===============================================================================
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
FOR THE QUARTERLY PERIOD ENDED: JUNE 30, 1997
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
FOR THE TRANSITION PERIOD FROM ________ TO ________
-------------------
COMMISSION FILE NUMBER: 333-643
TRUMP ATLANTIC CITY ASSOCIATES
------------------------------------------------------
(Exact name of registrant as specified in its charter)
NEW JERSEY 22-3213714
------------------------------- -------------------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
2500 BOARDWALK
ATLANTIC CITY, NEW JERSEY 08401
--------------------------------------- ----------
(Address of principal executive offices) (Zip Code)
(609) 441-6060
----------------------------------------------------
(Registrant's telephone number, including area code)
COMMISSION FILE NUMBER: 333-643
TRUMP ATLANTIC CITY FUNDING, INC.
-------------------------------------------------------
(Exact name of registrant as specified in its charter)
DELAWARE 22-3418939
------------------------------- -------------------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
2500 BOARDWALK
ATLANTIC CITY, NEW JERSEY 08401
--------------------------------------- ----------
(Address of principal executive offices) (Zip Code)
(609) 441-6060
----------------------------------------------------
(Registrant's telephone number, including area code)
NOT APPLICABLE
----------------------------------------------------
(Former name, former address and former fiscal year,
if changed since last report)
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
---- ----
THE NUMBER OF OUTSTANDING SHARES OF COMMON STOCK, PAR VALUE $.01 PER SHARE,
OF TRUMP ATLANTIC CITY FUNDING, INC. AS OF AUGUST 14, 1997 WAS 100.
TRUMP ATLANTIC CITY 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.
================================================================================
<PAGE>
TRUMP ATLANTIC CITY ASSOCIATES AND SUBSIDIARIES
INDEX TO FORM 10-Q
PAGE NO.
--------
PART I -- FINANCIAL INFORMATION
ITEM 1 -- Financial Statements
Condensed Consolidated Balance Sheets of Trump Atlantic
City Associates and Subsidiaries as of June 30, 1997
(unaudited) and December 31, 1996.............................. 1
Condensed Consolidated Statements of Operations of Trump
Atlantic City Associates and Subsidiaries for the Three
and Six Months Ended June 30, 1997 and 1996 (unaudited)........ 2
Condensed Consolidated Statement of Capital of Trump
Atlantic City Associates and Subsidiaries for the Six Months
Ended June 30, 1997 (unaudited)................................ 3
Condensed Consolidated Statements of Cash Flows of Trump
Atlantic City Associates and Subsidiaries for the Six Months
Ended June 30, 1997 and 1996 (unaudited)....................... 4
Notes to Condensed Consolidated Financial Statements of Trump
Atlantic City Associates and Subsidiaries (unaudited).......... 5-7
ITEM 2 -- Management's Discussion and Analysis of Financial
Condition and Results of Operations..................... 8-13
ITEM 3 -- Quantitative and Qualitative Disclosures
About Market Risk...................................... 13
PART II -- OTHER INFORMATION
ITEM 1 -- Legal Proceedings........................................ 14
ITEM 2 -- Changes in Securities.................................... 14
ITEM 3 -- Defaults Upon Senior Securities.......................... 14
ITEM 4 -- Submission of Matters to a Vote of Security Holders...... 14
ITEM 5 -- Other Information........................................ 14
ITEM 6 -- Exhibits and Reports on Form 8-K......................... 15
SIGNATURES
SIGNATURE -- Trump Atlantic City Associates........................ 16
SIGNATURE -- Trump Atlantic City Funding, Inc. .................... 17
i
<PAGE>
PART I -- FINANCIAL INFORMATION
ITEM 1 -- FINANCIAL STATEMENTS
TRUMP ATLANTIC CITY ASSOCIATES AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(IN THOUSANDS)
ASSETS
JUNE 30, DECEMBER 31,
1997 1996
---------- ------------
(UNAUDITED)
CURRENT ASSETS:
Cash and cash equivalents...................... $ 47,885 $ 71,320
Receivables, net............................... 52,709 45,231
Inventories.................................... 9,435 9,393
Advances to affiliates, net.................... 7,777 5,237
Other current assets........................... 8,806 6,495
---------- ----------
Total Current Assets......................... 126,612 137,676
PROPERTY AND EQUIPMENT, NET...................... 1,474,661 1,456,267
DEFERRED LOAN COSTS, NET......................... 35,808 39,153
OTHER ASSETS..................................... 28,910 25,910
---------- ----------
Total Assets................................. $1,665,991 $1,659,006
========== ==========
LIABILITIES AND CAPITAL
CURRENT LIABILITIES:
Current maturities of long-term debt........... $ 10,255 $ 9,410
Accounts payable and accrued expenses.......... 87,077 77,942
Accrued interest payable....................... 23,216 23,160
---------- ----------
Total Current Liabilities.................... 120,548 110,512
LONG-TERM DEBT, net of current maturities........ 1,205,741 1,207,795
OTHER LONG-TERM LIABILITIES ..................... 3,609 4,569
DISTRIBUTION PAYABLE TO TRUMP PLAZA
FUNDING, INC. .................................. 3,822 3,822
DEFERRED STATE INCOME TAXES...................... 450 450
---------- ----------
Total Liabilities............................ 1,334,170 1,327,148
---------- ----------
CAPITAL:
Partners' Capital.............................. 373,790 363,646
Accumulated Deficit............................ (41,969) (31,788)
---------- ----------
Total Capital.................................. 331,821 331,858
---------- ----------
Total Liabilities and Capital................ $1,665,991 $1,659,006
========== ==========
The accompanying notes are an integral part of these condensed
consolidated financial statements.
1
<PAGE>
<TABLE>
TRUMP ATLANTIC CITY ASSOCIATES AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
FOR THE THREE MONTHS AND SIX MONTHS ENDED JUNE 30, 1997 AND 1996
(UNAUDITED)
(IN THOUSANDS)
<CAPTION>
THREE MONTHS SIX MONTHS
ENDED JUNE 30, ENDED JUNE 30,
------------------------ ------------------------
1997 1996 1997 1996
----- ---- ---- ----
<S> <C> <C> <C> <C>
REVENUES:
Gaming.................................... $232,498 $205,760 $447,641 $280,030
Rooms..................................... 21,336 18,356 39,024 24,154
Food and Beverage......................... 29,781 26,919 56,127 38,302
Other..................................... 8,611 6,226 15,750 8,326
-------- -------- -------- --------
Gross Revenues.......................... 292,226 257,261 558,542 350,812
Less--Promotional allowances................ 35,700 30,711 66,801 43,129
-------- -------- -------- --------
Net Revenues............................ 256,526 226,550 491,741 307,683
-------- -------- -------- --------
COSTS AND EXPENSES:
Gaming.................................... 145,193 121,381 279,640 165,359
Rooms..................................... 7,339 6,081 13,831 8,352
Food and Beverage......................... 9,552 8,984 18,128 11,491
General and Administrative................ 42,180 38,474 84,928 56,172
Depreciation and Amortization............. 14,248 16,679 35,009 21,202
Pre-Opening............................... -- 2,853 -- 3,332
-------- -------- -------- --------
218,512 194,452 431,536 265,908
-------- -------- -------- --------
Income from operations.................. 38,014 32,098 60,205 41,775
-------- -------- -------- --------
NON-OPERATING INCOME
AND (EXPENSES):
Interest income........................... 617 434 1,432 629
Interest expense.......................... (35,957) (31,831) (71,818) (41,582)
Other non-operating income................ -- 10,557 -- 9,182
-------- -------- --------- --------
(35,340) (20,840) (70,386) (31,771)
-------- -------- -------- --------
Income (loss) before extraordinary loss..... 2,674 11,258 (10,181) 10,004
Extraordinary loss........................ -- (59,132) -- (59,132)
-------- -------- --------- --------
NET INCOME (LOSS)........................... $ 2,674 $(47,874) $(10,181) $(49,128)
======== ======== ======== ========
</TABLE>
The accompanying notes are an integral part of these
condensed consolidated financial statements.
2
<PAGE>
TRUMP ATLANTIC CITY ASSOCIATES AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENT OF CAPITAL
FOR THE SIX MONTHS ENDED JUNE 30, 1997
(UNAUDITED)
(IN THOUSANDS)
<TABLE>
<CAPTION>
RETAINED
EARNINGS
PARTNERS' (ACCUMULATED
CAPITAL DEFICIT) TOTAL
-------- ------------ -----
<S> <C> <C> <C>
Balance, December 31, 1996................................. $363,646 $(31,788) $331,858
Net Loss.................................................. -- (10,181) (10,181)
Contributed Capital -- Trump Hotels & Casino Resorts
Holdings, L.P. ........................................... 10,144 -- 10,144
-------- -------- --------
Balance, June 30, 1997..................................... $373,790 $(41,969) $331,821
======== ======== ========
</TABLE>
The accompanying notes are an integral part of this
condensed consolidated financial statement.
3
<PAGE>
TRUMP ATLANTIC CITY ASSOCIATES AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE SIX MONTHS ENDED JUNE 30, 1997 AND 1996
(UNAUDITED)
(IN THOUSANDS)
<TABLE>
<CAPTION>
SIX MONTHS ENDED
JUNE 30,
-------------------------
1997 1996
------- ------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss .................................................... $(10,181) $ (49,128)
Adjustments to reconcile net loss to net cash flows from
operating activities --
Noncash charges --
Extraordinary loss ..................................... -- 59,132
Depreciation and amortization ............................ 35,009 21,202
Accretion of discounts on indebtedness ................... -- 132
Provisions for losses on receivables ..................... 4,378 1,547
Amortization of deferred loan offering costs ............. 3,345 2,045
Deferred income taxes .................................... -- (14)
Valuation allowance of CRDA investments and utilization of
credits and donations .................................. 1,932 894
-------- -----------
34,483 35,810
Changes in assets and liabilities:
Increase in receivables .................................. (11,856) (19,311)
Increase in inventories .................................. (42) (74)
Increase in advances to affiliates ....................... (2,540) (2,109)
Increase in other current assets ......................... (2,215) (5,451)
(Increase) decrease in other assets ...................... (178) 836
Increase in accounts payable and accrued expenses ........ 8,871 5,114
Increase (decrease) in accrued interest payable .......... 56 (19,723)
Increase (decrease) in other long-term liabilities ....... (960) (450)
-------- -----------
Net cash provided (used) by operating activities ............ 25,619 (5,358)
-------- -----------
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchase of property and equipment, net ..................... (51,215) (158,865)
Purchase of CRDA investments ................................ (5,085) (1,862)
Purchase of Taj Holding, net of cash acquired ............... -- 46,714
-------- -----------
Net cash used in Investing Activities ....................... (56,300) (114,013)
-------- -----------
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from issuance of other long term debt ............. 1,837 5,906
Payments and current maturities of long-term debt .......... (4,735) (4,410)
Capital contributed from Trump Hotels & Casino
Resorts Holdings, L.P. ................................... 10,144 204,785
Retirement of long-term debt ............................... -- (1,156,836)
Issuance of Trump AC Mortgage Notes ........................ -- 1,200,000
Retirement of NatWest loan ................................. -- (36,500)
Cost of issuing debt ....................................... -- (41,042)
-------- -----------
Net cash provided by financing activities ............. 7,246 171,903
-------- -----------
Net (decrease) increase in cash & cash equivalents .... (23,435) 52,532
CASH AND CASH EQUIVALENTS AT BEGINNING OF YEAR .............. 71,320 15,937
-------- -----------
CASH AND CASH EQUIVALENTS AT JUNE 30 ........................ $ 47,885 $ 68,469
======== ===========
CASH INTEREST PAID .......................................... $ 68,355 $ 13,933
======== ===========
Supplemental Disclosure of noncash activities:
Purchase of property and equipment under capitalized
lease obligations .......................................... $ 1,689 --
THCR purchased all of the capital stock of Taj Holding for
$31,181 in cash and 323,423 shares of its common stock
valued at $9,319. In addition, the contribution by
Trump of his 50% interest in Taj Associates amounting
to $40,500, net of the $10,000 payment to Bankers
Trust, was recorded as minority interest. In
conjunction with the acquisition, the accumulated
deficit amounting to $108,574 was recorded as an
increase to Property, Plant and Equipment.
Fair Value of net assets acquired........................ $1,005,816
Cash paid for the capital stock and payment to
Bankers Trust ......................................... (41,181)
Minority interest of Trump............................... (30,500)
----------
Liabilities assumed.............................. $ 934,135
==========
</TABLE>
In connection with the purchase of the Specified Parcels in 1996,
THCR issued 500,000 shares of its common stock valued at $10,500.
The accompanying notes are an integral part of these
condensed consolidated financial statements.
4
<PAGE>
TRUMP ATLANTIC CITY ASSOCIATES AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
(1) CONDENSED FINANCIAL STATEMENTS
The accompanying condensed consolidated financial statements include those
of Trump Atlantic City Associates, a New Jersey general partnership formerly
known as Trump Plaza Holding Associates ("Trump AC"), and its 99% owned
subsidiaries, Trump Plaza Associates, a New Jersey general partnership ("Plaza
Associates"), which owns and operates the Trump Plaza Hotel and Casino located
in Atlantic City, New Jersey ("Trump Plaza"), Trump Taj Mahal Associates, a New
Jersey general partnership ("Taj Associates"), which owns and operates the Trump
Taj Mahal Casino Resort located in Atlantic City, New Jersey (the "Taj Mahal"),
Trump Atlantic City Funding, Inc., a Delaware corporation ("Trump AC Funding"),
Trump Atlantic City Corporation, a Delaware Corporation ("TACC"), Trump Casino
Services, L.L.C., a New Jersey limited liability company ("Trump Services"), and
Trump Communications, L.L.C., a New Jersey limited liability company. Trump AC's
sole sources of liquidity are distributions in respect of its interests in Plaza
Associates and Taj Associates. Trump AC is owned by Trump Hotels & Casino
Resorts Holdings, L.P., a Delaware limited partnership ("THCR Holdings") (See
Note 2). Trump AC and Trump AC Funding have no independent operations and,
therefore, their ability to service debt is dependent upon the successful
operations of Plaza Associates and Taj Associates. There are no restrictions on
the ability of the guarantors (the "Subsidiary Guarantors") of the Trump AC
Mortgage Notes (as defined in Note 2) to distribute funds to Trump AC.
All significant intercompany balances and transactions have been eliminated
in the accompanying condensed consolidated financial statements.
The accompanying condensed consolidated financial statements have been
prepared by Trump AC without audit, pursuant to the rules and regulations of the
Securities and Exchange Commission. Accordingly, certain information and note
disclosures normally included in financial statements prepared in conformity
with generally accepted accounting principles have been condensed or omitted. In
the opinion of Trump AC, all adjustments, consisting of only normal recurring
adjustments, necessary to present fairly the financial position, results of
operations and cash flows for the periods presented, have been made.
The casino industry in Atlantic City is seasonal in nature; therefore,
results of operations for the six months ended June 30, 1997 are not necessarily
indicative of the operating results for a full year.
The separate financial statements of the Subsidiary Guarantors have not
been included because (i) the Subsidiary Guarantors constitute all of Trump AC's
direct and indirect subsidiaries; (ii) the Subsidiary Guarantors have fully and
unconditionally guaranteed the Trump AC Mortgage Notes on a joint and several
basis; (iii) the aggregate assets, liabilities, earnings and equity of the
Subsidiary Guarantors are substantially equivalent to the assets, liabilities,
earnings and equity of Trump AC on a consolidated basis; and (iv) the separate
financial and other disclosures concerning the Subsidiary Guarantors are not
deemed material to investors.
Certain reclassifications have been made to prior year financial statements
to conform to the current year presentation.
(2) PUBLIC OFFERINGS AND MERGER
On June 12, 1995, Trump Hotels & Casino Resorts, Inc. ("THCR") completed a
public offering of 10,000,000 shares of its common stock, par value $.01 per
share (the "THCR Common Stock"), at $14.00 per share (the "1995 Stock Offering")
for gross proceeds of $140,000,000. Concurrent with the 1995 Stock Offering,
THCR Holdings, a then 60% subsidiary of THCR, and its subsidiary Trump Hotels &
Casino Resorts Funding, Inc. issued 151 /2% Senior Secured Notes due 2005 for
gross proceeds of $155,000,000 (together with the 1995 Stock Offering, the "1995
Offerings"). From the proceeds of the 1995 Stock Offering, THCR contributed
$126,848,000 to THCR Holdings. THCR Holdings subsequently contributed
$172,859,000 to Trump AC.
5
<PAGE>
TRUMP ATLANTIC CITY ASSOCIATES AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
(UNAUDITED)
On April 17, 1996, pursuant to the Agreement and Plan of Merger, as amended
(the "Taj Merger Agreement"), pursuant to which a wholly owned subsidiary of
THCR was merged (the "Taj Merger") with and into Taj Mahal Holding Corp., a
Delaware corporation now known as THCR Holding Corp. ("Taj Holding"), each
outstanding share of Class A Common Stock of Taj Holding, par value $.01 per
share (the "Taj Holding Class A Common Stock"), which in the aggregate
represented 50% of the economic interest in Taj Associates, was converted into
the right to receive, at each holder's election, either (a) $30 in cash or (b)
that number of shares of THCR Common Stock having a market value equal to $30.
Donald J. Trump ("Trump") held the remaining 50% interest in Taj Associates and
contributed such interest in Taj Associates to Trump AC in exchange for limited
partnership interests in THCR Holdings. In addition, the outstanding shares of
Taj Holding's Class C Common Stock, par value $.01 per share, all of which were
held by Trump, were canceled in connection with the Taj Merger. The following
transactions occurred in connection with the Taj Merger (collectively referred
to as the "Taj Merger Transaction"):
(a) the payment of an aggregate of $31,181,000 in cash and the
issuance of 323,423 shares of THCR Common Stock to the holders of Taj
Holding Class A Common Stock pursuant to the Taj Merger Agreement;
(b) the contribution by Trump to Trump AC of all of his direct and
indirect ownership interests in Taj Associates, and the contribution by
THCR to Trump AC of all of its indirect ownership interests in Taj
Associates acquired in the Taj Merger Transaction;
(c) the public offerings by (i) THCR of 12,500,000 shares of THCR
Common Stock (plus 750,000 shares of THCR Common Stock issued in connection
with the partial exercise of the underwriters' over-allotment option) (the
"1996 Stock Offering") for net proceeds of $386,062,000 and (ii) Trump AC
and Trump AC Funding, Trump AC's wholly owned finance subsidiary, of
$1,200,000,000 aggregate principal amount of 11 1/4% First Mortgage Notes
due 2006 (the "Trump AC Mortgage Notes") (together with the 1996 Stock
Offering, the "1996 Offerings");
(d) the redemption of the outstanding shares of Taj Holding's Class B
Common Stock, par value $.01 per share, immediately prior to the Taj Merger
Transaction for $.50 per share in accordance with its terms;
(e) the redemption of the outstanding 11.35% Mortgage Bonds, Series A,
due 1999 of Trump Taj Mahal Funding, Inc. (the "Taj Bonds");
(f) the retirement of the outstanding 10 7/8 Mortgage Notes due 2001
(the "Plaza Notes") of Trump Plaza Funding, Inc.;
(g) the satisfaction of the indebtedness of Taj Associates under its
loan agreement with National Westminster Bank USA ("Nat West");
(h) the purchase of certain real property used in the operation of the
Taj Mahal that was leased from a corporation wholly owned by Trump (the
"Specified Parcels");
(i) the purchase of certain real property used in the operation of
Trump Plaza that was leased from an unaffiliated third party;
(j) the payment to Bankers Trust Company ("Bankers Trust") to obtain
releases of liens and guarantees that Bankers Trust had in connection with
indebtedness owed by Trump to Bankers Trust; and
(k) the issuance to Trump of warrants to purchase an aggregate of 1.8
million shares of THCR Common Stock, (i) 600,000 shares of which may be
purchased on or prior to April 17, 1999 at $30 per share, (ii) 600,000
shares of which may be purchased on or prior to April 17, 2000 at $35 per
share and (iii) 600,000 shares of which may be purchased on or prior to
April 17, 2001 at $40 per share.
The Taj Merger Transaction has been accounted for as a "purchase" for
accounting and reporting purposes and the results of Taj Associates have been
included in the accompanying financial statements since the date of acquisition.
Accordingly, the excess of the purchase price over the fair value of the net
assets acquired ($200,782,000), which was allocated to land ($7,979,000) and
building ($192,803,000) based on an appraisal on a pro rata basis, consists of
the following:
a) $40,500,000, representing the payment of $30.00 for each of the
1,350,000 outstanding shares of Taj Holding Class A Common Stock. Holders
of 298,739 shares of Taj Holding Class A Common Stock elected to receive
6
<PAGE>
TRUMP ATLANTIC CITY ASSOCIATES AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
(UNAUDITED)
323,423 shares of THCR Common Stock and holders of 1,051,261 shares of Taj
Holding Class A Common Stock elected to receive $31,181,000 in cash;
b) $40,500,000, representing the contribution by Trump to Trump AC (on
behalf, and at the direction, of THCR Holdings) of all of his direct and
indirect ownership interest in 50% of Taj Associates;
c) $9,900,000 of fees and expenses associated with the Taj Merger
Transaction;
d) $108,574,000, representing the negative book value of Taj
Associates at the date of the Taj Merger Transaction; and
e) $1,308,000 of closing costs associated with the purchase of the
Specified Parcels.
In connection with the Taj Merger Transaction, THCR purchased the Specified
Parcels from Trump Taj Mahal Realty Corp., a corporation owned by Trump, and Taj
Associates was released from its guarantee to First Union National Bank (the
"Guarantee"). The aggregate cost of acquiring the Specified Parcels was
$50,600,000 in cash and 500,000 shares of THCR Common Stock valued at
$10,500,000 (an average value of $21.00 per share based on the price of the THCR
Common Stock several days before and after the date of the amended Taj Merger
Agreement). The obligation of Taj Associates which had been accrued with respect
to the Guarantee ($17,923,000) was eliminated. In addition, THCR exercised the
option to purchase a tower adjacent to Trump Plaza's main tower ("Trump Plaza
East") for $28,084,000, which amount has been included in land and building.
Unaudited pro forma information, assuming that the Taj Merger Transaction
had occurred on January 1, 1996, is as follows:
SIX MONTHS ENDED
JUNE 30, 1996
----------------
Net Revenues................................... $458,393,000
Income from operations......................... 51,547,000
Loss before extraordinary loss................. (9,706,000)
Extraordinary loss............................. (59,132,000)
Net loss....................................... $(68,838,000)
The pro forma information is presented for informational purposes only and
does not purport to present what the results of operations would have been had
the Taj Merger Transaction, in fact, occurred on January 1, 1996 or to project
the results of operations for any future period.
(3) PROPERTY AND EQUIPMENT
During the second quarter of 1997, Trump AC revised its estimates of the
useful lives of buildings, building improvements and furniture and fixtures
which were acquired in 1996. Buildings and building improvements were
reevaluated to have a new forty year life and furniture and fixtures were
determined to have a seven year life. Trump AC believes these changes more
appropriately reflect the timing of the economic benefits to be received from
these assets during their estimated useful lives. For the three and six months
ended June 30, 1997, the net effect of applying these new lives was to increase
net income by $1,926,000.
7
<PAGE>
ITEM 2 --MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
CAPITAL RESOURCES AND LIQUIDITY
Cash flows from operating activities are Trump AC's principal source of
liquidity. With proceeds from the 1996 Offerings, Trump AC, among other things,
retired the outstanding Taj Bonds, retired the outstanding Plaza Notes,
satisfied the indebtedness of Taj Associates under its loan agreement with Nat
West, purchased certain real property used in the operation of Trump Plaza and
the Taj Mahal and paid Bankers Trust to release certain liens and guarantees.
The indenture under which the Trump AC Mortgage Notes were issued restricts
the ability of Trump AC and its subsidiaries to make distributions or pay
dividends, as the case may be, unless certain financial ratios are achieved. In
addition, the ability of Plaza Associates and Taj Associates to make payments of
dividends or distributions (except for payment of interest) through Trump AC to
THCR Holdings may be restricted by the CCC.
Capital expenditures for Trump AC were $51,215,000 for the six months ended
June 30, 1997. Capital expenditures for the six months ended June 30, 1996
includes Trump Plaza East and Trump World's Fair expansions of $37,028,000 and
$51,418,000, respectively. In addition, in 1997, Plaza Associates exercised its
option to purchase from Seashore Four Associates, an entity beneficially owned
by Trump, one of the parcels of land underlying Trump Plaza's main tower,
pursuant to the terms of a lease, the payments under which were terminated upon
the exercise of such option. The exercise price and associated closing costs
were $10,144,000.
Capital expenditures attributable to the Taj Mahal were $29,603,000 for the
six months ended June 30, 1997 and $68,677,000 for the period from inception,
April 17, 1996, to June 30, 1996. Capital expenditures for improvements to
existing facilities were approximately $5,147,000 for the six months ended June
30, 1997 and $6,040,000 for the period from inception, April 17, 1996, to June
30, 1996. Capital expenditures attributable to the expansion of the facility
were approximately $24,456,000 for the six months ended June 30, 1997. Capital
expenditures for the period from inception, April 17, 1996, to June 30, 1996
included the purchase of property previously leased upon which a portion of the
casino hotel complex is situated for $61,808,000.
The expansion at the Taj Mahal (the "Taj Mahal Expansion") consists of the
construction of a new 15-bay bus terminal which was completed in December 1996,
a 2,400 space expansion of the existing self parking facilities, which was
completed in May 1997 and an approximate 7,000 square foot casino expansion with
260 slot machines which was completed in July 1997. The costs of the Taj Mahal
Expansion of approximately $43,200,000 is being funded principally out of cash
from operations.
RESULTS OF OPERATIONS: OPERATING REVENUES AND EXPENSES
The financial information presented below reflects the results of
operations of Trump AC. Because Trump AC has no business operations other than
its interest in Plaza Associates and Taj Associates at June 30, 1997, its
results of operations are not discussed below. Taj Associates was acquired on
April 17, 1996.
8
<PAGE>
Comparison of Three-Month Periods Ended June 30, 1997 and 1996. The
following table includes selected data of Plaza Associates and Taj Associates
(since the date of acquisition, April 17, 1996) for the three months ended June
30, 1997 and 1996.
<TABLE>
<CAPTION>
THREE MONTHS ENDED JUNE 30,
------------------------------------------------------------------------------
1997 1996 1997 1996 1997 1996
PLAZA PLAZA TAJ TAJ TOTAL TOTAL
ASSOCIATES ASSOCIATES ASSOCIATES ASSOCIATES TRUMP AC TRUMP AC
---------- ---------- ---------- ---------- -------- ---------
(in thousands)
<S> <C> <C> <C> <C> <C> <C>
Revenues:
Gaming...................................... $ 97,865 $ 96,076 $ 134,633 $ 109,684 $ 232,498 $ 205,760
Other ...................................... 28,376 27,144 31,352 24,357 59,728 51,501
--------- --------- --------- --------- --------- ---------
Gross Revenues ............................. 126,241 123,220 165,985 134,041 292,226 257,261
Less: Promotional Allowances ................... 16,732 16,846 18,968 13,865 35,700 30,711
--------- --------- --------- --------- --------- ---------
Net Revenues ............................... 109,509 106,374 147,017 120,176 256,526 226,550
--------- --------- --------- --------- --------- ---------
Costs & Expenses:
Gaming ..................................... 61,195 57,525 83,998 63,856 145,193 121,381
Pre-opening ................................ -- 2,853 -- -- -- 2,853
General & Administrative ................... 21,388 18,937 20,742 19,537 42,180 38,474
Depreciation and Amortization .............. 5,458 5,923 8,758 10,756 14,248 16,679
Other ...................................... 8,324 7,223 8,567 7,842 16,891 15,065
--------- --------- --------- --------- --------- ---------
Total Costs and Expenses ................... 96,365 92,461 122,065 101,991 218,512 194,452
--------- --------- --------- --------- --------- ---------
Income from Operations ......................... 13,144 13,913 24,952 18,185 38,014 32,098
--------- --------- --------- --------- --------- ---------
Non-Operating Income (Expense) ............... 142 751 242 10,206 617 10,991
Interest Expense ............................. (12,198) (11,991) (23,759) (19,840) (35,957) (31,831)
--------- --------- --------- --------- --------- ---------
Total Non-Operating Expense .................. (12,056) (11,240) (23,517) (9,634) (35,340) (20,840)
--------- --------- --------- --------- --------- ---------
Extraordinary Loss ........................... -- (59,132) -- -- -- (59,132)
--------- --------- --------- --------- --------- ---------
Net Income (Loss)............................... $ 1,088 $ (56,459) $ 1,435 $ 8,551 $ 2,674 $ (47,874)
========= ========= ========= ========= ========= =========
</TABLE>
Gaming revenues were $232,498,000 for the three months ended June 30, 1997,
an increase of $26,738,000 or 13.0% from gaming revenues of $205,760,000 for
1996. This increase in gaming revenues consists of $24,949,000 from Taj
Associates' gaming revenues over the last year in addition to an increase of
$1,789,000 in Plaza Associates' table games and slot revenues. Management
believes that Taj Associates' increase in gaming revenues is partly due to the
opening of the new bus terminal, expanded self-parking facilities and increased
marketing initiatives. Management believes that Plaza Associates' increase in
gaming revenues is primarily due to the May 1996 opening of Trump World's Fair,
the availability of additional hotel rooms at Trump World's Fair, as well as
management's marketing initiatives.
Slot revenues were $153,885,000 for the three months ended June 30, 1997,
an increase of $21,425,000 or 16.2% from slot revenues of $132,460,000 for 1996.
Taj Associates' slot revenues were $79,584,000 for the three months ended June
30, 1997, an increase of $18,323,000 or 29.9% from slot revenues of $61,261,000
for the period from inception, April 17, 1996, to June 30, 1996. Taj Associates'
increase is partly due to the opening of the new bus terminal and expanded self-
parking facilities. Plaza Associates' slot revenues were $74,301,000 for three
months ended June 30, 1997, an increase of $3,102,000 or 4.4% from slot revenues
of $71,199,000 for the three months ended June 30, 1996. Plaza Associates'
increase is due to the addition of 1,506 slot machines at Trump World's Fair, as
well as management's marketing programs.
Table games revenues were $74,004,000 for the three months ended June 30,
1997, an increase of $4,970,000 or 7.2% from $69,034,000 for 1996. Taj
Associates' table games revenues of $50,440,000 for the three months ended June
30, 1997 increased by $6,283,000 or 14.2% for the period from inception, April
17, 1996, to June 30, 1996. Plaza Associates' table games revenue of $23,564,000
for the three months ended June 30, 1997 decreased by $1,313,000 or 5.3% from
1996. Plaza Associates' decrease is primarily due to a decrease in table games
drop by 6.5% for the three months ended June 30, 1997, offset by an increase in
hold percentage of 0.2%.
In addition to table games and slot revenues, Taj Associates'
keno/poker/simulcasting operations generated approximately $3,911,000 in poker
revenues, $383,000 in simulcasting revenue and $315,000 in keno revenue for the
three months ended June 30, 1997, compared to $3,647,000 of poker revenue,
$322,000 of simulcasting revenue and $297,000 of keno revenue for the period
from inception, April 17, 1996, to June 30, 1996.
9
<PAGE>
Other revenues were $59,728,000 for the three months ended June 30, 1997,
an increase of $8,227,000 or 16.0% from other revenues of $51,501,000 for the
comparable period in 1996. Other revenues include revenues from rooms, food and
beverage, entertainment and miscellaneous items. Taj Associates' other revenues
were $31,352,000 for the three months ended June 30, 1997, an increase of
$6,995,000 or 28.7% for the period from inception, April 17, 1996, to June 30,
1996. Taj Associates' increase is partly due to expanded entertainment events in
conjunction with the expanded self-parking facilities. Plaza Associates' other
revenues were $28,376,000 for the three months ended June 30, 1997, an increase
of $1,232,000 or 4.5% from the comparable period in 1996. Plaza Associates'
increase reflects the additional rooms at Trump World's Fair, as well as
increases in rooms and food and beverage revenues attendant to increased levels
of gaming activity due in part to increased promotional activities.
Promotional allowances were $35,700,000 for the three months ended June 30,
1997, an increase of $4,989,000 or 16.2% from promotional allowances of
$30,711,000 for the three months ended June 30, 1996. Taj Associates'
promotional allowances increased to $18,968,000 or 36.8% from promotional
allowances of $13,865,000 for the period from inception, April 17, 1996, to June
30, 1996. Taj Associates' increase is partly due to increased gaming revenues as
well as increased marketing initiatives. Plaza Associates' promotional
allowances decreased $114,000 from the comparable period in 1996.
Gaming costs and expenses were $145,193,000 for the three months ended June
30, 1997, an increase of $23,812,000 or 19.6% from $121,381,000 for the
comparable period in 1996. Gaming costs and expenses for Taj Associates were
$83,998,000, an increase of $20,142,000 or 31.5% from $63,856,000 for the period
from inception, April 17, 1996, to June 30, 1996. Taj Associates' increase is
primarily due to increased promotional and operating expenses as well as taxes
associated with increased levels of gaming revenues from 1996. Gaming costs and
expenses for Plaza Associates were $61,195,000, an increase of $3,670,000 or
6.4% from $57,525,000 for the comparable period in 1996. Plaza Associates'
increase is primarily due to increased promotional and operating expenses as
well as taxes associated with increased levels of gaming revenues from 1996.
General and administrative expenses were $42,180,000 for the three months
ended June 30, 1997, an increase of $3,706,000 or 9.6% from general and
administrative expenses of $38,474,000 for the comparable period in 1996. Taj
Associates' general and administrative expenses were $20,742,000 for the three
months ended June 30, 1997, an increase of $1,205,000 or 6.2% for the period
from inception, April 17, 1996, to June 30, 1996. Plaza Associates' increase of
$2,451,000 over the comparable period is due to expenses associated with Trump
World's Fair.
During the second quarter of 1997, Trump AC revised its estimates of the
useful lives of buildings, building improvements and furniture and fixtures
which were acquired in 1996. Buildings and building improvements were
reevaluated to have a new forty year life and furniture and fixtures were
determined to have a seven year life. Trump AC believes these changes more
appropriately reflect the timing of the economic benefits to be received from
these assets during their estimated useful lives. For the three months ended
June 30, 1997, the net effect of applying these new lives was to increase net
income by $1,926,000.
Pre-opening expenses of $2,853,000 were recorded by Plaza Associates for
the three months ended June 30, 1996 and reflect the costs associated with
opening Trump World's Fair in May 1996.
Other expenses were $16,891,000 for the three months ended June 30, 1997,
an increase of $1,826,000 or 12.1% from the comparable period in 1996. Other
expenses include costs associated with operating Trump Plaza and the Taj Mahal's
hotels. Taj Associates' other expenses increased by $725,000 or 9.2% for the
period from inception, April 17, 1996, to June 30, 1996. Plaza Associates' other
expenses increased by $1,101,000 or 15.2% from the comparable period. This
increase is due to operating Trump World's Fair.
Income from operations was $38,014,000 for three months ended June 30,
1997, an increase of $5,916,000 or 18.4% from income from operations of
$32,098,000 for the comparable period in 1996. Taj Associates contributed
10
<PAGE>
$24,952,000 during the three months ended June 30, 1997, an increase of
$6,767,000 or 37.2% for the period from inception, April 17, 1996, to June 30,
1996. Plaza Associates contributed $13,144,000 during the three months ended
June 30, 1997, a decrease of $769,000 or 5.5% from the comparable period in
1996.
Interest expense was $35,957,000 for the three months ended June 30, 1997,
an increase of $4,126,000 or 13.0% from interest expense of $31,831,000 for
1996. Taj Associates reflects an increase of $3,919,000 in interest expense from
the period from inception April 17, 1996, to June 30, 1996. Plaza Associates
reflects an increase of $207,000 in interest expense due to the additional debt
incurred in the acquisition of certain land and equipment.
Other non-operating income was $617,000 for the three months ended June 30,
1997, a decrease of $10,374,000 from the comparable period in 1996. Taj
Associates reflects a one time $10,000,000 non-refundable licensing fee in the
three months ended June 30, 1996 resulting from an agreement with Atlantic
Jersey Thermal Systems, Inc. Plaza Associates reflects a decrease in
non-operating expenses of $609,000 or 81.1% from $751,000 in 1996. This decrease
is attributable to a decrease in non-operating expenses associated with Trump
Plaza East and Trump World's Fair.
The extraordinary loss of $59,132,000 for the three months ended June 30,
1996 relates to the redemption of the Plaza Notes and the write-off of
unamortized deferred financing costs on April 17, 1996.
Comparison of Six-Month Periods Ended June 30, 1997 and 1996. The following
table includes selected data of Plaza Associates and Taj Associates (since the
date of acquisition, April 17, 1996) for the six months ended June 30, 1997 and
1996.
<TABLE>
<CAPTION>
Six Months Ended June 30,
--------------------------------------------------------------------------------------
1997 1996 1997 1996 1997 1996
Plaza Plaza Taj Taj Total Total
Associates Associates Associates Associates Trump AC Trump AC
---------- ---------- ---------- ---------- -------- ----------
(in thousand)
<S> <C> <C> <C> <C> <C> <C>
Revenues:
Gaming ............................... $ 184,735 $ 170,346 $ 262,906 $ 109,684 $ 447,641 $280,030
Other ................................ 52,886 46,425 58,015 24,357 110,901 70,782
--------- --------- --------- --------- --------- --------
Gross Revenues ....................... 237,621 216,771 320,921 134,041 558,542 350,812
Less: Promotional Allowances ............. 31,293 29,264 35,508 13,865 66,801 43,129
--------- --------- --------- --------- --------- --------
Net Revenues ......................... 206,328 187,507 285,413 120,176 491,741 307,683
--------- --------- --------- --------- --------- --------
Costs & Expenses:
Gaming ............................... 116,446 101,503 163,194 63,856 279,640 165,359
Pre-opening .......................... -- 3,332 -- -- 3,332
General & Administrative ............. 41,904 36,635 42,982 19,537 84,928 56,172
Depreciation and Amortization ........ 11,997 10,446 22,958 10,756 35,009 21,202
Other ................................ 15,788 12,001 16,171 7,842 31,959 19,843
--------- --------- --------- --------- --------- --------
Total Costs and Expenses ............. 186,135 163,917 245,305 101,991 431,536 265,908
--------- --------- --------- --------- --------- --------
Income from Operations ................... 20,193 23,590 40,108 18,185 60,205 41,775
--------- --------- --------- --------- --------- --------
Non-Operating Income (Expense) ......... 303 (429) 632 10,206 1,432 9,811
Interest Expense ....................... (24,391) (21,742) (47,427) (19,840) (71,818) (41,582)
--------- --------- --------- --------- --------- --------
Total Non-Operating Expense ............ (24,088) (22,171) (46,795) (9,634) (70,386) (31,771)
--------- --------- --------- --------- --------- --------
Extraordinary Loss ..................... -- (59,132) -- -- -- (59,132)
--------- --------- --------- --------- --------- --------
Net Income (Loss) ........................ $ (3,895) $ (57,713) $ (6,687) $ 8,551 $ (10,181) $(49,128)
========= ========= ========= ========= ========= ========
</TABLE>
Gaming revenues were $447,641,000 for the six months ended June 30, 1997,
an increase of $167,611,000 or 59.9% from gaming revenues of $280,030,000 for
the comparable period in 1996. This increase is primarily attributable to the
acquisition of Taj Associates on April 17, 1996. Taj Associates' gaming revenues
were $262,906,000, an increase of $153,222,000 for the period from inception,
April 17, 1996, to June 30, 1996. Management believes that Plaza Associates'
8.4% increase in gaming revenues is primarily due to the May 1996 opening of
Trump World's Fair, the February 1996 opening of Trump Plaza East, the
availability of additional hotel rooms at both Trump World's Fair and Trump
Plaza East, as well as management's marketing initiatives.
Slot revenues were $285,166,000 for the six months ended June 30, 1997, an
increase of $102,873,000 or 56.4%
11
<PAGE>
from slot revenues of $182,293,000 for the comparable period of 1996. This
increase is primarily attributable to the acquisition of Taj Associates on April
17, 1996. Taj Associates' slot revenues were $145,976,000, an increase of
$84,715,000 for the period from inception, April 17, 1996, to June 30, 1996.
Plaza Associates' slot revenues were $139,190,000 for the six months ended June
30, 1997, an increase of $18,158,000 or 15.0% from slot revenues of $121,032,000
for the six months ended June 30, 1996. Plaza Associates' increase is due to the
addition of 1,924 slot machines at Trump World's Fair and Trump Plaza East, as
well as management's marketing programs.
Table games revenues were $153,313,000 for the six months ended June 30,
1997, an increase of $59,842,000 or 64.0% from $93,471,000 for the comparable
period in 1996. This increase is primarily attributable to the acquisition of
Taj Associates on April 17, 1996. Taj Associates' table games revenues were
$107,768,000, an increase of $63,611,000 for the period from inception, April
17, 1996, to June 30, 1996. Plaza Associates' table games revenues of
$45,545,000 for the six months ended June 30, 1997 decreased by $3,769,000 or
7.7% from the comparable period in 1996. Plaza Associates' decrease is primarily
due to a decrease in hold percentage to 14.1% from 15.4% for the comparable
period in 1996 offset by an increase in the table drop by 1.0% for the six
months ended June 30, 1996.
In addition to table games and slot revenues, Taj Associates'
keno/poker/simulcasting operations generated approximately $7,910,000 in poker
revenues, $706,000 of simulcasting revenue and $546,000 of keno revenues for the
six months ended June 30, 1997, compared to $3,647,000 of poker revenue,
$322,000 of simulcasting revenue and $297,000 of keno revenues for the period
from inception, April 17, 1996, to June 30, 1996.
Other revenues were $110,901,000 for the six months ended June 30, 1997, an
increase of $40,119,000 or 56.7% from other revenues of $70,782,000 for the
comparable period in 1996. Other revenues include revenues from rooms, food and
beverage, entertainment and miscellaneous items. This increase is primarily
attributable to the acquisition of Taj Associates on April 17, 1996. Taj
Associates' other revenues were $58,015,000, an increase of $33,658,000 for the
period from inception, April 17, 1996, to June 30, 1996. Plaza Associates' other
revenue was $52,886,000 for the six months ended June 30, 1997, an increase of
$6,461,000 or 13.9% from the comparable period in 1996. Plaza Associates'
increase reflects the additional rooms at Trump Plaza East and Trump World's
Fair, as well as increases in rooms and food and beverage revenues attendant to
increased levels of gaming activity due in part to increased promotional
activities.
Promotional allowances were $66,801,000 for the six months ended June 30,
1997, an increase of $23,672,000 or 54.9% from promotional allowances of
$43,129,000 for the six months ended June 30, 1996. Taj Associates' promotional
allowances were $35,508,000, an increase of $21,643,000 for the period from
inception, April 17, 1996, to June 30, 1996. Plaza Associates' promotional
allowances increased $2,029,000 or 6.9% from the comparable period in 1996.
Plaza Associates' increase is attributable primarily to the additional rooms at
Trump World's Fair and Trump Plaza East as well as the addition of three
restaurants at Trump World's Fair, and increases in marketing initiatives during
the six months ended June 30, 1997.
Gaming costs and expenses were $279,640,000 for the six months ended June
30, 1997, an increase of $114,281,000 or 69.1% from $165,359,000 for the
comparable period in 1996. This increase is primarily attributable to the
acquisition of Taj Associates on April 17, 1996. Taj Associates' gaming costs
and expenses were $163,194,000, an increase of $99,338,000 for the period from
inception, April 17, 1996, to June 30, 1996. Gaming costs and expenses for Plaza
Associates were $116,446,000, an increase of $14,943,000 or 14.7% from
$101,503,000 for the comparable period in 1996. Plaza Associates' increase is
primarily due to increased promotional and operating expenses as well as taxes
associated with increased levels of gaming revenues from the comparable period
in 1996.
General and administrative expenses were $84,928,000 for the six months
ended June 30, 1997, an increase of $28,756,000 or 51.2% from general and
administrative expenses of $56,172,000 for the comparable period in 1996. This
increase is primarily attributable to the acquisition of Taj Associates on April
17, 1996. Taj Associates' general and administrative expenses were $42,982,000,
an increase of $23,445,000 for the period from inception, April 17, 1996, to
June 30, 1996. Plaza Associates' increase of $5,269,000 over the comparable
period is due to expenses associated with Trump Plaza East and Trump World's
Fair.
12
<PAGE>
During the second quarter of 1997, Trump AC revised its estimates of the
useful lives of buildings, building improvements and furniture and fixtures
which were acquired in 1996. Buildings and building improvements were
reevaluated to have a new forty year life and furniture and fixtures were
determined to have a seven year life. Trump AC believes these changes more
appropriately reflect the timing of the economic benefits to be received from
these assets during their estimated useful lives. For the six months ended June
30, 1997, the net effect of applying these new lives was to increase net income
by $1,926,000.
Pre-opening expenses of $3,332,000 were incurred by Plaza Associates for
the six months ended June 30, 1996 and reflect the costs associated with opening
Trump World's Fair in May 1996.
Other expenses were $31,959,000 for the six months ended June 30, 1997, an
increase of $12,116,000 or 61.1% from the comparable period in 1996. Other
expenses include costs associated with operating Trump Plaza's and the Taj
Mahal's hotels. This increase is primarily attributable to the acquisition of
Taj Associates on April 17, 1996. Taj Associates' other expenses were
$16,171,000, an increase of $8,329,000 for the period from inception, April 17,
1996, to June 30, 1996. Plaza Associates' other expenses increased by $3,787,000
or 31.6% from the comparable period. This increase is due to operating Trump
World's Fair and Trump Plaza East, both with opening dates in 1996.
Income from operations was $60,205,000 for the six months ended June 30,
1997, an increase of $18,430,000 or 44.1% from income from operations of
$41,775,000 for the comparable period in 1996. Taj Associates contributed
$40,108,000 of income during the six months ended June 30, 1997, an increase of
$21,923,000 for the period from inception, April 17, 1996, to June 30, 1996.
Plaza Associates contributed $20,193,000 during the six months ended June 30,
1997, a decrease of $3,397,000 or 14.4% from the comparable period in 1996.
Interest expense was $71,818,000 for the six months ended June 30, 1997, an
increase of $30,236,000 or 72.7% from interest expense of $41,582,000 for the
comparable period in 1996. This increase is primarily attributable to the
acquisition of Taj Associates on April 17, 1996. Taj Associates' interest
expenses were $47,427,000 an increase of $27,587,000 for the period from
inception, April 17, 1996, to June 30, 1996. Plaza Associates reflects
$24,391,000 in interest expense at June 30, 1997, an increase in interest
expense due to the retirement of the Plaza Notes and the issuance of the Trump
AC Mortgage Notes in addition to debt incurred in the acquisition of certain
land and equipment.
Other non-operating income was $1,432,000 for the six months ended June 30,
1997, a decrease of $8,379,000 from the comparable period in 1996. Taj
Associates' non-operating income consists of a one-time $10,000,000
non-refundable licensing fee in the six months ended June 30, 1996 resulting
from the Atlantic Thermal Agreement. Plaza Associates reflects a decrease in
non-operating expense of $732,000 or 170.6% from $429,000 in 1996. This decrease
is attributable to a decrease in non-operating expenses associated with Trump
Plaza East and Trump World's Fair.
The extraordinary loss of $59,132,000 for the six months ended June 30,
1996 relates to the redemption of the Plaza Notes and the write-off of
unamortized deferred financing costs on April 17, 1996.
SEASONALITY
The casino industry in Atlantic City is seasonal in nature; accordingly,
the results of operations for the period ending June 30, 1997 are not
necessarily indicative of the operating results for a full year.
ITEM 3--QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
Pursuant to the General Instructions to Rule 305 of Regulation S-K, the
quantitative and qualitative disclosures called for by this Item 3 and by Rule
305 of Regulation S-K are inapplicable to the Registrants at this time.
13
<PAGE>
PART II -- OTHER INFORMATION
ITEM 1 -- LEGAL PROCEEDINGS
Plaza Associates and Taj Associates, their partners, certain members of
their former Executive Committee and certain of their employees, have been and
are involved in various legal proceedings. In general, Plaza Associates and Taj
Associates have agreed to indemnify such persons and entities, against any and
all losses, claims, damages, expenses (including reasonable costs, disbursements
and counsel fees) and liabilities (including amounts paid or incurred in
satisfaction of settlements, judgments, fines and penalties) incurred by them in
said legal proceedings. Such persons and entities are vigorously defending the
allegations against them and intend to vigorously contest any future
proceedings.
On March 13, 1997, THCR filed a lawsuit in the United States District
Court, District of New Jersey, against Mirage Resorts Incorporated, the State of
New Jersey ("State"), the New Jersey Department of Transportation, the South
Jersey Transportation Authority, the Casino Reinvestment Development Authority
("CRDA"), the New Jersey Transportation Trust Fund Authority and others. THCR
was seeking declaratory and injunctive relief to recognize and prevent
violations by the defendants of the casino clause of the New Jersey State
Constitution and various federal securities and environmental laws relating to
proposed infrastructure improvements in the Atlantic City marina. While this
action was pending, defendants State and CRDA then filed an action in the New
Jersey State Court seeking declaration of the claim relating to the casino
clause of the New Jersey State Constitution. On May 1, 1997, the United States
District Court dismissed the federal claims and ruled that the State
constitutional claims should be pursued in State Court. This decision is
currently being appealed and all briefs are scheduled to be filed by
mid-October. On May 14, 1997, the State Court entered a summary judgement in
favor of the State and CRDA. This decision is also being appealed and all briefs
are scheduled to be filed by mid-September.
Various other legal proceedings are now pending against Plaza Associates
and Taj Associates. Except as set forth on Trump AC's and Trump AC Funding's
Annual Report on Form 10-K for the year ended December 31, 1996, Trump AC
considers all such proceedings to be ordinary litigation incident to the
character of its business and not material to its business or financial
condition. The majority of such claims are covered by liability insurance
(subject to applicable deductibles), and Trump AC believes that the resolution
of these claims, to the extent not covered by insurance, will not, individually
or in the aggregate, have a material adverse effect on its financial condition
or results of operations of Plaza Associates or Taj Associates.
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
None.
14
<PAGE>
ITEM 6 -- EXHIBITS AND REPORTS ON FORM 8-K
A. EXHIBITS:
EXHIBIT NO. DESCRIPTION OF EXHIBIT
---------- ----------------------
27.1 Financial Data Schedule of Trump Atlantic City Associates.
27.2 Financial Data Schedule of Trump Atlantic City Funding, Inc.
B. CURRENT REPORTS ON FORM 8-K:
The Registrants did not file any Current Reports on Form 8-K during the
period beginning April 1, 1997 and ending June 30, 1997.
15
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, as
amended, the registrant has duly caused this report to be signed on its behalf
by the undersigned thereunto duly authorized.
TRUMP ATLANTIC CITY ASSOCIATES
(Registrant)
By: TRUMP HOTELS & CASINO RESORTS HOLDINGS, L.P.,
its general partner
By: TRUMP HOTELS & CASINO RESORTS, INC.,
its general partner
Date: August 14, 1997
By: /s/ NICHOLAS L. RIBIS
--------------------------------------------
NICHOLAS L. RIBIS
PRESIDENT, CHIEF EXECUTIVE OFFICER,
CHIEF FINANCIAL OFFICER AND DIRECTOR
(DULY AUTHORIZED OFFICER AND
PRINCIPAL FINANCIAL OFFICER)
16
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, as
amended, the registrant has duly caused this report to be signed on its behalf
by the undersigned thereunto duly authorized.
TRUMP ATLANTIC CITY FUNDING, INC.
(Registrant)
Date: August 14, 1997
By: /s/ NICHOLAS L. RIBIS
-----------------------------------------
NICHOLAS L. RIBIS
CHIEF EXECUTIVE OFFICER AND PRESIDENT
(DULY AUTHORIZED OFFICER AND
PRINCIPAL FINANCIAL OFFICER)
<TABLE> <S> <C>
<ARTICLE> 5
<CIK> 0000897729
<NAME> TRUMP ATLANTIC CITY ASSOCIATES
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-START> JAN-01-1997
<PERIOD-END> JUN-30-1997
<CASH> 47,885
<SECURITIES> 0
<RECEIVABLES> 69,293
<ALLOWANCES> 16,584
<INVENTORY> 9,435
<CURRENT-ASSETS> 126,612
<PP&E> 1,712,900
<DEPRECIATION> 238,239
<TOTAL-ASSETS> 1,665,991
<CURRENT-LIABILITIES> 120,548
<BONDS> 1,200,000
0
0
<COMMON> 0
<OTHER-SE> 331,821
<TOTAL-LIABILITY-AND-EQUITY> 1,665,991
<SALES> 491,741
<TOTAL-REVENUES> 558,542
<CGS> 0
<TOTAL-COSTS> 311,599 <F1>
<OTHER-EXPENSES> 119,937 <F2>
<LOSS-PROVISION> 4,378
<INTEREST-EXPENSE> 71,818
<INCOME-PRETAX> (10,181)
<INCOME-TAX> 0
<INCOME-CONTINUING> (10,181)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (10,181)
<EPS-PRIMARY> 0
<EPS-DILUTED> 0
<FN>
<F1> Includes gaming, lodging, food & beverage and other
<F2> Includes general & administration, depreciation & amortization, and
pre-opening expenses
</FN>
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<CIK> 0001006918
<NAME> TRUMP ATLANTIC CITY FUNDING, INC.
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-START> JAN-01-1997
<PERIOD-END> JUN-30-1997
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0
0
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</TABLE>
