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 March 31, 1999
[ ] 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 of (I.R.S. Employer Identification No.)
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, 1998and March
31, 1999 3
Statements of Operations For the Three Months
Ended March 31, 1998 and 1999 4
Statements of Partners' Capital Accounts (Deficit)
For the Year Ended December 31, 1998 and the Three
Months Ended March 31, 1999 5
Statements of Cash Flows For the Three Months
Ended March 31, 1998 and 1999 6
Notes to Financial Statements 7 - 9
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations 10 - 12
Item 3. Quantitative and Qualitative Disclosures
About Market Risk 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 March 31, 1999,
and the results of operations and cash flows for the three months ended March
31, 1998 and 1999.
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, 1998 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>
<CAPTION>
ATLANTIC CITY BOARDWALK ASSOCIATES, L.P.
Balance Sheets
December 31, 1998 and March 31, 1999
(Unaudited)
Assets 1998 1999
---- ----
Current assets:
<S> <C> <C>
Cash and cash equivalents $ 1,527,000 296,000
Rent due from New Claridge 786,000 829,000
Interest receivable from partners 35,000 34,000
Prepaid expenses 210,000 120,000
Other assets 159,000 124,000
--------- ---------
Total current assets 2,717,000 1,403,000
----------- -----------
Hotel Assets 184,318,000 184,419,000
Less: Accumulated depreciation and amortization (110,952,000) (112,263,000)
------------- -------------
Net Hotel Assets 73,366,000 72,156,000
------------- -------------
Note receivable from New Claridge, including accrued interest of
$4,122,000 and $4,230,000 in 1998 and 1999, respectively 7,722,000 7,830,000
Deferred rent from New Claridge 20,905,000 22,239,000
Intangibles, net of accumulated amortization of
$3,802,000 and $3,803,000 in 1998 and 1999, respectively 3,000 2,000
---------- ----------
$ 104,713,000 103,630,000
=========== ===========
Liabilities and Partners' Capital Accounts
Current liabilities:
Accounts payable $ 1,764,000 1,261,000
Accrued interest due to New Claridge 861,000 977,000
Current portion of long-term debt due principally to
New Claridge 2,065,000 2,281,000
--------- ---------
Total current liabilities 4,690,000 4,519,000
Long-term debt due principally to New Claridge, including 79,622,000 79,559,000
accrued interest of $20,000,000 in 1998 and 1999 ---------- ----------
Total liabilities 84,312,000 84,078,000
---------- ----------
Partners' capital accounts:
New general partners 116,000 107,000
Former general partners 180,000 175,000
Special limited partners 155,000 155,000
Investor limited partners 19,950,000 19,115,000
---------- ----------
Total partners' capital accounts 20,401,000 19,552,000
Commitments and contingencies
----------- -----------
$ 104,713,000 103,630,000
=========== ===========
</TABLE>
See accompanying notes to financial statements.
<PAGE>
<TABLE>
<CAPTION>
ATLANTIC CITY BOARDWALK ASSOCIATES, L.P.
Statements of Operations
(Unaudited)
For the Three Months Ended March 31, 1998 and 1999
1998 1999
Revenues: ---- ----
<S> <C> <C>
Rent from New Claridge for the lease of Hotel Assets $ 7,263,000 6,136,000
Interest from New Claridge 108,000 108,000
Interest from Special Limited Partners 9,000 -
Investment 10,000 10,000
--------- ---------
7,390,000 6,254,000
--------- ---------
Expenses:
Cost of maintaining and repairing
Hotel Assets paid to New Claridge 2,885,000 2,816,000
Interest, principally on mortgages to New Claridge 3,216,000 2,858,000
General and administrative 116,000 92,000
General Partners' management fee 33,000 33,000
Depreciation and amortization 1,362,000 1,312,000
--------- ---------
7,612,000 7,111,000
--------- ---------
Net loss $ (222,000) (857,000)
========== =========
Net loss per limited partnership unit - basic and diluted
(450 units outstanding at the end of each period) $ (484) (1,873)
========== =========
See accompanying notes to financial statements.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
ATLANTIC CITY BOARDWALK ASSOCIATES, L.P.
Statements of Partners' Capital Accounts (Deficit)
For the Year Ended December 31, 1998
and the Three Months Ended March 31, 1999
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, 1997 $ 134,000 191,000 (10,000) (148,000) 5,295,000 16,363,000 21,825,000
Capital contributions - - 26,000 304,000 - - 330,000
Net loss (18,000) (11,000) (1,000) (16,000) (419,000) (1,289,000) (1,754,000)
-------- -------- ------- -------- --------- ----------- -----------
Partners' Capital
Accounts (Deficit),
December 31, 1998 116,000 180,000 15,000 140,000 4,876,000 15,074,000 20,401,000
Capital contributions - - - 8,000 - - 8,000
Net loss (9,000) (5,000) - (8,000) (205,000) (630,000) (857,000)
-------- ------- ------- ------- --------- ----------- -----------
Partners' Capital
Accounts (Deficit),
March 31, 1999
(unaudited) $ 107,000 175,000 15,000 140,000 4,671,000 14,444,000 19,552,000
======== ======= ====== ======= ========= ========== ==========
</TABLE>
See accompanying notes to financial statements.
<PAGE>
<TABLE>
<CAPTION>
ATLANTIC CITY BOARDWALK ASSOCIATES, L.P.
Statements of Cash Flows
(Unaudited)
For the Three Months Ended March 31, 1998 and 1999
1998 1999
Cash flows from operating activities: ---- ----
<S> <C> <C>
Net loss $ (222,000) (857,000)
Adjustments to reconcile net loss to net cash
provided by (used in) operating activities:
Depreciation and amortization 1,362,000 1,312,000
Accretion of discount on mortgage note 477,000 549,000
Decrease (increase) in deferred rent 3,468,000 (1,334,000)
Deferred interest on receivable from New Claridge (108,000) (108,000)
Change in current assets and liabilities:
Decrease in rent due from New Claridge,
interest receivable from partners,
prepaid expenses and other assets 117,000 83,000
Decrease in accounts payable and
accrued interest due to New Claridge (278,000) (387,000)
---------- ---------
Net cash provided by (used in) operating activities 4,816,000 (742,000)
---------- ---------
Cash flows from investing activities:
Purchase of Hotel Assets (198,000) (101,000)
---------- ---------
Cash flows from financing activities:
Capital contributions - 8,000
Proceeds of borrowings from New Claridge 495,000 76,000
Principal payments of debt, principally to New Claridge (4,657,000) (472,000)
----------- ---------
Net cash used in financing activities (4,162,000) (388,000)
----------- ---------
Net increase (decrease) in cash and cash equivalents 456,000 (1,231,000)
Cash and cash equivalents, beginning of period 552,000 1,527,000
----------- -----------
Cash and cash equivalents, end of period $ 1,008,000 296,000
=========== ===========
Supplemental cash flow information:
Interest paid, principally to New Claridge $ 3,091,000 2,573,000
=========== ===========
</TABLE>
See accompanying notes to financial statements.
<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.
As discussed in the Claridge's Annual Report on Form 10-K for the year
ended December 31, 1998, the Corporation has experienced recurring
losses and deterioration in its cash flow since 1996. Since the
Corporation does not have substantial cash reserves or access to a line
of credit, the Corporation needed to experience significant
improvements in operating results in 1997 over 1996 levels in order to
meet its on-going obligations, including the interest due on the 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 in 1998 fell below 1997 levels due to
increased competition for casino customers. In 1998, the Corporation
experienced a net loss of $9.4 million, compared to a net loss of $6.0
million in 1997. In the fall of 1998, New Claridge redirected its bus
program to reduce the number of customers who arrive by bus, and,
thereby, related costs. Total coin issued to bus passengers in 1998 was
$13.5 million, compared to $15.0 million of coin issued to bus
passengers in 1997. Marketing efforts are being directed toward the
mid-level slot customer through the use of promotions, direct mail and
advertising. Additionally, management continues to conserve cash
through various cost containment measures. Management will also
consider various refinancing alternatives, including a sale of the
Corporation, or a restructuring of its financial obligations.
In view of the operating results of New Claridge in 1998, and in order
to meet its obligations, management of the Corporation took several
steps to enhance its cash position, through both operational changes,
including the previously mentioned redirection of the bus program, and
certain transactions with PDS Financial Corporation ("PDS") and the New
Jersey Casino Reinvestment Development Authority ("CRDA"), as further
discussed below.
In December 1997, New Claridge obtained a commitment from PDS for a
sale lease-back facility ("Facility"). Under the terms of the Facility,
New Claridge could 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
<PAGE>
machines to PDS for approximately $1 million under this Facility. The
machines will be 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. In December 1998, New Claridge
completed the sale of an additional 379 slot machines to PDS for
approximately $776,000, under terms similar to those described above.
No additional financing is available under this Facility.
In October 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 resulted in the receipt by New Claridge of approximately
$930,000 from the CRDA in December 1998.
In addition, in February 1999, the Corporation and New Claridge agreed
to a settlement of approximately $2.3 million in the arbitration
proceedings concerning the accident which took place in New Claridge's
self-parking garage in July 1996. The settlement proceeds were received
by New Claridge in late February 1999.
As a result of these transactions, on March 2, 1999, New Claridge was
able to pay the interest due on the Notes on February 1, 1999, under
the 30-day grace period allowed in accordance with the terms of the
indenture governing the Notes.
The Corporation had a net loss of $1,248,000 for the three months ended
March 31, 1999, compared to a net loss of $1,645,000 for the same
period in 1998. The decrease in net loss is due in part to a change in
New Claridge's marketing strategy. New Claridge's marketing efforts
have been redirected toward the mid-level slot customer through the use
of direct promotions and advertising. New Claridge offers promotional
incentives to its customers in the form of coin to play slot machines
and gaming chips to play table games, through its direct marketing
programs, based on their level of gaming activity. Promotional
incentives issued through these programs during the first quarter of
1999 totalled $2,324,000, compared to $2,933,000 in the first quarter
of 1998.
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 Webb to retain an
interest equal to $20 million plus interest from December 1, 1988
accruing at the rate of 15% per annum compounded quarterly ("Contingent
Payment") 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. To give effect to this
<PAGE>
Contingent Payment, the Corporation and the Partnership agreed not to
make any distributions to the holders of their equity securities,
whether derived from operations or from sale or refinancing proceeds,
until Webb had received the Contingent Payment. It is estimated that at
March 31, 1999, the aggregate amount owing in respect of the Contingent
Payment was approximately $91.6 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
Restructuring Agreement.
On April 2, 1990, Webb transferred its interest in the Contingent
Payment to an irrevocable trust for the benefit of the Valley of the
Sun United Way, and upon such transfer Webb was no longer required to
be qualified or licensed by the New Jersey Casino Control Commission.
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 it's
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 Months Ended March 31, 1999
as Compared to the Three Months Ended March 31, 1998
Rental income for the three months ended March 31, 1999 decreased $1,127,000 as
compared to the three months ended March 31, 1998. This decrease is primarily
due to the expiration of both the Operating Lease and Expansion Operating Lease
on September 30, 1998. Each lease provides for three ten-year renewal options at
the election of New Claridge. New Claridge agreed to exercise the first of the
ten-year renewal options, extending the term of the Operating Lease and
Expansion Operating Lease through September 30, 2008. Monthly basic rent for the
first three months of 1999 was $2 million for the Operating Lease and
approximately $208,000 for the Expansion Operating Lease. During the first three
months of 1998, basic rent was approximately $2.4 million per month for the
Operating Lease and approximately $409,000 per month for the Expansion Operating
Lease. In offset to these rent decreases, rents abated for the first three
months of 1999 were approximately $2 million, compared to approximately $2.5
million for the same period in 1998, due to the effects of the Sixth Amendment
to the Operating Lease and Fifth Amendment to the Expansion Operating Lease, as
discussed below.
For the three months ended March 31, 1999, interest expense decreased $358,000
as compared to the same period ended March 31, 1998 due to principal payments
made during 1998 and 1999 that reduced the average outstanding balance of the
wraparound and expansion mortgages.
General and administrative expenses decreased $24,000 for the three months ended
March 31, 1999 as compared to the three months ended March 31, 1998. Effective
September 1998, the Partnership renewed its Directors and Officers Liability
insurance policy at a reduced annual premium of approximately $253,000 compared
to the prior year's premium of approximately $344,000.
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, are
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 and 1998 amendment to the
restructuring continue this deferral or abatement of excess cash flow through
2004. 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, are 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, as well as the deferral
of $1.1 million of rental obligation in March 1999 (as discussed below), leaves
the Partnership with minimal liquidity.
The Operating Lease and the Expansion Operating Lease were amended as part of
the 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
<PAGE>
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 provided 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).
In conjunction with the Fifth Amendment to the Operating Lease and the Fourth
Amendment to the Expansion Operating Lease, as discussed above, the Corporation,
New Claridge and the Partnership entered into a restructuring agreement,
effective March 1, 1997, to modify certain terms of the Expandable Wraparound
Mortgage (see below).
Under the terms of the Operating Lease, as amended effective March 1, 1997, New
Claridge had an option to purchase, on September 30, 1998, the Hotel Assets and
the underlying land. To exercise this 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 the 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.
Effective September 30, 1998, the Operating Lease and Expansion Operating Lease
were further amended, pursuant to a Sixth Amendment to the Operating Lease and
Fifth Amendment to the Expansion Operating Lease (the "Sixth Amendment"), to
allow for the deferral of $1.1 million of rent in March 1999, dependent upon (i)
New Claridge having received the proceeds in connection with its settlement of
the parking garage litigation, and (ii) the Corporation or New Claridge having
paid the interest due on the Notes. New Claridge received the proceeds from the
settlement of the Parking garage litigation in February 1999, and paid the
interest due on the Notes on March 2, 1999, within the 30-day grace period
allowed in accordance with the terms of the Indenture. The $1.1 million of basic
rent deferred in 1999 is to be paid to the Partnership in monthly installments
of $25,000 commencing January 1, 2000 until paid in full. This amendment also
provides for additional abatements of rent, through December 31, 2004, as
necessary to reduce the Partnership's cash flow to an amount necessary only to
meet the Partnership's cash requirements; these abatements, however, are to be
reduced by specified amounts for each period commencing January 1, 2000 and
ending December 31, 2004 ($83,333 per month in 2000, $130,000 per month in 2001,
$180,000 per month in 2002 and 2003, and $130,000 per month in 2004).
In addition to the deferral and abatements of rent provided for in the Sixth
Amendment, the amendment provides for the payment of $3.5 million of additional
basic rent on the earlier of (i) the maturity date of the Expandable Wraparound
Mortgage Note (see below), (ii) such earlier date, if any, as the entire
principal amount of the Expandable Wraparound Mortgage becomes due and payable,
or (iii) the date on which any merger, consolidation, or similar transaction to
which the Corporation or New Claridge is a party, or any sale of all or
substantially all of the assets of the Corporation or New Claridge is
consummated, or any change in control of the Corporation or New Claridge occurs.
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
<PAGE>
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.
The Partnership had a working capital deficiency of $3,116,000 as of March 31,
1999 and $1,973,000 as of December 31, 1998. The increase in the deficiency is
primarily the result of the deferral of $1.1 million of rent in March 1999,
pursuant to the Sixth Amendment. The working capital deficiency primarily
results from the consummation of the 1989 Restructuring Agreement. 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 2004 in the September 1998
amendment to the 1997 restructuring. Thus, so long as the Claridge is
financially viable and New Claridge continues to make all payments under the
operating leases, the Partnership expects to be able to pay its current
liabilities.
The Partnership is aware of the issue associated with the programming code in
existing computer systems as the year 2000 approaches. The "year 2000" problem
is the result of computer programs which were written using two digits rather
than four to define the applicable year, which could cause certain systems to
recognize the year 2000 as the year 1900. The Partnership has addressed this
issue and does not anticipate any significant costs associated with these system
changes. The Partnership has also updated its computer accounting system and
software with confirmation from the vendors of their year 2000 compliance.
Substantially all of the Partnership's revenues are derived from the New
Claridge, therefore any year 2000 issues impacting on New Claridge could also
impact the Partnership's financial condition. New Claridge has reported in its
Annual Report that it has addressed this issue and does not expect the amounts
required to be expensed related to correcting this problem to have a material
effect on its financial position or results of operations. Although management
of the Corporation anticipates completion of this project by the end of 1999,
there can be no assurances of this. If the modifications are not complete
timely, the year 2000 problem could have a material impact on the Corporation's
and the Partnership's ability to conduct business. The Partnership does not have
a contingency plan, but is currently discussing such a plan.
Item 3. Quantitative and Qualitative Disclosures About Market Risk
There have been no material changes in the information provided in the
Partnership's Annual Report on Form 10-K for the year ended December 31, 1998
filed with the Securities and Exchange Commission.
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 March
31, 1999.
<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 May 14, 1999 /s/ Anthony C. Atchley
by Anthony C. Atchley, General Partner
Date May 14, 1999 /s/ Gerald C. Heetland
by Gerald C. Heetland, General Partner
Date May 14, 1999 /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 THE QUARTER
ENDED MARCH 31, 1999 AND IS QUALIFIED IN IT'S ENTIRETY BY REFERENCE
TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<CIK> 0000730408
<NAME> ATLANTIC CITY BOARDWALK ASSOCIATES, L.P.
<MULTIPLIER> 1
<CURRENCY> US
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1999
<PERIOD-START> JAN-01-1999
<PERIOD-END> MAR-31-1999
<EXCHANGE-RATE> 1
<CASH> 296,000
<SECURITIES> 0
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 1,403,000
<PP&E> 184,419,000
<DEPRECIATION> 112,263,000
<TOTAL-ASSETS> 103,630,000
<CURRENT-LIABILITIES> 4,519,000
<BONDS> 79,559,000
0
0
<COMMON> 0
<OTHER-SE> 19,552,000
<TOTAL-LIABILITY-AND-EQUITY> 103,630,000
<SALES> 0
<TOTAL-REVENUES> 6,254,000
<CGS> 0
<TOTAL-COSTS> 2,816,000
<OTHER-EXPENSES> 1,437,000
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 2,858,000
<INCOME-PRETAX> (857,000)
<INCOME-TAX> 0
<INCOME-CONTINUING> (857,000)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (857,000)
<EPS-PRIMARY> 0
<EPS-DILUTED> 0
</TABLE>
