================================================================================
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 March 31, 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
TRUMP ATLANTIC CITY ASSOCIATES
(Exact Name of Registrant as specified in its charter)
New Jersey 22-3213714
---------- ----------
(State or other jurisdiction (I.R.S. Employer
of incorporation or organization) 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 (I.R.S. Employer
of incorporation or organization) 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 (I.R.S. Employer
of incorporation or organization) 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 (I.R.S. Employer
of incorporation or organization) 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
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 May 14, 1999, there were 100 shares of Trump Atlantic City Funding,
Inc.'s Common Stock outstanding.
As of May 14, 1999, there were 100 shares of Trump Atlantic City Funding
II, Inc.'s Common Stock outstanding.
As of May 14, 1999, there were 100 shares of Trump Atlantic City Funding
III, Inc.'s Common Stock outstanding.
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.
--------
PART I -- FINANCIAL INFORMATION
ITEM 1 -- Financial Statements
<S> <C>
Condensed Consolidated Balance Sheets of Trump Atlantic City Associates and
Subsidiaries as of December 31, 1998 and March 31, 1999 (unaudited) .................................... 1
Condensed Consolidated Statements of Operations of Trump Atlantic City Associates and
Subsidiaries for the Three Months Ended March 31, 1998 and 1999 (unaudited)............................. 2
Condensed Consolidated Statement of Capital of Trump Atlantic City Associates and
Subsidiaries for the Three Months Ended March 31, 1999 (unaudited)...................................... 3
Condensed Consolidated Statements of Cash Flows of Trump Atlantic City Associates and
Subsidiaries for the Three Months Ended March 31, 1998 and 1999 (unaudited)............................. 4
Notes to Condensed Consolidated Financial Statements of Trump Atlantic City Associates and
Subsidiaries (unaudited)................................................................................ 5
ITEM 2 -- Management's Discussion and Analysis of Financial Condition and
Results of Operations............................................................................. 6-8
ITEM 3 -- Quantitative and Qualitative Disclosures About Market Risk......................................... 8
PART II -- OTHER INFORMATION
ITEM 1 -- Legal Proceedings.................................................................................. 9
ITEM 2 -- Changes in Securities and Use of Proceeds.......................................................... 9
ITEM 3 -- Defaults Upon Senior Securities.................................................................... 9
ITEM 4 -- Submission of Matters to a Vote of Security Holders................................................ 9
ITEM 5 -- Other Information.................................................................................. 9
ITEM 6 -- Exhibits and Reports on Form 8-K................................................................... 10
SIGNATURES
Signature -- Trump Atlantic City Associates.................................................................. 11
Signature -- Trump Atlantic City Funding, Inc................................................................ 12
Signature -- Trump Atlantic City Funding II, Inc............................................................. 13
Signature -- Trump Atlantic City Funding III, Inc............................................................ 14
</TABLE>
i
<PAGE>
PART I -- FINANCIAL INFORMATION
ITEM 1 -- FINANCIAL STATEMENTS
TRUMP ATLANTIC CITY ASSOCIATES AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(IN THOUSANDS)
ASSETS
<TABLE>
<CAPTION>
December 31, March 31,
1998 1999
----------- -----------
(unaudited)
CURRENT ASSETS:
<S> <C> <C>
Cash and cash equivalents ............................................... $ 80,954 $ 115,020
Receivables, net ........................................................ 60,786 52,967
Inventories ............................................................. 9,183 8,953
Due from affiliates, net ................................................ 35,031 34,291
Other current assets .................................................... 7,438 5,859
----------- -----------
Total Current Assets .................................................. 193,392 217,090
PROPERTY AND EQUIPMENT, NET ............................................... 1,432,965 1,420,270
DEFERRED LOAN COSTS, NET .................................................. 30,644 29,098
OTHER ASSETS .............................................................. 31,605 34,403
----------- -----------
Total Assets .......................................................... $ 1,688,606 $ 1,700,861
=========== ===========
LIABILITIES AND CAPITAL
CURRENT LIABILITIES:
Current maturities of long-term debt .................................... $ 3,482 $ 3,051
Accounts payable and accrued expenses ................................... 83,216 76,653
Accrued interest payable ................................................ 24,375 60,938
----------- -----------
Total Current Liabilities ............................................. 111,073 140,642
LONG-TERM DEBT, net of current maturities ................................. 1,299,217 1,299,089
OTHER LONG-TERM LIABILITIES ............................................... 5,557 5,557
----------- -----------
Total Liabilities ..................................................... 1,415,847 1,445,288
----------- -----------
CAPITAL:
Partners' Capital ....................................................... 329,691 329,691
Accumulated Deficit ..................................................... (56,932) (74,118)
----------- -----------
Total Capital ......................................................... 272,759 255,573
----------- -----------
Total Liabilities and Capital ......................................... $ 1,688,606 $ 1,700,861
=========== ===========
</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 MONTHS ENDED MARCH 31, 1998 AND 1999
(UNAUDITED)
(IN THOUSANDS)
<TABLE>
<CAPTION>
Three Months
Ended March 31,
----------------------
1998 1999
---------- ----------
REVENUES:
<S> <C> <C>
Gaming......................................................................... $ 201,764 $ 195,166
Rooms.......................................................................... 16,919 15,716
Food and Beverage.............................................................. 25,744 24,230
Other.......................................................................... 7,586 7,295
---------- ----------
Gross Revenues............................................................... 252,013 242,407
Less--Promotional allowances................................................... 30,417 28,110
---------- ----------
Net Revenues................................................................. 221,596 214,297
---------- ----------
COSTS AND EXPENSES:
Gaming......................................................................... 126,652 122,398
Rooms.......................................................................... 6,440 6,718
Food and Beverage.............................................................. 8,167 8,208
General and Administrative..................................................... 41,252 41,253
Depreciation and Amortization.................................................. 15,428 15,551
---------- ----------
197,939 194,128
---------- ----------
Income from operations....................................................... 23,657 20,169
---------- ----------
NON-OPERATING INCOME AND (EXPENSES):
Interest income................................................................ 1,867 707
Interest expense............................................................... (38,779) (38,397)
Non-Operating income........................................................... -- 335
---------- ----------
Non-Operating expense, net.................................................... (36,912) (37,355)
---------- ----------
NET LOSS......................................................................... $ (13,255) $ (17,186)
========= ==========
</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 THREE MONTHS ENDED MARCH 31, 1999
(UNAUDITED)
(IN THOUSANDS)
RETAINED
EARNINGS
PARTNERS' (ACCUMULATED
CAPITAL DEFICIT) TOTAL
--------------- -------------- --------------
Balance, December 31, 1998... $ 329,691 $ (56,932) $ 272,759
Net Loss..................... -- (17,186) (17,186)
--------------- -------------- --------------
Balance, March 31, 1999...... $ 329,691 $ (74,118) $ 255,573
============== ============== ==============
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 THREE MONTHS ENDED MARCH 31, 1998 AND 1999
(UNAUDITED)
(DOLLARS IN THOUSANDS)
<CAPTION>
THREE MONTHS ENDED
MARCH 31,
--------------------------
1998 1999
--------- ---------
CASH FLOWS FROM OPERATING ACTIVITIES:
<S> <C> <C>
Net loss ..................................................................................... $ (13,255) $ (17,186)
Adjustments to reconcile net loss to net cash flows from operating activities --
Noncash charges --
Depreciation and amortization ......................................................... 15,428 15,551
Accretion of discounts on indebtedness ................................................ 200 178
Provisions for losses on receivables .................................................. 2,244 2,635
Amortization of deferred loan offering costs .......................................... 1,717 1,546
Utilization of CRDA credits and donations ............................................. 53 --
Valuation allowance of CRDA investments ............................................... 823 814
Gain on disposition of property ....................................................... -- (335)
(Increase)/decrease in receivables ..................................................... (3,614) 5,185
Decrease in inventories ............................................................... 580 230
Decrease in advances to affiliates .................................................... 6,570 740
Decrease in other current assets ...................................................... 1,385 1,588
Increase in other assets .............................................................. (1,302) (1,271)
Increase/(decrease) in accounts payable and accrued expenses .......................... 3,340 (6,432)
Increase in accrued interest payable .................................................. 35,912 36,562
Decrease in other long-term liabilities ............................................... (633) --
--------- ---------
Net cash provided by operating activities ............................................. 49,448 39,805
--------- ---------
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchase of property and equipment, net ................................................. (3,308) (2,614)
Purchase of CRDA investments ............................................................ (2,608) (2,654)
Proceeds from disposition of property ................................................... -- 1,045
--------- ---------
Net cash used in investing activities ................................................. (5,916) (4,223)
--------- ---------
CASH FLOWS FROM FINANCING ACTIVITIES:
Additional borrowings ................................................................... 900 --
Payments and current maturities of long-term debt ....................................... (1,794) (1,516)
Cost of issuing debt .................................................................... (169) --
--------- ---------
Net cash used in financing activities .................................................. (1,063) (1,516)
--------- ---------
NET INCREASE IN CASH & CASH EQUIVALENTS .......................................................... 42,469 34,066
CASH AND CASH EQUIVALENTS AT BEGINNING OF YEAR ................................................... 114,879 80,954
--------- ---------
CASH AND CASH EQUIVALENTS AT MARCH 31 ............................................................ $ 157,348 $ 115,020
========= =========
CASH INTEREST PAID ............................................................................... $ 296 $ 97
========= =========
Supplemental Disclosure of noncash activities:
Purchase of property and equipment under capitalized lease obligations ........................... $ 881 $ 779
========= =========
</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 it's 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 it's
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 months ended March 31, 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 $6,514,000 which Plaza Associates
estimates will be recoverable on the 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, March 31,
1998 1999
-------------- --------------
(unaudited)
<S> <C> <C>
Total Assets (including notes receivable of $1,296,438,000 at December 31, 1998
and $1,296,615,000 at March 31, 1999
and related interest receivable) ....................................................... $1,320,813,000 $1,357,553,000
============== ==============
Total Liabilities and Capital (including notes payable of
$1,296,438,000 at December 31, 1998 and $1,296,615,000
at March 31, 1999 and related interest payable) ........................................ $1,320,813,000 $1,357,553,000
============== ==============
<CAPTION>
Three Months Ended March 31,
1998 1999
-------------- --------------
<S> <C> <C>
Interest Income ........................................................................... $ 36,562,000 $ 36,562,000
============== ==============
Interest Expense .......................................................................... $ 36,562,000 $ 36,562,000
============== ==============
Net Income ................................................................................ -- --
============== ==============
</TABLE>
5
<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. 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 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 $3,308,000 and $2,614,000 for
the three months ended March 31, 1998 and 1999, respectively.
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 March 31, 1999, its
results of operations are not discussed below.
Comparison of Three-Month Periods Ended March 31, 1998 and 1999. The
following table includes selected data of Plaza Associates and Taj Associates
for the three months ended March 31, 1998 and 1999.
<TABLE>
<CAPTION>
Three Months Ended March 31,
---------------------------------------------------------------------------------------
1998 1999 1998 1999 1998 1999
Plaza Plaza Taj Taj Total Total
Associates Associates Associates Associates Trump AC Trump AC
---------------------------------------------------------------------------------------
(in thousands)
Revenues:
<S> <C> <C> <C> <C> <C> <C>
Gaming ..................... $ 87,293 $ 82,322 $ 114,471 $ 112,844 $ 201,764 $ 195,166
Other ...................... 23,054 22,463 27,195 24,778 50,249 47,241
--------- --------- --------- --------- --------- ---------
Gross Revenues ............. 110,347 104,785 141,666 137,622 252,013 242,407
Less: Promotional Allowances 14,323 13,989 16,094 14,121 30,417 28,110
--------- --------- --------- --------- --------- ---------
Net Revenues ............... 96,024 90,796 125,572 123,501 221,596 214,297
--------- --------- --------- --------- --------- ---------
Costs & Expenses:
Gaming ..................... 54,019 50,233 72,633 72,165 126,652 122,398
General & Administrative ... 20,030 19,628 21,250 21,834 41,252 41,253
Depreciation & Amortization 6,053 5,949 9,317 9,376 15,428 15,551
Other ...................... 6,582 7,194 8,025 7,732 14,607 14,926
--------- --------- --------- --------- --------- ---------
Total Costs and Expenses ... 86,684 83,004 111,225 111,107 197,939 194,128
--------- --------- --------- --------- --------- ---------
Income from Operations ......... 9,340 7,792 14,347 12,394 23,657 20,169
--------- --------- --------- --------- --------- ---------
Non-Operating Income ......... 421 58 189 552 1,867 1,042
Interest Expense ............. (11,983) (11,761) (23,580) (23,445) (38,779) (38,397)
--------- --------- --------- --------- --------- ---------
Total Non-Operating Expense .. (11,562) (11,703) (23,391) (22,893) (36,912) (37,355)
--------- --------- --------- --------- --------- ---------
Net Loss ....................... $ (2,222) $ (3,911) $ (9,044) $ (10,499) $ (13,255) $ (17,186)
========= ========= ========= ========= ========= =========
</TABLE>
6
<PAGE>
<TABLE>
<CAPTION>
Three Months Ended March 31,
---------------------------------------------------------------------------------------
1998 1999 1998 1999 1998 1999
Plaza Plaza Taj Taj Total Total
Associates Associates Associates Associates Trump AC Trump AC
---------------------------------------------------------------------------------------
(dollars in thousands)
<S> <C> <C> <C> <C> <C> <C>
Table Game Revenues ............. $ 24,908 $ 21,668 $ 41,556 $ 38,715 $ 66,464 $ 60,383
Incr (Decr) over Prior Period ... $ (3,240) $ (2,841) $ (6,081)
Table Game Drop ................. $ 151,612 $ 140,082 $ 274,652 $ 234,539 $ 426,264 $ 374,621
Incr (Decr) over Prior Period ... $ (11,530) $ (40,113) $ (51,643)
Table Win Percentage ............ 16.4% 15.5% 15.1% 16.5% 15.6% 16.1%
Incr (Decr) over Prior Period ... (0.9) pts 1.4 pts 0.5 pts
Number of Table Games ........... 117 103 156 147 273 250
Incr (Decr) over Prior Period ... (14) (9) (23)
Slot Revenues ................... $ 62,385 $ 60,654 $ 68,380 $ 69,071 $ 130,765 $ 129,725
Incr (Decr) over Prior Period ... $ (1,731) $ 691 $ (1,040)
Slot Handle ..................... $ 776,292 $ 770,592 $ 832,008 $ 885,143 $1,608,300 $1,655,735
Incr (Decr) over Prior Period ... $ (5,700) $ 53,135 $ 47,435
Slot Win Percentage ............. 8.0% 7.9% 8.2% 7.8% 8.1% 7.8%
Incr (Decr) over Prior Period ... (0.1) pts (0.4) pts (0.3) pts
Number of Slot Machines ......... 4,076 4,204 4,145 4,175 8,221 8,379
Incr (Decr) over Prior Period ... 128 30 158
Poker Revenues .................. -- -- $ 3,921 $ 4,432 $ 3,921 $ 4,432
Incr (Decr) over Prior Period ... -- $ 511 $ 511
Number of Poker Tables .......... -- -- 62 61 62 61
Incr (Decr) over Prior Period ... -- (1) (1)
Other Gaming Revenues ........... -- -- $ 614 $ 626 $ 614 $ 626
Incr (Decr) over Prior Period ... -- $ 12 $ 12
Total Gaming Revenues ........... $ 87,293 $ 82,322 $ 114,471 $ 112,844 $ 201,764 $ 195,166
Incr (Decr) over Prior Period ... $ (4,971) $ (1,627) $ (6,598)
Number of Guest Rooms ........... 1,404 1,404 1,250 1,250 2,654 2,654
Occupancy Rate .................. 77.3% 81.6% 85.2% 93.6% 81.0% 87.2%
Average Daily Rate (Room Revenue) $ 77.53 $ 75.29 $ 97.76 $ 75.67 $ 87.42 $ 75.49
</TABLE>
Gaming revenues are the primary source of Trump AC's revenues. The year
over year decrease in gaming revenues was due primarily to adverse weather
conditions in January, 1999 and 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 15.4% and 15.9% for the
quarters ended March 31, 1998 and 1999, respectively.
Other revenues decreased from the comparable period in 1998 due
primarily to reduced complimentary revenues and correspondingly reduced
promotional allowances.
Gaming Costs and expenses decreased from the comparable period in 1998
due to decreased marketing and promotional costs.
YEAR 2000
Trump AC has assessed the year 2000 issue and has begun implementing a
plan to ensure its systems are Year 2000 compliant. Analysis has been made of
Trump AC's various customer support and internal administration system with
appropriate modifications having been made or underway. Testing the
modifications is expected to be completed during 1999. Trump AC is approximately
85% complete in its modifications.
7
<PAGE>
Trump AC believes that the issues for concern are predominately
software related versus 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 be assessing the situation and considering 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 March 31, 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, 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.
8
<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 CRDA.
On March 20, 1998, the Appellate Division affirmed. THCR has appealed to the
State Supreme Court, which heard argument on January 21, 1999.
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. This decision has been
appealed and is pending in the Appellate Division.
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.
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.
9
<PAGE>
ITEM 6 --EXHIBITS AND REPORTS ON FORM 8-K
A. EXHIBITS:
EXHIBIT NO. DESCRIPTION OF EXHIBIT
----------- ----------------------
27.1 Financial Data Schedule of Trump Atlantic City Associates.
27.2 Financial Data Schedule of Trump Atlantic City Funding, Inc.
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 January 1, 1999 and ending March 31, 1999.
10
<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: May 14, 1999
By: /S/ FRANCIS X. MCCARTHY JR.
-------------------------------
FRANCIS X. MCCARTHY JR.
CHIEF FINANCIAL OFFICER
(PRINCIPAL FINANCIAL AND ACCOUNTING OFFICER)
11
<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: May 14, 1999
By: /S/ FRANCIS X. MCCARTHY JR.
-------------------------------
FRANCIS X. MCCARTHY JR.
CHIEF FINANCIAL OFFICER
(PRINCIPAL FINANCIAL AND ACCOUNTING OFFICER)
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 FUNDING II, INC.
(Registrant)
Date: May 14, 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 III, INC.
(Registrant)
Date: May 14, 1999
By: /S/ FRANCIS X. MCCARTHY JR.
-------------------------------
FRANCIS X. MCCARTHY JR.
CHIEF FINANCIAL OFFICER
(PRINCIPAL FINANCIAL AND ACCOUNTING OFFICER)
14
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<NAME> Trump Atlantic City Funding II, Inc.
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<PERIOD-TYPE> 3-MOS
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<PERIOD-START> JAN-01-1999
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<PERIOD-START> JAN-01-1999
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