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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
FOR THE QUARTERLY PERIOD ENDED: MARCH 31, 1997
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
FOR THE TRANSITION PERIOD FROM ________ TO ________
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COMMISSION FILE NUMBER: 1-9029
TRUMP'S CASTLE FUNDING, INC.
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(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
--------------------------------------- ----------
(Address of principal executive offices) (Zip Code)
(609) 441-6060
----------------------------------------------------
(Registrant's telephone number, including area code)
COMMISSION FILE NUMBER: 1-9029
TRUMP'S CASTLE ASSOCIATES, L.P.
------------------------------------------------------
(Exact name of registrant as specified in its charter)
NEW JERSEY 22-2608426
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(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
ONE CASTLE BOULEVARD
ATLANTIC CITY, NEW JERSEY 08401
--------------------------------------- ----------
(Address of principal executive offices) (Zip Code)
(609) 441-6060
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(Registrant's telephone number, including area code)
NOT APPLICABLE
---------------------------------------------------------------
(Former name, former address and former fiscal year, if changed
since last report)
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INDICATE BY CHECK MARK WHETHER THE REGISTRANTS (1) HAVE FILED ALL REPORTS
REQUIRED TO BE FILED BY SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF
1934 DURING THE PRECEDING 12 MONTHS (OR FOR SUCH SHORTER PERIOD THAT THE
REGISTRANTS WERE REQUIRED TO FILE SUCH REPORTS), AND (2) HAVE BEEN SUBJECT TO
SUCH FILING REQUIREMENTS FOR THE PAST 90 DAYS. YES X NO
--- ---
INDICATE BY CHECK MARK 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
--- ---
AS OF MAY 9, 1997, THERE WERE 200 SHARES OF TRUMP'S CASTLE FUNDING, INC.'S
COMMON STOCK, PAR VALUE $.01 PER SHARE, OUTSTANDING.
TRUMP'S CASTLE FUNDING, INC. MEETS THE CONDITIONS SET FORTH IN GENERAL
INSTRUCTIONS H(1)(a) AND (b) OF FROM 10-Q AND IS THEREFORE FILING THIS FORM WITH
THE REDUCED DISCLOSURE FORMAT.
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<PAGE>
<TABLE>
<CAPTION>
TRUMP'S CASTLE ASSOCIATES, L.P. AND SUBSIDIARY
-------------------
INDEX TO FORM 10-Q
PAGE NO.
--------
<S> <C>
PART I -- FINANCIAL INFORMATION
ITEM 1 -- Financial Statements
Consolidated Balance Sheets of Trump's Castle Associates, L.P. and Subsidiary as of
March 31, 1997 (unaudited) and December 31, 1996 ............................................... 1
Consolidated Statements of Operations of Trump's Castle Associates, L.P. and Subsidiary
for the Three Months Ended March 31, 1997 and 1996 (unaudited) ................................. 2
Consolidated Statement of Partners' Capital of Trump's Castle Associates, L.P. and
Subsidiary for the Three Months Ended March 31, 1997 (unaudited) ............................... 3
Consolidated Statements of Cash Flows of Trump's Castle Associates, L.P. and Subsidiary
for the Three Months Ended March 31, 1997 and 1996 (unaudited) ................................. 4
Notes to Consolidated Financial Statements of Trump's Castle
Associates, L.P. and Subsidiary (unaudited) .................................................... 5-6
ITEM 2 -- Management's Discussion and Analysis of Financial Condition and Results of Operations ...... 7-8
ITEM 3 -- Quantitative and Qualitative Disclosures About Market Risk ................................. 8
PART II -- OTHER INFORMATION
ITEM 1-- Legal Proceedings ........................................................................... 9
ITEM 2-- Changes in Securities ....................................................................... 9
ITEM 3-- Defaults Upon Senior Securities ............................................................. 9
ITEM 4-- Submission of Matters to Vote of Security Holders ........................................... 9
ITEM 5-- Other Information ........................................................................... 9
ITEM 6-- Exhibits and Reports on Form 8-K ............................................................ 9-10
SIGNATURES
SIGNATURE -- Trump's Castle Funding, Inc. ....................................................... 11
SIGNATURE -- Trump's Castle Associates, L.P. .................................................... 12
i
</TABLE>
<PAGE>
PART I -- FINANCIAL INFORMATION
ITEM 1 -- FINANCIAL STATEMENTS
TRUMP'S CASTLE ASSOCIATES, L.P. AND SUBSIDIARY
CONSOLIDATED BALANCE SHEETS
(IN THOUSANDS)
ASSETS
MARCH 31, DECEMBER 31,
1997 1996
--------- ------------
(UNAUDITED)
SUCCESSOR SUCCESSOR
--------- ---------
CURRENT ASSETS:
Cash and cash equivalents ............................ $ 22,217 $ 15,380
Receivables, net ..................................... 7,905 7,696
Due from affiliates .................................. 1,970 1,970
Inventories .......................................... 1,691 1,298
Other current assets ................................. 1,344 1,560
-------- --------
Total current assets ............................... 35,127 27,904
PROPERTY AND EQUIPMENT, NET ........................... 505,227 509,876
OTHER ASSETS .......................................... 11,982 10,231
-------- --------
Total assets ....................................... $552,336 $548,011
======== ========
LIABILITIES AND PARTNERS' CAPITAL
CURRENT LIABILITIES:
Current maturities-other borrowings .................. $ 3,764 $ 3,714
Accounts payable and accrued expenses ................ 32,098 32,735
Due to Affiliates .................................... 5,613 1,712
Accrued interest payable ............................. 11,909 4,020
-------- --------
Total current liabilities .......................... 53,384 42,181
MORTGAGE NOTES
(Net of unamortized discount of $32,385
and $ 33,071, respectively) .......................... 209,756 209,070
PIK NOTES
(Net of unamortized discount of $ 7,440
and $ 7,509, respectively) ........................... 63,300 63,231
OTHER BORROWINGS ...................................... 61,960 63,283
OTHER LONG TERM LIABILITIES ........................... 6,028 3,654
-------- --------
Total liabilities .................................. 394,428 381,419
COMMITMENTS AND CONTINGENCIES
PARTNERS' CAPITAL ..................................... 157,908 166,592
-------- --------
Total Liabilities and Capital ...................... $552,336 $548,011
======== ========
The accompanying notes to consolidated financial statements are an integral part
of these consolidated statements.
1
<PAGE>
TRUMP'S CASTLE ASSOCIATES, L.P. AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF OPERATIONS
FOR THE THREE MONTHS ENDED MARCH 31, 1997 AND 1996
(UNAUDITED)
(IN THOUSANDS)
THREE MONTHS
ENDED MARCH 31,
---------------------------
1997 1996
SUCCESSOR PREDECESSOR
--------- -----------
REVENUES:
Gaming ...................................... $ 63,974 $ 63,242
Rooms ....................................... 3,937 4,166
Food and beverage ........................... 7,953 7,280
Other ....................................... 2,206 1,352
-------- --------
Gross Revenues ............................. 78,070 76,040
Less-Promotional allowances .................. 9,646 9,096
-------- --------
Net Revenues ................................ 68,424 66,944
-------- --------
COSTS AND EXPENSES:
Gaming ...................................... 41,034 40,959
Rooms ....................................... 608 589
Food and beverage ........................... 2,123 2,031
General and administrative .................. 16,173 16,670
Depreciation and amortization ............... 5,041 3,838
-------- --------
Total costs and expenses .................... 64,979 64,087
-------- --------
Income From Operations ..................... 3,445 2,857
INTEREST INCOME .............................. 69 93
INTEREST EXPENSE ............................. (12,198) (11,760)
-------- --------
Net Loss .................................... $ (8,684) $ (8,810)
======== ========
The accompanying notes to consolidated financial statements are an integral part
of these consolidated statements.
2
<PAGE>
TRUMP'S CASTLE ASSOCIATES, L.P. AND SUBSIDIARY
CONSOLIDATED STATEMENT OF PARTNERS' CAPITAL
FOR THE THREE MONTHS ENDED MARCH 31, 1997
(UNAUDITED)
(IN THOUSANDS)
<TABLE>
<CAPTION>
PARTNERS' PARTNERS'
CAPITAL DEFICIT TOTAL
-------- -------- --------
<S> <C> <C> <C> <C> <C>
Balance at December 31, 1996 (Successor) ....................... $180,395 $(13,803) $166,592
Net Loss ....................................................... -- (8,684) (8,684)
-------- -------- --------
Balance at March 31, 1997 (Successor) .......................... $180,395 $(22,487) $157,908
======== ======== ========
</TABLE>
The accompanying notes to consolidated financial statements are an integral part
of this consolidated statement.
3
<PAGE>
TRUMP'S CASTLE ASSOCIATES, L.P. AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE THREE MONTHS ENDED MARCH 31, 1997 AND 1996
(UNAUDITED)
(IN THOUSANDS)
<TABLE>
<CAPTION>
THREE MONTHS
ENDED MARCH 31,
---------------------------
1997 1996
--------- -----------
SUCCESSOR PREDECESSOR
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss ....................................................................... $ (8,684) $ (8,810)
Adjustments to reconcile net loss to net cash flows provided
by operating activities--
Noncash charges--
Depreciation and amortization ............................................... 5,041 3,838
Accretion of bond discount .................................................. 755 646
Provision for losses on receivables ......................................... 337 312
Valuation allowance--CRDA investments ....................................... 289 287
-------- --------
(2,262) (3,727)
(Increase) decrease in receivables .......................................... (546) 1,586
(Increase) decrease in inventories .......................................... (393) 38
Decrease (increase) in other current assets ................................. 216 (1,016)
(Increase) decrease in other assets ......................................... (1,231) 26
Increase in current liabilities ............................................. 11,153 5,916
Increase in other liabilities ............................................... 2,374 2,113
-------- --------
Net cash flows provided by operating activities ............................ 9,311 4,936
-------- --------
CASH FLOWS USED IN INVESTING ACTIVITIES:
Purchases of property and equipment, net .................................... (584) (2,276)
Purchase of CRDA investments ................................................ (809) (681)
-------- --------
Net cash flows used in investing activities ................................ (1,393) (2,957)
-------- --------
CASH FLOWS USED IN FINANCING ACTIVITIES:
Repayment of other borrowings ............................................... (1,081) (675)
-------- --------
Net cash flows used in financing activities ................................ (1,081) (675)
-------- --------
Net increase in cash and cash equivalents .................................. 6,837 1,304
CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD ................................ 15,380 21,038
-------- --------
CASH AND CASH EQUIVALENTS AT END OF PERIOD ...................................... $ 22,217 $ 22,342
======== ========
SUPPLEMENTAL INFORMATION:
Cash paid for interest ......................................................... $ 1,118 $ 1,482
======== ========
</TABLE>
The accompanying notes to consolidated financial statements are an integral part
of these consolidated statements.
4
<PAGE>
TRUMP'S CASTLE ASSOCIATES, L.P. AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
(1) ORGANIZATION AND OPERATIONS
The accompanying consolidated financial statements include those of Trump's
Castle Associates, L.P., a New Jersey limited partnership (the "Partnership"),
and its wholly owned subsidiary, Trump's Castle Funding, Inc., a New Jersey
corporation ("Funding"). All significant intercompany balances and transactions
have been eliminated in the consolidated financial statements.
The Partnership was formed in 1985 for the sole purpose of acquiring and
operating Trump's Castle Casino Resort ("Trump's Castle"), a luxury casino hotel
located in the Marina District of Atlantic City, New Jersey. A substantial
portion of Trump's Castle's revenues are derived from its gaming operations.
Competition in the Atlantic City gaming market is intense and the Partnership
believes that the competition will continue as new entrants to the gaming
industry become operational.
Prior to the acquisition of the Partnership (see Note 2), Donald J. Trump
("Trump") was the beneficial owner of 100% of the common equity interest in the
Partnership, subject to the right of holders of warrants for 50% of the common
stock of Trump's Castle Hotel & Casino, Inc. ("TCHI") (the "TCHI Warrants") to
acquire an indirect beneficial interest in 0.5% of the common equity interest in
the Partnership.
Funding was incorporated on May 28, 1985 solely to serve as a financing
company to raise funds through the issuance of bonds to the public. Since
Funding has no business operations, its ability to repay the principal and
interest on the 11-1/2% Senior Secured Notes due 2000 (the "Senior Notes"), the
11-3/4% Mortgage Notes due 2003 (the "Mortgage Notes") and its Increasing Rate
Subordinated Pay-in-Kind Notes due 2005 (the "PIK Notes") is completely
dependent upon the operations of the Partnership.
On October 7, 1996, Trump Hotels & Casino Resorts Holdings, L.P. ("THCR
Holdings") acquired from Trump all of the outstanding equity of the Partnership
(see Note 2). THCR Holdings is currently a 62.2% owned subsidiary of Trump
Hotels & Casino Resorts, Inc. ("THCR").
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. 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 pursuant to the rules and regulations of the Securities and
Exchange Commission (the "SEC"). 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 annual
report on Form 10-K for the year ended December 31, 1996 filed with the SEC by
the Partnership and Funding. Certain reclassifications have been made to conform
prior year financial information with the current year presentation.
The casino industry in Atlantic City is seasonal in nature; accordingly,
the results of operations for the period ending March 31, 1997 are not
necessarily indicative of the operating results for a full year.
(2) ACQUISITION OF THE PARTNERSHIP AND BASIS OF PRESENTATION
Pursuant to the terms of the Agreement dated as of June 24, 1996, as
amended (the "Agreement"), between THCR Holdings and entities owned by Trump,
THCR Holdings acquired on October 7, 1996 all of the outstanding equity interest
of the Partnership (the "Acquisition"). The Acquisition has been accounted for
as a purchase. For his equity interest in the Partnership, Trump received a
15.33863% limited partnership interest in THCR Holdings valued at $168,126,000,
which is exchangeable into 5,837,700 shares of Common Stock of THCR, par value
$.01 per share (the "THCR Common Stock") (valuing each share at $28.80 based on
the price of the THCR Common Stock several
5
<PAGE>
TRUMP'S CASTLE ASSOCIATES, L.P. AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
(UNAUDITED)
days before and after the date of the Agreement). The excess of the purchase
price over the fair value of the net assets acquired of $196,109,000
(including transaction costs, the purchase of the outstanding TCHI Warrants and
the historical negative book value of the Partnership of $20,714,000) has been
recorded on the books of the Partnership and has been allocated to property,
plant and equipment based upon a recent appraisal.
As a result of the Acquisition, a new basis of accounting was established
and financial statements prior toOctober 7, 1996 are presented as Predecessor
financial statements. The financial statements from October 7, 1996 are
presented as Successor financial statements.
(3) FINANCIAL INFORMATION OF FUNDING
Financial information relating to Funding is as follows (in thousands):
<TABLE>
<CAPTION>
MARCH 31, DECEMBER 31,
1997 1996
-------- -------
<S> <C> <C>
Total Assets (including Mortgage Notes Receivable of $242,141, net of
unamortized discount of $32,385 and $33,071 at March 31, 1997 and
December 31, 1996, PIK Notes Receivable of $70,740, net of unamortized
discount of $7,440 and $7,509 at March 31, 1997 and December 31, 1996,
and Senior Notes Receivable of $27,000 at March 31, 1997 and
December 31, 1996) ............................................................ $300,056 $299,301
======== ========
Total Liabilities and Capital (including Mortgage Notes Payable of
$242,141, net of unamortized discount of $32,385 and $33,071 at March 31,
1997 and December 31, 1996, PIK Notes Payable of$70,740, net of
unamortized discount of $7,440 and $7,509 atMarch 31, 1997 and December
31, 1996, and Senior Notes Payable of $27,000 at March 31, 1997 and
December 31, 1996) ............................................................ $300,056 $299,301
======== ========
</TABLE>
<TABLE>
<CAPTION>
THREE MONTHS
ENDED MARCH 31,
--------------------------
1997 1996
--------- -----------
SUCCESSOR PREDECESSOR
<S> <C> <C>
Interest Income ................................................................... $11,061 $10,648
Interest Expense .................................................................. 11,061 10,648
------- -------
Net Income ........................................................................ $ -- $ --
======= =======
</TABLE>
6
<PAGE>
ITEM 2. -- MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS.
CAPITAL RESOURCES AND LIQUIDITY
Cash flow from operating activities is the Partnership's principal source
of liquidity. For the three months ended March 31, 1997, the Partnership's net
cash flow provided by operating activities before cash interest payments on debt
obligations was $10.4 million.
In addition to cash needs to fund the day-to-day operations of Trump's
Castle, the Partnership's principal uses of cash are capital expenditures and
debt service.
Capital expenditures for 1997 are anticipated to be approximately $7.0
million and principally consist of hotel room renovations, as well as ongoing
casino floor improvements, parking garage upgrades and Marina leasehold
improvements. In addition, during 1997, the Partnership commenced a $5.0 million
project to retheme the property with a nautical emphasis and rename it Trump
Marina. Capital expenditures of $584,000 were incurred during the three months
ended March 31, 1997 primarily for the previous mentioned projects.
The Partnership's debt consists primarily of (i) a term loan with a bank
with an outstanding principal balance of approximately $34.4 million at March
31, 1997 (the "Term Loan"), (ii) the Senior Notes, (iii) the Mortgage Notes and
(iv) the PIK Notes.
The Term Loan bears interest at the prime rate plus 3%, currently 11-1/2%,
and requires amortized monthly principal payments of approximately $158,000. The
Term Loan matures on May 28, 2000.
The Senior Notes have an outstanding principal amount of $27.0 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 of November 15, 1998 and 1999.
The Mortgage Notes have an outstanding principal amount of approximately
$242.1 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 $70.7
million and mature on November 15, 2005. Interest is currently payable
semi-annually at the rate of 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. The Partnership anticipates that interest due in 1997 of
approximately $10.2 million will be paid through the issuance of additional PIK
Notes.
The Partnership's total cash debt service requirement was approximately
$2.2 million during the three months ended March 31, 1997 and the Partnership
anticipates that approximately $37.9 million in cash will be required during the
remainder of 1997 to meet its debt service obligations. As a result of the
Acquisition and the Partnership's designation as an unrestricted subsidiary
under the indenture under which the 15-1/2% Senior Secured Notes of THCR
Holdings and Trump Hotels & Casino Resorts Funding, Inc. were issued, the
Partnership has the ability to receive certain advances for working capital,
debt service and other purposes. In addition, the Partnership has the authority
to obtain a working capital facility of up to $10.0 million, although there can
be no assurance that such financing will be available on terms acceptable to the
Partnership.
RESULTS OF OPERATIONS: OPERATING REVENUES AND EXPENSES
The financial information presented below reflects the financial condition
and results of operations of the Partnership. 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.
7
<PAGE>
Comparison of Results of Operations for the Three Months Periods Ended
March 31, 1997 and 1996. The Partnership's net revenues (gross revenues less
promotional allowances) for the three months ended March 31, 1997 and 1996 were
approximately $68.4 million and $66.9 million, respectively. The $1.5 million or
2.2% increase is primarily the result of the increased table game win percentage
as described below.
Gaming revenues provide the majority of the Partnership's revenues and
primarily consist of slot machine and table games win.
Slot win was approximately $45.2 million and $45.3 million (a decrease of
approximately $100,000 or 0.2%) for the three months ended March 31, 1997 and
1996, respectively. The total dollar amount wagered by customers on slot
machines decreased by approximately $3.6 million or 0.7% to $547.9 million for
the three months ended March 31, 1997. The decrease in slot volume was the
reason for the decline in slot revenues as the slot win percentage (slot win as
a percentage of dollars wagered on slot machines) remained constant at 8.2%.
Table game win was approximately $18.8 million and $17.9 million (an
increase of $900,000 or 5.0%) for the three months ended March 31, 1997 and
1996, respectively. The total dollar amount wagered by customers on table games
increased by approximately $400,000 or 0.3% to $116.6 million for the three
months ended March 31, 1997 from $116.2 million for the three months ended 1996.
The increase in table game win was primarily caused by an increase in the table
game win percentage (table game win as a percentage of dollars wagered on table
games) to 16.1% for the three months ended March 31, 1997 from 15.4% for the
three months ended March 31, 1996. 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 period to period, due in part to the
play of certain premium patrons who tend to wager substantial dollar amounts on
table games.
For the three months ended March 31, 1997 and 1996, credit extended to the
table games customers was approximately 31.5% and 29.3% of overall table play,
respectively. This relatively high level of credit play is the result of an
increased level of play by individuals who wager relatively large sums. These
premium patrons tend to use a higher percentage of credit when they wager.
Non gaming revenues, in the aggregate, increased by approximately $1.3
million or 10.2% to $14.1 million for the three months ended March 31, 1997 from
$12.8 million for the three months ended March 31, 1996, primarily as a result
of an increase in other revenue activity (consisting primarily of admissions
revenues).
Promotional allowances increased by approximately $500,000 or 5.5% to $9.6
million for the three months ended March 31, 1997 from $9.1 million for the
three months ended March 31, 1996, primarily as a result of an increase in
complimentary entertainment events.
General and Administrative expenses decreased approximately $500,000 or
3.0% for the three months ended March 31, 1997 from the same period in 1996
primarily due to reduced salaries and employee benefits.
Depreciation and Amortization expense increased approximately $1.2 million
or 31.3% for the three months ended March 31, 1997, from $3.8 million for the
three months ended March 31, 1996, primarily due to the additional depreciation
expense related to the acquisition of the Partnership by THCR Holdings.
Interest expense increased approximately $400,000 or 3.4% to $12.2 million
for the three months ended March 31, 1997 from $11.8 million for the three
months ended March 31, 1996 primarily due to an increase in the outstanding
principal related to the PIK Notes.
SEASONALITY
The casino industry in Atlantic City is seasonal in nature; accordingly,
the results of operations for the period ending March 31, 1997 are not
necessarily indicative of the operating results for a full year.
ITEM 3--QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
Pursuant to the General Instructions to Rule 305 of Regulation S-K, the
quantitative and qualitative disclosures called for by this Item 3 and by Rule
305 of Regulation S-K are inapplicable to the Registrants at this time.
8
<PAGE>
PART II -- OTHER INFORMATION
ITEM 1 -- LEGAL PROCEEDINGS
The Partnership, its partners, its affiliates, Funding and certain of their
employees have been involved in various legal proceedings. In general, the
Partnership and Funding have agreed to indemnify such persons and entities
against any and all losses, claims, damages, expenses (including reasonable
costs, disbursements and counsel fees) and liabilities (including amounts paid
or incurred in satisfaction of settlements, judgments, fines and penalties)
incurred by them in said legal proceedings. Such persons and entities are
vigorously defending the allegations against them and intend to vigorously
contest any future proceedings.
On March 13, 1997, THCR filed a lawsuit in the United States District
Court, District of New Jersey, against Mirage Resorts Incorporated, the State of
New Jersey, the New Jersey Department of Transportation, the South Jersey
Transportation Authority, the New Jersey Casino Reinvestment Development
Authority, the New Jersey Transportation Trust Fund Authority and others. THCR
was seeking declaratory and injunctive relief to recognize and prevent
violations by the defendants of the casino clause of the New Jersey State
Constitution and various federal securities and environmental laws relating to
proposed infrastructure improvements in the Atlantic City marina. The defendants
then filed an action in the New Jersey State Court seeking declaration of the
claim relating to the casino clause of the New Jersey State Constitution. On May
1, 1997, the United States District Court decided that the matter should be
heard in the New Jersey State Court. Oral arguments were heard in the New Jersey
State Court on May 9, 1997. A decision is expected in the near future.
Various other legal proceedings are now pending against the Partnership.
Except as set forth in the Partnership's and Funding's Annual Report on Form
10-K for the year ended December 31, 1996, the Partnership considers all such
proceedings to be ordinary litigation incident to the character of its business
and not material to its business or financial condition. The majority of such
claims are covered by liability insurance (subject to applicable deductibles),
and the Partnership believes that the resolution of these claims, to the extent
not covered by insurance, will not, individually or in the aggregate, have a
material adverse effect on its financial condition or results of operations of
the Partnership.
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:
EXHIBIT NO. DESCRIPTION OF EXHIBIT
----------- ----------------------
27.1 Financial Data Schedule of Trump's Castle Funding, Inc.
27.2 Financial Data Schedule of Trump's Castle Associates, L.P.
9
<PAGE>
B. CURRENT REPORTS ON FORM 8-K:
The Registrants filed a Current Report on Form 8-K on January 22, 1997,
reporting under Item 5 thereto the execution on January 20, 1997 of a letter of
intent (the "Letter of Intent") among THCR, THCR Holdings and Colony Capital,
Inc. ("Colony"), which contemplated, among other things, that an institutional
fund (or an affiliate thereof) for which Colony would act as investment advisor
would purchase preferred securities and a 51% common equity interest in the
Partnership and THCR Common Stock warrants. Under Item 7 to such Form 8-K, the
Registrant filed as exhibits the Letter of Intent and two press releases of THCR
announcing the execution thereof. No financial statements were filed in
connection with such Form 8-K. On March 27, 1997, THCR announced that
negotiations with respect to the transactions contemplated by the Letter of
Intent had been terminated.
10
<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.
TRUMP'S CASTLE FUNDING, INC.
(Registrant)
Date: May 14, 1997
By: /s/ DONALD J. TRUMP
----------------------------------
DONALD J. TRUMP
PRESIDENT AND TREASURER
(DULY AUTHORIZED OFFICER AND
PRINCIPAL FINANCIAL OFFICER)
11
<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.
TRUMP'S CASTLE ASSOCIATES, L.P.
(Registrant)
Date: May 14, 1997
By: /s/ JOHN P. BURKE
--------------------------------
JOHN P. BURKE
TREASURER
(DULY AUTHORIZED OFFICER AND
CHIEF ACCOUNTING OFFICER
12
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
The schedule contains summary financial information from Trump's Castle Funding,
Inc. This data has been extracted from the Consolidated Balance Sheets and
Consolidated Statements of Operations for the three month period ended
March 31, 1997 and is qualified in its entirety by reference to such
Financial Statements.
</LEGEND>
<CIK> 0000770618
<NAME> Trump's Castle Funding, Inc.
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-mos
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-START> JAN-01-1997
<PERIOD-END> MAR-31-1997
<CASH> 0
<SECURITIES> 0
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 0
<PP&E> 0
<DEPRECIATION> 0
<TOTAL-ASSETS> 300,056
<CURRENT-LIABILITIES> 0
<BONDS> 0
0
0
<COMMON> 200
<OTHER-SE> 0
<TOTAL-LIABILITY-AND-EQUITY> 300,056
<SALES> 0
<TOTAL-REVENUES> 11,061
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> (11,061)
<INCOME-PRETAX> 0
<INCOME-TAX> 0
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 0
<EPS-PRIMARY> 0
<EPS-DILUTED> 0
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION FROM
TRUMP'S CASTLE ASSOCIATES, L.P. THIS DATA HAS BEEN EXTRACTED
FROM THE CONSOLIDATED BALANCE SHEETS AND CONSOLIDATED STATEMENTS
OF OPERATIONS FOR THE THREE MONTH PERIOD ENDED MARCH 31, 1997
AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL
STATEMENTS.
</LEGEND>
<CIK> 0000911534
<NAME> TRUMP'S CASTLE ASSOCIATES, L.P.
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-START> JAN-01-1997
<PERIOD-END> MAR-31-1997
<CASH> 22,217
<SECURITIES> 0
<RECEIVABLES> 7,905 <F1>
<ALLOWANCES> 0
<INVENTORY> 1,691
<CURRENT-ASSETS> 1,344
<PP&E> 515,087
<DEPRECIATION> (9,860)
<TOTAL-ASSETS> 552,336
<CURRENT-LIABILITIES> 53,384
<BONDS> 273,056
0
0
<COMMON> 200
<OTHER-SE> 0
<TOTAL-LIABILITY-AND-EQUITY> 552,336
<SALES> 0
<TOTAL-REVENUES> 68,424
<CGS> 0
<TOTAL-COSTS> 59,938
<OTHER-EXPENSES> 5,041
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> (13)
<INCOME-PRETAX> 0
<INCOME-TAX> 0
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 8,684
<EPS-PRIMARY> 0
<EPS-DILUTED> 0
<FN>
<F1>ASSET VALUES REPRESENT NET AMOUNTS
</FN>
</TABLE>
