-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, PjXybQRsziI3zmb0lzAxQK7V5p1Ws+CheeWY8HEeWMhwFPJHWRc71Y6WyUnMc+nP 5RlkBc2KTPgC3+SAJhQFuw== /in/edgar/work/20000811/0001095811-00-002569/0001095811-00-002569.txt : 20000921 0001095811-00-002569.hdr.sgml : 20000921 ACCESSION NUMBER: 0001095811-00-002569 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 5 CONFORMED PERIOD OF REPORT: 20000630 FILED AS OF DATE: 20000811 FILER: COMPANY DATA: COMPANY CONFORMED NAME: BOYD GAMING CORP CENTRAL INDEX KEY: 0000906553 STANDARD INDUSTRIAL CLASSIFICATION: [7990 ] IRS NUMBER: 880242733 STATE OF INCORPORATION: NV FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: SEC FILE NUMBER: 001-12168 FILM NUMBER: 692140 BUSINESS ADDRESS: STREET 1: 2950 S INDUSTRIAL RD CITY: LAS VEGAS STATE: NV ZIP: 89109 BUSINESS PHONE: 7027927200 MAIL ADDRESS: STREET 1: 2950 SOUTH INDUSTRIAL ROAD CITY: LAS VEGAS STATE: NV ZIP: 89109 FORMER COMPANY: FORMER CONFORMED NAME: BOYD GROUP DATE OF NAME CHANGE: 19941130 10-Q 1 e10-q.txt FORM 10-Q QUARTERLY ENDED JUNE 30,2000. 1 UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D. C. 20549 FORM 10-Q (Mark One) [ X ] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the period ended June 30, 2000 OR [ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from _________ to _________ Commission file number 1-12168 BOYD GAMING CORPORATION (Exact name of registrant as specified in its charter) NEVADA 88-0242733 (State or other jurisdiction of (I.R.S. Employer incorporation or organization) Identification No.) 2950 INDUSTRIAL ROAD LAS VEGAS, NEVADA 89109 (Address of principal executive offices) (Zip Code) (702) 792-7200 (Registrant's telephone number, including area code) Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to filing requirements for the past 90 days. Yes X No --- --- Shares outstanding of each of the Registrant's classes of common stock as of July 31, 2000: Class Outstanding - ---------------------------- ----------- Common stock, $.01 par value 62,234,954 2 BOYD GAMING CORPORATION QUARTERLY REPORT ON FORM 10-Q FOR THE PERIOD ENDED JUNE 30, 2000 TABLE OF CONTENTS PART I. FINANCIAL INFORMATION
Page No. -------- Item 1. Unaudited Condensed Consolidated Financial Statements Condensed Consolidated Balance Sheets at June 30, 2000 and December 31, 1999 3 Condensed Consolidated Statements of Operations for the three and six month periods ended June 30, 2000 and 1999 4 Condensed Consolidated Statement of Changes in Stockholders' Equity for the six month period ended June 30, 2000 5 Condensed Consolidated Statements of Cash Flows for the six month periods ended June 30, 2000 and 1999 6 Notes to Condensed Consolidated Financial Statements 7 Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations 19 Item 3. Quantitative and Qualitative Disclosure about Market Risk 28 PART II. OTHER INFORMATION Item 4. Submission of Matters to a Vote of Security Holders 29 Item 6. Exhibits and Reports on Form 8-K 30 Signature Page 31
2 3 PART I. FINANCIAL INFORMATION ITEM 1. FINANCIAL STATEMENTS BOYD GAMING CORPORATION AND SUBSIDIARIES CONDENSED CONSOLIDATED BALANCE SHEETS (UNAUDITED) (IN THOUSANDS, EXCEPT SHARE DATA) - -------------------------------------------------------------------------------- ASSETS
JUNE 30, DECEMBER 31, 2000 1999 ---------- ------------ Current assets Cash and cash equivalents .................................. $ 72,069 $ 86,192 Accounts receivable, net ................................... 13,075 17,585 Inventories ................................................ 5,245 6,181 Prepaid expenses and other ................................. 13,538 14,718 Income taxes receivable .................................... -- 1,108 Deferred income taxes ...................................... 8,550 16,835 ---------- ---------- Total current assets ............................... 112,477 142,619 Property and equipment, net ................................... 923,750 901,014 Other assets and deferred charges, net ........................ 48,637 45,689 Intangible assets, net ........................................ 349,982 354,659 ---------- ---------- Total assets ....................................... $1,434,846 $1,443,981 ========== ========== LIABILITIES AND STOCKHOLDERS' EQUITY Current liabilities Current maturities of long-term debt ....................... $ 1,585 $ 1,744 Trade payables ............................................. 29,482 36,531 Construction payables ...................................... 15,598 8,609 Accrued liabilities Payroll and related .................................... 29,628 31,184 Interest and other ..................................... 72,583 58,862 Income taxes payable ................................... 10,662 -- ---------- ---------- Total current liabilities .......................... 159,538 136,930 Long-term debt, net of current maturities ..................... 880,579 982,149 Deferred income taxes and other liabilities ................... 63,994 57,923 Commitments and contingencies Stockholders' equity Preferred stock, $.01 par value; 5,000,000 shares authorized -- -- Common stock, $.01 par value; 200,000,000 shares authorized; 62,234,954 and 62,227,753 shares outstanding ............ 622 622 Additional paid-in capital .................................. 142,020 141,986 Retained earnings ........................................... 188,093 124,371 ---------- ---------- Total stockholders' equity ......................... 330,735 266,979 ---------- ---------- Total liabilities and stockholders' equity ......... $1,434,846 $1,443,981 ========== ==========
The accompanying notes are an integral part of these unaudited condensed consolidated financial statements. 3 4 BOYD GAMING CORPORATION AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED) (IN THOUSANDS, EXCEPT PER SHARE DATA) - --------------------------------------------------------------------------------
THREE MONTHS ENDED SIX MONTHS ENDED JUNE 30, JUNE 30, ----------------------- ----------------------- 2000 1999 2000 1999 --------- --------- --------- --------- Revenues Casino ......................................... $ 215,490 $ 178,222 $ 441,118 $ 357,755 Food and beverage .............................. 38,821 39,977 79,731 80,945 Room ........................................... 19,305 17,470 37,700 36,774 Other .......................................... 18,863 18,746 36,071 36,091 Management fee ................................. -- 10,031 3,815 20,844 Termination fee, net ........................... -- -- 70,988 -- --------- --------- --------- --------- Gross revenues .................................... 292,479 264,446 669,423 532,409 Less promotional allowances ....................... 22,760 22,510 46,997 47,215 --------- --------- --------- --------- Net revenues ........................... 269,719 241,936 622,426 485,194 --------- --------- --------- --------- Costs and expenses Casino ......................................... 106,683 89,067 216,498 179,365 Food and beverage .............................. 25,603 26,193 50,878 52,026 Room ........................................... 5,848 5,941 11,554 12,183 Other .......................................... 18,495 17,103 35,010 32,504 Selling, general and administrative ............ 42,398 35,239 84,037 70,277 Maintenance and utilities ...................... 12,100 9,891 23,806 19,545 Depreciation ................................... 19,682 17,096 38,784 34,390 Amortization of intangible license rights and acquisition costs ........................... 2,450 1,438 4,900 2,876 Corporate expense .............................. 4,769 6,587 12,107 12,689 Preopening expense ............................. 1,950 315 2,332 854 --------- --------- --------- --------- Total .................................. 239,978 208,870 479,906 416,709 --------- --------- --------- --------- Operating income .................................. 29,741 33,066 142,520 68,485 --------- --------- --------- --------- Other income (expense) Interest income ................................ 328 46 462 103 Interest expense, net of amounts capitalized ... (19,250) (16,662) (39,368) (33,793) --------- --------- --------- --------- Total .................................. (18,922) (16,616) (38,906) (33,690) --------- --------- --------- --------- Income before provision for income taxes and cumulative effect ............................. 10,819 16,450 103,614 34,795 Provision for income taxes ........................ 4,166 6,745 39,892 14,450 --------- --------- --------- --------- Income before cumulative effect ................... 6,653 9,705 63,722 20,345 Cumulative effect of a change in accounting for start-up activities, net of tax benefit of $936 -- -- -- (1,738) --------- --------- --------- --------- Net income ........................................ $ 6,653 $ 9,705 $ 63,722 $ 18,607 ========= ========= ========= ========= Basic and diluted net income per common share: Income before cumulative effect ................ $ 0.11 $ 0.16 $ 1.02 $ 0.33 Cumulative effect, net of tax .................. -- -- -- (0.03) --------- --------- --------- --------- Net income ..................................... $ 0.11 $ 0.16 $ 1.02 $ 0.30 ========= ========= ========= ========= Average basic shares outstanding .................. 62,230 62,029 62,229 62,029 Average diluted shares outstanding ................ 62,302 62,143 62,303 62,085 ========= ========= ========= =========
The accompanying notes are an integral part of these unaudited condensed consolidated financial statements. 4 5 BOYD GAMING CORPORATION AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY FOR THE SIX MONTH PERIOD ENDED JUNE 30, 2000 (UNAUDITED) (IN THOUSANDS, EXCEPT SHARE DATA) - --------------------------------------------------------------------------------
COMMON STOCK ADDITIONAL TOTAL ---------------------- PAID-IN RETAINED STOCKHOLDERS' SHARES AMOUNT CAPITAL EARNINGS EQUITY ---------- ------ ---------- -------- ------------- Balances, January 1, 2000 62,227,753 $622 $141,986 $124,371 $266,979 Net income .............. -- -- -- 63,722 63,722 Stock options exercised . 7,201 -- 34 -- 34 ---------- ---- -------- -------- -------- BALANCES, JUNE 30, 2000 . 62,234,954 $622 $142,020 $188,093 $330,735 ========== ==== ======== ======== ========
The accompanying notes are an integral part of these unaudited condensed consolidated financial statements. 5 6 BOYD GAMING CORPORATION AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED) (IN THOUSANDS) - --------------------------------------------------------------------------------
SIX MONTHS ENDED JUNE 30, --------------------- 2000 1999 --------- -------- CASH FLOWS FROM OPERATING ACTIVITIES Net income ................................................. $ 63,722 $ 18,607 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation and amortization ......................... 43,684 37,266 Cumulative effect of a change in accounting principle . -- 2,674 Deferred income taxes ................................. 14,018 11,238 Preopening expense .................................... 2,332 854 Equity loss in unconsolidated subsidiaries ............ 678 1,157 Changes in assets and liabilities: Accounts receivable, net ............................ 4,697 4,655 Inventories ......................................... 936 1,721 Prepaid expenses and other .......................... 1,180 (364) Other assets ........................................ 290 1,333 Other current liabilities ........................... 6,748 (1,896) Other liabilities ................................... 338 388 Income taxes receivable ............................. 1,108 2,494 Income taxes payable ................................ 10,662 -- --------- -------- Net cash provided by operating activities .................. 150,393 80,127 --------- -------- CASH FLOWS FROM INVESTING ACTIVITIES Acquisition of property, equipment and other assets ..... (55,975) (38,068) Investment in and advances to unconsolidated subsidiaries (4,514) (4,156) Preopening expense ...................................... (2,332) (854) --------- -------- Net cash used in investing activities ...................... (62,821) (43,078) --------- -------- CASH FLOWS FROM FINANCING ACTIVITIES Payments on long-term debt .............................. (429) (977) Net payments under credit agreements .................... (101,300) (41,250) Proceeds from issuance of common stock .................. 34 1,070 --------- -------- Net cash used in financing activities ...................... (101,695) (41,157) --------- -------- Net decrease in cash and cash equivalents .................. (14,123) (4,108) Cash and cash equivalents, beginning of period ............. 86,192 75,937 --------- -------- Cash and cash equivalents, end of period ................... $ 72,069 $ 71,829 ========= ======== SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION Cash paid for interest, net of amounts capitalized ...... $ 36,612 $ 35,172 Cash paid for income taxes, net of refunds .............. 14,104 3,882 ========= ======== SUPPLEMENTAL SCHEDULE OF NON-CASH INVESTING AND FINANCING ACTIVITIES Property additions acquired on construction and trade payables which were accrued, but not yet paid ......... $ 15,966 $ 2,195 ========= ========
The accompanying notes are an integral part of these unaudited condensed consolidated financial statements. 6 7 BOYD GAMING CORPORATION AND SUBSIDIARIES NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) - -------------------------------------------------------------------------------- NOTE 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Principles of Consolidation The accompanying condensed consolidated financial statements include the accounts of Boyd Gaming Corporation and its wholly-owned subsidiaries, collectively referred to herein as the "Company." The Company owns and operates eleven casino entertainment facilities located in Las Vegas, Nevada, Tunica, Mississippi, East Peoria, Illinois, Kenner, Louisiana, and Michigan City, Indiana as well as a travel agency located in Honolulu, Hawaii. In addition, the Company managed a casino entertainment facility in Philadelphia, Mississippi for which it had a management contract that expired on January 31, 2000 (see Note 3). All material intercompany accounts and transactions have been eliminated. Basis of Presentation In the opinion of management, the accompanying unaudited condensed consolidated financial statements contain all adjustments, consisting only of normal recurring adjustments, necessary to present fairly the results of its operations for the three and six month periods ended June 30, 2000 and 1999 and cash flows for the six month periods ended June 30, 2000 and 1999. It is suggested that this report be read in conjunction with the Company's audited consolidated financial statements included in the Annual Report on Form 10-K for the year ended December 31, 1999. The operating results for the three and six month periods ended June 30, 2000 and 1999 and cash flows for the six month periods ended June 30, 2000 and 1999 are not necessarily indicative of the results that will be achieved for the full year or future periods. Use of Estimates The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts in the condensed consolidated financial statements and accompanying notes. Significant estimates used by the Company include the estimated useful lives for depreciable and amortizable assets, the estimated allowance for doubtful accounts receivable, the estimated valuation allowance for deferred tax assets, and estimated cash flows in assessing the recoverability of long-lived assets. Actual results could differ from those estimates. Capitalized Interest Interest costs associated with major construction projects are capitalized. When no debt is incurred specifically for a project, interest is capitalized on amounts expended for the project using the Company's weighted average cost of borrowing. Capitalization of interest ceases when the project or discernible portions of the project are substantially complete. Capitalized interest during the three and six month periods ended June 30, 2000 was $1.3 million and $2.2 million, respectively. Capitalized interest during the three and six month periods ended June 30, 1999 was $0.3 million and $0.4 million, respectively. 7 8 BOYD GAMING CORPORATION AND SUBSIDIARIES NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) (CONTINUED) - -------------------------------------------------------------------------------- Preopening Expenses The Company expenses certain costs of start-up activities as incurred. During the three and six month periods ended June 30, 2000, the Company expensed $2.0 million and $2.3 million, respectively, in preopening expenses, $1.5 million of which relates to the Company's unsuccessful efforts to assist in the development and operation of a Rhode Island Indian casino with the Narragansett Indian Tribe. The remainder of the preopening expenses incurred during the three and six month periods ended June 30, 2000 relate primarily to the Company's share of preopening expense in The Borgata, the Company's Atlantic City joint venture. During the three and six month periods ended June 30, 1999, the Company expensed $0.3 million and $0.9 million in preopening costs that related primarily to the Company's share of preopening expense in The Borgata. Reclassifications Certain prior period amounts in the condensed consolidated financial statements have been reclassified to conform to the June 30, 2000 presentation. These reclassifications had no effect on the Company's net income. Recently Issued Accounting Standards In December 1999, the Securities and Exchange Commission issued Staff Accounting Bulletin No. 101, "Revenue Recognition in Financial Statements" ("SAB 101"). SAB 101 clarifies existing accounting principles related to revenue recognition in financial statements. The Company is required to comply with the provisions of SAB 101 by the fourth quarter of 2000. Due to the nature of the Company's operations, management does not believe that SAB 101 will have a significant impact on the Company's financial statements. NOTE 2. NET INCOME PER COMMON SHARE The Company has adopted Statement of Financial Accounting Standards ("SFAS") No. 128, "Earnings per Share" that requires the presentation of basic and diluted net income per share. Basic per share amounts are computed by dividing net income by the average shares outstanding during the period. Diluted per share amounts are computed by dividing net income by average shares outstanding plus the dilutive effects of common share equivalents. Diluted net income per share during the three and six month periods ended June 30, 2000 and 1999 is determined considering the dilutive effects of outstanding stock options. The effect of stock options outstanding to purchase approximately 5.4 million shares were not included in the diluted calculation during the three and six month periods ended June 30, 2000 and 4.5 million and 4.6 million shares, respectively, were not included in the diluted calculation during the three and six month periods ended June 30, 1999 since the exercise price of such options was greater than the average price of the Company's common shares during the period. NOTE 3. TERMINATION OF MANAGEMENT CONTRACT On October 20, 1999, the Company signed an agreement with the Mississippi Band of Choctaw Indians (the "Tribe") to terminate the Company's management of the Silver Star Resort and Casino in Philadelphia, Mississippi. Under the agreement, the Company continued to manage Silver Star under the terms of the management contract through January 31, 2000, at which time the Tribe made a $72 million termination 8 9 BOYD GAMING CORPORATION AND SUBSIDIARIES NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) (CONTINUED) - -------------------------------------------------------------------------------- payment to the Company and the Company recorded the termination fee, net of certain expenses. The agreement with the Tribe terminated the Company's original management contract 17 months prior to its scheduled maturity date. The one-time payment will accelerate the utilization of the Company's tax credits and net operating losses carried forward from prior years. As a result of this utilization, the majority of the Company's deferred tax assets are classified as part of current assets on the accompanying condensed consolidated balance sheets as of June 30, 2000 and December 31, 1999. NOTE 4. ACQUISITION On November 10, 1999, the Company acquired Blue Chip Casino, L.L.C. ("Blue Chip") for approximately $261 million in net cash, including $10.3 million for a hotel and parking facility that was under construction and attached to the existing casino complex. Intangible license rights, representing the excess of the purchase price over the fair value of the net assets acquired, was approximately $158 million. The purchase price excludes a contingent purchase price payment of $5.0 million. The contingent purchase price payment will be made to the former owners of Blue Chip Casino, Inc. in the event that, over a period of 36 months, Blue Chip's aggregate earnings before interest, taxes, depreciation and amortization and certain other qualified expenses exceeds a specified amount. The Company's pro forma condensed consolidated results of operations, as if the acquisition had occurred on January 1, 1999, are as follows:
SIX MONTHS ENDED JUNE 30, 1999 -------------- Pro forma (in thousands, except per share data): Net revenues ................................ $565,571 Income before cumulative effect ............. $ 30,930 Net income .................................. $ 29,192 Basic and diluted net income per common share: Income before cumulative effect ............. $ 0.50 Net income .................................. $ 0.47
NOTE 5. SUBSEQUENT EVENT Effective July 28, 2000, the Company amended its bank credit facility primarily to allow for an increase of up to $225 million in its joint venture investment in The Borgata and to reduce and modify the Company's capital raising requirements for The Borgata. 9 10 BOYD GAMING CORPORATION AND SUBSIDIARIES NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) (CONTINUED) - -------------------------------------------------------------------------------- NOTE 6. SEGMENT INFORMATION The Company's management reviews the results of operations based on the following distinct geographic gaming market segments: the Stardust Resort and Casino on the Las Vegas Strip; Sam's Town Hotel and Gambling Hall, the Eldorado Casino and Jokers Wild Casino on the Boulder Strip; the Downtown Properties; Sam's Town Hotel and Gambling Hall in Tunica, Mississippi; Par-A-Dice Hotel and Casino in East Peoria, Illinois; Treasure Chest Casino in Kenner, Louisiana; Blue Chip Casino in Michigan City, Indiana (acquired November 10, 1999); and management fee income from Silver Star Resort and Casino located near Philadelphia, Mississippi (through January 31, 2000). As used herein, "Downtown Properties" consist of the California Hotel and Casino, the Fremont Hotel and Casino, Main Street Station Casino, Brewery and Hotel and Vacations Hawaii. 10 11 BOYD GAMING CORPORATION AND SUBSIDIARIES NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) (CONTINUED) - --------------------------------------------------------------------------------
THREE MONTHS ENDED SIX MONTHS ENDED JUNE 30, JUNE 30, -------------------- --------------------- 2000 1999 2000 1999 -------- -------- -------- --------- (IN THOUSANDS) Casino Revenue Stardust ............................. $ 24,172 $ 23,038 $ 49,868 $ 50,570 Sam's Town Las Vegas ................. 26,506 30,557 57,466 60,464 Eldorado and Jokers Wild ............. 7,099 7,476 14,855 15,168 Downtown Properties .................. 34,109 32,829 67,688 66,182 Sam's Town Tunica .................... 20,140 25,553 42,533 50,559 Par-A-Dice ........................... 32,327 27,066 64,531 52,242 Treasure Chest ....................... 25,926 31,703 52,971 62,570 Blue Chip ............................ 45,211 -- 91,206 -- -------- -------- -------- --------- Total casino revenue ......... $215,490 $178,222 $441,118 $ 357,755 ======== ======== ======== ========= EBITDA(1) Stardust ............................. $ 4,044 $ 4,015 $ 8,801 $ 10,229 Sam's Town Las Vegas ................. 5,353 7,874 14,080 15,769 Eldorado and Jokers Wild ............. 1,468 2,127 3,388 4,381 Downtown Properties .................. 11,511 9,584 21,598 18,930 Sam's Town Tunica .................... 1,002 6,411 4,005 13,454 Par-A-Dice ........................... 12,132 9,662 24,314 18,282 Treasure Chest ....................... 4,224 9,257 9,929 18,324 Silver Star .......................... -- 9,572 74,803 19,925 Blue Chip ............................ 18,858 -- 39,725 -- -------- -------- -------- --------- Property EBITDA .................... 58,592 58,502 200,643 119,294 -------- -------- -------- --------- Other Costs and Expenses Corporate expense .................... 4,769 6,587 12,107 12,689 Depreciation and amortization ........ 22,132 18,534 43,684 37,266 Preopening expense ................... 1,950 315 2,332 854 Other expense, net ................... 18,922 16,616 38,906 33,690 -------- -------- -------- --------- Total other costs and expenses 47,773 42,052 97,029 84,499 -------- -------- -------- --------- Income before provision for income taxes and other items ....................... 10,819 16,450 103,614 34,795 Provision for income taxes ............. 4,166 6,745 39,892 14,450 -------- -------- -------- --------- Income before cumulative effect ........ 6,653 9,705 63,722 20,345 Cumulative effect, net of tax .......... -- -- -- (1,738) -------- -------- -------- --------- Net income ............................. $ 6,653 $ 9,705 $ 63,722 $ 18,607 ======== ======== ======== =========
(1) EBITDA is earnings before interest, taxes, depreciation, amortization and preopening expense. The Company believes that EBITDA is a useful financial measurement for assessing the operating performances of its properties. EBITDA does not represent net income or cash flows from operating, investing or financing activities as defined by accounting principles generally accepted in the United States of America. 11 12 BOYD GAMING CORPORATION AND SUBSIDIARIES NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) (CONTINUED) - -------------------------------------------------------------------------------- NOTE 7. GUARANTOR INFORMATION The Company's 9.25% Notes are guaranteed by a majority of the Company's wholly-owned existing significant subsidiaries. These guaranties are full, unconditional, and joint and several. The Company has significant subsidiaries that do not guarantee the 9.25% Notes. As such, the following consolidating schedules present separate condensed financial statement information on a combined basis for the parent only, as well as the Company's guarantor subsidiaries and non-guarantor subsidiaries, as of June 30, 2000 and December 31, 1999 and for the three and six month periods ended June 30, 2000 and 1999. CONDENSED CONSOLIDATING BALANCE SHEET INFORMATION AS OF JUNE 30, 2000
COMBINED COMBINED NON- ELIMINATION PARENT GUARANTORS GUARANTORS ENTRIES CONSOLIDATED ---------- ---------- ---------- ----------- ------------ (IN THOUSANDS) ASSETS Current assets ............................. $ 2,319 $ 79,804 $ 30,684 $ (330)(1) $ 112,477 Property and equipment, net ................ 40,550 729,903 153,297 -- 923,750 Other assets and deferred charges, net ..... 1,152,194 (475,994) 521,532 (1,149,095)(1)(2) 48,637 Intangible assets, net ..................... -- 114,478 235,504 -- 349,982 ---------- --------- -------- ----------- ---------- Total assets ........................... $1,195,063 $ 448,191 $941,017 $(1,149,425) $1,434,846 ========== ========= ======== =========== ========== LIABILITIES AND STOCKHOLDERS' EQUITY Current liabilities ........................ $ 35,619 $ 73,125 $ 50,944 $ (150)(1) $ 159,538 Long-term debt, net of current maturities .. 822,700 57,879 -- -- 880,579 Deferred income taxes and other liabilities 6,009 52,103 5,882 -- 63,994 Stockholders' equity ....................... 330,735 265,084 884,191 (1,149,275)(2) 330,735 ---------- --------- -------- ----------- ---------- Total liabilities and stockholders' equity ............................ $1,195,063 $ 448,191 $941,017 $(1,149,425) $1,434,846 ========== ========= ======== =========== ==========
- ---------- Elimination Entries (1) To eliminate intercompany payables and receivables. (2) To eliminate investment in subsidiaries and subsidiaries' equity. 12 13 BOYD GAMING CORPORATION AND SUBSIDIARIES NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) (CONTINUED) - -------------------------------------------------------------------------------- CONDENSED CONSOLIDATING BALANCE SHEET INFORMATION AS OF DECEMBER 31, 1999
COMBINED COMBINED NON- ELIMINATION PARENT GUARANTORS GUARANTORS ENTRIES CONSOLIDATED ---------- ---------- ---------- ----------- ------------ (IN THOUSANDS) ASSETS Current assets ............................. $ 17,583 $ 100,696 $ 26,599 $ (2,259)(1) $ 142,619 Property and equipment, net ................ 43,559 708,072 149,383 -- 901,014 Other assets and deferred charges, net ..... 1,163,857 (524,688) 464,362 (1,057,842)(1)(2) 45,689 Intangible assets, net ..................... -- 116,107 238,552 -- 354,659 ---------- --------- -------- ----------- ---------- Total assets ........................... $1,224,999 $ 400,187 $878,896 $(1,060,101) $1,443,981 ========== ========= ======== =========== ========== LIABILITIES AND STOCKHOLDERS' EQUITY Current liabilities ........................ $ 36,470 $ 62,993 $ 39,640 $ (2,173)(1) $ 136,930 Long-term debt, net of current maturities .. 914,028 68,088 33 -- 982,149 Deferred income taxes and other liabilities 7,522 49,059 1,342 -- 57,923 Stockholders' equity ....................... 266,979 220,047 837,881 (1,057,928)(2) 266,979 ---------- --------- -------- ----------- ---------- Total liabilities and stockholders' Equity ............................ $1,224,999 $ 400,187 $878,896 $(1,060,101) $1,443,981 ========== ========= ======== =========== ==========
- ---------- Elimination Entries (1) To eliminate intercompany payables and receivables. (2) To eliminate investment in subsidiaries and subsidiaries' equity. 13 14 BOYD GAMING CORPORATION AND SUBSIDIARIES NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) (CONTINUED) - -------------------------------------------------------------------------------- CONDENSED CONSOLIDATING STATEMENT OF OPERATIONS INFORMATION FOR THE THREE MONTHS ENDED JUNE 30, 2000
COMBINED COMBINED NON- ELIMINATION PARENT GUARANTORS GUARANTORS ENTRIES CONSOLIDATED -------- ---------- ---------- ----------- ------------ (IN THOUSANDS) Revenues Casino .............................. $ -- $ 144,353 $ 71,137 $ -- $ 215,490 Food and beverage ................... -- 34,476 4,345 -- 38,821 Room ................................ -- 18,525 780 -- 19,305 Other ............................... 2,999 7,222 12,388 (3,746)(1) 18,863 Management fee and equity income .... 30,797 708 17,152 (48,657)(1) -- -------- --------- -------- -------- --------- Gross revenues ........................ 33,796 205,284 105,802 (52,403) 292,479 Less promotional allowances ........... -- 19,906 2,854 -- 22,760 -------- --------- -------- -------- --------- Net revenues ................ 33,796 185,378 102,948 (52,403) 269,719 -------- --------- -------- -------- --------- Costs and expenses Casino .............................. -- 79,706 26,977 -- 106,683 Food and beverage ................... -- 20,607 4,996 -- 25,603 Room ................................ -- 5,465 383 -- 5,848 Other ............................... -- 9,603 17,103 (8,211)(1) 18,495 Selling, general and administrative . -- 27,969 14,429 -- 42,398 Maintenance and utilities ........... -- 8,759 3,341 -- 12,100 Depreciation and amortization ....... 624 16,182 5,326 -- 22,132 Corporate expense ................... 8,059 31 425 (3,746)(1) 4,769 Preopening expense .................. 1,549 133 268 -- 1,950 -------- --------- -------- -------- --------- Total ....................... 10,232 168,455 73,248 (11,957) 239,978 -------- --------- -------- -------- --------- Operating income ...................... 23,564 16,923 29,700 (40,446) 29,741 Other income (expense), net ........... (17,823) (1,264) 165 -- (18,922) -------- --------- -------- -------- --------- Income before income taxes ............ 5,741 15,659 29,865 (40,446) 10,819 Provision (benefit) for income taxes .. (912) 2,771 2,307 -- 4,166 -------- --------- -------- -------- --------- Net income ............................ $ 6,653 $ 12,888 $ 27,558 $(40,446) $ 6,653 ======== ========= ======== ======== =========
- ---------- Elimination Entries (1) To eliminate intercompany revenue and expense. 14 15 BOYD GAMING CORPORATION AND SUBSIDIARIES NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) (CONTINUED) - -------------------------------------------------------------------------------- CONDENSED CONSOLIDATING STATEMENT OF OPERATIONS INFORMATION FOR THE THREE MONTHS ENDED JUNE 30, 1999
COMBINED COMBINED NON- ELIMINATION PARENT GUARANTORS GUARANTORS ENTRIES CONSOLIDATED -------- ---------- ---------- ----------- ------------ (IN THOUSANDS) Revenues Casino .............................. $ -- $ 146,519 $31,703 $ -- $ 178,222 Food and beverage ................... -- 37,259 2,718 -- 39,977 Room ................................ -- 17,470 -- -- 17,470 Other ............................... 2,846 8,298 11,147 (3,545)(1) 18,746 Management fee and equity income .... 34,726 11,910 5,238 (41,843)(1) 10,031 -------- --------- ------- -------- --------- Gross revenues ........................ 37,572 221,456 50,806 (45,388) 264,446 Less promotional allowances ........... -- 20,583 1,927 -- 22,510 -------- --------- ------- -------- --------- Net revenues ................ 37,572 200,873 48,879 (45,388) 241,936 -------- --------- ------- -------- --------- Costs and expenses Casino .............................. -- 77,745 11,322 -- 89,067 Food and beverage ................... -- 23,510 2,683 -- 26,193 Room ................................ -- 5,941 -- -- 5,941 Other ............................... -- 17,938 11,601 (12,436)(1) 17,103 Selling, general and administrative . -- 27,925 7,314 -- 35,239 Maintenance and utilities ........... -- 8,470 1,421 -- 9,891 Depreciation and amortization ....... 471 15,820 2,243 -- 18,534 Corporate expense ................... 9,629 66 437 (3,545)(1) 6,587 Preopening expense .................. 18 -- 297 -- 315 -------- --------- ------- -------- --------- Total ....................... 10,118 177,415 37,318 (15,981) 208,870 -------- --------- ------- -------- --------- Operating income ...................... 27,454 23,458 11,561 (29,407) 33,066 Other income (expense), net ........... (15,427) (1,462) 273 -- (16,616) -------- --------- ------- -------- --------- Income before income taxes ............ 12,027 21,996 11,834 (29,407) 16,450 Provision for income taxes ............ 2,322 4,423 -- -- 6,745 -------- --------- ------- -------- --------- Net income ............................ $ 9,705 $ 17,573 $11,834 $(29,407) $ 9,705 ======== ========= ======= ======== =========
- --------- Elimination Entries (1) To eliminate intercompany revenue and expense. 15 16 BOYD GAMING CORPORATION AND SUBSIDIARIES NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) (CONTINUED) - -------------------------------------------------------------------------------- CONDENSED CONSOLIDATING STATEMENT OF OPERATIONS INFORMATION FOR THE SIX MONTHS ENDED JUNE 30, 2000
COMBINED COMBINED NON- ELIMINATION PARENT GUARANTORS GUARANTORS ENTRIES CONSOLIDATED -------- ---------- ---------- ----------- ------------ (IN THOUSANDS) Revenues Casino .............................. $ -- $ 296,941 $144,177 $ -- $ 441,118 Food and beverage ................... -- 70,950 8,781 -- 79,731 Room ................................ -- 36,584 1,116 -- 37,700 Other ............................... 5,998 14,426 23,140 (7,493)(1) 36,071 Management fee and equity income .... 135,430 5,598 37,612 (174,825)(1) 3,815 Termination fee, net ................ -- 70,988 -- -- 70,988 --------- --------- -------- --------- --------- Gross revenues ........................ 141,428 495,487 214,826 (182,318) 669,423 Less promotional allowances ........... -- 41,607 5,390 -- 46,997 --------- --------- -------- --------- --------- Net revenues ................ 141,428 453,880 209,436 (182,318) 622,426 --------- --------- -------- --------- --------- Costs and expenses Casino .............................. -- 162,355 54,143 -- 216,498 Food and beverage ................... -- 41,188 9,690 -- 50,878 Room ................................ -- 10,974 580 -- 11,554 Other ............................... -- 69,553 33,448 (67,991)(1) 35,010 Selling, general and administrative . -- 56,427 27,610 -- 84,037 Maintenance and utilities ........... -- 17,157 6,649 -- 23,806 Depreciation and amortization ....... 1,128 32,142 10,414 -- 43,684 Corporate expense ................... 18,628 93 879 (7,493)(1) 12,107 Preopening expense .................. 1,563 161 608 -- 2,332 --------- --------- -------- --------- --------- Total ....................... 21,319 390,050 144,021 (75,484) 479,906 --------- --------- -------- --------- --------- Operating income ...................... 120,109 63,830 65,415 (106,834) 142,520 Other income (expense), net ........... (36,634) (2,625) 353 -- (38,906) --------- --------- -------- --------- --------- Income before income taxes ............ 83,475 61,205 65,768 (106,834) 103,614 Provision for income taxes ............ 19,753 15,252 4,887 -- 39,892 --------- --------- -------- --------- --------- Net income ............................ $ 63,722 $ 45,953 $ 60,881 $(106,834) $ 63,722 ========= ========= ======== ========= =========
- ---------- Elimination Entries (1) To eliminate intercompany revenue and expense. 16 17 BOYD GAMING CORPORATION AND SUBSIDIARIES NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) (CONTINUED) - -------------------------------------------------------------------------------- CONDENSED CONSOLIDATING STATEMENT OF OPERATIONS INFORMATION FOR THE SIX MONTHS ENDED JUNE 30, 1999
COMBINED COMBINED NON- ELIMINATION PARENT GUARANTORS GUARANTORS ENTRIES CONSOLIDATED -------- ---------- ---------- ----------- ------------ (IN THOUSANDS) Revenues Casino .............................. $ -- $ 295,185 $62,570 $ -- $ 357,755 Food and beverage ................... -- 75,737 5,208 -- 80,945 Room ................................ -- 36,774 -- -- 36,774 Other ............................... 5,692 17,091 20,396 (7,088)(1) 36,091 Management fee and equity income .... 71,685 24,561 10,350 (85,752)(1) 20,844 -------- --------- ------- -------- --------- Gross revenues ........................ 77,377 449,348 98,524 (92,840) 532,409 Less promotional allowances ........... -- 43,451 3,764 -- 47,215 -------- --------- ------- -------- --------- Net revenues ................ 77,377 405,897 94,760 (92,840) 485,194 -------- --------- ------- -------- --------- Costs and expenses Casino .............................. -- 156,434 22,931 -- 179,365 Food and beverage ................... -- 46,832 5,194 -- 52,026 Room ................................ -- 12,183 -- -- 12,183 Other ............................... -- 36,256 21,701 (25,453)(1) 32,504 Selling, general and administrative . -- 56,429 13,848 -- 70,277 Maintenance and utilities ........... -- 16,573 2,972 -- 19,545 Depreciation and amortization ....... 917 31,877 4,472 -- 37,266 Corporate expense ................... 18,850 95 832 (7,088)(1) 12,689 Preopening expense .................. 63 -- 791 -- 854 -------- --------- ------- -------- --------- Total ....................... 19,830 356,679 72,741 (32,541) 416,709 -------- --------- ------- -------- --------- Operating income ...................... 57,547 49,218 22,019 (60,299) 68,485 Other income (expense), net ........... (31,243) (3,002) 555 -- (33,690) -------- --------- ------- -------- --------- Income before income taxes ............ 26,304 46,216 22,574 (60,299) 34,795 Provision for income taxes ............ 5,959 8,491 -- -- 14,450 -------- --------- ------- -------- --------- Income before cumulative effect ....... 20,345 37,725 22,574 (60,299) 20,345 Cumulative effect, net of taxes ....... (1,738) -- -- -- (1,738) -------- --------- ------- -------- --------- Net income ............................ $ 18,607 $ 37,725 $22,574 $(60,299) $ 18,607 ======== ========= ======= ======== =========
- ---------- Elimination Entries (1) To eliminate intercompany revenue and expense. 17 18 BOYD GAMING CORPORATION AND SUBSIDIARIES NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) (CONTINUED) - -------------------------------------------------------------------------------- CONDENSED CONSOLIDATING STATEMENT OF CASH FLOW INFORMATION FOR THE SIX MONTHS ENDED JUNE 30, 2000
COMBINED COMBINED NON- PARENT GUARANTORS GUARANTORS CONSOLIDATED --------- ---------- ---------- ------------ (IN THOUSANDS) Cash flows from operating activities ............... $ 93,614 $ 39,392 $ 17,387 $ 150,393 --------- -------- -------- --------- Cash flows from investing activities Acquisition of property, equipment and other assets (3,866) (47,818) (4,291) (55,975) Investment in and advances to unconsolidated subsidiaries .................................... -- -- (4,514) (4,514) Preopening expense ................................ (1,563) (161) (608) (2,332) --------- -------- -------- --------- Net cash used in investing activities .............. (5,429) (47,979) (9,413) (62,821) --------- -------- -------- --------- Cash flows from financing activities Net payments under credit agreements ............. (101,300) -- -- (101,300) Proceeds from issuance of common stock ........... 34 -- -- 34 Receipt/(payment) of dividends ................... 3,459 911 (4,370) -- Receipt/ (payments) on long-term debt ............ 9,766 (10,195) -- (429) --------- -------- -------- --------- Net cash used in financing activities .............. (88,041) (9,284) (4,370) (101,695) --------- -------- -------- --------- Net increase (decrease) in cash and cash equivalents 144 (17,871) 3,604 (14,123) Cash and cash equivalents, beginning of period ..... 138 62,755 23,299 86,192 --------- -------- -------- --------- Cash and cash equivalents, end of period ........... $ 282 $ 44,884 $ 26,903 $ 72,069 ========= ======== ======== =========
CONDENSED CONSOLIDATING STATEMENT OF CASH FLOW INFORMATION FOR THE SIX MONTHS ENDED JUNE 30, 1999
COMBINED COMBINED NON- PARENT GUARANTORS GUARANTORS CONSOLIDATED --------- ---------- ---------- ------------ (IN THOUSANDS) Cash flows from operating activities ............... $ 37,991 $ 25,975 $ 16,161 $ 80,127 -------- -------- -------- -------- Cash flows from investing activities Acquisition of property, equipment and other assets (2,916) (31,323) (3,829) (38,068) Investment in and advances to unconsolidated subsidiaries .................................... -- (172) (3,984) (4,156) Preopening expense ................................ (63) -- (791) (854) -------- -------- -------- -------- Net cash used in investing activities .............. (2,979) (31,495) (8,604) (43,078) -------- -------- -------- -------- Cash flows from financing activities Net payments under credit agreements ............. (41,250) -- -- (41,250) Receipt/(payment) of dividends ................... 7,670 (3,304) (4,366) -- Other ............................................ 293 (200) -- 93 -------- -------- -------- -------- Net cash used in financing activities .............. (33,287) (3,504) (4,366) (41,157) -------- -------- -------- -------- Net increase (decrease) in cash and cash equivalents 1,725 (9,024) 3,191 (4,108) Cash and cash equivalents, beginning of period ..... 1,054 55,492 19,391 75,937 -------- -------- -------- -------- Cash and cash equivalents, end of period ........... $ 2,779 $ 46,468 $ 22,582 $ 71,829 ======== ======== ======== ========
18 19 ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS RESULTS OF OPERATIONS The following table sets forth, for the periods indicated, certain operating data for the Company's properties. As used herein, "Boulder Strip Properties" consist of Sam's Town Hotel and Gambling Hall ("Sam's Town Las Vegas"), the Eldorado Casino (the "Eldorado") and Jokers Wild Casino ("Jokers Wild"); "Downtown Properties" consist of the California Hotel and Casino (the "California"), the Fremont Hotel and Casino (the "Fremont"), Main Street Station, Casino, Brewery and Hotel ("Main Street Station") and Vacations Hawaii, the Company's wholly-owned travel agency which operates for the benefit of the Downtown casino properties; and "Central Region Properties" consist of Sam's Town Hotel and Gambling Hall in Tunica, Mississippi ("Sam's Town Tunica"), Par-A-Dice Hotel and Casino ("Par-A-Dice"), Treasure Chest Casino ("Treasure Chest"), Blue Chip Casino ("Blue Chip") (acquired in November 1999), and management fee income from Silver Star Resort and Casino (through January 31, 2000). Net revenues displayed in this table and discussed in this section are net of promotional allowances; as such, references to room revenue and food and beverage revenue do not agree to the amounts on the Condensed Consolidated Statements of Operations. Operating income from properties for the purpose of this table excludes corporate expense, including related depreciation and amortization, preopening expense and the termination fee.
THREE MONTHS ENDED SIX MONTHS ENDED JUNE 30, JUNE 30, --------------------- --------------------- 2000 1999 2000 1999 -------- -------- -------- -------- (IN THOUSANDS) Net revenues Stardust ................ $ 37,883 $ 35,831 $ 77,224 $ 77,121 Boulder Strip Properties 41,291 47,968 88,489 96,547 Downtown Properties (a) . 57,632 55,610 112,671 109,603 Central Region Properties 132,913 102,527 273,054 201,923 -------- -------- -------- -------- Total properties . $269,719 $241,936 $551,438 $485,194 ======== ======== ======== ======== Operating income Stardust ................ $ 205 $ 1,073 $ 1,273 $ 4,368 Boulder Strip Properties 3,290 6,280 10,428 12,670 Downtown Properties ..... 7,392 5,649 13,387 11,146 Central Region Properties 26,630 27,710 62,887 55,318 -------- -------- -------- -------- Total properties . $ 37,517 $ 40,712 $ 87,975 $ 83,502 ======== ======== ======== ========
- -------- (a) Includes revenues related to Vacations Hawaii, a Honolulu Travel Agency, of $11,029 and $10,401, respectively, for the three month periods ended June 30, 2000 and 1999 and revenues of $20,680 and $18,873, respectively, for the six month periods ended June 30, 2000 and 1999. REVENUES Consolidated net revenues increased 11.5% during the quarter ended June 30, 2000 compared to the quarter ended June 30, 1999. Company-wide casino revenue increased 21%, food and beverage revenue decreased 3.9% and room revenue increased 8.3%. The increase in net revenues is due primarily to the acquisition of 19 20 Blue Chip in November 1999. Blue Chip contributed $47 million in revenue during the quarter ended June 30, 2000. Partially offsetting the increase related to Blue Chip were declines in net revenues at Sam's Town Las Vegas, Sam's Town Tunica and Treasure Chest of 15.9%, 21% and 17.8%, respectively. The declines in net revenues at both Sam's Town operations are primarily due to significant construction disruption as well as the competitive environment in their respective gaming markets. The decline in net revenues at Treasure Chest is due primarily to intense promotional competition from its land-based competitor. Also offsetting the increase in net revenues from Blue Chip is the January 2000 termination of the management contract for Silver Star which contributed $10.0 million of revenue during the quarter ended June 30, 1999. Consolidated net revenues before the termination fee increased 13.7% during the six month period ended June 30, 2000 compared to the same period in the prior year. Company-wide casino revenue increased 23%, food and beverage revenue decreased 3.0% and room revenue remained virtually unchanged. The increase in net revenues is due primarily to the acquisition of Blue Chip in November 1999. Blue Chip contributed $95 million in revenue during the six month period ended June 30, 2000. Partially offsetting the increase related to Blue Chip were declines in net revenues at Sam's Town Las Vegas, Sam's Town Tunica and Treasure Chest of 9.7%, 16.2% and 14.8%, respectively. The declines in net revenues at both Sam's Town operations are primarily due to significant construction disruption as well as the competitive environment in their respective gaming markets. The decline in net revenues at Treasure Chest is due primarily to intense promotional competition from its land-based competitor. Also offsetting the increase in net revenues from Blue Chip is the January 2000 termination of the management contract for Silver Star which contributed $3.8 million in revenue during the six month period ended June 30, 2000 compared to $21 million during the same period in the prior year. OPERATING INCOME Consolidated operating income before preopening expense decreased 5.1% to $32 million during the quarter ended June 30, 2000 from $33 million during the quarter ended June 30, 1999. The acquisition of Blue Chip contributed $15.5 million of operating income during the quarter ended June 30, 2000. Operating income for the quarter ended June 30, 1999 includes $9.6 million from the management contract from Silver Star which terminated in January 2000. After the effects of Blue Chip and Silver Star, the decline in operating income is due primarily to the declines in net revenue at Sam's Town Las Vegas, Sam's Town Tunica and Treasure Chest. For the six month period ended June 30, 2000, consolidated operating income before preopening expense and termination fee increased 6.5% to $74 million from $69 million during the same period in the prior year. The acquisition of Blue Chip contributed $33 million of operating income during the six month period ended June 30, 2000 and Silver Star (which terminated in January 2000) contributed $3.8 million in operating income during the six month period ended June 30, 2000 compared to $20 million during the same period in the prior year. Offsetting the effects of Blue Chip were declines in operating income at Sam's Town Las Vegas, Sam's Town Tunica and Treasure Chest mainly related to their decline in revenues. STARDUST For the quarter ended June 30, 2000, net revenues at the Stardust increased 5.7% versus the same period in the prior year. Casino revenue increased 4.9% due primarily to an increase in slot wagering. Room revenue 20 21 increased 6.0% mainly due to an increase in occupied rooms. Operating income at the Stardust declined $0.9 million or 81% and operating income margin declined to 0.5% during the quarter ended June 30, 2000 as compared to 3.0% during the quarter ended June 30, 1999. These declines in operating income and operating income margin are due to the competitive environment on the Las Vegas Strip causing an increase in higher marketing and showroom expenses. For the six month period ended June 30, 2000, net revenues at the Stardust remained virtually unchanged versus the comparable period in the prior year. Casino revenue declined 1.4% as an increase in slot wagering did not offset a decline in table game wagering. Room revenue declined 7.1% due mainly to an 11% decline in available rooms as a result of the closure of the motor inn rooms in 1999. Operating income declined 71% to $1.3 million during the six month period ended June 30, 2000 compared to $4.4 million during the same period of the prior year due to the competitive environment on the Las Vegas Strip as well as an increase in showroom expenses. BOULDER STRIP PROPERTIES Net revenues at the Boulder Strip Properties declined 13.9% during the quarter ended June 30, 2000 compared to the quarter ended June 30, 1999 due primarily to construction disruption related to the ongoing $86 million renovation and expansion project at Sam's Town Las Vegas, which began during the last half of 1999, as well as increased competition. Casino revenue at the Boulder Strip Properties declined 11.6% due to declines in slot and table game wagering. Non-gaming revenue at the Boulder Strip Properties declined 23% primarily due to the permanent closure of Sam's Town's Western Emporium retail store in September 1999 as part of the property's renovation and expansion project. For the quarter ended June 30, 2000, operating income declined 48% to $3.3 million from $6.3 million during the quarter ended June 30, 1999. Operating income margin declined to 8.0% for the quarter ended June 30, 2000 from 13.1% during the quarter ended June 30, 1999. The declines in operating income and operating income margin are due primarily to the decline in net revenues. During the six month period ended June 30, 2000, net revenues at the Boulder Strip Properties declined 8.3% compared to the same period in the prior year. The decline is mainly attributable to construction disruption related to Sam's Town Las Vegas' renovation and expansion project as well as increased competition. Casino revenue declined 4.4% due to declines in slot and table game wagering and non-gaming revenue declined 23% due mainly to the permanent closure of Sam's Town Las Vegas' Western Emporium. Operating income at the Boulder Strip Properties declined 17.7% during the six month period ended June 30, 2000 and operating income margin declined from 13.1% during the six month period ended June 30, 1999 to 11.8% for the six month period ended June 30, 2000. The declines in operating income and operating income margin are primarily attributable to the decline in net revenues partially offset by a decline in marketing expenses. DOWNTOWN PROPERTIES Net revenues at the Downtown Properties increased 3.6% during the quarter ended June 30, 2000 compared to the quarter ended June 30, 1999 due primarily to a 3.9% increase in casino revenues that is attributable to an increase in slot and table game wagering. Non-gaming revenue increased 3.2% due mainly to a 6.0% increase in net revenues at Vacations Hawaii, the Company's Honolulu travel agency. Operating income at 21 22 the Downtown Properties increased 31% to $7.4 million during the quarter ended June 30, 2000 from $5.6 million during the quarter ended June 30, 1999 as a result of the increase in revenues as well as cost consolidation efforts and more effective marketing at the Downtown casino properties. Net revenues at the Downtown Properties increased 2.8% during the six month period ended June 30, 2000 compared to the same period in the prior year. The increase is attributable to a 9.6% increase in net revenues at Vacations Hawaii as well as a 2.3% increase in casino revenue due to increased slot and table game wagering. Operating income at the Downtown Properties increased $2.2 million or 20% during the six month period ended June 30, 2000 compared to the same period in the prior year. Operating income margin increased to 11.9% during the six month period ended June 30, 2000 versus 10.2% in the comparable period of the prior year. The increase in operating income and operating income margin is primarily attributable to the increase in net revenues as well as cost consolidation efforts and more effective marketing at the Downtown casino properties. CENTRAL REGION Net revenues from the Central Region increased $30 million or 30% during the quarter ended June 30, 2000 compared to the quarter ended June 30, 1999. The majority of the increase is due to the November 1999 acquisition of Blue Chip, which earned $47 million in net revenues during the quarter ended June 30, 2000. Also contributing to the increase in net revenues was a 17.6% increase at Par-A-Dice due mainly to the change to dockside operations in June 1999. Sam's Town Tunica and Treasure Chest experienced declines in net revenues of 21% and 17.8%, respectively, due to their highly competitive environments as well as significant construction disruption at Sam's Town Tunica involving its main entry, casino and restaurant operations. Management fees from Silver Star declined $10.0 million as the management contract was terminated on January 31, 2000. Operating income in the Central Region declined 3.9% to $27 million during the quarter ended June 30, 2000 from $28 million during the quarter ended June 30, 1999 as Blue Chip and Par-A-Dice's increases in operating income did not offset Treasure Chest and Silver Star's declines in operating income or the operating loss of $1.4 million experienced at Sam's Town Tunica. During the six month period ended June 30, 2000, net revenues from the Central Region increased 35% compared to the same period in the prior year. The majority of the increase is due to the November 1999 acquisition of Blue Chip, which earned $95 million in net revenues during the six month period ended June 30, 2000. Also contributing to the increase in net revenues was a 22% increase at Par-A-Dice due mainly to the change to dockside operations in June 1999. Sam's Town Tunica and Treasure Chest experienced declines in net revenues of 16.2% and 14.8%, respectively, due to their highly competitive environments as well as significant construction disruption at Sam's Town Tunica involving its main entry, casino and restaurant operations. Management fees from Silver Star declined $17.0 million as the management contract was terminated on January 31, 2000. Operating income in the Central Region increased 13.7% to $63 million during the six month period ended June 30, 2000 from $55 million during the same period in the prior year. The increase in operating income is due mainly to the acquisition of Blue Chip as well as the increase in net revenues at Par-A-Dice, partially offset by declines in operating income related to the reduction in net revenues from Treasure Chest and management fee income from Silver Star and the operating loss of $0.8 million experienced at Sam's Town Tunica. 22 23 TERMINATION FEE On October 20, 1999, the Company agreed to terminate its management contract with the Mississippi Band of Choctaw Indians (the "Tribe") prior to the contract's expiration date in June 2001 in exchange for a one-time payment of $72 million. Pursuant to that agreement, the Company continued to manage Silver Star under the terms of the management contract through January 31, 2000, at which time the Tribe made the one-time termination payment and the Company recorded the termination fee, net of certain expenses. OTHER EXPENSES Depreciation and amortization expense increased 19.4% during the quarter ended June 30, 2000 compared to the quarter ended June 30, 1999 and 17.2% during the six month period ended June 30, 2000 compared to the same period in the prior year primarily as a result of depreciation and amortization expense related to the fixed assets, intangible license rights and acquisition costs of Blue Chip (acquired in November 1999). Preopening expense increased $1.6 million during the quarter ended June 30, 2000 compared to the quarter ended June 30, 1999 due primarily to $1.5 million incurred as the result of unsuccessful efforts to assist in the development and operation of a Rhode Island Indian casino with the Narragansett Indian Tribe. Preopening expense increased $1.4 million during the six month period ended June 30, 2000 compared to the same period in the prior year as a result of the Rhode Island preopening expense. OTHER INCOME (EXPENSE) Other income and expense is primarily comprised of interest expense, net of capitalized interest. Net interest expense increased by $2.6 million during the quarter ended June 30, 2000 as compared to the quarter ended June 30, 1999. The increase is attributable to higher average debt levels as a result of the borrowings related to the November 1999 acquisition of Blue Chip. Net interest expense was partially offset by $1.3 million in capitalized interest costs during the quarter ended June 30, 2000 compared to $0.3 million during the quarter ended June 30, 1999. For the six month period ended June 30, 2000, net interest expense increased $5.6 million as compared to the same period of the prior year. The increase is attributable to higher average debt levels as a result of the borrowings related to the November 1999 acquisition of Blue Chip. Net interest expense was partially offset by $2.2 million in capitalized interest costs during the six month period ended June 30, 2000 compared to $0.4 million during the comparable period in the prior year. CUMULATIVE EFFECT OF A CHANGE IN ACCOUNTING FOR START-UP ACTIVITIES During the quarter ended March 31, 1999, the Company reported a charge of $1.7 million, net of $0.9 million in tax benefit, as the cumulative effect of a change in accounting for start-up activities. The American Institute of Certified Public Accountants issued Statement of Position 98-5, "Reporting on the Costs of Start-Up Activities" that required the Company to expense certain previously capitalized costs of start-up activities as a cumulative effect of change in accounting principle. 23 24 NET INCOME As a result of these factors, the Company reported net income of $6.7 million and $9.7 million, respectively, during the quarters ended June 30, 2000 and 1999 and $63.7 million and $18.6 million, respectively, during the six month periods ended June 30, 2000 and 1999. LIQUIDITY AND CAPITAL RESOURCES CASH FLOW FROM OPERATING ACTIVITIES AND WORKING CAPITAL The Company's policy is to use operating cash flow in combination with debt financing to fund renovations and expansion of its business. During the six month period ended June 30, 2000, the Company generated operating cash flow of $150 million compared to $80 million during the six month period ended June 30, 1999. The increase in operating cash flow is primarily attributable to the $72 million termination payment received from Silver Star as well as the incremental earnings from Blue Chip, which was acquired in November 1999, partially offset by declines in earnings at Sam's Town Tunica and Treasure Chest. As of June 30, 2000 and 1999, the Company had balances of cash and cash equivalents of $72 million and a working capital deficit of $47 million at June 30, 2000 compared to working capital of $12.2 million at June 30, 1999. Much of the working capital deficit at June 30, 2000 is attributable to the decrease in cash and cash equivalents as well as $10.7 million in income taxes payable principally related to the income generated from the $72 million termination payment and $15.6 million in construction payables mainly associated with the Sam's Town Las Vegas renovation and expansion project. The Company has historically operated with minimal or negative levels of working capital in order to minimize borrowings and related interest costs under its $600 million bank credit facility (the "Bank Credit Facility"). CASH FLOWS FROM INVESTING ACTIVITIES The Company is committed to continually maintaining and enhancing its existing facilities, most notably by upgrading and remodeling its casinos, hotel rooms, restaurants, and other public spaces and by providing the latest slot machines for its customers. The Company's capital expenditures primarily related to these purposes were approximately $26 million and $31 million, respectively, during the six month periods ended June 30, 2000 and 1999. The Company also incurred approximately $30 million in capital expenditures during the six months ended June 30, 2000 for the renovation and expansion of Sam's Town Las Vegas and the renovation of Sam's Town Tunica. During the six month period ended June 30, 1999, the Company incurred approximately $6.9 million in capital expenditures for the renovation of the Stardust. CASH FLOWS FROM FINANCING ACTIVITIES Substantially all of the funding for the Company's acquisitions and renovation and expansion projects comes from cash flows from existing operations as well as debt financing. During the six month period ended June 30, 2000, the Company paid down debt by $102 million as compared to $42 million during the six month period ended June 30, 1999. The termination payment accounted for $72 million of the debt reduction during the six month period ended June 30, 2000. At June 30, 2000, outstanding borrowings and unused availability under the Bank Credit Facility were $425 million and $174.3 million, respectively. 24 25 The Company's Bank Credit Facility consists of a $500 million revolver component (the "Revolver") and a term loan component (the "Term Loan") with an original principal balance of $100 million, both of which mature in June 2003. Availability under the Revolver will be reduced by $15.6 million on December 31, 2001 and at the end of each quarter thereafter until March 31, 2003. The Term Loan is being repaid in increments of $0.25 million per quarter which began on September 30, 1999 and will continue through March 31, 2003, bringing the June 30, 2000 outstanding balance to $99 million. The interest rate on the Bank Credit Facility is based upon either the agent bank's quoted base rate or the Eurodollar rate, plus an applicable margin that is determined by the level of a predefined financial leverage ratio. In addition, the Company incurs a commitment fee on the unused portion of the Revolver which ranges from 0.375% to 0.50% per annum. The blended rate on outstanding borrowings under the Bank Credit Facility as of June 30, 2000 was 8.4%. The Bank Credit Facility is secured by substantially all of the real and personal property of the Company and its subsidiaries, including eleven casino properties. The obligations of the Company under the Bank Credit Facility are guaranteed by the significant subsidiaries of the Company. Effective July 28, 2000, the Company amended its bank credit facility primarily to allow for an increase of up to $225 million in its joint venture investment in The Borgata and to reduce and modify the Company's capital raising requirements for The Borgata. The Bank Credit Facility contains certain financial and other covenants, including, without limitation, various covenants (i) requiring the maintenance of a minimum net worth, (ii) requiring the maintenance of a minimum interest coverage ratio, (iii) establishing a maximum permitted total leverage ratio and senior secured leverage ratio, (iv) imposing limitations on the incurrence of additional indebtedness, (v) imposing limitations on the maximum permitted expansion capital expenditures during the term of the Bank Credit Facility, (vi) imposing limits on the maximum permitted maintenance capital expenditures during each year of the term of the Bank Credit Facility, and (vii) imposing restrictions on investments, dividends and certain other payments. Management believes the Company and its subsidiaries are in compliance with the Bank Credit Facility covenants. The Company's $200 million principal amount of Senior Notes (the "9.25% Notes") and $250 million principal amount of Senior Subordinated Notes (the "9.50% Notes") contain limitations on, among other things, (a) the ability of the Company and its Restricted Subsidiaries (as defined in the Indenture Agreements) to incur additional indebtedness, (b) the payment of dividends and other distributions with respect to the capital stock of the Company and its Restricted Subsidiaries and the purchase, redemption or retirement of capital stock of the Company and its Restricted Subsidiaries, (c) the making of certain investments, (d) asset sales, (e) the incurrence of liens, (f) transactions with affiliates, (g) payment restrictions affecting restricted subsidiaries and (h) certain consolidations, mergers and transfers of assets. Management believes the Company and its subsidiaries are in compliance with the covenants related to the 9.25% and 9.50% Notes at June 30, 2000. The Company's ability to service its debt will be dependent on its future performance, which will be affected by, among other things, prevailing economic conditions and financial, business and other factors, certain of which are beyond the Company's control. 25 26 EXPANSION AND OTHER PROJECTS The Company continues to explore development opportunities in the Las Vegas locals market. The Company is in the midst of an $86 million expansion and renovation project at Sam's Town Las Vegas. The expansion project includes, among other things, an 18 screen state-of-the-art movie theatre complex, childcare facilities, an arcade, additional casino space for 500 slot machines, an 11,200 square foot multi-purpose events center for concerts and meetings and a new 650 seat buffet. The renovation project includes the remodeling of the casino and restaurants and a reconfigured and remodeled porte cochere and valet parking area to improve access to the property. As of June 30, 2000, the Company had incurred $58 million in cumulative costs associated with the Sam's Town Las Vegas expansion and renovation project. The renovation portion of the project is expected to continue through the summer of 2000 and the expansion is expected to be completed by mid November 2000. There can be no assurances that the Sam's Town Las Vegas renovation and expansion project will be completed on time or within budget. In addition, in January 2000, the Company reached an agreement in principle with Nevso, L.L.C. to purchase approximately 18 acres of land in western Las Vegas to develop a locals hotel and casino. The purchase of the land and development of the project is subject to a number of contingencies, including but not limited to, the parties reaching a definitive agreement and securing various regulatory and development approvals. The zoning to allow the construction of the project and its use as a locals resort casino was reversed upon administrative appeal and is the subject of litigation. The Company can make no assurances that this project will go forward or that if the project goes forward that it will be successful. The Company's primary expansion project is the development of an Atlantic City casino resort. On May 29, 1996, the Company, through a wholly-owned subsidiary, entered into a joint venture agreement with MAC, Corp., which has become a wholly-owned subsidiary of MGM MIRAGE, to jointly develop and own a casino hotel entertainment facility in Atlantic City, New Jersey. Certain aspects of the joint venture agreement were subsequently modified into an amended and restated joint venture agreement (the "Agreement") on July 14, 1998. While the Company is in discussions to amend the Agreement, the Agreement currently provides for a hotel of at least 1,200 rooms and a casino and related amenities (collectively named "The Borgata") and contemplates a total cost of $750 million. Any project costs exceeding the $750 million budget shall be funded by the Company without any proportionate increase in the ownership of the joint venture by the Company. The Agreement provides for each party to make an equity contribution of $150 million with the Company contributing $90 million when MGM MIRAGE contributes land to the venture. The Agreement further provides for the venture to arrange $450 million in non-recourse financing for the project. The Company's ongoing discussions with MGM MIRAGE include increasing the size of The Borgata to at least 2,000 rooms and increasing the budget to $1.035 billion. Pursuant to these discussions, any project costs exceeding the $1.035 billion increased budget shall be funded by the Company without any proportionate increase in the ownership of the joint venture by the Company. Under these discussions, cash equity contributions by the Company would increase to $207 million, while MGM MIRAGE's cash equity contributions would increase to $117 million. MGM MIRAGE would also contribute land to the venture, valued at $90 million. In addition, it is contemplated that the joint venture would obtain $621 million in non-recourse financing. Funding of the Company's capital contributions to The Borgata is expected to be derived from cash flow from operations, availability under the Company's Bank Credit Facility, incremental bank financing, or additional debt offerings. The Borgata is subject to the many risks inherent in the development and operation of a new business enterprise, including potential unanticipated design, construction, regulatory, environmental and operating problems, increased project costs, timing delays, lack of adequate financing and the significant risks commonly associated with implementing a 26 27 marketing strategy in a new market. Once construction begins, if The Borgata does not become operational within the time frame and budget currently contemplated or does not compete successfully in its new market, it could have a material adverse effect on the Company's business, financial condition and results of operations. The Company is in the planning stages of this development and as of June 30, 2000 has contributed or advanced total funds of $10.2 million to The Borgata. The Company expects to contribute its $90 million capital contribution contemporaneously with MGM MIRAGE's contribution of the land, which is expected to occur when a significant portion of the building plans are complete, permits are obtained and financing is arranged. Such date is expected to be early in the fourth quarter of this year. Also, if The Borgata is increased in size pursuant to the discussions, it will result in a longer construction period and would move the expected completion date from late 2002 to the middle of 2003. The Company recently began a $21 million renovation project at Sam's Town Tunica to reconfigure and remodel the casino, redesign and enhance its restaurant product, remodel the atrium and build an RV park adjacent to the property. The renovation project is expected to be completed by December 31, 2000, although there can be no assurances that the project will be completed on time or within budget. As of June 30, 2000, the Company had incurred $3.6 million in total costs associated with the Sam's Town Tunica renovation project. The Company has undertaken a Customer Information System ("CIS") project that will standardize the Company's customer tracking systems. The purpose of the CIS project is to link all points of customer contact at a particular property to enable the Company to better monitor customer activity in order to enhance and direct marketing efforts. As of June 30, 2000, the Company had incurred $16.7 million in cumulative costs associated with the CIS project, $4.9 million of which was incurred during the six month period ended June 30, 2000. Substantially all of these costs have been capitalized. The Company expects to spend approximately $10 million during the last half of 2000 on the CIS project. The Company has never undertaken a technology project of this magnitude and may experience difficulties in the integration and implementation of this project. In addition, given the inherent difficulties of a project of this magnitude and the resources required, the timing and costs involved could differ materially from those anticipated by the Company. There can be no assurance that the CIS project will be completed successfully, on schedule, or within budget. Substantial funds are required for The Borgata, the other projects discussed above, and for other future expansion projects. There are no assurances that any of the above mentioned projects will go forward on a timely basis, if at all, or ultimately become operational. The source of funds required to meet the Company's working capital needs (including maintenance capital expenditures) is expected to be cash flow from operations and availability under the Company's Bank Credit Facility. The source of funds for the Company's expansion projects may come from cash flow from operations and availability under the Company's Bank Credit Facility, incremental bank financing, additional debt or equity offerings, joint venture partners or other sources. No assurance can be given that additional financing will be available or that, if available, such financing will be obtainable on terms favorable to the Company or its stockholders. PRIVATE SECURITIES LITIGATION REFORM ACT The Private Securities Litigation Reform Act of 1995 provides a "safe harbor" for forward looking statements. Certain information included in this Form 10-Q and other materials filed or to be filed by the Company with the Securities and Exchange Commission (as well as information included in oral statements 27 28 or other written statements made or to be made by the Company) contains statements that are forward looking, such as statements relating to plans for future expansion and other business development activities as well as capital spending, financing sources, and the effects of regulation (including gaming and tax regulation) and competition. Such forward looking statements involve important risks and uncertainties that could significantly affect anticipated results in the future, and accordingly, actual results may differ materially from those expressed in any forward looking statements made by or on behalf of the Company. These risks and uncertainties include, but are not limited to, those related to construction, expansion and development activities, economic conditions, changes in tax laws, changes in laws or regulations affecting gaming licenses, changes in competition, and factors affecting leverage and debt service including sensitivity to fluctuation in interest rates and other factors described from time to time in the Company's reports filed with the Securities and Exchange Commission, including the Company's Annual Report on Form 10-K for the year ended December 31, 1999. Any forward looking statements are made pursuant to the Private Securities Litigation Reform Act of 1995 and, as such, speak only as of the date made. ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURE ABOUT MARKET RISK Market risk is the risk of loss arising from adverse changes in market rates and prices, such as interest rates, foreign currency exchange rates and commodity prices. The Company's primary exposure to market risk is interest rate risk associated with its long-term debt. The Company attempts to limit its exposure to interest rate risk by managing the mix of its long-term fixed-rate borrowings and short-term borrowings under the Bank Credit Facility. Borrowings under the Bank Credit Facility bear interest, at the Company's option, at the agent bank's quoted base rate or at a specified premium over the Eurodollar rate. However, the amount of outstanding borrowings is expected to fluctuate and may be reduced from time to time. The Company currently does not utilize hedging instruments. 28 29 PART II. OTHER INFORMATION ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS The Company's Annual Meeting was held on May 25, 2000. The stockholders re-elected Robert L. Boughner, Marianne Boyd Johnson and Maj. Gen. Billy G. McCoy, Ret. USAF to three year terms, ending on the date of the Company's Annual Meeting in 2003. The number of shares voting as to the election of each nominee, the ratification of the appointment of Deloitte & Touche LLP to serve as independent auditors for the year ending December 31, 2000, the approval of a proposed amendment to the Company's Articles of Incorporation in order to comply with the New Jersey Casino Control Act and the Indiana Riverboat Gaming Act, the approval of the 2000 Executive Management Incentive Plan and certain Performance Units Granted under the 1996 Stock Incentive Plan, and the approval of an amendment to the 1996 Stock Incentive Plan to increase the number of shares subject to the plan from 3,000,000 to 5,500,000 is set forth below:
Votes ------------------------- Election of Class III Directors For Withheld - ------------------------------------- ---------- --------- Robert L. Boughner 57,749,989 1,005,224 Marianne Boyd Johnson 58,124,690 630,523 Maj. Gen. Billy G. McCoy, Ret. USAF 58,066,107 689,106
The Stockholders ratified the selection of Deloitte & Touche LLP as independent auditors for the Company for the year ending December 31, 2000 with voting as follows: 58,588,233 for; 114,082 against; 52,898 non-votes. The Stockholders approved the amendment to the Company's Articles of Incorporation with voting as follows: 58,395,451 for; 237,411 against; 122,351 non-votes. The Stockholders approved the 2000 Executive Management Incentive Plan and certain Performance Units Granted under the 1996 Stock Incentive Plan with voting as follows: 57,287,051 for; 1,328,094 against; 140,068 non-votes. The Stockholders approved the amendment to the 1996 Stock Incentive Plan with voting as follows: 52,990,918 for; 5,572,023 against; 192,272 non-votes. 29 30 ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K (a) Exhibits. 10.32 First Amendment to First Amended and Restated Credit Agreement, dated as of July 26, 2000, by and among the Company as the Borrower, Certain Commercial Lending Institutions, as the Lenders, Canadian Imperial Bank of Commerce, as letter of credit issuer and administrative Agent, Wells Fargo Bank, N.A., as Swingline Lender and Syndication Agent, and Bank of America, N.A., as Documentation Agent. 10.33 2000 Executive Management Incentive Plan (incorporated by reference to Appendix A of the Registrant's Proxy Statement for its Annual Meeting on May 25, 2000). 10.34 Certificate of Amendment of Articles of Incorporation. 10.35 1996 Stock Incentive Plan (as amended on May 25, 2000). 27 Financial Data Schedule (b) Reports on Form 8-K. (i) None 30 31 SIGNATURES Pursuant to the requirements of the Securities and Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized, on August 11, 2000. BOYD GAMING CORPORATION By: /s/ ELLIS LANDAU -------------------------------------- Ellis Landau Executive Vice President, Chief Financial Officer, Treasurer (Principal Financial Officer) 31 32 EXHIBIT INDEX Exhibit Number Description - -------------- ----------- 10.32 First Amendment to First Amended and Restated Credit Agreement, dated as of July 26, 2000, by and among the Company as the Borrower, Certain Commercial Lending Institutions, as the Lenders, Canadian Imperial Bank of Commerce, as letter of credit issuer and administrative Agent, Wells Fargo Bank, N.A., as Swingline Lender and Syndication Agent, and Bank of America, N.A., as Documentation Agent. 10.33 2000 Executive Management Incentive Plan (incorporated by reference to Appendix A of the Registrant's Proxy Statement for its Annual Meeting on May 25, 2000). 10.34 Certificate of Amendment of Articles of Incorporation. 10.35 1996 Stock Incentive Plan (as amended on May 25, 2000). 27 Financial Data Schedule EX-10.32 2 ex10-32.txt EXHIBIT 10.32 1 EXHIBIT 10.32 FIRST AMENDMENT TO FIRST AMENDED AND RESTATED CREDIT AGREEMENT THIS FIRST AMENDMENT TO FIRST AMENDED AND RESTATED CREDIT AGREEMENT (this "Amendment") is made and dated as of the 26th day of July, 2000, by and among BOYD GAMING CORPORATION, a Nevada corporation (the "Borrower"), the commercial lending institutions listed on the signature pages hereof (collectively, the "Lenders"), WELLS FARGO BANK, N.A., as Swingline Lender and Syndication Agent, CANADIAN IMPERIAL BANK OF COMMERCE ("CIBC"), as letter of credit issuer, BANK OF AMERICA, N.A., as Documentation Agent, and CIBC, as administrative agent and collateral agent for the Lenders (herein, in such capacity, called the "Agent"). RECITALS A. The Borrower and the Lenders entered into that certain First Amended and Restated Credit Agreement dated as of June 30, 1999 (the "Credit Agreement"), pursuant to which the Lenders agreed to extend credit to the Borrower on the terms and subject to the conditions set forth therein. B. The Borrower and the Lenders desire to amend certain terms and conditions of the Credit Agreement pursuant to this Amendment. NOW, THEREFORE, in consideration of the above Recitals and for other good and valuable consideration, the receipt and adequacy of which are hereby acknowledged, the parties hereto hereby agree to amend the Credit Agreement as follows: AGREEMENT 1. The Credit Agreement is hereby amended as follows: a. The definition of the term "EBITDA" in Section 1.1 of the Credit Agreement is hereby amended by adding the following clause immediately prior to the end thereof: "provided, however, that the $70,988,000 payment received by the Borrower in January of 2000 in connection with the termination of its management contract for the Silver Star Hotel and Casino shall not be recorded solely in the first 2 Fiscal Quarter of 2000, rather such payment shall be recorded in six equal installments of $11,833,333 each, commencing with the first Fiscal Quarter of 2000 through and including the second Fiscal Quarter of 2001." b. The following definitions in Section 1.1 of the Credit Agreement are hereby amended to read in their entirety as follows: "Aggregate Percentage" means, relative to any Lender, the percentage set forth opposite its name on Schedule I under the caption "Aggregate Percentage" or as set forth in its Lender Assignment Agreement, as such percentage may be adjusted from time to time pursuant to Section 2.9 or pursuant to Lender Assignment Agreements executed by such Lender and its Assignee Lenders and delivered pursuant to Section 10.11. "Revolving Loan Commitment Amount" means, on any date, $500,000,000, as such amount may be reduced from time to time pursuant to Section 2.2 or increased pursuant to Section 2.9 minus the aggregate principal amount of indebtedness of the Borrower to the Swingline Lender resulting from outstanding Swing Loans, minus the aggregate undrawn face amount of outstanding Letters of Credit. "Revolving Percentage" means, relative to any Revolving Lender for all Revolving Loans made or Letters of Credit issued, the percentage set forth opposite its name on Schedule I under the caption "Revolving Percentage" or as set forth in its Lender Assignment Agreement, as such percentage may be adjusted from time to time pursuant to Section 2.9 or pursuant to Lender Assignment Agreements executed by such Lender and its Assignee Lenders and delivered pursuant to Section 10.11. "Term Loan Commitment Amount" means, on any date, $100,000,000, as such amount may be reduced from time to time pursuant to Section 2.2 or increased pursuant to Section 2.9. "Term Percentage" means, relative to any Term Lender for its Term Loan made, the percentage set forth opposite its name on Schedule I under the caption "Term Percentage" or as set forth in its Lender Assignment Agreement, as such percentage may be adjusted from time to time pursuant to Section 2.9 or pursuant to Lender Assignment Agreements 2 3 executed by such Lender and its Assignee Lenders and delivered pursuant to Section 10.11. c. The third sentence of Section 2.1.1 of the Credit Agreement is hereby amended to read in its entirety as follows: "Except as otherwise provided in Section 2.9, on the date of the initial Borrowing hereunder, the Term Loan Commitment shall terminate, and any portion of the Term Loan Commitment Amount that is not borrowed on such date shall be extinguished." d. Clause (a) of Section 2.2.3 of the Credit Agreement is hereby amended by adding the following sentence immediately prior to the end thereof: "In the event that the Revolving Loan Commitment Amount shall be increased pursuant to Section 2.9 hereof, the reduction amounts shown above from and after the date of such increase will be ratably increased." e. Clause (b) of Section 2.2.3 of the Credit Agreement is hereby amended by adding the following sentence immediately prior to the end thereof: "In the event that the Term Loan Commitment Amount shall be increased pursuant to Section 2.9 hereof, the reduction amounts shown above from and after the date of such increase will be ratably increased." f. Clause (ii) of Section 7.1.12 of the Credit Agreement is hereby amended to read in its entirety as follows: "(ii) Prior to completing the Required Borgata Investment, the Borrower shall have received not less than $100,000,000 (A) of net proceeds from the issuance of Subordinated Debt or (B) of increased Commitment Amounts pursuant to Section 2.9 hereof." g. Clauses (b), (c) and (d) of Section 7.2.4 of the Credit Agreement are hereby amended to read in their entirety as follows: (b) the Total Leverage Ratio at the end of any Fiscal Quarter, for the period of four consecutive Fiscal Quarters ending on such date, to be greater than the ratio set forth below opposite such period: 3 4 Period Ratio ------ ----- June 30, 1999 - September 30, 2000 4.50 to 1.0 December 31, 2000 and thereafter 4.75 to 1.0; provided, that until the Borrower shall have made the Required Borgata Investment, then the foregoing chart shall be replaced with the following chart: Period Ratio ------ ----- June 30, 1999 - December 31, 2001 4.25 to 1.0 March 31, 2002 to December 31, 2002 4.50 to 1.0 March 31, 2003 and thereafter 4.25 to 1.0; (c) the Senior Secured Leverage Ratio at the end of any Fiscal Quarter for any period of four consecutive Fiscal Quarters ending on or after June 30, 1999 to be greater than 2.50 to 1.00; provided, that if the Borrower shall have increased the Commitment Amounts pursuant to Section 2.9 hereof by at least $100,000,000, then commencing with the period of four consecutive Fiscal Quarters ending on December 31, 2001 and continuing for each period of four consecutive Fiscal Quarters thereafter, the Senior Leverage Ratio at the end of any Fiscal Quarter shall not be greater than 2.75 to 1.00. (d) the Interest Coverage Ratio at the end of any Fiscal Quarter, for the period of four consecutive Fiscal Quarters ending on such date, to be less than the ratio set forth below opposite such period: Period Ratio ------ ----- June 30, 1999 - June 30, 2000 2.50 to 1.0 September 30, 2000 and thereafter 2.25 to 1.0; provided that until the Borrower shall have made the Required Borgata Investment, then the foregoing chart shall be replaced with the following chart: Period Ratio ------ ----- June 30, 1999 and thereafter 2.50 to 1.0; h. Clause (ii) of Section 7.2.5 of the Credit Agreement is hereby amended by replacing the figure "$150,000,000" with the figure "$225,000,000". i. There shall be added to the Credit Agreement a new Section 2.9 reading in its entirety as follows: 4 5 SECTION 2.9. Increase in Revolving Loan Commitment Amount and/or Term Loan Commitment Amount. (a) Provided that no Default or Event of Default then exists, the Borrower may on any Business Day prior to the Revolving Loan Commitment Termination Date, request in writing that the then effective Term Loan Commitment Amount and/or Revolving Loan Commitment Amount be increased in accordance with the provisions of this Section. The Borrower may make only two requests under this Section and in no event may the aggregate amount of such increases exceed $150,000,000. Not less than $100,000,000 of any requested increase shall be used by the Borrower to fund its Investment in the Borgata Joint Venture. Any request under this Section to increase the Commitment Amount(s)shall be submitted by the Borrower to the Agent, specify the proposed effective date (which date shall be not less than 5 days after the date of such request), the amount of such increase and the Commitment Amount(s) proposed to be increased (which shall be in integral multiples of $1,000,000) and the Borrower's uses for such increase. The Agent may, in the exercise of its sole discretion, approve or disapprove of the Borrower's request. If the Agent shall approve, no Lender shall have any obligation, express or implied, to offer to increase its Commitment. Only the consent of the Agent and those Lenders that have increased their Commitments (the "Increasing Lenders") shall be required for an increase in the Commitment Amounts pursuant to this Section. (b) The Borrower may accept some or all of the offered amounts from the then-current Lenders or designate new lenders who qualify as Eligible Assignees and which are reasonably acceptable to the Agent as additional Lenders hereunder in accordance with clause (c) of this Section (each, a "New Lender"), which New Lender may assume all or a portion of the increase in the applicable Commitment Amount. The Agent and the Borrower shall have discretion to adjust the allocation of the increased Commitment Amount among Increasing Lenders and New Lenders. (c) Each New Lender designated by the Borrower and reasonably acceptable to the Agent shall become an additional party hereto as a New Lender concurrently with the effectiveness of the proposed increase in the applicable Commitment Amount upon its execution of an instrument of joinder to this Agreement which is in form and substance 5 6 reasonably acceptable to the Agent and which, in any event, contains the representations, warranties, indemnities and other protections afforded to the Agent and the other Lenders. (d) Subject to the foregoing, any increase requested by the Borrower shall be effective as of the date proposed by the Borrower and shall be in the principal amount equal to (i) the amount which Increasing Lenders are willing to assume as increases to the amount of their Commitments plus (ii) the amount offered by any New Lender, in either case as adjusted by the Agent and the Borrower pursuant to Section 2.9(b). Upon the effectiveness of any such increase, if requested by the applicable Lender, the Borrower shall issue replacement Notes to each Increasing Lender and new Notes to each New Lender, and the applicable Percentages of each Lender will be adjusted to give effect to the increase in the applicable Commitment Amount as set forth in a new Schedule I issued by the Agent. To the extent that the adjustment of Percentages results in loss or expenses to any Lender as a result of the prepayment of any Eurodollar Rate Loan on a date other than the scheduled last day of the Interest Period applicable thereto, the Borrower shall be responsible for such loss or expenses pursuant to Section 4.4. 2. Effective Date. This Amendment shall be effective on the date on which: a. This Amendment shall have been executed by the Borrower, the Majority Revolving Lenders and the Majority Lenders; and b. The Agent shall have received executed acknowledgment and reaffirmations, substantially in the form set forth in Exhibit A hereto, duly executed by each of the Guarantors; and, on such date the Applicable Margin shall be adjusted to give effect to the terms hereof. 3. Representations and Warranties. The Borrower hereby represents and warrants to the Agent and the Lenders as follows: a. The Borrower has the power and authority and the legal right to execute, deliver and perform this Amendment and has taken all necessary action to authorize the execution, delivery and performance of this Amendment. This Amendment has been duly 6 7 executed and delivered by the Borrower. The Credit Agreement (as amended by this Amendment) and the other Loan Documents to which the Borrower is party constitute legal, valid, and binding obligations of the Borrower, enforceable against the Borrower in accordance with their terms, subject to applicable bankruptcy, insolvency, reorganization, moratorium and other similar laws now or hereafter in effect relating to creditors' rights generally, and general principles of equity. b. At and as of the date of execution hereof and at and as of the effective date of this Amendment and after giving effect to this Amendment: (1) the representations and warranties of the Borrower contained in the Credit Agreement are true and correct in all respects, and (2) no Default or Event of Default has occurred and is continuing under the Credit Agreement. 4. Reaffirmation of Credit Agreement. This Amendment shall be deemed to be an amendment to the Credit Agreement, and the Credit Agreement, as amended hereby, is hereby ratified, approved and confirmed in each and every respect. All references to the Credit Agreement in any other document, instrument, agreement or writing shall hereafter be deemed to refer to the Credit Agreement as amended hereby. 5. Reaffirmation of Loan Documents. The Borrower hereby further affirms and agrees that (a) the execution and delivery by the Borrower of and the performance of its obligations under the Credit Agreement, as amended by this Amendment, shall not in any way amend, impair, invalidate or otherwise affect any of the obligations of the Borrower or the rights of the Agent or the Lenders under any of the Loan Documents or any other document or instrument made or given by the Borrower in connection therewith, and (b) the term "Obligations" as used in the Loan Documents includes, without limitation, the Obligations of the Borrower under the Credit Agreement as amended by this Amendment. 6. Miscellaneous Provisions. a. Survival. The provisions of this Amendment shall survive to the extent provided in Section 10.5 of the Credit Agreement. b. Governing Law. THIS AMENDMENT SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE INTERNAL LAWS OF NEVADA. 7 8 c. Counterparts. This Amendment may be executed in any number of counterparts, all of which together shall constituted one agreement. d. No Other Amendment. Except as expressly amended herein, the Credit Agreement, the other Loan Documents and all documents, instruments and agreements relating thereto or executed in connection therewith shall remain in full force and effect as currently written. 8 9 IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be executed by their respective officers thereunto duly authorized as of the day and year first above written. BOYD GAMING CORPORATION By: /s/ ELLIS LANDAU ------------------------------ Title: Executive Vice President CANADIAN IMPERIAL BANK OF COMMERCE, as Agent and L/C Issuer By: /s/ PAUL J. CHAKMAK ----------------------------- Title: Managing Director 9 10 EXHIBIT A to First Amendment to First Amended and Restated Credit Agreement July 26, 2000 The parties listed on the signature pages hereof c/o Boyd Gaming Corporation 2950 South Industrial Road Las Vegas, Nevada 89109 Attention: Chief Financial Officer Re: Boyd Gaming Corporation Gentlemen: Please refer to (1) the First Amended and Restated Credit Agreement, dated as of June 30, 1999 (the "Credit Agreement"), by and among Boyd Gaming Corporation, as the Borrower, the commercial lending institutions party thereto (collectively, the "Lenders"), Wells Fargo Bank, N.A., as Swingline Lender and Syndication Agent, Canadian Imperial Bank of Commerce ("CIBC"), as letter of credit issuer, Bank of America, N.A., as Documentation Agent, and CIBC, as Administrative Agent and collateral agent for the Lenders (herein, in such capacity, called the "Agent") (the Lenders and the Agent herein are collectively called the "Beneficiaries") and (2) the Amended and Restated General Continuing Guaranty, dated as of June 30, 1999 (the "Guaranty") to which each of you is now a party in favor of the Agent for the Beneficiaries. Pursuant to an amendment dated of even date herewith, certain terms of the Credit Agreement were amended. We hereby request that you (i) acknowledge and reaffirm all of your obligations and undertakings under the Guaranty and (ii) acknowledge and agree that the Guaranty is and shall remain in full force and effect in accordance with the terms thereof. 11 Please indicate your agreement to the foregoing by signing in the space provided below, and returning the executed copy to the undersigned. CANADIAN IMPERIAL BANK OF COMMERCE, as Agent By: ---------------------------------- Title: Managing Director CIBC World Markets Corp., AS AGENT Acknowledged and Agreed: MARE-BEAR, INC. a Nevada corporation By: ---------------------------------- Title: SAM-WILL, INC. a Nevada corporation By: ---------------------------------- Title: BOYD TUNICA, INC. a Mississippi corporation By: ---------------------------------- Title: CALIFORNIA HOTEL AND CASINO a Nevada corporation By: ---------------------------------- Title: 2 12 CALIFORNIA HOTEL FINANCE CORPORATION, a Nevada corporation By: ---------------------------------- Title: BOYD ATLANTIC CITY, INC. a New Jersey corporation By: ---------------------------------- Title: ELDORADO, INC. a Nevada corporation By: ---------------------------------- Title: PAR-A-DICE GAMING CORPORATION an Illinois corporation By: ---------------------------------- Title: BOYD MISSISSIPPI, INC. a Nevada corporation By: ---------------------------------- Title: 3 13 BOYD KENNER, INC. a Louisiana corporation By: ---------------------------------- Title: BOYD LOUISIANA L.L.C. a Louisiana limited liability company By: ---------------------------------- Title: M.S.W., INC. a Nevada corporation By: ---------------------------------- Title: TREASURE CHEST CASINO, L.L.C. a Louisiana limited liability company By: Boyd Kenner, Inc., Managing Agent By: ---------------------------------- Title: 4 14 BLUE CHIP CASINO LLC, an Indiana limited liability company By: Boyd Indiana, Inc., an Indiana corporation, its sole member By: ---------------------------------- Title: BOYD INDIANA, INC. By: ---------------------------------- Title: 5 EX-10.34 3 ex10-34.txt EXHIBIT 10.34 1 EXHIBIT 10.34 CERTIFICATE OF AMENDMENT OF ARTICLES OF INCORPORATION OF BOYD GAMING CORPORATION The undersigned hereby certify as follows: 1. That they are the President and Secretary, respectively, of BOYD GAMING CORPORATION. 2. That at a meeting of the stockholders held on May 25, 2000, the stockholders voted to adopt the amendment to the corporation's Articles of Incorporation as set forth in Paragraph 3 following. The amendment below as adopted by the holders of 58,395,451 shares of the Corporation's $.01 par value common stock representing approval of the amendment by the holders of approximately 93.84% of the shares entitled to vote with respect to such amendment. The total number of outstanding shares of common stock of the corporation having voting power with respect to such amendment is 62,228,487. 3. That at a meeting of the Board of Directors held on February 24, 2000, the Directors of the corporation adopted the following resolution to amend the Articles of Incorporation: RESOLVED: That Article V, Section D, of the Articles of Incorporation of the corporation, as restated and filed with the Secretary of State for the State of Nevada on March 17, 1994, shall be further amended and restated in its entirety to read as follows: D. Redemption of Stock. As long as the Corporation remains either a holding company or an intermediary holding company subject to the statutes, regulations, rules, ordinances, orders or interpretations (the "Gaming Laws") of any gaming authority (the "Gaming Authorities"), all securities of the Corporation shall be held subject to the applicable provisions of such Gaming Laws. Not by way of limitation, if the Corporation becomes, and so long as it remains, either a holding company or an intermediary holding company subject to regulation under the New Jersey Casino Control Act (the "New Jersey Act"), the Indiana Riverboat Gambling Act (the "Indiana Act") or any other Gaming Authority which has similar requirements, all securities of the Corporation shall be held subject to the condition that if a holder thereof is found to be disqualified by either the New Jersey Casino Control Commission pursuant to the New Jersey Act, the Indiana Gaming Commission pursuant to the Indiana Act, or any other Gaming Authority which has similar requirements, such holder shall, at the election of the Corporation, either: (i) sell any or all of such securities to the Corporation at the Redemption Price (defined below); or (ii) otherwise dispose of his interest in the Corporation, all within 30 days following the Corporation's receipt of notice (the "Notice Date") of the holder's disqualification. The Redemption Price shall be the lesser 1 2 of (i) the lowest closing sale price of the such securities between the Notice Date and the date 30 days after the Notice Date or (ii) such holder's original purchase price for such securities. The disqualified holder will also be responsible for and will pay all costs associated by the Corporation in connection with the disposition or redemption of securities, including but not limited to attorneys fees. Promptly following the Notice Date, the Corporation shall either deliver such written notice along with the Corporation's election personally to the disqualified holder or shall mail it to such holder at the address shown on the Corporation's records, or use any other reasonable means to provide notice. Failure of the Corporation to provide notice to a disqualified holder after making reasonable efforts to do so shall not preclude the corporation from exercising its rights. If any disqualified holder fails to dispose his securities within 30 days following the Notice Date, the corporation, by action or the Board of Directors, may redeem such securities at the lesser of (i) the lowest closing sale price of the such securities between the Notice Date and the date 30 days after the Notice Date or (ii) such holder's original purchase price for such securities. So long as the corporation is a "publicly traded holding company" as defined in the New Jersey Act and the Indiana Act, commencing on the Notice Date, it shall be unlawful for the disqualified holder to: (i) receive any dividends or interest upon any securities of the Corporation held by such holder; (ii) exercise, directly or through any trustee or nominee, any right conferred by such securities; or (iii) receive any remuneration in any form, for services rendered or otherwise, from the Corporation or any subsidiary of the Corporation that holds a casino license. IN WITNESS WHEREOF, the undersigned have executed this Amendment to Articles of Incorporation on this 30th day of June, 2000. /s/ DONALD D. SNYDER ------------------------------------ DONALD D. SNYDER, President /s/ CHARLES E. HUFF ------------------------------------ CHARLES E. HUFF, Secretary STATE OF NEVADA ) ) ss: COUNTY OF CLARK ) On this ____ day of ________________, 2000, personally appeared before me, a Notary Public, DONALD D. SNYDER and CHARLES E. HUFF, as President and Secretary, respectively, of Boyd Gaming Corporation who acknowledged that they executed the foregoing Certificate of Amendment to Articles of Incorporation on behalf of said corporation. ----------------------------------- Notary Public 2 EX-10.35 4 ex10-35.txt EX-10.35 1 EXHIBIT 10.35 BOYD GAMING CORPORATION 1996 STOCK INCENTIVE PLAN (as amended 5/25/00) 1. Purposes of the Plan. The purposes of this Stock Incentive Plan are to attract and retain the best available personnel for positions of substantial responsibility, to provide additional incentive to Employees and Consultants of the Company and its Subsidiaries and to promote the success of the Company's business. 2. Definitions. As used herein, the following definitions shall apply: (a) "Administrator" means the Board or any of the Committees appointed to administer the Plan. (b) "Affiliate" and "Associate" shall have the respective meanings ascribed to such terms in Rule 12b-2 promulgated under the Exchange Act. (c) "Applicable Laws" means the legal requirements relating to the administration of stock incentive plans, if any, under applicable provisions of federal securities laws, state corporate and securities laws, the Code, the rules of any applicable stock exchange or national market system, and the rules of any foreign jurisdiction applicable to Awards granted to residents therein. (d) "Award" means the grant of an Option, SAR, Dividend Equivalent Right, Restricted Stock, Performance Unit, Performance Share, or other right or benefit under the Plan. (e) "Award Agreement" means the written agreement evidencing the grant of an Award executed by the Company and the Grantee, including any amendments thereto. (f) "Board" means the Board of Directors of the Company. (g) "Boyd Family" means William S. Boyd, any direct descendant or spouse of such person, or any direct descendant of such spouse, and any trust or other estate in which each person who has a beneficial interest, directly or indirectly through one or more intermediaries in capital stock of the Company is one of the foregoing persons. The members of the Boyd Family shall be deemed to beneficially own any capital stock of a corporation held by any other corporation (the "parent corporation" so long as the members of the Boyd Family beneficially own, directly or indirectly through one or more intermediates, in the aggregate 50% or more of the total voting power of the capital stock of the parent corporation. (h) "Change in Control" means a change in ownership or control of the Company effected through either of the following transactions: 1 2 (i) the direct or indirect acquisition by any person or related group of persons (other than an acquisition from or by the Company, by a Company-sponsored employee benefit plan, by a person that directly or indirectly controls, is controlled by, or is under common control with, the Company or a Permitted Holder) of beneficial ownership (within the meaning of Rule 13d-3 of the Exchange Act) of securities possessing more than fifty percent (50%) of the total combined voting power of the Company's outstanding securities pursuant to a tender or exchange offer made directly to the Company's stockholders which a majority of the Continuing Directors who are not Affiliates or Associates of the offeror do not recommend such stockholders accept, or (ii) a change in the composition of the Board over a period of thirty-six (36) months or less such that a majority of the Board members (rounded up to the next whole number) ceases, by reason of one or more contested elections for Board membership, to be comprised of individuals who are Continuing Directors. (i) "Code" means the Internal Revenue Code of 1986, as amended. (j) "Committee" means any committee appointed by the Board to administer the Plan. (k) "Common Stock" means the common stock of the Company. (l) "Company" means Boyd Gaming Corporation, a Nevada corporation. (m) "Consultant" means any person who is engaged by the Company or any Parent or Subsidiary to render consulting or advisory services as an independent contractor and is compensated for such services. (n) "Continuing Directors" means members of the Board who either (i) have been Board members continuously for a period of at least thirty-six (36) months or (ii) have been Board members for less than thirty-six (36) months and were elected or nominated for election as Board members by at least a majority of the Board members described in clause (i) who were still in office at the time such election or nomination was approved by the Board. (o) "Continuous Status as an Employee or Consultant" means that the employment or consulting relationship with the Company, any Parent, or Subsidiary, is not interrupted or terminated. Continuous Status as an Employee or Consultant shall not be considered interrupted in the case of (i) any leave of absence approved by the Company or (ii) transfers between locations of the Company or between the Company, its Parent, any Subsidiary, or any successor. A leave of absence approved by the Company shall include sick leave, military leave, or any other personal leave approved by an authorized representative of the Company. For purposes of Incentive Stock Options, no such leave may exceed ninety (90) days, unless reemployment upon expiration of such leave is guaranteed by statute or contract. (p) "Corporate Transaction" means any of the following stockholder-approved transactions to which the Company is a party: 2 3 (i) a merger or consolidation in which the Company is not the surviving entity, except for a transaction the principal purpose of which is to change the state in which the Company is incorporated; (ii) the sale, transfer or other disposition of all or substantially all of the assets of the Company (including the capital stock of the Company's subsidiary corporations) in connection with the complete liquidation or dissolution of the Company; or (iii) any reverse merger in which the Company is the surviving entity but in which securities possessing more than fifty percent (50%) of the total combined voting power of the Company's outstanding securities are transferred to a person or persons different from those who held such securities immediately prior to such merger. (q) "Covered Employee" means an Employee who is a "covered employee" under Section 162(m)(3) of the Code. (r) "Director" means a member of the Board. (s) "Dividend Equivalent Right" means a right entitling the Grantee to compensation measured by dividends paid with respect to Common Stock. (t) "Employee" means any person, including an Officer or Director, who is an employee of the Company or any Parent or Subsidiary of the Company for purposes of Section 422 of the Code. The payment of a director's fee by the Company shall not be sufficient to constitute "employment" by the Company. (u) "Exchange Act" means the Securities Exchange Act of 1934, as amended. (v) "Fair Market Value" means, as of any date, the value of Common Stock determined as follows: (i) Where there exists a public market for the Common Stock, the Fair Market Value shall be (A) the closing sales price for a Share for the last market trading day prior to the time of the determination (or, if no sales were reported on that date, on the last trading date on which sales were reported) on the New York Stock Exchange or such other stock exchange determined by the Administrator to be the primary market for the Common Stock or (B) if the Common Stock is not traded on such an exchange, the Nasdaq National Market or (C) if the Common Stock is not traded on any such exchange or national market system, the average of the closing bid and asked prices of a Share on the Nasdaq Small Cap Market for the day prior to the time of the determination (or, if no such prices were reported on that date, on the last date on which such prices were reported), in each case, as reported in The Wall Street Journal or such other source as the Administrator deems reliable; or (ii) In the absence of an established market of the type described in (i), above, for the Common Stock, the Fair Market Value thereof shall be determined by the Administrator in good faith. 3 4 (w) "Grantee" means an Employee or Consultant who receives an Award under the Plan. (x) "Incentive Stock Option" means an Option intended to qualify as an incentive stock option within the meaning of Section 422 of the Code. (y) "Non-Qualified Stock Option" means an Option not intended to qualify as an Incentive Stock Option. (z) "Officer" means a person who is an officer of the Company within the meaning of Section 16 of the Exchange Act and the rules and regulations promulgated thereunder. (aa) "Option" means a stock option granted pursuant to the Plan. (bb) "Parent" means a "parent corporation," whether now or hereafter existing, as defined in Section 424(e) of the Code. (cc) "Performance - Based Compensation" means compensation qualifying as "performance-based compensation" under Section 162(m) of the Code. (dd) "Performance Shares" means Shares or an award denominated in Shares which may be earned in whole or in part upon attainment of performance criteria established by the Administrator. (ee) "Performance Units" means an award which may be earned in whole or in part upon attainment of performance criteria established by the Administrator and which may be settled for cash, Shares or other securities or a combination of cash, Shares or other securities as established by the Administrator. (ff) "Permitted Holders" means the Boyd Family and any group (as such term is used in Section 13(d) and 14(d) of the Exchange Act) comprised solely of members of the Boyd Family. (gg) "Plan" means this 1996 Stock Incentive Plan. (hh) "Restricted Stock" means Shares issued under the Plan to the Grantee for such consideration, if any, and subject to such restrictions on transfer, rights of first refusal, repurchase provisions, forfeiture provisions, and other terms and conditions as established by the Administrator. (ii) "Rule 16b-3" means Rule 16b-3 promulgated under the Exchange Act or any successor thereto. (jj) "SAR" means a stock appreciation right entitling the Grantee to Shares or cash compensation, as established by the Administrator, measured by appreciation in the value of Common Stock. 4 5 (kk) "Share" means a share of the Common Stock. (ll) "Subsidiary" means a "subsidiary corporation," whether now or hereafter existing, as defined in Section 424(f) of the Code. (mm) "Subsidiary Disposition" means the disposition by the Company of its equity holdings in any subsidiary corporation effected by a merger or consolidation involving that subsidiary corporation, the sale of all or substantially all of the assets of that subsidiary corporation or the Company's sale or distribution of substantially all of the outstanding capital stock of such subsidiary corporation. 3. Stock Subject to the Plan. (a) Subject to the provisions of Section 10, below, the maximum aggregate number of Shares which may be issued pursuant to all Awards (including Incentive Stock Options) is 5,500,000 Shares. The Shares to be issued pursuant to Awards may be authorized, but unissued, or reacquired Common Stock. (b) If an Award expires or becomes unexercisable without having been exercised in full, or is surrendered pursuant to an Award exchange program, or if any unissued Shares are retained by the Company upon exercise of an Award in order to satisfy the exercise price for such Award or any withholding taxes due with respect to such Award, such unissued or retained Shares shall become available for future grant or sale under the Plan (unless the Plan has terminated). Shares that actually have been issued under the Plan pursuant to an Award shall not be returned to the Plan and shall not become available for future distribution under the Plan, except that if unvested Shares are forfeited, or repurchased by the Company at their original purchase price, such Shares shall become available for future grant under the Plan. 4. Administration of the Plan. (a) Plan Administrator. (i) Administration with Respect to Officers. With respect to grants of Awards to Employees who are also Officers or Directors of the Company, the Plan shall be administered by (A) the Board or (B) a Committee designated by the Board, which Committee shall be constituted in such a manner as to satisfy the Applicable Laws and to permit such grants and related transactions under the Plan to be exempt from Section 16(b) of the Exchange Act in accordance with Rule 16b-3. Once appointed, such Committee shall continue to serve in its designated capacity until otherwise directed by the Board. (ii) Administration With Respect to Consultants and Other Employees. With respect to grants of Awards to Employees or Consultants who are neither Directors nor Officers of the Company, the Plan shall be administered by (A) the Board or (B) a Committee designated by the Board, which Committee shall be constituted in such a manner as to satisfy the Applicable Laws. Once appointed, such Committee shall continue to serve in its designated capacity until otherwise directed by the Board. The Board may authorize one or more Officers to 5 6 grant such Awards and may limit such authority by requiring that such Awards must be reported to and ratified by the Board or a Committee within six (6) months of the grant date, and if so ratified, shall be effective as of the grant date. (iii) Administration With Respect to Covered Employees. Notwithstanding the foregoing, grants of Awards to any Covered Employee intended to qualify as Performance-Based Compensation shall be made only by a Committee (or subcommittee of a Committee) which is comprised solely of two or more Directors eligible to serve on a committee making Awards qualifying as Performance-Based Compensation. In the case of such Awards granted to Covered Employees, references to the "Administrator" or to a "Committee" shall be deemed to be references to such Committee or subcommittee. (iv) Administration Errors. In the event an Award is granted in a manner inconsistent with the provisions of this subsection (a), such Award shall be presumptively valid as of its grant date to the extent permitted by the Applicable Laws. (b) Powers of the Administrator. Subject to Applicable Laws and the provisions of the Plan (including any other powers given to the Administrator hereunder), and except as otherwise provided by the Board, the Administrator shall have the authority, in its discretion: (i) to select the Employees and Consultants to whom Awards may be granted from time to time hereunder; (ii) to determine whether and to what extent Awards are granted hereunder; (iii) to determine the number of Shares or the amount of other consideration to be covered by each Award granted hereunder; (iv) to approve forms of Award Agreement for use under the Plan; (v) to determine the terms and conditions of any Award granted hereunder; (vi) to amend the terms of any outstanding Award granted under the Plan, including a reduction in the exercise price (or base amount on which appreciation is measured) of any Award to reflect a reduction in the Fair Market Value of the Common Stock since the grant date of the Award, provided that any amendment that would adversely affect the Grantee's rights under an outstanding Award shall not be made without the Grantee's written consent; (vii) to construe and interpret the terms of the Plan and Awards granted pursuant to the Plan; 6 7 (viii) to establish additional terms, conditions, rules or procedures to accommodate the rules or laws of applicable foreign jurisdictions and to afford Grantees favorable treatment under such laws; provided, however, that no Award shall be granted under any such additional terms, conditions, rules or procedures with terms or conditions which are inconsistent with the provisions of the Plan; and (ix) to take such other action, not inconsistent with the terms of the Plan, as the Administrator deems appropriate. (c) Effect of Administrator's Decision. All decisions, determinations and interpretations of the Administrator shall be conclusive and binding on all persons. 5. Eligibility. Awards other than Incentive Stock Options may be granted to Employees and Consultants. Incentive Stock Options may be granted only to Employees. An Employee or Consultant who has been granted an Award may, if otherwise eligible, be granted additional Awards. Awards may be granted to such Employees of the Company and its subsidiaries who are residing in foreign jurisdictions as the Administrator may determine from time to time. 6. Terms and Conditions of Awards. (a) Type of Awards. The Administrator is authorized under the Plan to award any type of arrangement to an Employee or Consultant that is not inconsistent with the provisions of the Plan and that by its terms involves or might involve the issuance of (i) Shares, (ii) an Option, a SAR or similar right with an exercise or conversion privilege at a fixed or variable price related to the Common Stock and/or the passage of time, the occurrence of one or more events, or the satisfaction of performance criteria or other conditions, or (iii) any other security with the value derived from the value of the Common Stock. Such awards include, without limitation, Options, SARs, sales or bonuses of Restricted Stock, Dividend Equivalent Rights, Performance Units or Performance Shares, and an Award may consist of one such security or benefit, or two or more of them in any combination or alternative. (b) Designation of Award. Each Award shall be designated in the Award Agreement. In the case of an Option, the Option shall be designated as either an Incentive Stock Option or a Non-Qualified Stock Option. However, notwithstanding such designation, to the extent that the aggregate Fair Market Value of Shares subject to Options designated as Incentive Stock Options which become exercisable for the first time by a Grantee during any calendar year (under all plans of the Company or any Parent or Subsidiary) exceeds $100,000, such excess Options, to the extent of the Shares covered thereby in excess of the foregoing limitation, shall be treated as Non-Qualified Stock Options. For this purpose, Incentive Stock Options shall be taken into account in the order in which they were granted, and the Fair Market Value of the Shares shall be determined as of the date the Option with respect to such Shares is granted. (c) Conditions of Award. Subject to the terms of the Plan, the Administrator shall determine the provisions, terms, and conditions of each Award including, but not limited to, the Award vesting schedule, repurchase provisions, rights of first refusal, forfeiture provisions, 7 8 form of payment (cash, Shares, or other consideration) upon settlement of the Award, payment contingencies, and satisfaction of any performance criteria. The performance criteria established by the Administrator may be based on any one of, or combination of, increase in share price, earnings per share, total stockholder return, return on equity, return on assets, return on investment, net operating income, cash flow, revenue, economic value added, personal management objectives, or other measure of performance selected by the Administrator. Partial achievement of the specified criteria may result in a payment or vesting corresponding to the degree of achievement as specified in the Award Agreement. (d) Deferral of Award Payment. The Administrator may establish one or more programs under the Plan to permit selected Grantees the opportunity to elect to defer receipt of consideration upon exercise of an Award, satisfaction of performance criteria, or other event that absent the election would entitle the Grantee to payment or receipt of Shares or other consideration under an Award. The Administrator may establish the election procedures, the timing of such elections, the mechanisms for payments of, and accrual of interest or other earnings, if any, on amounts or Shares so deferred, and such other terms, conditions, rules and procedures that the Administrator deems advisable for the administration of any such deferral program. (e) Award Exchange Programs. The Administrator may establish one or more programs under the Plan to permit selected Grantees to exchange an Award under the Plan for one or more other types of Awards under the Plan on such terms and conditions as established by the Administrator from time to time. (f) Individual Option and SAR Limit. The maximum number of Shares with respect to which Options and SARs may be granted to any Employee in any fiscal year of the Company shall be five hundred thousand (500,000) Shares. The foregoing limitation shall be adjusted proportionately in connection with any change in the Company's capitalization pursuant to Section 10, below. To the extent required by Section 162(m) of the Code or the regulations thereunder, in applying the foregoing limitation with respect to an Employee, if any Option or SAR is canceled, the canceled Option or SAR shall continue to count against the maximum number of Shares with respect to which Options and SARs may be granted to the Employee. For this purpose, the repricing of an Option (or in the case of a SAR, the base amount on which the stock appreciation is calculated is reduced to reflect a reduction in the Fair Market Value of the Common Stock) shall be treated as the cancellation of the existing Option or SAR and the grant of a new Option or SAR. (g) Term of Award. The term of each Award shall be the term stated in the Award Agreement, provided, however, that the term of an Incentive Stock Option shall be no more than ten (10) years from the date of grant thereof. However, in the case of an Incentive Stock Option granted to a Grantee who, at the time the Option is granted, owns stock representing more than ten percent (10%) of the voting power of all classes of stock of the Company or any Parent or Subsidiary, the term of the Incentive Stock Option shall be five (5) years from the date of grant thereof or such shorter term as may be provided in the Award Agreement. 8 9 (h) Transferability of Awards. Incentive Stock Options may not be sold, pledged, assigned, hypothecated, transferred, or disposed of in any manner other than by will or by the laws of descent or distribution and may be exercised, during the lifetime of the Grantee, only by the Grantee. Other Awards shall be transferable to the extent provided in the Award Agreement. (i) Time of Granting Awards. The date of grant of an Award shall for all purposes be the date on which the Administrator makes the determination to grant such Award, or such other date as is determined by the Administrator. Notice of the grant determination shall be given to each Employee, Director or Consultant to whom an Award is so granted within a reasonable time after the date of such grant. 7. Award Exercise or Purchase Price, Consideration, Taxes and Reload Options. (a) Exercise or Purchase Price. The exercise or purchase price, if any, for an Award shall be as follows: (i) In the case of an Incentive Stock Option: (A) granted to an Employee who, at the time of the grant of such Incentive Stock Option owns stock representing more than ten percent (10%) of the voting power of all classes of stock of the Company or any Parent or Subsidiary, the per Share exercise price shall be not less than one hundred ten percent (110%) of the Fair Market Value per Share on the date of grant. (B) granted to any Employee other than an Employee described in the preceding paragraph, the per Share exercise price shall be not less than one hundred percent (100%) of the Fair Market Value per Share on the date of grant. (ii) In the case of a Non-Qualified Stock Option, the per Share exercise price shall be not less than eighty-five percent (85%) of the Fair Market Value per Share on the date of grant unless otherwise determined by the Administrator. (iii) In the case of Awards intended to qualify as Performance-Based Compensation, the exercise or purchase price, if any, shall be not less than one hundred percent (100%) of the Fair Market Value per Share on the date of grant. (iv) In the case of other Awards, such price as is determined by the Administrator. (b) Consideration. Subject to Applicable Laws, the consideration to be paid for the Shares to be issued upon exercise or purchase of an Award including the method of payment, shall be determined by the Administrator (and, in the case of an Incentive Stock Option, shall be determined at the time of grant). In addition to any other types of consideration the Administrator may determine, the Administrator is authorized to accept as consideration for Shares issued under the Plan the following: 9 10 (i) cash; (ii) check; (iii) delivery of Grantee's promissory note with such recourse, interest, security, and redemption provisions as the Administrator determines as appropriate; (iv) surrender of Shares (including withholding of Shares otherwise deliverable upon exercise of the Award) which have a Fair Market Value on the date of surrender equal to the aggregate exercise price of the Shares as to which said Award shall be exercised (but only to the extent that such exercise of the Award would not result in an accounting compensation charge with respect to the Shares used to pay the exercise price unless otherwise determined by the Administrator); (v) delivery of a properly executed exercise notice together with such other documentation as the Administrator and the broker, if applicable, shall require to effect an exercise of the Award and delivery to the Company of the sale or loan proceeds required to pay the exercise price; or (vi) any combination of the foregoing methods of payment. (c) Taxes. No Shares shall be delivered under the Plan to any Grantee or other person until such Grantee or other person has made arrangements acceptable to the Administrator for the satisfaction of any foreign, federal, state, or local income and employment tax withholding obligations, including, without limitation, obligations incident to the receipt of Shares or the disqualifying disposition of Shares received on exercise of an Incentive Stock Option. Upon exercise of an Award, the Company shall withhold or collect from Grantee an amount sufficient to satisfy such tax obligations. (d) Reload Options. In the event the exercise price or tax withholding of an Option is satisfied by the Company or the Grantee's employer withholding Shares otherwise deliverable to the Grantee, the Administrator may issue the Grantee an additional Option, with terms identical to the Award Agreement under which the Option was exercised, but at an exercise price as determined by the Administrator in accordance with the Plan. 8. Exercise of Award. (a) Procedure for Exercise; Rights as a Stockholder. (i) Any Award granted hereunder shall be exercisable at such times and under such conditions as determined by the Administrator under the terms of the Plan and specified in the Award Agreement. (ii) An Award shall be deemed to be exercised when written notice of such exercise has been given to the Company in accordance with the terms of the Award by the person entitled to exercise the Award and full payment for the Shares with respect to which the 10 11 Award is exercised has been received by the Company. Until the issuance (as evidenced by the appropriate entry on the books of the Company or of a duly authorized transfer agent of the Company) of the stock certificate evidencing such Shares, no right to vote or receive dividends or any other rights as a stockholder shall exist with respect to Shares subject to an Award, notwithstanding the exercise of an Option or other Award. The Company shall issue (or cause to be issued) such stock certificate promptly upon exercise of the Award. No adjustment will be made for a dividend or other right for which the record date is prior to the date the stock certificate is issued, except as provided in the Award Agreement or Section 10, below. (b) Exercise of Award Following Termination of Employment, Director or Consulting Relationship. (i) An Award may not be exercised after the termination date of such Award set forth in the Award Agreement and may be exercised following the termination of a Grantee's Continuous Status as an Employee or Consultant only to the extent provided in the Award Agreement. (ii) Where the Award Agreement permits a Grantee to exercise an Award following the termination of the Grantee's Continuous Status as an Employee or Consultant for a specified period, the Award shall terminate to the extent not exercised on the last day of the specified period or the last day of the original term of the Award, whichever occurs first. (iii) Any Award designated as an Incentive Stock Option to the extent not exercised within the time permitted by law for the exercise of Incentive Stock Options following the termination of a Grantee's Continuous Status as an Employee shall convert automatically to a Non-Qualified Stock Option and thereafter shall be exercisable as such to the extent exercisable by its terms for the period specified in the Award Agreement. (c) Buyout Provisions. The Administrator may at any time offer to buy out for a payment in cash or Shares, an Award previously granted, based on such terms and conditions as the Administrator shall establish and communicate to the Grantee at the time that such offer is made. 9. Conditions Upon Issuance of Shares. (a) Shares shall not be issued pursuant to the exercise of an Award unless the exercise of such Award and the issuance and delivery of such Shares pursuant thereto shall comply with all Applicable Laws, and shall be further subject to the approval of counsel for the Company with respect to such compliance. (b) As a condition to the exercise of an Award, the Company may require the person exercising such Award to represent and warrant at the time of any such exercise that the Shares are being purchased only for investment and without any present intention to sell or distribute such Shares if, in the opinion of counsel for the Company, such a representation is required by any Applicable Laws. 11 12 10. Adjustments Upon Changes in Capitalization. Subject to any required action by the stockholders of the Company, the number of Shares covered by each outstanding Award, and the number of Shares which have been authorized for issuance under the Plan but as to which no Awards have yet been granted or which have been returned to the Plan, as well as the price per share of Common Stock covered by each such outstanding Award, shall be proportionately adjusted for any increase or decrease in the number of issued shares of Common Stock resulting from a stock split, reverse stock split, stock dividend, combination or reclassification of the Common Stock, or any other similar event resulting in an increase or decrease in the number of issued shares of Common Stock. Except as expressly provided herein, no issuance by the Company of shares of stock of any class, or securities convertible into shares of stock of any class, shall affect, and no adjustment by reason hereof shall be made with respect to, the number or price of Shares subject to an Award. 11. Corporate Transactions/Changes in Control/Subsidiary Dispositions. (a) In the event of a Corporate Transaction, each Award which is at the time outstanding under the Plan shall terminate unless assumed by the successor company or its Parent. (b) In the event of a Change in Control (other than a Change in Control which also is a Corporate Transaction), each Award which is at the time outstanding under the Plan shall remain so exercisable until the expiration or sooner termination of the applicable Award term. (c) In the event of a Subsidiary Disposition, each Award with respect to those Grantees who are at the time engaged primarily in Continuous Service as an Employee or Consultant with the subsidiary corporation involved in such Subsidiary Disposition which is at the time outstanding under the Plan shall remain so exercisable until the expiration or sooner termination of the Award term. (d) The portion of any Incentive Stock Option accelerated under this Section 11 in connection with a Corporate Transaction, Change in Control or Subsidiary Disposition shall remain exercisable as an Incentive Stock Option under the Code only to the extent the $100,000 dollar limitation of Section 422(d) of the Code is not exceeded. To the extent such dollar limitation is exceeded, the accelerated excess portion of such Option shall be exercisable as a Non-Qualified Stock Option. 12. Term of Plan. The Plan shall become effective upon the earlier to occur of its adoption by the Board or its approval by the stockholders of the Company. It shall continue in effect for a term of ten (10) years unless sooner terminated. 13. Amendment, Suspension or Termination of the Plan. (a) The Board may at any time amend, suspend or terminate the Plan. To the extent necessary to comply with Applicable Laws, the Company shall obtain stockholder approval of any Plan amendment in such a manner and to such a degree as required. 12 13 (b) No Award may be granted during any suspension of the Plan or after termination of the Plan. (c) Any amendment, suspension or termination of the Plan shall not affect Awards already granted, and such Awards shall remain in full force and effect as if the Plan had not been amended, suspended or terminated, unless mutually agreed otherwise between the Grantee and the Administrator, which agreement must be in writing and signed by the Grantee and the Company. 14. Reservation of Shares. (a) The Company, during the term of the Plan, will at all times reserve and keep available such number of Shares as shall be sufficient to satisfy the requirements of the Plan. (b) The inability of the Company to obtain authority from any regulatory body having jurisdiction, which authority is deemed by the Company's counsel to be necessary to the lawful issuance and sale of any Shares hereunder, shall relieve the Company of any liability in respect of the failure to issue or sell such Shares as to which such requisite authority shall not have been obtained. 15. No Effect on Terms of Employment. The Plan shall not confer upon any Grantee any right with respect to continuation of employment or consulting relationship with the Company, nor shall it interfere in any way with his or her right or the Company's right to terminate his or her employment or consulting relationship at any time, with or without cause. 16. Stockholder Approval. The grant of Incentive Stock Options under the Plan shall be subject to approval by the stockholders of the Company within twelve (12) months before or after the date the Plan is adopted. Such stockholder approval shall be obtained in the degree and manner required under Applicable Laws. The Administrator may grant Incentive Stock Options under the Plan prior to approval by the stockholders, but until such approval is obtained, no such Incentive Stock Option shall be exercisable. In the event that stockholder approval is not obtained within the twelve (12) month period provided above, all Incentive Stock Options previously granted under the Plan shall terminate. 13 EX-27 5 ex27.txt FINANCIAL DATA SCHEDULE
5 1,000 3-MOS DEC-31-2000 JUN-30-2000 72,069 0 18,385 5,310 5,245 112,477 1,435,542 511,792 1,434,846 159,538 880,579 0 0 622 330,113 1,434,846 0 269,719 0 0 239,978 0 19,250 10,819 4,166 6,653 0 0 0 6,653 0.11 0.11
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