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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: September 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.)
2500 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.)
2500 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 November 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 September 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 Nine
Months Ended September 30, 1996 and 1995 (unaudited) ............... 2
Condensed Consolidated Statement of Capital of Trump Atlantic
City Associates and Subsidiaries for the Nine Months Ended
September 30, 1996 (unaudited) ..................................... 3
Condensed Consolidated Statements of Cash Flows of Trump Atlantic
City Associates and Subsidiaries for the Nine Months Ended
September 30, 1996 and 1995 (unaudited) ............................ 4
Notes to Condensed Consolidated Financial Statements of Trump
Atlantic City Associates and Subsidiaries (unaudited) .............. 5-9
ITEM 2 -- Management's Discussion and Analysis of Financial Condition
and Results of Operations ..................................10-15
PART II -- OTHER INFORMATION
ITEM 1 -- Legal Proceedings ............................................ 16
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 ............................. 17
SIGNATURES
Signature -- Trump Atlantic City Associates ............................. 18
Signature -- Trump Atlantic City Funding, Inc. .......................... 19
i
PART I -- FINANCIAL INFORMATION
ITEM 1 -- FINANCIAL STATEMENTS
TRUMP ATLANTIC CITY ASSOCIATES AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(in thousands)
ASSETS
September 30, December 31,
1996 1995
------------- ------------
(unaudited)
CURRENT ASSETS:
Cash and cash equivalents .......................... $ 127,629 $ 15,937
Receivables, net ................................... 54,933 14,058
Inventories ........................................ 9,393 2,609
Due from affiliates, net ........................... 4,543 1,298
Other current assets ............................... 9,366 5,045
----------- --------
Total Current Assets ............................. 205,864 38,947
PROPERTY AND EQUIPMENT, NET .......................... 1,423,006 395,942
LAND RIGHTS .......................................... 29,043 29,320
DEFERRED LOAN COSTS, NET ............................. 40,899 9,866
OTHER ASSETS ......................................... 21,474 5,949
----------- --------
Total Assets ..................................... $ 1,720,286 $480,024
=========== ========
LIABILITIES AND CAPITAL
CURRENT LIABILITIES:
Current maturities of long-term debt ............... $ 9,522 $ 2,901
Accounts payable and accrued expenses .............. 73,859 27,912
Accrued interest payable ........................... 61,792 1,497
----------- --------
Total Current Liabilities ........................ 145,173 32,310
LONG-TERM DEBT, net of discount and current
maturities ......................................... 1,208,765 332,721
OTHER LONG-TERM LIABILITIES .......................... 5,190 --
DISTRIBUTION PAYABLE TO PLAZA FUNDING ................ 3,822 3,822
DEFERRED STATE INCOME TAXES .......................... 387 359
----------- --------
Total Liabilities ................................ 1,363,337 369,212
----------- --------
CAPITAL:
Partners' Equity ................................... 363,646 94,087
Retained Earnings (Accumulated Deficit) ............ (6,697) 16,725
----------- --------
Total Capital ...................................... 356,949 110,812
----------- --------
Total Liabilities and Capital .................... $ 1,720,286 $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 NINE MONTHS ENDED SEPTEMBER 30, 1996 AND 1995
(unaudited)
(in thousands)
Three Months Nine Months
Ended September 30, Ended September 30,
1996 1995 1996 1995
---- ---- ---- ----
REVENUES:
Gaming ..................................... $ 261,981 $ 85,188 $ 542,011 $ 224,499
Rooms ...................................... 24,310 5,865 48,464 14,671
Food and Beverage .......................... 32,552 12,514 70,854 33,403
Other ...................................... 8,709 3,422 17,035 7,187
--------- --------- --------- ---------
Gross Revenues ........................... 327,552 106,989 678,364 279,760
Less--Promotional allowances ................. 36,251 12,094 74,636 28,611
--------- --------- --------- ---------
Net Revenues ............................. 291,301 94,895 603,728 251,149
--------- --------- --------- ---------
COSTS AND EXPENSES:
Gaming ..................................... 150,327 45,296 315,904 121,987
Rooms ...................................... 4,872 431 9,767 1,741
Food and Beverage .......................... 13,634 4,777 29,651 13,783
Pre-Opening ................................ 501 -- 3,833 --
General and Administrative ................. 44,129 17,080 101,897 51,073
Depreciation and Amortization .............. 20,255 3,956 41,457 11,792
Other ...................................... 1,205 935 3,066 2,556
--------- --------- --------- ---------
234,923 72,475 505,575 202,932
--------- --------- --------- ---------
Income from operations ................... 56,378 22,420 98,153 48,217
--------- --------- --------- ---------
NON-OPERATING INCOME AND (EXPENSES):
Interest income ............................ 854 219 1,483 689
Interest expense ........................... (36,495) (9,844) (78,077) (34,419)
Other non-operating income (expense) ....... 5,011 (2,005) 14,193 (3,847)
--------- --------- --------- ---------
(30,630) (11,630) (62,401) (37,577)
--------- --------- --------- ---------
Income before provision for state
income taxes and extraordinary loss ........ 25,748 10,790 35,752 10,640
Provision for state income taxes ............. 42 993 42 993
--------- --------- --------- ---------
Income before extraordinary loss ............. 25,706 9,797 35,710 9,647
Extraordinary Loss ........................... -- -- (59,132) (9,250)
--------- --------- --------- ---------
NET INCOME (LOSS) ............................ $ 25,706 $ 9,797 $ (23,422) $ 397
========= ========= ========= =========
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 NINE MONTHS ENDED SEPTEMBER 30, 1996
(unaudited)
(in thousands)
Retained
Earnings
Partners' (Accumulated
Capital Deficit) Total
-------- -------- ---------
Balance, December 31, 1995 .............. $ 94,087 $ 16,725 $ 110,812
Net Loss ............................... -- (23,422) (23,422)
Contributed Capital-- Trump Hotels
& Casino Resorts Holdings, L.P. ....... 269,559 -- 269,559
-------- -------- ---------
Balance, September 30, 1996 ............. $363,646 $ (6,697) $ 356,949
======== ======== =========
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 NINE MONTHS ENDED SEPTEMBER 30, 1996 AND 1995
(unaudited)
(in thousands, except share data)
Nine Months Ended
September 30,
--------------
1996 1995
----------- ---------
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss (income) .................................... $ (23,422) $ 397
Adjustments to reconcile net loss to net cash
flows from operating activities --
Noncash charges --
Extraordinary loss ................................ 59,132 9,250
Depreciation and amortization ..................... 41,457 11,792
Accretion of discounts on indebtedness ............ 132 1,021
Provisions for losses on receivables .............. 3,213 734
Amortization of deferred loan offering costs ...... 3,842 1,344
Utilization of CRDA credits and donations ......... -- 445
Deferred income taxes ............................. 28 992
Valuation allowance of CRDA investments ........... 2,098 (790)
----------- ---------
86,480 25,185
Changes in assets and liabilities, net of effects
from purchase of Taj Mahal:
Increase in receivables ........................... (24,319) (6,258)
Decrease in inventories ........................... 47 382
Increase in advances from affiliates .............. (4,925) (609)
(Increase) decrease in other current assets ....... (1,236) 1,799
Decrease in other assets .......................... (1,641) 3,126
Increase in accounts payable and accrued expenses . 2,160 8,298
Increase in accrued interest payable .............. 14,319 2,773
Decrease in other long-term liabilities ........... (900) --
----------- ---------
Net cash provided by operating activities ............ 73,267 34,696
----------- ---------
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchase of property and equipment, net .............. (186,447) (86,612)
Purchase of CRDA investments ......................... (4,493) (2,284)
Purchase of Taj Holding, net of cash acquired ........ 46,714 --
----------- ---------
Net cash used in Investing Activities ................ (144,226) (88,896)
----------- ---------
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from issuance of other long-term debt ...... 5,906 1,928
Payments and current maturities of long-term debt ... (8,117) (3,906)
Redemption of Plaza PIK Notes ....................... -- (81,746)
Contributed capital ................................. 219,240 146,859
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 ...... 182,651 63,135
----------- ---------
Net increase in cash & cash equivalents ........ 111,692 8,935
CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD ..... 15,937 11,144
----------- ---------
CASH AND CASH EQUIVALENTS AT END OF PERIOD ........... $ 127,629 $ 20,079
=========== =========
CASH INTEREST PAID ................................... $ 14,983 $ 22,848
=========== =========
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 valued 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--(Continued)
(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. 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 nine months ended September 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 151 @ 2% Senior Secured Notes due 2005 for gross proceeds
of $155,000,000 (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 111 @ 4% First Mortgage Notes
due 2006 (the "Trump AC Mortgage Notes"), guaranteed by Plaza Associates,
Taj Associates and TACC (collectively, the "Subsidiary Guarantors")
(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 107 @ 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 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
6
TRUMP ATLANTIC CITY ASSOCIATES AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS--(Continued)
(UNAUDITED)
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;
b) $40,500,000, representing the contribution by Trump to Trump AC (on
behalf, and at thedirection, 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 (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:
Nine Months Ended
-----------------------------
September 30, 1996 September 30, 1995
------------------ ------------------
Revenues $ 749,694 $ 668,445
Income from operations 107,925 125,555
Income before extraordinary loss 16,000 17,586
Extraordinary loss (59,132) (9,250)
Net income (loss) $ (43,132) $ 7,343
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 "Taj Thermal Agreement"). In
consideration of the license, Atlantic Thermal paid Taj Associates $10,000,000,
which amount has been included in other non-operating income during the nine
months endedSeptember 30, 1996.
On September 26, 1996, Plaza Associates entered into a similar service
agreement with respect to Trump Plaza with Atlantic Thermal (the "Plaza Thermal
Agreement") in which Atlantic Thermal paid Plaza Associates $5,000,000 on
September 30, 1996. This amount has been included in other non-operating income
during the three month and nine month periods ended September 30, 1996.
7
TRUMP ATLANTIC CITY ASSOCIATES AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS--(Continued)
(UNAUDITED)
(4) Long-Term Debt
Long-term debt consists of the following:
September 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 ............. 3,521,000 2,953,000
Other .................................... 14,766,000 6,017,000
------------- -----------
1,218,287,000 335,622,000
Less--Current maturities ................ 9,522,000 2,901,000
------------- -----------
$1,208,765,000 $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 tocomplete 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 24, 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 the 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 24, 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 which were secured by certain real estate assets located in New York,
unrelated to Plaza Associates or Trump AC. 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., a New Jersey limited liability
company and a subsidiary of Trump AC ("Trump Services"), are required to
maintain certain licenses.
8
TRUMP ATLANTIC CITY ASSOCIATES AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS--(Continued)
(UNAUDITED)
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.
9
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, redeemed the outstanding Taj Bonds, retired the outstanding Plaza Notes,
satisfied the indebtedness of Taj Associates under its loan agreement with Nat
West, 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 the 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 nine
months ended September 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
$186,502,000 for the nine months ended September 30, 1996, an increase of
approximately $99,890,000 or 115.3% from the comparable period in 1995. Capital
expenditures attributable to Trump Plaza East were approximately $36,877,000 and
$14,296,000 for the nine months ended September 30, 1996 and 1995. Capital
expenditures attributable to Trump World's Fair were approximately $56,007,000
and $64,685,000 for the nine months ended September 30, 1996 and 1995,
respectively. Capital expenditures for improvements to Trump Plaza's existing
facilities were $2,769,000 and $7,631,000 for the nine months ended September
30, 1996 and 1995.
On September 30, 1996, Plaza Associates exercised its option to purchase
from Trump Seashore Associates, an entity benefically owned by Trump, one of the
parcels of land underlying Trump Plaza's main tower pursuant to the terms of a
lease, the payments under which were terminated upon the exercise of such
option. The exercise price of $14,500,000 was contributed by THCR.
Capital expenditures attributable to the Taj Mahal were $76,160,000 for the
period April 17, 1996 through September 30, 1996. Capital expenditures for
improvements to existing facilities were approximately $9,675,000 for the period
April 17, 1996 through September 30, 1996. Capital expenditures for the purchase
for property previously leased upon which a portion of the Taj Mahal is situated
and Taj Merger closing costs amounted to approximately $61,808,000. Capital
expenditures attributable to the expansion of the facility were approximately
$4,677,000 for the period April 17, 1996 through September 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 $129,300,000 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 September 30, 1996, Trump AC had combined working capital of
$60,691,000. 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.
10
Important Factors Relating to Forward Looking Statements
In connection with certain forward-looking statements contained in this
Quarterly Report on Form 10-Q and those that may be made in the future by or on
behalf of Trump AC and Trump AC Funding, Trump AC and Trump AC Funding note that
there are various factors that could cause actual results to differ materially
from those set forth in any such forward-looking statements. The forward-looking
statements contained in this Quarterly Report were prepared by management and
are qualified by, and subject to, significant business, economic, competitive,
regulatory and other uncertainties and contingencies, all of which are difficult
or impossible to predict and many of which are beyond the control of Trump AC
and Trump AC Funding. Accordingly, there can be no assurance that the
forward-looking statements contained in this Quarterly Report will be realized
or that actual results will not be significantly higher or lower. The statements
have not been audited by, examined by, compiled by or subjected to agreed-upon
procedures by independent accountants, and no third-party has independently
verified or reviewed such statements. Readers of this Quarterly Report should
consider these facts in evaluating the information contained herein. In
addition, the business and operations of Trump AC and Trump AC Funding are
subject to substantial risks which increase the uncertainty inherent in the
forward-looking statements contained in this Quarterly Report. The inclusion of
the forward-looking statements contained in this Quarterly Report should not be
regarded as a representation by Trump AC and Trump AC Funding or any other
person that the forward-looking statements contained in this Quarterly Report
will be achieved. In light of the foregoing, readers of this Quarterly Report
are cautioned not to place undue reliance on the forward-looking statements
contained herein.
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 September 30, 1996, its
results of operations are not discussed below. Taj Associates was acquired on
April 17, 1996.
Comparison of Three-Month Periods Ended September 30, 1996 and 1995. The
following table includes selected data of Plaza Associates and Taj Associates
for the three months ended September 30, 1996 and of Plaza Associates for the
three months ended September 30, 1995:
Three Months Ended September 30,
-----------------------------------------------
1995 1996 1996 1996
Plaza Plaza Taj Total
Associates Associates Associates Trump AC
---------- ---------- ---------- ----------
(in thousands)
Revenues:
Gaming ....................... $ 85,188 $ 111,165 $ 150,816 $ 261,981
Other ........................ 21,801 33,230 32,341 65,571
Gross Revenues ............... 106,989 144,395 183,157 327,552
Less: Promotional Allowances ... 12,094 18,029 18,222 36,251
Net Revenues ................. 94,895 126,366 164,935 291,301
Costs and Expenses:
Gaming ....................... 45,296 66,745 83,582 150,327
Pre-opening .................. -- 501 -- 501
General & Administrative ..... 17,080 24,157 19,972 44,129
Depreciation & Amortization .. 3,956 6,206 14,049 20,255
Other ........................ 6,143 10,269 9,420 19,711
Total Costs and Expenses ..... 72,475 107,878 127,023 234,923
Income from Operations ......... 22,420 18,488 37,912 56,378
Non-Operating Income (Expense) (1,786) 5,197 252 5,865
Interest Expense .............. (9,844) (12,667) (23,828) (36,495)
Total Non-Operating Income
(Expense) .................... (11,630) (7,470) (23,576) (30,630)
Provision for Income Taxes .... (993) (42) -- (42)
Net Income (Loss) .............. $ 9,797 $ 10,976 $ 14,336 $ 25,706
11
Gaming revenues were $261,981,000 for the three months ended September 30,
1996, an increase of $176,793,000 or 207.5% from gaming revenues of $85,188,000
for the comparable period in 1995. This increase in gaming revenues consists of
$150,816,000 from Taj Associates 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 marketing initiatives.
Slot revenues were $160,947,000 for the three months ended September 30,
1996, an increase of $102,048,000 or 173.3% from slot revenues of $58,899,000
for the comparable period in 1995. This increase is directly attributable to the
acquisition of Taj Associates which contributed $78,832,000 in slot revenues.
Plaza Associates' slot revenues were $82,115,000 for the three months ended
September 30, 1996, an increase of $23,216,000 or 39.4% from slot revenues of
$58,899,000 for the three months ended September 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 $95,499,000 for the three months ended September
30, 1996, an increase of $69,210,000 or 263.3% from $26,289,000 for the
comparable period in 1995. This increase is attributable to the acquisition of
Taj Associates which contributed $66,449,000 in table games revenues with a
corresponding $384,966,000 in table games drop (i.e., the dollar value of chips
purchased). Plaza Associates' table games revenues of $29,050,000 for the three
months ended September 30, 1996 increased by $2,761,000 or 10.5% from the
comparable period in 1995. Plaza Associates' increase is primarily due to an
increase in table games drop by 9.8% for the three months ended September 30,
1996.
In addition to table games and slot revenues, Taj Associates' poker/race
simulcasting/keno operations generated approximately $4,713,000 in poker
revenue, $400,000 in race simulcasting revenues, and $422,000 in keno revenues
for the three months ended September 30, 1996.
Other revenues were $65,571,000 for the three months ended September 30,
1996, an increase of $43,770,000 or 200.8% from other revenues of $21,801,000
for the comparable period in 1995. Other revenues include revenues from rooms,
food and beverage and miscellaneous items. The increase is directly attributable
to the acquisition of Taj Associates which generated $32,341,000 in other
revenues for the three months ended September 30, 1996. Plaza Associates' other
revenues were $33,230,000 for the three months ended September 30, 1996, an
increase of $11,429,000 or 52.4% 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 room, and food and beverage revenues
attendant to increased levels of gaming activity due in part to increased
promotional activities.
Promotional allowances were $36,251,000 for the three months ended
September 30, 1996, an increase of $24,157,000 or 199.7% from promotional
allowances of $12,094,000 for the three months ended September 30, 1995. Taj
Associates generated $18,222,000 in promotional allowances for the three months
ended September 30, 1996. Plaza Associates experienced an increase in
promotional allowances to $18,029,000 or 49.1% from promotional allowances of
$12,094,000 in 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 September
30, 1996.
Gaming costs and expenses were $150,327,000 for the three months ended
September 30, 1996, an increase of $105,031,000 or 231.9% from $45,296,000 for
the comparable period in 1995. This increase is primarily attributable to Taj
Associates' gaming costs and expenses of $83,582,000 for the three months ended
September 30, 1996. Gaming costs and expenses for Plaza Associates were
$66,745,000, an increase of $21,449,000 or 47.4% from $45,296,000 in the
comparable period in 1995. Plaza Associates' increase is primarily due to
increased promotional and operational expenses resulting from operating Trump
World's Fair and Trump Plaza East, both with opening dates in 1996, as well as
taxes associated with increased levels of gaming revenues from the comparable
periodin 1995.
General and administrative expenses were $44,129,000 for the three months
ended September 30, 1996, an increase of $27,049,000 or 158.4% from general and
administrative expenses of $17,080,000 for the comparable period in 1995. This
increase is primarily due to the acquisition of Taj Associates which incurred
$19,972,000 in general and administrative expenses since its acquisition. Plaza
Associates' increase of $7,077,000 over the comparable period is due in part to
expenses associated with Trump Plaza East and Trump World's Fair.
12
Pre-opening expenses of $501,000 were incurred by Plaza Associates for the
three months ended September 30, 1996 and reflect the costs associated with
opening Trump World's Fair in May 1996.
Other expenses were $19,711,000 for the three months ended September 30,
1996, an increase of $13,568,000 or 220.9% from the comparable period in 1995.
Other expenses include costs associated with operating Trump Plaza's and the Taj
Mahal's hotels. The increase over the comparable period reflects Taj Associates'
$9,420,000 of other expenses since its date of acquisition. Plaza Associates'
other expenses increased by $4,126,000 or 67.2% from the comparable period. This
increase is due to operating Trump World's Fair and Trump East, both with
opening dates in 1996.
Income from operations was $56,378,000 for the three months ended September
30, 1996, an increase of $33,958,000 or 151.5% from income from operations of
$22,420,000 for the comparable period in 1995. Taj Associates contributed
$37,912,000 of income from operations for the three months ended September 30,
1996. Plaza Associates contributed $18,488,000 during the three months ended
September 30, 1996, a decrease of $3,932,000, or 17.5% from the comparable
period in 1995.
Interest expense was $36,495,000 for the three months ended September 30,
1996, an increase of $26,651,000 or 270.7% from interest expense of $9,844,000
for the comparable period in 1995. This increase is attributable to the
acquisition of Taj Associates, which has incurred $23,828,000 of interest
expense for the three months ended September 30, 1996. Plaza Associates reflects
an increase of $2,823,000 in interest expense due in part to the issuance of the
Trump AC Mortgage Notes.
Other non-operating income was $5,011,000 for the three months ended
September 30, 1996, an increase of $7,016,000 from the comparable period in
1995. Non-operating income consists of a $5,000,000 non-refundable licensing fee
from the Plaza Thermal Agreement.
Comparison of Nine-Month Periods ended September 30, 1996 and 1995. The
following table includes selected data of Plaza Associates and Taj Associates
(since date of acquisition) for the nine months endedSeptember 30, 1996 and of
Plaza Associates for the nine months ended September 30, 1995:
Nine Months Ended September 30,
-----------------------------------------------
1995 1996 1996 1996
Plaza Plaza Taj Total
Associates Associates Associates Trump AC
---------- ---------- ---------- ----------
(in thousands)
Revenues:
Gaming ....................... $ 224,499 $ 281,511 $ 260,500 $ 542,011
Other ........................ 55,261 79,655 56,698 136,353
Gross Revenues ............... 279,760 361,166 317,198 678,364
Less: Promotional Allowances ... 28,611 42,549 32,087 74,636
Net Revenues .................. 251,149 318,617 285,111 603,728
Costs and Expenses:
Gaming ....................... 121,987 168,466 147,438 315,904
Pre-opening .................. -- 3,833 -- 3,833
General & Administrative ..... 51,073 62,388 39,509 101,897
Depreciation & Amortization .. 11,792 16,652 24,805 41,457
Other ........................ 18,080 25,200 17,262 42,484
Total Costs and Expenses ..... 202,932 276,539 229,014 505,575
Income from Operations ......... 48,217 42,078 56,097 98,153
Non-Operating Income (Expense) (3,158) 4,768 10,458 15,676
Interest Expense .............. (34,419) (34,409) (43,668) (78,077)
Total Non-Operating Income
(Expense) .................... (37,577) (29,641) (33,210) (62,401)
Extraordinary Loss ............ (9,250) (59,132) -- (59,132)
Provision for Income Taxes .... (993) (42) -- (42)
Net Income (Loss) .............. $ 397 $ (46,737) $ 22,887 $ (23,422)
13
Gaming revenues were $542,011,000 for the nine months ended September 30,
1996, an increase of $317,512,000 or 141.4% from gaming revenues of $224,499,000
for the comparable period in 1995. This increase in gaming revenues consists of
$260,500,000 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' 25.4% 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 marketing initiatives.
Slot revenues were $343,239,000 for the nine months ended September 30,
1996, an increase of $190,921,000 or 125.3% from slot revenues of $152,318,000
for the comparable period in 1995. This increase is directly attributable to the
acquisition of Taj Associates which contributed $140,093,000 in slot revenues.
Plaza Associates' slot revenues were $203,146,000 for the nine months ended
September 30, 1996, an increase of $50,828,000 or 33.4% from slot revenues of
$152,318,000 for the nine months ended September 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 $188,971,000 for the nine months ended September
30, 1996, an increase of $116,790,000 or 161.8% from $72,181,000 for the
comparable period in 1995. This increase is attributable to the acquisition of
Taj Associates which contributed $110,606,000 in table games revenues with a
corresponding $645,990,000 of table games drop (i.e., the dollar value of chips
purchased). Plaza Associates' table games revenue of $78,365,000 for the nine
months ended September 30, 1996 increased by $6,184,000 or 8.6% from the
comparable period in 1995. Plaza Associates' increase is primarily due to an
increase in table games drop by 9.8% for the nine months ended September 30,
1996.
In addition to table games and slot revenues, Taj Associates' poker/race
simulcasting/ keno operations generated approximately $8,360,000 in poker
revenue, $722,000 in race simulcasting revenue, and $719,000 in keno revenue
since its acquisition date.
Other revenues were $136,353,000 for the nine months ended September 30,
1996, an increase of $81,092,000 or 146.7% from other revenues of $55,261,000
for the comparable period in 1995. Other revenues include revenues from rooms,
food and beverage and miscellaneous items. The increase primarily is
attributable to the acquisition of Taj Associates which generated $56,698,000 of
other revenue since its acquisition date. Plaza Associates' other revenue was
$79,655,000 for the nine months ended September 30, 1996, an increase of
$24,394,000 or 44.1% 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, food and beverage revenues attendant to
increased levels of gaming activity due in part to increased promotional
activities.
Promotional allowances were $74,636,000 for the nine months ended September
30, 1996, an increase of $46,025,000 or 160.9% from promotional allowances of
$28,611,000 for the nine months ended September 30, 1995. Taj Associates
generated $32,087,000 in promotional allowances since its acquisition date.
Plaza Associates experienced an increase in promotional allowances to
$42,549,000 or 48.7% from promotional allowances of $28,611,000 in 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 nine months ended September 30, 1996.
Gaming costs and expenses were $315,904,000 for the nine months ended
September 30, 1996, an increase of $193,917,000 or 159.0% from $121,987,000 for
the comparable period in 1995. This increase was primarily attributable to Taj
Associates' gaming costs and expenses of $147,438,000 since its acquisition.
Gaming costs and expenses for Plaza Associates were $168,466,000, an increase of
$46,479,000 or 38.1% from $121,987,000 for the comparable period in 1995. Plaza
Associates' increase is primarily due to increased promotional and operational
expenses resulting from operating Trump World's Fair and Trump Plaza East, both
with opening dates in 1996, as well as taxes associated with increased levels of
gaming revenues from the comparable period in 1995.
General and administrative expenses were $101,897,000 for the nine months
ended September 30, 1996, an increase of $50,824,000 or 99.5% from general and
administrative expenses of $51,073,000 for the comparable period in 1995. This
increase is primarily due to the acquisition of Taj Associates which incurred
$39,509,000 in general and administrative expenses since its acquisition. Plaza
Associates' increase of $11,315,000 over the comparable period is due in part to
expenses associated with the Trump Plaza East and Trump World's Fair.
14
Pre-opening expenses of $3,833,000 were incurred by Plaza Associates and
reflect the costs associated with opening Trump World's Fair in May 1996.
Other expenses were $42,484,000 for the nine months ended September 30,
1996, an increase of $24,404,000 or 135.0% from the comparable period in 1995.
Other expenses include costs associated with operating Trump Plaza's and the Taj
Mahal's hotels. The increase over the comparable period reflects Taj Associates'
$17,262,000 of other expenses since its date of acquisition. Plaza Associates'
other expenses increased by $7,120,000 or 39.4% 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 $98,153,000 for the nine months ended September
30, 1996, an increase of $49,936,000 or 103.6% from income from operations of
$48,217,000 for the comparable period in 1995. Taj Associates contributed
$56,097,000 of income from operations since its acquisition. Plaza Associates
contributed $42,078,000 during the nine months ended September 30, 1996, a
decrease of $6,139,000 or 12.7% from the comparable period in 1995.
Interest expense was $78,077,000 for the nine months ended September 30,
1996, an increase of $43,658,000 or 126.8% from interest expense of $34,419,000
for the comparable period in 1995. This increase is attributable to the
acquisition of Taj Associates, which has incurred $43,668,000 of interest
expense since its date of acquisition. Plaza Associates reflects $34,409,000
interest expense at September 30, 1996, compared to $34,419,000 for the
comparable period in 1995.
Other non-operating income was $14,193,000 for the nine months ended
September 30, 1996, an increase of $18,040,000 from the comparable period in
1995. Non-operating income includes $15,000,000 of non-refundable licensing fees
resulting from the Plaza Thermal Agreement and the Taj Thermal Agreement.
The extraordinary loss of $59,132,000 for the nine months ended September
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 nine months ended September 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 onJune 12,
1995.
15
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.
ITEM 2 -- CHANGES IN SECURITIES
None.
ITEM 3 -- DEFAULTS UPON SENIOR SECURITIES
None.
ITEM 4 -- SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
None.
ITEM 5 -- OTHER INFORMATION
On October 23, 1996, Trump Services, Plaza Associates, Taj Associates and
Trump's Castle Associates, L.P. entered into an Amended and Restated Services
Agreement (the "Services Agreement"), pursuant to which Trump Services, in order
to generate efficiencies and realize synergies through the consolidation of
operations, provides certain management, financial and other functions necessary
and incidental to the operations of each of Trump Plaza, the Taj Majal and
Trump's Castle Casino Resort. Trump Services, a wholly owned subsidiary of Trump
AC, will receive no compensation for providing the services, other than payments
to fund the costs and expenses incurred in connection therewith.
Reference is made to the Services Agreement, attached as an Exhibit hereto
and incorporated herein by reference.
16
ITEM 6 --EXHIBITS AND REPORTS ON FORM 8-K
a. Exhibits:
Exhibit No. Description of Exhibit
----------- ----------------------
10.65.1 Amended and Restated Services Agreement, dated as October 23,
1996, by and among Trump Plaza Associates, Trump Taj Mahal
Associates, Trump's Castle Associates, L.P. and Trump Casino
Services, L.L.C.
10.67 Thermal Energy Service Agreement, dated as of September 26,
1996, by and between Atlantic Jersey Thermal Systems, Inc.
and Trump Plaza 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 Current Reports on Form 8-K during the
period beginning July 1, 1996 and ending September 30, 1996.
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)
By: TRUMP HOTELS & CASINO RESORTS
HOLDINGS, L.P.,
its general partner
By: TRUMP HOTELS & CASINO RESORTS, INC.,
its general partner
Date: November 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
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 FUNDING, INC.
(Registrant)
Date: November 14, 1996
By: /s/ NICHOLAS L. RIBIS
-----------------------------------
Nicholas L. Ribis
Chief Executive Officer and President
(Duly Authorized Officer and
Principal Financial Officer)
19