x | QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
o | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
Nevada | 88-0242733 | |
(State or other jurisdiction of incorporation or organization) | (I.R.S. Employer Identification No.) |
Large accelerated filer | o | Accelerated filer | x | |||
Non-accelerated filer | o (Do not check if a smaller reporting company) | Smaller reporting company | o |
Class | Outstanding as of October 31, 2011 | |||
Common stock, $0.01 par value | 86,317,735 |
Page No. | ||
September 30, 2011 | December 31, 2010 | ||||||
ASSETS | |||||||
Current assets | |||||||
Cash and cash equivalents | $ | 187,118 | $ | 145,623 | |||
Restricted cash | 22,692 | 19,494 | |||||
Accounts receivable, net | 47,145 | 47,942 | |||||
Inventories | 14,321 | 16,029 | |||||
Prepaid expenses and other current assets | 53,151 | 37,153 | |||||
Income taxes receivable | — | 5,249 | |||||
Deferred income taxes | 9,113 | 8,149 | |||||
Total current assets | 333,540 | 279,639 | |||||
Property and equipment, net | 3,296,396 | 3,383,371 | |||||
Assets held for development | 1,119,845 | 1,119,403 | |||||
Debt financing costs, net | 30,322 | 34,993 | |||||
Restricted investments | 20,984 | 48,168 | |||||
Other assets, net | 77,084 | 70,425 | |||||
Intangible assets, net | 547,075 | 539,714 | |||||
Goodwill, net | 213,576 | 213,576 | |||||
Total assets | $ | 5,638,822 | $ | 5,689,289 | |||
LIABILITIES AND STOCKHOLDERS’ EQUITY | |||||||
Current liabilities | |||||||
Current maturities of long-term debt | $ | 363,598 | $ | 25,690 | |||
Non-recourse obligations of variable interest entity | 221,912 | 243,059 | |||||
Accounts payable | 55,227 | 57,183 | |||||
Income taxes payable | 3,122 | 6,504 | |||||
Accrued liabilities | 305,450 | 278,469 | |||||
Total current liabilities | 949,309 | 610,905 | |||||
Long-term debt, net of current maturities | 2,802,075 | 3,193,065 | |||||
Deferred income taxes | 364,295 | 362,174 | |||||
Other long-term tax liabilities | 46,882 | 44,813 | |||||
Other liabilities | 72,369 | 83,589 | |||||
Commitments and contingencies (Note 10) | |||||||
Stockholders’ equity | |||||||
Preferred stock, $0.01 par value, 5,000,000 shares authorized | — | — | |||||
Common stock, $0.01 par value, 200,000,000 shares authorized; 86,290,986 and 86,244,978 shares outstanding | 863 | 862 | |||||
Additional paid-in capital | 642,243 | 635,028 | |||||
Retained earnings | 557,546 | 560,909 | |||||
Accumulated other comprehensive loss, net | — | (7,594 | ) | ||||
Total Boyd Gaming Corporation stockholders’ equity | 1,200,652 | 1,189,205 | |||||
Noncontrolling interest | 203,240 | 205,538 | |||||
Total stockholders’ equity | 1,403,892 | 1,394,743 | |||||
Total liabilities and stockholders’ equity | $ | 5,638,822 | $ | 5,689,289 |
Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||||||
2011 | 2010 | 2011 | 2010 | ||||||||||||
REVENUES | |||||||||||||||
Operating revenues: | |||||||||||||||
Gaming | $ | 500,824 | $ | 503,746 | $ | 1,469,316 | $ | 1,344,283 | |||||||
Food and beverage | 99,221 | 101,164 | 285,883 | 255,166 | |||||||||||
Room | 64,831 | 64,142 | 181,881 | 154,247 | |||||||||||
Other | 34,105 | 33,960 | 100,412 | 91,595 | |||||||||||
Gross revenues | 698,981 | 703,012 | 2,037,492 | 1,845,291 | |||||||||||
Less promotional allowances | 108,766 | 107,634 | 307,928 | 256,332 | |||||||||||
Net revenues | 590,215 | 595,378 | 1,729,564 | 1,588,959 | |||||||||||
COST AND EXPENSES | |||||||||||||||
Operating costs and expenses: | |||||||||||||||
Gaming | 230,675 | 237,601 | 680,457 | 635,461 | |||||||||||
Food and beverage | 50,868 | 50,690 | 148,516 | 132,481 | |||||||||||
Room | 13,586 | 13,661 | 39,921 | 36,767 | |||||||||||
Other | 28,617 | 28,089 | 82,191 | 74,333 | |||||||||||
Selling, general and administrative | 96,301 | 100,697 | 288,872 | 270,641 | |||||||||||
Maintenance and utilities | 40,925 | 42,661 | 115,113 | 104,770 | |||||||||||
Depreciation and amortization | 46,034 | 52,451 | 145,106 | 147,905 | |||||||||||
Corporate expense | 11,025 | 11,021 | 36,569 | 36,636 | |||||||||||
Preopening expenses | 1,720 | 2,684 | 5,292 | 4,990 | |||||||||||
Write-downs and other items, net | 2,300 | 1,340 | 9,269 | 4,932 | |||||||||||
Total operating costs and expenses | 522,051 | 540,895 | 1,551,306 | 1,448,916 | |||||||||||
Operating income from Borgata | — | — | — | 8,146 | |||||||||||
Operating income | 68,164 | 54,483 | 178,258 | 148,189 | |||||||||||
Other expense (income): | |||||||||||||||
Interest income | (15 | ) | — | (40 | ) | (4 | ) | ||||||||
Interest expense | 60,083 | 45,781 | 184,068 | 109,438 | |||||||||||
Fair value adjustment of derivative instruments | — | — | 265 | — | |||||||||||
Gain on early retirements of debt | (54 | ) | — | (34 | ) | (3,949 | ) | ||||||||
Gain on distribution from Borgata | — | (2,535 | ) | — | (2,535 | ) | |||||||||
Other income | (1,000 | ) | (10,000 | ) | (1,000 | ) | (10,000 | ) | |||||||
Other non-operating expenses from Borgata, net | — | — | — | 3,133 | |||||||||||
Total other expense, net | 59,014 | 33,246 | 183,259 | 96,083 | |||||||||||
Income (loss) before income taxes | 9,150 | 21,237 | (5,001 | ) | 52,106 | ||||||||||
Income tax (expense) benefit | (2,170 | ) | (6,371 | ) | 28 | (15,532 | ) | ||||||||
Net income (loss) | 6,980 | 14,866 | (4,973 | ) | 36,574 | ||||||||||
Net (income) loss attributable to noncontrolling interest | (3,871 | ) | (9,275 | ) | 1,610 | (19,166 | ) | ||||||||
Net income (loss) attributable to Boyd Gaming Corporation | $ | 3,109 | $ | 5,591 | $ | (3,363 | ) | $ | 17,408 | ||||||
Basic net income (loss) per common share: | $ | 0.04 | $ | 0.06 | $ | (0.04 | ) | $ | 0.20 | ||||||
Weighted average basic shares outstanding | 87,256 | 86,582 | 87,206 | 86,508 | |||||||||||
Diluted net income (loss) per common share: | $ | 0.04 | $ | 0.06 | $ | (0.04 | ) | $ | 0.20 | ||||||
Weighted average diluted shares outstanding | 87,432 | 86,684 | 87,206 | 86,724 |
Boyd Gaming Corporation Stockholders’ Equity | |||||||||||||||||||||||||||||
Accumulated | |||||||||||||||||||||||||||||
Other | Additional | Other | Total | ||||||||||||||||||||||||||
Comprehensive | Common Stock | Paid-in | Retained | Comprehensive | Noncontrolling | Stockholders' | |||||||||||||||||||||||
Income (loss) | Shares | Amount | Capital | Earnings | Loss, Net | Interest | Equity | ||||||||||||||||||||||
Balances, January 1, 2011 | 86,244,978 | $ | 862 | $ | 635,028 | $ | 560,909 | $ | (7,594 | ) | $ | 205,538 | $ | 1,394,743 | |||||||||||||||
Net loss | $ | (3,363 | ) | — | — | (3,363 | ) | — | — | (3,363 | ) | ||||||||||||||||||
Derivative instruments fair value adjustment, net of taxes of $4,230 | 7,594 | — | — | — | 7,594 | — | 7,594 | ||||||||||||||||||||||
Comprehensive income | 4,231 | ||||||||||||||||||||||||||||
Comprehensive loss attributable to noncontrolling interest | (688 | ) | — | — | — | — | — | (688 | ) | (688 | ) | ||||||||||||||||||
Comprehensive income attributable to Boyd Gaming Corporation | $ | 3,543 | |||||||||||||||||||||||||||
Stock options exercised | 46,008 | 1 | 275 | — | — | — | 276 | ||||||||||||||||||||||
Tax effect from share-based compensation arrangements | — | — | (800 | ) | — | — | — | (800 | ) | ||||||||||||||||||||
Share-based compensation costs | — | — | 7,740 | — | — | — | 7,740 | ||||||||||||||||||||||
Change in noncontrolling interest in Borgata and LVE | — | — | — | — | — | (1,610 | ) | (1,610 | ) | ||||||||||||||||||||
Balances, September 30, 2011 | 86,290,986 | $ | 863 | $ | 642,243 | $ | 557,546 | $ | — | $ | 203,240 | $ | 1,403,892 |
Boyd Gaming Corporation Stockholders’ Equity | |||||||||||||||||||||||||||||
Accumulated | |||||||||||||||||||||||||||||
Other | Additional | Other | Total | ||||||||||||||||||||||||||
Comprehensive | Common Stock | Paid-in | Retained | Comprehensive | Noncontrolling | Stockholders' | |||||||||||||||||||||||
Income (loss) | Shares | Amount | Capital | Earnings | Loss, Net | Interest | Equity | ||||||||||||||||||||||
Balances, January 1, 2010 | 86,130,454 | $ | 861 | $ | 623,035 | $ | 550,599 | $ | (18,126 | ) | $ | — | $ | 1,156,369 | |||||||||||||||
Net income | $ | 17,408 | — | — | — | 17,408 | — | — | 17,408 | ||||||||||||||||||||
Derivative instruments fair value adjustment, net of taxes of $3,756 | 6,842 | — | — | — | — | 6,842 | — | 6,842 | |||||||||||||||||||||
Comprehensive income attributable to Boyd Gaming Corporation | $ | 24,250 | — | — | — | — | — | — | — | ||||||||||||||||||||
Stock options exercised | 100,186 | 1 | 622 | — | — | — | 623 | ||||||||||||||||||||||
Tax effect from share-based compensation arrangements | — | — | (22 | ) | — | — | — | (22 | ) | ||||||||||||||||||||
Share-based compensation costs | — | — | 8,124 | — | — | — | 8,124 | ||||||||||||||||||||||
Change in noncontrolling interest in Borgata | — | — | — | — | — | 236,080 | 236,080 | ||||||||||||||||||||||
Balances, September 30, 2010 | 86,230,640 | $ | 862 | $ | 631,759 | $ | 568,007 | $ | (11,284 | ) | $ | 236,080 | $ | 1,425,424 |
Nine Months Ended | |||||||
September 30, | |||||||
2011 | 2010 | ||||||
Cash Flows from Operating Activities | |||||||
Net income (loss) | $ | (4,973 | ) | $ | 36,574 | ||
Adjustments to reconcile net income (loss) to net cash provided by operating activities: | |||||||
Depreciation and amortization | 145,106 | 147,905 | |||||
Amortization of debt financing costs | 6,673 | 6,149 | |||||
Amortization of discounts on senior secured notes | 2,507 | 484 | |||||
Share-based compensation expense | 7,740 | 8,124 | |||||
Deferred income taxes | (3,074 | ) | 14,814 | ||||
Operating and non-operating income from Borgata | — | (5,013 | ) | ||||
Distributions of earnings received from Borgata | — | 1,910 | |||||
Gain on equity distributions | — | (2,535 | ) | ||||
Noncash asset write-downs | 6,052 | — | |||||
Gain on early retirements of debt | (34 | ) | (3,949 | ) | |||
Other operating activities | 2,575 | 1,983 | |||||
Changes in operating assets and liabilities: | |||||||
Restricted cash | (3,198 | ) | (4,734 | ) | |||
Accounts receivable, net | (4,375 | ) | 1,382 | ||||
Inventories | 1,710 | 439 | |||||
Prepaid expenses and other current assets | (5,997 | ) | (7,250 | ) | |||
Income taxes receivable | 5,264 | 9,961 | |||||
Other assets, net | 430 | 236 | |||||
Accounts payable and accrued liabilities | 28,770 | 30,697 | |||||
Income taxes payable | (3,382 | ) | — | ||||
Other long-term tax liabilities | 2,069 | 1,519 | |||||
Other liabilities | (947 | ) | 2,265 | ||||
Net cash provided by operating activities | 182,916 | 240,961 | |||||
Cash Flows from Investing Activities | |||||||
Capital expenditures | (55,491 | ) | (64,069 | ) | |||
Acquisition of assets | (34,495 | ) | — | ||||
Decrease in restricted investments | 27,184 | — | |||||
Net cash effect upon change in controlling interest of Borgata | — | 26,025 | |||||
Other investing activities | — | (731 | ) | ||||
Net cash used in investing activities | (62,802 | ) | (38,775 | ) | |||
Cash Flows from Financing Activities | |||||||
Payments on retirements of long-term debt | (8,198 | ) | (28,861 | ) | |||
Borrowings under bank credit facility | 109,650 | 525,700 | |||||
Payments under bank credit facility | (111,503 | ) | (714,800 | ) | |||
Borrowings under Borgata bank credit facility | 574,700 | 369,773 | |||||
Payments under Borgata bank credit facility | (620,600 | ) | (954,962 | ) | |||
Proceeds from issuance of Borgata senior secured notes | — | 773,176 | |||||
Debt financing costs, net | (1,283 | ) | — | ||||
Payments under note payable | — | (46,875 | ) | ||||
Payments on obligations of variable interest entity | (27,000 | ) | — | ||||
Distributions to noncontrolling interests in Borgata | — | (120,176 | ) | ||||
Other financing activities | 5,615 | (5,688 | ) | ||||
Net cash used in financing activities | (78,619 | ) | (202,713 | ) | |||
Increase in cash and cash equivalents | 41,495 | (527 | ) | ||||
Cash and cash equivalents, beginning of period | 145,623 | 93,202 | |||||
Cash and cash equivalents, end of period | $ | 187,118 | $ | 92,675 |
Nine Months Ended | |||||||
September 30, | |||||||
2011 | 2010 | ||||||
Supplemental Disclosure of Cash Flow Information | |||||||
Cash paid for interest | $ | 220,971 | $ | 97,366 | |||
Cash paid (received) for income taxes, net | 1,221 | (9,143 | ) | ||||
Supplemental Schedule of Noncash Investing and Financing Activities | |||||||
Payables incurred for capital expenditures | $ | 4,871 | $ | 4,409 | |||
Fair value adjustment on derivative instruments | 11,931 | 11,777 | |||||
Extinguishment of previous Borgata credit facility with advance from new Borgata credit facility | — | 73,010 | |||||
Assets and Liabilities Recorded at Fair Value (net of Cash Received) Due to Change in Controlling Interest of Borgata | |||||||
Accounts receivable, net | $ | — | $ | 29,099 | |||
Inventories | — | 4,118 | |||||
Prepaid expenses and other current assets | — | 9,437 | |||||
Deferred income taxes | — | 1,290 | |||||
Property and equipment, net | — | 1,352,321 | |||||
Investments in and advances to unconsolidated subsidiaries, net | — | 5,135 | |||||
Intangibles | — | — | |||||
Indefinite lived intangibles | — | — | |||||
Other assets, net | — | 34,964 | |||||
Fair value of assets | $ | — | $ | 1,436,364 | |||
Current maturities of long-term debt | $ | — | $ | 632,289 | |||
Accounts payable | — | 6,822 | |||||
Income taxes payable | — | 5,699 | |||||
Accrued liabilities | — | 71,949 | |||||
Deferred income taxes | — | 13,982 | |||||
Other long-term tax liabilities | — | 10,242 | |||||
Other long-term liabilities | — | 16,418 | |||||
Fair value of liabilities | $ | — | $ | 757,401 |
Las Vegas Locals | |
Gold Coast Hotel and Casino | Las Vegas, Nevada |
The Orleans Hotel and Casino | Las Vegas, Nevada |
Sam's Town Hotel and Gambling Hall | Las Vegas, Nevada |
Suncoast Hotel and Casino | Las Vegas, Nevada |
Eldorado Casino | Henderson, Nevada |
Jokers Wild Casino | Henderson, Nevada |
Downtown Las Vegas | |
California Hotel and Casino | Las Vegas, Nevada |
Fremont Hotel and Casino | Las Vegas, Nevada |
Main Street Station Casino, Brewery and Hotel | Las Vegas, Nevada |
Midwest and South | |
Sam's Town Hotel and Gambling Hall | Tunica, Mississippi |
Par-A-Dice Hotel Casino | East Peoria, Illinois |
Blue Chip Casino, Hotel & Spa | Michigan City, Indiana |
Treasure Chest Casino | Kenner, Louisiana |
Delta Downs Racetrack Casino & Hotel | Vinton, Louisiana |
Sam's Town Hotel and Casino | Shreveport, Louisiana |
Atlantic City | |
Borgata Hotel Casino & Spa | Atlantic City, New Jersey |
Building and improvements | 10 through 40 years |
Riverboats and barges | 10 through 40 years |
Furniture and equipment | 3 through 10 years |
Three Months Ended | Nine Months Ended | ||||||||||||||
September 30, | September 30, | ||||||||||||||
2011 | 2010 | 2011 | 2010 | ||||||||||||
(In thousands) | |||||||||||||||
Rooms | $ | 33,989 | $ | 35,775 | $ | 94,811 | $ | 82,387 | |||||||
Food and beverage | 44,464 | 45,477 | 128,028 | 118,191 | |||||||||||
Other | 30,313 | 26,382 | 85,089 | 55,754 | |||||||||||
Total promotional allowances | $ | 108,766 | $ | 107,634 | $ | 307,928 | $ | 256,332 |
Three Months Ended | Nine Months Ended | ||||||||||||||
September 30, | September 30, | ||||||||||||||
2011 | 2010 | 2011 | 2010 | ||||||||||||
(In thousands) | |||||||||||||||
Rooms | $ | 14,192 | $ | 14,287 | $ | 40,309 | $ | 40,483 | |||||||
Food and beverage | 40,591 | 41,852 | 116,828 | 119,915 | |||||||||||
Other | 4,870 | 4,807 | 12,856 | 12,792 | |||||||||||
Total cost of promotional allowances | $ | 59,653 | $ | 60,946 | $ | 169,993 | $ | 173,190 |
Three Months Ended | Nine Months Ended | ||||||||||
September 30, | September 30, | ||||||||||
2011 | 2010 | 2011 | 2010 | ||||||||
(In thousands) | |||||||||||
Earnings per share: | |||||||||||
Basic weighted average shares outstanding | 87,256 | 86,582 | 87,206 | 86,508 | |||||||
Potential dilutive effect | 176 | 102 | — | 216 | |||||||
Diluted weighted average shares outstanding | 87,432 | 86,684 | 87,206 | 86,724 |
December 31, 2010 | |||||||||||
As Originally Reported | Acquisition Method Accounting Adjustments | As Retrospectively Adjusted | |||||||||
(In thousands) | |||||||||||
ASSETS | |||||||||||
Current assets | |||||||||||
Cash and cash equivalents | $ | 145,623 | $ | — | $ | 145,623 | |||||
Restricted cash | 19,494 | — | 19,494 | ||||||||
Accounts receivable, net | 47,942 | — | 47,942 | ||||||||
Inventories | 16,029 | — | 16,029 | ||||||||
Prepaid expenses and other current assets | 37,390 | (237 | ) | 37,153 | |||||||
Income taxes receivable | 5,249 | — | 5,249 | ||||||||
Deferred income taxes | 8,149 | — | 8,149 | ||||||||
Total current assets | 279,876 | (237 | ) | 279,639 | |||||||
Property and equipment, net | 3,471,933 | (88,562 | ) | 3,383,371 | |||||||
Assets held for development | 1,119,403 | — | 1,119,403 | ||||||||
Debt financing costs, net | 38,451 | (3,458 | ) | 34,993 | |||||||
Restricted investments | 48,168 | — | 48,168 | ||||||||
Other assets, net | 70,425 | — | 70,425 | ||||||||
Intangible assets, net | 460,714 | 79,000 | 539,714 | ||||||||
Goodwill, net | 213,576 | — | 213,576 | ||||||||
Total assets | $ | 5,702,546 | $ | (13,257 | ) | $ | 5,689,289 | ||||
LIABILITIES AND STOCKHOLDERS' EQUITY | |||||||||||
Current liabilities | |||||||||||
Current maturities of long-term debt | $ | 25,690 | $ | — | $ | 25,690 | |||||
Non-recourse obligations of variable interest entity | 243,059 | — | 243,059 | ||||||||
Accounts payable | 57,183 | — | 57,183 | ||||||||
Income taxes payable | 6,504 | — | 6,504 |
Accrued liabilities | 279,779 | (1,310 | ) | 278,469 | |||||||
Total current liabilities | 612,215 | (1,310 | ) | 610,905 | |||||||
Long-term debt, net of current maturities | 3,193,065 | — | 3,193,065 | ||||||||
Deferred income taxes | 360,342 | 1,832 | 362,174 | ||||||||
Other long-term tax liabilities | 44,813 | — | 44,813 | ||||||||
Other liabilities | 85,859 | (2,270 | ) | 83,589 | |||||||
Stockholders' equity | |||||||||||
Preferred stock | — | — | — | ||||||||
Common stock | 862 | — | 862 | ||||||||
Additional paid-in-capital | 635,028 | — | 635,028 | ||||||||
Retained earnings | 560,909 | — | 560,909 | ||||||||
Accumulated other comprehensive loss, net | (7,594 | ) | — | (7,594 | ) | ||||||
Total Boyd Gaming Corporation stockholders' equity | 1,189,205 | — | 1,189,205 | ||||||||
Noncontrolling interest | 217,047 | (11,509 | ) | 205,538 | |||||||
Total stockholders' equity | 1,406,252 | (11,509 | ) | 1,394,743 | |||||||
Total liabilities and stockholders' equity | $ | 5,702,546 | $ | (13,257 | ) | $ | 5,689,289 |
Bargain Purchase Gain | |||
(In thousands) | |||
Fair value of controlling equity interest | $ | 397,931 | |
Carrying value of equity investment in Borgata | 397,622 | ||
Bargain purchase gain | $ | 309 |
Nine Months Ended September 30, 2010 | ||||
(In thousands) | ||||
REVENUES | ||||
Operating revenues: | ||||
Gaming | $ | 357,314 | ||
Food and beverage | 82,372 | |||
Room | 64,042 | |||
Other | 24,047 | |||
Gross revenues | 527,775 | |||
Less promotional allowances | 116,420 | |||
Net revenues | 411,355 | |||
COSTS AND EXPENSES | ||||
Operating costs and expenses: | ||||
Gaming | 141,649 | |||
Food and beverage | 39,593 | |||
Room | 8,593 | |||
Other | 19,528 | |||
Selling, general and administrative | 64,473 | |||
Maintenance and utilities | 35,337 | |||
Depreciation and amortization | 36,313 | |||
Write-downs and other items, net | 8 | |||
Total operating costs and expenses | 345,494 | |||
Operating income | 65,861 | |||
Other expense | ||||
Interest expense | 23,347 | |||
Total other expense, net | 23,347 | |||
Income before income taxes | 42,514 | |||
Income taxes | (4,183 | ) | ||
Net income | $ | 38,331 |
Nine Months Ended September 30, 2010 | |||||||||||||||
Boyd Gaming Corp | Borgata | Boyd Gaming Corp | |||||||||||||
As Reported | Stub Period | Adjustments | Pro Forma | ||||||||||||
(In thousands) | |||||||||||||||
Revenues | |||||||||||||||
Gaming | $ | 1,344,283 | $ | 137,831 | $ | — | $ | 1,482,114 | |||||||
Food and beverage | 255,166 | 31,217 | — | 286,383 | |||||||||||
Room | 154,247 | 24,154 | — | 178,401 | |||||||||||
Other | 91,595 | 9,179 | — | 100,774 | |||||||||||
Gross revenues | 1,845,291 | 202,381 | — | 2,047,672 | |||||||||||
Less promotional allowances | 256,332 | 44,091 | — | 300,423 | |||||||||||
Net revenues | 1,588,959 | 158,290 | — | 1,747,249 | |||||||||||
Costs and expenses | |||||||||||||||
Gaming | 635,461 | 59,861 | — | 695,322 | |||||||||||
Food and beverage | 132,481 | 13,500 | — | 145,981 | |||||||||||
Room | 36,767 | 2,185 | — | 38,952 | |||||||||||
Other | 74,333 | 7,127 | — | 81,460 | |||||||||||
Selling, general and administrative | 270,641 | 28,981 | — | 299,622 | |||||||||||
Maintenance and utilities | 104,770 | 13,522 | — | 118,292 | |||||||||||
Depreciation and amortization | 147,905 | 16,754 | — | 164,659 | |||||||||||
Corporate expense | 36,636 | — | — | 36,636 | |||||||||||
Preopening expenses | 4,990 | — | — | 4,990 | |||||||||||
Write-downs and other items, net | 4,932 | 68 | — | 5,000 | |||||||||||
Total costs and expenses | 1,448,916 | 141,998 | — | 1,590,914 | |||||||||||
Operating income from Borgata | 8,146 | — | (8,146 | ) | — | ||||||||||
Operating income | 148,189 | 16,292 | (8,146 | ) | 156,335 | ||||||||||
Other expense (income) | |||||||||||||||
Interest income | (4 | ) | — | — | (4 | ) | |||||||||
Interest expense, net | 109,438 | 5,060 | — | 114,498 | |||||||||||
Other income | (10,000 | ) | — | (10,000 | ) | ||||||||||
Gain on early retirements of debt | (3,949 | ) | — | — | (3,949 | ) | |||||||||
Gain on equity distribution | (2,535 | ) | — | — | (2,535 | ) | |||||||||
Other non-operating expenses from Borgata, net | 3,133 | — | (3,133 | ) | — | ||||||||||
Total other expense, net | 96,083 | 5,060 | (3,133 | ) | 98,010 | ||||||||||
Income (loss) before income taxes | 52,106 | 11,232 | (5,013 | ) | 58,325 | ||||||||||
Income taxes | (15,532 | ) | (1,207 | ) | — | (16,739 | ) | ||||||||
Net income (loss) | 36,574 | 10,025 | (5,013 | ) | 41,586 | ||||||||||
Net loss attributable to noncontrolling interest | (19,166 | ) | — | (5,012 | ) | (24,178 | ) | ||||||||
Net income attributable to Boyd Gaming Corporation | $ | 17,408 | $ | 10,025 | $ | (10,025 | ) | $ | 17,408 |
September 30, 2011 | |||||||||||||||
Boyd Gaming Corporation (as historically presented) | LVE, LLC | Eliminations | Boyd Gaming Corporation (as consolidated) | ||||||||||||
(In thousands) | |||||||||||||||
ASSETS | |||||||||||||||
Current assets | $ | 334,501 | $ | 1,185 | $ | (2,146 | ) | $ | 333,540 | ||||||
Property and equipment, net | 3,296,396 | — | — | 3,296,396 | |||||||||||
Assets held for development | 923,793 | 196,052 | — | 1,119,845 | |||||||||||
Debt financing costs, net | 30,322 | — | — | 30,322 | |||||||||||
Restricted investments | — | 20,984 | — | 20,984 | |||||||||||
Other assets | 72,733 | 4,351 | — | 77,084 | |||||||||||
Intangible assets, net | 547,075 | — | — | 547,075 | |||||||||||
Goodwill, net | 213,576 | — | — | 213,576 | |||||||||||
Total Assets | $ | 5,418,396 | $ | 222,572 | $ | (2,146 | ) | $ | 5,638,822 | ||||||
LIABILITIES | |||||||||||||||
Current maturities of long-term debt | $ | 363,598 | $ | — | $ | — | $ | 363,598 | |||||||
Non-recourse obligations of variable interest entity | — | 221,912 | — | 221,912 | |||||||||||
Accounts payable | 55,192 | 35 | — | 55,227 | |||||||||||
Accrued and other liabilities | 304,579 | 871 | — | 305,450 | |||||||||||
Long-term debt, net of current maturities | 2,802,075 | — | — | 2,802,075 | |||||||||||
Deferred income taxes | 364,295 | — | — | 364,295 | |||||||||||
Other liabilities | 107,096 | 17,423 | (2,146 | ) | 122,373 | ||||||||||
STOCKHOLDERS' EQUITY | |||||||||||||||
Common stock | $ | 863 | $ | — | $ | — | $ | 863 | |||||||
Additional paid-in capital | 642,243 | — | — | 642,243 | |||||||||||
Retained earnings | 557,546 | — | — | 557,546 | |||||||||||
Noncontrolling interest | 220,909 | (17,669 | ) | — | 203,240 | ||||||||||
Total Liabilities and Stockholders' Equity | $ | 5,418,396 | $ | 222,572 | $ | (2,146 | ) | $ | 5,638,822 | ||||||
December 31, 2010 | |||||||||||||||
Boyd Gaming Corporation (as historically presented) | LVE, LLC | Eliminations | Boyd Gaming Corporation (as consolidated) | ||||||||||||
(In thousands) | |||||||||||||||
ASSETS | |||||||||||||||
Current assets | $ | 278,902 | $ | 737 | $ | — | $ | 279,639 | |||||||
Property and equipment, net | 3,383,371 | — | — | 3,383,371 | |||||||||||
Assets held for development | 923,038 | 196,365 | — | 1,119,403 | |||||||||||
Debt financing costs, net | 34,993 | — | — | 34,993 | |||||||||||
Restricted investments | — | 48,168 | — | 48,168 | |||||||||||
Other assets | 65,963 | 4,462 | — | 70,425 | |||||||||||
Intangible assets, net | 539,714 | — | — | 539,714 | |||||||||||
Goodwill, net | 213,576 | — | — | 213,576 | |||||||||||
Total Assets | $ | 5,439,557 | $ | 249,732 | $ | — | $ | 5,689,289 | |||||||
LIABILITIES | |||||||||||||||
Current maturities of long-term debt | $ | 25,690 | $ | — | $ | — | $ | 25,690 | |||||||
Non-recourse obligations of variable interest entity | — | 243,059 | — | 243,059 | |||||||||||
Accounts payable | 56,790 | 393 | — | 57,183 | |||||||||||
Accrued and other liabilities | 277,429 | 1,040 | — | 278,469 | |||||||||||
Long-term debt, net of current maturities | 3,193,065 | — | — | 3,193,065 | |||||||||||
Deferred income taxes | 362,174 | — | — | 362,174 | |||||||||||
Other liabilities | 115,948 | 18,958 | — | 134,906 | |||||||||||
STOCKHOLDERS' EQUITY | |||||||||||||||
Common stock | 862 | — | — | 862 | |||||||||||
Additional paid-in capital | 635,028 | — | — | 635,028 | |||||||||||
Retained earnings | 560,909 | — | — | 560,909 | |||||||||||
Accumulated other comprehensive loss, net | (7,594 | ) | — | — | (7,594 | ) | |||||||||
Noncontrolling interest | 219,256 | (13,718 | ) | — | 205,538 | ||||||||||
Total Liabilities and Stockholders' Equity | $ | 5,439,557 | $ | 249,732 | $ | — | $ | 5,689,289 |
Three Months Ended September 30, 2011 | |||||||||||||||
Boyd Gaming Corporation (as historically presented) | LVE, LLC | Eliminations | Boyd Gaming Corporation (as consolidated) | ||||||||||||
(In thousands) | |||||||||||||||
REVENUES | |||||||||||||||
Other revenue | $ | 34,105 | $ | 2,724 | $ | (2,724 | ) | $ | 34,105 | ||||||
COSTS AND EXPENSES | |||||||||||||||
Maintenance and utilities | $ | 40,906 | $ | 19 | $ | — | $ | 40,925 | |||||||
Preopening expenses | 4,444 | — | (2,724 | ) | 1,720 | ||||||||||
Operating income | $ | 65,459 | $ | 2,705 | $ | — | $ | 68,164 | |||||||
Other expense | |||||||||||||||
Interest expense, net | $ | 55,081 | $ | 5,002 | $ | — | $ | 60,083 | |||||||
Income before income taxes | $ | 11,447 | $ | (2,297 | ) | $ | — | $ | 9,150 | ||||||
Income taxes | (2,170 | ) | — | — | (2,170 | ) | |||||||||
Net income | 9,277 | (2,297 | ) | — | 6,980 | ||||||||||
Net (income) loss attributable to noncontrolling interest | (6,168 | ) | 2,297 | — | (3,871 | ) | |||||||||
Net income attributable to Boyd Gaming Corporation | $ | 3,109 | $ | — | $ | — | $ | 3,109 |
Nine Months Ended September 30, 2011 | |||||||||||||||
Boyd Gaming Corporation (as historically presented) | LVE, LLC | Eliminations | Boyd Gaming Corporation (as consolidated) | ||||||||||||
(In thousands) | |||||||||||||||
REVENUES | |||||||||||||||
Other revenue | $ | 100,412 | $ | 8,134 | $ | (8,134 | ) | $ | 100,412 | ||||||
COSTS AND EXPENSES | |||||||||||||||
Maintenance and utilities | $ | 114,163 | $ | 950 | $ | — | $ | 115,113 | |||||||
Preopening expenses | 13,426 | — | (8,134 | ) | 5,292 | ||||||||||
Operating income | $ | 171,074 | $ | 7,184 | $ | — | $ | 178,258 | |||||||
Other expense | |||||||||||||||
Interest expense, net | $ | 173,632 | $ | 10,436 | $ | — | $ | 184,068 | |||||||
Loss before income taxes | $ | (1,749 | ) | $ | (3,252 | ) | $ | — | $ | (5,001 | ) | ||||
Income tax benefit | 28 | — | — | 28 | |||||||||||
Net loss | (1,721 | ) | (3,252 | ) | — | (4,973 | ) | ||||||||
Net (income) loss attributable to noncontrolling interest | (1,642 | ) | 3,252 | — | 1,610 | ||||||||||
Net loss attributable to Boyd Gaming Corporation | $ | (3,363 | ) | $ | — | $ | — | $ | (3,363 | ) |
September 30, 2011 | |||||
(in thousands) | |||||
Assets acquired: | |||||
Intangible value of Development Agreement | $ | 21,373 | |||
Note receivable from Tribe (at present value) | 3,127 | ||||
Purchase price | $ | 24,500 | |||
September 30, 2011 | December 31, 2010 | ||||||
(In thousands) | |||||||
Land | $ | 579,267 | $ | 576,947 | |||
Buildings and improvements | 3,312,773 | 3,309,506 | |||||
Furniture and equipment | 1,154,962 | 1,131,837 | |||||
Riverboats and barges | 167,549 | 167,420 | |||||
Other | 28,286 | 25,423 | |||||
Total property and equipment | 5,242,837 | 5,211,133 | |||||
Less accumulated depreciation | 1,946,441 | 1,827,762 | |||||
Property and equipment, net | $ | 3,296,396 | $ | 3,383,371 |
September 30, 2011 | December 31, 2010 | ||||||
(In thousands) | |||||||
Echelon Project Infrastructure | |||||||
Land | $ | 213,649 | $ | 213,649 | |||
Construction and development costs | 500,887 | 500,132 | |||||
Project management and other costs | 115,712 | 115,712 | |||||
Professional and design fees | 93,545 | 93,545 | |||||
Central Energy Facility | |||||||
Construction and development costs | 196,052 | 196,365 | |||||
Total assets held for development | $ | 1,119,845 | $ | 1,119,403 |
September 30, 2011 | |||||||||||||||||
Weighted Average Original Life | Gross Carrying Value | Cumulative Amortization | Cumulative Impairment Losses | Intangible Assets, Net | |||||||||||||
(In thousands) | |||||||||||||||||
Amortizing intangibles: | |||||||||||||||||
Customer relationships | 3.9 years | $ | 14,400 | $ | (8,630 | ) | $ | — | $ | 5,770 | |||||||
Favorable lease rates | 43.8 years | 45,370 | (7,564 | ) | — | 37,806 | |||||||||||
Development agreement | 10.0 years | 21,373 | — | — | 21,373 | ||||||||||||
81,143 | (16,194 | ) | — | 64,949 | |||||||||||||
Indefinite lived intangible assets: | |||||||||||||||||
Trademarks | Indefinite | 115,700 | — | (5,000 | ) | 110,700 | |||||||||||
Gaming license rights | Indefinite | 567,886 | (33,960 | ) | (162,500 | ) | 371,426 | ||||||||||
683,586 | (33,960 | ) | (167,500 | ) | 482,126 | ||||||||||||
$ | 764,729 | $ | (50,154 | ) | $ | (167,500 | ) | $ | 547,075 | ||||||||
December 31, 2010 | |||||||||||||||||
Weighted Average Original Life | Gross Carrying Value | Cumulative Amortization | Cumulative Impairment Losses | Intangible Assets, Net | |||||||||||||
(In thousands) | |||||||||||||||||
Amortizing intangibles: | |||||||||||||||||
Customer relationships | 5 years | $ | 14,400 | $ | (400 | ) | $ | — | 14,000 | ||||||||
Favorable lease rates | 43.8 years | 45,370 | (6,782 | ) | — | 38,588 | |||||||||||
59,770 | (7,182 | ) | — | 52,588 | |||||||||||||
Indefinite lived intangible assets: | |||||||||||||||||
Trademarks | Indefinite | 115,700 | — | — | 115,700 | ||||||||||||
Gaming license rights | Indefinite | 567,886 | (33,960 | ) | (162,500 | ) | 371,426 | ||||||||||
683,586 | (33,960 | ) | (162,500 | ) | 487,126 | ||||||||||||
December 31, 2010 | $ | 743,356 | $ | (41,142 | ) | $ | (162,500 | ) | $ | 539,714 |
Customer Relationships | Favorable Lease Rates | Trademarks | Development Agreements | Gaming License Rights | Intangible Assets, Net | |||||||||||||||||||
(In thousands) | ||||||||||||||||||||||||
Nine Months Ended September 30, 2011 | ||||||||||||||||||||||||
Balance December 31, 2010 | $ | 14,000 | $ | 38,588 | $ | 115,700 | $ | — | $ | 371,426 | $ | 539,714 | ||||||||||||
Additions | — | — | — | 21,373 | — | 21,373 | ||||||||||||||||||
Impairments | — | — | (5,000 | ) | — | — | (5,000 | ) | ||||||||||||||||
Amortization | (8,230 | ) | (782 | ) | — | — | — | (9,012 | ) | |||||||||||||||
Balance September 30, 2011 | $ | 5,770 | $ | 37,806 | $ | 110,700 | $ | 21,373 | $ | 371,426 | $ | 547,075 | ||||||||||||
Nine Months Ended September 30, 2010 | ||||||||||||||||||||||||
Balance December 31, 2009 | $ | — | $ | 39,632 | $ | 50,700 | $ | — | $ | 371,426 | $ | 461,758 | ||||||||||||
Additions | 14,000 | — | 65,000 | — | 79,000 | |||||||||||||||||||
Amortization | — | — | (785 | ) | — | — | (785 | ) | ||||||||||||||||
Balance September 30, 2010 | $ | 14,000 | $ | 38,847 | $ | 115,700 | $ | — | $ | 371,426 | $ | 539,973 |
For the Year Ending December 31, | Customer Relationships | Favorable Lease Rates | Development Agreement | Total | |||||||||||
(In thousands) | |||||||||||||||
2011 (remainder) | $ | 1,032 | $ | 261 | — | $ | 1,293 | ||||||||
2012 | 3,174 | 1,043 | — | 4,217 | |||||||||||
2013 | 1,564 | 1,043 | — | 2,607 | |||||||||||
2014 | — | 1,043 | 1,053 | 2,096 | |||||||||||
2015 | — | 1,043 | 2,401 | 3,444 | |||||||||||
Thereafter | — | 33,373 | 17,919 | 51,292 | |||||||||||
$ | 5,770 | $ | 37,806 | 21,373 | $ | 64,949 |
September 30, 2011 | December 31, 2010 | ||||||
(In thousands) | |||||||
Construction and term loan facility | $ | 120,155 | $ | 120,572 | |||
Tax-exempt variable rate bonds | 73,000 | 100,000 | |||||
Notes payable to members of variable interest entity | 28,757 | 22,487 | |||||
$ | 221,912 | $ | 243,059 |
September 30, 2011 | December 31, 2010 | ||||||
(In thousands) | |||||||
Payroll and related expenses | $ | 75,899 | $ | 73,054 | |||
Interest | 48,520 | 51,347 | |||||
Gaming liabilities | 73,025 | 70,908 | |||||
Accrued expenses and other liabilities | 108,006 | 83,160 | |||||
Total accrued liabilities | $ | 305,450 | $ | 278,469 |
September 30, 2011 | |||||||||||||||
Outstanding Principal | Unamortized Discount | Unamortized Origination Fees | Long-Term Debt, Net | ||||||||||||
(In thousands) | |||||||||||||||
Boyd Gaming Long-Term Debt: | |||||||||||||||
Bank credit facility | $ | 1,423,147 | $ | — | $ | — | $ | 1,423,147 | |||||||
9.125% senior notes due 2018 | 500,000 | — | (8,866 | ) | 491,134 | ||||||||||
6.75% senior subordinated notes due 2014 | 215,668 | — | — | 215,668 | |||||||||||
7.125% senior subordinated notes due 2016 | 240,750 | — | — | 240,750 | |||||||||||
Other | 11,248 | — | — | 11,248 | |||||||||||
$ | 2,390,813 | $ | — | $ | (8,866 | ) | $ | 2,381,947 | |||||||
Borgata Debt: | |||||||||||||||
Bank credit facility | 15,000 | — | — | 15,000 | |||||||||||
9.50% senior secured notes due 2015 | 398,000 | (3,449 | ) | (8,099 | ) | 386,452 | |||||||||
9.875% senior secured notes due 2018 | 393,500 | (2,429 | ) | (8,797 | ) | 382,274 | |||||||||
$ | 806,500 | $ | (5,878 | ) | $ | (16,896 | ) | $ | 783,726 | ||||||
Less current maturities | 363,598 | — | — | 363,598 | |||||||||||
Long-term debt, net | $ | 2,833,715 | $ | (5,878 | ) | $ | (25,762 | ) | $ | 2,802,075 |
December 31, 2010 | |||||||||||||||
Outstanding Principal | Unamortized Discount | Unamortized Origination Fees | Long-Term Debt, Net | ||||||||||||
(In thousands) | |||||||||||||||
Boyd Gaming Long-Term Debt: | |||||||||||||||
Bank credit facility | $ | 1,425,000 | $ | — | $ | — | $ | 1,425,000 | |||||||
9.125% senior notes due 2018 | 500,000 | — | (9,794 | ) | 490,206 | ||||||||||
6.75% senior subordinated notes due 2014 | 215,668 | — | — | 215,668 | |||||||||||
7.125% senior subordinated notes due 2016 | 240,750 | — | — | 240,750 | |||||||||||
Other | 11,761 | — | — | 11,761 | |||||||||||
$ | 2,393,179 | $ | — | $ | (9,794 | ) | $ | 2,383,385 | |||||||
Borgata Debt: | |||||||||||||||
Bank credit facility | 60,900 | — | — | 60,900 | |||||||||||
9.50% senior secured notes due 2015 | 400,000 | (3,969 | ) | (9,319 | ) | 386,712 | |||||||||
9.875% senior secured notes due 2018 | 400,000 | (2,648 | ) | (9,594 | ) | 387,758 | |||||||||
$ | 860,900 | $ | (6,617 | ) | $ | (18,913 | ) | $ | 835,370 | ||||||
Less current maturities | 25,690 | — | — | 25,690 | |||||||||||
Long-term debt, net | $ | 3,228,389 | $ | (6,617 | ) | $ | (28,707 | ) | $ | 3,193,065 |
December 31, 2010 | ||||||||||||||
Notional | ||||||||||||||
Effective Date | Amount | Fixed Rate | Liability | Maturity Date | ||||||||||
September 28, 2007 | $ | 100,000 | 5.13 | % | $ | 2,374 | June 30, 2011 | |||||||
September 28, 2007 | 200,000 | 5.14 | % | 4,751 | June 30, 2011 | |||||||||
June 30, 2008 | 200,000 | 5.13 | % | 4,746 | June 30, 2011 | |||||||||
Totals | $ | 500,000 | $ | 11,871 |
Derivatives in a Cash Flow Hedging Relationship - Interest Rate Swap Contracts | Gain Recognized in OCI on Derivative (Effective Portion) | Location of Gain (Loss) Reclassified from AOCI into Income (Ineffective Portion) | Gain (Loss) Reclassified from AOCI into Income (Ineffective Portion) | |||||||
Three Months Ended | ||||||||||
September 30, 2011 | $ | — | Interest expense | $ | — | |||||
September 30, 2010 | — | Interest expense | 5,764 | |||||||
Nine Months Ended | ||||||||||
September 30, 2011 | — | Interest expense | (11,824 | ) | ||||||
September 30, 2010 | — | Interest expense | 16,921 |
Derivatives Not Designated as Hedging Instruments - Interest Rate Swap Contracts | Location of Loss Recognized in Income on Derivative (Ineffective Portion) | Loss Recognized in Income on Derivative (Ineffective Portion) | ||||
Three Months Ended September 30, 2011 | Fair value adjustment of derivative instruments | $ | — | |||
Nine Months Ended September 30, 2011 | Fair value adjustment of derivative instruments | $ | 265 |
Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||||||
2011 | 2010 | 2011 | 2010 | ||||||||||||
(In thousands) | |||||||||||||||
Gaming | $ | 53 | $ | 57 | $ | 157 | $ | 205 | |||||||
Food and beverage | 10 | 10 | 30 | 38 | |||||||||||
Room | 5 | 5 | 14 | 18 | |||||||||||
Selling, general and administrative | 265 | 447 | 796 | 1,292 | |||||||||||
Corporate expense | 1,454 | 1,877 | 6,743 | 6,571 | |||||||||||
Total shared-based compensation expense | $ | 1,787 | $ | 2,396 | $ | 7,740 | $ | 8,124 |
Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||||||
2011 | 2010 | 2011 | 2010 | ||||||||||||
(In thousands) | |||||||||||||||
Fair value adjustment of derivative instruments | $ | — | $ | 3,780 | $ | 11,824 | $ | 10,598 | |||||||
Tax effect | — | (1,348 | ) | (4,230 | ) | (3,756 | ) | ||||||||
Fair value adjustment of derivative instruments, net of tax | $ | — | $ | 2,432 | $ | 7,594 | $ | 6,842 |
Borgata | LVE | Total | |||||||||
(In thousands) | |||||||||||
Nine Months Ended September 30, 2011 | |||||||||||
Beginning balance, January 1, 2011 | $ | 219,256 | $ | (13,718 | ) | $ | 205,538 | ||||
Attributable net loss | 1,642 | (3,252 | ) | (1,610 | ) | ||||||
Comprehensive loss | — | (688 | ) | (688 | ) | ||||||
Ending Balance, September 30, 2011 | $ | 220,898 | $ | (17,658 | ) | $ | 203,240 |
Effective Date | Notional Amount | Fixed Rate | Maturity Date | ||||||
Derivatives Designated as Hedging Instruments: | |||||||||
December 21, 2007 | $ | 131,986 | 4.59 | % | November 1, 2013 | ||||
Derivatives Not Designated as Hedging Instruments: | |||||||||
December 21, 2007 | 100,000 | 3.42 | % | November 1, 2013 | |||||
Totals | $ | 231,986 |
September 30, 2011 | |||||||||||||||
Balance | Level 1 | Level 2 | Level 3 | ||||||||||||
(In thousands) | |||||||||||||||
Assets | |||||||||||||||
Cash and cash equivalents | $ | 187,118 | $ | 187,118 | $ | — | $ | — |
December 31, 2010 | |||||||||||||||
Balance | Level 1 | Level 2 | Level 3 | ||||||||||||
(In thousands) | |||||||||||||||
Assets | |||||||||||||||
Cash and cash equivalents | $ | 145,623 | $ | 145,623 | $ | — | $ | — | |||||||
Liabilities | |||||||||||||||
Derivative instruments | $ | 11,871 | $ | — | $ | 11,871 | $ | — |
September 30, 2011 | |||||||||||||
Outstanding Face Amount | Carrying Value | Estimated Fair Value | Fair Value Hierarchy | ||||||||||
(In thousands) | |||||||||||||
Bank credit facility | $ | 1,423,147 | $ | 1,423,147 | $ | 1,328,998 | Level 2 | ||||||
9.125% Senior Notes due 2018 | 500,000 | 491,134 | 424,585 | Level 1 | |||||||||
6.75% Senior Subordinated Notes due 2014 | 215,668 | 215,668 | 198,173 | Level 1 | |||||||||
7.125% Senior Subordinated Notes due 2016 | 240,750 | 240,750 | 181,526 | Level 1 | |||||||||
Borgata bank credit facility | 15,000 | 15,000 | 15,000 | Level 2 | |||||||||
Borgata 9.50% Senior Secured Notes due 2015 | 398,000 | 386,452 | 364,170 | Level 1 | |||||||||
Borgata 9.875% Senior Secured Notes due 2018 | 393,500 | 382,274 | 348,248 | Level 1 | |||||||||
Other | 11,248 | 11,248 | 10,686 | Level 3 | |||||||||
Total long-term debt, including current maturities | $ | 3,197,313 | $ | 3,165,673 | $ | 2,871,386 |
December 31, 2010 | |||||||||||||
Outstanding Face Amount | Carrying Value | Estimated Fair Value | Fair Value Hierarchy | ||||||||||
(In thousands) | |||||||||||||
Bank credit facility | $ | 1,425,000 | $ | 1,425,000 | $ | 1,346,625 | Level 2 | ||||||
9.125% Senior Notes due 2018 | 500,000 | 490,206 | 487,755 | Level 1 | |||||||||
6.75% Senior Subordinated Notes due 2014 | 215,668 | 215,668 | 212,163 | Level 1 | |||||||||
7.125% Senior Subordinated Notes due 2016 | 240,750 | 240,750 | 217,879 | Level 1 | |||||||||
Borgata bank credit facility | 60,900 | 60,900 | 60,900 | Level 2 | |||||||||
Borgata 9.50% Senior Secured Notes due 2015 | 400,000 | 386,712 | 375,111 | Level 1 | |||||||||
Borgata 9.875% Senior Secured Notes due 2018 | 400,000 | 387,758 | 379,518 | Level 1 | |||||||||
Other | 11,761 | 11,761 | 11,173 | Level 3 | |||||||||
Total long-term debt, including current maturities | $ | 3,254,079 | $ | 3,218,755 | $ | 3,091,124 |
Three Months Ended | Nine Months Ended | ||||||||||||||
September 30, | September 30, | ||||||||||||||
2011 | 2010 | 2011 | 2010 | ||||||||||||
In thousands | |||||||||||||||
Impairment of trademark | $ | — | $ | — | $ | 5,000 | $ | — | |||||||
Measurement period adjustments | — | — | (473 | ) | — | ||||||||||
Asset write-downs | (3 | ) | 262 | 926 | 274 | ||||||||||
Acquisition related expenses | 1,874 | 1,078 | 2,244 | 4,658 | |||||||||||
Tunica flood expenses, net of recoveries | 429 | — | 1,572 | — | |||||||||||
Total write-downs and other items, net | $ | 2,300 | $ | 1,340 | $ | 9,269 | $ | 4,932 |
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California Hotel and Casino | Las Vegas, Nevada |
Fremont Hotel and Casino | Las Vegas, Nevada |
Main Street Station Casino, Brewery and Hotel | Las Vegas, Nevada |
Midwest and South | |
Sam's Town Hotel and Gambling Hall | Tunica, Mississippi |
Par-A-Dice Hotel Casino | East Peoria, Illinois |
Blue Chip Casino, Hotel & Spa | Michigan City, Indiana |
Treasure Chest Casino | Kenner, Louisiana |
Delta Downs Racetrack Casino & Hotel | Vinton, Louisiana |
Sam's Town Hotel and Casino | Shreveport, Louisiana |
Atlantic City | |
Borgata Hotel Casino & Spa | Atlantic City, New Jersey |
Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||||||
2011 | 2010 | 2011 | 2010 | ||||||||||||
(In thousands) | |||||||||||||||
Net Revenues | |||||||||||||||
Las Vegas Locals | $ | 145,915 | $ | 145,593 | $ | 452,270 | $ | 455,243 | |||||||
Downtown Las Vegas | 53,327 | 51,898 | 165,578 | 161,088 | |||||||||||
Midwest and South | 187,906 | 188,695 | 553,787 | 556,221 | |||||||||||
Atlantic City | 202,018 | 207,687 | 553,864 | 411,355 | |||||||||||
Reportable Segment Net Revenues | 589,166 | 593,873 | 1,725,499 | 1,583,907 | |||||||||||
Other | 1,049 | 1,505 | 4,065 | 5,052 | |||||||||||
Net revenues | $ | 590,215 | $ | 595,378 | $ | 1,729,564 | $ | 1,588,959 | |||||||
Reportable Segment Adjusted EBITDA | |||||||||||||||
Las Vegas Locals | $ | 30,793 | $ | 26,116 | $ | 109,006 | $ | 103,339 | |||||||
Downtown Las Vegas | 6,005 | 5,679 | 24,375 | 23,361 | |||||||||||
Midwest and South | 44,524 | 38,407 | 128,011 | 113,276 | |||||||||||
Atlantic City | 50,287 | 54,319 | 120,626 | 102,182 | |||||||||||
Our share of Borgata's operating income | 8,180 | ||||||||||||||
Reportable Segment Adjusted EBITDA | $ | 131,609 | $ | 124,521 | $ | 382,018 | $ | 350,338 | |||||||
Other operating costs and expenses | |||||||||||||||
Depreciation and amortization | $ | 46,034 | $ | 52,451 | $ | 145,106 | $ | 147,905 | |||||||
Corporate expense | 11,025 | 11,021 | 36,569 | 36,636 | |||||||||||
Preopening expenses | 1,720 | 2,684 | 5,292 | 4,990 | |||||||||||
Our share of Borgata's other items and write-downs, net | — | — | — | 34 | |||||||||||
Write-downs and other items, net | 2,300 | 1,340 | 9,269 | 4,932 | |||||||||||
Other | 2,366 | 2,542 | 7,524 | 7,652 | |||||||||||
Total other operating costs and expenses | 63,445 | 70,038 | 203,760 | 202,149 | |||||||||||
Operating income | $ | 68,164 | $ | 54,483 | $ | 178,258 | $ | 148,189 |
Three Months Ended | Nine Months Ended | ||||||||||||||
September 30, | September 30, | ||||||||||||||
2011 | 2010 | 2011 | 2010 | ||||||||||||
In thousands | |||||||||||||||
Operating income from Borgata | $ | — | $ | — | $ | — | $ | 8,146 | |||||||
Our share of Borgata's write-downs and other items, net | — | — | — | 34 | |||||||||||
Our share of Borgata's operating income before net amortization, preopening and other items | $ | — | $ | — | $ | — | $ | 8,180 |
September 30, 2011 | December 31, 2010 | ||||||
(In thousands) | |||||||
Assets | |||||||
Las Vegas Locals | $ | 1,250,101 | $ | 1,284,160 | |||
Downtown Las Vegas | 131,832 | 136,868 | |||||
Midwest and South | 1,088,407 | 1,117,959 | |||||
Atlantic City | 1,421,326 | 1,433,265 | |||||
Total Reportable Segment assets | 3,891,666 | 3,972,252 | |||||
Corporate | 1,488,640 | 1,428,763 | |||||
Other | 258,516 | 288,274 | |||||
Total assets | $ | 5,638,822 | $ | 5,689,289 |
September 30, 2011 | ||||||||||||||||||||||||
Parent | Guarantor Subsidiaries | Non-Guarantor Subsidiaries (100% Owned) | Non-Guarantor Subsidiaries (Not 100% Owned) | Eliminations | Consolidated | |||||||||||||||||||
(In thousands) | ||||||||||||||||||||||||
Assets | ||||||||||||||||||||||||
Cash and cash equivalents | $ | 75,603 | $ | 76,185 | $ | 3,145 | $ | 32,185 | $ | — | $ | 187,118 | ||||||||||||
Other current assets | 15,570 | 67,686 | 16,951 | 46,215 | — | 146,422 | ||||||||||||||||||
Property and equipment, net | 109,909 | 1,882,468 | 72,562 | 1,231,457 | — | 3,296,396 | ||||||||||||||||||
Assets held for development | — | 923,793 | — | 196,052 | — | 1,119,845 | ||||||||||||||||||
Investments in subsidiaries | 3,721,284 | 262,357 | 32 | 4,175 | (3,987,848 | ) | — | |||||||||||||||||
Intercompany receivable | — | 634,230 | — | — | (634,230 | ) | — | |||||||||||||||||
Other assets, net | 78,833 | (21,388 | ) | 2,898 | 68,047 | — | 128,390 | |||||||||||||||||
Intangible assets, net | 21,373 | 459,933 | — | 65,769 | — | 547,075 | ||||||||||||||||||
Goodwill, net | — | 212,794 | 782 | — | — | 213,576 | ||||||||||||||||||
Total assets | $ | 4,022,572 | $ | 4,498,058 | $ | 96,370 | $ | 1,643,900 | $ | (4,622,078 | ) | $ | 5,638,822 | |||||||||||
Liabilities and Stockholders' Equity | ||||||||||||||||||||||||
Current maturities of long-term debt | $ | 362,878 | $ | 720 | $ | — | $ | — | $ | — | — | $ | 363,598 | |||||||||||
Non-recourse obligations | — | — | — | 221,912 | — | 243,059 | 221,912 | |||||||||||||||||
Current liabilities | 51,861 | 182,205 | 14,899 | 114,834 | — | 363,799 | ||||||||||||||||||
Intercompany payable | 378,661 | — | 192,900 | — | (571,561 | ) | — | |||||||||||||||||
Long-term debt, net of current maturities | 2,007,821 | 10,528 | — | 783,726 | — | 2,802,075 | ||||||||||||||||||
Other long-term liabilities | 20,699 | 403,686 | 1,401 | 57,760 | — | 483,546 | ||||||||||||||||||
Preferred stock | — | — | — | — | — | — | ||||||||||||||||||
Common stock | 863 | 31,128 | 32 | — | (31,160 | ) | 863 | |||||||||||||||||
Additional paid-in capital | 642,243 | 2,914,250 | 41,724 | 476,733 | (3,432,707 | ) | 642,243 | |||||||||||||||||
Retained earnings (deficit) | 557,546 | 955,541 | (154,586 | ) | (11,065 | ) | (789,890 | ) | 557,546 | |||||||||||||||
Total Boyd Gaming Corporation stockholders' equity (deficit) | 1,200,652 | 3,900,919 | (112,830 | ) | 465,668 | (4,253,757 | ) | 1,200,652 | ||||||||||||||||
Noncontrolling interest | — | — | — | — | 203,240 | 203,240 | ||||||||||||||||||
Total stockholders' equity (deficit) | 1,200,652 | 3,900,919 | (112,830 | ) | 465,668 | (4,050,517 | ) | 1,403,892 | ||||||||||||||||
Total liabilities and stockholders' equity | $ | 4,022,572 | $ | 4,498,058 | $ | 96,370 | $ | 1,643,900 | $ | (4,622,078 | ) | $ | 5,638,822 |
December 31, 2010 | |||||||||||||||||||||||
Parent | Guarantor Subsidiaries | Non-Guarantor Subsidiaries (100% Owned) | Non-Guarantor Subsidiaries (Not 100% Owned) | Eliminations | Consolidated | ||||||||||||||||||
(In thousands) | |||||||||||||||||||||||
Assets | |||||||||||||||||||||||
Cash and cash equivalents | $ | 11,231 | $ | 88,282 | $ | 3,679 | $ | 42,431 | $ | — | $ | 145,623 | |||||||||||
Other current assets | 10,395 | 61,829 | 15,246 | 46,546 | — | 134,016 | |||||||||||||||||
Property and equipment, net | 111,921 | 1,939,834 | 77,949 | 1,253,667 | — | 3,383,371 | |||||||||||||||||
Assets held for development | — | 923,038 | — | 196,365 | — | 1,119,403 | |||||||||||||||||
Investments in subsidiaries | 3,373,486 | 424,707 | — | 5,185 | (3,803,378 | ) | — | ||||||||||||||||
Intercompany receivable | 50,824 | — | 69,931 | — | (120,755 | ) | — | ||||||||||||||||
Other assets, net | 73,420 | 46,885 | 2,979 | 89,836 | (59,534 | ) | 153,586 | ||||||||||||||||
Intangible assets, net | — | 460,714 | — | 79,000 | — | 539,714 | |||||||||||||||||
Goodwill, net | — | 212,794 | 782 | — | — | 213,576 | |||||||||||||||||
Total assets | $ | 3,631,277 | $ | 4,158,083 | $ | 170,566 | $ | 1,713,030 | $ | (3,983,667 | ) | $ | 5,689,289 | ||||||||||
Liabilities and Stockholders' Equity | |||||||||||||||||||||||
Current maturities of long-term debt | $ | 25,000 | $ | 690 | $ | — | $ | — | $ | — | $ | 25,690 | |||||||||||
Non-recourse obligations | — | — | — | 243,059 | — | 243,059 | |||||||||||||||||
Current liabilities | 39,663 | 175,870 | 17,462 | 109,161 | — | 342,156 | |||||||||||||||||
Intercompany payable | — | 472,794 | 246,144 | — | (718,938 | ) | — | ||||||||||||||||
Long-term debt, net of current maturities | 2,346,623 | 11,072 | — | 835,370 | — | 3,193,065 | |||||||||||||||||
Other long-term liabilities | 30,786 | 399,148 | 1,538 | 59,104 | — | 490,576 | |||||||||||||||||
Preferred stock | — | — | — | — | — | — | |||||||||||||||||
Common stock | 862 | 30,298 | 32 | — | (30,330 | ) | 862 | ||||||||||||||||
Additional paid-in capital | 635,028 | 2,320,477 | 41,724 | 421,472 | (2,783,673 | ) | 635,028 | ||||||||||||||||
Retained earnings (deficit) | 560,909 | 747,734 | (136,334 | ) | 44,864 | (656,264 | ) | 560,909 | |||||||||||||||
Accumulated other comprehensive loss | (7,594 | ) | — | — | — | — | (7,594 | ) | |||||||||||||||
Total Boyd Gaming Corporation stockholders' equity (deficit) | 1,189,205 | 3,098,509 | (94,578 | ) | 466,336 | (3,470,267 | ) | 1,189,205 | |||||||||||||||
Noncontrolling interest | — | — | — | — | 205,538 | 205,538 | |||||||||||||||||
Total stockholders' equity (deficit) | 1,189,205 | 3,098,509 | (94,578 | ) | 466,336 | (3,264,729 | ) | 1,394,743 | |||||||||||||||
Total liabilities and stockholders' equity | $ | 3,631,277 | $ | 4,158,083 | $ | 170,566 | $ | 1,713,030 | $ | (3,983,667 | ) | $ | 5,689,289 |
Three months ended September 30, 2011 | |||||||||||||||||||||||
Parent | Guarantor Subsidiaries | Non-Guarantor Subsidiaries (100% Owned) | Non-Guarantor Subsidiaries (Not 100% Owned) | Eliminations | Consolidated | ||||||||||||||||||
(In thousands) | |||||||||||||||||||||||
Net revenues | $ | 39,028 | $ | 374,328 | $ | 13,869 | $ | 204,742 | $ | (41,752 | ) | $ | 590,215 | ||||||||||
Costs and expenses | |||||||||||||||||||||||
Operating | — | 207,138 | 14,033 | 102,575 | — | 323,746 | |||||||||||||||||
Selling, general and administrative | — | 61,739 | 1,703 | 32,859 | — | 96,301 | |||||||||||||||||
Maintenance and utilities | — | 23,067 | 1,182 | 16,676 | — | 40,925 | |||||||||||||||||
Depreciation and amortization | 2,158 | 27,943 | 770 | 15,163 | — | 46,034 | |||||||||||||||||
Corporate expense | 23,160 | 76,993 | 1,157 | — | (90,285 | ) | 11,025 | ||||||||||||||||
Preopening expenses | 229 | 1,176 | 4,039 | — | (3,724 | ) | 1,720 | ||||||||||||||||
Write-downs and other items, net | 1,875 | 428 | 4 | (7 | ) | — | 2,300 | ||||||||||||||||
Total costs and expenses | 27,422 | 398,484 | 22,888 | 167,266 | (94,009 | ) | 522,051 | ||||||||||||||||
Equity in earnings of subsidiaries | 16,322 | 24,950 | — | — | (41,272 | ) | — | ||||||||||||||||
Operating income | 27,928 | 794 | (9,019 | ) | 37,476 | 10,985 | 68,164 | ||||||||||||||||
Other expense (income) | |||||||||||||||||||||||
Interest expense, net | 33,902 | 170 | — | 25,996 | — | 60,068 | |||||||||||||||||
Other income | (1,000 | ) | — | — | — | — | (1,000 | ) | |||||||||||||||
Gain on early retirement of debt | — | — | — | (54 | ) | — | (54 | ) | |||||||||||||||
Total other expense, net | 32,902 | 170 | — | 25,942 | — | 59,014 | |||||||||||||||||
Income (loss) before income taxes | (4,974 | ) | 624 | (9,019 | ) | 11,534 | 10,985 | 9,150 | |||||||||||||||
Income taxes | 8,083 | (15,244 | ) | 6,458 | (1,467 | ) | — | (2,170 | ) | ||||||||||||||
Net income (loss) | 3,109 | (14,620 | ) | (2,561 | ) | 10,067 | 10,985 | 6,980 | |||||||||||||||
Net loss attributable to controlling interest | — | — | — | — | (3,871 | ) | (3,871 | ) | |||||||||||||||
Net income (loss) attributable to Boyd Gaming Corporation | $ | 3,109 | $ | (14,620 | ) | $ | (2,561 | ) | $ | 10,067 | $ | 7,114 | $ | 3,109 |
Three months ended September 30, 2010 | |||||||||||||||||||||||
Parent | Guarantor Subsidiaries | Non-Guarantor Subsidiaries (100% Owned) | Non-Guarantor Subsidiaries (Not 100% Owned) | Eliminations | Consolidated | ||||||||||||||||||
(In thousands) | |||||||||||||||||||||||
Net revenues | $ | 33,574 | $ | 375,916 | $ | 12,506 | $ | 207,688 | $ | (34,306 | ) | $ | 595,378 | ||||||||||
Costs and expenses | |||||||||||||||||||||||
Operating | — | 211,371 | 13,689 | 104,981 | — | 330,041 | |||||||||||||||||
Selling, general and administrative | — | 67,337 | 2,187 | 31,173 | — | 100,697 | |||||||||||||||||
Maintenance and utilities | — | 24,174 | 1,272 | 17,215 | — | 42,661 | |||||||||||||||||
Depreciation and amortization | 2,914 | 32,893 | 191 | 16,453 | — | 52,451 | |||||||||||||||||
Corporate expense | 12,513 | 72,071 | 2,131 | — | (75,694 | ) | 11,021 | ||||||||||||||||
Preopening expenses | 553 | 4,355 | (2,224 | ) | — | — | 2,684 | ||||||||||||||||
Write-downs and other items, net | 1,078 | 69 | 197 | (4 | ) | — | 1,340 | ||||||||||||||||
Total costs and expenses | 17,058 | 412,270 | 17,443 | 169,818 | (75,694 | ) | 540,895 | ||||||||||||||||
Equity in earnings of subsidiaries | 14,600 | 4,160 | — | — | (18,760 | ) | — | ||||||||||||||||
Operating income | 31,116 | (32,194 | ) | (4,937 | ) | 37,870 | 22,628 | 54,483 | |||||||||||||||
Other expense (income) | |||||||||||||||||||||||
Interest expense, net | 28,326 | (1,635 | ) | 1,815 | 17,275 | — | 45,781 | ||||||||||||||||
Other income | — | (12,535 | ) | — | — | — | (12,535 | ) | |||||||||||||||
Total other expense, net | 28,326 | (14,170 | ) | 1,815 | 17,275 | — | 33,246 | ||||||||||||||||
Income (loss) before income taxes | 2,790 | (18,024 | ) | (6,752 | ) | 20,595 | 22,628 | 21,237 | |||||||||||||||
Income taxes | 2,801 | (11,377 | ) | 4,251 | (2,046 | ) | — | (6,371 | ) | ||||||||||||||
Net income (loss) | 5,591 | (29,401 | ) | (2,501 | ) | 18,549 | 22,628 | 14,866 | |||||||||||||||
Net loss attributable to noncontrolling interest | — | — | — | — | (9,275 | ) | (9,275 | ) | |||||||||||||||
Net income (loss) attributable to Boyd Gaming Corporation | $ | 5,591 | $ | (29,401 | ) | $ | (2,501 | ) | $ | 18,549 | $ | 13,353 | $ | 5,591 |
Nine months ended September 30, 2011 | |||||||||||||||||||||||
Parent | Guarantor Subsidiaries | Non-Guarantor Subsidiaries (100% Owned) | Non-Guarantor Subsidiaries (Not 100% Owned) | Eliminations | Consolidated | ||||||||||||||||||
(In thousands) | |||||||||||||||||||||||
Net revenues | $ | 115,728 | $ | 1,133,248 | $ | 42,452 | $ | 561,998 | $ | (123,862 | ) | $ | 1,729,564 | ||||||||||
Costs and expenses | |||||||||||||||||||||||
Operating | — | 618,299 | 43,086 | 289,700 | — | 951,085 | |||||||||||||||||
Selling, general and administrative | — | 186,489 | 5,978 | 96,405 | — | 288,872 | |||||||||||||||||
Maintenance and utilities | — | 63,551 | 3,119 | 48,443 | — | 115,113 | |||||||||||||||||
Depreciation and amortization | 6,186 | 86,140 | 2,203 | 50,577 | — | 145,106 | |||||||||||||||||
Corporate expense | 71,814 | 78,405 | 2,078 | — | (115,728 | ) | 36,569 | ||||||||||||||||
Preopening expenses | 724 | 12,610 | — | 92 | (8,134 | ) | 5,292 | ||||||||||||||||
Write-downs and other items, net | 2,244 | 1,263 | 4 | 5,758 | — | 9,269 | |||||||||||||||||
Total costs and expenses | 80,968 | 1,046,757 | 56,468 | 490,975 | (123,862 | ) | 1,551,306 | ||||||||||||||||
Equity in earnings of subsidiaries | 46,471 | 19,716 | — | — | (66,187 | ) | — | ||||||||||||||||
Operating income | 81,231 | 106,207 | (14,016 | ) | 71,023 | (66,187 | ) | 178,258 | |||||||||||||||
Other expense (income) | |||||||||||||||||||||||
Interest expense, net | 113,472 | 514 | — | 70,042 | — | 184,028 | |||||||||||||||||
Fair value adjustment of derivative instruments | 265 | — | — | — | — | 265 | |||||||||||||||||
Other income | (1,000 | ) | — | — | — | — | (1,000 | ) | |||||||||||||||
(Gain) loss on early retirements of debt | 20 | — | — | (54 | ) | — | (34 | ) | |||||||||||||||
Total other expense, net | 112,757 | 514 | — | 69,988 | — | 183,259 | |||||||||||||||||
Income (loss) before income taxes | (31,526 | ) | 105,693 | (14,016 | ) | 1,035 | (66,187 | ) | (5,001 | ) | |||||||||||||
Income taxes | 28,163 | (32,064 | ) | 4,904 | (975 | ) | — | 28 | |||||||||||||||
Net income (loss) | (3,363 | ) | 73,629 | (9,112 | ) | 60 | (66,187 | ) | (4,973 | ) | |||||||||||||
Net loss attributable to noncontrolling interest | — | — | — | — | 1,610 | 1,610 | |||||||||||||||||
Net income (loss) attributable to Boyd Gaming Corporation | $ | (3,363 | ) | $ | 73,629 | $ | (9,112 | ) | $ | 60 | $ | (64,577 | ) | $ | (3,363 | ) |
Nine months ended September 30, 2010 | |||||||||||||||||||||||
Parent | Guarantor Subsidiaries | Non-Guarantor Subsidiaries (100% Owned) | Non-Guarantor Subsidiaries (Not 100% Owned) | Eliminations | Consolidated | ||||||||||||||||||
(In thousands) | |||||||||||||||||||||||
Net revenues | $ | 103,400 | $ | 1,131,724 | $ | 46,611 | $ | 411,356 | $ | (104,132 | ) | $ | 1,588,959 | ||||||||||
Costs and expenses | |||||||||||||||||||||||
Operating | — | 627,911 | 41,767 | 209,364 | — | 879,042 | |||||||||||||||||
Selling, general and administrative | — | 199,487 | 6,681 | 64,473 | — | 270,641 | |||||||||||||||||
Maintenance and utilities | — | 66,075 | 3,358 | 35,337 | — | 104,770 | |||||||||||||||||
Depreciation and amortization | 9,330 | 99,704 | 2,557 | 36,314 | — | 147,905 | |||||||||||||||||
Corporate expense | 59,781 | 72,071 | 8,916 | — | (104,132 | ) | 36,636 | ||||||||||||||||
Preopening expenses | 709 | 4,281 | — | — | — | 4,990 | |||||||||||||||||
Write-downs and other items, net | 4,658 | 69 | 197 | 8 | — | 4,932 | |||||||||||||||||
Total costs and expenses | 74,478 | 1,069,598 | 63,476 | 345,496 | (104,132 | ) | 1,448,916 | ||||||||||||||||
Equity in earnings of subsidiaries | 52,297 | 18,325 | — | — | (62,476 | ) | 8,146 | ||||||||||||||||
Operating income | 81,219 | 80,451 | (16,865 | ) | 65,860 | (62,476 | ) | 148,189 | |||||||||||||||
Other expense (income) | |||||||||||||||||||||||
Interest expense, net | 85,539 | (1,267 | ) | 1,815 | 23,347 | — | 109,434 | ||||||||||||||||
Gain on early retirements of debt | (3,949 | ) | — | — | — | — | (3,949 | ) | |||||||||||||||
Other income | — | (12,535 | ) | (12,535 | ) | ||||||||||||||||||
Other non-operating expenses, net | — | 3,133 | — | — | — | 3,133 | |||||||||||||||||
Total other expense, net | 81,590 | (10,669 | ) | 1,815 | 23,347 | — | 96,083 | ||||||||||||||||
Income (loss) before income taxes | (371 | ) | 91,120 | (18,680 | ) | 42,513 | (62,476 | ) | 52,106 | ||||||||||||||
Income taxes | 17,779 | (35,393 | ) | 6,265 | (4,183 | ) | — | (15,532 | ) | ||||||||||||||
Net income (loss) | 17,408 | 55,727 | (12,415 | ) | 38,330 | (62,476 | ) | 36,574 | |||||||||||||||
Noncontrolling interest | — | — | — | — | (19,166 | ) | (19,166 | ) | |||||||||||||||
Net income (loss) attributable to Boyd Gaming Corporation | $ | 17,408 | $ | 55,727 | $ | (12,415 | ) | $ | 38,330 | $ | (81,642 | ) | $ | 17,408 |
Nine months ended September 30, 2011 | |||||||||||||||||||||||
Parent | Guarantor Subsidiaries | Non-Guarantor Subsidiaries (100% Owned) | Non-Guarantor Subsidiaries (Not 100% Owned) | Eliminations | Consolidated | ||||||||||||||||||
(In thousands) | |||||||||||||||||||||||
Cash flows from operating activities | |||||||||||||||||||||||
Net cash from operating activities | $ | 108,892 | $ | 10,671 | $ | (317 | ) | $ | 63,670 | $ | — | $ | 182,916 | ||||||||||
Cash flows from investing activities | |||||||||||||||||||||||
Capital expenditures | (13,441 | ) | (22,768 | ) | (217 | ) | (19,065 | ) | — | (55,491 | ) | ||||||||||||
Acquisitions of assets | (34,495 | ) | — | — | — | — | (34,495 | ) | |||||||||||||||
Decrease in restricted investment | — | — | — | 27,184 | — | 27,184 | |||||||||||||||||
Net cash from investing activities | (47,936 | ) | (22,768 | ) | (217 | ) | 8,119 | — | (62,802 | ) | |||||||||||||
Cash flows from financing activities | |||||||||||||||||||||||
Borrowings under bank credit facility | 109,650 | — | — | 574,700 | — | 684,350 | |||||||||||||||||
Payments under bank credit facility | (111,503 | ) | — | — | (620,600 | ) | — | (732,103 | ) | ||||||||||||||
Payments on long-term debt | — | — | — | (8,198 | ) | — | (8,198 | ) | |||||||||||||||
Debt financing costs, net | — | — | — | (27,000 | ) | — | (27,000 | ) | |||||||||||||||
Other financing activities | 5,269 | — | — | (937 | ) | — | 4,332 | ||||||||||||||||
Net cash from financing activities | 3,416 | — | — | (82,035 | ) | — | (78,619 | ) | |||||||||||||||
Net change in cash and cash equivalents | 64,372 | (12,097 | ) | (534 | ) | (10,246 | ) | — | 41,495 | ||||||||||||||
Cash and cash equivalents, beginning of period | 11,231 | 88,282 | 3,679 | 42,431 | — | 145,623 | |||||||||||||||||
Cash and cash equivalents, end of period | $ | 75,603 | $ | 76,185 | $ | 3,145 | $ | 32,185 | $ | — | $ | 187,118 |
Nine months ended September 30, 2010 | |||||||||||||||||||||||
Parent | Guarantor Subsidiaries | Non-Guarantor Subsidiaries (100% Owned) | Non-Guarantor Subsidiaries (Not 100% Owned) | Eliminations | Consolidated | ||||||||||||||||||
(In thousands) | |||||||||||||||||||||||
Cash flows from operating activities | |||||||||||||||||||||||
Net cash from operating activities | $ | 229,108 | $ | 28,372 | $ | 45,355 | $ | 89,109 | $ | (150,983 | ) | $ | 240,961 | ||||||||||
Cash flows from investing activities | |||||||||||||||||||||||
Capital expenditures | (12,082 | ) | (42,240 | ) | (129 | ) | (9,618 | ) | — | (64,069 | ) | ||||||||||||
Net cash upon change in control of Borgata | — | — | 26,025 | — | 26,025 | ||||||||||||||||||
Other investing activities | 54 | — | — | (785 | ) | — | (731 | ) | |||||||||||||||
Net cash from investing activities | (12,028 | ) | (42,240 | ) | (129 | ) | 15,622 | — | (38,775 | ) | |||||||||||||
Cash flows from financing activities | |||||||||||||||||||||||
Borrowings under bank credit facility | 525,700 | — | — | 369,773 | — | 895,473 | |||||||||||||||||
Payments under bank credit facility | (714,800 | ) | — | — | (954,962 | ) | — | (1,669,762 | ) | ||||||||||||||
Payments under note payable | — | — | (46,875 | ) | — | — | (46,875 | ) | |||||||||||||||
Distributions to noncontrolling interest | — | — | — | (271,159 | ) | 150,983 | (120,176 | ) | |||||||||||||||
Proceeds from stock options exercised | — | — | — | 773,176 | — | 773,176 | |||||||||||||||||
Payments on long-term debt | (28,181 | ) | (680 | ) | — | — | — | (28,861 | ) | ||||||||||||||
Other financing activities | 237 | — | — | (5,925 | ) | — | (5,688 | ) | |||||||||||||||
Net cash from financing activities | (217,044 | ) | (680 | ) | (46,875 | ) | (89,097 | ) | 150,983 | (202,713 | ) | ||||||||||||
Net change in cash and cash equivalents | 36 | (14,548 | ) | (1,649 | ) | 15,634 | — | (527 | ) | ||||||||||||||
Cash and cash equivalents, beginning of period | 363 | 88,071 | 4,768 | — | — | 93,202 | |||||||||||||||||
Cash and cash equivalents, end of period | $ | 399 | $ | 73,523 | $ | 3,119 | $ | 15,634 | $ | — | $ | 92,675 |
Las Vegas Locals | |
Gold Coast Hotel and Casino | Las Vegas, Nevada |
The Orleans Hotel and Casino | Las Vegas, Nevada |
Sam's Town Hotel and Gambling Hall | Las Vegas, Nevada |
Suncoast Hotel and Casino | Las Vegas, Nevada |
Eldorado Casino | Henderson, Nevada |
Jokers Wild Casino | Henderson, Nevada |
Downtown Las Vegas | |
California Hotel and Casino | Las Vegas, Nevada |
Fremont Hotel and Casino | Las Vegas, Nevada |
Main Street Station Casino, Brewery and Hotel | Las Vegas, Nevada |
Midwest and South | |
Sam's Town Hotel and Gambling Hall | Tunica, Mississippi |
Par-A-Dice Hotel Casino | East Peoria, Illinois |
Blue Chip Casino, Hotel & Spa | Michigan City, Indiana |
Treasure Chest Casino | Kenner, Louisiana |
Delta Downs Racetrack Casino & Hotel | Vinton, Louisiana |
Sam's Town Hotel and Casino | Shreveport, Louisiana |
Atlantic City | |
Borgata Hotel Casino & Spa | Atlantic City, New Jersey |
Three Months Ended | Nine Months Ended | ||||||||||||||||||
September 30, | September 30, | ||||||||||||||||||
2011 | 2010 | 2011 | 2010 | 2010 | |||||||||||||||
Actual | Pro Forma | ||||||||||||||||||
(In thousands) | |||||||||||||||||||
Net revenues | $ | 590,215 | $ | 595,378 | $ | 1,729,564 | $ | 1,588,959 | $ | 1,747,249 | |||||||||
Operating Income | 68,164 | 54,483 | 178,258 | 148,189 | 156,335 | ||||||||||||||
Net income (loss) attributable to Boyd Gaming Corporation | 3,109 | 5,591 | (3,363 | ) | 17,408 | 17,408 |
Three Months Ended | Nine Months Ended | ||||||||||||||||||
September 30, | September 30, | ||||||||||||||||||
2011 | 2010 | 2011 | 2010 | 2010 | |||||||||||||||
Actual | Pro Forma | ||||||||||||||||||
(In thousands) | |||||||||||||||||||
REVENUES | |||||||||||||||||||
Gaming | $ | 500,824 | $ | 503,746 | $ | 1,469,316 | $ | 1,344,283 | $ | 1,482,114 | |||||||||
Food and beverage | 99,221 | 101,164 | 285,883 | 255,166 | 286,383 | ||||||||||||||
Room | 64,831 | 64,142 | 181,881 | 154,247 | 178,401 | ||||||||||||||
Other | 34,105 | 33,960 | 100,412 | 91,595 | 100,774 | ||||||||||||||
$ | 698,981 | $ | 703,012 | $ | 2,037,492 | $ | 1,845,291 | $ | 2,047,672 | ||||||||||
COSTS AND EXPENSES | |||||||||||||||||||
Gaming | $ | 230,675 | $ | 237,601 | $ | 680,457 | $ | 635,461 | $ | 695,322 | |||||||||
Food and beverage | 50,868 | 50,690 | 148,516 | 132,481 | 145,981 | ||||||||||||||
Room | 13,586 | 13,661 | 39,921 | 36,767 | 38,952 | ||||||||||||||
Other | 28,617 | 28,089 | 82,191 | 74,333 | 81,460 | ||||||||||||||
$ | 323,746 | $ | 330,041 | $ | 951,085 | $ | 879,042 | $ | 961,715 | ||||||||||
MARGINS | |||||||||||||||||||
Gaming | 53.9 | % | 52.8 | % | 53.7 | % | 52.7 | % | 53.1 | % | |||||||||
Food and beverage | 48.7 | % | 49.9 | % | 48.1 | % | 48.1 | % | 49.0 | % | |||||||||
Room | 79.0 | % | 78.7 | % | 78.1 | % | 76.2 | % | 78.2 | % | |||||||||
Other | 16.1 | % | 17.3 | % | 18.2 | % | 18.9 | % | 19.2 | % |
Three Months Ended | Nine Months Ended | ||||||||||||||
September 30, | September 30, | ||||||||||||||
2011 | 2010 | 2011 | 2010 | ||||||||||||
(In thousands) | |||||||||||||||
Net revenues | |||||||||||||||
Las Vegas Locals | $ | 145,915 | $ | 145,593 | $ | 452,270 | $ | 455,243 | |||||||
Downtown Las Vegas | 53,327 | 51,898 | 165,578 | 161,088 | |||||||||||
Midwest and South | 187,906 | 188,695 | 553,787 | 556,221 | |||||||||||
Atlantic City | 202,018 | 207,687 | 553,864 | 411,355 | |||||||||||
Reportable Segment Net Revenues | 589,166 | 593,873 | 1,725,499 | 1,583,907 | |||||||||||
Other | 1,049 | 1,505 | 4,065 | 5,052 | |||||||||||
Net revenues | $ | 590,215 | $ | 595,378 | $ | 1,729,564 | $ | 1,588,959 | |||||||
Adjusted EBITDA | |||||||||||||||
Las Vegas Locals | $ | 30,793 | $ | 26,116 | $ | 109,006 | $ | 103,339 | |||||||
Downtown Las Vegas | 6,005 | 5,679 | 24,375 | 23,361 | |||||||||||
Midwest and South | 44,524 | 38,407 | 128,011 | 113,276 | |||||||||||
Wholly-owned Adjusted Property EBITDA | 81,322 | 70,202 | 261,392 | 239,976 | |||||||||||
Corporate expense | (9,570 | ) | (9,144 | ) | (29,826 | ) | (30,065 | ) | |||||||
Wholly-owned Adjusted EBITDA | 71,752 | 61,058 | 231,566 | 209,911 | |||||||||||
Atlantic City | 50,287 | 54,319 | 120,626 | 102,182 | |||||||||||
Adjusted EBITDA | $ | 122,039 | $ | 115,377 | $ | 352,192 | $ | 312,093 |
Three Months Ended | Nine Months Ended | ||||||||||||||||
September 30, | September 30, | ||||||||||||||||
2011 | 2010 | 2011 | 2010 | 2010 | |||||||||||||
Actual | Pro Forma | ||||||||||||||||
(In thousands) | |||||||||||||||||
Selling, general and administrative | $ | 96,301 | $ | 100,697 | $ | 288,872 | 270,641 | 299,622 | |||||||||
Maintenance and utilities | 40,925 | 42,661 | 115,113 | 104,770 | 118,292 | ||||||||||||
Depreciation and amortization | 46,034 | 52,451 | 145,106 | 147,905 | 164,659 | ||||||||||||
Corporate expense | 11,025 | 11,021 | 36,569 | 36,636 | 36,636 | ||||||||||||
Preopening expenses | 1,720 | 2,684 | 5,292 | 4,990 | 4,990 | ||||||||||||
Write-downs and other items, net | 2,300 | 1,340 | 9,269 | 4,932 | 5,000 |
Three Months Ended | Nine Months Ended | ||||||||||||||||||
September 30, | September 30, | ||||||||||||||||||
2011 | 2010 | 2011 | 2010 | 2010 | |||||||||||||||
Actual | Pro Forma | ||||||||||||||||||
(In thousands) | |||||||||||||||||||
Interest Expense | |||||||||||||||||||
Boyd Gaming Corporation | $ | 34,086 | $ | 28,506 | $ | 114,026 | $ | 86,091 | $ | 86,081 | |||||||||
Borgata | 20,995 | 17,275 | 59,606 | 23,347 | 28,407 | ||||||||||||||
Variable Interest Entity | 5,002 | — | 10,436 | — | |||||||||||||||
$ | 60,083 | $ | 45,781 | $ | 184,068 | $ | 109,438 | $ | 114,488 | ||||||||||
Average Long-Term Debt Balance | |||||||||||||||||||
Boyd Gaming Corporation | $ | 2,391,826 | $ | 2,460,410 | $ | 2,391,996 | $ | 2,555,253 | $ | 2,555,253 | |||||||||
Borgata | $ | 813,250 | $ | 731,700 | $ | 833,700 | $ | 680,284 | $ | 680,284 | |||||||||
Weighted Average Interest Rates | |||||||||||||||||||
Boyd Gaming Corporation | 5.2 | % | 4.5 | % | 5.2 | % | 4.5 | % | 4.5 | % | |||||||||
Borgata | 9.5 | % | 6.4 | % | 9.6 | % | 4.6 | % | 4.6 | % |
Three Months Ended | Nine Months Ended | ||||||||||||||
September 30, | September 30, | ||||||||||||||
2011 | 2010 | 2011 | 2010 | ||||||||||||
(In thousands) | |||||||||||||||
Net income (loss) attributable to Boyd Gaming Corporation | $ | 3,109 | $ | 5,591 | $ | (3,363 | ) | $ | 17,408 | ||||||
Adjustments related to Boyd Gaming: | |||||||||||||||
Preopening expenses, excluding impact of LVE | 4,444 | 2,684 | 13,334 | 4,990 | |||||||||||
Adjustments to property tax accruals, net | (3,926 | ) | — | (7,464 | ) | — | |||||||||
Write-downs and other items, net | 2,280 | 1,344 | 3,484 | 4,924 | |||||||||||
Change in fair value of derivative instruments | — | — | 265 | — | |||||||||||
(Gain) loss on early retirements of debt, net | — | — | 20 | (3,949 | ) | ||||||||||
Other income | (1,000 | ) | (10,000 | ) | (1,000 | ) | (10,000 | ) | |||||||
Gain on equity distribution | — | (2,535 | ) | — | (2,535 | ) | |||||||||
Adjustments related to Borgata: | |||||||||||||||
Preopening expenses | — | — | 92 | — | |||||||||||
Write-downs and other items, net | 20 | (4 | ) | 5,785 | 8 | ||||||||||
Accelerated amortization on deferred loan fees | — | 2,012 | — | 2,012 | |||||||||||
Valuation adjustments related to consolidation, net | 649 | — | 322 | — | |||||||||||
Gain on early retirements of debt, net | (54 | ) | — | (54 | ) | — | |||||||||
Our share of Borgata's write-downs and other items, net | — | — | — | 34 | |||||||||||
Total adjustments | 2,413 | (6,499 | ) | 14,784 | (4,516 | ) | |||||||||
Income tax effect for above adjustments | (587 | ) | 3,322 | (4,332 | ) | 2,620 | |||||||||
Impact on noncontrolling interest | (308 | ) | (1,004 | ) | (3,073 | ) | (1,010 | ) | |||||||
Adjusted earnings (loss) | $ | 4,627 | $ | 1,410 | $ | 4,016 | $ | 14,502 |
Three Months Ended | Nine Months Ended | ||||||||||||||
September 30, | September 30, | ||||||||||||||
2011 | 2010 | 2011 | 2010 | ||||||||||||
Basic net income (loss) per common share | $ | 0.04 | $ | 0.06 | $ | (0.04 | ) | $ | 0.20 | ||||||
Adjustments related to Boyd Gaming: | |||||||||||||||
Preopening expenses, excluding impact of LVE | 0.05 | 0.03 | 0.15 | 0.06 | |||||||||||
Adjustments to property tax accruals, net | (0.05 | ) | — | (0.09 | ) | — | |||||||||
Write-downs and other items, net | 0.02 | 0.03 | 0.04 | 0.07 | |||||||||||
Change in fair value of derivative instruments | — | — | — | — | |||||||||||
(Gain) loss on early retirements of debt, net | — | — | — | (0.05 | ) | ||||||||||
Other income | (0.01 | ) | (0.12 | ) | (0.01 | ) | (0.12 | ) | |||||||
Gain on equity distribution | — | (0.03 | ) | — | (0.03 | ) | |||||||||
Adjustments related to Borgata: | |||||||||||||||
Preopening expenses | — | — | — | — | |||||||||||
Write-downs and other items, net | — | — | — | — | |||||||||||
Accelerated amortization on deferred loan fees | — | 0.02 | 0.08 | 0.02 | |||||||||||
Valuation adjustments related to consolidation, net | 0.01 | — | — | — | |||||||||||
Gain on early retirements of debt, net | — | — | — | — | |||||||||||
Our share of Borgata's write-downs and other items, net | — | — | — | — | |||||||||||
Total adjustments | $ | 0.02 | $ | (0.07 | ) | $ | 0.17 | $ | (0.05 | ) | |||||
Income tax effect for above adjustments | (0.01 | ) | 0.04 | (0.05 | ) | 0.03 | |||||||||
Impact on noncontrolling interest | — | (0.01 | ) | (0.03 | ) | (0.01 | ) | ||||||||
Adjusted earnings (loss) per share | $ | 0.05 | $ | 0.02 | $ | 0.05 | $ | 0.17 |
Nine Months Ended | |||||||
September 30, | |||||||
2011 | 2010 | ||||||
(In thousands) | |||||||
Net cash provided by operating activities | $ | 182,916 | $ | 240,961 | |||
Cash flows from investing activities: | |||||||
Capital expenditures | (55,491 | ) | (64,069 | ) | |||
Acquisition of assets | (34,495 | ) | — | ||||
Decrease in restricted investments | 27,184 | — | |||||
Net cash effect upon change in controlling interest of Borgata | — | 26,025 | |||||
Other investing activities | — | (731 | ) | ||||
Net cash used in investing activities | (62,802 | ) | (38,775 | ) | |||
Cash flows from financing activities: | |||||||
Net payments under bank credit facility | (1,853 | ) | (189,100 | ) | |||
Net payments under Borgata bank credit facility | (45,900 | ) | (585,189 | ) | |||
Proceeds from issuance of Borgata senior secured notes | — | 773,176 | |||||
Payments on retirements of long-term debt | (8,198 | ) | (28,861 | ) | |||
Deferred financing costs related to issuance of Borgata senior secured notes | (1,283 | ) | — | ||||
Payments on variable interest entity non-recourse obligations | (27,000 | ) | — | ||||
Payments under note payable | — | (46,875 | ) | ||||
Noncontrolling interest distributions by Borgata | — | (120,176 | ) | ||||
Other financing activities | 5,615 | (5,688 | ) | ||||
Net cash used in financing activities | (78,619 | ) | (202,713 | ) | |||
Increase (decrease) in cash and cash equivalents | $ | 41,495 | $ | (527 | ) |
• | the outcome of gaming license selection processes; |
• | the approval of gaming in jurisdictions where we have been active but where casino gaming is not currently permitted; |
• | identification of additional suitable investment opportunities in current gaming jurisdictions; and |
• | availability of acceptable financing. |
• | the factors that contribute to our ongoing success and our ability to be successful in the future; |
• | our business model, areas of focus and strategy for realizing improved results; |
• | competition, including expansion of gaming into additional markets, the impact of competition on our operations, our ability to respond to such competition, and our expectations regarding continued competition in the markets in which we compete; |
• | expenses; |
• | our commitment to having a significant presence on the Las Vegas Strip; |
• | indebtedness, including Boyd Gaming's and Borgata's ability to refinance or pay amounts outstanding under our respective bank credit facilities and notes when they become due and our compliance with related covenants, and our expectation that we and Borgata will need to refinance all or a portion of our respective indebtedness at maturity; |
• | our expectations with respect to Borgata, including our responsibility and control over day-to-day operations and the managerial resources we expect to devote to effectuate the sale of the MGM Interest; |
• | our expectation regarding the trends that will affect the gaming industry over the next few years and the impact of these trends on merger and acquisition activity in general; |
• | our belief that consumer confidence will strengthen as the job market recovers and expands; |
• | our expectations with respect to the valuation of Borgata's tangible and intangible assets; |
• | the type of covenants that will be included in any future debt instruments; |
• | our expectations with respect to continued disruptions in the global capital markets, the effect of this on consumer confidence and reduced levels of consumer spending and the impact of these trends on our financial results; |
• | our ability to meet our projected operating and maintenance capital expenditures and the costs associated with our expansion, renovations and development of new projects; |
• | our ability to pay dividends or to pay any specific rate of dividends, and our expectations with respect to the receipt of dividends from Borgata; |
• | our commitment to finding opportunities to strengthen our balance sheet and to operate more efficiently; |
• | our intention to pursue acquisition opportunities and our ability to obtain financing for and successfully take advantage of such opportunities; |
• | our intention to fund purchases made under our share repurchase program, if any, with existing cash resources and availability under our bank credit facility; |
• | our expectations regarding the closing of the sale of the Assets and Liabilities related to the Dania Jai-Alai Business in the fourth quarter of 2011; |
• | our expenditures for capital improvement projects with respect to IP Casino Resort and Spa; |
• | Adjusted EBITDA, Adjusted Earnings (Loss) and Adjusted Earnings Per Share and their usefulness as measures of operating performance or valuation; |
• | the impact of new accounting pronouncements on our consolidated financial statements; |
• | that our Amended Credit Facility and Borgata's credit facility and our respective cash flows from operating activities will be sufficient to meet our respective projected operating and maintenance capital expenditures for the next twelve months; |
• | our ability to fund any expansion projects using cash flows from operations and availability under the Amended Credit Facility; |
• | our ability to satisfy the representations, warranties and covenants in the Lender Joinder Agreement, receive funding and make repayments under the Increased Term Loan; |
• | our market risk exposure and efforts to minimize risk; |
• | the timing of the delay of construction at Echelon, when, or if, construction will recommence, the effect that such delay will have on our business, operations or financial condition, our expectations as to the costs associated with delays related to the project as well as the value of capitalized costs and recurring project costs we expect to incur in the future, and our belief that financing for a development project like Echelon continues to be unavailable; |
• | expansion, development, investment and renovation plans, including the scope of such plans, expected costs, financing (including sources thereof and our expectation that long-term debt will substantially increase in connection with such projects), timing and the ability to achieve market acceptance; |
• | our belief that, except for the Copeland matter discussed herein, all pending claims, if adversely decided, will not have a material adverse effect on our business, financial position, or results of operations; |
• | that margin improvements will remain a driver of profit growth for the Company going-forward; |
• | our belief that the risks to our business associated with the United States Coast Guard, ("USCG") inspection should not change by reason of inspection by American Bureau of Shipping Consulting, ("ABSC"); |
• | development opportunities in existing or new jurisdictions and our ability to successfully take advantage of such opportunities; |
• | regulations, including anticipated taxes, tax credits or tax refunds expected, and the ability to receive and maintain necessary approvals for our projects; |
• | our expectation that Congress legalizes online gaming in the U.S.; |
• | our asset impairment analyses and our intangible asset and goodwill impairment tests; |
• | the resolution of our pending litigation, including the litigation involving Treasure Chest casino; |
• | our relationship with LVE including, without limitation, our mutual agreement to not initiate litigation, the monthly periodic fee and our option to purchase LVE's assets; |
• | the likelihood of interruptions to our rights in the land we lease under long term leases for certain of our hotels and casinos; |
• | the outcome of various tax audits and assessments, including our appeals thereof, timing of resolution of such audits, our estimates as to the amount of taxes that will ultimately be owed and the impact of these audits on our consolidated financial statements; |
• | our overall outlook, including all statements under the heading Overall Outlook in Part I. Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations; |
• | our ability to receive insurance reimbursement and our estimates of self-insurance accruals and future liability; |
• | that operating results for previous periods are not necessarily indicative of future performance; |
• | that estimates and assumptions made in the preparation of financial statements in conformity with U.S. GAAP may differ from actual results; |
• | our estimates as to the effect of any changes in our Consolidated EBITDA on our ability to remain in compliance with certain Amended Credit Facility covenants; and |
• | expectations, plans, beliefs, hopes or intentions regarding the future. |
• | The economic downturn and its effect on consumer spending. |
• | The fact that our expansion, development and renovation projects (including enhancements to improve property performance) are subject to many risks inherent in expansion, development or construction of a new or existing project, including: |
• | design, construction, regulatory, environmental and operating problems and lack of demand for our projects; |
• | delays and significant cost increases, shortages of materials, shortages of skilled labor or work stoppages; |
• | poor performance or nonperformance of any of our partners or other third parties upon whom we are relying in connection with any of our projects; |
• | construction scheduling, engineering, environmental, permitting, construction or geological problems, weather interference, floods, fires or other casualty losses; |
• | failure by us, our partners, or Borgata to obtain financing on acceptable terms, or at all; and |
• | failure to obtain necessary government or other approvals on time, or at all. |
• | The risk that our ongoing suspension of construction at Echelon may result in adverse affects on our business, results of operations or financial condition, including with respect to our joint venture participants and other resulting liabilities; |
• | The risk that USCG may not continue to allow in-place underwater inspections of our riverboats; |
• | The risk that any of our projects may not be completed, if at all, on time or within established budgets, or that any project will result in increased earnings to us; |
• | The risk that significant delays, cost overruns, or failures of any of our projects to achieve market acceptance could have a material adverse effect on our business, financial condition and results of operations; |
• | The risk that our projects may not help us compete with new or increased competition in our markets; |
• | The risk that new gaming licenses or jurisdictions become available (or offer different gaming regulations or taxes) that results in increased competition to us; |
• | The risk associated with owning real property, including environmental regulation and uncertainties with respect to environmental expenditures and liabilities; |
• | The risk associated with challenges to legalized gaming in existing or current markets; |
• | The risk that the actual fair value for assets acquired and liabilities assumed from any of our acquisitions differ materially from our preliminary estimates; |
• | The risk that negative industry or economic trends, including the market price of our common stock trading below its book value, reduced estimates of future cash flows, disruptions to our business, slower growth rates or lack of growth in our business, may result in significant write-downs or impairments in future periods; |
• | The risks associated with growth and acquisitions, including our ability to identify, acquire, develop or profitably manage additional companies or operations or successfully integrate such companies or operations into our existing operations without substantial costs, delays or other problems; |
• | The risk that we may not receive gaming or other necessary licenses for new projects or that regulatory authorities may revoke, suspend, condition or limit our gaming or other licenses, impose substantial fines and take other adverse actions against any of our casino operations; |
• | Our inability to select the new joint venture partner for Borgata and the possibility that a new operating agreement will be entered into with the new venture partner, which could result in changes to Borgata's ongoing operations; |
• | The risk that we may be unable to finance our expansion, development, investment and renovation projects, including cost overruns on any particular project, as well as other capital expenditures through cash flow, borrowings under our Amended Credit Facility or Borgata's bank credit facility and additional financings, which could jeopardize our expansion, development, investment and renovation efforts; |
• | The risk that we or Borgata may be unable to refinance our respective outstanding indebtedness as it comes due, or that if we or Borgata do refinance, the terms are not favorable to us or them; |
• | Risks associated with our ability to comply with the Total Leverage, Secured Leverage and Interest Coverage ratios in our Amended Credit Facility, and the risks associated with Borgata's ability to comply with the minimum consolidated EBITDA and minimum liquidity covenants; |
• | The risk that we ultimately may not be successful in dismissing the action filed against Treasure Chest and may lose our ability to operate that property, which result could adversely affect our business, financial condition and results of operations; |
• | The effects of the extensive governmental gaming regulation and taxation policies that we are subject to, as well as any changes in laws and regulations, including increased taxes, which could harm our business; |
• | The effects of extreme weather conditions or natural disasters on our facilities and the geographic areas from which we draw our customers, and our ability to recover insurance proceeds (if any); |
• | The risks relating to mechanical failure and regulatory compliance at any of our facilities; |
• | The risk that the instability in the financial condition of our lenders could have a negative impact on our Amended Credit Facility and Borgata's bank credit facility; |
• | The effects of events adversely impacting the economy or the regions from which we draw a significant percentage of our customers, including the effects of the current economic recession, war, terrorist or similar activity or disasters in, at, or around our properties; |
• | The effects of energy price increases on our cost of operations and our revenues; |
• | Financial community and rating agency perceptions of our Company, and the effect of economic, credit and capital market conditions on the economy and the gaming and hotel industry; |
• | The effect of the expansion of legalized gaming in the mid-Atlantic region; and |
• | Borgata's expected liabilities under the multiemployer pensions in which it operates. |
Item 1. | Legal Proceedings |
Item 1A. | Risk Factors |
• | delays and significant cost increases; |
• | shortages of materials; |
• | shortages of skilled labor or work stoppages; |
• | poor performance or nonperformance by any of our joint venture partners or other third parties on whom we place reliance; |
• | unforeseen construction scheduling, engineering, environmental, permitting, construction or geological problems; and |
• | weather interference, floods, fires or other casualty losses. |
• | difficulty in satisfying our obligations under our current indebtedness; |
• | increasing our vulnerability to general adverse economic and industry conditions; |
• | requiring us to dedicate a substantial portion of our cash flows from operations to payments on our indebtedness, |
• | limiting our flexibility in planning for, or reacting to, changes in our business and the industry in which we operate; |
• | placing us at a disadvantage compared to our competitors that have less debt; and |
• | limiting, along with the financial and other restrictive covenants in our indebtedness, among other things, our ability to borrow additional funds. |
• | incur additional debt, including providing guarantees or credit support; |
• | incur liens securing indebtedness or other obligations; |
• | dispose of assets; |
• | make certain acquisitions; |
• | pay dividends or make distributions and make other restricted payments; |
• | enter into sale and leaseback transactions; |
• | engage in any new businesses; and |
• | enter into transactions with our stockholders and our affiliates. |
• | require the maintenance of a minimum consolidated interest coverage ratio; |
• | establish a maximum permitted consolidated total leverage ratio; |
• | establish a maximum permitted secured leverage ratio; |
• | impose limitations on the incurrence of indebtedness; |
• | impose limitations on transfers, sales and other dispositions; and |
• | impose restrictions on investments, dividends and certain other payments. |
• | incur additional debt; |
• | pay dividends and make other distributions; |
• | create liens; |
• | enter into transactions with affiliates; |
• | merge or consolidate; and |
• | engage in unrelated business activities. |
• | actual or anticipated fluctuations in our results of operations; |
• | announcements of significant acquisitions or other agreements by us or by our competitors; |
• | our sale of common stock or other securities in the future; |
• | trading volume of our common stock; |
• | conditions and trends in the gaming and destination entertainment industries; |
• | changes in the estimation of the future size and growth of our markets; and |
• | general economic conditions, including, without limitation, changes in the cost of fuel and air travel. |
Item 6. | Exhibits |
31.1 | Certification of the Chief Executive Officer of the Registrant pursuant to Exchange Act rule 13a-14(a). | ||
31.2 | Certification of the Chief Financial Officer of the Registrant pursuant to Exchange Act rule 13a-14(a). | ||
32.1 | Certification of the Chief Executive Officer of the Registrant pursuant to Exchange Act Rule 13a-14(b) and 18 U.S.C. § 1350. | ||
32.2 | Certification of the Chief Financial Officer of the Registrant pursuant to Exchange Act Rule 13a-14(b) and 18 U.S.C. § 1350. | ||
101 | The following materials from Boyd Gaming Corporation's Quarterly Report on Form 10-Q for the quarter ended September 30, 2011, formatted in XBRL (eXtensible Business Reporting Language): (i) Condensed Consolidated Balance Sheets as of September 30, 2011 and December 31, 2010, (ii) Condensed Consolidated Statements of Operations for the three and nine months ended September 30, 2011 and 2010, (iii) Condensed Consolidated Statement of Changes in Stockholders' Equity for the nine months ended September 30, 2011, (iv) Condensed Consolidated Statements of Cash Flows for the nine months ended September 30, 2011 and 2010, and (vi) Notes to Condensed Consolidated Financial Statements.* |
BOYD GAMING CORPORATION | ||
By: | /S/ ELLIE J. BOWDISH | |
Ellie J. Bowdish | ||
Vice President and Chief Accounting Officer (Principal Accounting Officer) |
10.2 | Agreement for Purchase and Sale, dated June 15, 2011, among the Company, Imperial Palace of Mississippi, LLC and Key Largo Holdings, LLC. | ||
31.1 | Certification of the Chief Executive Officer of the Registrant pursuant to Exchange Act rule 13a-14(a). | ||
31.2 | Certification of the Chief Financial Officer of the Registrant pursuant to Exchange Act rule 13a-14(a). | ||
32.1 | Certification of the Chief Executive Officer of the Registrant pursuant to Exchange Act Rule 13a-14(b) and 18 U.S.C. § 1350. | ||
32.2 | Certification of the Chief Financial Officer of the Registrant pursuant to Exchange Act Rule 13a-14(b) and 18 U.S.C. § 1350. | ||
101 | The following materials from Boyd Gaming Corporation's Quarterly Report on Form 10-Q for the quarter ended September 30, 2011, formatted in XBRL (eXtensible Business Reporting Language): (i) Condensed Consolidated Balance Sheets as of September 30, 2011 and December 31, 2010, (ii) Condensed Consolidated Statements of Operations for the three and nine months ended September 30, 2011 and 2010, (iii) Condensed Consolidated Statement of Changes in Stockholders' Equity for the nine months ended September 30, 2011, (iv) Condensed Consolidated Statements of Cash Flows for the nine months ended September 30, 2011 and 2010, and (vi) Notes to Condensed Consolidated Financial Statements. |
2. | Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; |
3. | Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; |
4. | The registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have: |
a. | designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; |
b. | designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; |
c. | evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and |
d. | disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting. |
5. | The registrant's other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions): |
a. | all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and |
Dated: November 9, 2011 | By: | /s/ Keith E. Smith |
Keith E. Smith | ||
President and Chief Executive Officer |
2. | Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; |
3. | Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; |
4. | The registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have: |
a. | designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; |
b. | designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; |
c. | evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and |
d. | disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting. |
5. | The registrant's other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions): |
a. | all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and |
Dated: November 9, 2011 | By: | /s/ Josh Hirsberg |
Josh Hirsberg | ||
Senior Vice President and Chief Financial Officer and Treasurer |
Dated: November 9, 2011 | By: | /s/ Keith E. Smith |
Keith E. Smith | ||
President and Chief Executive Officer |
Dated: November 9, 2011 | By: | /s/ Josh Hirsberg |
Josh Hirsberg | ||
Senior Vice President and Chief Financial Officer and Treasurer |
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Condensed Consolidated Balance Sheets (Parentheticals) (USD $) | Sep. 30, 2011 | Dec. 31, 2010 |
---|---|---|
Stockholders' Equity: | ||
Common stock, par value | $ 0.01 | $ 0.01 |
Common stock, shares authorized | 200,000,000 | 200,000,000 |
Common stock, shares issued | 86,290,986 | 86,244,978 |
Common stock, shares outstanding | 86,290,986 | 86,244,978 |
Preferred stock, par value | $ 0.01 | $ 0.01 |
Preferred stock, shares authorized | 5,000,000 | 5,000,000 |
Condensed Consolidated Statements of Operations (USD $) In Thousands, except Per Share data | 3 Months Ended | 9 Months Ended | ||
---|---|---|---|---|
Sep. 30, 2011 | Sep. 30, 2010 | Sep. 30, 2011 | Sep. 30, 2010 | |
Operating revenues: | ||||
Gaming | $ 500,824 | $ 503,746 | $ 1,469,316 | $ 1,344,283 |
Food and beverage | 99,221 | 101,164 | 285,883 | 255,166 |
Room | 64,831 | 64,142 | 181,881 | 154,247 |
Other | 34,105 | 33,960 | 100,412 | 91,595 |
Gross revenues | 698,981 | 703,012 | 2,037,492 | 1,845,291 |
Less promotional allowances | 108,766 | 107,634 | 307,928 | 256,332 |
Net revenues | 590,215 | 595,378 | 1,729,564 | 1,588,959 |
Operating costs and expenses: | ||||
Gaming | 230,675 | 237,601 | 680,457 | 635,461 |
Food and beverage | 50,868 | 50,690 | 148,516 | 132,481 |
Room | 13,586 | 13,661 | 39,921 | 36,767 |
Other | 28,617 | 28,089 | 82,191 | 74,333 |
Selling, general and administrative | 96,301 | 100,697 | 288,872 | 270,641 |
Maintenance and utilities | 40,925 | 42,661 | 115,113 | 104,770 |
Depreciation and amortization | 46,034 | 52,451 | 145,106 | 147,905 |
Corporate expense | 11,025 | 11,021 | 36,569 | 36,636 |
Preopening expenses | 1,720 | 2,684 | 5,292 | 4,990 |
Write-downs and other items, net | 2,300 | 1,340 | 9,269 | 4,932 |
Total operating costs and expenses | 522,051 | 540,895 | 1,551,306 | 1,448,916 |
Operating income from Borgata | 0 | 0 | 0 | 8,146 |
Operating income | 68,164 | 54,483 | 178,258 | 148,189 |
Other expense (income): | ||||
Interest income | (15) | 0 | (40) | (4) |
Interest expense | 60,083 | 45,781 | 184,068 | 109,438 |
Fair value adjustment of derivative instruments | 0 | 0 | 265 | 0 |
Gain on early retirements of debt | (54) | 0 | (34) | (3,949) |
Gain on distribution from Borgata | 0 | (2,535) | 0 | (2,535) |
Other income | (1,000) | (10,000) | (1,000) | (10,000) |
Other non-operating expenses from Borgata, net | 0 | 0 | 0 | 3,133 |
Total other expense, net | 59,014 | 33,246 | 183,259 | 96,083 |
Income (loss) before income taxes | 9,150 | 21,237 | (5,001) | 52,106 |
Income tax (expense) benefit | (2,170) | (6,371) | 28 | (15,532) |
Net income (loss) | 6,980 | 14,866 | (4,973) | 36,574 |
Net (income) loss attributable to noncontrolling interest | (3,871) | (9,275) | 1,610 | (19,166) |
Net income (loss) attributable to Boyd Gaming Corporation | $ 3,109 | $ 5,591 | $ (3,363) | $ 17,408 |
Basic net income (loss) per common share: | $ 0.04 | $ 0.06 | $ (0.04) | $ 0.2 |
Weighted average basic shares outstanding | 87,256 | 86,582 | 87,206 | 86,508 |
Diluted net income (loss) per common share: | $ 0.04 | $ 0.06 | $ (0.04) | $ 0.2 |
Weighted average diluted shares outstanding | 87,432 | 86,684 | 87,206 | 86,724 |
Write-downs and Other Items, Net | 9 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Sep. 30, 2011 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Write Downs and Other Items Net [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Asset Impairment and Other Charges Net [Text Block] | WRITE-DOWNS AND OTHER ITEMS, NET Write-downs and other items, net are comprised of the following:
Impairment of Trademark As discussed in Note 5, Intangible Assets, during the nine months ended September 30, 2011, we recorded a $5.0 million impairment to the trademark, based upon the performance of an interim impairment test in connection with the valuation of Borgata. Measurement Period Adjustments In connection with the valuation procedures we performed on Borgata, we recorded measurement adjustments of $0.5 million during the nine months ended September 30, 2011, which were primarily comprised of a $0.3 million bargain purchase gain. Asset Write-Downs During the three months ended September 30, 2010, we recognized a loss of $0.3 million in connection with the disposal of certain property and equipment in the ordinary course of business. During the nine months ended September 30, 2011 and 2010, we recognized losses of $0.9 million and $0.3 million, respectively, in connection with the disposal of certain property and equipment in the ordinary course of business. Acquisition Related Expenses During the three months ended September 30, 2011 and 2010, we recorded $1.9 million and $1.1 million of expenses related to evaluating various acquisition possibilities and other business development activities. During the nine months ended September 30, 2011 and 2010, we recorded $2.2 million and $4.7 million of expenses related to evaluating various acquisition possibilities and other business development activities. Tunica Flood Expenses, Net of Recoveries Due to flooding of the Mississippi River and temporary closure of the property in May 2011, during the three and nine months ended September 30, 2011, we recorded $0.4 million and $1.6 million of Tunica flood expenses, net of recoveries. |
Document and Entity Information | 9 Months Ended | |
---|---|---|
Sep. 30, 2011 | Oct. 31, 2011 | |
Entity Information [Line Items] | ||
Entity Registrant Name | BOYD GAMING CORP | |
Entity Central Index Key | 0000906553 | |
Current Fiscal Year End Date | --12-31 | |
Entity Filer Category | Accelerated Filer | |
Document Type | 10-Q | |
Document Period End Date | Sep. 30, 2011 | |
Document Fiscal Year Focus | 2011 | |
Document Fiscal Period Focus | Q3 | |
Amendment Flag | false | |
Entity Common Stock, Shares Outstanding | 86,317,735 | |
Entity Well Known Seasoned Issuer | No | |
Entity Voluntary Filers | No | |
Entity Current Reporting Status | Yes |
Subsequent Events | 9 Months Ended |
---|---|
Sep. 30, 2011 | |
Subsequent Events [Abstract] | |
Subsequent Events | SUBSEQUENT EVENTS We have evaluated all events or transactions that occurred after September 30, 2011. During this period, the following material subsequent events occurred. Completion of Acquisition of IP Casino Resort Spa On October 4, 2011, we completed our previously announced acquisition of the assets of the IP Casino Resort Spa in Biloxi, Mississippi, (the "IP") for a purchase price of $278 million in cash. Following the closing of the transaction, we also made a charitable contribution to the Engelstad Family Foundation equal to an aggregate of $10 million, which funds are intended to be distributed on behalf of, and in the name of, the Company, over five years to local and regional Biloxi charitable organizations to be designated by the Company. In addition, following the closing, we intend to perform certain capital improvement projects with respect to the IP with costs estimated to be $44 million. We will apply acquisition method accounting to this business combination at the transaction date, which requires acquired assets and assumed liabilities to be recorded at their respective fair values. Due to the limited time since the acquisition date, the initial accounting for the business combination is incomplete at this time. Prospectively, however, the acquired assets and liabilities will be recorded in our consolidated balance sheet at fair value as of the closing date; the results of operations of the IP will be included in our consolidated statements of operations and cash flows beginning in the fourth quarter of 2011; and all other disclosures pursuant to the guidance for business combinations will be provided in our Annual Report on Form 10-K for the year ended December 31, 2011. Agreement with bwin.party On October 31, 2011, we announced that we had entered into an agreement with bwin.party digital entertainment plc, the world's largest publicly traded online gaming company. Should Congress legalize online poker in the United States (the "U.S."), and subject to regulatory approvals, we would acquire a 10% stake in a new company that would offer online poker to U.S.-based players under bwin.party's brands, including PartyPoker. Separately, we entered into a 15-year agreement to use bwin.party's technology platform and associated services to offer online poker to U.S. players under a brand we develop, assuming Congress passes enabling legislation. Entry into Lender Joinder Agreement On November 2, 2011, we entered into a Lender Joinder Agreement (the “Lender Joinder Agreement”) among the Company, Bank of America, N.A. (“Bank of America”), as the Administrative Agent, and the Increasing Lender. The Lender Joinder Agreement increases the Term Loan Commitments under the Second Amended and Restated Credit Agreement dated as of December 17, 2010 (as amended, restated, supplemented or otherwise modified from time to time, the “Credit Facility”) among the Company, certain financial institutions as lenders, Bank of America, as the Administrative Agent and as letter of credit issuer, and Wells Fargo Bank, National Association, as syndication agent and swing line lender, by an aggregate amount of $350 million (the “Increased Term Loan”). The Lender Joinder Agreement provides that subject only to continued satisfaction of the representations, warranties and covenants under the Credit Facility, the Increased Term Loan will be funded on November 10, 2011. Proceeds from the Increased Term Loan will be used to repay the outstanding portion of our existing credit facility which otherwise matures in May 2012. |
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Assets Held for Development | 9 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Sep. 30, 2011 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Assets Held for Development [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Assets Held For Development | ASSETS HELD FOR DEVELOPMENT Assets held for development, which is comprised of assets associated with our Echelon development project, consists of the following:
Echelon Project Infrastructure At September 30, 2011 and December 31, 2010, the capitalized costs related to the Echelon project included land and construction in progress. The construction and development costs consist primarily of site preparation work, underground utility installation and infrastructure and common area development. Professional and design fees include architectural design, development and permitting fees, inspections, consulting and legal fees. We expect to additionally incur approximately $0.3 million to $3.0 million of capitalized costs annually, principally related to such items as transportation of stored offsite steel as well as offsite improvements. In addition, we expect annual recurring project costs, consisting primarily of monthly charges related to construction of the central energy center, site security, property taxes, rent and insurance, of approximately $15.0 million to $17.0 million that will be charged to preopening or other expense as incurred during the project's suspension period. These capitalized costs and recurring project costs are in addition to other contingencies with respect to our various commitments, including commitments and contingencies with respect to the ESA entered into between Echelon Resorts and LVE. We evaluate our investment in assets held for development in accordance with the authoritative accounting guidance on impairment or disposal of long lived assets. For a long-lived asset to be held and used, such as these assets under development, we review the asset for impairment whenever events or changes in circumstances indicate that the carrying amount may not be recoverable. We then compare the estimated undiscounted future cash flows of the asset to the carrying value of the asset. The asset is not impaired if the undiscounted future cash flows exceed its carrying value. If the carrying value exceeds the undiscounted future cash flows, then an impairment charge is recorded, typically measured using a discounted cash flow model, which is based on the estimated future results of the relevant reporting unit discounted using our weighted-average cost of capital and market indicators of terminal year free cash flow multiples. For these assets under development, future cash flows include remaining construction costs. The suspension of development on the Echelon project implied that the carrying amounts of the assets related to the development may not be recoverable; therefore, at the time of the suspension, we performed an impairment test of these assets, which occurred during the three months ended September 30, 2009. This impairment test was comprised of a future undiscounted cash flow analysis, and contemplated several viable alternative plans for the future development of Echelon. One such scenario includes the outright sale of the project as is, which is primarily based upon land value. We considered the land value by analyzing recent sales transactions of sites with similar characteristics such as location, zoning, access, and visibility, to establish a general understanding of the potential comparable sales. The recoverability under this option represented any excess sales price, net of estimated selling costs, from the land over the carrying value of the assets, including land, held for development. Another scenario is the full development of the project, as designed, at a later date. The cash inflows related to this option represent the revenue projections for the individual components associated with each planned construction element (casino, hotel, food and beverage, retail, convention and other), based upon the estimated respective dates of completion and particular graduated supply absorption rates. These projections are offset by outflows for incurred and estimated costs to complete the development. For costs already incurred, and to compensate for potential losses due to the delay, we adjusted for (i) physical deterioration; (ii) functional obsolescence; and (iii) economic obsolescence. Physical deterioration is impairment to the condition of the asset brought about by “wear and tear,” disintegration, and/or the action of the elements. Functional obsolescence is the impairment in the efficiency of the asset brought about by such factors as inadequacy or change in technology that affect the asset. Economic obsolescence is the impairment in the desirability of the asset arising from external economic forces, building code enhancements or changes in supply and demand relationships. For estimated costs to complete, we applied selected construction expense growth rates to our present cost analysis. In addition to these hard and soft construction costs, we estimated outflows for preservation costs that are intended and required to maintain the development site and the existing structures as well as development materials for future use. These net outflows were incrementally added to our estimated operating and ongoing maintenance costs, to establish the undiscounted net cash flow of the project. Our final scenario is a scaled-down version of the full project, whereby only certain components would be developed. This cash flow projection considered the inflows and outflows discussed above, with relevant curtailment for revenue from, and costs related to, the amenities not completed. Because no specific strategic plan can be determined with certainty at this time, the analysis considered the net cash flows related to each alternative, weighted against its projected likelihood. The outcome of this evaluation resulted in the determination that there was no impairment of the assets held for development, as the estimated weighted net undiscounted cash flows from the project exceed the current carrying value of the assets held for development. As we further explore the viability of alternatives for the project, we will continue to monitor these assets for recoverability. Central Energy Facility The capitalized construction costs of the central energy facility include labor, materials, construction overhead and capitalized interest, all of which has been directly incurred by LVE. Depreciation is generally recorded on a straight line basis over useful lives of property ranging from 5 to 50 years, but has not commenced on the components of the facility, as it has not been placed in service. The costs of repairs and maintenance, including planned major maintenance activities and minor replacements of property are charged to maintenance expense as incurred. These assets are tested for recoverability whenever events or changes in circumstances indicate that such amounts may not be recoverable. Impairment is the condition that exists when the carrying amount of a long-lived asset exceeds its fair value. An impairment loss shall be recognized only if the carrying amount of a long-lived asset is not recoverable and exceeds its fair value. The carrying amount of a long-lived asset is not recoverable if it exceeds the sum of the undiscounted cash flows expected to result from the use and eventual disposition of the asset. That assessment shall be based on the carrying amount of the asset at the date it is tested for recoverability. An impairment loss shall be measured as the amount by which the carrying amount of a long-lived asset exceeds its fair value. The assets of the central energy facility are pledged as collateral to the outstanding debt obligations of LVE, as further discussed in Note 7, Non-recourse Obligations of Variable Interest Entity below. |
Condensed Consolidating Financial Information | 9 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Condensed Consolidating Financial Information [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Condensed Consolidating Financial Information for Subsidiary Guarantors and Nonguarantors [Text Block] | CONDENSED CONSOLIDATING FINANCIAL INFORMATION Separate condensed consolidating financial information for our subsidiary guarantors and non-guarantors of our 9.125% senior notes due 2018 is presented below. The non-guarantors primarily represent special purpose entities, tax holding companies, our less significant operating subsidiaries and our less than wholly-owned subsidiaries. The tables below present the condensed consolidating balance sheets as of September 30, 2011 and December 31, 2010 and the condensed consolidating statements of operations for the three and nine month periods ended September 30, 2011 and 2010 and the condensed consolidating statements of cash flows for the nine months ended September 30, 2011 and 2010. Condensed Consolidating Balance Sheets
Condensed Consolidating Statements of Operations
Condensed Consolidating Statements of Operations, continued
Condensed Consolidating Statements of Operations, continued
Condensed Consolidating Statements of Operations, continued
Condensed Consolidating Statements of Cash Flows
Condensed Consolidating Statements of Cash Flows
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Derivative Instruments | 9 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Derivatives [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Derivative Instruments and Hedging Activities Disclosure | DERIVATIVE INSTRUMENTS We utilize derivative instruments to manage interest rate risk. Derivatives that are not designated as hedges for accounting purposes must be adjusted to fair value through income. We designated current interest rate swaps as cash flow hedges through September 30, 2010, and measured their effectiveness using the long-haul method. If the derivative qualifies and is designated as a hedge, depending on the nature of the hedge, changes in its fair value will either be offset against the change in fair value of the hedged item through earnings or recognized in other comprehensive income (loss) until the hedged item is recognized in earnings. The effective portion of any gain or loss on our interest rate swaps is recorded in other comprehensive income (loss). We use the hypothetical derivative method to measure the ineffective portion of our interest rate swaps. Any ineffective portion of a derivative's change in fair value is immediately recognized in earnings. Interest Rate Swap Agreements The Company previously entered into floating-to-fixed interest rate swap arrangements in order to manage interest rate risk relating to its Amended Credit Facility, which matured on June 30, 2011. We were a party to certain floating-to-fixed interest rate swap agreements with an aggregate notional amount of $500 million, whereby we received payments based upon the three-month LIBOR and made payments based upon a stipulated fixed rate. These interest rate swap agreements modified the Company's exposure to interest rate risk by synthetically converting a portion of the Company's floating rate debt to a fixed rate. The following presents the activity related to our accounting for the interest rate swaps during the periods in which they were outstanding. The following table presents the historical fair value of the interest rate swaps recorded in the accompanying condensed consolidated balance sheets as of December 31, 2010, the balance of which are included in other long-term liabilities.
Hedge Accounting These derivative instruments were accounted for as cash flow hedges through September 30, 2010. Accounting for cash flow hedging requires determining a division of hedge results deemed effective and deemed ineffective. However, most of the Company's hedges were designed in such a way so as to perfectly offset specifically-defined interest payments, such that no ineffectiveness has occurred, nor would any ineffectiveness occur, as long as the forecasted cash flows of the designated hedged items and the associated swap contracts remain unchanged. However, on October 1, 2010, in anticipation of the refinancing of our former bank credit facility, we de-designated all of our interest rate swap agreements as cash flow hedges. Concurrent with the de-designation of the hedging relationship, hedge accounting was suspended and the amount remaining in accumulated other comprehensive loss associated with this cash flow hedging relationship was frozen. This amount was amortized into interest expense over the respective remaining term of the associated debt. Fair Value Fair value approximates the amount we would pay if these contracts were settled at the respective valuation dates. Fair value is estimated based upon current, and predictions of future, interest rate levels along a yield curve, the remaining duration of the instruments and other market conditions, and therefore, is subject to significant estimation and a high degree of variability and fluctuation between periods. The fair value is adjusted, to reflect the impact of credit ratings of the counterparties or the Company, as applicable. These adjustments resulted in a reduction in the fair values as compared to their settlement values during the period of dedesignation. Credit risk relating to derivative counterparties is mitigated by using multiple, highly rated counterparties, and the credit quality of each is monitored on an ongoing basis. The fair values of our derivative instruments at December 31, 2010 included approximately $0.2 million of credit valuation adjustments to reflect the impact of the credit ratings of both the Company and our counterparties, based primarily upon the market value of the credit default swaps of the respective parties. These credit valuation adjustments resulted in a reduction in the fair values of our derivative instruments as compared to their settlement values. Classification of Changes in Fair Value The effect of derivative instruments on the condensed consolidated statements of operations for the three and nine months ended September 30, 2011 and 2010 was as follows (in thousands):
Due to the maturity of the floating-to-fixed interest rate swaps in June 2011, there was no interest expense recorded during the three months ended September 30, 2011. The net effect of our floating-to-fixed interest rate swaps resulted in an increase in interest expense of $5.8 million for the three months ended September 30, 2010. We recorded an increase in interest expense of $11.8 million and $16.9 million for the nine months ended September 30, 2011 and 2010, respectively, as compared to the contractual rate of the underlying hedged debt, for these periods. Due to the de-designation of the floating-to-fixed interest rate swaps in 2010, we recognized $0.3 million loss on the change in fair value of these swap for the nine months ended September 30, 2011. In addition, the Company accreted $5.8 million for the three months ended September 30, 2010, and amortized $11.8 million and accreted $16.9 million during the nine months ended September 30, 2011 and 2010, respectively in OCI related to these, and other derivatives that were previously de-designated as hedging instruments. |
Summary of Significant Accounting Policies | 9 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Summary of Signficant Accounting Policies [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Organization, Consolidation, Basis of Presentation, Business Description and Accounting Policies | SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Organization Boyd Gaming Corporation (and together with its subsidiaries, the “Company,” "Boyd Gaming," “we” or “us”) was incorporated in the state of Nevada in 1988 and has been operating since 1973. The Company's common stock is traded on the New York Stock Exchange under the symbol “BYD”. We are a diversified operator of 15 wholly-owned gaming entertainment properties and one controlling interest in a limited liability company. Headquartered in Las Vegas, we have gaming operations in Nevada, Illinois, Louisiana, Mississippi, Indiana and New Jersey, which we aggregate in order to present the following four reportable segments:
Hawaiian Operations In addition to these properties, we own and operate a travel agency in Hawaii, and a captive insurance company, also in Hawaii, that underwrites travel-related insurance. Results for our travel agency and our captive insurance company are included in our Downtown Las Vegas segment, as our Downtown Las Vegas properties concentrate their marketing efforts on gaming customers from Hawaii. Dania Jai-Alai We also own and operate Dania Jai-Alai, which is a pari-mutuel jai-alai facility with approximately 47 acres of related land located in Dania Beach, Florida. On April 29, 2011, we and Dania Entertainment Center, LLC (the “Buyer”) entered into an Asset Purchase Agreement (the “Agreement”) for the sale of certain assets and liabilities of the Dania Jai-Alai Business (as defined below). Pursuant to the terms of the Agreement, we agreed to sell and transfer, and the Buyer agreed to purchase and assume, certain assets and liabilities (“Assets and Liabilities”) related to our Dania Jai-Alai pari-mutuel facility, located in Dania Beach, Broward County, Florida at which jai-alai and related gaming operations are conducted, including poker and inter-track wagering (the “Dania Jai-Alai Business”), for a purchase price of $80.0 million (the “Purchase Price”). The closing of the transactions contemplated by the Agreement is subject to certain closing conditions. On September 15, 2011, the Buyer elected to extend the closing date of the pending acquisition of Dania Jai-Alai Business. The terms of the extension provide that sale will close on or before November 28, 2011; however, we have no assurance that the Buyer can or will be in a position to close on such date. As permitted under the terms of the definitive sale agreement, the Buyer made an additional, non-refundable payment of $2 million to us in exchange for the extension of the closing date. Of the $2 million payment, $1 million will be applied to the $80 million purchase price. We previously received a $5 million non-refundable deposit upon execution of the definitive agreement. Echelon Development Additionally, we own 85 acres of land on the Las Vegas Strip, where our multibillion dollar Echelon development project (“Echelon”) is located. On August 1, 2008, due to the difficult environment in the capital markets, as well as weak economic conditions, we announced the delay of Echelon. As we do not believe that a significant level of economic recovery has occurred along the Las Vegas Strip, or that financing for a development project like Echelon is currently available on terms satisfactory to us, we do not expect to resume construction of Echelon for three to five years. IP Casino Resort Spa On October 4, 2011, we completed our previously announced acquisition of the assets of the IP Casino Resort Spa in Biloxi, Mississippi, for a purchase price of $278 million in cash. Following the closing of the transaction, we also made a charitable contribution to the Engelstad Family Foundation equal to an aggregate of $10 million, which funds are intended to be distributed on behalf of, and in the name of, Boyd Gaming over five years to charitable organizations to be designated by Boyd Gaming. In addition, following the closing, we intend to perform certain capital improvement projects with respect to the IP Casino Resort Spa with costs estimated to be $44 million. We will apply acquisition method accounting to this business combination at the transaction date, which requires acquired assets and assumed liabilities to be recorded at their respective fair values. Due to the limited time since the acquisition date, the initial accounting for the business combination is incomplete at this time. Prospectively, however, the acquired assets and liabilities will be recorded in our consolidated balance sheet at fair value as of the closing date; the results of operations of the IP will be included in our consolidated statements of operations and cash flows beginning in the fourth quarter of 2011; and all other disclosures pursuant to the guidance for business combinations will be provided in our Annual Report on Form 10-K for the year ended December 31, 2011. The IP Casino Resport Spa will be reported in our Midwest and South business segment. Basis of Presentation Interim Condensed Consolidated Financial Statements As permitted by the rules and regulations of the SEC, certain information and footnote disclosures normally included in financial statements prepared in accordance with GAAP have been condensed or omitted, although we believe that the disclosures made are adequate to make the information reliable. These condensed consolidated financial statements should be read in conjunction with the audited consolidated financial statements and notes thereto included in our Annual Report on Form 10-K for the year ended December 31, 2010. Our Form 10-K, as originally filed with the SEC on March 15, 2011, (the "Provisional Form 10-K")was subsequently revised on a Form 8-K filed on September 2, 2011 (the "Retrospective Form 8-K"). This Retrospective Form 8-K updated the audited consolidated financial statements and certain other items of the Provisional Form 10-K, specifically and primarily related to the recasting of the consolidated balance sheet as of December 31, 2010, and related notes thereto. The updated historical financial statements, and other conforming changes to the Provisional Form 10-K are filed as Exhibit 99.1 to the Retrospective Form 8-K and have been updated, solely to include the retrospective measurement period adjustments and new footnote disclosure. All other information provided in the Provisional Form 10-K, unless otherwise provided, remain unchanged and the Retrospective Form 8-K does not modify or update such other disclosures in the Provisional Form 10-K in any other way. In our opinion, the accompanying unaudited condensed consolidated financial statements contain all adjustments necessary to fairly present our financial position as of September 30, 2011 and December 31, 2010, the results of our operations for the three and nine months ended September 30, 2011 and 2010, and the results of our cash flows for the nine months ended September 30, 2011 and 2010. The condensed consolidated balance sheet as of September 30, 2011 is unaudited; however the condensed consolidated balance sheet presented as of December 31, 2011 has been derived from our audited financial statements as of such date. Our operating results for the three and nine months ended September 30, 2011 and 2010, and our cash flows for the nine months ended September 30, 2011 and 2010, are unaudited, and are not necessarily indicative of the results that would be achieved for the full year or future periods. Effective Control of Borgata On March 24, 2010, as a result of the amendment to our operating agreement with MGM Resorts International (“MGM”) (our original 50% partner in Borgata), which provided, among other things, for the termination of MGM's participating rights in the operations of Borgata, we effectively obtained control of Borgata. The amendment to the operating agreement was related to MGM's divestiture of its interest pursuant to a regulatory settlement, as discussed further in Note 2, Consolidation of Certain Interests. This resulting change in control required acquisition method accounting in accordance with the authoritative accounting guidance for business combinations. As a result, we measured our previously held equity interest at a provisional fair value as of March 24, 2010, the date we effectively obtained control. The financial position of Borgata is presented in our condensed consolidated balance sheets as of September 30, 2011 and December 31, 2010; its results of operations for the three months ended September 30, 2011 and 2010 are included in our condensed consolidated statement of operations for the three months ended September 30, 2011 and 2010; its results of operations for the nine months ended September 30, 2011 are included in our condensed consolidated statements of operations and cash flows for the nine months ended September 30, 2011; and its results of operations for the period from March 24 through September 30, 2010 are included in our condensed consolidated statements of operations and cash flows for the nine months ended September 30, 2010. Consolidation of Variable Interest Entity LVE Energy Partners, LLC (“LVE”) is a joint venture between Marina Energy LLC and DCO ECH Energy, LLC. Through our wholly-owned subsidiary, Echelon Resorts LLC ("Echelon Resorts"), we have entered into an Energy Sales Agreement ("ESA") with LVE to design, build, own (other than the underlying real property which is leased from Echelon Resorts) and operate a central energy center and related distribution system for our planned Echelon resort development. In April 2007, we entered into an ESA with LVE to provide chilled and hot water, electricity and emergency electricity generation to Echelon and potentially other joint venture entities associated with the Echelon development project or other third parties. LVE began construction of the facility in 2007 and expected to provide full energy services to Echelon in 2010, when we originally expected to open. However, LVE suspended construction in January 2009, after our announcement of the delay of Echelon. On April 3, 2009, LVE notified us that, in its view, Echelon Resorts would be in breach of the ESA unless it recommenced and proceeded with construction of the Echelon development project by May 6, 2009. We believe that LVE's position is without merit; however, in the event of litigation, we cannot state with certainty the eventual outcome nor estimate the possible loss or range of loss, if any, associated with this matter. On March 7, 2011, Echelon Resorts and LVE entered into both a purchase option agreement (the "Purchase Option Agreement") and a periodic fee agreement (the "Periodic Fee Agreement"). LVE has agreed not to initiate any litigation with respect to its April 3, 2009 claim of an alleged breach of the ESA and both Echelon Resorts and LVE have mutually agreed that neither LVE nor Echelon Resorts would give notice of, file or otherwise initiate any claim or cause of action, in or before any court, administrative agency, arbitrator, mediator or other tribunal, that arises under the ESA, subject to certain exceptions, and that any statute of limitations or limitation periods for defenses, claims, causes of actions and counterclaims shall be tolled while the Periodic Fee Agreement is in effect. Under the Periodic Fee Agreement, Echelon Resorts has agreed to pay LVE, beginning March 4, 2011, a monthly periodic fee (the “Periodic Fee”) and an operation and maintenance fee until Echelon Resorts either (i) resumes construction of the project or (ii) exercises its option to purchase LVE's assets pursuant to the terms of the Purchase Option Agreement. The amount of the Periodic Fee is fixed at $11.9 million annually through November 2013. Thereafter, the amount of the Periodic Fee is estimated to be approximately $10.8 million annually. The operation and maintenance fee cannot exceed $0.6 million per annum without Echelon Resorts' prior approval. Under the Purchase Option Agreement, Echelon Resorts has the right, at its sole discretion, upon written notice to LVE, to purchase the assets of LVE including the central energy center and the related distribution system for a price of $195.1 million, subject to certain possible adjustments. The ESA will be terminated concurrent with the purchase of the LVE assets. New consolidation guidance regarding the variable interest model became effective on January 1, 2010. Under this new qualitative model, the primary beneficiary is identified as the variable interest holder that has both the power to direct the activities of the variable interest entity that most significantly impacts the entity's economic performance and the obligation to absorb losses or the right to receive benefits from the entity that could potentially be significant to the variable interest entity. Upon adoption, this guidance required us to consolidate LVE for financial statement purposes, as we determined that we are presently the primary beneficiary of the executory contract, the ESA, giving rise to the variable interest. Principles of Consolidation The accompanying condensed consolidated financial statements include the accounts of Boyd Gaming Corporation and its subsidiaries. In addition, as discussed above, the financial position of Borgata is consolidated in our condensed consolidated balance sheets as of September 30, 2011 and December 31, 2010; its results of operations for the three and nine months ended September 30, 2011 are included in our condensed consolidated statements of operations for the three and nine months ended September 30, 2011; its results of operations for the period from July 1 through September 30, 2010 are included in our condensed consolidated statements of operations for the three months ended September 30, 2010; and its results of operations for the period from March 24 through September 30, 2010 are included in our condensed consolidated statements of operations and cash flows for the nine months ended September 30, 2010. At September 30, 2011 and December 31, 2010, approximately $1.42 billion and $1.45 billion, respectively, of our consolidated total assets are related to Borgata. Additionally, the financial position of LVE is consolidated in our condensed consolidated balance sheets as of September 30, 2011 and December 31, 2010, and its results of operations for the three and nine months ended September 30, 2011 are included in our condensed consolidated statements of operations and cash flows during such periods. At September 30, 2011, approximately $220.4 million of our consolidated total assets related to LVE, however, certain of these assets, approximating $196.1 million, are pledged as security on LVE's outstanding construction loan advances, and an additional $21.0 million of such assets are held in restricted escrow funds in accordance with the underlying terms of LVE's tax-exempt bond financing. At December 31, 2010, approximately $249.7 million of our consolidated total assets related to LVE, however, certain of these assets, approximating $196.4 million, were pledged as security on LVE's outstanding construction loan advances, and an additional $48.2 million of such assets were held in restricted escrow funds in accordance with the underlying terms of LVE's tax-exempt bond financing. All material intercompany accounts and transactions have been eliminated in consolidation. Investments in unconsolidated affiliates, which are less than 50% owned and do not meet the consolidation criteria of the authoritative accounting guidance for voting interest, controlling interest or variable interest entities, are accounted for under the equity method. See Note 2, Consolidation of Certain Interests. Property and Equipment, Net Property and equipment are stated at cost. Depreciation is computed using the straight-line method over the estimated useful lives of the assets or, for leasehold improvements, over the shorter of the asset's useful life or term of the lease. The estimated useful lives of our major components of property and equipment are:
Gains or losses on disposals of assets are recognized as incurred, using the specific identification method. Costs of major improvements are capitalized, while costs of normal repairs and maintenance are charged to expense as incurred. Assets Held for Development The costs incurred relative to projects under development are carried at cost. Development costs clearly associated with the acquisition, development, and construction of a project are capitalized as a cost of that project, during the periods in which activities necessary to get the property ready for its intended use are in progress. Certain pre-acquisition costs, not qualifying for capitalization, are charged to preopening or other operating expense as incurred. Debt Financing Costs Debt financing costs, which include legal, and other direct costs related to the issuance of our outstanding debt, are deferred and amortized to interest expense over the contractual term of the underlying long-term debt using the effective interest method. In the event that our debt is modified, repurchased or otherwise reduced prior to its original maturity date, we ratably reduce the unamortized debt financing costs. Restricted Investments In accordance with the terms of the tax-exempt loan agreements, which are the obligations of LVE, unused proceeds are required to be held in escrow pending approval of construction expenditures. These investments are held in an interest-bearing account. Intangible Assets Intangible assets include customer relationships, favorable lease rates, gaming license rights and trademarks. Amortizing intangible assets: Customer relationships represent the value of repeat business associated with our customer loyalty programs. These intangible assets are being amortized on an accelerated method over their approximate useful life. Favorable lease rates represent the amount by which acquired lease rental rates are favorable to market terms. These favorable lease values are amortized over the remaining lease term, primarily on leasehold land interests, ranging in remaining duration from 41 to 52 years. Development agreements are contracts between two parties establishing an agreement for development of a product or service. These agreements are amortized over the respective cash flow period of the related agreement. Indefinite lived intangible assets: Trademarks are based on the value of our brand, which reflects the level of service and quality we provide and from which we generate repeat business. Gaming license rights represent the value of the license to conduct gaming in certain jurisdictions, which is subject to highly extensive regulatory oversight, and a limitation on the number of licenses available for issuance with these certain jurisdictions. These assets, considered indefinite-lived intangible assets, are not subject to amortization, but instead are subject to an annual impairment test, performed in the second quarter of each year, and between annual test dates in certain circumstances. If the fair value of an indefinite-lived intangible asset is less than its carrying amount, an impairment loss is recognized equal to the difference. License rights are tested for impairment using a discounted cash flow approach, and trademarks are tested for impairment using the relief-from-royalty method. Long-Term Debt, Net Long-term debt is reported at amortized cost. The discount on the senior secured notes and the transaction costs paid to the initial purchasers upon issuance of the senior and senior secured notes are recorded as an adjustment to the face amount of our outstanding debt. This resulting difference between the net proceeds upon issuance of the senior and senior secured notes and the face amount of the senior and senior secured notes is accreted to interest expense using the effective interest method. Noncontrolling Interest Noncontrolling interest is the portion of the ownership in Borgata not directly attributable to Boyd Gaming Corporation, as well as the ownership of LVE, none of which is attributable to Boyd Gaming Corporation, and is reported as a separate component of our stockholders' equity in our condensed consolidated financial statements. Our consolidated net income is reported at amounts that include the amounts attributable to both us and the noncontrolling interest. At September 30, 2011 and December 31, 2010, there was a noncontrolling interest of $220.9 million and $219.3 million, respectively, associated with the portion of ownership in Borgata that is not attributable to the stockholders of Boyd Gaming Corporation. As discussed above, we effectively obtained control of Borgata on March 24, 2010 and began consolidating its financial statements at that date. At September 30, 2011 and December 31, 2010, there was a deficit in the noncontrolling interest of LVE of $17.7 million and $13.7 million, respectively, associated with the entire ownership in LVE that is not attributable to the stockholders of Boyd Gaming Corporation. Revenue Recognition Gaming revenue represents the net win from gaming activities, which is the aggregate difference between gaming wins and losses. The majority of our gaming revenue is counted in the form of cash and chips and therefore is not subject to any significant or complex estimation procedures. Cash discounts, commissions and other cash incentives to customers related to gaming play are recorded as a reduction of gross gaming revenues. Room revenue recognition criteria are met at the time of occupancy. Food and beverage revenue recognition criteria are met at the time of service. Promotional Allowances The retail value of accommodations, food and beverage, and other services furnished to guests without charge is included in gross revenues and then deducted as promotional allowances. Promotional allowances also include incentives such as cash, goods and services (such as complimentary rooms and food and beverages) earned in our slot bonus point program. We reward customers, through the use of bonus programs, with points based on amounts wagered that can be redeemed for a specified period of time, principally for cash, and to a lesser extent for goods or services, depending upon the property. We record the estimated retail value of these goods and services as revenue and then deduct them as promotional allowances The amounts included in promotional allowances for the three and nine months ended September 30, 2011 and 2010 are as follows:
The estimated costs of providing such promotional allowances for the three and nine months ended September 30, 2011 and 2010 are as follows:
Gaming Taxes We are subject to taxes based on gross gaming revenues in the jurisdictions in which we operate. These gaming taxes are an assessment of our gaming revenues and are recorded as a gaming expense on the condensed consolidated statements of operations. These taxes totaled approximately $65.3 million and $66.2 million for the three months ended September 30, 2011 and 2010, respectively, and totaled approximately $192.6 million and $195.9 million for the nine months ended September 30, 2011 and 2010, respectively. Earnings per Share Basic earnings per share is computed by dividing net income applicable to Boyd Gaming Corporation stockholders, excluding net income attributable to noncontrolling interests, by the weighted-average number of common shares outstanding during the period. Diluted earnings per share reflects the additional dilution for all potentially-dilutive securities, such as stock options. The weighted average number of common and common share equivalent shares used in the calculations of basic and diluted earnings per share for the three and nine months ended September 30, 2011 and 2010, consisted of the following amounts:
Due to the net loss for the nine months ended September 30, 2011, the effect of all potential common shares was anti-dilutive, and therefore was not included in the computation of diluted earnings per share. Anti-dilutive options totaling 9.0 million and 8.1 million have been excluded from the computation of diluted earnings per share for the three months ended September 30, 2011, and 2010, respectively. Anti-dilutive options totaling 7.8 million and 8.1 million have been excluded from the computation of diluted earnings per share for the nine months ended September 30, 2011 and 2010, respectively. Use of Estimates The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Significant estimates incorporated into our condensed consolidated financial statements include the estimated allowance for doubtful accounts receivable, the estimated useful lives for depreciable and amortizable assets, recoverability of assets held for development, measurement of the fair value of our controlling interest and the noncontrolling interest in Borgata, fair values of acquired assets and liabilities, estimated cash flows in assessing the recoverability of long-lived assets and assumptions relative to the valuation and impairment of goodwill and intangible assets, estimated valuation allowances for deferred tax assets, slot bonus point programs, certain tax liabilities and uncertain tax positions, self-insured liability reserves, share-based payment valuation assumptions, fair values of assets and liabilities measured at fair value, fair values of assets and liabilities disclosed at fair value, fair values of derivative instruments, contingencies and litigation, claims and assessments. Actual results could differ from these estimates. Recently Issued Accounting Pronouncements A variety of proposed or otherwise potential accounting standards are currently under study by standard-setting organizations and certain regulatory agencies. Because of the tentative and preliminary nature of such proposed standards, we have not yet determined the effect, if any, that the implementation of such proposed standards would have on our consolidated financial statements. Accounting Standards Update 2011-08 Intangibles, Goodwill and Other ("Update 2011-08") In September 2011, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update 2011-08 Intangible, Goodwill and Other, which is an amendment to Topic 350 of the Accounting Standards Codification ("ASC"). The objective of Update 2011-08 is to simplify how entities, both public and nonpublic, test goodwill for impairment. The amendments in the Update 2011-08 permit an entity to first assess qualitative factors to determine whether it is more likely than not that the fair value of a reporting unit is less than its carrying amount as a basis for determining whether it is necessary to perform the two-step goodwill impairment test described in Topic ASC 350. (the more-likely-than-not threshold is defined as having a likelihood of more than 50 percent). Previous guidance under Topic ASC 350 required an entity to test goodwill for impairment, on at least an annual basis, by comparing the fair value of a reporting unit with its carrying amount, including goodwill (step one). If the fair value of a reporting unit is less than its carrying amount, then the second step of the test must be performed to measure the amount of the impairment loss, if any. Under the amendments in Update 2011-08, an entity is not required to calculate the fair value of a reporting unit unless the entity determines that it is more likely than not that its fair value is less than its carrying amount. The amendment will be effective for our fiscal year, and interim periods within the fiscal year beginning January 1, 2012, although early adoption is permitted. Update 2011-08 will not have a material impact on the computation of the impairment of goodwill or other intangibles. Accounting Standards Update 2011-05 Presentation of Comprehensive Income ("Update 2011-05") In June 2011, the FASB issued Accounting Standards Update 2011-05 Presentation of Comprehensive Income, which is an amendment to Topic ASC 220. The objective of Update 2011-05 is to improve the comparability, consistency, and transparency of financial reporting and to increase the prominence of items reported in other comprehensive income. Update 2011-05 provides an entity with the option to present the total of comprehensive income, the components of net income, and the components of other comprehensive income either in a single continuous statement of comprehensive income or in two separate but consecutive statements. In both choices, an entity is required to present each component of net income along with total net income, each component of other comprehensive income along with a total for other comprehensive income, and a total amount for comprehensive income. In a single continuous statement, the entity is required to present the components of net income and total net income, the components of other comprehensive income and a total for other comprehensive income, along with the total of comprehensive income in that statement. In the two-statement approach, an entity is required to present components of net income and total net income in the statement of net income. The statement of other comprehensive income should immediately follow the statement of net income and include the components of other comprehensive income and a total for other comprehensive income, along with a total for comprehensive income. Update 2011-05 does not change the items that must be reported in other comprehensive income or when an item of other comprehensive income must be reclassified to net income, nor does Update 2011-05 affect how earnings per share is calculated or presented. Update 2011-05 should be applied retrospectively and will be effective for our fiscal year, and interim periods within the fiscal year beginning January 1, 2012. Update 2011-05 will not have a material impact on the computation of comprehensive income, but will require a revised presentation thereof. Accounting Standards Update 2011-04 Fair Value Measurement ("Update 2011-04") In May 2011, the FASB issued Accounting Standards Update 2011-04 Fair Value Measurement, which is an amendment to Topic ASC 820. The objective of Update 2011-04 is to more clearly explain how to measure fair value to allow for better comparability between GAAP and International Financial Reporting Standards ("IFRS"). It is not intended to result in a change in the application of the requirements in Topic ASC 820, but instead is intended to amend a particular principle or requirement for measuring fair value or for disclosing information about fair value measurements. Update 2011-04 does not change the items that must be reported as fair value measurements under Topic ASC 820 but simply how to measure these items and how they should be disclosed. Update 2011-04 should be applied prospectively. Early adoption is not permitted. Update 2011-04 will be effective for our fiscal year, and interim periods within the fiscal year beginning January 1, 2012. Update 2011-04 will not have a material impact on our financial statements. |
Non-recourse Obligations of Variable Interest Entity | 9 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Non-Recourse Obligations of Variable Interest Entity | NON-RECOURSE OBLIGATIONS OF VARIABLE INTEREST ENTITY The non-recourse obligations of variable interest entity represent the outstanding debt of LVE, all of which is classified as current, and is comprised of the following:
Assets serving as collateral for these debt obligations had a carrying value of $217.4 million and $244.5 million at September 30, 2011 and December 31, 2010, respectively, and primarily consist of certain assets held for development and restricted investments. The condensed consolidated statements of operations for the three and nine months ended September 30, 2011 includes $0.7 million and $3.3 million of loss, respectively, and the condensed consolidated statement of cash flows for the nine months ended September 30, 2011 includes $6.8 million of net operating cash outflows related to this consolidated variable interest entity; however, none of the offsetting consolidated income or operating cash inflows are available to service this debt, which is non-recourse and non-guaranteed by Boyd. Construction and Term Loan Facility In December 2007, LVE entered into a construction and term loan facility with two commercial banks with a committed amount of up to $143.5 million, of which $120.2 million was outstanding at September 30, 2011. Proceeds from the construction loan were used to finance the construction of the central energy center and district energy system. The loan is secured by the assets of LVE and does not contain financial covenants. Although LVE's loan is presently in default, and classified as current, the original loan maturities are as follows: $4.2 million in 2011; $83.1 million in 2012 and the remainder in 2013. The construction loan bears interest at a variable rate based on the London InterBank Offered Rate ("LIBOR"). LVE entered into an interest rate swap with scheduled increases in the notional amount designed to fix the LIBOR portion of the interest rate on this debt until its maturity in November 2013, which was hedged against the outstanding debt. However, due to the construction delays, the outstanding amount of debt did not increase as fast as the contractual increases in notional amount of the swap, which rendered a portion of the swap ineffective, and as a result the swap was de-designated in July 2011. Tax-exempt Variable Rate Bonds In December 2007, LVE issued $100.0 million of tax-exempt variable rate bonds through the State of Nevada Department of Business and Industry, which mature in October 2035. Unused proceeds from the tax-exempt, variable rate bonds are required to be escrowed pending approved construction expenditures. Such unused funds are reported as restricted investments on our consolidated balance sheet. The tax-exempt variable rate bonds bear interest at rates that are determined by a remarketing agent on a weekly basis. LVE entered into an interest rate swap with a total notional amount of $100.0 million that effectively fixes the underlying interest rate index on these bonds until November 2013. Investors in these bonds receive liquidity and credit support provided by a letter of credit from a commercial bank. This letter of credit expires in November 2013, but can be accelerated by the bank in the event of a default under the construction and term loan facility. Events of Default The central energy center and district energy system are being financed by LVE with debt that is non-recourse to us. The outstanding balance of LVE's bank debt is approximately $193.2 million as of September 30, 2011, consisting of borrowing under the construction and term loan facility of $120.2 million and outstanding tax-exempt bonds of $73.0 million. In September 2009, LVE reached an agreement with the banks that are financing the energy facilities to address defaults under the financing agreements. These LVE defaults were caused by construction delay and the termination of an energy services agreement by a hotel operator associated with the project. As a result of these defaults, the banks had previously stopped funding the project. The terms of the September 2009 agreement required the LVE joint venture partners to guarantee the payment of future interest costs by LVE through December 2010. In addition, the LVE joint venture partners had each committed to provide approximately $8.9 million of additional capital as of September 2009 to cover costs related to the termination of the energy services agreement by a hotel operator and interest costs incurred since August 2008 when construction of Echelon was suspended. In turn, the banks waived all existing defaults under the financing agreements and were relieved of their commitment to provide additional funding. As a result of the ongoing construction delay, the central energy center and district energy system was not completed by the end of 2010 as originally expected. Consequently, the full amount of LVE's debt became due and payable in December 2010. LVE intends to seek additional financing to complete the facility once construction of the resort resumes; however, as of September 30, 2011, LVE was in default under the financing agreements with the banks, and all its debt has been presented as currently due. |
Stockholders' Equity and Stock Incentive Plans | 9 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Stockholders' Equity and Stock Incentive Plans [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Shareholders' Equity and Share-based Payments [Text Block] | STOCKHOLDERS' EQUITY AND STOCK INCENTIVE PLANS Share Repurchase Program We have in the past, and may in the future, acquire our debt or equity securities, through open market purchases, privately negotiated transactions, tender offers, exchange offers, redemptions or otherwise, upon such terms and at such prices as we may determine from time to time. In July 2008, our Board of Directors authorized an amendment to our existing share repurchase program to increase the amount of common stock available to be repurchased to $100 million. We are not obligated to purchase any shares under our stock repurchase program. Subject to applicable corporate securities laws, repurchases under our stock repurchase program may be made at such times and in such amounts as we deem appropriate. Purchases under our stock repurchase program can be discontinued at any time that we feel additional purchases are not warranted. We intend to fund the repurchases under the stock repurchase program with existing cash resources and availability under our bank credit facility. We are subject to certain limitations regarding the repurchase of common stock, such as restricted payment limitations related to our outstanding notes and our bank credit facility. During the nine months ended September 30, 2011 or 2010, we did not repurchase any shares of our common stock. We are currently authorized to repurchase up to an additional $92.1 million in shares of our common stock under the share repurchase program. Dividends Dividends are declared at our Board of Director's discretion. We are subject to certain limitations regarding payment of dividends, such as restricted payment limitations related to our outstanding notes and our bank credit facility. In July 2008, our Board of Directors suspended the quarterly dividend for the current and future periods; therefore, we did not declare a dividend during the nine months ended September 30, 2011 or 2010. Share-Based Compensation We account for share-based awards exchanged for employee services in accordance with the authoritative accounting guidance for share-based payments. Under the guidance, share-based compensation expense is measured at the grant date, based on the estimated fair value of the award, and is recognized as expense, net of estimated forfeitures, over the employee's requisite service period. The following table provides classification detail of the total costs related to our share-based employee compensation plans reported in our condensed consolidated statements of operations.
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Accrued Liabilities | 9 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Other Liabilities Disclosure | ACCRUED LIABILITIES Accrued liabilities consist of the following:
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Intangible Assets [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Intangible Assets Disclosure | INTANGIBLE ASSETS Intangible assets consist of the following:
Amortizing Intangible Assets Customer Relationships Customer relationships represent the value of repeat business associated with our customer loyalty programs. The value of customer relationships is determined using a multi-period excess earnings method, which is a specific discounted cash flow model. The value is determined at an amount equal to the present value of the incremental after-tax cash flows attributable only to these customers, discounted to present value at a risk-adjusted rate of return. With respect to the application of this methodology, we used the following significant projections and assumptions: revenue of our rated customers, based on expected level of play; promotional allowances provided to these existing customers; attrition rate related to these customers; operating expenses; general and administrative expenses; trademark expense; discount rate; and the present value of tax benefit. Favorable Lease Rates Favorable lease rates represent the rental rates for assumed land leases that are favorable to comparable market rates. The fair value is determined on a technique whereby the difference between the lease rate and the then current market rate for the remaining contractual term is discounted to present value. The assumptions underlying this computation include the actual lease rates, the expected remaining lease term, including renewal options, based on the existing lease; current rates of rent for leases on comparable properties with similar terms obtained from market data and analysis; and an assumed discount rate. The estimates underlying the result covered a term of 41 to 52 years. Development Agreements Development agreements are contracts between two parties establishing an agreement for development of a product or service. The value of development agreements is determined using a multi-period excess earnings method, which is a specific discounted cash flow model. The fair value of the development agreement is determined at an amount equal to the present value of the incremental cash flows attributable only to future development revenue, discounted to the present value at a risk-adjusted rate of return. With respect to the application of this methodology, we used the following significant assumptions: future development revenues; general and administrative expenses; and discount rate. The projections are modeled for a ten year period, representing the cash flow earnings period pursuant to the development agreement. Indefinite Lived Intangible Assets Trademarks Trademarks are based on the value of our brand, which reflects the level of service and quality we provide and from which we generate repeat business. Trademarks are valued using the relief from royalty method, which presumes that without ownership of such trademark, we would have to make a stream of payments to a brand or franchise owner in return for the right to use their name. By virtue of this asset, we avoid any such payments and record the related intangible value of our ownership of the Borgata name. We used the following significant projections and assumptions to determine value under the relief from royalty method: revenue from gaming and hotel activities; royalty rate; general and administrative expenses; tax expense; terminal growth rate; discount rate; and the present value of tax benefit. The projections underlying this discounted cash flow model were forecasted for fifteen years. Gaming License Rights Gaming license rights represent the value of the license to conduct gaming in certain jurisdictions, which is subject to highly extensive regulatory oversight, and a limitation on the number of licenses available for issuance therein. The value of gaming licenses is determined using a multi-period excess earnings method, which is a specific discounted cash flow model. The value is determined at an amount equal to the present value of the incremental after-tax cash flows attributable only to future gaming revenue, discounted to present value at a risk-adjusted rate of return. With respect to the application of this methodology, we used the following significant projections and assumptions: gaming revenues; gaming operating expenses; general and administrative expenses; tax expense; terminal value; and discount rate. These projections are modeled for a five year period. Activity For the Nine Months Ended September 30, 2011 and 2010 The following table sets forth the changes in these intangible assets during the nine months ended September 30, 2011 and 2010:
Future Amortization Customer relationships are being amortized on an accelerated basis over an approximate four-year period. Favorable lease rates are being amortized on a straight-line basis over a weighted-average useful life of 43.8 years. Future amortization is as follows:
Trademarks and gaming license rights are not subject to amortization, as we have determined that they have an indefinite useful life, however these assets are subject to an annual impairment test. Impairment Testing Intangible assets include gaming license rights, trademarks and customer lists. Indefinite lived intangible assets are not subject to amortization, but they are subject to an annual impairment test in the second quarter of each year and between annual test dates in certain circumstances. License rights are tested for impairment using a discounted cash flow approach, and trademarks are tested for impairment using the relief-from-royalty method. If the fair value of an indefinite-lived intangible asset is less than its carrying amount, an impairment loss is recognized equal to the difference. If our estimates of projected cash flows related to these assets are not achieved, or if any other significant assumptions are changed, we may be subject to an interim impairment test prior to our next annual scheduled impairment test. As a result of such test, we may be subject to a future impairment charge, which could have a material adverse impact on our consolidated financial statements. The results of our annual scheduled impairment test of indefinite-lived intangible assets, performed during the second quarter of 2011, did not require us to record an impairment charge; however, if our estimates of projected cash flows related to these assets are not achieved, or if any other significant assumptions are changed, we may be subject to an interim impairment test prior to our next annual scheduled impairment test. Such test could result in a future a future impairment charge, which could have a material adverse impact on our consolidated financial statements. During the first quarter of 2011, we performed an interim impairment test over the trademark we recorded in connection with the valuation of Borgata due to our consideration of certain facts and circumstances surrounding an adverse change in the business climate in Atlantic City. We believe our actual results have been adversely impacted by increased regional competition, and that in addition, our projected future results will be further impacted by cannibalization of our business upon the opening of a new property in Atlantic City, which was announced in February 2011. We also believe the refinancing of Borgata's debt and recapitalization of its member equity contributed to the results of this impairment test. Our analysis consisted of a valuation of the trademark, using the relief from royalty method, as discussed above. The only significant change in our assumptions from the initial fair valuation were revised revenue and profitability projections, reflecting the impact of the changed present and forecasted circumstances. The impairment test shall consist of a comparison of the fair value of trademark with its carrying amount. As a result, we recorded a $5.0 million impairment to the trademark, representing the amount by which the carrying amount exceeded its fair value. |
Condensed Consolidated Statement of Changes in Stockholders' Equity (Parentheticals) (USD $) In Thousands | 9 Months Ended | |
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Sep. 30, 2011 | Sep. 30, 2010 | |
Derivative instruments fair value adjustment, tax | $ 4,230 | $ 3,756 |
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Consolidation of Certain Interests [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Business Combination and Consolidation of Variable Interest Entity | CONSOLIDATION OF CERTAIN INTERESTS Controlling Interest Borgata Hotel Casino and Spa Overview The Company and MGM each originally held a 50% interest in Marina District Development Holding Co., LLC (“Holding Company”). The Holding Company owns all the equity interests in Marina District Development Company, LLC, d.b.a. Borgata Hotel Casino and Spa. In February 2010, we entered into an agreement with MGM to amend the operating agreement to, among other things, facilitate the transfer of MGM's interest in the Holding Company ("MGM Interest") to a divestiture trust (“Divestiture Trust”) established for the purpose of selling the MGM Interest to a third party. The proposed sale of the MGM Interest through the Divestiture Trust was a part of a then-proposed settlement agreement between MGM and the New Jersey Department of Gaming Enforcement (the “NJDGE”). Pursuant to the terms of the amended operating agreement, in connection with the refinancing of the Borgata bank credit facility on August 6, 2010, the Holding Company made a $135.4 million one-time distribution to us, of which $30.8 million was a priority distribution equal to the excess prior capital contributions made by us. On March 17, 2010, MGM announced that its settlement agreement with the NJDGE had been approved by the New Jersey Casino Control Commission ("NJCCC"). Under the terms of the settlement agreement, MGM agreed to transfer the MGM Interest into the Divestiture Trust and further agreed to sell such interest within a 30-month period. During the first 18 months of such period, MGM has the power to direct the trustee to sell the MGM Interest, subject to the approval of the NJCCC. If the sale has not occurred by such time, the trustee will be solely responsible for the sale of the MGM Interest. The MGM Interest was transferred to the Divestiture Trust on March 24, 2010. MGM has subsequently announced that it has entered into an amendment with respect to its settlement agreement with the NJDGE, as approved by the NJCCC. The amendment provides that the mandated sale of the MGM Interest be increased by an additional 18 months to a total of 48 months. During the first 36 months (or until March 24, 2013), MGM has the right to direct the Divestiture Trust to sell the MGM Interest. If a sale is not concluded by that time, the Divestiture Trust will be responsible for selling MGM's Interest during the following 12-month period. Effective Change in Control In connection with the amendments to the operating agreements MGM relinquished all of its specific participating rights under the operating agreement, and we retained all authority to manage the day-to-day operations of Borgata. MGM's relinquishment of its participating rights effectively provided us with direct control of Borgata. This resulting change in control required acquisition method accounting in accordance with the authoritative accounting guidance for business combinations. Acquisition Method Accounting The application of the acquisition method accounting guidance had the following effects on our condensed consolidated financial statements: (i) our previously held equity interest was measured at a provisional fair value at the date control was obtained; (ii) we recognized and measured the identifiable assets and liabilities in accordance with promulgated valuation recognition and measurement provisions; and (iii) we recorded the noncontrolling interest held in trust for the economic benefit of MGM as a separate component of our stockholders' equity. The provisional fair value measurements and estimates of these items were estimated as of the date we effectively obtained control. The provisional fair value measurements and estimates of these items have been subsequently refined. We had provisionally recorded these fair values using an earnings valuation multiple model, because, at the time of the preliminary estimate, we had not completed our procedures with respect to the independent valuation of the business enterprise and Borgata's tangible and intangible assets. Our subsequent valuation procedures have necessitated a revision of the valuation of the provisional assets and liabilities. Thus, upon finalization of our valuation, certain measurement adjustments were identified and retrospectively recorded in the condensed consolidated balance sheet as of December 31, 2010, and certain disclosures were updated to reflect the measurement period adjustments, as reflected herein. Retrospective Adjustment to Condensed Consolidated Balance Sheet We have retrospectively adjusted the provisional values to reflect the fair valuation, and therefore, the condensed consolidated balance sheet as of December 31, 2010 presented herein reflects the adjustments above.
Bargain Purchase Gain The fair valuation resulted in the recording of a bargain purchase gain, due to the excess fair value of Borgata over the historical basis of our equity interest in Borgata. Recorded in write-downs and other items, net on the condensed consolidated statement of operations, this gain was recorded as a cumulative adjustment during the nine months ended September 30, 2011. The gain was computed as follows:
The fair value of our controlling interest included a $72.4 million control premium, which is reflected in the fair value of the enterprise, and included in the calculation of the bargain purchase gain. A control premium of 10% was applied to the enterprise value members' equity, excluding interest bearing debt, to calculate an indicated value of equity on a controlling basis. While the value of control is somewhat below prevailing market rates, we believe the control premium reflects the value of our influence, mitigated by only a 50% interest and return. Results of Operations of Borgata (for the period from March 24, 2010 through September 30, 2010) reflecting amounts included on a consolidated basis The results of Borgata, as included in the accompanying condensed consolidated statements of operations from the date we effectively obtained control, March 24, 2010, (specifically, for the period from March 24 through September 30, 2010) for the nine months ended September 30, 2010) are presented below. These results of operations do not reflect the retrospective impact from the measurement period adjustments discussed above, as such amounts were not material to either the three and nine months ended September 30, 2010.
Supplemental Pro Forma Information Pro Forma Condensed Consolidated Statement of Operations for the nine months ended September 30, 2010 The following supplemental pro forma information presents the financial results as if the effective control of Borgata had occurred as of the beginning of the earliest period presented herein, or on January 1, 2010. This supplemental pro forma information has been prepared for comparative purposes and does not purport to be indicative of what the actual results for the nine months ended September 30, 2010 would have been had the consolidation of Borgata been completed as of the earlier date, nor are they indicative of any future results.
The pro forma adjustments reflect the differences resulting from the conversion of the equity method of accounting to a fully consolidated presentation. There were no significant intercompany transactions affecting the statement of operations between the Boyd wholly-owned entities and Borgata which would require elimination during the nine months ended September 30, 2010. Variable Interest LVE Energy Partners, LLC The effects of the consolidation of LVE on our financial position as of September 30, 2011 and December 31, 2010, and its impact on our results of operations for the three and nine months ended September 30, 2011 are reconciled by respective line items to amounts as reported in our condensed consolidated balance sheets and condensed consolidated statements of operations are presented below. The primary impact on our condensed consolidated balance sheets as of September 30, 2011 and December 31, 2010 was as follows:
The reduction in accounts receivable, net and other liabilities reflects the elimination of the Periodic Fee booked as a receivable by LVE, which mirrors the payable recorded on Boyd's general ledger. Both the receivable and payable are eliminated in consolidation completely, thereby having no impact on our consolidated balance sheet. The impact on our condensed consolidated statement of operations for the three months ended September 30, 2011 was as follows:
The impact on our condensed consolidated statement of operations for the nine months ended September 30, 2011 was as follows:
The reduction in other revenue and preopening expenses reflects the elimination of the Periodic Fee paid by Boyd Gaming to LVE. Such fee is recognized as revenue by LVE, but eliminated in consolidation completely, thereby having no impact on our consolidated other revenues. Although this Periodic Fee is eliminated in this consolidation, it is actually paid to LVE directly on a monthly basis. |
Asset Acquisitions | 9 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Asset Acquisitions [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Finite-Lived Intangible Assets Acquired [Table Text Block] | ASSET ACQUISITIONS We account for the acquisition of assets in business combination transactions in accordance with the accounting standards, which require that the assets acquired and liabilities assumed be recorded at their estimated fair values. In September 2011, the Company acquired the membership interests of a limited liability company (the "LLC") for a purchase price of $24.5 million. The primary asset of the LLC is a previously executed development agreement (the "Development Agreement") with a Native American Tribe (the "Tribe"). The Development Agreement establishes the terms between the LLC and the Tribe under which a gaming facility will be developed on the Tribe's land. The Development Agreement provides a fee of 5% of gross revenues of the gaming operations, (subject to a maximum percentage capped by Indian Gaming Regulation), upon completion of development, and for a subsequent period of seven years. The fair value of the assets of the LLC was allocated in our consolidated financial statements as follows:
Other than the obligation under the Development Agreement to develop the gaming facility, there were no liabilities assumed in connection with the acquisition of the LLC. In addition to approximately $4.5 million expended by the prior owners of the LLC related to pre-development efforts, we are obligated to fund certain pre-development costs, which are estimated to be approximately $1 million to $2 million annually, for the next several years. These costs are reimbursable to us with future cash flows from the operations of the gaming facility and are evidenced by a note receivable from the Tribe. |
Commitments and Contingencies | 9 Months Ended |
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Sep. 30, 2011 | |
Commitments and Contingencies [Abstract] | |
Commitments and Contingencies Disclosure | COMMITMENTS AND CONTINGENCIES Commitments There have been no material changes to our commitments described under Note 12, Commitments and Contingencies, in our Annual Report on Form 10-K for the year ended December 31, 2010 filed with the SEC on March 15, 2011. Contingencies Nevada Use Tax Refund Claims On March 27, 2008, the Nevada Supreme Court issued a decision in Sparks Nugget, Inc. vs. The State of Nevada Department of Taxation (the “Department”), holding that food purchased for subsequent use in the provision of complimentary and/or employee meals was exempt from use tax. On April 14, 2008, the Department filed a Petition for Rehearing (the “Petition”) on the decision. Additionally, on the same date the Nevada Legislature filed an Amicus Curiae brief in support of the Department's position. The Nevada Supreme Court denied the Department's Petition on July 17, 2008. We paid use tax, over the period November 2000 through May 2008, on food purchased for subsequent use in complimentary and employee meals at our Nevada casino properties and estimate the refund to be in the range of $17.5 million to $19.9 million, including interest. In late 2009, the Department audited and denied our refund claim and subsequently issued a $12.3 million sales tax deficiency assessment, plus interest of $7.5 million. We appealed both the denial of the refund claim as well as the deficiency assessment in a hearing before the Nevada Administrative Law Judge ("Judge") in September 2010. In April 2011, the judge issued a split decision, granting a refund on employee meals and applying a sales tax measure on complimentary meals; however, the ruling barred retroactive application of the sales tax measure to all years included in the refund claim period, effectively overturning the Department's 2009 deficiency assessment. Both we and the Department appealed the decision, with the exception of the portion related to the deficiency assessment, to the Nevada State Tax Commission (the "Commission"). The Department did not appeal the Judge's decision overturning the 2009 deficiency assessment and therefore, the ruling on the deficiency assessment is final and non-appealable. On August 8, 2011, the Commission remanded the case back to the Judge. The administrative hearing was held on September 26, 2011, at which time we introduced additional supporting documentation. The Judge issued a decision on November 8, 2011, reversing her position on the employee meal refund claim. Such decision also affirmed the denial of the complimentary meal refund, as well as the denial of a retroactive application of the sales tax measure to both employee and complimentary meals. We intend to appeal the decision to the Commission. Due to uncertainty surrounding the ultimate resolution of an appeal to the Commission, as well as subsequent appeals to higher levels of the state judicial system, we will not record any gain until both we and the Department have exhausted all appeal options and a final, non-appealable decision has been rendered. For periods subsequent to May 2008, we have not collected, remitted or accrued a liability for sales tax on complimentary and employee meals at our Nevada casino properties, as we do not believe it is probable, based on both procedural issues and the technical merits of the Department's arguments, that we will owe this tax. Blue Chip Property Taxes In May 2007, Blue Chip received a valuation notice indicating an unanticipated increase of nearly 400% to its assessed property value as of January 1, 2006. At that time, we estimated that the increase in assessed property value could result in a property tax assessment ranging between $4 million and $11 million for the eighteen-month period ended June 30, 2007. We recorded an additional charge of $3.2 million during the three months ended June 30, 2007 to increase our property tax liability to $5.8 million at June 30, 2007 as we believed that was the most likely amount to be assessed within the range. We subsequently received a property tax bill related to our 2006 tax assessment for $6.2 million in December 2007. As we have appealed the assessment, Indiana statutes allow for a minimum required payment of $1.9 million, which was paid against the $6.2 million assessment in January 2008. In February 2009, we received a notice of revaluation, which reduced the property's assessed value by $100 million and the tax assessment by approximately $2.2 million per year. We have subsequently paid the minimum required payment of $1.9 million against provisional bills received in 2007 through 2011, all of which were based on the 2006 valuation notice. In March 2011, we reached a settlement with the assessor, reducing the valuation by an additional $96.0 million and $74.0 million for the 2006 and 2007 tax years, respectively. As a result of the agreement reached on the 2006 and 2007 valuations, we have revised our accrual for years 2008 through 2011 to reflect the expected carryforward effect of the reductions received in the prior year settlements. In October 2011, we reached an agreement with the assessor on valuations for tax years 2008 and 2009. As a result, we further reduced our property tax liability and previously accrued property tax expense by an additional $3.7 million during the three months ended September 30, 2011, which aggregated to a reduction of $9.7 million during the nine months ended September 30, 2011. Although we have not received valuation notices for years 2010 through 2011, or final tax rates for the years 2007 through 2011, we believe the assessment for the period from January 1, 2008 through September 30, 2011 could result in a property tax assessment ranging between $10.0 million and $15.0 million. We have accrued, net of the payments discussed above, approximately $14.6 million of property tax liability as of September 30, 2011, based on what we believe to be the most likely assessment within our range, once all appeals have been exhausted; however, we can provide no assurances that the estimated amount will approximate the actual amount. The final tax assessment notices for the period January 1, 2007 through January 1, 2011, which have not been received as of September 30, 2011, could result in further adjustment to our estimated property tax liability at Blue Chip. Copeland Alvin C. Copeland, the sole shareholder (deceased) of an unsuccessful applicant for a riverboat license at the location of our Treasure Chest Casino (“Treasure Chest”), has made several attempts to have the Treasure Chest license revoked and awarded to his company. In 1999 and 2000, Copeland unsuccessfully opposed the renewal of the Treasure Chest license and has brought two separate legal actions against Treasure Chest. In November 1993, Copeland objected to the relocation of Treasure Chest from the Mississippi River to its current site on Lake Pontchartrain. The predecessor to the Louisiana Gaming Control Board allowed the relocation over Copeland's objection. Copeland then filed an appeal of the agency's decision with the Nineteenth Judicial District Court. Through a number of amendments to the appeal, Copeland unsuccessfully attempted to transform the appeal into a direct action suit and sought the revocation of the Treasure Chest license. Treasure Chest intervened in the matter in order to protect its interests. The appeal/suit, as it related to Treasure Chest, was dismissed by the District Court and that dismissal was upheld on appeal by the First Circuit Court of Appeal. Additionally, in 1999, Copeland filed a direct action against Treasure Chest and certain other parties seeking the revocation of Treasure Chest's license, an award of the license to him, and monetary damages. The suit was dismissed by the trial court, citing that Copeland failed to state a claim on which relief could be granted. The dismissal was appealed by Copeland to the Louisiana First Circuit Court of Appeal. On September 21, 2002, the First Circuit Court of Appeal reversed the trial court's decision and remanded the matter to the trial court. On January 14, 2003, we filed a motion to dismiss the matter and that motion was partially denied. The Court of Appeal refused to reverse the denial of the motion to dismiss. In May 2004, we filed additional motions to dismiss on other grounds. There was no activity regarding this matter during 2005 and 2006, and the case was set to be dismissed by the court for failure to prosecute by the plaintiffs in mid-May 2007; however on May 1, 2007, the plaintiff filed a motion to set a hearing date related to the motions to dismiss. The hearing was scheduled for September 10, 2007, at which time all parties agreed to postpone the hearing indefinitely. The hearing has not yet been rescheduled. Mr. Copeland has since passed away and his son, the executor of his estate, has petitioned the court to be substituted as plaintiff in the case. On June 9, 2009, the plaintiff filed to have the exceptions set for hearing. The parties decided to submit the exceptions to the court on the previously filed briefs. The court issued a ruling denying the exceptions on August 9, 2010. Copeland's counsel indicated a desire to move forward with the litigation and requested that the parties respond to outstanding discovery. Subsequently, on August 11, 2010, Robert J. Guidry, the co-defendant, filed a third party demand against the U.S. Attorney's Office seeking enforcement of Guidry's plea agreement which would limit Guidry's exposure in the case. On September 9, 2010, the U.S. Attorney's Office removed the suit to the U.S. District Court, Middle District of Louisiana. Pending before the District Court are a motion to dismiss for failing to state a cause of action filed by Guidry, asserting the same arguments he tried in state court, which the Company joined, and a motion to dismiss for lack of subject matter jurisdiction filed by the U.S. Attorney, which may result in the case being remanded to state court. The U.S. District Court heard the motions on March 16, 2011. A ruling has not yet been issued. On April 1, 2011, the U.S. Attorney's Office moved for summary judgment, maintaining its jurisdictional argument as well as seeking substantive relief. On September 2, 2011, the judge issued an Order stating that the case should be remanded to state district court but allowed for additional filings by September 13, 2011. A Remand Order was issued on September 15, 2011, sending the case back to the 19th Judicial District Court, East Baton Rouge Parish, State of Louisiana.We currently are vigorously defending the lawsuit. If this matter ultimately results in the Treasure Chest license being revoked, it could have a significant adverse effect on our business, financial condition and results of operations. We are also parties to various legal proceedings arising in the ordinary course of business. We believe that, except for the Copeland matter discussed above, all pending claims, if adversely decided, would not have a material adverse effect on our business, financial position or results of operations. |
Property and Equipment, Net | 9 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Property and Equipment, Net [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Property, Plant and Equipment Disclosure | PROPERTY AND EQUIPMENT, NET Property and equipment, net consists of the following:
Depreciation expense for the three months ended September 30, 2011 and 2010 was $46.2 million and $52.5 million, respectively. Depreciation expense for the nine months ended September 30, 2011 and 2010 was $138.4 million and $147.9 million, respectively. The amounts recorded during the nine months ended September 30, 2011 include the effect of certain measurement period adjustments. Other property and equipment presented in the table above primarily relates to costs capitalized in conjunction with major improvements and that have not yet been placed into service, and accordingly, such costs are not currently being depreciated. We test certain of these property and equipment assets for recoverability if a recent operating or cash flow loss, combined with a history of operating or cash flow losses or a projection or forecast that demonstrates continuing losses, is associated with the use of a long-lived asset. Impairment is the condition that exists when the carrying amount of a long-lived asset exceeds its fair value. An impairment loss shall be recognized only if the carrying amount of a long-lived asset is not recoverable and exceeds its fair value. The carrying amount of a long-lived asset is not recoverable if it exceeds the sum of the undiscounted cash flows expected to result from the use and eventual disposition of the asset. That assessment shall be based on the carrying amount of the asset at the date it is tested for recoverability. An impairment loss shall be measured as the amount by which the carrying amount of a long-lived asset exceeds its fair value. |
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Noncontrolling Interest [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Noncontrolling Interest Disclosure | NONCONTROLLING INTEREST Noncontrolling interest represents: (i) the 50% interest in Borgata, held by the Divestiture Trust for the economic benefit of MGM, which was initially recorded at fair value at the date of the effective change in control, on March 24, 2010; and (ii) all 100% of the members' equity interest in LVE, the variable interest entity which was consolidated in our financial statements effective January 1, 2010, but in which we hold no equity interest. Pursuant to the authoritative accounting guidance for noncontrolling interests, a noncontrolling interest continues to be attributed its share of losses even if that attribution results in a deficit noncontrolling interest balance, as is the case with LVE, as presented below. Changes in the noncontrolling interest during the nine months ended September 30, 2011 are as follows:
LVE Comprehensive Income LVE has entered into interest rate derivative contracts in order to hedge exposure to increasing interest rates, and the impact of those rates on the cash flows of its variable-rate debt. LVE's active interest rate swaps are as follows (notional amount in thousands):
These derivatives were de-designated in July 2011. At inception, these interest rate derivatives were designated as cash flow hedges and determined to be highly effective. The differential to be paid or received as a result of these swaps is accrued as interest rates change and is recognized as an adjustment to interest expense. The change in fair value of the effective portion of these derivative has been recorded in accumulated other comprehensive loss. During the three and nine months ended September 30, 2011, LVE recognized a gain of $0.1 million and a loss of $0.7 million, respectively, in comprehensive income related to the changes in the fair value of the effective portion of these hedges. Prior to January 1, 2010, the date LVE is first reflected in our financial condition and results of operations, hedge accounting was discontinued on the interest rate swap related to the taxable debt because it was no longer expected to be highly effective in hedging the exposure to increased interest rates and the impact of those rates on cash flows. The ineffective portion of the swap caused the variable-rate debt to increase at a slower pace than the contractual increases in notional amount of the swap. |
Fair Value Measurements | 9 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Fair Value [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Fair Value Disclosures | FAIR VALUE MEASUREMENTS We have adopted the authoritative accounting guidance for fair value measurements, which does not determine or affect the circumstances under which fair value measurements are used, but defines fair value, expands disclosure requirements around fair value and specifies a hierarchy of valuation techniques based on whether the inputs to those valuation techniques are observable or unobservable. Observable inputs reflect market data obtained from independent sources, while unobservable inputs reflect the Company's market assumptions. These inputs create the following fair value hierarchy: Level 1: Quoted prices for identical instruments in active markets. Level 2: Quoted prices for similar instruments in active markets; quoted prices for identical or similar instruments in markets that are not active; and model-derived valuations in which all significant inputs and significant value drivers are observable in active markets. Level 3: Valuations derived from valuation techniques in which one or more significant inputs or significant value drivers are unobservable. As required by the guidance for fair value measurements, financial assets and liabilities are classified in their entirety based on the lowest level of input that is significant to the fair value measurement. Thus, assets and liabilities categorized as Level 3 may be measured at fair value using inputs that are observable (Levels 1 and 2) and unobservable (Level 3). Management's assessment of the significance of a particular input to the fair value measurement requires judgment and may affect the valuation of assets and liabilities and their placement within the fair value hierarchy levels. Balances Measured at Fair Value The following tables show the fair values of certain of our financial instruments.
The fair value of our cash and cash equivalents, classified in the fair value hierarchy as Level 1, is based on statements received from our banks at September 30, 2011 and December 31, 2010. Our derivative instruments are classified in the fair value hierarchy as Level 2 as the LIBOR swap rate is observable at commonly quoted intervals for the full term of the interest rate swaps. See Note 10, Derivative Instruments for further discussion regarding the fair valuation of our interest rate swaps. Balances Disclosed at Fair Value The following table provides the fair value measurement information about our long-term debt at September 30, 2011 and December 31, 2010.
The estimated fair value of the Amended Credit Facility is based on a relative value analysis performed on or about September 30, 2011 and December 31, 2010, respectively. The estimated fair value of Borgata's bank credit facility at September 30, 2011 and December 31, 2010 approximates its carrying value due to the short-term nature and variable repricing of the underlying Eurodollar loans comprising the Borgata bank credit facility. The estimated fair values of our senior subordinated and senior notes and Borgata's senior secured notes are based on quoted market prices as of September 30, 2011 and December 31, 2010, respectively. Debt included in the “Other” category is fixed-rate debt that is due March 2013 and is not traded and does not have an observable market input; therefore, we have estimated its fair value based on a discounted cash flow approach, after giving consideration to the changes in market rates of interest, creditworthiness of both parties, and credit spreads. There were no transfers between Level 1 and Level 2 measurements during the nine months ended September 30, 2011 or the year ended December 31, 2010. Fair Value of Non-Recourse Obligations of Variable Interest Entity At September 30, 2011 and December 31, 2010, the carrying value of LVE's long-term debt approximates its fair value due to the prevailing interest rates on the debt, which are comparable to market. |
Segment Information | 9 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Segment Information [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Segment Reporting Disclosure | SEGMENT INFORMATION We have aggregated certain of our properties in order to present four Reportable Segments: (i) Las Vegas Locals; (ii) Downtown Las Vegas; (iii) Midwest and South; and (iv) Atlantic City. The table below lists the classification of each of our properties.
Results of Operations - Adjusted EBITDA We determine each of our wholly-owned properties' profitability based upon Property EBITDA, which represents each property's earnings before interest expense, income taxes, depreciation and amortization, preopening expenses, write-downs and other charges, share-based compensation expense, deferred rent, change in value of derivative instruments, and gain/loss on early retirements of debt, as applicable. Reportable Segment Adjusted EBITDA is the aggregate sum of the Property EBITDA for each of the properties included in our Las Vegas Locals, Downtown Las Vegas, and Midwest and South segments, and also includes our share of Borgata's operating income before net amortization, preopening and other items. Results for Downtown Las Vegas include the results of our travel agency and captive insurance company. Effective April 1, 2008, we reclassified the reporting of our Midwest and South segment to exclude the results of Dania Jai-Alai, our pari-mutuel jai-alai facility, since it does not share similar economic characteristics with our other Midwest and South operations; therefore, the results of Dania Jai-Alai are included as part of the “Other” category on the accompanying table. We reclassify the reporting of corporate expense on the accompanying table in order to exclude it from our subtotal for Reportable Segment Adjusted EBITDA and include it as part of total other operating costs and expenses. Furthermore, corporate expense is now presented to include its portion of share-based compensation expense. Corporate expense represents unallocated payroll, professional fees, aircraft expenses and various other expenses not directly related to our casino and hotel operations, in addition to the corporate portion of share-based compensation expense. Other operating costs and expenses include Property EBITDA from Dania Jai-Alai, deferred rent, and share-based compensation expense charged to our Reportable Segments. Interest expense is net of interest income and amounts capitalized. The following table sets forth, for the periods indicated, certain operating data for our Reportable Segments, and reconciles Adjusted EBITDA to operating income (loss), as reported in our accompanying condensed consolidated statements of operations for the three and nine months ended September 30, 2011 and 2010.
Operating Income from Borgata The following table reconciles our operating income from Borgata, as reported in our condensed consolidated statements of operations, to the Atlantic City Reportable Segment Adjusted EBITDA, as reported above:
As discussed above, Borgata's results of operations for the three and nine months ended September 30, 2011 and for the period from July 1, 2010 through September 30, 2010 and March 24 through September 30, 2010 are included in our condensed consolidated statements of operations for the three and nine months ended September 30, 2011 and 2010, respectively. Total Assets The Company's total assets, by Reportable Segment, consisted of the following amounts at September 30, 2011 and December 31, 2010:
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Long-Term Debt | 9 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Long Term Debt Net of Current Maturities [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Long-term Debt | LONG-TERM DEBT Long-term debt, net of current maturities consists of the following:
Bank Credit Facility Significant Terms On December 3, 2010, we entered into an Amendment and Restatement Agreement among certain financial institutions (each a “Lender”), Bank of America, N.A., as administrative agent and letter of credit issuer and Wells Fargo Bank, National Association, as swing line lender (the “Amendment and Restatement Agreement”). Pursuant to the terms of the Amendment and Restatement Agreement, our First Amended and Restated Credit Agreement, dated as of May 24, 2007, as amended by the First Amendment and Consent to First Amended Credit Agreement, dated as of December 21, 2009 (as amended, the “Amended Credit Facility”), was amended and restated to, among other things, (i) reduce the aggregate commitments under the former credit facility and (ii) permit consenting Lenders to extend the maturity date of their commitments, new Lenders to issue revolving commitments and term loans and existing Lenders to increase their commitments (each, an “Extending Lender”) in each case with a maturity date five years from the restatement effective date. Each of the Extending Lenders permanently reduced their commitments under the former credit facility by up to 50% of the amount thereof. As a result, the aggregate commitments under the Amended Credit Facility were reduced from $3 billion to approximately $1.5 billion (including $500 million of term loans, and excluding $548.8 million in non-extending amounts), which commitments may be increased from time to time by up to $500 million (instead of $1 billion in commitment increases provided for under the former credit facility) through additional revolving credit or term loans under the Amended Credit Facility. Pursuant to the terms of the Amended Credit Facility, the term loans amortize in an annual amount equal to 5% of the original principal amount thereof, which commenced on March 31, 2011, payable on a quarterly basis. The interest rate per annum applicable to revolving and term loans under the Amended Credit Facility is based upon, at the option of the Company, LIBOR or the “base rate,” plus an applicable margin in either case. The applicable margin under the Amended Credit Facility is a percentage per annum determined in accordance with a specified pricing grid based on the total leverage ratio. The applicable margin on the outstanding balance on the Extended Revolving Facility (as defined in our Amended Credit Facility) ranges from 2.50% to 3.50% (if using LIBOR), and from 1.50% to 2.50% (if using the base rate). The applicable margin on the outstanding balance of the loans and commitments of the non-extending lenders continues to range from 0.625% to 1.625% (if using LIBOR), and from 0.0% to 0.375% (if using the base rate). A fee of a percentage per annum (which ranges from 0.250% to 0.500%) determined by the level of the total leverage ratio is payable on the unused portions of the Amended Credit Facility. The “base rate” under the Amended Credit Facility is the highest of (x) Bank of America's publicly-announced prime rate, (y) the federal funds rate plus 0.50%, or (z) the Eurodollar rate for a one month period plus 1.00%. Subject to certain conditions, amounts outstanding under the Amended Credit Facility may be prepaid without premium or penalty, and the unutilized portion of any of the commitments may be terminated without penalty. The blended interest rate for outstanding borrowings under our Amended Credit Facility was 3.3% at both September 30, 2011 and December 31, 2010. At September 30, 2011, approximately $1.42 billion was outstanding under our Amended Credit Facility, with $15.5 million allocated to support various letters of credit, leaving remaining contractual availability of approximately $564.5 million. Guarantees The Company's obligations under the Amended Credit Facility, subject to certain exceptions, are guaranteed by certain of the Company's subsidiaries and are secured by the capital stock of certain subsidiaries. In addition, subject to certain exceptions, the Company and each of the guarantors granted the administrative agent first priority liens and security interests on substantially all of their real and personal property (other than gaming licenses and subject to certain other exceptions) as additional security for the performance of the secured obligations under the Amended Credit Facility. Financial and Other Covenants The Amended Credit Facility contains certain financial and other covenants, including, without limitation, various covenants (i) requiring the maintenance of a minimum consolidated interest coverage ratio of 2.00 to 1.00, (ii) establishing a maximum permitted consolidated total leverage ratio (discussed below), (iii) establishing a maximum permitted secured leverage ratio (discussed below), (iv) imposing limitations on the incurrence of indebtedness, (v) imposing limitations on transfers, sales and other dispositions and (vi) imposing restrictions on investments, dividends and certain other payments. Subject to certain exceptions, the Company may be required to repay the amounts outstanding under the Amended Credit Facility in connection with certain asset sales and issuances of certain additional secured indebtedness. The minimum consolidated Interest Coverage Ratio (all capitalized terms in this section are defined in the Amended Credit Facility) is calculated as (a) twelve-month trailing Consolidated EBITDA to (b) consolidated interest expense. The maximum permitted consolidated Total Leverage Ratio is calculated as Consolidated Funded Indebtedness to twelve-month trailing Consolidated EBITDA. Presently, and through December 31, 2011, our maximum Total Leverage Ratio is set at 7.75 to 1.00. Thereafter, on a scheduled basis in 0.25 basis point increments, the maximum ratio decreases to a low 5.50 to 1.00 at March 15, 2015 through the duration of the term. The maximum permitted Secured Leverage Ratio is calculated as Secured Indebtedness to twelve-month trailing Consolidated EBITDA. Presently, and through March 31, 2012, our maximum Secured Leverage Ratio is set at 4.50 to 1.00. Thereafter, on a scheduled basis in 0.25 basis point increments, the maximum ratio decreases to a low 3.25 to 1.00 at June 30, 2014 through the duration of the term. Compliance with Financial Covenants We believe that, at September 30, 2011, we were in compliance with the Amended Credit Facility covenants, including the minimum consolidated Interest Coverage Ratio, the maximum permitted consolidated Total Leverage Ratio and the maximum permitted Secured Leverage Ratio, which, as of that date, were 2.26 to 1.00, 7.15 to 1.00 and 4.25 to 1.00, respectively. Debt Financing Costs In conjunction with the Amendment and Restatement Agreement, we incurred approximately $20.6 million in incremental debt financing costs, which have been deferred and are being amortized over the remaining term of the Amended Credit Facility. Senior Notes 9.125% Senior Notes due December 2018. Significant Terms On November 10, 2010, we issued, through a private placement, $500 million aggregate principal amount of 9.125% senior notes due December 2018. The notes require semi-annual interest payments on December 1 and June 1 of each year, which commenced on June 1, 2011. The notes will mature on December 1, 2018 and are fully and unconditionally guaranteed, on a joint and several basis, by certain of our current and future domestic restricted subsidiaries, all of which are 100% owned by us. The notes contain certain restrictive covenants that, subject to exceptions and qualifications, among other things, limit our ability and the ability of our restricted subsidiaries (as defined in the indenture governing the notes) to incur additional indebtedness or liens, pay dividends or make distributions or repurchase our capital stock, make certain investments, and sell or merge with other companies. We believe that we are in compliance with these covenants at September 30, 2011. In addition, upon the occurrence of a change of control (as defined in the indenture governing the notes), we will be required, unless certain conditions are met, to offer to repurchase the notes at a price equal to 101% of the principal amount of the notes, plus accrued and unpaid interest, if any, to, but not including, the date of purchase. If we sell assets or experience an event of loss, we will be required under certain circumstances to offer to purchase the notes. At any time prior to December 1, 2013, we may redeem up to 35% of the aggregate principal amount of the notes at a redemption price equal to 109.125% of the principal amount thereof, plus accrued and unpaid interest, if any, up to, but excluding, the applicable redemption date, with the net cash proceeds that we raise in one or more equity offerings. In addition, prior to December 1, 2014, we may redeem the notes, in whole or in part, at a redemption price equal to 100% of the principal amount thereof, plus accrued and unpaid interest, if any, up to, but excluding, the applicable redemption date, plus a make whole premium. Subsequent to December 1, 2014, we may redeem all or a portion of the notes at redemption prices (expressed as percentages of the principal amount) ranging from 104.563% in 2014 to 100% in 2016 and thereafter, plus accrued and unpaid interest. Registration Rights Agreement Pursuant to the registration rights agreement entered into with the initial purchasers of these senior notes at the time of the private placement, on September 15, 2011, the Company commenced an offer to exchange all of the outstanding $500.0 million aggregate principal amount of the notes that have been registered under the Securities Act of 1933. On October 18, 2011, the expiration date of the exchange offer, 100% of the notes were validly tendered and accepted for exchange. Senior Subordinated Notes 6.75% Senior Subordinated Notes due April 2014. Significant Terms On April 15, 2004, we issued, through a private placement, $350 million principal amount of 6.75% senior subordinated notes due April 2014. In July 2004, all, except for $50,000 in aggregate principal amount of these notes, were exchanged for substantially similar notes that were registered with the SEC. The notes require semi-annual interest payments on April 15 and October 15 of each year, through April 2014, at which time the entire principal balance becomes due and payable. The notes contain certain restrictive covenants regarding, among other things, incurrence of debt, sales of assets, mergers and consolidations, and limitations on restricted payments (as defined in the indenture governing the notes). We believe that we are in compliance with these covenants at September 30, 2011. Effective April 15, 2009, we may redeem all or a portion of the notes at redemption prices (expressed as percentages of the principal amount) ranging from 103.375% in 2009 to 100% in 2012 and thereafter, plus accrued and unpaid interest. Senior Subordinated Notes 7.125% Senior Subordinated Notes due February 2016. Significant Terms On January 30, 2006, we issued $250 million principal amount of 7.125% senior subordinated notes due February 2016. The notes require semi-annual interest payments on February 1 and August 1 of each year, through February 2016, at which time the entire principal balance becomes due and payable. The notes contain certain restrictive covenants regarding, among other things, incurrence of debt, sales of assets, mergers and consolidations, and limitations on restricted payments (as defined in the indenture governing the notes). We believe that we are in compliance with these covenants at September 30, 2011. We may redeem all or a portion of the notes at redemption prices (expressed as percentages of the principal amount) ranging from 103.563% in 2011 to 100% in 2014 and thereafter, plus accrued and unpaid interest. Repurchases of Senior Subordinated Notes We did not repurchase any of our senior subordinated or senior notes during the three months ended September 30, 2011 or 2010. During the nine months ended September 30, 2011 we did not repurchase any of our senior subordinated notes. During the nine months ended September 30, 2010, we purchased and retired $33.0 million, principal amount of our senior subordinated notes. The total purchase price of the notes was $28.9 million, resulting in a gain of $3.9 million, net of associated deferred financing fees, which is recorded on our condensed consolidated statement of operations for the respective period. The transactions were funded by availability under our former bank credit facility. Indentures The indentures governing the senior and senior subordinated notes each include permitted investment clauses, the most restrictive of which limits the amount of permitted investments to a basket of $150 million, increased by a calculated amount including 50% of net income, as defined in the indentures, and net of previous permitted investments. Also, the indentures allow for the incurrence of additional indebtedness, if after giving effect to such incurrence, our coverage ratio (as defined in the indentures, essentially a ratio of consolidated EBITDA to fixed charges, including interest) for a trailing four quarter period on a pro forma basis would be at least 2.0 to 1.0. Such pro forma coverage ratio was above 2.0 to 1.0 at the dates in which these respective tranches of senior and senior subordinated notes were issued; and, at September 30, 2011, after giving effect to the repayment of certain indebtedness, as defined in the indentures, our coverage ratio was above 2.0 to 1.0. Borgata Bank Credit Facility Significant Terms In August 2010, Marina District Finance Company, Inc. (“MDFC”) closed a $950 million debt financing, consisting of the establishment of a $150.0 million new payment priority secured revolving credit facility (the "Borgata bank credit facility") and the issuance of $800 million of aggregate principal amount of notes. MDFC is a wholly-owned subsidiary of MDDC, which develops and owns Borgata, and which is the guarantor of both the Borgata bank credit facility and the notes. The proceeds from the financing were used to (i) pay fees and expenses related to the financing; (ii) repay the former credit facility; and (iii) make a one-time distribution to Borgata's joint venture owners. The Borgata bank credit facility provides for a $150.0 million payment priority secured revolving credit facility and matures in August 2014. The Borgata bank credit facility is guaranteed on a senior secured basis by MDDC and any future subsidiaries of MDDC and is secured by a first priority lien on substantially all of the assets of the assets of MDFC, MDDC and any future subsidiaries of MDDC, subject to certain exceptions. The obligations under the Borgata bank credit facility will have priority in payment to payment of the notes. Neither Boyd Gaming nor any of its wholly-owned subsidiaries is a guarantor of Borgata's bank credit facility or senior secured notes. Outstanding borrowings under the Borgata bank credit facility accrue interest at a selected rate based upon either: (i) the highest of (a) the agent bank's quoted prime rate, (b) the one-month Eurodollar rate plus 1.00%, and (c) the daily federal funds rate plus 1.50%, and in any event not less than 1.50% (such highest rate, the “base rate”), or (ii) the Eurodollar rate, plus with respect to each of clause (i) and (ii) an applicable margin as provided in the Borgata bank credit facility. In addition, a commitment fee is incurred on the unused portion of the Borgata bank credit facility ranging from 0.50% per annum to 1.00% per annum. At September 30, 2011, the outstanding balance under the Borgata bank credit facility was $15.0 million, leaving contractual availability of $135.0 million. The interest rate on the outstanding borrowings at September 30, 2011 was 4.4%. Financial and Other Covenants The Borgata bank credit facility contains certain financial and other covenants, including, without limitation, (i) establishing a minimum consolidated EBITDA (as defined in the Borgata bank credit facility) of $150 million over each trailing twelve-month period ending on the last day of each calendar quarter; (ii) establishing a minimum liquidity (as defined in the Borgata bank credit facility) of $30 million as of the end of each calendar quarter; (iii) imposing limitations on MDFC's ability to incur additional debt; and (iv) imposing restrictions on Borgata's ability to pay dividends and make other distributions, make certain restricted payments, create liens, enter into transactions with affiliates, merge or consolidate, and engage in unrelated business activities. Compliance with Financial Covenants We believe that MDFC was in compliance with the Borgata bank credit facility covenants, including minimum consolidated EBITDA and minimum liquidity, which, at September 30, 2011, were $155.4 million and $135.0 million, respectively. Borgata Senior Secured Notes 9.5% Senior Secured Notes Due 2015. Significant Terms In August 2010, MDFC issued, through a private placement, $400 million principal amount of 9.5% senior secured notes due October 2015, at an issue price of 98.943%, resulting in a discount at issuance of $4.2 million. The notes require semi-annual interest payments on April 15 and October 15, which commenced on April 15, 2011. The notes are guaranteed on a senior secured basis by MDDC and any future restricted subsidiaries of MDDC. The notes contain covenants that, among other things, limit MDFC's ability and the ability of MDDC to (i) incur additional indebtedness or liens; (ii) pay dividends or make distributions; (iii) make certain investments; (iv) sell or merge with other companies; and (v) enter into certain types of transactions. MDFC believes that it is in compliance with these covenants at September 30, 2011. At any time prior to October 15, 2013, the notes may be redeemed at 100% of the principal amount thereof, plus a “make-whole premium” and accrued and unpaid interest. In addition, until October 15, 2013, MDFC may redeem up to 35% of the notes at a redemption price of 109.50% of the principal amount, plus accrued and unpaid interest, if any, to the redemption date, with the net cash proceeds from certain equity offerings. In addition, at any time prior to October 15, 2013, MDFC may redeem up to an aggregate of 10% of the notes in each twelve month period at a redemption price of 103% of the principal amount thereof plus accrued and unpaid interest, if any, to, but not including, the redemption date. On or after October 15, 2013, MDFC shall have the option to redeem the 2015 Notes, in whole or in part, at redemption prices (expressed as percentages of the principal amount) ranging from 104.75% beginning on October 15, 2013 to 102.375% beginning on October 15, 2014, plus accrued and unpaid interest to the applicable redemption date. 9.875% Senior Secured Notes Due 2018. Significant Terms In August 2010, MDFC issued, through a private placement, $400 million principal amount of 9.875% senior secured notes due August 2018, at an issue price of 99.315%, resulting in an original issue discount of $2.7 million. The notes require semi-annual interest payments on February 15 and August 15, which commenced on February 15, 2011. The notes are guaranteed on a senior secured basis by MDDC and any future restricted subsidiaries of MDDC. The notes contain covenants that, among other things, limit MDFC's ability and the ability of MDDC to (i) incur additional indebtedness or liens; (ii) pay dividends or make distributions; (iii) make certain investments; (iv) sell or merge with other companies; and (v) enter into certain types of transactions. MDFC believes that it is in compliance with these covenants at September 30, 2011. At any time prior to August 15, 2014, the notes may be redeemed at 100% of the principal amount thereof, plus a “make-whole premium” and accrued and unpaid interest. In addition, until August 15, 2013, MDFC may redeem up to 35% of the notes at a redemption price of 109.875% of the principal amount, plus accrued and unpaid interest, if any, to the redemption date, with the net cash proceeds from certain equity offerings. In addition, at any time prior to August 15, 2013, MDFC may redeem up to an aggregate of 10% of the notes in each twelve month period at a redemption price of 103% of the principal amount thereof plus accrued and unpaid interest, if any, to, but not including, the redemption date. On or after August 15, 2013, MDFC shall have the option to redeem the 2018 Notes, in whole or in part, at redemption prices (expressed as percentages of the principal amount) ranging from 104.938% beginning on August 15, 2014, to 102.469% beginning on August 15, 2015, to 100% beginning on August 15, 2016 and thereafter, plus accrued and unpaid interest, to the applicable redemption date. The original issue discount has been recorded as an offset to the principal amount of these notes and is being accreted to interest expense over the term of the notes using the effective interest method. The effective interest rate on the 9.50% notes due 2015 notes is 10.2% and on the 9.875% notes due 2018 is 10.3%. Repurchase of Senior Secured Notes During the three and nine months ended September 30, 2011, Borgata repurchased and retired $8.5 million, principal amount, in total, of their senior secured notes, which included $2.0 million of the 9.5% notes and $6.5 million of the 9.875% notes. The total purchase price of the notes was $8.4 million, resulting in a gain of $0.1 million, net of associated deferred financing fees, which is recorded on Borgata's condensed consolidated statement of operations for the respective periods. Registration Rights Agreement Pursuant to the registration rights agreement entered into with the initial purchasers of these senior secured notes at the time of the private placement, on May 27, 2011, MDFC commenced an offer to exchange all of the outstanding $400.0 million aggregate principal amount of 9.5% senior secured notes and $400.0 million aggregate principal amount of 9.875% senior secured notes for new 9.5% senior secured notes due 2015 and 9.875% senior secured notes due 2018, respectively, that have been registered under the Securities Act of 1933. On June 28, 2011, the expiration date of the exchange offer, $396.4 million of the 9.5% senior secured notes due 2015 and $400.0 million of the 9.875% senior secured notes due 2018 were validly tendered and accepted for exchange. This amount represents approximately 99.1% of the 9.5% senior secured notes and 100% of the 9.875% senior secured notes, respectively. |
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