===============================================================================
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: SEPTEMBER 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)
NOT APPLICABLE
----------------------------------------------------
(Former name, former address and former fiscal year,
if changed since last report)
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 NOVEMBER 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>
<TABLE>
TRUMP ATLANTIC CITY ASSOCIATES AND SUBSIDIARIES
INDEX TO FORM 10-Q
<CAPTION>
PAGE NO.
--------
<S> <C>
PART I -- FINANCIAL INFORMATION
ITEM 1 -- Financial Statements
Condensed Consolidated Balance Sheets of Trump Atlantic City Associates and
Subsidiaries as of September 30, 1997 (unaudited) and December 31, 1996 ....................... 1
Condensed Consolidated Statements of Operations of Trump Atlantic City Associates and
Subsidiaries for the Three Months and Nine Months Ended September 30, 1997
and 1996 (unaudited) .......................................................................... 2
Condensed Consolidated Statement of Capital of Trump Atlantic City Associates and
Subsidiaries for the Nine Months Ended September 30, 1997 (unaudited) ......................... 3
Condensed Consolidated Statements of Cash Flows of Trump Atlantic City Associates and
Subsidiaries for the Nine Months Ended September 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 ......................................................................... 8-12
ITEM 3 -- Quantitative and Qualitative Disclosures About Market Risk ...................................... 12
PART II -- OTHER INFORMATION
ITEM 1 -- Legal Proceedings ............................................................................... 13-14
ITEM 2 -- Changes in Securities and Use of Proceeds ....................................................... 14
ITEM 3 -- Defaults Upon Senior Securities ................................................................. 14
ITEM 4 -- Submission of Matters to a Vote of Security Holders ............................................. 14
ITEM 5 -- Other Information ............................................................................... 14
ITEM 6 -- Exhibits and Reports on Form 8-K ................................................................ 14
SIGNATURES
SIGNATURE -- Trump Atlantic City Associates ............................................................... 15
SIGNATURE -- Trump Atlantic City Funding, Inc. ............................................................ 16
</TABLE>
i
<PAGE>
PART I -- FINANCIAL INFORMATION
ITEM 1 -- FINANCIAL STATEMENTS
TRUMP ATLANTIC CITY ASSOCIATES AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(IN THOUSANDS)
ASSETS
SEPTEMBER 30, DECEMBER 31,
1997 1996
----------- -----------
(UNAUDITED)
CURRENT ASSETS:
Cash and cash equivalents ...................... $ 91,557 $ 71,320
Receivables, net ............................... 54,687 45,231
Inventories .................................... 9,671 9,393
Advances to affiliates, net .................... 6,851 5,237
Other current assets ........................... 8,452 6,495
---------- ----------
Total Current Assets ......................... 171,218 137,676
PROPERTY AND EQUIPMENT, NET ...................... 1,472,046 1,456,267
DEFERRED LOAN COSTS, NET ......................... 34,207 39,153
OTHER ASSETS ..................................... 30,195 25,910
---------- ----------
Total Assets ................................. $1,707,666 $1,659,006
========== ==========
LIABILITIES AND CAPITAL
CURRENT LIABILITIES:
Current maturities of long-term debt ........... $ 9,322 $ 9,410
Accounts payable and accrued expenses .......... 84,214 77,942
Accrued interest payable ....................... 56,916 23,160
---------- ----------
Total Current Liabilities .................... 150,452 110,512
LONG-TERM DEBT, net of current maturities ........ 1,204,415 1,207,795
OTHER LONG-TERM LIABILITIES ...................... 3,151 4,569
DISTRIBUTION PAYABLE TO TRUMP PLAZA
FUNDING, INC. ................................... 3,822 3,822
DEFERRED STATE INCOME TAXES ...................... 450 450
---------- ----------
Total Liabilities ............................ 1,362,290 1,327,148
---------- ----------
CAPITAL:
Partners' Capital .............................. 373,790 363,646
Accumulated Deficit ............................ (28,414) (31,788)
---------- ----------
Total Capital .................................. 345,376 331,858
---------- ----------
Total Liabilities and Capital ................ $1,707,666 $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 NINE MONTHS ENDED SEPTEMBER 30, 1997 AND 1996
(UNAUDITED)
(IN THOUSANDS)
<CAPTION>
THREE MONTHS NINE MONTHS
ENDED SEPTEMBER 30, ENDED SEPTEMBER 30,
---------------------- -----------------------
1997 1996 1997 1996
-------- -------- --------- --------
<S> <C> <C> <C> <C>
REVENUES:
Gaming ........................................... $238,596 $261,981 $ 686,237 $542,011
Rooms ............................................ 23,683 24,310 62,707 48,464
Food and Beverage ................................ 31,751 32,552 87,878 70,854
Other ............................................ 10,669 8,709 26,419 17,035
-------- -------- --------- --------
Gross Revenues ................................. 304,699 327,552 863,241 678,364
Less--Promotional allowances ....................... 39,250 39,343 106,051 82,472
-------- -------- --------- --------
Net Revenues ................................... 265,449 288,209 757,190 595,892
-------- -------- --------- --------
COSTS AND EXPENSES:
Gaming ........................................... 144,739 150,289 424,379 315,648
Rooms ............................................ 7,484 7,235 21,315 15,587
Food and Beverage ................................ 10,040 10,582 28,168 22,073
Pre-Opening ...................................... -- 501 -- 3,833
General and Administrative ....................... 39,215 43,011 124,143 99,183
Depreciation and Amortization .................... 15,137 20,255 50,146 41,457
-------- -------- --------- --------
216,615 231,873 648,151 497,781
-------- -------- --------- --------
Income from operations ......................... 48,834 56,336 109,039 98,111
-------- -------- --------- --------
NON-OPERATING INCOME
AND (EXPENSES):
Interest income .................................. 560 854 1,992 1,483
Interest expense ................................. (35,839) (36,495) (107,657) (78,077)
Other non-operating income ....................... -- 5,011 -- 14,193
-------- -------- --------- --------
(35,279) (30,630) (105,665) (62,401)
-------- -------- --------- --------
Income before extraordinary loss ................... 13,555 25,706 3,374 35,710
Extraordinary Loss ................................. -- -- -- (59,132)
-------- -------- --------- --------
NET INCOME (LOSS) .................................. $ 13,555 $ 25,706 $ 3,374 $(23,422)
======== ======== ========= ========
The accompanying notes are an integral part of
these condensed consolidated financial statements.
</TABLE>
2
<PAGE>
TRUMP ATLANTIC CITY ASSOCIATES AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENT OF CAPITAL
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 1997
(UNAUDITED)
(IN THOUSANDS)
RETAINED
EARNINGS
PARTNERS' (ACCUMULATED
CAPITAL DEFICIT) TOTAL
-------- -------- --------
Balance, December 31, 1996 ............... $363,646 $(31,788) $331,858
Net Income ............................... -- 3,374 3,374
Contributed Capital -- Trump Hotels &
Casino Resorts Holdings, L.P. .......... 10,144 -- 10,144
-------- -------- --------
Balance, September 30, 1997 .............. $373,790 $(28,414) $345,376
======== ======== ========
The accompanying notes are an integral part of
this condensed consolidated financial statement.
3
<PAGE>
<TABLE>
TRUMP ATLANTIC CITY ASSOCIATES AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 1997 AND 1996
(UNAUDITED)
(DOLLARS IN THOUSANDS)
<CAPTION>
NINE MONTHS ENDED
SEPTEMBER 30,
-------------------------
1997 1996
-------- -----------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income (loss) ..................................................................... $ 3,374 $ (23,422)
Adjustments to reconcile net loss to net cash flows from operating activities --
Noncash charges --
Extraordinary loss ................................................................. -- 59,132
Depreciation and amortization ...................................................... 50,146 41,457
Accretion of discounts on indebtedness ............................................. -- 132
Provisions for losses on receivables ............................................... 4,982 3,213
Amortization of deferred loan offering costs ....................................... 4,946 3,842
Deferred income taxes .............................................................. -- 28
Valuation allowance of CRDA investments and utilization of credits and donations ... 2,941 2,098
-------- -----------
66,389 86,480
Changes in assets and liabilities:
Increase in receivables ............................................................ (14,438) (24,319)
(Increase) decrease in inventories ................................................. (278) 47
Increase in advances to affiliates ................................................. (1,614) (4,925)
Increase in other current assets ................................................... (1,090) (1,236)
Decrease in other assets ........................................................... 188 1,641
Increase in accounts payable and accrued expenses .................................. 6,065 2,160
Increase in accrued interest payable ............................................... 33,756 14,319
Decrease in other long-term liabilities ............................................ (2,285) (900)
-------- -----------
Net cash provided by operating activities ............................................. 86,693 73,267
-------- -----------
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchase of property and equipment, net ............................................... (63,449) (186,447)
Purchase of CRDA investments .......................................................... (7,994) (4,493)
Purchase of Taj Holding, net of cash acquired ......................................... -- 46,714
-------- -----------
Net cash used in investing activities ................................................. (71,443) (144,226)
-------- -----------
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from issuance of other long term debt ....................................... 2,001 5,906
Payments and current maturities of long-term debt .................................... (7,158) (8,117)
Capital contributed from THCR Holdings ............................................... 10,144 219,240
Retirement of long-term debt ......................................................... -- (1,156,836)
Issuance of Trump AC Mortgage Notes .................................................. -- 1,200,000
Retirement of Nat West loan .......................................................... -- (36,500)
Cost of issuing debt ................................................................. -- (41,042)
-------- -----------
Net cash provided by financing activities ....................................... 4,987 182,651
-------- -----------
Net increase in cash & cash equivalents ......................................... 20,237 111,692
CASH AND CASH EQUIVALENTS AT BEGINNING OF YEAR ........................................ 71,320 15,937
-------- -----------
CASH AND CASH EQUIVALENTS AT SEPTEMBER 30 ............................................. $ 91,557 $ 127,629
======== ===========
CASH INTEREST PAID .................................................................... $ 68,911 $ 14,983
======== ===========
Supplemental Disclosure of noncash activities:
Purchase of property and equipment under capitalized lease obligations ............... $ 3,204 $ 8,436
======== ===========
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
===========
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.
</TABLE>
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 ("Trump AC"), a New Jersey general partnership
formerly known as Trump Plaza Holding Associates, and its 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 nine months ended September 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:
NINE MONTHS ENDED
SEPTEMBER 30, 1996
------------------
Net Revenues .......................................... $ 749,694,000
Income from operations ................................ 107,925,000
Loss before extraordinary loss ........................ 16,000,000
Extraordinary loss .................................... (59,132,000)
Net loss .............................................. $ (43,132,000)
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 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 and nine months ended
September 30, 1997, the net effect of applying these new lives was to increase
net income by $2,108,000 and $4,034,000 respectively
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 and were $86,693,000 compared to $73,267,000 for the comparable period
in 1996. 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 New Jersey Casino Control Commission
("CCC").
Capital expenditures for Trump AC were $63,449,000 for the nine months
ended September 30, 1997. Capital expenditures for the nine months ended
September 30, 1996 includes Trump Plaza East and Trump World's Fair expansions
of $36,877,000 and $56,007,000, 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 $37,948,000 for the
nine months ended September 30, 1997 and $76,160,000 for the period from
acquisition, April 17, 1996, to September 30, 1996. Capital expenditures for
improvements to existing facilities were approximately $7,596,000 for the nine
months ended September 30, 1997 and $9,675,000 for the period from acquisition,
April 17, 1996, to September 30, 1996. Capital expenditures attributable to the
expansion of the facility were approximately $30,352,000 for the nine months
ended September 30, 1997 and $4,677,000 for the period from acquisition, April
17, 1996, to September 30, 1996. Capital expenditures for the period from
acquisition, April 17, 1996, to September 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") consisted 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 total costs of the
Taj Mahal Expansion including amounts expended in 1996 are approximately
$43,000,000 and are 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 September 30, 1997, its
results of operations are not discussed below. Taj Associates was acquired on
April 17, 1996.
8
<PAGE>
<TABLE>
Comparison of Three-Month Periods Ended September 30, 1997 and 1996. The following table includes selected data
of Plaza Associates and Taj Associates for the three months ended September 30, 1997 and 1996.
<CAPTION>
Three Months Ended September 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 .......................... $100,772 $111,165 $137,824 $ 150,816 $ 238,596 $261,981
Other ........................... 30,840 33,230 35,263 32,341 66,103 65,571
-------- -------- -------- --------- ---------- --------
Gross Revenues .................. 131,612 144,395 173,087 183,157 304,699 327,552
Less: Promotional Allowances ........ 18,448 21,121 20,802 18,222 39,250 39,343
-------- -------- -------- --------- ---------- --------
Net Revenues .................... 113,164 123,274 152,285 164,935 265,449 288,209
-------- -------- -------- --------- ---------- --------
Costs & Expenses:
Gaming .......................... 62,273 66,707 82,466 83,582 144,739 150,289
Pre-opening ..................... -- 501 -- -- -- 501
General & Administrative ........ 17,525 23,017 21,649 19,972 39,215 43,011
Depreciation and Amortization ... 6,118 6,206 8,990 14,049 15,137 20,255
Other ........................... 8,802 8,397 8,722 9,420 17,524 17,817
-------- -------- -------- --------- ---------- --------
Total Costs and Expenses ........ 94,718 104,828 121,827 127,023 216,615 231,873
-------- -------- -------- --------- ---------- --------
Income from Operations: ............. 18,446 18,446 30,458 37,912 48,834 56,336
-------- -------- -------- --------- ---------- --------
Non-Operating Income (Expense) .... 126 5,197 260 252 560 5,865
Interest Expense .................. (12,189) (12,667) (23,650) (23,828) (35,839) (36,495)
-------- -------- -------- --------- ---------- --------
Total Non-Operating Expense ....... (12,063) (7,470) (23,390) (23,576) (35,279) (30,630)
-------- -------- -------- --------- ---------- --------
Income before extraordinary loss .. 6,383 10,976 7,068 14,336 13,555 25,706
Extraordinary Loss ................ -- -- -- -- -- --
-------- -------- -------- --------- ---------- --------
Net Income........................... $ 6,383 $ 10,976 $ 7,068 $ 14,336 $ 13,555 $ 25,706
======== ======== ======== ========= ========== ========
<CAPTION>
Three Months Ended September 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>
Table Game Revenues.................. $ 25,540 $ 29,050 $ 48,816 $ 66,449 $ 74,356 $ 95,499
Incr (Decr) over Prior Period........ $ (3,510) $(17,633) $ (21,143)
Table Game Drop ..................... $172,673 $198,629 $346,450 $ 384,966 $ 519,123 $583,595
Incr (Decr) over Prior Period ....... $(25,956) $(38,516) $ (64,472)
Table Win Percentage ................ 14.8% 14.6% 14.1% 17.3% 14.3% 16.4%
Incr (Decr) over Prior Period ....... .2 pts (3.2 pts) (2.1 pts)
Number of Table Games ............... 110 140 155 167 265 307
Incr (Decr) over Prior Period ....... (30) (12) (42)
Slot Revenues........................ $ 75,232 $ 82,115 $ 84,083 $ 78,832 $ 159,315 $160,947
Incr (Decr) over Prior Period........ $ (6,883) $ 5,251 $ (1,632)
Slot Handle ......................... $932,471 $963,194 $996,477 $ 945,884 $1,928,948 $1,909,078
Incr (Decr) over Prior Period ....... $(30,723) $ 50,593 $ 19,870
Slot Win Percentage ................. 8.1% 8.5% 8.4% 8.3% 8.3% 8.4%
Incr (Decr) over Prior Period ....... (.4 pts) .1 pts (.1 pts)
Number of Slot Machines ............. 4,090 4,223 4,136 3,796 8,226 8,019
Incr (Decr) over Prior Period ....... (133) 340 207
Poker Revenues ...................... -- -- $ 4,259 $ 4,713 $ 4,259 $ 4,713
Incr (Decr) over Prior Period ....... -- $ (454) $ (454)
Number of Poker Tables .............. -- -- 63 64 63 64
Incr (Decr) over Prior Period ....... -- (1) (1)
Other Gaming Revenues ............... -- -- $ 666 $ 822 $ 666 $ 822
Incr (Decr) over Prior Period ....... -- $ (156) $ (156)
Total Gaming Revenues ............... $100,772 $111,165 $137,824 $ 150,816 $ 238,596 $261,981
Incr (Decr) over Prior Period ....... $(10,393) $(12,992) $ (23,385)
</TABLE>
9
<PAGE>
Gaming revenues are the primary source of Trump AC's revenues. Taj
Associates' year over year decrease in gaming revenues was due primarily to last
year's third quarter results which included an unusual approximately $12 million
dollar table game win from one premium player, contrasted against an unusually
low table game win percentage in the current year. Table games revenues
represent the amount retained by Trump AC from amounts wagered at table games.
The table win percentage tends to be fairly constant over the long term, but may
vary significantly in the short term, due to large wagers by "high rollers". Taj
Associates' decrease in table game revenues was somewhat offset by increases in
slot revenue partly due to the opening of the new bus terminal, expanded
self-parking facilities, expanded casino and increased marketing initiatives.
Gaming costs and expenses were $144,739,000 for the three months ended
September 30, 1997, a decrease of $5,550,000 or 3.7% from $150,289,000 for the
comparable period in 1996. Gaming costs and expenses for Taj Associates were
$82,466,000 for the three months ended September 30, 1997, a decrease of
$1,116,000 or 1.3% from $83,582,000 for the comparable period in 1996. Taj
Associates' decrease is primarily due to a decrease in cash complimentaries
related to high end table game activity. Gaming costs and expenses for Plaza
Associates were $62,273,000 for the three months ended September 30, 1997, a
decrease of $4,434,000 or 6.6% from $66,707,000 for the comparable period in
1996. Plaza Associates' decrease is primarily due to decreased promotional and
operating expenses as well as reduced taxes associated with decreased levels of
gaming revenues from the comparable period of 1996.
General and administrative expenses were $39,215,000 for the three months
ended September 30, 1997, a decrease of $3,796,000 or 8.8% from general and
administrative expenses of $43,011,000 for the comparable period in 1996. Taj
Associates' general and administrative expenses were $21,649,000 for the three
months ended September 30, 1997, an increase of $1,677,000 or 8.4% from the
comparable period in 1996. Taj Associates' increase is primarily due to last
year's third quarter results which included a reduction in performance based
compensation provisions. Plaza Associates' general and administrative expenses
were $17,525,000 for the three months ended September 30, 1997, a decrease of
$5,492,000 or 23.9% from the comparable period in 1996. Plaza Associates'
decrease is due to an anticipated adjustment of real estate taxes for Trump
World's Fair resulting from reassessments which are under appeal.
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 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 September 30,
1997, the net effect of applying these new lives was to increase net income by
$2,108,000.
Other non-operating income was $560,000 for the three months ended
September 30, 1997, a decrease of $5,305,000 from the comparable period in 1996.
Plaza Associates earned a one time $5,000,000 non-refundable licensing fee in
the three months ended September 30, 1996 resulting from an agreement with
Atlantic Jersey Thermal Systems, Inc. to operate their heating and cooling
facilities for a period of 20 years.
10
<PAGE>
<TABLE>
Comparison of Nine-Month Periods Ended September 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 nine months ended September 30, 1997
and 1996.
<CAPTION>
Nine Months Ended September 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 ......................... $ 285,507 $ 281,511 $ 400,730 $ 260,500 $ 686,237 $ 542,011
Other .......................... 83,726 79,655 93,278 56,698 177,004 136,353
---------- ---------- ---------- ---------- ---------- ----------
Gross Revenues ................. 369,233 361,166 494,008 317,198 863,241 678,364
Less: Promotional Allowances ....... 49,741 50,385 56,310 32,087 106,051 82,472
---------- ---------- ---------- ---------- ---------- ----------
Net Revenues ................... 319,492 310,781 437,698 285,111 757,190 595,892
---------- ---------- ---------- ---------- ---------- ----------
Costs & Expenses:
Gaming ......................... 178,719 168,210 245,660 147,438 424,379 315,648
Pre-opening .................... -- 3,833 -- -- -- 3,833
General & Administrative ....... 59,429 59,652 64,631 39,509 124,143 99,183
Depreciation and Amortization .. 18,115 16,652 31,948 24,805 50,146 41,457
Other .......................... 24,590 20,398 24,893 17,262 49,483 37,660
---------- ---------- ---------- ---------- ---------- ----------
Total Costs and Expenses ....... 280,853 268,745 367,132 229,014 648,151 497,781
---------- ---------- ---------- ---------- ---------- ----------
Income from Operations: ............ 38,639 42,036 70,566 56,097 109,039 98,111
---------- ---------- ---------- ---------- ---------- ----------
Non-Operating Income (Expense) ... 429 4,768 892 10,458 1,992 15,676
Interest Expense ................. (36,580) (34,409) (71,077) (43,668) (107,657) (78,077)
---------- ---------- ---------- ---------- ---------- ----------
Total Non-Operating Expense ...... (36,151) (29,641) (70,185) (33,210) (105,665) (62,401)
---------- ---------- ---------- ---------- ---------- ----------
Income before extraordinary loss . 2,488 12,395 381 22,887 3,374 35,710
Extraordinary Loss ............... -- (59,132) -- -- -- (59,132)
---------- ---------- ---------- ---------- ---------- ----------
Net Income (Loss) .................. $ 2,488 $ (46,737) $ 381 $ 22,887 $ 3,374 $ (23,422)
========== ========== ========== ========== ========== ==========
<CAPTION>
Nine Months Ended September 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>
Table Game Revenues ................ $ 71,085 $ 78,365 $ 156,584 $ 110,606 $ 227,669 $ 188,971
Incr (Decr) over Prior Period ...... $ (7,280) $ 45,978 $ 38,698
Table Game Drop .................... $ 496,513 $ 519,449 $ 991,231 $ 645,990 $1,487,744 $1,165,439
Incr (Decr) over Prior Period ...... $ (22,936) $ 345,241 $ 322,305
Table Win Percentage ............... 14.3% 15.1% 15.8% 17.1% 15.3% 16.2%
Incr (Decr) over Prior Period ...... (.8 pts) (1.3 pts) (.9 pts)
Number of Table Games .............. 118 123 160 166 278 289
Incr (Decr) over Prior Period ...... (5) (6) (11)
Slot Revenues ...................... $ 214,422 $ 203,146 $ 230,059 $ 140,093 $ 444,481 $ 343,239
Incr (Decr) over Prior Period ...... $ 11,276 $ 89,966 $ 101,242
Slot Handle ........................ $2,622,704 $2,417,134 $2,751,430 $1,685,494 $5,374,134 $4,102,628
Incr (Decr) over Prior Period ...... $ 205,570 $1,065,936 $1,271,506
Slot Win Percentage ................ 8.2% 8.4% 8.4% 8.3% 8.3% 8.4%
Incr (Decr) over Prior Period ...... (.2 pts) .1 pts (.1 pts)
Number of Slot Machines ............ 4,080 3,431 3,924 3,742 8,004 7,173
Incr (Decr) over Prior Period ...... 649 182 831
Poker Revenues ..................... -- -- $ 12,169 $ 8,360 $ 12,169 $ 8,360
Incr (Decr) over Prior Period ...... -- $ 3,809 $ 3,809
Number of Poker Tables ............. -- -- 63 64 63 64
Incr (Decr) over Prior Period ...... -- (1) (1)
Other Gaming Revenues .............. -- -- $ 1,918 $ 1,441 $ 1,918 $ 1,441
Incr (Decr) over Prior Period ...... -- -- $ 477 $ 477
Total Gaming Revenues .............. $ 285,507 $ 281,511 $ 400,730 $ 260,500 $ 686,237 $ 542,011
Incr (Decr) over Prior Period ...... $ 3,996 $ 140,230 $ 144,226
</TABLE>
11
<PAGE>
Gaming revenues are the primary source of Trump AC's revenues. The increase
in gaming revenues is primarily attributable to the acquisition of Taj
Associates on April 17, 1996.
Gaming costs and expenses were $424,379,000 for the nine months ended
September 30, 1997, an increase of $108,731,000 or 34.4% from $315,648,000 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 $245,660,000 for the nine months ended September 30, 1997, an
increase of $98,222,000 for the period from inception, April 17, 1996, to
September 30, 1996. Gaming costs and expenses for Plaza Associates were
$178,719,000 for the nine months ended September 30, 1997, an increase of
$10,509,000 or 6.2% from $168,210,000 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 $124,143,000 for the nine months
ended September 30, 1997, an increase of $24,960,000 or 25.2% from general and
administrative expenses of $99,183,000 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 $64,631,000
for the nine months ended September 30, 1997, an increase of $25,122,000 for the
period from inception, April 17, 1996, to September 30, 1996. Plaza Associates'
general and administrative expenses were $59,429,000 for the nine months ended
September 30, 1997, a decrease of $223, 000 from the comparable period in 1996.
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 nine months ended
September 30, 1997, the net effect of applying these new lives was to increase
net income by $4,034,000.
Other non-operating income was $1,992,000 for the nine months ended
September 30, 1997, a decrease of $13,684,000 from the comparable period in
1996. Taj Associates' non-operating income included a one-time $10,000,000
non-refundable licensing fee in the nine months ended September 30, 1996
resulting from an agreement with Atlantic Jersey Thermal Systems, Inc. Plaza
Associates reflects a decrease in non-operating expense of $4,339,000 or 91.0%
from $4,768,000 in 1996. This decrease is attributable to a one time $5,000,000
non-refundable licensing fee in the nine months ended September 30, 1996
resulting from an agreement with Atlantic Jersey Thermal Systems, Inc.
The extraordinary loss of $59,132,000 for the nine months ended September
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 September 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.
12
<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.
Plaza Associates. The Casino Reinvestment Development Authority ("CRDA") is
required to set aside funds for investment in hotel development projects in
Atlantic City undertaken by casino licensees which result in the construction or
rehabilitation of at least 200 hotel rooms. These investments are to fund up to
27% of the cost to casino licensees of such projects. Plaza Associates made
application for such funding to the CRDA with respect to its proposed
construction of the Trump Plaza East facilities, demolition of a structure
attached thereto, development of an appurtenant public park, roadway and parking
area and acquisition of the entire project site. The CRDA, in rulings through
January 10, 1995, approved the hotel development project and, with respect to
same, reserved to Plaza Associates the right to take up to approximately $14.2
million in investment tax credits. Plaza Associates has, except for certain
small parcels discussed below, acquired the site and has constructed the
proposed hotel tower, public park, roadway and parking area.
As part of its approval and on the basis of its powers of eminent domain,
the CRDA, during 1994, initiated certain condemnation proceedings in the New
Jersey Superior Court to acquire four small parcels of land within the project
site. These proceedings are currently pending and include claims as to three of
the parcels that the CRDA did not properly determine that the parcels were to be
used for public purposes. The CRDA is currently drafting a summary judgment
motion seeking dismissal of these claims.
The defendants in two of those matters have filed a separate joint
complaint in the New Jersey Superior Court alleging, among other claims, that
the CRDA and Plaza Associates are wrongfully attempting to deprive them of
property rights in violation of these constitutional and civil rights. Coking,
et al v. Casino Reinvestment Development Authority, et al., Docket No.
ATL-L-2555-97. The CRDA's motion for summary judgment and Plaza Associates'
motion to dismiss for failure to state a claim were granted by the New Jersey
Superior Court on October 24 and November 11, 1997.
Other Litigation. On March 13, 1997, THCR filed a lawsuit in the United
States District Court, District of New Jersey, against Mirage Resorts
Incorporated ("Mirage"), the State of New Jersey ("State"), the New Jersey
Department of Transportation ("NJDOT"), the South Jersey Transportation
Authority ("SJTA"), the CRDA, the New Jersey Transportation Trust Fund Authority
and others. THCR was seeking declaratory and injunctive relief to recognize and
prevent violations by the defendants of the casino clause of the New Jersey
State Constitution and various federal securities and environmental laws
relating to proposed infrastructure improvements in the Atlantic City marina.
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. On May 14, 1997, the State Court entered a summary
judgment in favor of the State and CRDA. This decision is also being appealed.
On June 26, 1997, THCR filed an action against NJDOT, SJTA, Mirage and
others, in the Superior Court of New Jersey, Chancery Division, Atlantic County
(the "Chancery Division Action"). THCR is seeking to declare unlawful and enjoin
certain actions and omissions of the defendants arising out of and relating to a
certain Road Development Agreement dated as of January 10, 1997, by and among
NJDOT, SJTA and Mirage (the "Road Development Agreement") and the public funding
of a certain road and tunnel project to be constructed in Atlantic City, as
further described in the Road Development Agreement. THCR moved to consolidate
this action with other previously filed related actions. Defendants opposed
THCR's motion to consolidate the Chancery Division Action, initially moved to
dismiss this action on procedural grounds and subsequently moved to dismiss this
action on substantive grounds. On October 20, 1997, the Chancery Court denied
the defendants' motion to dismiss this action on procedural grounds, but granted
the motion to dismiss this action on substantive grounds. THCR intends to appeal
this decision.
On June 26, 1997, THCR also filed an action, in lieu of prerogative writs,
against the CRDA, in the Superior Court of New Jersey, Law Division, Atlantic
County, seeking review of the CRDA's April 15, 1997 approval of funding ($120
million principal amount plus interest) for the road and tunnel project
discussed above, a declaratory judgment that the said project is not eligible
for such CRDA funding, and an injunction prohibiting the CRDA from contributing
such funding to the said project. Defendants have moved to dismiss this action
on procedural grounds and have also sought to transfer this action to New
Jersey's Appellate Division. On October 3, 1997, the New Jersey Superior Court
transferred
13
<PAGE>
this action to the Appellate Division where it is currently pending.
On September 9, 1997, Mirage filed a complaint against Trump, THCR and
Hilton Hotels Corporation, in the United States District Court for the Southern
District of New York. The complaint seeks damages for alleged violations of
antitrust laws, tortious interference with prospective economic advantage and
tortious inducement of a breach of fiduciary duties arising out of activities
purportedly engaged in by defendants in furtherance of an alleged conspiracy to
impede Mirage's efforts to build a casino resort in the Marina District of
Atlantic City, New Jersey. Among other things, Mirage contends that the
defendants filed several frivolous lawsuits and funded others that challenge the
proposed state funding mechanisms for the construction of a proposed roadway and
tunnel that would be paid for chiefly through government funds and which would
link the Atlantic City Expressway with the site of Mirage's proposed new casino
resort. THCR and Trump believe that Mirage's claims are without merit.
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 AND USE OF PROCEEDS
None.
ITEM 3 -- DEFAULTS UPON SENIOR SECURITIES
None.
ITEM 4 -- SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
None.
ITEM 5 -- OTHER INFORMATION
None.
ITEM 6 -- EXHIBITS AND REPORTS ON FORM 8-K
A. EXHIBITS:
EXHIBIT NO. DESCRIPTION OF EXHIBIT
----------- ----------------------
27.1 Financial Data Schedule of Trump 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 July 1, 1997 and ending September 30, 1997.
14
<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: November 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)
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 FUNDING, INC.
(Registrant)
Date: November 14, 1997
By: /s/ NICHOLAS L. RIBIS
-----------------------------------------
NICHOLAS L. RIBIS
CHIEF EXECUTIVE OFFICER AND PRESIDENT
(DULY AUTHORIZED OFFICER AND
PRINCIPAL FINANCIAL OFFICER)
16
<TABLE> <S> <C>
<ARTICLE> 5
<CIK> 0000897729
<NAME> TRUMP ATLANTIC CITY ASSOCIATES
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-START> JAN-01-1997
<PERIOD-END> SEP-30-1997
<CASH> 91,557
<SECURITIES> 0
<RECEIVABLES> 70,542
<ALLOWANCES> 15,855
<INVENTORY> 9,671
<CURRENT-ASSETS> 171,218
<PP&E> 1,724,996
<DEPRECIATION> 252,950
<TOTAL-ASSETS> 1,707,666
<CURRENT-LIABILITIES> 150,452
<BONDS> 1,200,000
0
0
<COMMON> 0
<OTHER-SE> 345,376
<TOTAL-LIABILITY-AND-EQUITY> 1,707,666
<SALES> 757,190
<TOTAL-REVENUES> 863,241
<CGS> 0
<TOTAL-COSTS> 473,862 <F1>
<OTHER-EXPENSES> 174,289 <F2>
<LOSS-PROVISION> 4,982
<INTEREST-EXPENSE> 107,657
<INCOME-PRETAX> 3,374
<INCOME-TAX> 0
<INCOME-CONTINUING> 3,374
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 3,374
<EPS-PRIMARY> 0
<EPS-DILUTED> 0
<FN>
<F1> Includes gaming, lodging, food & beverage and other
<F2> Includes general & administration, depreciation & amortization expenses
</FN>
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<CIK> 0001006918
<NAME> TRUMP ATLANTIC CITY FUNDING, INC.
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-START> JAN-01-1997
<PERIOD-END> SEP-30-1997
<CASH> 0
<SECURITIES> 0
<RECEIVABLES> 56,250
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 56,250
<PP&E> 0
<DEPRECIATION> 0
<TOTAL-ASSETS> 1,256,250
<CURRENT-LIABILITIES> 56,250
<BONDS> 1,200,000
0
0
<COMMON> 0
<OTHER-SE> 0
<TOTAL-LIABILITY-AND-EQUITY> 1,256,250
<SALES> 0
<TOTAL-REVENUES> 101,250
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 101,250
<INCOME-PRETAX> 0
<INCOME-TAX> 0
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 0
<EPS-PRIMARY> 0
<EPS-DILUTED> 0
</TABLE>
