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, 2004
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 No.: 333-00643
TRUMP ATLANTIC CITY ASSOCIATES
(Exact Name of Registrant as specified in its charter)
| New Jersey | 22-3213714 | |
| (State or other jurisdiction of incorporation or organization) | (I.R.S. Employer Identification Number) |
1000 Boardwalk at Virginia Avenue
Atlantic City, New Jersey 08401
(609) 449-6515
(Address, Including Zip Code and Telephone Number, Including Area Code, of Registrant’s Principal Executive Offices)
TRUMP ATLANTIC CITY FUNDING, INC.
(Exact Name of Registrant as specified in its charter)
Commission File No.: 333-00643-02
| Delaware | 22-3418939 | |
| (State or other jurisdiction of incorporation or organization) | (I.R.S. Employer Identification Number) |
1000 Boardwalk at Virginia Avenue
Atlantic City, New Jersey 08401
(609) 449-6515
(Address, Including Zip Code and Telephone Number, Including Area Code, of Registrant’s Principal Executive Offices)
TRUMP ATLANTIC CITY FUNDING II, INC.
(Exact Name of Registrant as specified in its charter)
Commission File No.: 333-43979-03
| Delaware | 22-3550202 | |
| (State or other jurisdiction of incorporation or organization) | (I.R.S. Employer Identification Number) |
1000 Boardwalk at Virginia Avenue
Atlantic City, New Jersey 08401
(609) 449-6515
(Address, Including Zip Code and Telephone Number, Including Area Code, of Registrant’s Principal Executive Offices)
TRUMP ATLANTIC CITY FUNDING III, INC.
(Exact Name of Registrant as specified in its charter)
Commission File No.: 333-43975-03
| Delaware | 22-3550203 | |
| (State or other jurisdiction of incorporation or organization) | (I.R.S. Employer Identification Number) |
1000 Boardwalk at Virginia Avenue
Atlantic City, New Jersey 08401
(609) 449-6515
(Address, Including Zip Code and Telephone Number, Including Area Code, of Registrant’s Principal Executive Offices)
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 ¨
Indicate by check mark whether any of the Registrants is an accelerated filer (as defined in Exchange Rule 12b-2). Yes ¨ No x
As of May 14, 2004, there were 100 shares of Trump Atlantic City Funding, Inc.’s common stock outstanding.
As of May 14, 2004, there were 100 shares of Trump Atlantic City Funding II, Inc.’s common stock outstanding.
As of May 14, 2004, there were 100 shares of Trump Atlantic City Funding III, Inc.’s common stock outstanding.
Each of Trump Atlantic City Associates, Trump Atlantic City Funding, Inc., Trump Atlantic City Funding II, Inc. and Trump Atlantic City Funding III, Inc. meets the conditions set forth in General Instruction (H)(1)(a) and (b) of Form 10-Q and is therefore filing this form with the reduced disclosure format.
TRUMP ATLANTIC CITY ASSOCIATES AND SUBSIDIARIES
FORM 10-Q
Table of Contents
i
TRUMP ATLANTIC CITY ASSOCIATES AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(in thousands)
| December 31, 2003 |
March 31, 2004 |
|||||||
| (unaudited) | ||||||||
| ASSETS | ||||||||
| CURRENT ASSETS: |
||||||||
| Cash and cash equivalents |
$ | 59,727 | $ | 91,441 | ||||
| Receivables, net |
25,200 | 24,193 | ||||||
| Inventories |
8,427 | 8,042 | ||||||
| Other current assets |
8,187 | 7,578 | ||||||
| Total current assets |
101,541 | 131,254 | ||||||
| PROPERTY AND EQUIPMENT, NET |
1,247,472 | 1,249,997 | ||||||
| DEFERRED LOAN COSTS, NET |
6,966 | 6,103 | ||||||
| OTHER ASSETS |
40,528 | 41,515 | ||||||
| Total assets |
$ | 1,396,507 | $ | 1,428,869 | ||||
| LIABILITIES AND CAPITAL | ||||||||
| CURRENT LIABILITIES: |
||||||||
| Current maturities of long-term debt |
$ | 19,127 | $ | 23,532 | ||||
| Accounts payable and accrued expenses |
91,279 | 95,821 | ||||||
| Accrued interest payable |
24,375 | 60,938 | ||||||
| Due to affiliates, net |
7,799 | 9,992 | ||||||
| Total current liabilities |
142,580 | 190,283 | ||||||
| LONG-TERM DEBT, net of current maturities |
1,317,243 | 1,324,974 | ||||||
| OTHER LONG-TERM LIABILITIES |
23,078 | 23,012 | ||||||
| Total liabilities |
1,482,901 | 1,538,269 | ||||||
| CAPITAL/(DEFICIT): |
||||||||
| Partners’ capital |
220,408 | 220,306 | ||||||
| Accumulated deficit |
(306,802 | ) | (329,706 | ) | ||||
| Total capital/(deficit) |
(86,394 | ) | (109,400 | ) | ||||
| Total liabilities and capital/(deficit) |
$ | 1,396,507 | $ | 1,428,869 | ||||
See accompanying notes.
1
TRUMP ATLANTIC CITY ASSOCIATES AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
FOR THE THREE MONTHS ENDED MARCH 31, 2003 AND 2004
(unaudited)
(in thousands)
| Three Months Ended March 31, |
||||||||
| 2003 |
2004 |
|||||||
| REVENUES: |
||||||||
| Gaming |
$ | 198,663 | $ | 190,154 | ||||
| Rooms |
13,073 | 12,504 | ||||||
| Food and beverage |
21,038 | 21,023 | ||||||
| Other |
5,579 | 6,575 | ||||||
| Gross revenues |
238,353 | 230,256 | ||||||
| Less-Promotional allowances |
49,852 | 51,941 | ||||||
| Net revenues |
188,501 | 178,315 | ||||||
| COSTS AND EXPENSES: |
||||||||
| Gaming |
93,889 | 89,615 | ||||||
| Rooms |
6,006 | 5,382 | ||||||
| Food and beverage |
7,215 | 6,783 | ||||||
| General and administrative |
42,394 | 41,279 | ||||||
| General and administrative - related party |
307 | 444 | ||||||
| Depreciation and amortization |
15,447 | 18,217 | ||||||
| 165,258 | 161,720 | |||||||
| Income from operations |
23,243 | 16,595 | ||||||
| NON-OPERATING INCOME AND (EXPENSE): |
||||||||
| Interest and other non-operating income |
217 | 120 | ||||||
| Interest expense |
(38,642 | ) | (38,616 | ) | ||||
| Non-operating expense, net |
(38,425 | ) | (38,496 | ) | ||||
| Loss before income tax provision |
(15,182 | ) | (21,901 | ) | ||||
| Income tax provision |
(859 | ) | (1,003 | ) | ||||
| NET LOSS |
$ | (16,041 | ) | $ | (22,904 | ) | ||
See accompanying notes.
2
TRUMP ATLANTIC CITY ASSOCIATES AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENT OF CAPITAL/(DEFICIT)
FOR THE THREE MONTHS ENDED MARCH 31, 2004
(unaudited)
(in thousands)
| Partners’ Capital |
Accumulated Deficit |
Total Capital/(Deficit) |
||||||||||
| Balance, December 31, 2003 |
$ | 220,408 | $ | (306,802 | ) | $ | (86,394 | ) | ||||
| Partnership distribution |
(102 | ) | — | (102 | ) | |||||||
| Net loss |
— | (22,904 | ) | (22,904 | ) | |||||||
| Balance, March 31, 2004 |
$ | 220,306 | $ | (329,706 | ) | $ | (109,400 | ) | ||||
See accompanying notes.
3
TRUMP ATLANTIC CITY ASSOCIATES AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE THREE MONTHS ENDED MARCH 31, 2003 AND 2004
(unaudited)
(in thousands)
| Three Months Ended March 31, |
||||||||
| 2003 |
2004 |
|||||||
| CASH FLOWS FROM OPERATING ACTIVITIES: |
||||||||
| Net loss |
$ | (16,041 | ) | $ | (22,904 | ) | ||
| Adjustments to reconcile net loss to net cash flows from operating activities— |
||||||||
| Depreciation and amortization |
15,447 | 18,217 | ||||||
| Accretion of discount on indebtedness |
112 | 100 | ||||||
| Amortization of deferred loan offering costs |
967 | 863 | ||||||
| Provisions for losses on receivables |
1,468 | 890 | ||||||
| Valuation allowance - CRDA investments |
1,171 | 809 | ||||||
| (Increase)/decrease in receivables |
(1,968 | ) | 117 | |||||
| Decrease in inventories |
413 | 385 | ||||||
| Decrease in other current assets |
1,270 | 586 | ||||||
| Decrease/(increase) in other assets |
1,345 | (722 | ) | |||||
| Increase in amounts due to affiliates |
94 | 2,193 | ||||||
| Increase in accounts payable, accrued expenses and other liabilities |
36,845 | 42,509 | ||||||
| Net cash provided by operating activities |
41,123 | 43,043 | ||||||
| CASH FLOWS FROM INVESTING ACTIVITIES: |
||||||||
| Purchase of property and equipment |
(6,412 | ) | (4,539 | ) | ||||
| Purchases of CRDA investments, net |
(2,491 | ) | (2,365 | ) | ||||
| Net cash used in investing activities |
(8,903 | ) | (6,904 | ) | ||||
| CASH FLOWS FROM FINANCING ACTIVITIES: |
||||||||
| Payments of long-term debt |
(3,506 | ) | (4,323 | ) | ||||
| Distributions to parent company |
(862 | ) | (102 | ) | ||||
| Net cash used in financing activities |
(4,368 | ) | (4,425 | ) | ||||
| NET INCREASE IN CASH AND CASH EQUIVALENTS |
27,852 | 31,714 | ||||||
| CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD |
79,007 | 59,727 | ||||||
| CASH AND CASH EQUIVALENTS AT END OF PERIOD |
$ | 106,859 | $ | 91,441 | ||||
| Supplemental Disclosures of Cash Flow Information: |
||||||||
| • Cash paid for interest |
$ | 1,008 | $ | 1,092 | ||||
| • Cash paid for income taxes |
$ | — | $ | 175 | ||||
| • Equipment purchased under capital leases |
$ | 1,760 | $ | 16,359 | ||||
See accompanying notes.
4
TRUMP ATLANTIC CITY ASSOCIATES AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(unaudited)
(1) Organization and Operations
The accompanying condensed consolidated financial statements include those of Trump Atlantic City Associates, a New Jersey general partnership (“Trump AC” or the “Company”), and its subsidiaries: (i) Trump Taj Mahal Associates, a New Jersey general partnership (“Taj Associates”) which owns and operates the Trump Taj Mahal Casino Resort located in Atlantic City, New Jersey (the “Taj Mahal”), (ii) Trump Plaza Associates, a New Jersey general partnership (“Plaza Associates”) which owns and operates the Trump Plaza Hotel and Casino located in Atlantic City, New Jersey (“Trump Plaza” and together with the Taj Mahal, the “Trump AC Properties”), (iii) Trump Atlantic City Funding, Inc. (“Trump AC Funding”), (iv) Trump Atlantic City Funding II, Inc. (“Trump AC Funding II”), (v) Trump Atlantic City Funding III, Inc. (“Trump AC Funding III”), (vi) Trump Atlantic City Corporation (“TACC”), and (vii) Trump Administration, a separate division of Taj Associates (“Trump Administration”). Trump AC’s sole sources of liquidity are distributions in respect of its interests in Taj Associates and Plaza Associates. Trump AC is 100% beneficially owned by Trump Hotels & Casino Resorts Holdings, L.P., a Delaware limited partnership (“THCR Holdings”) of which Trump Hotels & Casino Resorts, Inc., a Delaware corporation (“THCR”), is the sole general partner. Trump AC, Trump AC Funding, Trump AC Funding II and Trump AC Funding III (collectively the “Issuers”) have no independent operations and, therefore, their ability to service debt is dependent upon the successful operations of Taj Associates and Plaza Associates. There are no restrictions on the ability of Taj Associates and Plaza Associates, the primary guarantors (the “Subsidiary Guarantors”) of the aggregate principal amount of $1.3 billion 11 1/4% First Mortgage Notes due May 1, 2006 of the Issuers (the “Trump AC Mortgage Notes”), to distribute funds to Trump AC in respect of the guaranteed debt.
The separate financial statements of the Subsidiary Guarantors have not been included because (i) the Subsidiary Guarantors constitute all of Trump AC’s direct and indirect subsidiaries; (ii) the Subsidiary Guarantors have fully and unconditionally guaranteed the Trump AC Mortgage Notes on a joint and several basis; (iii) the aggregate assets, liabilities, earnings and equity of the Subsidiary Guarantors are substantially equivalent to the assets, liabilities, earnings and equity of Trump AC on a consolidated basis; and (iv) the separate financial and other disclosures concerning the Subsidiary Guarantors are not deemed by management to be material. The assets and operations of the nonguarantor subsidiaries are not significant.
Trump AC has no operations, except for its ownership of the Trump AC Properties through Taj Associates and Plaza Associates. The majority of Trump AC’s revenues are derived from its gaming operations. The Atlantic City market is very competitive, especially since the opening of the Borgata Casino Hotel and Spa by a joint venture of MGM Mirage and Boyd Gaming in Atlantic City’s marina district in July 2003, and is anticipated to become more competitive in the future. The Company views each casino property as an operating segment and all such operating segments have been aggregated into one reporting segment. Each casino property derives its revenues from casino operations, room rental, food and beverage sales and entertainment revenue.