UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the quarterly period ended: MARCH 31, 1994
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period _______________ to ______________.
Commission file number: 2-0219
TRUMP PLAZA FUNDING, INC.
(Exact name of Registrant as specified in its charter)
NEW JERSEY 13-3339198
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
MISSISSIPPI AVENUE AND THE BOARDWALK
ATLANTIC CITY, NEW JERSEY 08401
(Address of principal executive (Zip Code)
offices)
(609) 441-6526
(Registrant's telephone number, including area code)
TRUMP PLAZA HOLDING ASSOCIATES
(Exact name of Registrant as specified in its charter)
NEW JERSEY 22-3213714
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
MISSISSIPPI AVENUE AND THE BOARDWALK
ATLANTIC CITY, NEW JERSEY 08401
(Address of principal executive (Zip Code)
offices)
(609) 441-6526
(Registrant's telephone number, including area code)
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q, continued
Indicate by check mark whether the Registrants (1) have 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) have been
subject to such filing requirements for the past 90 days. Yes X No
Indicate by check mark whether the Registrants have filed all documents
and reports required to be filed by Section 12, 13 or 15(d) of the
Securities Exchange Act of 1934 subsequent to the distribution of
securities under a plan confirmed by a court. Yes X No
The number of outstanding shares of Trump Plaza Funding, Inc.'s, common
stock as of May 12, 1994, was 100.
Total number of pages in this Report: 21
TRUMP PLAZA FUNDING, INC., TRUMP PLAZA HOLDING ASSOCIATES AND
TRUMP PLAZA ASSOCIATES
INDEX TO FORM 10-Q
Page Number
PART I -- FINANCIAL INFORMATION
ITEM 1 -- Financial Statements
Condensed Balance Sheets of Trump Plaza Funding,Inc.
as of March 31, 1994 (unaudited) and December 31, 1993. 1
Condensed Statements of Income of Trump Plaza Funding, Inc.
for the Three Months Ended March 31, 1994 and 1993 (unaudited). 2
Condensed Statement of Capital of Trump Plaza Funding, Inc.
for the Three Months Ended March 31, 1994 (unaudited). 3
Condensed Statements of Cash Flows of Trump Plaza
Funding, Inc. for the Three Months Ended March 31, 1994
and 1993 (unaudited). 4
Condensed Consolidated Balance Sheets of Trump Plaza Holding
Associates and Trump Plaza Associates as of March 31, 1994
(unaudited) and December 31, 1993. 5
Condensed Consolidated Statements of Operations of Trump Plaza
Holding Associates and Trump Plaza Associates for the Three Months
Ended March 31, 1994 and 1993 (unaudited). 6
Condensed Consolidated Statement of Capital (Deficit) of Trump Plaza
Holding Associates and Trump Plaza Associates for the Three Months Ended
March 31, 1994 (unaudited). 7
Condensed Consolidated Statements of Cash Flows of Trump Plaza
Holding Associates and Trump Plaza Associates for the Three Months Ended
March 31, 1994 and 1993 (unaudited). 8
Notes to Condensed Financial Statements of Trump Plaza Funding, Inc.,
Trump Plaza Holding Associates and Trump Plaza Associates. 9-15
ITEM 2 -- Management's Discussion and Analysis of Financial
Condition and Results of Operations 16-18
PART II -- OTHER INFORMATION
ITEM 1 -- Legal Proceedings 18-19
ITEM 2 -- Changes in Securities 19
ITEM 3 -- Defaults upon Senior Securities 19
ITEM 4 -- Submission of Matters to a Vote of Security Holders 19
ITEM 5 -- Other Information 19
ITEM 6 -- Exhibits and Reports on Form 8-K 19
Signatures - Trump Plaza Funding, Inc. 20
Signatures - Trump Plaza Holding Associates 21
PART I - FINANCIAL INFORMATION
ITEM 1- Financial Statements
TRUMP PLAZA FUNDING, INC.
CONDENSED BALANCE SHEETS
(in thousands, except share amounts)
March 31, December 31,
1994 1993
--------- -----------
(unaudited)
ASSETS
CURRENT ASSETS:
Cash $ 2 $ 2
Mortgage Interest Receivable 10,467 1,495
Receivable From Partnership 974 974
------- -------
Total Current Assets 11,443 2,471
Mortgage Note Receivable 325,949 325,859
Receivable From Partnership 2,949 2,949
------- -------
Total Assets $340,341 $331,279
======= =======
LIABILITIES AND CAPITAL
CURRENT LIABILITIES:
Accrued Interest Payable $ 10,467 $ 1,495
Income Taxes Payable 974 974
------- -------
Total current liabilities 11,441 2,469
10 7/8% Mortgage Bonds, net of
discount due 2001 325,949 325,859
Deferred Income Taxes Payable 2,949 2,949
------- -------
Total Liabilities 340,339 331,277
------- -------
Common Stock, $.01 par value, 1,000
shares authorized, 100 shares issued
and outstanding - -
Additional Paid in Capital 2 2
Retained Earnings - -
------- -------
Total Liabilities and Capital $340,341 $331,279
======= =======
The accompanying notes are an integral part of
these condensed balance sheets.
1
TRUMP PLAZA FUNDING, INC.
CONDENSED STATEMENTS OF INCOME
FOR THE THREE MONTHS ENDED MARCH 31, 1994 AND 1993
(unaudited)
(in thousands)
1994 1993
------ ------
Interest Income From Partnership $ 9,062 $ 6,750
Preferred Partnership Investment
Income - 1,906
Reimbursement for Income Taxes - 904
Interest Expense (9,062) (6,750)
Director's Fees and Related
Expenses - (121)
------ ------
Income Before Provision for Taxes - 2,689
Provision for Income Taxes - 904
------ ------
Net Income $ - $ 1,785
====== ======
The accompanying notes are an integral part
of these condensed financial statements.
2
TRUMP PLAZA FUNDING, INC.
CONDENSED STATEMENT OF CAPITAL
FOR THE THREE MONTHS ENDED MARCH 31, 1994
(unaudited)
(in thousands except share amounts)
Common Stock
--------------
Additional
Number of Paid In Retained
Shares Amount Capital Earnings Total
--------- -------- --------- -------- -------
Balance December 31, 1993 100 - $ 2 - $ 2
Net Income - - - - -
----- ----- ----- ----- -----
Balance,
March 31, 1994 100 - $ 2 - $ 2
===== ===== ===== ===== =====
The accompanying notes are an integral part of
these condensed financial statements.
3
TRUMP PLAZA FUNDING, INC.
CONDENSED STATEMENTS OF CASH FLOWS
FOR THE THREE MONTHS ENDED MARCH 31, 1994 AND 1993
(unaudited)
(in thousands)
1994 1993
-------- --------
CASH FLOWS FROM OPERATING ACTIVITIES:
Net Income $ - $ 1,785
Adjustments to Reconcile Net Income
To Net Cash Flows Provided by
(Used In) Operating Activities:
Accretion of discount on indebtedness 90 -
Preferred Stock Accretion - (155)
Deferred income taxes payable - 53
------ ------
90 1,683
Decrease in receivable from Partnership - 847
(Increase) decrease in interest receivable (8,972) 6,748
Increase (decrease) in interest payable 8,972 (6,748)
Increase in income tax payable - 851
------ ------
Net Cash Flows Provided By Operating Activities - 3,381
------ ------
CASH FLOWS FROM INVESTING ACTIVITIES:
Preferred Stock Dividends - (3,502)
------ ------
CASH FLOWS FROM FINANCING ACTIVITIES:
Capital Contribution - 121
Increase in Mortgage Note Receivable (90) -
------ ------
Net Cash Flows Provided By (Used In)
Financing Activities (90) 121
------ ------
Net Change in Cash - -
Cash at Beginning of Year 2 2
------ ------
Cash at March 31, $ 2 $ 2
====== ======
The accompanying notes are an integral part of
these condensed financial statements.
4
TRUMP PLAZA HOLDING ASSOCIATES AND
TRUMP PLAZA ASSOCIATES
CONDENSED CONSOLIDATED BALANCE SHEETS
(in thousands)
ASSETS
March 31, December 31,
CURRENT ASSETS: 1994 1993
----------- -----------
(unaudited)
Cash and cash equivalents $ 16,376 $ 14,393
Receivables, net 5,766 6,957
Inventories 3,406 3,566
Receivable from affiliates, net 562 -
Other current assets 1,695 2,701
------- -------
Total current assets 27,805 27,617
PROPERTY AND EQUIPMENT, net 295,478 293,141
LAND RIGHTS 29,966 30,058
OTHER ASSETS 22,801 23,682
------- -------
Total Assets $376,050 $374,498
======= =======
LIABILITIES AND CAPITAL
CURRENT LIABILITIES:
Current maturities of long-term debt $ 1,659 $ 1,633
Accounts payable and accrued expenses 25,922 24,554
Accrued interest payable 12,786 1,829
Due to affiliate, net - 97
Distribution Payable to Trump Plaza
Funding, Inc. 974 974
------- --------
Total Current Liabilities 41,341 29,087
LONG-TERM DEBT, net of discount and current
maturities 396,148 395,948
DISTRIBUTION PAYABLE TO
TRUMP PLAZA FUNDING, INC. 2,949 2,949
DEFERRED STATE INCOME TAXES 210 1,224
------- --------
Total Liabilities 440,648 429,208
------- --------
CAPITAL:
Partners' Deficit (78,772) (78,772)
Retained Earnings 14,174 24,062
------- -------
Total Deficit (64,598) (54,710)
------- -------
Total Liabilities and Capital $376,050 $374,498
======= =======
The accompanying notes are an integral part
of these condensed consolidated balance sheets.
5
TRUMP PLAZA HOLDING ASSOCIATES AND
TRUMP PLAZA ASSOCIATES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
FOR THE THREE MONTHS ENDED MARCH 31, 1994 AND 1993
(unaudited)
(in thousands)
For the Three
Months Ended
March 31,
-------------
1994 1993
-------- --------
Revenues:
Gaming $54,157 $60,680
Rooms 3,631 3,635
Food and Beverage 8,383 9,468
Other 1,820 1,886
------- -------
Gross Revenues 67,991 75,669
Less- Promotional allowances 6,988 7,511
------- -------
Net Revenues 61,003 68,158
------- -------
COSTS AND EXPENSES:
Gaming 31,112 33,647
Rooms 682 662
Food and Beverage 3,531 3,888
General and Administrative 18,311 18,094
Depreciation and Amortization 3,922 4,363
Other 840 921
------- -------
58,398 61,575
------- -------
Income from operations 2,605 6,583
------- -------
NON-OPERATING INCOME AND
(EXPENSES):
Interest income 102 125
Interest expense (12,129) (7,553)
Other non-operating expense (1,480) (59)
------- -------
(13,507) (7,487)
------- -------
Loss before benefit
for state income
taxes (10,902) (904)
BENEFIT FOR STATE
INCOME TAXES (1,014) (73)
------- -------
Net Loss $(9,888) $ (831)
======= =======
The accompanying notes are an integral part of these
condensed consolidated financial statements.
6
TRUMP PLAZA HOLDING ASSOCIATES AND
TRUMP PLAZA ASSOCIATES
CONDENSED CONSOLIDATED STATEMENT OF CAPITAL (DEFICIT)
FOR THE THREE MONTHS ENDED MARCH 31, 1994
(unaudited)
(in thousands)
Partners' Retained
Capital Earnings Total
-------- -------- -----------
Balance,
December 31, 1993 $(78,772) $24,062 $(54,710)
Net Loss - (9,888) (9,888)
------- ------ -------
Balance,
March 31, 1994 $(78,772) $14,174 $(64,598)
======= ====== =======
The accompanying notes are an integral part
of these condensed consolidated financial statements.
7
TRUMP PLAZA HOLDING ASSOCIATES AND
TRUMP PLAZA ASSOCIATES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE THREE MONTHS ENDED MARCH 31, 1994 AND 1993
(unaudited)
(in thousands)
1994 1993
---------- ----------
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss $(9,888) $ (831)
Adjustments to reconcile net loss to
net cash flows from operating activities-
Noncash charges-
Depreciation and amortization 3,922 4,363
Accretion of discounts on indebtedness 455 -
Provisions for losses on receivables 246 177
Deferred state income taxes (1,014) (73)
------ ------
(6,279) 3,636
Decrease in receivables 945 812
Decrease in inventories 160 242
Increase in advances to affiliates (659) (131)
Decrease in other current assets 1,006 1,140
Decrease(increase) in other assets 879 (1,573)
Increase in accounts payable and
accrued expenses 1,368 1,890
Increase (decrease)in accrued interest payable 10,957 (6,348)
------ ------
Net cash flows provided by (used in) operating
activities 8,377 (332)
------ ------
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchase of property and equipment, net (6,165) (2,359)
------ ------
CASH FLOWS FROM FINANCING ACTIVITIES:
Preferred Partnership Interest
Distribution - (3,623)
Additional Borrowings 158 97
Payments and current maturities of
long-term debt (387) (312)
------ ------
Net cash flows used in financing activities (229) (3,838)
------ ------
Net increase (decrease) in cash and
cash equivalents 1,983 (6,529)
CASH AND CASH EQUIVALENTS AT BEGINNING OF YEAR 14,393 18,802
------ ------
CASH AND CASH EQUIVALENTS AT MARCH 31, $16,376 $12,273
====== ======
CASH INTEREST PAID $ 172 $13,901
====== ======
The accompanying notes are an integral part of
these condensed consolidated financial statements.
8
TRUMP PLAZA FUNDING, INC., TRUMP PLAZA HOLDING ASSOCIATES AND
TRUMP PLAZA ASSOCIATES
NOTES TO CONDENSED FINANCIAL STATEMENTS
(UNAUDITED)
1. CONDENSED FINANCIAL STATEMENTS:
The accompanying condensed financial statements include those of Trump
Plaza Funding, Inc. (the "Company"), a New Jersey General Corporation as
well as those of Trump Plaza Holding Associates, ("Holding") a New Jersey
General Partnership, and its 99% owned subsidiary, Trump Plaza Associates,
(the "Partnership") a New Jersey General Partnership, which owns and
operates Trump Plaza Hotel and Casino located in Atlantic City, New
Jersey. The Company owns the remaining 1% interest in the Partnership.
Holding's sole source of liquidity is distributions in respect of its
interest in the Partnership.
All significant intercompany balances and transactions have been
eliminated in the condensed consolidated financial statements of Holding.
The minority interest in the Partnership has not been separately reflected
in the consolidated financial statements of Holding since it is not
material.
The accompanying condensed financial statements have been prepared by the
Company, Holding and the Partnership without audit. In the opinion of the
Company, Holding and the Partnership, all adjustments, consisting of only
normal recurring adjustments, necessary to present fairly the financial
position, the results of operations and cash flows for the periods
presented, have been made. Certain prior year amounts have been
reclassified to conform with the current period presentation.
The accompanying condensed financial statements have been prepared by the
Company, Holding and the Partnership pursuant to the rules and regulations
of the Securities and Exchange Commission. Accordingly, certain
information and note disclosures normally included in financial statements
prepared in conformity with generally accepted accounting principles have
been condensed or omitted. These condensed financial statements should be
read in conjunction with the financial statements and notes thereto
included in the Company's, Holding's and the Partnership's Annual Report
on Form 10-K for the year ended December 31, 1993 filed with the
Securities and Exchange Commission.
The casino industry in Atlantic City is seasonal in nature; therefore,
results of operations for the three months ended March 31, 1994 are not
necessarily indicative of the operating results for a full year.
9
TRUMP PLAZA FUNDING, INC., TRUMP PLAZA HOLDING ASSOCIATES AND
TRUMP PLAZA ASSOCIATES
NOTES TO CONDENSED FINANCIAL STATEMENTS
(UNAUDITED)
2. LONG-TERM DEBT :
Long-term debt consists of the following:
March 31, December 31,
1994 1993
------------ -----------
Company:
10 7/8% Mortgage Notes, due 2001 net
of unamortized discount of $4,051,000
in 1994 (A) $325,949,000 $325,859,000
=========== ===========
Holding and the Partnership:
Partnership
Partnership Note (10 7/8% Mortgage Notes,
due 2001 net of unamortized discount of
$4,051,000 in 1994) (A) $325,949,000 $325,859,000
Mortgage notes payable (C) 6,291,000 6,410,000
Other notes payable 950,000 1,060,000
----------- -----------
333,190,000 333,329,000
Less - Current maturities 1,659,000 1,633,000
----------- -----------
331,531,000 331,696,000
Holding
PIK Notes (12 1/2% Notes due 2003 net
of discount of $10,946,000 in 1994) (B) 64,617,000 64,252,000
----------- -----------
$396,148,000 $395,948,000
=========== ===========
(A) On June 25, 1993 the Company issued $330,000,000 principal amount of
10 7/8% Mortgage Notes, due 2001 (the "Mortgage Notes"), net of
discount of $4,313,000. Net proceeds of the Offering were used to
redeem all of the Company's outstanding $225,000,000 principal amount
12% Mortgage Bonds, due 2002 (the "Mortgage Bonds"), and together
with other funds (see (B) Pay-In-Kind Notes), all of the Company's
Stock Units, comprised of $75,000,000 liquidation preference
participating cumulative redeemable Preferred Stock with associated
shares of Common Stock, to repay $17,500,000 principal amount 9.14%
Regency Note due 2003, to make a portion of the Special Distribution
and to pay transaction expenses.
The Mortgage Notes mature on June 15, 2001 and are redeemable at any
time on or after June 15, 1998, at the option of the Company or the
Partnership, in whole or in part, at the principal amount plus a
premium which declines ratably each year to zero in the year of
Maturity. The Mortgage Notes bear interest at the stated rate of 10
7/8% per annum from the date of issuance, payable semi-annually on
each June 15 and December 15, commencing December 15, 1993 and are
secured by substantially all of the Partnership's assets. The
accompanying consolidated financial statements reflect interest
expense at the effective interest rate of 11.12% per annum.
10
TRUMP PLAZA FUNDING, INC., TRUMP PLAZA HOLDING ASSOCIATES AND
TRUMP PLAZA ASSOCIATES
NOTES TO CONDENSED FINANCIAL STATEMENTS
(UNAUDITED)
2. LONG-TERM DEBT CONT.:
The Mortgage Note Indenture contains certain covenants limiting the
ability of the Partnership to incur indebtedness, including
indebtedness secured by liens on Trump Plaza. In addition, the
Partnership may, under certain circumstances, incur up to $25.0
million of indebtedness to finance the expansion of its facilities,
which indebtedness may be secured by a lien on the Boardwalk
Expansion Site (See Note 6 Future Expansion) senior to the liens of
the Note Mortgage and Guarantee Mortgage thereon. The Mortgage Notes
represent the senior indebtedness of the Company. The Partnership
Note and the Guarantee rank pari passu in right of payment with all
existing and future senior indebtedness of the Partnership.
The Mortgage Notes, the Partnership Note, the Note Mortgage, the
Guarantee and the Guarantee Mortgage are non-recourse to the partners
of the Partnership, to the shareholders of the Company and to all
other persons and entities (other than the Company and the
Partnership), including Trump. Upon an event of default, holders of
the Mortgage Notes would have recourse only to the assets of the
Company and the Partnership.
(B) On June 25, 1993 Holding issued $60,000,000 principal amount of 12
1/2% Pay-In-Kind Notes, due 2003 (the "PIK Notes"), together with
Warrants to acquire an additional $12,000,000 of PIK Notes at no
additional cost. The Warrants are exercisable following the earlier
of certain triggering events or June 15, 1996.
The PIK Notes mature on June 15, 2003 and bear interest at the rate
of 12 1/2 % per annum from the date of issuance, payable semi-
annually on each June 15 and December 15, commencing December 15,
1993. At the option of Holding, interest is payable in whole or in
part, in cash or, in lieu of cash, through the issuance of additional
PIK Notes valued at 100% of their principal amount. The ability of
Holding to pay interest in cash on the PIK Notes is entirely
dependent on the ability of the Partnership to distribute available
cash, as defined, to Holding for such purpose.
On December 15, 1993, the Partnership elected to issue in lieu of
cash, an additional $3,562,000 in PIK Notes to satisfy its semi-
annual PIK Note interest obligation.
The PIK Notes are subordinate to the Company's Mortgage Notes and any
other indebtedness of the Partnership and are secured by a pledge of
Holding's 99% equity interest in the Partnership. The indenture to
which the PIK Notes were issued (the "PIK Note Indenture") contains
covenants prohibiting Holding from incurring additional indebtedness
and engaging in other activities, and other covenants restricting the
activities of the Partnership substantially similar to those set
forth in the Mortgage Note Indenture. The PIK Notes and the Warrants
are non-recourse to the Partners of Holding, including Trump, and to
all other persons and entities (other than Holding). Upon an event
of default, holders of PIK Notes or Warrants will have recourse only
to the assets of Holding which consist solely of its equity interest
in the Partnership.
11
TRUMP PLAZA FUNDING, INC., TRUMP PLAZA HOLDING ASSOCIATES AND
TRUMP PLAZA ASSOCIATES
NOTES TO CONDENSED FINANCIAL STATEMENTS
(UNAUDITED)
2. LONG-TERM DEBT CONT.:
(C) Interest on these notes are payable with interest rates ranging from
10.0% to 11.0%. The notes are due at various dates between 1994 and
1998 and are secured by real property.
3. INCOME TAXES:
The Company, Holding and the Partnership adopted Statement of Financial
Accounting Standards No. 109, "Accounting for Income Taxes" ("SFAS No.
109"), effective January 1, 1993. Adoption of this new standard did not
have a significant impact on the respective statements of financial
condition or results of operations. SFAS No. 109 requires recognition of
deferred tax liabilities and assets for the expected future tax
consequences of events that have been included in the financial statements
or tax returns. Under this method deferred tax liabilities and assets are
determined based on the difference between the financial statement and the
tax basis of assets and liabilities using enacted tax rates in effect for
the year in which the differences are expected to reverse.
The accompanying condensed financial statements of the Company include a
provision for Federal income taxes, based on distributions from the
Partnership relating to the Company's Preferred Stock which was redeemed
on June 25, 1993. The Company will be reimbursed for such income taxes by
the Partnership. The accompanying condensed consolidated financial
statements of Holding and the Partnership do not include a provision for
Federal income taxes since any income or losses allocated to its partners
are reportable for Federal income tax purposes by the partners.
Under the New Jersey Casino Control Commission regulations, the
Partnership is required to file a New Jersey corporation business tax
return. Accordingly, a benefit for state income taxes has been reflected
in the accompanying condensed consolidated financial statements of Holding
and the Partnership.
The Partnership's deferred state income taxes result primarily from
differences in the timing of reporting of depreciation for tax and
financial statement purposes.
4. CASINO LICENSE RENEWAL:
The operation of an Atlantic City hotel and casino is subject to
significant regulatory controls which affect virtually all of its
operations. Under the New Jersey Casino Control Act (the "Act") the
Partnership is required to maintain certain licenses.
In April, 1993, the New Jersey Casino Control Commission ("CCC") renewed
the Partnership's license to operate Trump Plaza. This license must be
renewed in June, 1995, is not transferable and will include a review of
the financial stability of the Partnership. Upon revocation, suspension
for more than 120 days, or failure to renew the casino license, the Act
allows
12
TRUMP PLAZA FUNDING, INC., TRUMP PLAZA HOLDING ASSOCIATES AND
TRUMP PLAZA ASSOCIATES
NOTES TO CONDENSED FINANCIAL STATEMENTS
(UNAUDITED)
4. CASINO LICENSE RENEWAL CONT.:
for the appointment of a conservator to take possession of the hotel and
casino's business and property, subject to all valid liens, claims and
encumbrances.
5. LEGAL PROCEEDINGS:
The Partnership, its Partners, certain members of its former Executive
Committee, and certain of its employees, have been involved in various
legal proceedings. In general, the Partnership has agreed to indemnify
such persons against any and all losses, claims, damages, expenses
(including reasonable costs, disbursements and counsel fees) and
liabilities (including amounts paid or incurred in satisfaction of
settlements, judgements, fines and penalties) incurred by them in said
legal proceedings. Such persons and entities are vigorously defending the
allegations against them and intend to vigorously contest any future
proceedings.
Various other legal proceedings are now pending against the Partnership.
The Partnership considers all such other proceedings to be ordinary
litigation incident to the character of its business and not material to
its business or financial condition. The Partnership believes that the
resolution of these claims will not, individually or in the aggregate,
have a material adverse effect on the financial condition or results of
operations.
The Partnership is also a party to various administrative proceedings
involving allegations that it has violated certain provisions of the Act.
The Partnership believes that the final outcome of these proceedings will
not, either individually or in the aggregate, have a material adverse
effect on its financial condition, results of operations or on the ability
of the Partnership to otherwise retain or renew any casino or other
licenses required under the Act for the operation of Trump Plaza.
6. FUTURE EXPANSION:
In 1993, the Partnership received the approval of the CCC, subject to
certain conditions, for the expansion of its hotel facilities (the
"Boardwalk Expansion Site"). On June 25, 1993, Donald J. Trump ("Trump")
transferred title to the Boardwalk Expansion Site to a lender in exchange
for a reduction in indebtedness to such lender in an amount equal to the
sum of fair market value of the Boardwalk Expansion Site and all rent
payments made to such lender by Trump under the Boardwalk Expansion Site
Lease. On June 25, 1993, the lender leased the Boardwalk Expansion Site
to Trump (the "Boardwalk Expansion Site Lease") for a term of five years,
which expires on June 30, 1998, during which time Trump is obligated to
pay the lender $260,000 per month in lease payments. In October 1993, the
Partnership assumed the Boardwalk Expansion Site Lease and related
expenses.
13
TRUMP PLAZA FUNDING, INC., TRUMP PLAZA HOLDING ASSOCIATES AND
TRUMP PLAZA ASSOCIATES
NOTES TO CONDENSED FINANCIAL STATEMENTS
(UNAUDITED)
6. FUTURE EXPANSION CONT.:
On June 25, 1993, the Partnership acquired a five-year option to purchase
the Boardwalk Expansion Site (the "Option"). In addition, the Partnership
has a right of first refusal upon any proposed sale of all or any portion
of the Boardwalk Expansion Site during the term of the Option. Until such
time as the Option is exercised or expires, the Partnership will be
obligated, from and after the date it entered into the Option, to pay the
net expenses associated with the Boardwalk Expansion Site. During the
three months ended March 31, 1994 the Partnership incurred $1.3 million
of such expenses. Under the Option, the Partnership has the right to
acquire the Boardwalk Expansion Site for a purchase price of $26.0 million
through 1994, increasing by $1.0 million annually thereafter until
expiration on June 30, 1998. The CCC has required that the Partnership
exercise the Option or its right of first refusal no later than July 1,
1995. If the Partnership defaults in making payments due under the
Option, the Partnership would be liable to the lender for the sum of (a)
the present value of all remaining payments to be made by the Partnership
pursuant to the Option during the term thereof and (b) the cost of
demolition of all improvements then located on the Boardwalk Expansion
Site.
As of March 31, 1994, the Partnership had capitalized approximately $4.9
million in construction costs related to the Boardwalk Expansion Site.
The Partnership's ability to acquire the Boardwalk Expansion Site pursuant
to the Option would be dependent upon its ability to obtain financing to
acquire the property. The ability to incur such indebtedness is
restricted by the Indenture and the PIK Note Indenture and requires the
consent of certain of Trump's personal creditors. The Partnership's
ability to develop the Boardwalk Expansion Site would be dependent upon
its ability to use existing cash on hand and generate cash flow from
operations sufficient to fund development costs. No assurance can be
given that such cash on hand will be available to the Partnership for such
purposes or that it will be able to generate sufficient cash flow from
operations. In addition, exercise of the Option or the right of first
refusal requires the consent of certain of Trump's personal creditors, and
there can be no assurance that such consent will be obtained at the time
the Partnership desires to exercise the Option or such right.
The accompanying financial statements do not include any adjustments that
may be necessary should the Partnership be unable to exercise the Option.
7. ADVANCES TO DONALD J. TRUMP:
In December 1993, Trump entered into an option agreement (the "Chemical
Option Agreement") with Chemical Bank ("Chemical") and ACFH Inc. ("ACFH")
a wholly owned subsidiary of Chemical. The Chemical Option Agreement
grants to Trump an option to purchase (i) the Trump Regency (including the
land, improvements and personal property used in the operation of the
hotel) and (ii) certain promissory notes made by Trump and/or certain of
his affiliates and payable to Chemical (the "Chemical Notes") which are
secured by certain real estate assets located in New York, unrelated to
the Partnership.
14
TRUMP PLAZA FUNDING, INC., TRUMP PLAZA HOLDING ASSOCIATES AND
TRUMP PLAZA ASSOCIATES
NOTES TO CONDENSED FINANCIAL STATEMENTS
(UNAUDITED)
7. ADVANCES TO DONALD J. TRUMP CONT.:
The aggregate purchase price payable for the assets subject to the
Chemical Option Agreement is $80 million. Under the terms of the Chemical
Option Agreement, $1 million was required to be paid for the option by
January 5, 1994. In addition, the Chemical Option Agreement provides for
an expiration of the option on May 6, 1994, subject to an extension until
June 30, 1994 upon payment of an additional $250,000 on or prior to May 6,
1994. The $1 million payment and the $250,000 payment may be credited
against the $80 million purchase price. The Chemical Option Agreement does
not allocate the purchase price among the assets subject to the option or
permit the option to be exercised for some, but not all, of such assets.
In connection with the execution of the Chemical Option Agreement, Trump
agreed with the Partnership that, if Trump is able to acquire the Trump
Regency pursuant to the exercise of the option, he would make the Trump
Regency available for the sole benefit of the Partnership on a basis
consistent with the Partnership's contractual obligations and
requirements. Trump further agreed that the Partnership would not be
required to pay any additional consideration to Trump in connection with
any assignment of the option to purchase the Trump Regency. On January 5,
1994, the Partnership obtained the approval of the CCC to make the $1
million payment, which was made on that date. Because of, among other
things, the likelihood that a financing transaction that would provide the
funds to acquire the assets subject to the Chemical Option Agreement would
not be completed by the June 30, 1994 expiration date, the $250,000
payment that was due on or prior to May 6, 1994 in order to extend the
option until June 30, 1994 has not been made. Trump, Chemical and ACFH
have discussed the terms of an extension of the option exercise period and
the modification of other conditions to the Chemical Option Agreement.
The parties have reached a tentative agreement in regards to an extension
of the option through September 30, 1994 and certain other modifications
to the Chemical Option Agreement.
15
Item 2 -- MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
RESULTS OF OPERATIONS
CAPITAL RESOURCES AND LIQUIDITY
The Company was incorporated on March 14, 1986 as a New Jersey
corporation, and was originally formed solely to raise funds through the
issuance and sale of its debt securities for the benefit of the
Partnership. On June 25, 1993 the Company issued and the Partnership
guaranteed $330,000,000 of Mortgage Notes (for net proceeds of
$325,687,000) and Holding issued an aggregate of $60,000,000 of PIK Notes,
together with Warrants to acquire an additional $12,000,000 of PIK Notes
at no additional cost. Holding has no other assets or business other than
its 99% equity interest in the Partnership. The Company owns the
remaining 1% interest in the Partnership.
In July 1993, the Partnership received approval from the CCC, subject to
certain conditions, for the expansion of its hotel facilities on the
Boardwalk Expansion Site. The expansion will enable the Partnership to
increase Trump Plaza's casino floor space by 30,000 square feet.
Management anticipates that cash from operations, including the additional
revenues anticipated to be provided by the expansion of the casino floor
together with Atlantic City Casino Reinvestment Development Authority
credits, will provide the working capital needed to renovate the Boardwalk
Expansion Site, although no assurances can be given that cashflow from
operations will be sufficient for such purpose. See Note 6 to the
Condensed Financial Statements -- Future Expansion.
Cash flow from operating activities is the Partnership's principal source
of liquidity. For the three months ended March 31, 1994, net cash from
operating activities was $8,377,000. Interest on the Mortgage Bonds was
payable semiannually on March 15 and September 15, while interest on the
Mortgage Notes is payable semiannually on each June 15 and December 15,
commencing December 15, 1993. The increase of $8,709,000 in net cash
provided by operating activities as compared to the comparable period in
1993 reflects the aforementioned changes in payments of accrued interest
on the Mortgage Bonds. For the three months ended March 31, 1994, cash
and cash equivalents of $16,376,000 reflects an overall increase of
$1,983,000 from $14,393,000 at December 31, 1993 which is primarily the
result of improvements in cash flows from operating activities.
Capital expenditures of $6,165,000 for the three months ended March 31,
1994 increased approximately $3,806,000, from the comparable period in
1993 and was primarily attributable to the refurbishing costs associated
with the Boardwalk Expansion Site, and the expansion of the casino floor.
These expenditures were financed from funds generated from operations.
The Boardwalk Expansion Site described in Note 6 to the Condensed
Financial Statements, may require additional borrowings.
At March 31, 1994, the Partnership had a combined working capital deficit
totalling approximately $13,536,000, compared to a working capital deficit
of $1,470,000 at December 31, 1993.
16
Item 2 -- MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
RESULTS OF OPERATIONS
CAPITAL RESOURCES AND LIQUIDITY CONT.
Pursuant to the terms of the Partnership Agreement, prior to amendment on
June 25, 1993, which eliminated such distribution requirements arising
from costs incurred subsequent to the June 25, 1993 Amendment, the
Partnership was required to make certain periodic distributions to the
Company and Trump sufficient to pay taxes attributable to distributions
received from the Partnership, any amounts required to be paid to
directors as fees or pursuant to indemnification obligations, premiums on
directors' and officers' liability insurance and other reasonable general
and administrative expenses. The Partnership was also required to
distribute to the Company, to the extent of cash available therefrom,
funds sufficient to enable the Company to pay dividends on, and the
redemption price of its Stock Units. For the three months ended March 31,
1994, no distributions were made and for the comparable period in 1993,
such distributions were $3,623,000.
Pursuant to the terms of a Services Agreement with Trump Plaza Management
Corp. ("TPM"), a corporation beneficially owned by Trump, in consideration
for services provided, the Partnership pays TPM each year an annual fee of
$1,000,000 in equal monthly installments, and reimburses TPM on a monthly
basis for all reasonable out-of-pocket expenses incurred by TPM in
performing its obligations under the Services Agreement, up to certain
amounts. Under this Agreement, $290,000 was charged to expense for the
three months ended March 31, 1994.
The Mortgage Note Indenture and the PIK Note Indenture restrict the
ability of the Partnership to make distributions to its partners,
including restrictions relating to the achievement of certain financial
ratios. Subject to the satisfaction of these restrictions, the Partnership
may make distributions to its partners with respect to their Partnership
interests.
The financial information presented below reflects the results of
operations of the Partnership. Since the Company and Holding have no
business operations other than its interest in the Partnership, their
results of operations are not discussed below.
COMPARISON OF THREE-MONTH PERIODS ENDED MARCH 31, 1994 AND 1993
OPERATING REVENUES AND EXPENSES
Gaming revenues were $54,157,000 for three months ended March 31, 1994, a
decrease of $6,523,000 or 10.7% from gaming revenues of $60,680,000 for
the comparable period in 1993. This decrease in gaming revenues consisted
of a reduction in both table games and slot revenues. These results were
impacted by a number of major ice and snow storms throughout the
northeastern United States, which severely restricted travel in the
region. Bad weather also impacted results for the three months ended
March 31, 1993; however, the weather during the comparable period in 1994
was much more severe.
Slot revenues were $33,350,000 for the three months ended March 31, 1994,
a decrease of $4,139,000 or 11.0% from $37,489,000 in 1993.
17
COMPARISON OF THREE-MONTH PERIODS ENDED MARCH 31, 1994 AND 1993
OPERATING REVENUES AND EXPENSES
Table games revenues were $20,807,000 for the three months ended March 31,
1994, a decrease of $2,384,000 or 10.3%, from $23,191,000 in the
comparable period 1993. This decrease was primarily due to a reduction in
table games drop (i.e., the dollar value of chips purchased) by 11.3%, for
the three months ended March 31, 1994, from 1993, slightly offset by an
increase in the table games hold percentage to 15.9% (the percentage of
table drop retained by the Partnership) for the three months ended March
31, 1994 from 15.7% in the comparable period in 1993.
Other revenues were $13,834,000 for the three months ended March 31, 1994,
a decrease of $1,155,000 or 7.7%, from other revenues of $14,989,000 in
the comparable period in 1993. Other revenues include revenues from
rooms, food and beverage and miscellaneous items. The decrease primarily
reflects decreases in food and beverage revenues attendant to reduced
levels of gaming activity, and reduced promotional expenses.
Promotional allowances were $6,988,000 for the three months ended March
31, 1994, a decrease of $523,000 or 7.0% from promotional allowances of
$7,511,000 in 1993. This reduction is primarily attributable to a
reduction in gaming activity during the three months ended March 31, 1994.
Gaming costs and expenses were $31,112,000 for the three months ended
March 31, 1994, a decrease of $2,535,000, or 7.5%, from gaming costs and
expenses of $33,647,000 for the comparable period in 1993. This decrease
was primarily due to decreased promotional and operating expense and taxes
associated with decreased levels of gaming revenues from the comparable
period in 1993.
Income from operations was $2,605,000 for the three months ended March 31,
1994, a decrease of $3,978,000, or 60.4% from income from operations of
$6,583,000 for the comparable period in 1993.
Net interest expense was $12,027,000 for the three months ended March 31,
1994, an increase of $4,599,000, or 61.9% from net interest expense of
$7,428,000 in the comparable period in 1993. This is attributable to
interest expense associated with the Mortgage Notes and PIK Notes.
Other non-operating expense was $1,480,000 for the three months ended
March 31, 1994, an increase of $1,421,000 from non-operating expense of
$59,000 for the comparable period in 1993. This increase is directly
attributable to costs associated with the Boardwalk Expansion Site. See
Note 6 to Condensed Consolidated Financial Statements -- Future Expansion.
PART II - OTHER INFORMATION
ITEM 1 -- LEGAL PROCEEDINGS
(a) The Partnership, its partners, certain members of its former
Executive Committee and certain of its employees are involved in
various legal proceedings, some of which are described below. The
Partnership agreed to indemnify such persons and entities, against
any and all losses, claims, damages, expenses (including reasonable
costs, disbursements and counsel fees) and liabilities (including
amounts paid or incurred in satisfaction of settlements, judgments,
fines and penalties) incurred by them in said legal proceedings.
18
ITEM 1 -- LEGAL PROCEEDINGS
Such persons and entities are vigorously defending the allegations
against them and intend to vigorously contest any future proceedings.
(b) Reference is made to the description of the legal proceedings
contained in the Company's and the Partnership's Annual Report on
Form 10-K for the year ended December 31, 1993, filed with the
Securities and Exchange Commission.
(c) Penthouse Litigation. In April, 1993, the Partnership filed a motion
to dismiss certain claims in the federal court action, based on the
favorable decision in the state court action. On July 15, 1993, the
court acted favorably on the Partnerships' motion and dismissed the
federal court action in its entirety.
With respect to the state court proceeding, a judgement was entered
on October 13, 1993, dismissing with prejudice all claims against
Donald Trump and Trump Plaza Associates. On November 5, 1993, BPHC
filed a motion seeking to have this judgement declared interlocutory
in nature, rather than final. The Partnership intends to oppose this
motion.
ITEM 2 -- CHANGES IN SECURITIES
None
ITEM 3 -- DEFAULTS UPON SENIOR SECURITIES
None
ITEM 4 -- SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
None
ITEM 5 -- OTHER INFORMATION
On April 21, 1994, Mr. William Velardo resigned from his position with the
Company. Mr. Velardo had been serving as Chief Operating Officer of the
Company since Mr. Kevin DeSanctis' resignation from the Company on March
7, 1994. Mr. Nicholas R. Ribis, Chief Executive Officer of the
Partnership, is currently serving as acting Chief Operating Officer of the
Company until a successor to Mr. Velardo is appointed.
ITEM 6 -- EXHIBITS AND REPORTS ON FORM 8-K.
a. Exhibits: None.
b. Current Reports on Form 8-K: None
19
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, as
amended, the Registrant has duly caused this Report to be signed on its
behalf by the undersigned thereunto duly authorized.
TRUMP PLAZA FUNDING, INC.
(Registrant)
Dated: May 12, 1994 By: ___________________________
Francis X. McCarthy, Jr.
Vice President, Chief Financial
Officer and Principal Accounting
Officer
(Duly Authorized Officer and
Chief Accounting Officer)
20
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, as
amended, the Registrant has duly caused this Report to be signed on its
behalf by the undersigned thereunto duly authorized.
TRUMP PLAZA HOLDING ASSOCIATES
(Registrant)
Dated: May 12, 1994 By: ___________________________
Francis X. McCarthy, Jr.
Chief Financial and Accounting
Officer
(Duly Authorized Officer and
Chief Accounting Officer)