FILED PURSUANT TO RULE 424 (B) (3)
REGISTRATION NO. 333-43975
REGISTRATION NO. 333-43979
TRUMP ATLANTIC CITY ASSOCIATES
TRUMP ATLANTIC CITY FUNDING II, INC.
SUPPLEMENT TO PROSPECTUS
DATED MAY 8, 1998
TRUMP ATLANTIC CITY ASSOCIATES
TRUMP ATLANTIC CITY FUNDING III, INC.
SUPPLEMENT TO PROSPECTUS
DATED MAY 8, 1998
THE DATE OF THIS SUPPLEMENT IS MAY 22, 1998
On May 15, 1998, Trump Atlantic City Associates ("Trump AC"), Trump Atlantic
City Funding, Inc., Trump Atlantic City Funding II, Inc. ("Funding II") and
Trump Atlantic City Funding III, Inc. ("Funding III") filed the attached
Quarterly Report on Form 10-Q for the period ended March 31, 1998. The
Prospectus of Trump AC and Funding II dated May 8, 1998 and the Prospectus of
Trump AC and Funding III dated May 8, 1998 are hereby supplemented with the
information set forth in the attached Quarterly Report on Form 10-Q.
================================================================================
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 March 31, 1998
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 (I.R.S. Employer Identification Number)
incorporation or organization)
2500 Boardwalk
Atlantic City, New Jersey 08401
Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (609) 441-6060
Former name, former address and formal fiscal year, if changed since last
report: Not Applicable
TRUMP ATLANTIC CITY FUNDING, INC.
(Exact Name of Registrant as specified in its charter)
New Jersey 22-3418939
(State or other jurisdiction of (I.R.S. Employer Identification Number)
incorporation or organization)
2500 Boardwalk
Atlantic City, New Jersey 08401
Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (609) 441-6060
Former name, former address and formal fiscal year, if changed since last
report: Not Applicable
TRUMP ATLANTIC CITY FUNDING II, INC.
(Exact Name of Registrant as specified in its charter)
New Jersey 22-3550202
(State or other jurisdiction of (I.R.S. Employer Identification Number)
incorporation or organization)
2500 Boardwalk
Atlantic City, New Jersey 08401
Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (609) 441-6060
Former name, former address and formal fiscal year, if changed since last
report: Not Applicable
TRUMP ATLANTIC CITY FUNDING III, INC.
(Exact Name of Registrant as specified in its charter)
New Jersey 22-3550203
(State or other jurisdiction of (I.R.S. Employer Identification Number)
incorporation or organization)
2500 Boardwalk
Atlantic City, New Jersey 08401
Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (609) 441-6060
Former name, former address and formal fiscal year, if changed since last
report: Not Applicable
Indicate by check mark whether the Registrants (1) have filed all Reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
Registrants were required to file such reports), and (2) have been subject to
such filing requirements for the past 90 days. Yes |X| No |_|
As of May 15, 1998, there were 100 shares of Trump Atlantic City Funding,
Inc.'s Common Stock outstanding.
As of May 15, 1998, there were 100 shares of Trump Atlantic City Funding
II, Inc.'s Common Stock outstanding.
As of May 15, 1998, there were 100 shares of Trump Atlantic City Funding
III, Inc.'s Common Stock outstanding.
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 March 31, 1998 (unaudited)
and December 31, 1997........................................... 1
Condensed Consolidated Statements of Operations of Trump
Atlantic City Associates and Subsidiaries for the Three Months
Ended March 31, 1998 and 1997 (unaudited)....................... 2
Condensed Consolidated Statement of Capital of Trump Atlantic City
Associates and Subsidiaries for the Three Months
Ended March 31, 1998 (unaudited)................................ 3
Condensed Consolidated Statements of Cash Flows of Trump Atlantic
City Associates and Subsidiaries for the Three Months
Ended March 31, 1998 and 1997 (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.......................... 7-9
ITEM 3 -- Quantitative and Qualitative Disclosures About Market
Risk......................................... ............... 9
PART II -- OTHER INFORMATION
ITEM 1 -- Legal Proceedings....................................... 10-11
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
March 31, December 31,
1998 1997
------------ ------------
(unaudited)
CURRENT ASSETS:
Cash and cash equivalents ........................... $ 157,348 $ 114,879
Receivables, net .................................... 57,849 56,478
Inventories ......................................... 9,299 9,880
Advances to affiliates, net ......................... 15,312 21,880
Other current assets ................................ 6,216 7,319
----------- -----------
Total Current Assets .............................. 246,024 210,436
PROPERTY AND EQUIPMENT, NET ........................... 1,448,304 1,460,050
DEFERRED LOAN COSTS, NET .............................. 35,293 36,842
OTHER ASSETS .......................................... 34,424 31,745
----------- -----------
Total Assets ...................................... $ 1,764,045 $ 1,739,073
=========== ===========
LIABILITIES AND CAPITAL
CURRENT LIABILITIES:
Current maturities of long-term debt ................ $ 7,597 $ 6,964
Accounts payable and accrued expenses ............... 76,971 73,478
Accrued interest payable ............................ 59,762 23,850
----------- -----------
Total Current Liabilities ......................... 144,330 104,292
LONG-TERM DEBT, net of current maturities ............. 1,298,849 1,300,027
OTHER LONG-TERM LIABILITIES ........................... 6,182 6,815
----------- -----------
Total Liabilities ................................. 1,449,361 1,411,134
----------- -----------
CAPITAL:
Partners' Capital ................................... 373,790 373,790
Accumulated Deficit ................................. (59,106) (45,851)
----------- -----------
Total Capital ..................................... 314,684 327,939
----------- -----------
Total Liabilities and Capital ..................... $ 1,764,045 $ 1,739,073
=========== ===========
The accompany notes are an integral part of these condensed consolidated
financial statements.
1
TRUMP ATLANTIC CITY ASSOCIATES AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
FOR THE THREE MONTHS ENDED MARCH 31, 1998 AND 1997
(unaudited)
(in thousands)
Three Months
Ended March 31,
---------------
1998 1997
--------- ---------
REVENUES:
Gaming ..................................... $ 201,764 $ 215,143
Rooms ...................................... 16,919 17,688
Food and Beverage .......................... 25,744 26,346
Other ...................................... 7,586 7,139
--------- ---------
Gross Revenues ........................... 252,013 266,316
Less--Promotional allowances ................. 30,417 31,101
--------- ---------
Net Revenues ............................. 221,596 235,215
--------- ---------
COSTS AND EXPENSES:
Gaming ..................................... 126,652 134,447
Rooms ...................................... 6,440 6,493
Food and Beverage .......................... 8,167 8,576
General and Administrative ................. 41,252 42,746
Depreciation and Amortization .............. 15,428 20,761
--------- ---------
197,939 213,023
--------- ---------
Income from operations ................... 23,657 22,192
--------- ---------
NON-OPERATING INCOME AND (EXPENSES):
Interest income ............................ 1,867 814
Interest expense ........................... (38,779) (35,861)
--------- ---------
Non-operating expense, net ............... (36,912) (35,047)
--------- ---------
NET LOSS ..................................... $ (13,255) $ (12,855)
========= =========
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 THREE MONTHS ENDED MARCH 31, 1998
(unaudited)
(in thousands)
Retained
Earnings
Partners' (Accumulated
Capital Deficit) Total
Balance, December 31, 1997 $ 373,790 $ (45,851) $ 327,939
Net Loss ................. -- (13,255) (13,255)
--------- --------- ---------
Balance, March 31, 1998 .. $ 373,790 $ (59,106) $ 314,684
========= ========= =========
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 THREE MONTHS ENDED MARCH 31, 1998 AND 1997
(unaudited)
(dollars in thousands)
Three Months Ended
March 31,
-------------------------
1998 1997
------------ ------------
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss ....................................................................... $ (13,255) $ (12,855)
Adjustments to reconcile net loss to net cash flows from operating activities --
Noncash charges --
Depreciation and amortization ............................................. 15,428 20,761
Accretion of discounts on indebtedness .................................... 200 --
Provisions for losses on receivables ...................................... 2,244 1,832
Amortization of deferred loan offering costs .............................. 1,717 1,696
Utilization of CRDA credits and donations ................................. 53 --
Valuation allowance of CRDA investments ................................... 823 1,217
(Increase)/decrease in receivables ......................................... (3,614) (3,771)
Decrease in inventories .................................................... 580 9
(Increase)/decrease in advances to affiliates .............................. 6,570 (1,958)
Decrease in other current assets ........................................... 1,385 1,121
Increase in other assets ................................................... (1,302) (879)
Increase in accounts payable and accrued expenses .......................... 3,340 12,671
Increase in accrued interest payable ....................................... 35,912 33,750
Decrease in other long-term liabilities .................................... (633) (510)
--------- ---------
Net cash provided by operating activities ................................. 49,448 53,084
--------- ---------
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchase of property and equipment, net .................................... (3,308) (19,268)
Purchase of CRDA investments ............................................... (2,608) (2,429)
--------- ---------
Net cash used in investing activities ..................................... (5,916) (21,697)
--------- ---------
CASH FLOWS FROM FINANCING ACTIVITIES:
Additional borrowings ...................................................... 900 --
Payments and current maturities of long-term debt .......................... (1,794) (2,406)
Cost of issuing debt ....................................................... (169) --
--------- ---------
Net cash provided by financing activities .................................. (1,063) (2,406)
--------- ---------
NET INCREASE IN CASH & CASH EQUIVALENTS .......................................... 42,469 28,981
CASH AND CASH EQUIVALENTS AT BEGINNING OF YEAR ................................... 114,879 71,320
--------- ---------
CASH AND CASH EQUIVALENTS AT MARCH 31 ............................................ $ 157,348 $ 100,301
========= =========
CASH INTEREST PAID ............................................................... $ 296 $ 398
========= =========
Supplemental Disclosure of noncash activities:
Purchase of property and equipment under capitalized lease obligations ......... $ 881 $ 11,544
========= =========
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) Condensed Financial Statements
The accompanying condensed consolidated financial statements include those
of Trump Atlantic City Associates, a New Jersey general partnership ("Trump
AC"), 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"),
Trump Casino Services, L.L.C., a New Jersey limited liability company ("Trump
Services"), and Trump Communications, L.L.C., a New Jersey limited liability
company ("Trump Communications") (Plaza Associates, Taj Associates, Trump
Services and Trump Communications are collectively referred to herein as the
"Subisdiary Guarantors"). Trump AC's sole sources of liquidity are distributions
in respect of its interests in Plaza Associates and Taj Associates. Trump AC is
owned by Trump Hotels & Casino Resorts Holdings, L.P., a Delaware limited
partnership ("THCR Holdings"). THCR Holdings is currently a 63.4% owned
subsidiary of Trump Hotels & Casino Resorts, Inc. ("THCR"). 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 $1.2 billion aggregate principal amount of 11 1/4% First Mortgage Notes due
2006 (the "TAC I Notes") of Trump AC and Trump AC Funding (the "TAC I Notes"),
the $75,000,000 aggregate principal amount of 11 1/4% First Mortgage Notes (TAC
II) due 2006 (the "TAC II Notes") of Trump AC and Trump AC Funding II and the
$25,000,000 aggregate principal amount of 11 1/4% First Mortgage Notes (TAC III)
due 2006 (the "TAC III Notes") of Trump AC and Trump AC Funding III to
distribute funds to Trump AC.
Plaza Associates owns and operates the 1,404 room Trump Plaza Hotel and
Casino which commenced operations in 1984. Trump AC acquired Taj Associates on
April 17, 1996. Taj Associates owns and operates the 1,250 room Trump Taj Mahal
Casino Resort which was opened on April 2, 1990.
All significant intercompany balances and transactions have been
eliminated in the accompanying condensed consolidated financial statements. The
minority interests in Plaza Associates and Taj Associates have not been
separately reflected in the consolidated financial statements of Trump AC since
they are not material.
The accompanying condensed consolidated financial statements have been
prepared by Trump AC without audit, pursuant to the rules and regulations of the
Securities and Exchange Commission ("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. In the opinion of Trump AC, all adjustments, consisting of only normal
recurring adjustments, necessary to present fairly the financial position,
results of operations and cash flows for the periods presented, have been made.
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, 1997
filed with the SEC.
The casino industry in Atlantic City is seasonal in nature; therefore,
results of operations for the three months ended March 31, 1998 are not
necessarily indicative of the operating results for a full year.
The separate financial statements of the Subsidiary Guarantors have not
been included because (i) the Subsidiary Guarantors constitute all of Trump AC's
direct and indirect subsidiaries; (ii) the Subsidiary Guarantors have fully and
unconditionally guaranteed the TAC I Notes, the TAC II Notes and the TAC III
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 Trump AC Funding, Trump AC Funding II and Trump AC Funding III are
not significant.
Certain reclassifications have been made to prior year financial
statements to conform to the current year presentation.
(2) Property and Equipment
During the second quarter of 1997, Trump AC revised its estimates of the
useful lives of buildings, building improvements and furniture and fixtures
which were acquired in 1996. Buildings and building improvements were
reevaluated to have a forty year life and furniture and fixtures were determined
to have a seven year life. Trump AC believes these changes more appropriately
reflect the timing of the economic benefits to be received from these assets
during their estimated useful lives. For the three months ended March 31, 1998,
the net effect of applying these new lives was to decrease net loss by
$1,951,000.
5
(3) 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 as of March 31, 1998 is as follows:
Total Assets (including First Mortgage Notes receivable of $1,295,873,000 and
related interest receivable) ............................................. $1,355,623,000
==============
Total Liabilities and Capital (including First Mortgage Notes payable of
$1,295,873,000 and related interest payable) ............................. $1,355,623,000
==============
Interest Income ............................................................. $ 36,562,000
==============
Interest Expense ............................................................ $ 36,562,000
==============
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. In 1997 Trump AC and Trump AC Funding II issued $75,000,000 and Trump
AC and Trump AC Funding III issued $25,000,000 in principal amount of 11 1/4%
First Mortgage Notes due 2006. Proceeds from the offerings of the TAC II Notes
and the TAC III Notes are intended by Trump AC to provide expansion funds and
working capital for operations. Accordingly, the company expects to have
sufficient liquidity to meets its obligations. 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 where necessary.
The indentures under which the First Mortgage Notes 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
("CCC").
Capital expenditures for Trump AC were $3,308,000 and $19,268,000 for the
three months ended March 31, 1998 and 1997, respectively. Capital expenditures
for improvements to Trump Plaza's existing facilities were $2,847,000 and
$4,253,000 for the three months ended March 31, 1998 and 1997, respectively. In
addition, in 1997, Plaza Associates exercised its option to purchase from
Seashore Four Associates, an entity beneficially owned by Donald J. Trump, one
of the parcels of land underlying Trump Plaza's main tower, pursuant to the
terms of a lease, the payments under which were terminated upon the exercise of
such option. The purchase price and associated closing costs were $10,144,000.
Capital expenditures attributable to the Taj Mahal were $175,000 and
$15,015,000 for the three months ended March 31, 1998 and 1997, respectively.
Capital expenditures for improvements to existing facilities were approximately
$175,000 and $2,340,000 for the three months ended March 31, 1998 and 1997,
respectively. Capital expenditures attributable to the expansion of the facility
were approximately $12,675,000 for the three months ended March 31, 1997.
The expansion at the Taj Mahal (the "Taj Mahal Expansion") consisted of
the construction of a new 14-bay bus terminal which was completed in December
1996, a 2,400 space expansion of the existing self parking facilities, which was
completed in May 1997, and an approximate 7,000 square foot casino expansion
with 260 slot machines which was completed in July 1997. The total costs of the
Taj Mahal Expansion including amounts expended in 1996 and 1997 were
approximately $43,500,000 and have been funded principally out of cash from
operations.
Trump AC has assessed the Year 2000 issue and has begun implementing a
plan to resolve the issue, which is expected to be completed in early 1999.
Based upon management's assessment, it is anticipated that associated costs
incurred to satisfactorily complete the plan will not be material.
Results of Operations: Operating Revenues and Expenses
The financial information presented below reflects the results of
operations of Trump AC. Because Trump AC has no business operations other than
its interests in Plaza Associates and Taj Associates at March 31, 1998, its
results of operations are not discussed below.
7
Comparison of Three-Month Periods Ended March 31, 1998 and 1997. The
following table includes selected data of Plaza Associates and Taj Associates
for the three months ended March 31, 1998 and 1997.
Three Months Ended March 31,
--------------------------------------------------------------------------
1998 1997 1998 1997 1998 1997
Plaza Plaza Taj Taj Total Total
Associates Associates Associates Associates Trump AC Trump AC
---------------------------------------------------------------------------
(in thousands)
Revenues:
Gaming ..................... $ 87,293 $ 86,870 $ 114,471 $ 128,273 $ 201,764 $ 215,143
Other ...................... 23,054 24,510 27,195 26,663 50,249 51,173
--------- --------- --------- --------- --------- ---------
Gross Revenues ............. 110,347 111,380 141,666 154,936 252,013 266,316
Less: Promotional Allowances ... 14,323 14,561 16,094 16,540 30,417 31,101
--------- --------- --------- --------- --------- ---------
Net Revenues ............... 96,024 96,819 125,572 138,396 221,596 235,215
--------- --------- --------- --------- --------- ---------
Costs & Expenses:
Gaming ..................... 54,019 55,251 72,633 79,196 126,652 134,447
General & Administrative ... 20,030 20,514 21,250 22,240 41,252 42,746
Depreciation & Amortization 6,053 6,539 9,317 14,200 15,428 20,761
Other ...................... 6,582 7,465 8,025 7,604 14,607 15,069
--------- --------- --------- --------- --------- ---------
Total Costs and Expenses ... 86,684 89,769 111,225 123,240 197,939 213,023
--------- --------- --------- --------- --------- ---------
Income from Operations ......... 9,340 7,050 14,347 15,156 23,657 22,192
--------- --------- --------- --------- --------- ---------
Non-Operating Income (Expense) 421 160 189 390 1,867 814
Interest Expense ............. (11,983) (12,193) (23,580) (23,668) (38,779) (35,861)
--------- --------- --------- --------- --------- ---------
Total Non-Operating Expense .. (11,562) (12,033) (23,391) (23,278) (36,912) (35,047)
--------- --------- --------- --------- --------- ---------
Net Income/(loss) .............. $ (2,222) $ (4,983) $ (9,044) $ (8,122) $ (13,255) $ (12,855)
========= ========= ========= ========= ========= =========
Three Months Ended March 31,
-----------------------------------------------------------------------------------
1998 1997 1998 1997 1998 1997
Plaza Plaza Taj Taj Total Total
Associates Associates Associates Associates Trump AC Trump AC
-----------------------------------------------------------------------------------
(in thousands)
Table Game Revenues ............. $ 24,908 $ 21,981 $ 41,556 $ 57,328 $ 66,464 $ 79,309
Incr (Decr) over Prior Period ... $ 2,927 $ (15,772) $ (12,845)
Table Game Drop ................. $ 151,612 $ 159,345 $ 274,652 $ 317,956 $ 426,264 $ 477,301
Incr (Decr) over Prior Period ... $ (7,733) $ (43,304) $ (51,037)
Table Win Percentage ............ 16.4% 13.8% 15.1% 18.0% 15.6% 16.6%
Incr (Decr) over Prior Period ... 2.6 pts (2.9) pts (1.0) pts
Number of Table Games ........... 117 135 156 166 273 301
Incr (Decr) over Prior Period ... (18) (10) (28)
Slot Revenues ................... $ 62,385 $ 64,889 $ 68,380 $ 66,392 $ 130,765 $ 131,281
Incr (Decr) over Prior Period ... $ (2,504) $ 1,988 $ (516)
Slot Handle ..................... $ 776,292 $ 787,344 $ 832,008 $ 833,184 $1,608,300 $1,620,528
Incr (Decr) over Prior Period ... $ (11,052) $ (1,176) $ (12,228)
Slot Win Percentage ............. 8.0% 8.2% 8.2% 8.0% 8.1% 8.1%
Incr (Decr) over Prior Period ... (.2) pts .2 pts 0 pts
Number of Slot Machines ......... 4,076 4,086 4,145 3,798 8,221 7,884
Incr (Decr) over Prior Period ... (10) 347 337
Poker Revenues .................. -- -- $ 3,921 $ 4,000 $ 3,921 $ 4,000
Incr (Decr) over Prior Period ... -- $ (79) $ (79)
Number of Poker Tables .......... -- -- 62 64 62 64
Incr (Decr) over Prior Period ... -- (2) (2)
Other Gaming Revenues ........... -- -- $ 614 $ 553 $ 614 $ 553
Incr (Decr) over Prior Period ... -- $ 61 61
Total Gaming Revenues ........... $ 87,293 $ 86,870 $ 114,471 $ 128,273 $ 201,764 $ 215,143
Incr (Decr) over Prior Period ... $ 423 $ (13,802) $ (13,379)
Number of Guest Rooms ........... 1,404 1,404 1,250 1,250 2,654 2,654
Occupancy Rate .................. 77.3% 84.8% 85.2% 90.3% 81.0% 87.4%
Average Daily Rate (Room Revenue) $ 77.53 $ 76.51 $ 97.76 $ 95.18 $ 87.42 $ 84.87
8
Gaming revenues are the primary source of Trump AC's revenues. Taj
Associates' year over year decrease in gaming revenues was due primarily to last
year's first quarter results which included an unusual approximately $8 million
dollar table game win from one premium player, contrasted against an unusually
low table game win percentage in the current year. Table games 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
quarters ended March 31, 1998 and 1997, respectively.
Gaming costs and expenses were $126,652,000 for the three months ended
March 31, 1998, a decrease of $7,795,000 or 6.2% from $134,447,000 from the
comparable period in 1997. This decrease is substantially proportionate to the
decrease in gaming revenues from the comparable period in 1997 and represent
primarily marketing and promotional costs.
During the second quarter of 1997, Trump AC revised its estimates of the
useful lives of buildings, building improvements, and furniture and fixtures
which were acquired in 1996. Buildings and building improvements were
reevaluated to have a forty year life and furniture and fixtures were determined
to have a seven year life. Trump AC believes these changes more appropriately
reflect the timing of the economic benefits to be received from these assets
during their estimated useful lives. For the three months ended March 31, 1998,
the net effect of applying these new lives was to increase net income by
$1,951,000.
Seasonality
The casino industry in Atlantic City is seasonal in nature; accordingly,
the results of operations for the period ending March 31, 1998 are not
necessarily indicative of the operating results for a full year.
ITEM 3--QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
Pursuant to the General Instructions to Rule 305 of Regulation S-K, the
quantitative and qualitative disclosures called for by this Item 3 and by Rule
305 of Regulation S-K are inapplicable to the Registrants at this time.
9
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.
Plaza Associates. The CRDA is required to set aside funds for
investment in hotel development projects in Atlantic City undertaken by casino
licensees which result in the construction or rehabilitation of at least 200
hotel rooms. These investments are to fund up to 27% of the cost to casino
licensees of such projects. In June 1993, Plaza Associates made application for
such funding to the CRDA with respect to its proposed construction of the Trump
Plaza East facilities, demolition of a certain structure adjacent thereto,
development of an appurtenant public park, roadway and parking area and
acquisition of the entire project site. The CRDA, in rulings through January 10,
1995, approved the hotel development project and, with respect to same and
pursuant to a credit agreement between them, reserved to Plaza Associates the
right to take investment tax credits up to approximately $14.2 million. Plaza
Associates has, except for three small parcels discussed below, acquired the
site and had constructed and presently operates and maintains the proposed hotel
tower, public park, roadway and parking area.
As part of its approval and on the basis of its powers of eminent domain,
the CRDA, during 1994, initiated certain condemnation proceedings in the
Superior Court of New Jersey, Atlantic County, to acquire five small parcels of
land within the project site. Plaza Associates has since acquired two of the
parcels and proceedings with respect to those parcels have been concluded. The
proceedings with respect to the remaining three parcels, which, if acquired,
will be included in the public park and parking area of the project, are
currently pending and include a claim by the defendants that the CRDA did not
properly determine that the parcels were to be used for public purposes. The
CRDA motion seeking dismissal of this claim has been briefed and, in February
1998, argued by the parties. Additionally, with respect to the two parcels to be
included in the public park portion of the project, the CRDA, by a separate
motion, seeks an order that the Plaza Associates' application and credit
agreement be deemed amended so as to terminate the CRDA obligation to acquire
the two parcels and enabling the CRDA to abandon the condemnation proceedings
with respect to these two parcels. This motion was opposed by Plaza Associates.
By order dated April 1, 1998, the Court denied the motion but granted the CRDA
leave to amend its pleadings by a filing within 14 days from the date thereof to
formally assert a claim for specific performance of the alleged agreement. The
CRDA did not file any such amended pleading within this permitted time period.
The defendants in two of the condemnation proceedings filed a separate
joint complaint in the New Jersey Superior Court alleging, among other claims,
that the CRDA and Plaza Associates are wrongfully attempting to deprive them of
property rights in violation of their constitutional and civil rights. Coking,
et al. v. Casino Reinvestment Development Authority, et al., Docket No.
ATL-L-2555-97. The CRDA's motion for summary judgment on the complaint and Plaza
Associates' motion to dismiss it for failure to state a claim were granted by
the New Jersey Superior Court on October 24, 1997 and November 11, 1997.
Other Litigation. On March 13, 1997, THCR filed a lawsuit in the United
States District Court, District of New Jersey, against Mirage, the State of New
Jersey ("State"), the New Jersey Department of Transportation ("NJDOT"), the
South Jersey Transportation Authority ("SJTA"), the CRDA, the New Jersey
Transportation Trust Fund Authority and others. THCR was seeking declaratory and
injunctive relief to recognize and prevent violations by the defendants of the
casino clause of the New Jersey State Constitution and various federal
securities and environmental laws relating to proposed infrastructure
improvements in the Atlantic City marina area. While this action was pending,
defendants State and CRDA then filed an action in the New Jersey State Court
seeking a declaratory judgment as to the claim relating to the casino clause of
the New Jersey State Constitution. On May 1, 1997, the United States District
Court dismissed the federal claims and ruled that the State constitutional
claims should be pursued in State Court. On April 2, 1998, the United States
Court of Appeals for the Third Circuit affirmed the dismissal. THCR has
petitioned the Third Circuit for a rehearing. On May 14, 1997 the State Court
entered a summary judgment in favor of the State and the CRDA, which was
affirmed by the Appellate Division on March 20, 1998. THCR has filed a Notice of
Appeal in the State Supreme Court.
On August 14, 1996, certain stockholders of THCR filed two derivative
actions in the Court of Chancery in Delaware (Civil Action Nos. 15148 and 15160)
(the "Delaware cases") against each of the members of the Board of Directors of
THCR, THCR, THCR Holdings, Castle Associates and Trump Casinos II, Inc.
("TCI-II"). The plaintiffs claim that the directors of THCR breached their
fiduciary duties in connection with its acquisition of Castle Associates (the
"Castle Acquisition") by purchasing these interests at an excessive price in a
self-dealing transaction. The complaint sought to enjoin the transaction, and
also sought damages and an accounting. The injunction was never pursued. These
plaintiffs served a notice of dismissal in the Delaware cases on December 29,
1997. The Court of Chancery has not yet ordered the Delaware cases dismissed.
10
On October 16, 1996, a stockholder of THCR filed a derivative action in
the United States District Court, Southern District of New York (96 Civ. 7820)
against each member of the Board of Directors of THCR, THCR, THCR Holdings,
Castle Associates, TCI, TCI-II, TCHI and Salomon Brothers, Inc ("Salomon"). The
plaintiff claims that certain of the defendants breached their fiduciary duties
and engaged in ultra vires acts in connection with the Castle Acquisition and
that Salomon was negligent in the issuance of its fairness opinion with respect
to the Castle Acquisition. The plaintiff also alleges violations of the federal
securities laws for alleged omissions and misrepresentations in THCR's proxies,
and that Trump, TCI-II and TCHI breached the acquisition agreement by supplying
THCR with untrue information for inclusion in the proxy statement delivered to
THCR's stockholders in connection with the Castle Acquisition. The plaintiff
seeks removal of the directors of THCR, and injunction, rescission and damages.
The Delaware cases were amended and refiled in the Southern District of
New York and consolidated with the federal action for all purposes, including
pretrial proceedings and trial. On or about January 17, 1997, the plaintiffs
filed their Consolidated Amended Derivative Complaint (the "First Amended
Complaint"), reflecting the consolidation. On or about March 24, 1997, the
plaintiffs filed their Second Consolidated Amended Derivative Complaint (the
"Second Amended Complaint"). In addition to the allegations made in the First
Amended Complaint, the Second Amended Complaint claims that certain of the
defendants breached their fiduciary duties and wasted corporate assets in
connection with the previously contemplated transaction with Colony Capital,
Inc. ("Colony Capital"). The Second Amended Complaint also includes claims
against Colony Capital for aiding and abetting certain of those violations. In
addition to the relief sought in the First Amended Complaint, the Second Amended
Complaint sought to enjoin the previously contemplated transaction with Colony
Capital or, if it was effectuated, to rescind it. On March 27, 1997, THCR and
Colony Capital mutually agreed to end negotiations with respect to such
transaction. On June 26, 1997, plaintiffs served their Third Consolidated
Amended Derivative Complaint (the "Third Amended Complaint"), which omitted the
claims against Colony Capital. THCR and the other defendants in the action moved
to dismiss the Third Amended Complaint on August 5, 1997. The plaintiffs opposed
the defendants' motions to dismiss the Third Amended Complaint by response dated
October 24, 1997. The defendants' reply was served December 9, 1997. By letter
dated April 2, 1998, the plaintiffs sought the Court's permission to amend
further the Third Amended Complaint to add certain additional factual
allegations. The defendants opposed the application and the Court has not yet
ruled on it.
Various legal proceedings are now pending against Trump AC. Trump AC
considers all such proceedings to be ordinary litigation incident to the
character of its business. Trump AC believes that the resolution of these
claims, to the extent not covered by insurance, will not, individually or in the
aggregate, have a material adverse effect on the financial condition or results
of operations of Trump AC.
From time to time, Plaza Associates and Taj Associates may be involved in
routine administrative proceedings involving alleged violations of certain
provisions of the Casino Control Act. However, management believes that the
final outcome of these proceedings will not, either individually or in the
aggregate, have a material adverse effect on Plaza Associates or Taj Associates
or on the ability of Plaza Associates or Taj Associates to otherwise retain or
renew any casino or other licenses required under the Casino Control Act for the
operation of Trump Plaza and the Taj Mahal.
11
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 January 1, 1998 and ending March 31, 1998.
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 general partner
Date: May 15, 1998
By: /S/ NICHOLAS L. RIBIS
-----------------------------------
Nicholas L. Ribis
President
(Duly Authorized Officer and
Principal Financial 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: May 15, 1998
By: /S/ NICHOLAS L. RIBIS
-----------------------------------
Nicholas L. Ribis
President and Chief Executive Officer
(Duly Authorized Officer and
Principal Financial 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: May 15, 1998
By: /s/ NICHOLAS L. RIBIS
---------------------
Nicholas L. Ribis
President and Chief Executive Officer
(Duly Authorized Officer and
Principal Financial 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: May 15, 1998
By: /S/ NICHOLAS L. RIBIS
-----------------------------------
Nicholas L. Ribis
President and Chief Executive Officer
(Duly Authorized Officer and
Principal Financial Officer)
16