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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D. C. 20549
FORM 10-Q / A
(AMENDMENT NUMBER 1)
(Mark One)
[ X ] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(D)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended December 31, 1995
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
January 31, 1996
<TABLE>
<CAPTION>
Class Outstanding
----- -----------
<S> <C>
Common stock, $.01 Par value 57,115,365
</TABLE>
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ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
RESULTS OF OPERATIONS
The following 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 Casino and Jokers Wild
Casino; "Downtown Properties" consist of the California Hotel and Casino and the
Fremont Hotel and Casino; and the "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 (opened September 1994).
<TABLE>
<CAPTION>
THREE MONTHS ENDED SIX MONTHS ENDED
DECEMBER 31, DECEMBER 31,
------------------------- --------------------------
1995 1994 1995 1994
--------- --------- --------- ---------
(IN THOUSANDS) (IN THOUSANDS)
<S> <C> <C> <C> <C>
INCOME STATEMENT DATA
NET REVENUES
Stardust $ 48,612 $ 50,581 $ 96,406 $ 98,737
Boulder Strip Properties 50,492 43,631 93,404 83,361
Downtown Properties 36,311 35,203 68,762 68,099
Central Region 64,086 39,494 119,989 75,431
--------- --------- --------- ---------
Total Properties 199,501 168,909 378,561 325,628
--------- --------- --------- ---------
OPERATING INCOME
Stardust 7,114 8,284 12,917 14,816
Boulder Strip Properties 6,673 3,845 9,566 5,407
Downtown Properties 5,995 7,028 8,979 11,399
Central Region 17,747 17,511 40,888 29,855
Preopening expense -- -- (10,004) --
--------- --------- --------- ---------
Total Properties 37,529 36,668 62,346 61,477
--------- --------- --------- ---------
</TABLE>
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Consolidated net revenues increased 18.6% and 16.5%, respectively, for
the three and six-month periods ended December 31, 1995 compared to the
comparable periods in the prior fiscal year. The Company's Central Region
properties, which consist of Sam's Town Tunica, Sam's Town Kansas City, Silver
Star Hotel and Casino, and Treasure Chest Casino, accounted for the majority of
the increase in revenues for both the second fiscal quarter and for the first
six months of the current fiscal year with Central Region revenues increasing
62% and 59%, respectively. These increases are primarily attributable to the
opening of Sam's Town Kansas City in September 1995 and increases at Sam's Town
Tunica of 15.4% and 24.6%, respectively, for the three and six-month periods.
Management fees and joint venture income related to the Silver Star Hotel and
Casino and Treasure Chest Casino also increased, up a total of 8.0% and 38% for
the three and six-month periods ending December 31, 1995. In the Company's
Nevada Region, which consists of the Stardust Resort and Casino, Sam's Town Las
Vegas, the Eldorado Casino, Jokers Wild Casino, the California Hotel and Casino
and the Fremont Hotel and Casino, revenues increased 4.6% and 3.3%, respectively
for the three and six-month period ended December 31, 1995 versus the comparable
periods in the prior fiscal year. Revenues at the Boulder Strip properties
increased 15.7% and 12.0%, respectively, for the three and six-month periods,
while Stardust revenues declined 3.9% and 2.4%, respectively, and revenues at
the Downtown Properties increased 3.1% and 1.0%, respectively. Revenue growth on
a consolidated basis was achieved in all major revenue categories of the
Company's operations for both the three and six-month periods ended December 31,
1995, with casino revenue up 20.0% and 16.2%, respectively, food and beverage
revenue up 14.0% and 8.5%, respectively, and room revenue up 13.8% and 18.0%,
respectively. Slot revenue, which currently accounts for more than 70% of casino
revenue, increased 24% and 21%, respectively, for the three and six-month
periods ended December 31, 1995 versus comparable periods in the prior fiscal
year. Table games revenue, the only other significant component of casino
revenue, increased 16.5% and 8.9%, respectively, for the three and six-month
periods. The Company's hotel rooms posted an overall occupancy rate of 92% and
94% for the three and six-month periods ended December 31, 1995. Company-wide
occupied rooms increased 6.5% and 7.9%, respectively, in the three and six-month
periods primarily as a result of Sam's Town Tunica expansion (300 rooms, opened
in December 1994) and the opening of the California Hotel and Casino room
expansion (146 rooms, opened in December 1994) both of which were open for the
full six month period ending December 31, 1995. In addition the Company's
average room rate rose 9.9% and 11.4%, respectively, for the three and six-month
periods ended December 31, 1995, primarily as a result of an increase in average
room rate at the Stardust of 13.7% and 15.5%, respectively. Occupancy statistics
do not include Main Street Station rooms. The Company purchased Main Street
Station in December 1993 as a closed casino/hotel facility and has been using
its rooms to augment the rooms base at the California and Fremont.
Consolidated operating income increased to $31.3 million and $50.0
million, respectively, for the three and six-month periods ended December 31,
1995 compared to $27.8 million and $48.6 million, respectively, in the
comparable periods of the prior fiscal year. Included in this years results is a
charge of $10.0 million recorded in the first quarter of the current fiscal year
related to the opening of Sam's Town Kansas City on September 13, 1995. This
increase in consolidated operating income for both the three and six-month
periods was the result of increased operating income in the Central Region and
the Boulder Strip Properties offset by declines at the Stardust and Downtown
Properties. Operating income in the Central Region includes management fees and
joint venture income related to the Company's Silver Star Hotel
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and Casino and Treasure Chest Casino operations. For the three months ended
December 31, 1995, consolidated operating income margin was 15.6% versus 16.3%
for the comparable period in the prior fiscal year. The decline in operating
income margin is primarily related to lower than expected results at Sam's Town
Kansas City. For the six months ended December 31, 1995 consolidated operating
income margin declined to 13.2% from 14.9% in the comparable period of the prior
fiscal year, primarily as a result of preopening expenses related to its Sam's
Town Kansas City.
Net revenues at the Stardust declined 3.9% and 2.4%, respectively, for
the second fiscal quarter and for the first six months of the current fiscal
year versus the comparable periods in the prior fiscal year. Slot revenue
decreased 4.5% in the second quarter and declined 4.4% for the six months ended
December 31, 1995 compared to the comparable periods in the prior fiscal year.
Table games revenue for the three and six-month periods ended December 31, 1995
was down 11.3% and 6.4%, respectively, versus comparable periods in the prior
fiscal year as a result of flat wagering and lower net winnings. Room revenue at
the Stardust for the three and six-months ended December 31, 1995 increased 6.7%
and 10.6%, respectively, with declines in occupied rooms offset by increases in
the average daily room rate of 13.7% and 15.5%, respectively. Operating income
margin for the three and six-month periods ended December 31, 1995 were 14.6%
and 13.4%, respectively, versus 16.4% and 15.0%, respectively, in the comparable
periods in the prior fiscal year. The decline in operating income and operating
income margin for the three and six-month periods is primarily attributable to
decreased revenues and higher advertising and promotional expenses partially
offset by increased operating income and operating income margins in the rooms
department.
Net revenues at the Boulder Strip Properties increased 15.7% and 12.0%,
respectively, for the three and six-month periods ended December 31, 1995
compared to the comparable periods in the prior fiscal year. Net revenues at
Sam's Town increased 17.3% and 13.0% for the three and six-month periods ended
December 31, 1995 versus the comparable periods in the prior fiscal year while
revenues at the Eldorado and Jokers Wild increased slightly in both the three
and six-month periods. Casino revenues at the Boulder Strip Properties increased
21.4% and 16.2%, respectively, for the three and six-month periods ended
December 31, 1995, while rooms revenue increased 11.4% and 11.6%, respectively,
and food and beverage revenue increased 8.0% and 3.9%, respectively. Operating
income margins at the Boulder Strip Properties increased to 13.2% and 10.2%,
respectively, for the three and six-month periods ended December 31, 1995 versus
8.8% and 6.5%, respectively, in the comparable periods of the prior year. All
three Boulder Strip Properties posted operating income margin increases in the
three and six-month periods ending December 31, 1995 with Sam's Town posting
increases of 5.0 and 4.3 percentage points, respectively. Operating income
margins at the Eldorado increased 3.5 and 1.5 percentage points, respectively,
and operating income margins at Jokers Wild increased 2.9 and 0.5 percentage
points, respectively, for the three and six-month periods. The significant
increases in revenues, operating income and operating income margins for both
three and six month periods at Sam's Town are primarily attributable to the
successful implementation of aggressive marketing programs, creating increased
customer awareness and visitation.
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Net revenues at the Downtown Properties increased 3.1% and 1.0%,
respectively, for the three and six-month periods ended December 31, 1995 versus
the comparable periods in the prior fiscal year. Slot revenue and table games
revenue for the second quarter and first six months ended December 31, 1995,
were flat on slightly increased wagering. Net revenues at the Fremont increased
2.4% and declined 1.8% for the three and six-month period ended December 31,
1995 versus the comparable periods in the prior fiscal year. Net revenues at the
California increased 3.8% and 3.5% for the three and six-month periods ended
December 31, 1995 versus the comparable period in the prior fiscal year.
Operating income margins at the Downtown Properties were 16.5% and 13.1% for the
three and six-month periods ended December 31, 1995 versus 20.0% and 16.7% in
the comparable period of the prior year. The Fremont operating income margin was
14.4% and 11.7%, respectively, for the three and six-month periods ended
December 31, 1995 versus 17.9% and 15.7%, respectively, in the comparable three
and six-month periods in the prior fiscal year. The California had operating
income margins of 18.4% and 14.3%, respectively, for the three and six-month
periods ended December 31, 1995 versus 21.8% and 17.7%, respectively, in the
comparable three and six-month periods in the prior fiscal year. Construction of
the Fremont Street Experience project, which was completed and opened to the
public in late December 1995, continued to negatively impact the Downtown
Properties for the majority of the second fiscal quarter and first six months of
the current fiscal year.
Net revenues in the Central Region increased 62% and 59%, respectively,
for the three and six-month periods ended December 31, 1995. The opening of
Sam's Town Kansas City on September 13, 1995 accounted for the majority of the
increase for both the three and six-month periods. Sam's Town Tunica revenues
increased 15.4% and 24.6%, respectively, for the three and six-month periods
versus comparable periods in the prior fiscal year while management fees and
joint venture income related to the Silver Star and Treasure Chest operations
increased 8.0% and 38%, respectively. Operating income in the Central Region
increased 28% to $17.7 million for the second fiscal quarter as a result of a
3.9% decline in operating income at Sam's Town Tunica and a 8.0% increase in
operating income from management fees and joint venture income. The decline in
operating income at Sam's Town Tunica is related to higher advertising and
promotional expenses and higher payroll costs not fully offset by increased
revenues. Sam's Town Kansas City, in its first full quarter of operation,
produced a slight operating loss for the three months ended December 31, 1995.
The operating loss at Sam's Town Kansas City is primarily attributable to
revenues not sufficient to cover the high level of fixed costs associated with
the operation of the facility. The Company is in the process of developing and
implementing new marketing programs and making certain physical and equipment
changes in an effort to improve revenues. For the six-month period ended
December 31, 1995, operating income in the Central Region increased 37% to $40.9
million with Sam's Town Tunica operating income increasing 34% and management
fees and joint venture operating income increasing 38%.
Interest expense, net of amounts capitalized was $14.4 million and
$26.6 million for the three and six-month periods ended December 31, 1995,
respectively, versus $12.5 million and $24.8 million in the comparable periods
in the prior fiscal year. The Company incurred increased interest expense for
the three and six-month periods ended December 31, 1995 as a result of increased
borrowings and less capitalized interest related to projects under development
versus the comparable periods in the prior year. Depreciation expense increased
$2.4 million and $3.4 million for the three and six-month periods ended December
31, 1995 primarily as a result
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of the opening of Sam's Town Kansas City, in September 1995, the California
Hotel and Casino rooms addition and the Sam's Town Tunica rooms addition, both
of which opened in late December 1994.
The Company's tax rate for the prior year's second quarter was
unusually high as a result of the non-deductibility of certain expenses related
to the Company's development efforts.
As a result of these factors, net income increased $3.2 million or 44%
and $1.9 million or 15%, respectively, for the three and six-month periods ended
December 31, 1995 compared to the same periods in the prior fiscal year.
FINANCIAL CONDITION AND CAPITAL RESOURCES
For the six months ended December 31, 1995, the Company's net cash
provided by operating activities was $64.9 million compared to $12.8 million in
the first six months of the prior fiscal year. Net cash provided by operating
activities in the prior fiscal year was negatively impacted by significant
reductions in accounts payable and increases in other assets related to the
opening of new properties and the timing of payments related to the opening of
these projects. As of December 31, 1995, the Company had balances of cash and
cash equivalents of approximately $56.0 million and had approximately $47.8
million of credit available under bank credit agreements. On December 27, 1995,
the Company completed a $30 million reducing revolving credit facility secured
by the Sam's Town Kansas City assets.
The Company recently announced plans for a $40 million expansion
project at Sam's Town Tunica. This project, which is in the final design phase,
is expected to include a 350 room hotel tower and 1,000 space parking garage.
The Company's Sam's Town Kansas City facility was completed and opened on
September 13, 1995 at a cost of approximately $145 million. In connection with
the opening of the Fremont Street Experience, the Company is expected to open
Main Street Station Hotel and Casino during fiscal 1997. This project would
include a redesign of the property's public space, expanded restaurant
facilities and increased parking capacity. The Company is in the design and
planning stages of this project and has not yet developed a definitive budget. A
refurbishment of the property's hotel rooms is currently underway. The Company
has also identified a potential casino/hotel site in Reno, Nevada and is
currently evaluating the project for the site. The Company has been selected by
the City of Cape Girardeau, Missouri to be the developer and operator of a
riverboat casino facility in downtown Cape Girardeau. There can be no assurance
that these projects will go forward or 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 projects is
expected to be cash on hand, cash flow from operations, availability under
existing credit agreements, new borrowings to the extent permitted under
existing debt agreements, the issuance of additional equity and vendor and other
financing. There is no assurance that such financing strategies can be effected
on satisfactory terms.
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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: June 7, 1996 By /s/ Keith E. Smith
----------------------------------
Keith E. Smith
Vice President and Controller
(Chief Accounting Officer)
