================================================================================
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, 2001
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.)
Huron Ave. & Brigantine Blvd.
Atlantic City, New Jersey 08401
(Address of principal executive offices) (Zip Code)
(609) 441-8406
(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.)
Huron Ave. & Brigantine Blvd.
Atlantic City, New Jersey 08401
(Address of principal executive offices) (Zip Code)
(609) 441-8406
(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.)
Huron Ave. & Brigantine Blvd.
Atlantic City, New Jersey 08401
(Address of principal executive offices) (Zip Code)
(609) 441-8406
(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, 2001 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, 2001 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, 2001 was 100.
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TRUMP HOTELS & CASINO RESORTS, INC.,
TRUMP HOTELS & CASINO RESORTS HOLDINGS, L.P.
AND
TRUMP HOTELS & CASINO RESORTS FUNDING, INC.
INDEX TO FORM 10-Q
PART I--FINANCIAL INFORMATION
ITEM 1--Financial Statements Page No.
--------
Condensed Consolidated Balance Sheets of Trump Hotels
& Casino Resorts, Inc. as of December 31, 2000 and
June 30, 2001 (unaudited)...................................... 1
Condensed Consolidated Statements of Operations of Trump
Hotels & Casino Resorts, Inc. for the Three and Six
Months Ended June 30, 2000 and 2001 (unaudited)................ 2
Condensed Consolidated Statement of Stockholders' Equity
of Trump Hotels & Casino Resorts, Inc. for the Six Months
Ended June 30, 2001 (unaudited)................................ 3
Condensed Consolidated Statements of Cash Flows of Trump
Hotels & Casino Resorts, Inc. for the Six Months Ended
June 30, 2000 and 2001 (unaudited)............................. 4
Condensed Consolidated Balance Sheets of Trump Hotels &
Casino Resorts Holdings, L.P. as of December 31, 2000 and
June 30, 2001 (unaudited)...................................... 5
Condensed Consolidated Statements of Operations of Trump
Hotels & Casino Resorts Holdings, L.P. for the Three and
Six Months Ended June 30, 2000 and 2001 (unaudited)............ 6
Condensed Consolidated Statement of Partners' Capital of
Trump Hotels & Casino Resorts Holdings, L.P. for the Six
Months Ended June 30, 2001 (unaudited)......................... 7
Condensed Consolidated Statements of Cash Flows of Trump
Hotels & Casino Resorts Holdings, L.P. for the Six Months
Ended June 30, 2000 and 2001 (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......................... 11
ITEM 3 -- Quantitative and Qualitative Disclosures About Market Risk.. 16
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.................................... 17
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.................................... 18
ITEM 6 -- Exhibits and Reports on Form 8-K..................... 18
SIGNATURES
Signature -- Trump Hotels & Casino Resorts, Inc................ 19
Signature -- Trump Hotels & Casino Resorts Holdings, L.P....... 20
Signature -- Trump Hotels & Casino Resorts Funding, Inc........ 21
PART I - FINANCIAL INFORMATION
ITEM 1 - FINANCIAL STATEMENTS
TRUMP HOTELS & CASINO RESORTS, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(dollars in thousands, except share data)
ASSETS
December 31, June 30,
2000 2001
----------- ----------
(unaudited)
CURRENT ASSETS:
Cash and cash equivalents........................... $ 95,429 $ 105,920
Receivables, net.................................... 52,715 45,054
Inventories......................................... 12,324 11,850
Due from affiliates, net............................ 2,525 902
Prepaid expenses and other current assets........... 9,941 15,113
----------- ----------
Total Current Assets............................... 172,934 178,839
INVESTMENT IN BUFFINGTON HARBOR, L.L.C............... 36,585 36,345
INVESTMENT IN TRUMP'S CASTLE PIK NOTES............... 90,101 97,755
PROPERTY AND EQUIPMENT, NET.......................... 1,815,068 1,802,936
DEFERRED BOND AND LOAN ISSUANCE COSTS, NET........... 23,273 22,165
OTHER ASSETS (Note 3)................................ 61,190 65,518
----------- ----------
Total Assets......................................... $ 2,199,151 $2,203,558
=========== ==========
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Current maturities of long-term debt (Note 6)....... $ 27,021 $ 16,709
Accounts payable and accrued expenses............... 147,639 160,929
Accrued interest payable............................ 29,967 29,986
----------- ----------
Total Current Liabilities....................... 204,627 207,624
LONG-TERM DEBT, net of current maturities (Note 6)... 1,827,023 1,866,685
OTHER LONG-TERM LIABILITIES.......................... 25,455 26,008
----------- ----------
Total Liabilities.................................... 2,057,105 2,100,317
----------- ----------
MINORITY INTEREST.................................... 26,897 12,706
STOCKHOLDERS' EQUITY:
Common Stock, $.01 par value, 75,000,000 shares
authorized, 24,206,756 issued; 22,010,027
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................................. (320,538) (345,152)
Less treasury stock at cost, 2,196,729 shares....... (20,200) (20,200)
----------- ----------
Total Stockholders' Equity........................... 115,149 90,535
----------- ----------
Total Liabilities and Stockholders' Equity........... $ 2,199,151 $2,203,558
=========== ==========
The accompanying notes are an integral part of these condensed consolidated
balance sheets
1
TRUMP HOTELS & CASINO RESORTS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
FOR THE THREE AND SIX MONTHS ENDED JUNE 30, 2000 AND 2001
(unaudited)
(dollars in thousands, except share data)
Three Months Ended Six Months Ended
June 30 June 30
------------------------ -------------------------
2000 2001 2000 2001
---- ---- ---- ----
REVENUES:
Gaming...................................... $ 312,545 $ 309,168 $ 607,566 $ 602,146
Rooms....................................... 20,036 20,871 38,031 38,937
Food and Beverage........................... 33,259 32,404 64,092 63,388
Other....................................... 10,200 9,399 18,258 16,991
----------- ---------- ----------- -----------
Gross Revenues.............................. 376,040 371,842 727,947 721,462
Less -- Promotional allowances (Note 5)..... 43,832 41,364 82,293 80,130
----------- ---------- ----------- -----------
Net Revenues................................ 332,208 330,478 645,654 641,332
----------- ---------- ----------- -----------
COSTS AND EXPENSES:
Gaming (Note 5)............................. 184,039 184,323 365,882 365,936
Rooms....................................... 8,211 8,017 15,643 15,359
Food and Beverage........................... 11,905 11,289 22,039 21,165
General and Administrative.................. 72,420 66,020 139,918 131,797
Depreciation and Amortization............... 18,633 18,645 38,355 37,520
Trump World's Fair Closing (Note 4)......... 254 - 736 -
----------- ---------- ----------- -----------
295,462 288,294 582,573 571,777
----------- ---------- ----------- -----------
Income from operations..................... 36,746 42,184 63,081 69,555
----------- ---------- ----------- -----------
NON-OPERATING INCOME AND (EXPENSES):
Interest income............................. 1,494 1,017 3,258 2,099
Interest expense............................ (54,987) (54,934) (111,019) (109,287)
Other non-operating income (expense)........ (38) 296 (508) 426
----------- ---------- ----------- -----------
(53,531) (53,621) (108,269) (106,762)
----------- ---------- ----------- -----------
Loss before equity in loss of Buffington
Harbor, L.L.C., and minority interest........ (16,785) (11,437) (45,188) (37,207)
Equity in loss of Buffington Harbor, L.L.C.. (812) (800) (1,532) (1,598)
Minority Interest........................... 6,436 4,475 17,086 14,191
----------- ---------- ----------- -----------
Loss before extraordinary item............... (11,161) (7,762) (29,634) (24,614)
Extraordinary gain ($13,067) net of
minority interest ($4,779) (Note 2)......... 8,288 - 8,288 -
----------- ---------- ----------- -----------
NET LOSS..................................... $ (2,873) $ (7,762) $ (21,346) $ (24,614)
=========== ========== =========== ===========
Basic and diluted loss per share before
extraordinary item.......................... $ (.51) $ (.35) $ (1.34) $ (1.12)
Extraordinary item.......................... .38 - .38 -
----------- ---------- ----------- -----------
Basic and diluted loss per share............. $ (.13) $ (.35) $ (.97) $ (1.12)
=========== ========== =========== ===========
Average number of shares outstanding......... 22,065,562 22,010,027 22,072,409 22,010,027
=========== ========== =========== ===========
The accompanying notes are an integral part of these condensed consolidated
financial statements.
2
TRUMP HOTELS & CASINO RESORTS, INC.
CONDENSED CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY
FOR THE SIX MONTHS ENDED JUNE 30, 2001
(unaudited)
(dollars in thousands)
Number of Shares
----------------
Common Additional
Class B Stock Paid in Accumulated Treasury
Common Common Amount Capital Deficit Stock Total
------ ------ ------ ------- ------- ----- -----
Balance, December 31, 2000.. 24,206,756 1,000 $ 242 $ 455,645 $ (320,538) $ (20,200) $ 115,149
Net Loss.................... - - - - (24,614) - (24,614)
---------- ------ ------ ---------- ----------- --------- ---------
Balance, June 30, 2001...... 24,206,756 1,000 $ 242 $ 455,645 $ (345,152) $ (20,200) $ 90,535
========== ====== ====== ========== =========== ========= =========
The accompanying notes are an integral part of this condensed consolidated
financial statement.
3
TRUMP HOTELS & CASINO RESORTS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE SIX MONTHS ENDED JUNE 30, 2000 AND 2001
(unaudited)
(dollars in thousands)
2000 2001
---- ----
CASH FLOWS FROM OPERATING ACTIVITIES:
Net Loss.......................................................................... $ (21,346) $ (24,614)
Adjustments to reconcile net loss to net cash flows from operating activities:
Extraordinary gain, net of minority interest................................... (8,288) -
Issuance of debt in exchange for accrued interest.............................. 7,339 8,392
Non-cash increase in Trump's Castle PIK Notes.................................. (6,693) (7,654)
Equity in loss of Buffington Harbor, L.L.C..................................... 1,532 1,598
Depreciation and amortization.................................................. 38,355 37,520
Minority interest in net loss.................................................. (17,086) (14,191)
Accretion of discounts on mortgage notes....................................... 2,774 3,153
Amortization of deferred loan costs............................................ 3,284 2,944
Provision for losses on receivables............................................ 2,947 4,079
Valuation allowance of CRDA investments and amortization of Indiana
gaming costs................................................................. 4,439 3,585
Loss (gain) on disposition of property......................................... 464 (423)
(Increase) decrease in receivables............................................. (2,445) 3,582
(Increase) decrease in inventories............................................. (17) 474
Increase in other current assets............................................... (3,349) (5,163)
Decrease in due from affiliates................................................ 25,022 1,623
Increase in other assets...................................................... (1,207) (668)
Increase in accounts payable and accrued expenses.............................. 14,575 13,171
(Decrease) increase in accrued interest payable................................ (93) 19
Increase (decrease) in other long-term liabilities............................ 118 (115)
----------- -----------
Net cash flows provided by operating activities............................. 40,325 27,312
----------- -----------
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchase of property and equipment, net........................................ (10,205) (6,807)
Investment in Buffington Harbor, L.L.C......................................... (249) (1,358)
CRDA Investments............................................................... (6,602) (6,575)
----------- -----------
Net cash flows used in investing activities................................. (17,056) (14,740)
----------- -----------
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from additional borrowings............................................ - 27,500
Payment of long-term debt...................................................... (20,591) (27,746)
Loan costs from additional borrowing........................................... - (1,835)
----------- -----------
Net cash flows used in financing activities................................. (20,591) (2,081)
----------- -----------
Net increase in cash and cash equivalents................................... 2,678 10,491
CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD.................................. 104,026 95,429
----------- -----------
CASH AND CASH EQUIVALENTS AT END OF PERIOD........................................ $ 106,704 $ 105,920
=========== ===========
CASH INTEREST PAID................................................................ $ 104,930 $ 102,673
=========== ===========
SUPPLEMENTAL DISCLOSURE OF NON-CASH ACTIVITIES:
Purchase of property and equipment under capital lease obligations................ $ 7,328 $ 18,049
=========== ===========
Exchange of THCR Common Stock to treasury stock................................... $ 203 $ -
=========== ===========
The accompanying notes are an integral part of these condensed consolidated
financial statements.
4
TRUMP HOTELS & CASINO RESORTS HOLDINGS, L.P.
CONDENSED CONSOLIDATED BALANCE SHEETS
(dollars in thousands)
ASSETS
December 31, June 30,
2000 2001
----------- ----------
(unaudited)
CURRENT ASSETS:
Cash and cash equivalents......................... $ 95,425 $ 105,916
Receivables, net.................................. 52,715 45,054
Inventories....................................... 12,324 11,850
Due from affiliates, net.......................... 2,525 902
Prepaid expenses and other current assets......... 9,941 15,113
---------- ----------
Total Current Assets.......................... 172,930 178,835
INVESTMENT IN BUFFINGTON HARBOR, L.L.C.............. 36,585 36,345
INVESTMENT IN TRUMP'S CASTLE PIK NOTES.............. 90,101 97,755
PROPERTY AND EQUIPMENT, NET......................... 1,815,068 1,802,936
DEFERRED BOND AND LOAN ISSUANCE COSTS, NET.......... 23,273 22,165
OTHER ASSETS (Note 3)............................... 61,190 65,518
---------- ----------
Total Assets........................................ $2,199,147 $2,203,554
========== ==========
LIABILITIES AND PARTNERS' CAPITAL
CURRENT LIABILITIES:
Current maturities of long-term debt (Note 6)..... $ 27,021 $ 16,709
Accounts payable and accrued expenses............. 147,639 160,929
Accrued interest payable.......................... 29,967 29,986
---------- ----------
Total Current Liabilities..................... 204,627 207,624
LONG-TERM DEBT, net of current maturities (Note 6).. 1,827,023 1,866,685
OTHER LONG-TERM LIABILITIES......................... 25,455 26,008
---------- ----------
Total Liabilities................................... 2,057,105 2,100,317
---------- ----------
PARTNERS' CAPITAL:
Partners' capital................................... 652,503 652,503
Accumulated deficit................................. (490,261) (529,066)
Less stock of THCR.................................. (20,200) (20,200)
---------- ----------
Total Partners' Capital............................. 142,042 103,237
---------- ----------
Total Liabilities and Partners' Capital............. $2,199,147 $2,203,554
========== ==========
The accompanying notes are an integral part of these condensed consolidated
balance sheets.
5
TRUMP HOTELS & CASINO RESORTS HOLDINGS, L.P.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
FOR THE THREE AND SIX MONTHS ENDED JUNE 30, 2000 AND 2001
(unaudited)
(dollars in thousands)
Three Months Ended Six Months Ended
June 30, June 30,
--------------------- ---------------------
2000 2001 2000 2001
---- ---- ---- ----
REVENUES:
Gaming.................................................. $ 312,545 $ 309,168 $ 607,566 $ 602,146
Rooms................................................... 20,036 20,871 38,031 38,937
Food and Beverage....................................... 33,259 32,404 64,092 63,388
Other................................................... 10,200 9,399 18,258 16,991
--------- --------- --------- ---------
Gross Revenues.......................................... 376,040 371,842 727,947 721,462
Less -- Promotional allowances (Note 5)................. 43,832 41,364 82,293 80,130
--------- --------- --------- ---------
Net Revenues............................................ 332,208 330,478 645,654 641,332
--------- --------- --------- ---------
COSTS AND EXPENSES:
Gaming (Note 5)......................................... 184,039 184,323 365,882 365,936
Rooms................................................... 8,211 8,017 15,643 15,359
Food and Beverage....................................... 11,905 11,289 22,039 21,165
General and Administrative.............................. 72,420 66,020 139,918 131,797
Depreciation and Amortization........................... 18,633 18,645 38,355 37,520
Trump World's Fair Closing (Note 4)..................... 254 - 736 -
--------- --------- --------- ---------
295,462 288,294 582,573 571,777
--------- --------- --------- ---------
Income from operations.................................. 36,746 42,184 63,081 69,555
--------- --------- --------- ---------
NON-OPERATING INCOME AND (EXPENSES):
Interest income......................................... 1,494 1,017 3,258 2,099
Interest expense........................................ (54,987) (54,934) (111,019) (109,287)
Other non-operating income (expense).................... (38) 296 (508) 426
--------- --------- --------- ---------
(53,531) (53,621) (108,269) (106,762)
--------- --------- --------- ---------
Loss before equity in loss of Buffington Harbor, L.L.C... (16,785) (11,437) (45,188) (37,207)
Equity in loss of Buffington Harbor, L.L.C............... (812) (800) (1,532) (1,598)
--------- --------- --------- ---------
Loss before extraordinary item........................... (17,597) (12,237) (46,720) (38,805)
Extraordinary gain (Note 2).............................. 13,067 - 13,067 -
--------- --------- --------- ---------
NET LOSS................................................. $ (4,530) $ (12,237) $ (33,653) $ (38,805)
========= ========= ========= =========
The accompanying notes are an integral part of these condensed consolidated
financial statements.
6
TRUMP HOTELS & CASINO RESORTS HOLDINGS, L.P.
CONDENSED CONSOLIDATED STATEMENT OF PARTNERS' CAPITAL
FOR THE SIX MONTHS ENDED JUNE 30, 2001
(unaudited)
(dollars in thousands)
Partners' Accumulated THCR
Capital Deficit Common Stock Total
------- ------- ------------ -----
Balance, December 31, 2000.. $ 652,503 $ (490,261) $ (20,200) $ 142,042
Net Loss.................... - (38,805) - (38,805)
--------- ---------- --------- ---------
Balance, June 30, 2001...... $ 652,503 $ (529,066) $ (20,200) $ 103,237
========= ========== ========= =========
The accompanying notes are an integral part of this condensed consolidated
financial statement.
7
TRUMP HOTELS & CASINO RESORTS HOLDINGS, L.P.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE SIX MONTHS ENDED JUNE 30, 2000 AND 2001
(unaudited)
(dollars in thousands)
2000 2001
---- ----
CASH FLOWS FROM OPERATING ACTIVITIES:
Net Loss.............................................................................. $ (33,653) $ (38,805)
Adjustments to reconcile net loss to net cash flows from operating activities:
Extraordinary gain, net of minority interest..................................... (13,067) -
Issuance of debt in exchange for accrued interest................................ 7,339 8,392
Non-cash increase in Trump's Castle PIK Notes.................................... (6,693) (7,654)
Equity in loss of Buffington Harbor, L.L.C...................................... 1,532 1,598
Depreciation and amortization.................................................... 38,355 37,520
Accretion of discounts on mortgage notes......................................... 2,774 3,153
Amortization of deferred loan costs.............................................. 3,284 2,944
Provision for losses on receivables.............................................. 2,947 4,079
Valuation allowance of CRDA investments and amortization of Indiana
gaming costs.................................................................. 4,439 3,585
Loss(gain) on disposition of property............................................ 464 (423)
(Increase) decrease in receivables............................................... (2,445) 3,582
(Increase) decrease in inventories............................................... (17) 474
Increase in other current assets................................................. (3,349) (5,163)
Decrease in due from affiliates.................................................. 25,022 1,623
Increase in other assets......................................................... (1,207) (668)
Increase in accounts payable and accrued expenses................................ 14,575 13,171
(Decrease) increase in accrued interest payable.................................. (93) 19
Increase (decrease) in other long-term liabilities............................... 118 (115)
--------- ---------
Net cash flows provided by operating activities............................. 40,325 27,312
--------- ---------
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchase of property and equipment, net.......................................... (10,205) (6,807)
Investment in Buffington Harbor, L.L.C........................................... (249) (1,358)
CRDA Investments................................................................. (6,602) (6,575)
--------- ---------
Net cash flows used in investing activities................................. (17,056) (14,740)
--------- ---------
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from additional borrowings.............................................. - 27,500
Payment of long-term debt........................................................ (20,591) (27,746)
Loan costs from additional borrowing............................................. - (1,835)
--------- ---------
Net cash flows used in financing activities................................. (20,591) (2,081)
--------- ---------
Net increase in cash and cash equivalents............................................. 2,678 10,491
CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD...................................... 104,022 95,425
--------- ---------
CASH AND CASH EQUIVALENTS AT END OF PERIOD............................................ $ 106,700 $ 105,916
========= =========
CASH INTEREST PAID.................................................................... $ 104,930 $ 102,673
========= =========
SUPPLEMENTAL DISCLOSURE OF NON-CASH ACTIVITIES
Purchase of property and equipment under capital lease obligations.................... $ 7,328 $ 18,049
========= =========
Exchange of THCR Common Stock to treasury stock....................................... $ 203 $ -
========= =========
The accompanying notes are an integral part of these condensed consolidated
financial statements.
8
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,
par value $.01 per share (the "THCR Common Stock") (subject to certain
adjustments), and if converted, would give Trump ownership of 42.3% of the THCR
Common Stock (including his current personal share ownership) or 43.8% (assuming
currently exercisable options held by Trump were exercised). 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
accounting principles generally accepted in the United States 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, 2000
filed with the SEC.
The casino industry in Atlantic City and Indiana is seasonal in nature.
Accordingly, results of operations for the period ended June 30, 2001 are not
necessarily indicative of the operating results for a full year.
THCR, THCR Holdings and Trump Hotels & Casino Resorts Funding, Inc., a
Delaware corporation ("THCR Funding"), have no operations and their ability to
service their debt is dependent on the successful operations of the following
subsidiaries of THCR Holdings (the "Subsidiaries"): (i) Trump Atlantic City
Associates, a New Jersey general partnership ("Trump AC"), which is comprised of
Trump Taj Mahal Associates, a New Jersey general partnership ("Taj Associates"),
and Trump Plaza Associates, a New Jersey general partnership ("Plaza
Associates"); (ii) Trump Indiana, Inc., a Delaware corporation ("Trump
Indiana"); and (iii) Trump's Castle Associates, L.P. , a New Jersey limited
partnership ("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 and
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, 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.
9
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:
December 31, June 30,
2000 2001
------------ -----------
(unaudited)
Total Assets (including THCR Holdings' 15 1/2% Senior Secured
Notes due 2005 ("the Senior Notes") receivable of
$145,000,000 at December 31, 2000 and
June 30, 2001) (a)....................................... $145,936,000 $145,936,000
============ ============
Total Liabilities and Capital (including $145,000,000 of
Senior Notes)........................................... $145,936,000 $145,936,000
============ ============
Six Months Ended June 30,
2000 2001
---- ----
Interest Income from THCR Holdings............................. $ 11,238,000 $11,238,000
Interest Expense............................................... $ 11,238,000 $11,238,000
------------ -----------
Net Income..................................................... $ - $ -
============ ===========
(a) During 2000, THCR Enterprises, L.L.C., a New Jersey limited liability
company ("THCR Enterprises") and wholly-owned subsidiary of THCR Holdings,
purchased $35,500,000 of these Senior Notes. For the three and six months
ended June 30, 2000, an extraordinary gain of $13,067,000 was recorded,
net of a writetown of deferred loan costs of $1,403,000 which was adjusted
to $8,288,000 after minority interest of $4,779,000.
(3) Other Assets
Plaza Associates is appealing a real estate tax assessment by the City
of Atlantic City. At December 31, 2000 and June 30, 2001, other assets include
$8,014,000, which Plaza Associates estimates will be recoverable on the
settlement of the appeal.
(4) 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.
(5) Volume Based Cash Rebates
In January 2001, the Emerging Issues Task Force (EITF) reached a
consensus on certain issues within Issue No. 00-22, "Accounting for 'Points' and
Certain Other Time-Based or Volume-Based Sales Incentive Offers, and Offers for
Free Products or Services to Be Delivered in the Future," (EITF 00-22).
Application of EITF 00-22 is required for interim and annual periods ending
after February 15, 2001. EITF 00-22 requires volume-based cash rebates to be
classified as a reduction of revenue. Accordingly, such rebates have been
classified as promotional allowances. THCR previously classified these
expenditures as a gaming expense. Prior period amounts have been reclassified to
conform with the current presentation.
(6) Trump Indiana Note Payable
On April 27, 2001, Trump Indiana entered into a loan agreement with a
bank group for $27,500,000. Proceeds from the loan were used to pay off maturing
debt for the vessel, the hotel, the $5,000,000 bridge loan and provide working
capital. The new debt will bear a fixed rate of interest of 8.85% for the first
$10,000,000 of the loan, and a floating rate will apply to the balance of the
loan. The initial rate on the floating portion will be a blended 7.86%. The loan
will amortize over 84 months at a fixed amount per month and will mature with a
balloon payment payable at the end of 60 months.
10
(7) Recent Accounting Pronouncement
In July 2001, the FASB issued Statement No. 141 "Business Combinations"
("SFAS 141") and Statement No. 142 "Goodwill and Other Intangible Assets" ("SFAS
142"). SFAS 141 is effective as follows: a) use of the pooling-of-interest
method is prohibited for business combinations initiated after June 30, 2001;
and b) the provisions of SFAS 141 also apply to all business combinations
accounted for by the purchase method that are complete after June 30, 2001.
There are also transition provisions that apply to business combinations
completed before July 1, 2001 that were accounted for by the purchase method.
SFAS 142 is effective for fiscal years beginning after December 15, 2001 and
applies to all goodwill and other intangible assets recognized in an entity's
statement of financial position at that date, regardless of when those assets
were initially recognized. THCR is currently evaluating the provisions of SFAS
141 and SFAS 142 and has not yet determined the effects of these changes on
THCR's financial position or results of operations.
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 anticipate having sufficient liquidity to
meet their obligations during 2001. 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 $10,205,000 and $6,807,000 for the
six months ended June 30, 2000 and 2001, respectively.
On April 27, 2001, Trump Indiana entered into a loan agreement with a
bank group for $27,500,000. Proceeds from the loan were used to pay off maturing
debt for the vessel, the hotel, the $5,000,000 bridge loan and provide working
capital. The new debt will bear a fixed rate of interest of 8.85% for the first
$10,000,000 of the loan, and a floating rate will apply to the balance of the
loan. The initial rate on the floating portion will be a blended 7.86%. The loan
will amortize over 84 months at a fixed amount per month and will mature at the
end of 60 months.
On June 19, 2001, the joint venture set up to construct a covered
parking garage to be used by Trump Indiana and The Majestic Star Casino, LLC
("Majestic") consummated its financing to construct a 2,000 space covered
parking facility and related infrastructure on a 10.6 acre parcel of land
adjacent to Buffington Harbor in Gary, Indiana. The parking facility, including
the land acquisition, has an estimated cost of $37,900,000 of which Trump
Indiana and Majestic have invested $17,000,000 in advanced lease payments and
$20,900,000 has been funded through a loan obtained by the parking garage joint
venture.
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 uncertain 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,
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 unforseeable and/or 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 on favorable terms, or at all.
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 rules and regulations
promulgated 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 rules and regulations promulgated by the Indiana
Gaming Commission.
11
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 Periods Ended June 30, 2000 and 2001. The
following tables include selected data of Plaza Associates, Taj Associates,
Trump Indiana and Trump Marina.
Three Months Ended June 30, 2000
----------------------------------------------------------------
Plaza Taj Trump Trump THCR
Associates Associates Indiana Marina Consolidated*
---------- ---------- ------- ------ -------------
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............... 13.3 19.7 0.9 9.9 43.8
------- -------- ------ ------ --------
Net Revenues............................... 86.5 142.1 31.0 72.6 332.2
------- -------- ------ ------ --------
Costs and Expenses:
Gaming..................................... 52.2 73.4 19.1 39.3 184.0
Other...................................... 5.7 9.0 1.5 4.3 20.5
General & Administrative................... 19.1 27.2 7.5 16.8 72.4
Depreciation & Amortization................ 3.3 9.2 1.8 4.3 18.6
------- -------- ------ ------ --------
Total Costs and Expenses................... 80.3 118.8 29.9 64.7 295.5
------- -------- ------ ------ --------
Income from Operations..................... 6.2 23.3 1.1 7.9 36.7
------- -------- ------ ------ --------
Non-operating Income....................... 0.1 0.3 0.1 0.3 1.5
Interest Expense........................... (11.8) (23.3) (1.4) (14.1) (55.0)
------- -------- ------ ------ --------
Total Non-operating Expense, Net........... (11.7) (23.0) (1.3) (13.8) (53.5)
------- -------- ------ ------ --------
Loss in Joint Venture...................... - - (0.8) - (0.8)
Extraordinary gain, net.................... - - - - 8.3
------- -------- ------ ------ --------
Income (Loss) Before Minority Interest..... $ (5.5) $ 0.3 $ (1.0) $ (5.9) (9.3)
======= ======== ====== ======
Minority Interest.......................... 6.4
--------
Net Loss................................... $ (2.9)
========
*Intercompany eliminations and expenses of THCR and THCR Holdings are not
separately shown.
Three Months Ended June 30, 2001
----------------------------------------------------------------
Plaza Taj Trump Trump THCR
Associates Associates Indiana Marina Consolidated*
---------- ---------- ------- ------ -------------
Revenues: (dollars in millions)
Gaming..................................... $ 80.7 $ 132.5 $ 31.5 $ 64.4 $ 309.2
Other...................................... 18.3 27.0 2.3 15.2 62.7
------- -------- ------ ------ --------
Gross Revenues............................. 99.0 159.5 33.8 79.6 371.9
Less: Promotional Allowances............... 12.9 17.7 0.8 10.0 41.4
------- -------- ------ ------ --------
Net Revenues............................... 86.1 141.8 33.0 69.6 330.5
------- -------- ------ ------ --------
Costs and Expenses:
Gaming..................................... 51.9 74.0 19.1 39.4 184.3
Other...................................... 4.9 9.3 1.6 3.5 19.4
General & Administrative................... 17.1 24.7 6.9 16.5 66.0
Depreciation & Amortization................ 4.2 8.3 1.9 4.2 18.6
------- -------- ------ ------ --------
Total Costs and Expenses................... 78.1 116.3 29.5 63.6 288.3
------- -------- ------ ------ --------
Income from Operations..................... 8.0 25.5 3.5 6.0 42.2
------- -------- ------ ------ --------
Non-operating Income....................... 0.5 0.3 0.2 0.2 1.3
Interest Expense........................... (12.2) (23.3) (1.3) (14.8) (55.0)
------- -------- ------ ------ --------
Total Non-operating Expense, Net........... (11.7) (23.0) (1.1) (14.6) (53.7)
------- -------- ------ ------ --------
Loss in Joint Venture...................... - - (0.8) - (0.8)
------- -------- ------ ------ --------
Income(Loss) Before Minority Interest...... $ (3.7) $ 2.5 $ 1.6 $ (8.6) (12.3)
======= ======== ====== ======
Minority Interest.......................... 4.5
--------
Net Loss................................... $ (7.8)
========
* Intercompany eliminations and expenses of THCR and THCR Holdings are not
separately shown.
12
Three Months Ended June 30, 2000
-------------------------------------------------------------------------------
Plaza Taj Trump Trump THCR
Associates Associates Indiana Marina Consolidated*
---------- ---------- ------- ------ -------------
Revenues: (dollars in millions)
Table Game Revenues........................ $ 24.3 $ 46.2 $ 6.9 $ 18.2 $ 95.7
Table Game Drop............................ $ 161.1 $ 269.3 $ 40.7 $111.3 $ 582.4
Table Win Percentage....................... 15.1% 17.2% 17.0% 16.4% 16.4%
Number of Table Games...................... 96 143 50 76 365
Slot Revenues.............................. $ 57.2 $ 82.7 $ 22.8 $ 48.4 $ 211.1
Slot Handle................................ $ 721.4 $ 1,069.1 $ 359.7 $612.3 $ 2,762.5
Slot Win Percentage........................ 7.9% 7.7% 6.3% 7.9% 7.6%
Number of Slot Machines.................... 2,851 4,572 1,250 2,340 11,013
Other Gaming Revenues...................... - $ 5.3 - $ 0.5 $ 5.7
Total Gaming Revenues...................... $ 81.5 $ 134.2 $ 29.7 $ 67.1 $ 312.5
Three Months Ended June 30, 2001
-------------------------------------------------------------------------------
Plaza Taj Trump Trump THCR
Associates Associates Indiana Marina Consolidated*
---------- ---------- ------- ------ -------------
Revenues: (dollars in millions)
Table Game Revenues........................ $ 22.2 $ 42.7 $ 6.3 $ 14.1 $ 85.3
Incr (Decr) over prior period............ $ (2.1) $ (3.5) $ (0.6) $ (4.1) $ (10.4)
Table Game Drop............................ $ 141.3 $ 245.3 $ 37.4 $ 93.0 $ 517.0
Incr (Decr) over prior period............ $ (19.8) $ (24.0) $ (3.3) $ (18.3) $ (65.4)
Table Win Percentage....................... 15.7% 17.4% 16.9% 15.2% 16.5%
Incr (Decr) over prior period............ 0.6 pts. 0.2 pts. (0.1) pts. (1.2) pts. 0.1 pts.
Number of Table Games...................... 99 143 52 79 373
Incr (Decr) over prior period............ 3 - 2 3 8
Slot Revenues.............................. $ 58.5 $ 84.3 $ 25.2 $ 50.1 $ 218.2
Incr (Decr) over prior period............ $ 1.3 $ 1.6 $ 2.4 $ 1.7 $ 7.1
Slot Handle................................ $ 768.8 $ 1,100.9 $ 341.6 $ 642.6 $ 2,853.9
Incr (Decr) over prior period............ $ 47.4 $ 31.8 $ (18.1) $ 30.3 $ 91.4
Slot Win Percentage........................ 7.6% 7.7% 7.4% 7.8% 7.6%
Incr (Decr) over prior period............ (0.3) pts. 0.0 pts. 1.1 pts. (0.1) pts. 0.0 pts.
Number of Slot Machines.................... 2,839 4,597 1,281 2,524 11,241
Incr (Decr) over prior period............ (12) 25 31 184 228
Other Gaming Revenues...................... - $ 5.5 - $ 0.2 $ 5.7
Incr (Decr) over prior period............ - $ 0.2 - $ (0.3) $ (0.0)
Total Gaming Revenues...................... $ 80.7 $ 132.5 $ 31.5 $ 64.4 $ 309.2
Incr (Decr) over prior period............ $ (0.8) $ (1.7) $ 1.8 $ (2.7) $ (3.3)
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 (table game drop). 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
16.3% and 15.4% for the quarters ended June 30, 2000 and June 30, 2001,
respectively.
Table games revenues decreased $10.4 million or 10.9% to $85.3 million for
the three months ended June 30, 2001 from $95.7 million in the comparable period
in 2000. Decreased table drop at all four properties primarily contributed to
the decrease in revenues. Trump Taj Mahal Casino Resort (the "Taj Mahal") and
the Trump Plaza Hotel and Casino ("Trump Plaza") had increased win percentage in
2001 which primarily offset their respective decreases in table drop. Trump
Marina's and Trump Indiana's decreases are due to declines in both table drop
and win percentage.
Slot revenue increased $7.1 million or 3.4% to $218.2 million for the three
months ended June 30, 2000 from $211.1 million in the comparable period in 2000.
Increased slot handle of $109.5 million at the three Atlantic City casinos
primarily contributed to the increase in revenues. Trump Indiana's slot revenues
in 2001 increased $2.4 million or 10.5% from the comparable period in 2000 due
to a 1.1% increase in hold percentage which totally offset an $18.1 million or
5.0% decrease in slot handle from the comparable period in 2000.
General and administrative expenses were $66.0 million for the three months
ended June 30, 2001, a $6.4 million or 8.8% decrease from $72.4 million in the
comparable period in 2000. The decrease is primarily attributed to reductions in
entertainment and regulatory expenses at the Taj Mahal; entertainment,
regulatory and advertising expenses at Trump Plaza and approximately $1,000,000
in corporate overhead.
13
Results of Operations: Operating Revenues and Expenses for Six Months
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 Six-Month Periods Ended June 30, 2000 and 2001. The following
tables include selected data of Plaza Associates, Taj Associates, Trump Indiana
and Trump Marina.
Six Months Ended June 30, 2000
-----------------------------------------------------------------
Plaza Taj Trump Trump THCR
Associates Associates Indiana Marina Consolidated*
---------- ---------- ------- ------ -------------
Revenues: (dollars in millions)
Gaming....................................... $ 159.1 $ 259.3 $ 62.7 $ 126.5 $ 607.6
Other........................................ 36.1 52.2 4.4 27.8 120.4
-------- -------- ------ -------- --------
Gross Revenues............................... 195.2 311.5 67.1 154.3 728.0
Less: Promotional Allowances................. 25.9 36.6 2.0 17.9 82.3
-------- -------- ------ -------- --------
Net Revenues................................. 169.3 274.9 65.1 136.4 645.7
-------- -------- ------ -------- --------
Costs and Expenses:
Gaming....................................... 102.6 147.0 41.4 74.8 365.9
Other........................................ 10.7 17.0 3.1 7.4 38.4
General & Administrative..................... 35.2 50.2 16.0 33.2 139.9
Depreciation & Amortization.................. 7.8 18.2 3.7 8.7 38.4
-------- -------- ------ -------- --------
Total Costs and Expenses..................... 156.3 232.4 64.2 124.1 582.6
-------- -------- ------ -------- --------
Income from Operations....................... 13.0 42.5 0.9 12.3 63.1
-------- -------- ------ -------- --------
Non-operating Income......................... 0.3 0.5 0.2 0.5 2.7
Interest Expense............................. (23.8) (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
-------- -------- ------ -------- --------
Loss Before Minority Interest................ $ (10.5) $ (3.8) $ (3.4) $ (15.3) (38.4)
======== ======== ====== ========
Minority Interest............................ 17.1
--------
Net Loss..................................... $ (21.3)
========
*Intercompany eliminations and expenses of THCR and THCR Holdings are not
separately shown.
Six Months Ended June 30, 2001
-----------------------------------------------------------------
Plaza Taj Trump Trump THCR
Associates Associates Indiana Marina Consolidated*
---------- ---------- ------- ------ -------------
Revenues: (dollars in millions)
Gaming....................................... $ 161.1 $ 251.9 $ 62.6 $ 126.5 $ 602.1
Other........................................ 35.7 51.3 4.6 27.8 119.4
-------- -------- ------ -------- --------
Gross Revenues............................... 196.8 303.2 67.2 154.3 721.5
Less: Promotional Allowances................. 26.0 33.6 1.7 18.9 80.2
-------- -------- ------ -------- --------
Net Revenues................................. 170.8 269.6 65.5 135.4 641.3
-------- -------- ------ -------- --------
Costs and Expenses:
Gaming....................................... 104.0 146.7 37.3 77.9 365.9
Other........................................ 9.5 17.7 3.3 6.1 36.5
General & Administrative..................... 33.7 49.2 14.6 33.0 131.8
Depreciation & Amortization.................. 8.3 16.9 3.7 8.5 37.5
-------- -------- ------ -------- --------
Total Costs and Expenses..................... 155.5 230.5 58.9 125.5 571.7
-------- -------- ------ -------- --------
Income from Operations....................... 15.3 39.1 6.6 9.9 69.6
-------- -------- ------ -------- --------
Non-operating Income......................... 0.6 0.5 0.4 0.4 2.5
Interest Expense............................. (24.0) (46.5) (2.5) (29.5) (109.3)
-------- -------- ------ -------- --------
Total Non-operating Expense, Net............. (23.4) (46.0) (2.1) (29.1) (106.8)
-------- -------- ------ -------- --------
Loss in Joint Venture........................ - - (1.6) - (1.6)
-------- -------- ------ -------- --------
Income(Loss) Before Minority Interest........ $ (8.1) $ (6.9) $ 2.9 $ (19.2) (38.8)
======== ======== ====== ========
Minority Interest............................ 14.2
--------
Net Loss..................................... $ (24.6)
========
* Intercompany eliminations and expenses of THCR and THCR Holdings are not
separately shown.
14
Six Months Ended June 30, 2000
--------------------------------------------------------------
Plaza Taj Trump Trump THCR
Associates Associates Indiana Marina Consolidated
---------- ---------- ------- ------ ------------
(dollars in millions)
Table Game Revenues.................... $ 47.6 $ 88.3 $ 14.3 $ 31.8 $ 182.1
Table Game Drop........................ $ 313.4 $ 521.4 $ 83.9 $ 199.7 $1,118.4
Table Win Percentage................... 15.2% 16.9% 17.0% 15.9% 16.3%
Number of Table Games.................. 96 143 50 76 365
Slot Revenues.......................... $ 111.5 $ 160.5 $ 48.4 $ 94.1 $ 414.4
Slot Handle............................ $1,416.6 $ 2,078.2 $ 759.8 $1,194.8 $5,449.4
Slot Win Percentage.................... 7.9% 7.7% 6.4% 7.9% 7.6%
Number of Slot Machines................ 2,809 4,547 1,252 2,303 10,911
Other Gaming Revenues.................. - $ 10.5 - $ 0.6 $ 11.1
Total Gaming Revenues.................. $ 159.1 $ 259.3 $ 62.7 $ 126.5 $ 607.6
Six Months Ended June 30, 2001
---------------------------------------------------------------
Plaza Taj Trump Trump THCR
Associates Associates Indiana Marina Consolidated
---------- ---------- ------- ------ ------------
(dollars in millions)
Table Game Revenues.................... $ 48.4 $ 77.5 $ 12.8 $ 29.1 $ 167.8
Incr (Decr) over prior period......... $ 0.8 $ (10.8) $ (1.5) $ (2.7) $ (14.3)
Table Game Drop........................ $ 282.2 $ 485.2 $ 75.1 $ 184.7 $1,027.2
Incr (Decr) over prior period......... $ (31.2) $ (36.2) $ (8.8) $ (15.0) $ (91.2)
Table Win Percentage................... 17.1% 16.0% 17.1% 15.8% 16.3%
Incr (Decr) over prior period......... 1.9 pts. (0.9)pts. 0.1 pts. (0.1)pts. 0.0 pts.
Number of Table Games.................. 99 143 52 78 372
Incr (Decr) over prior period......... 3 0 2 2 7
Slot Revenues.......................... $ 112.7 $ 163.4 $ 49.8 $ 97.1 $ 423.0
Incr (Decr) over prior period......... $ 1.2 $ 2.9 $ 1.4 $ 3.0 $ 8.6
Slot Handle............................ $1,475.9 $ 2,138.1 $ 692.7 $ 1,255.5 $5,562.2
Incr (Decr) over prior period......... $ 59.3 $ 59.9 $ (67.1) $ 60.7 $ 112.8
Slot Win Percentage.................... 7.6% 7.6% 7.2% 7.7% 7.6%
Incr (Decr) over prior period......... (0.3) pts. (0.1)pts. 0.8pts. (0.2)pts. 0.0 pts.
Number of Slot Machines................ 2,842 4,631 1,273 2,527 11,273
Incr (Decr) over prior period......... 33 84 21 224 362
Other Gaming Revenues.................. - $ 11.0 - $ 0.3 $ 11.3
Incr (Decr) over prior period......... - $ 0.5 - $ (0.3) $ 0.2
Total Gaming Revenues.................. $ 161.1 $ 251.9 $ 62.6 $ 126.5 $ 602.1
Incr (Decr) over prior period......... $ 2.0 $ (7.4) $ (0.1) $ 0.0 $ (5.5)
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 (table game drop). 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
15.9% and 15.3% for the six months ended June 30, 2000 and June 30, 2001,
respectively.
Table games revenues decreased $14.3 million or 7.9% to $167.8 million for
the six months ended June 30, 2001 from $182.1 million in the comparable period
in 2000. Decreased table drop at all four properties primarily contributed to
the decrease in revenues. Trump Plaza had increased win percentages in 2001
which primarily offset its decrease in table drop. The Taj Mahal's lower table
win percentage also contributed to its lower table win.
Slot revenues increased $8.6 million or 2.1% to $423.0 million for the six
months ended June 30, 2001 from $414.4 million in the comparable period in 2000.
Increased slot handle of $179.9 million at the three Atlantic City casinos
primarily contributed to the increase in revenues. Trump Indiana's slot
revenues in 2001 increased $1.4 million or 2.9% from the comparable period in
2000 due to a 0.8% increase in hold percentage which totally offset a $67.1
million or 8.8% decrease in slot handle from the comparable period in 2000.
General and administrative expenses were $131.8 million for the six months
ended June 30, 2001, an $8.1 million or 5.8% decrease from $139.9 million in
the comparable period in 2000. The decrease is primarily attributed to
reductions in insurance, litigation and entertainment expenses at the Taj Mahal;
entertainment, regulatory and advertising costs at Trump Plaza and a $4.2
million decrease in corporate expenses. The decrease in corporate general and
administrative expenses is due to the downsizing of the New York corporate
office and an aircraft lease termination in 2000, as well as decreased legal and
lobbying costs in 2001.
15
During 2000, THCR Enterprises purchased an aggregate principal amount of
$35.5 million of the Senior Notes, in consideration for an aggregate purchase
price of $19.0 million, plus accrued and unpaid interest. The decrease in
interest expense is primarily due to the elimination of interest expense
associated with these notes.
Seasonality
The casino industry in Atlantic City and Indiana is seasonal in nature.
Accordingly, the results of operations for the period ending June 30, 2001 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.
16
PART II -- OTHER INFORMATION
ITEM 1 -- LEGAL PROCEEDINGS
Metelman Action, Proposed Settlement. 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-C43-00) 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 defendants filed a
motion to dismiss in lieu of an answer. On July 21, 2000, the Court dismissed
the plaintiff's Complaint, without prejudice. The Court granted the plaintiff
ten weeks during which to file an Amended Complaint, pleading a stockholder
derivative action, and effective October 12, 2000, plaintiff filed an Amended
Complaint, pleading a stockholder derivative action.
In March 2001, without admitting any wrongdoing or liability, the parties
reached an agreement to settle the case and on May 15, 2001, entered into a
stipulation of Settlement (the "Stipulation"). On May 17, 2001, the Court
preliminarily approved the Stipulation, pending a Settlement Hearing to
determine the fairness and adequacy of the proposed settlement. Pursuant to the
Stipulation, THCR sent to holders of THCR Common Stock of record as of May 15,
2001 a notice of Settlement outlining the terms of the proposed settlement,
including such stockholders' right to object in writing to the terms of the
proposed settlement on or before July 20, 2001. The Settlement Hearing is
scheduled to be held by the Court on August 17, 2001.
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.
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, 2000, THCR considers all such proceedings to be ordinary litigation
incident to the character of its business and not material to its business or
financial condition. THCR believes that the resolution of these claims, to the
extent not covered by insurance, will not, individually or in the aggregate,
have a material adverse effect on its financial condition or results of
operations of THCR.
From time to time, Plaza Associates, Taj Associates, Castle Associates and
Trump Indiana may be involved in routine administrative proceedings involving
alleged violations of certain provisions of the New Jersey Casino Control Act
(the "Casino Control Act") and the Indiana Riverboat Gambling Act, (the "Indiana
Riverboat 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
At the 2001 Annual Meeting of stockholders held on June 12, 2001 at the
Trump Taj Mahal Casino Resort in Atlantic City, New Jersey, the stockholders of
THCR of record as of April 13, 2001 voted in person or by proxy on the following
two proposals:
Proposal 1. The stockholders of THCR re-elected the following Directors of
THCR. The number of votes cast for each of the director-nominees were as
follows:
Common Stock
---------------------------------------------
Broker
------
For Withheld Abstentions Nonvotes
--- -------- ----------- --------
Donald J. Trump.... 33,396,969 849,612 Not Applicable None
Wallace B. Askins.. 33,668,816 577,765 Not Applicable None
Don M. Thomas...... 33,672,516 574,065 Not Applicable None
Peter M. Ryan...... 33,654,216 592,365 Not Applicable None
All 1,000 shares of Class B Common Stock having the voting equivalency of
13,918,723 shares of THCR Common Stock were voted for the election of each of
the director-nominees, as reflected in the above table.
17
Proposal 2. The appointment of Arthur Andersen LLP as the independent
public accounts of THCR for the fiscal year ending December 31, 2001 was
ratified by a vote of 33,821,717 shares of THCR Common Stock for, and 380,825
shares against, with 44,039 shares abstaining. Included in the vote for
ratification were all 1,000 shares of THCR's Class B Common Stock, having the
voting equivalency of 13,918,723 shares of THCR Common Stock.
ITEM 5 -- OTHER INFORMATION
None
ITEM 6 -- EXHIBITS AND REPORTS ON FORM 8-K
a. Exhibits:
Exhibit No. Description of Exhibit
----------- -------------------------------------------------------
10.77 Term Loan Agreement, dated March 30, 2001, between
Trump Indiana, Inc. and Firstar Bank, N.A.
10.78 First Preferred Ship Mortgage, dated April 18, 2001, by
Trump Indiana, Inc. and Firstar Bank, N.A.
10.79 Parking lease, dated June 19, 2001, between Buffinton
Harbor Parking Associates,LLC, as lessor, and Trump
Indiana, Inc. as lessee
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, 2001 ending June 30, 2001.
18
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, 2001
By: /s/ Francis X. McCarthy, Jr.
-----------------------------------------------
Francis X. McCarthy, Jr.
Executive Vice President of Finance and
Chief Financial Officer
(Duly Authorized Officer and Principal
Financial Officer)
19
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, 2001 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)
20
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, 2001
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