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, 2000
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 No.: 333-643
TRUMP ATLANTIC CITY ASSOCIATES
(Exact Name of Registrant as specified in its charter)
New Jersey 22-3213714
(State or other jurisdiction of incorporation or organization) (I.R.S. Employer Identification Number)
1000 Boardwalk
Atlantic City, New Jersey 08401
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (609) 449-6542
Former name, former address and formal fiscal year, if changed since last report: Not Applicable
TRUMP ATLANTIC CITY FUNDING, INC.
(Exact Name of Registrant as specified in its charter)
Delaware 22-3418939
(State or other jurisdiction of incorporation or organization) (I.R.S. Employer Identification Number)
1000 Boardwalk
Atlantic City, New Jersey 08401
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (609) 449-6542
Former name, former address and formal fiscal year, if changed since last report: Not Applicable
TRUMP ATLANTIC CITY FUNDING II, INC.
(Exact Name of Registrant as specified in its charter)
Delaware 22-3550202
(State or other jurisdiction of incorporation or organization) (I.R.S. Employer Identification Number)
1000 Boardwalk
Atlantic City, New Jersey 08401
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (609) 449-6542
Former name, former address and formal fiscal year, if changed since last report: Not Applicable
TRUMP ATLANTIC CITY FUNDING III, INC.
(Exact Name of Registrant as specified in its charter)
Delaware 22-3550203
(State or other jurisdiction of incorporation or organization) (I.R.S. Employer Identification Number)
1000 Boardwalk
Atlantic City, New Jersey 08401
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (609) 449-6542
Former name, former address and formal fiscal year, if changed since last report: Not Applicable
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 ____
---
As of August 14, 2000, there were 100 shares of Trump Atlantic City Funding,
Inc.'s Common Stock outstanding.
As of August 14, 2000, there were 100 shares of Trump Atlantic City Funding
II, Inc.'s Common Stock outstanding.
As of August 14, 2000, there were 100 shares of Trump Atlantic City Funding
III, Inc.'s Common Stock outstanding.
Each of Trump Atlantic City Funding, Inc., Trump Atlantic City Funding II,
Inc. and Trump Atlantic City Funding III, 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.
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 December 31, 1999 and June 30, 2000 (unaudited)................................. 1
Condensed Consolidated Statements of Operations of Trump Atlantic City Associates and
Subsidiaries for the Three and Six Months Ended June 30, 1999 and 2000 (unaudited)................. 2
Condensed Consolidated Statement of Capital of Trump Atlantic City Associates and
Subsidiaries for the Six Months Ended June 30, 2000 (unaudited).................................... 3
Condensed Consolidated Statements of Cash Flows of Trump Atlantic City Associates and
Subsidiaries for the Six Months Ended June 30, 1999 and 2000 (unaudited)........................... 4
Notes to Condensed Consolidated Financial Statements of Trump Atlantic City Associates and
Subsidiaries (unaudited)........................................................................... 5-6
ITEM 2 -- Management's Discussion and Analysis of Financial Condition and
Results of Operations.................................................................... 7-10
ITEM 3 -- Quantitative and Qualitative Disclosures About Market Risk............................... 11
PART II -- OTHER INFORMATION
ITEM 1 -- Legal Proceedings........................................................................ 12
ITEM 2 -- Changes in Securities and Use of Proceeds................................................ 13
ITEM 3 -- Defaults Upon Senior Securities.......................................................... 13
ITEM 4 -- Submission of Matters to a Vote of Security Holders...................................... 13
ITEM 5 -- Other Information........................................................................ 13
ITEM 6 -- Exhibits and Reports on Form 8-K......................................................... 13
SIGNATURES
Signature -- Trump Atlantic City Associates........................................................ 14
Signature -- Trump Atlantic City Funding, Inc...................................................... 15
Signature -- Trump Atlantic City Funding II, Inc................................................... 16
Signature -- Trump Atlantic City Funding III, Inc.................................................. 17
i
PART I -- FINANCIAL INFORMATION
ITEM 1 -- FINANCIAL STATEMENTS
TRUMP ATLANTIC CITY ASSOCIATES AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(in thousands)
ASSETS
December 31, June 30,
1999 2000
----------- ------------
(unaudited)
CURRENT ASSETS:
Cash and cash equivalents................ $ 75,061 $ 69,850
Receivables, net......................... 33,881 33,154
Inventories.............................. 9,458 9,520
Due from affiliates, net................. 62,948 73,690
Other current assets..................... 5,258 8,222
----------- ------------
Total Current Assets................... 186,606 194,436
PROPERTY AND EQUIPMENT, NET................ 1,322,599 1,308,972
DEFERRED LOAN COSTS, NET................... 24,750 22,054
OTHER ASSETS (Note 2)...................... 36,911 40,075
----------- ------------
Total Assets........................... $ 1,570,866 $ 1,565,537
=========== ============
LIABILITIES AND CAPITAL
CURRENT LIABILITIES:
Current maturities of long-term debt..... $ 4,438 $ 4,897
Accounts payable and accrued expenses.... 110,256 121,330
Accrued interest payable................. 24,375 24,375
----------- ------------
Total Current Liabilities.............. 139,069 150,602
LONG-TERM DEBT, net of current maturities.. 1,302,824 1,305,729
OTHER LONG-TERM LIABILITIES................ 5,557 5,557
----------- ------------
Total Liabilities...................... 1,447,450 1,461,888
----------- ------------
CAPITAL:
Partners' Capital........................ 329,691 329,691
Accumulated Deficit...................... (206,275) (226,042)
----------- ------------
Total Capital.......................... 123,416 103,649
----------- ------------
Total Liabilities and Capital.......... $ 1,570,866 $ 1,565,537
=========== ============
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 AND SIX MONTHS ENDED JUNE 30, 1999 AND 2000
(unaudited)
(in thousands)
Three Months Six Months
Ended June 30, Ended June 30,
-------------------- -----------------
1999 2000 1999 2000
------- ------- ------- -------
REVENUES:
Gaming............................... $ 225,753 $ 215,688 $ 420,919 $ 418,356
Rooms................................ 19,577 14,946 35,293 28,385
Food and Beverage.................... 27,140 23,837 51,370 46,634
Other................................ 7,930 7,156 15,225 13,207
--------- --------- --------- ---------
Gross Revenues..................... 280,400 261,627 522,807 506,582
Less--Promotional allowances......... 31,358 26,996 59,468 53,733
--------- --------- --------- ---------
Net Revenues....................... 249,042 234,631 463,339 452,849
--------- --------- --------- ---------
COSTS AND EXPENSES:
Gaming................................ 135,390 131,644 257,788 258,334
Rooms................................. 7,838 6,511 14,556 12,376
Food and Beverage..................... 10,125 7,860 18,333 14,679
General and Administrative............ 43,791 46,364 85,270 85,388
Depreciation and Amortization......... 14,881 12,463 30,206 25,948
Trump World's Fair Closing (Note 3)... -- 254 -- 736
--------- --------- --------- ---------
212,025 205,096 406,153 397,461
--------- --------- --------- ---------
Income from operations.............. 37,017 29,535 57,186 55,388
--------- --------- --------- ---------
NON-OPERATING INCOME AND (EXPENSES):
Interest income....................... 781 789 1,488 1,611
Interest expense...................... (38,342) (38,296) (76,739) (76,796)
Non-Operating income.................. -- 3 335 30
--------- --------- --------- ---------
Non-Operating expense, net............ (37,561) (37,504) (74,916) (75,155)
--------- --------- --------- ---------
NET LOSS................................ $ (544) $ (7,969) $ (17,730) $ (19,767)
========= ========= ========= =========
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, 2000
(unaudited)
(in thousands)
Retained
Earnings
Partners' (Accumulated
Capital Deficit) Total
----------- -------------- ---------
Balance, December 31, 1999... $ 329,691 $ (206,275) $ 123,416
Net Loss..................... -- (19,767) (19,767)
----------- -------------- ---------
Balance, June 30, 2000....... $ 329,691 $ (226,042) $ 103,649
=========== ============== =========
The accompanying notes are an integral part of this condensed consolidated
financial statement.
3
TRUMP ATLANTIC CITY ASSOCIATES AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE SIX MONTHS ENDED JUNE 30, 1999 AND 2000
(unaudited)
(dollars in thousands)
Six Months Ended
June 30,
-----------------------
1999 2000
--------- ---------
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss........................................................................... $ (17,730) $ (19,767)
Adjustments to reconcile net loss to net cash flows from operating activities --
Noncash charges --
Depreciation and amortization ................................................... 30,206 25,948
Accretion of discounts on indebtedness .......................................... 351 312
Provisions for losses on receivables ........................................... 6,168 2,305
Amortization of deferred loan offering costs .................................... 3,037 2,695
Valuation allowance of CRDA investments ......................................... 1,953 1,773
Gain on disposition of property ............................................... (335) (31)
Decrease/(increase) in receivables................................................ 3,682 (1,578)
Increase in inventories........................................................... (286) (61)
Increase in advances to affiliates................................................ (13,381) (10,741)
Increase in other current assets.................................................. (2,632) (2,594)
Increase in other assets.......................................................... (1,737) (792)
Increase in accounts payable and accrued expenses................................. 1,382 11,162
--------- ---------
Net cash provided by operating activities .................................... 10,678 8,631
--------- ---------
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchase of property and equipment, net.......................................... (5,481) (5,914)
Purchase of CRDA investments..................................................... (5,098) (5,005)
Proceeds from disposition of property............................................ 1,087 30
--------- ---------
Net cash used in investing activities ......................................... (9,492) (10,889)
--------- ---------
CASH FLOWS FROM FINANCING ACTIVITIES:
Payments and current maturities of long-term debt............................... (2,710) (2,953)
--------- ---------
Net cash used in financing activities.......................................... (2,710) (2,953)
--------- ---------
NET DECREASE IN CASH & CASH EQUIVALENTS ........................................ (1,524) (5,211)
CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD ............................... 80,954 75,061
--------- ---------
CASH AND CASH EQUIVALENTS AT END OF PERIOD ..................................... $ 79,430 $ 69,850
========= =========
CASH INTEREST PAID ............................................................. $ 73,419 $ 73,630
========= =========
Supplemental Disclosure of noncash activities:
Purchase of property and equipment under capitalized lease obligations ......... $ 3,620 $ 6,014
========= =========
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) Organization and Operations
The accompanying consolidated financial statements include those of Trump
Atlantic City Associates, a New Jersey general partnership ("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"),
Trump Atlantic City Funding II, Inc., a Delaware corporation ("Trump AC Funding
II"), Trump Atlantic City Funding III, Inc., a Delaware corporation ("Trump AC
Funding III"), Trump Atlantic City Corporation, a Delaware Corporation ("TACC"),
and Trump Casino Services, L.L.C., a New Jersey limited liability company
("TCS"). Trump AC's sole sources of liquidity are distributions in respect of
its interests in Plaza Associates and Taj Associates. Trump AC is 100%
beneficially owned by Trump Hotels & Casino Resorts Holdings, L.P., a Delaware
limited partnership ("THCR Holdings"). Trump AC, Trump AC Funding, Trump AC
Funding II and Trump AC Funding III 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 guarantors (the "Subsidiary Guarantors") of the 11 1/4% First
Mortgage Notes due 2006 of Trump AC and Trump AC Funding, of Trump AC and Trump
AC Funding II and of Trump AC and Trump AC Funding III (the "Trump AC Mortgage
Notes") to distribute funds to Trump AC.
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 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. The assets and operations of the nonguarantor
subsidiaries are not significant.
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 without audit. In the opinion of management, all adjustments,
consisting of only normal recurring adjustments necessary to present fairly the
financial position, the results of operations and cash flows for the periods
presented, have been made.
The accompanying condensed consolidated financial statements have been
prepared pursuant to the rules and regulations of the Securities and Exchange
Commission ("SEC"). Accordingly, certain information and note disclosures
normally included in financial statements prepared in conformity with generally
accepted accounting principles have been condensed or omitted.
These condensed consolidated financial statements should be read in
conjunction with the consolidated financial statements and notes thereto
included in the annual report on Form 10-K for the year ended December 31, 1999
filed with the SEC.
The casino industry in Atlantic City is seasonal in nature; therefore,
results of operations for the three and six months ended June 30, 2000 are not
necessarily indicative of the operating results for a full year.
Reclassifications
Certain reclassifications have been made to prior year financial statements
to conform to the current year presentation.
5
(2) Other Assets
Plaza Associates is appealing a real estate tax assessment by the City of
Atlantic City. Included in other assets at June 30, 2000 is $8,014,000 which
Plaza Associates believes will be recoverable on settlement of the appeal.
(3) Trump World's Fair Closing
On October 4, 1999, Trump AC closed Trump World's Fair. In addition to
closing costs recorded at December 31, 1999, costs of $736,000 were recorded
during the six months ended June 30, 2000.
(4) Combined Financial Information--Trump AC Funding, Trump AC Funding II, and
Trump AC Funding III.
Combined financial information relating to Trump AC Funding, Trump AC
Funding II and Trump AC Funding III is as follows:
December 31, June 30,
1999 2000
--------------- ---------------
(unaudited)
Total Assets (including notes receivable of $1,297,119,000 at
December 31, 1999 and $1,297,432,000 at June 30, 2000 and
related interest receivable).................................. $ 1,321,494,000 $ 1,321,807,000
=============== ===============
Total Liabilities and Capital (including notes payable of
$1,297,119,000 at December 31, 1999 and $1,297,432,000 at
June 30, 2000 and related interest payable)................... $ 1,321,494,000 $ 1,321,807,000
=============== ===============
Six Months Ended June 30,
1999 2000
--------------- ---------------
Interest Income................................................ $ 73,125,000 $ 73,125,000
============ ============
Interest Expense............................................... $ 73,125,000 $ 73,125,000
============ ============
Net Income..................................................... $ -- $ --
============ ============
6
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. Trump AC expects to have sufficient liquidity to meet its obligations
during 2000. Cash flow is managed based upon the seasonality of the operations.
Any excess cash flow achieved from operations during peak periods is utilized to
subsidize non-peak periods when necessary.
The ability of Trump AC to repay its long-term debt when due will depend on
the ability of Plaza Associates and Taj Associates to generate cash from
operations sufficient for such purposes or on the ability of Trump AC to
refinance such indebtedness. Cash Flow from operations may not be sufficient to
repay a substantial portion of the principal amount of the indebtedness upon
maturity. The future operating performance and the ability to refinance such
indebtedness will be subject to the then prevailing economic conditions,
industry conditions and numerous other financial, business and other factors,
many of which are beyond the control of Trump AC. There can be no assurance that
the future operating performance of Plaza Associates and Taj Associates will be
sufficient to meet these repayment obligations or that the general state of the
economy, the status of the capital markets generally or the receptiveness of the
capital markets to the gaming industry will be conducive to refinancing or other
attempts to raise capital.
The indentures under which the notes of Trump AC were issued restrict the
ability of Trump AC and its subsidiaries to make distributions or pay dividends,
as the case may be, unless certain financial ratios are achieved. In addition,
the ability of Plaza Associates and Taj Associates to make payments of dividends
or distributions (except for payment of interest) through Trump AC to THCR
Holdings may be restricted by the Casino Control Commission.
Capital expenditures for Trump AC were $5,481,000 and $5,914,000 for the
six months ended June 30, 1999 and 2000, respectively.
Capital expenditures for Trump Plaza were $1,323,000 and $385,000 and for
the Taj Mahal were $3,946,000 and $4,992,000 for the six months ended June 30,
1999 and 2000, respectively.
Results of Operations: Operating Revenues and Expenses
The financial information presented below reflects the results of
operations of Plaza Associates and Taj Associates. Because Trump AC has no
business operations other than its interests in Plaza Associates and Taj
Associates its results of operations are not discussed below.
Comparison of Three-Month Periods Ended June 30, 1999 and 2000. The
following table includes selected data of Plaza Associates and Taj Associates
for the three months ended June 30, 1999 and 2000 (Trump AC also includes TCS;
which were not separately disclosed).
7
Three Months Ended June 30,
----------------------------------------------------------------------------
1999 2000 1999 2000 1999 2000
Plaza Plaza Taj Taj Total Total
Associates Associates Associates Associates Trump AC Trump AC
----------------------------------------------------------------------------
(in thousands)
Revenues:
Gaming......................... $ 93,898 $ 81,461 $ 131,855 $ 134,227 $ 225,753 $ 215,688
Other.......................... 25,926 18,337 28,721 27,602 54,647 45,939
--------- --------- --------- --------- --------- ---------
Gross Revenues................. 119,824 99,798 160,576 161,829 280,400 261,627
Less: Promotional Allowances... 15,513 11,941 15,845 15,055 31,358 26,996
--------- --------- --------- --------- --------- ---------
Net Revenues................... 104,311 87,857 144,731 146,774 249,042 234,631
--------- --------- --------- --------- --------- ---------
Costs & Expenses:
Gaming......................... 55,755 53,614 79,634 78,030 135,390 131,644
General & Administrative....... 20,361 19,128 23,400 27,224 43,791 46,364
Depreciation & Amortization.... 5,698 3,307 9,183 9,156 14,881 12,463
Trump World's Fair closing..... -- 254 -- -- -- 254
Other.......................... 8,703 5,353 9,260 9,018 17,963 14,371
--------- --------- --------- --------- --------- ---------
Total Costs and Expenses....... 90,517 81,656 121,477 123,428 212,025 205,096
--------- --------- --------- --------- --------- ---------
Income from Operations............. 13,794 6,201 23,254 23,346 37,017 29,535
--------- --------- --------- --------- --------- ---------
Non-Operating Income............. -- 3 -- -- -- 3
Interest Income.................. 267 141 456 288 781 789
Interest Expense................. (11,749) (11,823) (23,425) (23,345) (38,342) (38,296)
--------- --------- --------- --------- --------- ---------
Total Non-Operating Expense...... (11,482) (11,679) (22,969) (23,057) (37,561) (37,504)
--------- --------- --------- --------- --------- ---------
Net Income/(Loss).................. $ 2,312 $ (5,478) $ 285 $ 289 $ (544) $ (7,969)
========= ========= ========= ========= ========= =========
Three Months Ended June 30,
-------------------------------------------------------------------------------------
1999 2000 1999 2000 1999 2000
Plaza Plaza Taj Taj Total Total
Associates Associates Associates Associates Trump AC Trump AC
-------------------------------------------------------------------------------------
(dollars in thousands)
Table Game Revenues................. $ 23,160 $ 24,311 $ 44,829 $ 46,228 $ 67,989 $ 70,539
Incr (Decr) over Prior Period....... $ 1,151 $ 1,399 $ 2,550
Table Game Drop..................... $ 153,855 $ 161,118 $ 269,683 $ 269,268 $ 423,538 $ 430,386
Incr (Decr) over Prior Period....... $ 7,263 $ (415) $ 6,848
Table Win Percentage................ 15.1% 15.1% 16.6% 17.2% 16.1% 16.4%
Incr (Decr) over Prior Period....... -- 0.6 0.3 pts
Number of Table Games............... 100 96 149 143 249 239
Incr (Decr) over Prior Period....... (4) (6) (10)
Slot Revenues....................... $ 70,738 $ 57,150 $ 81,548 $ 82,715 $ 152,286 $ 139,865
Incr (Decr) over Prior Period....... $ (13,588) $ 1,167 $ (12,421)
Slot Handle......................... $ 884,807 $ 721,365 $ 1,012,813 $ 1,069,101 $ 1,897,620 $ 1,790,466
Incr (Decr) over Prior Period....... $ (163,442) $ 56,288 $ (107,154)
Slot Win Percentage................. 8.0% 7.9% 8.1% 7.7% 8.0% 7.8%
Incr (Decr) over Prior Period....... (0.1) (0.4) (0.2) pts
Number of Slot Machines............. 4,223 2,851 4,240 4,572 8,463 7,423
Incr (Decr) over Prior Period....... (1,372) 332 (1,040)
Poker Revenues...................... -- -- $ 4,843 $ 4,688 $ 4,843 $ 4,688
Incr (Decr) over Prior Period....... -- $ (155) $ (155)
Number of Poker Tables.............. -- -- 62 65 62 65
Incr (Decr) over Prior Period....... -- 3 3
Other Gaming Revenues............... -- -- $ 635 $ 596 $ 635 $ 596
Incr (Decr) over Prior Period....... -- $ (39) $ (39)
Total Gaming Revenues............... $ 93,898 $ 81,461 $ 131,855 $ 134,227 $ 225,753 $ 215,688
Incr (Decr) over Prior Period....... $ (12,437) $ 2,372 $ (10,065)
Number of Guest Rooms............... 1,404 904 1,250 1,250 2,654 2,154
Occupancy Rate...................... 92.3% 89.9% 96.1% 93.1% 94.1% 91.8%
Average Daily Rate (Room Revenue)... $ 81.26 $ 78.69 $ 91.36 $ 86.16 $ 89.84 $ 83.09
8
Gaming revenues are the primary source of Trump AC's revenues. The year
over year decrease in gaming revenues was due to a decline in slot revenues at
the Trump Plaza due to the closing of Trump World's Fair. Table game revenues
increased approximately $2,550,000 or 3.8% from the comparable period in 1999
due to increased volumes at the Trump Plaza and an improved table win percentage
at the Taj Mahal. Over-all Trump AC's table win percentage increased to 16.4%
from 16.1% in the comparable period in 1999. Table game revenues represent the
amount retained by Trump AC from amounts wagered at table games. The table win
percentage tends to be fairly constant over the long term, but may vary
significantly in the short term, due to large wagers by "high rollers". The
Atlantic City industry table win percentages were 15.4% and 16.3% for the three
months ended June 30, 1999 and 2000, respectively.
Slot revenues decreased approximately $12,421,000 or 8.2% from the
comparable period in 1999. Slot revenues at the Taj Mahal increased
approximately $1,167,000 or 1.4% from the comparable period in 1999 but were
offset by a decline at the Trump Plaza due to the closing of Trump World's Fair.
Other non-gaming revenues and their associated expenses, as well as
Depreciation & Amortization were reduced from the comparable period in 1999 due
to the closing of Trump World's Fair.
Gaming costs and expenses decreased approximately $3,746,000 or 2.8% from
the comparable period in 1999 due to the closing of the Trump World's Fair and
reduced gaming bad debt expense at the Taj Mahal. Promotional costs at Trump
Plaza disproportionately exceeded slot revenue increases at Trump Plaza's
remaining operation after closure of Trump World's Fair.
General and Administrative expenses increased approximately $2,573,000 or
5.9% from the comparable period in 1999. General and Administrative expenses at
Trump Plaza decreased approximately $1,233,000 or 6.1% from the comparable
period in 1999 due to the closing of the Trump World's Fair. Expenses at Taj
Mahal increased approximately $3,824,000 or 16.3% from the comparable period in
1999 primarily due to additional entertainment costs resulting from a higher
ratio of cash to complimentary ticket sales as well as increases in regulatory
costs, legal fees and insurance reserves.
Comparison of Six-Month Periods Ended June 30, 1999 and 2000. The
following table includes selected data of Plaza Associates and Taj Associates
for the six months ended June 30, 1999 and 2000 (Trump AC also includes TCS;
which were not separately disclosed).
Six Months Ended June 30,
--------------------------------------------------------------------------
1999 2000 1999 2000 1999 2000
Plaza Plaza Taj Taj Total Total
Associates Associates Associates Associates Trump AC Trump AC
--------------------------------------------------------------------------
(in thousands)
Revenues:
Gaming......................... $ 176,220 $ 159,064 $ 244,699 $ 259,292 $ 420,919 $ 418,356
Other.......................... 48,389 36,091 53,499 52,135 101,888 88,226
--------- --------- --------- --------- --------- ---------
Gross Revenues................. 224,609 195,155 298,198 311,427 522,807 506,582
Less: Promotional Allowances... 29,502 23,787 29,966 29,946 59,468 53,733
--------- --------- --------- --------- --------- ---------
Net Revenues................... 195,107 171,368 268,232 281,481 463,339 452,849
--------- --------- --------- --------- --------- ---------
Costs & Expenses:
Gaming......................... 105,989 104,722 151,799 153,612 257,788 258,334
General & Administrative....... 39,988 35,162 45,234 50,189 85,270 85,388
Depreciation & Amortization.... 11,647 7,756 18,559 18,192 30,206 25,948
Trump World's Fair closing..... -- 736 -- -- -- 736
Other.......................... 15,897 10,040 16,992 17,015 32,889 27,055
--------- --------- --------- --------- --------- ---------
Total Costs and Expenses....... 173,521 158,416 232,584 239,008 406,153 397,461
--------- --------- --------- --------- --------- ---------
Income from Operations............. 21,586 12,952 35,648 42,473 57,186 55,388
--------- --------- --------- --------- --------- ---------
Non-Operating Income............. -- 30 335 -- 335 30
Interest Income.................. 325 229 673 512 1,488 1,611
Interest Expense................. (23,510) (23,727) (46,870) (46,802) (76,739) (76,796)
--------- --------- --------- --------- --------- ---------
Total Non-Operating Expense...... (23,185) (23,468) (45,862) (46,290) (74,916) (75,155)
--------- --------- --------- --------- --------- ---------
Net Loss........................... $ (1,599) $ (10,516) $ (10,214) $ (3,817) $ (17,730) $ (19,767)
========= ========= ========= ========= ========= =========
9
Six Months Ended June 30,
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1999 2000 1999 2000 1999 2000
Plaza Plaza Taj Taj Total Total
Associates Associates Associates Associates Trump AC Trump AC
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(dollars in thousands)
Table Game Revenues.............. $ 44,828 $ 47,632 $ 83,544 $ 88,315 $ 128,372 $ 135,947
Incr (Decr) over Prior Period.... $ 2,804 $ 4,771 $ 7,575
Table Game Drop.................. $ 293,937 $ 313,363 $ 504,222 $ 521,429 $ 798,159 $ 834,792
Incr (Decr) over Prior Period.... $ 19,426 $ 17,207 $ 36,633
Table Win Percentage............. 15.3% 15.2% 16.6% 16.9% 16.1% 16.3%
Incr (Decr) over Prior Period.... (0.1) 0.3 (0.2) pts
Number of Table Games............ 102 96 148 143 250 239
Incr (Decr) over Prior Period.... (6) (5) (11)
Slot Revenues.................... $ 131,392 $ 111,432 $ 150,619 $ 160,477 $ 282,011 $ 271,909
Incr (Decr) over Prior Period.... $ (19,960) $ 9,858 $ (10,102)
Slot Handle...................... $ 1,655,399 $ 1,416,646 $ 1,897,956 $ 2,078,222 $ 3,553,355 $ 3,494,868
Incr (Decr) over Prior Period.... $ (238,753) $ 180,266 $ (58,487)
Slot Win Percentage.............. 7.9% 7.9% 7.9% 7.7% 7.9% 7.8%
Incr (Decr) over Prior Period.... -- (0.2) (0.1) pts
Number of Slot Machines.......... 4,213 2,809 4,207 4,547 8,420 7,356
Incr (Decr) over Prior Period.... (1,404) 340 (1,064)
Poker Revenues................... -- -- $ 9,275 $ 9,333 $ 9,275 $ 9,333
Incr (Decr) over Prior Period.... -- $ 58 $ 58
Number of Poker Tables........... -- -- 61 65 61 65
Incr (Decr) over Prior Period.... -- 4 4
Other Gaming Revenues............ -- -- $ 1,261 $ 1,167 $ 1,261 $ 1,167
Incr (Decr) over Prior Period.... -- $ (94) $ (94)
Total Gaming Revenues............ $ 176,220 $ 159,064 $ 244,699 $ 259,292 $ 420,919 $ 418,356
Incr (Decr) over Prior Period.... $ (17,156) $ 14,593 $ (2,563)
Number of Guest Rooms............... 1,404 904 1,250 1,250 2,654 2,154
Occupancy Rate...................... 86.9% 88.2% 94.8% 91.6% 90.6% 90.2%
Average Daily Rate (Room Revenue)... $ 78.57 $ 77.96 $ 83.67 $ 81.93 $ 81.04 $ 80.30
Gaming revenues are the primary source of Trump AC's revenues. The year
over year decrease in gaming revenues was due to a decline in slot revenues at
the Trump Plaza due to the closing of Trump World's Fair. Table game revenues
increased approximately $7,575,000 or 5.9% from the comparable period in 1999
due to increased volumes at both the Taj Mahal and Trump Plaza. Over all Trump
AC's table win percentage increased to 16.3% from 16.1% in the comparable period
in 1999. Table game revenues represent the amount retained by Trump AC from
amounts wagered at table games. The table win percentage tends to be fairly
constant over the long term, but may vary significantly in the short term, due
to large wagers by "high rollers". The Atlantic City industry table win
percentages were 15.7% and 15.9% for the six months ended June 30, 1999 and
2000, respectively.
Slot revenues decreased approximately $10,102,000 or 3.6% from the
comparable period in 1999. Slot revenues at the Taj Mahal increased
approximately $9,858,000 or 6.5% from the comparable period in 1999 but were
offset by a decline at the Trump Plaza due to the closing of Trump World's Fair.
Other non-gaming revenues and their associated expenses, as well as
Depreciation & Amortization were reduced from the comparable period in 1999 due
to the closing of Trump World's Fair.
General and Administrative expenses increased approximately $118,000 from
the comparable period in 1999. General and Administrative expenses at Trump
Plaza decreased approximately $4,826,000 or 12.1% from the comparable period in
1999 due to the closing of Trump World's Fair. Expenses at Taj Mahal increased
approximately $4,955,000 or 11.0% from the comparable period in 1999 primarily
due to additional entertainment costs resulting from a higher ratio of cash to
complimentary ticket sales as well as increases in regulatory costs, legal fees
and insurance reserves.
Seasonality
The casino industry in Atlantic City is seasonal in nature; accordingly,
the results of operations for the period ending June 30, 2000 are not
necessarily indicative of the operating results for a full year.
10
Important Factors Relating to Forward Looking Statements
The Private Securities Litigation Reform Act of 1995 provides a ''safe
harbor'' for forward-looking statements so long as those statements are
identified as forward-looking and are accompanied by meaningful cautionary
statements identifying important factors that could cause actual results to
differ materially from those projected in such statements. All statements, trend
analysis and other information contained in this Quarterly Report on Form 10-Q
relative to Trump AC performance, trends in Trump AC operations or financial
results, plans, expectations, estimates and beliefs, as well as other statements
including words such as "anticipate," "believe," "plan," "estimate," "expect,"
"intend" and other similar expressions, constitute forward-looking statements
under the Private Securities Litigation Reform Act of 1995. 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 the
Registrants, the Registrants 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 the Registrants.
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. Readers of this Quarterly Report should
consider these facts in evaluating the information contained herein. In
addition, the business and operations of the Registrants 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 the Registrants 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.
ITEM 3--QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
Management has reviewed the disclosure requirements for Item 3 and, based upon
Trump AC, Trump AC Funding, Trump AC Funding II and Trump AC Funding III's
current capital structure, scope of operations and financial statement
structure, management believes that such disclosure is not warranted at this
time. Since conditions may change, each of Trump AC, Trump AC Funding, Trump AC
Funding II and Trump AC Funding III will periodically review their compliance
with this disclosure requirement to the extent applicable.
11
PART II -- OTHER INFORMATION
ITEM 1 -- LEGAL PROCEEDINGS
General. Trump AC, its partners, certain members of its former executive
committee, and certain of its employees, have been involved in various legal
proceedings. Such persons and entities are vigorously defending the allegations
against them and intend to contest vigorously any future proceedings. In
general, Trump AC has agreed to indemnify such persons against any and all
losses, claims, damages, expenses (including reasonable costs, disbursements and
counsel fees) and liabilities (including amounts paid or incurred in
satisfaction of settlements, judgments, fines and penalties) incurred by them in
said legal proceedings.
Other Litigation. On or about March 20, 2000, Mark Metelman, a stockholder of
Trump Hotels & Casino Resorts, Inc. ("THCR"), filed a proposed class action on
behalf of all THCR stockholders in the Superior Court of New Jersey, Chancery
Division, Atlantic County (Civil Action No. Atl-C-43-00) against THCR and each
member of the Board of Directors of THCR. The plaintiff claims that a third
party made an offer to purchase THCR and that one or more members of the Board
of Directors wrongly failed to consider the supposed offer. The plaintiff
seeks, among other things, an order requiring the defendants "to fully and
fairly consider offers to purchase [THCR]," as well as money damages. The
defendants believe the complaint is based on erroneous factual allegations and
is legally without merit, and filed a motion to dismiss in lieu of answer. On
July 12, 2000, plaintiff filed a brief in opposition to defendants' motion to
dismiss for which oral argument was heard on July 21, 2000. On July 21, 2000,
the Court dismissed plaintiffs' Complaint without prejudice. The Court granted
the plaintiffs 10 weeks within which to file an Amended Complaint, pleading a
shareholders derivative action. If plaintiffs do not file an Amended Complaint
within the 10 week time period, the dismissal shall be considered to be with
prejudice.
On July 27, 2000, the Enforcement Staff (the "Staff") of the Northeast
Regional Office of the Securities and Exchange Commission informed THCR that it
is considering recommending that the Commission authorize filing a civil
injunctive action against THCR, its former Chief Executive Officer and its Chief
Financial Officer, charging that each of them violated the Securities Exchange
Act of 1934 by issuing on October 25, 1999, a press release that was materially
false and misleading because it failed to disclose that $17 million of THCR's
operating income in the third quarter of 1999 came from a one-time gain in
connection with Taj Associates' September 1999 acquisition of the All Star Cafe
restaurant from Planet Hollywood International, Inc. The details of that
transaction, and its effects on THCR's third quarter results, were discussed in
THCR's Report on Form 10-Q filed with the Commission on November 4, 1999. The
Staff indicated to THCR that it may seek authority from the Commission to seek
injunctive relief and civil penalties, among other things.
THCR intends to submit a statement to the Commission setting forth the
reasons why THCR believes that the contemplated civil action should not be
brought. If, notwithstanding THCR's submission, such an action is brought, THCR
intends to defend it vigorously. There can be no assurances, however, of the
outcome of such an action. THCR does not believe that such an action, if
brought, would have a material adverse effect on its business, operating results
or financial position.
THCR. On or about July 30, 1999, William K. Steiner, a stockholder of THCR,
filed a derivative action (the "Steiner Action") in the Court of Chancery in
Delaware (Civil Action No. 17336NC). The plaintiff in the Steiner Action,
through his attorneys, had entered into a stipulation dismissing the case,
without prejudice, subject to the approval of the Delaware Chancery Court. No
consideration was paid by any defendant in exchange for the plaintiffs'
agreement to dismiss the case.
Various legal proceedings are now pending against Trump AC. Trump AC
considers all such proceedings to be ordinary litigation incident to the
character of its business. 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 the financial condition or results
of operations of Trump AC.
From time to time, Plaza Associates and Taj Associates may be involved in
routine administrative proceedings involving alleged violations of certain
provisions of the Casino Control Act. However, management believes that the
final outcome of these proceedings will not, either individually or in the
aggregate, have a material adverse effect on Plaza Associates or Taj Associates
or on the ability of Plaza Associates or Taj Associates to otherwise retain or
renew any casino or other licenses required under the Casino Control Act for the
operation of Trump Plaza and the Taj Mahal.
-12-
ITEM 2 -- CHANGES IN SECURITIES AND USE OF PROCEEDS
None.
ITEM 3 -- DEFAULTS UPON SENIOR SECURITIES
None.
ITEM 4 -- SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
None.
ITEM 5 -- OTHER INFORMATION
None.
ITEM 6 --EXHIBITS AND REPORTS ON FORM 8-K
a. Exhibits:
Exhibit No. Description of Exhibit
----------- ----------------------
27.1 Financial Data Schedule of Trump Atlantic City Associates.
27.2 Financial Data Schedule of Trump Atlantic City Funding, Inc.
27.3 Financial Data Schedule of Trump Atlantic City Funding II, Inc.
27.4 Financial Data Schedule of Trump Atlantic City Funding III, Inc.
b. Current Reports on Form 8-K:
The Registrants did not file any Current Reports on Form 8-K during the
period beginning April 1, 2000 and ending June 30, 2000.
13
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 Atlantic City Holding, Inc.,
its general partner
Date: August 14, 2000
By: /s/ Francis X. McCarthy, Jr.
---------------------------------
Francis X. McCarthy, Jr.
Chief Financial Officer
(Principal Financial and Accounting Officer)
14
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: August 14, 2000
By: /s/ Francis X. McCarthy, Jr.
-------------------------------------------
Francis X. McCarthy, Jr.
Chief Financial Officer
(Principal Financial and Accounting Officer)
15
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 II, INC.
(Registrant)
Date: August 14, 2000
By: /s/ Francis X. McCarthy, Jr.
-------------------------------------------
Francis X. McCarthy, Jr.
Chief Financial Officer
(Principal Financial and Accounting Officer)
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 FUNDING III, INC.
(Registrant)
Date: August 14, 2000
By: /s/ Francis X. McCarthy, Jr.
----------------------------------------
Francis X. McCarthy, Jr.
Chief Financial Officer
(Principal Financial and Accounting Officer)
17