UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

Form 10-Q

(Mark one)

ý QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

OR

For the transition period from __________to ____________

Commission File Number: 000-52975

American Casino & Entertainment Properties LLC

(Exact name of registrant as specified in its charter)

(Registrant's telephone number, including area code)

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).

PART I-FINANCIAL INFORMATION

AMERICAN CASINO & ENTERTAINMENT PROPERTIES LLC

CONDENSED CONSOLIDATED BALANCE SHEETS

See notes to condensed consolidated financial statements.

AMERICAN CASINO & ENTERTAINMENT PROPERTIES LLC

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

See notes to condensed consolidated financial statements.

AMERICAN CASINO & ENTERTAINMENT PROPERTIES LLC

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

See notes to condensed consolidated financial statements.

AMERICAN CASINO & ENTERTAINMENT PROPERTIES LLC

CONDENSED CONSOLIDATED STATEMENT OF MEMBERS’ EQUITY

(Unaudited)

(In thousands)

AMERICAN CASINO & ENTERTAINMENT PROPERTIES LLC

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

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.

Note 2. Basis of Presentation

These condensed consolidated financial statements should be read in conjunction with the notes to the 20142015 consolidated audited financial statements presented in our annual report on Form 10-K for the year ended December 31, 2014,2015, filed with the SEC on March 26, 201523, 2016 (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.

permitted as of the beginning of an interim or annual reporting period. The Company is currently assessing the impact the adoption of this new accounting guidance will have on its consolidated financial statements.

On February 24, 2014, we entered into an amendment, or the Amendment, of the First Lien Credit Agreement. Among other changes, the Amendment reduced the interest rate on the First Lien Term Loans. During the three months ended September 30, 2015 and September 30, 2014,March 31, 2016, we paid Goldman Sachs approximately $0$11,000 in fees associated with the Amendment. During the nine months ended September 30, 2015 and September 30, 2014, we paid Goldman Sachsinterest, compared to approximately $0 and $674,000, respectively, in fees associated with the Amendment. On July 7, 2015, in connection with our entry into the Credit Agreement described in Note 5, we paid Goldman Sachs approximately $2.5 million in fees.

The Realty Management Division of Goldman Sachs, or Goldman Sachs RMD, provides various services to us such as environmental services and insurance brokerage. We expensed Goldman Sachs RMD fees of approximately $35,000 and $411,000 during the three and nine months ended September 30, 2015, respectively,March 31, 2016, compared to $393,000$0 for the three and nine months ended September 30, 2014.March 31, 2015. As of September 30, 2015March 31, 2016 and December 31, 2014,2015, we owed Goldman Sachs RMD $0.

On February 24, 2015, 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 Highgate (23%) and an employee of Highgate (40%). We expensed fees of approximately $11,000$46,000 during the three and nine months ended September 30, 2015March 31, 2016 compared to $0 for the three and nine months ended September 30, 2014.March 31, 2015. As of September 30, 2015March 31, 2016 and December 31, 2014,2015, we owed TTL approximately $11,000$15,000 and $0,$1,000, 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 $6,000 and $5,000 for both the three months ended September 30, 2015March 31, 2016 and September 30, 2014, respectively. We expensed fees of approximately $12,000 and $12,000 for the nine months ended September 30, 2015 and September 30, 2014, respectively.March 31, 2015. As of September 30, 2015March 31, 2016 and December 31, 2014,2015, we owed Nor1 approximately $2,000 and $1,000,$7,000, respectively.

We follow a related party transaction approval policy for reviewing related party transactions. These procedures are intended to ensure that transactions with related parties are fair to us and in our best interests. If a proposed transaction appears to or does involve a related party,person, the transaction is presented to our management for review. If management is unable to determine if a transaction is with a related party it will be 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.

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 indefinite-lived intangible assets consist of trade names. Intangible assets are recorded at cost or at fair value on the date of acquisition.

As of September 30, 2015March 31, 2016 and December 31, 2014,2015, we had the following indefinite-lived intangible assets.

On July 7, 2015, the Company and certain of its subsidiaries, or the Guarantors, entered into a Credit and Guaranty Agreement, or the Credit Agreement, with the lenders party thereto from time to time, or the Lenders, Deutsche Bank AG New York Branch, or DBNY, as administrative agent and collateral agent, Goldman Sachs Lending Partners LLC or Goldman Sachs LP, and Deutsche Bank Securities Inc. or DBSI, as joint lead arrangers, joint bookrunners and co-syndication agents, and DBSI as documentation agent. The Guarantors pledged as collateral all of the real, personal and mixed property, including equity interests, in which liens are purported to be granted pursuant to the collateral documents. Pursuant to the terms of the Credit Agreement, the Lenders provided the Company with senior secured loan facilities in an aggregate principal amount of $310 million, consisting of $295 million of senior secured term loans, or the 2015 Term Loans, and a $15 million revolving credit facility, or the 2015 Revolving Facility. The maturity date of the 2015 Term Loans is the earlier to occur of (i) July 7, 2022 and (ii) the acceleration of the Term Loans, and the maturity date of the 2015 Revolving Facility is the earlier to occur of (i) July 7, 2020 and (ii) the acceleration of the 2015 Revolving Facility. The proceeds of the 2015 Term Loans were used, together with cash on hand, to repay in full the Company’s existing debt under the 2013 Credit Agreements.

The 2015 Term Loans bear interest either at a base rate plus 3.00%2.75% per annum or at the reserve-adjusted eurodollar rate plus 4.00%3.75% per annum. In the case of eurodollar rate loans, interest is computed on the basis of a 360-day year and the actual number of days between interest periods, with interest payable on the last day of each interest period of one month, two

months, or three months, or, in the case of interest periods longer than three months, every three months. As of September 30, 2015,March 31, 2016, all outstanding 2015 Term Loans are eurodollar loans. The 2015 Term Loans are subject to scheduled principal payments on the last day of each calendar quarter ending on and after December 31, 2015 in an amount equal to 0.25% of the original principal balance. The 2015 Term Loans are also subject to annual principal payments based on excess cash flow. For the fiscal year ending December 31, 2015, the Company will be required to make a principal payment equal to 50% of excess cash flow for the period of August 1, 2015 through December 31, 2015, and for all fiscal years ending on and after December 31, 2016 through the maturity date of the 2015 Term Loans, theLoans.The percentage of excess cash flow required to be prepaid will vary based on the ratio of total indebtedness (net of unrestricted cash) to trailing four quarter adjusted EBITDA. In addition, we are entitled to, at any time, make voluntary principal prepayments to the 2015 Term Loans in amounts of $1 million or greater.

As of September 30,March 31, 2016 and December 31, 2015 there were no borrowings outstanding under the 2015 Revolving Facility.

The Credit Agreement includes a number of covenants that place restrictions on how we may operate our business, including, among others (i) restrictions on incurring other indebtedness and liens; (ii) a springing financial maintenance covenant; and (iii) restrictions on distributions, investments, acquisitions, significant asset disposals or making fundamental changes to our business. As of September 30, 2015March 31, 2016 we were in compliance with the covenants of the Credit Agreement.

 

There are 16,500,000 stock options and 2,500,000 restricted stock units, or RSUs, available for issuance under the W2007/ACEP Holdings, LLC 2013 Management Incentive Plan, or 2013 Plan, that was approved on March 26, 2014. On March 26, 2014, our Board of Directors approved the grant of 2,500,000 RSUs under the 2013 Plan to executive officers, effective April 1, 2014. RSUs only vest upon a qualifying event (generally an initial public offering, the sale or disposition of Holdings’ membership interests in the Company, or sale or other disposition of Holdings). Additionally on March 26, 2014, our Board of Directors approved the grant of 13,035,000 stock options to be measured and valued over the next three years in accordance with ASC 718, effective April 1, 2014. In 2014, the Company measured and expensed 6,517,500 stock options granted under the 2013 Plan that have already vested. In 2015, the Company measured and expensed 3,258,750 stock options granted under the 2013 Plan that have already vested. The remaining stock options will be measured and expensed ratably over the next two yearsnine months based on the establishment of performance and service conditions and will vest upon the achievement of such performance and service conditions. The stock options expire 10 years from the grant date.

As of September 30, 2015,March 31, 2016, we have approximately $300,000$840,000 of unrecognized incentive expense related to non-vested stock options that is expected to be recognized over a weighted-average period of approximately threenine months.

A summary of stock option activity for the ninethree months ended September 30, 2015March 31, 2016 is as follows:

The fair value of each stock option granted under the 2013 Plan is estimated on the date of the grant using the Black-Scholes-Merton option-pricing model.

A summary of RSU activity for the ninethree months ended September 30, 2015March 31, 2016 is as follows:

As of September 30, 2015,March 31, 2016, there was $2.4 million of total unrecognized compensation cost related to all unvested restricted stock awards. As of September 30, 2015March 31, 2016 no shares were exercisable as the shares only vest upon the occurrence of a qualifying event. Compensation costs will be recognized when a qualifying event becomes probable.

With the exception of historical facts, the matters discussed in this quarterly report on Form 10-Q are forward looking statements. Forward-looking statements may relate to, among other things, future actions, future performance generally, business development activities, future capital expenditures, strategies, the outcome of contingencies such as legal proceedings, future financial results, financing sources and availability and the effects of regulation and competition. When we use the words “believe”, “intend”, “expect”, “may”, “will”, “should”, “anticipate”, “could”, “estimate”, “plan”, “predict”, “project”, or their negatives, or other similar expressions, the statements which include those words are usually forward-looking statements. When we describe strategy that involves risks or uncertainties, we are making forward-looking statements.

These forward-looking statements are based on the current plans and expectations of our management and are subject to certain risks and uncertainties that could cause actual results to differ materially from historical results or those anticipated. These factors include, but are not limited to: the size of our indebtedness, our indebtedness' effect on our business, the adverse effect of government regulation and other matters affecting the gaming industry, increased operating costs of our properties, increased competition in the gaming industry, adverse effects of economic downturns and terrorism, our failure to make necessary capital expenditures, increased costs associated with our growth strategy, the loss of key personnel, risks associated with geographical market concentration, our failure to satisfy our working capital needs from operations or our indebtedness, our inability to raise additional money, our dependence on water, energy and technology services, adverse effects of increasing energy costs, and the availability of and costs associated with potential sources of financing.

The following discussion contains management’s discussion and analysis of financial condition and results of operations. Management’s discussion and analysis should be read in conjunction with “Item 1. Financial Statements” of this quarterly report on Form 10-Q and Management’s Discussion and Analysis of Financial Condition and Results of Operations presented in our annual report on Form 10-K for the year ended December 31, 2014.2015.

The following table sets forth the results of our operations for the periods indicated.

We believe that our presentation of EBITDA is an important supplemental measure of our operating performance to investors. EBITDA is a commonly used measure of performance in our industry which we believe, when considered with measures calculated in accordance with United States Generally Accepted Accounting Principles (GAAP), gives investors a more complete understanding of operating results before the impact of investing and financing transactions and income taxes and facilitates comparisons between us and our competitors. Although EBITDA is a non-GAAP measure, we believe this measure will be used by investors in their assessment of our operating performance and the valuation of our company.

Our consolidated gross revenues increased 6.3%3.3% to $100.6$105.1 million for the three months ended September 30, 2015March 31, 2016 from $94.6$101.7 million for the three months ended September 30, 2014.March 31, 2015. Our consolidated income from operations and EBITDA increased 56.3%19.3% and decreased 66.7%5.5% to $11.1$17.3 million and $4.8$22.9 million for the three months ended September 30, 2015March 31, 2016 compared to $7.1$14.5 million and $14.4$21.7 million for the three months ended September 30, 2014,March 31, 2015, respectively. The increase in our gross revenues is due primarily to higher casino, hotel and food and beverage revenues caused by higher slot coin-in and table games holddrop for the casino, occupancy, average daily room rates and resort fees for the hotel and higher food and beverageaverage revenue per covers for food and beverage.

For the three months ended September 30,March 31, 2016 and 2015, and 2014, certain expenses had an impact on income from operations and EBITDA. EBITDA for the three months ended September 30, 2015March 31, 2016 was negatively impacted by a $13.6non-cash $1.1 million loss on debt redemption related to the early redemption ofvoluntary $35.0 million principal payment on the remaining aggregate principal amount of our First Lien Term Loans and

Casino revenues consist of revenues from slot machines, table games, poker, race and sports book, bingo and keno. Casino revenues increased 2.3%0.9% to $48.8$55.6 million for the three months ended September 30, 2015,March 31, 2016, compared to $47.7$55.1 million for the three months ended September 30, 2014.March 31, 2015. Our slot revenues increased 2.7%1.5% and table revenues increased 5.4%1.6%. Slot revenues increased due to a 0.1 percentage point increase in hold and 1.6%0.4% increase in coin-in and table revenues increased due to a 5.0%1.7% increase in drop compared to the three months ended September 30, 2014.March 31, 2015. For the three months ended September 30, 2015,March 31, 2016, slot machine revenues were 85.5%85.8% of casino revenues, and table game revenues were 12.1%11.2% of casino revenues, compared to 85.1%85.3% and 11.7%11.1% of casino revenues, respectively, for the three months ended September 30, 2014.March 31, 2015. Other casino revenues, consisting of race and sports book, poker, bingo and keno, decreased 20.0%15.0% for the three months ended September 30, 2015March 31, 2016 compared to the three months ended September 30, 2014.March 31, 2015. Bingo revenues decreased 40.8%25.9% compared to the three months ended September 30, 2014,March 31, 2015, due to a 2.72.4 percentage point decrease in hold percentage and a 4.8%2.1% decrease in bingo write. Race and sports book revenues decreased 31.4%7.0% compared to the three months ended September 30, 2014March 31, 2015 due to a 4.32.1 percentage point decrease in hold percentage. Poker revenues decreased 8.0%9.6% compared to the three months ended September 30, 2014March 31, 2015 due to reduced tournament revenues. Keno revenues increased 39.8%16.6% compared to the three months ended September 30, 2014March 31, 2015 due to a 7.15.8 percentage point increase in hold percentage. Casino operating expenses increased 0.6%3.7% to $15.9$17.0 million for the three months ended September 30, 2015,March 31, 2016, compared to $15.8$16.4 million for the three months ended September 30, 2014.March 31, 2015. The increase was due primarily to higher labor costs and revenue taxes.slot participation expenses. Our casino operating margin increaseddecreased to 67.4%69.4% for the three months ended September 30, 2015,March 31, 2016, compared to 66.9%70.2% for the three months ended September 30, 2014.March 31, 2015.

Hotel revenues increased 16.3%11.3% to $22.1$21.6 million for the three months ended September 30, 2015March 31, 2016 from $19.0$19.4 million for the three months ended September 30, 2014.March 31, 2015. Average daily room rates increased for all properties and occupancy increased for all properties.properties except the Aquarius. Overall room occupancy increaseddeclined to 77.4%71.0% for the three months ended September 30, 2015March 31, 2016 compared to 72.6%71.3% for the three months ended September 30, 2014.March 31, 2015. Our hotel expenses increased 6.4%5.7% to $10.0$9.2 million for the three months ended September 30, 2015,March 31, 2016, compared to $9.4$8.7 million for the three months ended September 30, 2014March 31, 2015 due primarily to higher labor costs and commissions and brokers fees and supplies. The increased costs were related to higher occupancy during the third quarter of 2015 compared to the third quarter of 2014.fees. Due to the increase in revenues, our hotel operating margin increased to 54.8%57.4% for the three months ended September 30, 2015March 31, 2016 as compared to 50.5%55.2% for the three months ended September 30, 2014.March 31, 2015.

Food and beverage revenues increased 7.4%4.7% to $20.2$19.9 million for the three months ended September 30, 2015,March 31, 2016, compared to $18.8$19.0 million for the three months ended September 30, 2014.March 31, 2015. Food and beverage revenues increased at all properties.Stratosphere and the Aquarius. Overall, food covers and beverage covers increased 4.4%decreased 3.7% and 3.4%1.0%, respectively, for the three months ended September 30, 2015,March 31, 2016, compared to the three months ended September 30, 2014.March 31, 2015. Average revenue per cover for the three months ended September 30, 2015March 31, 2016 increased 3.0%8.9% compared to the three months ended September 30, 2014.March 31, 2015. Our food and beverage expenses increased 7.0%4.3% to $15.2$14.6 million for the three months ended September 30, 2015March 31, 2016 compared to $14.2$14.0 million for the three months ended September 30, 2014March 31, 2015 due to higher food and beverage cost of goods and labor costs. Our food and beverage operating margin was 24.8%26.6% for the three months ended September 30, 2015March 31, 2016 compared to 24.5%26.3% for the three months ended September 30, 2014.March 31, 2015.

Tower, retail, entertainment and other revenues increased 4.4%decreased 2.4% to $9.5$8.0 million for the three months ended September 30, 2015,March 31, 2016, compared to $9.1$8.2 million for the three months ended September 30, 2014.March 31, 2015. Tower revenues decreased 1.8%6.4% for the three months ended September 30, 2015,March 31, 2016, compared to the three months ended September 30, 2014. Sky Jump revenues decreased 6.7% due to a 3.6% decrease in guests.March 31, 2015. Tower guests increased 2.1% howeverdecreased 1.6% and revenue per guest decreased 3.9%4.3% for the three months ended September 30, 2015,March 31, 2016, compared to the three months ended September 30, 2014.March 31, 2015. Entertainment revenue increased 17.0%

2016 compared to $2.7$2.8 million for the three months ended September 30, 2014March 31, 2015 due primarily to decreased entertainer fees and labor costs and entertainer fees.costs.

Promotional allowances are comprised of the retail value of goods and services provided to casino patrons under various marketing programs. As a percentage of casino revenues, promotional allowances increaseddecreased to 14.1%12.8% for the three months ended September 30, 2015March 31, 2016 from 14.0%13.2% for the three months ended September 30, 2014.March 31, 2015. The increasedecrease in promotional allowances was due primarily to increaseddecreased food and room promotions.

Selling, general and administrative expenses are primarily comprised of payroll, marketing, advertising, utilities and other administrative expenses. These expenses increased 0.6% to $31.6were unchanged at $30.7 million, or 31.4%29.2% of gross revenues, for the three months ended September 30, 2015,March 31, 2016, compared to $31.4$30.7 million, or 33.2%30.2% of gross revenues for the three months ended September 30, 2014.March 31, 2015. Non-cash expense for share-based compensation expenseexpenses were $306,000$280,000 for the three months ended September 30, 2015March 31, 2016 compared to $487,000$451,000 and for the three months ended September 30, 2014.March 31, 2015. During the three months ended September 30, 2015,March 31, 2016, increased labor costs, repair and maintenance expensessupplies and credit card fees were partially offset by reduced utilities expenses and guest loss and damage expenses compared to the three months ended September 30, 2014. We expensed approximately $146,000 related to our interactive gaming initiative during the three months ended September 30, 2015 compared to approximately $169,000 during the three months ended September 30, 2014.March 31, 2015.

Interest expense decreased 35.4%40.6% to $4.2$3.8 million for the three months ended September 30, 2015,March 31, 2016, compared to $6.5$6.4 million for the three months ended September 30, 2014.March 31, 2015. The decrease was due to a $30.0 million principal payment on the First Lien Term Loans on March 31, 2015 and the issuance of the 2015 Term Loans to prepay in full the Company's existing debt under the 2013 Credit Agreements on July 7, 2015.

The following liquidity and capital resources discussion contains certain forward-looking statements with respect to our business, financial condition, results of operations, dispositions, acquisitions, renovation projects and our subsidiaries, which involve risks and uncertainties that cannot be predicted or quantified, and consequently, actual results may differ materially from those expressed or implied herein. Such risks and uncertainties include, but are not limited to, financial market risks, the ability to maintain existing management, competition within the gaming industry, the cyclical nature of the hotel business and gaming business, economic conditions, regulatory matters and litigation and other risks described in our filings with the SEC. In addition, renovation projects entail significant risks, including shortages of materials or skilled labor, unforeseen regulatory problems, work stoppages, weather interference, floods, unanticipated cost increases, and disruption to business. The anticipated costs and construction periods are based on budgets, conceptual design documents and construction schedule estimates. There can be no assurance that the budgeted costs or construction period will be met. All forward-looking statements are based on our current expectations and projections about future events.

As of September 30, 2015March 31, 2016 we had $69.6$56.5 million in cash and cash equivalents compared to $75.8$63.2 million on September 30, 2014.March 31, 2015. Net cash provided by operating activities was $54.1$24.9 million for the ninethree months ended September 30, 2015March 31, 2016 compared to $35.0$20.6 million for the ninethree months ended September 30, 2014.March 31, 2015. The increase in cash flow from operations was driven primarily by $14.7 million for loss on debt redemption along with increased net revenue.

During the ninethree months ended September 30, 2015,March 31, 2016, our total capital expenditures were $12.6$8.2 million (including approximately $99,000$3.8 million in non-cash items), of which approximately $3.2$1.0 million was spent on slot machine replacements and conversions, $4.6$1.0 million on renovations to our rooms, public areas and food and beverage venues, $800,000$3.1 million on pool renovations at the Stratosphere and Aquarius, $400,000 on our information technology systems and $4.0$2.7 million on our facilities and operations. For the ninethree months ended September 30, 2014,March 31, 2015, our total capital expenditures were $9.3$3.9 million (including approximately $28,000$122,000 in non-cash items), of which approximately $2.2 million$700,000 was spent on slot machine replacements and conversions, $1.9 million$900,000 for renovations to our rooms, public areas and food and beverage venues $1.4 million on upgrading our information technology systems and $3.7$2.3 million on our facilities and operations.

Cash flowflows used in financing activities were $49.0$35.7 million for the ninethree months ended September 30, 2015March 31, 2016 compared to $5.1$30.5 million for the ninethree months ended September 30, 2014.March 31, 2015. On March 31, 2016, in respect of the 2015 Term Loans, we made a $35.0 million voluntary principal payment. On March 31, 2015, in respect of the First Lien Term Loans, we made an "excess cash flow" principal payment for the 2014 fiscal year of approximately $9.4 million and a voluntary principal payment of $20.6 million. On July 7, 2015, proceeds from the issuance of the 2015 Term Loans of $293.5 million were used together with cash on hand to repay in full the Company’s existing debt under the 2013 Credit Agreements.

Our primary cash requirements for the next twelve months are expected to include (i) expenses associated with ongoing day-to-day operations, (ii) interest and principal payments on indebtedness, (iii) payments for design and development costs of future projects, and (iv) regular maintenance and other capital expenditures. During 2015,2016, we currently anticipate spending approximately $30 million on capital projects.

On July 7, 2015, we entered into a Credit and Guaranty Agreement in an aggregate principal amount of $310 million, consisting of $295 million of 2015 Term Loans and a $15 million 2015 Revolving Facility. The proceeds of the 2015 Term Loans were used, together with cash on hand of approximately $17.4 million, to repay in full the Company’s existing debt under the 2013 Credit Agreements. We expect to reduce our cash paid for interest by approximately $7.0 million in the first twelve months.

The 2015 Term Loans bear interest either at a base rate plus 3.00%2.75% per annum or at the reserve-adjusted eurodollar rate plus 4.00%3.75% per annum. In the case of eurodollar loans, interest is computed on the basis of a 360-day year and the actual number of days between interest periods with interest payable on the last day of each interest period of one month, two months, or three months, or, in the case of interest periods longer than three months, every three months. The 2015 Term Loans are subject to scheduled principal payments on the last day of each calendar quarter ending on and after December 31, 2015 in an amount equal to 0.25% of the original principal balance. The 2015 Term Loans are also subject to annual principal payments based on excess cash flow. For the fiscal year ending December 31, 2015, the Company will be required to make a principal payment equal to 50% of excess cash flow for the period of August 1, 2015 through December 31, 2015, and for all fiscal years ending on and after December 31, 2016 through the maturity date of the 2015 Term Loans, theLoans. The percentage of excess cash flow required to be prepaid will vary based on the ratio of total indebtedness (net of unrestricted cash) to trailing four quarter adjusted EBITDA. In addition, we are entitled to at any time make voluntary principal prepayments to the 2015 Term Loans in amounts of $1 million or greater.

Market risk is the risk of loss arising from adverse changes in market rates and prices, such as interest rates, foreign currency exchange rates and commodity prices. Our primary risk exposure relates to interest rate risk.

The fair value of our debt is estimated based on the quoted market prices for the same or similar issues. The estimated fair value of the 2015 Term Loans was approximately $294.8$258.4 million as of September 30, 2015.March 31, 2016.

For the ninethree months ended September 30, 2015,March 31, 2016, we incurred approximately $16.8$3.8 million in interest expense. Interest on the 2015 Term Loans is variable and based on LIBORreserve-adjusted eurodollar rate plus a margin, with a floor LIBOR rate of 1.00%. If the LIBORreserve-adjusted eurodollar rate increased by 1.00% above the floor rate, our annual interest costs would increase by approximately $3.0$2.6 million.

On July 7, 2015, we entered into a Credit and Guaranty Agreement in an aggregate principal amount of $310 million, consisting of $295 million of 2015 Term Loans, and a $15 million 2015 Revolving Facility. The proceeds of the 2015 Term Loans were used, together with cash on hand of approximately $17.4 million, to repay in full the Company’s existing debt under the 2013 Credit Agreements. We expect to reduce our cash paid for interest by approximately $7.0 million in the first twelve months.

The 2015 Term Loans bear interest either at a base rate plus 3.00%2.75% per annum or at the reserve-adjusted eurodollar rate plus 4.00%3.75% per annum. In the case of eurodollar loans, interest is computed on the basis of a 360-day year and the actual number of days between interest periods with interest payable on the last day of each interest period of one month, two months, or three months, or, in the case of interest periods longer than three months, every three months. As of March 31, 2016, all outstanding 2015 Term Loans are eurodollar loans. The 2015 Term Loans are subject to scheduled principal payments on the last day of each calendar quarter ending on and after December 31, 2015 in an amount equal to 0.25% of the original principal balance. The 2015 Term Loans are also subject to annual principal payments based on excess cash flow. For the fiscal year ending December 31, 2015, the Company will bewas required to make a principal payment equal to 50% of excess cash flow for the period of August 1, 2015 through December 31, 2015, and for all fiscal years ending on and after December 31, 2016 through the maturity date of the 2015 Term Loans, the percentage of excess cash flow required to be prepaid will vary based on the ratio of total indebtedness (net of unrestricted cash) to trailing four quarter adjusted EBITDA. In addition, we are entitled to at any time make voluntary principal prepayments to the 2015 Term Loans in amounts of $1 million or greater.

We do not invest in derivative financial instruments, interest rate swaps or other investments that alter interest rate exposure.

Our principal executive officer and principal financial officer, based on their evaluation of our disclosure controls and procedures (as such terms are defined in Rule 13a-15(e) under the Securities Exchange Act of 1934, as amended the Exchange Act) as of the end of the period covered by this quarterly report on Form 10-Q, have concluded that our disclosure controls and procedures are effective for ensuring that information required to be disclosed by us in the reports that we file or submit under the Exchange Act, is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms.

There were no changes in our internal control over financial reporting that occurred during the first ninethree months of 20152016 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

It should be noted that any system of controls, however well designed and operated, can provide only reasonable and not absolute assurance that the objectives of the system are met. In addition, the design of any control system is based in part upon certain assumptions about the likelihood of certain events. Because of these and other inherent limitations of control systems, there can be no assurance that any design will succeed in achieving its stated goals under all potential future conditions, regardless of how remote.

PART II-OTHER INFORMATION

 

The list of exhibits required by Item 601 of Regulation S-K and filed as part of this report is set forth in the exhibits index.

 

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

  

EXHIBITS INDEX

*Pursuant to rule 406T of Regulation S-T, the XBRL related information in this exhibit is furnished and not filed or a part of a registration statement or prospectus for the purposes of Sections 11 or 12 of the Securities Act of 1933, as amended, is deemed not filed for the purposes of Section 18 of the Securities Exchange of 1934, as amended, and otherwise is not subject to liability under these sections.