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 June 30, 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 incorporation (I.R.S. Employer
or organization) Identification No.)
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, 1998 and
June 30, 1999 3
Statements of Operations For the Six
Months Ended June 30, 1998 and 1999 4
Statements of Partners' Capital Accounts
(Deficit) For the Year Ended December 31,
1998 and the Six Months Ended June 30, 1999 5
Statements of Cash Flows For the Six Months
Ended June 30, 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 June 30, 1999,
and the results of operations and cash flows for the six months ended June 30,
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 June 30, 1999
(Unaudited)
Assets 1998 1999
---- ----
Current assets:
<S> <C> <C>
Cash and cash equivalents $ 1,527,000 610,000
Rent due from New Claridge 786,000 500,000
Interest receivable from partners 35,000 34,000
Prepaid expenses 210,000 68,000
Other assets 159,000 64,000
--------- ---------
Total current assets 2,717,000 1,276,000
--------- ---------
Hotel Assets 184,318,000 184,513,000
Less: Accumulated depreciation and amortization (110,952,000) (113,562,000)
------------- -------------
Net Hotel Assets 73,366,000 70,951,000
------------- -------------
Note receivable from New Claridge, including accrued interest of
$4,122,000 and $4,338,000 in 1998 and 1999, respectively 7,722,000 7,938,000
Deferred rent from New Claridge 20,905,000 22,476,000
Intangibles, net of accumulated amortization of
$3,802,000 and $3,803,000 in 1998 and 1999, respectively 3,000 2,000
------------ ------------
$ 104,713,000 102,643,000
=========== ============
Liabilities and Partners' Capital Accounts
Current liabilities:
Accounts payable $ 1,764,000 1,388,000
Accrued interest due to New Claridge 861,000 764,000
Current portion of long-term debt due principally to
New Claridge 2,065,000 2,536,000
--------- ---------
Total current liabilities 4,690,000 4,688,000
Long-term debt due principally to New Claridge, including 79,622,000 79,599,000
accrued interest of $20,000,000 in 1998 and 1999 ---------- ----------
Total liabilities 84,312,000 84,287,000
---------- ----------
Partners' capital accounts:
New general partners 116,000 95,000
Former general partners 180,000 168,000
Special limited partners 155,000 143,000
Investor limited partners 19,950,000 17,950,000
---------- ----------
Total partners' capital accounts 20,401,000 18,356,000
Commitments and contingencies ---------- ----------
$ 104,713,000 102,643,000
=========== ===========
</TABLE>
See accompanying notes to financial statements.
<PAGE>
<TABLE>
<CAPTION>
ATLANTIC CITY BOARDWALK ASSOCIATES, L.P.
Statements of Operations
(Unaudited)
Three Months Ended Six Months Ended
June 30, June 30,
1998 1999 1998 1999
---- ---- ---- ----
Revenues:
<S> <C> <C> <C> <C>
Rent from New Claridge for
the lease of Hotel Assets $ 6,405,000 5,822,000 13,668,000 11,958,000
Interest from New Claridge 108,000 108,000 216,000 216,000
Interest from Special Limited Partners 9,000 - 18,000 -
Investment 12,000 8,000 22,000 18,000
Other 1,000 - 1,000 -
--------- --------- ---------- ----------
6,535,000 5,938,000 13,925,000 12,192,000
--------- --------- ---------- ----------
Expenses:
Cost of maintaining and repairing
Hotel Assets, paid to New Claridge 2,958,000 2,760,000 5,843,000 5,576,000
Interest, principally on mortgages to
New Claridge 3,079,000 2,875,000 6,295,000 5,733,000
General and administrative 178,000 168,000 294,000 260,000
General Partners' management fee 32,000 32,000 65,000 65,000
Depreciation and amortization 1,353,000 1,299,000 2,715,000 2,611,000
--------- --------- --------- ---------
7,600,000 7,134,000 15,212,000 14,245,000
--------- --------- ---------- ----------
Net loss $ (1,065,000) (1,196,000) (1,287,000) (2,053,000)
=========== =========== =========== ===========
Net loss per limited partnership unit
(450 units outstanding
at the end of each period) $ (2,329) (2,616) (2,813) (4,489)
=========== ====== ====== ======
</TABLE>
See accompanying notes to financial statements.
<PAGE>
<TABLE>
<CAPTION>
0
ATLANTIC CITY BOARDWALK ASSOCIATES, L.P.
Statements of Partners' Capital Accounts (Deficit)
For the Year Ended December 31, 1998
and the Six Months Ended June 30, 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 (21,000) (12,000) (1,000) (19,000) (491,000) (1,509,000) (2,053,000)
-------- -------- ------- -------- --------- ----------- -----------
Partners' Capital
Accounts (Deficit),
June 30, 1999
(unaudited) $ 95,000 168,000 14,000 129,000 4,385,000 13,565,000 18,356,000
========= ======= ====== ======= ========= ========== ===========
</TABLE>
See accompanying notes to financial statements.
<PAGE>
<TABLE>
<CAPTION>
ATLANTIC CITY BOARDWALK ASSOCIATES, L.P.
Statements of Cash Flows
(Unaudited)
For the Six Months Ended June 30, 1998 and 1999
1998 1999
---- ----
<S> <C> <C>
Cash flows from operating activities:
Net loss $ (1,287,000) (2,053,000)
Adjustments to reconcile net loss to
net cash provided by (used in) operating activities:
Depreciation and amortization 2,715,000 2,611,000
Accretion of discount on mortgage note 972,000 1,117,000
Decrease (increase) in deferred rent from New Claridge 6,936,000 (1,571,000)
Deferred interest on receivable from New Claridge (216,000) (216,000)
Change in current assets and liabilities:
Decrease in rent due from New Claridge,
interest receivable from partners,
prepaid expenses and other assets 249,000 524,000
Decrease in accounts payable and
accrued interest due New Claridge (228,000) (473,000)
---------- --------
Net cash provided by (used in) operating activities 9,141,000 (61,000)
---------- ---------
Cash flows from investing activities:
Purchase of Hotel Assets (364,000) (174,000)
---------- ---------
Cash flows from financing activities:
Capital contributions - 8,000
Proceeds of borrowings from New Claridge 654,000 175,000
Principal payments of debt, principally to New Claridge (9,153,000) (865,000)
----------- ---------
Net cash used in financing activities (8,499,000) (682,000)
----------- ---------
Net increase (decrease) in cash and cash equivalents 278,000 (917,000)
Cash and cash equivalents, beginning of period 552,000 1,527,000
----------- ----------
Cash and cash equivalents, end of period $ 830,000 610,000
=========== ==========
Supplemental cash flow information:
Interest paid $ 6,043,000 5,345,000
=========== ==========
Supplemental noncash investing and financing activities:
Capital lease obligation incurred to acquire Hotel Assets $ 67,000 21,000
=========== ==========
</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. Although 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, operating results in 1998 fell below 1997
levels due to increased citywide 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, as a result, reduce the 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 is also considering 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
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. In February 1998, New Claridge sold 370 slot machines to PDS
<PAGE>
for approximately $1 million under this Facility. The machines were
then 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 $85 million of First Mortgage
Notes due 2002 ("Notes") on February 1, 1999, under the 30-day grace
period allowed in accordance with the terms of the indenture governing
the Notes. Operating results for the first half of 1999, however, have
continued to lag behind prior year levels, which has affected the
Corporation's ability to continue to meet its obligation to pay
interest on the Notes. As a result, the Corporation did not pay the
interest due August 2, 1999 on the Notes and on August 16, 1999 filed
a voluntary petition under Chapter 11 of the United States Bankruptcy
Code.
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 ("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.
The Partnership and New Claridge have reapplied for a four-year casino
service industry license and four-year casino license, respectively.
However, in light of the filing of a voluntary petition under Chapter
11 of the United States Bankruptcy Code on August 16, 1999, New
Claridge anticipates that its casino license will be renewed for an
additional period, the term of which will be determined by the
Commission. Additionally, New Claridge recognizes that its casino
license will likely contain financial reporting conditions and
requirements consistent with the manner in which the Commission has
relicensed other casino licensees who have filed voluntary petition
under Chapter 11 in the past. Any possible effect of New Claridge's
future licensing on the Partnership's license renewal is not known.
<PAGE>
(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 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 June 30, 1999, the aggregate amount owing in
respect of the Contingent Payment was approximately $95 million.
In connection with the 1989 restructuring, Del Webb Corporation
("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.
(4) Subsequent Events
The Corporation has experienced recurring losses and deterioration in
its cash flow since 1996, which has affected the Corporation's ability
to continue to meet its obligation to pay interest on the Notes. As a
result, the Corporation did not pay the interest due August 2, 1999 on
the Notes, and, on August 16, 1999, filed a voluntary petition under
Chapter 11 of the United States Bankruptcy Code. (See "Liquidity and
Capital Resources).
<PAGE>
Item 2. Management's Discussion and Analysis of Financial Condition and
Results of Operations
Results of Operations for the Six Months Ended June 30, 1999
as Compared to the Six Months Ended June 30, 1998
Rental income for the six months ended June 30, 1999 decreased $1,710,000 as
compared to the six months ended June 30, 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 six months of 1999 was $2 million for the Operating Lease and
approximately $208,000 for the Expansion Operating Lease. During the first six
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 six months
of 1999 were approximately $3.7 million, compared to approximately $6.0 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.
For the six months ended June 30, 1999, interest expense decreased $562,000 as
compared to the same period ended June 30, 1998 due to principal payments made
during 1998 that reduced the average outstanding balance of the wraparound and
expansion mortgages.
General and administrative expenses decreased $34,000 for the six months ended
June 30, 1999 as compared to the six months ended June 30, 1998. This decrease
is primarily due to a decrease in insurance expense. 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. The Corporation has experienced recurring losses and deterioration in
its cash flow since 1996, which has affected the Corporation's ability to
continue to meet its obligation to pay interest on the $85 million of First
Mortgage Notes due 2002 ("Notes"). As a result, the Corporation did not pay the
interest due August 2, 1999 on the Notes, and, on August 16, 1999, filed a
voluntary petition under Chapter 11 of the United States Bankruptcy Code.
The following discussion concerning the Corporation's liquidity and its
bankruptcy filing is taken from the Corporation's Quarterly Report on Form 10-Q:
Management of the Corporation has reported that it believes that such filing
will permit the Corporation to conserve its cash pending a restructuring of its
financial obligations in the Chapter 11 proceeding. As of July 31, 1999 the
Corporation had approximately $13.5 million of cash and cash equivalents,
including approximately $9.3 million of "bankroll" used in casino operations.
Management anticipates an as of yet indeterminate one-time increase in general
and administrative expenses, primarily for professional fees, in connection with
preparing for such filing, as well as an increase in ongoing general and
administrative expenses, again primarily for professional fees, during the
pendency of the bankruptcy proceeding.
While management of the Corporation and its subsidiaries has reported that they
believe they have sustainable operations, the cash generated by those operations
<PAGE>
clearly is not sufficient to (i) permit the Corporation to meet the debt service
on the currently outstanding Notes; (ii) to make significant capital
improvements that management believes are necessary to improve the Claridge's
competitive position in the Atlantic City casino market; and (iii) regularly
make capital improvements in the future to maintain that competitive position.
Accordingly, management of the Corporation intends to seek, in the Chapter 11
proceeding, to reduce the Corporation's debt obligations to a level that it
believes is consistent with the sustainable level of cash to be generated by the
Claridge. At the same time, management will seek to simplify the ownership
structure of the Claridge as between the Corporation, New Claridge and the
Partnership. Any such restructuring of the financial obligations of the Claridge
and of its ownership structure will be subject to the outcome of the Chapter 11
proceeding and, in particular, the approval of the holders of the requisite
percentage of the outstanding Notes, as to which there can be no assurance.
The Corporation has previously announced that it has entered into a letter of
intent with Schottenstein Realty Corporation ("Schottenstein") regarding an
investment in the Claridge in connection with any such restructuring. The letter
of intent contemplates a $10 million investment by Schottenstein in the Claridge
in exchange for a substantial equity interest in a new entity that would own the
assets used by the Claridge, including the assets currently owned by the
Partnership, other than the casino assets. The letter of intent contemplates
that this new entity would exchange new notes and equity in the entity for the
currently outstanding Notes. The new notes would have a substantially smaller
principal amount than the existing Notes, together with a lower interest rate
and a later maturity date. The letter of intent also calls for providing a
limited amount of equity in the entity to the Partnership and to setting aside a
portion of the equity in the new entity as incentive compensation for the
management of the Claridge. The above described terms of the letter of intent
are not binding on the Corporation or Schottenstein until reflected in a
definitive agreement, and, in any case, are subject to negotiation and approval
by holders of the Notes and the Partnership and to approval by the Bankruptcy
Court. There can be no assurance that such a definitive agreement will be
reached or that any definitive agreement that is reached will not have terms
that are substantially different from those described above.
Based upon the foregoing information reported by the Corporation, the
Partnership anticipates the following:
In the very short term, federal bankruptcy law requires New Claridge to pay
post-petition rent to the Partnership until such time as New Claridge either
assumes or rejects the lease with the Partnership. Accordingly, during the
bankruptcy cases of New Claridge and the Corporation, the Partnership expects to
be able to continue to pay the Partnership's debt service and operating expenses
with lease payments from New Claridge. The Partnership anticipates that New
Claridge will either assume the lease with agreed upon modifications or reject
the lease and negotiate a substitute lease agreement. Neither the Corporation
nor New Claridge has advised the Partnership of any definitive plans regarding
the treatment in their bankruptcy cases of the lease or other claims amongst the
Corporation, New Claridge and/or the Partnership.
In view of the August 16, 1999 filing by the Corporation of a voluntary petition
under Chapter 11 of the United States Bankruptcy Code, and in light of the fact
that the Notes are secured by a non-recourse mortgage granted by the Partnership
representing a first lien on the Hotel Assets, it is possible that the
Partnership will also file a voluntary petition under Chapter 11. However, it is
impossible to speculate, at this time, if and when this will actually happen,
and, if it does occur, what effects such a filing by the Partnership will have
on the Operating Lease and Expansion Operating Lease Agreement and the
Expandable Wraparound Mortgage Agreement, or the Partnership's performance of
its obligations under these agreements.
<PAGE>
The Partnership had a working capital deficiency of $3,412,000 as of June 30,
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 to the Operating Lease and Fifth Amendment to
the Expansion Operating Lease. 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.
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
June 30, 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 August 23, 1999 /s/ Anthony C. Atchley
___________________________________________________
by Anthony C. Atchley, General Partner
Date August 23, 1999 /s/ Gerald C. Heetland
___________________________________________________
by Gerald C. Heetland, General Partner
Date __August 23, 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
June 30, 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> 6-mos
<FISCAL-YEAR-END> DEC-31-1999
<PERIOD-END> JUN-30-1999
<EXCHANGE-RATE> 1
<CASH> 610,000
<SECURITIES> 0
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 1,276,000
<PP&E> 184,513,000
<DEPRECIATION> 113,562,000
<TOTAL-ASSETS> 102,643,000
<CURRENT-LIABILITIES> 4,688,000
<BONDS> 79,599,000
0
0
<COMMON> 0
<OTHER-SE> 18,356,000
<TOTAL-LIABILITY-AND-EQUITY> 102,643,000
<SALES> 0
<TOTAL-REVENUES> 12,192,000
<CGS> 0
<TOTAL-COSTS> 5,576,000
<OTHER-EXPENSES> 2,936,000
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 5,733,000
<INCOME-PRETAX> (2,053,000)
<INCOME-TAX> 0
<INCOME-CONTINUING> (2,053,000)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (2,053,000)
<EPS-BASIC> 0
<EPS-DILUTED> 0
</TABLE>
