===============================================================================
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
FOR THE QUARTERLY PERIOD ENDED: JUNE 30, 1997
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
FOR THE TRANSITION PERIOD FROM ___ TO ___
COMMISSION FILE NUMBER: 1-13794
TRUMP HOTELS & CASINO RESORTS, INC.
------------------------------------------------------
(Exact name of registrant as specified in its charter)
DELAWARE 13-3818402
- ------------------------------- -------------------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
2500 BOARDWALK
ATLANTIC CITY, NEW JERSEY 08401
- ---------------------------------------- ----------
(Address of principal executive offices) (Zip Code)
(609) 441-6060
----------------------------------------------------
(Registrant's telephone number, including area code)
NOT APPLICABLE
---------------------------------------------------
Former name, former address and former fiscal year,
if changed since last report)
COMMISSION FILE NUMBER: 33-90786
TRUMP HOTELS & CASINO RESORTS HOLDINGS, L.P.
------------------------------------------------------
(Exact name of registrant as specified in its charter)
DELAWARE 13-3818407
- ------------------------------- -------------------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
2500 BOARDWALK
ATLANTIC CITY, NEW JERSEY 08401
- ---------------------------------------- ----------
(Address of principal executive offices) (Zip Code)
(609) 441-6060
----------------------------------------------------
(Registrant's telephone number, including area code)
NOT APPLICABLE
----------------------------------------------------
(Former name, former address and former fiscal year,
if changed since last report)
================================================================================
<PAGE>
================================================================================
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Commission file number: 33-90786
TRUMP HOTELS & CASINO RESORTS FUNDING, INC.
------------------------------------------------------
(Exact name of registrant as specified in its charter)
DELAWARE 13-3818405
- ------------------------------- -------------------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
2500 BOARDWALK
ATLANTIC CITY, NEW JERSEY 08401
- ---------------------------------------- ----------
(Address of principal executive offices) (Zip Code)
(609) 441-6060
----------------------------------------------------
(Registrant's telephone number, including area code)
NOT APPLICABLE
----------------------------------------------------
(Former name, former address and former fiscal year,
if changed since last report)
INDICATE BY CHECK MARK WHETHER THE REGISTRANTS (1) HAVE FILED ALL REPORTS
REQUIRED TO BE FILED BY SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF
1934 DURING THE PRECEDING 12 MONTHS (OR FOR SUCH SHORTER PERIOD THAT THE
REGISTRANTS WERE REQUIRED TO FILE SUCH REPORTS), AND (2) HAVE BEEN SUBJECT TO
SUCH FILING REQUIREMENTS FOR THE PAST 90 DAYS.
YES X NO
--- ---
THE NUMBER OF OUTSTANDING SHARES OF COMMON STOCK, PAR VALUE $.01 PER SHARE,
OF TRUMP HOTELS & CASINO RESORTS, INC. AS OF AUGUST 14, 1997 WAS 22,500,256.
THE NUMBER OF OUTSTANDING SHARES OF CLASS B COMMON STOCK, PAR VALUE $.01
PER SHARE, OF TRUMP HOTELS & CASINO RESORTS, INC. AS OF AUGUST 14, 1997 WAS
1,000.
THE NUMBER OF OUTSTANDING SHARES OF COMMON STOCK, PAR VALUE $.01 PER SHARE,
OF TRUMP HOTELS & CASINO RESORTS FUNDING, INC. AS OF AUGUST 14, 1997 WAS 100.
================================================================================
<PAGE>
TRUMP HOTELS & CASINO RESORTS, INC.,
TRUMP HOTELS & CASINO RESORTS HOLDINGS, L.P.
AND
TRUMP HOTELS & CASINO RESORTS FUNDING, INC.
INDEX TO FORM 10-Q
<TABLE>
PART I--FINANCIAL INFORMATION
<CAPTION>
ITEM 1--FINANCIAL STATEMENTS PAGE NO.
--------
<S> <C>
Condensed Consolidated Balance Sheets of Trump Hotels & Casino Resorts, Inc.
as of June 30, 1997 (unaudited) and December 31, 1996....................................... 1
Condensed Consolidated Statements of Operations of Trump Hotels & Casino Resorts, Inc.
for the Three and Six Months Ended June 30,1997 and 1996 (unaudited)........................ 2
Condensed Consolidated Statement of Stockholders' Equity of Trump Hotels & Casino Resorts, Inc.
for the Six Months Ended June 30, 1997 (unaudited)......................................... 3
Condensed Consolidated Statements of Cash Flows of Trump Hotels & Casino Resorts, Inc.
for the Six Months Ended June 30, 1997 and 1996 (unaudited)................................. 4-5
Condensed Consolidated Balance Sheets of Trump Hotels & Casino Resorts Holdings, L.P.
as of June 30, 1997 (unaudited) and December 31, 1996....................................... 6
Condensed Consolidated Statements of Operations of Trump Hotels & Casino Resorts Holdings, L.P.
for the Three and Six Months Ended June 30, 1997 and 1996 (unaudited)....................... 7
Condensed Consolidated Statement of Capital of Trump Hotels & Casino Resorts
Holdings, L.P. for the Six Months Ended June 30, 1997 (unaudited)......................... 8
Condensed Consolidated Statements of Cash Flows of Trump Hotels & Casino Resorts Holdings, L.P.
for the Six Months Ended June 30, 1997 and 1996 (unaudited)................................. 9-10
Condensed Balance Sheets of Trump Hotels & Casino Resorts Funding, Inc. as of June 30, 1997
(unaudited) and December 31, 1996........................................................... 11
Statements of Operations of Trump Hotels & Casino Resorts Funding, Inc. for the Three
and Six Months Ended June 30,1997 and 1996 (unaudited)...................................... 12
Statements of Cash Flows of Trump Hotels & Casino Resorts Funding, Inc.
for the Six Months Ended June 30, 1997 and 1996 (unaudited)................................. 13
Notes to Condensed Consolidated Financial Statements of Trump Hotels & Casino Resorts, Inc.,
Trump Hotels & Casino Resorts Holdings, L.P. and Trump Hotels & Casino Resorts
Funding, Inc. (unaudited).................................................................. 14-18
ITEM 2--Management's Discussion and Analysis of Financial Condition and Results of Operations....... 19-26
ITEM 3--Quantitative and Qualitative Disclosures About Market Risk.................................. 26
</TABLE>
<PAGE>
TRUMP HOTELS & CASINO RESORTS, INC.
TRUMP HOTELS & CASINO RESORTS HOLDINGS, L.P.
AND
TRUMP HOTELS & CASINO RESORTS FUNDING, INC.
INDEX TO FORM 10-Q CONT'D
PAGE NO.
--------
PART II -- OTHER INFORMATION
ITEM 1 -- Legal Proceedings........................................ 26-27
ITEM 2 -- Changes in Securities.................................... 27
ITEM 3 -- Defaults Upon Senior Securities.......................... 27
ITEM 4 -- Submission of Matters to a Vote of Security Holders...... 27
ITEM 5 -- Other Information........................................ 27
ITEM 6 -- Exhibits and Reports on Form 8-K......................... 27
SIGNATURES
SIGNATURE -- Trump Hotels & Casino Resorts, Inc.................... 28
SIGNATURE -- Trump Hotels & Casino Resorts Holdings, L.P........... 29
SIGNATURE -- Trump Hotels & Casino Resorts Funding, Inc............ 30
<PAGE>
PART I -- FINANCIAL INFORMATION
ITEM 1 -- FINANCIAL STATEMENTS
TRUMP HOTELS & CASINO RESORTS, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(IN THOUSANDS)
<TABLE>
<CAPTION>
JUNE 30, DECEMBER 31,
1997 1996
---------- ----------
(UNAUDITED)
ASSETS
CURRENT ASSETS:
<S> <C> <C>
Cash and cash equivalents..................................................... $ 104,478 $ 175,749
Receivables, net ...................................................... 64,151 54,395
Inventories................................................................... 12,331 10,710
Prepaid expenses and other current assets..................................... 20,862 12,729
---------- ----------
Total Current Assets..................................................... 201,822 253,583
INVESTMENT IN BUFFINGTON HARBOR, L.L.C........................................ 45,752 45,782
INVESTMENT IN CASTLE PIK NOTES................................................ 48,595 44,191
PROPERTY AND EQUIPMENT, NET................................................... 2,019,523 2,009,261
DEFERRED LOAN COSTS, NET...................................................... 44,647 48,602
OTHER ASSETS.................................................................. 65,271 54,017
---------- ----------
Total Assets.................................................................. $2,425,610 $2,455,436
========== ==========
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Current maturities of long-term debt........................................ $ 24,676 $ 19,356
Accounts payable and accrued expenses....................................... 132,121 117,811
Accrued interest payable.................................................... 28,396 28,393
Due to affiliates, net...................................................... -- 1,171
---------- ----------
Total Current Liabilities................................................. 185,193 166,731
LONG-TERM DEBT, net of current maturities..................................... 1,708,440 1,713,425
DEFERRED INCOME TAXES PAYABLE................................................. 4,272 4,272
OTHER LONG TERM LIABILITIES................................................... 11,024 10,309
---------- ----------
Total Liabilities......................................................... 1,908,929 1,894,737
MINORITY INTEREST............................................................. 162,819 172,604
STOCKHOLDERS' EQUITY:
Common Stock, $.01 par value, 75,000,000 shares authorized,
24,206,756 issued and outstanding ........................................ 241 241
Class B Common Stock, $.01 par value, 1,000 shares
authorized, issued and outstanding......................................... -- --
Additional Paid in Capital.................................................. 455,646 455,452
Accumulated Deficit......................................................... (84,749) (67,598)
Less treasury stock, 1,706,500 shares of THCR Common Stock,
at cost.................................................................. (17,276) --
----------- ----------
Total Stockholders' Equity................................................ 353,862 388,095
----------- ----------
Total Liabilities and Stockholders' Equity.................................... $2,425,610 $2,455,436
========== ==========
The accompanying notes are an integral part of these condensed consolidated financial statements.
</TABLE>
1
<PAGE>
<TABLE>
TRUMP HOTELS & CASINO RESORTS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
FOR THE THREE AND SIX MONTHS ENDED JUNE 30, 1997 AND 1996
(UNAUDITED)
(IN THOUSANDS, EXCEPT SHARE DATA)
<CAPTION>
THREE MONTHS ENDED SIX MONTHS ENDED
JUNE 30, JUNE 30,
--------------------------- ---------------------------
1997 1996 1997 1996
----------- ----------- ----------- -----------
REVENUES:
<S> <C> <C> <C> <C>
Gaming...................................................... $ 336,686 $ 214,091 $ 653,575 $ 288,361
Rooms ...................................................... 26,178 18,356 47,803 24,154
Food and Beverage .......................................... 39,011 27,140 73,978 38,523
Other ...................................................... 12,225 6,253 21,942 8,353
----------- ----------- ----------- -----------
Gross Revenues ............................................. 414,100 265,840 797,298 359,391
Less -- Promotional allowances ................................ 46,076 30,711 87,032 43,129
----------- ----------- ----------- -----------
Net Revenues ............................................... 368,024 235,129 710,266 316,262
----------- ----------- ----------- -----------
COSTS AND EXPENSES:
Gaming ...................................................... 212,572 125,415 411,375 169,393
Rooms ....................................................... 8,030 6,081 15,130 8,352
Food and Beverage ........................................... 12,809 9,091 24,220 11,598
General and Administrative .................................. 68,784 45,083 136,404 64,056
Depreciation and Amortization ............................... 19,203 17,095 46,275 21,622
Pre-Opening ................................................. -- 7,856 -- 9,966
----------- ----------- ----------- -----------
321,398 210,621 633,404 284,987
----------- ----------- ----------- -----------
Income from operations .................................... 46,626 24,508 76,862 31,275
----------- ----------- ----------- -----------
NON-OPERATING INCOME AND (EXPENSES):
Interest income ............................................. 1,237 2,951 3,202 3,721
Interest expense ............................................ (52,671) (38,121) (105,270) (54,147)
Other non-operating income .................................. -- 10,557 -- 9,182
----------- ----------- ----------- -----------
(51,434) (24,613) (102,068) (41,244)
----------- ----------- ----------- -----------
Loss before equity in loss of Buffington Harbor, L.L.C.,
income taxes, extraordinary items and minority interest .... (4,808) (105) (25,206) (9,969)
Equity in loss of Buffington Harbor, L.L.C .................... (1,092) -- (1,730) --
------------ ------------ ------------ ------------
Loss before income taxes, extraordinary items
and minority interest ....................................... (5,900) (105) (26,936) (9,969)
Income tax benefit ............................................ 883 -- -- --
Extraordinary loss ............................................ -- (59,132) -- (59,132)
Minority Interest ............................................. 1,810 14,828 9,785 14,828
----------- ----------- ----------- -----------
NET LOSS ...................................................... $ (3,207) $ (44,409) $ (17,151) $ (54,273)
=========== =========== =========== ===========
Loss per share ................................................ $ (.14) $ (2.06) $ (.74) $ (3.42)
=========== =========== =========== ===========
Weighted average shares ....................................... 22,679,097 21,577,655 23,094,469 15,887,108
=========== =========== =========== ===========
The accompanying notes are an integral part of these condensed consolidated financial statements.
</TABLE>
2
<PAGE>
TRUMP HOTELS & CASINO RESORTS, INC.
CONDENSED CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY
FOR THE SIX MONTHS ENDED JUNE 30, 1997
(UNAUDITED)
(IN THOUSANDS, EXCEPT SHARE DATA)
<TABLE>
<CAPTION>
NUMBER OF SHARES
---------------------- COMMON ADDITIONAL
CLASS B STOCK PAID IN ACCUMULATED TREASURY
COMMON COMMON AMOUNT CAPITAL DEFICIT STOCK TOTAL
---------- ------- ------ ---------- ----------- -------- --------
<S> <C> <C> <C> <C> <C> <C> <C>
Balance, December 31, 1996....... 24,140,090 1,000 $241 $455,452 $(67,598) $ -- $388,095
Purchase of treasury
stock, 1,706,500 shares of
THCR Common Stock,
at cost......................... -- -- -- -- -- (17,276) (17,276)
Issuance of Phantom Stock Award 66,666 -- -- -- -- -- --
Accretion of Phantom Stock
Units........................... -- -- -- 194 -- -- 194
Net Loss......................... -- -- -- -- (17,151) -- (17,151)
---------- ----- ---- -------- -------- -------- --------
Balance, June 30, 1997........... 24,206,756 1,000 $241 $455,646 $(84,749) $(17,276) $353,862
========== ===== ==== ======== ======== ======== ========
The accompanying notes are an integral part of this condensed consolidated financial statement.
</TABLE>
3
<PAGE>
TRUMP HOTELS & CASINO RESORTS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS FOR
THE SIX MONTHS ENDED JUNE 30, 1997 AND 1996
(UNAUDITED)
(IN THOUSANDS)
<TABLE>
<CAPTION>
1997 1996
---- ----
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net Loss.......................................................................... $(17,151) $ (54,273)
Adjustments to reconcile net loss to net cash flows from operating activities:
Extraordinary loss.............................................................. -- 59,132
Equity in loss of Buffington Harbor, L.L.C...................................... 1,730 --
Depreciation and amortization................................................... 46,275 21,622
Payment-In-Kind interest in Castle PIK Notes.................................... (4,404) --
Minority interest in net loss................................................... (9,785) (14,828)
Accretion of discounts on mortgage notes........................................ 1,543 132
Amortization of deferred loan costs............................................. 3,955 2,582
Provision for losses on receivables............................................. 5,336 1,547
Valuation allowance of CRDA investments and amortization of Indiana
gaming costs................................................................. 5,020 894
Accretion of phantom stock units................................................ 194 233
-------- ---------
32,713 17,041
Change in assets and liabilities:
Increase in receivables......................................................... (15,092) (22,576)
Increase in inventories......................................................... (1,621) (901)
Increase in other current assets................................................ (7,800) (11,349)
Decrease in due to affiliates................................................... (1,408) (1,623)
Increase in other assets........................................................ (9,848) (444)
Increase in accounts payable & accrued expenses................................. 14,046 14,320
Increase (decrease) in accrued interest payable................................. 3 (19,723)
Increase (decrease)in other long-term liabilities............................... 5,623 (450)
-------- ---------
Net cash flows provided by (used in) operating activities ..................... 16,616 (25,705)
-------- ---------
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchase of property and equipment, net........................................... (54,256) (196,043)
Investment in Buffington Harbor, L.L.C............................................ (1,700) (18, 948)
CRDA Investments.................................................................. (6,757) (1,862)
Cash restricted for future construction........................................... -- 40,030
Cash restricted for interest ..................................................... -- (12,987)
Investment in Trump Marina........................................................ -- (41,943)
Purchase of Taj Holding, net of cash acquired .................................... -- 46,714
-------- ---------
Net cash flows used in investing activities..................................... (62,713) (185,039)
-------- ---------
Continued .........
The accompanying notes are an integral part of these condensed consolidated financial statements.
4
<PAGE>
TRUMP HOTELS & CASINO RESORTS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS FOR
THE SIX MONTHS ENDED JUNE 30, 1997 AND 1996 CONT'D
(UNAUDITED)
(IN THOUSANDS)
1997 1996
---- ----
<S> <C> <C>
CASH FLOWS FROM FINANCING ACTIVITIES:
Purchase of treasury stock........................................................ $(17,276) $ --
Issuance of long-term debt-other.................................................. 2,013 26,012
Payment of long-term debt-other................................................... (9,911) (4,410)
Issuance of common stock, net..................................................... -- 386,062
Repayment of long term debt....................................................... -- (1,156,836)
Issuance of Trump AC Mortgage Notes............................................... -- 1,200,000
Retirement of NatWest loan........................................................ -- (36,500)
Cost of issuing debt.............................................................. -- (41,042)
-------- ----------
Net cash flows provided by (used in) financing activities....................... (25,174) 373,286
-------- ----------
Net increase (decrease) in cash and cash equivalents............................ (71,271) 162,542
CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD.................................... 175,749 19,208
-------- ----------
CASH AND CASH EQUIVALENTS AT END OF PERIOD.......................................... $104,478 $ 181,750
======== ==========
CASH INTEREST PAID.................................................................. $ 99,151 $ 26,487
======== ==========
Supplemental Disclosure of Non-Cash Activities:
Purchase of property and equipment under capital lease obligations................. $ 1,689
========
THCR purchased all of the capital stock of Taj Holding for $31,181 in cash and
323,423 shares of its common stock valued at $9,319. In addition, the
contribution by Trump of his 50% interest in Taj Associates amounting to
$40,500, net of the $10,000 payment to Bankers Trust, was recorded as a
minority interest. In conjunction with the acquisition, the accumulated deficit
amounting to $108,574 was reflected as an increase to Property, Plant &
Equipment
Fair value of net assets acquired.......................................... $1,005,816
Cash paid for the capital stock and payment to Bankers Trust............... (41,181)
Minority interest of Trump................................................. (30,500)
----------
Liabilities assumed................................................... $ 934,135
==========
In connection with the purchase of the Specified Parcels in 1996, THCR issued
500,000 shares of its common stock valued at $10,500.
A note receivable from Trump in the amount of $3,167 was forgiven in 1996 in
accordance with its terms.
The accompanying notes are an integral part of these condensed consolidated financial statements.
</TABLE>
5
<PAGE>
TRUMP HOTELS & CASINO RESORTS HOLDINGS, L.P.
CONDENSED CONSOLIDATED BALANCE SHEETS
(IN THOUSANDS)
<TABLE>
<CAPTION>
JUNE 30, DECEMBER 31,
1997 1996
---------- ----------
(UNAUDITED)
ASSETS
CURRENT ASSETS:
<S> <C> <C>
Cash and cash equivalents................................................... $ 104,474 $ 175,745
Receivables, net............................................................ 64,151 54,395
Inventories................................................................. 12,331 10,710
Prepaid expenses and other current assets................................... 20,862 12,729
---------- ----------
Total Current Assets..................................................... 201,818 253,579
INVESTMENT IN BUFFINGTON HARBOR, L.L.C........................................ 45,752 45,782
INVESTMENT IN CASTLE PIK NOTES................................................ 48,595 44,191
PROPERTY AND EQUIPMENT, NET................................................... 2,019,523 2,009,261
DEFERRED LOAN COSTS, NET...................................................... 44,647 48,602
OTHER ASSETS.................................................................. 65,271 54,017
---------- ----------
Total Assets.............................................................. $2,425,606 $2,455,432
========== ==========
LIABILITIES AND CAPITAL
CURRENT LIABILITIES:
Current maturities of long-term debt........................................ $ 24,676 $ 19,356
Accounts payable and accrued expenses....................................... 132,121 117,811
Accrued interest payable.................................................... 28,396 28,393
Due to affiliates, net...................................................... -- 1,171
---------- ----------
Total Current Liabilities................................................. 185,193 166,731
LONG-TERM DEBT, net of current maturities..................................... 1,708,440 1,713,425
DEFERRED INCOME TAXES PAYABLE................................................. 4,272 4,272
OTHER LONG TERM LIABILITIES................................................... 11,024 10,309
---------- ----------
Total Liabilities......................................................... 1,908,929 1,894,737
---------- ----------
CAPITAL:
Partners Capital........................................................... 635,227 652,503
Accumulated Deficit ..................................................... (118,550) (91,808)
---------- ----------
Total Capital.............................................................. 516,677 560,695
---------- ----------
Total Liabilities and Capital.............................................. $2,425,606 $2,455,432
========== ==========
The accompanying notes are an integral part of these condensed consolidated financial statements.
</TABLE>
6
<PAGE>
<TABLE>
TRUMP HOTELS & CASINO RESORTS HOLDINGS L.P.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
FOR THE THREE AND SIX MONTHS ENDED JUNE 30, 1997 AND 1996
(UNAUDITED)
(IN THOUSANDS)
<CAPTION>
THREE MONTHS ENDED SIX MONTHS ENDED
JUNE 30, JUNE 30,
--------------------------- --------------------------
1997 1996 1997 1996
-------- -------- -------- --------
<S> <C> <C> <C> <C>
REVENUES:
Gaming........................................ $336,686 $214,091 $653,575 $288,361
Rooms......................................... 26,178 18,356 47,803 24,154
Food and Beverage............................. 39,011 27,140 73,978 38,523
Other......................................... 12,225 6,253 21,942 8,353
-------- -------- -------- --------
Gross Revenues................................ 414,100 265,840 797,298 359,391
Less -- Promotional allowances................... 46,076 30,711 87,032 43,129
-------- -------- -------- --------
Net Revenues.................................. 368,024 235,129 710,266 316,262
-------- -------- -------- --------
COSTS AND EXPENSES:
Gaming......................................... 212,572 125,415 411,375 169,393
Rooms.......................................... 8,030 6,081 15,130 8,352
Food and Beverage.............................. 12,809 9,091 24,220 11,598
General and Administrative..................... 68,707 44,967 136,210 63,823
Depreciation and Amortization.................. 19,203 17,095 46,275 21,622
Pre-Opening.................................... -- 7,856 -- 9,966
-------- -------- -------- --------
321,321 210,505 633,210 284,754
-------- -------- -------- --------
Income from operations....................... 46,703 24,624 77,056 31,508
-------- -------- -------- --------
NON-OPERATING INCOME AND (EXPENSES):
Interest income................................ 1,237 2,951 3,202 3,721
Interest expense............................... (52,671) (38,121) (105,270) (54,147)
Other non-operating income .................... -- 10,557 -- 9,182
-------- -------- -------- --------
(51,434) (24,613) (102,068) (41,244)
-------- -------- -------- --------
Income (loss) before equity in loss of Buffington
Harbor, L.L.C., income taxes, and extraordinary
items.......................................... (4,731) 11 (25,012) (9,736)
Equity in loss of Buffington Harbor, L.L.C....... (1,092) -- (1,730) --
-------- -------- -------- --------
Income (loss) before income taxes and extraordinary
items......................................... (5,823) 11 (26,742) (9,736)
Income tax benefit............................... 883 -- -- --
Extraordinary loss............................... -- (59,132) -- (59,132)
-------- -------- -------- --------
NET LOSS........................................ $ (4,940) $(59,121) $(26,742) $(68,868)
======== ======== ======== ========
The accompanying notes are an integral part of these condensed consolidated financial statements.
</TABLE>
7
<PAGE>
TRUMP HOTELS & CASINO RESORTS HOLDINGS, L.P.
CONDENSED CONSOLIDATED STATEMENT OF CAPITAL
FOR THE SIX MONTHS ENDED JUNE 30, 1997
(UNAUDITED)
(IN THOUSANDS)
PARTNERS' ACCUMULATED
CAPITAL DEFICIT TOTAL
-------- ----------- ---------
Balance, December 31, 1996.......... $652,503 $ (91,808) $560,695
Purchase of 1,706,500 shares of
THCR Common Stock................ (17,276) -- (17,276)
Net Loss............................ -- (26,742) (26,742)
-------- --------- --------
Balance, June 30, 1997.............. $635,227 $(118,550) $516,677
======== ========= ========
The accompanying notes are an integral part of this condensed
consolidated financial statement.
8
<PAGE>
<TABLE>
TRUMP HOTELS & CASINO RESORTS HOLDINGS, L.P.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS FOR
THE SIX MONTHS ENDED JUNE 30, 1997 AND 1996
(UNAUDITED)
(IN THOUSANDS)
<CAPTION>
1997 1996
---- ----
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net Loss.......................................................................... $(26,742) $ (68,868)
Adjustments to reconcile net loss to net cash flows from operating activities:
Extraordinary loss.............................................................. -- 59,132
Equity in loss of Buffington Harbor, L.L.C...................................... 1,730 --
Depreciation and amortization................................................... 46,275 21,622
Payment-In-Kind interest in Castle PIK Notes.................................... (4,404) --
Accretion of discounts on mortgage notes........................................ 1,543 132
Amortization of deferred loan costs............................................. 3,955 2,582
Provision for losses on receivables............................................. 5,336 1,547
Valuation allowance of CRDA investments and amortization of Indiana
gaming costs................................................................... 5,020 894
-------- ---------
32,713 17,041
Change in assets and liabilities:
Increase in receivables......................................................... (15,092) (22,576)
Increase in inventories......................................................... (1,621) (901)
Increase in other current assets................................................ (7,800) (11,412)
Decrease in due to affiliates................................................... (1,408) (1,413)
Increase in other assets........................................................ (9,848) (444)
Increase in accounts payable & accrued expenses................................. 14,046 14,320
Increase (decrease) in accrued interest payable................................. 3 (19,723)
Increase (decrease)in other long-term liabilities............................... 5,623 (450)
-------- ---------
Net cash flows provided by (used in) operating activities..................... 16,616 (25,558)
-------- ---------
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchase of property and equipment, net......................................... (54,256) (196,043)
Investment in Buffington Harbor, L.L.C.......................................... (1,700) (18,948)
CRDA Investments................................................................ (6,757) (1,862)
Cash restricted for future construction......................................... -- 40,030
Cash restricted for interest .................................................. -- (12,987)
Investment in Trump Marina...................................................... -- (41,943)
Purchase of Taj Holding, net of cash acquired................................... -- 46,714
-------- ---------
Net cash flows used in investing activities................................... (62,713) (185,039)
-------- ---------
The accompanying notes are an integral part of these condensed consolidated financial statements.
</TABLE>
9
<PAGE>
<TABLE>
TRUMP HOTELS & CASINO RESORTS HOLDINGS, L.P.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS FOR
THE SIX MONTHS ENDED JUNE 30, 1997 AND 1996 CONT'D
(UNAUDITED)
(IN THOUSANDS)
<CAPTION>
1997 1996
---- ----
<S> <C> <C>
CASH FLOWS FROM FINANCING ACTIVITIES:
Purchase of THCR Common Stock................................................... $(17,276) $ --
Issuance of long-term debt-other................................................ 2,013 26,012
Payment of long-term debt-other................................................. (9,911) (4,410)
Contributed capital ............................................................ -- 385,920
Repayment of Long Term Debt..................................................... -- (1,156,836)
Issuance of Trump AC Mortgage Notes............................................. -- 1,200,000
Retirement of NatWest loan...................................................... -- (36,500)
Cost of issuing debt............................................................ -- (41,042)
-------- ----------
Net cash flows provided by (used in) financing activities (25,174) 373,144
-------- ----------
Net increase (decrease) in cash and cash equivalents.......................... (71,271) 162,547
CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD.................................. 175,745 19,199
-------- ----------
CASH AND CASH EQUIVALENTS AT END OF PERIOD........................................ $104,474 $ 181,746
======== ==========
CASH INTEREST PAID................................................................ $ 99,151 $ 26,487
======== ==========
Supplemental Disclosure of Non-Cash Activities:
Purchase of property and equipment under capital lease obligations................ $ 1,689
========
THCR purchased all of the capital stock of Taj Holding for $31,181 in cash and
323,423 shares of its common stock valued at $9,319. In addition, the
contribution by Trump of his 50% interest in Taj Associates amounting to
$40,500, net of the $10,000 payment to Bankers Trust, was recorded as a
minority interest. In conjunction with the acquisition, the accumulated deficit
amounting to $108,574 was reflected as an increase to Property, Plant &
Equipment
Fair value of net assets acquired.......................................... $1,005,816
Cash paid for the capital stock and payment to Bankers Trust............... (41,181)
Minority interest of Trump................................................. (30,500)
----------
Liabilities assumed................................................... $ 934,135
==========
In connection with the purchase of the Specified Parcels in 1996, THCR issued
500,000 shares of its common stock valued at $10,500.
A note receivable from Trump in the amount of $3,167 was forgiven in 1996 in
accordance with its terms.
</TABLE>
The accompanying notes are an integral part of these condensed consolidated
financial statements.
10
<PAGE>
TRUMP HOTELS & CASINO RESORTS FUNDING, INC.
CONDENSED BALANCE SHEETS
(IN THOUSANDS)
JUNE 30, DECEMBER 31,
1997 1996
---- ----
(UNAUDITED)
ASSETS
Cash .................................................. $ -- $ --
Mortgage Interest Receivable .......................... 936 936
Mortgage Note Receivable .............................. 145,000 145,000
-------- --------
Total Assets ..................................... $145,936 $145,936
======== ========
LIABILITIES AND CAPITAL
Accrued Interest Payable .............................. $ 936 $ 936
15 1/2% Senior Secured Notes, due 2005 ................ 145,000 145,000
Common Stock, $.01 par value, 1,000 shares authorized,
100 shares issued and outstanding .................. -- --
Retained Earnings ..................................... -- --
-------- --------
Total Liabilities and Capital .................... $145,936 $145,936
======== ========
The accompanying notes are an integral part of these condensed
financial statements.
11
<PAGE>
TRUMP HOTELS & CASINO RESORTS FUNDING, INC.
STATEMENTS OF OPERATIONS
FOR THE THREE AND SIX MONTHS ENDED JUNE 30, 1997 AND 1996
(UNAUDITED)
(IN THOUSANDS)
THREE MONTHS SIX MONTHS
JUNE 30, JUNE 30,
--------------------- ---------------------
1997 1996 1997 1996
------- ------- -------- --------
Interest Income.......... $ 5,619 $ 6,006 $ 11,238 $ 12,012
Interest Expense......... (5,619) (6,006) (11,238) (12,012)
------- ------- -------- --------
Net Income............... $ -- $ -- $ -- $ --
======= ======= ======== ========
The accompanying notes are an integral part of these condensed
financial statements.
12
<PAGE>
TRUMP HOTELS & CASINO RESORTS FUNDING, INC.
STATEMENT OF CASH FLOWS
FOR THE SIX MONTHS ENDED JUNE 30, 1997 AND 1996
(UNAUDITED)
(IN THOUSANDS)
1997 1996
---- ----
CASH FLOWS FROM OPERATING ACTIVITIES:
Net Income............................................ $ -- $ --
Decrease (increase) in interest receivable............ -- --
Increase (decrease) in interest payable............... -- --
--------- ---------
Net Cash Flows Provided By Operating Activities....... -- --
--------- ---------
Cash and Cash Equivalents at Beginning of Period...... -- --
--------- ---------
Cash and Cash Equivalents at End of Period............ $ -- $ --
========= =========
The accompanying notes are an integral part of these condensed
financial statements.
13
<PAGE>
TRUMP HOTELS & CASINO RESORTS, INC.,
TRUMP HOTELS & CASINO RESORTS HOLDINGS, L.P.
AND
TRUMP HOTELS & CASINO RESORTS FUNDING, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
(1) ORGANIZATION AND OPERATIONS
The accompanying condensed consolidated financial statements include those
of Trump Hotels & Casino Resorts, Inc., a Delaware corporation ("THCR"),
Trump Hotels & Casino Resorts Holdings, L.P., a Delaware limited
partnership ("THCR Holdings"), and subsidiaries. THCR Holdings and its
subsidiaries, including Trump Hotels & Casino Resorts Funding, Inc. ("THCR
Funding"), is an entity which is currently owned approximately 61.8% by
THCR, as a general partner, and approximately 38.2% by Donald J. Trump
("Trump"), as a limited partner. Trump's limited partnership interest in
THCR Holdings represents his economic interests in the assets and
operations of THCR Holdings. Accordingly, such limited partnership interest
is convertible at Trump's option into 13,918,723 shares of THCR's common
stock, par value $.01 per share (the "THCR Common Stock"). The accompanying
consolidated financial statements include those of (i) THCR and its 61.8%
owned subsidiary, THCR Holdings, and (ii) THCR Holdings and its wholly
owned subsidiaries:
o Trump Atlantic City Associates ("Trump AC") and its subsidiaries,
Trump Plaza Associates ("Plaza Associates") and Trump Taj Mahal
Associates ("Taj Associates"). Plaza Associates owns and operates
the Trump Plaza Hotel and Casino ("Trump Plaza") located in
Atlantic City, New Jersey. Taj Associates owns and operates the
Trump Taj Mahal Casino Resort (the "Taj Mahal") located in
Atlantic City, New Jersey. Taj Associates was acquired on April
17, 1996.
o Trump Indiana, Inc. ("Trump Indiana"). Trump Indiana, which
commenced operations on June 8, 1996, owns and operates a river
boat gaming facility at Buffington Harbor, on Lake Michigan,
Indiana (the "Indiana Riverboat").
o Trump's Castle Associates, L.P. ("Castle Associates") which was
acquired on October 7, 1996. Castle Associates owns and operates
Trump Marina Hotel Casino ("Trump Marina") located in Atlantic
City, New Jersey.
o THCR Funding, the issuer of $145,000,000 15 1/2% Senior Secured
Notes, (the "Senior Notes").
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. Accordingly, certain information and note disclosures normally
included in financial statements prepared in conformity with generally accepted
accounting principles have been condensed or omitted.
The casino industry in Atlantic City is seasonal in nature; accordingly,
results of operations for the period ended June 30, 1997 are not necessarily
indicative of the operating results for a full year.
THCR, THCR Holdings and THCR Funding commenced operations on June 12, 1995.
THCR, THCR Holdings and THCR Funding have no operations and their ability to
service their debt is dependent on the successful operations of Trump AC, Trump
Indiana and Castle Associates. THCR, through THCR Holdings and its subsidiaries,
is the exclusive vehicle through which Trump engages in new gaming activities in
emerging or established gaming jurisdictions.
(2) PUBLIC OFFERINGS AND MERGER
On June 12, 1995, THCR completed a public offering of 10,000,000 shares of
its common stock at $14.00 per share (the "1995 Stock Offering") for gross
proceeds of $140,000,000. Concurrent with the 1995 Stock Offering, THCR
Holdings, together with its subsidiary, THCR Funding, issued 15 1/2% Senior
Notes due 2005 for gross proceeds of $155,000,000 (the "1995 Note Offering" and,
together with the 1995 Stock Offering, the "1995 Offerings"). From the proceeds
of the 1995 Stock Offering, THCR contributed $126,848,000 to THCR Holdings, in
exchange for an approximately 60% general partnership interest in THCR Holdings.
14
<PAGE>
TRUMP HOTELS & CASINO RESORTS, INC.,
TRUMP HOTELS & CASINO RESORTS HOLDINGS, L.P.
AND
TRUMP HOTELS & CASINO RESORTS FUNDING, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
Prior to the 1995 Offerings, Trump was the sole stockholder of THCR and the
sole beneficial owner of THCR Holdings. Concurrent with the 1995 Offerings,
Trump contributed to THCR Holdings his 100% beneficial interest in Plaza
Associates. Trump also contributed to THCR Holdings all of his existing
interests and rights to new gaming activities in both emerging and established
gaming jurisdictions, including Trump Indiana but excluding his interests in Taj
Associates and Castle Associates. In exchange for his contributions to THCR
Holdings, Trump received an approximately 40% limited partnership interest in
THCR Holdings.
On April 17, 1996, pursuant to the Agreement and Plan of Merger, as amended
(the "Taj Merger Agreement"), pursuant to which a wholly owned subsidiary of
THCR was merged (the "Taj Merger") with and into Taj Mahal Holding Corp., now
known as THCR Holding Corp. ("Taj Holding"), each outstanding share of Class A
Common Stock of Taj Holding (the "Taj Holding Class A Common Stock"), which in
the aggregate represented 50% of the economic interest in Taj Associates, was
converted into the right to receive, at each holder's election, either (a) $30
in cash or (b) that number of shares of THCR Common Stock having a market value
equal to $30. Trump held the remaining 50% interest in Taj Associates and
contributed such interest in Taj Associates to Trump AC in exchange for limited
partnership interests in THCR Holdings. In addition, the outstanding shares of
Taj Holding's Class C Common Stock, all of which were held by Trump, were
canceled in connection with the Taj Merger. The following transactions occurred
in connection with the Taj Merger (collectively referred to as the "Taj Merger
Transaction"):
(a) the payment of an aggregate of $31,181,000 in cash and the
issuance of 323,423 shares of THCR Common Stock to the holders of Taj
Holding Class A Common Stock pursuant to the Taj Merger Agreement;
(b) the contribution by Trump to Trump AC of all of his direct and
indirect ownership interests in Taj Associates, and the contribution by
THCR to Trump AC of all of its indirect ownership interests in Taj
Associates acquired in the Taj Merger;
(c) the public offerings by (i) THCR of 12,500,000 shares of THCR
Common Stock (plus 750,000 shares of THCR Common Stock issued in connection
with the partial exercise of the underwriters' over-allotment option) (the
"1996 Stock Offering") for net proceeds of $386,062,000 and (ii) Trump AC
and Trump Atlantic City Funding, Inc. ("Trump AC Funding") of
$1,200,000,000 aggregate principal amount of 11 1/4% First Mortgage Notes
due 2006 (the "Trump AC Mortgage Notes") (together with the 1996 Stock
Offering, the "1996 Offerings");
(d) the redemption of the outstanding shares of Taj Holding's Class B
Common Stock immediately prior to the Taj Merger for $.50 per share in
accordance with its terms;
(e) the redemption of the outstanding 11.35% Mortgage Bonds, Series A,
due 1999 of Trump Taj Mahal Funding, Inc. (the "Taj Bonds");
(f) the retirement of the outstanding 10 7/8% Mortgage Notes due 2001
(the "Plaza Notes") of Trump Plaza Funding, Inc.;
(g) the satisfaction of the indebtedness of Taj Associates under its
loan agreement with National Westminster Bank USA ("Nat West");
(h) the purchase of certain real property used in the operation of the
Taj Mahal that was leased from a corporation wholly owned by Trump (the
"Specified Parcels");
(i) the purchase of certain real property used in the operation of
Trump Plaza that was leased from an unaffiliated third party;
(j) the payment to Bankers Trust Company ("Bankers Trust") to obtain
releases of liens and guarantees that Bankers Trust had in connection with
indebtedness owed by Trump to Bankers Trust; and
15
<PAGE>
TRUMP HOTELS & CASINO RESORTS, INC.,
TRUMP HOTELS & CASINO RESORTS HOLDINGS, L.P.
AND
TRUMP HOTELS & CASINO RESORTS FUNDING, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
(k) the issuance to Trump of warrants (the "Trump Warrants") to
purchase an aggregate of 1,800,000 shares of THCR Common Stock, (i) 600,000
shares of which may be purchased on or prior to April 17, 1999 at $30 per
share, (ii) 600,000 shares of which may be purchased on or prior to April
17, 2000 at $35 per share and (iii) 600,000 shares of which may be
purchased on or prior to April 17, 2001 at $40 per share.
As a result of the contribution by Trump to Trump AC of his ownership
interests in Taj Associates and the contribution by THCR to Trump AC of its
indirect ownership interests in Taj Associates acquired in the Taj Merger,
together with THCR's contribution to THCR Holdings of the proceeds from the 1996
Stock Offering, Trump's aggregate beneficial equity interest in THCR Holdings
decreased from approximately 40% to approximately 25%, and THCR's aggregate
beneficial equity interest in THCR Holdings increased from approximately 60% to
approximately 75%.
The Taj Merger Transaction has been accounted for as a "purchase" for
accounting and reporting purposes and the results of Taj Associates have been
included in the accompanying financial statements since the date of the Taj
Merger. Accordingly, the excess of the purchase price over the fair value of the
net assets acquired ($200,782,000), which was allocated to land ($7,979,000) and
building ($192,803,000) based on an appraisal on a pro rata basis, consists of
the following:
(a) $40,500,000, representing the payment of $30.00 for each of the
1,350,000 shares of Taj Holding Class A Common Stock. Holders of 298,739
shares of Taj Holding Class A Common Stock elected to receive 323,423
shares of THCR Common Stock and holders of 1,051,261 shares of Taj Holding
Class A Common Stock elected to receive $31,181,000 in cash;
(b) $40,500,000, representing the contribution by Trump to Trump AC of
his ownership interest in 50% of Taj Associates;
(c) $9,900,000 of fees and expenses associated with the Taj Merger
Transaction;
(d) $108,574,000, representing the negative book value of Taj
Associates at the date of the Taj Merger Transaction; and
(e) $1,308,000 of closing costs associated with the purchase of the
Specified Parcels.
In connection with the Taj Merger Transaction, THCR purchased the Specified
Parcels from Trump Taj Mahal Realty Corp., a corporation owned by Trump, and Taj
Associates was released from its guarantee to First Union National Bank (the
"Guarantee"). The aggregate cost of acquiring the Specified Parcels was
$50,600,000 in cash and 500,000 shares of THCR Common Stock valued at
$10,500,000 (an average value of $21.00 per share based on the price of the THCR
Common Stock several days before and after the date of the amended Taj Merger
Agreement). The obligation of Taj Associates which had been accrued with respect
to the Guarantee ($17,923,000) was eliminated. In addition, THCR exercised the
option to purchase a tower adjacent to Trump Plaza's main tower ("Trump Plaza
East") for $28,084,000, which amount has been included in land and building.
On October 7, 1996, THCR Holdings acquired from Trump all of his
outstanding equity interest in Castle Associates (the "Castle Acquisition")
pursuant to the terms of the Agreement dated as of June 24, 1996, as amended
(the "Agreement"), by and among THCR, THCR Holdings, Trump Casinos II, Inc.,
formerly known as TC/GP, Inc. ("TCI-II"), Trump's Castle Hotel & Casino, Inc.
("TCHI") and Trump.
16
<PAGE>
TRUMP HOTELS & CASINO RESORTS, INC.,
TRUMP HOTELS & CASINO RESORTS HOLDINGS, L.P.
AND
TRUMP HOTELS & CASINO RESORTS FUNDING, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
On October 7, 1996, the closing date of the Castle Acquisition, the following
transactions were effected:
(a) Trump contributed to THCR Holdings his 61.5% equity interest in
Castle Associates, in consideration for which he received a 9.52854%
limited partnership interest in THCR Holdings, exchangeable into 3,626,450
shares of THCR Common Stock (valuing each share at $28.80, based on the
price of the THCR Common Stock several days before and after the date of
the Agreement (the "THCR Stock Contribution Value"));
(b) TCI-II contributed to THCR Holdings its 37.5% equity interest in
Castle Associates, in consideration for which it received a 5.81009%
limited partnership interest in THCR Holdings, exchangeable into 2,211,250
shares of THCR Common Stock (valuing each share at the THCR Stock
Contribution Value); and
(c) THCR-TCHI Merger Corp., a Delaware corporation and a wholly owned
subsidiary of THCR Holdings, merged with and into TCHI (holder of a 1%
equity interest in Castle Associates) whereupon (i) each holder of common
stock of TCHI and (ii) each holder of the outstanding warrants (the "Castle
Warrants") received an aggregate of $1,769,000 in cash.
In the aggregate, Trump received a limited partnership interest in THCR
Holdings convertible into 5,837,700 shares of THCR Common Stock. The
contribution by Trump of his equity interests was valued at $168,126,000
(valuing each share at the THCR Stock Contribution Value).
The Castle Acquisition has been accounted for as a "purchase" for
accounting and reporting purposes and the results of Castle Associates have been
included in the accompanying financial statements since the date of acquisition.
Accordingly, the excess of the purchase price over the fair value of the net
assets acquired ($196,109,000) was allocated to land ($38,438,000) and building
($157,671,000) based on an appraisal on a pro rata basis, and consisted of the
following:
(a) $168,126,000, representing the value assigned to the 5,837,700
shares of THCR Common Stock received by Trump for the contribution of his
equity interests;
(b) $1,769,000 in cash, representing the amounts paid for the shares
of TCHR's Common Stock and outstanding Castle Warrants;
(c) $20,714,000, representing the negative book value of Castle
Associates at the date of the Castle Acquisition; and
(d) $5,500,000 of fees and expenses associated with the Castle
Acquisition.
As a result of the contribution by Trump to THCR Holdings of his ownership
interests in Castle Associates, Trump's aggregate beneficial equity interest in
THCR Holdings increased from approximately 25% to 36.6% and THCR's aggregate
beneficial equity interest in THCR Holdings decreased from approximately 75% to
approximately 63.4%.
Unaudited pro forma information, assuming that the Taj Merger and the
Castle Acquisition had occurred on January 1, 1996, is as follows:
SIX MONTHS ENDED
JUNE 30, 1996
----------------
Net revenues........................................... $601,967,000
Income from operations................................. 43,497,000
Loss before extraordinary loss and minority interest... (50,567,000)
Extraordinary Loss..................................... (59,132,000)
Loss before Minority Interest.......................... (109,699,000)
Minority Interest...................................... 40,150,000
------------
Net loss............................................... $(69,549,000)
============
Net loss per share..................................... $ (2.87)
============
17
<PAGE>
TRUMP HOTELS & CASINO RESORTS, INC.,
TRUMP HOTELS & CASINO RESORTS HOLDINGS, L.P.
AND
TRUMP HOTELS & CASINO RESORTS FUNDING, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
The pro forma information is presented for informational purposes only and
does not purport to present what the results of operations would have been had
the Taj Merger Transaction and the Castle Acquisition, in fact, occurred on
January 1, 1996 or to project the results of operations for any future period.
Reclassifications
Certain reclassifications have been made to prior year financial statements
to conform to the current year presentation.
Earnings Per Share
On March 31, 1997, the Financial Accounting Standards Board issued SFAS No.
128, "Earnings Per Share" ("SFAS No. 128"). SFAS No. 128 is effective for fiscal
years ending after December 15, 1997, and, when adopted, it will require
restatement of prior years' earnings per share. If THCR had adopted SFAS No. 128
for the six months ended June 30, 1997, there would have been no effect on
earnings per share.
(3) PROPERTY AND EQUIPMENT
During the second quarter of 1997, THCR revised its estimates of the useful
lives of buildings, building improvements, furniture and fixtures which were
acquired in 1996. Building and building improvements were reevaluated to have a
new forty year life and furniture and fixtures were determined to have a seven
year life. THCR believes these changes more appropriately reflect the timing of
the economic benefits to be received from these assets during their estimated
useful lives. For the three and six months ended June 30, 1997, the net effect
of applying these new lives was to increase net income by $3,326,000 and
decrease loss per share by $.09.
(4) CERTAIN TRANSACTIONS WITH COMPANY EXECUTIVES
Loans to certain members of executive management of $1,523,000 and
$3,647,000 have been recorded in "Other Current Assets" and "Other Assets",
respectively. These loans were made in connection with management employment and
executive agreements.
(5) PURCHASE OF TREASURY STOCK
On January 6, 1997, the Board of Directors of THCR (the "Board of
Directors") authorized the repurchase by THCR Holdings of up to 1,250,000 shares
of THCR Common Stock from time to time in the open market or privately
negotiated transactions. On March 10, 1997, the Board of Directors authorized
the repurchase of up to an additional 1,250,000 shares of THCR Common Stock. The
repurchase program is effective until the end of 1997. As of June 30, 1997, THCR
Holdings had repurchased 1,706,500 shares of THCR Common Stock.
18
<PAGE>
ITEM 2--MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
CAPITAL RESOURCES AND LIQUIDITY
The indenture governing the Senior Notes (the "Senior Note Indenture")
restricts the ability of THCR Holdings and its subsidiaries to make
distributions to partners or pay dividends, as the case may be, unless certain
financial ratios are achieved. Further, given the rapidly changing competitive
environment, THCR's future operating results are highly conditional and could
fluctuate significantly.
In addition, the ability of (i) Plaza Associates and Taj Associates
(through Trump AC) and (ii) Castle Associates to make payments of dividends or
distributions to THCR Holdings may be restricted by the CCC. Similarly, the
ability of Trump Indiana to make payments of dividends or distributions to THCR
Holdings may be restricted by the Indiana Gaming Commission.
Cash flows from operating activities are THCR's principal source of
liquidity. With the proceeds from the 1996 Offerings, THCR, among other things,
redeemed the outstanding Taj Bonds, retired the outstanding Plaza Notes,
satisfied the indebtedness of Taj Associates under its loan agreement with Nat
West, purchased certain real property used in the operation of Trump Plaza and
the Taj Mahal and paid Bankers Trust to release certain liens and guarantees.
Capital expenditures for Trump AC were $51,215,000 for the six months ended
June 30, 1997. Capital expenditures for the six months ended June 30, 1996 of
$158,865,000 include Trump Plaza East and Trump World's Fair's expenditures of
approximately $37,028,000 and $51,418,000, respectively. In addition, Plaza
Associates exercised its option to purchase from Seashore Four Associates, an
entity beneficially owned by Trump, one of the parcels of land underlying Trump
Plaza's main tower, pursuant to the terms of a lease, the payments under which
were terminated upon the exercise of such option. The exercise price and
associated closing costs were $10,144,000.
Capital expenditures attributable to the Taj Mahal were $29,603,000 for the
six months ended June 30, 1997 and $68,677,000 for the period from acquisition,
April 17, 1996 to June 30, 1996. Capital expenditures for improvements to
existing facilities were approximately $5,147,000 for the six months ended June
30, 1997 and $6,040,000 for the period from acquisition, April 17, 1996 to June
30, 1996. Capital expenditures attributable to the expansion of the facility
were approximately $24,456,000 for the six months ended June 30, 1997. Capital
expenditures for the period from acquisition, April 17, 1996 to June 30, 1996,
included the purchase of property previously leased, upon which a portion of the
casino hotel complex is situated, for $61,808,000.
The expansion at the Taj Mahal (the "Taj Mahal Expansion") consists of the
construction of a new 15-bay bus terminal which was completed in December 1996,
a 2,400 space expansion of the existing self parking facilities, which was
completed in May 1997, and an approximately 7,000 square-foot casino expansion
with 260 slot machines, which was completed in July 1997. The costs of the Taj
Mahal Expansion of approximately $43,200,000 are being funded principally out of
cash from operations.
In addition to the approximately $96,000,000 spent prior to commencing the
operation of the Indiana Riverboat on June 8, 1996, an additional $57,000,000 of
funds (consisting of approximately $40,000,000 for the construction of a hotel
and other amenities and $17,000,000 for infrastructure improvements and other
municipal uses) will be required to be spent by Trump Indiana in connection with
the Indiana Riverboat facility and related commitments, including commitments
required in connection with the licensure process. The remaining $57,000,000
required to be spent over the initial five-year license term is expected to be
funded with cash from operations.
Castle Associates' capital expenditures for 1997 are anticipated to be
approximately $2,500,000 and principally consist of hotel room renovations, as
well as ongoing casino floor improvements, parking garage upgrades and marina
leasehold improvements. In addition, during 1997, Castle Associates commenced a
$4,200,000 project to retheme the property with a nautical emphasis and rename
it Trump Marina. Capital expenditures of $1,400,000 for these projects were
incurred during the six months ended June 30, 1997.
At June 30, 1997, THCR had combined working capital of $16,629,000. The
combined working capital included a receivable from the New Jersey Casino
Reinvestment Development Authority (the "CRDA") of approximately $2,836,000 for
reimbursable improvements made to Trump Plaza East.
19
<PAGE>
RESULTS OF OPERATIONS: OPERATING REVENUES AND EXPENSES
All business activities of THCR and THCR Holdings are conducted by Plaza
Associates, Taj Associates, Trump Marina and Trump Indiana for the three and six
month periods ended June 30, 1997.
Comparison of Three-Month Periods Ended June 30, 1997 and 1996. The
following tables include selected data of Plaza Associates, Taj Associates,
Trump Indiana and Trump Marina.
<TABLE>
<CAPTION>
THREE MONTHS ENDED JUNE 30, 1997
---------------------------------------------------------------------------------
PLAZA TAJ TRUMP AC TRUMP TRUMP THCR
ASSOCIATES ASSOCIATES CONSOLIDATED INDIANA MARINA CONSOLIDATED*
---------- ---------- ------------ ------- ------ -------------
(IN THOUSANDS)
<S> <C> <C> <C> <C> <C> <C>
Revenues:
Table Games ................................... $ 23,564 $ 50,440 $ 74,004 $ 11,319 $ 18,799 $ 104,122
Slots ......................................... 74,301 79,584 153,885 24,324 49,210 227,419
Other Gaming .................................. -- 4,609 4,609 -- 536 5,145
--------- --------- --------- --------- --------- ---------
Sub-Total Gaming ............................. 97,865 134,633 232,498 35,643 68,545 336,686
Other ......................................... 28,376 31,352 59,728 964 16,722 77,414
--------- --------- --------- --------- --------- ---------
Gross Revenue ................................ 126,241 165,985 292,226 36,607 85,267 414,100
Less: Promotional Allowances ................... 16,732 18,968 35,700 148 10,228 46,076
--------- --------- --------- --------- --------- ---------
Net Revenue .................................. 109,509 147,017 256,526 36,459 75,039 368,024
--------- --------- --------- --------- --------- ---------
Costs and Expenses:
Gaming ........................................ 61,195 83,998 145,193 22,930 44,449 212,572
Pre-opening ................................... -- -- -- -- -- --
General & Administrative ...................... 21,388 20,742 42,180 7,569 16,049 68,784
Depreciation & Amortization ................... 5,458 8,758 14,248 1,260 3,684 19,203
Other ......................................... 8,324 8,567 16,891 760 3,188 20,839
--------- --------- --------- --------- --------- ---------
Total Costs and Expenses ..................... 96,365 122,065 218,512 32,519 67,370 321,398
--------- --------- --------- --------- --------- ---------
Income from Operations ......................... 13,144 24,952 38,014 3,940 7,669 46,626
--------- --------- --------- --------- --------- ---------
Non-operating Income ........................... 142 242 617 41 91 1,237
Interest Expense ............................... (12,198) (23,759) (35,957) (2,460) (12,330) (52,671)
--------- --------- --------- --------- --------- ---------
Total Non-operating Income ................... (12,056) (23,517) (35,340) (2,419) (12,239) (51,434)
--------- --------- --------- --------- --------- ---------
Loss in Joint Venture .......................... -- -- -- (1,092) -- (1,092)
Income Tax Benefit ............................. -- -- -- 883 -- 883
--------- --------- --------- --------- --------- ---------
Income (Loss) before Minority Interest ......... $ 1,088 $ 1,435 $ 2,674 $ 1,312 $ (4,570) $ (5,017)
========= ========= ========= ========= =========
Minority Interest .............................. 1,810
---------
Net Loss ....................................... $ (3,207)
=========
</TABLE>
- -----------
* Intercompany eliminations and expenses of THCR and THCR Holdings are not
separately shown.
<TABLE>
<CAPTION>
THREE MONTHS ENDED JUNE 30, 1996
---------------------------------------------------------------------------------
PLAZA TAJ TRUMP AC TRUMP TRUMP THCR
ASSOCIATES ASSOCIATES CONSOLIDATED INDIANA MARINA CONSOLIDATED*
---------- ---------- ------------ ------- ------ -------------
(A) (B) (C)
(IN THOUSANDS)
<S> <C> <C> <C> <C> <C>
Revnues:
Table Games ................................... $ 24,877 $ 44,157 $ 69,034 $ 1,708 $ 70,742
Slots ......................................... 71,199 61,261 132,460 6,623 139,083
Other Gaming .................................. -- 4,266 4,266 -- 4,266
--------- --------- --------- --------- ---------
Sub-Total Gaming ............................. 96,076 109,684 205,760 8,331 214,091
Other ......................................... 27,144 24,357 51,501 248 51,749
--------- --------- --------- --------- ---------
Gross Revenue ................................ 123,220 134,041 257,261 8,579 265,840
Less: Promotional Allowances ................... 16,846 13,865 30,711 -- 30,711
--------- --------- --------- --------- ---------
Net Revenue .................................. 106,374 120,176 226,550 8,579 235,129
--------- --------- --------- --------- ---------
Costs and Expenses:
Gaming ........................................ 57,525 63,856 121,381 4,034 125,415
Pre-opening ................................... 2,853 -- 2,853 5,003 7,856
General & Administrative ...................... 18,937 19,537 38,474 1,901 45,083
Depreciation & Amortization ................... 5,923 10,756 16,679 356 17,095
Other ......................................... 7,223 7,842 15,065 107 15,172
--------- --------- --------- --------- ---------
Total Costs and Expenses ..................... 92,461 101,991 194,452 11,401 210,621
--------- --------- --------- --------- ---------
Income from Operations ......................... 13,913 18,185 32,098 (2,822) 24,508
--------- --------- --------- --------- ---------
Non-operating Income ........................... 751 10,206 10,991 -- 13,508
Interest Expense ............................... (11,991) (19,840) (31,831) 5 (38,121)
--------- --------- --------- --------- ---------
Total Non-operating Income ................... (11,240) (9,634) (20,840) 5 (24,613)
--------- --------- --------- --------- ---------
Loss in Joint Venture .......................... -- -- -- -- --
Income Tax ..................................... -- -- -- -- --
Extraordinary Loss ............................. (59,132) -- (59,132) -- (59,132)
--------- --------- --------- --------- ----------
Income (Loss) before
Minority Interest ............................. $ (56,459) $ 8,551 $ (47,874) $ ( 2,817) N/A $ (59,237)
========= ========= ========= =========
Minority Interest .............................. 14,828
---------
Net Loss ....................................... $ (44,409)
=========
</TABLE>
- ---------------
* Intercompany eliminations and expenses of THCR and THCR Holdings are not
separately shown.
(a) Results from date of acquisition, April 17, 1996
(b) Results from date of commencement of operations, June 8, 1996.
(c) Results from date of acquisition, October 7, 1996
20
<PAGE>
Gaming revenues were $336,686,000 for the three months ended June 30, 1997,
an increase of $122,595,000 or 57.3% from gaming revenues of $214,091,000 for
the comparable period in 1996. Taj Associates, which was acquired on April 17,
1996, contributed an increase of $24,949,000 to $134,633,000 for the three
months ended June 30, 1997. Management believes that Taj Associates' increase in
gaming revenues is partly due to the opening of the new bus terminal, expanded
self-parking facilities and increased marketing initiatives. Trump Marina, which
was acquired on October 7, 1996, contributed $68,545,000, and Trump Indiana,
which opened the Indiana Riverboat on June 8, 1996, contributed an increase of $
27,312,000 to $35,643,000 for the three months ended June 30, 1997.
Additionally, Plaza Associates' table games and slot revenues increased
$1,789,000 or 1.9% to $97,865,000 for the three months ended June 30, 1997.
Management believes that Plaza Associates' increase in gaming revenues is
primarily due to the May 1996 opening of Trump World's Fair, and the
availability of additional hotel rooms at Trump World's Fair as well as
marketing initiatives.
Slot revenues were $227,419,000 for the three months ended June 30, 1997,
an increase of $88,336,000 or 63.5% from slot revenues of $139,083,000 for the
comparable period in 1996. Taj Associates slot revenues were $79,584,000 for the
three months ended June 30, 1997, an increase of $18,323,000 or 29.9% from slot
revenues of $61,261,000 for the period from acquisition, April 17, 1996 to June
30, 1996. Taj Associates increase is partly due to the opening of the new bus
terminal and expanded self-parking facilities. The acquisition of Trump Marina
contributed $49,210,000 in slot revenues, and the full quarter of slot revenues
in 1997 of the Indiana Riverboat contributed an increase of $17,701,000 to
$24,324,000. Plaza Associates' slot revenues were $74,301,000 for the three
months ended June 30, 1997, an increase of $3,102,000 or 4.4% from slot revenues
of $71,199,000 for the three months ended June 30, 1996. Plaza Associates'
increase is due to the addition of 1,506 slot machines at Trump World's Fair, as
well as management's marketing programs.
Table games revenues were $104,122,000 for the three months ended June 30,
1997, an increase of $33,380,000 or 47.2% from $70,742,000 for the comparable
period in 1996. This increase is attributable to a full quarter of table games
revenues from Taj Associates in 1997, which contributed an increase of
$6,283,000 to $50,440,000. The acquisition of Trump Marina contributed
$18,799,000 and the Indiana Riverboat contributed an increase of $9,611,000 to
$11,319,000 in table games revenues. Plaza Associates' table games revenues of
$23,564,000 for the three months ended June 30, 1997, decreased by $1,313,000 or
5.3% from the comparable period in 1996. Plaza Associates' decrease is primarily
due to a decrease in table games drop (dollar value of chips purchased) of 6.5%
for the three months ended June 30, 1997, offset by an increase in hold
percentage of 0.2%.
In addition to table games and slot revenues, Taj Associates' poker/race
simulcasting/keno operations generated approximately $3,911,000 in poker
revenues, $383,000 in race simulcasting revenues and $315,000 in keno revenues
for the three months ended June 30, 1997, an overall increase of $343,000 or
8.0% from the comparable period in 1996. Trump Marina generated $536,000 in
other gaming revenues for the three months ended June 30, 1997.
Other revenues were $77,414,000 for the three months ended June 30, 1997,
an increase of $25,665,000 or 49.6% from other revenues of $51,749,000 for the
comparable period in 1996. Other revenues include revenues from rooms, food and
beverage, entertainment and miscellaneous items. Taj Associates contributed an
increase of $6,995,000 to $31,352,000 for the three months ended June 30, 1997,
partially due to expanded entertainment events in conjunction with the expanded
self-parking facilities. Trump Marina contributed $16,722,000 in other revenues
for the three months ended June 30, 1997, and Trump Indiana, which has no rooms
revenue, contributed an increase of $716,000 to $964,000 in 1997. Plaza
Associates' other revenues were $28,376,000 for the three months ended June 30,
1997, an increase of $1,232,000 or 4.5% from the comparable period in 1996.
Plaza Associates' increase reflects the additional rooms at Trump World's Fair
as well as increases in rooms and food and beverage revenues attendant to
increased levels of gaming activity due in part to increased promotional
activities.
Promotional allowances were $46,076,000 for the three months ended June 30,
1997, an increase of $15,365,000 or 50.0% from promotional allowances of
$30,711,000 for the three months ended June 30, 1996. Taj Associates generated
an increase of $5,103,000 in promotional allowances for the three months ended
June 30, 1997 from $13,865,000 for the comparable period in 1996. Taj
Associates' increase is partly due to increased gaming revenues as well as
increased marketing initiatives. Trump Marina generated $10,228,000 and Trump
Indiana generated an increase of $148,000 in promotional allowances for the
three months ended June 30, 1997. Plaza Associates' promotional allowances
decreased $114,000 from the comparable period in 1996.
21
<PAGE>
Gaming costs and expenses were $212,572,000 for the three months ended June
30, 1997, an increase of $87,157,000 or 69.5% from $125,415,000 for the
comparable period in 1996. This increase was partially attributable to the
increase of $20,142,000 in Taj Associates' gaming costs and expenses to
$83,998,000 for the three months ended June 30, 1997. Taj Associates' increase
is primarily due to increased promotional and operating expenses as well as
taxes associated with increased levels of gaming revenues from 1996. Trump
Marina contributed an increase of $44,449,000 and Trump Indiana contributed an
increase of $18,896,000 to $22,930,000 for the three months ended June 30, 1997.
Gaming costs and expenses for Plaza Associates were $61,195,000, an increase of
$3,670,000 or 6.4% from $57,525,000 for the comparable period in 1996. Plaza
Associates' increase is primarily due to increased promotional and operational
expenses as well as taxes associated with increased levels of gaming revenue
above 1996.
General and administrative expenses were $68,784,000 for the three months
ended June 30, 1997, an increase of $23,701,000 or 52.6% from general and
administrative expenses of $45,083,000 for the comparable period in 1996. This
increase is partially due to Taj Associates, which incurred an increase of
$1,205,000 to $20,742,000 for the three months ended June 30, 1997. Trump Marina
incurred $16,049,000 in general and administrative expenses, and Trump Indiana
incurred an increase of $5,668,000 to $7,569,000 in 1997 , which includes a
$500,000 management fee payable to THCR Holdings. Plaza Associates' increase of
$2,451,000 from the comparable period is due in part to expenses associated with
Trump World's Fair. General and administrative expenses for THCR
(unconsolidated) were $3,486,000 for the three months ended June 30, 1997, a
decrease of $1,222,000 from the comparable period in 1996. This decrease is due
to compensation awards associated with the Taj Merger, which had no comparable
expense in 1997.
During the second quarter of 1997, THCR revised its estimates of the useful
lives of buildings, building improvements, furniture and fixtures which were
acquired in 1996. Building and building improvements were reevaluated to have a
new forty year life and furniture and fixtures were determined to have a seven
year life. THCR believes these changes more appropriately reflect the timing of
the economic benefits to be received from these assets during their estimated
useful lives. For the three months ended June 30, 1997, the net effect of
applying these new lives was to increase net income by $3,326,000 and decrease
loss per share by $.09.
Pre-opening expenses of $2,853,000 were incurred by Plaza Associates for
the three months ended June 30, 1996 and reflect the costs associated with
opening Trump World's Fair in May 1996. Trump Indiana incurred $ 5,003,000 in
pre-opening expenses for the three months ended June 30, 1996.
Other expenses were $20,839,000 for the three months ended June 30, 1997,
an increase of $5,667,000 or 37.4% from the comparable period in 1996. Other
expenses include costs associated with operating Trump Plaza's, Trump Marina's
and the Taj Mahal's hotels. Taj Associates' other expenses increased $725,000 to
$8,567,000 for the three months ended June 30, 1997. Trump Marina incurred
$3,188,000 in 1997 while Trump Indiana's other expenses increased $653,000 from
the comparable period in 1996. Plaza Associates' other expenses increased by
$1,101,000 or 15.2% from the comparable period in 1996. This increase is due to
operating Trump World's Fair.
Income from operations was $46,626,000 for the three months ended June 30,
1997, an increase of $22,118,000 or 90.2% above income from operations of
$24,508,000 for the comparable period in 1996. Taj Associates contributed an
increase of $6,767,000 from the comparable period in 1996 while Trump Marina
contributed $7,669,000 of income from operations. Trump Indiana contributed
$3,940,000 during the three months ended June 30, 1997, an increase of
$6,762,000 from the comparable period in 1996. THCR (unconsolidated) contributed
an increase in operating income due to a $1,271,000 decrease in operating
expenses for the three months ended June 30, 1997, from the comparable period in
1996. These increases in income from operations were partially offset by Plaza
Associates' decrease of $769,000 or 5.5% from $13,913,000 for the comparable
period in 1996.
Interest expense was $52,671,000 for the three months ended June 30, 1997,
an increase of $14,550,000 or 38.2% from interest expense of $38,121,000 for the
comparable period in 1996. This increase is attributable to Taj Associates'
increase of $3,919,000 of interest expense and Trump Marina, which incurred
$10,055,000 of interest expense, for the three months ended June 30, 1997.
Interest income was $1,237,000 for the three months ended June 30, 1997, a
decrease of $1,714,000 or 58.1% from interest income of $2,951,000 for the
comparable period in 1996. Plaza Associates reflects a decrease in 1997 of
$609,000 in non-operating income. This decrease is attributable to a decrease in
non-operating expenses associated with Trump Plaza East and Trump World's Fair.
Taj Associates reflects a one-time $10,000,000 non-refundable licensing fee in
1996 resulting from an agreement with Atlantic Jersey Thermal Systems, Inc (the
"Atlantic Thermal Agreement").
The extraordinary loss of $59,132,000 for the three months ended June 30,
1996 is related to the redemption of the Plaza Notes and the write-off of
unamortized deferred financing costs on April 17,1996.
22
<PAGE>
Comparison of Six-Month Periods Ended June 30, 1997 and 1996. The following
tables include selected data of Plaza Associates, Taj Associates, Trump Indiana
and Trump Marina.
<TABLE>
<CAPTION>
SIX MONTHS ENDED JUNE 30, 1997
---------------------------------------------------------------------------------
PLAZA TAJ TRUMP AC TRUMP TRUMP THCR
ASSOCIATES ASSOCIATES CONSOLIDATED INDIANA MARINA CONSOLIDATED*
---------- ---------- ------------ ------- ------ -------------
(IN THOUSANDS)
<S> <C> <C> <C> <C> <C> <C>
Revenues:
Table Games.................................... $ 45,545 $107,768 $153,313 $ 22,555 $ 37,343 $ 213,211
Slots.......................................... 139,190 145,976 285,166 50,860 94,353 430,379
Other Gaming................................... -- 9,162 9,162 -- 823 9,985
-------- -------- -------- -------- -------- --------
Total Gaming.................................. 184,735 262,906 447,641 73,415 132,519 653,575
Other.......................................... 52,886 58,015 110,901 2,004 30,818 143,723
-------- -------- -------- -------- -------- --------
Gross Revenue................................. 237,621 320,921 558,542 75,419 163,337 797,298
Less: Promotional Allowances.................... 31,293 35,508 66,801 357 19,874 87,032
-------- -------- -------- -------- -------- --------
Net Revenue................................... 206,328 285,413 491,741 75,062 143,463 710,266
-------- -------- -------- -------- -------- --------
Costs and Expenses:
Gaming......................................... 116,446 163,194 279,640 46,252 85,483 411,375
Pre-opening.................................... -- -- -- -- -- --
General & Administrative....................... 41,904 42,982 84,928 14,474 32,222 136,404
Depreciation & Amortization.................... 11,997 22,958 35,009 2,520 8,725 46,275
Other.......................................... 15,788 16,171 31,959 1,472 5,919 39,350
-------- -------- -------- -------- -------- --------
Total Costs and Expenses...................... 186,135 245,305 431,536 64,718 132,349 633,404
-------- -------- -------- -------- -------- --------
Income from Operations.......................... 20,193 40,108 60,205 10,344 11,114 76,862
-------- -------- -------- -------- -------- --------
Non-operating Income............................ 303 632 1,432 435 160 3,202
Interest Expense................................ (24,391) (47,427) (71,818) (5,409) (24,528) (105,270)
-------- -------- -------- -------- -------- --------
Total Non-operating Income.................... (24,088) (46,795) (70,386) (4,974) (24,368) (102,068)
-------- -------- -------- -------- -------- --------
Loss in Joint Venture........................... -- -- -- (1,730) -- (1,730)
Extraordinary Loss.............................. -- -- -- -- -- --
-------- -------- -------- -------- -------- --------
Income (Loss) before Minority Interest.......... $ (3,895) $ (6,687) $(10,181) $ 3,640 $(13,254) $(26,936)
======== ======== ======== ======== ========
Minority Interest............................... 9,785
--------
Net Loss........................................ $(17,151)
========
</TABLE>
- ----------------
* Intercompany eliminations and expenses of THCR and THCR Holdings are not
separately shown.
<TABLE>
<CAPTION>
SIX MONTHS ENDED JUNE 30, 1996
---------------------------------------------------------------------------------
PLAZA TAJ TRUMP AC TRUMP TRUMP THCR
ASSOCIATES ASSOCIATES CONSOLIDATED INDIANA MARINA CONSOLIDATED*
---------- ---------- ------------ ------- ------ -------------
(A) (B) (C)
(IN THOUSANDS)
<S> <C> <C> <C> <C> <C> <C>
Revenues:
Table Games ................................... $ 49,314 $ 44,157 $ 93,471 $ 1,708 $ 95,179
Slots ......................................... 121,032 61,261 182,293 6,623 188,916
Other Gaming .................................. -- 4,266 4,266 -- 4,266
-------- -------- -------- ------- --------
Total Gaming ................................. 170,346 109,684 280,030 8,331 288,361
Other ......................................... 46,425 24,357 70,782 248 71,030
-------- -------- -------- ------- --------
Gross Revenue ................................ 216,771 134,041 350,812 8,579 359,391
Less: Promotional Allowances ................... 29,264 13,865 43,129 -- 43,129
-------- -------- -------- ------- --------
Net Revenue .................................. 187,507 120,176 307,683 8,579 316,262
-------- -------- -------- ------- --------
Costs and Expenses:
Gaming ........................................ 101,503 63,856 165,359 4,034 169,393
Pre-opening ................................... 3,332 -- 3,332 6,634 9,966
General & Adminisrtative ...................... 36,635 19,537 56,172 1,901 64,056
Depreciation & Amortization ................... 10,446 10,756 21,202 356 21,622
Other ......................................... 12,001 7,842 19,843 107 19,950
-------- -------- -------- ------- --------
Total Costs and Expenses ..................... 163,917 101,991 265,908 13,032 284,987
-------- -------- -------- ------- --------
Income from Operations ......................... 23,590 18,185 41,775 (4,453) 31,275
-------- -------- -------- ------- --------
Non-operating Income (Exp.) .................... (429) 10,206 9,811 1 12,903
Interest Expense ............................... (21,742) (19,840) (41,582) 5 (54,147)
-------- -------- -------- ------- --------
Total Non-operating Income (Exp.) ............ (22,171) (9,634) (31,771) 6 (41,244)
-------- -------- -------- ------- --------
Extraordinary Loss ............................. (59,132) -- (59,132) -- (59,132)
-------- -------- -------- ------- --------
Income (Loss) before
Minority Interest ............................. $(57,713) $ 8,551 $(49,128) $(4,447) N/A $(69,101)
======== ======== ======== ======
Minority Interest .............................. 14,828
--------
Net Loss ....................................... $(54,273)
========
</TABLE>
- -------------
* Intercompany eliminations and expenses of THCR and THCR Holdings are not
separately shown.
(a) Results from date of acquisition, April 17, 1996
(b) Results from date of commencement of operations, June 8, 1996
(c) Results from date of acquisition, October 7, 1996
23
<PAGE>
Gaming revenues were $653,575,000 for the six months ended June 30, 1997,
an increase of $365,214,000 or 126.7% from gaming revenues of $288,361,000 for
the comparable period in 1996. Taj Associates, which was acquired on April 17,
1996, contributed an increase of $153,222,000 to $262,906,000 for the six months
ended June 30, 1997. Trump Marina, which was acquired on October 7, 1996,
contributed $132,519,000, and Trump Indiana, which opened the Indiana Riverboat
on June 8, 1996, contributed an increase of $65,084,000 to $73,415,000 for the
six months ended June 30, 1997. Additionally, Plaza Associates' table games and
slot revenues increased $14,389,000 or 8.4% to $184,735,000 for the six months
ended June 30, 1997. Management believes that Plaza Associates' increase in
gaming revenues is primarily due to the May 1996 opening of Trump World's Fair,
the February 1996 opening of Trump Plaza East and the availability of additional
hotel rooms at both Trump World's Fair and Trump Plaza East, as well as
marketing initiatives.
Slot revenues were $430,379,000 for the six months ended June 30, 1997, an
increase of $241,463,000 or 127.8% from slot revenues of $188,916,000 for the
comparable period in 1996. This increase is directly attributable to a full six
months of slot revenues in 1997 for Taj Associates, which contributed an
increase of $84,715,000 to $145,976,000 from the comparable period in 1996, the
acquisition of Trump Marina, which contributed $94,353,000, and a full six
months of slot revenues from the Indiana Riverboat, which contributed an
increase of $44,237,000 to $50,860,000. Plaza Associates' slot revenues were
$139,190,000 for the six months ended June 30, 1997, an increase of $18,158,000
or 15.0% from slot revenues of $121,032,000 for the six months ended June 30,
1996. Plaza Associates' increase is due to the addition of 1,924 slot machines
at Trump World's Fair and Trump Plaza East, as well as management's marketing
programs.
Table games revenues were $213,211,000 for the six months ended June 30,
1997, an increase of $118,032,000 or 124.0% from $95,179,000 for the comparable
period in 1996. This increase is attributable to Taj Associates' increase of
$63,611,000 to $107,768,000 for the six months ended June 30, 1997. The
acquisition of Trump Marina contributed $37,343,000 and the Indiana Riverboat
contributed an increase of $20,847,000 to $22,555,000 in table games revenues.
Plaza Associates' table games revenues of $45,545,000 for the three months ended
June 30, 1997 decreased by $3,769,000 or 7.7% from the comparable period in
1996, primarily due to a decrease in hold percentage from 15.4% to 14.1%. The
decrease in hold percentage was partially offset by an increase in table games
drop (dollar value of chips purchased) of 1.0% for the six months ended June 30,
1997.
In addition to table games and slot revenues, Taj Associates' poker/race
simulcasting/keno operations generated approximately $7,910,000 in poker
revenues, $706,000 in race simulcasting revenues and $546,000 in keno revenues
for the six months ended June 30, 1997, an overall increase of $4,896,000 from
the comparable period in 1996. Trump Marina generated $823,000 in other gaming
revenues for the six months ended June 30, 1997.
Other revenues were $143,723,000 for the six months ended June 30, 1997, an
increase of $72,693,000 or 102.3% from other revenues of $71,030,000 for the
comparable period in 1996. Other revenues include revenues from rooms, food and
beverage, entertainment and miscellaneous items. Taj Associates contributed an
increase of $33,658,000 to $58,015,000 for the six months ended June 30, 1997.
Trump Marina contributed $30,818,000 in other revenues for the six months ended
June 30, 1997, and Trump Indiana, which has no rooms revenue, contributed an
increase of $1,756,000 to $2,004,000 in 1997. Plaza Associates' other revenues
were $52,886,000 for the six months ended June 30, 1997, an increase of
$6,461,000 or 13.9% from the comparable period in 1996. Plaza Associates'
increase reflects the additional rooms at Trump Plaza East and Trump World's
Fair as well as increases in rooms and food and beverage revenues attendant to
increased levels of gaming activity due in part to increased promotional
activities.
Promotional allowances were $87,032,000 for the six months ended June 30,
1997, an increase of $43,903,000 or 101.8% from promotional allowances of
$43,129,000 for the six months ended June 30, 1996. Taj Associates generated an
increase of $21,643,000 in promotional allowances for the six months ended June
30, 1997 from $13,865,000 for the comparable period in 1996. Trump Marina
generated $19,874,000 and Trump Indiana generated an increase of $357,000 in
promotional allowances for the six months ended June 30, 1997. Plaza Associates'
promotional allowances increased to $31,293,000 or 6.9% from promotional
allowances of $29,264,000 in the comparable period in 1996. Plaza Associates'
increase is primarily attributable to the additional rooms at Trump World's Fair
and Trump Plaza East as well as the addition of three restaurants at Trump
World's Fair and increases in marketing initiatives during the six months ended
June 30, 1997.
Gaming costs and expenses were $411,375,000 for the three months ended June
30, 1997, an increase of $241,982,000 or 142.9% from $169,393,000 for the
comparable period in 1996. This increase was partially attributable to the
increase of $99,338,000 in Taj Associates' gaming costs and expenses to
$163,194,000 for the six months ended June 30, 1997. Trump Marina contributed an
increase of $85,483,000 and Trump Indiana contributed an increase of $42,218,000
to
24
<PAGE>
$46,252,000 for the six months ended June 30, 1997. Gaming costs and expenses
for Plaza Associates were $116,446,000, an increase of $14,943,000 or 14.7% from
$101,503,000 for the comparable period in 1996. Plaza Associates' increase is
primarily due to increased promotional and operating expenses resulting from
operating Trump World's Fair and Trump Plaza East, as well as taxes associated
with increased levels of gaming from the comparable period in 1996.
General and administrative expenses were $136,404,000 for the six months
ended June 30, 1997, an increase of $72,348,000 or 112.9% from general and
administrative expenses of $64,056,000 for the comparable period in 1996. Taj
Associates incurred an increase of $23,445,000 to $42,982,000 for the six months
ended June 30, 1997. Trump Marina incurred $32,222,000 in general and
administrative expenses, and Trump Indiana incurred an increase of $12,573,000
to $14,474,000 in 1997, which includes a $1,000,000 management fee payable to
THCR Holdings. Plaza Associates' increase of $5,269,000 from the comparable
period is due in part to expenses associated with Trump Plaza East and Trump
World's Fair. General and administrative expenses for THCR (unconsolidated) were
$5,780,000 for the six months ended June 30, 1997, a decrease of $203,000 from
the comparable period in 1996.
During the second quarter of 1997, THCR revised its estimates of the useful
lives of buildings, building improvements, furniture and fixtures which were
acquired in 1996. Building and building improvements were reevaluated to have a
new forty year life and furniture and fixtures were determined to have a seven
year life. THCR believes these changes more appropriately reflect the timing of
the economic benefits to be received from these assets during their estimated
useful lives. For the six months ended June 30, 1997, the net effect of applying
these new lives was to increase net income by $3,326,000 and decrease loss per
share by $.09.
Pre-opening expenses of $3,332,000 were incurred by Plaza Associates for
the six months ended June 30, 1996 and reflect the costs associated with opening
Trump World's Fair in May 1996. Trump Indiana incurred $ 6,634,000 in
pre-opening expenses for the six months ended June 30, 1996.
Other expenses were $39,350,000 for the six months ended June 30, 1997, an
increase of $19,400,000 or 97.2% from the comparable period in 1996. Other
expenses include costs associated with operating Trump Plaza's, Trump Marina's
and the Taj Mahal's hotels. Taj Associates' other expenses increased $8,329,000
to $16,171,000 for the six months ended June 30, 1997. Trump Marina incurred
$5,919,000 in 1997 while Trump Indiana's other expenses increased $1,365,000
from the comparable period in 1996. Plaza Associates' other expenses increased
by $3,787,000 or 31.6% from the comparable period in 1996. This increase is due
to operating Trump World's Fair and Trump Plaza East, both having opening dates
in 1996.
Income from operations was $76,862,000 for the six months ended June 30,
1997, an increase of $45,587,000 or 145.8% from income from operations of
$31,275,000 for the comparable period in 1996. Taj Associates contributed an
increase of $21,923,000 from the comparable period in 1996 while Trump Marina
contributed $11,114,000 of income from operations. Trump Indiana contributed
$10,344,000 during the six months ended June 30, 1997, an increase of
$14,797,000 from the comparable period in 1996. THCR (unconsolidated)
contributed an increase in operating income for the six months ended June 30,
1997 due to an overall decrease in operating expenses of $246,000. These
increases were partially offset by Plaza Associates' decrease of $3,397,000 in
income from operations for the six months ended June 30, 1997 or 14.4% from the
comparable period in 1996.
Interest expense was $105,270,000 for the six months ended June 30, 1997,
an increase of $51,123,000 or 94.40% from interest expense of $54,147,000 for
the comparable period in 1996. This increase is attributable to Taj Associates'
increase of $27,587,000 of interest expense and Trump Marina, which incurred
$20,124,000 of interest expense, for the six months ended June 30, 1997,
excluding $4,404,000 payable to THCR Holdings on the Castle PIK Notes. Plaza
Associates reflects an increase of $2,649,000 in interest expense due to the
retirement of the Plaza Notes and the issuance of the Trump AC Mortgage Notes in
addition to debt incurred in the acquisition of certain land and equipment.
Trump Indiana incurred an increase of $1,557,000 in interest expense for the six
months ended June 30, 1997 due to lease financing, which was offset by a
$794,000 decrease in interest expenses primarily due to the retirement of
$10,000,000 of Senior Notes by THCR Holdings.
Interest income was $3,202,000 for the six months ended June 30, 1997, a
decrease of $519,000 or 13.9% from interest income of $3,721,000 for the
comparable period in 1996. Plaza Associates reflects a decrease in 1997 of
$732,000 in non-operating expenses associated with Trump Plaza East and Trump
World's Fair. Taj Associates' non-operating income in 1996 consists of a
one-time $10,000,000 non-refundable licensing fee resulting from an agreement
with Atlantic Jersey Thermal Systems, Inc.
25
<PAGE>
The extraordinary loss of $59,132,000 for the six months ended June 30,
1996, is related to the redemption of the Plaza Notes and the write-off of
unamortized deferred financing costs on April 17, 1996.
SEASONALITY
The casino industry in Atlantic City is seasonal in nature; accordingly,
the results of operations for the period ending June 30, 1997 are not
necessarily indicative of the operating results for a full year.
ITEM 3--QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
Pursuant to the General Instructions to Rule 305 of Regulation S-K, the
quantitative and qualitative disclosures called for by this Item 3 and by Rule
305 of Regulation S-K are inapplicable to the Registrants at this time.
PART II -- OTHER INFORMATION
ITEM 1 -- LEGAL PROCEEDINGS
THCR and certain of its employees have been involved in various legal
proceedings. In general, THCR 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. Such persons and entities are
vigorously defending the allegations against them and intend to vigorously
contest any future proceedings.
On March 13, 1997, THCR filed a lawsuit in the United States District
Court, District of New Jersey, against Mirage Resorts Incorporated, the State of
New Jersey ("State"), the New Jersey Department of Transportation, the South
Jersey Transportation Authority, the Casino Reinvestment Development Authority
("CRDA"), the New Jersey Transportation Trust Fund Authority and others. THCR
was seeking declaratory and injunctive relief to recognize and prevent
violations by the defendants of the casino clause of the New Jersey State
Constitution and various federal securities and environmental laws relating to
proposed infrastructure improvements in the Atlantic City marina. While this
action was pending, defendants State and CRDA then filed an action in the New
Jersey State Court seeking declaration of the claim relating to the casino
clause of the New Jersey State Constitution. On May 1, 1997, the United States
District Court dismissed the federal claims and ruled that the State
constitutional claims should be pursued in State Court. This decision is
currently being appealed and all briefs are scheduled to be filed by
mid-October. On May 14, 1997, the State Court entered a summary judgment in
favor of the State and CRDA. This decision is also being appealed and all briefs
are scheduled to be filed by mid-September.
On August 14, 1996, certain stockholders of THCR filed two derivative
actions in the Court of Chancery in Delaware (Civil Action Nos. 15148 and 15160)
(the "Delaware cases") against each of the members of the Board of Directors of
THCR, THCR, THCR Holdings, Castle Associates and TCI-II. The plaintiffs claim
that the directors of THCR breached their fiduciary duties in connection with
the Castle Acquisition by purchasing these interests at an excessive price in a
self-dealing transaction. The complaint sought to enjoin the transaction, and
also sought damages and an accounting. The injunction was never pursued.
On October 16, 1996, a stockholder of THCR filed a derivative action in the
United States District Court, Southern District of New York (96 Civ. 7820)
against each member of the Board of Directors of THCR, THCR, THCR Holdings,
Castle Associates, TCI, TCI-II, TCHI and Salomon Brothers, Inc. ("Salomon"). The
plaintiff claims that certain of the defendants breached their fiduciary duties
and engaged in ultra vires acts in connection with the Castle Acquisition and
that Salomon was negligent in the issuance of its fairness opinion with respect
to the Castle Acquisition. The plaintiff also alleges violations of the federal
securities laws for alleged omissions and misrepresentations in THCR's proxies,
and that Trump, TCI-II and TCHI breached the acquisition agreement by supplying
THCR with untrue information for inclusion in the proxy statement delivered to
THCR's stockholders in connection with the Castle Acquisition. The plaintiff
seeks removal of the directors of THCR, and injunction, rescission and damages.
26
<PAGE>
The Delaware cases were recently dismissed in Delaware and amended and
refiled in the Southern District of New York. These cases have subsequently been
consolidated with the federal action for all purposes, including pretrial
proceedings and trial. On or about January 17, 1997, the plaintiffs filed their
Consolidated Amended Derivative Complaint (the "First Amended Complaint"),
reflecting the consolidation. On or about March 24, 1997, the plaintiffs filed
their Second Consolidated Amended Derivative Complaint (the "Second Amended
Complaint"). In addition to the allegations made in the First Amended Complaint,
the Second Amended Complaint claims that certain of the defendants breached
their fiduciary duties and wasted corporate assets in connection with the
previously contemplated transaction with Colony Capital, Inc. ("Colony
Capital"). The Second Amended Complaint also includes claims against Colony
Capital for aiding and abetting certain of those violations. In addition to the
relief sought in the First Amended Complaint, the Second Amended Complaint
sought to enjoin the previously contemplated transaction with Colony Capital or,
if it was effectuated, to rescind it. On March 27, 1997, THCR and Colony Capital
mutually agreed to end negotiations with respect to such transaction. On June
26, 1997, plaintiffs served their Third Consolidated Amended Derivative
Complaint (the "Third Amended Complaint"), which omitted the claims against
Colony Capital. THCR and the other defendants in the action moved to dismiss the
Third Amended Complaint on August 5, 1997.
THCR believes that the suits are without merit and intend to contest
vigorously the allegations against them. At this early stage, however, no
opinion can be expressed as to the likely outcome of these actions.
Various other legal proceedings are now pending against THCR. Except as set
forth herein and in THCR's Annual Report on Form 10-K for the year ended
December 31, 1996, THCR considers all such proceedings to be ordinary litigation
incident to the character of its business and not material to its business or
financial condition. THCR believes that the resolution of these claims, to the
extent not covered by insurance, will not, individually or in the aggregate,
have a material adverse effect on its financial condition or results of
operations of THCR.
ITEM 2 -- CHANGES IN SECURITIES
None.
ITEM 3 -- DEFAULTS UPON SENIOR SECURITIES
None.
ITEM 4 -- SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
None.
ITEM 5 -- OTHER INFORMATION
None.
ITEM 6 -- EXHIBITS AND REPORTS ON FORM 8-K
A. EXHIBITS:
EXHIBIT NO. DESCRIPTION OF EXHIBIT
---------- ----------------------
27.1(1) Financial Data Schedule of Trump Hotels & Casino Resorts, Inc.
27.2(2) Financial Data Schedule of Trump Hotels & Casino Resorts
Holdings, L.P.
27.3(2) Financial Data Schedule of Trump Hotels & Casino Funding, Inc.
- --------------
(1) Filed only with the Quarterly Report on Form 10-Q of the THCR for the
quarter ended June 30, 1997.
(2) Filed only with the Quarterly Report on Form 10-Q of THCR Holdings and THCR
Funding for the quarter ended June 30, 1997.
B. CURRENT REPORTS ON FORM 8-K:
The Registrants did not file any Current Reports on Form 8-K during the
period beginning April 1, 1997 and ending June 30, 1997.
27
<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 HOTELS & CASINO RESORTS, INC.
(Registrant)
Date: August 14, 1997
By: /s/ NICHOLAS L. RIBIS
-------------------------------------
NICHOLAS L. RIBIS
President, Chief Executive Officer,
Chief Financial Officer and Director
(Duly Authorized Officer and Principal
Financial Officer)
28
<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 HOTELS & CASINO RESORTS HOLDINGS, L.P.
(Registrant)
Date: August 14, 1997
By: Trump Hotels & Casino Resorts, Inc.,
its general partner
By: /s/ NICHOLAS L. RIBIS
------------------------------------------
NICHOLAS L. RIBIS
President, Chief Executive Officer,
Chief Financial Officer and Director
(Duly Authorized Officer and Principal
Financial Officer)
29
<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 HOTELS & CASINO RESORTS FUNDING, INC.
(Registrant)
Date: August 14, 1997
By: /s/ NICHOLAS L. RIBIS
----------------------------------------
NICHOLAS L. RIBIS
President, Chief Executive Officer,
Chief Financial Officer and Director
(Duly Authorized Officer and Principal
Financial Officer)
30
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-START> JAN-01-1997
<PERIOD-END> JUN-30-1997
<CASH> 104,478
<SECURITIES> 0
<RECEIVABLES> 82,380
<ALLOWANCES> 18,229
<INVENTORY> 12,331
<CURRENT-ASSETS> 201,822
<PP&E> 2,276,684
<DEPRECIATION> 257,161
<TOTAL-ASSETS> 2,425,610
<CURRENT-LIABILITIES> 185,193
<BONDS> 1,623,752
<COMMON> 241
0
0
<OTHER-SE> 353,621
<TOTAL-LIABILITY-AND-EQUITY> 2,425,610
<SALES> 710,266
<TOTAL-REVENUES> 797,298
<CGS> 0
<TOTAL-COSTS> 450,725 <F1>
<OTHER-EXPENSES> 182,679 <F2>
<LOSS-PROVISION> 5,336
<INTEREST-EXPENSE> 105,270
<INCOME-PRETAX> (17,151)
<INCOME-TAX> 0
<INCOME-CONTINUING> (17,151)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (17,151)
<EPS-PRIMARY> (0.74)
<EPS-DILUTED> (0.74)
<FN>
<F1> Includes gaming, lodging, food & beverage and other
<F2> Includes general & administration and depreciation & amortization
</FN>
</TABLE>
