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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: June 30, 1996
OR
| | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the transition period from ________ to ________
----------
Commission file number: 333-643
TRUMP ATLANTIC CITY 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 offices) (Zip Code)
(609) 441-6060
(Registrant's telephone number, including area code)
Commission file number: 333-643
TRUMP ATLANTIC CITY FUNDING, INC.
(Exact name of registrant as specified in its charter)
DELAWARE 22-3418939
(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 offices) (Zip Code)
(609) 441-6060
(Registrant's telephone number, including area code)
----------
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
registrants were required to file such reports), and (2) have been subject to
such filing requirements for the past 90 days. Yes |X| No | |
The number of outstanding shares of Common Stock, par value $.01 per share,
of Trump Atlantic City Funding, Inc. as of August 14, 1996 was 100.
Trump Atlantic City Funding, Inc. meets the conditions set forth in General
Instruction (H)(1)(a) and (b) of Form 10-Q and is therefore filing this Form
with the reduced disclosure format.
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TRUMP ATLANTIC CITY ASSOCIATES AND SUBSIDIARIES
----------
INDEX TO FORM 10-Q
Page No.
PART I -- FINANCIAL INFORMATION
ITEM 1 -- Financial Statements
Condensed Consolidated Balance Sheets of Trump
Atlantic City Associates and Subsidiaries as of June
30, 1996 (unaudited) and December 31, 1995............................ 1
Condensed Consolidated Statements of Operations of
Trump Atlantic City Associates and Subsidiaries for
the Three Months and Six Months Ended June 30, 1996
and 1995 (unaudited).................................................. 2
Condensed Consolidated Statement of Capital of Trump
Atlantic City Associates and Subsidiaries for the
Six Months Ended June 30, 1996 (unaudited)............................ 3
Condensed Consolidated Statements of Cash Flows of
Trump Atlantic City Associates and Subsidiaries for
the Six Months Ended June 30, 1996 and 1995
(unaudited)........................................................... 4
Notes to Condensed Consolidated Financial Statements
of Trump Atlantic City Associates and Subsidiaries
(unaudited)......................................................... 5-8
ITEM 2 -- Management's Discussion and Analysis of Financial Condition and
Results of Operations............................................ 9-14
PART II -- OTHER INFORMATION
ITEM 1 -- Legal Proceedings................................................ 15
ITEM 2 -- Changes in Securities............................................ 16
ITEM 3 -- Defaults Upon Senior Securities.................................. 16
ITEM 4 -- Submission of Matters to a Vote of Security Holders............. 16
ITEM 5 -- Other Information............................................... 16
ITEM 6 -- Exhibits and Reports on Form 8-K................................ 16
SIGNATURES
Signature -- Trump Atlantic City Associates................................ 17
Signature -- Trump Atlantic City Funding, Inc. ............................ 18
i
PART I -- FINANCIAL INFORMATION
ITEM 1 -- FINANCIAL STATEMENTS
TRUMP ATLANTIC CITY ASSOCIATES AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(in thousands)
ASSETS
June 30, December 31,
1996 1995
----------- -----------
(unaudited)
CURRENT ASSETS:
Cash and cash equivalents .......................... $ 68,469 $ 15,937
Receivables, net ................................... 51,591 14,058
Inventories ........................................ 9,514 2,609
Due from affiliates, net ........................... 2,678 1,298
Other current assets ............................... 12,664 5,045
----------- -----------
Total current assets ............................. 144,916 38,947
PROPERTY AND EQUIPMENT, NET .......................... 1,414,219 395,942
LAND RIGHTS .......................................... 29,135 29,320
DEFERRED LOAN COSTS, NET ............................. 42,696 10,850
OTHER ASSETS ......................................... 21,072 4,965
----------- -----------
Total Assets ..................................... $ 1,652,038 $ 480,024
=========== ===========
LIABILITIES AND CAPITAL
CURRENT LIABILITIES:
Current maturities of long-term debt ............... $ 8,027 $ 2,901
Accounts payable and accrued expenses .............. 78,104 27,912
Accrued interest payable ........................... 27,750 1,497
----------- -----------
Total Current Liabilities ........................ 113,881 32,310
LONG-TERM DEBT, net of discount and current maturities 1,211,562 332,721
OTHER LONG-TERM LIABILITIES .......................... 5,640 --
DEFERRED STATE INCOME TAXES .......................... 4,167 4,181
----------- -----------
Total Liabilities ................................ 1,335,250 369,212
----------- -----------
CAPITAL:
Partners' Equity ................................... 349,191 94,087
Retained Earnings (Accumulated Deficit) ............ (32,403) 16,725
----------- -----------
Total Capital ...................................... 316,788 110,812
----------- -----------
Total Liabilities and Capital .................... $ 1,652,038 $ 480,024
=========== ===========
The accompanying notes are an integral part of these condensed
consolidated balance sheets.
1
TRUMP ATLANTIC CITY ASSOCIATES AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
FOR THE THREE MONTHS AND SIX MONTHS ENDED JUNE 30, 1996 AND 1995
(unaudited)
(in thousands)
For the Three Months For the Six Months
Ended June 30, Ended June 30,
-------------------- --------------------
1996 1995 1996 1995
------- ------- ------- -------
REVENUES:
Gaming ............................................ $ 205,760 $ 73,589 $ 280,030 $ 139,311
Rooms ............................................. 18,356 4,908 24,154 8,806
Food and Beverage ................................. 26,919 10,630 38,302 20,889
Other ............................................. 6,226 1,984 8,326 3,765
------- ------- ------- -------
Gross Revenues .................................. 257,261 91,111 350,812 172,771
Less--Promotional allowances ........................ 27,702 8,960 38,385 16,517
------- ------- ------- -------
Net Revenues .................................... 229,559 82,151 312,427 156,254
------- ------- ------- -------
COSTS AND EXPENSES:
Gaming ............................................ 121,451 39,906 165,577 76,691
Rooms ............................................. 4,118 630 4,895 1,310
Food and Beverage ................................. 11,923 4,557 16,017 9,006
Pre-Opening ....................................... 2,853 -- 3,332 --
General and Admin ................................. 39,376 17,243 57,768 33,993
Depreciation and Amortization ..................... 16,679 3,744 21,202 7,836
Other ............................................. 1,061 788 1,861 1,621
------- ------- ------- -------
197,461 66,868 270,652 130,457
------- ------- ------- -------
Income from operations .......................... 32,098 15,283 41,775 25,797
------- ------- ------- -------
NON-OPERATING INCOME AND (EXPENSES):
Interest income ................................... 434 297 629 470
Interest expense .................................. (31,831) (12,048) (41,582) (24,575)
Other non-operating income (expense) .............. 10,557 (933) 9,182 (1,842)
------- ------- ------- -------
(20,840) (12,684) (31,771) (25,947)
------- ------- ------- -------
Income (loss) before provision for state income taxes
and extraordinary loss ............................. 11,258 2,599 10,004 (150)
Provision for state income taxes .................... -- 206 -- --
------- ------- ------- -------
Income before extraordinary items ................... 11,258 2,393 10,004 (150)
Extraordinary Loss .................................. (59,132) (9,250) (59,132) (9,250)
------- ------- ------- -------
NET LOSS ........................................... $ (47,874) $ (6,857) $ (49,128) $ (9,400)
======= ======= ======= =======
The accompanying notes are an integral part of these condensed
consolidated financial statements.
2
TRUMP ATLANTIC CITY ASSOCIATES AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENT OF CAPITAL
FOR THE SIX MONTHS ENDED JUNE 30, 1996
(unaudited)
(in thousands)
Retained
Earnings
Partners' (Accumulated
Capital Deficit) Total
--------- -------- ---------
Balance, December 31, 1995 ......................... $94,087 $16,725 $ 110,812
Net Loss .......................................... -- (49,128) (49,128)
Contributed Capital -- Trump Hotels & Casino Resorts
Holdings, L.P. .................................... 255,104 -- 255,104
--------- -------- ---------
Balance, June 30, 1996 ............................. $ 349,191 $(32,403) $ 316,788
========= ======== =========
The accompanying notes are an integral part of these condensed
consolidated financial statements.
3
TRUMP ATLANTIC CITY ASSOCIATES AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE SIX MONTHS ENDED JUNE 30, 1996 AND 1995
(unaudited)
(in thousands, except share data)
1996 1995
-------- -------
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss ....................................................................... $(49,128) $(9,400)
Adjustments to reconcile net loss to net cash flows from
operating activities --
Noncash charges --
Extraordinary Loss ........................................................ 59,132 9,250
Depreciation and amortization ............................................. 21,202 7,836
Accretion of discounts on indebtedness .................................... 132 915
Provisions for losses on receivables ...................................... 1,547 556
Amortization of deferred loan offering costs .............................. 2,045 --
Utilization of CRDA credits and donations ................................. -- 262
Deferred income taxes ..................................................... (14) --
Valuation allowance of CRDA investments ................................... 894 (57)
-------- -------
35,810 9,362
Changes in assets and liabilities, net of effects from purchase of Taj Mahal:
Increase in receivables ................................................... (19,311) (2,322)
(Increase) decrease in inventories ........................................ (74) 126
Increase in advances from affiliates ...................................... (2,109) (555)
Increase in other current assets .......................................... (5,451) (1,321)
Decrease in other assets .................................................. 836 2,149
Increase in accounts payable and accrued expenses ......................... 5,114 1,796
Decrease in accrued interest payable ...................................... (19,723) (374)
Decrease in other long-term liabilities ................................... (450) --
-------- -------
Net cash (used) provided by operating activities ............................... (5,358) 8,861
-------- -------
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchase of property and equipment, net ........................................ (158,865) (74,188)
Purchase of CRDA Investments ................................................... (1,862) (1,501)
Purchase of Taj Holding, net of cash acquired .................................. 46,714 --
-------- -------
Net cash used in Investing Activities .......................................... (114,013) (75,689)
-------- -------
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from issuance of other long-term debt ............................... 5,906 1,930
Payments and current maturities of long-term debt ............................ (4,410) (2,370)
Redemption of Plaza PIK Notes ................................................ -- (81,746)
Contributed capital .......................................................... 204,785 146,859
Retirement of long-term debt ................................................. (1,156,836) --
Issuance of Trump AC Mortgage Notes .......................................... 1,200,000 --
Retirement of Nat West loan .................................................. (36,500) --
Cost of Issuing debt ......................................................... (41,042) --
-------- -------
Net cash provided by financing activities ............................ 171,903 64,673
-------- -------
Net increase (decrease) in cash & cash equivalents ................... 52,532 (654)
CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD ............................... 15,937 11,144
-------- -------
CASH AND CASH EQUIVALENTS AT END OF PERIOD ..................................... $68,469 $10,490
======== =======
CASH INTEREST PAID ............................................................. $13,933 $22,495
======== =======
Supplemental Disclosure of noncash activities:
THCR purchased all of the capital stock of Taj Holding for $31,181 in cash and
323,423 shares of its common stock value at $9,319. In addition, the
contribution by Trump of his 50% interest in Taj Associates amounting to
$40,500, net of the $10,000 payment to Bankers Trust, was recorded as minority
interest. In conjunction with the acquisition, the accumulated deficit
amounting to $108,574 was recorded as an increase to Property, Plant & Equipment
Fair Value of net assets acquired .............................................. $ 1,005,816
Cash paid for the capital stock and payment to Bankers Trust ................... (41,181)
Minority interest of Trump ..................................................... (30,500)
--------
Liabilities assumed ............................................................ 934,135
========
In connection with the purchase of the Specified Parcels THCR issued 500,000
shares of its common stock valued at $10,500
The accompanying notes are an integral part of these condensed
consolidated financial statements.
4
TRUMP ATLANTIC CITY ASSOCIATES AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
(1) Condensed Financial Statements
The accompanying condensed consolidated financial statements include those
of Trump Atlantic City Associates, a New Jersey general partnership, formerly
known as Trump Plaza Holding Associates ("Trump AC"), and its subsidiaries,
Trump Plaza Associates, a New Jersey general partnership ("Plaza Associates"),
which owns and operates the Trump Plaza Hotel and Casino located in Atlantic
City, New Jersey ("Trump Plaza"), Trump Taj Mahal Associates, a New Jersey
general partnership ("Taj Associates"), which owns and operates the Trump Taj
Mahal Casino Resort located in Atlantic City, New Jersey (the "Taj Mahal"),
Trump Atlantic City Funding, Inc., a Delaware corporation ("Trump AC Funding"),
and Trump Atlantic City Corporation, a Delaware Corporation ("TACC"). Trump AC's
sole sources of liquidity are distributions in respect of its interest in Plaza
Associates and Taj Associates. Trump AC is owned by Trump Hotels & Casino
Resorts Holdings, L.P., a Delaware limited partnership ("THCR Holdings") (See
Note 2). Trump AC and Trump AC Funding have no independent operations and,
therefore, their ability to service debt is dependent upon the successful
operations of Plaza Associates and Taj Associates. There are no restrictions on
the ability of the Subsidiary Guarantors (as defined in Note 2) to distribute
funds to Trump AC.
All significant intercompany balances and transactions have been eliminated
in the accompanying condensed consolidated financial statements.
The accompanying condensed consolidated financial statements have been
prepared by Trump AC without audit, pursuant to the rules and regulations of the
Securities and Exchange Commission (the "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. In the opinion of Trump AC, all adjustments, consisting of
only normal recurring adjustments, necessary to present fairly the financial
position, 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 casino industry in Atlantic City is seasonal in nature; therefore,
results of operations for the six months ended June 30, 1996 are not necessarily
indicative of the operating results for a full year.
The separate financial statements of the Subsidiary Guarantors have not
been included because (i) the Subsidiary Guarantors constitute all of Trump AC's
direct and indirect subsidiaries; (ii) the Subsidiary Guarantors have fully and
unconditionally guaranteed the Trump AC Mortgage Notes (as defined in Note 2) on
a joint and several basis; (iii) the aggregate assets, liabilities, earnings and
equity of the Subsidiary Guarantors are substantially equivalent to the assets,
liabilities, earnings and equity of Trump AC on a consolidated basis; and (iv)
the separate financial and other disclosures concerning the Subsidiary
Guarantors are not deemed material to investors.
(2) Public Offerings and Merger
On June 12, 1995, Trump Hotels & Casino Resorts, Inc. ("THCR") completed a
public offering of 10,000,000 shares of its common stock, par value $.01 per
share (the "Common Stock"), at $14.00 per share (the "June 1995 Stock Offering")
for gross proceeds of $140,000,000. Concurrent with the June 1995 Stock
Offering, THCR Holdings and its subsidiary Trump Hotels & Casino Resorts
Funding, Inc. issued 15-1/2% Senior Secured Notes due 2005 (the "THCR Senior
Notes") for gross proceeds of $155,000,000 (the "June 1995 Note Offering" and,
together with the June 1995 Stock Offering, the "June 1995 Offerings"). THCR
contributed approximately $126,848,000 of the proceeds of the June 1995 Stock
Offering to THCR Holdings. THCR Holdings subsequently contributed $146,859,000
of the proceeds of the June 1995 Offerings to Trump AC.
On April 17, 1996, pursuant to the Agreement and Plan of Merger, as amended
(the "Taj Merger Agreement"), among THCR, Taj Mahal Holding Corp., a Delaware
Corporation now known as THCR Holding Corp. ("Taj Holding"), and THCR Merger
Corp., a wholly owned subsidiary of THCR ("Taj Merger Sub"), Taj Merger Sub was
merged with and into Taj Holding (the "Taj Merger"), and each outstanding share
of Class A Common Stock of Taj Holding, par value $.01 per share (the "Taj
Holding Class A Common Stock"), which in the aggregate represented
5
TRUMP ATLANTIC CITY ASSOCIATES AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS--(Continued)
(UNAUDITED)
50% of the economic interest in Taj Associates, was converted into the right to
receive, at each holder's election, either (a) $30 in cash or (b) that number of
shares of Common Stock having a market value equal to $30. Donald J. Trump
("Trump") held the remaining 50% interest in Taj Associates and contributed such
interest in Taj Associates to Trump AC in exchange for limited partnership
interests in THCR Holdings. In addition, the outstanding shares of Taj Holding's
Class C Common Stock, par value $.01 per share, all of which were held by Trump,
were canceled in connection with the Taj Merger. The following transactions
occurred in connection with the Taj Merger (collectively referred to as the "Taj
Merger Transaction"):
(a) the payment of an aggregate of $31,181,000 in cash and the
issuance of 323,423 shares of Common Stock to the holders of Taj Holding
Class A Common Stock pursuant to the Taj Merger Agreement;
(b) the contribution by Trump to Trump AC of all of his direct and
indirect ownership interests in Taj Associates, and the contribution by
THCR to Trump AC of all of its indirect ownership interests in Taj
Associates acquired in the Taj Merger;
(c) the public offerings by (i) THCR of 12,500,000 shares of Common
Stock (plus 750,000 shares of Common Stock issued in connection with the
partial exercise of the underwriters' over-allotment opinion) (the "1996
Stock Offering") for net proceeds of $386,062,000 and (ii) Trump AC and
Trump AC Funding, Trump AC's wholly owned finance subsidiary, of
$1,200,000,000 aggregate principal amount of 11-1/4% First Mortgage Notes
due 2006 (the "Trump AC Mortgage Notes"), guaranteed by Plaza Associates,
Taj Associates and TACC (collectively the "Subsidiary Guarantors") (the
"1996 Note Offering" and, together with the 1996 Stock Offering, the "1996
Offerings");
(d) the redemption of the outstanding shares of Taj Holding's Class B
Common Stock, par value $.01 per share, immediately prior to the Taj Merger
for $.50 per share in accordance with its terms;
(e) the redemption of the outstanding 11.35% Mortgage Bonds, Series A,
due 1999 of Trump Taj Mahal Funding, Inc. (the "Taj Bonds");
(f) the retirement of the outstanding 10-7/8 Mortgage Notes due 2001
(the "Plaza Notes") of Trump Plaza Funding, Inc. ("Plaza Funding");
(g) the satisfaction of the indebtedness of Taj Associates under its
loan agreement with National Westminster Bank USA ("Nat West");
(h) the purchase of certain real property used in the operation of the
Taj Mahal that was leased from a corporation wholly owned by Trump (the
"Specified Parcels");
(i) the purchase of certain real property used in the operation of
Trump Plaza that was leased from an unaffiliated third party;
(j) the payment to Bankers Trust Company ("Bankers Trust") to obtain
releases of liens and guarantees that Bankers Trust had in connection with
indebtedness owed by Trump to Bankers Trust; and
(k) the issuance to Trump of warrants (the "Trump Warrants") to
purchase an aggregate of 1.8 million shares of Common Stock, (i) 600,000
shares of which may be purchased on or prior to April 17, 1999, at $30 per
share, (ii) 600,000 shares of which may be purchased on or prior to April
17, 2000, at $35 per share, and (iii) 600,000 shares of which may be
purchased on or prior to April 17, 2001, at $40 per share.
The Taj Merger Transaction has been accounted for as a "purchase" for
accounting and reporting purposes. Accordingly, the excess of the purchase price
over the fair value of the net assets acquired ($200,782,000), which was
allocated to land ($7,979,000) and building ($192,803,000) based on an appraisal
on a pro rata basis, consists of the following:
a) $40,500,000, representing the payment of $30.00 for each of the
1,350,000 outstanding shares of Taj Holding Class A Common Stock. Holders
of 323,423 shares of Taj Holding Class A Common Stock elected to receive
323,423 shares of Common Stock and holders of 1,051,000 shares of Taj
Holding Class A Common Stock elected to receive $31,181,243 in cash;
6
TRUMP ATLANTIC CITY ASSOCIATES AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS--(Continued)
(UNAUDITED)
b) $40,500,000, representing the contribution by Trump to Trump AC (on
behalf, and at the direction, of THCR Holdings) of all of his direct and
indirect ownership interest in 50% of Taj Associates;
c) $9,900,000 of fees and expenses associated with the Taj Merger
Transaction;
d) $108,574,000, representing the negative book value of Taj
Associates at the date of the Taj Merger Transaction; and
e) $1,308,000 of closing costs associated with the purchase of the
Specified Parcels.
In connection with the Taj Merger Transaction, THCR purchased the Specified
Parcels from Trump Taj Mahal Realty Corp., a corporation owned by Trump, and Taj
Associates was released from its guarantee to First Union National Bank ("First
Fidelity") (the "Guarantee"). The aggregate cost of acquiring the Specified
Parcels was $50,600,000 in cash and 500,000 shares of Common Stock valued at
$10,500,000 (an average value of $21.00 per share based on the price of the
Common Stock several days before and after the date of the amended agreement
governing the Taj Merger). The obligation of Taj Associates which had been
accrued with respect to the Guarantee ($17,923,000) was eliminated. In addition,
THCR exercised the option to purchase a tower adjacent to Trump Plaza's main
tower ("Trump Plaza East") for $28,084,000, which amount has been included in
land and building.
Unaudited pro forma information, assuming that the Taj Merger Transaction
had occurred on January 1, 1995, is as follows:
Six Months Ended
-------------------------------------
June 30, 1996 June 30, 1995
------------- -------------
Revenues ......................... $458,393 $415,742
Income from operations ........... 51,547 66,303
Loss before extraordinary loss ... (9,706) (4,515)
Extraordinary loss ............... (59,132) (9,250)
Net loss ........................ (68,838) (13,765)
The pro forma information is presented for informational purposes only and
does not purport to present what the results of operations would have been had
the Taj Merger Transaction, in fact, occurred on January 1, 1995 or to project
the results of operations for any future period.
(3) License Revenue
On June 30, 1996, Taj Associates entered into a Thermal Energy Service
Agreement with Atlantic Jersey Thermal Systems, Inc. ("Atlantic Thermal")
pursuant to which Atlantic Thermal was granted an exclusive license for a period
of 20 years to use, operate and maintain certain steam and chilled water
production facilities at the Taj Mahal (the "Atlantic Thermal Agreement"). In
consideration of the license, Atlantic Thermal will pay to Taj Associates
$10,000,000 no later than September 1, 1996, which amount has been included in
other non-operating income during the three months period and six months ended
June 30, 1996.
(4) Long-Term Debt
Long-term debt consists of the following:
June 30, 1996 December 31, 1995
-------------- -----------------
Trump AC Mortgage Notes (A) ...... $1,200,000,000 $ --
Plaza Notes net of unamortized
discount of $3,348,000 (B) ..... -- 326,652,000
Other mortgage notes payable ..... 3,631,000 2,953,000
Other ............................ 15,958,000 6,017,000
-------------- ------------
1,219,589,000 335,622,000
Less--Current maturities ......... 8,027,000 2,901,000
-------------- ------------
$1,211,562,000 $332,721,000
============== ============
(A) In connection with the Taj Merger Transaction, $1,200,000,000 of Trump
AC Mortgage Notes were issued by Trump AC and Trump AC Funding. The proceeds of
the offering of Trump AC Mortgage Notes were used to
7
TRUMP ATLANTIC CITY ASSOCIATES AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS--(Continued)
(UNAUDITED)
complete the Taj Merger Transaction, as discussed in Note 2. Costs associated
with the issuance of the Trump AC Mortgage Notes, totalling approximately
$44,200,000 have been deferred and are being amortized over the life of the
Trump AC Mortgage Notes.
(B) On June 25, 1993, Plaza Funding issued $330,000,000 principal amount of
Plaza Notes, net of discount of $4,313,000, and loaned the proceeds to Plaza
Associates. The Plaza Notes were subsequently retired with the proceeds of the
offering of Trump AC Mortgage Notes (See Note 2). The retirement of the Plaza
Notes and the write-off of related unamortized deferred financing costs resulted
in an extraordinary loss of $59,132,000.
On June 25, 1993, Trump AC issued $60,000,000 principal amount of 12-1/2%
Pay-In-Kind Notes, due 2003 (the "Plaza PIK Notes"), together with warrants to
acquire an additional $12,000,000 of Plaza PIK Notes at no additional cost (the
"Plaza PIK Note Warrants"). The Plaza PIK Note Warrants were exercised prior to
June 12, 1995 and, with the proceeds from the June 1995 Offerings contributed by
THCR Holdings to Trump AC, the Plaza PIK Notes were repurchased and redeemed on
June 12, 1995. Such repurchase and redemption resulted in the recognition of an
extraordinary loss of $9,250,000 relating to the redemption and the write-off of
unamortized deferred financing costs.
(5) Trump World's Fair
Under an Option Agreement with Chemical Bank ("Chemical"), Trump had an
option to purchase (i) the former Trump Regency Hotel ("Trump World's Fair")
(including the land, improvements and personal property used in the operation of
the hotel) (the "Trump World's Fair Purchase Option") and (ii) certain
promissory notes made by Trump and/or certain of his affiliates and payable to
Chemical (the "Chemical Notes") which were secured by certain real estate assets
located in New York, unrelated to Plaza Associates. In connection with such
Option Agreement, Trump assigned his rights to Plaza Associates. On June 12,
1995, the Trump World's Fair Purchase Option was exercised. The option price of
$60,000,000 was funded with $58,150,000 from the capital contributed by THCR
Holdings (See Note 2) and $1,850,000 of option payments made by Plaza
Associates. In May 1996, Trump World's Fair was opened and integrated into Trump
Plaza.
(6) Casino Licenses
The operation of an Atlantic City casino hotel is subject to significant
regulatory controls which affect virtually all of its operations. Under the New
Jersey Casino Control Act (the "Casino Control Act"), Plaza Associates, Taj
Associates and Trump Casino Services, L.L.C. ("Trump Services") are required to
maintain certain licenses.
In June 1995, the New Jersey Casino Control Commission (the "CCC") renewed
Plaza Associates' license to operate Trump Plaza through June 1999. In May 1996,
the CCC granted Plaza Associates a license to operate Trump World's Fair through
May 1997. In June 1995, the CCC renewed Taj Associates' license to operate the
Taj Mahal through June 1999. In June 1996, the CCC also granted Trump Services a
license through July 1997. All these licenses are not transferable and their
renewal will include a financial review of the relevant operating entities. Upon
revocation, suspension for more than 120 days or failure to renew the casino
license, the Casino Control Act provides 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.
8
ITEM 2 -- MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
Capital Resources and Liquidity
Cash flows from operating activities are Trump AC's principal source of
liquidity. With the proceeds from the 1996 Offerings, Trump AC, among other
things, retired the outstanding Taj Bonds, retired the outstanding Plaza Notes,
satisfied the indebtedness of Taj Associates under its loan agreement with
NatWest, purchased certain real property used in the operation of Trump Plaza
and the Taj Mahal and paid Bankers Trust to release certain liens and
guarantees.
With proceeds from the June 1995 Offerings, THCR Holdings made a capital
contribution of $146,859,000 to Trump AC and Plaza Associates. This contribution
was used to repurchase and redeem the Plaza PIK Notes and Plaza PIK Notes
Warrants (together with related accrued interest), exercise the Trump World's
Fair Purchase Option and purchase Trump World's Fair and fund construction costs
incurred in the renovation and integration of Trump Plaza East. During the six
months ended June 30, 1996, THCR Holdings made additional capital contributions
of $35,500,000 to Plaza Associates to fund such construction costs. The
renovations of Trump Plaza East were completed in February 1996 and Trump
World's Fair in May 1996. Capital expenditures for Trump AC were $158,865,000
for the six months ended June 30, 1996, an increase of approximately $84,677,000
or 114.1% from the comparable period in 1995. Capital expenditures attributable
to Trump Plaza East were approximately $37,028,000 and $7,201,000 for the six
months ended June 30, 1996 and 1995. Capital expenditures attributable to Trump
World's Fair were approximately $51,418,000 and $60,929,000 for the six months
ended June 30, 1996 and 1995, respectively. Capital expenditures for
improvements to Trump Plaza's existing facilities were $1,742,000 and $6,058,000
for the six months ended June 30, 1996 and 1995.
Capital expenditures attributable to the Taj Mahal were approximately
$68,677,000 for the period April 17, 1996 through June 30, 1996. Capital
expenditures for improvements to existing facilities were approximately
$6,040,000 for the period April 17, 1996 through June 30, 1996. Capital
expenditures for the purchase for property previously leased upon which a
portion of the casino hotel complex is situated and Taj Merger and closing costs
amounted to approximately $61,808,000. Capital expenditures attributable to the
expansion of the facility were approximately $829,000 for the period April 17,
1996 through June 30, 1996.
Taj Associates has begun an expansion plan of its existing operations
involving the construction of an approximately 800 room hotel tower adjacent to
the existing hotel tower, a 2,000 space expansion of the existing self-parking
facilities and related hotel infrastructure improvements. It is expected that
the expansion budget of approximately $127,500,000 will be funded principally
out of cash from operations of the Taj Mahal and Trump Plaza and is scheduled to
be completed in phases from mid 1997 through the latter part of 1998.
At June 30, 1996, Trump AC had combined working capital of $31,035,000. The
combined working capital included a receivable from the New Jersey Casino
Reinvestment Development Authority (the "CRDA") of approximately $7,400,000 for
reimbursable improvements made to Trump Plaza East, which receivable is
currently the subject of litigation.
Results of Operations: Operating Revenues and Expenses
The financial information presented below reflects the results of
operations of Trump AC. Because Trump AC has no business operations other than
its interest in Plaza Associates and Taj Associates at June 30, 1996, its
results of operations are not discussed below. Taj Associates was acquired on
April 17, 1996.
9
Comparison of Three-Month Periods Ended June 30, 1996 and 1995. The
following table includes selected data of Plaza Associates and Taj Associates
(since the date of acquisition, April 17, 1996) for the three months ended June
30, 1996 and 1995:
Three Months Ended June 30,
----------------------------------------------------------------
1995 1996 1996 1996
Plaza Plaza Taj Total
Associates Associates Associates Trump AC
------------- ------------- ------------- -------------
(in thousands)
Revenues:
Gaming ...................... $ 73,589,000 $ 96,076,000 $ 109,684,000 $ 205,760,000
Other ....................... 17,522,000 27,144,000 24,357,000 51,501,000
Gross Revenues .............. 91,111,000 123,220,000 134,041,000 257,261,000
Less: Promotional Allowances .. 8,960,000 13,837,000 13,865,000 27,702,000
Net Revenues ................ 82,151,000 109,383,000 120,176,000 229,559,000
Costs & Expenses:
Gaming ...................... 39,906,000 57,595,000 63,856,000 121,451,000
Pre-opening ................. -- 2,853,000 -- 2,853,000
General & Administrative .... 17,243,000 19,839,000 19,537,000 39,376,000
Depreciation and Amortization 3,744,000 5,923,000 10,756,000 16,679,000
Other ....................... 5,975,000 9,260,000 7,842,000 17,102,000
Income from Operations ........ 15,283,000 13,913,000 18,185,000 32,098,000
Non-Operating Income & Expense (12,684,000) (11,240,000) (9,634,000) (20,840,000)
Provision for Taxes ........... 206,000 -- -- --
Extraordinary Loss ............ (9,250,000) (59,132,000) -- (59,132,000)
Net Income (Loss) ............. $ (6,857,000) $ (56,459,000) $ 8,551,000 $ (47,874,000)
Gaming revenues were $205,760,000 for the three months ended June 30, 1996,
an increase of $132,171,000 or 179.6% from gaming revenues of $73,589,000 for
the comparable period in 1995. This increase in gaming revenues consists of
$109,684,000 from Taj Associates since the date of acquisition in addition to an
increase in Plaza Associates' table games and slot revenues. Management believes
that Plaza Associates' increase in gaming revenues is primarily due to the May
1996 opening of Trump World's Fair, the February 1996 opening of Trump Plaza
East, the availability of additional hotel rooms at both Trump World's Fair and
Trump Plaza East, as well as management's marketing initiatives.
Slot revenues were $132,460,000 for the three months ended June 30, 1996,
an increase of $82,345,000 or 164.3% from slot revenues of $50,115,000 for the
comparable period in 1995. This increase is directly attributable to the
acquisition of Taj Associates which contributed $61,261,000 in slot revenues.
Plaza Associates' slot revenues were $71,199,000 for the three months ended June
30, 1996, an increase of $21,084,000 or 42.1% from slot revenues of $50,115,000
for the three months ended June 30, 1995. Plaza Associates' increase is due to
the addition of 1,924 slot machines at Trump World's Fair and Trump Plaza East,
as well as management's marketing programs.
Table games revenues were $69,034,000 for the three months ended June 30,
1996, an increase of $45,560,000 or 194.1% from $23,474,000 for the comparable
period in 1995. This increase is attributable to the acquisition of Taj
Associates, which contributed $44,157,000 in table games revenues with a
corresponding $261,024,000 in table games drop (i.e., the dollar value of chips
purchased). Plaza Associates' table games revenues of $24,877,000 for the three
months ended June 30, 1996 increased by $1,403,000 or 6.0% from the comparable
period in 1995. Plaza Associates' increase is primarily due to an increase in
table games drop by 11.4% for the three months ended June 30, 1996, offset by a
slight decrease in the hold percentage to 14.1% from 14.9% for the comparable
period in 1995.
10
In addition to table games and slot revenues, Taj Associates' poker/race
simulcasting/keno operations generated approximately $3,647,000 in poker
revenue, $322,000 in race simulcasting revenues and $297,000 in keno revenues
since its acquisition date.
Other revenues were $51,501,000 for the three months ended June 30, 1996,
an increase of $33,979,000 or 193.9% from other revenues of $17,522,000 for the
comparable period in 1995. Other revenues include revenues from rooms, food and
beverage, entertainment and miscellaneous items. The increase is directly
attributable to the acquisition of Taj Associates, which generated $24,357,000
in other revenues since its acquisition date. Plaza Associates' other revenues
were $27,144,000 for the three months ended June 30, 1996, an increase of
$9,622,000 or 54.9% from the comparable period in 1995. Plaza Associates'
increase reflects the additional rooms at Trump Plaza East and Trump World's
Fair, as well as increases in rooms and food and beverage revenues attendant to
increased levels of gaming activity due in part to increased promotional
activities.
Promotional allowances were $27,702,000 for the three months ended June 30,
1996, an increase of $18,742,000 or 209.2% from promotional allowances of
$8,960,000 for the three months ended June 30, 1995. Taj Associates generated
$13,865,000 in promotional allowances since its acquisition date. Plaza
Associates experienced an increase in promotional allowances to $13,837,000 or
54.4% from promotional allowances of $8,960,000 for the comparable period in
1995. Plaza Associates' increase is attributable primarily to the additional
rooms at Trump World's Fair and Trump Plaza East as well as the addition of
three restaurants at Trump World's Fair, and increases in marketing initiatives
during the three months ended June 30, 1996.
Gaming costs and expenses were $121,451,000 for the three months ended June
30, 1996, an increase of $81,545,000 or 204.3% from $39,906,000 for the
comparable period in 1995. This increase is primarily attributable to Taj
Associates' gaming costs and expenses of $63,856,000 since its acquisition.
Gaming costs and expenses for Plaza Associates were $57,595,000, an increase of
$17,689,000 or 44.3% from $39,906,000 for the comparable period in 1995. Plaza
Associates' increase is primarily due to increased promotional and operating
expenses as well as taxes associated with increased levels of gaming revenues
from the comparable period in 1995.
General and administrative expenses were $39,376,000 for the three months
ended June 30, 1996, an increase of $22,133,000 or 128.4% from general and
administrative expenses of $17,243,000 for the comparable period in 1995. This
increase is primarily due to the acquisition of Taj Associates, which recorded
$19,537,000 in general and administrative expenses since its acquisition. Plaza
Associates' increase of $2,596,000 over the comparable period is due in part to
expenses associated with Trump Plaza East and Trump World's Fair.
Pre-opening expenses of $2,853,000 were recorded by Plaza Associates for
the three months ended June 30, 1996 and reflect the costs associated with
opening Trump World's Fair in May 1996.
Other expenses were $17,102,000 for the three months ended June 30, 1996,
an increase of $11,127,000 or 186.2% from the comparable period in 1995. Other
expenses include costs associated with operating Trump Plaza and the Taj Mahal's
hotels with all of their amenities. The increase over the comparable period
reflects Taj Associates' $7,842,000 of other expenses since its date of
acquisition. Plaza Associates' other expenses increased by $3,285,000 or 55.0%
from the comparable period. This increase is due to operating Trump World's Fair
and Trump Plaza East, both with opening dates in 1996.
Income from operations was $32,098,000 for the three months ended June 30,
1996, an increase of $16,815,000 or 110.0% from income from operations of
$15,283,000 for the comparable period in 1995. Taj Associates contributed
$18,185,000 of income from operations since its acquisition. Plaza Associates
contributed $13,913,000 during the three months ended June 30, 1996, a decrease
of $1,370,000 or 9.0% from the comparable period in 1995.
Interest expense was $31,831,000 for the three months ended June 30, 1996,
an increase of $19,783,000 or 164.2% from interest expense of $12,048,000 for
the comparable period in 1995. This increase is attributable to the acquisition
of Taj Associates with an interest expense of $19,840,000 recorded at June 30,
1996. Plaza Associates reflects a decrease of $57,000 in interest expense due to
the redemption of the Plaza PIK Notes in 1995 offset by the retirement of the
Plaza Notes and the issuance of the Trump AC Mortgage Notes.
11
Other non-operating income was $10,557,000 for the three months ended June
30, 1996, an increase of $11,490,000 from the comparable period in 1995.
Non-operating income consists of a one time $10,000,000 non-refundable licensing
fee resulting from the Atlantic Thermal Agreement. Plaza Associates reflects a
decrease in non-operating expense of $376,000 or 40.3% from $933,000 in 1995.
This decrease is attributable to a decrease in non-operating expenses associated
with Trump Plaza East.
The extraordinary loss of $59,132,000 for the three months ended June 30,
1996 relates to the redemption of the Plaza Notes and the write-off of
unamortized deferred financing costs on April 17, 1996. The extraordinary loss
of $9,250,000 for the three months ended June 30, 1995 relates to the redemption
and write-off of unamortized deferred financing costs relating to the redemption
of the Plaza PIK Notes and the Plaza PIK Note Warrants on June 12, 1995.
Comparison of Six-Month Periods Ended June 30, 1996 and 1995. The following
table includes selected data of Plaza Associates and Taj Associates (since the
date of acquisition, April 17, 1996) for the six months ended June 30, 1996 and
1995:
Six Months Ended June 30,
----------------------------------------------------------------
1995 1996 1996 1996
Plaza Plaza Taj Total
Associates Associates Associates Trump AC
------------- ------------- ------------- -------------
(in thousands)
Revenues:
Gaming ...................... $ 139,311,000 $ 170,346,000 $ 109,684,000 $ 280,030,000
Other ....................... 33,460,000 46,425,000 24,357,000 70,782,000
Gross Revenues .............. 172,771,000 216,771,000 134,041,000 350,812,000
Less: Promotional Allowances .. 16,517,000 24,520,000 13,865,000 38,385,000
Net Revenues ................. 156,254,000 192,251,000 120,176,000 312,427,000
Costs & Expenses:
Gaming ...................... 76,691,000 101,721,000 63,856,000 165,577,000
Pre-opening ................. -- 3,332,000 -- 3,332,000
General & Administrative .... 33,993,000 38,231,000 19,537,000 57,768,000
Depreciation and Amortization 7,836,000 10,446,000 10,756,000 21,202,000
Other ....................... 11,937,000 14,931,000 7,842,000 22,773,000
Income from Operations ........ 25,797,000 23,590,000 18,185,000 41,775,000
Non-Operating Income & Expense (25,947,000) (22,171,000) (9,634,000) (31,771,000)
Provision for Taxes ........... -- -- -- --
Extraordinary Loss ............ (9,250,000) (59,132,000) -- (59,132,000)
Net Income (Loss) ............. $ (9,400,000) $ (57,713,000) $ 8,551,000 $ (49,128,000)
Gaming revenues were $280,030,000 for the six months ended June 30, 1996,
an increase of $140,719,000 or 101.0% from gaming revenues of $139,311,000 for
the comparable period in 1995. This increase in gaming revenues consists of
$109,684,000 from Taj Associates since the date of acquisition in addition to an
increase in Plaza Associates' table games and slot revenues. Management believes
that Plaza Associates' 22.3% increase in gaming revenues is primarily due to the
May 1996 opening of Trump World's Fair, the February 1996 opening of Trump Plaza
East, the availability of additional hotel rooms at both Trump World's Fair and
Trump Plaza East, as well as management's marketing initiatives.
12
Slot revenues were $182,292,000 for the six months ended June 30, 1996, an
increase of $88,873,000 or 95.1% from slot revenues of $93,419,000 for the
comparable period in 1995. This increase is directly attributable to the
acquisition of Taj Associates which contributed $61,261,000 in slot revenues.
Plaza Associates' slot revenues were $121,031,000 for the six months ended June
30, 1996, an increase of $27,612,000 or 29.6% from slot revenues of $93,419,000
for the six months ended June 30, 1995. Plaza Associates' increase is due to the
addition of 1,924 slot machines at Trump World's Fair and Trump Plaza East, as
well as management's marketing programs.
Table games revenues were $93,472,000 for the six months ended June 30,
1996, an increase of $47,580,000 or 103.7% from $45,892,000 for the comparable
period in 1995. This increase is attributable to the acquisition of Taj
Associates, which contributed $44,157,000 in table games revenues with a
corresponding $261,024,000 of table games drop (i.e., the dollar value of chips
purchased). Plaza Associates' table games revenues of $49,315,000 for the six
months ended June 30, 1996 increased by $3,423,000 or 7.5% from the comparable
period in 1995. Plaza Associates' increase is primarily due to an increase in
table games drop by 9.9% for the six months ended June 30, 1996, offset by a
slight decrease in the hold percentage to 15.4% from 15.7% for the comparable
period in 1995.
In addition to table games and slot revenues, Taj Associates' poker/race
simulcasting/keno operations generated approximately $3,647,000 in poker
revenues, $322,000 in race simulcasting revenues and $297,000 in keno revenues
since its acquisition date.
Other revenues were $70,782,000 for the six months ended June 30, 1996, an
increase of $37,322,000 or 111.5% from other revenues of $33,460,000 for the
comparable period in 1995. Other revenues include revenues from rooms, food and
beverage, entertainment and miscellaneous items. The increase primarily is
attributable to the acquisition of Taj Associates, which generated $24,357,000
of other revenues since its acquisition date. Plaza Associates' other revenues
were $46,425,000 for the six months ended June 30, 1996, an increase of
$12,965,000 or 38.7% from the comparable period in 1995. Plaza Associates'
increase reflects the additional rooms at Trump Plaza East and Trump World's
Fair, as well as increases in rooms and food and beverage revenues attendant to
increased levels of gaming activity due in part to increased promotional
activities.
Promotional allowances were $38,385,000 for the six months ended June 30,
1996, an increase of $21,868,000 or 132.4% from promotional allowances of
$16,517,000 for the six months ended June 30, 1995. Taj Associates generated
$13,865,000 in promotional allowances since its acquisition date. Plaza
Associates experienced an increase in promotional allowances to $24,520,000 or
48.5% from promotional allowances of $16,517,000 for the comparable period in
1995. Plaza Associates' increase is attributable primarily to the additional
rooms at Trump World's Fair and Trump Plaza East as well as the addition of
three restaurants at Trump World's Fair, and increases in marketing initiatives
during the six months ended June 30, 1996.
Gaming costs and expenses were $165,577,000 for the six months ended June
30, 1996, an increase of $88,886,000 or 115.9% from $76,691,000 for the
comparable period in 1995. This increase was primarily attributable to Taj
Associates' gaming costs and expenses of $63,856,000 since its acquisition.
Gaming costs and expenses for Plaza Associates were $101,721,000, an increase of
$25,030,000 or 32.6% from $76,691,000 for the comparable period in 1995. Plaza
Associates' increase is primarily due to increased promotional and operating
expenses as well as taxes associated with increased levels of gaming revenues
from the comparable period in 1995.
General and administrative expenses were $57,768,000 for the six months
ended June 30, 1996, an increase of $23,775,000 or 69.9% from general and
administrative expenses of $33,993,000 for the comparable period in 1995. This
increase is primarily due to the acquisition of Taj Associates, which recorded
$19,537,000 in general and administrative expenses since its acquisition. Plaza
Associates' increase of $4,238,000 over the comparable period is due in part to
expenses associated with Trump Plaza East and Trump World's Fair.
Pre-opening expenses of $3,332,000 were recorded by Plaza Associates and
reflect the costs associated with opening Trump World's Fair in May 1996.
Other expenses were $22,773,000 for the six months ended June 30, 1996, an
increase of $10,836,000 or 90.8% from the comparable period in 1995. Other
expenses include costs associated with operating Trump Plaza and the Taj Mahal's
hotels with all of their amenities. The increase over the comparable period
reflects Taj Associates' $7,842,000 of other expenses since its date of
acquisition. Plaza Associates' other expenses increased by $2,994,000
13
or 25.0% from the comparable period. This increase is due to operating Trump
World's Fair and Trump Plaza East, both with opening dates in 1996.
Income from operations was $41,775,000 for the six months ended June 30,
1996, an increase of $15,978,000 or 61.9% from income from operations of
$25,797,000 for the comparable period in 1995. Taj Associates contributed
$18,185,000 of income from operations since its acquisition. Plaza Associates
contributed $23,590,000 during the six months ended June 30, 1996, a decrease of
$2,207,000 or 8.6% from the comparable period in 1995.
Interest expense was $41,582,000 for the six months ended June 30, 1996, an
increase of $17,007,000 or 69.2% from interest expense of $24,575,000 for the
comparable period in 1995. This increase is attributable to the acquisition of
Taj Associates with an interest expense of $19,840,000 recorded at June 30,
1996. Plaza Associates reflects $21,742,000 in interest expense at June 30,
1996, a decrease in interest expense due to the redemption of the Plaza PIK
Notes in 1995 offset by the retirement of the Plaza Notes and the issuance of
the Trump AC Mortgage Notes.
Other non-operating income was $9,182,000 for the six months ended June 30,
1996, an increase of $11,024,000 from the comparable period in 1995.
Non-operating income consists of a one-time $10,000,000 non-refundable licensing
fee resulting from the Atlantic Thermal Agreement. Plaza Associates reflects a
decrease in non-operating expense of $1,024,000 or 55.6% from $1,842,000 in
1995. This decrease is attributable to a decrease in non-operating expenses
associated with Trump Plaza East.
The extraordinary loss of $59,132,000 for the six months ended June 30,
1996 relates to the redemption of the Plaza Notes and the write-off of
unamortized deferred financing costs on April 17, 1996. The extraordinary loss
of $9,250,000 for the six months ended June 30, 1995 relates to the redemption
and write-off of unamortized deferred financing costs relating to the redemption
of the Plaza PIK Notes and the Plaza PIK Note Warrants on June 12, 1995.
14
PART II - OTHER INFORMATION
ITEM 1 - LEGAL PROCEEDINGS
Plaza Associates and Taj Associates, their partners, certain members of
their former Executive Committee and certain of their employees, have been
involved in various legal proceedings. In general, Plaza Associates and Taj
Associates have 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.
Various legal proceedings are now pending against Plaza Associates and Taj
Associates. Trump AC considers all such proceedings to be ordinary litigation
incident to the character of its business and not material to its business or
financial condition. The majority of such claims are covered by liability
insurance (subject to applicable deductibles), and Trump AC believes that the
resolution of these claims, to the extent not covered by insurance, will not,
individually or in the aggregate, have a material adverse effect on its
financial condition or results of operations of Plaza Associates or Taj
Associates.
In Vera Coking, et al. v. Atlantic City Planning Board and Trump Plaza
Associates, the Atlantic City Planning Board's approval of the Trump Plaza East
renovation had been challenged on various grounds. In July 1994, a New Jersey
Superior Court judge upheld the Atlantic City Planning Board approvals with
respect to the hotel renovation component of Trump Plaza East and the new
roadway but invalidated the approval of the valet parking lot and the public
park because Plaza Associates lacked site control with respect to the small
parcels of land the CRDA sought to condemn. Plaintiffs appealed the court's
decision upholding the approval of the hotel renovation and new roadway and
Plaza Associates cross-appealed the court's decision invalidating the approval
of the public park and valet parking area. Plaza Associates withdrew its
cross-appeal and received land-use approval for and has constructed the valet
parking area after deletion of one of the small parcels. In June 1996, the
Superior Court of New Jersey, Appellate Division, affirmed the trial court's
ruling upholding the approvals for the hotel renovation and the new roadway.
In a related matter, Joseph Banin and Vera Coking v. Atlantic City Planning
Board and Trump Plaza Associates, the land-use approval for Trump Plaza East had
been challenged on various grounds. The land-use approval involved certain minor
amendments to the previously granted site plan approvals for the hotel
renovation component of Trump Plaza East and the new roadway. The amendments
included certain design changes with respect to Trump Plaza East and certain
design changes to the roadway. The amendments did not require any variance
relief and the amendments fully complied with the Land Use Ordinance of the City
of Atlantic City. The plaintiffs alleged that the Atlantic City Planning Board
acted in an arbitrary and capricious manner in approving the amendments and
further argue that the chairperson of the Atlantic City Planning Board had a
conflict of interest in hearing the matter because of her status as an employee
of the CRDA, the entity that had approved certain funding for the project. On
January 26, 1996, the New Jersey Superior Court upheld the approval of the
amendment by the Atlantic City Planning Board and rejected the plaintiffs' claim
with respect to the chairwoman's conflict of interest. The plaintiffs' time to
appeal this decision expired in June 1996.
On March 29, 1990, Taj Associates entered into a Lease Agreement (the
"Lease Agreement") with the City of Atlantic City for a term of seven years,
subject to the explicit, prior approval of the New Jersey Department of
Environmental Protection ("NJDEP") to continue use of the land beyond April 2,
1992, pursuant to which Taj Associates leased a parcel of land containing
approximately 1,300 spaces for employee intercept parking at a cost of
approximately $1,000,000 per year. In addition, Taj Associates has expended in
excess of $1,400,000 in improving the site. The permit under which the lease is
operated was issued by NJDEP on December 20, 1989 for five years and contains
several conditions, one of which required Taj Associates to find another
location "off-island" for employee parking by April 2, 1992. NJDEP extended this
condition for two successive one-year periods through April 2, 1994. On November
14, 1994, as a result of the non-renewal of the permit, Taj Associates notified
Atlantic City that the Lease Agreement had become inoperative and was therefore
being canceled as of December 20, 1994. Taj Associates subsequently obtained
"off-island" parking with Trump's Castle Associates sufficient to meet its
employee parking requirements. Atlantic City has indicated in a letter to Taj
Associates that it contests the cancellation of the lease agreement and claims
certain extensions to the permit apply, to which Taj Associates does not agree.
No legal proceedings have been commenced by Atlantic City to date.
15
Taj Associates was also a party to an administrative proceeding involving
allegations that it had violated certain provisions of the Casino Control Act.
In June 1996, Taj Associates entered into a stipulation and settlement with the
Division of Gaming Enforcement of the CCC. The final outcome of this proceeding
did not have a material adverse effect on Taj Associates or on its ability to
otherwise retain or renew any casino or other licenses required under the Casino
Control Act for the operation of the Taj Mahal.
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
Trump Services, a New Jersey limited liability company, was formed on June
27, 1996 for the purpose of realizing cost savings and operational synergies by
consolidating certain administrative functions of, and providing certain
services to, each of Plaza Associates and Taj Associates. Trump AC and TACC, a
wholly owned subsidiary of Trump AC, own a 99% and 1% interest, respectively, in
Trump Services. On July 8, 1996, Trump Services, Plaza Associates and Taj
Associates entered into an agreement pursuant to which Trump Services will
provide to each of Taj Associates and Plaza Associates certain management,
financial and other functions and services necessary and incidental to the
respective operations of each of their casino hotels (the "Services Agreement").
On June 30, 1996, Taj Associates and Atlantic Thermal entered into the
Atlantic Thermal Agreement, pursuant to which Atlantic Thermal has the exclusive
right to use the steam and chilled water production facilities located at the
Taj Mahal in order to sell to Taj Associates all of Taj Associates' heating and
cooling energy requirements for the Taj Mahal at a cost savings to Taj
Associates and to offer for sale to third parties such thermal energy
requirements as they may require, all on the terms and conditions set forth
therein.
Reference is made to (i) the Services Agreement and (ii) the Atlantic
Thermal Agreement, attached as Exhibits hereto. Both Exhibits are incorporated
herein by reference.
ITEM 6 - EXHIBITS AND REPORTS ON FORM 8-K
a. Exhibits:
Exhibit No. Description of Exhibit
----------- ----------------------
10.65 Services Agreement, dated as of July 8, 1996, among
Trump Plaza Associates, Trump Taj Mahal Associates and
Trump Casino Services, L.L.C.
10.66 Thermal Energy Service Agreement, dated as of June 30, 1996,
by and between Atlantic Jersey Thermal Systems, Inc. and
Trump Taj Mahal Associates.
27.1 Financial Data Schedule of Trump Atlantic City Associates.
27.2 Financial Data Schedule of Trump Atlantic City Funding, Inc.
b. Current Reports on Form 8-K:
The Registrants did not file any reports on Form 8-K during the period
beginning April 1, 1996 and ending June 30, 1996.
16
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 ATLANTIC CITY ASSOCIATES
(Registrant)
By: TRUMP HOTELS & CASINO RESORTS HOLDINGS, L.P.,
its general partner
By: TRUMP HOTELS & CASINO RESORTS, INC.,
its general partner
Date: August 14, 1996
By: /s/ NICHOLAS L. RIBIS
----------------------------------------
Nicholas L. Ribis
President, Chief Executive Officer,
Chief Financial Officer and Director
(Duly Authorized Officer and
Principal Financial Officer)
17
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 ATLANTIC CITY ASSOCIATES
(Registrant)
Date: August 14, 1996
By: /s/ NICHOLAS L. RIBIS
----------------------------------------
Nicholas L. Ribis
President, Chief Executive Officer,
Chief Financial Officer and Director
(Duly Authorized Officer and
Principal Financial Officer)
18
EXHIBIT INDEX
Sequentially
Numbered
Exhibit No. Description Page
- ----------- ----------- -------------
10.65 Services Agreement, dated as of
July 8, 1996, among Trump Plaza
Associates, Trump Taj Mahal
Associates and Trump Casino Services,
L.L.C.
10.66 Thermal Energy Service Agreement, dated
as of June 30, 1996, by and between
Atlantic Jersey Thermal Systems, Inc.
and Trump Taj Mahal Associates.
27.1 Financial Data Schedule of Trump Atlantic
City Associates.
27.2 Financial Data Schedule of Trump Atlantic
City Funding, Inc.