===============================================================================
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
FOR THE QUARTERLY PERIOD ENDED: SEPTEMBER 30, 1997
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
FOR THE TRANSITION PERIOD FROM ___ TO ___
COMMISSION FILE NUMBER: 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 NOVEMBER 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 NOVEMBER 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 NOVEMBER 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
PART I--FINANCIAL INFORMATION
ITEM 1--FINANCIAL STATEMENTS PAGE NO.
--------
Condensed Consolidated Balance Sheets of Trump Hotels
& Casino Resorts, Inc. as of September 30, 1997
(unaudited) and December 31, 1996.......................................1
Condensed Consolidated Statements of Operations
of Trump Hotels & Casino Resorts, Inc.
for the Three Months and Nine Months Ended
September 30, 1997 and 1996 (unaudited).................................2
Condensed Consolidated Statement of Stockholders'
Equity of Trump Hotels & Casino Resorts, Inc.
for the Nine Months Ended September 30, 1997 (unaudited)................3
Condensed Consolidated Statements of Cash Flows of
Trump Hotels & Casino Resorts, Inc. for the Nine Months
Ended September 30, 1997 and 1996 (unaudited).................... ......4-5
Condensed Consolidated Balance Sheets of Trump Hotels
& Casino Resorts Holdings, L.P. as of September 30, 1997
(unaudited) and December 31, 1996.........................................6
Condensed Consolidated Statements of Operations of Trump
Hotels & Casino Resorts Holdings, L.P. for the Three Months
and Nine Months Ended September 30, 1997 and 1996 (unaudited).............7
Condensed Consolidated Statement of Capital of Trump
Hotels & Casino Resorts Holdings, L.P. for the Nine Months
Ended September 30, 1997 (unaudited).....................................8
Condensed Consolidated Statements of Cash Flows of Trump
Hotels & Casino Resorts Holdings, L.P. for the Nine Months
Ended September 30, 1997 and 1996 (unaudited)..........................9-10
Condensed Balance Sheets of Trump Hotels & Casino Resorts
Funding, Inc. as of September 30, 1997 (unaudited) and
December 31, 1996.......................................................11
Statements of Operations of Trump Hotels & Casino Resorts
Funding, Inc. for the Three Months and Nine Months
Ended September 30, 1997 and 1996 (unaudited)...........................12
Statement of Cash Flows of Trump Hotels & Casino Resorts
Funding, Inc. for the Nine Months Ended September 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..........................................19-25
ITEM 3 -- Quantitative and Qualitative Disclosures About Market Risk.........25
<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.............................................25-27
ITEM 2 -- Changes in Securities and Use of Proceeds.....................27
ITEM 3 -- Defaults Upon Senior Securities...............................27
ITEM 4 -- Submission of Matters to a Vote of Security Holders...........27
ITEM 5 -- Other Information.............................................28
ITEM 6 -- Exhibits and Reports on Form 8-K..............................28
SIGNATURES
SIGNATURE -- Trump Hotels & Casino Resorts, Inc.........................29
SIGNATURE -- Trump Hotels & Casino Resorts Holdings, L.P................30
SIGNATURE -- Trump Hotels & Casino Resorts Funding, Inc.................31
<PAGE>
PART I -- FINANCIAL INFORMATION
ITEM 1 -- FINANCIAL STATEMENTS
TRUMP HOTELS & CASINO RESORTS, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(DOLLARS IN THOUSANDS)
ASSETS
SEPTEMBER 30, DECEMBER 31,
1997 1996
---------- -----------
UNAUDITED)
CURRENT ASSETS:
Cash and cash equivalents ................ $ 146,304 $ 175,749
Receivables, net ......................... 67,371 54,395
Inventories .............................. 12,333 10,710
Prepaid expenses and other current assets 29,661 12,729
----------- -----------
Total Current Assets ................ 255,669 253,583
INVESTMENT IN BUFFINGTON HARBOR, L.L.C ... 44,894 45,782
INVESTMENT IN CASTLE PIK NOTES ........... 50,948 44,191
PROPERTY AND EQUIPMENT, NET .............. 2,017,374 2,009,261
DEFERRED LOAN COSTS, NET ................. 42,741 48,602
OTHER ASSETS ............................. 61,682 54,017
----------- -----------
Total Assets ............................. $ 2,473,308 $ 2,455,436
=========== ===========
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Current maturities of long-term debt ... $ 24,050 $ 19,356
Accounts payable and accrued expenses .. 128,373 117,811
Accrued interest payable ............... 75,648 28,393
Due to affiliates, net ................. -- 1,171
----------- -----------
Total Current Liabilities ............ 228,071 166,731
LONG-TERM DEBT, net of current maturities 1,705,618 1,713,425
DEFERRED INCOME TAXES PAYABLE ............ 4,272 4,272
OTHER LONG TERM LIABILITIES .............. 13,883 10,309
----------- -----------
Total Liabilities .................... 1,951,844 1,894,737
----------- -----------
MINORITY INTEREST ........................ 164,568 172,604
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 .................... (81,715) (67,598)
Less treasury stock, 1,706,500 shares
of THCR Common Stock, at cost ........ (17,276) --
----------- -----------
Total Stockholders' Equity ........... 356,896 388,095
----------- -----------
Total Liabilities and Stockholders' Equity $ 2,473,308 $ 2,455,436
=========== ===========
The accompanying notes are an integral part of these
condensed consolidated financial statements.
1
<PAGE>
<TABLE>
TRUMP HOTELS & CASINO RESORTS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
FOR THE THREE MONTHS AND NINE MONTHS ENDED SEPTEMBER 30, 1997 AND 1996
(UNAUDITED)
(DOLLARS IN THOUSANDS)
<CAPTION>
THREE MONTHS ENDED NINE MONTHS ENDED
SEPTEMBER 30, SEPTEMBER 30,
------------------------- ----------------------------
1997 1996 1997 1996
------------ --------- ------------ ------------
<S> <C> <C> <C> <C>
REVENUES:
Gaming ...................................................... $ 341,080 $ 298,414 $ 994,655 $ 586,775
Rooms ....................................................... 29,346 24,310 77,149 48,464
Food and Beverage ........................................... 42,830 33,108 118,146 71,631
Other ....................................................... 14,190 9,073 36,132 17,426
------------ ------------ ------------ ------------
Gross Revenues .............................................. 427,446 364,905 1,226,082 724,296
Less -- Promotional allowances ................................. 51,850 39,343 140,220 82,472
------------ ------------ ------------ ------------
Net Revenues ................................................ 375,596 325,562 1,085,862 641,824
------------ ------------ ------------ ------------
COSTS AND EXPENSES:
Gaming ...................................................... 209,766 167,861 621,141 337,254
Rooms ....................................................... 8,174 7,235 23,304 15,587
Food and Beverage ........................................... 13,299 11,134 37,519 22,732
General and Administrative .................................. 66,895 54,493 203,299 118,549
Depreciation and Amortization ............................... 20,379 21,937 66,654 43,559
Pre-Opening ................................................. -- 3,561 -- 13,527
------------ ------------ ------------ ------------
318,513 266,221 951,917 551,208
------------ ------------ ------------ ------------
Income from operations ...................................... 57,083 59,341 133,945 90,616
------------ ------------ ------------ ------------
NON-OPERATING INCOME AND (EXPENSES):
Interest income ............................................. 1,290 4,787 4,492 8,508
Interest expense ............................................ (52,565) (43,697) (157,835) (97,844)
Other non-operating income .................................. -- 5,691 -- 14,873
------------ ------------ ------------ ------------
(51,275) (33,219) (153,343) (74,463)
------------ ------------ ------------ ------------
Income (loss) before equity in loss of Buffington Harbor,
L.L.C., extraordinary items and minority interest ......... 5,808 26,122 (19,398) 16,153
Equity in loss of Buffington Harbor, L.L.C ..................... (1,025) -- (2,755) --
------------ ------------ ------------ ------------
Income (loss) before extraordinary items and minority
interest .................................................... 4,783 26,122 (22,153) 16,153
Extraordinary loss ............................................. -- -- -- (59,132)
Minority Interest .............................................. (1,749) (6,581) 8,036 8,247
------------ ------------ ------------ ------------
NET INCOME (LOSS) .............................................. $ 3,034 $ 19,541 $ (14,117) $ (34,732)
============ ============ ============ ============
Earnings (loss) per share ...................................... $ .13 $ .81 $ (.62) $ (1.86)
============ ============ ============ ============
Weighted average shares ........................................ 22,500,256 24,206,756 22,894,222 18,710,930
============ ============ ============ ============
</TABLE>
The accompanying notes are an integral part of these
condensed consolidated financial statements.
2
<PAGE>
<TABLE>
TRUMP HOTELS & CASINO RESORTS, INC.
CONDENSED CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 1997
(UNAUDITED)
(DOLLARS IN THOUSANDS)
<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 ...................... -- -- -- -- (14,117) -- (14,117)
---------- ----- ----- -------- -------- -------- --------
Balance, September 30, 1997 ... 24,206,756 1,000 $ 241 $455,646 $(81,715) $(17,276) $356,896
========== ===== ===== ======== ======== ======== ========
The accompanying notes are an integral
part of this condensed consolidated financial statement.
</TABLE>
3
<PAGE>
<TABLE>
TRUMP HOTELS & CASINO RESORTS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS FOR
THE NINE MONTHS ENDED SEPTEMBER 30, 1997 AND 1996
(UNAUDITED)
(DOLLARS IN THOUSANDS)
<CAPTION>
1997 1996
---- ----
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net Loss ..................................................................... $ (14,117) $ (34,732)
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 ................................. 2,755 --
Depreciation and amortization .............................................. 66,654 43,559
Payment-In-Kind interest in Castle PIK Notes ............................... (6,757) --
Minority interest in net loss .............................................. (8,036) (8,247)
Accretion of discounts on mortgage notes ................................... 2,361 132
Amortization of deferred loan costs ........................................ 5,861 4,684
Provision for losses on receivables ........................................ 6,393 3,213
Valuation allowance of CRDA investments and amortization of Indiana
gaming costs ............................................................ 7,587 2,098
Accretion of phantom stock units ........................................... 194 350
--------- ---------
62,895 70,189
Change in assets and liabilities:
Increase in receivables .................................................... (19,369) (31,300)
Increase in inventories .................................................... (1,623) (97)
Increase in other current assets ........................................... (15,799) (5,430)
Decrease in due to affiliates .............................................. (1,437) (2,173)
Increase in other assets ................................................... (5,277) (6,909)
Increase in accounts payable & accrued expenses ............................ 10,355 4,141
Increase in accrued interest payable ....................................... 47,255 20,560
Increase (decrease) in other long-term liabilities ......................... 7,615 (872)
--------- ---------
Net cash flows provided by operating activities ............................ 84,615 48,109
--------- ---------
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchase of property and equipment, net ...................................... (71,575) (228,318)
Investment in Buffington Harbor, L.L.C ....................................... (1,867) (22,237)
CRDA Investments ............................................................. (10,572) (4,493)
Cash restricted for future construction ...................................... -- 14,911
Cash restricted for interest ................................................. -- 12,013
Investment in Trump Marina ................................................... -- (41,991)
Purchase of Taj Holding, net of cash acquired ................................ -- 46,714
--------- ---------
Net cash flows used in investing activities ................................ (84,014) (223,401)
--------- ---------
</TABLE>
Continued . . . . . . .
The accompanying notes are an integral part of these
condensed consolidated financial statements.
4
<PAGE>
<TABLE>
TRUMP HOTELS & CASINO RESORTS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS FOR
THE NINE MONTHS ENDED SEPTEMBER 30, 1997 AND 1996 CONT'D
(UNAUDITED)
(DOLLARS IN THOUSANDS)
<CAPTION>
1997 1996
---- ----
<S> <C> <C>
CASH FLOWS FROM FINANCING ACTIVITIES:
Purchase of treasury stock ...................................... $(17,276) $ --
Issuance of long-term debt-other ................................ 2,177 40,231
Payment of long-term debt-other ................................. (14,947) (15,721)
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 ............................................ -- (41,477)
-------- -----------
Net cash flows provided by (used in) financing activities ..... (30,046) 375,759
-------- -----------
Net increase (decrease) in cash and cash equivalents .......... (29,445) 200,467
CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD .................. 175,749 19,208
-------- -----------
CASH AND CASH EQUIVALENTS AT END OF PERIOD ........................ $146,304 $ 219,675
======== ===========
CASH INTEREST PAID ................................................ $101,151 $ 28,186
======== ===========
Supplemental Disclosure of Non-Cash Activities:
Purchase of property and equipment under capital lease obligations $ 4,095 $ 10,488
======== ===========
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
==========
</TABLE>
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.
5
<PAGE>
TRUMP HOTELS & CASINO RESORTS HOLDINGS, L.P.
CONDENSED CONSOLIDATED BALANCE SHEETS
(DOLLARS IN THOUSANDS)
ASSETS
SEPTEMBER 30, DECEMBER 31,
1997 1996
------------ ------------
(UNAUDITED)
CURRENT ASSETS:
Cash and cash equivalents ............... $ 146,300 $ 175,745
Receivables, net ........................ 67,371 54,395
Inventories ............................. 12,333 10,710
Prepaid expenses and other current assets 29,661 12,729
----------- -----------
Total Current Assets ................. 255,665 253,579
INVESTMENT IN BUFFINGTON HARBOR, L.L.C .... 44,894 45,782
INVESTMENT IN CASTLE PIK NOTES ............ 50,948 44,191
PROPERTY AND EQUIPMENT, NET ............... 2,017,374 2,009,261
DEFERRED LOAN COSTS, NET .................. 42,741 48,602
OTHER ASSETS .............................. 61,682 54,017
----------- -----------
Total Assets .......................... $ 2,473,304 $ 2,455,432
=========== ===========
LIABILITIES AND CAPITAL
CURRENT LIABILITIES:
Current maturities of long-term debt .... $ 24,050 $ 19,356
Accounts payable and accrued expenses ... 128,373 117,811
Accrued interest payable ................ 75,648 28,393
Due to affiliates, net .................. -- 1,171
----------- ----------
Total Current Liabilities ............. 228,071 166,731
LONG-TERM DEBT, net of current maturities . 1,705,618 1,713,425
DEFERRED INCOME TAXES PAYABLE ............. 4,272 4,272
OTHER LONG TERM LIABILITIES ............... 13,883 10,309
----------- ----------
Total Liabilities ..................... 1,951,844 1,894,737
----------- ----------
CAPITAL:
Partners Capital ....................... 635,227 652,503
Accumulated Deficit .................... (113,767) (91,808)
----------- ----------
Total Capital .......................... 521,460 560,695
----------- ----------
Total Liabilities and Capital .......... $ 2,473,304 $ 2,455,432
=========== ==========
The accompanying notes are an integral part of these
condensed consolidated financial statements.
6
<PAGE>
<TABLE>
TRUMP HOTELS & CASINO RESORTS HOLDINGS L.P.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
FOR THE THREE MONTHS AND NINE MONTHS ENDED SEPTEMBER 30, 1997 AND 1996
(UNAUDITED)
(DOLLARS IN THOUSANDS)
<CAPTION>
THREE MONTHS ENDED NINE MONTHS ENDED
SEPTEMBER 30, SEPTEMBER 30,
--------------------- ----------------------
1997 1996 1997 1996
-------- -------- ---------- --------
<S> <C> <C> <C> <C>
REVENUES:
Gaming ........................................ $341,080 $298,414 $ 994,655 $586,775
Rooms ......................................... 29,346 24,310 77,149 48,464
Food and Beverage ............................. 42,830 33,108 118,146 71,631
Other ......................................... 14,190 9,073 36,132 17,426
-------- -------- ---------- --------
Gross Revenues ................................ 427,446 364,905 1,226,082 724,296
Less -- Promotional allowances ................... 51,850 39,343 140,220 82,472
-------- -------- ---------- --------
Net Revenues .................................. 375,596 325,562 1,085,862 641,824
-------- -------- ---------- --------
COSTS AND EXPENSES:
Gaming ......................................... 209,766 167,861 621,141 337,254
Rooms .......................................... 8,174 7,235 23,304 15,587
Food and Beverage .............................. 13,299 11,134 37,519 22,732
General and Administrative ..................... 66,895 54,376 203,105 118,199
Depreciation and Amortization .................. 20,379 21,937 66,654 43,559
Pre-Opening .................................... -- 3,561 -- 13,527
-------- -------- ---------- --------
318,513 266,104 951,723 550,858
-------- -------- ---------- --------
Income from operations ....................... 57,083 59,458 134,139 90,966
-------- -------- ---------- --------
NON-OPERATING INCOME AND (EXPENSES):
Interest income ................................ 1,290 4,787 4,492 8,508
Interest expense ............................... (52,565) (43,697) (157,835) (97,844)
Other non-operating income ..................... -- 5,691 -- 14,873
-------- -------- ---------- --------
(51,275) (33,219) (153,343) (74,463)
-------- -------- ---------- --------
Income (loss) before equity in loss of Buffington
Harbor, L.L.C., and extraordinary
items .......................................... 5,808 26,239 (19,204) 16,503
Equity in loss of Buffington Harbor, L.L.C ....... (1,025) -- (2,755) --
-------- -------- ---------- --------
Income (loss) before extraordinary items ......... 4,783 26,239 (21,959) 16,503
Extraordinary loss ............................... -- -- -- (59,132)
-------- -------- ---------- --------
NET INCOME (LOSS) ................................ $ 4,783 $ 26,239 $ (21,959) $(42,629)
======== ======== ========== ========
</TABLE>
The accompanying notes are an integral part of these
condensed consolidated financial statements.
7
<PAGE>
TRUMP HOTELS & CASINO RESORTS HOLDINGS, L.P.
CONDENSED CONSOLIDATED STATEMENT OF CAPITAL
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 1997
(UNAUDITED)
(DOLLARS 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 ...................... -- (21,959) (21,959)
-------- --------- --------
Balance, September 30, 1997 ... $635,227 $(113,767) $521,460
======== ========= ========
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 NINE MONTHS ENDED SEPTEMBER 30, 1997 AND 1996
(UNAUDITED)
(DOLLARS IN THOUSANDS)
<CAPTION>
1997 1996
---- ----
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net Loss ..................................................................... $ (21,959) $ (42,629)
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 ................................. 2,755 --
Depreciation and amortization .............................................. 66,654 43,559
Payment-In-Kind interest in Castle PIK Notes ............................... (6,757) --
Accretion of discounts on mortgage notes ................................... 2,361 132
Amortization of deferred loan costs ........................................ 5,861 4,684
Provision for losses on receivables ........................................ 6,393 3,213
Valuation allowance of CRDA investments and amortization of Indiana
gaming costs .............................................................. 7,587 2,098
--------- ---------
62,895 70,189
Change in assets and liabilities:
Increase in receivables .................................................... (19,369) (31,300)
Increase in inventories .................................................... (1,623) (97)
Increase in other current assets ........................................... (15,799) (5,493)
Decrease in due to affiliates .............................................. (1,437) (1,963)
Increase in other assets ................................................... (5,277) (6,909)
Increase in accounts payable & accrued expenses ............................ 10,355 4,141
Increase in accrued interest payable ....................................... 47,255 20,560
Increase (decrease)in other long-term liabilities .......................... 7,615 (872)
--------- ---------
Net cash flows provided by operating activities .......................... 84,615 48,256
--------- ---------
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchase of property and equipment, net .................................... (71,575) (228,318)
Investment in Buffington Harbor, L.L.C ..................................... (1,867) (22,237)
CRDA Investments ........................................................... (10,572) (4,493)
Cash restricted for future construction .................................... -- 14,911
Cash restricted for interest ............................................... -- 12,013
Investment in Trump Marina ................................................. -- (41,991)
Purchase of Taj Holding, net of cash acquired .............................. -- 46,714
--------- ---------
Net cash flows used in investing activities .............................. (84,014) (223,401)
--------- ---------
</TABLE>
Continued ......
The accompanying notes are an integral part of these
condensed consolidated financial statements.
9
<PAGE>
<TABLE>
TRUMP HOTELS & CASINO RESORTS HOLDINGS, L.P.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS FOR
THE NINE MONTHS ENDED SEPTEMBER 30, 1997 AND 1996 CONT'D
(UNAUDITED)
(DOLLARS 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 ............................... 2,177 40,231
Payment of long-term debt-other ................................ (14,947) (15,721)
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 ........................................... -- (41,477)
--------- -----------
Net cash flows provided by (used in) financing activities .... (30,046) 375,617
--------- -----------
Net increase (decrease) in cash and cash equivalents ......... (29,445) 200,472
CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD ................. 175,745 19,199
--------- -----------
CASH AND CASH EQUIVALENTS AT END OF PERIOD ....................... $ 146,300 $ 219,671
========= ===========
CASH INTEREST PAID ............................................... $ 101,566 $ 28,186
========= ===========
Supplemental Disclosure of Non-Cash Activities:
Purchase of property and equipment under capital lease obligations $ 4,095 $ 10,488
========= ===========
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
===========
</TABLE>
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.
10
<PAGE>
TRUMP HOTELS & CASINO RESORTS FUNDING, INC.
CONDENSED BALANCE SHEETS
(DOLLARS IN THOUSANDS)
ASSETS
SEPTEMBER 30, DECEMBER 31,
1997 1996
------------ -----------
(UNAUDITED)
Cash ................................................. $ -- $ --
Interest Receivable .................................. 6,555 936
Note Receivable ...................................... 145,000 145,000
-------- --------
Total Assets .................................... $151,555 $145,936
======== ========
LIABILITIES AND CAPITAL
Accrued Interest Payable ............................. $ 6,555 $ 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 ................... $151,555 $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 MONTHS AND NINE MONTHS ENDED SEPTEMBER 30, 1997 AND 1996
(UNAUDITED)
(DOLLARS IN THOUSANDS)
THREE MONTHS ENDED NINE MONTHS ENDED
SEPTEMBER 30, SEPTEMBER 30,
------------------ -----------------
1997 1996 1997 1996
---- ----- ---- ----
Interest Income .......... $ 5,618 $ 6,007 $ 16,856 $ 18,019
Interest Expense ......... (5,618) (6,007) (16,856) (18,019)
------- ------- -------- --------
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 NINE MONTHS ENDED SEPTEMBER 30, 1997 AND 1996
(UNAUDITED)
(DOLLARS IN THOUSANDS)
1997 1996
---- ----
CASH FLOWS FROM OPERATING ACTIVITIES:
Net Income .......................................... $ -- $ --
Decrease (increase) in interest receivable .......... (5,619) (6,006)
Increase (decrease) in interest payable ............. 5,619 6,006
------- -------
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, including Trump Hotels &
Casino Resorts Funding, Inc. ("THCR Funding"). THCR Holdings is an entity
which is currently owned approximately 61.8% by THCR, as both a general and
limited 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:
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.
Trump Indiana, Inc. ("Trump Indiana"), which commenced operations on
June 8, 1996, owns and operates a riverboat gaming facility at
Buffington Harbor, on Lake Michigan, Indiana (the "Indiana
Riverboat").
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.
THCR Funding, the issuer of $145,000,000 15 1/2% Senior Secured Notes,
due 2005 (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 September 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 the Senior Notes
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 "Castle 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 Castle 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 TCHI'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 Transaction
and the Castle Acquisition had occurred on January 1, 1996, is as follows:
NINE MONTHS ENDED
SEPTEMBER 30, 1996
------------------
Net revenues........................................... $ 995,692,000
Income from operations................................. 94,578,000
Loss before extraordinary loss and minority interest... (33,303,000)
Extraordinary Loss..................................... (59,132,000)
Loss before Minority Interest.......................... (92,435,000)
Minority Interest...................................... 33,831,000
------------
Net loss............................................... $ (58,604,000)
=============
Net loss per share..................................... $ (2.42)
=============
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 nine months ended September 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
forty year life and furniture and fixtures were determined to have a seven year
life. During the third quarter 1997, Trump Indiana revised its estimates of the
useful life of the riverboat and its improvements from fifteen to thirty years.
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 and nine months ended September 30, 1997, the net
effect of applying these new lives was to increase net income by $2,381,000 and
$4,496,000, respectively, and decrease loss per share by $.10 and $.19,
respectively.
(4) 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 September 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 New Jersey Casino
Control Commission ("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 and were $84,615,000 compared to $48,109,000 for the comparable period
in 1996. 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
NatWest, 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 $63,449,000 for the nine months
ended September 30, 1997. Capital expenditures for the nine months ended
September 30, 1996 include Trump Plaza East's and Trump World's Fair's
expenditures of approximately $36,877,000 and $56,007,000, respectively. In
addition, in 1997, Plaza Associates exercised its option to purchase from
Seashore Four Associates, an entity beneficially owned by Trump, one of the
parcels of land underlying Trump Plaza's main tower, pursuant to the terms of a
lease, the payments under which were terminated upon the exercise of such
option. The exercise price and associated closing costs were $10,144,000.
Capital expenditures attributable to the Taj Mahal were $37,948,000 for the
nine months ended September 30, 1997 and $76,160,000 for the period from
acquisition, April 17, 1996 to September 30, 1996. Capital expenditures for
improvements to existing facilities were approximately $7,596,000 for the nine
months ended September 30, 1997, and $9,675,000 for the period from acquisition,
April 17, 1996 to September 30, 1996. Capital expenditures attributable to the
expansion of the facility were approximately $30,352,000 for the nine months
ended September 30, 1997, and $4,677,000 for the period from acquisition, April
17, 1996 to September 30, 1996. Capital expenditures for the period from
acquisition, April 17, 1996 to September 30, 1996, included the purchase of
property previously leased, upon which a portion of the casino hotel complex is
situated, for $61,808,000.
The expansion at the Taj Mahal (the "Taj Mahal Expansion") consisted of the
construction of a new 15-bay bus terminal which was completed in December 1996,
a 2,400 space expansion of the existing self parking facilities, which was
completed in May 1997, and an approximate 7,000 square-foot casino expansion
with 260 slot machines, which was completed in July 1997. The total costs of the
Taj Mahal Expansion including amounts expended in 1996 are approximately
$43,000,000 and are being funded principally out of cash from operations.
In addition to the approximately $96,000,000 spent prior to commencing the
operation of the Indiana Riverboat on June 8, 1996, $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 invested by Trump Indiana in connection
with the its Riverboat facility including commitments required in connection
with the licensure process. The additional investments required to be made over
the initial five-year license term are expected to be funded with cash from
operations.
Castle Associates' capital expenditures for 1997 are anticipated to be
approximately $1,500,000 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 completed a
$4,200,000 project to retheme the property with a nautical emphasis and rename
it Trump Marina. Capital expenditures of $5,453,000 were incurred during the
nine months ended September 30, 1997, primarily for the previously mentioned
projects.
19
<PAGE>
<TABLE>
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 nine month periods ended September 30, 1997.
Comparison of Three-Month Periods Ended September 30, 1997 and 1996. The following tables include selected data of Plaza
Associates, Taj Associates, Trump Indiana and Trump Marina.
<CAPTION>
THREE MONTHS ENDED SEPTEMBER 30, 1997
---------------------------------------------------------------------------------
PLAZA TAJ TRUMP AC TRUMP TRUMP THCR
ASSOCIATES ASSOCIATES CONSOLIDATED INDIANA MARINA CONSOLIDATED*
---------- ---------- ------------ ------- ------ ------------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C> <C> <C> <C>
Revenues:
Gaming ........................................ $ 100,772 $ 137,824 $ 238,596 $ 29,875 $ 72,609 $ 341,080
Other ......................................... 30,840 35,263 66,103 724 19,539 86,366
--------- --------- --------- --------- --------- ---------
Gross Revenue ................................ 131,612 173,087 304,699 30,599 92,148 427,446
Less: Promotional Allowances ................... 18,448 20,802 39,250 149 12,451 51,850
--------- --------- --------- --------- --------- ---------
Net Revenue .................................. 113,164 152,285 265,449 30,450 79,697 375,596
--------- --------- --------- --------- --------- ---------
Costs and Expenses:
Gaming ........................................ 62,273 82,466 144,739 20,422 44,605 209,766
Pre-opening ................................... -- -- -- -- -- --
General & Administrative ...................... 17,525 21,649 39,215 7,357 16,610 66.895
Depreciation & Amortization ................... 6,118 8,990 15,137 1,059 4,171 20,379
Other ......................................... 8,802 8,722 17,524 218 3,731 21,473
--------- --------- --------- --------- --------- ---------
Total Costs and Expenses ..................... 94,718 121,827 216,615 29,056 69,117 318,513
--------- --------- --------- --------- --------- ---------
Income from Operations ......................... 18,446 30,458 48,834 1,394 10,580 57,083
--------- --------- --------- --------- --------- ---------
Non-operating Income ........................... 126 260 560 45 112 1,290
Interest Expense ............................... (12,189) (23,650) (35,839) (2,340) (12,781) (52,565)
--------- --------- --------- --------- --------- ---------
Total Non-operating Income ................... (12,063) (23,390) (35,279) (2,295) (12,669) (51,275)
--------- --------- --------- --------- --------- ---------
Loss in Joint Venture .......................... -- -- -- (1,025) -- (1,025)
Income Tax Benefit ............................. -- -- -- -- -- --
--------- --------- --------- --------- --------- ---------
Income (Loss) before Minority Interest ......... $ 6,383 $ 7,068 $ 13,555 $ (1,926) $ (2,089) $ 4,783
========= ========= ========= ========= ========= =========
Minority Interest .............................. (1,749)
---------
Net Income...................................... $ 3,034
=========
* Intercompany eliminations and expenses of THCR and THCR Holdings are not separately shown.
</TABLE>
<TABLE>
<CAPTION>
THREE MONTHS ENDED SEPTEMBER 30, 1996
---------------------------------------------------------------------------------
PLAZA TAJ TRUMP AC TRUMP TRUMP THCR
ASSOCIATES ASSOCIATES CONSOLIDATED INDIANA MARINA CONSOLIDATED*
---------- ---------- ------------ ------- --------- ------------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C> <C> <C> <C>
Revenues:
Gaming .................................. $ 111,165 $ 150,816 $ 261,981 $ 36,433 N/A $ 298,414
Other ................................... 33,230 32,341 65,571 920 66,491
--------- --------- --------- --------- ---------
Gross Revenue .......................... 144,395 183,157 327,552 37,353 364,905
Less: Promotional Allowances ............. 21,121 18,222 39,343 -- 39,343
--------- --------- --------- --------- ---------
Net Revenue ............................ 123,274 164,935 288,209 37,353 325,562
--------- --------- --------- --------- ---------
Costs and Expenses:
Gaming .................................. 66,707 83,582 150,289 17,572 167,861
Pre-opening ............................. 501 -- 501 3,060 3,561
General & Administrative ................ 23,017 19,972 43,011 7,925 54,493
Depreciation & Amortization ............. 6,206 14,049 20,255 1,458 21,937
Other ................................... 8,397 9,420 17,817 552 18,369
--------- --------- --------- --------- ---------
Total Costs and Expenses ............... 104,828 127,023 231,873 30,567 266,221
--------- --------- --------- --------- ---------
Income from Operations ................... 18,446 37,912 56,336 6,786 59,341
--------- --------- --------- --------- ---------
Non-operating Income ..................... 5,197 252 5,865 361 10,478
Interest Expense ......................... (12,667) (23,828) (36,495) (3,206) (43,697)
--------- --------- --------- --------- ---------
Total Non-operating Income ............. (7,470) (23,576) (30,630) (2,845) (33,219)
--------- --------- --------- --------- ---------
Loss in Joint Venture .................... -- -- -- -- --
Income Tax ............................... -- -- -- -- --
Extraordinary Loss ....................... -- -- -- --
--------- --------- --------- --------- ---------
Income (Loss) before
Minority Interest ....................... $ 10,976 $ 14,336 $ 25,706 $ 3,941 N/A $ 26,122
========= ========= ========= ========= =========
Minority Interest......................... ( 6,581)
---------
Net Income................................ $ 19,541
=========
* 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
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
THREE MONTHS ENDED SEPTEMBER 30,
--------------------------------------------------------------------------------------------
PLAZA TAJ TRUMP AC TRUMP TRUMP THCR
ASSOCIATES ASSOCIATES CONSOLIDATED INDIANA MARINA CONSOLIDATED
------------ ----------- ------------ ------------ ------------ -------------
1997 (a) (b) (c)
---- (DOLLARS IN THOUSANDS)
<S> <C> <C> <C> <C> <C> <C>
Table Game Revenues ................. $ 25,540 $ 48,816 $ 74,356 $ 8,394 $ 23,080 $ 105,830
Incr (Decr) over prior period .... $ (3,510) $ (17,633) $ (21,143) $ (1,628) N/A $ 309
Table Game Drop ..................... $ 172,673 $ 346,450 $ 519,123 $ 47,359 $135,946 $ 702,428
Incr (Decr) over prior period .... $ (25,956) $ (38,516) $ (64,472) $ (10,675) N/A $ 60,799
Table Win Percentage ................ 14.8% 14.1% 14.3% 17.7% 17.0% 15.1%
Incr (Decr) over prior period .... .2pts. (3.2pts.) (2.1pts.) .4pts. N/A (1.3pts.)
Number of Table Games ............... 110 155 265 67 94 426
Incr (Decr) over prior period .... (30) (12) (42) (5) N/A 47
Slot Revenues ....................... $ 75,232 $ 84,083 $ 159,315 $ 21,481 $ 48,603 $ 229,399
Incr (Decr) over prior period .... $ (6,883) $ 5,251 $ (1,632) $ (4,930) N/A $ 42,041
Slot Handle ......................... $ 932,471 $ 996,477 $ 1,928,948 $ 321,147 $606,858 $ 2,856,953
Incr (Decr) over prior period .... $ (30,723) $ 50,593 $ 19,870 $ (99,867) N/A $ 526,861
Slot Win Percentage ................. 8.1% 8.4% 8.3% 6.7% 8.0% 8.0%
Incr (Decr) over prior period .... (.4pts.) .1pts. (.1pts.) .4 pts. N/A .0 pts.
Number of Slot Machines ............. 4,090 4,136 8,226 1,416 2,142 11,784
Incr (Decr) over prior period .... (133) 340 207 (84) N/A 2,265
Other Gaming Revenues .............. N/A $ 4,925 $ 4,925 N/A $ 926 $ 5,851
Incr (Decr) over prior period .... N/A $ (610) $ (610) N/A N/A $ 316
Total Gaming Revenues ............... $ 100,772 $ 137,824 $ 238,596 $ 29,875 $ 72,609 $ 341,080
Incr (Decr) over prior period .... $ (10,393) $ (12,992) $ (23,385) $ (6,558) N/A $ 42,666
1996
----
Table Game Revenues ................. $ 29,050 $ 66,449 $ 95,499 $ 10,022 N/A $ 105,521
Table Game Drop ..................... $ 198,629 $ 384,966 $ 583,595 $ 58,034 N/A $ 641,629
Table Win Percentage ................ 14.6% 17.3% 16.4% 17.3% N/A 16.4%
Number of Table Games ............... 140 167 307 72 N/A 379
Slot Revenues ....................... $ 82,115 $ 78,832 $ 160,947 $ 26,411 N/A $ 187,358
Slot Handle ......................... $ 963,194 $ 945,884 $ 1,909,078 $ 421,014 N/A $2,330,092
Slot Win Percentage ................. 8.5% 8.3% 8.4% 6.3% N/A 8.0%
Number of Slot Machines ............. 4,223 3,796 8,019 1,500 N/A 9,519
Other Gaming Revenues ............... N/A $ 5,535 $ 5,535 N/A N/A $ 5,535
Total Gaming Revenues ............... $ 111,165 $ 150,816 $ 261,981 $ 36,433 N/A $ 298,414
</TABLE>
(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.
Gaming revenues are the primary source of THCR's revenues. Taj Associates'
year over year decrease in gaming revenues was due primarily to last year's
third quarter results which included an unusual approximately $12 million dollar
table game win from one premium player, contrasted against an unusually low
table game win percentage in the current year. Table games revenues represent
the amount retained by THCR from amounts wagered at table games. The table win
percentage tends to be fairly constant over the long term, but may vary
significantly in the short term, due to large wagers by "high rollers". Taj
Associates' decrease in table game revenues was somewhat offset by increases in
slot revenue partly due to the opening of the new bus terminal, expanded
self-parking facilities, expanded casino and increased marketing initiatives.
Gaming costs and expenses were $209,766,000 for the three months ended
September 30, 1997, an increase of $41,905,000 or 25.0% from $167,861,000 for
the comparable period in 1996. This increase was primarily attributable to the
addition of $44,605,000 of gaming expenses as a result of the acquisition of
Trump Marina in October 1996. Trump Indiana incurred an increase of $2,850,000
or 16.2% to $20,422,000 for the three months ended September 30, 1997 as a
result of increases in costs related to player promotions and special events
caused by the expansion of gaming in Indiana. These increases were partially
offset by decreases from Taj Associates and Plaza Associates. Gaming costs and
expenses for Taj Associates were $82,466,000 for the three months ended
September 30, 1997, a decrease of $1,116,000 or 1.3% from $83,582,000 for the
comparable period in 1996. Taj Associates' decrease is primarily due to a
decrease in cash complimentaries related to high end table game activity. Gaming
costs and expenses for Plaza Associates were $62,273,000, for the three months
ended September 30, 1997, a decrease of $4,434,000 or 6.6% from $66,707,000 for
the comparable period in 1996. Plaza Associates' decrease is primarily due to
decreased promotional and operating expenses as well as reduced taxes associated
with decreased levels of gaming revenues from 1996.
21
<PAGE>
General and administrative expenses were $66,895,000 for the three months
ended September 30, 1997, an increase of $12,402,000 or 22.8% from general and
administrative expenses of $54,493,000 for the comparable period in 1996. This
increase is primarily due to the addition of $16,610,000 in expenses from Trump
Marina. Taj Associates' general and administrative expenses were $21,649,000 for
the three months ended September 30, 1997, an increase of $1,677,000 or 8.4%
from the comparable period in 1996. Taj Associates' increase is primarily due to
last year's third quarter results which included a reduction in
performance-based compensation provisions. Plaza Associates' general and
administrative expenses were $17,525,000 for the three months ended September
30, 1997, a decrease of $5,492,000 or 23.9% from the comparable period in 1996.
Plaza Associates' decrease is due to an anticipated adjustment of real estate
taxes for Trump World's Fair resulting from reassessments which are under
appeal. Trump Indiana's general and administrative expenses decreased $568,000
or 7.2% to $7,357,000 for the three months ended September 30, 1997, which
includes a $500,000 management fee payable to THCR Holdings which had no
comparable expense 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
forty year life and furniture and fixtures were determined to have a seven year
life. During the third quarter of 1997, Trump Indiana revised its estimates of
the useful life of the riverboat and its improvements from fifteen to thirty
years. 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 September 30, 1997, the net effect of applying
these new lives was to increase net income by $2,381,000 and decrease loss per
share by $.10.
Other non-operating income decreased $5,691,000 for the three months ended
September 30, 1997 from the comparable period in 1996. Plaza Associates earned a
one-time $5,000,000 non-refundable licensing fee in the three months ended
September 30, 1996 resulting from an agreement with Atlantic Jersey Thermal
Systems, Inc. to operate their heating and cooling facilities for a period of 20
years.
22
<PAGE>
<TABLE>
Comparison of Nine-Month Periods Ended September 30, 1997 and 1996. The following tables include selected data of Plaza
Associates, Taj Associates, Trump Indiana and Trump Marina.
<CAPTION>
NINE MONTHS ENDED SEPTEMBER 30, 1997
-------------------------------------------------------------------------------------------
PLAZA TAJ TRUMP AC TRUMP TRUMP THCR
ASSOCIATES ASSOCIATES CONSOLIDATED INDIANA MARINA CONSOLIDATED*
---------- ---------- ------------ ------- ------- -------------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C> <C> <C> <C>
Revenues:
Gaming ............................ $285,507 $400,730 $ 686,237 $103,290 $205,128 $ 994,655
Other ............................. 83,726 93,278 177,004 2,728 51,695 231,427
-------- -------- --------- -------- -------- ----------
Gross Revenues ................... 369,233 494,008 863,241 106,018 256,823 1,226,082
Less: Promotional Allowances ....... 49,741 56,310 106,051 506 33,663 140,220
-------- -------- --------- -------- -------- ----------
Net Revenues ..................... 319,492 437,698 757,190 105,512 223,160 1,085,862
-------- -------- --------- -------- -------- ----------
Costs and Expenses:
Gaming ............................ 178,719 245,660 424,379 66,674 130,088 621,141
Pre-opening ....................... -- -- -- -- -- --
General & Administrative .......... 59,429 64,631 124,143 21,831 48,832 203,299
Depreciation & Amortization ....... 18,115 31,948 50,146 3,579 12,896 66,654
Other ............................. 24,590 24,893 49,483 1,690 9,650 60,823
-------- -------- --------- -------- -------- ----------
Total Costs and Expenses ......... 280,853 367,132 648,151 93,774 201,466 951,917
-------- -------- --------- -------- -------- ----------
Income from Operations: ............ 38,639 70,566 109,039 11,738 21,694 133,945
-------- -------- --------- -------- -------- ----------
Non-operating Income ............... 429 892 1,992 480 272 4,492
Interest Expense ................... (36,580) (71,077) (107,657) (7,749) (37,309) (157,835)
-------- -------- --------- -------- -------- ----------
Total Non-operating Income ....... (36,151) (70,185) (105,665) (7,269) (37,037) (153,343)
-------- -------- --------- -------- -------- ----------
Loss in Joint Venture .............. -- -- -- (2,755) -- (2,755)
Extraordinary Loss ................. -- -- -- -- -- --
-------- -------- --------- -------- -------- ----------
Income (Loss) before
Minority Interest ................. $ 2,488 $ 381 $ 3,374 $ 1,714 $(15,343) $ (22,153)
======== ======== ========= ======== ======== ==========
Minority Interest................... 8,036
-----------
Net Loss............................ $ (14,117)
==========
- --------
* Intercompany eliminations and expenses of THCR and THCR Holdings are not separately shown.
</TABLE>
<TABLE>
<CAPTION>
NINE MONTHS ENDED SEPTEMBER 30, 1996
---------------------------------------------------------------------------------
PLAZA TAJ TRUMP AC TRUMP TRUMP THCR
ASSOCIATES ASSOCIATES CONSOLIDATED INDIANA MARINA CONSOLIDATED*
---------- ---------- ------------ ------- ------ -------------
(a) (b) (c)
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C> <C> <C> <C>
Revenues:
Gaming ........................................ $ 281,511 $ 260,500 $ 542,011 $ 44,764 N/A $ 586,775
Other ......................................... 79,655 56,698 136,353 1,168 137,521
--------- --------- --------- --------- ---------
Gross Revenues ................................ 361,166 317,198 678,364 45,932 724,296
Less: Promotional Allowances ................... 50,385 32,087 82,472 -- 82,472
--------- --------- --------- --------- ---------
Net Revenues ................................. 310,781 285,111 595,892 45,932 641,824
--------- --------- --------- --------- ---------
Costs and Expenses:
Gaming ........................................ 168,210 147,438 315,648 21,606 337,254
Pre-opening ................................... 3,833 -- 3,833 9,694 13,527
General & Administrative ...................... 59,652 39,509 99,183 9,826 118,549
Depreciation & Amortization ................... 16,652 24,805 41,457 1,814 43,559
Other ......................................... 20,398 17,262 37,660 659 38,319
--------- --------- --------- --------- ---------
Total Costs and Expenses ..................... 268,745 229,014 497,781 43,599 551,208
--------- --------- --------- --------- ---------
Income from Operations ......................... 42,036 56,097 98,111 2,333 90,616
--------- --------- --------- --------- ---------
Non-operating Income (Exp.) .................... 4,768 10,458 15,676 362 23,381
Interest Expense ............................... (34,409) (43,668) (78,077) (5,596) (97,844)
--------- --------- --------- --------- ---------
Total Non-operating Income (Exp.) ............ (29,641) (33,210) (62,401) (5,234) (74,463)
--------- --------- --------- --------- ---------
Extraordinary Loss ............................. (59,132) -- (59,132) -- (59,132)
--------- --------- --------- --------- ---------
Income (Loss) before
Minority Interest .............................. $ (46,737) $ 22,887 $ (23,422) $ (2,901) N/A $ (42,979)
========= ========= ========= ========= ---------
Minority Interest............................... 8,247
---------
Net Loss........................................ $ (34,732)
=========
- -------------------
* 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.
</TABLE>
23
<PAGE>
<TABLE>
<CAPTION>
NINE MONTHS ENDED SEPTEMBER 30,
--------------------------------------------------------------------------------------------
PLAZA TAJ TRUMP AC TRUMP TRUMP THCR
ASSOCIATES ASSOCIATES CONSOLIDATED INDIANA MARINA CONSOLIDATED
------------ ----------- ------------ ----------- ---------- -------------
1997 (a) (b) (c)
---- (DOLLARS IN THOUSANDS)
<S> <C> <C> <C> <C> <C> <C>
Table Game Revenues ................. $ 71,085 $ 156,584 $ 227,669 $ 30,949 $ 60,423 $ 319,041
Incr (Decr) over prior period .... $ (7,280) $ 45,978 $ 38,698 $ 19,219 N/A $ 118,340
Table Game Drop ..................... $ 496,513 $ 991,231 $ 1,487,744 $ 165,143 $ 380,850 $ 2,033,737
Incr (Decr) over prior period .... $ (22,936) $ 345,241 $ 322,305 $ 95,032 N/A $ 798,187
Table Win Percentage ................ 14.3% 15.8% 15.3% 18.7% 15.9% 15.7%
Incr (Decr) over prior period .... (.8pts.) (1.3pts) (.9pts) 2.0pts. N/A (.5pts.)
Number of Table Games ............... 118 160 278 69 90 437
Incr (Decr) over prior period .... (5) (6) (11) (2) N/A 77
Slot Revenues ....................... $ 214,422 $ 230,059 $ 444,481 $ 72,341 $ 142,956 $ 659,778
Incr (Decr) over prior period .... $ 11,276 $ 89,966 $ 101,242 $ 39,307 N/A $ 283,505
Slot Handle ......................... $ 2,622,704 $ 2,751,430 $ 5,374,134 $ 1,076,973 $1,744,751 $ 8,195,858
Incr (Decr) over prior period .... $ 205,570 $ 1,065,936 $ 1,271,506 $ 560,908 N/A $ 3,577,165
Slot Win Percentage ................. 8.2% 8.4% 8.3% 6.7% 8.2% 8.1%
Incr (Decr) over prior period .... (.2pts.) .1pts. (.1pts.) .3pts. N/A .0pts.
Number of Slot Machines ............. 4,080 3,924 8,004 1,428 2,214 11,646
Incr (Decr) over prior period .... 649 182 831 (72) N/A 2,973
Other Gaming Revenues ............... N/A $ 14,087 $ 14,087 N/A $ 1,749 $ 15,836
Incr (Decr) over prior period .... N/A $ 4,286 $ 4,286 N/A N/A $ 6,035
Total Gaming Revenues ............... $ 285,507 $ 400,730 $ 686,237 $ 103,290 $ 205,128 $ 994,655
Incr (Decr) over prior period .... $ 3,996 $ 140,230 $ 144,226 $ 58,526 N/A $ 407,880
1996
----
Table Game Revenues ................. $ 78,365 $ 110,606 $ 188,971 $ 11,730 N/A $ 200,701
Table Game Drop ..................... $ 519,449 $ 645,990 $ 1,165,439 $ 70,111 N/A $ 1,235,550
Table Win Percentage ................ 15.1% 17.1% 16.2% 16.7% N/A 16.2%
Number of Table Games ............... 123 166 289 71 N/A 360
Slot Revenues ....................... $ 203,146 $ 140,093 $ 343,239 $ 33,034 N/A $ 376,273
Slot Handle ......................... $ 2,417,134 $ 1,685,494 $ 4,102,628 $ 516,065 N/A $ 4,618,693
Slot Win Percentage ................. 8.4% 8.3% 8.4% 6.4% N/A 8.1%
Number of Slot Machines ............. 3,431 3,742 7,173 1,500 N/A 8,673
Other Gaming Revenues ............... N/A $ 9,801 $ 9,801 N/A N/A $ 9,801
Total Gaming Revenues ............... $ 281,511 $ 260,500 $ 542,011 $ 44,764 N/A $ 586,775
</TABLE>
(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.
Gaming revenues are the primary source of THCR's revenues. The increase in
gaming revenues is primarily attributable to the acquisitions of Taj Associates
on April 17, 1996, Trump Marina on October 7, 1996, and the opening of the
Indiana Riverboat on June 8, 1996.
Gaming costs and expenses were $621,141,000 for the nine months ended
September 30, 1997, an increase of $283,887,000 or 84.2% from $337,254,000 for
the comparable period in 1996. This increase was partially attributable to the
increase of $98,222,000 in Taj Associates' gaming costs and expenses to
$245,660,000 for the nine months ended September 30, 1997. Trump Marina
contributed an increase of $130,088,000 and Trump Indiana contributed an
increase of $45,068,000 to $66,674,000 for the nine months ended September 30,
1997. Gaming costs and expenses for Plaza Associates were $178,719,000 for the
nine months ended September 30, 1997, an increase of $10,509,000 or 6.2% from
$168,210,000 for the comparable period in 1996. Plaza Associates' increase is
primarily due to increased promotional and operating expenses as well as taxes
associated with increased levels of gaming from the comparable period in 1996.
24
<PAGE>
General and administrative expenses were $203,299,000 for the nine months
ended September 30, 1997, an increase of $84,750,000 or 71.5% from general and
administrative expenses of $118,549,000 for the comparable period in 1996. Taj
Associates incurred an increase of $25,122,000 to $64,631,000 for the nine
months ended September 30, 1997. Trump Marina incurred $48,832,000 in general
and administrative expenses, and Trump Indiana incurred an increase of
$12,005,000 to $21,831,000 for the nine months ended September 30, 1997, which
includes a $1,500,000 management fee payable to THCR Holdings. Plaza Associates'
general and administrative expenses were $59,429,000 for the nine months ended
September 30, 1997, a decrease of $223,000 from the comparable period in 1996.
During the second quarter of 1997, 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 revaluated to have a
forty year life and furniture and fixtures were determined to have a seven year
life. During the third quarter of 1997, Trump Indiana revised its estimates of
the useful life of the riverboat and its improvements from fifteen to thirty
years. 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 nine months ended September 30, 1997, the net effect of applying
these new lives was to increase net income by $4,496,000 and decrease loss per
share by $.19.
Non-operating income decreased in 1997 primarily due to non-recurring
income in 1996. Non-operating income in 1996 included Taj Associates' one-time
$10,000,000 and Plaza Associates' one-time $5,000,000 non-refundable licensing
fees resulting from agreements with Atlantic Jersey Thermal Systems, Inc. to
operate their heating and cooling facilities for a period of 20 years.
The extraordinary loss of $59,132,000 for the nine months ended September
30, 1996, relates to the redemption of the Plaza Notes and the write-off of
unamortized deferred financing costs on April 17, 1996.
SEASONALITY
The casino industry in Atlantic City is seasonal in nature; accordingly,
the results of operations for the period ending September 30, 1997 are not
necessarily indicative of the operating results for a full year.
ITEM 3 -- QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
Pursuant to the General Instructions to Rule 305 of Regulation S-K, the
quantitative and qualitative disclosures called for by this Item 3 and by Rule
305 of Regulation S-K are inapplicable to the Registrants at this time.
PART II -- OTHER INFORMATION
ITEM -- LEGAL PROCEEDINGS
THCR and certain of its subsidiaries, affiliates and 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.
Plaza Associates. The Casino Reinvestment Development Authority ("CRDA") is
required to set aside funds for investment in hotel development projects in
Atlantic City undertaken by casino licensees which result in the construction or
rehabilitation of at least 200 hotel rooms. These investments are to fund up to
27% of the cost to casino licensees of such projects. Plaza Associates made
application for such funding to the CRDA with respect to its proposed
construction of the Trump Plaza East facilities, demolition of a structure
attached thereto, development of an appurtenant public park, roadway and parking
area and acquisition of the entire project site. The CRDA, in rulings through
January 10, 1995, approved the hotel development project and, with respect to
same, reserved to Plaza Associates the right to take up to approximately $14.2
million investment tax credits. Plaza Associates has, except for certain small
parcels discussed below, acquired the site and has constructed the proposed
hotel tower, public park, roadway and parking area.
As part of its approval and on the basis of its powers of eminent domain,
the CRDA, during 1994, initiated certain condemnation proceedings in the New
Jersey Superior Court to acquire four small parcels of land within the project
site. These proceedings are currently pending and include claims that the CRDA
did not properly determine that the parcels were to be used for public purposes.
The CRDA is currently drafting a summary judgment motion seeking dismissal of
these claims as to three of the parcels.
25
<PAGE>
The defendants in two of those matters have filed a separate joint
complaint in the New Jersey Superior Court alleging, among other claims, that
the CRDA and Plaza Associates are wrongfully attempting to deprive them of
property rights in violation of their constitutional and civil rights. Coking,
et al. v. Casino Reinvestment Development Authority, et.al., Docket No.
ATL-L-2555-97. The CRDA's motion for summary judgment and Plaza Associates'
motion to dismiss for failure to state a claim were granted by the New Jersey
Superior Court on October 24 and November 11, 1997.
Other Litigation. On March 13, 1997, THCR filed a lawsuit in the United
States District Court, District of New Jersey, against Mirage Resorts
Incorporated ("Mirage"), the State of New Jersey ("State"), the New Jersey
Department of Transportation ("NJDOT"), the South Jersey Transportation
Authority ("SJTA"), the CRDA, the New Jersey Transportation Trust Fund Authority
and others. THCR was seeking declaratory and injunctive relief to recognize and
prevent violations by the defendants of the casino clause of the New Jersey
State Constitution and various federal securities and environmental laws
relating to proposed infrastructure improvements in the Atlantic City marina
area. While this action was pending, defendants State and the CRDA then filed an
action in the New Jersey State Court seeking declaration of the claim relating
to the casino clause of the New Jersey State Constitution. On May 1, 1997, the
United States District Court dismissed the federal claims and ruled that the
State constitutional claims should be pursued in State Court. This decision is
currently being appealed. On May 14, 1997, the State Court entered a summary
judgment in favor of the State and the CRDA. This decision is also being
appealed.
On June 26, 1997, THCR filed an action against NJDOT, SJTA, Mirage and
others, in the Superior Court of New Jersey, Chancery Division, Atlantic County
(the "Chancery Division Action"). THCR is seeking to declare unlawful and enjoin
certain actions and omissions of the defendants arising out of and relating to a
certain Road Development Agreement dated as of January 10, 1997, by and among
NJDOT, SJTA and Mirage (the "Road Development Agreement") and the public funding
of a certain road and tunnel project to be constructed in Atlantic City, as
further described in the Road Development Agreement. THCR moved to consolidate
this action with other previously filed related actions. Defendants opposed
THCR's motion to consolidate the Chancery Division Action, initially moved to
dismiss this action on procedural grounds and subsequently moved to dismiss this
action on substantive grounds. On October 20, 1997, the Chancery Court denied
the defendants' motion to dismiss this action on procedural grounds, but granted
the motion to dismiss this action on substantive grounds. THCR intends to appeal
this decision.
On June 26, 1997, THCR also filed an action, in lieu of prerogative writs,
against the CRDA, in the Superior Court of New Jersey, Law Division, Atlantic
County, seeking review of the CRDA's April 15, 1997 approval of funding ($120
million principal amount plus interest) for the road and tunnel project
discussed above, a declaratory judgment that the said project is not eligible
for such CRDA funding, and an injunction prohibiting the CRDA from contributing
such funding to the said project. Defendants have moved to dismiss this action
on procedural grounds and have also sought to transfer this action to New
Jersey's Appellate Division. On October 3, 1997, the New Jersey Superior Court
transferred this action to the Appellate Division where it is currently pending.
On September 9, 1997, Mirage filed a complaint against Trump, THCR and
Hilton Hotels Corporation, in the United States District Court for the Southern
District of New York. The complaint seeks damages for alleged violations of
antitrust laws, tortious interference with prospective economic advantage and
tortious inducement of a break of fiduciary duties arising out of activities
purportedly engaged in by defendants in furtherance of an alleged conspiracy to
impede Mirage's efforts to build a casino resort in the Marina District of
Atlantic City, New Jersey. Among other things, Mirage contends that the
defendants filed several frivolous lawsuits and funded others that challenge the
proposed state funding mechanisms for the construction of a proposed roadway and
tunnel that would be paid for chiefly through government funds and which would
link the Atlantic City Expressway with the site of Mirage's proposed new casino
resort. THCR and Trump believe that Mirage's claims are without merit.
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, Trump Casinos, Inc., 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
26
<PAGE>
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.
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.
Trump Indiana. Commencing in early 1994, Trump Indiana (which was then
wholly owned by Trump), through its Indiana counsel, had discussions with eight
Indiana residents regarding the potential purchase by such residents of
non-voting stock of Trump Indiana, representing a total of 7.5% of the equity in
Trump Indiana. The purchase price of the stock was to have been paid with a
promissory note secured by the stock purchased, although the purchase price and
other material terms of the proposed purchase were never agreed upon. Such
discussions did not result in an agreement for, or the purchase of, any stock by
the residents. It was subsequently determined to include Trump Indiana as a
wholly owned subsidiary of THCR Holdings in connection with the June 1995
Offerings. The residents then asserted a right to purchase stock in Trump
Indiana. Trump Indiana and THCR did not agree with the residents' assertions of
any such rights with respect to the stock of Trump Indiana or otherwise, and so
advised the residents. Although discussions had been ongoing with respect to the
resolution of this matter, on March 29, 1996, in the matter entitled Keshav D.
Aggarwal, et. al. v. Donald J. Trump, Trump Hotels & Casino Resorts, Inc., Trump
Hotels & Casino Resorts Holdings, L.P. and Trump Indiana, Inc., such residents
filed a complaint with respect to this matter in the United States District
Court, Southern District of Indiana, seeking, among other things, compensatory
and punitive damages in an unspecified amount and that the court order the
defendants to transfer ownership of 7.5% of Trump Indiana to the plaintiffs.
Trump, THCR, THCR Holdings and Trump Indiana filed an answer to the complaint on
May 31, 1996. Cross-motions for summary judgment have been filed by all parties
and a decision regarding each motion is expected in the near future. In
September 1997, a monetary settlement was reached between all defendants and
four of the plaintiffs, which settlement is pending. A trial date has been set
for March 1998. THCR and the other defendants intend to vigorously contest the
allegations against them. Further, management believes that the further
resolution of these claims will not have a material adverse effect on THCR.
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 AND USE OF PROCEEDS
None.
ITEM 3 -- DEFAULTS UPON SENIOR SECURITIES
None.
ITEM 4 -- SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
None.
27
<PAGE>
ITEM 5 -- OTHER INFORMATION
None.
ITEM 6 -- EXHIBITS AND REPORTS ON FORM 8-K
A. EXHIBITS:
<TABLE>
<CAPTION>
EXHIBIT NO. DESCRIPTION OF EXHIBIT
---------- ----------------------
<S> <C>
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.
</TABLE>
(1) Filed only with the Quarterly Report on Form 10-Q of THCR for the
quarter ended September 30, 1997.
(2) Filed only with the Quarterly Report on Form 10-Q of THCR
Holdings and THCR Funding for the quarter ended September 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 July 1, 1997 and ending September 30, 1997.
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, INC.
(Registrant)
Date: November 14, 1997
By: /s/ NICHOLAS L. RIBIS
----------------------------------
NICHOLAS L. RIBIS
PRESIDENT, CHIEF EXECUTIVE OFFICER,
CHIEF FINANCIAL OFFICER AND DIRECTOR
(DULY AUTHORIZED OFFICER AND PRINCIPAL
FINANCIAL OFFICER)
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 HOLDINGS, L.P.
(Registrant)
Date: November 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)
30
<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: November 14, 1997
By: /s/ NICHOLAS L. RIBIS
---------------------------------------
NICHOLAS L. RIBIS
PRESIDENT, CHIEF EXECUTIVE OFFICER,
CHIEF FINANCIAL OFFICER AND DIRECTOR
(DULY AUTHORIZED OFFICER AND PRINCIPAL
FINANCIAL OFFICER)
31
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-START> JAN-01-1997
<PERIOD-END> SEP-30-1997
<CASH> 146,304
<SECURITIES> 0
<RECEIVABLES> 84,824
<ALLOWANCES> 17,453
<INVENTORY> 12,333
<CURRENT-ASSETS> 255,669
<PP&E> 2,294,486
<DEPRECIATION> 277,112
<TOTAL-ASSETS> 2,473,308
<CURRENT-LIABILITIES> 228,071
<BONDS> 1,624,570
0
0
<COMMON> 241
<OTHER-SE> 356,655
<TOTAL-LIABILITY-AND-EQUITY> 2,473,308
<SALES> 1,085,862
<TOTAL-REVENUES> 1,226,082
<CGS> 0
<TOTAL-COSTS> 681,964 <F1>
<OTHER-EXPENSES> 269,953 <F2>
<LOSS-PROVISION> 6,393
<INTEREST-EXPENSE> 157,835
<INCOME-PRETAX> (14,117)
<INCOME-TAX> 0
<INCOME-CONTINUING> (14,117)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (14,117)
<EPS-PRIMARY> (0.62)
<EPS-DILUTED> (0.62)
<FN>
<F1> Includes gaming, lodging, food & beverage and other
<F2> Includes general & administration and depreciation & amortization
</FN>
</TABLE>
