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SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

For the Quarterly Period Ended June 30, 2004

OR

For the transition period from              to             

Commission File No.: 333-00643

TRUMP ATLANTIC CITY ASSOCIATES

(Exact Name of Registrant as specified in its charter)

1000 Boardwalk at Virginia Avenue

Atlantic City, New Jersey 08401

(609) 449-6515

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

TRUMP ATLANTIC CITY FUNDING, INC.

(Exact Name of Registrant as specified in its charter)

Commission File No.: 333-00643-02

1000 Boardwalk at Virginia Avenue

Atlantic City, New Jersey 08401

(609) 449-6515

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

TRUMP ATLANTIC CITY FUNDING II, INC.

(Exact Name of Registrant as specified in its charter)

Commission File No.: 333-43979-03

1000 Boardwalk at Virginia Avenue

Atlantic City, New Jersey 08401

(609) 449-6515

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

TRUMP ATLANTIC CITY FUNDING III, INC.

(Exact Name of Registrant as specified in its charter)

Commission File No.: 333-43975-03

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 August 16, 2004, there were 100 shares of Trump Atlantic City Funding, Inc.’s common stock outstanding.

As of August 16, 2004, there were 100 shares of Trump Atlantic City Funding II, Inc.’s common stock outstanding.

As of August 16, 2004, there were 100 shares of Trump Atlantic City Funding III, Inc.’s common stock outstanding.

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

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TRUMP ATLANTIC CITY ASSOCIATES AND SUBSIDIARIES

FORM 10-Q

Table of Contents

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PART I – FINANCIAL INFORMATION

ITEM 1 – FINANCIAL STATEMENTS

TRUMP ATLANTIC CITY ASSOCIATES AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS

(in thousands)

See accompanying notes.

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TRUMP ATLANTIC CITY ASSOCIATES AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

FOR THE THREE AND SIX MONTHS ENDED JUNE 30, 2003 AND 2004

(unaudited)

(in thousands)

See accompanying notes.

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TRUMP ATLANTIC CITY ASSOCIATES AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENT OF CAPITAL/(DEFICIT)

FOR THE SIX MONTHS ENDED JUNE 30, 2004

(unaudited)

(in thousands)

See accompanying notes.

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TRUMP ATLANTIC CITY ASSOCIATES AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

FOR THE SIX MONTHS ENDED JUNE 30, 2003 AND 2004

(unaudited)

(in thousands)

See accompanying notes.

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TRUMP ATLANTIC CITY ASSOCIATES AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(unaudited)

(1) Organization and Operations

The accompanying condensed consolidated financial statements include those of Trump Atlantic City Associates, a New Jersey general partnership (“Trump AC”or the “Company”), and its subsidiaries: (i) Trump Taj Mahal Associates, a New Jersey general partnership (“Taj Associates”) which owns and operates the Trump Taj Mahal Casino Resort located in Atlantic City, New Jersey (the “Taj Mahal”), (ii) Trump Plaza Associates, a New Jersey general partnership (“Plaza Associates”) which owns and operates the Trump Plaza Hotel and Casino located in Atlantic City, New Jersey (“Trump Plaza” and together with the Taj Mahal, the “Trump AC Properties”), (iii) Trump Atlantic City Funding, Inc. (“Trump AC Funding”), (iv) Trump Atlantic City Funding II, Inc. (“Trump AC Funding II”), (v) Trump Atlantic City Funding III, Inc. (“Trump AC Funding III”), (vi) Trump Atlantic City Corporation (“TACC”), and (vii) Trump Administration, a separate division of Taj Associates (“Trump Administration”). Trump AC’s sole sources of liquidity are distributions in respect of its interests in Taj Associates and Plaza Associates. Trump AC is 100% beneficially owned by Trump Hotels & Casino Resorts Holdings, L.P., a Delaware limited partnership (“THCR Holdings”) of which Trump Hotels & Casino Resorts, Inc., a Delaware corporation (“THCR”), is the sole general partner. Trump AC, Trump AC Funding, Trump AC Funding II and Trump AC Funding III (collectively the “Issuers”) have no independent operations and, therefore, their ability to service debt is dependent upon the successful operations of Taj Associates and Plaza Associates. There are no restrictions on the ability of Taj Associates and Plaza Associates, the primary guarantors (the “Subsidiary Guarantors”) of the aggregate principal amount of $1.3 billion 11.25% First Mortgage Notes due May 1, 2006 of the Issuers (the “Trump AC Mortgage Notes”), to distribute funds to Trump AC in respect of the guaranteed debt.

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

Trump AC has no operations, except for its ownership of the Trump AC Properties through Taj Associates and Plaza Associates. The majority of Trump AC’s revenues are derived from its gaming operations. The Atlantic City market is very competitive, especially since the opening of the Borgata Casino Hotel and Spa by a joint venture of MGM Mirage and Boyd Gaming in Atlantic City’s marina district in July 2003, and is anticipated to become more competitive in the future. The Company views each casino property as an operating segment and all such operating segments have been aggregated into one reporting segment. Each casino property derives its revenues from casino operations, room rental, food and beverage sales and entertainment revenue.

THCR and its subsidiaries are very highly leveraged, with extensive secured borrowings by its operating level subsidiaries, including the Trump AC Mortgage Notes. The Company has incurred recurring operating losses, which totaled $14.0 million, $3.4 million, and $53.9 million during the years ended December 31, 2001, 2002, and 2003, respectively and had a working capital deficit of $64.8 million at June 30, 2004. The recurring operating losses are primarily the result of substantial debt service obligations on outstanding indebtedness. In 2004, the Company’s debt service obligation is expected to be approximately $155 million. Additionally, the Company has experienced increased competition and other challenges in the Atlantic City market. The Company’s liquidity situation continues to be constrained, due to the Company’s diminished cash flows, increased trade payables, limited capacity to raise additional capital and minimal cash reserves beyond those required to fulfill gaming regulatory requirements. Due to these factors, the Company has not been able to expand its operations or reinvest in the maintenance of the Trump AC Properties at desired levels. Furthermore, the Company does not currently have any short-term borrowing capacity available.

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TRUMP ATLANTIC CITY ASSOCIATES AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(unaudited)

To address these factors, management and the board of directors reviewed various financing alternatives. As discussed in Note 8, on August 9, 2004, THCR announced that THCR, Donald J. Trump and DLJ Merchant Banking Partners III, L.P. (“DLJMB”), a private equity fund of Credit Suisse First Boston (“CSFB”), have reached an agreement in principle with a Committee formed by certain holders of the Trump AC Mortgage Notes (the “Trump AC Noteholder Committee”) to restructure the Company’s approximately $1.8 billion aggregate principal face amount of public indebtedness and to recapitalize the Company (the “Recapitalization Plan”). The Recapitalization Plan is contingent upon a variety of factors. No assurances can be given that the Recapitalization Plan will occur, or if it does occur, that it will occur on terms acceptable to THCR to allow THCR and its subsidiaries to meet their obligations as they become due. In addition, management has implemented programs to obtain cash flow savings and will continue to attempt to implement such programs in the upcoming year whether or not the Recapitalization Plan occurs. These programs include labor savings through increased automation of the Company’s slot machine product on the gaming floor and the further reduction of planned capital expenditures and maintenance programs. However, there can be no assurances that these programs would be successful for any protracted period of time. Accordingly, the financial statements do not include any adjustments to reflect the possible future effects on the recoverability and classification of assets, or the amounts and classification of liabilities that may result from the outcome of this uncertainty or the comprehensive recapitalization.

Given the large number of holders of the Trump AC Mortgage Notes and the Trump Casino Holdings’ 11.625% First Priority Mortgage Notes (the “TCH First Priority Notes”) and Trump Casino Holdings 17.625% Second Priority Notes (the “TCH Second Priority Notes,” and together with the TCH First Priority Notes, the “TCH Notes”), THCR intends to effect the transactions in a voluntary chapter 11 proceeding pursuant to a pre-negotiated plan of reorganization in order to implement the Recapitalization Plan in an efficient and timely manner. THCR intends to commence its chapter 11 case by the end of September 2004. If the chapter 11 case is commenced by the end of November 2004, the Company would not be required to make the November 1, 2004 interest payment on the Trump AC Mortgage Notes. If THCR’s case is not commenced on or before such date, the Company cannot ensure that it will have sufficient funds on hand from operations to make the November 1, 2004 interest payment on the Trump AC Mortgage Notes within the 30 day grace period provided in the indentures governing such notes. Under such circumstances, THCR and the Company would need to borrow funds to provide for such payment of interest. The availability of such funds cannot be assured.

Subject to the foregoing, 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.

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 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, 2003 filed with the SEC and available on the SEC’s website, www.sec.gov, or through THCR’s website, www.trump.com.

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 six months ended June 30, 2004 are not necessarily indicative of the operating results for a full year.

Reclassifications

Certain reclassifications and disclosures have been made to prior year financial statements in order to conform to the current year presentation.

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TRUMP ATLANTIC CITY ASSOCIATES AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(unaudited)

(2) Other Assets

Plaza Associates is appealing a real estate tax assessment by the City of Atlantic City. At December 31, 2003 and June 30, 2004, other assets include $8,014,000 which Plaza Associates believes will be recoverable on the settlement of the appeal.

(3) Trump Plaza Warehouse

On February 17, 2003, Plaza Associates’ off-site warehouse collapsed due to an unusual amount of snowfall. As a result, it was demolished, and Trump AC is currently leasing another warehouse. In April of 2004, Plaza Associates settled a claim with the insurance carrier. A gain of $2.1 million was recognized in the quarter ended June 30, 2004 in other non-operating income.

(4) 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:

(5) Recent Accounting Pronouncements

In January 2003, the FASB issued Interpretation No. 46 (“FIN 46”), “Consolidation of Variable Interest Entities, an interpretation of ARB 51.” The primary objectives of this interpretation are to provide guidance on the identification of entities for which control is achieved through means other than through voting rights (“variable interest entities”) and how to determine when and which business enterprise (the “primary beneficiary”) should consolidate the variable interest entity. This new model for consolidation applies to an entity in which either (i) the equity investors (if any) do not have a controlling financial interest; or (ii) the equity investment at risk is insufficient to finance that entity’s activities without receiving additional subordinated financial support from other parties. In addition, FIN 46 requires that the primary beneficiary, as well as all other enterprises with a significant variable interest in a variable interest entity, make additional disclosures. Certain disclosure requirements of FIN 46 were effective for financial statements issued after January 31, 2003. In December 2003, the FASB issued FIN 46 (revised December 2003), “Consolidation of Variable Interest Entities” (“FIN 46-R”) to address certain FIN 46 implementation issues. The effective dates and impact of FIN 46 and FIN 46-R are as follows: (i) Special-purpose entities (“SPEs”) created prior to February 1, 2003- the company must apply either the provisions of FIN 46 or early adopt the provisions of FIN 46-R at the end of the first interim or annual reporting period ending after December 15, 2003; (ii) Non-SPEs created prior to February 1, 2003- the company is required to adopt FIN 46-R at the end of the first interim or annual reporting period ending after March 15, 2004; and (iii) All entities, regardless of whether an SPE, that were created subsequent to January 31, 2003- the provisions of FIN 46 were applicable for variable interests in entities obtained after January 31, 2003. The adoption of the provisions

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TRUMP ATLANTIC CITY ASSOCIATES AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(unaudited)

applicable to SPEs and all other variable interests obtained after January 31, 2003 did not have a material impact on the Company’s consolidated financial position, consolidated results of operations, or liquidity. Adoption of this pronouncement had no material impact on the Company’s consolidated financial position, consolidated results of operations, or liquidity.

(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 six months ended June 30, 2003 and 2004, Trump AC declared cash partnership distributions to THCR of $893,000 and $1,134,000, respectively, consisting of operating expense reimbursements.

(7) NJSEA Subsidy Agreement

On April 12, 2004, the twelve Atlantic City casino properties, including the Trump AC properties, executed an agreement with the New Jersey Sports & Exposition Authority (“NJSEA”) and the Casino Reinvestment Development Authority (“CRDA”) to, among other things, enhance purses, fund breeders’ awards and establish account wagering at New Jersey horse racing tracks (“NJSEA Subsidy Agreement” or “Agreement”).

The Agreement provides that the casinos pro rata according to their gross revenue: (a) shall pay $34 million to NJSEA in cash in four yearly payments through October 15, 2007 and donate $52 million to NJSEA from the regular payment of their CRDA obligations for use by NJSEA through 2008 to enhance such purses, fund such breeders’ awards and establish such account wagering; and (b) shall donate $10 million from the regular payment of their CRDA obligations for use by CRDA as grants to such other North Jersey projects as CRDA shall determine. The $62 million donation of CRDA obligations is conditioned upon the timely enactment and funding of the Casino Expansion Fund Act. Trump AC has estimated its portion of the industry obligation at approximately 17.0%.

The Agreement also anticipated that legislation to establish and fund a $62 million Casino Expansion Fund would be effective by December 1, 2004 and that the fund will be administered by CRDA and made available pro rata to each casino for use in expanding its casino hotel facility in the amounts and at the times it makes its donation payments to CRDA (“Casino Expansion Fund Act”). The Agreement further provides for a moratorium until January 2009, which casinos may enforce by court injunction, on the conduct of “casino gaming” at any New Jersey racetrack (unless casinos controlling a majority of the hotel rooms controlled by the casinos in Atlantic City otherwise agree) and a moratorium until January 2006 on the authorization of “casino gaming” at any New Jersey racetrack, the violation of which would terminate the Agreement and all further payments to NJSEA and require NJSEA to return all undistributed cash and CRDA to return all undistributed donated CRDA obligations to the casinos. The Agreement also grants a license through August 2008 for the display, at no cost to the casino industry, of messages promoting Atlantic City generally in prominent locations at NJSEA’s Meadowlands and Monmouth racetracks.

The Agreement finally provides that, if the Casino Expansion Fund is not established and funded by the New Jersey Legislature by December 1, 2004: (a) the casinos shall provide $7 million in cash to NJSEA by December 10, 2004 and donate $13 million from the regular payment of their CRDA obligations to NJSEA for use by NJSEA to enhance such purses, fund such breeders’ awards and establish such account wagering; (b) the moratorium on the conduct of “casino gaming” at New Jersey racetracks shall expire as of January 2006; and (c) the Agreement shall otherwise terminate.

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TRUMP ATLANTIC CITY ASSOCIATES AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(unaudited)

In addition to the NJSEA Subsidy Agreement, prominent leaders of the New Jersey Legislature publicly stated during spring 2004 their intent that the Legislature enact the Casino Expansion Fund Act by December 2004, repeal in increments over time the 4.25% tax on casino complimentaries it imposed as of July 2003 and, for four years, refrain from imposing any new or increased casino industry specific taxes. In this regard, legislation was enacted effective June 30, 2004 which: (a) establishes the Atlantic City Expansion Fund, identifies the Casino Hotel Room Occupancy Fee as its funding source and directs CRDA to provide the Atlantic City Expansion Fund with $62 million and to make same available to each casino licensee for investment in an eligible project which increases the number of hotel rooms in its casino hotel facility; and (b) fully phases out the 4.25% tax on casino complimentaries as of July 1, 2009.

(8) Subsequent Events

Recapitalization Plan. As previously disclosed, in the first quarter of 2004, THCR, the Company and certain affiliates of the Company entered into an exclusivity agreement and certain letter agreements with DLJMB in connection with a proposed equity investment to sponsor a comprehensive recapitalization of THCR. On August 9, 2004, THCR issued a press release and on August 10, 2004, filed a Current Report on Form 8-K with the SEC announcing that THCR, Donald J. Trump and DLJMB have reached an agreement in principle with the Trump AC Noteholder Committee to recapitalize THCR and its subsidiaries, including the Company (the “Recapitalization Plan”), and proposed restructuring of THCR’s approximately $1.8 billion aggregate principal amount of indebtedness for approximately $1.25 billion of new secured notes with an anticipated interest rate of 7.875% per annum and which are expected to be guaranteed by all of THCR’s operating subsidiaries and secured by a second lien on all of such subsidiaries’ present and future assets, including the Trump AC Properties (the “New Notes”). As part of the Recapitalization Plan, Mr. Trump and DLJMB would co-invest $400 million of equity into the recapitalized Company. Mr. Trump’s investment in the recapitalized Company is intended to be approximately $70.9 million, $55 million of which would be in the form of a co-investment with DLJMB and the remainder of which would be invested through Mr. Trump’s contribution of approximately $15.9 million principal amount of his TCH Second Priority Notes. Mr. Trump’s beneficial ownership of the recapitalized Company’s common stock is expected to be up to approximately 25%, on a fully-diluted basis.

Given the large number of noteholders, THCR intends to effect the transactions in a chapter 11 proceeding pursuant to a pre-negotiated plan of reorganization in order to implement the Recapitalization Plan in an efficient and timely manner. THCR intends to commence its chapter 11 case by the end of September 2004 and expects, but cannot ensure that, the Recapitalization Plan will be consummated in the first quarter of 2005. If the case is commenced by such time, the Company would not be required to make the November 1, 2004 interest payment on the Trump AC Mortgage Notes. If THCR’s case is not commenced by the end of November 2004, the Company cannot ensure that it will have sufficient funds on hand from operations to make the November 1, 2004 interest payment on the Trump AC Mortgage Notes within the 30 day grace period provided in the indentures governing such notes. Under such circumstances, THCR and the Company would need to borrow funds to provide for such payment of interest. The availability of such funds cannot be assured.

The consummation of the Recapitalization Plan is subject to a variety of conditions discussed below. The Company intends to maintain its current level of operations during the pendency of the proceedings, expects that its patrons and vendors would experience no change in the way the Company does business with them, and anticipates that the proposed plan of reorganization would not impair trade creditor claims. THCR intends to arrange for up to $100 million debtor-in-possession financing during the proceedings.

In connection with the Recapitalization Plan, THCR has held discussions with certain holders of the TCH Notes, which have formed a committee (the “TCH Noteholder Committee”) to discuss a potential restructuring, and the TCH Noteholder Committee has engaged legal and financial advisors. As part of those discussions, THCR delivered to the TCH Noteholder Committee a proposal that provided for a proposed recovery for the TCH First Priority Notes of amounts in excess of the aggregate accreted amount of those notes as of September 30, 2004. On August 9, 2004, the TCH Noteholder Committee informed THCR that such committee was not in agreement with the proposal made by the Company, and such proposal is no longer outstanding. THCR has not reached any specific agreement with the TCH Noteholder Committee or any other holders of the TCH Notes concerning a restructuring, and there is no assurance that THCR will reach such an agreement with such holders. THCR’s current proposal contemplates a recovery by holders of TCH First Priority Notes of approximately the accreted value of such notes (approximately 95.6% of the aggregate principal face amount), which THCR believes is an appropriate recovery under the United States bankruptcy code.

Although the Trump AC Noteholder Committee has agreed in principle to support the Recapitalization Plan, such support does not constitute its official approval of the plan of reorganization that is anticipated to be proposed by THCR after a chapter 11 case is commenced. Such approval can be obtained only after a court approved plan disclosure document is distributed to persons entitled to vote on the plan. Moreover, the holders of TCH Notes have not agreed in principle to support the Recapitalization Plan. Although THCR will continue to seek support of TCH Noteholders, it cannot assure that such support will be obtained. In such event, THCR currently anticipates consummating the Recapitalization Plan without obtaining the support of TCH Noteholders.

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TRUMP ATLANTIC CITY ASSOCIATES AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(unaudited)

The consummation of the Recapitalization Plan is subject to a number of conditions, the satisfaction of which cannot be assured, including, among other things, the negotiation of a definitive investment agreement with DLJMB, an indenture governing the New Notes, the documentation relating to THCR’s proposed arrangements with Mr. Trump and a plan of reorganization. The plan of reorganization would also be subject to obtaining applicable governmental approvals, including court confirmation of the plan of reorganization and approval of the related solicitation materials, gaming regulatory authority approvals and relevant filings under the Hart-Scott Rodino Antitrust Improvements Act of 1976, as amended. The definitive terms and conditions of the Recapitalization Plan would be outlined in a disclosure statement that would be sent to security holders and creditors entitled to vote on the plan of reorganization. There can be no assurances that the Recapitalization Plan will be officially proposed as described herein or consummated.

Upon THCR’s announcement of the Recapitalization Plan and intended commencement of the chapter 11 case, the New York Stock Exchange suspended the trading of THCR’s current common stock, and informed THCR that it has applied to the Securities and Exchange Commission to delist THCR’s current common stock, pending the completion of applicable procedures. The recapitalized Company intends to apply to have its new common stock listed on the New York Stock Exchange or other national securities exchange upon the consummation of the Recapitalization Plan.

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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, as amended. 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.

The consummation of the Recapitalization Plan is subject to a number of conditions, the satisfaction of which cannot be assured, including, among other things, the negotiation and performance of definitive transaction documents in connection with the proposed restructuring; THCR’s ability to obtain the required consents of noteholders and other constituencies to carry out the proposed recapitalization; the proposed investment by DLJMB and DLJMB’s role in the recapitalized Company; substantial deterioration of the Company’s base business and cash flows; the negotiation of the potential arrangements with Donald J. Trump in connection with the proposed restructuring; court approval of THCR’s first day papers and other motions presented by it from time to time; the ability of THCR to develop, prosecute, confirm and consummate one or more plans of reorganization with respect to the chapter 11 case (or any significant delay with respect thereto); the risk that certain parties may challenge the enforceability of the Restructuring Support Agreement in connection with the chapter 11 proceedings; risks associated with third parties seeking and obtaining court approval to terminate or shorten the exclusivity period for THCR to propose and confirm one or more plans of reorganization, or for the appointment of a chapter 11 trustee or to convert the case to a chapter 7 case; the ability of THCR and the Company to continue as a going concern; the ability of THCR and the Company to obtain trade credit, and shipments and terms with vendors and service providers for current orders; THCR’s and the Company’s ability to maintain contracts that are critical to its operations; potential adverse developments with respect to THCR’s and the Company’s liquidity or results of operations; the ability to fund and execute its business plan; the ability to attract, retain and compensate key executives and associates; and the ability of THCR and the Company to attract and retain customers; licenses and approvals under applicable laws and regulations, including gaming laws and regulations; adverse outcomes of pending litigation or the possibility of new litigation; changes in the competitive climate in which THCR and the Company operates; or a broad downturn in the economy as a whole. Accordingly, there can be no assurance that the Recapitalization Plan will be consummated on the terms as proposed, or at all, or that actual results will not differ significantly from the terms expressed in this report.

These and other factors, including the terms of any reorganization plan ultimately confirmed, can affect the value of the Company’s assets, liabilities, common stock and debt securities. No assurance can be given as to what values, if any, might be ascribed to such assets or liabilities or recovered by debt or equity holders in a chapter 11 case. A plan of reorganization could result in holders of THCR’s common stock receiving no value for their interests. Because of such possibilities, the value of THCR’s common stock is highly speculative. We urge that appropriate caution be exercised in making investment decisions regarding the Company’s securities.

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 Taj Mahal Casino Resort (the “Taj Mahal”) and Trump Plaza Hotel and Casino (“Trump Plaza” and together with the Taj Mahal, the “Trump AC Properties”) in Atlantic City, New Jersey. Terms not defined in this section shall have the meanings ascribed to them elsewhere in this Quarterly Report on Form10-Q.

Overview

THCR and its subsidiaries are very highly leveraged, with extensive secured borrowings by its operating level subsidiaries, including the Trump AC Mortgage Notes. The Company has incurred recurring operating losses, which totaled $14.0 million, $3.4 million, and $53.9 million during the years ended December 31, 2001, 2002, and 2003, respectively, and had a working capital deficit of $64.8 million at June 30, 2004. The recurring operating losses are primarily the result of substantial debt service obligations on the Trump AC Mortgage Notes. In 2004, the Company’s debt service obligation is expected to be approximately $155 million. Additionally, the Company has experienced increased competition and other challenges in the Atlantic City market. The Company’s liquidity situation continues to be constrained, due to the Company’s diminished cash flows, increased trade payables, limited capacity to raise additional capital and minimal cash reserves beyond those required to fulfill gaming regulatory requirements. Due to these factors, the Company has not been able to expand its operations or reinvest in the maintenance of its owned properties at desired levels. Furthermore, the Company does not currently have any short-term borrowing capacity available.

Recapitalization Plan

        As previously disclosed, in the first quarter of 2004, THCR and certain of its subsidiaries, including the Company, entered into an exclusivity agreement and certain letter agreements with DLJMB in connection with a proposed equity investment to sponsor a comprehensive recapitalization of THCR and its subsidiaries. On August 9, 2004, THCR issued a press release and on August 10, 2004, filed a Current Report on Form 8-K with the SEC announcing that THCR, Donald J. Trump and DLJMB have reached an agreement in principle with a committee formed by certain holders of the Trump AC Mortgage Notes (the “Trump AC Noteholder Committee”) recapitalize THCR (the “Recapitalization Plan”) and restructure the Trump AC Mortgage Notes and TCH Notes (approximately $1.8 billion aggregate principal amount of indebtedness) into approximately $1.25 billion of new secured notes with an anticipated interest rate of 7.875% per annum and which are expected to be guaranteed by all of THCR’s operating subsidiaries and secured by a second lien on all of such subsidiaries’ present and future assets, including the Trump AC Properties (the “New Notes”). As part of the Recapitalization Plan, Mr. Trump and DLJMB would co-invest $400 million of equity into the recapitalized Company. Mr. Trump’s investment in the recapitalized Company is intended to be approximately $70.9 million, $55 million of which would be in the form of a co-investment with DLJMB and the remainder of which would be invested through Mr. Trump’s contribution of approximately $15.9 million principal amount of his TCH Second Priority Notes. Mr. Trump’s beneficial ownership of the recapitalized Company’s common stock is expected to be up to approximately 25%, on a fully-diluted basis.

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THCR, Mr. Trump and the Trump AC Noteholder Committee have entered into a restructuring support agreement reflecting an agreement in principle to support the Recapitalization Plan to restructure the existing notes for approximately $1.25 billion principal amount of the New Notes, cash and common stock of the recapitalized Company (the “Restructuring Support Agreement”). The New Notes, which would be issued by THCR’s holding subsidiary, would have a 10-year maturity and would be senior obligations of the issuer, guaranteed by substantially all of THCR’s operating subsidiaries, including Taj Associates and Plaza Associates, and secured by a second priority lien on substantially all of such operating subsidiaries’ assets, including the Trump AC Properties, subject to a first priority lien for secured financing of up to $500 million.

If the Recapitalization Plan is successfully completed, THCR expects to achieve:

Under the terms of the Recapitalization Plan, holders of the Trump AC Mortgage Notes would exchange their notes, now approximately $1.3 billion aggregate principal amount, for approximately $228.2 million in cash, approximately $851.9 million aggregate principal amount of the New Notes and approximately $107.2 million of common stock of the recapitalized Company (approximately 18.4% of the primary common shares), based on DLJMB’s purchase price of approximately $0.029 per share (the “Purchase Price”). The holders of the TCH First Priority Notes, now approximately $406.3 million accreted aggregate principal amount, would exchange their notes for approximately $55.9 million in cash, and approximately $350.4 million aggregate principal amount of the New Notes. The holders of the TCH Second Priority Notes, now approximately $68.8 million aggregate principal amount, would exchange their notes for approximately $500,000 in cash, approximately $47.7 million aggregate principal amount of the New Notes, and approximately $15.7 million of common stock of the recapitalized Company (approximately 2.7% of the primary common shares), based on the Purchase Price. In addition, the holders of the Trump AC Mortgage Notes and TCH Notes would receive certain accrued interest as set forth on the term sheet attached to the Restructuring Support Agreement.

Each of the existing stockholders of THCR, including Mr. Trump, would either keep their existing shares or, under certain circumstances, exchange their existing shares for new shares with the same economic terms as THCR’s current shares. In addition, each stockholder would receive a 30-day right to purchase an amount, proportionate to that holder’s existing ownership, of shares of the recapitalized Company’s common stock, at the Purchase Price in a rights offering in the aggregate amount of $50 million (the “Rights Offering”). The right to purchase shares in the Rights Offering would be transferable only in connection with transfers or assignments of each holder’s interests in the shares underlying the rights. If all holders of the existing shares, excluding Mr. Trump, or those holders’ permitted transferees were to participate fully in the Rights Offering, they would invest approximately $22.8 million and own approximately 4% of the recapitalized Company’s common stock, on a primary basis, or approximately 3.9% on a fully-diluted basis. If none of the holders or permitted transferees were to participate in the Rights Offering, their holdings would represent approximately 0.1% of the recapitalized Company’s shares. Any shares of common stock purchased in the Rights Offering and amounts invested directly in THCR or its holding subsidiary by Mr. Trump would reduce DLJMB’s investment in the recapitalized Company. If all holders of the existing shares, including Mr. Trump, or those holders’ permitted transferees were to participate fully in the Rights Offering, DLJMB would own approximately 55.3% of the recapitalized Company’s common stock, on a primary basis, or approximately 53.2% on a fully diluted basis.

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As part of the Recapitalization Plan, Mr. Trump would:

DLJMB, THCR and its subsidiaries, including the Company, and Mr. Trump anticipate entering into an investment agreement establishing the definitive terms of DLJMB’s equity investment in the recapitalized Company and/or its holding subsidiary. Also in connection with DLJMB’s proposed investment, on August 9, 2004, THCR entered into a new exclusivity agreement (the “Second Exclusivity Agreement”) with DLJMB pursuant to which THCR has agreed that THCR and its subsidiaries, including the Company, will work exclusively with DLJMB in implementing the Recapitalization Plan until the earlier of December 31, 2004 or the filing of a chapter 11 case. In addition, on August 9, 2004, THCR and certain of its subsidiaries, including the Company, have renewed certain letter agreements entered into with DLJMB in February 2004 (the “Renewed Letter Agreement”) pursuant to which such entities have agreed to reimburse DLJMB for all reasonable and accountable out-of-pocket expenses not exceeding $5 million and incurred by DLJMB in connection with the Recapitalization Plan beginning after the date of the Renewed Letter Agreement and accruing until, and payable upon, the earlier to occur (i) an Alternative Transaction (defined in the Renewed Letter Agreement to include the sale of assets or securities or the filing of a voluntary chapter 11 case without the participation of DLJMB) or (ii) January 31, 2006. Also, under the Renewed Letter Agreement, THCR has agreed to pay DLJMB a transaction fee of $25 million if an Alternative Transaction occurs on or before June, 30, 2005. In addition, THCR has entered into an escrow agreement with DLJMB pursuant to which THCR has agreed to reimburse DLJMB for certain expenses incurred in the course of their due diligence in connection with the Recapitalization Plan.

Upon the successful recapitalization of THCR and assuming Mr. Trump’s $55 million investment into the recapitalized Company, Mr. Trump would beneficially own up to approximately 25% of the recapitalized Company’s common stock, consisting of common stock and/or common stock equivalents, and warrants to purchase common stock. In consideration of Mr. Trump’s equity investment and modifications to his contractual arrangements with THCR, Mr. Trump would also receive a parcel of land owned by THCR in Atlantic City, NJ constituting the former World’s Fair site which may be developed for non-gaming related use and THCR’s 25% interest in the Miss Universe pageant. In addition, the recapitalized Company would enter into a renewable three-year development agreement with Mr. Trump pursuant to which The Trump Organization would have the right of first offer to serve as THCR’s general contractor, on commercially reasonable arm’s length terms, with respect to construction and development projects for casinos and casino hotels and related lodging at THCR’s existing and future properties, including the Trump AC Properties.

The recapitalized Company’s Board of Directors would consist of nine members. Initially, DLJMB would have the right to nominate five members, and Mr. Trump would have the right to nominate three. DLJMB and Mr. Trump would mutually agree upon the nomination of one independent director and each would nominate one independent director out of their respective nominees, subject to applicable rules and regulations of the Securities and Exchange Commission, the governance requirements of the New York Stock Exchange or other exchanges on which the recapitalized Company’s new common stock would be traded, and regulations of the gaming regulatory agencies. The number of directors that DLJMB or Mr. Trump would be able to nominate to the Board would be subject to adjustment based on their respective ownership of the recapitalized Company’s common stock at any given time.

Given the large number of noteholders, THCR intends to effect the transactions in a voluntary chapter 11 proceeding pursuant to a pre-negotiated plan of reorganization in order to implement the Recapitalization Plan in an efficient and timely manner. The Company intends to commence its chapter 11 case by the end of September 2004 and expects, but cannot ensure that, the Recapitalization Plan will be consummated in the first quarter of 2005. If the case is commenced by such time, the Company would not be required to make the November 1, 2004 interest payment on the Trump AC Mortgage Notes. If THCR’s case is not commenced by the end of November 2004, the Company cannot ensure that it will have sufficient funds on hand from operations to make the November 1, 2004 interest payment on the Trump AC Mortgage Notes within the 30 day grace period provided in the indentures governing such notes. Under such circumstances, THCR and the Company would need to borrow funds to provide for such payment of interest. The availability of such funds cannot be assured.

The consummation of the Recapitalization Plan is subject to a variety of conditions discussed below. The Company intends to maintain its current level of operations during the pendency of the proceedings, expects that its patrons and vendors would experience no change in the way the Company does business with them, and anticipates that the proposed plan of reorganization would not impair trade creditor claims. THCR intends to arrange for up to $100 million debtor-in-possession financing during the proceedings.

In connection with the Recapitalization Plan, THCR has held discussions with certain holders of the TCH Notes, which have formed a committee (the “TCH Noteholder Committee”) to discuss a potential restructuring, and the TCH Noteholder Committee has engaged legal and financial advisors. As part of those discussions, THCR delivered to the TCH Noteholder Committee a proposal that provided for a proposed recovery for the TCH First Priority Notes of amounts in excess of the aggregate accreted amount of those notes as of September 30, 2004. On August 9, 2004, the TCH Noteholder Committee informed THCR that such committee was not in agreement with the proposal made by the Company, and such proposal is no longer outstanding. THCR has not reached any specific agreement with the TCH Noteholder Committee or any other holders of the TCH Notes concerning a restructuring, and there is no assurance that THCR will reach such an agreement with such holders. THCR’s current proposal contemplates a recovery by holders of TCH First Priority Notes of approximately the accreted value of such notes (approximately 95.6% of the aggregate principal face amount), which THCR believes is an appropriate recovery under the United States bankruptcy code.

Although a committee formed by certain holders of the Trump AC Mortgage Notes has agreed in principle to support the Recapitalization Plan, such support does not constitute its official approval of the plan of reorganization that is anticipated to be proposed by THCR after a chapter 11 proceeding is commenced. Such approval can be obtained only after a court approved

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plan disclosure document is distributed to persons entitled to vote on the plan. Moreover, the holders of TCH Notes have not agreed in principle to support the Recapitalization Plan. Although THCR will continue to seek support of TCH Noteholders, it cannot assure that such support will be obtained. In such event, THCR currently anticipates consummating the Recapitalization Plan without obtaining the support of TCH Noteholders.

The consummation of the Recapitalization Plan is subject to a number of conditions, the satisfaction of which cannot be assured, including, among other things, the negotiation of a definitive investment agreement with DLJMB, an indenture governing the New Notes, the documentation relating to THCR’s proposed arrangements with Mr. Trump and a plan of reorganization. The plan of reorganization would also be subject to obtaining applicable governmental approvals, including court confirmation of the plan of reorganization and approval of the related solicitation materials, gaming regulatory authority approvals and relevant filings under the Hart-Scott Rodino Antitrust Improvements Act of 1976, as amended. The definitive terms and conditions of the Recapitalization Plan would be outlined in a disclosure statement that would be sent to security holders and creditors entitled to vote on the plan of reorganization. There can be no assurances that the Recapitalization Plan will be officially proposed as described herein, approved or consummated.

Upon THCR’s announcement of the Recapitalization Plan and intended commencement of the chapter 11 case, the New York Stock Exchange suspended the trading of THCR’s current common stock, and informed THCR that it has applied to the Securities and Exchange Commission to delist THCR’s current common stock, pending the completion of applicable procedures. The recapitalized Company intends to apply to have its new common stock listed on the New York Stock Exchange or other national securities exchange upon the consummation of the Recapitalization Plan.

None of the securities proposed to be issued in connection with the proposed recapitalization (including the New Notes and shares referenced herein) have been registered under the Securities Act of 1933, as amended (the “Securities Act”), or any state securities laws and unless so registered may not be offered or sold in the United States except pursuant to an exemption from, or in a transaction not subject to, the registration requirements of the Securities Act and applicable state securities laws. None of the Restructuring Support Agreement, the term sheet attached thereto or the press release issued by THCR on August 9, 2004, constitutes an offer to sell or the solicitation of offers to buy any security or constitute an offer, solicitation or sale of any security in any jurisdiction in which such offer, solicitation or sale would be unlawful.

The Company has filed a Current Report on Form 8-K with the Securities and Exchange Commission and has furnished as exhibits to the report the Restructuring Support Agreement (including the term sheet provided to certain noteholders, Mr. Trump and DLJMB) executed by certain holders of the Trump AC Mortgage Notes, Mr. Trump and the Company, the Second Exclusivity Agreement and Renewed Letter Agreement executed by the Company and DLJMB, and certain financial projections previously supplied pursuant to confidentiality agreements entered into with the Trump AC Noteholder Committee and the TCH Noteholder Committee.

Factors That May Affect Our Future Results

Some of the factors that may affect our future results are discussed below. For a discussion of other factors that may affect our future results, please see our Annual Report on Form 10-K for the year ended December 31, 2003, previously filed with the SEC and available for inspection on our website at www.trump.com.

We have substantial indebtedness and interest expense which limit our capital expenditures.

Our company has substantial indebtedness and associated interest expense. At June 30, 2004, our consolidated long-term debt was approximately $1.3 billion. The Trump AC Mortgage Notes are guaranteed by Taj Associates and by Plaza Associates, and are secured by substantially all of the fixed and other assets of such entities on a first priority basis. Management believes that this indebtedness and associated interest expense hinders the Company’s ability to reinvest in the maintenance of its properties at desired levels.

If we fail to commence our chapter 11 proceeding by the end of November 2004, we cannot ensure that we will be able to make the November 1, 2004 interest payment on the Trump AC Mortgage Notes.

Interest on the Trump AC Mortgage Notes (approximately $73.1 million, semi-annually) is payable on May 1 and November 1 of each year. Given the large number of holders of the Trump AC Mortgage Notes and TCH Notes, THCR intends to effect the transactions in a voluntary chapter 11 proceeding pursuant to a pre-negotiated plan of reorganization in order to implement the Recapitalization Plan in an efficient and timely manner. THCR intends to commence its chapter 11 case by the end of September 2004. If the case is commenced by such time, the Company would not be required to make the November 1, 2004 interest payment on the Trump AC Mortgage Notes. If THCR’s case is not commenced by the end of November 2004, the Company cannot ensure that it will have sufficient funds on hand from operations to make the November 1, 2004 interest payment on the Trump AC Mortgage Notes within the 30 day grace period provided in the indentures governing such notes.

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Under such circumstances, THCR and the Company would need to borrow funds to provide for such payment of interest. The availability of such funds cannot be assured.

It is an “Event of Default” under the indentures pursuant to which the Trump AC Mortgage Notes were issued if the interest thereon is not paid within 30 days of the due date. Upon the occurrence of an “Event of Default”, the Trustee may, and upon the request of the holders of 25% of the outstanding Trump AC Mortgage Notes, is required to, declare the entire unpaid amount of the Trump AC Mortgage Notes to be immediately due and payable. If such an “Event of Default” were to occur and the Trump AC Mortgage Notes were to be accelerated, Trump AC would not be able to pay such indebtedness. In such event, Trump AC would likely seek to restructure the Trump AC Mortgage Notes. See “Summary of the Company; Public Indebtedness; Events of Default”.

The Trump AC Mortgage Notes are not guaranteed by THCR or TCH, and the assets of TCH do not secure the Trump AC Mortgage Notes. An “Event of Default” under the Trump AC Mortgage Notes is not an “Event of Default” under the indentures pursuant to which the TCH Notes were issued. The ability of Trump AC and its subsidiaries to pay interest on the Trump AC Mortgage Notes depends primarily on the ability of its subsidiaries to generate cash flows sufficient for such purposes. There can be no assurances that the future operating performance of the Trump AC Properties will be sufficient to generate the cash flows required to meet the debt service obligations on any indebtedness. The ability of Trump AC to borrow funds for such purpose is also restricted. See “Summary of the Company; Public Indebtedness; Events of Default”.

THCR is pursuing the Recapitalization Plan which is intended to reduce debt and provide capital, the completion of which cannot be assured.

On August 9, 2004, THCR announced the Recapitalization Plan to attempt to reduce the high levels of indebtedness of its subsidiaries, including Trump AC, and related interest expense, and to infuse equity capital into THCR and its subsidiaries. Also on August 9, 2004, THCR entered into the Second Exclusivity Agreement with DLJMB, and THCR and certain of its subsidiaries, including the Company, entered into the Renewed Letter Agreement with DLJMB pursuant to which THCR has agreed to reimburse DLJMB for out-of-pocket expenses not exceeding $5 million no later than January 31, 2006 and to pay DLJMB $25 million if an Alternative Transaction (as defined in the Renewal Letter Agreement) occurs on or before June 30, 2005. See “Recapitalization Plan.”

If the Recapitalization Plan is not consummated, the Company will be required to seek alternative sources of financing to make its debt service, including interest payments on the Trump AC Mortgage Notes, and pay any fees owing to DLJMB. There can be no assurances that the general state of the economy, the status of capital markets, generally, or the receptiveness of the capital markets to the gaming industry or to THCR and its subsidiaries, including the Company, specifically, will be conducive to refinancing debt on reasonable terms, or at all.

The consummation of the Recapitalization Plan is subject to a number of conditions, the satisfaction of which cannot be assured, including, among other things, the negotiation and performance of definitive transaction documents in connection with the proposed restructuring; THCR’s ability to obtain the required consents of noteholders and other constituencies to carry out the proposed recapitalization; the proposed investment by DLJMB and DLJMB’s role in the recapitalized Company; substantial deterioration of the Company’s base business and cash flows; the negotiation of the potential arrangements with Donald J. Trump in connection with the proposed restructuring; court approval of THCR’s first day papers and other motions presented by it from time to time; the ability of THCR to develop, prosecute, confirm and consummate one or more plans of reorganization with respect to the chapter 11 case (or any significant delay with respect thereto); the risk that certain parties may challenge the enforceability of the Restructuring Support Agreement in connection with the chapter 11 proceedings; risks associated with third parties seeking and obtaining court approval to terminate or shorten the exclusivity period for THCR to propose and confirm one or more plans of reorganization, or for the appointment of a chapter 11 trustee or to convert the case to a chapter 7 case; the ability of THCR and the Company to continue as a going concern; the ability of THCR and the Company to obtain trade credit, and shipments and terms with vendors and service providers for current orders; THCR’s and the Company’s ability to maintain contracts that are critical to its operations; potential adverse developments with respect to THCR’s and the Company’s liquidity or results of operations; the ability to fund and execute its business plan; the ability to attract, retain and compensate key executives and associates; and the ability of THCR and the Company to attract and retain customers; licenses and approvals under applicable laws and regulations, including gaming laws and regulations; adverse outcomes of pending litigation or the possibility of new litigation; changes in the competitive climate in which THCR and the Company operates; or a broad downturn in the economy as a whole. Accordingly, there can be no assurance that the Recapitalization Plan will be consummated on the terms as proposed, or at all, or that actual results will not differ significantly from the terms expressed in this report.

Even if the plan is approved and implemented, and facilitates the desired expansion and development of THCR’s properties, the change may not lead to the hoped for increase in the volume and profitability of THCR’s business.

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Alternatives to the Recapitalization Plan

If the Recapitalization Plan or other recapitalization plan is not consummated, THCR will continue to consider alternatives to optimize stakeholder return, reduce its consolidated indebtedness and improve its capital structure, including the alternatives described above and others. There is no assurance that any such alternatives will be achieved.

Restrictions contained in the indentures governing the Trump AC Mortgage Notes may impose limits on our ability to pursue certain business strategies.

The indentures governing the Trump AC Mortgage Notes contain operating and financial restrictions that limit our discretion on various business matters. These restrictions include covenants limiting our ability to:

These restrictions may severely restrict flexibility in planning for, or reacting to, changes in our business and the gaming industry. This reduced flexibility could hurt our results of operations and our ability to meet our debt service obligations with respect to our indebtedness.

Pennsylvania and New York have enacted gaming legislation which may harm us, and other states may do so in the future.

In July 2004, the Pennsylvania state legislature passed extensive legislation that could adversely affect us. The legislation permits up to 61,000 slot machines statewide at up to 14 different locations, seven or eight of which would be at racetracks, plus four or five slot parlors and two small resorts. Three of the racetracks, Pocono Downs, Philadelphia Park and Chester Downs, as well as two slot parlors located within the city limits of Philadelphia, are in Atlantic City’s customer markets. It is anticipated that up to 15,000 slot machines would be in place by 2006.

Also in July 2004, the Appellate Division of the Supreme Court of New York unanimously ruled that Indian-owned casinos could legally be operated in New York under the New York state law passed in October 2001. The law permits three new casinos in western New York, one in Niagara Falls, one in Buffalo and one on land owned by the Seneca Indian Nation, all of which would be owned by the Seneca Indian Nation. The legislation also permits up to three casinos in the Catskills in Ulster and Sullivan counties, also to be owned by Native American tribes. In addition, the legislation allows slot machines to be placed in Indian-owned casinos. The court also ruled that New York state could participate in the multi-state Mega-Millions lottery game.

The New York law had also permitted the installation of video lottery terminals, or VLTs, at five horse racing tracks situated across the state of New York. In its July 2004 ruling, however, the Appellate Division of the Supreme Court of New York ruled that the law was unconstitutional because it required that a portion of VLT revenues go to horse-racing breeding funds and track purses. New York’s constitution stipulates that all net proceeds from lottery games go to aid education in New York state. It is anticipated that the ruling will be appealed.

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In addition, other states neighboring New Jersey, including Maryland, are currently contemplating gaming legislation. The net effect of these facilities and other items, when operational, on Atlantic City, including our properties, cannot be predicted. Since our market is primarily a drive-to market, legalized gaming in one or more states neighboring or within close proximity to New Jersey could have a material adverse effect on the Atlantic City gaming market overall, including our properties.

We do not know how the recently announced gaming company mergers will, upon consummation, affect us.

In June 2004, MGM Mirage and Mandalay Resort Group announced that they have entered into a definitive merger agreement under which MGM Mirage will purchase Mandalay Resort Group. If consummated, the MGM Mirage would own and operate up to 28 properties across the country. Also, in July 2004, Harrah’s Entertainment Inc. announced its intention of buying Caesars Entertainment Inc., which would, if consummated, create the world’s largest gaming company with as many as 54 casinos across the country. The Harrah’s-Caesars company would hold a large percentage of properties in jurisdictions in which we currently compete. The final terms of either of these mergers, including whether or not any of the companies will have to divest of any of their properties under the federal anti-trust laws or under the rules and regulations promulgated by the various gaming regulatory agencies, are unknown at this time. The effects of either of these mergers on the gaming market, in general, or on any jurisdiction in which we currently have properties, in particular, cannot be ascertained at this time.

Taxation of the gaming industry, already significant, may increase in the future which would reduce our profitability.

NJSEA Subsidy Agreement. On April 12, 2004, the twelve Atlantic City casino properties, including the Trump AC properties, executed an agreement with the New Jersey Sports & Exposition Authority (“NJSEA”) and the Casino Reinvestment Development Authority (“CRDA”) to, among other things, enhance purses, fund breeders’ awards and establish account wagering at New Jersey horse racing tracks (“NJSEA Subsidy Agreement” or “Agreement”).

The Agreement provides that the casinos pro rata according to their gross revenue: (a) shall pay $34 million to NJSEA in cash in four yearly payments through October 15, 2007 and donate $52 million to NJSEA from the regular payment of their CRDA obligations for use by NJSEA through 2008 to enhance such purses, fund such breeders’ awards and establish such account wagering; and (b) shall donate $10 million from the regular payment of their CRDA obligations for use by CRDA as grants to such other North Jersey projects as CRDA shall determine. The $62 million donation of CRDA obligations is conditioned upon the timely enactment and funding of the Casino Expansion Fund Act. Trump AC has estimated its portion of the industry obligation at approximately 17.0%.

The Agreement also anticipated that legislation to establish and fund a $62 million Casino Expansion Fund would be effective by December 1, 2004 and that the fund will be administered by CRDA and made available pro rata to each casino for use in expanding its casino hotel facility in the amounts and at the times it makes its donation payments to CRDA (“Casino Expansion Fund Act”). The Agreement further provides for a moratorium until January 2009, which casinos may enforce by court injunction, on the conduct of “casino gaming” at any New Jersey racetrack (unless casinos controlling a majority of the hotel rooms controlled by the casinos in Atlantic City otherwise agree) and a moratorium until January 2006 on the authorization of “casino gaming” at any New Jersey racetrack, the violation of which would terminate the Agreement and all further payments to NJSEA and require NJSEA to return all undistributed cash and CRDA to return all undistributed donated CRDA obligations to the casinos. The Agreement also grants a license through August 2008 for the display, at no cost to the casino industry, of messages promoting Atlantic City generally in prominent locations at NJSEA’s Meadowlands and Monmouth racetracks.

The Agreement finally provides that, if the Casino Expansion Fund is not established and funded by the New Jersey Legislature by December 1, 2004: (a) the casinos shall provide $7 million in cash to NJSEA by December 10, 2004 and donate $13 million from the regular payment of their CRDA obligations to NJSEA for use by NJSEA to enhance such purses, fund such breeders’ awards and establish such account wagering; (b) the moratorium on the conduct of “casino gaming” at New Jersey racetracks shall expire as of January 2006; and (c) the Agreement shall otherwise terminate.

In addition to the NJSEA Subsidy Agreement, prominent leaders of the New Jersey Legislature publicly stated during spring 2004 their intent that the Legislature enact the Casino Expansion Fund Act by December 2004, repeal in increments over time the 4.25% tax on casino complimentaries it imposed as of July 2003 and, for four years, refrain from imposing any new or increased casino industry specific taxes. In this regard, legislation was enacted effective June 30, 2004 which: (a) establishes the Atlantic City Expansion Fund, identifies the Casino Hotel Room Occupancy Fee as its funding source and directs CRDA to provide the Atlantic City Expansion Fund with $62 million and to make same available to each casino licensee for investment in an eligible project which increases the number of hotel rooms in its casino hotel facility; and (b) fully phases out the 4.25% tax on casino complimentaries as of July 1, 2009.

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

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.

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% at both the Taj Mahal and the Trump Plaza. 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 January 2003, the FASB issued Interpretation No. 46 (“FIN 46”), “Consolidation of Variable Interest Entities, an interpretation of ARB 51.” The primary objectives of this interpretation are to provide guidance on the identification of entities for which control is achieved through means other than through voting rights (“variable interest entities”) and how to determine when and which business enterprise (the “primary beneficiary”) should consolidate the variable interest entity. This new model for consolidation applies to an entity in which either (i) the equity investors (if any) do not have a controlling financial interest; or (ii) the equity investment at risk is insufficient to finance that entity’s activities without receiving additional subordinated financial support from other parties. In addition, FIN 46 requires that the primary beneficiary, as well as all other enterprises with a significant variable interest in a variable interest entity, make additional disclosures. Certain disclosure requirements of FIN 46 were effective for financial statements issued after January 31, 2003. In December 2003, the FASB issued FIN 46 (revised December 2003), “Consolidation of Variable Interest Entities” (“FIN 46-R”) to address certain FIN 46 implementation issues. The effective dates and impact of FIN 46 and FIN 46-R are as follows: (i) Special-purpose entities (“SPEs”) created

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prior to February 1, 2003- the company must apply either the provisions of FIN 46 or early adopt the provisions of FIN 46-R at the end of the first interim or annual reporting period ending after December 15, 2003; (ii) Non-SPEs created prior to February 1, 2003- the company is required to adopt FIN 46-R at the end of the first interim or annual reporting period ending after March 15, 2004; and (iii) All entities, regardless of whether an SPE, that were created subsequent to January 31, 2003- the provisions of FIN 46 were applicable for variable interests in entities obtained after January 31, 2003. The adoption of the provisions applicable to SPEs and all other variable interests obtained after January 31, 2003 did not have a material impact on the Company’s consolidated financial position, consolidated results of operations, or liquidity. Adoption of this pronouncement had no material impact on the Company’s consolidated financial position, consolidated results of operations, or liquidity.

Financial Condition -

Liquidity and Capital Resources

The Company had a working capital deficit of $64.8 million at June 30, 2004 and has experienced recurring operating losses. The recurring operating losses are primarily the result of substantial debt service obligations on outstanding indebtedness. In 2004, the Company’s debt service obligation on the Trump AC Mortgage Notes is approximately $146.3 million per year. Additionally, the Company has experienced increased competition and other challenges in the Atlantic City market. The Company’s liquidity situation continues to be constrained, due to the Company’s diminished cash flows, increased trade payables, limited capacity to raise additional capital and minimal cash reserves beyond those required to fulfill gaming regulatory requirements. Cash flows from operating activities of the Taj Mahal and Trump Plaza 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 and related interest expense. Sources of the Company’s short-term and long-term liquidity include casino gaming revenues and room, food and beverage sales. Our cash flows from operating activities declined from $58.9 million to $31.1 million in the years ended December 31, 2002 and 2003, respectively. Additionally our cash flows from operating activities declined from $16.4 million to $7.4 million in the six months ended June 30, 2003 and 2004, respectively and our working capital deficit as of June 30, 2004 was $64.8 million. 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.

Also, in connection with their audit of the Company’s financial statements for the year ended December 31, 2003, the Company’s independent auditors expressed substantial doubt about the Company’s ability to continue as a going concern, absent the successful completion of a restructuring or alternative transaction. The Company’s financial condition would also make it difficult for the Company to obtain alternative financing in the event the Recapitalization Plan is not consummated. If the Recapitalization Plan is not successfully consummated, the Company will be required to obtain alternative sources of financing to make its debt service, including interest payments on the Trump AC Mortgage Notes, and pay any fees owing DLJMB. There can be 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 Trump AC and its subsidiaries, specifically, will be conducive to refinancing debt on reasonable terms, or at all. Absent the Company commencing the chapter 11 proceedings contemplated by the Recapitalization Plan by the end of November 2004 or finding alternative sources of funding, the Company cannot ensure that it will have sufficient funds on hand to make its November 1, 2004 interest payments on the Trump AC Mortgage Notes within the 30-day grace period provided under the indentures governing such notes.

The Taj Mahal and Trump Plaza 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. In July 2003, the Borgata, a casino hotel built through a joint venture of Boyd Gaming Corporation and MGM Mirage, opened in Atlantic City’s marina district. Since its opening, the Borgata has adversely affected the revenues of the Trump AC Properties and has announced its intentions to expand its casino floor and amenities. In addition, some of our Atlantic City competitors have recently completed substantial renovations designed to improve their competitive position. Furthermore, alternatives to casino style gambling, such as VLTs, are increasing in the northeast region of the country from which we attract most of our customers.

In July 2004, the Pennsylvania state legislature passed extensive legislation permitted up to 61,000 slot machines statewide at up to 14 different locations, seven or eight of which would be at racetracks, plus four or five slot parlors and two small resorts. Three of the racetracks, Pocono Downs, Philadelphia Park and Chester Downs, as well as two slot parlors located within the city limits of Philadelphia, are in Atlantic City’s customer markets. It is anticipated that up to 15,000 slot machines would be in place by 2006. Also in July 2004, the Appellate Division of the Supreme Court of New York unanimously ruled that Indian-owned casinos could legally be operated in New York under the New York state law passed in October 2001. Legalized gaming in one or more states neighboring, or within close proximity to, Atlantic City, New Jersey could have a material adverse effect on the Atlantic City gaming market, overall, including our properties. See “Factors That May Affect Our Future Results – Pennsylvania and New York have enacted gaming legislation which may harm us, and other states may do so in the future.”

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Capital expenditures at the Trump AC Properties for the six months ended June 30, 2003 and 2004 are as follows:

TRUMP ATLANTIC CITY ASSOCIATES

CONSOLIDATING CAPITAL EXPENDITURES

(IN THOUSANDS)

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 six months ended June 30, 2003 and 2004, Trump AC declared cash partnership distributions to THCR of $893,000 and $1,134,000, respectively, consisting of operating expense reimbursements.

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 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 six months ended June 30, 2004 Trump AC has recorded a charge to income tax expense on the statement of operations for $350,000 related to the profits tax.

On April 12, 2004, the twelve Atlantic City casino properties, including the Trump AC properties, executed the NJSEA Subsidy Agreement with the NJSEA and the CRDA to, among other things, enhance purses, fund breeders’ awards and establish account wagering at New Jersey horse racing tracks. The NJSEA Subsidy Agreement provides that the casinos, pro rata according to their gross revenue, shall: (a) pay $34 million to NJSEA in cash in four yearly payments through October 15, 2007 and donate $52 million to NJSEA from the regular payment of their CRDA obligations to, in the aggregate, be used by NJSEA through 2008 to enhance such purses, fund such breeders’ awards and establish such account wagering; and (b) donate $10 million from the regular payment of their CRDA obligations to be used by CRDA as grants to such other North Jersey projects as it shall determine. Trump AC has estimated its portion of the industry obligation at approximately 17.0%.

Summary of the Company’s Public Indebtedness

Trump AC Mortgage Notes. Trump AC’s debt primarily consists of an aggregate $1.3 billion principal amount of the Trump AC Mortgage Notes described below.

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TAC I Notes. In connection with THCR’s acquisition of the Taj Mahal in April 1996 (the “Taj Acquisition”), Trump AC and Trump AC Funding issued, in an underwritten public offering, mortgage notes in the principal amount of $1.2 billion, bearing interest at the rate of 11-1/4% per annum, payable in cash semiannually in arrears on May 1st and November 1st of each year, and maturing on May 1, 2006 (the “TAC I Notes”). The obligations evidenced by the TAC I 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 TAC I Notes were issued pursuant to an indenture agreement, dated as of April 17, 1996 (the “TAC I Note Indenture”), by and among Trump AC and Trump AC Funding, as issuers, Plaza Associates, Taj Associates and The Trump Taj Mahal Corporation, as guarantors, and the Trustee.

TAC II Notes. In December 1997, Trump AC and Trump AC Funding II issued, in an underwritten public offering, mortgage notes in an aggregate principal amount of $75.0 million, bearing interest at the rate of 11-1/4% per annum, payable in cash semiannually in arrears on May 1st and November 1st of each year, and maturing on May 1, 2006 (the “TAC II Notes”). The TAC II Notes were issued pursuant to an indenture agreement, dated as of December 10, 1997 (the “TAC II Note Indenture”), by and among Trump AC and Trump AC Funding II, as issuers, TACC, Plaza Associates and Taj Associates, as guarantors, and the Trustee.

TAC III Notes. In December 1997, Trump AC and Trump AC Funding III issued, in an underwritten public offering, mortgage notes in an aggregate principal amount of $25.0 million, bearing interest at the rate of 11-1/4% per annum, payable in cash semiannually in arrears on May 1st and November 1st of each year, and maturing on May 1, 2006 (the “TAC III Notes”, and together with the TAC I Notes and TAC II Notes, the “Trump AC Mortgage Notes”). The TAC III Notes were issued pursuant to an indenture agreement, dated as of December 10, 1997 (the TAC III Note Indenture), by and among Trump AC and Trump AC Funding III, as issuers, TACC, Plaza Associates and Taj Associates, as guarantors, and the Trustee.

The Trump AC Mortgage Notes include restrictive covenants prohibiting or limiting, among other things, the sale of assets, the making of acquisitions and other investments, certain capital expenditures, the incurrence of additional debt and liens and the payment of dividends and distributions. Non-compliance could result in the acceleration of such indebtedness.

Given the large number of holders of the Trump AC Mortgage Notes and TCH Notes, THCR intends to effect the transactions in a voluntary chapter 11 proceeding pursuant to a pre-negotiated plan of reorganization in order to implement the Recapitalization Plan in an efficient and timely manner. THCR intends to commence its chapter 11 case by the end of September 2004. If the case is commenced by such time, the Company would not be required to make the November 1, 2004 interest payment on the Trump AC Mortgage Notes. If THCR’s case is not commenced by the end of November 2004, the Company cannot ensure that it will have sufficient funds on hand from operations to make the November 1, 2004 interest payment on the Trump AC Mortgage Notes within the 30 day grace period provided in the indentures governing such notes. Under such circumstances, THCR and the Company would need to borrow funds to provide for such payment of interest, the success of which cannot be assured. See “Management’s Discussion and Analysis of Financial Condition and Results of Operations; Factors That May Affect Our Results.”

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 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 Taj Associates and Plaza 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, Trump AC Funding II and Trump AC Funding III).

The ability of Trump AC and its subsidiaries to pay interest on the Trump AC Mortgage Notes depends primarily on the ability of Taj Mahal and Trump Plaza 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 the Taj Mahal and Trump Plaza is subject to general economic conditions, industry conditions, including competition and regulatory matters, and numerous other factors, many of which are unforeseeable or are beyond the control of the Taj Mahal and Trump Plaza. There can be no assurance that the future operating performance of the Taj Mahal and Trump Plaza will be sufficient to generate the cash flows required to meet the debt service obligations of the Taj Mahal, Trump Plaza or Trump AC. The ability of the Taj Mahal, Trump Plaza 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 Taj Associates and Plaza Associates (through Trump AC) to make payments, dividends or distributions to THCR Holdings may be restricted by the 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 following tables include selected data of Taj Associates and Plaza Associates for the three months ended June 30, 2003 and 2004.

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