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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, 1999
OR
[_] 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: 1-9029
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TRUMP'S CASTLE HOTEL & CASINO, INC.
-----------------------------------
(Exact name of registrant as specified in its charter)
NEW JERSEY 11-2735914
---------- ----------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
HURON AVENUE AND BRIGANTINE BOULEVARD
ATLANTIC CITY, NEW JERSEY 08401
(609) 441-6060
------------------------------------------------------------
(Address, including Zip Code and Telephone Number, Including
Area Code, of Registrant's Principal Executive Offices)
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.)
HURON AVENUE AND BRIGANTINE BOULEVARD
ATLANTIC CITY, NEW JERSEY 08401
(609) 441-6060
------------------------------------------------------------
(Address, including Zip Code and Telephone Number, Including
Area Code, of Registrant's Principal Executive Offices)
TRUMP'S CASTLE ASSOCIATES, L.P.
-------------------------------
(Exact name of registrant as specified in its charter)
NEW JERSEY 22-2608426
---------- ----------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
HURON AVENUE AND BRIGANTINE BOULEVARD
ATLANTIC CITY, NEW JERSEY 08401
(609) 441-6060
------------------------------------------------------------
(Address, including Zip Code and Telephone Number, Including
Area Code, of Registrant's Principal Executive Offices)
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] [_]
AS OF MAY 13, 1999, THERE WERE 100 SHARES OF TRUMP'S CASTLE HOTEL & CASINO,
INC.'S COMMON STOCK, NO PAR VALUE, OUTSTANDING. TRUMP'S CASTLE HOTEL & CASINO,
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 MAY 13, 1999, 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
FORM 10-Q AND IS THEREFORE FILING THIS FORM WITH THE REDUCED DISCLOSURE FORMAT.
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<PAGE>
TRUMP'S CASTLE ASSOCIATES, L.P. AND SUBSIDIARY
INDEX TO FORM 10-Q
<TABLE>
<CAPTION>
PAGE NO.
--------
PART I - FINANCIAL INFORMATION
ITEM 1 - Financial Statements
<S> <C>
Condensed Consolidated Balance Sheets as of
December 31, 1998 and March 31, 1999 (unaudited) ........................... 1
Condensed Consolidated Statements of Operations for the
three months ended March 31, 1998 and 1999 (unaudited)...................... 2
Condensed Consolidated Statement of Partners' Capital
for the three months ended March 31, 1999 (unaudited)....................... 3
Condensed Consolidated Statements of Cash Flows for the
three months ended March 31, 1998 and 1999 (unaudited) .................... 4
Notes to Condensed Consolidated Financial Statements
(unaudited)..................... 5
ITEM 2 - Management's Discussion and Analysis of Financial Condition
and Results of Operations .................................................. 8
ITEM 3 - Quantitative and Qualitative Disclosures About Market Risk ................. 12
PART II - OTHER INFORMATION
ITEM 1 - Legal Proceedings........................................................... 13
ITEM 2 - Changes in Securities and Use of Proceeds................................... 14
ITEM 3 - Defaults Upon Senior Securities............................................. 14
ITEM 4 - Submission of Matters to a Vote of Security Holders......................... 14
ITEM 5 - Other Information........................................................... 14
ITEM 6 - Exhibits and Reports on Form 8-K............................................ 14
SIGNATURES
SIGNATURE - Trump's Castle Hotel & Casino, Inc....................................... 15
SIGNATURE - Trump's Castle Funding, Inc.............................................. 16
SIGNATURE - Trump's Castle Associates, L.P........................................... 17
</TABLE>
<PAGE>
PART I - FINANCIAL INFORMATION
ITEM 1 - FINANCIAL STATEMENTS
TRUMP'S CASTLE ASSOCIATES, L.P. AND SUBSIDIARY
CONDENSED CONSOLIDATED BALANCE SHEETS
(IN THOUSANDS)
<TABLE>
<CAPTION>
DECEMBER 31, MARCH 31,
1998 1999
------------ -----------
(UNAUDITED)
ASSETS
CURRENT ASSETS:
<S> <C> <C>
Cash and cash equivalents ............................................ $ 19,723 $ 25,967
Receivables, net ..................................................... 8,401 8,107
Inventories .......................................................... 3,020 2,998
Other current assets ................................................. 1,884 1,871
-------- --------
Total current assets ........................................... 33,028 38,943
PROPERTY AND EQUIPMENT, NET ............................................. 488,745 485,687
OTHER ASSETS ............................................................ 15,115 15,584
-------- --------
Total assets ................................................... $536,888 $540,214
======== ========
LIABILITIES AND PARTNERS' CAPITAL
CURRENT LIABILITIES:
Current maturities-long term debt .................................... $ 1,277 $ 903
Accounts payable and accrued expenses ................................ 27,048 28,033
Due to affiliates .................................................... 21,602 20,409
Accrued interest payable ............................................. 4,777 13,531
-------- --------
Total current liabilities ...................................... 54,704 62,876
LONG TERM DEBT, LESS CURRENT MATURITIES ................................. 368,529 369,465
OTHER LONG TERM LIABILITIES ............................................. 3,541 6,696
-------- --------
Total liabilities .............................................. 426,774 439,037
COMMITMENTS AND CONTINGENCIES
PARTNERS' CAPITAL ....................................................... 110,114 101,177
-------- --------
Total liabilities and partners' capital ........................ $536,888 $540,214
======== ========
</TABLE>
The accompanying notes are an integral part of these condensed
consolidated statements.
1
<PAGE>
TRUMP'S CASTLE ASSOCIATES, L.P. AND SUBSIDIARY
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
FOR THE THREE MONTHS ENDED MARCH 31, 1998 AND 1999
(UNAUDITED)
(IN THOUSANDS)
THREE MONTHS
ENDED MARCH 31,
--------------------
1998 1999
-------- --------
REVENUES:
Gaming ...................... $ 62,733 $ 60,890
Rooms ....................... 3,557 3,286
Food and beverage ........... 7,494 7,269
Other ....................... 1,885 1,603
-------- --------
Gross revenues ........... 75,669 73,048
Less-promotional allowances .... 8,946 8,562
-------- --------
Net revenues ................ 66,723 64,486
-------- --------
COSTS AND EXPENSES:
Gaming ...................... 39,997 38,782
Rooms ....................... 668 692
Food and beverage ........... 1,832 1,776
General and administrative .. 15,009 14,704
Depreciation and amortization 4,050 4,250
-------- --------
61,556 60,204
-------- --------
Income from operations ...... 5,167 4,282
INTEREST INCOME ................ 228 219
INTEREST EXPENSE ............... (12,615) (13,438)
-------- --------
Net loss .................... $ (7,220) $ (8,937)
======== ========
The accompanying notes are an integral part of these condensed
consolidated statements.
2
<PAGE>
TRUMP'S CASTLE ASSOCIATES, L.P. AND SUBSIDIARY
CONDENSED CONSOLIDATED STATEMENT OF PARTNERS' CAPITAL
FOR THE THREE MONTHS ENDED MARCH 31, 1999
(UNAUDITED)
(IN THOUSANDS)
PARTNERS' PARTNERS'
CAPITAL DEFICIT TOTAL
------- ------- -----
Balance at December 31, 1998 .......... $ 175,395 $ (65,281) $ 110,114
Net loss .............................. -- (8,937) (8,937)
---------- --------- ---------
Balance at March 31, 1999 ............. $ 175,395 $ (74,218) $ 101,177
========== ========= =========
The accompanying notes are an integral part of this condensed
consolidated statement.
3
<PAGE>
TRUMP'S CASTLE ASSOCIATES, L.P. AND SUBSIDIARY
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE THREE MONTHS ENDED MARCH 31, 1998 AND 1999
(UNAUDITED)
(IN THOUSANDS)
<TABLE>
<CAPTION>
THREE MONTHS
ENDED MARCH 31,
--------------------
1998 1999
--------- --------
CASH FLOWS FROM OPERATING ACTIVITIES:
<S> <C> <C>
Net loss ................................................... $ (7,220) $ (8,937)
Adjustments to reconcile net loss to net cash flows provided
by operating activities-
Depreciation and amortization ....................... 4,050 4,250
Accretion of bond discount .......................... 885 1,033
Provision (credit) for losses on receivables ........ 230 (149)
Valuation allowance-CRDA investments ................ 257 349
(Increase) decrease in receivables .................. (647) 443
Decrease in inventories ............................. 223 22
Decrease in other current assets .................... 448 13
Increase in other assets ............................ (13) (45)
Increase in current liabilities ..................... 12,629 9,904
Decrease in amounts due to affiliates ............... (1,388) (1,238)
Increase in other liabilities ....................... 2,719 3,155
-------- --------
Net cash flows provided by operating activities 12,173 8,800
-------- --------
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchases of property and equipment, net ............ (40) (1,312)
Purchase of CRDA investments ........................ (770) (773)
-------- --------
Net cash flows used in investing activities .... (810) (2,085)
-------- --------
CASH FLOWS FROM FINANCING ACTIVITIES:
Repayment of other borrowings ....................... (3,504) (471)
-------- --------
Net cash flows used in financing activities .... (3,504) (471)
-------- --------
Net increase in cash and cash equivalents ...... 7,859 6,244
CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD .............. 14,472 19,723
-------- --------
CASH AND CASH EQUIVALENTS AT END OF PERIOD .................... $ 22,331 $ 25,967
======== ========
SUPPLEMENTAL INFORMATION:
Cash paid for interest ..................................... $ 1,058 $ 292
======== ========
</TABLE>
The accompanying notes are an integral part of these condensed
consolidated statements.
4
<PAGE>
TRUMP'S CASTLE ASSOCIATES, L.P. AND SUBSIDIARY
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
(1) ORGANIZATION AND OPERATIONS
The accompanying condensed 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"). The Partnership is 99% owned by Trump Hotels
& Casino Resorts Holdings, L.P., a Delaware limited partnership ("THCR
Holdings"), and 1% by Trump's Castle Hotel & Casino, Inc., a New Jersey
corporation ("TCHI"). TCHI is wholly owned by THCR Holdings, and THCR Holdings
is currently a 63.4% owned subsidiary of Trump Hotels & Casino Resorts, Inc., a
Delaware corporation ("THCR").
All significant intercompany balances and transactions have been
eliminated in these condensed consolidated financial statements.
The Partnership operates the Trump Marina Hotel Casino ("Trump
Marina"), a luxury casino hotel located in the Marina District of Atlantic City,
New Jersey. The primary portion of Trump Marina'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 to intensify due to
expansion by existing operators and new entrants to the gaming industry becoming
operational.
Since Funding has no business operations, its ability to repay the
principal and interest on the $62,000,000 10 1/4% Senior Secured Notes due 2003
(the "New 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.
Since TCHI has no business operations, its ability to repay the
principal and interest on the $5,000,000 10 1/4% Senior Secured Notes due 2003
(the "Working Capital Loan") is completely dependent upon the operations of the
Partnership.
The accompanying condensed 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 condensed 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 condensed consolidated 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, 1998
filed with the SEC by the Partnership, Funding and TCHI.
Certain reclassifications have been made to conform prior year
financial information to the current year presentation.
The casino industry in Atlantic City is seasonal in nature;
accordingly, the results of operations for the three month period ending March
31, 1999 are not necessarily indicative of the operating results for a full
year.
5
<PAGE>
TRUMP'S CASTLE ASSOCIATES, L.P. AND SUBSIDIARY
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)
(UNAUDITED)
(2) FINANCIAL INFORMATION OF FUNDING
Financial information relating to Funding is as follows (in thousands):
DECEMBER 31, MARCH 31,
1998 1999
-------- ---------
Total Assets (including Mortgage
Notes Receivable of $242,141, net
of unamortized discount of $26,807
at December 31, 1998 and $25,886 at
March 31, 1999, PIK Notes
Receivable of $92,510, net of
unamortized discount of $6,806 at
December 31, 1998 and $6,694 at
March 31, 1999, New Senior Notes
Receivable of $62,000 at December
31, 1998 and March 31, 1999) ................... $363,038 $364,071
======== ========
Total Liabilities and Capital
(including Mortgage Notes Payable
of $242,141, net of unamortized
discount of $26,807 at December 31,
1998 and $25,886 at March 31, 1999,
PIK Notes Payable of $92,510, net
of unamortized discount of $6,806
at December 31, 1998 and $6,694 at
March 31, 1999, New Senior Notes
Payable of $62,000 at December 1998
and March 31, 1999) ............................ $363,038 $364,071
======== ========
THREE MONTHS
ENDED MARCH 31,
---------------
1998 1999
------- -------
Interest Income .......................... $11,544 $12,976
Interest Expense ......................... 11,544 12,976
------- -------
Net Income ............................... $ -- $ --
======= =======
6
<PAGE>
TRUMP'S CASTLE ASSOCIATES, L.P. AND SUBSIDIARY
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)
(UNAUDITED)
(3) FINANCIAL INFORMATION OF TCHI
Financial information relating to TCHI is as follows (in thousands):
DECEMBER 31, MARCH 31,
1998 1999
------------ ---------
Total Assets (including Working Capital Loan
Receivable of $5,000 at December 31, 1998
and March 31, 1999) ............................ $5,000 $5,000
====== ======
Total Liabilities and Capital (including
Working Capital Loan Payable of $5,000 at
December 31, 1998 and March 31, 1999) ........... $5,000 $5,000
====== ======
THREE MONTHS
ENDED MARCH 31,
-------------------
1998 1999
------ ------
Interest Income .............................. $ -- $128
Interest Expense ............................. -- 128
---- ----
Net Income ................................... $ -- $ --
==== ====
7
<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, 1999, the
Partnership's net cash flow provided by operating activities was $8,800,000.
In addition to funding operations, the Partnership's principal uses of
cash are capital expenditures and debt service.
Capital expenditures for 1999 are anticipated to be approximately
$9,000,000 and principally consist of a casino floor and slot machine renovation
project, hotel room renovations, as well as ongoing property enhancements.
The Partnership's debt consists primarily of (i) the Mortgage Notes,
(ii) the PIK Notes, (iii) the New Senior Notes, and (iv) the Working Capital
Loan.
The Mortgage Notes have an outstanding principal amount of
approximately $242,141,000, bear interest at the rate of 11 3/4% per annum and
mature on November 15, 2003.
The PIK Notes have an outstanding principal amount of approximately
$92,510,000 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 1999 of approximately
$13,281,000 will be paid through the issuance of additional PIK Notes.
On April 17, 1998, Funding refinanced its 11 1/2% Senior Secured Notes
due 2000 (the "Old Senior Notes") and its term loan with a bank (the "Term
Loan") by issuing the New Senior Notes. The proceeds from the issuance of the
New Senior Notes were used to redeem all of the issued and outstanding Old
Senior Notes at 100% of their principal amount and to repay the Term Loan in
full. In conjunction with this refinancing, TCHI obtained the Working Capital
Loan and loaned the proceeds to the Partnership.
The New Senior Notes have an outstanding principal amount of
$62,000,000 and bear interest at the rate of 10 1/4% per annum, payable
semi-annually each April and October. The entire principal balance of the New
Senior Notes matures on April 30, 2003.
The Working Capital Loan has an outstanding principal amount of
$5,000,000 and bears interest at the rate of 10 1/4% per annum, payable
semi-annually each April and October. The entire principal balance of the
Working Capital Loan matures on April 30, 2003.
The Partnership's total cash debt service requirement was approximately
$541,000 for the three months ended March 31, 1999 and the Partnership
anticipates that approximately $37,192,000 in cash will be required during the
remainder of 1999 to meet its debt service obligations. Although the Partnership
has the authority to obtain a working capital facility of up to $10,000,000 (of
which approximately $5,446,000 is outstanding), there can be no assurance that
such financing will be available, or on terms acceptable to the Partnership.
8
<PAGE>
ITEM 2 - MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS - (CONTINUED)
The ability of Funding, TCHI and the Partnership to pay their
indebtedness when due will depend on the ability of the Partnership to either
generate cash from operations sufficient for such purposes or to refinance such
indebtedness on or before the date on which it becomes due. Cash flow from
operations may not be sufficient to repay a substantial portion of the principal
amount of the debt at maturity. The future operating performance of the
Partnership and the ability to refinance this debt will be subject to the then
prevailing economic conditions, industry conditions and numerous other
financial, business and other factors, many of which are beyond the control of
Funding, TCHI or the Partnership. There can be no assurance that the future
operating performance of the Partnership will be sufficient to meet these
repayment obligations or that the general state of the economy, the status of
the capital markets or the receptiveness of the capital markets to the gaming
industry will be conducive to refinancing this debt or other attempts to raise
capital.
YEAR 2000
The Partnership has assessed the Year 2000 issue and has begun
implementing a plan to ensure its systems are Year 2000 compliant. Analysis has
been made of the Partnership's various customer support and internal
administration systems with appropriate modifications having been made or
underway. Testing of the modifications is expected to be completed during 1999.
The Partnership is approximately 85% complete in its modifications.
The Partnership believes that the issues of concern are predominantly
software related versus hardware related. Further, the Partnership relies upon
third party suppliers for support of their individual systems provided to the
Partnership. These are primarily support of property, plant and equipment, such
as telephones, elevators and fire safety systems. Contact has been made with all
significant system suppliers and the Partnership is at various stages of
assessment, negotiation and implementation. When necessary, contracts have been
issued to update these systems so as to ensure Year 2000 compliance. The cost of
addressing the Year 2000 issue is not expected to be material and will be funded
out of operations.
If the Partnership did not assess the Year 2000 issue and provide for
its compliance, it would be forced to convert to manual systems to carry on its
business. Since the Partnership expects to be fully Year 2000 compliant, it does
not feel that a contingency plan is necessary at this time. However, the
Partnership will continually be assessing the situation and considering whether
a contingency plan is necessary as the millennium approaches.
This Year 2000 disclosure constitutes Year 2000 readiness disclosure
within the meaning of the Year 2000 Information and Readiness Disclosure Act.
9
<PAGE>
ITEM 2 - MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS - (CONTINUED)
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.
COMPARISON OF RESULTS OF OPERATIONS FOR THE THREE MONTH PERIODS ENDED MARCH 31,
1998 AND 1999.
Gaming revenues are the primary source of the Partnership's revenues
and primarily consist of table game and slot machine win. The following chart
details activity for the major components of gaming revenues:
THREE MONTHS ENDED
MARCH 31,
-----------------------------
1998 1999
--------- ----------
(DOLLARS IN THOUSANDS)
Table Game Revenue ....................... $ 17,678 $ 15,447
Decrease from Prior Period ............... $ (2,231)
Table Game Drop .......................... $ 111,844 $ 101,296
Decrease from Prior Period ............... $ (10,548)
Table Game Win Percentage ................ 15.8% 15.2%
Decrease from Prior Period ............... (0.6) pts.
Number of Table Games .................... 94 91
Decrease from Prior Period ............... (3)
Slot Revenue ............................. $ 44,772 $ 45,270
Increase from Prior Period ............... $ 498
Slot Handle .............................. $ 551,843 $ 552,582
Increase from Prior Period ............... $ 739
Slot Win Percentage ...................... 8.1% 8.2%
Increase from Prior Period ............... 0.1 pts.
Number of Slot Machines .................. 2,155 2,178
Increase from Prior Period ............... 23
Other Gaming Revenue ..................... $ 283 $ 173
Decrease from Prior Period ............... $ (110)
Total Gaming Revenues .................... $ 62,733 $ 60,890
Decrease from Prior Period ............... $ (1,843)
10
<PAGE>
ITEM 2 - MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS - (CONTINUED)
Table game revenues decreased by approximately $2,231,000 or 12.6% to
$15,447,000 for the three months ended March 31, 1999 from $17,678,000 for the
three months ended March 31, 1998. This decrease is the result of lower table
game volume than the previous year, coupled with a lower table game win
percentage. Table game revenues represent the amount retained by the Partnership
from amounts wagered at table games. The table game win percentage tends to be
fairly constant over the long term, but may vary significantly in the short
term, due to large wagers by "high rollers." The Atlantic City industry table
game win percentages were 15.9% and 15.4% for the three months ended March 31,
1999 and 1998, respectively.
Non gaming revenues, in the aggregate, decreased by approximately
$778,000 or 6.0% to $12,158,000 for the three months ended March 31, 1999 from
$12,936,000 for the three months ended March 31, 1998, primarily as a result of
a decrease in complimentary room and food and beverage revenues due to a change
in marketing strategy. This also resulted in a corresponding decrease in
Promotional Allowances of $384,000 or 4.3% to $8,562,000 for the three months
ended March 31, 1999 from $8,946,000 for the three months ended March 31, 1998.
Gaming costs decreased approximately $1,215,000 or 3.0% to $38,782,000
for the three months ended March 31, 1999 from $39,997,000 for the three months
ended March 31, 1998. This decrease is primarily the result of a decrease in
promotional and complimentary expenses achieved by eliminating less profitable
programs as well as a result of favorable changes in the reserve for gaming
receivables.
Interest expense increased approximately $823,000 or 6.5% to
$13,438,000 for the three months ended March 31, 1999 from $12,615,000 for the
three months ended March 31, 1998, primarily due to an increase in the
outstanding principal of the PIK Notes.
SEASONALITY
The casino industry in Atlantic City is seasonal in nature;
accordingly, the results of operations for the three month period ending March
31, 1999 are not necessarily indicative of the operating results for a full
year.
IMPORTANT FACTORS RELATING TO FORWARD LOOKING STATEMENTS
The Private Securities Litigation Reform Act of 1995 provides a "safe
harbor" for forward-looking statements so long as those statements are
identified as forward-looking and are accompanied by meaningful cautionary
statements identifying important factors that could cause actual results to
differ materially from those projected in such statements. In connection with
certain forward-looking statements contained in this Quarterly Report on Form
10-Q and those that may be made in the future by or on behalf of the
Registrants, the Registrants note that there are various factors that could
cause actual results to differ materially from those set forth in any such
forward-looking statements. The forward-looking statements contained in the
Quarterly Report were prepared by management and are qualified by, and subject
to, significant business, economic, competitive, regulatory and other
uncertainties and contingencies, all of which are difficult or impossible to
predict and many of which are beyond the control of the Registrants.
Accordingly, there can be no assurance that the forward-looking statements
contained in this Quarterly Report will be realized or that actual results will
not be significantly higher or lower. The statements have not been audited by,
examined by, compiled by or subjected to agreed-upon procedures by independent
accountants, and no third-party has independently verified or reviewed such
statements. Readers of this Quarterly Report should consider these facts in
evaluating the information contained herein. In addition, the business and
operations of the Registrants are subject to substantial risks which increase
the uncertainty inherent in the forward-looking statements contained in this
Quarterly Report. The inclusion of the forward-looking statements contained in
this Quarterly Report should not be regarded as a representation by the
Registrants or any other person that the forward-looking statements contained in
this Quarterly Report will be achieved. In light of the foregoing, readers of
this Quarterly Report are cautioned not to place undue reliance on the
forward-looking statements contained herein.
11
<PAGE>
ITEM 3 - QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
Management has reviewed the disclosure requirements for Item 3 and,
based upon the Partnership, Funding and TCHI's current capital structure, scope
of operations and financial statement structure, management believes that such
disclosure is not warranted at this time. Since conditions may change, the
Partnership, Funding and TCHI will periodically review its compliance with this
disclosure requirement to the extent applicable.
12
<PAGE>
PART II - OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
General. The Partnership, its partners, certain members of the former
Executive Committee of the Partnership, Funding, TCHI and certain of their
employees are involved in various legal proceedings. Such persons and entities
are vigorously defending the allegations against them and intend to contest
vigorously any future proceedings. The Partnership, Funding and TCHI have agreed
to indemnify such persons 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.
Other Litigation. On March 13, 1997, THCR filed a lawsuit in the United
States District Court, District of New Jersey, against Mirage, the State of New
Jersey ("State"), the New Jersey Department of Transportation ("NJDOT"), the
South Jersey Transportation Authority ("SJTA"), the Casino Reinvestment
Development Authority (the "CRDA"), 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 area. While this action was pending, defendants State and CRDA then filed
an action in the New Jersey State Court seeking a declaratory judgment as to the
claim relating to the casino clause of the New Jersey State Constitution. On May
1, 1997, the United States District Court dismissed the federal claims and ruled
that the State constitutional claims should be pursued in State Court. On April
2, 1998, the United States Court of Appeals for the Third Circuit affirmed the
dismissal and THCR's petition to the Third Circuit for a rehearing was denied.
On May 14, 1997 the State Court granted judgment in favor of the State and CRDA.
On March 20, 1998, the Appellate Division affirmed. THCR has appealed to the
State Supreme Court, which heard argument on January 21, 1999.
On June 26, 1997, THCR filed an action against NJDOT, SJTA, Mirage and
others, in the Superior Court of New Jersey, Chancery Division, Atlantic County
(the "Chancery Division Action"). THCR is seeking to declare unlawful and enjoin
certain actions and omissions of the defendants arising out of and relating to a
certain Road Development Agreement dated as of January 10, 1997, by and among
NJDOT, SJTA and Mirage (the "Road Development Agreement") and the public funding
of a certain road and tunnel project to be constructed in Atlantic City, as
further described in the Road Development Agreement. THCR moved to consolidate
this action with other previously filed related actions. Defendants opposed
THCR's motion to consolidate the Chancery Division Action, initially moved to
dismiss this action on procedural grounds and subsequently moved to dismiss this
action on substantive grounds. On October 20, 1997, the Chancery Court denied
the defendants' motion to dismiss this action on procedural grounds, but entered
summary judgment dismissing this action on substantive grounds. This decision
has been appealed and is pending in the Appellate Division.
Various other legal proceedings are now pending against the
Partnership. The Partnership considers all such proceedings to be ordinary
litigation incident to the character of its business. Management believes that
the resolution of these claims will not, individually or in the aggregate, have
a material adverse effect on the financial condition or results of operations of
the Partnership.
From time to time, the Partnership may be involved in routine
administrative proceedings involving alleged violations of certain provisions of
the New Jersey Casino Control Act. However, the Partnership believes that the
final outcome of these proceedings will not, either individually or in the
aggregate, have a material adverse effect on the Partnership or on its ability
to otherwise retain or renew any casino or other licenses required under the New
Jersey Casino Control Act for the operation of Trump Marina.
13
<PAGE>
PART II - OTHER INFORMATION - (CONTINUED)
ITEM 2 - CHANGES IN SECURITIES AND USE OF PROCEEDS
None.
ITEM 3 - DEFAULTS UPON SENIOR SECURITIES
None.
ITEM 4 - SUBMISSION OF MATTERS TO A 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 Hotel & Casino, Inc.
27.2 Financial Data Schedule of Trump's Castle Funding, Inc.
27.3 Financial Data Schedule of Trump's Castle Associates, L.P.
b. Current Reports on Form 8-K:
None.
14
<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 HOTEL & CASINO, INC.
(Registrant)
Date: May 14, 1999
By: /s/ Nicholas L. Ribis
-------------------------
NICHOLAS L. RIBIS
President and Chief Executive Officer
(Duly Authorized Officer and
Principal Financial Officer)
15
<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, 1999
By: /s/ Nicholas L. Ribis
-------------------------
NICHOLAS L. RIBIS
President and Chief Executive Officer
(Duly Authorized Officer and
Principal Financial Officer)
16
<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)
By: Trump's Castle Hotel & Casino, Inc.
its general partner
Date: May 14, 1999
By: /s/ Nicholas L. Ribis
-------------------------
NICHOLAS L. RIBIS
President and Chief Executive Officer
(Duly Authorized Officer and
Principal Financial Officer)
17
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
The schedule contains summary financial information from Trump's Castle
Hotel & Casino, Inc. This data has been extracted from the Consolidated
Balance Sheets and Consolidated Statement of Operations for the three month
period ended March 31, 1999 and is qualified in its entirety by reference
to such Financial Statements.
</LEGEND>
<CIK> 0001063882
<NAME> TRUMP'S CASTLE HOTEL & CASINO, INC.
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1999
<PERIOD-START> JAN-01-1999
<PERIOD-END> MAR-31-1999
<CASH> 0
<SECURITIES> 0
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 0
<PP&E> 0
<DEPRECIATION> 0
<TOTAL-ASSETS> 5,000
<CURRENT-LIABILITIES> 0
<BONDS> 0
0
0
<COMMON> 0
<OTHER-SE> 0
<TOTAL-LIABILITY-AND-EQUITY> 5,000
<SALES> 0
<TOTAL-REVENUES> 128
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 128
<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>
The schedule contains summary financial information from Trump's Castle
Funding, Inc. This data has been extracted from the Consolidated Balance
Sheets and Consolidated Statement of Operations for the three month period
ended March 31, 1999 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-31-1999
<PERIOD-START> JAN-01-1999
<PERIOD-END> MAR-31-1999
<CASH> 0
<SECURITIES> 0
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 0
<PP&E> 0
<DEPRECIATION> 0
<TOTAL-ASSETS> 364,071
<CURRENT-LIABILITIES> 0
<BONDS> 0
0
0
<COMMON> 0
<OTHER-SE> 0
<TOTAL-LIABILITY-AND-EQUITY> 364,071
<SALES> 0
<TOTAL-REVENUES> 12,976
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 12,976
<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>
The 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, 1999 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-31-1999
<PERIOD-START> JAN-01-1999
<PERIOD-END> MAR-31-1999
<CASH> 25,967
<SECURITIES> 0
<RECEIVABLES> 8,107<F1>
<ALLOWANCES> 0
<INVENTORY> 2,998
<CURRENT-ASSETS> 38,943
<PP&E> 528,419
<DEPRECIATION> 42,732
<TOTAL-ASSETS> 540,214
<CURRENT-LIABILITIES> 62,876
<BONDS> 369,465
0
0
<COMMON> 0
<OTHER-SE> 0
<TOTAL-LIABILITY-AND-EQUITY> 540,214
<SALES> 0
<TOTAL-REVENUES> 64,486
<CGS> 0
<TOTAL-COSTS> 55,954
<OTHER-EXPENSES> 4,250<F2>
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 13,438
<INCOME-PRETAX> 0
<INCOME-TAX> 0
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (8,937)
<EPS-PRIMARY> 0
<EPS-DILUTED> 0
<FN>
<F1>Asset values represent net amounts.
<F2>Represents depreciation and amortization expenses.
</FN>
</TABLE>
