- -------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the Quarterly Period Ended June 30, 2001
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:
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:
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:
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:
Indicate by check mark whether the Registrants (1) have filed all Reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
Registrants were required to file such reports), and (2) have been subject to
such filing requirements for the past 90 days. Yes X No
- -
As of August 14, 2001, there were 100 shares of Trump Atlantic City
Funding, Inc.'s Common Stock outstanding.
As of August 14, 2001, there were 100 shares of Trump Atlantic City Funding
II, Inc.'s Common Stock outstanding.
As of August 14, 2001, there were 100 shares of Trump Atlantic City Funding
III, Inc.'s Common Stock outstanding.
Each of Trump Atlantic City Associates, Trump Atlantic City Funding, Inc.,
Trump Atlantic City Funding II, Inc. and Trump Atlantic City Funding III, Inc.
meets the conditions set forth in General Instruction (H)(1)(a) and (b) of Form
10-Q and is therefore filing this form with the reduced disclosure format.
- -------------------------------------------------------------------------------
TRUMP ATLANTIC CITY ASSOCIATES AND SUBSIDIARIES
INDEX TO FORM 10-Q
Page No.
--------
PART I -- FINANCIAL INFORMATION
ITEM 1 -- Financial Statements
Condensed Consolidated Balance Sheets of Trump Atlantic City Associates and
Subsidiaries as of December 31, 2000 and June 30, 2001 (unaudited) ..................................... 1
Condensed Consolidated Statements of Operations of Trump Atlantic City Associates and
Subsidiaries for the Three and Six Months Ended June 30, 2000 and 2001 (unaudited)...................... 2
Condensed Consolidated Statement of Capital of Trump Atlantic City Associates and
Subsidiaries for the Six Months Ended June 30, 2001 (unaudited)......................................... 3
Condensed Consolidated Statements of Cash Flows of Trump Atlantic City Associates and
Subsidiaries for the Six Months Ended June 30, 2000 and 2001 (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
ITEM 2 -- Changes in Securities and Use of Proceeds......................................................... 12
ITEM 3 -- Defaults Upon Senior Securities................................................................... 12
ITEM 4 -- Submission of Matters to a Vote of Security Holders............................................... 12
ITEM 5 -- Other Information................................................................................. 12
ITEM 6 -- Exhibits and Reports on Form 8-K.................................................................. 12
SIGNATURES
Signature -- Trump Atlantic City Associates................................................................. 13
Signature -- Trump Atlantic City Funding, Inc............................................................... 14
Signature -- Trump Atlantic City Funding II, Inc............................................................ 15
Signature -- Trump Atlantic City Funding III, Inc........................................................... 16
i
PART I -- FINANCIAL INFORMATION
ITEM 1 -- FINANCIAL STATEMENTS
TRUMP ATLANTIC CITY ASSOCIATES AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(in thousands)
ASSETS
December 31, June 30,
2000 2001
--------------- ----------------
(unaudited)
CURRENT ASSETS:
Cash and cash equivalents......................................................... $ 67,205 $ 71,057
Receivables, net.................................................................. 34,317 28,957
Inventories....................................................................... 8,928 8,600
Due from affiliates, net.......................................................... 80,013 83,835
Other current assets.............................................................. 6,969 9,390
--------------- ----------------
Total Current Assets............................................................ 197,432 201,839
PROPERTY AND EQUIPMENT, NET......................................................... 1,290,638 1,280,686
DEFERRED LOAN COSTS, NET............................................................ 19,509 17,106
OTHER ASSETS (Note 2) .............................................................. 34,847 39,285
--------------- ----------------
Total Assets.................................................................... $ 1,542,426 $ 1,538,916
=============== ================
LIABILITIES AND CAPITAL
CURRENT LIABILITIES:
Current maturities of long-term debt.............................................. $ 4,553 $ 7,603
Accounts payable and accrued expenses............................................. 110,684 117,595
Accrued interest payable.......................................................... 24,375 24,375
--------------- ----------------
Total Current Liabilities....................................................... 139,612 149,573
LONG-TERM DEBT, net of current maturities........................................... 1,303,019 1,310,224
OTHER LONG-TERM LIABILITIES......................................................... 5,557 5,549
--------------- ----------------
Total Liabilities............................................................... 1,448,188 1,465,346
--------------- ----------------
CAPITAL:
Partners' Capital................................................................. 329,691 329,691
Accumulated Deficit............................................................... (235,453) (256,121)
--------------- ----------------
Total Capital................................................................... 94,238 73,570
--------------- ----------------
Total Liabilities and Capital................................................... $ 1,542,426 $ 1,538,916
=============== ================
The accompanying notes are an integral part of these condensed consolidated balance sheets.
1
TRUMP ATLANTIC CITY ASSOCIATES AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
FOR THE THREE AND SIX MONTHS ENDED JUNE 30, 2000 AND 2001
(unaudited)
(in thousands)
Three Months Six Months
Ended June 30, Ended June 30,
-------------- --------------
2000 2001 2000 2001
---- ---- ---- ----
REVENUES:
Gaming............................................... $ 215,688 $ 213,191 $ 418,356 $ 412,971
Rooms................................................ 14,946 15,250 28,385 28,247
Food and Beverage.................................... 23,837 23,812 46,634 46,922
Other................................................ 7,156 6,191 13,207 11,797
------------ ------------ ----------- ------------
Gross Revenues..................................... 261,627 258,444 506,582 499,937
Less--Promotional allowances......................... 33,054 30,581 62,426 59,516
------------ ------------ ----------- ------------
Net Revenues....................................... 228,573 227,863 444,156 440,421
------------ ------------ ----------- ------------
COSTS AND EXPENSES:
Gaming............................................... 125,586 125,875 249,641 250,742
Rooms................................................ 6,511 6,552 12,376 12,630
Food and Beverage.................................... 7,860 7,608 14,679 14,518
General and Administrative........................... 46,364 41,805 85,388 82,946
Depreciation and Amortization........................ 12,463 12,544 25,948 25,169
Trump World's Fair Closing (Note 3) ................. 254 -- 736 --
------------ ------------ ----------- ------------
199,038 194,384 388,768 386,005
------------ ------------ ----------- ------------
Income from operations............................. 29,535 33,479 55,388 54,416
------------ ------------ ----------- ------------
NON-OPERATING INCOME AND (EXPENSES):
Interest and Other income............................ 792 980 1,641 1,681
Interest expense..................................... (38,296) (38,585) (76,796) (76,765)
------------ ------------ ----------- ------------
Non-Operating expense, net.......................... (37,504) (37,605) (75,155) (75,084)
------------ ------------ ----------- ------------
NET LOSS............................................... $ (7,969) $ (4,126) $ (19,767) $ (20,668)
============ ============ =========== ============
The accompanying notes are an integral part of these condensed consolidated financial statements.
2
TRUMP ATLANTIC CITY ASSOCIATES AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENT OF CAPITAL
FOR THE SIX MONTHS ENDED JUNE 30, 2001
(unaudited)
(in thousands)
Partners' Accumulated Total
Capital Deficit Capital
-------------- ----------------- ---------------
Balance, December 31, 2000......................................... $ 329,691 $ (235,453) $ 94,238
Net Loss........................................................... -- (20,668) (20,668)
-------------- ----------------- ---------------
Balance, June 30, 2001............................................. $ 329,691 $ (256,121) $ 73,570
============== ================= ===============
The accompanying notes are an integral part of this condensed consolidated financial statement.
3
TRUMP ATLANTIC CITY ASSOCIATES AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE SIX MONTHS ENDED JUNE 30, 2000 AND 2001
(unaudited)
(dollars in thousands)
Six Months Ended
June 30,
---------------------------
2000 2001
----------- ------------
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss ................................................................................... $ (19,767) $ (20,668)
Adjustments to reconcile net loss to net cash flows from operating activities --
Noncash charges--
Depreciation and amortization .......................................................... 25,948 25,169
Accretion of discounts on indebtedness ................................................. 312 278
Provisions for losses on receivables ................................................... 2,305 3,333
Amortization of deferred loan offering costs ........................................... 2,695 2,403
Valuation allowance of CRDA investments ................................................ 1,773 2,093
Gain on disposition of property ........................................................ (30) (295)
(Increase)/decrease in receivables ...................................................... (1,578) 2,027
(Increase)/decrease in inventories ...................................................... (61) 328
Increase in advances to affiliates ...................................................... (10,741) (3,822)
Increase in other current assets ........................................................ (2,594) (2,412)
Increase in other assets ................................................................ (792) (113)
Increase in accounts payable, accrued expenses and other liabilities .................... 11,161 6,783
----------- ------------
Net cash provided by operating activities .............................................. 8,631 15,104
----------- ------------
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchase of property and equipment ...................................................... (5,884) (3,723)
Purchase of CRDA investments............................................................. (5,005) (4,961)
----------- ------------
Net cash used in investing activities .................................................. (10,889) (8,684)
----------- ------------
CASH FLOWS FROM FINANCING ACTIVITIES:
Payments and current maturities of long-term debt ...................................... (2,953) (2,568)
----------- ------------
Net cash used in financing activities ................................................. (2,953) (2,568)
----------- ------------
NET (DECREASE)/INCREASE IN CASH & CASH EQUIVALENTS ........................................... (5,211) 3,852
CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD ............................................. 75,061 67,205
----------- ------------
CASH AND CASH EQUIVALENTS AT END OF PERIOD ................................................... $ 69,850 $ 71,057
=========== ============
CASH INTEREST PAID ........................................................................... $ 73,630 $ 74,154
=========== ============
Supplemental Disclosure of noncash activities:
Purchase of property and equipment under capitalized lease obligations ....................... $ 6,014 $ 12,544
=========== ============
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 condensed consolidated financial statements include
those of Trump Atlantic City Associates ("Trump AC"), a New Jersey general
partnership 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"). Effective December 31, 2000, TCS was merged
into Taj Associates, and the obligations and administrative duties and
responsibilities of TCS were assumed by Trump Administration, a separate
division of Taj Associates ("Trump Administration"). 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"), of
which Trump Hotels & Casino Resorts, Inc., a Delaware corporation ("THCR"), is
the sole general partner. 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 accounting
principles generally accepted in the United States 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, 2000
filed with the SEC.
The casino industry in Atlantic City is seasonal in nature; therefore,
results of operations for the three and six months ended June 30, 2001 are not
necessarily indicative of the operating results for a full year.
Reclassifications
Certain reclassifications have been made to prior year financial
statements to conform to the current year presentation.
5
(2) Other Assets
Plaza Associates is appealing a real estate tax assessment by the City
of Atlantic City. Included in other assets at June 30, 2001 and 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 $736,000 were
recorded during the six months ended June 30, 2000.
(4) Combined Financial Information--Trump AC Funding, Trump AC Funding II, and
Trump AC Funding III.
Combined financial information relating to Trump AC Funding, Trump AC
Funding II and Trump AC Funding III is as follows:
December 31, June 30,
2000 2001
-------------------- ------------------
(unaudited)
Total Assets (including notes receivable of $1,297,726,000 at
December 31, 2000 and $1,298,004,000 at June 30, 2001 and
related interest receivable)................................. $ 1,322,101,000 $ 1,322,379,000
================= =================
Total Liabilities and Capital (including notes payable of
$1,297,726,000 at December 31, 2000 and $1,298,004,000 at
June 30, 2001 and related interest payable).................. $ 1,322,101,000 $ 1,322,379,000
================= =================
Six Months Ended June 30,
2000 2001
------------------- -------------------
Interest Income................................................. $ 73,125,000 $ 73,125,000
================= ==================
Interest Expense................................................ $ 73,125,000 $ 73,125,000
================= ==================
Net Income...................................................... $ -- $ --
================= ==================
(5) Recent Accounting Pronoucement
In January 2001, the Emerging Issues Task Force ("EITF") reached a
consensus on certain issues within Issue No. 00-22, "Accounting for 'Points' and
Certain Other Time-Based or Volume-Based Sales Incentive Offers, and Offers for
Free Products or Services to Be Delivered in the Future," ("EITF 00-22").
Application of EITF 00-22 is required for interim and annual periods ending
after February 15, 2001. EITF 00-22 requires volume-based cash rebates to be
classified as a reduction of revenue. Accordingly, such rebates have been
classified as promotional allowances. Trump AC previously classified these
expenditures as a gaming expense. Prior period amounts have been reclassified to
conform with the current presentation.
In July 2001, the FASB issued Statement No. 141 "Business Combinations"
("SFAS 141") and Statement No. 142 "Goodwill and Other Intangible Assets" ("SFAS
142"). SFAS 141 is effective as follows: a) use of the pooling-of-interest
method is prohibited for business combinations initiated after June 30, 2001;
and b) the provisions of SFAS 141 also apply to all business combinations
accounted for by the purchase method that are completed after June 30, 2001.
There are also transition provisions that apply to business combinations
completed before July 1, 2001, that were accounted for by the purchase method.
SFAS 142 is effective for fiscal years beginning after December 15, 2001 and
applies to all goodwill and other intangible assets recognized in an entity's
statement of financial position at that date, regardless of when those assets
were initially recognized. The Company is currently evaluating the provisions of
SFAS 141 and SFAS 142 and has not yet determined the effects of these changes on
the Company's financial position or results of operations.
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 2001. 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 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 New Jersey Casino Control Commission.
Capital expenditures for Trump AC were $5,884,000 and $3,723,000 for
the six months ended June 30, 2000 and 2001, respectively. Capital expenditures
for Trump Plaza were $385,000 and $1,523,000 and for the Taj Mahal were
$4,992,000 and $2,175,000 for the six months ended June 30, 2000 and 2001,
respectively.
The ability of the Registrants to repay their indebtedness when due
will depend on the ability of Trump AC to either generate cash from operations
sufficient for such purposes or to refinance such indebtedness on or before the
date on which it becomes due. Cash flow from operations may not be sufficient to
repay a substantial portion of the principal amount of the debt at maturity. The
future operating performance of Trump AC and its ability to refinance its debt
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 Trump AC will be sufficient to meet these repayment
obligations or that the general state of the economy, the status of the capital
markets or the receptiveness of the capital markets to the gaming industry will
be conducive to refinancing this debt or other attempts to raise capital.
Results of Operations: Operating Revenues and Expenses
The financial information presented below reflects the results of
operations of Plaza Associates and Taj Associates. Because Trump AC has no
business operations other than its interests in Plaza Associates and Taj
Associates, its results of operations are not discussed below.
Comparison of Three-Month Periods Ended June 30, 2000 and 2001. The
following tables include selected data of Plaza Associates and Taj Associates
for the three months ended June 30, 2000 and 2001 (Trump AC also includes TCS
and Trump Administration; which are not separately disclosed).
7
Three Months Ended June 30,
---------------------------------------------------------------------------------
2000 2001 2000 2001 2000 2001
Plaza Plaza Taj Taj Total Total
Associates Associates Associates Associates Trump AC * Trump AC *
---------------------------------------------------------------------------------
(in thousands)
Revenues:
Gaming........................... $ 81,461 $ 80,725 $ 134,227 $ 132,466 $ 215,688 $ 213,191
Other............................ 18,337 18,250 27,602 27,003 45,939 45,253
------------ ----------- ------------ ----------- ----------- -----------
Gross Revenues................... 99,798 98,975 161,829 159,469 261,627 258,444
Less: Promotional Allowances..... 13,341 12,860 19,713 17,721 33,054 30,581
------------ ----------- ------------ ----------- ----------- -----------
Net Revenues..................... 86,457 86,115 142,116 141,748 228,573 227,863
------------ ----------- ------------ ----------- ----------- -----------
Costs & Expenses:
Gaming........................... 52,214 51,867 73,372 74,008 125,586 125,875
Other............................ 5,353 4,920 9,018 9,240 14,371 14,160
General & Administrative......... 19,128 17,068 27,224 24,683 46,364 41,805
Depreciation & Amortization...... 3,307 4,197 9,156 8,347 12,463 12,544
Trump World's Fair closing ...... 254 -- -- -- 254 --
------------ ----------- ------------ ----------- ----------- -----------
Total Costs and Expenses......... 80,256 78,052 118,770 116,278 199,038 194,384
------------ ----------- ------------ ----------- ----------- -----------
Income from Operations............... 6,201 8,063 23,346 25,470 29,535 33,479
------------ ----------- ------------ ----------- ----------- -----------
Interest and Other Income.......... 144 464 288 283 792 980
Interest Expense................... (11,823) (12,226) (23,345) (23,265) (38,296) (38,585)
------------ ----------- ------------ ----------- ----------- -----------
Total Non-Operating Expense........ (11,679) (11,762) (23,057) (22,982) (37,504) (37,605)
------------ ----------- ------------ ----------- ----------- -----------
Net Income/( Loss) .................. $ (5,478) $ (3,699) $ 289 $ 2,488 $ (7,969) $ (4,126)
============ =========== ============ =========== =========== ===========
* Intercompany eliminations and expenses of Trump AC, Trump AC Funding, Trump AC Funding II and Trump AC Funding
III are not separately shown.
Three Months Ended June 30,
----------------------------------------------------------------------------------------
2000 2001 2000 2001 2000 2001
Plaza Plaza Taj Taj Total Total
Associates Associates Associates Associates Trump AC Trump AC
----------------------------------------------------------------------------------------
(dollars in thousands)
Table Game Revenues.................. $ 24,311 $ 22,173 $ 46,228 $ 42,657 $ 70,539 $ 64,830
Incr (Decr) over Prior Period........ $ (2,138) $ (3,571) $ (5,709)
Table Game Drop...................... $ 161,118 $ 141,347 $ 269,268 $ 245,342 $ 430,386 $ 386,689
Incr (Decr) over Prior Period........ $ (19,771) $ (23,926) $ (43,697)
Table Win Percentage................. 15.1% 15.7% 17.2% 17.4% 16.4% 16.8%
Incr (Decr) over Prior Period........ 0.6 pts 0.2 pts 0.4 pts
Number of Table Games................ 96 99 143 143 239 242
Incr (Decr) over Prior Period........ 3 -- 3
Slot Revenues........................ $ 57,150 $ 58,552 $ 82,715 $ 84,328 $ 139,865 $ 142,880
Incr (Decr) over Prior Period........ $ 1,402 $ 1,613 $ 3,015
Slot Handle.......................... $ 721,365 $ 768,834 $ 1,069,101 $ 1,100,943 $ 1,790,466 $ 1,869,777
Incr (Decr) over Prior Period........ $ 47,469 $ 31,842 $ 79,311
Slot Win Percentage.................. 7.9% 7.6% 7.7% 7.7% 7.8% 7.6%
Incr (Decr) over Prior Period........ (0.3) pts -- (0.2) pts
Number of Slot Machines.............. 2,851 2,839 4,572 4,597 7,423 7,436
Incr (Decr) over Prior Period........ (12) 25 13
Poker Revenues....................... -- -- $ 4,688 $ 4,936 $ 4,688 $ 4,936
Incr (Decr) over Prior Period........ -- $ 248 $ 248
Number of Poker Tables............... -- -- 65 67 65 67
Incr (Decr) over Prior Period........ -- 2 2
Other Gaming Revenues................ -- -- $ 596 $ 545 $ 596 $ 545
Incr (Decr) over Prior Period........ -- $ (51) $ (51)
Total Gaming Revenues................ $ 81,461 $ 80,725 $ 134,227 $ 132,466 $ 215,688 $ 213,191
Incr (Decr) over Prior Period........ $ (736) $ (1,761) $ (2,497)
Number of Guest Rooms................ 904 904 1,250 1,250 2,154 2,154
Occupancy Rate....................... 89.9% 94.3% 93.1% 96.2% 91.8% 95.4%
Average Daily Rate (Room Revenue).... $ 78.69 $ 82.13 $ 86.16 $ 81.12 $ 83.09 $ 81.55
8
Gaming revenues are the primary source of Trump AC's revenues. The year
over year decrease in gaming revenues was caused by table games activity. Table
game revenues decreased by approximately $5,709,000 or 8.1% from the comparable
period in 2000 due to a decrease in table drop at both the Taj Mahal and Trump
Plaza. Table drop was negatively effected by decreased activity from premium
international table game customers as well as a weak domestic market. Over all
Trump AC's table win percentage increased to 16.8% from 16.4% in the comparable
period in 2000. 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 16.3% and 15.4% for the quarters ended June 30, 2000 and 2001,
respectively.
Slot revenues increased by approximately $3,015,000 or 2.1% from the
comparable period in 2000 as a result of innovative marketing initiatives and
managements efforts to improve the slot product on the casino floor.
Promotional allowances decreased by approximately $2,473,000 or 7.5%
from the comparable period in 2000 due primarily to decreased cash
complimentaries at the Taj Mahal associated with decreased table game revenues.
General and Administrative expenses decreased by approximately
$4,559,000 or 9.8% from the comparable period in 2000. Expense decreases at the
Taj Mahal were primarily due to decreased entertainment and regulatory expenses.
Expense decreases at the Trump Plaza were primarily due to decreased
entertainment, advertising and regulatory expenses.
Comparison of Six-Month Periods Ended June 30, 2000 and 2001. The
following table includes selected data of Plaza Associates and Taj Associates
for the six months ended June 30, 2000 and 2001 (Trump AC also includes TCS and
Trump Administration; which were not separately disclosed).
Six Months Ended June 30,
---------------------------------------------------------------------------------
2000 2001 2000 2001 2000 2001
Plaza Plaza Taj Taj Total Total
Associates Associates Associates Associates Trump AC * Trump AC *
---------------------------------------------------------------------------------
(in thousands)
Revenues:
Gaming........................... $ 159,064 $ 161,070 $ 259,292 $ 251,901 $ 418,356 $ 412,971
Other............................ 36,091 35,704 52,135 51,262 88,226 86,966
------------ ----------- ------------ ----------- ----------- -----------
Gross Revenues................... 195,155 196,774 311,427 303,163 506,582 499,937
Less: Promotional Allowances..... 25,874 25,951 36,552 33,565 62,426 59,516
------------ ----------- ------------ ----------- ----------- -----------
Net Revenues..................... 169,281 170,823 274,875 269,598 444,156 440,421
------------ ----------- ------------ ----------- ----------- -----------
Costs & Expenses:
Gaming........................... 102,635 104,031 147,006 146,711 249,641 250,742
Other............................ 10,040 9,444 17,015 17,704 27,055 27,148
General & Administrative......... 35,162 33,686 50,189 49,190 85,388 82,946
Depreciation & Amortization...... 7,756 8,297 18,192 16,872 25,948 25,169
Trump World's Fair closing ...... 736 -- -- -- 736 --
Total Costs and Expenses......... 156,329 155,458 232,402 230,477 388,768 386,005
------------ ----------- ------------ ----------- ----------- -----------
Income from Operations............... 12,952 15,365 42,473 39,121 55,388 54,416
------------ ----------- ------------ ----------- ----------- -----------
Interest and Other Income.......... 259 589 512 525 1,641 1,681
Interest Expense................... (23,727) (24,041) (46,802) (46,527) (76,796) (76,765)
------------ ----------- ------------ ----------- ----------- -----------
Total Non-Operating Expense........ (23,468) (23,452) (46,290) (46,002) (75,155) (75,084)
------------ ----------- ------------ ----------- ----------- -----------
Net Loss............................. $ (10,516)$ (8,087)$ (3,817) $ (6,881) $ (19,767) $ (20,668)
============ =========== ============ =========== =========== ===========
* Intercompany eliminations and expenses of Trump AC, Trump AC Funding, Trump
AC Funding II and Trump AC Funding III are not separately shown.
9
Six Months Ended June 30,
----------------------------------------------------------------------------------------
2000 2001 2000 2001 2000 2001
Plaza Plaza Taj Taj Total Total
Associates Associates Associates Associates Trump AC Trump AC
----------------------------------------------------------------------------------------
(dollars in thousands)
Table Game Revenues.................. $ 47,632 $ 48,368 $ 88,315 $ 77,507 $ 135,947 $ 125,875
Incr (Decr) over Prior Period........ $ 736 $ (10,808) $ (10,072)
Table Game Drop...................... $ 313,363 $ 282,231 $ 521,429 $ 485,173 $ 834,792 $ 767,404
Incr (Decr) over Prior Period........ $ (31,132) $ (36,256) $ (67,388)
Table Win Percentage................. 15.2% 17.1% 16.9% 16.0% 16.3% 16.4%
Incr (Decr) over Prior Period........ 1.9 pts (0.9) pts 0.1 pts
Number of Table Games................ 96 99 143 143 239 242
Incr (Decr) over Prior Period........ 3 -- 3
Slot Revenues........................ $ 111,432 $ 112,702 $ 160,477 $ 163,421 $ 271,909 $ 276,123
Incr (Decr) over Prior Period........ $ 1,270 $ 2,944 $ 4,214
Slot Handle.......................... $ 1,416,646 $ 1,475,863 $ 2,078,222 $ 2,138,071 $ 3,494,868 $ 3,613,934
Incr (Decr) over Prior Period........ $ 59,217 $ 59,849 $ 119,066
Slot Win Percentage.................. 7.9% 7.6% 7.7% 7.6% 7.8% 7.6%
Incr (Decr) over Prior Period........ (0.3) pts (0.1) pts (0.2) pts
Number of Slot Machines.............. 2,809 2,842 4,547 4,631 7,356 7,473
Incr (Decr) over Prior Period........ 33 84 117
Poker Revenues....................... -- -- $ 9,333 $ 9,874 $ 9,333 $ 9,874
Incr (Decr) over Prior Period........ -- $ 541 $ 541
Number of Poker Tables............... -- -- 65 67 65 67
Incr (Decr) over Prior Period........ -- 2 2
Other Gaming Revenues................ -- -- $ 1,167 $ 1,099 $ 1,167 $ 1,099
Incr (Decr) over Prior Period........ -- $ (68) $ (68)
Total Gaming Revenues................ $ 159,064 $ 161,070 $ 259,292 $ 251,901 $ 418,356 $ 412,971
Incr (Decr) over Prior Period........ $ 2,006 $ (7,391) $ (5,385)
Number of Guest Rooms................ 904 904 1,250 1,250 2,154 2,154
Occupancy Rate....................... 88.2% 91.1% 91.6% 94.3% 90.2% 93.0%
Average Daily Rate (Room Revenue).... $ 77.96 $ 79.42 $ 81.93 $ 76.91 $ 80.30 $ 77.94
Gaming revenues are the primary source of Trump AC's revenues. The year
over year decrease in gaming revenues was caused by table games activity. Table
game revenues decreased by approximately $10,072,000 or 7.4% from the comparable
period in 2000 due to a decrease in table drop at both the Taj Mahal and Trump
Plaza. Table drop was negatively effected by decreased activity from premium
international table game customers as well as a weak domestic market. An
increase in the table games hold percentage at the Trump Plaza (from 15.2% to
17.1%) offset the decreased hold percentage experienced at the Taj Mahal (from
16.9% to 16.0%). Over all Trump AC's table win percentage increased to 16.4%
from 16.3% in the comparable period in 2000. 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 15.9% and 15.3% for the six
months ended June 30, 2000 and 2001, respectively.
Slot revenues increased by approximately $4,214,000 or 1.6% from the
comparable period in 2000 as a result of innovative marketing initiatives and
managements efforts to improve the slot product on the casino floor.
Promotional allowances decreased by approximately $2,910,000 or 4.7%
from the comparable period in 2000 due primarily to decreased cash
complimentaries at the Taj Mahal associated with decreased table game revenues.
General and Administrative expenses decreased by approximately
$2,442,000 or 2.9% from the comparable period in 2000. Expense decreases at the
Taj Mahal were primarily due to decreased insurance, litigation and
entertainment expenses. Expense decreases at the Trump Plaza were primarily due
to decreased entertainment, advertising and regulatory expenses.
Seasonality
The casino industry in Atlantic City is seasonal in nature.
Accordingly, the results of operations for the period ended June 30, 2001 are
not necessarily indicative of the operating results for a full year.
10
Important Factors Relating to Forward Looking Statements
The Private Securities Litigation Reform Act of 1995 provides a "safe harbor"
for forward-looking statements so long as those statements are identified as
forward-looking and are accompanied by meaningful cautionary statements
identifying important factors that could cause actual results to differ
materially from those projected in such statements. All statements, trend
analysis and other information contained in this Quarterly Report on Form 10-Q
relative to Trump AC's performance, trends in Trump AC'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 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
Not Applicable.
11
PART II -- OTHER INFORMATION
ITEM 1 -- LEGAL PROCEEDINGS
Metelman Action; Proposed Settlement. 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-C43-00) against THCR and each member of
the Board of Directors of THCR. The plaintiff claimed 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 defendants filed a motion to
dismiss in lieu of an answer. On July 21, 2000, the Court dismissed the
plaintiff's Complaint, without prejudice. The Court granted the plaintiff ten
weeks during which to file an Amended Complaint, pleading a stockholder
derivative action, and effective October 12, 2000, plaintiff filed an Amended
Complaint, pleading a stockholder derivative action.
In March 2001, without admitting any wrongdoing or liability, the
parties reached an agreement to settle the case and on May 15, 2001, entered
into a Stipulation of Settlement (the "Stipulation"). On May 17, 2001, the Court
preliminarily approved the Stipulation, pending a Settlement Hearing to
determine the fairness and adequacy of the proposed settlement. Pursuant to the
Stipulation, THCR sent to holders of THCR Common Stock of record as of May 15,
2001 a Notice of Settlement outlining the terms of the proposed settlement,
including such stockholders' right to object in writing to the terms of the
proposed settlement on or before July 20, 2001. The Settlement Hearing is
scheduled to be held by the Court on August 17, 2001.
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.
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
Not Applicable.
ITEM 3 -- DEFAULTS UPON SENIOR SECURITIES
Not Applicable.
ITEM 4 -- SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
Not Applicable.
ITEM 5 -- OTHER INFORMATION
None.
ITEM 6 --EXHIBITS AND REPORTS ON FORM 8-K
a. Exhibits:
None.
b. Current Reports on Form 8-K:
The Registrants did not file any Current Reports on Form 8-K during the
period beginning April 1, 2001 and ending June 30, 2001.
12
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 Managing General Partner
Date: August 14, 2001
By: /S/ FRANCIS X. MCCARTHY, JR.
-----------------------------------------
Francis X. McCarthy, Jr.
Chief Financial Officer
(Duly Authorized Officer and Principal
Financial and Accounting Officer)
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 FUNDING, INC.
(Registrant)
Date: August 14, 2001
By: /S/ FRANCIS X. MCCARTHY, JR.
-----------------------------------
Francis X. McCarthy, Jr.
Chief Financial Officer
(Duly Authorized and 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 II, INC.
(Registrant)
Date: August 14, 2001
By: /S/ FRANCIS X. MCCARTHY, JR.
------------------------------------------
Francis X. McCarthy, Jr.
Chief Financial Officer
(Duly Authorized and 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 III, INC.
(Registrant)
Date: August 14, 2001
By: /S/ FRANCIS X. MCCARTHY, JR.
-----------------------------
Francis X. McCarthy, Jr.
Chief Financial Officer
(Duly Authorized and Principal
Financial and Accounting Officer)
16