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: September 30, 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 November 14, 1994, was 100.
Total number of pages in this Report:
TRUMP PLAZA FUNDING, INC., TRUMP PLAZA HOLDING ASSOCIATES AND
TRUMP PLAZA ASSOCIATES
INDEX TO FORM 10-Q
PART I -- FINANCIAL INFORMATION
ITEM 1 -- Financial Statements
Condensed Balance Sheets of Trump Plaza Funding,Inc.
as of September 30, 1994 (unaudited) and December 31, 1993.
Condensed Statements of Income of Trump Plaza Funding, Inc.
for the Three Months and Nine Months Ended September 30, 1994
and September 30, 1993 (unaudited).
Condensed Statement of Capital of Trump Plaza Funding, Inc.
for the Nine Months Ended September 30, 1994 (unaudited).
Condensed Statements of Cash Flows of Trump Plaza
Funding, Inc. for the Nine Months Ended September 30, 1994
and September 30, 1993 (unaudited).
Condensed Consolidated Balance Sheets of Trump Plaza Holding
Associates and Trump Plaza Associates as of September 30, 1994
(unaudited) and December 31, 1993.
Condensed Consolidated Statements of Operations of Trump Plaza
Holding Associates and Trump Plaza Associates for the Three Months and
Nine Months Ended September 30, 1994 and September 30, 1993 (unaudited).
Condensed Consolidated Statement of Capital (Deficit) of Trump Plaza
Holding Associates and Trump Plaza Associates for the Nine Months Ended
September 30, 1994 (unaudited).
Condensed Consolidated Statements of Cash Flows of Trump Plaza
Holding Associates and Trump Plaza Associates for the Nine Months Ended
September 30, 1994 and September 30, 1993 (unaudited).
Notes to Condensed Financial Statements of Trump Plaza Funding, Inc.,
Trump Plaza Holding Associates and Trump Plaza Associates.
ITEM 2 -- Management's Discussion and Analysis of Financial
Condition and Results of Operations
PART II -- OTHER INFORMATION
ITEM 1 -- Legal Proceedings
ITEM 2 -- Changes in Securities
ITEM 3 -- Defaults upon Senior Securities
ITEM 4 -- Submission of Matters to a Vote of Security Holders
ITEM 5 -- Other Information
ITEM 6 -- Exhibits and Reports on Form 8-K
Signatures - Trump Plaza Funding, Inc.
Signatures - Trump Plaza Holding Associates
PART I - FINANCIAL INFORMATION
ITEM 1- Financial Statements
TRUMP PLAZA FUNDING, INC.
CONDENSED BALANCE SHEETS
(in thousands, except share amounts)
September 30, December 31,
1994 1993
----------- -----------
(unaudited)
ASSETS
CURRENT ASSETS:
Cash $ 2 $ 2
Mortgage Interest Receivable 10,467 1,495
Receivable From Partnership - 974
------- -------
Total Current Assets 10,469 2,471
Mortgage Note Receivable 326,136 325,859
Receivable From Partnership 3,743 2,949
------- -------
Total Assets $340,348 $331,279
======= =======
LIABILITIES AND CAPITAL
CURRENT LIABILITIES:
Accrued Interest Payable $ 10,467 $ 1,495
Income Taxes Payable - 974
------- -------
Total Current Liabilities 10,467 2,469
10 7/8% Mortgage Bonds, net of
discount due 2001 326,136 325,859
Deferred Income Taxes Payable 3,743 2,949
------- -------
Total Liabilities 340,346 331,277
------- -------
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 $340,348 $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 AND NINE MONTHS ENDED SEPTEMBER 30, 1994 AND 1993
(unaudited)
(in thousands)
For the Three For the Nine
Months Ended Months Ended
September 30, September 30,
---------------- -----------------
1994 1993 1994 1993
------ ------ ------ ------
Interest Income From Partnership $ 9,067 $ 8,910 $ 27,193 $ 23,670
Preferred Partnership Investment
Income - - - 3,993
Reimbursement for Income Taxes - - - 1,802
Interest Expense (9,067) (8,910) (27,193) (23,670)
Director's Fees and Related
Expenses - - - (497)
------ ------ ------- -------
Income Before Provision for Taxes - - - 5,298
Provision for Income Taxes - - - 1,802
------ ------ ------- -------
Net Income $ - $ - $ - $ 3,496
====== ====== ======= =======
The accompanying notes are an integral part
of these condensed financial statements.
-2-
TRUMP PLAZA FUNDING, INC.
CONDENSED STATEMENT OF CAPITAL
(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,
September 30, 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 NINE MONTHS ENDED SEPTEMBER 30, 1994 AND 1993
(unaudited)
(in thousands)
1994 1993
-------- --------
CASH FLOWS FROM OPERATING ACTIVITIES:
Net Income $ - $ 3,496
Adjustments to Reconcile Net Income
To Net Cash Flows Provided by (Used In)
Operating Activities:
Accretion of Indebtedness 277 -
Preferred Stock Accretion - (315)
Deferred income taxes payable (180) 1,751
------- --------
97 4,932
Decrease in receivable from Partnership 180 275
Increase in interest receivable (8,972) (1,620)
Increase in interest payable 8,972 1,620
------- --------
Net cash flows provided by operating
activities 277 5,207
------- --------
CASH FLOWS FROM INVESTING ACTIVITIES:
Preferred Stock Dividends - (5,704)
------- --------
CASH FLOWS FROM FINANCING ACTIVITIES:
Capital Contribution - 35,000
Distribution from Partnership - 40,497
Increase in Mortgage Note receivable (277) (100,687)
Additional borrowings - 325,687
Payments of current maturities of
long term debt - (225,000)
Redemption of Preferred Stock - (75,000)
------- --------
Net cash flows (used in) provided by
financing activities (277) 497
------- --------
Net Change in Cash - -
Cash at Beginning of Year 2 2
------- --------
Cash at September 30, $ 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
September 30, December 31,
1994 1993
------------ ----------
(unaudited)
CURRENT ASSETS:
Cash and cash equivalents $ 22,159 $ 14,393
Receivables, net 7,037 6,957
Inventories 3,556 3,566
Other current assets 5,121 2,701
-------- --------
Total Current Assets 37,873 27,617
PROPERTY AND EQUIPMENT, net 296,300 293,141
LAND RIGHTS 29,781 30,058
OTHER ASSETS 22,126 23,682
-------- --------
Total Assets $ 386,080 $ 374,498
======== ========
LIABILITIES AND CAPITAL
CURRENT LIABILITIES:
Current maturities of long-term debt $ 3,142 $ 1,633
Accounts payable and accrued expenses 26,515 24,554
Accrued interest payable 12,931 1,829
Due to affiliate, net 472 97
Distribution Payable to Trump Plaza
Funding, Inc. - 974
-------- --------
Total Current Liabilities 43,060 29,087
LONG-TERM DEBT, net of discount and current
maturities 398,644 395,948
DISTRIBUTION PAYABLE TO
TRUMP PLAZA FUNDING, INC. 3,743 2,949
DEFERRED STATE INCOME TAXES 701 1,224
-------- --------
Total Liabilities 446,148 429,208
-------- --------
CAPITAL:
Partners' Deficit (78,825) (78,772)
Retained Earnings 18,757 24,062
-------- --------
Total Deficit (60,068) (54,710)
-------- --------
Total Liabilities and Capital $ 386,080 $ 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 AND NINE MONTHS ENDED SEPTEMBER 30, 1994 AND 1993
(unaudited)
(in thousands)
For the Three For the Nine
Months Ended Months Ended
September 30, September 30,
----------------- -----------------
1994 1993 1994 1993
-------- -------- -------- --------
REVENUES:
Gaming $ 75,573 $ 74,680 $ 197,068 $205,012
Rooms 5,552 5,674 14,014 13,971
Food and Beverage 11,370 12,091 29,556 32,042
Other 2,714 2,975 6,558 6,647
------- ------- -------- -------
Gross Revenues 95,209 95,420 247,196 257,672
Less- Promotional allowances 9,975 9,616 25,130 24,988
------- ------- -------- -------
Net revenues 85,234 85,804 222,066 232,684
------- ------- -------- -------
COSTS AND EXPENSES:
Gaming 37,981 35,923 104,100 104,864
Rooms 638 721 2,064 2,133
Food and Beverage 4,642 5,095 12,501 13,707
General and Administrative 18,238 18,000 53,933 53,705
Depreciation and Amortization 3,893 4,035 11,734 13,405
Other 998 1,062 2,787 2,965
------- ------- -------- -------
66,390 64,836 187,119 190,779
------- ------- -------- -------
Income from operations 18,844 20,968 34,947 41,905
------- ------- -------- -------
NONOPERATING INCOME AND
(EXPENSES):
Interest income 204 133 520 361
Interest expense (12,281) (12,098) (36,571) (28,600)
Other non-operating expense (1,914) (1,960) (4,724) (2,448)
------- ------- -------- -------
(13,991) (13,925) (40,775) (30,687)
------- ------- -------- -------
Income (loss) before
state income taxes and
extraordinary item 4,853 7,043 (5,828) 11,218
PROVISION (BENEFIT) FOR STATE
INCOME TAXES 464 902 (523) 1,325
------- ------- -------- -------
INCOME (LOSS) BEFORE
EXTRAORDINARY ITEM 4,389 6,141 (5,305) 9,893
EXTRAORDINARY GAIN - - - 4,120
------- ------- -------- -------
Net Income (Loss) $ 4,389 $ 6,141 $ (5,305) $ 14,013
======= ====== ======== =======
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)
(UNAUDITED)
(IN THOUSANDS)
Partners' Retained
Capital Earnings Total
-------- -------- -------
Balance,
December 31, 1993 $(78,772) $ 24,062 $(54,710)
Preferred Partnership
Interest Distribution (53) - (53)
Net Loss - (5,305) (5,305)
------- ------- -------
Balance,
September 30, 1994 $(78,825) $ 18,757 $(60,068)
======= ======= =======
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 NINE MONTHS ENDED SEPTEMBER 30, 1994 AND 1993
(unaudited)
(in thousands)
1994 1993
---------- ----------
CASH FLOWS FROM OPERATING ACTIVITIES:
Net Income (loss) $ (5,305) $ 14,013
Adjustments to reconcile net income (loss) to
net cash flows provided by operating activities-
Noncash charges-
Extraordinary gain - (4,120)
Depreciation and amortization 11,734 13,405
Accretion of discounts on indebtedness 1,412 211
Provisions for losses on receivables 357 122
Deferred state income taxes (523) 1,325
------- --------
7,675 24,956
(Increase) decrease in receivables (437) 927
Decrease (increase) in inventories 10 (563)
Decrease in due to affiliates 375 255
Increase in other current assets (2,420) (625)
Decrease in other assets 1,551 444
Increase (decrease) in accounts payable and
accrued expenses 1,961 (1,527)
Increase in accrued interest payable 11,102 3,940
------- --------
Net cash flows provided by
operating activities 19,817 27,807
------- --------
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchase of property and equipment, net (14,611) (6,557)
------- --------
CASH FLOWS FROM FINANCING ACTIVITIES:
Deferred Financing Costs - (17,518)
Distributions to Donald J. Trump - (87,500)
Distributions to the Company - (40,000)
Preferred Partnership Interest
Distribution (233) (6,252)
Additional Borrowings 4,348 386,066
Payments and current maturities of
long-term debt (1,555) (248,275)
------- --------
Net cash flows provided by (used in)
financing activities 2,560 (13,479)
------- --------
Net increase in cash and
cash equivalents 7,766 7,771
CASH AND CASH EQUIVALENTS AT BEGINNING OF YEAR 14,393 18,802
------- --------
CASH AND CASH EQUIVALENTS AT SEPTEMBER 30, $ 22,159 $ 26,573
======= ========
CASH INTEREST PAID $ 18,445 $ 24,438
======= ========
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 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 ("Trump Plaza") 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 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 nine months ended September 30, 1994 are
not necessarily indicative of the operating results for a full year.
-9-
2. LONG-TERM DEBT :
Long-term debt consists of the following:
September 30, December 31,
1994 1993
------------ -----------
Company:
10 7/8% Mortgage Notes, due 2001 net
of unamortized discount of $3,864,000
in 1994 and $4,141,000 in 1993 (A) $326,136,000 $325,859,000
=========== ===========
Holding and the Partnership:
Partnership
Partnership Note (10 7/8% Mortgage Notes,
due 2001 net of unamortized discount of
$3,864,000 in 1994 and $4,141,000 in
1993) (A) $326,136,000 $325,859,000
Mortgage notes payable (C) 5,602,000 6,410,000
Other notes payable 688,000 1,060,000
----------- -----------
332,426,000 333,329,000
Less - Current maturities 3,142,000 1,633,000
----------- -----------
329,284,000 331,696,000
Holding
PIK Notes (12 1/2% Notes due 2003 net
of discount of $10,176,000 in 1994
and $11,310,000 in 1993) (B) 69,360,000 64,252,000
----------- -----------
$398,644,000 $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-
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 Donald J. Trump ("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, and June 15, 1994 the Partnership elected to
issue in lieu of cash, an additional $3,562,000 and $3,973,000
respectively in PIK Notes to satisfy its semi-annual PIK Note interest
obligations.
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-
(C) Interest on these notes are payable with interest rates ranging from
8.8% 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
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.
-12-
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, 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.
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 nine
months ended September 30, 1994 the Partnership incurred $3.7 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
-13-
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 September 30, 1994, the Partnership had capitalized approximately
$9.3 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 Mortgage Note 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 "Original
Chemical Option Agreement") with Chemical Bank ("Chemical") and ACFH Inc.
("ACFH") a wholly owned subsidiary of Chemical. The Original Chemical
Option Agreement granted 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.
The aggregate purchase price payable for the assets subject to the Original
Chemical Option Agreement was $80 million. Under the terms of the Original
Chemical Option Agreement, $1 million was required to be paid for the
option by January 5, 1994. In addition, the Original Chemical Option
Agreement provided 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 Original Chemical Option Agreement did 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.
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In connection with the execution of the Original 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. On June 16, 1994 Trump, Chemical and ACFH entered into,
amended and restated the Original Chemical Option Agreement the (the "First
Amended Chemical Option Agreement"). The First Amended Chemical Option
Agreement provided for an extension of the expiration of the Option through
September 30, 1994, upon payment of $250,000. Such payment was made on
June 27, 1994. The Amended Chemical Option Agreement provided for a $60
million option price for the Trump Regency and one of the Chemical Notes
and a separate $20 million option price for the other Chemical Notes. The
Amended Chemical Option would be terminated if certain conditions were not
met. Certain of such conditions were not met. On August 30, 1994, Trump,
Chemical and ACFH entered into an amendment to the First Amended Chemical
Option Agreement (the "Second Amended Chemical Option Agreement"). The
Second Amended Chemical Option Agreement provides for an extension of the
expiration of the Option through March 31, 1995 upon the payment of $50,000
a month for the period October through December 1994, and $150,000 a month
for the period January through March 1995. No such payments will be made
until the Partnership receives the approval of the CCC.
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. During
the three months ended June 30, 1994, management elected to expand the
casino floor by approximately 10,000 square feet. Management anticipates
that cash from operations, including the additional revenues anticipated to
be provided by the 10,000 square foot expansion and future expansion of the
casino floor together with Atlantic City Casino Reinvestment Development
Authority credits, will provide the working capital needed to renovate the
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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 Consolidated Financial Statements --
Future Expansion.
Cash flow from operating activities is the Partnership's principal source
of liquidity. For the nine months ended September 30, 1994, net cash from
operating activities was $19,817,000. Interest on the Mortgage Bonds was
payable semi-annually on March 15 and September 15, while interest on the
Mortgage Notes is payable semi-annually on each June 15 and December 15,
commencing December 15, 1993. The decrease of $7,990,000 in net cash
provided by operating activities as compared to the comparable period in
1993 reflects a decrease in income from operations of $6,958,000. For the
nine months ended September 30, 1994, cash and cash equivalents of
$22,159,000 reflects an overall increase of $7,766,000 from $14,393,000 at
December 31, 1993 which is primarily the result of the aforementioned
changes in payments of accrued interest on the Mortgage Bonds offset by
capital expenditures requirements as more fully discussed below.
Capital expenditures of $14,611,000 for the nine months ended September 30,
1994 represented an increase of approximately $8,054,000 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 Consolidated Financial Statements, may require
additional borrowings.
At September 30, 1994, the Partnership had a combined working capital
deficit totalling approximately $5,187,000, compared to a working capital
deficit of $1,470,000 at December 31, 1993, primarily due to an increase in
accrued interest as discussed above.
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 nine months ended September 30, 1994, $233,000 in
distributions were made and for the comparable period in 1993, such
distributions were $6,252,000.
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, $961,000 was charged to expense for the
nine months ended September 30, 1994.
-16-
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.
On June 15, 1994 and December 15, 1993 the Partnership elected to issue in
lieu of cash, an additional $3,973,000 and $3,562,000 respectively in PIK
notes to satisfy its semi-annual PIK note interest obligations.
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 SEPTEMBER 30, 1994 AND 1993
OPERATING REVENUES AND EXPENSES
Gaming revenues were $75,573,000 for three months ended September 30, 1994,
an increase of $893,000 or 1.2% from gaming revenues of $74,680,000 for the
comparable period in 1993. This increase in gaming revenues was primarily
attributable to an increase in table games revenues.
Slot revenues were $49,847,000 for the three months ended September 30,
1994, a decrease of $177,000 or .4% from $50,024,000 in 1993.
Table games revenues were $25,726,000 for the three months ended September
30, 1994, an increase of $1,070,000 or 4.3% from $24,656,000 in the
comparable period in 1993. This increase was primarily due to an increase
in the table games hold percentage (the percentage of table drop retained
by the Partnership) to 15.0% for the three months ended September 30, 1994
from 14.2% in the comparable period in 1993, offset by a slight reduction
in the table games drop (i.e., the dollar value of chips purchased) by
$1,694,000 or 1.0% for the three months ended September 30, 1994 from the
comparable period in 1993.
Other revenues were $19,636,000 for the three months ended September 30,
1994, a decrease of $1,104,000 or 5.3% from other revenues of $20,740,000
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 changes in
bus couponing.
Gaming costs and expenses were $37,981,000 for the three months ended
September 30, 1994, an increase of $2,058,000, or 5.7%, from operating
expenses of $35,923,000 for the comparable period in 1993. This increase
was primarily due to increased promotional and operating expenses
associated with gaming revenues from the comparable period in 1993.
Income from operations was $18,844,000 for the three months ended
September 30, 1994, a decrease of $2,124,000 or 10.1% from income from
operations of $20,968,000 for the comparable period in 1993.
-17-
COMPARISON OF NINE-MONTH PERIODS ENDED SEPTEMBER 30, 1994 AND 1993
OPERATING REVENUES AND EXPENSES
Gaming revenues were $197,068,000 for the nine months ended September 30,
1994, a decrease of $7,944,000 or 3.9% from gaming revenues of $205,012,000
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, during the three months ended March 31,
1994, 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. The
decrease in gaming revenues was also due in part to a planned casino floor
and Boardwalk Expansion site construction which created inefficiencies in
the operation of the casino floor by temporarily disrupting the normal flow
of patrons upon entrance to the casino, as well as detracting from the
overall appearance of the casino floor and property surrounding and
adjacent to Trump Plaza. Also, 1994 Trump Plaza experienced turnover of
certain management positions, which affected operations.
Slot revenues were $127,784,000 for the nine months ended September 30,
1994, a decrease of $5,229,000 or 3.9% from $133,013,000 in 1993.
Table games revenues were $69,284,000 for the nine months ended September
30, 1994, a decrease of $2,715,000 or 3.8% from table games revenues of
$71,999,000 for the comparable period in 1993. This decrease was primarily
due to a reduction in table games drop (i.e., the dollar value of chips
purchased) by $27,565,000 or 5.8% for the nine months ended September 30,
1994 from the comparable period in 1993, offset by a slight increase in
the table game hold percentage to 15.4% (the percentage of table drop
retained by the Partnership) for the nine months ended September 30, 1994
from 15.1% for the comparable period in 1993.
Other revenues were $50,128,000 for the nine months ended September 30,
1994, a decrease of $2,532,000, or 4.8% from other revenues of $52,660,000
for the comparable period in 1993. This decrease in other revenues
primarily reflects decreases in food and beverage revenues attendant to
changes in bus couponing.
Gaming costs and expenses were $104,100,000 for the nine months ended
September 30, 1994, a decrease of $764,000 or .7% from gaming costs and
expenses of $104,864,000 for the comparable period in 1993. This decrease
was primarily due to taxes associated with decreased levels of gaming
activity and revenues from the comparable period in 1993, offset by
increased marketing costs.
Income from operations was $34,947,000 for the nine months ended September
30, 1994, a decrease of $6,958,000 or 16.6% from income from operations of
$41,905,000 for the comparable period in 1993.
Net interest expense was $36,051,000 for the nine months ended September
30, 1994, an increase of $7,812,000 or 27.7% from net interest expense of
$28,239,000 in the comparable period in 1993. This is attributable to
interest expense associated with the Mortgage Notes and PIK Notes.
-18-
Other non-operating expense was $4,724,000 for the nine months ended
September 30, 1994, an increase of $2,276,000 or 9.3% from non-operating
expense of $2,448,000 for the comparable period in 1993. This increase is
directly attributable to nine months of costs associated with the Boardwalk
Expansion Site amounting to $3,726,000 as compared to four months of cost
amounting to $2,309,000 for the comparable period in 1993 in addition to
$995,000 in costs associated with donations to Casino Reinvestment
Development Authority for the nine months ended September 30, 1994. See
Note 6 to the Condensed 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. 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. With reference to the federal court
proceedings, the United States Court of Appeals for the Third Circuit
issued a Judgement Order dated April 20, 1994, certified as a true
copy and ordering the judgment of the District Court dismissing the
federal court action in its entirety be affirmed. No petition for
certiorari was filed.
With reference to the state court proceedings, BPHC's application for
reconsideration of the Court's determination that the judgment
entered on October 13, 1993 in favor of the Trump parties was denied
on November 19, 1993. On November 29, 1993, BPHC Acquisition, Inc.
and BPHC Parking Corp.filed a notice of appeal. BPHC unsuccessfully
moved to dismiss this appeal. This appeal was subsequently
consolidated with BPHC's appeal from the Final Judgement entered in
favor of the Penthouse parties. A briefing schedule has been entered.
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
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ITEM 5 -- OTHER INFORMATION
On September 19, 1994 Mr. Barry J. Cregan was appointed Chief Operating
Officer of the Partnership.
ITEM 6 -- EXHIBITS AND REPORTS ON FORM 8-K.
a. Exhibits:
Exhibit No. Exhibit
10 Employment Agreement between the Partnership and
Barry J. Cregan.
b. Current Reports on Form 8-K: None
-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 FUNDING, INC.
(Registrant)
Dated: November 14, 1994 By:
___________________________
Francis X. McCarthy, Jr.
Vice President, Chief
Financial Officer and
PrincipalAccounting Officer
(Duly Authorized Officer and
Chief Accounting Officer)
-21-
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: November 14, 1994 By:
___________________________
Francis X. McCarthy, Jr.
Chief Financial and
Accounting Officer
(Duly Authorized Officer and
Chief Accounting Officer)
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