<PAGE> 1
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON JUNE 7, 1996
REGISTRATION NO. 333-
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
------------------------
FORM S-3
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
------------------------
BOYD GAMING CORPORATION
(Exact Name of Registrant as Specified in Its Charter)
<TABLE>
<S> <C>
NEVADA 88-0242733
(State or Other Jurisdiction (I.R.S. Employer
of Incorporation or Organization) Identification Number)
</TABLE>
2950 SOUTH INDUSTRIAL ROAD, LAS VEGAS, NEVADA 89109, (702) 792-7200
(Address, Including Zip Code, and Telephone Number, Including Area Code,
of Registrants' Principal Executive Offices)
------------------------
ELLIS LANDAU
SENIOR VICE PRESIDENT AND CHIEF FINANCIAL OFFICER
BOYD GAMING CORPORATION
2950 SOUTH INDUSTRIAL ROAD
LAS VEGAS, NEVADA 89109
(702) 792-7200
(Name, Address, Including Zip Code, and Telephone Number, Including
Area Code, of Registrants' Agent For Service)
------------------------
COPIES TO:
<TABLE>
<S> <C>
ROBERT M. MATTSON, JR. ESQ. MARC S. ROSENBERG, ESQ.
MORRISON & FOERSTER LLP CRAVATH, SWAINE & MOORE
19900 MACARTHUR BOULEVARD WORLDWIDE PLAZA
12TH FLOOR 825 EIGHTH AVENUE
IRVINE, CALIFORNIA 92715 NEW YORK, NEW YORK 10019-7475
</TABLE>
------------------------
APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC: From time
to time after this Registration Statement becomes effective.
If the only securities being registered on this form are being offered
pursuant to dividend or interest reinvestment plans, please check the following
box: / /
If any of the securities being registered on this Form are to be offered on
a delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, other than securities offered only in connection with dividend or interest
reinvestment plans, check the following box: / /
If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following box
and list the Securities Act registration statement number of the earlier
effective registration statement for the same offering. / / ________
If this Form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. / / ________
If delivery of this prospectus is expected to be made pursuant to Rule 434,
please check the following box. / /
------------------------
CALCULATION OF REGISTRATION FEE
- --------------------------------------------------------------------------------
<TABLE>
<S> <C> <C> <C> <C>
- --------------------------------------------------------------------------------
TITLE OF EACH CLASS AMOUNT TO BE PROPOSED MAXIMUM PROPOSED MAXIMUM
OF SECURITIES TO BE REGISTERED OFFERING PRICE AGGREGATE OFFERING AMOUNT OF
REGISTERED PER SHARE PRICE(2) REGISTRATION FEE
</TABLE>
- --------------------------------------------------------------------------------
<TABLE>
<S> <C> <C> <C> <C>
Common Stock 6,027,201
$.01 par value...................... shares(1) N/A $98,318,716.31 $33,903.01
</TABLE>
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
(1) Includes shares that the Underwriters have the option to purchase from the
Company and certain Selling Stockholders solely to cover over-allotments, if
any.
(2) Estimated solely for the purpose of calculating the registration fee
pursuant to Rule 457(c), based on $16.3125, the average of the high and low
prices of the Common Stock on May 31, 1996, as reported on the New York
Stock Exchange Composite Tape.
------------------------
THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL
FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT
THIS REGISTRATION STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH
SECTION 8(A) OF THE SECURITIES ACT OF 1933 OR UNTIL THE REGISTRATION STATEMENT
SHALL BECOME EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO
SECTION 8(A), MAY DETERMINE.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<PAGE> 2
BOYD GAMING CORPORATION
CROSS-REFERENCE SHEET
PURSUANT TO ITEM 501(B) OF REGULATION S-K SHOWING
LOCATION IN PROSPECTUS OF INFORMATION REQUIRED BY ITEMS OF FORM S-3
<TABLE>
<CAPTION>
ITEM NUMBER AND HEADING IN
FORM S-3 REGISTRATION STATEMENT LOCATION IN PROSPECTUS
--------------------------------------------- ------------------------------------------
<C> <S> <C>
1. Forepart of this Registration Statement and
Outside Front Cover Page of Prospectus....... Outside Front Cover Page
2. Inside Front and Outside Back Cover Pages of
Prospectus................................... Inside Front and Outside Back Cover Pages
3. Summary Information, Risk Factors and Ratio
of Earnings to Fixed Charges................. Prospectus Summary; Risk Factors
4. Use of Proceeds.............................. Prospectus Summary; Use of Proceeds;
Management's Discussion and Analysis of
Financial Condition and Results of
Operations
5. Determination of Offering Price.............. Outside Front Cover Page; Underwriting
6. Dilution..................................... Not Applicable
7. Selling Security Holders..................... Principal and Selling Stockholders
8. Plan of Distribution......................... Outside Front Cover Page; Underwriting
9. Description of Securities to be Registered... Prospectus Summary; Capitalization;
Description of Capital Stock
10. Interests of Named Experts and Counsel....... Legal Matters; Experts
11. Material Changes............................. Pro Forma Consolidated Financial
Statements
12. Incorporation of Certain Information By
Reference.................................... Incorporation of Certain Documents By
Reference
13. Disclosure of Commission Position on
Indemnification for Securities Act
Liabilities.................................. Not Applicable
</TABLE>
<PAGE> 3
Information contained herein is subject to completion or amendment. A
registration statement relating to these securities has been filed with the
Securities
and Exchange Commission. These securities may not be sold nor may offers to
buy be accepted prior to the time the registration statement becomes
effective. This Prospectus shall not constitute an offer to sell or the
solicitation of an offer to buy nor shall there be any sale of these
securities in any
state in which such offer, solicitation or sale would be unlawful prior to
registration or qualification under the securities laws of any such state.
SUBJECT TO COMPLETION
JUNE 7, 1996
PROSPECTUS
5,297,201 SHARES [LOGO]
BOYD GAMING CORPORATION
COMMON STOCK
($.01 PAR VALUE)
Of the 5,297,201 shares of Common Stock offered hereby (the "Shares"), 4,000,000
Shares are being sold by Boyd Gaming Corporation (the "Company") and 1,297,201
Shares are being sold by the Selling Stockholders (the "Offering"). The Company
will not receive any of the proceeds from the sale of the Shares by the Selling
Stockholders. See "Principal and Selling Stockholders."
The Common Stock is traded on the New York Stock Exchange ("NYSE") under the
symbol "BYD." On June 6, 1996, the closing sale price of the Common Stock on the
NYSE was $16.75 per share. See "Price Range of Common Stock."
Concurrent with the Offering, the Company is offering $200 million aggregate
principal amount of its % Senior Notes Due 2003 (the "Notes") to the public
(the "Notes Offering" and, collectively with the Offering, the "Offerings"). See
"Prospectus Summary -- The Offering -- Concurrent Offering of Notes."
Consummation of the Offering is not contingent upon consummation of the Notes
Offering, and there can be no assurance that the Notes Offering will be
consummated.
SEE "RISK FACTORS" ON PAGE 9 FOR A DISCUSSION OF CERTAIN FACTORS THAT SHOULD BE
CONSIDERED BY PROSPECTIVE PURCHASERS OF THE COMMON STOCK OFFERED HEREBY.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
NONE OF THE NEVADA GAMING COMMISSION, THE NEVADA STATE GAMING CONTROL BOARD, THE
MISSISSIPPI GAMING COMMISSION, THE MISSOURI GAMING COMMISSION, THE LOUISIANA
GAMING CONTROL BOARD OR ANY OTHER GAMING AUTHORITY HAS PASSED UPON THE ADEQUACY
OR ACCURACY OF THIS PROSPECTUS OR THE INVESTMENT MERITS OF THE COMMON STOCK
OFFERED HEREBY. ANY REPRESENTATION TO THE CONTRARY IS UNLAWFUL.
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PROCEEDS TO
PRICE TO UNDERWRITING PROCEEDS TO SELLING
PUBLIC(1) DISCOUNT COMPANY(1)(2) STOCKHOLDERS(1)
<S> <C> <C> <C> <C>
Per Share...................... $ $ $ $
Total(2)....................... $ $ $ $
</TABLE>
- --------------------------------------------------------------------------------
(1) Before deducting offering expenses payable by the Company estimated to be
$750,000.
(2) The Company and certain Selling Stockholders have granted to the
Underwriters 30-day options to purchase up to 730,000 Shares at the Price to
Public, less the Underwriting Discount, solely to cover over-allotments, if
any. If the Underwriters exercise such options in full, the total Price to
Public, Underwriting Discount, Proceeds to Company and Proceeds to Selling
Stockholders will be $ , $ , $ , and $ ,
respectively. See "Underwriting."
The Shares are offered subject to receipt and acceptance by the Underwriters, to
prior sale and to the Underwriters' right to reject any order in whole or in
part and to withdraw, cancel or modify the offer without notice. It is expected
that delivery of the Shares will be made at the offices of Salomon Brothers Inc,
Seven World Trade Center, New York, New York or through the facilities of The
Depository Trust Company, on or about , 1996.
SALOMON BROTHERS INC
GOLDMAN, SACHS & CO.
MONTGOMERY SECURITIES
RAYMOND JAMES & ASSOCIATES, INC.
The date of this Prospectus is , 1996.
<PAGE> 4
[LOGOS]
NEVADA REGION:
<TABLE>
<S> <C> <C> <C> <C>
STARDUST CALIFORNIA HOTEL FREMONT
SAM'S TOWN ELDORADO JOKERS
LAS VEGAS WILD
MAIN STREET SAM'S TOWN
STATION RENO
expected opening expected opening
end of 1996 spring 1998
CENTRAL REGION:
SAM'S TOWN SAM'S TOWN PAR-A-DICE
TUNICA KANSAS CITY expected acquisition
mid/late 1996
SILVER TREASURE CHEST
STAR CHEST
NEW JERSEY REGION:
STARDUST
ATLANTIC CITY
expected opening
1999
</TABLE>
IN CONNECTION WITH THE OFFERING, THE UNDERWRITERS MAY OVER-ALLOT OR EFFECT
TRANSACTIONS WHICH STABILIZE OR MAINTAIN THE MARKET PRICE OF THE SECURITIES
OFFERED HEREBY AT A LEVEL ABOVE THAT WHICH MIGHT OTHERWISE PREVAIL IN THE OPEN
MARKET. SUCH TRANSACTIONS MAY BE EFFECTED ON THE NEW YORK STOCK EXCHANGE OR
OTHERWISE. SUCH STABILIZING, IF COMMENCED, MAY BE DISCONTINUED AT ANY TIME.
<PAGE> 5
[PHOTOS & MAPS]
LAS VEGAS LAS VEGAS MAP
DEPICTING SEVEN PROPERTY
LOCATIONS
STARDUST
HOTEL
ATRIUM AT
SAM'S TOWN
LAS VEGAS
<PAGE> 6
[PHOTOS AND MAPS]
THE FREMONT
AND FREMONT STREET
EXPERIENCE
RENO
RENO MAP
DEPICTING
LOCATION OF
SAM'S TOWN
RENO
RENDERING OF
SAM'S TOWN
RENO
<PAGE> 7
PROSPECTUS SUMMARY
The following summary is qualified in its entirety by the more detailed
information and financial statements included or incorporated in this
Prospectus. Unless otherwise indicated, or the context otherwise requires, the
term "Company" refers to Boyd Gaming Corporation, a Nevada corporation, and its
subsidiaries. See "Risk Factors" for certain factors a prospective investor
should consider in evaluating the Company before purchasing the shares of Common
Stock offered hereby.
THE COMPANY
Boyd Gaming Corporation is one of the leading casino entertainment
companies in the United States. The Company is a multi-jurisdictional gaming
company which currently owns or operates ten casino entertainment facilities, is
in the process of constructing its eleventh property, acquiring its twelfth
property and acquiring land upon which it intends to construct its thirteenth
property. The Company has operated successfully for more than two decades in the
highly competitive Las Vegas market and has entered four new gaming
jurisdictions in the past two years. The Company owns and operates six
facilities in three distinct markets in Las Vegas, Nevada: the Stardust Resort
and Casino (the "Stardust") on the Las Vegas Strip; Sam's Town Hotel and
Gambling Hall ("Sam's Town Las Vegas"), the Eldorado Casino (the "Eldorado") and
the Jokers Wild Casino ("Jokers Wild") on the Boulder Strip; and the California
Hotel and Casino (the "California") and the Fremont Hotel and Casino (the
"Fremont") in downtown Las Vegas. The Company also owns or manages four
facilities in new gaming jurisdictions, all opened during 1994 and 1995. The
Company owns and operates Sam's Town Hotel and Gambling Hall, a dockside gaming
and entertainment complex in Tunica County, Mississippi that is currently
undergoing a hotel and parking garage addition ("Sam's Town Tunica") and Sam's
Town Kansas City, a riverboat gaming and entertainment complex in Kansas City,
Missouri. The Company manages and owns a minority interest in the Treasure Chest
Casino (the "Treasure Chest"), a riverboat casino in Kenner, Louisiana, and
manages for the Mississippi Band of Choctaw Indians the Silver Star Hotel and
Casino (the "Silver Star"), a land-based casino in the midst of a major
expansion project, located near Philadelphia, Mississippi. The Company plans to
open Main Street Station Hotel and Casino ("Main Street Station") by the end of
calendar year 1996 in downtown Las Vegas, and recently entered into a definitive
purchase agreement to acquire a riverboat casino in East Peoria, Illinois (the
"Par-A-Dice Acquisition"). The Company is in the process of acquiring land upon
which it plans to develop a casino, hotel and entertainment complex in Reno,
Nevada ("Sam's Town Reno"). Following the land acquisition, the Company expects
to commence construction of Sam's Town Reno by the end of calendar year 1996. In
addition, the Company and Mirage Resorts, Inc. ("Mirage") recently announced the
signing of a joint venture agreement to jointly develop and own a casino hotel
entertainment facility in Atlantic City, New Jersey. Assuming completion of Main
Street Station, completion of the Par-A-Dice Acquisition, development of Sam's
Town Reno and completion of the expansion projects currently underway at certain
of its existing facilities, the Company will own or operate an aggregate of
approximately 618,000 square feet of casino space containing approximately
17,850 slot machines and over 610 table games. See "Prospectus
Summary -- Property Data."
The Company's operating strategy stresses delivering to its primarily
middle-income patrons a high-value, customer-friendly casino entertainment
experience. To execute this strategy, the Company, on an ongoing basis,
reinvests in its properties in order to keep them fresh and competitive,
especially with respect to its slot products, and strives to achieve the highest
level of customer satisfaction in order to build customer loyalty. The Company
also draws upon its long-standing experience in the gaming industry to design
each of its facilities to appeal to a broad range of customers within its
respective markets and employs sophisticated marketing programs and techniques,
including database marketing and consumer research, tailored to accomplish
property-specific and company-wide objectives. The Company has successfully
developed its Sam's Town western theme into a widely-recognized brand name and
has similar plans for the Stardust name. The Company integrates the operations
of its facilities to benefit from economies of scale and to foster collaborative
generation of new ideas, products and strategies between properties.
3
<PAGE> 8
The Company's development and expansion strategy is to grow and further
diversify its business through development and acquisition of new facilities and
expansion and improvement of its existing properties. The Company masterplans
its facilities to accommodate additional development and monitors it operations
on an ongoing basis to expand and modify its existing properties as needed to
address changing market dynamics, as demonstrated at Sam's Town Tunica and as
intended at the Stardust and Sam's Town Las Vegas. The Company seeks expansion
opportunities which complement its existing business. To accomplish this, the
Company identifies strategic opportunities in established and new gaming
jurisdictions that include one or more of the following characteristics: (i)
close proximity to large population centers or high volume regional tourist
areas, (ii) an imposed or legislated limited competition environment, and (iii)
no significant overlap with the Company's existing properties.
NEW DEVELOPMENTS
On April 26, 1996, the Company entered into a definitive purchase agreement
to acquire 100% of the capital stock of Par-A-Dice Gaming Corporation
("Par-A-Dice Gaming") and 100% of the capital stock of East Peoria Hotel, Inc.
("EPH"), each an Illinois corporation, for an aggregate consideration of
approximately $175 million. The Company expects to use borrowings under its New
Bank Credit Facility (as defined herein) to fund the Par-A-Dice Acquisition. See
"Use of Proceeds." Par-A-Dice Gaming is the owner and operator of the Par-A-Dice
Riverboat Casino in East Peoria, Illinois, and EPH is the general partner of a
limited partnership which is developing a 204-room full-service hotel (the
"Par-A-Dice Hotel") located immediately adjacent to the Par-A-Dice Riverboat
Casino (the Par-A-Dice Riverboat Casino and the Par-A-Dice Hotel are together
referred to herein as the "Par-A-Dice"). The Par-A-Dice is located in East
Peoria, Illinois, approximately 170 miles from Chicago and features a
state-of-the-art riverboat casino with gaming on four levels and non-gaming
amenities, including three restaurants and the Par-A-Dice Hotel which is
scheduled to be completed in the fall of 1996.
The Company has identified a site in Reno, Nevada upon which it plans to
develop Sam's Town Reno, a $92 million casino, hotel and entertainment complex,
featuring the Sam's Town brand name and western theme. Sam's Town Reno is
planned to include a 33,000 square foot casino, a hotel with 211 guest rooms and
suites, five restaurants, an outdoor arena, an events center and various other
amenities. The Company is in the process of acquiring the site and is currently
planning to commence construction of the project by the end of calendar year
1996, with the opening occurring as early as spring 1998.
On May 29, 1996, the Company, through a wholly-owned subsidiary, entered
into a joint venture agreement with a subsidiary of Mirage (the "Mirage Joint
Venture") to jointly develop and own a casino hotel entertainment facility in
Atlantic City, New Jersey (the "Atlantic City Project"). The Atlantic City
Project, which is expected to cost approximately $500 million, is planned to be
one component of a multi-facility casino entertainment development,
master-planned by Mirage for the Marina district of Atlantic City. Pursuant to
the joint venture agreement, the Company will control the development and
operation of the Atlantic City Project. The Atlantic City Project will be
adjacent and connected to Mirage's planned wholly-owned resort. Construction is
anticipated to begin after completion of the environmental remediation of the
property and is expected to take approximately 24 months to complete. The Mirage
Joint Venture will give the Company a presence in Atlantic City, the primary
casino gaming market serving the eastern United States.
In addition to the Par-A-Dice Acquisition and the above-mentioned expansion
and development projects, the Company continues to consider development
opportunities in established and new gaming markets as well as expansion of its
existing facilities. The Company is currently exploring expansion opportunities
at certain of its Las Vegas properties, including further development of its
61-acre Stardust site and its 63-acre Sam's Town Las Vegas site.
----------------------
The Company was incorporated in Nevada in 1988 to serve as a holding
company for California Hotel and Casino ("CH&C") which was incorporated in 1973.
The executive offices of the Company are located at 2950 South Industrial Road,
Las Vegas, Nevada 89109, and its telephone number is (702) 792-7200.
4
<PAGE> 9
PROPERTY DATA
The following table sets forth certain information regarding the Company's
properties. Certain of these properties are in various stages of expansion or
development or in the process of being acquired. There can be no assurance that
such properties will contain the casino square footage, gaming units, hotel
rooms or restaurants as set forth below when and if such expansion, development
or acquisition is completed. See "Risk Factors -- Expansion to Other Locations;
Additional Financing Requirements," "-- Uncertainties of Consummation of the
Par-A-Dice Acquisition and Development of Sam's Town Reno and the Mirage Joint
Venture Project" and "Business -- New Developments."
<TABLE>
<CAPTION>
CASINO SPACE SLOT TABLE HOTEL LAND
(SQ. FT.) MACHINES GAMES ROOMS RESTAURANTS (ACRES)
------------ -------- ----- ----- ----------- -------
<S> <C> <C> <C> <C> <C> <C>
LAS VEGAS STRIP
Stardust Resort and Casino.......... 87,000 1,976 76 2,320 7 61
DOWNTOWN LAS VEGAS
California Hotel and Casino......... 36,000 1,130 38 781 5 16
Fremont Hotel and Casino............ 32,000 1,106 31 452 5 2
Main Street Station Hotel and
Casino(a)......................... 28,500 900 25 404 3 15
BOULDER STRIP
Sam's Town Las Vegas................ 118,000 2,763 55 650 12 63
Eldorado Casino..................... 16,000 558 11 -- 3 4
Jokers Wild Casino.................. 22,500 647 13 -- 2 13
NORTHERN NEVADA
Sam's Town Reno(b).................. 33,000 1,200 36 211 5 100
CENTRAL REGION
Sam's Town Tunica (c)............... 75,000 1,806 78 858 5 150
Sam's Town Kansas City.............. 28,000 1,018 65 -- 5 34
Silver Star Hotel and Casino(d)..... 85,000 2,906 89 503 5 20
Treasure Chest Casino............... 24,000 855 54 -- 4 --
Par-A-Dice (e)...................... 33,000 997 42 204 3 19
--
------- ------ --- ----- ---
Total (f)...................... 618,000 17,862 613 6,383 64 497
======= ====== === ===== == ===
</TABLE>
- ---------------
(a) The information presented reflects Main Street Station after its completion,
which is expected to be completed by the end of calendar year 1996.
(b) The information presented reflects Sam's Town Reno, after consummation of
the pending land acquisition and completion of the project, which is
expected to be completed as early as spring 1998.
(c) The information presented reflects Sam's Town Tunica after completion of the
expansion, which is expected to be completed by the end of calendar year
1996. Prior to the expansion, Sam's Town Tunica had 508 hotel rooms.
(d) The information presented reflects the Silver Star after completion of the
expansion, which is expected to be completed in early calendar year 1997.
Prior to the expansion, the Silver Star had 66,000 square feet of casino
space, 1,885 slot machines, 81 table games, 100 hotel rooms and four
restaurants.
(e) Pending acquisition. Reflects the Par-A-Dice Hotel after its construction
which is expected to be completed by the end of calendar year 1996.
(f) Includes 504,500 square feet of casino space, 13,744 slot machines, 502
table games, 4,811 hotel rooms, 52 restaurants and 363 acres of land at
existing properties, prior to completion of any expansion projects.
5
<PAGE> 10
THE OFFERING
<TABLE>
<S> <C>
Common Stock Offered:
By the Company............................ 4,000,000 Shares(a)
By the Selling Stockholders............... 1,297,201 Shares(a)
Common Stock to be Outstanding after the
Offering(a)(b)............................ 61,119,365 Shares
Use of Proceeds............................. The net proceeds of the Offering will be
used to reduce indebtedness outstanding
under the Company's and CH&C's $500 million
reducing revolving bank credit facility
("New Bank Credit Facility") and increase
the availability thereunder and for general
corporate purposes. The Company expects to
use borrowings under the New Bank Credit
Facility to fund the Par-A-Dice Acquisition.
See "Use of Proceeds."
Concurrent Offering of Notes................ Concurrently with the Offering, the Company
is offering $200 million of Senior Notes of
the Company (the "Notes Offering"). The
Offering is not contingent upon consummation
of the Notes Offering, and there can be no
assurance that the Notes Offering will be
consummated. The net proceeds to the Company
from the Notes Offering will be used to
reduce outstanding indebtedness under its
New Bank Credit Facility.
NYSE Symbol................................. BYD
</TABLE>
- ---------------
(a) Excludes 600,000 and 130,000 Shares, respectively, subject to the
Underwriters' over-allotment options from the Company and certain Selling
Stockholders. See "Underwriting."
(b) Excludes Shares reserved for issuance upon the exercise of stock
options outstanding as of June , 1996 under the Company's stock option
plans.
6
<PAGE> 11
SUMMARY CONSOLIDATED FINANCIAL DATA
The consolidated financial information set forth below has been derived
from the Consolidated Financial Statements of the Company for the respective
periods presented and is qualified in its entirety by, and should be read in
conjunction with, the Consolidated Financial Statements and notes thereto,
"Management's Discussion and Analysis of Financial Condition and Results of
Operations" and the other financial and statistical data included elsewhere or
incorporated in this Prospectus.
<TABLE>
<CAPTION>
NINE MONTHS
ENDED
MARCH 31, FISCAL YEAR ENDED JUNE 30,
------------------- ----------------------------------------------------
1996 1995 1995 1994 1993 1992 1991
-------- -------- -------- -------- -------- -------- --------
(IN THOUSANDS, EXCEPT FOR PER SHARE DATA)
<S> <C> <C> <C> <C> <C> <C> <C>
INCOME STATEMENT DATA
Net revenues................. $581,509 $492,385 $660,340 $468,219 $431,174 $406,804 $349,932
Operating income............. 81,752 80,818 110,570 54,248 62,919 47,395 37,748
Interest expense, net(a)..... 38,335 36,258 46,371 36,093 32,378 37,762 34,545
Income before cumulative
effect of a change in
accounting principle and
extraordinary item......... 26,102 24,295 36,249 10,650 20,134 6,114 752
Income before extraordinary
item....................... 26,102 24,295 36,249 12,685 20,134 6,114 752
Net income................... 26,102 24,295 36,249 12,685 12,737 6,114 752
Net income (loss) per common
share...................... $0.46.... $ 0.43 $ 0.64 $ 0.23 $ 0.22 $ 0.09 $ (0.02)
Weighted average common
shares outstanding......... 57,038 56,852 56,870 54,297 48,582 48,946 49,648
OTHER OPERATING DATA
Depreciation and
amortization............... 45,868 40,953 54,518 42,136 39,450 38,853 31,957
Preopening expense........... 10,004 -- -- 4,605 -- -- --
Capital expenditures......... 59,153 82,150 183,299 326,829 24,485 18,702 104,042
</TABLE>
<TABLE>
<CAPTION>
MARCH 31,
1996
--------------
(IN THOUSANDS)
<S> <C> <C> <C> <C> <C> <C>
BALANCE SHEET DATA
Total assets........................................................................... $941,953
Long-term debt (excluding current portion)............................................. 548,034
Stockholders' equity................................................................... 230,067
</TABLE>
- ---------------
(a) Net of interest income and amounts capitalized.
7
<PAGE> 12
PRO FORMA SUMMARY CONSOLIDATED FINANCIAL DATA
The following pro forma summary consolidated financial information for the
Company reflects the Par-A-Dice Acquisition. The pro forma consolidated income
statement data for the nine months ended March 31, 1996 and for the year ended
June 30, 1995 has been presented as if the Par-A-Dice Acquisition occurred on
July 1, 1994. The pro forma consolidated balance sheet data as of March 31, 1996
has been presented as if the Par-A-Dice Acquisition occurred on March 31, 1996.
The pro forma information set forth below should be read in conjunction with the
consolidated financial statements of the Company, the consolidated financial
statements of Par-A-Dice Gaming and the pro forma consolidated financial
statements (including the notes to such financial statements) included elsewhere
or incorporated in this Prospectus. The operating results for the nine months
ended March 31, 1996 are not necessarily indicative of the results that may be
expected for the full fiscal year.
<TABLE>
<CAPTION>
NINE MONTHS ENDED FISCAL YEAR ENDED
MARCH 31, 1996 JUNE 30, 1995
----------------------------------- -----------------------------------
COMPANY PAR-A-DICE COMPANY COMPANY PAR-A-DICE COMPANY
HISTORICAL HISTORICAL PRO FORMA HISTORICAL HISTORICAL PRO FORMA
---------- ---------- --------- ---------- ---------- ---------
(IN THOUSANDS)
<S> <C> <C> <C> <C> <C> <C>
INCOME STATEMENT DATA
Net revenues......................... $ 581,509 $ 79,909 $661,418 $ 660,340 $100,017 $760,357
Operating income..................... 81,752 21,996 101,248 110,570 26,980 134,216
Interest expense, net(a)............. 38,335 611 48,051 46,371 979 59,556
Net income........................... 26,102 21,074 32,431 36,249 25,493 42,951
OTHER OPERATING DATA
Depreciation and amortization........ 45,868 3,306 51,674 54,518 4,426 62,278
Preopening expense................... 10,004 -- 10,004 -- -- --
Capital expenditures................. 59,153 11,316 70,469 183,299 2,517 185,816
</TABLE>
<TABLE>
<CAPTION>
MARCH 31, 1996
---------------------
ACTUAL PRO FORMA
-------- ----------
(IN THOUSANDS)
<S> <C> <C> <C> <C> <C>
BALANCE SHEET DATA
Total assets.................................................................... $941,953 $1,128,313
Long-term debt (excluding current portion)...................................... 548,034 728,809
Stockholders' equity............................................................ 230,067 230,067
</TABLE>
- ---------------
(a) Net of interest income and amounts capitalized.
8
<PAGE> 13
RISK FACTORS
This Prospectus contains forward-looking statements within the meaning of
Section 27A of the Securities Act of 1933, as amended. Discussions containing
such forward-looking statements may be found in the material set forth under
"Prospectus Summary," "Use of Proceeds," "Management's Discussion and Analysis
of Financial Condition and Results of Operations" and "Business," as well as
within the Prospectus generally (including the documents incorporated by
reference therein). Also, documents subsequently filed by the Company with the
Commission may contain forward-looking statements. Actual results could differ
materially from those projected in the forward-looking statements as a result of
the risk factors set forth below and the matters set forth or incorporated by
reference in the Prospectus generally. The Company cautions the reader, however,
that this list of factors may not be exhaustive, particularly with respect to
future filings. Before making a decision to purchase any of the securities
described in this Prospectus, prospective investors should carefully consider
the following factors.
LEVERAGE AND DEBT SERVICE
At March 31, 1996, the Company had total consolidated long-term debt
(excluding current portion) of approximately $548 million, including $228
million under its Former Bank Credit Facilities (as defined herein) which the
Company replaced with the New Bank Credit Facility on June , 1996. The New
Bank Credit Facility is a five-year, $500 million reducing revolving credit
facility. Debt service requirements on the New Bank Credit Facility consists of
interest expense on outstanding indebtedness. Beginning in December 1998, the
total principal amount available under the New Bank Credit Facility will be
reduced by $25 million and reduced by an additional $50 million at the end of
each six-month period thereafter. Debt service requirements on the 11% Senior
Subordinated Notes due 2002 (the "11% Notes") issued by a financing subsidiary
of CH&C consist of semi-annual interest payments and repayment of the $185
million principal amount on December 1, 2002, and debt service requirements
under the Company's 10.75% Senior Subordinated Notes due 2003 (the "10.75%
Notes") consist of semi-annual interest payments and repayment of the $150
million principal amount on September 1, 2003. The Company expects to fund the
Par-A-Dice Acquisition from borrowings under the New Bank Credit Facility. The
Company also will fund its existing $40 million expansion project for Sam's Town
Tunica, the $45 million renovation, expansion and re-equipping of Main Street
Station, the $92 million Sam's Town Reno project and its subsidiary's capital
contributions to the Mirage Joint Venture with borrowings under its New Bank
Credit Facility, proceeds from the Offerings and other financing to the extent
not funded from cash flow from operations. The Company's ability to service its
debt will be dependent on its future performance, which will be affected by
prevailing economic conditions and financial, business and other factors,
certain of which are beyond the Company's control. Accordingly, no assurance can
be given that the Company will maintain a level of operating cash flow that will
permit it to service its obligations. If the Company is unable to generate
sufficient cash flow or is unable to refinance or extend outstanding amounts, it
will have to adopt one or more alternatives, such as reducing or delaying
planned expansion and capital expenditures, selling assets, restructuring debt
or obtaining additional equity capital. There is no assurance that any of these
financing strategies could be effected on satisfactory terms. In addition,
certain states' laws contain restrictions on the ability of companies engaged in
the gaming business to undertake certain financing transactions. Such
restrictions may prevent the Company from obtaining necessary capital. See
"Capitalization," "Management's Discussion and Analysis of Financial Condition
and Results of Operations -- Liquidity and Capital Resources," and "Risk
Factors -- Expansion to Other Locations; Additional Financing Requirements" and
"-- Governmental Regulation; Environmental Risks."
UNCERTAINTIES OF CONSUMMATION OF THE PAR-A-DICE ACQUISITION AND DEVELOPMENT OF
SAM'S TOWN RENO AND THE MIRAGE JOINT VENTURE PROJECT
On April 26, 1996, the Company entered into a definitive stock purchase
agreement for the Par-A-Dice Acquisition. The Par-A-Dice Acquisition is subject
to regulatory approvals, including the approval of the Illinois Gaming Board and
the Mississippi Gaming Commission. No assurance can be given that the
9
<PAGE> 14
necessary approvals will be received. The Company has no prior experience in
Illinois, and no assurance can be given that the Company will be able to compete
successfully in this market. Furthermore, the Par-A-Dice Acquisition is subject
to certain closing conditions, and there can be no assurance that the
acquisition will be completed according to the terms currently contemplated.
The Company has reached preliminary agreement for the acquisition of a
100-acre parcel of land upon which it plans to build a casino hotel and
entertainment complex in Reno, Nevada. The development of Sam's Town Reno is
subject to a number of contingencies, including, but not limited to, execution
of a definitive acquisition agreement, approval of, and licensing by, the Nevada
gaming authorities, land-use permits, building and zoning permits and liquor
licenses. Accordingly, there can be no assurance that Sam's Town Reno will be
completed according to the terms currently contemplated, if at all.
On May 29, 1996, the Company entered into a joint venture agreement with
Mirage to jointly develop and own a casino hotel entertainment facility in the
Marina district of Atlantic City, New Jersey. The casino hotel project
contemplated by the Mirage Joint Venture is subject to a number of
contingencies, including, but not limited to, approval and funding by government
authorities of highway improvements necessary to accommodate the additional
traffic that would be generated to and from the Marina district, approval of,
and licensing by, the New Jersey gaming authorities, state and local land-use
permits, building and zoning permits, liquor licenses and funding requirements.
Accordingly, there can be no assurance that the Atlantic City Project will be
completed according to the terms currently contemplated, if at all. In addition,
the Company has no prior experience in New Jersey, and no assurance can be given
that, if the project is completed, the Company will be able to successfully
compete in this market. See "Business -- New Developments."
EXPANSION TO OTHER LOCATIONS; ADDITIONAL FINANCING REQUIREMENTS
The Company is engaged in several projects to expand its operations, and
regularly evaluates development and expansion opportunities. See
"Business -- Properties." Each of these projects will be subject to the many
risks inherent in the establishment of a new business enterprise, including
unanticipated design, construction, regulatory, environmental and operating
problems, and the significant risks commonly associated with implementing a
marketing strategy in new markets. There can be no assurance that any of these
projects will become operational within the time frames and budgets currently
contemplated or at all. Moreover, the Company will incur significant costs and
expenses in connection with its current expansion projects. There can be no
assurance that these expenditures will ultimately result in the establishment of
profitable operations.
Many permits, licenses and approvals necessary for the Company's expansion
projects have not yet been obtained. The scope of the approvals required for
projects of this nature is extensive, including, without limitation, gaming
approvals, state and local land-use permits, building and zoning permits and
liquor licenses. Unexpected changes or concessions required by local, state or
federal regulatory authorities could involve significant additional costs and
delay the scheduled openings of the facilities. There can be no assurance that
the Company will receive the necessary permits, licenses and approvals or that
such permits, licenses and approvals will be obtained within the anticipated
time frame. In addition, although the Company designs its expansion projects for
existing facilities to minimize disruption of business operations, major
expansion projects, such as those currently underway at Sam's Town Tunica and
the Silver Star and those currently being considered for the Stardust and Sam's
Town Las Vegas, require, from time to time, portions of the casino and parking
areas to be closed and disrupt portions of existing casino or hotel operations
to some extent. Any significant disruption in casino or hotel operations could
have a material adverse effect on the Company's business and results of
operations.
The Company intends to finance its current and future expansion projects
primarily with cash flow from operations, borrowings under its New Bank Credit
Facility, proceeds from the Offerings, and vendor and other financing, which may
include additional borrowings to the extent permitted under its existing debt
agreements and funds obtained through public offerings and/or private placements
of equity and debt securities. No assurance can be given that the aforementioned
sources of funds will be sufficient to finance the Company's expansion or that
other financing will be available on acceptable terms, in a timely manner or at
all. In addition, the 11% Notes, the 10.75% Notes, the New Bank Credit Facility
and the
10
<PAGE> 15
Notes contain certain restrictions on the ability of the Company to incur
additional indebtedness. See "Risk Factors -- Holding Company Structure and
Dividend Limitations" and "Management's Discussion and Analysis of Financial
Condition and Results of Operations -- Liquidity and Capital Resources."
COMPETITION
The gaming industry is highly competitive. Gaming activities include:
traditional land-based casinos; riverboat and dockside gaming; casino gaming on
Indian land; state-sponsored lotteries; video poker in restaurants, bars and
hotels; pari-mutuel betting on horse racing, dog racing and jai-alai; sports
bookmaking and card rooms. The casinos owned, managed and being developed by the
Company compete and will in the future compete with all these forms of gaming
and will compete with any new forms of gaming that may be legalized in existing
and additional jurisdictions, as well as with other types of entertainment. The
Company also competes with other gaming companies for opportunities to acquire
legal gaming sites in emerging and established gaming jurisdictions and for the
opportunity to manage casinos on Indian land. Some of the competitors of the
Company have greater financial and other resources than the Company. Such
competition in the gaming industry could adversely affect the Company's ability
to compete for new gaming opportunities. In addition, further expansion of
gaming into new jurisdictions could also adversely affect the Company's business
by diverting its customers to competitors in such new jurisdictions. In
particular, the expansion of casino gaming in or near any geographic area from
which the Company attracts or expects to attract a significant number of its
customers could have a material adverse effect on the Company's business.
GOVERNMENTAL REGULATION; ENVIRONMENTAL RISKS
The ownership and operation of the Company's gaming facilities and the
Par-A-Dice are subject, and the Atlantic City Project will be subject, to
extensive regulation by state and local regulatory authorities. Nevada,
Mississippi, Missouri, Louisiana, Illinois and New Jersey have each promulgated
detailed regulations governing gaming operations. Regulatory authorities in
these states have broad powers with respect to the licensing of casino
operations, and may revoke, suspend, condition or limit the Company's gaming
licenses, impose substantial fines and take other actions, any one of which
could have a material adverse effect on the Company's business. Directors,
officers and certain key employees of the Company must also be approved by
certain state regulatory authorities. If state regulatory authorities were to
find a person occupying any such position unsuitable, the Company would be
required to sever its relationship with that person. Charles L. Ruthe, President
and a director of the Company, has been on a leave of absence as President and a
director of the Company since September 1995 pending investigation by the
Missouri Gaming Commission of certain matters relating to Mr. Ruthe's
suitability to hold a Missouri gaming license. There can be no assurance that
Mr. Ruthe's application for a Missouri gaming license will be granted. Certain
public issuances of securities and certain other transactions by the Company
also require the approval of certain state regulatory authorities. In addition,
Mississippi gaming authorities must approve any future expansion of the
Company's gaming operations outside of Mississippi.
The Company operates the Silver Star pursuant to a management agreement
with the Mississippi Band of Choctaw Indians. The operation and management of
the Silver Star is subject to the regulating authority of the National Indian
Gaming Commission ("NIGC") and the Choctaw Gaming Commission. Under the Indian
Gaming Regulatory Act of 1988 ("IGRA"), management contracts for Indian gaming
facilities must be approved by the NIGC. In addition, the Company, its
directors, persons with management responsibility, certain owners of the Company
and certain persons with a financial interest in the management agreement as
determined by the NIGC and the Choctaw Gaming Commission must provide background
information and be investigated by the NIGC and the Choctaw Gaming Commission
and be approved in connection with the approval of a management contract by the
NIGC and issuance of a license to the Company to operate a gaming facility by
the Choctaw Gaming Commission. Persons who acquire beneficial ownership of the
Company's securities may be subject to certain reporting and qualification
procedures established by the NIGC and the Choctaw Gaming Commission. Such
limitations could adversely affect the marketability of the Common Stock or
could affect or prevent certain corporate transactions, including mergers or
other business combinations.
11
<PAGE> 16
The Company is subject to a variety of regulations in the states in which
it operates. If additional gaming regulations are adopted in a state in which
the Company operates, such regulations could impose restrictions or costs that
could have a material adverse effect on the Company. From time to time, various
proposals have been introduced in some of the legislatures of the states in
which the Company has existing or planned operations that, if enacted, would
adversely affect the tax, regulatory, operational or other aspects of the gaming
industry and the Company. No assurance can be given that such legislation will
not be enacted. The federal government has also previously considered a federal
tax on casino revenues and may consider such tax in the future. In addition,
gaming companies are currently subject to significant state and local taxes and
fees in addition to normal federal and state corporate income taxes, and such
taxes and fees are subject to increase at any time. Any material increase in
these taxes or fees could adversely affect the Company.
The Company is subject to certain federal, state and local safety and
health laws, regulations and ordinances that apply to non-gaming businesses
generally, such as the Clean Air Act, Clean Water Act, Occupational Safety and
Health Act, Resource Conservation Recovery Act and the Comprehensive
Environmental Response, Compensation and Liability Act. The Company has not
made, and does not anticipate making, material expenditures with respect to such
environmental laws and regulations. However, the coverage and attendant
compliance costs associated with such laws, regulations and ordinances may
result in future additional costs to the Company's operations. For example, in
1990 the U.S. Congress enacted the Oil Pollution Act to consolidate and
rationalize mechanisms under various oil spill response laws. Pursuant to the
Oil Pollution Act, the Department of Transportation implemented regulations
requiring owners and operators of certain vessels to establish and maintain
through the U.S. Coast Guard evidence of financial responsibility sufficient to
meet their potential liability under both the Oil Pollution Act and the
Comprehensive Environmental Response, Compensation and Liability Act for
discharges or threatened discharges of oil or hazardous substances. This
requirement may be satisfied by either proof of adequate insurance (including
self-insurance) or the posting of a surety bond or guaranty.
The riverboats operated by the Company must comply with U.S. Coast Guard
requirements as to boat design, on-board facilities, equipment, personnel and
safety. Each of them must hold a Certificate of Seaworthiness or must be
approved by the American Bureau of Shipping ("ABS") for stabilization and
flotation, and may also be subject to local zoning and building codes. The U.S.
Coast Guard requirements establish design standards, set limits on the operation
of the vessels and require individual licensing of all personnel involved with
the operation of the vessels. Loss of a vessel's Certificate of Seaworthiness or
ABS approval would preclude its use as a floating casino. In addition, U.S.
Coast Guard regulations require a hull inspection at a U.S. Coast Guard-approved
dry docking facility for all cruising riverboats at five-year intervals.
Currently, the closest such facility to Sam's Town Kansas City is located in St.
Louis, Missouri. The travel to and from such docking facility, as well as the
time required for inspections and any necessary repairs of the Sam's Town Kansas
City and Treasure Chest riverboats, and, if the Par-A-Dice Acquisition is
consummated, the Par-A-Dice riverboat, could be significant. The loss of a
dockside casino or riverboat casino from service for any period of time could
adversely affect the Company's operating results.
MANAGEMENT CONTRACT OF LIMITED DURATION
The management contract for the Silver Star, which is owned by the
Mississippi Band of Choctaw Indians, expires in July 2001. The Company must
submit any renewal of the management contract to the NIGC, which has the right
to review management contracts. There can be no assurance that the current
management contract will be renewed upon expiration or approved by the NIGC upon
any such review. The failure to renew the Company's management contract would
result in the loss of revenues to the Company derived from the Silver Star
management contract which could have an adverse effect on the Company. The NIGC
also has the right to review contracts and has the authority to reduce the term
of a management contract or the management fee or otherwise require modification
of the contract, which could have an adverse effect on the Company.
12
<PAGE> 17
RELIANCE ON CERTAIN MARKETS
The California and the Fremont derive a substantial portion of their
customers from the Hawaiian market. In fiscal 1995, patrons from Hawaii made up
over 90% of the room nights at the California and over 60% at the Fremont. An
increase in fuel costs or transportation prices, a decrease in airplane seat
availability or a deterioration of relations with tour and travel agents, as
they affect travel between the Hawaii markets and the Company's facilities,
could materially adversely affect the Company's results. The Company's Las Vegas
properties also draw a substantial number of customers from certain other
specific geographic areas, including Southern California, Arizona, Las Vegas and
the Midwest. Sam's Town Tunica draws patrons from northern Mississippi, western
Tennessee (principally Memphis) and Arkansas. The Treasure Chest appeals
primarily to local market patrons and attracts patrons from the western suburbs
of New Orleans. The Silver Star draws customers from central Mississippi,
including the greater Jackson area, and central Alabama, including Birmingham,
Montgomery and Tuscaloosa. Sam's Town Kansas City draws customers from the
greater Kansas City metropolitan area, as well as from other parts of Missouri
and Kansas. The Par-A-Dice draws customers not only from the greater Peoria area
but also from Chicago, Indiana, Iowa and Missouri. Adverse economic conditions
in any of these markets, or the failure of the Company's facilities to continue
to attract customers from these geographic markets as a result of increased
competition in those markets, could have a material adverse effect on the
Company's operating results.
HOLDING COMPANY STRUCTURE AND DIVIDEND LIMITATIONS
Because the Company is a holding company, its ability to pay dividends will
be dependent upon the ability of its subsidiaries and controlled entities to pay
dividends and make distributions to the Company. The New Bank Credit Facility
prohibits the Company from declaring or paying dividends if, before or after
giving effect to such dividend an Event of Default, as defined in the New Bank
Credit Facility, exists or would exist. In addition, the New Bank Credit
Facility imposes a requirement that the Company's tangible net worth not fall
below certain specified levels, which could effectively impose limitations on
the Company's ability to pay dividends. The indenture governing the 11% Notes
restricts dividends and distributions to the Company totaling more than $15
million plus 50% of Consolidated Net Income (as defined in such indenture).
These limitations substantially restrict CH&C's ability to provide funds for
other Company developments and operations. As a result, subsidiaries of the
Company (other than subsidiaries of CH&C) will be required to fund their
developments and operations primarily with funds from other sources. Although
the proceeds from the sale of the Common Stock offered hereby and existing cash
balances will be available to finance non-CH&C developments and operations, no
assurance can be given that additional financing for non-CH&C projects will be
available on acceptable terms, in a timely manner or at all.
VOLATILITY OF STOCK PRICE
The market prices of securities of companies whose future operating results
are highly dependent on specific developments, such as passage or defeat of
relevant gaming legislation or related initiatives, are often highly volatile.
Announcements concerning legislation approving or defeating gaming, other
governmental actions, developments in the gaming industry generally,
announcements by the Company or by competitors, results of the Company's
operations and stock market conditions generally may have a significant impact
on the market price of the Common Stock. In addition, sales of substantial
amounts of Common Stock in the public market by the Company's major stockholders
could have an adverse effect on the price of the Common Stock.
CONCENTRATION OF OWNERSHIP
William S. Boyd, Chairman and Chief Executive Officer of the Company,
together with his immediate family, will beneficially own or control
approximately 50.9% (50.3% if the Underwriters' over-allotment options are
exercised in full) of the Common Stock of the Company after this Offering.
Therefore, the Boyd family will continue to have the ability to elect all of the
directors of the Company and approve or disapprove any other matters submitted
to a vote of the Company's stockholders, including a merger, consolidation or
sale of assets.
13
<PAGE> 18
USE OF PROCEEDS
The net proceeds to the Company from the Offering, after deduction of
selling and offering expenses, are estimated to be approximately $62.9 million
($72.4 million if the Underwriters' over-allotment options are exercised in
full). The Company intends to use the net proceeds from the Offering to reduce
outstanding indebtedness under its New Bank Credit Facility and for general
corporate purposes. If the concurrent Notes Offering is consummated, the net
proceeds to the Company from that offering are estimated to be approximately
$195 million. The Company intends to use those net proceeds to reduce
outstanding indebtedness under its New Bank Credit Facility.
Borrowings under the New Bank Credit Facility mature in June 2001 and bear
interest based on the agent bank's reference rate or the London Interbank
Offered Rate, at the Company's discretion. As of June , 1996, the interest
rate for the New Bank Credit Facility was % per annum. The indebtedness
under the New Bank Credit Facility was used to pay outstanding amounts under the
Company's and certain of its subsidiaries' former bank credit facilities
("Former Bank Credit Facilities") and for general corporate purposes. The
Company expects to incur substantial additional borrowings under the New Bank
Credit Facility to fund the Par-A-Dice Acquisition and as necessary on a
periodic basis in connection with the completion of construction at Sam's Town
Tunica, Main Street Station, Sam's Town Reno, the Company's capital
contributions to the Mirage Joint Venture and for general corporate purposes,
including certain elements of other planned improvements and expansions at the
Company's existing facilities. In addition, the Company may use borrowings under
the New Bank Credit Facility to fund the redemption of the 10.75% Notes which
become redeemable in September 1996. For a description of the New Bank Credit
Facility, see "Management's Discussion and Analysis of Financial Condition and
Results of Operations -- Liquidity and Capital Resources."
Pending use of the net proceeds as set forth above, the Company intends to
invest such funds in short-term, interest bearing securities.
PRICE RANGE OF COMMON STOCK
The following table sets forth, for the calendar quarters indicated, the
high and low sales prices of the Common Stock as reported on the NYSE Composite
Tape.
<TABLE>
<CAPTION>
HIGH LOW
---- ---
<S> <C> <C>
1994
First Quarter........................................................... 19 3/8 13 1/2
Second Quarter.......................................................... 15 7/8 10 5/8
Third Quarter........................................................... 15 11 7/8
Fourth Quarter.......................................................... 14 3/4 10 1/2
1995
First Quarter........................................................... 14 1/4 10 1/2
Second Quarter.......................................................... 18 5/8 13 1/8
Third Quarter........................................................... 16 3/4 13 1/2
Fourth Quarter.......................................................... 15 1/8 10
1996
First Quarter........................................................... 12 7/8 10 3/4
Second Quarter (through June 6, 1996)................................... 16 7/8 11 1/8
</TABLE>
On June 6, 1996, the closing sales price of the Common Stock on the NYSE
was $16 3/4 per share. On that date, the Company had approximately 1,952 holders
of record of its Common Stock.
14
<PAGE> 19
DIVIDEND POLICY
The Company has not paid any cash dividends on its Common Stock to date.
The Company currently anticipates that it will retain future earnings to fund
the development and growth of its business and does not anticipate paying cash
dividends in the foreseeable future. Restrictions imposed by commercial lenders
and noteholders may also limit the ability of the Company to pay cash dividends.
See "Management's Discussion and Analysis of Financial Condition and Results of
Operations -- Liquidity and Capital Resources" and "Risk Factors -- Holding
Company Structure and Dividend Limitations."
CAPITALIZATION
The following sets forth (i) the consolidated capitalization of the Company
as of March 31, 1996, (ii) such capitalization, as adjusted to give effect to
the Offerings (without giving effect to the exercise of the Underwriters'
over-allotment options) and the New Bank Credit Facility, and (iii) the
capitalization as adjusted and pro forma to reflect the Par-A-Dice Acquisition.
This table should be read in conjunction with the pro forma consolidated
financial statements of the Company and the consolidated financial statements of
the Company and of Par-A-Dice Gaming which are included elsewhere or
incorporated in this Prospectus.
<TABLE>
<CAPTION>
MARCH 31, 1996
------------------------------------
AS ADJUSTED
FOR THE AS ADJUSTED
OFFERINGS/ AND PRO
NEW BANK FORMA FOR
CREDIT PAR-A-DICE
ACTUAL FACILITY ACQUISITION
-------- ----------- -----------
(IN THOUSANDS)
<S> <C> <C> <C>
Cash, cash equivalents and marketable securities.......... $ 51,918 $ 78,018 $ 58,637
======== ======== ==========
Long-term debt, including current portion
Notes payable under Former Bank Credit Facilities(a).... $228,250 $ -- $ --
Notes payable under New Bank Credit Facility(b)......... -- -- 155,675
% Notes due 2003...................................... -- 200,000 200,000
11% Senior Subordinated Notes due 2002(c)............... 185,000 185,000 185,000
10.75% Senior Subordinated Notes due 2003(d)............ 150,000 150,000 150,000
Other................................................... 25,441 25,441 25,441
-------- -------- ----------
Total long-term debt................................. 588,691 560,441 716,116
Stockholders' equity...................................... 230,067 292,219 292,219
-------- -------- ----------
Total capitalization................................. $818,758 $ 852,660 $ 1,008,335
======== ======== ==========
</TABLE>
- ---------------
(a) Borrowings under the Company's and its subsidiaries' Former Bank Credit
Facilities at March 31, 1996 represented obligations of subsidiaries of the
Company as follows: $144.3 million for CH&C; $54.0 million for Sam's Town
Tunica; and $30.0 million for Sam's Town Kansas City.
(b) Represents borrowings under the New Bank Credit Facility to fund the
Par-A-Dice Acquisition.
(c) The 11% Notes are obligations of California Hotel Finance Corporation, a
wholly-owned special purpose subsidiary of CH&C and are guaranteed on a
senior subordinated basis by CH&C.
(d) The 10.75% Notes are obligations of the Company.
15
<PAGE> 20
SELECTED CONSOLIDATED FINANCIAL DATA
The selected consolidated financial data presented below as of and for the
fiscal years ended June 30, 1995 and 1994, and for the fiscal year ended June
30, 1993, have been derived from audited consolidated financial statements
audited by Deloitte & Touche LLP and contained elsewhere in this Prospectus. The
selected consolidated financial data presented below as of June 30, 1993, and as
of and for the fiscal years ended June 30, 1992 and 1991, have been derived from
audited consolidated financial statements of the Company not contained herein.
The selected consolidated financial data presented below as of March 31, 1996
and for the nine months ended March 31, 1996 and 1995 have been derived from
unaudited consolidated financial statements of the Company. Management believes
that the unaudited consolidated financial statements include all adjustments,
consisting only of normal recurring adjustments, necessary for a fair
presentation of the results for such periods. Operating results for the nine
months ended March 31, 1996 and the fiscal years shown below are not necessarily
indicative of the results that may be expected for the full fiscal year.
<TABLE>
<CAPTION>
NINE MONTHS
ENDED MARCH 31, FISCAL YEAR ENDED JUNE 30,
-------------------- --------------------------------------------------------
1996 1995 1995 1994 1993 1992 1991
-------- -------- -------- -------- -------- -------- --------
(IN THOUSANDS, EXCEPT FOR PER SHARE DATA)
<S> <C> <C> <C> <C> <C> <C> <C>
INCOME STATEMENT DATA
Net revenues................................... $581,509 $492,385 $660,340 $468,219 $431,174 $406,804 $349,932
Operating expense.............................. 499,757 411,567 549,770 413,971 368,255 359,409 312,184
-------- -------- -------- -------- -------- -------- --------
Operating income............................... 81,752 80,818 110,570 54,248 62,919 47,395 37,748
Interest expense(a)............................ 38,335 36,258 46,371 36,093 32,378 37,762 34,545
Gain (loss) on investment...................... -- -- -- -- 1,062 -- (1,820)
-------- -------- -------- -------- -------- -------- --------
Income before provision for income taxes,
cumulative effect of a change in accounting
principle and extraordinary item............. 43,417 44,560 64,199 18,155 31,603 9,633 1,383
Provision for income taxes..................... 17,315 20,265 27,950 7,505 11,469 3,519 631
-------- -------- -------- -------- -------- -------- --------
Income before cumulative effect of a change in
accounting principle and extraordinary
item......................................... 26,102 24,295 36,249 10,650 20,134 6,114 752
Cumulative effect of a change in accounting for
income taxes................................. -- -- -- 2,035 -- -- --
-------- -------- -------- -------- -------- -------- --------
Income before extraordinary item............... 26,102 24,295 36,249 12,685 20,134 6,114 752
Extraordinary item, net of tax................. -- -- -- -- (7,397) -- --
-------- -------- -------- -------- -------- -------- --------
Net income..................................... 26,102 24,295 36,249 12,685 12,737 6,114 752
Dividends on preferred stock................... -- -- -- 467 1,881 1,920 1,929
-------- -------- -------- -------- -------- -------- --------
Net income (loss) applicable to common stock... $ 26,102 $ 24,295 $ 36,249 $ 12,218 $ 10,856 $ 4,194 $ (1,177)
======== ======== ======== ======== ======== ======== ========
PER SHARE DATA
Earnings per common share
Income (loss) before cumulative effect of a
change in accounting principle and
extraordinary item......................... $ 0.46 $ 0.43 $ 0.64 $ 0.19 $ 0.37 $ 0.09 $ (0.02)
Cumulative effect of a change in accounting
for income taxes........................... -- -- -- 0.04 -- -- --
Extraordinary item........................... -- -- -- -- (0.15) -- --
-------- -------- -------- -------- -------- -------- --------
Net income (loss).............................. $ 0.46 $ 0.43 $ 0.64 $ 0.23 $ 0.22 $ 0.09 $ (0.02)
======== ======== ======== ======== ======== ======== ========
Dividends on common stock...................... -- -- -- -- -- -- --
Weighted average common shares outstanding..... 57,038 56,852 56,870 54,297 48,582 48,946 49,648
OTHER OPERATING DATA
Depreciation and amortization.................. $ 45,868 $ 40,953 $ 54,518 $ 42,136 $ 39,450 $ 38,853 $ 31,957
Preopening expense............................. 10,004 -- -- 4,605 -- -- --
Capital expenditures........................... 59,153 82,150 183,299 326,829 24,485 18,702 104,042
</TABLE>
<TABLE>
<CAPTION>
NINE MONTHS
ENDED MARCH 31, FISCAL YEAR ENDED JUNE 30,
--------------- ------------------------------------------------------------
1996 1995 1994 1993 1992 1991
--------------- -------- -------- -------- -------- --------
(IN THOUSANDS)
<S> <C> <C> <C> <C> <C> <C>
BALANCE SHEET DATA
Total assets.................................. $ 941,953 $949,513 $836,297 $500,123 $467,133 $514,861
Long-term debt (excluding current portion).... 548,034 587,957 525,637 364,927 317,106 361,743
Stockholders' equity.......................... 230,067 202,613 164,405 72,686 62,668 58,532
</TABLE>
- ---------------
(a) Net of interest income and amounts capitalized.
16
<PAGE> 21
BOYD GAMING CORPORATION
PRO FORMA CONSOLIDATED FINANCIAL STATEMENTS
The accompanying pro forma consolidated financial statements present pro
forma information for the Company and Par-A-Dice Gaming giving effect to the
Par-A-Dice Acquisition. The pro forma consolidated financial statements of the
Company are based on the historical consolidated financial statements of the
Company and Par-A-Dice Gaming as of and for the nine months ended March 31, 1996
and the year ended June 30, 1995.
The accompanying pro forma consolidated income statements for the nine
months ended March 31, 1996 and for the year ended June 30, 1995, have been
presented as if the Par-A-Dice Acquisition occurred on July 1, 1994. The
accompanying pro forma consolidated balance sheet at March 31, 1996 has been
presented as if the Par-A-Dice Acquisition occurred on March 31, 1996.
The pro forma adjustments are based on currently available information and
upon certain assumptions that management of the Company believes are reasonable
under the circumstances.
THESE PRO FORMA CONSOLIDATED FINANCIAL STATEMENTS ARE PROVIDED FOR
INFORMATIONAL PURPOSES ONLY AND ARE NOT NECESSARILY INDICATIVE OF THE RESULTS
THAT WILL BE ACHIEVED FOR FUTURE PERIODS. THESE PRO FORMA CONSOLIDATED FINANCIAL
STATEMENTS DO NOT PURPORT TO REPRESENT WHAT THE COMPANY'S RESULTS OF OPERATIONS
OR FINANCIAL POSITION WOULD ACTUALLY HAVE BEEN IF THE PAR-A-DICE ACQUISITION IN
FACT HAD OCCURRED AT JULY 1, 1994 OR MARCH 31, 1996. THESE PRO FORMA
CONSOLIDATED FINANCIAL STATEMENTS AND THE RELATED NOTES THERETO SHOULD BE READ
IN CONJUNCTION WITH THE COMPANY'S CONSOLIDATED FINANCIAL STATEMENTS AND THE
CONSOLIDATED FINANCIAL STATEMENTS OF PAR-A-DICE GAMING INCLUDED ELSEWHERE OR
INCORPORATED IN THIS PROSPECTUS.
17
<PAGE> 22
BOYD GAMING CORPORATION
PRO FORMA CONSOLIDATED BALANCE SHEETS
MARCH 31, 1996
(IN THOUSANDS)
<TABLE>
<CAPTION>
ADJUSTMENTS
COMPANY PAR-A-DICE AND COMPANY
HISTORICAL HISTORICAL ELIMINATIONS PRO FORMA
---------- ---------- ----------- ----------
<S> <C> <C> <C> <C>
ASSETS
Current assets
Cash and cash equivalents.............. $ 51,918 $ 6,719 $ 180,775(a)
(3,000)(b)
(17,100)(c)
(160,675)(d) $ 58,637
Accounts receivable, net............... 17,358 384 17,742
Inventories............................ 6,455 266 6,721
Prepaid expenses....................... 17,039 391 17,430
-------- ------- ----------
Total current assets................ 92,770 7,760 100,530
Property, equipment and leasehold
interests, net......................... 782,754 50,077 (e) 832,831
Other assets and deferred charges........ 55,810 1,271 3,000(b)
(1,117)(d) 58,964
Goodwill and intangibles, net............ 10,619 125,369(d) 135,988
-------- ------- -------- ----------
Total assets........................ $ 941,953 $ 59,108 $ 127,252 $1,128,313
======== ======= ======== ==========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities
Current portion of long-term debt...... $ 40,657 $ 2,400 $ (2,400)(c) $ 40,657
Accounts payable....................... 40,066 1,091 41,157
Accrued liabilities....................
Payroll and related................. 21,491 -- 21,491
Interest and other.................. 25,229 3,494 28,723
Income taxes payable................... 3,882 -- 3,882
-------- ------- -------- ----------
Total current liabilities........... 131,325 6,985 (2,400) 135,910
Long-term debt, net of current
maturities............................. 548,034 14,700 180,775(a)
(14,700)(c) 728,809
Deferred income taxes.................... 32,527 -- 32,527
Minority interest........................ -- 1,000 1,000
Commitments..............................
Stockholders' equity
Common stock........................... 571 -- 571
Additional paid-in capital............. 101,436 9,048 (9,048)(d) 101,436
Retained earnings...................... 128,060 27,375 (27,375)(d) 128,060
-------- ------- -------- ----------
Total stockholders' equity.......... 230,067 36,423 (36,423) 230,067
-------- ------- -------- ----------
Total liabilities and stockholders'
equity............................ $ 941,953 $ 59,108 $ 127,252 $1,128,313
======== ======= ======== ==========
</TABLE>
The accompanying notes are an integral part of these pro forma consolidated
financial statements.
18
<PAGE> 23
BOYD GAMING CORPORATION
PRO FORMA CONSOLIDATED STATEMENTS OF INCOME
NINE MONTHS ENDED MARCH 31, 1996
(IN THOUSANDS, EXCEPT PER SHARE DATA)
<TABLE>
<CAPTION>
ADJUSTMENTS
COMPANY PAR-A-DICE AND COMPANY
HISTORICAL HISTORICAL ELIMINATIONS PRO FORMA
---------- ---------- --------------- ---------
<S> <C> <C> <C> <C>
Revenues
Casino............................... $ 413,097 $ 74,012 $ $ 487,109
Food and beverage.................... 105,703 5,861 111,564
Rooms................................ 52,308 -- 52,308
Other................................ 35,300 1,705 37,005
Management fees and joint venture.... 30,893 -- 30,893
-------- ------- -------- --------
Gross revenues......................... 637,301 81,578 718,879
Less promotional allowances............ 55,792 1,669 57,461
-------- ------- -------- --------
Net revenues...................... 581,509 79,909 661,418
-------- ------- -------- --------
Costs and expenses
Casino............................... 203,769 25,319 229,088
Food and beverage.................... 74,337 5,598 79,935
Rooms................................ 17,910 -- 17,910
Other................................ 25,653 1,203 26,856
Selling, general and
administrative.................... 83,179 20,327 103,506
Maintenance and utilities............ 22,620 2,160 24,780
Depreciation and amortization........ 45,868 3,306 (3,306)(f)
5,806(g) 51,674
Corporate expense.................... 16,417 -- 16,417
Preopening expense................... 10,004 -- 10,004
-------- ------- -------- --------
Total............................. 499,757 57,913 2,500 560,170
-------- ------- -------- --------
Operating income....................... 81,752 21,996 (2,500) 101,248
-------- ------- -------- --------
Other income (expense)
Interest income...................... 987 516 (63)(h) 1,440
Interest expense, net of amounts
capitalized....................... (39,322) (1,127) 1,127(i)
(10,169)(j) (49,491)
-------- ------- -------- --------
Total............................. (38,335) (611) (9,105) (48,051)
-------- ------- -------- --------
Income before provision for income
taxes................................ 43,417 21,385 (11,605) 53,197
Provision for income taxes............. 17,315 311 3,140(k) 20,766
-------- ------- -------- --------
Net income............................. $ 26,102 $ 21,074 $ (14,745) $ 32,431
======== ======= ======== ========
Net income per common share............ $ 0.46 $ 0.57
======== ========
</TABLE>
The accompanying notes are an integral part of these pro forma consolidated
financial statements.
19
<PAGE> 24
BOYD GAMING CORPORATION
PRO FORMA CONSOLIDATED STATEMENTS OF INCOME
FOR THE YEAR ENDED JUNE 30, 1995
(IN THOUSANDS, EXCEPT PER SHARE DATA)
<TABLE>
<CAPTION>
ADJUSTMENTS
COMPANY PAR-A-DICE AND COMPANY
HISTORICAL HISTORICAL ELIMINATIONS PRO FORMA
---------- ---------- ----------- ----------
<S> <C> <C> <C> <C>
Revenues
Casino............................... $ 463,179 $ 93,050 $ $ 556,229
Food and beverage.................... 123,527 6,744 130,271
Rooms................................ 62,300 -- 62,300
Other................................ 37,563 2,520 40,083
Management fees and joint venture.... 35,763 -- 35,763
-------- ------- -------- --------
Gross revenues......................... 722,332 102,314 824,646
Less promotional allowances............ 61,992 2,297 64,289
-------- ------- -------- --------
Net revenues......................... 660,340 100,017 760,357
-------- ------- -------- --------
Costs and expenses
Casino............................... 221,844 33,169 255,013
Food and beverage.................... 90,670 5,278 95,948
Rooms................................ 24,578 -- 24,578
Other................................ 25,567 349 25,916
Selling, general and
administrative.................... 79,785 27,094 106,879
Maintenance and utilities............ 28,452 2,721 31,173
Depreciation and amortization........ 54,518 4,426 (4,426)(f)
7,760(g) 62,278
Corporate expense.................... 24,356 -- 24,356
-------- ------- -------- --------
Total............................. 549,770 73,037 3,334 626,141
-------- ------- -------- --------
Operating income....................... 110,570 26,980 (3,334) 134,216
-------- ------- -------- --------
Other income (expense)
Interest income...................... 2,072 457 (84)(h) 2,445
Interest expense, net of amounts
capitalized....................... (48,443) (1,436) 1,436(i)
(13,558)(j) (62,001)
-------- ------- -------- --------
Total............................. (46,371) (979) (12,206) (59,556)
-------- ------- -------- --------
Income before provision for income
taxes................................ 64,199 26,001 (15,540) 74,660
Provision for income taxes............. 27,950 508 3,251(k) 31,709
-------- ------- -------- --------
Net income............................. $ 36,249 $ 25,493 $ (18,791) $ 42,951
======== ======= ======== ========
Net income per common share............ $ 0.64 $ 0.76
======== ========
</TABLE>
The accompanying notes are an integral part of these pro forma consolidated
financial statements.
20
<PAGE> 25
BOYD GAMING CORPORATION
NOTES TO PRO FORMA CONSOLIDATED FINANCIAL STATEMENTS
(IN THOUSANDS)
The pro forma adjustments contained in the accompanying pro forma
consolidated financial statements reflect:
(a) The proceeds from the draw down of the New Bank Credit Facility to fund the
Par-A-Dice Acquisition.
(b) The payment of $3,000 in fees related to the Par-A-Dice Acquisition.
(c) The retirement of assumed indebtedness of Par-A-Dice Gaming.
(d) The payment of approximately $160,675 to the Par-A-Dice Gaming shareholders,
the transfer of certain assets of $1,117 not associated with the Par-A-Dice
to the Par-A-Dice Gaming shareholders (the "Transferred Assets"), the
elimination of Par-A-Dice Gaming's equity ($9,048 in common stock and
$27,375 in retained earnings) and the allocation of the excess purchase
price over historical value of acquired assets ($125,369) to
intangibles-license rights based on the Company's estimates of the fair
market values of the assets being acquired.
(e) No adjustment to property, equipment and leasehold interests is necessary as
the book value at March 31, 1996 reflects the fair value of the assets to
be acquired in the merger.
(f) The elimination of Par-A-Dice Gaming's historical depreciation and
amortization expense for the year ended June 30, 1995 and for the
nine-months ended March 31, 1996.
(g) Depreciation and amortization expense as follows:
<TABLE>
<CAPTION>
NINE-
AMOUNT LIFE ANNUAL MONTHS
-------- ---- ------ ------
<S> <C> <C> <C> <C>
Property, equipment and leasehold
interests.................................. $ 50,077 11 $4,426 $3,306
Other assets................................. 3,000 15 200 150
Intangibles-license rights................... 125,369 40 3,134 2,350
------ ------
Total................................... $7,760 $5,806
====== ======
</TABLE>
(h) The elimination of interest income of $63 and $84, respectively, for the
nine months ended March 31, 1996 and the year ended June 30, 1995 related
to the transfer of the Transferred Assets.
(i) The elimination of Par-A-Dice Gaming's historical interest expense for the
year ended June 30, 1995 and for the nine-months ended March 31, 1996.
(j) Interest expense on $180,775 in debt at an assumed interest rate of 7.5%.
(k) An adjustment to the provision for income taxes of $3,140 and $3,251,
respectively, for the nine months ended March 31, 1996 and the year ended
June 30, 1995 in order to result in a 36% combined state and federal
corporate tax rate due to the conversion from Subchapter S status to C
corporate status under the Internal Revenue Code.
21
<PAGE> 26
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" consists of Sam's Town Las Vegas, the Eldorado and the Jokers Wild;
"Downtown Properties" consists of the California and the Fremont; and "Central
Region Properties" consists of Sam's Town Tunica, Sam's Town Kansas City (opened
September 1995), management fee income from the Silver Star, and management fee
and joint venture income from the Treasure Chest (opened September 1994).
<TABLE>
<CAPTION>
NINE MONTHS ENDED
MARCH 31, FISCAL YEAR ENDED JUNE 30,
------------------- ------------------------------
1996 1995 1995 1994 1993
-------- -------- -------- -------- --------
(IN THOUSANDS) (IN THOUSANDS)
<S> <C> <C> <C> <C> <C>
INCOME STATEMENT DATA
Net revenues
Stardust......................... $146,336 $147,011 $193,563 $195,899 $191,735
Boulder Strip Properties......... 143,033 125,682 168,036 125,087 108,982
Downtown Properties.............. 103,787 100,977 135,232 137,726 129,961
Central Region Properties........ 185,345 118,715 163,509 9,507 --
-------- -------- -------- -------- --------
Total Properties............ 578,501 492,385 660,340 468,219 430,678
Operating income
Stardust......................... 22,164 22,677 30,688 26,713 28,039
Boulder Strip Properties......... 17,382 10,687 15,551 20,686 24,696
Downtown Properties.............. 13,259 16,305 22,561 23,583 21,810
Central Region Properties........ 58,632 49,650 68,486 2,439 --
Preopening expense............... (10,004) -- -- (4,605) --
-------- -------- -------- -------- --------
Total Properties............ 101,433 99,319 137,286 68,816 74,545
</TABLE>
NINE MONTHS ENDED MARCH 31, 1996 COMPARED TO NINE MONTHS ENDED MARCH 31, 1995
Consolidated net revenues increased 18.1% for the nine-month period ended
March 31, 1996 compared to the comparable period in the prior fiscal year. The
Company's Central Region properties accounted for the majority of the increase
in revenues for the first nine months of the current fiscal year with Central
Region revenues increasing 56%. This increase was primarily attributable to the
opening of Sam's Town Kansas City in September 1995 and an increase at Sam's
Town Tunica of 16.1% for the nine months ended March 31, 1996 versus the
comparable period in the prior fiscal year. Management fees and joint venture
income related to the Silver Star and the Treasure Chest also increased 23.7%
for the nine-month period ending March 31, 1996. In the Company's Nevada Region,
which consists of the Stardust, Sam's Town Las Vegas, the Eldorado, Jokers Wild,
the California and the Fremont, revenues increased 5.2% for the nine-month
period ended March 31, 1996 versus the comparable period in the prior fiscal
year. Revenues at the Boulder Strip Properties increased 13.8% for the
nine-month period, while the Stardust revenues declined 0.5%, and revenues at
the Downtown Properties increased 2.8%. Revenue growth on a consolidated basis
was achieved in all major revenue categories of the Company's operations for the
nine-month period ended March 31, 1996, with casino revenue up 18.6%, food and
beverage revenue up 6.5%, and room revenue up 24.4%. Slot revenue, which
currently accounts for more than 70% of casino revenue, increased 23% for the
nine-month period ended March 31, 1996 versus the comparable period in the prior
fiscal year. Table games revenue, the only other significant component of casino
revenue, increased 9.1% for the nine-month period ended March 31, 1996. The
Company's hotel rooms posted an overall occupancy rate of 95% for the nine-month
period ended March 31, 1996. Company-wide, occupied rooms increased 6.9% in the
nine-month period primarily as a result of Sam's
22
<PAGE> 27
Town Tunica rooms expansion (300 rooms, opened in December 1994) and the
California rooms expansion (146 rooms, opened in December 1994) both of which
were open for the full nine-month period ending March 31, 1996. In addition, the
Company's average room rate rose 8.7% for the nine-month period ended March 31,
1996, primarily as a result of an increase in the average room rate at the
Stardust of 12.0%. 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. Main Street Station is currently undergoing an
extensive renovation project and the Company expects to open the property in
fiscal 1997 as a complete casino hotel facility.
Consolidated operating income was $81.8 million for the nine-month period
ended March 31, 1996 compared to $80.8 million in the comparable period of the
prior fiscal year. Included in this year's 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. The increase in consolidated
operating income for the nine-month period ended March 31, 1996 was primarily
the result of increased operating income at the Boulder Strip Properties offset
by declines at the Stardust, Downtown Properties and the Central Region.
Operating income in the Central Region includes management fees and joint
venture income related to the Silver Star and Treasure Chest operations. For the
nine-months ended March 31, 1996, consolidated operating income margin was 14.1%
versus 16.4% in the comparable period of the prior fiscal year, primarily as a
result of preopening expenses related to the opening of Sam's Town Kansas City
in September 1995, an operating loss at Sam's Town Kansas City for the
nine-month period and a decline in operating income margins at the Downtown
Properties offsetting operating income margin gains at the Boulder Strip
Properties.
Net revenues at the Stardust declined 0.5% for the first nine months of the
current fiscal year versus the comparable period in the prior fiscal year. Slot
revenue declined 1.5% for the nine months ended March 31, 1996 compared to the
comparable period in the prior fiscal year. Table games revenue for the
nine-month period ended March 31, 1996 was down 6.6% versus the comparable
period in the prior fiscal year as a result of flat wagering and lower net
winnings. Rooms revenue at the Stardust for the nine-months ended March 31, 1996
increased 8.2%. For the nine months ended March 31, 1996, a decline of 2.8% in
occupied rooms was offset by increases in the average room rate of 12.0% versus
the comparable period in the prior fiscal year. Operating income margin for the
nine-month period ended March 31, 1996 was 15.1%, versus 15.4% in the comparable
period in the prior fiscal year. The decline in operating income and operating
income margin for the nine-month period was 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 13.8% for the
nine-month period ended March 31, 1996 compared to the comparable period in the
prior fiscal year. Net revenues at Sam's Town Las Vegas increased 15.5% for the
nine-month period ended March 31, 1996 versus the comparable period in the prior
fiscal year while revenues for the other Boulder Strip Properties increased
slightly for the nine-month period ended March 31, 1996. Casino revenues at the
Boulder Strip Properties increased 17.5% for the nine-month period ended March
31, 1996, while rooms revenue increased 10.3% and food and beverage revenue
increased 7.1%. Operating income margins at the Boulder Strip Properties
increased to 12.2% for the nine-month period ended March 31, 1996 versus 8.5%,
in the comparable period of the prior year. Sam's Town Las Vegas posted an
increase in operating income margin of 4.7 percentage points for the nine-month
period ended March 31, 1996. Operating income margins increased 0.6 percentage
points at the Eldorado and declined 1.5 percentage points at Jokers Wild for the
nine-month period. Declines in operating income margins at the Eldorado and
Jokers Wild are primarily a result of lower net winnings in the casino
department. The significant increases in revenues, operating income and
operating income margins for the nine-month period at Sam's Town Las Vegas are
primarily attributable to the implementation of successful aggressive marketing
programs creating increased customer awareness and visitation.
23
<PAGE> 28
Net revenues at the Downtown Properties increased 2.8% for the nine-month
period ended March 31, 1996 versus the comparable period in the prior fiscal
year. Slot revenue increased while table games revenue decreased for the nine
months ended March 31, 1996. Net revenues at the Fremont increased 3.2% for the
nine-month period ended March 31, 1996 versus the comparable period in the prior
fiscal year. Net revenues at the California increased 2.4% for the nine-month
period ended March 31, 1996 versus the comparable period in the prior fiscal
year. Operating income margins at the Downtown Properties were 12.8% for the
nine-month period ended March 31, 1996 versus 16.1% in the comparable period of
the prior year. The Fremont operating income margin was 12.1% for the nine-month
period ended March 31, 1996 versus 15.4%, in the comparable nine-month period in
the prior fiscal year. The decline in operating income margin at the Fremont was
primarily a result of lower net winnings and increased marketing and promotional
costs for the nine-month period ended March 31, 1996. The California had
operating income margin of 13.4%, for the nine-month period ended March 31, 1996
versus 16.9%, in the comparable nine-month period in the prior fiscal year. The
decline in operating income margin at the California was primarily a result of
lower net winnings for the nine-month period ended March 31, 1996. Construction
of the Fremont Street Experience project, which was completed and opened to the
public in December 1995, negatively impacted the Downtown Properties for the
majority of the first and second fiscal quarters. The Fremont Street Experience,
which was open for the entire third fiscal quarter, drew additional visitors to
the downtown area. The Fremont benefited from increased walk-in visitor traffic
due to its proximity to the Fremont Street Experience.
Net revenues in the Central Region increased 56%, for the nine-month period
ended March 31, 1996. The opening of Sam's Town Kansas City on September 13,
1995 accounted for the majority of the increase for the nine-month period. Sam's
Town Tunica revenues increased 16.1%, for the nine-month period ended March 31,
1996 versus the comparable period in the prior fiscal year while management fees
and joint venture income related to the Silver Star and the Treasure Chest
operations increased 23.7%. Since opening, Sam's Town Kansas City has produced a
slight operating loss, net of preopening expense. For the nine-month period
ended March 31, 1996, operating income in the Central Region increased 18.1% to
$58.6 million with Sam's Town Tunica operating income increasing 15.6% and
management fees and joint venture operating income increasing 24%.
Interest expense, net of amounts capitalized, was $39.3 million for the
nine-month period ended March 31, 1996, versus $37.9 million in the comparable
period in the prior fiscal year. The Company incurred increased interest expense
for the nine month period ended March 31, 1996 as a result of increased
borrowings and less capitalized interest related to projects under development
versus the comparable period in the prior year. Depreciation expense increased
$4.9 million for the nine-month period ended March 31, 1996 primarily as a
result of the opening of Sam's Town Kansas City in September 1995, the
California rooms addition and the Sam's Town Tunica rooms addition, both of
which opened in late December 1994.
As a result of these factors, net income increased $1.8 million or 7.4% for
the nine-month period ended March 31, 1996 compared to the same period in the
prior fiscal year.
FISCAL 1995 COMPARED TO FISCAL 1994
Consolidated net revenues increased 41% for fiscal 1995 compared to fiscal
1994. This increase in net revenues in fiscal 1995 resulted from the Company's
current expansion program which included the opening of Sam's Town Tunica in May
1994 and a subsequent rooms expansion project in December 1994, the opening of
the Silver Star in July 1994 and a subsequent casino expansion in December 1994,
the opening of the Treasure Chest in September 1994, the opening of Sam's Town
Las Vegas expansion in July 1994 and the opening of the California Hotel rooms
expansion in December 1994. The Company's Central Region, which consists of
Sam's Town Tunica, the Silver Star and the Treasure Chest, accounted for more
than 80% of the increase in net revenues. Only one of these properties was open
prior to the start of the fiscal year, as Sam's Town Tunica was open for
approximately one month in fiscal 1994. In the Company's Nevada Region, which
consists of the Stardust, Sam's Town Las Vegas, the Eldorado, Jokers Wild, the
California and the Fremont, net revenues increased 8.3% with net revenues at the
Boulder Strip
24
<PAGE> 29
Properties increasing 34% and net revenues at the Stardust and Downtown
Properties declining 1.2% and 1.8%, respectively. Net revenues at the Boulder
Strip Properties were enhanced by the opening in July 1994 of the Sam's Town Las
Vegas expansion and by the acquisition of the Eldorado and Jokers Wild in
October 1993. The Company's revenue growth was achieved in all major revenue
categories with casino revenue increasing 36%, room revenue increasing 45%, food
and beverage revenue increasing 18.6% and other revenue increasing 28%.
Management fee and joint venture revenue relating to the operation of the Silver
Star, which opened in July 1994 and the Treasure Chest, which opened in
September 1994, totaled $35.8 million for fiscal 1995. Slot revenue, which
accounted for more than two-thirds of total casino revenue, increased 38% in
fiscal 1995 compared to fiscal 1994. The increase in slot revenue was primarily
attributable to the opening of Sam's Town Tunica in May 1994 and the opening of
the Sam's Town Las Vegas expansion in July 1994. Table games revenue, the only
other significant component of casino revenue, increased 39% also as a result of
the opening of Sam's Town Tunica and the Sam's Town Las Vegas expansion.
Company-wide room revenue increased 45% for fiscal 1995 compared to fiscal 1994
primarily as a result of a 25% increase in occupied rooms and a 12.7% increase
in average daily room rate. The increase in occupied rooms was attributable to
the opening of the Sam's Town Las Vegas expansion in July 1994 (650 rooms), the
opening and subsequent expansion of Sam's Town Tunica (200 rooms opened May 1994
and an additional 308 rooms opened December 1994) and the opening of the
California rooms expansion (146 rooms opened December 1994). The Company's hotel
rooms posted an overall occupancy percentage of 95% in fiscal 1995 compared to
98% in fiscal 1994. Occupancy statistics do not include Main Street Station
rooms which the Company uses to augment the rooms base at the California and the
Fremont. Occupancy rates at the Stardust declined to 97% while Sam's Town Tunica
posted an occupancy rate of 87% for fiscal 1995.
Consolidated operating income increased 104% for fiscal 1995 compared to
fiscal 1994 while consolidated operating income margins increased 5.1 percentage
points to 16.7% for fiscal 1995 compared to 11.6% in fiscal 1994. The increase
in operating income and operating income margins for fiscal 1995 was generated
primarily by the Company's Central Region properties which produced $68.5
million in operating income and posted a 42% operating income margin. In the
Nevada Region, the Stardust operating income margin increased to 15.9% in fiscal
1995 from 13.6% in fiscal 1994 and operating income margins at the Boulder Strip
and Downtown Properties declined to 9.3% and 16.7%, respectively, in fiscal
1995. Higher corporate expense related to the Company's development activities
also impacted consolidated operating income margins. Operating income in the
Central Region includes management fees and joint venture income related to the
Silver Star and the Treasure Chest. Neither of these properties were open in
fiscal 1994.
Net revenues at the Stardust declined 1.2% for fiscal 1995 as compared to
the prior fiscal year. Casino and food and beverage revenues declined 3.8% and
5.1% respectively, while rooms revenue increased 14.4% and showroom revenue
increased 19.9%. Slot revenue declined 1.8% with a 3.5% increase in wagering
offset by lower net winnings. Table games revenue declined 3.8% as a result of a
decline of 2.2% in wagering combined with slightly lower net winnings. Other
casino revenues declined 15.9% for fiscal 1995 with both the sports book and
keno posting declines in wagering, 17.3% and 17.8% respectively, offset by
slightly higher net winnings. The decline in wagering in the sports book was
primarily attributable to the decline in baseball wagering due to the Major
League Baseball strike. Rooms revenue at the Stardust increased 14.4% for fiscal
1995 compared to fiscal 1994 with a 2.6% decline in occupied rooms offset by a
15.7% increase in average daily room rate. The Stardust posted an occupancy rate
of 97% in fiscal 1995 versus 99% in the prior fiscal year. Operating income
margins increased 2.3 percentage points to 15.9% for fiscal 1995 versus 13.6% in
fiscal 1994. The increase in the operating income margin was the result of
increased operating income in the rooms department and showroom department
combined with slight decreases in payroll and overhead expenses.
Net revenues for the Boulder Strip Properties increased 34% for fiscal 1995
versus fiscal 1994 primarily as a result of the opening of the Sam's Town Las
Vegas expansion in July 1994 and also as a result of the acquisition of the
Eldorado and Jokers Wild in October 1993. Sam's Town revenue increased 31% as a
result of the expansion with casino revenue increasing 22%, food and beverage
revenue
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increasing 54% and increased rooms revenue as a result of having a full year of
rooms revenue in fiscal 1995. For most of fiscal 1994 all 200 hotel rooms at
Sam's Town Las Vegas were removed as part of the expansion project. Net revenues
at the Eldorado and Jokers Wild increased 40% and 56%, respectively, primarily
as a result of their acquisition in October 1993. The operating income margin
for the Boulder Strip Properties was 9.3% in fiscal 1995 versus 16.5% in fiscal
1994. The decline in the operating income margin was attributable to a decline
in Sam's Town operating income margin to 7.3% from 15.6% and a decline in
operating income margins at the Eldorado and Jokers Wild to 14.8% and 19.8%,
respectively, from 18.3% and 23.7%, respectively. The decline in operating
income margins at Sam's Town Las Vegas was primarily attributable to the growth
in revenues which did not match the growth in expenses associated with the
expanded property and increased competition, primarily the opening of a new
property on the Boulder Strip. The decline in operating income margins at the
Eldorado and Jokers Wild resulted from increased competition on the Boulder
Strip.
Net revenues at the Downtown Properties decreased 1.8% for fiscal 1995 as
compared to fiscal 1994. Net revenues at the California increased 2.5% in fiscal
1995 with casino revenue increasing 1.5%, rooms revenue increasing 15.9% and
food and beverage revenue declining 4.2%. Net revenues at the California were
enhanced by the opening in December 1994 of a 146-room expansion project. At the
Fremont, net revenues declined 6.1% with casino revenue declining 4.5% and rooms
and food and beverage revenue declining 3.8% and 14.3%, respectively. During the
third and fourth fiscal quarters, the Fremont and to a lesser extent the
California were negatively impacted by the construction of the Fremont Street
Experience. The construction of the Fremont Street Experience, as well as work
on several adjacent streets, impeded the free flow of both vehicular and
pedestrian traffic through downtown Las Vegas. The Company was negatively
impacted by this construction until the Fremont Street Experience opened in
December 1995. Operating income margins at the Downtown Properties were 16.7% in
fiscal 1995 versus 17.1% in fiscal 1994 with operating income margins at the
California of 17.5% in fiscal 1995 versus 18.7% in fiscal 1994 and operating
income margins at the Fremont of 15.7% in fiscal 1995 versus 15.5% in fiscal
1994. The decline in operating income margin at the California was attributable
to increased revenues in lower margin departments and certain inefficiencies
associated with the opening of the new hotel rooms.
The Central Region produced net revenues of $163.5 million for fiscal 1995
versus $9.5 million in fiscal 1994. Sam's Town Tunica, in its first full year of
operation, produced net revenues of $127.7 million while management fee and
joint venture income from the Silver Star and the Treasure Chest totaled $35.8
million. Operating income and the operating income margin for fiscal 1995 was
$68.5 million or 42%. Operating income was $32.7 million at Sam's Town Tunica
while operating income from the Silver Star and the Treasure Chest totaled $35.8
million. The Central Region results include the full revenues and income from
Sam's Town Tunica which opened in May 1994, management fee income from the
Silver Star which opened in July 1994 and management fee and joint venture
income from the Treasure Chest which opened in September 1994. Net revenues,
operating income and operating income margin were enhanced by the opening of a
308-room expansion at Sam's Town Tunica in December 1994 and a casino expansion
at the Silver Star which opened in December 1994.
Interest income for fiscal 1995 was $2.1 million compared to $3.4 million
in fiscal 1994. Interest expense, net of amounts capitalized, increased $9.0
million or 22.7% for fiscal 1995 versus the prior year as a result of increased
borrowings and higher interest rates. Depreciation expense for fiscal 1995
increased 29% primarily as a result of the openings of Sam's Town Tunica and the
Sam's Town Las Vegas expansion.
The Company's tax rate for fiscal 1995 was 44% as compared to 41% for
fiscal 1994. The increase in the Company's tax rate was primarily a result of
the increase in certain non-deductible expenses related to the Company's
development efforts.
As a result of these factors, net income before the cumulative effect of a
change in accounting principle increased $25.6 million or 240% for fiscal 1995
as compared to fiscal 1994. Net income increased $24.0 million or 197% during
fiscal 1995 compared to the prior fiscal year.
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FISCAL 1994 COMPARED TO FISCAL 1993
Consolidated net revenues increased 8.6% for fiscal 1994 compared to fiscal
1993. The Company experienced revenue growth in each of its areas with net
revenues at the Stardust increasing 2.2%, and net revenues at the Boulder Strip
Properties and Downtown Properties increasing 14.8% and 6.0%, respectively.
Revenues at the Boulder Strip Properties were enhanced by the acquisition of the
Eldorado and Jokers Wild in October 1993 in connection with the Company's
initial public offering. Revenues at these properties offset declines at Sam's
Town Las Vegas which occurred as a result of construction disruption related to
the expansion project at that property. The expanded Sam's Town Las Vegas
facility opened in July 1994. Revenues for fiscal 1994 were also enhanced by the
opening in May 1994 of Sam's Town Tunica, located in Tunica County, Mississippi,
which posted revenues of $9.5 million for its first month of operation. Revenue
growth was achieved in both casino and food and beverage operations for fiscal
1994 compared to fiscal 1993, with casino revenue increasing 10.7% and food and
beverage revenue increasing 6.5%. Slot revenue, which accounted for more than
two-thirds of total casino revenue in fiscal 1994, increased 11.7%. The
increased slot revenue was primarily attributable to the acquisition of the
Eldorado and Jokers Wild, the opening of Sam's Town Tunica, and increases at the
Stardust and Downtown Properties. Table games revenue, the only other
significant component of casino revenue, increased 5.8% also as a result of the
acquisition of the Eldorado and Jokers Wild and the opening of Sam's Town
Tunica. The Company's hotel rooms posted an overall occupancy percentage of 98%
for fiscal 1994, up 1.5 percentage points from fiscal 1993, led by the Stardust
which posted a 2.2% increase in occupied rooms over the prior year. Occupancy
percentages do not include Main Street Station rooms which the Company uses to
augment the rooms base at the California and the Fremont. Company-wide rooms
revenue decreased 4.1% during fiscal 1994 due primarily to the absence of rooms
for the majority of the year at Sam's Town Las Vegas, as a result of the
expansion project at that property, and decreased rooms revenue at the Stardust
as a result of a slightly lower average room rate and increased promotional
allowances.
Consolidated operating income margins were 11.6% for fiscal 1994 compared
to 14.6% for fiscal 1993. The decline in operating income margins resulted from
the write-off of $4.6 million in preopening expenses related to Sam's Town
Tunica and the effects of construction disruption at Sam's Town Las Vegas
related to the expansion project at that facility.
Net revenue at the Stardust rose 2.2% for fiscal 1994 as compared to the
prior fiscal year as a result of increases in casino revenue (3.0%), food and
beverage revenue (10.8%) and occupied rooms (2.2%). Slot revenue increased 2.1%
with a 9.8% increase in slot wagering offset by lower net winnings. Slot revenue
increased in the first half of the fiscal year and decreased in the second half
due to the Company's plan, implemented in the second quarter of the fiscal year,
to offer customers a more competitive slot product. The initial impact of this
plan resulted in increased wagering not offsetting lower net winnings. Table
games revenue decreased 1.3% with a decline in wagering of 3.0% offset by
slightly higher net winnings. Other casino revenues increased 26.8%, with keno
and sports book posting 75.0% and 45.8% increases, respectively, based on higher
net winnings. The Stardust achieved an occupancy rate of 99%, up 2.1 percentage
points from the prior fiscal year. Operating income margins were 13.6% for
fiscal 1994 compared to 14.6% in fiscal 1993. The decline in operating income
margin was the result of higher marketing costs associated with the opening of
three new properties on the Las Vegas Strip in fiscal 1994.
Net revenues for the Boulder Strip Properties increased 14.8% for fiscal
1994 versus fiscal 1993 as a result of the acquisition of the Eldorado and
Jokers Wild. Sam's Town Las Vegas revenue decreased 5.6% during fiscal 1994 as a
result of construction disruption related to the expansion project which took
place at the property during fiscal 1994. The expanded Sam's Town Las Vegas
facility opened July 1, 1994. Decreases in rooms revenue, resulting from the
removal of all 200 hotel rooms as part of the expansion project, decreases in
slot revenue (5.1%), table games revenue (5.0%), and food and beverage revenue
(6.6%) all contributed to the revenue decline at Sam's Town Las Vegas. The
operating income margin at the Boulder Strip Properties was 16.5% in fiscal 1994
versus 22.7% in fiscal 1993, with Sam's Town Las Vegas operating income margin
declining to 15.6% in fiscal 1994 from 22.7%
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in the prior fiscal year. Higher operating income margins at the Eldorado and
Jokers Wild during 1994 partially offset the decline at Sam's Town Las Vegas.
The Eldorado and Jokers Wild had operating income margins of 18.3% and 23.6%,
respectively.
Net revenues at the California and the Fremont increased 6.0% for fiscal
1994 versus fiscal 1993. Slot revenues rose 6.3% during fiscal 1994 on an
increase of 4.6% in slot wagering and slightly higher net winnings. Table games
revenue also rose, increasing 3.9% in fiscal 1994 on slightly higher wagering
and net winnings. The Downtown Properties posted significant increases in rooms
revenue in fiscal 1994 (15.9%) as a result of the use of additional rooms at
Main Street Station, located across the street from the California, for the
entire year. Operating income at the Downtown Properties increased 8.1% over the
prior year as a result of the increased revenues and higher operating margins
overall. The Downtown Properties achieved an operating margin of 17.1% overall
for fiscal 1994 versus 16.8% for the prior year.
Interest income rose over the prior year primarily due to excess proceeds
from the Company's senior subordinated note offering in September 1993 and the
proceeds from the Company's initial public offering in October 1993. Interest
expense, net of amounts capitalized, increased 16.5% versus the prior fiscal
year due to increased borrowings. Interest incurred and capitalized during
fiscal 1994 that was related to construction of new properties and major
additions totaled $6.6 million.
During the prior fiscal year, the Company recorded a gain on the sale of an
investment of $1.1 million. Also during the prior fiscal year, the Company
recorded an extraordinary loss (net of tax) of $7.4 million resulting from the
redemption at 106% of the Company's $135 million 12 3/4% senior subordinated
note issue due 1996 and the write-off of certain associated expenses.
The Company adopted Statement of Financial Accounting Standard (SFAS) No.
109, Accounting for Income Taxes, effective July 1, 1993. As a result, the
Company recorded a cumulative effect of a change in an accounting principle of
$2.0 million in fiscal 1994.
As a result of these factors, net income decreased 0.4% during fiscal 1994
as compared to the prior fiscal year. Net income per common share rose to $.23
in fiscal 1994 from $.22 in fiscal 1993 as a reduction in preferred dividends
resulting from the conversion of the outstanding $100 preferred stock offset
slightly lower net income and additional shares outstanding.
LIQUIDITY AND CAPITAL RESOURCES
For the nine months ended March 31, 1996, the Company's net cash provided
by operating activities was $84.8 million compared to $58.3 million in the first
nine 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 those projects.
As of March 31, 1996, the Company had balances of cash and cash equivalents of
approximately $52.0 million and had approximately $83.0 million of credit
available under bank credit agreements. In June 1996, the Company and its
wholly-owned subsidiary, CH&C, entered into the New Bank Credit Facility, a $500
million five-year reducing revolving credit facility which replaced the
Company's and certain of its subsidiaries' Former Bank Credit Facilities.
Availability under the new facility will be reduced by $25 million at the end of
two-and-a-half years and reduced by an additional $50 million at the end of each
six-month period thereafter until maturity. Interest on the New Bank Credit
Facility is based upon the agent bank's quoted reference rate or the London
Interbank Offered Rate, at the discretion of the Company. The interest rate
under the New Bank Credit Facility at June , 1996 was %. As of the
, 1996 closing of the New Bank Credit Facility, the Company and CH&C
had approximately $270 million in unused availability. The Company intends to
use the proceeds of the Offerings to reduce outstanding indebtedness under the
New Bank Credit Facility.
The Company's principal sources of funds for the year ending June 30, 1995
consisted of cash flows from operating activities of $83.1 million and
borrowings under the Former Bank Credit Facilities. As of June 30, 1995, the
Company had $12.0 million available under the Former Bank Credit Facilities. For
the fiscal year ended June 30, 1994, the Company's principal sources of funds
consisted of proceeds from
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the issuance of long-term debt of $148.5 million, proceeds from the issuance of
Common Stock of $72.4 million and cash flows from operating activities of $75.8
million. For the fiscal year ended June 30, 1993, the Company's principal
sources of funds consisted of cash flows from operating activities of $54.4
million and proceeds from the issuance of long-term debt of $28.9 million, net
of amounts refinanced.
For the nine months ended March 31, 1996, cash used in investing activities
was $81.6 million, primarily related to the completion of Sam's Town Kansas City
(approximately $31.1 million) and the acquisition of property and equipment
($50.5 million). The Company's principal uses of funds for the three years ended
June 30, 1995 consisted of cash used in investing activities, primarily for the
acquisition of property and equipment, and cash used in financing activities,
primarily cash paid to reduce long-term debt. For the year ended June 30, 1995,
cash used in investing activities was $145.5 million, primarily related to the
completion of the Sam's Town Las Vegas expansion and the construction of Sam's
Town Kansas City. For the year ended June 30, 1994, cash used in investing
activities was $310.4 million and was primarily related to the $105 million
expansion project at Sam's Town Las Vegas and the construction of Sam's Town
Tunica. For the year ended June 30, 1993, cash used in investing activities was
$23 million, primarily for the acquisition of property and equipment.
The Company is currently involved in several projects to expand its
operations. On April 26, 1996 the Company entered into a definitive stock
purchase agreement for the Par-A-Dice Acquisition for an aggregate consideration
of approximately $175 million. Closing of the transaction is conditioned upon,
among other things, approval by the Illinois Gaming Board. The Company plans to
fund the Par-A-Dice Acquisition from borrowings under the New Bank Credit
Facility. The Company recently began construction of a $40 million expansion at
Sam's Town Tunica. This project will include a 350-room hotel tower and a
1,000-space parking garage. The Company recently began the renovation and
expansion of Main Street Station. This project, which is expected to cost
approximately $45 million, will include a redesign of the property's public
space, expanded restaurant facilities, a refurbishment of the property's 400
hotel rooms, acquisition of all new gaming equipment and increased parking. The
Company has identified a casino hotel site in Reno, Nevada and is currently in
the process of acquiring the land. Upon acquisition of the land, the Company
plans to develop Sam's Town Reno on the site at a total estimated cost of
approximately $92 million. On May 29, 1996 the Company, through a wholly-owned
subsidiary, executed a Joint Venture Agreement with Mirage for the Mirage Joint
Venture. The Mirage Joint Venture Agreement provides for $100 million in capital
contributions by the Company during the course of the construction of the
Atlantic City Project. In addition, the Company is exploring the possible
expansion of its Stardust and Sam's Town Las Vegas properties; substantial funds
would be required for any such expansion of those properties. 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 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
flow from operations, availability under bank credit agreements, new borrowings
to the extent permitted under existing debt agreements, the proceeds of the
Offerings, the issuance of additional equity and vendor and other financing.
There is no assurance that required financing strategies can be effected on
satisfactory terms.
The Company's ability to service its debt will be dependent on its future
performance, which will be affected by prevailing economic conditions and
financial, business and other factors, certain of which are beyond the Company's
control.
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BUSINESS
GENERAL
Boyd Gaming Corporation is one of the leading casino entertainment
companies in the United States. The Company is a multi-jurisdictional gaming
company which currently owns or operates ten casino entertainment facilities, is
in the process of constructing its eleventh property, acquiring its twelfth
property and acquiring land upon which it intends to construct its thirteenth
property. The Company owns and operates six facilities in three distinct markets
in Las Vegas, Nevada: the Stardust on the Las Vegas Strip; Sam's Town Las Vegas,
the Eldorado and Jokers Wild on the Boulder Strip; and the California and the
Fremont in downtown Las Vegas. The Company also owns or manages four facilities
in new gaming jurisdictions, all opened during 1994 and 1995. The Company owns
and operates Sam's Town Tunica, a dockside gaming and entertainment complex in
Tunica County, Mississippi currently undergoing a hotel and parking garage
addition and Sam's Town Kansas City, a riverboat gaming and entertainment
complex in Kansas City, Missouri. The Company manages and owns a minority
interest in the Treasure Chest, a riverboat casino in Kenner, Louisiana, and
manages for the Mississippi Band of Choctaw Indians the Silver Star, a
land-based casino in the midst of a major expansion project, located near
Philadelphia, Mississippi. The Company plans to open Main Street Station in
downtown Las Vegas and commence construction of Sam's Town Reno by the end of
calendar year 1996 following the pending acquisition of the land for the Sam's
Town Reno project. In addition, the Company recently entered into a definitive
purchase agreement to acquire the Par-A-Dice in East Peoria, Illinois and
recently announced the signing of a joint venture agreement with Mirage to
jointly develop and own a casino hotel entertainment facility in Atlantic City,
New Jersey. Assuming completion of Main Street Station, completion of the
Par-A-Dice Acquisition, development of Sam's Town Reno and completion of the
expansion projects currently underway at certain of its existing facilities, the
Company will own or operate an aggregate of approximately 618,000 square feet of
casino space containing approximately 17,850 slot machines and over 610 table
games.
The Company currently conducts substantially all of its business through
five wholly-owned subsidiaries: California Hotel and Casino ("CH&C"); Boyd
Tunica, Inc. ("Boyd Tunica"); Boyd Kenner, Inc. ("Boyd Kenner"); Boyd
Mississippi, Inc. ("Boyd Mississippi"); and Boyd Kansas City, Inc. ("Boyd Kansas
City"). CH&C directly owns and operates Sam's Town Las Vegas and the California
and owns and operates the Stardust, the Fremont and the Eldorado and Jokers
Wild, and owns and will operate Main Street Station, through wholly owned
subsidiaries. Boyd Tunica owns and operates Sam's Town Tunica; Boyd Kenner
operates the Treasure Chest and owns a 15% equity interest in the Treasure
Chest, L.L.C. ("Treasure Chest L.L.C."), the owner of the Treasure Chest; Boyd
Mississippi operates Silver Star; and Boyd Kansas City owns and operates Sam's
Town Kansas City. The Par-A-Dice will be owned and operated by Boyd Illinois, a
wholly-owned subsidiary of the Company, and Sam's Town Reno will be owned and
operated by a wholly-owned subsidiary of the Company or CH&C.
OPERATING STRATEGY
The Company believes that the following key elements have contributed to
the success of the Company in the past and are central to its future success.
High-Value Casino Entertainment Experience
The Company is committed to providing a high-quality casino entertainment
experience to its primarily middle-income customers at an attractive price in
order to develop customer loyalty. The Company delivers value to its customer
through providing high levels of service in an inviting and entertaining
environment. The Company delivers additional value to its customers through
attractively priced casino entertainment, hotel, restaurant and live
entertainment offerings and regularly reinvests in its existing facilities in an
effort to maintain the quality and competitiveness of its properties.
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Fun, Friendly, Fresh Atmosphere
Each of the Company's facilities offers fast, friendly service in an
informal, fun and fresh atmosphere. The Company believes that its innovative
employee training programs and highly accessible management inspire and motivate
its employees to provide friendly, attentive service. The Company has a strong
and responsive customer feedback system, which features guest comment cards in
its restaurants and hotel rooms, and regularly conducts other consumer research.
In addition to providing a measure of customer service, comment cards and
consumer research allow the Company to obtain valuable customer feedback and
marketing information for its database.
Emphasis on Slot Play
The Company emphasizes slot machine wagering, the most consistently
profitable segment of the casino entertainment business. Technological advances
in slot product have resulted in sophisticated interactive games which offer
customers greater variety, higher and more frequent payoffs and longer periods
of play for their casino entertainment dollar. The Company continually invests
in state-of-the-art machines, the development of proprietary slot games and
related equipment at all of its facilities in order to further enhance the slot
customer's experience.
Comprehensive Marketing and Promotion
The Company's marketing strategy focuses on promoting visitation,
identifying customers and rewarding customers based on their gaming potential to
encourage repeat visitation. The Company stimulates visitation by actively
promoting its casino entertainment offerings, its hotels, destination
restaurants and live entertainment using a variety of promotional advertising
media including outdoor advertising and print and broadcast media. The Company
develops and maintains an extensive customer database. The database is expanded
daily, adding new casino customers by obtaining their mailing addresses and
other marketing information. To encourage repeat visitation, the Company employs
a direct mail program targeting its database customers with a variety of product
offerings, including incentives to visit the Company's facilities frequently.
During fiscal 1995, the Company distributed approximately 10 million pieces of
mail to its database customers. The Company also provides complimentary rooms,
food and other services to valued customers, but maintains limits on such items
consistent with its focus on middle-income patrons.
PROPERTIES
The Company currently owns and operates six properties in Las Vegas: the
Stardust; Sam's Town Las Vegas; the Eldorado; Jokers Wild; the California; and
the Fremont. The Company also owns and/or operates four properties outside the
State of Nevada: Sam's Town Tunica, in Tunica County, Mississippi; Silver Star,
in central Mississippi; Treasure Chest in the western suburbs of New Orleans;
and Sam's Town Kansas City in Kansas City, Missouri.
The Stardust
The Stardust, situated on 52 acres of land owned and nine acres of land
leased by the Company on the Las Vegas Strip, is a casino hotel complex with
approximately 87,000 square feet of casino space, a conference center containing
approximately 35,000 square feet of meeting space and a 900-seat showroom. The
casino offers nearly 2,000 slot machines and 76 table games, including tables
featuring "21," craps, roulette, baccarat, mini-baccarat, pai gow, Caribbean
stud and poker, as well as keno. The Stardust features "Enter the Night," a
critically acclaimed production show that includes computerized lighting, lasers
and digital surround sound. The Stardust also has one of the largest and best
known race and sports books in the United States, and is the home of the
Stardust line, a racing and sports line service which is quoted throughout the
United States and abroad. The Stardust features more than 2,300 guest rooms,
1,500 in its 32-story hotel tower. Notwithstanding the increased number of rooms
available in Las Vegas, the Stardust achieved a 97% occupancy rate in fiscal
1995 and a 95% occupancy
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rate for the nine months ended March 31, 1996. The Stardust complex, which is
distinguished by dramatic award-winning building lighting, has seven
restaurants, a shopping arcade, two swimming pools and parking spaces for
approximately 2,900 cars.
The Stardust caters primarily to adult Las Vegas visitors seeking the
classic Las Vegas gaming experience. Using its extensive database, the property
promotes customer loyalty and generates repeat customer business by continually
communicating with its customers regarding special events, new product offerings
and special incentive promotions at the property. The Company uses a network of
tour operators and wholesalers to reach customers who prefer packaged trips and
print and broadcast media to attract the independent traveler. The Company
attracts proven slot and table game players through direct mail promotions for
tournaments, events and a variety of special offers. With its conference center,
the Stardust also attracts meeting and banquet business. In addition, the
Stardust draws a significant number of walk-in customers. Patrons of the
Stardust come primarily from the western United States, including Southern
California and Arizona, and the Midwest.
The Company has developed a master plan for the Stardust, calling for,
among other things, as many as two additional hotel towers, and previously took
steps for a future expansion, including incorporating footings for one of the
two proposed additional towers in the existing facility. In addition, the
Company has determined that the 61-acre Stardust site is capable of
accommodating the development of an entirely new casino entertainment facility
adjacent to the existing Stardust and is exploring the feasibility of such a
project.
Boulder Strip Properties
Sam's Town Las Vegas is situated on 56 acres of land owned and seven acres
of land leased by the Company on the Boulder Strip, approximately six miles east
of the Las Vegas Strip. Following a $105 million expansion completed in July
1994, Sam's Town features an approximately 118,000 square foot casino, a 56-lane
state-of-the-art bowling center and the 25,000 square foot Western Emporium
retail store. The gaming facilities now include nearly 2,800 slot machines and
55 table games, including tables featuring "21," craps, roulette, pai gow, poker
and Caribbean stud, as well as keno, an expanded race and sports book and a
large bingo parlor. The expanded property has 650 guest rooms, 12 restaurants,
approximately 3,200 parking spaces, including two parking garages which together
can accommodate up to 2,000 cars and approximately 500 recreational vehicles.
The expanded Sam's Town facility features a 25,000 square foot atrium enclosing
a Sierra Nevada-style park with extensive foliage and trees, streams, bridges
and water features. Fronting the park are an Italian restaurant, a western
steakhouse and a food court, as well as new retail outlets. Also available at
the property is a 5,400 square foot sports bar featuring interactive activities,
an outdoor recreation complex with a swimming pool and volleyball court and a
conference facility.
Sam's Town Las Vegas has a western theme and features an informal, friendly
atmosphere that appeals to both local residents and visitors. Gaming and bowling
tournaments, paycheck sweepstakes, costume contests, and holiday parties,
together with motivated and well-trained employees, many of whom are familiar to
regular visitors, create a social center that attracts many Las Vegas residents.
The property hosts two of the largest events on the Ladies Professional Bowling
Tour, including the Sam's Town Ladies Professional Bowling Tournament, which
events are televised on ESPN, and a premier amateur bowling tournament which
attracts participants from throughout the world. Additionally, the Company
attracts local market patrons, many of whom are repeat customers, by offering
excellent price/value relationships in its food and beverage operations, and by
aggressive slot marketing programs which include more generous slot payouts. The
popularity of Sam's Town Las Vegas among local residents allows it to benefit
from the rapid development of the Las Vegas community, which has been one of the
fastest growing communities in the United States over the last decade. The
addition of 650 new guest rooms, as well as destination restaurants and other
amenities, as part of the expansion has increased the appeal of Sam's Town Las
Vegas to Las Vegas visitors. Since completion of the expansion, overnight
visitation to the property has substantially increased. The Company has
developed a master plan for Sam's Town Las Vegas calling for, among other
things, a second hotel tower. Although
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the Company has not yet made any decision regarding a future Sam's Town Las
Vegas expansion, it is currently exploring the feasibility of such a project.
The Eldorado is situated on four acres of land owned by the Company in
downtown Henderson, which is southeast of Las Vegas. The casino has over 16,000
square feet of gaming space featuring approximately 560 slot machines and 11
table games, including tables featuring "21," craps, roulette and pai gow, as
well as keno, bingo and a sports book. The facility also offers three
restaurants, a live entertainment lounge and a parking garage for up to 500
cars. The principal customers at the Eldorado are Henderson residents.
Jokers Wild is situated on 13 acres of land owned by the Company on the
Boulder Strip. Following a $5.6 million expansion completed in April 1994, the
property offers over 22,500 square feet of casino space with approximately 650
slot machines and 13 table games, including tables featuring "21," craps,
roulette, pai gow, Caribbean stud and poker, as well as keno and a sports book.
The facility also offers a buffet restaurant, a coffee shop, an entertainment
lounge, a video arcade and approximately 800 parking spaces. Jokers Wild serves
both local residents and visitors to the Las Vegas area traveling on the Boulder
Highway.
Downtown Properties
The California is situated on 13.9 acres of land owned and 1.6 acres of
land leased by the Company in downtown Las Vegas. The California was the
Company's first property and has over 36,000 square feet of gaming space, 781
guest rooms, five restaurants, approximately 5,000 square feet of meeting space,
more than 800 parking spaces, including a parking garage for up to 425 cars, and
an approximately 220-space recreational vehicle park, the only such facility in
the downtown area. The casino offers over 1,100 slot machines and 38 table
games, including tables featuring "21," craps, roulette, mini-baccarat, pai gow
and Caribbean stud, as well as keno and a sports book. In December 1994, the
Company completed a $15 million expansion of the California that added 140 new
guest rooms and six suites, as well as other amenities.
The Fremont is situated on 1.4 acres of land owned and 0.9 acres of land
leased by the Company on the principal thoroughfare in downtown Las Vegas. The
property offers nearly 32,000 square feet of casino space including
approximately 1,100 slot machines, and 31 table games, including tables
featuring "21," craps, roulette, pai gow, poker and Caribbean stud, as well as
keno and a race and sports book. The hotel has 452 guest rooms and five
restaurants including the Second Street Grill, an upscale contemporary
restaurant, and the Paradise Buffet, which features tropical themed
surroundings. The property also has approximately 8,200 square feet of meeting
space and a parking garage for up to 350 cars.
While many casinos in downtown Las Vegas compete with other downtown
properties and properties on the Las Vegas Strip for the same customers, the
Company has developed a distinctive niche for its Downtown Properties focusing
primarily on customers from Hawaii. The Company's marketing strategy for the
Downtown Properties focuses on gaming enthusiasts from Hawaii and tour and
travel agents from Hawaii with whom the Company has cultivated relationships
since it opened the California in 1975. Through the Company's recently acquired
Hawaiian travel agency, the Company operates two DC-10 charter flights from
Honolulu to Las Vegas each week, helping to ensure stable, reasonably priced air
seats. This, as well as the Company's strong, informal relationships with other
Hawaiian travel agencies, its moderately priced, all-inclusive packages and its
Hawaiian promotions have allowed the California and the Fremont to capture a
significant share of the Hawaiian tourist trade in Las Vegas. For more than a
decade the Downtown Properties have been the leading Las Vegas destination for
visitors from Hawaii. The Company attributes this success to the amenities and
atmosphere at the Downtown Properties, which are designed to appeal specifically
to visitors from Hawaii, and to its marketing strategy featuring significant
promotions in Hawaii and a monthly newsletter circulated to over 68,000
households, primarily in Hawaii. In fiscal 1995, patrons from Hawaii comprised
over 90% of the room nights at the California and over 60% of the room nights at
the Fremont.
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<PAGE> 38
In December 1993, the Company acquired for $16.5 million Main Street
Station, a casino/hotel which is not currently in operation located across the
street from the California. The Company has used the facility, where it
previously leased rooms, to provide lodging for additional customers at the
Downtown Properties. The renovation and expansion of Main Street Station is
currently underway, and the Company expects to open the facility as a full
service casino hotel by the end of calendar 1996. The project includes a 28,500
square foot, newly-equipped casino with 25 table games and over 900 slot
machines. The project also includes a complete renovation of the property's
hotel rooms and an expansion and renovation of the property's food facilities to
include a 500-seat buffet, a 130-seat specialty restaurant, a 100-seat cafe, a
200-seat brew pub and oyster bar and expanded parking to include 2,000 spaces.
With the opening of Main Street Station, the Company's third property in
downtown Las Vegas, the Company has begun coordinating marketing efforts,
consolidating support functions and standardizing operating procedures and
systems with the goal of enhancing revenues and reducing expenses. This effort
will include a consolidated database and marketing program for all Downtown
Properties. The Company believes these efforts will provide it with a
competitive advantage.
The Company, together with other downtown casino operators and the City of
Las Vegas, retained a well-known urban design firm to develop a major new
attraction known as the Fremont Street Experience. The attraction was designed
to capitalize on Fremont Street's famous lights and features a semi-circular
space frame nine stories above the street, stretching along four city blocks
against which a sound and light spectacle is displayed. As part of the project,
vehicular traffic on portions of Fremont Street has been eliminated, asphalt
replaced by a patterned streetscape and special events have been brought to the
downtown area to entertain visitors. The Fremont Street Experience cost
approximately $70 million. Of this amount, $22 million was provided by eight
downtown casino operators (including the Company), and the remainder was
provided by local bond issuances. The Company invested approximately $5 million
in the project. The Company believes that, since its opening in December 1995,
the Fremont Street Experience has significantly enhanced the experience of
visiting downtown Las Vegas and has attracted additional customers to the
downtown area. However, no assurance can be given that the Fremont Street
Experience will materially benefit the operating results of the Company's
Downtown Properties.
Central Region Properties
The Company has exported its popular Sam's Town western theme and
atmosphere to the growing Mississippi dockside gaming market by developing Sam's
Town Tunica, which opened on May 25, 1994. Sam's Town Tunica is located in
Tunica County near State Highway 61 approximately 25 miles south of Memphis,
Tennessee. The adult population within a 200-mile radius is over 3 million and
includes the cities of Nashville, Tennessee; Jackson, Mississippi; and Little
Rock, Arkansas. The Company has distinguished itself from other operators in the
area by developing a major casino entertainment complex with extensive amenities
including a 508-room hotel, an entertainment lounge featuring country-western
music, five destination restaurants including Corky's B-B-Q, featuring the food
of that popular Memphis eatery, bars, specialty shops and River Palace Arena, a
1,650 seat entertainment facility featuring country-western entertainers. In
December 1994, an $18 million expansion was completed which included the
addition of 308 guest rooms surrounded by a swimming pool and recreational area.
The complex offers a two-story casino of approximately 75,000 square feet
featuring over 1,800 slot machines and 78 table games, including tables
featuring "21," craps, roulette, poker, Caribbean stud and pai gow, as well as
keno. The design of the facility integrates the water-based and land-based
components of the facility. The Company, seeking to further its strong position
in both the overnight and drive-in markets in Tunica, is currently expanding
Sam's Town Tunica. The $40 million expansion project, which is currently under
construction and expected to be completed by the end of calendar year 1996,
includes a 350-room hotel tower and a 1,000 car parking garage. The new hotel
tower will bring the total room count to 858, and the garage will be the first
enclosed parking structure at a Tunica County casino.
The Company has extended its popular Sam's Town theme to the Kansas City
market with the opening of Sam's Town Kansas City on September 13, 1995. Sam's
Town Kansas City was completed at
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<PAGE> 39
a cost of approximately $145 million, including land, capitalized interest and
pre-opening costs. The facility, which is situated on 34 acres located on the
Missouri River and Interstate 435, features a continuously docked riverboat
housing a 28,000 square foot casino on three decks with over 1,000 slot machines
and 65 table games. The 80,000 square foot land-based facility contains five
food facilities, including a 7,000 square foot sports bar, and ticketing
services, all surrounding a turn-of-the-century Kansas City streetscape. The
facility also features a 1,350-space garage, connected to the main facilities by
an enclosed moving walkway. Including surface parking, the property offers a
total of 2,000 parking spaces. The Kansas City metropolitan area has an adult
population of over one million. The Company's facility is located near the
Interstate 435 entertainment corridor in Kansas City which provides access to
the Worlds of Fun and Oceans of Fun theme parks, the Kansas City Zoo, and the
Kansas City Chiefs' and Kansas City Royals' Stadiums. In connection with the
operation of Sam's Town Kansas City, the Company has entered into an agreement
to pay the City of Kansas City approximately $250,000 per year for a period of
ten years beginning in September 1995. The Company intends to offer 10% of the
capital stock of Boyd Kansas City, the entity that owns and operates Sam's Town
Kansas City, to certain persons or entities located in the Kansas City area. The
price to be paid by such persons or entities will be based on the total cost of
the project.
The Company manages and partly owns the Treasure Chest, a riverboat casino
operation located on Lake Pontchartrain in Kenner, Louisiana, which opened in
September 1994. Located near the New Orleans International Airport, the Treasure
Chest primarily serves patrons from Jefferson Parish, including suburbs on the
west side of New Orleans. The gaming operation features a classic paddle-wheel
riverboat with a total capacity of 2,000 persons, approximately 24,000 square
feet of casino space, over 850 slot machines and 54 table games, including
tables for "21," craps, roulette and poker. Each of the riverboat's three decks
has a different theme, with one featuring a contemporary Las Vegas-style decor,
one offering a nautical environment and one providing a festive Mardi Gras
setting.
The management agreement between the Company and Treasure Chest L.L.C.
provides for an initial five-year term expiring June 1999, extendible at the
Company's option for three additional five-year periods if certain operating
results are achieved. The agreement also provides for a management fee of 10% of
the enterprise's net operating profit before interest, depreciation, income
taxes, amortization, extraordinary items and the management fee. The Company
owns a 15% equity interest in Treasure Chest L.L.C.
Pursuant to an agreement with the Mississippi Band of Choctaw Indians, the
Company operates the Silver Star, the only land-based casino in the State of
Mississippi. The facility, which opened in July 1994, is located on tribal lands
in central Mississippi. The principal markets served by the facility are central
Mississippi and Alabama, with the Birmingham, Montgomery and Tuscaloosa
metropolitan areas located within approximately 200 miles of the site. The
property, a contemporary Las Vegas-style facility emphasizing light, color and
geometric design, includes a 100-room hotel and a casino with approximately
66,000 square feet of gaming space with over 1,880 slot machines and 81 table
games, including tables for "21," craps, roulette, mini baccarat and Caribbean
stud, as well as a lounge suitable for entertainment and dancing, a swimming
pool, four restaurants and more than 1,300 parking spaces. A $10 million casino
expansion project was completed in December 1994, and a 55,000 square foot
conference center was completed in June 1995. In addition, an expansion project,
including 400 additional rooms and suites, a casino expansion, a new restaurant,
an 18-hole golf course and a full-service spa, is currently under construction.
The management agreement for Silver Star provides for a seven-year term
expiring in July 2001 and a management fee of 30% of the enterprise's operating
income before debt service for the first five years and 40% of its operating
income before debt service for the final two years. Under the agreement, the
Company provided $30.5 million in debt financing for the construction and
start-up of the facility, which amount was repaid during fiscal 1995 from the
enterprise's cash flow. The Company has loaned to the tribe an additional $10
million for a casino expansion project which was completed in December 1994.
This loan is being repaid over five years.
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<PAGE> 40
NEW DEVELOPMENTS
Par-A-Dice Acquisition
On April 26, 1996, the Company entered into a definitive purchase agreement
for the Par-A-Dice Acquisition. The Par-A-Dice is a riverboat facility located
along the Illinois River in East Peoria, Illinois, approximately 170 miles from
Chicago. The Par-A-Dice initially commenced operations in November 1991,
operating from a temporary facility in downtown Peoria. In May 1993, the
facility was relocated across the Illinois River to a newly constructed
land-based pavilion, containing two restaurants, a bar, gift shop, ticketing
area and surface parking for 750 cars, located on 19 acres in East Peoria. In
May 1994, the original Par-A-Dice Casino replica paddle-wheel riverboat was
replaced with a new, state-of-the-art, twin hull cruise ship. The new boat
measures 238 feet long and 66 feet wide and since the recent completion of an
expansion in March 1996, features 33,000 square feet of gaming space on four
levels with approximately 1,000 slot machines and 42 table games, as well as
limited food and beverage services. The Par-A-Dice Hotel, which is currently
under construction and scheduled to be completed in the fall of 1996, is a
204-room full-service hotel with extensive food and beverage and banquet and
meeting facilities. The Company believes the hotel will enable the Par-A-Dice to
further develop an overnight customer base for the facility and provides much
needed banquet and meeting capabilities.
The Par-A-Dice is the primary casino entertainment facility serving central
Illinois, and is strategically located within 1/8 of a mile from an exit off of
Interstate 74, a major regional east-west interstate highway. The Par-A-Dice is
the only casino entertainment facility within approximately 100 miles of Peoria.
There are more than 350,000 people living within the Peoria metropolitan area
and over 1.7 million people over the age of 21 within 100 miles of Peoria. The
Par-A-Dice Acquisition is subject to certain closing conditions including the
obtaining of regulatory approvals from the Mississippi Gaming Commission and the
Illinois Gaming Board. See "Risk Factors -- Uncertainties of Consummation of the
Par-A-Dice Acquisition and Development of Sam's Town Reno and the Mirage Joint
Venture Project."
Sam's Town Reno
The Company recently announced its plans for a $92 million casino hotel and
entertainment complex in Reno, Nevada. The Company is in the process of
acquiring by the end of July a 100-acre parcel of land south of Reno and
adjacent to a newly opened freeway interchange. Plans for the Sam's Town Reno
project include a 33,000 square foot casino, featuring over 1,200 slot machines
and 36 table games and a hotel with 211 guest rooms and suites. The project is
also planned to include five destination restaurants, two entertainment lounges,
a 5,000-seat outdoor arena, an approximately 15,000 square foot events arena,
retail shops and two old time movie theaters. The Company has reached
preliminary agreement with the owner of the property to acquire the land and is
in the process of completing that acquisition. Following the land acquisition,
the Company expects to commence construction of Sam's Town Reno by the end of
this calendar year, with the opening occurring as early as spring 1998.
William S. Boyd, Chairman and Chief Executive Officer of the Company, and
Warren L. Nelson, a Director of the Company, each owns a 17.5% partnership
interest in the partnership which owns the land to be acquired. The $6 million
purchase price for the land is based upon an independent third-party appraisal
and the purchase of the land from the partnership has been approved by an
independent committee of the Company's Board of Directors. See "Risk
Factors -- Uncertainties of Consummation of the Par-A-Dice Acquisition and
Development of Sam's Town Reno and the Mirage Joint Venture Project."
Mirage Joint Venture
On May 29, 1996, the Company, through a wholly-owned subsidiary, entered
into a joint venture agreement with a subsidiary of Mirage to jointly develop
and own a casino hotel entertainment facility in Atlantic City, New Jersey. The
Atlantic City Project is planned to be one component of a multi-facility casino
entertainment development, master-planned by Mirage for the Marina district of
Atlantic City. The Atlantic City Project is expected to cost approximately $500
million. The agreement contemplates that the joint venture would fund $300
million of the project cost with non-recourse third-party financing. The
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<PAGE> 41
remaining $200 million is expected to be funded equally by capital contributions
from the partners, including, in the case of Mirage, contribution of the land.
Pursuant to the joint venture agreement, the Company will control the
development and operation of the Atlantic City Project. The Atlantic City
Project will include a hotel of at least 1,000 rooms and will be adjacent and
connected to Mirage's planned wholly-owned resort. Construction is anticipated
to begin after completion of the remediation of the property and to take
approximately 24 months to complete. The Mirage Joint Venture will give the
Company a presence in Atlantic City, the primary casino gaming market serving
the eastern United States. See "Risk Factors -- Uncertainties of Consummation of
the Par-A-Dice Acquisition and Development of Sam's Town Reno and the Mirage
Joint Venture Project."
37
<PAGE> 42
MANAGEMENT
DIRECTORS AND EXECUTIVE OFFICERS
The following table sets forth the current directors and executive officers
of Boyd Gaming Corporation:
<TABLE>
<CAPTION>
NAME AGE POSITION
- --------------------------- --- ----------------------------------------------------------
<S> <C> <C>
William S. Boyd............ 64 Chairman of the Board of Directors and Chief Executive
Charles L. Ruthe........... 62 President and Director
Robert L. Boughner......... 43 Executive Vice President, Chief Operating Officer and
Director
Ellis Landau............... 52 Senior Vice President, Chief Financial Officer and
Treasurer
Ralph Purnell.............. 61 Senior Vice President-Director of Operations, Nevada
Region
Maunty C. Collins.......... 53 Senior Vice President-Director of Operations, Central
Region
James Hippler.............. 49 Senior Vice President-Administration
Charles E. Huff............ 51 Vice President, Secretary and General Counsel
Keith E. Smith............. 35 Vice President and Controller
Brian Larson............... 39 Vice President-Development and Assistant Secretary
William R. Boyd............ 36 Vice President and Director
Marianne Boyd Johnson...... 37 Assistant Secretary and Director
Perry B. Whitt............. 73 Vice Chairman of the Board of Directors and Director
Kenny C. Guinn............. 59 Director
Warren L. Nelson........... 82 Director
Donald Snyder.............. 48 Director
</TABLE>
William S. Boyd is the father of William R. Boyd and Marianne Boyd Johnson.
William S. Boyd has served as a director of the Company since its inception
in June 1988 and as Chairman of the Board of Directors and Chief Executive
Officer since August 1988. A co-founder of CH&C, he has served as a director and
President of CH&C since its inception in 1973, and has also held several other
offices with CH&C. Mr. Boyd has also served as President and a Director of
Eldorado, Inc., which operates the Eldorado Properties. Prior to joining the
Company, Mr. Boyd practiced law in Las Vegas for 15 years. Between 1970 and 1974
he also was Secretary and Treasurer and a member of the Board of Directors of
the Union Plaza Hotel and Casino. Mr. Boyd has been active in numerous business
and civic organizations in Las Vegas.
Charles L. Ruthe has served as a director of the Company since its
inception, President since August 1988 and Chief Operating Officer from August
1988 to April 1990. Mr. Ruthe is currently on a leave of absence from his
positions as President of the Company and as a director pending approval by the
Missouri Gaming Commission of Mr. Ruthe's gaming license application. He has
served as a director of CH&C since its inception and has also held several
offices with CH&C. Mr. Ruthe is active in many Las Vegas business and civic
organizations. Mr. Ruthe is a director of Sierra Health Services, Inc., a
healthcare company. In 1995, Mr. Ruthe was appointed President of Boyd
Development Corporation, a wholly-owned subsidiary of the Company.
Robert L. Boughner has been Executive Vice President and Chief Operating
Officer of the Company since April 1990 and has served as a director since April
1996. From 1985 until April 1990, he served as Senior Vice President of
Administration of CH&C and prior to that time he held various management
positions in the Company. Mr. Boughner is active in civic and industry affairs,
and serves on the Board of Directors of the Las Vegas Convention and Visitors
Authority, the Nevada Hotel and Motel Association and the Nevada Restaurant
Association.
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<PAGE> 43
Ellis Landau has been Senior Vice President, Chief Financial Officer and
Treasurer of the Company since August 1990. From April 1990 through July 1990,
he served as a consultant to the Company. Prior to joining the Company, Mr.
Landau held various management positions with Ramada, Inc., a gaming and
hospitality company whose gaming operations were transferred to Aztar
Corporation, including Vice President and Treasurer of that company from 1978 to
February 1990.
Ralph Purnell has been Senior Vice President-Director of Operations, Nevada
Region of the Company since its inception. From the inception of the Company
until April 1994, Mr. Purnell served as Senior Vice President-Gaming of the
Company. From 1975 to 1988, Mr. Purnell held various positions with CH&C,
including General Manager of the Stardust and the California. Mr. Purnell serves
on the Board of Directors of the Nevada Resort Association.
Maunty C. Collins has been Senior Vice President-Director of Operations,
Central Region of the Company since June 1993. From December 1991 through June
1993, he served as Assistant General Manager at the Stardust. From 1985 until
December 1991, he was General Manager at Sam's Town Gold River in Laughlin,
Nevada. From 1978 to 1985, Mr. Collins held various positions at properties
owned by the Company.
James W. Hippler has been Senior Vice President-Administration of the
Company since April 1990. From 1980 to 1990, Mr. Hippler held various positions
with CH&C, including Director of Risk Management, Director of Internal Audit and
Director of Human Resources.
Charles E. Huff has been Vice President, Secretary and General Counsel of
the Company since its inception. He has served as Vice President and General
Counsel of CH&C since July 1986 and Secretary since January 1988. Prior to
joining CH&C, Mr. Huff practiced law in Las Vegas for 13 years.
Keith E. Smith became Vice President and Controller of the Company in June
1993. From September 1990 to June 1993 he served as Corporate Controller of the
Company. From May 1989 to September 1990, Mr. Smith was Vice President-Finance
of the Dunes Hotel, Casino and Country Club in Las Vegas. From 1982 to May 1989,
he was employed by Ramada, Inc. in a variety of positions, including Controller
of the Tropicana Resort and Casino in Las Vegas.
Brian A. Larson became Vice President-Development of the Company in June
1993 and Assistant Secretary in August 1993. He has also served as Associate
General Counsel of the Company since March 1993. From 1987 through February
1993, Mr. Larson was associated with the law firm of Snell & Wilmer in Phoenix,
Arizona, in which he became a partner on January 1, 1992.
William R. Boyd has been a Vice President of the Company since December
1990 and a director since September 1992. From June 1987 until December 1990, he
was director of operations at the Fremont. From 1978 until 1987, he held various
positions at the California and at Sam's Town Las Vegas.
Marianne Boyd Johnson has been Assistant Secretary of the Company since
September 1989 and a director since September 1990. From 1976 until September
1990, she held a variety of full and part-time sales and marketing positions
with the Company and CH&C.
Perry B. Whitt has served as a director of the Company since its inception
and Vice Chairman of the Board of Directors since August 1988. He has served as
a director of CH&C since its inception, and has also held several offices with
CH&C. Mr. Whitt has over 40 years experience in the gaming industry, much of it
with the Boyd family. He is also President of Utility Shareholders Association
of Nevada and serves on the Board of Directors of BankWest of Nevada.
Kenny C. Guinn has served as a director of the Company since January 1994.
He has served as Chairman of the Board of Southwest Gas Corporation
("Southwest") since May 1993 and Chairman of the Board of PriMerit Bank, a
subsidiary of Southwest ("PriMerit"), since 1987. From 1978 to May 1993, Mr.
Guinn served in various other executive positions for Southwest and PriMerit,
including Chief Executive Officer of Southwest from 1988 to 1993 and Chief
Executive Officer of PriMerit until 1992. He served as Interim President of the
University of Nevada, Las Vegas from May 1994 until May 1995. Mr. Guinn is also
a director of Oasis Residential, Inc. and Del Webb, Inc.
Warren L. Nelson has served as a director of the Company since its
inception and as a director of CH&C since its inception. For the last 28 years,
he has been a co-owner and director of the Club Cal
39
<PAGE> 44
Neva, a gaming facility in Reno, Nevada. Mr. Nelson has over 55 years experience
in the gaming industry. He is a Director of International Game Technology, a
slot machine manufacturer.
Donald Snyder has served as a director of the Company since April 1996.
From 1993 to the present, Mr. Snyder has served as Chairman, President and Chief
Executive Officer of the Fremont Street Experience Limited Liability Company,
the developer and operator of the Fremont Street Experience in Downtown Las
Vegas. From 1992 to 1993, he was President of Strategic Associates, Inc., a
consulting firm. From 1987 through 1991, he served as Chairman of the Board and
Chief Executive Officer of First Interstate Bank of Nevada.
40
<PAGE> 45
PRINCIPAL AND SELLING STOCKHOLDERS
The following table sets forth certain information regarding the beneficial
ownership of the Common Stock as of May 15, 1996 and as adjusted to reflect the
Offering (i) by each person who is known by the Company to own more than 5% of
the Common Stock, (ii) by each director and named executive officer of the
Company (iii) the other Selling Stockholders and (iv) by all officers and
directors of the Company as a group. Except as indicated, each person listed
below has sole voting and investment power with respect to the shares set forth
opposite such person's name.
<TABLE>
<CAPTION>
SHARES BENEFICIALLY OWNED SHARES BENEFICIALLY OWNED
PRIOR TO THE OFFERING SHARES TO BE AFTER THE OFFERING
-------------------------- SOLD IN THE --------------------------
NAME(A) NUMBER PERCENTAGE(B) OFFERING NUMBER PERCENTAGE(C)
- --------------------------------------- ---------- ------------- ------------ ---------- -------------
<S> <C> <C> <C> <C> <C>
William S. Boyd(d)..................... 26,166,348 45.5% 136,201 26,030,147 42.3%
Jimma L. Beam(e)....................... 3,610,829 6.3 -- 3,610,829 5.9
Marianne Boyd Johnson(f)............... 2,050,757 3.6 180,000 1,870,757 3.1
William R. Boyd(g)..................... 2,041,239 3.6 180,000 1,861,239 3.1
Perry B. Whitt(h)...................... 1,704,808 3.0 100,000 1,604,808 2.6
Robert Boughner(i)..................... 522,203 * 100,000 422,203 *
Charles L. Ruthe(j).................... 432,121 * 200,000 232,121 *
Ellis Landau(k)........................ 395,000 * 125,000 270,000 *
Ralph Purnell(l)....................... 254,332 * -- 254,332 *
Maunty C. Collins(m)................... 212,356 * -- 212,356 *
Charles E. Huff(n)..................... 73,783 * -- 73,783 *
Warren L. Nelson(o).................... 57,750 * -- 57,750 *
James Hippler(p)....................... 30,829 * -- 30,829 *
Keith E. Smith(q)...................... 19,280 * -- 19,280 *
Brian Larson(r)........................ 18,767 * -- 18,767 *
Kenny C. Guinn(s)...................... 7,750 * -- 7,750 *
Donald Snyder.......................... -- * -- -- *
Samuel J. Boyd......................... 1,652,000 80,000 1,572,000
Gregory W. Nelson...................... 516,611 * 50,000 466,611 *
Milton D. Reade........................ 423,279 * 1,000 422,279 *
Ingeburg C. Boyd....................... 385,941 * 1,000 384,941 *
Al Garbian............................. 380,000 * 40,000 340,000 *
George R. Neuman....................... 300,634 * 35,000 265,634 *
John F. Merrill........................ 107,679 * 40,000 67,679 *
Kenneth G. Mapel....................... 1,000
Dale K. Mapel.......................... 1,000
Sharon A. Mapel........................ 1,000
Daniel D. Reade........................ 1,000
Guy K. Kirtley......................... 25,000
All officers and directors as a group
(16 persons)(t)...................... 33,987,323 59.5 1,021,201 32,966,122 53.1
</TABLE>
- ---------------
* Represents less than one percent.
(a) The mailing address of all persons in the list set forth above is: 2950
South Industrial Road, Las Vegas, Nevada 89109.
(b) Percentage beneficially owned is based on 57,115,365 total shares of Common
Stock outstanding.
(c) Percentage beneficially owned is based on 61,115,365 total shares of Common
Stock outstanding (including 4,000,000 shares issued and sold in the
Offering) and assumes no exercise of the Underwriters' over-allotment
option.
(d) Includes 22,969,681 shares of Common Stock held by The William S. Boyd
Gaming Properties Trust, of which Mr. Boyd is trustee, and 2,800,000 shares
held by the William S. Boyd Family Limited Partnership, of which a
corporation owned by Mr. Boyd is the sole general partner. Also includes
396,667 shares issuable pursuant to options exercisable within 60 days of
the date of the Offering.
(e) Includes 1,000 shares of Common Stock held by the Jimma L. Beam Revocable
Trust, of which Ms. Beam is trustee.
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<PAGE> 46
(f) Includes 2,012,906 shares of Common Stock held by The Marianne E. Boyd
Gaming Properties Trust, of which Ms. Johnson is trustee, 1,000 shares held
by the Marianne E. Boyd Trust, of which Ms. Johnson is trustee, and 19,488
shares held by educational trusts for Ms. Johnson's nieces and nephews, of
which Ms. Johnson is trustee. Ms. Johnson disclaims beneficial ownership of
the shares held by such educational trusts. Also includes 16,000 shares
issuable pursuant to options exercisable within 60 days of the date of the
Offering.
(g) Includes 1,967,266 shares of Common Stock held by The William R. Boyd Gaming
Properties Trust, of which Mr. Boyd is trustee, 48,403 shares held in trust
for the benefit of Mr. Boyd's children, and 4,837 shares held in an
educational trust for Mr. Boyd's nephew, of which Mr. Boyd is trustee. Mr.
Boyd disclaims beneficial ownership of the shares held by such children's
and educational trusts. Also includes 18,167 shares issuable pursuant to
options exercisable within 60 days of the date of the Offering.
(h) Includes 1,702,058 shares of Common Stock held by the Whitt Family Trust, of
which Mr. Whitt and his wife are trustees. Also includes 2,750 shares
issuable pursuant to options exercisable within 60 days of the date of the
Offering.
(i) Includes 408,870 shares of Common Stock held by the Robert L. Boughner
Investment Trust, of which Mr. Boughner is trustee. Also includes 113,333
shares issuable pursuant to options exercisable within 60 days of the date
of the Offering.
(j) Includes 1,000 shares of Common Stock owned by the Donna A. Ruthe Revocable
Living Trust, of which Mr. Ruthe's wife is trustee. Also includes 113,333
shares of Common Stock which Mr. Ruthe has the right to acquire through the
exercise of options exercisable within 60 days of the date of the Offering.
(k) Includes 90,000 shares of Common Stock issuable pursuant to options
exercisable within 60 days of the date of the Offering.
(l) Includes 9,000 shares of Common Stock owned by the Ralph W. Purnell
Irrevocable Trust. Also includes 80,000 shares issuable pursuant to options
exercisable within 60 days of the date of the Offering.
(m) Includes 97,550 shares of Common Stock held by the Maunty C. Collins Trust,
of which Mr. Collins is trustee, and 1,708 shares owned by Mr. Collin's
wife. Also includes 70,000 shares issuable pursuant to options exercisable
within 60 days of the date of the Offering.
(n) Includes 3,400 shares of Common Stock issuable pursuant to options
exercisable within 60 days of the date of the Offering.
(o) Includes 2,750 shares of Common Stock issuable pursuant to options
exercisable within 60 days of the date of the Offering.
(p) Includes 18,167 shares of Common Stock issuable pursuant to options
exercisable within 60 days of the date of the Offering.
(q) Includes 325 shares of Common Stock owned by Mr. Smith's wife. Also includes
18,167 shares issuable pursuant to options exercisable within 60 days of the
date of the Offering.
(r) Includes 18,167 shares of Common Stock issuable pursuant to options
exercisable within 60 days of the date of the Offering.
(s) Includes 2,750 shares of Common Stock issuable pursuant to options
exercisable within 60 days of the date of the Offering.
(t) Includes 963,651 shares of Common Stock issuable pursuant to options
exercisable within 60 days of the date of the Offering.
42
<PAGE> 47
DESCRIPTION OF CAPITAL STOCK
The Company is authorized to issue up to 200,000,000 shares of Common
Stock, $.01 par value, and 5,000,000 shares of Preferred Stock, $.01 par value
(the "Preferred Stock"). Upon the closing of the Offering, there will be
61,115,365 shares of Common Stock issued and outstanding (61,715,365 if the
Underwriters' over-allotment options are exercised in full) and no shares of
Preferred Stock outstanding.
COMMON STOCK
Each holder of Common Stock is entitled to one vote for each share held of
record on each matter submitted to a vote of stockholders. Holders of Common
Stock do not have the right of cumulative voting for the election of directors.
Subject to any preferences which may be granted to the holders of Preferred
Stock, each holder of Common Stock is entitled to receive ratably such dividends
as may be declared by the Board of Directors out of funds legally available
therefor, as well as any distributions to the stockholders and, in the event of
a liquidation, dissolution or winding up of the Company, is entitled to share
ratably in all assets of the Company remaining after payment of liabilities.
Holders of Common Stock have no conversion, redemption or preemptive rights or
other rights to subscribe for additional shares. Shares of Common Stock will not
be subject to redemption except as required to comply with any laws, rules or
regulations governing the conduct of the gaming business. The outstanding shares
of Common Stock are, and the shares to be sold by the Company in this Offering
will be, when issued and delivered, validly issued, fully paid and
nonassessable. Certificates for shares of Common Stock may bear legends required
by the gaming authorities of the various states in which the Company operates.
The Board may issue shares of Preferred Stock in one of more series and
determine the designation and fix the number of shares of each series without
further action by the holders of Common Stock. The Board is further authorized
to fix and determine the dividend rate, premium or redemption rate, conversion
rights, voting rights, preferences, privileges, restrictions and other
variations granted to and imposed on any unissued series of Preferred Stock. No
shares of Preferred Stock will be outstanding immediately after the Offering,
and the Company currently has no plans to issue any such shares. The issuance of
shares of Preferred Stock under certain circumstances could have the effect of
delaying or preventing a change of control of the Company or other corporate
action.
CERTAIN ANTI-TAKEOVER EFFECTS
The Company's Restated Articles of Incorporation and Restated Bylaws
contain certain provisions that are intended to enhance the likelihood of
continuity and stability in the composition of the Company's Board of Directors
and in the policies formulated by the Board of Directors and to discourage an
unsolicited takeover of the Company if the Board of Directors determines that
such a takeover is not in the best interests of the Company and its
stockholders. However, these provisions could have the effect of discouraging
certain attempts to acquire the Company or remove incumbent management even if
some or a majority of the Company's stockholders deemed such an attempt to be in
their best interests, including those attempts that might result in a premium
over the market price for the shares of Common Stock held by stockholders.
Advance Notice Requirements for Stockholder Proposals and Director
Nominations. The Bylaws establish advance notice procedures with regard to
stockholder proposals and the nomination, other than by or at the direction of
the Board or a committee thereof, of candidates for election as directors. The
Company may reject a stockholder proposal or nomination that is not made in
accordance with such procedures.
Classified Board of Directors. The Restated Articles of Incorporation
provide for the board to be divided into three classes, as nearly equal in
numbers as the then number of Board members permit with the term of office of
one class expiring each year. As a result, approximately one-third of the Board
will be elected each year. Currently, the size of the Board is fixed at six
members. The classified Board provision could have the effect of discouraging a
third party from making a tender offer or otherwise attempting to
43
<PAGE> 48
obtain control of the Company, even though such an attempt might be beneficial
to the company and its stockholders. The Restated Articles of Incorporation also
provide that a director may not be removed from office without cause unless by
the vote of the holders of 66.67% or more of the outstanding shares of Common
Stock entitled to vote.
NEVADA LEGISLATION
On October 1, 1991, Nevada's "Combination with Interested Stockholders
Statute" and certain amendments to Nevada's "Control Share Acquisition Statute"
became effective. Both statutes may have the effect of delaying or making it
more difficult to effect a change in control of the Company.
The Combination with Interested Stockholders Statute prevents an
"interested stockholder" and an applicable Nevada corporation from entering into
a "combination," unless certain conditions are met. A "combination" means any
merger or consolidation with an "interested stockholder," or any sale, lease,
exchange, mortgage, pledge, transfer or other disposition, in one transaction or
a series of transactions with an "interested stockholder": (i) having an
aggregate market value equal to 5% or more of the aggregate market value of the
assets of the corporation; (ii) having an aggregate market value equal to 5% or
more of the aggregate market value of all of the outstanding shares of the
corporation; or (iii) representing 10% or more of the earning power or net
income of the corporation. An "interested stockholder" means the beneficial
owner of 10% or more of the voting shares of a corporation, or an affiliate or
associate thereof. A corporation may not engage in a "combination" within five
years after the interested stockholder acquired his shares unless the
combination or the purchase of shares made by the interested stockholder
disapproved by the board of directors before the interested stockholder acquired
such shares. If this approval is not obtained, then after the expiration of the
five-year period, the business combination may be consummated with the approval
of the board of directors or a majority of the voting power held by
disinterested stockholders, or if the consideration to be paid by the interested
stockholder is at least equal to the highest of: (i) the highest price per share
paid by the interested stockholder within the five years immediately preceding
the date of the announcement of the combination or in the transaction in which
he became an interested stockholder, whichever is higher; (ii) the market value
per Common Share on the date of the announcement of the combination or the date
the interested stockholder acquired the shares, whichever is higher; or (iii)
for the holders of preferred stock, the highest liquidation value of the
preferred stock, if it is higher.
Nevada's Control Share Acquisition Statute prohibits an acquiror, under
certain circumstances, from voting shares of a target corporation's stock after
crossing certain threshold ownership percentages, unless the acquiror obtains
the approval of the target corporation's disinterested stockholders. The Control
Share Acquisition Statute specifies three thresholds: one-fifth or more but less
than one-third, one-third but less than a majority, and a majority or more, of
the outstanding voting power. Once an acquiror crosses one of the above
thresholds, those shares in an offer or acquisition and acquired within 90 days
become Control Shares (as defined in such statute) and such Control Shares are
deprived of the right to vote until disinterested stockholders restore the
right. the Control Share Acquisition Statute also provides that in the event
Control Shares are accorded full voting rights and the acquiring person has
acquired a majority or more of all voting power, all other stockholders who do
not vote in favor of authorizing voting rights to the Control Shares are
entitled to demand payment for the fair value of their shares. the Board is
required to notify stockholders as soon as practicable after such an event has
occurred that they have the right to receive the fair value of their shares in
accordance with statutory procedures established generally for dissenter's
right.
TRANSFER AGENT AND REGISTRAR
The Transfer Agent and Registrar for the Common Stock is Wells Fargo & Co.
44
<PAGE> 49
UNDERWRITING
Subject to the terms and conditions set forth in the Underwriting Agreement
among the Company, the Selling Stockholders and Salomon Brothers Inc, Goldman,
Sachs & Co., Montgomery Securities and Raymond James & Associates, Inc., as
representatives of the several underwriters (the "Representatives"), the Company
and the Selling Stockholders have agreed to sell to the entities named below
(the "Underwriters"), and each such Underwriter has severally agreed to purchase
from the Company and the Selling Stockholders, the aggregate number of shares of
Common Stock set forth opposite its name below:
<TABLE>
<CAPTION>
NUMBER
NAME OF UNDERWRITER OF SHARES
----------------------------------------------------------------- ---------
<S> <C>
Salomon Brothers Inc ............................................
Goldman, Sachs & Co. ............................................
Montgomery Securities............................................
Raymond James & Associates, Inc. ................................
----------
Total.................................................. 5,297,201
==========
</TABLE>
The Underwriting Agreement provides that the several Underwriters will be
obligated to purchase all the shares of Common Stock being offered (other than
the shares covered by the over-allotment options described below), if any are
purchased.
The Representatives have advised the Company that they propose initially to
offer the Common Stock directly to the public at the public offering price set
forth on the cover page of this Prospectus and to certain dealers at such price
less a concession not in excess of $ per share. The Underwriters may
allow, and such dealers may reallow, a concession not in excess of $
per share on sales to certain other dealers. After the initial offering, the
price to public, and concessions to dealers may be changed.
The Company and certain of the Selling Stockholders have granted to the
Underwriters options, exercisable for 30 days from the date of this Prospectus,
to purchase up to 730,000 additional shares of Common Stock at the price to
public less the underwriting discount set forth on the cover page of this
Prospectus. The Underwriters may exercise these options solely for the purpose
of covering over-allotments, if any, incurred in the sale of shares of Common
Stock being offered hereby. To the extent the Underwriters exercise such
options, each of the Underwriters will be obligated, subject to certain
conditions, to purchase the same proportion of such additional shares as the
number of shares set forth opposite such Underwriter's name in the preceding
table bears to the total number of shares of Common Stock offered by the
Underwriters hereby.
45
<PAGE> 50
The Company, each Selling Stockholder, each director and executive officer
of the Company and certain other stockholders of the Company, holding in the
aggregate shares of Common Stock, have agreed that they will not offer,
sell, contract to sell or otherwise dispose of, directly or indirectly, with
certain exceptions, any shares of Common Stock or any securities convertible
into, or exchangeable for, Common Stock for a period of 120 days from the date
of this Prospectus without the prior consent of the Representatives.
No action has been taken or will be taken in any jurisdiction by the
Company or the Underwriters that would permit a public offering of the shares
offered hereby in any jurisdiction where action for that purpose is required,
other than the United States. Persons who come into possession of this
Prospectus are required by the Company and the Underwriters to inform themselves
about and to observe any restrictions as to the offering of the shares offered
hereby and the distribution of this Prospectus.
The Company and the Selling Stockholders have agreed to indemnify the
Underwriters against certain civil liabilities, including certain liabilities
under the Securities Act of 1933, as amended (the "Securities Act"), or
contribute to payments the Underwriters may be required to make in respect
thereof.
LEGAL MATTERS
Certain matters with respect to the Common Stock offered hereby will be
passed upon for the Company by Morrison & Foerster LLP, Irvine, California. With
respect to all matters of Nevada law, Morrison & Foerster will rely on the
opinion of McDonald, Carano, Wilson, McCune, Bergin, Frankovich & Hicks, Reno,
Nevada. Cravath, Swaine & Moore, New York, New York, has acted as counsel for
the Underwriters in connection with the Offering being made hereby.
EXPERTS
The consolidated financial statements of the Company as of June 30, 1995
and 1994 and for each of the three years in the period ended June 30, 1995
included and incorporated in this Prospectus by reference from the Company's
Annual Report on Form 10-K for the year ended June 30, 1995 have been audited by
Deloitte & Touche LLP, independent auditors, as stated in their reports, which
are included and incorporated by reference herein, and have been so included and
incorporated in reliance upon the reports of such firm given upon their
authority as experts in accounting and auditing. The consolidated financial
statements of Par-A-Dice Gaming Corporation as of December 31, 1995 and 1994 and
for each of the three years in the period ended December 31, 1995, included in
Boyd Gaming Corporation's Form 8-K Current Report dated June 7, 1996, have been
incorporated herein by reference in reliance on the reports of Coopers & Lybrand
L.L.P., independent accountants, given on the authority of such firm as experts
in accounting and auditing.
AVAILABLE INFORMATION
The Company is subject to the informational reporting requirements of the
Securities Exchange Act of 1934, as amended (the "Exchange Act"), and in
accordance therewith files reports, proxy statements and other information with
the Securities and Exchange Commission ("Commission"). Reports, proxy
statements, and other information filed by the Company may be inspected and
copied at the public reference facilities maintained by the Commission at 450
Fifth Street, N.W., Washington, D.C. 20549, and at the Commission's Regional
Offices at 75 Park Place, New York, New York 10007 and at the Northwestern
Atrium Center, 500 West Madison Street, Chicago, Illinois 60661. Copies of such
information may be obtained by mail from the Public Reference Section of the
Commission at 450 Fifth Street, N.W., Washington, D.C. 20549, at prescribed
rates. Such reports, proxy statements and other information concerning the
Company can also be inspected at the offices of the New York Stock Exchange, 20
Broad Street, New York, New York 10005, on which the Company's Common Stock is
listed.
46
<PAGE> 51
The Company has filed a registration statement on Form S-3 (herein,
together with all amendments and exhibits, referred to as the "Registration
Statement") under the Securities Act of 1933, as amended (the "Securities Act")
with respect to the Common Stock offered hereby. This Prospectus does not
contain all of the information set forth in the Registration Statement, certain
parts of which are omitted in accordance with the rules and regulations of the
Commission. For further information with respect to the Company and the Common
Stock, reference is made to the Registration Statement and the exhibits filed as
a part thereof. Statements contained herein concerning any document filed as an
exhibit are not necessarily complete and, in each instance, reference is made to
the copy of said document filed as an exhibit to the Registration Statement or
otherwise filed with the Commission. Each such statement is qualified in its
entirety by such reference.
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The following documents have been filed with the Commission and are
incorporated by reference in this prospectus: (i) the Company's Annual Report on
Form 10-K for the year ended June 30, 1995; (ii) the Company's amended Annual
Report on Form 10-K/A for the year ended June 30, 1995, (iii) the Company's
Quarterly Report on Form 10-Q for the quarter ended September 30, 1995; (iv) the
Company's amended Quarterly Report on Form 10-Q/A for the quarter ended
September 30, 1995; (v) the Company's Quarterly Report on Form 10-Q for the
quarter ended December 31, 1995; (vi) the Company's amended Quarterly Report on
Form 10-Q/A for the quarter ended December 31, 1995; (vii) the Company's
Quarterly Report on Form 10-Q for the quarter ended March 31, 1996; (viii) the
Company's Current Report on Form 8-K, dated May 13, 1996; (ix) the Company's
Current Report on Form 8-K, dated June 7, 1996; (x) the description of the
Common Stock contained in the Company's Registration Statement on Form 8-A
declared effective by the Commission on October 15, 1993; and (xi) all other
documents filed by the Company pursuant to Section 13(a), 13(c), 14 or 15(d) of
the Exchange Act subsequent to the date of this Prospectus and prior to the
termination of the offering of the Securities or incorporated herein by
reference. Any statement contained in a document incorporated or deemed to be
incorporated by reference herein shall be deemed to be modified or superseded
for purposes of this Prospectus to the extent that a statement contained herein
or in any other subsequently filed document which also is or is deemed to be
incorporated by reference herein modifies or supersedes such statement. Any such
statement so modified or superseded shall not be deemed, except as so modified
or superseded, to constitute a part of this Prospectus.
The Company will provide without charge to each person to whom a copy of
this Prospectus is delivered, upon the request of such person, a copy of any or
all of the documents which are incorporated by reference herein, other than
exhibits to such documents (unless such exhibits are specifically incorporated
by reference into such documents). Written or telephone requests should be
directed to Boyd Gaming Corporation, 2950 South Industrial Road, Las Vegas,
Nevada 89109, Attention: Investor Relations, telephone (702) 792-7200.
47
<PAGE> 52
BOYD GAMING
INDEX TO CONSOLIDATED FINANCIAL STATEMENTS
<TABLE>
<CAPTION>
PAGE
-----
<S> <C>
Independent Auditors' Report.......................................................... F-2
Consolidated Financial Statements
Consolidated Balance Sheets......................................................... F-3
Consolidated Statements of Income................................................... F-4
Consolidated Statements of Cash Flows............................................... F-5
Consolidated Statements of Changes in Stockholders' Equity.......................... F-6
Notes to Consolidated Financial Statements............................................ F-7
</TABLE>
F-1
<PAGE> 53
INDEPENDENT AUDITORS' REPORT
We have audited the accompanying consolidated balance sheets of Boyd Gaming
Corporation and subsidiaries (the "Company") as of June 30, 1995 and 1994, and
the related consolidated statements of income, changes in stockholders' equity
and cash flows for each of the three years in the period ended June 30, 1995.
These financial statements are the responsibility of the Company's management.
Our responsibility is to express an opinion on these financial statements based
on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, such consolidated financial statements present fairly, in
all material respects, the financial position of Boyd Gaming Corporation and
subsidiaries at June 30, 1995 and 1994, and the results of their operations and
their cash flows for each of the three years in the period ended June 30, 1995
in conformity with generally accepted accounting principles.
DELOITTE & TOUCHE LLP
Las Vegas, Nevada
August 18, 1995
F-2
<PAGE> 54
BOYD GAMING CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(IN THOUSANDS, EXCEPT SHARE DATA)
<TABLE>
<CAPTION>
MARCH 31, JUNE 30,
--------- ---------------------
1996 1995 1994
--------- -------- --------
(UNAUDITED)
<S> <C> <C> <C>
ASSETS
Current assets
Cash and cash equivalents............................. $ 51,918 $ 83,169 $ 66,964
Short-term investments................................ -- -- 5,000
Accounts receivable, net.............................. 17,358 16,135 11,274
Inventories........................................... 6,455 6,648 6,468
Prepaid expenses and other............................ 17,039 13,465 15,405
-------- -------- --------
Total current assets............................... 92,770 119,417 105,111
Property, equipment and leasehold interests, net........ 782,754 765,799 656,955
Other assets and deferred charges....................... 55,810 53,686 63,264
Goodwill, net........................................... 10,619 10,611 10,967
-------- -------- --------
Total assets....................................... $ 941,953 $949,513 $836,297
======== ======== ========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities
Current maturities of long-term debt.................. $ 40,657 $ 36,347 $ 21,344
Accounts Payable...................................... 40,066 50,432 72,179
Accrued liabilities
Payroll and related................................ 21,491 21,133 18,789
Interest and other................................. 25,229 20,792 18,448
Income taxes payable.................................. 3,882 596 --
-------- -------- --------
Total current liabilities.......................... 131,325 129,300 130,760
Long-term debt, net of current maturities............... 548,034 587,957 525,637
Deferred income taxes................................... 32,527 29,643 15,495
Commitments
Stockholders' equity
Preferred stock, $.01 par value; 5,000,000 shares
authorized......................................... -- -- --
Common stock, $.01 par value; 200,000,000 shares
authorized; 57,115,365, 56,999,018 and 56,816,895
shares outstanding................................. 571 570 568
Additional paid-in capital............................ 101,436 100,085 98,128
Retained earnings..................................... 128,060 101,958 65,709
-------- -------- --------
Total stockholders' equity......................... 230,067 202,613 164,405
-------- -------- --------
Total liabilities and stockholders' equity......... $ 941,953 $949,513 $836,297
======== ======== ========
</TABLE>
The accompanying notes are an integral part of these consolidated financial
statements.
F-3
<PAGE> 55
BOYD GAMING CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
(IN THOUSANDS, EXCEPT PER SHARE DATA)
<TABLE>
<CAPTION>
NINE MONTHS ENDED
MARCH 31, FOR THE YEAR ENDED JUNE 30,
--------------------- ---------------------------------
1996 1995 1995 1994 1993
--------- --------- --------- --------- ---------
(UNAUDITED)
<S> <C> <C> <C> <C> <C>
Revenues
Casino.................................................... $ 413,097 $ 348,296 $ 463,179 $ 341,473 $ 308,495
Food and beverage......................................... 105,703 92,575 123,527 99,082 91,500
Rooms..................................................... 52,308 45,212 62,300 44,934 44,394
Other..................................................... 35,300 27,881 37,563 28,695 27,352
Management fee and joint venture.......................... 30,893 24,969 35,763 -- --
-------- -------- -------- -------- --------
Gross revenues.............................................. 637,301 538,933 722,332 514,184 471,741
Less promotional allowances................................. 55,792 46,548 61,992 45,965 40,567
-------- -------- -------- -------- --------
Net revenues............................................ 581,509 492,385 660,340 468,219 431,174
-------- -------- -------- -------- --------
Costs and expenses
Casino.................................................... 203,769 166,479 221,844 164,798 145,777
Food and beverage......................................... 74,337 68,064 90,670 74,115 67,236
Rooms..................................................... 17,910 18,093 24,578 19,683 18,881
Other..................................................... 25,653 19,275 25,567 20,633 19,374
Selling, general and administrative....................... 83,179 60,038 79,785 54,441 48,435
Maintenance and utilities................................. 22,620 21,638 28,452 21,057 19,220
Depreciation and amortization............................. 45,868 40,953 54,518 42,136 39,450
Corporate expense......................................... 16,417 17,027 24,356 12,503 9,882
Preopening expense........................................ 10,004 -- -- 4,605 --
-------- -------- -------- -------- --------
Total................................................... 499,757 411,567 549,770 413,971 368,255
-------- -------- -------- -------- --------
Operating income............................................ 81,752 80,818 110,570 54,248 62,919
-------- -------- -------- -------- --------
Other income (expense)
Interest income........................................... 987 1,682 2,072 3,379 1,510
Interest expense, net of amounts capitalized.............. (39,322) (37,940) (48,443) (39,472) (33,888)
Gain on investment........................................ -- -- -- -- 1,062
-------- -------- -------- -------- --------
Total................................................... (38,335) (36,258) (46,371) (36,093) (31,316)
-------- -------- -------- -------- --------
Income before provision for income taxes, cumulative effect
of a change in accounting principle and extraordinary
item...................................................... 43,417 44,560 64,199 18,155 31,603
Provision for income taxes.................................. 17,315 20,265 27,950 7,505 11,469
-------- -------- -------- -------- --------
Income before cumulative effect of a change in accounting
principle and extraordinary item.......................... 26,102 24,295 36,249 10,650 20,134
Cumulative effect of a change in accounting for income
taxes..................................................... -- -- -- 2,035 --
-------- -------- -------- -------- --------
Income before extraordinary item............................ 26,102 24,295 36,249 12,685 20,134
Extraordinary item, net of tax benefit of $3,805............ -- -- -- -- 7,397
-------- -------- -------- -------- --------
Net income.................................................. 26,102 24,295 36,249 12,685 12,737
Dividends on preferred stock................................ -- -- -- 467 1,881
-------- -------- -------- -------- --------
Net income applicable to common stock....................... $ 26,102 $ 24,295 $ 36,249 $ 12,218 $ 10,856
======== ======== ======== ======== ========
Net income per common share
Income before cumulative effect of a change in accounting
principle and extraordinary item........................ $ .46 $ .43 $ 0.64 $ 0.19 $ 0.37
Cumulative effect of a change in accounting for income
taxes................................................... -- -- -- 0.04 --
Extraordinary item........................................ -- -- -- -- (0.15)
-------- -------- -------- -------- --------
Net income.................................................. $ .46 $ .43 $ 0.64 $ 0.23 $ 0.22
======== ======== ======== ======== ========
</TABLE>
The accompanying notes are an integral part of these consolidated financial
statements.
F-4
<PAGE> 56
BOYD GAMING CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(IN THOUSANDS)
<TABLE>
<CAPTION>
NINE MONTHS ENDED
MARCH 31, FOR THE YEAR ENDED JUNE 30,
-------------------- ---------------------------------
1996 1995 1995 1994 1993
-------- --------- --------- --------- ---------
(UNAUDITED)
<S> <C> <C> <C> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES
Net income................................................ $ 26,102 $ 24,295 $ 36,249 $ 12,685 $ 12,737
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation and amortization........................... 45,868 40,953 54,518 42,136 39,450
Cumulative effect of a change in accounting for income
taxes................................................. -- -- -- (2,035) --
Extraordinary item...................................... -- -- -- -- 7,397
Gain on sale of investment.............................. -- -- -- -- (1,062)
Deferred income taxes................................... 2,884 8,666 14,148 877 102
Other................................................... (31) (29) 84 (142) (62)
Changes in assets and liabilities:
Increase in accounts receivable, net.................. (1,223) (5,270) (3,089) (4,383) (50)
(Increase) decrease in inventories.................... 193 (22) (180) (1,891) (605)
(Increase) decrease in prepaid expenses............... (3,574) 1,614 1,940 (4,952) (342)
(Increase) decrease in other assets................... (5,547) 6,504 (2,032) (3,995) (3,106)
Increase (decrease) in other current liabilities...... 16,870 (18,390) (19,146) 39,766 (3,771)
Increase (decrease) in income taxes payable........... 3,286 -- 596 (2,291) 3,728
-------- --------- --------- ---------
Net cash provided by operating activities................. 84,828 58,321 83,088 75,775 54,416
-------- --------- --------- ---------
CASH FLOWS FROM INVESTING ACTIVITIES
Acquisition of property, equipment and other assets..... (81,616) (104,172) (181,212) (307,045) (24,926)
Proceeds from loans receivable.......................... -- -- 30,667 -- --
Proceeds from sale of investment........................ -- -- -- -- 1,935
Cash acquired in Eldorado, Inc. acquisition............. -- -- -- 1,622 --
Decrease (increase) in short-term investments........... -- 5,000 5,000 (5,000) --
-------- --------- --------- ---------
Net cash used in investing activities..................... (81,616) (99,172) (145,545) (310,423) (22,991)
-------- --------- --------- ---------
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from issuance of long-term debt................ 1,074 7,850 86,025 148,500 180,375
Payments on long-term debt.............................. (26,687) (16,650) (22,027) (13,862) (160,711)
Net borrowings under credit agreements.................. (10,000) 18,000 13,000 35,000 --
Cash paid to retire bonds............................... -- -- -- -- (9,534)
Dividends paid.......................................... -- -- -- (467) (1,881)
Proceeds from issuance of common stock.................. 1,150 1,132 1,664 72,368 --
Other................................................... -- -- -- -- (838)
-------- --------- --------- ---------
Net cash provided by (used in) financing activities....... (34,463) 10,332 78,662 241,539 7,411
-------- --------- --------- ---------
Net increase (decrease) in cash and cash equivalents...... (31,251) (30,519) 16,205 6,891 38,836
Cash and cash equivalents, beginning of year.............. 83,169 66,964 66,964 60,073 21,237
-------- --------- --------- ---------
Cash and cash equivalents, end of year.................... $ 51,918 $ 36,445 $ 83,169 $ 66,964 $ 60,073
======== ========= ========= =========
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION
Cash paid for interest, net of amounts capitalized...... $ 40,320 $ 38,521 $ 51,405 $ 33,541 $ 25,085
======== ========= ========= =========
Cash paid for income taxes.............................. $ 10,991 $ 12,465 $ 12,607 $ 10,050 $ 7,638
======== ========= ========= =========
SUPPLEMENTAL SCHEDULE OF NON-CASH INVESTING
AND FINANCING ACTIVITIES
Property additions acquired on contracts and trade
payables which were accrued, but not yet paid........... $ 1,646 $ 8,109 $ 24,109 $ 22,022 $ 2,238
======== ========= ========= =========
Deferred bond financing costs incurred.................. $ - $ - $ - $ 1,500 $ 4,625
======== ========= ========= =========
Unamortized bond financing costs written-off............ $ - $ - $ - $ - $ 1,667
======== ========= ========= =========
Tax benefit on extraordinary item....................... $ - $ - $ - $ - $ 3,805
======== ========= ========= =========
Acquisition of Eldorado, Inc.
Assets acquired....................................... $ - $ - $ - $ 21,796 $ -
Liabilities assumed................................... - - - 14,662 -
-------- --------- --------- ---------
Net acquisition....................................... $ - $ - $ - $ 7,134 $ -
======== ========= ========= =========
Conversion of preferred stock to common stock........... $ - $ - $ - $ 17,788 $ -
======== ========= ========= =========
</TABLE>
The accompanying notes are an integral part of these consolidated financial
statements.
F-5
<PAGE> 57
BOYD GAMING CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY
(IN THOUSANDS, EXCEPT SHARE DATA)
<TABLE>
<CAPTION>
PREFERRED STOCK COMMON STOCK ADDITIONAL TOTAL
--------------------- --------------------- PAID-IN RETAINED TREASURY STOCKHOLDERS'
SHARES AMOUNT SHARES AMOUNT CAPITAL EARNINGS STOCK EQUITY
-------- -------- ---------- ------ --------- --------- ------- -------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
BALANCES, JULY 1,
1992................ 181,870 $ 19,260 48,761,507 $ 513 $ 3,604 $ 42,635 $(3,344) $ 62,668
Net income........... 12,737 12,737
Cash dividends on
preferred stock.... (1,881) (1,881)
Common stock
acquired........... (1,624,753) (1,629) (1,629)
Preferred stock
acquired........... (3,989) (399) (399)
Common stock sold.... 1,273,752 39 1,151 1,190
------- -------- ---------- ----- ------- ------- ------- ---------
BALANCES, JUNE 30,
1993............... 177,881 19,260 48,410,506 513 3,643 53,491 (4,221) 72,686
Net income........... 12,685 12,685
Cash dividends on
preferred stock.... (467) (467)
Conversion of
preferred stock.... (177,881) (19,260) 1,046,358 10 17,778 1,472 --
Purchase of
fractional
shares............. (78) (1) (1)
Stock issued in
connection with
Employee stock
purchase plan...... 36,944 463 463
Stock issued in
connection with
acquisition........ 2,723,165 27 7,107 7,134
Issuance of stock,
net of expenses.... 4,600,000 46 71,859 71,905
Cancellation of
treasury stock..... (28 ) (2,721) 2,749 --
------- -------- ---------- ----- ------- ------- ------- ---------
BALANCES, JUNE 30,
1994............... -- -- 56,816,895 568 98,128 65,709 -- 164,405
Net income........... 36,249 36,249
Stock issued in
connection with
Employee stock
purchase plan...... 182,123 2 1,957 1,959
------- -------- ---------- ----- ------- ------- ------- ---------
BALANCES, JUNE 30,
1995............... -- -- 56,999,018 570 100,085 101,958 -- 202,613
Net income
(unaudited) for
nine months ended
March 31, 1996..... 26,102 26,102
Stock issued in
connection with
Employee stock
purchase plan
(unaudited)........ 116,347 1 1,351 1,352
------- -------- ---------- ----- ------- ------- ------- ---------
BALANCES, MARCH 31,
1996 (UNAUDITED)... -- $ -- 57,115,365 $ 571 $ 101,436 $ 128,060 $ -- $ 230,067
======= ======== ========== ===== ======= ======= ======= =========
</TABLE>
The accompanying notes are an integral part of these consolidated financial
statements.
F-6
<PAGE> 58
BOYD GAMING CORPORATION AND SUBSIDIARIES
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 is expected to open in September 1995. The
Company manages a casino entertainment facility near Philadelphia, Mississippi
which opened July 1, 1994 and 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 September 1994 for which it has a five-year
management contract with certain renewal options. All material intercompany
accounts and transactions have been eliminated. Certain reclassifications have
been made to prior years' amounts to conform with the current year presentation.
Cash and Cash Equivalents.
Cash and cash equivalents include highly liquid investments with an
original maturity of three months or less. These investments are stated at cost
which approximates fair value.
Short-Term Investments.
Short-term investments consist of highly liquid investments with an
original maturity of more than three months. These investments are stated at
cost which approximates market value.
Inventories.
Inventories are stated at lower of cost or market. Cost is determined using
the first-in, first-out and retail inventory methods.
Property and Equipment.
Property and equipment are stated at cost. Depreciation and amortization
are computed using the straight-line method over the estimated useful lives of
the assets. Costs of major improvements including interest incurred during
construction of new facilities and major additions are capitalized; costs of
normal repairs and maintenance are charged to expense as incurred. Gains or
losses on disposals of assets are recognized as incurred.
Fair Value of Financial Instruments.
The carrying value of the Company's cash and cash equivalents, trade
receivables and trade payables approximates fair value because of the short
maturity of those instruments. The Company estimates fair value of its long-term
obligations based on quoted market prices or on the current rates offered to the
Company for debt of the same remaining maturities.
Goodwill.
The excess of total acquisition costs over the fair value of assets
acquired is amortized using the straight-line method over forty years. As of
June 30, 1995 and 1994, accumulated amortization was $3,654,000 and $3,297,000,
respectively.
F-7
<PAGE> 59
Revenues.
Casino revenues represent the net win from gaming wins and losses. Revenues
include the retail value of room, food, beverage and other goods and services
provided to customers without charge. Such amounts are then deducted as
promotional allowances. The estimated costs of providing these promotional
allowances is charged to the casino department in the following amounts:
<TABLE>
<CAPTION>
YEAR ENDED JUNE 30
-------------------------------
1995 1994 1993
------- ------- -------
(IN THOUSANDS)
<S> <C> <C> <C>
Rooms....................................... $ 8,991 $ 8,308 $ 6,700
Food and beverage........................... 49,674 35,507 29,727
Other....................................... 2,422 1,324 1,128
------- ------- -------
Total....................................... $61,087 $45,139 $37,555
======= ======= =======
</TABLE>
Income Taxes.
The Company and its subsidiaries file a consolidated federal tax return.
Effective July 1, 1993, the Company adopted Statement of Financial Accounting
Standard (SFAS) No. 109, "Accounting for Income Taxes." SFAS No. 109 requires
recognition of deferred tax assets and liabilities for the expected future tax
consequences of events that have been included in the financial statements or
tax returns. Deferred income taxes reflect the net tax effects of (i) temporary
differences between the carrying amounts of assets and liabilities for financial
reporting purposes and the amounts used for income tax purposes , and (ii)
operating loss and tax credit carryforwards. Prior to 1994, the Company
accounted for income taxes under APB 11.
Preopening Expenses.
Expenses incurred prior to the opening of new facilities are capitalized as
incurred and charged to expense upon commencement of operations. Preopening
expenses for Sam's Town Kansas City, which is scheduled to open September 13,
1995, are expected to be approximately $10 million.
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 56,870,104, 54,297,226 and 48,581,891 for the years ended June 30, 1995,
1994 and 1993, 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.
NOTE 2: RELATED PARTIES
In connection with the closing of the Company's initial public offering in
October 1993, the Company purchased Eldorado, Inc., owner of the Eldorado Casino
and Jokers Wild Casino. The acquisition was accounted for as a purchase at
historical cost. The Company issued 2,723,165 shares of common stock in exchange
for all of the outstanding stock of Eldorado, Inc. and the assumption of debt
and other liabilities. For the year ended June 30, 1994, revenue, net income and
net income per common share on a proforma basis as if Eldorado, Inc. were owned
by the Company for the entire fiscal year were $476,550,000, $12,794,000 and
$.23, respectively. For the year ended June 30, 1993, revenue, net income before
extraordinary item, net income and net income per common share on a proforma
basis as if
F-8
<PAGE> 60
Eldorado, Inc. were owned by the Company for the entire fiscal year were
$450,174,000, $22,268,000, $14,871,000 and $.29, respectively. Certain former
stockholders of Eldorado, Inc. are also directors, officers and significant
shareholders of the Company.
NOTE 3: ACCOUNTS RECEIVABLE
Account receivable at June 30 are as follows:
<TABLE>
<CAPTION>
1995 1994
------- -------
(IN THOUSANDS)
<S> <C> <C>
Casino................................................. $ 5,661 $ 4,651
Hotel.................................................. 2,415 2,155
Other.................................................. 9,854 6,157
------- -------
Total.................................................. 17,930 12,963
Less allowance for doubtful accounts................... 1,795 1,689
------- -------
Total.................................................. $16,135 $11,274
======= =======
</TABLE>
NOTE 4: PROPERTY, EQUIPMENT, AND LEASEHOLD INTEREST
Property, equipment and leasehold interest consist of the following at June
30:
<TABLE>
<CAPTION>
1995 1994
-------- --------
(IN THOUSANDS)
<S> <C> <C>
Land................................................. $115,803 $109,583
Buildings and improvements........................... 482,443 374,964
Furniture and equipment.............................. 281,791 251,922
Leasehold improvements............................... 42,878 42,030
Construction in progress............................. 129,190 118,060
-------- --------
Total fixed assets................................... 1,052,105 896,559
Less accumulated depreciation and amortization....... 286,306 239,604
-------- --------
Net fixed assets..................................... $765,799 $656,955
======== ========
</TABLE>
Depreciation and amortization are computed using the straight-line method
over the following useful lives:
<TABLE>
<CAPTION>
USEFUL LIVES
-------------
<S> <C>
Buildings and improvements.................... 4 to 40 years
Furniture and equipment....................... 3 to 30 years
Leasehold improvements........................ 3 to 40 years
</TABLE>
Certain property and equipment is pledged as collateral for long-term debt.
See Notes 5 and 6. Property and equipment at June 30 include assets recorded
under capital leases as follows:
<TABLE>
<CAPTION>
1995 1994
------ ------
(IN THOUSANDS)
<S> <C> <C>
Furniture and equipment.................. $1,309 $1,309
Less accumulated amortization............ 1,164 944
------ ------
Net...................................... $ 145 $ 365
====== ======
</TABLE>
Interest costs of $7.1 million and $6.6 million were capitalized in 1995
and 1994, respectively, during construction of new properties and major
additions. No interest costs were capitalized during 1993.
F-9
<PAGE> 61
NOTE 5: LONG-TERM DEBT
Long-term debt at June 30 consists of the following:
<TABLE>
<CAPTION>
1995 1994
-------- --------
(IN THOUSANDS)
<S> <C> <C>
Notes payable under credit agreements................ $281,500 $210,000
11% senior subordinated notes........................ 185,000 185,000
10.75% senior subordinated notes..................... 150,000 150,000
Other................................................ 7,804 1,981
-------- --------
Total long-term debt................................. 624,304 546,981
Less current maturities.............................. 36,347 21,344
-------- --------
Total................................................ $587,957 $525,637
======== ========
</TABLE>
The Company, through a wholly-owned subsidiary, Boyd Tunica, Inc., entered
into an agreement with a group of banks whereby the banks made available $60
million pursuant to a loan which matures in August 1998. Principal on the loan
is payable quarterly beginning October 1, 1995 in the amount of $3.0 million per
quarter with the entire unpaid balance due August 1998. Interest rates under the
loan may be based on either the prime rate or London Interbank Offered Rate at
the discretion of the Company. The loan agreement contains certain financial
covenants and limitations on the incurrence of debt. The average interest rate
under the loan at June 30, 1995 was 7.4%.
The Company through its wholly-owned subsidiary, California Hotel and
Casino, has an amended senior credit agreement with a group of commercial
lending institutions. The amended agreement consists of a term loan and a
revolving credit facility. Principal on the term loan is payable quarterly and
ranges from $6.3 million in fiscal 1996 to $7.5 million in fiscal 1998. The
outstanding principal balance under the term loan at June 30, 1995 was $80
million. Total availability under the revolving credit facility reduces to $125
million on June 30, 1996 and to $115 million on June 30, 1997 with any
outstanding principal balance on the revolving credit facility due on June 30,
1998. At June 30, 1995, the Company had unused availability of $12 million under
the revolving credit facility. The amended agreement provides for interest rates
to be based on either the prime rate or the London Interbank Offered Rate at the
discretion of the Company. The average interest rate under the amended agreement
at June 30, 1995 was 8.5%.
The term loan and revolving credit facility are collateralized by the real
and personal property comprising four casino hotel properties owned by the
Company in Nevada and by related security agreements with assignments of rents.
The amended agreement contains certain financial covenants, limitations on
the incurrence of debt and restrictions on dividends.
The Company has $150 million principal amount of 10.75% senior subordinated
notes due September 2003. The notes require semiannual interest payments on
March 1 and September 1 of each year through September 1, 2003, at which time
the principal balance is due and payable. The notes may be redeemed at the
Company's option anytime after September 1, 1996 at redemption prices ranging
from 105% in 1996 to 100% in 1999. 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 relating to
the notes).
The Company, through its wholly-owned subsidiary California Hotel Finance
Corporation, has $185 million principal amount of 11% senior subordinated notes
due December 2002. The net proceeds were used to refinance certain indebtedness
of the Company and provide for working capital needs and expansion of the
Company's operations. The notes require semiannual interest payments on June 1
and December 1 of each year until December 1, 2002, at which time the principal
balance is due and payable. The notes may be redeemed at the Company's option
anytime after December 1, 1997 at redemption prices ranging from 104.125% in
1997 to 100% in 1999. The notes contain certain covenants regarding
F-10
<PAGE> 62
incurrence of debt, sales and disposition of assets, mergers or consolidations
and limitations on restricted payments (as defined in the indenture relating to
the notes).
The estimated fair value of the Company's long-term debt at June 30, 1995
was approximately $636 million, versus its book value of $624 million. At June
30, 1994 the estimated fair value of the Company's long-term debt was
approximately $558 million, versus its book value of $547 million.
In connection with the refinancing of $135 million 12.75% senior
subordinated notes in November 1992, the Company recorded a $7.4 million
extraordinary loss (net of income tax benefit of $3.8 million).
Interest rates on the Company's other long-term debt range from 8.1% to
16.8%.
Management believes the Company and its subsidiaries are in compliance with
all covenants contained in its long-term debt agreements at June 30, 1995.
The scheduled maturities of long-term debt for the years ending June 30 are
as follows:
<TABLE>
<CAPTION>
(IN THOUSANDS)
<S> <C>
1996........................................ $ 36,347
1997........................................ 48,780
1998........................................ 160,858
1999........................................ 30,949
2000........................................ 11,817
Thereafter.................................. 335,553
Total....................................... $624,304
</TABLE>
NOTE 6: LEASES
Future minimum lease payments required under noncancelable leases
(principally for land) and capital leases (principally for equipment) as of June
30, 1995 are as follows:
<TABLE>
<CAPTION>
OPERATING CAPITAL
LEASES LEASES
--------- -------
(IN THOUSANDS)
<S> <C> <C>
1996..................................................... $ 2,293 $ 109
1997..................................................... 2,236 29
1998..................................................... 1,900 --
1999..................................................... 1,873 --
2000..................................................... 1,796 --
Thereafter............................................... 70,345 --
-------
Total minimum payments required.......................... $80,443 138
Loan interest............................................ 34
-------
Present value of minimum lease payments.................. $ 104
=======
</TABLE>
Rent expense for the years ended June 30, 1995, 1994 and 1993 was
$2,761,000, $2,288,000 and $2,107,000, respectively and is included in selling,
general and administrative expenses.
NOTE 7: EMPLOYEE BENEFIT PLANS
The Company contributes to multi-employer pension plans under various union
agreements. Contributions, based on wages paid to covered employees, totaled
approximately $1,999,000, $2,174,000 and $2,157,000 in 1995, 1994 and 1993,
respectively. The Company's share of the unfunded liability related to
multi-employer plans, if any, is not determinable.
F-11
<PAGE> 63
The Company expensed voluntary contributions of $1,750,000 in 1995,
$1,500,000 in 1994 and 1993 to the Company's 401(k) profit-sharing plan and
trust.
A summary of the provision for income taxes for the years ended June 30 is
as follows:
PROVISION FOR INCOME TAXES:
<TABLE>
<CAPTION>
1995 1994 1993
------- ------ ------
(IN THOUSANDS)
<S> <C> <C> <C>
Current
Federal................................................... $14,165 $6,277 $6,632
State..................................................... 494 352 --
------- ------
14,659 6,629 6,632
Deferred
Federal................................................... 12,786 876 1,032
State..................................................... 505 -- --
------- ------
13,291 876 1,032
------- ------
$27,950 $7,505 $7,664
======= ======
</TABLE>
The following table provides a reconciliation between the federal statutory
rate and the effective income tax rate from continuing operations at June 30
where both are expressed as a percentage of income.
<TABLE>
<CAPTION>
1995 1994 1993
---- ---- ----
<S> <C> <C> <C>
Tax provision at statutory rate..................... 35.0% 35.0% 34.0%
Increase (decrease) resulting from:
Development expenditures for new jurisdictions.... 3.1 -- --
Company provided benefits......................... 2.7 2.5 2.6
State income tax, net of federal benefit.......... 1.0 1.3 --
Tax preferred investments......................... (0.1) (2.5) --
Statutory rate change............................. -- 3.8 --
Other, net........................................ 1.8 1.2 1.0
----- -----
43.5% 41.3% 37.6%
===== =====
</TABLE>
The tax items comprising the Company's net deferred tax liability as of
June 30 are as follows:
<TABLE>
<CAPTION>
1995 1994
-------- --------
(IN THOUSANDS)
<S> <C> <C>
Deferred tax liabilities:
Difference between book and tax basis of property.... $33,053 $22,615
Difference between book and tax basis of amortizable
assets............................................. 1,513 --
Reserve differential for gaming activities........... 894 1,116
Other................................................ 1,192 89
-------
36,652 23,820
-------
Deferred tax assets:
Alternative minimum tax credit carryforward.......... 3,944 5,351
Preopening expense amortized for tax purposes........ 1,126 1,612
Provision for doubtful accounts...................... 832 795
Other................................................ 1,107 567
-------
7,009 8,325
-------
Net deferred tax liabilities......................... $29,643 $15,495
=======
</TABLE>
F-12
<PAGE> 64
The tax effects of timing differences resulting in deferred income taxes at
June 30 were as follows:
<TABLE>
<CAPTION>
1993
--------------
(IN THOUSANDS)
<S> <C>
Alternative minimum tax....................... $1,486
Accelerated depreciation...................... (498)
Accrual versus cash adjustments............... 446
Other, net.................................... (402)
------
$1,032
======
</TABLE>
The Internal Revenue Service has examined the Company's federal
consolidated income tax returns through the year ended June 30, 1989. The
Company is currently under examination for fiscal years 1990 through 1992.
Management of the Company does not believe any significant adjustments will be
required. The Internal Revenue Service is considering a proposal that would
limit the federal income tax deductibility of the cost of providing
complimentary promotional items to customers. Such a proposal, if adopted, could
have a significant effect on the Company's tax rate.
NOTE 9: CAPITAL STOCK AND STOCK INCENTIVE PLANS
Capital Stock.
Two hundred million shares of common stock with a par value of $.01 per
share are authorized, of which 56,999,018 and 56,816,895 shares were issued at
June 30, 1995 and 1994, respectively, including no treasury shares.
The Company has authorized 5,000,000 shares of $.01 par value preferred
stock of which no shares were issued at June 30, 1995 and 1994.
The Company had 300,000 shares of $100 Preferred Stock with a par value of
$.01 per share and redemption value of $100 per share authorized of which
192,598 were issued at June 30, 1993 including 14,717 treasury shares at June
30, 1993. Upon the closing of the initial public offering, such preferred stock
automatically converted into common stock of the Company.
Stock Options.
In June 1993, shareholders of the Company approved a Flexible Stock
Incentive Plan (the "Flexible Plan") which provides for the granting of
incentive stock options, as determined under the Internal Revenue Code, to
employees of the Company, the granting of non-qualified stock options, stock
bonuses and stock appreciation rights to employees, officers, directors and
consultants of the Company and for the sale of restricted common stock to such
persons. The maximum number of shares of common stock available for issuance
under this plan is 4,000,000 shares. As of June 30, 1995, a total of 3,975,100
non-qualified stock options had been issued and none had been exercised.
Options granted under the plan generally become exercisable as to one-third
of the optioned shares each year after the date of grant. Options granted under
this plan expire no later than ten years after the grant date. Under the plan,
the exercise price of incentive options and non-qualified options granted to
certain executive officers may not be less than the fair market value of the
optioned stock at the date of grant.
In June 1993, shareholders of the Company approved a Directors'
Non-Qualified Stock Option Plan (the 'Director Plan") which provides for the
granting of up to 50,000 common shares. Options granted under the plan become
exercisable as to one-fourth of the optioned shares each year after the date of
the grant. Options granted under the plan expire no later than ten years after
the grant. Under the plan, the exercise price of the options granted may not be
less than the fair market value of the optioned stock at
F-13
<PAGE> 65
the date of grant. At June 30, 1995, a total of 17,000 stock options had been
issued and none had been exercised.
<TABLE>
<CAPTION>
NUMBER OF SHARES OPTION PRICES
-------------------- ------------------------------------
FLEXIBLE DIRECTOR FLEXIBLE DIRECTOR
PLAN PLAN PLAN PLAN
---------- -------- ------------------ ----------------
<S> <C> <C> <C> <C>
Options outstanding at July 1, 1993... -- -- -- --
Options granted....................... 2,688,000 15,000 $17.000 $17.00 - $18.50
Options canceled...................... 36,800 -- 17.000 --
--------- ------
Options outstanding at June 30,
1994................................ 2,651,200 15,000 $17.000 $17.00 - $18.50
Options granted....................... 1,287,100 2,000 13.625 14.00
Options canceled...................... 38,682 -- 13.625 14.00
--------- ------
Options outstanding at June 30, 1995 3,899,618 17,000 $13.625 - $17.000 $14.00 - $18.50
========= ======
Exercisable options at June 30,
1995................................ 875,610 3,750
</TABLE>
At June 30, 1995, there were 100,382 and 33,000 options available for
future grant under the Flexible Plan and Director Plan respectively.
Employee Stock Purchase Plan.
In June 1993, shareholders of the Company approved an Employee Stock
Purchase Plan, which allows employees to purchase the Company's common stock,
through payroll deductions, at a price that shall not be less than 85% of fair
market value on the first or last date of the purchase period. The plan provides
for a maximum of 1,500,000 shares to be issued. During 1995, 182,123 shares were
issued to employees at a price of $9.14. In 1994, 36,944 shares were issued to
employees at a price of $12.54. At June 30, 1995, there were 1,280,933 shares
available for issuance under the plan.
NOTE 10: LEGAL PROCEEDINGS
The Company is a defendant in various pending litigation. In the opinion of
management, all pending claims in such litigation will not, in the aggregate,
have a material adverse effect on the Company.
NOTE 11: INITIAL PUBLIC OFFERING
In October 1993, the Company completed an initial public offering of 4.6
million shares of common stock at a price of $17 per share. In connection with
the closing of the offering, the Company effected a previously declared
11.322241 for 1 split of its common stock. Accordingly, the per share
information, average number of shares outstanding and total shares outstanding
and the accompanying financial statements have been adjusted as if the stock
split occurred as of the earliest period presented. The Company's $100 Preferred
Stock automatically converted into common stock of the Company upon the closing
of the initial public offering. Proceeds from the offering were approximately
$73.1 million.
Upon the closing of the public offering, the Company acquired all of the
outstanding shares of Eldorado, Inc. in exchange for shares of common stock of
the Company and assumption of indebtedness. Holders of certain promissory notes
of Eldorado, Inc. also received shares of common stock of the Company in
exchange for such notes.
NOTE 12: INTERIM INFORMATION (UNAUDITED)
In the opinion of the Company, the accompanying unaudited Consolidated
Financial Statements as of March 31, 1996 and for the nine months ended March
31, 1996 and 1995 contain all adjustments necessary, consisting of only normal
recurring adjustments, to present fairly the results of its operations and cash
flows for the nine months ended March 31, 1996 and 1995. The operating results
and cash flows for the nine months ended March 31, 1996 are not necessarily
indicative of the results that will be achieved for the full fiscal year or
future periods.
F-14
<PAGE> 66
Recently Issued 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, effective for the
Company's fiscal year beginning July 1, 1996, 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. Management believes that adoption of
SFAS No. 121 will not have a significant effect on the financial position or
results of operations of the Company.
The FASB issued SFAS No. 123 "Accounting for Stock-Based Compensation" in
October, 1995. This statement, effective for the Company's fiscal year beginning
July 1, 1996, 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.
Subsequent Events.
On April 26, 1996, the Company entered into a 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 constructing a 204-room hotel adjacent to the
Par-A-Dice casino. Closing of the transaction is conditioned upon, among other
things, approval of the Illinois Gaming Board. The total purchase price is $175
million and includes the riverboat casino facility, the 204-room hotel and a
vacant potential gaming site in Missouri.
In April 1996, the Company and its wholly-owned subsidiary, California
Hotel and Casino, received a commitment for a new $500 million five-year
Reducing Revolving Credit Facility. This facility will replace the Company's and
its subsidiaries' current bank credit facilities. Availability under the new
facility will reduce semiannually starting in the third year. The Company is
currently negotiating the closing of this transaction which is expected to be
completed in June 1996.
F-15
<PAGE> 67
[PHOTOS AND MAPS]
<TABLE>
<S> <C>
ATLANTIC CITY
ATLANTIC CITY MARINA MAP
CENTRAL ILLINOIS
ILLINOIS MAP
PAR-A-DICE
BOAT
</TABLE>
RENDERING
OF
PAR-A-DICE
HOTEL
<PAGE> 68
[PHOTOS AND MAPS]
MISSISSIPPI
<TABLE>
<S> <C>
STATE MAP
DEPICTING TWO SAM'S TOWN
PROPERTY LOCATIONS TUNICA
</TABLE>
SILVER STAR
<TABLE>
<S> <C>
NEW ORLEANS
MAP OF
NEW ORLEANS
</TABLE>
<PAGE> 69
[PHOTOS AND MAPS]
<TABLE>
<S> <C>
KANSAS CITY
MAP
OF
KANSAS CITY
SAM'S TOWN
KANSAS CITY
NEW ORLEANS
TREASURE CHEST
</TABLE>
<PAGE> 70
NO DEALER, SALESPERSON OR ANY OTHER PERSON HAS BEEN AUTHORIZED TO GIVE ANY
INFORMATION OR TO MAKE ANY REPRESENTATIONS OTHER THAN THOSE CONTAINED IN THIS
PROSPECTUS IN CONNECTION WITH THE OFFER MADE BY THIS PROSPECTUS AND, IF GIVEN OR
MADE, SUCH INFORMATION OR REPRESENTATIONS MUST NOT BE RELIED UPON AS HAVING BEEN
AUTHORIZED BY THE COMPANY, THE SELLING STOCKHOLDERS OR THE UNDERWRITERS. NEITHER
THE DELIVERY OF THIS PROSPECTUS NOR ANY SALE MADE HEREUNDER SHALL, UNDER ANY
CIRCUMSTANCES, CREATE ANY IMPLICATION THAT THERE HAS BEEN NO CHANGE IN THE
AFFAIRS OF THE COMPANY SINCE THE DATES AS OF WHICH INFORMATION IS GIVEN IN THIS
PROSPECTUS. THIS PROSPECTUS DOES NOT CONSTITUTE AN OFFER OR SOLICITATION BY
ANYONE IN ANY JURISDICTION IN WHICH SUCH OFFER OR SOLICITATION IS NOT AUTHORIZED
OR IN WHICH THE PERSON MAKING SUCH OFFER OR SOLICITATION IS NOT QUALIFIED TO DO
SO OR TO ANY PERSON TO WHOM IT IS UNLAWFUL TO MAKE SUCH OFFER OR SOLICITATION.
------------------------
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Prospectus Summary........................ 3
Risk Factors.............................. 9
Use of Proceeds........................... 14
Price Range of Common Stock............... 14
Dividend Policy........................... 15
Capitalization............................ 15
Selected Consolidated Financial Data...... 16
Pro Forma Consolidated Financial
Statements.............................. 17
Management's Discussion and Analysis of
Financial Condition and Results of
Operations.............................. 22
Business.................................. 30
Management................................ 38
Principal and Selling Stockholders........ 41
Description of Capital Stock.............. 43
Underwriting.............................. 45
Legal Matters............................. 46
Experts................................... 46
Available Information..................... 46
Incorporation of Certain Documents by
Reference............................... 47
Index to Consolidated Financial
Statements.............................. F-1
</TABLE>
5,297,201 SHARES
BOYD GAMING
CORPORATION
COMMON STOCK
($.01 PAR VALUE)
[LOGO]
SALOMON BROTHERS INC
GOLDMAN, SACHS & CO.
MONTGOMERY SECURITIES
RAYMOND JAMES &
ASSOCIATES, INC.
PROSPECTUS
DATED , 1996
<PAGE> 71
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION
Set forth below are the approximate amounts of the fees and expenses
payable by the Company in connection with the offering described in the
Registration Statement; all amounts are estimated except for the SEC
registration fee:
<TABLE>
<S> <C>
SEC registration fee..................................................... $ 33,903
NYSE and NASD fees....................................................... 56,150
Printing and engraving expenses.......................................... 150,000
Accounting fees and expenses............................................. 150,000
Legal fees and expenses.................................................. 225,000
Blue sky fees and expenses (including legal fees)........................ 20,000
Transfer agent's and registrar's fees and expenses....................... 5,000
Miscellaneous............................................................ 109,947
----------
Total.......................................................... $750,000
==========
</TABLE>
ITEM 15. INDEMNIFICATION OF DIRECTORS AND OFFICERS
Under Sections 78.751 and 78.752 of the Nevada Revised Statutes, the
Company has broad powers to indemnify and insure its directors and officers
against liabilities they may incur in their capacities as such.
Article VIII of the Company's Restated Articles of Incorporation and
Article 10 of the Company's Restated Bylaws provide for indemnification of its
directors, officers, employees and other agents to the maximum extent permitted
by law. The Company also has entered into Indemnification Agreements with its
executive officers and directors and provides indemnity insurance pursuant to
which directors and officers are indemnified or insured against liability or
loss under certain circumstances which may include liability, or related loss
under the Securities Act and the Exchange Act.
Under the terms of the Form of Underwriting Agreement, filed as an exhibit
hereto, directors, certain officers and controlling persons of the Company are
entitled to indemnification under certain circumstances including proceedings
under the Securities Act and the Exchange Act.
ITEM 16. EXHIBITS
<TABLE>
<C> <S>
1 Form of Underwriting Agreement (to be filed by amendment).
3.1 Restated Articles of Incorporation (filed as an Exhibit to Registrant's Registration
Statement on Form S-1, File No. 33-64006, which became effective on October 15, 1993
and incorporated herein).
3.2 Restated Bylaws.
5 Opinion of Morrison & Foerster LLP (to be filed by amendment).
23.1 Consent of Deloitte & Touche LLP.
23.2 Consent of Morrison & Foerster LLP (to be included in Exhibit 5 to this Registration
Statement).
23.3 Consent of Coopers & Lybrand L.L.P.
24 Powers of Attorney (see Pages II-3 to II-4).
</TABLE>
ITEM 17. UNDERTAKINGS
(a) The undersigned Registrants hereby undertake that, for purposes of
determining any liability under the Securities Act of 1933, each filing of the
Registrants' annual reports pursuant to Section 13(a)
II-1
<PAGE> 72
or Section 15(d) of the Securities Exchange Act of 1934 (and, where applicable,
each filing of an employee benefit plan's annual report pursuant to Section
15(d) of the Securities Exchange Act of 1934) that is incorporated by reference
in the registration statement shall be deemed to be a new registration statement
relating to the securities offered therein, and the offering of such securities
at that time shall be deemed to be the initial bona fide offering thereof.
(b) Insofar as indemnification for liabilities arising under the Securities
Act of 1933 may be permitted to directors, officers and controlling persons of
the registrants pursuant to the foregoing provisions, or otherwise, the
registrants have been advised that in the opinion of the Securities and Exchange
Commission such indemnification is against public policy as expressed in the Act
and is, therefore, unenforceable. In the event that a claim for indemnification
against such liabilities (other than the payment by the registrants of expenses
incurred or paid by a director, officer or controlling person of the registrants
in the successful defense of any action, suit or proceeding) is asserted by such
director, officer or controlling person in connection with the securities being
registered, the Registrants will, unless in the opinion of its counsel the
matter has been settled by controlling precedent, submit to a court of
appropriate jurisdiction the question whether such indemnification by it is
against public policy as expressed in the Act and will be governed by the final
adjudication of such issue.
(c) The undersigned Registrants hereby understand that:
(i) For purposes of determining any liability under the Securities Act
of 1933, the information omitted from the form of prospectus filed as part
of this Registration Statement in reliance upon Rule 430A and contained in
a form of prospectus filed by the Registrants pursuant to Rule 424(b)(1) or
(4) or 497(h) under the Securities Act shall be deemed to be a part of this
Registration Statement as of the time it was declared effective.
(ii) For the purpose of determining any liability under the Securities
Act of 1933, each posteffective amendment that contains a form of
prospectus shall be deemed to be a new registration statement relating to
the securities offered therein, and the offering of such securities at that
time shall be deemed to be the initial bona fide offering thereof.
II-2
<PAGE> 73
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, as amended, the
Company certifies that it has reasonable grounds to believe that it meets all of
the requirements for filing on Form S-3 and has duly caused this Registration
Statement to be signed on its behalf by the undersigned, thereunto duly
authorized in the City of Las Vegas, State of Nevada, on June 7, 1996.
BOYD GAMING CORPORATION
By: /s/ WILLIAM S. BOYD
------------------------------------
Title Chief Executive Officer
-----------------------------------
POWER OF ATTORNEY
Each of the undersigned hereby appoints William S. Boyd, Ellis Landau and
Keith Smith, and each of them (with full power in each to act alone), as
attorneys and agents for the undersigned, with full power of substitution for
and in the name, place, and stead of the undersigned, to sign and file with the
Securities and Exchange Commission under the Securities Act of 1933 any and all
amendments and exhibits to this Registration Statement and any and all
applications, instruments, and other documents to be filed with the Securities
and Exchange Commission pertaining to the registration of the securities covered
hereby, with full power and authority to do and perform any and all acts and
things whatsoever requisite or desirable, hereby ratifying and confirming all
that each of said attorneys-in-fact, his substitute or substitutes, may do or
cause to be done by virtue hereof.
Pursuant to the requirements of the Securities Act of 1933, as amended,
this Registration Statement has been signed below by the following persons and
in the capacities indicated on the date indicated.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
- -------------------------------------- ---------------------------------------- -------------
<S> <C> <C>
/s/ WILLIAM S. BOYD Chairman of the Board of Directors, June 7, 1996
- -------------------------------------- Chief Executive Officer and Director
William S. Boyd (Principal Executive Officer)
/s/ ELLIS LANDAU Senior Vice President, Chief Financial June 7, 1996
- -------------------------------------- Officer and Treasurer (Principal
Ellis Landau Financial Officer)
/s/ KEITH SMITH Vice President and Controller June 7, 1996
- -------------------------------------- (Principal Accounting Officer)
Keith Smith
/s/ ROBERT L. BOUGHNER Director June 7, 1996
- --------------------------------------
Robert L. Boughner
/s/ WILLIAM R. BOYD Director June 7, 1996
- --------------------------------------
William R. Boyd
/s/ MARIANNE BOYD JOHNSON Director June 7, 1996
- --------------------------------------
Marianne Boyd Johnson
/s/ KENNY C. GUINN Director June 7, 1996
- --------------------------------------
Kenny C. Guinn
</TABLE>
II-3
<PAGE> 74
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
- -------------------------------------- ---------------------------------------- -------------
<S> <C> <C>
/s/ WARREN L. NELSON Director June 7, 1996
- --------------------------------------
Warren L. Nelson
Director June , 1996
- --------------------------------------
Charles L. Ruthe
/s/ DONALD D. SNYDER Director June 7, 1996
- --------------------------------------
Donald D. Snyder
/s/ PERRY B. WHITT Director June 7, 1996
- --------------------------------------
Perry B. Whitt
</TABLE>
II-4
<PAGE> 75
INDEX TO EXHIBITS
<TABLE>
<CAPTION>
SEQUENTIALLY
EXHIBIT NUMBERED
NUMBER DESCRIPTION PAGES
- ------ ------------------------------------------------------------------------ ------------
<C> <S> <C>
1 Form of Underwriting Agreement (to be filed by amendment)...............
3.1 Restated Articles of Incorporation (filed as an Exhibit to Registrant's
Registration Statement on Form S-1, File No. 33-64006, which became
effective on October 15, 1993 and incorporated herein)..................
3.2 Restated Bylaws.........................................................
5 Opinion of Morrison & Foerster LLP (to be filed by amendment)...........
23.1 Consent of Deloitte & Touche LLP........................................
23.2 Consent of Morrison & Foerster LLP (to be included in Exhibit 5 to this
Registration Statement).................................................
23.3 Consent of Coopers & Lybrand L.L.P......................................
24 Powers of Attorney (see Pages II-3 to II-4).............................
</TABLE>
<PAGE> 1
Exhibit 3.2
RESTATED BY-LAWS OF
BOYD GAMING CORPORATION
(A NEVADA CORPORATION)
ARTICLE I
OFFICES
SECTION 1.1. Principal Office. The principal offices of the corporation
shall be in the City of Las Vegas, State of Nevada, or other location as the
Board of Directors may determine.
SECTION 1.2. Other Offices. The corporation may also have offices at
such other places both within and without the State of Nevada as the Board of
Directors may from time to time determine or the business of the corporation may
require.
ARTICLE 2
MEETINGS OF STOCKHOLDERS
SECTION 2.1. Place of Meeting. All meetings of stockholders shall be
held at such place, either within or without the State of Nevada, as shall be
designated from time to time by the Board of Directors and stated in the notice
of the meeting.
SECTION 2.2. Annual Meetings. The annual meeting of stockholders shall
be held at such date and time as shall be designated from time to time by the
Board of Directors and stated in the notice of the meeting.
SECTION 2.3. Special Meetings. Special meetings of the stockholders,
for any purpose or purposes, unless otherwise prescribed by statute or by the
Articles of Incorporation of the corporation, as amended (the "Articles of
Incorporation"), may be called by the Chairman of the Board, the President or by
the Board of Directors or by written order of a majority of the directors and
shall be called by the Chairman of the Board, the President or the Secretary at
the request in writing of stockholders owning a majority in amount of the entire
capital stock of the corporation issued and outstanding and entitled vote. Such
request shall state the purposes of the proposed meeting. The officers or
directors shall fix the time and any place, either within or without the State
of Nevada, as the place for holding such meeting.
SECTION 2.4. Notice of Meeting. Written notice of the annual and each
special meeting of stockholders, stating the time, place and purpose or purposes
thereof, shall be given to each stockholder entitled to vote thereat, not less
than 10 nor more than 60 days before the
1
<PAGE> 2
meeting and shall be signed by the Chairman of the Board, the President or the
Secretary of the Corporation.
SECTION 2.5. Business Conducted at Meetings. At a meeting of the
stockholders, only such business shall be conducted as shall have been properly
brought before the meeting. To be properly brought before a meeting, business
must be (a) specified in the notice of meeting (or any supplement thereto) given
by or at the direction of the Chairman of the Board, the President or the Board
of Directors, or (b) otherwise properly brought before the meeting by a
stockholders. For business to be properly brought before a meeting by a
stockholder, the stockholder must have given timely notice thereof in writing to
the Secretary of the corporation. To be timely, a stockholder's notice must be
delivered to or mailed and received at the principal executive offices of the
corporation not less than 60 days prior to the meeting. A stockholder's notice
to the Secretary shall set forth as to each matter the stockholder proposes to
bring before the meeting (a) the reasons for conducting such business at the
meeting, (b) the name and address, as they appear on the corporation's books, of
the stockholder proposing such business, (c) the class and number of shares of
the corporation which are beneficially owned by the stockholder, and (d) any
material interest of the stockholder in such business. Notwithstanding anything
in the by-laws to the contrary, no business shall be conducted at a meeting
except in accordance with the procedures set forth in this Section 2.5. The
Chairman of the meeting shall, if the facts warrant, determine and declare to
the meeting that business was not properly brought before the meeting and in
accordance with the provisions of this Section 2.5, and, if he should so
determine, he shall so declare to the meeting, and any such business not
properly brought before the meeting shall not be transacted.
SECTION 2.6. Nomination of Directors. Nomination of candidates for
election as directors of the corporation at any meeting of stockholders called
for election of directors, in whole or in part (an "Election Meeting"), may be
made by the Board of Directors or by any stockholder entitled to vote at such
Election Meeting, in accordance with the following procedures:
2.6.1. Nominations made by the Board of Directors shall be
made at a meeting of the Board or by written consent of the directors in lieu of
a meeting prior to the date of the Election Meeting. At the request of the
Secretary of the corporation, each proposed nominee shall provide the
corporation with such information concerning himself as is required, under the
rules of the Securities and Exchange Commission ("SEC"), to be included in the
corporation's proxy statement soliciting proxies for his election as a director.
2.6.2. Not less than 60 days prior to the date of the Election
Meeting, any stockholder who intends to make a nomination at the Election
Meeting shall deliver a notice to the Secretary of the corporation setting forth
(a) the name, age, business address and the residence address of each nominee
proposed in such notice, (b) the principal occupation or employment of such
nominee, (c) the number of shares of capital stock of the corporation which are
beneficially owned by each such nominee, (d) such other information concerning
each such nominee as would be required, under the rules of the SEC, in a proxy
statement soliciting proxies
2
<PAGE> 3
for the election of such nominees. Such notice shall include a signed consent to
serve as a director of the-corporation, if elected, of each such nominee.
2.6.3. In the event that a person is validly designated as a
nominee in accordance with this Section 2.6 and shall thereafter become unable
or willing to stand for election to the Board of Directors, the Board of
Directors or the stockholder who proposed such nominee, as the case may be, may
designate a substitute nominee.
2.6.4. If the Chairman of the Election Meeting determines that
a nomination was not made in accordance with the foregoing procedures, such
nomination shall be void.
SECTION 2.7. Quorum. The holders of a majority of the stock issued and
outstanding and entitled to vote thereat, present in person or represented by
proxy, shall constitute a quorum at any meeting of stockholders for the
transaction of business except when stockholders are required to vote by class,
in which event a majority of the issued and outstanding shares of the
appropriate class shall be present in person or by proxy, and except as
otherwise provided by statute or by the Articles of Incorporation.
Notwithstanding any other provision of the Articles of Incorporation or by these
by-laws, the holders of a majority of the shares of capital stock entitled to
vote thereat, present in person or represented by proxy, whether or not a quorum
is present, shall have power to adjourn the meeting from time to time, without
notice other than announcement at the meeting, until a quorum shall be present
or represented. If the adjournment is for more than 30 days, or if after the
adjournment a new record date is fixed for the adjourned meeting, a notice of
the adjourned meeting shall be given to each stockholder of record entitled to
vote at the meeting. At such adjourned meeting at which a quorum shall be
present or represented any business may be transacted which might have been
transacted at the meeting as originally notified.
SECTION 2.8. Voting. When a quorum is present at any meeting of the
stockholders, the vote of the holders of a majority of the stock having voting
power present in person or represented by proxy shall decide any question
brought before such meeting, unless the question is one upon which, by express
provision of the statutes, of the Articles of Incorporation or of these by-laws,
a different vote is required, in which case such express provision shall govern
and control the decision of such question. Every stockholder having the right to
vote shall be entitled to vote in person, or by proxy appointed by an instrument
in writing subscribed by such stockholder or by his duly authorized attorney;
provided, however, that no such proxy shall be valid after the expiration of six
months from the date of its execution, unless coupled with an interest, or
unless the person executing it specifies therein the length of time for which it
is to continue in force, which in no case shall exceed seven years from the date
of its execution. If such instrument shall designate two or more persons to act
as proxies, unless such instrument shall provide the contrary, a majority of
such persons present at any meeting at which their powers thereunder are to be
exercised shall have and may exercise all the powers of voting or giving
consents thereby conferred, or if only one be present, then such powers may be
exercised by that one; or, if an even number attend and a majority do not agree
on any particular issue, each proxy so attending shall be entitled to exercise
such powers, in representing such shares. Unless
3
<PAGE> 4
required by statute or determined by the Chairman of the meeting to be
advisable, the vote on any question need not be by written ballot. No
shareholder shall have cumulative voting rights.
SECTION 2.9. Consent of Stockholders. Whenever the vote of the
stockholders at a meeting thereof is required or permitted to be taken for or in
connection with any corporate action, the meeting and vote of stockholders may
be dispensed with if all the stockholders who would have been entitled to vote
upon the action if such meeting were held shall consent in writing to such
corporate action being taken; or if the Articles of Incorporation authorize the
action to be taken with the written consent of the holders of less than all the
stock who would have been entitled to vote upon the action if a meeting were
held, then on the written consent of the stockholders having not less than such
percentage of the number of votes as may be authorized in the Articles of
Incorporation; provided, that in no case shall the written consent be by the
holders of stock having less than the minimum percentage of the vote required by
statute, and provided that prompt notice must be given to all stockholders of
the taking of corporate action without a meeting and less than unanimous written
consent.
SECTION 2.10. Voting of Stock of Certain Holders. Shares standing in
the name of another corporation, domestic or foreign, may be voted by such
officer, agent or proxy as the by-laws of such corporation may prescribe, or in
the absence of such provision, as the Board of Directors of such corporation may
determine. Shares standing in the name of a deceased person may be voted by the
executor or administrator of such deceased person, either in person or by proxy.
Shares standing in the name of a guardian, conservator or trustee may be voted
by such fiduciary, either in person or by proxy, but no such fiduciary shall be
entitled to vote shares held in such fiduciary capacity without a transfer of
such shares into the name of such fiduciary. Shares outstanding in the name of a
receiver may be voted by such receiver. A stockholder whose shares are pledged
shall be entitled to vote such shares, unless in the transfer by the pledgor on
the books of the corporation, he has expressly empowered the pledgee to vote
thereon, in which case only the pledgee, or his proxy, may represent the stock
and vote thereon.
SECTION 2.11. Treasury Stock. The corporation shall not vote, directly
or indirectly, shares of its own stock owned by it; and such shares shall not be
counted in determining the total number outstanding shares.
SECTION 2.12. Fixing Record Date. The Board of Directors may fix in
advance a date, not exceeding 60 nor less than 10 days preceding the date of any
meeting of stockholders, or the date for payment of any dividend or
distribution, or the date for the allotment of rights, or the date when any
change or conversion or exchange of capital stock shall go into effect, or a
date in connection with obtaining a consent, as a record date for the
determination of the stockholders entitled to notice of, and to vote at any such
meeting and any adjournment thereof, or entitled to receive payment of any such
dividend or distribution, or to receive any such allotment of rights, or to
exercise the rights in respect of any such change, conversion or exchange of
capital stock, or to give such consent, and in such case such stockholders and
only such stockholders as shall be stockholders of record on the date so fixed
shall be entitled to such notice of and to vote at any such meeting and any
adjournment thereof, or to receive payment of such dividend or distribution, or
to receive such allotment of rights, or to exercise such rights, or
4
<PAGE> 5
to give such consent, as the case may be, notwithstanding any transfer of any
stock on the books of the corporation after any such record date fixed as
aforesaid.
ARTICLE 3
BOARD OF DIRECTORS
SECTION 3.1. Powers. The business and affairs of the corporation shall
be managed by its Board of Directors, which may exercise all such powers of the
corporation and do all such lawful acts and things as are not by statute or by
the Articles of Incorporation or by these by-laws directed or required to be
exercised or done by the stockholders.
SECTION 3.2. Number, Election and Term. The number of directors which
shall constitute the whole board shall be not less than five and not more than
nine. Within the limits above specified, the number of the directors of the
corporation shall be determined by resolution of the Board of Directors. The
directors shall be classified as set forth in the Articles of Incorporation.
Except as provided in Section 3.3, the directors shall be elected at the annual
meeting of stockholders and shall hold office until his successor is elected and
qualified. At each annual meeting of stockholders, the successors to the class
of directors whose term shall then expire shall be elected to hold office for a
term expiring at the third succeeding annual meeting. A minimum of two of the
directors must be "outside" directors. The term "outside" director shall mean a
director who is not an employee, officer or former officer of the corporation or
a subsidiary or division thereof, or a relative of a principal executive
officer, or who is not an individual member of an organization acting as an,
advisor, consultant, legal counsel, etc., receiving compensation on a continuing
basis from the corporation in addition to director's fees. Directors need not be
residents of Nevada or stockholders of the corporation.
SECTION 3.3. Vacancies, Additional Directors and Removal From Office.
If any vacancy occurs in the Board of Directors caused by death, resignation,
retirement, disqualification or removal from office of any director, or
otherwise, or if any new directorship is created by an increase in the
authorized number of directors, a majority of the directors then in office,
though less than a quorum, or a sole remaining director, may choose a successor
or fill the newly created directorship; any director so chosen shall hold office
until the next election of the class for which such director shall have been
chosen and until his successor shall be elected and qualified, unless sooner
displaced. No decrease in the number of directors constituting the Board of
Directors shall shorten the term of any incumbent director. Notwithstanding any
other provisions of these by-laws or the fact that some lesser percentage may be
specified by law, any director or the entire Board of Directors may be removed
at any time, but only for cause or only by the affirmative vote of the holders
of 66-2/3% or more of the outstanding shares of the capital stock of this
Corporation entitled to vote generally in the election of directors (considered
for this purpose as one class) cast at a meeting of the stockholders called for
that purpose.
5
<PAGE> 6
SECTION 3.4. Regular Meetings. A regular meeting of the Board of
Directors shall be held each year, without other notice than this by-law, at the
place of, and immediately following, the annual meeting of stockholders; and
other regular meetings of the Board of Directors shall be held during each year,
at such time and place as the Board of Directors may from time to time provide
by resolution, either within or without the State of Nevada, without other
notice than such resolution.
SECTION 3.5. Special Meeting. A special meeting of the Board of
Directors may be called by the Chairman of the Board or by the President and
shall be called by the Secretary on the written request of any two directors.
The Chairman of the Board or President so calling, or the directors so
requesting, any such meeting shall fix the time and any place, either within or
without the State of Nevada, as the place for holding such meeting.
SECTION 3.6. Notice of Special Meeting. Written notice of special
meetings of the Board of Directors shall be given to each director at least 48
hours prior to the time of such meeting. Any director may waive notice of any
meeting. The attendance of a director at any meeting shall constitute a waiver
of notice of such meeting, except where a director attends a meeting solely for
the purpose of objecting to the transaction of any business because the meeting
is not lawful called or convened. Neither the business to be transacted at, nor
the purpose of, any special meeting of the Board of Directors need be specified
in the notice or waiver of notice of such meeting, except that notice shall be
given with respect to any matter where notice is required by statute.
SECTION 3.7. Quorum. A majority of the Board of Directors shall
constitute a quorum for the transaction of business at any meeting of the Board
of Directors, and the act of a majority of the directors present at any meeting
at which there is quorum shall be the act of the Board of Directors, except as
may be otherwise specifically provided by statute, by the Articles of
Incorporation or by these by-laws. If a quorum shall not be present at any
meeting of the Board of Directors, the directors present thereat may adjourn the
meeting from time to time, without notice other than announcement at the
meeting, until a quorum shall be present.
SECTION 3.8. Action Without Meeting. Unless otherwise restricted by the
Articles of Incorporation or these by-laws, any action required or permitted to
be taken at any meeting of the Board of Directors, or of any committee thereof
as provided in Article IV of these by-laws, may be taken without a meeting, if a
written consent thereto is signed by all members of the Board or of such
committee, as the case may be.
SECTION 3.9. Meeting by Telephone. Any action required or permitted to
be taken by the Board of Directors or any committee thereof may be taken by
means of a meeting by conference telephone network or similar communications
method so long as all persons participating in the meeting can hear each other.
Any person participating in such meeting shall be deemed to be present in person
at such meeting.
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ARTICLE 4
COMMITTEES OF DIRECTORS
SECTION 4.1. Executive Committee. The Board of Directors may, by
resolution passed by a majority of the whole Board, designate an Executive
Committee of the Board of Directors (the "Executive Committee"). If such a
committee is designated by the Board of Directors, it shall be composed of
members who are directors, and the members of the Executive Committee shall be
designated by the Board of Directors in the resolution appointing the Executive
Committee. Thereafter, the Board of Directors shall designate the members of the
Executive Committee on an annual basis at its first regular meeting held
pursuant to Section 3.4 of these by-laws after the annual meeting of
stockholders or as soon thereafter as conveniently possible. The Executive
Committee shall have and may exercise all of the powers of the Board of
Directors during the period between meetings of the Board of Directors except as
reserved to the Board of Directors or as delegated by these by-laws or by the
Board of Directors to another standing or special committee or as may be
prohibited by law.
SECTION 4.2. Audit Committee. The Audit Committee of the Board of
Directors (the "Audit Committee") shall be designated annually by the Board of
Directors at its first regular meeting held pursuant to Section 3.4 of these
by-laws after the annual meeting of stockholders or as soon thereafter as
conveniently possible. The Audit Committee shall consist solely of directors who
are independent of management and who are free from any relationship that, in
the opinion of the Board of Directors, would interfere with the designated
director's exercise of independent judgment as a member of the Audit Committee.
SECTION 4.3. Compensation and Stock Option Committee. The Compensation
and Stock Option Committee of the Board of Directors (the "Compensation and
Stock Option Committee") shall consist of two or more directors to be designated
annually by the Board of Directors at its first regular meeting held pursuant to
Section 3.4 of these by-laws after the annual meeting of stockholders or as soon
thereafter as conveniently possible. The Compensation and Stock Option Committee
shall consist of at least two "outside" directors.
SECTION 4.4. Other Committees. The Board of Directors may, by
resolution passed by a majority of the whole Board, designate one or more
additional special or standing committees, each such additional committee to
consist of one or more of the directors of the corporation. Each such committee
shall have and may exercise such of the powers of the Board of Directors in the
management of the business and affairs of the corporation as may be provided in
such resolution, except as delegated by these by-laws or by the Board of
Directors to another standing or special committee or as may be prohibited by
law.
SECTION 4.5. Committee Operations. A majority of a committee shall
constitute a quorum for the transaction of any committee business. Such
committee or committees shall have such name or names and such limitations of
authority as provided in these by-laws or as may be determined from time to time
by resolution adopted by the Board of Directors. The corporation
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shall pay all expenses of committee operations. The Board of Directors may
designate one or more appropriate directors as alternate members of any
committee, who may replace any absent or disqualified member at any meeting of
such committee. In the absence or disqualification of any members of such
committee or committees, the member or members thereof present at any meeting
and not disqualified from voting, whether or not he or they constitute a quorum,
may unanimously appoint another appropriate member of the Board of Directors to
act at the meeting in the place of any absent or disqualified member.
SECTION 4.6. Minutes. Each committee of directors shall keep regular
minutes of its proceedings and report the same to the Board of Directors when
required. The Secretary or any Assistant Secretary of the corporation shall (a)
serve as the Secretary of the special or standing committees of the Board of
Directors of the corporation, (b) keep regular minutes of standing or special
committee proceedings, (c) make available to the Board of Directors, as
required, copies of all resolutions adopted or minutes or reports of other
actions recommended or taken by any such standing or special committee and (d)
otherwise as requested keep the members of the Board of Directors apprised of
the actions taken by such standing or special committees.
SECTION 4.7. Compensation. Directors, as such may receive reasonable
compensation for their services which shall be set by the Board of Directors and
expenses of attendance at each regular or special meeting of the Board;
provided, however, that nothing herein contained shall be construed to preclude
any director from serving the corporation in any other capacity and receiving
additional compensation therefor. Members of special or standing committees may
be allowed like compensation for attending committee meetings.
ARTICLE 5
NOTICE
SECTION 5.1. Methods of Giving Notice. Whenever under the provisions of
the statutes, the Articles of Incorporation or these by-laws, notice is required
to be given to any director, member of any committee or stockholder, personal
notice is not required but such notice may be given in writing and mailed to
such director, member or stockholder; provided that in the case of a director or
a member of any committee such notice may be given orally or by telephone or
telegram. If mailed, notice to a director, member of a committee or stockholder
shall be deemed to be given when deposited in the United States mail first class
in a sealed envelope, with postage thereon prepaid, addressed, in the case of a
stockholder, to the stockholder at the stockholder's address as it appears on
the records of the corporation or, in the case of a director or a member of a
committee to such person at his business address. If sent by telegraph, notice
to a director or member of a committee shall be deemed to be given when the
telegraph, so addressed, is delivered to the telegraph company.
SECTION 5.2. Written Waiver. Whenever any notice is required to be
given by statute, the Articles of Incorporation or these by-laws, a waiver
thereof in writing, signed by the
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person or persons entitled to said notice, whether before or after the time
stated therein, shall be deemed equivalent thereto.
SECTION 5.3. Consent. Whenever all parties entitled to vote at any
meeting, whether of directors or stockholders, consent, either by a writing on
the records of the meeting or filed with the secretary, or by presence at such
meeting and oral consent entered on the minutes, or by taking part in the
deliberations at such meeting without objection, the actions taken at such
meeting shall be as valid as if had at a meeting regularly called and noticed,
and at such meeting any business may be transacted which is not excepted from
the written consent or to the consideration of which no objection for lack of
notice is made at the time, and if any meeting be irregular for lack of notice
or such consent, provided a quorum was present at such meeting, the proceedings
of such meeting may be ratified and approved and rendered valid and the
irregularity or defect therein waived by a writing signed by all parties having
the right to vote thereat. Such consent or approval, if given by stockholders,
may be by proxy or attorney, but all such proxies and powers of attorney must be
in writing.
ARTICLE 6
OFFICERS
SECTION 6.1. Officers. The Board of Directors shall elect and appoint
all. the officers of the corporation. The officers of the corporation shall
include, without limitation, the Chairman of the Board, President, Secretary and
Treasurer and such other officers and agents, including, without limitation, one
or more Vice Presidents (any one or more of which may be designated Executive
Vice President or Senior Vice President), Assistant Vice Presidents, Assistant
Secretaries and Assistant Treasurers, as they deem necessary, who shall hold
their offices for such terms and shall exercise such powers and perform such
duties as prescribed by the Board of Directors or Chairman of the Board. Any two
or more offices may be held by the same person. No officer shall execute,
acknowledge, verify or countersign any instrument on behalf of the corporation
in more than one capacity, if such instrument is required by law, by these
by-laws or by any act of the corporation to be executed, acknowledged, verified
or countersigned by two or more officers. The Chairman of the Board shall be
elected from among the directors. With the foregoing exception, none of the
other officers need be a director, and none of the officers need be a
stockholder of the corporation.
SECTION 6.2. Election and Term of Office. The officers of the
corporation shall be elected annually by the Board of Directors at its first
regular meeting held after the annual meeting of stockholders or as soon
thereafter as conveniently possible. Each officer shall hold office until his
successor shall have been chosen and shall have qualified or until his death or
the effective date of this resignation or removal, or until he shall cease to be
a director in the case of the Chairman of the Board.
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SECTION 6.3. Removal and Resignation. Any officer or agent may be
removed, either with or without cause, by the affirmative vote of a majority of
the Board of Directors whenever, in its judgment, the best interests of the
corporation shall be served thereby, but such removal shall be without prejudice
to the contractual rights, if any, of the person so removed. Any executive
officer or other officer or agent may resign at any time by giving written
notice to the corporation. Any such resignation shall take effect at the date of
the receipt of such notice or at any later time specified therein, and unless
otherwise specified therein, the acceptance of such resignation shall not be
necessary to make it effective.
SECTION 6.4. Vacancies. Any vacancy occurring in any office of the
corporation by death, resignation, removal or otherwise, shall be filled by the
Board of Directors for the unexpired portion of the term.
SECTION 6.5. Salaries. The salary of the Chief Executive Officer shall
be determined by the Compensation and Stock Option Committee. Salaries of all
other officers of the corporation shall be determined by the Chief Executive
Officer in consultation with the Compensation and Stock Option Committee; and no
officer who is also a director shall be prevented from receiving such salary by
reason of his also being a director.
SECTION 6.6. Chairman of the Board. The Chairman of the Board shall
preside at all meetings of the Board of Directors and of the stockholders of the
corporation. In the Chairman's absence, such duties shall be attended to by the
President. The Chairman of the Board shall hold the position of chief executive
officer of the corporation and shall perform shall duties as usually pertain to
the position of chief executive officer and such duties as may be prescribed by
the Board of Directors or the Executive Committee. The Chairman of the Board
shall formulate and submit to the Board of Directors or the Executive Committee
matters of general policy for the corporation and shall perform such other
duties as usually appertain to the office or as may be prescribed by the Board
of Directors. He may sign with the President or any other officer of the
corporation thereunto authorized by the Board of Directors certificates for
shares of the corporation, the issuance of which shall have been authorized by
resolution of the Board of Directors, and any deeds or bonds, which the Board of
Directors or the Executive Committee has authorized to be executed, except in
cases where the signing and execution thereof has been expressly delegated or
reserved by these by-laws or by the Board of Directors or the Executive
Committee to some other officer or agent of the corporation, or shall be
required by law to be otherwise executed.
SECTION 6.7. President. The President, subject to the control of the
Board of Directors, the Executive Committee, and the Chairman of the Board,
shall in general supervise and control the business and affairs of the
corporation. The President shall keep the Board of Directors, the Executive
Committee and the Chairman of the Board fully informed as they or any of them
shall request and shall consult them concerning the business of the corporation.
He may sign with the Chairman of the Board or any other officer of the
corporation thereunto authorized by the Board of Directors, certificates for
shares of capital stock of the corporation, the issuance of which shall have
been authorized by resolution of the Board of Directors, and any deeds, bonds,
mortgages, contracts, checks, notes, drafts or other instruments which the Board
of
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Directors or the Executive Committee has authorized to be executed, except in
cases where the signing and execution thereof has been expressly delegated by
these by-laws or by the Board of Directors or the Executive Committee to some
other officer or agent of the corporation, or shall be required by law to be
otherwise executed. In general he shall perform all other duties normally
incident to the office of the President, except any duties expressly delegated
to other persons by these by-laws, the Board of Directors, or the Executive
Committee, and such other duties as may be prescribed by the stockholders,
Chairman of the Board, the Board of Directors or the Executive Committee, from
time to time.
SECTION 6.8. Vice Presidents. In the absence of the President, or in
the event of his inability or refusal to act, the Executive Vice President (or
in the event there shall be or more than one Vice President designated Executive
Vice President, any Executive Vice President designated by the Board) shall
perform the duties an exercise the powers of the President. Any Vice President
authorized by resolution of the Board of Directors to do so, may sign with any
other officer of the corporation thereunto authorized by the Board of Directors,
certificates for shares of capital stock of the corporation, the issuance of
which shall have been authorized by resolution of the Board of Directors. The
Vice Presidents shall perform such other duties as from time to time may be
assigned to them by the Chairman of the Board, the Board of Directors or the
Executive Committee.
SECTION 6.9. Secretary. The Secretary shall (a) keep the minutes of the
meetings of the stockholders, the Board of Directors and committees of
directors; (b) see that all notices are duly given in accordance with provisions
of these by-laws and as required by law; (c) be custodian of the corporate
records and of the seal of the corporation, and see that the seal of the
corporation or a facsimile thereof is affixed to all certificates for shares
prior to the issuance thereof and to all documents, the execution of which on
behalf of the corporation under its seal is duly authorized in accordance with
the provisions of these by-laws; (d) keep or cause to be kept a register of the
post office address of each stockholder which shall be furnished by such
stockholder; (e) have general charge of other stock transfer books of the
corporation; and (f) in general, perform all duties normally incident to the
office of the Secretary and such other duties as from time to time may be
assigned to him by the Chairman of the Board, the President, the Board of
Directors or the Executive Committee.
SECTION 6.10. Treasurer. The Treasurer shall (a) have charge and
custody of and be responsible for all funds and securities of the corporation;
receive and give receipts for moneys due and payable to the corporation from any
source whatsoever and deposit all such moneys in the name of the corporation in
such banks, trust companies or other depositories as shall be selected in
accordance with the provisions of Section 7.3 of these by-laws; (b) prepare, or
cause to be prepared, for submission at each regular meeting of the Board of
Directors, at each annual meeting of stockholders, and at such other times as
may be required by the Board of Directors, the Chairman of the Board, the
President or the Executive Committee, a statement of financial condition of the
corporation in such detail as may be required; and (c) in general, perform all
the duties incident to the office of Treasurer and such other duties as from
time to time may be assigned to him by the Chairman of the Board, the President,
the Board of Directors or the Executive Committee. If required by the Board of
Directors or the Executive Committee, the
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Treasurer shall give a bond for the faithful discharge of his duties as such sum
and with such surety or sureties as the Board of Directors or the Executive
Committee shall determine.
SECTION 6.11. Assistant Secretary or Treasurer. The Assistant
Secretaries and Assistant Treasurers shall, in general, perform such duties as
shall be assigned to them by the Secretary or the Treasurer, respectively, or by
the Chairman of the Board, the President, the Board of Directors or the
Executive Committee. The Assistant Secretaries or Assistant Treasurers shall, in
the absence of the Secretary or Treasurer, respectively, perform all functions
and duties which such absent officers may delegate, but such delegation shall
not relieve the absent officer from the responsibilities and liabilities of his
office. The Assistant Treasurers shall respectively, if required by the Board of
Directors or the Executive Committee, give bonds for the faithful discharge of
their duties in such sums with such sureties as the Board of Directors or the
Executive Committee shall determine.
ARTICLE 7
CONTRACTS, CHECKS AND DEPOSITS
SECTION 7.1. Contracts. Subject to the provisions of Section 6.1, the
Board of Directors or the Executive Committee may authorize any officer,
officers, agent or agents, to enter into any contract or execute and deliver an
instrument in the name of and on behalf of the corporation, and such authority
may be general or confined to specific instances.
SECTION 7.2. Checks, etc. All checks, demands, drafts or other orders
for the payment of money, notes or other evidences of indebtedness issued in the
name of the corporation, shall be signed by such officer or officers or such
agent or agents of the corporation, and in such manner, as shall be determined
by the Board of Directors or the Executive Committee.
SECTION 7.3. Deposits. All funds of the corporation not otherwise
employed shall be deposited from time to time to the credit of the corporation
in such banks, trust companies or other depositories as the Chairman of the
Board, the President or the Treasurer may be empowered by the Board of Directors
or the Executive Committee to select or as the Board of Directors or the
Executive Committee may select.
ARTICLE 8
CERTIFICATE OF STOCK
SECTION 8.1. Issuance. Each stockholder of this corporation shall be
entitled to a certificate or certificates showing the number of shares of stock
registered in his name on the books of the corporation. The certificates shall
be in such form as may be determined by the
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Board of Directors or the Executive Committee, shall be issued in numerical
order and shall be entered in the books of the corporation as they are issued.
They shall exhibit the holder's name and the number of shares and shall be
signed by the Chairman of the Board and the President or such other officers as
may from time to time be authorized by resolution of the Board of Directors. Any
or all the signatures on the certificate may be a facsimile. The seal of the
corporation shall be impressed, by original or by facsimile, printed or
engraved, on all such certificates. In case any officer who has signed or whose
facsimile signature has been placed upon any such certificate shall have ceased
to be such officer before such certificate is issued, such certificate may
nevertheless be issued by the corporation with the same effect as if such
officer had not ceased to be such officer at the date of its issue. If the
corporation shall be authorized to issue more than one class of stock or more
than one series of any class, the designation, preferences and relative,
participating, option or other special rights of each class of stock or series
thereof and the qualifications, limitations or restrictions of such preferences
and rights shall be set forth in full or summarized on the face or back of the
certificate which the corporation shall issue to represent such class of stock;
provided that except as otherwise provided by statute, in lieu of the foregoing
requirements there may be set forth on the face or back of the certificate which
the corporation shall issue to represent such class or series of stock, a
statement that the corporation will furnish to each stockholder who so requests
the designations, preferences and relative, participating, option or other
special rights of each class of stock or series thereof and the qualifications,
limitations or restrictions of such preferences and rights. All certificates
surrendered to the corporation for transfer shall be canceled and no new
certificate shall be issued until the former certificate for a like number of
shares shall have been surrendered and canceled, except that in the case of a
lost, stolen, destroyed or mutilated certificate a new one may be issued
therefor upon such terms and with such indemnity, if any, to the corporation as
the Board of Directors may prescribe. In addition to the above, all certificates
evidencing shares of the corporation's stock or other securities issued by the
corporation shall contain such legend or legends as may from time to time be
required by the Nevada Revised Statutes and/or the Nevada Gaming Commission
Regulations then in effect.
SECTION 8.2. Lost Certificates. The Board of Directors may direct that
a new certificate or certificates be issued in place of any certificate or
certificates theretofore issued by the corporation alleged to have been lost,
stolen or destroyed, upon the making of an affidavit of that fact by the person
claiming the certificate of stock to be lost, stolen or destroyed. When
authorizing such issue of a new certificate or certificates, the Board of
Directors may, in its discretion and as a condition precedent to the issuance
thereof, require the owner of such lost, stolen or destroyed certificate or
certificates, or his legal representative, to advertise the same in such manner
as it shall require or to give the corporation a bond in such sum as it may
direct as indemnity against any claim that may be made against the corporation
with respect to the certificate or certificates alleged to have been lost,
stolen or destroyed, or both.
SECTION 8.3. Transfers. Upon surrender to the corporation or the
transfer agent of the corporation of a certificate for shares duly endorsed or
accompanied by proper evidence of succession, assignment or authority to
transfer, it shall be the duty of the corporation to issue a new certificate and
to the person entitled thereto, cancel the old certificate and record the
transaction upon its books. Transfers of shares shall be made only on the books
of the
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corporation by the registered holder thereof, or by his attorney thereunto
authorized by power of attorney and filed with the Secretary of the corporation
or the transfer agent.
SECTION 8.4. Registered Stockholders. The corporation shall be entitled
to treat the holder of record of any share or shares of stock as the holder in
fact thereof and, accordingly, shall not be bound to recognize any equitable or
other claim to or interest in such share or shares on the part of any other
person, whether or not it shall have express or other notice thereof, except as
otherwise provided by laws of the State of Nevada.
SECTION 8.5. Uncertificated Shares. The Board of Directors may approve
the issuance of uncertificated shares of some or all of the shares of any or all
of its classes or series of capital stock.
ARTICLE 9
DIVIDENDS
SECTION 9.1. Declaration. Dividends upon the capital stock of the
corporation, subject to the provisions of the Articles of Incorporation, if any,
may be declared by the Board of Directors at any regular or special meeting,
pursuant to law. Dividends may be paid in cash, in property or in shares of
capital stock, subject to the provisions of the Articles of Incorporation.
SECTION 9.2. Reserve. Before payment of any dividend, there may be set
aside out of any funds of the corporation available for dividends such sum or
sums as the Board of Directors from time to time, in their absolute discretion,
think proper as a reserve or reserves to meet contingencies, or for equalizing
dividends, or for repairing or maintaining any property of the corporation, or
for such other purpose as the Board of Directors shall think conducive to the
interests of the corporation, and the Board of Directors may modify or abolish
any such reserve in the manner in which it was created.
ARTICLE 10
INDEMNIFICATION
SECTION 10.1. Third Party Actions. The corporation shall indemnify any
person who was or is a party or is threatened to be made a party to any
threatened, pending or completed action, suit or proceeding, whether civil,
criminal, administrative or investigative (other than an action by or in the
right of the corporation) by reason of the fact that he is or was a director,
officer, employee or agent of the corporation, or is or was serving at the
request of the corporation as a director, officer, employee or agent of another
corporation, partnership, joint venture, trust or other enterprise, against
expenses (including amounts paid in settlement and attorneys' fees), judgments
fines and amounts paid in settlement actually and reasonably incurred
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by him in connection with such action, suit or proceeding if he acted in good
faith and in a manner he reasonably believed to be in or not opposed to the best
interest of the corporation, and, with respect to any criminal action or
proceeding, had no reasonable cause to believe his conduct was unlawful. The
termination of any action, suit or proceeding by judgment, order, settlement,
conviction, or upon a plea of nolo contendere or its equivalent, shall not, of
itself create a presumption that the person did not act in good faith and in a
manner which he reasonably believed to be in or not opposed to the best
interests of the corporation, and, with respect to any criminal action or
proceeding, had reasonable cause to believe that his conduct was unlawful.
SECTION 10.2. Actions by or in the Right of the Corporation. The
corporation shall indemnify any person who was or is a party or is threatened to
be made a party to any threatened, pending or completed action or suit by or in
the right of the corporation to procure a judgment in its favor by reason of the
fact that he is or was a director, officer, employee or agent of the
corporation, or is or was serving at the request of the corporation as a
director, officer, employee or agent of another corporation, partnership, joint
venture, trust or other enterprise against expenses (including attorneys' fees)
actually and reasonably incurred by him in connection with the defense or
settlement of such action or suit if he acted in good faith and in a manner he
reasonably believed to be in or not opposed to the best interests of the
corporation. No indemnification shall be made in respect of any claim, issue or
matter as to which such person shall have been adjudged by a court of competent
jurisdiction to be liable to the corporation or for amounts paid in settlement
to the corporation, unless and only to the extent that the court in which such
action or suit was brought or other court of competent jurisdiction shall
determine upon application that in view of all the circumstances of the case,
such person is fairly and reasonably entitled to indemnify for such expenses as
the court shall deem proper.
SECTION 10.3. Successful Defense. To the extent that a director,
officer, employee or agent of the corporation has been successful on the merits
or otherwise in defense of any action, suit or proceeding referred to in
Sections 10.1 and 10.2, or in defense of any claim, issue or matter therein, he
shall be indemnified against expenses (including attorneys' fees) actually and
reasonably incurred by him in connection with the defense.
SECTION 10.4. Determination of Conduct. Any indemnification under
Section 10. 1 or 10.2 (unless ordered by a court or advanced pursuant to Section
10.5) shall be made by the corporation only as authorized in the specific case
upon a determination that indemnification of the director, officer, employee or
agent is proper in the circumstances. Such determination shall be made (a) by
the stockholders, (b) by the Board of Directors by a majority vote of a quorum
consisting of directors who were not parties to such action, suit or proceeding,
(c) if a majority vote of a quorum consisting of directors who were not parties
to the act, suit or proceedings so orders, by independent legal counsel in a
written opinion, or (d) if a quorum consisting of directors who were not parties
to the act, suit or proceeding cannot be obtained, by independent legal counsel
in a written opinion.
SECTION 10.5. Payment of Expenses in Advance. Expenses incurred in
defending a civil or criminal action, suit or proceeding shall be paid by the
corporation as they are incurred and in advance of the final disposition of such
action, suit or proceeding upon receipt of an
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undertaking by or on behalf of the director or officer, to repay such amount if
it is ultimately determined by a court of competent jurisdiction that he is not
entitled to be indemnified by the corporation. The provisions of this Section
10.5 do not affect any rights to advancement of expenses to which corporate
personnel other than directors or officers may be entitled under any contract or
otherwise by law.
SECTION 10.6. Indemnity Not Exclusive. The indemnification and
advancement of expenses authorized in or order by a court provided hereunder
shall not exclude any other rights to which a person seeking indemnification or
advancement of expenses may be entitled under the Articles of Incorporation,
agreement, vote of stockholders or disinterested directors or otherwise, for
either an action in his official capacity or an action in another capacity while
holding his office, except that indemnification, unless ordered by a court
pursuant to Section 10.2 or for the advancement of expenses made pursuant to
Section 10.5, may not be made to or on behalf of any director or officer if a
final adjudication establishes that his acts or omissions involved intentional
misconduct, fraud or a knowing violation of the law and was material to the
cause of action, and shall continue for a person who has ceased to be a
director, officer, employee or agent and insures to the benefit of the heirs,
executors and administrators of such a person.
SECTION 10.7. The Corporation. For purposes of this Article 10,
references to "the corporation" shall include, in addition to the resulting
corporation, any constituent corporation (including any constituent of a
constituent) absorbed in a consolidation or merger which, if its separate
existence had continued, would have had power and authority to indemnify its
directors, officers and employees or agents, so that any person who is or was a
director, officer, employee or agent of such constituent corporation, or is or
was serving at the request of such constituent corporation as a director,
officer, employee or agent of another corporation, partnership, joint venture,
trust or other enterprise, shall stand in the same position under and subject to
the provisions of this Article 10 (including, without limitation, the provisions
of Section 10.4) with respect to the resulting or surviving corporation as he
would have with respect to such constituent corporation if its separate
existence had continued.
ARTICLE 11
MISCELLANEOUS
SECTION 11.1. Seal. The corporate seal shall have inscribed thereon the
name of the corporation, and the words "Corporate Seal, Nevada." The seal may be
used by causing it or a facsimile thereof to the impressed or affixed or
otherwise reproduced.
SECTION 11.2. Books. The books of the corporation may be kept within or
without the State of Nevada (subject to any provisions contained in the
statutes) at such place or places as may be designated from time to time by the
Board of Directors or the Executive Committee.
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SECTION 11.3. Fiscal Year. The fiscal year of the corporation shall
begin the first day of July of each year or upon such other day as may be
designated by the Board of Directors.
ARTICLE 12
AMENDMENT
Subject to the provisions of the Articles of Incorporation, these
by-laws may be altered, amended, or repealed at any regular meeting of the
stockholders (or at any special meeting thereof duly called for the purpose) by
a majority vote of the shares represented and entitled to vote at such meeting.
Subject to the laws of the State of Nevada, the Board of Directors may, by
majority vote of those present at any meeting at which a quorum is present,
amend these by-laws, or enact such other by-laws as in their judgment may be
advisable for the regulation of the conduct of the affairs of the corporation.
<PAGE> 1
EXHIBIT 23.1
INDEPENDENT AUDITORS' CONSENT
We consent to the use in this Registration Statement of Boyd Gaming
Corporation on Form S-3 relating to the offering of $.01 par value Common Stock
of our reports dated August 18, 1995, included and incorporated by reference in
the Annual Report on Form 10-K of Boyd Gaming Corporation for the year ended
June 30, 1995, and to the use of our report dated August 18, 1995, appearing in
the Prospectus, which is part of this Registration Statement. We also consent to
the reference to us under the headings "Selected Consolidated Financial Data"
and "Experts" in such Prospectus.
DELOITTE & TOUCHE LLP
Las Vegas, Nevada
June 7, 1996
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EXHIBIT 23.3
CONSENT OF INDEPENDENT ACCOUNTANTS
We consent to the incorporation by reference in the registration statement of
Boyd Gaming Corporation (Boyd Gaming) on Form S-3 relating to the offering of
4,000,000 common shares of Boyd Gaming of our report dated March 15, 1996,
except for footnote 11 for which the date is May 23, 1996, relating to the
consolidated financial statements of Par-A-Dice Gaming Corporation as of
December 31, 1995 and 1994, and for each of the three years in the period ended
December 31, 1995, included in the Current Report of Boyd Gaming on Form 8-K
dated June 7, 1996.
We also consent to the reference to our firm under the caption "Experts".
COOPERS & LYBRAND L.L.P.
Chicago, Illinois
June 7, 1996
