<PAGE> 1
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D. C. 20549
FORM 10-Q
(Mark One)
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended December 31, 1996
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR
15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from _______________ to _______________
Commission file number 1-12168
BOYD GAMING CORPORATION
(Exact name of registrant as specified in its charter)
NEVADA 88-0242733
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
2950 SOUTH INDUSTRIAL ROAD
LAS VEGAS, NEVADA
89109
(Address of principal executive offices)
(Zip Code)
(702) 792-7200
(Registrant's telephone number, including area code)
Indicate by check mark whether the registrant (1) has filed all
reports required to be filed by Section 13 or 15(d) of the Securities Exchange
Act of 1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to
filing requirements for the past 90 days.
Yes X No
--- ---
Shares outstanding of each of the Registrant's classes of common stock as of
January 31, 1997
Class Outstanding
----- -----------
Common stock, $.01 par value 61,363,015
<PAGE> 2
BOYD GAMING CORPORATION
FORM 10-Q
QUARTER ENDED DECEMBER 31, 1996
INDEX
<TABLE>
<CAPTION>
Page No.
--------
<S> <C> <C>
Part I. Financial Information
Item 1. Condensed Financial Statements
Consolidated Condensed Balance Sheets at December 31, 1996
and June 30, 1996 3
Consolidated Condensed Statements of Operations for the three and
six months ended December 31, 1996 and 1995 4
Consolidated Condensed Statements of Cash Flows for the six
months ended December 31, 1996 and 1995 5
Consolidated Condensed Statements of Changes in Stockholders' Equity
for the six months ended December 31, 1996 6
Notes to Consolidated Condensed Financial Statements 7
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations 10
Part II. Other Information
Item 4. Submission of Matters to a Vote of Security Holders 19
Item 6. Exhibits and Reports on Form 8-K 19
Signatures 20
</TABLE>
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<PAGE> 3
PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
BOYD GAMING CORPORATION AND SUBSIDIARIES
CONSOLIDATED CONDENSED BALANCE SHEETS (UNAUDITED)
<TABLE>
<CAPTION>
DECEMBER 31, JUNE 30,
(IN THOUSANDS, EXCEPT SHARE DATA) 1996 1996
- ----------------------------------------------------------------------------------------------------------------
<S> <C> <C>
ASSETS
Current assets
Cash and cash equivalents $ 70,426 $ 48,980
Accounts receivable, net 25,876 16,040
Inventories 8,850 6,531
Prepaid expenses 19,120 15,265
Income taxes receivable 7,144 --
---------- --------
Total current assets 131,416 86,816
Property, equipment and leasehold interests, net 887,334 797,593
Other assets and deferred charges 60,564 58,489
Goodwill and other intangible assets, net 125,091 10,527
---------- --------
Total assets $1,204,405 $953,425
========== ========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities
Current maturities of long-term debt $ 1,778 $ 4,031
Accounts payable 70,679 47,193
Accrued liabilities
Payroll and related 25,619 22,956
Interest and other 32,231 20,956
Income taxes payable -- 678
---------- --------
Total current liabilities 130,307 95,814
Long-term debt, net of current maturities 775,577 590,808
Deferred income taxes 33,717 33,546
Commitments
Stockholders' equity
Preferred stock, $.01 par value; 5,000,000 shares authorized -- --
Common stock, $.01 par value; 200,000,000 shares authorized;
61,363,015 and 57,213,720 shares outstanding 614 572
Additional paid-in capital 137,305 102,583
Retained earnings 126,885 130,102
---------- --------
Total stockholders' equity 264,804 233,257
---------- --------
Total liabilities and stockholders' equity $1,204,405 $953,425
========== ========
</TABLE>
The accompanying notes are an integral part of these consolidated financial
statements.
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<PAGE> 4
BOYD GAMING CORPORATION AND SUBSIDIARIES
CONSOLIDATED CONDENSED STATEMENTS OF OPERATIONS
(UNAUDITED)
(IN THOUSANDS, EXCEPT PER SHARE DATA)
<TABLE>
<CAPTION>
THREE MONTHS ENDED SIX MONTHS ENDED
DECEMBER 31, DECEMBER 31,
---------------------- ------------------------
1996 1995 1996 1995
- ------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Revenues
Casino $138,011 $142,714 $268,208 $269,408
Food and beverage 37,493 35,883 73,387 68,087
Rooms 18,248 17,335 35,449 34,330
Other 15,319 13,466 28,575 23,012
Management fees and joint ventures 10,094 9,746 20,406 20,210
-------- -------- -------- --------
Gross revenues 219,165 219,144 426,025 415,047
Less promotional allowances 20,052 18,855 40,175 35,698
-------- -------- -------- --------
Net revenues 199,113 200,289 385,850 379,349
-------- -------- -------- --------
Costs and expenses
Casino 73,858 69,917 145,928 131,425
Food and beverage 26,007 25,346 50,885 50,776
Rooms 5,784 5,830 12,044 12,299
Other 12,075 9,659 23,266 15,853
Selling, general and administrative 28,226 30,082 58,860 52,559
Maintenance and utilities 9,290 7,185 18,327 15,514
Depreciation and amortization 15,717 15,839 30,834 30,400
Corporate expense 4,315 5,151 10,744 10,510
Preopening expense 3,481 -- 3,481 10,004
-------- -------- -------- --------
Total 178,753 169,009 354,369 329,340
-------- -------- -------- --------
Operating income 20,360 31,280 31,481 50,009
-------- -------- -------- --------
Other income (expense)
Interest income 165 427 342 787
Interest expense, net of amounts
capitalized (13,811) (14,385) (27,069) (26,615)
-------- -------- -------- --------
Total (13,646) (13,958) (26,727) (25,828)
-------- -------- -------- --------
Income before provision for income taxes
and extraordinary item 6,714 17,322 4,754 24,181
Provision for income taxes 2,647 6,755 1,902 9,430
-------- -------- -------- --------
Income before extraordinary item 4,067 10,567 2,852 14,751
Extraordinary loss on early retirement
of debt 6,069 -- 6,069 --
-------- -------- -------- --------
Net income (loss) $ (2,002) $ 10,567 $ (3,217) $ 14,751
======== ======== ======== ========
NET INCOME (LOSS) PER COMMON SHARE
Net income before extraordinary item $ 0.07 $ 0.19 $ 0.05 $ 0.26
Extraordinary item (0.10) -- (0.10) --
-------- -------- -------- --------
Net income (loss) $(0.03) $ 0.19 $ (0.05) $ 0.26
======== ======== ======== ========
</TABLE>
The accompanying notes are an integral part of these
consolidated financial statements.
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<PAGE> 5
BOYD GAMING CORPORATION AND SUBSIDIARIES
CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS
(Unaudited)
(In thousands)
<TABLE>
<CAPTION>
Six Months Ended
December 31,
--------------------
1996 1995
- -------------------------------------------------------------------------------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES
Net income (loss) $ (3,217) $ 14,751
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation and amortization 30,834 30,400
Deferred income taxes 171 990
Extraordinary loss on early retirement of debt 6,069 --
Other 301 (17)
Changes in assets and liabilities:
Increase in accounts receivable, net (9,836) (1,266)
Increase in inventories (2,319) (602)
Increase in prepaid expenses (3,855) (2,098)
Increase in other assets (1,634) (2,825)
Increase in income taxes receivable (7,144) --
Increase in other current liabilities 33,016 23,036
Increase (decrease) in income taxes payable (678) 2,577
-------- --------
Net cash provided by operating activities 41,708 64,946
-------- --------
CASH FLOWS FROM INVESTING ACTIVITIES
Net cash paid for acquisition of Par-A-Dice
Hotel and Casino (170,725)
Acquisition of property, equipment and other assets (79,132) (71,256)
Proceeds from sale of riverboat 20,000 --
-------- --------
Net cash used in investing activities (229,857) (71,256)
-------- --------
CASH FLOWS FROM FINANCING ACTIVITIES
Early retirement of long-term debt (157,500) --
Proceeds from issuance of long-term debt 200,000 374
Net borrowings under credit agreements 150,850 (5,750)
Payments on long-term debt (18,334) (16,662)
Proceeds from issuance of common stock 34,579 1,150
-------- --------
Net cash provided by (used in) financing activities 209,595 (20,888)
-------- --------
NET INCREASE IN CASH AND CASH EQUIVALENTS 21,446 (27,198)
CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD 48,980 83,169
-------- --------
CASH AND CASH EQUIVALENTS, END OF PERIOD $ 70,426 $ 55,971
======== ========
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION
Cash paid for interest, net of amounts capitalized $ 29,950 $ 25,673
======== ========
Cash paid for income taxes $ 4,915 $ 5,881
======== ========
SUPPLEMENTAL SCHEDULE OF NON-CASH INVESTING AND
FINANCING ACTIVITIES
Property additions acquired on contracts and trade
payables which were accrued, but not yet paid $ 7,398 $ 3,545
======== ========
Acquisition of Par-A-Dice Hotel and Casino
Fair value of assets acquired $174,800 $ --
Cash paid 170,725 --
======== ========
Liabilities assumed $ 4,075 $ --
======== ========
</TABLE>
The accompanying notes are an integral part of these
consolidated financial statements.
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<PAGE> 6
BOYD GAMING CORPORATION AND SUBSIDIARIES
CONSOLIDATED CONDENSED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY
FOR THE SIX MONTHS ENDED DECEMBER 31, 1996
(Unaudited)
(In thousands, except share data)
- ------------------------------------------------------------------
<TABLE>
<CAPTION>
Common Stock Additional Total
------------------- Paid-In Retained Stockholder's
Shares Amount Capital Earnings Equity
---------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Balances, July 1, 1996 57,213,720 $572 $102,583 $130,102 $233,257
Net loss for the six months
ended December 31, 1996 (3,217) (3,217)
Issuance of common stock 4,000,000 40 33,493 33,533
Stock issued in connection
with employee stock
purchase plan 149,295 2 1,229 1,231
---------- ---- -------- -------- --------
Balances, December 31, 1996 61,363,015 $614 $137,305 $126,885 $264,804
========== ==== ======== ======== ========
</TABLE>
The accompanying notes are an integral part of these consolidated financial
statements.
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<PAGE> 7
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
NOTE 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Principles of Consolidation
The accompanying Consolidated Condensed 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 seven casino entertainment facilities in Las Vegas, Nevada, one in
Tunica, Mississippi, one in Kansas City, Missouri which opened in September
1995 and one in East Peoria, Illinois which was acquired in December 1996. The
Company manages a casino entertainment facility in Philadelphia, Mississippi,
which opened July 1, 1994, for which it has a seven year management contract.
The Company is also part owner of and manages a riverboat gaming operation in
Kenner, Louisiana which opened in September 1994. The Company has recently
entered into an agreement to sell its interest in the entity which owns the
Kenner gaming operation (See Note 3. Additional Information - Treasure Chest
Casino). All material intercompany accounts and transactions have been
eliminated.
Basis of Presentation
In the opinion of the Company, the accompanying unaudited Consolidated
Condensed Financial Statements contain all adjustments, consisting only of
normal recurring adjustments, necessary to present fairly the results of its
operations for the three and six months ended December 31, 1996 and 1995 and
its cash flows for the six months ended December 31, 1996 and 1995. It is
suggested that this report be read in conjunction with the Company's audited
financial statements included in the Annual Report on Form 10-K for the fiscal
year ended June 30, 1996. The operating results for the three and six months
ended December 31, 1996 and cash flows for the six months ended December
31, 1996 are not necessarily indicative of the results that will be achieved
for the full fiscal year or for future periods.
Net Income (Loss) Per Common Share
Net income (loss) per common share is based upon the weighted average number of
common stock and common stock equivalents outstanding during the period which
were 61,084,908 and 57,000,283 for the three months ended December 31, 1996 and
1995, respectively, and 59,149,914 and 56,999,650 for the six months ended
December 31, 1996 and 1995, respectively.
Use of Estimates
The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions
that affect the reported amounts of assets and liabilities at the date of the
financial statements and the reported amounts of revenues and expenses during
the reporting period. Actual results could differ from those estimates.
Goodwill and Other Intangible Assets
The excess of total acquisition costs over the fair value of assets acquired is
amortized using the straight-line method over 40 years.
-7-
<PAGE> 8
Recently Adopted Accounting Standards
The FASB issued SFAS No. 121, Accounting for the Impairment of Long-Lived
Assets to Be Disposed Of, in March 1995. This statement was adopted by the
Company for the fiscal year beginning July 1, 1996 and requires that long-lived
assets and certain identifiable intangibles to be held and used by an entity be
reviewed whenever events or changes in circumstances indicate that the carrying
amount of an asset may not be recoverable. The adoption of SFAS No. 121 did
not have an effect on the financial position or results of operations of the
Company as of December 31, 1996.
The FASB issued SFAS No. 123, Accounting for Stock-Based Compensation, in
October 1995. This statement was adopted by the Company for the fiscal year
beginning July 1, 1996 and requires certain disclosures about the impact on
results of operations of the fair value of stock based employee compensation
arrangements. Management intends to continue to account for stock based
employee compensation arrangements in accordance with Accounting Principles
Board No. 25, Accounting for Stock Issued to Employees, and accordingly
believes that adoption of SFAS No. 123 will not have a significant effect on
the financial position or results of operations of the Company. The Company
will include the pro forma effects of this statement in its notes to financial
statements for the year fiscal ending June 30, 1997.
NOTE 2. CAPITAL STOCK
Two hundred million shares of common stock with a par value of $.01 per share
are authorized, of which 61,363,015 and 57,213,720 shares were issued at
December 31, 1996 and June 30, 1996, respectively, including no treasury
shares at December 31, 1996 and June 30, 1996.
The Company has authorized 5,000,000 shares of $.01 par value preferred stock
of which no shares were issued at December 31, 1996 and June 30, 1996.
NOTE 3. ADDITIONAL INFORMATION
Sale of Riverboat
On August 23, 1996, the Company sold its riverboat Mary's Prize for $20 million
and retired debt of $17.6 million in connection therewith. Projects for which
Mary's Prize was constructed have either been delayed or did not materialize.
Debt and Equity Offerings
On October 4, 1996, the Company issued $200 million of 9.25% Senior Notes and
sold 4.0 million shares of the Company's Common Stock in two registered public
offerings. The net proceeds of these offerings of approximately $230 million
were used to reduce outstanding indebtedness under the Company's bank credit
facility.
On November 4, 1996, the Company redeemed its $150 million 10.75% Notes with
borrowings under its bank credit facility. As a result, the Company recognized
an extraordinary loss of $6.1 million, net of tax benefit of $3.3 million,
related to the early retirement of the 10.75% Notes.
-8-
<PAGE> 9
The $200 million in Senior Notes are guaranteed by all existing significant
subsidiaries of the Company. The guaranties are full, unconditional, and joint
and several. All of the Company's significant subsidiaries are wholly-owned.
Assets, equity, income and cash flows of all other subsidiaries of the Company
that do not guaranty the notes are less than 3% of the respective consolidated
amounts and are inconsequential, individually and in the aggregate, to the
Company. The Company has not included separate financial information of the
guarantors since such information is not material to investors.
The Company, through its wholly owned subsidiary California Hotel Finance
Company, has $185 million principal amount of 11% senior subordinated notes due
December 2002. The notes contain certain covenants regarding incurrence of
debt, sales and disposition of assets, mergers or consolidations and
limitations on restricted payments (as defined in the indenture to the notes).
As a result of these restrictions, at December 31, 1996 California Hotel and
Casino (a wholly owned subsidiary of the Company) had a portion of its retained
earnings and its net assets in the amounts of $31.7 million and $86.9 million ,
respectively, that were not available for distribution as dividends to the
Company.
Treasure Chest Casino
The Company has agreed to sell its 15% interest in Treasure Chest Casino L.L.C.,
owner of the Treasure Chest Casino in Kenner, Louisiana. The interest is being
purchased by both Treasure Chest Casino L.L.C. and its majority owner for a
purchase price of $15.2 million. The Company does not expect to record a
significant gain or loss on this sale. The sale, which is subject to various
governmental and regulatory approvals, is expected to close in the Company's
third fiscal quarter and will not result in a material gain or loss for the
Company. The Company, through its wholly owned subsidiary, Boyd Kenner, Inc.,
expects to manage Treasure Chest Casino until approximately October 1997.
Par-A-Dice Acquisition
On December 5, 1996 the Company completed the acquisition of Par-A-Dice Gaming
Corporation, owner and operator of the Par-A-Dice riverboat casino in East
Peoria, Illinois and East Peoria Hotel, Inc., the general partner of a
partnership which recently opened a 204-room hotel adjacent to the Par-A-Dice
casino for a purchase price of approximately $172 million subject to certain
adjustments as set forth in the stock purchase agreement. The fair value of the
net assets exceeded the purchase price by approximately $115 million. The pro
forma income statement effects of the acquisition as if it had occurred as of
July 1, 1995 are as follows:
SIX MONTHS ENDED
DECEMBER 31,
---------------------
PRO FORMA (IN THOUSANDS, EXCEPT PER SHARE DATA) 1996 1995
- ----------------------------------------------- --------- --------
Net revenues $428,998 $432,371
-------- --------
Income before extraordinary item $ 5,860 $ 18,699
-------- --------
Net income (loss) $ (209) $ 18,699
-------- --------
Net income (loss) per common share:
- ----------------------------------
Net income before extraordinary item $ .10 $ .33
-------- --------
Net income (loss) $ .00 $ .33
======== ========
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<PAGE> 10
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
RESULTS OF OPERATIONS
<TABLE>
<CAPTION>
Three Months Ended Six Months Ended
December 31, December 31,
----------------------------- ------------------------------
1996 1995 1996 1995
---------- ---------- ---------- ----------
<S> <C> <C> <C> <C>
NET REVENUES
Stardust $ 46,024 $ 48,612 $ 91,290 $ 96,406
Boulder Strip Properties 51,538 50,492 96,758 93,404
Downtown Properties 37,375 36,311 70,577 68,762
Central Region 60,465 64,086 119,432 119,989
-------- -------- -------- --------
TOTAL PROPERTIES $195,402 $199,501 $378,057 $378,561
-------- -------- -------- --------
OPERATING INCOME
Stardust $ 4,870 $ 7,114 $ 8,342 $ 12,917
Boulder Strip Properties 7,607 6,673 11,419 9,566
Downtown Properties 3,764 5,995 6,130 8,979
Central Region 12,581 17,747 21,782 40,888
Preopening expense (3,481) --- (3,481) (10,004)
-------- -------- -------- --------
TOTAL PROPERTIES $ 25,341 $ 37,529 $ 44,192 $ 62,346
======== ======== ======== ========
</TABLE>
THE ABOVE TABLE SETS FORTH FOR THE PERIODS INDICATED CERTAIN INCOME STATEMENT
DATA FOR THE COMPANY'S PROPERTIES. AS USED HEREIN, "BOULDER STRIP PROPERTIES"
CONSIST OF SAM'S TOWN LAS VEGAS, THE ELDORADO AND JOKERS WILD; "DOWNTOWN
PROPERTIES" CONSIST OF THE CALIFORNIA, THE FREMONT AND MAIN STREET STATION
(OPENED NOVEMBER 1996); AND "CENTRAL REGION" CONSIST OF SAM'S TOWN TUNICA, SAM'S
TOWN KANSAS CITY (OPENED SEPTEMBER 1995), PAR-A-DICE (ACQUIRED DECEMBER 1996),
MANAGEMENT FEE INCOME FROM SILVER STAR HOTEL AND CASINO, AND MANAGEMENT FEE AND
JOINT VENTURE INCOME FROM TREASURE CHEST CASINO. OPERATING INCOME FROM
PROPERTIES AS SHOWN IN THE TABLE EXCLUDES CORPORATE EXPENSE, INCLUDING RELATED
DEPRECIATION AND AMORTIZATION, AND THE RESULTS OF THE COMPANY'S HAWAIIAN TRAVEL
AGENCY, WHICH ITEMS ARE NOT ALLOCATED TO THE PROPERTIES.
REVENUES
Consolidated net revenues declined slightly for the three-month period
ended December 31, 1996 compared to the same period in the prior fiscal year
with Company-wide casino revenue declining 3.3%, food and beverage revenue
increasing 6.7% and rooms revenue increasing 2.7%. Consolidated net revenues
for the current fiscal quarter were enhanced by the opening of Main Street
Station Casino, Brewery and Hotel in downtown Las Vegas on November 22, 1996,
the acquisition of Par-A-Dice Hotel and Casino, located in East Peoria,
Illinois on December 5, 1996 and the opening of a new 350-room hotel tower at
Sam's Town Tunica in December 1996. In the Company's Nevada Region revenues
decreased slightly (.4%) for the three month period ended December 31, 1996
compared to the same period in the prior fiscal year. Revenues at the Stardust
declined 5.3% while revenues increased 2.1% at the Boulder Strip properties and
revenues increased 2.9% at the Downtown Properties for the current three month
period versus the comparable period of the prior year. The increase in
revenues at the Downtown Properties was attributable to revenues from Main
Street Station which opened in November 1996. In the Company's Central Region
revenues decreased 5.7% for the three months ended December 31,
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<PAGE> 11
1996 compared to the prior year period. Revenues from Par-A-Dice Hotel and
Casino, which was acquired in December 1996, partially offset declines in
revenues at Sam's Town Tunica and Sam's Town Kansas City. Management fee and
joint venture income increased 1.4% for the three months ended December 31,
1996.
Consolidated net revenues increased 1.7% for the six month period
ended December 31, 1996 compared to the same period in the prior fiscal year.
Company-wide casino revenue declined .4% and rooms revenue declined 4.1% from
the prior year while food and beverage revenue increased 6.7% compared to the
prior year. In the Company's Nevada Region revenues were unchanged for the six
month period ended December 31, 1996 compared to the same period in the prior
fiscal year. Revenue increases of 3.6% at the Boulder Strip Properties and
2.6% at the Downtown Properties were offset by a 5.3% decline in revenue at the
Stardust for the six month period. Revenues at the Downtown Properties were
enhanced for the six month period by the opening of Main Street Station in
November 1996. In the Central Region revenues declined slightly (.5%) for the
six months ended December 31, 1996. Central Region revenues were enhanced for
the six months ended December 31, 1996 with revenues from Par-A-Dice Hotel and
Casino, acquired in December 1996, the opening of a new 350-room hotel tower at
Sam's Town Tunica in December 1996 and Sam's Town Kansas City which operated
for only part of last year's first six month period.
OPERATING INCOME
Consolidated operating income for the second quarter of fiscal 1997
was $20.4 million versus $31.2 million in the prior year's second quarter.
Consolidated operating income for the current quarter includes preopening
expense of $3.5 million related to the opening of Main Street Station. The
decrease in consolidated operating income resulted from a 29% decline in
operating income in the Central Region and a 18% decline in operating income in
the Nevada Region. Operating income in the Central Region includes management
fees and joint venture income related to the Company's Silver Star Hotel and
Casino and Treasure Chest Casino operations. Consolidated operating income
margin declined to 10.2% from 15.6% for the second quarter of fiscal 1997
versus the same period in fiscal 1996. This decrease resulted primarily from
operating income margin in the Nevada Region declining to 12.0% from 14.6% and
operating income margin declining to 20.8% from 27.7% in the Central Region
for the second fiscal quarter of 1997 compared to the prior year's second
quarter.
Consolidated operating income for the six months ended December 31, 1996
was $31.5 million versus $50.0 million in the comparable period in the prior
fiscal year. Consolidated operating income for the current quarter includes
preopening expense of $3.5 million related to the opening of Main Street
Station. The decrease in consolidated operating income resulted primarily from a
47% decline in operating income in the Central Region and a 17.7% decline in
operating income in the Nevada Region. Consolidated operating income margin
declined to 8.2% from 13.2% for the six months ended December 31, 1996 compared
to the same period in the prior fiscal year. This decrease resulted primarily
from operating margin in the Nevada Region declining to 10.0% from 12.2% and
operating income margin in the Central Region declining to 18.2% from 34.1% for
the six months ended December 31, 1996 versus the comparable period in the prior
fiscal year.
-11-
<PAGE> 12
STARDUST
Net revenues at the Stardust decreased 5.3% for the second quarter of
fiscal 1997 versus the second quarter in the prior fiscal year. Casino revenue
declined 6.6% primarily as a result of lower win percentage in the race and
sports books partially offset by a 17% increase in wagering volume. Table
games and slots produced comparable wagering and win for the three months ended
December 31, 1996 versus the comparable period in the prior fiscal year. Rooms
revenue for the three months ended December 31, 1996 decreased 5.1% with a 1.2%
increase in occupied rooms offset by a .8% decline in average daily room rate.
Operating income decreased $2.2 million (32%) for the three months ended
December 31, 1996 versus the comparable period in the prior fiscal year.
Operating income margin for the second quarter of fiscal 1997 declined to 10.6%
from 14.6% in the prior year's second fiscal quarter. The decline in operating
income and operating income margin is primarily a result of lower revenues
leading to decreased operating income and operating income margins in the
casino and rooms departments and increased marketing and promotional expenses.
For the six months ended December 31, 1996 net revenues at the
Stardust decreased 5.3% compared to the comparable period in the prior fiscal
year. Casino revenue declined 6.0% as a result of lower win percentages in the
casino and race and sports book partially offset by increased wagering volumes.
Rooms revenue for the six months ended December 31, 1996 decreased 9.0% with a
1.2% increase in occupied rooms offset by an 1.7% decrease in average daily
room rate. Operating income margin for the six months ended December 31, 1996
declined to 9.1% from 13.4% in the prior year's six month period. Operating
income declined $4.6 million (35%) for the six months ended December 31, 1996
versus the comparable period in the prior fiscal year. The decline in
operating income and operating income margin is primarily a result of lower
revenues leading to decreased operating income and operating income margins in
the casino and rooms departments and increased marketing and promotional
expenses.
BOULDER STRIP PROPERTIES
Net revenues at the Boulder Strip Properties increased 2.1% for the
three months ended December 31, 1996 compared to the same period in the prior
fiscal year primarily as a result of a 3.0% increase in revenues at the Sam's
Town Las Vegas. Casino revenues at the Boulder Strip Properties increased 2.2%
for the three months ended December 31, 1996. Rooms revenue and food and
beverage revenue increased 22.5% and 4.1%, respectively, for the three months
ended December 31, 1996 compared to the comparable period in the prior fiscal
year. The operating income margin at the Boulder Strip Properties increase to
14.8% from 13.2% for the three months ended December 31, 1996 versus the
comparable period in the prior fiscal year due primarily to improved operating
margins at Sam's Town Las Vegas in the casino, rooms and food and beverage
departments.
For the six months ended December 31, 1996 net revenues at the Boulder
Strip Properties increased 3.6% compared to the same period in the prior fiscal
year primarily as a result of a 5.3% increase in revenues at Sam's Town Las
Vegas. Casino revenues at the Boulder Strip Properties increased 4.4% for the
six months ended December 31, 1996 versus the comparable period in the prior
fiscal year, while rooms revenue and food and beverage revenue increased
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<PAGE> 13
9.5% and 2.1%, respectively. The operating income margin in the Boulder Strip
Properties increased to 11.8% from 10.2% for the six months ended December 31,
1996 versus the comparable period in the prior fiscal year due primarily to
improved operating margins at Sam's Town Las Vegas in the casino, rooms and
food and beverage departments.
DOWNTOWN PROPERTIES
Net revenues at the Downtown Properties increased 2.9% for the three
months ended December 31, 1996 compared to the same period in the prior year as
a result of the opening of Main Street Station in November 1996. Net revenues
at the California decreased 15.7% for the three months ended December 31, 1996
with casino revenue declining 16.8%, rooms revenue declining 24.1 % and food
beverage revenue declining 9.1%. Casino revenue at the California declined as
a result of lower wagering volumes and a lower win percentage for the three
months ended December 31, 1996 versus the comparable period in the prior fiscal
year. Rooms revenue at the California declined as a result of a 8.1% decrease
in occupied rooms for the three months ended December 31, 1996 versus the
comparable period in the prior fiscal year. At the Fremont, net revenues
decreased 2.9% for the three months ended December 31, 1996 versus the
comparable period in the prior fiscal year with casino revenue decreasing 7.0%
and food and beverage increasing 7.8% while rooms revenue was unchanged.
Operating income margins at the Downtown Properties were 10.1% for the three
months ended December 31, 1996 versus 16.5% in the comparable period in the
prior fiscal year with operating income margins at both the California and
Fremont declining. Operating income margins at the California declined in the
casino and rooms departments as a result of lower revenues, while operating
income margins at the Fremont declined due to decreases in the casino and rooms
departments as a result of lower revenues which were partially offset by
increased margins in the food and beverage departments. Downtown Properties
results for the three months ended December 31, 1996 include Main Street
Station which opened in November 1996. Through December 31, 1996, Main Street
Station contributed $4.6 million in revenue and produced a small operating loss
before preopening expense. Upon commencement of operations a preopening charge
of $3.5 million was recorded.
Net revenues at the Downtown Properties increased 2.6% for the six
months ended December 31, 1996 compared to the same period in the prior fiscal
year. Net revenues at the California decreased 11.0% for the first six months
of fiscal 1997 with casino revenue declining 11.7%, rooms revenue declining
15.6% and food and beverage revenue declining 6.6%. All revenues were impacted
due to a rooms remodel project at the California in the first quarter of fiscal
1997. The California had approximately 15% of its rooms base unavailable in
the first fiscal quarter of 1997. At the Fremont, net revenues increased 3.9%
for the six month period ended December 31, 1996 versus the comparable period
in the prior fiscal year, with casino revenue increasing .7% and rooms and food
and beverage increasing .4% and 17.1%, respectively. Operating income margins
at the Downtown Properties were 8.7% for the six months ended December 31, 1996
versus 13.1 % in the comparable period in the prior fiscal year with operating
income margins at both the California and Fremont declining primarily as a
result of lower revenues. Operating income margins at the California declined
in the casino and rooms departments while operating income margins at the
Fremont declined due to decreases in the casino and rooms departments which
were partially offset by increased margins in the food and beverage
departments. Revenues for the Downtown Properties were enhanced in all
departments
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<PAGE> 14
by the opening of Main Street Station in November 1996 which contributed $4.6
million in revenues and produced a slight operating loss before preopening
expense.
CENTRAL REGION
The Central Region produced net revenues of $60.5 million for the
three months ended December 31, 1996 versus $64.1 million in last year's three
month period ended December 31, 1995. Sam's Town Tunica net revenues decreased
22.4% to 27.3 million in the second quarter of fiscal 1997 versus $35.1 million
in the second quarter of the prior fiscal year. Management fee and joint
venture income from Silver Star and Treasure Chest totaled $10.1 million for
the three months ended December 31, 1996 compared to $9.7 million in the prior
year's second fiscal quarter. Revenues for the three month period were
enhanced by the acquisition of Par-A-Dice Hotel and Casino on December 5, 1996
and the opening of a new 350-room hotel tower at Sam's Town Tunica. Par-A-Dice
produced net revenues of $7.5 million in its first 27 days of operation.
Operating income and operating income margin in the Central Region declined to
$12.6 million and 20.8%, respectively, for the second quarter of fiscal 1997
versus $17.7 million and 27.7%, respectively, in the comparable period in the
prior fiscal year. Contributing to the decline in operating income and
operating income margin in the Central Region was a $2.5 million operating loss
at Sam's Town Kansas City for the second quarter of fiscal 1997. Sam's Town
Kansas City continues to operate at a loss and management is currently
evaluating its options including additional aggressive cost containment
measures. In addition, Sam's Town Tunica reported a $4.3 million operating
income decline for the second fiscal quarter ended December 31, 1996 versus the
comparable period in the prior fiscal year. This decline was primarily due to
the effects of increased competition and the continuing effects of the
construction disruption related to a 350-room hotel addition along with an
additional 1,000 space parking garage. Both were open and operating in
December 1996. Operating income margin at Sam's Town Tunica declined to 14.2%
for the quarter ended December 31, 1996. The Central Region results include
the full revenues and income from Sam's Town Tunica, Sam's Town Kansas City
(opened September 1995), Par-A-Dice Hotel and Casino (acquired December 5,
1996), management fee income from Silver Star Hotel and Casino and management
fee and joint venture income from Treasure Chest Casino. The Company has
agreed to sell its 15% interest in Treasure Chest Casino L.L.C., owner of the
Treasure Chest Casino for a purchase price of $15.2 million. The sale,
which is subject to various governmental and regulatory approval is expected to
close during the Company's third quarter of fiscal 1997. The Company, through
its wholly owned subsidiary Boyd Kenner, Inc., expects to manage Treasure Chest
until approximately October 1997.
The Central Region produced net revenues of $119.4 million for the six
months ended December 31, 1996 versus $120.0 million in last year's comparable
period. Sam's Town Tunica net revenues decreased 24.0% to $57.5 million in the
first six months of fiscal 1997 versus $75.7 million for the first six months
of the prior fiscal year as a result of construction disruption and increased
competition in the Tunica market. Management fee and joint venture income from
Silver Star and Treasure Chest totaled $20.4 million for the six months ended
December 31, 1996 compared to $20.2 million in the prior year's first six
months. Revenues were enhanced by Sam's Town Kansas City, which was open for
the entire six months of the current year and produced net revenues of $34.0
million versus $24.1 million in last year's first six month period. Sam's Town
Kansas City opened September 13, 1995 and therefore only has 110 days of
results
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<PAGE> 15
included in the prior year period. In addition, revenues were enhanced by the
acquisition of Par-A-Dice Hotel and Casino on December 5, 1996. Par-A-Dice
produced $7.5 million in revenues in its first 27 days of operations.
Operating income and operating income margin in the Central Region declined to
$21.8 million and 18.2%, respectively, for the first six months of fiscal 1997
versus $40.9 million and 34.1%, respectively, in the comparable period in the
prior fiscal year. Contributing to the decline in operating income and
operating income margin in the Central Region was a $6.6 million operating loss
at Sam's Town Kansas City for the first six months of fiscal 1997. Sam's Town
Kansas City continues to operate at a loss and management continues to evaluate
its options including additional aggressive cost containment measures. In
addition, Sam's Town Tunica reported a $13.5 million operating income decline
for the first six months of fiscal 1997 versus the comparable period in the
prior fiscal year. This decline was primarily due to the effects of increased
competition and the continuing effects of the construction disruption related
to the 350-room hotel tower addition along with an additional 1,000 space
parking garage. Operating income margin at Sam's Town Tunica declined to 11.8%
for the six months ended December 31, 1996.
In accordance with the provisions of SFAS No. 121, management has been
reviewing, on a quarterly basis, whether anticipated net cash flows from Sam's
Town Kansas City will be sufficient to recover the Company's investment in that
property. At December 31, 1996, the Company had approximately $138 million in
recorded net long-lived assets and intangibles associated with Sam's Town Kansas
City. A number of factors are considered in the evaluation of recoverability,
including, but not limited to, anticipated revenues and the duration thereof,
expected operating costs, the competitive environment and future legislative and
regulatory changes. Although at December 31, 1996 the results of the Company's
analysis prepared in accordance with the provisions of SFAS No. 121 did not have
an effect on the carrying amount of Sam's Town Kansas City, there can be no
assurance that this will be true in future periods. Management will continue to
monitor the effects of SFAS No. 121 on the carrying amount of Sam's Town Kansas
City. In addition to such monitoring, the Company is continuing its efforts to
improve operating results at Sam's Town Kansas City through, among other things,
property enhancements and improving operating efficiencies. However, under
Missouri's restrictive gaming laws and given the current competitive environment
the Company believes significant improvement to acceptable levels is unlikely.
The Company is encouraging elected officials in Missouri to change existing
regulations principally wagering limits and simulated cruising requirements, to
allow for a more customer friendly gaming experience and a more profitable
gaming operation which in turn will enhance Missouri's goal of tax revenue
generation, job creation and general economic development. If some legislative
and regulatory relief is not forthcoming, the Company will evaluate its
alternatives with respect to its operations at Sam's Town Kansas City and the
possible write down of its investment in that property.
Included in the three and six month results ended December 31, 1996 is
a preopening charge of $3.5 million taken upon the opening of Main Street
Station in November 1996. A $10.0 million preopening charge was taken in the
prior year's first six months related to the opening of Sam's Town Kansas City.
Interest expense, net of amounts capitalized was $13.8 million for the
second quarter of fiscal 1997 compared to $14.4 million in the second quarter
of the prior year. The Company incurred lower interest expense for the quarter
ended December 31, 1996 as a result of lower net
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<PAGE> 16
borrowings during the second quarter of fiscal 1997 compared to the comparable
period in the prior year. Depreciation expense decreased slightly primarily as
a result of the opening of Sam's Town Kansas City and other expansion projects
offsetting lower depreciation on older properties in the Nevada Region.
Interest expense, net of amounts capitalized was $27.1 million for the
first six months of fiscal 1997 compared to $26.6 million in the prior years
first six months. Depreciation expense increased slightly with increased
depreciation from Sam's Town Kansas City and other expansion projects being
offset by lower depreciation in the Nevada Region.
In connection with the redemption of the Company's $150 million 10.75%
Notes the Company recognized an extraordinary loss of $6.1 million, net of tax,
in the second fiscal quarter of 1997.
As a result of these factors, the Company reported a net loss of $2.0
million in the second fiscal quarter of fiscal 1997 versus net income of $10.6
million in the prior years second fiscal quarter.
For the six months ended December 31,1996 the Company reported a net
loss of $3.2 million versus net income of $14.8 in the comparable period in the
prior fiscal year.
LIQUIDITY AND CAPITAL RESOURCES
For the six months ended December 31, 1996, the Company's principal
source of funds was net cash provided by operating activities and financing
activities. Net cash provided by operating activities was $41.8 million versus
$64.9 million in the prior year's first six months ended December 31, 1996.
Net cash provided by financing activities for the six months ended December 31,
1996 was $210 million which is primarily attributed to issuance of long-term
debt and proceeds received from the Company's issuance of 4.0 million shares of
common stock. As of December 31, 1996, the Company had balances of cash and
cash equivalents of approximately $70.4 million and had approximately $114
million available under bank credit agreements.
The Company's principal uses of funds for the six months ended
December 31, 1996 were cash used in investing activities, mainly for capital
expenditures. Net cash used in investing activities for the six months ended
December 31, 1996 was $230 million and included $172 million for the
acquisition of Par-A-Dice Hotel and Casino, completed on December 5, 1996.
In addition, $32 million was related to the Main Street Station project and
$32 million was related to a new 350-room hotel tower and a 1,000 space
parking garage project at Sam's Town Tunica.
On December 5, 1996 the Company completed the acquisition of
Par-A-Dice Gaming Corporation, owner and operator of the Par-A-Dice riverboat
casino in East Peoria, Illinois and East Peoria Hotel, Inc., the general
partner of a partnership which recently opened a 204-room hotel adjacent to the
Par-A-Dice casino. The total purchase price was approximately $172 million.
The Company's source of funds for the Par- A-Dice acquisition was borrowings
under its bank credit facility.
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<PAGE> 17
The Company, as part of its ongoing strategic planning process, has
recently completed a review of its current growth opportunities. Based on this
review, the Company expects to be focusing its growth efforts in two areas. In
Nevada, the Company has decided to refocus its efforts on the Stardust Resort &
Casino. The Company is considering the next phase of its master plan for the
Stardust, which calls for, among other things, as many as two additional hotel
towers. 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 continuing to
explore the feasibility of such a project. Outside Nevada, the Company is
focusing its efforts on its joint venture with Mirage Resorts, Inc. On May 29,
1996, the Company, through a wholly owned subsidiary, executed a joint venture
agreement with Mirage Resorts, Inc., (the "Mirage Joint Venture") to jointly
develop and own a casino hotel entertainment facility in the Marina district of
Atlantic City, New Jersey (the "Atlantic City Project"). The 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. On
January 10, 1997 Mirage and the State of New Jersey and South Jersey
Transportation Authority entered into a definitive agreement by which the
highway improvements can be funded and built. The Company's joint venture
agreement with Mirage 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 capital contributions primarily from cash flow from
operations and availability under its bank credit facility. During the first
quarter of fiscal 1997 the Company purchased a casino hotel site in Reno, Nevada
with plans to develop Sam's Town Reno on the site. The Company has determined
that the development of the Stardust Master Plan and the Atlantic City Project
should take priority over the Sam's Town Reno project at this time.
There can be no assurance that any of the above mentioned projects
will go forward and ultimately become operational. The source of funds
required to meet the Company's working capital needs (including maintenance
capital expenditures) and those required to complete the above mentioned
projects is expected to be cash on hand, cash flow from operations,
availability under its bank credit facility, new borrowings to the extent
permitted under existing debt agreements, the issuance of additional equity and
vendor and other financing. No assurance can be given that required financing
strategies can be effected on satisfactory terms.
The Bank Credit Facility contains certain financial and other covenants,
including, without limitation, various covenants (i) requiring the maintenance
of a minimum Tangible Net Worth, (ii) requiring the maintenance of a minimum
Fixed Charge Coverage Ratio, (iii) establishing a maximum permitted Funded Debt
to EBITDA, (iv) imposing limitations on the incurrence of additional
indebtedness and the creation of liens, (v) imposing limits on the maximum
permitted Maintenance Capital Expenditures, restrictions on Investments, 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. As of December 31, 1996, the Company is in compliance with
all of its covenants under its bank credit facility; however, to provide for
continued compliance with its covenants in future periods and to provide the
Company with greater flexibility, the Company is currently in discussions with
its banks to amend a number of those covenants.
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<PAGE> 18
The Company, through its wholly owned subsidiary California Hotel
Finance Company, has $185 million principal amount of 11% Senior Subordinated
Notes due December 2002. The Notes contain certain covenants, including but
not limited to limitations on restricted payments (as defined in the indenture
related to the notes). As a result of these restrictions, at December 31, 1996
California Hotel and Casino ( a wholly owned subsidiary of the Company) had a
portion of its retained earnings and net assets, in the amounts of $32.0
million and $87.2 million, respectively, that were not available for
distribution as dividends to the Company.
On October 4, 1996, the Company issued $200 million of 9.25% Senior
Notes and sold 4.0 million shares of the Company's Common Stock. The net
proceeds of these offerings of approximately $230 million were used to reduce
outstanding indebtedness under the Company's bank credit facility. On November
4, 1996, the Company redeemed its $150 million 10.75% Notes with borrowings
under its bank credit facility. Also, on August 23, 1996, the Company sold its
riverboat Mary's Prize for $20 million and retired debt of $17.6 million in
connection therewith.
PRIVATE SECURITIES LITIGATION REFORM ACT
The Private Securities Litigation Reform Act of 1995 provides a "safe
harbor" for forward looking statements. Certain information included in this
Form 10-Q and other materials filed or to be filed by the Company with the
Securities and Exchange Commission (as well as information included in oral
statements or other written statements made or to be made by the Company)
contains statements that are forward looking, such as statements relating to
plans for future expansion and other business development activities as well as
other capital spending, financing sources, and the effects of regulation (
including gaming and tax regulation) and competition. Such forward looking
statements involve important risks and uncertainties that could significantly
affect anticipated results in the future, and accordingly, actual results may
differ materially form those expressed in any forward looking statements made
by or on behalf of the Company. These risks and uncertainties include, but are
not limited to, those related to construction and development activities,
economic conditions, changes in tax laws, changes in laws or regulations
affecting gaming licenses, changes in competition, and factors affecting
leverage and debt service including sensitivity to fluctuation in interest
rates, and other factors described from time to time in the Company's reports
filed with the Securities and Exchange Commission, including the Company's Form
10-K for the year ended June 30, 1996 and its Registration Statements (File
Nos. 333-05555 and 333-05521) related to its recent offerings of 9.25% Senior
Notes and Common Stock. Any forward looking statements are made pursuant to
the Private Securities Litigation Reform Act of 1995 and, as such, speak only
as of the date made.
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<PAGE> 19
PART II. OTHER INFORMATION
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.
The Company held its Annual Meeting of Stockholders on November 22,
1996 to elect three Class II directors, to ratify the appointment of
the independent auditors of the Company and approve the Boyd Gaming
Corporation 1997 Stock Incentive Plan and authorize the number of
members of the Board of Director's to 15.
At the annual meeting, all of the nominees were elected as follows:
<TABLE>
<CAPTION>
VOTES
-----
FOR WITHHELD
--- --------
<S> <C> <C>
Class II (term expiring in 1999)
William R. Boyd 52,939,749 348,216
Warren L. Nelson 52,957,259 330,706
Donald D. Snyder 53,028,485 259,480
</TABLE>
In addition, the following individuals continue as directors:
Class III (term expiring in 1997)
Kenny Guinn
Marianne Boyd Johnson
Charles L. Ruthe
Class I (terms expiring in 1998)
William S. Boyd
Perry B. Whitt
The stockholders ratified the selection of Deloitte and Touche LLP as
independent auditors for the Company for the fiscal year ended June
30, 1997 with voting as follows: [53,131,338] for; [130,475] against;
[26,252] non-votes.
The stockholders approved the Boyd Gaming Corporation 1997 Stock
Incentive Plan as follows:
[51,078,854] for; [1,775,261] against; [120,439] non-votes.
The stockholders approved an increase in the authorized number of
members of the Board of Directors to 15 as follows: [52,117,957] for;
[1,125,188] against; [41,794] non-votes.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K.
(a) Exhibits.
3.1 Restated Bylaws
27. Financial Data Schedule
(b) Reports on form 8-K.
None.
(c) Amended By Laws and Articles
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<PAGE> 20
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of
1934, the Registrant has duly caused this report to be signed on its behalf by
the undersigned thereunto duly authorized.
BOYD GAMING CORPORATION
(Registrant)
Date: February 14, 1997 By /s/ Keith Smith
----------------------------------
Keith Smith
Senior Vice President and
Controller (Chief Accounting Officer)
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<PAGE> 1
EXHIBIT 3.1
RESTATED BY-LAWS OF
BOYD GAMING CORPORATION
(A NEVADA CORPORATION)
ARTICLE I
OFFICES
SECTION 1.1. Principal Office. The principal offices of the
corporation shall be in the City of Las Vegas, State of Nevada, or other
location as the Board of Directors may determine.
SECTION 1.2. Other Offices. The corporation may also have offices at
such other places both within and without the State of Nevada as the Board of
Directors may from time to time determine or the business of the corporation
may require.
ARTICLE 2
MEETINGS OF STOCKHOLDERS
SECTION 2.1. Place of Meeting. All meetings of stockholders shall be
held at such place, either within or without the State of Nevada, as shall be
designated from time to time by the Board of Directors and stated in the
notice of the meeting.
SECTION 2.2. Annual Meetings. The annual meeting of stockholders shall
be held at such date and time as shall be designated from time to time by the
Board of Directors and stated in the notice of the meeting.
SECTION 2.3. Special Meetings. Special meetings of the stockholders,
for any purpose or purposes, unless otherwise prescribed by statute or by the
Articles of Incorporation of the corporation, as amended (the "Articles of
Incorporation"), may be called by the Chairman of the Board, the President or by
the Board of Directors or by written order of a majority of the directors and
shall be called by the Chairman of the Board, the President or the Secretary at
the request in writing of stockholders owning a majority in amount of the entire
capital stock of the corporation issued and outstanding and entitled vote. Such
request shall state the purposes of the proposed meeting. The officers or
directors shall fix the time and any place, either within or without the State
of Nevada, as the place for holding such meeting.
SECTION 2.4. Notice of Meeting. Written notice of the annual and each
special meeting of stockholders, stating the time, place and purpose or
purposes thereof, shall be given to each stockholder entitled to vote thereat,
not less than 10 nor more than 60 days before the
1
<PAGE> 2
meeting and shall be signed by the Chairman of the Board, the President or the
Secretary of the Corporation.
SECTION 2.5. Business Conducted at Meetings. At a meeting of the
stockholders, only such business shall be conducted as shall have been
properly brought before the meeting. To be properly brought before a meeting,
business must be (a) specified in the notice of meeting (or any supplement
thereto) given by or at the direction of the Chairman of the Board, the
President or the Board of Directors, or (b) otherwise properly brought before
the meeting by a stockholders. For business to be properly brought before a
meeting by a stockholder, the stockholder must have given timely notice thereof
in writing to the Secretary of the corporation. To be timely, a stockholder's
notice must be delivered to or mailed and received at the principal executive
offices of the corporation not less than 60 days prior to the meeting. A
stockholder's notice to the Secretary shall set forth as to each matter the
stockholder proposes to bring before the meeting (a) the reasons for conducting
such business at the meeting, (b) the name and address, as they appear on the
corporation's books, of the stockholder proposing such business, (c) the class
and number of shares of the corporation which are beneficially owned by the
stockholder, and (d) any material interest of the stockholder in such business.
Notwithstanding anything in the by-laws to the contrary, no business shall be
conducted at a meeting except in accordance with the procedures set forth in
this Section 2.5. The Chairman of the meeting shall, if the facts warrant,
determine and declare to the meeting that business was not properly brought
before the meeting and in accordance with the provisions of this Section 2.5,
and, if he should so determine, he shall so declare to the meeting, and any
such business not properly brought before the meeting shall not be transacted.
SECTION 2.6. Nomination of Directors. Nomination of candidates for
election as directors of the corporation at any meeting of stockholders called
for election of directors, in whole or in part (an "Election Meeting"), may be
made by the Board of Directors or by any stockholder entitled to vote at such
Election Meeting, in accordance with the following procedures:
2.6.1. Nominations made by the Board of Directors shall be made at
a meeting of the Board or by written consent of the directors in lieu of a
meeting prior to the date of the Election Meeting. At the request of the
Secretary of the corporation, each proposed nominee shall provide the
corporation with such information concerning himself as is required, under the
rules of the Securities and Exchange Commission ("SEC"), to be included in the
corporation's proxy statement soliciting proxies for his election as a
director.
2.6.2. Not less than 60 days prior to the date of the Election
Meeting, any stockholder who intends to make a nomination at the Election
Meeting shall deliver a notice to the Secretary of the corporation setting
forth (a) the name, age, business address and the residence address of each
nominee proposed in such notice, (b) the principal occupation or employment
of such nominee, (c) the number of shares of capital stock of the corporation
which are beneficially owned by each such nominee, (d) such other information
concerning each such nominee as would be required, under the rules of the SEC,
in a proxy statement soliciting proxies
2
<PAGE> 3
for the election of such nominees. Such notice shall include a signed consent
to serve as a director of the-corporation, if elected, of each such nominee.
2.6.3. In the event that a person is validly designated as a
nominee in accordance with this Section 2.6 and shall thereafter become unable
or willing to stand for election to the Board of Directors, the Board of
Directors or the stockholder who proposed such nominee, as the case may be, may
designate a substitute nominee.
2.6.4. If the Chairman of the Election Meeting determines that a
nomination was not made in accordance with the foregoing procedures, such
nomination shall be void.
SECTION 2.7. Quorum. The holders of a majority of the stock issued and
outstanding and entitled to vote thereat, present in person or represented by
proxy, shall constitute a quorum at any meeting of stockholders for the
transaction of business except when stockholders are required to vote by class,
in which event a majority of the issued and outstanding shares of the
appropriate class shall be present in person or by proxy, and except as
otherwise provided by statute or by the Articles of Incorporation.
Notwithstanding any other provision of the Articles of Incorporation or by these
by-laws, the holders of a majority of the shares of capital stock entitled to
vote thereat, present in person or represented by proxy, whether or not a quorum
is present, shall have power to adjourn the meeting from time to time, without
notice other than announcement at the meeting, until a quorum shall be present
or represented. If the adjournment is for more than 30 days, or if after the
adjournment a new record date is fixed for the adjourned meeting, a notice of
the adjourned meeting shall be given to each stockholder of record entitled to
vote at the meeting. At such adjourned meeting at which a quorum shall be
present or represented any business may be transacted which might have been
transacted at the meeting as originally notified.
SECTION 2.8. Voting. When a quorum is present at any meeting of the
stockholders, the vote of the holders of a majority of the stock having
voting power present in person or represented by proxy shall decide any
question brought before such meeting, unless the question is one upon which, by
express provision of the statutes, of the Articles of Incorporation or of these
by-laws, a different vote is required, in which case such express provision
shall govern and control the decision of such question. Every stockholder
having the right to vote shall be entitled to vote in person, or by proxy
appointed by an instrument in writing subscribed by such stockholder or by his
duly authorized attorney; provided, however, that no such proxy shall be valid
after the expiration of six months from the date of its execution, unless
coupled with an interest, or unless the person executing it specifies therein
the length of time for which it is to continue in force, which in no case shall
exceed seven years from the date of its execution. If such instrument shall
designate two or more persons to act as proxies, unless such instrument shall
provide the contrary, a majority of such persons present at any meeting at
which their powers thereunder are to be exercised shall have and may exercise
all the powers of voting or giving consents thereby conferred, or if only one
be present, then such powers may be exercised by that one; or, if an even
number attend and a majority do not agree on any particular issue, each proxy
so attending shall be entitled to exercise such powers, in representing such
shares. Unless
3
<PAGE> 4
required by statute or determined by the Chairman of the meeting to be
advisable, the vote on any question need not be by written ballot. No
shareholder shall have cumulative voting rights.
SECTION 2.9. Consent of Stockholders. Whenever the vote of the
stockholders at a meeting thereof is required or permitted to be taken for
or in connection with any corporate action, the meeting and vote of
stockholders may be dispensed with if all the stockholders who would have been
entitled to vote upon the action if such meeting were held shall consent in
writing to such corporate action being taken; or if the Articles of
Incorporation authorize the action to be taken with the written consent of the
holders of less than all the stock who would have been entitled to vote upon
the action if a meeting were held, then on the written consent of the
stockholders having not less than such percentage of the number of votes as may
be authorized in the Articles of Incorporation; provided, that in no case shall
the written consent be by the holders of stock having less than the minimum
percentage of the vote required by statute, and provided that prompt notice
must be given to all stockholders of the taking of corporate action without a
meeting and less than unanimous written consent.
SECTION 2.10. Voting of Stock of Certain Holders. Shares standing in
the name of another corporation, domestic or foreign, may be voted by such
officer, agent or proxy as the by-laws of such corporation may prescribe,
or in the absence of such provision, as the Board of Directors of such
corporation may determine. Shares standing in the name of a deceased person
may be voted by the executor or administrator of such deceased person,
either in person or by proxy. Shares standing in the name of a guardian,
conservator or trustee may be voted by such fiduciary, either in person or by
proxy, but no such fiduciary shall be entitled to vote shares held in such
fiduciary capacity without a transfer of such shares into the name of such
fiduciary. Shares outstanding in the name of a receiver may be voted by such
receiver. A stockholder whose shares are pledged shall be entitled to vote
such shares, unless in the transfer by the pledgor on the books of the
corporation, he has expressly empowered the pledgee to vote thereon, in which
case only the pledgee, or his proxy, may represent the stock and vote thereon.
SECTION 2.11. Treasury Stock. The corporation shall not vote, directly
or indirectly, shares of its own stock owned by it; and such shares shall not
be counted in determining the total number outstanding shares.
SECTION 2.12. Fixing Record Date. The Board of Directors may fix in
advance a date, not exceeding 60 nor less than 10 days preceding the date of
any meeting of stockholders, or the date for payment of any dividend or
distribution, or the date for the allotment of rights, or the date when any
change or conversion or exchange of capital stock shall go into effect, or a
date in connection with obtaining a consent, as a record date for the
determination of the stockholders entitled to notice of, and to vote at any
such meeting and any adjournment thereof, or entitled to receive payment of any
such dividend or distribution, or to receive any such allotment of rights, or
to exercise the rights in respect of any such change, conversion or exchange of
capital stock, or to give such consent, and in such case such stockholders and
only such stockholders as shall be stockholders of record on the date so fixed
shall be entitled to such notice of and to vote at any such meeting and any
adjournment thereof, or to receive payment of such dividend or distribution, or
to receive such allotment of rights, or to exercise such rights, or
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to give such consent, as the case may be, notwithstanding any transfer of any
stock on the books of the corporation after any such record date fixed as
aforesaid.
ARTICLE 3
BOARD OF DIRECTORS
SECTION 3.1. Powers. The business and affairs of the corporation shall
be managed by its Board of Directors, which may exercise all such powers of
the corporation and do all such lawful acts and things as are not by statute
or by the Articles of Incorporation or by these by-laws directed or required
to be exercised or done by the stockholders.
SECTION 3.2. Number, Election and Term. The number of directors which
shall constitute the whole board shall be not less than five and not more than
fifteen. Within the limits above specified, the number of the directors of the
corporation shall be determined by resolution of the Board of Directors. The
directors shall be classified as set forth in the Articles of Incorporation.
Except as provided in Section 3.3, the directors shall be elected at the annual
meeting of stockholders and shall hold office until his successor is elected and
qualified. At each annual meeting of stockholders, the successors to the class
of directors whose term shall then expire shall be elected to hold office for a
term expiring at the third succeeding annual meeting. A minimum of two of the
directors must be "outside" directors. The term "outside" director shall mean a
director who is not an employee, officer or former officer of the corporation or
a subsidiary or division thereof, or a relative of a principal executive
officer, or who is not an individual member of an organization acting as an,
advisor, consultant, legal counsel, etc., receiving compensation on a continuing
basis from the corporation in addition to director's fees. Directors need not
be residents of Nevada or stockholders of the corporation.
SECTION 3.3. Vacancies, Additional Directors and Removal From
Office. If any vacancy occurs in the Board of Directors caused by death,
resignation, retirement, disqualification or removal from office of any
director, or otherwise, or if any new directorship is created by an increase in
the authorized number of directors, a majority of the directors then in office,
though less than a quorum, or a sole remaining director, may choose a successor
or fill the newly created directorship; any director so chosen shall hold office
until the next election of the class for which such director shall have been
chosen and until his successor shall be elected and qualified, unless sooner
displaced. No decrease in the number of directors constituting the Board of
Directors shall shorten the term of any incumbent director. Notwithstanding any
other provisions of these by-laws or the fact that some lesser percentage may be
specified by law, any director or the entire Board of Directors may be removed
at any time, but only for cause or only by the affirmative vote of the holders
of 66-2/3% or more of the outstanding shares of the capital stock of this
Corporation entitled to vote generally in the election of directors (considered
for this purpose as one class) cast at a meeting of the stockholders called for
that purpose.
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SECTION 3.4. Regular Meetings. A regular meeting of the Board of
Directors shall be held each year, without other notice than this by-law,
at the place of, and immediately following, the annual meeting of
stockholders; and other regular meetings of the Board of Directors shall be
held during each year, at such time and place as the Board of Directors may
from time to time provide by resolution, either within or without the State of
Nevada, without other notice than such resolution.
SECTION 3.5. Special Meeting. A special meeting of the Board of
Directors may be called by the Chairman of the Board or by the President and
shall be called by the Secretary on the written request of any two directors.
The Chairman of the Board or President so calling, or the directors so
requesting, any such meeting shall fix the time and any place, either within or
without the State of Nevada, as the place for holding such meeting.
SECTION 3.6. Notice of Special Meeting. Written notice of special
meetings of the Board of Directors shall be given to each director at
least 48 hours prior to the time of such meeting. Any director may waive
notice of any meeting. The attendance of a director at any meeting shall
constitute a waiver of notice of such meeting, except where a director attends
a meeting solely for the purpose of objecting to the transaction of any
business because the meeting is not lawful called or convened. Neither the
business to be transacted at, nor the purpose of, any special meeting of the
Board of Directors need be specified in the notice or waiver of notice of such
meeting, except that notice shall be given with respect to any matter where
notice is required by statute.
SECTION 3.7. Quorum. A majority of the Board of Directors shall
constitute a quorum for the transaction of business at any meeting of the
Board of Directors, and the act of a majority of the directors present at any
meeting at which there is quorum shall be the act of the Board of Directors,
except as may be otherwise specifically provided by statute, by the Articles of
Incorporation or by these by-laws. If a quorum shall not be present at any
meeting of the Board of Directors, the directors present thereat may adjourn
the meeting from time to time, without notice other than announcement at the
meeting, until a quorum shall be present.
SECTION 3.8. Action Without Meeting. Unless otherwise restricted by
the Articles of Incorporation or these by-laws, any action required or
permitted to be taken at any meeting of the Board of Directors, or of any
committee thereof as provided in Article IV of these by-laws, may be taken
without a meeting, if a written consent thereto is signed by all members of \
the Board or of such committee, as the case may be.
SECTION 3.9. Meeting by Telephone. Any action required or permitted
to be taken by the Board of Directors or any committee thereof may be
taken by means of a meeting by conference telephone network or similar
communications method so long as all persons participating in the meeting can
hear each other. Any person participating in such meeting shall be deemed to
be present in person at such meeting.
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ARTICLE 4
COMMITTEES OF DIRECTORS
SECTION 4.1. Executive Committee. The Board of Directors may, by
resolution passed by a majority of the whole Board, designate an Executive
Committee of the Board of Directors (the "Executive Committee"). If such a
committee is designated by the Board of Directors, it shall be composed of
members who are directors, and the members of the Executive Committee shall be
designated by the Board of Directors in the resolution appointing the Executive
Committee. Thereafter, the Board of Directors shall designate the members of
the Executive Committee on an annual basis at its first regular meeting held
pursuant to Section 3.4 of these by-laws after the annual meeting of
stockholders or as soon thereafter as conveniently possible. The Executive
Committee shall have and may exercise all of the powers of the Board of
Directors during the period between meetings of the Board of Directors except as
reserved to the Board of Directors or as delegated by these by-laws or by the
Board of Directors to another standing or special committee or as may be
prohibited by law.
SECTION 4.2. Audit Committee. The Audit Committee of the Board of
Directors (the "Audit Committee") shall be designated annually by the Board of
Directors at its first regular meeting held pursuant to Section 3.4 of these
by-laws after the annual meeting of stockholders or as soon thereafter as
conveniently possible. The Audit Committee shall consist solely of directors
who are independent of management and who are free from any relationship that,
in the opinion of the Board of Directors, would interfere with the designated
director's exercise of independent judgment as a member of the Audit Committee.
SECTION 4.3. Compensation and Stock Option Committee. The Compensation
and Stock Option Committee of the Board of Directors (the "Compensation and
Stock Option Committee") shall consist of two or more directors to be
designated annually by the Board of Directors at its first regular meeting
held pursuant to Section 3.4 of these by-laws after the annual meeting of
stockholders or as soon thereafter as conveniently possible. The Compensation
and Stock Option Committee shall consist of at least two "outside" directors.
SECTION 4.4. Other Committees. The Board of Directors may, by
resolution passed by a majority of the whole Board, designate one or more
additional special or standing committees, each such additional committee to
consist of one or more of the directors of the corporation. Each such
committee shall have and may exercise such of the powers of the Board of
Directors in the management of the business and affairs of the corporation as
may be provided in such resolution, except as delegated by these by-laws or by
the Board of Directors to another standing or special committee or as may be
prohibited by law.
SECTION 4.5. Committee Operations. A majority of a committee shall
constitute a quorum for the transaction of any committee business. Such
committee or committees shall have such name or names and such limitations of
authority as provided in these by-laws or as may be determined from time to
time by resolution adopted by the Board of Directors. The corporation
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shall pay all expenses of committee operations. The Board of Directors may
designate one or more appropriate directors as alternate members of any
committee, who may replace any absent or disqualified member at any meeting of
such committee. In the absence or disqualification of any members of such
committee or committees, the member or members thereof present at any meeting
and not disqualified from voting, whether or not he or they constitute a
quorum, may unanimously appoint another appropriate member of the Board of
Directors to act at the meeting in the place of any absent or disqualified
member.
SECTION 4.6. Minutes. Each committee of directors shall keep
regular minutes of its proceedings and report the same to the Board of
Directors when required. The Secretary or any Assistant Secretary of the
corporation shall (a) serve as the Secretary of the special or standing
committees of the Board of Directors of the corporation, (b) keep regular
minutes of standing or special committee proceedings, (c) make available to the
Board of Directors, as required, copies of all resolutions adopted or minutes
or reports of other actions recommended or taken by any such standing or
special committee and (d) otherwise as requested keep the members of the Board
of Directors apprised of the actions taken by such standing or special
committees.
SECTION 4.7. Compensation. Directors, as such may receive reasonable
compensation for their services which shall be set by the Board of Directors
and expenses of attendance at each regular or special meeting of the Board;
provided, however, that nothing herein contained shall be construed to
preclude any director from serving the corporation in any other capacity and
receiving additional compensation therefor. Members of special or standing
committees may be allowed like compensation for attending committee meetings.
ARTICLE 5
NOTICE
SECTION 5.1. Methods of Giving Notice. Whenever under the provisions
of the statutes, the Articles of Incorporation or these by-laws, notice is
required to be given to any director, member of any committee or stockholder,
personal notice is not required but such notice may be given in writing and
mailed to such director, member or stockholder; provided that in the case of a
director or a member of any committee such notice may be given orally or by
telephone or telegram. If mailed, notice to a director, member of a committee
or stockholder shall be deemed to be given when deposited in the United States
mail first class in a sealed envelope, with postage thereon prepaid, addressed,
in the case of a stockholder, to the stockholder at the stockholder's address as
it appears on the records of the corporation or, in the case of a director or a
member of a committee to such person at his business address. If sent by
telegraph, notice to a director or member of a committee shall be deemed to be
given when the telegraph, so addressed, is delivered to the telegraph company.
SECTION 5.2. Written Waiver. Whenever any notice is required to be
given by statute, the Articles of Incorporation or these by-laws, a waiver
thereof in writing, signed by the
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person or persons entitled to said notice, whether before or after the time
stated therein, shall be deemed equivalent thereto.
SECTION 5.3. Consent. Whenever all parties entitled to vote
at any meeting, whether of directors or stockholders, consent, either by a
writing on the records of the meeting or filed with the secretary, or by
presence at such meeting and oral consent entered on the minutes, or by taking
part in the deliberations at such meeting without objection, the actions taken
at such meeting shall be as valid as if had at a meeting regularly called and
noticed, and at such meeting any business may be transacted which is not
excepted from the written consent or to the consideration of which no objection
for lack of notice is made at the time, and if any meeting be irregular for
lack of notice or such consent, provided a quorum was present at such meeting,
the proceedings of such meeting may be ratified and approved and rendered valid
and the irregularity or defect therein waived by a writing signed by all
parties having the right to vote thereat. Such consent or approval, if given
by stockholders, may be by proxy or attorney, but all such proxies and powers
of attorney must be in writing.
ARTICLE 6
OFFICERS
SECTION 6.1. Officers. The Board of Directors shall elect and
appoint all. the officers of the corporation. The officers of the
corporation shall include, without limitation, the Chairman of the Board,
President, Secretary and Treasurer and such other officers and agents,
including, without limitation, one or more Vice Presidents (any one or more of
which may be designated Executive Vice President or Senior Vice President),
Assistant Vice Presidents, Assistant Secretaries and Assistant Treasurers, as
they deem necessary, who shall hold their offices for such terms and shall
exercise such powers and perform such duties as prescribed by the Board of
Directors or Chairman of the Board. Any two or more offices may be held by the
same person. No officer shall execute, acknowledge, verify or countersign any
instrument on behalf of the corporation in more than one capacity, if such
instrument is required by law, by these by-laws or by any act of the
corporation to be executed, acknowledged, verified or countersigned by two or
more officers. The Chairman of the Board shall be elected from among the
directors. With the foregoing exception, none of the other officers need be a
director, and none of the officers need be a stockholder of the corporation.
SECTION 6.2. Election and Term of Office. The officers of the
corporation shall be elected annually by the Board of Directors at its
first regular meeting held after the annual meeting of stockholders or as soon
thereafter as conveniently possible. Each officer shall hold office until his
successor shall have been chosen and shall have qualified or until his death or
the effective date of this resignation or removal, or until he shall cease to
be a director in the case of the Chairman of the Board.
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SECTION 6.3. Removal and Resignation. Any officer or agent may be
removed, either with or without cause, by the affirmative vote of a
majority of the Board of Directors whenever, in its judgment, the best
interests of the corporation shall be served thereby, but such removal shall be
without prejudice to the contractual rights, if any, of the person so removed.
Any executive officer or other officer or agent may resign at any time by
giving written notice to the corporation. Any such resignation shall take
effect at the date of the receipt of such notice or at any later time specified
therein, and unless otherwise specified therein, the acceptance of such
resignation shall not be necessary to make it effective.
SECTION 6.4. Vacancies. Any vacancy occurring in any office of the
corporation by death, resignation, removal or otherwise, shall be filled by
the Board of Directors for the unexpired portion of the term.
SECTION 6.5. Salaries. The salary of the Chief Executive Officer
shall be determined by the Compensation and Stock Option Committee.
Salaries of all other officers of the corporation shall be determined by the
Chief Executive Officer in consultation with the Compensation and Stock Option
Committee; and no officer who is also a director shall be prevented from
receiving such salary by reason of his also being a director.
SECTION 6.6. Chairman of the Board. The Chairman of the Board shall
preside at all meetings of the Board of Directors and of the stockholders
of the corporation. In the Chairman's absence, such duties shall be
attended to by the President. The Chairman of the Board shall hold the
position of chief executive officer of the corporation and shall perform shall
duties as usually pertain to the position of chief executive officer and such
duties as may be prescribed by the Board of Directors or the Executive
Committee. The Chairman of the Board shall formulate and submit to the Board
of Directors or the Executive Committee matters of general policy for the
corporation and shall perform such other duties as usually appertain to the
office or as may be prescribed by the Board of Directors. He may sign with the
President or any other officer of the corporation thereunto authorized by the
Board of Directors certificates for shares of the corporation, the issuance of
which shall have been authorized by resolution of the Board of Directors, and
any deeds or bonds, which the Board of Directors or the Executive Committee has
authorized to be executed, except in cases where the signing and execution
thereof has been expressly delegated or reserved by these by-laws or by the
Board of Directors or the Executive Committee to some other officer or agent of
the corporation, or shall be required by law to be otherwise executed.
SECTION 6.7. President. The President, subject to the control of the
Board of Directors, the Executive Committee, and the Chairman of the Board,
shall in general supervise and control the business and affairs of the
corporation. The President shall keep the Board of Directors, the Executive
Committee and the Chairman of the Board fully informed as they or any
of them shall request and shall consult them concerning the business of the
corporation. He may sign with the Chairman of the Board or any other officer
of the corporation thereunto authorized by the Board of Directors, certificates
for shares of capital stock of the corporation, the issuance of which shall
have been authorized by resolution of the Board of Directors, and any deeds,
bonds, mortgages, contracts, checks, notes, drafts or other instruments which
the Board of
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Directors or the Executive Committee has authorized to be executed, except in
cases where the signing and execution thereof has been expressly delegated by
these by-laws or by the Board of Directors or the Executive Committee to some
other officer or agent of the corporation, or shall be required by law to be
otherwise executed. In general he shall perform all other duties normally
incident to the office of the President, except any duties expressly delegated
to other persons by these by-laws, the Board of Directors, or the Executive
Committee, and such other duties as may be prescribed by the stockholders,
Chairman of the Board, the Board of Directors or the Executive Committee, from
time to time.
SECTION 6.8. Vice Presidents. In the absence of the President,
or in the event of his inability or refusal to act, the Executive Vice
President (or in the event there shall be or more than one Vice President
designated Executive Vice President, any Executive Vice President designated by
the Board) shall perform the duties an exercise the powers of the President.
Any Vice President authorized by resolution of the Board of Directors to do so,
may sign with any other officer of the corporation thereunto authorized by the
Board of Directors, certificates for shares of capital stock of the
corporation, the issuance of which shall have been authorized by resolution of
the Board of Directors. The Vice Presidents shall perform such other duties as
from time to time may be assigned to them by the Chairman of the Board, the
Board of Directors or the Executive Committee.
SECTION 6.9. Secretary. The Secretary shall (a) keep the minutes
of the meetings of the stockholders, the Board of Directors and committees
of directors; (b) see that all notices are duly given in accordance with
provisions of these by-laws and as required by law; (c) be custodian of
the corporate records and of the seal of the corporation, and see that the seal
of the corporation or a facsimile thereof is affixed to all certificates for
shares prior to the issuance thereof and to all documents, the execution of
which on behalf of the corporation under its seal is duly authorized in
accordance with the provisions of these by-laws; (d) keep or cause to be kept a
register of the post office address of each stockholder which shall be
furnished by such stockholder; (e) have general charge of other stock transfer
books of the corporation; and (f) in general, perform all duties normally
incident to the office of the Secretary and such other duties as from time to
time may be assigned to him by the Chairman of the Board, the President, the
Board of Directors or the Executive Committee.
SECTION 6.10. Treasurer. The Treasurer shall (a) have charge and
custody of and be responsible for all funds and securities of the
corporation; receive and give receipts for moneys due and payable to the
corporation from any source whatsoever and deposit all such moneys in the name
of the corporation in such banks, trust companies or other depositories as
shall be selected in accordance with the provisions of Section 7.3 of these
by-laws; (b) prepare, or cause to be prepared, for submission at each regular
meeting of the Board of Directors, at each annual meeting of stockholders, and
at such other times as may be required by the Board of Directors, the Chairman
of the Board, the President or the Executive Committee, a statement of
financial condition of the corporation in such detail as may be required; and
(c) in general, perform all the duties incident to the office of Treasurer and
such other duties as from time to time may be assigned to him by the Chairman
of the Board, the President, the Board of Directors or the Executive Committee.
If required by the Board of Directors or the Executive Committee, the
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Treasurer shall give a bond for the faithful discharge of his duties as such
sum and with such surety or sureties as the Board of Directors or the Executive
Committee shall determine.
SECTION 6.11. Assistant Secretary or Treasurer. The Assistant
Secretaries and Assistant Treasurers shall, in general, perform such duties as
shall be assigned to them by the Secretary or the Treasurer, respectively, or
by the Chairman of the Board, the President, the Board of Directors or the
Executive Committee. The Assistant Secretaries or Assistant Treasurers shall,
in the absence of the Secretary or Treasurer, respectively, perform all
functions and duties which such absent officers may delegate, but such
delegation shall not relieve the absent officer from the responsibilities and
liabilities of his office. The Assistant Treasurers shall respectively, if
required by the Board of Directors or the Executive Committee, give bonds for
the faithful discharge of their duties in such sums with such sureties as the
Board of Directors or the Executive Committee shall determine.
ARTICLE 7
CONTRACTS, CHECKS AND DEPOSITS
SECTION 7.1. Contracts. Subject to the provisions of Section 6.1,
the Board of Directors or the Executive Committee may authorize any officer,
officers, agent or agents, to enter into any contract or execute and deliver
an instrument 'n the name of and on behalf of the corporation, and such
authority may be general or confined to specific instances.
SECTION 7.2. Checks, etc. All checks, demands, drafts or other orders
for the payment of money, notes or other evidences of indebtedness issued
in the name of the corporation, shall be signed by such officer or officers
or such agent or agents of the corporation, and in such manner, as shall be
determined by the Board of Directors or the Executive Committee.
SECTION 7.3. Deposits. All funds of the corporation not otherwise
employed shall be deposited from time to time to the credit of the
corporation in such banks, trust companies or other depositories as the
Chairman of the Board, the President or the Treasurer may be empowered by the
Board of Directors or the Executive Committee to select or as the Board of
Directors or the Executive Committee may select.
ARTICLE 8
CERTIFICATE OF STOCK
SECTION 8.1. Issuance. Each stockholder of this corporation shall
be entitled to a certificate or certificates showing the number of shares of
stock registered in his name on the books of the corporation. The
certificates shall be in such form as may be determined by the
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Board of Directors or the Executive Committee, shall be issued in numerical
order and shall be entered in the books of the corporation as they are issued.
They shall exhibit the holder's name and the number of shares and shall be
signed by the Chairman of the Board and the President or such other officers as
may from time to time be authorized by resolution of the Board of Directors.
Any or all the signatures on the certificate may be a facsimile. The seal of
the corporation shall be impressed, by original or by facsimile, printed or
engraved, on all such certificates. In case any officer who has signed or
whose facsimile signature has been placed upon any such certificate shall have
ceased to be such officer before such certificate is issued, such certificate
may nevertheless be issued by the corporation with the same effect as if such
officer had not ceased to be such officer at the date of its issue. If the
corporation shall be authorized to issue more than one class of stock or more
than one series of any class, the designation, preferences and relative,
participating, option or other special rights of each class of stock or series
thereof and the qualifications, limitations or restrictions of such preferences
and rights shall be set forth in full or summarized on the face or back of the
certificate which the corporation shall issue to represent such class of stock;
provided that except as otherwise provided by statute, in lieu of the foregoing
requirements there may be set forth on the face or back of the certificate
which the corporation shall issue to represent such class or series of stock, a
statement that the corporation will furnish to each stockholder who so requests
the designations, preferences and relative, participating, option or other
special rights of each class of stock or series thereof and the qualifications,
limitations or restrictions of such preferences and rights. All certificates
surrendered to the corporation for transfer shall be canceled and no new
certificate shall be issued until the former certificate for a like number of
shares shall have been surrendered and canceled, except that in the case of a
lost, stolen, destroyed or mutilated certificate a new one may be issued
therefor upon such terms and with such indemnity, if any, to the corporation as
the Board of Directors may prescribe. In addition to the above, all
certificates evidencing shares of the corporation's stock or other securities
issued by the corporation shall contain such legend or legends as may from time
to time be required by the Nevada Revised Statutes and/or the Nevada Gaming
Commission Regulations then in effect.
SECTION 8.2. Lost Certificates. The Board of Directors may direct
that a new certificate or certificates be issued in place of any
certificate or certificates theretofore issued by the corporation alleged to
have been lost, stolen or destroyed, upon the making of an affidavit of that
fact by the person claiming the certificate of stock to be lost, stolen or
destroyed. When authorizing such issue of a new certificate or certificates,
the Board of Directors may, in its discretion and as a condition precedent to
the issuance thereof, require the owner of such lost, stolen or destroyed
certificate or certificates, or his legal representative, to advertise the same
in such manner as it shall require or to give the corporation a bond in such
sum as it may direct as indemnity against any claim that may be made against
the corporation with respect to the certificate or certificates alleged to have
been lost, stolen or destroyed, or both.
SECTION 8.3. Transfers. Upon surrender to the corporation or the
transfer agent of the corporation of a certificate for shares duly endorsed
or accompanied by proper evidence of succession, assignment or authority to
transfer, it shall be the duty of the corporation to issue a new certificate
and to the person entitled thereto, cancel the old certificate and record the
transaction upon its books. Transfers of shares shall be made only on the
books of the
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corporation by the registered holder thereof, or by his attorney thereunto
authorized by power of attorney and filed with the Secretary of the corporation
or the transfer agent.
SECTION 8.4. Registered Stockholders. The corporation shall be
entitled to treat the holder of record of any share or shares of stock as
the holder in fact thereof and, accordingly, shall not be bound to recognize
any equitable or other claim to or interest in such share or shares on the part
of any other person, whether or not it shall have express or other notice
thereof, except as otherwise provided by laws of the State of Nevada.
SECTION 8.5. Uncertificated Shares. The Board of Directors may approve
the issuance of uncertificated shares of some or all of the shares of any or
all of its classes or series of capital stock.
ARTICLE 9
DIVIDENDS
SECTION 9.1. Declaration. Dividends upon the capital stock of the
corporation, subject to the provisions of the Articles of Incorporation,
if any, may be declared by the Board of Directors at any regular or special
meeting, pursuant to law. Dividends may be paid in cash, in property or in
shares of capital stock, subject to the provisions of the Articles of
Incorporation.
SECTION 9.2. Reserve. Before payment of any dividend, there may be set
aside out of any funds of the corporation available for dividends such sum
or sums as the Board of Directors from time to time, in their absolute
discretion, think proper as a reserve or reserves to meet contingencies, or for
equalizing dividends, or for repairing or maintaining any property of the
corporation, or for such other purpose as the Board of Directors shall think
conducive to the interests of the corporation, and the Board of Directors may
modify or abolish any such reserve in the manner in which it was created.
ARTICLE 10
INDEMNIFICATION
SECTION 10.1. Third Party Actions. The corporation shall indemnify
any person who was or is a party or is threatened to be made a party to any
threatened, pending or completed action, suit or proceeding, whether civil,
criminal, administrative or investigative (other than an action by or in
the right of the corporation) by reason of the fact that he is or was a
director, officer, employee or agent of the corporation, or is or was serving
at the request of the corporation as a director, officer, employee or agent of
another corporation, partnership, joint venture, trust or other enterprise,
against expenses (including amounts paid in settlement and attorneys' fees),
judgments fines and amounts paid in settlement actually and reasonably incurred
14
<PAGE> 15
by him in connection with such action, suit or proceeding if he acted in good
faith and in a manner he reasonably believed to be in or not opposed to the
best interest of the corporation, and, with respect to any criminal action or
proceeding, had no reasonable cause to believe his conduct was unlawful. The
termination of any action, suit or proceeding by judgment, order, settlement,
conviction, or upon a plea of nolo contendere or its equivalent, shall not, of
itself create a presumption that the person did not act in good faith and in a
manner which he reasonably believed to be in or not opposed to the best
interests of the corporation, and, with respect to any criminal action or
proceeding, had reasonable cause to believe that his conduct was unlawful.
SECTION 10.2. Actions by or in the Right of the Corporation.
The corporation shall indemnify any person who was or is a party or is
threatened to be made a party to any threatened, pending or completed action or
suit by or in the right of the corporation to procure a judgment in its favor
by reason of the fact that he is or was a director, officer, employee or agent
of the corporation, or is or was serving at the request of the corporation as a
director, officer, employee or agent of another corporation, partnership, joint
venture, trust or other enterprise against expenses (including attorneys' fees)
actually and reasonably incurred by him in connection with the defense or
settlement of such action or suit if he acted in good faith and in a manner he
reasonably believed to be in or not opposed to the best interests of the
corporation. No indemnification shall be made in respect of any claim, issue
or matter as to which such person shall have been adjudged by a court of
competent jurisdiction to be liable to the corporation or for amounts paid in
settlement to the corporation, unless and only to the extent that the court in
which such action or suit was brought or other court of competent jurisdiction
shall determine upon application that in view of all the circumstances of the
case, such person is fairly and reasonably entitled to indemnify for such
expenses as the court shall deem proper.
SECTION 10.3. Successful Defense. To the extent that a director,
officer, employee or agent of the corporation has been successful on the
merits or otherwise in defense of any action, suit or proceeding referred
to in Sections 10.1 and 10.2, or in defense of any claim, issue or matter
therein, he shall be indemnified against expenses (including attorneys' fees)
actually and reasonably incurred by him in connection with the defense.
SECTION 10.4. Determination of Conduct. Any indemnification under
Section 10. 1 or 10.2 (unless ordered by a court or advanced pursuant to
Section 10.5) shall be made by the corporation only as authorized in the
specific case upon a determination that indemnification of the director,
officer, employee or agent is proper in the circumstances. Such determination
shall be made (a) by the stockholders, (b) by the Board of Directors by a
majority vote of a quorum consisting of directors who were not parties to such
action, suit or proceeding, (c) if a majority vote of a quorum consisting of
directors who were not parties to the act, suit or proceedings so orders, by
independent legal counsel in a written opinion, or (d) if a quorum consisting
of directors who were not parties to the act, suit or proceeding cannot be
obtained, by independent legal counsel in a written opinion.
SECTION 10.5. Payment of Expenses in Advance. Expenses incurred in
defending a civil or criminal action, suit or proceeding shall be paid by the
corporation as they are incurred and in advance of the final disposition of
such action, suit or proceeding upon receipt of an
15
<PAGE> 16
undertaking by or on behalf of the director or officer, to repay such amount if
it is ultimately determined by a court of competent jurisdiction that he is not
entitled to be indemnified by the corporation. The provisions of this Section
10.5 do not affect any rights to advancement of expenses to which corporate
personnel other than directors or officers may be entitled under any contract
or otherwise by law.
SECTION 10.6. Indemnity Not Exclusive. The indemnification and
advancement of expenses authorized in or order by a court provided
hereunder shall not exclude any other rights to which a person seeking
indemnification or advancement of expenses may be entitled under the Articles
of Incorporation, agreement, vote of stockholders or disinterested directors or
otherwise, for either an action in his official capacity or an action in
another capacity while holding his office, except that indemnification, unless
ordered by a court pursuant to Section 10.2 or for the advancement of expenses
made pursuant to Section 10.5, may not be made to or on behalf of any director
or officer if a final adjudication establishes that his acts or omissions
involved intentional misconduct, fraud or a knowing violation of the law and
was material to the cause of action, and shall continue for a person who has
ceased to be a director, officer, employee or agent and insures to the benefit
of the heirs, executors and administrators of such a person.
SECTION 10.7. The Corporation. For purposes of this Article 10,
references to "the corporation" shall include, in addition to the resulting
corporation, any constituent corporation (including any constituent of a
constituent) absorbed in a consolidation or merger which, if its separate
existence had continued, would have had power and authority to indemnify its
directors, officers and employees or agents, so that any person who is or was a
director, officer, employee or agent of such constituent corporation, or is or
was serving at the request of such constituent corporation as a director,
officer, employee or agent of another corporation, partnership, joint venture,
trust or other enterprise, shall stand in the same position under and subject
to the provisions of this Article 10 (including, without limitation, the
provisions of Section 10.4) with respect to the resulting or surviving
corporation as he would have with respect to such constituent corporation if
its separate existence had continued.
ARTICLE 11
MISCELLANEOUS
SECTION 11.1. Seal. The corporate seal shall have inscribed thereon
the name of the corporation, and the words "Corporate Seal, Nevada." The seal
may be used by causing it or a facsimile thereof to the impressed or affixed
or otherwise reproduced.
SECTION 11.2. Books. The books of the corporation may be kept within
or without the State of Nevada (subject to any provisions contained in the
statutes) at such place or places as may be designated from time to time by
the Board of Directors or the Executive Committee.
16
<PAGE> 17
SECTION 11.3. Fiscal Year. The fiscal year of the corporation shall
begin the first day of July of each year or upon such other day as may be
designated by the Board of Directors.
ARTICLE 12
AMENDMENT
Subject to the provisions of the Articles of Incorporation, these
by-laws may be altered, amended, or repealed at any regular meeting of the
stockholders (or at any special meeting thereof duly called for the purpose) by
a majority vote of the shares represented and entitled to vote at such meeting.
Subject to the laws of the State of Nevada, the Board of Directors may, by
majority vote of those present at any meeting at which a quorum is present,
amend these by-laws, or enact such other by-laws as in their judgment may be
advisable for the regulation of the conduct of the affairs of the corporation.
17
<PAGE> 18
CERTIFICATE OF AMENDMENT OF
ARTICLES OF INCORPORATION
OF
BOYD GAMING CORPORATION
The undersigned hereby certify as follows:
1. That they are the Vice President and Secretary, respectively, of
BOYD GAMING CORPORATION.
2. That at a meeting of the stockholders held on November 22, 1996,
the stockholders voted to adopt the amendment to the corporation's Articles of
Incorporation as set forth in Paragraph 3 following. The amendment below is
adopted by the holders of 52,117,957 shares of the Corporation's $.01 par value
common stock representing approval of the amendment by the holders of
approximately 85% of the shares entitled to vote with respect to such
amendment. The total number of outstanding shares of common stock of the
corporation having voting power with respect to such amendment is 61,213,720.
3. That at a meeting of the Board of Directors held on November 22,
1996, the Directors of the corporation adopted the following resolution to
amend the Articles of Incorporation:
RESOLVED: That Article VIII, Section A of the Articles of Incorporation
of the corporation, as restated and filed with the Secretary of State
for the State of Nevada on March 17, 1994, shall be further amended and
restated in its entirety to read as follows:
A. Number of Directors.
The number of directors of the Corporation shall not be less
than five (5) nor more than fifteen (15) until changed by amendment of
the Articles of Incorporation. The exact number of members constituting
the Board of Directors shall be fixed from time to time within the
limits specified in the Articles of Incorporation by the Board of
Directors pursuant to a resolution adopted by a majority of the total
number of authorized directors.
The first board of directors, consisting of five (5) members,
is constituted as follows:
1
<PAGE> 19
1. Samuel A. Boyd 3000 Las Vegas Boulevard South
Las Vegas, Nevada 89109
2. William S. Boyd 3000 Las Vegas Boulevard South
Las Vegas, Nevada 89109
3. Perry B. Whit 3000 Las Vegas Boulevard South
Las Vegas, Nevada 89109
4. Charles L. Ruthe 3000 Las Vegas Boulevard South
Las Vegas, Nevada 89109
5. Warren L. Nelson 3000 Las Vegas Boulevard South
Las Vegas, Nevada 89109
IN WITNESS WHEREOF, the undersigned have executed this Amendment to
Articles of Incorporation on this 30 day of December, 1996.
/s/ WILLIAM R. BOYD
-------------------------------
WILLIAM R. BOYD, Vice President
/s/ CHARLES E. HUFF
--------------------------------
CHARLES E. HUFF, Secretary
STATE OF NEVADA )
) ss:
COUNTY OF CLARK )
On this 30 day of December, 1996, personally appeared before me, a
Notary Public, WILLIAM R. BOYD and CHARLES E. HUFF, as Vice President and
Secretary, respectively, of Boyd Gaming Corporation who acknowledged that they
executed the foregoing Certificate of Amendment to Articles of Incorporation on
behalf of said corporation.
/s/ E. GAE JOYCE
-------------------------------------
Notary Public
2
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