10-Q

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, 2003

OR

¨ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934

For the transition period from                      to                     

Commission File No.: 333-00643

TRUMP ATLANTIC CITY ASSOCIATES

(Exact Name of Registrant as specified in its charter)

New Jersey (State or other jurisdiction of incorporation or organization) 22-3213714 (I.R.S. Employer Identification Number)

1000 Boardwalk at Virginia Avenue

Atlantic City, New Jersey 08401

(609) 449-6515

(Address, Including Zip Code and Telephone Number, Including Area Code, of Registrant’s Principal Executive Offices)

TRUMP ATLANTIC CITY FUNDING, INC.

(Exact Name of Registrant as specified in its charter)

Delaware (State or other jurisdiction of incorporation or organization) 22-3418939 (I.R.S. Employer Identification Number)

1000 Boardwalk at Virginia Avenue

Atlantic City, New Jersey 08401

(609) 449-6515

(Address, Including Zip Code and Telephone Number, Including Area Code, of Registrant’s Principal Executive Offices)

TRUMP ATLANTIC CITY FUNDING II, INC.

(Exact Name of Registrant as specified in its charter)

Delaware (State or other jurisdiction of incorporation or organization) 22-3550202 (I.R.S. Employer Identification Number)

1000 Boardwalk at Virginia Avenue

Atlantic City, New Jersey 08401

(609) 449-6515

(Address, Including Zip Code and Telephone Number,

Including Area Code, of Registrant’s Principal Executive Offices)

TRUMP ATLANTIC CITY FUNDING III, INC.

(Exact Name of Registrant as specified in its charter)

Delaware (State or other jurisdiction of incorporation or organization) 22-3550203 (I.R.S. Employer Identification Number)

1000 Boardwalk at Virginia Avenue

Atlantic City, New Jersey 08401

(609) 449-6515

(Address, Including Zip Code and Telephone Number, Including Area Code, of Registrant’s Principal Executive Offices)

Indicate by check mark whether the Registrants (1) have filed all Reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the Registrants were required to file such reports), and (2) have been subject to such filing requirements for the past 90 days. Yes  x  No  ¨

Indicate by check mark whether any of the Registrants is an accelerated filer (as defined in Exchange Rule 12b-2).  

Yes  ¨  No  x

As of November 14, 2003, there were 100 shares of Trump Atlantic City Funding, Inc.’s Common Stock outstanding.

As of November 14, 2003, there were 100 shares of Trump Atlantic City Funding II, Inc.’s Common Stock outstanding.

As of November 14, 2003, there were 100 shares of Trump Atlantic City Funding III, Inc.’s Common Stock outstanding.

Each of Trump Atlantic City Associates, Trump Atlantic City Funding, Inc., Trump Atlantic City Funding II, Inc. and Trump Atlantic City Funding III, Inc. meets the conditions set forth in General Instruction (H)(1)(a) and (b) of Form 10-Q and is therefore filing this form with the reduced disclosure format.

TRUMP ATLANTIC CITY ASSOCIATES AND SUBSIDIARIES

INDEX TO FORM 10-Q

			Page No.
PART I — FINANCIAL INFORMATION
	ITEM 1 — Financial Statements
		Condensed Consolidated Balance Sheets as of December 31, 2002 and September 30, 2003 (unaudited)	1
		Condensed Consolidated Statements of Operations for the Three and Nine Months Ended September 30, 2002 and 2003 (unaudited)	2
		Condensed Consolidated Statement of Capital/(Deficit) for the Nine Months Ended September 30, 2003 (unaudited)	3
		Condensed Consolidated Statements of Cash Flows for the Nine Months Ended September 30, 2002 and 2003 (unaudited)	4
		Notes to Condensed Consolidated Financial Statements (unaudited) Notes to Condensed Consolidated Financial Statements (unaudited)	5-8
	ITEM 2 — Management’s Discussion and Analysis of Financial Condition and Results of Operations		9-18
	ITEM 3 — Quantitative and Qualitative Disclosures About Market Risk		18
	ITEM 4 — Controls and Procedures		18
PART II — OTHER INFORMATION
	ITEM 1 — Legal Proceedings		19
	ITEM 2 — Changes in Securities and Use of Proceeds		19
	ITEM 3 — Defaults Upon Senior Securities		19
	ITEM 4 — Submission of Matters to a Vote of Security Holders		19
	ITEM 5 — Other Information		19
	ITEM 6 — Exhibits and Reports on Form 8-K		19
SIGNATURES			20
EXHIBIT INDEX			21

i

PART I — FINANCIAL INFORMATION

ITEM 1 — FINANCIAL STATEMENTS

TRUMP ATLANTIC CITY ASSOCIATES AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS

(in thousands)

	December 31, 2002			September 30, 2003
				(unaudited)
ASSETS
CURRENT ASSETS:
Cash and cash equivalents	$	79,007		$	108,946
Receivables, net		24,632			25,265
Inventories		8,740			8,460
Other current assets		7,512			10,449
Total current assets		119,891			153,120
PROPERTY AND EQUIPMENT, NET		1,268,125			1,256,785
DEFERRED LOAN COSTS, NET		10,675			7,853
OTHER ASSETS		39,436			41,004
Total assets	$	1,438,127		$	1,458,762
LIABILITIES AND CAPITAL
CURRENT LIABILITIES:
Current maturities of long-term debt	$	12,199		$	16,603
Accounts payable and accrued expenses		90,401			98,749
Accrued interest payable		24,375			60,938
Due to affiliates, net		9,104			11,036
Total current liabilities		136,079			187,326
LONG-TERM DEBT, net of current maturities		1,316,284			1,317,575
OTHER LONG-TERM LIABILITIES		13,829			13,887
Total liabilities		1,466,192			1,518,788
CAPITAL/(DEFICIT):
Partners’ capital		224,841			220,881
Accumulated deficit		(252,906	)		(280,907	)
Total capital/(deficit)		(28,065	)		(60,026	)
Total liabilities and capital/(deficit)	$	1,438,127		$	1,458,762

See accompanying notes.

1

TRUMP ATLANTIC CITY ASSOCIATES AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

FOR THE THREE AND NINE MONTHS ENDED SEPTEMBER 30, 2002 AND 2003

(unaudited)

(in thousands)

	Three Months Ended September 30,						Nine Months Ended September 30,
	2002			2003			2002			2003
REVENUES:
Gaming	$	239,678		$	221,313		$	667,940		$	638,541
Rooms		16,580			15,938			45,742			43,860
Food and beverage		25,274			25,595			71,007			70,178
Other		8,138			7,743			21,538			19,259
Gross revenues		289,670			270,589			806,227			771,838
Less-Promotional allowances		56,913			63,781			164,968			169,829
Net revenues		232,757			206,808			641,259			602,009
COSTS AND EXPENSES:
Gaming		102,192			100,752			294,780			291,171
Rooms		6,315			5,821			19,372			18,238
Food and beverage		8,457			8,522			24,050			24,026
General and administrative		45,046			42,490			127,673			130,094
Depreciation and amortization		14,729			16,772			41,532			47,845
Debt renegotiation costs		—			—			1,570			300
		176,739			174,357			508,977			511,674
Income from operations		56,018			32,451			132,282			90,335
NON-OPERATING INCOME AND (EXPENSE):
Interest and other non-operating income		251			98			809			532
Interest expense		(38,383	)		(38,528	)		(114,834	)		(115,921	)
Non-operating expense, net		(38,132	)		(38,430	)		(114,025	)		(115,389	)
Income (Loss) before income tax provision		17,886			(5,979	)		18,257			(25,054	)
Income tax provision		(2,768	)		(1,138	)		(2,768	)		(2,947	)
NET INCOME (LOSS)	$	15,118		$	(7,117	)	$	15,489		$	(28,001	)

See accompanying notes.

2

TRUMP ATLANTIC CITY ASSOCIATES AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENT OF CAPITAL/(DEFICIT)

FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2003

(unaudited)

(in thousands)

	Partners’ Capital			Accumulated Deficit			Total Capital/(Deficit)
Balance, December 31, 2002	$	224,841		$	(252,906	)	$	(28,065	)
Partnership distribution		(3,960	)		—			(3,960	)
Net loss		—			(28,001	)		(28,001	)
Balance, September 30, 2003	$	220,881		$	(280,907	)	$	(60,026	)

See accompanying notes.

3

TRUMP ATLANTIC CITY ASSOCIATES AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2002 AND 2003

(unaudited)

(in thousands)

	Nine Months Ended September 30,
	2002			2003
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income (loss)	$	15,489		$	(28,001	)
Adjustments to reconcile net income (loss) to net cash flows from operating activities —
Non-cash charges —
Depreciation and amortization		41,532			47,845
Accretion of discounts on indebtedness		368			325
Provisions for losses on receivables		5,762			3,616
Amortization of deferred loan offering costs		3,170			2,822
Valuation allowance of CRDA investments		3,246			3,483
Increase in receivables		(1,677	)		(4,249	)
Decrease in inventories		139			280
(Increase) decrease in amounts due from affiliates		(3,041	)		1,932
Increase in other current assets		(2,793	)		(3,068	)
(Increase) decrease in other assets		(330	)		994
Increase in accounts payable, accrued expenses and other liabilities		22,313			44,918
Net cash provided by operating activities		84,178			70,897
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchase of property and equipment		(14,405	)		(17,639	)
Purchase of CRDA investments, net		(7,940	)		(6,997	)
Net cash used in investing activities		(22,345	)		(24,636	)
CASH FLOWS FROM FINANCING ACTIVITIES:
Payments of long-term debt		(7,713	)		(12,362	)
Distributions to parent company		—			(3,960	)
Net cash used in financing activities		(7,713	)		(16,322	)
NET INCREASE IN CASH AND CASH EQUIVALENTS		54,120			29,939
CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD		70,909			79,007
CASH AND CASH EQUIVALENTS AT END OF PERIOD	$	125,029		$	108,946
CASH INTEREST PAID	$	74,734		$	76,212
Supplemental Disclosure of noncash activities:
Purchase of property and equipment under capitalized lease obligations	$	16,610		$	17,732
Partnership Distribution	$	101,341		$	—

See accompanying notes.

4

TRUMP ATLANTIC CITY ASSOCIATES AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(unaudited)

(1) Organization and Operations

The accompanying condensed consolidated financial statements include those of Trump Atlantic City Associates, a New Jersey general partnership (“Trump AC” or the “Company”), and its subsidiaries: (i) Trump Plaza Associates, a New Jersey general partnership (“Plaza Associates”) which owns and operates the Trump Plaza Hotel and Casino located in Atlantic City, New Jersey (“Trump Plaza”), (ii) Trump Taj Mahal Associates, a New Jersey general partnership (“Taj Associates”) which owns and operates the Trump Taj Mahal Casino Resort located in Atlantic City, New Jersey (the “Taj Mahal”), (iii) Trump Atlantic City Funding, Inc. (“Trump AC Funding”), (iv) Trump Atlantic City Funding II, Inc. (“Trump AC Funding II”), (v) Trump Atlantic City Funding III, Inc. (“Trump AC Funding III”), (vi) Trump Atlantic City Corporation (“TACC”), and (vii) Trump Administration, a separate division of Taj Associates (“Trump Administration”). Trump AC’s sole sources of liquidity are distributions in respect of its interests in Plaza Associates and Taj Associates. Trump AC is 100% beneficially owned by Trump Hotels & Casino Resorts Holdings, L.P., a Delaware limited partnership (“THCR Holdings”) of which Trump Hotels & Casino Resorts, Inc., a Delaware corporation (“THCR”), is the sole general partner. Trump AC, Trump AC Funding, Trump AC Funding II and Trump AC Funding III have no independent operations and, therefore, their ability to service debt is dependent upon the successful operations of Plaza Associates and Taj Associates. There are no restrictions on the ability of Plaza Associates and Taj Associates, the primary guarantors (the “Subsidiary Guarantors”) of the 11¼% First Mortgage Notes due May 1, 2006 issued by (i) Trump AC and Trump AC Funding, (ii) Trump AC and Trump AC Funding II and (iii) Trump AC and Trump AC Funding III (collectively, the “Trump AC Mortgage Notes”) to distribute funds to Trump AC in respect of the guaranteed debt.

The separate financial statements of the Subsidiary Guarantors have not been included because (i) the Subsidiary Guarantors constitute all of Trump AC’s direct and indirect subsidiaries; (ii) the Subsidiary Guarantors have fully and unconditionally guaranteed the Trump AC Mortgage Notes on a joint and several basis; (iii) the aggregate assets, liabilities, earnings and equity of the Subsidiary Guarantors are substantially equivalent to the assets, liabilities, earnings and equity of Trump AC on a consolidated basis; and (iv) the separate financial and other disclosures concerning the Subsidiary Guarantors are not deemed by management to be material. The assets and operations of the nonguarantor subsidiaries are not significant.

Trump AC has no operations, except for its ownership of Plaza Associates and Taj Associates. A substantial portion of Trump AC’s revenues are derived from its gaming operations. The Atlantic City market is very competitive, especially since the opening of the Borgata by a joint venture of MGM Mirage and Boyd Gaming in Atlantic City’s marina district in July 2003, and is anticipated to become more competitive in the future.

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 Registrants’ Annual Report on Form 10-K for the year ended December 31, 2002 filed with the SEC and available on the SEC’s website, www.sec.gov.

The casino industry in Atlantic City is seasonal in nature with the peak season being the spring and summer months; therefore, results of operations for the three and nine months ended September 30, 2003 are not necessarily indicative of the operating results for a full year.

5

TRUMP ATLANTIC CITY ASSOCIATES AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(unaudited)

Reclassifications

Certain reclassifications and disclosures have been made to prior year financial statements for them to be in conformity with the current year presentation.

(2) Other Assets

Plaza Associates is appealing a real estate tax assessment by the City of Atlantic City. At December 31, 2002 and September 30, 2003, other assets include $8,014,000 which Plaza Associates believes will be recoverable on the settlement of the appeal.

(3) Combined Financial Information — Trump AC Funding, Trump AC Funding II and Trump AC Funding III

Combined financial information relating to Trump AC Funding, Trump AC Funding II and Trump AC Funding III is as follows:

	December 31, 2002		September 30, 2003
			(unaudited)
Total Assets (including First Mortgage Notes receivable of $1,298,747,000 at December 31, 2002 and $1,299,073,000 at September 30, 2003 and related interest receivable)	$	1,323,122,000	$	1,360,011,000
Total Liabilities and Capital (including First Mortgage Notes payable of $1,298,747,000 at December 31, 2002 and $1,299,073,000 at September 30, 2003 and related interest payable)	$	1,323,122,000	$	1,360,011,000

	Nine Months Ended September 30,
	2002		2003
Interest Income	$	109,687,000	$	109,687,000
Interest Expense		109,687,000		109,687,000
Net Income	$	—	$	—

(4) Recent Accounting Pronouncements

In July 2001, the FASB issued SFAS No. 143, “Accounting for Asset Retirement Obligations.” This standard addresses the financial accounting and reporting for obligations associated with the retirement of tangible long-lived assets and the associated asset retirement costs. The standard is effective for fiscal years beginning after June 15, 2002. The effect of adoption was not material to the Company’s financial results.

6

TRUMP ATLANTIC CITY ASSOCIATES AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(unaudited)

In November 2002, the FASB issued Interpretation No. 45, “Guarantor’s Accounting and Disclosure Requirements for Guarantees, Including Indirect Guarantees of Indebtedness of Others, an Interpretation of FASB Statements No. 5, 57, and 107 and Rescission of FASB Interpretation No. 34” (“FIN No. 45”). The interpretation requires that upon issuance of a guarantee, the entity must recognize a liability for the fair value of the obligation it assumes under that obligation. This interpretation is intended to improve the comparability of financial reporting by requiring identical accounting for guarantees issued with separately identified consideration and guarantees issued without separately identified consideration. For the company, the initial recognition, measurement provision and disclosure requirements of FIN No. 45 are applicable to guarantees issued or modified after December 31, 2002. The effect of adoption was not material to the Company’s financial results.

In January 2003, the FASB issued Interpretation No. 46, “Consolidation of Variable Interest Entities” (“FIN No. 46”). This interpretation clarifies the application of Accounting Research Bulletin No. 51, “Consolidated Financial Statements,” to certain entities in which equity investors do not have the characteristics of a controlling financial interest or do not have sufficient subordinated financial support from other parties. FIN No. 46 applies immediately to variable interest entities created after January 31, 2003, and to variable interest entities in which an enterprise obtains an interest after that date. For existing variable interest entities, the consolidated requirement is effective for interim or annual financial statements, ending after December 15, 2003, as amended. Trump AC is still evaluating whether it has any variable entities, which will be subject to consolidation pursuant to FIN No. 46.

(5) Debt Renegotiation Costs

Debt renegotiation costs represent expenditures incurred with attempts to refinance or modify the terms of the Trump AC Mortgage Notes which were approximately $1,300,000,000 aggregate principal amount as of September 30, 2003. Trump AC has incurred approximately $1,570,000 and $300,000 in Debt Renegotiation Costs in the nine months ended September 30, 2002 and 2003, respectively. Trump AC has since terminated such efforts. Accordingly, the debt renegotiation costs have been expensed in the accompanying statements of operations. Trump AC may renew its efforts to refinance or modify the Trump AC Mortgage Notes at a later date if and when capital market conditions are favorable.

(6) Partnership Distribution

Pursuant to the indentures governing the Trump AC Mortgage Notes, Trump AC is permitted to reimburse THCR for its operating and interest expenses. These reimbursements are subject to limitations set forth in such indentures, including an annual limitation of $10,000,000 in operating expense reimbursements and a life-time limitation of $50,000,000 in interest expense reimbursements. During the quarter ended June 30, 2002, Trump AC declared a partnership distribution to THCR of $101,341,000, consisting of $50,000,000 of prior years interest reimbursements and $51,341,000 of prior years operating expense reimbursements. Previously, these amounts were presented as Advances to Affiliates on the balance sheet. During the nine months ended September 30, 2003, Trump AC declared cash partnership distributions to THCR of $3,960,000 consisting of operating expense reimbursements.

(7) State of New Jersey Income Taxes

On July 3, 2002, the State of New Jersey passed the New Jersey Business Tax Reform Act (the “Act”). This Act, among other things, requires the suspension of the use of New Jersey net operating loss carryforwards for two years and imposes a new Alternative Minimum Assessment amount under the New Jersey corporate business tax based on either gross receipts or gross profits, as defined. The Act is retroactive to January 1, 2002. In addition on July 1, 2003, the New Jersey legislature passed a law (“New Jersey Profits Tax”) which imposes a 7.5% tax on each casino’s 2002 adjusted net income, defined as net income plus management fees, subject to a minimum tax of at least $350,000 per casino. In accordance with the Acts, Trump AC has recorded a provision for current income tax expense of $2,768,000 and $2,947,000 (including $175,000 related to the New Jersey Profits Tax) for the nine months ended September 30, 2002 and 2003, respectively.

7

TRUMP ATLANTIC CITY ASSOCIATES AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(unaudited)

(8) New Jersey Casino Taxes

On July 1, 2003, the New Jersey legislature passed a law that increases the taxation of New Jersey casinos. The new law imposes, among other taxes, a 4.25% tax on complimentaries (i.e., free rooms, food, beverages and entertainment given to patrons), an increase in the hotel tax of $3.00 per day on each occupied room, and increases the parking fee tax from $1.50 to $3.00 per car per day. In addition, each casino is charged a profits tax based on 7.5% of each casino’s 2002 adjusted net income (defined as net income plus management fees) subject to a minimum annual tax of $350,000. The tax is assessed during the period from July 1 to June 30 consistent with the fiscal year of the State of New Jersey. For the three and nine months ended September 30, 2003, Trump AC has recorded a charge to income tax expense on the statement of operations for $175,000 related to the profits tax.

8

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,” “continue” or “could” 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 Atlantic City Associates (“Trump AC”) and its wholly-owned subsidiaries, unless otherwise noted. Through its wholly-owned subsidiaries, Trump AC owns and operates the Trump Plaza Hotel and Casino (“Trump Plaza”) and the Trump Taj Mahal Casino Resort (the “Taj Mahal” and together with Trump Plaza, the “Trump AC Properties”). Terms not defined in this section shall have the meanings ascribed to them elsewhere in this Quarterly Report on Form 10-Q.

General

Our business is subject to a variety of risks and uncertainties, some of which are discussed below.

The Company Has Substantial Indebtedness Maturing in May 2006.

The Company’s indebtedness consists primarily of the Trump AC Mortgage Notes which mature on May 1, 2006. At September 30, 2003, the outstanding principal balance of the Trump AC Mortgage Notes was approximately $1.3 billion. Interest expense as a percentage of net revenues was 17.9% and 19.3% for the nine months ended September 30, 2002 and 2003, respectively.

The Atlantic City market is very competitive, especially since the opening of the Borgata by a joint venture of MGM Mirage and Boyd Gaming in Atlantic City’s marina district in July 2003, and is anticipated to become more competitive in the future. Capital expenditures, such as room refurbishments, amenity upgrades and new gaming equipment, are necessary from time to time to preserve the competitiveness of the Trump AC Properties. Management believes that the Company must provide for capital expenditures to compete effectively. See “Financial Condition — Liquidity and Capital Resources.”

The ability of Trump AC and its subsidiaries to pay interest on the Trump AC Mortgage Notes depends primarily on the ability of Trump Plaza and the Taj Mahal to generate sufficient amounts of cash from operations. The future operating performance of Trump Plaza and the Taj Mahal 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 management. There can be no assurance that the future operating performance of Trump Plaza and the Taj Mahal will be sufficient to generate the cash flows required to meet the debt service obligations of Trump Plaza, Taj Mahal or Trump AC. Also, the ability of the Company to pay the principal amount of the Trump AC Mortgage Notes at maturity (whether scheduled or by acceleration thereof) is primarily dependent upon its 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 in general or to the Company in particular will be conducive to refinancing debt at any given time or on more favorable terms.

We are continuously exploring ways to improve our capital structure and enhance our properties and their operating efficiencies. Some potential efforts contemplated include: (i) recapitalizing our company, (ii) further reducing our overhead costs and interest expenses in order to pursue capital expansion plans, such as the addition of hotel rooms, (iii) selling one or more of our assets, (iv) optimizing our labor resources and (v) utilizing the latest technology with proven economies of scale (e.g., coinless slot machines). There can be no assurances, however, that we will be successful in effecting any such efforts or doing so in a timely manner, or, if effected, in realizing significant costs savings in order to maintain or enhance our competitiveness.

9

We Do Not Know Whether the Borgata Will Continue to Adversely Affect Us in the Long Term.

In July 2003, the Borgata Casino Hotel and Spa opened in Atlantic City’s marina district. The Borgata has approximately 2,000 rooms and suites, an approximate 135,000 square-foot casino, restaurants, retail shops, a spa and pool and entertainment venues. Since its opening, the Borgata has not grown the Atlantic City market as had been originally anticipated and, along with a sluggish economy and adverse weather conditions, has adversely affected the results of the Trump AC Properties, compared to the same period in the prior year. Borgata’s effect, however, may be temporary and attributable to the desire of gaming patrons to visit a new casino. The Borgata has not been operating long enough to determine whether or not it will adversely affect the Trump AC Properties and the Company in the long term. While we believe that the Borgata may attract additional visitors to Atlantic City in the long term, it is possible that the Borgata could have an adverse effect on the long-term business and operations of the Trump AC Properties. See “Financial Condition — Liquidity and Capital Resources.”

Taxation of the Gaming Industry, Already Significant, May Increase in the Future which Would Reduce Our Profitability.

The casino industry represents a significant source of tax revenues to the various jurisdictions in which casinos operate. We, as well as other gaming companies, are currently subject to significant state and local taxes and fees in addition to normal federal and state corporate income taxes. New Jersey taxes annual gaming revenues at the rate of 8.0% and levies an annual investment alternative tax of 2.5% on annual gaming revenue. This 2.5% obligation, however, can be satisfied by purchasing certain bonds or making certain investments in the amount of 1.25% of annual gaming revenues. In July 2002, the State of New Jersey passed the New Jersey Business Tax Reform Act, which, among other things, requires the suspension of the use of net operating loss carry forwards for two years and imposes a new Alternative Minimum Assessment amount under the New Jersey corporate business tax based on either gross receipts or gross profits, as defined.

On July 1, 2003, the New Jersey legislature passed a law that increases the taxation of New Jersey casinos. The new law imposes, among other taxes, a 4.25% tax on complimentaries (i.e., free rooms, food, beverages and entertainment given to patrons), an increase in the hotel tax of $3.00 per day on each occupied room, and increases the parking fee tax from $1.50 to $3.00 per car per day. In addition, each casino is charged a profits tax based on 7.5% of each casino’s 2002 adjusted net income (defined as net income plus management fees) subject to a minimum annual tax of $350,000. The tax is assessed during the period from July 1 to June 30 consistent with the fiscal year of the State of New Jersey. For the three and nine months ended September 30, 2003, Trump AC has recorded a charge to income tax expense on the statement of operations for $175,000 related to the profits tax.

Future changes in state taxation of casino gaming companies cannot be predicted, and any such changes could adversely affect our profitability.

Our Business is Subject to a Variety of Other Risks and Uncertainties

Our financial condition and results of operations could be adversely affected by other events and uncertainties that are unforseeable and/or beyond our control, such as (i) capital market conditions which could diminish our ability to raise capital for refinancing the Trump AC Mortgage Notes and other debt or to pursue other alternatives, (ii) future acts of terrorism or terrorism threats and their impact on capital markets, the economy, consumer behavior and operating expenses, including insurance premiums, (iii) competition from existing and potential new competitors in Atlantic City and other nearby markets, which is expected to increase over the next five years, (iv) regulatory changes, and (v) adverse or unfavorable weather forecasts and conditions.

Critical Accounting Policies

The preparation of financial statements in accordance with accounting principles generally accepted in the United States requires management to make estimates and assumptions that affect the reported amount of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting periods. Management periodically evaluates the Company’s policies and the estimates and assumptions related to such policies. Trump Taj Mahal and Trump Plaza operate in a highly regulated industry and are subject to regulations that describe and regulate operating and internal control procedures. The Company believes its most critical accounting policies and significant estimates are described below.

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Revenue Recognition and Allowance for Doubtful Accounts

The majority of the Company’s revenue is from gaming activities, and the majority of such revenue is derived from cash, which by nature does not involve estimations. The Company extends credit to certain qualified patrons on a discretionary basis. Credit play as a percentage of total dollars wagered on table games has historically been approximately 20%. Trump Taj Mahal and Trump Plaza establishes credit limits based upon the particular patron’s creditworthiness, as determined by an examination of various factors, including a credit check of the patron, a verification of the patron’s personal checking account balance and current credit limits and indebtedness at other casinos in the United States, as well as many island casinos. The Company provides an allowance for doubtful accounts for a portion of those customers whose checks have been unable to be deposited due to non-sufficient funds. This allowance is based on a specific review of customer accounts as well as a review of the history of write-offs of returned markers. Management believes that the reserve recorded is reasonable; however, these estimates could change in the near term based on the actual collection experience with each returned marker.

Long-lived Assets

Management has determined that the Company’s policy associated with its long-lived assets and the related estimates is critical to the preparation of the consolidated financial statements. The Company has a significant investment in long-lived property and equipment. Management estimates that the undiscounted future cash flows expected to result from the use of these assets exceed the current carrying value of these assets. Any adverse change to the estimate of these undiscounted cash flows could necessitate an impairment charge that would adversely affect operating results. Management estimates the useful lives for the Company’s assets based on historical experience and the estimates of assets’ commercial lives. Should the actual useful life of a class of assets differ from the estimated useful life, an impairment charge would be recorded. Management reviews useful lives and obsolescence and assesses commercial viability of the Company’s assets periodically.

Self-Insurance Reserves

Self-insurance reserves represent the estimated amounts of uninsured claims related to employee health medical costs, workman’s compensation, and personal injury claims that have occurred in the normal course of business. These reserves are established by management based upon specific review of open claims, with consideration of incurred but not reported claims as of the balance sheet date. The costs of the ultimate disposition of these claims may differ from these reserve estimates.

Recent Accounting Pronouncements

In July 2001, the FASB issued SFAS No. 143, “Accounting for Asset Retirement Obligations.” This standard addresses the financial accounting and reporting for obligations associated with the retirement of tangible long-lived assets and the associated asset retirement costs. The standard is effective for fiscal years beginning after June 15, 2002. The effect of adoption was not material to the Company’s financial results.

In November 2002, the FASB issued Interpretation No. 45, “Guarantor’s Accounting and Disclosure Requirements for Guarantees, Including Indirect Guarantees of Indebtedness of Others, an Interpretation of FASB Statements No. 5, 57, and 107 and Rescission of FASB Interpretation No. 34” (“FIN No. 45”). The interpretation requires that upon issuance of a guarantee, the entity must recognize a liability for the fair value of the obligation it assumes under that obligation. This interpretation is intended to improve the comparability of financial reporting by requiring identical accounting for guarantees issued with separately identified consideration and guarantees issued without separately identified consideration. For the company, the initial recognition, measurement provision and disclosure requirements of FIN No. 45 are applicable to guarantees issued or modified after December 31, 2002. The effect of adoption was not material to the Company’s financial results.

In January 2003, the FASB issued Interpretation No. 46, “Consolidation of Variable Interest Entities” (“FIN No. 46”). This interpretation clarifies the application of Accounting Research Bulletin No. 51, “Consolidated Financial Statements,” to certain entities in which equity investors do not have the characteristics of a controlling financial interest or do not have sufficient subordinated financial support from other parties. FIN No. 46 applies immediately to variable interest entities created after January 31, 2003, and to variable interest entities in which an enterprise obtains an interest after that date. For existing variable interest entities, the consolidated requirement is effective for interim or annual financial statements ending after December 15, 2003. Trump AC is still evaluating whether it has any variable interest entities, which will be subject to consolidation pursuant to FIN No. 46.

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Financial Condition —

Liquidity and Capital Resources

Cash flows from operating activities of Trump Plaza and the Taj Mahal are the Company’s primary source of liquidity. The Company also relies on capital lease financing to satisfy a portion of its capital resource needs. The Company’s ability to borrow funds for its liquidity needs is severely restricted by covenants in the indentures governing the Trump AC Mortgage Notes and by its already high levels of indebtedness. Sources of the Company’s short-term and long-term liquidity include casino gaming revenues and room, food and beverage sales. Although we expect the Company to have sufficient liquidity from the operating activities of Trump Plaza and the Taj Mahal 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 and our ability to service our debt obligations including the Trump AC Mortgage Notes.

Trump Plaza and the Taj Mahal also compete with other Atlantic City casino/hotels based on the quality of customer service, the array of games offered, the attractiveness of a casino/hotel and the extent and quality of the facilities and amenities. Because of the high levels of interest expense related to the Trump AC Mortgage Notes, the Company’s capital expenditures in recent years at Trump Plaza and the Taj Mahal have been limited and have prevented the Company from pursuing various capital expansion plans, such as the addition of more hotel rooms which might improve its competitive position.

In July 2003, the Borgata, a casino hotel built through a joint venture of MGM Mirage and Boyd Gaming, opened in Atlantic City’s marina district. Since its opening, the Borgata has adversely affected the revenues of the Trump AC Properties. The long term impact, however, of the Borgata on Atlantic City’s casinos and, in particular, the Trump AC Properties, cannot be ascertained at this time. See “General; We Do Not Know Whether the Borgata Will Continue to Adversely Affect Us in the Long Term.”

Because the Company has substantial indebtedness and related interest expense, we have not been able to pursue various capital expenditures, such as the addition of more hotel rooms. The inability to finance and make capital improvements to our properties could result in a deterioration of our competitive position. Capital expenditures at the Trump AC Properties for the nine months ended September 30, 2002 and 2003 are as follows:

TRUMP ATLANTIC CITY ASSOCIATES

CONSOLIDATING CAPITAL EXPENDITURES

(IN THOUSANDS)

	TAJ ASSOCIATES		PLAZA ASSOCIATES		TOTAL TRUMP AC
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2002
Purchase of Property & Equipment	$	10,021	$	4,384	$	14,405
Capital Lease Additions (a)		8,269		8,341		16,610
Total Capital Expenditures	$	18,290	$	12,725	$	31,015
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2003
Purchase of Property & Equipment	$	14,454	$	3,185	$	17,639
Capital Lease Additions (a)		10,609		7,123		17,732
Total Capital Expenditures	$	25,063	$	10,308	$	35,371

(a) Capital lease additions were principally slot machines.

Pursuant to the indentures governing the Trump AC Mortgage Notes, Trump AC is permitted to reimburse THCR for its operating and interest expenses. These reimbursements are subject to limitations set forth in such indentures, including an annual limitation of $10,000,000 in operating expense reimbursements and a life-time limitation of $50,000,000 in interest expense reimbursements. During the quarter ended June 30, 2002, Trump AC declared a partnership distribution to THCR of $101,341,000, consisting of $50,000,000 of prior years interest reimbursements and $51,341,000 of prior years operating expense reimbursements. Previously these amounts were presented as Advances to Affiliates on the balance sheet. During the nine months ended September 30, 2003, Trump AC declared cash partnership distributions to THCR of $3,960,000 consisting of operating expense reimbursements.

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We are continuously exploring ways to improve our capital structure and enhance our properties and their operating efficiencies. Some potential efforts contemplated include: (i) recapitalizing our company, (ii) further reducing our overhead costs and interest expenses in order to pursue capital expansion plans, such as the addition of hotel rooms, (iii) selling one or more of our assets, (iv) optimizing our labor resources and (v) utilizing the latest technology with proven economies of scale (e.g., coinless slot machines). There can be no assurances, however, that we will be successful in effecting any such efforts or doing so in a timely manner, or, if effected, in realizing significant costs savings in order to maintain or enhance our competitiveness.

On July 3, 2002, the State of New Jersey passed the New Jersey Business Tax Reform Act (the “Act”). This Act, among other things, requires the suspension of the use of the New Jersey net operating loss carryforwards for two years and imposes a new Alternative Minimum Assessment amount under the New Jersey corporate business tax based on either gross receipts or gross profits, as defined. The Act is retroactive to January 1, 2002. In addition on July 1, 2003, the New Jersey legislature passed a law (“New Jersey Profits Tax”) which imposes a 7.5% tax on each casino’s 2002 adjusted net income, defined as net income plus management fees, subject to a minimum tax of at least $350,000 per casino. In accordance with the Acts, Trump AC has recorded a provision for current income tax expense of $2,768,000 and $2,947,000 (including $175,000 related to the New Jersey Profits Tax) for the nine months ended September 30, 2002 and 2003, respectively.

On July 1, 2003, the New Jersey legislature passed a law that increases the taxation of New Jersey casinos. The new law imposes, among other taxes, a 4.25% tax on complimentaries (i.e., free rooms, food, beverages and entertainment given to patrons), an increase in the hotel tax of $3.00 per day on each occupied room, and increases the parking fee tax from $1.50 to $3.00 per car per day. In addition, each casino is charged a profits tax based on 7.5% of each casino’s 2002 adjusted net income (defined as net income plus management fees) subject to a minimum annual tax of $350,000. The tax is assessed during the period from July 1 to June 30 consistent with the fiscal year of the State of New Jersey. For the three and nine months ended September 30, 2003 Trump AC has recorded a charge to income tax expense on the statement of operations for $175,000 related to the profits tax.

Summary of the Company’s Public Indebtedness

Trump AC Mortgage Notes. Trump AC’s debt primarily consists of: (i) $1.2 billion principal amount of 11-¼% First Mortgage Notes due May 1, 2006 of Trump AC and Trump AC Funding; (ii) $75.0 million principal amount of 11-¼% First Mortgage Notes due May 1, 2006 of Trump AC and Trump AC Funding II; and (iii) $25.0 million principal amount of 11-¼% First Mortgage Notes due May 1, 2006 of Trump AC and Trump AC Funding III (collectively, the “Trump AC Mortgage Notes”).

Interest on the Trump AC Mortgage Notes is payable on May 1st and November 1st of each year. The Trump AC Mortgage Notes are redeemable in whole or in part, at any time upon not less than 30 but not more than 60 days notice. If redeemed at any time during the twelve-month period prior to May 1, 2004, the redemption price is 101.875% of the outstanding principal amount, plus accrued interest. If any of the Trump AC Mortgage Notes are redeemed on or after May 1, 2004, the redemption price is 100.0% of the outstanding principal amount of the Trump AC Mortgage Notes redeemed, plus accrued interest.

The Trump AC Mortgage Notes are secured on a senior basis by substantially all of the real and personal property owned or leased by Plaza Associates and Taj Associates. The liens securing the Trump AC Mortgage Notes are subordinate to liens securing approximately $1.2 million of senior indebtedness. The obligations evidenced by the Trump AC Mortgage Notes are jointly and severally guaranteed by Taj Associates, Plaza Associates and Trump AC and all future subsidiaries of Trump AC (other than Trump AC Funding).

The ability of Trump AC and its subsidiaries to pay interest on the Trump AC Mortgage Notes depends primarily on the ability of Trump Plaza and the Taj Mahal 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 future operating performance of Trump Plaza and the Taj Mahal 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 Trump Plaza and the Taj Mahal. There can be no assurance that the future operating performance of Trump Plaza and the Taj Mahal will be sufficient to generate the cash flows required to meet the debt service obligations of Trump Plaza, the Taj Mahal or Trump AC. The ability of Trump Plaza, the Taj Mahal and Trump AC 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.

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The indentures governing the public indebtedness of Trump AC restrict such entity’s ability to make distributions to THCR Holdings. In addition, the ability of Plaza Associates and Taj Associates (through Trump AC) to make payments, dividends or distributions to THCR Holdings may be restricted by the New Jersey Casino Control Commission (“CCC”).

“Events of Default.” Pursuant to each of the indentures governing the Trump AC Mortgage Notes (collectively, the “Indentures”), if an “Event of Default” occurs and is continuing, the trustee or the holders of 25.0% of the aggregate principal amount of the respective debt issue then outstanding, by notice in writing to the respective issuer or issuers, may, and the trustee at the request of such holders shall, declare all principal and accrued interest of such debt issue to be immediately due and payable. An “Event of Default” under each of the Indentures includes, but is not limited to, the occurrence of one or more of the following events: (i) a default in an installment payment of any interest (including any defaulted interest) on a respective debt issue when due and payable and which continues for 30 days; (ii) any Indebtedness (as defined) of the respective issuers or any of their Subsidiaries (as defined) for borrowed money having an outstanding principal amount of $20.0 million in the aggregate becoming by declaration or otherwise, due and payable prior to its stated maturity; (iii) one or more judgments, orders or decrees for the payment of money in excess of $10.0 million, either individually or in the aggregate, being rendered against the respective issuers or any of their Subsidiaries (as defined) or any of their respective properties and not discharged, and either an enforcement proceeding shall have been consummated by any creditor upon such judgment, order or decree or there shall be a period of 60 days during which a stay of enforcement of such judgment or order, by reason of a pending appeal or otherwise, shall not be in effect; (iv) an entry by a court having competent jurisdiction in the premises of a decree or order for relief in an involuntary case or proceeding under any applicable bankruptcy law or a decree or order adjudging the respective issuers or any of their Significant Subsidiaries (as defined) bankrupt or insolvent or seeking reorganization, arrangement, adjustment or composition of or in respect of the issuers or any of their Significant Subsidiaries (as defined) under any applicable federal or state law; and (v) the issuers or any of their Significant Subsidiaries (as defined) commencing a voluntary case or proceeding under any applicable bankruptcy law or any other case or proceeding to be adjudicated bankrupt or insolvent or the issuers or any of their Significant Subsidiaries (as defined) filing a petition, answer or consent seeking reorganization or relief under any applicable federal or state law.

Results of Operations: Operating Revenues and Expenses

The financial information presented below reflects the results of operations of Plaza Associates and Taj Associates. Because Trump AC has no business operations other than its interests in Plaza Associates and Taj Associates, its results of operations are not discussed below.

Comparison of Three-Month Periods Ended September 30, 2002 and 2003. The following tables include selected data of Plaza Associates and Taj Associates for the three months ended September 30, 2002 and 2003.

	Three Months Ended September 30,
	2002 Plaza Associates			2003 Plaza Associates			2002 Taj Associates			2003 Taj Associates			2002 Total Trump AC *			2003 Total Trump AC *
	(in thousands)
Revenues:
Gaming	$	93,549		$	83,455		$	146,129		$	137,858		$	239,678		$	221,313
Other		18,801			19,186			31,191			30,090			49,992			49,276
Gross revenues		112,350			102,641			177,320			167,948			289,670			270,589
Less: promotional allowances		24,625			25,800			32,288			37,981			56,913			63,781
Net revenues		87,725			76,841			145,032			129,967			232,757			206,808
Costs and expenses:
Gaming		40,071			38,956			62,121			61,796			102,192			100,752
Other		5,430			5,754			9,342			8,589			14,772			14,343
General and administrative		16,947			16,163			28,067			26,232			45,046			42,490
Depreciation and amortization		4,965			5,423			9,764			11,349			14,729			16,772
Total costs and expenses		67,413			66,296			109,294			107,966			176,739			174,357
Income from operations		20,312			10,545			35,738			22,001			56,018			32,451
Interest and other non-operating income (expense)		76			44			39			(15	)		251			98
Interest expense		(13,888	)		(13,922	)		(24,495	)		(24,606	)		(38,383	)		(38,528	)
Total non-operating expense, net		(13,812	)		(13,878	)		(24,456	)		(24,621	)		(38,132	)		(38,430	)
Income (loss) before income tax provision		6,500			(3,333	)		11,282			(2,620	)		17,886			(5,979	)
Income tax provision		(978	)		(449	)		(1,790	)		(689	)		(2,768	)		(1,138	)
Net income (loss)	$	5,522		$	(3,782	)	$	9,492		$	(3,309	)	$	15,118		$	(7,117	)

* Intercompany eliminations and expenses of Trump Administration, Trump AC, Trump AC Funding, Trump AC Funding II and Trump AC Funding III are not separately shown.

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	Three Months Ended September 30,
	2002 Plaza Associates			2003 Plaza Associates			2002 Taj Associates			2003 Taj Associates			2002 Total Trump AC			2003 Total Trump AC
	(dollars in thousands)
Table Game Revenues (1)	$	27,367		$	20,903		$	41,550		$	37,189		$	68,917		$	58,092
Incr (Decr) over Prior Period				$	(6,464	)				$	(4,361	)				$	(10,825	)
Table Game Drop (2)	$	168,230		$	158,096		$	257,044		$	233,611		$	425,274		$	391,707
Incr (Decr) over Prior Period				$	(10,134	)				$	(23,433	)				$	(33,567	)
Table Win Percentage (3)		16.3	%		13.2	%		16.2	%		15.9	%		16.2	%		14.8	%
Incr (Decr) over Prior Period					(3.1	)pts					(0.3	)pts					(1.4	)pts
Number of Table Games		88			90			139			127			227			217
Incr (Decr) over Prior Period					2						(12	)					(10	)
Slot Revenues (4)	$	66,182		$	62,552		$	98,548		$	94,643		$	164,730		$	157,195
Incr (Decr) over Prior Period				$	(3,630	)				$	(3,905	)				$	(7,535	)
Slot Handle (5)	$	820,076		$	780,985		$	1,219,085		$	1,184,689		$	2,039,161		$	1,965,674
Incr (Decr) over Prior Period				$	(39,091	)				$	(34,396	)				$	(73,487	)
Slot Win Percentage (6)		8.1	%		8.0	%		8.1	%		8.0	%		8.1	%		8.0	%
Incr (Decr) over Prior Period					(0.1	)pts					(0.1	)pts					(0.1	)pts
Number of Slot Machines		2,982			2,946			4,823			4,670			7,805			7,616
Incr (Decr) over Prior Period					(36	)					(153	)					(189	)
Poker Revenues		—			—		$	5,428		$	5,603		$	5,428		$	5,603
Incr (Decr) over Prior Period					—					$	175					$	175
Number of Poker Tables		—			—			68			66			68			66
Incr (Decr) over Prior Period					—						(2	)					(2	)
Other Gaming Revenues		—			—		$	603		$	423		$	603		$	423
Incr (Decr) over Prior Period					—					$	(180	)				$	(180	)
Total Gaming Revenues	$	93,549		$	83,455		$	146,129		$	137,858		$	239,678		$	221,313
Incr (Decr) over Prior Period				$	(10,094	)				$	(8,271	)				$	(18,365	)
Number of Guest Rooms		904			904			1,250			1,250			2,154			2,154
Occupancy Rate		96.7	%		96.8	%		98.0	%		98.5	%		96.4	%		97.8	%
Average Daily Rate (Room Revenue)	$	84.38		$	81.86		$	86.91		$	82.54		$	86.75		$	82.26

(1) “Table Game Revenues” is defined as the total amount wagered by table game patrons (the “Table Game Drop”), less the amounts paid back to such patrons by the casino for winning wagers.

(2) “Table Game Drop” is defined as the total amount wagered by table game patrons.

(3) “Table Win Percentage” is defined as the ratio, expressed as a percentage, of Table Games Revenues to Table Game Drop.

(4) “Slot Revenues” is defined as the total amount wagered by slot patrons (the “Slot Handle”), less the amount paid back to slot patrons by the casino for winning pulls.

(5) “Slot Handle” is defined as the total amount wagered by slot patrons.

(6) “Slot Win Percentage” is defined as the ratio, expressed as a percentage, of Slot Revenues to Slot Handle.

Gaming revenues are the primary source of Trump AC’s revenues. The year-over-year decrease in gaming revenues was due to decreased table game and slot revenues at both the Taj Mahal and Trump Plaza which was principally the result of the lack of overall market growth to accommodate the Borgata opening as well as a sluggish economy and poor weather conditions, including Hurricane Isabel in September.

Table game revenues decreased by approximately $10,825,000, or 15.7%, from the comparable period in 2002 due to decreases in the table game drop as well as the table win percentage principally at Trump Plaza. Overall Trump AC’s table win percentage decreased to 14.8% from 16.2% in the comparable period in 2002. Table game revenues represent the amount retained by Trump AC 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 win percentages were 15.5% and 15.2% for the quarters ended September 30, 2002 and 2003, respectively.

Slot revenues decreased by approximately $7,535,000, or 4.6%, from the comparable period in 2002 primarily as a result of the decreased slot handle at both the Taj Mahal and Trump Plaza.

Promotional Allowances increased by approximately $6,868,000, or 12.1%, from the comparable period in 2002 primarily as a result of increases in coin expense and complimentary hotel services.

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Gaming costs and expenses decreased by approximately $1,440,000, or 1.4%, from the comparable period in 2002 primarily due to decreases in payroll and bad debt expenses.

General and Administrative costs and expenses decreased by approximately $2,556,000, or 5.7%, from the comparable period in 2002. Expense decreases at both the Taj Mahal and Trump Plaza were primarily related to decreases in employee benefits partially offset by increases in insurance and utility expenses.

In accordance with the New Jersey Business Tax Reform Act, Trump AC has recorded a provision for current income tax expense of $2,768,000 and $963,000 for the three months ended September 30, 2002 and 2003. The comparable expense in the three months ended September 30, 2002 was cumulative and retroactive to January 1, 2002 since this change was recorded beginning in the period in which the tax law was passed (third quarter 2002) pursuant to the accounting literature in Financial Accounting Standards Board Statement Number 109, “Accounting for Income Taxes.”

On July 1, 2003, the New Jersey legislature passed a law that increases the taxation of New Jersey casinos. The new law imposes, among other taxes, a 4.25% tax on complimentaries (i.e., free rooms, food, beverages and entertainment given to patrons), an increase in the hotel tax of $3.00 per day on each occupied room, and increases the parking fee tax from $1.50 to $3.00 per car per day. In addition, each casino is charged a profits tax based on 7.5% of each casino’s 2002 adjusted net income (defined as net income plus management fees) subject to a minimum annual tax of $350,000. The tax is assessed during the period from July 1 to June 30 consistent with the fiscal year of the State of New Jersey. For the three and nine months ended September 30, 2003 Trump AC has recorded a charge to income tax expense on the statement of operations for $175,000 related to the profits tax.

Comparison of Nine-Month Periods Ended September 30, 2002 and 2003. The following table includes selected data of Plaza Associates and Taj Associates for the nine months ended September 30, 2002 and 2003.

	Nine Months Ended September 30,
	2002 Plaza Associates			2003 Plaza Associates			2002 Taj Associates			2003 Taj Associates			2002 Total Trump AC *			2003 Total Trump AC *
	(in thousands)
Revenues:
Gaming	$	259,433		$	243,318		$	408,507		$	395,223		$	667,940		$	638,541
Other		53,178			52,332			85,109			80,965			138,287			133,297
Gross Revenues		312,611			295,650			493,616			476,188			806,227			771,838
Less: promotional allowances		69,731			70,086			95,237			99,743			164,968			169,829
Net revenues		242,880			225,564			398,379			376,445			641,259			602,009
Costs and expenses:
Gaming		117,505			113,346			177,275			177,825			294,780			291,171
Other		16,099			16,178			27,323			26,086			43,422			42,264
General and administrative		48,161			49,513			79,440			80,424			127,673			130,094
Depreciation and amortization		13,466			15,144			28,066			32,701			41,532			47,845
Debt renegotiation costs		—			—			—			—			1,570			300
Total costs and expenses		195,231			194,181			312,104			317,036			508,977			511,674
Income from operations		47,649			31,383			86,275			59,409			132,282			90,335
Interest and other non-operating income		245			219			195			72			809			532
Interest expense		(38,834	)		(42,219	)		(71,907	)		(73,702	)		(114,834	)		(115,921	)
Total non-operating expense		(38,589	)		(42,000	)		(71,712	)		(73,630	)		(114,025	)		(115,389	)
Income (loss) before income tax provision		9,060			(10,617	)		14,563			(14,221	)		18,257			(25,054	)
Income tax provision		(978	)		(1,141	)		(1,790	)		(1,806	)		(2,768	)		(2,947	)
Net income (Loss)	$	8,082		$	(11,758	)	$	12,773		$	(16,027	)	$	15,489		$	(28,001	)

* Intercompany eliminations and expenses of Trump Administration, Trump AC, Trump AC Funding, Trump AC Funding II and Trump AC Funding III are not separately shown.

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	Nine Months Ended September 30,
	2002 Plaza Associates			2003 Plaza Associates			2002 Taj Associates			2003 Taj Associates			2002 Total Trump AC			2003 Total Trump AC
	(dollars in thousands)
Table Game Revenues (1)	$	77,360		$	68,013		$	116,067		$	115,430		$	193,427		$	183,443
Incr (Decr) over Prior Period				$	(9,347	)				$	(637	)				$	(9,984	)
Table Game Drop (2)	$	458,240		$	443,295		$	700,590		$	685,171		$	1,158,830		$	1,128,466
Incr (Decr) over Prior Period				$	(14,945	)				$	(15,419	)				$	(30,364	)
Table Win Percentage (3)		16.9	%		15.3	%		16.6	%		16.8	%		16.7	%		16.3	%
Incr (Decr) over Prior Period					(1.6	) pts					0.2 pts						(0.4	) pts
Number of Table Games		88			90			139			127			227			217
Incr (Decr) over Prior Period					2						(12	)					(10	)
Slot Revenues (4)	$	182,073		$	175,305		$	275,481		$	262,985		$	457,554		$	438,290
Incr (Decr) over Prior Period				$	(6,768	)				$	(12,496	)				$	(19,264	)
Slot Handle (5)	$	2,261,239		$	2,203,086		$	3,476,466		$	3,290,264		$	5,737,705		$	5,493,350
Incr (Decr) over Prior Period				$	(58,153	)				$	(186,202	)				$	(244,355	)
Slot Win Percentage (6)		8.1	%		8.0	%		7.9	%		8.0	%		8.0	%		8.0	%
Incr (Decr) over Prior Period					(0.1	) pts					0.1 pts						— pts
Number of Slot Machines		2,912			2,953			4,843			4,703			7,755			7,656
Incr (Decr) over Prior Period					41						(140	)					(99	)
Poker Revenues		—			—		$	15,309		$	15,444		$	15,309		$	15,444
Incr (Decr) over Prior Period					—					$	135					$	135
Number of Poker Tables		—			—			68			66			68			66
Incr (Decr) over Prior Period					—						(2	)					(2	)
Other Gaming Revenues		—			—		$	1,650		$	1,364		$	1,650		$	1,364
Incr (Decr) over Prior Period					—					$	(286	)				$	(286	)
Total Gaming Revenues	$	259,433		$	243,318		$	408,507		$	395,223		$	667,940		$	638,541
Incr (Decr) over Prior Period				$	(16,115	)				$	(13,284	)				$	(29,399	)
Number of Guest Rooms		904			904			1,250			1,250			2,154			2,154
Occupancy Rate		94.1	%		93.5	%		95.9	%		95.2	%		95.1	%		94.4	%
Average Daily Rate (Room Revenue)	$	82.17		$	79.57		$	81.45		$	78.54		$	81.76		$	78.97

(1) “Table Game Revenues” is defined as the total amount wagered by table game patrons (the “Table Game Drop”), less the amounts paid back to such patrons by the casino for winning wagers.

(2) “Table Game Drop” is defined as the total amount wagered by table game patrons.

(3) “Table Win Percentage” is defined as the ratio, expressed as a percentage, of Table Games Revenues to Table Game Drop.

(4) “Slot Revenues” is defined as the total amount wagered by slot patrons (the “Slot Handle”), less the amount paid back to slot patrons by the casino for winning pulls.

(5) “Slot Handle” is defined as the total amount wagered by slot patrons.

(6) “Slot Win Percentage” is defined as the ratio, expressed as a percentage, of Slot Revenues to Slot Handle.

Gaming revenues are the primary source of Trump AC’s revenues. The year-over-year decrease in gaming revenues was due to decreased table game and slot revenues at both the Taj Mahal and Trump Plaza. The decrease in total gaming revenue was principally caused by severe winter weather conditions in the Atlantic City Market, adverse economic conditions and the war in Iraq. In addition, during the third quarter of 2003 the lack of overall market growth to accommodate the Borgata opening as well as a sluggish economy and poor weather conditions, including Hurricane Isabel in September, also contributed to this year-over-year decrease.

Table game revenues decreased by approximately $9,984,000, or 5.2%, from the comparable period in 2002 due to decreases in the table game drop at both the Taj Mahal and Trump Plaza. Overall Trump AC’s table win percentage decreased to 16.3% from 16.7% in the comparable period in 2002. Table game revenues represent the amount retained by Trump AC 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 win percentages were 15.8% and 16.0% for the nine months ended September 30, 2002 and 2003, respectively.

Slot revenues decreased by approximately $19,264,000, or 4.2%, from the comparable period in 2002 primarily as a result of the decreased slot handle at both the Taj Mahal and Trump Plaza.

Promotional Allowances increased by approximately $4,861,000, or 2.9%, from the comparable period in 2002 primarily as a result of increases in coin expense and complimentary hotel services.

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Gaming costs and expenses decreased by approximately $3,609,000, or 1.2%, from the comparable period in 2002 primarily due to decreases in payroll and bad debt expenses at Trump Plaza.

General and Administrative costs and expenses increased by approximately $2,421,000, or 1.9%, from the comparable period in 2002. Expense increases at both the Taj Mahal and Trump Plaza were primarily related to increased real estate taxes, insurance and utility expenses. Additionally both the Taj Mahal and Trump Plaza recorded a donation of casino reinvestment obligations which resulted in a charge of $1,480,000 for the nine months ended September 30, 2003.

Trump AC was seeking to refinance or modify the terms of the Trump AC Mortgage Notes which were approximately $1,300,000,000 aggregate principal amount as of September 30, 2003. In connection with such efforts, Trump AC has incurred approximately $1,570,000 and $300,000 in debt renegotiation costs in the nine months ended September 30, 2002 and 2003, respectively. Trump AC has since terminated such efforts but intends to revisit the capital markets at a later time if and when more favorable market conditions exist.

Seasonality

Cash flows from the Trump Plaza and the Taj Mahal operating activities are seasonal in nature, with spring and summer traditionally being peak seasons and autumn and winter being non-peak seasons. Consequently, the Company’s operating results during the two quarters ending in March and December are not historically as profitable as the two quarters ending in June and September. Any excess cash flow achieved from operations during peak seasons is used to subsidize non-peak seasons. Performance in non-peak seasons is usually dependent on favorable weather and a long-weekend holiday calendar. In the event that the Trump Plaza and the Taj Mahal are unable to generate excess cash flows in one or more peak seasons, they may not be able to subsidize non-peak seasons, if necessary.

ITEM 3 — QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

Market risk is the risk of loss arising from adverse changes in market rates and prices, including interest rates, foreign currency exchange rates and commodity rates. We have limited exposure to market risk due to the fact that the interest rates on our long term debt are fixed and we do not utilize these financial instruments for trading purposes.

The carrying amount of the following financial instruments approximates fair value as follows: (a) cash and cash equivalents, receivables and payables are based on the short-term nature of these financial instruments and (b) CRDA bonds and deposits are based on the allowances to give effect to the below market interest rates.

The carrying amount and fair value of our fixed rate indebtedness is as set forth below:

	September 30, 2003
	Carrying Amount		Fair Value
	(in thousands)
$1.2 billion 11- 1/4% First Mortgage Notes due 2006	$	1,200,000	$	936,000
$75 million 11- 1/4% First Mortgage Notes due 2006	$	74,378	$	58,500
$25 million 11- 1/4% First Mortgage Notes due 2006	$	24,695	$	19,500

ITEM 4 — CONTROLS AND PROCEDURES

(a) Evaluation of Disclosure Controls and Procedures. Based on their evaluation as of the end of the period covered by this Quarterly Report on Form 10-Q, the principal executive officer and principal financial officer of each of the Registrants have concluded that their disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934 (the “Exchange Act”)) are effective to ensure that information required to be disclosed by the Registrants in reports that they file or submit under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in Securities and Exchange Commission rules and forms.

(b) Changes in Internal Controls. There were no specific changes in the Registrants’ internal controls over financial reporting during the fiscal quarter covered by this Form 10-Q that have materially affected, or are reasonably likely to materially affect, the Registrants’ internal control over financial reporting.

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PART II — OTHER INFORMATION

ITEM 1 — LEGAL PROCEEDINGS

General. Currently and from time to time, Trump AC, its partners, certain members of its former executive committee, executive officers and certain of its employees are involved in various legal proceedings incidental to Trump AC’s business. While any proceeding or litigation has an element of uncertainty, management believes that the final outcomes of these matters are not likely to have a material adverse effect upon the Registrants’ results of operations or financial position. In general, Trump AC has agreed to indemnify its partners, executive officers and directors 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 absent a showing of such persons’ gross negligence or malfeasance.

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

On September 17, 2003, Trump AC was added as a party to that certain Amended and Restated Executive Agreement, effective as of January 1, 2003, by and among Donald J. Trump, THCR and THCR Holdings (the “Amended Executive Agreement”). As disclosed in THCR’s 2003 proxy statement, Mr. Trump, THCR and THCR Holdings had entered into the Amended Executive Agreement on April 10, 2003 in consideration for Mr. Trump terminating his Services Agreement, dated December 28, 1995, with Trump Marina Associates, L.P. (“Trump Marina”) in connection with a March 2003 private placement of first and second priority mortgage notes secured, in part, by the assets of, and guaranteed by, Trump Marina. Other than adding Trump AC as a party to the Amended Executive Agreement, none of the terms of such agreement were changed. A copy of the Amended Executive Agreement, as amended, is filed as an exhibit to this Form 10-Q.

Subsequent Event. On November 5, 2003, Standard & Poor’s Rating Services (“S&P”) revised its outlook for the Trump AC Mortgage Notes from stable to negative. At the same time, however, S&P affirmed its “CCC+” corporate and senior secured debt ratings for the Trump AC Mortgage Notes.

ITEM 6 — EXHIBITS AND REPORTS ON FORM 8-K

a. Exhibits:

10.1	*	Amended and Restated Executive Agreement, effective as of January 1, 2003, by and among Donald J. Trump, Trump Hotels & Casino Resorts, Inc., Trump Hotels & Casino Resorts Holdings, L.P. and Trump Atlantic City Associates.
31.1		Certification of the Chief Executive Officer of the Registrants Pursuant to Rule 13a-14(a)/15(d)-14(a) of the Securities Exchange Act of 1934, as Amended.
31.2		Certification of the Chief Financial Officer of the Registrants Pursuant to Rule 13a-14(a)/15(d)-14(a) of the Securities Exchange Act of 1934, as Amended.
32.1		Certification of the Chief Executive Officer of the Registrants Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
32.2		Certification of the Chief Financial Officer of the Registrants Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

* Management contract or compensatory plan or arrangement.

b. Current Reports on Form 8-K:

THCR filed a Current Report on Form 8-K with the SEC on July 23, 2003 regarding its earnings press release, including the results of Trump AC, for the second quarter and six months ended June 30, 2003.

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SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, each of the registrants has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

	TRUMP ATLANTIC CITY ASSOCIATES                             (Registrant)
	By:	TRUMP ATLANTIC CITY HOLDING, INC., its Managing General Partner
Date: November 14, 2003	By:	/s/    FRANCIS X. MCCARTHY, JR.
		Francis X. McCarthy, Jr. Chief Financial Officer (Duly Authorized Officer and Principal Financial and Accounting Officer)
	TRUMP ATLANTIC CITY FUNDING, INC.                             (Registrant)
Date: November 14, 2003	By:	/s/    FRANCIS X. MCCARTHY, JR.
		Francis X. McCarthy, Jr. Chief Financial Officer (Duly Authorized Officer and Principal Financial and Accounting Officer)
	TRUMP ATLANTIC CITY FUNDING II, INC.                             (Registrant)
Date: November 14, 2003	By:	/s/    FRANCIS X. MCCARTHY, JR.
		Francis X. McCarthy, Jr. Chief Financial Officer (Duly Authorized Officer and Principal Financial and Accounting Officer)
	TRUMP ATLANTIC CITY FUNDING III, INC.                             (Registrant)
Date: November 14, 2003	By:	/s/    FRANCIS X. MCCARTHY, JR.
		Francis X. McCarthy, Jr. Chief Financial Officer (Duly Authorized Officer and Principal Financial and Accounting Officer)

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EXHIBIT INDEX
Exhibit No.	Description
10.1*	Amended and Restated Executive Agreement, effective as of January 1, 2003, by and among Donald J. Trump, Trump Hotels & Casino Resorts, Inc., Trump Hotels & Casino Resorts Holdings, L.P. and Trump Atlantic City Associates.
31.1	Certification of the Chief Executive Officer of the Registrants Pursuant to Rule 13a-14(a)/15(d)-14(a) of the Securities Exchange Act of 1934, as Amended.
31.2	Certification of the Chief Financial Officer of the Registrants Pursuant to Rule 13a-14(a)/15(d)-14(a) of the Securities Exchange Act of 1934, as Amended.
32.1	Certification of the Chief Executive Officer of the Registrants Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
32.2	Certification of the Chief Financial Officer of the Registrants Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

* Management contract or compensatory plan or arrangement.

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EX-10.1

EXHIBIT 10.1

AMENDED AND RESTATED EXECUTIVE AGREEMENT

THIS AMENDED AND RESTATED EXECUTIVE AGREEMENT (the “Agreement”), made as of this 1^ST day of January, 2003, is by and among DONALD J. TRUMP (the “Executive”), TRUMP HOTELS & CASINO RESORTS, INC., a Delaware corporation (the “Company”), and TRUMP HOTELS & CASINO RESORTS HOLDINGS, L.P., a Delaware limited partnership (“THCR Holdings”), and TRUMP ATLANTIC CITY ASSOCIATES, a New Jersey general partnership (“TAC”).

W I T N E S S E T H

WHEREAS, Executive has served as Chairman of the Board of the Company since its inception as a public company in 1995 and as its President and Chief Executive Officer since June, 2000, and has been compensated for serving as such pursuant to the terms of an Executive Agreement, dated as of June 12, 1995, among Executive, the Company and THCR Holdings (as amended prior to the date hereof, the “Executive Agreement); and

WHEREAS, through a corporation owned by him, Executive has provided certain consulting and marketing services to Trump’s Castle Associates, a subsidiary of the Company, pursuant to a Services Agreement, dated December 28, 1993, which expires on December 31, 2005 (the “Services Agreement”); and

WHEREAS, Executive agreed to an early termination of the Services Agreement in order to facilitate the consummation of a refinancing of certain public debt issues of the Company and its subsidiaries (the “Refinancing”); and

WHEREAS, the ongoing services of Executive and his association with the Company are vital to the continued success and future prospects of the Company; and

WHEREAS, Executive, THCR Holdings and the Company heretofore entered into an Amended and Restated Executive Agreement, dated as of April 10, 2003 (the “April 10 Agreement”), pursuant to which Executive agreed to serve as President and Chief Executive Officer of the Company; and

WHEREAS, the parties hereto desire that Executive also agree to serve as the President and Chief Executive Officer of TAC for no additional consideration as contemplated by the April 10 Agreement; and

WHEREAS, the Company desires to secure the services of Executive on a long-term basis and to memorialize the terms of employment of the Executive in this amendment to the April 10 Agreement and restatement thereof; and

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WHEREAS, the Executive is willing to perform certain services on behalf of the Company and THCR Holdings on the terms and conditions hereinafter provided;

NOW, THEREFORE, in consideration of the promises and the mutual covenants herein contained, the parties hereto agree as follows:

2

ARTICLE I

EMPLOYMENT; DUTIES

Section 1.1 Employment; Duties. The Company shall employ Executive, and Executive hereby agrees to serve, as the President and Chief Executive Officer of the Company. The Company shall recommend that Executive be nominated to serve as a member of the Board of Directors of the Company and, if elected a director, that he serve as its Chairman at all times during the term hereof. Executive shall have such reasonable and customary powers and duties as are generally associated with the positions of President and Chief Executive Officer of a public company, as well as those conferred upon such offices and the position of Chairman of the Board by the by-laws of the Company and resolutions of its Board of Directors. In recognition of the fact that Executive has, and will continue to have, diverse business interests in addition to those of the Company, Executive shall not be required to devote any fixed amount of time to the performance of his duties hereunder, but shall devote sufficient time to discharge his duties hereunder responsibly and in a professional manner. Executive agrees to serve as a director and executive officer of such subsidiaries of the Company as the Board of Directors of the Company and Executive may agree for no additional compensation. Executive hereby agrees to serve as the President and Chief Executive Officer of TAC. Executive may perform this Agreement from one or more locations within the United States that he selects. Executive agrees that he will use his reasonable efforts to maintain all Material Licenses. Nothing herein shall be construed as affecting the obligations of Executive under the Contribution Agreement.

ARTICLE II

TERM

Section 2.1 Term. This Agreement shall be effective as of January 1, 2003 and shall continue for an initial term of three years and thereafter for a three-year rolling term which rolling term shall be automatically extended so that the remaining term of this Agreement on any date after the initial three year term is always at least three years. If during such rolling term either party gives written notice to the other of its election not to continue extending such term, then the term of this Agreement shall end three years from the date on which such notice is given (except that Section 4.4 hereof shall survive any such termination). The parties hereto acknowledge that the Services Agreement was terminated as of December 31, 2002; provided, however, that any Incentive Fee under the Services Agreement (as defined therein) earned in 2002 that is payable in 2003 shall remain payable.

3

ARTICLE III

COMPENSATION; BENEFITS

Section 3.1 (a) Annual Base Compensation. The Executive shall be paid an annual base salary of $1,500,000 (the “Annual Base Compensation”). The Annual Base Compensation shall be payable to Executive monthly in accordance with the regular payroll practices of the Company.

(b) Additional Fixed Compensation. In addition to Annual Base Compensation, Executive shall be paid additional fixed compensation of $1,500,000 per year (“Additional Fixed Compensation”) for each year beginning with 2003 that the Consolidated EBITDA of the Company is at least $270,000,000 (“Minimum EBITDA”). Minimum EBITDA is subject to adjustment as provided in subsection (d) below. Additional Fixed Compensation shall also be paid monthly in twelve equal installments; provided, however, that if the Board of Directors of the Company shall determine, in its good faith reasonable judgment, that the Company’s Consolidated EBITDA for the current year will not equal or exceed the Minimum EBITDA then the monthly payment thereof shall cease until such time as the Board of Directors shall determine that the Minimum EBITDA will be achieved, at which time the monthly payments shall resume and prior arrearages shall be paid promptly. If, for any year, it shall be determined by March 31 of the next ensuing year that the Minimum EBITDA was not achieved for the prior year, then Executive shall promptly repay all amounts previously paid to him in respect of the Additional Fixed Compensation for such year, without interest. Until such time as Executive makes such repayment, Additional Fixed Compensation for the current year shall accrue but shall not be paid.

(c) Incentive Fee. In addition to Annual Base Compensation and Additional Fixed Compensation, Executive shall also be paid annual incentive compensation equal to 5.0 percent (5%) of the amount by which the Consolidated EBITDA of the Company for any year exceeds Minimum EBITDA for such year (the “Incentive Fee”).

If the Company’s Consolidated EBITDA for any fiscal year does not exceed Minimum EBITDA for such fiscal year, then the Incentive Fee for such year shall be $0. If the Company’s Consolidated EBITDA is less than Minimum EBITDA for a given year, such deficiency shall not be carried forward to reduce or increase the Minimum EBITDA for the following year. Minimum EBITDA is subject to adjustment only as provided in Section 3.1(d) or Section 4.13 hereof.

The Incentive Fee if and when earned with respect to any year or portion thereof, shall be payable to Executive within thirty (30) days after submission by the Company to the New Jersey Casino Control Commission (the “Casino Control Commission”) of an annual report reflecting the consolidated results of operations of the Company for such year.

(d) The parties hereto agree that the Minimum EBITDA of $270 million set forth above in subsection (a) is based upon the operations of THCR and its subsidiaries existing as of

4

January 1, 2003. The parties agree to negotiate in good faith to adjust Minimum EBITDA either upwards or downwards, as appropriate, to reflect any new casino gaming operations of THCR and its subsidiaries undertaken after January 1, 2003, or the sale of any operations after such date.

Section 3.2 Expenses. Within ten (10) business days after presentation of expense vouchers in such detail as may be necessary under applicable rules or regulations of the Internal Revenue Service, or as otherwise may reasonably be requested by the Company, the Company shall reimburse the Executive for all reasonable and sufficiently documented expenses incurred by the Executive in connection with this Agreement. Executive shall also be reimbursed for amounts paid by him or a corporation owned by him in respect of expenses relating to his New York staff that are related to the performance by Executive of this Agreement.

Section 3.3 Fringe Benefits and Air Travel. During the term hereof, Executive shall be entitled to fringe benefits and perquisites in accordance with the most favorable plans, practices, programs and policies of the Company as in effect at the time with respect to other senior executives of the Company.

Section 3.4 Office and Support Services. During the term, Executive shall be entitled to office space, and to secretarial and other support services, at least equal to the most favorable of such as provided with respect to other senior executives of the Company.

Section 3.5 Other Benefits. Executive shall be eligible to participate in any and all other benefit plans of the Company for which senior executive employees are eligible.

ARTICLE IV

DEFINITIONS – ADDITIONAL PROVISIONS

Section 4.1 Certain Definitions. For purposes of this Agreement, the following terms shall have the following meanings:

“Consolidated EBITDA” means, with respect to the Company and its consolidated subsidiaries, for any period, an amount equal to the sum of (i) the net income (or loss) of the Company and its consolidated subsidiaries for such period determined in accordance with generally accepted accounting principles, consistently applied, excluding any extraordinary, unusual or non-recurring gains or losses, plus (ii) all amounts deducted in computing such net income (or loss) in respect of interest (including the imputed interest portions of rentals under capitalized leases), depreciation, amortization and taxes based upon or measured by income, plus (iii) other non-cash charges arising from market value adjustments and adjustments pertaining to contributions of deposits in each case in respect of CRDA Bonds. Additional Fixed Compensation and Incentive Fee for a given year shall not be deducted in determining net income of the Company for such year for purposes of this Section 4.1.

5

“Contribution Agreement” means the Contribution Agreement among THCR Holdings, Donald J. Trump, THCR/LP and Trump Casinos, Inc., as amended.

“Material License” means the casino gaming licenses and qualifications referred to in Sections 4.6, 4.7 and 4.8 hereof and any other license or qualification that Executive is required to obtain with respect to any new jurisdiction in which the Company or its subsidiaries conduct casino gaming activities in the future.

“Subsidiary” or “subsidiary” means: a corporation a majority of whose voting stock is at the time, directly or indirectly, owned by such person, by such person and one or more subsidiaries of such person or by one or more subsidiaries of such person; any other person (other than a corporation) in which such person, one or more subsidiaries of such person, or such person and one or more subsidiaries of such person, directly or indirectly, at the date of determination thereof have a majority ownership interest; or a partnership or limited liability company in which such person or a subsidiary of such person is, at the time, general partner or a managing member and has a majority ownership interest.

Section 4.2 CHOICE OF LAW. THIS AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF DELAWARE WITHOUT REGARD TO ITS PRINCIPLES OF CONFLICTS OF LAWS.

Section 4.3 Confidential Information. Neither the Company nor Executive shall disclose or permit the disclosure of any information deemed confidential by either of them except (i) to the directors, officers, agents, employees or representatives of the company and THCR Holdings and their subsidiaries; (ii) if required by a court of competent jurisdiction or other governmental agency or body or otherwise required by law or legal process; or (iii) to the extent reasonably required to perform the Agreement.

Section 4.4 Indemnification.

(a) The Executive shall be indemnified and held harmless by the Company and THCR Holdings in his capacity as a director and officer of the Company (and any of its subsidiaries of which Executive is a director or officer) to the full extent permitted by the Delaware General Corporation Law.

(b) The Company shall continue to maintain in full force and effect director and officer liability insurance for the benefit of Executive consistent with its current practices.

(c) The provisions of this Section 4.4 shall survive the expiration of the Term of employment of Executive for any reason for 10 years thereafter or such longer period as the Company maintains such insurance for the benefit of past directors and officers.

Section 4.5 Notices. All notices to be given hereunder shall be given in writing and shall be deemed given when delivered by messenger (including delivery by overnight express delivery services) or by first-class U.S. mail, with postage prepaid, registered or

6

certified, and if intended for the Company, THCR Holdings or TAC, delivered or addressed to the following addresses (or at such other address for a party as shall be specified by like notice):

Trump Hotels & Casino Resorts, Inc.

Trump Hotels & Casino Resorts Holdings, L.P.

Trump Atlantic City Associates

1000 Boardwalk at Virginia

Atlantic City, NJ 08401

Attention: Robert M. Pickus, Esq.

and if intended for the Executive, delivered or addressed to:

Donald J. Trump

The Trump Organization

725 Fifth Avenue

New York, New York 10022

Section 4.6 New Jersey Casino Control Act. The Executive has been found qualified by the New Jersey Casino Control Commission as a natural person qualifier of Trump Plaza Associates. Performance of Executive’s duties as chairman of the board and president and chief executive officer of the Company requires his continuing qualification as a natural person qualifier of Trump’s Castle Associates, LP, Trump Plaza Associates and Trump Taj Mahal Associates. The Executive agrees to take all steps necessary to maintain his qualification as a natural person qualifier of such entities in a timely manner.

Section 4.7 Indiana Riverboat Gambling Act. The Executive has been found suitable by the Indiana Gaming Commission as a key person of Trump Indiana, Inc. Performance of Executive’s duties as Chairman of the Board of the Company requires a continuing finding of suitability as a key person of Trump Indiana, Inc. The Executive agrees to take all steps necessary to maintain his suitability in a timely manner.

Section 4.8 National Indian Gaming Commission. The National Indian Gaming Commission has found Executive suitable as a key person of THCR Management Services, LLC. Executive agrees to take all steps necessary to maintain this suitability in a timely manner.

Section 4.9 Limitations on Rights of Third Parties. Except as otherwise set forth herein, nothing in this Agreement is intended or shall be construed to confer upon or give any Person, other than the parties hereto and their respective successors, any rights or remedies under or by reason of this Agreement or any transaction contemplated hereby.

Section 4.10 Assignments. This Agreement (other than the right of the Executive to receive payments hereunder) is not assignable and any purported assignment or other transfer of rights or obligations under this Agreement shall be void and of no effect.

7

Section 4.11 No Joint Venture or Company. Nothing expressed or implied in this Agreement is intended or shall be construed to create or establish a joint venture or a partnership between the parties hereto.

Section 4.12 Amendments. This Agreement may not be amended, modified, altered or waived, in whole or in part, except by a subsequent writing signed by the parties hereto. No amendments may be made to this Agreement without the prior approval of the Compensation Committee of the Company.

Section 4.13 Termination. Except as provided in Section 2.1, this Agreement may be terminated by the Company and THCR Holdings only in the event that Executive fails to maintain the licenses and qualifications referred to in Sections 4.6, 4.7 and 4.8 hereof and such failure has a material adverse effect on the Company and its subsidiaries taken as a whole. Executive may terminate this Agreement as provided in Section 2.1 or in the event of a material breach hereof by the Company or THCR Holdings. The provisions of Section 4.4 hereof shall survive termination of this Agreement for any reason for ten years. If this Agreement is terminated as of any date other than December 31 of any year, then the Consolidated EBITDA amounts specified an Sections 3.1(b) and 3.1(c) shall be adjusted ratably downward to reflect the actual number of days elapsed in the year of termination to the date of termination and the amount payable under such Section 3.1(b) shall be similarly adjusted. In the event of a termination of this Agreement by any party, the amount of any Additional Fixed Compensation (adjusted, if appropriate) shall be paid to Executive within 30 days of termination and the amount of any Incentive Fee (adjusted, if appropriate) shall be made paid as soon as practicable, but in no event later than 90 days after termination.

Section 4.14 Limitation on Damages. Neither party shall be liable to the other party for any consequential damages resulting from a breach of this Agreement.

8

IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly executed as of the day and year first above written.

DONALD J. TRUMP

/s/    DONALD J. TRUMP        

TRUMP HOTELS & CASINO RESORTS, INC.
By:	/s/    ROBERT M. PICKUS
	Authorized Officer

TRUMP HOTELS & CASINO RESORTS HOLDINGS, L.P.
By:	Trump Hotels & Casino Resorts, Inc. its general partner
By:	/s/    ROBERT M. PICKUS
	Authorized Officer

TRUMP ATLANTIC CITY ASSOCIATES
By:	Trump Hotels & Casino Resorts Holdings, L.P. Trump Hotels & Casino Resorts, Inc. its general partner
By:	/s/    ROBERT M. PICKUS
	Authorized Officer

9

EX-31.1

Exhibit 31.1

CERTIFICATION

I, DONALD J. TRUMP, certify that:

1. I have reviewed this quarterly report on Form 10-Q of Trump Atlantic City Associates, Trump Atlantic City Funding, Inc., Trump Atlantic City Funding II, Inc. and Trump Atlantic City Funding III, Inc.;

2. Based on my knowledge, this quarterly report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this quarterly report;

3. Based on my knowledge, the financial statements, and other financial information included in this quarterly report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrants as of, and for, the periods presented in this quarterly report;

4. The registrants’ other certifying officers and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) for the registrants and we have:

a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrants, including their consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b) Evaluated the effectiveness of the registrants’ disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

c) Disclosed in this report any change in the registrants’ internal control over financial reporting that occurred during the registrants’ most recent fiscal quarter (the registrants’ fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrants’ internal control over financial reporting; and

5. The registrants’ other certifying officers and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrants’ auditors and the audit committee of registrants’ board of directors (or persons performing the equivalent function):

a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrants’ ability to record, process, summarize and report financial information; and

b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrants’ internal controls over financial reporting.

Date: November 14, 2003

/s/    DONALD J. TRUMP        

Donald J. Trump

Chief Executive Officer and President of:

Trump Atlantic City Holding, Inc.,

the managing general partner of

Trump Atlantic City Associates;

Trump Atlantic City Funding, Inc.

Trump Atlantic City Funding II, Inc.

Trump Atlantic City Funding III, Inc.

EX-31.2

Exhibit 31.2

CERTIFICATION

I, FRANCIS X. MCCARTHY, JR., certify that:

1. I have reviewed this quarterly report on Form 10-Q of Trump Atlantic City Associates, Trump Atlantic City Funding, Inc., Trump Atlantic City Funding II, Inc. and Trump Atlantic City Funding III, Inc.;

2. Based on my knowledge, this quarterly report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this quarterly report;

3. Based on my knowledge, the financial statements, and other financial information included in this quarterly report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrants as of, and for, the periods presented in this quarterly report;

4. The registrants’ other certifying officers and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) for the registrants and we have:

a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrants, including their consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b) Evaluated the effectiveness of the registrants’ disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

c) Disclosed in this report any change in the registrants’ internal control over financial reporting that occurred during the registrants’ most recent fiscal quarter (the registrants’ fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrants’ internal control over financial reporting; and

5. The registrants’ other certifying officers and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrants’ auditors and the audit committee of registrants’ board of directors (or persons performing the equivalent function):

a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrants’ ability to record, process, summarize and report financial information; and

b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrants’ internal controls over financial reporting.

Date: November 14, 2003

/s/    FRANCIS X. MCCARTHY, JR.        

Francis X. McCarthy, Jr.

Executive Vice President of Finance and Chief Financial Officer of:

Trump Atlantic City Holding, Inc.,

the managing general partner of

Trump Atlantic City Associates;

Trump Atlantic City Funding, Inc.;

Trump Atlantic City Funding II, Inc.; and

Trump Atlantic City Funding III, Inc.

EX-32.1

Exhibit 32.1

CERTIFICATION PURSUANT TO

18 U.S.C. SECTION 1350,

AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Quarterly Report of Trump Atlantic City Associates, Trump Atlantic City Funding, Inc., Trump Atlantic City Funding II, Inc. and Trump Atlantic City Funding III, Inc. (the “Companies”) on Form 10-Q for the period ending September 30, 2003 as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Donald J. Trump, the Chief Executive Officer of the Companies, certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that:

(a) The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

(b) The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Companies.

/s/    DONALD J. TRUMP

Donald J. Trump

Chief Executive Officer of

Trump Atlantic City Holding, Inc.,

the managing general partner of

Trump Atlantic City Associates;

Trump Atlantic City Funding, Inc.

Trump Atlantic City Funding II, Inc.

Trump Atlantic City Funding III, Inc.

November 14, 2003

EX-32.2

Exhibit 32.2

CERTIFICATION PURSUANT TO

18 U.S.C. SECTION 1350,

AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Quarterly Report of Trump Atlantic City Associates, Trump Atlantic City Funding, Inc., Trump Atlantic City Funding II, Inc. and Trump Atlantic City Funding III, Inc. (the “Companies”) on Form 10-Q for the period ending September 30, 2003 as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Francis X. McCarthy, Jr., the Chief Financial Officer of the Companies, certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that:

(a) The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

(b) The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Companies.

/s/    FRANCIS X. MCCARTHY, JR.

Francis X. McCarthy, Jr.

Chief Financial Officer of

Trump Atlantic City Holding, Inc.,

the managing general partner of

Trump Atlantic City Associates;

Trump Atlantic City Funding, Inc.

Trump Atlantic City Funding II, Inc.

Trump Atlantic City Funding III, Inc.

November 14, 2003