<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 June 30, 2000
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 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
July 31, 2000:
Class Outstanding
---------------------------- -----------
Common stock, $.01 par value 62,234,954
<PAGE> 2
BOYD GAMING CORPORATION
QUARTERLY REPORT ON FORM 10-Q
FOR THE PERIOD ENDED JUNE 30, 2000
TABLE OF CONTENTS
PART I. FINANCIAL INFORMATION
<TABLE>
<CAPTION>
Page No.
--------
<S> <C> <C>
Item 1. Unaudited Condensed Consolidated Financial Statements
Condensed Consolidated Balance Sheets at June 30, 2000
and December 31, 1999 3
Condensed Consolidated Statements of Operations for the
three and six month periods ended June 30, 2000 and 1999 4
Condensed Consolidated Statement of Changes in
Stockholders' Equity for the six month period ended
June 30, 2000 5
Condensed Consolidated Statements of Cash Flows for the six
month periods ended June 30, 2000 and 1999 6
Notes to Condensed Consolidated Financial Statements 7
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations 19
Item 3. Quantitative and Qualitative Disclosure about Market Risk 28
PART II. OTHER INFORMATION
Item 4. Submission of Matters to a Vote of Security Holders 29
Item 6. Exhibits and Reports on Form 8-K 30
Signature Page 31
</TABLE>
2
<PAGE> 3
PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
BOYD GAMING CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(UNAUDITED)
(IN THOUSANDS, EXCEPT SHARE DATA)
--------------------------------------------------------------------------------
ASSETS
<TABLE>
<CAPTION>
JUNE 30, DECEMBER 31,
2000 1999
---------- ------------
<S> <C> <C>
Current assets
Cash and cash equivalents .................................. $ 72,069 $ 86,192
Accounts receivable, net ................................... 13,075 17,585
Inventories ................................................ 5,245 6,181
Prepaid expenses and other ................................. 13,538 14,718
Income taxes receivable .................................... -- 1,108
Deferred income taxes ...................................... 8,550 16,835
---------- ----------
Total current assets ............................... 112,477 142,619
Property and equipment, net ................................... 923,750 901,014
Other assets and deferred charges, net ........................ 48,637 45,689
Intangible assets, net ........................................ 349,982 354,659
---------- ----------
Total assets ....................................... $1,434,846 $1,443,981
========== ==========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities
Current maturities of long-term debt ....................... $ 1,585 $ 1,744
Trade payables ............................................. 29,482 36,531
Construction payables ...................................... 15,598 8,609
Accrued liabilities
Payroll and related .................................... 29,628 31,184
Interest and other ..................................... 72,583 58,862
Income taxes payable ................................... 10,662 --
---------- ----------
Total current liabilities .......................... 159,538 136,930
Long-term debt, net of current maturities ..................... 880,579 982,149
Deferred income taxes and other liabilities ................... 63,994 57,923
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;
62,234,954 and 62,227,753 shares outstanding ............ 622 622
Additional paid-in capital .................................. 142,020 141,986
Retained earnings ........................................... 188,093 124,371
---------- ----------
Total stockholders' equity ......................... 330,735 266,979
---------- ----------
Total liabilities and stockholders' equity ......... $1,434,846 $1,443,981
========== ==========
</TABLE>
The accompanying notes are an integral part of these unaudited condensed
consolidated financial statements.
3
<PAGE> 4
BOYD GAMING CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(UNAUDITED)
(IN THOUSANDS, EXCEPT PER SHARE DATA)
--------------------------------------------------------------------------------
<TABLE>
<CAPTION>
THREE MONTHS ENDED SIX MONTHS ENDED
JUNE 30, JUNE 30,
----------------------- -----------------------
2000 1999 2000 1999
--------- --------- --------- ---------
<S> <C> <C> <C> <C>
Revenues
Casino ......................................... $ 215,490 $ 178,222 $ 441,118 $ 357,755
Food and beverage .............................. 38,821 39,977 79,731 80,945
Room ........................................... 19,305 17,470 37,700 36,774
Other .......................................... 18,863 18,746 36,071 36,091
Management fee ................................. -- 10,031 3,815 20,844
Termination fee, net ........................... -- -- 70,988 --
--------- --------- --------- ---------
Gross revenues .................................... 292,479 264,446 669,423 532,409
Less promotional allowances ....................... 22,760 22,510 46,997 47,215
--------- --------- --------- ---------
Net revenues ........................... 269,719 241,936 622,426 485,194
--------- --------- --------- ---------
Costs and expenses
Casino ......................................... 106,683 89,067 216,498 179,365
Food and beverage .............................. 25,603 26,193 50,878 52,026
Room ........................................... 5,848 5,941 11,554 12,183
Other .......................................... 18,495 17,103 35,010 32,504
Selling, general and administrative ............ 42,398 35,239 84,037 70,277
Maintenance and utilities ...................... 12,100 9,891 23,806 19,545
Depreciation ................................... 19,682 17,096 38,784 34,390
Amortization of intangible license rights and
acquisition costs ........................... 2,450 1,438 4,900 2,876
Corporate expense .............................. 4,769 6,587 12,107 12,689
Preopening expense ............................. 1,950 315 2,332 854
--------- --------- --------- ---------
Total .................................. 239,978 208,870 479,906 416,709
--------- --------- --------- ---------
Operating income .................................. 29,741 33,066 142,520 68,485
--------- --------- --------- ---------
Other income (expense)
Interest income ................................ 328 46 462 103
Interest expense, net of amounts capitalized ... (19,250) (16,662) (39,368) (33,793)
--------- --------- --------- ---------
Total .................................. (18,922) (16,616) (38,906) (33,690)
--------- --------- --------- ---------
Income before provision for income taxes and
cumulative effect ............................. 10,819 16,450 103,614 34,795
Provision for income taxes ........................ 4,166 6,745 39,892 14,450
--------- --------- --------- ---------
Income before cumulative effect ................... 6,653 9,705 63,722 20,345
Cumulative effect of a change in accounting for
start-up activities, net of tax benefit of $936 -- -- -- (1,738)
--------- --------- --------- ---------
Net income ........................................ $ 6,653 $ 9,705 $ 63,722 $ 18,607
========= ========= ========= =========
Basic and diluted net income per common share:
Income before cumulative effect ................ $ 0.11 $ 0.16 $ 1.02 $ 0.33
Cumulative effect, net of tax .................. -- -- -- (0.03)
--------- --------- --------- ---------
Net income ..................................... $ 0.11 $ 0.16 $ 1.02 $ 0.30
========= ========= ========= =========
Average basic shares outstanding .................. 62,230 62,029 62,229 62,029
Average diluted shares outstanding ................ 62,302 62,143 62,303 62,085
========= ========= ========= =========
</TABLE>
The accompanying notes are an integral part of these unaudited condensed
consolidated financial statements.
4
<PAGE> 5
BOYD GAMING CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY FOR THE SIX
MONTH PERIOD ENDED JUNE 30, 2000
(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, 2000 62,227,753 $622 $141,986 $124,371 $266,979
Net income .............. -- -- -- 63,722 63,722
Stock options exercised . 7,201 -- 34 -- 34
---------- ---- -------- -------- --------
BALANCES, JUNE 30, 2000 . 62,234,954 $622 $142,020 $188,093 $330,735
========== ==== ======== ======== ========
</TABLE>
The accompanying notes are an integral part of these unaudited condensed
consolidated financial statements.
5
<PAGE> 6
BOYD GAMING CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
(IN THOUSANDS)
--------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SIX MONTHS ENDED
JUNE 30,
---------------------
2000 1999
--------- --------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES
Net income ................................................. $ 63,722 $ 18,607
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation and amortization ......................... 43,684 37,266
Cumulative effect of a change in accounting principle . -- 2,674
Deferred income taxes ................................. 14,018 11,238
Preopening expense .................................... 2,332 854
Equity loss in unconsolidated subsidiaries ............ 678 1,157
Changes in assets and liabilities:
Accounts receivable, net ............................ 4,697 4,655
Inventories ......................................... 936 1,721
Prepaid expenses and other .......................... 1,180 (364)
Other assets ........................................ 290 1,333
Other current liabilities ........................... 6,748 (1,896)
Other liabilities ................................... 338 388
Income taxes receivable ............................. 1,108 2,494
Income taxes payable ................................ 10,662 --
--------- --------
Net cash provided by operating activities .................. 150,393 80,127
--------- --------
CASH FLOWS FROM INVESTING ACTIVITIES
Acquisition of property, equipment and other assets ..... (55,975) (38,068)
Investment in and advances to unconsolidated subsidiaries (4,514) (4,156)
Preopening expense ...................................... (2,332) (854)
--------- --------
Net cash used in investing activities ...................... (62,821) (43,078)
--------- --------
CASH FLOWS FROM FINANCING ACTIVITIES
Payments on long-term debt .............................. (429) (977)
Net payments under credit agreements .................... (101,300) (41,250)
Proceeds from issuance of common stock .................. 34 1,070
--------- --------
Net cash used in financing activities ...................... (101,695) (41,157)
--------- --------
Net decrease in cash and cash equivalents .................. (14,123) (4,108)
Cash and cash equivalents, beginning of period ............. 86,192 75,937
--------- --------
Cash and cash equivalents, end of period ................... $ 72,069 $ 71,829
========= ========
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION
Cash paid for interest, net of amounts capitalized ...... $ 36,612 $ 35,172
Cash paid for income taxes, net of refunds .............. 14,104 3,882
========= ========
SUPPLEMENTAL SCHEDULE OF NON-CASH
INVESTING AND FINANCING ACTIVITIES
Property additions acquired on construction and trade
payables which were accrued, but not yet paid ......... $ 15,966 $ 2,195
========= ========
</TABLE>
The accompanying notes are an integral part of these unaudited 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." The Company owns and operates
eleven casino entertainment facilities located in Las Vegas, Nevada, Tunica,
Mississippi, East Peoria, Illinois, Kenner, Louisiana, and Michigan City,
Indiana as well as a travel agency located in Honolulu, Hawaii. In addition, the
Company managed a casino entertainment facility in Philadelphia, Mississippi for
which it had a management contract that expired on January 31, 2000 (see Note
3). 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 for the three and six month periods ended June 30, 2000 and 1999 and
cash flows for the six month periods ended June 30, 2000 and 1999. 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, 1999. The operating results for the three and six
month periods ended June 30, 2000 and 1999 and cash flows for the six month
periods ended June 30, 2000 and 1999 are not necessarily indicative of the
results that will be achieved for the full year or future periods.
Use of Estimates
The preparation of financial statements in conformity with accounting
principles generally accepted in the United States of America requires
management to make estimates and assumptions that affect the reported amounts in
the condensed consolidated financial statements and accompanying notes.
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 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 six month periods ended June 30, 2000 was $1.3 million and $2.2
million, respectively. Capitalized interest during the three and six month
periods ended June 30, 1999 was $0.3 million and $0.4 million, respectively.
7
<PAGE> 8
BOYD GAMING CORPORATION AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) (CONTINUED)
--------------------------------------------------------------------------------
Preopening Expenses
The Company expenses certain costs of start-up activities as incurred.
During the three and six month periods ended June 30, 2000, the Company expensed
$2.0 million and $2.3 million, respectively, in preopening expenses, $1.5
million of which relates to the Company's unsuccessful efforts to assist in the
development and operation of a Rhode Island Indian casino with the Narragansett
Indian Tribe. The remainder of the preopening expenses incurred during the three
and six month periods ended June 30, 2000 relate primarily to the Company's
share of preopening expense in The Borgata, the Company's Atlantic City joint
venture. During the three and six month periods ended June 30, 1999, the Company
expensed $0.3 million and $0.9 million in preopening costs that related
primarily to the Company's share of preopening expense in The Borgata.
Reclassifications
Certain prior period amounts in the condensed consolidated financial
statements have been reclassified to conform to the June 30, 2000 presentation.
These reclassifications had no effect on the Company's net income.
Recently Issued Accounting Standards
In December 1999, the Securities and Exchange Commission issued Staff
Accounting Bulletin No. 101, "Revenue Recognition in Financial Statements" ("SAB
101"). SAB 101 clarifies existing accounting principles related to revenue
recognition in financial statements. The Company is required to comply with the
provisions of SAB 101 by the fourth quarter of 2000. Due to the nature of the
Company's operations, management does not believe that SAB 101 will have a
significant impact on the Company's financial statements.
NOTE 2. NET INCOME PER COMMON SHARE
The Company has adopted Statement of Financial Accounting Standards ("SFAS")
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 effects of common share equivalents. Diluted net income per
share during the three and six month periods ended June 30, 2000 and 1999 is
determined considering the dilutive effects of outstanding stock options. The
effect of stock options outstanding to purchase approximately 5.4 million shares
were not included in the diluted calculation during the three and six month
periods ended June 30, 2000 and 4.5 million and 4.6 million shares,
respectively, were not included in the diluted calculation during the three and
six month periods ended June 30, 1999 since the exercise price of such options
was greater than the average price of the Company's common shares during the
period.
NOTE 3. 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 continued to manage Silver Star under the terms of the
management contract through January 31, 2000, at which time the Tribe made a $72
million termination
8
<PAGE> 9
BOYD GAMING CORPORATION AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) (CONTINUED)
--------------------------------------------------------------------------------
payment to the Company and the Company recorded the termination fee, net of
certain expenses. The agreement with the Tribe terminated the Company's original
management contract 17 months prior to its scheduled maturity 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 a result of this
utilization, the majority of the Company's deferred tax assets are classified as
part of current assets on the accompanying condensed consolidated balance sheets
as of June 30, 2000 and December 31, 1999.
NOTE 4. ACQUISITION
On November 10, 1999, the Company acquired Blue Chip Casino, L.L.C. ("Blue
Chip") for approximately $261 million in net cash, including $10.3 million for a
hotel and parking facility that was under construction and attached to the
existing casino complex. Intangible license rights, representing the excess of
the purchase price over the fair value of the net assets acquired, was
approximately $158 million. The purchase price excludes a contingent purchase
price payment of $5.0 million. The contingent purchase price payment will be
made to the former owners of Blue Chip Casino, Inc. in the event that, over a
period of 36 months, Blue Chip's aggregate earnings before interest, taxes,
depreciation and amortization and certain other qualified expenses exceeds a
specified amount. The Company's pro forma condensed consolidated results of
operations, as if the acquisition had occurred on January 1, 1999, are as
follows:
<TABLE>
<CAPTION>
SIX MONTHS
ENDED JUNE 30,
1999
--------------
<S> <C>
Pro forma (in thousands, except per share data):
Net revenues ................................ $565,571
Income before cumulative effect ............. $ 30,930
Net income .................................. $ 29,192
Basic and diluted net income per common share:
Income before cumulative effect ............. $ 0.50
Net income .................................. $ 0.47
</TABLE>
NOTE 5. SUBSEQUENT EVENT
Effective July 28, 2000, the Company amended its bank credit facility
primarily to allow for an increase of up to $225 million in its joint venture
investment in The Borgata and to reduce and modify the Company's capital raising
requirements for The Borgata.
9
<PAGE> 10
BOYD GAMING CORPORATION AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) (CONTINUED)
--------------------------------------------------------------------------------
NOTE 6. SEGMENT INFORMATION
The Company's management reviews the results of operations based on the
following distinct geographic gaming market segments: the Stardust Resort and
Casino on the Las Vegas Strip; Sam's Town Hotel and Gambling Hall, the Eldorado
Casino and Jokers Wild Casino on the Boulder Strip; the Downtown Properties;
Sam's Town Hotel and Gambling Hall in Tunica, Mississippi; Par-A-Dice Hotel and
Casino in East Peoria, Illinois; Treasure Chest Casino in Kenner, Louisiana;
Blue Chip Casino in Michigan City, Indiana (acquired November 10, 1999); and
management fee income from Silver Star Resort and Casino located near
Philadelphia, Mississippi (through January 31, 2000). As used herein, "Downtown
Properties" consist of the California Hotel and Casino, the Fremont Hotel and
Casino, Main Street Station Casino, Brewery and Hotel and Vacations Hawaii.
10
<PAGE> 11
BOYD GAMING CORPORATION AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) (CONTINUED)
--------------------------------------------------------------------------------
<TABLE>
<CAPTION>
THREE MONTHS ENDED SIX MONTHS ENDED
JUNE 30, JUNE 30,
-------------------- ---------------------
2000 1999 2000 1999
-------- -------- -------- ---------
(IN THOUSANDS)
<S> <C> <C> <C> <C>
Casino Revenue
Stardust ............................. $ 24,172 $ 23,038 $ 49,868 $ 50,570
Sam's Town Las Vegas ................. 26,506 30,557 57,466 60,464
Eldorado and Jokers Wild ............. 7,099 7,476 14,855 15,168
Downtown Properties .................. 34,109 32,829 67,688 66,182
Sam's Town Tunica .................... 20,140 25,553 42,533 50,559
Par-A-Dice ........................... 32,327 27,066 64,531 52,242
Treasure Chest ....................... 25,926 31,703 52,971 62,570
Blue Chip ............................ 45,211 -- 91,206 --
-------- -------- -------- ---------
Total casino revenue ......... $215,490 $178,222 $441,118 $ 357,755
======== ======== ======== =========
EBITDA(1)
Stardust ............................. $ 4,044 $ 4,015 $ 8,801 $ 10,229
Sam's Town Las Vegas ................. 5,353 7,874 14,080 15,769
Eldorado and Jokers Wild ............. 1,468 2,127 3,388 4,381
Downtown Properties .................. 11,511 9,584 21,598 18,930
Sam's Town Tunica .................... 1,002 6,411 4,005 13,454
Par-A-Dice ........................... 12,132 9,662 24,314 18,282
Treasure Chest ....................... 4,224 9,257 9,929 18,324
Silver Star .......................... -- 9,572 74,803 19,925
Blue Chip ............................ 18,858 -- 39,725 --
-------- -------- -------- ---------
Property EBITDA .................... 58,592 58,502 200,643 119,294
-------- -------- -------- ---------
Other Costs and Expenses
Corporate expense .................... 4,769 6,587 12,107 12,689
Depreciation and amortization ........ 22,132 18,534 43,684 37,266
Preopening expense ................... 1,950 315 2,332 854
Other expense, net ................... 18,922 16,616 38,906 33,690
-------- -------- -------- ---------
Total other costs and expenses 47,773 42,052 97,029 84,499
-------- -------- -------- ---------
Income before provision for income taxes
and other items ....................... 10,819 16,450 103,614 34,795
Provision for income taxes ............. 4,166 6,745 39,892 14,450
-------- -------- -------- ---------
Income before cumulative effect ........ 6,653 9,705 63,722 20,345
Cumulative effect, net of tax .......... -- -- -- (1,738)
-------- -------- -------- ---------
Net income ............................. $ 6,653 $ 9,705 $ 63,722 $ 18,607
======== ======== ======== =========
</TABLE>
(1) EBITDA is earnings before interest, taxes, depreciation, amortization and
preopening expense. The Company believes that EBITDA is a useful financial
measurement for assessing the operating performances of its properties.
EBITDA does not represent net income or cash flows from operating, investing
or financing activities as defined by accounting principles generally
accepted in the United States of America.
11
<PAGE> 12
BOYD GAMING CORPORATION AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) (CONTINUED)
--------------------------------------------------------------------------------
NOTE 7. GUARANTOR INFORMATION
The Company's 9.25% Notes are guaranteed by a majority of the Company's
wholly-owned existing significant 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 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 June 30, 2000 and December
31, 1999 and for the three and six month periods ended June 30, 2000 and 1999.
CONDENSED CONSOLIDATING BALANCE SHEET INFORMATION
AS OF JUNE 30, 2000
<TABLE>
<CAPTION>
COMBINED
COMBINED NON- ELIMINATION
PARENT GUARANTORS GUARANTORS ENTRIES CONSOLIDATED
---------- ---------- ---------- ----------- ------------
(IN THOUSANDS)
<S> <C> <C> <C> <C> <C>
ASSETS
Current assets ............................. $ 2,319 $ 79,804 $ 30,684 $ (330)(1) $ 112,477
Property and equipment, net ................ 40,550 729,903 153,297 -- 923,750
Other assets and deferred charges, net ..... 1,152,194 (475,994) 521,532 (1,149,095)(1)(2) 48,637
Intangible assets, net ..................... -- 114,478 235,504 -- 349,982
---------- --------- -------- ----------- ----------
Total assets ........................... $1,195,063 $ 448,191 $941,017 $(1,149,425) $1,434,846
========== ========= ======== =========== ==========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities ........................ $ 35,619 $ 73,125 $ 50,944 $ (150)(1) $ 159,538
Long-term debt, net of current maturities .. 822,700 57,879 -- -- 880,579
Deferred income taxes and other liabilities 6,009 52,103 5,882 -- 63,994
Stockholders' equity ....................... 330,735 265,084 884,191 (1,149,275)(2) 330,735
---------- --------- -------- ----------- ----------
Total liabilities and stockholders'
equity ............................ $1,195,063 $ 448,191 $941,017 $(1,149,425) $1,434,846
========== ========= ======== =========== ==========
</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 (UNAUDITED) (CONTINUED)
--------------------------------------------------------------------------------
CONDENSED CONSOLIDATING BALANCE SHEET INFORMATION
AS OF DECEMBER 31, 1999
<TABLE>
<CAPTION>
COMBINED
COMBINED NON- ELIMINATION
PARENT GUARANTORS GUARANTORS ENTRIES CONSOLIDATED
---------- ---------- ---------- ----------- ------------
(IN THOUSANDS)
<S> <C> <C> <C> <C> <C>
ASSETS
Current assets ............................. $ 17,583 $ 100,696 $ 26,599 $ (2,259)(1) $ 142,619
Property and equipment, net ................ 43,559 708,072 149,383 -- 901,014
Other assets and deferred charges, net ..... 1,163,857 (524,688) 464,362 (1,057,842)(1)(2) 45,689
Intangible assets, net ..................... -- 116,107 238,552 -- 354,659
---------- --------- -------- ----------- ----------
Total assets ........................... $1,224,999 $ 400,187 $878,896 $(1,060,101) $1,443,981
========== ========= ======== =========== ==========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities ........................ $ 36,470 $ 62,993 $ 39,640 $ (2,173)(1) $ 136,930
Long-term debt, net of current maturities .. 914,028 68,088 33 -- 982,149
Deferred income taxes and other liabilities 7,522 49,059 1,342 -- 57,923
Stockholders' equity ....................... 266,979 220,047 837,881 (1,057,928)(2) 266,979
---------- --------- -------- ----------- ----------
Total liabilities and stockholders'
Equity ............................ $1,224,999 $ 400,187 $878,896 $(1,060,101) $1,443,981
========== ========= ======== =========== ==========
</TABLE>
----------
Elimination Entries
(1) To eliminate intercompany payables and receivables.
(2) To eliminate investment in subsidiaries and subsidiaries' equity.
13
<PAGE> 14
BOYD GAMING CORPORATION AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) (CONTINUED)
--------------------------------------------------------------------------------
CONDENSED CONSOLIDATING STATEMENT OF OPERATIONS INFORMATION
FOR THE THREE MONTHS ENDED JUNE 30, 2000
<TABLE>
<CAPTION>
COMBINED
COMBINED NON- ELIMINATION
PARENT GUARANTORS GUARANTORS ENTRIES CONSOLIDATED
-------- ---------- ---------- ----------- ------------
(IN THOUSANDS)
<S> <C> <C> <C> <C> <C>
Revenues
Casino .............................. $ -- $ 144,353 $ 71,137 $ -- $ 215,490
Food and beverage ................... -- 34,476 4,345 -- 38,821
Room ................................ -- 18,525 780 -- 19,305
Other ............................... 2,999 7,222 12,388 (3,746)(1) 18,863
Management fee and equity income .... 30,797 708 17,152 (48,657)(1) --
-------- --------- -------- -------- ---------
Gross revenues ........................ 33,796 205,284 105,802 (52,403) 292,479
Less promotional allowances ........... -- 19,906 2,854 -- 22,760
-------- --------- -------- -------- ---------
Net revenues ................ 33,796 185,378 102,948 (52,403) 269,719
-------- --------- -------- -------- ---------
Costs and expenses
Casino .............................. -- 79,706 26,977 -- 106,683
Food and beverage ................... -- 20,607 4,996 -- 25,603
Room ................................ -- 5,465 383 -- 5,848
Other ............................... -- 9,603 17,103 (8,211)(1) 18,495
Selling, general and administrative . -- 27,969 14,429 -- 42,398
Maintenance and utilities ........... -- 8,759 3,341 -- 12,100
Depreciation and amortization ....... 624 16,182 5,326 -- 22,132
Corporate expense ................... 8,059 31 425 (3,746)(1) 4,769
Preopening expense .................. 1,549 133 268 -- 1,950
-------- --------- -------- -------- ---------
Total ....................... 10,232 168,455 73,248 (11,957) 239,978
-------- --------- -------- -------- ---------
Operating income ...................... 23,564 16,923 29,700 (40,446) 29,741
Other income (expense), net ........... (17,823) (1,264) 165 -- (18,922)
-------- --------- -------- -------- ---------
Income before income taxes ............ 5,741 15,659 29,865 (40,446) 10,819
Provision (benefit) for income taxes .. (912) 2,771 2,307 -- 4,166
-------- --------- -------- -------- ---------
Net income ............................ $ 6,653 $ 12,888 $ 27,558 $(40,446) $ 6,653
======== ========= ======== ======== =========
</TABLE>
----------
Elimination Entries
(1) To eliminate intercompany revenue and expense.
14
<PAGE> 15
BOYD GAMING CORPORATION AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) (CONTINUED)
--------------------------------------------------------------------------------
CONDENSED CONSOLIDATING STATEMENT OF OPERATIONS INFORMATION
FOR THE THREE MONTHS ENDED JUNE 30, 1999
<TABLE>
<CAPTION>
COMBINED
COMBINED NON- ELIMINATION
PARENT GUARANTORS GUARANTORS ENTRIES CONSOLIDATED
-------- ---------- ---------- ----------- ------------
(IN THOUSANDS)
<S> <C> <C> <C> <C> <C>
Revenues
Casino .............................. $ -- $ 146,519 $31,703 $ -- $ 178,222
Food and beverage ................... -- 37,259 2,718 -- 39,977
Room ................................ -- 17,470 -- -- 17,470
Other ............................... 2,846 8,298 11,147 (3,545)(1) 18,746
Management fee and equity income .... 34,726 11,910 5,238 (41,843)(1) 10,031
-------- --------- ------- -------- ---------
Gross revenues ........................ 37,572 221,456 50,806 (45,388) 264,446
Less promotional allowances ........... -- 20,583 1,927 -- 22,510
-------- --------- ------- -------- ---------
Net revenues ................ 37,572 200,873 48,879 (45,388) 241,936
-------- --------- ------- -------- ---------
Costs and expenses
Casino .............................. -- 77,745 11,322 -- 89,067
Food and beverage ................... -- 23,510 2,683 -- 26,193
Room ................................ -- 5,941 -- -- 5,941
Other ............................... -- 17,938 11,601 (12,436)(1) 17,103
Selling, general and administrative . -- 27,925 7,314 -- 35,239
Maintenance and utilities ........... -- 8,470 1,421 -- 9,891
Depreciation and amortization ....... 471 15,820 2,243 -- 18,534
Corporate expense ................... 9,629 66 437 (3,545)(1) 6,587
Preopening expense .................. 18 -- 297 -- 315
-------- --------- ------- -------- ---------
Total ....................... 10,118 177,415 37,318 (15,981) 208,870
-------- --------- ------- -------- ---------
Operating income ...................... 27,454 23,458 11,561 (29,407) 33,066
Other income (expense), net ........... (15,427) (1,462) 273 -- (16,616)
-------- --------- ------- -------- ---------
Income before income taxes ............ 12,027 21,996 11,834 (29,407) 16,450
Provision for income taxes ............ 2,322 4,423 -- -- 6,745
-------- --------- ------- -------- ---------
Net income ............................ $ 9,705 $ 17,573 $11,834 $(29,407) $ 9,705
======== ========= ======= ======== =========
</TABLE>
---------
Elimination Entries
(1) To eliminate intercompany revenue and expense.
15
<PAGE> 16
BOYD GAMING CORPORATION AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) (CONTINUED)
--------------------------------------------------------------------------------
CONDENSED CONSOLIDATING STATEMENT OF OPERATIONS INFORMATION
FOR THE SIX MONTHS ENDED JUNE 30, 2000
<TABLE>
<CAPTION>
COMBINED
COMBINED NON- ELIMINATION
PARENT GUARANTORS GUARANTORS ENTRIES CONSOLIDATED
-------- ---------- ---------- ----------- ------------
(IN THOUSANDS)
<S> <C> <C> <C> <C> <C>
Revenues
Casino .............................. $ -- $ 296,941 $144,177 $ -- $ 441,118
Food and beverage ................... -- 70,950 8,781 -- 79,731
Room ................................ -- 36,584 1,116 -- 37,700
Other ............................... 5,998 14,426 23,140 (7,493)(1) 36,071
Management fee and equity income .... 135,430 5,598 37,612 (174,825)(1) 3,815
Termination fee, net ................ -- 70,988 -- -- 70,988
--------- --------- -------- --------- ---------
Gross revenues ........................ 141,428 495,487 214,826 (182,318) 669,423
Less promotional allowances ........... -- 41,607 5,390 -- 46,997
--------- --------- -------- --------- ---------
Net revenues ................ 141,428 453,880 209,436 (182,318) 622,426
--------- --------- -------- --------- ---------
Costs and expenses
Casino .............................. -- 162,355 54,143 -- 216,498
Food and beverage ................... -- 41,188 9,690 -- 50,878
Room ................................ -- 10,974 580 -- 11,554
Other ............................... -- 69,553 33,448 (67,991)(1) 35,010
Selling, general and administrative . -- 56,427 27,610 -- 84,037
Maintenance and utilities ........... -- 17,157 6,649 -- 23,806
Depreciation and amortization ....... 1,128 32,142 10,414 -- 43,684
Corporate expense ................... 18,628 93 879 (7,493)(1) 12,107
Preopening expense .................. 1,563 161 608 -- 2,332
--------- --------- -------- --------- ---------
Total ....................... 21,319 390,050 144,021 (75,484) 479,906
--------- --------- -------- --------- ---------
Operating income ...................... 120,109 63,830 65,415 (106,834) 142,520
Other income (expense), net ........... (36,634) (2,625) 353 -- (38,906)
--------- --------- -------- --------- ---------
Income before income taxes ............ 83,475 61,205 65,768 (106,834) 103,614
Provision for income taxes ............ 19,753 15,252 4,887 -- 39,892
--------- --------- -------- --------- ---------
Net income ............................ $ 63,722 $ 45,953 $ 60,881 $(106,834) $ 63,722
========= ========= ======== ========= =========
</TABLE>
----------
Elimination Entries
(1) To eliminate intercompany revenue and expense.
16
<PAGE> 17
BOYD GAMING CORPORATION AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) (CONTINUED)
--------------------------------------------------------------------------------
CONDENSED CONSOLIDATING STATEMENT OF OPERATIONS INFORMATION
FOR THE SIX MONTHS ENDED JUNE 30, 1999
<TABLE>
<CAPTION>
COMBINED
COMBINED NON- ELIMINATION
PARENT GUARANTORS GUARANTORS ENTRIES CONSOLIDATED
-------- ---------- ---------- ----------- ------------
(IN THOUSANDS)
<S> <C> <C> <C> <C> <C>
Revenues
Casino .............................. $ -- $ 295,185 $62,570 $ -- $ 357,755
Food and beverage ................... -- 75,737 5,208 -- 80,945
Room ................................ -- 36,774 -- -- 36,774
Other ............................... 5,692 17,091 20,396 (7,088)(1) 36,091
Management fee and equity income .... 71,685 24,561 10,350 (85,752)(1) 20,844
-------- --------- ------- -------- ---------
Gross revenues ........................ 77,377 449,348 98,524 (92,840) 532,409
Less promotional allowances ........... -- 43,451 3,764 -- 47,215
-------- --------- ------- -------- ---------
Net revenues ................ 77,377 405,897 94,760 (92,840) 485,194
-------- --------- ------- -------- ---------
Costs and expenses
Casino .............................. -- 156,434 22,931 -- 179,365
Food and beverage ................... -- 46,832 5,194 -- 52,026
Room ................................ -- 12,183 -- -- 12,183
Other ............................... -- 36,256 21,701 (25,453)(1) 32,504
Selling, general and administrative . -- 56,429 13,848 -- 70,277
Maintenance and utilities ........... -- 16,573 2,972 -- 19,545
Depreciation and amortization ....... 917 31,877 4,472 -- 37,266
Corporate expense ................... 18,850 95 832 (7,088)(1) 12,689
Preopening expense .................. 63 -- 791 -- 854
-------- --------- ------- -------- ---------
Total ....................... 19,830 356,679 72,741 (32,541) 416,709
-------- --------- ------- -------- ---------
Operating income ...................... 57,547 49,218 22,019 (60,299) 68,485
Other income (expense), net ........... (31,243) (3,002) 555 -- (33,690)
-------- --------- ------- -------- ---------
Income before income taxes ............ 26,304 46,216 22,574 (60,299) 34,795
Provision for income taxes ............ 5,959 8,491 -- -- 14,450
-------- --------- ------- -------- ---------
Income before cumulative effect ....... 20,345 37,725 22,574 (60,299) 20,345
Cumulative effect, net of taxes ....... (1,738) -- -- -- (1,738)
-------- --------- ------- -------- ---------
Net income ............................ $ 18,607 $ 37,725 $22,574 $(60,299) $ 18,607
======== ========= ======= ======== =========
</TABLE>
----------
Elimination Entries
(1) To eliminate intercompany revenue and expense.
17
<PAGE> 18
BOYD GAMING CORPORATION AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) (CONTINUED)
--------------------------------------------------------------------------------
CONDENSED CONSOLIDATING STATEMENT OF CASH FLOW INFORMATION
FOR THE SIX MONTHS ENDED JUNE 30, 2000
<TABLE>
<CAPTION>
COMBINED
COMBINED NON-
PARENT GUARANTORS GUARANTORS CONSOLIDATED
--------- ---------- ---------- ------------
(IN THOUSANDS)
<S> <C> <C> <C> <C>
Cash flows from operating activities ............... $ 93,614 $ 39,392 $ 17,387 $ 150,393
--------- -------- -------- ---------
Cash flows from investing activities
Acquisition of property, equipment and other assets (3,866) (47,818) (4,291) (55,975)
Investment in and advances to unconsolidated
subsidiaries .................................... -- -- (4,514) (4,514)
Preopening expense ................................ (1,563) (161) (608) (2,332)
--------- -------- -------- ---------
Net cash used in investing activities .............. (5,429) (47,979) (9,413) (62,821)
--------- -------- -------- ---------
Cash flows from financing activities
Net payments under credit agreements ............. (101,300) -- -- (101,300)
Proceeds from issuance of common stock ........... 34 -- -- 34
Receipt/(payment) of dividends ................... 3,459 911 (4,370) --
Receipt/ (payments) on long-term debt ............ 9,766 (10,195) -- (429)
--------- -------- -------- ---------
Net cash used in financing activities .............. (88,041) (9,284) (4,370) (101,695)
--------- -------- -------- ---------
Net increase (decrease) in cash and cash equivalents 144 (17,871) 3,604 (14,123)
Cash and cash equivalents, beginning of period ..... 138 62,755 23,299 86,192
--------- -------- -------- ---------
Cash and cash equivalents, end of period ........... $ 282 $ 44,884 $ 26,903 $ 72,069
========= ======== ======== =========
</TABLE>
CONDENSED CONSOLIDATING STATEMENT OF CASH FLOW INFORMATION
FOR THE SIX MONTHS ENDED JUNE 30, 1999
<TABLE>
<CAPTION>
COMBINED
COMBINED NON-
PARENT GUARANTORS GUARANTORS CONSOLIDATED
--------- ---------- ---------- ------------
(IN THOUSANDS)
<S> <C> <C> <C> <C>
Cash flows from operating activities ............... $ 37,991 $ 25,975 $ 16,161 $ 80,127
-------- -------- -------- --------
Cash flows from investing activities
Acquisition of property, equipment and other assets (2,916) (31,323) (3,829) (38,068)
Investment in and advances to unconsolidated
subsidiaries .................................... -- (172) (3,984) (4,156)
Preopening expense ................................ (63) -- (791) (854)
-------- -------- -------- --------
Net cash used in investing activities .............. (2,979) (31,495) (8,604) (43,078)
-------- -------- -------- --------
Cash flows from financing activities
Net payments under credit agreements ............. (41,250) -- -- (41,250)
Receipt/(payment) of dividends ................... 7,670 (3,304) (4,366) --
Other ............................................ 293 (200) -- 93
-------- -------- -------- --------
Net cash used in financing activities .............. (33,287) (3,504) (4,366) (41,157)
-------- -------- -------- --------
Net increase (decrease) in cash and cash equivalents 1,725 (9,024) 3,191 (4,108)
Cash and cash equivalents, beginning of period ..... 1,054 55,492 19,391 75,937
-------- -------- -------- --------
Cash and cash equivalents, end of period ........... $ 2,779 $ 46,468 $ 22,582 $ 71,829
======== ======== ======== ========
</TABLE>
18
<PAGE> 19
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 Hotel and Gambling Hall ("Sam's Town Las Vegas"), the
Eldorado Casino (the "Eldorado") and Jokers Wild Casino ("Jokers Wild");
"Downtown Properties" consist of the California Hotel and Casino (the
"California"), the Fremont Hotel and Casino (the "Fremont"), Main Street
Station, Casino, Brewery and Hotel ("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 Hotel and Gambling Hall in Tunica, Mississippi ("Sam's Town Tunica"),
Par-A-Dice Hotel and Casino ("Par-A-Dice"), Treasure Chest Casino ("Treasure
Chest"), Blue Chip Casino ("Blue Chip") (acquired in November 1999), and
management fee income from Silver Star Resort and Casino (through January 31,
2000). 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 from properties for the purpose of
this table excludes corporate expense, including related depreciation and
amortization, preopening expense and the termination fee.
<TABLE>
<CAPTION>
THREE MONTHS ENDED SIX MONTHS ENDED
JUNE 30, JUNE 30,
--------------------- ---------------------
2000 1999 2000 1999
-------- -------- -------- --------
(IN THOUSANDS)
<S> <C> <C> <C> <C>
Net revenues
Stardust ................ $ 37,883 $ 35,831 $ 77,224 $ 77,121
Boulder Strip Properties 41,291 47,968 88,489 96,547
Downtown Properties (a) . 57,632 55,610 112,671 109,603
Central Region Properties 132,913 102,527 273,054 201,923
-------- -------- -------- --------
Total properties . $269,719 $241,936 $551,438 $485,194
======== ======== ======== ========
Operating income
Stardust ................ $ 205 $ 1,073 $ 1,273 $ 4,368
Boulder Strip Properties 3,290 6,280 10,428 12,670
Downtown Properties ..... 7,392 5,649 13,387 11,146
Central Region Properties 26,630 27,710 62,887 55,318
-------- -------- -------- --------
Total properties . $ 37,517 $ 40,712 $ 87,975 $ 83,502
======== ======== ======== ========
</TABLE>
--------
(a) Includes revenues related to Vacations Hawaii, a Honolulu Travel Agency,
of $11,029 and $10,401, respectively, for the three month periods ended
June 30, 2000 and 1999 and revenues of $20,680 and $18,873, respectively,
for the six month periods ended June 30, 2000 and 1999.
REVENUES
Consolidated net revenues increased 11.5% during the quarter ended June 30,
2000 compared to the quarter ended June 30, 1999. Company-wide casino revenue
increased 21%, food and beverage revenue decreased 3.9% and room revenue
increased 8.3%. The increase in net revenues is due primarily to the acquisition
of
19
<PAGE> 20
Blue Chip in November 1999. Blue Chip contributed $47 million in revenue during
the quarter ended June 30, 2000. Partially offsetting the increase related to
Blue Chip were declines in net revenues at Sam's Town Las Vegas, Sam's Town
Tunica and Treasure Chest of 15.9%, 21% and 17.8%, respectively. The declines in
net revenues at both Sam's Town operations are primarily due to significant
construction disruption as well as the competitive environment in their
respective gaming markets. The decline in net revenues at Treasure Chest is due
primarily to intense promotional competition from its land-based competitor.
Also offsetting the increase in net revenues from Blue Chip is the January 2000
termination of the management contract for Silver Star which contributed $10.0
million of revenue during the quarter ended June 30, 1999.
Consolidated net revenues before the termination fee increased 13.7% during
the six month period ended June 30, 2000 compared to the same period in the
prior year. Company-wide casino revenue increased 23%, food and beverage revenue
decreased 3.0% and room revenue remained virtually unchanged. The increase in
net revenues is due primarily to the acquisition of Blue Chip in November 1999.
Blue Chip contributed $95 million in revenue during the six month period ended
June 30, 2000. Partially offsetting the increase related to Blue Chip were
declines in net revenues at Sam's Town Las Vegas, Sam's Town Tunica and Treasure
Chest of 9.7%, 16.2% and 14.8%, respectively. The declines in net revenues at
both Sam's Town operations are primarily due to significant construction
disruption as well as the competitive environment in their respective gaming
markets. The decline in net revenues at Treasure Chest is due primarily to
intense promotional competition from its land-based competitor. Also offsetting
the increase in net revenues from Blue Chip is the January 2000 termination of
the management contract for Silver Star which contributed $3.8 million in
revenue during the six month period ended June 30, 2000 compared to $21 million
during the same period in the prior year.
OPERATING INCOME
Consolidated operating income before preopening expense decreased 5.1% to
$32 million during the quarter ended June 30, 2000 from $33 million during the
quarter ended June 30, 1999. The acquisition of Blue Chip contributed $15.5
million of operating income during the quarter ended June 30, 2000. Operating
income for the quarter ended June 30, 1999 includes $9.6 million from the
management contract from Silver Star which terminated in January 2000. After the
effects of Blue Chip and Silver Star, the decline in operating income is due
primarily to the declines in net revenue at Sam's Town Las Vegas, Sam's Town
Tunica and Treasure Chest.
For the six month period ended June 30, 2000, consolidated operating income
before preopening expense and termination fee increased 6.5% to $74 million from
$69 million during the same period in the prior year. The acquisition of Blue
Chip contributed $33 million of operating income during the six month period
ended June 30, 2000 and Silver Star (which terminated in January 2000)
contributed $3.8 million in operating income during the six month period ended
June 30, 2000 compared to $20 million during the same period in the prior year.
Offsetting the effects of Blue Chip were declines in operating income at Sam's
Town Las Vegas, Sam's Town Tunica and Treasure Chest mainly related to their
decline in revenues.
STARDUST
For the quarter ended June 30, 2000, net revenues at the Stardust increased
5.7% versus the same period in the prior year. Casino revenue increased 4.9% due
primarily to an increase in slot wagering. Room revenue
20
<PAGE> 21
increased 6.0% mainly due to an increase in occupied rooms. Operating income at
the Stardust declined $0.9 million or 81% and operating income margin declined
to 0.5% during the quarter ended June 30, 2000 as compared to 3.0% during the
quarter ended June 30, 1999. These declines in operating income and operating
income margin are due to the competitive environment on the Las Vegas Strip
causing an increase in higher marketing and showroom expenses.
For the six month period ended June 30, 2000, net revenues at the Stardust
remained virtually unchanged versus the comparable period in the prior year.
Casino revenue declined 1.4% as an increase in slot wagering did not offset a
decline in table game wagering. Room revenue declined 7.1% due mainly to an 11%
decline in available rooms as a result of the closure of the motor inn rooms in
1999. Operating income declined 71% to $1.3 million during the six month period
ended June 30, 2000 compared to $4.4 million during the same period of the prior
year due to the competitive environment on the Las Vegas Strip as well as an
increase in showroom expenses.
BOULDER STRIP PROPERTIES
Net revenues at the Boulder Strip Properties declined 13.9% during the
quarter ended June 30, 2000 compared to the quarter ended June 30, 1999 due
primarily to construction disruption related to the ongoing $86 million
renovation and expansion project at Sam's Town Las Vegas, which began during the
last half of 1999, as well as increased competition. Casino revenue at the
Boulder Strip Properties declined 11.6% due to declines in slot and table game
wagering. Non-gaming revenue at the Boulder Strip Properties declined 23%
primarily due to the permanent closure of Sam's Town's Western Emporium retail
store in September 1999 as part of the property's renovation and expansion
project. For the quarter ended June 30, 2000, operating income declined 48% to
$3.3 million from $6.3 million during the quarter ended June 30, 1999. Operating
income margin declined to 8.0% for the quarter ended June 30, 2000 from 13.1%
during the quarter ended June 30, 1999. The declines in operating income and
operating income margin are due primarily to the decline in net revenues.
During the six month period ended June 30, 2000, net revenues at the Boulder
Strip Properties declined 8.3% compared to the same period in the prior year.
The decline is mainly attributable to construction disruption related to Sam's
Town Las Vegas' renovation and expansion project as well as increased
competition. Casino revenue declined 4.4% due to declines in slot and table game
wagering and non-gaming revenue declined 23% due mainly to the permanent closure
of Sam's Town Las Vegas' Western Emporium. Operating income at the Boulder Strip
Properties declined 17.7% during the six month period ended June 30, 2000 and
operating income margin declined from 13.1% during the six month period ended
June 30, 1999 to 11.8% for the six month period ended June 30, 2000. The
declines in operating income and operating income margin are primarily
attributable to the decline in net revenues partially offset by a decline in
marketing expenses.
DOWNTOWN PROPERTIES
Net revenues at the Downtown Properties increased 3.6% during the quarter
ended June 30, 2000 compared to the quarter ended June 30, 1999 due primarily to
a 3.9% increase in casino revenues that is attributable to an increase in slot
and table game wagering. Non-gaming revenue increased 3.2% due mainly to a 6.0%
increase in net revenues at Vacations Hawaii, the Company's Honolulu travel
agency. Operating income at
21
<PAGE> 22
the Downtown Properties increased 31% to $7.4 million during the quarter ended
June 30, 2000 from $5.6 million during the quarter ended June 30, 1999 as a
result of the increase in revenues as well as cost consolidation efforts and
more effective marketing at the Downtown casino properties.
Net revenues at the Downtown Properties increased 2.8% during the six month
period ended June 30, 2000 compared to the same period in the prior year. The
increase is attributable to a 9.6% increase in net revenues at Vacations Hawaii
as well as a 2.3% increase in casino revenue due to increased slot and table
game wagering. Operating income at the Downtown Properties increased $2.2
million or 20% during the six month period ended June 30, 2000 compared to the
same period in the prior year. Operating income margin increased to 11.9% during
the six month period ended June 30, 2000 versus 10.2% in the comparable period
of the prior year. The increase in operating income and operating income margin
is primarily attributable to the increase in net revenues as well as cost
consolidation efforts and more effective marketing at the Downtown casino
properties.
CENTRAL REGION
Net revenues from the Central Region increased $30 million or 30% during the
quarter ended June 30, 2000 compared to the quarter ended June 30, 1999. The
majority of the increase is due to the November 1999 acquisition of Blue Chip,
which earned $47 million in net revenues during the quarter ended June 30, 2000.
Also contributing to the increase in net revenues was a 17.6% increase at
Par-A-Dice due mainly to the change to dockside operations in June 1999. Sam's
Town Tunica and Treasure Chest experienced declines in net revenues of 21% and
17.8%, respectively, due to their highly competitive environments as well as
significant construction disruption at Sam's Town Tunica involving its main
entry, casino and restaurant operations. Management fees from Silver Star
declined $10.0 million as the management contract was terminated on January 31,
2000. Operating income in the Central Region declined 3.9% to $27 million during
the quarter ended June 30, 2000 from $28 million during the quarter ended June
30, 1999 as Blue Chip and Par-A-Dice's increases in operating income did not
offset Treasure Chest and Silver Star's declines in operating income or the
operating loss of $1.4 million experienced at Sam's Town Tunica.
During the six month period ended June 30, 2000, net revenues from the
Central Region increased 35% compared to the same period in the prior year. The
majority of the increase is due to the November 1999 acquisition of Blue Chip,
which earned $95 million in net revenues during the six month period ended June
30, 2000. Also contributing to the increase in net revenues was a 22% increase
at Par-A-Dice due mainly to the change to dockside operations in June 1999.
Sam's Town Tunica and Treasure Chest experienced declines in net revenues of
16.2% and 14.8%, respectively, due to their highly competitive environments as
well as significant construction disruption at Sam's Town Tunica involving its
main entry, casino and restaurant operations. Management fees from Silver Star
declined $17.0 million as the management contract was terminated on January 31,
2000. Operating income in the Central Region increased 13.7% to $63 million
during the six month period ended June 30, 2000 from $55 million during the same
period in the prior year. The increase in operating income is due mainly to the
acquisition of Blue Chip as well as the increase in net revenues at Par-A-Dice,
partially offset by declines in operating income related to the reduction in net
revenues from Treasure Chest and management fee income from Silver Star and the
operating loss of $0.8 million experienced at Sam's Town Tunica.
22
<PAGE> 23
TERMINATION FEE
On October 20, 1999, the Company agreed to terminate its management contract
with the Mississippi Band of Choctaw Indians (the "Tribe") prior to the
contract's expiration date in June 2001 in exchange for a one-time payment of
$72 million. Pursuant to that agreement, the Company continued to manage Silver
Star under the terms of the management contract through January 31, 2000, at
which time the Tribe made the one-time termination payment and the Company
recorded the termination fee, net of certain expenses.
OTHER EXPENSES
Depreciation and amortization expense increased 19.4% during the quarter
ended June 30, 2000 compared to the quarter ended June 30, 1999 and 17.2% during
the six month period ended June 30, 2000 compared to the same period in the
prior year primarily as a result of depreciation and amortization expense
related to the fixed assets, intangible license rights and acquisition costs of
Blue Chip (acquired in November 1999).
Preopening expense increased $1.6 million during the quarter ended June 30,
2000 compared to the quarter ended June 30, 1999 due primarily to $1.5 million
incurred as the result of unsuccessful efforts to assist in the development and
operation of a Rhode Island Indian casino with the Narragansett Indian Tribe.
Preopening expense increased $1.4 million during the six month period ended June
30, 2000 compared to the same period in the prior year as a result of the Rhode
Island preopening expense.
OTHER INCOME (EXPENSE)
Other income and expense is primarily comprised of interest expense, net of
capitalized interest. Net interest expense increased by $2.6 million during the
quarter ended June 30, 2000 as compared to the quarter ended June 30, 1999. The
increase is attributable to higher average debt levels as a result of the
borrowings related to the November 1999 acquisition of Blue Chip. Net interest
expense was partially offset by $1.3 million in capitalized interest costs
during the quarter ended June 30, 2000 compared to $0.3 million during the
quarter ended June 30, 1999.
For the six month period ended June 30, 2000, net interest expense increased
$5.6 million as compared to the same period of the prior year. The increase is
attributable to higher average debt levels as a result of the borrowings related
to the November 1999 acquisition of Blue Chip. Net interest expense was
partially offset by $2.2 million in capitalized interest costs during the six
month period ended June 30, 2000 compared to $0.4 million during the comparable
period in the prior year.
CUMULATIVE EFFECT OF A CHANGE IN ACCOUNTING FOR START-UP ACTIVITIES
During the quarter ended March 31, 1999, the Company reported a charge of
$1.7 million, net of $0.9 million in tax benefit, 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
change in accounting principle.
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<PAGE> 24
NET INCOME
As a result of these factors, the Company reported net income of $6.7
million and $9.7 million, respectively, during the quarters ended June 30, 2000
and 1999 and $63.7 million and $18.6 million, respectively, during the six month
periods ended June 30, 2000 and 1999.
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 six month period ended June 30, 2000, the Company generated
operating cash flow of $150 million compared to $80 million during the six month
period ended June 30, 1999. The increase in operating cash flow is primarily
attributable to the $72 million termination payment received from Silver Star as
well as the incremental earnings from Blue Chip, which was acquired in November
1999, partially offset by declines in earnings at Sam's Town Tunica and Treasure
Chest. As of June 30, 2000 and 1999, the Company had balances of cash and cash
equivalents of $72 million and a working capital deficit of $47 million at June
30, 2000 compared to working capital of $12.2 million at June 30, 1999. Much of
the working capital deficit at June 30, 2000 is attributable to the decrease in
cash and cash equivalents as well as $10.7 million in income taxes payable
principally related to the income generated from the $72 million termination
payment and $15.6 million in construction payables mainly associated with the
Sam's Town Las Vegas renovation and expansion project. The Company has
historically operated with minimal or negative levels of working capital in
order to minimize borrowings and related interest costs under its $600 million
bank credit facility (the "Bank Credit Facility").
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 $26 million and $31 million, respectively,
during the six month periods ended June 30, 2000 and 1999. The Company also
incurred approximately $30 million in capital expenditures during the six months
ended June 30, 2000 for the renovation and expansion of Sam's Town Las Vegas and
the renovation of Sam's Town Tunica. During the six month period ended June 30,
1999, the Company incurred approximately $6.9 million in capital expenditures
for the renovation of the Stardust.
CASH FLOWS FROM FINANCING ACTIVITIES
Substantially all of the funding for the Company's acquisitions and
renovation and expansion projects comes from cash flows from existing operations
as well as debt financing. During the six month period ended June 30, 2000, the
Company paid down debt by $102 million as compared to $42 million during the six
month period ended June 30, 1999. The termination payment accounted for $72
million of the debt reduction during the six month period ended June 30, 2000.
At June 30, 2000, outstanding borrowings and unused availability under the Bank
Credit Facility were $425 million and $174.3 million, respectively.
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<PAGE> 25
The Company's Bank Credit Facility consists of a $500 million revolver
component (the "Revolver") and a term loan component (the "Term Loan") with an
original principal balance of $100 million, 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 is being repaid in increments of $0.25 million per quarter which began on
September 30, 1999 and will continue through March 31, 2003, bringing the June
30, 2000 outstanding balance to $99 million. The interest rate on the 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 blended rate on outstanding borrowings under the Bank
Credit Facility as of June 30, 2000 was 8.4%. The Bank Credit Facility is
secured by substantially all of the real and personal property of the Company
and its subsidiaries, including eleven casino properties. The obligations of the
Company under the Bank Credit Facility are guaranteed by the significant
subsidiaries of the Company.
Effective July 28, 2000, the Company amended its bank credit facility
primarily to allow for an increase of up to $225 million in its joint venture
investment in The Borgata and to reduce and modify the Company's capital raising
requirements for The Borgata.
The 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 Bank Credit Facility, (vi)
imposing limits on the maximum permitted maintenance capital expenditures during
each year of the term of the 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 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 June 30, 2000.
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.
25
<PAGE> 26
EXPANSION AND OTHER PROJECTS
The Company continues to explore development opportunities in the Las Vegas
locals market. The Company is in the midst of an $86 million expansion and
renovation project at Sam's Town Las Vegas. The expansion project includes,
among other things, an 18 screen state-of-the-art movie theatre complex,
childcare facilities, an arcade, additional casino space for 500 slot machines,
an 11,200 square foot multi-purpose events center for concerts and meetings and
a new 650 seat buffet. The renovation project includes the remodeling of the
casino and restaurants and a reconfigured and remodeled porte cochere and valet
parking area to improve access to the property. As of June 30, 2000, the Company
had incurred $58 million in cumulative costs associated with the Sam's Town Las
Vegas expansion and renovation project. The renovation portion of the project is
expected to continue through the summer of 2000 and the expansion is expected to
be completed by mid November 2000. There can be no assurances that the Sam's
Town Las Vegas renovation and expansion project will be completed on time or
within budget. In addition, in January 2000, the Company reached an agreement in
principle with Nevso, L.L.C. to purchase approximately 18 acres of land in
western Las Vegas to develop a locals hotel and casino. The purchase of the land
and development of the project is subject to a number of contingencies,
including but not limited to, the parties reaching a definitive agreement and
securing various regulatory and development approvals. The zoning to allow the
construction of the project and its use as a locals resort casino was reversed
upon administrative appeal and is the subject of litigation. The Company can
make no assurances that this project will go forward or that if the project goes
forward that it will be successful.
The Company's primary expansion project is the development of an Atlantic
City casino resort. On May 29, 1996, the Company, through a wholly-owned
subsidiary, entered into a joint venture agreement with MAC, Corp., which has
become a wholly-owned subsidiary of MGM MIRAGE, to jointly develop and own a
casino hotel entertainment facility in Atlantic City, New Jersey. Certain
aspects of the joint venture agreement were subsequently modified into an
amended and restated joint venture agreement (the "Agreement") on July 14, 1998.
While the Company is in discussions to amend the Agreement, the Agreement
currently provides for a hotel of at least 1,200 rooms and a casino and related
amenities (collectively named "The Borgata") and contemplates a total cost of
$750 million. Any project costs exceeding the $750 million budget shall be
funded by the Company without any proportionate increase in the ownership of the
joint venture by the Company. The Agreement provides for each party to make an
equity contribution of $150 million with the Company contributing $90 million
when MGM MIRAGE contributes land to the venture. The Agreement further provides
for the venture to arrange $450 million in non-recourse financing for the
project. The Company's ongoing discussions with MGM MIRAGE include increasing
the size of The Borgata to at least 2,000 rooms and increasing the budget to
$1.035 billion. Pursuant to these discussions, any project costs exceeding the
$1.035 billion increased budget shall be funded by the Company without any
proportionate increase in the ownership of the joint venture by the Company.
Under these discussions, cash equity contributions by the Company would increase
to $207 million, while MGM MIRAGE's cash equity contributions would increase to
$117 million. MGM MIRAGE would also contribute land to the venture, valued at
$90 million. In addition, it is contemplated that the joint venture would obtain
$621 million in non-recourse financing. Funding of the Company's capital
contributions to The Borgata is expected to be derived from cash flow from
operations, availability under the Company's Bank Credit Facility, incremental
bank financing, or additional debt offerings. The Borgata is subject to the many
risks inherent in the development and operation 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
26
<PAGE> 27
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 is in the planning stages of this development
and as of June 30, 2000 has contributed or advanced total funds of $10.2 million
to The Borgata. The Company expects to contribute its $90 million capital
contribution contemporaneously with MGM MIRAGE's contribution of the land, which
is expected to occur when a significant portion of the building plans are
complete, permits are obtained and financing is arranged. Such date is expected
to be early in the fourth quarter of this year. Also, if The Borgata is
increased in size pursuant to the discussions, it will result in a longer
construction period and would move the expected completion date from late 2002
to the middle of 2003.
The Company recently began a $21 million renovation project at Sam's Town
Tunica to reconfigure and remodel the casino, redesign and enhance its
restaurant product, remodel the atrium and build an RV park adjacent to the
property. The renovation project is expected to be completed by December 31,
2000, although there can be no assurances that the project will be completed on
time or within budget. As of June 30, 2000, the Company had incurred $3.6
million in total costs associated with the Sam's Town Tunica renovation project.
The Company has undertaken 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. As of June 30, 2000, the Company had
incurred $16.7 million in cumulative costs associated with the CIS project, $4.9
million of which was incurred during the six month period ended June 30, 2000.
Substantially all of these costs have been capitalized. The Company expects to
spend approximately $10 million during the last half of 2000 on the CIS project.
The Company has never undertaken a technology 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, the other projects
discussed above, and 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 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 Bank Credit Facility, incremental bank financing, 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.
PRIVATE SECURITIES LITIGATION REFORM ACT
The Private Securities Litigation Reform Act of 1995 provides a "safe
harbor" for forward looking statements. Certain information included in this
Form 10-Q and other materials filed or to be filed by the Company with the
Securities and Exchange Commission (as well as information included in oral
statements
27
<PAGE> 28
or other written statements made or to be made by the Company) contains
statements that are forward looking, such as statements relating to plans for
future expansion and other business development activities as well as capital
spending, financing sources, and the effects of regulation (including gaming and
tax regulation) and competition. Such forward looking statements involve
important risks and uncertainties that could significantly affect anticipated
results in the future, and accordingly, actual results may differ materially
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 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, 1999. 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
Market risk is the risk of loss arising from adverse changes in market rates
and prices, such as interest rates, foreign currency exchange rates and
commodity prices. The Company's primary exposure to market risk is interest rate
risk associated with its long-term debt. The Company attempts to limit its
exposure to interest rate risk by managing the mix of its long-term fixed-rate
borrowings and short-term borrowings under the Bank Credit Facility. Borrowings
under the Bank Credit Facility bear interest, at the Company's option, at the
agent bank's quoted base rate or at a specified premium over the Eurodollar
rate. However, the amount of outstanding borrowings is expected to fluctuate and
may be reduced from time to time. The Company currently does not utilize hedging
instruments.
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<PAGE> 29
PART II. OTHER INFORMATION
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
The Company's Annual Meeting was held on May 25, 2000. The stockholders
re-elected Robert L. Boughner, Marianne Boyd Johnson and Maj. Gen. Billy G.
McCoy, Ret. USAF to three year terms, ending on the date of the Company's Annual
Meeting in 2003. The number of shares voting as to the election of each nominee,
the ratification of the appointment of Deloitte & Touche LLP to serve as
independent auditors for the year ending December 31, 2000, the approval of a
proposed amendment to the Company's Articles of Incorporation in order to comply
with the New Jersey Casino Control Act and the Indiana Riverboat Gaming Act, the
approval of the 2000 Executive Management Incentive Plan and certain Performance
Units Granted under the 1996 Stock Incentive Plan, and the approval of an
amendment to the 1996 Stock Incentive Plan to increase the number of shares
subject to the plan from 3,000,000 to 5,500,000 is set forth below:
<TABLE>
<CAPTION>
Votes
-------------------------
Election of Class III Directors For Withheld
------------------------------------- ---------- ---------
<S> <C> <C>
Robert L. Boughner 57,749,989 1,005,224
Marianne Boyd Johnson 58,124,690 630,523
Maj. Gen. Billy G. McCoy, Ret. USAF 58,066,107 689,106
</TABLE>
The Stockholders ratified the selection of Deloitte & Touche LLP as
independent auditors for the Company for the year ending December 31, 2000 with
voting as follows: 58,588,233 for; 114,082 against; 52,898 non-votes.
The Stockholders approved the amendment to the Company's Articles of
Incorporation with voting as follows: 58,395,451 for; 237,411 against;
122,351 non-votes.
The Stockholders approved the 2000 Executive Management Incentive Plan and
certain Performance Units Granted under the 1996 Stock Incentive Plan with
voting as follows: 57,287,051 for; 1,328,094 against; 140,068 non-votes.
The Stockholders approved the amendment to the 1996 Stock Incentive Plan
with voting as follows: 52,990,918 for; 5,572,023 against; 192,272 non-votes.
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<PAGE> 30
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits.
10.32 First Amendment to First Amended and Restated Credit
Agreement, dated as of July 26, 2000, by and among the
Company as the Borrower, Certain Commercial Lending
Institutions, as the Lenders, Canadian Imperial Bank of
Commerce, as letter of credit issuer and administrative
Agent, Wells Fargo Bank, N.A., as Swingline Lender and
Syndication Agent, and Bank of America, N.A., as
Documentation Agent.
10.33 2000 Executive Management Incentive Plan (incorporated by
reference to Appendix A of the Registrant's Proxy
Statement for its Annual Meeting on May 25, 2000).
10.34 Certificate of Amendment of Articles of Incorporation.
10.35 1996 Stock Incentive Plan (as amended on May 25, 2000).
27 Financial Data Schedule
(b) Reports on Form 8-K.
(i) None
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SIGNATURES
Pursuant to the requirements of the Securities and Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized, on August 11, 2000.
BOYD GAMING CORPORATION
By: /s/ ELLIS LANDAU
--------------------------------------
Ellis Landau
Executive Vice President,
Chief Financial Officer,
Treasurer (Principal Financial Officer)
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EXHIBIT INDEX
Exhibit Number Description
-------------- -----------
10.32 First Amendment to First Amended and Restated Credit
Agreement, dated as of July 26, 2000, by and among the
Company as the Borrower, Certain Commercial Lending
Institutions, as the Lenders, Canadian Imperial Bank of
Commerce, as letter of credit issuer and administrative
Agent, Wells Fargo Bank, N.A., as Swingline Lender and
Syndication Agent, and Bank of America, N.A., as
Documentation Agent.
10.33 2000 Executive Management Incentive Plan (incorporated by
reference to Appendix A of the Registrant's Proxy Statement
for its Annual Meeting on May 25, 2000).
10.34 Certificate of Amendment of Articles of Incorporation.
10.35 1996 Stock Incentive Plan (as amended on May 25, 2000).
27 Financial Data Schedule
