================================================================================
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, 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 number: 1-13794
TRUMP HOTELS & CASINO RESORTS, INC.
(Exact name of registrant as specified in its charter)
DELAWARE 13-3818402
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
Huron Ave. & Brigantine Blvd.
Atlantic City, New Jersey 08401
(Address of principal executive offices) (Zip Code)
(609) 441-8406
(Registrant's telephone number, including area code)
1000 Boardwalk
(Former name, former address and former fiscal year, if changed since last
report)
Commission file number: 33-90786
TRUMP HOTELS & CASINO RESORTS HOLDINGS, L.P.
(Exact name of registrant as specified in its charter)
DELAWARE 13-3818407
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
Huron Ave. & Brigantine Blvd.
Atlantic City, New Jersey 08401
(Address of principal executive offices) (Zip Code)
(609) 441-8406
(Registrant's telephone number, including area code)
1000 Boardwalk
(Former name, former address and former fiscal year, if changed since last
report)
Commission file number: 33-90786
TRUMP HOTELS & CASINO RESORTS FUNDING, INC.
(Exact name of registrant as specified in its charter)
DELAWARE 13-3818405
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
Huron Ave. & Brigantine Blvd.
Atlantic City, New Jersey 08401
(Address of principal executive offices) (Zip Code)
(609) 441-8406
(Registrant's telephone number, including area code)
1000 Boardwalk
(Former name, former address and former fiscal year, if changed since last
report)
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 Hotels & Casino Resorts, Inc. as of November 14, 2000 was 22,010,027.
The number of outstanding shares of Class B Common Stock, par value $.01 per
share, of Trump Hotels & Casino Resorts, Inc. as of November 14, 2000 was 1,000.
The number of outstanding shares of Common Stock, par value $.01 per share, of
Trump Hotels & Casino Resorts Funding, Inc. as of November 14, 2000 was 100.
================================================================================
TRUMP HOTELS & CASINO RESORTS, INC.,
TRUMP HOTELS & CASINO RESORTS HOLDINGS, L.P.
AND
TRUMP HOTELS & CASINO RESORTS FUNDING, INC.
INDEX TO FORM 10-Q
PART I -- FINANCIAL INFORMATION
ITEM 1 -- Financial Statements Page No.
--------
Condensed Consolidated Balance Sheets of Trump Hotels & Casino Resorts, Inc.
as of December 31, 1999 and September 30, 2000 (unaudited)....................................... 1
Condensed Consolidated Statements of Operations of Trump Hotels & Casino Resorts, Inc.
for the Three and Nine Months Ended September 30, 1999 and 2000 (unaudited)...................... 2
Condensed Consolidated Statement of Stockholders' Equity of Trump Hotels & Casino Resorts, Inc.
for the Nine Months Ended September 30, 2000 (unaudited)....................................... 3
Condensed Consolidated Statements of Cash Flows of Trump Hotels & Casino Resorts, Inc.
for the Nine Months Ended September 30, 1999 and 2000 (unaudited)............................... 4
Condensed Consolidated Balance Sheets of Trump Hotels & Casino Resorts Holdings, L.P.
as of December 31, 1999 and September 30, 2000 (unaudited)...................................... 5
Condensed Consolidated Statements of Operations of Trump Hotels & Casino Resorts Holdings, L.P.
for the Three and Nine Months Ended September 30, 1999 and 2000 (unaudited)...................... 6
Condensed Consolidated Statement of Partners' Capital of Trump Hotels & Casino Resorts
Holdings, L.P. for the Nine Months Ended September 30, 2000 (unaudited)......................... 7
Condensed Consolidated Statements of Cash Flows of Trump Hotels & Casino Resorts Holdings, L.P.
for the Nine Months Ended September 30, 1999 and 2000 (unaudited)................................ 8
Notes to Condensed Consolidated Financial Statements of Trump Hotels & Casino Resorts, Inc.,
Trump Hotels & Casino Resorts Holdings, L.P. and Trump Hotels & Casino Resorts
Funding, Inc. (unaudited)....................................................................... 9
ITEM 2 -- Management's Discussion and Analysis of Financial Condition and Results
of Operations...................................................................................... 12
ITEM 3 -- Quantitative and Qualitative Disclosures About Market Risk......................................... 18
TRUMP HOTELS & CASINO RESORTS, INC.,
TRUMP HOTELS & CASINO RESORTS HOLDINGS, L.P.
AND
TRUMP HOTELS & CASINO RESORTS FUNDING, INC.
INDEX TO FORM 10-Q CONT'D
Page No.
--------
PART II -- OTHER INFORMATION
ITEM 1 -- Legal Proceedings.................................... 19
ITEM 2 -- Changes in Securities and Use of Proceeds............ 20
ITEM 3 -- Defaults Upon Senior Securities...................... 20
ITEM 4 -- Submission of Matters to a Vote of Security Holders.. 20
ITEM 5 -- Other Information.................................... 20
ITEM 6 -- Exhibits and Reports on Form 8-K..................... 21
SIGNATURES
Signature -- Trump Hotels & Casino Resorts, Inc................ 22
Signature -- Trump Hotels & Casino Resorts Holdings, L.P....... 23
Signature -- Trump Hotels & Casino Resorts Funding, Inc........ 24
PART I - FINANCIAL INFORMATION
ITEM 1 - FINANCIAL STATEMENTS
TRUMP HOTELS & CASINO RESORTS, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(dollars in thousands, except share data)
ASSETS
December 31, September 30,
1999 2000
------------ -------------
(unaudited)
CURRENT ASSETS:
Cash and cash equivalents.................................................... $ 104,026 $ 164,544
Receivables, net............................................................. 47,781 56,606
Inventories.................................................................. 13,060 12,145
Due from affiliates, net (Notes 7 and 8)..................................... 27,368 1,438
Prepaid expenses and other current assets.................................... 8,618 13,704
------------ -------------
Total Current Assets..................................................... 200,853 248,437
INVESTMENT IN BUFFINGTON HARBOR, L.L.C......................................... 38,185 37,142
INVESTMENT IN TRUMP'S CASTLE PIK NOTES......................................... 76,250 86,461
PROPERTY AND EQUIPMENT, NET.................................................... 1,860,596 1,837,926
DEFERRED BOND AND LOAN ISSUANCE COSTS, NET..................................... 30,838 24,550
OTHER ASSETS (Note 3).......................................................... 60,298 61,707
------------ -------------
Total Assets................................................................... $ 2,267,020 $ 2,296,223
============ =============
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Current maturities of long-term debt......................................... $ 12,411 $ 21,457
Accounts payable and accrued expenses........................................ 146,170 158,775
Accrued interest payable..................................................... 30,301 79,963
------------ -------------
Total Current Liabilities................................................ 188,882 260,195
LONG-TERM DEBT, net of current maturities (Note 6)............................. 1,855,327 1,826,256
OTHER LONG-TERM LIABILITIES.................................................... 21,738 28,436
------------ -------------
Total Liabilities.............................................................. 2,065,947 2,114,887
------------ -------------
MINORITY INTEREST.............................................................. 48,409 41,265
STOCKHOLDERS' EQUITY:
Common Stock, $.01 par value, 75,000,000 shares authorized,
24,206,756 issued; 22,079,256 and 22,010,027, outstanding in 1999 and
2000, respectively......................................................... 242 242
Class B Common Stock, $.01 par value, 1,000 shares
authorized, issued and outstanding......................................... - -
Additional Paid in Capital................................................... 455,645 455,645
Accumulated Deficit.......................................................... (283,226) (295,616)
Less treasury stock at cost, 2,127,500 and 2,196,729 shares, in 1999 and
2000, respectively (Note 7)................................................ (19,997) (20,200)
------------ -------------
Total Stockholders' Equity..................................................... 152,664 140,071
------------ -------------
Total Liabilities and Stockholders' Equity................................. $ 2,267,020 $ 2,296,223
============ =============
The accompanying notes are an integral part of these condensed consolidated
balance sheets.
1
TRUMP HOTELS & CASINO RESORTS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
FOR THE THREE AND NINE MONTHS ENDED SEPTEMBER 30, 1999 AND 2000
(unaudited)
(dollars in thousands, except share data)
Three Months Ended Nine Months Ended
September 30, September 30,
-------------------- -------------------
1999 2000 1999 2000
---- ---- ---- ----
REVENUES:
Gaming.............................................. $ 350,308 $ 357,752 $ 972,529 $ 965,318
Rooms............................................... 28,569 23,771 72,262 61,802
Food and Beverage................................... 40,428 39,765 109,523 103,856
Other............................................... 30,902 12,691 51,442 30,949
----------- ----------- ----------- -----------
Gross Revenues...................................... 450,207 433,979 1,205,756 1,161,925
Less -- Promotional allowances...................... 47,136 45,077 125,522 116,785
----------- ----------- ----------- -----------
Net Revenues........................................ 403,071 388,902 1,080,234 1,045,140
----------- ----------- ----------- -----------
COSTS AND EXPENSES:
Gaming.............................................. 210,021 211,463 595,461 587,929
Rooms............................................... 8,936 7,853 26,183 23,496
Food and Beverage................................... 14,903 12,770 40,176 34,809
General and Administrative (Note 7)................. 71,129 70,622 211,982 210,540
Depreciation and Amortization....................... 21,041 19,586 63,367 57,941
Trump World's Fair Closing (Note 5)................. 128,375 29 128,375 765
----------- ----------- ----------- -----------
454,405 322,323 1,065,544 915,480
----------- ----------- ----------- -----------
Income (loss) from operations....................... (51,334) 66,579 14,690 129,660
----------- ----------- ----------- -----------
NON-OPERATING INCOME AND (EXPENSES):
Interest income..................................... 1,834 1,451 5,143 4,710
Interest expense.................................... (55,876) (54,865) (166,781) (165,885)
Other non-operating expense......................... (259) (86) (1,719) (594)
----------- ----------- ----------- -----------
(54,301) (53,500) (163,357) (161,769)
----------- ----------- ----------- -----------
Income (Loss) before equity in loss of Buffington
Harbor, L.L.C.,minority interest, cumulative
effect of change in accounting principle and
extraordinary item.................................. (105,635) 13,079 (148,667) (32,109)
Equity in loss of Buffington Harbor, L.L.C............ (734) (796) (2,246) (2,328)
----------- ----------- ----------- -----------
Income (Loss) before minority interest,
cumulative effect of change in accounting
principle and extraordinary item.................... (106,369) 12,283 (150,913) (34,437)
Minority Interest..................................... 38,899 (4,492) 55,189 12,594
----------- ----------- ----------- -----------
Income (Loss) before cumulative effect of change
in accounting principle and extraordinary item...... (67,470) 7,791 (95,724) (21,843)
Cumulative effect of change in accounting principle,
net of minority interest (Note 4)................... - - (3,565) -
Extraordinary gain, net of minority interest
(Note 6)............................................ - 1,165 - 9,453
----------- ----------- ----------- -----------
NET INCOME (LOSS)..................................... $ (67,470) $ 8,956 $ (99,289) $ (12,390)
=========== =========== =========== ===========
Basic and diluted earnings (loss) per share
before cumulative effect of change in accounting
principle and extraordinary item.................... $ (3.04) $ .35 $ (4.31) $ (.99)
Cumulative effect of change in accounting
principle........................................... - - (.16) -
Extraordinary item.................................... - .06 - .43
----------- ----------- ----------- -----------
Basic and diluted earnings (loss) per share........... $ (3.04) $ .41 $ (4.47) $ ( .56)
=========== =========== =========== ===========
Average number of shares outstanding.................. 22,195,256 22,010,027 22,195,256 22,051,463
=========== =========== =========== ===========
The accompanying notes are an integral part of these condensed consolidated
financial statements.
2
TRUMP HOTELS & CASINO RESORTS, INC.
CONDENSED CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2000
(unaudited)
(dollars in thousands)
Number of Shares
----------------
Common Additional
Class B Stock Paid in Accumulated Treasury
Common Common Amount Capital Deficit Stock Total
------ ------- ------ ------- ------- ----- -----
Balance, December 31, 1999........ 24,206,756 1,000 $242 $455,645 $(283,226) $(19,997) $152,664
Receipt of 69,229 shares of
THCR Common Stock, in
satisfaction of debt (Note 7).. - - - - - (203) (203)
Net Loss.......................... - - - - (12,390) - (12,390)
---------- ----- ---- -------- --------- -------- --------
Balance, September 30, 2000....... 24,206,756 1,000 $242 $455,645 $(295,616) $(20,200) $140,071
========== ===== ==== ======== ========= ======== ========
The accompanying notes are an integral part of this condensed consolidated
financial statement.
3
TRUMP HOTELS & CASINO RESORTS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 1999 AND 2000
(unaudited)
(dollars in thousands)
1999 2000
---- ----
CASH FLOWS FROM OPERATING ACTIVITIES:
Net Loss ....................................................................... $(99,289) $(12,390)
Adjustments to reconcile net loss to net cash flows from operating activities:
Extraordinary gain, net of minority interest ................................. - (9,453)
Cumulative effect of change in accounting principle .......................... 3,565 -
Issuance of debt in exchange for accrued interest ............................ 6,418 7,339
Interest income - Castle PIK Notes ........................................... (8,930) (10,211)
Equity in loss of Buffington Harbor, L.L.C. .................................. 2,246 2,328
Depreciation and amortization ................................................ 63,367 57,941
Minority interest in net loss ................................................ (55,189) (12,594)
Accretion of discounts on mortgage notes ..................................... 3,738 4,228
Amortization of deferred loan costs .......................................... 5,398 4,814
Provision for losses on receivables .......................................... 10,581 4,519
Valuation allowance of CRDA investments and amortization of Indiana
gaming costs ............................................................... 7,050 7,697
Gain on disposition of property .............................................. (385) (36)
(Gain) loss on property received upon termination of lease ................... (17,200) 495
Write-off of net book value of Trump World's Fair assets ..................... 97,682 -
Decrease (increase) in receivables .............................................. 211 (13,345)
(Increase) decrease in inventories .............................................. (44) 915
Decrease (increase) in other current assets ..................................... 663 (4,719)
Decrease in due from affiliates ................................................. 355 25,515
Increase in other assets ........................................................ (174) (1,495)
Increase in accounts payable and accrued expenses ............................... 24,192 14,774
Increase in accrued interest payable ............................................ 50,937 49,662
Increase in other long-term liabilities ......................................... 3,364 3,923
-------- --------
Net cash flows provided by operating activities .......................... 98,556 119,907
-------- --------
CASH FLOWS FROM INVESTING ACTIVITIES:
Acquisition of property and equipment, net of property received on lease
termination ................................................................ (18,669) (25,388)
Proceeds from disposition of property ........................................ 4,502 30
Investment in Buffington Harbor, L.L.C. ...................................... (335) (1,285)
CRDA Investments ............................................................. (10,524) (10,251)
Restricted cash .............................................................. 2,523 -
-------- --------
Net cash flows used in investing activities .............................. (22,503) (36,894)
-------- --------
CASH FLOWS FROM FINANCING ACTIVITIES:
Additional borrowings ........................................................ - 7,978
Payment of long-term debt .................................................... (11,199) (30,380)
Cost of issuing debt ......................................................... - (93)
-------- --------
Net cash flows used in financing activities .............................. (11,199) (22,495)
-------- --------
Net increase in cash and cash equivalents ................................ 64,854 60,518
CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD ................................ 114,757 104,026
-------- --------
CASH AND CASH EQUIVALENTS AT END OF PERIOD ...................................... $179,611 $164,544
======== ========
CASH INTEREST PAID .............................................................. $106,138 $106,350
======== ========
Supplemental Disclosure of Non-Cash Activities:
Purchase of property and equipment under capital lease obligations .............. $ 12,677 $ 10,861
======== ========
Exchange of THCR Common Stock to treasury stock ................................ $ - $ 203
======== ========
The accompanying notes are an integral part of these condensed consolidated
financial statements.
4
TRUMP HOTELS & CASINO RESORTS HOLDINGS, L. P.
CONDENSED CONSOLIDATED BALANCE SHEETS
(dollars in thousands)
ASSETS
December 31, September 30,
1999 2000
------------ -------------
(unaudited)
CURRENT ASSETS:
Cash and cash equivalents .................................... $ 104,022 $ 164,540
Receivables, net ............................................. 47,781 56,606
Inventories .................................................. 13,060 12,145
Due from affiliates, net (Notes 7 and 8) ..................... 27,368 1,438
Prepaid expenses and other current assets .................... 8,618 13,704
------------ -------------
Total Current Assets ....................................... 200,849 248,433
INVESTMENT IN BUFFINGTON HARBOR, L.L.C. ......................... 38,185 37,142
INVESTMENT IN TRUMP'S CASTLE PIK NOTES .......................... 76,250 86,461
PROPERTY AND EQUIPMENT, NET ..................................... 1,860,596 1,837,926
DEFERRED BOND AND LOAN ISSUANCE COSTS, NET ...................... 30,838 24,550
OTHER ASSETS (Note 3) ........................................... 60,298 61,707
------------ -------------
Total Assets .................................................... $ 2,267,016 $ 2,296,219
============ =============
LIABILITIES AND PARTNERS' CAPITAL
CURRENT LIABILITIES:
Current maturities of long-term debt ......................... $ 12,411 $ 21,457
Accounts payable and accrued expenses ........................ 146,170 158,775
Accrued interest payable ..................................... 30,301 79,963
------------ -------------
Total Current Liabilities .................................. 188,882 260,195
LONG-TERM DEBT, net of current maturities (Note 6) .............. 1,855,327 1,826,256
OTHER LONG-TERM LIABILITIES ..................................... 21,738 28,436
------------ -------------
Total Liabilities ............................................... 2,065,947 2,114,887
------------ -------------
PARTNERS' CAPITAL:
Partners' capital ............................................... 652,503 652,503
Accumulated deficit ............................................. (431,437) (450,971)
Less cost of stock of THCR (Note 7) ............................. (19,997) (20,200)
------------ -------------
Total Partners' Capital ......................................... 201,069 181,332
------------ -------------
Total Liabilities and Partners' Capital ......................... $ 2,267,016 $ 2,296,219
============ =============
The accompanying notes are an integral part of these condensed consolidated
balance sheets.
5
TRUMP HOTELS & CASINO RESORTS HOLDINGS, L.P.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
FOR THE THREE AND NINE MONTHS ENDED SEPTEMBER 30, 1999 AND 2000
(unaudited)
(dollars in thousands)
Three Months Ended Nine Months Ended
September 30, September 30,
------------------ -------------------
1999 2000 1999 2000
---- ---- ---- ----
REVENUES:
Gaming ............................................ $ 350,308 $357,752 $ 972,529 $ 965,318
Rooms ............................................. 28,569 23,771 72,262 61,802
Food and Beverage ................................. 40,428 39,765 109,523 103,856
Other ............................................. 30,902 12,691 51,442 30,949
--------- -------- ---------- ----------
Gross Revenues .................................... 450,207 433,979 1,205,756 1,161,925
Less -- Promotional allowances ...................... 47,136 45,077 125,522 116,785
--------- -------- ---------- ----------
Net Revenues ...................................... 403,071 388,902 1,080,234 1,045,140
--------- -------- ---------- ----------
COSTS AND EXPENSES:
Gaming ............................................ 210,021 211,463 595,461 587,929
Rooms ............................................. 8,936 7,853 26,183 23,496
Food and Beverage ................................. 14,903 12,770 40,176 34,809
General and Administrative (Note 7) ............... 71,129 70,622 211,982 210,540
Depreciation and Amortization ..................... 21,041 19,586 63,367 57,941
Trump World's Fair Closing Costs (Note 5) ......... 128,375 29 128,375 765
--------- -------- ---------- ----------
454,405 322,323 1,065,544 915,480
--------- -------- ---------- ----------
Income (loss) from operations ..................... (51,334) 66,579 14,690 129,660
--------- -------- ---------- ----------
NON-OPERATING INCOME AND (EXPENSES):
Interest income ................................... 1,834 1,451 5,143 4,710
Interest expense .................................. (55,876) (54,865) (166,781) (165,885)
Other non-operating expense ....................... (259) (86) (1,719) (594)
--------- -------- ---------- ----------
(54,301) (53,500) (163,357) (161,769)
--------- -------- ---------- ----------
Income (Loss) before equity in loss of Buffington
Harbor, L.L.C., cumulative effect of change
in accounting principle and extraordinary item .... (105,635) 13,079 (148,667) (32,109)
Equity in loss of Buffington Harbor, L.L.C. ......... (734) (796) (2,246) (2,328)
--------- -------- ---------- ----------
Income (Loss) before cumulative effect of change in
accounting principle and extraordinary item ....... (106,369) 12,283 (150,913) (34,437)
Cumulative effect of change in accounting
principle (Note 4) ................................ - - (5,620) -
Extraordinary gain (Note 6) ......................... - 1,836 - 14,903
--------- -------- ---------- ----------
NET INCOME (LOSS) ................................... $(106,369) $ 14,119 $ (156,533) $ (19,534)
========= ======== ========== ==========
The accompanying notes are an integral part of these condensed consolidated
financial statements.
6
TRUMP HOTELS & CASINO RESORTS HOLDINGS, L.P.
CONDENSED CONSOLIDATED STATEMENT OF PARTNERS' CAPITAL
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2000
(unaudited)
(dollars in thousands)
Partners' Accumulated THCR
Capital Deficit Common Stock Total
------- ------- ------------ -----
Balance, December 31, 1999.................. $652,503 $(431,437) $(19,997) $201,069
Receipt of 69,229 shares of THCR Common
Stock in satisfaction of debt (Note 7)..... - - (203) (203)
Net Loss.................................... - (19,534) - (19,534)
-------- --------- -------- --------
Balance, September 30, 2000 $652,503 $(450,971) $(20,200) $181,332
======== ========= ======== ========
The accompanying notes are an integral part of this condensed consolidated
financial statement.
7
TRUMP HOTELS & CASINO RESORTS HOLDINGS, L.P.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 1999 AND 2000
(unaudited)
(dollars in thousands)
1999 2000
---- ----
CASH FLOWS FROM OPERATING ACTIVITIES:
Net Loss ....................................................................... $(156,533) $(19,534)
Adjustments to reconcile net loss to net cash flows from operating activities:
Extraordinary gain ............................................................ - (14,903)
Cumulative effect of change in accounting principle ........................... 5,620 -
Issuance of debt in exchange for accrued interest ............................. 6,418 7,339
Interest income - Castle PIK Notes ............................................ (8,930) (10,211)
Equity in loss of Buffington Harbor, L.L.C. ................................... 2,246 2,328
Depreciation and amortization ................................................. 63,367 57,941
Accretion of discounts on mortgage notes ...................................... 3,738 4,228
Amortization of deferred loan costs ........................................... 5,398 4,814
Provision for losses on receivables ........................................... 10,581 4,519
Valuation allowance of CRDA investments and amortization of Indiana
gaming costs ................................................................. 7,050 7,697
Gain on disposition of property ............................................... (385) (36)
(Gain) loss on property received upon termination of lease .................... (17,200) 495
Write-off of net book value of Trump World's Fair assets ...................... 97,682 -
Decrease (increase) in receivables ............................................. 211 (13,345)
(Increase) decrease in inventories ............................................. (44) 915
Decrease (increase) in other current assets .................................... 663 (4,719)
Decrease in due from affiliates ................................................ 355 25,515
Increase in other assets ....................................................... (174) (1,495)
Increase in accounts payable and accrued expenses .............................. 24,192 14,774
Increase in accrued interest payable ........................................... 50,937 49,662
Increase in other long-term liabilities ........................................ 3,364 3,923
--------- --------
Net cash flows provided by operating activities ............................ 98,556 119,907
--------- --------
CASH FLOWS FROM INVESTING ACTIVITIES:
Acquisition of property and equipment, net of property received on lease
termination .................................................................. (18,669) (25,388)
Proceeds from disposition of property.......................................... 4,502 30
Investment in Buffington Harbor, L.L.C. ....................................... (335) (1,285)
CRDA Investments .............................................................. (10,524) (10,251)
Restricted cash ............................................................... 2,523 -
--------- --------
Net cash flows used in investing activities ................................ (22,503) (36,894)
--------- --------
CASH FLOWS FROM FINANCING ACTIVITIES:
Additional borrowings ......................................................... - 7,978
Payment of long-term debt ..................................................... (11,199) (30,380)
Cost of issuing debt .......................................................... - (93)
--------- --------
Net cash flows used in financing activities ................................ (11,199) (22,495)
--------- --------
Net increase in cash and cash equivalents .................................. 64,854 60,518
CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD ................................ 114,753 104,022
--------- --------
CASH AND CASH EQUIVALENTS AT END OF PERIOD ...................................... $ 179,607 $164,540
========= ========
CASH INTEREST PAID .............................................................. $ 106,138 $106,350
========= ========
Supplemental Disclosure of Non-Cash Activities:
Purchase of property and equipment under capital lease obligations .............. $ 12,677 $ 10,861
========= ========
Exchange of THCR Common Stock to treasury stock ................................. $ - $ 203
========= ========
The accompanying notes are an integral part of these condensed consolidated
financial statements.
8
TRUMP HOTELS & CASINO RESORTS, INC.,
TRUMP HOTELS & CASINO RESORTS HOLDINGS, L.P.
AND
TRUMP HOTELS & CASINO RESORTS FUNDING, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(unaudited)
(1) Organization and Operations
The accompanying condensed consolidated financial statements include those
of Trump Hotels & Casino Resorts, Inc., a Delaware corporation ("THCR"), Trump
Hotels & Casino Resorts Holdings, L.P., a Delaware limited partnership ("THCR
Holdings"), and Subsidiaries (as defined). THCR Holdings is currently owned
approximately 63.4% by THCR, as both a general and limited partner, and
approximately 36.6% by Donald J. Trump ("Trump"), as a limited partner. Trump's
limited partnership interest in THCR Holdings represents his economic interests
in the assets and operations of THCR Holdings. Such limited partnership interest
is convertible at Trump's option into 13,918,723 shares of THCR's common stock
(the "THCR Common Stock") (subject to certain adjustments), representing
approximately 38.5% of the outstanding shares of THCR Common Stock. Accordingly,
the accompanying condensed consolidated financial statements include those of
(i) THCR and its 63.4% owned subsidiary, THCR Holdings, and (ii) THCR Holdings
and its wholly owned subsidiaries.
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; accordingly,
results of operations for the three and nine month periods ended September 30,
2000 are not necessarily indicative of the operating results for a full year.
THCR and THCR Holdings commenced operations on June 12, 1995. THCR, THCR
Holdings and Trump Hotels & Casino Resorts Funding, Inc. ("THCR Funding") have
no operations and their ability to service their debt is dependent on the
successful operations of Trump Atlantic City Associates ("Trump AC"), which is
comprised of Trump Taj Mahal Associates ("Taj Associates") and Trump Plaza
Associates ("Plaza Associates"); Trump Indiana, Inc. ("Trump Indiana") and
Trump's Castle Associates, L.P. ("Castle Associates") d/b/a Trump Marina Hotel
Casino ("Trump Marina"), THCR Funding, Trump AC, Trump Indiana and Castle
Associates, collectively, the Subsidiaries. THCR, through THCR Holdings and its
subsidiaries, is the exclusive vehicle through which Trump engages in new gaming
activities in emerging or established gaming jurisdictions.
Basic and Diluted Earnings (Loss) Per Share
Basic earnings (loss) per share is based on the weighted average number
of shares of THCR Common Stock outstanding. Diluted earnings (loss) per share
are the same as basic earnings (loss) per share as common stock equivalents have
not been included as they would be anti-dilutive. The shares of THCR's Class B
Common Stock owned by Trump have no economic interest and therefore are not
considered in the calculation of weighted average shares outstanding.
Reclassifications
Certain reclassifications have been made to prior year financial statements
to conform to the current year presentation.
9
TRUMP HOTELS & CASINO RESORTS, INC.,
TRUMP HOTELS & CASINO RESORTS HOLDINGS, L.P.
AND
TRUMP HOTELS & CASINO RESORTS FUNDING, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(unaudited)
(2) Financial Information
Financial information relating to THCR Funding is as follows:
December 31, September 30,
1999 2000
------------ -------------
(unaudited)
Total Assets (including THCR Holdings' 15 1/2% Senior Secured
Notes due 2005 (the "Senior Notes") receivable of
$145,000,000 and accrued interest at December 31,
1999 and September 30, 2000)............................. $145,936,000 $ 151,555,000
============ =============
Total Liabilities and Capital (including $145,000,000 of
Senior Notes) (See Note 6 below)......................... $145,936,000 $ 151,555,000
============ =============
Nine Months Ended September 30,
1999 2000
---- ----
Interest Income from THCR Holdings.......................... $ 16,856,000 $ 16,856,000
Interest Expense............................................ $ 16,856,000 $ 16,856,000
------------ -------------
Net Income.................................................. $ - $ -
============ =============
(3) Other Assets
Plaza Associates is appealing a real estate tax assessment by the City
of Atlantic City. Included in other assets is $8,014,000 which Plaza Associates
estimates will be recoverable on the settlement of the appeal.
(4) Change in Accounting Policy
On April 9, 1998, the American Institute of Certified Public
Accountants ("AICPA") issued Statement of Position ("SOP") 98-5 "Reporting on
the Costs of Start-Up Activities". The new standard amended previous guidance
from the AICPA that permitted capitalization of start-up costs in certain
industries and requires that all nongovernmental entities expense the costs of
start-up activities as those costs are incurred. Under the SOP, the term "start-
up" has been broadly defined to include pre-operating, pre-opening and
organization activities. At adoption, a company must record a cumulative effect
of a change in accounting principle to write off any unamortized start-up costs
that existed as of the beginning of the fiscal year in which the SOP is adopted
and an operating expense for those costs which were incurred since the beginning
of the fiscal year and adoption of the SOP.
THCR adopted the new standard in the first quarter of 1999 and wrote
off development costs of $5,620,000 as a change in accounting policy. The
cumulative effect after minority interest of $2,055,000 was $3,565,000.
(5) Trump World's Fair Closing
On October 4, 1999, THCR closed Trump World's Fair. In addition to
closing costs recorded at December 31, 1999, additional costs of $765,000 were
recorded during the nine months ended September 30, 2000.
(6) Repurchase of Senior Notes
During May 2000, THCR Enterprises, L.L.C. ("THCR Enterprises")
repurchased $30,500,000 of THCR Holdings' Senior Notes for $16,030,000 plus
accrued interest. An extraordinary gain of $14,470,000 was partially offset by
the write-down of unamortized loan costs of $1,403,000, resulting in a net
extraordinary gain of $13,067,000, which was adjusted to $8,288,000 after
minority interest of $4,779,000. During August 2000, THCR Enterprises
repurchased
10
TRUMP HOTELS & CASINO RESORTS, INC.,
TRUMP HOTELS & CASINO RESORTS HOLDINGS, L.P.
AND
TRUMP HOTELS & CASINO RESORTS FUNDING, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(unaudited)
an additional $5,000,000 of THCR Holdings' Senior Notes for $3,000,000 plus
accrued interest. An extraordinary gain of $2,000,000 was partially offset by
an additional writedown of deferred loan costs of $164,000, resulting in a net
extraordinary gain of $1,165,000 after minority interest of $671,000.
(7) Employment Agreement - Nicholas L. Ribis
On June 12, 2000, the employment agreement of Nicholas L. Ribis
("Ribis") expired in accordance with its terms. Loans which had been advanced to
Ribis to satisfy personal income tax were settled through the repurchase of
69,229 shares of THCR Common Stock (treasury stock) for an aggregate value of
$203,360, the closing market price at June 12, 2000. The difference of the
outstanding balance of $962,475 on the loan and the value of the treasury stock
was $759,115, which was charged to general and administrative expenses during
the quarter ended June 30, 2000.
An additional loan of $1,856,277 comprised of principal
of$1,458,469 and accrued interest of $397,808 was rolled over on June 13, 2000.
The loan bears interest at the Chase Bank prime (9.5% at June 13, 2000) and is
due on or before June 30, 2003. On July 19, 2000, Ribis repaid $517,145; the
remaining principal balance of $1,356,277 will be paid on or before July 11,
2001. Accordingly, the entire principal amount plus accrued interest through
September 30, 2000 has been classified as current.
(8) Donald Trump Loans
On April 27, 2000, prior to maturity, Trump repaid all outstanding
loans of $24,516,233 including interest.
(9) Twenty-Nine Palms Development
On April 27, 2000, THCR through its subsidiary, Trump Hotels & Casino
Resorts Development Company, L.L.C., signed a definitive agreement with the
Twenty-Nine Palms Band of Mission Indians for the development and management
of a Native American casino on Twenty-Nine Palms tribal land in Southern
California near Palm Springs. This development is scheduled to open in late 2001
and is subject to certain approvals.
(10) Indiana Wagering Tax Add-back
In July 1999, the Indiana Department of Revenue ("Department") issued
a Letter of Findings to an Indiana gaming company that the Riverboat Wagering
Tax ("RWT"), a tax deducted in computing Federal taxable income is not
deductible when computing Indiana adjusted gross income because the RWT
represents a tax that is "based on or measured by income." We understand that
such other Indiana gaming company, with the assistance of the Indiana Casino
Association, of which Trump Indiana is a member, is vigorously contesting this
finding in the Indiana Tax Court on the basis that the RWT is an excise tax,
which is excluded from Indiana's add-back requirements. The Department has
issued proposed assessments of $3,720,000 plus interest for the 1996, 1997 and
1998 calendar years to Trump Indiana. The effect of an assessment, if any, for
1999 and 2000 has not been determined. Trump Indiana anticipates filing a
written protest of such assessments with the Department in November 2000.
Accordingly, no provision has been made in these financial statements for
additional Indiana state taxes.
11
TRUMP HOTELS & CASINO RESORTS, INC.,
TRUMP HOTELS & CASINO RESORTS HOLDINGS, L.P.
AND
TRUMP HOTELS & CASINO RESORTS FUNDING, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(unaudited)
ITEM 2--MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
Capital Resources and Liquidity
Cash flows from operating activities are THCR's principal source of
liquidity. THCR and its subsidiaries expect to have sufficient liquidity to
meet their 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.
Capital expenditures for THCR were $18,669,000 and $25,388,000 for the
nine months ended September 30, 1999 and 2000, respectively.
The indenture governing the Senior Notes (the "Senior Note Indenture")
restricts the ability of THCR Holdings and its subsidiaries to make
distributions to partners or pay dividends, as the case may be, unless certain
financial ratios are achieved.
The indentures of Trump AC and Castle Associates restrict their ability to
make distributions to THCR Holdings. Therefore, the ability of THCR Holdings to
service its debt is dependent on the successful operations of Trump Indiana and
other future operations, the permitted distributions from Trump AC and Castle
Associates.
The ability of THCR to repay its long-term debt when due will depend on the
ability of Plaza Associates, Taj Associates, Castle Associates and Trump Indiana
to generate cash from operations sufficient for such purposes or on the ability
of THCR 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 THCR. There can be no assurance
that the future operating performance of Plaza Associates, Taj Associates,
Castle Associates or Trump Indiana 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.
In addition, the ability of (i) Plaza Associates and Taj Associates
(through Trump AC) and (ii) Castle Associates to make payments of dividends or
distributions to THCR Holdings may be restricted by the New Jersey Casino
Control Commission. Similarly, the ability of Trump Indiana to make payments of
dividends or distributions to THCR Holdings may be restricted by the Indiana
Gaming Commission.
On April 27, 2000, prior to maturity, Trump repaid all outstanding loans of
$24,516,233 including interest. During May 2000, THCR Enterprises repurchased
$30,500,000 of THCR Holdings' Senior Notes for $16,030,000 plus accrued
interest. An extraordinary gain of $14,470,000 was partially offset by the
write-down of unamortized loan costs of $1,403,000, resulting in a net
extraordinary gain of $13,067,000, which was adjusted to $8,288,000 after
minority interest of $4,779,000. During August 2000, THCR Enterprises
repurchased an additional $5,000,000 of THCR Holdings' Senior Notes for
$3,000,000 plus accrued interest, resulting in an extraordinary gain of
$2,000,000, which was adjusted to $1,165,000 after an additional writedown of
$164,000 of deferred loan costs and minority interest of $671,000.
12
Results of Operations: Operating Revenues and Expenses
All business activities of THCR and THCR Holdings are conducted by Plaza
Associates, Taj Associates, Castle Associates (d/b/a Trump Marina) and Trump
Indiana.
Comparison of Three Month Periods Ended September 1999 and 2000. The
following tables include selected data of Plaza Associates, Taj Associates,
Trump Indiana and Trump Marina.
Three Months Ended September 30, 1999
------------------------------------------------------------
Plaza Taj Trump Trump THCR
Associates Associates Indiana Marina Consolidated
---------- ---------- ------- ------ ------------
Revenues: (dollars in millions)
Gaming...................................... $ 104.9 $ 136.4 $ 33.6 $ 75.3 $ 350.3
Other....................................... 29.1 49.6 2.5 18.8 99.9
------- -------- ------ ------ --------
Gross Revenues............................. 134.0 186.0 36.1 94.1 450.2
Less: Promotional Allowances................. 17.0 18.3 1.2 10.6 47.1
------- -------- ------ ------ --------
Net Revenues............................... 117.0 167.7 34.9 83.5 403.1
------- -------- ------ ------ --------
Costs and Expenses:
Gaming...................................... 58.1 85.4 23.0 43.5 210.0
General & Administrative.................... 20.2 22.8 7.1 16.2 71.2
Depreciation & Amortization................. 5.7 9.0 1.8 4.5 21.0
Other....................................... 8.3 9.1 1.9 4.5 23.8
Trump World's Fair Closing Costs............ 128.4 - - - 128.4
------- -------- ------ ------ --------
Total Costs and Expenses................... 220.7 126.3 33.8 68.7 454.4
------- -------- ------ ------ --------
Income (Loss) from Operations................ (103.7) 41.4 1.1 14.8 (51.3)
------- -------- ------ ------ --------
Non-operating Income, net.................... 0.1 0.2 - 0.2 1.5
Interest Expense............................. (12.0) (23.4) (1.8) (13.6) (55.9)
------- -------- ------ ------ --------
Total Non-operating Expense, Net........... (11.9) (23.2) (1.8) (13.4) (54.4)
------- -------- ------ ------ --------
Loss in Joint Venture........................ - - (0.7) - (0.7)
------- -------- ------ ------ --------
Net Income (Loss) Before Minority
Interest.................................. $(115.6) $ 18.2 $ (1.4) $ 1.4 $ (106.4)
======= ======== ====== ======
Minority Interest............................ 38.9
--------
Net Loss..................................... $ (67.5)
========
Three Months Ended September 30, 2000
------------------------------------------------------------
Plaza Taj Trump Trump THCR
Associates Associates Indiana Marina Consolidated
---------- ---------- ------- ------ ------------
Revenues: (dollars in millions)
Gaming...................................... $ 90.4 $ 155.6 $ 29.6 $ 82.1 $ 357.7
Other....................................... 21.4 33.0 2.4 19.5 76.3
------- -------- ------ ------ --------
Gross Revenues............................. 111.8 188.6 32.0 101.6 434.0
Less: Promotional Allowances................ 14.4 18.5 0.7 11.5 45.1
------- -------- ------ ------ --------
Net Revenues............................... 97.4 170.1 31.3 90.1 388.9
------- -------- ------ ------ --------
Costs and Expenses:
Gaming...................................... 57.0 87.8 18.6 48.1 211.5
General & Administrative.................... 17.7 25.5 8.1 17.5 70.6
Depreciation & Amortization................. 4.3 8.8 2.0 4.4 19.6
Other....................................... 5.4 9.5 1.6 4.1 20.6
Trump World's Fair Closing.................. - - - - -
------- -------- ------ ------ --------
Total Costs and Expenses................... 84.4 131.6 30.3 74.1 322.3
------- -------- ------ ------ --------
Income from Operations....................... 13.0 38.5 1.0 16.0 66.6
------- -------- ------ ------ --------
Non-operating Income, net.................... 0.1 0.3 0.1 0.3 1.4
Interest Expense............................. (12.1) (23.3) (1.4) (14.3) (54.9)
------- -------- ------ ------ --------
Total Non-operating Expense, Net........... (12.0) (23.0) (1.3) (14.0) (53.5)
------- -------- ------ ------ --------
Loss in Joint Venture........................ - - (0.8) - (0.8)
------- -------- ------ ------ --------
Net Income (Loss) Before Minority
Interest & Extraordinary Gain................ $ 1.0 $ 15.5 $ (1.1) $ 2.0 $ 12.3
======= ======== ====== ======
Minority Interest............................ (4.5)
Extraordinary Gain, net of minority
interest................................. 1.2
--------
Net Income................................... $ 9.0
========
13
Three Months Ended September 30, 1999
------------------------------------------------------------
Plaza Taj Trump Trump THCR
Associates Associates Indiana Marina Consolidated
---------- ---------- ------- ------ ------------
(dollars in millions)
Table Game Revenues.......................... $ 31.2 $ 40.8 $ 6.8 $ 20.4 $ 99.3
Table Game Drop.............................. $ 177.7 $ 283.2 $ 42.5 $134.8 $ 638.2
Table Win Percentage......................... 17.6% 14.4% 16.1% 15.1% 15.6%
Number of Table Games........................ 94 149 49 85 377
Slot Revenues................................ $ 73.7 $ 89.6 $ 26.8 $ 54.3 $ 244.4
Slot Handle.................................. $ 923.7 $1,106.8 $397.0 $700.3 $3,127.8
Slot Win Percentage.......................... 8.0% 8.1% 6.7% 7.8% 7.8%
Number of Slot Machines...................... 4,186 4,419 1,287 2,123 12,015
Other Gaming Revenues........................ - $ 6.0 - $ 0.6 $ 6.6
Total Gaming Revenues........................ $ 104.9 $ 136.4 $ 33.6 $ 75.3 $ 350.3
Three Months Ended September 30, 2000
--------------------------------------------------------------
Plaza Taj Trump Trump THCR
Associates Associates Indiana Marina Consolidated
---------- ---------- ------- ------ ------------
(dollars in millions)
Table Game Revenues.......................... $ 26.0 $ 53.7 $ 6.3 $ 25.2 $ 111.3
Incr (Decr) over prior period................ $ (5.2) $ 12.9 $ (0.5) $ 4.8 $ 12.0
Table Game Drop.............................. $ 185.1 $ 301.9 $ 39.8 $140.2 $ 667.0
Incr (Decr) over prior period................ $ 7.4 $ 18.7 $ (2.7) $ 5.4 $ 28.8
Table Win Percentage......................... 14.1% 17.8% 16.0% 17.9% 16.7%
Incr (Decr) over prior period................ (3.5)pts. 3.4pts. (0.1)pts. 2.8pts. 1.1pts.
Number of Table Games........................ 97 143 50 76 366
Incr (Decr) over prior period................ 3 (6) 1 (9) (11)
Slot Revenues................................ $ 64.4 $ 95.9 $ 23.3 $ 56.3 $ 239.8
Incr (Decr) over prior period................ $ (9.3) $ 6.3 $ (3.5) $ 2.0 $ (4.6)
Slot Handle.................................. $ 833.5 $1,219.6 $348.1 $724.1 $3,125.3
Incr (Decr) over prior period................ $ (90.2) $ 112.8 $(48.9) $ 23.8 $ (2.5)
Slot Win Percentage.......................... 7.7% 7.9% 6.7% 7.8% 7.7%
Incr (Decr) over prior period................ (0.3)pts (0.2)pts. - - (0.1)pts.
Number of Slot Machines...................... 2,867 4,552 1,237 2,515 11,171
Incr (Decr) over prior period................ (1,319) 133 (50) 392 (844)
Other Gaming Revenues........................ - $ 6.0 - $ 0.6 $ 6.6
Incr (Decr) over prior period................ - $ - - $ - $ -
Total Gaming Revenues........................ $ 90.4 $ 155.6 $ 29.6 $ 82.1 $ 357.7
Incr (Decr)over prior period................. $ (14.5) $ 19.2 $ (4.0) $ 6.8 $ 7.4
Gaming revenues are the primary source of THCR's revenues. Table games
revenues represent the amount retained by THCR 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 14.9% and 15.1%
for the three months period ended September 30, 1999 and September 30, 2000,
respectively. Slot revenues at Plaza Associates declined due to the closing of
Trump World's Fair in October 1999.
Other non-gaming revenues and their associated expenses as well as
depreciation and amortization were reduced from the comparable period in 1999
due to the closing of Trump World's Fair. Additionally, 1999 other non-gaming
revenues at the Taj Mahal included a one-time non-recurring gain on the
acquisition of the All Star Cafe in the amount of $17.2 million.
Gaming costs and expenses were $211.5 million for the three months ended
September 30, 2000, an increase of $1.5 million from $210.0 million for the
comparable period in 1999. Gaming expenses at the Trump Atlantic City
properties, Trump Plaza and the Taj Mahal, increased $1.3 million or .9%
primarily due to increased gaming volumes at the Taj Mahal. Trump Marina's
gaming costs increased by $4.6 million or 10.4% primarily due to increased
spending in promotional and complimentary marketing programs, which was incurred
to stimulate gaming revenues. Trump Indiana's gaming costs decreased $4.4
million or 19.2% primarily due to decreased coin and cash promotional expenses
as well as reduced gaming taxes proportionate to the reduction in gaming
revenues, which have declined as a result of the legalization of dockside gaming
competition in Illinois.
14
General and administrative expenses were $70.6 million for the three months
ended September 30, 2000, a $.6 million decrease from the comparable period in
1999. Expenses at the Taj Mahal increased $2.7 million or 11.8% 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 utilities and real estate taxes. Trump Marina's expense increased
$1.3 million or 8.4% from the comparable period in 1999 due to incremental costs
related to the Services Agreement with Trump Casinos II, Inc. ("TCI-II".) Trump
Indiana's expenses increased $1.0 million or 14.3% from the comparable period in
1999 primarily due to a credit received in 1999 for a real estate tax abatement.
These increases were offset by a $2.5 million or 12.4% decrease at Trump Plaza
due to the closing of Trump World's Fair in 1999, and a $3.1 million or 50.4%
decrease in corporate overhead due to costs efficiencies achieved from
streamlining of operations.
15
Comparison of Nine Months Period Ended September 30, 1999 and 2000. The
following tables include selected data of Plaza Associates, Taj Associates,
Trump Indiana and Trump Marina.
Nine Months Ended September 30, 1999
--------------------------------------------------------------
Plaza Taj Trump Trump THCR
Associates Associates Indiana Marina Consolidated
---------- ---------- ------- ------ ------------
Revenues: (dollars in millions)
Gaming.................................... $ 281.1 $ 381.1 $ 104.8 $ 205.5 $ 972.5
Other..................................... 77.5 103.1 5.9 46.7 233.2
-------- -------- -------- -------- --------
Gross Revenues........................... 358.6 484.2 110.7 252.2 1,205.7
Less: Promotional Allowances............... 46.5 48.3 2.2 28.5 125.5
-------- -------- -------- -------- --------
Net Revenues............................. 312.1 435.9 108.5 223.7 1,080.2
-------- -------- -------- -------- --------
Costs and Expenses:
Gaming..................................... 164.1 237.2 69.3 124.9 595.4
General & Administrative................... 60.2 68.0 24.2 46.6 212.0
Depreciation & Amortization................ 17.3 27.6 5.3 13.0 63.4
Other...................................... 24.2 26.0 5.1 11.0 66.3
Trump World's Fair Closing................. 128.4 - - - 128.4
-------- -------- -------- -------- --------
Total Costs and Expenses................. 394.2 358.8 103.9 195.5 1,065.5
-------- -------- -------- -------- --------
Income (Loss) from Operations.............. (82.1) 77.1 4.6 28.2 14.7
-------- -------- -------- -------- --------
Non-operating Income (Expense), net........ 0.5 1.2 (1.6) 0.5 3.4
Interest Expense........................... (35.6) (70.3) (5.4) (40.3) (166.8)
-------- -------- -------- -------- --------
Total Non-operating Expense, Net......... (35.1) (69.1) (7.0) (39.8) (163.4)
-------- -------- -------- -------- --------
Loss in Joint Venture...................... - - (2.2) - (2.2)
-------- -------- -------- -------- --------
Net Income (Loss) Before Minority
Interest & Cumulative Effect of
Accounting Change....................... $ (117.2) $ 8.0 $ (4.6) $ (11.6) $ (150.9)
======== ======== ======== ========
Minority Interest.......................... 55.2
Cumulative Effect of Accounting Change..... (3.6)
--------
Net Loss................................... $ (99.3)
========
Nine Months Ended September 30, 2000
--------------------------------------------------------------
Plaza Taj Trump Trump THCR
Associates Associates Indiana Marina Consolidated
---------- ---------- ------- ------ ------------
Revenues: (dollars in millions)
Gaming.................................... $ 249.5 $ 414.9 $ 92.4 $ 208.5 $ 965.3
Other..................................... 57.5 85.1 6.7 47.4 196.6
-------- -------- -------- -------- --------
Gross Revenues........................... 307.0 500.0 99.1 255.9 1,161.9
Less: Promotional Allowances............... 38.2 48.5 2.3 27.9 116.8
-------- -------- -------- -------- --------
Net Revenues............................. 268.8 451.5 96.8 228.0 1,045.1
-------- -------- -------- -------- --------
Costs and Expenses:
Gaming.................................... 161.7 241.4 60.4 124.4 587.9
General & Administrative.................. 52.9 75.7 24.0 50.7 210.5
Depreciation & Amortization............... 12.1 27.0 5.7 13.0 57.9
Other..................................... 15.4 26.5 4.8 11.6 58.3
Trump World's Fair Closing................ 0.8 - - - 0.8
-------- -------- -------- -------- --------
Total Costs and Expenses................. 242.9 370.6 94.9 199.7 915.4
-------- -------- -------- -------- --------
Income from Operations..................... 25.9 80.9 1.9 28.3 129.7
-------- -------- -------- -------- --------
Non-operating Income, net.................. 0.4 0.9 0.2 0.8 4.1
Interest Expense........................... (35.8) (70.1) (4.3) (42.3) (165.9)
-------- -------- -------- -------- --------
Total Non-operating Expense, Net......... (35.4) (69.2) (4.1) (41.5) (161.8)
-------- -------- -------- -------- --------
Loss in Joint Venture...................... - - (2.3) - (2.3)
-------- -------- -------- -------- --------
Net Income (Loss) Before Minority
Interest & Extraordinary Gain.............. $ (9.5) $ 11.7 $ (4.5) $ (13.2) $ (34.4)
======== ======== ======== ========
Minority Interest.......................... 12.6
Extraordinary Gain, net of minority
interest................................ 9.4
--------
Net Loss................................... $ (12.4)
========
16
Nine Months Ended September 30, 1999
--------------------------------------------------------------
Plaza Taj Trump Trump THCR
Associates Associates Indiana Marina Consolidated
---------- ---------- ------- ------ ------------
(dollars in millions)
Table Game Revenues........................ $ 76.0 $ 124.4 $ 23.3 $ 55.4 $ 279.1
Table Game Drop............................ $ 471.7 $ 787.4 $ 140.7 $ 362.1 $1,761.9
Table Win Percentage....................... 16.1% 15.8% 16.6% 15.3% 15.8%
Number of Table Games...................... 99 148 49 87 383
Slot Revenues.............................. $ 205.1 $ 240.2 $ 81.5 $ 148.4 $ 675.2
Slot Handle................................ $2,579.1 $3,004.7 $1,256.6 $1,878.9 $8,719.3
Slot Win Percentage........................ 8.0% 8.0% 6.5% 7.9% 7.7%
Number of Slot Machines.................... 4,202 4,278 1,287 2,145 11,912
Other Gaming Revenues...................... - $ 16.5 - $ 1.7 $ 18.2
Total Gaming Revenues...................... $ 281.1 $ 381.1 $ 104.8 $ 205.5 $ 972.5
Nine Months Ended September 30, 2000
--------------------------------------------------------------
Plaza Taj Trump Trump THCR
Associates Associates Indiana Marina Consolidated
---------- ---------- ------- ------ ------------
(dollars in millions)
Table Games Revenues....................... $ 73.7 $ 142.0 $ 20.7 $ 57.0 $ 293.3
Incr (Decr) over prior period.............. $ (2.3) $ 17.6 $ (2.6) $ 1.6 $ 14.2
Table Game Drop............................ $ 498.4 $ 823.3 $ 123.7 $ 339.8 $1,785.2
Incr (Decr) over prior period.............. $ 26.7 $ 35.9 $ (17.0) $ (22.3) $ 23.3
Table Win Percentage....................... 14.8% 17.2% 16.7% 16.8% 16.4%
Incr (Decr) over prior period.............. (1.3)pts. 1.4pts. 0.1 pts. 1.5pts. 0.6pts.
Number of Table Games...................... 96 143 50 76 365
Incr (Decr) over prior period.............. (3) (5) 1 (11) (18)
Slot Revenues.............................. $ 175.8 $ 256.3 $ 71.7 $ 150.3 $ 654.2
Incr (Decr) over prior period.............. $ (29.3) $ 16.1 $ (9.8) $ 1.9 $ (21.0)
Slot Handle................................ $2,250.2 $3,297.8 $1,107.9 $1,918.9 $8,574.8
Incr (Decr) over prior period.............. $ (328.9) $ 293.1 $ (148.7) $ 40.0 $ (144.5)
Slot Win Percentage........................ 7.8% 7.8% 6.5% 7.8% 7.6%
Incr (Decr) over prior period.............. (0.2)pts (0.2)pts. - (0.1)pts. (0.1)pts.
Number of Slot Machines.................... 2,831 4,548 1,250 2,373 11,002
Incr (Decr) over prior period.............. (1,371) 270 (37) 228 (910)
Other Gaming Revenues...................... - $ 16.6 - $ 1.2 $ 17.8
Incr (Decr) over prior period.............. - $ 0.1 - $ (0.5) $ (0.4)
Total Gaming Revenues...................... $ 249.5 $ 414.9 $ 92.4 $ 208.5 $ 965.3
Incr (Decr)over prior period............... $ (31.6) $ 33.8 $ (12.4) $ 3.0 $ ( 7.2)
Gaming revenues are the primary source of THCR's revenues. Table games
revenues represent the amount retained by THCR 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 15.6%
for the nine months period ended September 30, 1999 and September 30, 2000,
respectively. Slot revenues at Plaza Associates declined due to the closing of
Trump World's Fair in October 1999.
Other non-gaming revenues and their associated expenses as well as
depreciation and amortization were reduced from the comparable period in 1999
due to the closing of Trump World's Fair. Additionally, 1999 other non-gaming
revenues at the Taj Mahal included a one-time non-recurring gain on the
acquisition of the All Star Cafe in the amount of $17.2 million.
Gaming costs and expenses were $587.9 million for the nine months ended
September 30, 2000, a decrease of $7.5 million from $595.4 million for the
comparable period in 1999. Gaming expenses at the Trump Atlantic City
properties, Trump Plaza and the Taj Mahal, increased $1.9 million or .5%
primarily due to increased gaming volumes at the Taj Mahal. These increases
were offset by a $.5 million decrease at Trump Marina. Also, Trump Indiana's
gaming costs decreased $8.9 million or 12.9% primarily due to decreased coin and
cash promotional expenses as well as reduced gaming taxes proportionate to the
reduction in gaming revenues, as a result of the legalization of dockside gaming
competition in Illinois.
17
General and administrative expenses were $210.5 million, a decrease of $1.5
million from the comparable period in 1999. Taj Mahal's expenses increased $7.7
million or 11.2% 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, utilities, real estate
taxes and insurance reserves. Trump Marina's expenses increased $4.1 million or
8.7% from the comparable period in 1999, primarily due to incremental costs
related to the Services Agreement with TCI-II, employee benefits and insurance
costs. These increases were offset by a decrease of $7.3 million or 12.2% from
the comparable period at Trump Plaza due to the closing of Trump World's Fair, a
decrease of $5.6 million or 34.2% in corporate overhead from the comparable
period in 1999 due to costs efficiencies achieved from streamlining of
operations, and a $.2 million decrease from the comparable period at Trump
Indiana.
Non-operating expense includes the $1.3 million jury settlement awarded on
March 3, 1999 to residents of Indiana who had asserted claims to ownership of
7.5% of the value of Trump Indiana. Non-operating expense for the nine months
ended September 2000 primarily consists of a loss incurred upon termination of a
lease at THCR Holdings.
During the first quarter of 1999, THCR wrote off $5.6 million of new
development costs which had been classified as prepaid expense at December 31,
1998. The cumulative effect (after minority interest) of this accounting change
was $3.6 million.
Seasonality
The casino industry in Atlantic City and Indiana is seasonal in nature;
accordingly, the results of operations for the period ending September 30, 2000
are not necessarily indicative of the operating results for a full year.
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 THCR's performance, trends in THCR's
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 the 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 THCR, THCR Funding and THCR Holdings' 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, THCR,
THCR Holdings and THCR Funding will periodically review their compliance with
this disclosure requirement to the extent applicable.
18
PART II -- OTHER INFORMATION
ITEM 1 -- LEGAL PROCEEDINGS
General. THCR and certain of its employees have been involved in various
legal proceedings. Such persons are vigorously defending the allegations against
them and intend to contest vigorously any future proceedings. In general, THCR
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.
Metelman Action. On or about March 20, 2000, Mark Metelman, a stockholder
of 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 plantiff 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 with which to file an
Amended Complaint, pleading a shareholders derivative action. Effective October
12, plaintiffs filed an Amended Complaint pleading a shareholder derivative
action, and defendants are required to answer or otherwise move in early
November.
SEC Investigation. The Enforcement Staff (the "Staff") of the Northeast
Regional Office of the Securities and Exchange Commission has informed THCR that
it is considering recommending that the Commission authorize the commencement of
proceedings against THCR and its former Chief Executive Officer, charging that
they 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 has indicated to THCR that it may seek authority
from the Commission to seek injunctive relief, a cease and desist order, and/or
civil penalties, among other things.
THCR intends to submit a memorandum to the Commission setting forth the
reasons why it believes that the contemplated proceedings should not be brought.
If, notwithstanding THCR's submission, proceedings are brought against it, THCR
intends to defend them vigorously. There can be no assurances, however, of the
outcome of such proceedings. THCR continues to believe that such proceedings, if
brought, would not have a material adverse effect on its business, operating
results or financial position.
Steiner Action. 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.
Castle Acquisition. As discussed more fully in THCR's Report on Form 10-K
dated March 30, 2000, in 1996 certain shareholders filed a number of derivative
actions in Delaware and New York, purportedly on behalf of THCR, against each of
the then-members of the Board of Directors of THCR, THCR, THCR Holdings, Castle
Associates, TCI-II, Trump's Castle Hotel and Casino, Inc., Trump Casino, Inc.,
and Salomon Brothers, Inc., in connection with THCR's 1996 acquisition of Castle
Associates. Those cases were eventually consolidated in the Southern District of
New York.
On June 26, 1997, plaintiffs served their Third Consolidated Amended
Derivative Complaint (the "Third Complaint") in the consolidated cases. THCR and
the other defendants in the action moved to dismiss the Third Amended Complaint
on August 5, 1997. By decision and order dated September 21, 2000, the Court
denied in substantial part defendants' motions to dismiss. The Court also
granted plaintiffs' application to amend the Third Amended Complaint. On October
11, 2000, Plaintiffs served their Fourth Consolidated Amended Stockholders'
Derivative Complaint. The defendants expect to file answers to the Fourth
Consolidated Amended Stockholders' Derivative Complaint later this month, and to
begin discovery. The defendants expect to defend vigorously the litigation. THCR
cannot, however, predict the outcome of the case.
19
Various other legal proceedings are now pending against THCR. Except as set
forth herein and in THCR's Annual Report on Form 10-K for the year ended
December 31, 1999, THCR considers all such proceedings to be ordinary litigation
incident to the character of its business and not material to its business or
financial condition. THCR 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 THCR.
From time to time, Plaza Associates, Taj Associates, Castle Associates and
Trump Indiana may be involved in routine administrative proceedings involving
alleged violations of certain provisions of the New Jersey Casino Control Act
(the "Casino Control Act") and the Indiana Riverboat Gambling Act, as the case
may be. However, management believes that the final outcome of these
proceedings will not, either individually or in the aggregate, have a material
adverse effect on THCR or on the ability of Plaza Associates, Taj Associates,
Castle Associates or Trump Indiana to otherwise retain or renew any casino or
other licenses required under the Casino Control Act or the Indiana Riverboat
Gambling Act, as the case may be, for the operation of Trump Plaza, the Taj
Mahal, Trump Marina and the Trump Indiana Riverboat, respectively.
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
At the 2000 Annual Meeting of shareholders on August 3, 2000, the
stockholders of THCR voted on the following two proposals:
Proposal 1. The stockholders of THCR re-elected the following Directors of
THCR. The number of votes cast for each of the nominees were as follows:
Common Stock
--------------------------------------------------
For Withheld Absentions Broker Nonvotes
--- -------- ---------- ---------------
Donald J. Trump.... 33,253,792 850,711 None None
Wallace B. Askins.. 33,281,630 822,873 None None
Don M. Thomas...... 33,284,836 819,667 None None
Peter M. Ryan...... 33,287,645 816,858 None None
All 1,000 shares of Class B Common Stock were voted in favor of Proposal 1.
Proposal 2. The appointment of Arthur Andersen LLP as the independent
public accountants of THCR for the fiscal year ending December 31, 2000, was
ratified by a vote of 31,651,235 shares of THCR Common Stock for, and
2,393,663 shares against, with 59,605 shares abstaining. All 1,000 shares of
THCR's Class B Common Stock were voted in favor of Proposal 2.
ITEM 5 -- OTHER INFORMATION
None.
20
ITEM 6 -- EXHIBITS AND REPORTS ON FORM 8-K
a. Exhibits:
Exhibit No. Description of Exhibit
----------- ----------------------
27.1(1) Financial Data Schedule of Trump Hotels & Casino Resorts,
Inc.
27.2(2) Financial Data Schedule of Trump Hotels & Casino Resorts
Holdings, L.P.
27.3(2) Financial Data Schedule of Trump Hotels & Casino Resorts
Funding, Inc.
(1) Filed only with the Quarterly Report on Form 10-Q of THCR for the
quarter ended September 30, 2000.
(2) Filed only with the Quarterly Report on Form 10-Q of THCR Holdings
and THCR Funding for the quarter ended September 30, 2000.
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, 2000 ending September 30, 2000.
21
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, as amended,
the registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
TRUMP HOTELS & CASINO RESORTS, INC.
(Registrant)
Date: November 14, 2000
By: /s/ Francis X. McCarthy, Jr.
---------------------------------------
Francis X. McCarthy, Jr.
Executive Vice President of Finance and
Chief Financial Officer
(Duly Authorized Officer and Principal
Financial Officer)
22
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 HOTELS & CASINO RESORTS HOLDINGS, L.P.
(Registrant)
Date: November 14, 2000 By: Trump Hotels & Casino Resorts, Inc.,
its general partner
By: /s/ Francis X. McCarthy, Jr.
---------------------------------------
Francis X. McCarthy, Jr.
Executive Vice President of Finance and
Chief Financial Officer
(Duly Authorized Officer and Principal
Financial Officer)
23
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 HOTELS & CASINO RESORTS FUNDING, INC.
(Registrant)
Date: November 14, 2000
By: /s/ Francis X. McCarthy, Jr.
---------------------------------------
Francis X. McCarthy, Jr.
Executive Vice President of Finance and
Chief Financial Officer
(Duly Authorized Officer and Principal
Financial Officer)
24