<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 period ended September 30, 1999
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR
15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from ________ to ________
Commission file number 1-12168
BOYD GAMING CORPORATION
(Exact name of registrant as specified in its charter)
NEVADA 88-0242733
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
2950 SOUTH INDUSTRIAL ROAD
LAS VEGAS, NEVADA
89109
(Address of principal executive offices)
(Zip Code)
(702) 792-7200
(Registrant's telephone number, including area code)
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to filing requirements
for the past 90 days.
Yes [X] No [__]
Shares outstanding of each of the Registrant's classes of common stock as of
October 31, 1999:
Class Outstanding
----- -----------
Common stock, $.01 par value 62,221,218
<PAGE> 2
QUARTERLY REPORT ON FORM 10-Q
FOR THE PERIOD ENDED SEPTEMBER 30, 1999
TABLE OF CONTENTS
PART I. FINANCIAL INFORMATION
<TABLE>
<CAPTION>
Page No.
--------
<S> <C>
Item 1. Unaudited Condensed Consolidated Financial Statements
Condensed Consolidated Balance Sheets at September 30, 1999
and December 31, 1998 3
Condensed Consolidated Statements of Operations for the
three and nine month periods ended September 30, 1999 and 1998 4
Condensed Consolidated Statement of Changes in Stockholders'
Equity for the nine month period ended September 30, 1999 5
Condensed Consolidated Statements of Cash Flows for the nine
month periods ended September 30, 1999 and 1998 6
Notes to Condensed Consolidated Financial Statements 7
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations 18
Item 3. Quantitative and Qualitative Disclosure about Market Risk 27
PART II. OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K 28
Signature Page 29
</TABLE>
-2-
<PAGE> 3
PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
BOYD GAMING CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>
(UNAUDITED) SEPTEMBER 30, DECEMBER 31,
(IN THOUSANDS, EXCEPT SHARE DATA) 1999 1998
- -------------------------------------------------------------------------------------------------
<S> <C> <C>
ASSETS
Current assets
Cash and cash equivalents $ 63,946 $ 75,937
Accounts receivable, net 17,735 21,988
Inventories 7,278 9,567
Prepaid expenses and other 16,949 17,333
Income taxes receivable 647 11,065
Deferred income taxes 18,777 5,855
---------- ----------
Total current assets 125,332 141,745
Property and equipment, net 775,433 763,207
Other assets and deferred charges, net 43,644 38,690
Intangible assets, net 198,550 202,614
---------- ----------
Total assets $1,142,959 $1,146,256
========== ==========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities
Current maturities of long-term debt $ 2,097 $ 1,961
Accounts payable 30,858 32,065
Accrued liabilities
Payroll and related 26,974 29,465
Interest and other 54,630 54,162
---------- ----------
Total current liabilities 114,559 117,653
Long-term debt, net of current maturities 714,041 774,890
Deferred income taxes and other 56,803 26,407
Commitments and contingencies
Stockholders' equity
Preferred stock, $.01 par value; 5,000,000 shares authorized -- --
Common stock, $.01 par value; 200,000,000 shares authorized;
62,215,232 and 62,027,514 shares outstanding 622 620
Additional paid-in capital 141,920 140,616
Retained earnings 115,014 86,070
---------- ----------
Total stockholders' equity 257,556 227,306
---------- ----------
Total liabilities and stockholders' equity $1,142,959 $1,146,256
========== ==========
</TABLE>
The accompanying notes are an integral part of these condensed consolidated
financial statements.
-3-
<PAGE> 4
BOYD GAMING CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
<TABLE>
<CAPTION>
THREE MONTHS ENDED NINE MONTHS ENDED
(UNAUDITED) SEPTEMBER 30, SEPTEMBER 30,
----------------------- -----------------------
(IN THOUSANDS, EXCEPT PER SHARE DATA) 1999 1998 1999 1998
- --------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Revenues
Casino $175,778 $173,466 $533,533 $541,003
Food and beverage 37,834 38,589 118,779 121,097
Room 17,038 18,232 53,812 55,110
Other 17,469 16,410 53,560 52,151
Management fee 13,976 10,247 34,820 30,606
-------- -------- -------- --------
Gross revenues 262,095 256,944 794,504 799,967
Less promotional allowances 22,580 22,351 69,795 69,847
-------- -------- -------- --------
Net revenues 239,515 234,593 724,709 730,120
-------- -------- -------- --------
Costs and expenses
Casino 89,412 89,174 268,777 276,149
Food and beverage 25,216 26,105 77,242 79,514
Room 5,795 6,161 17,978 18,643
Other 16,339 16,671 48,843 48,947
Selling, general and administrative 34,375 35,645 104,652 111,440
Maintenance and utilities 11,429 10,956 30,974 31,069
Depreciation and amortization 17,478 17,940 54,744 54,938
Corporate expense 5,409 3,169 18,098 13,755
Preopening expense (primarily
unconsolidated subsidiary) 354 -- 1,208 --
Restructuring charge -- -- -- 5,925
-------- -------- -------- --------
Total 205,807 205,821 622,516 640,380
-------- -------- -------- --------
Operating income 33,708 28,772 102,193 89,740
-------- -------- -------- --------
Other income (expense)
Interest income 137 87 240 293
Interest expense, net of amounts capitalized (16,539) (18,443) (50,332) (56,462)
-------- -------- -------- --------
Total (16,402) (18,356) (50,092) (56,169)
-------- -------- -------- --------
Income before provision for income taxes and
cumulative effect of a change in accounting
principle 17,306 10,416 52,101 33,571
Provision for income taxes 6,969 4,479 21,419 14,276
-------- -------- -------- --------
Income before cumulative effect of a change in
accounting principle 10,337 5,937 30,682 19,295
Cumulative effect of a change in accounting for
start-up activities, net of tax benefit of $936 -- -- 1,738 --
-------- -------- -------- --------
Net income $ 10,337 $ 5,937 $ 28,944 $ 19,295
======== ======== ======== ========
BASIC AND DILUTED NET INCOME PER COMMON SHARE
Income before cumulative effect of a change in
accounting principle $ 0.17 $ 0.10 $ 0.50 $ 0.31
Cumulative effect of a change in accounting for
start-up activities, net of tax -- -- (0.03) --
-------- -------- -------- --------
Net income $ 0.17 $ 0.10 $ 0.47 $ 0.31
======== ======== ======== ========
Average basic shares outstanding 62,213 61,826 62,091 61,723
Average diluted shares outstanding 62,431 61,831 62,201 61,857
======== ======== ======== ========
</TABLE>
The accompanying notes are an integral part of these condensed consolidated
financial statements.
-4-
<PAGE> 5
BOYD GAMING CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY
FOR THE NINE MONTH PERIOD ENDED SEPTEMBER 30, 1999 (UNAUDITED)
(IN THOUSANDS, EXCEPT SHARE DATA)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
COMMON STOCK ADDITIONAL TOTAL
------------------------ PAID-IN RETAINED STOCKHOLDERS'
SHARES AMOUNT CAPITAL EARNINGS EQUITY
------------------------ ---------- -------- -------------
<S> <C> <C> <C> <C> <C>
Balances, January 1, 1999 62,027,514 $620 $140,616 $ 86,070 $227,306
Net income -- -- -- 28,944 28,944
Stock issued in connection with employee
stock purchase plan 179,801 2 1,256 -- 1,258
Stock options exercised 7,917 -- 48 -- 48
---------- ---- -------- -------- --------
Balances, September 30, 1999 62,215,232 $622 $141,920 $115,014 $257,556
========== ==== ======== ======== ========
</TABLE>
The accompanying notes are an integral part of these condensed
consolidated financial statements.
-5-
<PAGE> 6
BOYD GAMING CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
NINE MONTHS ENDED
SEPTEMBER 30,
(UNAUDITED) ------------------------------
(IN THOUSANDS) 1999 1998
- ----------------------------------------------------------------------------- ------------------------------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES
Net income $ 28,944 $ 19,295
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation and amortization 54,744 54,938
Cumulative effect of a change in accounting for start-up activities 2,674 --
Deferred income taxes 17,074 19,124
Restructuring charge -- 5,925
Equity loss in unconsolidated subsidiary 1,003 --
Changes in assets and liabilities:
Accounts receivable, net 1,496 1,030
Inventories 2,289 1,498
Prepaid expenses and other (2,290) (2,576)
Income taxes receivable 10,418 (9,296)
Other assets (2,061) (3,550)
Other current liabilities 548 (1,726)
Other liabilities 400 --
--------- --------
Net cash provided by operating activities 115,239 84,662
--------- --------
CASH FLOWS FROM INVESTING ACTIVITIES
Acquisition of property, equipment and other assets (65,449) (44,451)
Investment in and advances to unconsolidated subsidiary (4,185) --
Proceeds from sale of Sam's Town Kansas City's assets 2,000 10,500
--------- --------
Net cash used in investing activities (67,634) (33,951)
--------- --------
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from issuance of common stock 1,118 762
Proceeds from issuance of debt -- 8,000
Net payments under bank credit facility (59,250) (67,250)
Payments on long-term debt (1,464) (2,449)
--------- --------
Net cash used in financing activities (59,596) (60,937)
--------- --------
Net decrease in cash and cash equivalents (11,991) (10,226)
Cash and cash equivalents, beginning of period 75,937 78,277
--------- --------
Cash and cash equivalents, end of period $ 63,946 $ 68,051
========= ========
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION
Cash paid for interest, net of amounts capitalized $ 50,986 $ 56,617
========= ========
Cash paid for income taxes $ 4,182 $ 5,066
========= ========
</TABLE>
The accompanying notes are an integral part of these
condensed consolidated financial statements.
-6-
<PAGE> 7
BOYD GAMING CORPORATION AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
- --------------------------------------------------------------------------------
NOTE 1. - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Principles of Consolidation
The accompanying condensed consolidated financial statements include the
accounts of Boyd Gaming Corporation and its wholly-owned subsidiaries,
collectively referred to herein as the "Company". At September 30, 1999, the
Company owned and operated ten casino entertainment facilities located in Las
Vegas, Nevada, Tunica, Mississippi, East Peoria, Illinois, and Kenner, Louisiana
as well as a travel agency located in Honolulu, Hawaii. In addition, the Company
manages a casino entertainment facility in Philadelphia, Mississippi, for which
it has a management contract that terminates on January 31, 2000 (see Note 5).
All material intercompany accounts and transactions have been eliminated.
Basis of Presentation
In the opinion of management, the accompanying unaudited condensed consolidated
financial statements contain all adjustments, consisting only of normal
recurring adjustments, necessary to present fairly the results of its operations
and cash flows for the three and nine month periods ended September 30, 1999 and
1998. It is suggested that this report be read in conjunction with the Company's
audited consolidated financial statements included in the Annual Report on Form
10-K for the year ended December 31, 1998. The operating results for the three
and nine month periods ended September 30, 1999 and 1998 and cash flows for the
nine month periods ended September 30, 1999 and 1998 are not necessarily
indicative of the results that will be achieved for the full year or for future
periods.
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. Significant estimates used by the Company include the
estimated useful lives for depreciable and amortizable assets, the estimated
allowance for doubtful accounts receivable, the estimated valuation allowance
for deferred tax assets, and estimated cash flows used in assessing the
recoverability of long-lived assets. Actual results could differ from those
estimates.
Capitalized Interest
Interest costs associated with major construction projects are capitalized. When
no debt is incurred specifically for a project, interest is capitalized on
amounts expended for the project using the Company's weighted average cost of
borrowing. Capitalization of interest ceases when the project or discernible
portions of the project are substantially complete. Capitalized interest during
the three and nine month periods ended September 30, 1999 was $0.5 million and
$0.9 million, respectively. There were no such interest costs capitalized during
the three and nine month periods ended September 30, 1998.
-7-
<PAGE> 8
BOYD GAMING CORPORATION AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
- --------------------------------------------------------------------------------
Preopening Expenses
The American Institute of Certified Public Accountants issued Statement of
Position 98-5, "Reporting on the Costs of Start-Up Activities," which is
effective for fiscal years beginning after December 15, 1998. The statement
requires businesses to expense certain costs of start-up activities as incurred.
During the three and nine month periods ended September 30, 1999, the Company
expensed $0.4 million and $1.2 million, respectively, in preopening costs that
related primarily to the Company's share of preopening expense in the Atlantic
City joint venture. The initial application of this statement in January 1999
required the Company to expense certain previously capitalized items as a
cumulative effect of a change in accounting principle. As such, the Company
reported a charge of $1.7 million, net of tax, to the consolidated statement of
operations during the three month period ended March 31, 1999 as the cumulative
effect of the change in accounting principle.
Recently Issued Accounting Standards
The Financial Accounting Standards Board issued Statement of Financial
Accounting Standards No. 133, "Accounting of Derivative Instruments and Hedging
Activities." This statement establishes accounting and reporting standards for
derivative instruments for fiscal years beginning after June 15, 2000.
Management has not yet completed an analysis of its existing contracts,
agreements and other commitments to determine the potential impact that the
adoption of this statement will have on the consolidated financial statements.
NOTE 2. - NET INCOME PER COMMON SHARE
The Company has adopted Statement of Financial Accounting Standards No. 128,
"Earnings per Share" that requires the presentation of basic and diluted net
income per share. Basic per share amounts are computed by dividing net income by
the average shares outstanding during the period. Diluted per share amounts are
computed by dividing net income by average shares outstanding plus the dilutive
effect of common share equivalents. Diluted net income per share during the
three and nine month periods ended September 30, 1999 and 1998 is determined
considering the dilutive effect of outstanding stock options. The effect of
stock options outstanding to purchase approximately 2.6 million and 4.6 million
shares, respectively, was not included in the diluted calculations during the
three and nine month periods ended September 30, 1999 and 4.6 million and 2.7
million shares, respectively, were not included in the diluted calculations
during the three and nine month periods ended September 30, 1998 since the
exercise price of such options was greater than the average price of the
Company's common shares during the periods.
NOTE 3. - DEBT
On July 21, 1999, the Company replaced its existing bank credit facility with a
new $600 million bank credit facility (the "New Bank Credit Facility"). The New
Bank Credit Facility consists of a $500 million revolver component (the
"Revolver") and a $100 million term loan component (the "Term Loan"), both of
which mature in June 2003. Availability under the Revolver will be reduced by
$15.6 million on December 31, 2001 and at the end of each quarter thereafter
until March 31, 2003. The Term Loan will be repaid in increments of $0.25
million per quarter which began on September 30, 1999 and will continue through
March 31, 2003. The interest rate on the New Bank Credit Facility is based upon
either the agent bank's quoted base rate or the Eurodollar rate, plus an
applicable margin that is determined by the level of a predefined financial
leverage
-8-
<PAGE> 9
BOYD GAMING CORPORATION AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
- --------------------------------------------------------------------------------
ratio. In addition, the Company incurs a commitment fee on the unused portion of
the Revolver which ranges from 0.375% to 0.50% per annum. The New Bank Credit
Facility is secured by substantially all of the real and personal property of
the Company and its subsidiaries, including ten casino properties. The
obligations of the Company under the New Bank Credit Facility are guaranteed by
the significant subsidiaries of the Company.
The New Bank Credit Facility contains certain financial and other covenants
including, without limitation, various covenants (i) requiring the maintenance
of a minimum net worth, (ii) requiring the maintenance of a minimum interest
coverage ratio, (iii) establishing a maximum permitted total leverage ratio and
senior secured leverage ratio, (iv) imposing limitations on the incurrence of
additional indebtedness, (v) imposing limitations on the maximum permitted
expansion capital expenditures during the term of the New Bank Credit Facility,
(vi) imposing limits on the maximum permitted maintenance capital expenditures
during each year of the term of the New Bank Credit Facility, and (vii) imposing
restrictions on investments and certain other payments. Management believes the
Company and its subsidiaries are in compliance with the New Bank Credit Facility
covenants.
NOTE 4. - ACQUISITION
On November 10, 1999, the Company acquired the Blue Chip Casino, a riverboat
casino in Michigan City, Indiana for approximately $274 million in cash, subject
to certain adjustments. Included as part of the acquisition is a hotel and
parking facility, currently under construction and attached to the existing
casino complex. The Company funded the acquisition from borrowings under the New
Bank Credit Facility.
NOTE 5. - TERMINATION OF MANAGEMENT CONTRACT
On October 20, 1999, the Company signed an agreement with the Mississippi Band
of Choctaw Indians (the "Tribe") to terminate the Company's management of the
Silver Star Resort and Casino in Philadelphia, Mississippi. Under the agreement,
the Company will continue to manage Silver Star under the current terms of the
management contract until January 31, 2000, at which time the Tribe will make a
one-time payment of $72 million to the Company. This agreement with the Tribe
terminates the Company's original management contract 17 months prior to the
contract's scheduled expiration date. The one time payment will accelerate the
utilization of the Company's tax credits and net operating losses carried
forward from prior years. As such, the Company's deferred tax assets are
classified as part of current assets on the accompanying condensed consolidated
balance sheet at September 30, 1999.
NOTE 6. - SEGMENT INFORMATION
The Company's management reviews the results of operations based on four
distinct geographic gaming market segments: the Stardust Resort and Casino on
the Las Vegas Strip, Boulder Strip Properties, Downtown Properties and Central
Region Properties. As used herein, "Boulder Strip Properties" consist of Sam's
Town Hotel and Gambling Hall, the Eldorado Casino, and Jokers Wild Casino;
"Downtown Properties" consist of the California Hotel and Casino, the Fremont
Hotel and Casino, Main Street Station Casino, Brewery and Hotel and Vacations
Hawaii; "Central Region Properties" consist of Sam's Town Hotel and Gambling
Hall located in Tunica, Mississippi, Sam's Town Kansas City (through July 15,
1998), Par-A-Dice Hotel and Casino, Treasure Chest Casino, and management fee
income from Silver Star Resort and Casino.
-9-
<PAGE> 10
BOYD GAMING CORPORATION AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
THREE MONTHS ENDED NINE MONTHS ENDED
SEPTEMBER 30, SEPTEMBER 30,
-------------------------- --------------------------
(IN THOUSANDS) 1999 1998 1999 1998
-------- -------- -------- --------
<S> <C> <C> <C> <C>
Casino Revenue
Stardust $ 21,285 $ 25,543 $ 71,855 $ 79,133
Boulder Strip Properties 35,107 36,244 110,739 107,809
Downtown Properties 32,386 30,056 98,568 94,374
-------- -------- -------- --------
Nevada Region 88,778 91,843 281,162 281,316
Central Region 87,000 81,623 252,371 259,687
-------- -------- -------- --------
Total Casino Revenue $175,778 $173,466 $533,533 $541,003
======== ======== ======== ========
EBITDA (1)
Stardust $ 106 $ 2,356 $ 10,335 $ 15,925
Boulder Strip Properties 6,713 7,953 26,863 28,491
Downtown Properties 9,389 5,857 28,319 18,987
-------- -------- -------- --------
Nevada Region 16,208 16,166 65,517 63,403
Central Region 40,741 33,715 110,726 100,955
-------- -------- -------- --------
Property EBITDA 56,949 49,881 176,243 164,358
-------- -------- -------- --------
Other Costs and Expenses
Corporate expense 5,409 3,169 18,098 13,755
Depreciation and amortization 17,478 17,940 54,744 54,938
Preopening expense 354 -- 1,208 --
Restructuring charge -- -- -- 5,925
Other expense, net 16,402 18,356 50,092 56,169
-------- -------- -------- --------
Total Other Costs and Expenses 39,643 39,465 124,142 130,787
-------- -------- -------- --------
Income before provision for income taxes
and cumulative effect of a change in
accounting principle 17,306 10,416 52,101 33,571
Provision for taxes 6,969 4,479 21,419 14,276
-------- -------- -------- --------
Income before cumulative effect of a change
in accounting principle 10,337 5,937 30,682 19,295
Cumulative effect of a change in accounting
for start-up activities, net -- -- 1,738 --
-------- -------- -------- --------
Net Income $ 10,337 $ 5,937 $ 28,944 $ 19,295
======== ======== ======== ========
</TABLE>
(1) EBITDA is earnings before interest, taxes, depreciation and amortization
expense, preopening expense and restructuring charge. The Company believes
that EBITDA is a useful financial measurement for assessing the operating
performance of its properties. EBITDA does not represent net income or cash
flows from operating, investing and financing activities as defined by
generally accepted accounting principles.
-10-
<PAGE> 11
BOYD GAMING CORPORATION AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
- --------------------------------------------------------------------------------
NOTE 7. - GUARANTOR INFORMATION
The Company's $200 million of 9.25% Senior Notes (the "9.25% Notes") are
guaranteed by a majority of the Company's wholly-owned subsidiaries. These
guaranties are full, unconditional, and joint and several. The Company has
significant subsidiaries that do not guarantee the 9.25% Notes. As such, the
following consolidating schedules present separate condensed consolidating
financial statement information on a combined basis for the parent only, as well
as the Company's guarantor subsidiaries and non-guarantor subsidiaries, as of
September 30, 1999 and December 31, 1998 and for the three and nine month
periods ended September 30, 1999 and 1998.
-11-
<PAGE> 12
BOYD GAMING CORPORATION AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
- --------------------------------------------------------------------------------
CONDENSED CONSOLIDATING BALANCE SHEET INFORMATION AS OF SEPTEMBER 30, 1999
<TABLE>
<CAPTION>
COMBINED
COMBINED NON- ELIMINATION
(IN THOUSANDS) PARENT GUARANTORS GUARANTORS ENTRIES CONSOLIDATED
- -----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
ASSETS
Current assets $ 25,366 $ 83,175 $ 19,169 $ (2,378) {1} $ 125,332
Property and equipment, net 39,487 697,098 38,848 -- 775,433
Other assets and deferred charges, net 903,800 (462,974) 174,923 (572,105) {1}{2} 43,644
Intangible assets, net -- 116,922 81,628 -- 198,550
-------- --------- -------- --------- ----------
Total assets $968,653 $ 434,221 $314,568 $(574,483) $1,142,959
======== ========= ======== ========= ==========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities $ 29,564 $ 65,888 $ 21,489 $ (2,382) {1} $ 114,559
Long-term debt, net of current maturities 645,819 68,189 33 -- 714,041
Deferred income taxes and other 35,719 20,951 133 -- 56,803
Stockholders' equity 257,551 279,193 292,913 (572,101) {2} 257,556
-------- --------- -------- --------- ----------
Total liabilities and stockholders' equity $968,653 $ 434,221 $314,568 $(574,483) $1,142,959
======== ========= ======== ========= ==========
</TABLE>
Elimination Entries
{1} - To eliminate intercompany payables and receivables.
{2} - To eliminate investment in subsidiaries and subsidiaries' equity.
CONDENSED CONSOLIDATING BALANCE SHEET INFORMATION AS OF DECEMBER 31, 1998
<TABLE>
<CAPTION>
COMBINED
COMBINED NON- ELIMINATION
(IN THOUSANDS) PARENT GUARANTORS GUARANTORS ENTRIES CONSOLIDATED
- -----------------------------------------------------------------------------------------------------------------------------------
ASSETS
<S> <C> <C> <C> <C> <C> <C>
Current assets $ 23,193 $ 97,564 $ 22,533 $ (1,545) {1} $ 141,745
Property and equipment, net 36,490 687,740 38,977 -- 763,207
Other assets and deferred charges, net 919,264 (515,630) 153,170 (518,114) {1}{2} 38,690
Intangible assets, net -- 119,365 83,249 -- 202,614
-------- --------- --------- --------- ----------
Total assets $978,947 $ 389,039 $297,929 $(519,659) $1,146,256
========= ========= ========= ========= ==========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities $ 35,301 $ 69,217 $ 15,575 $ (2,440) {1} $ 117,653
Long-term debt, net of current maturities 706,373 68,484 33 -- 774,890
Deferred income taxes and other 9,984 16,382 41 -- 26,407
Stockholders' equity 227,289 234,956 282,280 (517,219) {2} 227,306
-------- --------- -------- --------- ----------
Total liabilities and stockholders' equity $978,947 $ 389,039 $297,929 $(519,659) $1,146,256
======== ========= ======== ========= ==========
</TABLE>
Elimination Entries
{1} - To eliminate intercompany payables and receivables.
{2} - To eliminate investment in subsidiaries and subsidiaries' equity.
-12-
<PAGE> 13
BOYD GAMING CORPORATION AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
CONDENSED CONSOLIDATING STATEMENT OF OPERATIONS INFORMATION FOR THE
THREE MONTH PERIOD ENDED SEPTEMBER 30, 1999
<TABLE>
<CAPTION>
COMBINED
COMBINED NON- ELIMINATION
(IN THOUSANDS) PARENT GUARANTORS GUARANTORS ENTRIES CONSOLIDATED
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Revenues
Casino $ -- $ 145,417 $30,361 $ -- $ 175,778
Food and beverage -- 35,149 2,685 -- 37,834
Room -- 17,038 -- -- 17,038
Other 2,846 7,632 10,533 (3,542) {1} 17,469
Management fee 33,052 15,641 4,574 (39,291) {1} 13,976
-------- --------- ------- -------- ---------
Gross revenues 35,898 220,877 48,153 (42,833) 262,095
Less promotional allowances -- 20,641 1,939 -- 22,580
-------- --------- ------- -------- ---------
Net revenues 35,898 200,236 46,214 (42,833) 239,515
-------- --------- ------- -------- ---------
Costs and expenses
Casino -- 77,992 11,420 -- 89,412
Food and beverage -- 22,482 2,734 -- 25,216
Room -- 5,795 -- -- 5,795
Other -- 19,612 11,621 (14,894) {1} 16,339
Selling, general and administrative -- 27,916 6,459 -- 34,375
Maintenance and utilities -- 9,911 1,518 -- 11,429
Depreciation and amortization 495 14,800 2,183 -- 17,478
Corporate expense 8,523 35 393 (3,542) {1} 5,409
Preopening expense 123 -- 231 -- 354
-------- --------- ------- -------- ---------
Total 9,141 178,543 36,559 (18,436) 205,807
-------- --------- ------- -------- ---------
Operating income 26,757 21,693 9,655 (24,397) 33,708
Other income (expense), net (15,055) (1,597) 250 -- (16,402)
-------- --------- ------- -------- ---------
Income before provision for income taxes 11,702 20,096 9,905 (24,397) 17,306
Provision for income taxes 1,365 5,604 -- -- 6,969
-------- --------- ------- -------- ---------
Net income $ 10,337 $ 14,492 $ 9,905 $(24,397) $ 10,337
======== ========= ======= ======== =========
</TABLE>
Elimination Entries
{1} - To eliminate intercompany revenue and expense as well as equity income.
-13-
<PAGE> 14
BOYD GAMING CORPORATION AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
- --------------------------------------------------------------------------------
CONDENSED CONSOLIDATING STATEMENT OF OPERATIONS INFORMATION FOR THE
THREE MONTH PERIOD ENDED SEPTEMBER 30, 1998
<TABLE>
<CAPTION>
COMBINED
COMBINED NON- ELIMINATION
(IN THOUSANDS) PARENT GUARANTORS GUARANTORS ENTRIES CONSOLIDATED
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Revenues
Casino $ -- $ 144,924 $28,542 $ -- $ 173,466
Food and beverage -- 36,123 2,466 -- 38,589
Room -- 18,232 -- -- 18,232
Other 2,411 7,597 9,308 (2,906) {1} 16,410
Management fee 26,681 11,895 4,364 (32,693) {1} 10,247
-------- --------- ------- -------- ---------
Gross revenues 29,092 218,771 44,680 (35,599) 256,944
Less promotional allowances -- 20,600 1,751 -- 22,351
-------- --------- ------- -------- ---------
Net revenues 29,092 198,171 42,929 (35,599) 234,593
-------- --------- ------- -------- ---------
Costs and expenses
Casino -- 78,456 10,718 -- 89,174
Food and beverage -- 23,486 2,619 -- 26,105
Room -- 6,161 -- -- 6,161
Other -- 19,534 9,804 (12,667) {1} 16,671
Selling, general and administrative -- 29,578 6,067 -- 35,645
Maintenance and utilities -- 9,802 1,154 -- 10,956
Depreciation and amortization 184 15,478 2,278 -- 17,940
Corporate expense 5,435 262 378 (2,906) (1) 3,169
-------- --------- ------- -------- ---------
Total 5,619 182,757 33,018 (15,573) 205,821
-------- --------- ------- -------- ---------
Operating income 23,473 15,414 9,911 (20,026) 28,772
Other income (expense), net (17,023) (1,661) 328 -- (18,356)
-------- --------- ------- -------- ---------
Income before provision for income taxes 6,450 13,753 10,239 (20,026) 10,416
Provision for income taxes 3,023 1,456 -- -- 4,479
-------- --------- ------- -------- ---------
Net income $ 3,427 $ 12,297 $10,239 $(20,026) $ 5,937
======== ========= ======= ======== =========
</TABLE>
Elimination Entries
{1} - To eliminate intercompany revenue and expense as well as equity income.
-14-
<PAGE> 15
BOYD GAMING CORPORATION AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
- --------------------------------------------------------------------------------
CONDENSED CONSOLIDATING STATEMENT OF OPERATIONS INFORMATION FOR THE
NINE MONTH PERIOD ENDED SEPTEMBER 30, 1999
<TABLE>
<CAPTION>
COMBINED
COMBINED NON- ELIMINATION
(IN THOUSANDS) PARENT GUARANTORS GUARANTORS ENTRIES CONSOLIDATED
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Revenues
Casino $ -- $ 440,602 $ 92,931 $ -- $ 533,533
Food and beverage -- 110,886 7,893 -- 118,779
Room -- 53,812 -- -- 53,812
Other 8,538 24,723 30,929 (10,630) {1} 53,560
Management fee 104,737 40,202 14,924 (125,043) {1} 34,820
--------- --------- -------- --------- ---------
Gross revenues 113,275 670,225 146,677 (135,673) 794,504
Less promotional allowances -- 64,092 5,703 -- 69,795
--------- --------- -------- --------- ---------
Net revenues 113,275 606,133 140,974 (135,673) 724,709
--------- --------- -------- --------- ---------
Costs and expenses
Casino -- 234,426 34,351 -- 268,777
Food and beverage -- 69,314 7,928 -- 77,242
Room -- 17,978 -- -- 17,978
Other -- 55,868 33,322 (40,347) {1} 48,843
Selling, general and administrative -- 84,345 20,307 -- 104,652
Maintenance and utilities -- 26,484 4,490 -- 30,974
Depreciation and amortization 1,412 46,677 6,655 -- 54,744
Corporate expense 27,373 130 1,225 (10,630) {1} 18,098
Preopening expense 186 -- 1,022 -- 1,208
--------- --------- -------- --------- ---------
Total 28,971 535,222 109,300 (50,977) 622,516
--------- --------- -------- --------- ---------
Operating income 84,304 70,911 31,674 (84,696) 102,193
Other income (expense), net (46,298) (4,599) 805 -- (50,092)
--------- --------- -------- --------- ---------
Income before provision for income taxes 38,006 66,312 32,479 (84,696) 52,101
Provision for income taxes 7,324 14,095 -- -- 21,419
--------- --------- -------- --------- ---------
Income before cumulative effect 30,682 52,217 32,479 (84,696) 30,682
Cumulative effect, net 1,738 -- -- -- 1,738
--------- --------- -------- --------- ---------
Net income $ 28,944 $ 52,217 $ 32,479 $ (84,696) $ 28,944
========= ========= ======== ========= =========
</TABLE>
Elimination Entries
{1} - To eliminate intercompany revenue and expense as well as equity income.
-15-
<PAGE> 16
BOYD GAMING CORPORATION AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
- --------------------------------------------------------------------------------
CONDENSED CONSOLIDATING STATEMENT OF OPERATIONS INFORMATION FOR THE
NINE MONTH PERIOD ENDED SEPTEMBER 30, 1998
<TABLE>
<CAPTION>
COMBINED
COMBINED NON- ELIMINATION
(IN THOUSANDS) PARENT GUARANTORS GUARANTORS ENTRIES CONSOLIDATED
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Revenues
Casino $ -- $ 451,436 $ 89,567 $ -- $ 541,003
Food and beverage -- 113,849 7,248 -- 121,097
Room -- 55,110 -- -- 55,110
Other 7,236 27,267 26,158 (8,510){1} 52,151
Management fee 85,553 35,985 15,020 (105,952){1} 30,606
-------- --------- -------- --------- ---------
Gross revenues 92,789 683,647 137,993 (114,462) 799,967
Less promotional allowances -- 64,683 5,164 -- 69,847
-------- --------- -------- --------- ---------
Net revenues 92,789 618,964 132,829 (114,462) 730,120
-------- --------- -------- --------- ---------
Costs and expenses
Casino -- 242,936 33,213 -- 276,149
Food and beverage -- 71,873 7,641 -- 79,514
Room -- 18,643 -- -- 18,643
Other -- 58,193 28,757 (38,003){1} 48,947
Selling, general and administrative -- 92,414 19,026 -- 111,440
Maintenance and utilities -- 27,620 3,449 -- 31,069
Depreciation and amortization 381 47,807 6,750 -- 54,938
Corporate expense 19,779 1,336 1,150 (8,510)(1) 13,755
Restructuring charge -- 5,925 -- -- 5,925
-------- --------- -------- --------- ---------
Total 20,160 566,747 99,986 (46,513) 640,380
-------- --------- -------- --------- ---------
Operating income 72,629 52,217 32,843 (67,949) 89,740
Other income (expense), net (51,960) (4,886) 677 -- (56,169)
-------- --------- -------- --------- ---------
Income before provision for income taxes 20,669 47,331 33,520 (67,949) 33,571
Provision for income taxes 3,583 10,693 -- -- 14,276
-------- --------- -------- --------- ---------
Net income $ 17,086 $ 36,638 $ 33,520 $ (67,949) $ 19,295
======== ========= ======== ========= =========
</TABLE>
Elimination Entries
{1} - To eliminate intercompany revenue and expense as well as equity income.
-16-
<PAGE> 17
BOYD GAMING CORPORATION AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
- --------------------------------------------------------------------------------
CONDENSED CONSOLIDATING STATEMENT OF CASH FLOWS INFORMATION FOR THE
NINE MONTH PERIOD ENDED SEPTEMBER 30, 1999
<TABLE>
<CAPTION>
COMBINED
COMBINED NON-
(IN THOUSANDS) PARENT GUARANTORS GUARANTORS CONSOLIDATED
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Cash flows provided by operating activities $ 52,816 $ 49,885 $ 12,538 $ 115,239
-------- -------- -------- ---------
Cash flows from investing activities
Acquisition of property, equipment and other assets (4,409) (56,137) (4,903) (65,449)
Investments in and advances to unconsolidated subsidiary -- -- (4,185) (4,185)
Proceeds from sale of Sam's Town Kansas City's assets -- 2,000 -- 2,000
-------- -------- -------- ---------
Net cash used in investing activities (4,409) (54,137) (9,088) (67,634)
-------- -------- -------- ---------
Cash flows from financing activities
Net payments under bank credit facility (59,250) -- -- (59,250)
Receipt (payment) of dividends 11,791 (5,242) (6,549) --
Other (41) (305) -- (346)
-------- -------- -------- ---------
Net cash used in financing activities (47,500) (5,547) (6,549) (59,596)
-------- -------- -------- ---------
Net increase (decrease) in cash and cash equivalents 907 (9,799) (3,099) (11,991)
Cash and cash equivalents, beginning of period 1,054 55,492 19,391 75,937
-------- -------- -------- ---------
Cash and cash equivalents, end of period $ 1,961 $ 45,693 $ 16,292 $ 63,946
======== ======== ======== =========
</TABLE>
CONDENSED CONSOLIDATING STATEMENT OF CASH FLOWS INFORMATION FOR THE
NINE MONTH PERIOD ENDED SEPTEMBER 30, 1998
<TABLE>
<CAPTION>
COMBINED
COMBINED NON-
(IN THOUSANDS) PARENT GUARANTORS GUARANTORS CONSOLIDATED
- -------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Cash flows provided by (used in) operating activities $ 53,278 $ (1,605) $ 32,989 $ 84,662
-------- -------- -------- --------
Cash flows from investing activities
Acquisition of property equipment and other assets (588) (42,191) (1,672) (44,451)
Proceeds from sale of Sam's Town Kansas City's assets -- 10,500 -- 10,500
-------- -------- -------- --------
Net cash used in investing activities (588) (31,691) (1,672) (33,951)
-------- -------- -------- --------
Cash flows from financing activities
Proceeds from issuance of long-term debt -- 8,000 -- 8,000
Net payments under bank credit facility (67,250) -- -- (67,250)
Receipt (payment) of dividends 13,752 14,820 (28,572) --
Other (1,095) (463) (129) (1,687)
-------- -------- -------- --------
Net cash provided by (used in) financing activities (54,593) 22,357 (28,701) (60,937)
-------- -------- -------- --------
Net increase (decrease) in cash and cash equivalents (1,903) (10,939) 2,616 (10,226)
Cash and cash equivalents, beginning of period 2,832 58,317 17,128 78,277
-------- -------- -------- --------
Cash and cash equivalents, end of period $ 929 $ 47,378 $ 19,744 $ 68,051
======== ======== ======== ========
</TABLE>
-17-
<PAGE> 18
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
RESULTS OF OPERATIONS
The following table sets forth, for the periods indicated, certain operating
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, Main Street Station and
Vacations Hawaii, the Company's wholly-owned travel agency which operates for
the benefit of the Downtown casino properties; and "Central Region Properties"
consist of Sam's Town Tunica, Sam's Town Kansas City (through July 15, 1998),
Par-A-Dice, Treasure Chest Casino, and management fee income from Silver Star
Resort and Casino. Net revenues displayed in this table and discussed in this
section are net of promotional allowances; as such, references to room revenue
and food and beverage revenue do not agree to the amounts on the Condensed
Consolidated Statements of Operations. Operating income (loss) from properties
for the purposes of this table excludes corporate expense, including related
depreciation and amortization, preopening expense and restructuring charge.
<TABLE>
<CAPTION>
Three Months Ended Nine Months Ended
September 30, September 30,
------------------------------ ---------------------------
(In thousands) 1999 1998 1999 1998
--------- --------- -------- --------
<S> <C> <C> <C> <C>
Net revenues
Stardust $ 32,239 $ 38,024 $109,360 $120,459
Boulder Strip Properties 44,008 45,746 140,555 140,050
Downtown Properties(a) 53,824 49,893 163,427 153,413
--------- --------- -------- --------
Nevada Region 130,071 133,663 413,342 413,922
Central Region 109,444 100,930 311,367 316,198
--------- --------- -------- --------
Total properties $ 239,515 $ 234,593 $724,709 $730,120
========= ========= ======== ========
Operating income (loss)
Stardust $ (2,946) $ (373) $ 1,422 $ 7,053
Boulder Strip Properties 3,506 4,236 16,176 17,543
Downtown Properties 5,379 2,148 16,525 7,649
--------- --------- -------- --------
Nevada Region 5,939 6,011 34,123 32,245
Central Region 34,332 26,385 89,650 78,358(b)
--------- --------- -------- --------
Total properties $ 40,271 $ 32,396 $123,773 $110,603
========= ========= ======== ========
</TABLE>
(a) Includes revenues related to Vacations Hawaii, a Honolulu travel agency,
of $9,760 and $8,525, respectively, for the quarters ended September 30,
1999 and 1998, and revenues of $28,633 and $24,069, respectively, for the
nine month periods ended September 30, 1999 and 1998.
(b) Before restructuring charge.
-18-
<PAGE> 19
REVENUES
Consolidated net revenues increased 2.1% during the quarter ended September 30,
1999 compared to the quarter ended September 30, 1998. Company wide casino
revenue increased 1.3%, food and beverage revenue decreased 3.7%, and room
revenue decreased 5.7%. Net revenues from the Stardust, Boulder Strip and
Downtown Properties (the "Nevada Region") decreased 2.7% during the quarter
ended September 30, 1999 compared to the quarter ended September 30, 1998. Net
revenues at the Downtown Properties increased 7.9%, while net revenues at the
Stardust and Boulder Strip decreased 15.2% and 3.8%, respectively. The decline
in revenues at the Stardust and Boulder Strip is partially attributable to
construction disruption at the Stardust and Sam's Town Las Vegas as well as
increased competition at both locations. The Stardust renovation project is
scheduled to be completed before the end of 1999. Sam's Town Las Vegas'
renovation of the existing facility is expected to continue until the spring of
2000, while a major expansion of the property is expected to take place during
2000. Net revenues in the Central Region increased 8.4% during the quarter ended
September 30, 1999 compared to the quarter ended September 30, 1998 primarily
due to the increase in net revenues at Par-A-Dice and Silver Star. Par-A-Dice
experienced its first full quarter of dockside operations which began in
Illinois on June 26, 1999. The increase in revenues at Silver Star is due mainly
to the increase in the management fee percentage from 30% to 40% of operating
income on July 1, 1999 pursuant to the terms of the management agreement. The
management contract is set to terminate on January 31, 2000, which is 17 months
prior to its originally scheduled expiration date. See further discussion under
"Liquidity and Capital Resources-Termination of Management Contract."
Consolidated net revenue decreased slightly during the nine month period ended
September 30, 1999 compared to the same period in the prior year which included
6 1/2 months of operations from Sam's Town Kansas City. Company-wide casino
revenue decreased 1.4%, food and beverage revenue decreased 2.5%, and room
revenue decreased 1.4%. These decreases were offset by an increase in management
fee revenue of 13.8%. Net revenues from the Nevada Region remained virtually
unchanged during the nine month period ended September 30, 1999 compared to the
nine month period ended September 30, 1998 as a 9.2% decline in revenues at the
Stardust was partially offset by a 6.5% increase in revenues at the Downtown
Properties. Net revenues at the Boulder Strip were virtually unchanged. Net
revenues in the Central Region declined 1.5% during the nine month period ended
September 30, 1999 compared to the same period in the prior year. The decrease
is primarily a result of the closure of the Sam's Town Kansas City property in
July 1998, partially offset by increases at Par-A-Dice, Silver Star, and
Treasure Chest of 13.0%, 13.8%, and 3.9%, respectively.
OPERATING INCOME (LOSS)
Consolidated operating income before preopening expense increased by 18.4% to
$34 million during the quarter ended September 30, 1999 from $29 million during
the quarter ended September 30, 1998. Operating income in the Nevada Region
decreased 1.2% as the operating loss experienced at Stardust increased to $2.9
million during the quarter ended September 30, 1999 compared to $0.4 million in
the quarter ended September 30, 1998. The increase in operating loss at the
Stardust was nearly offset by a 150% increase in operating income at the
Downtown Properties that was principally due to the increase in net revenues
coupled with cost reductions resulting from more efficient operations. The
increased operating loss at the Stardust is attributable to increased
competition on the Las Vegas Strip, as well as construction disruption related
to the renovation project which is scheduled to be completed before the end of
1999. In the Central Region, operating income increased 30% due to a 60%
increase at Par-A-Dice and a 38% increase related to the Silver Star net
management fee income. The increases at Par-A-Dice and Silver Star are related
to the increases in net revenues from those properties. In addition, there was a
reduction in operating loss from the closure of the Sam's Town Kansas City
property in July 1998.
For the nine month period ended September 30, 1999, consolidated operating
income before preopening expense and a restructuring charge increased 8.1% to
$103 million from $96 million in the same period from the prior year.
-19-
<PAGE> 20
Operating income in the Nevada Region increased 5.8% due primarily to the
increase in net revenues coupled with cost reductions resulting from the
operating efficiencies experienced at the Downtown Properties, partially offset
by a decline at the Stardust and Boulder Strip Properties. In the Central
Region, operating income increased 14.4% due primarily to increases at
Par-A-Dice and Silver Star related to increases in net revenues at those
properties, in addition to the reduction in operating loss from the Sam's Town
Kansas City property which was closed in July 1998.
STARDUST
For the quarter ended September 30, 1999, net revenues at the Stardust decreased
15.2% compared to the quarter ended September 30, 1998 due to increased
competition as well as construction disruption related to a renovation project
that is expected to be completed by the end of 1999. Casino revenue declined
16.7% due to a decrease in slot and table game wagering. Room revenue declined
14.8% during the quarter ended September 30, 1999 compared to the quarter ended
September 30, 1998 resulting from a decline in the number of available rooms by
33% due to the closure of motor inn rooms and the renovation of guest rooms in
both hotel towers. Operating loss at the Stardust increased to $2.9 million
during the quarter ended September 30, 1999 from $0.4 million during to the same
period in the prior year as a result of the decline in revenues.
For the nine month period ended September 30, 1999, net revenues at the Stardust
declined 9.2% versus the comparable period in the prior year. Casino revenue
declined 9.2% due to a decrease in slot and table game wagering. Room revenue
declined 8.2% as the number of available rooms declined 24% as a result of the
closure of the motor inn rooms and the renovation project. Operating income
decreased to $1.4 million during the nine month period ended September 30, 1999
from $7.1 million during the same period in the prior year as a result of the
decline in revenues.
BOULDER STRIP PROPERTIES
Net revenues at the Boulder Strip properties decreased 3.8% during the quarter
ended September 30, 1999 compared to the quarter ended September 30, 1998 due
primarily to a decline in casino revenue of 3.1% as a result of a decline in
slot wagering volume. Operating income at the Boulder Strip Properties declined
17.2% to $3.5 million during the quarter ended September 30, 1999 compared to
$4.2 million during the quarter ended September 30, 1998 due to the decrease in
net revenues and an increase in marketing and other expenses.
During the nine month period ended September 30, 1999, net revenues at the
Boulder Strip Properties remained virtually unchanged compared to the same
period in the prior year. Operating income at the Boulder Strip Properties
declined 7.8% to $16.2 million during the nine month period ended September 30,
1999 compared to $17.5 million during the same period in the prior year. The
decline is attributable to an increase in marketing and other expenses.
DOWNTOWN PROPERTIES
Net revenues at the Downtown Properties increased 7.9% during the quarter ended
September 30, 1999 compared to the quarter ended September 30, 1998 due
primarily to a 7.7% increase in casino revenue which was a result of an increase
in slot and table game wagering. Operating income at the Downtown Properties
increased 150% to $5.4 million during the quarter ended September 30, 1999
compared to $2.1 million during the quarter ended September 30, 1998 due to
operating gains experienced at the California, Fremont and Main Street Station,
partially offset by a slight operating loss at Vacations Hawaii, the Company's
Honolulu travel agency. Operating income margin increased to 10.0% during the
quarter ended September 30, 1999 from 4.3% during the comparable quarter in the
prior year. The increases in operating income and operating income margin are
primarily attributable to the increase
-20-
<PAGE> 21
in net revenues coupled with cost reductions in marketing and other expenses at
each of the Downtown casino properties.
Net revenues at the Downtown Properties increased 6.5% during the nine month
period ended September 30, 1999 compared to the same period in the prior year
due primarily to a 4.4% increase in casino revenue as slot wagering volume
increased at all three casino properties. Revenues related to Vacations Hawaii,
the Company's Honolulu travel agency, increased 19.0% for the nine month period
ended September 30, 1999 compared to the nine month period of the prior year.
Operating income at the Downtown Properties increased $8.9 million, or 116%,
during the nine month period ended September 30, 1999 compared to the same
period in the prior year. Operating income margin increased to 10.1% during the
nine month period ended September 30, 1999 versus 5.0% in the comparable prior
year period. The increases in operating income and operating income margin are
primarily attributable to the increase in net revenues as well as cost
reductions in marketing and other expenses at each of the Downtown Properties.
CENTRAL REGION
Net revenues in the Central Region increased 8.4% during the quarter ended
September 30, 1999 compared to the quarter ended September 30, 1998 primarily
due to the increase in net revenues at Par-A-Dice and Silver Star. Par-A-Dice
experienced its first full quarter of dockside operations which began in
Illinois on June 26, 1999. The increase in revenues at Silver Star is due mainly
to the increase in the management fee percentage from 30% to 40% of operating
income on July 1, 1999 pursuant to the terms of the management agreement. The
management contract is set to terminate on January 31, 2000, which is 17 months
prior to its originally scheduled expiration date. See further discussion under
"Liquidity and Capital Resources-Termination of Management Contract". At
Treasure Chest, net revenues increased 6.4% due primarily to increases in slot
and table game wagering. At Sam's Town Tunica, net revenues decreased 9.3% due
to declines in slot and table game wagering related to increased competition in
the Tunica gaming market. Operating income in the Central Region increased 30.1%
due primarily to the increases in net revenues at Par-A-Dice and Silver Star.
Net revenues in the Central Region declined 1.5% during the nine month period
ended September 30, 1999 compared to the same period in the prior year. The
majority of the decrease is attributable to the closure of the Sam's Town Kansas
City property in July 1998, partially offset by increases in net revenues at
Par-A-Dice (13.0%), Silver Star (13.8%), and Treasure Chest (3.9%). Operating
income in the Central Region increased to $90 million during the nine month
period ended September 30, 1999 compared to $78 million during the comparable
period in the prior year due to the closure of the Sam's Town Kansas City
property as well as increased net revenues at Par-A-Dice and Silver Star.
OTHER INCOME (EXPENSE)
Other income and expense is primarily comprised of interest expense. Interest
expense decreased by $1.9 million and $6.1 million, respectively, during the
three and nine month periods ended September 30, 1999 compared to the
corresponding periods in the prior year. The declines are attributable to lower
debt levels combined with a decline in interest rates on floating rate debt. In
addition, the Company capitalized $0.5 million and $0.9 million, respectively,
in interest costs during the quarter ended September 30, 1999 and the nine month
period ended September 30, 1999. There were no such costs capitalized during the
quarter or nine month period ended September 30, 1998.
-21-
<PAGE> 22
CUMULATIVE EFFECT OF A CHANGE IN ACCOUNTING FOR START-UP ACTIVITIES
The Company reported a charge of $1.7 million, net of $0.9 million in tax
benefits, as the cumulative effect of a change in accounting for start-up
activities. The American Institute of Certified Public Accountants issued
Statement of Position 98-5, "Reporting on the Costs of Start-Up Activities" that
required the Company to expense certain previously capitalized costs of start-up
activities as a cumulative effect of a change in accounting principle.
NET INCOME
As a result of these factors, the Company reported net income of $10.3 million
and $5.9 million, respectively, during the quarters ended September 30, 1999 and
1998, and $28.9 million and $19.3 million, respectively, during the nine month
periods ended September 30, 1999 and 1998.
LIQUIDITY AND CAPITAL RESOURCES
CASH FLOW FROM OPERATING ACTIVITIES AND WORKING CAPITAL
The Company's policy is to use operating cash flow in combination with debt
financing to fund renovations and expansion of its business.
During the nine month period ended September 30, 1999, the Company generated
operating cash flows of $115 million compared to $85 million during the same
period in the prior year. The increase in operating cash flows is primarily
attributable to the Company's enhanced earnings, as well as the realization of a
portion of the tax benefits related to the sale of certain assets at the Sam's
Town Kansas City property. (See further discussion regarding the tax benefits in
the following paragraph). As of September 30, 1999 and 1998, the Company had
balances of cash and cash equivalents of $64 million and $68 million,
respectively, and working capital of $10.8 million and $22.8 million,
respectively. The Company has historically operated with minimal levels of
working capital in order to minimize borrowings and interest costs under the
Company's bank credit facility.
In connection with the July 1998 sale of certain tangible assets of Sam's Town
Kansas City for $12.5 million, the Company has been and will be able to realize
the benefit of approximately $35 million in tax attributes. The realization of
these tax attributes, which began in the quarter ended September 30, 1998 and
continued to benefit operating cash flow in 1999, generated refunds of
approximately $11 million. Current and future federal tax payments on the
Company's taxable income will also be reduced at such time as the remaining tax
attributes are realized. At September 30, 1999, the Company had $18.8 million in
current deferred tax assets.
CASH FLOWS FROM INVESTING ACTIVITIES
The Company is committed to continually maintaining and enhancing its existing
facilities, most notably by upgrading and remodeling its casinos, hotel rooms,
restaurants, and other public spaces and by providing the latest slot machines
for its customers. The Company's capital expenditures primarily related to these
purposes were approximately $65 million and $44 million, respectively, during
the nine month periods ended September 30, 1999 and 1998. See "Expansion and
Other Projects" for a further discussion on current and planned investing
activities.
The Company received $10.5 million in cash at the time of sale of certain
tangible assets of Sam's Town Kansas City in 1998 and received the remaining
$2.0 million when certain third party consents were received in 1999. In
addition, the Company funded $4.2 million during 1999 to its Atlantic City joint
venture. See further discussion regarding the joint venture under "Expansion and
Other Projects."
CASH FLOW FROM FINANCING ACTIVITIES
-22-
<PAGE> 23
Substantially all of the funding for the Company's renovation and expansion
projects comes from debt financing, as well as cash flows from existing
operations. The Company paid down outstanding debt with its free cash flow
generated from operations and excess cash balances which resulted in cash flows
used for financing activities of $60 million during the nine month period ended
September 30, 1999 compared to $61 million during the nine month period ended
September 30, 1998. At September 30, 1999, outstanding borrowings and unused
availability under the bank credit facility were $258 million and $342 million,
respectively. Interest under the bank credit facility is based upon the agent
bank's quoted base rate or the Eurodollar rate, at the discretion of the
Company. The blended rate on outstanding borrowings under the bank credit
facility as of September 30, 1999 was 7.7%.
On July 21, 1999, the Company replaced its existing bank credit facility with a
new $600 million bank credit facility (the "New Bank Credit Facility"). The New
Bank Credit Facility consists of a $500 million revolver component (the
"Revolver") and a $100 million term loan component (the "Term Loan"), both of
which mature in June 2003. Availability under the Revolver will be reduced by
$15.6 million on December 31, 2001 and at the end of each quarter thereafter
until March 31, 2003. The Term Loan will be repaid in increments of $0.25
million per quarter which began on September 30, 1999 and will continue through
March 31, 2003. The interest rate on the New Bank Credit Facility is based upon
either the agent bank's quoted base rate or the Eurodollar rate, plus an
applicable margin that is determined by the level of a predefined financial
leverage ratio. In addition, the Company incurs a commitment fee on the unused
portion of the Revolver which ranges from 0.375% to 0.50% per annum. The New
Bank Credit Facility is secured by substantially all of the real and personal
property of the Company and its subsidiaries, including ten casino properties.
The obligations of the Company under the New Bank Credit Facility are guaranteed
by the significant subsidiaries of the Company.
The New Bank Credit Facility contains certain financial and other covenants,
including, without limitation, various covenants (i) requiring the maintenance
of a minimum net worth, (ii) requiring the maintenance of a minimum interest
coverage ratio, (iii) establishing a maximum permitted total leverage ratio and
senior secured leverage ratio, (iv) imposing limitations on the incurrence of
additional indebtedness, (v) imposing limitations on the maximum permitted
expansion capital expenditures during the term of the New Bank Credit Facility,
(vi) imposing limits on the maximum permitted maintenance capital expenditures
during each year of the term of the New Bank Credit Facility, and (vii) imposing
restrictions on investments, dividends and certain other payments. Management
believes the Company and its subsidiaries are in compliance with the New Bank
Credit Facility covenants.
The Company's $200 million principal amount of Senior Notes (the "9.25% Notes")
and $250 million principal amount of Senior Subordinated Notes (the "9.50%
Notes") contain limitations on, among other things, (a) the ability of the
Company and its Restricted Subsidiaries (as defined in the Indenture Agreements)
to incur additional indebtedness, (b) the payment of dividends and other
distributions with respect to the capital stock of the Company and its
Restricted Subsidiaries and the purchase, redemption or retirement of capital
stock of the Company and its Restricted Subsidiaries, (c) the making of certain
investments, (d) asset sales, (e) the incurrence of liens, (f) transactions with
affiliates, (g) payment restrictions affecting restricted subsidiaries and (h)
certain consolidations, mergers and transfers of assets. Management believes the
Company and its subsidiaries are in compliance with the covenants related to the
9.25% and 9.50% Notes at September 30, 1999.
The Company's ability to service its debt will be dependent on its future
performance, which will be affected by, among other things, prevailing economic
conditions and financial, business and other factors, certain of which are
beyond the Company's control.
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<PAGE> 24
EXPANSION AND OTHER PROJECTS
The Company, as part of its ongoing strategic planning process, is currently
establishing its priorities for the future. In Nevada, the Company is exploring
development opportunities in the Las Vegas locals market. In addition, the
Company has recently initiated an $80 million expansion and renovation project
at Sam's Town Las Vegas. The project includes, among other things, an 18 screen
state-of-the-art movie theatre, additional casino space for 500 slot machines,
an 11,200 square foot multi-purpose events center, a new 550 seat buffet, and a
reconfigured and remodeled porte cochere and valet parking area to improve
access to the property. As of September 30, 1999, the Company has incurred $11.0
million in costs associated with the Sam's Town Las Vegas expansion and
renovation. The renovation portion of the project is expected to continue until
the spring of 2000 and the expansion is expected to be completed by December 31,
2000.
The Company has postponed plans to develop a new property on the Stardust's
61-acre site until the impact of the opening of several new resorts on the Las
Vegas Strip has been determined. Instead, the Company has initiated a $25
million renovation of the Stardust which includes guest rooms, public space and
exterior enhancements intended to make the property more competitive with other
Strip resorts. In connection with the renovation project, the Stardust removed
from service, in April 1999, all of its approximately 550 motor inn rooms. The
Company is evaluating the impact of the motor inn closure on the Stardust's
operations. Based upon the results of the evaluation, the Company will either
refurbish or demolish the Stardust motor inn rooms. As of September 30, 1999,
the Company had incurred $17.3 million in costs associated with the Stardust
renovation, $15.8 million of which was incurred during the nine month period
ended September 30, 1999. This project is expected to be substantially complete
by the end of 1999.
The Company, through a wholly-owned subsidiary, is a party to a Joint Venture
Agreement (the "Agreement") with Mirage Resorts, Incorporated, through a
wholly-owned subsidiary ("Mirage"), to jointly develop and own The Borgata, a
casino hotel entertainment facility in Atlantic City, New Jersey. The Agreement
contemplates a hotel of at least 1,200 rooms and a casino and related amenities
adjacent and connected to Mirage's planned wholly-owned resort. The Agreement
provides for each party to make an equity contribution of $150 million. The
Company will contribute $90 million when Mirage contributes the land to the
venture, which is expected in the middle of 2000. The Agreement further provides
for the venture to arrange $450 million in non-recourse financing for the
project. There can be no assurances that The Borgata can be designed or
developed for $750 million. Funding of the Company's joint venture capital
contributions is expected to be derived from cash flow from operations,
availability under the Company's New Bank Credit Facility and additional debt
offerings. The Borgata will be subject to the many risks inherent in the
establishment of a new business enterprise, including potential unanticipated
design, construction, regulatory, environmental and operating problems,
increased project costs, timing delays, lack of adequate financing and the
significant risks commonly associated with implementing a marketing strategy in
a new market. Once construction begins, if The Borgata does not become
operational within the time frame and budget currently contemplated or does not
compete successfully in its new market, it could have a material adverse effect
on the Company's business, financial condition and results of operations. The
Company has begun work on the planning stages of this development which is
expected to open in 2002. As of September 30, 1999, the Company has contributed
or advanced funds of $5.3 million to The Borgata, $4.2 million of which was
contributed or advanced during the nine month period ended September 30, 1999.
On November 10, 1999, the Company acquired the Blue Chip Casino, a riverboat
casino in Michigan City, Indiana for approximately $274 million in cash, subject
to certain adjustments. Included as part of the acquisition is a hotel and
parking facility, currently under construction and attached to the existing
casino complex. The Company funded the acquisition from borrowings under the New
Bank Credit Facility.
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<PAGE> 25
The Company began a Customer Information System ("CIS") project that will
standardize the Company's customer tracking systems. The purpose of the CIS
project is to link all points of customer contact at a particular property to
enable the Company to better monitor customer activity in order to enhance and
direct marketing efforts. The Company expects to spend $14 million in 1999 on
the CIS project. For the nine month period ended September 30, 1999, the Company
had incurred $4.8 million in costs associated with the CIS project,
substantially all of which was capitalized. The Company has never undertaken a
CIS project of this magnitude and may experience difficulties in the integration
and implementation of this project. In addition, given the inherent difficulties
of a project of this magnitude and the resources required, the timing and costs
involved could differ materially from those anticipated by the Company. There
can be no assurance that the CIS project will be completed successfully, on
schedule, or within budget.
Substantial funds are required for The Borgata, as well as the other projects
discussed above and would also be required for other future expansion projects.
There are no assurances that any of the above mentioned projects will go forward
on a timely basis, if at all, or ultimately become operational. The source of
funds required to meet the Company's working capital needs (including
maintenance capital expenditures) is expected to be cash flow from operations
and availability under the Company's New Bank Credit Facility. The source of
funds for the Company's expansion projects may come from cash flow from
operations and availability under the Company's New Bank Credit Facility,
additional debt or equity offerings, joint venture partners or other sources. No
assurance can be given that additional financing will be available or that, if
available, such financing will be obtainable on terms favorable to the Company
or its stockholders.
TERMINATION OF MANAGEMENT CONTRACT
On October 20, 1999, the Company signed an agreement with the Mississippi Band
of Choctaw Indians (the "Tribe") to terminate the Company's management of the
Silver Star Resort and Casino in Philadelphia, Mississippi. Under the agreement,
the Company will continue to manage Silver Star under the current terms of the
management contract until January 31, 2000, at which time the Tribe will make a
one-time payment of $72 million to the Company. This agreement with the Tribe
terminates the Company's original management contract 17 months prior to the
contract's scheduled expiration date. The Company plans to use the net proceeds
of the termination agreement to reduce its outstanding indebtedness under the
New Bank Credit Facility.
YEAR 2000 PROJECT
The Year 2000 issue is the result of computer programs being written using two
digits rather than four to define the applicable year. Any programs that have
time-sensitive software may recognize a date using "00" as the year 1900 rather
than the year 2000. This could result in a major system failure or
miscalculations.
The Company is currently engaged in a five-phase process of evaluating and
resolving the problems that might be associated with its internal operating
systems and the Year 2000 issue. The five phases are as follows:
1. Evaluation and development of remediation plans for traditional
information technology ("IT") systems;
2. Evaluation and development of remediation plans for non-IT
systems;
3. Implementation and testing of remediation plans;
4. Evaluation of vendor compliance with Year 2000 issues; and
5. Preparation of contingency plans.
The first phase of the process is the evaluation and development of remediation
plans for IT systems which was completed in the fourth quarter of 1998. In this
phase, the Company evaluated which IT systems are Year 2000 compliant and made
plans to bring identified non-compliant systems into compliance.
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<PAGE> 26
The second phase of the process is the evaluation and development of remediation
plans for non-IT systems which was completed in October 1999. In this phase, the
Company evaluated which non-IT systems are Year 2000 compliant and made plans to
bring identified non-compliant systems into compliance. The Company did not
discover Year 2000 issues in the course of its evaluation processes in phases
one or two. However, issues may not have been detected that could have a
material adverse effect on the business, financial condition and results of
operations of the Company.
Phase three of the process involves the implementation of remediation plans for
IT and non-IT systems that were identified in phases one and two as
non-compliant. This process was substantially complete by the end of the third
quarter of 1999 and involved either the replacement of the Company's existing
systems with systems that are Year 2000 compliant or the remedial review and
replacement of the software code with code that does not use the two digit year
code. As part of this phase, the Company intends to perform date sensitive
testing including testing on systems that vendors have certified to be Year 2000
compliant, to ensure that the modifications developed adequately resolve the
Year 2000 issue. While the Company believes the testing program should provide
additional evidence of its ability to operate in the Year 2000, the Company may
discover Year 2000 issues in the course of its testing process, or issues may
not be detected, that could have a material adverse effect on the business,
financial condition and results of operations of the Company.
Phase four involves evaluating Year 2000 compliance for those vendors who
provide the Company with goods and services critical to the servicing of our
guests, mainly in the non-gaming portions of our business. No individual vendor
supplies the Company with a significant portion of the goods or services used in
the non-gaming operations. This process was substantially completed in October
1999 and the Company did not discover Year 2000 issues in the course of
evaluation of its vendors. However, issues may not have been detected that could
have a material adverse effect on the business, financial condition and results
of operations of the Company.
The final phase of the process, expected to be completed during the fourth
quarter of 1999, will involve the development of a contingency plan in the event
any non-compliant critical systems remain by January 1, 2000. As part of this
phase, the Company will attempt to quantify the impact, if any, of the failure
to complete any necessary corrective action. The Company currently believes that
the majority of the equipment and processes used by the Company have adequate
manual backup procedures that would allow the Company to continue to operate a
significant portion of the business in the event the conversion project is not
completed on schedule (or the systems of other companies on which the Company
may rely are not timely converted). However, in most of the Central Region
gaming jurisdictions, electronic monitoring of operations is required. Waivers
for manual processes may be obtained from these gaming jurisdictions; however,
there can be no assurance that a material portion of the gaming business at
those properties would not be affected until the time at which a waiver is
granted or if this waiver will be granted at all. If the Company is able to
obtain timely waivers for the Central Region properties, the remaining primary
risks associated with the Year 2000 may be an effect on the timing of the
reporting of certain operating results to management and may include an adverse
effect on business volumes if the Year 2000 problems could not be timely
corrected. Although the Company cannot currently estimate the magnitude of such
impact, if systems material to the Company's operations have not been made Year
2000 compliant upon completion of this phase, the Year 2000 issue could have a
material adverse impact on the Company's business, financial condition and
results of operation.
The Company currently estimates approximately $8 million in costs directly
associated with the Year 2000 project that is expected to be funded from cash
flow from operations and availability under the Company's New Bank Credit
Facility. This current estimate includes approximately $3 million in operating
expenses related to the remediation efforts, including training. At September
30, 1999, the Company had incurred approximately $7.5 million in costs directly
related to the Year 2000 project, $5.5 million of which were capitalized as they
related to replacement of systems that were not Year 2000 compliant.
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<PAGE> 27
Given the inherent risks for a project of this magnitude and the resources
required, the timing and costs involved could differ materially from those
anticipated by the Company. There can be no assurance that the Year 2000 project
will be completed on schedule or within budget.
RECENTLY ISSUED ACCOUNTING STANDARDS
See Note 1 to Notes to Condensed Consolidated Financial Statements for a
complete discussion of recently issued accounting standards and their expected
impact on the Company's consolidated financial statements.
PRIVATE SECURITIES LITIGATION REFORM ACT
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 the Company's Year 2000 project, plans for future
expansion and other business development activities as well as capital spending,
financing sources, anticipated timing of completion of projects under
development, and the effects of regulation (including gaming and tax regulation)
and competition. These statements may be identified by the utilization of words
such as "believes", "expects", "anticipates", "intends", "plans" and similar
expressions. Forward looking statements involve important risks and
uncertainties that could significantly affect anticipated results in the future,
and accordingly, actual results may differ materially from 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, expansion 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, risks related to the Year 2000
project and other factors described from time to time in the Company's reports
filed with the Securities and Exchange Commission, including the Company's
Annual Report on Form 10-K for the year ended December 31, 1998. 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.
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURE ABOUT MARKET RISK
The Company is exposed to market risk from changes in interest rates. To reduce
such risks, the Company selectively uses financial instruments for its floating
rate debt. On December 31, 1997, the Company entered into an interest rate swap
agreement for a notional amount of $100 million. The agreement calls for the
Company to swap its variable LIBOR rate (5.51% at September 30, 1999) for a
fixed LIBOR rate of 5.54%. The variable LIBOR rate readjusts each quarter and
the agreement is cancelable should the LIBOR rate exceed 5.99%. The swap
agreement terminates in December 2000. The fair value of the swap liability at
September 30, 1999 is less than $0.1 million based on the present value of
future cash outflows expected from the Company based on the LIBOR rate at
September 30, 1999.
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<PAGE> 28
PART II. OTHER INFORMATION
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits.
10.31 Termination and Transition Agreement among the Company
and the Mississippi Band of Choctaw Indians, dated as
of October 20, 1999.
27. Financial Data Schedule
(b) Reports on Form 8-K.
(i) The Company filed a current report on Form 8-K dated
July 13, 1999 related to a definitive agreement to
acquire 100% of the equity interests in Blue Chip
Casino, LLC.
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<PAGE> 29
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
BOYD GAMING CORPORATION
(Registrant)
Date: November 12, 1999 By /s/Ellis Landau
-----------------------------
Ellis Landau,
Executive Vice President,
Chief Financial Officer, and
Treasurer (Principal
Financial Officer)
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<PAGE> 30
EXHIBIT INDEX
EXHIBIT
NUMBER DESCRIPTION
--------- -----------
10.31 Termination and Transition Agreement among the Company and the
Mississippi Band of Choctaw Indians, dated as of October 20, 1999.
27. Financial Data Schedule
<PAGE> 1
EXHIBIT 10.31
TERMINATION AND TRANSITION AGREEMENT
This Agreement is dated as of October _____, 1999 and is between
the Mississippi Band of Choctaw Indians (the "Tribe") and Boyd Mississippi, Inc.
("Boyd"). Whereas, the Tribe and Boyd previously entered into a Management
Agreement, dated as of November 1, 1993, as previously amended (the "Management
Agreement") that the parties now desire to terminate on the terms and conditions
set forth herein. Now, therefore, the parties agree as follows:
ARTICLE 1
TERMINATION
In accordance with Section 7.3 of the Management Agreement and in
consideration of, and conditional upon, the payment of all of the payments to be
made pursuant to Article 2 , the parties agree that the Management Agreement
shall terminate effective as of 11:59 p.m., January 31, 2000 ("Termination
Date"). Such termination shall not relieve either party of obligations arising
out of the Management Agreement in connection with management services provided
by Boyd under the Management Agreement prior to the Termination Date, including,
without limitation, obligations of indemnification, payment for pre-termination
services, and rights and obligations with respect to the Claims Reserve, which
are intended to survive termination of the Management Agreement.
1
<PAGE> 2
ARTICLE 2
TERMINATION PAYMENTS AND ADJUSTMENTS
Subject to the adjustments and retentions set forth in this
Agreement, the Tribe shall pay Boyd, in cash by wire transfer, as follows:
(a) Estimated January Management Fee ("Management Fee") payable
in cash by wire transfer to Boyd on February 2, 2000, in the event Boyd has
fully and completely closed the accounting books of Silver Star on or before
February 2, 2000. In the event Boyd has not fully and completely closed the
accounting books of Silver Star on or before February 2, 2000, the Management
Fee shall be paid to Boyd within two (2) business days after Boyd has fully and
completely closed the accounting books of Silver Star, which shall be closed not
later February 23, 2000, with payment not later than February 25, 2000, subject
to the retention in Article 3;
(b) The balance of principal plus any accrued interest due for
the outstanding facilities expansion loan by Boyd to the Tribe and/or Silver
Star payable in cash by wire transfer to Boyd on February 1, 2000;
(c) Any accounts payable due to Boyd that have been properly
documented and substantiated as of February 1, 2000, payable in cash by wire
transfer to Boyd on February 1, 2000. In the event some or all of the accounts
payable are not supported by proper documentation and substantiation, such
accounts payable shall be paid to Boyd within two (2) business days after the
receipt by the Tribe of proper documentation and substantiation, but not later
than February 25, 2000;
(d) A termination payment ("Termination Payment") payable in cash
by wire transfer to Boyd on February 1, 2000, in the aggregate amount of
Seventy-Two Million Dollars ($72,000,000).
2
<PAGE> 3
(e) Boyd and the Tribe agree to review the audit results within
five (5 ) business days of completion of the audit. Boyd and the Tribe will
mutually agree on any required adjustments to the Management Fee resulting from
the audit. Boyd and the Tribe agree that if the total of all such adjustments
agreed to are less than $200,000, then no adjustment shall be made to the
Retention Account. If the total of all such adjustments agreed to exceed
$200,000 then the total of all adjustments agreed to shall cause the Retention
Account to be adjusted as follows:
(i) If the total adjustments cause Net Total Revenues to
increase, then the Tribe shall deposit into the Retention
Account 40% of such adjustments.
(ii) If the total adjustments cause Total Net Revenues to
decrease, then 40% of such decrease shall be paid to the
Tribe from the Retention Account. To the extent that the
Retention Account is not sufficient to cover such
adjustments, Boyd agrees to fund any shortfall.
After all adjustments as described in (i) and (ii) are complete,
then the balance of the Retention Account, including all accrued
interest, is payable to Boyd.
(f) The parties shall jointly prepare a list of required
maintenance and repair projects on or before December 1, 1999. Such list shall
be compiled based on normal maintenance and repairs consistent with prior
practice and shall not include items which would be considered capital in nature
consistent with prior practice. The budgeted amount of each required maintenance
and repair project, to the extent not completed, shall be accrued as of the
Termination Date on the accounting books of Silver Star.
3
<PAGE> 4
(g) Any prepaid items subject to refund shall be reconciled on or
before the Termination Date. Any refunds of prepaid Silver Star expense items
paid under the Management Agreement shall be retained by the Tribe or paid over
to the Tribe by Boyd. Any amounts due the Tribe shall be paid by Boyd on
February 1, 2000.
(h) Boyd shall terminate Silver Star's insurance policies
effective as of the Termination Date and the Tribe shall procure its own
insurance without any adjustment to the Termination Payment.
(i) Boyd shall provide the Tribe with written notice containing
instructions for the wire transfers provided by this Article 2 on or before
January 20, 2000.
(j) The Tribe shall provide Boyd with evidence of the
availability of funds to make the wire transfer payments set forth in this
Article 2, either by providing evidence of cash available to make such payments
or binding loan commitment letter, on or before December 17, 1999.
ARTICLE 3
RETENTION.
Boyd and the Tribe agree that Seven Hundred Fifty Thousand
Dollars ($750,000) of the Management Fee shall be withheld and placed in an
interest-bearing account ("Retention Account") established at Trustmark National
Bank. The Retention Account shall be established pursuant to an Escrow Agreement
in substantially the form attached hereto as Exhibit A and shall be in addition
to and not in substitution for the Claims Reserve to be maintained and
distributed in accordance with Article 4 of the Management Agreement. The
Retention Account shall be maintained until the final resolution of any audit
differences as described in Article 2.
4
<PAGE> 5
ARTICLE 4
TRANSITION MATTERS
4.1 Transition Plan. The parties agree to cooperate with each
other in good faith in order to facilitate, to the best of their respective
abilities, a smooth transition of the management control of the Silver Star
facilities from Boyd to the Tribe as soon as can be accomplished. Such
cooperation includes, without limitation, the parties' agreement to implement
and substantially comply with a Transition Plan in substantially the form
attached hereto as Exhibit B for management transition and transition of custody
of assets.
4.2 General Manager. The Tribe shall notify Boyd at least ten
(10) days prior to the arrival of its new General Manager at the Silver Star
facilities. Boyd shall use its best efforts to assist in the assimilation and
familiarization of the Tribe's General Manager on the management aspects of the
Silver Star operations and facilities.
4.3 Employee Access. Boyd shall afford the Tribe reasonable
access to employees working in the Silver Star facilities for education and
transition communications purposes. All such access shall be coordinated with
Boyd's General Manager and shall not interfere with the normal business
operations of Silver Star.
4.4 COBRA Matters. With respect to employees (and their
dependents) of Boyd who experienced a qualifying event (as defined in Section
4980B(f)(3) of the Internal Revenue Code of 1986) prior to February 1, 2000,
Boyd shall have full and complete responsibility for compliance with the
provisions of Section 4980B of the Internal Revenue Code of 1986 and Sections
601-607 of the Employee Retirement Income Security Act (ERISA) (collectively
referred to as COBRA
5
<PAGE> 6
continuation coverage), including, but not limited to, provision of required
notices, coverage under health plan, correct calculation of premium, and correct
duration of COBRA coverage. Those Silver Star employees retained by the Tribe
who are currently eligible for health care benefits shall be immediately
eligible for coverage in the Tribe's health plan. With respect to individuals
currently employed at Silver Star who remain employed by Boyd after February 1,
2000, the Tribe shall have no liability or responsibility for provision of or
compliance with COBRA.
4.5 Health Care Matters. Effective February 1, 2000, Silver Star
employees hired by the Tribe will no longer be eligible for future health care
coverage provided by Boyd, except as required by federal or state law, or under
written agreement between the applicable employees and Boyd or between the Tribe
and Boyd. Notwithstanding the foregoing, claims incurred by Silver Star
employees covered under the Boyd health plan (and their covered dependents)
prior to February 1, 2000, but not submitted for payment or reported until after
January 31, 2000; shall be covered by the Boyd health plan, if submitted to
PERCS at 2950 Industrial Road, Las Vegas, Nevada 89109 no later than April 30,
2001. Boyd and the Boyd health plan will continue to have responsibility, under
relevant federal and state law, for any claims submitted with respect to
services or other charges incurred prior to February 1, 2000; regardless of the
status of the claim, adjudication, appeal or any legal proceeding arising out of
said claim. Boyd agrees that it will continue to provide administrative
services, through PERCS (a unit of Boyd) for claims processing for claims
incurred prior to Feb. 1, 2000, but not reported until after January 31, 2000
for Silver Star employees and their covered dependents, such services to be
provided for 15 months after January 31, 2000. Other than through its
participation in the Medical Claims Account described below, the Tribe will have
no liability or responsibility for any health care plan claims submitted by
Silver Star employees or their covered
6
<PAGE> 7
dependents with respect to services or other charges incurred prior to February
1, 2000, regardless of the status of the claim, adjudication, appeal or any
legal proceeding arising out of said claim.
Within two (2) business days after the closing of the accounting
books of Silver Star, the Tribe shall deposit the amount accrued in the
accounting books of Silver Star as of the Termination Date for the payment of
claims and related expenses for amounts incurred by Silver Star employees and
their covered dependents under the Boyd health plan prior to February 1, 2000
but not reported until after January 31, 2000 into a segregated bank account
(the "Medical Claims Account"). Such claims shall be eligible for payment from
the Medical Claims Account if submitted on or before 15 months after January 31,
2000. After all of the funds in the Medical Claims Account are paid for claims
and expenses attributable to Silver Star employees and their covered dependents,
there will be contributed, in the proportion of sixty percent (60%) by the Tribe
and forty percent (40%) by Boyd, an amount equal to the actual claims and
expenses attributable to Silver Star employees and their covered dependents
until the expiration of the fifteen (15) month period after the Termination
Date.
4.6 Employment Matters. Except as provided below, no later than
January 31, 2000, Boyd will deliver possession to the Tribe of all personnel
records of its former and current employees of the Silver Star, provided that
Boyd shall have the right to have reasonable access to such personnel records
during normal business hours. Boyd will provide a master list of all personnel
records delivered to the Tribe. Boyd may retain copies of personnel records of
former and current Silver Star employees, provided that Boyd provides the Tribe
with a list of copied personnel
7
<PAGE> 8
records it has retained. However, Boyd will retain, and provide the Tribe with
copies of, personnel records of current Silver Star employees who will remain
Boyd employees after January 31, 2000. Boyd shall provide all notices required
by law, including but not limited to Warn Act notices.
4.7 Contracts and Obligations. All contracts entered into by Boyd
on behalf of the Tribe in accordance with Article 3 of the Management Agreement
shall be fully assigned to and assumed by the Tribe as of the Termination Date,
and Boyd shall thereafter retain no rights or responsibilities with respect to
such contracts. The Tribe shall indemnify and hold Boyd harmless against any
damages, costs, expenses or liabilities arising out of any third party claim
against Boyd based on or relating to the Tribe's operation of the Silver Star
facilities or any other property owned by the Tribe to the extent based upon
acts, omissions or events occurring after the Termination Date,. but excluding
claims based on Boyd's use or management of the Silver Star Facilities prior to
the Termination Date.
4.8 Further Indemnification. The Tribe shall indemnify Boyd
against expenses and obligations incurred after the Termination Date that are
properly allocable to the Tribe pursuant to this Agreement. Boyd shall indemnify
the Tribe against expenses and obligations incurred after the Termination Date
that are properly allocable to Boyd pursuant to this Agreement.
ARTICLE 5
DISPUTE RESOLUTION
5.1 Disputes. Without limiting other remedies expressly provided
in this Agreement, in the event that either party believes that the other party
has failed to comply with any requirement of this Agreement, or has incorrectly
calculated adjustments pursuant to Article 2 or
8
<PAGE> 9
wrongly made payments from the Retention Account, the procedures in Sections
5.2, 5.3 and 5.4 shall be utilized.
5.2 Notice. The party asserting noncompliance shall serve written
notice on the other party. The notice shall identify the specific provision
alleged to have been violated. Thereafter, Boyd and the Tribe shall meet within
ten (10) days in an effort to resolve the dispute.
5.3 Arbitration. In the event the dispute is not resolved to the
satisfaction of the parties within thirty (30) days after service of the notice
set forth in Section 5.2 above, and the amount in controversy is $250,000, or
less, then the dispute shall be resolved through arbitration, as follows:
(a) The parties shall agree upon one arbitrator.
(b) If the parties are unable to so agree, the Tribe and Boyd
shall each select one arbitrator, who thereafter shall select a
third arbitrator with expertise in the subject matter of the
dispute, and the three arbitrators so selected shall arbitrate the
dispute. In the event the two arbitrators selected by the parties
are unable to agree on a third arbitrator, the third arbitrator
shall be an attorney appointed by the American Arbitration
Association.
(c) The arbitrator(s) shall meet with the parties immediately
after his or their appointment to determine a schedule and
procedures for arbitration, including whether and to what extent
discovery is required, but recognizing that one of the purposes of
this dispute resolution process is to minimize the time and expense
that would otherwise be incurred in judicial proceedings. The
arbitrator(s) may set the matter for an evidentiary hearing, or oral
argument, or may determine to dispose of
9
<PAGE> 10
the dispute based upon written submissions only. If an evidentiary
hearing is held, the normal rules of evidence shall be relaxed,
pursuant to the arbitrator's discretion. All parties shall have the
right to participate in the hearing and may determine the most
effective and efficient method for the presentation of their case.
The parties may present evidence through live testimony, written
report and affidavits, or the argument of counsel or its
representative at the hearing. The parties may be represented by any
person of their choice at proceedings before the arbitrator(s),
irrespective of whether the representative is an attorney.
(d) The cost of arbitration fees paid to the arbitrator(s)
shall be shared equally by the parties, unless the arbitrator(s)
award such cost to the prevailing party. All parties shall bear
their own costs and attorney fees associated with their
participation in arbitration. The decision of the arbitrator(s)
shall be final and non-reviewable and judgment upon the award
rendered by the arbitrator(s) may be entered in a court subject to
the provisions of Section 6.9 of this Agreement.
(e) Any party may pursue any remedy which is otherwise
available to that party to enforce orders of the arbitrator(s) in
the event voluntary compliance does not occur.
5.4 Suit in Federal Court. In the event of a dispute between the
parties in which the amount in controversy is greater than $250,000, and which
is not resolved to the satisfaction of the parties within thirty (30) days after
service of the notice set forth in Section 5.2 above, the parties agree to be
sued in the United States District Court in Jackson, Mississippi, the United
States Court of Appeals, and the United States Supreme Court, and the Tribe
agrees to a limited waiver of tribal
10
<PAGE> 11
sovereign immunity in accordance with the provisions of this Section 5.4 and the
Limited Waiver of Tribal Sovereign Immunity referenced in Section 6.9 of this
Agreement
ARTICLE 6
MISCELLANEOUS
6.1 Assignment and Subcontractors. The rights and obligations
under this Agreement shall not be assigned or subcontracted by either party
without the prior written consent of the other party. However, Boyd may assign
its rights and obligations pursuant to this Agreement to Boyd Gaming Corporation
or any wholly-owned subsidiary thereof, provided that Boyd Gaming Corporation
must guarantee performance by any of its wholly-owned subsidiaries serving as an
assignee.
6.2 Notices. Any notice, consent or other communication permitted
or required by this Agreement shall be in writing and shall be effective on the
date sent and shall be delivered by personal service, via telecopier with
reasonable evidence of transmission, express delivery or by certified or
registered mail, postage prepaid, return receipt requested, and, until written
notice of a new address or addresses is given, shall be addressed as follows:
If to the Tribe: Mississippi Band of Choctaw Indians
Attention: Tribal Chief
Tribal Office Building
Highway 16 West
P.O. Box 6010
Philadelphia, Mississippi 39350
Fax: (601) 656-1992
11
<PAGE> 12
If to Boyd: Boyd Mississippi, Inc.
c/o Boyd Gaming Corporation
Attention: Brian A. Larson
2950 South Industrial Road
Las Vegas, Nevada 89109-1100
Fax: (702) 792-7335
With a copy to: Boyd Gaming Corporation
Attn: Keith Smith
2950 South Industrial Blvd.
Las Vegas, Nevada 89109-1100
Fax: (702) 792-7312
Copies of any notices shall be given to the Chairman of the
Choctaw Gaming Commission, Highway 16 West, P.O. Box 6045, Tribal Office
Building, Philadelphia, Mississippi 39350.
6.3 Amendments. This Agreement may be amended only by written
instrument duly executed by both of the parties hereto and with any and all
necessary regulatory approvals previously obtained.
6.4 Counterparts. This Agreement may be executed in two or more
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same agreement.
6.5 Force Majeure. Neither party shall be in default in
performance of its obligations or duties hereunder if such failure or
performance is due to causes beyond its reasonable control, including acts of
God, war, fires, floods, accidents or any other causes,
12
<PAGE> 13
contingencies, or circumstances not subject to its reasonable control which
prevent or hinder performance of this Agreement.
6.6 Time is of the Essence. The parties agree that the schedule
requirements set forth in this Agreement and in the Transition Plan attached as
Exhibit B are material terms of this Agreement and that time is of the essence
to this transaction.
6.7 Further Assurances. Both parties hereto agree to do all acts
and further things and deliver necessary documents as shall from time to time be
reasonably required to carry out the terms and provisions of this Agreement.
6.8 Severability. In the event that any provision of this
Agreement is, by final order of a court of competent jurisdiction, held to be
illegal or void, the validity of the remaining portions of the Agreement shall
be enforced as if the Agreement did not contain such illegal or void clauses or
provisions, and the parties shall use their best efforts to negotiate an
amendment to this Agreement which will comply with the judicial order and
maintain the originally contemplated rights, duties and obligations of the
parties hereunder.
6.9 Sovereign Immunity. Nothing in this Agreement shall be deemed
or construed to constitute a waiver of the Tribe's sovereign immunity, and the
only applicable waiver of sovereign immunity shall be that as approved by the
Tribal Council in its Limited Waiver of Tribal Sovereign Immunity in the amount
of Seven Hundred Fifty Thousand Dollars ($750,000) until final payment of the
Retention Account at which time the amount shall reduce to Five Hundred Thousand
Dollars ($500,000) for a period of three (3) years from February 1, 2000. The
Tribe agrees that it will not amend or alter the Limited Waiver of Tribal
Sovereign Immunity which will in any way lessen the rights of Boyd as set forth
in the Limited Waiver of Tribal
13
<PAGE> 14
Sovereign Immunity, provided, however the Limited Waiver of Tribal
Sovereign Immunity shall be null and void three (3) years from February 1, 2000.
The form of the Limited Waiver of Tribal Sovereign Immunity is attached hereto
as Exhibit C.
6.10 Nondisclosure. The parties agree not to divulge to third
parties the terms of this Agreement or any other proprietary or confidential
information exchanged between the parties pursuant to this Agreement or pursuant
to the Management Agreement, unless (1) the information is required to be
disclosed pursuant to judicial or governmental requirements, (2) the information
is at the time of disclosure already in the public domain, or (3) to the extent
required in order to obtain financing. This prohibition shall not apply to
disclosures by either party to their respective attorneys, accountants, or other
professional advisers. In situations where disclosure of the terms of this
Agreement to regulatory, governmental or judicial entities is required by laws
or regulations, the parties will make reasonable efforts to secure confidential
treatment of the terms of this Agreement by such entities. The parties agree to
consult with each other and cooperate regarding any press releases regarding
this Agreement and the relationships described herein. Notwithstanding anything
in this Section 6.10 to the contrary, the Tribe agrees that Boyd may publicly
disclose the financial terms of this Agreement.
6.11 Representations and Warranties of Boyd. Boyd
hereby represents and warrants as follows:
(a) Boyd is a body corporate, duly organized and existing
under the Constitution and laws of the State of Nevada and is duly
qualified to do business in Mississippi and under the laws of the
Mississippi Band of Choctaw Indians.
14
<PAGE> 15
(b) Boyd has full legal right, power and authority under the
laws of the State of Mississippi and has taken all official action
necessary (i) to enter into this Agreement, (ii) to perform its
obligations hereunder, and (iii) to consummate all other
transactions contemplated by this Agreement.
(c) This Agreement has been duly executed and delivered by
Boyd and will constitute a valid and binding obligation, enforceable
against Boyd in accordance with its terms, except as enforceability
may be limited by bankruptcy, insolvency, reorganization, moratorium
and other similar laws affecting the rights of creditors generally,
or lessors, and certain judicial rulings which may affect the
Tribe's right to specific performance but which rulings do not
prevent the practical realization of the benefits intended to be
conferred hereby.
(d) The execution and delivery of this Agreement, the
performance by Boyd of its obligations hereunder and the
consummation by Boyd of the transactions contemplated hereby will
not violate any contract or agreement to which Boyd or any of its
affiliated companies is a party or any law, regulation, rule or
ordinance or any order, judgment or decree of any federal, state or
local court or require any regulatory approval.
(e) There is no action, suit, proceeding, inquiry, or
investigation pending or, to the knowledge of Boyd, threatened
against Boyd by or before any court, governmental authority or
public board or body which (i) affects or questions its existence or
the title to office of any of its officers; (ii) affects or seeks to
prohibit, restrain, or enjoin the execution and delivery of this
Agreement; (iii) affects or
15
<PAGE> 16
questions the validity or enforceability of this Agreement; (iv)
seriously questions the power or authority of Boyd to carry out the
transactions contemplated by, or to perform its obligations under,
this Agreement.
6.12 Representations and Warranties of Tribe. The Tribe hereby
represents and warrants as follows:
(a) The Tribe is a duly organized Indian tribe under the
Constitution and laws of the United States.
(b) The Tribe has full legal right, power and authority under
the laws of the Tribe and has taken all official Tribal Council
action necessary (i) to enter into this Agreement, (ii) to perform
its obligations hereunder, and (iii) to consummate all other
transactions contemplated by this Agreement.
(c) This Agreement, when executed and delivered by the Tribe
will constitute a valid and binding obligation, enforceable against
the Tribe in accordance with its terms, except as enforceability may
be limited by bankruptcy, insolvency, reorganization, moratorium and
other similar laws affecting the rights of creditors generally, and
certain judicial rulings which may affect Boyd's right to specific
performance remedies contained herein but which rulings do not
prevent the practical realization of the benefits intended to be
conferred hereby and except as enforceability may be limited by the
express terms of any Limited Waiver of Tribal Sovereign Immunity.
(d) The execution and delivery of this Agreement, the
performance by Tribe of its obligations hereunder and the
consummation by Tribe of the
16
<PAGE> 17
transactions contemplated hereby will not violate any contract or
agreement to which the Tribe or its affiliated entities is a party,
law, regulation, rule or ordinance or any order, judgment or decree
of any federal, state or local court, or require any approval by
governmental authorities.
(e) There is no action, suit, proceeding, inquiry, or
investigation pending or, to the knowledge of the Tribe, threatened
against the Tribe by or before any court, governmental agency or
public board or body which (i) affects or questions its existence or
its territorial jurisdiction or the title to office of any of its
officers; (ii) affects or seeks to prohibit, restrain, or enjoin the
execution and delivery of this Agreement; (iii) affects or questions
the validity or enforceability of this Agreement; (iv) questions the
power or authority of the Tribe to carry out the transactions
contemplated by, or to perform its obligations under, this
Agreement.
(f) The Tribe shall comply with all laws and regulations and
shall comply with all terms and conditions applicable to the Tribe
of all permits, licenses, approvals and exemptions necessary for
operation of the Facilities.
6.13 Interpretation. This Agreement has been negotiated, made and
executed in Mississippi and shall be construed in accordance with the laws of
Mississippi, without regard to its conflict of laws provisions, and applicable
federal laws.
17
<PAGE> 18
6.14 Entire Agreement. This Agreement, including all exhibits,
represents the entire agreement between the parties with respect to termination
of the Management Agreement and is intended to supersede any inconsistent
provisions contained in the Management Agreement.
IN WITNESS WHEREOF, the parties hereto have executed this
Agreement.
MISSISSIPPI BAND OF CHOCTAW INDIANS
By:
-------------------------------
Phillip Martin, Chief of the
Mississippi Band of
Choctaw Indians
Attest:
- --------------------------------
Harrison Ben, Secretary of the
Mississippi Band of Choctaw
Indians
BOYD MISSISSIPPI, INC.
By:
-------------------------------
William S. Boyd, President
18
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1999
<PERIOD-END> SEP-30-1999
<CASH> 63,946
<SECURITIES> 0
<RECEIVABLES> 21,744
<ALLOWANCES> 4,009
<INVENTORY> 7,278
<CURRENT-ASSETS> 125,332
<PP&E> 1,277,019
<DEPRECIATION> 501,586
<TOTAL-ASSETS> 1,142,959
<CURRENT-LIABILITIES> 114,559
<BONDS> 714,041
0
0
<COMMON> 622
<OTHER-SE> 256,934
<TOTAL-LIABILITY-AND-EQUITY> 1,142,959
<SALES> 0
<TOTAL-REVENUES> 239,515
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 205,807
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 16,539
<INCOME-PRETAX> 17,306
<INCOME-TAX> 6,969
<INCOME-CONTINUING> 10,337
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 10,337
<EPS-BASIC> 0.17
<EPS-DILUTED> 0.17
</TABLE>
