SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K
[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934 [FEE REQUIRED]
For the Fiscal Year Ended December 31, 1993
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934 [NO FEE REQUIRED]
For the transition period from_______to______
Commission File No.: 2-0219
TRUMP PLAZA FUNDING, INC.
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(Exact Name of Registrant as specified in its charter)
New Jersey 13-3339198
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(State or other jurisdiction of (I.R.S. Employer Identification
incorporation or organization) Number)
Mississippi Avenue and The Boardwalk
Atlantic City, New Jersey 08401
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(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (609) 441-6526
TRUMP PLAZA HOLDING ASSOCIATES
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(Exact Name of Registrant as specified in its charter)
New Jersey 22-3213714
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(State or other jurisdiction of (I.R.S. Employer Identification
incorporation or organization) Number)
Mississippi Avenue and The Boardwalk
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Atlantic City, New Jersey 08401
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(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (609) 441-6526
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Securities registered pursuant to Section 12(b) of the Act: None
Securities registered pursuant to Section 12(g) of the Act: None
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
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Indicate by check mark if disclosure of delinquent filers
pursuant to Item 405 of Regulation
S-K is not contained herein, and will not be contained, to the best of
the Registrants' knowledge, in definitive proxy or information
statements incorporated by reference in Part III of this Form 10-K or
any amendment to this Form 10-K. [ ]
The aggregate market value of the voting stock of Trump Plaza
Funding, Inc. held by non-affiliates as of March 30, 1994 was
approximately: $ 0
Indicate by check mark whether the Registrants have filed all
documents and reports required to be filed by Section 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
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As of March 30, 1994, there were 100 shares of Trump Plaza
Funding, Inc.'s Common Stock outstanding.
Documents Incorporated by Reference -- Not applicable.
<PAGE>
FORM 10-K
TABLE OF CONTENTS
Item Page
PART I . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
ITEM 1. BUSINESS. . . . . . . . . . . . . . . . . . . . . . . 1
ITEM 2. PROPERTIES. . . . . . . . . . . . . . . . . . . . . . 28
ITEM 3. LEGAL PROCEEDINGS . . . . . . . . . . . . . . . . . . 33
ITEM 4. SUBMISSION OF MATTERS
TO A VOTE OF SECURITY HOLDERS . . . . . . . . . . . . 36
PART II. . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
ITEM 5. MARKET FOR REGISTRANT'S COMMON
EQUITY AND RELATED STOCKHOLDER MATTERS. . . . . . . . 37
ITEM 6. SELECTED FINANCIAL DATA . . . . . . . . . . . . . . . 38
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS . . . . 39
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA . . . . . 49
ITEM 9. DISAGREEMENTS ON ACCOUNTING
AND FINANCIAL DISCLOSURE. . . . . . . . . . . . . . . 49
PART III . . . . . . . . . . . . . . . . . . . . . . . . . . . 50
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS . . . . . . . . . . 50
ITEM 11. EXECUTIVE COMPENSATION . . . . . . . . . . . . . . . 55
ITEM 12. SECURITY OWNERSHIP OF CERTAIN
BENEFICIAL OWNERS AND MANAGEMENT. . . . . . . . . . . 59
ITEM 13. CERTAIN RELATIONSHIPS
AND RELATED TRANSACTIONS. . . . . . . . . . . . . . . 60
PART IV. . . . . . . . . . . . . . . . . . . . . . . . . . . . 67
ITEM 14. EXHIBITS, FINANCIAL STATEMENT
SCHEDULES, AND REPORTS ON FORM 8-K. . . . . . . . . . 67
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PART I
ITEM 1. BUSINESS.
(a) General Development of Business
Trump Plaza Associates (the "Partnership") owns and
operates the Trump Plaza Hotel and Casino ("Trump Plaza"), a
luxury casino hotel located on The Boardwalk in Atlantic City,
New Jersey. The Partnership was organized in June 1982 as a
general partnership under the laws of the State of New Jersey.
Trump Plaza Funding, Inc. (the "Company") was incorporated on
March 14, 1986 as a New Jersey corporation and was originally
formed solely to raise funds through the issuance and sale of its
debt securities for the benefit of the Partnership.
The partners in the Partnership are Trump Plaza Holding
Associates ("Holding"), which has a 99% interest in the
Partnership, and the Company, which has a 1% interest in the
Partnership. Donald J. Trump ("Trump"), by virtue of his
ownership of the Company, Holding and Trump Plaza Holding Inc.
("Holding Inc."), which owns a 1% partnership interest in
Holding, is the beneficial owner of 100% of the equity interest
in the Partnership.
In 1993, the Partnership, the Company and certain
affiliated entities completed a refinancing (the "Refinancing")
of their debt and equity interests. The purpose of the
Refinancing was (i) to repay, in full, the mortgage indebtedness
and certain other indebtedness issued as part of the
restructuring (the "Restructuring") of the indebtedness of the
Partnership and the Company pursuant to a prepackaged plan of
reorganization (the "Plan") under chapter 11 of the Bankruptcy
Code of 1978, as amended, effective as of May 29, 1992, (ii) to
repurchase the preferred stock interest in Trump Plaza not owned
by Trump and (iii) to repay certain personal indebtedness of
Trump.
The Refinancing
On June 25, 1993, the Company consummated the Refinancing,
which included (i) the offering (the "Mortgage Note Offering") by
the Company of $330 million in aggregate principal amount of its
10-7/8% Mortgage Notes due 2001 (the "Mortgage Notes") and (ii)
the offering (the "Units Offering" and, together with the
Mortgage Note Offering, the "Offerings") by Holding of 12,000
Units (the "Units") consisting of an aggregate of $60 million in
principal amount of 12-1/2% Pay-in-Kind Notes due 2003 (the "PIK
Notes") and 12,000 Warrants to acquire an aggregate of $12
million in principal amount of PIK Notes. Each of the Warrants
entitles the holder to acquire $1,000 principal amount of PIK
Notes for no additional consideration. The partnership agreement
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of the Partnership was amended and restated to alter certain
procedures and to effectuate the consummation of the Offerings.
The proceeds of the Units Offering were distributed to
Trump. Trump used $35 million of such proceeds to purchase stock
of the Company, which used such funds, together with a portion of
the proceeds of the Mortgage Note Offering, to redeem the
Company's outstanding stock units (the "Stock Units"), each
consisting of (i) one share of the Company's 9.34% Participating
Cumulative Redeemable Preferred Stock (the "Preferred Stock"),
liquidation preference $25 per share, par value $1 per share, and
(ii) one share of the Company's common stock (the "Common
Stock"), par value $.00001 per share. The remaining $25 million
of the proceeds of the Units Offering were distributed to Trump
as part of a special distribution (the "Special Distribution").
Trump used the Special Distribution primarily to reduce his
personal indebtedness and to satisfy certain property tax
obligations with respect to real estate owned by him. Out of the
proceeds of the Mortgage Note Offering, $225 million was used to
redeem all of the Bonds (as defined below).
In connection with the Offerings, the Company formed
Holding, a New Jersey general partnership, for the purpose of
offering the Units. Trump contributed to Holding his equity
ownership interest in the Partnership and became the sole
beneficial owner of Holding. The two partners in Holding are
Trump and Holding Inc. Holding Inc. acts as the managing general
partner of Holding. Holding has no assets other than its equity
interest in the Partnership.
Also in connection with the Offerings, the Company became
the managing general partner of the Partnership as of June 18,
1993 upon its merger with TP/GP Corp., a New Jersey corporation
("TP/GP"), which had been the managing general partner of the
Partnership until such date. Holding and the Company, both of
which became wholly-owned by Trump upon such merger, became the
sole partners of the Partnership.
The Mortgage Notes are senior indebtedness of the Company.
The Company and the Partnership are subject to restrictions on
the incurrence of additional indebtedness. The Mortgage Notes
are unconditionally guaranteed by the Partnership. The Guarantee
ranks pari passu in right of payment with all existing and future
senior indebtedness of the Partnership. The PIK Notes are
secured by Holding's equity interest in the Partnership. Holders
of the PIK Notes and the Warrants are not creditors of the
Partnership and, consequently, have no recourse to the assets of
the Partnership if an event of default should occur thereunder.
Accordingly, the PIK Notes are structurally subordinated to the
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indebtedness of the Partnership, including the Mortgage Notes.
In the event of a sale of equity interests in Holding or
an affiliate thereof which owns any direct or indirect equity
interest in Trump Plaza, Holding is required to, or is required
to cause such affiliate to, use 35% of the net proceeds of such
sale, within 90 days after receipt thereof, to redeem PIK Notes
at 100% of the principal amount thereof, if such redemption
occurs prior to June 15, 1995. After such date, the redemption
price is 108% of the principal amount of the PIK Notes until June
15, 1998, with the redemption price decreasing annually
thereafter. The PIK Notes are redeemable at the option of
Holding, in whole or in part, at any time on or after June 15,
1998 at the redemption prices set forth therein, together with
accrued and unpaid interest to the date of redemption.
Upon consummation of the Refinancing (i) Trump became the
sole owner record of the Company's outstanding Common Stock, as
well as the sole owner of the equity interest of Holding and the
Partnership and (ii) the Company redeemed its Stock Units,
including the Preferred Stock, and the Bonds (as defined below).
As of December 31, 1993, the Company's debt consisted of
approximately $330 million principal amount outstanding of its
Mortgage Notes and $325,859,000 (net of discount) of mortgage
indebtedness. As of December 31, 1993, Holding's debt consisted
of approximately $64,252,000 of PIK Notes and $12 million of
deferred warrant obligations. As of December 31, 1993, the
Partnership's debt consisted of a non-recourse promissory note to
the Company in the amount of $325,859,000 (net of discount) and
approximately $7.5 million of other indebtedness. The
Partnership has unconditionally guaranteed the Mortgage Notes.
The Restructuring
In 1991, the Partnership began to experience a liquidity
problem. Management believes that the Partnership's liquidity
problem was attributable, in part, to an overall deterioration in
the Atlantic City gaming market, as indicated by reduced rates of
casino revenue growth for the industry for the two prior years,
aggravated by an economic recession in the Northeast and the
Persian Gulf War. Comparatively excessive casino gaming capacity
in Atlantic City, due in part to the opening of the Trump Taj
Mahal Casino Resort (the "Taj Mahal") in April 1990, may also
have contributed to the Partnership's liquidity problem.
In order to alleviate its liquidity problem, on May 29,
1992 (the "Effective Date"), the Partnership and the Company
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restructured their indebtedness pursuant to the Plan. The
purpose of the Restructuring was to improve the amortization
schedule and extend the maturity of the Partnership's
indebtedness by (i) eliminating the sinking fund requirement on
the Company's 12-7/8% First Mortgage Bonds, due 1998 (the
"Original Bonds"), (ii) extending the maturity and lowering the
interest rate on the Original Bonds, (iii) reducing the aggregate
principal amount of such indebtedness from $250 million to $225
million, and (iv) eliminating certain other indebtedness by
reconstituting such debt in part as Bonds (defined below) and in
part as Stock Units. The Restructuring was necessitated by the
Partnership's inability to either generate cash flow or obtain
additional financing sufficient to make the scheduled sinking
fund payment on the Original Bonds.
On the Effective Date, the Company, which theretofore had
no interest in the Partnership, received a 50% beneficial
interest in TP/GP, and the Company and TP/GP were admitted as
partners of the Partnership. The Company issued $225 million
principal amount of the Company's 12% Mortgage Bonds due 2002
(the "Bonds") and approximately three million Stock Units to
certain creditors. Pursuant to the terms of the partnership
agreement, the Company was issued the Preferred Stock. TP/GP
became the managing general partner of the Partnership, and
through its Board of Directors, managed the affairs of the
Partnership until its merger into the Company on June 24, 1993.
Upon consummation of the Plan, each holder of $1,000
principal amount of Original Bonds and such other indebtedness
received (i) $900 principal amount of Bonds, (ii) 12 Stock Units
and (iii) certain cash payments.
As a result of the Refinancing, the Company redeemed the
Stock Units, consisting of the Company's Common Stock and
Preferred Stock and Trump became the sole beneficial owner of the
Company's Common Stock. The Company also retired the outstanding
principal amount and interest on the Bonds. In addition, TP/GP
was merged into the Company and the Company became the managing
general partner of the Partnership.
(b) Financial Information about Industry Segments
The Partnership operates in only one industry segment.
See the Financial Statements of the Company and the Partnership
included elsewhere herein.
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(c) Narrative Description of Business
General
The Partnership owns and operates Trump Plaza, a luxury
casino hotel located in Atlantic City, New Jersey. Trump Plaza,
with its 60,000 square foot casino (presently being expanded to
75,000 square feet by June 1994), first class guest rooms and
other luxury amenities, is the only casino hotel in Atlantic City
with both a "Four Star" Mobil Travel Guide rating and a "Four
Diamond" AAA rating. Management believes that these ratings
reflect the high quality amenities and services that Trump Plaza
provides to its casino patrons and hotel guests. Trump Plaza is
conveniently located on The Boardwalk, at the end of the main
highway into Atlantic City and is one of the first casino hotels
visible from that approach. Management believes that the central
location of Trump Plaza, with its accessibility to "drive in" and
"walk in" patrons, is highly advantageous to Trump Plaza. In
addition, the Casino Reinvestment Development Authority ("CRDA")
is currently overseeing the development of a "tourist corridor"
which will link The Boardwalk with downtown Atlantic City and,
when completed, will feature an entertainment and retail complex
of up to 800,000 square feet. Trump Plaza will be located at the
end of the tourist corridor by The Boardwalk.
Trump Plaza seeks to attract casino patrons who tend to
wager more frequently and in larger denominations than the
typical Atlantic City gaming patron (a "high-end" patron). This
strategy is accomplished, in part, through the attractiveness of
the facility, which is enhanced by routinely attending to the
aesthetics of the casino and other public areas in Trump Plaza.
In addition, Trump Plaza provides a consistency in the conduct of
play of its table games that serious gaming patrons seek.
Finally, Trump Plaza offers a broad selection of dining choices
(including four gourmet restaurants), headline entertainment,
deluxe accommodations and other amenities and services.
Facilities and Amenities
The casino in Trump Plaza currently offers 86 table games
and 1,836 slot machines. After the planned expansion of Trump
Plaza, the casino will offer approximately 2,244 slot machines,
86 table games and a keno lounge. In addition to the casino,
Trump Plaza consists of a 31-story tower with 557 guest rooms,
including 62 suites. The facility also offers 10 restaurants, a
750-seat cabaret theatre, four cocktail lounges, 28,000 square
feet of convention, ballroom and meeting room space, a swimming
pool, tennis courts and a health spa. A 10-story parking garage,
which can accommodate 2,650 cars, is connected to Trump Plaza via
an enclosed pedestrian walkway.
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The entry level of Trump Plaza includes a cocktail lounge,
three gift shops, a deli, a coffee shop, an ice cream parlor and
a buffet. The casino level houses the casino, a fast food
restaurant, an exclusive slot lounge for high-end patrons and a
gift shop. There is also an enclosed skywalk which connects
Trump Plaza at the casino level with the Atlantic City Convention
Center.
Trump Plaza's guest rooms are located in a tower which
affords most guest rooms a view of the ocean. While rooms are of
varying size, a typical guest room consists of approximately 400
square feet. Trump Plaza also features 23 one-bedroom suites, 21
two-bedroom suites and 18 "Super Suites." The Super Suites are
located on the top two floors of the tower and offer luxurious
accommodations and 24-hour butler and maid service. The Super
Suites and certain other suites are located on the "Club Level"
which requires guests to use a special elevator key for access,
and contains a lounge area (the "Club Level Lounge") that offers
24-hour food and bar facilities.
Trump Plaza is connected by an enclosed pedestrian walkway
to a 10-story parking garage, which can accommodate approximately
2,650 cars, and contains 13 bus bays, a comfortable lounge, a
gift shop and waiting area (the "Transportation Facility"). The
Transportation Facility provides patrons with immediate access to
the casino, and is located directly off of the main highway into
Atlantic City.
Business Strategy
General. In 1990, the Atlantic City casino industry
experienced a significant increase in room capacity and in
available casino floor space, due primarily to opening the Taj
Mahal, which at the time was wholly-owned by Trump. Management
believes that the opening of Taj Mahal had a disproportionately
adverse effect on Trump Plaza due to the common use to the
"Trump" name. Management believes that results in 1991 were
adversely affected by the weakness in the economy throughout the
Northeast and the adverse impact on tourism and consumer spending
caused by the war in the Middle East.
In 1991, the Partnership retained the services of Nicholas
L. Ribis as Chief Executive Officer, and Kevin DeSanctis as
President and Chief Operating Officer. Mr. DeSanctis resigned
from his positions on March 7, 1994. See "Management."
Mr. Trump and this new management team implemented a new business
strategy, designed to capitalize on Trump Plaza's first-class
facilities and improve operating results. Key elements of this
strategy consist of redirecting marketing efforts to more
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profitable patron segments and continually monitoring operations
to adapt to, and anticipate, industry trends.
A primary element of the new business strategy is to seek
to attract patrons who tend to wager more frequently and in
larger denominations than the typical Atlantic City gaming
customer. Such high-end players typically wager $5 or more per
play in slots and $25 or more per play in table games. In order
to attract more high-end gaming patrons to Trump Plaza in a
cost-effective manner, the Partnership has refocused its
marketing efforts. Commencing in 1991, the Partnership
substantially curtailed costly "junket" marketing operations
which involved attracting groups of patrons to the facility on an
entirely complimentary basis (e.g., by providing free air fare,
gifts and room accommodations). In the fall of 1992, the
Partnership decided to de-emphasize marketing efforts directed at
"high roller" patrons from the Far East, who tend to wager
$50,000 or more per play in table games. In each case the
Partnership determined that the potential benefit derived from
these patrons did not outweigh the high costs associated with
attracting such players and the resultant volatility in the
results of operations of Trump Plaza. This shift in marketing
strategy has allowed the Partnership to focus its efforts on
attracting the high-end players.
Gaming Environment. Trump Plaza also pursues a continuous
preventative maintenance program that emphasizes the casino,
hotel rooms and public areas in Trump Plaza. These programs are
designed to maintain the attractiveness of Trump Plaza to its
gaming patrons. Trump Plaza continuously monitors the
configuration of the casino floor and the games it offers to
patrons with a view towards making changes and improvements.
Trump Plaza's casino floor has clear, large signs for the
convenience of patrons. As new games have been approved by the
Casino Control Commission ("CCC"), the Partnership has integrated
such games into its casino operations to the extent it deems
appropriate.
In recent years, there has been an industry trend towards
fewer table games and more slot machines. For the Atlantic City
casino industry, revenue from slot machines increased from 54.6%
of the industry gaming revenue in 1988 to 67.1% of the industry
gaming revenue in 1993. Trump Plaza experienced a similar
increase, with slot revenue increasing from 51.2% of gaming
revenue in 1988 to 70.2% of the industry gaming revenue in 1993.
In response to this trend, Trump Plaza has devoted more of its
casino floor space to slot machines. In April 1993, Trump Plaza
removed 12 table games from the casino floor and replaced them
with 75 slot machines. Moreover, as part of its program to
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attract high-end slot players, the Partnership created "Fifth
Avenue Slots," a partitioned portion of the casino floor that
includes approximately 70 slot machines (most of which provide
for $5 or more per play), an exclusive lounge for high-end
patrons and other amenities.
"Comping" Strategy. In order to compete effectively with
other Atlantic City casino hotels, the Partnership offers
complimentary drinks, meals, room accommodations and/or travel
arrangements to its patrons ("complimentaries" or "comps").
Trump Plaza's policy on complimentaries is to provide comps
primarily to patrons with a demonstrated propensity to wager at
Trump Plaza.
Entertainment. Trump Plaza offers headline entertainment,
as well as other entertainment and revue shows as part of its
strategy to attract high-end and other patrons. In 1993, Trump
Plaza entered into Atlantic City exclusive contracts with Kenny
Rogers, Anne Murray, Jay Black, Jimmy Roselli, Paul Anka, Regis
Philbin & Kathie Lee Gifford, Engelbert and Jerry Vale. Trump
Plaza offers headline entertainment weekly during the summer and
monthly during the off-season, and also features other
entertainment and revue shows.
Player Development/Casino Hosts. The Partnership
currently employs approximately 24 gaming representatives in New
Jersey, New York and other states, as well as several
international representatives, to promote Trump Plaza to
prospective gaming patrons. Player development personnel host
special events, offer incentives and contact patrons directly in
an effort to attract high-end table game patrons from the United
States, Canada and South America. Trump Plaza's casino hosts
assist patrons on the casino floor, make room and dinner
reservations and provide general assistance. They also solicit
Trump Card (the frequent player slot card) sign-ups in order to
increase the Partnership's marketing base.
Promotional Activities. The Trump Card, a player
identification card, constitutes a key element in Trump Plaza's
direct marketing program. Slot machine players are encouraged to
register for and utilize their personalized Trump Card to earn
various complimentaries based upon their level of play. The
Trump Card is inserted during play into a card reader attached to
the slot machine for use in computerized rating systems. These
computer systems record data about the cardholder, including
playing preferences, frequency and denomination of play and the
amount of gaming revenues produced.
Trump Plaza designs promotional offers, conveyed via
direct mail and telemarketing, to patrons expected to provide
revenues based upon their historical gaming patterns. Such
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information is gathered on slot wagering by the Trump Card and on
table game wagering by the casino game supervisors. Promotional
activities include the mailing of vouchers for complimentary slot
play. Trump Plaza also utilizes a special events calendar (e.g.,
birthday parties, sweepstakes and special competitions) to
promote its gaming operations.
The Partnership conducts slot machine and table game
tournaments in which cash prizes are offered to a select group of
players invited to participate in the tournament based upon their
tendency to play. Such players tend to play at their own expense
during "off-hours" of the tournament. At times, tournament
players are also offered special dining and entertainment
privileges that encourage them to remain at Trump Plaza.
Bus Program. Trump Plaza has a bus program, which
transports approximately 2,400 gaming patrons per day during the
week and 3,500 per day on the weekends. The Partnership's bus
program offers incentives and discounts to certain scheduled and
chartered bus customers. Trump Plaza's Transportation Facility
contains 13 bus bays and is connected by an enclosed pedestrian
walkway to Trump Plaza. The Transportation Facility provides
patrons with immediate access to the casino, and contains a
comfortable lounge area for patrons waiting for return buses.
Credit Policy. Historically, Trump Plaza has extended
credit to certain qualified patrons. For the years ended
December 31, 1991, 1992 and 1993, credit play as a percentage of
total dollars wagered was approximately 29%, 28% and 18%,
respectively. As part of the Partnership's new business strategy
and in response to the general economic downturn in the Northeast
and recent credit experience, Trump Plaza has imposed stricter
standards on applications for new or additional credit and has
reduced credit to international patrons.
Atlantic City Market
Gaming in Atlantic City started in May 1978 when the first
casino hotel opened for business. Since 1978, gaming in Atlantic
City has grown from one casino to 12 casinos as of December 31,
1993, with approximately $3.3 billion of casino industry revenue
generated in 1993. Gaming revenue for all Atlantic City casino
hotels has increased approximately 2.6%, 5.2%, 1.3%, 7.5% and
2.7% during 1989, 1990, 1991, 1992 and 1993, respectively (in
each case as compared to the prior year). See "Competition"
below.
Atlantic City is near many densely populated metropolitan
areas. The primary area served by Atlantic City casino hotels is
the corridor that extends from Washington, D.C. to Boston and
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includes New York City and Philadelphia. Within this primary
area, Atlantic City may be reached by automobile or bus.
Principal arteries lead into Atlantic City from the metropolitan
New York area and from the Baltimore/Washington, D.C. area, both
of which are approximately three hours away by automobile.
Atlantic City can also be reached by air and rail transportation,
although most patrons arrive by automobile or bus.
Historically, Atlantic City has suffered from inadequate
rail and air transportation. As a result, a majority of Atlantic
City gaming patrons travel from the mid-atlantic and northeast
regions of the United States by automobile or bus. Rail service
to Atlantic City has recently been improved with the introduction
of Amtrak express service to and from Philadelphia and New York
City. An expansion of the Atlantic City International Airport
(located approximately 12 miles from Atlantic City) to handle
large airline carriers and large passenger jets was recently
completed. Despite the expansion of the Atlantic City
International Airport, however, access to Atlantic City by air is
still limited by a lack of regularly scheduled flights and by
inadequate terminal facilities. The lack of adequate
transportation infrastructure has limited the expansion of the
Atlantic City gaming industry's geographic patron base and the
attractiveness of Atlantic City to major conventions.
In February 1993, the State of New Jersey broke ground for
a new $250,000,000 Convention Center on a 30.5-acre site adjacent
to the Atlantic City Expressway. Targeted for completion in
1996, the new Convention Center will house approximately 500,000
square feet of exhibit space along with 45 meeting rooms
totalling nearly 110,000 square feet. The building will include
a 1,600-car underground garage and an indoor street linking the
Convention Center to the existing Rail Terminal. The new
Convention Center has been designed to serve as the centerpiece
of Atlantic City's renaissance as a favorable meeting
destination.
Possible Expansion Sites
Management has determined to expand the Partnership's
facilities. The purpose of such an expansion is to increase the
casino floor space and to add additional gaming units. Any such
expansion will require various regulatory approvals, including
the approval of the CCC. Furthermore, the Casino Control Act
requires that additional guest rooms be put in service within a
specified time period after any such casino expansion. As
discussed below, the Partnership has planned expansion of its
hotel facilities. If the Partnership completed any casino
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expansion and subsequently did not complete the requisite number
of additional guest rooms within the specified time period, the
Partnership might have to close all or a portion of the expanded
casino in order to comply with regulatory requirements, which
could have a material adverse effect on the results of operations
and financial condition of the Partnership.
Boardwalk Expansion Site. In 1993, the Partnership
received the approval of CCC, subject to certain conditions, for
the expansion of the Trump Plaza hotel facilities on a 2.0-acre
parcel of land located directly across the street from Trump
Plaza on the Boardwalk upon which there is located an
approximately 361-room hotel, which is closed to the public and
is in need of substantial renovation and repair (the "Boardwalk
Expansion Site"). In June 1993, Trump and the lender holding
mortgage liens on the Boardwalk Expansion Site negotiated the
terms of a restructuring of loans of approximately $52.0 million
of principal and accrued interest secured by the liens on the
Boardwalk Expansion Site. On June 25, 1993, the date the
Offerings were consummated, Trump transferred title to the
Boardwalk Expansion Site to the lender in exchange for a
reduction in Trump's indebtedness to such lender, with a further
reduction of Trump's indebtedness if the Partnership assumed the
Boardwalk Expansion Site Lease (as defined below). On such date,
the lender leased the Boardwalk Expansion Site to Trump (the
"Boardwalk Expansion Site Lease") for a term of five years, which
expires on June 30, 1998, during which time Trump is obligated to
pay the lender $260,000 per month in lease payments. In
connection with the Offerings, the Partnership acquired a five-
year option (the "Option") to acquire the Boardwalk Expansion
Site. In October 1993, the Partnership assumed the Boardwalk
Expansion Site Lease and related expenses. See "Management's
Discussion and Analysis of Financial Condition and Results of
Operation -- Liquidity and Capital Resources."
The Partnership's ability to acquire the Boardwalk
Expansion Site pursuant to the Option is dependent upon its
ability to obtain financing to acquire the property. The ability
to incur such indebtedness is restricted by the Mortgage Note
Indenture and the PIK Note Indenture and would require the
consent of certain of Trump's personal creditors. The
Partnership's ability to develop the Boardwalk Expansion Site is
dependent upon its ability to use existing cash on hand and
generate cash flow from operations sufficient to fund development
costs. No assurance can be given that such cash on hand will be
available to the Partnership for such purposes or that it will be
able to generate sufficient cash flow from operations. In
addition, exercise of the Option requires the consent of certain
of Trump's personal creditors, and there can be no assurance that
such consent will be obtained at the time the Partnership desires
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to exercise the Option. The CCC has required that the
Partnership exercise the Option by no later than July 1, 1995.
See "Management's Discussion and Analysis of Financial Condition
and Results of Operations -- Liquidation and Capital Resources."
Management has determined to build or refurbish rooms at
the Boardwalk Expansion Site. When completed, the hotel will
have approximately 361 rooms, including a retail space, located
on two stories, fronting The Boardwalk.
In September 1993, Trump entered into a sublease agreement
(the "Time Warner Sublease") with Time Warner Entertainment
Company, L.P. ("Time Warner") for a period of ten years with the
sublessee's option to renew the sublease for a ten-year period.
Under this agreement, Time Warner agreed to sublease the entire
first floor of the retail space (approximately 17,000 square
feet) located at the Boardwalk Expansion Site for a new Warner
Brothers Studio Store. In October 1993, the Partnership assumed
Trump's duties and obligations under the Time Warner Sublease.
The Time Warner Sublease is subject to certain conditions
subsequent; the Partnership believes that it will satisfy all
conditions subsequent to that agreement in 1994. Management
believes that the store will be a major attraction on The
Boardwalk and will increase the flow of patrons through the
casino. The remaining portion of the Boardwalk Expansion Site
will be used for a new entranceway to Trump Plaza, directly off
the Atlantic City Expressway, as well as a public park and
parking facilities for Trump Plaza patrons.
As a result of such expansion, the Partnership, upon
approval by the CCC, will be able to increase Trump Plaza's casino
floor space by 30,000 square feet. The Partnership has begun
construction at such site (pursuant to rights granted to the
Partnership by the lender and the lessee under the Boardwalk
Expansion Site Lease) prior to acquiring title thereto pursuant
to the Option. See "Management's Discussion and Analysis of
Financial Condition and Results of Operations -- Liquidity and Capital
Resources."
The Partnership is obligated to either pay a tax to the
CRDA of 2.5% of its gross casino revenues or to obtain investment
tax credits in an amount equal to 1.25% of its gross casino
revenues. In connection with the assumption of the Boardwalk
Expansion Site Lease, the Partnership obtained from the CRDA
$10.3 million of investment tax credits with respect to the
demolition of certain structures on the Boardwalk Expansion Site
and the construction of certain improvements on the site. There
can be no assurance, however, that such credits would be
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sufficient to defray a significant portion of the total project
costs.
Regency Expansion Site. In December 1993, Trump entered
into an option agreement to acquire the Trump Regency Hotel
("Trump Regency"). In consideration for the Partnership's making
certain payments in connection with the option, Trump agreed
that, if the Trump Regency is acquired pursuant to such option,
he would make the Trump Regency available for the sole benefit of
the Partnership on a basis consistent with the Partnership's
contractual obligations and requirements. See "Certain
Relationships and Related Transactions -- Trump Regency."
Competition
Competition in the Atlantic City casino hotel market is
intense. Trump Plaza competes primarily with other casinos
located in Atlantic City, New Jersey, as well as gaming establishments
located on Native American reservations in New York and Connecticut,
and also would compete with any other facilities in the northeastern
and mid-atlantic regions of the United States at which casino gaming
or other forms of wagering may be authorized in the future. To a lesser
extent, Trump Plaza faces competition from cruise lines, riverboat
gambling, casinos located in Mississippi, Nevada, New Orleans, Puerto Rico,
the Bahamas and other locations inside and outside the United
States and from other forms of legalized gaming in New Jersey and
in its surrounding states such as lotteries, horse racing
(including off-track betting), jai alai and dog racing and from
illegal wagering of various types. To the extent that legalized
gaming becomes more prevalent in New Jersey or other nearby
jurisdictions, competition from Native Americans or others would
intensify.
At present, there are 12 casino hotels located in Atlantic
City, including Trump Plaza, all of which compete for patrons.
In addition, there are several sites on The Boardwalk and in the
Atlantic City Marina area on which casino hotels could be built
in the future, although Management is not aware of any present
plans to develop such sites.
Total Atlantic City gaming revenue has increased over the
past four years, although at varying rates. In 1991, six Atlantic
City casino hotels reported increases in gaming revenues as compared
to 1990, and five reported decreases in gaming revenues (including
Trump Plaza). Management believes that the reduced rate of growth
in aggregate gaming revenues in Atlantic City since 1987 as compared
to prior years was principally due to the weakness in the economy
throughout the Northeast and the adverse impact in 1991 of the
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war in the Middle East on tourism and consumer spending.
Although all 12 Atlantic City casinos reported increases in
gaming revenues in 1992 as compared to 1991, the Partnership believes
that this was due, in part, to the depressed industry conditions in
1991. In 1993, nine casinos experienced increased casino revenues,
as compared to 1992, while three casinos (including Trump Plaza) reported
decreases.
In 1990, the Atlantic City casino industry experienced a
significant increase in room capacity and in available casino
floor space, including the rooms and floor space made available
by the opening of the Taj Mahal, which at the time was
wholly-owned by Trump. The effects of such expansion were to
increase competition and to contribute to a 1990 decline in
gaming revenues per square foot. In 1990, the Atlantic City
casino industry experienced a decline in gaming revenues per
square foot of 5.0% which trend continued in 1991, although at
the reduced rate of 2.9%. However, in 1992 and 1993, the
Atlantic City casino industry experienced an increase of 6.9% and
1.4%, respectively in gaming revenues per square foot each as
compared to the prior year.
Casinos in Atlantic City must be located in approved hotel
facilities which offer dining, entertainment and other guest
facilities. Competition among casino hotels is based primarily
upon promotional allowances, advertising, the attractiveness of
the casino area, service, quality and price of rooms, food and
beverages, restaurant, convention and parking facilities and
entertainment. In order to compete effectively with all other
Atlantic City casino hotels, the Partnership offers complimentary
drinks, meals, room accommodations and/or travel arrangements to
patrons with a demonstrated propensity to wager at Trump Plaza,
as well as cash bonuses and other incentives pursuant to approved
coupon programs.
In 1988, Congress passed the Indian Gaming Regulatory Act
("IGRA"), which requires any state in which casino-style gaming
is permitted (even if only for limited charity purposes) to
negotiate compacts with federally recognized Native American
tribes at the request of such tribes. Under IGRA, Native
American tribes enjoy comparative freedom from regulation and
taxation of gaming operations, which provides such tribes with an
advantage over their competitors, including the Partnership. In
1991, the Mashantucket Pequot Nation opened a casino facility in
Ledyard, Connecticut, located in the far eastern portion of such
state, an approximately three-hour drive from New York City. In
February 1992, the Mashantucket Pequot Nation initiated 24 hour
gaming. In January 1993, slot machines were added at such
facility, and the facility currently contains over 3,100 slot
machines. The Mashantucket Pequot Nation has announced various
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expansion plans, including its intention to build another casino
in Ledyard together with hotels, restaurants and a theme park.
Trump, the Partnership and the Other Trump Casinos have recently
filed a lawsuit seeking, among other things, a declaration that
IGRA is unconstitutional and seeking an injunction against the enforcement
of certain provisions of IGRA. The complaint states, among other things,
that the Mashantucket Pequot Nation's casino has caused the Partnership
substantial economic injury. The complaint states further that any
future expansions of existing Native American gaming facilities or new
ventures by such persons or others in the northeastern or mid-Atlantic
region of the United States would have a further adverse impact on
Atlantic City in general and could cause the Partnership further
substantial economic injury.
A group in New Jersey terming itself the "Ramapough
Indians" has applied to the U.S. Department of the Interior to be
recognized formally as a Native American tribe, which recognition
would permit it to require the State of New Jersey to negotiate a
gaming compact under IGRA. On December 3, 1993, however, the
Interior Department proposed that such Federal recognition to the
Ramapough Indians be denied. Similarly, a group in Cumberland
County, New Jersey calling itself the "Nanticoke Lenni Lenape"
tribe has filed a notice of intent with the Federal Bureau of
Indian Affairs seeking formal recognition as a Native American
tribe. Also, it has been reported that a Sussex County, New
Jersey businessman has offered to donate land he owns there to
the Oklahoma-based Lenape/Delaware Indian Nation which originated
in New Jersey and already has Federal tribal status but does not
have a reservation in the state. In addition, in July 1993, the
Oneida Nation opened a casino featuring 24-hour table gaming, but
without slot machines, near Syracuse, New York. Representatives
of the St. Regis Mohawk Nation signed a gaming compact with New
York State officials for the opening of a casino, without slot
machines, in the northern portion of the state close to the
Canadian border. The St. Regis Mohawk Nation has announced that
it intends to open their casino in the summer of 1994. The Narragansett
Native American Nation of Rhode Island has recently won a federal
court case, which will require the Governor of Rhode Island to negotiate
a casino gaming compact with the Nation. The Mohegan Nation, which is
located in Connecticut, received federal recognition in March 1994.
Other Native American Nations are seeking federal recognition,
land, and negotiation of gaming compacts in New York, Pennsylvania,
Connecticut and other nearby states.
Legislation permitting other forms of casino gaming has
been proposed, from time to time, in various states, including
those bordering New Jersey. The Partnership's operations would
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be adversely affected by such competition, particularly if casino
gaming were permitted in jurisdictions near or in New Jersey or
other states in the Northeast. In December 1993, the Rhode
Island Lottery Commission approved the addition of slot machine
games on video terminals at Lincoln Greyhound Park and Newport
Jai Alai, where poker and blackjack have been offered for over
two years. Currently, casino gaming, other than Native American
gaming, is not allowed in other areas of New Jersey or in New
York or Pennsylvania. However, the Partnership expects that
proposals may be introduced to legalize riverboat or
other forms of gaming in Philadelphia and one or more other
locations in Pennsylvania. The State of Louisiana recently approved
casino gaming in the City of New Orleans, and a developer has
been selected. To the extent that legalized gaming becomes more
prevalent in New Jersey or other jurisdictions, competition would intensify.
In addition, legislation has from time to time been
introduced in the New Jersey State Legislature relating to types
of state-wide legalized gaming, such as video games with small
wagers. To date, no such legislation, which may
require a state constitutional amendment, has been enacted.
Management is unable to predict whether any such legislation, if
enacted, would have a material adverse impact on the business,
operations or financial condition of the Partnership.
Conflicts of Interest
Trump is a 100% beneficial owner of Trump's Castle Casino
Resort ("Trump's Castle") subject to certain litigation warrants
and a 50% beneficial owner of the Taj Mahal (collectively, the
"Other Trump Casinos"), and is the sole beneficial owner of
TC/GP, Inc., an entity that as of December 31, 1993 has provided
certain services to Trump's Castle; prior thereto, Trump's Castle
Management Corp., an entity solely owned by Trump, provided
management services to Trump's Castle. Under certain
circumstances, Trump could increase his beneficial interest in
Taj Mahal to 100%. In addition, Trump has a personal services
agreement with the partnership that owns the Taj Mahal pursuant
to which he receives substantial compensation based, in part, on
the financial results of the Taj Mahal. The Other Trump Casinos
compete directly with each other and with other Atlantic City
casino hotels, including Trump Plaza. Nicholas L. Ribis, the
Chief Executive Officer of the Partnership, is also the chief
executive officer of the partnerships that own the Other Trump
Casinos. In addition, Messrs. Ribis and Trump serve on the
governing bodies of the partnerships that own the Other Trump
Casinos. As a result of Trump's interests in three competing
Atlantic City casinos and the common chief executive officer, a
conflict of interest may be deemed to exist by reason of such
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persons' access to information and business opportunities
possibly useful to any or all of such casinos. No specific
procedures have been devised for resolving conflicts of interest
confronting, or which may confront, Trump, such persons and the
Other Trump Casinos. See "Certain Relationships and Related
Transactions."
Employees and Labor Relations
The Partnership has approximately 3,800 employees of whom
approximately 1,100 are covered by collective bargaining
agreements. Management believes that its relationships with its
employees are satisfactory. All of the Partnership's employees
must be licensed or registered under the Casino Control Act. See
"Gaming Regulations -- Employees." The Company has no employees.
In April 1993, the National Labor Relations board found
that the Partnership had violated the National Labor Relations
Act (the "NLRA") in the context of a union organizing campaign by
table game dealers of the Partnership in association with the
Sports Arena and Casino Employees Union Local 137, a/w Laborers'
International Union of North America, AFL-CIO ("Local 137"). In
connection with such finding, the Partnership was ordered to
refrain from interfering with, restraining, or coercing employees
in the exercise of the rights guaranteed them by Section 7 of the
NLRA, to notify its employees of such rights and to hold an
election by secret ballot among its employees, which is
anticipated to be held in May 1994, regarding whether they desire
to be represented for collective bargaining by Local 137.
Seasonality
The gaming industry in Atlantic City traditionally has
been seasonal, with its strongest performance occurring from May
through September, and with December and January showing
substantial decreases in activity. Revenues have been
significantly higher on Fridays, Saturdays, Sundays and holidays
than on other days.
Gaming and Other Laws and Regulations
The following is only a summary of the applicable
provisions of the Casino Control Act and certain other laws and
regulations. It does not purport to be a full description
thereof and is qualified in its entirety by reference to the
Casino Control Act and such other laws and regulations.
In general, the Casino Control Act contains detailed
provisions concerning, among other things: the granting of
casino licenses; the suitability of the approved hotel facility,
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and the amount of authorized casino space and gaming units
permitted therein; the qualification of natural persons and
entities related to the casino licensee; the licensing and
registration of employees and vendors of casino licensees; rules
of the games; the selling and redeeming of gaming chips; the
granting and duration of credit and the enforceability of gaming
debts; management control procedures, accounting and cash control
methods and reports to gaming agencies; security standards; the
manufacture and distribution of gaming equipment; equal
employment opportunity for employees of casino operators,
contractors of casino facilities and others; and advertising,
entertainment and alcoholic beverages.
Casino Control Commission. The ownership and operation of
casino/hotel facilities in Atlantic City are the subject of
strict state regulation under the Casino Control Act. The CCC is
empowered to regulate a wide spectrum of gaming and non-gaming
related activities and to approve the form of ownership and
financial structure of not only a casino licensee, but also its
entity qualifiers and intermediary and holding companies.
Operating Licenses. The Partnership was issued its
initial casino license on May 14, 1984. On April 19, 1993, the CCC
renewed the Partnership's casino license through March 31, 1995, and
on March 15, 1993 approved Trump as a natural person qualifier
through May 1995.
No assurance can be given that the CCC will renew the casino license
or, if it does so, as to the conditions it may impose, if any,
with respect thereto.
Casino Licensee. No casino hotel facility may operate
unless the appropriate license and approvals are obtained from
the CCC, which has broad discretion with regard to the issuance,
renewal, revocation and suspension of such licenses and
approvals, which are non-transferable. The qualification
criteria with respect to the holder of a casino license include
its financial stability, integrity and responsibility; the
integrity and adequacy of its financial resources which bear any
relation to the casino project; its good character, honesty and
integrity; and the sufficiency of its business ability and casino
experience to establish the likelihood of a successful, efficient
casino operation. The casino license held by the Partnership is
renewable for periods of up to two years. The CCC may reopen
licensing hearings at any time, and must reopen a licensing
hearing at the request of the New Jersey Division of Gaming
Enforcement (the "Division").
To be considered financially stable, a licensee must
demonstrate the following ability: to pay winning wagers when due,
to achieve a gross operating profit; to pay all local, state and federal
taxes when due, to make necessary capital and maintenance expenditures
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to insure that it has a superior first-class facility, and to pay,
exchange, refinance or extend debts which will mature or become
due and payable during the license term.
In the event a licensee fails to demonstrate financial stability,
the CCC may take such action as it deems necessary to fulfill the
purposes of the Casino Control Act and protect the public interest,
including: issuing conditional licenses, approvals or determinations;
establishing an appropriate cure period, imposing reporting requirements;
placing restrictions on the transfer of cash or the assumption of
liability; requiring reasonable reserves or trust accounts; denying
licensure; or appointing a conservator. See "Conservatorship" below.
The partnership believes that it has adequate financial resources to
meet the financial stability requirements of the CCC for the foreseeable
future.
Pursuant to the Casino Control Act, CCC Regulations and
precedent, no entity may hold a casino license unless each
officer, director, principal employee, person who directly or
indirectly holds any beneficial interest or ownership in the
licensee, each person who in the opinion of the CCC has the
ability to control or elect a majority of the board of directors
of the licensee (other than a banking or other licensed lending
institution which makes a loan or holds a mortgage or other lien
acquired in the ordinary course of business) and any lender,
underwriter, agent or employee of the licensee or other person
whom the CCC may consider appropriate, obtains and maintains
qualification approval from the CCC. Qualification approval
means that such person must, but for residence, individually meet
the qualification requirements as a casino key employee. See
"Narrative Description of Business -- Gaming and Other Laws and
Regulations -- Employees." Pursuant to a condition of its
casino license, payments by the Partnership to or for the
benefit of any related entity or partner are subject to prior
CCC approval; and, if the Partnership's cash position falls below
$5.0 million for three consecutive business days, the Partnership
must present to the CCC and the Division evidence as to why it should
not obtain a working capital facility in an appropriate amount.
Control Persons. An entity qualifier or intermediary or
holding company, such as Holding, Holding Inc. and the Company,
is required to register with the CCC and meet the same basic
standards for approval as a casino licensee; provided, however,
that the CCC, with the concurrence of the Director of the
Division, may waive compliance by a publicly-traded corporate
holding company with the requirement that an officer, director,
lender, underwriter, agent or employee thereof, or person
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directly or indirectly holding a beneficial interest or ownership
of the securities thereof individually qualify for approval under
casino key employee standards so long as the CCC and the Director
are, and remain, satisfied that such officer, director, lender,
underwriter, agent or employee is not significantly involved in
the activities of the casino licensee, or that such security
holder does not have the ability to control the publicly-traded
corporate holding company or elect one or more of its directors.
Persons holding five percent or more of the equity securities of
such holding company are presumed to have the ability to control
the company or elect one or more of its directors and will,
unless this presumption is rebutted, be required to individually
qualify. Equity securities are defined as any voting stock or
any security similar to or convertible into or carrying a right
to acquire any security having a direct or indirect participation
in the profits of the issuer.
Financial Sources. The CCC may require all financial
backers, investors, mortgagees, bond holders and holders of
notes or other evidence of indebtedness, either in effect or
proposed, which bears any relation to the casino project,
publicly traded securities of an entity which holds a
casino license or is an entity qualifier, subsidiary or holding
company of a casino licensee (a "Regulated Company"), to qualify
as financial sources. In the past, the CCC has waived the
qualification requirement for holders of less than 15% of a
series of publicly traded mortgage bonds so long as the bonds
remained widely distributed and freely traded in the public
market and the holder had no ability to control the casino
licensee. The CCC may require holders of less than 15% of a
series of debt to qualify as financial sources even if not
active in the management of the issuer or the casino licensee.
Institutional Investors. An institutional investor
("Institutional Investor") is defined by the Casino Control Act
as any retirement fund administered by a public agency for the
exclusive benefit of federal, state or local public employees;
investment company registered under the Investment Company Act of
1940; collective investment trust organized by banks under Part
Nine of the Rules of the Comptroller of the Currency; closed end
investment trust; chartered or licensed life insurance company or
property and casualty insurance company; banking and other
chartered or licensed lending institution; investment advisor
registered under the Investment Advisers Act of 1940; and such
other persons as the CCC may determine for reasons consistent
with the policies of the Casino Control Act.
An Institutional Investor may be granted a waiver by the
CCC from financial source or other qualification requirements
applicable to a holder of publicly-traded securities, in the
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absence of a prima facie showing by the Division that there is
any cause to believe that the holder may be found unqualified, on
the basis of CCC findings that: (i) its holdings were purchased
for investment purposes only and, upon request by the CCC, it
files a certified statement to the effect that it has no
intention of influencing or affecting the affairs of the issuer,
the casino licensee or its holding or intermediary companies;
provided, however, that the Institutional Investor will be
permitted to vote on matters put to the vote of the outstanding
security holders; and (ii) if (x) the securities are debt
securities of a casino licensee's holding or intermediary
companies or another subsidiary company of the casino licensee's
holding or intermediary companies which is related in any way to
the financing of the casino licensee and represent either (A) 20%
or less of the total outstanding debt of the company, or (B) 50%
or less of any issue of outstanding debt of the company, (y) the
securities are equity securities and represent less than 10% of
the equity securities of a casino licensee's holding or
intermediary companies, or (z) the securities so held exceed
such percentages, upon a showing of good cause. There can be no
assurance, however, that the CCC will make such findings or grant
such waiver and, in any event, an Institutional Investor may be
required to produce for the CCC or the Division upon request, any
document or information which bears any relation to such debt or
equity securities.
Generally, the CCC requires each institutional holder
seeking waiver of qualification to execute a certification to the
effect that (i) the holder has received the definition of
Institutional Investor under the Casino Control Act and believes
that it meets the definition of Institutional Investor; (ii) the
holder purchased the securities for investment purposes only and
holds them in the ordinary course of business; (iii) the holder
has no involvement in the business activities of, and no
intention of influencing or affecting the affairs of the issuer,
the casino licensee or any affiliate; and (iv) if the holder
subsequently determines to influence or affect the affairs of the
issuer, the casino licensee or any affiliate, it shall provide
not less than 30 days' prior notice of such intent and shall file
with the CCC an application for qualification before taking any
such action. If an Institutional Investor changes its investment
intent, or if the CCC finds reasonable cause to believe that it
may be found unqualified, the Institutional Investor may take no
action with respect to the security holdings, other than to
divest itself of such holdings, until it has applied for interim
casino authorization (see "Interim Casino Authorization" below)
and has executed a trust agreement pursuant to such an
application.
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Ownership and Transfer of Securities. The Casino Control
Act imposes certain restrictions upon the issuance, ownership and
transfer of securities of a Regulated Company and defines the
term "security" to include instruments which evidence a direct or
indirect beneficial ownership or creditor interest in a Regulated
Company including, but not limited to, mortgages, debentures,
security agreements, notes and warrants. Each of the Company and the
Partnership are deemed to be a Regulated Company, and instruments
evidencing a beneficial ownership or creditor interest therein,
including partnership interest, are deemed to be the securities of a
Regulated Company.
If the CCC finds that a holder of such securities is not
qualified under the Casino Control Act, it has the right to take
any remedial action it may deem appropriate including the right
to force divestiture by such disqualified holder of such
securities. In the event that certain disqualified holders fail
to divest themselves of such securities, the CCC has the power to
revoke or suspend the casino license affiliated with the
Regulated Company which issued the securities. If a holder is
found unqualified, it is unlawful for the holder (i) to exercise,
directly or through any trustee or nominee, any right conferred
by such securities, or (ii) to receive any dividends or interest
upon such securities or any remuneration, in any form, from
its affiliated casino licensee for services rendered or
otherwise.
With respect to non-publicly-traded securities, the Casino
Control Act and CCC regulations require that the corporate
charter or partnership agreement of a Regulated Company establish
a right in the CCC of prior approval with regard to transfers of
securities, shares and other interests and an absolute right in
the Regulated Company to repurchase at the market price or the
purchase price, whichever is the lesser, any such security, share
or other interest in the event that the CCC disapproves a
transfer. With respect to publicly-traded securities, such
corporate charter or partnership agreement is required to
establish that any such securities of the entity are held subject
to the condition that, if a holder thereof is found to be
disqualified by the CCC, such holder shall dispose of such
securities.
Interim Casino Authorization. Interim casino
authorization is a process which permits a person who enters into
a contract to obtain property relating to a casino operation or
who obtains publicly-traded securities relating to a casino
licensee to close on the contract or own the securities until
plenary licensure or qualification. During the period of interim
authorization, the property relating to the casino operation or
the securities are held in trust.
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Whenever any person enters into a contract to transfer any
property which relates to an ongoing casino operation, including
a security of the casino licensee or a holding or intermediary
company or entity qualifier, under circumstances which would
require that the transferee obtain licensure or be qualified
under the Casino Control Act, and that person is not already
licensed or qualified, the transferee is required to apply for
interim authorization. Furthermore, the closing or settlement
date in the contract may not be earlier than the 121st day after
the submission of a complete application for licensure or
qualification together with a fully executed trust agreement in a
form approved by the CCC. If, after the report of the Division
and a hearing by the CCC, the CCC grants interim authorization,
the property will be subject to a trust. If the CCC denies
interim authorization, the contract may not close or settle until
the CCC makes a determination on the qualifications of the
applicant. If the CCC denies qualification, the contract will be
terminated for all purposes and there will be no liability on the
part of the transferor.
If, as the result of a transfer of publicly traded
securities of a licensee, a holding or intermediary company or
entity qualifier of a licensee or a financing entity of a
licensee, any person is required to qualify under the Casino
Control Act, that person is required to file an application for
licensure or qualification within 30 days after the CCC
determines that qualification is required or declines to waive
qualification. The application must include a fully executed
trust agreement in a form approved by the CCC or, in the
alternative, within 120 days after the CCC determines that
qualification is required, the person whose qualification is
required must divest such securities as the CCC may require in
order to remove the need to qualify.
The CCC may grant interim casino authorization where it
finds by clear and convincing evidence that: (i) statements of
compliance have been issued pursuant to the Casino Control Act;
(ii) the casino hotel is an approved hotel in accordance with the
Casino Control Act; (iii) the trustee satisfies qualification
criteria applicable to key casino employees, except for residency
and casino experience; and (iv) interim operation will best serve
the interests of the public.
When the CCC finds the applicant qualified, the trust will
terminate. If the CCC denies qualification to a person who has
received interim casino authorization, the trustee is required to
endeavor, and is authorized, to sell, assign, convey or otherwise
dispose of the property subject to the trust to such persons who
are licensed or qualified or shall themselves obtain interim
casino authorization.
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Where a holder of publicly traded securities is required,
in applying for qualification as a financial source or qualifier,
to transfer such securities to a trust in application for interim
casino authorization and the CCC thereafter orders that the trust
become operative: (i) during the time the trust is operative,
the holder may not participate in the earnings of the casino
hotel or receive any return on its investment or debt security
holdings; and (ii) after disposition, if any, of the securities by
the trustee, proceeds distributed to the unqualified holder may
not exceed the lower of their actual cost to the unqualified
holder or their value calculated as if the investment had been
made on the date the trust became operative.
Approved Hotel Facilities. The CCC may permit a licensee,
such as the Partnership, to increase its casino space if the
licensee agrees to add a prescribed number of qualifying sleeping
units within two years after the commencement of gaming operations
in the additional casino space. However, if the casino licensee
does not fulfill such agreement due to conditions within its control,
the licensee will be required to close the additional casino space,
or any portion thereof that the CCC determines should be closed.
License Fees. The CCC is authorized to establish annual
fees for the renewal of casino licenses. The renewal fee is
based upon the cost of maintaining control and regulatory
activities prescribed by the Casino Control Act, and may not be
less than $200,000 for a two-year casino license. Additionally,
casino licensees are subject to potential assessments to fund any
annual operating deficits incurred by the CCC or the Division.
There is also an annual license fee of $500 for each slot machine
maintained for use or in use in any casino.
Gross Revenue Tax. Each casino licensee is also required
to pay an annual tax of 8% on its gross casino revenues. For the
years ended December 31, 1992 and 1993, the Partnership's gross
revenue tax was approximately $21.0 million and $21.3 million
respectively, and its license, investigations, and other fees
and assessments totalled approximately $4.7 million and
$4.0 million respectively.
Investment Alternative Tax Obligations. An investment
alternative tax imposed on the gross casino revenues of each
licensee in the amount of 2.5% is due and payable on the last day
of April following the end of the calendar year. A licensee is
obligated to pay the investment alternative tax for a period of
25 years. Estimated payments of the investment alternative tax
obligation must be made quarterly in an amount equal to 1.25% of
estimated gross revenues for the preceding three-month period.
Investment tax credits may be obtained by making qualified
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investments or by the purchase of bonds issued by the CRDA.
CRDA bonds may have terms as long as fifty years and bear
interest at below market rates, resulting in a value lower than
the face value of such CRDA bonds.
For the first ten years of its obligation, the
licensee is entitled to an investment tax credit against the
investment alternative tax in an amount equal to twice the
purchase price of bonds issued to the licensee by the CRDA.
Thereafter, the licensee is (i) entitled to an investment tax
credit in an amount equal to twice the purchase price of such
bonds or twice the amount of its investments authorized in lieu
of such bond investments or made in projects designated as
eligible by the CRDA and (ii) has the option of entering into a
contract with the CRDA to have its tax credit comprised of direct
investments in approved eligible projects which may not comprise
more than 50% of its eligible tax credit in any one year.
From the moneys made available to the CRDA, the CRDA
set aside $100,000,000 for investment in hotel development
projects in Atlantic City undertaken by a licensee which result
in the construction or rehabilitation of at least 200 hotel rooms
by December 31, 1996. The CRDA is required to determine the amount
each casino licensee may be eligible to receive out of the moneys
set aside.
Minimum Casino Parking Charges. As of July 1, 1993, each
casino licensee was required to impose on and collect from patrons
a standard minimum parking charge of at least $2.00 for the use of
parking, space for the purpose of parking, garaging or storing motor
vehicles in a parking facility owned or leased by a casino licensee or
by any person on behalf of a casino licensee. Of the amount collected
by the casino licensee, $1.50 will be paid to the New Jersey
State Treasurer and paid by the New Jersey State Treasurer into a
special fund established and held by the New Jersey State
Treasurer for the exclusive use of the CRDA.
Amounts in the special fund will be expended by the CRDA
for (i) eligible projects in the corridor region of Atlantic City,
which projects are related to the improvement of roads,
infrastructure, traffic regulation and public safety, and
(ii) funding up to 35% of the cost to casino licensee of expanding
their hotel facilities to provide additional hotel rooms, which hotel
rooms are required to be available upon the opening of the Atlantic
City Convention Center and dedicated to convention events.
Conservatorship. If, at any time, it is determined that
the Partnership, the Company, Holding, Inc. or Holding has violated
the Casino Control Act or that any of such entities cannot meet the
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qualification requirements of the Casino Control Act, such entity
could be subject to fines or the suspension or revocation of its
license or qualification. If the Partnership's license is
suspended for a period in excess of 120 days or revoked or if the
CCC fails or refuses to renew such casino license, the CCC could
appoint a conservator to operate and dispose of the Partnership's
casino hotel facilities. A conservator would be vested with
title to all property of the Partnership relating to the casino
and the approved hotel subject to valid liens and/or
encumbrances. The conservator would be required to act under the
direct supervision of the CCC and would be charged with the duty
of conserving, preserving and, if permitted, continuing the
operation of the casino hotel. During the period of the
conservatorship, a former or suspended casino licensee is
entitled to a fair rate of return out of net earnings, if any, on
the property retained by the conservator. The CCC may also
discontinue any conservatorship action and direct the conservator
to take such steps as are necessary to effect an orderly transfer
of the property of a former or suspended casino licensee.
Employees. All employees of the Partnership must be
licensed by or registered with the CCC, depending on the nature
of the position held. Casino employees are subject to more
stringent requirements than non-casino employees and must meet
applicable standards pertaining to financial stability, integrity
and responsibility, good character, honesty and integrity,
business ability and casino experience and New Jersey residency.
These requirements have resulted in significant competition among
Atlantic City casino operators for the services of qualified
employees.
Gaming Credit. The Partnership's casino games are
conducted on a credit as well as cash basis. Gaming debts
arising in Atlantic City in accordance with applicable
regulations are enforceable in the courts of the State of New
Jersey. The extension of gaming credit is subject to regulations
that detail procedures which casinos must follow when granting
gaming credit and recording counter checks which have been
exchanged, redeemed or consolidated.
Control Procedures. Gaming at Trump Plaza is conducted by
trained and supervised personnel. The Partnership employs
extensive security and internal controls. Security checks are
made to determine, among other matters, that job applicants for
key positions have had no criminal history or associations.
Security controls utilized by the surveillance department include
closed circuit video camera to monitor the casino floor and money
counting areas. The count of moneys from gaming also is observed
daily by representatives of the CCC.
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Other Laws and Regulations. The United States Department
of the Treasury has adopted regulations pursuant to which a
casino is required to file a report of each deposit, withdrawal,
exchange of currency, gambling tokens or chips, or other payments
or transfers by, through, or to such casino which involves a
transaction in currency of more than $10,000 per patron per
gaming day. Such reports are required to be made on forms
prescribed by the Secretary of the Treasury and are filed with
the Commissioner of the Internal Revenue Service (the "IRS"). In
addition, the Partnership is required to maintain detailed
records (including the names, addresses, social security numbers
and other information with respect to its gaming customers)
dealing with, among other items, the deposit and withdrawal of
funds and the maintenance of a line of credit. The Department of
the Treasury has recently adopted regulations, scheduled to
become effective in December 1994, which will require the
Partnership, among other things, to keep records of the name,
permanent address and taxpayer identification number (or in
the case of a non-resident alien, such person's passport number)
of any person engaging in a currency transaction in excess of
$3,000. The Partnership is unable to predict what effect,
if any, these new reporting obligations will have on gaming
practices of certain of its patrons.
In the past, the IRS had taken the position that gaming
winnings from table games by non-resident aliens was subject to a
30% withholding tax. The IRS, however, subsequently adopted a
practice of not collecting such tax. Recently enacted
legislation exempts from tax withholding table game winnings by
non-resident aliens, unless the Secretary of the Treasury
determines by regulation that such collections have become
administratively feasible.
As the result of an audit conducted by the U.S. Department
of Treasury, Office of Financial Enforcement, the Partnership was
alleged to have failed to timely file the "Currency Transaction
Report by Casino" in connection with 65 individual currency
transactions in excess of $10,000 during the period from October
31, 1986 to December 10, 1988. The Partnership paid a fine of
$292,500 in connection with these violations. The Partnership
has revised its internal control procedures to ensure continued
compliance with these regulations.
The Partnership is subject to other federal, state and
local regulations and, on a periodic basis, must obtain various
licenses and permits, including those required to sell alcoholic
beverages. Management believes that it has obtained all required
licenses and permits to conduct its business.
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(d) Financial Information About Foreign and Domestic
Operations and Export Sales
Not applicable.
ITEM 2. PROPERTIES.
The Partnership owns and leases several parcels of land in
and around Atlantic City, New Jersey, each of which is used in
connection with the operation of Trump Plaza and each of which is
subject to the liens of the Note Mortgage and Guarantee Mortgage
(collectively, the "Mortgages") and certain other liens. The "Note
Mortgage" is the mortgage on and related assignments of the assets
constituting the real property owned and leased by the Partnership
and substantially all of the Partnership's other assets, all of
which constitute Trump Plaza and its related properties, which
secures the non-recourse promissory note (the"Partnership Note")
of the Partnership issued to the Company in exchange for the
Company's lending to the Partnership the proceeds of the Mortgage
Note Offering. In exchange for the use of such proceeds, the
Company has assigned the Note Mortgage and the Partnership Note
to the Trustee. The "Guarantee Mortgage" is the mortgage on
and related assignments of the assets of the Partnership described
above, senior to the lien of the Note Mortgage, which secures the
Partnership's non-recourse guarantee (the "Guarantee") of the
Mortgage Notes. The Mortgage Note Indenture, the Note Mortgage and
the Guarantee Mortgage are herein collectively referred to as the
"Mortgage Note Agreements."
Casino Parcel. Trump Plaza is located on The Boardwalk in
Atlantic City, New Jersey, next to the Atlantic City Convention
Center. It occupies the entire city block (approximately 2.38
acres) bounded by The Boardwalk, Mississippi Avenue, Pacific
Avenue and Columbia Place (the "Casino Parcel").
The Casino Parcel consists of four tracts of land, one of
which is owned by the Partnership and three of which are leased
to the Partnership pursuant to three non-renewable Ground Leases,
each of which expires on December 31, 2078 (each, a "Ground
Lease"). Trump Seashore Associates, Seashore Four Associates and
Plaza Hotel Management Company (each, a "Ground Lessor") are the
owners/lessors under such Ground Leases (respectively, the "TSA
Lease," "SFA Lease" and "PHMC Lease"; the land which is subject
to the Ground Leases (which includes Additional Parcel 1, as
hereinafter defined) is referred to collectively as the
"Leasehold Tracts" and individually as a "Leasehold Tract").
Trump Seashore Associates and Seashore Four Associates are
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beneficially owned by Trump and are, therefore, affiliates of the
Company and the Partnership.
On August 1, 1991, as security for indebtedness owed to a
third party, Trump Seashore Associates transferred its interest
in the TSA Lease to United States Trust Company of New York
("UST"), as trustee for the benefit of such third party creditor.
The trust agreement among UST, Trump Seashore Associates and such
creditor provides that the trust shall terminate on the earlier
of (i) August 1, 2012 or (ii) the date on which such third party
creditor certifies to UST that all principal, interest and other
sums due and owing from Trump Seashore Associates to such third
party creditor have been paid.
Trump Seashore Associates is currently negotiating with its
third party lender for the extension or refinancing of the
indebtedness described above, which debt matured on October 28,
1993. The lender has agreed to forebear from pursuing remedies
under such loan through May 28, 1994, while such refinancing
negotiations are taking place. The Mortgage Note Agreements
provide that, upon such refinancing, the refinancing lender
shall consent to the execution of an agreement between TSA and
the Partnership providing, among other matters, for certain
protections for holders of Mortgage Notes in the event of a
default arising under the TSA Lease.
While the transfer to UST of Trump Seashore Associates'
interest in the TSA Lease was primarily a financing transaction
to provide the third-party creditor with a potentially enhanced
security interest, because of the transfer of such interest to
UST, it is not certain that the TSA Lease would be deemed to be
held by an affiliate of the Partnership and, therefore, even if
the agreement described above is executed by TSA, the holders of
the Mortgage Notes and the PIK Notes may not have the benefit of
any such agreement regarding the TSA Lease.
The SFA Lease and the PHMC Lease each contain options
pursuant to which the Partnership may purchase the Leasehold
Tract covered by such Ground Lease at certain times during the
term of such Ground Lease under certain circumstances. Upon any
refinancing of the mortgage indebtedness which currently
encumbers the fee interest in the TSA Lease Leasehold Tract,
including any refinancing resulting from the on-going
negotiations described above, the TSA Lease will be amended to
confirm the existence thereunder of the purchase options, or
provide for an additional option grant, in each case substantially
similar to those currently set forth in the other Ground Leases.
The purchase price pursuant to each option is specified in the
applicable Ground Lease.
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The Ground Leases are "net leases" pursuant to which the
Partnership, in addition to the payment of fixed rent, is
responsible for all costs and expenses with respect to the use,
operation and ownership of the Leasehold Tracts and the
improvements now, or which may in the future be, located thereon,
including, but not limited to, all maintenance and repair costs,
insurance premiums, real estate taxes, assessments and utility
charges.
The improvements located on the Leasehold Tracts are owned
by the Partnership during the terms of the respective Ground
Leases and upon the expiration of the term of each Ground Lease
(for whatever reason), ownership of such improvements will vest
in the Ground Lessor. Subject to the provisions of the Mortgage
Note Agreements, the Partnership has the right to improve the
Leasehold Tracts, alter, demolish and/or rebuild the improvements
constructed thereon, and remove any personal property and movable
trade fixtures therefrom.
The Ground Leases provide that each Ground Lessor may
encumber its fee estate with mortgage liens, but any such fee
mortgage will not increase the rent under the applicable Ground
Lease and must be subordinate to such Ground Lease. Accordingly,
any default by a Ground Lessor under any such fee mortgage
(including that mortgage encumbering the TSA Lease parcel, for
which refinancing negotiations are on-going) will not result in
a termination of the applicable Ground Lease but would permit the
fee mortgagee to bring a foreclosure action and succeed to the
interests of the Ground Lessor in the fee estate, subject to the
Partnership's leasehold estate under such Ground Lease. Each
Ground Lease also specifically provides that the Lessor may sell
its interest in the applicable Leasehold Tract, but any such sale
would be made subject to the Partnership's interest in the
applicable Ground Lease.
The Mortgages are subject and subordinate to each of the
Ground Leases. Accordingly, if a Ground Lease were to be
terminated while such Mortgages were outstanding, the lien of the
Mortgages would be extinguished as to the applicable Leasehold
Tract. The Ground Leases, however, contain certain provisions to
protect the Mortgage Note Trustee and the holders of the Mortgage
Notes from such an occurrence, including the following: (i) no
cancellation, surrender, acceptance of surrender or modification
of a Ground Lease is binding on the Mortgage Note Trustee or
affects the lien of the Mortgages without the Mortgage Note
Trustee's prior written consent, (ii) the Mortgage Note Trustee
is entitled to a copy of any notices (including notices of
default) sent by a Ground Lessor to the Partnership, has the
right to perform any term or condition of the Ground Lease to be
performed by the Partnership and can cure any defaults, (iii) if
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any default is not remedied within the applicable grace period
specified in the Ground Lease, then before the Ground Lessor
exercises its rights under the Ground Lease or any statute, the
Mortgage Note Trustee has an additional period of time within
which to cure, or commence the curing of, the default and (iv)
upon any termination of a Ground Lease, the Ground Lessor must
enter into a new lease, on substantially the same terms as the
applicable Ground Lease, with the Mortgage Note Trustee. In the
event of a default by the Partnership under a Ground Lease,
however, notwithstanding any additional cure period granted to
the Mortgage Note Trustee, there can be no assurance that the
Mortgage Note Trustee will take action to cure the default, will
have sufficient time to cure the default or will otherwise be
able to take advantage of such provisions. If the Ground Lease
were then terminated and a new lease entered into, the Mortgage
Note Trustee would nevertheless remain obligated to cure all pre-
existing defaults.
If a bankruptcy case is filed by or commenced against a
lessor under applicable bankruptcy law, the trustee in bankruptcy
in a liquidation or reorganization case under the applicable
bankruptcy law, or a debtor-in-possession in a reorganization
case under the applicable bankruptcy law, has the right, at its
option, to assume or reject the lease of the debtor-lessor
(subject, in each case, to court approval). If the lease is
assumed, the rights and obligations of the Partnership
thereunder, and the rights of the Mortgage Note Trustee as
leasehold mortgagee under the Mortgage Note Agreements, would
continue in full force and effect. If the lease is rejected, the
Partnership would have the right, at its election, either (i) to
treat the lease as terminated, in which event the lien of the
Mortgages on the leasehold estate created thereby would be
extinguished, or (ii) to continue in possession of the land and
improvements under the lease for the balance of the term thereof
and at the rental set forth therein (with a right to offset
against such rent any damages caused by the lessor's failure to
thereafter perform its obligations under such lease). The
Mortgage Note Agreements provide that if a lease is rejected, the
Partnership assigns to the Trustee its rights to elect whether to
treat the lease as terminated or to remain in possession of the
leased premises.
In the case of the Ground Leases, the rejection of a
Ground Lease by a trustee in bankruptcy or debtor-lessor (as
debtor-in-possession) may result in termination of any options to
purchase the fee estate of the debtor-lessor and the Mortgage
Note Trustee's option (as leasehold mortgagee), in certain
circumstances, to enter into a new lease directly with the
lessor. In addition, under an interpretation of New Jersey law,
it is possible that a court would regard such options as separate
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contracts and, therefore, severable from the Ground Lease. In
such event, the trustee in bankruptcy or debtor-lessor (as
debtor-in-possession) could assume the Ground Lease, while
rejecting some or all of such options under the Ground Lease.
Parking Parcels. The Partnership owns a parcel of land
(the "Garage Parcel") located across the street from the Casino
Parcel and along Pacific Avenue in a portion of the block bounded
by Pacific Avenue, Mississippi Avenue, Atlantic Avenue and
Missouri Avenue. The Partnership has constructed on the Garage
Parcel a 10-story parking garage capable of accommodating
approximately 2,650 cars and which includes offices and a bus
transportation center with bays accommodating up to 13 buses at
one time. An enclosed pedestrian walkway from the parking garage
accesses Trump Plaza at the casino level. Parking at the parking
garage is available to Trump Plaza's guests, as well as to the
general public. Two of the tracts comprising a portion of the
Garage Parcel are subject to first mortgages on the Partnership's
fee interest in such tracts. As of December 31, 1993, such
mortgages had approximate outstanding principal balances of $2.7
million and $2.0 million.
The Partnership leases, pursuant to the PHMC Lease, a
parcel of unimproved land located on the northwest corner of the
intersection of Mississippi and Pacific Avenues consisting of
approximately 11,800 square feet ("Additional Parcel 1") and owns
another unimproved parcel on Mississippi Avenue adjacent to
Additional Parcel 1 consisting of approximately 5,750 square feet
(the "Bordonaro Parcel"). The Bordonaro Parcel is encumbered by
a first mortgage having an outstanding principal balance, as of
December 31, 1993, of approximately $150,000. Additionally
Parcel 1 and the Bordonaro Parcel are presently paved and used
for surface parking.
The Partnership also owns five unimproved parcels of land,
aggregating approximately 43,300 square feet, and sub leases on
an unimproved parcel consisting of approximately 3,125 square
feet. All of such parcels are contiguous and are located along
Atlantic Avenue, in the same block as the Garage Parcel. They
are used for surface parking for employees of Trump Plaza and are
not encumbered by any mortgage liens other than those of the
Mortgages.
Warehouse Parcel. The Partnership owns a warehouse and
office facility located in Egg Harbor Township, New Jersey
containing approximately 64,000 square feet of space (the "Egg
Harbor Parcel"). The Egg Harbor Parcel is encumbered by a first
mortgage having an outstanding principal balance, as of December
31, 1993, of approximately $1.6 million.
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Boardwalk Expansion Site. See "Certain Relationships and Related
Transactions -- Boardwalk Expansion Site."
Superior Mortgages. The lien securing the indebtedness on
the Garage Parcel, the Bordonaro Parcel and the Egg Harbor Parcel
(all of such liens are collectively called the "Existing Senior
Mortgages") are all senior to the liens of the Mortgages. The
principal amount currently secured by such Existing Senior
Mortgages as of December 31, 1993 is in the aggregate, $6.4
million.
If the Partnership were to default in the payment of the
indebtedness secured by any of the Existing Senior Mortgages or
default in the performance of any of the other obligations
thereunder, and the holder of an Existing Senior Mortgage were to
commence a foreclosure action, the debt owed to the holder of
such Existing Senior Mortgage, together with the debt owed to the
holder of any other Existing Senior Mortgage which is also then
being foreclosed, would have to be satisfied before the holders
of the Mortgage Notes would realize any proceeds from the sale of
the portion of the property encumbered thereby. If the Company
and the Partnership default in the payment of the Mortgage Notes
or any other obligation under the Mortgages, and the Mortgage
Note Trustee elects to foreclose under the Mortgages, the
Mortgage Note Trustee will receive the proceeds of the sale of
the collateral under the Mortgage Note Indenture (the
"Collateral") subject to the rights of the holders of any
Existing Senior Mortgages. The purchaser of the Collateral at
any such foreclosure sale would take title to the Collateral
subject to the extent not foreclosed upon the Existing Senior
Mortgages.
In addition to the Existing Senior Mortgages, the
Partnership may, under certain circumstances, borrow up to $25
million to pay for certain expansion site costs which may be
secured by a lien on the expansion site superior to the lien of
the Mortgages thereon.
The Partnership has financed or leased and from time to
time will finance or lease its acquisition of furniture, fixtures
and equipment. The lien in favor of any such lender or lessor
will be superior to the liens of the Mortgages.
ITEM 3. LEGAL PROCEEDINGS.
The Partnership, its partners, certain members of its
former Executive Committee, and certain of its employees, have
been involved in various legal proceedings. In general, the
Partnership has agreed to indemnify such persons against any and
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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.
Penthouse Litigation
On April 3, 1989, BPHC Acquisition, Inc. and BPHC Parking
Corp. (collectively, "BPHC") filed a third-party complaint (the
"Complaint") against the Partnership and Trump. The Complaint
arose in connection with the action entitled Boardwalk
Properties, Inc. and Penthouse International Ltd. v. BPHC
Acquisition, Inc. and BPHC Parking Corp., which was instituted on
March 20, 1989 in the New Jersey Superior Court, Chancery
Division, Atlantic County.
The suit arose in connection with the conditional sale by
Boardwalk Properties, Inc. ("BPI") (or, with respect to certain
of the property, BPI's agreement to sell) to Trump of BPI's fee
and leasehold interests in (i) an approximately 2.0-acre parcel
of land located directly across the street from Trump Plaza upon
which there is located an approximately 500 room hotel, which is
closed to the public and is in need of substantial renovation
(the "Penthouse Site"), (ii) an approximately 4.2-acre parcel of
land located on Atlantic Avenue, diagonally across from Trump
Plaza's parking garage (the "Columbus Plaza Site") which was then
owned by an entity in which 50% of the interests were each owned
by BPHC and BPI and (iii) an additional 1,462-square foot parcel
of land located within the area of the Penthouse Site (the
"Bongiovanni Site"). Prior to BPI entering into its agreement
with Trump, BPI had entered into agreements with BPHC which
provided, among other things, for the sale to BPHC of the
Penthouse Site, as well as BPI's interest in the Columbus Plaza
Site, assuming that certain contingencies were satisfied by a
certain date. Additionally, by agreement between BPHC and BPI,
in the event BPHC failed to close on the Penthouse Site, BPHC
would convey to BPI the Bongiovanni Site. Upon BPHC's failure to
close on the Penthouse Site, BPI entered into its agreement with
Trump pursuant to which it sold the Penthouse Site to Trump and
instituted a lawsuit against BPHC for specific performance to
compel BPHC to transfer to BPI, BPHC's interest in the Columbus
Plaza and Bongiovanni Sites, as provided for in the various
agreements between BPHC and BPI and in the agreement between BPI
and Trump.
The Complaint alleges that the Partnership and/or Trump
engaged in the following activities: civil conspiracy, violations
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of the New Jersey Antitrust Act, violations of the New Jersey
RICO statute, malicious interference with contractual relations,
malicious interference with prospective economic advantage,
inducement to breach a fiduciary duty and malicious abuse of
process. The relief sought in the Complaint included, among
other things, compensatory damages, punitive damages, treble
damages, injunctive relief, the revocation of all of the
Partnership's and Trump's casino licenses, the revocation of the
Partnership's current Certificate of Partnership, the revocation
of any other licenses or permits issued to the Partnership and
Trump by the State of New Jersey, and a declaration voiding the
conveyance by BPI to Trump of BPI's interest in the Penthouse
Site, as well as BPI's and/or Trump's rights to obtain title to
the Columbus Plaza Site.
The Partnership and Trump filed an answer denying all
liability and alleging that all of BPHC's claims are without
merit. On November 9, 1990, BPHC filed an application to amend
its counterclaims against BPI and the Complaint, which amendment
sought to withdraw all of BPHC's affirmative claims for equitable
relief and thereby limit such claims to monetary damages. On
December 20, 1990, the Superior Court entered an Order permitting
BPHC to withdraw its affirmative demands for equitable relief.
Trial of the Penthouse litigation was bifurcated into
issues of liability and damages, with liability issues to be
tried first. On March 25, 1993, after trial on issues of
liability, the Superior Court rendered a decision rejecting all
of BPHC's claims in the Complaint. On October 13, 1993, the
court entered a judgment dismissing with prejudice all claims
against Trump and the Partnership. On November 5, 1993 BPHC
filed a motion seeking to have this judgment declared
interlocutory in nature, rather than final. The Partnership
successfully opposed this motion which was denied on November 19,
1993. On November 30, 1993, BPHC filed a notice of appeal to the
Appellate Division. On January 19, 1994, BPHC filed a motion in
the Appellate Division seeking a determination that the Superior
Court had erred in ruling that the judgment as to the Partnership
and Trump was final. The Partnership and Trump successfully
opposed that motion, which was denied on March 3, 1994. A
briefing schedule for the appeal from the final judgment has been
set. If that schedule is not subsequently modified, BPHC's brief
is due on April 18, 1994, the brief of the Partnership and Trump
is due on May 18, 1994 and BPHC's reply brief is due on May 31,
1994.
On January 9, 1991, BPHC instituted suit against Trump,
the Partnership, BPI, Penthouse International Ltd. and Robert C.
Guccione in the United States District Court for the District of
New Jersey. This action is virtually identical to the state
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court action described above. The Partnership and Trump filed an
answer denying all liability and alleging that all of BPHC's
claims are without merit. In April 1993, the Partnership filed a
motion to dismiss certain claims based on the favorable decision
in the state court action. In May 1993, the court issued an
order to show cause, scheduling a hearing for June 1993 to
determine whether certain claims of the plaintiff's amended
complaint should be dismissed with prejudice. On July 15, 1993,
the court acted favorably on the Partnership's motion and
dismissed the action in its entirety. The order of dismissal was
appealed to the United States Court of Appeals for the Third
Circuit. All briefs have been filed and the appeal is presently
scheduled for disposition in April 1994.
Other Litigation
Various other legal proceedings are now pending against
the Partnership. The Partnership considers all such other
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 a $250,000 deductible per claim), and the
Partnership believes that the resolution of these claims, to the
extent not covered by insurance, together with uninsured claims
will not, individually or in the aggregate, have a material
adverse effect on the financial condition and results of
operations of the partnership.
The Partnership is also a party to various administrative
proceedings involving allegations that it has violated certain
provisions of the Casino Control Act. 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 the ability of the Partnership to
otherwise retain or renew any casino or other licenses required
under the Casino Control Act for the operation of Trump Plaza.
ITEM 4. SUBMISSION OF MATTERS
TO A VOTE OF SECURITY HOLDERS.
No matters were submitted by the Registrant to its
security holders for a vote during the fourth quarter of 1993.
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ITEM 5. MARKET FOR REGISTRANT'S COMMON
EQUITY AND RELATED STOCKHOLDER MATTERS.
(a) There is no established public trading market for the
Company's outstanding Common Stock.
(b) As of December 31, 1993, Trump was the sole holder of
record of the Company's Common Stock.
(c) The Company has not paid any cash dividends on its
Common Stock.
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ITEM 6. SELECTED FINANCIAL DATA.
SELECTED FINANCIAL INFORMATION
The following table sets forth historical financial
information of the Partnership for each of the five years ended
December 31, 1993. This information should be read in
conjunction with the financial statements of the Partnership and
related notes included elsewhere in this Report and "Management's
Discussion and Analysis of Financial Condition and Results of
Operations."
Year Ended December 31,
-----------------------
1989 1990 1991 1992 1993
---- ---- ---- ---- ----
Statements of Operations Data: (dollars in thousands)
Revenues:
Gaming . . . . . . . . . . . . $306,009 $276,932 $233,265 $265,448 $264,081
Other. . . . . . . . . . . . . 90,680 87,286 66,411 73,270 69,203
Trump Regency. . . . . . . . . - - 11,547 9,465 -
-------- ------- -------- -------- -------
Gross revenues . . . . . . . 396,689 364,218 311,223 348,183 333,284
Promotional allowances 42,551 44,281 31,539 34,865 32,793
-------- ------- -------- -------- -------
Net revenues . . . . . . . . . 354,138 319,937 279,684 313,318 300,491
Costs and expenses:
Gaming . . . . . . . . . . . . 177,401 178,356 133,547 146,328 136,895
Other . . . . . . . . . . . . 29,158 26,331 23,404 23,670 24,778
General and administrative 71,533 76,057 69,631 75,459 71,624
Depreciation and amortization. 16,906 16,725 16,193 15,842 17,554
Restructuring costs. . . . . . - - 943 5,177 -
Trump Regency . . . . . . . . - 3,359 19,879 11,839 -
-------- ------- ------- -------- --------
294,998 300,828 263,597 278,315 250,851
-------- ------- ------- -------- --------
Income from operations 59,140 19,109 16,087 35,003 49,640
-------- ------- ------- -------- --------
Net interest expense . . . . . . 31,988 33,128 33,363 31,356 39,889
Extraordinary (loss) gain - - - (38,205) 4,120
Net income (loss) (1). . . . . . 24,564 (10,591) (29,230) (35,787) 9,338
Balance Sheet Data:
Cash and cash equivalents. . . . $11,627 $10,005 $10,474 $18,802 14,393
Property and equipment - net . . 321,391 316,595 306,834 300,266 293,141
Total assets . . . . . . . . . . 406,950 395,775 378,398 370,349 374,498
Total long-term debt - net (2) 273,411 247,048 33,326 249,723 395,948
Preferred Partnership Interest - - - 58,092 -
Total capital. . . . . . . . . . 88,481 83,273 54,043 11,362 (54,710)
- --------------
(1) Net loss for the year ended December 31, 1990 includes income
of $2.4 million resulting from the settlement of a lawsuit
relating to a boxing match. Net loss for the year ended
December 31, 1991 includes a $10.9 million charge associated
with rejection of the Regency Lease and $4.0 million of costs
associated with certain litigation. Net income for 1992
includes $1.5 million of costs associated with certain
litigation. Net income for 1993 includes $3.9 million of
costs associated with the Boardwalk Expansion Site.
(2) Long-term debt of $225 million at December 31, 1991 had been
classified as a current liability.
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ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS.
General
The Company was incorporated on March 14, 1986 as a New
Jersey Corporation, and was originally formed solely to raise
funds through the issuance and sale of its debt securities for
the benefit of the Partnership. As part of a prepackaged plan of
reorganization under chapter 11 of the U.S. Bankruptcy Code
consummated on May 29, 1992, the Company became a partner of the
Partnership and issued approximately three million Stock Units,
each comprised of one share of Preferred Stock and one share of
Common Stock. On June 25, 1993 the Company issued and the
Partnership guaranteed $330,000,000 of Mortgage Notes (for net
proceeds of $325,687,000) and Holding, issued 12,000 Units
consisting of an aggregate of $60,000,000 of PIK Notes, together
with Warrants to acquire an additional $12,000,000 of PIK Notes
at no additional cost. Holding has no other assets or business
other than its 99% equity interest in the Partnership. The
Company owns the remaining 1% interest in the Partnership. The
combined proceeds of the Offerings, together with cash on hand,
were used substantially as follows: (i) $225.0 million of such
proceeds were used to repay the Partnership's Promissory Note to
the Company in the principal amount of $225.0 million, which
proceeds were then used by the Company to redeem the Bonds; (ii)
$12.0 million was used to repay the Regency Note (see "Item 13.
Certain Relationships and Related Transactions -- Trump
Regency"); (iii) $40.0 million was distributed to the Company
(which used such funds, together with $35.0 million from the
Units Offering distributed to Trump and paid to the Company, to
redeem its Stock Units); (iv) approximately $17.3 million was
used to pay the expenses incurred in connection with the
Offerings; and (v) approximately $52.5 million was used to make
the Special Distribution to Trump, which was used by Trump
primarily to pay certain personal indebtedness. No portion of
the net proceeds was retained by Holding, the Company or the
Partnership for working capital purposes.
The financial information presented below reflects the
results of operations of the Partnership. Since the Company and
Holding have no business operations other than their interest in
the Partnership, their results of operations are not discussed
below.
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Results Of Operations For The Years Ended December 31, 1993 and
1992
Gaming revenues were $264.1 million for the year ended
December 31, 1993, a decrease of $1.4 million or 0.5% from gaming
revenues of $265.4 million in 1992. This decrease in gaming
revenues consisted of a reduction in table games revenues, which
was partially offset by an increase in slot revenues. These
results were impacted by major snow storms during February and
March, which severely restricted travel in the region. The
decrease in revenues was also attributable, in part, to the
revenues derived from "high roller" patrons from the Far East
during 1992, which did not recur in 1993, due in part to the
decision to de-emphasize marketing efforts directed at "high
roller" patrons from the Far East and also to the effects of the
adverse economic conditions in that region.
Slot revenues were $170.5 million for the year ended
December 31, 1993, an increase of $1.0 million or 0.6%, from slot
revenues of $169.5 million in 1992. The Partnership elected to
discontinue certain progressive slot jackpot programs thereby
reversing certain accruals into revenues which had the effect of
improving slot revenue by $4.1 million for the year ended
December 31, 1992. Excluding the aforementioned adjustment, slot
revenues would have resulted in a $5.0 million or 3.0%
improvement over 1992. The Partnership believes that its
improvement in slot revenues reflects its intensified slot
marketing efforts directed towards patrons who tend to wager more
per slot play and general growth in the industry. See "Business
- -- Business Strategy."
Table games revenues were $93.6 million for the year ended
December 31, 1993, a decrease of $2.3 million or 2.4% from table
games revenues of $95.9 million in 1992. This decrease was
primarily due to a reduction in table games drop (i.e., the
dollar value of chips purchased) by 9.2% for the year ended
December 31, 1993 from 1992, offset by an increase in the table
games hold percentage to 14.9% (the percentage of table drop
retained by the Partnership) for the year ended December 31, 1993
from 13.9% in 1992. The reduction in table game drop was due to
the large dollar amounts wagered during 1992 by certain foreign
customers.
During the year ended December 31, 1993, gaming credit
extended to customers was approximately 18.0% of overall table
play. At December 31, 1993, gaming receivables amounted to
approximately $16.0 million, with allowances for doubtful gaming
receivables of approximately $10.4 million.
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Other revenues were $69.2 million for the year ended
December 31, 1993, a decrease of $4.1 million or 5.6%, from other
revenues (excluding revenues from Trump Regency) of $73.3 million
in 1992. Other revenues include revenues from rooms, food and
beverage and miscellaneous items. The decrease in other revenues
primarily reflects a $2.1 million adjustment to the outstanding
gaming chip liability in 1992, (this amount had been offset in
gaming cost and expenses with a specific reserve provision for
casino uncollectible accounts receivable) as well as decreases in
food and beverage revenues attendant to reduced levels of gaming
activity, and reduced promotional allowances.
Promotional allowances were $32.8 million for the year
ended December 31, 1993, a decrease of $2.1 million or 5.9%, from
promotional allowances of $34.9 million in 1992. This decrease
is primarily attributable to a reduction in table gaming activity
as well as the Partnership's focusing its marketing efforts during
the period towards patrons who tend to wager more frequently and
in larger denominations.
Gaming costs and expenses were $136.9 million for the year
ended December 31, 1993, a decrease of $9.4 million, or 6.4%,
from gaming costs and expenses of $146.3 million in 1992. This
decrease was primarily due to a $4.8 million decrease in gaming
bad debt expense as well as decreased promotional and operating
expenses and taxes associated with decreased levels of gaming
activity and revenues from 1992.
Other costs and expenses were $24.8 million for the year
ended December 31, 1993 an increase of $1.1 million or 4.7%, from
other costs and expenses of $23.7 million in 1992.
General and administrative expenses were $71.6 million for
the year ended December 31, 1993, a decrease of $3.8 million, or
5.1%, from general and administrative expenses of $75.5 million
in 1992. This decrease resulted primarily from a $2.4 million
real estate tax charge resulting from a reassessment by local
authorities of prior years' property values incurred during 1992
and overall cost reductions related to cost containment efforts.
Income from operations was $49.6 million for the year
ended December 31, 1993, an increase of $7.0 million or 16.4%
from income from operations (excluding the operations of Trump
Regency and before restructuring costs) of $42.6 million for
1992. In addition to the items described above, 1993 costs and
expenses were lower as a result of the absence of the
Restructuring costs and the expenses associated with the Trump
Regency which were incurred in 1992.
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Net interest expense was $39.9 million for the year ended
December 31, 1993, an increase of $8.5 million, or 27.2% from net
interest expense of $31.4 million in 1992. This is attributable
to the interest expense associated with the Offerings.
Other non-operating expenses were $3.9 million for the
year ended December 31, 1993, an increase of $2.4 million or
164.9% from non-operating expense of $1.5 million in 1992. This
increase is directly attributable to costs associated with the
Boardwalk Expansion Site. See "Note 7 to the Financials --
Commitments and Contingent Future Expansions."
The Offerings resulted in an extraordinary gain of $4.1
million for the year ended December 31, 1993, which reflects the
excess of carrying value of the Regency Hotel obligation over the
amount of the settlement payment, net of related prepaid
expenses. The Restructuring resulted in an extraordinary loss of
$38.2 million for the year ended December 31, 1992 consisting of
the effects of stating the Bonds and Preferred Stock issued at
fair value and the write off of certain deferred financing
charges and costs.
Results Of Operations For The Year Ended December 31, 1992 and
1991
Gaming revenues were $265.4 million for the year ended
December 31, 1992, an increase of $32.1 million, or 13.8%, from
gaming revenues of $233.3 million in 1991. This increase in
gaming revenues was primarily attributable to an increase in slot
revenues which was partially offset by a decline in table game
revenues.
Slot revenues were $169.5 million for the year ended
December 31, 1992, an increase of $35.1 million, or 26.1%, from
slot revenues of $134.4 million in 1991. The Partnership
believes that its improvement in slot revenues reflects its
intensified slot marketing efforts directed towards patrons who
tend to wager more per slot play and general growth in the
industry. See "Business - Business Strategy". In addition, the
Partnership elected to discontinue certain progressive slot
jackpot programs, thereby reversing certain accruals into
revenues which had the effect of improving slot revenue by $4.1
million for the year ended December 31, 1992.
Table game revenues were $95.9 million for the year ended
December 31, 1992, a decrease of $3.0 million, or 3.0%, from
table game revenues of $98.9 million in 1991. While table game
drop (i.e., the dollar value of chips purchased) increased 6.7%
for the year ended December 31, 1992 from 1991, the decline in
table game revenues was due to a decrease in the table game hold
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percentage (i.e., the percentage of table game drop retained by
the Partnership) to 13.9% for the year ended December 31, 1992
from 15.3% in 1991. The reduction in table game hold percentage
was due, in part, to the large dollar amounts wagered by a few
patrons, whose individual success at the gaming tables had an
impact on the overall table game hold percentage.
During the year ended December 31, 1992, gaming credit
extended to customers was approximately 27.8% of overall table
play. At December 31, 1992, gaming receivables amounted to
approximately $20.5 million, with allowances for doubtful gaming
receivables of approximately $14.0 million.
Other revenues (excluding revenues from Trump Regency)
were $73.3 million for the year ended December 31, 1992, an
increase of $6.9 million, or 10.4%, from other revenues of $66.4
million in 1991. Other revenues include revenues from rooms,
food and beverage and miscellaneous items. This increase in
other revenues primarily reflects increases in food and beverage
revenues attendant to increased levels of gaming activity. In
addition, the Partnership recognized $2.1 million in other
revenues during the year ended December 31, 1992 as the result of
the cancellation of outstanding chips to offset the debt of a
patron who owed in excess of such amounts to the Partnership.
The revenue derived from such cancellation, however, was offset
by an associated increase in bad debt expense in 1992.
Promotional allowances were $34.9 million for the year
ended December 31, 1992, an increase of $3.4 million, or 10.8%,
from promotional allowances of $31.5 million in 1991. This
increase is primarily attributable to the increase in gaming
activity during the period.
Gaming costs and expenses were $146.3 million for the year
ended December 31, 1992, an increase of $12.8 million, or 9.6%,
from gaming costs and expenses of $133.5 million in 1991. This
increase was primarily due to increased promotional and operating
expenses associated with increased slot revenues, increased taxes
and increased regulatory expenses. Gaming costs and expenses
also increased due to the $2.1 million increase in bad debt
expense referred to above.
Other costs and expenses were $23.7 million for the year
ended December 31, 1992, an increase of $0.3 million, or 1.3%,
from other costs and expenses of $23.4 million in 1991.
General and administrative expenses were $75.5 million for
the year ended December 31, 1992, an increase of $5.9 million, or
8.5%, from general and administrative expenses of $69.6 million
in 1991. This increase resulted primarily from a $2.4 million
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increase in real estate taxes arising from a reassessment by
local authorities of prior years property values, as well as
increased property insurance and other costs associated with
maintaining Trump Plaza.
In connection with the Restructuring, the Partnership
incurred $5.2 million of non-recurring costs for the year ended
December 31, 1992, comprised of professional fees and other costs
and expenses of the Restructuring.
Pursuant to the terms of the Restructuring, the
Partnership ceased operating Trump Regency as of September 30,
1992. For the year ended December 31, 1992, the Partnership
realized a net loss of $2.4 million from the operation of Trump
Regency, compared to the net loss of $8.3 million in 1991. See
"Certain Relationships and Related Transactions."
Income from operations (excluding the operations of Trump
Regency and before restructuring costs) was $42.6 million for the
year ended December 31, 1992, an increase of $17.2 million, or
67.7%, from income from operations of $25.4 million in 1991.
Net interest expense was $31.4 million for the year ended
December 31, 1992, a decrease of $2.0 million, or 6.0%, from net
interest expense of $33.4 million in 1991.
The Restructuring resulted in an extraordinary loss of
$38.2 million for the year ended December 31, 1992, which
reflects a $32.8 million accounting adjustment to carry the Bonds
and Preferred Stock issued in the Restructuring on the
Partnership's balance sheet at fair market value based upon then
current rates of interest. The Partnership also wrote-off
certain deferred financing charges and costs of $5.4 million.
Net loss was $35.8 million for the year ended December 31,
1992, and increase of $6.6 million, or 22.6%, from the net loss
of $29.2 million in 1991.
Liquidity and Capital Resources
The Partnership. Cash flow from operating activities is
the Partnership's principal source of liquidity. For the year
ended December 31, 1993, net cash from operating activities was
$18.5 million. On June 25, 1993, the date of consummation of the
Offerings, the Partnership paid accrued interest on the Bonds.
Interest on the Bonds was payable semi-annually on March 15 and
September 15, while interest on the Mortgage Notes is payable
semi-annually on each June 15 and December 15, commencing
December 15, 1993. The decrease of $7.7 million in net cash
provided by operating activities as compared to 1992 reflects the
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aforementioned changes in payments of accrued interest on the
Bonds.
Capital expenditures of $10.1 million for the year ended
December 31, 1993 increased approximately $1.4 million from 1992,
and was primarily due to the refurbishment of the casino floor
(including new carpeting), the purchase of additional slot
machines, the construction of an electronic graphic sign adjacent
to the transportation facility and demolition and refurbishing
costs associated with the Boardwalk Expansion Site. These
expenditures were financed from funds generated from operations.
The Boardwalk Expansion (as described below), may require
additional borrowings. Capital expenditures for 1992, and 1991
were $8.6 million and $5.5 million, respectively. Previously,
the Partnership provided for significant capital expenditures
which concentrated on the construction of the Transportation
Facility and the renovation of certain restaurants, hotel rooms
and the hotel lobby. See "Business -- Facilities and Amenities."
At December 31, 1993, the Partnership had a combined
working capital deficit totalling $1.5 million, compared to a
working capital deficit of $18.2 million at December 31, 1992.
In 1993, the Partnership received the approval of the CCC,
subject to certain conditions, for the Expansion of its hotel
facilities on the Boardwalk Expansion Site upon which there is
located an approximately 361-room hotel, which is closed to the
public and in need of substantial renovation and repair. On June
25, 1993, the date the Offerings were consummated, Trump
transferred title to the Boardwalk Expansion Site to a lender in
exchange for a reduction in Trump's indebtedness to such lender
in an amount equal to the sum of fair market value of the
Boardwalk Expansion Site and all rent payments made to such
lender by Trump under the Boardwalk Expansion Site Lease (as
defined below). On the date the Offerings were consummated, the
lender leased the Boardwalk Expansion Site to Trump for a term of
five years, which expires on June 30, 1998, during which time
Trump will be obligated to pay the lender $260,000 per month in
lease payments. In October 1993, the Partnership assumed the
Boardwalk Expansion Site Lease and related expenses. In connection
with the Offerings, the Partnership acquired a five-year option to
purchase the Boardwalk Expansion Site.
Until such time as the Option is exercised or expires, the
Partnership will be obligated, from and after the date it entered
into the Option, to pay the net expenses associated with the
Boardwalk Expansion Site, including, without limitation, current
real estate taxes (approximately $1.2 million per year based upon
current assessed valuation), $66,000 per month until January 1,
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1995 in respect of past due taxes and annual lease payments for
the portion of the Boardwalk Expansion Site currently leased
by the Partnership from a third party, which lease payments were $86,058
for 1993 and $83,500 for 1992, and increase annually based on the
consumer price index. In addition, net expenses include the
costs of demolishing certain structures situated on the Boardwalk
Expansion Site at a cost of approximately $1.5 million, the
redemption in November 1993 of $496,000 in tax sale certificates
issued to third parties and $100,000 in annual insurance expense.
Under the Option, the Partnership has the right to acquire the
Boardwalk Expansion Site for a purchase price of $26.0 million
through 1994, increasing by $1.0 million annually thereafter
until expiration on June 30, 1998. In addition, the Partnership
has a right of first refusal upon any proposed sale of all or any
portion of the Boardwalk Expansion Site during the term of the
Option. Trump, individually, also has been granted by such
lender a right of first refusal upon a proposed sale of all or
any portion of the Boardwalk Expansion Site. Trump, has agreed
with the Partnership that his right of first refusal will be
subject to the Partnership's prior exercise of its right of first
refusal (with any decision of the Partnership requiring the
approval of the Independent Directors of the Company, acting as
the managing general partner of the Partnership). Acquisition of
the Boardwalk Expansion Site by the Partnership would under
certain circumstances (provided there are no events of default
under the Boardwalk Expansion Site Lease or the Option and
provided that certain other events had not theretofore or do not
thereafter occur) discharge Trump's obligation to such lender in
full. Under the terms of the Option, if the Partnership defaults
in making payments due under the Option, the Partnership would be
liable to the lender for the sum of (a) the present value of all
remaining payments to be made by the Partnership pursuant to the
Option during the term thereof and (b) the cost of demolition of
all improvements then located on the Boardwalk Expansion Site.
The Partnership's ability to acquire the Boardwalk
Expansion Site pursuant to the Option would be dependent upon its
ability to obtain financing to acquire the property. The ability
to incur such indebtedness is restricted by the Mortgage Note
Indenture and the PIK Note Indenture and requires the consent of
certain of Trump's personal creditors. The Partnership's ability
to develop the Boardwalk Expansion Site would be dependent upon
its ability to use existing cash on hand and generate cash flow
from operations sufficient to fund development costs. No
assurance can be given that such cash on hand will be available
to the Partnership for such purposes or that it will be able to
generate sufficient cash flow from operations. In addition,
exercise of the Option or the right of first refusal requires the
consent of certain of Trump's personal creditors, and there can
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be no assurance that such consent will be obtained at the time
the Partnership desires to exercise the Option or such right.
The CCC has required that the Partnership exercise the Option or
its right of first refusal therein no later than July 1, 1995.
Management has determined to build or refurbish rooms at
the Boardwalk Expansion Site. As a result of such expansion, the
Partnership will be permitted to increase Trump Plaza's casino
floor space by 30,000 square feet. The Partnership plans to add
approximately 10,000 square feet in April, 1994 with an
additional 5,000 square feet in June, 1994 and 10,000 square feet
planned to open in April, 1995. The 5,000 remaining allowable
square feet will be added as patron demand warrants. The
Partnership has begun construction at such site pursuant to
rights granted to the Partnership by the lender under the
Boardwalk Expansion Site Lease. Pursuant to the terms
of certain personal indebtedness of Trump, the Partnership is
restricted from expending more than $15.0 million less any CRDA
tax credits for improvements at the Boardwalk Expansion Site
prior to such time as it exercises the Option. The Partnership
has received approximately $294,000 in CRDA credit as of December
31, 1993. The Partnership's ability to exercise the Option will
be restricted by, among other things, the Mortgage Note
Indenture, the PIK Note Indenture and the terms of certain
indebtedness of Trump, and would require the approval of the CCC.
Management does not currently anticipate that it will be in a position to
exercise the Option to acquire such site prior to 1995
due, in part, to limitations on its ability to incur additional
indebtedness. If the Partnership is unable to finance the
purchase price of the Boardwalk Expansion Site pursuant to the
Option, any amounts expended with respect to the Boardwalk
Expansion Site, including payments under the Option and the
Boardwalk Expansion Site lease, if assumed, and any improvements
thereon would inure to the benefit of the owner of the Boardwalk
Expansion Site and not to the Partnership. In such event, the
Partnership might have to close all or a portion of the expanded
casino in order to comply with regulatory requirements, which
could have a material adverse effect on the results of operations
and financial condition of the Partnership. As of December 31,
1993, the Partnership had expended approximately $2.7 million in
construction costs related to the Boardwalk Expansion Site.
Pursuant to the terms of the Partnership Agreement, prior
to amendment on June 25, 1993, the date of the consummation of
the Offerings, which eliminated such distribution requirements,
the Partnership was required to make certain periodic distributions
to the Company and Trump sufficient to pay taxes attributable
to distributions received from the Partnership, any amounts
required to be paid to directors as fees or pursuant to
indemnification obligations, premiums on directors' and officers'
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liability insurance and other reasonable general and administrative
expenses. The Partnership was also required to distribute to
the Company, to the extent of cash available therefrom, funds
sufficient to enable the Company to pay dividends on, and the
redemption price of its Stock Units. For the year ended December
31, 1993, such distributions were approximately $6.3 million.
Pursuant to the terms of a Services Agreement with Trump
Plaza Management Corp. ("TPM"), a corporation beneficially owned
by Trump, in consideration for services provided, the Partnership
pays TPM each year an annual fee of $1.0 million in equal monthly
installments, and reimburses TPM on a monthly basis for all
reasonable out-of-pocket expenses incurred by TPM in performing
its obligations under the Services Agreement, up to certain
amounts. Under this Agreement, approximately $1.2 million was
charged to expense for the year ended December 31, 1993.
The Mortgage Note Indenture and the PIK Note Indenture
restrict the ability of the Partnership to make distributions to
its partners, including restrictions relating to the achievement
of certain financial ratios. Subject to the satisfaction of
these restrictions, the Partnership may make distributions to its
partners with respect to their partnership interests.
The Company. The Company's sole source of liquidity is,
and will be, payments made by the Partnership in respect of the
Partnership Note securing the Company's indebtedness, and
distributions from the Partnership, if any, in respect of its
Partnership interest.
Holding. Holding has no business operations other than
that associated with holding its partnership interest in the
Partnership and as issuer of the PIK Notes and Warrants.
Holding's sole source of liquidity is from distributions in
respect of its interest in the Partnership. Prior to the Units
Offering, Holding did not have any long-term or short-term
indebtedness; upon consummation of the Units Offering on June 25,
1993, Holding issued $72.0 million of indebtedness comprised of
$60.0 million of PIK Notes and $12.0 million of deferred warrant
obligations. Holding's indebtedness will increase upon exercise
of the Warrants and upon the issuance of additional PIK Notes in
lieu of cash interest paid on the PIK Notes. On December 15,
1993, the Partnership elected to issue in lieu of cash, an
additional $3.6 million in PIK Notes to satisfy its semi-annual
PIK Note interest obligation.
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ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA.
An index to the financial statements and required
financial statement schedules is set forth at Item 14.
ITEM 9. DISAGREEMENTS ON ACCOUNTING
AND FINANCIAL DISCLOSURE.
None.
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PART III
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS.
Management
Prior to the merger of TP/GP into the Company, management
of the affairs of the Partnership was vested in TP/GP. As of
June 18, 1993, the date of such merger, the Company became the
managing partner of the Partnership. As of such date, the
Company was granted full authority to do all things deemed
necessary or desirable of the operations, business and affairs of
the Partnership.
As currently constituted, the Board of Directors of the
Company consists of Messrs. Trump, Nicholas L. Ribis, Jay Kramer
and Don M. Thomas. As currently constituted, the board of
directors of Holding Inc. consists of Messrs. Trump, Ribis,
Ernest E. East, Kramer and Thomas. In addition, Holding Inc.
acts as the managing partner of Holding. Trump is currently the
sole beneficial owner of the Partnership, the Company, Holding
and Holding Inc.
Pursuant to the PIK Notes Indenture and the Mortgage Notes
Indenture, the Company and Holding Inc. are each required to have
at least two Independent Directors (as such term is defined by
the American Stock Exchange, Inc.). The prior approval of the
majority of the Company's Independent Directors will be required
before the Partnership can engage in certain affiliate
transactions.
Set forth below, are the names, ages, positions and
offices held with the Company, Holding and the Partnership and a
brief account of the business experience during the past five
years of each member of the Board of Directors and the executive
officers of the Company, Holding and the Partnership.
Donald J. Trump - Mr. Trump, 47 years old, has been a
general partner of the Partnership and a 100% shareholder,
director, Chairman of the Board of Directors, President and
Treasurer of the Company, the managing general partner of the
Partnership. Prior to the consummation of the Offerings, Trump
was a 50% shareholder, director, Chairman of the Board of
Directors, President and Treasurer of TP/GP. Trump was President
and sole director of the Company from May 1986 to May 1992; and
Chairman of the executive committee and President of the
Partnership from May 1986 to May 1992. Trump has been Chairman
of the Board of Partner Representatives of Trump's Castle
Associates, the partnership that owns Trump's Castle ("TCA"),
since May 1992; and was Chairman of the executive committee of
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TCA, from June 1985 to May 1992. Trump was Chairman of the
executive committee of Trump Taj Mahal Associates, the
partnership that owns the Taj Mahal ("TTMA"), from June 1988 to
October 1991; and has been Chairman of the board of directors of
the managing general partner of TTMA since October 1991;
President and sole director of Trump Boardwalk since May 1986;
and President of the Trump Organization, which has been in the
business, through its affiliates and subsidiaries, of acquiring,
developing and managing real estate properties for more than the
past five years. Trump was a member of the board of directors of
Alexander's Inc. from 1987 to March 1992.
Nicholas L. Ribis - Mr. Ribis, 49 years old, has been the
Chief Executive Officer of the Partnership since February 1991
and a member of the Executive Committee of the Partnership from
April 1991 to May 29, 1992 and was a director and Vice President
of TP/GP from May 1992 until its merger into the Company in June
1993. Mr. Ribis serves as the Chairman of the Atlantic City
Casino Association. He has also been Chief Executive Officer of
TCA and TTMA since March 1991; member of the executive committee
of TCA from April 1991 to May 1992; member of the Board of
Partner Representatives of TCA since May 1992; member of the
executive committee of TTMA from April 1991 to October 1991; and
member of the board of directors of the managing general partner
of TTMA since October 1991. From January 1980 to January 1991,
Mr. Ribis was Senior Partner in, and since February 1991, is
Counsel to, the law firm of Ribis, Graham & Curtin, which serves
as New Jersey legal counsel to all of the above-named companies,
and certain of their affiliated entities, including the Company.
Kevin DeSanctis - Mr. DeSanctis, 41 years old, was
President of the Company from March 1991 until March 7, 1994 and
was Chief Financial Officer of the Company from May to July 1992.
Mr. DeSanctis was a director of TP/GP from May 29, 1992 until
TP/GP's merger into the Company in June 1993 and has been
President and Chief Operating Officer of the Partnership since
March 1991. From August 1989 to February 1991, Mr. DeSanctis
served as Vice President of Casino Operations of the Mirage Hotel
and Casino in Las Vegas, Nevada. Mr. DeSanctis previously served
as Vice President of Casino Operations of the Golden Nugget Hotel
and Casino from April 1989 to August 1989; Senior Vice President
of Casino Operations of Clark Management Company (d/b/a Dunes
Hotel/Casino) from January 1988 to April 1989; Senior Vice
President/Director of Casino Operations of the Aladdin Hotel &
Casino from March 1987 to November 1987; Vice President/Director
of Casino Operations of the Flamingo Hilton from January 1986 to
February 1987 and in various other positions within the Las Vegas
gaming industry prior thereto.
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William Velardo - Mr. Velardo, 39 years old, has been the
acting Chief Operating Officer of the Company since March 7, 1994
and, prior thereto, was Vice President of Casino Operations
of the Partnership since May 1991. Mr. Velardo served
as an Administrative Assistant of the Partnership from March 1991
until receiving licensure in the position of Vice President of
Casino Operations. From November 1989 to March 1991, Mr. Velardo
served as Casino Manager at the Mirage Hotel and Casino in Las
Vegas. Prior to his position at the Mirage, Mr. Velardo served
in a variety of casino management positions for over 13 years, 11
of which were with Caesars Palace and Caesars Tahoe.
Ernest E. East - Mr. East, 51 years old, was Secretary of
TP/GP from May 1992 until its merger into the Company in June
1993 and has been Secretary of the Company since July 1992;
Senior Vice President-Administrative and Corporate Affairs of the
Partnership since July 1991; and Senior Vice President-
Administrative and Corporate Affairs of TCA and TTMA since July
1991; member of the Board of Partner Representatives of TCA since
May 1992; member of the board of directors of the managing
general partner of TTMA since October 1991. Mr. East was
formerly the Vice President-General Counsel of the Del Webb
Corporation from January 1984 through June 1991.
Jay Kramer - Mr. Kramer, 76 years old, is an attorney and
labor relations specialist. Mr. Kramer was a Commissioner and
Chairman of the New York Sate Labor Relations Board from 1954
through 1976, under five governors. Mr. Kramer was a director of
TP/GP until its merger into the Company in June 1993 and has been
a director of the Company since June 1993. Mr. Kramer served as
a member of the Audit Committee of TTMA from July 1990 through
October 1991, and as a member of the Audit Committee of TCA and
the Partnership from August 1986 through May 1992. In 1981 and
1982, Mr. Kramer served as director, audit committee member and
sole stockholder of Claridge Management Corporation, an entity
formed to act as the managing general partner of Claridge Casino
pending the licensing of the owner of such casino by the CCC.
Mr. Kramer has been the impartial chairman (the automatic
arbitrator of all disputes) in many industries, including the
National Building Trade Congress, the fur industry, the
pharmaceuticals industry, the deep sea tanker industry, Three
Mile Island and numerous others.
Don M. Thomas - Mr. Thomas, 62 years old, has been the
Senior Vice President of Corporate Affairs of the Pepsi-Cola
Bottling Co. of New York since January 1985. Mr. Thomas was the
Acting Chairman, and a Commissioner, of the CRDA from 1985
through 1987, and a Commissioner of the CCC from 1980 through
1984. From 1974 through 1980, Mr. Thomas served as Vice
President, General Counsel of the National Urban League. From
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1966 through 1974, Mr. Thomas served in various capacities with
Chrysler Corporation rising to the level of President-Auto
Dealerships. Mr. Thomas was an attorney with American Airlines
from 1957 through 1966. Mr. Thomas was a director of TP/GP until
its merger into the Company in June 1993 and has been a director
of the Company since June 1993. Mr. Thomas is an attorney
licensed to practice law in the State of New York.
Mitchell G. Etess - Mr. Etess, 36 years old, has been
Senior Vice President of Marketing of the Partnership since
December 1991 and Advertising Manager and Public Relations
Manager of the Partnership's predecessor from December 1988 to
December 1991. From January 1988 to December 1988, Mr. Etess was
a vice president of the advertising agency of Gordon, Etess &
Associates in Pinehurst, North Carolina. Mr. Etess was General
Manager of the Holly Inn in Pinehurst, North Carolina from
November 1986 to November 1987; Associate Manager of Club Corp.
of America in Traverse City, Michigan from May 1986 to November
1986, and Manager of Grossinger's Hotel in New York from February
1985 to November 1985.
Francis X. McCarthy, Jr. - Mr. McCarthy, 41 years old, was
Vice President of Finance and Accounting of TP/GP from October
1992 until June 1993, the date of TP/GP's merger into the
Company, and has been Senior Vice President of Finance and
Administration of the Partnership since August 1990; Chief
Accounting Officer of the Company since May 1992; Vice President
and Chief Financial Officer of the Company since July 1992 and
Assistant Treasurer of the Company since March 1991. Mr.
McCarthy previously served in a variety of financial positions
for Greater-Bay Hotel and Casino, Inc. from June 1980 through
August 1990.
John P. Burke - Mr. Burke, 46 years old, has been
corporate treasurer of the Partnership since October 1991;
corporate treasurer of TCA since October 1991; Vice President of
The Trump Organization since September 1990; and member of the
board of directors of TTMA since October 1991. Mr. Burke was an
Executive Vice President and Chief Administrative Officer of
Imperial Corporation of America from April 1989 through September
1990. From May 1980 through April 1989, Mr. Burke was Executive
Vice President and Chief Financial Officer of Tamco Enterprises,
Inc.
Robert M. Pickus - Mr. Pickus, 38 years old, has been Vice
President and General Counsel of the Partnership since December
1993 and was Senior Vice President and General Counsel of TCA,
Secretary of Trump's Castle Funding, Inc. from June 1988 until
December 1993 and General Counsel of TCA from June 1985 to June
1988. Mr. Pickus was also Secretary of Trump's Castle Hotel &
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Casino, Inc., an entity beneficially owned by Trump, from October
1991 until December 1993.
Patricia M. Wild - Ms. Wild, 41 years old, was Assistant
Secretary of the Company and Vice President and General Counsel
of the Partnership from February 1991 until December 1993; Vice
President and General Counsel of the Company from July 1992 until
December 1993; and Associate General Counsel of the Partnership
from May 1989 through January 1991. From December 1986 to April
1989, Ms. Wild served as a Deputy Attorney General on the
Environmental Prosecutions Task Force of the New Jersey
Department of Law and Public Safety, Division of Criminal
Justice. From April 1983 to December 1986, Ms. Wild served as
Deputy Attorney General with the New Jersey Division of Gaming
Enforcement.
All of the persons listed above have been qualified or
licensed by the CCC.
The employees of the Partnership serve at the pleasure of
the Company, the managing general partner of the Partnership,
subject to any contractual rights contained in any employment
agreement. The officers of the Company serve at the pleasure of
the Board of Directors of the Company. The officers of Holding
Inc. serve at the pleasure of the board of directors of that
company.
Donald J. Trump, Nicholas L. Ribis and Ernest E. East
served as either executive officers and/or directors of TTMA and
its affiliated entities when such parties filed their petition
for reorganization under chapter 11 of the Bankruptcy Code on
July 17, 1991. The Second Amended Joint Plan of Reorganization
of such parties was confirmed on August 28, 1991, and was
declared effective on October 4, 1991. Donald J. Trump, Nicholas
L. Ribis, Ernest E. East and John P. Burke also served as
executive committee members, officers, and/or directors of TCA
and its affiliated entities, at the time such parties filed a
petition for reorganization under chapter 11 of the Bankruptcy
Code on March 9, 1992. The First Amended Joint Plan of
Reorganization of such parties was confirmed on May 5, 1992, and
declared effective on May 29, 1992. Donald J. Trump, Nicholas L.
Ribis, Ernest E. East and John P. Burke served as either
executive officers and/or directors of the Partnership and its
affiliated entities when such parties filed their petition for
reorganization under chapter 11 of the Bankruptcy Code in March
1992. The First Amended Joint Plan of Reorganization of such
parties was confirmed on April 30, 1992, and was declared
effective on May 29, 1992. Trump was a partner of Plaza
Operating Partners Ltd. when it filed a petition for
reorganization under chapter 11 of the Bankruptcy Code on
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November 2, 1992. The plan of reorganization for Plaza Operating
Partners Ltd. was confirmed on December 11, 1992 and declared
effective in January 1993. John P. Burke was Executive Vice
President and Chief Administrative Officer of Imperial
Corporation of America ("Imperial"), a thrift holding company
whose major subsidiary, Imperial Savings, was seized by the
Resolution Trust Corporation in February 1990. Subsequently, in
February 1990, Imperial filed a petition for reorganization under
chapter 11 of the Bankruptcy Code.
ITEM 11. EXECUTIVE COMPENSATION.
Compensation
Holding, the Company and the Partnership do not offer
their executive officers stock option or stock appreciation right
plans, long-term incentive plans or defined benefit pension
plans.
The following table sets forth compensation paid or
accrued during the years ended December 31, 1993, 1992 and 1991
to the Chief Executive Officer and each of the four most highly
compensated executive officers of the Partnership whose cash
compensation, including bonuses and deferred compensation,
exceeded $100,000 for the year ended December 31, 1993.
Executive Officers of the Company do not receive any additional
compensation for serving in such capacity. Compensation accrued
during one year and paid in another is recorded under the year of
accrual. Information relating to long-term compensation is
inapplicable and has therefore been omitted from the table.
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<TABLE>
<CAPTION>
Summary Compensation Table
Name and Other
Principal Annual All Other
Position Year Salary Bonus Compensation(1) Compensation(2)
- --------- ---- ------ ---- --------------- ---------------
<S> <C> <C> <C> <C> <C>
Nicholas L. Ribis(3) ..... 1993 $225,000 $250,000 $380,500 --
Chief Executive Officer 1992 300,000 300,000 256,000 --
1991 225,000 175,000 313,228 --
Kevin DeSanctis(4)........ 1993 559,753 178,000 118,000 $ 4,497
Chief Operating 1992 410,890 160,000 72,372 4,364
Officer 1991 314,153 100,000 -- 4,238
Francis X.McCarthy, Jr.... 1993 189,069 90,000 -- 3,781
Senior Vice President 1992 170,618 50,000 -- 1,651
Finance and Administration 1991 148,962 142 -- 738
William Velardo (5)....... 1993 187,607 75,000 -- 3,598
Vice President 1992 170,216 50,000 -- 3,405
of Casino Operations 1991 124,033 142 -- 2,295
Mitchell G. Etess......... 1993 171,964 75,000 -- 3,213
Senior Vice President 1992 153,765 50,000 -- 2,307
of Marketing 1991 129,631 142 -- 1,927
</TABLE>
- -----------
(1) Represents the dollar value of annual compensation not properly
categorized as salary or bonus, including amounts reimbursed for
income taxes and director's fees. Following SEC rules, perquisites
and other personal benefits are not included in this table if the
aggregate amount of that compensation is the lesser of either
$50,000 or 10% of the total of salary and bonus for that officer.
(2) Represents vested and unvested contributions made by the
Partnership under the Trump Plaza Hotel and Casino Retirement
Savings Plan. Funds accumulated for an employee, which consist of
a certain percentage of the employee's compensation plus
Partnership contributions equalling 50% of the participant's
contributions, are retained until termination of employment,
attainment of age 59 1/2 or financial hardship, at which time the
employee may withdraw his or her vested funds.
(3) Mr. Ribis devotes approximately one-third of his professional time
to the affairs of the Partnership. Mr. Ribis is also employed as
the chief executive officer of the Other Trump Casinos; his
compensation from the Other Trump Casinos is not included in the
table.
(4) Mr. DeSanctis resigned from all of his positions with the Company
on March 7, 1994.
(5) Mr. Velardo has been serving as acting Chief Operating Officer
since March 7, 1994.
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Employment Agreements
The Partnership has an employment agreement with Nicholas
L. Ribis pursuant to which Mr. Ribis acts as Chief Executive
Officer of the Partnership. The agreement, which expires in
September 1996, provides for an annual salary of $550,000. The
salary increases by ten percent for each of the second and third
years of the agreement. Upon execution of the employment
agreement, Mr. Ribis received a $250,000 signing bonus. In the
event the Partnership, or any entity which acquires substantially
all of the equity interests or assets of the Partnership,
proposes to engage in an offering of common shares to the public,
the Partnership and Mr. Ribis have agreed to negotiate new
compensation arrangements which shall include equity
participation for Mr. Ribis. Mr. Ribis is also chief executive
officer of TTMA and TCA, the partnerships that own the Other
Trump Casinos, and receives compensation from such entities for
such services. Mr. Ribis devotes approximately one-third of his
professional time to the affairs of the Partnership. All other
executive officers of the Partnership, except Messrs. East and
Burke, devote substantially all of their time to the business of
the Partnership.
The Partnership had an employment agreement with Kevin
DeSanctis, former President and Chief Operating Officer of Trump
Plaza. The agreement was terminated upon the resignation of Mr.
DeSanctis. Mr. DeSanctis received $205,000 of salary in 1994.
The Partnership has an employment agreement with Ernest E.
East, Esq., who is Senior Vice President of Administration and
Corporate Affairs of the Partnership. The agreement, which
expires in June 1995, provides for an annual salary of $100,000.
Mr. East also has similar employment agreements with each of TTMA
and TCA. Mr. East devotes approximately one-third of his
professional time to the affairs of the Partnership.
The Partnership had an employment agreement with
William Velardo, who until March 7, 1994 was the Vice President
of Casino Operations of the Partnership. That agreement expired
on March 12, 1994. The Partnership has not yet negotiated a
separate employment agreement with Mr. Velardo, who, as of March
7, 1994, has been the acting Chief Operating Officer of the
Company.
The Partnership has a severance agreement with Robert M.
Pickus, Esq., who is the Vice President/General Counsel of the
Partnership. The agreement provides that upon Mr. Pickus'
termination other than for cause (as defined in the agreement) or
loss of his casino key employee license from CCC, the Partnership
will pay Mr. Pickus a severance payment equal to the amount of
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his salary at its then current rate for a period of one year,
which is anticipated to be in excess of $150,000.
All of the above agreements provide for discretionary
bonuses and/or signing bonuses.
Compensation of Directors
Each director of the Company, receives an annual fee of
$50,000 and $2,000 per meeting attended, plus reasonable
out-of-pocket expenses incurred in attending any meeting of the
Board of Directors of the Company. Each director of TP/GP, other
than Trump, received an annual fee of $50,000 and $2,000 per
meeting attended, plus reasonable out-of-pocket expenses incurred
in attending any meeting of the board of directors of TP/GP. In
addition, each member of the TP/GP Audit Committee received a fee
of $1,500 for each meeting attended.
Upon consummation of the PIK Notes Offerings, all members
of the board of directors of Holding Inc., other than Trump,
received an annual fee of $50,000 and a fee of $2,000 per meeting
attended, plus reasonable out-of-pocket expenses incurred in
attending any meeting of the Board. Such fees were paid to
persons who also act as officers or employees of the Partnership.
Compensation Committee Interlocks and Insider Participation
Holding does not have a compensation committee and its
officers serve without separate compensation.
In general, the compensation of executive officers of the
Partnership is determined by the Board of Directors of the
Company, composed of Donald J. Trump, Nicholas L. Ribis, Jay
Kramer and Don M. Thomas. The compensation of Nicholas L. Ribis
and Kevin DeSanctis is set forth in their employment agreements
with the Partnership, pursuant to which the Partnership has
delegated the responsibility over certain matters, such as
bonuses, to Trump. See "Employment Agreements" above. No
officer or employee of Trump Plaza, other than Messrs. Ribis and
DeSanctis, who serve on the Board of Directors of the Company,
participated in the deliberations of the Board of Directors of
the Company concerning executive compensation. Executive
officers of the Company do not receive any additional
compensation for serving in such capacity.
The SEC requires issuers to disclose the existence of any
other corporation in which both (i) an executive officer of the
registrant serves on the board of directors and/or compensation
committee, and (ii) a director of the registrant serves as an
executive officer. Messrs. Ribis, East and Burke, executive
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officers of the Partnership, have served on the board of
directors of other entities in which members of the Board of
Directors of the Company and TP/GP (namely, Messrs. Trump and
Ribis) served and continue to serve as executive officers.
Management believes that such relationships have not affected the
compensation decisions made by the Board of Directors of the
Company and TP/GP in the last fiscal year.
Messrs. Ribis, East and Burke serve on the board of
directors of Taj Mahal Holding Corp., which holds an indirect
equity interest in TTMA, the partnership that owns the Taj Mahal,
of which Messrs. Trump and Ribis are executive officers. Such
persons also serve on the board of directors of TM/GP Corporation
(a subsidiary of Taj Mahal Holding Corp.), the managing general
partner of TTMA, of which Messrs. Trump and Ribis are executive
officers. Mr. Ribis is compensated by TTMA for his services as
its chief executive officer; Mr. East is compensated by TTMA for
his services as its vice president.
Mr. Ribis also serves on the board of directors of Trump
Taj Mahal Realty Corp. ("Taj Realty Corp."), which leases certain
real property to TTMA, of which Trump is an executive officer.
Trump, however, does not receive any compensation for serving as
an executive officer of Taj Realty Corp. Mr. East also serves on
the Board of Partner Representatives of TCA, the partnership that
owns Trump's Castle, of which Messrs. Trump and Ribis are
executive officers. Mr. Ribis receives compensation from TCA for
acting as its chief executive officer.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN
BENEFICIAL OWNERS AND MANAGEMENT.
Trump has owned 100% of the Common Stock since June 25,
1993. Trump has sole voting and investment power regarding the
Common Stock owned by him.
In connection with the PIK Note Offering which was
consummated on June 25, 1993, TP/GP was merged with and into the
Company, and the Company became the managing general partner of
the Partnership. Trump contributed his interest in the
Partnership to Holding, which is beneficially-owned by Trump.
Since such date, the Company and Holding have been the sole
partners in the Partnership.
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ITEM 13. CERTAIN RELATIONSHIPS
AND RELATED TRANSACTIONS.
Although the Partnership has not fully considered all of
the areas in which it intends to engage in transactions with
affiliates of the partners, it is free to do so, subject to
certain restrictions. Payments to affiliates in connection with
any such transactions are governed by the provisions of the
Mortgage Note Indenture and the PIK Note Indenture which
generally require that such transactions be on terms as favorable
to the Partnership as would be obtainable from an unaffiliated
party, and requires the approval of a majority of the Independent
Directors of the Company for certain affiliated transactions.
The Partnership has engaged in some limited intercompany
transactions with TCA and TTMA. The Partnership utilized TCA's
print shop operations (until it closed in February 1991) and
utilized its fleet maintenance and limousine services until April
1991. The Partnership paid TCA approximately $317,000 in 1991
and paid to TTMA approximately $1,000, $242,000 and $0 in 1993,
1992 and 1991, respectively, for fleet maintenance and limousine
services. In the future the Partnership may be required to make
payments to TTMA for the continued use of its limousine bays.
Payments made by the Partnership to TCA for services provided by
its print shop approximated $4,000 in 1991. The Partnership also
has joint property insurance coverage with TCA and TTMA for which
the annual premium paid by the Partnership was $251,000 for the
twelve months ended May 1993.
The Partnership also leases from TTMA certain office
facilities located in Pleasantville, New Jersey. In 1993, 1992
and 1991, lease payments by the Partnership to TTMA totalled
approximately $30,000, $138,000 and $98,000, respectively, and to
TCA (the former owner of such facility) totalled approximately
$42,000 in 1991. In 1990, lease payments for such leases to TCA
totalled approximately $135,000. Such lease terminated on March
19, 1993, and the Partnership vacated the premises. Through
February 1, 1993, the Partnership also leased from Trump
approximately 120 parking spaces at the Penthouse Site for
approximately $5.50 per parking space per day, with payments
under such arrangement for the year ended December 31, 1993 and
December 31, 1992 totalling $21,000 and $227,000 respectively.
The Partnership also leased portions of its warehouse
facility located in Egg Harbor Township, New Jersey to TTMA until
1991. Lease payments by TTMA to the Partnership totalled $46,000
and $23,000 in 1991 and 1990, respectively. The Partnership also
leased such warehouse to TCA until January 31, 1994; lease
payments by TCA to the Partnership totalled $15,000, $14,000, and
$18,000 in 1993, 1992 and 1991, respectively.
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Until January 1991, Helicopter Air Services, Inc. (d/b/a
Trump Air) ("Trump Air"), a Delaware corporation wholly-owned by
Trump, provided regularly scheduled helicopter services to the
public between New York City and Atlantic City. In addition, the
Partnership provided complimentary carriage to certain patrons of
Trump Plaza on an Aerospatiale Super Puma helicopter that was
operated by Trump Air and owned by another corporation that is
wholly-owned by Trump. Trump Air was reimbursed by the
Partnership for its actual costs and expenses incurred in
rendering helicopter services provided by the Super Puma. All
other helicopter services provided by Trump Air to patrons of
Trump Plaza were paid for by the Partnership at Trump Air's
prevailing ticket rates. In 1990, the Partnership paid Trump Air
approximately $231,000 for air services provided to patrons of
Trump Plaza.
Trump and Trump Boardwalk collectively own 100% of the
interests in Seashore Four. Seashore Four is the fee owner of a
parcel of land constituting a portion of the Casino Parcel, which
it leases to the Partnership pursuant to the SFA Lease, a
long-term, triple-net lease. Seashore Four was assigned the
lessor's interest in the existing SFA Lease in connection with
its acquisition of fee title to such parcel from a non-affiliated
third party in November 1983. The SFA Lease was entered into by
the Partnership with such third party on an arm's-length basis.
The Partnership recorded rental expenses of approximately
$900,000, $900,000 and $900,000 in 1993, 1992 and 1991,
respectively, concerning rent owed to Seashore Four.
Trump and Trump Seashore Associates, Inc. collectively own
100% of the interests in Trump Seashore Associates ("Trump
Seashore"). Trump Seashore is the fee owner of a parcel of land
constituting a portion of the Casino Parcel, which it leases to
the Partnership pursuant to the Trump Seashore Lease, a
long-term, triple-net lease. In July 1988, Trump Seashore
exercised a $10 million option to purchase the fee title to such
parcel from a non-affiliated third party. In connection
therewith, Trump Seashore was assigned the lessors' interest in
the Trump Seashore Lease, which interest has, however, been
transferred to UST. See "Properties." The Partnership paid
rental payments to Trump Seashore of approximately $1.0 million,
$1.0 million and $1.1 million in 1993, 1992 and 1991,
respectively.
The Partnership has separately agreed to reimburse Trump
for any payments which he may make under (i) a note (the
"Harrah's Note") for which Trump and the Partnership are
co-makers and which constitutes part of the redemption price for
Harrah's Atlantic City, Inc.'s ("HAC") prior interests in the
Partnership and Seashore Four, which were redeemed in 1986,
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pursuant to a Redemption Agreement dated as of March 11, 1986;
and (ii) his or Trump Boardwalk's indemnity of HAC under the
Redemption Agreement, insofar as it relates to the Partnership.
Trump and Trump Boardwalk have agreed to assign to the
Partnership any payment either receives pursuant to HAC's and The
Promus Companies Incorporated's (HAC's parent corporation)
indemnity, insofar as it relates to the Partnership. The
Harrah's Note was repaid on May 16, 1993.
Prior to the consummation of the Offerings, the board of
directors of TP/GP authorized the Partnership to lease, on a per
diem basis, certain real property in Florida owned by Trump,
known as "Mar-a-lago," to entertain certain patrons of Trump
Plaza. To date, the Partnership has not leased Mar-a-lago, and
the Partnership currently has no specific plans to lease
Mar-a-lago in the future; nevertheless, the Partnership may enter
into such arrangements in the future.
In May of 1991, the Partnership entered into a lease with
Atlantic City Explorers Club of which Hugh B. McCluskey, a former
partner of the law firm of Ribis, Graham & Curtin, is President,
whereby the Partnership leased certain property in Atlantic City
for $60,000.00 per annum. Nicholas L. Ribis, the Chief Executive
Officer of the Partnership, is Of Counsel to such law firm. The
lease was terminated in January 1993.
Trump Regency. In June 1989, Trump Crystal Tower
Associates Limited Partnership, a New Jersey limited partnership
wholly-owned by Trump, acquired from Elsinore Shore Associates
all of the assets constituting the former Atlantis casino hotel,
which is located on The Boardwalk adjacent to the Atlantic City
Convention Center on the opposite side from Trump Plaza. Prior
to such acquisition, all of the Atlantis' gaming operations were
discontinued. The facility was renamed the Trump Regency Hotel
and leased to the Partnership, which operated it solely as a
non-casino hotel. As part of the Restructuring, the lease was
terminated and the Partnership issued to Chemical Bank
("Chemical"), the assignee of rents payable under such lease, a
promissory note in the original principal amount of $17.5 million
(the "Regency Note"). At such time, title to the Trump Regency
was transferred by Trump to ACFH Inc. ("ACFH"), a wholly owned
subsidiary of Chemical. Since that time, the Trump Regency has
been operated by ACFH as a non-casino hotel. The Partnership
repaid the Regency Note with a portion of the proceeds of the
Offerings.
In December 1993, Trump entered into an option agreement
(the "Chemical Option Agreement") with Chemical and ACFH. The
Chemical Option Agreement grants to Trump an option to purchase
(i) the Trump Regency (including the land, improvements and
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personal property used in the operation of the hotel) and (ii)
certain promissory notes made by Trump and/or certain of his
affiliates and payable to Chemical (the "Chemical Notes") which
are secured by certain real estate assets located in New York,
unrelated to Trump Plaza. As of December 31, 1993, the aggregate
amount owed by Trump and his affiliates under the Chemical Notes
(none of which constitutes an obligation of Plaza Associates) was
approximately $65 million.
The aggregate purchase price payable for the assets
subject to the Chemical Option Agreement is $80 million. Under
the terms of the Chemical Option Agreement, $1 million was
required to be paid for the option by January 5, 1994. The
option expires on May 6, 1994, provided that the option may be
extended until June 30, 1994 by the payment of an additional
$250,000 on or before that date. The $1 million payment (and the
$250,000 payment, if made) may be credited against the $80
million purchase price. The Chemical Option Agreement does not
allocate the purchase price among the assets subject to the
option or permit the option to be exercised for some, but not
all, of such assets.
In connection with the execution of the Chemical Option
Agreement, Trump agreed with the Partnership that, if Trump is
able to acquire the Trump Regency pursuant to the exercise of the
option, he would make the Trump Regency available for the sole
benefit of the Partnership on a basis consistent with the
Partnership's contractual obligations and requirements. Trump
further agreed that Trump Plaza would not be required to pay any
additional consideration to Trump in connection with any
assignment of the option to purchase the Trump Regency to the
Partnership. In consideration of the foregoing agreements, the
Partnership agreed to make the $1 million option payment to
Chemical (subject to refund by Trump if the option is terminated
as a result of certain specified events). On January 5, 1994,
the Partnership obtained the approval of the CCC to make the $1
million payment, and the payment was made on that date.
Boardwalk Expansion Site. On February 2, 1993, the
Partnership acquired the Option from Trump to enter into a
long-term lease of the Boardwalk Expansion Site, on which the
partially constructed Penthouse Hotel is located. See
"Management's Discussion and Analysis of Financial Condition and
Results of Operations - Liquidity and Capital Resources."
The portion of the Boardwalk Expansion Site owned by Trump
(which constitutes substantially all of the Boardwalk Expansion
Site) is encumbered by a mortgage securing a loan with a balance
of approximately $52.0 million of principal and accrued interest.
In June 1993 Trump and the lender which holds such mortgage
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<PAGE>
negotiated the terms of a restructuring of such loan. In
connection with such restructuring Trump transferred title to the
property to such lender, on the date the Offerings are
consummated, entered into the Boardwalk Expansion Site Lease.
The Boardwalk Expansion Site Lease has a term of five years
during which time Trump will be obligated to pay the lender
$260,000 per month in lease payments. In October 1993, the
Partnership assumed the Boardwalk Expansion Site Lease and the
obligation to make some or all of the payments thereunder subject
to certain limitations, including regulatory approval and the
satisfaction of the conditions set forth in the Mortgage Note
Indenture and the PIK Note Indenture. See "Management's
Discussion and Analysis of Financial Condition and Results of
Operation -- Liquidity and Capital Resources." In connection
with the Offerings, the Partnership acquired the Option to
purchase the Boardwalk Expansion Site. Until such time as the
Option is exercised or expires, the Partnership will be obligated
to pay the net expenses associated with the Boardwalk Expansion
Site. See "Management's Discussion and Analysis of Financial
Condition and Results of Operation -- Liquidity and Capital
Resources."
Under the Option, the Partnership has the right to
purchase the Boardwalk Expansion Site for a purchase price of
$26.0 million through 1994, increasing by $1.0 million annually
thereafter until 1998, in consideration of which the Partnership
will pay certain expenses of the Boardwalk Expansion Site,
including annual lease payments for the portion of the Boardwalk
Expansion Site currently leased by Trump from a third party,
which lease payments were $86,058 for 1993 and $83,500 for 1992
and increase annually based on the consumer price index, as well
as current real estate taxes (approximately $1.2 million per year
based upon current assessed valuation). See "Management's
Discussion and Analysis of Financial Condition and Results of
Operation -- Liquidity and Capital Resources." Acquisition of
the Boardwalk Expansion Site by the Partnership would under
certain circumstances (provided there are no events of default
under the Boardwalk Expansion Site Lease or the Option and
provided that certain other events had not theretofore or do not
thereafter occur) discharge Trump's obligation to such lender in
full. Management believes that the Boardwalk Expansion Site will
be useful to the operation of Trump Plaza as the site of the
future expansion of the Partnership's hotel operations. See
"Management's Discussion and Analysis of Financial Condition and
Results of Operations -- Liquidity and Capital Resources" and
"Business -- Possible Expansion Sites."
-64-
<PAGE>
Services Agreement
On June 24, 1993, The Partnership and Trump Plaza
Management Corp. ("TPM") entered into an Amended and Restated
Services agreement (the "Services Agreement") pursuant to which
TPM is required to provide to the Partnership, from time to time
when reasonably requested, consulting services on a non-exclusive
basis, relating to marketing, advertising, promotional and other
similar and related services (the "Services") with respect to the
business and operations of the Partnership. In addition, the
Services Agreement contains a non-exclusive "license" of the
"Trump" name. TPM is not required to devote any prescribed
amount of time to the performance of its duties. In
consideration for the Services, the Partnership pays TPM an
annual fee of $1.0 million in equal monthly installments. In
addition to such annual fee, the Partnership reimburses TPM on a
monthly basis for all reasonable out-of-pocket expenses incurred
by TPM in performing its obligations under the Services
Agreement. The Partnership paid TPM $1,247,000 and $708,000 in
1993 and 1992, respectively, for the Services. Pursuant to the
Services Agreement, the Partnership will agree to hold TPM, its
officers, directors and employees harmless from and against any
loss arising out of or in connection with the performance of the
Services and to hold Trump harmless from and against any loss
arising out of the license of the "Trump" name.
Indemnification Agreements
The directors of the Company and the directors of TP/GP
(other than Trump) serving prior to the Offerings have entered
into separate indemnification agreements with the Partnership
pursuant to which such persons are afforded the full benefits of
the indemnification provisions of the Partnership Agreement. The
Partnership has also entered into an Indemnification Trust
Agreement with an Indemnification Trustee (the "Trust Agreement")
pursuant to which the sum $100,000 has been deposited by the
Partnership with the Indemnification Trustee for the benefit of
the directors of the Company and the Class B Directors of TP/GP
serving prior to the Offerings to provide a source for
indemnification for such persons if the Partnership, the Company
or TP/GP, as the case may be, fails to immediately honor a demand
for indemnification by such persons. The Trust Agreement also
provides that the directors of the Company and TP/GP (other than
Trump) serving prior to the Offerings, under certain
circumstances, are entitled to request that the lender under the
Working Capital Facility deposit funds with the Indemnification
Trustee for distribution to such persons in the event that they
are entitled to indemnification for the Company, the Partnership
or TP/GP and such indemnity is not provided. Not more than
$200,000 per director (or an aggregate of $1.0 million) may be
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<PAGE>
drawn down for such purpose; the Partnership is obligated to
repay all such amounts. In connection with the Offerings, the
Indemnification Agreements with the directors of the Company and
the Class B Directors of TP/GP were amended to provide that (i)
the Working Capital Facility would not be terminated or amended
in a manner adverse to such directors unless prior thereto there
is deposited an additional aggregate amount of $600,000 in the
Indemnification Trust Fund for the benefit of such directors, and
(ii) the Partnership would maintain directors' and officers'
insurance covering such persons during the term of the
Indemnification Agreements; provided, however, that if such
insurance would not be available on a commercially practicable
basis, the Partnership could, in lieu of obtaining such
insurance, annually deposit an amount in the Indemnification
Trust Fund equal to $500,000 for the benefit of such directors;
provided, further, that deposits relating to the failure to
obtain such insurance shall not exceed $2.5 million. Since the
Working Capital Facility was terminated upon consummation of the
Offerings, the Partnership deposited $600,000 in the
Indemnification Trust Fund in June 1993.
-66-
<PAGE>
PART IV
ITEM 14. EXHIBITS, FINANCIAL STATEMENT
SCHEDULES, AND REPORTS ON FORM 8-K.
(a) Financial Statements. See the Index immediately
following the signature page.
(b) Reports on Form 8-K. The Registrant did not file any
reports on Form 8-K during the last quarter of the
year ended December 31, 1993.
(c) Exhibits.
-67-
<PAGE>
Exhibit No. Exhibit
- ----------- -------
3.1 Amended and Restated Certificate of Incorporation
of the Company. (1)
3.1.1 Form of Second Amended and Restated Certificate
of Incorporation of the Company. (8)
3.2 Amended and Restated By-Laws of the Company. (1)
3.3 Amended and Restated Certificate of Incorporation
of TP/GP. (1)
3.4 Amended and Restated By-Laws of TP/GP. (1)
3.5 Certificate of Incorporation of Holding Inc. (8)
3.6 By-Laws of Holding. (8)
3.7 Second Amended and Restated Partnership Agreement
of the Partnership. (9)
3.8 Partnership Agreement of Holding. (8)
3.8.1 Amendment No. 1 to the Partnership Agreement of
Holding. (8)
3.9 Agreement and Plan of Merger between TP/GP and
the Company. (8)
4.1 Mortgage Note Indenture, among the Company, as
issuer, the Partnership, as guarantor, and the
Mortgage Note Trustee, as trustee. (9)
4.2 Indenture of Mortgage, between the Partnership,
as Mortgagor, and the Company, as Mortgagee. (9)
4.3 Assignment Agreement between the Company and the
Mortgage Note Trustee. (9)
4.4 Assignment of Operating Assets from the
Partnership to the Company. (9)
4.5 Assignment of Leases and Rents from the
Partnership to the Company. (9)
4.6 Indenture of Mortgage between the Partnership and
the Mortgage Note Trustee (the Guarantee
Mortgage). (9)
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<PAGE>
4.7 Assignment of Leases and Rents from the
Partnership to the Mortgage Note Trustee. (9)
4.8 Assignment of Operating Assets from the
Partnership to the Mortgage Note Trustee. (9)
4.9 Partnership Note. (9)
4.10 Mortgage Note (included in Exhibit 4.1). (9)
4.11 Pledge Agreement of the Company in favor and for
the benefit of the Trustee. (9)
4.12 Indenture between Holding, as Issuer, and the PIK
Note Trustee, as trustee. (9)
4.13 PIK Note (included in Exhibit 4.12). (9)
4.14 Warrant Agreement. (8)
4.15 Warrant (included in Exhibit 4.14). (8)
4.16 Pledge Agreement of Holding in favor and for the
benefit of the PIK Note Trustee. (8)
10.10 Agreement of Lease, dated as of July 1, 1980, by
and between SSG Enterprises, as Lessor and
Atlantic City Seashore 2, Inc., as Lessee, as SSG
Enterprises' interest has been assigned to
Seashore Four, and as Atlantic City Seashore 2,
Inc.'s interest has been, through various
assignments, assigned to the Partnership (with
schedules). (4)
10.11 Agreement of Lease, dated July 11, 1980, by and
between Plaza Hotel Management Company, as
Lessor, and Atlantic City Seashore 3, Inc., as
Lessee, as Atlantic City Seashore 3, Inc.'s
interest has been, through various assignments,
assigned to the Partnership (with schedules). (4)
10.12 Agreement of Lease, dated as of July 1, 1980, by
and between Magnum Associates and Magnum
Associates II, as Lessor and Atlantic City
Seashore 1, Inc., as Lessee, as Atlantic City
Seashore 1, Inc.'s interest has been, through
various assignments, assigned to the Partnership
(with schedules). (4)
10.13-10.15 Intentionally omitted.
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<PAGE>
10.16 Trump Plaza Hotel and Casino Retirement Savings
Plan effective as of November 1, 1986. (2)
10.17-10.20 Intentionally omitted.
10.21 Assignment of Lease, dated as of July 28, 1988,
by and between Magnum Associates and Magnum
Associates II, as assignor, Trump Seashore
Associates, as assignee, and Trump Plaza
Associates, as lessee. (5)
10.22-10.23 Intentionally omitted.
10.24 Employment Agreement, dated January 28, 1991,
between the Partnership and Kevin DeSanctis. (5)
10.24.1 Amendment to Employment Agreement, dated August
6, 1992, between the Partnership and Kevin
DeSanctis. (7)
10.25 Intentionally omitted.
10.26 Employment Agreement, dated as of June 1, 1992
between the Partnership and Ernest E. East. (1)
10.27 Employment Agreement, dated as of March 13, 1991
between the Partnership and William Velardo. (3)
10.28 Option Agreement, dated as of February 2, 1993
between Trump and the Partnership. (3)
10.29 Appraisal of Trump Plaza by Appraisal Group
International, dated March 5, 1993. (8)
10.30 Amended and Restated Services Agreement between
the Partnership and Trump. (6)
10.31 Working Capital Facility between the Partnership
and Belmont Fund, L.P. (1)
10.31.1 Mortgage and Security Agreement of the
Partnership in favor of Belmont Fund, L.P. (8)
10.31.2 Assignment of Rents and Leases: by the
Partnership to Belmont Fund L.P., dated May 29,
1992. (8)
10.31.3 Assignment of Operating Assets: by the
Partnership to Belmont Fund L.P., dated May 29,
1992. (8)
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<PAGE>
10.32.1 Mortgage: from Donald J. Trump, Nominee to
Emil F. Aysseh, Trustee dated January 12, 1983.
(8)
10.32.2 Mortgage: from Donald J. Trump, Nominee to
Emil F. Aysseh, Trustee dated June 23, 1983. (8)
10.32.3 Mortgage Consolidation, Modification, and
Extension Agreement: dated June 23, 1983. (8)
10.32.4 Partial Assignment of Mortgage: (1/3 interest) by
Alfred Aysseh to New Canaan Bank Trust Company.
(8)
10.32.5 Partial Assignment of Mortgage: (1/3 interest) by
New Canaan Bank and Trust Company to Alfred
Aysseh. (8)
10.32.6 Assignment of Mortgage: Emil F. Aysseh, Trustee
to Community National Bank and Trust Company of
New York. (8)
10.32.7 Mortgage Note and Mortgage Modification
Agreement: by and between Emil F. Aysseh,
Trustee and Donald J. Trump, Nominee dated
January 10, 1992. (8)
10.33 Mortgage: from Donald J. Trump, Nominee to
Albert Rothenberg and Robert Rothenberg, dated
October 3, 1983. (8)
10.34 Mortgage: made by Harrah's Associates to Adeline
Bordonaro, dated January 28, 1986. (8)
10.35 Mortgage: made by the Partnership to The Mutual
Benefit Life Insurance Company, dated October 5,
1990. (8)
10.35.1 Collateral Assignment of Leases: made by the
Partnership to The Mutual Benefit Life Insurance
Company, dated October 5, 1990. (8)
10.36 Form of Option between the Partnership and
Midlantic Bank. (9)
10.37 Form of Lease between Trump and Midlantic Bank.
(8)
10.38 Employment Agreement between the Partnership and
Nicholas L. Ribis.
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<PAGE>
10.39 Severance Agreement between the Parnership and
Robert M. Pickus.
25 Power of Attorney of directors and certain
officers of the Company (included in signature
page). (8)
- ------------
(1) Incorporated herein by reference to the Exhibit to
the Company's Quarterly Report on Form 10-Q for the
quarter ended June 30, 1992.
(2) Incorporated herein by reference to the identically
numbered Exhibit in the Company's Annual Report on
Form 10-K for the year ended December 31, 1986.
(3) Incorporated herein by reference to the identically
numbered Exhibit in the Company's Annual Report on
Form 10-K for the year ended December 31, 1992.
(4) Incorporated herein by reference to the identically
numbered Exhibit in the Company's Registration
Statement on Form S-1, Registration No. 33-4604,
declared effective on May 9, 1986.
(5) Incorporated herein by reference to the identically
numbered Exhibit in the Company's Annual Report on
Form 10-K for the fiscal year ended December 31,
1990.
(6) Previously filed in Holding's Registration Statement
on Form S-1, Registration No. 33-58608.
(7) Incorporated herein by reference to the Exhibit to
the Company's Quarterly Report on Form 10-Q for the
quarter ended September 30, 1992.
(8) Incorporated herein by reference to the identically
numbered Exhibit in the Company's and the
Partnership's Registration Statement on Form S-1,
Registration No. 33-58602.
(9) Incorporated herein by reference to the identically
numbered Exhibit in Holding's Registration Statement
on Form S-1, Registration No. 33-58608.
(d) Financial Statement Schedules. See the Index
immediately following the signature page.
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<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange
Act of 1934, as amended, the Company and registrants have duly
caused this report to be signed on their behalf by the
undersigned, thereunto duly authorized, in the City of New York,
State of New York, on the 30th day of March, 1994.
TRUMP PLAZA HOLDING ASSOCIATES
By: Trump Plaza Holding, Inc.
Its Managing General Partner
-----------------------
By: Donald J. Trump
Title: President
TRUMP PLAZA FUNDING, INC.
------------------------
By: Donald J. Trump
Title: President
Pursuant to the requirements of the Securities Exchange
Act of 1934, as amended, this Report has been signed below by the
following persons on behalf of the registrants and in the
capacities and on the dates indicated.
Signature Title Date
--------- ----- ----
TRUMP PLAZA FUNDING, INC.
By:
- ------------------------
Donald J. Trump Principal Executive March 30, 1994
Officer
By:
- ------------------------
Francis X. McCarthy Jr. Principal Financial March 30, 1994
and Accounting Officer
By:
- ------------------------
Donald J. Trump Director March 30, 1994
<PAGE>
By:
- ------------------------
Nicholas L. Ribis Director March 30, 1994
By:
- ------------------------
Jay Kramer Director March 30, 1994
By:
- ------------------------
Don M. Thomas Director March 30, 1994
TRUMP PLAZA HOLDING ASSOCIATES
By: Trump Plaza Holding, Inc.
its Managing General Partner
By:
- ------------------------
Donald J. Trump Chief Executive Officer March 30, 1994
By:
- ------------------------
Francis X. McCarthy Jr. Principal Financial March 30, 1994
and Accounting Officer
By:
- ------------------------
Donald J. Trump Director March 30, 1994
By:
- ------------------------
Nicholas L. Ribis Director March 30, 1994
By:
- ------------------------
Ernest E. East Director March 30, 1994
By:
- ------------------------
Jay Kramer Director March 30, 1994
By:
- ------------------------
Don M. Thomas Director March 30, 1994
<PAGE>
INDEX TO FINANCIAL STATEMENTS
Reports of Independent Public Accountants......... F-2
Balance Sheets of Trump Plaza Funding, Inc.
as of December 31, 1993 and 1992................ F-3
Statements of Income of Trump Plaza Funding,
Inc. for the years ended December 31, 1993,
1992 and 1991................................... F-4
Statements of Capital of Trump Plaza Funding,
Inc. for the Years Ended December 31, 1993,
1992 and 1991................................... F-5
Statements of Cash Flows of Trump Plaza Funding,
Inc. for the Years Ended December 31, 1993,
1992 and 1991................................... F-6
Report of Independent Public Accountants. F-7
Consolidated Balance Sheets of Trump Plaza Holding
Associates and Trump Plaza Associates as of
December 31, 1993 and 1992...................... F-8
Consolidated Statements of Operations of Trump Plaza
Holding Associates and Trump Plaza Associates
for the Years Ended December 31, 1993, 1992 and 1991. F-9
Consolidated Statements of Capital (Deficit) of Trump
Plaza Holding Associates and Trump Plaza
Associates for the Years Ended December 31, 1993,
1992 and 1991........................................ F-10
Consolidated Statements of Cash Flows of Trump Plaza
Holding Associates and Trump Plaza Associates
for the Years Ended December 31, 1993, 1992 and 1991. F-11
Notes to Financial Statements of Trump Plaza
Funding, Inc., Trump Plaza Holding Associates
and Trump Plaza Associates.......................... F-13
Schedule
II Amounts Receivable (Payable) From (To)
Related Parties, Underwriters, Promoters,
and Employees other than Related Parties.......... F-22
V Property and Equipment............................ F-23
<PAGE>
VI Accumulated Depreciation and
Amortization of Property and Equipment.......... F-24
VIII Valuation and Qualifying Accounts............... F-25
X Supplementary Income Statement Information...... F-26
Other Schedules are omitted for the reason that they are
not required or are not applicable, or the required information
is shown in the consolidated financial statements or notes
thereto
<PAGE>
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
To Trump Plaza Funding, Inc.:
We have audited the accompanying balance sheets of Trump Plaza Funding, Inc. (a
New Jersey corporation) as of December 31, 1993 and 1992, and the related
statements of income and retained earnings and cash flows for each of the three
years in the period ended December 31, 1993. These financial statements are the
responsibility of the Company's management. Our responsibility is to express an
opinion on these financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of Trump Plaza Funding, Inc. as of
December 31, 1993 and 1992, and the results of its operations and its cash flows
for each of the three years in the period ended December 31, 1993, in conformity
with generally accepted accounting principles.
ARTHUR ANDERSEN & CO.
Roseland, New Jersey
February 18, 1994
F-2
<PAGE>
TRUMP PLAZA FUNDING, INC.
BALANCE SHEETS
DECEMBER 31, 1993 AND 1992
ASSETS
DECEMBER 31, DECEMBER 31,
1993 1992
----------- -----------
CURRENT ASSETS:
Cash $ 2,000 $ 2,000
Mortgage Interest Receivable 1,495,000 7,950,000
Receivable From Partnership 974,000 4,228,000
----------- -----------
Total current assets 2,471,000 12,180,000
Mortgage Note Receivable 325,859,000 225,000,000
Receivable From Partnership 2,949,000 -
Investment in Preferred Partnership
Interest - 58,092,000
----------- -----------
Total assets $331,279,000 $295,272,000
=========== ===========
LIABILITIES AND CAPITAL
CURRENT LIABILITIES:
Accrued Interest Payable $ 1,495,000 $ 7,950,000
Income Taxes Payable 974,000 2,086,000
Dividends Payable - 2,026,000
----------- ----------
Total current liabilities 2,469,000 12,062,000
10 7/8% Mortgage Bonds, net of discount
due 2001 (Notes 1, 2 and 4) 325,859,000 -
12% Mortgage Bonds,
due 2002 (Notes 1, 2 and 4) - 225,000,000
Deferred Income Taxes Payable 2,949,000 116,000
----------- -----------
Total liabilities 331,277,000 237,178,000
----------- -----------
Commitments and Contingencies (Note 7)
Preferred Stock, 3,600,893 authorized,
2,999,580 issued and outstanding in 1992 - 58,092,000
Common Stock, $.00001 par value 3,600,893
authorized, 2,999,580 issued and
outstanding in 1992 - -
Common Stock, $.01 par value, 1,000 shares
authorized, 100 shares issued and outstanding,
at December 31, 1993 and none in 1992 - -
Additional Paid in Capital 2,000 2,000
Retained Earnings - -
----------- -----------
Total liabilities and capital $331,279,000 $295,272,000
=========== ===========
The accompanying notes to financial statements are an
integral part of these balance sheets.
F-3
<PAGE>
TRUMP PLAZA FUNDING, INC.
STATEMENTS OF INCOME
FOR THE YEARS ENDED DECEMBER 31, 1993, 1992 AND 1991
1993 1992 1991
----------- ---------- -----------
Interest Income From Partnership $ 32,642,000 $ 27,720,000 $ 30,444,000
Preferred Partnership Investment
Income 3,993,000 4,468,000 -
Reimbursement for Income Taxes 1,802,000 2,202,000 -
Interest Expense (32,642,000) (27,720,000) (30,444,000)
Directors' Fees and Related
Expenses (497,000) (224,000) -
----------- ----------- ------------
Income Before Provision for Taxes 5,298,000 6,446,000 -
Provision for Income Taxes 1,802,000 2,202,000 -
----------- ----------- ------------
Net Income $ 3,496,000 $ 4,244,000 $ -
=========== =========== ===========
The accompanying notes to financial statements are an
integral part of these statements.
F-4
<PAGE>
TRUMP PLAZA FUNDING, INC.
STATEMENTS OF CAPITAL
FOR THE YEARS ENDED DECEMBER 31, 1993, 1992 AND 1991
Common Stock
------------
Additional
Number of Paid In Retained
Shares Amount Capital Earnings Total
--------- -------- ---------- ------------ ----------
Balance,
December 31, 1993 200 $ 2,000 $ - $ - $ 2,000
Net Income - - - - -
--------- -------- --------- ----------- ---------
Balance,
December 31, 1991 200 2,000 - - 2,000
Net Income - - - 4,244,000 4,244,000
Accrued dividends on
preferred stock - - - (4,126,000) (4,126,000)
Preferred Stock
Accretion - - - (342,000) (342,000)
Capital contribution
from Partnership - - - 224,000 224,000
Redemption of stock
units upon
consummation of
offering, effective
May 29, 1992 (200) (2,000) - - (2,000)
Issuance of stock
upon consummation
of offering
effective
May 29, 1992 2,999,580 - 2,000 - 2,000
--------- ------- ---------- --------- ----------
Balance,
December 31, 1992 2,999,580 - 2,000 - 2,000
Net Income - - - 3,496,000 3,496,000
Accrued dividends
on preferred
stock - - - (3,678,000) (3,678,000)
Preferred stock
accretion - - - (315,000) (315,000)
Capital contribution
from Partnership - - 40,000,000 497,000 40,497,000
Capital contribution
from Donald J. Trump - - 35,000,000 - 35,000,000
Redemption
of Preferred Stock - - (75,000,000) - 75,000,000)
Redemption of
Stock Units upon
consummation of
offering,
effective
June 25, 1993 (2,999,580) - - - -
Issuance of stock
upon consummation
of offering,
effective
June 25, 1993 100 - - - -
-------- ------- ----------- -------- ---------
Balance,
December 31, 1993 100 $ - $ 2,000 $ - $ 2,000
========= ======== =========== ========= ==========
The accompanying notes to financial statements are an
integral part of these statements.
F-5
<PAGE>
<TABLE>
<CAPTION>
TRUMP PLAZA FUNDING, INC
STATEMENTS OF CASH FLOWS
FOR THE YEARS ENDED DECEMBER 31, 1993, 1992 AND 1991
1993 1992 1991
------------- ----------- -----------
<S> <C> <C> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net Income $ 3,496,000 $ 4,244,000 $ -
Adjustments to Reconcile Net Income
To Net Cash Flows Provided by
Operating Activities:
Accretion of Discount on Indebtedness 172,000 - -
Preferred Stock Accretion (315,000) (342,000) -
Deferred Income Taxes Payable 747,000 116,000 -
------------- ---------- -----------
4,100,000 4,018,000 -
Decrease (increase) in receivable
from Partnership 305,000 (4,228,000) 25,000,000
Decrease (increase) in
interest receivable 6,455,000 (6,573,000) 134,000
Increase in income taxes payable 974,000 2,086,000 -
(Decrease) increase in accrued
interest payable (6,455,000) 6,573,000 (134,000)
------------- ---------- -----------
Net Cash Flows Provided by
Operating Activities 5,379,000 1,876,000 25,000,000
------------- ---------- -----------
CASH FLOWS FROM INVESTING ACTIVITIES:
Preferred Stock Dividends (5,704,000) (2,100,000) -
------------- ---------- -----------
CASH FLOWS FROM FINANCING ACTIVITIES:
Capital Contribution 35,000,000 224,000 -
Distribution from Partnership 40,497,000 - -
Increase in Mortgage Note receivable (100,859,000) - -
Additional borrowings 325,687,000 - -
Payment of long term debt (225,000,000) - (25,000,000)
Redemption of Preferred Stock (75,000,000) - -
------------- ---------- -----------
Net Cash Flows provided by (used in)
Financing Activities 325,000 224,000 (25,000,000)
------------- ---------- -----------
Net Change in Cash - - -
Cash at Beginning of Year 2,000 2,000 2,000
------------- ---------- -----------
Cash at End of Year $ 2,000 $ 2,000 $ 2,000
============= ========== ==========
</TABLE>
The accompanying notes to financial statements
are an integral part of these statements.
F-6
<PAGE>
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
To Trump Plaza Holding Associates and Trump Plaza Associates:
We have audited the accompanying consolidated balance sheets of Trump Plaza
Holding Associates (a New Jersey general partnership) and Trump Plaza Associates
( a New Jersey general partnership) as of December 31, 1993 and 1992, and the
related statements of operations, capital and cash flows for each of the three
years in the period ended December 31, 1993. These consolidated financial
statements and the schedules referred to below are the responsibility of the
management of Trump Plaza Holding Associates and Trump Plaza Associates. Our
responsibility is to express an opinion on these financial statements and
schedules based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of Trump Plaza Holding Associates
and Trump Plaza Associates as of December 31, 1993 and 1992,and the results of
their operations and their cash flows for each of the three years in the period
ended December 31, 1993, in conformity with generally accepted accounting
principles.
Our audits were made for the purpose of forming an opinion on the basic
financial statements taken as a whole. The schedules listed in the index to the
financial statements and schedules are presented for purposes of complying with
the Securities and Exchange Commission's rules and are not part of the basic
financial statements. These schedules have been subjected to the auditing
procedures applied in our audits of the basic financial statements and, in our
opinion, fairly state in all material respects the financial data required to be
set forth therein in relation to the basis financial statements taken as a
whole.
ARTHUR ANDERSEN & CO.
Roseland, New Jersey
February 18, 1994
F-7
<PAGE>
TRUMP PLAZA HOLDING ASSOCIATES AND
TRUMP PLAZA ASSOCIATES
CONSOLIDATED BALANCE SHEETS
December 31, 1993 and 1992
ASSETS 1993 1992
-------- --------
Current Assets:
Cash and cash equivalents...................... $14,393,000 $18,802,000
Trade receivables, net of allowance for
doubtful accounts of $10,616,000 and
$14,402,000, respectively..................... 6,759,000 7,675,000
Accounts receivable, other..................... 198,000 195,000
Due from affiliates, net (Note 9).............. - 91,000
Iventories..................................... 3,566,000 3,068,000
Prepaid expenses and other current assets...... 2,701,000 2,502,000
------------ ------------
Total current assets...................... 27,617,000 32,333,000
------------ ------------
Property and Equipment (Note 5):
Land and land improvements................... 35,613,000 34,907,000
Buildings and building improvements.......... 295,617,000 293,908,000
Furniture, fixtures and equipment............ 78,173,000 74,622,000
Leasehold improvements....................... 2,404,000 2,378,000
Construction in progress..................... 3,784,000 3,924,000
------------ ------------
415,591,000 409,739,000
Less--Accumulated depreciation and
amortization................................ (122,450,000) (109,473,000)
------------ ------------
Net property and equipment............... 293,141,000 300,266,000
------------ ------------
Land Rights, net of accumulated amortization
of $3,410,000 and $3,041,000, respectively... 30,058,000 30,428,000
------------ ------------
Other Assets:
Deferred bond issuance costs, net of
accumulated amortization of $1,088,000
in 1993 (Note 2)............................ 16,254,000 -
Other (Note 8)............................... 7,428,000 7,322,000
------------ ------------
Total other assets........................ 23,682,000 7,322,000
------------ ------------
Total assets.............................. $374,498,000 $370,349,000
============ ============
LIABILITIES AND CAPITAL
Current Liabilities:
Current maturities of long-term debt (Note 4) $1,633,000 $9,980,000
Accounts payable............................. 6,309,000 7,767,000
Accrued payroll.............................. 5,806,000 4,978,000
Accrued interest payable (Note 4)............ 1,829,000 8,028,000
Due to affiliates, net (Note 9).............. 97,000 -
Other accrued expenses....................... 7,109,000 10,475,000
Other current liabilities.................... 5,330,000 5,221,000
Distribution payable to Trump Plaza
Funding, Inc................................ 974,000 4,112,000
------------ ------------
Total current liabilities................. 29,087,000 50,561,000
------------ ------------
Non-Current Liabilities:
Long-term debt, net of current maturities
(Notes 2 and 4)............................. 395,948,000 249,723,000
Distribution payable to Trump Plaza
Funding, Inc................................ 2,949,000 116,000
Deferred state income taxes.................. 1,224,000 495,000
------------ ------------
Total noncurrent liabilities.............. 400,121,000 250,334,000
------------ ------------
Total liabilities......................... 429,208,000 300,895,000
------------ ------------
Commitments and Contingencies (Notes 5 and 7)
Preferred Partnership Interest................. - 58,092,000
------------ ------------
Capital:
Partners' Deficit............................ (78,772,000) (3,362,000)
Retained Earnings............................ 24,062,000 14,724,000
------------ ------------
Total Capital (Deficit)........................ (54,710,000) 11,362,000
------------ ------------
Total liabilities and capital............. $374,498,000 $370,349,000
============ ============
The accompanying notes to financial statements are an
integral part of these consolidated balance sheets.
F-8
<PAGE>
<TABLE>
<CAPTION>
TRUMP PLAZA HOLDING ASSOCIATES AND
TRUMP PLAZA ASSOCIATES
CONSOLIDATED STATEMENTS OF OPERATIONS
FOR THE YEARS ENDED DECEMBER 31, 1993, 1992 AND 1991
1993 1992 1991
------------ ------------ -------------
<S> <C> <C> <C>
REVENUES:
Gaming $264,081,000 $265,448,000 $233,265,000
Rooms 18,324,000 18,369,000 18,184,000
Food and Beverage 41,941,000 43,889,000 40,937,000
Other 8,938,000 11,012,000 7,290,000
Trump Regency (Note 4) - 9,465,000 11,547,000
------------ ------------ ------------
Gross Revenues 333,284,000 348,183,000 311,223,000
Less-Promotional allowances 32,793,000 34,865,000 31,539,000
------------- ----------- -----------
Net Revenues 300,491,000 313,318,000 279,684,000
------------- ----------- -----------
COSTS AND EXPENSES:
Gaming 136,895,000 146,328,000 133,547,000
Rooms 2,831,000 2,614,000 2,870,000
Food and Beverage 18,093,000 18,103,000 17,096,000
General and Administrative 71,624,000 75,459,000 69,631,000
Depreciation and Amortization 17,554,000 15,842,000 16,193,000
Restructuring costs - 5,177,000 943,000
Trump Regency (Note 4) - 11,839,000 19,879,000
Other 3,854,000 2,953,000 3,438,000
----------- ----------- -----------
250,851,000 278,315,000 263,597,000
----------- ----------- -----------
Income from operations 49,640,000 35,003,000 16,087,000
----------- ----------- -----------
NON-OPERATING INCOME (EXPENSE):
Interest income 546,000 487,000 1,032,000
Interest expense
(Note 4) (40,435,000) (31,843,000) (34,395,000)
Other non-operating expense
(Note 6) (3,873,000) ( 1,462,000) (14,818,000
------------ ------------ -----------
Non-operating expense, net (43,762,000) (32,818,000) (48,181,000)
------------ ------------ -----------
Income (loss) before
state income taxes
and extraordinary items 5,878,000 2,185,000 (32,094,000)
PROVISION (BENEFIT) FOR STATE
INCOME TAXES 660,000 ( 233,000) ( 2,864,000)
---------- ----------- ------------
INCOME (LOSS) BEFORE EXTRAORDINARY
ITEMS 5,218,000 2,418,000 (29,230,000)
EXTRAORDINARY GAIN (LOSS)
(Notes 2 and 6) 4,120,000 (38,205,000) -
------------ ------------- ------------
NET INCOME (LOSS) $ 9,338,000 $(35,787,000) $(29,230,000)
============ ============ ============
</TABLE>
The accompanying notes to financial statements are an
integral part of these consolidated statements.
F-9
<PAGE>
<TABLE>
<CAPTION>
TRUMP PLAZA HOLDING ASSOCIATES AND
TRUMP PLAZA ASSOCIATES
CONSOLIDATED STATEMENTS OF CAPITAL (DEFICIT)
FOR THE YEARS ENDED DECEMBER 31, 1993, 1992 AND 1991
Partners' Retained
Capital Earnings Total
------------ ------------ ------------
<S> <C> <C> <C>
Balance
December 31, 1990 $ 40,502,000 $ 42,771,000 $ 83,273,000
Net Loss - (29,230,000) (29,230,000)
------------ ------------ ------------
Balance
December 31, 1991 40,502,000 13,541,000 54,043,000
Net Loss - (35,787,000) (35,787,000)
Preferred Partnership
Interest Distribution, Net (43,864,000) 36,970,000 (6,894,000)
------------ ---------- -----------
Balance
December 31, 1992 (3,362,000) 14,724,000 11,362,000
Net Income - 9,338,000 9,338,000
Preferred Partnership Interest
Distribution (6,317,000) - (6,317,000)
Distribution to Donald J. Trump
to repay certain personal
indebtness (52,500,000) - (52,500,000)
Distribution to Donald J. Trump
to redeem Trump Plaza Funding,
Inc. Preferred Stock Units (35,000,000) - (35,000,000)
Conversion of Preferred
Partnership Interest into
General Partnership Interest 18,407,000 - 18,407,000
------------ ----------- -----------
Balance
December 31, 1993 $(78,772,000) $ 24,062,000 $(54,710,000)
============= ============= =============
</TABLE>
The accompanying notes to financial statements are an
integral part of these consolidated statements.
F-10
<PAGE>
<TABLE>
<CAPTION>
TRUMP PLAZA HOLDING ASSOCIATES AND
TRUMP PLAZA ASSOCIATES
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE YEARS ENDED DECEMBER 31, 1993, 1992 AND 1991
1993 1992 1991
----------- ------------- -------------
<S> <C> <C> <C>
CASH FLOW FROM OPERATING ACTIVITIES:
Net Income (loss) $ 9,338,000 $(35,787,000) $(29,230,000)
Adjustments to reconcile net income
(loss) to net cash flows provided by
operating activities-
Noncash charges-
Extraordinary (gain) loss (4,120,000) 38,205,000 -
Depreciation and amortization
of property and equipment 17,177,000 15,211,000 15,270,000
Accretion of discount on
indebtedness 862,000 - -
Amortization of other assets 377,000 631,000 923,000
Provision for losses on
receivables 90,000 4,675,000 5,234,000
Deferred state income taxes 729,000 (233,000) (2,802,000)
Utilization of CRDA credits and
donations - 1,358,000 2,226,000
Valuation allowance of CRDA
investments 1,047,000 645,000 219,000
Settlement of Regency obligation - - 10,850,000
---------- ---------- ----------
25,500,000 24,705,000 2,690,000
Decrease (increase) in receivables 823,000 99,000 ( 99,000)
(Increase) decrease in inventories (498,000) (167,000) 200,000
Increase (decrease) in amounts
due to affiliates 188,000 374,000 ( 22,000)
(Increase) decrease in prepaid
expenses and other current
assets (199,000) (580,000) 1,370,000
Decrease in due from partners - - 1,842,000
Increase (decrease) in other
assets 2,726,000 (828,000) (3,142,000)
(Decrease) increase in accounts
payable, accrued expenses and
other current liabilities (10,086,000) 2,588,000 6,675,000
------------ ---------- ----------
Net cash flows provided by
operating activities 18,454,000 26,191,000 9,514,000
----------- ---------- ----------
</TABLE>
F-11
<PAGE>
<TABLE>
<CAPTION>
TRUMP PLAZA HOLDING ASSOCIATES AND
TRUMP PLAZA ASSOCIATES
CONSOLIDATED STATEMENTS OF CASH FLOWS, cont.
FOR THE YEARS ENDED DECEMBER 31, 1993, 1992 AND 1991
1993 1992 1991
<S> <C> <C> <C>
-------------- ------------- ------------
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchases of property and
equipment $ (10,052,000) $ (8,643,000) $ (5,509,000)
Purchases of CRDA investments (2,823,000) (1,853,000) (666,000)
-------------- ------------- -------------
Net cash flows used in investing
activities (12,875,000) (10,496,000) (6,175,000)
-------------- ------------- -------------
CASH FLOWS FROM FINANCING ACTIVITIES:
Deferred Financing costs (17,342,000) - -
Distributions to Donald J. Trump (87,500,000) - -
Distributions to the Company (40,000,000) - -
Preferred Partnership Interest
Distribution (6,282,000) (2,324,000) -
Borrowing 389,709,000 251,575,000 25,225,000
Payments and current maturities
of long-term debt (248,573,000) (256,618,000) (28,095,000)
------------- ------------- -------------
Net cash flows used in financing
activities (9,988,000) (7,367,000) (2,870,000)
------------- ------------- -------------
Net (decrease) increase in
cash and cash equivalents (4,409,000) 8,328,000 469,000
CASH AND CASH EQUIVALENTS AT BEGINNING
OF YEAR 18,802,000 10,474,000 10,005,000
------------- ------------- -------------
CASH AND CASH EQUIVALENTS AT END
OF YEAR $ 14,393,000 $ 18,802,000 $ 10,474,000
============= ============= ===========
</TABLE>
The accompanying notes to financial statements are an
integral part of these consolidated statements.
F-12
<PAGE>
TRUMP PLAZA FUNDING, INC. AND
TRUMP PLAZA HOLDING ASSOCIATES
AND TRUMP PLAZA ASSOCIATES
NOTES TO FINANCIAL STATEMENTS
(1) Organization:
-------------
The accompanying financial statements include those of Trump Plaza Funding, Inc.
(the "Company"), a New Jersey General Corporation as well as those of Trump
Plaza Holding Associates ("Holding"), a New Jersey General Partnership, and its
99% owned subsidiary, Trump Plaza Associates (the "Partnership"), a New Jersey
General Partnership, which owns and operates Trump Plaza Hotel and Casino
located in Atlantic City, New Jersey. The Company owns the remaining 1% interest
in the Partnership. Holding's sole source of liquidity is distributions in
respect of its interest in the Partnership.
All significant intercompany balances and transactions have been eliminated in
the consolidated financial statements of Holding. The minority interest in the
Partnership has not been separately reflected in the consolidated financial
statements of Holding since it is not material.
The Company was incorporated on March 14, 1986 as a New Jersey corporation, and
was originally formed solely to raise funds through the issuance and sale of its
debt securities for the benefit of the Partnership. As part of a Prepackaged
Plan of Reorganization under Chapter 11 of the U.S. Bankruptcy code consummated
on May 29, 1992, the Company became a partner of the Partnership and issued
approximately three million Stock Units, each comprised of one share of
Preferred Stock and one share of Common Stock of the Company. On June 25, 1993,
the Stock Units were redeemed with a portion of the proceeds of the Company's 10
7/8% Mortgage Notes due 2001 (the "Mortgage Notes") as well as Holding's Units.
See Note 2-Offering of Mortgage Notes and Units.
Holding was formed in February, 1993 as a New Jersey general partnership for the
purpose of raising funds for the Partnership. On June 25, 1993, Holding
completed the sale of 12,000 Units (the "Units"), each Unit consisting of $5,000
principal amount of 12 1/2% Pay-In-Kind Notes, due 2003 (the "PIK Notes"), and
one Warrant to acquire $1,000 principal amount of PIK Notes (collectively with
the Mortgage Note Offering, the "Offerings"). The PIK Notes and the Warrants are
separately transferable. Holding has no other assets or business other than its
99% equity interest in the Partnership. See Note 2-Offering of Mortgage Notes
and Units.
The Partnership was organized in June 1982 as a New Jersey general partnership.
Prior to the date of the consummation of the Offerings, the Partnership's three
partners were TP/GP, the managing general partner of the Partnership, the
Company and Donald J. Trump ("Trump"). On June 25, 1993, Trump contributed his
interest in TP/GP to the Company and TP/GP merged with and into the Company. The
Company then became the managing general partner of the Partnership. In
addition, Trump contributed his interest in the Partnership to Holding, and the
Company and Holding, each of which are wholly owned by Trump, became the sole
partners of the Partnership.
(2) Offering of Mortgage Notes and Units:
-------------------------------------
On June 25, 1993 the Company issued, and the Partnership guaranteed $330,000,000
of Mortgage Notes (for net proceeds of $325,687,000) and Holding issued an
aggregate of $60,000,000 of PIK Notes, together with Warrants to acquire an
additional $12,000,000 of PIK Notes at no additional cost (the "Offerings"). The
combined proceeds, together with cash on hand were used substantially as
follows: (i) $225.0 million of such proceeds were used to repay the
Partnership's promissory note to the Company in the principal amount of $225.0
million, which proceeds were then used by the Company to redeem the 12% Mortgage
Bonds, due 2002; (ii) $12.0 million was used to repay the Regency Note (see Note
4); (iii) $40.0 million was distributed to the Company (which used such funds,
together with $35.0 million from the Units Offering distributed to Trump and
paid to the Company, to redeem its Stock Units); (iv) approximately $17.3
million was used to pay the expenses incurred in connection with the Offerings;
(v) approximately $52.5 million was used to make the Special Distribution to
Trump which was used by Trump to repay certain personal indebtedness and (vi) to
pay accrued interest on the Bonds and accrued dividends on the Preferred Stock.
F-13
<PAGE>
(3) Summary of significant accounting policies:
-------------------------------------------
Gaming Revenues and Promotional Allowances
- ------------------------------------------
Gaming revenues represent the net win from gaming activities which is the
difference between amounts wagered and amounts won by patrons. The retail value
of accommodations, food, beverage and other services provided to customers
without charge is included in gross revenue and deducted as promotional
allowances. The estimated departmental costs of providing such promotional
allowance are included in gaming costs and expenses as follows:
YEARS ENDED DECEMBER 31,
------------------------
(in thousands)
1993 1992 1991
---- ---- ----
ROOMS $ 4,190 $ 4,804 $ 4,307
FOOD AND BEVERAGE 14,726 14,982 13,572
OTHER 3,688 3,884 2,802
------- ------- -------
$22,604 $23,670 $20,681
====== ====== ======
During 1992, certain Progressive Slot Jackpot Programs were discontinued which
resulted in $4,100,000 of related accruals being taken into income.
Inventories
- -----------
Inventories of provisions and supplies are carried at the lower of cost
(weighted average) or market.
Property and Equipment
- ----------------------
Property and equipment is carried at cost and is depreciated on the
straight-line method using rates based on the following estimated useful lives:
Buildings and building improvements 40 years
Furniture, fixtures and equipment 3-10 years
Leasehold improvements 10-40 years
Interest associated with borrowings used to finance construction projects has
been capitalized and is being amortized over the estimated useful lives of the
assets.
Land Rights
- -----------
Land rights represent the fair value of such rights, at the time of contribution
to the Partnership by the Trump Plaza Corporation, an affiliate of the
Partnership. These rights are being amortized over the period of the underlying
operating leases which extend through 2078.
Income Taxes
- ------------
The Company, Holding and the Partnership adopted Statement of Financial
Accounting Standards No. 109, "Accounting for Income Taxes" ("SFAS No. 109"),
effective January 1, 1993. Adoption of this new standard did not have a
significant impact on the respective statements of financial condition or
results of operations. SFAS No. 109 requires recognition of deferred tax
liabilities and assets for the expected future tax consequences of events that
have been included in the financial statements or tax returns. Under this method
deferred tax liabilities and assets are determined based on the difference
between the financial statement and the tax basis of assets and liabilities
using enacted tax rates in effect for the year in which the differences are
expected to reverse.
The accompanying financial statements of the Company include a provision for
Federal income taxes, based on distributions from the Partnership relating to
the Company's Preferred Stock which was redeemed on June 25, 1993. The Company
will be reimbursed for such income taxes by the Partnership. The accompanying
consolidated financial statements of Holding and the Partnership do not include
a provision for Federal income taxes since any income or losses allocated to its
partners are reportable for Federal income tax purposes by the partners.
F-14
<PAGE>
Income Taxes cont.
- ------------------
Under the New Jersey Casino Control Commission regulations, the Partnership is
required to file a New Jersey corporation business tax return. Accordingly, a
provision (benefit) for state income taxes has been reflected in the
accompanying consolidated financial statements of Holding and the Partnership.
The Partnership's deferred state income taxes result primarily from differences
in the timing of reporting depreciation for tax and financial statement
purposes.
Statements of Cash Flows
- ------------------------
For purposes of the statements of cash flows, the Company, Holding and the
Partnership consider all highly liquid debt instruments purchased with a
maturity of three months or less to be cash equivalents. The following
supplemental disclosures are made to the statements of cash flows.
1993 1992 1991
---------- ---------- ----------
Cash paid during the year
for interest $41,118,000 $25,310,000 $34,533,000
========== ========== ==========
Cash paid for state
and Federal income taxes $ 81,000 $ - $ -
========== ========== ==========
Reclassifications
- -----------------
Certain reclassifications were made to the 1991 and 1992 consolidated financial
statements to present them on a basis consistent with the 1993 classification.
(4) Long-Term debt:
---------------
Long term debt consists of the following:
December 31, December 31,
1993 1992
------------ ------------
Company:
10 7/8% Mortgage Notes, due 2001
net of unamortized discount of
$4,141,000 in 1993 (A) $325,859,000 $ -
12% First Mortgage bonds, due 2002 (A) - 225,000,000
----------- -----------
$325,859,000 $225,000,000
=========== ===========
Holding and the Partnership:
Partnership
Partnership Note (10 7/8% Mortgage Notes,
due 2001 net of unamortized discount
of $4,141,000 in 1993) (A) $325,859,000 $ -
Partnership Note (12% First Mortgage
bonds, due 2002) (A) - 225,000,000
10% note payable to Harrah's Atlantic
City, Inc. (C) - 8,471,000
Mortgage notes payable (D)
6,410,000 7,284,000
Regency Hotel Obligation (A) - 17,500,000
Other notes payable 1,060,000 1,448,000
----------- -----------
333,329,000 259,703,000
Less - Current maturities 1,633,000 9,980,000
----------- -----------
331,696,000 249,723,000
Holding
PIK Notes (12 1/2% Notes due 2003 net of
discount of $11,310,000 in 1993) (B)
64,252,000 -
----------- -----------
$395,948,000 249,723,000
=========== ===========
F-15
<PAGE>
(4) Long-Term debt cont.:
---------------------
(A) On June 25, 1993 the Company issued $330,000,000 principal amount of 10
7/8% Mortgage Notes, due 2001, net of discount of $4,313,000. Net proceeds
of the Offering were used to redeem all of the Company's outstanding
$225,000,000 principal amount 12% Mortgage Bonds, due 2002 and together
with other funds (see (B) Pay-In-Kind Notes) all of the Company's Stock
Units, comprised of $75,000,000 liquidation preference participating
cumulative redeemable Preferred Stock with associated shares of Common
Stock, to repay $17,500,000 principal amount 9.14% Regency Note due 2003
(see Note 6), to make a portion of the Special Distribution and to pay
transaction expenses. See Note 2- Offering of Mortgage Notes and Units.
The Mortgage Notes mature on June 15, 2001 and are redeemable at any time
on or after June 15, 1998, at the option of the Company or the Partnership,
in whole or in part, at the principal amount plus a premium which declines
ratably each year to zero in the year of maturity. The Mortgage Notes bear
interest at the stated rate of 10 7/8% per annum from the date of issuance,
payable semi-annually on each June 15 and December 15, commencing December
15, 1993 and are secured by substantially all of the Partnership's assets.
The accompanying consolidated financial statements reflect interest expense
at the effective interest rate of 11.12% per annum.
The Mortgage Note Indenture contains certain covenants limiting the ability
of the Partnership to incur indebtedness, including indebtedness secured by
liens on Trump Plaza. In addition, the Partnership may, under certain
circumstances, incur up to $25.0 million of indebtedness to finance the
expansion of its facilities, which indebtedness may be secured by a lien on
the Boardwalk Expansion Site (see Note 8 Commitments And Contingencies)
senior to the liens of the Note Mortgage and Guarantee Mortgage thereon.
The Mortgage Notes represent the senior indebtedness of the Company. The
Partnership Note and the Guarantee rank pari passu in right of payment with
all existing and future senior indebtedness of the Partnership.
The Mortgage Notes, the Partnership Note, the Note Mortgage, the Guarantee
and the Guarantee Mortgage are non-recourse to the partners of the
Partnership, to the shareholders of the Company and to all other persons
and entities (other than the Company and the Partnership), including Trump.
Upon an event of default, holders of the Mortgage Notes would have recourse
only to the assets of the Company and the Partnership.
(B) On June 25, 1993 Holding issued $60,000,000 principal amount of 12 1/2% PIK
Notes, due 2003, together with Warrants to acquire an additional
$12,000,000 of PIK Notes at no additional cost. The Warrants are
exercisable following the earlier of certain triggering events or June 15,
1996.
The PIK Notes mature on June 15, 2003 and bear interest at the rate of 12
1/2% per annum from the date of issuance, payable semi-annually on each
June 15 and December 15, commencing December 15, 1993. At the option of
Holding, interest is payable in whole or in part, in cash or, in lieu of
cash, through the issuance of additional PIK Notes valued at 100% of their
principal amount. The ability of Holding to pay interest in cash on the PIK
Notes is entirely dependent on the ability of the Partnership to distribute
available cash, as defined, to Holding for such purpose.
On December 15, 1993 the Partnership elected to issue, in lieu of cash, an
additional $3,562,000 in PIK Notes to satisfy its semi-annual PIK Note
interest obligation.
The PIK Notes are subordinate to the Company's Mortgage Notes and any other
indebtedness of the Partnership and are secured by a pledge of Holding's
99% equity interest in the Partnership. The indenture to which the PIK
Notes were issued (the "PIK Note Indenture") contains covenants prohibiting
Holding from incurring additional indebtedness and engaging in other
activities, and other covenants restricting the activities of the
Partnership substantially similar to those set forth in the Mortgage Note
Indenture. The PIK Notes and the Warrants are non-recourse to the Partners
of Holding, including Trump, and to all other persons and entities (other
than Holding). Upon an event of default, holders of PIK Notes or Warrants
will have recourse only to the assets of Holding which consist solely of
its equity interest in the Partnership.
F-16
<PAGE>
(4) Long-Term debt cont.:
---------------------
(C) The entire $8,471,000 principal amount of the 10% note payable was repaid
on May 16, 1993.
(D) Interest on these notes are payable with interest rates ranging from 10.0%
to 11.0%. The notes are due at various dates between 1994 and 1998 and are
secured by real property.
The aggregate maturities of long-term debt in each of the years subsequent to
1993 are:
1994 $ 1,633,000
1995 2,850,000
1996 542,000
1997 2,012,000
1998 433,000
Thereafter 390,111,000
------------
$397,581,000
============
(5) Leases:
-------
The Partnership leases property (primarily land), certain parking space, and
various equipment under operating leases. Rent expense for the years ended
December 31, 1993, 1992, and 1991 was $4,338,000, $4,361,000 and $11,219,000
respectively, of which $2,513,000, $2,127,000 and $8,478,000, respectively,
relates to affiliates of the Partnership.
Future minimum lease payments under the noncancelable operating leases are as
follows:
Amounts
Relating to
Total Affiliates
------------ ------------
1994 $ 6,220,000 $ 1,900,000
1995 6,445,000 2,125,000
1996 6,670,000 2,350,000
1997 6,670,000 2,350,000
1998 5,110,000 2,350,000
Thereafter 274,183,000 193,600,000
------------ ------------
$305,298,000 $204,675,000
============ ============
Certain of these leases contain options to purchase the leased properties at
various prices throughout the leased terms. At December 31, 1993, the aggregate
option price for these leases was approximately $58,000,000.
In October 1993, the Partnership assumed the Boardwalk Expansion Site Lease and
related expenses which are included in the above lease commitment amounts. In
connection with the Offerings, the Partnership acquired a five-year option to
purchase the Boardwalk Expansion Site. Management intends to exercise this
option by June 30, 1995. See Note 7-"Commitments and Contingencies Future
Expansion."
(6) Extraordinary Gain (Loss) and Non-Operating Expense:
----------------------------------------------------
The $4,120,000 excess of the carrying value of the Regency Hotel obligation over
the amount of the settlement payment net of related prepaid expenses, has been
reported as an extraordinary gain for the year ended December 31, 1993.
The extraordinary loss for the year ended December 31, 1992 consists of the
effect of stating the Bonds and Preferred Stock issued at fair value as compared
to the carrying value of these securities and the write off of certain deferred
financing charges and costs.
Non-operating expense in 1993 includes $3,873,000 in costs associated with the
Boardwalk Expansion Site (see Note 7-Commitments and Contingencies Future
Expansion), net of miscellaneous non- operating credits. In 1992 these costs
included $1,462,000 of legal expenses relating to the Penthouse litigation, and
in 1991 these costs included $3,968,000 of legal expenses incurred in connection
with the Penthouse litigation and $10,850,000 for the settlement of the Regency
lease.
F-17
<PAGE>
(7) Commitments and Contingencies:
------------------------------
Casino License Renewal
- ----------------------
The operation of an Atlantic City hotel and casino is subject to significant
regulatory controls which affect virtually all of its operations. Under the New
Jersey Casino Control Act (the "Act"), the Partnership is required to maintain
certain licenses.
In April, 1993, the New Jersey Casino Control Commission ("CCC") renewed the
Partnership's license to operate Trump Plaza. This license must be renewed in
June, 1995, is not transferable and will include a review of the financial
stability of the Partnership. Upon revocation, suspension for more than 120
days, or failure to renew the casino license, the Act provides for the mandatory
appointment of a conservator to take possession of the hotel and casino's
business and property, subject to all valid liens, claims and encumbrances.
Legal Proceedings
- -----------------
The Partnership, its Partners, certain members of its former Executive
Committee, and certain of its employees, have been involved in various legal
proceedings. In general, the Partnership has 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, judgements, 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.
Various other legal proceedings are now pending against the Partnership. The
Partnership considers all such other proceedings to be ordinary litigation
incident to the character of its business and not material to its business or
financial condition. The Partnership believes that the resolution of these
claims will not, individually or in the aggregate, have a material adverse
effect on its financial condition or results of operations.
The Partnership is also a party to various administrative proceedings involving
allegations that it has violated certain provisions of the Act. The Partnership
believes that the final outcome of these proceedings will not, either
individually or in the aggregate, have a material adverse effect on its
financial condition, results of operations or on the ability of the Partnership
to otherwise retain or renew any casino or other licenses required under the Act
for the operation of Trump Plaza.
Casino Reinvestment Development
- -------------------------------
Authority Obligations
---------------------
Pursuant to the provisions of the Act, the Partnership, commencing twelve months
after the date of opening of Trump Plaza in May 1984, and continuing for a
period of twenty-five years thereafter, must either obtain investment tax
credits (as defined in the Casino Control Act), in an amount equivalent to 1.25%
of its gross casino revenues, or pay an alternative tax of 2.5% of its gross
casino revenues, (as defined in the Casino Control Act). Investment tax credits
may be obtained by making qualified investments or by the purchase of bonds at
below market interest rates from the Casino Reinvestment Development Authority
("CRDA"). The Partnership is required to make quarterly deposits with the CRDA.
In April 1990, the Partnership modified its agreement with the CRDA under which
it was required to purchase bonds to satisfy the investment alternative tax.
Under the terms of the agreement, the Partnership donated $11,971,000 in
deposits previously made to the CRDA for the purchase of CRDA bonds through
December 31, 1989, in exchange for satisfaction of an equivalent amount of its
prior bond purchase commitments, as well as receiving future tax credits, to be
utilized to satisfy substantial portions of the Partnership's future investment
alternative tax obligations. The Partnership charged $1,358,000 and $2,493,000
to operations in 1992 and 1991, respectively, which represents amortization of
the tax credits discussed above. As of December 31, 1993, no tax credits were
available. For the years ended December 31, 1993, 1992 and 1991, the Partnership
charged to operations $1,047,000, $645,000 and $219,000, respectively, to give
effect to the below market interest rates associated with the CRDA bonds.
F-18
<PAGE>
Concentrations of Credit Risks
- ------------------------------
In accordance with casino industry practice, the Partnership extends credit to a
limited number of casino patrons, after extensive background checks and
investigations of credit worthiness. At December 31, 1993 approximately 31% of
the Partnership's casino receivables were from customers whose primary residence
is outside the United States with no significant concentration in any one
foreign country.
Future Expansion
- ----------------
In 1993, the Partnership received the approval of the CCC, subject to certain
conditions, for the expansion of its hotel facilities (the "Boardwalk Expansion
Site"). On June 25, 1993, Trump transferred title to the Boardwalk Expansion
Site to a lender in exchange for a reduction in Trump's indebtedness to such
lender in an amount equal to the sum of fair market value of the Boardwalk
Expansion Site and all rent payments made to such lender by Trump under the
Boardwalk Expansion Site Lease. On the date the Offerings were consummated, the
lender leased the Boardwalk Expansion Site to Trump ("the Boardwalk Expansion
Site Lease") for a term of five years, which expires on June 30, 1998, during
which time Donald J. Trump was obligated to pay the lender $260,000 per month in
lease payments. See Note 6-"Extraordinary Gain (Loss) and Non-Operating
Expense." In October 1993, the Partnership assumed the Boardwalk Expansion Site
Lease and related expenses.
In connection with the Offerings, the Partnership acquired a five- year option
to purchase the Boardwalk Expansion Site (the "Option"). Until such time as the
Option is exercised or expires, the Partnership will be obligated, from and
after the date it entered into the Option, to pay the net expenses associated
with the Boardwalk Expansion Site. During the year ended December 31, 1993 the
Partnership incurred $4.4 million of such expenses. Under the Option, the
Partnership has the right to acquire the Boardwalk Expansion Site for a purchase
price of $26.0 million through 1994, increasing by $1.0 million annually
thereafter until expiration on June 30, 1998. The CCC has required that the
Partnership exercise the Option for its right of first refusal therein no later
than July 1, 1995. If the Partnership defaults in making payments due under the
Option, the Partnership would be liable to the lender for the sum of (a) the
present value of all remaining payments to be made by the Partnership pursuant
to the Option during the term thereof and (b) the cost of demolition of all
improvements then located on the Boardwalk Expansion Site. As of December 31,
1993, the Partnership had capitalized approximately $2.7 million in construction
costs related to the Boardwalk Expansion Site.
The Partnership's ability to acquire the Boardwalk Expansion Site pursuant to
the Option would be dependent upon its ability to obtain financing to acquire
the property. The ability to incur such indebtedness is restricted by the
Mortgage Note Indenture and the PIK Note Indenture and requires the consent of
certain of Trump's personal creditors. The Partnership's ability to develop the
Boardwalk Expansion Site is dependent upon its ability to use existing cash on
hand and generate cash flow from operations sufficient to fund development
costs. No assurance can be given that such cash on hand will be available to the
Partnership for such purposes or that it will be able to generate sufficient
cash flow from operations. In addition, exercise of the Option requires the
consent of certain of Trump's personal creditors, and there can be no assurance
that such consent will be obtained at the time the Partnership desires to
exercise the Option or such right.
The accompanying financial statements do not include any adjustments that may be
necessary should the Partnership be unable to exercise the Option.
(8) Employee Benefit Plans:
-----------------------
The Partnership has a retirement savings plan for its nonunion employees under
Section 401(K) of the Internal Revenue Code. Employees are eligible to
contribute up to 15% of their earnings to the plan and the Partnership will
match 50% of an eligible employee's contributions up to a maximum of 4% of the
employee's earnings. The Partnership recorded charges of $765,000, $699,000 and
$571,000 for matching contributions for the years ended December 31, 1993, 1992
and 1991, respectively.
F-19
<PAGE>
(9) Transactions with Affiliates:
-----------------------------
Due to/from Affiliates
- ----------------------
Amounts due to affiliates was $97,000, as of December 31, 1993 and due from
affiliates was $91,000 as of December 31,1992. The Partnership leases warehouse
facility space to Trump Castle Associates and had formerly leased space to Trump
Taj Mahal Associates. Lease payments of $15,000, $14,000 and $18,000 were
received from Trump Castle Associates in 1993, 1992 and 1991, respectively, and
$46,000 from Trump Taj Mahal Associates in 1991.
The Partnership leases office space from Trump Taj Mahal Associates, which
terminated on March 19, 1993. Lease payments of $30,000, $138,000 and $98,000
were paid to Trump Taj Mahal Associates in 1993, 1992 and 1991 respectively.
Prior to April 1991, the Partnership leased office space from Trump Castle
Associates. Lease payments to Trump Castle Associates amounted to $42,000 in
1991.
The Partnership paid Trump Castle Associates $317,000 in 1991, and Trump Taj
Mahal Associates $1,000 and $242,000 in 1992 and 1991, respectively, for fleet
maintenance and limousine services. Additionally, the Partnership paid Trump
Castle Associates $4,000 in 1991 for printing services.
The Partnership leases two parcels of land under long-term ground leases from
Seashore Four Associates and Trump Seashore Associates. In 1993, 1992 and 1991,
the Partnership paid $900,000, $900,000 and $900,000, respectively, to Seashore
Four Associates, and paid $1,000,000, $1,000,000 and $1,100,000 in 1993, 1992
and 1991, respectively, to Trump Seashore Associates.
Services Agreement
- ------------------
Pursuant to the terms of a Services Agreement with Trump Plaza Management Corp.
("TPM"), a corporation beneficially owned by Donald J. Trump, in consideration
for services provided, the Partnership pays TPM each year an annual fee of $1.0
million in equal monthly installments, and reimburses TPM on a monthly basis for
all reasonable out-of-pocket expenses incurred by TPM in performing its
obligations under the Services Agreement, up to certain amounts. Under this
Agreement, approximately $1.2 million and $0.7 million was charged to expense
for the years ended December 31, 1993 and 1992, respectively.
Advances to Donald J. Trump
- ---------------------------
In December 1993, Trump entered into an option agreement (the "Chemical Option
Agreement") with Chemical Bank ("Chemical") and ACFH Inc. ("ACFH") a wholly
owned subsidiary of Chemical. The Chemical Option Agreement grants to Trump an
option to purchase (i) the Trump Regency (including the land, improvements and
personal property used in the operation of the hotel) and (ii) certain
promissory notes made by Trump and/or certain of his affiliates and payable to
Chemical (the "Chemical Notes") which are secured by certain real estate assets
located in New York, unrelated to the Partnership.
The aggregate purchase price payable for the assets subject to the Chemical
Option Agreement is $80 million. Under the terms of the Chemical Option
Agreement, $1 million was required to be paid for the option by January 5, 1994.
The option expires on May 6, 1994, provided that the option may be extended
until June 30, 1994 by the payment of an additional $250,000 on or before that
date. The $1 million payment (and the $250,000 payment, if made) may be credited
against the $80 million purchase price. The Chemical Option Agreement does not
allocate the purchase price among the assets subject to the option or permit the
option to be exercised for some, but not all, of such assets.
In connection with the execution of the Chemical Option Agreement, Trump agreed
with the Partnership that, if Trump is able to acquire the Trump Regency
pursuant to the exercise of the option, he would make the Trump Regency
available for the sole benefit of the Partnership on a basis consistent with the
Partnership's contractual obligations and requirements. Trump further agreed
that the Partnership would not be required to pay any additional consideration
to Trump in connection with any assignment of the option to purchase the Trump
Regency. On January 5, 1994, the Partnership obtained the approval of the CCC to
make the $1 million payment, and the payment was made on that date.
F-20
<PAGE>
(10) Fair Value of Financial Instruments:
------------------------------------
The carrying amount of the following financial instruments of the Company,
Holding and the Partnership approximates fair value, as follows: (a) cash and
cash equivalents, accrued interest receivables and payables are based on the
short term nature of these financial instruments. (b) CRDA bonds and deposits
are based on the allowances to give effect to the below market interest rates.
The estimated fair values of other financial instruments are as follows:
December 31, 1993
-----------------
Carrying Amount Fair Value
--------------- ---------------
12 1/2% PIK Notes $ 64,252,000 $ 68,784,000
10 7/8% Mortgage Notes $325,859,000 $313,500,000
The fair values of the PIK and Mortgage Notes are based on quoted market prices
obtained by the Partnership from its investment advisor.
There are no quoted market prices for other notes payable and a reasonable
estimate could not be made without incurring excessive costs.
F-21
<PAGE>
<TABLE>
<CAPTION>
SCHEDULE II
TRUMP PLAZA HOLDING ASSOCIATES AND
----------------------------------
TRUMP PLAZA ASSOCIATES
----------------------
AMOUNTS RECEIVABLE (PAYABLE) FROM (TO) RELATED
----------------------------------------------
PARTIES, UNDERWRITERS, PROMOTERS AND EMPLOYEES OTHER
----------------------------------------------------
THAN RELATED PARTIES
--------------------
FOR THE YEARS ENDED DECEMBER 31, 1993, 1992 AND 1991
----------------------------------------------------
Balance at Balance at
Beginning End of
Name of Debtor of Period Additions Deductions Period
--------------- ----------- ----------- ----------- ------------
<S> <C> <C> <C> <C>
YEAR ENDED DECEMBER 31, 1993:
Seashore Four Associates $ (592,000) $ (900,000) $ 926,000 $ (566,000)
Trump Taj Mahal Associates
Limited Partnership (50,000) (229,000) 206,000 (73,000)
Trump's Castle Associates
Limited Partnership (333,000) (1,138,000) 1,150,000 (321,000)
Trump Seashore Associates 1,153,000 710,000 (1,000,000) 863,000
Trump Penthouse Parcel (87,000) - 87,000 -
Trump Plaza Management Corp. - (1,247,000) 1,247,000 -
------------ ------------ ------------ ------------
$ 91,000 $(2,804,000) $ 2,616,000 $ (97,000)
============ ============ ============ =============
YEAR ENDED DECEMBER 31, 1992:
Seashore Four Associates $ (665,000) $ (900,000) $ 973,000 $ (592,000)
Trump Taj Mahal Associates
Limited Partnership (222,000) (295,000) 467,000 (50,000)
Trump's Castle Associates
Limited Partnership (345,000) (1,018,000) 1,030,000 (333,000)
Trump Seashore Associates 1,415,000 738,000 (1,000,000) 1,153,000
Trump Penthouse Parcel (26,000) 162,000 (223,000) (87,000)
Trump Crystal Tower Associates
Limited Partnership 285,000 146,000 (431,000) -
Trump Plaza Management Corp. - (708,000) 708,000 -
Other affiliated companies 23,000 - (23,000) -
----------- ----------- ----------- ----------
$ 465,000 $(1,875,000) $ 1,501,000 $ 91,000
=========== ============ =========== ==========
YEAR ENDED DECEMBER 31, 1991:
Seashore Four Associates $ (83,000) $ (900,000) $ 318,000 $ (665,000)
Trump Taj Mahal Associates
Limited Partnership (53,000) (344,000) 175,000 (222,000)
Trump's Castle Associates
Limited Partnership (431,000) (1,165,000) 1,251,000 (345,000)
Trump Seashore Associates 1,356,000 1,159,000 (1,100,000) 1,415,000
Trump Penthouse Parcel (65,000) 39,000 - (26,000)
Helicopter Air Services Inc. 218,000 - (218,000) -
Trump Crystal Tower Assoc.
Limited Partnership (708,000) 57,000 936,000 285,000
Trump Shuttle 113,000 (113,000) - -
Trump Sports and Entertainment 75,000 (75,000) - -
Other affiliated companies 21,000 2,000 - 23,000
----------- ----------- ----------- ----------
$ 443,000 $(1,340,000) $ 1,362,000 $ 465,000
=========== =========== =========== ==========
All of the above amounts are noninterest bearing and are due on demand.
</TABLE>
F-22
<PAGE>
<TABLE>
<CAPTION>
SCHEDULE V
TRUMP PLAZA HOLDING ASSOCIATES AND
----------------------------------
TRUMP PLAZA ASSOCIATES
----------------------
PROPERTY AND EQUIPMENT
----------------------
FOR THE YEARS ENDED DECEMBER 31, 1993, 1992 AND 1991
----------------------------------------------------
Other Changes-
Balance at Additions Balance at
Beginning Additions (Deductions) End of
of Period at Cost Retirements (A) Period
----------- ----------- ----------- ------------ ------------
YEAR ENDED
DECEMBER 31, 1993:
<S> <C> <C> <C> <C> <C>
Land and land
improvements $ 34,907,000 $ 383,000 $ - $ 323,000 $ 35,613,000
Buildings and
building
improvements 293,908,000 218,000 - 1,491,000 295,617,000
Furniture,
fixtures and
equipment 74,622,000 5,912,000 - (2,361,000) 78,173,000
Leasehold
improvements 2,378,000 - - 26,000 2,404,000
Construction in
progress 3,924,000 3,539,000 - (3,679,000) 3,784,000
----------- ---------- ---------- ----------- -----------
$409,739,000 $10,052,000 - $ (4,200,000) $415,591,000
=========== ========== ========== =========== ===========
YEAR ENDED
DECEMBER 31, 1992:
Land and land
improvements $ 34,760,000 $ 100,000 $ - $ 47,000 $ 34,907,000
Buildings and
building
improvements 292,364,000 408,000 - 1,136,000 293,908,000
Furniture,
fixtures and
equipment 69,968,000 4,019,000 (811,000) 1,446,000 74,622,000
Leasehold
improvements 2,378,000 - - - 2,378,000
Construction in
progress 2,437,000 4,116,000 - (2,629,000) 3,924,000
----------- ---------- ---------- ----------- -----------
$401,907,000 $ 8,643,000 $ (811,000) $ - $409,739,000
=========== ========== ========== =========== ===========
YEAR ENDED
DECEMBER 31, 1991:
Land and land
improvements $ 34,747,000 $ 1,000 $ - $ 12,000 $ 34,760,000
Buildings and
building
improvements 291,206,000 281,000 - 877,000 292,364,000
Furniture,
fixtures and
equipment 65,930,000 2,026,000 (163,000) 2,175,000 69,968,000
Leasehold
improvements 2,378,000 - - - 2,378,000
Construction in
progress 2,300,000 3,201,000 - (3,064,000) 2,437,000
----------- ---------- ---------- ----------- -----------
$396,561,000 $ 5,509,000 $ (163,000) $ - $401,907,000
=========== ========== ========== =========== ============
</TABLE>
(A) Represents reclassification of completed capital projects to
in-service classifications.
F-23
<PAGE>
SCHEDULE VI
<TABLE>
<CAPTION>
TRUMP PLAZA HOLDING ASSOCIATES AND
----------------------------------
TRUMP PLAZA ASSOCIATES
----------------------
ACCUMULATED DEPRECIATION AND AMORTIZATION
-----------------------------------------
OF PROPERTY AND EQUIPMENT
-------------------------
FOR THE YEARS ENDED DECEMBER 31, 1993, 1992 AND 1991
----------------------------------------------------
Additions
Balance at Charged to Transfers Balance at
Beginning Costs and and End of
of Period Expenses Retirements Period
--------- ---------- ----------- ----------
YEAR ENDED DECEMBER 31, 1993
<S> <C> <C> <C> <C>
Land improvements $ 1,340,000 $ 195,000 $ - $ 1,535,000
Buildings and building
improvements 52,463,000 7,554,000 - 60,017,000
Furniture, fixtures and
equipment 54,477,000 9,243,000 (4,200,000)(A) 59,520,000
Leasehold improvements 1,193,000 185,000 - 1,378,000
----------- ---------- ---------- -----------
$109,473,000 $17,177,000 $(4,200,000) $122,450,000
=========== ========== ========== ===========
YEAR ENDED DECEMBER 31, 1992:
Land improvements $ 1,177,000 $ 163,000 $ - $ 1,340,000
Buildings and building
improvements 41,827,000 7,493,000 3,143,000(A) 52,463,000
Furniture, fixtures and
equipment 51,060,000 7,371,000 (3,954,000)(A),(B) 54,477,000
Leasehold improvements 1,009,000 184,000 - 1,193,000
----------- ---------- ---------- -----------
$ 95,073,000 $15,211,000 $ (811,000) $109,473,000
=========== ========== ========== ===========
YEAR ENDED DECEMBER 31, 1991:
Land improvements $ 1,023,000 $ 154,000 $ - $ 1,177,000
Buildings and building
improvements 34,797,000 7,030,000 - 41,827,000
Furniture, fixtures and
equipment 43,320,000 7,903,000 (163,000)(B) 51,060,000
Leasehold improvements 826,000 183,000 - 1,009,000
----------- ---------- ---------- -----------
$ 79,966,000 $15,270,000 $ (163,000) $ 95,073,000
=========== ========== ========== ===========
</TABLE>
(A) Represents reclassification of certain capital projects to
appropriate classifications.
(B) Includes retirements of $811,000, and $163,000 in 1992, and 1991
respectively.
F-24
<PAGE>
SCHEDULE VIII
<TABLE>
<CAPTION>
TRUMP PLAZA HOLDING ASSOCIATES AND
----------------------------------
TRUMP PLAZA ASSOCIATES
----------------------
VALUATION AND QUALIFYING ACCOUNTS
---------------------------------
FOR THE YEARS ENDED DECEMBER 31, 1993, 1992 AND 1991
----------------------------------------------------
Balance at Charged to Other Balance at
Beginning Costs and Changes End of
of Period Expenses (Deductions) Period
----------- ---------- ------------ -----------
YEAR ENDED DECEMBER 31, 1993:
<S> <C> <C> <C> <C>
Allowance for doubtful
accounts $14,402,000 $ 90,000 $ (3,876,000)(A) $10,616,000
========== ========= =========== ==========
Valuation allowance for
interest differential on
CRDA bonds $ 1,934,000 $1,047,000 $ - $ 2,981,000
========== ========= =========== ===========
YEAR ENDED DECEMBER 31, 1992:
Allowance for doubtful
accounts $20,231,000 $4,675,000 $(10,504,000)(A) $14,402,000
========== ========= =========== ===========
Valuation allowance for
interest differential on
CRDA bonds $ 1,385,000 $ 645,000 $ (96,000)(B) $ 1,934,000
========== ========= =========== ==========
YEAR ENDED DECEMBER 31, 1991:
Allowance for doubtful
accounts $19,373,000 $5,234,000 $ (4,376,000)(A) $20,231,000
========== ========= =========== ==========
Valuation allowance for
interest differential on
CRDA bonds $ 1,157,000 $ 219,000 $ 9,000 (B) $ 1,385,000
========== ========= =========== ==========
</TABLE>
(A) Write-off of uncollectible accounts.
(B) Write-off of allowance applicable to
contribution of CRDA deposits.
F-25
<PAGE>
<TABLE>
<CAPTION>
SCHEDULE X
TRUMP PLAZA HOLDING ASSOCIATES AND
----------------------------------
TRUMP PLAZA ASSOCIATES
----------------------
SUPPLEMENTARY INCOME STATEMENT INFORMATION
------------------------------------------
FOR THE YEARS ENDED DECEMBER 31, 1993, 1992 AND 1991
----------------------------------------------------
Charged to Costs and Expenses
-----------------------------
Item 1993 1992 1991
---- ---- ---- ----
<S> <C> <C> <C>
Taxes, other than payroll and
income taxes:
Gaming taxes $ 21,345,000 $ 21,085,000 $ 18,429,000
=========== =========== ===========
Real estate taxes $ 7,662,000 $ 10,967,000 $ 7,818,000
=========== =========== ===========
Advertising costs $ 5,225,000 $ 5,869,000 $ 4,810,000
=========== =========== ===========
</TABLE>
F-26
EMPLOYMENT AGREEMENT
AGREEMENT, dated as of September __, 1993, between
TRUMP PLAZA ASSOCIATES (the "Company"), and NICHOLAS L. RIBIS
(the "Executive").
1. Employment. The Company agrees to employ the
Executive and the Executive agrees to be employed by the Company
under the terms and conditions hereinafter set forth.
2. Term. The term of this Agreement (the "Term")
shall be for three years, commencing on the date hereof.
3. Salary. During the first year of the Term, the
Company shall pay the Executive an annual salary of $550,000,
payable in accordance with the Company's normal payroll
practices. The salary shall be increased by ten percent for each
of the second and third years of the Term.
4. Duties. The Executive shall serve as Chief
Executive Officer of the Company and hereby promises to perform
and discharge well and faithfully the duties which may be
assigned to him from time to time by the Board of Directors of
the Company, provided such duties are consistent with Executive's
position as Chief Executive Officer.
5. Signing Bonus. Upon execution of this Agreement,
the Company shall pay the Executive a one-time signing bonus of
$250,000.
6. Benefits/Expenses. During the Term, Executive
shall participate in all employee benefit plans of the Company,
subject to the eligibility, enrollment and other requirements of
such plans, and, in addition, shall continue to receive his
current automobile allowance and such other benefits as he is
presently receiving. The Executive shall be entitled to
reimbursement by the Company for reasonable expenses incurred in
connection with the performance of his duties hereunder, on the
same basis and under the same terms applicable to other Executive
officers of the Company.
7. Roll-Up; Public Offering. In the event that the
Company, or any entity which acquires substantially all of the
stock or assets of the Company, proposes to engage in an offering
of common shares to the public (a "Public Offering"), the parties
hereto shall negotiate in good faith to adopt new employment
compensation arrangements for Executive which shall include
equity participation for Executive.
<PAGE>
8. Termination for Cause. The Company may at any
time terminate the Executive's employment for "Cause" and shall
thereafter have no obligations to the Executive for continued
payment of salary, benefits or other amounts payable to Executive
hereunder accruing after the date of termination. For purposes
of this Agreement, Cause shall mean either (i) Executive's
conviction of a felony, or (ii) the revocation or termination of
Executive's casino key employee license issued by the New Jersey
Casino Control Commission.
9. Covenant Not to Compete. In the event that,
during the Term, either (i) the Company terminates the
Executive's employment for Cause, or (ii) the Executive
voluntarily terminates his employment (other than following any
material breach of this Agreement by the Company), the Executive
shall not, for a period of the lesser of (A) one year from such
termination, or (B) the period then remaining in the Term as of
the date of such termination, engage directly or indirectly, as
an employee, consultant or otherwise, in the management or
operation of any gambling casino located in the Atlantic City,
New Jersey market; provided, however, that this covenant shall
not be applicable in the event that a Public Offering occurs and
Executive voluntarily terminates his employment as a result of
the parties' failure to negotiate mutually satisfactory
compensation arrangements as contemplated by Section 7 hereof.
10. Board Approval. This Agreement is subject to the
approval of the governing board of the Company.
11. Law to Govern. This Agreement shall be governed
by and construed and enforced in accordance with the laws of the
State of New Jersey, without giving effect to the principles of
conflicts of laws thereof.
12. Entire Agreement. This instrument contains the
entire agreement of the parties with respect to the subject
matter hereof. The execution of this Agreement by the parties
shall make null and void any prior agreement or understanding
between the parties with respect to terms and conditions of
employment. It may not be changed orally but only by an
agreement in writing signed by the party against whom enforcement
of any waiver, change, modification, extension or discharge is
sought.
<PAGE>
IN WITNESS WHEREOF, the parties have executed this
Agreement as of the day first hereinabove written.
TRUMP PLAZA ASSOCIATES
By:
--------------------------------
Donald J. Trump
--------------------------------
Nicholas L. Ribis
SEVERANCE AGREEMENT
This Agreement is entered into this 10th day of
January, 1994 by and between Trump Plaza Associates (hereinafter
"TPA") with offices located at Boardwalk and Mississippi Avenue,
Atlantic City, New Jersey and Robert M. Pickus residing at 663
Weilers Lane, Absecon, New Jersey (hereinafter "Employee").
WITNESSETH
Whereas, on and before December 3, 1993 Employee was
for many years employed by the Trump's Castle Casino Resort; and
Whereas, TPA desires to employ Employee as Vice
President/General counsel and is willing to enter into this
severance agreement;
Now therefore, based upon the execution of this
Agreement, Employee's employment, and other good and valuable
consideration, TPA and Employee agree as follows:
1. In the event TPA terminates the employment of
Employee for a reason set forth below, TPA shall pay Employee on
the date of termination the full amount of compensation and any
reimbursements due him through the date of termination whereupon
TPA shall have no further liability or obligation to Employee.
(a) Upon revocation or termination of the
Employee's casino key employee license;
(b) Upon an act committed by the Employee
constituting "cause" which is defined to mean: an act
by the Employee constituting a breach of any of the
material terms of his employment; the indictment and/or
conviction of any criminal offense constituting a
felony; the deliberate refusal by the Employee to
perform his duties as Vice President/General Counsel;
or if the Employee:
(i) Files a petition in bankruptcy or is
adjudicated as bankrupt;
(ii) Institutes or suffers to be instituted
any procedure in bankruptcy court for
reorganization or arrangement of his financial
affairs;
(iii) Has a receiver of his assets or
property appointed because of insolvency; or
<PAGE>
(iv) Makes a general assignment for the
benefit of creditors;
(c) Upon the death or permanent disability of the
Employee;
(d) Upon the voluntary resignation by Employee.
2. If Employee's employment should be terminated by
TPA for any reason, other than those specified in Section (1)
above (it being understood that a purported termination for Cause
which is contested by Employee and finally determined not to have
been proper shall be treated as a termination under this Section
(2)), then TPA shall on the date of termination pay Employee his
salary and any reimbursements due to the date of termination and
as severance payment the full amount of his salary at its then
current rate for a period of one year whereupon TPA shall have no
further liability or obligation to Employee under this Agreement
or otherwise.
In Witness Whereof, TPA and Employee have set their
hands and seals the date and year first above written.
TRUMP PLAZA ASSOCIATES
By: _________________________
Kevin DeSanctis
President and Chief
Operating Officer
By: _________________________
Robert M. Pickus
