<PAGE>
================================================================================
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
[x] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended: September 30, 1999
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from _____ to _____
Commission file 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)
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 4, 1999 was
22,195,256.
The number of outstanding shares of Class B Common Stock, par value $.01
per share, of Trump Hotels & Casino Resorts, Inc. as of November 4, 1999
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 4,
1999 was 100.
================================================================================
<PAGE>
TRUMP HOTELS & CASINO RESORTS, INC.,
TRUMP HOTELS & CASINO RESORTS HOLDINGS, L.P.
AND
TRUMP HOTELS & CASINO RESORTS FUNDING, INC.
INDEX TO FORM 10-Q
<TABLE>
<CAPTION>
PART I -- FINANCIAL INFORMATION
<S> <C> <C>
ITEM 1 -- Financial Statements Page No.
--------
Condensed Consolidated Balance Sheets of Trump Hotels & Casino Resorts, Inc.
as of December 31, 1998 and September 30, 1999 (unaudited) 1
Condensed Consolidated Statements of Operations of Trump Hotels & Casino Resorts, Inc.
for the Three and Nine Months Ended September 30, 1998 and 1999 (unaudited) 2
Condensed Consolidated Statement of Stockholders' Equity of Trump Hotels & Casino Resorts, Inc.
for the Nine Months Ended September 30, 1999 (unaudited) 3
Condensed Consolidated Statements of Cash Flows of Trump Hotels & Casino Resorts, Inc.
for the Nine Months Ended September 30, 1998 and 1999 (unaudited) 4
Condensed Consolidated Balance Sheets of Trump Hotels & Casino Resorts Holdings, L.P.
as of December 31, 1998 and September 30, 1999 (unaudited) 5
Condensed Consolidated Statements of Operations of Trump Hotels & Casino Resorts Holdings, L.P.
for the Three and Nine Months Ended September 30, 1998 and 1999 (unaudited) 6
Condensed Consolidated Statement of Partners' Capital of Trump Hotels & Casino Resorts
Holdings, L.P. for the Nine Months Ended September 30, 1999 (unaudited) 7
Condensed Consolidated Statements of Cash Flows of Trump Hotels & Casino Resorts Holdings, L.P.
for the Nine Months Ended September 30, 1998 and 1999 (unaudited) 8
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) 9
ITEM 2 -- Management's Discussion and Analysis of Financial Condition and Results
of Operations 12
ITEM 3 -- Quantitative and Qualitative Disclosures About Market Risk 16
</TABLE>
<PAGE>
TRUMP HOTELS & CASINO RESORTS, INC.
TRUMP HOTELS & CASINO RESORTS HOLDINGS, L.P.
AND
TRUMP HOTELS & CASINO RESORTS FUNDING, INC.
INDEX TO FORM 10-Q CONT'D
Page No.
--------
PART II -- OTHER INFORMATION
ITEM 1 -- Legal Proceedings 16
ITEM 2 -- Changes in Securities and Use of Proceeds 16
ITEM 3 -- Defaults Upon Senior Securities 16
ITEM 4 -- Submission of Matters to a Vote of Security Holders 16
ITEM 5 -- Other Information 17
ITEM 6 -- Exhibits and Reports on Form 8-K 17
SIGNATURES
Signature -- Trump Hotels & Casino Resorts, Inc. 18
Signature -- Trump Hotels & Casino Resorts Holdings, L.P. 19
Signature -- Trump Hotels & Casino Resorts Funding, Inc. 20
<PAGE>
PART I - FINANCIAL INFORMATION
ITEM 1 - FINANCIAL STATEMENTS
TRUMP HOTELS & CASINO RESORTS, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(dollars in thousands, except share data)
ASSETS
December 31, September 30,
1998 1999
------------ -------------
(unaudited)
CURRENT ASSETS:
Cash and cash equivalents............................ $ 114,757 $ 179,611
Receivables, net..................................... 70,951 60,159
Inventories.......................................... 12,804 12,848
Due from affiliates, net............................. 12,774 24,230
Prepaid expenses and other current assets............ 18,679 12,942
---------- ----------
Total Current Assets............................. 229,965 289,790
INVESTMENT IN BUFFINGTON HARBOR, L.L.C................ 40,765 38,854
INVESTMENT IN TRUMP'S CASTLE PIK NOTES................ 64,137 73,067
PROPERTY AND EQUIPMENT, NET........................... 1,977,609 1,865,236
CASH RESTRICTED FOR FUTURE CONSTRUCTION............... 2,523 -
DEFERRED BOND AND LOAN ISSUANCE COSTS, NET............ 37,978 32,579
DUE FROM AFFILIATES................................... 15,766 3,955
OTHER ASSETS.......................................... 59,721 62,822
---------- ----------
Total Assets.......................................... $2,428,464 $2,366,303
========== ==========
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Current maturities of long-term debt................. $ 10,504 $ 14,346
Accounts payable and accrued expenses................ 118,597 143,480
Accrued interest payable............................. 30,379 81,316
---------- ----------
Total Current Liabilities........................ 159,480 239,142
LONG-TERM DEBT, net of current maturities............. 1,838,492 1,847,062
OTHER LONG-TERM LIABILITIES........................... 18,044 24,184
---------- ----------
Total Liabilities..................................... 2,016,016 2,110,388
---------- ----------
MINORITY INTEREST..................................... 125,540 68,296
STOCKHOLDERS' EQUITY:
Common Stock, $.01 par value, 75,000,000 shares
authorized, 24,206,756 issued and outstanding....... 242 242
Class B Common Stock, $.01 par value, 1,000 shares
authorized, issued and outstanding.................. - -
Additional Paid in Capital........................... 455,645 455,645
Accumulated Deficit.................................. (149,444) (248,733)
Less treasury stock, 2,011,500 shares of THCR Common
Stock, at cost...................................... (19,535) (19,535)
---------- ----------
Total Stockholders' Equity............................ 286,908 187,619
---------- ----------
Total Liabilities and Stockholders' Equity............ $2,428,464 $2,366,303
========== ==========
The accompanying notes are an integral part of these condensed consolidated
financial statements.
1
<PAGE>
TRUMP HOTELS & CASINO RESORTS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
FOR THE THREE AND NINE MONTHS ENDED SEPTEMBER 30, 1998 AND 1999
(unaudited)
(dollars in thousands, except share data)
<TABLE>
<CAPTION>
Three Months Ended Nine Months Ended
September 30, September 30,
-------------------------- ----------------------------------
1998 1999 1998 1999
------------ ------------ -------------- ------------------
<S> <C> <C> <C> <C>
REVENUE:
Gaming.............................................. $ 364,172 $ 350,308 $ 971,945 $ 972,529
Rooms............................................... 26,841 28,569 70,930 72,262
Food and Beverage................................... 40,927 40,429 110,443 109,523
Other............................................... 13,132 30,902 33,556 51,442
----------- ----------- ----------- -----------
Gross Revenues...................................... 445,072 450,208 1,186,874 1,205,756
Less -- Promotional allowances...................... 47,685 47,136 128,578 125,522
----------- ----------- ----------- -----------
Net Revenues........................................ 397,387 403,072 1,058,296 1,080,234
----------- ----------- ----------- -----------
COSTS AND EXPENSES:
Gaming.............................................. 220,846 210,945 607,901 598,238
Rooms............................................... 8,470 8,930 23,739 26,177
Food and Beverage................................... 13,989 14,901 38,199 40,175
General and Administrative.......................... 70,536 70,213 200,548 209,212
Depreciation and Amortization....................... 21,058 21,041 62,657 63,367
Trump World's Fair Closing Costs.................... - 128,375 - 128,375
----------- ----------- ----------- -----------
334,899 454,405 933,044 1,065,544
----------- ----------- ----------- -----------
Income (loss) from operations....................... 62,488 (51,333) 125,252 14,690
----------- ----------- ----------- -----------
NON-OPERATING INCOME AND (EXPENSES):
Interest income..................................... 2,019 1,833 7,166 5,143
Interest expense.................................... (55,390) (55,876) (166,679) (166,781)
Other non-operating expense......................... - (259) (286) (1,719)
----------- ----------- ----------- -----------
(53,371) (54,302) (159,799) (163,357)
----------- ----------- ----------- -----------
Income (Loss) before equity in loss of Buffington
Harbor, L.L.C.,minority interest, and cumulative
effect of change in accounting principle............ 9,117 (105,635) (34,547) (148,667)
Equity in loss of Buffington Harbor, L.L.C........... (742) (734) (2,225) (2,246)
----------- ----------- ----------- -----------
Income (Loss) before minority interest and
cumulative effect of change in accounting
principle........................................... 8,375 (106,369) (36,772) (150,913)
Minority Interest.................................... (3,063) 38,899 13,434 55,189
----------- ----------- ----------- -----------
Income (Loss) before cumulative effect of change
in accounting principle............................. 5,312 (67,470) (23,338) (95,724)
Cumulative effect of change in accounting principle
($5,620), net of minority interest ($2,055)......... - - - (3,565)
----------- ----------- ----------- -----------
NET INCOME (LOSS).................................... $ 5,312 $ (67,470) $ (23,338) $ (99,289)
=========== =========== =========== ===========
Basic and diluted earnings (loss) per share
before cumulative effect of change in accounting
principle........................................... $.24 $(3.04) $(1.05) $(4.31)
Cumulative effect of change in accounting
principle........................................... - - - (.16)
----------- ----------- ----------- -----------
Basic and diluted earnings (loss) per share.......... $.24 $(3.04) $(1.05) $(4.47)
=========== =========== =========== ===========
Average number of shares outstanding................. 22,195,256 22,195,256 22,206,428 22,195,256
=========== =========== =========== ===========
</TABLE>
The accompanying notes are an integral part of these condensed consolidated
financial statements.
2
<PAGE>
TRUMP HOTELS & CASINO RESORTS, INC.
CONDENSED CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 1999
(unaudited)
(dollars in thousands)
<TABLE>
<CAPTION>
Number of Shares
------------------
Common Additional
Class B Stock Paid in Accumulated Treasury
Common Common Amount Capital Deficit Stock Total
---------- ------ ------ -------- ------------ --------- --------
<S> <C> <C> <C> <C> <C> <C> <C>
Balance, December 31, 1998... 24,206,756 1,000 $242 $455,645 $(149,444) $(19,535) $286,908
Net Loss..................... (99,289) (99,289)
---------- ----- ------ -------- ----------- -------- --------
Balance, September 30, 1999.. 24,206,756 1,000 $242 $455,645 $(248,733) $(19,535) $187,619
========== ===== ====== ======== =========== ======== ========
</TABLE>
The accompanying notes are an integral part of this condensed consolidated
financial statement.
3
<PAGE>
TRUMP HOTELS & CASINO RESORTS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 1998 AND 1999
(unaudited)
(dollars in thousands)
<TABLE>
<CAPTION>
1998 1999
--------- ----------
CASH FLOWS FROM OPERATING ACTIVITIES:
<S> <C> <C>
Net Loss........................................................................ $(23,338) $(99,289)
Adjustments to reconcile net loss to net cash flows from operating activities:
Cumulative effect of change in accounting principle............................ - 3,565
Issuance of debt in exchange for accrued interest.............................. 5,612 6,418
Interest income - Castle PIK Notes............................................. (7,809) (8,930)
Equity in loss of Buffington Harbor, L.L.C..................................... 2,225 2,246
Depreciation and amortization.................................................. 62,657 63,367
Minority interest in net loss.................................................. (13,434) (55,189)
Accretion of discounts on mortgage notes....................................... 3,343 3,738
Amortization of deferred loan costs............................................ 5,997 5,398
Provision for losses on receivables............................................ 10,510 10,581
Valuation allowance of CRDA investments and amortization of Indiana
gaming costs.................................................................. 6,463 7,050
Gain on disposition of property................................................ - (385)
Gain on property received upon termination of lease............................ - (17,200)
Write-off of net book value of Trump World's Fair assets....................... - 97,682
(Increase) decrease in receivables.............................................. (14,022) 211
Increase in inventories......................................................... (453) (44)
(Increase) decrease in other current assets..................................... (5,601) 663
Decrease in due from affiliates................................................. 552 355
Increase in other assets........................................................ (9,997) (174)
Increase in accounts payable and accrued expenses............................... 9,967 24,192
Increase in accrued interest payable............................................ 52,622 50,937
(Decrease) increase in other long-term liabilities.............................. (366) 3,364
-------- --------
Net cash flows provided by operating activities............................... 84,928 98,556
-------- --------
CASH FLOWS FROM INVESTING ACTIVITIES:
Acquisition of property and equipment, net of property received on lease
termination................................................................... (25,772) (18,669)
Proceeds from disposition of property.......................................... - 4,502
Investment in Buffington Harbor, L.L.C......................................... 88 (335)
CRDA Investments............................................................... (10,272) (10,524)
Restricted cash................................................................ 6,013 2,523
-------- --------
Net cash flows used in investing activities................................... (29,943) (22,503)
-------- --------
CASH FLOWS FROM FINANCING ACTIVITIES:
Purchase of treasury stock..................................................... (2,259) -
Issuance of long-term debt..................................................... 68,164 -
Payment of long-term debt...................................................... (72,992) (11,199)
Cost of issuing debt........................................................... (628) -
-------- --------
Net cash flows used in financing activities................................... (7,715) (11,199)
-------- --------
Net increase in cash and cash equivalents..................................... 47,270 64,854
CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD................................. 140,328 114,757
-------- --------
CASH AND CASH EQUIVALENTS AT END OF PERIOD....................................... $187,598 $179,611
======== ========
CASH INTEREST PAID............................................................... $104,710 $106,138
======== ========
Supplemental Disclosure of Non-Cash Activities:
Purchase of property and equipment under capital lease obligations............... $ 2,192 $ 12,677
======== ========
</TABLE>
The accompanying notes are an integral part of these condensed consolidated
financial statements.
4
<PAGE>
TRUMP HOTELS & CASINO RESORTS HOLDINGS, L.P.
CONDENSED CONSOLIDATED BALANCE SHEETS
(dollars in thousands)
ASSETS
<TABLE>
<CAPTION>
December 31, September 30,
1998 1999
------------ --------------
(unaudited)
<S> <C> <C>
CURRENT ASSETS:
Cash and cash equivalents.................. $ 114,753 $ 179,607
Receivables, net........................... 70,951 60,159
Inventories................................ 12,804 12,848
Due from affiliates, net................... 12,774 24,230
Prepaid expenses and other current assets.. 18,679 12,942
---------- ----------
Total Current Assets................... 229,961 289,786
INVESTMENT IN BUFFINGTON HARBOR, L.L.C...... 40,765 38,854
INVESTMENT IN TRUMP'S CASTLE PIK NOTES...... 64,137 73,067
PROPERTY AND EQUIPMENT, NET................. 1,977,609 1,865,236
CASH RESTRICTED FOR FUTURE CONSTRUCTION..... 2,523 -
DEFERRED BOND AND LOAN ISSUANCE COSTS, NET.. 37,978 32,579
DUE FROM AFFILIATES......................... 15,766 3,955
OTHER ASSETS................................ 59,721 62,822
---------- ----------
Total Assets................................ $2,428,460 $2,366,299
========== ==========
</TABLE>
LIABILITIES AND PARTNERS' CAPITAL
<TABLE>
<CAPTION>
CURRENT LIABILITIES:
<S> <C> <C>
Current maturities of long-term debt...... $ 10,504 $ 14,346
Accounts payable and accrued expenses..... 118,597 143,480
Accrued interest payable.................. 30,379 81,316
---------- ----------
Total Current Liabilities............. 159,480 239,142
LONG-TERM DEBT, net of current maturities.. 1,838,492 1,847,062
OTHER LONG-TERM LIABILITIES................ 18,044 24,184
---------- ----------
Total Liabilities.......................... 2,016,016 2,110,388
---------- ----------
PARTNERS' CAPITAL:
Partners' capital.......................... 652,503 652,503
Accumulated deficit........................ (220,524) (377,057)
Less cost of stock of THCR................. (19,535) ( 19,535)
---------- ----------
Total Partners' Capital.................... 412,444 255,911
---------- ----------
Total Liabilities and Partners' Capital.... $2,428,460 $2,366,299
========== ==========
</TABLE>
The accompanying notes are an integral part of these condensed consolidated
financial statements.
5
<PAGE>
TRUMP HOTELS & CASINO RESORTS HOLDINGS, L.P.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
FOR THE THREE AND NINE MONTHS ENDED SEPTEMBER 30, 1998 AND 1999
(unaudited)
(dollars in thousands)
<TABLE>
<CAPTION>
Three Months Ended Nine Months Ended
September 30, September 30,
-------------------------- ------------------------
1998 1999 1998 1999
-------------- ---------- ----------- -----------
<S> <C> <C> <C> <C>
REVENUES:
Gaming.............................................. $364,172 $ 350,308 $ 971,945 $ 972,529
Rooms............................................... 26,841 28,569 70,930 72,262
Food and Beverage................................... 40,927 40,429 110,443 109,523
Other............................................... 13,132 30,902 33,556 51,442
-------- --------- ---------- ----------
Gross Revenues...................................... 445,072 450,208 1,186,874 1,205,756
Less -- Promotional allowances...................... 47,685 47,136 128,578 125,522
-------- --------- ---------- ----------
Net Revenues........................................ 397,387 403,072 1,058,296 1,080,234
-------- --------- ---------- ----------
COSTS AND EXPENSES:
Gaming.............................................. 220,846 210,945 607,901 598,238
Rooms............................................... 8,470 8,930 23,739 26,177
Food and Beverage................................... 13,989 14,901 38,199 40,175
General and Administrative.......................... 70,536 70,213 200,548 209,212
Depreciation and Amortization....................... 21,058 21,041 62,657 63,367
Trump World's Fair Closing Costs.................... - 128,375 - 128,375
-------- --------- ---------- ----------
334,899 454,405 933,044 1,065,544
-------- --------- ---------- ----------
Income (loss) from operations....................... 62,488 (51,333) 125,252 14,690
-------- --------- ---------- ----------
NON-OPERATING INCOME AND (EXPENSES):
Interest income..................................... 2,019 1,833 7,166 5,143
Interest expense.................................... (55,390) (55,876) (166,679) (166,781)
Other non-operating expense......................... - (259) (286) (1,719)
-------- --------- ---------- ----------
(53,371) (54,302) (159,799) (163,357)
-------- --------- ---------- ----------
Income (Loss) before equity in loss of Buffington
Harbor, L.L.C., and cumulative effect of change
in accounting principle............................. 9,117 (105,635) (34,547) (148,667)
Equity in loss of Buffington Harbor, L.L.C........... (742) (734) (2,225) (2,246)
-------- --------- ---------- ----------
Income (Loss) before cumulative effect of change in
accounting principle................................ 8,375 (106,369) (36,772) (150,913)
Cumulative effect of change in accounting
principle........................................... - - - (5,620)
-------- --------- ---------- ----------
NET INCOME (LOSS).................................... $ 8,375 $(106,369) $ (36,772) $ (156,533)
======== ========= ========== ==========
</TABLE>
The accompanying notes are an integral part of these condensed consolidated
financial statements.
6
<PAGE>
TRUMP HOTELS & CASINO RESORTS HOLDINGS, L.P.
CONDENSED CONSOLIDATED STATEMENT OF PARTNERS' CAPITAL
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 1999
(unaudited)
(dollars in thousands)
Partners' Accumulated THCR
Capital Deficit Common Stock Total
------- ------- ------------ -----
Balance, December 31, 1998 $652,503 $(220,524) $(19,535) $412,444
Net Loss................... (156,533) (156,533)
--------- --------- -------- --------
Balance, September 30, 1999 $652,503 $(377,057) $(19,535) $255,911
========= ========= ======== ========
The accompanying notes are an integral part of this condensed consolidated
financial statement.
7
<PAGE>
TRUMP HOTELS & CASINO RESORTS HOLDINGS, L.P.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 1998 AND 1999
(unaudited)
(dollars in thousands)
<TABLE>
<CAPTION>
1998 1999
--------- -----------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net Loss........................................................................ $(36,772) $(156,533)
Adjustments to reconcile net loss to net cash flows from operating activities:
Cumulative effect of change in accounting principle............................ - 5,620
Issuance of debt in exchange for accrued interest.............................. 5,612 6,418
Interest income - Castle PIK Notes............................................. (7,809) (8,930)
Equity in loss of Buffington Harbor, L.L.C..................................... 2,225 2,246
Depreciation and amortization.................................................. 62,657 63,367
Accretion of discounts on mortgage notes....................................... 3,343 3,738
Amortization of deferred loan costs............................................ 5,997 5,398
Provision for losses on receivables............................................ 10,510 10,581
Valuation allowance of CRDA investments and amortization of Indiana
gaming costs.................................................................. 6,463 7,050
Gain on disposition of property................................................ - (385)
Gain on property received upon termination of lease............................ - (17,200)
Write-off of net book value of Trump World's Fair assets....................... - 97,682
(Increase) decrease in receivables.............................................. (14,022) 211
Increase in inventories......................................................... (453) (44)
(Increase) decrease in other current assets..................................... (5,601) 663
Decrease in due from affiliates................................................. 552 355
Increase in other assets........................................................ (9,997) (174)
Increase in accounts payable and accrued expenses............................... 9,967 24,192
Increase in accrued interest payable............................................ 52,622 50,937
(Decrease) increase in other long-term liabilities.............................. (366) 3,364
-------- ---------
Net cash flows provided by operating activities............................... 84,928 98,556
-------- ---------
CASH FLOWS FROM INVESTING ACTIVITIES:
Acquisition of property and equipment, net of property received on lease
termination................................................................... (25,772) (18,669)
Proceeds from disposition of property.......................................... - 4,502
Investment in Buffington Harbor, L.L.C......................................... 88 (335)
CRDA Investments............................................................... (10,272) (10,524)
Restricted cash................................................................ 6,013 2,523
-------- ---------
Net cash flows used in investing activities................................... (29,943) (22,503)
-------- ---------
CASH FLOWS FROM FINANCING ACTIVITIES:
Purchase of treasury stock..................................................... (2,259) -
Issuance of long-term debt..................................................... 68,164 -
Payment of long-term debt...................................................... (72,992) (11,199)
Cost of issuing debt........................................................... (628) -
-------- ---------
Net cash flows used in financing activities................................... (7,715) (11,199)
-------- ---------
Net increase in cash and cash equivalents..................................... 47,270 64,854
CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD................................. 140,324 114,753
-------- ---------
CASH AND CASH EQUIVALENTS AT END OF PERIOD....................................... $187,594 $ 179,607
======== =========
CASH INTEREST PAID............................................................... $104,710 $ 106,138
======== =========
Supplemental Disclosure of Non-Cash Activities:
Purchase of property and equipment under capital lease obligations............... $ 2,192 $ 12,677
======== =========
</TABLE>
The accompanying notes are an integral part of these condensed consolidated
financial statements.
8
<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. ("THCR"), a Delaware corporation, and Trump
Hotels & Casino Resorts Holdings, L.P. ("THCR Holdings"), a Delaware limited
partnership, and its wholly owned subsidiaries. THCR Holdings is currently
owned approximately 63.4% by THCR, as both a general and limited partner, and
approximately 36.6% 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. Such limited partnership
interest is convertible at Trump's option into 13,918,723 shares of THCR's
common stock (the "THCR Common Stock") (subject to certain adjustments),
representing approximately 38.5% of the outstanding shares of THCR Common Stock.
Accordingly, the accompanying condensed consolidated financial statements
include those of (i) THCR and its 63.4% owned subsidiary, THCR Holdings, and
(ii) THCR Holdings and its wholly owned subsidiaries.
All significant intercompany balances and transactions have been eliminated
in the accompanying condensed consolidated financial statements.
The accompanying condensed consolidated financial statements have been
prepared without audit. In the opinion of management, all adjustments,
consisting of only normal recurring adjustments necessary to present fairly the
financial position, the results of operations and cash flows for the periods
presented, have been made.
The accompanying condensed consolidated financial statements have been
prepared pursuant to the rules and regulations of the Securities and Exchange
Commission ("SEC"). Accordingly, certain information and note disclosures
normally included in financial statements prepared in conformity with generally
accepted accounting principles have been condensed or omitted.
These condensed consolidated financial statements should be read in
conjunction with the consolidated financial statements and notes thereto
included in the annual report on Form 10-K for the year ended December 31, 1998
filed with the SEC.
The casino industry in Atlantic City is seasonal in nature; accordingly,
results of operations for the three and nine month periods ended September 30,
1999 are not necessarily indicative of the operating results for a full year.
THCR and THCR Holdings commenced operations on June 12, 1995. THCR, THCR
Holdings and Trump Hotels & Casino Resorts Funding, Inc. ("THCR Funding") have
no operations and their ability to service their debt is dependent on the
successful operations of their wholly owned subsidiaries: Trump Atlantic City
Associates ("Trump AC"), which owns Trump Taj Mahal Associates ("Taj
Associates") and Trump Plaza Associates ("Plaza Associates"); Trump Indiana,
Inc. ("Trump Indiana") and Trump's Castle Associates, L.P. ("Castle
Associates"), which operates the Trump Marina Hotel Casino ("Trump Marina").
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.
Basic and Diluted Earnings (Loss) Per Share
Basic earnings (loss) per share is based on the weighted average number of
shares of THCR Common Stock outstanding. Diluted earnings (loss) per share are
the same as basic earnings (loss) per share as common stock equivalents have not
been included as they would be anti-dilutive. The shares of THCR's Class B
Common Stock owned by Trump have no economic interest and therefore are not
considered in the calculation of weighted average shares outstanding.
Reclassifications
Certain reclassifications have been made to prior year financial statements
to conform to the current year presentation.
9
<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)
(2) Financial Information
Financial information relating to THCR Funding is as follows:
<TABLE>
<CAPTION>
December 31, September 30,
1998 1999
-------------- ----------------
(unaudited)
<S> <C> <C>
Total Assets (including THCR Holdings' 15 1/2% Senior Secured
Notes due 2005 ("the Senior Notes") receivable of
$145,000,000 and accrued interest at December 31,
1998 and September 30, 1999).............................. $145,936,000 $151,555,000
============ ===============
Total Liabilities and Capital (including $145,000,000 of
Senior Notes and accrued interest payable)................ $145,936,000 $151,555,000
============ ===============
Nine Months Ended September 30,
1998 1999
------------ ---------------
Interest Income from THCR Holdings............................. $ 16,856,000 $ 16,856,000
Interest Expense............................................... $ 16,856,000 $ 16,856,000
------------ ---------------
Net Income..................................................... $ - $ -
============ ===============
</TABLE>
(3) Other Assets
Plaza Associates is appealing a real estate tax assessment by the City of
Atlantic City. Included in other assets is $7,264,000 which Plaza Associates
estimates will be recoverable on the settlement of the appeal.
(4) Change in Accounting Policy
On April 9, 1998, the American Institute of Certified Public Accountants
("AICPA") issued Statement of Position ("SOP") 98-5 "Reporting on the Costs of
Start-Up Activities". The new standard amended previous guidance from the AICPA
that permitted capitalization of start-up costs in certain industries and
requires that all nongovernmental entities expense the costs of start-up
activities as those costs are incurred. Under the SOP, the term "start-up" has
been broadly defined to include pre-operating, pre-opening and organization
activities. At adoption, a company must record a cumulative effect of a change
in accounting principle to write off any unamortized start-up costs that existed
as of the beginning of the fiscal year in which the SOP is adopted and an
operating expense for those costs which were incurred since the beginning of the
fiscal year and adoption of the SOP.
THCR adopted the new standard in the first quarter of 1999. Had THCR
adopted the new standard as of September 30, 1998, the net loss of $23,338,000
for the nine months ended September 30, 1998 would have increased by $1,091,000
for the effect of the write-off of nine months capitalized costs. The
corresponding earnings per share effect would increase the net loss per share as
reported of $1.05 by $.05 for the write-off of nine months capitalized costs to
an adjusted loss per share of $1.10 for the nine months ended September 30,
1998.
10
<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)
(5) Flamingo Hilton Riverboat Casino, L.P. ("Flamingo-Kansas City")
The January 13, 1999 agreement entered into by THCR Holdings with Hilton
Hotels Corporation and Flamingo-Kansas City to acquire a riverboat casino
facility and related assets and rights located in Kansas City, Missouri expired
in accordance with its terms on August 31, 1999.
(6) All Star Cafe Transaction
All Star Cafe, Inc. ("All Star") had entered into a twenty-year lease (the
"All Star Cafe Lease") with Taj Associates for the lease of space at the Trump
Taj Mahal Casino Resort (the "Taj Mahal") for an All Star Cafe. The basic rent
under the All Star Cafe Lease was $1.0 million per year, paid in equal monthly
installments. In addition, All Star was to pay percentage rent in an amount
equal to the difference, if any, between (i) 8% of All Star's gross sales made
during each calendar month during the first lease year, 9% of All Star's gross
sales made during each calendar month during the second lease year and 10% of
All Star's gross sales made during each calendar month during the third through
the twentieth lease years, and (ii) one-twelfth of the annual basic rent. The
All Star Cafe opened in March 1997.
On September 15, 1999, an agreement was reached between Taj Associates, All
Star and Planet Hollywood International, Inc. to terminate the All Star Cafe
Lease effective September 24, 1999. Upon termination of the All Star Cafe Lease,
all improvements, alterations and All Star's personal property with the
exception of Specialty Trade Fixtures became the property of Taj Associates.
Specialty Trade Fixtures, which included signs, emblems, logos, memorabilia and
other material with logos of the Official All Star Cafe presently displayed at
the premises, could be continued to be used by Taj Associates for a period of up
to 120 days without charge. Taj Associates recorded the estimated fair market
value of these assets in other revenue based on an independent appraisal in
the amount of $17,200,000.
Subsequent to the expiration of the 120 day period, Taj Associates intends
to continue operating the facility as a theme restaurant tentatively to be named
Trump City Cafe.
(7) Trump World's Fair Closing
On October 4, 1999, THCR closed Trump World's Fair. The estimated cost of
closing Trump World's Fair is $128,375,000 which includes $97,682,000 for the
writedown of the assets and $30,693,000 of costs incurred and to be incurred in
connection with the closing and demolition of the building.
(8) Sale of Assets
THCR is continuing its efforts to sell one or more of its properties with
the intention of reducing THCR Holdings' indebtedness. Currently, THCR is in
discussions with potential buyers. There can be no assurance that any
transaction will be completed.
(9) Purchase of Treasury Stock
THCR has decided to extend its stock repurchase program until the end of
2000 when and to the extent permissible.
11
<PAGE>
ITEM 2--MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
Capital Resources and Liquidity
Cash flows from operating activities are THCR's principal source of
liquidity. THCR expects to have sufficient liquidity to meet its obligations
and intends to reduce debt by buying back bonds in the open market, when
permissible. Cash flow is managed based upon the seasonality of the operations.
Any excess cash flow achieved from operations during peak periods is utilized to
subsidize non-peak periods where necessary.
THCR is continuing its efforts to sell one or more of its properties with
the intention of reducing THCR Holdings' indebtedness. Currently, THCR is in
discussions with potential buyers. There can be no assurance that any
transaction will be completed.
THCR has decided to extend its stock repurchase program until the end of
2000 when and to the extent permissible.
The indenture governing the Senior Notes (the "Senior Note Indenture") as
well as indentures of THCR Holdings' subsidiaries restrict 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, THCR's future operating results are conditional and could fluctuate,
given the rapidly changing competitive environment.
In addition, the ability of Plaza Associates, Taj Associates and 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.
Capital expenditures for THCR were $25,772,000 and $18,669,000 for the
nine months ended September 30, 1998 and 1999, respectively.
Year 2000
THCR has assessed the Year 2000 issue and has implemented a plan to ensure
its systems are Year 2000 compliant. Analysis has been made of THCR's various
customer support and internal administration systems and appropriate
modifications have been made or are underway. Testing the modifications is
expected to be completed during 1999. THCR is approximately 98% complete in
its modifications.
THCR believes that the issues of concern are predominantly software related
as opposed to hardware related. Further, THCR relies upon third party suppliers
for support of property, plant and equipment, such as communications equipment,
elevators and fire safety systems. Contact has been made with all significant
system suppliers and THCR is at various stages of implementation. When
necessary, contracts have been issued to update these systems so as to ensure
Year 2000 compliance. The cost of addressing the Year 2000 issue is not
expected to be material as modifications are being made with existing systems
personnel and no significant expenditures for new hardware or software are
expected.
If THCR did not assess the Year 2000 issue and provide for its compliance,
it would be forced to convert to manual systems to carry on its business. Since
THCR expects to be fully Year 2000 compliant, it does not feel that a
contingency plan is necessary at this time. However, THCR will continually
assess the situation and evaluate whether a contingency plan is necessary as the
millennium approaches.
This Year 2000 disclosure constitutes Year 2000 readiness disclosure within
the meaning of the Year 2000 Information and Readiness Disclosure Act.
12
<PAGE>
Results of Operations: Operating Revenues and Expenses
All business activities of THCR and THCR Holdings are conducted by Plaza
Associates, Taj Associates, Trump Marina and Trump Indiana.
Comparison of Three-Month Periods Ended September 30, 1998 and 1999. The
following tables include selected data of Plaza Associates, Taj Associates,
Trump Indiana and Trump Marina.
<TABLE>
<CAPTION>
Three Months Ended September 30, 1998
-----------------------------------------------------------------
Plaza Taj Trump Trump THCR
Associates Associates Indiana Marina Consolidated
----------- ----------- --------- ------------- -------------
<S> <C> <C> <C> <C> <C>
(dollars in millions)
Table Game Revenues.................... $ 27.9 $ 60.1 $ 8.5 $ 20.8 $ 117.3
Table Game Drop........................ $177.9 $ 328.5 $ 54.9 $132.7 $ 694.0
Table Win Percentage................... 15.7% 18.3% 15.4% 15.7% 16.9%
Number of Table Games.................. 101 156 60 91 408
Slot Revenues.......................... $ 75.8 $ 82.5 $ 29.7 $ 52.5 $ 240.5
Slot Handle............................ $929.4 $1,011.6 $457.3 $650.0 $3,048.3
Slot Win Percentage.................... 8.2% 8.2% 6.5% 8.1% 7.9%
Number of Slot Machines................ 4,204 4,136 1,375 2,170 11,885
Other Gaming Revenues.................. N/A $ 5.4 N/A $ 1.0 $ 6.4
Total Gaming Revenues.................. $103.7 $ 148.0 $ 38.2 $ 74.3 $ 364.2
Three Months Ended September 30, 1999
-------------------------------------
Plaza Taj Trump Trump THCR
Associates Associates Indiana Marina Consolidated
---------- ---------- ---------- -------- ------------
(dollars in millions)
Table Game Revenues.................... $ 31.2 $ 40.8 $ 6.9 $ 20.4 $ 99.3
Incr (Decr) over prior period.......... $ 3.3 $ (19.3) $ (1.6) $ (0.4) $ (18.0)
Table Game Drop........................ $177.7 $ 283.2 $ 42.5 $134.8 $ 638.2
Incr (Decr) over prior period.......... $ (0.2) $ (45.3) $(12.4) $ 2.1 $ (55.8)
Table Win Percentage................... 17.6 % 14.4% 16.1% 15.1% 15.6 %
Incr (Decr) over prior period.......... 1.9 pts. (3.9) pts. 0.7 pts. (0.6) pts. (1.3) pts.
Number of Table Games.................. 94 149 50 85 378
Decrease over prior period............. (7) (7) (10) (6) (30)
Slot Revenues.......................... $ 73.7 $ 89.6 $ 26.8 $ 54.3 $ 244.4
Incr (Decr) over prior period.......... $ (2.1) $ 7.1 $ (2.9) $ 1.8 $ 3.9
Slot Handle............................ $923.7 $1,106.8 $397.0 $700.3 $3,127.8
Incr (Decr) over prior period.......... $ (5.7) $ 95.2 $(60.3) $ 50.3 $ 79.5
Slot Win Percentage.................... 8.0 % 8.1 % 6.7 % 7.8 % 7.8 %
Incr (Decr) over prior period.......... (0.2) pts. (0.1) pts. 0.2 pts. (0.3) pts. (0.1) pts.
Number of Slot Machines................ 4,186 4,419 1,300 2,123 12,028
Incr (Decr) over prior period.......... (18) 283 (75) (47) 143
Other Gaming Revenues.................. N/A $ 6.0 N/A $ 0.6 $ 6.6
Incr (Decr) over prior period.......... N/A $ 0.6 N/A $ (0.4) $ 0.2
Total Gaming Revenues.................. $104.9 $ 136.4 $ 33.7 $ 75.3 $ 350.3
Incr (Decr) over prior period.......... $ 1.2 $ (11.6) $ (4.5) $ 1.0 $ (13.9)
</TABLE>
Gaming revenues are the primary source of THCR's revenues. The year over year
decrease in gaming revenues was due primarily to a decrease in table game
revenues at the Taj Mahal as a result of a decline in high-end
international table game players due to economic conditions. Taj Associates'
table game revenues declined $19,252,000 or 32.0% from the comparable period in
1998 as a result of a decline in both the table game drop of $45,302,000 or
13.8% and a decline in the table win percentage to 14.4% from 18.3% in the
comparable period in 1998. The table win percentage decline resulted in a year
over year reduction in table game revenues of approximately $11,043,000 of the
$19,252,000 decline. Table games revenues represent the amount retained by 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". The Atlantic City industry table
win percentages were 15.5% and 14.9% for the quarters ended September 30, 1998
and 1999, respectively.
13
<PAGE>
All Star Cafe, Inc. ("All Star") had entered into a twenty-year lease with
Taj Associates for the lease of space at the Taj Mahal for an All Star Cafe.
The basic rent under the All Star Cafe Lease was $1.0 million per year, paid in
equal monthly installments. In addition, All Star was to pay percentage rent in
an amount equal to the difference, if any, between (i) 8% of All Star's gross
sales made during each calendar month during the first lease year, 9% of All
Star's gross sales made during each calendar month during the second lease year
and 10% of All Star's gross sales made during each calendar month during the
third through the twentieth lease years, and (ii) one-twelfth of the annual
basic rent. The All Star Cafe opened in March 1997.
On September 15, 1999, an agreement was reached between Taj Associates, All
Star and Planet Hollywood International, Inc. to terminate the All Star Cafe
Lease effective September 24, 1999. Upon termination of the All Star Cafe Lease,
all improvements, alterations and All Star's personal property with the
exception of Specialty Trade Fixtures became the property of Taj Associates.
Specialty Trade Fixtures, which included signs, emblems, logos, memorabilia and
other material with logos of the Official All Star Cafe presently displayed at
the premises, could be continued to be used by Taj Associates for a period of up
to 120 days without charge. Taj Associates recorded the estimated fair market
value of these assets in other revenue based on an independent appraisal in the
amount of $17,200,000.
Subsequent to the expiration of the 120 day period, Taj Associates intends
to continue operating the facility as a theme restaurant tentatively to be named
Trump City Cafe.
Gaming expenses were $210,945,000 for the three months ended September 30,
1999, a decrease of $9,901,000 or 4.5% from $220,846,000 for the comparable
period in 1998. This decrease is primarily the result of lower coin,
promotional and regulatory costs.
On October 4, 1999, THCR closed Trump World's Fair. The estimated cost of
closing Trump World's Fair is $128,375,000 which includes $97,682,000 for the
writedown of the assets and $30,693,000 of costs incurred and to be incurred in
connection with the closing and demolition of the building.
Comparison of Nine-Month Periods Ended September 30, 1998 and 1999. The
following tables include selected data of Plaza Associates, Taj Associates,
Trump Indiana and Trump Marina.
<TABLE>
<CAPTION>
Nine Months Ended September 30, 1998
----------------------------------------------------------------
Plaza Taj Trump Trump THCR
Associates Associates Indiana Marina Consolidated
----------- ----------- --------- ------------- -------------
<S> <C> <C> <C> <C> <C>
(dollars in millions)
Table Game Revenues................... $ 76.3 $ 149.3 $ 25.7 $ 53.6 $ 304.9
Table Game Drop....................... $ 485.6 $ 903.0 $ 161.9 $ 345.3 $1,895.8
Table Win Percentage.................. 15.7% 16.5% 15.9% 15.5% 16.1%
Number of Table Games................. 110 155 60 92 417
Slot Revenues......................... $ 207.6 $ 224.5 $ 75.6 $ 142.9 $ 650.6
Slot Handle........................... $2,562.3 $2,742.6 $1,186.1 $1,763.5 $8,254.5
Slot Win Percentage................... 8.1% 8.2% 6.4% 8.1% 7.9%
Number of Slot Machines............... 4,124 4,137 1,375 2,163 11,799
Other Gaming Revenues................. N/A $ 14.6 N/A $ 1.8 $ 16.4
Total Gaming Revenues................. $ 283.9 $ 388.4 $ 101.3 $ 198.3 $ 971.9
Nine Months Ended September 30, 1999
------------------------------------
Plaza Taj Trump Trump THCR
Associates Associates Indiana Marina Consolidated
---------- ---------- ---------- -------- ------------
(dollars in millions)
Table Game Revenues................... $ 76.0 $ 124.4 $ 23.3 $ 55.4 $ 279.1
Incr (Decr) over prior period......... $ (0.3) $ (24.9) $ (2.4) $ 1.8 $ (25.8)
Table Game Drop....................... $ 471.7 $ 787.4 $ 140.7 $ 362.1 $1,761.9
Incr (Decr) over prior period......... $ (13.9) $ (115.6) $ (21.2) $ 16.8 $ (133.9)
Table Win Percentage.................. 16.1% 15.8% 16.6% 15.3% 15.8 %
Incr (Decr) over prior period......... 0.4 pts. (0.7) pts. 0.7 pts. (0.2) pts. (0.3) pts.
Number of Table Games................. 99 148 50 87 384
Decrease over prior period............ (11) (7) (10) (5) (33)
Slot Revenues......................... $ 205.1 $ 240.2 $ 81.5 $ 148.4 $ 675.2
Incr (Decr) over prior period......... $ (2.5) $ 15.7 $ 5.9 $ 5.5 $ 24.6
Slot Handle........................... $2,579.1 $3,004.7 $1,256.6 $1,878.9 $8,719.3
Increase over prior period............ $ 16.8 $ 262.1 $ 70.5 $ 115.4 $ 464.8
Slot Win Percentage................... 8.0 % 8.0 % 6.5 % 7.9 % 7.7 %
Incr (Decr) over prior period......... (0.1) pts. (0.2) pts. 0.1 pts. (0.2) pts. (0.2) pts.
Number of Slot Machines............... 4,202 4,278 1,300 2,145 11,925
Incr (Decr) over prior period......... 78 141 (75) (18) 126
Other Gaming Revenues................. N/A $ 16.5 N/A $ 1.7 $ 18.2
Incr (Decr) over prior period......... N/A $ 1.9 N/A $ (0.1) $ 1.8
Total Gaming Revenues................. $ 281.1 $ 381.1 $ 104.8 $ 205.5 $ 972.5
Incr (Decr) over prior period......... $ (2.8) $ (7.3) $ 3.5 $ 7.2 $ 0.6
</TABLE>
Gaming revenues are the primary source of THCR's revenues. The year over year
decrease in gaming revenues was due primarily to a decrease in table game
revenues at the Taj Mahal as a result of a decline in high-end
14
<PAGE>
international table game players due to economic conditions and last year
results which included an unusual $8 million dollar table game win from one
premium player. Taj Associates' table game revenue declined $24,899,000 or
16.7% from the comparable period in 1998 as a result of a decline in both the
table game drop of $115,633,000 or 12.8% and a decline in the table win
percentage to 15.8% from 16.5% in the comparable period in 1998. The table win
percentage decline resulted in a year over year reduction in table game revenues
of approximately $5,512,000 of the $24,899,000 decline. Table games revenues
represent the amount retained by 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".
The Atlantic City industry table win percentages were 15.3 % and 15.4% for the
nine months ended September 30, 1998 and 1999, respectively.
All Star Cafe, Inc. ("All Star") had entered into a twenty-year lease with
Taj Associates for the lease of space at the Taj Mahal for an All Star Cafe.
The basic rent under the All Star Cafe Lease was $1.0 million per year, paid in
equal monthly installments. In addition, All Star was to pay percentage rent in
an amount equal to the difference, if any, between (i) 8% of All Star's gross
sales made during each calendar month during the first lease year, 9% of All
Star's gross sales made during each calendar month during the second lease year
and 10% of All Star's gross sales made during each calendar month during the
third through the twentieth lease years, and (ii) one-twelfth of the annual
basic rent. The All Star Cafe opened in March 1997.
On September 15, 1999, an agreement was reached between Taj Associates, All
Star and Planet Hollywood International, Inc. to terminate the All Star Cafe
Lease effective September 24, 1999. Upon termination of the All Star Cafe Lease,
all improvements, alterations and All Star's personal property with the
exception of Specialty Trade Fixtures became the property of Taj Associates.
Specialty Trade Fixtures, which included signs, emblems, logos, memorabilia and
other material with logos of the Official All Star Cafe presently displayed at
the premises, could be continued to be used by Taj Associates for a period of up
to 120 days without charge. Taj Associates recorded the estimated fair market
value of these assets in other revenue based on an independent appraisal in the
amount of $17,200,000.
Subsequent to the expiration of the 120 day period, Taj Associates intends
to continue operating the facility as a theme restaurant tentatively to be named
Trump City Cafe.
Gaming expenses were $598,238,000 for the nine months ended September 30,
1999, a decrease of $9,663,000 or 1.6% from $607,901,000 for the comparable
period in 1998. This decrease is primarily due to lower promotional costs in
1999.
General and administrative expenses were $209,212,000 for the nine months
ended September 30, 1999, an increase of $8,664,000 or 4.3% from $200,548,000
for the comparable period in 1998. This increase is primarily the result of
higher entertainment and insurance costs at the Atlantic City properties and
increases in corporate development costs which were deferred prior to 1999.
On October 4, 1999, THCR closed Trump World's Fair. The estimated cost of
closing Trump World's Fair is $128,375,000 which includes $97,682,000 for the
writedown of the assets and $30,693,000 of costs incurred and to be incurred in
connection with the closing and demolition of the building.
Non-operating expense includes the $1,334,000 jury settlement awarded on
March 3, 1999 to residents of Indiana who had asserted claims to ownership of
7.5% of the value of Trump Indiana.
Seasonality
The casino industry in Atlantic City and Indiana is seasonal in nature;
accordingly, the results of operations for the three and nine month periods
ending September 30, 1999 are not necessarily indicative of the operating
results for a full year.
Important Factors Relating to Forward-Looking Statements
The Private Securities Litigation Reform Act of 1995 provides a "safe harbor"
for forward-looking statements so long as those statements are identified as
forward-looking and are accompanied by meaningful cautionary statements
identifying important factors that could cause actual results to differ
materially from those projected in such statements. In connection with certain
forward-looking statements contained in this Quarterly Report on Form 10-Q and
those that may be made in the future by or on behalf of the Registrants, the
Registrants note that there are various factors that could cause actual results
to differ materially from those set forth in any such forward-looking
statements. The forward-looking statements contained in this Quarterly Report
were prepared by management and are qualified by, and subject to, significant
business, economic, competitive, regulatory and other uncertainties and
contingencies, all of which are difficult or impossible to predict and many of
which are beyond the control of the Registrants. Accordingly, there can be no
assurance that the forward-looking statements contained in this Quarterly Report
will be realized or that actual results will not be significantly higher or
lower. The statements have not been audited by, examined by, compiled by or
subjected to agreed-upon procedures by independent accountants, and no third-
party has independently verified or reviewed such statements. Readers of this
Quarterly Report should consider these facts in evaluating the information
contained herein. In addition, the business and operations of the Registrants
are subject to substantial risks which increase the uncertainty inherent in the
forward-looking statements contained in this Quarterly Report. The inclusion of
the forward-looking statements contained in this Quarterly Report should not be
regarded as a representation by the Registrant or any other person that the
forward-looking statements contained in the Quarterly Report will be achieved.
In light of the foregoing, readers of this Quarterly Report are cautioned not to
place undue reliance on the forward-looking statements contained herein.
15
<PAGE>
ITEM 3-- QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
Management has reviewed the disclosure requirements for Item 3 and, based upon
THCR, THCR Funding and THCR Holdings' current capital structure, scope of
operations and financial statement structure, management believes that such
disclosure is not warranted at this time. Since conditions may change, THCR,
THCR Funding and THCR Holdings will periodically review their compliance with
this disclosure requirement to the extent applicable.
PART II -- OTHER INFORMATION
ITEM 1 -- LEGAL PROCEEDINGS
General. THCR and certain of its employees have been involved in various
legal proceedings. Such persons are vigorously defending the allegations against
them and intend to contest vigorously any future 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.
Steiner Action. On or about July 30, 1999, William K. Steiner, a
stockholder of THCR, filed a derivative action in the Court of Chancery in
Delaware (Civil Action No. 17336NC) against each member of the Board of
Directors of THCR. The plaintiff claims that the directors breached their
fiduciary duties by approving certain loans from THCR to Trump. The complaint
seeks to rescind the loans, and also seeks an order requiring the defendants to
account to THCR for losses and damages allegedly resulting from the loans. The
defendants believe that the suit is without merit and on October 1, 1999,
defendants moved to dismiss the complaint. The parties have not yet established
a briefing schedule with respect to the motions.
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, 1998, 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.
From time to time, Plaza Associates, Taj Associates, Castle Associates
and Trump Indiana may be involved in routine administrative proceedings
involving alleged violations of certain provisions of the New Jersey Casino
Control Act (the"Casino Control Act") and the Indiana Riverboat Gambling Act, as
the case may be. However, management believes that the final outcome of these
proceedings will not, either individually or in the aggregate, have a material
adverse effect on THCR or on the ability of Plaza Associates, Taj Associates,
Castle Associates or Trump Indiana to otherwise retain or renew any casino or
other licenses required under the Casino Control Act or the Indiana Riverboat
Gambling Act, as the case may be, for the operation of Trump Plaza, the Trump
Taj Mahal, Trump Marina and the Trump Indiana Riverboat, respectively.
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
At the 1999 Annual Meeting of shareholders on August 27, 1999, the
stockholders of THCR voted on the following two proposals:
Proposal 1. The stockholders of THCR re-elected each of the Directors of
THCR. The number of votes cast for each of the nominees were are follows:
<TABLE>
<CAPTION>
Common Stock
--------------------
For Withheld
---------- --------
<S> <C> <C>
Donald J. Trump.... 33,914,960 715,157
Nicholas L. Ribis.. 34,129,283 500,834
Wallace B. Askins.. 34,193,801 436,316
Don M. Thomas...... 34,191,811 438,306
Peter M. Ryan...... 34,194,386 435,731
</TABLE>
All 1,000 shares of Class B Common Stock were voted in favor of Proposal 1.
16
<PAGE>
Proposal 2. The appointment of Arthur Andersen LLP as the independent
public accountants of THCR for the fiscal year ending December 31, 1999 was
ratified by a vote of 34,322,114 shares of Common Stock for, and 158,964 shares
against, with 149,039 shares abstaining. All 1,000 shares of Class B Common
Stock were voted in favor of Proposal 2.
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 Resorts Funding, Inc.
</TABLE>
(1) Filed only with the Quarterly Report on Form 10-Q of THCR for the
quarter ended September 30, 1999.
(2) Filed only with the Quarterly Report on Form 10-Q of THCR Holdings
and THCR Funding for the quarter ended September 30, 1999.
b. Current Reports on Form 8-K:
The Registrants did not file any Current Reports on Form 8-K during the
period beginning July 1, 1999 ending September 30, 1999.
17
<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 4, 1999
By: /s/ FRANCIS X. MCCARTHY, JR.
------------------------------------------------
Francis X. McCarthy, Jr.
Executive Vice President of Finance and
Chief Financial Officer
(Duly Authorized Officer and Principal
Financial Officer)
18
<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 4, 1999 By: Trump Hotels & Casino Resorts, Inc.,
its general partner
By: /s/ FRANCIS X. MCCARTHY, JR.
---------------------------------
Francis X. McCarthy, Jr.
Executive Vice President of Finance and
Chief Financial Officer
(Duly Authorized Officer and
Principal Financial Officer)
19
<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 4, 1999
By:/s/ FRANCIS X. MCCARTHY, JR.
---------------------------------
Francis X. McCarthy, Jr.
Executive Vice President of Finance and
Chief Financial Officer
(Duly Authorized Officer and Principal
Financial Officer)
20
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<CIK> 0000943320
<NAME> TRUMP HOTELS & CASINO RESORTS, INC.
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1999
<PERIOD-START> JAN-01-1999
<PERIOD-END> SEP-30-1999
<CASH> 179,611
<SECURITIES> 0
<RECEIVABLES> 82,906
<ALLOWANCES> 22,747
<INVENTORY> 12,848
<CURRENT-ASSETS> 289,790
<PP&E> 2,278,181
<DEPRECIATION> 412,945
<TOTAL-ASSETS> 2,366,303
<CURRENT-LIABILITIES> 239,142
<BONDS> 1,752,632
0
0
<COMMON> 242
<OTHER-SE> 187,377
<TOTAL-LIABILITY-AND-EQUITY> 2,366,303
<SALES> 1,080,234
<TOTAL-REVENUES> 1,205,756
<CGS> 0
<TOTAL-COSTS> 664,590<F1>
<OTHER-EXPENSES> 400,954<F2>
<LOSS-PROVISION> 10,581
<INTEREST-EXPENSE> 166,781
<INCOME-PRETAX> (95,724)
<INCOME-TAX> 0
<INCOME-CONTINUING> (95,724)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> (3,565)
<NET-INCOME> (99,289)
<EPS-BASIC> (4.47)
<EPS-DILUTED> (4.47)
<FN>
<F1>Includes gaming, lodging, food & beverage and other
<F2>Includes general & administrative, depreciation & amortization, and Trump
World's Fair closing costs.
</FN>
</TABLE>
