================================================================================
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 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)
Huron Avenue and Brigantine Boulevard
Atlantic City, New Jersey 08401
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (609) 441-8406
Former name, former address and formal fiscal year, if changed since last report: 1000 Boardwalk
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)
Huron Avenue and Brigantine Boulevard
Atlantic City, New Jersey 08401
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (609) 441-8406
Former name, former address and formal fiscal year, if changed since last report: 1000 Boardwalk
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)
Huron Avenue and Brigantine Boulevard
Atlantic City, New Jersey 08401
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (609) 441-8406
Former name, former address and formal fiscal year, if changed since last report: 1000 Boardwalk
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)
Huron Avenue and Brigantine Boulevard
Atlantic City, New Jersey 08401
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (609) 441-8406
Former name, former address and formal fiscal year, if changed since last report: 1000 Boardwalk
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 November 14, 2000, there were 100 shares of Trump Atlantic City
Funding, Inc.'s Common Stock outstanding.
As of November 14, 2000, there were 100 shares of Trump Atlantic City
Funding II, Inc.'s Common Stock outstanding.
As of November 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.
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TRUMP ATLANTIC CITY ASSOCIATES AND SUBSIDIARIES
INDEX TO FORM 10-Q
Page No.
--------
PART I -- FINANCIAL INFORMATION
ITEM 1 -- Financial Statements
Condensed Consolidated Balance Sheets of Trump Atlantic City Associates and
Subsidiaries as of December 31, 1999 and September 30, 2000 (unaudited)................................................ 1
Condensed Consolidated Statements of Operations of Trump Atlantic City Associates and
Subsidiaries for the Three and Nine Months Ended September 30, 1999 and 2000 (unaudited)............................... 2
Condensed Consolidated Statement of Capital of Trump Atlantic City Associates and
Subsidiaries for the Nine Months Ended September 30, 2000 (unaudited).................................................. 3
Condensed Consolidated Statements of Cash Flows of Trump Atlantic City Associates and
Subsidiaries for the Nine Months Ended September 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........................................................................................... 7-11
ITEM 3 -- Quantitative and Qualitative Disclosures About Market Risk...................................................... 11
PART II -- OTHER INFORMATION
ITEM 1 -- Legal Proceedings............................................................................................... 12-13
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, September 30,
1999 2000
------------- -------------
(unaudited)
CURRENT ASSETS:
Cash and cash equivalents...................................................... $ 75,061 $ 119,576
Receivables, net............................................................... 33,881 38,783
Inventories.................................................................... 9,458 8,714
Due from affiliates, net....................................................... 62,948 72,472
Other current assets........................................................... 5,258 9,442
---------------- ----------------
Total Current Assets......................................................... 186,606 248,987
PROPERTY AND EQUIPMENT, NET...................................................... 1,322,599 1,301,056
DEFERRED LOAN COSTS, NET......................................................... 24,750 20,764
OTHER ASSETS (Note 2)............................................................ 36,911 39,387
---------------- ----------------
Total Assets................................................................. $ 1,570,866 $ 1,610,194
================ ================
LIABILITIES AND CAPITAL
CURRENT LIABILITIES:
Current maturities of long-term debt........................................... $ 4,438 $ 4,830
Accounts payable and accrued expenses.......................................... 110,256 117,488
Accrued interest payable....................................................... 24,375 60,938
---------------- ----------------
Total Current Liabilities.................................................... 139,069 183,256
LONG-TERM DEBT, net of current maturities........................................ 1,302,824 1,303,946
OTHER LONG-TERM LIABILITIES...................................................... 5,557 5,557
---------------- ----------------
Total Liabilities............................................................ 1,447,450 1,492,759
---------------- ----------------
CAPITAL:
Partners' Capital.............................................................. 329,691 329,691
Accumulated Deficit............................................................ (206,275) (212,256)
---------------- ----------------
Total Capital................................................................ 123,416 117,435
---------------- ----------------
Total Liabilities and Capital................................................ $ 1,570,866 $ 1,610,194
================ ================
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 NINE MONTHS ENDED SEPTEMBER 30, 1999 AND 2000
(unaudited)
(in thousands)
Three Months Nine Months
Ended September 30, Ended September 30,
------------------- -------------------
1999 2000 1999 2000
---- ---- ---- ----
REVENUES:
Gaming................................................... $ 241,324 $ 246,040 $ 662,243 $ 664,396
Rooms.................................................... 22,457 16,866 57,750 45,251
Food and Beverage........................................ 29,170 28,656 80,540 75,290
Other.................................................... 27,110 8,833 42,335 22,040
--------- --------- --------- ---------
Gross Revenues......................................... 320,061 300,395 842,868 806,977
Less--Promotional allowances............................. 35,397 32,891 94,865 86,624
--------- --------- --------- ---------
Net Revenues........................................... 284,664 267,504 748,003 720,353
--------- --------- --------- ---------
COSTS AND EXPENSES:
Gaming................................................... 143,493 144,815 401,281 403,149
Rooms.................................................... 7,276 6,453 21,832 18,829
Food and Beverage........................................ 10,037 8,422 28,370 23,101
General and Administrative............................... 43,043 43,211 128,315 128,599
Depreciation and Amortization............................ 14,704 13,174 44,910 39,122
Trump World's Fair Closing (Note 3)...................... 128,375 29 128,375 765
--------- --------- --------- ---------
346,928 216,104 753,083 613,565
--------- --------- --------- ---------
Income/(loss) from operations.......................... (62,264) 51,400 (5,080) 106,788
--------- --------- --------- ---------
NON-OPERATING INCOME AND (EXPENSES):
Interest income.......................................... 879 874 2,369 2,485
Interest expense......................................... (38,592) (38,494) (115,331) (115,290)
Non-Operating income..................................... 50 6 385 36
--------- --------- --------- ---------
Non-Operating expense, net.............................. (37,663) (37,614) (112,577) (112,769)
--------- --------- --------- ---------
NET (LOSS)/INCOME.......................................... $ (99,927) $ 13,786 $(117,657) $ (5,981)
========= ========= ========= =========
The accompanying notes are an integral part of these condensed consolidated
financial statements.
2
TRUMP ATLANTIC CITY ASSOCIATES AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENT OF CAPITAL
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2000
(unaudited)
(in thousands)
Retained
Earnings
Partners' (Accumulated
Capital Deficit) Total
------------- -------------- ------------
Balance, December 31, 1999....................................... $ 329,691 $ (206,275) $ 123,416
Net Loss......................................................... -- (5,981) (5,981)
------------- -------------- ------------
Balance, September 30, 2000...................................... $ 329,691 $ (212,256) $ 117,435
============= ============== ============
The accompanying notes are an integral part of these condensed consolidated
financial statements.
3
TRUMP ATLANTIC CITY ASSOCIATES AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 1999 AND 2000
(unaudited)
(dollars in thousands)
Nine Months Ended
September 30,
------------------------------
1999 2000
------------- ------------
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss.................................................................................... $ (117,657) $ (5,981)
Adjustments to reconcile net loss to net cash flows from operating activities --
Noncash charges--
Depreciation and amortization............................................................. 44,910 39,122
Accretion of discounts on indebtedness.................................................... 518 462
Provisions for losses on receivables...................................................... 10,321 3,400
Amortization of deferred loan offering costs.............................................. 4,485 3,986
Valuation allowance of CRDA investments................................................... 3,175 3,537
Gain on property received upon termination of lease....................................... (17,200) --
Gain on disposition of property........................................................... (385) (36)
Write off net book value of Trump World's Fair Assets..................................... 97,682 --
Decrease/(increase) in receivables......................................................... 4,657 (8,303)
(Increase)/decrease in inventories......................................................... (157) 744
Increase in advances to affiliates......................................................... (13,671) (9,524)
Decrease/(increase) in other current assets................................................ 462 (3,817)
Increase in other assets................................................................... (1,624) (2,083)
Increase in accounts payable and accrued expenses.......................................... 26,314 9,402
Increase in accrued interest payable....................................................... 36,563 36,563
------------- ------------
Net cash provided by operating activities................................................. 78,393 67,472
------------- ------------
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchase of property and equipment, net of property received upon lease termination....... (10,925) (12,832)
Purchase of CRDA investments.............................................................. (7,941) (7,729)
Proceeds from disposition of property..................................................... 4,502 30
------------- ------------
Net cash used in investing activities.................................................... (14,364) (20,531)
------------- ------------
CASH FLOWS FROM FINANCING ACTIVITIES:
Additional Borrowings.................................................................... -- 2,978
Payments and current maturities of long-term debt........................................ (4,151) (5,404)
------------- ------------
Net cash used in financing activities................................................... (4,151) (2,426)
------------- ------------
NET INCREASE IN CASH & CASH EQUIVALENTS..................................................... 59,878 44,515
CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD............................................ 80,954 75,061
------------- ------------
CASH AND CASH EQUIVALENTS AT END OF PERIOD.................................................. $ 140,832 $ 119,576
============= ============
CASH INTEREST PAID.......................................................................... $ 73,862 $ 74,509
============= ============
Supplemental Disclosure of noncash activities:
Purchase of property and equipment under capitalized lease obligations...................... $ 7,818 $ 7,060
============= ============
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 nine months ended September 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 September 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, additional costs of $765,000 were
recorded during the nine months ended September 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, September 30,
1999 2000
------------ --------------
(unaudited)
Total Assets (including notes receivable of $1,297,119,000 at
December 31, 1999 and $1,297,581,000 at September 30, 2000
and related interest receivable)......................................... $ 1,321,494,000 $ 1,358,519,000
================== ==================
Total Liabilities and Capital (including notes payable of
$1,297,119,000 at December 31, 1999 and $1,297,581,000
at September 30, 2000 and related interest payable)...................... $ 1,321,494,000 $ 1,358,519,000
================== ==================
Nine Months Ended September 30,
1999 2000
------------------ -------------------
Interest Income........................................................ $ 109,687,000 $ 109,687,000
================= ==================
Interest Expense....................................................... $ 109,687,000 $ 109,687,000
================= ==================
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 $10,925,000 and $12,832,000 for the
nine months ended September 30, 1999 and 2000, respectively, including capital
expenditures for Trump Plaza of $3,221,000 and $3,991,000 and for the Taj Mahal
of $7,233,000 and $8,166,000 for the nine months ended September 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 September 30, 1999 and 2000. The
following table includes selected data of Plaza Associates and Taj Associates
for the three months ended September 30, 1999 and 2000 (Trump AC also includes
TCS; which is not separately disclosed).
7
Three Months Ended September 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......................... $ 104,900 $ 90,398 $ 136,424 $ 155,642 $ 241,324 $ 246,040
Other.......................... 29,145 21,427 49,592 32,928 78,737 54,355
--------- --------- ------------ ------------ ------------ -------------
Gross Revenues................. 134,045 111,825 186,016 188,570 320,061 300,395
Less: Promotional Allowances... 17,043 14,385 18,354 18,506 35,397 32,891
--------- --------- ------------ ------------ ------------ -------------
Net Revenues................... 117,002 97,440 167,662 170,064 284,664 267,504
--------- --------- ------------ ------------ ------------ -------------
Costs & Expenses:
Gaming......................... 58,142 57,008 85,351 87,807 143,493 144,815
General & Administrative....... 20,228 17,711 22,800 25,492 43,043 43,211
Depreciation & Amortization.... 5,692 4,330 9,012 8,844 14,704 13,174
Trump World's Fair closing..... 128,375 29 -- -- 128,375 29
Other.......................... 8,263 5,400 9,050 9,475 17,313 14,875
--------- --------- ------------ ------------ ------------ -------------
Total Costs and Expenses....... 220,700 84,478 126,213 131,618 346,928 216,104
--------- --------- ------------ ------------ ------------ -------------
Income/(Loss) from Operations...... (103,698) 12,962 41,449 38,446 (62,264) 51,400
--------- --------- ------------ ------------ ------------ -------------
Non-Operating Income............. 50 6 -- 50 6
Interest Income.................. 97 112 183 350 879 874
Interest Expense................. (12,026) (12,069) (23,408) (23,304) (38,592) (38,494)
--------- --------- ------------ ------------ ------------ -------------
Total Non-Operating Expense...... (11,879) (11,951) (23,225) (22,954) (37,663) (37,614)
--------- --------- ------------ ------------ ------------ -------------
Net Income/(Loss).................. $(115,577) $ 1,011 $ 18,224 $ 15,492 $ (99,927) $ 13,786
========= ========= ============ ============ ============ =============
Three Months Ended September 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................ $ 31,208 $ 26,004 $ 40,835 $ 53,697 $ 72,043 $ 79,701
Incr (Decr) over Prior Period...... $ (5,204) $ 12,862 $ 7,658
Table Game Drop.................... $ 177,742 $ 185,079 $ 283,155 $ 301,864 $ 460,897 $ 486,943
Incr (Decr) over Prior Period...... $ 7,337 $ 18,709 $ 26,046
Table Win Percentage............... 17.6% 14.1% 14.4% 17.8% 15.6% 16.4%
Incr (Decr) over Prior Period...... (3.5) pts 3.4 pts .80 pts
Number of Table Games.............. 94 97 149 143 243 240
Incr (Decr) over Prior Period...... 3 (6) (3)
Slot Revenues...................... $ 73,692 $ 64,394 $ 89,603 $ 95,888 $ 163,295 $ 160,282
Incr (Decr) over Prior Period...... $ (9,298) $ 6,285 $ (3,013)
Slot Handle........................ $ 923,717 $ 833,534 $ 1,106,772 $ 1,219,587 $ 2,030,489 $ 2,053,121
Incr (Decr) over Prior Period...... $ (90,183) $ 112,815 $ 22,632
Slot Win Percentage................ 8.0% 7.7% 8.1% 7.9% 8.0% 7.8%
Incr (Decr) over Prior Period...... (.3) pts (.2 pts) (.2) pts
Number of Slot Machines............ 4,186 2,867 4,419 4,552 8,605 7,419
Incr (Decr) over Prior Period...... (1,319) 133 (1,186)
Poker Revenues..................... -- -- $ 5,327 $ 5,388 $ 5,327 $ 5,388
Incr (Decr) over Prior Period...... -- $ 61 $ 61
Number of Poker Tables............. -- -- 64 66 64 66
Incr (Decr) over Prior Period...... -- 2 2
Other Gaming Revenues.............. -- -- $ 659 $ 669 $ 659 $ 669
Incr (Decr) over Prior Period...... -- $ 10 $ 10
Total Gaming Revenues.............. $ 104,900 $ 90,398 $ 136,424 $ 155,642 $ 241,324 $ 246,040
Incr (Decr) over Prior Period...... $ (14,502) $ 19,218 $ 4,716
Number of Guest Rooms.............. 1,404 904 1,250 1,250 2,654 2,154
Occupancy Rate..................... 95.5% 96.6% 98.6% 98.8% 96.9% 97.9%
Average Daily Rate (Room Revenue).. $ 92.40 $ 82.13 $ 97.55 $ 90.34 $ 94.87 $ 86.94
8
Gaming revenues are the primary source of Trump AC's revenues. Table
game revenues increased approximately $7,658,000 or 10.6% from the comparable
period in 1999 due to increased volumes and improved table win percentage at the
Taj Mahal. Overall Trump AC's table win percentage increased to 16.4% from 15.6%
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 14.9% and 15.1% for the three
months ended September 30, 1999 and 2000, respectively.
Slot revenues decreased approximately $3,013,000 or 1.8% from the
comparable period in 1999. Slot revenues at the Taj Mahal increased
approximately $6,285,000 or 7.0% 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. 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 $17,200,000.
General and Administrative expenses increased approximately $168,000 or
.4% from the comparable period in 1999. General and Administrative expenses at
Trump Plaza decreased approximately $2,517,000 or 12.4% from the comparable
period in 1999 due to the closing of the Trump World's Fair. Expenses at Taj
Mahal increased approximately $2,692,000 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 tax expenses.
Comparison of Nine-Month Periods Ended September 30, 1999 and 2000. The
following table includes selected data of Plaza Associates and Taj Associates
for the nine months ended September 30, 1999 and 2000 (Trump AC also includes
TCS; which is not separately disclosed).
Nine Months Ended September 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..................................... $ 281,120 $ 249,462 $ 381,123 $ 414,934 $ 662,243 $ 664,396
Other...................................... 77,534 57,518 103,091 85,063 180,625 142,581
--------- --------- --------- --------- --------- ---------
Gross Revenues............................. 358,654 306,980 484,214 499,997 842,868 806,977
Less: Promotional Allowances............... 46,545 38,172 48,320 48,452 94,865 86,624
--------- --------- --------- --------- --------- ---------
Net Revenues............................... 312,109 268,808 435,894 451,545 748,003 720,353
--------- --------- --------- --------- --------- ---------
Costs & Expenses:
Gaming..................................... 164,131 161,730 237,150 241,419 401,281 403,149
General & Administrative................... 60,216 52,873 68,034 75,681 128,315 128,599
Depreciation & Amortization................ 17,339 12,086 27,571 27,036 44,910 39,122
Trump World's Fair closing................. 128,375 765 -- -- 128,375 765
Other...................................... 24,160 15,440 26,042 26,490 50,202 41,930
--------- --------- --------- --------- --------- ---------
Total Costs and Expenses................... 394,221 242,894 358,797 370,626 753,083 613,565
--------- --------- --------- --------- --------- ---------
Income/(Loss) from Operations.................. (82,112) 25,914 77,097 80,919 (5,080) 106,788
--------- --------- --------- --------- --------- ---------
Non-Operating Income......................... 50 36 335 -- 385 36
Interest Income.............................. 422 341 856 862 2,369 2,485
Interest Expense............................. (35,536) (35,796) (70,278) (70,106) (115,331) (115,290)
--------- --------- --------- --------- --------- ---------
Total Non-Operating Expense.................. (35,064) (35,419) (69,087) (69,244) (112,577) (112,769)
--------- --------- --------- --------- --------- ---------
Net Income/(Loss).............................. $(117,176) $ (9,505) $ 8,010 $ 11,675 $(117,657) $ (5,981)
========= ========= ========= ========= ========= =========
9
Nine Months Ended September 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...................... $ 76,035 $ 73,636 $ 124,379 $ 142,012 $ 200,414 $ 215,648
Incr (Decr) over Prior Period............ $ (2,399) $ 17,633 $ 15,234
Table Game Drop.......................... $ 471,679 $ 498,442 $ 787,378 $ 823,293 $ 1,259,057 $ 1,321,735
Incr (Decr) over Prior Period............ $ 26,763 $ 35,915 $ 62,678
Table Win Percentage..................... 16.1% 14.8% 15.8% 17.2% 15.9% 16.3%
Incr (Decr) over Prior Period............ (1.3) pts 1.4 .4%
Number of Table Games.................... 99 96 148 143 247 239
Incr (Decr) over Prior Period............ (3) (5) (8)
Slot Revenues............................ $ 205,085 $ 175,826 $ 240,222 $ 256,366 $ 445,307 $ 432,192
Incr (Decr) over Prior Period............ $ (29,259) $ 16,144 $ (13,115)
Slot Handle.............................. $ 2,579,116 $ 2,250,180 $ 3,004,728 $ 3,297,809 $ 5,583,844 $ 5,547,989
Incr (Decr) over Prior Period............ $ (328,936) $ 293,081 $ (35,855)
Slot Win Percentage...................... 8.0% 7.8% 8.0% 7.8% 8.0% 7.8%
Incr (Decr) over Prior Period............ (.2) pts (.2 pts) (.2) pts
Number of Slot Machines.................. 4,202 2,831 4,278 4,548 8,480 7,379
Incr (Decr) over Prior Period............ (1,371) 270 (1,101)
Poker Revenues........................... -- -- $ 14,602 $ 14,720 $ 14,602 $ 14,720
Incr (Decr) over Prior Period............ -- $ 118 $ 118
Number of Poker Tables................... -- -- 62 65 62 65
Incr (Decr) over Prior Period............ -- 3 3
Other Gaming Revenues.................... -- -- $ 1,920 $ 1,836 $ 1,920 $ 1,836
Incr (Decr) over Prior Period............ -- $ (84) $ (84)
Total Gaming Revenues.................... $ 281,120 $ 249,462 $ 381,123 $ 414,934 $ 662,243 $ 664,396
Incr (Decr) over Prior Period............ $ (31,658) $ 33,811 $ 2,153
Number of Guest Rooms.................... 1,404 904 1,250 1,250 2,654 2,154
Occupancy Rate........................... 89.8% 91.0% 96.1% 94.0% 92.8% 92.8%
Average Daily Rate (Room Revenue)........ $ 83.47 $ 79.44 $ 88.47 $ 84.90 $ 85.91 $ 82.65
Gaming revenues are the primary source of Trump AC's revenues. Table
game revenues increased approximately $15,234,000 or 7.6% from the comparable
period in 1999 due to increased volumes and an improved table win percentage at
the Taj Mahal. Overall Trump AC's table win percentage increased to 16.3% from
15.9% 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 15.6% for the nine
months ended September 30, 1999 and 2000, respectively.
Slot revenues decreased approximately $13,115,000 or 2.9% from the
comparable period in 1999. Slot revenues at the Taj Mahal increased
approximately $16,144,000 or 6.7% from the comparable period in 1999 but were
offset by a decline at 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. Additionally, 1999 Other non-gaming
revenues at the Taj Mahal included a one time nonrecurring gain on the
acquisition of the All Star Cafe in the amount of $17,200,000.
General and Administrative expenses increased approximately $284,000
from the comparable period in 1999. General and Administrative expenses at Trump
Plaza decreased approximately $7,343,000 or 12.2% from the comparable period in
1999 due to the closing of Trump World's Fair. Expenses at the Taj Mahal
increased approximately $7,647,000 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 expense, real estate taxes and insurance reserves.
10
Seasonality
The casino industry in Atlantic City 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
Importang 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.
Metelman Action. 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 plaintiff 10 weeks within which to file an Amended Complaint, pleading a
shareholders derivative action. On October 12, 2000 plaintiff 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 the Company's third
quarter results, were discussed in the Company's Report on Form 10-Q filed with
the Commission on November 4, 1999. The Staff has indicated to the Company 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, TC/GP, Inc., TCHI, Trump Casino, Inc., and Salomon
Brothers, Inc., in connection with THCR's 1996 acquisition of Trump's 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 Amended 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' motion 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.
12
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 New Jersey 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 New Jersey
Casino Control Act for the operation of Trump Plaza and the Taj Mahal.
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 July 1, 2000 and ending September 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: November 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: November 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: November 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: November 14, 2000
By: /s/ Francis X. McCarthy, Jr.
-----------------------------
Francis X. McCarthy, Jr.
Chief Financial Officer
(Principal Financial and Accounting Officer)
17