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: September 30, 2006
OR
| ¨ | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the transition period from to .
TRUMP ENTERTAINMENT RESORTS, INC.
TRUMP ENTERTAINMENT RESORTS HOLDINGS, L.P.
TRUMP ENTERTAINMENT RESORTS FUNDING, INC.
(Exact name of registrant as specified in its charter)
| DELAWARE | 1-13794 | 13-3818402 | ||
| DELAWARE | 33-90786 | 13-3818407 | ||
| DELAWARE | 33-90786-01 | 13-3818405 | ||
| (State or other jurisdiction of incorporation or organization) |
(Commission File Number) | (I.R.S. Employer Identification No.) |
1000 Boardwalk at Virginia Avenue
Atlantic City, New Jersey 08401
(609) 449-6515
(Address, including zip code, and telephone number, including area code, of principal executive offices)
N/A
(Former name, former address and former fiscal year, if changed since last report)
Securities registered pursuant to Section 12(b) of the Act: None
Securities registered pursuant to Section 12(g) of the Act:
| Registrant |
Title of Each Class | |
| Trump Entertainment Resorts, Inc. | Common Stock, par value $0.001 per share | |
| Trump Entertainment Resorts Holdings, L.P. | None | |
| Trump Entertainment Resorts Funding, Inc. | None |
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 registrant was required to file such reports), and (2) have been subject to such filing requirements for the past 90 days. Yes x No ¨
Indicate by check mark whether each registrant is a large accelerated filer, an accelerated filer or a non-accelerated filer. See definition of accelerated filer and large accelerated filer in Rule 12b-2 of the Exchange Act.
Trump Entertainment Resorts, Inc.
Large Accelerated Filer ¨ Accelerated Filer x Non-Accelerated Filer ¨
Trump Entertainment Resorts Holdings, L.P.
Large Accelerated Filer ¨ Accelerated Filer ¨ Non-Accelerated Filer x
Trump Entertainment Resorts Funding, Inc.
Large Accelerated Filer ¨ Accelerated Filer ¨ Non-Accelerated Filer x
Indicate by check mark whether the registrants are shell companies (as defined in Rule 12b-2 of the Exchange Act). Yes ¨ No x
Indicate by check mark whether the registrants have filed all documents and reports required to be filed by Sections 12, 13 or 15(d) of the Securities Exchange Act of 1934 subsequent to the distribution of securities under a plan confirmed by a court. Yes x No ¨
As of November 6, 2006, there were 30,990,902 shares of common stock and 900 shares of class B common stock (having a voting equivalency of 9,377,484 shares of common stock) of Trump Entertainment Resorts, Inc. outstanding.
PART I – FINANCIAL INFORMATION
Item 1. Financial Statements
TRUMP ENTERTAINMENT RESORTS, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(dollars in thousands, except share and per share data)
| Reorganized Company | ||||||||
| September 30, 2006 |
December 31, 2005 |
|||||||
| (unaudited) | ||||||||
| Current assets: |
||||||||
| Cash and cash equivalents |
$ | 161,252 | $ | 228,554 | ||||
| Restricted cash |
27,327 | 45,005 | ||||||
| Accounts receivable, net |
41,679 | 36,024 | ||||||
| Accounts receivable, other |
10,724 | 9,716 | ||||||
| Inventories |
10,844 | 10,716 | ||||||
| Deferred income taxes |
2,289 | 2,289 | ||||||
| Prepaid expenses and other current assets |
17,707 | 12,178 | ||||||
| Total current assets |
271,822 | 344,482 | ||||||
| Net property and equipment |
1,505,362 | 1,463,142 | ||||||
| Other assets: |
||||||||
| Intangible assets, net |
205,089 | 206,345 | ||||||
| Goodwill |
228,536 | 238,045 | ||||||
| Deferred financing costs, net |
18,591 | 20,725 | ||||||
| Other assets, net |
62,786 | 57,024 | ||||||
| Total other assets |
515,002 | 522,139 | ||||||
| Total assets |
$ | 2,292,186 | $ | 2,329,763 | ||||
| Current liabilities: |
||||||||
| Accounts payable |
$ | 19,173 | $ | 38,739 | ||||
| Accrued payroll and related expenses |
28,737 | 26,553 | ||||||
| Income taxes payable |
24,715 | 36,765 | ||||||
| Partnership distribution payable |
340 | 3,041 | ||||||
| Accrued interest payable |
40,441 | 11,517 | ||||||
| Self-insurance reserves |
13,639 | 12,398 | ||||||
| Other current liabilities |
40,592 | 43,145 | ||||||
| Current maturities of long-term debt |
15,753 | 30,007 | ||||||
| Total current liabilities |
183,390 | 202,165 | ||||||
| Long-term debt, net of current maturities |
1,397,535 | 1,407,952 | ||||||
| Deferred income taxes |
144,352 | 144,352 | ||||||
| Other long-term liabilities |
17,151 | 18,428 | ||||||
| Minority interest |
128,063 | 129,708 | ||||||
| Stockholders’ equity: |
||||||||
| Preferred stock, $1 par value; 1,000,000 shares authorized, -0- shares issued and outstanding |
— | — | ||||||
| Common stock, $.001 par value; 75,000,000 shares authorized, 30,952,329 and 27,177,696 shares issued and outstanding at September 30, 2006 and December 31, 2005, respectively |
31 | 27 | ||||||
| Class B Common stock, $0.001 par value; 1,000 shares authorized, 900 shares issued and outstanding |
— | — | ||||||
| Additional paid-in capital |
457,016 | 453,659 | ||||||
| Accumulated deficit |
(35,352 | ) | (26,528 | ) | ||||
| Total stockholders’ equity |
421,695 | 427,158 | ||||||
| Total liabilities and stockholders’ equity |
$ | 2,292,186 | $ | 2,329,763 | ||||
See accompanying notes to condensed consolidated financial statements
2
TRUMP ENTERTAINMENT RESORTS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(unaudited)
(dollars in thousands, except share and per share data)
| Reorganized Company | ||||||||
| Three Months Ended September 30, |
||||||||
| 2006 | 2005 | |||||||
| Revenues: |
||||||||
| Gaming |
$ | 301,781 | $ | 290,104 | ||||
| Rooms |
22,811 | 21,278 | ||||||
| Food and beverage |
37,594 | 34,992 | ||||||
| Other |
15,999 | 13,802 | ||||||
| 378,185 | 360,176 | |||||||
| Less promotional allowances |
(89,817 | ) | (82,909 | ) | ||||
| Net revenues |
288,368 | 277,267 | ||||||
| Costs and expenses: |
||||||||
| Gaming |
135,577 | 129,747 | ||||||
| Rooms |
7,901 | 7,141 | ||||||
| Food and beverage |
11,936 | 11,913 | ||||||
| Selling, general and administrative |
73,552 | 73,307 | ||||||
| Selling, general and administrative-related party |
610 | 508 | ||||||
| Depreciation and amortization |
17,814 | 16,244 | ||||||
| Reorganization expense and related costs |
— | 5,741 | ||||||
| 247,390 | 244,601 | |||||||
| Income from operations |
40,978 | 32,666 | ||||||
| Non-operating income (expense): |
||||||||
| Interest income |
2,490 | 696 | ||||||
| Interest expense |
(33,029 | ) | (32,735 | ) | ||||
| (30,539 | ) | (32,039 | ) | |||||
| Income before income taxes, minority interest and discontinued operations |
10,439 | 627 | ||||||
| Provision for income taxes |
(2,756 | ) | (2,335 | ) | ||||
| Minority interest |
(1,850 | ) | 402 | |||||
| Income (loss) from continuing operations |
5,833 | (1,306 | ) | |||||
| Income from discontinued operations: |
||||||||
| Trump Indiana |
— | 6,786 | ||||||
| Provision for income taxes |
— | (851 | ) | |||||
| Minority interest |
— | (1,395 | ) | |||||
| Income from discontinued operations |
— | 4,540 | ||||||
| Net income |
$ | 5,833 | $ | 3,234 | ||||
| Continuing operations |
$ | 0.19 | $ | (0.05 | ) | |||
| Discontinued operations |
— | 0.17 | ||||||
| Basic net income per share |
$ | 0.19 | $ | 0.12 | ||||
| Continuing operations |
$ | 0.19 | $ | (0.05 | ) | |||
| Discontinued operations |
— | 0.17 | ||||||
| Diluted net income per share |
$ | 0.19 | $ | 0.12 | ||||
| Weighted average shares outstanding: |
||||||||
| Basic |
30,977,329 | 27,064,819 | ||||||
| Diluted |
40,360,777 | 27,064,819 | ||||||
See accompanying notes to condensed consolidated financial statements
3
TRUMP ENTERTAINMENT RESORTS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(dollars in thousands, except share and per share data)
| Reorganized Company | Predecessor Company |
|||||||||||||
| Nine Months Ended September 30, 2006 |
For the Period May 20, 2005 |
For the Period From January 1, 2005 Through May 19, 2005 |
||||||||||||
| (unaudited) | (unaudited) | |||||||||||||
| Revenues: |
||||||||||||||
| Gaming |
$ | 822,640 | $ | 414,380 | $ | 398,409 | ||||||||
| Rooms |
59,044 | 30,006 | 26,360 | |||||||||||
| Food and beverage |
94,785 | 50,232 | 44,198 | |||||||||||
| Other |
33,796 | 18,870 | 12,809 | |||||||||||
| 1,010,265 | 513,488 | 481,776 | ||||||||||||
| Less promotional allowances |
(228,273 | ) | (120,366 | ) | (117,337 | ) | ||||||||
| Net revenues |
781,992 | 393,122 | 364,439 | |||||||||||
| Costs and expenses: |
||||||||||||||
| Gaming |
374,774 | 188,623 | 186,545 | |||||||||||
| Rooms |
23,273 | 10,319 | 9,805 | |||||||||||
| Food and beverage |
32,268 | 17,116 | 13,767 | |||||||||||
| Selling, general and administrative |
214,291 | 102,195 | 92,957 | |||||||||||
| Selling, general and administrative-related party |
1,930 | 8,893 | 775 | |||||||||||
| Depreciation and amortization |
51,746 | 22,259 | 35,753 | |||||||||||
| Reorganization expense (income) and related costs |
— | 7,671 | (25,967 | ) | ||||||||||
| 698,282 | 357,076 | 313,635 | ||||||||||||
| Income from operations |
83,710 | 36,046 | 50,804 | |||||||||||
| Non-operating income (expense): |
||||||||||||||
| Interest income |
8,348 | 918 | 836 | |||||||||||
| Interest expense |
(98,100 | ) | (47,357 | ) | (86,862 | ) | ||||||||
| Other non-operating income, net |
— | 65 | — | |||||||||||
| (89,752 | ) | (46,374 | ) | (86,026 | ) | |||||||||
| Loss before income taxes, minority interest, discontinued operations and extraordinary item |
(6,042 | ) | (10,328 | ) | (35,222 | ) | ||||||||
| Provision for income taxes |
(5,587 | ) | (3,046 | ) | (2,074 | ) | ||||||||
| Minority interest |
2,805 | 3,144 | — | |||||||||||
| Loss from continuing operations |
(8,824 | ) | (10,230 | ) | (37,296 | ) | ||||||||
| Income from discontinued operations: |
||||||||||||||
| Trump Indiana |
— | 8,937 | 142,959 | |||||||||||
| Provision for income taxes |
— | (1,292 | ) | (24,211 | ) | |||||||||
| Minority interest |
— | (1,797 | ) | — | ||||||||||
| Income from discontinued operations |
— | 5,848 | 118,748 | |||||||||||
| (Loss) income before extraordinary item |
(8,824 | ) | (4,382 | ) | 81,452 | |||||||||
| Extraordinary gain on extinguishment of debt |
— | — | 196,932 | |||||||||||
| Net (loss) income |
$ | (8,824 | ) | $ | (4,382 | ) | $ | 278,384 | ||||||
| Continuing operations |
$ | (0.29 | ) | $ | (0.38 | ) | $ | (1.25 | ) | |||||
| Discontinued operations |
— | 0.22 | 3.97 | |||||||||||
| Extraordinary gain on extinguishment of debt |
— | — | 6.59 | |||||||||||
| Basic net (loss) income per share |
$ | (0.29 | ) | $ | (0.16 | ) | $ | 9.31 | ||||||
| Continuing operations |
$ | (0.29 | ) | $ | (0.38 | ) | $ | (1.25 | ) | |||||
| Discontinued operations |
— | 0.22 | 3.97 | |||||||||||
| Extraordinary gain on extinguishment of debt |
— | — | 6.59 | |||||||||||
| Diluted net (loss) income per share |
$ | (0.29 | ) | $ | (0.16 | ) | $ | 9.31 | ||||||
| Weighted average shares outstanding: |
||||||||||||||
| Basic |
30,897,495 | 27,052,393 | 29,904,764 | |||||||||||
| Diluted |
30,897,495 | 27,052,393 | 29,904,764 | |||||||||||
See accompanying notes to condensed consolidated financial statements
4
TRUMP ENTERTAINMENT RESORTS, INC.
CONDENSED CONSOLIDATED STATEMENT OF STOCKHOLDERS’ EQUITY
(unaudited)
(in thousands, except share data)
| Shares | Common Stock |
Shares | Class B Common Stock |
Additional Paid-in Capital |
Accumulated Deficit |
Total Stockholders’ Equity |
|||||||||||||||||
| Reorganized Company: |
|||||||||||||||||||||||
| Balance, December 31, 2005 |
27,177,696 | $ | 27 | 900 | $ | — | $ | 453,659 | $ | (26,528 | ) | $ | 427,158 | ||||||||||
| Warrants converted |
3,377,553 | 3 | — | — | (3 | ) | — | — | |||||||||||||||
| Stock-based compensation expense, net of minority interest of $989 |
— | — | — | — | 3,220 | — | 3,220 | ||||||||||||||||
| Issuance of restricted stock, net |
433,889 | 1 | — | — | (1 | ) | — | — | |||||||||||||||
| Other |
(36,809 | ) | — | — | — | 141 | — | 141 | |||||||||||||||
| Net loss |
— | — | — | — | — | (8,824 | ) | (8,824 | ) | ||||||||||||||
| Balance, September 30, 2006 |
30,952,329 | $ | 31 | 900 | $ | — | $ | 457,016 | $ | (35,352 | ) | $ | 421,695 | ||||||||||
See accompanying notes to condensed consolidated financial statements
5
TRUMP ENTERTAINMENT RESORTS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(dollars in thousands)
| Reorganized Company | Predecessor Company | |||||||||||||
| Nine Months Ended September 30, 2006 |
For the Period May 20, 2005 |
For the Period From January 1,
2005 May 19, 2005 |
||||||||||||
| (unaudited) | (unaudited) | |||||||||||||
| CASH FLOWS FROM OPERATING ACTIVITIES: |
||||||||||||||
| Net (loss) income |
$ | (8,824 | ) | $ | (4,382 | ) | $ | 278,384 | ||||||
| Adjustments to reconcile net (loss) income to net cash flows provided by (used in) operating activities: |
||||||||||||||
| Non-cash reorganization (income) expense, net |
— | — | (210,117 | ) | ||||||||||
| Deferred and non-cash charge in lieu of income taxes |
2,075 | 20,000 | — | |||||||||||
| Minority interest in net (loss) |
(2,805 | ) | (1,347 | ) | — | |||||||||
| Extraordinary gain on extinguishment of debt |
— | — | (196,932 | ) | ||||||||||
| Depreciation and amortization |
51,746 | 24,931 | 38,486 | |||||||||||
| Amortization of deferred financing costs |
1,954 | 974 | 665 | |||||||||||
| Provisions for losses on receivables |
3,753 | 837 | 1,445 | |||||||||||
| Stock-based compensation expense |
4,209 | — | — | |||||||||||
| Valuation allowance - CRDA investments |
3,396 | 1,785 | 1,757 | |||||||||||
| Compensatory stock warrants |
— | 8,000 | — | |||||||||||
| Other |
(644 | ) | 1,528 | 755 | ||||||||||
| Changes in operating assets and liabilities: |
||||||||||||||
| (Increase) decrease in accounts receivable |
(10,164 | ) | 485 | 546 | ||||||||||
| (Increase) decrease in inventories |
(128 | ) | 161 | (485 | ) | |||||||||
| Increase in other current assets |
(5,529 | ) | (5,290 | ) | (2,143 | ) | ||||||||
| Decrease (increase) in other assets |
763 | (2,662 | ) | (842 | ) | |||||||||
| Decrease in due to affiliates, net |
— | (663 | ) | (538 | ) | |||||||||
| (Decrease) increase in accounts payable, accrued expenses and other current liabilities |
(24,379 | ) | (41,842 | ) | 60,847 | |||||||||
| Increase (decrease) in accrued interest payable |
28,924 | (45,342 | ) | 68,866 | ||||||||||
| (Decrease) increase in other long-term liabilities |
(1,277 | ) | (4,586 | ) | 3,835 | |||||||||
| Net cash flows provided by (used in) operating activities including discontinued operations |
43,070 | (47,413 | ) | 44,529 | ||||||||||
| CASH FLOWS FROM INVESTING ACTIVITIES: |
||||||||||||||
| Purchase of property and equipment, net |
(91,377 | ) | (37,784 | ) | (39,033 | ) | ||||||||
| Decrease in restricted cash |
17,678 | — | — | |||||||||||
| Purchases of CRDA investments, net |
(9,921 | ) | (3,785 | ) | (6,115 | ) | ||||||||
| Other |
— | 1,426 | — | |||||||||||
| Net cash flows used in investing activities |
(83,620 | ) | (40,143 | ) | (45,148 | ) | ||||||||
| CASH FLOWS FROM FINANCING ACTIVITIES: |
||||||||||||||
| Borrowings from revolving credit facility, net |
— | 28,700 | — | |||||||||||
| Borrowings from term loan |
— | 150,000 | — | |||||||||||
| Repayments of term loan |
(1,125 | ) | (375 | ) | — | |||||||||
| Borrowings from (repayment of) DIP facility, net |
— | (53,958 | ) | 18,172 | ||||||||||
| Repayment of other long-term debt |
(22,803 | ) | (11,779 | ) | — | |||||||||
| Repayment of long-term debt subject to compromise |
— | — | (13,439 | ) | ||||||||||
| Payment of deferred financing costs |
(597 | ) | (10,538 | ) | (2,926 | ) | ||||||||
| Contributed capital from reorganization |
— | 55,000 | — | |||||||||||
| Cash distributions to noteholders and stockholders |
— | (41,120 | ) | — | ||||||||||
| Partnership distributions |
(2,680 | ) | — | — | ||||||||||
| Other |
453 | — | — | |||||||||||
| Net cash flows (used in) provided by financing activities |
(26,752 | ) | 115,930 | 1,807 | ||||||||||
| Net (decrease) increase in cash and cash equivalents |
(67,302 | ) | 28,374 | 1,188 | ||||||||||
| Cash and cash equivalents at beginning of period |
228,554 | 106,454 | 105,266 | |||||||||||
| Cash and cash equivalents at end of period |
$ | 161,252 | $ | 134,828 | $ | 106,454 | ||||||||
| SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION: |
||||||||||||||
| Cash paid for interest |
$ | 67,780 | $ | 77,269 | $ | 16,129 | ||||||||
| Cash paid for income taxes |
525 | 19,225 | 6,014 | |||||||||||
| Equipment purchased under capital leases |
277 | 10,270 | 122 | |||||||||||
| Debt of Reorganized Company issued in exchange for debt and accrued interest of Predecessor Company |
(1,020 | ) | 1,250,000 | — | ||||||||||
| Stock and minority interest of Reorganized Company issued in exchange for debt and accrued interest of Predecessor Company |
— | 527,300 | — | |||||||||||
See accompanying notes to condensed consolidated financial statements
6
TRUMP ENTERTAINMENT RESORTS HOLDINGS, L.P.
CONDENSED CONSOLIDATED BALANCE SHEETS
(dollars in thousands)
| Reorganized Company | ||||||||
| September 30, 2006 |
December 31, 2005 |
|||||||
| (unaudited) | ||||||||
| Current assets: |
||||||||
| Cash and cash equivalents |
$ | 160,349 | $ | 228,550 | ||||
| Restricted cash |
27,327 | 45,005 | ||||||
| Accounts receivable, net |
41,679 | 36,024 | ||||||
| Accounts receivable, other |
10,724 | 9,716 | ||||||
| Inventories |
10,844 | 10,716 | ||||||
| Deferred income taxes |
904 | 904 | ||||||
| Prepaid expenses and other current assets |
17,707 | 12,178 | ||||||
| Total current assets |
269,534 | 343,093 | ||||||
| Net property and equipment |
1,505,362 | 1,463,142 | ||||||
| Other assets: |
||||||||
| Intangible assets, net |
205,089 | 206,345 | ||||||
| Goodwill |
129,980 | 139,289 | ||||||
| Deferred financing costs, net |
18,591 | 20,725 | ||||||
| Other assets, net |
62,786 | 57,024 | ||||||
| Total other assets |
416,446 | 423,383 | ||||||
| Total assets |
$ | 2,191,342 | $ | 2,229,618 | ||||
| Current liabilities: |
||||||||
| Accounts payable |
$ | 19,173 | $ | 38,739 | ||||
| Accrued payroll and related expenses |
28,737 | 26,553 | ||||||
| Income taxes payable |
24,715 | 36,765 | ||||||
| Accrued partner distributions |
340 | 3,041 | ||||||
| Accrued interest payable |
40,441 | 11,517 | ||||||
| Self-insurance reserves |
13,639 | 12,398 | ||||||
| Other current liabilities |
40,592 | 43,145 | ||||||
| Current maturities of long-term debt |
15,753 | 30,007 | ||||||
| Total current liabilities |
183,390 | 202,165 | ||||||
| Long-term debt, net of current maturities |
1,397,535 | 1,407,952 | ||||||
| Deferred income taxes |
39,224 | 39,224 | ||||||
| Other long-term liabilities |
17,147 | 18,424 | ||||||
| Partners’ capital |
||||||||
| Partners’ capital |
593,502 | 590,012 | ||||||
| Accumulated deficit |
(39,456 | ) | (28,159 | ) | ||||
| Total partners’ capital |
554,046 | 561,853 | ||||||
| Total liabilities and partners’ capital |
$ | 2,191,342 | $ | 2,229,618 | ||||
See accompanying notes to condensed consolidated financial statements
7
TRUMP ENTERTAINMENT RESORTS HOLDINGS, L.P.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(unaudited)
(dollars in thousands)
| Reorganized Company | ||||||||
| Three Months Ended September 30, |
||||||||
| 2006 | 2005 | |||||||
| Revenues: |
||||||||
| Gaming |
$ | 301,781 | $ | 290,104 | ||||
| Rooms |
22,811 | 21,278 | ||||||
| Food and beverage |
37,594 | 34,992 | ||||||
| Other |
15,999 | 13,802 | ||||||
| 378,185 | 360,176 | |||||||
| Less promotional allowances |
(89,817 | ) | (82,909 | ) | ||||
| Net revenues |
288,368 | 277,267 | ||||||
| Costs and expenses: |
||||||||
| Gaming |
135,577 | 129,747 | ||||||
| Rooms |
7,901 | 7,141 | ||||||
| Food and beverage |
11,936 | 11,913 | ||||||
| Selling, general and administrative |
73,552 | 73,307 | ||||||
| Selling, general and administrative-related party |
610 | 508 | ||||||
| Depreciation and amortization |
17,814 | 16,244 | ||||||
| Reorganization expense and related costs |
— | 5,741 | ||||||
| 247,390 | 244,601 | |||||||
| Income from operations |
40,978 | 32,666 | ||||||
| Non-operating income (expense): |
||||||||
| Interest income |
2,481 | 696 | ||||||
| Interest expense |
(33,029 | ) | (32,735 | ) | ||||
| (30,548 | ) | (32,039 | ) | |||||
| Income before income taxes and discontinued operations |
10,430 | 627 | ||||||
| Provision for income taxes |
(2,556 | ) | (2,335 | ) | ||||
| Income (loss) from continuing operations |
7,874 | (1,708 | ) | |||||
| Income from discontinued operations: |
||||||||
| Trump Indiana |
— | 6,786 | ||||||
| Provision for income taxes |
— | (851 | ) | |||||
| Income from discontinued operations |
— | 5,935 | ||||||
| Net income |
$ | 7,874 | $ | 4,227 | ||||
See accompanying notes to condensed consolidated financial statements
8
TRUMP ENTERTAINMENT RESORTS HOLDINGS, L.P.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(unaudited)
(dollars in thousands)
| Reorganized Company | Predecessor Company |
|||||||||||||
| Nine Months Ended September 30, 2006 |
For the Period May 20, 2005 |
For the Period From January 1, 2005 Through May 19, 2005 |
||||||||||||
| Revenues: |
||||||||||||||
| Gaming |
$ | 822,640 | $ | 414,380 | $ | 398,409 | ||||||||
| Rooms |
59,044 | 30,006 | 26,360 | |||||||||||
| Food and beverage |
94,785 | 50,232 | 44,198 | |||||||||||
| Other |
33,796 | 18,870 | 12,809 | |||||||||||
| 1,010,265 | 513,488 | 481,776 | ||||||||||||
| Less promotional allowances |
(228,273 | ) | (120,366 | ) | (117,337 | ) | ||||||||
| Net revenues |
781,992 | 393,122 | 364,439 | |||||||||||
| Costs and expenses: |
||||||||||||||
| Gaming |
374,774 | 188,623 | 186,545 | |||||||||||
| Rooms |
23,273 | 10,319 | 9,805 | |||||||||||
| Food and beverage |
32,268 | 17,116 | 13,767 | |||||||||||
| Selling, general and administrative |
214,291 | 102,195 | 92,957 | |||||||||||
| Selling, general and administrative-related party |
1,930 | 8,893 | 775 | |||||||||||
| Depreciation and amortization |
51,746 | 22,259 | 35,753 | |||||||||||
| Reorganization expense (income) and related costs |
— | 7,671 | (25,967 | ) | ||||||||||
| 698,282 | 357,076 | 313,635 | ||||||||||||
| Income from operations |
83,710 | 36,046 | 50,804 | |||||||||||
| Non-operating income (expense): |
||||||||||||||
| Interest income |
8,330 | 918 | 836 | |||||||||||
| Interest expense |
(98,100 | ) | (47,357 | ) | (86,862 | ) | ||||||||
| Other non-operating income, net |
— | 65 | — | |||||||||||
| (89,770 | ) | (46,374 | ) | (86,026 | ) | |||||||||
| Loss before income taxes, minority interest, discontinued operations and extraordinary item |
(6,060 | ) | (10,328 | ) | (35,222 | ) | ||||||||
| Provision for income taxes |
(5,387 | ) | (3,046 | ) | (2,074 | ) | ||||||||
| Minority interest |
150 | — | — | |||||||||||
| Loss from continuing operations |
(11,297 | ) | (13,374 | ) | (37,296 | ) | ||||||||
| Income from discontinued operations: |
||||||||||||||
| Trump Indiana |
— | 8,937 | 142,959 | |||||||||||
| Provision for income taxes |
— | (1,292 | ) | (24,211 | ) | |||||||||
| Income from discontinued operations |
— | 7,645 | 118,748 | |||||||||||
| (Loss) income before extraordinary item |
(11,297 | ) | (5,729 | ) | 81,452 | |||||||||
| Extraordinary gain on extinguishment of debt |
— | — | 196,932 | |||||||||||
| Net (loss) income |
$ | (11,297 | ) | $ | (5,729 | ) | $ | 278,384 | ||||||
See accompanying notes to condensed consolidated financial statements
9
TRUMP ENTERTAINMENT RESORTS HOLDINGS, L.P.
CONSOLIDATED STATEMENTS OF PARTNERS’ CAPITAL
(unaudited)
(dollars in thousands)
| Partners’ Capital |
Accumulated Deficit |
Total Partners’ Capital |
||||||||||
| Reorganized Company: |
||||||||||||
| Balance, December 31, 2005 |
$ | 590,012 | $ | (28,159 | ) | $ | 561,853 | |||||
| Stock-based compensation expense |
4,209 | — | 4,209 | |||||||||
| Partnership distributions |
(719 | ) | (719 | ) | ||||||||
| Net loss |
— | (11,297 | ) | (11,297 | ) | |||||||
| Balance, September 30, 2006 |
$ | 593,502 | $ | (39,456 | ) | $ | 554,046 | |||||
See accompanying notes to consolidated financial statements
10
TRUMP ENTERTAINMENT RESORTS HOLDINGS, L.P.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(dollars in thousands)
| Reorganized Company | Predecessor Company |
|||||||||||||
| Nine Months Ended September 30, 2006 |
For the Period May 20, 2005 |
For the Period From January 1, 2005 Through May 19, 2005 |
||||||||||||
| (unaudited) | (unaudited) | |||||||||||||
| CASH FLOWS FROM OPERATING ACTIVITIES: |
||||||||||||||
| Net (loss) income |
$ | (11,297 | ) | $ | (5,729 | ) | $ | 278,384 | ||||||
| Adjustments to reconcile net (loss) income to net cash flows provided by (used in) operating activities: |
||||||||||||||
| Non-cash reorganization (income) expense, net |
— | — | (210,117 | ) | ||||||||||
| Deferred and non-cash charge in lieu of income taxes |
1,875 | 20,000 | — | |||||||||||
| Minority interest in net (loss) income |
(150 | ) | — | — | ||||||||||
| Extraordinary gain on extinguishment of debt |
— | — | (196,932 | ) | ||||||||||
| Depreciation and amortization |
51,746 | 24,931 | 38,486 | |||||||||||
| Amortization of deferred financing costs |
1,954 | 974 | 665 | |||||||||||
| Provisions for losses on receivables |
3,753 | 837 | 1,445 | |||||||||||
| Stock-based compensation expense |
4,209 | — | — | |||||||||||
| Valuation allowance - CRDA investments |
3,396 | 1,785 | 1,757 | |||||||||||
| Compensatory stock warrants |
— | 8,000 | — | |||||||||||
| Other |
(644 | ) | 1,528 | 755 | ||||||||||
| Changes in operating assets and liabilities: |
||||||||||||||
| (Increase) decrease in accounts receivable |
(10,164 | ) | 485 | 546 | ||||||||||
| (Increase) decrease in inventories |
(128 | ) | 161 | (485 | ) | |||||||||
| Increase in other current assets |
(5,529 | ) | (5,290 | ) | (2,143 | ) | ||||||||
| Decrease (increase) in other assets |
763 | (2,662 | ) | (842 | ) | |||||||||
| Decrease in due to affiliates, net |
— | (663 | ) | (538 | ) | |||||||||
| (Decrease) increase in accounts payable, accrued expenses and other current liabilities |
(24,379 | ) | (41,838 | ) | 60,847 | |||||||||
| Increase (decrease) in accrued interest payable |
28,924 | (45,342 | ) | 68,866 | ||||||||||
| (Decrease) increase in other long-term liabilities |
(1,277 | ) | (4,590 | ) | 3,835 | |||||||||
| Net cash flows provided by (used in) operating activities including discontinued operations |
43,052 | (47,413 | ) | 44,529 | ||||||||||
| CASH FLOWS FROM INVESTING ACTIVITIES: |
||||||||||||||
| Purchase of property and equipment, net |
(91,377 | ) | (37,784 | ) | (39,033 | ) | ||||||||
| Decrease in restricted cash |
17,678 | — | — | |||||||||||
| Purchases of CRDA investments, net |
(9,921 | ) | (3,785 | ) | (6,115 | ) | ||||||||
| Other |
— | 1,426 | — | |||||||||||
| Net cash flows used in investing activities |
(83,620 | ) | (40,143 | ) | (45,148 | ) | ||||||||
| CASH FLOWS FROM FINANCING ACTIVITIES: |
||||||||||||||
| Borrowings from revolving credit facility, net |
— | 28,700 | — | |||||||||||
| Borrowings from term loan |
— | 150,000 | — | |||||||||||
| Repayments of term loan |
(1,125 | ) | (375 | ) | — | |||||||||
| Repayment of (borrowings from) DIP facility, net |
— | (53,958 | ) | 18,172 | ||||||||||
| Repayment of other long-term debt |
(22,803 | ) | (11,779 | ) | — | |||||||||
| Repayment of long-term debt subject to compromise |
— | — | (13,439 | ) | ||||||||||
| Payment of deferred financing costs |
(597 | ) | (10,538 | ) | (2,926 | ) | ||||||||
| Contributed capital from reorganization |
— | 55,000 | — | |||||||||||
| Partnership distributions |
(3,420 | ) | — | — | ||||||||||
| Cash distributions to noteholders and stockholders |
— | (41,120 | ) | — | ||||||||||
| Other |
312 | — | — | |||||||||||
| Net cash flows (used in) provided by financing activities |
(27,633 | ) | 115,930 | 1,807 | ||||||||||
| Net (decrease) increase in cash and cash equivalents |
(68,201 | ) | 28,374 | 1,188 | ||||||||||
| Cash and cash equivalents at beginning of period |
228,550 | 106,450 | 105,262 | |||||||||||
| Cash and cash equivalents at end of period |
$ | 160,349 | $ | 134,824 | $ | 106,450 | ||||||||
| SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION: |
||||||||||||||
| Cash paid for interest |
$ | 67,780 | $ | 77,269 | $ | 16,129 | ||||||||
| Cash paid for income taxes |
525 | 19,225 | 6,014 | |||||||||||
| Equipment purchased under capital leases |
277 | 10,270 | 122 | |||||||||||
| Debt of Reorganized Company issued in exchange for debt and accrued interest of Predecessor Company |
(1,020 | ) | 1,250,000 | — | ||||||||||
| Stock and minority interest of Reorganized Company issued in exchange for debt and accrued interest of Predecessor Company |
— | 527,300 | — | |||||||||||
See accompanying notes to condensed consolidated financial statements
11
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(unaudited)
(dollars in thousands, except share and per share data)
(1) Organization, Reorganization and Emergence from Chapter 11
Organization - The accompanying consolidated financial statements include those of Trump Entertainment Resorts, Inc. (“TER,” formerly Trump Hotels & Casino Resorts, Inc.), a Delaware corporation, its majority-owned subsidiary, Trump Entertainment Resorts Holdings, L.P. (“TER Holdings,” formerly Trump Hotels & Casino Resorts Holdings, L.P. “THCR”), a Delaware limited partnership, and their respective subsidiaries. Except where otherwise noted, the words “we,” “us,” “our” and similar terms, as well as “Company,” refer to TER and all of its subsidiaries. Through TER Holdings and its wholly owned subsidiaries we own and operate the Trump Taj Mahal Casino Resort (“Trump Taj Mahal”), Trump Plaza Hotel and Casino (“Trump Plaza”) and Trump Marina Hotel Casino (“Trump Marina”) in Atlantic City, New Jersey. During September 2005, TER Keystone Development Co., LLC (“TER Keystone”) was formed by TER Holdings to pursue a gaming license in Philadelphia, Pennsylvania. Prior to the December 2005 sale of our former subsidiary Trump Indiana, Inc. (“Trump Indiana”), we also owned and operated a riverboat casino in Gary, Indiana.
TER currently beneficially owns an approximate 76.5% profits interest in TER Holdings, as both a general and limited partner, and Donald J. Trump (“Mr. Trump”) owns directly and indirectly an approximate 23.5% profits interest in TER Holdings, as a limited partner. Mr. Trump’s limited partnership interests are exchangeable at Mr. Trump’s option into 9,377,484 shares of TER’s Common Stock, par value $0.001 per share (the “TER Common Stock”) (subject to certain adjustments), which, if exchanged, would give Mr. Trump ownership of an aggregate of approximately 26.3% of the TER Common Stock (including shares currently held directly by Mr. Trump) or approximately 28.8% assuming currently exercisable warrants held by Mr. Trump were exercised. Mr. Trump also holds 900 shares of TER’s Class B Common Stock, par value $0.001 per share (the “Class B Common Stock”). The Class B Common Stock has the voting equivalency of the 9,377,484 shares of TER Common Stock for which Mr. Trump’s limited partnership interests in TER Holdings may be exchanged, and generally votes on all matters with the TER Common Stock as a single class. The Class B Common Stock is redeemable at par to the extent that Mr. Trump exchanges his limited partnership interests in TER Holdings for TER Common Stock and is not entitled to receive any dividends.
Reorganization and Emergence from Chapter 11 - On November 21, 2004, our predecessor, Trump Hotels & Casino Resorts, Inc. and its subsidiaries (collectively, the “Debtors”) filed voluntary petitions for relief under Chapter 11 of the United States Bankruptcy Code in the United States Bankruptcy Court for the District of New Jersey (the “Bankruptcy Court”), as part of a prearranged plan of reorganization. While in bankruptcy, the Debtors continued to manage their properties and operate their businesses as “debtors-in-possession” under the jurisdiction of the Bankruptcy Court.
On April 5, 2005, the Bankruptcy Court entered an order confirming the Second Amended and Restated Joint Plan of Reorganization, dated as of March 30, 2005, of the Debtors, as amended (the “Plan”). The Plan became effective on May 20, 2005 (the “Effective Date”), at which time all material conditions to the Plan were satisfied and the Debtors emerged from Chapter 11. Our Annual Report on Form 10-K for the year ended December 31, 2005 as filed with the Securities and Exchange Commission (the “SEC”) contains disclosures regarding the reorganization, including fresh-start accounting, reorganization expense (income) and related costs, $8.0 million in ten year warrants issued to Mr. Trump and the extraordinary gain on extinguishment of debt recorded by our Predecessor Company.
(2) Basis of Presentation
The accompanying condensed consolidated financial statements have been prepared in accordance with the rules and regulations of the SEC and in accordance with accounting principles generally accepted in the United States of America for interim financial reporting. 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. The accompanying condensed consolidated financial statements have been prepared without audit. In the opinion of management, all adjustments, including normal recurring adjustments necessary to present fairly the financial position, results of operations and cash flows for the periods presented, have been made. The results for interim periods are not necessarily indicative of results that may be expected for any other interim period or for the full year. These condensed consolidated financial statements should be read in conjunction with the consolidated financial statements and notes thereto included in our Annual Report on Form 10-K for the year ended December 31, 2005 as filed with the SEC and all of our other filings, including Current Reports on Form 8-K, filed with the SEC after such date and through the date of this report, available on the SEC’s website at www.sec.gov or our website at www.trumpcasinos.com.
12
The condensed consolidated financial statements include our accounts and those of our controlled subsidiaries and partnerships. We have eliminated all significant intercompany transactions. We view each casino property as an operating segment and all such operating segments have been aggregated into one reporting segment.
Our discontinued operations include the results of Trump Indiana, which was sold on December 21, 2005. Net revenues for Trump Indiana were $36,330, $51,942 and $52,160 for the three months ended September 30, 2005, the period from May 20, 2005 through September 30, 2005 and the period from January 1, 2005 through May 19, 2005, respectively. Included in income from discontinued operations is an allocation of interest expense based on Trump Indiana’s nonrelated party debt assumed by the purchaser of Trump Indiana of $53, $76 and $17 for the three months ended September 30, 2005, the period from May 20, 2005 through September 30, 2005 and the period from January 1, 2005 through May 19, 2005, respectively. Included in income from discontinued operations for the period from January 1, 2005 to May 19, 2005 is $134,750 of net reorganization gain.
From the filing of the Chapter 11 petition to the Effective Date, our Predecessor Company operated as debtors-in-possession under the jurisdiction of the Bankruptcy Court. Accordingly, the consolidated financial statements for periods from the filing of the Chapter 11 petition through the emergence from Chapter 11 were prepared in accordance with the American Institute of Certified Public Accountants Statement of Position 90-7, “Financial Reporting by Entities in Reorganization under the Bankruptcy Code” (“SOP 90-7”). SOP 90-7 required the reporting of pre-petition liabilities subject to compromise separately on the balance sheet at an estimate of the amount ultimately allowable by the Bankruptcy Court. SOP 90-7 also required separate reporting of certain expenses relating to the Debtors’ Chapter 11 filings as reorganization items.
Upon emergence from Chapter 11, we adopted fresh-start reporting in accordance with SOP 90-7. Under fresh-start reporting, a new entity was deemed to have been created for financial reporting purposes and the recorded amounts of assets and liabilities were adjusted to reflect their estimated fair values. The term “Predecessor Company” refers to the Company and its subsidiaries for periods prior to and including May 19, 2005, and the term “Reorganized Company” refers to the Company and its subsidiaries for periods on and subsequent to May 20, 2005.
As a result of the adoption of fresh-start reporting, the Reorganized Company’s post-emergence financial statements are generally not comparable with the financial statements of the Predecessor Company prior to its emergence from bankruptcy, including the historical financial statements included in this report. Due to the adoption of fresh-start reporting, the Predecessor Company and Reorganized Company financial statements are prepared on different bases.
Under the terms of the Predecessor Company’s Reorganization Plan (the “Plan”), any of the Reorganized Company’s Senior Secured Notes, cash, common stock or Class A Warrants issued to the Plan’s disbursing agent and not distributed as of May 20, 2006, revert to the Reorganized Company. As of May 20, 2006, undistributed amounts included $1,020 in Senior Secured Notes, $414 in cash and 36,809 shares of TER Common Stock. Goodwill has been reduced by $1,434 and our Senior Secured Notes have been reduced by $1,020 reflecting this matter.
13
(3) Long-Term Debt
Long-term debt consists of the following:
| Reorganized Company | ||||||
| September 30, 2006 |
December 31, 2005 | |||||
| Long-term debt: | ||||||
| Senior Secured Credit Facility: |
||||||
| Senior Secured Line of Credit, expires May 20, 2010 interest payable at least quarterly at either LIBOR or prime plus a margin |
$ | — | $ | — | ||
| Term Loan, matures May 20, 2012, interest and principal payments due quarterly at either LIBOR and/or prime plus a margin (8.03% at September 30, 2006) |
148,125 | 149,250 | ||||
| 148,125 | 149,250 | |||||
| Senior Secured Notes, due June 1, 2015, interest payable semi-annually at 8.5%, first interest payment due December 1, 2005 |
1,248,980 | 1,250,000 | ||||
| Other: |
||||||
| Capitalized lease obligations, payments due at various dates from 2006 through 2009, secured by slot and other equipment, interest at 4.3% to 20% |
16,183 | 38,709 | ||||
| Total long-term debt |
1,413,288 | 1,437,959 | ||||
| Less: current maturities |
15,753 | 30,007 | ||||
| Long-term debt, net of current maturities |
$ | 1,397,535 | $ | 1,407,952 | ||
Senior Secured Credit Facility - On May 20, 2005, we and TER Holdings entered into an agreement for a $500,000 senior secured credit facility (the “Credit Facility”) with a group of lenders. Pursuant to the Credit Facility, as amended, the lenders have agreed to provide TER Holdings (i) a revolving credit facility in the amount of $200,000, (ii) a single-draw term loan facility in the amount of $150,000, which was drawn on the Effective Date, and (iii) a delayed draw term loan facility in the amount of $150,000, which may be drawn in multiple borrowings through May 20, 2007. The Credit Facility, as amended, also includes a sub-facility for letters of credit in an amount of up to $70,000. At September 30, 2006, we have outstanding letters of credit of $40,000 under the Credit Facility.
Proceeds from the term loans may be utilized to (i) pay off amounts outstanding under the debtor-in-possession financing, which occurred on the Effective Date, (ii) fund the construction of a new tower at the Trump Taj Mahal, (iii) pay fees and expenses in connection with our restructuring, and (iv) provide for ongoing working capital and general corporate needs; provided that $150,000 of the term loan is restricted to fund construction of a new tower at Trump Taj Mahal. The revolving portion of the Credit Facility may be used to fund ongoing working capital requirements of TER Holdings and its subsidiaries and other general corporate purposes. The revolving credit facility matures on May 20, 2010. The term loan matures on May 20, 2012, and must be repaid during the final year of such loans in equal quarterly amounts, subject to amortization of approximately 1.0% per year prior to the final year.
Borrowings under the Credit Facility are secured by a first priority security interest on substantially all the assets of TER Holdings and its subsidiaries. TER Holdings’ obligations under the Credit Facility are guaranteed by us and each of our direct and indirect subsidiaries except TER Keystone. We and our subsidiaries are subject to a number of affirmative and negative covenants and must comply with certain financial covenants including maintenance of a leverage ratio of 8.75 to 1, a first lien coverage ratio of 2.25 to 1 and an interest coverage ratio of 1.35 to 1. The Credit Facility restricts our ability to make certain distributions or pay dividends.
On September 28, 2006, we and TER Holdings entered into Amendment No. 2 to our Credit Facility. Under the terms of the Amendment, the definition of earnings before interest expense, income taxes, depreciation and amortization (“EBITDA”) for financial covenant purposes was modified. Under the new definition, we are allowed to adjust our calculation of EBITDA for the impact of the three-day closing of our gaming operations during July 2006 as mandated by the State of New Jersey Casino Control Commission. At September 30, 2006, we were in compliance with our covenants.
Senior Secured Notes - On the Effective Date, TER Holdings and its wholly owned finance subsidiary, Trump Entertainment Resorts Funding, Inc. (“TER Funding”) issued $1,250,000 of Senior Secured Notes (“Senior Notes”). These Senior Notes were used to pay distributions under the Plan. The Senior Notes due June 1, 2015, bear interest at 8.5% per annum. $1,020 of the Senior Secured Notes were returned to us under the terms of the Predecessor Company’s Bankruptcy Plan and retired on May 20, 2006.
14
$730,000 of the aggregate principal amount of the Senior Notes is nonrecourse to the issuers and to the partners of TER Holdings (the “Qualified Portion”). $520,000 of the aggregate principal amount of the Senior Notes is recourse to the issuers and to TER, in its capacity as general partner of TER Holdings (the “Non-Qualified Portion”).
The Non-Qualified Portion and Qualified Portion are recalculated on a periodic basis no less frequently than annually based on certain tax considerations, provided that in no event will the Qualified Portion exceed $730,000 in aggregate principal amount of Senior Notes.
TER Holdings and TER Funding are co-issuers of the Senior Notes. All other subsidiaries of TER Holdings, except TER Keystone, are guarantors (the “Guarantors”) of the Senior Notes on a joint and several basis.
The Senior Notes are senior obligations of the issuers and are guaranteed on a senior basis by the Guarantors and rank senior in right of payment to the issuers’ and Guarantors’ future subordinated indebtedness. Notwithstanding the foregoing, because amounts borrowed under the Credit Facility are secured by substantially all the assets of the issuers and the Guarantors on a priority basis, the Senior Notes and the guarantees thereof are effectively subordinated to amounts borrowed under the Credit Facility.
The Senior Notes are secured by substantially all of our real property and incidental personal property, subject to liens securing amounts borrowed under the Credit Facility and certain permitted prior liens. The issuers and Guarantors of the Senior Notes are subject to certain covenants under the indenture governing the Senior Notes. Under these covenants, TER Holdings and the Guarantors are subject to limitations on the incurrence of additional indebtedness and payment of dividends.
15
(4) Earnings Per Share
The computations of basic and diluted earnings (loss) per share are as follows:
| Reorganized Company | |||||||
| Three Months Ended September 30, |
|||||||
| (in thousands, except share and per share data) |
2006 | 2005 | |||||
| Numerator for basic earnings per share: |
|||||||
| Income (loss) from continuing operations |
$ | 5,833 | $ | (1,306 | ) | ||
| Income from discontinued operations |
— | 4,540 | |||||
| Net income |
$ | 5,833 | $ | 3,234 | |||
| Numerator for diluted earnings per share: |
|||||||
| Income (loss) from continuing operations |
$ | 5,833 | $ | (1,306 | ) | ||
| Addback: Minority interest to reflect dilution of redeemable partnership interest |
1,850 | — | |||||
| Income (loss) from continuing operations, with addback of minority interest related to redeemable partnership interest |
7,683 | (1,306 | ) | ||||
| Income from discontinued operations |
— | 4,540 | |||||
| Net income |
$ | 7,683 | $ | 3,234 | |||
| Denominator: |
|||||||
| Denominator for basic earnings per share - Weighted average shares outstanding including Class A Warrants |
30,977,329 | 27,064,819 | |||||
| Effect of dilutive securities (computed using the treasury stock method): |
|||||||
| Redeemable partnership interest in TER Holdings and Class B Common Stock and stock options |
9,383,448 | — | |||||
| Denominator for diluted earnings per share - adjusted weighted-average shares |
40,360,777 | 27,064,819 | |||||
| Basic net income (loss) per share: |
|||||||
| Continuing operations |
$ | 0.19 | $ | (0.05 | ) | ||
| Discontinued operations |
— | 0.17 | |||||
| Net income |
$ | 0.19 | $ | 0.12 | |||
| Diluted net income (loss) per share: |
|||||||
| Continuing operations |
$ | 0.19 | $ | (0.05 | ) | ||
| Discontinued operations |
— | 0.17 | |||||
| Net income |
$ | 0.19 | $ | 0.12 | |||
| Reorganized Company | Predecessor Company |
|||||||||||||
| (in thousands, except share and per share data) |
Nine Months Ended September 30, 2006 |
For the Period May 20, 2005 Through |
For the
Period Through May 19, 2005 |
|||||||||||
| Numerator for basic and diluted earnings per share: |
||||||||||||||
| Loss from continuing operations |
$ | (8,824 | ) | $ | (10,230 | ) | $ | (37,296 | ) | |||||
| Income from discontinued operations |
— | 5,848 | 118,748 | |||||||||||
| Extraordinary gain on extinguishment of debt |
— | — | 196,932 | |||||||||||
| Net (loss) income |
$ | (8,824 | ) | $ | (4,382 | ) | $ | 278,384 | ||||||
| Denominator: |
||||||||||||||
| Denominator for basic earnings per share - Weighted average shares outstanding including Class A Warrants |
30,897,495 | 27,052,393 | 29,904,764 | |||||||||||
| Effect of dilutive securities (computed using the treasury stock method): |
||||||||||||||
| Redeemable partnership interest in TER Holdings and Class B Common Stock and stock options |
— | — | — | |||||||||||
| Denominator for diluted earnings per share - adjusted weighted-average shares |
30,897,495 | 27,052,393 | 29,904,764 | |||||||||||
| Basic net (loss) income per share: |
||||||||||||||
| Continuing operations |
$ | (0.29 | ) | $ | (0.38 | ) | $ | (1.25 | ) | |||||
| Discontinued operations |
— | 0.22 | 3.97 | |||||||||||
| Extraordinary gain on extinguishment of debt |
— | — | 6.59 | |||||||||||
| Net (loss) income |
$ | (0.29 | ) | $ | (0.16 | ) | $ | 9.31 | ||||||
| Diluted net (loss) income per share: |
||||||||||||||
| Continuing operations |
$ | (0.29 | ) | $ | (0.38 | ) | $ | (1.25 | ) | |||||
| Discontinued operations |
— | 0.22 | 3.97 | |||||||||||
| Extraordinary gain on extinguishment of debt |
— | — | 6.59 | |||||||||||
| Net (loss) income |
$ | (0.29 | ) | $ | (0.16 | ) | $ | 9.31 | ||||||
16
Potentially dilutive common shares excluded from the computation of diluted earnings (loss) per share due to anti-dilution are as follows:
| Reorganized Company | ||||
| Three Months Ended September 30, | ||||
| 2006 | 2005 | |||
| Potentially dilutive common shares: |
||||
| Class B Common Stock |
— | 9,377,484 | ||
| Ten year warrants |
1,446,706 | 1,446,706 | ||
| Total |
1,446,706 | 10,824,190 | ||
| Reorganized Company | Predecessor Company | |||||||
| Nine Months Ended September 30, 2006 |
For the Period May 20, 2005 |
For the Period From January 1, 2005 Through May 19, 2005 | ||||||
| Potentially dilutive common shares: |
||||||||
| Class B Common Stock |
9,377,484 | 9,377,484 | 13,918,723 | |||||
| Ten year warrants |
1,446,706 | 1,446,706 | — | |||||
| Employee stock options |
300,000 | — | 2,474,500 | |||||
| Total |
11,124,190 | 10,824,190 | 16,393,223 | |||||
During periods reflecting income from continuing operations, minority interest recorded in the statement of operations is added to our income from continuing operations and net income to calculate diluted earnings per share as the Class B Common Stock becomes dilutive. During periods reflecting a loss from continuing operations, the Class B Common Stock is anti-dilutive.
The shares attributable to our Class A Warrants are considered outstanding for both basic and diluted earnings per share, for all periods from May 20, 2005 through May 20, 2006 (date shares were issued) as there were no events precluding their eventual issuance.
(5) Stock-based Compensation Plans
Reorganized Company
Our shareholders approved the 2005 Incentive Award Plan (the “2005 Stock Plan”) allowing for incentive stock options, nonqualified stock options, restricted stock, stock appreciation rights, performance shares and other stock-based awards to our officers, employees, consultants and independent directors. A total of 4,000,000 shares of Common Stock have been reserved for the issuance of awards available for grant under the 2005 Stock Plan.
In accordance with the revised provisions of Statement of Financial Accounting Standards (“SFAS”) Statement 123, “Share Based Payment” (“FAS 123R”) which we adopted on May 20, 2005, we recorded compensation expense for our stock option and restricted stock awards of $1,207 and $4,209 for the three and nine months ended September 30, 2006. Such expense is included in general and administrative expenses.
Restricted Stock – At September 30, 2006, there were 305,556 shares of nonvested restricted stock issued and outstanding. The remaining unrecognized compensation expense for nonvested restricted stock to be recognized over the remaining contractual life was $2,961. The weighted-average remaining contractual life of outstanding restricted stock grants at September 30, 2006 was 1.1 years.
Stock Options – At September 30, 2006 there were 300,000 stock options outstanding which vest in 100,000 share increments on July 31, 2008, 2009 and 2010. At September 30, 2006, the remaining unrecognized compensation expense for nonvested stock options to be recognized over the remaining contractual life was $1,803.
17
(6) Income Taxes
Our income tax provision attributable to continuing operations and discontinued operations is as follows:
| Reorganized Company | ||||||
| Three Months Ended September 30, | ||||||
| 2006 | 2005 | |||||
| Continuing operations |
$ | 2,756 | $ | 2,335 | ||
| Discontinued operations |
— | 851 | ||||
| $ | 2,756 | $ | 3,186 | |||
| Reorganized Company | Predecessor Company | ||||||||||
| Nine Months Ended September 30, 2006 |
For the Period From May 20,
2005 |
For the Period From January 1, 2005 Through May 19, 2005 | |||||||||
| Continuing operations |
$ | 5,587 | $ | 3,046 | $ | 2,074 | |||||
| Discontinued operations |
— | 1,292 | 24,211 | ||||||||
| $ | 5,587 | $ | 4,338 | $ | 26,285 | ||||||
The income tax provision attributable to income (loss) from continuing operations before income taxes is as follows:
| Reorganized Company | ||||||
| Three Months Ended September 30, | ||||||
| 2006 | 2005 | |||||
| Current - federal |
$ | — | $ | — | ||
| Deferred - federal |
— | — | ||||
| Provision for federal income taxes |
— | — | ||||
| Current - state |
1,156 | 2,335 | ||||
| Deferred - state |
— | — | ||||
| Provision for state income taxes |
1,156 | 2,335 | ||||
| Non-cash charge in lieu of taxes: |
1,600 | — | ||||
| $ | 2,756 | $ | 2,335 | |||
| Reorganized Company | Predecessor Company | ||||||||||
| Nine Months Ended September 30, 2006 |
For the Period From May 20,
2005 |
For the Period From January 1, 2005 Through May 19, 2005 | |||||||||
| Current - federal |
$ | — | $ | — | $ | — | |||||
| Deferred - federal |
— | — | — | ||||||||
| Provision for federal income taxes |
— | — | — | ||||||||
| Current - state |
3,512 | 3,046 | 2,074 | ||||||||
| Deferred - state |
— | — | — | ||||||||
| Provision for state income taxes |
3,512 | 3,046 | 2,074 | ||||||||
| Non-cash charge in lieu of taxes |
2,075 | — | — | ||||||||
| $ | 5,587 | $ | 3,046 | $ | 2,074 | ||||||
18
Our current federal income tax provision reflects the utilization of net operating loss carryforwards and our deferred income tax provision reflects the impact of changes to valuation allowances. Predecessor Company net operating losses utilized to offset taxable income of the Reorganized Company are recorded in our provision for income taxes as a non-cash charge in lieu of taxes and as a reduction to goodwill, if available, and then to other intangible assets and additional paid-in-capital to the extent goodwill would be reduced to zero. For the nine months ended September 30, 2006, our goodwill has been reduced by $2,075 for our non-cash charge in lieu of taxes.
Federal and State Income Tax Audits
Certain of our subsidiaries are currently involved in examinations with the IRS concerning their federal partnership income tax returns for the tax years 2002 through 2004. While any adjustments resulting from this examination could affect their specific state income tax returns, we do not believe that adjustments, if any, will have a material adverse effect on their financial condition or results of operations.
At September 30, 2006, we have accrued $6,900 to reflect Trump Indiana’s expected federal and state income amounts due (including interest) related to Trump Indiana’s IRS audit for the years 1996 through 2004 and the impact on the period from January 1, 2005 through December 21, 2005, the date of the sale of Trump Indiana to Majestic Star Casino, LLC (“Majestic Star”). In accordance with the terms of our Stock Purchase Agreement with Majestic Star, TER Holdings has assumed the liability for expected federal and state income taxes (including interest) related to Trump Indiana for the tax years 1995 through December 21, 2005. In June 2006, we reached a settlement with the IRS for the years 1995 through 1997. Based upon this settlement, management reduced the estimated accrual by $6,000 for the years 1995 through 1997 and all subsequent years through December 21, 2005 and has reduced goodwill accordingly.
State income taxes for our New Jersey operations are computed under the alternative minimum assessment method. We believe our New Jersey partnerships are exempt from these taxes and, as such, have not remitted payments of the amounts provided. The New Jersey Division of Taxation has issued an assessment to collect the unpaid taxes for the tax years 2002 and 2003. At September 30, 2006, we have accrued $22,300 for taxes and interest relating to this alternative minimum tax assessment for 2002 and 2003, as well as the open years 2004 through September 30, 2006. We are currently in discussions with the New Jersey Division of Taxation regarding settlement of these assessments.
Tax Distributions
TER Holdings’ partnership agreement requires distributions to its partners, TER and Mr. Trump, sufficient in amount to cover all federal, state and local income taxes incident to their ownership of TER Holdings, including special allocations of income, gains, losses, deductions and credits. TER Holdings made distributions of $3,420 during the nine months ended September 30, 2006 and recorded distributions payable of $340 during the three months ended September 30, 2006. In addition, the partnership agreement contains an indemnification clause which may result in additional payments to Mr. Trump upon the disposition of any of our existing casino properties. The amount of these indemnification payments would be sufficient in amount to cover the impact of the disposition on Mr. Trump’s federal, state and local income tax positions up to $100,000 and would only be due if Mr. Trump would not consent to the transaction.
Recently Issued Accounting Pronouncements
In July 2006, the Financial Accounting Standards Board (“FASB”) issued Interpretation No. 48 (“FIN 48”), “Accounting for Uncertainty in Income Taxes,” which clarifies the accounting for uncertainty in income taxes recognized in the financial statements in accordance with FASB Statement No. 109, “Accounting for Income Taxes.” FIN 48 provides guidance on the financial statement recognition and measurement of a tax position taken or expected to be taken in a tax return. FIN 48 also provides guidance on derecognition, classification, interest and penalties, accounting in interim periods, disclosures, and transition. FIN 48 is effective for fiscal years beginning after December 15, 2006. We are currently evaluating the impact of FIN 48 on our consolidated financial statements.
19
(7) Subsidiary Guarantors
As described in Note 3, TER Holdings and its wholly-owned finance subsidiary, TER Funding, are co-issuers of our Senior Notes and the Guarantors are guarantors of the Senior Notes on a joint and several basis. TER Funding has no assets, operations, revenues or cash flows other than those related to the issuance, administration and repayment of our Senior Notes. As the assets, interest expense and cash flows relating to our Senior Notes are included in columns captioned “TER Holdings” in the following condensed consolidating financial statements, we have not shown TER Funding as a separate column in our subsidiary guarantor consolidating financial statements contained in this footnote.
Condensed balance sheets as of September 30, 2006 and December 31, 2005 are as follows:
| September 30, 2006 (Reorganized Company) | |||||||||||||||||||
| TER Holdings |
Guarantors | Non- Guarantors |
Eliminations | Consolidated | |||||||||||||||
| Current assets: |
|||||||||||||||||||
| Cash and cash equivalents |
$ | 79,367 | $ | 80,963 | $ | 19 | $ | — | $ | 160,349 | |||||||||
| Restricted cash |
27,327 | — | — | — | 27,327 | ||||||||||||||
| Other current assets |
30,411 | 78,239 | 234 | (27,026 | ) | 81,858 | |||||||||||||
| Total current assets |
137,105 | 159,202 | 253 | (27,026 | ) | 269,534 | |||||||||||||
| Property and equipment, net |
3,262 | 1,501,509 | 591 | — | 1,505,362 | ||||||||||||||
| Other assets: |
|||||||||||||||||||
| Investment in subsidiaries |
774,919 | — | — | (774,919 | ) | — | |||||||||||||
| Other, net |
1,088,411 | 437,015 | — | (1,108,980 | ) | 416,446 | |||||||||||||
| Total other assets |
1,863,330 | 437,015 | — | (1,883,899 | ) | 416,446 | |||||||||||||
| Total assets |
$ | 2,003,697 | $ | 2,097,726 | $ | 844 | $ | (1,910,925 | ) | $ | 2,191,342 | ||||||||
| Current liabilities: |
|||||||||||||||||||
| Accounts payable |
$ | 3,918 | $ | 14,624 | $ | 631 | $ | — | $ | 19,173 | |||||||||
| Other current liabilities |
48,403 | 127,087 | — | (27,026 | ) | 148,464 | |||||||||||||
| Current maturities of long-term debt |
1,500 | 14,253 | — | — | 15,753 | ||||||||||||||
| Total current liabilities |
53,821 | 155,964 | 631 | (27,026 | ) | 183,390 | |||||||||||||
| Long-term debt, net of current maturities |
1,395,605 | 1,110,910 | — | (1,108,980 | ) | 1,397,535 | |||||||||||||
| Deferred income taxes |
— | 39,224 | — | — | 39,224 | ||||||||||||||
| Other long-term liabilities |
225 | 16,922 | — | — | 17,147 | ||||||||||||||
| Partners’ capital |
|||||||||||||||||||
| Partners’ capital |
593,502 | 728,778 | 7,509 | (736,287 | ) | 593,502 | |||||||||||||
| Accumulated deficit |
(39,456 | ) | 45,928 | (7,296 | ) | (38,632 | ) | (39,456 | ) | ||||||||||
| Total partners’ capital |
554,046 | 774,706 | 213 | (774,919 | ) | 554,046 | |||||||||||||
| Total liabilities and partners’ capital |
$ | 2,003,697 | $ | 2,097,726 | $ | 844 | $ | (1,910,925 | ) | $ | 2,191,342 | ||||||||
20
| December 31, 2005 (Reorganized Company) | |||||||||||||||||||
| TER Holdings |
Guarantors | Non- Guarantors |
Eliminations | Consolidated | |||||||||||||||
| Current assets: |
|||||||||||||||||||
| Cash and cash equivalents |
$ | 131,228 | $ | 97,322 | $ | — | $ | — | $ | 228,550 | |||||||||
| Restricted cash |
45,005 | — | — | — | 45,005 | ||||||||||||||
| Other current assets |
9,172 | 66,597 | 488 | (6,719 | ) | 69,538 | |||||||||||||
| Total current assets |
185,405 | 163,919 | 488 | (6,719 | ) | 343,093 | |||||||||||||
| Property and equipment, net |
666 | 1,462,476 | — | 1,463,142 | |||||||||||||||
| Other assets: |
|||||||||||||||||||
| Investment in subsidiaries |
742,001 | — | — | (742,001 | ) | — | |||||||||||||
| Other, net |
1,085,814 | 437,569 | — | (1,100,000 | ) | 423,383 | |||||||||||||
| Total other assets |
1,827,815 | 437,569 | — | (1,842,001 | ) | 423,383 | |||||||||||||
| Total assets |
$ | 2,013,886 | $ | 2,063,964 | $ | 488 | $ | (1,848,720 | ) | $ | 2,229,618 | ||||||||
| Current liabilities: |
|||||||||||||||||||
| Accounts payable |
$ | 10,882 | $ | 27,341 | $ | 516 | $ | — | $ | 38,739 | |||||||||
| Other current liabilities |
41,676 | 98,462 | — | (6,719 | ) | 133,419 | |||||||||||||
| Current maturities of long-term debt |
1,500 | 28,507 | — | — | 30,007 | ||||||||||||||
| Total current liabilities |
54,058 | 154,310 | 516 | (6,719 | ) | 202,165 | |||||||||||||
| Long-term debt net of current maturities |
1,397,750 | 1,110,202 | — | (1,100,000 | ) | 1,407,952 | |||||||||||||
| Deferred income taxes |
— | 39,224 | — | — | 39,224 | ||||||||||||||
| Other long-term liabilities |
225 | 18,199 | — | — | 18,424 | ||||||||||||||
| Partners’ capital (deficit) |
|||||||||||||||||||
| Partners’ capital |
590,012 | 726,632 | 3,814 | (730,446 | ) | 590,012 | |||||||||||||
| Accumulated deficit |
(28,159 | ) | 15,397 | (3,842 | ) | (11,555 | ) | (28,159 | ) | ||||||||||
| Total partners’ capital (deficit) |
561,853 | 742,029 | (28 | ) | (742,001 | ) | 561,853 | ||||||||||||
| Total liabilities and partners’ capital (deficit) |
$ | 2,013,886 | $ | 2,063,964 | $ | 488 | $ | (1,848,720 | ) | $ | 2,229,618 | ||||||||
21
Condensed statements of operations for the three months ended September 30, 2006 and 2005, for the nine months ended September 30, 2006, for the period from May 20, 2005 through September 30, 2005, and for the period from January 1, 2005 through May 19, 2005 are as follows:
| Three Months Ended September 30, 2006 (Reorganized Company) | ||||||||||||||||||||
| TER Holdings |
Guarantors | Non- Guarantors |
Eliminations | Consolidated | ||||||||||||||||
| Revenues: |
||||||||||||||||||||
| Gaming |
$ | — | $ | 301,781 | $ | — | $ | — | $ | 301,781 | ||||||||||
| Rooms, food, beverage and other |
— | 76,404 | — | — | 76,404 | |||||||||||||||
| — | 378,185 | — | — | 378,185 | ||||||||||||||||
| Less promotional allowances |
— | (89,817 | ) | — | — | (89,817 | ) | |||||||||||||
| Net revenues |
— | 288,368 | — | — | 288,368 | |||||||||||||||
| Costs and expenses: |
||||||||||||||||||||
| Gaming |
— | 135,577 | — | — | 135,577 | |||||||||||||||
| Rooms, food, beverage and other |
— | 19,837 | — | — | 19,837 | |||||||||||||||
| Selling, general and administrative |
7,348 | 66,358 | 456 | — | 74,162 | |||||||||||||||
| Depreciation and amortization |
58 | 17,756 | — | — | 17,814 | |||||||||||||||
| 7,406 | 239,528 | 456 | — | 247,390 | ||||||||||||||||
| Income (loss) from operations |
(7,406 | ) | 48,840 | (456 | ) | — | 40,978 | |||||||||||||
| Non-operating income (expense): |
||||||||||||||||||||
| Interest income |
24,868 | 750 | 4 | (23,141 | ) | 2,481 | ||||||||||||||
| Interest expense |
(30,971 | ) | (25,110 | ) | (89 | ) | 23,141 | (33,029 | ) | |||||||||||
| (6,103 | ) | (24,360 | ) | (85 | ) | — | (30,548 | ) | ||||||||||||
| Income (loss) before equity in net income (loss) of consolidated subsidiaries, income taxes, minority interest and discontinued operations |
(13,509 | ) | 24,480 | (541 | ) | — | 10,430 | |||||||||||||
| Equity in net income (loss) of consolidated subsidiaries |
21,383 | — | — | (21,383 | ) | — | ||||||||||||||
| Provision for income taxes |
— | (2,556 | ) | — | — | (2,556 | ) | |||||||||||||
| Minority interest |
— | — | — | — | — | |||||||||||||||
| Income (loss) from continuing operations |
7,874 | 21,924 | (541 | ) | (21,383 | ) | 7,874 | |||||||||||||
| Income from discontinued operations: |
||||||||||||||||||||
| Trump Indiana |
— | — | — | — | — | |||||||||||||||
| Provision for income taxes |
— | — | — | — | — | |||||||||||||||
| Trump Indiana, net of income taxes |
— | — | — | — | — | |||||||||||||||
| Equity in net income of discontinued operations |
— | — | — | — | — | |||||||||||||||
| Income from discontinued operations |
— | — | — | — | — | |||||||||||||||
| Net income (loss) |
$ | 7,874 | $ | 21,924 | $ | (541 | ) | $ | (21,383 | ) | $ | 7,874 | ||||||||
22
| Three Months Ended September 30, 2005 (Reorganized Company) | ||||||||||||||||||||
| TER Holdings |
Guarantors | Non- Guarantors |
Eliminations | Consolidated | ||||||||||||||||
| Revenues: |
||||||||||||||||||||
| Gaming |
$ | — | $ | 290,104 | $ | — | $ | — | $ | 290,104 | ||||||||||
| Rooms, food, beverage and other |
— | 70,072 | — | — | 70,072 | |||||||||||||||
| — | 360,176 | — | — | 360,176 | ||||||||||||||||
| Less promotional allowances |
— | (82,909 | ) | — | — | (82,909 | ) | |||||||||||||
| Net revenues |
— | 277,267 | — | — | 277,267 | |||||||||||||||
| Costs and expenses: |
||||||||||||||||||||
| Gaming |
— | 129,747 | — | — | 129,747 | |||||||||||||||
| Rooms, food, beverage and other |
— | 19,054 | — | — | 19,054 | |||||||||||||||
| Selling, general and administrative |
5,121 | 64,770 | 3,924 | — | 73,815 | |||||||||||||||
| Depreciation and amortization |
43 | 16,201 | — | — | 16,244 | |||||||||||||||
| Reorganization expense and related costs |
5,394 | 347 | — | — | 5,741 | |||||||||||||||
| 10,558 | 230,119 | 3,924 | — | 244,601 | ||||||||||||||||
| (Loss) income from operations |
(10,558 | ) | 47,148 | (3,924 | ) | — | 32,666 | |||||||||||||
| Non-operating income (expense): |
||||||||||||||||||||
| Interest income |
25,549 | 635 | — | (25,488 | ) | 696 | ||||||||||||||
| Interest expense |
(29,773 | ) | (25,034 | ) | (3,416 | ) | 25,488 | (32,735 | ) | |||||||||||
| (4,224 | ) | (24,399 | ) | (3,416 | ) | — | (32,039 | ) | ||||||||||||
| (Loss) income before equity in net income (loss) of consolidated subsidiaries, income taxes, minority interest and discontinued operations |
(14,782 | ) | 22,749 | (7,340 | ) | — | 627 | |||||||||||||
| Equity in income (loss) from continuing operations of consolidated subsidiaries |
13,074 | — | — | (13,074 | ) | — | ||||||||||||||
| Provision for income taxes |
— | (2,335 | ) | — | — | (2,335 | ) | |||||||||||||
| (Loss) income from continuing operations |
(1,708 | ) | 20,414 | (7,340 | ) | (13,074 | ) | (1,708 | ) | |||||||||||
| Income from discontinued operations: |
— | |||||||||||||||||||
| Trump Indiana |
— | — | 6,786 | — | 6,786 | |||||||||||||||
| Provision for income taxes |
— | — | (851 | ) | — | (851 | ) | |||||||||||||
| Income from discontinued operations |
— | — | 5,935 | — | 5,935 | |||||||||||||||
| Equity in income of discontinued operations |
5,935 | — | — | (5,935 | ) | — | ||||||||||||||
| Income from discontinued operations |
5,935 | — | 5,935 | (5,935 | ) | 5,935 | ||||||||||||||
| Net income (loss) |
$ | 4,227 | $ | 20,414 | $ | (1,405 | ) | $ | (19,009 | ) | $ | 4,227 | ||||||||
23
| Nine Months Ended September 30, 2006 (Reorganized Company) | ||||||||||||||||||||
| TER Holdings |
Guarantors | Non- Guarantors |
Eliminations | Consolidated | ||||||||||||||||
| Revenues: |
||||||||||||||||||||
| Gaming |
$ | — | $ | 822,640 | $ | — | $ | — | $ | 822,640 | ||||||||||
| Rooms, food, beverage and other |
— | 187,625 | — | — | 187,625 | |||||||||||||||
| — | 1,010,265 | — | — | 1,010,265 | ||||||||||||||||
| Less promotional allowances |
— | (228,273 | ) | — | — | (228,273 | ) | |||||||||||||
| Net revenues |
— | 781,992 | — | — | 781,992 | |||||||||||||||
| Costs and expenses: |
||||||||||||||||||||
| Gaming |
— | 374,774 | — | — | 374,774 | |||||||||||||||
| Rooms, food, beverage and other |
— | 55,541 | — | — | 55,541 | |||||||||||||||
| Selling, general and administrative |
22,274 | 191,692 | 2,255 | — | 216,221 | |||||||||||||||
| Depreciation and amortization |
155 | 51,591 | — | — | 51,746 | |||||||||||||||
| 22,429 | 673,598 | 2,255 | — | 698,282 | ||||||||||||||||
| Income (loss) from operations |
(22,429 | ) | 108,394 | (2,255 | ) | — | 83,710 | |||||||||||||
| Non-operating income (expense): |
||||||||||||||||||||
| Interest income |
75,368 | 2,737 | 15 | (69,790 | ) | 8,330 | ||||||||||||||
| Interest expense |
(92,408 | ) | (75,213 | ) | (269 | ) | 69,790 | (98,100 | ) | |||||||||||
| (17,040 | ) | (72,476 | ) | (254 | ) | — | (89,770 | ) | ||||||||||||
| (Loss) income before equity in net income (loss) of consolidated subsidiaries, income taxes, minority interest and discontinued operations |
(39,469 | ) | 35,918 | (2,509 | ) | — | (6,060 | ) | ||||||||||||
| Equity in net income (loss) of consolidated subsidiaries |
28,172 | — | — | (28,172 | ) | — | ||||||||||||||
| Provision for income taxes |
— | (5,387 | ) | — | — | (5,387 | ) | |||||||||||||
| Minority interest |
— | — | 150 | — | 150 | |||||||||||||||
| (Loss) income from continuing operations |
(11,297 | ) | 30,531 | (2,359 | ) | (28,172 | ) | (11,297 | ) | |||||||||||
| Income from discontinued operations: |
— | |||||||||||||||||||
| Trump Indiana |
— | — | — | — | — | |||||||||||||||
| Provision for income taxes |
— | — | — | — | — | |||||||||||||||
| Trump Indiana, net of income taxes |
— | — | — | — | — | |||||||||||||||
| Equity in net income of discontinued operations |
— | — | — | — | — | |||||||||||||||
| Income from discontinued operations |
— | — | — | — | — | |||||||||||||||
| Net (loss) income |
$ | (11,297 | ) | $ | 30,531 | $ | (2,359 | ) | $ | (28,172 | ) | $ | (11,297 | ) | ||||||
24
| For the Period from May 20, 2005 through September 30, 2005 (Reorganized Company) | ||||||||||||||||||||
| TER Holdings |
Guarantors | Non- Guarantors |
Eliminations | Consolidated | ||||||||||||||||
| Revenues: |
||||||||||||||||||||
| Gaming |
$ | — | $ | 414,380 | $ | — | $ | — | $ | 414,380 | ||||||||||
| Rooms, food, beverage and other |
— | 99,108 | — | — | 99,108 | |||||||||||||||
| — | 513,488 | — | — | 513,488 | ||||||||||||||||
| Less promotional allowances |
— | (120,366 | ) | — | — | (120,366 | ) | |||||||||||||
| Net revenues |
— | 393,122 | — | — | 393,122 | |||||||||||||||
| Costs and expenses: |
||||||||||||||||||||
| Gaming |
— | 188,623 | — | — | 188,623 | |||||||||||||||
| Rooms, food, beverage and other |
— | 27,435 | — | — | 27,435 | |||||||||||||||
| Selling, general and administrative |
15,325 | 91,839 | 3,924 | — | 111,088 | |||||||||||||||
| Depreciation and amortization |
64 | 22,195 | — | — | 22,259 | |||||||||||||||
| Reorganization expense and related costs |
7,325 | 346 | — | — | 7,671 | |||||||||||||||
| 22,714 | 330,438 | 3,924 | — | 357,076 | ||||||||||||||||
| (Loss) income from operations |
(22,714 | ) | 62,684 | (3,924 | ) | — | 36,046 | |||||||||||||
| Non-operating income (expense): |
||||||||||||||||||||
| Interest income |
39,285 | 821 | — | (39,188 | ) | 918 | ||||||||||||||
| Interest expense |
(44,018 | ) | (37,623 | ) | (4,904 | ) | 39,188 | (47,357 | ) | |||||||||||
| Other non-operating income |
— | 65 | — | — | 65 | |||||||||||||||
| (4,733 | ) | (36,737 | ) | (4,904 | ) | — | (46,374 | ) | ||||||||||||
| (Loss) income before equity in net (loss) of consolidated subsidiaries, income taxes and discontinued operations |
(27,447 | ) | 25,947 | (8,828 | ) | — | (10,328 | ) | ||||||||||||
| Equity in income (loss) from continuing operations of consolidated subsidiaries |
14,073 | — | — | (14,073 | ) | — | ||||||||||||||
| Provision for income taxes |
— | (3,046 | ) | — | — | (3,046 | ) | |||||||||||||
| (Loss) income from continuing operations |
(13,374 | ) | 22,901 | (8,828 | ) | (14,073 | ) | (13,374 | ) | |||||||||||
| Income from discontinued operations: |
||||||||||||||||||||
| Trump Indiana |
— | — | 8,937 | — | 8,937 | |||||||||||||||
| Provision for income taxes |
— | — | (1,292 | ) | — | (1,292 | ) | |||||||||||||
| Trump Indiana, net of income taxes |
— | — | 7,645 | — | 7,645 | |||||||||||||||
| Equity in income of discontinued operations |
7,645 | — | — | (7,645 | ) | — | ||||||||||||||
| Income from discontinued operations |
7,645 | — | 7,645 | (7,645 | ) | 7,645 | ||||||||||||||
| Net (loss) income |
$ | (5,729 | ) | $ | 22,901 | $ | (1,183 | ) | $ | (21,718 | ) | $ | (5,729 | ) | ||||||
25
| For the Period from January 1, 2005 to May 19, 2005 (Predecessor Company) | ||||||||||||||||||||
| TER Holdings |
Guarantors | Non- Guarantors |
Eliminations | Consolidated | ||||||||||||||||
| Revenues: |
||||||||||||||||||||
| Gaming |
$ | — | $ | 398,409 | $ | — | $ | — | $ | 398,409 | ||||||||||
| Rooms, food, beverage and other |
— | 83,367 | — | — | 83,367 | |||||||||||||||
| — | 481,776 | — | — | 481,776 | ||||||||||||||||
| Less promotional allowances |
— | (117,337 | ) | — | — | (117,337 | ) | |||||||||||||
| Net revenues |
— | 364,439 | — | — | 364,439 | |||||||||||||||
| Costs and expenses: |
||||||||||||||||||||
| Gaming |
— | 186,545 | — | — | 186,545 | |||||||||||||||
| Rooms, food, beverage and other |
— | 23,572 | — | — | 23,572 | |||||||||||||||
| Selling, general and administrative |
5,929 | 87,373 | 430 | — | 93,732 | |||||||||||||||
| Depreciation and amortization |
64 | 35,689 | — | — | 35,753 | |||||||||||||||
| Reorganization expense (income) and related costs |
49,319 | (80,186 | ) | 4,900 | — | (25,967 | ) | |||||||||||||
| 55,312 | 252,993 | 5,330 | — | 313,635 | ||||||||||||||||
| Income (loss) from operations |
(55,312 | ) | 111,446 | (5,330 | ) | — | 50,804 | |||||||||||||
| Non-operating income (expense): |
||||||||||||||||||||
| Interest income |
11 | 791 | 56,502 | (56,468 | ) | 836 | ||||||||||||||
| Interest expense |
(1,841 | ) | (75,767 | ) | (65,722 | ) | 56,468 | (86,862 | ) | |||||||||||
| Other non-operating income (expense) |
— | — | — | — | — | |||||||||||||||
| (1,830 | ) | (74,976 | ) | (9,220 | ) | — | (86,026 | ) | ||||||||||||
| (Loss) income before equity in net income (loss) of consolidated subsidiaries, income taxes, discontinued operations and extraordinary item |
(57,142 | ) | 36,470 | (14,550 | ) | — | (35,222 | ) | ||||||||||||
| Equity in net income (loss) of consolidated subsidiaries |
19,846 | — | — | (19,846 | ) | — | ||||||||||||||
| Provision for income taxes |
— | (2,074 | ) | — | — | (2,074 | ) | |||||||||||||
| (Loss) income from continuing operations |
(37,296 | ) | 34,396 | (14,550 | ) | (19,846 | ) | (37,296 | ) | |||||||||||
| Income from discontinued operations: |
— | |||||||||||||||||||
| Trump Indiana |
— | — | 142,959 | — | 142,959 | |||||||||||||||
| Provision for income taxes |
— | — | (24,211 | ) | — | (24,211 | ) | |||||||||||||
| Trump Indiana, net of income taxes |
— | — | 118,748 | — | 118,748 | |||||||||||||||
| Equity in net income of discontinued operations |
118,748 | — | — | (118,748 | ) | — | ||||||||||||||
| Income from discontinued operations |
118,748 | — | 118,748 | (118,748 | ) | 118,748 | ||||||||||||||
| Income (loss) before extraordinary item |
81,452 | 34,396 | 104,198 | (138,594 | ) | 81,452 | ||||||||||||||
| Equity in consolidated subsidiaries’ extraordinary gain (loss) on extinguishment of debt |
196,932 | — | — | (196,932 | ) | — | ||||||||||||||
| Extraordinary gain on extinguishment of debt |
— | 198,884 | (1,952 | ) | — | 196,932 | ||||||||||||||
| Net income (loss) |
$ | 278,384 | $ | 233,280 | $ | 102,246 | $ | (335,526 | ) | $ | 278,384 | |||||||||
26
Condensed statements of cash flows for the nine months ended September 30, 2006, for the period from May 20, 2005 to September 30, 2005 and for the period from January 1, 2005 to May 19, 2005 are as follows:
| Nine Months Ended September 30, 2006 (Reorganized Company) | ||||||||||||||||||||
| TER Holdings |
Guarantors | Non- Guarantors |
Eliminations | Consolidated | ||||||||||||||||
| NET CASH (USED IN) PROVIDED BY OPERATING ACTIVITIES: |
$ | (47,519 | ) | $ | 93,019 | $ | (2,448 | ) | $ | — | $ | 43,052 | ||||||||
| CASH FLOWS FROM INVESTING ACTIVITIES: |
||||||||||||||||||||
| Purchases of property and equipment |
(2,520 | ) | (88,574 | ) | (283 | ) | — | (91,377 | ) | |||||||||||
| Increase in restricted cash |
17,678 | — | — | — | 17,678 | |||||||||||||||
| Purchases of CRDA investments, net |
— | (9,921 | ) | — | — | (9,921 | ) | |||||||||||||
| Investments in and advances from (to) subsidiaries |
(14,520 | ) | — | — | 14,520 | — | ||||||||||||||
| Other |
— | — | — | — | — | |||||||||||||||
| Net cash (used in) provided by investing activities |
638 | (98,495 | ) | (283 | ) | 14,520 | (83,620 | ) | ||||||||||||
| CASH FLOWS FROM FINANCING ACTIVITIES: |
||||||||||||||||||||
| Repayment of term loan |
(1,125 | ) | — | — | — | (1,125 | ) | |||||||||||||
| Repayment of other long-term debt |
— | (22,803 | ) | — | — | (22,803 | ) | |||||||||||||
| Advances of intercompany debt, net |
— | 10,000 | — | (10,000 | ) | — | ||||||||||||||
| Contributed capital |
— | 4,000 | 2,600 | (6,600 | ) | — | ||||||||||||||
| Distributions by subsidiaries |
— | (2,080 | ) | 2,080 | — | |||||||||||||||
| Partnership distributions |
(3,420 | ) | — | — | — | (3,420 | ) | |||||||||||||
| Other |
(435 | ) | — | 150 | — | (285 | ) | |||||||||||||
| Net cash (used in) provided by financing activities |
(4,980 | ) | (10,883 | ) | 2,750 | (14,520 | ) | (27,633 | ) | |||||||||||
| Net (decrease) increase in cash and cash equivalents |
(51,861 | ) | (16,359 | ) | 19 | — | ||||||||||||||