<PAGE> 1
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D. C. 20549
FORM 10-Q
(Mark One)
/X/ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended September 30, 1996
OR
/ / TRANSITION REPORT PURSUANT TO SECTION 13 OR
15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from _______ to _______
Commission file number 1-12168
BOYD GAMING CORPORATION
(Exact name of registrant as specified in its charter)
NEVADA 88-0242733
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
2950 SOUTH INDUSTRIAL ROAD
LAS VEGAS, NEVADA
89109
(Address of principal executive offices)
(Zip Code)
(702) 792-7200
(Registrant's telephone number, including area code)
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to
filing requirements for the past 90 days.
Yes X No
----- -----
Shares outstanding of each of the Registrant's classes of common stock as of
October 31, 1996
Class Outstanding
----- -----------
Common stock, $.01 par value 61,213,720
<PAGE> 2
BOYD GAMING CORPORATION
FORM 10-Q
QUARTER ENDED SEPTEMBER 30, 1996
INDEX
Page No.
--------
Part I. Financial Information
Item 1. Financial Statements
Consolidated Balance Sheets at September 30, 1996
and June 30, 1996 3
Consolidated Statements of Operations for the three months
ended September 30, 1996 and 1995 4
Consolidated Statements of Cash Flows for the three
months ended September 30, 1996 and 1995 5
Consolidated Statement of Changes in Stockholders' Equity
for the three months ended September 30, 1996 6
Notes to Consolidated Financial Statements 7
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations 10
Part II. Other Information 12
Item 6. Exhibits and Reports on Form 8-K 14
Signatures 15
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PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
BOYD GAMING CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>
SEPTEMBER 30, JUNE 30,
(IN THOUSANDS, EXCEPT SHARE DATA) 1996 1996
- ----------------------------------------------------------------------------------------------
ASSETS
Current assets
<S> <C> <C>
Cash and cash equivalents $ 45,519 $ 48,980
Accounts receivable, net 16,302 16,040
Inventories 6,746 6,531
Prepaid expenses 17,819 15,265
Deferred income taxes 1,909 --
-------- --------
Total current assets 88,295 86,816
Property, equipment and leasehold interests, net 813,335 797,593
Other assets and deferred charges 57,158 58,489
Goodwill, net 10,432 10,527
-------- --------
Total assets $969,220 $953,425
======== ========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities
Current maturities of long-term debt $ 1,746 $ 4,031
Accounts payable 59,648 47,193
Accrued liabilities
Payroll and related 22,353 22,956
Interest and other 23,157 20,956
Income taxes payable -- 678
-------- --------
Total current liabilities 106,904 95,814
Long-term debt, net of current maturities 596,143 590,808
Deferred income taxes 34,131 33,546
Commitments
Stockholders' equity
Preferred stock -- --
Common stock, $.01 par value; 200,000,000 shares authorized;
57,213,720 shares outstanding 572 572
Additional paid-in capital 102,583 102,583
Retained earnings 128,887 130,102
-------- --------
Total stockholders' equity 232,042 233,257
-------- --------
Total liabilities and stockholders' equity $969,220 $953,425
======== ========
</TABLE>
The accompanying notes are an integral part of
these consolidated financial statements.
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<PAGE> 4
BOYD GAMING CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
<TABLE>
<CAPTION>
THREE MONTHS ENDED
SEPTEMBER 30,
-----------------------
(IN THOUSANDS, EXCEPT PER SHARE DATA) 1996 1995
- ---------------------------------------------------------------------------------------------
<S> <C> <C>
Revenues
Casino $130,197 $126,694
Food and beverage 35,894 32,204
Rooms 17,201 16,995
Other 13,256 9,546
Management fees and joint venture 10,312 10,464
-------- --------
Gross revenues 206,860 195,903
Less promotional allowances 20,123 16,843
-------- --------
Net revenues 186,737 179,060
-------- --------
Costs and expenses
Casino 72,070 61,508
Food and beverage 24,878 25,430
Rooms 6,260 6,469
Other 11,191 6,194
Selling, general and administrative 30,634 22,477
Maintenance and utilities 9,037 8,329
Depreciation and amortization 15,117 14,561
Corporate expense 6,429 5,359
Preopening expense -- 10,004
-------- --------
Total 175,616 160,331
-------- --------
Operating income 11,121 18,729
-------- --------
Other income (expense)
Interest income 177 360
Interest expense, net of amounts capitalized (13,258) (12,230)
-------- --------
Total (13,081) (11,870)
-------- --------
Income (loss) before provision (benefit) for income taxes (1,960) 6,859
Provision (benefit) for income taxes (745) 2,675
-------- --------
Net income (loss) $ (1,215) $ 4,184
======== ========
Net income (loss) per common share $ (0.02) $ 0.07
======== ========
</TABLE>
The accompanying notes are an integral part of these consolidated financial
statements.
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BOYD GAMING CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
THREE MONTHS
SEPTEMBER 30,
-------------
(IN THOUSANDS) 1996 1995
- ---------------------------------------------------------------------------------------------------
CASH FLOWS FROM OPERATING ACTIVITIES
<S> <C> <C>
Net income (loss) $ (1,215) $ 4,184
Adjustments to reconcile net income (loss) to net cash provided by
operating activities:
Depreciation and amortization 15,117 14,561
Deferred income taxes (1,324) (1,255)
Other 363 4
Changes in assets and liabilities:
Increase in accounts receivable, net (262) (1,183)
Increase in inventories (215) (143)
Increase in prepaid expenses (2,554) (4,500)
(Increase) decrease in other assets 11 (784)
Increase in other current liabilities 3,921 10,857
Increase (decrease) in income taxes payable (678) 3,303
-------- --------
Net cash provided by operating activities 13,164 25,044
-------- --------
CASH FLOWS FROM INVESTING ACTIVITIES
Acquisition of property, equipment and other assets (39,675) (37,546)
Proceeds from sale of riverboat 20,000 --
-------- --------
Net cash used in investing activities (19,675) (37,546)
-------- --------
CASH FLOWS FROM FINANCING ACTIVITIES
Net borrowings under credit agreements 21,000 (17,501)
Payments on long-term debt (17,950) (6,831)
-------- --------
Net cash provided by (used in) financing activities 3,050 (24,332)
-------- --------
NET DECREASE IN CASH AND CASH EQUIVALENTS (3,461) (36,834)
CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD 48,980 83,169
-------- --------
CASH AND CASH EQUIVALENTS, END OF PERIOD $ 45,519 $ 46,335
======== ========
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION
Cash paid for interest, net of amounts capitalized $ 13,357 $ 10,779
======== ========
Cash paid for income taxes $ 1,339 $ 646
======== ========
SUPPLEMENTAL SCHEDULE OF NON-CASH INVESTING AND FINANCING ACTIVITIES
Property additions aquired on contracts and trade
payables which were accrued, but not yet paid $ 20,722 $ 13,410
======== ========
</TABLE>
The accompanying notes are an integral part of these consolidated financial
statements.
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BOYD GAMING CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF
CHANGES IN STOCKHOLDERS' EQUITY
<TABLE>
<CAPTION>
(IN THOUSANDS, EXCEPT SHARE DATA)
- -----------------------------------------------------------------------------------------------------------------
COMMON STOCK ADDITIONAL TOTAL
------------------------- PAID-IN RETAINED STOCKHOLDERS'
SHARES AMOUNT CAPITAL EARNINGS EQUITY
-----------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
BALANCES, JULY 1, 1996 57,213,720 $ 572 $102,583 $130,102 $233,257
NET LOSS FOR THE THREE MONTHS
ENDED SEPTEMBER 30, 1996 (1,215) (1,215)
---------- ------- -------- -------- --------
BALANCES, SEPTEMBER 30, 1996 57,213,720 $ 572 $102,583 $128,887 $232,042
========== ======= ======== ======== ========
</TABLE>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE
CONSOLIDATED FINANCIAL STATEMENTS.
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<PAGE> 7
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Principles of Consolidation
The accompanying Consolidated Financial Statements include the accounts of Boyd
Gaming Corporation and its wholly owned subsidiaries, collectively referred to
herein as the "Company". The Company owns and operates six casino entertainment
facilities in Las Vegas, Nevada, one in Tunica, Mississippi and one in Kansas
City, Missouri which opened in September 1995. The Company manages a casino
entertainment facility in Philadelphia, Mississippi, which opened July 1, 1994,
for which it has a seven year management contract. The Company is also part
owner of and manages a riverboat gaming operation in Kenner, Louisiana which
opened in September 1994. The Company has recently entered into an agreement to
sell its interest in the entity which owns the Kenner gaming operation (See Note
3. Additional Information - Treasure Chest Casino). All material intercompany
accounts and transactions have been eliminated.
Basis of Presentation
In the opinion of the Company, the accompanying unaudited Consolidated Financial
Statements contain all adjustments necessary to present fairly the results of
its operations for the three months ended September 30, 1996 and 1995 and its
cash flows for the three months ended September 30, 1996 and 1995. It is
suggested that this report be read in conjunction with the Company's audited
financial statements included in the Annual Report on Form 10-K for the fiscal
year ended June 30, 1996. The operating results for the three months ended
September 30, 1996 and cash flows for the three months ended September 30, 1996
are not necessarily indicative of the results that will be achieved for the full
fiscal year or for future periods.
Net Income Per Common Share
Net income per common share is based upon the weighted average number of common
stock and common stock equivalents outstanding during the period which were
57,213,720 and 56,999,018 for the three months ended September 30, 1996 and
1995, respectively.
Use of Estimates
The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions that
affect the reported amounts of assets and liabilities at the date of the
financial statements and the reported amounts of revenues and expenses during
the reporting period. Actual results could differ from those estimates.
Recently Adopted Accounting Standards
The FASB issued SFAS No. 121, Accounting for the Impairment of Long-Lived Assets
to Be Disposed Of, in March 1995. This statement was adopted by the Company for
the fiscal year beginning July1, 1996 and requires that long-lived assets and
certain identifiable intangibles to be held and used by an entity be reviewed
whenever events or changes in circumstances indicate that the carrying amount of
an asset may not be recoverable. The adoption of SFAS No. 121 did not have
an effect on the
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<PAGE> 8
financial position or results of operations of the Company as of September 30,
1996.
The FASB issued SFAS No. 123, Accounting for Stock-Based Compensation, in
October 1995. This statement was adopted by the Company for the fiscal year
beginning July 1, 1996 and requires certain disclosures about the impact on
results of operations of the fair value of stock based employee compensation
arrangements. Management intends to continue to account for stock based employee
compensation arrangements in accordance with Accounting Principles Board No. 25,
Accounting for Stock Issued to Employees, and accordingly believes that adoption
of SFAS No. 123 will not have a significant effect on the financial position or
results of operations of the Company. The Company will include the pro forma
effects of this statement in its notes to financial statements for the year
fiscal ending June 30, 1997.
NOTE 2. CAPITAL STOCK
Two hundred million shares of common stock with a par value of $.01 per share
are authorized, of which 57,213,720 shares were issued at September 30, 1996 and
June 30, 1996, including no treasury shares at September 30, 1996 and June 30,
1996.
The Company has authorized 5,000,000 shares of $.01 par value preferred stock of
which no shares were issued at September 30, 1996 and June 30, 1996.
NOTE 3. ADDITIONAL INFORMATION
Sale of Riverboat
On August 23, 1996, the Company sold its riverboat Mary's Prize for $20 million
and retired debt of $17.6 million in connection therewith. Projects for which
Mary's Prize was constructed have either been delayed or did not materialize.
Debt and Equity Offerings
On October 4, 1996, the Company issued $200 million of 9.25% Senior Notes and
sold 4.0 million shares of the Company's Common Stock in two registered public
offerings. The net proceeds of these offerings of approximately $230 were used
to reduce outstanding indebtedness under the Company's bank credit facility. On
November 4, 1996, the Company redeemed its $150 million 10.75% Notes with
borrowings under its bank credit facility. As a result, the Company will
recognize an extraordinary loss of approximately $10 million on a pre-tax basis
on extinguishment of debt in the Company's second fiscal quarter.
The $200 million in Senior Notes are guaranteed by all existing significant
subsidiaries of the Company. The guaranties are full, unconditional, and joint
and several. All of the Company's significant subsidiaries are wholly-owned.
Assets, equity, income and cash flows of all other subsidiaries of the Company
that do not guaranty the notes are less than 3% of the respective consolidated
amounts and are inconsequential, individually and in the aggregate, to the
Company. The Company has not included separate financial information of the
guarantors since such information is not material to investors.
The Company, through its wholly owned subsidiary California Hotel Finance
Company, has $185
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<PAGE> 9
million principal amount of 11% senior subordinated notes due December 2002. The
notes contain certain covenants regarding incurrence of debt, sales and
disposition of assets, mergers or consolidations and limitations on restricted
payments (as defined in the indenture to the notes). As a result of these
restrictions, at September 30, 1996 California Hotel and Casino (a wholly owned
subsidiary of the Company) had a portion of its retained earnings and its net
assets in the amounts of $31.7 million and $86.9 million , respectively, that
were not available for distribution as dividends to the Company.
Treasure Chest Casino
On October 28, 1996, the Company entered into a definitive agreement to sell its
15% interest in Treasure Chest Casino L.L.C., owner of the Treasure Chest Casino
in Kenner, Louisiana. The interest is being purchased by both Treasure Chest
Casino L.L.C. and its majority owner. The sale, which is subject to various
governmental and regulatory approvals, is expected to close in January 1997 and
will not result in a material gain or loss for the Company. The Company,
through its wholly owned subsidiary, expects to manage Treasure Chest Casino
until approximately October 1997.
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<PAGE> 10
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
RESULTS OF OPERATIONS
Financial Highlights
<TABLE>
<CAPTION>
THREE MONTHS ENDED SEPTEMBER 30, 1996 1995
- --------------------------------------------------------------------------------
(IN THOUSANDS)
NET REVENUES
<S> <C> <C>
Stardust $ 45,266 $ 47,794
Boulder Strip Properties 45,220 42,912
Downtown Properties 33,202 32,451
Central Region 58,967 55,903
- --------------------------------------------------------------------------------
Total Properties $182,655 $ 179,060
- --------------------------------------------------------------------------------
OPERATING INCOME
Stardust $ 3,472 $ 5,803
Boulder Strip Properties 3,812 2,893
Downtown Properties 2,366 2,984
Central Region 9,201 23,141
Preopening expense -- (10,004)
- --------------------------------------------------------------------------------
Total Properties $ 18,851 $ 24,817
- --------------------------------------------------------------------------------
</TABLE>
The above table sets forth for the periods indicated certain Income Statement
Data for the Company's properties. As used herein, "Boulder Strip Properties"
consist of Sam's Town Las Vegas, the Eldorado and Jokers Wild; "Downtown
Properties" consist of the California and the Fremont; and "Central Region"
consist of Sam's Town Tunica, Sam's Town Kansas City (opened September 1995),
management fee income from Silver Star Hotel and Casino, and management fee and
joint venture income from Treasure Chest Casino.
Consolidated net revenues increased 4.3% for the three-month period
ended September 30, 1996 compared to the same period in the prior fiscal year.
In the Company's Central Region, revenues increased 5.5% compared to the prior
year's first fiscal quarter. Revenues were enhanced in the Central Region as a
result of Sam's Town Kansas City operating for the entire first fiscal quarter
of the current year and only a portion of last year's first quarter. Sam's Town
Kansas City opened on September 13, 1995. In the Company's Nevada Region
revenues increased slightly for the three month period ended September 30, 1996
compared to the same period in the prior fiscal year. Revenues at the Boulder
Strip Properties increased 5.4%, revenues at the Downtown Properties increased
2.3%, while revenues at the Stardust declined 5.3% versus the comparable period
of the prior year. Company-wide casino revenue increased 2.8% and food and
beverage revenue increased 6.8%. Rooms revenue decreased 10.5% as a result of a
decline in the average daily room rate at the Stardust and a rooms remodel
project at the California Hotel and Casino which removed approximately 17% of
its rooms from service for the current year's first fiscal quarter.
Consolidated operating income for the first quarter of fiscal 1997 was
$11.1 million versus $18.7 million for the prior year's first quarter, a
decrease of 41%. The decrease in consolidated operating income was the result of
a 60% decline in operating income in the Central Region and a 17% decline in
operating income in the Nevada Region. Operating income in the Central Region
includes management fee and joint venture income related to the Company's Silver
Star Hotel and Casino and Treasure Chest Casino operations. Consolidated
operating income margin declined to 6.0% from 10.5% for the first three months
of fiscal 1997 versus the same period in fiscal 1996. This decrease resulted
from operating margins in the Central Region declining to 15.6% from
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<PAGE> 11
23.5%, respectively, and operating income margins in the Nevada Region declining
to 7.8% from 9.5%, respectively, for the first quarter of fiscal 1997 compared
to the prior year's first quarter.
Net revenues at the Stardust decreased 5.3% for the first quarter of
fiscal 1997 versus the first quarter in the prior fiscal year. Casino revenue
declined 5.5% as a result of increased wagering volumes offset by lower win
percentages. Rooms revenue for the three months ended September 30, 1996
decreased 13% with a 1.3% increase in occupied rooms offset by a 2.6% decrease
in the average daily room rate. Operating income margin for the quarter declined
to 7.7% from 12.1% in the prior year's first quarter. The decline in operating
income and operating income margin is attributable primarily to decreased
operating income and operating income margins in the casino and rooms
departments along with higher advertising and promotional expenses.
Net revenues at the Boulder Strip Properties increased 5.4% for the
three months ended September 30, 1996 compared to the same period in the prior
year primarily as a result of a 8.1% increase in revenues at Sam's Town Las
Vegas. Casino revenues at the Boulder Strip Properties increased 6.8% for the
three months ended September 30, 1996, while rooms revenue and food and beverage
revenue were consistent with the prior year's first fiscal quarter. The
operating income margin at the Boulder Strip Properties increased to 8.4% from
6.7% for the three months ended September 30, 1996 versus the comparable period
in the prior fiscal year due to improved operating margins at Sam's Town Las
Vegas in the casino, rooms and food and beverage departments.
Net revenues at the Downtown Properties increased 2.3% for the three
months ended September 30, 1996 compared to the same period in the prior year.
Net revenues at the California decreased 5.8% for the first three months of
fiscal 1996 with casino revenue declining 6.0%, rooms revenue declining 6.6% and
food and beverage revenue declining 3.9%. All revenues were impacted for the
first fiscal quarter due to a rooms remodel project at the California. The
California had approximately 17% of its rooms base unavailable in the three
month period ended September 30, 1996. At the Fremont, net revenues increased
11.6% for the three months ended September 30, 1996 versus the comparable period
in the prior fiscal year, with casino revenue increasing 6.5% and rooms and food
and beverage increasing 2.5% and 27.8%, respectively. Operating income margins
at the Downtown Properties were 7.1% for the three months ended September 30,
1996 versus 9.2% in the comparable period in the prior fiscal year with
operating income margins at both the California and Fremont declining. Operating
income margins at the California declined in the casino and rooms departments
primarily as a result of the rooms remodel project while operating income
margins at the Fremont declined due to declines in the casino and rooms
departments which were partially offset by increased margins in the food and
beverage departments.
The Central Region produced net revenues of $59.0 million in the first
quarter of fiscal 1997 versus $55.9 million in last year's first quarter. Sam's
Town Tunica net revenues decreased 25.4% to $30.3 million in the first quarter
of fiscal 1997 versus $40.6 million in the first quarter of the prior fiscal
year. Management fee and joint venture income from Silver Star and Treasure
Chest totaled $10.3 million for the three months ended September 30, 1996
compared to $10.5 million in the prior year's first fiscal quarter. Revenues
were enhanced by Sam's Town Kansas City, which was open for the entire first
fiscal quarter of the current year, and produced net revenues of $18.4 million
versus $4.9 million in last year's first fiscal quarter. Sam's Town Kansas City
opened on September 13, 1995 and therefore only had 18 days of results included
in the prior year period. Operating income and operating income margin in the
Central Region declined to
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<PAGE> 12
$9.2 million and 15.6%, respectively, for the first quarter of fiscal 1997
versus $23.1 million and 41%, respectively, in the comparable period in the
prior fiscal year. Contributing to the decline in operating income and operating
income margin in the Central Region was a $4.1 million operating loss at Sam's
Town Kansas City for the first quarter, which continues to operate at a loss. In
addition, Sam's Town Tunica reported a $9.2 million operating income decline for
the first fiscal quarter ended September 30, 1996 versus the comparable period
in the prior fiscal year. This decline was primarily due to the effects of
increased competition and the continuing effects of construction disruption.
Operating income margin at Sam's Town Tunica declined to 9.7% for the quarter
ended September 30, 1996. The Central Region results include the full revenues
and income from Sam's Town Tunica and Sam's Town Kansas City (opened September
13, 1995), management fee income from Silver Star Hotel and Casino and
management fee and joint venture income from Treasure Chest Casino. The Company
has recently entered into a definitive agreement to sell its 15% interest in
Treasure Chest Casino L.L.C., owner of the Treasure Chest Casino. The sale,
which is subject to various governmental and regulatory approvals is expected to
close in January 1997. The Company, through its wholly owned subsidiary, expects
to manage Treasure Chest until approximately October 1997.
Interest expense, net of amounts capitalized was $13.3 million for the
first quarter of fiscal 1997 compared to $12.2 million in the first quarter of
the prior year. The Company incurred increased interest expense for the quarter
ended September 30, 1996 as a result of increased borrowings and decreased
capitalized interest during the first quarter of fiscal 1997 compared to the
comparable period in the prior year. Depreciation expense increased $.6 million
primarily as a result of the opening of Sam's Town Kansas City.
As a result of these factors, net income decreased $5.4 million for the
first fiscal quarter of 1997 compared to the first fiscal quarter of the prior
year.
LIQUIDITY AND CAPITAL RESOURCES
For the three months ended September 30, 1996 and 1995, the Company's
principal source of funds was net cash provided by operating activities. Net
cash provided by operating activities was $13.2 million in the first quarter of
fiscal 1997 compared to $25.0 million in the same period last year. As of
September 30, 1996, the Company had balances of cash and cash equivalents of
$45.5 million and had approximately $244 million of credit available under its
bank credit facility.
The Company's principal uses of funds for the three months ended
September 30, 1996 and 1995 were cash used in investing activities, mainly for
capital expenditures and, for the prior year period, cash used in financing
activities related to the reduction of long-term debt. Capital expenditures for
the three months ended September 30, 1996 totaled $39.7 million. Of this amount
$10 million was related to the renovation and expansion of Main Street Station
and $16 million was related to the 350-room hotel tower and parking garage
project of Sam's Town Tunica. Main Street Station, which is expected to cost
approximately $45 million and Sam's Town Tunica, which is expected to cost
approximately $40 million, have approximately $22 million and $17 million,
respectively, remaining to be spent. Both projects are expected to be completed
in the Company's second fiscal quarter. The Company plans to fund the Sam's Town
Tunica expansion and the Main Street Station renovation primarily from cash flow
from operations and availability under its bank credit facility.
The Company is currently involved in several other projects to expand
its operations. On April 26, 1996, the Company entered into a definitive stock
purchase agreement to acquire Par-A-Dice Gaming Corporation, owner and operator
of the Par-A-Dice riverboat casino in East Peoria, Illinois and East Peoria
Hotel, Inc. the general partner of a partnership which recently opened a
204-room hotel adjacent to the Par-A-Dice casino. Closing of the transaction is
conditioned
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<PAGE> 13
upon, among other things, approval by the Illinois Gaming Board. The total
purchase price is approximately $175 million subject to certain adjustments as
set forth in the stock purchase agreement. The Company plans to fund the
Par-A-Dice acquisition from borrowings under its bank credit facility. The
Company recently acquired a casino hotel site in Reno, Nevada and plans to
develop Sam's Town Reno on the site at a total estimated cost of approximately
$92 million. The Company plans to fund the Sam's Town Reno development primarily
from cash flow from operations and availability under its bank credit facility.
On May 29, 1996, the Company, through a wholly owned subsidiary, executed a
joint venture agreement with Mirage Resorts, Inc., (the "Mirage Joint Venture")
to jointly develop and own a casino hotel entertainment facility in the Marina
district of Atlantic City, New Jersey (the "Atlantic City Project"). The Mirage
Joint Venture provides for $100 million in capital contributions by the Company
during the course of the construction of the Atlantic City Project. The Company
plans to fund its Mirage Joint Venture capital contributions primarily from cash
flow from operations and availability under its bank credit facility. There can
be no assurance that any of the above mentioned projects will go forward and
ultimately become operational. The source of funds required to meet the
Company's working capital needs (including maintenance capital expenditures) and
those required to complete the above mentioned projects is expected to be cash
on hand, cash flow from operations, availability under its bank credit facility,
new borrowings to the extent permitted under existing debt agreements, the
issuance of additional equity and vendor and other financing. No assurance can
be given that required financing strategies can be effected on satisfactory
terms.
The Company, through its wholly owned subsidiary California Hotel
Finance Company, has $185 million principal amount of 11% Senior Subordinated
Notes due December 2002. The Notes contain certain covenants, including but not
limited to limitations on restricted payments (as defined in the indenture
related to the notes). As a result of these restrictions, at September 30, 1996
California Hotel and Casino (a wholly owned subsidiary of the Company) had a
portion of its retained earnings and net assets, in the amounts of $31.7
million and $86.9 million, respectively, that were not available for
distribution as dividends to the Company.
On October 4, 1996, the Company issued $200 million of 9.25% Senior
Notes and sold 4.0 million shares of the Company's Common Stock. The net
proceeds of these offerings of approximately $230 were used to reduce
outstanding indebtedness under the Company's bank credit facility. On November
4, 1996, the Company redeemed its $150 million 10.75% Notes with borrowings
under its bank credit facility. Also, on August 23, 1996, the Company sold its
riverboat Mary's Prize for $20 million and retired debt of $17.6 million in
connection therewith.
PRIVATE SECURITIES LITIGATION REFORM ACT
The Private Securities Litigation Reform Act of 1995 provides a "safe
harbor" for forward looking statements. Certain information included in this
Form 10-Q and other materials filed or to be filed by the Company with the
Securities and Exchange Commission (as well as information included in oral
statements or other written statements made or to be made by the Company)
contains statements that are forward looking, such as statements relating to
plans for future expansion and other business development activities as well as
other capital spending, financing sources, and the effects of regulation (
including gaming and tax regulation) and competition. Such forward looking
statements involve important risks and uncertainties that could significantly
affect anticipated results in the future, and accordingly, actual results may
differ materially form those expressed in any forward looking statements made by
or on behalf of the Company. These risks and uncertainties include, but are not
limited to, those related to construction and development activities, economic
conditions, changes in tax laws, changes in laws or regulations affecting gaming
licenses, changes in competition, and factors affecting leverage and debt
service including sensitivity to fluctuation in interest rates, and other
factors described from time to time in the Company's reports filed with the
Securities and Exchange Commission, including the Company's Form 10-K for the
year ended June 30, 1996 and its Registration Statements (File Nos. 333-05555
and 333-05521) related to its recent offerings of 9.25% Senior Notes and
Common Stock. Any forward looking statements are made pursuant to the Private
Securities Litigation Reform Act of 1995 and, as such, speak only as of the
date made.
PART II. OTHER INFORMATION
-13-
<PAGE> 14
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K.
(a). Exhibits.
10.57 Boyd Gaming Corporation - 1996 Stock Incentive Plan.
(Incorporated by reference to the Appendix A of the
Company's October 22, 1996 Proxy Statement for the
1996 Annual Meeting of Stockholders).
10.58 Form of Indenture relating to $200,000,000 aggregate
principal amount of 9.25% Senior Notes due 2003,
including the Form of Note. (Incorporated by
reference to Exhibit 4 of the Company's Registration
Statement on Form S-3, File No. 333-05555).
27 Financial Data Schedule
(b). Reports on Form 8-K.
Company's Current Report on Form 8-K, dated August
16, 1996, regarding the acquisition of land for Sam's
Town Reno and the sale of Mary's Prize Riverboat.
-14-
<PAGE> 15
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
BOYD GAMING CORPORATION
(Registrant)
Date: November 14, 1996 By Keith Smith
-------------------------------
Keith Smith
Vice President and Controller
(Chief Accounting Officer)
-15-
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