================================================================================
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: March 31, 1998
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 May 15, 1998 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 May 15, 1998 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 May 15, 1998 was
100.
================================================================================
TRUMP HOTELS & CASINO RESORTS, INC.
<PAGE>
TRUMP HOTELS & CASINO RESORTS HOLDINGS, L.P.
AND
TRUMP HOTELS & CASINO RESORTS FUNDING, INC.
INDEX TO FORM 10-Q
PART I--FINANCIAL INFORMATION
ITEM 1--Financial Statements Page No.
Condensed Consolidated Balance Sheets of Trump Hotels & Casino Resorts,
Inc. as of March 31, 1998 (unaudited) and December 31, 1997............. 1
Condensed Consolidated Statements of Operations of Trump Hotels &
Casino Resorts, Inc. for the Three Months Ended March 31, 1998 and
1997 (unaudited)........................................................ 2
Condensed Consolidated Statement of Stockholders' Equity of Trump
Hotels & Casino Resorts, Inc. for the Three Months Ended
March 31, 1998 (unaudited)............................................. 3
Condensed Consolidated Statements of Cash Flows of Trump Hotels &
Casino Resorts, Inc. for the Three Months Ended March 31, 1998
and 1997 (unaudited).................................................... 4
Condensed Consolidated Balance Sheets of Trump Hotels & Casino
Resorts Holdings, L.P. as of March 31, 1998 (unaudited) and
December 31, 1997....................................................... 5
Condensed Consolidated Statements of Operations of Trump Hotels &
Casino Resorts Holdings, L.P. for the Three Months Ended March 31,
1998 and 1997 (unaudited)............................................... 6
Condensed Consolidated Statement of Partners' Capital of Trump Hotels
& Casino Resorts Holdings, L.P. for the Three Months Ended
March 31, 1998 (unaudited).............................................. 7
Condensed Consolidated Statements of Cash Flows of Trump Hotels & Casino
Resorts Holdings, L.P.for the Three Months Ended March 31, 1998 and 1997
(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....... 15
<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....................... 17
ITEM 3 -- Defaults Upon Senior Securities................................. 17
ITEM 4 -- Submission of Matters to a Vote of Security Holders............. 17
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>
TRUMP HOTELS & CASINO RESORTS, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(in thousands, except share data)
ASSETS
March 31, December 31,
1998 1997
---------- ----------
(unaudited)
CURRENT ASSETS:
Cash and cash equivalents ...................... $ 191,950 $ 140,328
Receivables, net ............................... 70,926 68,075
Inventories .................................... 12,201 13,011
Due from affiliates, net ....................... 250 13,173
Prepaid expenses and other current assets ...... 13,836 13,892
---------- ----------
Total Current Assets ..................... 289,163 248,479
INVESTMENT IN BUFFINGTON HARBOR, L.L.C ........... 43,009 43,535
INVESTMENT IN TRUMP'S CASTLE PIK NOTES ........... 55,897 53,381
PROPERTY AND EQUIPMENT, NET ...................... 1,989,280 2,004,751
CASH RESTRICTED FOR FUTURE CONSTRUCTION .......... 12,031 13,000
DEFERRED BOND AND LOAN ISSUANCE COSTS, NET ....... 43,518 45,071
DUE FROM AFFILIATES .............................. 3,530 3,493
OTHER ASSETS ..................................... 63,643 60,659
---------- ----------
Total Assets ..................................... $2,500,071 $2,472,369
========== ==========
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Current maturities of long-term debt ........... $ 17,006 $ 21,890
Accounts payable and accrued expenses .......... 116,953 109,489
Accrued interest payable ....................... 78,551 29,038
---------- ----------
Total Current Liabilities .................... 212,510 160,417
LONG-TERM DEBT, net of current maturities ........ 1,820,337 1,817,569
OTHER LONG-TERM LIABILITIES ...................... 20,016 17,080
---------- ----------
Total Liabilities ................................ 2,052,863 1,995,066
---------- ----------
MINORITY INTEREST ................................ 138,252 148,418
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 ............................ (127,396) (109,726)
Less treasury stock, 2,011,500 and 1,706,500
shares of THCR Common Stock,
respectively, at cost ......................... (19,535) (17,276)
---------- ----------
Total Stockholders' Equity ....................... 308,956 328,885
---------- ----------
Total Liabilities and Stockholders' Equity ....... $2,500,071 $2,472,369
========== ==========
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 MONTHS ENDED MARCH 31, 1998 AND 1997
(unaudited)
(dollars in thousands)
Three Months Ended
March 31,
--------------------------
1998 1997
----------- -----------
REVENUES:
Gaming ........................................ $ 292,213 $ 316,889
Rooms ......................................... 20,476 21,625
Food and Beverage ............................. 33,672 34,933
Other ......................................... 9,653 9,717
----------- -----------
Gross Revenues ................................ 356,014 383,164
Less -- Promotional allowances ................ 39,560 40,922
----------- -----------
Net Revenues .................................. 316,454 342,242
----------- -----------
COSTS AND EXPENSES:
Gaming ........................................ 186,364 198,803
Rooms ......................................... 7,108 7,101
Food and Beverage ............................. 10,776 11,411
General and Administrative .................... 65,900 67,618
Depreciation and Amortization ................. 20,591 27,072
----------- -----------
290,739 312,005
----------- -----------
Income from operations ........................ 25,715 30,237
----------- -----------
NON-OPERATING INCOME AND (EXPENSES):
Interest income ............................... 3,108 1,964
Interest expense .............................. (55,621) (52,599)
Other non-operating expense ................... (297) --
----------- -----------
(52,810) (50,635)
----------- -----------
Loss before equity in loss of Buffington Harbor,
L.L.C. and Minority Interest .................. (27,095) (20,398)
Equity in loss of Buffington Harbor, L.L.C ....... (741) (638)
----------- -----------
Loss before income taxes and minority interest ... (27,836) (21,036)
Provision for income taxes ....................... -- (883)
Minority Interest ................................ 10,166 7,975
----------- -----------
NET LOSS ......................................... $ (17,670) $ (13,944)
=========== ===========
Basic loss per share ............................. $ (.79) $ (.59)
=========== ===========
Weighted average shares .......................... 22,229,145 23,524,052
=========== ===========
Dilutive loss per share .......................... $ (.79) $ (.59)
=========== ===========
Weighted average shares .......................... 22,229,145 23,524,052
=========== ===========
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 THREE MONTHS ENDED MARCH 31, 1998
(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, 1997 24,206,756 1,000 $ 242 $ 455,645 $ (109,726) $ (17,276) $ 328,885
Purchase of treasury
stock, 305,000 shares of
THCR Common Stock,
at cost ................. -- -- -- -- -- (2,259) (2,259)
Net Loss ................. -- -- -- -- (17,670) -- (17,670)
---------- ----- ---------- ---------- ---------- ---------- ----------
Balance, March 31, 1998 .. 24,206,756 1,000 $ 242 $ 455,645 $ (127,396) $ (19,535) $ 308,956
========== ========== ========== ========== ========== ========== ==========
</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 THREE MONTHS ENDED MARCH 31, 1998 AND 1997
(unaudited)
(dollars in thousands)
<TABLE>
<CAPTION>
1998 1997
---- ----
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net Loss ..................................................................... $ (17,670) $ (13,944)
Adjustments to reconcile net loss to net cash flows from operating activities:
Equity in loss of Buffington Harbor, L.L.C ................................. 741 638
Depreciation and amortization .............................................. 20,591 27,072
Payment-In-Kind interest in Castle PIK Notes ............................... (2,516) (2,128)
Minority interest in net loss .............................................. (10,166) (7,975)
Accretion of discounts on mortgage notes ................................... 1,085 755
Amortization of deferred loan costs ........................................ 2,120 2,002
Provision for losses on receivables ........................................ 2,568 2,295
Valuation allowance of CRDA investments and amortization of Indiana
gaming costs ............................................................ 2,389 2,712
Accretion of phantom stock units ........................................... -- 117
Increase in receivables .................................................... (5,419) (5,075)
Decrease (increase) in inventories ......................................... 810 (400)
Decrease in other current assets ........................................... 378 1,361
Decrease (increase) in due from affiliates ................................. 12,886 (1,014)
Increase in other assets ................................................... (1,434) (4,326)
Increase in accounts payable and accrued expenses .......................... 7,311 12,894
Increase in accrued interest payable ....................................... 49,513 47,218
Increase in other long-term liabilities .................................... 2,011 2,777
--------- ---------
Net cash flows provided by operating activities ........................... 65,198 64,979
--------- ---------
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchase of property and equipment, net ...................................... (4,756) (30,897)
Investment in Buffington Harbor, L.L.C ....................................... (215) (1,021)
CRDA Investments ............................................................. (3,378) (3,238)
Cash restricted for future construction ...................................... 969 --
--------- ---------
Net cash flows used in investing activities ................................ (7,380) (35,156)
--------- ---------
CASH FLOWS FROM FINANCING ACTIVITIES:
Purchase of treasury stock ................................................... (2,259) (12,896)
Issuance of long-term debt-other ............................................. 900 --
Payment of long-term debt-other .............................................. (4,268) (4,858)
Cost of issuing debt ......................................................... (569) --
--------- ---------
Net cash flows used in financing activities ................................ (6,196) (17,754)
--------- ---------
Net increase in cash and cash equivalents .................................. 51,622 12,069
CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD ............................... 140,328 175,749
--------- ---------
CASH AND CASH EQUIVALENTS AT END OF PERIOD ..................................... $ 191,950 $ 187,818
========= =========
CASH INTEREST PAID ............................................................. $ 1,975 $ 1,904
========= =========
Supplemental Disclosure of Non-Cash Activities:
Purchase of property and equipment under capital lease obligations ............. $ 881 $ 1,400
========= =========
</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
March 31, December 31,
1998 1997
---------- ----------
(unaudited)
CURRENT ASSETS:
Cash and cash equivalents ..................... $ 191,946 $ 140,324
Receivables, net .............................. 70,926 68,075
Inventories ................................... 12,201 13,011
Due from Affiliates, net ...................... 250 13,173
Prepaid expenses and other current assets ..... 13,836 13,892
----------- -----------
Total Current Assets ...................... 289,159 248,475
INVESTMENT IN BUFFINGTON HARBOR, L.L.C ........... 43,009 43,535
INVESTMENT IN TRUMP'S CASTLE PIK NOTES ........... 55,897 53,381
PROPERTY AND EQUIPMENT, NET ...................... 1,989,280 2,004,751
CASH RESTRICTED FOR FUTURE CONSTRUCTION .......... 12,031 13,000
DEFERRED BOND AND LOAN ISSUANCE COSTS, NET ....... 43,518 45,071
DUE FROM AFFILIATES .............................. 3,530 3,493
OTHER ASSETS ..................................... 63,643 60,659
----------- -----------
Total Assets ..................................... $ 2,500,067 $ 2,472,365
=========== ===========
LIABILITIES AND CAPITAL
CURRENT LIABILITIES:
Current maturities of long-term debt .......... $ 17,006 $ 21,890
Accounts payable and accrued expenses ......... 116,953 109,489
Accrued interest payable ...................... 78,551 29,038
----------- -----------
Total Current Liabilities ............. 212,510 160,417
LONG-TERM DEBT, net of current maturities ........ 1,820,337 1,817,569
OTHER LONG-TERM LIABILITIES ...................... 20,016 17,080
----------- -----------
Total Liabilities ................................ 2,052,863 1,995,066
----------- -----------
PARTNERS' CAPITAL:
Partners' Capital ................................ 652,503 652,503
Accumulated Deficit .............................. (185,764) (157,928)
Less treasury stock .............................. (19,535) (17,276)
----------- -----------
Total Partners' Capital .......................... 447,204 477,299
----------- -----------
Total Liabilities and Partners' Capital .......... $ 2,500,067 $ 2,472,365
=========== ===========
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 MONTHS ENDED MARCH 31, 1998 AND 1997
(unaudited)
(dollars in thousands)
Three Months Ended
March 31,
------------------
1998 1997
----------- -----------
REVENUES:
Gaming ........................................ $ 292,213 $ 316,889
Rooms ......................................... 20,476 21,625
Food and Beverage ............................. 33,672 34,933
Other ......................................... 9,653 9,717
----------- -----------
Gross Revenues ................................ 356,014 383,164
Less -- Promotional allowances ................ 39,560 40,922
----------- -----------
Net Revenues .................................. 316,454 342,242
----------- -----------
COSTS AND EXPENSES:
Gaming ........................................ 186,364 198,803
Rooms ......................................... 7,108 7,101
Food and Beverage ............................. 10,776 11,411
General and Administrative .................... 65,900 67,501
Depreciation and Amortization ................. 20,591 27,072
----------- -----------
290,739 311,888
----------- -----------
Income from operations ........................ 25,715 30,354
----------- -----------
NON-OPERATING INCOME AND (EXPENSES):
Interest income ............................... 3,108 1,964
Interest expense .............................. (55,621) (52,599)
Other non-operating expense ................... (297) --
----------- -----------
(52,810) (50,635)
----------- -----------
Loss before equity in loss of Buffington
Harbor, L.L.C., and income taxes ............. (27,095) (20,281)
Equity in loss of Buffington Harbor, L.L.C ....... (741) (638)
----------- -----------
Loss before income taxes ......................... (27,836) (20,919)
Provision for income taxes ....................... -- (883)
----------- -----------
NET LOSS ......................................... $ (27,836) $ (21,802)
=========== ===========
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 THREE MONTHS ENDED MARCH 31, 1998
(unaudited)
(dollars in thousands)
Partners' Accumulated THCR
Capital Deficit Common Stock Total
--------- --------- --------- ---------
Balance, December 31, 1997 .. $ 652,503 $(157,928) $ (17,276) $ 477,299
Purchase of 305,000 shares of
THCR Common Stock ........ -- -- (2,259) (2,259)
Net Loss .................... -- (27,836) -- (27,836)
--------- --------- --------- ---------
Balance, March 31, 1998 ..... $ 652,503 $(185,764) $ (19,535) $ 447,204
========= ========= ========= =========
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 THREE MONTHS ENDED MARCH 31, 1998 AND 1997
(unaudited)
(dollars in thousands)
<TABLE>
<CAPTION>
1998 1997
---- ----
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net Loss ....................................................... $ (27,836) $ (21,802)
Adjustments to reconcile net loss to net cash flows from
operating activities:
Equity in loss of Buffington Harbor, L.L.C ................... 741 638
Depreciation and amortization ................................ 20,591 27,072
Payment-In-Kind interest in Castle PIK Notes ................. (2,516) (2,128)
Accretion of discounts on mortgage notes ..................... 1,085 755
Amortization of deferred loan costs .......................... 2,120 2,002
Provision for losses on receivables .......................... 2,568 2,295
Valuation allowance of CRDA investments and amortization
of Indiana gaming costs ................................... 2,389 2,712
Increase in receivables ...................................... (5,419) (5,075)
Decrease (increase) in inventories ........................... 810 (400)
Decrease in other current assets ............................. 378 1,361
Decrease (increase) in due from affiliates ................... 12,886 (1,014)
Increase in other assets ..................................... (1,434) (4,326)
Increase in accounts payable and accrued expenses ............ 7,311 12,894
Increase in accrued interest payable ......................... 49,513 47,218
Increase in other long-term liabilities ...................... 2,011 2,777
--------- ---------
Net cash flows provided by operating activities ............. 65,198 64,979
--------- ---------
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchase of property and equipment, net ........................ (4,756) (30,897)
Investment in Buffington Harbor, L.L.C ......................... (215) (1,021)
CRDA Investments ............................................... (3,378) (3,238)
Cash restricted for future construction ........................ 969 --
--------- ---------
Net cash flows used in investing activities .................. (7,380) (35,156)
--------- ---------
CASH FLOWS FROM FINANCING ACTIVITIES:
Purchase of treasury stock ..................................... (2,259) (12,896)
Issuance of long-term debt-other ............................... 900 --
Payment of long-term debt-other ................................ (4,268) (4,858)
Cost of issuing debt ........................................... (569) --
--------- ---------
Net cash flows used in financing activities .................. (6,196) (17,754)
--------- ---------
Net increase in cash and cash equivalents .................... 51,622 12,069
CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD ................. 140,324 175,745
--------- ---------
CASH AND CASH EQUIVALENTS AT END OF PERIOD ....................... $ 191,946 $ 187,814
========= =========
CASH INTEREST PAID ............................................... $ 1,975 $ 1,904
========= =========
Supplemental Disclosure of Non-Cash Activities:
Purchase of property and equipment under capital lease obligations $ 881 $ 1,400
========= =========
</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, including Trump Hotels &
Casino Resorts Funding, Inc. ("THCR Funding"). THCR Holdings is an entity
which 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. Accordingly, such limited partnership interest is
convertible at Trump's option into 13,918,723 shares of THCR's common
stock, par value $.01 per share. The accompanying 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:
Trump Atlantic City Associates ("Trump AC") and its subsidiaries,
Trump Plaza Associates ("Plaza Associates") and Trump Taj Mahal
Associates ("Taj Associates"). Plaza Associates owns and operates
the Trump Plaza Hotel and Casino ("Trump Plaza") located in Atlantic
City, New Jersey. Taj Associates owns and operates the Trump Taj
Mahal Casino Resort (the "Taj Mahal") located in Atlantic City, New
Jersey. Taj Associates was acquired on April 17, 1996.
Trump Indiana, Inc. ("Trump Indiana"), which commenced operations on
June 8, 1996, owns and operates a riverboat gaming facility at
Buffington Harbor, on Lake Michigan, Indiana (the "Indiana
Riverboat").
Trump's Castle Associates, L.P. ("Castle Associates"), which was
acquired on October 7, 1996. Castle Associates owns and operates
Trump Marina Hotel Casino ("Trump Marina") located in Atlantic City,
New Jersey.
THCR Funding, the co-issuer of $145,000,000 15 1/2% Senior Secured
Notes, due 2005 (the "Senior Notes").
All significant intercompany balances and transactions have been
eliminated in the accompanying condensed consolidated financial statements.
The accompanying condensed consolidated financial statements have
been prepared without audit. In the opinion of management, all adjustments,
consisting of only normal recurring adjustments necessary to present fairly the
financial position, the results of operations and cash flows for the periods
presented, have been made.
The accompanying condensed consolidated financial statements have
been prepared pursuant to the rules and regulations of the Securities and
Exchange Commission ("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, 1997
filed with the SEC.
The casino industry in Atlantic City is seasonal in nature;
accordingly, results of operations for the period ended March 31, 1998 are not
necessarily indicative of the operating results for a full year.
THCR, THCR Holdings and THCR Funding have no operations and their
ability to service their debt is dependent on the successful operations of Trump
AC, Trump Indiana and Castle Associates. THCR, through THCR Holdings and its
subsidiaries, is the exclusive vehicle through which Trump engages in new gaming
activities in emerging or established gaming jurisdictions.
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)
Basic Loss Per Share
In the fourth quarter of 1997, THCR adopted Statement of Financial
Accounting Standards Board, Statement No. 128 "Earnings per Share" ("SFAS No.
128"). SFAS No. 128 requires the presentation in the consolidated statement of
operations for all years presented of both basic and dilutive earnings per
share. Basic and dilutive loss per share calculated under this Statement does
not differ from earnings per share reported in prior periods.
Basic loss per share is based on the weighted average number of
shares of THCR Common Stock outstanding. Dilutive 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, par value $.01 per share ("the THCR 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.
(2) Property and Equipment
During the second quarter of 1997, THCR revised its estimates of the
useful lives of buildings, building improvements, furniture and fixtures which
were acquired in 1996. Building and building improvements were reevaluated to
have a forty year life and furniture and fixtures were determined to have a
seven year life. During the third quarter of 1997, Trump Indiana revised its
estimates of the useful life of the riverboat and its improvements from fifteen
to thirty years. THCR believes these changes more appropriately reflect the
timing of the economic benefits to be received from these assets during their
estimated useful lives. For the three months ended March 31, 1998, the net
effect of applying these new lives was to decrease net loss by $2,300,000 and
decrease loss per share by $.11.
(3) Long-Term Debt
On April 17, 1998, Trump's Castle Funding, Inc. refinanced its 11 1/2%
Senior Secured Notes due 2000 (the "Old Senior Notes") and its term loan with a
bank (the "Term Loan") by issuing 10 1/4% Senior Secured Notes due 2003 (the
"New Senior Notes"). The proceeds from the issuance of the New Senior Notes were
used to redeem all of the issued and outstanding Old Senior Notes at 100% of
their principal amount and to repay the Term Loan in full. In conjunction with
this refinancing, Trump's Castle Hotel & Casino Inc. ("TCHI"), a New Jersey
corporation and the general partner of Castle Associates, obtained a working
capital credit facility (the "Working Capital Loan"). Both the New Senior Notes
and the Working Capital Loan are guaranteed by Castle Associates.
The New Senior Notes have an outstanding principal amount of $62,000,000
and bear interest at the rate of 10 1/4% per annum, payable semi-annually each
April and October. The New Senior Notes mature on April 17, 2003.
The Working Capital Loan has an outstanding principal amount of $5,000,000
and bears interest at the rate of 10 1/4% per annum, payable semi-annually each
April and October. The entire principal balance of the Working Capital Loan
matures on April 17, 2003.
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)
(4) Financial Information
Financial information relating to THCR Funding is as follows:
<TABLE>
<CAPTION>
March 31, December 31,
1998 1997
---- ------
<S> <C> <C>
Total Assets (including Notes receivable of
$145,000,000 at March 31, 1998 and
December 31, 1997) ................................... $151,555,000 $145,936,000
============ ============
Total Liabilities and Capital (including $145,000,000 of Senior
Secured Notes Due 2005) .............................. $151,555,000 $145,936,000
============ ============
Three Months Ended March 31,
1998 1997
---- ----
Interest Income from THCR Holdings ............................ $ 5,619,000 $ 5,619,000
Interest Expense .............................................. $ 5,619,000 $ 5,619,000
------------ ------------
Net Income .................................................... $ -- $ --
============ ============
</TABLE>
(5) 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 amends 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 has not yet decided when it will adopt the new standard, but it
is not expected to be adopted earlier than the first quarter of 1999. Had THCR
adopted the new standard as of March 31, 1998, the net loss of $17,670,000 would
have increased by $355,000 for the effect of the write-off of first quarter
capitalized costs and $1,872,000 for the cumulative effect of change in
accounting principle to an adjusted net loss of $19,897,000. The corresponding
earnings per share effect would increase the net loss per share as reported of
$.79 by $.02 for the write-off of first quarter capitalized costs and $.08 for
the cumulative effect of change in accounting principle to an adjusted loss per
share of $.89.
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 and were $65,198,000 compared to $64,979,000 for the comparable period
in 1997.
Capital expenditures for Trump AC were $3,308,000 and $19,268,000 for the
three months ended March 31, 1998 and 1997, respectively. Capital expenditures
for improvements to Trump Plaza's existing facilities were $2,847,000 and
$4,253,000 for the three months ended March 31, 1998 and 1997, respectively. In
addition, in 1997, Plaza Associates exercised its option to purchase from
Seashore Four Associates, an entity beneficially owned by Trump, one of the
parcels of land underlying Trump Plaza's main tower, pursuant to the terms of a
lease, the payments under which were terminated upon the exercise of such
option. The purchase price and associated closing costs were $10,144,000.
Capital expenditures attributable to the Taj Mahal were $175,000 and
$15,015,000 for the three months ended March 31, 1998 and 1997, respectively.
Capital expenditures for improvements to existing facilities were approximately
$175,000 and $2,340,000 for the three months ended March 31, 1998 and 1997,
respectively. Capital expenditures attributable to the expansion of the facility
were approximately $12,675,000 for the three months ended March 31, 1997.
The expansion at the Taj Mahal (the "Taj Mahal Expansion") consisted of
the construction of a new 14-bay bus terminal which was completed in December
1996, a 2,400 space expansion of the existing self parking facilities, which was
completed in May 1997, and an approximate 7,000 square-foot casino expansion
with 260 slot machines, which was completed in July 1997. The total costs of the
Taj Mahal Expansion including amounts expended in 1996 and 1997 were
approximately $43,500,000 and have been funded principally out of cash from
operations.
Capital expenditures attributable to Castle Associates were $40,000 and
$584,000 for the three months ended March 31, 1998 and 1997, respectively.
Capital expenditures attributable to Trump Indiana were $1,372,000 and $883,000
for the three months ended March 31, 1998 and 1997, respectively. Approximately
$15 million costs of hotel construction and other infrastructure improvements
will be applied towards satisfying the economic development commitment required
in connection with the Indiana licensing process. THCR is currently negotiating
with the Majestic Star Casino, L.L.C. ("Barden"), the other riverboat licensee
and joint owner with Trump Indiana of Buffington Harbor Riverboats, L.L. C.
("BHR"), and the City of Gary for the development of a 1,500 space parking
garage by BHR which would cost approximately $20 million.
On April 17, 1998 Trump's Castle Funding, Inc. refinanced its 11 1/2%
Senior Secured Notes due 2000 (the "Old Senior Notes") and its term loan with a
bank (the "Term Loan") by issuing 10 1/4% Senior Secured Notes due 2003 (the
"New Senior Notes"). The proceeds from the issuance of the New Senior Notes were
used to redeem all of the issued and outstanding Old Senior Notes and 100% of
their principal amount and to repay the Term Loan in full. In conjunction with
this refinancing, Trump's Castle Hotel & Casino Inc., a New Jersey corporation
and the general partner of Castle Associates, obtained a working capital credit
facility (the "Working Capital Loan"). Both the New Senior Notes and the Working
Capital Loan are guaranteed by Castle Associates.
The New Senior Notes have an outstanding principal amount of $62,000,000
and bear interest at the rate of 10 1/4% per annum, payable semi-annually each
April and October. The New Senior Notes mature on April 17, 2003.
The Working Capital Loan has an outstanding principal amount of $5,000,000
and bears interest at the rate of 10 1/4% per annum, payable semi-annually each
April and October. The entire principal balance of the Working Capital Loan
matures on April 17, 2003.
THCR has assessed the year 2000 issue and has begun implementing a plan to
resolve the issue, which is expected to be completed in early 1999. Based upon
management's assessment, it is anticipated that associated costs incurred to
satisfactorily complete the plan will not be material.
The indenture governing the Senior Notes (the "Senior Note Indenture") as
well as indentures of the 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.
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 March 31, 1998 and 1997. The
following tables include selected data of Plaza Associates, Taj Associates,
Trump Indiana and Trump Marina.
<TABLE>
<CAPTION>
Three Months Ended March 31, 1998
---------------------------------
Plaza Taj Trump Trump THCR
Associates Associates Indiana Marina Consolidated*
---------- ---------- ------- ------ -------------
<S> <C> <C> <C> <C> <C>
Revenues: (dollars in millions)
Gaming .......................... $ 87.3 $114.5 $ 27.8 $ 62.6 $292.2
Other ........................... 23.0 27.2 0.7 12.9 63.8
------ ------ ------ ------ ------
Gross Revenues ................. 110.3 141.7 28.5 75.5 356.0
Less: Promotional Allowances ..... 14.3 16.1 0.2 8.9 39.5
------ ------ ------ ------ ------
Net Revenues ................... 96.0 125.6 28.3 66.6 316.5
------ ------ ------ ------ ------
Costs and Expenses:
Gaming .......................... 54.0 72.7 19.8 39.9 186.4
General & Administrative ........ 20.0 21.2 6.9 15.0 65.9
Depreciation & Amortization ..... 6.0 9.3 1.1 4.0 20.6
Other ........................... 6.6 8.0 0.8 2.5 17.9
------ ------ ------ ------ ------
Total Costs and Expenses ....... 86.6 111.2 28.6 61.4 290.8
------ ------ ------ ------ ------
Income (Loss) from Operations .... 9.4 14.4 (0.3) 5.2 25.7
------ ------ ------ ------ ------
Non-operating Income ............. 0.4 0.2 0.0 0.2 2.8
Interest Expense ................. (12.0) (23.6) (2.5) (12.6) (55.6)
------ ------ ------ ------ ------
Total Non-operating Expense, Net (11.6) (23.4) (2.5) (12.4) (52.8)
------ ------ ------ ------ ------
Loss in Joint Venture ............ -- -- (0.7) -- (0.7)
Income Tax Benefit ............... -- -- -- -- --
------ ------ ------ ------ ------
Net Loss Before Minority
Interest ................... $ (2.2) $ (9.0) $ (3.5) $ (7.2) (27.8)
====== ====== ====== ====== ------
Minority Interest ................ 10.1
------
Net Loss ......................... $(17.7)
======
* Intercompany eliminations and expenses of THCR and THCR Holdings are not
separately shown.
<CAPTION>
Three Months Ended March 31, 1997
---------------------------------
Plaza Taj Trump Trump THCR
Associates Associates Indiana Marina Consolidated*
---------- ---------- ------- ------ -------------
<S> <C> <C> <C> <C> <C>
Revenues: (dollars in millions)
Gaming .......................... $ 86.9 $128.2 $ 37.8 $ 64.0 $316.9
Other ........................... 24.5 26.7 1.0 14.0 66.2
------ ------ ------ ------ ------
Gross Revenues ................. 111.4 154.9 38.8 78.0 383.1
Less: Promotional Allowances ..... 14.6 16.5 0.2 9.6 40.9
------ ------ ------ ------ ------
Net Revenues ................... 96.8 138.4 38.6 68.4 342.2
------ ------ ------ ------ ------
Costs and Expenses:
Gaming .......................... 55.3 79.2 23.3 41.0 198.8
General & Administrative ........ 20.5 22.2 6.9 16.2 67.6
Depreciation & Amortization ..... 6.5 14.2 1.3 5.1 27.1
Other ........................... 7.5 7.6 0.7 2.7 18.5
------ ------ ------ ------ ------
Total Costs and Expenses ....... 89.8 123.2 32.2 65.0 312.0
------ ------ ------ ------ ------
Income from Operations ........... 7.0 15.2 6.4 3.4 30.2
------ ------ ------ ------ ------
Non-operating Income ............. 0.2 0.4 0.3 0.1 2.0
Interest Expense ................. (12.2) (23.7) (2.9) (12.2) (52.6)
------ ------ ------ ------ ------
Total Non-operating Expense, Net (12.0) (23.3) (2.6) (12.1) (50.6)
------ ------ ------ ------ ------
Loss in Joint Venture ............ -- -- (0.6) -- (0.6)
Income Tax Provision ............. -- -- (0.9) -- (0.9)
------ ------ ------ ------ ------
Net Loss before Minority Interest $ (5.0) $ (8.1) $ 2.3 $ (8.7) (21.9)
====== ====== ====== ====== ======
Minority Interest ................ 8.0
------
Net Loss ......................... $(13.9)
======
</TABLE>
* Intercompany eliminations and expenses of THCR and THCR Holdings are not
separately shown.
13
<PAGE>
<TABLE>
<CAPTION>
Three Months Ended March 31, 1997
---------------------------------
Plaza Taj Trump Trump THCR
Associates Associates Indiana Marina Consolidated*
---------- ---------- ------- ------ -------------
(dollars in millions)
<S> <C> <C> <C> <C> <C>
Table Game Revenues..................... $24.9 $41.6 $8.4 $17.7 $92.6
Incr (Decr) over prior period........... $2.9 $(15.7) $(2.8) $(0.9) $(16.5)
Table Game Drop......................... $151.6 $274.7 $51.1 $111.8 $589.2
Incr (Decr) over prior period........... $(7.7) $(43.3) $(10.8) $(4.8) $(66.6)
Table Win Percentage.................... 16.4% 15.1% 16.4% 15.8% 15.7%
Incr (Decr) over prior period........... 2.6 pts. (2.9) pts. (1.7) pts. (0.1) pts. (0.9) pts.
Number of Table Games................... 117 156 58 94 425
Incr (Decr) over prior period........... (18) (10) (11) 1 (38)
Slot Revenues........................... $62.4 $68.4 $19.4 $44.6 $194.8
Incr (Decr) over prior period........... $(2.5) $2.0 $(7.2) $(0.5) $(8.1)
Slot Handle............................. $776.3 $832.0 $304.8 $551.8 $2,464.9
Incr (Decr) over prior period........... $(11.0) $(1.2) $(96.0) $(3.9) $(104.3)
Slot Win Percentage..................... 8.0% 8.2% 6.4% 8.1% 7.9%
Incr (Decr) over prior period........... (0.2) pts. 0.2 pts. (0.2) pts. (0.1) pts. 0.0
Number of Slot Machines................. 4,076 4,145 1,327 2,155 11,703
Incr (Decr) over prior period........... (10) 347 (117) (177) 43
Other Gaming Revenues.................. N/A $4.5 N/A $0.3 $4.8
Incr (Decr) over prior period........... N/A $(0.1) N/A $0.0 $(0.1)
Total Gaming Revenues................... $87.3 $114.5 $27.8 $62.6 $292.2
Incr (Decr) over prior period........... $0.4 $(13.8) $(9.9) $(1.4) $(24.7)
<CAPTION>
Three Months Ended March 31, 1997
---------------------------------
Plaza Taj Trump Trump THCR
Associates Associates Indiana Marina Consolidated*
---------- ---------- ------- ------ -------------
<S> <C> <C> <C> <C> <C>
Table Game Revenues................... $22.0 $57.3 $11.2 $18.6 $109.1
Table Game Drop....................... $159.3 $318.0 $61.9 $116.6 $655.8
Table Win Percentage.................. 13.8% 18.0% 18.1% 15.9% 16.6%
Number of Table Games................. 135 166 69 93 463
Slot Revenues......................... $64.9 $66.4 $26.6 $45.1 $202.9
Slot Handle........................... $787.3 $833.2 $400.8 $547.9 $2,569.2
Slot Win Percentage................... 8.2% 8.0% 6.6% 8.2% 7.9%
Number of Slot Machines............... 4,086 3,798 1,444 2.332 11,660
Other Gaming Revenues................. N/A $4.6 N/A $0.3 $4.9
Total Gaming Revenues................. $86.9 $128.2 $37.8 $64.0 $316.9
</TABLE>
Gaming revenues are the primary source of THCR's revenues. Taj Associates'
year over year decrease in gaming revenues was due primarily to last year's
first quarter results which included an unusual approximately $8 million dollar
table game win from one premium player, contrasted against an unusually low
table game win percentage in the current year. Table games revenues represent
the amount retained by THCR from amounts wagered at table games. The table win
percentage tends to be fairly constant over the long term, but may vary
significantly in the short term, due to large wagers by "high rollers".
Decreases in revenue at Trump Indiana are attributed to the new facilities and
capacity added over the past year.
Gaming costs and expenses were $186,364,000 for the three months ended
March 31, 1998, a decrease of $12,439,000
14
<PAGE>
or 6.3% from $198,803,000 from the comparable period in 1997. This decrease is
substantially proportionate to the decrease in gaming revenues from the
comparable period in 1997, and represent primarily marketing and promotional
costs.
During the second quarter of 1997, THCR revised its estimates of the
useful lives of buildings, building improvements, furniture and fixtures which
were acquired in 1996. Building and building improvements were reevaluated to
have a forty year life and furniture and fixtures were determined to have a
seven year life. During the third quarter of 1997, Trump Indiana revised its
estimates of the useful life of the riverboat and its improvements from fifteen
to thirty years. THCR believes these changes more appropriately reflect the
timing of the economic benefits to be received from these assets during their
estimated useful lives. For the three months ended March 31, 1998, the net
effect of applying these new lives was to decrease net loss by $2,300,000 and
decrease loss per share by $.11.
Seasonality
The casino industry in Atlantic City and Indiana is seasonal in nature;
accordingly, the results of operations for the period ending March 31, 1998 are
not necessarily indicative of the operating results for a full year.
ITEM 3 -- QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
Pursuant to the General Instructions to Rule 305 of Regulation S-K, the
quantitative and qualitative disclosures called for by this Item 3 and by Rule
305 of Regulation S-K are inapplicable to the Registrants at this time.
PART II -- OTHER INFORMATION
ITEM -- LEGAL PROCEEDINGS
THCR and certain of its subsidiaries, affiliates and employees have been
involved in various legal proceedings. In general, THCR has agreed to indemnify
such persons against any and all losses, claims, damages, expenses (including
reasonable costs, disbursements and counsel fees) and liabilities (including
amounts paid or incurred in satisfaction of settlements, judgments, fines and
penalties) incurred by them in said legal proceedings. Such persons and entities
are vigorously defending the allegations against them and intend to vigorously
contest any future proceedings.
Plaza Associates. The CRDA is required to set aside funds for investment
in hotel development projects in Atlantic City undertaken by casino licensees
which result in the construction or rehabilitation of at least 200 hotel rooms.
These investments are to fund up to 27% of the cost to casino licensees of such
projects. In June 1993, ,Plaza Associates made application for such funding to
the CRDA with respect to its proposed construction of the Trump Plaza East
facilities, demolition of a certain structure adjacent thereto, development of
an appurtenant public park, roadway and parking area and acquisition of the
entire project site. The CRDA, in rulings through January 10, 1995, approved the
hotel development project and, with respect to same and pursuant to a credit
agreement between them, reserved to Plaza Associates the right to take
investment tax credits up to approximately $14.2 million. Plaza Associates has,
except for three small parcels discussed below, acquired the site and had
constructed and presently operates and maintains the proposed hotel tower,
public park, roadway and parking area.
As part of its approval and on the basis of its powers of eminent domain,
the CRDA, during 1994, initiated certain condemnation proceedings in the
Superior Court of New Jersey, Atlantic County, to acquire five small parcels of
land within the project site. Plaza Associates has since acquired two of the
parcels and proceedings with respect to those parcels have been concluded. The
proceedings with respect to the remaining three parcels, which, if acquired,
will be included in the public park and parking area of the project, are
currently pending and include a claim by the defendants that the CRDA did not
properly determine that the parcels were to be used for public purposes. The
CRDA motion seeking dismissal of this claim has been briefed and, in February
1998, argued by the parties. Additionally, with respect to the two parcels to be
included in the public park portion of the project, the CRDA, by a separate
motion, seeks an order that the Plaza Associates' application and credit
agreement be deemed amended so as to terminate the CRDA obligation to acquire
the two parcels and enabling the CRDA to abandon the condemnation proceedings
with respect to these two parcels. This motion was opposed by Plaza Associates.
By order dated April 1, 1998, the Court denied the motion but granted the CRDA
leave to amend its pleadings by a filing within 14 days from the date thereof to
formally assert a claim for specific performance of the alleged agreement. The
CRDA did not file any such amended pleading within this permitted time period.
The defendants in two of the condemnation proceedings filed a separate
joint complaint in the New Jersey Superior Court alleging, among other claims,
that the CRDA and Plaza Associates are wrongfully attempting to deprive them of
property rights in violation of their constitutional and civil rights. Coking,
et al. v. Casino Reinvestment Development
15
<PAGE>
Authority, et al., Docket No. ATL-L-2555-97. The CRDA's motion for summary
judgment on the complaint and Plaza Associates' motion to dismiss it for failure
to state a claim were granted by the New Jersey Superior Court on October 24,
1997 and November 11, 1997.
Other Litigation. On March 13, 1997, THCR filed a lawsuit in the United
States District Court, District of New Jersey, against Mirage Resorts
Incorporated ("Mirage"), the State of New Jersey ("State"), the New Jersey
Department of Transportation ("NJDOT"), the South Jersey Transportation
Authority ("SJTA"), the CRDA, the New Jersey Transportation Trust Fund Authority
and others. THCR was seeking declaratory and injunctive relief to recognize and
prevent violations by the defendants of the casino clause of the New Jersey
State Constitution and various federal securities and environmental laws
relating to proposed infrastructure improvements in the Atlantic City marina
area. While this action was pending, defendants State and the CRDA then filed an
action in the New Jersey State Court seeking declaration of the claim relating
to the casino clause of the New Jersey State Constitution. On May 1, 1997, the
United States District Court dismissed the federal claims and ruled that the
State constitutional claims should be pursued in State Court. On April 2, 1998,
the United States Court of Appeals for the Third Circuit affirmed the dismissal.
THCR has petitioned the Third Circuit for a rehearing. On May 14, 1997, the
State Court entered a summary judgement in favor of the State and the CRDA,
which was affirmed by the Appellate Division on March 20, 1998. THCR has filed a
Notice of Appeal in the State Supreme Court.
On August 14, 1996, certain stockholders of THCR filed two derivative
actions in the Court of Chancery in Delaware (Civil Action Nos. 15148 and 15160)
(the "Delaware cases") against each of the members of the Board of Directors of
THCR, THCR, THCR Holdings, Castle Associates and Trump Casinos II, Inc.
("TCI-II"). The plaintiffs claim that the directors of THCR breached their
fiduciary duties in connection with the its acquisition of Castle Associates
("the Castle Acquisition") by purchasing these interests at an excessive price
in a self-dealing transaction. The complaint sought to enjoin the transaction,
and also sought damages and an accounting. The injunction was never pursued.
These plaintiffs served a notice of dismissal in the Delaware cases on December
29, 1997. The Court of Chancery has not yet ordered the Delaware cases
dismissed.
On October 16, 1996, a stockholder of THCR filed a derivative action in
the United States District Court, Southern District of New York (96 Civ. 7820)
against each member of the Board of Directors of THCR, THCR, THCR Holdings,
Castle Associates, TCI, TCI-II, TCHI and Salomon Brothers, Inc. ("Salomon"). The
plaintiff claims that certain of the defendants breached their fiduciary duties
and engaged in ultra vires acts in connection with the Castle Acquisition and
that Salomon was negligent in the issuance of its fairness opinion with respect
to the Castle Acquisition. The plaintiff also alleges violations of the federal
securities laws for alleged omissions and misrepresentations in THCR's proxies,
and that Trump, TCI-II and TCHI breached the acquisition agreement by supplying
THCR with untrue information for inclusion in the proxy statement delivered to
THCR's stockholders in connection with the Castle Acquisition. The plaintiff
seeks removal of the directors of THCR, and injunction, rescission and damages.
The Delaware cases were amended and refiled in the Southern District of
New York and consolidated with the federal action for all purposes, including
pretrial proceedings and trial. On or about January 17, 1997, the plaintiffs
filed their Consolidated Amended Derivative Complaint (the "First Amended
Complaint"), reflecting the consolidation. On or about March 24, 1997, the
plaintiffs filed their Second Consolidated Amended Derivative Complaint (the
"Second Amended Complaint"). In addition to the allegations made in the First
Amended Complaint, the Second Amended Complaint claims that certain of the
defendants breached their fiduciary duties and wasted corporate assets in
connection with the previously contemplated transaction with Colony Capital,
Inc. ("Colony Capital"). The Second Amended Complaint also includes claims
against Colony Capital for aiding and abetting certain of those violations. In
addition to the relief sought in the First Amended Complaint, the Second Amended
Complaint sought to enjoin the previously contemplated transaction with Colony
Capital or, if it was effectuated, to rescind it. On March 27, 1997, THCR and
Colony Capital mutually agreed to end negotiations with respect to such
transaction. On June 26, 1997, plaintiffs served their Third Consolidated
Amended Derivative Complaint (the "Third Amended Complaint"), which omitted the
claims against Colony Capital. THCR and the other defendants in the action moved
to dismiss the Third Amended Complaint on August 5, 1997. The plaintiffs opposed
the defendants' motions to dismiss the Third Amended Complaint by response dated
October 24, 1997. The defendants' reply was served December 9, 1997. By letter
dated April 2, 1998, the plaintiffs sought the Court's permission to amend
further the Third Amended Complaint to add certain additional factual
allegations. The defendants opposed the application and the Court has not yet
ruled on it.
Trump Indiana. Commencing in early 1994, Trump Indiana (which was then
wholly owned by Trump), through its Indiana counsel, had discussions with eight
Indiana residents regarding the potential purchase by such residents of
non-voting stock of Trump Indiana, representing a total of 7.5% of the equity in
Trump Indiana. The purchase price of the stock was to have been paid with a
promissory note secured by the stock purchased, although the purchase price and
other
16
<PAGE>
material terms of the proposed purchase were never agreed upon. Such
discussions did not result in an agreement for, or the purchase of, any stock by
the residents. It was subsequently determined to include Trump Indiana as a
wholly owned subsidiary of THCR Holdings in connection with the June 1995
Offerings. The residents then asserted a right to purchase stock in Trump
Indiana. Trump Indiana and THCR did not agree with the residents' assertions of
any such rights with respect to the stock of Trump Indiana or otherwise, and so
advised the residents. Although discussions had been ongoing with respect to the
resolution of this matter, on March 29, 1996, in the matter entitled
Keshav D. Aggarwal, et. al. v. Donald J. Trump, Trump Hotels & Casino Resorts,
Inc., Trump Hotels & Casino Resorts Holdings, L.P. and Trump Indiana, Inc., such
residents filed a complaint with respect to this matter in the United States
District Court, Southern District of Indiana, seeking, among other things,
compensatory and punitive damages in an unspecified amount and that the court
order the defendants to transfer ownership of 7.5% of Trump Indiana to the
plaintiffs. Trump, THCR, THCR Holdings and Trump Indiana filed an answer to the
complaint on May 31, 1996. Cross-motions for summary judgment have been filed by
all parties and a decision regarding each motion is expected in the near future.
In September 1997, a monetary settlement was reached between all defendants and
four of the plaintiffs. Recently, the remaining plaintiffs voluntarily dismissed
their demands for the transfer of ownership in Trump Indiana. A trial date has
been set for July 1998. THCR and the other defendants intend to vigorously
contest the allegations against them. Further, management believes that the
further resolution of these claims will not have a material adverse effect on
THCR.
Various other legal proceedings are now pending against THCR. Except as set
forth herein and in THCR's Annual Report on Form 10-K for the year ended
December 31, 1997, THCR considers all such proceedings to be ordinary litigation
incident to the character of its business and not material to its business or
financial condition. THCR believes that the resolution of these claims, to the
extent not covered by insurance, will not, individually or in the aggregate,
have a material adverse effect on its financial condition or results of
operations of THCR.
ITEM 2 -- CHANGES IN SECURITIES AND USE OF PROCEEDS
None.
ITEM 3 -- DEFAULTS UPON SENIOR SECURITIES
None.
ITEM 4 -- SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
None.
ITEM 5 -- OTHER INFORMATION
None.
ITEM 6 -- EXHIBITS AND REPORTS ON FORM 8-K
a. Exhibits:
Exhibit No. Description of Exhibit
----------- ----------------------
27.1(1) Financial Data Schedule of Trump Hotels & Casino
Resorts, Inc.
27.2(2) Financial Data Schedule of Trump Hotels & Casino
Resorts Holdings, L.P.
27.3(2) Financial Data Schedule of Trump Hotels & Casino
Funding, Inc.
(1) Filed only with the Quarterly Report on Form 10-Q of THCR for
the quarter ended March 31, 1998.
(2) Filed only with the Quarterly Report on Form 10-Q of THCR
Holdings and THCR Funding for the quarter ended March 31,
1998.
b. Current Reports on Form 8-K:
The Registrants did not file any Current Reports on Form 8-K during
the period beginning January 1, 1998 and ending March 31, 1998.
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: May 15, 1998
By: /s/ R. BRUCE MC KEE
---------------------------------------------
R. Bruce McKee
Senior Vice President of Corporate
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: May 15, 1998
By: TRUMP HOTELS & CASINO RESORTS, INC.,
its general partner
By: /s/ R. BRUCE MC KEE
----------------------------------------------
R. Bruce McKee
Senior Vice President of Corporate
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: May 15, 1998
By: /s/ R. BRUCE MC KEE
----------------------------------------------
R. Bruce McKee
Senior Vice President of Corporate
Finance and Chief Financial Officer
(Duly Authorized Officer and
Principal Financial Officer)
20
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<NAME> TRUMP HOTELS & CASINO RESORTS FUNDING, INC.
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<S> <C>
<PERIOD-TYPE> 3-MOS
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