-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, PP3J/n5I3F8C18/PFipmSG9Z79skY5eYIvGbjj7xtaJOJI4K7gJrmEHYNxAfH/N/ BP8/ak1sjESbbJYfMYsPQA== 0000892569-96-002411.txt : 19961118 0000892569-96-002411.hdr.sgml : 19961118 ACCESSION NUMBER: 0000892569-96-002411 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19960930 FILED AS OF DATE: 19961114 SROS: NYSE FILER: COMPANY DATA: COMPANY CONFORMED NAME: BOYD GAMING CORP CENTRAL INDEX KEY: 0000906553 STANDARD INDUSTRIAL CLASSIFICATION: SERVICES-MISCELLANEOUS AMUSEMENT & RECREATION [7990] IRS NUMBER: 880242733 STATE OF INCORPORATION: NV FISCAL YEAR END: 0630 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 001-12168 FILM NUMBER: 96666224 BUSINESS ADDRESS: STREET 1: 2950 S INDUSTRIAL RD CITY: LAS VEGAS STATE: NV ZIP: 89109 BUSINESS PHONE: 7027927200 MAIL ADDRESS: STREET 1: 2950 SOUTH INDUSTRIAL ROAD CITY: LAS VEGAS STATE: NV ZIP: 89109 FORMER COMPANY: FORMER CONFORMED NAME: BOYD GROUP DATE OF NAME CHANGE: 19941130 10-Q 1 QUARTERLY REPORT FOR THE PERIOD ENDED 9/30/96 1 UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D. C. 20549 FORM 10-Q (Mark One) /X/ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended September 30, 1996 OR / / TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from _______ to _______ Commission file number 1-12168 BOYD GAMING CORPORATION (Exact name of registrant as specified in its charter) NEVADA 88-0242733 (State or other jurisdiction of (I.R.S. Employer incorporation or organization) Identification No.) 2950 SOUTH INDUSTRIAL ROAD LAS VEGAS, NEVADA 89109 (Address of principal executive offices) (Zip Code) (702) 792-7200 (Registrant's telephone number, including area code) Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to filing requirements for the past 90 days. Yes X No ----- ----- Shares outstanding of each of the Registrant's classes of common stock as of October 31, 1996 Class Outstanding ----- ----------- Common stock, $.01 par value 61,213,720 2 BOYD GAMING CORPORATION FORM 10-Q QUARTER ENDED SEPTEMBER 30, 1996 INDEX Page No. -------- Part I. Financial Information Item 1. Financial Statements Consolidated Balance Sheets at September 30, 1996 and June 30, 1996 3 Consolidated Statements of Operations for the three months ended September 30, 1996 and 1995 4 Consolidated Statements of Cash Flows for the three months ended September 30, 1996 and 1995 5 Consolidated Statement of Changes in Stockholders' Equity for the three months ended September 30, 1996 6 Notes to Consolidated Financial Statements 7 Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations 10 Part II. Other Information 12 Item 6. Exhibits and Reports on Form 8-K 14 Signatures 15 -2- 3 PART I. FINANCIAL INFORMATION ITEM 1. FINANCIAL STATEMENTS BOYD GAMING CORPORATION AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS
SEPTEMBER 30, JUNE 30, (IN THOUSANDS, EXCEPT SHARE DATA) 1996 1996 - ---------------------------------------------------------------------------------------------- ASSETS Current assets Cash and cash equivalents $ 45,519 $ 48,980 Accounts receivable, net 16,302 16,040 Inventories 6,746 6,531 Prepaid expenses 17,819 15,265 Deferred income taxes 1,909 -- -------- -------- Total current assets 88,295 86,816 Property, equipment and leasehold interests, net 813,335 797,593 Other assets and deferred charges 57,158 58,489 Goodwill, net 10,432 10,527 -------- -------- Total assets $969,220 $953,425 ======== ======== LIABILITIES AND STOCKHOLDERS' EQUITY Current liabilities Current maturities of long-term debt $ 1,746 $ 4,031 Accounts payable 59,648 47,193 Accrued liabilities Payroll and related 22,353 22,956 Interest and other 23,157 20,956 Income taxes payable -- 678 -------- -------- Total current liabilities 106,904 95,814 Long-term debt, net of current maturities 596,143 590,808 Deferred income taxes 34,131 33,546 Commitments Stockholders' equity Preferred stock -- -- Common stock, $.01 par value; 200,000,000 shares authorized; 57,213,720 shares outstanding 572 572 Additional paid-in capital 102,583 102,583 Retained earnings 128,887 130,102 -------- -------- Total stockholders' equity 232,042 233,257 -------- -------- Total liabilities and stockholders' equity $969,220 $953,425 ======== ========
The accompanying notes are an integral part of these consolidated financial statements. -3- 4 BOYD GAMING CORPORATION AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF OPERATIONS
THREE MONTHS ENDED SEPTEMBER 30, ----------------------- (IN THOUSANDS, EXCEPT PER SHARE DATA) 1996 1995 - --------------------------------------------------------------------------------------------- Revenues Casino $130,197 $126,694 Food and beverage 35,894 32,204 Rooms 17,201 16,995 Other 13,256 9,546 Management fees and joint venture 10,312 10,464 -------- -------- Gross revenues 206,860 195,903 Less promotional allowances 20,123 16,843 -------- -------- Net revenues 186,737 179,060 -------- -------- Costs and expenses Casino 72,070 61,508 Food and beverage 24,878 25,430 Rooms 6,260 6,469 Other 11,191 6,194 Selling, general and administrative 30,634 22,477 Maintenance and utilities 9,037 8,329 Depreciation and amortization 15,117 14,561 Corporate expense 6,429 5,359 Preopening expense -- 10,004 -------- -------- Total 175,616 160,331 -------- -------- Operating income 11,121 18,729 -------- -------- Other income (expense) Interest income 177 360 Interest expense, net of amounts capitalized (13,258) (12,230) -------- -------- Total (13,081) (11,870) -------- -------- Income (loss) before provision (benefit) for income taxes (1,960) 6,859 Provision (benefit) for income taxes (745) 2,675 -------- -------- Net income (loss) $ (1,215) $ 4,184 ======== ======== Net income (loss) per common share $ (0.02) $ 0.07 ======== ========
The accompanying notes are an integral part of these consolidated financial statements. -4- 5 BOYD GAMING CORPORATION AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS
THREE MONTHS SEPTEMBER 30, ------------- (IN THOUSANDS) 1996 1995 - --------------------------------------------------------------------------------------------------- CASH FLOWS FROM OPERATING ACTIVITIES Net income (loss) $ (1,215) $ 4,184 Adjustments to reconcile net income (loss) to net cash provided by operating activities: Depreciation and amortization 15,117 14,561 Deferred income taxes (1,324) (1,255) Other 363 4 Changes in assets and liabilities: Increase in accounts receivable, net (262) (1,183) Increase in inventories (215) (143) Increase in prepaid expenses (2,554) (4,500) (Increase) decrease in other assets 11 (784) Increase in other current liabilities 3,921 10,857 Increase (decrease) in income taxes payable (678) 3,303 -------- -------- Net cash provided by operating activities 13,164 25,044 -------- -------- CASH FLOWS FROM INVESTING ACTIVITIES Acquisition of property, equipment and other assets (39,675) (37,546) Proceeds from sale of riverboat 20,000 -- -------- -------- Net cash used in investing activities (19,675) (37,546) -------- -------- CASH FLOWS FROM FINANCING ACTIVITIES Net borrowings under credit agreements 21,000 (17,501) Payments on long-term debt (17,950) (6,831) -------- -------- Net cash provided by (used in) financing activities 3,050 (24,332) -------- -------- NET DECREASE IN CASH AND CASH EQUIVALENTS (3,461) (36,834) CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD 48,980 83,169 -------- -------- CASH AND CASH EQUIVALENTS, END OF PERIOD $ 45,519 $ 46,335 ======== ======== SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION Cash paid for interest, net of amounts capitalized $ 13,357 $ 10,779 ======== ======== Cash paid for income taxes $ 1,339 $ 646 ======== ======== SUPPLEMENTAL SCHEDULE OF NON-CASH INVESTING AND FINANCING ACTIVITIES Property additions aquired on contracts and trade payables which were accrued, but not yet paid $ 20,722 $ 13,410 ======== ========
The accompanying notes are an integral part of these consolidated financial statements. -5- 6 BOYD GAMING CORPORATION AND SUBSIDIARIES CONSOLIDATED STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY
(IN THOUSANDS, EXCEPT SHARE DATA) - ----------------------------------------------------------------------------------------------------------------- COMMON STOCK ADDITIONAL TOTAL ------------------------- PAID-IN RETAINED STOCKHOLDERS' SHARES AMOUNT CAPITAL EARNINGS EQUITY ----------------------------------------------------------------------- BALANCES, JULY 1, 1996 57,213,720 $ 572 $102,583 $130,102 $233,257 NET LOSS FOR THE THREE MONTHS ENDED SEPTEMBER 30, 1996 (1,215) (1,215) ---------- ------- -------- -------- -------- BALANCES, SEPTEMBER 30, 1996 57,213,720 $ 572 $102,583 $128,887 $232,042 ========== ======= ======== ======== ========
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE CONSOLIDATED FINANCIAL STATEMENTS. -6- 7 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS NOTE 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Principles of Consolidation The accompanying Consolidated Financial Statements include the accounts of Boyd Gaming Corporation and its wholly owned subsidiaries, collectively referred to herein as the "Company". The Company owns and operates six casino entertainment facilities in Las Vegas, Nevada, one in Tunica, Mississippi and one in Kansas City, Missouri which opened in September 1995. The Company manages a casino entertainment facility in Philadelphia, Mississippi, which opened July 1, 1994, for which it has a seven year management contract. The Company is also part owner of and manages a riverboat gaming operation in Kenner, Louisiana which opened in September 1994. The Company has recently entered into an agreement to sell its interest in the entity which owns the Kenner gaming operation (See Note 3. Additional Information - Treasure Chest Casino). All material intercompany accounts and transactions have been eliminated. Basis of Presentation In the opinion of the Company, the accompanying unaudited Consolidated Financial Statements contain all adjustments necessary to present fairly the results of its operations for the three months ended September 30, 1996 and 1995 and its cash flows for the three months ended September 30, 1996 and 1995. It is suggested that this report be read in conjunction with the Company's audited financial statements included in the Annual Report on Form 10-K for the fiscal year ended June 30, 1996. The operating results for the three months ended September 30, 1996 and cash flows for the three months ended September 30, 1996 are not necessarily indicative of the results that will be achieved for the full fiscal year or for future periods. Net Income Per Common Share Net income per common share is based upon the weighted average number of common stock and common stock equivalents outstanding during the period which were 57,213,720 and 56,999,018 for the three months ended September 30, 1996 and 1995, respectively. Use of Estimates The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. Recently Adopted Accounting Standards The FASB issued SFAS No. 121, Accounting for the Impairment of Long-Lived Assets to Be Disposed Of, in March 1995. This statement was adopted by the Company for the fiscal year beginning July1, 1996 and requires that long-lived assets and certain identifiable intangibles to be held and used by an entity be reviewed whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. The adoption of SFAS No. 121 did not have an effect on the -7- 8 financial position or results of operations of the Company as of September 30, 1996. The FASB issued SFAS No. 123, Accounting for Stock-Based Compensation, in October 1995. This statement was adopted by the Company for the fiscal year beginning July 1, 1996 and requires certain disclosures about the impact on results of operations of the fair value of stock based employee compensation arrangements. Management intends to continue to account for stock based employee compensation arrangements in accordance with Accounting Principles Board No. 25, Accounting for Stock Issued to Employees, and accordingly believes that adoption of SFAS No. 123 will not have a significant effect on the financial position or results of operations of the Company. The Company will include the pro forma effects of this statement in its notes to financial statements for the year fiscal ending June 30, 1997. NOTE 2. CAPITAL STOCK Two hundred million shares of common stock with a par value of $.01 per share are authorized, of which 57,213,720 shares were issued at September 30, 1996 and June 30, 1996, including no treasury shares at September 30, 1996 and June 30, 1996. The Company has authorized 5,000,000 shares of $.01 par value preferred stock of which no shares were issued at September 30, 1996 and June 30, 1996. NOTE 3. ADDITIONAL INFORMATION Sale of Riverboat On August 23, 1996, the Company sold its riverboat Mary's Prize for $20 million and retired debt of $17.6 million in connection therewith. Projects for which Mary's Prize was constructed have either been delayed or did not materialize. Debt and Equity Offerings On October 4, 1996, the Company issued $200 million of 9.25% Senior Notes and sold 4.0 million shares of the Company's Common Stock in two registered public offerings. The net proceeds of these offerings of approximately $230 were used to reduce outstanding indebtedness under the Company's bank credit facility. On November 4, 1996, the Company redeemed its $150 million 10.75% Notes with borrowings under its bank credit facility. As a result, the Company will recognize an extraordinary loss of approximately $10 million on a pre-tax basis on extinguishment of debt in the Company's second fiscal quarter. The $200 million in Senior Notes are guaranteed by all existing significant subsidiaries of the Company. The guaranties are full, unconditional, and joint and several. All of the Company's significant subsidiaries are wholly-owned. Assets, equity, income and cash flows of all other subsidiaries of the Company that do not guaranty the notes are less than 3% of the respective consolidated amounts and are inconsequential, individually and in the aggregate, to the Company. The Company has not included separate financial information of the guarantors since such information is not material to investors. The Company, through its wholly owned subsidiary California Hotel Finance Company, has $185 -8- 9 million principal amount of 11% senior subordinated notes due December 2002. The notes contain certain covenants regarding incurrence of debt, sales and disposition of assets, mergers or consolidations and limitations on restricted payments (as defined in the indenture to the notes). As a result of these restrictions, at September 30, 1996 California Hotel and Casino (a wholly owned subsidiary of the Company) had a portion of its retained earnings and its net assets in the amounts of $31.7 million and $86.9 million , respectively, that were not available for distribution as dividends to the Company. Treasure Chest Casino On October 28, 1996, the Company entered into a definitive agreement to sell its 15% interest in Treasure Chest Casino L.L.C., owner of the Treasure Chest Casino in Kenner, Louisiana. The interest is being purchased by both Treasure Chest Casino L.L.C. and its majority owner. The sale, which is subject to various governmental and regulatory approvals, is expected to close in January 1997 and will not result in a material gain or loss for the Company. The Company, through its wholly owned subsidiary, expects to manage Treasure Chest Casino until approximately October 1997. -9- 10 ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS RESULTS OF OPERATIONS Financial Highlights
THREE MONTHS ENDED SEPTEMBER 30, 1996 1995 - -------------------------------------------------------------------------------- (IN THOUSANDS) NET REVENUES Stardust $ 45,266 $ 47,794 Boulder Strip Properties 45,220 42,912 Downtown Properties 33,202 32,451 Central Region 58,967 55,903 - -------------------------------------------------------------------------------- Total Properties $182,655 $ 179,060 - -------------------------------------------------------------------------------- OPERATING INCOME Stardust $ 3,472 $ 5,803 Boulder Strip Properties 3,812 2,893 Downtown Properties 2,366 2,984 Central Region 9,201 23,141 Preopening expense -- (10,004) - -------------------------------------------------------------------------------- Total Properties $ 18,851 $ 24,817 - --------------------------------------------------------------------------------
The above table sets forth for the periods indicated certain Income Statement Data for the Company's properties. As used herein, "Boulder Strip Properties" consist of Sam's Town Las Vegas, the Eldorado and Jokers Wild; "Downtown Properties" consist of the California and the Fremont; and "Central Region" consist of Sam's Town Tunica, Sam's Town Kansas City (opened September 1995), management fee income from Silver Star Hotel and Casino, and management fee and joint venture income from Treasure Chest Casino. Consolidated net revenues increased 4.3% for the three-month period ended September 30, 1996 compared to the same period in the prior fiscal year. In the Company's Central Region, revenues increased 5.5% compared to the prior year's first fiscal quarter. Revenues were enhanced in the Central Region as a result of Sam's Town Kansas City operating for the entire first fiscal quarter of the current year and only a portion of last year's first quarter. Sam's Town Kansas City opened on September 13, 1995. In the Company's Nevada Region revenues increased slightly for the three month period ended September 30, 1996 compared to the same period in the prior fiscal year. Revenues at the Boulder Strip Properties increased 5.4%, revenues at the Downtown Properties increased 2.3%, while revenues at the Stardust declined 5.3% versus the comparable period of the prior year. Company-wide casino revenue increased 2.8% and food and beverage revenue increased 6.8%. Rooms revenue decreased 10.5% as a result of a decline in the average daily room rate at the Stardust and a rooms remodel project at the California Hotel and Casino which removed approximately 17% of its rooms from service for the current year's first fiscal quarter. Consolidated operating income for the first quarter of fiscal 1997 was $11.1 million versus $18.7 million for the prior year's first quarter, a decrease of 41%. The decrease in consolidated operating income was the result of a 60% decline in operating income in the Central Region and a 17% decline in operating income in the Nevada Region. Operating income in the Central Region includes management fee and joint venture income related to the Company's Silver Star Hotel and Casino and Treasure Chest Casino operations. Consolidated operating income margin declined to 6.0% from 10.5% for the first three months of fiscal 1997 versus the same period in fiscal 1996. This decrease resulted from operating margins in the Central Region declining to 15.6% from -10- 11 23.5%, respectively, and operating income margins in the Nevada Region declining to 7.8% from 9.5%, respectively, for the first quarter of fiscal 1997 compared to the prior year's first quarter. Net revenues at the Stardust decreased 5.3% for the first quarter of fiscal 1997 versus the first quarter in the prior fiscal year. Casino revenue declined 5.5% as a result of increased wagering volumes offset by lower win percentages. Rooms revenue for the three months ended September 30, 1996 decreased 13% with a 1.3% increase in occupied rooms offset by a 2.6% decrease in the average daily room rate. Operating income margin for the quarter declined to 7.7% from 12.1% in the prior year's first quarter. The decline in operating income and operating income margin is attributable primarily to decreased operating income and operating income margins in the casino and rooms departments along with higher advertising and promotional expenses. Net revenues at the Boulder Strip Properties increased 5.4% for the three months ended September 30, 1996 compared to the same period in the prior year primarily as a result of a 8.1% increase in revenues at Sam's Town Las Vegas. Casino revenues at the Boulder Strip Properties increased 6.8% for the three months ended September 30, 1996, while rooms revenue and food and beverage revenue were consistent with the prior year's first fiscal quarter. The operating income margin at the Boulder Strip Properties increased to 8.4% from 6.7% for the three months ended September 30, 1996 versus the comparable period in the prior fiscal year due to improved operating margins at Sam's Town Las Vegas in the casino, rooms and food and beverage departments. Net revenues at the Downtown Properties increased 2.3% for the three months ended September 30, 1996 compared to the same period in the prior year. Net revenues at the California decreased 5.8% for the first three months of fiscal 1996 with casino revenue declining 6.0%, rooms revenue declining 6.6% and food and beverage revenue declining 3.9%. All revenues were impacted for the first fiscal quarter due to a rooms remodel project at the California. The California had approximately 17% of its rooms base unavailable in the three month period ended September 30, 1996. At the Fremont, net revenues increased 11.6% for the three months ended September 30, 1996 versus the comparable period in the prior fiscal year, with casino revenue increasing 6.5% and rooms and food and beverage increasing 2.5% and 27.8%, respectively. Operating income margins at the Downtown Properties were 7.1% for the three months ended September 30, 1996 versus 9.2% in the comparable period in the prior fiscal year with operating income margins at both the California and Fremont declining. Operating income margins at the California declined in the casino and rooms departments primarily as a result of the rooms remodel project while operating income margins at the Fremont declined due to declines in the casino and rooms departments which were partially offset by increased margins in the food and beverage departments. The Central Region produced net revenues of $59.0 million in the first quarter of fiscal 1997 versus $55.9 million in last year's first quarter. Sam's Town Tunica net revenues decreased 25.4% to $30.3 million in the first quarter of fiscal 1997 versus $40.6 million in the first quarter of the prior fiscal year. Management fee and joint venture income from Silver Star and Treasure Chest totaled $10.3 million for the three months ended September 30, 1996 compared to $10.5 million in the prior year's first fiscal quarter. Revenues were enhanced by Sam's Town Kansas City, which was open for the entire first fiscal quarter of the current year, and produced net revenues of $18.4 million versus $4.9 million in last year's first fiscal quarter. Sam's Town Kansas City opened on September 13, 1995 and therefore only had 18 days of results included in the prior year period. Operating income and operating income margin in the Central Region declined to -11- 12 $9.2 million and 15.6%, respectively, for the first quarter of fiscal 1997 versus $23.1 million and 41%, respectively, in the comparable period in the prior fiscal year. Contributing to the decline in operating income and operating income margin in the Central Region was a $4.1 million operating loss at Sam's Town Kansas City for the first quarter, which continues to operate at a loss. In addition, Sam's Town Tunica reported a $9.2 million operating income decline for the first fiscal quarter ended September 30, 1996 versus the comparable period in the prior fiscal year. This decline was primarily due to the effects of increased competition and the continuing effects of construction disruption. Operating income margin at Sam's Town Tunica declined to 9.7% for the quarter ended September 30, 1996. The Central Region results include the full revenues and income from Sam's Town Tunica and Sam's Town Kansas City (opened September 13, 1995), management fee income from Silver Star Hotel and Casino and management fee and joint venture income from Treasure Chest Casino. The Company has recently entered into a definitive agreement to sell its 15% interest in Treasure Chest Casino L.L.C., owner of the Treasure Chest Casino. The sale, which is subject to various governmental and regulatory approvals is expected to close in January 1997. The Company, through its wholly owned subsidiary, expects to manage Treasure Chest until approximately October 1997. Interest expense, net of amounts capitalized was $13.3 million for the first quarter of fiscal 1997 compared to $12.2 million in the first quarter of the prior year. The Company incurred increased interest expense for the quarter ended September 30, 1996 as a result of increased borrowings and decreased capitalized interest during the first quarter of fiscal 1997 compared to the comparable period in the prior year. Depreciation expense increased $.6 million primarily as a result of the opening of Sam's Town Kansas City. As a result of these factors, net income decreased $5.4 million for the first fiscal quarter of 1997 compared to the first fiscal quarter of the prior year. LIQUIDITY AND CAPITAL RESOURCES For the three months ended September 30, 1996 and 1995, the Company's principal source of funds was net cash provided by operating activities. Net cash provided by operating activities was $13.2 million in the first quarter of fiscal 1997 compared to $25.0 million in the same period last year. As of September 30, 1996, the Company had balances of cash and cash equivalents of $45.5 million and had approximately $244 million of credit available under its bank credit facility. The Company's principal uses of funds for the three months ended September 30, 1996 and 1995 were cash used in investing activities, mainly for capital expenditures and, for the prior year period, cash used in financing activities related to the reduction of long-term debt. Capital expenditures for the three months ended September 30, 1996 totaled $39.7 million. Of this amount $10 million was related to the renovation and expansion of Main Street Station and $16 million was related to the 350-room hotel tower and parking garage project of Sam's Town Tunica. Main Street Station, which is expected to cost approximately $45 million and Sam's Town Tunica, which is expected to cost approximately $40 million, have approximately $22 million and $17 million, respectively, remaining to be spent. Both projects are expected to be completed in the Company's second fiscal quarter. The Company plans to fund the Sam's Town Tunica expansion and the Main Street Station renovation primarily from cash flow from operations and availability under its bank credit facility. The Company is currently involved in several other projects to expand its operations. On April 26, 1996, the Company entered into a definitive stock purchase agreement to acquire Par-A-Dice Gaming Corporation, owner and operator of the Par-A-Dice riverboat casino in East Peoria, Illinois and East Peoria Hotel, Inc. the general partner of a partnership which recently opened a 204-room hotel adjacent to the Par-A-Dice casino. Closing of the transaction is conditioned -12- 13 upon, among other things, approval by the Illinois Gaming Board. The total purchase price is approximately $175 million subject to certain adjustments as set forth in the stock purchase agreement. The Company plans to fund the Par-A-Dice acquisition from borrowings under its bank credit facility. The Company recently acquired a casino hotel site in Reno, Nevada and plans to develop Sam's Town Reno on the site at a total estimated cost of approximately $92 million. The Company plans to fund the Sam's Town Reno development primarily from cash flow from operations and availability under its bank credit facility. On May 29, 1996, the Company, through a wholly owned subsidiary, executed a joint venture agreement with Mirage Resorts, Inc., (the "Mirage Joint Venture") to jointly develop and own a casino hotel entertainment facility in the Marina district of Atlantic City, New Jersey (the "Atlantic City Project"). The Mirage Joint Venture provides for $100 million in capital contributions by the Company during the course of the construction of the Atlantic City Project. The Company plans to fund its Mirage Joint Venture capital contributions primarily from cash flow from operations and availability under its bank credit facility. There can be no assurance that any of the above mentioned projects will go forward and ultimately become operational. The source of funds required to meet the Company's working capital needs (including maintenance capital expenditures) and those required to complete the above mentioned projects is expected to be cash on hand, cash flow from operations, availability under its bank credit facility, new borrowings to the extent permitted under existing debt agreements, the issuance of additional equity and vendor and other financing. No assurance can be given that required financing strategies can be effected on satisfactory terms. The Company, through its wholly owned subsidiary California Hotel Finance Company, has $185 million principal amount of 11% Senior Subordinated Notes due December 2002. The Notes contain certain covenants, including but not limited to limitations on restricted payments (as defined in the indenture related to the notes). As a result of these restrictions, at September 30, 1996 California Hotel and Casino (a wholly owned subsidiary of the Company) had a portion of its retained earnings and net assets, in the amounts of $31.7 million and $86.9 million, respectively, that were not available for distribution as dividends to the Company. On October 4, 1996, the Company issued $200 million of 9.25% Senior Notes and sold 4.0 million shares of the Company's Common Stock. The net proceeds of these offerings of approximately $230 were used to reduce outstanding indebtedness under the Company's bank credit facility. On November 4, 1996, the Company redeemed its $150 million 10.75% Notes with borrowings under its bank credit facility. Also, on August 23, 1996, the Company sold its riverboat Mary's Prize for $20 million and retired debt of $17.6 million in connection therewith. PRIVATE SECURITIES LITIGATION REFORM ACT The Private Securities Litigation Reform Act of 1995 provides a "safe harbor" for forward looking statements. Certain information included in this Form 10-Q and other materials filed or to be filed by the Company with the Securities and Exchange Commission (as well as information included in oral statements or other written statements made or to be made by the Company) contains statements that are forward looking, such as statements relating to plans for future expansion and other business development activities as well as other capital spending, financing sources, and the effects of regulation ( including gaming and tax regulation) and competition. Such forward looking statements involve important risks and uncertainties that could significantly affect anticipated results in the future, and accordingly, actual results may differ materially form those expressed in any forward looking statements made by or on behalf of the Company. These risks and uncertainties include, but are not limited to, those related to construction and development activities, economic conditions, changes in tax laws, changes in laws or regulations affecting gaming licenses, changes in competition, and factors affecting leverage and debt service including sensitivity to fluctuation in interest rates, and other factors described from time to time in the Company's reports filed with the Securities and Exchange Commission, including the Company's Form 10-K for the year ended June 30, 1996 and its Registration Statements (File Nos. 333-05555 and 333-05521) related to its recent offerings of 9.25% Senior Notes and Common Stock. Any forward looking statements are made pursuant to the Private Securities Litigation Reform Act of 1995 and, as such, speak only as of the date made. PART II. OTHER INFORMATION -13- 14 ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K. (a). Exhibits. 10.57 Boyd Gaming Corporation - 1996 Stock Incentive Plan. (Incorporated by reference to the Appendix A of the Company's October 22, 1996 Proxy Statement for the 1996 Annual Meeting of Stockholders). 10.58 Form of Indenture relating to $200,000,000 aggregate principal amount of 9.25% Senior Notes due 2003, including the Form of Note. (Incorporated by reference to Exhibit 4 of the Company's Registration Statement on Form S-3, File No. 333-05555). 27 Financial Data Schedule (b). Reports on Form 8-K. Company's Current Report on Form 8-K, dated August 16, 1996, regarding the acquisition of land for Sam's Town Reno and the sale of Mary's Prize Riverboat. -14- 15 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 14, 1996 By Keith Smith ------------------------------- Keith Smith Vice President and Controller (Chief Accounting Officer) -15- EX-27 2 FINANCIAL DATA SCHEDULE
5 1,000 3-MOS JUN-30-1997 SEP-30-1996 45,519 0 16,302 0 6,746 88,295 813,335 0 969,220 106,904 0 0 0 572 231,147 969,220 186,737 186,737 0 175,616 0 0 13,258 (1,960) (745) (1,215) 0 0 0 (1,215) (.02) (.02)
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