================================================================================
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, 2002
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.)
1000 Boardwalk
Atlantic City, New Jersey 08401
(Address of principal executive offices) (Zip Code)
(609) 449-6515
(Registrant's telephone number, including area code)
Not Applicable
(Former name, former address and former fiscal year, if changed since last
report)
Commission file number: 33-90786
TRUMP HOTELS & CASINO RESORTS HOLDINGS, L.P.
(Exact name of registrant as specified in its charter)
DELAWARE 13-3818407
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
1000 Boardwalk
Atlantic City, New Jersey 08401
(Address of principal executive offices) (Zip Code)
(609) 449-6515
(Registrant's telephone number, including area code)
Not Applicable
(Former name, former address and former fiscal year, if changed since last
report)
Commission file number: 33-90786
TRUMP HOTELS & CASINO RESORTS FUNDING, INC.
(Exact name of registrant as specified in its charter)
DELAWARE 13-3818405
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
1000 Boardwalk
Atlantic City, New Jersey 08401
(Address of principal executive offices) (Zip Code)
(609) 449-6515
(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, 2002 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 May 15, 2002 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, 2002 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, 2001
and March 31, 2002 (unaudited) .......................................................................... 1
Condensed Consolidated Statements of Operations of Trump Hotels & Casino Resorts, Inc.
for the Three Months Ended March 31, 2001 and 2002 (unaudited) .......................................... 2
Condensed Consolidated Statement of Stockholders' Equity of Trump Hotels & Casino Resorts, Inc.
for the Three Months Ended March 31, 2002 (unaudited) ................................................... 3
Condensed Consolidated Statements of Cash Flows of Trump Hotels & Casino Resorts, Inc.
for the Three Months Ended March 31, 2001 and 2002 (unaudited) .......................................... 4
Condensed Consolidated Balance Sheets of Trump Hotels & Casino Resorts Holdings, L.P. as of December
31, 2001 and March 31, 2002 (unaudited) ................................................................. 5
Condensed Consolidated Statements of Operations of Trump Hotels & Casino Resorts Holdings, L.P.
for the Three Months Ended March 31, 2001 and 2002 (unaudited) .......................................... 6
Condensed Consolidated Statement of Partners' Capital of Trump Hotels & Casino Resorts Holdings,
L.P. for the Three Months Ended March 31, 2002 (unaudited) ............................................. 7
Condensed Consolidated Statements of Cash Flows of Trump Hotels & Casino Resorts Holdings, L.P.
for the Three Months Ended March 31, 2001 and 2002 (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. 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 ............................................ 19
PART II -- OTHER INFORMATION
ITEM 1 - Legal Proceedings ..................................................................................... 20
ITEM 2 - Changes in Securities and Use of Proceeds ............................................................. 20
ITEM 3 - Defaults Upon Senior Securities ....................................................................... 20
ITEM 4 - Submission of Matters to a Vote of Security Holders ................................................... 20
TRUMP HOTELS & CASINO RESORTS, INC.,
TRUMP HOTELS & CASINO RESORTS HOLDINGS, L.P.
AND
TRUMP HOTELS & CASINO RESORTS FUNDING, INC.
INDEX TO FORM 10-Q
ITEM 5 - Other Information ................................................................. 20
ITEM 6 - Exhibits and Reports on Form 8-K .................................................. 21
SIGNATURES
Signature - Trump Hotels & Casino Resorts, Inc. ............................................ 22
Signature - Trump Hotels & Casino Resorts Holdings, L.P. ................................... 23
Signature - Trump Hotels & Casino Resorts Funding, Inc. .................................... 24
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, March 31,
2001 2002
------------ -----------
(unaudited)
CURRENT ASSETS:
Cash and cash equivalents .............................................. $ 119,173 $ 170,307
Receivables, net ....................................................... 47,328 44,049
Inventories ............................................................ 11,658 11,495
Prepaid expenses and other current assets .............................. 9,120 7,699
----------- -----------
Total Current Assets ............................................. 187,279 233,550
INVESTMENT IN BUFFINGTON HARBOR, L.L.C..................................... 33,889 33,310
INVESTMENT IN TRUMP'S CASTLE PIK NOTES .................................... 105,940 110,242
PROPERTY AND EQUIPMENT, NET ............................................... 1,797,487 1,785,085
DEFERRED BOND AND LOAN ISSUANCE COSTS, NET ................................ 21,129 19,572
OTHER ASSETS (Note 3) ..................................................... 73,727 76,387
----------- -----------
Total Assets .............................................................. $ 2,219,451 $ 2,258,146
=========== ===========
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Current maturities of long-term debt ................................... $ 20,218 $ 19,145
Accounts payable and accrued expenses .................................. 144,042 146,010
Due to affiliates, net ................................................. 17 446
Accrued interest payable ............................................... 38,580 79,654
----------- -----------
Total Current Liabilities ........................................ 202,857 245,255
LONG-TERM DEBT, net of current maturities ................................. 1,881,636 1,880,646
OTHER LONG-TERM LIABILITIES ............................................... 33,191 37,598
----------- -----------
Total Liabilities ................................................ 2,117,684 2,163,499
----------- -----------
MINORITY INTEREST ......................................................... 12,304 9,660
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 .................................................... (345,850) (350,436)
Accumulated Other Comprehensive Loss ................................... (374) (264)
Less treasury stock at cost, 2,196,729 shares .......................... (20,200) (20,200)
----------- -----------
Total Stockholders' Equity ................................................ 89,463 84,987
----------- -----------
Total Liabilities and Stockholders' Equity ................................ $ 2,219,451 $ 2,258,146
=========== ===========
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 MONTHS ENDED MARCH 31, 2001 AND 2002
(unaudited)
(dollars in thousands, except share data)
Three Months Ended
March 31
-------------------------------
2001 2002
------------ -------------
REVENUES:
Gaming ...................................................................... $ 292,978 $ 311,438
Rooms ....................................................................... 18,066 18,835
Food and Beverage ........................................................... 30,984 30,334
Other ....................................................................... 7,592 8,716
------------ -------------
Gross Revenues .............................................................. 349,620 369,323
Less -- Promotional allowances (Note 4) ..................................... 68,126 68,148
------------ -------------
Net Revenues ................................................................ 281,494 301,175
------------ -------------
COSTS AND EXPENSES:
Gaming (Note 4).............................................................. 152,253 148,548
Rooms........................................................................ 7,342 7,662
Food and Beverage............................................................ 9,876 10,640
General and Administrative................................................... 65,776 64,594
Depreciation and Amortization................................................ 18,875 19,418
Debt Renegotiation Costs (Note 5)............................................ -- 2,115
------------ -------------
254,122 252,977
------------ -------------
Income from operations.................................................... 27,372 48,198
------------ -------------
NON-OPERATING INCOME AND (EXPENSES):
Interest income.............................................................. 1,081 482
Interest expense............................................................. (54,353) (55,215)
Other non-operating income (expense)......................................... 130 (93)
------------ -------------
(53,142) (54,826)
------------ -------------
Loss before equity in loss of Buffington Harbor, L.L.C., and minority interest (25,770) (6,628)
Equity in loss of Buffington Harbor, L.L.C................................... (798) (602)
Minority Interest............................................................ 9,716 2,644
------------ -------------
NET LOSS........................................................................ $ (16,852) $ (4,586)
============ =============
Basic and diluted loss per share $ (0.77) $ (0.21)
============ =============
Average number of shares outstanding 22,010,027 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 THREE MONTHS ENDED MARCH 31, 2002
(unaudited)
(dollars in thousands)
Accumulated
Common Additional Other Total
Stock Paid In Accumulated Comprehensive Treasury Stockholders'
Amount Capital Deficit Loss Stock Equity
-------- ----------- ----------- ------------- --------- -------------
Balance, December 31, 2001 $ 242 $ 455,645 $ (345,850) $ (374) $(20,200) $ 89,463
Net Loss...................... -- -- (4,586) -- -- (4,586)
Change in value of interest
rate swap.................. -- -- -- 110 -- 110
-----------
Total comprehensive loss...... -- -- -- -- -- (4,476)
------ ----------- ---------- ----------- -------- -----------
Balance, March 31, 2002 $ 242 $ 455,645 $ (350,436) $ (264) $(20,200) $ 84,987
====== =========== ========== =========== ======== ===========
At December 31, 2001 and March 31, 2002, there were 24,206,756 shares of Common
Stock issued and 1,000 shares of Class B Common Stock issued.
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 THREE MONTHS ENDED MARCH 31, 2001 AND 2002
(unaudited)
(dollars in thousands)
2001 2002
---------- ----------
CASH FLOWS FROM OPERATING ACTIVITIES:
Net Loss ............................................................................ $ (16,852) $ (4,586)
Adjustments to reconcile net loss to net cash flows from operating activities:
Issuance of debt in exchange for accrued interest ................................. 4,143 4,799
Non-cash increase in Trump's Castle PIK Notes ..................................... (3,762) (4,302)
Equity in loss of Buffington Harbor, L.L.C ........................................ 798 602
Depreciation and amortization ..................................................... 18,875 19,418
Minority interest in net loss ..................................................... (9,716) (2,644)
Accretion of discounts on mortgage notes .......................................... 1,550 1,772
Amortization of deferred loan costs ............................................... 1,514 1,629
Provision for losses on receivables ............................................... 1,912 1,759
Valuation allowance of CRDA investments and amortization of Indiana gaming costs... 2,210 1,364
Gain on disposition of property ................................................... (128) --
(Increase) decrease in receivables ................................................ (4,883) 1,518
Decrease in inventories ........................................................... 325 164
Decrease in other current assets .................................................. 2,112 1,162
Increase in due to affiliates ..................................................... 753 429
(Increase) decrease in other assets ............................................... (521) 800
Increase in accounts payable and accrued expenses ................................. 8,385 1,885
Increase in accrued interest payable .............................................. 45,474 36,275
Increase in other long-term liabilities ........................................... 4,301 4,520
--------- ---------
Net cash flows provided by operating activities ................................. 56,490 66,564
--------- ---------
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchase of property and equipment, net ........................................... (4,265) (5,162)
Investment in Buffington Harbor, L.L.C ............................................ (1,299) (23)
CRDA Investments .................................................................. (3,205) (3,383)
Note receivable from 29 Palms Tribe ............................................... -- (1,683)
--------- ---------
Net cash flows used in investing activities ..................................... (8,769) (10,251)
--------- ---------
CASH FLOWS FROM FINANCING ACTIVITIES:
Payment of long-term debt ......................................................... (2,274) (5,179)
Loan costs from additional borrowing .............................................. (351) --
--------- ---------
Net cash flows used in financing activities ..................................... (2,625) (5,179)
--------- ---------
Net increase in cash and cash equivalents ....................................... 45,096 51,134
CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD .................................... 95,429 119,173
--------- ---------
CASH AND CASH EQUIVALENTS AT END OF PERIOD .......................................... $ 140,525 $ 170,307
========= =========
CASH INTEREST PAID .................................................................. $ 1,907 $ 9,903
========= =========
SUPPLEMENTAL DISCLOSURE OF NON-CASH ACTIVITIES:
Purchase of property and equipment under capital lease obligations .................. $ 2,491 $ 1,455
========= =========
Accumulated Other Comprehensive Loss ................................................ $ -- $ 110
========= =========
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, March 31,
2001 2002
------------ -----------
(unaudited)
CURRENT ASSETS:
Cash and cash equivalents........................ $ 119,169 $ 170,303
Receivables, net................................. 47,328 44,049
Inventories...................................... 11,658 11,495
Prepaid expenses and other current assets........ 9,120 7,699
------------ -----------
Total Current Assets....................... 187,275 233,546
INVESTMENT IN BUFFINGTON HARBOR, L.L.C.............. 33,889 33,310
INVESTMENT IN TRUMP'S CASTLE PIK NOTES.............. 105,940 110,242
PROPERTY AND EQUIPMENT, NET......................... 1,797,487 1,785,085
DEFERRED BOND AND LOAN ISSUANCE COSTS, NET.......... 21,129 19,572
OTHER ASSETS (Note 3)............................... 73,727 76,387
------------ -----------
Total Assets........................................ $ 2,219,447 $ 2,258,142
============ ===========
LIABILITIES AND PARTNERS' CAPITAL
CURRENT LIABILITIES:
Current maturities of long-term debt............. $ 20,218 $ 19,145
Accounts payable and accrued expenses............ 144,042 146,010
Due to affiliates, net........................... 17 446
Accrued interest payable......................... 38,580 79,654
------------ -----------
Total Current Liabilities.................. 202,857 245,255
LONG-TERM DEBT, net of current maturities........... 1,881,636 1,880,646
OTHER LONG-TERM LIABILITIES......................... 33,191 37,598
------------ -----------
Total Liabilities................................... 2,117,684 2,163,499
------------ -----------
PARTNERS' CAPITAL:
Partners' capital................................... 652,503 652,503
Accumulated deficit................................. (530,166) (537,396)
Accumulated other comprehensive loss................ (374) (264)
Less stock of THCR.................................. (20,200) (20,200)
------------ -----------
Total Partners' Capital............................. 101,763 94,643
------------ -----------
Total Liabilities and Partners' Capital............. $ 2,219,447 $ 2,258,142
============ ===========
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 MONTHS ENDED MARCH 31, 2001 AND 2002
(unaudited)
(dollars in thousands)
Three Months Ended
March 31,
----------------------
2001 2002
--------- ---------
REVENUES:
Gaming ................................................. $ 292,978 $ 311,438
Rooms .................................................. 18,066 18,835
Food and Beverage ...................................... 30,984 30,334
Other .................................................. 7,592 8,716
--------- ---------
Gross Revenues ......................................... 349,620 369,323
Less -- Promotional allowances (Note 4) ................ 68,126 68,148
--------- ---------
Net Revenues ........................................... 281,494 301,175
--------- ---------
COSTS AND EXPENSES:
Gaming (Note 4) ........................................ 152,253 148,548
Rooms .................................................. 7,342 7,662
Food and Beverage ...................................... 9,876 10,640
General and Administrative ............................. 65,776 64,594
Depreciation and Amortization .......................... 18,875 19,418
Debt Renegotiation Costs (Note 5) ...................... -- 2,115
--------- ---------
254,122 252,977
--------- ---------
Income from operations .................................... 27,372 48,198
--------- ---------
NON-OPERATING INCOME AND (EXPENSES):
Interest income ........................................ 1,081 482
Interest expense ....................................... (54,353) (55,215)
Other non-operating income (expense) ................... 130 (93)
--------- ---------
(53,142) (54,826)
--------- ---------
Loss before equity in loss of Buffington Harbor, L.L.C. ... (25,770) (6,628)
Equity in loss of Buffington Harbor, L.L.C ................ (798) (602)
--------- ---------
NET LOSS .................................................. $ (26,568) $ (7,230)
========= =========
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 THREE MONTHS ENDED MARCH 31, 2002
(unaudited)
(dollars in thousands)
Accumulated
Other
Partners' Accumulated Comprehensive THCR
Capital Deficit Loss Common Stock Total
----------- ----------- ------------- ------------ ----------
Balance, December 31, 2001 ............. $ 652,503 $ (530,166) $ (374) $ (20,200) $ 101,763
Net Loss ............................... -- (7,230) -- -- (7,230)
Change in value of interest rate
swap .................................. -- -- 110 -- 110
----------
Total Comprehensive loss ............ -- -- -- -- (7,120)
----------- ----------- ------------ ---------- ----------
Balance, March 31, 2002 ................ $ 652,503 $ (537,396) $ (264) $ (20,200) $ 94,643
=========== =========== ============ ========== ==========
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 THREE MONTHS ENDED MARCH 31, 2001 AND 2002
(unaudited)
(dollars in thousands)
2001 2002
---------- ----------
CASH FLOWS FROM OPERATING ACTIVITIES:
Net Loss ...................................................................... $ (26,568) $ (7,230)
Adjustments to reconcile net loss to net cash flows from operating activities:
Issuance of debt in exchange for accrued interest ......................... 4,143 4,799
Non-cash increase in Trump's Castle PIK Notes ............................. (3,762) (4,302)
Equity in loss of Buffington Harbor, L.L.C ................................ 798 602
Depreciation and amortization ............................................. 18,875 19,418
Accretion of discounts on mortgage notes .................................. 1,550 1,772
Amortization of deferred loan costs ....................................... 1,514 1,629
Provision for losses on receivables ....................................... 1,912 1,759
Valuation allowance of CRDA investments and amortization of Indiana
gaming costs .......................................................... 2,210 1,364
Gain on disposition of property ........................................... (128) --
(Increase) decrease in receivables ........................................ (4,883) 1,518
Decrease in inventories ................................................... 325 164
Decrease in other current assets .......................................... 2,112 1,162
Increase in due to affiliates ............................................. 753 429
(Increase) decrease in other assets ....................................... (521) 800
Increase in accounts payable and accrued expenses ......................... 8,385 1,885
Increase in accrued interest payable ...................................... 45,474 36,275
Increase in other long-term liabilities ................................... 4,301 4,520
--------- ---------
Net cash flows provided by operating activities ....................... 56,490 66,564
--------- ---------
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchase of property and equipment, net ................................... (4,265) (5,162)
Investment in Buffington Harbor, L.L.C .................................... (1,299) (23)
CRDA Investments .......................................................... (3,205) (3,383)
Note receivable from 29 Palms Tribe ....................................... -- (1,683)
--------- ---------
Net cash flows used in investing activities ........................... (8,769) (10,251)
--------- ---------
CASH FLOWS FROM FINANCING ACTIVITIES:
Payment of long-term debt ................................................. (2,274) (5,179)
Loan costs from additional borrowing ...................................... (351) --
--------- ---------
Net cash flows used in financing activities ............................... (2,625) (5,179)
--------- ---------
Net increase in cash and cash equivalents ..................................... 45,096 51,134
CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD .............................. 95,425 119,169
--------- ---------
CASH AND CASH EQUIVALENTS AT END OF PERIOD .................................... $ 140,521 $ 170,303
========= =========
CASH INTEREST PAID ............................................................ $ 1,907 $ 9,903
SUPPLEMENTAL DISCLOSURE OF NON-CASH ACTIVITIES:
Purchase of property and equipment under capital lease obligations ............ $ 2,491 $ 1,455
========= =========
Accumulated Other Comprehensive Loss .......................................... $ -- $ 110
========= =========
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 43.6% of the THCR
Common Stock (including his current personal share ownership) or 45.6%
(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, 2001
filed with the SEC.
The casino industry in Atlantic City and Indiana is seasonal in nature.
Accordingly, results of operations for the period ended March 31, 2002 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.
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)
Reclassifications
Certain reclassifications have been made to prior year financial
statements to conform to the current year presentation.
(2) Financial Information
Financial information relating to THCR Funding is as follows:
December 31, March 31,
2001 2002
------------ -----------
(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, 2001 and March 31,
2002) (a) .................................................... $ 154,252,000 $ 151,555,000
============= =============
Total Liabilities and Capital (including $145,000,000 of
Senior Notes due 2005) ....................................... $ 154,252,000 $ 151,555,000
============= =============
Three Months Ended March 31,
2001 2002
------------- -------------
Interest Income from THCR Holdings ............................... $ 5,619,000 $ 5,619,000
Interest Expense ................................................. $ 5,619,000 $ 5,619,000
------------- -------------
Net Income ....................................................... $ -- $ --
============= =============
(a) THCR Enterprises, LLC, a wholly-owned subsidiary of THCR Holdings,
purchased $35,500,000 of these Senior Notes during 2000 having an
aggregate principal amount of $35,500,000.
(3) Other Assets
Plaza Associates is appealing a real estate tax assessment by the City of
Atlantic City. At December 31, 2001 and March 31, 2002, other assets include
$8,014,000, which Plaza Associates believes will be recoverable on the
settlement of the appeal.
During the three months ended March 31, 2002, Trump Indiana paid a sales
tax assessed by the State of Indiana relating to its vessel in the amount of
$1,800,000. As this assessment is being appealed by Trump Indiana, it has been
included in Other Assets. Trump Indiana believes that the $1,800,000 will be
recoverable on settlement of the appeal.
10
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) 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 additional rebates of $32,639,000 in the
three months ended March 31, 2001 have been re-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.
(5) Debt Renegotiation Costs
The Company previously announced that it was seeking to refinance or
modify the terms of THCR's and its subsidiaries' public debt issues, which was
approximately $1,700,000,000 aggregate principal amount as of March 31, 2002.
During the three months ended March 31, 2002, debt renegotiation costs of
$2,115,000 were incurred: $1,570,000 by Trump AC on its $1,300,000,000
outstanding debt, $471,000 by Trump Marina and $74,000 by THCR Holdings. Trump
AC has since terminated such efforts.
(6) Subsequent Events
On April 15, 2002, THCR Management Services, LLC ("THCR Management"), an
indirect, wholly-owned subsidiary of THCR Holdings, received approval from the
National Indian Gaming Commission of its five-year management agreement with the
Twenty-Nine Palms Band of Luiseno Mission Indians of California ("29 Palms
Tribe"). Under the management agreement, THCR Management will manage the
day-to-day operations of Trump 29 Casino, which opened on April 2, 2002 in
Coachella, California.
On April 24, 2002, the Company announced that two of its wholly-owned
subsidiaries, Trump Casino Holdings, LLC and Trump Casino Funding, Inc., were
offering for private placement to qualified institutional buyers, $470,000,000
aggregate principal amount of a new issue of first mortgage notes due 2010. The
proposed offering has been modified to consist of two tranches, $340,000,000
first mortgage notes and $130,000,000 second mortgage notes. The issuers intend
to use the net proceeds of the offering, if consummated, to redeem, repay or
acquire substantially all of the outstanding public indebtedness of Castle
Associates and THCR Holdings and the bank debt of Trump Indiana. The proposed
offering is subject to the prior approval of the New Jersey Casino Control
Commission and the Indiana Gaming Commission. The interest rates on the notes
and other terms are to be determined.
11
ITEM 2--MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
This report includes "forward-looking statements" within the meaning of
Section 21E of the Securities Exchange Act of 1934. All statements other than
statements of historical facts included in this report regarding the prospects
of our industry or our prospects, plans, financial position or business
strategy, may constitute forward-looking statements. In addition,
forward-looking statements generally can be identified by the use of
forward-looking words such as "may," "will," "expect," "intend," "estimate,"
"anticipate," "believe," "plans," "forecasts" or "continue" or the negatives of
these terms or variations of them or similar terms. Although we believe that the
expectations reflected in these forward-looking statements are reasonable, we
cannot assure you that these expectations will prove to be correct. Important
factors that could cause actual results to differ materially from our
expectations include business, competition, regulatory and other uncertainties
and contingencies discussed in this report that are difficult or impossible to
predict and which are beyond our control. All subsequent written and oral
forward-looking statements attributable to us or persons acting on our behalf
are expressly qualified in their entirety by the cautionary statements included
in this document. These forward-looking statements speak only as of the date of
this report. We do not intend to update these statements unless the securities
laws require us to do so.
In this section, the words "Company," "we," "our," "ours," and "us" refer
to Trump Hotels & Casino Resorts, Inc. ("THCR") and its wholly owned subsidiary,
Trump Hotels & Casino Resorts Holdings, L.P. ("THCR Holdings") and its
wholly-owned subsidiaries, unless otherwise noted. We, through one or more
wholly-owned subsidiaries, own and operate four casinos. Three of the four
casinos are located in Atlantic City, New Jersey: (i) the Trump Plaza Hotel and
Casino ("Trump Plaza"), (ii) the Trump Taj Mahal Casino Resort (the "Taj Mahal")
and (iii) the Trump Marina Hotel Casino ("Trump Marina," and together with the
Trump Plaza and the Taj Mahal, "the Trump Atlantic City Properties"). The fourth
is a riverboat casino docked in Buffington Harbor on Lake Michigan in Indiana
(the "Indiana Riverboat," and together with the Trump Atlantic City Properties,
the "Trump Casino Properties"). We also manage Trump 29 Casino located in the
Palm Springs, California area ("Trump 29 Casino") pursuant to a five-year
management agreement with the Twenty-Nine Palms Band of Luiseno Mission Indians
of California, a sovereign Native American nation (the "29 Palms Tribe"). Terms
not defined in this section shall have the meanings ascribed to them elsewhere
in this Quarterly Report on Form 10-Q.
General
The Company Has Substantial Indebtedness.
The Company has substantial indebtedness. At March 31, 2002, the Company's
long-term debt was approximately $1.9 billion and its ratio of debt to capital
was approximately 22 to 1. Interest expense as a percentage of net revenues was
19.3% and 18.3% for the three months ended March 31, 2001 and 2002,
respectively.
The Company previously announced that it was seeking to refinance or modify
the terms of THCR's and its subsidiaries' public debt issues. Recently, the
Company announced that two of its recently formed wholly-owned subsidiaries were
offering for private placement to qualified institutional buyers, pursuant to
Rule 144A and Regulation S under the Securities Act of 1933, as amended, $470
million aggregate principal amount of a new issue of first mortgage notes due
2010. The proposed offering has been modified to consist of two tranches: (i)
$340 million first mortgage notes due 2010 and (ii) $130 million second mortgage
notes due 2010. The interest rates of the first mortgage notes and second
mortgage notes, as well as other terms of the offering, have to be determined.
There can be assurances, however, that the offering will be completed as
proposed or otherwise.
The net proceeds of the offering, if consummated, will be used to redeem,
repay or acquire substantially all of the outstanding public indebtedness of
Castle Associates ($323.4 million aggregate pricinpal amount) and THCR Holdings
($109.5 million aggregate principal amount) and the bank debt of Trump Indiana
($24.2 million aggregate principal amount). The offering is conditioned upon
obtaining certain approvals, including the New Jersey Casino Control Commission
and the Indiana Gaming Commission. If refinancing these public debt issues
cannot be consummated, the Registrants will consider other options. There can be
no assurances, however, that any such alternatives could be successfully
completed.
The primary reason to refinance or modify THCR's and its subsidiaries
public debt issues is to extend their maturity and to reduce the high levels of
interest expense associated with such indebtedness in order to devote more
resources to capital expenditures at the Trump Atlantic City Properties. Capital
expenditures, such as room refurbishments, amenity upgrades and new gaming
equipment, are necessary to preserve the competitiveness of the Trump Casino
Properties. The Atlantic City market is very competitive and is anticipated to
become more competitive in the future. Management believes that the Company must
provide for capital expenditures that it believes are necessary to compete
effectively. Management believes that, based upon its current cash flow
forecasts for 2002, THCR and its subsidiaries will have sufficient cash flows to
meet their respective debt service and operating expense requirements throughout
2002.
In February 2002, we had discussions with a committee (the "TAC Notes
Committee") comprised of certain holders of the public debt of Trump AC (the
"Trump AC Mortgage Notes"). Discussions with the TAC Notes Committee did not
result in a transaction, and we have not had any subsequent meetings with the
TAC Notes Committee. Also, we have terminated our
12
agreement with our financial advisor pertaining to the Trump AC Mortgage Notes.
The Company may seek to modify or refinance the Trump AC Mortgage Notes in
the future if market conditions are favorable, although no transaction is
imminent and there can be no assurances that a transaction will occur or be
proposed in the future. As noted above, however, management believes that, based
upon its current cash flow forecasts for 2002, Trump AC will have sufficient
cash flows to meet its debt service and operating expense requirements
throughout 2002 without a transaction.
The ability of THCR Holdings and its subsidiaries to service the debt on
which they are obligated depends primarily on the ability of the Trump Casino
Properties to generate cash from operations sufficient for such purposes. In the
case of principal payments at maturity, the ability to refinance such
indebtedness is also important. The Trump Atlantic City Properties themselves
have substantial indebtedness and debt service requirements. The future
operating performance of the Trump Casino Properties is subject to general
economic conditions, industry conditions, including competition and regulatory
matters, and numerous other factors, many of which are unforeseeable or are
beyond the control of the Trump Casino Properties. There can be no assurance
that the future operating performance of the Trump Casino Properties will be
sufficient to generate the cash flows required to meet the debt service
obligations of the Trump Casino Properties or THCR Holdings. The ability of the
Trump Casino Properties and THCR Holdings to pay the principal amount of their
public debt at maturity (whether scheduled or by acceleration thereof) is
primarily dependent upon their ability to obtain refinancing. There is also no
assurance 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 or to the Company will be conducive to refinancing debt at any given
time.
The ability of the Trump Casino Properties to distribute funds to THCR
Holdings for purposes of THCR Holdings making interest payments on its
indebtedness is also limited by various covenants that bind such companies,
including financial ratios that require certain levels of cash flow be achieved
as a condition to the distribution of funds to THCR Holdings. Under such
restrictions, there can be no assurances that THCR Holdings will be provided
with funds from its subsidiaries sufficient to pay interest on its indebtedness
if operating results were to deteriorate.
We Do Not Know How the Borgata, When Opened, Will Affect Us.
In September 2000, Boyd Gaming and MGM Mirage commenced their joint
development of a 25-acre site located in the Marina District of Atlantic City
for the construction of the "Borgata," a Tuscan-style casino expected to feature
a 40-story tower with 2,010 rooms and suites, as well as a 135,000 square-foot
casino, restaurants, retail shops, a spa and pool, and entertainment venues.
Construction of the Borgata is scheduled to be completed in the third quarter of
2003, and is estimated to cost approximately $1.0 billion. While we believe that
the opening of the Borgata will attract additional visitors to Atlantic City,
especially to the Marina district which could benefit our Trump Marina property,
it is also possible that the Borgata could have an adverse effect on the
business and operations of the Trump Atlantic City Properties. This potential
adverse effect could include a reduction in net revenues caused by a loss of
gaming patrons. Also, substantial new expansion and development activity has
recently been completed or has been announced in Atlantic City which further
intensifies competitive pressure in the Atlantic City market and which could
have an adverse effect on our patronage and revenues.
New York Has Enacted Gaming Legislation Which May Harm Our Trump Atlantic
City Properties and Other States May Do So In The Future.
In October 2001, the New York State legislature passed extensive
legislation that could adversely affect the Company. The legislation permits
three new casinos in western New York, one in Niagara Falls, one in Buffalo and
one on land owned by the Seneca Indian Nation, all of which would be owned by
the Seneca Indian Nation. It is possible that the Niagara Falls and Buffalo
casinos could be open within a year. The legislation also permits up to three
casinos in the Catskills in Ulster and Sullivan counties, also to be owned by
Native Americans, which could open as early as mid-2005. In addition, slot
machines would be allowed to be placed in Indian-owned casinos. Video lottery
terminals would be installed and five horse racing tracks across the state of
New York and, if local governments approve, at certain other tracks. Finally,
the law provides for New York joining the Powerball lottery that operates in 26
states with large jackpots. The net effect of these facilities and other items,
when operational, on Atlantic City cannot be predicted. The Company believes,
however, that a substantial amount of existing and potential new gaming
customers could patronize such facilities instead of Atlantic City, at least
occasionally. On January 29, 2002, a lawsuit was commenced contesting the above
legislation package on the grounds that certain of its provisions were adopted
in violation of the State's constitution. The likely outcome of this lawsuit
cannot be ascertained at this time.
13
We also believe that Ohio, Pennsylvania, Virginia and Delaware are among
the other states currently contemplating some form of gaming legislation. Since
our market is primarily a drive-to market, legalized gambling in one or more
states neighboring or within close proximity to New Jersey could have an adverse
effect on the Atlantic City gaming industry overall, including THCR and the
Trump AC Properties.
Our Business is Subject to a Variety of Other Risks and Uncertainties.
As noted elsewhere, our financial condition and results of operations could
be affected by many events that are beyond our control, such as (i) capital
market conditions which could affect our ability to raise capital or pursue
other alternatives, (ii) future acts of terrorism and their impact on capital
markets, consumer behavior and operating expenses, (iii) competition from
existing and potential new competitors in Atlantic City and other nearby
markets, which is likely to increase over the next five years, (iv) possible
increases in gasoline prices which could discourage auto travel to Atlantic
City, and (v) adverse weather conditions. Good weather is particularly important
to the relative performance of our Trump Atlantic City Properties especially in
the winter months and our improved performance in the first quarter of 2002 is
partially attributable to mild weather conditions in the Northeast during such
period, as well as to expense reduction. Also, the cost of obtaining insurance
is likely to increase significantly in the wake of September 11, 2001. If
certain coverages are not available or are not available at a reasonable cost,
we will be self-insured for such risks.
Critical Accounting Policies
The preparation of our financial statements in conformity with generally
accepted accounting principles in the United States requires us to make
estimates and assumptions that affect the reported amounts of assets and
liabilities and disclosures of contingent assets and liabilities at the date of
the financial statements and the reported amounts of revenues and expenses
during the reporting period. Our estimates, judgements and assumptions are
continually evaluated based on available information and experience. Because of
the use of estimates inherent in the financial reporting process, actual results
could differ from those estimates.
Certain of our accounting policies require higher degrees of judgement than
others in their application. 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, 2001 filed with the SEC.
Recent Accounting Pronouncements
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 additional rebates of
$32,639,000 in the three months ended March 31, 2001 have been re-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.
14
Financial Condition -
Liquidity and Capital Resources
Cash flows from operating activities of the Company's owned and managed
casino properties are the Company's sole source of liquidity. The Company's
ability to borrow funds for its liquidity needs is severely restricted by
covenants in the various indentures governing its public debt issues and by its
already high levels of indebtedness. Sources of the Company's short-term and
long-term liquidity include: (i) table win, (ii) slot win, (iii) room occupancy,
(iv) food and beverage sales and (v) miscellaneous items, less promotional
expenses. Although we expect the Company to have sufficient liquidity from the
operating activities of the Trump Casino Properties to meet its short-term
obligations, there can be no assurances in this regard. A variety of factors,
including a decrease or change in the demand for our services, could have a
material adverse effect on our liquidity.
The Trump Casino Properties compete with other Atlantic City casino/hotels
on the basis of the quality of their guests' experience. We seek to provide
high-quality service and amenities and a first class casino gaming experience.
In a competitive marketplace like Atlantic City, the ability to offer a
high-quality casino gaming experience is largely dependant upon the quality of
customer service, the array of games offered, the attractiveness of a
casino/hotel and on extent and quality of the facilities and amenities.
Because the Company has substantial indebtedness and related interest
expenses, its capital expenditures in recent years has been limited. Moreover,
the Company has not been able to pursue various capital expansion plans, such as
the addition of more hotel rooms.
TRUMP HOTELS AND CASINO RESORTS
CONSOLIDATING CAPITAL EXPENDITURES
(IN THOUSANDS)
TOTAL
TAJ PLAZA TRUMP TRUMP TRUMP THCR THCR
ASSOCIATES ASSOCIATES AC MARINA INDIANA HOLDINGS CONSOL.
---------- ---------- -------- ------- ------- -------- --------
FOR THE THREE MONTHS
ENDED MARCH 31, 2001
Purchase of Property & Equipment $ 1,705 $ 260 $ 1,965 $ 1,140 $ 1,060 $ 100 $ 4,265
Capital Lease Additions (A) 2,413 78 2,491 -- -- -- 2,491
---------- ---------- -------- ------- ------- -------- --------
Total Capital Expenditures $ 4,118 $ 338 $ 4,456 $ 1,140 $ 1,060 $ 100 $ 6,756
========== ========== ======== ======= ======= ======== ========
FOR THE THREE MONTHS
ENDED MARCH 31, 2002
Purchase of Property & Equipment $ 2,153 $ 862 $ 3,015 $ 803 $ 1,304 $ 40 $ 5,162
Capital Lease Additions (A) 1,455 -- 1,455 -- -- -- 1,455
---------- ---------- -------- ------- ------- -------- --------
Total Capital Expenditures $ 3,608 $ 862 $ 4,470 $ 803 $ 1,304 $ 40 $ 6,617
========== ========== ======== ======= ======= ======== ========
(A) Capital lease additions for Trump AC were principally slot machines and a
telephone system.
15
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 March 31, 2001 and 2002. The
following tables include selected data of Plaza Associates, Taj Associates,
Trump Indiana and Trump Marina.
Three Months Ended March 31, 2001
-----------------------------------------------------------------------------
Plaza Taj Trump Trump THCR
Associates Associates Indiana Marina Consolidated*
-------------- ------------ ------------- ------------ -------------
(dollars in millions)
Revenues:
Gaming ................................... $ 80.3 $ 119.4 $ 31.1 $ 62.1 $ 293.0
Other .................................... 17.5 24.3 2.3 12.6 56.6
-------------- ------------ ------------- ------------ -------------
Gross Revenues ........................... 97.8 143.7 33.4 74.7 349.6
Less: Promotional Allowances ............. 21.6 27.0 3.2 16.4 68.1
-------------- ------------ ------------- ------------ -------------
Net Revenues ............................. 76.2 116.7 30.2 58.3 281.5
-------------- ------------ ------------- ------------ -------------
Costs and Expenses:
Gaming ................................... 43.7 61.6 15.9 31.1 152.3
Other .................................... 4.5 8.5 1.6 2.6 17.2
General & Administrative ................. 16.6 24.5 7.6 16.5 65.8
Depreciation & Amortization .............. 4.1 8.5 1.9 4.3 18.8
-------------- ------------ ------------- ------------ -------------
Total Costs and Expenses ................. 68.9 103.1 27.0 54.5 254.1
-------------- ------------ ------------- ------------ -------------
Income from Operations ................... 7.3 13.6 3.2 3.8 27.4
-------------- ------------ ------------- ------------ -------------
Non-operating Income ..................... 0.1 0.2 0.1 0.2 1.2
Interest Expense ......................... (11.8) (23.2) (1.2) (14.6) (54.4)
-------------- ------------ ------------- ------------ -------------
Total Non-operating Expense, Net ......... (11.7) (23.0) (1.1) (14.4) (53.2)
-------------- ------------ ------------- ------------ -------------
Loss in Joint Venture .................... -- -- (0.8) -- (0.8)
-------------- ------------ ------------- ------------ -------------
Income (Loss) before Minority Interest ... $ (4.4) $ (9.4) $ 1.3 $ (10.6) $ (26.6)
============== ============ ============= ============
Minority Interest ........................ 9.7
-------------
Net Loss ................................. $ (16.9)
=============
*Intercompany eliminations and expenses of THCR and THCR Holdings are not
separately shown.
16
Three Months Ended March 31, 2002
----------------------------------------------------------------------------
Plaza Taj Trump Trump THCR
Associates Associates Indiana Marina Consolidated*
---------- ---------- --------- ------- -------------
(dollars in millions)
Revenues:
Gaming ..................................... $ 81.5 $ 129.9 $ 32.7 $ 67.3 $ 311.4
Other ...................................... 16.6 26.4 2.2 12.8 57.9
---------- --------- --------- ------- ----------
Gross Revenues ............................. 98.1 156.3 34.9 80.1 369.3
Less: Promotional Allowances ............... 19.9 29.0 3.0 16.3 68.1
---------- --------- --------- ------- ----------
Net Revenues ............................... 78.2 127.3 31.9 63.8 301.2
---------- --------- --------- ------- ----------
Costs and Expenses:
Gaming ..................................... 40.4 60.6 16.7 31.0 148.5
Other ...................................... 5.2 8.5 1.6 3.1 18.4
General & Administrative ................... 15.7 25.2 6.7 15.9 64.6
Depreciation & Amortization ................ 4.3 8.8 1.4 4.9 19.4
Debt Renegotiation Costs ................... -- -- -- 0.5 2.1
---------- --------- --------- ------- ----------
Total Costs and Expenses ................... 65.6 103.1 26.4 55.4 253.0
---------- --------- --------- ------- ----------
Income from Operations ..................... 12.6 24.2 5.5 8.4 48.2
---------- --------- --------- ------- ----------
Non-operating Income ....................... 0.1 0.1 -- -- 0.4
Interest Expense ........................... (11.8) (23.3) (1.1) (15.6) (55.2)
---------- --------- --------- ------- ----------
Total Non-operating Expense, Net ........... (11.7) (23.2) (1.1) (15.6) (54.8)
---------- --------- --------- ------- ----------
Loss in Joint Venture ...................... -- -- (0.6) -- (0.6)
---------- --------- --------- ------- ----------
Income(Loss) before Minority Interest ...... $ 0.9 $ 1.0 $ 3.8 $ (7.2) $ (7.2)
========== ========= ========= =======
Minority Interest .......................... 2.6
----------
Net Loss ................................... $ (4.6)
==========
* Intercompany eliminations and expenses of THCR and THCR Holdings are not
separately shown.
17
Three Months Ended March 31, 2001
----------------------------------------------------------------------------
Plaza Taj Trump Trump THCR
Associates Associates Indiana Marina Consolidated*
---------- ---------- --------- ------- -------------
(dollars in millions)
Table Game Revenues ..................... $ 26.2 $ 34.8 $ 6.5 $ 15.0 $ 82.6
Table Game Drop ......................... $ 140.9 $ 239.8 $ 37.8 $ 91.6 $ 510.1
Table Win Percentage .................... 18.6% 14.5% 17.3% 16.3% 16.2%
Number of Table Games ................... 98 143 52 76 369
Slot Revenues ........................... $ 54.1 $ 79.1 $ 24.6 $ 47.0 $ 204.8
Slot Handle ............................. $ 707.0 $ 1,037.1 $ 351.0 $ 612.9 $ 2,708.0
Slot Win Percentage ..................... 7.7% 7.6% 7.0% 7.7% 7.6%
Number of Slot Machines ................. 2,844 4,664 1,264 2,531 11,303
Other Gaming Revenues ................... $ N/A $ 5.5 $ N/A $ 0.1 $ 5.6
Total Gaming Revenues ................... $ 80.3 $ 119.4 $ 31.1 $ 62.1 $ 293.0
Three Months Ended March 31, 2002
----------------------------------------------------------------------------------
Plaza Taj Trump Trump THCR
Associates Associates Indiana Marina Consolidated
---------- ---------- ------- ------ -------------
(dollars in millions)
Table Game Revenues ................ $ 25.7 $ 39.4 $ 6.3 $ 15.9 $ 87.3
Incr (Decr) over prior period ...... $ (0.5) $ 4.6 $ (0.2) $ 0.9 $ 4.7
Table Game Drop .................... $ 143.1 $ 225.7 $ 34.7 $ 85.4 $ 488.9
Incr (Decr) over prior period ...... $ 2.2 $ (14.1) $ (3.1) $ (6.2) $ (21.2)
Table Win Percentage ............... 17.9% 17.4% 18.2% 18.6% 17.9%
Incr (Decr) over prior period ...... (0.7) pts. 2.9 pts. 0.9 pts. 2.3 pts. 1.7 pts.
Number of Table Games .............. 88 139 50 80 357
Incr (Decr) over prior period ...... (10) (4) (2) 4 (12)
Slot Revenues ...................... $ 55.8 $ 85.0 $ 26.4 $ 51.3 $ 218.5
Incr (Decr) over prior period ...... $ 1.7 $ 5.9 $ 1.8 $ 4.3 $ 13.7
Slot Handle ........................ $ 702.9 $ 1,100.7 $ 347.2 $ 649.0 $ 2,799.8
Incr (Decr) over prior period ...... $ (4.1) $ 63.6 $ (3.8) $ 36.1 $ 91.8
Slot Win Percentage ................ 7.9% 7.7% 7.6% 7.9% 7.8%
Incr (Decr) over prior period ...... 0.2 pts. 0.1 pts. 0.6 pts. 0.2 pts. 0.2 pts.
Number of Slot Machines ............ 2,844 4,857 1,459 2,523 11,683
Incr (Decr) over prior period ...... 0 193 195 (8) 380
Other Gaming Revenues .............. $ N/A $ 5.5 $ N/A $ 0.1 $ 5.6
Incr (Decr) over prior period ...... $ N/A $ -- $ N/A $ -- $ --
Total Gaming Revenues .............. $ 81.5 $ 129.9 $ 32.7 $ 67.3 $ 311.4
Incr (Decr) over prior period ...... $ 1.2 $ 10.5 $ 1.6 $ 5.2 $ 18.4
Gaming revenues are the primary source of THCR's revenues. Table game
revenues represent the amount retained by THCR from amounts wagered at table
games. The table win percentage tends to be fairly constant over the long term,
but may vary significantly in the short term, due to large wagers by "high
rollers." The Atlantic City industry table game win percentages were 15.2% and
16.2 % for the three months ended March 31, 2001 and 2002, respectively. THCR's
table game win percentage was 16.2% and 17.9% for the three months ended March
31, 2001 and 2002, respectively.
Table games revenues increased $4.7 million or 5.7 % to $87.3 million for
the three months ended March 31, 2002 from $82.6 million in the comparable
period in 2001. The $4.6 million increase in table games revenue at the Trump
Taj Mahal Casino Resort ( the "Taj Mahal") was primarily due to a 2.9 points
increase in table win percentage which offset a $14.1 million decrease in table
game drop. Although the Trump Plaza Hotel and Casino's ( "Trump Plaza") table
game drop increased, the 0.7 point decrease in table win percentage resulted in
a $.5 million decrease in table games revenue. Trump Marina's $0.9 million
18
increase in table games revenue is due to a 2.3 points increase in table win
percentage which offset a $6.2 million decrease in table game drop. Trump
Indiana's $0.2 million decrease in table games revenue was primarily due to a
$3.1 million decrease in table game drop, which was negatively affected by
increasing competition in the Indiana and Illinois market for table game play
and the general decrease in table game play experienced throughout the casino
industry. The decrease in table game drop was partially offset by a 0.9 point
increase in table win percentage.
Slot revenues increased $13.7 million or 6.7 % to $218.5 million for the
three months ended March 31, 2002 from $204.8 million in the comparable period
in 2001. Increased slot handle of $63.6 million at the Taj Mahal and $36.1
million at Trump Marina primarily contributed to their respective increases in
slot revenues. Trump Plaza's slot revenues increased $1.7 million due to a 0.2
point increase in slot win percentage which totally offset a $4.1 million
decrease in slot handle. Trump Indiana's slot revenues increased $1.8 million
due to a 0.6 point increase in slot win percentage which totally offset a $3.8
million decrease in slot handle. Overall, slot revenues increased primarily as a
result of improved slot product on the casino floor, management's continued
focus on marketing initiatives and customer service as well as favorable weather
conditions in the Atlantic City area.
Gaming costs and expenses were $148.5 million for the three months ended
March 31, 2002, a decrease of $3.8 million or 2.5% from $152.3 million for the
three months ended March 31, 2001. Gaming costs at the Taj Mahal decreased $1.0
million or 1.6% from the comparable period in 2001 and Trump Plaza's gaming
costs decreased $3.3 million or 7.6% from the comparable period in 2001
primarily due to decreased payroll expense and more efficient marketing
programs. Trump Marina's gaming costs decreased $0.1 million primarily due to
decreased promotional expenses achieved by eliminating less profitable programs.
Trump Indiana's gaming costs increased $0.8 million or 5.0% from the comparable
period in 2001 primarily due to increased gaming taxes associated with the
increase in gaming revenues.
General and administrative expenses were $64.6 million for the three months
ended March 31, 2002, a $1.2 million or 1.8% decrease from $65.8 million in the
comparable period in 2001. Corporate expenses increased for the three months
ended March 31, 2002 from the comparable period in 2001, primarily due to the
receipt of an insurance reimbursement which offset legal expenses during the
first quarter of 2001.
THCR has been seeking to refinance or modify the terms of its debt which
was approximately $1.7 billion aggregate principal amount as of March 31, 2002.
During the three months ended March 31, 2002, debt renegotiation costs of $2.1
million were incurred: $1.5 million by Trump AC on its $1.3 billion outstanding
debt, $0.5 million by Trump Marina and $0.1 million by THCR Holdings.
During the three months ended March 31, 2002, Trump Indiana paid a sales
tax assessed by the State of Indiana relating to its vessel in the amount of
$1.8 million. As this assessment is being appealed by Trump Indiana, it has been
included in Other Assets. Trump Indiana believes that the $1.8 million will be
recoverable on settlement of the appeal.
Seasonality
The casino industry in Atlantic City and Indiana is seasonal in nature.
Accordingly, the results of operations for the period ending March 31, 2002 are
not necessarily indicative of the operating results for a full year.
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.
19
PART II -- OTHER INFORMATION
ITEM 1 -- LEGAL PROCEEDINGS
General. THCR and certain of its employees have been involved in various
legal proceedings. Such persons are vigorously defending the allegations against
them and intend to contest vigorously any future proceedings. In general, THCR
has agreed to indemnify such persons against any and all losses, claims,
damages, expenses (including reasonable costs, disbursements and counsel fees)
and liabilities (including amounts paid or incurred in satisfaction of
settlements, judgments, fines and penalties) incurred by them in said legal
proceedings.
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, 2001, 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
Subsequent Events.
On April 15, 2002, THCR Management received approval from the National
Indian Gaming Commission of its five-year management agreement with the 29 Palms
Tribe. Under the management agreement, THCR Management will manage the
day-to-day operations of Trump 29 Casino, which opened on April 2, 2002 in
Coachella, California.
On April 24, 2002, the Company announced that two of its wholly-owned
subsidiaries, Trump Casino Holdings, LLC and Trump Casino Funding, Inc., were
offering for private placement to qualified institutional buyers pursuant to
Rule 144A and Regulation S under the Securities Act of 1933, as amended, $470
million aggregate principal amount of a new issue of first mortgage notes due
2010. The proposed offering has been modified to consist of two tranches: (i)
$340 million first mortgage notes due 2010 and (ii) $130 million second mortgage
notes due 2010. The issuers intend to use the net proceeds of the offering, if
consummated, to redeem, repay or acquire substantially all of the outstanding
public indebtedness of Castle Associates and THCR Holdings and the bank debt of
Trump Indiana. The proposed offering is subject to the prior approval of the New
Jersey Casino Control Commission and the Indiana Gaming Commission. The interest
rates on the notes and other terms are to be determined.
On April 26, 2002, the Company filed its definitive proxy statement (the
"Proxy Statement") with the SEC relating to the Company's 2002 stockholders'
annual meeting (the "Annual Meeting"). The Annual Meeting will be held on
Wednesday, June 12, 2002, commencing at 2:00 p.m., local time, at the Trump Taj
Mahal Casino Resort, located at 1000 Boardwalk, Atlantic City, New Jersey.
Holders of record as of the close of business on April 17, 2002 of shares of
THCR Common Stock and THCR Class B Common Stock will be requested to vote in
person or by proxy at the Annual Meeting on the following proposals: (i) to
elect Messrs. Donald J. Trump, Wallace B. Askins, Don M. Thomas, Peter M. Ryan
and Robert J. McGuire to the Board of Directors of THCR; and (ii) to act upon
such other business as may properly come before the Annual Meeting or any
adjournment or postponement thereof. A copy of THCR's Annual Report for the
fiscal year ended December 31, 2001, proxy statement and proxy card for the
Annual Meeting were first mailed or given to stockholders entitled to notice of,
and to vote at, the Annual Meeting on or about April 26, 2002.
20
As explained in the Proxy Statement, due to Arthur Andersen, LLP's federal
indictment in March 2002 and the New Jersey Casino Control Commission's (the
"CCC") order requiring all New Jersey casino licensees to terminate any ongoing
business with Arthur Andersen by May 15, 2002, unless otherwise extended by the
CCC, stockholders will not be asked at the Annual Meeting to ratify the Board of
Directors' appointment of independent auditors in order to allow the Company's
Audit Committee and Board of Directors to carefully consider Arthur Andersen's
replacement. Although the Company anticipates completing its selection process
of new independent auditors by mid-June 2002, the Company has petitioned the CCC
to grant the Company a time extension for Arthur Andersen's termination in order
to allow Arthur Andersen to complete ongoing matters for the Company and in
order to allow an efficient transition to the Company's new independent
auditors.
ITEM 6 -- EXHIBITS AND REPORTS ON FORM 8-K
a. Exhibits:
None.
b. Current Reports on Form 8-K:
On January 17, 2002, the Registrants filed a Current Report on Form 8-K
with the SEC therein announcing that THCR had settled a dispute, without
admitting or denying any of the allegations, with the SEC pertaining to a press
release issued by THCR in October 1999.
21
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, 2002
By: /S/ FRANCIS X. MCCARTHY, JR.
------------------------------------------
Francis X. McCarthy, Jr.
Executive Vice President of Finance and
Chief Financial Officer
(Duly Authorized Officer and Principal
Financial Officer)
22
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, 2002 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)
23
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, 2002
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)
24