<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 September 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
TRUMP ATLANTIC CITY ASSOCIATES
(Exact Name of Registrant as specified in its charter)
<TABLE>
<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)
</TABLE>
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)
<TABLE>
<S> <C>
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)
</TABLE>
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)
<TABLE>
<S> <C>
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)
</TABLE>
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)
<TABLE>
<S> <C>
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)
</TABLE>
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 November 4, 1999, there were 100 shares of Trump Atlantic City Funding,
Inc.'s Common Stock outstanding.
As of November 4, 1999, there were 100 shares of Trump Atlantic City Funding
II, Inc.'s Common Stock outstanding.
As of November 4, 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.
--------
PART I -- FINANCIAL INFORMATION
<S> <C>
ITEM 1 -- Financial Statements
Condensed Consolidated Balance Sheets of Trump Atlantic City Associates and
Subsidiaries as of December 31, 1998 and September 30, 1999 (unaudited).......................... 1
Condensed Consolidated Statements of Operations of Trump Atlantic City Associates and
Subsidiaries for the Three and Nine Months Ended September 30, 1998 and 1999 (unaudited)......... 2
Condensed Consolidated Statement of Capital of Trump Atlantic City Associates and
Subsidiaries for the Nine Months Ended September 30, 1999 (unaudited)............................ 3
Condensed Consolidated Statements of Cash Flows of Trump Atlantic City Associates and
Subsidiaries for the Nine Months Ended September 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................................................ 11
ITEM 3 -- Defaults Upon Senior Securities.......................................................... 11
ITEM 4 -- Submission of Matters to a Vote of Security Holders...................................... 11
ITEM 5 -- Other Information........................................................................ 11
ITEM 6 -- Exhibits and Reports on Form 8-K......................................................... 11
SIGNATURES
Signature -- Trump Atlantic City Associates........................................................ 12
Signature -- Trump Atlantic City Funding, Inc...................................................... 13
Signature -- Trump Atlantic City Funding II, Inc................................................... 14
Signature -- Trump Atlantic City Funding III, Inc.................................................. 15
</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, September 30,
1998 1999
--------------- ---------------
(unaudited)
<S> <C> <C>
CURRENT ASSETS:
Cash and cash equivalents.................. $ 80,954 $ 140,832
Receivables, net........................... 60,786 45,808
Inventories................................ 9,183 9,340
Due from affiliates, net................... 35,031 48,702
Other current assets....................... 7,438 7,522
---------- ----------
Total Current Assets..................... 193,392 252,204
PROPERTY AND EQUIPMENT, NET.................. 1,432,965 1,323,357
DEFERRED LOAN COSTS, NET..................... 30,644 26,158
OTHER ASSETS................................. 31,605 36,984
---------- ----------
Total Assets............................. $1,688,606 $1,638,703
========== ==========
LIABILITIES AND CAPITAL
CURRENT LIABILITIES:
Current maturities of long-term debt....... $ 3,482 $ 4,513
Accounts payable and accrued expenses...... 83,216 110,221
Accrued interest payable................... 24,375 60,938
---------- ----------
Total Current Liabilities................ 111,073 175,672
LONG-TERM DEBT, net of current maturities.... 1,299,217 1,302,372
OTHER LONG-TERM LIABILITIES.................. 5,557 5,557
---------- ----------
Total Liabilities........................ 1,415,847 1,483,601
---------- ----------
CAPITAL:
Partners' Capital.......................... 329,691 329,691
Accumulated Deficit........................ (56,932) (174,589)
---------- ----------
Total Capital............................ 272,759 155,102
---------- ----------
Total Liabilities and Capital............ $1,688,606 $1,638,703
========== ==========
</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 NINE MONTHS ENDED SEPTEMBER 30, 1998 AND 1999
(unaudited)
(in thousands)
<TABLE>
<CAPTION>
Three Months Nine Months
Ended September 30, Ended September 30,
--------------------- --------------------
1998 1999 1998 1999
------ ------ ------ ------
<S> <C> <C> <C> <C>
REVENUES:
Gaming............................. $251,680 $241,324 $ 672,339 $ 662,243
Rooms.............................. 21,851 22,457 58,479 57,750
Food and Beverage.................. 30,047 29,170 83,146 80,540
Other.............................. 9,062 27,110 24,303 42,335
-------- -------- --------- ---------
Gross Revenues................... 312,640 320,061 838,267 842,868
Less--Promotional allowances....... 35,785 35,397 98,378 94,865
-------- -------- --------- ---------
Net Revenues..................... 276,855 284,664 739,889 748,003
-------- -------- --------- ---------
COSTS AND EXPENSES:
Gaming............................. 146,654 143,493 409,461 401,281
Rooms.............................. 7,686 7,276 21,356 21,832
Food and Beverage.................. 10,027 10,037 28,300 28,370
General and Administrative......... 43,162 43,043 124,574 128,315
Depreciation and Amortization...... 15,405 14,704 45,901 44,910
Trump World's Fair Closing......... -- 128,375 -- 128,375
-------- -------- --------- ---------
222,934 346,928 629,592 753,083
-------- -------- --------- ---------
Income/(Loss) from operations.... 53,921 (62,264) 110,297 (5,080)
-------- -------- --------- ---------
NON-OPERATING INCOME AND (EXPENSES):
Interest income.................... 1,236 879 4,482 2,369
Interest expense................... (38,475) (38,592) (115,994) (115,331)
Non-Operating income............... -- 50 -- 385
-------- -------- --------- ---------
Non-Operating expense, net......... (37,239) (37,663) (111,512) (112,577)
-------- -------- --------- ---------
NET INCOME/(LOSS).................... $ 16,682 $(99,927) $ (1,215) $(117,657)
======== ======== ========= =========
</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 NINE MONTHS ENDED SEPTEMBER 30, 1999
(unaudited)
(in thousands)
Retained
Earnings
Partners' (Accumulated
Capital Deficit) Total
--------- ------------- ----------
Balance, December 31, 1998.... $329,691 $ (56,932) $ 272,759
Net Loss...................... -- (117,657) (117,657)
-------- --------- ---------
Balance, September 30, 1999... $329,691 $(174,589) $ 155,102
======== ========= =========
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 NINE MONTHS ENDED SEPTEMBER 30, 1998 AND 1999
(unaudited)
(dollars in thousands)
<TABLE>
<CAPTION>
Nine Months Ended
September 30,
----------------------------
1998 1999
---------- ----------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss.................................................................................. $ (1,215) $(117,657)
Adjustments to reconcile net loss to net cash flows from operating activities --
Noncash charges --
Depreciation and amortization .......................................................... 45,901 44,910
Accretion of discounts on indebtedness ................................................. 582 518
Provisions for losses on receivables ................................................... 9,422 10,321
Amortization of deferred loan offering costs ........................................... 5,000 4,485
Valuation allowance of CRDA investments ................................................ 2,834 3,175
Gain on property received upon termination of lease .................................... -- (17,200)
Gain on disposition of property ........................................................ -- (385)
Write off of net book value of Trump World's Fair assets ............................... -- 97,682
(Increase)/decrease in receivables....................................................... (11,904) 4,657
Increase in inventories.................................................................. (425) (157)
Increase in advances to affiliates....................................................... (29,209) (13,671)
(Increase)/decrease in other current assets.............................................. (598) 462
Increase in other assets................................................................. (7,229) (1,624)
Increase in accounts payable and accrued expenses........................................ 6,724 26,314
Increase in accrued interest payable..................................................... 37,087 36,563
Decrease in other long-term liabilities.................................................. (1,879) --
-------- ---------
Net cash provided by operating activities .............................................. 55,091 78,393
-------- ---------
CASH FLOWS FROM INVESTING ACTIVITIES:
Acquisition of property and equipment, net of property received upon lease termination... (14,708) (10,925)
Purchase of CRDA investments............................................................. (7,808) (7,941)
Proceeds from disposition of property.................................................... -- 4,502
-------- ---------
Net cash used in investing activities .................................................. (22,516) (14,364)
-------- ---------
CASH FLOWS FROM FINANCING ACTIVITIES:
Additional borrowings.................................................................... 1,164 --
Payments and current maturities of long-term debt........................................ (6,635) (4,151)
Cost of issuing debt..................................................................... (220) --
-------- ---------
Net cash used in financing activities................................................... (5,691) (4,151)
-------- ---------
NET INCREASE IN CASH & CASH EQUIVALENTS .................................................. 26,884 59,878
CASH AND CASH EQUIVALENTS AT BEGINNING OF YEAR ........................................... 114,879 80,954
-------- ---------
CASH AND CASH EQUIVALENTS AT SEPTEMBER 30 ................................................ $141,763 $ 140,832
======== =========
CASH INTEREST PAID ....................................................................... $ 73,899 $ 73,862
======== =========
Supplemental Disclosure of noncash activities:
Purchase of property and equipment under capitalized lease obligations ................... $ 2,192 $ 7,818
======== =========
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 nine months ended September 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, September 30,
1998 1999
-------------- --------------
(unaudited)
<S> <C> <C>
Total Assets (including notes receivable of $1,296,438,000 at
December 31, 1998 and $1,296,956,000 at September 30,
1999 and related interest receivable).......................... $1,320,813,000 $1,357,894,000
============== ==============
Total Liabilities and Capital (including notes payable of
$1,296,438,000 at December 31, 1998 and $1,296,956,000
at September 30, 1999 and related interest payable)............ $1,320,813,000 $1,357,894,000
============== ==============
Nine Months Ended
September 30,
1998 1999
------------ ------------
Interest Income............................................... $109,657,000 $109,687,000
============ ============
Interest Expense.............................................. $109,657,000 $109,687,000
============ ============
Net Income.................................................... -- --
============ ============
</TABLE>
5
<PAGE>
(4) All Star Cafe Transaction
All Star Cafe, Inc. ("All Star") had entered into a twenty-year lease (the
"All Star Cafe Lease") with Taj Associates for the lease of space at the Trump
Taj Mahal Casino Resort (the "Taj Mahal") for an All Star Cafe (the "All Star
Cafe Lease"). The basic rent under the All Star Cafe Lease was $1.0 million per
year, paid in equal monthly installments. In addition, All Star was to pay
percentage rent in an amount equal to the difference, if any, between (i) 8% of
All Star's gross sales made during each calendar month during the first lease
year, 9% of All Star's gross sales made during each calendar month during the
second lease year and 10% of All Star's gross sales made during each calendar
month during the third through the twentieth lease years, and (ii) one-twelfth
of the annual basic rent. The All Star Cafe opened in March 1997.
On September 15, 1999 an agreement was reached between Taj Associates, All
Star and Planet Hollywood International, Inc. to terminate the All Star Cafe
Lease effective September 24, 1999. Upon termination of the All Star Cafe Lease,
all improvements, alterations and All Star's personal property with the
exception of Specialty Trade Fixtures became the property of Taj Associates.
Specialty Trade Fixtures, which included signs, emblems, logos, memorabilia and
other materials with logos of the Official All Star Cafe presently displayed at
the premises, could be continued to be used by Taj Associates for a period of up
to 120 days without charge. Taj Associates recorded the estimated fair market
value of these assets in other revenue based on an independent appraisal in the
amount of $17,200,000.
Subsequent to the expiration of the 120 day period Taj Associates intends
to continue operating the facility as a theme restaurant tentatively to be named
Trump City Cafe.
(5) Trump World's Fair Closing
On October 4, 1999, THCR closed Trump World's Fair. The estimated cost of
closing Trump World's Fair is $128,375,000, which includes $97,682,000 for the
writedown of the assets and $30,693,000 of costs incurred and to be incurred in
connection with the closing and demolition of the building.
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 (the "CCC").
Capital expenditures for Trump AC were $14,708,000 and $10,925,000 for the
nine months ended September 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 September 30, 1999, its
results of operations are not discussed below.
Comparison of Three-Month Periods Ended September 30, 1998 and 1999. The
following table includes selected consolidated data of Trump AC for the three
months ended September 30, 1998 and 1999.
Three Months Ended September 30,
--------------------------------
1998 1999
--------------------------------
(dollars in thousands)
Table Game Revenues................. $ 87,984 $ 72,043
Decrease over Prior Period.......... $ (15,941)
Table Game Drop..................... $ 506,310 $ 460,897
Decrease over Prior Period.......... $ (45,413)
Table Win Percentage................ 17.4% 15.6%
Decrease over Prior Period.......... (1.8) pts
Number of Table Games............... 257 243
Decrease over Prior Period.......... (14)
Slot Revenues....................... $ 158,228 $ 163,295
Increase over Prior Period.......... $ 5,067
Slot Handle......................... $1,941,043 $2,030,489
Increase over Prior Period.......... $ 89,446
Slot Win Percentage................. 8.2% 8.0%
Decrease over Prior Period.......... (0.2) pts
Number of Slot Machines............. 8,340 8,605
Increase over Prior Period.......... 265
Poker Revenues...................... $ 4,684 $ 5,327
Increase over Prior Period.......... $ 643
Number of Poker Tables.............. 62 64
Increase over Prior Period.......... 2
Other Gaming Revenues............... $ 784 $ 659
Decrease over Prior Period.......... $ (125)
Total Gaming Revenues............... $ 251,680 $ 241,324
Decrease over Prior Period.......... $ (10,356)
Number of Guest Rooms............... 2,654 2,654
Occupancy Rate...................... 96.7% 96.9%
Average Daily Rate (Room Revenue)... $ 92.52 $ 94.87
Gaming revenues are the primary source of Trump AC's revenues. The year
over year decrease in gaming revenues was due primarily to a decrease in table
game revenues at the Taj Mahal as a result of a decline in high-end
international table game players due to economic conditions. Taj Associates'
table game revenues declined $19,252,000 or 32.0% from the comparable period in
1998 as a result of a decline in both the table game drop of $45,302,000 or
13.8% and a decline in the table win percentage to 14.4% from 18.3% in the
comparable period in 1998. The table win percentage decline resulted in a year
over year reduction in table game revenues of approximately $11,043,000 of the
$19,252,000 decline. 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 15.5% and 14.9% for the quarters ended September 30, 1998
and 1999, respectively.
All Star Cafe, Inc. ("All Star") had entered into a twenty-year lease with
Taj Associates for the lease of space at the Taj Mahal for an All Star Cafe.
The basic rent under the All Star Cafe Lease was $1.0 million per year, paid in
equal monthly installments. In addition, All Star was to pay percentage rent in
an amount equal to the difference, if any, between (i) 8% of All Star's gross
sales made during each calendar month during the first lease year, 9% of All
Star's gross sales made during each calendar month during the second lease year
and 10% of All Star's gross sales made during each calendar month during the
third through the twentieth lease years, and (ii) one-twelfth of the annual
basic rent. The All Star Cafe opened in March 1997.
On September 15, 1999 an agreement was reached between Taj Associates, All
Star and Planet Hollywood International, Inc. to terminate the All Star Cafe
Lease effective September 24, 1999. Upon termination of the All Star Cafe Lease,
all improvements, alterations and All Star's personal property with the
exception of Specialty Trade Fixtures became the property of Taj Associates.
Specialty Trade Fixtures, which included signs, emblems, logos, memorabilia and
other materials with logos of the Official All Star Cafe presently displayed at
the premises, could be continued to be used by Taj Associates for a period of up
to 120 days without charge. Taj Associates recorded the estimated fair market
value of these assets in other revenue based on an independent appraisal in the
amount of $17,200,000.
Subsequent to the expiration of the 120 day period Taj Associates intends
to continue operating the facility as a theme restaurant tentatively to be
named Trump City Cafe.
8
<PAGE>
On October 4, 1999, THCR closed Trump World's Fair. The estimated cost of
closing Trump World's Fair is $128,375,000, which includes $97,682,000 for the
writedown of the assets and $30,693,000 of costs incurred and to be incurred in
connection with the closing and demolition of the building.
Comparison of Nine-Month Periods Ended September 30, 1998 and 1999. The
following table includes selected consolidated data of Trump AC for the nine
months ended September 30, 1998 and 1999.
Nine Months Ended September 30,
-------------------------------
1998 1999
-------------------------------
(dollars in thousands)
Table Game Revenues..................... $ 225,575 $ 200,414
Decrease over Prior Period.............. $ (25,161)
Table Game Drop......................... $1,388,631 $1,259,057
Decrease over Prior Period.............. $ (129,574)
Table Win Percentage.................... 16.2% 15.9%
Decrease over Prior Period............. (0.3) pts
Number of Table Games................... 265 247
Decrease over Prior Period.............. (18)
Slot Revenues........................... $ 432,140 $ 445,307
Increase over Prior Period.............. $ 13,167
Slot Handle............................. $5,304,993 $5,583,844
Increase over Prior Period.............. $ 278,851
Slot Win Percentage..................... 8.1% 8.0%
Decrease over Prior Period.............. (0.1) pts
Number of Slot Machines................. 8,261 8,480
Increase over Prior Period.............. 219
Poker Revenues.......................... $ 12,579 $ 14,602
Increase over Prior Period.............. $ 2,023
Number of Poker Tables.................. 62 62
Increase/(Decrease) over Prior Period... 0
Other Gaming Revenues................... $ 2,045 $ 1,920
Decrease over Prior Period.............. $ (125)
Total Gaming Revenues................... $ 672,339 $ 662,243
Decrease over Prior Period.............. $ (10,096)
Number of Guest Rooms................... 2,654 2,654
Occupancy Rate.......................... 89.1% 92.8%
Average Daily Rate (Room Revenue)....... $ 90.59 $ 85.91
Gaming revenues are the primary source of Trump AC's revenues. The year
over year decrease in gaming revenues was due primarily to a decrease in table
game revenues at the Taj Mahal as a result of a decline in high-end
international table game players due to economic conditions and last year
results which included an unusual $8 million dollar table game win from one
premium player. Taj Associates' table game revenue declined $24,899,000 or 16.7%
from the comparable period in 1998 as a result of a decline in both the table
game drop of $115,633,000 or 12.8% and a decline in the table win percentage to
15.8% from 16.5% in the comparable period in 1998. The table win percentage
decline resulted in a year over year reduction in table game revenues of
approximately $5,512,000 of the $24,899,000 decline. 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 15.3% and 15.4% for the nine
months ended September 30, 1998 and 1999, respectively.
All Star Cafe, Inc. ("All Star") had entered into a twenty-year lease with
Taj Associates for the lease of space at the Taj Mahal for an All Star Cafe.
The basic rent under the All Star Cafe Lease was $1.0 million per year, paid in
equal monthly installments. In addition, All Star was to pay percentage rent in
an amount equal to the difference, if any, between (i) 8% of All Star's gross
sales made during each calendar month during the first lease year, 9% of All
Star's gross sales made during each calendar month during the second lease year
and 10% of All Star's gross sales made during each calendar month during the
third through the twentieth lease years, and (ii) one-twelfth of the annual
basic rent. The All Star Cafe opened in March 1997.
On September 15, 1999 an agreement was reached between Taj Associates, All
Star and Planet Hollywood International, Inc. to terminate the All Star Cafe
Lease effective September 24, 1999. Upon termination of the All Star Cafe Lease,
all improvements, alterations and All Star's personal property with the
exception of Specialty Trade Fixtures became the property of Taj Associates.
Specialty Trade Fixtures, which included signs, emblems, logos, memorabilia and
other materials with logos of the Official All Star Cafe presently displayed at
the premises, could be continued to be used by Taj Associates for a period of up
to 120 days without charge. Taj Associates recorded the estimated fair market
value of these assets in other revenue based on an independent appraisal in the
amount of $17,200,000.
9
<PAGE>
Subsequent to the expiration of the 120 day period Taj Associates intends
to continue operating the facility as a theme restaurant tentatively to be
named Trump City Cafe.
Gaming costs and expenses decreased from the comparable period in 1998 due
to decreased marketing and promotional costs.
On October 4, 1999, THCR closed Trump World's Fair. The estimated cost of
closing Trump World's Fair is $128,375,000, which includes $97,682,000 for the
writedown of the assets and $30,693,000 of costs incurred and to be incurred in
connection with the closing and demolition of the building.
Year 2000
Trump AC has assessed the year 2000 issue and has implemented 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
approximately 98% 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
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.
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 September 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.
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 believe
that the suit is without merit and on October 1, 1999, the defendants moved to
dismiss the complaint. The parties have not yet established a briefing schedule
with respect to the motions.
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.
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 July 1, 1999 and ending September 30, 1999.
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 ASSOCIATES
(Registrant)
By: Trump Atlantic City Holding, Inc.,
its general partner
Date: November 4, 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, INC.
(Registrant)
Date: November 4, 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 II, INC.
(Registrant)
Date: November 4, 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 III, INC.
(Registrant)
Date: November 4, 1999
By: /s/ Francis X. McCarthy Jr.
--------------------------------------
Francis X. McCarthy Jr.
Chief Financial Officer
(Principal Financial and Accounting Officer)
15
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<CIK> 0000897729
<NAME> TRUMP ATLANTIC CITY ASSOCIATES
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1999
<PERIOD-START> JAN-01-1999
<PERIOD-END> SEP-30-1999
<CASH> 140,832
<SECURITIES> 0
<RECEIVABLES> 66,712
<ALLOWANCES> 20,904
<INVENTORY> 9,340
<CURRENT-ASSETS> 252,204
<PP&E> 1,670,064
<DEPRECIATION> 346,707
<TOTAL-ASSETS> 1,638,703
<CURRENT-LIABILITIES> 175,672
<BONDS> 1,296,956
0
0
<COMMON> 0
<OTHER-SE> 155,102
<TOTAL-LIABILITY-AND-EQUITY> 1,638,703
<SALES> 748,003
<TOTAL-REVENUES> 842,868
<CGS> 0
<TOTAL-COSTS> 451,483<F1>
<OTHER-EXPENSES> 301,600<F2>
<LOSS-PROVISION> 10,321
<INTEREST-EXPENSE> 115,331
<INCOME-PRETAX> (117,657)
<INCOME-TAX> 0
<INCOME-CONTINUING> (117,657)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (117,657)
<EPS-BASIC> 0
<EPS-DILUTED> 0
<FN>
<F1>
Includes gaming, lodging, food & beverage and other
<F2>Includes general & administration, depreciation & amortization expenses and
Trump World's Fair closing costs.
</FN>
</TABLE>
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<CIK> 0001006918
<NAME> TRUMP ATLANTIC CITY FUNDING, INC.
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1999
<PERIOD-START> JAN-01-1999
<PERIOD-END> SEP-30-1999
<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> 0
<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-BASIC> 0
<EPS-DILUTED> 0
</TABLE>
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<CIK> 0001052517
<NAME> TRUMP ATLANTIC CITY FUNDING II, INC.
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1999
<PERIOD-START> JAN-01-1999
<PERIOD-END> SEP-30-1999
<CASH> 0
<SECURITIES> 0
<RECEIVABLES> 3,516
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 3,516
<PP&E> 0
<DEPRECIATION> 0
<TOTAL-ASSETS> 76,475
<CURRENT-LIABILITIES> 3,516
<BONDS> 72,959
<COMMON> 0
0
0
<OTHER-SE> 0
<TOTAL-LIABILITY-AND-EQUITY> 76,475
<SALES> 0
<TOTAL-REVENUES> 0
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 6,328
<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
<CIK> 0001052519
<NAME> TRUMP ATLANTIC CITY FUNDING III, INC.
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1999
<PERIOD-START> JAN-01-1999
<PERIOD-END> SEP-30-1999
<CASH> 0
<SECURITIES> 0
<RECEIVABLES> 1,172
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 1,172
<PP&E> 0
<DEPRECIATION> 0
<TOTAL-ASSETS> 25,169
<CURRENT-LIABILITIES> 1,172
<BONDS> 23,997
<COMMON> 0
0
0
<OTHER-SE> 0
<TOTAL-LIABILITY-AND-EQUITY> 25,169
<SALES> 0
<TOTAL-REVENUES> 0
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 2,109
<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>
