<PAGE>
================================================================================
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: June 30, 2000
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
------------------------------
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) 449-6542
(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) 449-6542
(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) 449-6542
(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 No _______
-----
As of August 14, 2000, 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 August 14, 2000, 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.
================================================================================
<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, 1999 and June 30, 2000 (unaudited)........... 1
Condensed Consolidated Statements of Operations for the three and six months ended June 30,
1999 and 2000 (unaudited)........................................................................... 2
Condensed Consolidated Statement of Partners' Capital for the six months ended June 30,
2000 (unaudited).................................................................................... 3
Condensed Consolidated Statements of Cash Flows for the six months ended June 30, 1999
and 2000 (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..................................... 13
PART II - OTHER INFORMATION
ITEM 1 - Legal Proceedings.............................................................................. 14
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
Trump's Castle Hotel & Casino, Inc.................................................................... 15
Trump's Castle Funding, Inc........................................................................... 16
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, June 30,
1999 2000
------------ -----------
(unaudited)
<S> <C> <C>
ASSETS
------
CURRENT ASSETS
Cash and cash equivalents............................................... $ 21,413 $ 20,732
Receivables, net........................................................ 10,627 11,605
Inventories............................................................. 3,292 3,257
Prepaid expenses and other current assets............................... 1,825 2,872
--------- ---------
Total current assets................................................ 37,157 38,466
PROPERTY AND EQUIPMENT, NET.............................................. 481,731 477,823
OTHER ASSETS............................................................. 14,480 14,181
--------- ---------
Total assets........................................................ $ 533,368 $ 530,470
========= =========
LIABILITIES AND PARTNERS' CAPITAL
---------------------------------
CURRENT LIABILITIES
Current maturities-long term debt...................................... $ 1,296 $ 1,051
Accounts payable and accrued expenses.................................. 26,357 29,321
Due to affiliates...................................................... 20,116 19,086
Accrued interest payable............................................... 4,701 4,701
--------- ---------
Total current liabilities........................................... 52,470 54,159
LONG TERM DEBT, LESS CURRENT MATURITIES.................................. 389,045 399,616
OTHER LONG TERM LIABILITIES.............................................. 3,548 3,666
--------- ---------
Total liabilities................................................... 445,063 457,441
COMMITMENTS AND CONTINGENCIES
PARTNERS' CAPITAL........................................................ 88,305 73,029
--------- ---------
Total liabilities and partners' capital............................. $ 533,368 $ 530,470
========= =========
</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 AND SIX MONTHS ENDED JUNE 30, 1999 AND 2000
(unaudited)
(in thousands)
<TABLE>
<CAPTION>
Three Months Six Months
Ended June 30, Ended June 30,
1999 2000 1999 2000
---------- ---------- ---------- ----------
<S> <C> <C> <C> <C>
REVENUES
Gaming................................................... $ 69,214 $ 67,139 $ 130,104 $ 126,464
Rooms.................................................... 3,933 4,046 7,219 7,593
Food and beverage........................................ 8,897 8,638 16,166 15,831
Other.................................................... 3,017 2,664 4,620 4,388
---------- ---------- ---------- ----------
Gross revenues.......................................... 85,061 82,487 158,109 154,276
Less-promotional allowances.............................. 9,343 8,575 17,905 16,393
---------- ---------- ---------- ----------
Net revenues............................................ 75,718 73,912 140,204 137,883
---------- ---------- ---------- ----------
COSTS AND EXPENSES
Gaming................................................... 42,535 40,621 81,317 76,321
Rooms.................................................... 1,155 1,228 1,847 2,246
Food and beverage........................................ 2,827 3,028 4,603 5,209
General and administrative............................... 15,788 16,820 30,492 33,172
Depreciation and amortization............................ 4,276 4,321 8,526 8,662
---------- ---------- ---------- ----------
66,581 66,018 126,785 125,610
---------- ---------- ---------- ----------
Income from operations.................................. 9,137 7,894 13,419 12,273
INTEREST INCOME........................................... 173 264 392 514
INTEREST EXPENSE.......................................... (13,293) (14,066) (26,731) (28,063)
---------- ---------- ---------- ----------
Net loss................................................ $ (3,983) $ (5,908) $ (12,920) $ (15,276)
========== ========== ========== ==========
</TABLE>
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 SIX MONTHS ENDED JUNE 30, 2000
(unaudited)
(in thousands)
<TABLE>
<CAPTION>
Contributed Accumulated
Capital Deficit Total
----------- ----------- -----------
<S> <C> <C> <C>
Balance at December 31, 1999.. $ 175,395 $ (87,090) $ 88,305
Net loss...................... - (15,276) (15,276)
---------- ----------- -----------
Balance at June 30, 2000...... $ 175,395 $ (102,366) $ 73,029
========== =========== ===========
</TABLE>
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
(unaudited)
(in thousands)
<TABLE>
<CAPTION>
For the Six Months Ended June 30,
1999 2000
-------- --------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES
Net loss....................................................... $(12,920) $(15,276)
Adjustments to reconcile net loss to net cash flows provided
by operating activities-
Depreciation and amortization........................... 8,526 8,662
Issuance of PIK Notes in exchange for accrued interest.. 6,418 7,339
Accretion of bond discount.............................. 2,109 2,462
Provision for losses on receivables..................... 60 586
Valuation allowance-CRDA investments.................... 712 816
Increase in receivables................................. (4,256) (1,564)
(Increase) decrease in inventories...................... (93) 35
Increase in prepaid expenses and other current assets... (670) (1,047)
Decrease in other assets................................ 99 645
Increase in current liabilities......................... 3,010 2,964
Decrease in amounts due to affiliates................... (242) (1,165)
Increase in other liabilities........................... 3 118
-------- --------
Net cash flows provided by operating activities.... 2,756 4,575
-------- --------
CASH FLOWS FROM INVESTING ACTIVITIES
Purchases of property and equipment..................... (2,215) (2,870)
Purchase of CRDA investments............................ (1,639) (1,597)
-------- --------
Net cash flows used in investing activities........ (3,854) (4,467)
-------- --------
CASH FLOWS FROM FINANCING ACTIVITIES
Repayment of other borrowings........................... (926) (789)
-------- --------
Net cash flows used in financing activities........ (926) (789)
-------- --------
Net decrease in cash and cash equivalents.......... (2,024) (681)
CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD.................. 19,723 21,413
-------- --------
CASH AND CASH EQUIVALENTS AT END OF PERIOD........................ $ 17,699 $ 20,732
======== ========
SUPPLEMENTAL INFORMATION
Cash paid for interest $ 17,994 $ 18,098
======== ========
Purchase of equipment under capitalized lease obligations $ - $ 1,314
======== ========
</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
(dollars in thousands)
(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 majority of Trump Marina's revenues are derived from its gaming operations.
Since Funding has no business operations, its ability to repay the
principal and interest on the $62,000 10 1/4% Senior Secured Notes due 2003 (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.
Since TCHI has no business operations, its ability to repay the principal
and interest on the $5,000 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, 1999
filed with the SEC by the Partnership, Funding and TCHI.
The casino industry in Atlantic City is seasonal in nature. Accordingly,
the results of operations for the three and six month periods ending June 30,
2000 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)
(dollars in thousands)
(unaudited)
(2) Financial Information of Funding
Financial information relating to Funding is as follows:
<TABLE>
<CAPTION>
December 31, June 30,
1999 2000
--------- ---------
<S> <C> <C>
Total Assets (including Mortgage Notes Receivable
of $242,141, net of unamortized discount of $22,906
at December 31, 1999 and $20,728 at June 30, 2000,
PIK Notes Receivable of $105,791, net of unamortized
discount of $6,325 at December 31, 1999 and $113,130,
net of unamortized discount of $6,041 at June 30,
2000, Senior Notes Receivable of $62,000 at
December 31, 1999 and June 30, 2000) ................................. $ 380,701 $ 390,502
========= =========
Total Liabilities and Capital (including Mortgage
Notes Payable of $242,141, net of unamortized
discount of $22,906 at December 31, 1999 and $20,728
at June 30, 2000, PIK Notes Payable of $105,791, net
of unamortized discount of $6,325 at December 31,
1999 and $113,130, net of unamortized discount of
$6,041 at June 30, 2000, Senior Notes Payable
of $62,000 at December 31, 1999 and June 30, 2000) ................... $ 380,701 $ 390,502
========= =========
Six Months Ended June 30,
1999 2000
--------- ---------
Interest Income....................................................... $ 26,094 $ 27,235
Interest Expense...................................................... 26,094 27,235
--------- ---------
Net Income............................................................ $ - $ -
========= =========
</TABLE>
6
<PAGE>
TRUMP'S CASTLE ASSOCIATES, L.P. AND SUBSIDIARY
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - (continued)
(dollars in thousands)
(unaudited)
(3) Financial Information of TCHI
Financial information relating to TCHI is as follows:
<TABLE>
<CAPTION>
December 31, June 30,
1999 2000
--------- --------
<S> <C> <C>
Total Assets (including Working Capital Loan Receivable of
$5,000 at December 31, 1999 and June 30, 2000)......................... $ 5,000 $ 5,000
========= ========
Total Liabilities and Capital (including Working Capital Loan
Payable of $5,000 at December 31, 1999 and June 30, 2000).............. $ 5,000 $ 5,000
========= ========
Six Months Ended June 30,
1999 2000
--------- --------
Interest Income............................................................. $ 256 $ 256
Interest Expense............................................................ 256 256
--------- --------
Net Income.................................................................. $ - $ -
========= ========
</TABLE>
7
<PAGE>
ITEM 2 - MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS - (dollars in thousands)
Capital Resources and Liquidity
Cash flow from operating activities is the Partnership's principal source
of liquidity. For the six months ended June 30, 2000, the Partnership's net
cash flow provided by operating activities was $4,575.
In addition to funding operations, the Partnership's principal uses of cash
are capital expenditures and debt service.
Capital expenditures for 2000 are anticipated to be approximately $8,000
and principally consist of a slot room expansion project, hotel room
renovations, as well as ongoing property enhancements. The slot room expansion
project, which was completed during the second quarter of 2000, increased Trump
Marina's gaming space by approximately 5,600 square feet (7.4%) and added 244
slot machines.
The Partnership's debt consists primarily of (i) the Mortgage Notes, (ii)
the PIK Notes, (iii) the Senior Notes and (iv) the Working Capital Loan.
The Mortgage Notes have an outstanding principal amount of approximately
$242,141, bear interest at the rate of 11 3/4% per annum and mature November 15,
2003.
The PIK Notes have an outstanding principal amount of approximately
$113,130 and mature 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. During the second quarter of 2000, interest in the amount of
approximately $7,339 was satisfied through the issuance of additional PIK Notes.
The Partnership anticipates that additional interest due during the fourth
quarter of 2000 in the amount of approximately $7,849 will also be satisfied
through the issuance of additional PIK Notes. Approximately 90% of the PIK Notes
are currently owned by THCR Holdings.
The Senior Notes have an outstanding principal amount of $62,000 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 Senior Notes matures April 30,
2003.
The Working Capital Loan has an outstanding principal amount of $5,000 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 April 30, 2003. The Partnership has the authority to obtain a working
capital facility of up to $10,000 (of which approximately $5,000 is
outstanding), although there can be no assurance that such financing will be
available, or on terms acceptable to the Partnership.
The ability of Funding, TCHI and the Partnership to pay their indebtedness
when due will depend on the Partnership either generating cash from operations
sufficient for such purposes or refinancing 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.
8
<PAGE>
ITEM 2 - MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS - (dollars in thousands) - (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 June 30,
1999 and 2000.
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 revenue:
Three Months Ended June 30,
1999 2000
--------- ---------
Table Game Revenue....................... $ 19,552 $ 18,233
Decrease from Prior Period............... ($1,319)
Table Game Drop.......................... $ 126,040 $ 111,268
Decrease from Prior Period............... ($14,772)
Table Game Win Percentage................ 15.5% 16.4%
Increase from Prior Period............... 0.9pts.
Number of Table Games.................... 85 76
Decrease from Prior Period............... (9)
Slot Revenue............................. $ 48,821 $ 48,432
Decrease from Prior Period............... ($389)
Slot Handle.......................... $ 626,032 $ 612,262
Decrease from Prior Period............... ($13,770)
Slot Win Percentage...................... 7.8% 7.9%
Increase from Prior Period............... 0.1pts.
Number of Slot Machines.................. 2,133 2,340
Increase from Prior Period............... 207
Other Gaming Revenue..................... $ 841 $ 474
Decrease from Prior Period............... ($367)
Total Gaming Revenues.................... $ 69,214 $ 67,139
Decrease from Prior Period............... ($2,075)
9
<PAGE>
ITEM 2 - MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS - (dollars in thousands) - (continued)
Table game revenues decreased approximately $1,319 or 6.7% to $18,233 for
the three months ended June 30, 2000 from $19,552 for the three months ended
June 30, 1999. This decrease is the result of lower table game drop than the
previous year, partially offset by an increased table game win percentage. The
Partnership has continued its strategic marketing focus of de-emphasizing the
more volatile high-end table patron as it concentrates on the more profitable
slot patron. 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 16.3% and 15.4% for the three months
ended June 30, 2000 and 1999, respectively.
Slot revenues decreased slightly ($389 or 0.8%) to $48,432 for the three
months ended June 30, 2000 from $48,821 for the three months ended June 30,
1999. The Partnership completed its slot room expansion project during the
second quarter of 2000, increasing gaming space approximately 5,600 square feet
(7.4%) and adding 244 slot machines. This project enhances Trump Marina's
ability to attract and retain slot customers in the competitive Atlantic City
marketplace. Competition in the Atlantic City gaming market is intense and while
no significant expansion is expected in 2000, the Partnership believes that
competition will continue to intensify due to planned future expansion by
existing operators and as new entrants to the gaming industry become
operational.
Gross revenues include the retail value of the complimentary food, beverage
and hotel services provided to patrons. The retail value of these promotional
allowances is deducted from gross revenues to arrive at net revenues. The costs
of providing such complimentaries have been classified as gaming costs and
expenses through interdepartmental allocations in the accompanying consolidated
statements of operations. The costs associated with providing cash non-gaming
services are classified in food, beverage and rooms costs and expenses in the
accompanying consolidated statements of operations.
Non-gaming revenues, in the aggregate, decreased approximately $499 or 3.1%
to $15,348 for the three months ended June 30, 2000 from $15,847 for the three
months ended June 30, 1999. This result reflects the continued strategy
designed to control marketing costs and to increase cash sales from non-gaming
operations. Accordingly, promotional allowances decreased approximately $768 or
8.2% to $8,575 for the three months ended June 30, 2000 from $9,343 for the
three months ended June 30, 1999. In addition, cash sales from non-gaming
operations increased approximately $269 or 4.1% to $6,773 for the three months
ended June 30, 2000 from $6,504 for the three months ended June 30, 1999.
Gaming costs and expenses decreased approximately $1,914 or 4.5% to $40,621
for the three months ended June 30, 2000 from $42,535 for the three months ended
June 30, 1999, resulting from the strategic reduction or elimination of certain
promotional and complimentary programs.
Room costs increased approximately $73 or 6.3% to $1,228 for the three
months ended June 30, 2000 from $1,155 for the three months ended June 30, 1999.
This increase is due primarily to costs incurred related to a 11.8% increase in
cash rooms revenues generated in 2000 as compared to 1999.
Food and beverage costs increased approximately $201 or 7.1% to $3,028 for
the three months ended June 30, 2000 from $2,827 for the three months ended June
30, 1999. This increase is due primarily to costs incurred related to a 6.8%
increase in food and beverage cash revenues generated in 2000 as compared to
1999.
10
<PAGE>
ITEM 2 - MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS - (dollars in thousands) - (continued)
General and administrative costs and expenses increased approximately
$1,032 or 6.5% to $16,820 for the three months ended June 30, 2000 from $15,788
for the three months ended June 30, 1999. This increase is primarily the result
of incremental costs incurred related to a Services Agreement the Partnership
has with Trump Casinos II, Inc. and employee benefit accruals.
Interest expense increased approximately $773 or 5.8% to $14,066 for the
three months ended June 30, 2000 from $13,293 for the three months ended June
30, 1999, primarily due to an increase in the outstanding principal of the PIK
Notes.
Comparison of Results of Operations for the Six Month Periods Ended June 30,
1999 and 2000.
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 revenue:
Six Months Ended June 30,
1999 2000
---- ----
Table Game Revenue.............................. $ 34,999 $ 31,795
Decrease from Prior Period...................... ($3,204)
Table Game Drop................................. $ 227,336 $ 199,663
Decrease from Prior Period...................... ($27,673)
Table Game Win Percentage....................... 15.4% 15.9%
Increase from Prior Period...................... 0.5 pts.
Number of Table Games........................... 88 76
Decrease from Prior Period...................... (12)
Slot Revenue.................................... $ 94,091 $ 94,065
Decrease from Prior Period...................... ($26)
Slot Handle..................................... $1,178,614 $1,194,794
Increase from Prior Period...................... $ 16,180
Slot Win Percentage............................. 8.0% 7.9%
Decrease from Prior Period...................... (0.1) pts.
Number of Slot Machines......................... 2,155 2,303
Increase from Prior Period...................... 148
Other Gaming Revenue............................ $ 1,014 $ 604
Decrease from Prior Period...................... ($410)
Total Gaming Revenues........................... $ 130,104 $ 126,464
Decrease from Prior Period...................... ($3,640)
11
<PAGE>
ITEM 2 - MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS - (dollars in thousands) - (continued)
Table game revenues decreased approximately $3,204 or 9.2% to $31,795 for
the six months ended June 30, 2000 from $34,999 for the six months ended June
30, 1999. This decrease is the result of lower table game drop than the previous
year, offset slightly by an increased table game win percentage. The Partnership
has continued its strategic marketing focus of de-emphasizing the more volatile
high-end table patron as it concentrates on the more profitable slot patron.
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 15.7% for the six months ended June 30, 2000 and
1999, respectively.
Slot revenues remained relatively flat at $94,065 for the six months ended
June 30, 2000 as compared to $94,091 for the six months ended June 30, 1999.
The Partnership completed its slot room expansion project during the second
quarter of 2000, increasing gaming space approximately 5,600 square feet (7.4%)
and adding 244 slot machines. This project enhances Trump Marina's ability to
attract and retain slot customers in the competitive Atlantic City marketplace.
Competition in the Atlantic City gaming market is intense and while no
significant expansion is expected in 2000, the Partnership believes that
competition will continue to intensify due to planned future expansion by
existing operators and as new entrants to the gaming industry become
operational.
Gross revenues include the retail value of the complimentary food, beverage
and hotel services provided to patrons. The retail value of these promotional
allowances is deducted from gross revenues to arrive at net revenues. The costs
of providing such complimentaries have been classified as gaming costs and
expenses through interdepartmental allocations in the accompanying consolidated
statements of operations. The costs associated with providing cash non-gaming
services are classified in food, beverage and rooms costs and expenses in the
accompanying consolidated statements of operations.
Non-gaming revenues, in the aggregate, decreased approximately $193 or 0.7%
to $27,812 for the six months ended June 30, 2000 from $28,005 for the six
months ended June 30, 1999. This result reflects the continued strategy
designed to control marketing costs and to increase cash sales from non-gaming
operations. Accordingly, promotional allowances decreased approximately $1,512
or 8.4% to $16,393 for the six months ended June 30, 2000 from $17,905 for the
six months ended June 30, 1999. In addition, cash sales from non-gaming
operations increased approximately $1,319 or 13.1% to $11,419 for the six months
ended June 30, 2000 from $10,100 for the six months ended June 30, 1999.
Gaming costs and expenses decreased approximately $4,996 or 6.1% to $76,321
for the six months ended June 30, 2000 from $81,317 for the six months ended
June 30, 1999, resulting from the strategic reduction or elimination of certain
promotional and complimentary programs.
Room costs increased approximately $399 or 21.6% to $2,246 for the six
months ended June 30, 2000 from $1,847 for the six months ended June 30, 1999.
This increase is due primarily to costs incurred related to a 28.2% increase in
cash rooms revenues generated in 2000.
Food and beverage costs increased approximately $606 or 13.2% to $5,209 for
the six months ended June 30, 2000 from $4,603 for the six months ended June 30,
1999. This increase is due primarily to costs incurred related to a 12.3%
increase in food and beverage cash revenues generated in 2000.
General and administrative costs and expenses increased approximately
$2,680 or 8.8% to $33,172 for the six months ended June 30, 2000 from $30,492
for the six months ended June 30, 1999. This increase is primarily the result of
incremental costs incurred related to a Services Agreement the Partnership has
with Trump Casinos II, Inc., employee benefit accruals and insurance costs.
12
<PAGE>
ITEM 2 - MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS - (dollars in thousands) - (continued)
Interest expense increased approximately $1,332 or 5.0% to $28,063 for the
six months ended June 30, 2000 from $26,731 for the six months ended June 30,
1999, 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 and six month periods ending June 30,
2000 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. All statements, trend
analysis and other information contained in this Quarterly Report on Form 10-Q
relative to the Partnership's performance, trends in the Partnership's
operations or financial results, plans, expectations, estimates and beliefs, as
well as other statements including words such as "anticipate," "believe,"
"plan," "estimate," "expect," "intend" and other similar expressions, constitute
forward-looking statements under the Private Securities Litigation Reform Act of
1995. 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. 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.
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.
13
<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.
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 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 Casino Control Act for
the operation of Trump Marina.
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: August 14, 2000
By: /s/ Joseph A. D'Amato
----------------------
Acting President and Chief Operating 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: August 14, 2000
By: /s/ Joseph A. D'Amato
----------------------
Acting President and Chief Operating 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: August 14, 2000
By: /s/ Joseph A. D'Amato
----------------------
Acting President and Chief Operating Officer
(Duly Authorized Officer and
Principal Financial Officer)
17
