UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D. C. 20549
FORM 10-Q
(Mark One)
[ X ] Quarterly Report Pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934
For the quarterly period ended September 30, 1998
[ ] Transition Report Pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934
For the transition period from to
Commission file number 33-27399
ATLANTIC CITY BOARDWALK ASSOCIATES, L.P.
- --------------------------------------------------------------------------------
(Exact name of registrant as specified in its charter)
New Jersey 22-2469174
(State or other jurisdiction (I.R.S. Employer Identification No.)
of incorporation or organization)
Indiana Avenue & the Boardwalk, Atlantic City, New Jersey 08401
(Address of principal executive offices) (Zip Code)
(609) 340-3400
(Registrant's telephone number, including area code)
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Sections 13 or 15 (d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days. Yes X No ______
<PAGE>
ATLANTIC CITY BOARDWALK ASSOCIATES, L.P.
INDEX
PART I FINANCIAL INFORMATION Page No.
Item 1. Financial Statements
Introductory Note to Financial Statements 2
Balance Sheets as of December 31, 1997 and
September 30, 1998 3
Statements of Operations For the Three-Month and
Nine-Month Periods Ended September 30, 1997 and
1998 4
Statements of Partners' Capital Accounts
(Deficit) For the Year Ended December 31, 1997
and the Nine Months Ended September 30, 1998 5
Statements of Cash Flows For the Nine Months
Ended September 30, 1997 and 1998 6
Notes to Financial Statements 7 - 9
Item 2. Management's Discussion and Analysis of
Financial Condition and Results of Operations 10 -12
PART II OTHER INFORMATION
Items 1-5 No information is provided as the answers to
Items 1 through 5 are inapplicable.
Item 6. Exhibits and reports on Form 8-K 12
<PAGE>
PART I
Item 1. Financial Statements
Introductory Note to Financial Statements
The accompanying financial statements have been prepared by Atlantic City
Boardwalk Associates, L.P. ("Partnership") without audit, pursuant to the rules
and regulations of the Securities and Exchange Commission. In the opinion of
management, these financial statements contain all adjustments necessary to
present fairly the financial position of the Partnership as of September 30,
1998, and the results of operations for the three and nine months ended
September 30, 1997 and 1998, and cash flows for the nine months ended September
30, 1997 and 1998.
Although management believes that the disclosures included herein are adequate
to make the information contained herein not misleading, certain information and
footnote disclosures normally included in financial statements prepared in
accordance with generally accepted accounting principles are omitted herein and
are incorporated by reference from the Partnership's Annual Report on Form 10-K
for the year ended December 31, 1997 filed with the Securities and Exchange
Commission. While the Partnership was formed to own, and to lease to The
Claridge Hotel and Casino Corporation ("Corporation") and its affiliates,
certain real estate and related assets, the Partnership is separate and distinct
from the Corporation. Any person or entity seeking information regarding the
Corporation or its debt or equity securities should review the reports,
statements and other information filed by the Corporation with the Securities
and Exchange Commission.
<PAGE>
<TABLE>
ATLANTIC CITY BOARDWALK ASSOCIATES, L.P.
Balance Sheets
December 31, 1997 and September 30, 1998
<CAPTION>
(Unaudited)
Assets 1997 1998
------ ----- ----------
Current assets:
<S> <C> <C>
Cash and cash equivalents $ 552,000 1,036,000
Rent due from New Claridge 810,000 793,000
Interest receivable from partners 41,000 66,000
Prepaid expenses 254,000 252,000
Other assets 150,000 219,000
--------- ---------
Total current assets 1,807,000 2,366,000
--------- ---------
Hotel Assets 183,707,000 184,218,000
Less: Accumulated depreciation and amortization (105,660,000) (109,641,000)
----------- -----------
Net Hotel Assets 78,047,000 74,577,000
----------- -----------
Note receivable from New Claridge, including accrued interest of
$3,690,000 and $4,014,000 in 1997 and 1998, respectively 7,290,000 7,614,000
Deferred rent from New Claridge 31,022,000 20,619,000
Intangibles, net of accumulated amortization of
$3,727,000 and $3,792,000 in 1997 and 1998, respectively 78,000 13,000
----------- -----------
$ 118,244,000 105,189,000
=========== ===========
Liabilities and Partners' Capital Accounts
Current liabilities:
Accounts payable $ 1,391,000 1,394,000
Accrued interest due New Claridge 948,000 786,000
Current portion of long-term debt due principally to New Claridge 18,615,000 6,299,000
---------- ----------
Total current liabilities 20,954,000 8,479,000
Long-term debt due principally to New Claridge, including
accrued interest of $20,000,000 in 1997 and 1998 75,465,000 75,939,000
---------- ----------
Total liabilities 96,419,000 84,418,000
---------- ----------
Partners' capital accounts (deficit):
New general partners 134,000 123,000
Former general partners 191,000 185,000
Special limited partners (158,000) (149,000)
Investor limited partners 21,658,000 20,612,000
---------- ----------
Total partners' capital accounts (deficit) 21,825,000 20,771,000
Commitments and contingencies
----------- -----------
$ 118,244,000 105,189,000
=========== ===========
</TABLE>
See accompanying notes to financial statements.
<PAGE>
<TABLE>
ATLANTIC CITY BOARDWALK ASSOCIATES, L.P.
Statements of Operations
(Unaudited)
Three Months Ended Nine Months Ended
September 30, September 30,
------------------------ -------------------------
1997 1998 1997 1998
---- ---- ---- ----
Revenues:
<S> <C> <C> <C> <C>
Rent from New Claridge for
the lease of Hotel Assets $ 7,406,000 7,425,000 26,835,000 21,093,000
Interest from New Claridge 108,000 108,000 324,000 324,000
Interest from Special Limited Partners 9,000 9,000 27,000 27,000
Investment 7,000 14,000 25,000 36,000
Other - - 2,000 1,000
---------- --------- ---------- ----------
7,530,000 7,556,000 27,213,000 21,481,000
--------- --------- ---------- ----------
Expenses:
Cost of maintaining and repairing
Hotel Assets, paid to New Claridge 2,960,000 2,934,000 8,609,000 8,777,000
Interest, principally on mortgages to
New Claridge 3,506,000 2,944,000 10,879,000 9,239,000
General and administrative 120,000 101,000 491,000 395,000
General Partners' management fee 33,000 33,000 98,000 98,000
Depreciation and amortization 1,361,000 1,331,000 4,143,000 4,046,000
--------- --------- ----------- -----------
7,980,000 7,343,000 24,220,000 22,555,000
--------- --------- ----------- -----------
Net income (loss) $ (450,000) 213,000 2,993,000 (1,074,000)
=========== ========= ========== ===========
Net income (loss) per limited partnership unit
(450 units outstanding at the end of each period) $ (985) 464 6,544 (2,349)
=========== ========= ========== ===========
</TABLE>
See accompanying notes to financial statements.
<PAGE>
<TABLE>
ATLANTIC CITY BOARDWALK ASSOCIATES, L.P.
Statements of Partners' Capital Accounts (Deficit)
For the Year Ended December 31, 1997
and the Nine Months Ended September 30, 1998
<CAPTION>
Class A Class B Class A Class B Total
New Former Special Special Investor Investor Partners'
General General Limited Limited Limited Limited Capital
Partners Partners Partners Partners Partners Partners Accounts
-------- -------- -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C> <C>
Partners' Capital
Accounts (Deficit),
December 31, 1996 $ 105,000 173,000 (12,000) (175,000) 4,593,000 14,204,000 18,888,000
Net income 29,000 18,000 2,000 27,000 702,000 2,159,000 2,937,000
---------- --------- --------- ---------- ---------- ------------ -----------
Partners' Capital
Accounts (Deficit),
December 31, 1997 134,000 191,000 (10,000) (148,000) 5,295,000 16,363,000 21,825,000
Capital contributions
(unaudited) - - - 20,000 - - 20,000
Net loss
(unaudited) (11,000) (6,000) (1,000) (10,000) (257,000) (789,000) (1,074,000)
------------ ----------- -------- ---------- ---------- ------------ -----------
Partners' Capital
Accounts (Deficit),
September 30, 1998
(unaudited) $ 123,000 185,000 (11,000) (138,000) 5,038,000 15,574,000 20,771,000
======= ========== ======== ======= ========= ============ ===========
</TABLE>
See accompanying notes to financial statements.
<PAGE>
<TABLE>
<CAPTION>
ATLANTIC CITY BOARDWALK ASSOCIATES, L.P.
Statements of Cash Flows
(Unaudited)
For the Nine Months Ended September 30, 1997 and 1998
1997 1998
---------- ----------
Cash flows from operating activities:
<S> <C> <C>
Net income (loss) $2,993,000 (1,074,000)
Adjustments to reconcile net income (loss) to
net cash provided by operating activities:
Depreciation and amortization 4,143,000 4,046,000
Accretion of discount on mortgage note 1,291,000 1,484,000
Loss on disposal of assets 2,000 -
Decrease in deferred rent from New Claridge 3,717,000 10,403,000
Deferred interest on receivable from New Claridge (324,000) (324,000)
Change in current assets and liabilities:
(Increase) in rent due from New Claridge,
interest receivable from partners,
prepaid expenses and other assets (126,000) (75,000)
(Decrease) in accounts payable and
accrued interest due New Claridge (137,000) (159,000)
---------- -----------
Net cash provided by operating activities 11,559,000 14,301,000
---------- ----------
Cash flows from investing activities:
Purchase of Hotel Assets (60,000) (444,000)
---------- ----------
Cash flows from financing activities:
Capital contributions - 20,000
Proceeds of borrowings from New Claridge 149,000 777,000
Principal payments of debt, principally to New Claridge (12,559,000) (14,170,000)
----------- -----------
Net cash used in financing activities (12,410,000) (13,373,000)
----------- -----------
Net (decrease) increase in cash and cash equivalents (911,000) 484,000
Cash and cash equivalents, beginning of period 1,446,000 552,000
---------- -----------
Cash and cash equivalents, end of period $535,000 1,036,000
========== ===========
Supplemental cash flow information:
Interest paid $10,416,000 8,839,000
========== ===========
Supplemental noncash investing and financing activities:
Capital lease obligation incurred to acquire Hotel Assets $ - 67,000
========== ===========
See accompanying notes to financial statements.
</TABLE>
<PAGE>
ATLANTIC CITY BOARDWALK ASSOCIATES, L.P.
Notes to Financial Statements
(Unaudited)
(1) The Partnership
Atlantic City Boardwalk Associates, L.P. ("Partnership") was formed on
October 31, 1983 to acquire the buildings, parking facility and
non-gaming depreciable, tangible property (collectively, "Hotel
Assets") of the Claridge Hotel and Casino ("Claridge") located in
Atlantic City, New Jersey; to hold a leasehold interest in the land on
which the Claridge is located ("Land"), which Land was subsequently
acquired by the Partnership as part of a financial restructuring
("Restructuring Agreement"); and to engage in activities related or
incidental thereto. The Partnership leases the Land and Hotel Assets to
The Claridge at Park Place, Incorporated ("New Claridge"), a
wholly-owned subsidiary of The Claridge Hotel and Casino Corporation
("Corporation"), under operating leases.
(2) Financial Condition of the Partnership and New Claridge
The ability of the Partnership to fulfill its obligations is dependent
upon the ability of New Claridge to pay rental payments when due.
Accordingly, the financial stability of the Partnership is dependent
upon the financial condition of New Claridge. The following
information with respect to New Claridge is taken from the
Corporation's filings on Forms 10-K and 10-Q as filed with the
Securities and Exchange Commission.
The Corporation experienced recurring losses and serious deterioration
in its cash flow in 1996. Since the Corporation did not have
substantial cash reserves or access to a line of credit, the
Corporation needed to experience a significant improvement in
operating results in 1997 over 1996 levels in order to meet its
on-going obligations, including the interest due on the $85 million of
First Mortgage Notes. Operating results in 1997 did improve over 1996
levels, due primarily to the positive impact of the availability of
the self-parking garage, lower bus package pricing, and other cost
containment initiatives. However, operating results for the first nine
months of 1998 were below 1997 levels due to increased competition for
casino customers. New Claridge has redirected its bus program to
reduce the number of customers who arrive by bus and, thereby, related
costs. Marketing efforts are being directed toward the mid-level slot
customer through the use of promotions and advertising. Additionally,
management continues to conserve cash through various cost containment
measures, including limiting capital expenditures in 1998 to
approximately $1.5 million. Management will also consider various
refinancing efforts, including a sale of the Corporation.
In view of the operating results of New Claridge, and in order to meet
its obligations, the Corporation is taking steps to enhance its cash
position through both operational changes and certain transactions
with PDS Financial Corporation ("PDS") and the New Jersey Casino
Reinvestment Development Authority ("CRDA"), as further discussed
below. No assurances can be given that these efforts will be
successful.
In December 1997, New Claridge obtained a commitment from PDS for a
$1.8 million sale lease-back facility (the "Facility"). Under the
terms of the Facility, New Claridge may sell certain of its slot
machines to PDS under a sale lease-back arrangement, for a specified
amount per slot machine for up to $1.8 million. In February 1998, New
Claridge sold 370 slot machines to PDS for approximately $1 million
under this Facility. The machines have been leased back to New
Claridge under an operating lease arrangement for two years. After two
years, New Claridge has an option to either purchase the machines,
renew the lease arrangement for twelve months, or return the equipment
to PDS. On September 15, 1998 New Claridge initiated the sale of an
additional 379 slot machines to PDS for approximately $775,000. These
machines will also be leased back to New Claridge under an operating
lease arrangement for two years with terms similar to those described
above. This transaction is expected to be completed in early November
1998. Once completed, no additional financing will be available under
the Facility.
On October 22, 1998, the CRDA approved the direct investment of New
Claridge funds, already on deposit with the CRDA, and the completion of
certain donations of New Claridge funds also already on deposit. These
transactions are expected to result in New Claridge receiving
approximately $925,000 from the CRDA prior to December 31, 1998.
In addition, New Claridge has retained the law firm of Zelle and Larson
LLP of Minneapolis, Minnesota to assist in the recovery of certain
expenses incurred in reopening the self-parking garage and potential
lost profit claims as a result of the accident which occurred in the
self-parking garage on July 10, 1996. On July 22, 1997, New Claridge
filed a Complaint and Demand for Arbitration in the amount of $10
million against the general contractor and the architect for the
self-parking garage. Arbitration proceedings commenced in April 1998,
and are expected to continue into the fourth quarter of 1998. Recovery
of these claims would have a positive impact on New Claridge's
financial results and liquidity. However, there is no assurance that
the Corporation will be successful in realizing any recovery.
The Corporation had a net loss of $4,039,000 for the nine months ended
September 30, 1998, compared to a net loss of $2,192,000 for the same
period in 1997. The increase in net loss is due primarily to increased
marketing costs related to the initiatives to increase table games
business, as well as higher payroll costs, higher costs of providing
promotional allowances, and higher equipment rental costs as a result
of the limited capital expenditure funding available.
The ownership and operation of casino-hotel facilities in Atlantic City
are subject to extensive state regulation under the Casino Control Act
under the direction of the New Jersey Casino Control Commission. The
Casino Control Act provides that various categories of entities must
hold appropriate casino licenses. The Partnership currently operates
under a four-year casino service industry license effective October 31,
1995, while New Claridge operates under a four-year casino operator's
license effective September 30, 1995.
(3) Contingencies
The 1989 Restructuring Agreement provided for Del Webb Corporation
("Webb") to retain an interest, which was assigned to a trustee for
the benefit of the Valley of the Sun United Way on April 2, 1990,
equal to $20 million plus interest at a rate of 15% per annum,
compounded quarterly, commencing December 1, 1988, in any proceeds
ultimately recovered from the operations and/or the sale or
refinancing of the Claridge facility in excess of the first mortgage
loan and other liabilities ("Contingent Payment"). Consequently, New
Claridge has deferred the recognition of $20 million of forgiveness
income with respect to the Contingent Payment obligation. Interest on
the Contingent Payment has not been recorded by the Corporation since
the likelihood of paying such amount is not considered probable at
this time. As of September 30, 1998, accrued interest would have
amounted to approximately $65.1 million.
In connection with the 1989 restructuring, Webb agreed to permit those
partners/investors in the Partnership and Corporation ("Releasing
Partners/Investors") from whom Webb had received written releases from
all liabilities, rights ("Contingent Payment Rights") to receive
certain amounts to the extent available for application to the
Contingent Payment. Approximately 84% in interest of the
partners/investors provided releases and became Releasing
Partners/Investors. Payments to Releasing Partners/Investors are to be
made in accordance with a schedule of priorities, as defined in the
1989 Restructuring Agreement.
On February 23, 1996, the Corporation acquired an option to purchase,
at a discount from the carrying value, the Contingent Payment. The
purchase price of the option was $1 million, and the option could have
been exercised any time prior to December 31, 1997.
Given the recent operating results at New Claridge, the Corporation
was not able to exercise this Contingent Payment Option, and it
expired in accordance with its terms on December 31, 1997.
<PAGE>
Item 2. Management's Discussion and Analysis of Financial Condition and Results
of Operations
Results of Operations for the Three-Month and Nine-Month Periods Ended September
30, 1998 as Compared to the Three-Month and Nine-Month Periods Ended September
30, 1997
Rental income for the three months ended September 30, 1998 increased $19,000 as
compared to the three months ended September 30, 1997, and decreased $5,742,000
for the nine months ended September 30, 1998 as compared to the nine months
ended September 30, 1997. This decrease is primarily due to the abatement of
rent pursuant to the March 1, 1997 amendments to the Operating Lease and
Expansion Operating Lease. Prior to these amendments, rental income (including
the effect of the $38.8 million of rent abatements provided in accordance with
the 1989 Restructuring Agreement) was recognized on a leveled basis over the
initial lease term ending September 30, 1998. Since the amount of abatements
permitted in accordance with the March 1997 amendments will vary depending on
the Partnership's cash flow, the actual amount abated on a monthly basis is
recorded as a reduction of rental income. For the three- and nine-month periods
ended September 30, 1998 the reduction to rental income resulting from the
abatement of rent was approximately $2,848,000 and $8,814,000, respectively,
compared to $2,518,000 and $6,232,000 for the same periods in 1997. Also, during
1997, approximately $3,102,000 in deferred rent was recognized as rental income.
This did not occur in 1998, resulting in reduced rents when compared to 1997.
For the three- and nine-month periods ended September 30, 1998, interest expense
decreased $562,000 and $1,640,000, respectively, as compared to the same periods
ended September 30, 1997. These decreases are due to principal payments made
during 1997 and 1998 that reduced the average outstanding balance of the
wraparound and expansion mortgages.
General and administrative expenses for the three months ended September 30,
1998 decreased $19,000 as compared to the three months ended September 30, 1997
and $96,000 for the nine months ended September 30, 1998 as compared to the nine
months ended September 30, 1997. Professional fees during 1997 were significant
due to the Corporation's attempted reorganization last year, resulting in
reduced fees in 1998. Also, insurance expense decreased due to a decrease in the
insurance premium.
Liquidity and Capital Resources
The ability of the Partnership to continue to fulfill its obligations is
dependent upon the ability of New Claridge to continue to make rental payments
when due. Current lease payments from New Claridge, as recently amended (see
below), are not sufficient to pay the Partnership's debt service and operating
expenses for the three months ended December 31, 1998. As a result, New Claridge
will pay, as additional rent, the amount necessary to meet the operating needs
of the Partnership. After December 31, 1998, current lease payments from New
Claridge will be sufficient to pay the Partnership's debt service and operating
expenses.
As part of the 1989 Restructuring Agreement, rental payments in excess of
monthly cash flow requirements were deferred or abated so that excess cash did
not accumulate in the Partnership. The 1997 restructuring continues this
deferral or abatement of excess cash flow through 1998 and thereafter. At the
Closing of the 1989 restructuring the Partnership loaned New Claridge $3.6
million. The note, including interest, along with those rentals deferred under
the amendment to the operating leases, is to be repaid to the Partnership upon
(i) the sale or refinancing of the Claridge; (ii) full or partial satisfaction
of the Expandable Wraparound Mortgage; and (iii) full satisfaction of any first
mortgage then in place. The deferral of $1.3 million of rental obligation as
part of the 1997 restructuring leaves the Partnership with minimal liquidity.
The Operating Lease and the Expansion Operating Lease were amended as part of
the 1989 Restructuring Agreement to provide for the deferral of $15,078,000 of
rental payments during the period July 1, 1988 through the beginning of 1992,
and to provide for the abatement of $38,820,000 of basic rent through 1998,
thereby reducing the Partnership's cash flow to an amount estimated to be
necessary only to meet the Partnership's cash requirements. During the third
quarter of 1991, the maximum deferral of rent was reached. On August 1, 1991,
the Operating Lease and the Expansion Operating Lease were amended further to
revise the abatement provisions so that, commencing January 1, 1991, for each
calendar year through 1998, the lease abatements could not exceed $10 million in
any one calendar year, nor $38,820,000 in the aggregate. All of the $38,820,000
of available rent abatements was fully utilized by the end of the first quarter
of 1997.
The Fifth Amendment to the Operating Lease and the Fourth Amendment to the
Expansion Operating Lease, which were effective on March 1, 1997, provided for
the abatement of $867,953 of basic rent and for the deferral of $1,300,000 of
basic rent on March 1, 1997, and provides for additional abatements of basic
rent, commencing on April 1, 1997, as necessary to reduce the Partnership's cash
flow to an amount necessary to meet the Partnership's cash requirements through
December 31, 1998 (determined without regard to the repayment of the deferred
rent). The $1.3 million of basic rent deferred on March 1, 1997 is to be paid to
the Partnership in monthly installments of $25,000 for the period April 1, 1997
through December 31, 1997, and monthly installments of $50,000 for the year 1998
and thereafter until paid in full (subject to acceleration under certain
circumstances). For the years 1999 through 2003, additional abatements of basic
rent are to be made to provide the Partnership with the amount needed to meet
the Partnership's cash requirements plus an additional amount ($83,333 per month
in 1999 and 2000, $125,000 per month in 2001, and $166,667 per month in 2002 and
2003). All abatements of rent in excess of the $38.8 million which were allowed
in accordance with the 1989 and 1997 restructuring will be recognized as a
reduction of rental income as it is abated. During the nine months ended
September 30, 1998, rents abated amounted to approximately $8,814,000.
In addition, under the March 1, 1997 restructuring agreement between the
Corporation, New Claridge and the Partnership, New Claridge agreed to exercise
the first of three ten-year renewal options extending the term of the Operating
Lease and Expansion Operating Lease through September 30, 2008. Basic rent
during the renewal term of the Operating Lease will be calculated pursuant to a
formula with annual basic rent not to be more than $29.5 million or less than
$24 million for the twelve months commencing October 1, 1998, and subsequently,
not to be greater than 10% more than the basic rent for the immediately
preceding lease year in each lease year thereafter. Basic rent during the
renewal term of the Expansion Operating Lease will also be calculated pursuant
to a formula with annual basic rent not to be more than $3 million or less than
$2.5 million for the twelve months commencing October 1, 1998, and subsequently,
not to be greater than 10% more than the basic rent for the immediately
preceding lease year in each lease year thereafter. As calculated pursuant to
the defined formulas, basic rent for the twelve months commencing October 1,
1998 will be $24 million under the Operating Lease, and $2.5 million under the
Expansion Operating Lease.
Under the terms of the Operating Lease, as amended effective March 1, 1997, New
Claridge had an option to purchase (the "Purchase Option"), on September 30,
1998, the Hotel Assets and the underlying land for their fair market value at
the time the Purchase Option is exercised, which in no event may be less than
(i) the amount then outstanding under the Expandable Wraparound Mortgage, plus
(ii) $2.5 million, plus (iii) any amount of the $1.3 million of rent deferred on
March 1, 1997 not then paid. To exercise the Purchase Option, New Claridge was
required to give notice to the Partnership, at least nine months prior to the
option date, of its election to do so. Based on its current financial situation,
New Claridge did not give such notice to the Partnership in respect of the
September 30, 1998 option date. However, New Claridge may also exercise an
option, on September 30, 2003, to purchase the Hotel Assets and the underlying
land on January 1, 2004, for their fair market value at the time the option is
exercised.
The Partnership funds the purchase of additional Hotel Assets by borrowing
funds, at a 14% interest rate, from New Claridge. The ensuing notes are secured
under the Expandable Wraparound Mortgage up to $25 million. Principal and
interest on these notes are then reimbursed to the Partnership through
additional rentals from New Claridge. Under the Operating Lease, New Claridge is
required to reimburse the Partnership for all taxes, assessments, insurance and
general and administrative costs of the Partnership.
During 1988, Oppenheimer Holdings, Inc. and officers and employees of affiliated
Oppenheimer & Co., Inc. ("Special Limited Partners") committed to contribute
$400,000 by issuing 9% notes maturing September 30, 1998. As of September 30,
1998, $20,000 had been collected on these notes and recorded as a capital
contribution made by these Special Limited Partners. As of November 10, 1998,
approximately $320,000 has been collected on these notes.
The Partnership had a working capital deficiency of $6,113,000 as of September
30, 1998 and $19,147,000 as of December 31, 1997. The working capital deficiency
primarily results from the consummation of the 1989 Restructuring Agreement as
well as the 1997 restructuring. As part of the 1989 restructuring, the
Partnership's cash flow was reduced to an amount no greater than what the
Partnership needs to pay Partnership expenses, including debt service. Such
concept was continued through 1998 in the 1997 restructuring. Thus, so long as
the Claridge is financially viable and continues to make all payments under the
operating leases, the Partnership expects to be able to pay its current
liabilities.
Year 2000
The Partnership is aware of the issues associated with the programming code in
existing computer systems as the year 2000 approaches. The Partnership has
assessed its office hardware and software and found them to be year 2000
compliant. The Partnership's Hotel Assets are maintained at the Claridge. The
Claridge has also addressed these issues as discussed in the Corporation's
filing on Form 10-Q as filed with the Securites and Exchange Commission. If
their planned modifications are not completed timely, the year 2000 problem
could have a material impact on the Corporation's and the Partnership's ability
to conduct business.
PART II
Item 6. Exhibits and reports on Form 8-K
(a) Not applicable.
(b) No reports on Form 8-K were filed during the quarter ended
September 30, 1998.
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
Atlantic City Boardwalk Associates, L.P.
Registrant
Date November 13, 1998 /s/ Anthony C. Atchley
----------------- ----------------------------------
by Anthony C. Atchley, General
Partner
Date November 13, 1998 /s/ Gerald C. Heetland
----------------- ----------------------------------
by Gerald C. Heetland, General
Partner
Date November 13, 1998 /s/ Anthony C. Atchley
----------------- ---------------------------------
by AC Boardwalk Partners Corporation,
General Partner
by Anthony C. Atchley, President
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM
ATLANTIC CITY BOARDWALK ASSOCIATES, L.P.'S FORM 10-Q FOR THR QUARTER ENDED
SEPTEMBER 30, 1998 AND IS QUALIFIED IN IT'S ENTIRETY BY REFERENCE TO SUCH
FINANCIAL STATEMENTS.
</LEGEND>
<CIK> 0000730408
<NAME> ATLANTIC CITY BOARDWALK
<MULTIPLIER> 1000
<CURRENCY> U.S.
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-END> SEP-30-1998
<EXCHANGE-RATE> 1
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0
0
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