-----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, O9oDUyTuAUM6fpK4d47QVHeX1aUbEwnrt0owpHRg1Cyyg9qfDVUDU5ABa30+Z6BU BCbjN/w01wvyBWhtqbyuZA== 0000892569-97-000460.txt : 19970222 0000892569-97-000460.hdr.sgml : 19970222 ACCESSION NUMBER: 0000892569-97-000460 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 3 CONFORMED PERIOD OF REPORT: 19961231 FILED AS OF DATE: 19970214 SROS: NONE 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: 97535829 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 FORM 10-Q FOR THE QUARTER ENDED DECEMBER 31, 1996 1 UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D. C. 20549 FORM 10-Q (Mark One) [X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended December 31, 1996 OR [ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from _______________ to _______________ Commission file number 1-12168 BOYD GAMING CORPORATION (Exact name of registrant as specified in its charter) NEVADA 88-0242733 (State or other jurisdiction of (I.R.S. Employer incorporation or organization) Identification No.) 2950 SOUTH INDUSTRIAL ROAD LAS VEGAS, NEVADA 89109 (Address of principal executive offices) (Zip Code) (702) 792-7200 (Registrant's telephone number, including area code) Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to filing requirements for the past 90 days. Yes X No --- --- Shares outstanding of each of the Registrant's classes of common stock as of January 31, 1997 Class Outstanding ----- ----------- Common stock, $.01 par value 61,363,015 2 BOYD GAMING CORPORATION FORM 10-Q QUARTER ENDED DECEMBER 31, 1996 INDEX
Page No. -------- Part I. Financial Information Item 1. Condensed Financial Statements Consolidated Condensed Balance Sheets at December 31, 1996 and June 30, 1996 3 Consolidated Condensed Statements of Operations for the three and six months ended December 31, 1996 and 1995 4 Consolidated Condensed Statements of Cash Flows for the six months ended December 31, 1996 and 1995 5 Consolidated Condensed Statements of Changes in Stockholders' Equity for the six months ended December 31, 1996 6 Notes to Consolidated Condensed Financial Statements 7 Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations 10 Part II. Other Information Item 4. Submission of Matters to a Vote of Security Holders 19 Item 6. Exhibits and Reports on Form 8-K 19 Signatures 20
-2- 3 PART I. FINANCIAL INFORMATION ITEM 1. FINANCIAL STATEMENTS BOYD GAMING CORPORATION AND SUBSIDIARIES CONSOLIDATED CONDENSED BALANCE SHEETS (UNAUDITED)
DECEMBER 31, JUNE 30, (IN THOUSANDS, EXCEPT SHARE DATA) 1996 1996 - ---------------------------------------------------------------------------------------------------------------- ASSETS Current assets Cash and cash equivalents $ 70,426 $ 48,980 Accounts receivable, net 25,876 16,040 Inventories 8,850 6,531 Prepaid expenses 19,120 15,265 Income taxes receivable 7,144 -- ---------- -------- Total current assets 131,416 86,816 Property, equipment and leasehold interests, net 887,334 797,593 Other assets and deferred charges 60,564 58,489 Goodwill and other intangible assets, net 125,091 10,527 ---------- -------- Total assets $1,204,405 $953,425 ========== ======== LIABILITIES AND STOCKHOLDERS' EQUITY Current liabilities Current maturities of long-term debt $ 1,778 $ 4,031 Accounts payable 70,679 47,193 Accrued liabilities Payroll and related 25,619 22,956 Interest and other 32,231 20,956 Income taxes payable -- 678 ---------- -------- Total current liabilities 130,307 95,814 Long-term debt, net of current maturities 775,577 590,808 Deferred income taxes 33,717 33,546 Commitments Stockholders' equity Preferred stock, $.01 par value; 5,000,000 shares authorized -- -- Common stock, $.01 par value; 200,000,000 shares authorized; 61,363,015 and 57,213,720 shares outstanding 614 572 Additional paid-in capital 137,305 102,583 Retained earnings 126,885 130,102 ---------- -------- Total stockholders' equity 264,804 233,257 ---------- -------- Total liabilities and stockholders' equity $1,204,405 $953,425 ========== ========
The accompanying notes are an integral part of these consolidated financial statements. -3- 4 BOYD GAMING CORPORATION AND SUBSIDIARIES CONSOLIDATED CONDENSED STATEMENTS OF OPERATIONS (UNAUDITED) (IN THOUSANDS, EXCEPT PER SHARE DATA)
THREE MONTHS ENDED SIX MONTHS ENDED DECEMBER 31, DECEMBER 31, ---------------------- ------------------------ 1996 1995 1996 1995 - ------------------------------------------------------------------------------------------------------ Revenues Casino $138,011 $142,714 $268,208 $269,408 Food and beverage 37,493 35,883 73,387 68,087 Rooms 18,248 17,335 35,449 34,330 Other 15,319 13,466 28,575 23,012 Management fees and joint ventures 10,094 9,746 20,406 20,210 -------- -------- -------- -------- Gross revenues 219,165 219,144 426,025 415,047 Less promotional allowances 20,052 18,855 40,175 35,698 -------- -------- -------- -------- Net revenues 199,113 200,289 385,850 379,349 -------- -------- -------- -------- Costs and expenses Casino 73,858 69,917 145,928 131,425 Food and beverage 26,007 25,346 50,885 50,776 Rooms 5,784 5,830 12,044 12,299 Other 12,075 9,659 23,266 15,853 Selling, general and administrative 28,226 30,082 58,860 52,559 Maintenance and utilities 9,290 7,185 18,327 15,514 Depreciation and amortization 15,717 15,839 30,834 30,400 Corporate expense 4,315 5,151 10,744 10,510 Preopening expense 3,481 -- 3,481 10,004 -------- -------- -------- -------- Total 178,753 169,009 354,369 329,340 -------- -------- -------- -------- Operating income 20,360 31,280 31,481 50,009 -------- -------- -------- -------- Other income (expense) Interest income 165 427 342 787 Interest expense, net of amounts capitalized (13,811) (14,385) (27,069) (26,615) -------- -------- -------- -------- Total (13,646) (13,958) (26,727) (25,828) -------- -------- -------- -------- Income before provision for income taxes and extraordinary item 6,714 17,322 4,754 24,181 Provision for income taxes 2,647 6,755 1,902 9,430 -------- -------- -------- -------- Income before extraordinary item 4,067 10,567 2,852 14,751 Extraordinary loss on early retirement of debt 6,069 -- 6,069 -- -------- -------- -------- -------- Net income (loss) $ (2,002) $ 10,567 $ (3,217) $ 14,751 ======== ======== ======== ======== NET INCOME (LOSS) PER COMMON SHARE Net income before extraordinary item $ 0.07 $ 0.19 $ 0.05 $ 0.26 Extraordinary item (0.10) -- (0.10) -- -------- -------- -------- -------- Net income (loss) $(0.03) $ 0.19 $ (0.05) $ 0.26 ======== ======== ======== ========
The accompanying notes are an integral part of these consolidated financial statements. -4- 5 BOYD GAMING CORPORATION AND SUBSIDIARIES CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS (Unaudited) (In thousands)
Six Months Ended December 31, -------------------- 1996 1995 - ------------------------------------------------------------------------------- CASH FLOWS FROM OPERATING ACTIVITIES Net income (loss) $ (3,217) $ 14,751 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation and amortization 30,834 30,400 Deferred income taxes 171 990 Extraordinary loss on early retirement of debt 6,069 -- Other 301 (17) Changes in assets and liabilities: Increase in accounts receivable, net (9,836) (1,266) Increase in inventories (2,319) (602) Increase in prepaid expenses (3,855) (2,098) Increase in other assets (1,634) (2,825) Increase in income taxes receivable (7,144) -- Increase in other current liabilities 33,016 23,036 Increase (decrease) in income taxes payable (678) 2,577 -------- -------- Net cash provided by operating activities 41,708 64,946 -------- -------- CASH FLOWS FROM INVESTING ACTIVITIES Net cash paid for acquisition of Par-A-Dice Hotel and Casino (170,725) Acquisition of property, equipment and other assets (79,132) (71,256) Proceeds from sale of riverboat 20,000 -- -------- -------- Net cash used in investing activities (229,857) (71,256) -------- -------- CASH FLOWS FROM FINANCING ACTIVITIES Early retirement of long-term debt (157,500) -- Proceeds from issuance of long-term debt 200,000 374 Net borrowings under credit agreements 150,850 (5,750) Payments on long-term debt (18,334) (16,662) Proceeds from issuance of common stock 34,579 1,150 -------- -------- Net cash provided by (used in) financing activities 209,595 (20,888) -------- -------- NET INCREASE IN CASH AND CASH EQUIVALENTS 21,446 (27,198) CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD 48,980 83,169 -------- -------- CASH AND CASH EQUIVALENTS, END OF PERIOD $ 70,426 $ 55,971 ======== ======== SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION Cash paid for interest, net of amounts capitalized $ 29,950 $ 25,673 ======== ======== Cash paid for income taxes $ 4,915 $ 5,881 ======== ======== SUPPLEMENTAL SCHEDULE OF NON-CASH INVESTING AND FINANCING ACTIVITIES Property additions acquired on contracts and trade payables which were accrued, but not yet paid $ 7,398 $ 3,545 ======== ======== Acquisition of Par-A-Dice Hotel and Casino Fair value of assets acquired $174,800 $ -- Cash paid 170,725 -- ======== ======== Liabilities assumed $ 4,075 $ -- ======== ========
The accompanying notes are an integral part of these consolidated financial statements. -5- 6 BOYD GAMING CORPORATION AND SUBSIDIARIES CONSOLIDATED CONDENSED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY FOR THE SIX MONTHS ENDED DECEMBER 31, 1996 (Unaudited) (In thousands, except share data) - ------------------------------------------------------------------
Common Stock Additional Total ------------------- Paid-In Retained Stockholder's Shares Amount Capital Earnings Equity --------------------------------------------------------- Balances, July 1, 1996 57,213,720 $572 $102,583 $130,102 $233,257 Net loss for the six months ended December 31, 1996 (3,217) (3,217) Issuance of common stock 4,000,000 40 33,493 33,533 Stock issued in connection with employee stock purchase plan 149,295 2 1,229 1,231 ---------- ---- -------- -------- -------- Balances, December 31, 1996 61,363,015 $614 $137,305 $126,885 $264,804 ========== ==== ======== ======== ========
The accompanying notes are an integral part of these consolidated financial statements. -6- 7 NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS NOTE 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Principles of Consolidation The accompanying Consolidated Condensed Financial Statements include the accounts of Boyd Gaming Corporation and its wholly owned subsidiaries, collectively referred to herein as the "Company". The Company owns and operates seven casino entertainment facilities in Las Vegas, Nevada, one in Tunica, Mississippi, one in Kansas City, Missouri which opened in September 1995 and one in East Peoria, Illinois which was acquired in December 1996. The Company manages a casino entertainment facility in Philadelphia, Mississippi, which opened July 1, 1994, for which it has a seven year management contract. The Company is also part owner of and manages a riverboat gaming operation in Kenner, Louisiana which opened in September 1994. The Company has recently entered into an agreement to sell its interest in the entity which owns the Kenner gaming operation (See Note 3. Additional Information - Treasure Chest Casino). All material intercompany accounts and transactions have been eliminated. Basis of Presentation In the opinion of the Company, the accompanying unaudited Consolidated Condensed Financial Statements contain all adjustments, consisting only of normal recurring adjustments, necessary to present fairly the results of its operations for the three and six months ended December 31, 1996 and 1995 and its cash flows for the six months ended December 31, 1996 and 1995. It is suggested that this report be read in conjunction with the Company's audited financial statements included in the Annual Report on Form 10-K for the fiscal year ended June 30, 1996. The operating results for the three and six months ended December 31, 1996 and cash flows for the six months ended December 31, 1996 are not necessarily indicative of the results that will be achieved for the full fiscal year or for future periods. Net Income (Loss) Per Common Share Net income (loss) per common share is based upon the weighted average number of common stock and common stock equivalents outstanding during the period which were 61,084,908 and 57,000,283 for the three months ended December 31, 1996 and 1995, respectively, and 59,149,914 and 56,999,650 for the six months ended December 31, 1996 and 1995, respectively. Use of Estimates The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. Goodwill and Other Intangible Assets The excess of total acquisition costs over the fair value of assets acquired is amortized using the straight-line method over 40 years. -7- 8 Recently Adopted Accounting Standards The FASB issued SFAS No. 121, Accounting for the Impairment of Long-Lived Assets to Be Disposed Of, in March 1995. This statement was adopted by the Company for the fiscal year beginning July 1, 1996 and requires that long-lived assets and certain identifiable intangibles to be held and used by an entity be reviewed whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. The adoption of SFAS No. 121 did not have an effect on the financial position or results of operations of the Company as of December 31, 1996. The FASB issued SFAS No. 123, Accounting for Stock-Based Compensation, in October 1995. This statement was adopted by the Company for the fiscal year beginning July 1, 1996 and requires certain disclosures about the impact on results of operations of the fair value of stock based employee compensation arrangements. Management intends to continue to account for stock based employee compensation arrangements in accordance with Accounting Principles Board No. 25, Accounting for Stock Issued to Employees, and accordingly believes that adoption of SFAS No. 123 will not have a significant effect on the financial position or results of operations of the Company. The Company will include the pro forma effects of this statement in its notes to financial statements for the year fiscal ending June 30, 1997. NOTE 2. CAPITAL STOCK Two hundred million shares of common stock with a par value of $.01 per share are authorized, of which 61,363,015 and 57,213,720 shares were issued at December 31, 1996 and June 30, 1996, respectively, including no treasury shares at December 31, 1996 and June 30, 1996. The Company has authorized 5,000,000 shares of $.01 par value preferred stock of which no shares were issued at December 31, 1996 and June 30, 1996. NOTE 3. ADDITIONAL INFORMATION Sale of Riverboat On August 23, 1996, the Company sold its riverboat Mary's Prize for $20 million and retired debt of $17.6 million in connection therewith. Projects for which Mary's Prize was constructed have either been delayed or did not materialize. Debt and Equity Offerings On October 4, 1996, the Company issued $200 million of 9.25% Senior Notes and sold 4.0 million shares of the Company's Common Stock in two registered public offerings. The net proceeds of these offerings of approximately $230 million were used to reduce outstanding indebtedness under the Company's bank credit facility. On November 4, 1996, the Company redeemed its $150 million 10.75% Notes with borrowings under its bank credit facility. As a result, the Company recognized an extraordinary loss of $6.1 million, net of tax benefit of $3.3 million, related to the early retirement of the 10.75% Notes. -8- 9 The $200 million in Senior Notes are guaranteed by all existing significant subsidiaries of the Company. The guaranties are full, unconditional, and joint and several. All of the Company's significant subsidiaries are wholly-owned. Assets, equity, income and cash flows of all other subsidiaries of the Company that do not guaranty the notes are less than 3% of the respective consolidated amounts and are inconsequential, individually and in the aggregate, to the Company. The Company has not included separate financial information of the guarantors since such information is not material to investors. The Company, through its wholly owned subsidiary California Hotel Finance Company, has $185 million principal amount of 11% senior subordinated notes due December 2002. The notes contain certain covenants regarding incurrence of debt, sales and disposition of assets, mergers or consolidations and limitations on restricted payments (as defined in the indenture to the notes). As a result of these restrictions, at December 31, 1996 California Hotel and Casino (a wholly owned subsidiary of the Company) had a portion of its retained earnings and its net assets in the amounts of $31.7 million and $86.9 million , respectively, that were not available for distribution as dividends to the Company. Treasure Chest Casino The Company has agreed to sell its 15% interest in Treasure Chest Casino L.L.C., owner of the Treasure Chest Casino in Kenner, Louisiana. The interest is being purchased by both Treasure Chest Casino L.L.C. and its majority owner for a purchase price of $15.2 million. The Company does not expect to record a significant gain or loss on this sale. The sale, which is subject to various governmental and regulatory approvals, is expected to close in the Company's third fiscal quarter and will not result in a material gain or loss for the Company. The Company, through its wholly owned subsidiary, Boyd Kenner, Inc., expects to manage Treasure Chest Casino until approximately October 1997. Par-A-Dice Acquisition On December 5, 1996 the Company completed the acquisition of Par-A-Dice Gaming Corporation, owner and operator of the Par-A-Dice riverboat casino in East Peoria, Illinois and East Peoria Hotel, Inc., the general partner of a partnership which recently opened a 204-room hotel adjacent to the Par-A-Dice casino for a purchase price of approximately $172 million subject to certain adjustments as set forth in the stock purchase agreement. The fair value of the net assets exceeded the purchase price by approximately $115 million. The pro forma income statement effects of the acquisition as if it had occurred as of July 1, 1995 are as follows: SIX MONTHS ENDED DECEMBER 31, --------------------- PRO FORMA (IN THOUSANDS, EXCEPT PER SHARE DATA) 1996 1995 - ----------------------------------------------- --------- -------- Net revenues $428,998 $432,371 -------- -------- Income before extraordinary item $ 5,860 $ 18,699 -------- -------- Net income (loss) $ (209) $ 18,699 -------- -------- Net income (loss) per common share: - ---------------------------------- Net income before extraordinary item $ .10 $ .33 -------- -------- Net income (loss) $ .00 $ .33 ======== ======== -9- 10 ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS RESULTS OF OPERATIONS
Three Months Ended Six Months Ended December 31, December 31, ----------------------------- ------------------------------ 1996 1995 1996 1995 ---------- ---------- ---------- ---------- NET REVENUES Stardust $ 46,024 $ 48,612 $ 91,290 $ 96,406 Boulder Strip Properties 51,538 50,492 96,758 93,404 Downtown Properties 37,375 36,311 70,577 68,762 Central Region 60,465 64,086 119,432 119,989 -------- -------- -------- -------- TOTAL PROPERTIES $195,402 $199,501 $378,057 $378,561 -------- -------- -------- -------- OPERATING INCOME Stardust $ 4,870 $ 7,114 $ 8,342 $ 12,917 Boulder Strip Properties 7,607 6,673 11,419 9,566 Downtown Properties 3,764 5,995 6,130 8,979 Central Region 12,581 17,747 21,782 40,888 Preopening expense (3,481) --- (3,481) (10,004) -------- -------- -------- -------- TOTAL PROPERTIES $ 25,341 $ 37,529 $ 44,192 $ 62,346 ======== ======== ======== ========
THE ABOVE TABLE SETS FORTH FOR THE PERIODS INDICATED CERTAIN INCOME STATEMENT DATA FOR THE COMPANY'S PROPERTIES. AS USED HEREIN, "BOULDER STRIP PROPERTIES" CONSIST OF SAM'S TOWN LAS VEGAS, THE ELDORADO AND JOKERS WILD; "DOWNTOWN PROPERTIES" CONSIST OF THE CALIFORNIA, THE FREMONT AND MAIN STREET STATION (OPENED NOVEMBER 1996); AND "CENTRAL REGION" CONSIST OF SAM'S TOWN TUNICA, SAM'S TOWN KANSAS CITY (OPENED SEPTEMBER 1995), PAR-A-DICE (ACQUIRED DECEMBER 1996), MANAGEMENT FEE INCOME FROM SILVER STAR HOTEL AND CASINO, AND MANAGEMENT FEE AND JOINT VENTURE INCOME FROM TREASURE CHEST CASINO. OPERATING INCOME FROM PROPERTIES AS SHOWN IN THE TABLE EXCLUDES CORPORATE EXPENSE, INCLUDING RELATED DEPRECIATION AND AMORTIZATION, AND THE RESULTS OF THE COMPANY'S HAWAIIAN TRAVEL AGENCY, WHICH ITEMS ARE NOT ALLOCATED TO THE PROPERTIES. REVENUES Consolidated net revenues declined slightly for the three-month period ended December 31, 1996 compared to the same period in the prior fiscal year with Company-wide casino revenue declining 3.3%, food and beverage revenue increasing 6.7% and rooms revenue increasing 2.7%. Consolidated net revenues for the current fiscal quarter were enhanced by the opening of Main Street Station Casino, Brewery and Hotel in downtown Las Vegas on November 22, 1996, the acquisition of Par-A-Dice Hotel and Casino, located in East Peoria, Illinois on December 5, 1996 and the opening of a new 350-room hotel tower at Sam's Town Tunica in December 1996. In the Company's Nevada Region revenues decreased slightly (.4%) for the three month period ended December 31, 1996 compared to the same period in the prior fiscal year. Revenues at the Stardust declined 5.3% while revenues increased 2.1% at the Boulder Strip properties and revenues increased 2.9% at the Downtown Properties for the current three month period versus the comparable period of the prior year. The increase in revenues at the Downtown Properties was attributable to revenues from Main Street Station which opened in November 1996. In the Company's Central Region revenues decreased 5.7% for the three months ended December 31, -10- 11 1996 compared to the prior year period. Revenues from Par-A-Dice Hotel and Casino, which was acquired in December 1996, partially offset declines in revenues at Sam's Town Tunica and Sam's Town Kansas City. Management fee and joint venture income increased 1.4% for the three months ended December 31, 1996. Consolidated net revenues increased 1.7% for the six month period ended December 31, 1996 compared to the same period in the prior fiscal year. Company-wide casino revenue declined .4% and rooms revenue declined 4.1% from the prior year while food and beverage revenue increased 6.7% compared to the prior year. In the Company's Nevada Region revenues were unchanged for the six month period ended December 31, 1996 compared to the same period in the prior fiscal year. Revenue increases of 3.6% at the Boulder Strip Properties and 2.6% at the Downtown Properties were offset by a 5.3% decline in revenue at the Stardust for the six month period. Revenues at the Downtown Properties were enhanced for the six month period by the opening of Main Street Station in November 1996. In the Central Region revenues declined slightly (.5%) for the six months ended December 31, 1996. Central Region revenues were enhanced for the six months ended December 31, 1996 with revenues from Par-A-Dice Hotel and Casino, acquired in December 1996, the opening of a new 350-room hotel tower at Sam's Town Tunica in December 1996 and Sam's Town Kansas City which operated for only part of last year's first six month period. OPERATING INCOME Consolidated operating income for the second quarter of fiscal 1997 was $20.4 million versus $31.2 million in the prior year's second quarter. Consolidated operating income for the current quarter includes preopening expense of $3.5 million related to the opening of Main Street Station. The decrease in consolidated operating income resulted from a 29% decline in operating income in the Central Region and a 18% decline in operating income in the Nevada Region. Operating income in the Central Region includes management fees and joint venture income related to the Company's Silver Star Hotel and Casino and Treasure Chest Casino operations. Consolidated operating income margin declined to 10.2% from 15.6% for the second quarter of fiscal 1997 versus the same period in fiscal 1996. This decrease resulted primarily from operating income margin in the Nevada Region declining to 12.0% from 14.6% and operating income margin declining to 20.8% from 27.7% in the Central Region for the second fiscal quarter of 1997 compared to the prior year's second quarter. Consolidated operating income for the six months ended December 31, 1996 was $31.5 million versus $50.0 million in the comparable period in the prior fiscal year. Consolidated operating income for the current quarter includes preopening expense of $3.5 million related to the opening of Main Street Station. The decrease in consolidated operating income resulted primarily from a 47% decline in operating income in the Central Region and a 17.7% decline in operating income in the Nevada Region. Consolidated operating income margin declined to 8.2% from 13.2% for the six months ended December 31, 1996 compared to the same period in the prior fiscal year. This decrease resulted primarily from operating margin in the Nevada Region declining to 10.0% from 12.2% and operating income margin in the Central Region declining to 18.2% from 34.1% for the six months ended December 31, 1996 versus the comparable period in the prior fiscal year. -11- 12 STARDUST Net revenues at the Stardust decreased 5.3% for the second quarter of fiscal 1997 versus the second quarter in the prior fiscal year. Casino revenue declined 6.6% primarily as a result of lower win percentage in the race and sports books partially offset by a 17% increase in wagering volume. Table games and slots produced comparable wagering and win for the three months ended December 31, 1996 versus the comparable period in the prior fiscal year. Rooms revenue for the three months ended December 31, 1996 decreased 5.1% with a 1.2% increase in occupied rooms offset by a .8% decline in average daily room rate. Operating income decreased $2.2 million (32%) for the three months ended December 31, 1996 versus the comparable period in the prior fiscal year. Operating income margin for the second quarter of fiscal 1997 declined to 10.6% from 14.6% in the prior year's second fiscal quarter. The decline in operating income and operating income margin is primarily a result of lower revenues leading to decreased operating income and operating income margins in the casino and rooms departments and increased marketing and promotional expenses. For the six months ended December 31, 1996 net revenues at the Stardust decreased 5.3% compared to the comparable period in the prior fiscal year. Casino revenue declined 6.0% as a result of lower win percentages in the casino and race and sports book partially offset by increased wagering volumes. Rooms revenue for the six months ended December 31, 1996 decreased 9.0% with a 1.2% increase in occupied rooms offset by an 1.7% decrease in average daily room rate. Operating income margin for the six months ended December 31, 1996 declined to 9.1% from 13.4% in the prior year's six month period. Operating income declined $4.6 million (35%) for the six months ended December 31, 1996 versus the comparable period in the prior fiscal year. The decline in operating income and operating income margin is primarily a result of lower revenues leading to decreased operating income and operating income margins in the casino and rooms departments and increased marketing and promotional expenses. BOULDER STRIP PROPERTIES Net revenues at the Boulder Strip Properties increased 2.1% for the three months ended December 31, 1996 compared to the same period in the prior fiscal year primarily as a result of a 3.0% increase in revenues at the Sam's Town Las Vegas. Casino revenues at the Boulder Strip Properties increased 2.2% for the three months ended December 31, 1996. Rooms revenue and food and beverage revenue increased 22.5% and 4.1%, respectively, for the three months ended December 31, 1996 compared to the comparable period in the prior fiscal year. The operating income margin at the Boulder Strip Properties increase to 14.8% from 13.2% for the three months ended December 31, 1996 versus the comparable period in the prior fiscal year due primarily to improved operating margins at Sam's Town Las Vegas in the casino, rooms and food and beverage departments. For the six months ended December 31, 1996 net revenues at the Boulder Strip Properties increased 3.6% compared to the same period in the prior fiscal year primarily as a result of a 5.3% increase in revenues at Sam's Town Las Vegas. Casino revenues at the Boulder Strip Properties increased 4.4% for the six months ended December 31, 1996 versus the comparable period in the prior fiscal year, while rooms revenue and food and beverage revenue increased -12- 13 9.5% and 2.1%, respectively. The operating income margin in the Boulder Strip Properties increased to 11.8% from 10.2% for the six months ended December 31, 1996 versus the comparable period in the prior fiscal year due primarily to improved operating margins at Sam's Town Las Vegas in the casino, rooms and food and beverage departments. DOWNTOWN PROPERTIES Net revenues at the Downtown Properties increased 2.9% for the three months ended December 31, 1996 compared to the same period in the prior year as a result of the opening of Main Street Station in November 1996. Net revenues at the California decreased 15.7% for the three months ended December 31, 1996 with casino revenue declining 16.8%, rooms revenue declining 24.1 % and food beverage revenue declining 9.1%. Casino revenue at the California declined as a result of lower wagering volumes and a lower win percentage for the three months ended December 31, 1996 versus the comparable period in the prior fiscal year. Rooms revenue at the California declined as a result of a 8.1% decrease in occupied rooms for the three months ended December 31, 1996 versus the comparable period in the prior fiscal year. At the Fremont, net revenues decreased 2.9% for the three months ended December 31, 1996 versus the comparable period in the prior fiscal year with casino revenue decreasing 7.0% and food and beverage increasing 7.8% while rooms revenue was unchanged. Operating income margins at the Downtown Properties were 10.1% for the three months ended December 31, 1996 versus 16.5% in the comparable period in the prior fiscal year with operating income margins at both the California and Fremont declining. Operating income margins at the California declined in the casino and rooms departments as a result of lower revenues, while operating income margins at the Fremont declined due to decreases in the casino and rooms departments as a result of lower revenues which were partially offset by increased margins in the food and beverage departments. Downtown Properties results for the three months ended December 31, 1996 include Main Street Station which opened in November 1996. Through December 31, 1996, Main Street Station contributed $4.6 million in revenue and produced a small operating loss before preopening expense. Upon commencement of operations a preopening charge of $3.5 million was recorded. Net revenues at the Downtown Properties increased 2.6% for the six months ended December 31, 1996 compared to the same period in the prior fiscal year. Net revenues at the California decreased 11.0% for the first six months of fiscal 1997 with casino revenue declining 11.7%, rooms revenue declining 15.6% and food and beverage revenue declining 6.6%. All revenues were impacted due to a rooms remodel project at the California in the first quarter of fiscal 1997. The California had approximately 15% of its rooms base unavailable in the first fiscal quarter of 1997. At the Fremont, net revenues increased 3.9% for the six month period ended December 31, 1996 versus the comparable period in the prior fiscal year, with casino revenue increasing .7% and rooms and food and beverage increasing .4% and 17.1%, respectively. Operating income margins at the Downtown Properties were 8.7% for the six months ended December 31, 1996 versus 13.1 % in the comparable period in the prior fiscal year with operating income margins at both the California and Fremont declining primarily as a result of lower revenues. Operating income margins at the California declined in the casino and rooms departments while operating income margins at the Fremont declined due to decreases in the casino and rooms departments which were partially offset by increased margins in the food and beverage departments. Revenues for the Downtown Properties were enhanced in all departments -13- 14 by the opening of Main Street Station in November 1996 which contributed $4.6 million in revenues and produced a slight operating loss before preopening expense. CENTRAL REGION The Central Region produced net revenues of $60.5 million for the three months ended December 31, 1996 versus $64.1 million in last year's three month period ended December 31, 1995. Sam's Town Tunica net revenues decreased 22.4% to 27.3 million in the second quarter of fiscal 1997 versus $35.1 million in the second quarter of the prior fiscal year. Management fee and joint venture income from Silver Star and Treasure Chest totaled $10.1 million for the three months ended December 31, 1996 compared to $9.7 million in the prior year's second fiscal quarter. Revenues for the three month period were enhanced by the acquisition of Par-A-Dice Hotel and Casino on December 5, 1996 and the opening of a new 350-room hotel tower at Sam's Town Tunica. Par-A-Dice produced net revenues of $7.5 million in its first 27 days of operation. Operating income and operating income margin in the Central Region declined to $12.6 million and 20.8%, respectively, for the second quarter of fiscal 1997 versus $17.7 million and 27.7%, respectively, in the comparable period in the prior fiscal year. Contributing to the decline in operating income and operating income margin in the Central Region was a $2.5 million operating loss at Sam's Town Kansas City for the second quarter of fiscal 1997. Sam's Town Kansas City continues to operate at a loss and management is currently evaluating its options including additional aggressive cost containment measures. In addition, Sam's Town Tunica reported a $4.3 million operating income decline for the second fiscal quarter ended December 31, 1996 versus the comparable period in the prior fiscal year. This decline was primarily due to the effects of increased competition and the continuing effects of the construction disruption related to a 350-room hotel addition along with an additional 1,000 space parking garage. Both were open and operating in December 1996. Operating income margin at Sam's Town Tunica declined to 14.2% for the quarter ended December 31, 1996. The Central Region results include the full revenues and income from Sam's Town Tunica, Sam's Town Kansas City (opened September 1995), Par-A-Dice Hotel and Casino (acquired December 5, 1996), management fee income from Silver Star Hotel and Casino and management fee and joint venture income from Treasure Chest Casino. The Company has agreed to sell its 15% interest in Treasure Chest Casino L.L.C., owner of the Treasure Chest Casino for a purchase price of $15.2 million. The sale, which is subject to various governmental and regulatory approval is expected to close during the Company's third quarter of fiscal 1997. The Company, through its wholly owned subsidiary Boyd Kenner, Inc., expects to manage Treasure Chest until approximately October 1997. The Central Region produced net revenues of $119.4 million for the six months ended December 31, 1996 versus $120.0 million in last year's comparable period. Sam's Town Tunica net revenues decreased 24.0% to $57.5 million in the first six months of fiscal 1997 versus $75.7 million for the first six months of the prior fiscal year as a result of construction disruption and increased competition in the Tunica market. Management fee and joint venture income from Silver Star and Treasure Chest totaled $20.4 million for the six months ended December 31, 1996 compared to $20.2 million in the prior year's first six months. Revenues were enhanced by Sam's Town Kansas City, which was open for the entire six months of the current year and produced net revenues of $34.0 million versus $24.1 million in last year's first six month period. Sam's Town Kansas City opened September 13, 1995 and therefore only has 110 days of results -14- 15 included in the prior year period. In addition, revenues were enhanced by the acquisition of Par-A-Dice Hotel and Casino on December 5, 1996. Par-A-Dice produced $7.5 million in revenues in its first 27 days of operations. Operating income and operating income margin in the Central Region declined to $21.8 million and 18.2%, respectively, for the first six months of fiscal 1997 versus $40.9 million and 34.1%, respectively, in the comparable period in the prior fiscal year. Contributing to the decline in operating income and operating income margin in the Central Region was a $6.6 million operating loss at Sam's Town Kansas City for the first six months of fiscal 1997. Sam's Town Kansas City continues to operate at a loss and management continues to evaluate its options including additional aggressive cost containment measures. In addition, Sam's Town Tunica reported a $13.5 million operating income decline for the first six months of fiscal 1997 versus the comparable period in the prior fiscal year. This decline was primarily due to the effects of increased competition and the continuing effects of the construction disruption related to the 350-room hotel tower addition along with an additional 1,000 space parking garage. Operating income margin at Sam's Town Tunica declined to 11.8% for the six months ended December 31, 1996. In accordance with the provisions of SFAS No. 121, management has been reviewing, on a quarterly basis, whether anticipated net cash flows from Sam's Town Kansas City will be sufficient to recover the Company's investment in that property. At December 31, 1996, the Company had approximately $138 million in recorded net long-lived assets and intangibles associated with Sam's Town Kansas City. A number of factors are considered in the evaluation of recoverability, including, but not limited to, anticipated revenues and the duration thereof, expected operating costs, the competitive environment and future legislative and regulatory changes. Although at December 31, 1996 the results of the Company's analysis prepared in accordance with the provisions of SFAS No. 121 did not have an effect on the carrying amount of Sam's Town Kansas City, there can be no assurance that this will be true in future periods. Management will continue to monitor the effects of SFAS No. 121 on the carrying amount of Sam's Town Kansas City. In addition to such monitoring, the Company is continuing its efforts to improve operating results at Sam's Town Kansas City through, among other things, property enhancements and improving operating efficiencies. However, under Missouri's restrictive gaming laws and given the current competitive environment the Company believes significant improvement to acceptable levels is unlikely. The Company is encouraging elected officials in Missouri to change existing regulations principally wagering limits and simulated cruising requirements, to allow for a more customer friendly gaming experience and a more profitable gaming operation which in turn will enhance Missouri's goal of tax revenue generation, job creation and general economic development. If some legislative and regulatory relief is not forthcoming, the Company will evaluate its alternatives with respect to its operations at Sam's Town Kansas City and the possible write down of its investment in that property. Included in the three and six month results ended December 31, 1996 is a preopening charge of $3.5 million taken upon the opening of Main Street Station in November 1996. A $10.0 million preopening charge was taken in the prior year's first six months related to the opening of Sam's Town Kansas City. Interest expense, net of amounts capitalized was $13.8 million for the second quarter of fiscal 1997 compared to $14.4 million in the second quarter of the prior year. The Company incurred lower interest expense for the quarter ended December 31, 1996 as a result of lower net -15- 16 borrowings during the second quarter of fiscal 1997 compared to the comparable period in the prior year. Depreciation expense decreased slightly primarily as a result of the opening of Sam's Town Kansas City and other expansion projects offsetting lower depreciation on older properties in the Nevada Region. Interest expense, net of amounts capitalized was $27.1 million for the first six months of fiscal 1997 compared to $26.6 million in the prior years first six months. Depreciation expense increased slightly with increased depreciation from Sam's Town Kansas City and other expansion projects being offset by lower depreciation in the Nevada Region. In connection with the redemption of the Company's $150 million 10.75% Notes the Company recognized an extraordinary loss of $6.1 million, net of tax, in the second fiscal quarter of 1997. As a result of these factors, the Company reported a net loss of $2.0 million in the second fiscal quarter of fiscal 1997 versus net income of $10.6 million in the prior years second fiscal quarter. For the six months ended December 31,1996 the Company reported a net loss of $3.2 million versus net income of $14.8 in the comparable period in the prior fiscal year. LIQUIDITY AND CAPITAL RESOURCES For the six months ended December 31, 1996, the Company's principal source of funds was net cash provided by operating activities and financing activities. Net cash provided by operating activities was $41.8 million versus $64.9 million in the prior year's first six months ended December 31, 1996. Net cash provided by financing activities for the six months ended December 31, 1996 was $210 million which is primarily attributed to issuance of long-term debt and proceeds received from the Company's issuance of 4.0 million shares of common stock. As of December 31, 1996, the Company had balances of cash and cash equivalents of approximately $70.4 million and had approximately $114 million available under bank credit agreements. The Company's principal uses of funds for the six months ended December 31, 1996 were cash used in investing activities, mainly for capital expenditures. Net cash used in investing activities for the six months ended December 31, 1996 was $230 million and included $172 million for the acquisition of Par-A-Dice Hotel and Casino, completed on December 5, 1996. In addition, $32 million was related to the Main Street Station project and $32 million was related to a new 350-room hotel tower and a 1,000 space parking garage project at Sam's Town Tunica. On December 5, 1996 the Company completed the acquisition of Par-A-Dice Gaming Corporation, owner and operator of the Par-A-Dice riverboat casino in East Peoria, Illinois and East Peoria Hotel, Inc., the general partner of a partnership which recently opened a 204-room hotel adjacent to the Par-A-Dice casino. The total purchase price was approximately $172 million. The Company's source of funds for the Par- A-Dice acquisition was borrowings under its bank credit facility. -16- 17 The Company, as part of its ongoing strategic planning process, has recently completed a review of its current growth opportunities. Based on this review, the Company expects to be focusing its growth efforts in two areas. In Nevada, the Company has decided to refocus its efforts on the Stardust Resort & Casino. The Company is considering the next phase of its master plan for the Stardust, which calls for, among other things, as many as two additional hotel towers. In addition, the Company has determined that the 61-acre Stardust site is capable of accommodating the development of an entirely new casino entertainment facility adjacent to the existing Stardust and is continuing to explore the feasibility of such a project. Outside Nevada, the Company is focusing its efforts on its joint venture with Mirage Resorts, Inc. On May 29, 1996, the Company, through a wholly owned subsidiary, executed a joint venture agreement with Mirage Resorts, Inc., (the "Mirage Joint Venture") to jointly develop and own a casino hotel entertainment facility in the Marina district of Atlantic City, New Jersey (the "Atlantic City Project"). The Atlantic City Project is expected to include a hotel of at least 1,000 rooms and is expected to be adjacent and connected to Mirage's planned wholly-owned resort. The Company believes that certain highway improvements to permit greater access to the Marina District of Atlantic City will be necessary to support the multi-facility casino entertainment development master-planned by Mirage. On January 10, 1997 Mirage and the State of New Jersey and South Jersey Transportation Authority entered into a definitive agreement by which the highway improvements can be funded and built. The Company's joint venture agreement with Mirage provides for $100 million in capital contributions by the Company during the course of the construction of the Atlantic City Project. The Company plans to fund its capital contributions primarily from cash flow from operations and availability under its bank credit facility. During the first quarter of fiscal 1997 the Company purchased a casino hotel site in Reno, Nevada with plans to develop Sam's Town Reno on the site. The Company has determined that the development of the Stardust Master Plan and the Atlantic City Project should take priority over the Sam's Town Reno project at this time. There can be no assurance that any of the above mentioned projects will go forward and ultimately become operational. The source of funds required to meet the Company's working capital needs (including maintenance capital expenditures) and those required to complete the above mentioned projects is expected to be cash on hand, cash flow from operations, availability under its bank credit facility, new borrowings to the extent permitted under existing debt agreements, the issuance of additional equity and vendor and other financing. No assurance can be given that required financing strategies can be effected on satisfactory terms. The Bank Credit Facility contains certain financial and other covenants, including, without limitation, various covenants (i) requiring the maintenance of a minimum Tangible Net Worth, (ii) requiring the maintenance of a minimum Fixed Charge Coverage Ratio, (iii) establishing a maximum permitted Funded Debt to EBITDA, (iv) imposing limitations on the incurrence of additional indebtedness and the creation of liens, (v) imposing limits on the maximum permitted Maintenance Capital Expenditures, restrictions on Investments, the purchase or redemption of subordinated debt prior to its stated maturity, dividends and other distributions and the redemption or purchase of capital stock of the Company. As of December 31, 1996, the Company is in compliance with all of its covenants under its bank credit facility; however, to provide for continued compliance with its covenants in future periods and to provide the Company with greater flexibility, the Company is currently in discussions with its banks to amend a number of those covenants. -17- 18 The Company, through its wholly owned subsidiary California Hotel Finance Company, has $185 million principal amount of 11% Senior Subordinated Notes due December 2002. The Notes contain certain covenants, including but not limited to limitations on restricted payments (as defined in the indenture related to the notes). As a result of these restrictions, at December 31, 1996 California Hotel and Casino ( a wholly owned subsidiary of the Company) had a portion of its retained earnings and net assets, in the amounts of $32.0 million and $87.2 million, respectively, that were not available for distribution as dividends to the Company. On October 4, 1996, the Company issued $200 million of 9.25% Senior Notes and sold 4.0 million shares of the Company's Common Stock. The net proceeds of these offerings of approximately $230 million were used to reduce outstanding indebtedness under the Company's bank credit facility. On November 4, 1996, the Company redeemed its $150 million 10.75% Notes with borrowings under its bank credit facility. Also, on August 23, 1996, the Company sold its riverboat Mary's Prize for $20 million and retired debt of $17.6 million in connection therewith. PRIVATE SECURITIES LITIGATION REFORM ACT The Private Securities Litigation Reform Act of 1995 provides a "safe harbor" for forward looking statements. Certain information included in this Form 10-Q and other materials filed or to be filed by the Company with the Securities and Exchange Commission (as well as information included in oral statements or other written statements made or to be made by the Company) contains statements that are forward looking, such as statements relating to plans for future expansion and other business development activities as well as other capital spending, financing sources, and the effects of regulation ( including gaming and tax regulation) and competition. Such forward looking statements involve important risks and uncertainties that could significantly affect anticipated results in the future, and accordingly, actual results may differ materially form those expressed in any forward looking statements made by or on behalf of the Company. These risks and uncertainties include, but are not limited to, those related to construction and development activities, economic conditions, changes in tax laws, changes in laws or regulations affecting gaming licenses, changes in competition, and factors affecting leverage and debt service including sensitivity to fluctuation in interest rates, and other factors described from time to time in the Company's reports filed with the Securities and Exchange Commission, including the Company's Form 10-K for the year ended June 30, 1996 and its Registration Statements (File Nos. 333-05555 and 333-05521) related to its recent offerings of 9.25% Senior Notes and Common Stock. Any forward looking statements are made pursuant to the Private Securities Litigation Reform Act of 1995 and, as such, speak only as of the date made. -18- 19 PART II. OTHER INFORMATION ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS. The Company held its Annual Meeting of Stockholders on November 22, 1996 to elect three Class II directors, to ratify the appointment of the independent auditors of the Company and approve the Boyd Gaming Corporation 1997 Stock Incentive Plan and authorize the number of members of the Board of Director's to 15. At the annual meeting, all of the nominees were elected as follows:
VOTES ----- FOR WITHHELD --- -------- Class II (term expiring in 1999) William R. Boyd 52,939,749 348,216 Warren L. Nelson 52,957,259 330,706 Donald D. Snyder 53,028,485 259,480
In addition, the following individuals continue as directors: Class III (term expiring in 1997) Kenny Guinn Marianne Boyd Johnson Charles L. Ruthe Class I (terms expiring in 1998) William S. Boyd Perry B. Whitt The stockholders ratified the selection of Deloitte and Touche LLP as independent auditors for the Company for the fiscal year ended June 30, 1997 with voting as follows: [53,131,338] for; [130,475] against; [26,252] non-votes. The stockholders approved the Boyd Gaming Corporation 1997 Stock Incentive Plan as follows: [51,078,854] for; [1,775,261] against; [120,439] non-votes. The stockholders approved an increase in the authorized number of members of the Board of Directors to 15 as follows: [52,117,957] for; [1,125,188] against; [41,794] non-votes. ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K. (a) Exhibits. 3.1 Restated Bylaws 27. Financial Data Schedule (b) Reports on form 8-K. None. (c) Amended By Laws and Articles -19- 20 SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized. BOYD GAMING CORPORATION (Registrant) Date: February 14, 1997 By /s/ Keith Smith ---------------------------------- Keith Smith Senior Vice President and Controller (Chief Accounting Officer) -20- EX-3.1 2 RESTATED BYLAWS OF BOYD GAMING 1 EXHIBIT 3.1 RESTATED BY-LAWS OF BOYD GAMING CORPORATION (A NEVADA CORPORATION) ARTICLE I OFFICES SECTION 1.1. Principal Office. The principal offices of the corporation shall be in the City of Las Vegas, State of Nevada, or other location as the Board of Directors may determine. SECTION 1.2. Other Offices. The corporation may also have offices at such other places both within and without the State of Nevada as the Board of Directors may from time to time determine or the business of the corporation may require. ARTICLE 2 MEETINGS OF STOCKHOLDERS SECTION 2.1. Place of Meeting. All meetings of stockholders shall be held at such place, either within or without the State of Nevada, as shall be designated from time to time by the Board of Directors and stated in the notice of the meeting. SECTION 2.2. Annual Meetings. The annual meeting of stockholders shall be held at such date and time as shall be designated from time to time by the Board of Directors and stated in the notice of the meeting. SECTION 2.3. Special Meetings. Special meetings of the stockholders, for any purpose or purposes, unless otherwise prescribed by statute or by the Articles of Incorporation of the corporation, as amended (the "Articles of Incorporation"), may be called by the Chairman of the Board, the President or by the Board of Directors or by written order of a majority of the directors and shall be called by the Chairman of the Board, the President or the Secretary at the request in writing of stockholders owning a majority in amount of the entire capital stock of the corporation issued and outstanding and entitled vote. Such request shall state the purposes of the proposed meeting. The officers or directors shall fix the time and any place, either within or without the State of Nevada, as the place for holding such meeting. SECTION 2.4. Notice of Meeting. Written notice of the annual and each special meeting of stockholders, stating the time, place and purpose or purposes thereof, shall be given to each stockholder entitled to vote thereat, not less than 10 nor more than 60 days before the 1 2 meeting and shall be signed by the Chairman of the Board, the President or the Secretary of the Corporation. SECTION 2.5. Business Conducted at Meetings. At a meeting of the stockholders, only such business shall be conducted as shall have been properly brought before the meeting. To be properly brought before a meeting, business must be (a) specified in the notice of meeting (or any supplement thereto) given by or at the direction of the Chairman of the Board, the President or the Board of Directors, or (b) otherwise properly brought before the meeting by a stockholders. For business to be properly brought before a meeting by a stockholder, the stockholder must have given timely notice thereof in writing to the Secretary of the corporation. To be timely, a stockholder's notice must be delivered to or mailed and received at the principal executive offices of the corporation not less than 60 days prior to the meeting. A stockholder's notice to the Secretary shall set forth as to each matter the stockholder proposes to bring before the meeting (a) the reasons for conducting such business at the meeting, (b) the name and address, as they appear on the corporation's books, of the stockholder proposing such business, (c) the class and number of shares of the corporation which are beneficially owned by the stockholder, and (d) any material interest of the stockholder in such business. Notwithstanding anything in the by-laws to the contrary, no business shall be conducted at a meeting except in accordance with the procedures set forth in this Section 2.5. The Chairman of the meeting shall, if the facts warrant, determine and declare to the meeting that business was not properly brought before the meeting and in accordance with the provisions of this Section 2.5, and, if he should so determine, he shall so declare to the meeting, and any such business not properly brought before the meeting shall not be transacted. SECTION 2.6. Nomination of Directors. Nomination of candidates for election as directors of the corporation at any meeting of stockholders called for election of directors, in whole or in part (an "Election Meeting"), may be made by the Board of Directors or by any stockholder entitled to vote at such Election Meeting, in accordance with the following procedures: 2.6.1. Nominations made by the Board of Directors shall be made at a meeting of the Board or by written consent of the directors in lieu of a meeting prior to the date of the Election Meeting. At the request of the Secretary of the corporation, each proposed nominee shall provide the corporation with such information concerning himself as is required, under the rules of the Securities and Exchange Commission ("SEC"), to be included in the corporation's proxy statement soliciting proxies for his election as a director. 2.6.2. Not less than 60 days prior to the date of the Election Meeting, any stockholder who intends to make a nomination at the Election Meeting shall deliver a notice to the Secretary of the corporation setting forth (a) the name, age, business address and the residence address of each nominee proposed in such notice, (b) the principal occupation or employment of such nominee, (c) the number of shares of capital stock of the corporation which are beneficially owned by each such nominee, (d) such other information concerning each such nominee as would be required, under the rules of the SEC, in a proxy statement soliciting proxies 2 3 for the election of such nominees. Such notice shall include a signed consent to serve as a director of the-corporation, if elected, of each such nominee. 2.6.3. In the event that a person is validly designated as a nominee in accordance with this Section 2.6 and shall thereafter become unable or willing to stand for election to the Board of Directors, the Board of Directors or the stockholder who proposed such nominee, as the case may be, may designate a substitute nominee. 2.6.4. If the Chairman of the Election Meeting determines that a nomination was not made in accordance with the foregoing procedures, such nomination shall be void. SECTION 2.7. Quorum. The holders of a majority of the stock issued and outstanding and entitled to vote thereat, present in person or represented by proxy, shall constitute a quorum at any meeting of stockholders for the transaction of business except when stockholders are required to vote by class, in which event a majority of the issued and outstanding shares of the appropriate class shall be present in person or by proxy, and except as otherwise provided by statute or by the Articles of Incorporation. Notwithstanding any other provision of the Articles of Incorporation or by these by-laws, the holders of a majority of the shares of capital stock entitled to vote thereat, present in person or represented by proxy, whether or not a quorum is present, shall have power to adjourn the meeting from time to time, without notice other than announcement at the meeting, until a quorum shall be present or represented. If the adjournment is for more than 30 days, or if after the adjournment a new record date is fixed for the adjourned meeting, a notice of the adjourned meeting shall be given to each stockholder of record entitled to vote at the meeting. At such adjourned meeting at which a quorum shall be present or represented any business may be transacted which might have been transacted at the meeting as originally notified. SECTION 2.8. Voting. When a quorum is present at any meeting of the stockholders, the vote of the holders of a majority of the stock having voting power present in person or represented by proxy shall decide any question brought before such meeting, unless the question is one upon which, by express provision of the statutes, of the Articles of Incorporation or of these by-laws, a different vote is required, in which case such express provision shall govern and control the decision of such question. Every stockholder having the right to vote shall be entitled to vote in person, or by proxy appointed by an instrument in writing subscribed by such stockholder or by his duly authorized attorney; provided, however, that no such proxy shall be valid after the expiration of six months from the date of its execution, unless coupled with an interest, or unless the person executing it specifies therein the length of time for which it is to continue in force, which in no case shall exceed seven years from the date of its execution. If such instrument shall designate two or more persons to act as proxies, unless such instrument shall provide the contrary, a majority of such persons present at any meeting at which their powers thereunder are to be exercised shall have and may exercise all the powers of voting or giving consents thereby conferred, or if only one be present, then such powers may be exercised by that one; or, if an even number attend and a majority do not agree on any particular issue, each proxy so attending shall be entitled to exercise such powers, in representing such shares. Unless 3 4 required by statute or determined by the Chairman of the meeting to be advisable, the vote on any question need not be by written ballot. No shareholder shall have cumulative voting rights. SECTION 2.9. Consent of Stockholders. Whenever the vote of the stockholders at a meeting thereof is required or permitted to be taken for or in connection with any corporate action, the meeting and vote of stockholders may be dispensed with if all the stockholders who would have been entitled to vote upon the action if such meeting were held shall consent in writing to such corporate action being taken; or if the Articles of Incorporation authorize the action to be taken with the written consent of the holders of less than all the stock who would have been entitled to vote upon the action if a meeting were held, then on the written consent of the stockholders having not less than such percentage of the number of votes as may be authorized in the Articles of Incorporation; provided, that in no case shall the written consent be by the holders of stock having less than the minimum percentage of the vote required by statute, and provided that prompt notice must be given to all stockholders of the taking of corporate action without a meeting and less than unanimous written consent. SECTION 2.10. Voting of Stock of Certain Holders. Shares standing in the name of another corporation, domestic or foreign, may be voted by such officer, agent or proxy as the by-laws of such corporation may prescribe, or in the absence of such provision, as the Board of Directors of such corporation may determine. Shares standing in the name of a deceased person may be voted by the executor or administrator of such deceased person, either in person or by proxy. Shares standing in the name of a guardian, conservator or trustee may be voted by such fiduciary, either in person or by proxy, but no such fiduciary shall be entitled to vote shares held in such fiduciary capacity without a transfer of such shares into the name of such fiduciary. Shares outstanding in the name of a receiver may be voted by such receiver. A stockholder whose shares are pledged shall be entitled to vote such shares, unless in the transfer by the pledgor on the books of the corporation, he has expressly empowered the pledgee to vote thereon, in which case only the pledgee, or his proxy, may represent the stock and vote thereon. SECTION 2.11. Treasury Stock. The corporation shall not vote, directly or indirectly, shares of its own stock owned by it; and such shares shall not be counted in determining the total number outstanding shares. SECTION 2.12. Fixing Record Date. The Board of Directors may fix in advance a date, not exceeding 60 nor less than 10 days preceding the date of any meeting of stockholders, or the date for payment of any dividend or distribution, or the date for the allotment of rights, or the date when any change or conversion or exchange of capital stock shall go into effect, or a date in connection with obtaining a consent, as a record date for the determination of the stockholders entitled to notice of, and to vote at any such meeting and any adjournment thereof, or entitled to receive payment of any such dividend or distribution, or to receive any such allotment of rights, or to exercise the rights in respect of any such change, conversion or exchange of capital stock, or to give such consent, and in such case such stockholders and only such stockholders as shall be stockholders of record on the date so fixed shall be entitled to such notice of and to vote at any such meeting and any adjournment thereof, or to receive payment of such dividend or distribution, or to receive such allotment of rights, or to exercise such rights, or 4 5 to give such consent, as the case may be, notwithstanding any transfer of any stock on the books of the corporation after any such record date fixed as aforesaid. ARTICLE 3 BOARD OF DIRECTORS SECTION 3.1. Powers. The business and affairs of the corporation shall be managed by its Board of Directors, which may exercise all such powers of the corporation and do all such lawful acts and things as are not by statute or by the Articles of Incorporation or by these by-laws directed or required to be exercised or done by the stockholders. SECTION 3.2. Number, Election and Term. The number of directors which shall constitute the whole board shall be not less than five and not more than fifteen. Within the limits above specified, the number of the directors of the corporation shall be determined by resolution of the Board of Directors. The directors shall be classified as set forth in the Articles of Incorporation. Except as provided in Section 3.3, the directors shall be elected at the annual meeting of stockholders and shall hold office until his successor is elected and qualified. At each annual meeting of stockholders, the successors to the class of directors whose term shall then expire shall be elected to hold office for a term expiring at the third succeeding annual meeting. A minimum of two of the directors must be "outside" directors. The term "outside" director shall mean a director who is not an employee, officer or former officer of the corporation or a subsidiary or division thereof, or a relative of a principal executive officer, or who is not an individual member of an organization acting as an, advisor, consultant, legal counsel, etc., receiving compensation on a continuing basis from the corporation in addition to director's fees. Directors need not be residents of Nevada or stockholders of the corporation. SECTION 3.3. Vacancies, Additional Directors and Removal From Office. If any vacancy occurs in the Board of Directors caused by death, resignation, retirement, disqualification or removal from office of any director, or otherwise, or if any new directorship is created by an increase in the authorized number of directors, a majority of the directors then in office, though less than a quorum, or a sole remaining director, may choose a successor or fill the newly created directorship; any director so chosen shall hold office until the next election of the class for which such director shall have been chosen and until his successor shall be elected and qualified, unless sooner displaced. No decrease in the number of directors constituting the Board of Directors shall shorten the term of any incumbent director. Notwithstanding any other provisions of these by-laws or the fact that some lesser percentage may be specified by law, any director or the entire Board of Directors may be removed at any time, but only for cause or only by the affirmative vote of the holders of 66-2/3% or more of the outstanding shares of the capital stock of this Corporation entitled to vote generally in the election of directors (considered for this purpose as one class) cast at a meeting of the stockholders called for that purpose. 5 6 SECTION 3.4. Regular Meetings. A regular meeting of the Board of Directors shall be held each year, without other notice than this by-law, at the place of, and immediately following, the annual meeting of stockholders; and other regular meetings of the Board of Directors shall be held during each year, at such time and place as the Board of Directors may from time to time provide by resolution, either within or without the State of Nevada, without other notice than such resolution. SECTION 3.5. Special Meeting. A special meeting of the Board of Directors may be called by the Chairman of the Board or by the President and shall be called by the Secretary on the written request of any two directors. The Chairman of the Board or President so calling, or the directors so requesting, any such meeting shall fix the time and any place, either within or without the State of Nevada, as the place for holding such meeting. SECTION 3.6. Notice of Special Meeting. Written notice of special meetings of the Board of Directors shall be given to each director at least 48 hours prior to the time of such meeting. Any director may waive notice of any meeting. The attendance of a director at any meeting shall constitute a waiver of notice of such meeting, except where a director attends a meeting solely for the purpose of objecting to the transaction of any business because the meeting is not lawful called or convened. Neither the business to be transacted at, nor the purpose of, any special meeting of the Board of Directors need be specified in the notice or waiver of notice of such meeting, except that notice shall be given with respect to any matter where notice is required by statute. SECTION 3.7. Quorum. A majority of the Board of Directors shall constitute a quorum for the transaction of business at any meeting of the Board of Directors, and the act of a majority of the directors present at any meeting at which there is quorum shall be the act of the Board of Directors, except as may be otherwise specifically provided by statute, by the Articles of Incorporation or by these by-laws. If a quorum shall not be present at any meeting of the Board of Directors, the directors present thereat may adjourn the meeting from time to time, without notice other than announcement at the meeting, until a quorum shall be present. SECTION 3.8. Action Without Meeting. Unless otherwise restricted by the Articles of Incorporation or these by-laws, any action required or permitted to be taken at any meeting of the Board of Directors, or of any committee thereof as provided in Article IV of these by-laws, may be taken without a meeting, if a written consent thereto is signed by all members of \ the Board or of such committee, as the case may be. SECTION 3.9. Meeting by Telephone. Any action required or permitted to be taken by the Board of Directors or any committee thereof may be taken by means of a meeting by conference telephone network or similar communications method so long as all persons participating in the meeting can hear each other. Any person participating in such meeting shall be deemed to be present in person at such meeting. 6 7 ARTICLE 4 COMMITTEES OF DIRECTORS SECTION 4.1. Executive Committee. The Board of Directors may, by resolution passed by a majority of the whole Board, designate an Executive Committee of the Board of Directors (the "Executive Committee"). If such a committee is designated by the Board of Directors, it shall be composed of members who are directors, and the members of the Executive Committee shall be designated by the Board of Directors in the resolution appointing the Executive Committee. Thereafter, the Board of Directors shall designate the members of the Executive Committee on an annual basis at its first regular meeting held pursuant to Section 3.4 of these by-laws after the annual meeting of stockholders or as soon thereafter as conveniently possible. The Executive Committee shall have and may exercise all of the powers of the Board of Directors during the period between meetings of the Board of Directors except as reserved to the Board of Directors or as delegated by these by-laws or by the Board of Directors to another standing or special committee or as may be prohibited by law. SECTION 4.2. Audit Committee. The Audit Committee of the Board of Directors (the "Audit Committee") shall be designated annually by the Board of Directors at its first regular meeting held pursuant to Section 3.4 of these by-laws after the annual meeting of stockholders or as soon thereafter as conveniently possible. The Audit Committee shall consist solely of directors who are independent of management and who are free from any relationship that, in the opinion of the Board of Directors, would interfere with the designated director's exercise of independent judgment as a member of the Audit Committee. SECTION 4.3. Compensation and Stock Option Committee. The Compensation and Stock Option Committee of the Board of Directors (the "Compensation and Stock Option Committee") shall consist of two or more directors to be designated annually by the Board of Directors at its first regular meeting held pursuant to Section 3.4 of these by-laws after the annual meeting of stockholders or as soon thereafter as conveniently possible. The Compensation and Stock Option Committee shall consist of at least two "outside" directors. SECTION 4.4. Other Committees. The Board of Directors may, by resolution passed by a majority of the whole Board, designate one or more additional special or standing committees, each such additional committee to consist of one or more of the directors of the corporation. Each such committee shall have and may exercise such of the powers of the Board of Directors in the management of the business and affairs of the corporation as may be provided in such resolution, except as delegated by these by-laws or by the Board of Directors to another standing or special committee or as may be prohibited by law. SECTION 4.5. Committee Operations. A majority of a committee shall constitute a quorum for the transaction of any committee business. Such committee or committees shall have such name or names and such limitations of authority as provided in these by-laws or as may be determined from time to time by resolution adopted by the Board of Directors. The corporation 7 8 shall pay all expenses of committee operations. The Board of Directors may designate one or more appropriate directors as alternate members of any committee, who may replace any absent or disqualified member at any meeting of such committee. In the absence or disqualification of any members of such committee or committees, the member or members thereof present at any meeting and not disqualified from voting, whether or not he or they constitute a quorum, may unanimously appoint another appropriate member of the Board of Directors to act at the meeting in the place of any absent or disqualified member. SECTION 4.6. Minutes. Each committee of directors shall keep regular minutes of its proceedings and report the same to the Board of Directors when required. The Secretary or any Assistant Secretary of the corporation shall (a) serve as the Secretary of the special or standing committees of the Board of Directors of the corporation, (b) keep regular minutes of standing or special committee proceedings, (c) make available to the Board of Directors, as required, copies of all resolutions adopted or minutes or reports of other actions recommended or taken by any such standing or special committee and (d) otherwise as requested keep the members of the Board of Directors apprised of the actions taken by such standing or special committees. SECTION 4.7. Compensation. Directors, as such may receive reasonable compensation for their services which shall be set by the Board of Directors and expenses of attendance at each regular or special meeting of the Board; provided, however, that nothing herein contained shall be construed to preclude any director from serving the corporation in any other capacity and receiving additional compensation therefor. Members of special or standing committees may be allowed like compensation for attending committee meetings. ARTICLE 5 NOTICE SECTION 5.1. Methods of Giving Notice. Whenever under the provisions of the statutes, the Articles of Incorporation or these by-laws, notice is required to be given to any director, member of any committee or stockholder, personal notice is not required but such notice may be given in writing and mailed to such director, member or stockholder; provided that in the case of a director or a member of any committee such notice may be given orally or by telephone or telegram. If mailed, notice to a director, member of a committee or stockholder shall be deemed to be given when deposited in the United States mail first class in a sealed envelope, with postage thereon prepaid, addressed, in the case of a stockholder, to the stockholder at the stockholder's address as it appears on the records of the corporation or, in the case of a director or a member of a committee to such person at his business address. If sent by telegraph, notice to a director or member of a committee shall be deemed to be given when the telegraph, so addressed, is delivered to the telegraph company. SECTION 5.2. Written Waiver. Whenever any notice is required to be given by statute, the Articles of Incorporation or these by-laws, a waiver thereof in writing, signed by the 8 9 person or persons entitled to said notice, whether before or after the time stated therein, shall be deemed equivalent thereto. SECTION 5.3. Consent. Whenever all parties entitled to vote at any meeting, whether of directors or stockholders, consent, either by a writing on the records of the meeting or filed with the secretary, or by presence at such meeting and oral consent entered on the minutes, or by taking part in the deliberations at such meeting without objection, the actions taken at such meeting shall be as valid as if had at a meeting regularly called and noticed, and at such meeting any business may be transacted which is not excepted from the written consent or to the consideration of which no objection for lack of notice is made at the time, and if any meeting be irregular for lack of notice or such consent, provided a quorum was present at such meeting, the proceedings of such meeting may be ratified and approved and rendered valid and the irregularity or defect therein waived by a writing signed by all parties having the right to vote thereat. Such consent or approval, if given by stockholders, may be by proxy or attorney, but all such proxies and powers of attorney must be in writing. ARTICLE 6 OFFICERS SECTION 6.1. Officers. The Board of Directors shall elect and appoint all. the officers of the corporation. The officers of the corporation shall include, without limitation, the Chairman of the Board, President, Secretary and Treasurer and such other officers and agents, including, without limitation, one or more Vice Presidents (any one or more of which may be designated Executive Vice President or Senior Vice President), Assistant Vice Presidents, Assistant Secretaries and Assistant Treasurers, as they deem necessary, who shall hold their offices for such terms and shall exercise such powers and perform such duties as prescribed by the Board of Directors or Chairman of the Board. Any two or more offices may be held by the same person. No officer shall execute, acknowledge, verify or countersign any instrument on behalf of the corporation in more than one capacity, if such instrument is required by law, by these by-laws or by any act of the corporation to be executed, acknowledged, verified or countersigned by two or more officers. The Chairman of the Board shall be elected from among the directors. With the foregoing exception, none of the other officers need be a director, and none of the officers need be a stockholder of the corporation. SECTION 6.2. Election and Term of Office. The officers of the corporation shall be elected annually by the Board of Directors at its first regular meeting held after the annual meeting of stockholders or as soon thereafter as conveniently possible. Each officer shall hold office until his successor shall have been chosen and shall have qualified or until his death or the effective date of this resignation or removal, or until he shall cease to be a director in the case of the Chairman of the Board. 9 10 SECTION 6.3. Removal and Resignation. Any officer or agent may be removed, either with or without cause, by the affirmative vote of a majority of the Board of Directors whenever, in its judgment, the best interests of the corporation shall be served thereby, but such removal shall be without prejudice to the contractual rights, if any, of the person so removed. Any executive officer or other officer or agent may resign at any time by giving written notice to the corporation. Any such resignation shall take effect at the date of the receipt of such notice or at any later time specified therein, and unless otherwise specified therein, the acceptance of such resignation shall not be necessary to make it effective. SECTION 6.4. Vacancies. Any vacancy occurring in any office of the corporation by death, resignation, removal or otherwise, shall be filled by the Board of Directors for the unexpired portion of the term. SECTION 6.5. Salaries. The salary of the Chief Executive Officer shall be determined by the Compensation and Stock Option Committee. Salaries of all other officers of the corporation shall be determined by the Chief Executive Officer in consultation with the Compensation and Stock Option Committee; and no officer who is also a director shall be prevented from receiving such salary by reason of his also being a director. SECTION 6.6. Chairman of the Board. The Chairman of the Board shall preside at all meetings of the Board of Directors and of the stockholders of the corporation. In the Chairman's absence, such duties shall be attended to by the President. The Chairman of the Board shall hold the position of chief executive officer of the corporation and shall perform shall duties as usually pertain to the position of chief executive officer and such duties as may be prescribed by the Board of Directors or the Executive Committee. The Chairman of the Board shall formulate and submit to the Board of Directors or the Executive Committee matters of general policy for the corporation and shall perform such other duties as usually appertain to the office or as may be prescribed by the Board of Directors. He may sign with the President or any other officer of the corporation thereunto authorized by the Board of Directors certificates for shares of the corporation, the issuance of which shall have been authorized by resolution of the Board of Directors, and any deeds or bonds, which the Board of Directors or the Executive Committee has authorized to be executed, except in cases where the signing and execution thereof has been expressly delegated or reserved by these by-laws or by the Board of Directors or the Executive Committee to some other officer or agent of the corporation, or shall be required by law to be otherwise executed. SECTION 6.7. President. The President, subject to the control of the Board of Directors, the Executive Committee, and the Chairman of the Board, shall in general supervise and control the business and affairs of the corporation. The President shall keep the Board of Directors, the Executive Committee and the Chairman of the Board fully informed as they or any of them shall request and shall consult them concerning the business of the corporation. He may sign with the Chairman of the Board or any other officer of the corporation thereunto authorized by the Board of Directors, certificates for shares of capital stock of the corporation, the issuance of which shall have been authorized by resolution of the Board of Directors, and any deeds, bonds, mortgages, contracts, checks, notes, drafts or other instruments which the Board of 10 11 Directors or the Executive Committee has authorized to be executed, except in cases where the signing and execution thereof has been expressly delegated by these by-laws or by the Board of Directors or the Executive Committee to some other officer or agent of the corporation, or shall be required by law to be otherwise executed. In general he shall perform all other duties normally incident to the office of the President, except any duties expressly delegated to other persons by these by-laws, the Board of Directors, or the Executive Committee, and such other duties as may be prescribed by the stockholders, Chairman of the Board, the Board of Directors or the Executive Committee, from time to time. SECTION 6.8. Vice Presidents. In the absence of the President, or in the event of his inability or refusal to act, the Executive Vice President (or in the event there shall be or more than one Vice President designated Executive Vice President, any Executive Vice President designated by the Board) shall perform the duties an exercise the powers of the President. Any Vice President authorized by resolution of the Board of Directors to do so, may sign with any other officer of the corporation thereunto authorized by the Board of Directors, certificates for shares of capital stock of the corporation, the issuance of which shall have been authorized by resolution of the Board of Directors. The Vice Presidents shall perform such other duties as from time to time may be assigned to them by the Chairman of the Board, the Board of Directors or the Executive Committee. SECTION 6.9. Secretary. The Secretary shall (a) keep the minutes of the meetings of the stockholders, the Board of Directors and committees of directors; (b) see that all notices are duly given in accordance with provisions of these by-laws and as required by law; (c) be custodian of the corporate records and of the seal of the corporation, and see that the seal of the corporation or a facsimile thereof is affixed to all certificates for shares prior to the issuance thereof and to all documents, the execution of which on behalf of the corporation under its seal is duly authorized in accordance with the provisions of these by-laws; (d) keep or cause to be kept a register of the post office address of each stockholder which shall be furnished by such stockholder; (e) have general charge of other stock transfer books of the corporation; and (f) in general, perform all duties normally incident to the office of the Secretary and such other duties as from time to time may be assigned to him by the Chairman of the Board, the President, the Board of Directors or the Executive Committee. SECTION 6.10. Treasurer. The Treasurer shall (a) have charge and custody of and be responsible for all funds and securities of the corporation; receive and give receipts for moneys due and payable to the corporation from any source whatsoever and deposit all such moneys in the name of the corporation in such banks, trust companies or other depositories as shall be selected in accordance with the provisions of Section 7.3 of these by-laws; (b) prepare, or cause to be prepared, for submission at each regular meeting of the Board of Directors, at each annual meeting of stockholders, and at such other times as may be required by the Board of Directors, the Chairman of the Board, the President or the Executive Committee, a statement of financial condition of the corporation in such detail as may be required; and (c) in general, perform all the duties incident to the office of Treasurer and such other duties as from time to time may be assigned to him by the Chairman of the Board, the President, the Board of Directors or the Executive Committee. If required by the Board of Directors or the Executive Committee, the 11 12 Treasurer shall give a bond for the faithful discharge of his duties as such sum and with such surety or sureties as the Board of Directors or the Executive Committee shall determine. SECTION 6.11. Assistant Secretary or Treasurer. The Assistant Secretaries and Assistant Treasurers shall, in general, perform such duties as shall be assigned to them by the Secretary or the Treasurer, respectively, or by the Chairman of the Board, the President, the Board of Directors or the Executive Committee. The Assistant Secretaries or Assistant Treasurers shall, in the absence of the Secretary or Treasurer, respectively, perform all functions and duties which such absent officers may delegate, but such delegation shall not relieve the absent officer from the responsibilities and liabilities of his office. The Assistant Treasurers shall respectively, if required by the Board of Directors or the Executive Committee, give bonds for the faithful discharge of their duties in such sums with such sureties as the Board of Directors or the Executive Committee shall determine. ARTICLE 7 CONTRACTS, CHECKS AND DEPOSITS SECTION 7.1. Contracts. Subject to the provisions of Section 6.1, the Board of Directors or the Executive Committee may authorize any officer, officers, agent or agents, to enter into any contract or execute and deliver an instrument 'n the name of and on behalf of the corporation, and such authority may be general or confined to specific instances. SECTION 7.2. Checks, etc. All checks, demands, drafts or other orders for the payment of money, notes or other evidences of indebtedness issued in the name of the corporation, shall be signed by such officer or officers or such agent or agents of the corporation, and in such manner, as shall be determined by the Board of Directors or the Executive Committee. SECTION 7.3. Deposits. All funds of the corporation not otherwise employed shall be deposited from time to time to the credit of the corporation in such banks, trust companies or other depositories as the Chairman of the Board, the President or the Treasurer may be empowered by the Board of Directors or the Executive Committee to select or as the Board of Directors or the Executive Committee may select. ARTICLE 8 CERTIFICATE OF STOCK SECTION 8.1. Issuance. Each stockholder of this corporation shall be entitled to a certificate or certificates showing the number of shares of stock registered in his name on the books of the corporation. The certificates shall be in such form as may be determined by the 12 13 Board of Directors or the Executive Committee, shall be issued in numerical order and shall be entered in the books of the corporation as they are issued. They shall exhibit the holder's name and the number of shares and shall be signed by the Chairman of the Board and the President or such other officers as may from time to time be authorized by resolution of the Board of Directors. Any or all the signatures on the certificate may be a facsimile. The seal of the corporation shall be impressed, by original or by facsimile, printed or engraved, on all such certificates. In case any officer who has signed or whose facsimile signature has been placed upon any such certificate shall have ceased to be such officer before such certificate is issued, such certificate may nevertheless be issued by the corporation with the same effect as if such officer had not ceased to be such officer at the date of its issue. If the corporation shall be authorized to issue more than one class of stock or more than one series of any class, the designation, preferences and relative, participating, option or other special rights of each class of stock or series thereof and the qualifications, limitations or restrictions of such preferences and rights shall be set forth in full or summarized on the face or back of the certificate which the corporation shall issue to represent such class of stock; provided that except as otherwise provided by statute, in lieu of the foregoing requirements there may be set forth on the face or back of the certificate which the corporation shall issue to represent such class or series of stock, a statement that the corporation will furnish to each stockholder who so requests the designations, preferences and relative, participating, option or other special rights of each class of stock or series thereof and the qualifications, limitations or restrictions of such preferences and rights. All certificates surrendered to the corporation for transfer shall be canceled and no new certificate shall be issued until the former certificate for a like number of shares shall have been surrendered and canceled, except that in the case of a lost, stolen, destroyed or mutilated certificate a new one may be issued therefor upon such terms and with such indemnity, if any, to the corporation as the Board of Directors may prescribe. In addition to the above, all certificates evidencing shares of the corporation's stock or other securities issued by the corporation shall contain such legend or legends as may from time to time be required by the Nevada Revised Statutes and/or the Nevada Gaming Commission Regulations then in effect. SECTION 8.2. Lost Certificates. The Board of Directors may direct that a new certificate or certificates be issued in place of any certificate or certificates theretofore issued by the corporation alleged to have been lost, stolen or destroyed, upon the making of an affidavit of that fact by the person claiming the certificate of stock to be lost, stolen or destroyed. When authorizing such issue of a new certificate or certificates, the Board of Directors may, in its discretion and as a condition precedent to the issuance thereof, require the owner of such lost, stolen or destroyed certificate or certificates, or his legal representative, to advertise the same in such manner as it shall require or to give the corporation a bond in such sum as it may direct as indemnity against any claim that may be made against the corporation with respect to the certificate or certificates alleged to have been lost, stolen or destroyed, or both. SECTION 8.3. Transfers. Upon surrender to the corporation or the transfer agent of the corporation of a certificate for shares duly endorsed or accompanied by proper evidence of succession, assignment or authority to transfer, it shall be the duty of the corporation to issue a new certificate and to the person entitled thereto, cancel the old certificate and record the transaction upon its books. Transfers of shares shall be made only on the books of the 13 14 corporation by the registered holder thereof, or by his attorney thereunto authorized by power of attorney and filed with the Secretary of the corporation or the transfer agent. SECTION 8.4. Registered Stockholders. The corporation shall be entitled to treat the holder of record of any share or shares of stock as the holder in fact thereof and, accordingly, shall not be bound to recognize any equitable or other claim to or interest in such share or shares on the part of any other person, whether or not it shall have express or other notice thereof, except as otherwise provided by laws of the State of Nevada. SECTION 8.5. Uncertificated Shares. The Board of Directors may approve the issuance of uncertificated shares of some or all of the shares of any or all of its classes or series of capital stock. ARTICLE 9 DIVIDENDS SECTION 9.1. Declaration. Dividends upon the capital stock of the corporation, subject to the provisions of the Articles of Incorporation, if any, may be declared by the Board of Directors at any regular or special meeting, pursuant to law. Dividends may be paid in cash, in property or in shares of capital stock, subject to the provisions of the Articles of Incorporation. SECTION 9.2. Reserve. Before payment of any dividend, there may be set aside out of any funds of the corporation available for dividends such sum or sums as the Board of Directors from time to time, in their absolute discretion, think proper as a reserve or reserves to meet contingencies, or for equalizing dividends, or for repairing or maintaining any property of the corporation, or for such other purpose as the Board of Directors shall think conducive to the interests of the corporation, and the Board of Directors may modify or abolish any such reserve in the manner in which it was created. ARTICLE 10 INDEMNIFICATION SECTION 10.1. Third Party Actions. The corporation shall indemnify any person who was or is a party or is threatened to be made a party to any threatened, pending or completed action, suit or proceeding, whether civil, criminal, administrative or investigative (other than an action by or in the right of the corporation) by reason of the fact that he is or was a director, officer, employee or agent of the corporation, or is or was serving at the request of the corporation as a director, officer, employee or agent of another corporation, partnership, joint venture, trust or other enterprise, against expenses (including amounts paid in settlement and attorneys' fees), judgments fines and amounts paid in settlement actually and reasonably incurred 14 15 by him in connection with such action, suit or proceeding if he acted in good faith and in a manner he reasonably believed to be in or not opposed to the best interest of the corporation, and, with respect to any criminal action or proceeding, had no reasonable cause to believe his conduct was unlawful. The termination of any action, suit or proceeding by judgment, order, settlement, conviction, or upon a plea of nolo contendere or its equivalent, shall not, of itself create a presumption that the person did not act in good faith and in a manner which he reasonably believed to be in or not opposed to the best interests of the corporation, and, with respect to any criminal action or proceeding, had reasonable cause to believe that his conduct was unlawful. SECTION 10.2. Actions by or in the Right of the Corporation. The corporation shall indemnify any person who was or is a party or is threatened to be made a party to any threatened, pending or completed action or suit by or in the right of the corporation to procure a judgment in its favor by reason of the fact that he is or was a director, officer, employee or agent of the corporation, or is or was serving at the request of the corporation as a director, officer, employee or agent of another corporation, partnership, joint venture, trust or other enterprise against expenses (including attorneys' fees) actually and reasonably incurred by him in connection with the defense or settlement of such action or suit if he acted in good faith and in a manner he reasonably believed to be in or not opposed to the best interests of the corporation. No indemnification shall be made in respect of any claim, issue or matter as to which such person shall have been adjudged by a court of competent jurisdiction to be liable to the corporation or for amounts paid in settlement to the corporation, unless and only to the extent that the court in which such action or suit was brought or other court of competent jurisdiction shall determine upon application that in view of all the circumstances of the case, such person is fairly and reasonably entitled to indemnify for such expenses as the court shall deem proper. SECTION 10.3. Successful Defense. To the extent that a director, officer, employee or agent of the corporation has been successful on the merits or otherwise in defense of any action, suit or proceeding referred to in Sections 10.1 and 10.2, or in defense of any claim, issue or matter therein, he shall be indemnified against expenses (including attorneys' fees) actually and reasonably incurred by him in connection with the defense. SECTION 10.4. Determination of Conduct. Any indemnification under Section 10. 1 or 10.2 (unless ordered by a court or advanced pursuant to Section 10.5) shall be made by the corporation only as authorized in the specific case upon a determination that indemnification of the director, officer, employee or agent is proper in the circumstances. Such determination shall be made (a) by the stockholders, (b) by the Board of Directors by a majority vote of a quorum consisting of directors who were not parties to such action, suit or proceeding, (c) if a majority vote of a quorum consisting of directors who were not parties to the act, suit or proceedings so orders, by independent legal counsel in a written opinion, or (d) if a quorum consisting of directors who were not parties to the act, suit or proceeding cannot be obtained, by independent legal counsel in a written opinion. SECTION 10.5. Payment of Expenses in Advance. Expenses incurred in defending a civil or criminal action, suit or proceeding shall be paid by the corporation as they are incurred and in advance of the final disposition of such action, suit or proceeding upon receipt of an 15 16 undertaking by or on behalf of the director or officer, to repay such amount if it is ultimately determined by a court of competent jurisdiction that he is not entitled to be indemnified by the corporation. The provisions of this Section 10.5 do not affect any rights to advancement of expenses to which corporate personnel other than directors or officers may be entitled under any contract or otherwise by law. SECTION 10.6. Indemnity Not Exclusive. The indemnification and advancement of expenses authorized in or order by a court provided hereunder shall not exclude any other rights to which a person seeking indemnification or advancement of expenses may be entitled under the Articles of Incorporation, agreement, vote of stockholders or disinterested directors or otherwise, for either an action in his official capacity or an action in another capacity while holding his office, except that indemnification, unless ordered by a court pursuant to Section 10.2 or for the advancement of expenses made pursuant to Section 10.5, may not be made to or on behalf of any director or officer if a final adjudication establishes that his acts or omissions involved intentional misconduct, fraud or a knowing violation of the law and was material to the cause of action, and shall continue for a person who has ceased to be a director, officer, employee or agent and insures to the benefit of the heirs, executors and administrators of such a person. SECTION 10.7. The Corporation. For purposes of this Article 10, references to "the corporation" shall include, in addition to the resulting corporation, any constituent corporation (including any constituent of a constituent) absorbed in a consolidation or merger which, if its separate existence had continued, would have had power and authority to indemnify its directors, officers and employees or agents, so that any person who is or was a director, officer, employee or agent of such constituent corporation, or is or was serving at the request of such constituent corporation as a director, officer, employee or agent of another corporation, partnership, joint venture, trust or other enterprise, shall stand in the same position under and subject to the provisions of this Article 10 (including, without limitation, the provisions of Section 10.4) with respect to the resulting or surviving corporation as he would have with respect to such constituent corporation if its separate existence had continued. ARTICLE 11 MISCELLANEOUS SECTION 11.1. Seal. The corporate seal shall have inscribed thereon the name of the corporation, and the words "Corporate Seal, Nevada." The seal may be used by causing it or a facsimile thereof to the impressed or affixed or otherwise reproduced. SECTION 11.2. Books. The books of the corporation may be kept within or without the State of Nevada (subject to any provisions contained in the statutes) at such place or places as may be designated from time to time by the Board of Directors or the Executive Committee. 16 17 SECTION 11.3. Fiscal Year. The fiscal year of the corporation shall begin the first day of July of each year or upon such other day as may be designated by the Board of Directors. ARTICLE 12 AMENDMENT Subject to the provisions of the Articles of Incorporation, these by-laws may be altered, amended, or repealed at any regular meeting of the stockholders (or at any special meeting thereof duly called for the purpose) by a majority vote of the shares represented and entitled to vote at such meeting. Subject to the laws of the State of Nevada, the Board of Directors may, by majority vote of those present at any meeting at which a quorum is present, amend these by-laws, or enact such other by-laws as in their judgment may be advisable for the regulation of the conduct of the affairs of the corporation. 17 18 CERTIFICATE OF AMENDMENT OF ARTICLES OF INCORPORATION OF BOYD GAMING CORPORATION The undersigned hereby certify as follows: 1. That they are the Vice President and Secretary, respectively, of BOYD GAMING CORPORATION. 2. That at a meeting of the stockholders held on November 22, 1996, the stockholders voted to adopt the amendment to the corporation's Articles of Incorporation as set forth in Paragraph 3 following. The amendment below is adopted by the holders of 52,117,957 shares of the Corporation's $.01 par value common stock representing approval of the amendment by the holders of approximately 85% of the shares entitled to vote with respect to such amendment. The total number of outstanding shares of common stock of the corporation having voting power with respect to such amendment is 61,213,720. 3. That at a meeting of the Board of Directors held on November 22, 1996, the Directors of the corporation adopted the following resolution to amend the Articles of Incorporation: RESOLVED: That Article VIII, Section A of the Articles of Incorporation of the corporation, as restated and filed with the Secretary of State for the State of Nevada on March 17, 1994, shall be further amended and restated in its entirety to read as follows: A. Number of Directors. The number of directors of the Corporation shall not be less than five (5) nor more than fifteen (15) until changed by amendment of the Articles of Incorporation. The exact number of members constituting the Board of Directors shall be fixed from time to time within the limits specified in the Articles of Incorporation by the Board of Directors pursuant to a resolution adopted by a majority of the total number of authorized directors. The first board of directors, consisting of five (5) members, is constituted as follows: 1 19 1. Samuel A. Boyd 3000 Las Vegas Boulevard South Las Vegas, Nevada 89109 2. William S. Boyd 3000 Las Vegas Boulevard South Las Vegas, Nevada 89109 3. Perry B. Whit 3000 Las Vegas Boulevard South Las Vegas, Nevada 89109 4. Charles L. Ruthe 3000 Las Vegas Boulevard South Las Vegas, Nevada 89109 5. Warren L. Nelson 3000 Las Vegas Boulevard South Las Vegas, Nevada 89109 IN WITNESS WHEREOF, the undersigned have executed this Amendment to Articles of Incorporation on this 30 day of December, 1996. /s/ WILLIAM R. BOYD ------------------------------- WILLIAM R. BOYD, Vice President /s/ CHARLES E. HUFF -------------------------------- CHARLES E. HUFF, Secretary STATE OF NEVADA ) ) ss: COUNTY OF CLARK ) On this 30 day of December, 1996, personally appeared before me, a Notary Public, WILLIAM R. BOYD and CHARLES E. HUFF, as Vice President and Secretary, respectively, of Boyd Gaming Corporation who acknowledged that they executed the foregoing Certificate of Amendment to Articles of Incorporation on behalf of said corporation. /s/ E. GAE JOYCE ------------------------------------- Notary Public 2 EX-27 3 FINANCIAL DATA SCHEDULE
5 1,000 U.S. DOLLARS 6-MOS JUN-30-1997 DEC-31-1996 1,000 70,426 0 25,876 0 8,850 131,416 1,246,994 359,660 1,204,405 130,307 0 0 0 614 264,190 1,204,405 385,850 385,850 0 354,369 0 0 27,069 4,754 1,902 2,852 0 6,069 0 (3,217) (.05) (.05)
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