<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: June 30, 2000
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)
<TABLE>
<S> <C>
DELAWARE 13-3818402
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
1000 Boardwalk
Atlantic City, New Jersey 08401
(Address of principal executive offices) (Zip Code)
</TABLE>
(609) 449-6542
(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.)
1000 Boardwalk
Atlantic City, New Jersey 08401
(Address of principal executive offices) (Zip Code)
(609) 449-6542
(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.)
1000 Boardwalk
Atlantic City, New Jersey 08401
(Address of principal executive offices) (Zip Code)
(609) 449-6542
(Registrant's telephone number, including area code)
Not Applicable
(Former name, former address and former fiscal year, if changed since last
report)
Indicate by check mark whether the registrants (1) have filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrants were required to file such reports), and (2) have been subject to
such filing requirements for the past 90 days. Yes X No
--- ---
The number of outstanding shares of Common Stock, par value $.01 per share, of
Trump Hotels & Casino Resorts, Inc. as of August 14, 2000 was 22,010,027
The number of outstanding shares of Class B Common Stock, par value $.01 per
share, of Trump Hotels & Casino Resorts, Inc. as of August 14, 2000 was 1,000.
The number of outstanding shares of Common Stock, par value $.01 per share, of
Trump Hotels & Casino Resorts Funding, Inc. as of August 14, 2000 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
<TABLE>
<CAPTION>
Page No.
--------
<S> <C>
Condensed Consolidated Balance Sheets of Trump Hotels & Casino Resorts, Inc.
as of December 31, 1999 and June 30, 2000 (unaudited)................................................... 1
Condensed Consolidated Statements of Operations of Trump Hotels & Casino Resorts, Inc.
for the Three and Six Months ended June 30, 1999 and 2000 (unaudited)................................... 2
Condensed Consolidated Statement of Stockholders' Equity of Trump Hotels & Casino Resorts, Inc.
for the Six Months Ended June 30, 2000 (unaudited)..................................................... 3
Condensed Consolidated Statements of Cash Flows of Trump Hotels & Casino Resorts, Inc.
for the Six Months Ended June 30, 1999 and 2000 (unaudited)............................................. 4
Condensed Consolidated Balance Sheets of Trump Hotels & Casino Resorts Holdings, L.P.
as of December 31, 1999 and June 30, 2000 (unaudited) .................................................. 5
Condensed Consolidated Statements of Operations of Trump Hotels & Casino Resorts Holdings, L.P.
for the Three and Six Months ended June 30, 1999 and 2000 (unaudited)................................... 6
Condensed Consolidated Statement of Partners' Capital of Trump Hotels & Casino Resorts
Holdings, L.P. for the Six Months Ended June 30, 2000 (unaudited)...................................... 7
Condensed Consolidated Statements of Cash Flows of Trump Hotels & Casino Resorts Holdings, L.P.
for the Six Months Ended June 30, 1999 and 2000 (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............................................... 17
</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
<TABLE>
<CAPTION>
Page No.
<S> <C>
PART II -- OTHER INFORMATION
ITEM 1 -- Legal Proceedings....................................................................................... 17
ITEM 2 -- Changes in Securities and Use of Proceeds............................................................... 18
ITEM 3 -- Defaults Upon Senior Securities......................................................................... 18
ITEM 4 -- Submission of Matters to a Vote of Security Holders..................................................... 18
ITEM 5 -- Other Information....................................................................................... 18
ITEM 6 -- Exhibits and Reports on Form 8-K........................................................................ 19
SIGNATURES
Signature -- Trump Hotels & Casino Resorts, Inc................................................................... 20
Signature -- Trump Hotels & Casino Resorts Holdings, L.P.......................................................... 21
Signature -- Trump Hotels & Casino Resorts Funding, Inc........................................................... 22
</TABLE>
<PAGE>
PART I - FINANCIAL INFORMATION
ITEM 1 - FINANCIAL STATEMENTS
TRUMP HOTELS & CASINO RESORTS, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(dollars in thousands, except share data)
<TABLE>
<CAPTION>
ASSETS
December 31, June 30,
1999 2000
----------- -----------
(unaudited)
<S> <C> <C>
CURRENT ASSETS:
Cash and cash equivalents ............................................... $ 104,026 $ 106,704
Receivables, net ........................................................ 47,781 47,279
Inventories ............................................................. 13,060 13,078
Due from affiliates, net (Notes 7 & 8) .................................. 27,368 1,254
Prepaid expenses and other current assets ............................... 8,618 12,337
----------- -----------
Total Current Assets ............................................. 200,853 180,652
INVESTMENT IN BUFFINGTON HARBOR, L.L.C ..................................... 38,185 36,902
INVESTMENT IN TRUMP'S CASTLE PIK NOTES ..................................... 76,250 82,943
PROPERTY AND EQUIPMENT, NET ................................................ 1,860,596 1,840,934
DEFERRED BOND AND LOAN ISSUANCE COSTS, NET ................................. 30,838 26,155
OTHER ASSETS (Note 3) ...................................................... 60,298 64,312
----------- -----------
Total Assets ............................................................... $ 2,267,020 $ 2,231,898
=========== ===========
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Current maturities of long-term debt .................................... $ 12,411 $ 17,310
Accounts payable and accrued expenses ................................... 146,170 160,658
Accrued interest payable ................................................ 30,301 30,208
----------- -----------
Total Current Liabilities ........................................ 188,882 208,176
LONG-TERM DEBT, net of current maturities (Note 6) ......................... 1,855,327 1,832,799
OTHER LONG-TERM LIABILITIES ................................................ 21,738 23,706
----------- -----------
Total Liabilities .......................................................... 2,065,947 2,064,681
----------- -----------
MINORITY INTEREST .......................................................... 48,409 36,102
STOCKHOLDERS' EQUITY:
Common Stock, $.01 par value, 75,000,000 shares authorized, 24,206,756
issued; 22,079,256 and 22,010,027, outstanding in 1999 and
2000, respectively .................................................... 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 ..................................................... (283,226) (304,572)
Less treasury stock at cost, 2,127,500 and 2,196,729 shares,
respectively (Note 7) ................................................. (19,997) (20,200)
----------- -----------
Total Stockholders' Equity ................................................. 152,664 131,115
----------- -----------
Total Liabilities and Stockholders' Equity ................................. $ 2,267,020 $ 2,231,898
=========== ===========
</TABLE>
The accompanying notes are an integral part of these condensed consolidated
balance sheets
1
<PAGE>
TRUMP HOTELS & CASINO RESORTS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
FOR THE THREE AND SIX MONTHS ENDED JUNE 30, 1999 AND 2000
(unaudited)
(dollars in thousands, except share data)
<TABLE>
<CAPTION>
Three Months Ended Six Months Ended
June 30, June 30,
-------- --------
1999 2000 1999 2000
---- ---- ---- ----
<S> <C> <C> <C> <C>
REVENUES:
Gaming ............................................... $ 330,438 $ 312,545 $ 622,221 $ 607,566
Rooms ................................................ 24,121 20,036 43,693 38,031
Food and Beverage .................................... 36,858 33,259 69,094 64,092
Other ................................................ 11,291 10,200 20,540 18,258
------------ ------------ ------------ ------------
Gross Revenues ....................................... 402,708 376,040 755,548 727,947
Less -- Promotional allowances ....................... 41,256 36,292 78,386 71,709
------------ ------------ ------------ ------------
Net Revenues ......................................... 361,452 339,748 677,162 656,238
------------ ------------ ------------ ------------
COSTS AND EXPENSES:
Gaming ............................................... 200,441 191,579 385,437 376,466
Rooms ................................................ 9,444 8,211 17,247 15,643
Food and Beverage .................................... 14,062 11,905 25,274 22,039
General and Administrative (Note 7) .................. 72,211 72,420 140,853 139,918
Depreciation and Amortization ........................ 20,972 18,633 42,327 38,355
Trump World's Fair Closing (Note 5) .................. - 254 - 736
------------ ------------ ------------ ------------
317,130 303,002 611,138 593,157
------------ ------------ ------------ ------------
Income from operations ............................... 44,322 36,746 66,024 63,081
------------ ------------ ------------ ------------
NON-OPERATING INCOME AND (EXPENSES):
Interest income ...................................... 1,669 1,494 3,311 3,258
Interest expense ..................................... (55,376) (54,987) (110,907) (111,019)
Other non-operating expense .......................... (170) (38) (1,460) (508)
------------ ------------ ------------ ------------
(53,877) (53,531) (109,056) (108,269)
------------ ------------ ------------ ------------
Loss before equity in loss of Buffington Harbor, L.L.C. ,
cumulative effect of change in accounting principle
and extraordinary item ............................... (9,555) (16,785) (43,032) (45,188)
Equity in loss of Buffington Harbor, L.L.C .............. (746) (812) (1,512) (1,532)
------------ ------------ ------------ ------------
Loss before minority interest, cumulative effect
of change in accounting principle and
extraordinary item ................................... (10,301) (17,597) (44,544) (46,720)
Minority Interest ....................................... 3,767 6,436 16,290 17,086
------------ ------------ ------------ ------------
Loss before cumulative effect of change in
accounting principle and extraordinary item .......... (6,534) (11,161) (28,254) (29,634)
Cumulative effect of change in accounting principle
($5,620), net of minority interest
($2,055) (Note 4) .................................... - - (3,565) -
Extraordinary gain ($13,067), net of minority
interest ($4,779) (Note 6) ........................... - 8,288 - 8,288
------------ ------------ ------------ ------------
NET LOSS ................................................ $ (6,534) $ (2,873) $ (31,819) $ (21,346)
============ ============ ============ ============
Basic and diluted loss per share before cumulative
effect of change in accounting principle ............. $ (.29) $ (.51) $ (1.27) $ (1.34)
Cumulative effect of change in accounting principle ..... - - (.16) -
Extraordinary item ...................................... - .38 - .38
------------ ------------ ------------ ------------
Basic and diluted loss per share ........................ $ (.29) $ (.13) $ (1.43) $ (.97)
============ ============ ============ ============
Average number of shares outstanding .................... 22,195,256 22,065,562 22,195,256 22,072,409
============ ============ ============ ============
</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 SIX MONTHS ENDED JUNE 30, 2000
(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, 1999........ 24,206,756 1,000 $242 $455,645 $(283,226) $(19,997) $152,664
Receipt of 69,229 shares of
THCR Common Stock, in satisfaction
of debt
(Note 7)....................... (203) (203)
Net Loss.......................... - - - - (21,346) - (21,346)
---------- ------- ---- -------- --------- -------- --------
Balance, June 30, 2000........... 24,206,756 1,000 $242 $455,645 $(304,572) $(20,200) $131,115
========== ======= ==== ======== ========= ======== ========
</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 SIX MONTHS ENDED JUNE 30, 1999 AND 2000
(unaudited)
(dollars in thousands)
<TABLE>
<CAPTION>
1999 2000
---- ----
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net Loss ..................................................................... $ (31,819) $ (21,346)
Adjustments to reconcile net loss to net cash flows from operating activities:
Extraordinary gain, net of minority interest ................................ - (8,288)
Cumulative effect of change in accounting principle ......................... 3,565 -
Issuance of debt in exchange for accrued interest .......................... 6,418 7,339
Interest income - Castle PIK Notes ......................................... (5,853) (6,693)
Equity in loss of Buffington Harbor, L.L.C ................................. 1,512 1,532
Depreciation and amortization .............................................. 42,327 38,355
Minority interest in net loss ............................................... (16,290) (17,086)
Accretion of discounts on mortgage notes ................................... 2,460 2,774
Amortization of deferred loan costs ........................................ 3,646 3,284
Provision for losses on receivables ........................................ 6,270 2,947
Valuation allowance of CRDA investments and amortization of Indiana
gaming costs ............................................................ 4,515 4,439
(Gain) loss on disposition of property ..................................... (335) 464
Increase in receivables .................................................... (321) (2,445)
Increase in inventories .................................................... (244) (17)
Increase in other current assets ........................................... (2,706) (3,349)
(Increase) decrease in due from affiliates ................................. (1,025) 25,022
Increase in other assets ................................................... (2,288) (1,207)
Increase in accounts payable and accrued expenses .......................... 4,434 14,575
Decrease in accrued interest payable ....................................... (71) (93)
Increase in other long-term liabilities .................................... 3 118
--------- ---------
Net cash flows provided by operating activities ........................... 14,198 40,325
--------- ---------
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchase of property and equipment, net ...................................... (12,681) (10,235)
Proceeds from disposition of property ........................................ 1,087 30
Investment in Buffington Harbor, L.L.C ....................................... (167) (249)
CRDA Investments ............................................................. (6,737) (6,602)
Restricted cash .............................................................. 2,523 -
--------- ---------
Net cash flows used in investing activities ................................ (15,975) (17,056)
--------- ---------
CASH FLOWS FROM FINANCING ACTIVITIES:
Payment of long-term debt ................................................... (7,891) (20,591)
--------- ---------
Net cash flows used in financing activities ............................... (7,891) (20,591)
--------- ---------
Net (decrease) increase in cash and cash equivalents ....................... (9,668) 2,678
CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD ............................... 114,757 104,026
--------- ---------
CASH AND CASH EQUIVALENTS AT END OF PERIOD ..................................... $ 105,089 $ 106,704
========= =========
CASH INTEREST PAID ............................................................. $ 104,827 $ 104,930
========= =========
Supplemental Disclosure of Non-Cash Activities:
Purchase of property and equipment under capital lease obligations ............. $ 4,421 $ 7,328
========= =========
Exchange of THCR Common stock to treasury stock ................................ $ - $ 203
========= =========
</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)
<TABLE>
<CAPTION>
ASSETS
December 31, June 30,
1999 2000
----------- -----------
(unaudited)
<S> <C> <C>
CURRENT ASSETS:
Cash and cash equivalents ....................................................... $ 104,022 $ 106,700
Receivables, net ................................................................ 47,781 47,279
Inventories ..................................................................... 13,060 13,078
Due from affiliates, net (Notes 7 & 8) .......................................... 27,368 1,254
Prepaid expenses and other current assets ....................................... 8,618 12,337
----------- -----------
Total Current Assets ..................................................... 200,849 180,648
INVESTMENT IN BUFFINGTON HARBOR, L.L.C ............................................. 38,185 36,902
INVESTMENT IN TRUMP'S CASTLE PIK NOTES ............................................. 76,250 82,943
PROPERTY AND EQUIPMENT, NET ........................................................ 1,860,596 1,840,934
DEFERRED BOND AND LOAN ISSUANCE COSTS, NET ......................................... 30,838 26,155
OTHER ASSETS (Note 3) .............................................................. 60,298 64,312
----------- -----------
Total Assets ....................................................................... $ 2,267,016 $ 2,231,894
=========== ===========
LIABILITIES AND PARTNERS' CAPITAL
<S> <C> <C>
CURRENT LIABILITIES:
Current maturities of long-term debt ............................................ $ 12,411 $ 17,310
Accounts payable and accrued expenses ........................................... 146,170 160,658
Accrued interest payable ........................................................ 30,301 30,208
----------- -----------
Total Current Liabilities ................................................ 188,882 208,176
LONG-TERM DEBT, net of current maturities (Note 6) ................................. 1,855,327 1,832,799
OTHER LONG-TERM LIABILITIES ........................................................ 21,738 23,706
----------- -----------
Total Liabilities .................................................................. 2,065,947 2,064,681
----------- -----------
PARTNERS' CAPITAL
Partners' capital .................................................................. 652,503 652,503
Accumulated deficit ................................................................ (431,437) (465,090)
Less stock of THCR (Note 7) ........................................................ (19,997) (20,200)
----------- -----------
Total Partners' Capital ............................................................ 201,069 167,213
----------- -----------
Total Liabilities and Partners' Capital ............................................. $ 2,267,016 $ 2,231,894
=========== ===========
</TABLE>
The accompanying notes are an integral part of these condensed consolidated
balance sheets
5
<PAGE>
TRUMP HOTELS & CASINO RESORTS HOLDINGS, L.P.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
FOR THE THREE AND SIX MONTHS ENDED JUNE 30, 1999 AND 2000
(unaudited)
(dollars in thousands)
<TABLE>
<CAPTION>
Three Months Ended Six Months Ended
June 30, June 30,
1999 2000 1999 2000
---- ---- ---- ----
<S> <C> <C> <C> <C>
REVENUES:
Gaming ............................................... $ 330,438 $ 312,545 $ 622,221 $ 607,566
Rooms ................................................ 24,121 20,036 43,693 38,031
Food and Beverage .................................... 36,858 33,259 69,094 64,092
Other ................................................ 11,291 10,200 20,540 18,258
--------- --------- --------- ---------
Gross Revenues ....................................... 402,708 376,040 755,548 727,947
Less -- Promotional allowances ....................... 41,256 36,292 78,386 71,709
--------- --------- --------- ---------
Net Revenues ......................................... 361,452 339,748 677,162 656,238
--------- --------- --------- ---------
COSTS AND EXPENSES:
Gaming ............................................... 200,441 191,579 385,437 376,466
Rooms ................................................ 9,444 8,211 17,247 15,643
Food and Beverage .................................... 14,062 11,905 25,274 22,039
General and Administrative (Note 7) .................. 72,211 72,420 140,853 139,918
Depreciation and Amortization ........................ 20,972 18,633 42,327 38,355
Trump World's Fair Closing (Note 5) .................. - 254 - 736
--------- --------- --------- ---------
317,130 303,002 611,138 593,157
--------- --------- --------- ---------
Income from operations ............................... 44,322 36,746 66,024 63,081
--------- --------- --------- ---------
NON-OPERATING INCOME AND (EXPENSES):
Interest income ...................................... 1,669 1,494 3,311 3,258
Interest expense ..................................... (55,376) (54,987) (110,907) (111,019)
Other non-operating expense .......................... (170) (38) (1,460) (508)
--------- --------- --------- ---------
(53,877) (53,531) (109,056) (108,269)
--------- --------- --------- ---------
Loss before equity in loss of Buffington Harbor, L.L.C. ,
cumulative effect of change in accounting principle
and extraordinary item ............................... (9,555) (16,785) (43,032) (45,188)
Equity in loss of Buffington Harbor, L.L.C .............. (746) (812) (1,512) (1,532)
--------- --------- --------- ---------
Loss before cumulative effect
of change in accounting principle and
extraordinary item ................................... (10,301) (17,597) (44,544) (46,720)
Cumulative effect of change in accounting principle
(Note 4) ............................................. - - (5,620) -
Extraordinary gain (Note 6) ............................. - 13,067 - 13,067
--------- --------- --------- ---------
NET LOSS ................................................ $ (10,301) $ (4,530) $ (50,164) $ (33,653)
========= ========= ========= =========
</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 SIX MONTHS ENDED JUNE 30, 2000
(unaudited)
(dollars in thousands)
<TABLE>
<CAPTION>
Partners' Accumulated THCR
Capital Deficit Common Stock Total
------- ------- ------------ -----
<S> <C> <C> <C> <C>
Balance, December 31, 1999............................. $652,503 $(431,437) $(19,997) $201,069
Receipt of 69,229 shares of THCR
Common Stock in satisfaction of debt
(Note 7)............................................ (203) (203)
Net Loss............................................... - (33,653) - (33,653)
======== ========= ======== ========
Balance, June 30, 2000................................. $652,503 $(465,090) $(20,200) $167,213
======== ========= ======== ========
</TABLE>
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 SIX MONTHS ENDED JUNE 30, 1999 AND 2000
(unaudited)
(dollars in thousands)
<TABLE>
<CAPTION>
1999 2000
---- ----
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net Loss ..................................................................... $ (50,164) $ (33,653)
Adjustments to reconcile net loss to net cash flows from operating activities:
Extraordinary gain ....................................................... - (13,067)
Cumulative effect of change in accounting principle ........................ 5,620 -
Issuance of debt in exchange for accrued interest .......................... 6,418 7,339
Interest income - Castle PIK Notes ......................................... (5,853) (6,693)
Equity in loss of Buffington Harbor, L.L.C ................................. 1,512 1,532
Depreciation and amortization .............................................. 42,327 38,355
Accretion of discounts on mortgage notes ................................... 2,460 2,774
Amortization of deferred loan costs ........................................ 3,646 3,284
Provision for losses on receivables ........................................ 6,270 2,947
Valuation allowance of CRDA investments and amortization of Indiana
gaming costs ............................................................. 4,515 4,439
(Gain) loss on disposition of property ..................................... (335) 464
Increase in receivables .................................................... (321) (2,445)
Increase in inventories .................................................... (244) (17)
Increase in other current assets ........................................... (2,706) (3,349)
(Increase) decrease in due from affiliates ................................. (1,025) 25,022
Increase in other assets ................................................... (2,288) (1,207)
Increase in accounts payable and accrued expenses .......................... 4,434 14,575
Decrease increase in accrued interest payable .............................. (71) (93)
Increase in other long-term liabilities .................................... 3 118
--------- ---------
Net cash flows provided by operating activities .......................... 14,198 40,325
--------- ---------
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchase of property and equipment, net .................................... (12,681) (10,235)
Proceeds from disposition of property ...................................... 1,087 30
Investment in Buffington Harbor, L.L.C ..................................... (167) (249)
CRDA Investments ........................................................... (6,737) (6,602)
Restricted cash ............................................................ 2,523 -
--------- ---------
Net cash flows used in investing activities .............................. (15,975) (17,056)
--------- ---------
CASH FLOWS FROM FINANCING ACTIVITIES:
Payment of long-term debt .................................................. (7,891) (20,591)
--------- ---------
Net cash flows used in financing activities .............................. (7,891) (20,591)
--------- ---------
Net (decrease) increase in cash and cash equivalents ..................... (9,668) 2,678
CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD ................................ 114,753 104,022
--------- ---------
CASH AND CASH EQUIVALENTS AT END OF PERIOD ...................................... $ 105,085 $ 106,700
========= =========
CASH INTEREST PAID .............................................................. $ 104,827 $ 104,930
========= =========
Supplemental Disclosure of Non-Cash Activities:
Purchase of property and equipment under capital lease obligations .............. $ 4,421 $ 7,328
========= =========
Exchange of THCR Common Stock to treasury stock ................................. $ - $ 203
========= =========
</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., a Delaware corporation ("THCR"), Trump
Hotels & Casino Resorts Holdings, L.P., a Delaware limited partnership ("THCR
Holdings"), and Subsidiaries (as defined). 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 38.7% 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, 1999
filed with the SEC.
The casino industry in Atlantic City is seasonal in nature;
accordingly, results of operations for the period ended June 30, 2000 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 Trump Atlantic City Associates ("Trump AC"), which is
comprised of 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") d/b/a 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 Loss Per Share
Basic loss per share is based on the weighted average number of
shares of THCR Common Stock outstanding. Diluted earnings per share are the same
as basic earnings 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, June 30,
1999 2000
============ ============
(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 at December 31, 1999 and
June 30, 2000)........................................ $145,936,000 $145,936,000
============ ============
Total Liabilities and Capital (including $145,000,000 of
Senior Notes) ........................................ $145,936,000 $145,936,000
============ ============
(See Note 6 below)
Six Months Ended June 30,
1999 2000
---- ----
Interest Income from THCR Holdings............................. $ 11,238,000 $ 11,238,000
Interest Expense............................................... $ 11,238,000 $ 11,238,000
-------------- --------------
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 $8,014,000 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. Companies must adopt the new standard in fiscal years
beginning after December 15, 1998. 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 and capitalized since the beginning of the fiscal year and adoption of
the SOP.
THCR adopted the new standard in the first quarter of 1999 and wrote
off development costs of $5,620,000 as a change in accounting policy. The
cumulative effect after minority interest of $2,055,000 was $3,565,000.
(5) Trump World's Fair Closing
On October 4, 1999, THCR closed Trump World's Fair. In addition to
closing costs recorded at December 31, 1999, costs of $736,000 were recorded
during the six months ended June 30, 2000.
(6) Repurchase of Senior Notes
During May 2000, THCR Enterprises, L.L.C. ("THCR Enterprises")
repurchased $30,500,000 of THCR Holdings' Senior Notes for $16,030,000 plus
accrued interest. An extraordinary gain of $14,470,000 was partially offset by
the write-down of unamortized loan costs of $1,403,000, resulting in a net
extraordinary gain of $13,067,000, which was adjusted to $8,288,000 after
minority interest of $4,779,000.
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)
(7) Employment Agreement - Nicholas L. Ribis
On June 12, 2000, the employment agreement of Nicholas L. Ribis
("Ribis") expired. Loans which had been advanced to Ribis to satisfy personal
income tax were redeemed in accordance with the terms of the employment
agreement through the exchange of 69,229 shares of THCR Common Stock into
treasury stock for an aggregate value of $203,360, the closing market price at
June 12, 2000. The difference of the outstanding balance of $962,475 on the loan
and the value of the treasury stock was $759,115, which was charged to general
and administrative expenses during the quarter ended June 30, 2000.
An additional loan of $1,856,277 which included principal of
$1,458,469 and accrued interest of $397,808 was rolled over on June 13, 2000
with an interest rate of Chase Bank prime (9.5% at June 13, 2000) and is due on
or before July 11, 2001. On July 19, 2000, Ribis repaid $517,145 including
interest of $17,145. An additional $600,000 plus accrued interest is due
before January 12, 2001. The balance of $756,277 plus interest is due July 11,
2001. Accordingly, $1,108,817 (including accrued interest through June 30, 2000)
has been classified as current at June 30, 2000.
(8) Donald Trump Loans
On April 27, 2000, prior to maturity, Trump repaid all outstanding
loans of $24,516,233 including interest.
(9) Twenty-Nine Palms Development
On April 27, 2000, THCR through its subsidiaries, Trump Hotels &
Casino Resorts Development Company and THCR Management Services, L.L.C., signed
definitive agreements with the Twenty-Nine Palms Band of Mission Indians for the
development and management of a Native American casino on Twenty-Nine Palms
tribal land in Southern California near Palm Springs. This development is
scheduled to open in late 2001 and is subject to certain approvals.
(10) Indiana Wagering Tax Add-back
In July 2000, the Indiana Department of Revenue issued a Letter of
Findings to another Indiana gaming company that the Riverboat Wagering Tax
("RWT"), a tax deducted from Federal income tax, be added back to Federal
taxable income when computing Indiana adjusted gross income because the RWT
represented a tax that was "based on or measured by income." The Indiana Casino
Association, of which Trump Indiana is a member, is vigorously contesting this
finding based on the fact that the RWT is an excise tax, which is excluded from
Indiana's add-back requirements. Accordingly, no provision has been made in
these financial statements for additional Indiana state taxes.
11
<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)
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 and its subsidiaries expect to have sufficient liquidity to meet
their obligations during 2000. 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 when necessary.
Capital expenditures for THCR were $12,681,000 and $10,235,000 for the
six months ended June 30, 1999 and 2000, respectively.
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 conditional and could fluctuate
significantly.
The indentures of Trump AC and Castle Associates restrict their
ability to make distributions to THCR Holdings. Therefore, the ability of THCR
Holdings to service its debt is dependent on the successful operations of Trump
Indiana and other future operations and the permitted distributions from Trump
AC and Castle Associates.
The ability of THCR to repay its long-term debt when due will depend
on the ability of Plaza Associates, Taj Associates, Castle Associates and Trump
Indiana to generate cash from operations sufficient for such purposes or on the
ability of THCR to refinance such indebtedness. Cash flow from operations may
not be sufficient to repay a substantial portion of the principal amount of the
indebtedness upon maturity. The future operating performance and the ability to
refinance such indebtedness will be subject to the then prevailing economic
conditions, industry conditions and numerous other financial, business and other
factors, many of which are beyond the control of THCR. There can be no assurance
that the future operating performance of Plaza Associates, Taj Associates,
Castle Associates or Trump Indiana will be sufficient to meet these repayment
obligations or that the general state of the economy, the status of the capital
markets generally or the receptiveness of the capital markets to the gaming
industry will be conducive to refinancing or other attempts to raise capital.
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. Similarly, the ability of Trump Indiana to make payments of
dividends or distributions to THCR Holdings may be restricted by the Indiana
Gaming Commission.
On April 27, 2000, prior to maturity, Trump repaid all outstanding
loans of $24,516,233 including interest. During May 2000, THCR Enterprises
repurchased $30,500,000 of THCR Holdings' Senior Notes for $16,030,000 plus
accrued interest. An extraordinary gain of $14,470,000 was partially offset by
the write-down of unamortized loan costs of $1,403,000, resulting in a net
extraordinary gain of $13,067,000, which was adjusted to $8,288,000 after
minority interest of $4,779,000.
12
<PAGE>
Results of Operations: Operating Revenues and Expenses
All business activities of THCR and THCR Holdings are conducted by
Plaza Associates, Taj Associates, Castle Associates (d/b/a Trump Marina) and
Trump Indiana.
Comparison of Three Month Period Ended June 30, 1999 and 2000. The
following tables include selected data of Plaza Associates, Taj Associates,
Trump Indiana and Trump Marina.
<TABLE>
<CAPTION>
Three Months Ended June 30, 1999
--------------------------------
Plaza Taj Trump Trump THCR
Associates Associates Indiana Marina Consolidated
---------- ---------- ------- ------ ------------
<S> <C> <C> <C> <C> <C>
Revenues: (dollars in millions)
Gaming .......................... $93.9 $131.9 $35.5 $69.2 $330.4
Other ........................... 25.9 28.7 1.8 15.8 72.3
--------------- --------------- --------------- --------------- ---------------
Gross Revenues ................. 119.8 160.6 37.3 85.0 402.7
Less: Promotional Allowances ..... 15.5 15.9 0.6 9.3 41.3
--------------- --------------- --------------- --------------- ---------------
Net Revenues ................... 104.3 144.7 36.7 75.7 361.4
--------------- --------------- --------------- --------------- ---------------
Costs and Expenses:
Gaming .......................... 55.8 79.6 22.5 42.5 200.4
General & Administrative ........ 20.4 23.4 8.6 15.8 72.2
Depreciation & Amortization ..... 5.7 9.2 1.7 4.3 21.0
Other ........................... 8.6 9.2 1.6 4.0 23.5
--------------- --------------- --------------- --------------- ---------------
Total Costs and Expenses ....... 90.5 121.4 34.4 66.6 317.1
--------------- --------------- --------------- --------------- ---------------
Income from Operations ........... 13.8 23.3 2.3 9.1 44.3
--------------- --------------- --------------- --------------- ---------------
Non-operating Income (Expense) ... 0.3 0.4 (0.1) 0.2 1.5
Interest Expense ................. (11.8) (23.4) (1.8) (13.3) (55.4)
--------------- --------------- --------------- --------------- ---------------
Total Non-operating Expense, Net (11.5) (23.0) (1.9) (13.1) (53.9)
--------------- --------------- --------------- --------------- ---------------
Loss in Joint Venture ............ - - (0.7) - (0.7)
--------------- --------------- --------------- --------------- ---------------
Net Income (Loss) Before Minority
Interest & Cumulative Effect of
Accounting Change ............. $2.3 $0.3 $(0.3) $(4.0) $(10.3)
=============== =============== =============== ===============
Minority Interest ................ 3.8
---------------
Net Loss ......................... $(6.5)
===============
<CAPTION>
Three Months Ended June 30, 2000
--------------------------------
Plaza Taj Trump Trump THCR
Associates Associates Indiana Marina Consolidated
---------- ---------- ------- ------ ------------
<S> <C> <C> <C> <C> <C>
Revenues: (dollars in millions)
Gaming .......................... $81.5 $134.2 $29.7 $67.1 $312.5
Other ........................... 18.3 27.6 2.2 15.4 63.5
--------------- --------------- --------------- --------------- ---------------
Gross Revenues ................. 99.8 161.8 31.9 82.5 376.0
Less: Promotional Allowances ..... 11.9 15.0 0.7 8.6 36.3
--------------- --------------- --------------- --------------- ---------------
Net Revenues ................... 87.9 146.8 31.2 73.9 339.7
--------------- --------------- --------------- --------------- ---------------
Costs and Expenses:
Gaming .......................... 53.6 78.0 19.3 40.6 191.6
General & Administrative ........ 19.1 27.2 7.5 16.8 72.4
Depreciation & Amortization ..... 3.3 9.2 1.8 4.3 18.6
Trump World's Fair Closing ....... 0.3 - - - 0.3
Other ........................... 5.4 9.0 1.5 4.3 20.1
--------------- --------------- --------------- --------------- ---------------
Total Costs and Expenses ....... 81.7 123.4 30.1 66.0 303.0
--------------- --------------- --------------- --------------- ---------------
Income from Operations ........... 6.2 23.4 1.1 7.9 36.7
--------------- --------------- --------------- --------------- ---------------
Non-operating Income (Expense) ... 0.1 0.3 0.1 0.3 1.5
Interest Expense ................. (11.8) (23.4) (1.4) (14.1) (55.0)
--------------- --------------- --------------- --------------- ---------------
Total Non-operating Expense, Net (11.7) (23.1) (1.3) (13.8) (53.5)
--------------- --------------- --------------- --------------- ---------------
Loss in Joint Venture ............ - - (0.8) - (0.8)
Extraordinary gain, net .......... - - - - 8.3
--------------- --------------- --------------- --------------- ---------------
Net Income (Loss) Before Minority
Interest ...................... $(5.5) $0.3 $(1.0) $(5.9) $(9.3)
=============== =============== =============== ===============
Minority Interest ................ 6.4
---------------
Net Loss.......................... $(2.9)
===============
</TABLE>
13
<PAGE>
<TABLE>
<CAPTION>
Three Months Ended June 30, 1999
----------------------------------------------------------------------------------
Plaza Taj Trump Trump THCR
Associates Associates Indiana Marina Consolidated
---------- ---------- ------- ------ ------------
(dollars in millions)
<S> <C> <C> <C> <C> <C>
Table Game Revenues .............. $23.2 $44.8 $8.0 $19.6 $95.5
Table Game Drop .................. $153.9 $269.7 $46.8 $126.0 $596.4
Table Win Percentage ............. 15.1% 16.6% 17.0% 15.5% 16.0%
Number of Table Games ............ 100 149 52 85 386
Slot Revenues .................... $70.7 $81.6 $27.5 $48.8 $228.6
Slot Handle ...................... $884.8 $1,012.8 $418.1 $626.0 $2,941.7
Slot Win Percentage .............. 8.0% 8.1% 6.6% 7.8% 7.8%
Number of Slot Machines .......... 4,223 4,240 1,310 2,133 11,906
Other Gaming Revenues ............ - $5.5 - $0.8 $6.3
Total Gaming Revenues ............ $93.9 $131.9 $35.5 $69.2 $330.4
<CAPTION>
Three Months Ended June 30, 2000
----------------------------------------------------------------------------------
Plaza Taj Trump Trump THCR
Associates Associates Indiana Marina Consolidated
---------- ---------- ------- ------ ------------
(dollars in millions)
<S> <C> <C> <C> <C> <C>
Table Game Revenues .............. $24.3 $46.2 $6.9 $18.2 $95.7
Incr (Decr) over prior period .... $1.1 $1.4 $(1.1) $(1.4) $0.2
Table Game Drop .................. $161.1 $269.3 $40.7 $111.3 $582.4
Incr (Decr) over prior period .... $7.2 $(0.4) $(6.1) $(14.7) $(14.0)
Table Win Percentage ............. 15.1% 17.2% 17.0% 16.4% 16.4%
Increase (Decr) over prior period 0.0pts. 0.6pts. (0.0)pts. 0.9pts. 0.4pts.
Number of Table Games ............ 96 143 50 76 365
Increase (Decr) over prior period (4) (6) (2) (9) (21)
Slot Revenues .................... $57.2 $82.7 $22.8 $48.4 $211.1
Increase (Decr) over prior period $(13.5) $1.1 $(4.7) $(0.4) $(17.5)
Slot Handle ...................... $721.4 $1,069.1 $359.7 $612.3 $2,762.5
Incr (Decr) over prior period .... $(163.4) $56.3 $(58.4) $(13.7) $(179.2)
Slot Win Percentage .............. 7.9% 7.7% 6.3% 7.9% 7.6%
Incr (Decr) over prior period .... (0.1)pts (0.4)pts. (0.3)pts. 0.1pts. (0.2)pts.
Number of Slot Machines .......... 2,851 4,572 1,250 2,340 11,013
Incr (Decr) over prior period .... (1,372) 332 (60) 207 (893)
Other Gaming Revenues ............ - $5.3 - $0.5 $5.7
Increase (Decr)n over prior period - $(0.2) - $(0.3) $(0.6)
Total Gaming Revenues ............ $81.5 $134.2 $29.7 $67.1 $312.5
Increase (Decr)over prior period . $(12.4) $2.3 $(5.8) $(2.1) $(17.9)
</TABLE>
Gaming revenues are the primary source of THCR's revenues. 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 15.4% and 16.3%
for the quarters ended June 30, 1999 and 2000, respectively. Slot revenues at
Plaza Associates declined due to the closing of Trump World's Fair in October
1999.
Gaming costs and expenses were $191.6 million for the three months ended June
30, 2000, a decrease of $8.8 million from $200.4 million for the comparable
period in 1999. Gaming expenses at the Trump Atlantic City properties, Trump
Plaza Hotel and Casino ("Trump Plaza") and the Trump Taj Mahal Casino Resort
(the "Taj Mahal") decreased $3.7 million or 2.8% from the comparable period in
1999 due to the closing of the Trump World's Fair and reduced gaming bad debt
expense at the Taj Mahal. Promotional costs at Trump Plaza disproportionately
exceeded slot revenue increases at Trump Plaza's remaining operations after
closure of Trump World's Fair. Trump Marina's gaming costs and expenses
decreased $1.9 million as a result of a decrease in promotional and
complimentary expenses achieved by the strategic reductions or elimination of
less profitable programs. Also, Trump Indiana's gaming costs decreased $3.2
million proportionately to the decrease in gaming revenues. The legalization of
dockside gaming competition in Illinois has put the Indiana Riverboat at a
competitive disadvantage.
General and administrative expenses were $72.4 million for the three months
ended June 30, 2000, an increase of $.2 million from $72.2 million for the
comparable period in 1999. Expenses at Taj Associates increased $3.8 million or
16.3% from the comparable period in 1999 primarily due to additional
entertainment costs resulting from a higher ratio of cash to complimentary
ticket sales as well as increases in regulatory costs, legal fees and insurance
reserves. Trump Marina's expenses increased $1.0 million or 6.5% from the
comparable period in 1999 due to incremental costs related to the Services
Agreement with Trump Casinos II, Inc. ("TCII") and employee benefit accruals.
These increases were offset by a $1.3 million decrease at Plaza Associates
primarily due to the closing of Trump World's Fair in October 1999 and $1.1
million and $2.2 million decreases for Trump Indiana and corporate overhead,
respectively, due to costs efficiencies achieved from streamlining of
operations.
14
<PAGE>
Comparison of Six Months Period Ended June 30, 1999 and 2000. The following
tables include selected data of Plaza Associates, Taj Associates, Trump Indiana
and Trump Marina.
<TABLE>
<CAPTION>
Six Months Ended June 30, 1999
-------------------------------------------------------------------
Plaza Taj Trump Trump THCR
Associates Associates Indian Marina Consolidated
---------- ---------- ------ ------ ------------
Revenues: (dollars in millions)
<S> <C> <C> <C> <C> <C>
Gaming ........................... $176.2 $244.7 $71.2 $130.1 $622.2
Other ............................ 48.4 53.5 3.4 28.0 133.3
---------- ---------- ---------- ---------- ----------
Gross Revenues .................. 224.6 298.2 74.6 158.1 755.5
Less: Promotional Allowances ...... 29.5 30.0 1.0 17.9 78.4
---------- ---------- ---------- ---------- ----------
Net Revenues .................... 195.1 268.2 73.6 140.2 677.1
---------- ---------- ---------- ---------- ----------
Costs and Expenses:
Gaming ........................... 106.0 151.8 46.3 81.3 385.4
General & Administrative ......... 40.0 45.2 17.2 30.5 140.9
Depreciation & Amortization ...... 11.6 18.6 3.4 8.5 42.3
Other ............................ 15.9 16.9 3.2 6.5 42.5
---------- ---------- ---------- ---------- ----------
Total Costs and Expenses ........ 173.5 232.5 70.1 126.8 611.1
---------- ---------- ---------- ---------- ----------
Income from Operations ............ 21.6 35.7 3.5 13.4 66.0
---------- ---------- ---------- ---------- ----------
Non-operating Income (Expense) .... 0.3 1.0 (1.6) 0.4 1.9
Interest Expense .................. (23.5) (46.9) (3.6) (26.7) (110.9)
---------- ---------- ---------- ---------- ----------
Total Non-operating Expense, Net (23.2) (45.9) (5.2) (26.3) (109.0)
---------- ---------- ---------- ---------- ----------
Loss in Joint Venture ............. - - (1.5) - (1.5)
---------- ---------- ---------- ---------- ----------
Net Loss Before Minority
Interest ....................... $(1.6) $(10.2) $(3.2) $(12.9) $(44.5)
========== ========== ========== ==========
Minority Interest ................. 16.3
Cumulative Effect of Acctg. Change (3.6)
----------
Net Loss........................... $(31.8)
==========
</TABLE>
<TABLE>
<CAPTION>
Six Months Ended June 30, 2000
-------------------------------------------------------------------
Plaza Taj Trump Trump THCR
Associates Associates Indiana Marina Consolidated
---------- ---------- ------- ------ ------------
Revenues: (dollars in millions)
<S> <C> <C> <C> <C> <C>
Gaming .......................... $159.1 $259.3 $62.7 $126.5 $607.6
Other ........................... 36.1 52.1 4.4 27.8 120.4
---------- ---------- ---------- ---------- ----------
Gross Revenues ................. 195.2 311.4 67.1 154.3 728.0
Less: Promotional Allowances ..... 23.8 29.9 1.6 16.4 71.7
---------- ---------- ---------- ---------- ----------
Net Revenues ................... 171.4 281.5 65.5 137.9 656.3
---------- ---------- ---------- ---------- ----------
Costs and Expenses:
Gaming .......................... 104.7 153.6 41.8 76.3 376.5
General & Administrative ........ 35.2 50.2 15.9 33.2 139.9
Depreciation & Amortization ..... 7.8 18.2 3.7 8.7 38.4
Trump World's Fair Closing ....... 0.7 - - - 0.7
Other ........................... 10.0 17.0 3.2 7.4 37.7
---------- ---------- ---------- ---------- ----------
Total Costs and Expenses ....... 158.4 239.0 64.6 125.6 593.2
---------- ---------- ---------- ---------- ----------
Income from Operations ........... 13.0 42.5 0.9 12.3 63.1
---------- ---------- ---------- ---------- ----------
Non-operating Income (Expense) ... 0.2 0.5 0.2 0.5 2.7
Interest Expense ................. (23.7) (46.8) (3.0) (28.1) (111.0)
---------- ---------- ---------- ---------- ----------
Total Non-operating Expense, Net (23.5) (46.3) (2.8) (27.6) (108.3)
---------- ---------- ---------- ---------- ----------
Loss in Joint Venture ............ - - (1.5) - (1.5)
Extraordinary Gain, Net .......... - - - - 8.3
---------- ---------- ---------- ---------- ----------
Net Loss Before Minority
Interest ...................... $(10.5) $(3.8) $(3.4) $(15.3) $(38.4)
========== ========== ========== ==========
Minority Interest ................ 17.1
----------
Net Loss.......................... $(21.3)
==========
</TABLE>
15
<PAGE>
<TABLE>
<CAPTION>
Six Months Ended June 30, 1999
---------------------------------------
Plaza Taj Trump Trump THCR
Associates Associates Indiana Marina Consolidated
---------- ---------- ------- ------ ------------
(dollars in millions)
<S> <C> <C> <C> <C> <C>
Table Game Revenues....................... $ 44.8 $ 83.5 $ 16.4 $ 35.0 $ 179.8
Table Game Drop........................... $ 293.9 $ 504.2 $ 98.2 $ 227.3 $ 1,123.6
Table Win Percentage...................... 15.3% 16.6% 16.7% 15.4% 16.0%
Number of Table Games..................... 102 148 52 88 390
Slot Revenues............................. $ 131.4 $ 150.6 $ 54.8 $ 94.1 $ 430.8
Slot Handle............................... $ 1,655.4 $ 1,898.0 $ 859.6 $ 1,178.6 $ 5,591.6
Slot Win Percentage....................... 7.9% 7.9% 6.4% 8.0% 7.7%
Number of Slot Machines................... 4,213 4,207 1,310 2,155 11,885
Other Gaming Revenues..................... - $ 10.6 - $ 1.0 $ 11.6
Total Gaming Revenues..................... $ 176.2 $ 244.7 $ 71.2 $ 130.1 $ 622.2
<CAPTION>
Six Months Ended June 30, 2000
---------------------------------------
Plaza Taj Trump Trump THCR
Associates Associates Indiana Marina Consolidated
---------- ---------- ------- ------ ------------
(dollars in millions)
<S> <C> <C> <C> <C> <C>
Table Game Revenues....................... $ 47.6 $ 88.3 $ 14.3 $ 31.8 $ 182.1
Incr (Decr) over prior period............. $ 2.8 $ 4.8 $ (2.1) $ (3.2) $ 2.3
Table Game Drop........................... $ 313.4 $ 521.4 $ 83.9 $ 199.7 $ 1,118.4
Incr (Decr) over prior period............. $ 19.5 $ 17.2 $ (14.3) $ (27.6) $ (5.2)
Table Win Percentage...................... 15.2% 16.9% 17.0% 15.9% 16.3%
Increase (Decr) over prior period......... (0.1)pts. 0.3pts. 0.3pts. 0.5pts. 0.3pts.
Number of Table Games..................... 96 143 50 76 365
Increase (Decr) over prior period......... (6) (5) (2) (12) (25)
Slot Revenues............................. $ 111.5 $ 160.5 $ 48.4 $ 94.1 $ 414.4
Increase (Decr) over prior period......... $ (19.9) $ 9.9 $ (6.4) $ (0.0) $ (16.4)
Slot Handle............................... $ 1,416.6 $ 2,078.2 $ 759.8 $ 1,194.8 $ 5,449.4
Incr (Decr) over prior period............. $ (238.8) $ 180.2 $ (99.8) $ 16.2 $ (142.2)
Slot Win Percentage....................... 7.9% 7.7% 6.4% 7.9% 7.6%
Incr (Decr) over prior period............. (0.0)pts (0.2)pts. 0.0pts. (0.1)pts. (0.1)pts.
Number of Slot Machines................... 2,809 4,547 1,252 2,303 10,911
Incr (Decr) over prior period............. (1,404) 340 (58) 148 (974)
Other Gaming Revenues..................... - $ 10.5 - $ 0.6 $ 11.1
Increase (Decr)n over prior period........ - $ (0.1) - $ (0.4) $ (0.5)
Total Gaming Revenues..................... $ 159.1 $ 259.3 $ 62.7 $ 126.5 $ 607.6
Increase (Decr)over prior period.......... $ (17.1) $ 14.6 $ (8.5) $ (3.6) $ (14.6)
</TABLE>
Gaming revenues are the primary source of THCR's revenues. 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 15.7% and 15.9%
for the six month period ended June 30, 1999 and June 30, 2000, respectively.
Slot revenues at Plaza Associates declined due to the closing of Trump World's
Fair in October 1999.
Gaming costs and expenses were $376.5 million for the six months ended June
30, 2000, a decrease of $8.9 million from $385.4 million for the comparable
period in 1999. Gaming expenses at the Trump Atlantic City properties, Trump
Plaza Hotel and Casino ("Trump Plaza") and the Trump Taj Mahal Casino Resort
(the "Taj Mahal") increased $.5 million. This increase was offset by a
$5.0 million decrease at Trump Marina as a result of a decrease in promotional
and complimentary expenses achieved by the strategic reductions or elimination
of less profitable programs. Also, Trump Indiana's gaming costs decreased $4.5
million proportionately to the decrease in gaming revenues. The legalization of
dockside gaming competition in Illinois has put the Indiana Riverboat at a
competitive disadvantage.
16
<PAGE>
General and administrative expenses were $139.9 million for the six months
ended June 30, 2000, a decrease of $1.0 million from $140.9 million for the
comparable period in 1999. Expenses at Taj Associates increased $5.0 million or
11.0% from the comparable period in 1999 primarily due to additional
enterainment costs resulting from a higher ratio of cash to complimentary ticket
sales as well as increases in regulatory costs, legal fees and insurance
reserves. Trump Marina's expenses increased $2.7 million or 8.8% from the
comparable period in 1999 due to incremental costs related to the Services
Agreement with TCII, insurance and employee benefit accruals. These increases
were offset by a $4.8 million decrease at Plaza Associates due to the closing of
Trump World's Fair in October 1999 and $1.3 million and $2.6 million decreases
for Trump Indiana and corporate overhead, respectively, due to costs
efficiencies achieved from streamlining of operations.
Non-operating expense includes the $1.3 million jury settlement awarded on
March 3, 1999 to certain residents of Indiana who had asserted claims to
ownership of 7.5% of the value of Trump Indiana. Non-operating expense for the
six months ended June 30, 2000 primarily consists of a loss incurred upon
termination of a lease at THCR Holdings.
During the first quarter of 1999, THCR wrote off $5.6 million of new
development costs which had been classified as prepaid expense at December 31,
1998. The cumulative effect (after minority interest) of this accounting change
was $3.6 million.
Seasonality
The casino industry in Atlantic City and Indiana is seasonal in nature;
accordingly, the results of operations for the period ending June 30, 2000 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.
All statements, trend analysis and other information contained in this Quarterly
Report on Form 10-Q relative to THCR's performance, trends in THCR's operations
or financial results, plans, expectations, estimates and beliefs, as well as
other statements including words such as "anticipate," "believe," "plan,"
"estimate," "expect," "intend" and other similar expressions, constitute
forward-looking statements under the Private Securities Litigation Reform Act of
1995. 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. Readers of this Quarterly Report should
consider these facts in evaluating the information contained herein. In
addition, the business and operations of the Registrants are subject to
substantial risks which increase the uncertainty inherent in the forward-looking
statements contained in this Quarterly Report. The inclusion of the
forward-looking statements contained in this Quarterly Report should not be
regarded as a representation by the Registrants or any other person that the
forward-looking statements contained in 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.
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 Holdings and THCR Funding 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.
17
<PAGE>
Other Litigation. On or about March 20, 2000, Mark Metelman, a stockholder of
THCR, filed a proposed class action on behalf of all THCR stockholders in the
Superior Court of New Jersey, Chancery Division, Atlantic County (Civil Action
No. Atl-C-43.00) against THCR and each member of the Board of Directors of THCR.
The plaintiff claimed that a third party made an offer to purchase THCR and that
one or more members of the Board of Directors wrongly failed to consider the
supposed offer. The plaintiff sought, among other things, an order requiring the
defendants "to fully and fairly consider offers to purchase [THCR]," as well as
money damages. The defendants believed the complaint was based on erroneous
factual allegations and was legally without merit, and filed a motion to dismiss
the complaint. On July 21, 2000, the Court dismissed plaintiffs' Complaint,
without prejudice. The Court granted the plaintiffs ten weeks within which to
file an Amended Complaint, pleading a shareholders derivative action. If
plaintiffs do not file an Amended Complaint within the ten-week time period, the
dismissal shall be considered to be with prejudice.
On July 27, 2000, the Enforcement Staff (the "Staff") of the Northeast
Regional Office of the Securities and Exchange Commission informed THCR that it
is considering recommending that the Commission authorize filing a civil
injunctive action against THCR, its former Chief Executive Officer and its Chief
Financial Officer, charging that each of them violated the Securities Exchange
Act of 1934 by issuing on October 25, 1999, a press release that was materially
false and misleading because it failed to disclose that $17 million of THCR's
operating income in the third quarter of 1999 came from a one-time gain in
connection with Taj Associates' September 1999 acquisition of the All Star Cafe
restaurant from Planet Hollywood International, Inc. The details of that
transaction, and its effects on THCR's third quarter results, were discussed in
THCR's Report on Form 10-Q filed with the Commission on November 4, 1999. The
Staff indicated to THCR that it may seek authority from the Commission to seek
injunctive relief and civil penalties, among other things.
THCR intends to submit a statement to the Commission setting forth the
reasons why THCR believes that the contemplated civil action should not be
brought. If, notwithstanding THCR's submission, such an action is brought, THCR
intends to defend it vigorously. There can be no assurances, however, of the
outcome of such an action. THCR does not believe that such an action, if
brought, would have a material adverse effect on its business, operating results
or financial position.
On or about July 30, 1999, William K. Steiner, a stockholder of THCR, filed a
derivative action (the "Steiner Action") in the Court of Chancery in Delaware
(Civil Action No. 17336NC). The plaintiff in the Steiner Action, through his
attorneys, had entered into a stipulation dismissing the case, without
prejudice, subject to the approval of the Delaware Chancery Court. No
consideration was paid by any defendant in exchange for the plaintiff's
agreement to dismiss the case.
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, 1999, 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 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 Act, as the case may be,
for the operation of Trump Plaza, the 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
None
ITEM 5 -- OTHER INFORMATION None.
18
<PAGE>
ITEM 6 -- EXHIBITS AND REPORTS ON FORM 8-K
a. Exhibits:
<TABLE>
<CAPTION>
Exhibit No. Description of Exhibit
----------- ----------------------
<S> <C> <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 June 30, 2000.
(2) Filed only with the Quarterly Report on Form 10-Q of THCR Holdings and
THCR Funding for the quarter ended June 30, 2000.
b. Current Reports on Form 8-K:
The Registrants did not file any Current Reports on Form 8-K during the
period beginning April 1, 2000 ending June 30, 2000.
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, INC.
(Registrant)
Date: August 14, 2000
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
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, as amended,
the registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
TRUMP HOTELS & CASINO RESORTS HOLDINGS, L.P.
(Registrant)
Date: August 14, 2000 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)
21
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, as amended,
the registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
TRUMP HOTELS & CASINO RESORTS FUNDING, INC.
(Registrant)
Date: August 14, 2000
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)
22
