<PAGE>
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
For the Quarterly Period Ended June 30, 1999
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 No.: 333-643
<TABLE>
<CAPTION>
TRUMP ATLANTIC CITY ASSOCIATES
(Exact Name of Registrant as specified in its charter)
<S> <C>
New Jersey 22-3213714
(State or other jurisdiction of incorporation or organization) (I.R.S. Employer Identification Number)
2500 Boardwalk
Atlantic City, New Jersey 08401
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (609) 441-6060
Former name, former address and formal fiscal year, if changed since last report: Not Applicable
TRUMP ATLANTIC CITY FUNDING, INC.
(Exact Name of Registrant as specified in its charter)
Delaware 22-3418939
(State or other jurisdiction of incorporation or organization) (I.R.S. Employer Identification Number)
2500 Boardwalk
Atlantic City, New Jersey 08401
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (609) 441-6060
Former name, former address and formal fiscal year, if changed since last report: Not Applicable
TRUMP ATLANTIC CITY FUNDING II, INC.
(Exact Name of Registrant as specified in its charter)
Delaware 22-3550202
(State or other jurisdiction of incorporation or organization) (I.R.S. Employer Identification Number)
2500 Boardwalk
Atlantic City, New Jersey 08401
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (609) 441-6060
Former name, former address and formal fiscal year, if changed since last report: Not Applicable
TRUMP ATLANTIC CITY FUNDING III, INC.
(Exact Name of Registrant as specified in its charter)
Delaware 22-3550203
(State or other jurisdiction of incorporation or organization) (I.R.S. Employer Identification Number)
2500 Boardwalk
Atlantic City, New Jersey 08401
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (609) 441-6060
Former name, former address and formal fiscal year, if changed since last report: Not Applicable
</TABLE>
Indicate by check mark whether the Registrants (1) have filed all Reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
Registrants were required to file such reports), and (2) have been subject to
such filing requirements for the past 90 days. Yes X No ____
---
As of August 13, 1999, there were 100 shares of Trump Atlantic City Funding,
Inc.'s Common Stock outstanding.
As of August 13, 1999, there were 100 shares of Trump Atlantic City Funding
II, Inc.'s Common Stock outstanding.
As of August 13, 1999, there were 100 shares of Trump Atlantic City Funding
III, Inc.'s Common Stock outstanding.
Each of Trump Atlantic City Funding, Inc., Trump Atlantic City Funding II,
Inc. and Trump Atlantic City Funding III, 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
<TABLE>
<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 December 31, 1998 and June 30, 1999 (unaudited)............................................ 1
Condensed Consolidated Statements of Operations of Trump Atlantic City Associates and
Subsidiaries for the Three and Six Months Ended June 30, 1998 and 1999 (unaudited)............................ 2
Condensed Consolidated Statement of Capital of Trump Atlantic City Associates and
Subsidiaries for the Six Months Ended June 30, 1999 (unaudited)............................................... 3
Condensed Consolidated Statements of Cash Flows of Trump Atlantic City Associates and
Subsidiaries for the Six Months Ended June 30, 1998 and 1999 (unaudited)...................................... 4
Notes to Condensed Consolidated Financial Statements of Trump Atlantic City Associates and
Subsidiaries (unaudited)...................................................................................... 5-6
ITEM 2 -- Management's Discussion and Analysis of Financial Condition and
Results of Operations................................................................................. 7-10
ITEM 3 -- Quantitative and Qualitative Disclosures About Market Risk............................................ 10
PART II -- OTHER INFORMATION
ITEM 1 -- Legal Proceedings..................................................................................... 11
ITEM 2 -- Changes in Securities and Use of Proceeds............................................................. 12
ITEM 3 -- Defaults Upon Senior Securities....................................................................... 12
ITEM 4 -- Submission of Matters to a Vote of Security Holders................................................... 12
ITEM 5 -- Other Information..................................................................................... 12
ITEM 6 -- Exhibits and Reports on Form 8-K...................................................................... 12
SIGNATURES
Signature -- Trump Atlantic City Associates..................................................................... 13
Signature -- Trump Atlantic City Funding, Inc................................................................... 14
Signature -- Trump Atlantic City Funding II, Inc................................................................ 15
Signature -- Trump Atlantic City Funding III, 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)
<TABLE>
<CAPTION>
ASSETS
December 31, June 30,
1998 1999
----------- -----------
(unaudited)
<S> <C> <C>
CURRENT ASSETS:
Cash and cash equivalents............................................ $ 80,954 $ 79,430
Receivables, net..................................................... 60,786 50,937
Inventories.......................................................... 9,183 9,468
Due from affiliates, net............................................. 35,031 48,411
Other current assets................................................. 7,438 10,660
---------- ----------
Total Current Assets............................................... 193,392 198,906
PROPERTY AND EQUIPMENT, NET............................................ 1,432,965 1,411,001
DEFERRED LOAN COSTS, NET............................................... 30,644 27,607
OTHER ASSETS........................................................... 31,605 36,690
---------- ----------
Total Assets....................................................... $1,688,606 $1,674,204
========== ==========
LIABILITIES AND CAPITAL
CURRENT LIABILITIES:
Current maturities of long-term debt................................. $ 3,482 $ 3,806
Accounts payable and accrued expenses................................ 83,216 85,283
Accrued interest payable............................................. 24,375 24,375
---------- ----------
Total Current Liabilities.......................................... 111,073 113,464
LONG-TERM DEBT, net of current maturities.............................. 1,299,217 1,300,154
OTHER LONG-TERM LIABILITIES............................................ 5,557 5,557
---------- ----------
Total Liabilities.................................................. 1,415,847 1,419,175
---------- ----------
CAPITAL:
Partners' Capital.................................................... 329,691 329,691
Accumulated Deficit.................................................. (56,932) (74,662)
---------- ----------
Total Capital...................................................... 272,759 255,029
---------- ----------
Total Liabilities and Capital...................................... $1,688,606 $1,674,204
========== ==========
</TABLE>
The accompanying notes are an integral part of these condensed consolidated
financial statements.
1
<PAGE>
TRUMP ATLANTIC CITY ASSOCIATES AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
FOR THE THREE AND SIX MONTHS ENDED JUNE 30, 1998 AND 1999
(unaudited)
(in thousands)
<TABLE>
<CAPTION>
Three Months Six Months
Ended June 30, Ended June 30,
------------- -------------
1998 1999 1998 1999
---------- ---------- ---------- ----------
<S> <C> <C> <C> <C>
REVENUES:
Gaming........................................ $ 218,895 $ 225,753 $ 420,659 $ 420,919
Rooms......................................... 19,709 19,577 36,628 35,293
Food and Beverage............................. 27,355 27,140 53,099 51,370
Other......................................... 7,655 7,930 15,241 15,225
---------- ---------- ---------- ----------
Gross Revenues.............................. 273,614 280,400 525,627 522,807
Less--Promotional allowances.................. 32,176 31,358 62,593 59,468
---------- ---------- ---------- ----------
Net Revenues................................ 241,438 249,042 463,034 463,339
---------- ---------- ---------- ----------
COSTS AND EXPENSES:
Gaming........................................ 136,155 135,390 262,807 257,788
Rooms......................................... 7,230 7,838 13,670 14,556
Food and Beverage............................. 10,106 10,125 18,273 18,333
General and Administrative.................... 40,045 43,554 81,297 84,807
Depreciation and Amortization................. 15,183 15,118 30,611 30,669
---------- ---------- ---------- ----------
208,719 212,025 406,658 406,153
---------- ---------- ---------- ----------
Income from operations...................... 32,719 37,017 56,376 57,186
---------- ---------- ---------- ----------
NON-OPERATING INCOME AND (EXPENSES):
Interest income............................... 1,379 781 3,246 1,488
Interest expense.............................. (38,740) (38,342) (77,519) (76,739)
Non-Operating income.......................... -- -- -- 335
---------- ---------- ---------- ----------
Non-Operating expense, net.................... (37,361) (37,561) (74,273) (74,916)
---------- ---------- ---------- ----------
NET LOSS........................................ $ (4,642) $ (544) $ (17,897) $ (17,730)
========== ========== ========== ==========
</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, 1999
(unaudited)
(in thousands)
<TABLE>
<CAPTION>
Retained
Earnings
Partners' (Accumulated
Capital Deficit) Total
--------- ------------ ---------
<S> <C> <C> <C>
Balance, December 31, 1998............................................... $ 329,691 $ (56,932) $ 272,759
Net Loss................................................................. -- (17,730) (17,730)
--------- ------------ ---------
Balance, June 30, 1999................................................... $ 329,691 $ (74,662) $ 255,029
========= ============ =========
</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, 1998 AND 1999
(unaudited)
(dollars in thousands)
<TABLE>
<CAPTION>
Six Months Ended
June 30,
-----------------------------
1998 1999
----------- -----------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss............................................................................... $(17,897) $(17,730)
Adjustments to reconcile net loss to net cash flows from operating activities --
Noncash charges --
Depreciation and amortization......................................................... 30,611 30,669
Accretion of discounts on indebtedness................................................ 394 351
Provisions for losses on receivables.................................................. 5,423 6,168
Amortization of deferred loan offering costs.......................................... 3,484 3,037
Valuation allowance of CRDA investments............................................... 1,764 1,953
Gain on disposition of property....................................................... -- (335)
(Increase)/decrease in receivables.................................................... (8,480) 3,682
Decrease/(increase) in inventories.................................................... 959 (286)
Increase in advances to affiliates.................................................... (28,217) (13,381)
Increase in other current assets...................................................... (1,656) (2,632)
Increase in other assets.............................................................. (1,921) (2,200)
Increase in accounts payable and accrued expenses..................................... 5,597 1,382
Increase in accrued interest payable.................................................. 546 --
Decrease in other long-term liabilities............................................... (1,614) --
-------- --------
Net cash provided by operating activities............................................. (11,007) 10,678
-------- --------
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchase of property and equipment, net............................................... (7,726) (5,481)
Purchase of CRDA investments.......................................................... (5,064) (5,098)
Proceeds from disposition of property................................................. -- 1,087
-------- --------
Net cash used in investing activities................................................. (12,790) (9,492)
-------- --------
CASH FLOWS FROM FINANCING ACTIVITIES:
Additional borrowings................................................................. 1,047 --
Payments and current maturities of long-term debt..................................... (4,561) (2,710)
Cost of issuing debt.................................................................. (1,181) --
-------- --------
Net cash used in financing activities................................................ (4,695) (2,710)
-------- --------
NET DECREASE IN CASH & CASH EQUIVALENTS................................................. (28,492) (1,524)
CASH AND CASH EQUIVALENTS AT BEGINNING OF YEAR.......................................... 114,879 80,954
-------- --------
CASH AND CASH EQUIVALENTS AT JUNE 30.................................................... $ 86,387 $ 79,430
======== ========
CASH INTEREST PAID...................................................................... $ 73,664 $ 73,419
======== ========
Supplemental Disclosure of noncash activities:
Purchase of property and equipment under capitalized lease obligations.................. $ 1,673 $ 3,620
======== ========
Reversal of capital contribution........................................................ $ 24,599 $ --
======== ========
</TABLE>
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) Organization and Operations
The accompanying condensed consolidated financial statements include those
of Trump Atlantic City Associates, a New Jersey general partnership ("Trump
AC"), and its wholly owned subsidiaries. Trump AC is 100% beneficially owned by
Trump Hotels & Casino Resorts Holdings, L.P., a Delaware limited partnership
("THCR Holdings"). THCR Holdings is currently a 63.4% owned subsidiary of Trump
Hotels & Casino Resorts, Inc. ("THCR"). Trump AC and its wholly owned funding
subsidiaries have no independent operations and, therefore, their ability to
service debt is dependent upon the successful operations of Trump Plaza
Associates ("Plaza Associates") and Trump Taj Mahal Associates ("Taj
Associates").
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 without audit. In the opinion of management, all adjustments,
consisting of only normal recurring adjustments necessary to present fairly the
financial position, the results of operations and cash flows for the periods
presented, have been made.
The accompanying condensed consolidated financial statements have been
prepared pursuant to the rules and regulations of the Securities and Exchange
Commission ("SEC"). Accordingly, certain information and note disclosures
normally included in financial statements prepared in conformity with generally
accepted accounting principles have been condensed or omitted.
These condensed consolidated financial statements should be read in
conjunction with the consolidated financial statements and notes thereto
included in the annual report on Form 10-K for the year ended December 31, 1998
filed with the SEC.
The casino industry in Atlantic City is seasonal in nature; therefore,
results of operations for the three and six months ended June 30, 1999 are not
necessarily indicative of the operating results for a full year.
Reclassifications
Certain reclassifications have been made to prior year financial statements
to conform to the current year presentation.
(2) Other Assets
Plaza Associates is appealing a real estate tax assessment by the City of
Atlantic City. Included in other assets is $7,264,000 which Plaza Associates
estimates will be recoverable on settlement of the appeal.
(3) Combined Financial Information--Trump Atlantic City Funding, Inc., Trump
Atlantic City Funding II, Inc. and Trump Atlantic City Funding III, Inc.
Combined financial information relating to Trump Atlantic City Funding,
Inc. ("Trump AC Funding"), Trump Atlantic City Funding II, Inc. ("Trump AC
Funding II") and Trump Atlantic City Funding III, Inc. ("Trump AC Funding III")
is as follows:
<TABLE>
<CAPTION>
December 31, June 30,
1998 1999
---------------- ---------------
<S> <C> <C>
(unaudited)
Total Assets (including notes receivable of $1,296,438,000 at
December 31, 1998 and $1,296,789,000 at June 30, 1999
and related interest receivable).............................. $1,320,813,000 $1,321,164,000
============== ==============
Total Liabilities and Capital (including notes payable of
$1,296,438,000 at December 31, 1998 and $1,296,789,000
at June 30, 1999 and related interest payable)................ $1,320,813,000 $1,321,164,000
============== ==============
</TABLE>
<TABLE>
<CAPTION>
Six Months Ended June 30,
1998 1999
------------- -------------
<S> <C> <C>
Interest Income............................. $73,093,000 $73,125,000
=========== ===========
Interest Expense............................ $73,093,000 $73,125,000
=========== ===========
Net Income.................................. -- --
=========== ===========
</TABLE>
(4) Subsequent Event
On July 8, 1999, THCR announced its intention to close Trump World's Fair
on or after October 1, 1999. Trump World's Fair
5
<PAGE>
currently operates under Trump Plaza's gaming license. Trump AC has not yet
determined the estimated costs of closing Trump World's Fair.
6
<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. Trump AC expects to have sufficient liquidity to meet its
obligations and intends to reduce debt by buying back bonds in the open market,
when permissable. Cash flow is managed based upon the seasonality of the
operations. Any excess cash flow achieved from operations during peak periods
is utilized to subsidize non-peak periods where necessary.
The indentures under which the notes of Trump AC were issued restrict the
ability of Trump AC and its subsidiaries to make distributions to partners or
pay dividends, as the case may be, unless certain financial ratios are achieved.
Further, Trump AC's future operating results are conditional and could
fluctuate, given a rapidly changing competitive environment.
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 $7,726,000 and $5,481,000 for the
six months ended June 30, 1998 and 1999, respectively.
7
<PAGE>
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 interests in Plaza Associates and Taj Associates at June 30, 1999, its
results of operations are not discussed below.
Comparison of Three-Month Periods Ended June 30, 1998 and 1999. The
following table includes selected consolidated data of Trump AC for the three
months ended June 30, 1998 and 1999.
<TABLE>
<CAPTION>
Three Months Ended June 30,
-----------------------------------
1998 1999
-----------------------------------
(dollars in thousands)
<S> <C> <C>
Table Game Revenues..................... $ 71,127 $ 67,989
Decrease over Prior Period.............. $ (3,138)
Table Game Drop......................... $ 456,058 $ 423,538
Decrease over Prior Period.............. $ (32,520)
Table Win Percentage.................... 15.6% 16.1%
Increase over Prior Period.............. 0.5 pts
Number of Table Games................... 264 249
Decrease over Prior Period.............. (15)
Slot Revenues........................... $ 143,146 $ 152,286
Increase over Prior Period.............. $ 9,140
Slot Handle............................. $ 1,755,650 $ 1,897,620
Increase over Prior Period.............. $ 141,970
Slot Win Percentage..................... 8.2% 8.0%
Decrease over Prior Period.............. (0.2) pts
Number of Slot Machines................. 8,222 8,463
Increase over Prior Period.............. 241
Poker Revenues.......................... $ 3,975 $ 4,843
Increase over Prior Period.............. $ 868
Number of Poker Tables.................. 61 62
Increase over Prior Period.............. 1
Other Gaming Revenues................... $ 647 $ 635
Decrease over Prior Period.............. $ (12)
Total Gaming Revenues................... $ 218,895 $ 225,753
Increase over Prior Period.............. $ 6,858
Number of Guest Rooms................... 2,654 2,654
Occupancy Rate.......................... 89.4% 94.1%
Average Daily Rate (Room Revenue)....... $ 91.32 $ 89.84
</TABLE>
Gaming revenues are the primary source of Trump AC's revenues. The year
over year increase in gaming revenues was due primarily to an increase in slot
revenues, partially offset by a decrease in table game revenues due to a decline
in high-end international table game players due to Asian economic conditions.
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". The Atlantic City industry table win percentages were
14.9% and 15.4% for the quarters ended June 30, 1998 and 1999, respectively.
General and Administrative expenses increased from the comparable period in
1998 due primarily to increased entertainment and insurance costs.
8
<PAGE>
Comparison of Six-Month Periods Ended June 30, 1998 and 1999. The
following table includes selected consolidated data of Trump AC for the six
months ended June 30, 1998 and 1999.
<TABLE>
<CAPTION>
Six Months Ended June 30,
-----------------------------------
1998 1999
-----------------------------------
(dollars in thousands)
<S> <C> <C>
Table Game Revenues...................... $ 137,591 $ 128,372
Decrease over Prior Period............... $ (9,219)
Table Game Drop.......................... $ 882,322 $ 798,159
Decrease over Prior Period............... $ (84,163)
Table Win Percentage..................... 15.6% 16.1%
Increase over Prior Period.............. 0.5 pts
Number of Table Games.................... 268 250
Decrease over Prior Period............... (18)
Slot Revenues............................ $ 273,911 $ 282,011
Increase over Prior Period............... $ 8,100
Slot Handle.............................. $ 3,363,950 $ 3,553,355
Increase over Prior Period............... $ 189,405
Slot Win Percentage...................... 8.1% 7.9%
Decrease over Prior Period............... (0.2) pts
Number of Slot Machines.................. 8,221 8,420
Increase over Prior Period............... 199
Poker Revenues........................... $ 7,895 $ 9,275
Increase over Prior Period............... $ 1,380
Number of Poker Tables................... 62 61
Decrease over Prior Period............... (1)
Other Gaming Revenues.................... $ 1,262 $ 1,261
Decrease over Prior Period............... $ (1)
Total Gaming Revenues.................... $ 420,659 $ 420,919
Increase over Prior Period............... $ 260
Number of Guest Rooms.................... 2,654 2,654
Occupancy Rate........................... 85.2% 90.6%
Average Daily Rate (Room Revenue)........ $ 89.48 $ 81.04
</TABLE>
Gaming revenues are the primary source of Trump AC's revenues. The year
over year increase in gaming revenues was due primarily to an increase in slot
revenues, offset by a decline in high-end international table game players due
to Asian economic conditions and last year results which included an unusual $8
million dollar table game win from one premium player. 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".
The Atlantic City industry table win percentages were 15.2% and 15.7% for the
six months ended June 30, 1998 and 1999, respectively.
Gaming costs and expenses decreased from the comparable period in 1998 due
to decreased marketing and promotional costs.
General and Administrative expenses increased from the comparable period in
1998 due primarily to increased entertainment and insurance costs.
9
<PAGE>
Year 2000
Trump AC has assessed the year 2000 issue and has begun implementing a
plan to ensure that its systems are Year 2000 compliant. Analysis has been made
of Trump AC's various customer support and internal administration systems and
appropriate modifications have been made or are underway. Testing the
modifications is expected to be completed during 1999. Trump AC is approxi
mately 95% complete in its modifications.
Trump AC believes that the issues of concern are predominately software
related as opposed to hardware related. Further, Trump AC relies upon third
party suppliers for support of property, plant and equipment, such as
communications equipment, elevators and fire safety systems. Contact has been
made with all significant system suppliers and Trump AC is at various stages of
assessment, negotiation and implementation. When necessary, contracts have been
issued to update these systems so as to ensure Year 2000 compliance. The cost
of addressing the Year 2000 issue is not expected to be material and will be
funded out of operations.
If Trump AC did not assess the Year 2000 issue and provide for its
compliance, it would be forced to convert to manual systems to carry on its
business. Since Trump AC expects to be fully Year 2000 compliant, it does not
feel that a contingency plan is necessary at this time. However, Trump AC will
continually assess the situation and evaluate whether a contingency plan is
necessary as the millennium approaches.
This Year 2000 disclosure constitutes Year 2000 readiness disclosure
within the meaning of the Year 2000 Information and Readiness Disclosure Act.
Seasonality
The casino industry in Atlantic City is seasonal in nature; accordingly,
the results of operations for the period ending June 30, 1999 are not
necessarily indicative of the operating results for a full year.
Important Factors Relating to Forward Looking Statements
The Private Securities Litigation Reform Act of 1995 provides a "safe
harbor" for forward-looking statements so long as those statements are
identified as forward-looking and are accompanied by meaningful cautionary
statements identifying important factors that could cause actual results to
differ materially from those projected in such statements. In connection with
certain forward-looking statements contained in this Quarterly Report on Form
10-Q and those that may be made in the future by or on behalf of the
Registrants, the Registrants note that there are various factors that could
cause actual results to differ materially from those set forth in any such
forward-looking statements. The forward-looking statements contained in this
Quarterly Report were prepared by management and are qualified by, and subject
to, significant business, economic, competitive, regulatory and other
uncertainties and contingencies, all of which are difficult or impossible to
predict and many of which are beyond the control of the Registrants.
Accordingly, there can be no assurance that the forward-looking statements
contained in this Quarterly Report will be realized or that actual results will
not be significantly higher or lower. The statements have not been audited by,
examined by, compiled by or subjected to agreed-upon procedures by independent
accountants, and no third-party has independently verified or reviewed such
statements. Readers of this Quarterly Report should consider these facts in
evaluating the information contained herein. In addition, the business and
operations of the Registrants are subject to substantial risks which increase
the uncertainty inherent in the forward-looking statements contained in this
Quarterly Report. The inclusion of the forward-looking statements contained in
this Quarterly Report should not be regarded as a representation by the
Registrants or any other person that the forward-looking statements contained in
this Quarterly Report will be achieved. In light of the foregoing, readers of
this Quarterly Report are cautioned not to place undue reliance on the forward-
looking statements contained herein.
ITEM 3--QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
Management has reviewed the disclosure requirements for Item 3 and, based
upon Trump AC, Trump AC Funding, Trump AC Funding II and Trump AC Funding III's
current capital structure, scope of operations and financial statement
structure, management believes that such disclosure is not warranted at this
time. Since conditions may change, each of Trump AC, Trump AC Funding, Trump AC
Funding II and Trump AC Funding III will periodically review their compliance
with this disclosure requirement to the extent applicable.
10
<PAGE>
PART II -- OTHER INFORMATION
ITEM 1 -- LEGAL PROCEEDINGS
General. Trump AC, its partners, certain members of its former executive
committee, and certain of its employees, have been involved in various legal
proceedings. Such persons and entities are vigorously defending the allegations
against them and intend to contest vigorously any future proceedings. In
general, Trump AC has agreed to indemnify such persons against any and all
losses, claims, damages, expenses (including reasonable costs, disbursements and
counsel fees) and liabilities (including amounts paid or incurred in
satisfaction of settlements, judgments, fines and penalties) incurred by them in
said legal proceedings.
Other Litigation. On March 13, 1997, THCR filed a lawsuit in the United
States District Court, District of New Jersey, against Mirage, the State of New
Jersey ("State"), the New Jersey Department of Transportation ("NJDOT"), the
South Jersey Transportation Authority ("SJTA"), the Casino Reinvestment
Development Authority (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 area. 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. On April
2, 1998, the United States Court of Appeals for the Third Circuit affirmed the
dismissal and THCR's petition to the Third Circuit for a rehearing was denied.
On May 14, 1997 the State Court granted judgment in favor of the State and the
CRDA. On March 20, 1998, the Appellate Division affirmed. The State Supreme
Court affirmed on August 2, 1999, with two justices dissenting.
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 and, on June 9, 1999,
the Appellate Division affirmed. On July 14, 1999, THCR filed a Petition for
Certification seeking review of the Appellate Division's decision in the State
Supreme Court, where it is currently pending.
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 moved to dismiss this action on
procedural grounds and also sought to transfer this action to New Jersey's
Appellate Division. On October 3, 1997, this action was so transferred. On
June 9, 1999, the Appellate Division issued an opinion affirming the trial
court's ruling in the Chancery Division Action and ruling in favor of CRDA in
the law division action. On July 14, 1999, THCR filed a Petition for
Certificate seeking review of the Appellate Division's decision in the State
Supreme Court, where it is currently pending.
Steiner Action. On or about July 30, 1999, William K. Steiner, a
stockholder of THCR, filed a derivative action in the Court of Chancery in
Delaware (Civil Action No. 17336NC) against each member of the Board of
Directors of THCR. The plaintiff claims that the directors of THCR breached
their fiduciary duties by approving certain loans from THCR to Trump. The
complaint seeks to rescind the loans, and also seeks an order requiring the
defendants to account to THCR for losses and damages allegedly resulting from
the loans. The defendants have not yet responded to the complaint, but intend to
defend vigorously the allegations against them.
Various legal proceedings are now pending against Trump AC. Trump AC
considers all such proceedings to be ordinary litigation incident to the
character of its business. 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 the financial condition or results
of operations of Trump AC.
From time to time, Plaza Associates and Taj Associates may be involved in
routine administrative proceedings involving alleged violations of certain
provisions of the New Jersey Casino Control Act (the "Casino Control Act").
However, management believes that the final outcome of these proceedings will
not, either individually or in the aggregate, have a material adverse effect on
Plaza Associates or Taj Associates or on the ability of Plaza Associates or Taj
Associates to otherwise retain or renew any casino or other licenses required
under the Casino Control Act for the operation of Trump Plaza Hotel and Casino
and the Trump Taj Mahal Casino Resort.
11
<PAGE>
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.
27.3 Financial Data Schedule of Trump Atlantic City Funding
II, Inc.
27.4 Financial Data Schedule of Trump Atlantic City Funding
III, 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, 1999 and ending June 30, 1999.
12
<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 Atlantic City Holding, Inc.,
its general partner
Date: August 13, 1999
By: /s/ Francis X. McCarthy Jr.
-------------------------------------
Francis X. McCarthy Jr.
Chief Financial Officer
(Principal Financial and
Accounting Officer)
13
<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 13, 1999
By: /s/ Francis X. McCarthy Jr.
-------------------------------------
Francis X. McCarthy Jr.
Chief Financial Officer
(Principal Financial and
Accounting Officer)
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 FUNDING II, INC.
(Registrant)
Date: August 13, 1999
By: /s/ Francis X. McCarthy Jr.
-------------------------------------
Francis X. McCarthy Jr.
Chief Financial Officer
(Principal Financial and
Accounting 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 III, INC.
(Registrant)
Date: August 13, 1999
By: /s/ Francis X. McCarthy Jr.
-------------------------------------
Francis X. McCarthy Jr.
Chief Financial Officer
(Principal Financial and
Accounting Officer)
16
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<LEGEND>
The schedule contains summary financial information from Trump Atlantic City
Associates. This data has been extracted from the Consolidated Balance Sheets
and Consolidated Statement of Operations for the six month period ended June 30,
1999 and is qualified in its entirety by reference to such Financial Statements.
</LEGEND>
<CIK> 0000897729
<NAME> TRUMP ATLANTIC CITY ASSOCIATES
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1999
<PERIOD-START> JAN-01-1999
<PERIOD-END> JUN-30-1999
<CASH> 79,430
<SECURITIES> 0
<RECEIVABLES> 76,951
<ALLOWANCES> 26,014
<INVENTORY> 9,468
<CURRENT-ASSETS> 198,906
<PP&E> 1,764,942
<DEPRECIATION> 353,941
<TOTAL-ASSETS> 1,674,204
<CURRENT-LIABILITIES> 113,464
<BONDS> 1,296,789
0
0
<COMMON> 0
<OTHER-SE> 255,029
<TOTAL-LIABILITY-AND-EQUITY> 1,674,204
<SALES> 463,004
<TOTAL-REVENUES> 522,472
<CGS> 0
<TOTAL-COSTS> 290,677 <F1>
<OTHER-EXPENSES> 115,476 <F2>
<LOSS-PROVISION> 6,168
<INTEREST-EXPENSE> 76,739
<INCOME-PRETAX> (17,730)
<INCOME-TAX> 0
<INCOME-CONTINUING> (17,730)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (17,730)
<EPS-BASIC> 0
<EPS-DILUTED> 0
<FN>
<F1>Includes gaming, lodging food & beverage and other
<F2>Includes general & administration and depreciation & amortization expenses
</FN>
</TABLE>
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<LEGEND>
The schedule contains summary financial information from Trump Atlantic City
Funding, Inc. This data has been extracted from the Consolidated Balance Sheets
and Consolidated Statement of Operations for the six month period ended June 30,
1999 and is qualified in its entirety by reference to such Financial Statements.
</LEGEND>
<CIK> 0001006918
<NAME> TRUMP ATLANTIC CITY FUNDING, INC.
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1999
<PERIOD-START> JAN-01-1999
<PERIOD-END> JUN-30-1999
<CASH> 0
<SECURITIES> 0
<RECEIVABLES> 22,500
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 22,500
<PP&E> 0
<DEPRECIATION> 0
<TOTAL-ASSETS> 1,222,500
<CURRENT-LIABILITIES> 22,500
<BONDS> 1,200,000
0
0
<COMMON> 0
<OTHER-SE> 0
<TOTAL-LIABILITY-AND-EQUITY> 1,222,500
<SALES> 0
<TOTAL-REVENUES> 0
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 67,500
<INCOME-PRETAX> 0
<INCOME-TAX> 0
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 0
<EPS-BASIC> 0
<EPS-DILUTED> 0
</TABLE>
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<LEGEND>
The schedule contains summary financial information from Trump Atlantic City
Funding II, Inc. This data has been extracted from the Consolidated Balance
Sheets and Consolidated Statement of Operations for the six month period ended
June 30, 1999 and is qualified in its entirety by reference to such Financial
Statements.
</LEGEND>
<CIK> 0001052517
<NAME> TRUMP ATLANTIC CITY FUNDING II, INC.
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1999
<PERIOD-START> JAN-01-1999
<PERIOD-END> JUN-30-1999
<CASH> 0
<SECURITIES> 0
<RECEIVABLES> 1,406
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 1,406
<PP&E> 0
<DEPRECIATION> 0
<TOTAL-ASSETS> 74,253
<CURRENT-LIABILITIES> 1,406
<BONDS> 72,847
0
0
<COMMON> 0
<OTHER-SE> 0
<TOTAL-LIABILITY-AND-EQUITY> 74,253
<SALES> 0
<TOTAL-REVENUES> 0
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 4,219
<INCOME-PRETAX> 0
<INCOME-TAX> 0
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 0
<EPS-BASIC> 0
<EPS-DILUTED> 0
</TABLE>
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<LEGEND>
The schedule contains summary financial information from Trump Atlantic City
Funding III, Inc. This data has been extracted from the Consolidated Balance
Sheets and Consolidated Statement of Operations for the six month period ended
June 30, 1999 and is qualified in its entirety by reference to such Financial
Statements.
</LEGEND>
<CIK> 0001052519
<NAME> TRUMP ATLANTIC CITY FUNDING III, INC.
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1999
<PERIOD-START> JAN-01-1999
<PERIOD-END> JUN-30-1999
<CASH> 0
<SECURITIES> 0
<RECEIVABLES> 469
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 469
<PP&E> 0
<DEPRECIATION> 0
<TOTAL-ASSETS> 24,411
<CURRENT-LIABILITIES> 469
<BONDS> 23,942
0
0
<COMMON> 0
<OTHER-SE> 0
<TOTAL-LIABILITY-AND-EQUITY> 24,411
<SALES> 0
<TOTAL-REVENUES> 0
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 1,406
<INCOME-PRETAX> 0
<INCOME-TAX> 0
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 0
<EPS-BASIC> 0
<EPS-DILUTED> 0
</TABLE>
