officer for Lowestfare. Barton served in various management and leadership positions in the finance field. having held positions with IGT and Sigma Games prior to joining the property. while also serving as one of three key executives responsible for overall operations of the Stratosphere.

Nevada from August 1995 to 2005. Lind was a Senior Vice President at Ramada Express Hotel/Casino. Mr. Nevada from April 1982 to April 1984. Majetich originally joined the Company in 2000 as Director of Hotel Operations at Stratosphere. John Lind—Senior Vice President and General Manager at Laughlin Mr. and Assistant Controller at MGM Grand Hotel/Casino. Lind has been the Senior Vice President and General Manager at Flamingo Laughlin since June 14. he was Director of Operations at the property. including the position of CFO at Peppermill Casinos. a non-profit charity dedicated to children who have major heart diseases. Bear. he was Chief Financial Officer at Lady Luck Casino. in Missoula. Nevada from April 1984 to June 1993. Mr.Senior Management Biographies (cont. Prior to that. Reno. Lind is a Certified Public Accountant and holds a degree in Business Administration from the University of Montana. he held various positions in the gaming industry. Inc. 2006. Majetich serves on the board of directors of the Nick and Kelly Children’s Heart Fund. Mr. Prior to joining the Company. Mr. Reno. CONFIDENTIAL 40 . Laughlin. Bettendorf. in Lincoln. Majetich held positions at Excalibur (1992–2000) and Caesars Tahoe (1980–1992). Iowa from December 1994 to August 1995.) Mark Majetich—Senior Vice President and General Manager at Arizona Charlie’s Boulder Mark Majetich has been Vice President and General Manager at Boulder since May 2001. Majetich graduated from the University of Nebraska. Prior to that. Prior to that. Stearns & Co. Mr. with a Bachelor of Science degree in Education. Mr.

Section 6 Process Considerations .

com Robert Pellegrini Associate Tel: (212) 272-3081 Fax: (212) 881-9410 rpellegrini@bear. LLC. and we request that prospective buyers refrain from contacting the management or employees of American Casino and Entertainment Properties. STEARNS & CO. that may or may not prove to be correct. Invited Parties will have the opportunity to conduct additional due diligence. INC.com Drew Kelley Vice President Tel: (212) 272-7181 Fax: (212) 881-9848 dmkelley@bear. 2007 detailing: • Proposed purchase price • Proposed transaction structure • Proposed sources of financing.Process Considerations Interested parties should submit a written indication of interest (“Indications”) no later than 5:00 pm EST on Friday. This overview is not. Bear Stearns will notify a limited number of parties (“Invited Parties”) that they have been invited to continue to work towards a transaction. there can be no assurances that such statements or estimates are accurate. directly. nor is it intended to be. March 2.com May Lam Analyst Tel: (212) 272-0841 Fax: (212) 881-9732 mlam@bear. LLC. BEAR. CONFIDENTIAL 41 . and the business contains various risks and uncertainties. NY 10179 (212) 272-2000 Kenneth Shea Senior Managing Director Tel: (212) 272-6494 Fax: (212) 881-9718 kshea@bear. which are based on assumptions by American Casino and Entertainment Properties. Inc. including: • Access to certain members of the Facility’s management team • Access to a data room containing business and legal information This overview may include certain forward-looking statements and estimates. including timing and steps to secure committed financing (if it is part of a potential proposal) • Detailed due diligence and information request list. an offer to purchase any assets of American Casino and Entertainment Properties. and actual results may vary materially. Stearns & Co. All communications regarding interest in this opportunity should be directed to one of the representatives of Bear Stearns listed below. Accordingly. LLC.com Bear. including the amount of time required to complete the due diligence investigation • Any material terms or conditions that a proposal would be subject to • Detail of any anticipated corporate or regulatory approvals and associated timing Following receipt of Indications. 383 Madison Avenue New York.

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