<PAGE> 1
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON SEPTEMBER 25, 1996
REGISTRATION NO. 333-05521
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
------------------------
AMENDMENT NO. 2 TO
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, CHIEF FINANCIAL OFFICER AND TREASURER
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. / /
------------------------
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.
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- --------------------------------------------------------------------------------
<PAGE> 2
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
SEPTEMBER 25, 1996
PROSPECTUS [LOGO]
5,337,786 SHARES
BOYD GAMING CORPORATION
COMMON STOCK
($.01 PAR VALUE)
Of the 5,337,786 shares of Common Stock of Boyd Gaming Corporation (the
"Company"), $.01 par value per share (the "Common Stock"), offered hereby,
4,000,000 shares are being sold by the Company and 1,337,786 shares are being
sold by certain stockholders of the Company named herein (the "Selling
Stockholders") (the "Offering"). The Company will not receive any of the
proceeds from the sale of Common Stock 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 September 20, 1996, the closing sale price of the Common Stock
on the NYSE was $10 1/2 per share. See "Price Range of Common Stock."
Concurrent with the Offering, the Company is offering $200 million aggregate
principal amount of % 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" BEGINNING ON PAGE 10 FOR A DISCUSSION OF CERTAIN FACTORS THAT
SHOULD BE CONSIDERED BY PROSPECTIVE PURCHASERS OF THE COMMON STOCK.
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 DISCOUNT COMPANY(1) STOCKHOLDERS(1)
<S> <C> <C> <C> <C>
Per Share...................... $ $ $ $
Total(2)....................... $ $ $ $
</TABLE>
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(1) Before deducting offering expenses payable by the Company estimated to be
$750,000. The Company will bear all expenses of the Offering other than the
Underwriting Discount attributable to the shares of Common Stock being
offered by the Selling Stockholders, which will be borne by the respective
Selling Stockholders.
(2) The Company and certain Selling Stockholders have granted to the
Underwriters 30-day options to purchase up to 730,000 shares of Common Stock
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 of Common Stock 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 of Common Stock 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> 3
[BOYD GAMING LOGO]
<TABLE>
<S> <C> <C>
STARDUST
LAS VEGAS
CALIFORNIA HOTEL & CASINO FREMONT
LAS VEGAS LAS VEGAS
SAM'S TOWN
KANSAS CITY
SAM'S TOWN SAM'S TOWN
LAS VEGAS TUNICA
TREASURE CHEST
KENNER
SILVERSTAR ELDORADO
PHILADELPHIA HENDERSON
JOKERS WILD
HENDERSON
STARDUST
ATLANTIC CITY
Under Development
SAM'S TOWN PAR-A-DICE
RENO EAST PEORIA
Under Development Subject to Acquisition
MAIN STREET STATION
LAS VEGAS
Under Construction
</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> 4
[PHOTOS & MAPS]
LAS VEGAS LAS VEGAS MAP
DEPICTING SEVEN PROPERTY
LOCATIONS
[caption]
The Company's properties are located in
diverse markets throughout greater
Las Vegas.
STARDUST
HOTEL
[caption] The Stardust Resort and Casino is
located on the Las Vegas Strip.
ATRIUM AT
SAM'S TOWN
LAS VEGAS
[caption]
New hotel rooms overlook the indoor park
at Sam's Town Las Vegas.
<PAGE> 5
[PHOTOS AND MAPS]
THE FREMONT
AND FREMONT STREET
EXPERIENCE
The Fremont Street Experience
frames the Fremont Hotel and Casino
in downtown Las Vegas.
[caption]
CALIFORNIA HOTEL
& CASINO
The California Hotel and Casino is
located in downtown Las Vegas.
[caption]
RENO
RENO MAP
DEPICTING
LOCATION OF
SAM'S TOWN
RENO
[caption] The Company has acquired a site
in Reno, Nevada for development of
Sam's Town Hotel and Gambling Hall.
<PAGE> 6
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 a multi-jurisdictional gaming company which
currently owns or operates ten casino entertainment facilities, is constructing
its eleventh property and acquiring its twelfth property and recently acquired
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 Resort 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") in downtown Las Vegas and in April 1996
entered into a definitive purchase agreement to acquire a riverboat casino in
East Peoria, Illinois (the "Par-A-Dice Acquisition"). The Company recently
acquired land upon which it plans to develop a casino, hotel and entertainment
complex in Reno, Nevada ("Sam's Town Reno"). In addition, the Company and Mirage
Resorts, Inc. ("Mirage") recently announced the signing of a joint venture
agreement (the "Mirage Joint Venture") to jointly develop and own a casino hotel
entertainment facility in Atlantic City, New Jersey (the "Atlantic City
Project"). The Company currently owns or operates an aggregate of 504,500 square
feet of casino space containing 14,313 slot machines and 510 table games.
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 618,000 square feet of casino space
containing 17,849 slot machines and 615 table games. See " -- Property Data."
The Company's operating strategy stresses delivering to its primarily
middle-income patrons a value-oriented friendly casino entertainment experience.
To execute this strategy, the Company, on an ongoing basis, reinvests in its
properties in order to keep them modern, appealing 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 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 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 among its properties.
3
<PAGE> 7
The Company's development and expansion strategy is to grow and further
diversify its business through expansion and improvement of its existing
properties and development and acquisition of new facilities. The Company
master-plans its facilities to accommodate additional development and monitors
its 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 acquisition and development opportunities which complement its existing
business, such as the acquisition and redevelopment of Main Street Station,
acquisition of the Par-A-Dice, and development of Sam's Town Reno and the
Atlantic City Project. 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) limited competition, and
(iii) no significant overlap with the Company's existing properties.
DEVELOPMENT PROJECTS
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. See "Use of Proceeds." Par-A-Dice Gaming is the
owner and operator of the Par-A-Dice Riverboat Casino, a state-of-the-art
riverboat casino with gaming on four levels as well as non-gaming amenities,
including three restaurants, located in East Peoria, Illinois, approximately 170
miles from Chicago. 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 Company expects to use borrowings under a $500 million
reducing revolving bank credit facility (the "New Bank Credit Facility") to fund
the Par-A-Dice Acquisition. See "Description of Certain Indebtedness -- New Bank
Credit Facility." The Company currently anticipates the consummation of the
Par-A-Dice Acquisition and completion of the Par-A-Dice Hotel prior to year end,
subject to receipt of regulatory approvals. See "Risk Factors -- Uncertainties
of Consummation of the Par-A-Dice Acquisition and Development of Sam's Town Reno
and the Atlantic City Project."
The Company recently acquired land 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 currently plans to commence construction of Sam's Town
Reno in the first quarter of calendar 1997 and complete construction as early as
spring of 1998, subject to receipt of regulatory approvals, permits and
licenses. See "Risk Factors -- Uncertainties of Consummation of the Par-A-Dice
Acquisition and Development of Sam's Town Reno and the Atlantic City Project."
On May 29, 1996, the Company, through a wholly-owned subsidiary, entered
into the Mirage Joint Venture to jointly develop and own 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 is expected to be adjacent and connected to Mirage's planned
wholly-owned resort. The Mirage Joint Venture will give the Company a presence
in Atlantic City, the primary casino gaming market serving the eastern United
States. Environmental remediation and construction of the Atlantic City Project
will not begin until after the necessary highway improvements are approved and
funded and necessary approvals, permits and licenses are received. See "Risk
Factors -- Uncertainties of Consummation of the Par-A-Dice Acquisition and
Development of Sam's Town Reno and the Atlantic City Project."
4
<PAGE> 8
In addition to the Par-A-Dice Acquisition and the above-mentioned
expansion, the Company is currently exploring expansion opportunities at certain
of its Las Vegas properties. No assurance can be given that any acquisition,
expansion or development projects will be completed as described herein.
RECENT DEVELOPMENTS
In the fourth quarter of fiscal 1996, the Company reported net income
(before the write-off of a $1.4 million extraordinary item) of $3.5 million, as
compared to approximately $12 million in the comparable period in fiscal 1995.
Fourth quarter results were adversely affected by competitive pressures at Sam's
Town Tunica and Sam's Town Kansas City, as well as by construction disruption at
Sam's Town Tunica related to the addition of 350 hotel rooms and a 1,000-car
parking garage. The Company continues to be adversely affected by these factors
at the Tunica and Kansas City properties in the first quarter of fiscal 1997. In
addition, the Stardust has experienced a decline in revenues and an increase in
general marketing costs during the first quarter of fiscal 1997 as compared to
the comparable prior year period, principally as a result of increased
competition in Las Vegas. As a result of these factors, the Company currently
anticipates that it will report minimal net income or possibly a net loss for
the first quarter of fiscal 1997. See "Risk Factors -- Competition," " -- Recent
Earnings Decline" and "Management's Discussion and Analysis of Financial
Condition and Results of Operations -- Recent Developments."
------------------------
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.
5
<PAGE> 9
PROPERTY DATA
The following table sets forth certain information regarding the Company's
existing properties as of June 30, 1996, and certain information regarding the
estimated results of the Company's current expansion and development projects
and the Par-A-Dice Acquisition. 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. Each of these projects will be subject to the many risks inherent in
construction projects and in the establishment of a new business enterprise. In
addition, many permits, licenses and approvals necessary for the projects have
not yet been obtained. See "Risk Factors -- Uncertainties of Consummation of the
Par-A-Dice Acquisition and Development of Sam's Town Reno and the Atlantic City
Project," "-- Expansion to Other Locations," "-- Additional Financing
Requirements," "-- Governmental Gaming Regulation" and "Business -- Development
Projects."
<TABLE>
<CAPTION>
CASINO SPACE SLOT TABLE HOTEL LAND
EXISTING (SQ. FT.) MACHINES GAMES ROOMS RESTAURANTS (ACRES)
- ------------------------------------------------ ------------ -------- ----- ----- ----------- -------
<S> <C> <C> <C> <C> <C> <C>
LAS VEGAS STRIP
Stardust Resort and Casino...................... 87,000 1,958 78 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
BOULDER STRIP
Sam's Town Las Vegas............................ 118,000 2,774 55 650 12 63
Eldorado Casino................................. 16,000 558 11 -- 3 4
Jokers Wild Casino.............................. 22,500 647 11 -- 2 13
CENTRAL REGION
Sam's Town Tunica............................... 75,000 1,806 78 508 5 150
Sam's Town Kansas City.......................... 28,000 1,018 65 -- 5 34
Silver Star Resort and Casino................... 66,000 2,461 87 100 4 20
Treasure Chest Casino........................... 24,000 855 56 -- 4 --
--
------- ------ --- ----- ---
Total Existing.......................... 504,500 14,313 510 4,811 52 363
======= ====== === ===== == ===
</TABLE>
<TABLE>
<CAPTION>
PROJECTED ADDITIONS
- ------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
DOWNTOWN LAS VEGAS
Main Street Station Hotel and Casino(a)......... 28,500 900 25 404 3 15
NORTHERN NEVADA
Sam's Town Reno(b).............................. 33,000 1,200 36 211 5 100
CENTRAL REGION
Sam's Town Tunica(c)............................ -- -- -- 350 -- --
Silver Star Resort and Casino(d)................ 19,000 439 2 403 1 --
Par-A-Dice(e)................................... 33,000 997 42 204 3 19
--
------- ------ --- ----- ---
Total Projected Additions............... 113,500 3,536 105 1,572 12 134
======= ====== === ===== == ===
Total Existing and Projected............ 618,000 17,849 615 6,383 64 497
======= ====== === ===== == ===
</TABLE>
- ---------------
(a) The information presented reflects Main Street Station after its completion,
which is expected by the end of calendar year 1996.
(b) The information presented reflects Sam's Town Reno after completion of the
project. Construction of the project is expected to commence in the first
quarter of calendar year 1997 and may be completed as early as spring of
1998.
(c) The information presented reflects the Sam's Town Tunica expansion project,
which is expected by the end of calendar year 1996.
(d) The information presented reflects the Silver Star expansion project, which
is currently scheduled by the owners of the Silver Star for early calendar
year 1997.
(e) Pending acquisition. Reflects the Par-A-Dice Hotel after its construction.
The acquisition of the Par-A-Dice, which is subject to obtaining regulatory
approval, and the completion of the Par-A-Dice Hotel are expected by the end
of calendar year 1996.
6
<PAGE> 10
THE OFFERING
<TABLE>
<S> <C>
Common Stock Offered:
By the Company............................ 4,000,000 shares(a)
By the Selling Stockholders............... 1,337,786 shares(a)
Common Stock to be Outstanding after the
Offering(b)............................... 61,213,720 shares
Use of Proceeds............................. The net proceeds of the Offering will be
used to reduce outstanding indebtedness
under the New Bank Credit Facility without
reducing the commitment thereunder. Amounts
available under the New Bank Credit Facility
are expected to be used to effect the
redemption of the Company's 10.75% Senior
Subordinated Notes due 2003 (the "10.75%
Notes"), to fund the Par-A-Dice Acquisition
and for general corporate purposes. 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") to the public (the
"Notes Offering" and, collectively with the
Offering, the "Offerings"). 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 the
New Bank Credit Facility without reducing
the commitment thereunder. Amounts available
under the New Bank Credit Facility are
expected to be used to effect the redemption
of the 10.75% Notes, to fund the Par-A-Dice
Acquisition and for general corporate
purposes.
NYSE Symbol................................. BYD
</TABLE>
- ---------------
(a) Excludes 600,000 and 130,000 shares of Common Stock, respectively, subject
to the Underwriters' over-allotment options from the Company and certain
Selling Stockholders. See "Underwriting."
(b) Excludes 600,000 shares of Common Stock subject to the Underwriters'
over-allotment option from the Company and 3,889,587 shares of Common Stock
reserved for issuance upon the exercise of stock options outstanding as of
June 30, 1996 under the Company's stock option plans.
7
<PAGE> 11
SUMMARY CONSOLIDATED FINANCIAL DATA
The consolidated financial data set forth below has been derived from the
audited 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>
FISCAL YEAR ENDED JUNE 30,
----------------------------------------------------
1996 1995 1994 1993 1992
-------- -------- -------- -------- --------
(IN THOUSANDS, EXCEPT PER SHARE DATA)
<S> <C> <C> <C> <C> <C>
INCOME STATEMENT DATA
Net revenues...................................... $775,857 $660,340 $468,219 $431,174 $406,804
Operating income.................................. 100,786 110,570 54,248 62,919 47,395
Interest expense, net(a).......................... 51,186 46,371 36,093 32,378 37,762
Income before cumulative effect of a change in
accounting principle and extraordinary item..... 29,579 36,249 10,650 20,134 6,114
Income before extraordinary item.................. 29,579 36,249 12,685 20,134 6,114
Net income........................................ 28,144 36,249 12,685 12,737 6,114
Net income per common share....................... $ 0.49 $ 0.64 $ 0.23 $ 0.22 $ 0.09
Weighted average common shares outstanding........ 57,058 56,870 54,297 48,582 48,946
OTHER OPERATING DATA
Depreciation and amortization..................... $ 60,626 $ 54,518 $ 42,136 $ 39,450 $ 38,853
Preopening expense................................ 10,004 -- 4,605 -- --
Capital expenditures.............................. 90,977 183,299 326,829 24,485 18,702
</TABLE>
<TABLE>
<CAPTION>
JUNE 30,
1996
--------------
(IN THOUSANDS)
<S> <C> <C> <C> <C>
BALANCE SHEET DATA
Total assets............................................................................ $953,425
Long-term debt (excluding current portion).............................................. 590,808
Stockholders' equity.................................................................... 233,257
</TABLE>
- ---------------
(a) Net of interest income and amounts capitalized.
8
<PAGE> 12
PRO FORMA SUMMARY CONSOLIDATED FINANCIAL DATA
The following pro forma summary consolidated financial data for the Company
reflects the Par-A-Dice Acquisition. The pro forma consolidated income statement
data for the year ended June 30, 1996 has been presented as if the Par-A-Dice
Acquisition occurred on July 1, 1995. The pro forma consolidated balance sheet
data as of June 30, 1996 has been presented as if the Par-A-Dice Acquisition
occurred on June 30, 1996. These pro forma summary consolidated financial data
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 had in
fact occurred at July 1, 1995 or June 30, 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.
<TABLE>
<CAPTION>
FISCAL YEAR ENDED JUNE 30, 1996
-----------------------------------
COMPANY PAR-A-DICE COMPANY
HISTORICAL HISTORICAL PRO FORMA
---------- ---------- ---------
(IN THOUSANDS)
<S> <C> <C> <C>
INCOME STATEMENT DATA
Net revenues......................................................... $ 775,857 $105,864 $881,721
Operating income..................................................... 100,786 28,840 126,563
Interest expense, net(a)............................................. 51,186 842 63,974
Income from continuing operations.................................... 29,579 27,605 37,892
OTHER OPERATING DATA
Depreciation and amortization........................................ $ 60,626 $ 4,454 $ 68,143
Preopening expense................................................... 10,004 -- 10,004
Capital expenditures................................................. 90,977 16,273 107,250
</TABLE>
<TABLE>
<CAPTION>
JUNE 30, 1996
---------------------
ACTUAL PRO FORMA
-------- ----------
(IN THOUSANDS)
<S> <C> <C> <C> <C> <C>
BALANCE SHEET DATA
Total assets........................................................................ $953,425 $1,136,008
Long-term debt (excluding current portion).......................................... 590,808 767,366
Stockholders' equity................................................................ 233,257 233,257
</TABLE>
- ---------------
(a) Net of interest income and amounts capitalized.
9
<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). 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 Common Stock,
prospective investors should carefully consider the following factors.
LEVERAGE AND DEBT SERVICE
At June 30, 1996, after giving effect to the Offerings, the Par-A-Dice
Acquisition, redemption of the 10.75% Notes and the August 23, 1996 sale of the
Mary's Prize riverboat (the "Mary's Prize Sale"), the Company had total
consolidated long-term debt of approximately $719 million. The New Bank Credit
Facility is a five-year, $500 million reducing revolving credit facility. Debt
service requirements on the New Bank Credit Facility consist 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 until maturity in June 2001. 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 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, as well as redemption of the 10.75% Notes, from
borrowings under the New Bank Credit Facility. The Company also expects to 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 required capital
contributions to the Mirage Joint Venture, currently expected to be $100
million, with borrowings under its New Bank Credit Facility 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 borrowings,
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 or debt financing. There can be no assurance that
any of these financing strategies could be effected on satisfactory terms, if at
all. 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 "-- Additional Financing Requirements," "-- Governmental Gaming
Regulation," "Capitalization" and "Management's Discussion and Analysis of
Financial Condition and Results of Operations -- Liquidity and Capital
Resources."
UNCERTAINTIES OF CONSUMMATION OF THE PAR-A-DICE ACQUISITION AND DEVELOPMENT OF
SAM'S TOWN RENO AND THE ATLANTIC CITY 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. No
assurance can be given that the necessary approvals will be received. The
Company currently anticipates the consummation of the Par-A-Dice Acquisition and
the completion of the
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<PAGE> 14
Par-A-Dice Hotel prior to 1996 year end, subject to receipt of regulatory
approvals. The stock purchase agreement for the Par-A-Dice Acquisition provides
that if the Par-A-Dice Acquisition is not completed by December 31, 1996, such
agreement terminates. 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, however, as to when, or if
the Par-A-Dice Acquisition will be consummated or the Par-A-Dice Hotel will be
completed.
The Company recently acquired a 100-acre parcel of land upon which it plans
to build a casino hotel and entertainment complex in Reno, Nevada. The Company
plans to commence construction of Sam's Town Reno in the first quarter of 1997
and to complete construction as early as Spring 1998, subject to receipt of
appropriate regulatory approvals, permits and licenses. The development of Sam's
Town Reno is subject to a number of contingencies, including, but not limited
to, approval and licensing by the Nevada gaming authorities and the receipt of
land-use permits, building and zoning permits and liquor licenses. Accordingly,
there can be no assurance as to when, or if, such construction will be commenced
or completed due to the many risks and uncertainties inherent in the project.
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 of highway
improvements necessary to accommodate the additional traffic that is expected to
be generated to and from the Marina District, approval and licensing by the New
Jersey gaming authorities, environmental remediation, the receipt of state and
local land-use permits, building and zoning permits and liquor licenses. Once
the necessary highway improvements are assured and other requisite approvals are
received, the Company estimates that environmental remediation will take at
least six months and construction of the Atlantic City Project will thereafter
take at least two years. 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 -- Development Projects."
RECENT EARNINGS DECLINE
The competitive pressures on the Company's properties continue to increase
as new or expanded gaming facilities are opened. As a result of such competitive
pressures, particularly at Sam's Town Tunica and Sam's Town Kansas City, the
Company has experienced a recent earnings decline and may continue to report
reduced earnings in the future. In the fourth quarter of fiscal 1996, the
Company reported net income (before the write-off of a $1.4 million
extraordinary item) of $3.5 million, as compared to approximately $12 million in
the same period in 1995.
Results at Sam's Town Tunica have been hurt by increased competition as a
result of the opening of new gaming facilities in April and June of 1996. In
addition, operations at the property have been disrupted by the ongoing
construction of 350 additional hotel rooms and a 1,000-car parking garage,
projects which are not expected to be completed prior to mid-December 1996.
Sam's Town Kansas City reported an operating loss of $5 million (before the
write-off of preopening expenses) in fiscal 1996 as a result of high fixed costs
and substantial advertising and promotional expenses incurred in response to the
highly competitive operating environment. Competition in the Kansas City market
is expected to increase with the anticipated opening of two new gaming
facilities in the near future.
As a result of the factors described above, as well as a decline in revenue
and an increase in general marketing costs at the Stardust during the current
quarter, management expects that the Company's operating results for the first
quarter of fiscal 1997 will likely be well below those of the comparable prior
fiscal year period, and the Company expects to report a net loss for the
quarter. There can be no assurance that increased competition or other industry
factors will not materially adversely affect the
11
<PAGE> 15
Company's business, financial condition and results of operations in the future.
See "-- Competition" and "Management's Discussion and Analysis of Financial
Condition and Results of Operations -- Recent Developments."
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 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. Such competition in the gaming
industry could adversely affect the Company's ability to compete for new gaming
opportunities as well as its existing operations. In addition, further expansion
of gaming into other jurisdictions could also adversely affect the Company's
business by diverting its customers to competitors in such 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,
financial condition and results of operations. See "Business -- Development
Projects." The Company believes that successful gaming facilities compete based
on the following factors: location; attractions; quality of gaming facilities,
gaming experience and entertainment; quality of food, beverage and atmosphere;
and price. Although the Company believes it competes favorably with respect to
these factors in most of its markets, some of its competitors have significantly
greater financial and other resources than the Company.
The Company's Las Vegas properties compete primarily with other casino
hotels on the Las Vegas Strip, the Boulder Strip and in downtown Las Vegas.
Currently, there are approximately 25 major gaming properties located on or near
the Las Vegas Strip, 11 located in the downtown area and several located in
other areas of Las Vegas. Las Vegas gaming square footage and room capacity are
continuing to increase. A number of marquee properties have opened in the last
several years, and several others are currently under construction or planned
for the Las Vegas Strip, including the 1,500-room Stratosphere Tower, Casino and
Hotel, the 3,000-room Paris Casino-Resort, the 3,000-room Monte Carlo Resort and
Casino, the 2,035-room New York - New York Hotel/Casino, and the 3,000-room
Bellagio. Additionally, several properties have recently announced or begun
significant expansion and renovation projects, including Circus Circus-Las
Vegas, MGM Grand Hotel/Casino, Harrah's-Las Vegas, Rio Suite Hotel and Casino,
Luxor Hotel and Casino, and the Sahara Hotel and Casino. Each of the foregoing
facilities has or may have a theme and attractions which have drawn or may draw
significant numbers of visitors. Moreover, most of these facilities attract or
may attract primarily middle-income patrons, who are the focus of the Company's
marketing strategy. Although the Company believes that these additional
facilities will draw more visitors to Las Vegas, these properties also may
divert potential gaming activity from the Company. Future additions, expansions
and enhancements to existing properties and construction of new properties by
the Company's competitors could divert additional gaming activity from the
Company's facilities. There can be no assurance that the Company will compete
successfully in the Las Vegas market in the future.
Sam's Town Tunica competes primarily with other dockside gaming operations
in Tunica County and, to a lesser extent, with dockside casinos in Vicksburg,
Greenville, Natchez and Coahoma County, Mississippi, with dockside casinos on
the Mississippi Gulf Coast and with gaming operations in Louisiana. Gaming has
grown rapidly in Tunica County with ten dockside casinos now in operation.
Several casinos located in Tunica County have closed during the last 12 months.
One such closed facility was purchased by a competitor and reopened in April
1996. In addition, several Tunica-area casinos have recently added or are in the
process of adding hotel rooms, including 500 rooms at Fitzgeralds, 350 rooms at
the Hollywood Hotel and Casino, and 200 rooms at Harrah's Mardi Gras. Some of
these facilities are operated
12
<PAGE> 16
by certain of the Company's principal Nevada competitors and may be operated or
financed by companies with significantly greater financial resources than the
Company. Sam's Town Tunica reported an 80% decline in operating income in the
fourth quarter of fiscal 1996, which management attributes principally to
increased competition and also to the disruption associated with ongoing
construction at the facility. See "-- Recent Earnings Decline" and "Management's
Discussion and Analysis of Financial Condition and Results of
Operations -- Recent Events."
Sam's Town Kansas City competes primarily with other riverboat gaming
operations in the Kansas City area. Two riverboat gaming operations, one in
Riverside, Missouri and one in North Kansas City, Missouri are currently
operating. In addition, two other operations in the Kansas City area are
currently under construction and awaiting licensing. Several other companies,
including some of the Company's principal Nevada competitors, have announced
plans to participate in riverboat gaming in the Kansas City area. Some of these
gaming facilities are being developed by companies that have significantly
greater financial resources than the Company, some have been operating for a
longer time than the Company's facility and some may possess more desirable
locations. Sam's Town Kansas City reported an operating loss of $5 million
(before the write-off of preopening expenses) in fiscal 1996 as a result of high
fixed costs and substantial advertising and promotional expenses incurred in
response to the highly competitive operating environment. Competition in the
Kansas City market is expected to increase with the expected opening of two new
gaming facilities in the near future. No assurance can be given that the Company
will compete successfully in this new market.
The Treasure Chest competes primarily with other riverboat gaming
operations in the New Orleans metropolitan area. A large land-based casino is
planned for downtown New Orleans but the project is presently in bankruptcy
reorganization. If the land-based project opens, it will compete directly with
the Treasure Chest. There are presently 14 licensed riverboats in the State of
Louisiana with four of these projects (including the Treasure Chest) operating
in the New Orleans metropolitan area. Some of these riverboats are operated by
companies with significantly greater financial resources and some may possess
more desirable locations. No assurance can be given that the Treasure Chest will
compete successfully in the future.
The Par-A-Dice competes primarily with other gaming operations in Illinois
and, to a lesser extent, with riverboats in Indiana and dockside gaming
facilities in Indiana, Iowa and Missouri. The Illinois Riverboat Gambling Act
authorizes ten owner's licenses for riverboat gaming operations. All ten
licenses have been granted and ten riverboat gaming facilities are currently in
operation in Illinois. Some of these riverboats are being operated by companies
with greater experience in the Illinois market and significantly greater
financial resources than the Company. If the Par-A-Dice Acquisition is
consummated, there can be no assurance that the Par-A-Dice will compete
successfully in the future.
EXPANSION TO OTHER LOCATIONS
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. If these projects do not become operational within the
time frames and budgets currently contemplated, it could have a material adverse
effect on the Company's business, financial condition and results of operations.
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
13
<PAGE> 17
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, financial condition
and results of operations.
ADDITIONAL FINANCING REQUIREMENTS
The Company intends to finance its current and future expansion projects
primarily with cash flow from operations and borrowings under its New Bank
Credit Facility. If the Company is unable to finance such projects through cash
flow from operations and borrowings under its New Bank Credit Facility, 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 or debt financing. 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 Notes contain certain restrictions on the ability
of the Company to incur additional indebtedness. Following the Note Offering,
availability under the New Bank Credit Facility will effectively be reduced by
the cost to redeem all of the 10.75% Notes and will be subsequently increased if
and to the extent the Company funds a redemption of the 10.75% Notes. If the
Company is unable to secure additional financing, it could be forced to limit or
suspend expansion, development and acquisition projects, which may adversely
effect the Company's business, financial condition and results of operations.
See "-- Holding Company Structure and Dividend Limitations" and "Management's
Discussion and Analysis of Financial Condition and Results of
Operations -- Liquidity and Capital Resources."
GOVERNMENTAL GAMING REGULATION
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, financial
condition and results of operations. 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 regulatory authority of the National Indian
Gaming Commission ("NIGC") and the Choctaw Gaming Commission.
14
<PAGE> 18
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 in connection with the approval of the management agreement 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.
The Company is subject to a variety of regulations in the jurisdictions in
which it operates. If additional gaming regulations are adopted in a
jurisdiction 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 the legislatures of
some of the jurisdictions in which the Company has existing or planned
operations that, if enacted, could 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 a 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.
ENVIRONMENTAL RISKS
The Company is subject to certain federal, state and local environmental,
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 and 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, safety and health laws, regulations and
ordinances. 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 establish a comprehensive federal oil spill response and
liability framework. Pursuant to the Oil Pollution Act, the Department of
Transportation implemented regulations requiring owners and operators of certain
vessels, including the Company, 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. Any significant environmental liability or compliance
costs could have a material adverse effect on the Company's business, financial
condition and results of operations.
REGULATION OF RIVERBOATS
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
15
<PAGE> 19
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 business, financial
condition and results of operations.
CONTROL BY BOYD FAMILY
William S. Boyd, Chairman and Chief Executive Officer of the Company,
together with his immediate family, will beneficially own or control
approximately 51.0% (50.5% if the Underwriters' over-allotment options are
exercised in full) of the Common Stock of the Company after this Offering. As a
result, the Boyd family will continue to have the ability to significantly
influence the affairs of the Company, including the election of all of the
directors of the Company and, except as otherwise provided by law, approving or
disapproving other matters submitted to a vote of the Company's stockholders,
including a merger, consolidation or sale of assets.
MANAGEMENT AGREEMENTS OF LIMITED DURATION
The management agreement 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 agreement to the NIGC, which has the right
to review management agreements. There can be no assurance that the current
management agreement will be renewed upon expiration or approved by the NIGC
upon any such review. The failure to renew the Company's management agreement
would result in the loss of revenues to the Company derived from the Silver Star
management agreement, which could have a material adverse effect on the Company.
The NIGC also has the authority to reduce the term of a management agreement or
the management fee or otherwise require modification of the agreement, which
could have an adverse effect on the Company's business, financial condition and
results of operations.
The Company manages the Treasure Chest pursuant to a management agreement
with Treasure Chest L.L.C., owner of the Treasure Chest. The management
agreement's initial five-year term expires in June 1999, subject to extension at
the Company's option if certain operating results are achieved. The Company is
reevaluating its interests in the Treasure Chest, which include its management
agreement with, and ownership interest in, Treasure Chest L.L.C. Among the
alternatives under consideration is the sale of the Company's ownership
interest. In the event of such a sale or other substantial alteration of the
Company's interest in Treasure Chest L.L.C., which the Company currently
anticipates, the management agreement between the Company and Treasure Chest
L.L.C. would likely be terminated within the next six months. See
"Business -- Properties -- Central Region Properties."
RELIANCE ON CERTAIN MARKETS
The California and the Fremont derive a substantial portion of their
customers from the Hawaiian market. In fiscal 1996, patrons from Hawaii made up
over 80% of the room nights at the California and over 65% 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 Hawaiian market and the Company's facilities,
could materially adversely affect the Company's business, financial condition
and results of operations. 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,
16
<PAGE> 20
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 business, financial condition
and results of operations.
TAXATION OF NON-U.S. HOLDERS
A non-U.S. holder will be subject to United States Federal income tax on
gain from the sale or other disposition of Common Stock if the Company is a
"U.S. real property holding corporation" for Federal income tax purposes at the
time of the disposition or during certain specified periods of time preceding
the disposition and either (a) the Common Stock is not regularly traded on an
established securities market or (b) the non-U.S. holder owns, actually or
constructively, more than 5% of the outstanding Common Stock. The Company
believes that it is and will continue to be a U.S. real property holding
corporation and, at present, the Common Stock is regularly traded on an
established securities market. There can be no assurance, however, that the
Common Stock of the Company will be regularly traded on an established
securities market in the future. See "Certain United States Tax Consequences to
Non-United States Holders of Shares -- Disposition of the Common Stock."
HOLDING COMPANY STRUCTURE AND DIVIDEND LIMITATIONS
Because the Company is a holding company, its ability to pay dividends is
dependent upon the ability of its subsidiaries and controlled entities to pay
dividends and make distributions to the Company. 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 borrowings under the New Bank Credit Facility 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.
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 be less than the sum of (i) $210,000,000, plus (ii) 50%
of the Company's consolidated net income (without giving effect to certain
losses) for each fiscal quarter ending on or after September 30, 1996, plus
(iii) an amount equal to the increase in the Company's stockholders' equity
following June 19, 1996 by reasons of sales and issuances of the Company's
capital stock and minus (iv) the amount of goodwill, not to exceed $130,000,000,
associated with Par-A-Dice in the event the proposed Par-A-Dice Acquisition is
consummated. This requirement could impose limitations on the Company's ability
to pay dividends.
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 a material adverse effect on the price of the Common Stock.
CERTAIN ANTI-TAKEOVER EFFECTS
The Board may issue shares of Preferred Stock of the Company in one or more
series and determine the designation and fix the number of shares of each series
without further action by the holders of
17
<PAGE> 21
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 are outstanding
as of the date hereof, 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. See "Description of Capital Stock."
In addition, the Company's Restated Articles of Incorporation and Restated
Bylaws contain certain provisions that are intended 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. 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. See "Description of Capital
Stock -- Certain Anti-Takeover Effects."
Nevada's Combination with Interested Stockholders Statute (Nev. Rev. Stat.
Ann. Sections 78.411-.444 (1995)) prevents an "interested stockholder" (the
beneficial owner of 10% or more of the voting shares of a corporation, or an
affiliate or associate thereof) and an applicable Nevada corporation from
entering into any merger or consolidation or any sale, lease, exchange,
mortgage, pledge, transfer or other disposition, in one transaction or a series
of transactions, having either an aggregate market value equal to 5% or more of
the aggregate market value of the assets or all of the outstanding shares of the
corporation or representing 10% or more of the earning power or net income of
the corporation. A corporation may not engage in any of the described business
combinations within three years after the interested stockholder acquired his or
her shares unless the business combination or the purchase of shares made by the
interested stockholder was approved by the board of directors before the
interested stockholder acquired such shares. If this approval is not obtained,
then after the expiration of the three-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 a certain price or
value. See "Description of Capital Stock -- Nevada Legislation."
Nevada's Control Share Acquisition Statute (Nev. Rev. Stat. Ann. Sections
78.378-.3793 (1995)) 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. Once an acquiror crosses one of the
thresholds, the shares acquired in the immediate offer or acquisition and
those shares acquired within 90 days immediately preceding such offer or
acquisition become Control Shares (as defined in such statute) and such Control
Shares are deprived of the right to vote until disinterested stockholders
restore such 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 Control Shares with 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 such stockholders within 20 days after
the vote of the stockholders that they have the right to receive the fair value
of their shares in accordance with statutory procedures established generally
for dissenter's rights. See "Description of Capital Stock -- Nevada
Legislation."
In addition, certain gaming laws in jurisdictions in which the Company is
doing business or may do business in the future may require licenses, background
investigations or findings of suitability or other approvals by regulators in
connection with the acquisition of shares of Common Stock of the Company.
18
<PAGE> 22
USE OF PROCEEDS
The net proceeds to the Company from the Offering, after deduction of
selling and offering expenses, are estimated to be approximately $44.9 million
($51.7 million if the Underwriters' over-allotment option is exercised in full).
The Company intends to use the net proceeds from the Offering to reduce
outstanding indebtedness under the New Bank Credit Facility without reducing the
commitment thereunder. Amounts available under the New Bank Credit Facility will
be used to effect the redemption of the 10.75% Notes, to fund the Par-A-Dice
Acquisition 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 without
reducing the commitment thereunder. The redemption of the 10.75% Notes is only
expected to be effected in the event the Notes Offering is consummated.
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 July 1, 1996, the interest rate
for the New Bank Credit Facility was 7.2% 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
effect the redemption of the 10.75% Notes, to fund the Par-A-Dice Acquisition
and for general corporate purposes. For a description of the New Bank Credit
Facility, see "Description of Certain Indebtedness -- New Bank Credit Facility."
The 10.75% Notes mature in September 2003 and bear interest at a rate of 10.75%
per annum, payable semi-annually. The aggregate principal amount of the 10.75%
Notes is $150 million. For a description of the 10.75% Notes, see "Description
of Certain Indebtedness -- 10.75% Notes ."
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........................................................... 18 5/8 13 1/8
Third Quarter (through September 20)..................................... 15 1/2 10
</TABLE>
On September 20, 1996, the closing sales price of the Common Stock on the
NYSE was $10 1/2 per share. On that date, the Company had approximately 2,134
holders of record of its Common Stock.
19
<PAGE> 23
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 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" and "Description of Certain
Indebtedness."
CAPITALIZATION
The following sets forth (i) the consolidated capitalization of the Company
as of June 30, 1996, (ii) such capitalization, as adjusted to give effect to the
Par-A-Dice Acquistion (without giving effect to the Offerings), (iii) such
capitalization, as adjusted to give effect to the Offerings (without giving
effect to the Par-A-Dice Aquisition or to the exercise of the Underwriters'
over-allotment option from the Company), and (iv) the capitalization as adjusted
and pro forma to reflect the Par-A-Dice Acquisition, redemption of the 10.75%
Notes and the Mary's Prize Sale. The information provided below is not meant to
indicate the expected sequence of events, but rather is provided to separately
disclose the effect of each adjustment on the consolidated capitalization of the
Company. In particular, the Company does not anticipate the consummation of the
Par-A-Dice Acquisition will occur prior to consummation of the Offerings. See
"Risk Factors -- Uncertainties of Consummation of the Par-A-Dice Acquisition and
Development of Sam's Town Reno and the Atlantic City Project." 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>
JUNE 30, 1996 AS ADJUSTED
---------------------------------------- AND PRO
AS ADJUSTED FOR AS ADJUSTED FORMA FOR
PAR-A-DICE FOR THE PAR-A-DICE
ACTUAL ACQUISITION OFFERINGS ACQUISITION
-------- --------------- ----------- -----------
(IN THOUSANDS)
<S> <C> <C> <C> <C>
Cash and cash equivalents.................... $ 48,980 51,701 $ 54,330 $ 51,701
======== ======== ========== =========
Long-term debt, including current portion
New Bank Credit Facility(a)(b)............. $235,000 411,558 $ -- $ 326,283
% Notes due 2003(c)................... -- 0 200,000 200,000
11% Senior Subordinated Notes due 2002(d).. 185,000 185,000 185,000 185,000
10.75% Senior Subordinated Notes due
2003(e)................................. 150,000 150,000 150,000 --
Other(b)................................... 24,839 24,839 24,839 7,265
-------- -------- ---------- ---------
Total long-term debt.................... 594,839 771,397 559,839 718,548
Stockholders' equity......................... 233,257 233,257 278,107 273,457
-------- -------- ---------- ---------
Total capitalization.................... $828,096 1,004,654 $ 837,946 $ 992,005
======== ======== ========== =========
</TABLE>
- ---------------
(a) Represents borrowings under the New Bank Credit Facility to effect
redemption of the 10.75% Notes, to fund the Par-A-Dice Acquisition and for
general corporate purposes. Such borrowings are guaranteed by certain
existing and future subsidiaries of the Company and are secured.
(b) In connection with the Mary's Prize Sale for $20 million, approximately
$17.6 million of associated debt was retired and the balance of the proceeds
was applied to reduce amounts outstanding under the New Bank Credit
Facility.
(c) The % Notes are obligations of the Company and are guaranteed by certain
existing and future subsidiaries of the Company.
(d) 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.
(e) The 10.75% Notes are obligations of the Company.
20
<PAGE> 24
SELECTED CONSOLIDATED FINANCIAL DATA
The selected consolidated financial data presented below at and for the
fiscal years ended June 30, 1996 and 1995 and for the fiscal year ended June 30,
1994, have been derived from the audited consolidated financial statements
contained elsewhere in this Prospectus. The selected consolidated financial data
presented below as of June 30, 1994 and as of and for the fiscal years ended
June 30, 1993 and 1992 have been derived from audited consolidated financial
statements of the Company not contained herein. Operating results for the fiscal
years shown below are not necessarily indicative of the results that may be
expected for future fiscal years.
<TABLE>
<CAPTION>
FISCAL YEAR ENDED JUNE 30,
--------------------------------------------------------
1996 1995 1994 1993 1992
-------- -------- -------- -------- --------
(IN THOUSANDS, EXCEPT PER SHARE DATA)
<S> <C> <C> <C> <C> <C>
INCOME STATEMENT DATA
Net revenues............................................ $775,857 $660,340 $468,219 $431,174 $406,804
Operating expense....................................... 675,071 549,770 413,971 368,255 359,409
-------- -------- -------- -------- --------
Operating income........................................ 100,786 110,570 54,248 62,919 47,395
Interest expense, net(a)................................ 51,186 46,371 36,093 32,378 37,762
Gain on investment...................................... -- -- -- 1,062 --
-------- -------- -------- -------- --------
Income before provision for income taxes, cumulative
effect of a change in accounting principle and
extraordinary item.................................... 49,600 64,199 18,155 31,603 9,633
Provision for income taxes.............................. 20,021 27,950 7,505 11,469 3,519
-------- -------- -------- -------- --------
Income before cumulative effect of a change in
accounting principle and extraordinary item........... 29,579 36,249 10,650 20,134 6,114
Cumulative effect of a change in accounting for income
taxes................................................. -- -- 2,035 -- --
-------- -------- -------- -------- --------
Income before extraordinary item........................ 29,579 36,249 12,685 20,134 6,114
Extraordinary item, net of tax.......................... (1,435) -- -- (7,397) --
-------- -------- -------- -------- --------
Net income.............................................. 28,144 36,249 12,685 12,737 6,114
Dividends on preferred stock............................ -- -- 467 1,881 1,920
-------- -------- -------- -------- --------
Net income applicable to common stock................... $ 28,144 $ 36,249 $ 12,218 $ 10,856 $ 4,194
======== ======== ======== ======== ========
PER SHARE DATA
Earnings per common share
Income before cumulative effect of a change in
accounting principle and extraordinary item......... $ 0.52 $ 0.64 $ 0.19 $ 0.37 $ 0.09
Cumulative effect of a change in accounting for income
taxes............................................... -- -- 0.04 -- --
Extraordinary item.................................... (0.03) -- -- (0.15) --
-------- -------- -------- -------- --------
Net income.............................................. $ 0.49 $ 0.64 $ 0.23 $ 0.22 $ 0.09
======== ======== ======== ======== ========
Dividends on common stock............................... -- -- -- -- --
Weighted average common shares outstanding.............. 57,058 56,870 54,297 48,582 48,946
OTHER OPERATING DATA
Depreciation and amortization........................... $ 60,626 $ 54,518 $ 42,136 $ 39,450 $ 38,853
Preopening expense...................................... 10,004 -- 4,605 -- --
Capital expenditures.................................... 90,977 183,299 326,829 24,485 18,702
</TABLE>
<TABLE>
<CAPTION>
JUNE 30,
--------------------------------------------------------
1996 1995 1994 1993 1992
-------- -------- -------- -------- --------
(IN THOUSANDS)
<S> <C> <C> <C> <C> <C>
BALANCE SHEET DATA
Total assets............................................ $953,425 $949,513 $836,297 $500,123 $467,133
Long-term debt (excluding current portion).............. 590,808 587,957 525,637 364,927 317,106
Stockholders' equity.................................... 233,257 202,613 164,405 72,686 62,668
</TABLE>
- ---------------
(a) Net of interest income and amounts capitalized.
21
<PAGE> 25
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 using the purchase method of accounting. 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 year ended June 30, 1996.
The accompanying pro forma consolidated income statements for the years
ended June 30, 1996 have been presented as if the Par-A-Dice Acquisition
occurred on July 1, 1995. The accompanying pro forma consolidated balance sheet
as of June 30, 1996 has been presented as if the Par-A-Dice Acquisition occurred
on June 30, 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.
The accompanying 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. The accompanying 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, 1995 or June 30, 1996.
The accompanying 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.
22
<PAGE> 26
BOYD GAMING CORPORATION
PRO FORMA CONSOLIDATED BALANCE SHEETS
JUNE 30, 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.............. $ 48,980 $ 2,721 $ 176,558(a)
(3,000)(b)
(16,500)(c)
(157,058)(d) $ 51,701
Accounts receivable, net............... 16,040 339 16,379
Inventories............................ 6,531 272 6,803
Prepaid expenses....................... 15,265 654 15,919
-------- ------- -------- ----------
Total current assets................ 86,816 3,986 90,802
Property, equipment and leasehold
interests, net......................... 797,593 53,760 7,164(d) 858,517
Other assets and deferred charges........ 58,489 1,254 3,000(b)
(1,117)(d) 61,626
Goodwill and intangibles, net............ 10,527 -- 114,536(d) 125,063
-------- ------- -------- ----------
Total assets........................ $ 953,425 $ 59,000 $ 123,583 $1,136,008
======== ======= ======== ==========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities
Current portion of long-term debt...... $ 4,031 $ 2,400 $ (2,400)(c) $ 4,031
Accounts payable....................... 47,193 983 48,176
Accrued liabilities
Payroll and related................. 22,956 -- 22,956
Interest and other.................. 20,956 4,042 24,998
Income taxes payable................... 678 -- 678
-------- ------- -------- ----------
Total current liabilities........... 95,814 7,425 (2,400) 100,839
Long-term debt, net of current
maturities............................. 590,808 14,100 176,558(a)
(14,100)(c) 767,366
Deferred income taxes.................... 33,546 -- 33,546
Minority interest........................ -- 1,000 1,000
Commitments..............................
Stockholders' equity
Preferred stock........................ -- -- --
Common stock........................... 572 -- 572
Additional paid-in capital............. 102,583 8,788 (8,788)(d) 102,583
Retained earnings...................... 130,102 27,687 (27,687)(d) 130,102
-------- ------- -------- ----------
Total stockholders' equity.......... 233,257 36,475 (36,475) 233,257
-------- ------- -------- ----------
Total liabilities and stockholders'
equity............................ $ 953,425 $ 59,000 $ 123,583 $1,136,008
======== ======= ======== ==========
</TABLE>
The accompanying notes are an integral part of these pro forma consolidated
financial statements.
23
<PAGE> 27
BOYD GAMING CORPORATION
PRO FORMA CONSOLIDATED STATEMENTS OF INCOME
YEAR ENDED JUNE 30, 1996
(IN THOUSANDS, EXCEPT SHARE DATA)
<TABLE>
<CAPTION>
ADJUSTMENTS
COMPANY PAR-A-DICE AND COMPANY
HISTORICAL HISTORICAL ELIMINATIONS PRO FORMA
---------- ---------- --------------- ----------
<S> <C> <C> <C> <C>
Revenues
Casino................................. $ 548,167 $ 97,829 $ $ 645,996
Food and beverage...................... 142,420 7,742 150,162
Rooms.................................. 69,645 -- 69,645
Other.................................. 49,895 2,296 52,191
Management fees and joint venture...... 41,576 -- 41,576
-------- ------- -------- --------
Gross revenues........................... 851,703 107,867 959,570
Less promotional allowances.............. 75,846 2,003 77,849
-------- ------- -------- --------
Net revenues........................ 775,857 105,864 881,721
-------- ------- -------- --------
Costs and expenses
Casino................................. 273,545 32,508 306,053
Food and beverage...................... 99,213 7,633 106,846
Rooms.................................. 25,842 -- 25,842
Other.................................. 36,830 2,886 39,716
Selling, general and administrative.... 114,497 26,691 141,188
Maintenance and utilities.............. 30,171 2,852 33,023
Depreciation and amortization.......... 60,626 4,454 3,063(e)(f) 68,143
Corporate expense...................... 24,343 -- 24,343
Preopening expense..................... 10,004 -- 10,004
-------- ------- -------- --------
Total............................... 675,071 77,024 3,063 755,158
-------- ------- -------- --------
Operating income......................... 100,786 28,840 (3,063) 126,563
-------- ------- -------- --------
Other income (expense)
Interest income........................ 1,174 537 (84)(g) 1,627
Interest expense, net of amounts
capitalized......................... (52,360) (1,379) (11,862)(h)(i) (65,601)
-------- ------- -------- --------
Total............................... (51,186) (842) (11,946) (63,974)
-------- ------- -------- --------
Income before provision for income taxes
and extraordinary item................. 49,600 27,998 (15,009) 62,589
Provision for income taxes............... 20,021 393 4,283(j) 24,697
-------- ------- -------- --------
Income from continuing operations........ $ 29,579 $ 27,605 $ (19,292) $ 37,892
======== ======= ======== ========
Income per common share
Income from continuing operations...... $ 0.52 $ 0.66
======== ========
Supplemental Earnings Per Share Data
Pro forma average shares outstanding... 61,057,550(k)
========
Pro forma income from continuing
operations per common share......... $0.65(k)
</TABLE>
The accompanying notes are an integral part of these pro forma consolidated
financial statements.
24
<PAGE> 28
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 borrowings under of the New Bank Credit Facility to fund
the Par-A-Dice Acquisition.
(b) The payment of fees related to the Par-A-Dice Acquisition.
(c) The retirement of assumed indebtedness of Par-A-Dice Gaming.
(d) The payment of approximately $157,058 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 ($8,788 in common stock and
$27,687 in retained earnings) and the allocation of the excess purchase
price over historical value of acquired assets ($7,164 additional amount
allocated to property, equipment and leasehold interest related to
construction in process of the hotel facility, $114,536 allocated to
intangibles-license rights) based on the Company's estimates of the fair
market values of the assets being acquired.
(e) The elimination of Par-A-Dice Gaming's historical depreciation and
amortization expense for the year ended June 30, 1996.
(f) Depreciation and amortization expense as follows:
<TABLE>
<CAPTION>
AMOUNT LIFE DEPRECIATION
-------- ---- ------------
<S> <C> <C> <C>
Land............................................... $ 1,453 -- --
Buildings, equipment and leasehold interest........ 38,373 8 $4,454
Construction in process - Hotel.................... 21,098 -- --
-------- ------------
Total property, equipment and leasehold
interest.................................... 60,924 4,454
Other assets....................................... 3,000 15 200
Intangibles-license rights......................... 114,536 40 2,863
------------
Total......................................... $7,517
==========
</TABLE>
(g) The elimination of interest income of $84 for the year ended June 30, 1996
related to the Transferred Assets.
(h) The elimination of Par-A-Dice Gaming's historical interest expense for the
year ended June 30, 1996.
(i) Interest expense on $176,558 in debt at an assumed interest rate of 7.5%.
(j) An adjustment to the provision for income taxes of $4,283 for the year ended
June 30, 1996 in order to result in a 36% combined state and federal
corporate tax rate due to the conversion of Par-A-Dice Gaming from
Subchapter S status to C corporate status under the Internal Revenue Code.
(k) Pro forma average shares outstanding reflects the completion of the
Offering. Pro forma income from continuing operations per common share
reflects the after-tax effect of applying the net proceeds from the
Offering to reduce outstanding debt.
25
<PAGE> 29
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>
FISCAL YEAR ENDED JUNE 30,
----------------------------------
1996 1995 1994
-------- -------- --------
(IN THOUSANDS)
<S> <C> <C> <C>
INCOME STATEMENT DATA
Net revenues
Stardust................................... $194,513 $193,563 $195,899
Boulder Strip Properties................... 189,315 168,036 125,087
Downtown Properties........................ 139,602 135,232 137,726
Central Region Properties.................. 245,204 163,509 9,507
-------- -------- --------
Total Properties...................... $768,634 $660,340 $468,219
========= ========= =========
Operating income
Stardust................................... $ 30,748 $ 30,688 $ 26,713
Boulder Strip Properties................... 23,904 15,551 20,686
Downtown Properties........................ 18,444 22,561 23,583
Central Region Properties.................. 66,681 68,486 2,439
Preopening expense......................... (10,004) -- (4,605)
-------- -------- --------
Total Properties...................... $129,773 $137,286 $ 68,816
========= ========= =========
</TABLE>
RECENT DEVELOPMENTS
In the fourth quarter of fiscal 1996, the Company reported net income
(before the write-off of a $1.4 million extraordinary item) of $3.5 million, as
compared to approximately $12 million in the same period in fiscal 1995. For the
first quarter of fiscal 1997, management expects that the Company's operating
results will continue to be adversely affected by certain competitive trends
which affected the Company's results during the fourth fiscal quarter of 1996,
and, at Sam's Town Tunica, by the effect of construction disruption related to
ongoing construction projects, as well as trends specific to the first quarter
of fiscal 1997.
Sam's Town Tunica experienced an 80% decline in operating income in the
fourth quarter of fiscal 1996 and continues to experience operating results well
below those historically achieved. Management believes that the property has
been adversely affected by the opening of new gaming facilities in April and
June of 1996 and disruption from the ongoing construction of an additional 350
hotel rooms and a 1,000-car parking garage. The construction is not anticipated
to be completed prior to the middle of December 1996. As a result of the ongoing
impact of these factors, Sam's Town Tunica is expected to post fiscal 1997 first
quarter results that are higher than those in the fourth quarter of fiscal 1996,
though well below those experienced in the comparable prior year period.
Sam's Town Kansas City reported an operating loss of $5 million (before the
write-off of preopening expenses) in 1996. The property is expected to continue
to report poor results during the first quarter of fiscal 1997. Management
attributes the poor performance to high fixed costs and substantial advertising
and promotional expenses incurred in response to the highly competitive
operating environment. The
26
<PAGE> 30
Company is in the process of developing and implementing new marketing programs
and making certain physical and equipment changes in an effort to improve
revenues. While management expects results to slightly improve in the first
quarter of fiscal 1997 as compared to the fourth quarter of fiscal 1996, Sam's
Town Kansas City is expected to face increased competition following the
anticipated opening of two new gaming facilities in the near future. Further,
there can be no assurance when, or if, Sam's Town Kansas City will achieve
profitability.
In addition, management expects that the first quarter of fiscal 1997 may
be adversely affected by competitive pressures specific to the quarter. In
particular, the Stardust has experienced a decline in revenue and an increase in
general marketing costs during the first quarter of fiscal 1997 as compared to
the comparable prior year period. These results are, in part, attributable to
historical seasonal patterns experienced by the Stardust as well as to increased
competition in Las Vegas, as evidenced by the opening of new gaming facilities
in April and June of 1996.
As a result of the factors described above, management expects that the
Company's operating results for the first quarter of fiscal 1997 will likely be
well below those of the comparable prior fiscal year period. The Company expects
to report a net loss for the quarter. See "Risk Factors -- Recent Earnings
Decline" and "-- Competition."
FISCAL 1996 COMPARED TO FISCAL 1995
Consolidated net revenues increased 17.5% for fiscal 1996 compared to
fiscal 1995. The increase in net revenues for fiscal 1996 resulted primarily
from the opening of Sam's Town Kansas City in September 1995, increased revenues
at Sam's Town Las Vegas of 14.9% and increased revenues at Sam's Town Tunica of
8.2%. In the Company's Central Region, which consists of Sam's Town Tunica,
Sam's Town Kansas City, the Silver Star and the Treasure Chest, revenue
increased 50% for fiscal 1996 compared to fiscal 1995 while the Company's Nevada
Region, which consists of the Stardust, Sam's Town Las Vegas, the Eldorado,
Jokers Wild, the California and the Fremont, revenue increased 5.4% for fiscal
1996 compared to fiscal 1995. Revenue growth on a consolidated basis in fiscal
1996 was achieved in all major revenue categories, with casino revenue
increasing 18.3%, room revenue increasing 5.7%, food and beverage revenue
increasing 12.7% and management fee and joint venture income increasing 16.3%
compared to fiscal 1995. Slot revenue, which continued to account for more than
70% of casino revenue, increased 22% in fiscal 1996 compared to fiscal 1995. The
increase in slot revenue was primarily attributable to the opening of Sam's Town
Kansas City in September 1995 and to a 24% increase in slot revenue at Sam's
Town Las Vegas. Table games revenue, the only other significant component of
casino revenue, increased 10.6% in fiscal 1996 compared to fiscal 1995 primarily
as a result of the opening of Sam's Town Kansas City. Company-wide room revenue
increased 5.7% in fiscal 1996 compared to fiscal 1995 as a result of a 5.9%
increase in occupied rooms and a 6.3% increase in the average daily room rate.
The Company's hotel rooms posted an overall occupancy percentage of 96% in
fiscal 1996 compared to 95% in fiscal 1995 with occupancy at Sam's Town Tunica
increasing to 95% in fiscal 1996 from 87% in fiscal 1995 and occupancy at Sam's
Town Las Vegas increasing to 96% in fiscal 1996 compared to 92% in fiscal 1995.
The increase in occupied rooms was attributable to the openings of the Sam's
Town Tunica rooms expansion (300 rooms opened in December 1994) and the
California rooms expansion (146 rooms opened in December 1994). Both of these
rooms expansion projects were open for the entire fiscal 1996 but were only open
for the last six months of fiscal 1995. Occupancy statistics do not include
rooms at Main Street Station which the Company uses to augment the rooms base at
the California and the Fremont. The Main Street Station property was purchased
in December 1993 as a closed casino hotel facility and is currently undergoing
an extensive renovation and expansion project. The Company expects to open this
renovated and expanded property in fiscal 1997 as a complete casino hotel
facility.
Consolidated operating income declined 8.8% for fiscal 1996 as compared to
fiscal 1995 while consolidated operating income margins declined to 13.0% from
16.7%. This decline in consolidated operating income and consolidated operating
income margins was primarily attributable to the write-off of preopening
expenses related to the opening of Sam's Town Kansas City on September 13, 1995.
This
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preopening charge, which amounted to $10 million, was taken in the first quarter
of fiscal 1996. Consolidated operating income for fiscal 1996 before the
write-off of preopening expenses increased slightly compared to fiscal 1995
while consolidated operating income margins was 14.3% in fiscal 1996 compared to
16.7% in fiscal 1995. In the Company's Nevada Region, operating income increased
6.2% for fiscal 1996 compared to fiscal 1995 while consolidated operating income
margins increased to 14.0% for fiscal 1996 from 13.8% in fiscal 1995. This
increase in operating income and operating income margins was primarily
attributable to increases at Sam's Town Las Vegas of 83% and 4.3 percentage
points, respectively, offset by declines at the Downtown Properties of 18.2% and
3.5 percentage points, respectively. In the Company's Central Region, operating
income before the write-off of preopening expenses related to Sam's Town Kansas
City decreased 2.6% in fiscal 1996 compared to fiscal 1995 while operating
income margins declined to 27% primarily as a result of an operating loss at
Sam's Town Kansas City and a decline in operating income margin at Sam's Town
Tunica to 21.8% in fiscal 1996. Operating income in the Central Region includes
management fee and joint venture income related to the Company's Silver Star and
Treasure Chest operations.
Net revenues at the Stardust increased 0.5% for fiscal 1996 as compared to
the prior fiscal year. Casino and food and beverage revenues declined 0.5% and
1.6%, respectively, while rooms revenue increased 3.4% and showroom revenue
increased 9.3% for fiscal 1996 as compared to fiscal 1995. Slot revenue declined
1.3% in fiscal 1996 with a 2.3% increase in wagering offset by lower net
winnings. Table games revenue declined 4.1% for fiscal 1996 as compared to
fiscal 1995 as a result of an increase of 4.3% in wagering offset by lower net
winnings. Other casino revenues increased 11.9% for fiscal 1996 primarily as a
result of a 28% increase in revenue in the sports book. Rooms revenue at the
Stardust increased 3.4% for fiscal 1996 compared to fiscal 1995 with a 1.3%
decline in occupied rooms offset by a 7.9% increase in average daily room rate.
The Stardust posted an occupancy rate of 96% in fiscal 1996 versus 97% in the
prior fiscal year. Operating income increased slightly in fiscal 1996 compared
to fiscal 1995 and operating income margin was 15.8% compared to 15.9%,
respectively for fiscal 1996 versus fiscal 1995. The slight decline in operating
income margin was primarily the result of higher advertising and promotional
expenses not fully offset by increased operating income and operating income
margin in the rooms department.
Net revenues for the Boulder Strip Properties increased 12.7% for fiscal
1996 versus fiscal 1995 primarily as a result of increased revenues at Sam's
Town Las Vegas. Sam's Town Las Vegas revenue increased 14.9% for fiscal 1996
while revenues increased 6.8% at Jokers Wild and declined slightly at the
Eldorado. Casino revenues at the Boulder Strip Properties increased 16.7% for
fiscal 1996 versus fiscal 1995, while rooms revenue increased 4.7% and food and
beverage revenue increased 4.8%. Operating income at the Boulder Strip
Properties increased 54% for fiscal 1996 compared to fiscal 1995 while operating
income margin increased 3.3 percentage points to 12.6% for fiscal 1996. Sam's
Town Las Vegas posted increases in operating income and operating income margin
of 83% and 4.3 percentage points, respectively for the 1996 fiscal year.
Operating income margins increased 2.5 percentage points at the Eldorado and
declined 2.3 percentage points at Jokers Wild for fiscal 1996 versus fiscal
1995. The increase in operating income margin at the Eldorado was a result of
increased casino revenue while the decline in operating income margin at Jokers
Wild was primarily a result of increased expenses in the food and beverage
department for fiscal 1996 versus fiscal 1995. Management believes that the
significant increases in revenues, operating income and operating income margin
at Sam's Town Las Vegas for fiscal 1996 versus fiscal 1995 were primarily
attributable to the implementation of successful marketing programs creating
increased customer awareness and visitation.
Net revenues at the Downtown Properties increased 3.2% for fiscal 1996
compared to fiscal 1995. Net revenues at the California increased 1.4% while net
revenues at the Fremont increased 5.2%. Casino revenues at the Downtown
Properties were up slightly while food and beverage revenue increased 20% and
rooms revenue declined slightly. Operating income and operating income margins
at the Downtown Properties declined 18.2% and 3.5 percentage points,
respectively in fiscal 1996 as compared to fiscal 1995. Operating income at the
California declined 20% while operating income margin at the California declined
3.7 percentage points for fiscal 1996. The decline in operating income and
operating income
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margin at the California was primarily the result of increased operating costs
in the rooms and food and beverage departments and increased advertising and
promotional costs. Operating income and operating income margin at the Fremont
declined 15.6% and 3.1 percentage points, respectively for fiscal 1996 compared
to fiscal 1995 primarily as a result of increased advertising and promotional
costs. 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 quarter.
Net revenues at the Central Region Properties increased 50% for fiscal 1996
versus 1995. The opening of Sam's Town Kansas City on September 13, 1995
accounted for the majority of the increase in fiscal 1996. Sam's Town Tunica
revenues increased 8.2% for the 1996 fiscal year versus fiscal 1995 while
management fees and joint venture income related to the Silver Star and the
Treasure Chest operations increased 16.3%. Operating income in the Central
Region (before the write-off of preopening expenses related to Sam's Town Kansas
City) declined 2.6% to $66.7 million for fiscal 1996. The decline in operating
income was primarily a result of a $5 million operating loss at Sam's Town
Kansas City and an 8.0% decline in operating income at Sam's Town Tunica,
partially offset by a 16.3% increase in operating income from management fees
and joint venture income. The operating loss at Sam's Town Kansas City was
primarily attributable to revenues not sufficient to cover the high level of
fixed costs associated with the operation of the facility and higher levels of
advertising and promotional expenses aimed at increasing customer awareness and
revenues. Results from Sam's Town Tunica were weakened due to severe weather
during the third quarter of fiscal 1996, the effects of a new competitor opening
at the beginning of the fourth fiscal quarter and the impact of construction
disruption related to the 350-room hotel expansion project and construction of a
1,000-car parking garage which commenced in the second half of fiscal 1996.
Interest expense, net of amounts capitalized, increased $3.9 million or
8.1% for fiscal 1996 compared to fiscal 1995 primarily as a result of less
capitalized interest related to projects under development. Depreciation and
amortization expense for fiscal 1996 increased $6.1 million or 11.2% compared to
fiscal 1995 primarily as a result of the opening of Sam's Town Kansas City in
September 1995 and a full year of depreciation of the Sam's Town Las Vegas
expansion and the California rooms expansion projects which opened in December
1994.
The Company's tax rate for fiscal 1996 was 40% compared to 44% in fiscal
1995. The Company's 1995 tax rate was affected by the increase in certain
non-deductible expenses related to the Company's development efforts during that
year.
The Company recorded an extraordinary loss, net of tax, of $1.4 million in
fiscal 1996. This extraordinary loss resulted from the write-off of unamortized
bank loan fees in connection with its recent bank refinancing which was
completed on June 19, 1996.
As a result of these factors, net income before extraordinary item declined
$6.7 million and net income declined $8.1 million for fiscal 1996 compared to
fiscal 1995. Net income per common share declined to $0.49 for fiscal 1996 from
$0.64 in fiscal 1995 primarily as a result of lower net income and slightly more
additional shares outstanding.
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 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
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Company's Nevada Region, net revenues increased 8.3% with net revenues at the
Boulder Strip 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 of 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 Las Vegas
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revenue increased 31% as a result of the expansion with casino revenue
increasing 22%, food and beverage revenue 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 unavailable
as a result 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 Las
Vegas 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 Properties 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 Properties 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.
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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.
LIQUIDITY AND CAPITAL RESOURCES
Cash Flow and Working Capital
The Company's policy is to use operating cash flow and debt and equity
financing to fund renovation of its properties and expansion of its business.
With the opening of Sam's Town Kansas City in September 1995, the Company
completed a significant expansion program and is in the process of another
expansion program which includes the $40 million expansion of its Sam's Town
Tunica facility, the $45 million expansion and renovation of Main Street
Station, the $175 million Par-A-Dice Acquisition, the proposed $92 million
development of a casino, hotel and entertainment facility in Reno, Nevada and
the Company's anticipated $100 million investment in the Mirage Joint Venture.
In addition, the Company continues to explore new opportunities for growth.
For the year ended June 30, 1996, the Company's net cash provided by
operating activities was $103.9 million compared to $83.1 million in 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 June 30,
1996, the Company had balances of cash and cash equivalents of approximately $49
million.
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 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.
Long Term Debt
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 (under which approximately $235 million in borrowings was
outstanding as of June 30, 1996) which replaced the Company's and certain of its
subsidiaries' Former Bank Credit Facilities. See "Description of Certain
Indebtedness." Availability under the New Bank Credit Facility will be reduced
by $25 million at the end of two and one-half years and reduced by an additional
$50 million at the end of each six-month period thereafter until maturity in
June 2001. 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 July 1, 1996 was approximately 7.2%. The Company intends to use the proceeds
of the Offerings to reduce outstanding indebtedness under the New Bank Credit
Facility without reducing the commitment thereunder. The Company recently
effected the Mary's Prize Sale for $20 million and retired $17.6 million in debt
in connection therewith.
Capital Expenditures
The Company is committed to continually maintaining and enhancing its
existing facilities, most notably by upgrading and remodeling its casinos, hotel
rooms and restaurants and by providing the latest slot machines for its
customers. The Company's capital expenditures for these purposes were $30.1
million, $23.5 million and $16.2 million in the years ended June 30, 1996, 1995
and 1994, respectively.
For the year ended June 30, 1996, cash used in investing activities was
$106 million, primarily related to the completion of Sam's Town Kansas City
(approximately $36 million) and the acquisition of property and equipment
(approximately $70 million). The Company's principal uses of funds for the two
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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.
Stockholders' Equity
The Company's stockholders' equity increased from $202.6 million on June
30, 1995 to $233.3 million on June 30, 1996. The primary increase resulted from
the Company's earnings during fiscal 1996. In addition, during fiscal 1996,
212,368 and 2,334 additional shares of Common Stock were issued pursuant to the
Company's Employee Stock Purchase Plan and the Flexible Stock Incentive Plan,
respectively.
New Expansion Projects
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 began construction of a $40 million expansion at Sam's
Town Tunica in April 1996. This project consists of 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, consists of a redesign of the property's public
space, expanded restaurant facilities, a refurbishment of the property's 400
hotel rooms, acquisition of new gaming equipment and increased parking. The
Company plans to fund the Sam's Town Tunica expansion and Main Street Station
renovation primarily from cash flow from operations and availability under the
New Bank Credit Facility. The Company recently acquired a casino hotel site in
Reno, Nevada and plans to develop Sam's Town Reno on the site at a total
estimated cost of approximately $92 million. The Company plans to fund the Sam's
Town Reno development primarily from cash flow from operations and availability
under the New Bank Credit Facility. On May 29, 1996 the Company, through a
wholly-owned subsidiary, executed a joint venture agreement with Mirage for the
Atlantic City Project. The Mirage Joint Venture provides for $100 million in
capital contributions by the Company during the course of the construction of
the Atlantic City Project. The Company plans to fund its Mirage Joint Venture
capital contributions primarily from cash flow from operations and availability
under the New Bank Credit Facility. 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 or ultimately become operational. The source of funds required
to meet the Company's working capital needs (including maintenance capital
expenditures) and those required to complete the above-mentioned projects is
expected to be cash flow from operations and availability under the New Bank
Credit Facility. The Company does not currently anticipate issuing additional
equity or obtaining new borrowings in excess of amounts available under the New
Bank Credit Facility in the next 12 months. Thereafter, the Company may require
additional funds to support its working capital requirements or for other
purposes and may seek to raise such additional funds through public or private
equity and/or debt financings or from other sources. No assurance can be given
that additional financing will be available or that, if available, such
financing will be obtainable on terms favorable to the Company and its
stockholders. See "Risk Factors -- Leverage and Debt Service" and "-- Additional
Financing Requirements."
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The Company continues to pursue and investigate additional expansion
opportunities both in Nevada and in other markets where casino gaming is
currently permitted. The Company is also pursuing expansion opportunities in
jurisdictions where casino gaming is not currently permitted in order for the
Company to be prepared to develop projects upon approval of casino gaming. Such
expansion will be affected and determined by several key factors, including
license selection processes, approval of gaming in jurisdictions where the
Company has been active but where casino gaming is not currently permitted,
identification of additional suitable investment opportunities in current gaming
jurisdictions, and availability of acceptable financing. Additional projects
will require the Company to make substantial investments, which the Company
intends to fund through cash flow from operations and availability under the New
Bank Credit Facility. To the extent such sources of funds are not sufficient,
the Company may also seek to raise such additional funds through public or
private equity and/or debt financings or from other sources. No assurance can be
given that additional financing will be available or that, if available, such
financing will be obtainable on terms favorable to the Company and its
stockholders. See "Risk Factors -- Leverage and Debt Service" and "-- Additional
Financing Requirements."
Certain indebtedness of the Company contains restrictive covenants which,
among other things, impose significant restrictions on the Company's operations
and its ability to seek alternative financing means. For a summary of the
material terms of such restrictive covenants (which does not purport to be
complete and is qualified in its entirety by reference to the various governing
instruments, copies of which have been filed, or incorporated by reference, as
exhibits to the registration statement of which this Prospectus is a part), see
"Description of Certain Indebtedness."
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 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 recently acquired 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 that is 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 in April 1996 entered into a definitive purchase
agreement to acquire the Par-A-Dice in East Peoria, Illinois. The Company
recently acquired land on which it plans to develop Sam's Town Reno, a casino,
hotel and entertainment complex in Reno, Nevada. In addition, the Company
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. The Company currently owns or operates an aggregate of 504,500
square feet of casino space, containing 14,313 slot machines and 510 table
games. See "Prospectus Summary -- Property Data." 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
618,000 square feet of casino space containing 17,849 slot machines and 615
table games. See "Prospectus Summary -- Property Data." Due to the many risks
and uncertainties inherent in construction projects and the establishment of a
new business, there can be no assurance as to when, if at all, the development
and expansion projects will be completed or acquired. See "Risk
Factors -- Uncertainties of Consummation of the Par-A-Dice Acquisition and
Development of Sam's Town Reno and the Atlantic City Project," "-- Expansion to
Other Locations," "Competition" and "-- Governmental Gaming Regulation."
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. See " -- Properties -- Central Region Properties." Par-A-Dice
Gaming is expected to become 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.
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Value-Oriented Casino Entertainment Experience
The Company is committed to providing a high-quality casino entertainment
experience to its primarily middle-income customers at an affordable price in
order to develop customer loyalty. The Company delivers value to its customers
through providing service in an inviting and entertaining environment. The
Company delivers additional value to its customers through moderately-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.
Lively, Friendly Atmosphere
Each of the Company's facilities is clean and modern and offers friendly
service in an informal and lively atmosphere. The Company's employee training
programs are designed to motivate employees to provide the type of friendly and
attentive service which the Company seeks to provide at its facilities. The
Company has an extensive customer feedback system, ranging from guest comment
cards in its restaurants and hotel rooms, to other consumer surveys and
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 products have resulted in sophisticated interactive games, which offer
customers greater variety, more generous payoffs and increased periods of play
for their casino entertainment dollar. The Company continually invests in
upgrading its machines to reflect advances in technology and 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 actively promotes 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 1996, the Company
distributed approximately 14 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; Sam's Town
Kansas City, in Kansas City, Missouri; Treasure Chest, in the western suburbs of
New Orleans; and Silver Star, in central Mississippi.
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 78 table games, including tables
featuring "21," craps, roulette, baccarat, mini-baccarat, pai gow, Caribbean
stud and poker, as well as keno. The
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Stardust features "Enter the Night," a 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 that 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 96% occupancy rate for fiscal 1996. The
Stardust complex, which is distinguished by dramatic 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
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 has taken 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
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 located 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 achieved a 92% occupancy rate in
fiscal 1995 and a 96% occupancy rate in fiscal 1996.
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 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 have been 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 slot marketing
programs that include 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 metropolitan area, which has been one of the
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fastest growing communities in the United States over the last decade.
Management believes that 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 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 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, Nevada, 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 11 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 California achieved
a 95% occupancy rate in both fiscal 1995 and 1996.
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. The Fremont achieved a 96%
occupancy rate in both fiscal 1995 and 1996.
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 by
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 affordably 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
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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 1996, patrons from
Hawaii comprised over 80% of the room nights at the California and over 65% of
the room nights at the Fremont.
In December 1993, the Company acquired for $16.5 million Main Street
Station, a casino hotel that 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. 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. The renovation and expansion
of Main Street Station is expected to be completed by the end of calendar year
1996. There can be no assurance that the project will be completed on schedule
due to the many risks and uncertainties inherent in such renovation and
expansion. See "Risk Factors -- Expansion to Other Locations."
In anticipation of 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 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 surrounding 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,
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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
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, 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 expansion of Sam's Town Tunica is scheduled to be completed by the
end of calendar year 1996, although there can be no assurance that the project
will be completed on schedule due to the many risks and uncertainties inherent
in such expansion. See "Risk Factors -- Expansion to Other Locations." Sam's
Town Tunica achieved an 87% occupancy rate in fiscal 1995 and a 95% occupancy
rate in fiscal 1996.
The Company has extended its popular Sam's Town theme to the Kansas City,
Kansas market with the opening of Sam's Town Kansas City on September 13, 1995.
Sam's Town Kansas City was completed at a cost of approximately $145 million,
including land, capitalized interest and preopening 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 will pay the City of Kansas City approximately $250,000 per year for a
period of ten years ending in September 2004. 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 56 table games, including
tables for "21," craps, roulette and poker. Each of the riverboat's three decks
has a different theme, with one featuring 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.,
owner of the Treasure Chest, 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.
The Company is reevaluating its interests in the Treasure Chest, which
include its management agreement with, and ownership interest in, Treasure Chest
L.L.C. Among the alternatives under consideration is the sale of the Company's
ownership interest. In the event of such a sale or other substantial alteration
of the Company's interest in Treasure Chest L.L.C., which the Company currently
anticipates, the management agreement between the Company and Treasure Chest
L.L.C. would likely be terminated within the next six months.
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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 2,450 slot machines and 87 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.
Although the Mississippi Band of Choctaw Indians, the owner of the Silver Star,
has advised the Company that construction is currently scheduled to be completed
by early calendar year 1997, there can be no assurance that the project will be
completed on schedule due to the many risks and uncertainties inherent in such
expansion. See "Risk Factors -- Expansion to Other Locations." The Silver Star
achieved a 95% occupancy rate in fiscal 1995 and a 98% occupancy rate in fiscal
1996.
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 the casino expansion project which was completed in December 1994.
This loan is scheduled to be repaid over five years.
DEVELOPMENT PROJECTS
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 Riverboat Casino 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 Riverboat 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, is a 204-room full-service hotel with
food and beverage and banquet and meeting facilities. The Company believes the
hotel will enable the Par-A-Dice to develop an overnight customer base for the
facility and provides much needed banquet and meeting capabilities. The Company
currently anticipates the consummation of the Par-A-Dice Acquisition and the
completion of the Par-A-Dice Hotel prior to 1996 year end, subject to receipt of
regulatory approvals. There can be no assurance, however, as to when, or if, the
Par-A-Dice Acquisition will be consummated or the Par-A-Dice Hotel will be
completed. See "Risk Factors -- Uncertainties of Consummation of the Par-A-Dice
Acquisition and Development of Sam's Town Reno and the Atlantic City Project."
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
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the age of 21 living within 100 miles of Peoria. The Par-A-Dice Acquisition is
subject to certain closing conditions, including the obtaining of regulatory
approvals from the Illinois Gaming Board and the Mississippi Gaming Commission.
See "Risk Factors -- Uncertainties of Consummation of the Par-A-Dice Acquisition
and Development of Sam's Town Reno and the Atlantic City Project."
Pursuant to the Illinois Riverboat Gambling Act and Illinois Gaming Board
Rules, the Illinois Gaming Board (the "IGB") must approve the purchase agreement
for the Par-A-Dice Acquisition as it represents a transfer of 100% of the
ownership interest in Par-A-Dice. In order to facilitate the IGB investigation
and review of the proposed acquisition, the Company was required to file with
the IGB certain information about the Company. In particular, the Company
informed the IGB about the acquisition financing and the Offerings. In addition
to information about the Company and its operations, the Company's "Key Persons"
were required to provide certain personal information. A "Key Person" under
Illinois rules is defined as an officer, director, trustee, partner, proprietor,
or managing agent of, or a holder of any direct or indirect legal or beneficial
interest whose combined direct, indirect or attributed interest is 5% or more in
a business entity.
No assurance can be given that the Company will receive IGB approval for
the Par-A-Dice Acquisition. Review of the Par-A-Dice Acquisition by the IGB will
occur only after the IGB staff has concluded its investigation of the Company
and its Key Persons. The Company cannot with any certainty predict when this
transaction will be considered by the IGB, although an IGB determination could
be made as early as the fall of 1996.
In addition, pursuant to provisions of the Mississippi Gaming Control Act,
no Mississippi gaming licensee or any company that controls, is controlled by or
is under common control with a Mississippi gaming licensee may be involved in
gaming operations outside the State of Mississippi without the prior approval of
the Mississippi Gaming Commission, acting upon a recommendation of its Executive
Director. The Company has received such approvals from the Mississippi Gaming
Commission with respect to its subsidiaries' operations in Nevada, Missouri and
Louisiana and is required to obtain such approvals from the Mississippi Gaming
Commission prior to engaging in gaming operations in Illinois through Par-A-Dice
or another subsidiary. The Company intends to request that the Mississippi
Gaming Commission consider such approval at its meeting to be held on September
17, 1996, although there can be no assurance that the Commission will give the
requisite approval at that meeting. See "Risk Factors -- Governmental Gaming
Regulation."
In addition to approvals under applicable state gaming laws, the purchase
agreement for the Par-A-Dice Acquisition requires that certain other conditions
to closing be satisfied or waived by the Company. These conditions include the
receipt by the Company of consents under or the termination of certain
contractual arrangements of the Par-A-Dice, its shareholders, and its
subsidiaries, including consents under certain employment agreements and
agreements between the Par-A-Dice and its institutional lenders.
Sam's Town Reno
The Company recently announced its plans for a $92 million casino hotel and
entertainment complex in Reno, Nevada and acquired a 100-acre parcel of land
south of Reno and adjacent to a newly opened freeway interchange to be used as
the site of this project. 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 expected 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 plans to commence construction of Sam's
Town Reno in the first quarter of 1997 and to complete construction as early as
Spring 1998, subject to receipt of appropriate regulatory approvals, permits and
licenses. There can be no assurance, however, as to when, or if, such
construction will be commenced or completed due to the many risks and
uncertainties inherent in the project. See "Risk Factors -- Uncertainties of
Consummation of the Par-A-Dice Acquisition and Development of Sam's Town Reno
and the Atlantic City Project."
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<PAGE> 46
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 owned the acquired land. The $6 million
purchase price for the land was 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.
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
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 is expected to include a hotel of at least 1,000 rooms and is expected
to be adjacent and connected to Mirage's planned wholly-owned resort. The
Company believes that certain highway improvements to permit greater access to
the Marina District of Atlantic City will be necessary to support the
multi-facility casino entertainment development master-planned by Mirage. The
State of New Jersey Department of Transportation and Mirage are currently
considering the development of a mutually satisfactory plan for those
improvements. If such a plan is developed, the Company will submit its petition
for a statement of compliance to the New Jersey Casino Control Commission
("NJCCC"). Once filed, this petition is then forwarded to the New Jersey
Division of Gaming Enforcement ("NJDGE") for investigation. Historically, such
investigations have taken a minimum of twelve months to be completed. Once
construction has commenced, the Company, through a wholly-owned subsidiary, can
submit its application for casino licensure to the NJCCC. With a statement of
compliance for the Company in place, the investigation by the NJCCC and NJDGE in
connection with the casino license application will focus on issues concerning
operations, the facility and equal employment and business opportunity.
Environmental remediation and construction of the Atlantic City Project are not
expected to begin until after the necessary highway improvements are assured.
Once such improvements are assured and other requisite approvals are received,
the Company estimates that environmental remediation will take at least six
months and construction of the Atlantic City Project will thereafter take at
least two years. Accordingly, the Company is unable to estimate when, if at all,
the Atlantic City Project will be completed. See "Risk Factors -- Uncertainties
of Consummation of the Par-A-Dice Acquisition and Development of Sam's Town Reno
and the Atlantic City Project." The Mirage Joint Venture will give the Company a
presence in Atlantic City, the primary casino gaming market serving the eastern
United States.
Mary's Prize Sale
On August 23, 1996, the Company sold its riverboat Mary's Prize, which has
been completed since 1995 but has never been in operation, to Casino Magic of
Louisiana, Corp. for $20 million and retired $17.6 million of debt in connection
therewith. Projects for which Mary's Prize was constructed have either been
delayed or did not materialize.
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<PAGE> 47
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
Officer
Charles L. Ruthe........... 62 President and Director
Robert L. Boughner......... 43 Executive Vice President, Chief Operating Officer and
Director
Donald Snyder.............. 49 Executive Vice President-Administration 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............. 36 Vice President and Controller
Brian Larson............... 40 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........... 83 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 and Jokers Wild. 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> 48
Donald Snyder has been Executive Vice President-Administration since July
1996 and 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 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.
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 also served as
a director of CH&C from its inception until 1994, and has also held several
offices with CH&C. Mr. Whitt has over 50 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.
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<PAGE> 49
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 from its inception until 1994. For the last
29 years, he has been a co-owner and director of the Club Cal Neva, a gaming
facility in Reno, Nevada. Mr. Nelson has over 56 years experience in the gaming
industry. He is a Director of International Game Technology, a slot machine
manufacturer.
DESCRIPTION OF CERTAIN INDEBTEDNESS
The following summary of the material terms of the restrictive covenants
under certain outstanding indebtedness of the Company, certain of its
wholly-owned subsidiaries, CH&C and California Hotel Finance Corporation, a
wholly-owned finance subsidiary of CH&C ("CHFC"), does not purport to be
complete and is qualified in its entirety by reference to the various governing
instruments, copies of which have been filed, or incorporated by reference, as
exhibits to the Registration Statement of which this Prospectus is a part.
Capitalized terms used but not defined herein have the meanings ascribed to
them in the various governing instruments.
NEW BANK CREDIT FACILITY
On June 19, 1996, the Company and CH&C (collectively referred to herein as
the "Borrowers") entered into the New Bank Credit Facility pursuant to which
Canadian Imperial Bank of Commerce ("CIBC") and certain other financial
institutions (collectively, the "Banks") have provided a five-year reducing
revolving credit facility under which the Borrowers are able to borrow, on a
revolving basis, up to $500 million and under which CIBC serves as the agent
(the "Agent"). The available commitment under the New Bank Credit Facility,
which will expire June 18, 2001, began at $500 million and will be reduced over
the course of the five-year period according to a predetermined schedule
pursuant to which the commitment will be reduced to $475 million in December
1998 and will be further reduced by an additional $50 million at the end of each
six-month period thereafter until maturity. Any outstanding borrowings at
maturity must be repaid on such date. Following the Notes Offering, the
availability will be reduced by approximately $158 million, which amount
represents the expected cost to redeem the 10.75% Notes from September 1, 1996
to September 1, 1997 based on the terms of the 10.75% Indenture. The
availability will be increased if and to the extent that the Company redeems the
10.75% Notes. The New Bank Credit Facility includes a sublimit for standby
letters of credit in an amount up to $15 million to support various obligations
of the Borrowers and their subsidiaries. Outstanding indebtedness under the New
Bank Credit Facility will, in light of its secured nature, effectively rank
senior to the Notes and have prior claim to the assets securing the indebtedness
under the New Bank Credit Facility.
Borrowings under the New Bank Credit Facility bear interest, at the option
of the Borrowers, at a margin above (a) the Eurodollar Rate or (b) the highest
of the following: (i) the Agent's reference rate, (ii) the Federal Funds Rate
plus 1/2 of 1%, and (iii) the CD Published Moving Rate plus 1% (each as defined
in the New Bank Credit Facility). The margin above such rates, and the fee on
the unfunded
46
<PAGE> 50
portions of the New Bank Credit Facility, vary based on the Company's ratio of
Funded Debt (as defined below) to EBITDA (as defined below) pursuant to the
following price matrix:
<TABLE>
<CAPTION>
RATIO OF
FUNDED DEBT ALTERNATE BASE EURODOLLAR
EBITDA RATE MARGIN RATE MARGIN COMMITMENT FEE
- ------------ -------------- ----------- --------------
<S> <C> <C> <C>
(x)<2.00 0.000% 1.000% 0.3750%
2.00x<2.50 0.000% 1.250% 0.3750%
2.50x<3.00 0.250% 1.500% 0.3750%
3.00x<3.50 0.500% 1.750% 0.4375%
3.50x 0.750% 2.000% 0.5000%
</TABLE>
The margin at July 1, 1996 was 1.75% above the Eurodollar Rate Margin,
resulting in an interest rate of approximately 7.2% as of such date.
The New Bank Credit Facility initially is guaranteed by Mare-Bear, Inc.,
Sam-Will, Inc., Eldorado Inc., Boyd Tunica, Boyd Mississippi, Boyd Kansas City,
Boyd Kenner, and MSW, Inc. and thereafter must be guaranteed by any other
Significant Subsidiaries (as defined below) created after June 19, 1996
(collectively, the "Credit Facility Guarantors").
The obligations under the New Bank Credit Facility are secured by: (a)
first deeds of trust on (i) the Stardust, (ii) Sam's Town Las Vegas, (iii) the
California, (iv) the Fremont, (v) Sam's Town Tunica, and (vi) Sam's Town Kansas
City; (b) a first security interest in all furniture, fixtures, accounts,
inventory, equipment (other than leased or financed items) of the Borrowers and
Credit Facility Guarantors; (c) a negative pledge on (i) the real and personal
property of any other Significant Subsidiaries excepting permitted liens, and
(ii) the Silver Star and Treasure Chest management contracts; and (d) first
preferred ship mortgages on the whole of the Patco 400 Riverboat, moored at
Sam's Town Tunica, and the Judy's Prize riverboat, moored at Sam's Town Kansas
City. In addition, Par-A-Dice Gaming and EPH are expected to guaranty the
obligations under the new Bank Credit Facility following the Par-A-Dice
Acquisition, subject to the approval of the IGB. The deeds of trust and security
interest also secure the Borrower's obligations under any hedging arrangements
with any of the Banks.
The New Bank Credit Facility contains certain financial and other
covenants, including, without limitation, various covenants (i) requiring the
maintenance of a minimum Tangible Net Worth (as defined below) of not less than
the sum of (a) $210,000,000, plus (b) 50% of the Company's consolidated net
income (without giving effect to any losses) for each fiscal quarter ending on
or after September 30, 1996, plus (c) an amount equal to the increase in the
Company's stockholders' equity after June 19, 1996 by reasons of sales and
issuances of the Company's capital stock, and minus (d) the amount of goodwill,
not to exceed $130,000,000, associated with Par-A-Dice in the event the
Par-A-Dice Acquisition is consummated and (ii) requiring the maintenance of a
minimum Fixed Charge Coverage Ratio (as defined below) of 2.0 to 1.0 from June
19, 1996 to March 31, 1998 and 2.25 to 1.0 at any time thereafter, (iii)
establishing a maximum permitted Funded Debt (as defined below) to EBITDA (as
defined below) ratio of 4.0 to 1.0 from June 19, 1996 to March 31, 1997, 3.75 to
1.0 from April 1, 1997 to March 31, 1998, 3.5 to 1.0 from April 1, 1998 and
March 31, 1999 and 3.0 to 1.0 from April 1, 1999, (iv) imposing limitations on
the incurrence of additional indebtedness and the creation of liens, (v)
imposing limits on the maximum permitted Maintenance Capital Expenditures (as
defined below) for each fiscal year during the term of the New Bank Credit
Facility ($50,000,000 for fiscal years 1996, 1997 and 1998, $55,000,000 for
fiscal year 1999, and $60,000,000 for fiscal years 2000 and 2001), and (vi)
imposing restrictions on Investments (as defined below), the purchase or
redemption of subordinated debt prior to its stated maturity, dividends and
other distributions, and the redemption or purchase of capital stock of the
Company.
"EBITDA" means, for any period, the Company and certain of its
subsidiaries' consolidated earnings before depreciation, amortization,
interest expense, preopening expenses, extraordinary items and taxes, all
as determined in accordance with generally accepted accounting principles,
("GAAP"), plus the earnings, before depreciation, amortization, interest
expense, preopening
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<PAGE> 51
expenses, extraordinary items and taxes, all as determined in accordance
with GAAP, during such period for any new venture acquired by the Company
or its subsidiaries during such period, in either case, plus (or minus) any
non-cash loss (or gain) arising from a change in GAAP.
"Fixed Charge Coverage Ratio" means the ratio of (a) twelve-month
trailing EBITDA plus rental payments during such period to (b) the sum of
(i) the Company's and certain of its subsidiaries' consolidated interest
expense, provision for taxes and rental payments (each as defined under
GAAP) for such twelve-month period, plus (ii) all dividends and
distributions paid on any shares of capital stock of the Company during
such twelve month period plus (iii) all mandatory principal payments
required to be made by the Company or certain of its subsidiaries (whether
or not such payments are actually made) for such twelve-month period
(exclusive of (a) the repayment of certain indebtedness and (b) the payment
of the loans in connection with mandatory reductions of the commitment).
"Funded Debt" means the Company's outstanding total consolidated debt
(including letters of credits, synthetic leases and capital leases, but
excluding trade payables and other current accrued liabilities) calculated
as the average of the amounts outstanding as of the last day of each
calendar month in a fiscal quarter.
"Investment" means, relative to any person, (a) any loan or advance
made by such person to any other person (excluding commission, travel and
similar advances to officers and employees made in the ordinary course of
business); (b) any contingent liability of such person; and (c) any
ownership or similar interest held by such person in any other person.
"Maintenance Capital Expenditures" means any capital expenditures
which are made to maintain or restore the condition or usefulness of
property, but which are not properly chargeable to repairs and maintenance
in accordance with GAAP; provided, however, that such term will not include
any capital expenditures to restore the condition or usefulness of property
to the extent funded from insurance proceeds delivered to the Company or
its subsidiaries in accordance with the terms of the New Bank Credit
Facility.
"Tangible Net Worth" means the consolidated net worth of the Company
and certain of its subsidiaries after subtracting therefrom the aggregate
amount of any intangible assets of the Company and such subsidiaries,
including goodwill, franchises, licenses, patents, trademarks and trade
names.
10.75% SENIOR SUBORDINATED NOTES
The 10.75% Notes were issued under an indenture dated September 3, 1993
(the "10.75% Indenture"), between the Company and State Street Bank and Trust
Company, as Trustee. The aggregate principal amount of the 10.75% Notes is $150
million. The 10.75% Notes mature on September 1, 2003 and bear interest at a
rate of 10.75% per annum, payable semi-annually on September 1 and March 1. The
10.75% Notes, which are subordinate to the Notes, are subject to redemption at
the Company's option after September 1, 1996 at redemption prices ranging from
105.00% in 1996 to 100.00% in 1999 and thereafter of their principal amount,
plus accrued interest to the redemption date. In addition, upon a Change of
Control, as defined in the 10.75% Indenture, each holder of 10.75% Notes has the
right to require the Company to repurchase each holder's 10.75% Notes at a
purchase price in cash equal to 101% of the principal amount thereof. The
Company currently anticipates redeeming the 10.75% Notes during the second
quarter of fiscal 1997. See "Use of Proceeds."
The 10.75% Indenture contains restrictive covenants which, among other
things, impose significant restrictions on the Company's operations, including
restrictions on the Company's ability to incur any debt unless the Consolidated
Fixed Charge Coverage Ratio (as defined below) exceeds 3.0 to 1.0, or to create
or permit liens on assets, in each case other than debt or liens permitted in
certain limited amounts. "Consolidated Fixed Charge Coverage Ratio" is defined
in the 10.75% Indenture as the total interest expense of the Company and its
Restricted Subsidiaries (as defined below), including (i) the
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<PAGE> 52
interest component of capital lease obligations, (ii) one-third of the rental
expense attributable to operating leases, (iii) amortization of debt discount
and commissions, discounts and other similar fees and charges owed with respect
to debt, (iv) non-cash interest payments, (v) commissions, discounts and other
fees and charges owed with respect to letters of credit and bankers' acceptance
financing, (vi) net costs under interest rate swap obligations designed to
provide interest rate protection (including amortization of fees), and (vii)
dividends on all preferred stock of Restricted Subsidiaries owned by persons
other than the Company or a wholly-owned subsidiary of the Company, directly or
indirectly. "Restricted Subsidiaries" include all consolidated subsidiaries of
the Company except those specifically designated by the Company as an
"Unrestricted Subsidiary." In addition to debt incurred within the permitted
Consolidated Fixed Charge Coverage Ratio, the Company or any of its Restricted
Subsidiaries may have or incur debt (i) which was outstanding at the time of the
issuance of the 10.75% Notes or incurred in connection with the refinancing
thereof, (ii) to a Restricted Subsidiary (and, similarly, a Restricted
Subsidiary may incur debt to the Company), (iii) up to $40 million for the
acquisition, construction or expansion by the Company or a Restricted Subsidiary
of any new or existing facility or facilities relating to the gaming business
and the related businesses of the Company or such Restricted Subsidiary, (iv)
for the maintenance, refurbishment or replacement of assets relating to the
gaming business and the related businesses of the Company, (v) solely in respect
of performance bonds and completion guarantees, and (vi) with respect to
interest rate swap obligations. With respect to the creation of any liens on
assets, the Company or any of its Restricted Subsidiaries may create liens with
respect to (i) debt existing as of the date of the 10.75% Indenture, (ii) debt
senior to the 10.75% Notes, (iii) the property of any subsidiary securing debt
of such subsidiary, (iv) debt in favor of the Company or a wholly-owned
subsidiary, (v) securing debt of the Company that is pari passu with the 10.75%
Notes, so long as such liens are equal and ratable to liens with respect to the
10.75% Notes, and that is subordinate or junior in right of payment to the
10.75% Notes, so long as such liens are junior to liens with respect to the
10.75% Notes, and (vi) certain other permitted liens. In addition, the 10.75%
Indenture contains covenants that restrict the Company's ability to make
investments in or loans to affiliates, to sell or dispose of its assets or to
merge or consolidate with other entities. The Company intends to use the
proceeds of the Offerings to reduce indebtedness outstanding under the New Bank
Credit Facility. Amounts available under the New Bank Credit Facility will be
used to effect the redemption of the 10.75% Notes.
11% SENIOR SUBORDINATED NOTES
The 11% Notes were issued under an indenture dated November 15, 1992 (the
"11% Indenture"), among CHFC, CH&C, as Guarantor, and State Street Bank and
Trust Company, as Trustee. The aggregate outstanding principal amount of the 11%
Notes is $185 million. CH&C has guaranteed the payment of the 11% Notes (the
"CH&C Guaranty"). The CH&C Guaranty ranks junior in right to payment to all
Senior Debt (as defined in the 11% Indenture) of CH&C, including the Notes, and
pari passu with all other subordinated debt of CH&C.
The 11% Notes mature on December 1, 2002 and bear interest at a rate of 11%
per annum, payable semiannually on June 1 and December 1. The 11% Notes are
subject to redemption at the option of CHFC after December 1, 1997, at
redemption prices ranging from 104.125% in 1997 to 100% in 1999 and thereafter
of the principal amount outstanding plus accrued interest to the redemption
date. In addition, upon a Change of Control (as defined in the 11% Indenture),
each holder of 11% Notes has the right to require CHFC to repurchase the
holder's 11% Notes at a purchase price in cash equal to 101% of the principal
amount thereof.
The 11% Indenture contains restrictive covenants which, among other things,
impose significant restrictions on CH&C's operations, including restrictions on
CH&C's ability to incur any debt unless the Consolidated Fixed Charge Coverage
Ratio (as defined below) exceeds 2.0 to 1.0, or to create or permit liens on
assets, in each case, except such debt or liens in certain limited amounts.
"Consolidated Fixed Charge Coverage Ratio" is defined in the 11% Indenture as
the total interest expense of CH&C and its Restricted Subsidiaries (as defined
below), including (i) the interest component of capital lease
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<PAGE> 53
obligations, (ii) one-third of the rental expense attributable to operating
leases, (iii) amortization of debt discount and commissions, discounts and other
similar fees and charges owed with respect to debt, (iv) non-cash interest
payments, (v) commissions, discounts and other fees and charges owed with
respect to letters of credit and banker's acceptance financing, (vi) net costs
under interest swap obligations designed to provide interest rate swap
protection (including amortization of fees), and (vii) dividends on all
preferred stock of Restricted Subsidiaries owned by persons other than CH&C or a
wholly-owned subsidiary of CH&C, directly or indirectly. "Restricted
Subsidiaries" include all consolidated subsidiaries of CH&C except those
specifically designated by CH&C as an "Unrestricted Subsidiary." In addition to
the debt incurred within the Permitted Consolidated Fixed Charge Coverage Ratio,
CH&C or any of its Restricted Subsidiaries may have or incur debt (i) which was
outstanding at the time of the issuance of the 11% Notes, and incurred in
connection with the refinancing thereof, (ii) to a Restricted Subsidiary (and,
similarly, a Restricted Subsidiary may incur debt to the Company), (iii) up to
$40 million for the acquisition, construction or expansion by CH&C or a
Restricted Subsidiary of any new or existing facility or facilities relating to
the gaming business and the related businesses of CH&C or such Restricted
Subsidiary, (iv) for the maintenance, refurbishment or replacement of assets
relating to the gaming business and the related businesses of CH&C, (v) solely
in respect of performance bonds and completion guarantees, and (vi) with respect
to interest rate swap obligations. With respect to the existence and creation of
any liens on assets, CH&C or any of its Restricted Subsidiaries may suffer to
exist or create liens with respect to (i) debt existing as of the date of the
11% Indenture, (ii) debt senior to the 11% Notes, (iii) the property of any
subsidiary securing debt of such subsidiary, (iv) debt in favor of CH&C or a
wholly-owned subsidiary, (v) securing debt of CH&C that is pari passu with the
11% Notes, so long as such liens are equal and ratable to liens with respect to
the 11% Notes, and debt that is subordinate or junior in right of payment to the
11% Notes, so long as such liens are junior to liens with respect to the 11%
Notes, and (vi) certain other permitted liens. In addition, the 11% Indenture
contains covenants that restrict CH&C's ability to make investments in or loans
to affiliates, to sell or dispose of its assets, or to merge or consolidate with
other entities.
% SENIOR NOTES
The % Senior Notes (the " % Notes") are being offered concurrently with
the Common Stock being offered hereby. 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. The % Notes will be
issued under an indenture (the " % Indenture") to be dated as of ,
1996 among the Company, certain subsidiaries of the Company as guarantors and
The Bank of New York as Trustee. The aggregate outstanding amount of the %
Notes is $ million. Certain subsidiaries of the Company have guaranteed
payment of the % Notes on a senior basis.
The % Notes mature on , 2003 and bear interest at a rate of
% per annum, payable semiannually on and of each year
commencing 1997. The % Notes are subject to redemption at the
option of the Company after 2000, at redemption prices ranging from
% in 2000 to % in 2002 and thereafter of the principal amount outstanding
plus accrued interest to the redemption date. In addition, upon a Change of
Control (as defined in the % Indenture) (or, if the Notes have been rated
"investment grade," upon a Change of Control and a ratings decline), each holder
of % Notes has the option to require the Company to repurchase the holders %
Notes at a purchase price in cash equal to 101% of the principal amount thereof.
During any period of time that (i) the % Notes have Investment Grade
Status (as defined in the % Indenture), and (ii) no default or event of
default has occurred and is continuing under the % Indenture, the Company
and its Restricted Subsidiaries will not be subject to the provisions of the
% Indenture described below. In the event that the Company and its
Restricted Subsidiaries are not subject to such covenants with respect to the
% Notes for any period of time as a result of the preceding sentence and,
subsequently, at least two of the three rating agencies withdraw their ratings
or assign the % Notes a rating below the required ratings, then the Company
and its Restricted Subsidiaries will thereafter again be subject to such
covenants for the benefit of the % Notes.
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<PAGE> 54
The Company shall not, and shall not permit any Restricted Subsidiary to,
incur any indebtedness unless no event of default has occurred and is continuing
and unless after giving effect thereto, the Company's Consolidated Fixed Charge
Coverage Ratio (as defined below) would exceed 2.0 to 1.0. "Consolidated Fixed
Charge Coverage Ratio" is defined in the % Indenture as the total interest
expense of the Company and its Restricted Subsidiaries (other than Unrestricted
Subsidiaries (both as defined below), including (i) the interest component of
capital lease obligations, (ii) one-third of the rental expense attributable to
operating leases, (iii) amortization of indebtedness discount and commissions,
discounts and other similar fees and charges owed with respect to Indebtedness,
(iv) noncash interest payments, (v) commissions, discounts and other fees and
charges owed with respect to letters of credit and bankers' acceptance
financing, (vi) net costs pursuant to interest rate agreements, (vii) dividends
on all preferred stock of Restricted Subsidiaries held by persons other than the
Company or a Restricted Subsidiary, (viii) interest attributable to the
indebtedness of any other person for which the Company or any Restricted
Subsidiary is responsible or liable as obligor, guarantor or otherwise
(including Indebtedness guaranteed pursuant to investment guarantees), and
(viii) any dividend or distribution, whether in cash, property or securities, on
disqualified stock of the Company. "Restricted Subsidiaries" include all
consolidated subsidiaries of the Company except those specifically designated by
the Company as "Unrestricted Subsidiaries."
Notwithstanding the foregoing limitation, the Company may incur the
following indebtedness: (i) indebtedness evidenced by the Notes; (ii)
indebtedness outstanding on the date the % Notes are issued; (iii) so long
as no event of default has occurred and is continuing, indebtedness under the
New Bank Credit Facility or any replacement thereof in an aggregate amount
outstanding at any time not to exceed $500 million, as such amount may be
reduced as a result of certain repayments; (iv) indebtedness of the Company or a
Restricted Subsidiary owing to and held by a Restricted Subsidiary or the
Company; (v) indebtedness under agreements designed to provide interest rate
protection or to limit exchange rate risk in connection with transactions
entered into in the ordinary course of business; (vii) indebtedness in
connection with one or more standby letters of credit, performance bonds or
completion guarantees issued in the ordinary course of business or pursuant to
self-insurance obligations and not in connection with the borrowing of money or
the obtaining of advances or credit; (viii) Indebtedness outstanding under
Permitted FF&E Financings (as defined in the % Indenture) which are either (x)
non-recourse indebtedness of the Company and its Restricted Subsidiaries or (y)
limited in amount for each gaming facility owned or leased by the Company or any
of its Restricted Subsidiaries to the lesser of (1) the amount of FF&E used in
such gaming facility and financed by such Permitted FF&E Financing or (2) $10
million; (ix) so long as no Event of Default has occurred and is continuing,
indebtedness of the Company not otherwise permitted to be Incurred pursuant to
the provisions of the Consolidated Fixed Charge Coverage Ratio or this paragraph
in an aggregate amount Incurred not to exceed $25 million; or (x) refinancing
indebtedness incurred in respect of indebtedness outstanding pursuant to the
provisions of the Consolidated Fixed Charge Ratio, or clauses (i), (ii), (iii),
(viii) and this clause (x) of this paragraph.
In addition, 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 which may be
further limited by the agreements governing the Company's indebtedness. See
"Risk Factors -- Holding Company Structure and Dividend Limitations."
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<PAGE> 55
PRINCIPAL AND SELLING STOCKHOLDERS
The following table sets forth certain information regarding the beneficial
ownership of the Common Stock as of August 30, 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 OFFERING NUMBER PERCENTAGE
- --------------------------------------- ---------- ------------- ------------ ---------- -------------
<S> <C> <C> <C> <C> <C>
William S. Boyd(b)..................... 26,347,933 45.6% 142,786 26,205,147 42.4%
Jimma L. Beam(c)....................... 3,610,829 6.3 -- 3,610,829 5.9
Marianne Boyd Johnson(d)............... 2,061,522 3.6 180,000 1,881,522 3.0
William R. Boyd(e)..................... 2,049,239 3.6 180,000 1,869,239 3.0
Perry B. Whitt(f)...................... 1,693,158 3.0 100,000 1,593,158 2.6
Robert Boughner(g)..................... 572,203 * 150,000 422,203 *
Charles L. Ruthe(h).................... 482,121 * 300,000 182,121 *
Ellis Landau(i)........................ 437,305 * 125,000 312,305 *
Ralph Purnell(j)....................... 289,332 * -- 289,332 *
Maunty C. Collins(k)................... 242,997 * -- 242,997 *
Charles E. Huff(l)..................... 76,264 * -- 76,264 *
Warren L. Nelson(m).................... 59,500 * -- 59,500 *
James Hippler(n)....................... 38,829 * -- 38,829 *
Keith E. Smith(o)...................... 27,354 * -- 27,354 *
Brian Larson(p)........................ 26,767 * -- 26,767 *
Kenny C. Guinn(q)...................... 7,750 * -- 7,750 *
Donald Snyder(r)....................... 200 * -- 200 *
Samuel J. Boyd(s)...................... 1,676,000 2.9 100,000 1,576,000 2.6
Gregory W. Nelson...................... 516,611 * 20,000 496,611 *
Al Garbian............................. 380,000 * 40,000 340,000 *
All officers and directors as a group
(16 persons)(t)...................... 34,412,474 58.7 1,177,786 33,234,688 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) Includes 22,976,266 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
571,667 shares issuable pursuant to options exercisable within 60 days of
the date of the Offering. In the event the Underwriters' over-allotment
options were exercised in full, Mr. Boyd would sell an additional 30,000
shares in the Offering. Mr. Boyd is the Company's Chairman of the Board and
Chief Executive Officer.
(c) Includes 1,000 shares of Common Stock held by the Jimma L. Beam Revocable
Trust, of which Ms. Beam is trustee.
(d) 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 26,167 shares
issuable pursuant to options exercisable within 60 days of the date of the
Offering. In the event the Underwriters' over-allotment options were
exercised in full, Ms. Johnson would sell an additional 20,000 shares in the
Offering. Ms. Johnson is the Company's Assistant Secretary and a Director.
(e) 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 26,167 shares issuable pursuant to
options exercisable within 60 days of the date of the Offering. In the event
the Underwriters' over-allotment options were exercised in full, Mr. Boyd
would sell an additional 20,000 shares in the Offering. Mr. Boyd is the
Company's Vice President and a Director.
(f) Includes 1,688,658 shares of Common Stock held by the Whitt Family Trust, of
which Mr. Whitt and his wife are trustees. Also includes 4,500 shares
issuable pursuant to options exercisable within 60 days of the date of the
Offering. In the event the
52
<PAGE> 56
Underwriters' over-allotment options were exercised in full, Mr. Whitt would
sell an additional 10,000 shares in the Offering. Mr. Whitt is the Company's
Vice Chairman of the Board.
(g) Includes 408,870 shares of Common Stock held by the Robert L. Boughner
Investment Trust, of which Mr. Boughner is trustee. Also includes 163,333
shares issuable pursuant to options exercisable within 60 days of the date
of the Offering. In the event the Underwriters' over-allotment options were
exercised in full, Mr. Boughner would sell an additional 25,000 shares in
the Offering. Mr. Boughner is the Company's Executive Vice President, Chief
Operating Officer and a Director.
(h) 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 163,333
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.
Mr. Ruthe, the Company's President and a Director, is currently on leave of
absence.
(i) Includes 130,000 shares of Common Stock issuable pursuant to options
exercisable within 60 days of the date of the Offering. In the event the
Underwriters' over-allotment options were exercised in full, Mr. Landau
would sell an additional 25,000 shares in the Offering. Mr. Landau is the
Company's Senior Vice President, Chief Financial Officer and Treasurer.
(j) Includes 9,000 shares of Common Stock owned by the Ralph W. Purnell
Irrevocable Trust. Also includes 115,000 shares issuable pursuant to options
exercisable within 60 days of the date of the Offering. Mr. Purnell is the
Company's Senior Vice President -- Director of Operations, Nevada Region.
(k) 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 100,000 shares issuable pursuant to options exercisable
within 60 days of the date of the Offering. Mr. Collins is the Company's
Senior Vice President -- Director of Operations, Central Region.
(l) Includes 4,900 shares of Common Stock issuable pursuant to options
exercisable within 60 days of the date of the Offering. Mr. Huff is the
Company's Vice President, Secretary and General Counsel.
(m) Includes 4,500 shares of Common Stock issuable pursuant to options
exercisable within 60 days of the date of the Offering. Mr. Nelson is a
Director of the Company.
(n) Includes 26,167 shares of Common Stock issuable pursuant to options
exercisable within 60 days of the date of the Offering. Mr. Hippler is the
Company's Senior Vice President -- Administration.
(o) Includes 325 shares of Common Stock owned by Mr. Smith's wife. Also includes
26,442 shares issuable pursuant to options exercisable within 60 days of the
date of the Offering. Mr. Smith is the Company's Vice President and
Controller.
(p) Includes 26,167 shares of Common Stock issuable pursuant to options
exercisable within 60 days of the date of the Offering. Mr. Larson is the
Company's Vice President -- Development and Assistant Secretary.
(q) Includes 2,750 shares of Common Stock issuable pursuant to options
exercisable within 60 days of the date of the Offering. Mr. Guinn is a
Director of the Company.
(r) Mr. Snyder is the Company's Executive Vice President -- Administration and a
Director.
(s) Mr. Boyd is currently a shift boss at the Fremont and prior to such position
served as a shift boss at Sam's Town Las Vegas and the Company's Executive
Assistant -- Administration.
(t) Includes 1,390,093 shares of Common Stock issuable pursuant to options
exercisable within 60 days of the date of the Offering.
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<PAGE> 57
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
61,213,720 shares of Common Stock issued and outstanding (61,813,720 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
54
<PAGE> 58
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 (Nev. Rev. Stat. Ann.
sections 78.411-.444 (1995)) 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 three years after the interested
stockholder acquired his shares unless the combination or the purchase of shares
made by the interested stockholder was approved by the board of directors before
the interested stockholder acquired such shares. If this approval is not
obtained, then after the expiration of the three-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 three 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 greater than the
value of (i) and (ii) as applicable to preferred stock pursuant to the statute.
Nevada's Control Share Acquisition Statute (Nev. Rev. Stat. Ann. sections
78.378-.3793 (1995)) 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 in the election of directors. Once an acquiror crosses one of the above
thresholds, those shares in the immediate offer or acquisition and those shares
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 such stockholders within 20 days after
the vote of the stockholders that they have the right to receive the fair value
of their shares in accordance with statutory procedures established generally
for dissenter's rights.
TRANSFER AGENT AND REGISTRAR
The Transfer Agent and Registrar for the Common Stock is Chase Mellon
Securities Corp.
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<PAGE> 59
CERTAIN UNITED STATES TAX CONSEQUENCES TO
NON-UNITED STATES HOLDERS OF SHARES
The following is a summary of the principal United States Federal income
and estate tax consequences of the ownership and sale or other disposition of
Common Stock by a person (a "non-U.S. holder") which, for United States Federal
income tax purposes, is a nonresident alien individual, a foreign corporation, a
foreign partnership or a foreign estate or trust, as such terms are defined in
the Internal Revenue Code of 1986 (the "Code"). This summary deals only with
Common Stock held as capital assets and does not address all aspects of United
States Federal income and estate taxes which may be relevant to non-U.S. holders
which may be subject to special treatment under United States Federal income tax
laws (for example, insurance companies, tax exempt organizations, financial
institutions or broker-dealers). Furthermore, this summary does not discuss any
aspect of foreign, state or local taxation. This summary is based on current
provisions of the Code, existing and proposed regulations promulgated thereunder
and administrative and judicial interpretations thereof, all of which are
subject to change.
Dividends. Dividends paid to a non-U.S. holder of Common Stock will be
subject to withholding of United States Federal income tax at a 30% rate or such
lower rate as may be specified by an applicable income tax treaty, unless the
dividends (i) are effectively connected with the conduct of a trade or business
of the non-U.S. holder in the United States and the non-U.S. holder provides the
payer with proper documentation or (ii) if a tax treaty applies, are
attributable to a United States permanent establishment of the non-U.S. holder.
In order to claim the benefit of an applicable tax treaty rate, a non-U.S.
holder may have to file with the Company or its dividend paying agent an
exemption or reduced treaty rate certificate or letter in accordance with the
terms of such treaty.
Dividends that are effectively connected with such a United States trade or
business or, if a tax treaty applies, are attributable to such a United States
permanent establishment, are generally subject to tax on a net income basis
(that is, after allowance for applicable deductions) at rates applicable to
United States citizens, resident aliens and domestic United States corporations
and are not generally subject to withholding. Any such effectively connected
dividends received by a non-United States corporation may also, under certain
circumstances, be subject to an additional "branch profits tax" at a 30% rate or
such lower rate as may be specified by an applicable income tax treaty.
Under current United States Treasury regulations, dividends paid to an
address outside the United States are presumed to be paid to a resident of such
country for purposes of the withholding discussed above (unless the payer has
knowledge to the contrary), and, under the current interpretation of United
States Treasury regulations, for purposes of determining the applicability of a
tax treaty rate. Under recently proposed United States Treasury regulations (the
"Proposed Regulations"), not currently in effect, however, a non-U.S. holder of
Common Stock who wishes to claim the benefit of an applicable treaty rate would
be required to satisfy applicable certification and other requirements. The
Proposed Regulations are proposed to be effective for payments made after
December 31, 1997. There can be no assurance that the Proposed Regulations will
be adopted or as to the provisions that they will include if and when adopted in
temporary or final form. Certain certification and disclosure requirements must
be complied with in order to be exempt from withholding under the effectively
connected income exemption discussed above.
A non-U.S. holder of Common Stock that is eligible for a reduced rate of
United States tax withholding pursuant to an income tax treaty may obtain a
refund of any excess amounts currently withheld by filing an appropriate claim
for refund with the United States Internal Revenue Service.
Disposition of the Common Stock. A non-U.S. holder generally will not be
subject to United States Federal income tax in respect of gain recognized on the
sale or other disposition of Common Stock unless (i) (a) the gain is effectively
connected with the conduct of a trade or business of a non-U.S. holder in the
United States or (b) if a tax treaty applies, the gain is attributable to a
United States permanent establishment of the non-U.S. holder, (ii) in the case
of an individual non-U.S. holder who is present in the United States for 183 or
more days in the taxable year of the sale or other disposition and either
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<PAGE> 60
(a) such individual's "tax home" for United States Federal income tax purposes
is in the United States, or (b) the gain is attributable to an office or other
fixed place of business maintained in the United States by such individual or
(iii) (a) if the Company is or has been a "U.S. real property holding
corporation" for Federal income tax purposes at any time during the five-year
period ending on the date of the disposition, or, if shorter, the period during
which the non-U.S. holder held the Common Stock (the "applicable period"), and
(b) the Common Stock is not regularly traded on an established securities
market, or if the Common Stock is regularly traded on an established securities
market, the non-U.S. holder owns, actually or constructively, at any time during
the applicable period more than 5% of the Common Stock. The Company believes
that it is and will continue to be a U.S. real property holding corporation and,
at present, the Common Stock is regularly traded on an established securities
market.
If an individual non-U.S. holder falls under clause (i) above, such
individual generally will be taxed on the net gain derived from a sale under
regular graduated United States Federal income tax rates. If an individual
non-U.S. holder falls under clause (ii) above, such individual generally will be
subject to a flat 30% tax on the gain derived from a sale, which may be offset
by certain United States capital losses (notwithstanding the fact that such
individual is not considered a resident of the United States). Thus, non-U.S.
holders who have spent (or expect to spend) 183 days or more in the United
States in the taxable year in which they contemplate a sale of the Common Stock
are urged to consult their tax advisors as to the tax consequences of such sale.
If a non-U.S. holder that is a foreign corporation falls under clause (i)
above, it generally will be taxed on its net gain under regular graduated United
States Federal income tax rates and, in addition, will be subject to the branch
profits tax equal to 30% of its "effectively connected earnings and profits"
within the meaning of the Code for the taxable year, as adjusted for certain
items, unless it qualifies for a lower rate under an applicable income tax
treaty.
Federal Estate Taxes. Common Stock held by a holder who is neither a
United States citizen nor a United States resident (as specifically defined for
United States Federal estate tax purposes) at the time of death will be included
in such holder's gross estate for United States Federal estate tax purposes,
unless an applicable estate tax treaty provides otherwise.
United States Information Reporting Requirements and Backup Withholding
Tax. The Company must report annually to the Internal Revenue Service and to
each non-U.S. holder the amount of dividends paid to such holder and the tax
withheld with respect to such dividends. These information reporting
requirements apply regardless of whether withholding is required. Copies of the
information returns reporting such dividends and withholding may also be made
available to the tax authorities in the country in which the non-U.S. holder
resides under the provisions of an applicable income tax treaty.
United States backup withholding (which generally is imposed at a 31% rate)
generally will not apply to (i) the payment of dividends paid on the Common
Stock to a non-U.S. holder at an address outside the United States or (ii) the
payment of the proceeds of a sale of the Common Stock to or through the foreign
office of a broker. In the case of the payment of proceeds from such a sale of
the Common Stock through a foreign office of a broker that is a United States
person or a "U.S. related person," however, information reporting (but not
backup withholding) is required with respect to the payment unless the broker
has documentary evidence in its files that the owner is a non-U.S. holder (and
has no actual knowledge to the contrary) and certain other requirements are met
or the holder otherwise establishes an exemption. For this purpose, a "U.S.
related person" is (i) a "controlled foreign corporation" for United States
Federal income tax purposes or (ii) a foreign person 50% or more of whose gross
income from all sources for the three-year period ending with the close of its
taxable year preceding the payment (or for such part of the period that the
broker has been in existence) is derived from activities which are effectively
connected with the conduct of a United States trade or business. The payment of
the proceeds of a sale of the Common Stock to or through a United States office
of a broker is subject to information reporting and possible backup withholding
at a rate of 31% unless the holder certifies, among other things, its non-United
States status under penalties of perjury or otherwise establishes an exemption.
Any amounts withheld under the backup withholding rules from a payment to a
57
<PAGE> 61
non-U.S. holder will be allowed as a refund or a credit against such non-U.S.
holder's United States Federal income tax liability, provided that the required
information is furnished to the Internal Revenue Service.
The Proposed Regulations would provide alternative methods for satisfying
the certification requirements described above.
Recent Developments. Legislation has been proposed from time to time that
would tax 10 percent, non-U.S. holders on the gains from the sale of stock of
United States corporations. It is not clear if similar legislation will be
proposed in the future or, if proposed, whether it would be enacted into law.
THE FOREGOING DISCUSSION IS A SUMMARY OF THE PRINCIPAL UNITED STATES
FEDERAL INCOME AND ESTATE TAX CONSEQUENCES OF THE OWNERSHIP, SALE OR OTHER
DISPOSITION OF THE COMMON STOCK BY NON-UNITED STATES HOLDERS. ACCORDINGLY,
INVESTORS ARE URGED TO CONSULT WITH THEIR TAX ADVISORS WITH RESPECT TO THE
UNITED STATES FEDERAL INCOME TAX CONSEQUENCES OF THE OWNERSHIP AND DISPOSITION
OF THE COMMON STOCK INCLUDING THE APPLICATION AND EFFECT OF THE LAWS OF ANY
STATE, LOCAL, FOREIGN OR OTHER TAXING JURISDICTION.
58
<PAGE> 62
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.................................................. 5,337,786
==========
</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.
59
<PAGE> 63
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
The validity of the Common Stock offered hereby will be passed upon for the
Company by McDonald Carano Wilson McCune Bergin Frankovich & Hicks LLP, Reno and
Las Vegas, 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, 1996
and 1995 and for each of the three years in the period ended June 30, 1996
included in this Prospectus have been audited by Deloitte & Touche LLP,
independent auditors, as stated in their report, which is included herein, and
has been so included in reliance upon the report 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 Seven World Trade Center, New York, New York 10048 and at the
Northwestern Atrium Center, Suite 1400, 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. In addition, the Commission
maintains a Website (http://www.sec.gov) that contains such reports, proxy
statements and other information filed by the Company. Such reports, proxy
statements and other information concerning the Company can
60
<PAGE> 64
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.
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 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 Company's Current Report
on Form 8-K, dated June 19, 1996; (xi) the Company's Current Report on Form 8-K,
dated August 16, 1996; (xii) 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 (xiii) 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.
61
<PAGE> 65
BOYD GAMING CORPORATION AND SUBSIDIARIES
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 Changes in Stockholders' Equity.......................... F-5
Consolidated Statements of Cash Flows............................................... F-6
Notes to Consolidated Financial Statements............................................ F-7
</TABLE>
F-1
<PAGE> 66
INDEPENDENT AUDITORS' REPORT
Boyd Gaming Corporation and Subsidiaries
We have audited the accompanying consolidated balance sheets of Boyd Gaming
Corporation and Subsidiaries (the "Company") as of June 30, 1996 and 1995, 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, 1996.
These financial statements are the responsibility of the Company's management.
Our responsibility is to express an opinion on the 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, 1996 and 1995 and the results of their operations and
their cash flows for each of the three years in the period ended June 30, 1996
in conformity with generally accepted accounting principles.
DELOITTE & TOUCHE LLP
Las Vegas, Nevada
August 23, 1996
F-2
<PAGE> 67
BOYD GAMING CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(IN THOUSANDS, EXCEPT SHARE DATA)
<TABLE>
<CAPTION>
JUNE 30,
---------------------
1996 1995
-------- --------
<S> <C> <C>
ASSETS
Current assets
Cash and cash equivalents.......................................... $ 48,980 $ 83,169
Accounts receivable, net........................................... 16,040 16,135
Inventories........................................................ 6,531 6,648
Prepaid expenses................................................... 15,265 13,465
------- -------
Total current assets............................................ 86,816 119,417
Property, equipment and leasehold interests, net..................... 797,593 765,799
Other assets and deferred charges.................................... 58,489 53,686
Goodwill, net........................................................ 10,527 10,611
------- -------
Total assets.................................................... $953,425 $949,513
======= =======
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities
Current maturities of long-term debt............................... $ 4,031 $ 36,347
Accounts payable................................................... 47,193 50,432
Accrued liabilities
Payroll and related............................................. 22,956 21,133
Interest and other.............................................. 20,956 20,792
Income taxes payable............................................... 678 596
------- -------
Total current liabilities....................................... 95,814 129,300
Long-term debt, net of current maturities............................ 590,808 587,957
Deferred income taxes................................................ 33,546 29,643
Commitments
Stockholders' equity
Preferred stock, $.01 par value, 5,000,000 shares authorized....... -- --
Common stock, $.01 par value; 200,000,000 shares authorized;
57,213,720 and 56,999,018 shares outstanding.................... 572 570
Additional paid-in capital......................................... 102,583 100,085
Retained earnings.................................................. 130,102 101,958
------- -------
Total stockholders' equity...................................... 233,257 202,613
------- -------
Total liabilities and stockholders' equity...................... $953,425 $949,513
======= =======
</TABLE>
The accompanying notes are an integral part of these consolidated financial
statements.
F-3
<PAGE> 68
BOYD GAMING CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
(IN THOUSANDS, EXCEPT PER SHARE DATA)
<TABLE>
<CAPTION>
FOR THE YEAR ENDED JUNE 30,
-----------------------------------
1996 1995 1994
--------- --------- ---------
<S> <C> <C> <C>
Revenues
Casino......................................................... $ 548,167 $ 463,179 $ 341,473
Food and beverage.............................................. 142,420 123,527 99,082
Rooms.......................................................... 69,645 62,300 44,934
Other.......................................................... 49,895 37,563 28,695
Management fees and joint venture.............................. 41,576 35,763 --
-------- -------- --------
Gross revenues................................................... 851,703 722,332 514,184
Less promotional allowances...................................... 75,846 61,992 45,965
-------- -------- --------
Net revenues................................................. 775,857 660,340 468,219
-------- -------- --------
Costs and expenses
Casino......................................................... 273,545 221,844 164,798
Food and beverage.............................................. 99,213 90,670 74,115
Rooms.......................................................... 25,842 24,578 19,683
Other.......................................................... 36,830 25,567 20,633
Selling, general and administrative............................ 114,497 79,785 54,441
Maintenance and utilities...................................... 30,171 28,452 21,057
Depreciation and amortization.................................. 60,626 54,518 42,136
Corporate expense.............................................. 24,343 24,356 12,503
Preopening expense............................................. 10,004 -- 4,605
-------- -------- --------
Total........................................................ 675,071 549,770 413,971
-------- -------- --------
Operating income................................................. 100,786 110,570 54,248
-------- -------- --------
Other income (expense)
Interest income................................................ 1,174 2,072 3,379
Interest expense, net of amounts capitalized................... (52,360) (48,443) (39,472)
-------- -------- --------
Total........................................................ (51,186) (46,371) (36,093)
-------- -------- --------
Income before provision for income taxes, cumulative effect of a
change in accounting principle and extraordinary item.......... 49,600 64,199 18,155
Provision for income taxes....................................... 20,021 27,950 7,505
-------- -------- --------
Income before cumulative effect of a change in accounting
principle and extraordinary item............................... 29,579 36,249 10,650
Cumulative effect of a change in accounting for income taxes..... -- -- 2,035
-------- -------- --------
Income before extraordinary item................................. 29,579 36,249 12,685
Extraordinary item, net of tax benefit of $889................... 1,435 -- --
-------- -------- --------
Net income....................................................... 28,144 36,249 12,685
Dividends on preferred stock..................................... -- -- 467
-------- -------- --------
Net income applicable to common stock............................ $ 28,144 $ 36,249 $ 12,218
======== ======== ========
Net income per common share
Income before cumulative effect of a change in accounting
principle and extraordinary item............................. $ .52 $ 0.64 $ 0.19
Cumulative effect of a change in accounting for income taxes... -- -- 0.04
Extraordinary item............................................. (.03) -- --
-------- -------- --------
Net income....................................................... $ .49 $ 0.64 $ 0.23
======== ======== ========
</TABLE>
The accompanying notes are an integral part of these consolidated financial
statements.
F-4
<PAGE> 69
BOYD GAMING CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY
FOR THE YEARS ENDED JUNE 30, 1996, 1995 AND 1994
(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,
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............. 28,144 28,144
Stock issued in
connection with
employee stock
purchase plan........ 212,368 2 2,466 2,468
Stock options
exercised............ 2,334 -- 32 32
------- -------- ---------- ----- ------- ------- ------- ---------
BALANCES, JUNE 30,
1996................. -- -- 57,213,720 $572 $102,583 $130,102 -- $ 233,257
======= ======== ========== ===== ======= ======= ======= =========
</TABLE>
The accompanying notes are an integral part of these consolidated financial
statements.
F-5
<PAGE> 70
BOYD GAMING CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(IN THOUSANDS)
<TABLE>
<CAPTION>
FOR THE YEAR ENDED JUNE 30,
---------------------------------
1996 1995 1994
--------- --------- ---------
<S> <C> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES
Net income...................................................................... $ 28,144 $ 36,249 $ 12,685
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation and amortization............................................... 60,626 54,518 42,136
Cumulative effect of a change in accounting for income taxes................ -- -- (2,035)
Extraordinary item.......................................................... 1,435 -- --
Deferred income taxes....................................................... 3,903 14,148 877
Other....................................................................... 185 84 (142)
Changes in assets and liabilities:
(Increase) decrease in accounts receivable, net........................... 95 (3,089) (4,383)
(Increase) decrease in inventories........................................ 117 (180) (1,891)
(Increase) decrease in prepaid expenses................................... (1,800) 1,940 (4,952)
Increase in other assets.................................................. (4,412) (2,032) (3,995)
Increase (decrease) in other current liabilities.......................... 15,504 (19,146) 39,766
Increase (decrease) in income taxes payable............................... 82 596 (2,291)
-------- ---------
Net cash provided by operating activities....................................... 103,879 83,088 75,775
-------- ---------
CASH FLOWS FROM INVESTING ACTIVITIES
Acquisition of property, equipment and other assets......................... (107,734) (181,212) (307,045)
Proceeds from loans receivable.............................................. 2,000 30,667 --
Cash acquired in Eldorado, Inc. acquisition................................. -- -- 1,622
Decrease (increase) in short-term investments............................... -- 5,000 (5,000)
-------- ---------
Net cash used in investing activities........................................... (105,734) (145,545) (310,423)
-------- ---------
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from issuance of long-term debt.................................... 230,934 86,025 148,500
Payments on long-term debt.................................................. (265,149) (22,027) (13,862)
Net borrowings under credit agreements...................................... (250) 13,000 35,000
Dividends paid.............................................................. -- -- (467)
Proceeds from issuance of common stock...................................... 2,131 1,664 72,368
-------- ---------
Net cash provided by (used in) financing activities............................. (32,334) 78,662 241,539
-------- ---------
Net increase (decrease) in cash and cash equivalents............................ (34,189) 16,205 6,891
Cash and cash equivalents, beginning of year.................................... 83,169 66,964 60,073
-------- ---------
Cash and cash equivalents, end of year.......................................... $ 48,980 $ 83,169 $ 66,964
======== =========
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION
Cash paid for interest, net of amounts capitalized.......................... $ 54,064 $ 51,405 $ 33,541
Cash paid for income taxes.................................................. 15,266 12,607 10,050
======== =========
SUPPLEMENTAL SCHEDULE OF NON-CASH INVESTING
AND FINANCING ACTIVITIES
Property additions acquired on contracts and trade
payables which were accrued, but not yet paid............................. $ 7,352 $ 24,109 $ 22,022
Unamortized financing costs written-off..................................... 2,324 -- --
Deferred bond financing costs incurred...................................... -- -- 1,500
Conversion of preferred stock to common stock............................... -- -- 17,788
======== =========
Acquisition of Eldorado, Inc.
Assets acquired........................................................... -- -- $ 21,796
Liabilities assumed....................................................... -- -- 14,662
-------- ---------
Net acquisition........................................................... $ -- $ -- $ 7,134
======== =========
</TABLE>
The accompanying notes are an integral part of these consolidated financial
statements.
F-6
<PAGE> 71
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 opened in September 1995. The Company manages
a casino entertainment facility in Philadelphia, Mississippi, which opened July
1, 1994, for which it has a seven-year management contract. The Company is also
part owner of and manages a riverboat gaming operation in Kenner, Louisiana,
which opened September 1994, for which it has a five-year management contract
with certain renewal options. All material intercompany accounts and
transactions have been eliminated.
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.
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 disposal 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, 1996 and 1995, accumulated amortization was $4.0 million and $3.7
million, respectively.
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
F-7
<PAGE> 72
amounts are then deducted as promotional allowances. The estimated cost of
providing these promotional allowances is charged to the casino department in
the following amounts:
<TABLE>
<CAPTION>
YEAR ENDED JUNE 30,
-------------------------------
1996 1995 1994
------- ------- -------
(IN THOUSANDS)
<S> <C> <C> <C>
Rooms....................................... $10,660 $ 8,991 $ 8,308
Food and beverage........................... 59,254 49,674 35,507
Other....................................... 3,116 2,422 1,324
------- ------- -------
Total....................................... $73,030 $61,087 $45,139
======= ======= =======
</TABLE>
Income Taxes
The Company and its subsidiaries file a consolidated federal tax return.
The Company accounts for income taxes in accordance with the 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.
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 associated with the development of Sam's Town Kansas City, which opened
September 1995, amounted to $10 million and were charged to expense during the
year ended June 30, 1996. Preopening expenses associated with the development of
Sam's Town Tunica, which opened May 1994, amounted to $4.6 million, and were
charged to expense during the year ended June 30, 1994.
Net Income Per Common Share
Net income per common share is based upon the weighted average number of
common stock and common stock equivalents outstanding during the period which
were 57,057,550, 56,870,104 and 54,297,226 for the years ended June 30, 1996,
1995 and 1994, respectively.
Use of Estimates
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities at the
date of the financial statements and the reported amounts of revenues and
expenses during the reporting period. Actual results could differ from those
estimates.
Recently 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
F-8
<PAGE> 73
arrangements in accordance with Accounting Principles Board No. 25, Accounting
for Stock Issued to Employees, and accordingly believes that adoption of SFAS
No. 123 will not have a significant effect on the financial position or results
of operations of the Company. The Company will include the pro forma effects of
this statement in its notes to financial statements for the year fiscal ending
June 30, 1997.
NOTE 2: RELATED PARTIES
In connection with the closing of the Company's initial public offering in
October 1993, the Company purchased Eldorado, Inc., owner of 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 pro forma basis as if Eldorado, Inc. were owned
by the Company for the entire fiscal year were $4.8 million, $12.8 million and
$0.23, respectively. Certain former stockholders of Eldorado, Inc. are also
directors, officers and significant shareholders of the Company.
NOTE 3: ACCOUNTS RECEIVABLE
Accounts receivable at June 30 are as follows:
<TABLE>
<CAPTION>
1996 1995
------- -------
(IN THOUSANDS)
<S> <C> <C>
Casino................................................. $ 6,420 $ 5,661
Hotel.................................................. 3,622 2,415
Other.................................................. 8,110 9,854
------- -------
Total.................................................. 18,152 17,930
Less allowance for doubtful accounts................... 2,112 1,795
------- -------
Total.................................................. $16,040 $16,135
======= =======
</TABLE>
NOTE 4: PROPERTY, EQUIPMENT AND LEASEHOLD INTEREST
Property, equipment and leasehold interest consist of the following at June
30:
<TABLE>
<CAPTION>
1996 1995
---------- ----------
(IN THOUSANDS)
<S> <C> <C>
Land.............................................. $ 120,557 $ 115,803
Buildings and improvements........................ 605,332 482,443
Furniture and equipment........................... 312,937 281,791
Leasehold improvements............................ 42,270 42,878
Construction in progress.......................... 50,854 129,190
-------- --------
Total fixed assets................................ 1,131,950 1,052,105
Less accumulated depreciation and amortization.... 334,357 286,306
-------- --------
Net fixed assets.................................. $ 797,593 $ 765,799
======== ========
</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>
Interest costs of $4.3 million, $7.1 million and $6.6 million were
capitalized in 1996, 1995 and 1994, respectively, during construction of new
properties and major additions.
F-9
<PAGE> 74
NOTE 5: LONG-TERM DEBT
Long-term debt at June 30 consists of the following:
<TABLE>
<CAPTION>
1996 1995
-------- --------
(IN THOUSANDS)
<S> <C> <C>
Notes payable under credit agreements................ $235,000 $281,500
11% senior subordinated notes........................ 185,000 185,000
10.75% senior subordinated notes..................... 150,000 150,000
Other................................................ 24,839 7,804
-------- --------
Total long-term debt................................. 594,839 624,304
Less current maturities.............................. 4,031 36,347
-------- --------
Total................................................ $590,808 $587,957
======== ========
</TABLE>
On June 19, 1996, the Company entered into a $500 million five-year
reducing, revolving bank credit facility which matures in June 2001 (the "New
Bank Credit Facility"). The New Bank Credit Facility replaced the Company's
amended senior credit agreement, Boyd Tunica loan and Boyd Kansas City loan.
Total availability under the New Bank Credit Facility will be reduced by $25
million at the end of two and one-half years and reduced by an additional $50
million at the end of each six-month period thereafter until maturity. As of
June 30, 1996, the Company had unused availability of $265 million under the New
Bank Credit Facility. Interest on the New Bank Credit Facility is based upon the
agent bank's quoted reference rate or London Interbank Offered Rate, at the
discretion of the Company. The average interest rate under the New Bank Credit
Facility at June 30, 1996 was 7.2%.
The New Bank Credit Facility is collateralized by the real and personal
property comprising six casino hotel properties owned by the Company and by
related security agreements with assignment of rents.
The New Bank Credit Facility contains certain financial covenants,
limitations on the incurrence of debt and limitations on the incurrence of
capital expenditures and investments, all as defined in the New Bank Credit
Facility.
The Company has $150 million principal amount of 10.75% senior subordinated
notes due September 2003. The notes require semi-annual 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 any time 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
Company, 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 semi-annual 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
any time after December 1, 1997 at redemption prices ranging from 104.125% in
1997 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). As a result of these restrictions, at June 30, 1996 California Hotel and
Casino (a wholly-owned Subsidiary of the Company) had a portion of its retained
earnings and its net assets in the amounts of $51.5 million and $106.7 million,
respectively, that were not available for distribution as dividends to the
Company.
On June 7, 1996 the Company filed a registration statement with the
Securities and Exchange Commission which will allow the issuance of up to $200
million of senior notes of the Company. The notes will be guaranteed by all
existing significant subsidiaries of the Company. The guaranties will be full,
unconditional, and joint and several. All of the Company's significant
subsidiaries are wholly-owned.
F-10
<PAGE> 75
Assets, equity, income and cash flows of all other subsidiaries of the Company
that are not expected to guaranty the notes are less than 3% of the respective
consolidated amounts and are inconsequential, individually and in the aggregate,
to the Company. The Company has not included separate financial information of
the guarantors since such information is not material to investors. The net
proceeds to the Company from the notes offering will be used to reduce
outstanding indebtedness under its New Bank Credit Facility. Amounts available
under the New Bank Credit Facility are expected to be used to redeem the 10.75%
Notes.
The estimated fair value of the Company's long-term debt at June 30, 1996
was approximately $608 million, versus its book value of $595 million. At June
30, 1995 the estimated fair value of the Company's long-term debt was
approximately $636 million, versus its book value of $624 million.
In connection with the closure of the New Bank Credit Facility, the Company
recorded a $1.4 million extraordinary loss (net of income tax benefit of $.9
million) related to the write-off of unamortized bank fees.
Interest rates on the Company's other long-term debt range from 5.0% 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, 1996.
The scheduled maturities of long-term debt for the years ending June 30 are
as follows:
<TABLE>
<CAPTION>
(IN THOUSANDS)
<S> <C>
1997.......................................................... $ 4,031
1998.......................................................... 4,086
1999.......................................................... 4,091
2000.......................................................... 11,970
2001.......................................................... 235,411
Thereafter.................................................... 335,250
--------
Total......................................................... $594,839
========
</TABLE>
NOTE 6: LEASES
Future minimum lease payments required under noncancelable operating leases
(principally for land) as of June 30, 1996 are as follows:
<TABLE>
<CAPTION>
(IN THOUSANDS)
<S> <C>
1997.......................................................... $ 2,673
1998.......................................................... 2,298
1999.......................................................... 2,030
2000.......................................................... 1,975
2001.......................................................... 1,964
Thereafter.................................................... 76,156
-------
Total minimum payments required............................... $ 87,096
=======
</TABLE>
Rent expense for the years ended June 30, 1996, 1995 and 1994 was $2.9
million, $2.8 million and $2.3 million, 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 $2.2 million, $2.0 million and $2.2 million for the years ended in
1996, 1995 and 1994, respectively. The Company's share of the unfunded liability
related to multi-employer plans, if any, is not determinable.
F-11
<PAGE> 76
The Company has a retirement savings plan under Section 401(k) of the
Internal Revenue Code covering its non-union employees. The plan allows
employees to defer up to the lesser of the Internal Revenue Code -- prescribed
maximum amount or 15% of their income on a pre-tax basis through contributions
to the plan. On January 1, 1996 the Company combined its profit sharing plan
into the 401(k) plan. The Company expensed voluntary contributions of $1.4
million, $1.8 million and $1.5 million in 1996, 1995 and 1994, respectively, to
the Company's 401(k) profit-sharing plan and trust.
NOTE 8: INCOME TAXES
A summary of the provision for income taxes for the years ended June 30 is
as follows:
Provision for Income Taxes:
<TABLE>
<CAPTION>
1996 1995 1994
------- ------- ------
(IN THOUSANDS)
<S> <C> <C> <C>
Current
Federal............................................ $15,301 $14,165 $6,277
State.............................................. 817 494 352
------- ------- ------
16,118 14,659 6,629
------- ------- ------
Deferred
Federal............................................ 4,119 12,786 876
State.............................................. (216) 505 --
------- ------- ------
3,903 13,291 876
------- ------- ------
$20,021 $27,950 $7,505
======= ======= ======
</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>
1996 1995 1994
---- ---- ----
<S> <C> <C> <C>
Tax provision at statutory rate............................... 35.0% 35.0% 35.0%
Increase/(decrease) resulting from:
Licensing expenditures for new jurisdictions................ 0.5 3.1 --
Company provided benefits................................... 2.5 2.7 2.5
State income tax, net of federal benefit.................... 0.8 1.0 1.3
Tax preferred investments................................... -- (0.1) (2.5)
Statutory rate change....................................... -- -- 3.8
Other, net.................................................. 1.6 1.8 1.2
--- --- ---
40.4% 43.5% 41.3%
=== === ===
</TABLE>
F-12
<PAGE> 77
The tax items comprising the Company's net deferred tax liability as of
June 30 are as follows:
<TABLE>
<CAPTION>
1996 1995 1994
------- ------- -------
(IN THOUSANDS)
<S> <C> <C> <C>
Deferred tax liabilities:
Difference between book and tax basis of property........... $38,187 $33,053 $22,615
Difference between book and tax basis of amortizable
assets.................................................... 2,185 1,513 --
Reserve differential for gaming activities.................. 2,027 894 1,116
Other....................................................... 3,520 1,192 89
------ ------ ------
45,919 36,652 23,820
------ ------ ------
Deferred tax assets:
Alternative minimum tax credit carryforward................. 5,146 3,944 5,351
Preopening expense amortized for tax purposes............... 952 1,126 1,612
Provision for doubtful accounts............................. 3,498 832 795
Other....................................................... 2,777 1,107 567
------ ------ ------
12,373 7,009 8,325
------ ------ ------
Net deferred tax liability.................................. $33,546 $29,643 $15,495
====== ====== ======
</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.
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 57,213,720 and 56,999,018 shares were issued at
June 30, 1996 and June 30, 1995 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, 1996 and June 30, 1995.
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, 1996, 3,871,921
non-qualified stock options had been issued and 2,334 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 Director's
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 the date of grant. At
June 30, 1996, a total of 20,000 stock options had been issued and none had been
exercised.
F-13
<PAGE> 78
<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
Options granted................ 45,000 3,000 13.250 14.375
Options canceled............... (72,697) -- $13.625 - $17.000 --
Options exercised.............. (2,334) -- $13.625
--------- ------
Options outstanding June 30,
1996......................... 3,869,587 20,000 $13.250 - $17.000 $14.00 - $18.50
========= ======
Exercisable options at June 30,
1996......................... 2,146,017 8,000
</TABLE>
At June 30, 1996, there were 128,079 and 30,000 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 1996, 212,368 shares were
issued at $9.88. In 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, 1996, there were 1,068,565 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. 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.
F-14
<PAGE> 79
NOTE 12: OTHER INFORMATION
Acquisition
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 and 100%
of the capital stock of East Peoria Hotel, Inc. Par-a-Dice Gaming Corporation is
the owner and operator of the Par-a-Dice Riverboat Casino in East Peoria,
Illinois and East Peoria Hotel, Inc., is the general partner of a partnership
constructing a 204-room hotel adjacent to the Par-a-Dice Riverboat 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.
Joint Venture -- Mirage Resorts, Inc.
On May 29, 1996, the Company entered into a joint venture agreement with
Mirage Resorts, Inc. ("Mirage") to jointly develop and own a casino hotel
entertainment facility in the Marina District of 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. Pursuant to the joint
venture agreement, the Company will control the development and operation of the
Atlantic City Project. Environmental remediation and construction of the
Atlantic City Project are not expected to begin until after the necessary
highway improvements are assured.
Sam's Town Reno
On August 16, 1996 the Company acquired land upon which it plans to develop
Sam's Town Reno, a $92 million casino hotel and entertainment complex in Reno,
Nevada. William S. Boyd, Chairman and Chief Executive Officer of the Company and
Warren L. Nelson, a Director of the Company, each own a 17.5% partnership
interest in the partnership from which the Company acquired the land. The
development of Sam's Town Reno is subject to receipt of regulatory approvals,
permits and licenses.
NOTE 13: SUBSEQUENT EVENT
Sale of Riverboat
On August 23, 1996, the Company sold its riverboat Mary's Prize for $20
million and retired debt of $17.6 million in connection therewith. Projects for
which Mary's Prize was constructed have either been delayed or did not
materialize.
F-15
<PAGE> 80
BOYD GAMING CORPORATION AND SUBSIDIARIES
SELECTED QUARTERLY FINANCIAL INFORMATION
(UNAUDITED)
<TABLE>
<CAPTION>
FIRST SECOND THIRD FOURTH TOTAL
--------- --------- --------- --------- ---------
(IN THOUSANDS, EXCEPT PER SHARE DATA)
<S> <C> <C> <C> <C> <C>
1996
Net revenues....................... $ 179,060 $ 200,289 $ 202,160 $ 194,348 $ 775,857
Operating income................... 18,729 31,280 31,743 19,034 100,786
Income before income tax and
extraordinary item............... 6,859 17,322 19,236 6,183 49,600
Extraordinary item, net of tax..... -- -- -- 1,435 1,435
Net income......................... 4,184 10,567 11,351 2,042 28,144
======== ======== ======== ======== ========
Net income per common share:
Income before extraordinary item... $ 0.07 $ 0.19 $ 0.20 $ 0.06 $ 0.52
Extraordinary item, net of tax..... -- -- -- (.02) (.03)
-------- -------- -------- -------- --------
Net income......................... $ 0.07 $ 0.19 $ 0.20 $ 0.04 $ 0.49
======== ======== ======== ======== ========
1995
Net revenues....................... $ 156,719 $ 168,909 $ 166,757 $ 167,955 $ 660,340
Operating income................... 20,854 27,755 32,209 29,752 110,570
Income before income tax........... 9,235 15,747 19,578 19,639 64,199
Net income......................... 5,477 7,336 11,482 11,954 36,249
======== ======== ======== ======== ========
Net income per common share:
Net income......................... $ 0.10 $ 0.13 $ 0.20 $ 0.21 $ 0.64
======== ======== ======== ======== ========
</TABLE>
F-16
<PAGE> 81
[PHOTOS AND MAPS]
<TABLE>
<C> <S>
ATLANTIC CITY
ATLANTIC CITY
MARINA MAP
</TABLE>
[caption]
The Marina District in Atlantic City is
the
planned site for the Company's Stardust
Resort and Casino, a joint venture
development
with Mirage Resorts, Incorporated.
<TABLE>
<C> <S>
ILLINOIS
CENTRAL ILLINOIS PAR-A-DICE
MAP BOAT
The Company has signed an agreement to acquire,
subject to various approvals, the Par-A-Dice Par-A-Dice Riverboat Casino cruises on the Illinois
Riverboat Casino in East Peoria, Illinois. River.
[caption] [caption]
</TABLE>
RENDERING
OF
PAR-A-DICE
HOTEL
Par-A-Dice's 204-room hotel is currently under construction.
[caption]
<PAGE> 82
[PHOTOS AND MAPS]
MISSISSIPPI
STATE MAP
DEPICTING TWO
PROPERTY LOCATIONS
The Company operates two
properties in Mississippi.
[caption]
SILVER STAR
Silver Star Resort and Casino, located
near Philadelphia, Mississippi and
operated by the Company under a management
agreement, brings a
touch of Las Vegas to residents of central
Mississippi and Alabama.
[caption]
<TABLE>
<S> <C>
SAM'S TOWN
TUNICA
Sam's Town's theme brings the Old West to the banks of the Mississippi River in
Tunica County, Mississippi.
[caption]
<S> <C>
NEW ORLEANS
MAP OF
NEW ORLEANS
</TABLE>
[caption]
Treasure Chest Casino
offers
casino entertainment to
the
greater New Orleans
market.
<PAGE> 83
[PHOTOS AND MAPS]
<TABLE>
<S> <C>
KANSAS CITY
MAP
OF
KANSAS CITY
</TABLE>
Sam's Town Casino in Kansas City, Missouri is
located on the Missouri River and Interstate 435.
[caption]
<TABLE>
<S> <C>
SAM'S TOWN
KANSAS CITY
</TABLE>
Guests enter Sam's
Town Kansas City
from an elevated
moving walkway
and are welcomed
to Town Square.
[caption]
<TABLE>
<S> <C>
NEW ORLEANS
TREASURE CHEST
</TABLE>
Treasure Chest Casino, located on Lake
Ponchartrain in Kenner, Louisiana, is
operated by the Company under a
management agreement.
[caption]
<PAGE> 84
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.............................. 10
Use of Proceeds........................... 19
Price Range of Common Stock............... 19
Dividend Policy........................... 20
Capitalization............................ 20
Selected Consolidated Financial Data...... 21
Pro Forma Consolidated Financial
Statements.............................. 22
Management's Discussion and Analysis of
Financial Condition and Results of
Operations.............................. 26
Business.................................. 35
Management................................ 44
Description of Certain Indebtedness....... 46
Principal and Selling Stockholders........ 52
Description of Capital Stock.............. 54
Certain United States Tax Consequences to
Non-United States Holders of Shares..... 56
Underwriting.............................. 59
Legal Matters............................. 60
Experts................................... 60
Available Information..................... 60
Incorporation of Certain Documents by
Reference............................... 61
Index to Consolidated Financial
Statements.............................. F-1
</TABLE>
5,337,786 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> 85
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 16. EXHIBITS
<TABLE>
<C> <S>
1 Form of Underwriting Agreement.
2.1(6) Stock Purchase Agreement, dated as of April 26, 1996, by and among Registrant,
Par-A-Dice Gaming Corporation, East Peoria Hotel, Inc., and the Owners of all
the Capital Stock of Par-A-Dice Gaming Corporation and East Peoria Hotel.
3.1(1) Restated Articles of Incorporation.
3.2 Restated Bylaws (previously filed).
5.1 Opinion of McDonald Carano Wilson McCune Bergin Frankovich & Hicks LLP
(previously filed).
10.1(1) First Amended and Restated Credit Agreement dated as of September 2, 1993, by
and among CH&C, Certain Commercial Lending Institutions, CIBC Inc., First
Interstate Bank of Nevada and related Exhibits.
10.2(2) Form of Indenture relating to $150,000,000 aggregate principal amount 11% Senior
Subordinated Notes due 2002 of California Hotel Finance Corporation, including
the Form of Note.
10.3(1) Indenture dated as of September 3, 1993 relating to 10.75% Senior Subordinated
Notes Due 2003 ("10.75% Notes"), including Form of Note.
10.4(1) Note Purchase Agreement dated September 3, 1993 relating to 10.75% Notes.
10.5(1) Registration Rights Agreement dated as of September 3, 1993 relating to 10.75%
Notes.
10.6(1) Loan Agreement dated March 2, 1989, by and between First Interstate Bank of
Nevada and Eldorado, Inc., including related Promissory Note, and related
Revision Agreement dated October 31, 1989, by and between First Interstate Bank
of Nevada, N.A. and Eldorado, Inc.
10.7(3) Loan Agreement dated August 17, 1994 by and among Boyd Tunica, Inc., the
Registrant, First Interstate Bank of Nevada, Bankers Trust Company and Bank of
America Nevada.
10.8(2) Ninety-Nine Year Lease dated June 30, 1954, by and among Fremont Hotel, Inc.,
and Charles L. Ronnow and J.L. Ronnow, and Alice Elizabeth Ronnow.
10.9(2) Lease Agreement dated October 31, 1963, by and between Fremont Hotel, Inc. and
Cora Edit Garehime.
10.10(2) Lease Agreement dated December 31, 1963, by and among Fremont Hotel, Inc., Bank
of Nevada and Leon H. Rockwell, Jr.
10.11(2) Lease Agreement dated June 7, 1971, by and among Anthony Antonacci, Margaret Fay
Simon and Bank of Nevada, as Co-Trustees under Peter Albert Simon's Last Will
and Testament, and related Assignment of Lease dated February 25, 1985 to
Sam-Will, Inc. and Fremont Hotel, Inc.
10.12(2) Lease Agreement dated July 25, 1973, by and between CH&C and William Peccole, as
Trustee of the Peter Peccole 1970 Trust.
10.13(2) Lease Agreement dated July 1, 1974, by and among Fremont Hotel, Inc. and Bank of
Nevada, Leon H. Rockwell, Jr. and Margorie Rockwell Riley.
10.14(2) Ground Lease Agreement dated July 5, 1978, by and between CH&C, and Irene
Elizabeth Carey, as Trustee of the Carey Survivor's Trust U/A October 18, 1972
and Irene Elizabeth Carey, as Trustee of the Carey Family Trust U/A October 18,
1972.
</TABLE>
II-1
<PAGE> 86
<TABLE>
<C> <S>
10.15(2) Ninety-Nine Year Lease dated December 1, 1978 by and between Matthew Paratore,
and George W. Morgan and LaRue Morgan, and related Lease Assignment dated
November 10, 1987 to Sam-Will, Inc., d/b/a/ Fremont Hotel and Casino.
10.16(3) Collective Bargaining Agreement effective as of January 17, 1994, by and between
Sam-Will, Inc. d/b/a/ Fremont Hotel and Casino and the International Union of
Operating Engineers, Local No. 501, AFL-CIO (slot technician unit).
10.17(1) Labor Agreement dated as of January 13, 1993, by and between Mare-Bear, Inc.
d/b/a/ Stardust Hotel & Casino, and the International Union of Operating
Engineers, Local No. 501, AFL-CIO.
10.18(1) Labor Agreement dated as of January 13, 1993, by and between Sam-Will, Inc.,
d/b/a/ Fremont Hotel and Casino, and the International Union of Operating
Engineers, Local No. 501, AFL-CIO.
10.19(1) Labor Agreement dated January 13, 1993, by and between CH&C and the
International Union of Operating Engineers, Local No. 501, AFL-CIO.
10.20(1) Agreement dated as of May 1, 1991, by and between Mare-Bear, Inc., d/b/a/
Stardust Hotel & Casino, and the Local Joint Executive Board of Las Vegas for
and on behalf of the Culinary Workers' Union, Local No. 226 and Bartenders
Union, Local No. 165.
10.21(2) Agreement dated as of May 1, 1991, by and between Sam-Will, Inc., d/b/a/ Fremont
Hotel and Casino, and the Local Joint Executive Board of Las Vegas for and on
behalf of the Culinary Workers' Union, Local No. 226 and Bartenders Union, Local
No. 165.
10.22(1) Collective Bargaining Agreement dated September 12, 1991, by and between
Eldorado Casino and the Local Joint Executive Board of Las Vegas for and on
behalf of the Culinary Workers Union, Local No. 226 and Bartenders Union, Local
No. 165.
10.23(2) Collective Bargaining Agreement dated March 14, 1991, by and between Mare-Bear,
Inc., d/b/a/ Stardust Hotel & Casino, and the Musicians Union of Las Vegas,
Local No. 369, American Federation of Musicians, AFL-CIO.
10.24(2) Labor Agreement dated May 1, 1991, by and between Mare-Bear, Inc., d/b/a/
Stardust Hotel & Casino, and the International Alliance of Theatrical Stage
Employees and Moving Picture Machine Operators of the United States and Canada,
Local 720, Las Vegas, Nevada.
10.25(2) Labor Agreement dated May 1, 1991, by and between Mare-Bear, Inc., d/b/a/
Stardust Hotel & Casino, and the International Alliance of Theatrical Stage
Employees and Moving Picture Machine Operators of the United States and Canada,
Local 720, Las Vegas, Nevada (Theatrical Wardrobe Employees).
10.26(2) Labor Agreement dated June 14, 1983, by and between Stardust Hotel & Casino and
the International Brotherhood of Painters and Allied Trades, Local Union No.
159, AFL-CIO.
10.27(2) Labor Agreement dated June 1, 1983, by and between Stardust Hotel and Casino and
the United Brotherhood of Carpenters and Joiners of America, Local Union No.
1780, Las Vegas, Nevada.
10.28(2) Labor Agreement dated August 1, 1983, by and between Stardust Hotel and the
International Brotherhood of Electrical Workers, Local Union No. 357, AFL-CIO.
10.29(2) Implemented Proposal dated June 15, 1992, by and between Stardust Hotel and
Casino and the Back-End Teamsters Local Union No. 995.
10.30(2) Implemented Proposal dated June 15, 1992, by and between Fremont Hotel and
Casino and the Back-End Teamsters Local Union No. 995.
10.31(1) Agreement and Plan of Reorganization dated as of June 25, 1993, by and among
Eldorado, Inc., the Registrant, CH&C and certain stockholders and noteholders of
Eldorado, Inc.
</TABLE>
II-2
<PAGE> 87
<TABLE>
<C> <S>
10.32(1) Management Agreement dated March 11, 1993, by and between Mississippi Band of
Choctaw Indians and Boyd Mississippi, Inc.
10.33(3) Addendum to Management Agreement dated November 24, 1993, by and between
Mississippi Band of Choctaw Indians and Boyd Mississippi, Inc.
10.34(1) Casino Management Agreement dated August 30, 1993, by and between Treasure Chest
Casino, L.L.C. and Boyd Kenner, Inc.
10.35(1) Subscription Agreement dated as of August 30, 1993, by and among Boyd Kenner,
Inc., the Registrant and Treasure Chest Casino, L.L.C.
10.36(3) Amended and Restated Operating Agreement dated August 5, 1994, by and between
Treasure Chest Casino, L.L.C. and Boyd Kenner, Inc.
10.37(1) Real Estate Contract of Sale dated April 29, 1993, by and among Boyd Tunica,
Inc. and Shea Leatherman, Irwin L. Zanone and William A. Leatherman, Jr.
10.38(1) Real Estate Contract of Sale dated April 29, 1993, by and between Eugene H.
Beck, Jr. and the Boyd Group.
10.39(1) Real Estate Contract of Sale dated April 30, 1993, by and between Mid-West
Terminal Warehouse Company and the Boyd Group.
10.40(1) Real Estate Contract of Sale dated April 30, 1993, by and between Hunt Midwest
Real Estate Development, Inc. and the Boyd Group.
10.41(1) Amendment to Real Estate Contracts of Sale dated May 26, 1993, by and among The
Boyd Group, Hunt Midwest Real Estate Development, Inc., Mid-West Terminal
Warehouse Company and Eugene H. Beck, Jr.
10.42(1) Real Estate Contract of Sale dated as of April 30, 1993, by and between Vergie
G. Bevan, individually and as trustee of the Vergie G. Bevan Revocable Trust and
the Boyd Group.
10.43(3) Development Agreement dated June 6, 1994, by and among the Registrant, Boyd
Kansas City, Inc. and Port Authority of Kansas City, Missouri.
10.44(3) Agreement dated January 10, 1994 by and between Boyd Tunica, Inc. and W.G. Yates
& Sons Construction Company.
10.45(3) Building Contract dated July 15, 1993, by and between Marnell Corrao Associates,
Inc. and Sam's Town Hotel and Gambling Hall for Sam's Town Addition Phase V.
10.46(1) Form of Indemnification Agreement.
10.47(1)(4) 1993 Flexible Stock Incentive Plan and related agreements.
10.48(1)(4) 1993 Directors Non-Qualified Stock Option Plan and related agreements.
10.49(1)(4) 1993 Employee Stock Purchase Plan and related agreement.
10.50(2) 401(k) Profit Sharing Plan and Trust.
10.51(2) Note dated July 1, 1992, from Samuel A. Boyd Family Trust to the Boyd Group in
the principal sum of $3,000,000.
10.52(5) Promissory Note dated December 30, 1991, from Eldorado, Inc. to Samuel A. Boyd
in the principal sum of $600,000.
10.53(7) Joint Venture Agreement of Stardust A.C., dated as of May 29, 1996, by and
between MAC, Corp., a New Jersey Corporation, which is a wholly-owned subsidiary
of Mirage Resorts Incorporated, a Nevada Corporation, and Grand K, Inc., a
Nevada Corporation, which is a wholly-owned subsidiary of Registrant. (Certain
portions of this exhibit have been omitted and filed separately with the
Securities and Exchange Commission pursuant to a request for confidential
treatment for this Agreement.)
</TABLE>
II-3
<PAGE> 88
<TABLE>
<C> <S>
10.54(8) Credit Agreement dated as of June 19, 1996, by and among the Registrant and
California Hotel and Casino as the Borrowers, certain commercial lending
institutions as the Lenders, Canadian Imperial Bank of Commerce as the Agent,
Bank of America National Trust Savings Association and Wells Fargo Bank N.A. as
Co-Managing Agents and Bankers Trust Company, Credit Lyonnais and Societe
Generale as Co-Agents.
10.55(9) Property Purchase Agreement dated as of August 9, 1996, by and between Steamboat
Station Company, a Nevada general partnership, and Boyd Reno, Inc., a Nevada
corporation and wholly-owned subsidiary of the Company.
10.56(9) Buy-Sell Agreement dated as of August 2, 1996, by and between the Registrant and
Casino Magic of Louisiana, Corp., a Louisiana corporation.
23.1 Consent of Deloitte & Touche LLP.
23.2 Consent of McDonald Carano Wilson McCune Bergin Frankovich & Hicks LLP (included
in Exhibit 5.1 to this Registration Statement).
23.3 Consent of Coopers & Lybrand L.L.P.
24 Powers of Attorney (previously filed).
27 Financial Data Schedule (previously filed).
</TABLE>
- ---------------
(1) Incorporated by reference to the Registrant's Registration Statement on Form
S-1, File No. 33-64006, which became effective on October 15, 1993.
(2) Incorporated by reference to the Registration Statement on Form S-1, File
No. 33-51672, of California Hotel and Casino and California Hotel Finance
Corporation, which became effective on November 18, 1992.
(3) Incorporated by reference to Registrant's Annual Report on Form 10-K for the
year ended June 30, 1995.
(4) Management contracts or compensatory plans or arrangements.
(5) Incorporated by reference to Registrant's Annual Report on Form 10-K for the
year ended June 30, 1994.
(6) Incorporated by reference to Registrant's Current Report on Form 8-K dated
April 26, 1996.
(7) Incorporated by reference to Registrant's Current Report on Form 8-K dated
June 7, 1996.
(8) Incorporated by reference to Registrant's Current Report on Form 8-K dated
June 19, 1996.
(9) Incorporated by reference to Registrant's Current Report on Form 8-K dated
August 16, 1996.
II-4
<PAGE> 89
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 Amendment to
Registration Statement to be signed on its behalf by the undersigned, thereunto
duly authorized in the City of Las Vegas, State of Nevada, on September 23,
1996.
BOYD GAMING CORPORATION
By: /s/ WILLIAM S. BOYD
-----------------------------------
Title: Chief Executive Officer
-----------------------------------
Pursuant to the requirements of the Securities Act of 1933, as amended,
this Amendment to 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, September 23, 1996
- -------------------------------- Chief Executive Officer and Director
William S. Boyd (Principal Executive Officer)
* Senior Vice President, Chief Financial September 23, 1996
- -------------------------------- Officer and Treasurer (Principal
Ellis Landau Financial Officer)
/s/ KEITH SMITH Vice President and Controller September 23, 1996
- -------------------------------- (Principal Accounting Officer)
Keith Smith
* Director September 23, 1996
- --------------------------------
Robert L. Boughner
* Director September 23, 1996
- --------------------------------
William R. Boyd
* Director September 23, 1996
- --------------------------------
Marianne Boyd Johnson
* Director September 23, 1996
- --------------------------------
Kenny C. Guinn
* Director September 23, 1996
- --------------------------------
Warren L. Nelson
Director
- --------------------------------
Charles L. Ruthe
* Director September 23, 1996
- --------------------------------
Donald D. Snyder
* Director September 23, 1996
- --------------------------------
Perry B. Whitt
*By /s/ KEITH SMITH
- --------------------------------
Keith Smith
Attorney-in-Fact
</TABLE>
II-5
<PAGE> 90
INDEX TO EXHIBITS
<TABLE>
<CAPTION>
SEQUENTIALLY
EXHIBIT NUMBERED
NUMBER DESCRIPTION PAGES
- ------ ------------------------------------------------------------------ ------------
<C> <S> <C>
1 Form of Underwriting Agreement....................................
2.1(6) Stock Purchase Agreement dated April 26, 1996, by and among
Registrant, Par-A-Dice Gaming Corporation, East Peoria Hotel,
Inc., and the Owners of all the Capital Stock of Par-A-Dice Gaming
Corporation and East Peoria Hotel.................................
3.1(1) Restated Articles of Incorporation................................
3.2 Restated Bylaws (previously filed)................................
5.1 Opinion of McDonald Carano Wilson McCune Bergin Frankovich &
Hicks, LLP (previously filed).....................................
10.1(1) First Amended and Restated Credit Agreement dated as of September
2, 1993, by and among CH&C, Certain Commercial Lending
Institutions, CIBC Inc., First Interstate Bank of Nevada and
related Exhibits..................................................
10.2(2) Form of Indenture relating to $150,000,000 aggregate principal
amount 11% Senior Subordinated Notes due 2002 of California Hotel
Finance Corporation, including the Form of Note...................
10.3(1) Indenture dated as of September 3, 1993 relating to 10.75% Senior
Subordinated Notes Due 2003 ("10.75% Notes"), including Form of
Note..............................................................
10.4(1) Note Purchase Agreement dated September 3, 1993 relating to 10.75%
Notes.............................................................
10.5(1) Registration Rights Agreement dated as of September 3, 1993
relating to 10.75% Notes..........................................
10.6(1) Loan Agreement dated March 2, 1989, by and between First
Interstate Bank of Nevada and Eldorado, Inc., including related
Promissory Note, and related Revision Agreement dated October 31,
1989, between First Interstate Bank of Nevada, N.A. and Eldorado,
Inc...............................................................
10.7(3) Loan Agreement dated August 17, 1994 by and among Boyd Tunica,
Inc., the Registrant, First Interstate Bank of Nevada, Bankers
Trust Company and Bank of America Nevada..........................
10.8(2) Ninety-Nine Year Lease dated June 30, 1954, by and among Fremont
Hotel, Inc., and Charles L. Ronnow and J.L. Ronnow, and Alice
Elizabeth Ronnow..................................................
10.9(2) Lease Agreement dated October 31, 1963, by and between Fremont
Hotel, Inc. and Cora Edit Garehime................................
10.10(2) Lease Agreement dated December 31, 1963, by and among Fremont
Hotel, Inc., Bank of Nevada and Leon H. Rockwell, Jr..............
10.11(2) Lease Agreement dated June 7, 1971, by and among Anthony
Antonacci, Margaret Fay Simon and Bank of Nevada, as Co-Trustees
under Peter Albert Simon's Last Will and Testament, and related
Assignment of Lease dated February 25, 1985 to Sam-Will, Inc. and
Fremont Hotel, Inc................................................
10.12(2) Lease Agreement dated July 25, 1973, by and between CH&C and
William Peccole, as Trustee of the Peter Peccole 1970 Trust.......
10.13(2) Lease Agreement dated July 1, 1974, by and among Fremont Hotel,
Inc. and Bank of Nevada, Leon H. Rockwell, Jr. and Margorie
Rockwell Riley....................................................
</TABLE>
<PAGE> 91
<TABLE>
<CAPTION>
SEQUENTIALLY
EXHIBIT NUMBERED
NUMBER DESCRIPTION PAGES
- ------ ------------------------------------------------------------------ ------------
<C> <S> <C>
10.14(2) Ground Lease Agreement dated July 5, 1978, by and between CH&C,
and Irene Elizabeth Carey, as Trustee of the Carey Survivor's
Trust U/A October 18, 1972 and Irene Elizabeth Carey, as Trustee
of the Carey Family Trust U/A October 18, 1972....................
10.15(2) Ninety-Nine Year Lease dated December 1, 1978 by and between
Matthew Paratore, and George W. Morgan and LaRue Morgan, and
related Lease Assignment dated November 10, 1987 to Sam-Will,
Inc., d/b/a/ Fremont Hotel and Casino.............................
10.16(3) Collective Bargaining Agreement effective as of January 17, 1994,
by and between Sam-Will, Inc. d/b/a/ Fremont Hotel and Casino and
the International Union of Operating Engineers, Local No. 501,
AFL-CIO (slot technician unit)....................................
10.17(1) Labor Agreement dated as of January 13, 1993, by and between Mare-
Bear, Inc. d/b/a/ Stardust Hotel & Casino, and the International
Union of Operating Engineers, Local No. 501, AFL-CIO..............
10.18(1) Labor Agreement dated as of January 13, 1993, by and between Sam-
Will, Inc., d/b/a/ Fremont Hotel and Casino, and the International
Union of Operating Engineers, Local No. 501, AFL-CIO..............
10.19(1) Labor Agreement dated January 13, 1993, by and between CH&C and
the International Union of Operating Engineers, Local No. 501,
AFL-CIO...........................................................
10.20(1) Agreement dated as of May 1, 1991, by and between Mare-Bear, Inc.,
d/b/a/ Stardust Hotel & Casino, and the Local Joint Executive
Board of Las Vegas for and on behalf of the Culinary Workers'
Union, Local No. 226 and Bartenders Union, Local No. 165..........
10.21(2) Agreement dated as of May 1, 1991, by and between Sam-Will, Inc.,
d/b/a/ Fremont Hotel and Casino, and the Local Joint Executive
Board of Las Vegas for and on behalf of the Culinary Workers'
Union, Local No. 226 and Bartenders Union, Local No. 165..........
10.22(1) Collective Bargaining Agreement dated September 12, 1991, by and
between Eldorado Casino and the Local Joint Executive Board of Las
Vegas for and on behalf of the Culinary Workers Union, Local No.
226 and Bartenders Union, Local No. 165...........................
10.23(2) Collective Bargaining Agreement dated March 14, 1991, by and
between Mare-Bear, Inc., d/b/a/ Stardust Hotel & Casino, and the
Musicians Union of Las Vegas, Local No. 369, American Federation
of Musicians, AFL-CIO.............................................
10.24(2) Labor Agreement dated May 1, 1991, by and between Mare-Bear, Inc.,
d/b/a/ Stardust Hotel & Casino, and the International Alliance of
Theatrical Stage Employees and Moving Picture Machine Operators of
the United States and Canada, Local 720, Las Vegas, Nevada........
</TABLE>
<PAGE> 92
<TABLE>
<CAPTION>
SEQUENTIALLY
EXHIBIT NUMBERED
NUMBER DESCRIPTION PAGES
- ------ ------------------------------------------------------------------ ------------
<C> <S> <C>
10.25(2) Labor Agreement dated May 1, 1991, by and between Mare-Bear, Inc.,
d/b/a/ Stardust Hotel & Casino, and the International Alliance of
Theatrical Stage Employees and Moving Picture Machine Operators of
the United States and Canada, Local 720, Las Vegas, Nevada
(Theatrical Wardrobe Employees)...................................
10.26(2) Labor Agreement dated June 14, 1983, by and between Stardust Hotel
& Casino and the International Brotherhood of Painters and Allied
Trades, Local Union No. 159, AFL-CIO..............................
10.27(2) Labor Agreement dated June 1, 1983, by and between Stardust Hotel
and Casino and the United Brotherhood of Carpenters and Joiners of
America, Local Union No. 1780, Las Vegas, Nevada..................
10.28(2) Labor Agreement dated August 1, 1983, by and between Stardust
Hotel and the International Brotherhood of Electrical Workers,
Local Union No. 357, AFL-CIO......................................
10.29(2) Implemented Proposal dated June 15, 1992, by and between Stardust
Hotel and Casino and the Back-End Teamsters Local Union No.
995...............................................................
10.30(2) Implemented Proposal dated June 15, 1992, by and between Fremont
Hotel and Casino and the Back-End Teamsters Local Union No.
995...............................................................
10.31(1) Agreement and Plan of Reorganization dated as of June 25, 1993, by
and by and between Eldorado, Inc., the Registrant, CH&C and
certain stockholders and noteholders of Eldorado, Inc.............
10.32(1) Management Agreement dated March 11, 1993, by and between
Mississippi Band of Choctaw Indians and Boyd Mississippi, Inc.....
10.33(3) Addendum to Management Agreement dated November 24, 1993, by and
between Mississippi Band of Choctaw Indians and Boyd Mississippi,
Inc. .............................................................
10.34(1) Casino Management Agreement dated August 30, 1993, by and between
Treasure Chest Casino, L.L.C. and Boyd Kenner, Inc................
10.35(1) Subscription Agreement dated as of August 30, 1993, by and among
Boyd Kenner, Inc., the Registrant and Treasure Chest Casino,
L.L.C.............................................................
10.36(3) Amended and Restated Operating Agreement dated August 5, 1994, by
and between Treasure Chest Casino, L.L.C. and Boyd Kenner, Inc....
10.37(1) Real Estate Contract of Sale dated April 29, 1993, by and among
Boyd Tunica, Inc. and Shea Leatherman, Irwin L. Zanone and William
A. Leatherman, Jr.................................................
10.38(1) Real Estate Contract of Sale dated April 29, 1993, by and between
Eugene H. Beck, Jr. and the Boyd Group............................
10.39(1) Real Estate Contract of Sale dated April 30, 1993, by and between
Mid-West Terminal Warehouse Company and the Boyd Group............
10.40(1) Real Estate Contract of Sale dated April 30, 1993, by and between
Hunt Midwest Real Estate Development, Inc. and the Boyd Group.....
10.41(1) Amendment to Real Estate Contracts of Sale dated May 26, 1993, by
and among The Boyd Group, Hunt Midwest Real Estate Development,
Inc., Mid-West Terminal Warehouse Company and Eugene H. Beck,
Jr................................................................
10.42(1) Real Estate Contract of Sale dated as of April 30, 1993, by and
between Vergie G. Bevan, individually and as trustee of the Vergie
G. Bevan Revocable Trust and the Boyd Group.......................
</TABLE>
<PAGE> 93
<TABLE>
<CAPTION>
SEQUENTIALLY
EXHIBIT NUMBERED
NUMBER DESCRIPTION PAGES
- ------ ------------------------------------------------------------------ ------------
<C> <S> <C>
10.43(3) Development Agreement dated June 6, 1994, by and among the
Registrant, Boyd Kansas City, Inc. and Port Authority of Kansas
City, Missouri....................................................
10.44(3) Agreement dated January 10, 1994 by and between Boyd Tunica, Inc.
and W.G. Yates & Sons Construction Company........................
10.45(3) Building Contract dated July 15, 1993, by and between Marnell
Corrao Associates, Inc. and Sam's Town Hotel and Gambling Hall for
Sam's Town Addition Phase V.......................................
10.46(1) Form of Indemnification Agreement. ...............................
10.47(1)(4) 1993 Flexible Stock Incentive Plan and related agreements. .......
10.48(1)(4) 1993 Directors Non-Qualified Stock Option Plan and related
agreements. ......................................................
10.49(1)(4) 1993 Employee Stock Purchase Plan and related agreement. .........
10.50(2) 401(k) Profit Sharing Plan and Trust. ............................
10.51(2) Note dated July 1, 1992, from Samuel A. Boyd Family Trust to the
Boyd Group in the principal sum of $3,000,000. ...................
10.52(5) Promissory Note dated December 30, 1991, from Eldorado, Inc. to
Samuel A. Boyd in the principal sum of $600,000. .................
10.53(7) Joint Venture Agreement of Stardust A.C. dated as of May 29, 1996,
by and between MAC, Corp., a New Jersey corporation, which is a
wholly-owned subsidiary of Mirage Resorts Incorporated, a Nevada
corporation, and Grand K, Inc., a Nevada corporation, which is a
wholly-owned subsidiary of Registrant (certain portions of this
exhibit have been omitted and filed separately with the Securities
and Exchange Commission pursuant to a request for confidential
treatment for this Agreement). ...................................
10.54(8) Credit Agreement dated as of June 19, 1996, by and among the
Registrant and California Hotel and Casino as the Borrowers,
certain commercial lending institutions as the Lenders, Canadian
Imperial Bank of Commerce as the Agent, Bank of America National
Trust Savings Association and Wells Fargo Bank N.A. as Co-Managing
Agents and Bankers Trust Company, Credit Lyonnais and Societe
Generale as Co-Agents. ...........................................
10.55(9) Property Purchase Agreement dated as of August 9, 1996, by and
between Steamboat Station Company, a Nevada general partnership,
and Boyd Reno, Inc., a Nevada corporation and wholly-owned
subsidiary of the Company. .......................................
10.56(9) Buy-Sell Agreement dated as of August 2, 1996, by and between the
Registrant and Casino Magic of Louisiana, Corp., a Louisiana
corporation. .....................................................
23.1 Consent of Deloitte & Touche LLP. ................................
23.2 Consent of McDonald Carano Wilson McCune Bergin Frankovich & Hicks
LLP (included in Exhibit 5.1 to this Registration Statement). ....
23.3 Consent of Coopers & Lybrand L.L.P. ..............................
24 Powers of Attorney (previously filed). ...........................
27 Financial Data Schedule (previously filed)........................
</TABLE>
- ---------------
(1) Incorporated by reference to the Registrant's Registration Statement on Form
S-1, File No. 33-64006, which became effective on October 15, 1993.
<PAGE> 94
(2) Incorporated by reference to the Registration Statement on Form S-1, File
No. 33-51672, of California Hotel and Casino and California Hotel Finance
Corporation, which became effective on November 18, 1992.
(3) Incorporated by reference to Registrant's Annual Report on Form 10-K for the
year ended June 30, 1995.
(4) Management contracts or compensatory plans or arrangements.
(5) Incorporated by reference to Registrant's Annual Report on Form 10-K for the
year ended June 30, 1994.
(6) Incorporated by reference to Registrant's Current Report on Form 8-K dated
April 26, 1996.
(7) Incorporated by reference to Registrant's Current Report on Form 8-K dated
June 7, 1996.
(8) Incorporated by reference to Registrant's Current Report on Form 8-K dated
June 19, 1996.
(9) Incorporated by reference to Registrant's Current Report on Form 8-K dated
August 16, 1996.
<PAGE> 1
Exhibit 1
BOYD GAMING CORPORATION
5,337,786 Shares(1)
Common Stock
($.01 par value)
Underwriting Agreement
New York, New York
September , 1996
Salomon Brothers Inc
Goldman, Sachs & Co.
Montgomery Securities
Raymond James & Associates, Inc.
As Representatives of the several Underwriters,
c/o Salomon Brothers Inc
Seven World Trade Center
New York, New York 10048
Dear Sirs:
Boyd Gaming Corporation, a Nevada corporation (the "Company"), proposes
to issue and sell to the underwriters named in Schedule I hereto (the
"Underwriters"), for whom you (the "Representatives") are acting as
representatives, 4,000,000 shares of Common Stock, $.01 par value ("Common
Stock"), of the Company and the persons named in Schedule II hereto (the
"Selling Stockholders") propose to sell to the Underwriters an aggregate of
1,337,786 shares of Common Stock (said shares to be issued and sold by the
Company and shares to be sold by the Selling Stockholders collectively being
hereinafter called the "Underwritten Securities"). The Company and certain
Selling Stockholders also propose to grant to the Underwriters options to
purchase an aggregate of up to 730,000 additional shares of Common Stock (the
"Option Securities"; the Option Securities, together with the Underwritten
Securities, being hereinafter called the "Securities").
- --------
(1)Plus options to purchase from Boyd Gaming Corporation and certain
Selling Stockholders an aggregate of up to 730,000 additional shares to cover
over-allotments.
<PAGE> 2
2
1. Representations and Warranties. (a) The Company represents
and warrants to, and agrees with, each Underwriter as set forth below in this
Section 1. Certain terms used in this Section 1 are defined in paragraph (c)
hereof.
(i) The Company meets the requirements for use of Form S-3
under the Securities Act of 1933 (the "Act") and has filed with the
Securities and Exchange Commission (the "Commission") a registration
statement (file number 333-05521) on such Form, including a related
Preliminary Prospectus, for the registration under the Act of the
offering and sale of the Securities. The Company may have filed one or
more amendments thereto, including the related Preliminary Prospectus,
each of which has previously been furnished to you. The Company will
next file with the Commission either (i) prior to effectiveness of such
registration statement, a further amendment to such registration
statement (including the form of final prospectus) or (ii) after
effectiveness of such registration statement, a final prospectus in
accordance with Rules 430A and 424(b)(1) or (4). In the case of clause
(ii), the Company has included in such registration statement, as
amended at the Effective Date, all information (other than Rule 430A
Information) required by the Act and the rules thereunder to be
included in the Prospectus with respect to the Securities and the
offering thereof. As filed, such amendment and form of final
prospectus, or such final prospectus, shall contain all Rule 430A
Information, together with all other such required information, with
respect to the Securities and the offering thereof and, except to the
extent the Representatives shall agree in writing to a modification,
shall be in all substantive respects in the form furnished to you prior
to the Execution Time or, to the extent not completed at the Execution
Time, shall contain only such specific additional information and other
changes (beyond that contained in the latest Preliminary Prospectus) as
the Company has advised you, prior to the Execution Time, will be
included or made therein;
(ii) On the Effective Date, the Registration Statement did or
will, and when the Prospectus is first filed (if required) in
accordance with Rule 424(b) and on the Closing Date (as defined herein)
and on any date
<PAGE> 3
3
on which shares sold in respect of the Underwriters' over-allotment
option are purchased, if such date is not the Closing Date (the
"Settlement Date"), the Prospectus (and any supplements thereto) will,
comply in all material respects with the applicable requirements of the
Act and the rules thereunder; on the Effective Date, the Registration
Statement did not or will not contain any untrue statement of a
material fact or omit to state any material fact required to be stated
therein or necessary in order to make the statements therein not
misleading; and, on the Effective Date, the Prospectus, if not filed
pursuant to Rule 424(b), did not or will not, and on the date of any
filing pursuant to Rule 424(b) and on the Closing Date and the
Settlement Date, the Prospectus (together with any supplement thereto)
will not, include any untrue statement of a material fact or omit to
state a material fact necessary in order to make the statements
therein, in the light of the circumstances under which they were made,
not misleading; provided, however, that the Company makes no
representations or warranties as to the information contained in or
omitted from the Registration Statement or the Prospectus (or any
supplements thereto) in reliance upon and in conformity with
information furnished in writing to the Company by or on behalf of any
Underwriter through the Representatives specifically for inclusion in
the Registration Statement or the Prospectus (or any supplement
thereto);
(iii) The terms which follow, when used in this Agreement,
shall have the meanings indicated. The term the "Effective Date" shall
mean each date that the Registration Statement and any post-effective
amendment or amendments thereto became or become effective. "Execution
Time" shall mean the date and time that this Agreement is executed and
delivered by the parties hereto. "Gaming Authority" shall mean any of
the Nevada Gaming Commission, the Nevada Gaming Control Board, the
Mississippi Gaming Commission, the Mississippi State Tax Commission,
the Missouri Gaming Commission, the National Indian Gaming Commission,
the Bureau of Indian Affairs, the Illinois Gaming Board and any other
agency (including, without limitation, any agency established by a
federally-recognized Indian tribe to regulate gaming on such tribe's
reservation) which has, or may at any time have, jurisdiction over the
gaming activities of the Company or any of its
<PAGE> 4
4
subsidiaries or any successor to such authority. "Preliminary
Prospectus" shall mean any preliminary prospectus referred to in
paragraph (a)(i) above and any preliminary prospectus included in the
Registration Statement at the Effective Date that omits Rule 430A
Information. "Prospectus" shall mean the prospectus relating to the
Securities that is first filed pursuant to Rule 424(b) after the
Execution Time or, if no filing pursuant to Rule 424(b) is required,
shall mean the form of final prospectus relating to the Securities
included in the Registration Statement at the Effective Date.
"Registration Statement" shall mean the registration statement referred
to in paragraph (a)(i) above, including exhibits and financial
statements, as amended at the Execution Time (or, if not effective at
the Execution Time, in the form in which it shall become effective)
and, in the event any post-effective amendment thereto becomes
effective prior to the Closing Date (as hereinafter defined), shall
also mean such registration statement as so amended. Such term shall
include any Rule 430A Information deemed to be included therein at the
Effective Date as provided by Rule 430A. "Rule 424" and "Rule 430A"
refer to such rules under the Act. "Rule 430A Information" means
information with respect to the Securities and the offering thereof
permitted to be omitted from the Registration Statement when it becomes
effective pursuant to Rule 430A. Any reference herein to the
Registration Statement, a Preliminary Prospectus or the Prospectus
shall be deemed to refer to and include the documents incorporated by
reference therein pursuant to Item 12 of Form S-3 which were filed
under the Exchange Act on or before the Effective Date of the
Registration Statement or the issue date of such Preliminary Prospectus
or the Prospectus, as the case may be; and any reference herein to the
terms "amend", "amendment" or "supplement" with respect to the
Registration Statement, any Preliminary Prospectus or the Prospectus
shall be deemed to refer to and include the filing of any document
under the Exchange Act after the Effective Date of the Registration
Statement, or the issue date of any Preliminary Prospectus or the
Prospectus, as the case may be, deemed to be incorporated therein by
reference. For purposes of this Section 1, "knowledge" of any part with
respect to any fact shall mean, unless otherwise specified, both that
such party has actual knowledge of such fact and that after due
inquiry, such party has no reason to believe to the contrary;
<PAGE> 5
5
(iv) The Company and its subsidiaries possess such licenses,
certificates, authorizations, approvals, franchises, permits or other
rights (including all building permits and all authorizations from any
applicable Gaming Authority) issued by the appropriate Federal, state
or other governmental agencies or bodies as are currently necessary (A)
to conduct the business now operated by it, (B) to execute, deliver and
perform this Agreement and (C) to consummate the transactions
contemplated hereby. Except as described in the Registration Statement,
neither the Company nor any of its subsidiaries has received any notice
of proceedings or has any reason to believe proceedings are pending or
contemplated, relating to the revocation or modification of any such
license, certificate, authorization, approval, franchise, permit or
other right which, singly or in the aggregate, if the subject of any
unfavorable decision, ruling or finding, could reasonably be expected
to have a material adverse effect on the condition (financial or
other), earnings, business or properties of the Company and its
subsidiaries taken as a whole; except as described in the Registration
Statement, to the best knowledge of the Company, neither any Gaming
Authority nor any other governmental agencies are investigating the
Company or any related party, other than in ordinary course
administrative reviews or in any ordinary course review of the
transactions contemplated hereby;
(v) The Company and its subsidiaries have good and marketable
title in fee simple to, or valid and enforceable leasehold interests
in, all real property or interests in real property, and all material
personal property, owned or leased by them (to the extent described in
the Registration Statement as being owned or leased by them) (subject,
as to enforcement of remedies, to applicable bankruptcy, moratorium or
other laws affecting creditors' rights generally from time to time in
effect and to equitable principles which may limit the right to obtain
the remedy of specific performance or other injunctive relief) in each
case free and clear of all liens, encumbrances and defects except such
as are described in the Registration Statement and the Prospectus or
such as do not materially affect the aggregate value of such property
and interests taken as a whole and do not interfere with the use made
and proposed to be made of such property and interests by the
Registrants or any of
<PAGE> 6
6
their subsidiaries; and all real and all material personal properties
held under lease by the Company or any of its subsidiaries are held by
each of them under valid and enforceable leases (subject, as to
enforcement of remedies, to applicable bankruptcy, moratorium or other
laws affecting creditors' rights generally from time to time in effect
and to equitable principles which may limit the right to obtain the
remedy of specific performance or other injunctive relief) and the
interests of the Company or any subsidiary, as the case may be, in such
leases are free and clear of all material liens, encumbrances and
defects, and no consent or waiver need be obtained under such leases in
connection with the execution, delivery and performance of this
Agreement and the consummation of the transactions contemplated hereby,
in each case except as disclosed in the Prospectus. The Company and its
subsidiaries are in compliance in all material respects with the terms
and conditions of such leases, and such leases are in full force and
effect; and
(vi) The Securities to be sold by the Company have been duly
authorized for listing, subject to official notice of issuance, on the
New York Stock Exchange. The Securities to be sold by the Selling
Stockholders have been duly authorized for listing on the New York
Stock Exchange.
(b) Each Selling Stockholder, severally and not jointly,
represents and warrants to, and agrees with, each Underwriter that:
(i) Such Selling Stockholder is the lawful owner of the
Securities to be sold by such Selling Stockholder hereunder and upon
sale and delivery of, and payment for, such Securities, as provided
herein, such Selling Stockholder will convey good and marketable title
to such Securities, free and clear of all liens, encumbrances, equities
and claims whatsoever, including, without limitation, any claim or
interest another Selling Stockholder may have in such Securities.
(ii) The sale of Securities by such Selling Stockholder
pursuant hereto is not prompted by any adverse information concerning
the Company or any of
<PAGE> 7
7
its subsidiaries which is not set forth in the Prospectus or in any
supplement thereto.
(iii) Such Selling Stockholder has not taken and will not
take, directly or indirectly, any action designed to or which has
constituted or which might reasonably be expected to cause or result,
under the Exchange Act or otherwise, in stabilization or manipulation
of the price of any security of the Company to facilitate the sale or
resale of the Securities.
(iv) Certificates in negotiable form for such Selling
Stockholder's Securities have been placed in custody, for delivery
pursuant to the terms of this Agreement, under a Power of Attorney and
Custody Agreement executed and delivered by such Selling Stockholder,
in the form heretofore furnished to you (the "Power of Attorney and
Custody Agreement") with William S. Boyd, Ellis Landau and Keith Smith,
as Custodians and Attorneys-in-Fact (the "Custodian"); the Securities
represented by the certificates so held in custody for each Selling
Stockholder are subject to the interests hereunder of the Underwriters,
the Company and the other Selling Stockholders; the arrangements for
custody and delivery of such certificates, made by such Selling
Stockholder hereunder and under the Power of Attorney and Custody
Agreement, are not subject to termination by any acts of such Selling
Stockholder or the occurrence of any other event, including, without
limitation, the commencement of any bankruptcy, insolvency or similar
proceedings involving any Selling Stockholder; and if any such death,
disability, legal incapacity or any other such event shall occur before
the delivery of such Securities hereunder, certificates for the
Securities will be delivered by the Custodian in accordance with the
terms and conditions of this Agreement and the Power of Attorney and
Custody Agreement as if such death, disability, legal incapacity or
other event had not occurred, regardless of whether or not the
Custodian shall have received notice of such death, disability, legal
incapacity or other event.
(v) No consent, approval, authorization or order of any court
or governmental agency or body is required for the consummation by such
Selling Stockholder of the transactions contemplated herein, except
such as may
<PAGE> 8
8
have been obtained under the Act and such as may be required under the
blue sky laws of any jurisdiction in connection with the purchase and
distribution of the Securities by the Underwriters.
(vi) Neither the sale of the Securities being sold by such
Selling Stockholder nor the consummation of any other of the
transactions herein contemplated by such Selling Stockholder nor the
fulfillment of the terms hereof by such Selling Stockholder will
conflict with, result in a breach or violation of, or constitute a
default under any law or the terms of any indenture, loan or security
agreement or other agreement or instrument to which such Selling
Stockholder is a party or bound, or any judgment, order or decree
applicable to such Selling Stockholder of any court, regulatory body,
administrative agency, governmental body or arbitrator having
jurisdiction over such Selling Stockholder.
In respect of any statements in or omissions from the
Registration Statement or the Prospectus or any supplements thereto made in
reliance upon and in conformity with information ("Stockholder Information")
furnished in writing to the Company by any Selling Stockholder specifically for
use in connection with the preparation thereof, such Selling Stockholder hereby
represents and warrants to the Underwriters that the Stockholder Information as
set forth in the Registration Statement on the Effective Date did not or will
not contain any untrue statement of a material fact or omit to state any
material fact required to be stated therein or necessary in order to make the
statements therein not misleading, and as set forth on the Effective Date, the
Closing Date and the Settlement Date in the Prospectus did not and will not
include any untrue statement of a material fact or omit to state a material fact
necessary in order to make the statements therein, in light of the circumstances
under which they were made, not misleading. Each Underwriter acknowledges that
the statements set forth under the heading "Principal and Selling Stockholders"
in the Registration Statement and the Prospectus, as such statements relate to
each Selling Stockholder, constitute the only Stockholder Information furnished
in writing by or on behalf of such Selling Stockholder for inclusion in the
Registration Statement and the Prospectus, and such Selling Stockholder confirms
that such Stockholder Information is correct.
<PAGE> 9
9
(c) Each Selling Stockholder that is an executive officer or
director of the Company, severally and not jointly, represents and warrants to,
and agrees with, each Underwriter that such Selling Stockholder (i) has no
reason to believe that the representations and warranties of the Company
contained in this Section 1 are not true and correct, (ii) is familiar with the
Registration Statement and (iii) has no knowledge of any material fact,
condition or information not disclosed in the Prospectus or any supplement
thereto which has materially adversely affected or may reasonably be expected to
materially adversely affect the business of the Company or any of its
subsidiaries; provided, however, that the representations in clauses (i) and
(ii) of this paragraph 1(c) shall not be construed as imposing on such Selling
Stockholder the duty to independently investigate or verify the statements made
therein.
2. Purchase and Sale. (a) Subject to the terms and conditions
and in reliance upon the representations and warranties herein set forth, the
Company and the Selling Stockholders (collectively, the "Sellers" and,
individually, a "Seller") agree, severally and not jointly, to sell to each
Underwriter, and each Underwriter agrees, severally and not jointly, to purchase
from the Sellers, at a purchase price of $[ ] per share, the amount of the
Underwritten Securities set forth opposite such Underwriter's name in Schedule I
hereto.
(b) Subject to the terms and conditions and in reliance upon
the representations and warranties herein set forth, the Company hereby grants
an option to the several Underwriters to purchase, severally and not jointly, up
to 600,000 shares of the Option Securities at the same purchase price per share
as the Underwriters shall pay for the Underwritten Securities. Subject to the
terms and conditions and in reliance upon the representations and warranties
herein set forth, certain Selling Stockholders specified in Schedule II of this
Agreement hereby grant options to the several Underwriters to purchase,
severally and not jointly, up to 130,000 shares of the Option Securities at the
same purchase price per share as the Underwriters shall pay for the Underwritten
Securities. Said options may be exercised only to cover over-allotments in the
sale of the Underwritten Securities by the Underwriters. Said options may be
exercised in whole or in part (but not more than once) at any time on or before
the 30th day after the date of the Prospectus upon written or
<PAGE> 10
10
telegraphic notice by the Representatives to the Company and the Custodian
setting forth the number of shares of the Option Securities as to which the
several Underwriters are exercising the options and the Settlement Date.
Delivery of certificates for the shares of Option Securities by the Company and
the Selling Stockholders, and payment therefor to the Company and the Selling
Stockholders, shall be made as provided in Section 3 hereof. The number of
shares of the Option Securities to be purchased by each Underwriter shall be the
same percentage of the total number of shares of the Option Securities to be
purchased by the several Underwriters as such Underwriter is purchasing of the
Underwritten Securities, subject to such adjustments as the Representatives in
their absolute discretion shall make to eliminate any fractional shares.
3. Delivery and Payment. Delivery of and payment for the
Underwritten Securities and the Option Securities (if the option provided for in
Section 2(b) hereof shall have been exercised on or before the second business
day prior to the Closing Date) shall be made at 10:00 a.m., New York City time,
on [ ], 1996 or such later date (not later than [ ], 1996)
as the Representatives shall designate, which date and time may be postponed by
agreement among the Representatives, the Company and the Selling Stockholders or
as provided in Section 9 hereof (such date and time of delivery and payment for
the Securities being herein called the "Closing Date"). Delivery of the
Securities shall be made to the Representatives for the respective accounts of
the several Underwriters against payment by the several Underwriters through the
Representatives of the respective aggregate purchase prices of the Securities
being sold by the Company and by each of the Selling Stockholders to or upon the
order of the Company and the Selling Stockholders by certified or official bank
check or checks drawn on or by a New York Clearing House bank and payable in
next day funds. Delivery of the Underwritten Securities and the Option
Securities shall be made at such location as the Representatives shall
reasonably designate at least one business day in advance of the Closing Date
and payment for such Underwritten Securities and the Option Securities, shall be
made at the office of Cravath, Swaine & Moore, Worldwide Plaza, 825 Eighth
Avenue, New York, New York. Certificates for the Securities shall be registered
in such names and in such denominations as the Representatives may request not
less than two full business days in advance of the Closing Date.
<PAGE> 11
11
The Company and the Selling Stockholders agree to have the
Securities available for inspection, checking and packaging by the
Representatives in New York, New York, not later than 1:00 p.m. New York City
time on the business day prior to the Closing Date.
Each Selling Stockholder will pay all applicable state
transfer taxes, if any, involved in the transfer to the several Underwriters of
the Securities to be purchased by them from such Selling Stockholder and the
respective Underwriters will pay any additional stock transfer taxes involved in
further transfers.
If the option provided for in Section 2(b) hereof is exercised
after the second business day prior to the Closing Date, the Company will
deliver (at the expense of the Company) to the Representatives, at Salomon
Brothers Inc, Seven World Trade Center, New York, New York, on the date
specified by the Representatives (which shall be within two business days after
exercise of said option), certificates for the Option Securities in such names
and denominations as the Representatives shall have requested against payment of
the purchase price thereof to or upon the order of the Company and the Selling
Stockholders by certified or official bank check or checks drawn on or by a New
York Clearing House bank and payable in next day funds. If settlement for the
Option Securities occurs after the Closing Date, the Company and the Selling
Shareholders will deliver to the Representatives on the Settlement Date for the
Option Securities, and the obligation of the Underwriters to purchase the Option
Securities shall be conditioned upon receipt of, supplemental opinions,
certificates and letters confirming as of such date the opinions, certificates
and letters delivered on the Closing Date pursuant to Section 6 hereof.
4. Offering by Underwriters. It is understood that the several
Underwriters propose to offer the Securities for sale to the public as set forth
in the Prospectus.
5. Agreements. (a) The Company agrees with the several
Underwriters that:
(i) The Company will use its best efforts to cause the
Registration Statement, if not effective at the Execution Time, and any
amendment thereof, to become effective. Prior to the termination of the
<PAGE> 12
12
offering of the Securities, the Company will not file any amendment of
the Registration Statement or supplement to the Prospectus without the
prior consent of the Representatives. Subject to the foregoing
sentence, if the Registration Statement has become or becomes effective
pursuant to Rule 430A, or filing of the Prospectus is otherwise
required under Rule 424(b), the Company will cause the Prospectus,
properly completed, and any supplement thereto to be filed with the
Commission pursuant to the applicable paragraph of Rule 424(b) within
the time period prescribed and will provide evidence satisfactory to
the Representatives of such timely filing. The Company will promptly
advise the Representatives (A) when the Registration Statement, if not
effective at the Execution Time, and any amendment thereto, shall have
become effective, (B) when the Prospectus, and any supplement thereto,
shall have been filed (if required) with the Commission pursuant to
Rule 424(b), (C) when, prior to termination of the offering of the
Securities, any amendment to the Registration Statement shall have been
filed or become effective, (D) of any request by the Commission for any
amendment of the Registration Statement or supplement to the Prospectus
or for any additional information, (E) of the issuance by the
Commission of any stop order suspending the effectiveness of the
Registration Statement or the institution or threatening of any
proceeding for that purpose and (F) of the receipt by the Company of
any notification with respect to the suspension of the qualification of
the Securities for sale in any jurisdiction or the initiation or
threatening of any proceeding for such purpose. The Company will use
its best efforts to prevent the issuance of any such stop order and, if
issued, to obtain as soon as possible the withdrawal thereof.
(ii) If, at any time when a prospectus relating to the
Securities is required to be delivered under the Act, any event occurs
as a result of which the Prospectus as then supplemented would include
any untrue statement of a material fact or omit to state any material
fact necessary to make the statements therein in the light of the
circumstances under which they were made not misleading, or if it shall
be necessary to amend the Registration Statement or supplement the
Prospectus to comply with the Act or the rules thereunder, the Company
promptly will (A) prepare and file with the Commission, subject to the
second
<PAGE> 13
13
sentence of paragraph (a)(i) of this Section 5, an amendment or
supplement which will correct such statement or omission or effect such
compliance and (B) supply any supplemented Prospectus to you in such
quantities as you may reasonably request.
(iii) As soon as practicable, the Company will make generally
available to its security holders and to the Representatives an
earnings statement or statements of the Company and its subsidiaries
which need not be audited but which will satisfy the provisions of
Section 11(a) of the Act and Rule 158 under the Act.
(iv) The Company will furnish to the Representatives and
counsel for the Underwriters, without charge, signed copies of the
Registration Statement (including exhibits thereto) and to each other
Underwriter a copy of the Registration Statement (without exhibits
thereto) and, so long as delivery of a prospectus by an Underwriter or
dealer may be required by the Act, as many copies of each Preliminary
Prospectus and the Prospectus and any supplement thereto as the
Representatives may reasonably request. The Company will pay the
expenses of printing or other production (excluding, except in the case
of blue sky fees and expenses, the fees and expenses of counsel to the
Underwriters) of all documents relating to the offering.
(v) The Company will arrange for the qualification of the
Securities for sale under the laws of such jurisdictions as the
Representatives may designate, will maintain such qualifications in
effect so long as required for the distribution of the Securities and
will pay the fee of the National Association of Securities Dealers,
Inc., ("NASD") in connection with its review of the offering; provided
that in no event shall the Company be obligated to qualify to do
business in any jurisdiction where it is not now so qualified or take
any action that would subject it to service of process in suits (other
than those arising out of the offer and sale of the Securities) in any
jurisdiction in which it is not now so subject.
(vi) The Company and its subsidiaries will not, for a period
of 120 days following the Execution Time, without the prior written
consent of Salomon Brothers
<PAGE> 14
14
Inc, offer, sell or contract to sell, or otherwise dispose of, directly
or indirectly, or announce the offering of, or cause to be registered
or announce the registration or intended registration of, any other
shares of Common Stock or any securities convertible into, or
exchangeable for, shares of Common Stock; provided, however, that the
Company may issue and sell Common Stock and grant options pursuant to
any employee or director stock option plan, stock ownership plan, stock
purchase plan or dividend reinvestment plan of the Company in effect at
the Execution Time and the Company may issue Common Stock issuable upon
the conversion of securities or the exercise of options outstanding at
the Execution Time).
(vii) The Company confirms as of the date hereof that it is in
compliance with all provisions of Section 1 of the Laws of Florida,
Chapter 92-198, An Act Relating to Disclosure of Doing Business with
Cuba, and the Company further agrees that if it commences engaging in
business with the government of Cuba or with any person or affiliate
located in Cuba after the date the Registration Statement becomes or
has become effective with the Securities and Exchange Commission or
with the Florida Department of Banking and Finance (the "Department"),
whichever date is later, or if the information reported in the
Prospectus, if any, concerning the Company's business with Cuba or with
any person or affiliate located in Cuba changes in any material way at
any time when a Prospectus relating to the Securities is required to be
delivered under the Act, the Company will provide the Department notice
of such business or change, as appropriate, in a form acceptable to the
Department.
(viii) The Company, during the period when the Prospectus is
required to be delivered under the Act, will file promptly all
documents required to be filed with the Commission pursuant to Section
13 or 15(d) of the Exchange Act subsequent to the time the Registration
Statement becomes effective.
(b) Each Selling Stockholder agrees with the several
Underwriters that such Selling Stockholder will not, during the period of 120
days following the Execution Time, without the prior written consent of Salomon
Brothers Inc, offer, sell or contract to sell, or otherwise dispose of, directly
or indirectly, or announce the offering of, or
<PAGE> 15
15
exercise any registration rights with respect to, cause to be registered or
announce the registration or intended registration of, any other shares of
Common Stock beneficially owned by such person or by another Selling
Stockholder, or any securities convertible into, or exchangeable for, shares of
Common Stock, other than shares of Common Stock disposed of (i) as bona fide
gifts, or (ii) by the laws of testamentary or intestate descent.
6. Conditions to the Obligations of the Underwriters. The
obligations of the Underwriters to purchase the Underwritten Securities and the
Option Securities, as the case may be, shall be subject to the accuracy of the
representations and warranties on the part of the Company and the Selling
Stockholders contained herein as of the Execution Time, the Closing Date and any
Settlement Date pursuant to Section 3 hereof, to the accuracy of the statements
of the Company and the Selling Stockholders made in any certificates pursuant to
the provisions hereof, to the performance by the Company and the Selling
Stockholders of their obligations hereunder and to the following additional
conditions:
(a) If the Registration Statement has not become effective
prior to the Execution Time, unless the Representatives agree in
writing to a later time, the Registration Statement will become
effective not later than (i) 6:00 p.m. New York City time on the date
of determination of the public offering price, if such determination
occurred at or prior to 3:00 p.m. New York City time on such date or
(ii) 12:00 Noon New York City time on the business day following the
day on which the public offering price was determined, if such
determination occurred after 3:00 p.m. New York City time on such date;
if filing of the Prospectus, or any supplement thereto, is required
pursuant to Rule 424(b), the Prospectus, and any such supplement, will
be filed in the manner and within the time period required by Rule
424(b); and no stop order suspending the effectiveness of the
Registration Statement shall have been issued and no proceedings for
that purpose shall have been instituted or threatened.
(b) The Company shall have furnished to the Representatives
the opinion of Morrison & Foerster LLP, counsel for the Company, dated
the Closing Date, to the effect that:
<PAGE> 16
16
(i) each of the Company and its material subsidiaries
has been duly incorporated and is validly existing as a
corporation in good standing under the laws of the state of
its jurisdiction, with full corporate power and authority to
own its properties and conduct its business as described in
the Prospectus, and is duly qualified to do business as a
foreign corporation and is in good standing under the laws of
each jurisdiction which requires such qualification wherein
the Company or any of its material subsidiaries owns or leases
material properties or conducts material business (except in
those jurisdictions in which the failure to be so qualified or
in good standing would not have a material adverse effect on
the business or financial condition of the Company and its
subsidiaries, taken as a whole);
(ii) all the outstanding shares of capital stock of the
Company and its material subsidiaries have been duly and
validly authorized and issued and are fully paid and
nonassessable, and all outstanding shares of capital stock of
the subsidiaries of the Company are owned by the Company,
either directly or through wholly owned subsidiaries, free and
clear of any perfected security interest and, to the knowledge
of such counsel, after due inquiry, any other security
interests, claims, liens or encumbrances;
(iii) the Company's authorized equity capitalization is
as set forth in the Prospectus; the capital stock of the
Company conforms to the description thereof contained in the
Prospectus; the Securities to be sold by the Company have been
duly and validly authorized, and, when issued and delivered to
and paid for by the Underwriters pursuant to this Agreement,
will be fully paid and nonassessable; the Securities have been
duly authorized for listing, subject in the case of the
Securities to be sold by the Company to official notice of
issuance, on the New York Stock Exchange; the certificates for
the Securities are in valid and sufficient form; and the
holders of outstanding shares of capital stock of the Company
are not entitled to preemptive or, to such counsel's
knowledge, other rights to subscribe for the Securities;
<PAGE> 17
17
(iv) to the knowledge of such counsel, there is no
pending or threatened action, suit or proceeding before any
court or governmental agency, authority or body or any
arbitrator involving the Company or any of its subsidiaries of
a character required to be disclosed in the Registration
Statement which is not adequately disclosed therein, and there
is no franchise, contract or other document of a character
required to be described in the Registration Statement or
Prospectus, or to be filed as an exhibit, which is not
described or filed as required;
(v) the Registration Statement has become effective
under the Act; any required filing of the Prospectus, and any
supplements thereto, pursuant to Rule 424(b) has been made in
the manner and within the time period required by Rule 424(b);
to the knowledge of such counsel, no stop order suspending the
effectiveness of the Registration Statement has been issued,
no proceedings for that purpose have been instituted or
threatened and the Registration Statement and the Prospectus
(other than the financial statements (including the notes
thereto), supporting schedules and other financial and
statistical information contained therein as to which such
counsel need express no opinion) comply as to form in all
material respects with the applicable requirements of the Act
and the Exchange Act and the respective rules thereunder;
(vi) this Agreement has been duly authorized,
executed and delivered by the Company;
(vii) no consent, approval, authorization or order of any
court or governmental agency or body is required for the
consummation of the transactions contemplated herein, except
such as have been obtained under the Act and such as may be
required under the blue sky laws of any jurisdiction in
connection with the purchase and distribution of the
Securities by the Underwriters and such other approvals
(specified in such opinion) as have been obtained and such as
may be required under the gaming laws of the States of Nevada,
Mississippi, Missouri, Louisiana or
<PAGE> 18
18
Illinois and federal laws related to gaming on Indian lands;
(viii) neither the issue and sale of the Securities, nor
the consummation of any other of the transactions herein
contemplated nor the fulfillment of the terms hereof will
conflict with, result in a breach or violation of, or
constitute a default under any law or the charter or by-laws
of the Company or the terms of any indenture or the terms of
any other material agreement or instrument known to such
counsel and to which the Company or any of its subsidiaries is
a party or bound or any judgment, order or decree known to
such counsel to be applicable to the Company or any of its
subsidiaries of any court, regulatory body, administrative
agency, governmental body or arbitrator having jurisdiction
over the Company or any of its subsidiaries; and
(ix) to the knowledge of such counsel, no holders of
securities of the Company or any subsidiary have rights to the
registration of such securities under the Registration
Statement.
In addition, such counsel shall state that, based upon
conferences with the Company's representatives and the Company's accountants
concerning the Registration Statement and the Prospectus, and such counsel's
consideration of the matters required to be stated therein and the statements
contained therein (although such counsel may state that it has not independently
verified the accuracy, completeness or fairness of such statements), nothing has
come to such counsel's attention that leads such counsel to believe that at the
Effective Date the Registration Statement contained any untrue statement of a
material fact or omitted to state any material fact required to be stated
therein or necessary to make the statements therein not misleading (other than
the financial statements (including the notes thereto), supporting schedules and
other financial and statistical information contained therein as to which such
counsel need express no opinion) or that the Prospectus includes any untrue
statement of a material fact or omits to state a material fact necessary to make
the statements therein, in the light of the circumstances under which they were
made, not misleading (other than the financial statements (including the notes
thereto), supporting schedules and
<PAGE> 19
19
other financial and statistical information contained therein as to which such
counsel need express no opinion).
In rendering such opinion, such counsel may rely as to matters involving the
application of laws of any jurisdiction other than the States of California and
New York or the United States, to the extent they deem proper and specified in
such opinion, upon the opinion of other counsel of good standing whom they
believe to be reliable and who are satisfactory to counsel for the Underwriters
and (B) as to matters of fact, to the extent they deem proper, on certificates
of responsible officers of the Company and public officials. References to the
Prospectus in this paragraph (b) include any supplements thereto at the Closing
Date.
(c) The Selling Stockholders shall have furnished to the
Representatives the opinion of McDonald Carano Wilson McCune Bergin
Frankovich & Hicks LLP, counsel for the Selling Stockholders, dated the
Closing Date, to the effect that:
(i) this Agreement and the Power of Attorney and
Custody Agreement have been duly executed and delivered by the
Selling Stockholders, the Power of Attorney and Custody
Agreement is valid and binding on the Selling Stockholders and
each Selling Stockholder has full legal right and authority to
sell, transfer and deliver in the manner provided in this
Agreement and the Power of Attorney and Custody Agreement the
Securities being sold by such Selling Stockholder hereunder;
(ii) assuming the Underwriters have purchased the
Securities in good faith and without notice of any adverse
claim, upon the delivery by each Selling Stockholder to the
several Underwriters of certificates for the Securities being
sold hereunder by such Selling Stockholder against payment
therefor as provided herein, the several Underwriters will
have acquired such Securities free and clear of all liens,
encumbrances, equities and claims whatsoever, including,
without limitation, any claim or interest another Selling
Stockholder may have in such Securities;
(iii) to the best knowledge of such counsel, no
consent, approval, authorization or order of any
<PAGE> 20
20
court or governmental agency or body is required for the
consummation by any Selling Stockholder of the transactions
contemplated herein, except such as may have been obtained
under the Act and such as may be required under the blue sky
laws of any jurisdiction in connection with the purchase and
distribution of the Securities by the Underwriters and such
other approvals (specified in such Opinion) as have been
obtained; and
(iv) to the best knowledge of such counsel, neither the
sale of the Securities being sold by any Selling Stockholder
nor the consummation of any other of the transactions herein
contemplated by any Selling Stockholder or the fulfillment of
the terms hereof by any Selling Stockholder will conflict
with, result in a breach or violation of, or constitute a
default under any law or the terms of any indenture or loan or
security agreement or other agreement or instrument known to
such counsel and to which any Selling Stockholder is a party
or bound, or any judgment, order or decree known to such
counsel to be applicable to any Selling Stockholder of any
court, regulatory body, administrative agency, governmental
body or arbitrator having jurisdiction over any Selling
Stockholder.
In rendering such opinion, such counsel may rely (A) as to
matters involving the application of laws of any jurisdiction other than the
States of California and New York or the United States, to the extent they deem
proper and specified in such opinion, upon the opinion of other counsel of good
standing whom they believe to be reliable and who are satisfactory to counsel
for the Underwriters, and (B) as to matters of fact, to the extent they deem
proper, on certificates of the Selling Stockholders and public officials.
References to the Prospectus in this paragraph (c) include any
supplements thereto at the Closing Date.
(d) The Registrants shall have furnished to the
Representatives the opinion of McDonald Carano Wilson
<PAGE> 21
21
McCune Bergin Frankovich & Hicks LLP, Nevada counsel for the
Registrants, dated the Closing Date, to the effect that:
(i) the information contained in the Prospectus under
the caption "Risk Factors--Governmental Gaming Regulation",
"Risk Factors--Uncertainties of Consummation of the Par-A-Dice
Acquisition and Development of Sam's Town Reno and the
Atlantic City Project", "Risk Factors--Environmental Risks",
"Business-- Development Projects--Sam's Town Reno", "Risk
Factors--Certain Anti-Takeover Effects" and "Description of
Capital Stock--Nevada Legislation", to the extent that it
constitutes matters of Nevada law or legal conclusions
thereunder, has been reviewed by such counsel and fairly
summarizes the matters therein described in all material
respects; and
(ii) other than those arising under State securities
laws, no authorization, approval, consent or order of any
Nevada court or governmental authority or agency (including
the Nevada Gaming Commission, the Nevada State Gaming Control
Board and the Clark County Liquor and Gaming Licensing Board
and any other gaming or similar governmental or regulatory
authority of the State of Nevada or any political subdivision
thereof) is required in connection with the offering, issuance
or sale of the Securities to the Underwriters, or in
connection with the Guaranties, except such as have been
obtained and are in full force and effect at the Closing Date.
References to the Prospectus in this paragraph (d) include any
supplements thereto at the Closing Date.
(e) The Company shall have furnished to the Representatives
the opinion of Watkins Ludlum & Stennis, P.A., Mississippi counsel for
the Company, dated the Closing Date, to the effect that:
(i) the information contained in the Prospectus under
the caption "Risk Factors-- Governmental Gaming Regulation",
"Risk Factors-- Environmental Risks", "Risk
Factors--Uncertainties of Consummation of the Par-A-Dice
Acquisition and
<PAGE> 22
22
Development of Sam's Town Reno and the Atlantic City Project",
"Risk Factors--Management Agreements of Limited Duration" and
"Business-- Development Projects--Sam's Town Reno", to the
extent that it constitutes matters of Mississippi or Indian
law or legal conclusions thereunder, has been reviewed by such
counsel and fairly summarizes the matters therein described in
all material respects; and
(ii) other than those arising under State securities
laws, no authorization, approval, consent or order of any
Mississippi court or the Mississippi Gaming Commission or any
other gaming or other governmental or regulatory authority of
the State of Mississippi or any political subdivision thereof
or of the National Indian Gaming Commission or any other
agency, department or regulatory body of the Federal
government having jurisdiction over gaming on Indian lands or
in the State of Mississippi is required in connection with the
offering, issuance or sale of the Securities to the
Underwriters except such as have been obtained and are in full
force and effect at the Closing Date.
References to the Prospectus in this paragraph (e) include any
supplements thereto at the Closing Date.
(f) The Company shall have furnished to the Representatives
the opinion of Stinson, Mag & Fizzell, P.C., Missouri counsel for the
Company, dated the Closing Date, to the effect that:
(i) the information contained in the Prospectus under
the caption "Risk Factors-- Governmental Gaming Regulation"
and "Risk Factors--Environmental Risks", to the extent that it
constitutes matters of Missouri law or legal conclusions
thereunder, has been reviewed by such counsel and fairly
summarizes the matters therein described in all material
respects; and
(ii) other than those arising under State securities
laws, no authorization, approval, consent or order of any
Missouri court or governmental authority or agency (including
the Missouri Gaming Commission, the Missouri State
<PAGE> 23
23
Gaming Control Board and the Clay County Liquor and Gaming
Licensing Board and any other gaming or similar governmental
or regulatory authority of the State of Missouri or any
political subdivision thereof) is required in connection with
the offering, issuance or sale of the Securities to the
Underwriters except such as have been obtained and are in full
force and effect at the Closing Date.
References to the Prospectus in this paragraph (f) include any
supplements thereto at the Closing Date.
(g) The Company shall have furnished to the Representatives
the opinion of McGlinchey Stafford & Lang, Louisiana counsel for the
Company, dated the Closing Date, to the effect that:
(i) the information contained in the Prospectus under
the caption "Risk Factors-- Governmental Gaming Regulation",
and "Risk Factors--Environmental Risks" to the extent that it
constitutes matters of Louisiana law or legal conclusions
thereunder, has been reviewed by such counsel and fairly
summarizes the matters therein described in all material
respects; and
(ii) other than those arising under State securities
laws, no authorization, approval, consent or order of any
Louisiana court or governmental authority or agency (including
the Louisiana Gaming Commission and any other gaming or
similar governmental or regulatory authority of the State of
Louisiana or any political subdivision thereof) is required in
connection with the offering, issuance or sale of the
Securities to the Underwriters except such as have been
obtained and are in full force and effect at the Closing Date.
References to the Prospectus in this paragraph (g) include any
supplements thereto at the Closing Date.
(h) The Company shall have furnished to the Representatives
the opinion of Freeborn & Peters, Illinois counsel for the Company,
dated the Closing Date, to the effect that:
<PAGE> 24
24
(i) the information contained in the Prospectus under
the caption "Risk Factors-- Governmental Gaming Regulation",
"Risk Factors--Environmental Risks", "Risk Factors--
Uncertainties of Consummation of the Par-A-Dice Acquisition
and Development of Sam's Town Reno and the Atlantic City
Project", "Risk Factors--Competition" and "Business--
Development Projects--Par-A-Dice Acquisition", to the extent
that it constitutes matters of Illinois law or legal
conclusions thereunder, has been reviewed by such counsel
and fairly summarizes the matters therein described in all
material respects; and
(ii) other than those arising under State securities
laws, no authorization, approval, consent or order of any
Illinois court or governmental authority or agency (including
the Illinois Gaming Commission and any other gaming or similar
governmental or regulatory authority of the State of Illinois
or any political subdivision thereof) is required in
connection with the offering, issuance or sale of the
Securities to the Underwriters except such as have been
obtained and are in full force and effect at the Closing Date.
References to the Prospectus in this paragraph (h) include any
supplements thereto at the Closing Date.
(i) The Representatives shall have received from Cravath,
Swaine & Moore, counsel for the Underwriters, such opinion or opinions,
dated the Closing Date, with respect to the issuance and sale of the
Securities, the Registration Statement, the Prospectus (together with
any supplement thereto) and other related matters as the
Representatives may reasonably require, and the Company and each
Selling Stockholder shall have furnished to such counsel such documents
as they reasonably request for the purpose of enabling them to pass
upon such matters.
(j) The Company shall have furnished to the Representatives a
certificate of the Company, signed by the Chairman of the Board or the
President and the principal financial or accounting officer of the
Company, dated the Closing Date, to the effect that the signers of such
certificate have carefully examined the
<PAGE> 25
25
Registration Statement, the Prospectus, any supplement to the
Prospectus and this Agreement and that:
(i) the representations and warranties of the Company
in this Agreement are true and correct in all material
respects on and as of the Closing Date with the same effect as
if made on the Closing Date and the Company has complied with
all the agreements and satisfied all the conditions on its
part to be performed or satisfied at or prior to the Closing
Date;
(ii) no stop order suspending the effectiveness of the
Registration Statement has been issued and no proceedings for
that purpose have been instituted or, to the Company's
knowledge, threatened; and
(iii) since the date of the most recent financial
statements included in the Prospectus (exclusive of any
supplement thereto), there has been no development which could
reasonably be expected to result in a material adverse change
in the condition (financial or other), earnings, business or
properties of the Company and its subsidiaries, taken as a
whole, whether or not arising from transactions in the
ordinary course of business, except as set forth in the
Prospectus (exclusive of any supplement thereto).
(k) Each Selling Stockholder shall have furnished to the
Representatives a certificate, signed by or on behalf of such Selling
Stockholder, dated the Closing Date, to the effect that the signer of
such certificate has carefully examined the Registration Statement, the
Prospectus, any supplement to the Prospectus and this Agreement and
that the representations and warranties of such Selling Stockholder in
this Agreement are true and correct in all material respects on and as
of the Closing Date to the same effect as if made on the Closing Date.
(l) At the Execution Time and at the Closing Date, Deloitte &
Touche LLP shall have furnished to the Representatives a letter or
letters, dated respectively as of the Execution Time and as of the
Closing Date, in form and substance satisfactory to the
Representatives, confirming that they are independent accountants
within
<PAGE> 26
26
the meaning of the Act and the Exchange Act and the applicable
published rules and regulations thereunder and stating in effect that:
(i) in their opinion the audited financial statements
and financial statement schedules included or incorporated by
reference in the Registration Statement and the Prospectus and
reported on by them comply in form in all material respects
with the applicable accounting requirements of the Act and the
Exchange Act and the related published rules and regulations;
(ii) on the basis of a reading of the latest unaudited
financial statements made available by the Company; carrying
out certain specified procedures (but not an examination in
accordance with generally accepted auditing standards) which
would not necessarily reveal matters of significance with
respect to the comments set forth in such letter; a reading of
the minutes of the meetings of the stockholders, directors and
executive committee of the Company; and inquiries of certain
officials of the Company who have responsibility for financial
and accounting matters of the Company and its subsidiaries,
nothing came to their attention which caused them to believe
that:
(1) any unaudited financial statements
included or incorporated by reference in the
Registration Statement and the Prospectus do not
comply in form in all material respects with
applicable accounting requirements of the Act and
with the published rules and regulations of the
Commission with respect to financial statements
included or incorporated in quarterly reports on Form
10-Q under the Exchange Act; or that such unaudited
financial statements are not in conformity with
generally accepted accounting principles applied on a
basis consistent with the audited financial
statements included in the Registration Statement and
the Prospectus; or
(2) with respect to the period subsequent to
June 30, 1996, there were any changes, at a
specified date not more than
<PAGE> 27
27
five business days prior to the date of the letter,
in the long-term debt of the Company and its
subsidiaries or decreases in the stockholders' equity
of the Company, in each case as compared with the
amounts shown on the June 30, 1996, consolidated
balance sheet included in the Registration Statement
and the Prospectus, or for the period from July 1,
1996, to such specified date there were any
decreases, as compared with the corresponding period
in the preceding year in net revenues, operating
income, or income before provision for income taxes,
cumulative effect of a change in accounting principle
and extraordinary item, or in total or per share
amounts of net income of the Company and its
subsidiaries, except in all instances for changes or
decreases set forth in such letter, in which case the
letter shall be accompanied by an explanation by the
Company as to the significance thereof unless such
explanation is not deemed necessary by the
Representatives; and
(iii) they have performed certain other specified
procedures as a result of which they determined that certain
information of an accounting, financial or statistical nature
(which is limited to accounting, financial or statistical
information derived from the general accounting records of the
Company and its subsidiaries) set forth or incorporated in the
Prospectus and Registration Statement agrees with the
accounting records of the Company and its subsidiaries,
excluding any questions of legal interpretation; and
(iv) on the basis of a reading of the unaudited pro
forma financial statements included or incorporated in the
Registration Statement and the Prospectus (the "pro forma
financial statements"), carrying out certain specified
procedures, inquiries of certain officials of the Company who
have responsibility for financial and accounting matters, and
proving the arithmetic accuracy of the application of the pro
forma adjustments to the historical amounts in the pro forma
financial statements, nothing came to their
<PAGE> 28
28
attention which caused them to believe that the pro forma
financial statements do not comply in form in all material
respects with the applicable accounting requirements of Rule
11-02 of Regulation S-X or that the pro forma adjustments have
not been properly applied to the historical amounts in the
compilation of such statements.
References to the Prospectus in this paragraph (l) include any
supplement thereto at the date of this letter.
(m) At the Execution Time and at the Closing Date, Coopers &
Lybrand LLP shall have furnished to the Representatives a letter or
letters, dated respectively as of the Execution Time and as of the
Closing Date, in form and substance satisfactory to the
Representatives, confirming that they are independent accountants
within the meaning of the Act and the Exchange Act and the applicable
published rules and regulations thereunder and stating in effect that:
(i) in their opinion the audited financial statements
and financial statement schedules of Par-A-Dice Gaming
Corporation ("Par-A-Dice") included or incorporated by
reference in the Registration Statement and the Prospectus and
reported on by them comply in form in all material respects
with the applicable accounting requirements of the Act and the
Exchange Act and the related published rules and regulations;
(ii) on the basis of a reading of the latest unaudited
financial statements made available by Par-A-Dice, carrying
out certain specified procedures (but not an examination in
accordance with generally accepted auditing standards) which
would not necessarily reveal matters of significance with
respect to the comments set forth in such letter, a reading of
the minutes of the meetings of the stockholders, directors and
executive committee of Par-A-Dice, and inquiries of certain
officials of Par-A-Dice who have responsibility for financial
and accounting matters of Par-A-Dice, nothing came to their
attention which caused them to believe that:
(1) any unaudited financial statements
included or incorporated by reference in the
<PAGE> 29
29
Registration Statement and the Prospectus do not
comply in form in all material respects with
applicable accounting requirements of the Act and
with the published rules and regulations of the
Commission with respect to financial statements
included or incorporated in quarterly reports on Form
10-Q under the Exchange Act; or that such unaudited
financial statements are not in conformity with
generally accepted accounting principles applied on a
basis consistent with audited financial statements
included in the Registration Statement and the
Prospectus; or
(2) with respect to the period subsequent to
March 31, 1996, there were any changes, at a
specified date not more than five business days prior
to the date of the letter, in the long-term debt of
Par-A-Dice or decreases in the stockholders' equity
of Par-A-Dice, in each case as compared with the
amounts shown on the March 31, 1996 consolidated
balance sheet incorporated in the Registration
Statement and the Prospectus, or for the period from
April 1, 1996 to such specified date there were any
decreases, as compared with the corresponding period
in the preceding year in operating revenues,
operating income, or income before provision for
state income taxes, cumulative effect of a change in
accounting principle and extraordinary item, or in
total amounts of net income of Par-A-Dice, except in
all instances for changes or decreases set forth in
such letter, in which case the letter shall be
accompanied by an explanation by Par-A-Dice as to the
significance thereof unless such explanation is not
deemed necessary by the Representatives; and
(iii) they have performed certain other specified
procedures as a result of which they determined that certain
information of an accounting, financial or statistical nature
(which is limited to accounting, financial or statistical
information derived from the general accounting records of
Par-A-Dice) agrees with the accounting
<PAGE> 30
30
records of Par-A-Dice, excluding any questions of legal
interpretation.
References to the Prospectus in this paragraph (m) include any
supplement thereto at the date of the letter.
(n) Subsequent to the Execution Time or, if earlier, the dates
as of which information is given in the Registration Statement
(exclusive of any amendment thereof) and the Prospectus (exclusive of
any supplement thereto), there shall not have been (i) any change or
decrease specified in the letter or letters referred to in paragraphs
(l) and (m) of this Section 6 or (ii) any change, or any development
involving a prospective change, in or affecting the business or
properties of the Company and its subsidiaries the effect of which, in
any case referred to in clause (i) or (ii) above, is, in the reasonable
judgment of the Representatives, so material and adverse as to make it
impractical or inadvisable to proceed with the offering or delivery of
the Securities as contemplated by the Registration Statement (exclusive
of any amendment thereof) and the Prospectus (exclusive of any
supplement thereto).
(o) Subsequent to the Execution Time, there shall not have
been any decrease in the rating of the debt securities of the Company
or any subsidiary by any "nationally recognized statistical rating
organization" (as defined for purposes of Rule 436(g) under the Act) or
any notice given of any intended or potential decrease in any such
rating or of a possible change in
<PAGE> 31
31
any such rating that does not indicate the direction of the possible
change.
(p) Prior to or at the Closing Date, the Representatives shall
have received evidence, in form and substance satisfactory to the
Representatives, that the New Bank Credit Facility (as defined in the
Prospectus) has been executed and is in effect.
(q) Prior to or at the Closing Date, the Representatives shall
have received evidence, in form and substance satisfactory to the
Representatives, that any indebtedness pursuant to the Reducing
Revolving Loan Agreement dated as of October 16, 1995 among Boyd Kansas
City, Inc. and Bank of America, Bank of Scotland, et al., has been paid
and discharged and that such credit facility is no longer in effect.
(r) Prior to the Closing Date, the Company shall have
furnished to the Representatives such further information, certificates
and documents as the Representatives may reasonably request.
If any of the conditions specified in this Section 6 shall not
have been fulfilled in all material respects when and as provided in this
Agreement, or if any of the opinions and certificates mentioned above or
elsewhere in this Agreement shall not be in all material respects reasonably
satisfactory in form and substance to the Representatives and counsel for
Underwriters, this Agreement and all obligations of the Underwriters hereunder
may be canceled by the Representatives at, or at any time prior to, the Closing
Date. Notice of such cancellation shall be given to the Company and each of the
Selling Stockholders in writing or by telephone confirmed in writing.
The documents required to be delivered by this Section 6 shall
be delivered at the offices of Cravath, Swaine & Moore at Worldwide Plaza, 825
Eighth Avenue, New York, New York, on the Closing Date.
7. Reimbursement of Underwriters' Expenses. (a) If the sale of
the Securities provided for herein is not consummated because any condition to
the obligations of the Underwriters set forth in Section 6 hereof is not
satisfied, because of any termination pursuant to Section 10 hereof or because
of any refusal, inability or failure on the part of
<PAGE> 32
32
the Company or any Selling Stockholder to perform an agreement herein or comply
with any provision hereof other than by reason of a default by any of the
Underwriters, the Company will reimburse the Underwriters severally upon demand
for all out-of-pocket expenses (including reasonable fees and disbursements of
counsel) that shall have been incurred by them in connection with the proposed
purchase and sale of the Securities. If the Company is required to make any
payments to the Underwriters under this Section 7 because of any Selling
Stockholder's refusal, inability or failure to satisfy any condition to the
obligations of the Underwriters set forth in Section 6, such Selling Stockholder
shall reimburse the Company on demand for all amounts so paid.
(b) The Company agrees to be liable for the payment of all the
costs of the preparation, printing and filing under the Act of the Registration
Statement and any amendments and exhibits thereto and the Preliminary
Prospectus, the Prospectus and any amendments or supplements to the Prospectus;
the costs of distributing the Registration Statement as originally filed and
each amendment and any post-effective amendments thereof (including exhibits),
any Preliminary Prospectus and the Prospectus and any amendments or supplements
to the Prospectus as provided in this Agreement; the costs of word processing
this Agreement and any selling agreements; the cost of filings with the National
Association of Securities Dealers, Inc. ("NASD"), including the filing fee, and
the fees and expenses of qualifying the Securities under the securities laws of
the several jurisdictions in the United States as provided for herein and of
preparing and printing Blue Sky memoranda (including fees and expenses of
counsel to the Underwriters related to such Blue Sky qualification and
preparation); and all other costs and expenses incident to the performance of
the obligations of the Company under this Agreement; provided, however, that
except as otherwise provided in this Section 7, the Underwriters shall pay all
of their own costs and expenses, including the fees and expenses of their
counsel and any additional stock transfer taxes involved in further transfers of
the Securities.
8. Indemnification and Contribution. (a) The Company agrees to
indemnify and hold harmless each Underwriter, the directors, officers, employees
and agents of each Underwriter and each person who controls any Underwriter
within the meaning of either the Act or the
<PAGE> 33
33
Exchange Act against any and all losses, claims, damages or liabilities, joint
or several, to which they or any of them may become subject under the Act, the
Exchange Act or other Federal or state statutory law or regulation, at common
law or otherwise, insofar as such losses, claims, damages or liabilities (or
actions in respect thereof) arise out of or are based upon any untrue statement
or alleged untrue statement of a material fact contained in the registration
statement for the registration of the Securities as originally filed or in any
amendment thereof, or in any Preliminary Prospectus or the Prospectus, or in any
amendment thereof or supplement thereto, or arise out of or are based upon the
omission or alleged omission to state therein a material fact required to be
stated therein or necessary to make the statements therein not misleading, and
agrees to reimburse each such indemnified party, as incurred, for any legal or
other expenses reasonably incurred by them in connection with investigating or
defending any such loss, claim, damage, liability or action; provided, however,
that (i) the Company will not be liable in any such case to the extent that any
such loss, claim, damage or liability arises out of or is based upon any such
untrue statement or alleged untrue statement or omission or alleged omission
made therein in reliance upon and in conformity with written information
furnished to the Company by or on behalf of any Underwriter through the
Representatives specifically for inclusion therein, and (ii) such indemnity with
respect to any untrue statement or omission in the Preliminary Prospectus shall
not inure to the benefit of any Underwriter from whom the person asserting any
such loss, claim, damage or liability purchased the Securities that are the
subject thereof if such person did not receive a copy of the Prospectus at or
prior to the confirmation of the sale of such Securities to such person in any
case where such delivery is required by the Act and such untrue statement or
omission of a material fact contained in the Preliminary Prospectus was
completely corrected in the Prospectus. This indemnity agreement will be in
addition to any liability which any of the Registrants may otherwise have.
(b) The Selling Stockholders, jointly and severally, agree to
indemnify and hold harmless each Underwriter, the directors, officers, employees
and agents of each Underwriter and each person who controls any Underwriter
within the meaning of either the Act or the Exchange Act against any and all
losses, claims, damages or liabilities, joint or several, to which they or any
of them
<PAGE> 34
34
may become subject under the Act, the Exchange Act or other Federal or state
statutory law or regulation, at common law or otherwise, insofar as such losses,
claims, damages or liabilities (or actions in respect thereof) arise out of or
are based upon any untrue statement or alleged untrue statement of a material
fact contained in the registration statement for the registration of the
Securities as originally filed or in any amendment thereof, or in any
Preliminary Prospectus or the Prospectus, or in any amendment thereof or
supplement thereto, or arise out of or are based upon the omission or alleged
omission to state therein a material fact required to be stated therein or
necessary to make the statements therein not misleading, but only, in the case
of each of the foregoing, with reference to written information furnished to the
Company by or on behalf of such Selling Stockholder specifically for inclusion
in the documents referred to in the foregoing indemnity, and agree to reimburse
each such indemnified party, as incurred, for any legal or other expenses
reasonably incurred by them in connection with investigating or defending any
such loss, claim, damage, liability or action; provided, however, that (i) no
Selling Stockholder will be liable in any such case to the extent that any such
loss, claim, damage or liability arises out of or is based upon any such untrue
statement or alleged untrue statement or omission or alleged omission made
therein in reliance upon and in conformity with written information furnished to
the Company by or on behalf of any Underwriter through the Representatives
specifically for inclusion therein, (ii) such indemnity with respect to any
untrue statement or omission in the Preliminary Prospectus shall not inure to
the benefit of any Underwriter from whom the person asserting any such loss,
claim, damage or liability purchased the Securities that are the subject thereof
if such person did not receive a copy of the Prospectus at or prior to the
confirmation of the sale of such Securities to such person in any case where
such delivery is required by the Act and such untrue statement or omission of a
material fact contained in the Preliminary Prospectus was completely corrected
in the Prospectus and (iii) in no case shall the liability of any Selling
Stockholder under this Section 8(b) exceed the aggregate public offering price
of the Securities sold by such Selling Stockholder to the Underwriters (before
deducting expenses) minus the underwriting discounts or commissions paid thereon
to the Underwriters by such Selling Stockholder. This indemnity agreement will
be in addition to any liability which any of the Selling Stockholders may
otherwise have.
<PAGE> 35
35
(c) Each Underwriter severally agrees to indemnify and hold
harmless the Company, each of its directors, each of its officers who signs the
Registration Statement, each person who controls the Company or a Selling
Stockholder within the meaning of either the Act or the Exchange Act, and each
Selling Stockholder, to the same extent as the foregoing indemnity from the
Company to each Underwriter, but only with reference to written information
relating to such Underwriter furnished to the Company by or on behalf of such
Underwriter through the Representatives specifically for inclusion in the
documents referred to in the foregoing indemnity. This indemnity agreement will
be in addition to any liability which any Underwriter may otherwise have. The
Company and each Selling Stockholder acknowledge that the statements set forth
in the last paragraph of the cover page and under the heading "Underwriting" in
any Preliminary Prospectus and the Prospectus constitute the only information
furnished in writing by or on behalf of the several Underwriters for inclusion
in any Preliminary Prospectus or the Prospectus, and you, as the
Representatives, confirm that such statements are correct.
(d) Promptly after receipt by an indemnified party under this
Section 8 of notice of the commencement of any action, such indemnified party
will, if a claim in respect thereof is to be made against the indemnifying party
under this Section 8, notify the indemnifying party in writing of the
commencement thereof; but the failure so to notify the indemnifying party (i)
will not relieve it from liability under paragraph (a), (b) or (c) above unless
and to the extent it did not otherwise learn of such action and such failure
results in material prejudice to the indemnifying party and (ii) will not, in
any event, relieve the indemnifying party from any obligations to any
indemnified party other than the indemnification obligation provided in
paragraph (a), (b) or (c) above. The indemnifying party shall be entitled to
appoint counsel of the indemnifying party's choice at the indemnifying party's
expense to represent the indemnified party in any action for which
indemnification is sought (in which case the indemnifying party shall not
thereafter be responsible for the fees and expenses of any separate counsel
retained by the indemnified party or parties except as set forth below);
provided, however, that such counsel shall be reasonably satisfactory to the
indemnified party. Notwithstanding the indemnifying party's election to appoint
counsel to represent the indemnified party in an action, the
<PAGE> 36
36
indemnified party shall have the right to employ separate counsel (including
local counsel), and the indemnifying party shall bear the reasonable fees, costs
and expenses of one such separate counsel and local counsel if (i) the use of
counsel chosen by the indemnifying party to represent the indemnified party
would present such counsel with a conflict of interest, (ii) the actual or
potential defendants in, or targets of, any such action include both the
indemnified party and the indemnifying party and the indemnified party shall
have reasonably concluded that there may be legal defenses available to it
and/or to other indemnified parties which are different from or additional to
those available to the indemnifying party, (iii) the indemnifying party shall
not have employed counsel reasonably satisfactory to the indemnified party to
represent the indemnified party within a reasonable time after notice of the
institution of such action or (iv) the indemnifying party shall authorize the
indemnified party to employ separate counsel at the expense of the indemnifying
party. An indemnifying party will not, without the prior written consent of the
indemnified parties, settle or compromise or consent to the entry of any
judgment with respect to any pending or threatened claim, action, suit or
proceeding in respect of which indemnification or contribution may be sought
hereunder (whether or not the indemnified parties are actual or potential
parties to such claim or action) unless such settlement, compromise or consent
includes an unconditional release of each indemnified party from all liability
arising out of such claim, action, suit or proceeding.
(e) In the event that the indemnity provided in paragraph (a),
(b) or (c) of this Section 8 is unavailable to or insufficient to hold harmless
an indemnified party for any reason, the Company, the Selling Stockholders, and
each of the Underwriters agree to contribute to the aggregate losses, claims,
damages and liabilities (including legal or other expenses reasonably incurred
in connection with investigating or defending same) (collectively "Losses") to
which the Company, one or more of the Selling Stockholders and one or more of
the Underwriters may be subject in such proportion as is appropriate to reflect
the relative benefits received by the Company, the Selling Stockholders and the
Underwriters from the offering of the Securities; provided, however, that in no
case shall any Underwriter (except as may be provided in any agreement among
underwriters relating to the offering of the Securities) be responsible for any
amount in excess of the underwriting discount or commission applicable to the
Securities
<PAGE> 37
37
purchased by such Underwriter hereunder; provided, further, however, that in no
case shall any Selling Stockholder be responsible for any amount in excess of
the aggregate public offering price of the Securities sold by such Selling
Stockholder to the Underwriters (before deducting expenses) minus the
underwriting discounts or commissions paid thereon to the Underwriters by such
Selling Stockholder. If the allocation provided by the immediately preceding
sentence is unavailable for any reason, the Company, the Selling Stockholders,
severally and not jointly, and the Underwriters, severally and not jointly,
shall contribute in such proportion as is appropriate to reflect not only such
relative benefits but also the relative fault of the Company, the Selling
Stockholders and the Underwriters in connection with the statements or omissions
which resulted in such Losses as well as any other relevant equitable
considerations. Benefits received by the Company and the Selling Stockholders
shall be deemed to be equal to the total net proceeds from the offering (before
deducting expenses) received by each of them, and benefits received by the
Underwriters shall be deemed to be equal to the total underwriting discounts and
commissions, in each case as set forth on the cover page of the Prospectus.
Relative fault shall be determined by reference to whether any alleged untrue
statement or omission relates to information provided by the Company, the
Selling Stockholders or the Underwriters. The Company, the Selling Stockholders
and the Underwriters agree that it would not be just and equitable if
contribution were determined by pro rata allocation or any other method of
allocation which does not take account of the equitable considerations referred
to above. Notwithstanding the provisions of this paragraph (e), no person guilty
of fraudulent misrepresentation (within the meaning of Section 11(f) of the Act)
shall be entitled to contribution from any person who was not guilty of such
fraudulent misrepresentation. For purposes of this Section 8, each person who
controls an Underwriter within the meaning of either the Act or the Exchange Act
and each director, officer, employee and agent of an Underwriter shall have the
same rights to contribution as such Underwriter, and each person who controls
the Company or a Selling Stockholder within the meaning of either the Act or the
Exchange Act, each officer of the Company who shall have signed the Registration
Statement and each director of the Company shall have the same rights to
contribution as the Company, subject in each case to the applicable terms and
conditions of this paragraph (e).
<PAGE> 38
38
9. Default by an Underwriter. If any one or more Underwriters
shall fail to purchase and pay for any of the Securities agreed to be purchased
by such Underwriter or Underwriters hereunder and such failure to purchase shall
constitute a default in the performance of its or their obligations under this
Agreement, the remaining Underwriters shall be obligated severally to take up
and pay for (in the respective proportions which the amount of Securities set
forth opposite their names in Schedule I hereto bears to the aggregate amount of
Securities set forth opposite the names of all the remaining Underwriters) the
Securities which the defaulting Underwriter or Underwriters agreed but failed to
purchase; provided, however, that in the event that the aggregate amount of
Securities which the defaulting Underwriter or Underwriters agreed but failed to
purchase shall exceed 10% of the aggregate amount of Securities set forth in
Schedule I hereto, the remaining Underwriters shall have the right to purchase
all, but shall not be under any obligation to purchase any, of the Securities,
and if such nondefaulting Underwriters do not purchase all the Securities, this
Agreement will terminate without liability to any nondefaulting Underwriter, the
Selling Stockholders or the Company. In the event of a default by any
Underwriter as set forth in this Section 9, the Closing Date shall be postponed
for such period, not exceeding seven days, as the Representatives shall
determine in order that the required changes in the Registration Statement and
the Prospectus or in any other documents or arrangements may be effected.
Nothing contained in this Agreement shall relieve any defaulting Underwriter of
its liability, if any, to the Company, the Selling Stockholders and any
nondefaulting Underwriter for damages occasioned by its default hereunder.
10. Termination. This Agreement shall be subject to
termination in the absolute discretion of the Representatives, by notice given
to the Company prior to delivery of and payment for the Securities, if prior to
such time (i) trading in the Company's Common Stock shall have been suspended by
the Commission or the New York Stock Exchange or trading in securities generally
on the New York Stock Exchange shall have been suspended or limited or minimum
prices shall have been established on such Exchange, (ii) a banking moratorium
shall have been declared either by Federal or New York State authorities or
(iii) there shall have occurred any outbreak or escalation of hostilities,
declaration by the United States of a national emergency or war or other
calamity or crisis the effect of which on financial markets is such as to make
it, in the judgment of
<PAGE> 39
39
the Representatives, impracticable or inadvisable to proceed with the offering
or delivery of the Securities as contemplated by the Prospectus (exclusive of
any supplement thereto).
11. Representations and Indemnities to Survive. The respective
agreements, representations, warranties, indemnities and other statements of the
Company or its officers, of each Selling Stockholder and of the Underwriters set
forth in or made pursuant to this Agreement will remain in full force and
effect, regardless of any investigation made by or on behalf of any Underwriter,
any Selling Stockholder or the Company or any of the officers, directors or
controlling persons referred to in Section 8 hereof, and will survive delivery
of and payment for the Securities. The provisions of Sections 7 and 8 hereof
shall survive the termination or cancellation of this Agreement.
12. Notices. All communications hereunder will be in writing
and effective only on receipt, and, if sent to the Representatives, will be
mailed, delivered or telecopied and confirmed to them, care of Salomon Brothers
Inc, at Seven World Trade Center, New York, New York, 10048, telecopier (212)
783-4868, attention of Mr. Scott Henry; or, if sent to the Company or the
Selling Stockholders, will be mailed, delivered or telecopied and confirmed to
it or them at 2950 So. Industrial Road, Las Vegas, Nevada 89109, telecopier
(702) 792-7313, attention of the legal department.
13. Successors. This Agreement will inure to the benefit of
and be binding upon the parties hereto and their respective successors and the
officers, directors, agents and controlling persons referred to in Section 8
hereof, and no other person will have any right or obligation hereunder.
14. Applicable Law. This Agreement will be governed by and
construed in accordance with the laws of the State of New York without reference
to principles of conflict of law.
<PAGE> 40
40
15. Counterparts. This Agreement may be executed in one or
more of counterparts, each of which shall constitute an original, with the same
effect as if the signatures thereto and hereto were upon the same instrument.
If the foregoing is in accordance with your understanding of
our agreement, please sign and return to us the enclosed duplicate hereof,
whereupon this letter and your acceptance shall represent a binding agreement
among the Company, the Selling Stockholders and the several Underwriters.
Very truly yours,
BOYD GAMING CORPORATION,
by
____________________________________
Name:
Title:
SELLING STOCKHOLDERS,
by
____________________________________
Name:
Title: Custodian and
Attorney-in-Fact
for the Selling
Stockholders
named in
Schedule II to
this Agreement
<PAGE> 41
41
The foregoing Agreement is hereby confirmed and accepted as of the date first
above written.
SALOMON BROTHERS INC
GOLDMAN, SACHS & CO.
MONTGOMERY SECURITIES
RAYMOND JAMES & ASSOCIATES
by SALOMON BROTHERS INC
by
________________________
Name:
Title:
For themselves and the other
several Underwriters named in
Schedule I to the foregoing
Agreement
<PAGE> 42
42
SCHEDULE I
Number of
Shares of
Underwritten
Securities to
Underwriters be Purchased
Salomon Brothers Inc........................................ [ ]
Goldman, Sachs & Co......................................... [ ]
Montgomery Securities....................................... [ ]
Raymond James & Associates.................................. [ ]
Total.................................................. 5,337,786
=========
<PAGE> 43
43
SCHEDULE II
Selling Stockholders
SHARES
SUBJECT
TO OVER-
UNDERWRITTEN ALLOTMENT
NAME(S) SHARES OPTION
William S. Boyd 142,786 30,000
Marianne Boyd Johnson 180,000 20,000
William R. Boyd 180,000 20,000
Perry B. Whitt 100,000 10,000
Robert Boughner 150,000 25,000
Charles L. Ruthe 300,000 --
Ellis Landau 125,000 25,000
Samuel J. Boyd 100,000 --
Gregory W. Nelson 20,000 --
Al Garbian 40,000 --
TOTAL: 1,337,786 130,000
<PAGE> 1
EXHIBIT 23.1
INDEPENDENT AUDITORS' CONSENT
We consent to the use in Amendment No. 2 to Registration Statement No.
333-05521 of Boyd Gaming Corporation on Form S-3 relating to the offering of
$.01 par value Common Stock of our report dated August 23, 1996, appearing in
the Prospectus, which is part of this Registration Statement. We also consent to
the reference to us under the heading "Experts" in such Prospectus.
DELOITTE & TOUCHE LLP
Las Vegas, Nevada
September 23, 1996
<PAGE> 1
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 Amendment No. 2 to Form S-3
(Registration No. 333-05521) 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 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
September 23, 1996
