UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
(Mark One)
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the quarterly period ended September 30, 1995
------------------
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from ________ to ________
Commission file number 1-10075
TRUMP TAJ MAHAL FUNDING, INC.
(Exact name of Registrant as specified in its charter)
New Jersey 13-3469470
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
1000 The Boardwalk
Atlantic City, New Jersey 08401
(Address of principal executive (Zip Code)
offices)
(609) 449-5540
Registrant's telephone number, including area code
----------
TRUMP TAJ MAHAL ASSOCIATES
(Exact name of Registrant as specified in its Charter)
New Jersey 13-3469507
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
1000 The Boardwalk
Atlantic City, New Jersey 08401
(Address of principal executive (Zip Code)
offices)
(609) 449-5540
Registrant's telephone number, including area code
----------
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
Registrant was required to file such reports), and (2) have been subject to such
filing requirements for the past 90 days. Yes [X] No
Indicate by check mark whether the Registrant has filed all documents and
reports required to be filed by Sections 12, 13 or 15(d) of the Securities
Exchange Act of 1934 subsequent to the distribution of securities under a plan
confirmed by a court. Yes [X] No [ ].
The number of shares outstanding of Trump Taj Mahal Funding, Inc.'s common
stock as of November 1, 1995 was 200.
Trump Taj Mahal Funding, Inc. meets the conditions set forth in General
Instruction (H) (1) (a) and (b) of Form 10-Q and is therefore filing this Form
with the reduced disclosure format.
Total number of pages in this Report: 28
<PAGE>
TAJ MAHAL HOLDING CORP.
TRUMP TAJ MAHAL ASSOCIATES AND SUBSIDIARY
INDEX TO FORM 10Q
Page
Number
------
PART I - FINANCIAL INFORMATION
Item 1 -- Financial Statements -
For the Three and Nine Months Ended September 30, 1995 and 1994
Taj Mahal Holding Corp. and Subsidiary:
Consolidated Balance Sheets ........................................... 3
Consolidated Statements of Operations ................................. 4
Consolidated Statement of Stockholders' Equity ........................ 5
Consolidated Statements of Cash Flows ................................. 6
Notes to Consolidated Financial Statements ............................ 7
Trump Taj Mahal Associates and Subsidiary:
Consolidated Balance Sheets ........................................... 10
Consolidated Statements of Operations ................................. 11
Consolidated Statement of Capital (Deficit) ........................... 13
Consolidated Statements of Cash Flows ................................. 14
Notes to Consolidated Financial Statements ............................ 15
Item 2 -- Management's Discussion and Analysis of Financial Condition and . 20
Results of Operations
PART II - OTHER INFORMATION
Item 1 - Legal Proceedings ................................................ 26
Item 2 - Changes in Securities ............................................ 26
Item 3 - Defaults Upon Senior Securities .................................. 26
Item 4 - Submission of Matters of a Vote of Security Holders .............. 26
Item 5 - Other Information ................................................ 26
Item 6 - Exhibits and Reports on Form 8-K ................................. 27
Signatures ................................................................ 28
<PAGE>
TAJ MAHAL HOLDING CORP. AND SUBSIDIARY
CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>
ASSETS
September 30, December 31,
1995 1994
----------- -----------
(Unaudited)
<S> <C> <C>
Cash $ 100 $ 100
----------- -----------
Total Assets $ 100 $ 100
=========== ===========
STOCKHOLDERS' EQUITY (Note 1)
Class A Common Stock; $.01 par value; 10,000,000 shares $ 40 $ 40
authorized, 1,350,000 issued and outstanding
Class B Common Stock; $.01 par value: 860,000 shares 20 20
authorized, 780,242 and 765,130 issued and outstanding
Class C Common Stock; $.01 par value; 10,000,000 shares 40 40
authorized, 1,350,000 issued and outstanding
Additional paid in capital 6,934,000 5,729,000
Accumulated deficit (6,934,000) (5,729,000)
----------- -----------
Total Stockholders' Equity $ 100 $ 100
=========== ===========
The accompanying notes to financial statements
are an integral part of these balance sheets
</TABLE>
3
<PAGE>
TAJ MAHAL HOLDING CORP. AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
Three months ended
September 30,
--------------------------
1995 1994
------------ -----------
Revenue $ -- $ --
Expenses (Note 2) -
Director fees, insurance and administrative
expenses 390,000 831,000
------------ -----------
Net loss $ (390,000) $ (831,000)
=========== ===========
Net loss per common share (Note 2) $ (.29) $ (.62)
=========== ==========
Weighted average number of shares outstanding 1,350,000 1,350,000
============= ==========
Nine months ended
September 30,
--------------------------
1995 1994
----------- ---------
Revenue $ -- $ --
Expenses (Note 2) -
Director fees, insurance and administrative
expenses 1,205,000 1,710,000
----------- -----------
Net loss $(1,205,000) $(1,710,000)
=========== ===========
Net loss per common share (Note 2) $ (.89) $ (1.27)
=========== ===========
Weighted average number of shares outstanding 1,350,000 1,350,000
=========== ===========
The accompanying notes to financial statements
are an integral part of these statements
4
<PAGE>
TAJ MAHAL HOLDING CORP. AND SUBSIDIARY
CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY
(unaudited)
<TABLE>
<CAPTION>
COMMON STOCK
--------------------------------------
CLASS A CLASS B CLASS C
------------------ ----------------- ---------------- Additional
Number Number Number Paid in Accumulated
of Shares Amount of Shares Amount of Shares Amount Capital Deficit Total
--------- ------ --------- ------ --------- ------ ---------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Balance,
December 31, 1994 1,350,000 $ 40 765,130 $ 20 1,350,000 $ 40 $5,729,000 $(5,729,000) $ 100
Additional issuance
of common stock in
connection with the
Partnership's
interest payment - - 15,112 - - - - - -
Distribution from
the Partnership for
operating expenses - - - - - - 1,205,000 - 1,205,000
Net loss - - - - - - - (1,205,000) (1,205,000)
--------- ------ --------- ------ --------- ------ ---------- ----------- -----------
Balance,
September
30, 1995 1,350,000 $ 40 780,242 $ 20 1,350,000 $ 40 $6,934,000 $(6,934,000) $ 100
========= ====== ========= ====== ========= ====== ========== =========== ===========
</TABLE>
The accompanying notes to financial statements
are an integral part of these statements
5
<PAGE>
TAJ MAHAL HOLDING CORP. AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF CASH FLOWS
(unaudited)
For the nine months ended
September 30,
-----------------------------
1995 1994
----------- -----------
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss $(1,205,000) $(1,710,000)
CASH FLOWS FROM FINANCING ACTIVITIES:
Partnership distribution 1,205,000 1,710,000
----------- -----------
NET CHANGE IN CASH -- --
CASH AT BEGINNING OF PERIOD 100 100
----------- -----------
CASH AT END OF PERIOD $ 100 $ 100
=========== ===========
The accompanying notes to financial statements
are an integral part of these statements
6
<PAGE>
TAJ MAHAL HOLDING CORP. AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
1. Organization and Background:
The accompanying consolidated financial statements include those of Taj
Mahal Holding Corp. ("Holding") and its wholly owned subsidiary, TM/GP
Corporation ("TM/GP"), the managing general partner of Trump Taj Mahal
Associates, a New Jersey general partnership (the "Partnership") which
operates the Trump Taj Mahal Casino Resort. All significant intercompany
balances and transactions have been eliminated in the consolidated
financial statements.
Holding was organized on December 18, 1990 as a Delaware corporation wholly
owned by Donald J. Trump. Prior to January 1, 1992, Holding had no
activity. As described below, Holding was formed for the purpose of
consummating a plan of reorganization (the "Plan") involving the
Partnership and Trump Taj Mahal Funding, Inc. ("Funding"), a New Jersey
corporation which restructured the indebtedness of the Partnership. Prior
to the consummation of the Plan, both the Partnership and Funding were
owned by Donald J. Trump and affiliated entities.
Holding and its subsidiaries have no business operations other than their
investment in the Partnership. As a result, their ability to pay operating
expenses and dividends is completely dependent on the operations of the
Partnership.
Upon consummation of the Plan on October 4, 1991, the Partnership issued to
the holders of Funding's 14% First Mortgage Bonds, Series A, Due 1998 (the
"Old Bonds"), a general partnership interest representing 49.995% of the
equity of the Partnership. Such holders in turn contributed such
partnership interest to Holding. Funding also issued new 11.35% Mortgage
Bonds, Series A, Due 1999 (the "Bonds") in exchange for the Old Bonds. Each
$1,000 principal amount of Bonds trades as a unit with one share of Class B
Redeemable Common Stock (the "Class B Stock") of Holding, as described
below.
TM/GP, which has no other assets, received a 49.995% partnership interest
in the Partnership from Holding. Donald J. Trump also contributed to
Holding a 50% ownership interest in The Trump Taj Mahal Corporation, a
Delaware corporation, which owns a .01% interest in the Partnership, in
exchange for the Class C Common Stock (the "Class C Stock"), as described
below.
At the time of these transfers, Holding issued 1,350,000 shares of its
Class A Common Stock (the "Class A Stock") and 729,458 shares of its Class
B Stock to the holders of the Old Bonds and 1,350,000 shares of its Class C
Stock to Donald J. Trump. Notwithstanding their par value, the various
classes of common stock are recorded at stated value, which represents the
value assigned to the shares of Holding which were issued in connection
with the consummation of the Plan.
In accordance with the terms of the indenture pursuant to which the Bonds
were issued, a portion of the interest on the Bonds may be paid in cash or
7
<PAGE>
in additional Bonds (the "Additional Amount"). On May 15, 1992, 8,844 units
comprised of Bonds in the aggregate amount of $8,844,000 and 8,844 shares
of Class B Stock were issued by Funding as payment of the Additional
Amount. On May 15, 1993, 14,579 units comprised of Bonds in the aggregate
amount of approximately $14,579,000 and 14,579 shares of Class B Stock were
issued as payment of the Additional Amount. On May 15, 1994, 12,249 units
comprised of Bonds in the aggregate principle amount of approximately
$12,249,000 and 12,249 shares of Class B Stock were issued together with
$2,621,000 in cash as payment of the Additional Amount. On May 15, 1995,
15,112 units comprised of Bonds in the aggregate principal amount of
approximately $15,112,000 and 15,112 shares of Class B Stock were issued as
payment of the Additional Amount.
Currently, the holders of the Class B Stock are entitled to elect four of
the nine members of Holding's Board of Directors and Donald J. Trump, as
holder of the Class C Stock is entitled to elect the remaining five
directors. The Class A Stock has no voting rights during the time any of
the Class B Stock is outstanding. However, upon Holding's liquidation, all
three classes of Holding's common stock share ratably in the assets of
Holding to the extent of their par value, with the Class A Stock entitled
to the residual. The Class B Stock must be redeemed at a price of $.50 per
share when the Bonds, with which they were issued, are paid, redeemed or
purchased and canceled.
The accompanying financial statements have been prepared by Holding without
audit. In the opinion of Holding, all adjustments, consisting of only
normal recurring adjustments, necessary to present fairly the financial
position, results of operations and changes in cash flows for the periods
presented, have been made.
The accompanying financial statements have been prepared by Holding
pursuant to the rules and regulations of the Securities and Exchange
Commission (the "SEC"). Accordingly, certain information and note
disclosures normally included in financial statements prepared in
conformity with generally accepted accounting principles have been
condensed or omitted. These financial statements should be read in
conjunction with the financial statements and notes thereto included in
Holding's December 31, 1994 Annual Report on Form 10-K.
2. Summary of Significant Accounting Policies:
Investment in the Partnership
Holding accounts for its investment in the Partnership using the equity
method of accounting. Under this method, Holding reports as equity income
50% of the Partnership's earnings, if any, from October 4, 1991. In
addition, the difference between Holding's equity in the underlying
identifiable assets of the Partnership as of October 4, 1991 ($91,703,000)
and the cost basis of its investment in the Partnership is being amortized
into income over 40 years.
For the period from October 4, 1991 to September 30, 1995, the Partnership
incurred a net loss of $123,559,000. Holding's equity in this loss
($61,779,500) less amortization of the difference between the underlying
identifiable assets of the Partnership and the cost basis of its investment
8
<PAGE>
in the Partnership, for the period from October 4, 1991 to September 30,
1995, ($9,170,000), will not be reflected in Holding's financial statements
until such time as the Partnership generates earnings sufficient to offset
the accumulated net loss.
Income Taxes
Holding will record Federal income taxes based on its allocable share of
Partnership earnings. The payment of any such taxes will be reimbursed by
the Partnership. Under New Jersey Casino Control Commission regulations,
the Partnership is required to file a consolidated New Jersey corporation
business tax return and pay all state taxes attributable to its earnings.
Operating Expenses
Expenses of Holding consist of directors and officers liability insurance,
board of director fees and expenses, and administrative expenses. Holding
is entitled to full reimbursement of such expenses by the Partnership.
Total expenses for the nine months ended September 30, 1995 and 1994
approximated $1,205,000 and $1,710,000, respectively, all of which were
reimbursed by the Partnership.
Earnings Per Share
For the calculation of net loss per share, Class A Stock was used since it
is the only class of participating stock. Net loss per share is determined
by dividing the net loss by the weighted average number of shares of Class
A Stock outstanding.
3. Proposed Recapitalization:
On October 6, 1995, the Partnership, Funding, and Holding (collectively
with the Partnership and Funding, the "Taj Entities") executed a letter
agreement (the "Agreement") with certain institutional holders of the Class
A Common Stock (the "Class A Stock") of Holding (collectively, the
"Holders"), whereby the Holders agreed to support a proposed
recapitalization of the Taj Entities (the "Recapitalization") in which each
holder of Class A Stock would receive at least $30 for each share of Class
A Stock, payable in cash or shares of the Common Stock of Trump Hotels and
Casino Resorts, Inc. ("THCR"). The other terms of the Recapitalization have
not yet been determined. The Holders also agreed not to dispose of their
shares of Class A Stock except pursuant to the Recapitalization, other than
sales to third parties who agree to be bound by the Agreement. The
Agreement expires on April 30, 1996.
THCR,which is approximately 40% owned by Donald J. Trump and not affiliated
with the Taj Entities, is not a party to the Agreement. Any transaction
involving the issuance of shares of the Common Stock of THCR will be
subject to the approval of the Board of Directors and Stockholders of THCR.
The Recapitalization is expected to be subject to, among other conditions,
the receipt by the Taj Entities of financing in an amount sufficient to
effectuate the Recapitalization, the receipt of fairness opinions and the
negotiation of satisfactory documentation to effect the Recapitalization.
No assurances can be given that any type of recapitalization plan will be
consummated by the Taj Entities.
9
<PAGE>
TRUMP TAJ MAHAL ASSOCIATES AND SUBSIDIARY
CONSOLIDATED BALANCE SHEETS
(Dollars in thousands)
September 30, December 31,
1995 1994
----------- -----------
(unaudited)
ASSETS
CURRENT ASSETS:
Cash and cash investments $ 108,769 $ 61,196
Receivables, net of allowance of $5,354
and $4,059 for doubtful accounts 15,759 15,443
Inventory 6,950 6,431
Prepaid expenses and other current assets 5,175 7,806
--------- ---------
Total Current Assets 136,653 90,876
--------- ---------
PROPERTY AND EQUIPMENT:
Land 37,843 37,843
Building 663,284 656,702
Furniture, fixtures and equipment 170,047 160,372
Leasehold improvements 31,253 31,243
--------- ---------
902,427 886,160
Less: Accumulated depreciation and amortization (207,825) (179,375)
--------- ---------
694,602 706,785
--------- ---------
OTHER ASSETS 12,470 9,951
--------- ---------
Total Assets $ 843,725 $ 807,612
========= =========
LIABILITIES AND CAPITAL
CURRENT LIABILITIES:
Long-term debt due currently $ 868 $ 743
Accounts payable 5,880 3,256
Accrued interest payable 27,441 8,977
Due to affiliates, net 547 109
Other current liabilities 38,303 37,102
--------- ---------
Total Current Liabilities 73,039 50,187
--------- ---------
OTHER LONG TERM LIABILITIES 29,644 32,912
--------- ---------
LONG-TERM DEBT NET OF UNAMORTIZED DISCOUNT
OF $137,108 AND $153,597 688,143 656,701
--------- ---------
COMMITMENTS AND CONTINGENCIES
CAPITAL:
Contributed capital 123,765 123,765
Accumulated deficit (70,866) (55,953)
--------- ---------
Total Capital 52,899 67,812
--------- ---------
Total Liabilities and Capital $ 843,725 $ 807,612
========= =========
The accompanying notes to financial statements
are an integral part of this balance sheets.
10
<PAGE>
TRUMP TAJ MAHAL ASSOCIATES AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF OPERATIONS
(Dollars in thousands)
(unaudited)
For the three months ended
September 30,
--------------------------
1995 1994
--------- ---------
REVENUES:
Gaming $ 143,814 $ 132,786
Rooms 12,698 12,549
Food and beverage 15,281 16,097
Other 4,122 5,065
--------- ---------
Gross revenues 175,915 166,497
Less - Promotional allowances 18,107 18,510
--------- ---------
Net revenues 157,808 147,987
--------- ---------
COST AND EXPENSES:
Gaming 76,047 71,493
Rooms 3,897 4,062
Food and beverage 6,232 6,533
General and administrative 25,299 24,790
Depreciation and amortization 11,213 9,801
--------- ---------
122,688 116,679
--------- ---------
Income from operations 35,120 31,308
Interest income 1,025 482
Interest expense (29,700) (28,504)
--------- ---------
Net income $ 6,445 $ 3,286
========= =========
The accompanying notes to financial statements
are an integral part of this statement.
11
<PAGE>
TRUMP TAJ MAHAL ASSOCIATES AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF OPERATIONS
(Dollars in thousands)
(unaudited)
For the nine months ended
September 30,
--------------------------
1995 1994
--------- ---------
REVENUES:
Gaming $ 377,368 $ 345,329
Rooms 33,035 32,159
Food and beverage 42,933 44,110
Other 11,479 13,742
--------- ---------
Gross revenues 464,815 435,340
Less - Promotional allowances 47,519 48,802
--------- ---------
Net revenues 417,296 386,538
--------- ---------
COST AND EXPENSES:
Gaming 208,671 196,412
Rooms 11,500 11,491
Food and beverage 18,597 18,142
General and administrative 73,717 77,359
Depreciation and amortization 32,407 28,944
--------- ---------
344,892 332,348
--------- ---------
Income from operations 72,404 54,190
Interest income 2,752 1,343
Interest expense (88,864) (86,855)
--------- ---------
Net loss $ (13,708) $ (31,322)
========= =========
The accompanying notes to financial statements
are an integral part of this statement.
12
<PAGE>
TRUMP TAJ MAHAL ASSOCIATES AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF CAPITAL (DEFICIT)
(Dollars in thousands)
(unaudited)
Accumulated
Contributed Surplus Total
Capital (Deficit) Capital
-------- -------- --------
Balance, December 31, 1994 $123,765 $(55,953) $ 67,812
Net loss for the nine months ended
September 30, 1995 -- (13,708) (13,708)
Partnership distribution -- (1,205) (1,205)
-------- -------- --------
Balance, September 30, 1995 $123,765 $(70,866) $ 52,899
======== ======== ========
The accompanying notes to financial statements
are an integral part of this statement.
13
<PAGE>
TRUMP TAJ MAHAL ASSOCIATES AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Dollars in thousands)
(unaudited)
For the nine months ended
September 30,
---------------------
1995 1994
--------- ---------
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss ........................................... $ (13,708) $ (31,322)
Adjustments to reconcile net loss
to net cash flows provided by operating
activities--Depreciation and amortization ........ 32,407 28,944
Charges related to lease guarantee ............... 1,748 1,506
Accretion of discount on Bond indebtedness ....... 16,489 13,795
Other adjustments to reduce the carrying value
of non current assets .......................... 2,315 2,148
Provision for doubtful accounts .................. 3,825 1,809
--------- ---------
43,076 16,880
Changes in operating assets and liabilities:
Receivables, net ................................. (4,141) (1,688)
Inventory ........................................ (519) (1,883)
Other current assets ............................. 2,114 (673)
Other assets ..................................... (204) (654)
Due to affiliates, net ........................... 438 (451)
Accounts payable ................................. 2,624 2,251
Accrued interest payable ......................... 29,909 26,693
Other liabilities ................................ 13 87
--------- ---------
Net cash flows provided by operating
activities .................................... 73,310 40,562
--------- ---------
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchase of property and equipment ................. (19,477) (15,749)
Investment in CRDA obligation ...................... (4,274) (4,000)
-------- ---------
Net cash flows used in investing activities ...... (23,751) (19,749)
-------- ---------
CASH FLOWS FROM FINANCING ACTIVITIES:
Repayments of borrowings ........................... (781) (645)
Partnership distribution ........................... (1,205) (1,710)
-------- ---------
Net cash flows used in financing activities ...... (1,986) (2,355)
-------- ---------
NET INCREASE (DECREASE) IN CASH AND
CASH INVESTMENTS .................................... 47,573 18,458
CASH AND CASH INVESTMENTS BEGINNING OF PERIOD ........ 61,196 58,044
--------- ---------
CASH AND CASH INVESTMENTS END OF PERIOD .............. $ 108,769 $ 76,502
========= =========
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
Cash paid during the year for interest ............. $ 40,718 $ 42,074
========= =========
SUPPLEMENTAL DISCLOSURE OF NON-CASH TRANSACTIONS:
Issuance of PIK bonds in lieu of cash interest ..... $ 15,112 $ 12,249
========= =========
The accompanying notes to financial statements
are an integral part of this statement.
14
<PAGE>
TRUMP TAJ MAHAL ASSOCIATES AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
1. Organization and Operations:
The accompanying consolidated financial statements include those of Trump
Taj Mahal Associates (the "Partnership"), and its wholly owned subsidiary,
Trump Taj Mahal Funding, Inc. ("Funding"). All significant intercompany
balances and transactions have been eliminated in the consolidated
financial statements.
Trump Taj Mahal Associates was formed on June 23, 1988, as a New Jersey
limited partnership. The Partnership was converted to a general partnership
in December, 1990. The current partners and their respective ownership
interests are Trump Taj Mahal, Inc. ("TTMI"), 49.995%, The Trump Taj Mahal
Corporation ("Trump Corp."), .01%, and TM/GP Corporation ("TMGP"), the
managing general partner, and a wholly owned subsidiary of Taj Mahal
Holding Corp. ("Holding"), 49.995%.
The accompanying financial statements have been prepared by the Partnership
and Funding without audit. In the opinion of the Partnership and Funding,
all adjustments, consisting of only normal recurring adjustments, necessary
to present fairly the financial position, results of operations and changes
in cash flows for the periods presented, have been made.
The accompanying financial statements have been prepared by the Partnership
and Funding pursuant to the rules and regulations of the Securities and
Exchange Commission (the "SEC"). Accordingly, certain information and note
disclosures normally included in financial statements prepared in
conformity with generally accepted accounting principles have been
condensed or omitted. These financial statements should be read in
conjunction with the financial statements and notes thereto included in the
Partnership's and Funding's December 31, 1994 Annual Report on Form 10-K.
Donald J. Trump beneficially owns 50% of the Partnership and has pledged
his total ownership interest as collateral under various debt agreements.
The casino industry in Atlantic City is seasonal in nature. Therefore,
results of operations for the three and nine months ended September 30,
1995 and 1994 are not necessarily indicative of the operating results for a
full year.
2. Borrowings:
Long term debt consists of bank debt and outstanding Mortgage Bonds.
Funding's first Mortgage Bonds bear interest at the rate of 11.35% and are
due November 15, 1999. Each $1,000 principal amount of Bonds, together with
one share of Holding's Class B redeemable common stock, trade together as a
Unit, and may not be transferred separately. Interest on the Bonds is due
15
<PAGE>
semi-annually on each November 15 and May 15. Interest on the Bonds must be
paid in cash on each interest payment date at the rate of 9.375% per annum
(the "Mandatory Cash Interest Amount"). In addition to the Mandatory Cash
Interest Amount, effective May 15, 1992 and annually thereafter, an
additional amount of interest (the "Additional Amount") in cash or
additional Bonds or a combination thereof, is payable equal to the
difference between 11.35% of the outstanding principal amount of the Bonds
and the Mandatory Cash Interest Amount previously paid. To the extent that
there is excess available cash flow ("EACF") of the Partnership, as defined
in the Indenture, for the immediately preceding calendar year, Funding will
pay the Additional Amount in cash up to 10.28% and the balance thereof may
be paid at the option of Funding in cash or additional Units, provided that
an equivalent amount of cash is used to purchase or redeem Units.
Additional Bonds issued on October 4, 1991 amounted to approximately
$7,208,000. For the period from the issuance of the Bonds, October 4, 1991
through December 31, 1992, there was no EACF. Accordingly, Funding paid the
Additional Amounts on May 15, 1993 and May 15, 1992 through the issuance of
approximately $14,579,000 and $8,844,000, respectively, in additional
Bonds. Of the $14,870,000 Additional Amount due May 15, 1994, $2,621,000
was paid in cash and the $12,249,000 balance in Bonds. Of the $15,112,000
Additional Amount due May 15, 1995, Funding satisfied the entire obligation
through the issuance of Bonds.
Since Funding has no business operations, its ability to repay the
principal and interest on the Bonds is completely dependent on the
operations of the Partnership. The Bonds are guaranteed as to payment of
principle and interest by the Partnership and are collateralized by
substantially all the Partnership's property.
In accordance with AICPA Statement of Position 90-7, "Financial Reporting
By Entities in Reorganization Under the Bankruptcy Code", the Bonds when
issued were stated at the present value of amounts to be paid, determined
at current interest rates (effective rate of approximately 18%). The
effective interest rate of the Bonds was determined based on the trading
price of the Bonds for a specific period. Stating the debt at its
approximate present value resulted in a reduction of approximately
$204,276,000 in the carrying amount of the Bonds. This gain is being offset
by increased interest costs over the period of the Bonds to accrete such
Bonds to their face value at maturity. At September 30, 1995, the
unaccreted balance of this discount was approximately $137,108,000. The
current interest rates of other borrowings approximated their stated
interest rates as of the effective date.
The Partnership also has a loan agreement with National Westminster Bank,
U.S.A. (the "NatWest Loan") which provided financing up to $50,000,000 for
certain items of furniture, fixtures and equipment installed in the Taj
Mahal. The NatWest Loan bears interest at 9 3/8% per annum. Principal and
interest is payable monthly in the fixed amount of $373,000 to be applied
first to accrued interest and the balance to the extent available, to
principal, through maturity, November 15, 1999. Additionally, on May 15 of
each year while principal is still outstanding, NatWest will receive 16.5%
of the EACF of the preceding calendar year in excess of the Additional
Amount, to be applied first to accrued but unpaid interest, and then to
principal.
The NatWest Loan is secured by a first priority lien on the furniture,
fixtures and equipment acquired with the proceeds of the NatWest Loan plus
16
<PAGE>
any after acquired furniture, fixtures and equipment that replaces such
property, or of the same type, provided however, that the NatWest Loan may
be subordinated to a lien to secure purchase money financing of such after
acquired property up to 50% of the value of such after acquired property.
In November 1991, the Partnership obtained a working capital line of credit
in the amount of $25,000,000 with a maturity of five years. In September
1994, the Partnership extended the maturity to November 1999, in
consideration for modifications of the terms of the facility. Interest on
advances under the line are at prime plus 3% with a minimum of 7% per
annum. The Agreement provides for a 3/4% annual fee and a 1/2% unused line
fee and contains various covenants. During 1995 and 1994, no amounts were
outstanding under the line.
3. Casino License Renewal:
Funding and the Partnership are subject to regulation and licensing by the
New Jersey Casino Control Commission (the "CCC"). The Partnership's casino
license must be renewed periodically, is not transferable, is dependent
upon the financial stability of the Partnership and can be revoked at
anytime. Upon revocation, suspension for more than 120 days, or failure to
renew the casino license due to the Partnership's financial condition or
for any other reason, the Casino Control Act (the "Act") provides that the
CCC may appoint a conservator to take possession of and title to the hotel
and casino's business and property, subject to all valid liens, claims and
encumbrances. On June 22, 1995, the CCC renewed the Partnership's Casino
License for four years, through March 31, 1999.
4. Legal Proceedings:
The Partnership, its Partners, certain of its employees and Funding are
involved in various legal proceedings incurred in the normal course of
business. In the opinion of management of the Partnership, the expected
disposition of these proceedings would not have a material adverse effect
on the Partnership's or Funding's financial condition or results of
operations.
5. Partnership Distribution:
The Partnership is obligated to reimburse Holding for its operating
expenses which consist of directors and officers liability insurance, board
of director fees and expenses, and administrative expenses. Total expenses
for the nine months ended September 30, 1995 and 1994 approximated
$1,205,000 and $1,710,000, respectively.
17
<PAGE>
6. Financial Information - Funding:
Financial information relating to Funding is as follows (in thousands):
September 30, December 31,
1995 1994
----------- -----------
(unaudited)
Total Assets (including Mortgage Note
Receivable of $780,242 and $765,130 in
addition to related interest receivable) $ 813,472 $ 783,562
========= =========
Total Liabilities and Capital (including
Mortgage Bonds payable of $780,242 and
$765,130 in addition to related interest
payable) $ 813,472 $ 783,562
========= =========
Three months ending September 30: 1995 1994
----------- ---------
Interest Income $ 22,140 $ 21,711
=========== =========
Interest Expense $ 22,140 $ 21,711
=========== =========
Net Income $ -- $ --
=========== =========
Nine months ending September 30:
Interest Income $ 65,775 $ 64,611
=========== =========
Interest Expense $ 65,775 $ 64,611
=========== =========
Net Income $ -- $ --
=========== =========
7. Proposed Recapitalization:
On October 6, 1995, the Partnership, Funding, and Holding (collectively
with the Partnership and Funding, the "Taj Entities") executed a letter
agreement (the "Agreement") with certain institutional holders of the Class
A Common Stock (the "Class A Stock") of Holding (collectively, the
"Holders"), whereby the Holders agreed to support a proposed
recapitalization of the Taj Entities (the "Recapitalization") in which each
holder of Class A Stock would receive at least $30 for each share of Class
A Stock, payable in cash or shares of the Common Stock of Trump Hotels and
Casino Resorts, Inc. ("THCR"). The other terms of the Recapitalization have
not yet been determined. The Holders also agreed not to dispose of their
shares of Class A Stock except pursuant to the Recapitalization, other than
sales to third parties who agree to be bound by the Agreement. The
Agreement expires on April 30, 1996.
THCR,which is approximately 40% owned by Donald J. Trump and not affiliated
with the Taj Entities, is not a party to the Agreement. Any transaction
involving the issuance of shares of the Common Stock of THCR will be
subject to the approval of the Board of Directors and Stockholders of THCR.
18
<PAGE>
The Recapitalization is expected to be subject to, among other conditions,
the receipt by the Taj Entities of financing in an amount sufficient to
effectuate the Recapitalization, the receipt of fairness opinions and the
negotiation of satisfactory documentation to effect the Recapitalization.
No assurances can be given that any type of recapitalization plan will be
consummated by the Taj Entities.
19
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
Results of Operations
As Trump Taj Mahal Funding, Inc. ("Funding") and Taj Mahal Holding Corp.
("Holding") are entirely dependent on Trump Taj Mahal Associates (the
"Partnership") for their financial requirements, the following discussion
focuses on the results of operations of the Partnership.
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. Therefore,
results of operations for the nine months ended September 30 are not indicative
of a full year's operations.
Three Months Ended September 30, 1995 and 1994:
Net revenues for the three months ended September 30, 1995 and 1994 were
approximately $157,808,000 and $147,987,000, respectively. The approximately
$9,821,000 (6.6%) increase in net revenues was due primarily to the increase in
gaming revenues.
Gaming revenues comprise the major component of net revenues and consist of
win from table games, poker, slot machines, horserace simulcasting and keno.
Total gaming revenues increased by $11,028,000 (8.3%) to approximately
$143,814,000 in 1995 from $132,786,000 in 1994. These revenues represent a
market share of 13.6% in 1995 and 14.1% in 1994 of the Atlantic City gaming
market, based on figures filed with the New Jersey Casino Control Commission.
During the three months ended September 30, table game win increased by
$6,272,000 (12.3%) to approximately $57,319,000 in 1995 from $51,047,000 in
1994. Dollars wagered at table games increased by $11,272,000 (3.6%) to
$322,496,000 in 1995 from $311,224,000 in 1994 while table win percentage
increased to 17.8% in 1995 from 16.4% in 1994. Table win percentage, which
represents the percentage of the dollars wagered retained by the Partnership,
tends to be fairly constant over the long term, but may vary significantly in
the short term, due to large wagers by "high rollers." The win percentage for
the three months ended September 30, 1995 is significantly above the
partnership's and the industry's historical win percentage, and it is likely
that the Partnership's win percentage will decrease in the future. During the
twelve months ending December 31, 1994 and 1993 the Partnership's win percentage
approximated 16.4% and 16.3% respectively, while the Atlantic City average
approximated 15.8% and 15.6% respectively.
Slot win increased $4,979,000 (6.6%) to approximately $80,956,000 in 1995
from $75,977,000 in 1994. Dollars wagered in slot machines increased by
$114,747,000 (13.2%) to $982,433,000 in 1995 from $867,686,000 in 1994, this was
offset by a decrease in slot win percentage to 8.2% in 1995 from 8.7% in 1994.
The increase in slot machine wagering and the reduced slot win percentage is
consistent with the industry trend in Atlantic City in recent years.
In addition to table game and slot revenues, the Partnership's
Keno/Poker/Simulcasting operations generated approximately $4,655,000 in poker
revenues, $391,000 of simulcasting revenue and $493,000 of keno revenue in 1995
compared to $4,619,000 of poker revenue, $399,000 of simulcasting revenue and
$744,000 of keno revenue for the corresponding period in 1994. Keno operations
commenced June 15, 1994.
20
<PAGE>
Increases in gaming revenues during the three months ended September 30,
1995 over the comparable period of 1994 were attributable primarily to 1) the
increase in dollars wagered on table games and the improved win percentage, both
of which were substantially attributable to international high level players and
2) the general growth of the Atlantic City market.
Nongaming revenues consist primarily of room, food, beverage and
entertainment. For the three months ended September 30, 1995 and 1994, these
revenues totaled $32,101,000 and $33,711,000, respectively. Room revenue of
approximately $12,698,000 in 1995 was the result of an occupancy rate of 95.4%
and an average room rate of $115.69. In 1994 room revenue of $12,549,000 was the
result of an occupancy rate of 97.5% and an average room rate of $111.87.
In the food and beverage outlets the Partnership generated revenues of
approximately $15,281,000 and $16,097,000 in 1995 and 1994, respectively. The
approximately $816,000 decrease is primarily attributable to the decrease in the
number of persons served by approximately 1.1% and a decrease in the average
food check to $11.18 in 1995 from $11.43 in 1994. The decrease in food and
beverage revenue reflects both fewer complimentaries offered to patrons (which
are recorded both as revenue and as a promotional allowance) and reduced food
prices designed to stimulate cash sales.
The decrease in other revenue of approximately $943,000 was primarily
attributable to a decrease in entertainment revenue of approximately $520,000
resulting from an increased emphasis on promoter sponsored events in 1995 versus
events sponsored by the Partnership in 1994.
Promotional allowances decreased approximately $403,000 to $18,107,000 in
1995 from $18,510,000 in 1994 and were 10.3% of gross revenues in 1995 compared
to 11.1% in 1994 reflecting the Partnership's emphasis of increased control over
complimentaries while increasing gaming revenues.
Gaming expenses increased approximately $4,554,000 (6.4%) due primarily to
increased marketing/promotional costs associated with increased gaming revenues.
Both room and food and beverage expenses decreased slightly while general and
administrative expenses increased slightly. Depreciation expense has increased
in 1995 compared to 1994 due to increased capital expenditures on replacement
furniture, fixtures and equipment and the shorter lives associated therewith.
As a result of the foregoing factors, income from operations for the three
months ended September 30, 1995, increased by approximately $3,812,000 (12.2%)
to $35,120,000 from $31,308,000 for the comparable period of 1994.
The $1,196,000 (4.2%) increase in interest expense is attributable to 1)
the increased amount of principal outstanding resulting from the issuance of
Bonds to satisfy the Additional Amount and 2) the increased accretion of the
discount on the Bonds, as they approach maturity, offset by a decrease in costs
incurred for refinancing efforts during the period. See Liquidity and Capital
Resources - Debt Service subsequently in this Form 10Q for further discussion of
interest expense.
Nine Months Ended September 30, 1995 and 1994:
Net revenues for the nine months ended September 30, 1995 and 1994 were
approximately $417,296,000 and $386,538,000, respectively. The approximately
$30,758,000 (8.0%) increase in net revenues was due primarily to the increase in
gaming revenues.
21
<PAGE>
Gaming revenues comprise the major component of net revenues and consist of
win from table games, poker, slot machines, horserace simulcasting and keno.
Total gaming revenues increased by $32,039,000 (9.3%) to approximately
$377,368,000 in 1995 from $345,329,000 in 1994. These revenues represent a
market share of 13.4% in 1995 and 1994 of the Atlantic City gaming market, based
on figures filed with the New Jersey Casino Control Commission.
During the nine months ended September 30, table game win increased by
$16,827,000 (12.7%) to approximately $148,846,000 in 1995 from $132,019,000 in
1994. Dollars wagered at table games increased by $30,283,000 (3.6%) to
$866,614,000 in 1995 from $836,331,000 in 1994 while table win percentage
increased to 17.2% in 1995 from 15.8% in 1994. Table win percentage, which
represents the percentage of the dollars wagered retained by the Partnership,
tends to be fairly constant over the long term, but may vary significantly in
the short term, due to large wagers by "high rollers." The win percentage for
the nine months ended September 30, 1995 is significantly above the
Partnership's and the industry's historical win percentage, and it is likely
that the Partnership's win percentage will decrease in the future. During the
twelve months ending December 31, 1994 and 1993 the Partnership's win percentage
approximated 16.4% and 16.3% respectively, while the Atlantic City average
approximated 15.8% and 15.6% respectively.
Slot win increased $13,829,000 (6.9%) to approximately $212,888,000 in 1995
from $199,059,000 in 1994. Dollars wagered in slot machines increased by
$286,353,000 (12.6%) to $2,550,706,000 in 1995 from $2,264,353,000 in 1994, this
was offset by a decrease in slot win percentage to 8.3% in 1995 from 8.8% in
1994. The increase in slot machine wagering and the reduced slot win percentage
is consistent with the industry trend in Atlantic City in recent years.
In addition to table game and slot revenues, the Partnership's
Keno/Poker/Simulcasting operations generated approximately $13,267,000 in poker
revenues, $1,029,000 of simulcasting revenue and $1,338,000 of keno revenue in
1995 compared to $12,260,000 of poker revenue, $1,118,000 of simulcasting
revenue and $873,000 of keno revenue for the corresponding period in 1994. Keno
operations commenced June 15, 1994.
Increases in gaming revenues during the first three quarters of 1995 over
the comparable period of 1994 were attributable primarily to 1) the increase in
dollars wagered on slots relative to the depressed 1994 levels caused by severe
winter weather during the first three months of the year, 2) the increase in
dollars wagered on table games and the improved win percentage, both of which
were substantially attributable to international high level players, and 3) the
general growth of the Atlantic City market.
Nongaming revenues consist primarily of room, food, beverage and
entertainment. For the nine months ended September 30, 1995 and 1994, these
revenues totaled $87,447,000 and $90,011,000, respectively. Room Revenue of
approximately $33,035,000 in 1995 was the result of an occupancy rate of 92.0%
and an average room rate of $105.28. In 1994 room revenue of $32,159,000 was the
result of an occupancy rate of 93.9% and an average room rate of $100.45.
In the food and beverage outlets the Partnership generated revenues of
approximately $42,933,000 and $44,110,000 in 1995 and 1994, respectively. The
approximately $1,177,000 decrease is primarily attributable to a decrease in the
number of persons served by 1.0% and a decrease in the average food check to
$11.56 in 1995 from $11.62 in 1994. The decrease in food and beverage revenue
reflects both fewer complimentaries offered to patrons (which are recorded both
as revenue and as a promotional allowance) and reduced food prices designed to
stimulate cash sales.
22
<PAGE>
The decrease in other revenue of approximately $2,263,000 was primarily
attributable to a decrease in entertainment revenue of approximately $1,831,000
resulting from fewer events and an increased emphasis on promoter sponsored
entertainment events in 1995 versus events sponsored by the Partnership in 1994.
Promotional allowances decreased approximately $1,283,000 to $47,519,000 in
1995 from $48,802,000 in 1994 and were 10.2% of gross revenues in 1995 compared
to 11.2% in 1994 reflecting the Partnership's efforts to increase control over
complimentaries while increasing gaming revenues.
Gaming expenses increased approximately $12,259,000 (6.2%) primarily due to
increased marketing/promotional costs associated with increased gaming revenues.
Both room and food and beverage expenses remained generally constant. General
and administrative expenses decreased primarily due to the nonrecurrence of
costs for settlement of litigation which were incurred during 1994. Depreciation
expense increased in 1995 compared to 1994 due to increased capital expenditures
on replacement furniture, fixtures and equipment and the shorter lives
associated therewith.
As a result of the foregoing factors, income from operations for the nine
months ended September 30, 1995, increased by approximately $18,214,000 (33.6%)
to $72,404,000 from $54,190,000 for the comparable period of 1994.
The $2,009,000 (2.3%) increase in interest expense is attributable to 1)
the increased amount of principal outstanding resulting from the issuance of
Bonds to satisfy the Additional Amount and 2) the increased accretion of the
discount on the Bonds, as they approach maturity. These amounts were partially
offset by a decrease in costs incurred for refinancing efforts during the
period.
Liquidity and Capital Resources
Trump Taj Mahal Associates --
Working Capital:
Cash flow from operations and the funds available for borrowing under the
Working Capital Facility provide the Partnership with its ability to meet debt
service obligations and capital expenditure programs along with adequate
operating liquidity. Cash flow from operating activities for the nine months
ending September 30 was $73,310,000 in 1995 compared with $40,562,000 in 1994,
due primarily to the increase in gaming revenues. Correspondingly, working
capital at September 30, 1995 increased by $22,925,000 to approximately
$63,614,000 from approximately $40,689,000 at December 31, 1994.
Pursuant to the terms of the Plan and the Indenture governing the Bonds,
the Partnership may obtain a $25,000,000 Working Capital Facility, a $50,000,000
Senior Line of Credit and a $25,000,000 Standby Letter of Credit secured by
certain assets of the Partnership, including the Taj Mahal, on a basis senior to
the lien of the mortgage securing the New Bonds.
On November 14, 1991, the Partnership entered into a Working Capital
Facility in the amount of $25,000,000, which is secured by a lien on the
Partnership's assets senior to the lien of the Amended Mortgage securing the
23
<PAGE>
Bonds. During 1995 and 1994, there were no borrowings under the Working Capital
Facility. In September 1994, the Partnership extended the maturity to November
1999, in consideration of modifications of the terms of the facility. Interest
for borrowings under the Working Capital Facility accrues at the rate of prime
plus 3% (11.75% at September 30, 1995) with a minimum interest rate of 7% per
annum, and is payable monthly. Amounts borrowed under the Working Capital
Facility must be repaid by November 14, 1999. The Working Capital Facility also
provides for fees applicable to the commitment, maintenance, and unused portions
of the Working Capital Facility. To date, the Partnership has not sought to
obtain the Senior Line of Credit or the Standby Letter of Credit and there can
be no assurances as to whether and on what terms the Partnership could obtain
the Senior Line of Credit or the Standby Line of Credit.
Capital Expenditures:
Capital expenditures during the nine months ended September 30 totaled
approximately $19,477,000 in 1995 compared to $15,749,000 in 1994. The
Partnership's Capital Budget for fiscal 1995 is approximately $26,000,000, which
will be financed by cash flow from operations. The budget includes provisions
for completion of hotel room renovations, on-going casino floor reconfiguration
including 1,300 replacement slot machines, new telephone reservation equipment
and limousines.
Debt Service:
The Partnership remains a highly leveraged enterprise with total borrowings
as of September 30, 1995 in the amount of $826,119,000. Net of the unamortized
discount on the Bonds in the amount of $137,108,000 and current maturities of
$868,000, the net long term indebtedness is approximately $688,143,000. Assuming
industry conditions do not deteriorate substantially, the Partnership believes
that, as a result of cash provided from operations, together with its current
cash and cash investment balance and funds available from the Working Capital
Facility, it will have sufficient cash flow for the next twelve months to meet
its debt service requirements and capital expenditure program.
Interest on the Bonds must be paid in cash at the rate of 9.375% payable
semi-annually on May 15 and November 15 (the "Mandatory Cash Interest Amount").
In addition to this Mandatory Cash Interest Amount, effective May 15, 1992 and
annually thereafter, an Additional Amount of interest (the "Additional Amount")
in cash or additional Bonds or a combination thereof is payable equal to the
difference between 11.35% of the outstanding principal amount of the Bonds and
the Mandatory Cash Interest Amount paid on that date and the immediately
preceding November 15th. To the extent that there is excess available cash flow
("EACF") of the Partnership, as defined in the Indenture, for the immediately
preceding calendar year, Funding will pay the Additional Amount in cash up to
10.28% and the balance thereof may be paid at the option of Funding in cash or
additional Units, provided that an equivalent amount of cash is used to purchase
or redeem Units. Additional Bonds issued on October 4, 1991 amounted to
approximately $7,208,000. For the period from the issuance of the Bonds, October
4, 1991, through December 31, 1992, there was no EACF. Accordingly, Funding paid
the Additional Amounts on May 15, 1993 and May 15, 1992 through the issuance of
approximately $14,579,000 and $8,844,000, respectively, in additional Bonds. Of
the $14,870,000 Additional Amount due May 15, 1994, $2,621,000 was paid in cash
and the $12,249,000 balance in Bonds. Of the $15,112,000 Additional Amount due
May 15, 1995, the Partnership satisfied the obligation entirely through the
issuance of Bonds. The Partnership believes that it will satisfy its cash
interest obligations due in 1995 (including the Mandatory Cash Interest Amount)
with cash flow from operations.
24
<PAGE>
Interest expense for the nine months ended September 30, 1995 and 1994
consisted of the following (in thousands):
For the nine months ended
September 30,
-----------------------
1995 1994
---- ----
Minimum cash interest expense:
Bonds $54,330 $53,368
Bank loans 3,204 3,217
Working Capital Facility 235 325
Other, including refinancing costs 1,413 3,401
------- -------
59,182 60,311
------- -------
Additional Amount 11,445 11,243
------- -------
Accretion of discount:
Bonds 16,489 13,795
Guarantee of affiliate debt ..................... 1,748 1,506
------- -------
18,237 15,301
------- -------
Total interest expense ............................. $88,864 $86,855
======= =======
Taj Mahal Holding Corp. --
Holding's sole source of liquidity is from distributions from the
Partnership. As of September 30, 1995, Holding did not have any long or short
term indebtedness, and is not anticipated to have any in the near future.
The Partnership Agreement provides that the Partnership shall make
distributions (i) at the direction of TM/GP, a wholly-owned subsidiary of
Holding, and (ii) to each partner necessary for such partner to pay its taxes
arising out of its interest in the partnership ("Tax Distributions"). In
addition, the Partnership Agreement requires the Partnership to distribute to
TM/GP ("Expense Distributions") amounts necessary to permit TM/GP or Holding (a)
to make payments (generally for indemnification of officers and directors) that
TM/GP or Holding are required to make pursuant to the terms of the TM/GP
Certificate of Incorporation and the Holding Certificate of Incorporation, (b)
to pay fees to Directors (including fees for serving on a committee), (c) to pay
all other expenses of TM/GP and Holding, and (d) to permit Holding to redeem its
Class B Stock when required to make such a redemption pursuant to the terms of
its Certificate of Incorporation.
The Indenture pursuant to which the Bonds were issued prohibits the
Partnership from making any distributions other than Tax Distributions and
Expense Distributions during such time as the Bonds are outstanding.
The Holding Certificate of Incorporation requires Holding to redeem each
outstanding share of Class B Stock at a redemption price of $.50 per share
(adjusted to reflect stock splits, combinations and dividends since the original
date of issuance) at such time as the principal amount of Bonds with respect to
which such share was issued is redeemed, defeased, or paid in full.
Pursuant to the Stock Issuance Agreement entered into as of October 4,
1991, Holding has agreed to issue and deliver to Funding such number of
additional shares of Class B Stock as Funding may request to enable the Company
25
<PAGE>
to pay interest on the Bonds in the form of additional Units in accordance with
the terms of the Indenture. In accordance with the Stock Issuance Agreement,
Holding issued an additional 8,844 shares of Class B Stock on May 15, 1992,
14,579 additional shares of Class B Stock on May 15, 1993, 12,249 shares of
Class B Stock on May 15, 1994 and 15,112 shares of Class B Stock on May 15,
1995.
Part II - Other Information
Item 1. Legal Proceedings.
(a) Holding, the Partnership, its partners, certain members of its former
Executive Committee, Funding and certain of their employees are involved in
various legal proceedings incurred in the normal course of business. The
Partnership and Funding have agreed to indemnify such persons and entities
against any and all losses, claims, damages, expenses (including reasonable
costs, disbursements and counsel fees) and liabilities (including amounts paid
or incurred in satisfaction of settlements, judgments, fines and penalties)
incurred by them in said legal proceedings. Such persons and entities are
vigorously defending the allegations against them and intend to vigorously
contest any future proceedings.
(b) Reference is made to the description of the legal proceedings contained
in Funding's, the Partnership's and Holding's Annual Report on Form 10-K for the
year ended December 31, 1994, filed with the SEC.
Item 2. Changes in Securities.
None.
Item 3. Defaults Upon Senior Securities.
None.
Item 4. Submission of Matters to a Vote of Security Holders.
None.
Item 5. Other Information.
On October 3, 1995, Trump Taj Mahal Associates (the "Partnership")
terminated Dennis Gomes from his position as President and Chief Operating
Officer of the Partnership. In the interim, R. Bruce McKee, the Chief Financial
Officer of the Partnership, has been appointed acting Chief Operating Officer of
the Partnership.
Additionally, Catherine Crossley, Senior Vice President, Administration
whose contract was due to expire on November 30, 1995, resigned her position.
Further, the Partnership's employment agreement with William Cleek, Senior Vice
President, Marketing expired on October 31, 1995 and was not renewed. Mr.
Cleek's duties were assumed by Mr. Nicholas Niglio, previously Vice President of
International Marketing.
26
<PAGE>
Item 6. Exhibits and Reports on Form 8-K.
(a) Exhibits.
(1) Reference is made to the Exhibits and Exhibit Index included in the
Registrants' Annual Report on Form 10-K for the year ended December 31, 1994,
which is incorporated herein by reference.
(2) Extension and modification of Employment Agreement - Larry W. Clark.
(b) Reports and Form 8-K. Reference is made to the Form 8-K filed by the
Registrants on October 18, 1995 referencing 1) a proposed recapitalization and a
letter agreement with certain institutional holders of the Class A Common Stock
of Holding, and 2) the termination of Dennis C. Gomes from his position as
President and Chief Operating Officer of the Partnership.
27
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this Report to be signed on its behalf by the
undersigned thereunto duly authorized.
TRUMP TAJ MAHAL FUNDING, INC.
Date: November 13, 1995 By: /s/ Donald J. Trump
---------------------------------
Donald J. Trump, Chairman of the
Board, President (Principal
Executive Officer), Treasurer
(Principal Financial Officer) and
sole Director.
/s/ R. Bruce McKee
---------------------------------
R. Bruce McKee, Assistant Treasurer
(Principal Accounting Officer).
TRUMP TAJ MAHAL ASSOCIATES
By: TM/GP CORPORATION
as Managing General Partner
Date: November 13, 1995 /s/ Donald J. Trump
---------------------------------
Donald J. Trump
Chairman, Board of Directors.
/s/ R. Bruce McKee
---------------------------------
R. Bruce McKee, Assistant Treasurer
(Principal Accounting Officer).
28
October 10, 1995
Mr. Larry Clark
14 North Gristmill Place
Smithville, New Jersey 08201
Dear Larry:
This letter will serve as an amendment to the Employment Agreement dated
December 10, 1993, entered into between you and Trump Taj Mahal Associates ("the
Agreement").
TTMA shall extend your Agreement for a period of one (1) year commencing
December 1, 1995 and expiring November 30, 1996 ("the Expiration Date"). In
addition, you shall have the option of renewing the Agreement for a period of
one (1) year, provided that you notify TTMA of your intent to exercise your
option ninety (90) days in advance of the Expiration Date.
Paragraph 2 of the Agreement is hereby amended to provide for an annual base
salary of Three Hundred Thousand ($300,000.00) Dollars.
Paragraph 5(a) of the Agreement is hereby amended to provide for an annual bonus
in a minimum amount equal to the bonus paid to you for services rendered during
calendar year 1995.
Paragraph 13 of the Agreement is hereby amended to provide that in the event
TTMA terminates the Agreement without cause, you shall receive an amount equal
to one (1) year at your then current salary.
Paragraph 19 shall be added to the Agreement and shall provide that in the event
there is a material breach of the Agreement by TTMA, TTMA shall reimburse you
for reasonable legal expenses incurred by you in enforcing the terms and
conditions of the Agreement.
Except as hereby modified, all the other terms and conditions of the Agreement
shall remain in full force and effect.
Please acknowledge your agreement with this modification by signing below.
Very truly yours,
/s/ R. Bruce McKee
- - ------------------
R. Bruce McKee
Senior Vice President, Finance
and Chief Operating Officer
Agreed & Consented To:
/s/Larry W. Clark
- - -----------------
LARRY W. CLARK
10/10/95
- - ----------
Date
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<NAME> TRUMP TAJ MAHAL FUNDING INC.
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<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-START> JAN-01-1995
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<ALLOWANCES> 5,354
<INVENTORY> 6,950
<CURRENT-ASSETS> 5,175
<PP&E> 902,427
<DEPRECIATION> 207,825
<TOTAL-ASSETS> 843,725
<CURRENT-LIABILITIES> 73,039
<BONDS> 643,134
<COMMON> 0
0
0
<OTHER-SE> 0
<TOTAL-LIABILITY-AND-EQUITY> 843,725
<SALES> 417,296
<TOTAL-REVENUES> 464,815
<CGS> 0
<TOTAL-COSTS> 238,768<F1>
<OTHER-EXPENSES> 106,124<F2>
<LOSS-PROVISION> 3,825
<INTEREST-EXPENSE> 88,864
<INCOME-PRETAX> (13,708)
<INCOME-TAX> 0
<INCOME-CONTINUING> (13,708)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (13,708)
<EPS-PRIMARY> 0
<EPS-DILUTED> 0
<FN>
<F1> Includes gaming, lodging, food and beverage and other
<F2> Includes general & administrative and depreciation and amortization
</FN>
</TABLE>
