-----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, K7ELQyEiAkaia/8ybtGo4LzFGcBKUJYrge9MTwCM+ydv/Zp3QRaD/bxnagqz5/sT Vm1FkW8PiBRjY9ceN/sXpg== 0000892569-99-001471.txt : 19990518 0000892569-99-001471.hdr.sgml : 19990518 ACCESSION NUMBER: 0000892569-99-001471 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 3 CONFORMED PERIOD OF REPORT: 19990331 FILED AS OF DATE: 19990517 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: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: SEC FILE NUMBER: 001-12168 FILM NUMBER: 99627180 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 PERIOD ENDED 03/31/1999 1 UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D. C. 20549 FORM 10-Q (Mark One) [X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the period ended March 31, 1999 OR [ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from __________ to __________ Commission file number 1-12168 BOYD GAMING CORPORATION (Exact name of registrant as specified in its charter) NEVADA 88-0242733 (State or other jurisdiction of (I.R.S. Employer incorporation or organization) Identification No.) 2950 SOUTH INDUSTRIAL ROAD LAS VEGAS, NEVADA 89109 (Address of principal executive offices) (Zip Code) (702) 792-7200 (Registrant's telephone number, including area code) Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to filing requirements for the past 90 days. Yes X No --- --- Shares outstanding of each of the Registrant's classes of common stock as of April 30, 1999: Class Outstanding ----- ----------- Common stock, $.01 par value 62,027,514 2 BOYD GAMING CORPORATION QUARTERLY REPORT ON FORM 10-Q FOR THE PERIOD ENDED MARCH 31, 1999 TABLE OF CONTENTS
PART I. FINANCIAL INFORMATION Item 1. Unaudited Condensed Consolidated Financial Statements Condensed Consolidated Balance Sheets at March 31, 1999 and December 31, 1998 3 Condensed Consolidated Statements of Operations for the three month periods ended March 31, 1999 and 1998 4 Condensed Consolidated Statements of Cash Flows for the three month periods ended March 31, 1999 and 1998 5 Notes to Condensed Consolidated Financial Statements 6 Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations 13 Item 3. Quantitave and Qualitative Disclosure about Market Risk 20 PART II. OTHER INFORMATION Item 5. Other Information 21 Item 6. Exhibits and Reports on Form 8-K 21 Signature Page 22
-2- 3 PART I. FINANCIAL INFORMATION ITEM 1. FINANCIAL STATEMENTS BOYD GAMING CORPORATION AND SUBSIDIARIES CONDENSED CONSOLIDATED BALANCE SHEETS
(UNAUDITED) MARCH 31, DECEMBER 31, (IN THOUSANDS, EXCEPT SHARE DATA) 1999 1998 - -------------------------------------------------------------------------------------------- ASSETS Current assets Cash and cash equivalents $ 65,747 $ 75,937 Accounts receivable, net 21,495 21,988 Inventories 7,653 9,567 Prepaid expenses and other 14,056 17,333 Income taxes receivable 6,182 11,065 Deferred income taxes 2,072 5,855 ---------- ---------- Total current assets 117,205 141,745 Property and equipment, net 759,078 763,207 Other assets and deferred charges 38,870 38,690 Goodwill and other intangible assets, net 201,248 202,614 ---------- ---------- Total assets $1,116,401 $1,146,256 ========== ========== LIABILITIES AND STOCKHOLDERS' EQUITY Current liabilities Current maturities of long-term debt $ 1,815 $ 1,961 Accounts payable 29,942 32,065 Accrued liabilities Payroll and related 28,826 29,465 Interest and other 53,488 54,162 ---------- ---------- Total current liabilities 114,071 117,653 Long-term debt, net of current maturities 737,568 774,890 Deferred income taxes and other 28,554 26,407 Commitments and contingencies Stockholders' equity Preferred stock, $.01 par value; 5,000,000 shares authorized -- -- Common stock, $.01 par value; 200,000,000 shares authorized; 62,027,514 shares outstanding 620 620 Additional paid-in capital 140,616 140,616 Retained earnings 94,972 86,070 ---------- ---------- Total stockholders' equity 236,208 227,306 ---------- ---------- Total liabilities and stockholders' equity $1,116,401 $1,146,256 ========== ==========
The accompanying notes are an integral part of these condensed consolidated financial statements. -3- 4 BOYD GAMING CORPORATION AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
THREE MONTHS ENDED (UNAUDITED) MARCH 31, ---------------------- (IN THOUSANDS, EXCEPT PER SHARE DATA) 1999 1998 - -------------------------------------------------------------------------------------------------------- Revenues Casino $ 179,533 $ 185,864 Food and beverage 40,968 42,262 Room 19,304 18,514 Other 17,345 18,267 Management fee 10,813 10,796 --------- --------- Gross revenues 267,963 275,703 Less promotional allowances 24,705 25,661 --------- --------- Net revenues 243,258 250,042 --------- --------- Costs and expenses Casino 90,298 95,408 Food and beverage 25,833 26,137 Room 6,242 5,774 Other 15,401 15,899 Selling, general and administrative 35,038 38,583 Maintenance and utilities 9,654 9,495 Depreciation and amortization 18,732 18,611 Corporate expense 6,102 4,900 Preopening expense 539 -- --------- --------- Total 207,839 214,807 --------- --------- Operating income 35,419 35,235 --------- --------- Other income (expense) Interest income 57 113 Interest expense, net of amounts capitalized (17,131) (19,272) --------- --------- Total (17,074) (19,159) --------- --------- Income before provision for income taxes and cumulative effect of a change in accounting principle 18,345 16,076 Provision for income taxes 7,705 6,752 --------- --------- Income before cumulative effect of a change in accounting principle 10,640 9,324 Cumulative effect of a change in accounting for start-up activities, net of tax benefit of $936 1,738 -- --------- --------- Net income $ 8,902 $ 9,324 ========= ========= BASIC AND DILUTED NET INCOME PER COMMON SHARE - --------------------------------------------- Income before cumulative effect of a change in accounting principle 0.17 0.15 Cumulative effect of a change in accounting for start-up activities, net of tax (0.03) -- ========= --------- Net income $ 0.14 $ 0.15 ========= ========= Average basic shares outstanding 62,028 61,670 Average diluted shares outstanding 62,028 61,922 ========= =========
The accompanying notes are an integral part of these condensed consolidated financial statements. -4- 5 BOYD GAMING CORPORATION AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
THREE MONTHS ENDED (UNAUDITED) MARCH 31, -------------------- (IN THOUSANDS) 1999 1998 - ---------------------------------------------------------------------------------------------- CASH FLOWS FROM OPERATING ACTIVITIES Net income $ 8,902 $ 9,324 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation and amortization 18,732 18,611 Cumulative effect of a change in accounting for start-up activities 2,674 -- Deferred income taxes 5,732 2,084 Changes in assets and liabilities: Accounts receivable, net 493 306 Inventories 1,914 1,225 Prepaid expenses and other 603 (202) Income taxes receivable 4,883 2,787 Other assets (609) (2,955) Other current liabilities (255) 7,077 Other liabilities 198 -- Income taxes payable -- 1,183 -------- -------- Net cash provided by operating activities 43,267 39,440 -------- -------- CASH FLOWS FROM INVESTING ACTIVITIES- Acquisition of property, equipment and other assets (15,989) (8,321) -------- -------- CASH FLOWS FROM FINANCING ACTIVITIES Net payments under bank credit facility (37,000) (31,000) Payments on long-term debt (468) (515) -------- -------- Net cash used in financing activities (37,468) (31,515) -------- -------- Net decrease in cash and cash equivalents (10,190) (396) Cash and cash equivalents, beginning of period 75,937 78,277 -------- -------- Cash and cash equivalents, end of period $ 65,747 $ 77,881 ======== ======== SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION Cash paid for interest, net of amounts capitalized $ 18,803 $ 19,825 ======== ======== Cash paid for income taxes $ 253 $ 698 ======== ========
The accompanying notes are an integral part of these condensed consolidated financial statements. -5- 6 BOYD GAMING CORPORATION AND SUBSIDIARIES NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) - -------------------------------------------------------------------------------- NOTE 1. - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES PRINCIPLES OF CONSOLIDATION The accompanying condensed consolidated financial statements include the accounts of Boyd Gaming Corporation and its wholly-owned subsidiaries, collectively referred to herein as the "Company". At March 31, 1999, the Company owned and operated ten casino entertainment facilities located in Las Vegas, Nevada, Tunica, Mississippi, East Peoria, Illinois, and Kenner, Louisiana as well as a travel agency located in Honolulu, Hawaii. In addition, the Company manages a casino entertainment facility in Philadelphia, Mississippi, for which it has a seven year management contract that expires in June 2001. All material intercompany accounts and transactions have been eliminated. BASIS OF PRESENTATION In the opinion of management, the accompanying unaudited condensed consolidated financial statements contain all adjustments, consisting only of normal recurring adjustments, necessary to present fairly the results of its operations and cash flows for the three month periods ended March 31, 1999 and 1998. It is suggested that this report be read in conjunction with the Company's audited consolidated financial statements included in the Annual Report on Form 10-K for the year ended December 31, 1998. The operating results and cash flows for the three month periods ended March 31, 1999 and 1998 are not necessarily indicative of the results that will be achieved for the full year or for future periods. USE OF ESTIMATES The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Significant estimates used by the Company include the estimated useful lives for depreciable and amortizable assets, the estimated allowance for doubtful accounts receivable, the estimated valuation allowance for deferred tax assets, and estimated cash flows used in assessing the recoverability of long-lived assets. Actual results could differ from those estimates. CAPITALIZED INTEREST Interest costs associated with major construction projects are capitalized. When no debt is incurred specifically for a project, interest is capitalized on amounts expended for the project using the Company's weighted average cost of borrowing. Capitalization of interest ceases when the project is substantially complete. Capitalized interest during the three month period ended March 31, 1999 was $0.2 million. There were no such interest costs capitalized during the three month period ended March 31, 1998. PREOPENING EXPENSES The American Institute of Certified Public Accountants ("AICPA") issued Statement of Position ("SOP") 98-5, "Reporting on the Costs of Start-Up Activities," which is effective for fiscal years beginning after December 15, 1998. -6- 7 BOYD GAMING CORPORATION AND SUBSIDIARIES NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) - -------------------------------------------------------------------------------- The statement requires businesses to expense certain costs of start-up activities as incurred. For the three month period ended March 31, 1999, the Company expensed $0.5 million in preopening costs that related primarily to the Company's share of preopening expense in the Atlantic City Joint Venture. The initial application of this statement in January 1999 required the Company to expense certain previously capitalized items as a cumulative effect of a change in accounting principle. As such, the Company reported a charge of $1.7 million, net of tax, to the consolidated statement of operations during the three month period ended March 31, 1999 as the cumulative effect of the change in accounting principle. NOTE 2. - NET INCOME PER COMMON SHARE The Company has adopted Statement of Financial Accounting Standards No. 128, "Earnings per Share" that requires the presentation of basic and diluted net income per share. Basic per share amounts are computed by dividing net income by the average shares outstanding during the period. Diluted per share amounts are computed by dividing net income by average shares outstanding plus the dilutive effect of common share equivalents. Diluted net income per share during the three month periods ended March 31, 1999 and 1998 is determined considering the dilutive effect of outstanding stock options. The effect of stock options outstanding to purchase approximately 5,646,000 and 2,711,000 shares, respectively, was not included in the diluted calculation during the three month periods ended March 31, 1999 and 1998 since the exercise price of such options was greater than the average price of the Company's common shares during the periods. NOTE 3. - SEGMENT INFORMATION The Company's management reviews the results of operations based on four distinct geographic gaming market segments: the Stardust Resort and Casino on the Las Vegas Strip, Boulder Strip Properties, Downtown Properties and Central Region Properties. As used herein, "Boulder Strip Properties" consist of Sam's Town Hotel and Gambling Hall, the Eldorado Casino, and Jokers Wild Casino; "Downtown Properties" consist of the California Hotel and Casino, the Fremont Hotel and Casino, Main Street Station Casino, Brewery and Hotel, and Vacations Hawaii; "Central Region Properties" consist of Sam's Town Hotel and Gambling Hall located in Tunica, Mississippi, Sam's Town Kansas City (through July 15, 1998), Par-A-Dice Hotel and Casino, Treasure Chest Casino, and management fee income from Silver Star Resort and Casino. -7- 8 BOYD GAMING CORPORATION AND SUBSIDIARIES NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) - --------------------------------------------------------------------------------
THREE MONTHS ENDED MARCH 31, ------------------ (IN THOUSANDS) 1999 1998 -------- -------- Casino Revenue Stardust $ 27,532 $ 26,955 Boulder Strip Properties 37,599 36,263 Downtown Properties 33,353 32,017 -------- -------- Nevada Region 98,484 95,235 Central Region 81,049 90,629 -------- -------- Total Casino Revenue $179,533 $185,864 ======== ======== EBITDA (1) Stardust $ 6,214 $ 6,510 Boulder Strip Properties 10,149 10,693 Downtown Properties 9,346 5,821 -------- -------- Nevada Region 25,709 23,024 Central Region 35,083 35,722 -------- -------- Property EBITDA 60,792 58,746 -------- -------- Other Costs and Expenses Corporate expense 6,102 4,900 Depreciation and amortization 18,732 18,611 Preopening expense 539 -- Other expense, net 17,074 19,159 -------- -------- Total other costs and expenses 42,447 42,670 -------- -------- Income before provision for income taxes and cumulative effect of a change in accounting principle 18,345 16,076 Provision for taxes 7,705 6,752 -------- -------- Income before cumulative effect of a change in accounting principle 10,640 9,324 Cumulative effect of a change in accounting for start-up activities, net 1,738 -- -------- -------- Net income $ 8,902 $ 9,324 ======== ========
(1) EBITDA is earnings before interest, taxes, depreciation and amortization expense and preopening expense. NOTE 4. - GUARANTOR INFORMATION The Company's $200 million of 9.25% Senior Notes (the "9.25% Notes") are guaranteed by a majority of the Company's wholly-owned significant subsidiaries. These guaranties are full, unconditional, and joint and several. The Company has significant subsidiaries that do not guarantee the 9.25% Notes. As such, the following consolidating schedules present separate condensed consolidating financial statement information on a combined basis for the parent only, as well as the Company's guarantor subsidiaries and non-guarantor subsidiaries, as of March 31, 1999 and December 31, 1998 and for the three month periods ended March 31, 1999 and 1998. -8- 9 BOYD GAMING CORPORATION AND SUBSIDIARIES NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) - -------------------------------------------------------------------------------- Condensed Consolidating Balance Sheet Information as of March 31, 1999
COMBINED COMBINED NON- ELIMINATION (IN THOUSANDS) PARENT GUARANTORS GUARANTORS ENTRIES CONSOLIDATED - ------------------------------------------------------------------------------------------------------------------------------ ASSETS Current assets $ 12,320 $ 84,906 $ 22,007 $ (2,028){1} $ 117,205 Property and equipment, net 37,286 683,861 37,931 -- 759,078 Other assets and deferred charges 895,818 (483,005) 164,372 (538,315){1}{2} 38,870 Goodwill and other intangible assets, net -- 118,550 82,698 -- 201,248 ----------- ----------- ----------- --------- ----------- Total assets $ 945,424 $ 404,312 $ 307,008 $(540,343) $ 1,116,401 =========== =========== =========== ========= =========== LIABILITIES AND STOCKHOLDERS' EQUITY Current liabilities $ 30,242 $ 65,053 $ 21,154 $ (2,378){1} $ 114,071 Long-term debt, net of current maturities 669,148 68,387 33 -- 737,568 Deferred income taxes and other 9,826 18,644 84 -- 28,554 Stockholders' equity 236,208 252,228 285,737 (537,965){2} 236,208 ----------- ----------- ----------- --------- ----------- Total liabilities and stockholders' equity $ 945,424 $ 404,312 $ 307,008 $(540,343) $ 1,116,401 =========== =========== =========== ========= ===========
Elimination Entries - ------------------- {1} - To eliminate intercompany payables and receivables. {2} - To eliminate investment in subsidiaries and subsidiaries' equity. Condensed Consolidating Balance Sheet Information as of December 31, 1998
COMBINED COMBINED NON- ELIMINATION (IN THOUSANDS) PARENT GUARANTORS GUARANTORS ENTRIES CONSOLIDATED - ------------------------------------------------------------------------------------------------------------------------------ ASSETS Current assets $ 23,193 $ 97,564 $ 22,533 $ (1,545){1} $ 141,745 Property and equipment, net 36,490 687,740 38,977 -- 763,207 Other assets and deferred charges 919,264 (515,630) 153,170 (518,114){1}{2} 38,690 Goodwill and other intangible assets, net -- 119,365 83,249 -- 202,614 ---------- --------- ---------- ---------- ---------- Total assets $ 978,947 $ 389,039 $ 297,929 $ (519,659) $1,146,256 ========== ========= ========== ========== ========== LIABILITIES AND STOCKHOLDERS' EQUITY Current liabilities $ 35,301 $ 69,217 $ 15,575 $ (2,440){1} $ 117,653 Long-term debt, net of current maturities 706,373 68,484 33 -- 774,890 Deferred income taxes and other 9,984 16,382 41 -- 26,407 Stockholders' equity 227,289 234,956 282,280 (517,219){2} 227,306 ---------- --------- ---------- ---------- ---------- Total liabilities and stockholders' equity $ 978,947 $ 389,039 $ 297,929 $ (519,659) $1,146,256 ========== ========= ========== ========== ==========
Elimination Entries - ------------------- {1} - To eliminate intercompany payables and receivables. {2} - To eliminate investment in subsidiaries and subsidiaries' equity. -9- 10 BOYD GAMING CORPORATION AND SUBSIDIARIES NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) - -------------------------------------------------------------------------------- Condensed Consolidating Statement of Operations Information for the Three Month Period Ended March 31, 1999
COMBINED COMBINED NON- ELIMINATION (IN THOUSANDS) PARENT GUARANTORS GUARANTORS ENTRIES CONSOLIDATED - --------------------------------------------------------------------------------------------------------------------- Revenues Casino $ -- $ 148,666 $ 30,867 $ -- $ 179,533 Food and beverage -- 38,478 2,490 -- 40,968 Room -- 19,304 -- -- 19,304 Other 2,846 8,793 9,249 (3,543){1} 17,345 Management fee 36,959 12,651 5,112 (43,909){1} 10,813 --------- --------- --------- --------- --------- Gross revenues 39,805 227,892 47,718 (47,452) 267,963 Less promotional allowances -- 22,868 1,837 -- 24,705 --------- --------- --------- --------- --------- Net revenues 39,805 205,024 45,881 (47,452) 243,258 --------- --------- --------- --------- --------- Costs and expenses Casino -- 78,689 11,609 -- 90,298 Food and beverage -- 23,322 2,511 -- 25,833 Room -- 6,242 -- -- 6,242 Other -- 18,318 10,100 (13,017){1} 15,401 Selling, general and administrative -- 28,504 6,534 -- 35,038 Maintenance and utilities -- 8,103 1,551 -- 9,654 Depreciation and amortization 446 16,057 2,229 -- 18,732 Corporate expense 9,221 29 395 (3,543){1} 6,102 Preopening expense 45 -- 494 -- 539 --------- --------- --------- --------- --------- Total 9,712 179,264 35,423 (16,560) 207,839 --------- --------- --------- --------- --------- Operating income 30,093 25,760 10,458 (30,892) 35,419 Other income (expense), net (15,816) (1,540) 282 -- (17,074) --------- --------- --------- --------- --------- Income before provision for income taxes and cumulative effect of a change in accounting principle 14,277 24,220 10,740 (30,892) 18,345 Provision for income taxes 3,637 4,068 -- -- 7,705 --------- --------- --------- --------- --------- Income before cumulative effect of a change in accounting principle 10,640 20,152 10,740 (30,892) 10,640 Cumulative effect of a change in accounting for start-up activities, net 1,738 -- -- -- 1,738 --------- --------- --------- --------- --------- Net income $ 8,902 $ 20,152 $ 10,740 $ (30,892) $ 8,902 ========= ========= ========= ========= =========
Elimination Entries - ------------------- {1} - To eliminate intercompany revenue and expense. -10- 11 BOYD GAMING CORPORATION AND SUBSIDIARIES NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) - -------------------------------------------------------------------------------- Condensed Consolidating Statement of Operations Information for the Three Month Period Ended March 31, 1998
COMBINED COMBINED NON- ELIMINATION (IN THOUSANDS) PARENT GUARANTORS GUARANTORS ENTRIES CONSOLIDATED - ----------------------------------------------------------------------------------------------------------------- Revenues Casino $ -- $ 155,102 $ 30,762 $ -- $ 185,864 Food and beverage -- 39,936 2,326 -- 42,262 Room -- 18,514 -- -- 18,514 Other -- 10,245 8,517 (495)(1) 18,267 Management fee 29,669 12,709 5,377 (36,959)(1) 10,796 --------- --------- --------- --------- --------- Gross revenues 29,669 236,506 46,982 (37,454) 275,703 Less promotional allowances -- 24,016 1,645 -- 25,661 --------- --------- --------- --------- --------- Net revenues 29,669 212,490 45,337 (37,454) 250,042 --------- --------- --------- --------- --------- Costs and expenses Casino -- 84,140 11,268 -- 95,408 Food and beverage -- 23,648 2,489 -- 26,137 Room -- 5,774 -- -- 5,774 Other -- 20,263 9,460 (13,824)(1) 15,899 Selling, general and administrative -- 32,171 6,412 -- 38,583 Maintenance and utilities -- 8,134 1,361 -- 9,495 Depreciation and amortization 78 16,325 2,208 -- 18,611 Corporate expense 4,016 373 511 -- 4,900 --------- --------- --------- --------- --------- Total 4,094 190,828 33,709 (13,824) 214,807 --------- --------- --------- --------- --------- Operating income 25,575 21,662 11,628 (23,630) 35,235 Other expense, net (17,506) (1,653) -- -- (19,159) --------- --------- --------- --------- --------- Income before provision for income taxes 8,069 20,009 11,628 (23,630) 16,076 Provision for income taxes 1,013 5,739 -- -- 6,752 --------- --------- --------- --------- --------- Net income $ 7,056 $ 14,270 $ 11,628 $ (23,630) $ 9,324 ========= ========= ========= ========= =========
Elimination Entries - ------------------- {1} - To eliminate intercompany revenue and expense. -11- 12 BOYD GAMING CORPORATION AND SUBSIDIARIES NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) - -------------------------------------------------------------------------------- Condensed Consolidating Statement of Cash Flow Information for the Three Month Period Ended March 31, 1999
COMBINED COMBINED NON- (IN THOUSANDS) PARENT GUARANTORS GUARANTORS CONSOLIDATED - ----------------------------------------------------------------------------------------------------------- Cash flows provided by operating activities $ 33,963 $ 7,145 $ 2,159 $ 43,267 -------- -------- -------- -------- Cash flows from investing activities - Acquisition of property, equipment and other assets (1,242) (14,115) (632) (15,989) -------- -------- -------- -------- Cash flows from financing activities Net payments under bank credit facility (37,000) -- -- (37,000) Receipt (payment) of dividends 4,150 (1,967) (2,183) -- Payments on long-term debt (368) (100) -- (468) -------- -------- -------- -------- Net cash used in financing activities (33,218) (2,067) (2,183) (37,468) -------- -------- -------- -------- Net decrease in cash and cash equivalents (497) (9,037) (656) (10,190) Cash and cash equivalents, beginning of period 1,054 55,492 19,391 75,937 -------- -------- -------- -------- Cash and cash equivalents, end of period $ 557 $ 46,455 $ 18,735 $ 65,747 ======== ======== ======== ========
Condensed Consolidating Statement of Cash Flow Information for the Three Month Period Ended March 31, 1998
COMBINED COMBINED NON- (IN THOUSANDS) PARENT GUARANTORS GUARANTORS CONSOLIDATED - ----------------------------------------------------------------------------------------------------------- Cash flows provided by operating activities $ 33,173 $ 2,268 $ 3,999 $ 39,440 -------- -------- -------- -------- Cash flows from investing activities - Acquisition of property equipment and other assets (428) (7,219) (674) (8,321) -------- -------- -------- -------- Cash flows from financing activities Net payments under bank credit facility (31,000) -- -- (31,000) Other 1,966 (2,386) (95) (515) -------- -------- -------- -------- Net cash used in financing activities (29,034) (2,386) (95) (31,515) -------- -------- -------- -------- Net increase (decrease) in cash and cash equivalents 3,711 (7,337) 3,230 (396) Cash and cash equivalents, beginning of period 2,832 58,317 17,128 78,277 -------- -------- -------- -------- Cash and cash equivalents, end of period $ 6,543 $ 50,980 $ 20,358 $ 77,881 ======== ======== ======== ========
-12- 13 ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS RESULTS OF OPERATIONS The following table sets forth, for the periods indicated, certain operating data for the Company's properties. As used herein, "Boulder Strip Properties" consist of Sam's Town Las Vegas, the Eldorado and Jokers Wild; "Downtown Properties" consist of the California, the Fremont, Main Street Station and Vacations Hawaii, the Company's wholly-owned travel agency which operates for the benefit of the Downtown casino properties; and "Central Region Properties" consist of Sam's Town Tunica, Sam's Town Kansas City (through July 15, 1998), Par-A-Dice, Treasure Chest Casino, and management fee income from Silver Star Resort and Casino. Net revenues displayed in this table and discussed in this section are net of promotional allowances; as such, references to room revenue and food and beverage revenue do not agree to the amounts on the Condensed Consolidated Statements of Operations. Operating income from properties for the purposes of this table excludes corporate expense, including related depreciation and amortization, and preopening expense.
Three Months Ended March 31, --------------------- (In thousands) 1999 1998 - -------------- -------- --------- Net revenues Stardust $ 41,290 $ 41,333 Boulder Strip Properties 48,579 48,057 Downtown Properties (a) 53,993 50,829 Central Region 99,396 109,823 -------- -------- Total properties $243,258 $250,042 ======== ======== Operating income Stardust $ 3,295 $ 3,251 Boulder Strip Properties 6,390 7,107 Downtown Properties 5,497 2,072 Central Region 27,608 28,087 -------- -------- Total properties $ 42,790 $ 40,517 ======== ========
(a) Includes revenues related to Vacations Hawaii, a Honolulu travel agency, of $8,472 and $7,757, respectively, for the quarters ended March 31, 1999 and 1998. -13- 14 REVENUES Consolidated net revenues decreased 2.7% during the quarter ended March 31, 1999 compared to the quarter ended March 31, 1998. Company-wide casino revenue decreased 3.4%, food and beverage revenue decreased 1.1% and room revenue increased 10.0%. Net revenues from the Stardust, Boulder Strip and Downtown Properties (the "Nevada Region") increased 2.6% during the quarter ended March 31, 1999 compared to the quarter ended March 31, 1998. Net revenues at the Downtown Properties and Boulder Strip properties increased 6.2% and 1.1%, respectively, while net revenues at the Stardust remained virtually unchanged. Net revenues in the Central Region decreased 9.5% during the quarter ended March 31, 1999 compared to the quarter ended March 31, 1998 primarily as a result of the closure of the Sam's Town Kansas City property in July 1998. OPERATING INCOME - ---------------- Consolidated operating income before preopening expense increased by 2.1% to $36 million during the quarter ended March 31, 1999 from $35 million during the quarter ended March 31, 1998. Operating income in the Nevada Region increased 22% due to gains experienced at the Downtown Properties, partially offset by a decline at the Boulder Strip properties. In the Central Region, operating income decreased 1.7% due primarily to declines experienced at Sam's Town Tunica, partially offset by the reduction in operating loss from the closure of the Sam's Town Kansas City property in July 1998. STARDUST - -------- Net revenues and operating income at the Stardust for the quarter ended March 31, 1999 remained virtually unchanged from the quarter ended March 31, 1998. Casino revenue increased 2.1% due primarily to an increase in table game win; however, this increase was offset by a decline in other revenue due to an outsourcing of certain retail operations at the property. BOULDER STRIP PROPERTIES - ------------------------ Net revenues at the Boulder Strip Properties increased 1.1% during the quarter ended March 31, 1999 compared to the quarter ended March 31, 1998. The slight increase is due to a 3.7% increase in casino revenue, partially offset by a decline in non-gaming revenues. Operating income at the Boulder Strip Properties declined by 10.1% or $.7 million during the quarter ended March 31, 1999 compared to the quarter ended March 31, 1998, and operating income margin declined to 13.2% during the quarter ended March 31, 1999 from 14.8% during the quarter from March 31, 1998. The declines in operating income and operating income margin were primarily attributable to an increase in marketing expenses. DOWNTOWN PROPERTIES - ------------------- Net revenues at the Downtown Properties increased 6.2% during the quarter ended March 31, 1999 compared to the quarter ended March 31, 1998 due primarily to casino revenue, which increased 4.2% as a result of increased slot wagering volume at all three casino properties. Non-gaming revenue at the Downtown Properties increased 9.7% during the quarter ended March 31, 1999 versus the comparable quarter in 1998 due primarily to a 9.2% increase in revenues at Vacations Hawaii. Operating income at the Downtown Properties increased 165% to $5.5 million during the quarter ended March 31, 1999 compared to the quarter ended March 31, 1998, and operating income margin increased to 10.2% during the quarter ended March 31, 1999 from 4.1% during the comparable quarter in -14- 15 the prior year. The increase in operating income and margin was primarily attributable to the increase in net revenues coupled with a reduction in marketing expenses at each of the Downtown casino properties. CENTRAL REGION - -------------- Net revenues in the Central Region decreased 9.5% during the quarter ended March 31, 1999 compared to the quarter ended March 31, 1998. The majority of the decline in net revenues was due to the closure of Sam's Town Kansas City in July 1998. In addition, a 3.2% decline in net revenues at Sam's Town Tunica, due to increased competition in the Tunica gaming market, was partially offset by an increase in net revenues at Par-A-Dice of 2.3%. Operating income in the Central Region declined slightly (1.7%) as gains experienced by the closure of the Sam's Town Kansas City were primarily offset by a decline in operating income at Sam's Town Tunica. OTHER INCOME (EXPENSE) - ---------------------- Other income and expense is primarily comprised of interest expense. Interest expense decreased by $2.1 million during the quarter ended March 31, 1999 compared to the corresponding period in the prior year. The decrease is attributable to lower debt levels combined with a decline in interest rates on floating rate debt. In addition, the Company capitalized $.2 million in interest costs during the quarter ended March 31, 1999. There were no such interest costs capitalized during the quarter ended March 31, 1998. CUMULATIVE EFFECT OF A CHANGE IN ACCOUNTING FOR START-UP ACTIVITIES - ------------------------------------------------------------------- The Company reported a charge of $1.7 million, net of $.9 million in tax benefits, as the cumulative effect of a change in accounting for start-up activities. The American Institute of Certified Public Accountants issued Statement of Position 98-5, "Reporting on the Costs of Start-Up Activities" that required the Company to expense certain previously capitalized costs of start-up activities as a cumulative effect of a change in accounting principle. NET INCOME - ---------- As a result of these factors, the Company reported net income of $8.9 million and $9.3 million, respectively, during the quarter ended March 31, 1999 and March 31, 1998. LIQUIDITY AND CAPITAL RESOURCES CASH FLOW FROM OPERATING ACTIVITIES AND WORKING CAPITAL - ------------------------------------------------------- The Company's policy is to use operating cash flow in combination with debt and equity financing to fund renovations and expansion of its business. During the quarter ended March 31, 1999, the Company generated operating cash flows of $43 million compared to $39 million during the comparable period in the prior year. The increase in operating cash flows is primarily attributable to the enhanced earnings at the Downtown Properties, as well as the realization of a portion of the tax benefits related to the sale of certain assets at Sam's Town Kansas City. (See further discussion regarding the tax benefits in the following paragraph). As of March 31, 1999 and 1998, the Company had balances of cash and cash equivalents of $66 million and $78 million, respectively, and working capital of $3.1 million and $0.8 million, respectively. The Company has historically operated with minimal or negative levels of working capital in order to minimize borrowings and related interest costs under the Company's five year, reducing revolving credit facility (the "Bank Credit Facility"). -15- 16 In connection with the July 1998 sale of certain tangible assets of Sam's Town Kansas City for $12.5 million, the Company will be able to realize the benefit of approximately $35 million in deferred tax assets. The realization of these deferred tax assets, which began in the quarter ended September 30, 1998, will continue to benefit operating cash flow in 1999 by generating tax refunds and reducing the amount of future federal tax payments. CASH FLOWS FROM INVESTING ACTIVITIES - ------------------------------------ The Company is committed to continually maintaining and enhancing its existing facilities, most notably by upgrading and remodeling its casinos, hotel rooms, restaurants and other public spaces and by providing the latest slot machines for its customers. The Company's capital expenditures primarily related to these purposes were approximately $16.0 million and $8.3 million, respectively, during the quarter ended March 31, 1999 and 1998. See "Expansion and Other Projects" for a further discussion on current and planned investing activities. CASH FLOW FROM FINANCING ACTIVITIES - ----------------------------------- Much of the funding for the Company's renovation and expansion projects comes from debt and equity financing, as well as cash flows from existing operations. The Company paid down outstanding debt with its free cash flow generated from operations, which resulted in cash flows used for financing activities of $37 million during the quarter ended March 31, 1999 compared to $32 million during the quarter ended March 31, 1998. At March 31, 1999, outstanding borrowings and unused availability under the Bank Credit Facility were $280 million and $195 million, respectively. Interest under the Bank Credit Facility is based upon the agent bank's quoted reference rate or the London Interbank Offered Rate ("LIBOR"), at the discretion of the Company. The blended rate under the Bank Credit Facility at March 31, 1999 was 7.0%. 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 ratio, (iv) imposing limitations on the incurrence of additional indebtedness and the creation of liens, (v) imposing limitations on the maximum permitted expansion capital expenditures during the term of the Bank Credit Facility, (vi) imposing limits on the maximum permitted maintenance capital expenditures during each year of the term of the Bank Credit Facility, and (vii) imposing restrictions in 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. Management believes the Company and its subsidiaries are in compliance with the Bank Credit Facility covenants at March 31, 1999. The Company's $200 million principle amount of Senior Notes (the "9.25% Notes") and $250 million principle amount of Senior Subordinated Notes (the "9.50% Notes") contain limitations on, among other things, (a) the ability of the Company and its Restricted Subsidiaries (as defined in the Indenture Agreements) to incur additional indebtedness, (b) the payment of dividends and other distributions with respect to the capital stock of the Company and its Restricted Subsidiaries and the purchase, redemption or retirement of capital stock of the Company and its Restricted Subsidiaries, (c) the making of certain investments, (d) asset sales, (e) the incurrence of liens, (f) transactions with affiliates, (g) payment restrictions affecting restricted subsidiaries and (h) certain consolidations, mergers and transfers of assets. Management believes the Company and its subsidiaries are in compliance with the covenants related to the 9.25% and 9.50% Notes at March 31, 1999. The Company's ability to service its debt will be dependent on its future performance, which will be affected by, among other things, prevailing economic conditions and financial, business and other factors, certain of which are beyond the Company's control. -16- 17 EXPANSION AND OTHER PROJECTS - ---------------------------- The Company, as part of its ongoing strategic planning process, is currently establishing its priorities for the future. In Nevada, the Company is exploring opportunities for the development of new properties in the Las Vegas local market. In addition, the Company will begin an $80 million expansion and renovation project at Sam's Town Las Vegas during 1999. The project includes, among other things, a state-of-the-art movie theatre complex, additional gaming space, and a new buffet and bakery. This project is expected to be completed in 2001. The Company has postponed plans to develop a new property on the Stardust's 61-acre site until the impact of the opening of several new resorts on the Las Vegas Strip has been determined. Instead, the Company has initiated a $25 million renovation of the Stardust which includes guest rooms, public space and exterior enhancements intended to make the property more competitive with other Strip resorts. In connection with the renovation project, the Stardust removed from service, in April 1999, all of its approximately 550 motor inn rooms for a period of approximately 90 days. During this time, the Company will evaluate the impact of the motor inn closure on the Stardust's operations. Based upon the results of the evaluation, the Company will either refurbish or demolish the Stardust motor inn rooms. As of March 31, 1999, the Company had incurred $5.0 million in costs associated with the Stardust renovation, $3.5 million of which was incurred during the three month period ended March 31, 1999. On July 14, 1998, the Company, through a wholly-owned subsidiary, entered into an amended and restated joint venture agreement (the "Agreement") with a wholly-owned subsidiary of Mirage Resorts, Incorporated ("Mirage") to jointly develop and own The Borgata, a casino hotel entertainment facility in Atlantic City, New Jersey. Among other things, the Agreement provides for the settlement of litigation between the Company and Mirage relating to the joint venture agreement that the Company and Mirage entered into in May 1996. The Borgata is expected to cost $750 million and contemplates a hotel of approximately 1,400 rooms and a casino and related amenities adjacent and connected to Mirage's planned wholly-owned resort. The Agreement provides for at least $150 million in capital contributions by the Company, $90 million of which is expected to be contributed in 1999 or early 2000. Funding of the Company's joint venture capital contributions is expected to be derived from cash flow from operations and availability under the Company's Bank Credit Facility. The Borgata will be subject to the many risks inherent in the establishment of a new business enterprise, including potential unanticipated design, construction, regulatory, environmental and operating problems, lack of adequate financing and the significant risks commonly associated with implementing a marketing strategy in a new market. If the Borgata does not become operational within the time frame and budget currently contemplated or does not compete successfully in its new market, it could have a material adverse effect on the Company's business, financial condition and results of operations. As of March 31, 1999, the Company has contributed or advanced funds of $3.1 million to The Borgata. The Company has begun work on the planning stages of this development. In addition, outside of Nevada and New Jersey, the Company continues to monitor acquisition opportunities in many of the newer gaming markets as the industry continues to consolidate. The Company has begun an information systems ("IS") project that will standardize the Company's customer tracking systems. The purpose of the IS project is to link all points of customer contact to enable the Company to better monitor customer activity in order to enhance and direct marketing efforts. The Company expects to spend $14 million in 1999 on the IS project. As of March 31, 1999, the Company had incurred $1.4 million in costs associated with the IS project, substantially all of which were capitalized. The Company has never undertaken an IS project of this magnitude and may experience difficulties in the integration and implementation of this project. In addition, given the inherent difficulties of a project of this magnitude and the resources required, the timing and costs involved could differ materially from those anticipated by the Company. There can be no assurance that the IS project will be completed successfully, -17- 18 on schedule or within budget. Substantial funds are required for The Borgata, as well as the other projects discussed above and would also be required for other future expansion projects. Statements regarding the Company's planned expansion and other projects above are forward-looking statements, including the statements regarding anticipated costs and timing. There are no assurances that any of the above mentioned projects will go forward, be completed on time or within budget, or ultimately become operational. The source of funds required to meet the Company's working capital needs (including maintenance capital expenditures) is expected to be cash flow from operations and availability under the Company's Bank Credit Facility. The source of funds for the Company's expansion projects may come from cash flow from operations and availability under the Company's Bank Credit Facility, additional debt or equity offerings, joint venture partners or other sources. Currently, the Company is exploring various alternatives to modify the Bank Credit Facility including, but not limited to, increasing the total principle amount available to $500 million and extending the maturity. No assurance can be given that additional financing will be available or that, if available, such financing will be obtainable on terms favorable to the Company or its stockholders. YEAR 2000 READINESS DISCLOSURE - ------------------------------ The Year 2000 issue is the result of computer programs being written using two digits rather than four to define the applicable year. Any programs that have time-sensitive software may recognize a date using "00" as the year 1900 rather than the year 2000. This could result in a major system failure or miscalculations. The Company is currently engaged in a five-phase process of evaluating and resolving the problems that might be associated with its internal operating systems and the Year 2000 issue. The five phases are as follows: 1. Evaluation and development of remediation plans for traditional information technology ("IT") systems; 2. Evaluation and development of remediation plans for non-IT systems; 3. Implementation and testing of remediation plans; 4. Evaluation of vendor compliance with Year 2000 issues; and 5. Preparation of contingency plans. The first phase of the process is the evaluation and development of remediation plans for IT systems which was completed in the fourth quarter of 1998. In this phase, the Company evaluated which IT systems are Year 2000 compliant and made plans to bring identified non-compliant systems into compliance. The second phase of the process, expected to be completed by the end of the second quarter of 1999, is the evaluation and development of remediation plans for non-IT systems. The Company does not expect the impact of the Year 2000 to be material for its non-IT systems. The Company may discover Year 2000 issues in the course of its evaluation processes, or issues may not be detected, that would have a material adverse effect on the business, financial condition and results of operations of the Company. Phase three of the process involves the implementation of remediation plans for IT and non-IT systems that were identified in phase one and two as non-compliant. This process is expected to be completed by the end of the third quarter of 1999 and will involve either the replacement of the Company's existing systems with systems that are Year 2000 compliant or the remedial review and replacement of the software code with code that does not use the two digit year code. As part of this phase, the Company intends to perform date sensitive testing including testing on systems that vendors have certified to be Year 2000 compliant to ensure that the modifications developed adequately resolve -18- 19 the Year 2000 issue. While the Company believes the testing program should provide additional evidence of its ability to operate in the Year 2000, the Company may discover Year 2000 issues in the course of its testing process, or issues may not be detected, that would have a material adverse effect on the business, financial condition and results of operations of the Company. Phase four, expected to be completed by the end of the second quarter of 1999, involves evaluating Year 2000 compliance of those vendors which provide the Company with goods and services critical to the servicing of our guests, mainly in the non-gaming portions of our business. While no individual vendor supplies the Company with a significant portion of the goods or services used in the non-gaming operations, the Company may discover Year 2000 issues in the course of evaluation of its vendors, or issues may not be detected, that would have a material adverse effect on the business, financial condition and results of operations of the Company. The final phase of the process, expected to be completed during the third quarter of 1999, will involve the development of a contingency plan in the event any non-compliant critical systems remain by January 1, 2000. As part of this phase, the Company will attempt to quantify the impact, if any, of the failure to complete any necessary corrective action. The Company currently believes that the majority of the equipment and processes used by the Company have adequate manual backup procedures that would allow the Company to continue to operate a significant portion of the business in the event the conversion project is not completed on schedule (or the systems of other companies on which the Company may rely are not timely converted). However, in most of the Central Region gaming jurisdictions, electronic monitoring of operations is required. Waivers for manual processes may be obtained from these gaming jurisdictions; however, there can be no assurance that a material portion of the gaming business at those properties would not be affected until the time at which a waiver is granted or if a waiver is granted at all. If the Company is able to obtain timely waivers for the Central Region properties, the remaining primary risks associated with the Year 2000 may be an effect on the timing of the reporting of certain operating results to management and may include an adverse effect on business volumes if the Year 2000 problems could not be timely corrected. Although the Company cannot currently estimate the magnitude of such impact, if systems material to the Company's operations have not been made Year 2000 compliant upon completion of this phase, the Year 2000 issue could have a material adverse impact on the Company's business, financial condition and results of operation. The Company currently estimates approximately $8 million in costs directly associated with the Year 2000 project that is expected to be funded from cash flow from operations and availability under the Company's Bank Credit Facility. This estimate includes approximately $3 million in operating expenses related to the remediation efforts, including training. At March 31, 1999, the Company had incurred approximately $3.6 million in costs directly related to the Year 2000 project, $3.2 million of which were capitalized as they related to replacement of systems that were not Year 2000 compliant. The statements above regarding the Year 2000 project status, cost, timing, and the Company's Year 2000 readiness are forward-looking statements. Given the inherent risks for a project of this magnitude and the resources required, the timing and costs involved could differ materially from those anticipated by the Company. There can be no assurance that the Year 2000 project will be completed on schedule or within budget. -19- 20 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 the Company's Year 2000 Readiness Disclosure, IS project, plans for future expansion and other business development activities as well as capital spending, financing sources, and the effects of regulation (including gaming and tax regulation) and competition. Such forward looking statements involve important risks and uncertainties that could significantly affect anticipated results in the future, and accordingly, actual results may differ materially from those expressed in any forward looking statements made by or on behalf of the Company. These risks and uncertainties include, but are not limited to, those related to construction, expansion and development activities, economic conditions, changes in tax laws, changes in laws or regulations affecting gaming licenses, changes in competition, and factors affecting leverage and debt service including sensitivity to fluctuation in interest rates, risks related to the Year 2000 project and other factors described from time to time in the Company's reports filed with the Securities and Exchange Commission, including the Company's Annual Report on Form 10-K for the year ended December 31, 1998. Any forward looking statements are made pursuant to the Private Securities Litigation Reform Act of 1995 and, as such, speak only as of the date made. ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURE ABOUT MARKET RISK The Company is exposed to market risk from changes in interest rates. To reduce such risks, the Company selectively uses financial instruments for its floating rate debt. On December 31, 1997, the Company entered into an interest rate swap agreement for a notional amount of $100 million. The agreement calls for the Company to swap its variable LIBOR rate (5.00% at March 31, 1999) for a fixed LIBOR rate of 5.54%. The variable LIBOR rate readjusts each quarter and the agreement is cancelable should the LIBOR rate exceed 5.99%. The swap agreement terminates in December 2000. The fair value of the swap liability at March 31, 1999 is approximately $.9 million based on the present value of future cash outflows expected from the Company based on the LIBOR rate at March 31, 1999. -20- 21 PART II. OTHER INFORMATION ITEM 5. OTHER INFORMATION On April 22, 1999, the Board of Directors of the Company approved certain amendments to the Company's By-laws related to the required notice provisions. Under the By-laws, as amended, notice of any stockholder proposals to be properly considered at the 2000 Annual Meeting of Stockholders must be given to the Company's Secretary in writing not less than 45 days nor more than 75 days prior to the date on which the Company first mailed its proxy materials for the 1999 meeting (or the date on which the Company mails its proxy materials for the 2000 Annual Meeting if the date of that meeting is changed more than 30 days from the prior year). A stockholder's notice to the Secretary must set forth for each matter proposed to be brought before the annual meeting (a) a brief description of the matter the stockholder proposes to bring before the meeting and the reasons for conducting such business at the meeting, (b) the name and recent address of the stockholder proposing such business, (c) the class and number of shares of the Company which are beneficially owned by the stockholder and (d) any material interest of the stockholder in such business. ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K (a) Exhibits. 3.2 Restated By-laws 27. Financial Data Schedule (b) Reports on Form 8-K. (i) None -21- 22 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: May 12, 1999 By /s/ Ellis Landau ------------------------------- Ellis Landau, Executive Vice President, Chief Financial Officer, and Treasurer (Principal Financial Officer) -22- 23 EXHIBIT INDEX ------------- EXHIBIT NUMBER DESCRIPTION - ------- ----------- 3.2 Restated Bylaws 27. Financial Data Schedule EX-3.2 2 RESTATED BYLAWS 1 EXHIBIT 3.2 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 to 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 ten (10) nor more than sixty (60) days before the meeting and shall be signed by the Chairman of the Board, the President or the Secretary of the corporation. 1 2 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, (b) otherwise properly brought before the meeting by or at the direction of the Board of Directors, or (c) otherwise properly brought before the meeting by a stockholder. In addition to any other applicable requirements, 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 forty-five (45) days nor more than seventy-five (75) days prior to the anniversary of the date on which the corporation first mailed its proxy materials for the previous year's annual meeting of stockholders (or the date on which the corporation mails its proxy materials for the current year if during the prior year the corporation did not hold an annual meeting or if the date of the annual meeting was changed more than thirty (30) days from the prior year). A stockholder's notice to the Secretary shall set forth as to each matter the stockholder proposes to bring before the meeting (a) a brief description of the business desired to be brought before the annual meeting and 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; provided, however, that nothing in this Section 2.5 shall be deemed to preclude discussion by any stockholder of any business properly brought before the meeting in accordance with said procedure. 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 in accordance with the provisions of this Section 2.5, and if he or she should so determine, he or she shall so declare to the meeting. Any such business not properly brought before the meeting shall not be transacted. Nothing in this Section 2.5 shall affect the right of a stockholder to request inclusion of a proposal in the corporation's proxy statement to the extent that such right is provided by an applicable rule of the Securities and Exchange Commission ("SEC"). SECTION 2.6. Nomination of Directors. Nomination of candidates for election as directors of the corporation at any meeting of stockholders called for the 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 of Directors 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 or herself as is 2 3 required, under the rules of the SEC, to be included in the corporation's proxy statement soliciting proxies for his or her election as a director. 2.6.2. Not less than sixty (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, and (d) such other information concerning each such nominee as would be required, under the rules of the SEC, in a proxy statement soliciting proxies for the election of such nominees. Such notice shall include a signed consent of each such nominee to serve as a director of the corporation, if elected. 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 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 thirty (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 applicable law, 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 or her duly authorized attorney; provided, however, that 3 4 no such proxy shall be valid after the expiration of six (6) 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 (7) years from the date of its execution. If such instrument shall designate two (2) 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 (1) be present, then such powers may be exercised by that one (1). Unless 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 stockholder 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 or she has expressly empowered the pledgee to vote thereon, in which case only the pledgee, or his or her 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 of outstanding shares. SECTION 2.12. Fixing Record Date. The Board of Directors may fix in advance a date, not exceeding sixty (60) nor less than ten (10) days preceding the date of any meeting of stockholders, the date for payment of any dividend or distribution; the date for the allotment of 4 5 rights; 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 (the "Record Date") for the determination of the stockholders entitled to notice of, and to vote at, any such meeting and any adjournment thereof; entitled to receive payment of any such dividend or distribution; to receive any such allotment of rights; to exercise the rights in respect of any such change, conversion or exchange of capital stock; or to give such consent. In such case such stockholders and only such stockholders as shall be stockholders of record on the Record Date shall be entitled to such notice of and to vote at any such meeting and any adjournment thereof; to receive payment of such dividend or distribution; to receive such allotment of rights; to exercise such rights; or 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. 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 of Directors shall be not less than five (5) and not more than fifteen (15). 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 or her 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 (2) of the directors of the whole Board of Directors must be directors who are not employees, officers or former officers of the corporation or a subsidiary or division thereof, or relatives of a principal executive officer, or individual members of an organization acting as an advisor, consultant, legal counsel or in a similar role, receiving compensation on a continuing basis from the corporation in addition to director's fees ("Outside Directors"). 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 5 6 class for which such director shall have been chosen and until his or her 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 sixty-six and two-thirds percent (66-2/3%) or more of the outstanding shares of the capital stock of the 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. 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 provision, 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 (2) 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 forty-eight (48) hours prior to the time of a special 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 lawfully 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 when 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, 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, 6 7 may be taken without a meeting, if a written consent thereto is signed by all members of the Board of Directors 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 telephone conference 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. SECTION 3.10. 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 of Directors; 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 their services on committees. 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 of Directors, 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. An 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 Outside Directors 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. Members of the Audit Committee shall review and supervise the financial controls of the corporation, make recommendations to the Board of Directors regarding the corporation's auditors, review the books and accounts of the corporation, meet with the officers of the corporation regarding the corporation's financial controls, act upon 7 8 recommendations of the auditors and take such further action as the Audit Committee deems necessary to complete an audit of the books and accounts of the corporation. 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 (2) 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 (2) Outside Directors. The Compensation and Stock Option Committee shall review with management cash and other compensation policies for employees, shall determine the compensation of the Chief Executive Officer and shall make recommendations to the Chief Executive Officer regarding the compensation to be established for all other officers of the corporation. In addition, the Compensation and Stock Option Committee shall have full power and authority to administer the corporation's stock plans and, within the terms of the respective stock plans, determine the terms and conditions of issuances thereunder. SECTION 4.4. Other Committees. The Board of Directors may, by resolution passed by a majority of the whole Board of Directors, designate one (1) or more additional special or standing committees, each such additional committee to consist of one (1) 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 shall pay all expenses of committee operations. The Board of Directors may designate one (1) 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, she 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 corporation's Secretary, any Assistant Secretary or any other designated person 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 8 9 keep the members of the Board of Directors apprised of the actions taken by such standing or special committees. 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 telecopy. 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 or her business address. If sent by telecopy, notice to a director or member of a committee shall be deemed to be given when receipt of the telecopy is confirmed electronically. 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 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. 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 power of attorney, but all such proxies and powers of attorney must be in writing. 9 10 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 Senior Executive Vice President, 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 (2) 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 (1) 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 (2) 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 or her successor shall have been chosen and shall have qualified or until his or her death or the effective date of this resignation or removal, or until he or she shall cease to be a director in the case of the Chairman of the Board. 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. Compensation. The compensation of the Chief Executive Officer shall be determined by the Compensation and Stock Option Committee. Compensation of all other officers of the corporation shall be determined by the Chief Executive Officer in consultation with the Compensation and Stock Option Committee. No officer who is also a director shall be prevented from receiving such compensation by reason of his or her also being a director. 10 11 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 such 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 or she 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 or she 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 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 or she 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 or her inability or refusal to act, the Senior Executive Vice President (or in the event there shall be more than one Vice President designated Senior Executive Vice President, any Senior Executive Vice President designated by the Board of Directors), or in the event of the Senior Executive Vice President's inability or refusal to act, the Executive Vice President (or in the event there shall be more than one such officer, any such officer designated by the Board of Directors) shall perform the duties and 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 11 12 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 the 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 or her 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 or her 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 Treasurer shall give a bond for the faithful discharge of his or her duties in 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 or her 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 and with such sureties as the Board of Directors or the Executive Committee shall determine. 12 13 ARTICLE 7 EXECUTION OF CORPORATE INSTRUMENTS AND VOTING OF SECURITIES OWNED BY THE CORPORATION 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 in 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, and 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. SECTION 7.4. Voting of Securities Owned by Corporation. All stock and other securities of any other corporation owned or held by the corporation for itself, or for other parties in any capacity, and all proxies with respect thereto shall be executed by the person authorized to do so by resolution of the Board of Directors or, in the absence of such authorization, by the Chairman of the Board, the Chief Executive Officer, the President or any Vice President. 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 or her name on the books of the corporation. The certificates shall be in such form as may be determined by the 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 13 14 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 (1) class of stock or more than one (1) 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, the Nevada Gaming Commission Regulations, or the statutes and regulations of any other gaming jurisdiction in which the corporation or any of its affiliates has operations, which are 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 or her 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 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 corporation by the registered holder thereof, or by his or her 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 14 15 on the part of any other person, whether or not it shall have express or other notice thereof, except as otherwise provided by the 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 its 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 or she 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 by him or her in connection with such action, suit or proceeding if he or she acted in good faith and in a manner he or she 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 no reasonable cause to believe his or her 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 or she reasonably believed to be in or not opposed to the best interests of the 15 16 corporation, and with respect to any criminal action or proceeding, had reasonable cause to believe that his or her 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 or she 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 or her in connection with the defense or settlement of such action or suit if he or she acted in good faith and in a manner he or she 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 indemnity 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 or 10.2, or in defense of any claim, issue or matter therein, he or she shall be indemnified against expenses (including attorneys' fees) actually and reasonably incurred by him or her 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) by independent legal counsel in a written opinion if a majority vote of a quorum consisting of directors who were not parties to the act, suit or proceedings so orders, or (d) by independent legal counsel in a written opinion if a quorum consisting of directors who were not parties to the act, suit or proceeding cannot be obtained. 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 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 or she 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. 16 17 SECTION 10.6. Indemnity Not Exclusive. The indemnification and advancement of expenses authorized herein or ordered by a court 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 or her official capacity or an action in another capacity while holding his or her 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 or her acts or omissions involved intentional misconduct, fraud or a knowing violation of the law and was material to the cause of action. The indemnification and advancement of expenses shall continue for a person who has ceased to be a director, officer, employee or agent and inures 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. Accordingly, 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 or she 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 be 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. SECTION 11.3. Fiscal Year. The fiscal year of the corporation shall begin the first day of January of each year or upon such other day as may be designated by the Board of Directors. 17 18 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. 18 EX-27 3 FINANCIAL DATA SCHEDULE
5 1,000 3-MOS DEC-31-1999 MAR-31-1999 65,747 0 25,506 4,011 7,653 117,205 1,231,483 472,405 1,116,401 114,071 737,568 0 0 620 235,588 1,116,401 0 243,258 0 0 207,839 0 17,131 18,345 7,705 10,640 0 0 1,738 8,902 0.14 0.14
-----END PRIVACY-ENHANCED MESSAGE-----