UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
______________________________
FORM 10-Q
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the Quarterly Period Ended March 31, 1995
Commission File No. 1-9029
______________________________
TRUMP'S CASTLE FUNDING, INC.
(Exact name of Registrant as Specified in its Charter)
NEW JERSEY 11-2739203
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
One Castle Boulevard
Atlantic City, New Jersey 08401
(609) 340-5191
(Address, Including Zip Code and Telephone Number, Including Area
Code, of Registrant's Principal Executive Offices)
______________________________
TRUMP'S CASTLE ASSOCIATES
(Exact name of Registrant as Specified in its Charter)
NEW JERSEY 22-2608486
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
One Castle Boulevard
Atlantic City, New Jersey 08401
(609) 340-5191
(Address, Including Zip Code and Telephone Number, Including Area
Code, of Registrant's Principal Executive Offices)
______________________________
<PAGE>
Indicate by checkmark whether the registrants (1) have filed all
reports required to be filed by Section 13 or 15(d) of the Securities
Exchange Act of 1934 during the preceding 12 months (or for such
shorter period that the registrant was required to file such reports),
and (2) have been subject to such filing requirements for the past 90
days.
Yes X No
_____ _____
Indicate by checkmark whether the Registrants have filed all documents
and reports required to be filed by Sections 12, 13 or 15(d) of the
Securities Exchange Act of 1934 subsequent to the distribution of
securities under a plan confirmed by a court. Yes X No
_____ _____
Trump's Castle Funding, Inc. meets the conditions set forth in General
Instructions H(1) (a) and (b) of Form 10-Q and is therefore filing
this form with the reduced disclosure format.
As of April 30, 1995, there were 200 shares of Trump's Castle
Funding, Inc.'s common stock outstanding.
-2-
<PAGE>
TRUMP'S CASTLE ASSOCIATES AND SUBSIDIARY
INDEX TO FORM 10-Q
Page
Number
PART I -- FINANCIAL INFORMATION
Item 1 -- Financial Statements
Consolidated Balance Sheets of Trump's Castle
Associates and Subsidiary as of March 31, 1995
(unaudited) and December 31, 1994 4
Consolidated Statements of Operations of Trump's
Castle Associates and Subsidiary for the three
month periods ended March 31, 1995 and 1994
(unaudited) 5
Consolidated Statement of Changes in Capital
of Trump's Castle Associates and Subsidiary for
the three months ended March 31, 1995
(unaudited) 6
Consolidated Statements of Cash Flows for Trump's
Castle Associates and Subsidiary for the three
months Ended March 31, 1995 and 1994
(unaudited) 7
Notes to Consolidated Financial Statements 8-9
Item 2 -- Management's Discussion and Analysis of Financial
Condition and Results of Operations 10-12
PART II -- OTHER INFORMATION
Item 1 -- Legal Proceedings 13
Item 2 -- Changes in Securities 13
Item 3 -- Defaults Upon Senior Securities 13
Item 4 -- Submission of Matters to Vote of Security Holders 13
Item 5 -- Other Information 13
Item 6 -- Exhibits and Reports on Form 8-K 13
Signatures 14
-3-
<PAGE>
TRUMP'S CASTLE ASSOCIATES AND SUBSIDIARY
CONSOLIDATED BALANCE SHEETS
(in thousands)
March 31,
1995 December 31,
ASSETS (unaudited) 1994
_____________ ______________
CURRENT ASSETS:
Cash and temporary investments $22,581 $19,122
Receivables, net 6,311 8,858
Due from affiliates, net 613 434
Inventories 1,651 1,790
Other current assets 5,175 4,830
________ ________
Total Current Assets 36,331 35,034
PROPERTY AND EQUIPMENT, NET 325,997 328,174
OTHER ASSETS 5,923 5,589
________ ________
Total Assets $368,251 $368,797
======== ========
LIABILITIES AND CAPITAL
CURRENT LIABILITIES:
Current maturities - other borrowings $1,108 $1,108
Accounts payable and accrued expenses 24,396 28,982
Accrued interest payable 11,854 3,994
________ ________
Total Current Liabilities 37,358 34,084
MORTGAGE NOTES, due 2003 net of 204,921 204,412
unamortized discount of $37,220
and $37,729
PIK NOTES, due 2003 net of 46,198 46,129
unamortized discount of $7,896
and $7,965
OTHER BORROWINGS 63,892 63,892
OTHER LONG TERM LIABILITIES 5,168 3,315
________ ________
Total Liabilities 357,537 351,832
________ ________
CAPITAL 10,714 16,965
________ ________
Total Liabilities and Capital $368,251 $368,797
======== ========
The accompanying notes to consolidated financial statements
are an integral part of these consolidated balance sheets.
-4-
<PAGE>
TRUMP'S CASTLE ASSOCIATES AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF OPERATIONS
(unaudited)
(in thousands)
For the Three Months
Ended March 31
1995 1994
_______ _______
REVENUES:
Gaming $60,220 $61,782
Rooms 3,998 3,923
Food & beverage 6,056 6,268
Other 1,600 1,565
_______ _______
Gross Revenues 71,874 73,538
Less-Promotional allowances 6,433 7,209
_______ _______
Net Revenues 65,441 66,329
_______ _______
COSTS AND EXPENSES:
Gaming 35,827 37,766
Rooms 634 630
Food & beverage 2,783 2,750
General and administrative 17,899 18,277
Depreciation and amortization 3,536 3,591
_______ _______
Total costs and expenses 60,679 63,014
_______ _______
Income From Operations 4,762 3,315
INTEREST INCOME 154 147
INTEREST EXPENSE (11,167) (10,946)
________ ________
Net Loss ($6,251) ($7,484)
======== ========
The accompanying notes to consolidated financial statements
are an integral part of these consolidated statements.
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<PAGE>
TRUMP'S CASTLE ASSOCIATES AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF CAPITAL
FOR THE THREE MONTHS ENDED MARCH 31, 1995
(unaudited)
(in thousands)
Partners' Partners'
Capital Deficit Total
___________ ___________ __________
Balance at December 31, 1994 $73,395 ($56,430) $16,965
Net Loss - (6,251) (6,251)
_______ _________ _______
Balance at March 31, 1995 $73,395 ($62,681) $10,714
The accompanying notes to consolidated financial statements
are an integral part of these consolidated statements.
-6-
<PAGE>
TRUMP'S CASTLE ASSOCIATES AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF CASH FLOWS
(unaudited)
(in thousands)
For the Three Months
Ended March 31
1995 1994
______ ______
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss ($6,251) ($7,484)
Adjustments to reconcile net profit (loss)
to net cash flows provided by (used in)
operating activities
Noncash Charges-
Depreciation and amortization 3,536 3,591
Accretion of bond discounts 578 551
Provision for losses on receivables 238 2,388
Valuation adjustment of CRDA investments 345 291
_______ _______
(1,554) (663)
(Increase) Decrease in receivables, net 2,130 (3,807)
(Increase) Decrease in inventories 139 (155)
(Increase) Decrease in other current assets (490) 183
Decrease in other assets 66 2,089
Increase in current liabilities 3,274 1,907
Increase in other liabilities 1,853 0
______ ______
Net cash flows provided by (used in)
operating activities 5,418 (446)
______ ______
CASH FLOWS USED BY INVESTING ACTIVITIES:
Purchases of property and equipment, net (1,359) (931)
Purchase of CRDA investments (600) (703)
______ ______
Net cash flows used in investing activities (1,959) (1,634)
Net Increase (Decrease) in cash and cash equivalents 3,459 (2,080)
CASH AND CASH EQUIVALENTS
AT BEGINNING OF PERIOD 19,122 20,439
______ ______
CASH AND CASH EQUIVALENTS
AT MARCH 31 $22,581 $18,359
======= =======
SUPPLEMENTAL INFORMATION:
Cash paid for interest $855 $857
======= =======
The accompanying notes to consolidated financial statements
are an integral part of these consolidated statements.
-7-
<PAGE>
TRUMP'S CASTLE ASSOCIATES AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(unaudited)
(1) Organization and Operations
The accompanying consolidated financial statements include
those of Trump's Castle Associates, a New Jersey general
partnership (the "Partnership") and its wholly owned subsidiary,
Trump's Castle Funding, Inc., a New Jersey corporation (the
"Company"). All significant intercompany balances and
transactions have been eliminated in the consolidated financial
statements.
The accompanying consolidated financial statements have been
prepared by the Partnership without audit. In the opinion of the
Partnership, all adjustments, consisting of only normal recurring
adjustments, necessary to present fairly the financial position,
results of operations and cash flows for the periods presented
have been made.
The accompanying consolidated financial statements have
been prepared by the Partnership pursuant to the rules and
regulations of the Securities and Exchange Commission.
Accordingly, certain information and note disclosures normally
included in the financial statements prepared in conformity with
generally accepted accounting principles have been omitted.
These financial statements should be read in conjunction with
the consolidated financial statements and notes thereto included
in the Company's annual report on Form 10-K for the year ended
December 31, 1994 filed with the Securities and Exchange
Commission.
The results of operations for the three month period ended
March 31, 1995 are not necessarily indicative of the operating
results to be attained for any other period.
(2) PIK Notes
On November 15, 1994, the semi-annual interest payment
of $2,250,000 on the Increasing Rate Subordinated Pay-In-Kind
Notes due 2005 (the "PIK Notes") was paid by issuance of
additional PIK Notes. The Partnership anticipates that
approximately $3,753,000 principal amount of additional PIK Notes
will be issued in lieu of cash interest on May 15, 1995. Pursuant
to the terms of the PIK Note Indenture, the interest on the PIK
Notes increased from the rate of 7% per annum, which was effective
On October 1, 1994, to 13-7/8% per annum.
-8-
<PAGE>
(3) Financial Information of the Company
Financial information relating to the Company is as
follows (in thousands):
March 31, December 31,
1995 1994
_________ ___________
Total Assets (including Mortgage $323,235 $323,235
Notes Receivable of $242,141 at ======== ========
March 31, 1995 and December 31,
1994, PIK Notes Receivable of
$54,094 at March 31, 1995 and
December 31, 1994, and Senior
Notes Receivable of $27,000 at
March 31, 1995 and December
31, 1994.)
Total Liabilities and Capital $323,235 $323,235
(including Mortgage Notes ======== ========
Payable of $242,141 at March
31, 1995 and December 31, 1994,
PIK Notes Payable of $54,094 at
March 31, 1995 and December 31,
1994 and Senior Notes Payable
of $27,000 at March 31, 1995
and December 31, 1994.)
March 31, March 31,
1995 1994
_________ _________
Interest Income $ 10,292 $ 10,083
Interest Expense 10,292 10,083
________ ________
Net Income $ - $ -
======== ========
-9-
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATION.
The financial information presented below reflects the
financial condition and results of operations of Trump's Castle
Associates (the "Partnership"). Trump's Castle Funding, Inc.
("Funding") is a wholly owned subsidiary of the Partnership and
conducts no business other than collecting amounts due under
certain intercompany notes from the Partnership for the purpose
of paying principal of, premium, if any, and interest on its
indebtedness, which Funding issued as a nominee for the
Partnership.
Results of Operations for the Three Month Period
Ended March 31, 1995 and March 31, 1994.
The Partnership's net revenues (gross revenues less
promotional expenses) for the three months ended March 31, 1995
and 1994 totaled approximately $65.4 million and $66.3 million,
respectively, representing a $0.9 million (1.4%) decrease. Gaming
revenues were approximately $60.2 million for the three months
ended March 31, 1995 and $61.8 million for the comparable period
in 1994.
Gaming revenue is comprised of table game win, slot machine,
keno and simulcasting win. For the three months ended March 31,
1995 and 1994, table game win at Trump's Castle approximated $16.0
million and $22.9 million, respectively. During these periods,
dollars wagered on table games totaled approximately $101.1
million with a win percentage of 15.5% in 1995 and $111.2 million
with a win percentage of 20.1% in 1994. The table game win
percentage is outside the control of the Partnership, and although
it is fairly constant over the long term, it can vary
significantly from quarter to quarter, due in part to the play of
certain gaming patrons who tend to wager substantial dollar
amounts on table games.
For the three months ended March 31, 1995 and 1994, table
game credit extended to customers was approximately 26.2% and
31.0% of overall table play, respectively. Credit play is
directly related to the gaming patron mix. The credit percentage
tends to increase as the result of increased play by individuals
who wager relatively large sums. These patrons tend to use a
higher percentage of credit when they wager.
For the three months ended March 31, 1995 and 1994, slot
win at Trump's Castle approximated $43.8 million and $38.9
million, respectively. Dollars wagered on slot machines totaled
approximately $487.9 million and $427.6 million for the three
months ended March 31, 1995 and 1994, respectively, with a win
percentage of 9.0% in 1995 and 9.1% in 1994. The Partnership
believes that the increase in slot revenue, which resulted from
the increase in dollars wagered, is attributable in part to the
success of its marketing strategy and to general growth in the
industry.
-10-
<PAGE>
In the aggregate, nongaming revenues at Trump's Castle
did not vary significantly for the three months ended March 31,
1995 when compared to the same period in 1994.
Gaming costs and expenses decreased for the three months
ended March 31, 1995 by $1.9 million, as compared to the three
months ended March 31, 1994. This decrease is attributable to a
$2.0 million bad debt reserve recorded in the first quarter of
1994. The $2.0 million bad debt reserve was recorded against a
$4.0 million receivable relating to the January 1, 1994 gaming
loss by four international table game patrons. Approximately $1.4
million remains outstanding, with $1 million of this amount
reserved.
INFLATION. There was no significant impact on the
Partnership's operations as a result of inflation during the three
months ended March 31, 1995 and 1994.
LIQUIDITY AND CAPITAL RESOURCES. Cash flow from operating
activities is the Partnership's principal source of liquidity.
For the three months ended March 31, 1995, the Partnership's net
cash flow provided by operating activities was $5.4 million. Cash
and cash equivalents of $22.5 million at March 31, 1995 reflects
an increase of $3.5 million from December 31, 1994.
Capital expenditures of $1.4 million for the three months
ended March 31, 1995 were primarily for the purchase of new slot
machines.
Total anticipated capital expenditures for 1995 are
approximately $8 million and include casino floor improvements,
renovation of hotel rooms and the purchase of slot machines.
Management believes that this level of capital expenditure will be
sufficient to maintain the competitiveness of the casino, the
attractiveness of Trump's Castle and the aesthetics of its hotel
rooms and other public areas. The Partnership intends to finance
its capital expenditures in the future with existing cash on hand
and cash flow from operations.
Upon consummation of the Recapitalization, the Partnership's
debt consisted primarily of (i) a term loan with Midlantic
National Bank (the "Midlantic Term Loan"), (ii) the Senior Notes,
(iii) the Mortgage Notes, and (iv) the PIK Notes. The $38 million
Midlantic Term Loan bears interest at the rate of 9% per annum,
and matures on May 29, 1995. Subject to the satisfaction of
certain conditions, the Partnership has the option to extend the
Midlantic Term Loan for an additional five year term; provided,
however, that in connection with any such extension, the interest
rate on the Midlantic Term Loan will be adjusted, as provided
therein, and the Partnership will be required to amortize the
principal amount of the Midlantic Term Loan. The Partnership
intends to extend the term of the Midlantic Loan for an additional
five years pursuant to its terms.
-11-
<PAGE>
The Senior Notes have an outstanding principal amount of $27
million, and bear interest at the rate of 11-1/2% per annum (which
may be reduced to 11-1/4% upon the occurrence of certain events).
The Senior Notes mature on November 15, 2000, and are subject to a
sinking fund which requires the retirement of 15% of the Senior
Notes on each on November 15, 1998 and 1999. The Mortgage Notes
have an outstanding principal amount of approximately $243
million, bear interest at the rate of 11-3/4% per annum (which may
be reduced to 11-1/2% upon the occurrence of certain events), and
mature on November 15, 2003. The PIK Notes have an outstanding
principal amount of approximately $54.1 million and mature on
November 15, 2005. The PIK Notes bore interest at the rate of 7%
through September 30, 1994, when, pursuant to their terms, the
interest rate increased to 13-7/8%. On or prior to November 15,
2003, interest on the PIK Notes may be paid in cash or through the
issuance of additional PIK Notes. During 1994, the Partnership
and Funding issued an additional $3.6 million principal amount of
PIK Notes in payment of interest on the PIK Notes. The
Partnership anticipates that during 1995 interest on the PIK Notes
will be paid through the issuance of additional PIK Notes.
The Partnership anticipates that $36.1 million will be
needed in 1995 in operating cash flow to meet its debt service
obligations.
Management believes, based upon its current level of
operations, that although the Partnership is highly leveraged, it
will continue to have the ability to pay interest on its
indebtedness and to pay other liabilities with funds from
operations for the foreseeable future. However, there can be no
assurance to that effect. In the event that circumstances change,
the Partnership may seek to obtain a working capital facility of
up to $10 million, although there can be no assurance that such
financing will be available on terms acceptable to the
Partnership.
-12-
<PAGE>
PART II -- OTHER INFORMATION
Item 1. Legal Proceedings.
The Partnership and certain affiliated entities are
involved in various legal proceedings. Reference is
made to the description contained in the Partnership's
Annual Report on Form 10-K for the year ended December
31, 1994.
Item 2. Changes in Securities.
None
Item 3. Defaults Upon Senior Securities.
None
Item 4. Submission of Matters to Vote of Security
Holders.
None
Item 5. Other Information.
None.
Item 6. Exhibits and Reports on Form 8-K.
(a) Exhibits:
None
(b) The Company filed the following Current Reports on
Form 8-K:
None
-13-
<PAGE>
SIGNATURE
Pursuant to the requirements of the Securities
Exchange Act of 1934, the Registrants have duly caused this Report
to be signed on their behalf by the undersigned thereunto duly
authorized.
TRUMP'S CASTLE FUNDING, INC.
(Registrant)
By: /s/ Robert E. Schaffhauser
_____________________________
Robert E. Schaffhauser
Assistant Treasurer
(Duly Authorized Officer and
Chief Accounting Officer)
Date: May 12, 1995
TRUMP'S CASTLE ASSOCIATES
By: TC/GP, Inc.
Its: General Partner
By: /s/ Robert E. Schaffhauser
_____________________________
Robert E. Schaffhauser
Assistant Treasurer
(Duly Authorized Officer and
Chief Accounting Officer)
Date: May 12, 1995
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION FROM TRUMP'S CASTLE
FUNDING, INC. AND TRUMP'S CASTLE ASSOCIATES. THIS DATA HAS BEEN EXTRACTED FROM
THE CONSOLIDATED BALANCE SHEETS AND THE CONSOLIDATED STATEMENTS OF OPERATIONS
FOR THE THREE MONTH PERIOD ENDED MARCH 31, 1995 AND IS QUALIFIED IN ITS ENTIRETY
BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<CIK> 0000770618
<NAME> TRUMP'S CASTLE FUNDING, INC. AND TRUMP'S CASTLE ASSOICATES
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-END> MAR-31-1995
<CASH> 22,581
<SECURITIES> 0
<RECEIVABLES> 6,924<F1>
<ALLOWANCES> 0
<INVENTORY> 1,651
<CURRENT-ASSETS> 5,175
<PP&E> 503,056
<DEPRECIATION> (177,059)
<TOTAL-ASSETS> 368,251
<CURRENT-LIABILITIES> 37,358
<BONDS> 251,119
<COMMON> 200
0
0
<OTHER-SE> 0
<TOTAL-LIABILITY-AND-EQUITY> 368,251
<SALES> 0
<TOTAL-REVENUES> 65,441
<CGS> 0
<TOTAL-COSTS> 57,143
<OTHER-EXPENSES> 3,536
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> (11,167)
<INCOME-PRETAX> 0
<INCOME-TAX> 0
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (6,251)
<EPS-PRIMARY> 0
<EPS-DILUTED> 0
<FN>
<F1>ASSET VALUES REPRESENT NET AMOUNTS
</FN>
</TABLE>
