ITEM 1. BUSINESS
GENERAL
Boyd Gaming Corporation is a multi-jurisdictional gaming company that currently owns and operates eleven casino entertainment facilities. The Company has operated successfully for more than two decades in the highly competitive Las Vegas market and has entered several other gaming jurisdictions in the past seven years. The Company owns and operates seven facilities in three distinct markets in Las Vegas, Nevada: the Stardust Resort and Casino (the "Stardust") on the Las Vegas Strip; Sam's Town Hotel and Gambling Hall ("Sam's Town Las Vegas"), the Eldorado Casino (the "Eldorado") and the Jokers Wild Casino ("Jokers Wild") on the Boulder Strip; and the California Hotel and Casino (the "California"), the Fremont Hotel and Casino (the "Fremont") and Main Street Station Casino, Brewery and Hotel ("Main Street Station") in downtown Las Vegas. The Company also owns four facilities in other gaming jurisdictions. The Company owns and operates Sam's Town Hotel and Gambling Hall, a dockside gaming and entertainment complex in Tunica County, Mississippi ("Sam's Town Tunica"), the Par-A-Dice Hotel and Casino in East Peoria, Illinois ("Par-A-Dice") and the Treasure Chest Casino ("Treasure Chest"), a riverboat casino in Kenner, Louisiana. In November 1999, the Company acquired the Blue Chip Casino ("Blue Chip"), a riverboat casino and hotel in Michigan City, Indiana. Through January 31, 2000, the Company managed, for the Mississippi Band of Choctaw Indians, the Silver Star Resort and Casino ("Silver Star"), a land-based gaming and entertainment complex located near Philadelphia, Mississippi. The Company also owns and operates Vacations Hawaii, a travel agency that operates for the benefit of the California, Fremont and Main Street Station. The Company is also developing The Borgata, a $1 billion entertainment destination resort in Atlantic City, through a joint venture with MGM MIRAGE. As of December 31, 2000 the Company owned an aggregate of approximately 512,400 square feet of casino space, containing 14,366 slot machines and 417 table games. The Company derives the majority of its on-going gross revenues from its casino operations, which produced 74%, 68% and 68%, respectively of on-going gross revenues during the years ended December 31, 2000, 1999 and 1998. Food and beverage revenue, which produced 13.6%, 14.7%, and 15.1%, respectively of on-going gross revenues during the years ended December 31, 2000, 1999, and 1998 represents the only other revenue source that produced more than 10% of on-going gross revenues during this time frame. See "Properties" and "Item 2
ITEM 2. PROPERTIES
The following table sets forth certain information regarding the properties owned by the Company as of December 31, 2000.
ITEM 3.
ITEM 3. LEGAL PROCEEDINGS
The Company and its subsidiaries are parties to various legal proceedings arising in the ordinary course of business. Except for the Astoria and Copeland matters, in the opinion of management, all pending claims in such matters, if adversely decided, would not have a material adverse effect on the Company's financial position or results of operations. See "Item 1 -- Investment Considerations -- Governmental Gaming Regulation -- Louisiana" for a discussion regarding each of the pending Astoria and Copeland matters.
ITEM 4A. EXECUTIVE OFFICERS OF THE REGISTRANT
The following table sets forth the non-director executive officers of Boyd Gaming Corporation as of February 28, 2001:
ELLIS LANDAU has been Executive Vice President since January 1997 and Senior Vice President, Chief Financial Officer and Treasurer of the Company since August 1990. From April 1990 through July 1990, he served as a consultant to the Company.
KEITH E. SMITH became Executive Vice President -- Operations in May 1998. Mr. Smith joined the Company in September 1990 serving in various controllership positions, the last of which was Senior Vice President and Controller.
JAMES W. HIPPLER has been Senior Vice President -- Administration of the Company since April 1990. From 1980 to 1990, Mr. Hippler held various positions with CH&C, including Director of Risk Management, Director of Internal Audit and Director of Human Resources.
BRIAN A. LARSON became Secretary in February 2001 and became Senior Vice President and General Counsel in January 1998. He became Vice President -- Development of the Company in June 1993.
PART II
ITEM 5.
ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS
The Company's Common Stock is listed on the New York Stock Exchange under the symbol "BYD." Information with respect to sales prices and record holders of the Company's Common Stock is set forth below:
PRICE RANGE OF COMMON STOCK
The following table sets forth, for the calendar quarters indicated, the high and low sales prices of the Common Stock as reported on the NYSE Composite Tape.
On February 28, 2001, the closing sales price of the Common Stock on the NYSE was $3.51 per share. On that date, the Company had approximately 2,178 holders of record of its Common Stock.
The Company has not paid any cash dividends on its Common Stock to date. The Company currently anticipates that it will retain future earnings to fund the development and growth of its business and does not anticipate paying any cash dividends in the foreseeable future. Restrictions imposed by commercial lenders and note holders may also limit the ability of the Company to pay cash dividends.
ITEM 6.
ITEM 6. SELECTED CONSOLIDATED FINANCIAL DATA
The selected consolidated financial data presented below as of December 31, 2000 and 1999 and for the three years in the period ended December 31, 2000 have been derived from the audited consolidated financial statements contained elsewhere in this Form 10-K. The selected consolidated financial data presented below as of December 31, 1998 and 1997, and June 30, 1997 and 1996 and for the six month period ended December 31, 1997 and for the fiscal years ended June 30, 1997 and 1996 have been derived from audited consolidated financial statements of the Company not contained herein. Operating results for the periods presented below are not necessarily indicative of the results that may be expected for future years. Effective July 1, 1997, the Company changed its fiscal year from a June 30 year end to a December 31 year end.
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(a) Includes $5,925 and $131,339 of impairment and restructuring charges recorded during the year ended December 31, 1998 and the fiscal year ended June 30, 1997, respectively. See Note 4 to Notes to Consolidated Financial Statements for a discussion on the restructuring charge. The $131,339 of impairment charges recorded during the fiscal year ended June 30, 1997 are comprised of $126 million recorded to adjust the carrying value of the Company's fixed and intangible assets in the Missouri gaming market to fair value and $5.3 million recorded to adjust the carrying value of the Company's ownership interest in the Fremont Street Experience due to the significant levels of operating losses at the Fremont Street Experience.
(b) Net of interest income and amounts capitalized.
ITEM 7.
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
RESULTS OF OPERATIONS
The following table sets forth, for the periods indicated, certain operating data for the Company's properties. As used herein, "Boulder Strip Properties" consist of Sam's Town Las Vegas, the Eldorado and the Jokers Wild; "Downtown Properties" consist of the California, the Fremont, Main Street Station and Vacations Hawaii, the Company's wholly-owned travel agency which operates for the benefit of the Downtown casino properties; and "Central Region Properties" consist of Sam's Town Tunica, Sam's Town Kansas City (closed in July 1998), Par-A-Dice, Treasure Chest, Blue Chip (acquired November 1999), and management fee income from Silver Star (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 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.
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(a) Includes revenues related to Vacations Hawaii, a Honolulu Travel Agency, of $42,064, $37,522 and $32,341, respectively, for the years ended December 31, 2000, 1999 and 1998.
(b) Before preopening expense.
(c) Before restructuring charge.
YEAR ENDED DECEMBER 31, 2000 COMPARED TO THE YEAR ENDED DECEMBER 31, 1999
REVENUES
Consolidated net revenues before the termination fee increased 9.7% for the year ended December 31, 2000 compared to 1999. Company-wide casino revenue increased 18.4%, while food and beverage revenue 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 $185 million in net revenues during 2000 compared to $23 million during 1999. 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 8.3%, 15.0% and 13.3%, 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 2000 compared to $47 million during 1999.
OPERATING INCOME
For the year ended December 31, 2000 consolidated operating income before preopening expense and termination fee decreased 17.8% to $113 million from $138 million during 1999. The acquisition of Blue Chip contributed $62 million of operating income
during 2000 and Silver Star (which terminated in January 2000) contributed $3.8 million in operating income during 2000 compared to operating income of $7.8 million from Blue Chip and $46 million from Silver Star during 1999. Offsetting the effects of Blue Chip and Silver Star 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 year ended December 31, 2000, net revenues at the Stardust increased 3.6% compared to 1999. Casino revenue increased 0.9% due primarily to an increase in slot wagering. Room revenue declined 1.4% due mainly to a 2.5% decline in available rooms as a result of the closure of the motor inn rooms in 1999. Operating income declined 41% to $1.3 million during 2000 compared to $2.2 million during 1999 due to the competitive environment on the Las Vegas Strip as well as an increase in showroom expenses. Operating results during 1999 were impacted by a renovation project that was completed at the end of 1999.
BOULDER STRIP PROPERTIES
For the year ended December 31, 2000, net revenues at the Boulder Strip Properties declined 7.2% compared to the year ended December 31, 1999. The decline is mainly attributable to construction disruption related to the Sam's Town Las Vegas' renovation and expansion project as well as increased competition. Sam's Town Las Vegas' renovation and expansion project was substantially complete at December 31, 2000. The Company is revamping and enhancing its marketing programs for Sam's Town Las Vegas to build revenues following the disruptive construction period. Casino revenue at the Boulder Strip Properties declined 3.9% due to declines in slot and table game wagering and non-gaming revenue declined 19.7% due mainly to the permanent closure of Sam's Town Las Vegas' Western Emporium. Operating income at the Boulder Strip Properties declined 61% during 2000 as compared to 1999. The decline in operating income is primarily attributable to the decline in net revenues.
DOWNTOWN PROPERTIES
Net revenues at the Downtown Properties increased 3.0% during the year ended December 31, 2000 compared to 1999. The increase is attributable to a 12.1% increase in net revenues at Vacations Hawaii. (Hawaiian customers comprise a significant portion of the available room nights at these Downtown casino properties -- see "Business -- Properties"). Operating income at the Downtown Properties increased $3.3 million or 14.3% during 2000 compared to 1999. The increase in operating income is primarily attributable to cost consolidation efforts and more effective marketing at the Downtown casino properties.
CENTRAL REGION
During the year ended December 31, 2000, net revenues from the Central Region increased 22% compared to 1999. The majority of the increase is due to the November 1999 acquisition of Blue Chip, which contributed $185 million in net revenues during 2000 as compared to $23 million during 1999. Also contributing to the increase in net revenues was an 11.1% 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 15.0% and 13.3%, 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. The renovation project at Sam's Town Tunica was substantially complete at December 31, 2000. The Company is aggressively marketing all aspects of the Sam's Town Tunica property to build revenues following the disruptive construction period. Management fees from Silver Star declined $44 million as the management contract was terminated on January 31, 2000. Operating income in the Central Region declined 14.9% during 2000 as compared to 1999. The increase in operating income from the acquisition of Blue Chip as well as the increase in net revenues at Par-A-Dice did not offset the declines in operating income related to the reduction in net revenues from Treasure Chest, termination of the management contract and related fee income from Silver Star or the operating loss of $9.8 million experienced at Sam's Town Tunica.
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 22% during the year ended December 31, 2000 compared to 1999, primarily as a result of depreciation and amortization expense related to the fixed assets, intangible license rights and deferred acquisition costs of Blue Chip (acquired in November 1999).
Preopening expense increased $3.4 million during the year ended December 31, 2000 compared to 1999 due primarily to an increase in the Company's share of preopening expense in The Borgata, the Company's Atlantic City joint venture, as well as a result of unsuccessful efforts to assist in the development and operation of a Rhode Island Indian casino with the Narragansett Indian Tribe.
OTHER INCOME (EXPENSE)
Other income and expense is primarily comprised of interest expense, net of capitalized interest. Net interest expense increased by $10.1 million during the year ended December 31, 2000 compared to 1999. The increase is primarily 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 $6.3 million in capitalized interest costs during 2000 compared to $1.8 million during 1999.
NET INCOME
As a result of these factors, the Company reported net income of $63 million and $38 million, respectively, during the years ended December 31, 2000 and 1999.
YEAR ENDED DECEMBER 31, 1999 COMPARED TO THE YEAR ENDED DECEMBER 31, 1998
REVENUES
Consolidated net revenues increased 1.2% during the year ended December 31, 1999 compared to the year ended December 31, 1998. Company-wide casino revenue increased 1.6%, food and beverage revenue declined 2.6% and room revenue declined 3.6%. Net revenues from the Stardust, Boulder Strip Properties and Downtown Properties (the "Nevada Region") decreased 1.5% during 1999 compared to 1998 due to a 5.4% increase at the Downtown Properties, offset by declines of 8.8% at the Stardust and 3.0% at the Boulder Strip Properties. The decline in net revenues at the Stardust is attributable in part to increased competition on the Las Vegas Strip as well as construction disruption related to its year-long renovation project that was substantially completed by the end of 1999. The decline in net revenues at the Boulder Strip Properties is attributable to the competitive environment on the Boulder Strip as well as construction disruption experienced at Sam's Town Las Vegas related to its $84 million renovation and expansion project that began in August 1999. Net revenues in the Central Region increased 5.0% during the year ended December 31, 1999 compared to the year ended December 31, 1998. The increase is attributable, in part, to the acquisition of Blue Chip Casino on November 10, 1999, a 15.6% increase at Par-A-Dice due to the change to dockside operations which began on June 26, 1999, and an 18.0% increase from Silver Star due mainly to the July 1, 1999 increase in the management fee percentage from 30% to 40% of operating income. On January 31, 2000, the management contract for Silver Star was terminated 17 months prior to its originally scheduled expiration date in exchange for a $72 million payment to the Company. These increases in the Central Region were partially offset by a decline in net revenues due to the closure of the Sam's Town Kansas City property on July 15, 1998.
OPERATING INCOME
For the year ended December 31, 1999, consolidated operating income before preopening expense and impairment and restructuring charges increased by 6.5% to $138 million compared to $130 million in the prior year. Operating income in the Nevada Region declined 5.9% as the 70% gain experienced at the Downtown Properties did not overcome the declines experienced at the Stardust and the Boulder Strip due to increased competition and construction disruption at the Stardust and Sam's Town Las Vegas. In the Central Region, operating income increased 18.3% due to the acquisition of Blue Chip Casino, a 37% increase in operating income at Par-A-Dice due to the change to dockside operations which began on June 26, 1999 and an 18.5% increase at Silver Star related to the change in the management fee percentage from 30% to 40% of operating income. These increases were offset by declines in operating income at Sam's Town Tunica (24%) and Treasure Chest (18.2%) due to increased competition in their respective gaming markets.
STARDUST
For the year ended December 31, 1999, net revenues at the Stardust declined by 8.8% versus the prior year due to increased competition as well as construction disruption related to the year-long renovation project that was substantially completed by the end of 1999. Casino revenue declined 8.3% due primarily to a decline in slot and table game wagering. Room revenue declined 11.0% resulting from a 25% decline in the number of available rooms due to the April 1999 closure of motor inn rooms and the renovation of guest rooms in both hotel towers. Operating income declined 79% to $2.2 million during 1999 from $10.3 million in 1998. Operating income margin declined to 1.5% during 1999 from 6.3% in 1998. These declines in operating income and operating income margin are a result of the decline in revenues.
BOULDER STRIP PROPERTIES
Net revenues at the Boulder Strip Properties declined 3.0% during the year ended December 31, 1999 compared to the year ended December 31, 1998 due mainly to construction disruption related to the ongoing $84 million renovation and expansion project at Sam's Town Las Vegas, which began during the last half of 1999. Casino revenue remained virtually unchanged as a slight increase in slot win percentage offset a 7.5% decline in table game wagering. Non-gaming revenue declined 14.3% due primarily to the permanent closure of Sam's Town Las Vegas' Western Emporium in September 1999 as part of the property's renovation and expansion project. During 1999, operating income decreased 16.4% or $4.1 million compared to 1998. Operating income margin declined to 11.1% for 1999 compared to 12.9% for 1998. The decline in operating income and margin is attributable to the decline in revenues, an increase in marketing expense for 1999 compared to 1998 and the inventory liquidation of the Western Emporium.
DOWNTOWN PROPERTIES
Net revenues at the Downtown Properties increased 5.4% during 1999 compared to 1998. Casino revenue increased 4.1% due primarily to increased slot wagering at each of the Downtown casino properties. Non-gaming revenues during the year ended December 31, 1999 increased 6.3% compared to 1998 due to a 16.0% increase in revenues related to Vacations Hawaii, the Company's Honolulu travel agency. (Hawaiian customers comprise a significant portion of the available room nights at these Downtown casino properties - see "Business - Properties.") Operating income at the Downtown Properties increased $9.3 million or 70% during 1999 compared to 1998, and operating income margin increased to 10.4% during 1999 from 6.5% during 1998. These increases in operating income and operating income margin are attributable to the increase in net revenues coupled with cost consolidation and effective marketing at the Downtown casino properties.
CENTRAL REGION
Net revenues from the Central Region increased 5.0% during 1999 compared to 1998. The increase is attributable, in part, to Blue Chip Casino, which generated $23.3 million in revenue from the November 10, 1999 date of acquisition through the end of calendar 1999, as well as a 15.6% increase in revenue at Par-A-Dice and an 18.0% increase in management fees from Silver Star. The increase at Par-A-Dice is due mainly to the change to dockside operations which began in Illinois on June 26, 1999. The increase in revenues at Silver Star is due mainly to the increase in the management fee percentage from 30% to 40% of operating income on July 1, 1999 pursuant to the terms of the management agreement. On January 31, 2000, the management contract was terminated 17 months prior to its originally scheduled expiration date in exchange for a $72 million payment to the Company. Net revenues at Treasure Chest declined 1.1% and net revenues at Sam's Town Tunica declined 4.6% due to reductions in slot and table game wagering related to increased competition in both gaming markets. Operating income for the Central Region increased to $122 million during 1999 from $103 million during
1998 due primarily to the acquisition of Blue Chip Casino and the increase in net revenues at Par-A-Dice and Silver Star, partially offset by declines in operating income at Sam's Town Tunica and Treasure Chest.
OTHER EXPENSES
Depreciation expense remained virtually unchanged during 1999 compared to 1998 as an increase in depreciation expense related to the fixed assets of Blue Chip Casino (acquired on November 10, 1999) was offset by declines related to fully depreciated fixed assets at certain properties that have been operating for over five years. Amortization expense of intangible license rights and acquisition costs increased 10.0% during 1999 compared to 1998 due to the acquisition of Blue Chip Casino. Preopening expense during 1999 was $1.5 million and relates primarily to the Company's share of preopening expense in The Borgata, the Company's Atlantic City joint venture.
OTHER INCOME (EXPENSE)
Other income and expense is primarily comprised of interest expense. Interest expense decreased by $4.9 million during the year ended December 31, 1999 compared to the prior year. The decline is attributable to lower average debt levels during the year combined with a decline in interest rates on floating rate debt. In addition, the Company capitalized $1.8 million in interest costs during 1999. There were no such costs capitalized during the year ended December 31, 1998.
CUMULATIVE EFFECT OF A CHANGE IN ACCOUNTING FOR START-UP ACTIVITIES
The Company reported a charge of $1.7 million, net of $0.9 million in tax benefits, as the cumulative effect of a change in accounting for start-up activities. The American Institute of Certified Public Accountants issued Statement of Position 98-5, "Reporting on the Costs of Start-Up Activities" that required the Company to expense certain previously capitalized costs of start-up activities as the cumulative effect of a change in accounting principle.
NET INCOME
As a result of these factors, the Company reported net income of $38.3 million and $28.6 million, respectively, during the years ended December 31, 1999 and 1998.
LIQUIDITY AND CAPITAL RESOURCES
CASH FLOW FROM OPERATING ACTIVITIES AND WORKING CAPITAL
The Company's policy is to use operating cash flow in combination with debt financing to fund renovations and expansion of its business.
During 2000, the Company generated operating cash flow of $213 million compared to $159 million during 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 principally at Sam's Town Tunica, Treasure Chest and Sam's Town Las Vegas. As of December 31, 2000 and 1999, the Company had balances of cash and cash equivalents of $88 million and $86 million, respectively, and a working capital deficit of $28 million at December 31, 2000 compared to working capital of $5.7 million at December 31, 1999. The Company has historically operated with minimal or negative levels of working capital in order to minimize borrowings and related interest costs under the Bank Credit Facility. Management believes that the Company's Bank Credit Facility and cash flows from operating activities will be sufficient to meet the Company's operating and capital expenditure requirements for the next twelve months. In the longer term, or if the Company experiences a significant decline in revenue, or in the event of unforeseen circumstances, the Company may require additional funds and may seek to raise such funds through public or private equity or debt financing, bank lines of credit, or other sources. No assurance can be given that additional financing will be available or, if available, will be on terms favorable to the Company.
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 $59 million and $60 million, respectively, during 2000 compared to 1999. The Company also incurred approximately $81 million in capital expenditures during
2000 for the renovation and expansion of Sam's Town Las Vegas and the renovation of Sam's Town Tunica. During 1999, the Company incurred approximately $19 million in capital expenditures for the renovation of Stardust and incurred approximately $13 million in capital expenditures for the renovation and expansion of Sam's Town Las Vegas.
On November 10, 1999, the Company acquired the Blue Chip Casino, a riverboat casino in Michigan City, Indiana for $261 million in net cash. Included as part of the acquisition was a partially constructed hotel and parking facility attached to the existing casino complex. The hotel opened in February 2000. The Company funded the acquisition from borrowings under the Bank Credit Facility. See "Expansion and Other Projects" for a further discussion on current and planned investing activities.
During 2000, the Company invested $102 million in its unconsolidated subsidiaries, substantially all of which relates to the Atlantic City joint venture as compared to $4.7 million during 1999. See further discussion regarding the Atlantic City joint venture under "Expansion and Other Projects."
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 operations as well as debt financing. Cash flows provided by financing activities totaled $35 million during 2000, substantially all of which was borrowed from the Company's Bank Credit Facility. During 1999, cash flows provided by financing activities totaled $208 million, substantially all of which was borrowed from the Company's Bank Credit Facility to partially fund the acquisition of Blue Chip and other capital expenditures. At December 31, 2000, outstanding borrowings and unused availability under the Bank Credit Facility were $562 million and $136.1 million, respectively.
Effective July 28, 2000, the Company amended the Bank Credit Facility primarily to allow for an increase in its investment in The Borgata for an aggregate investment of $225 million and to reduce and modify the Company's capital raising requirement for The Borgata. At December 31, 2000, the Bank Credit Facility consisted of a $500 million revolver component (the "Revolver") and two term loan components with original principal balances of $100 million each ("Term Loan B" and "Term Loan C"). The Revolver, Term Loan B and Term Loan C all 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. Term Loan B repayments are in increments of $0.25 million per quarter which began on September 30, 1999 and will continue through March 31, 2003. Term Loan C repayments are in increments of $0.25 million per quarter which began on December 31, 2000 and will continue through March 31, 2003. As of December 31, 2000, the Company had unused availability of $136.1 million under the Bank Credit Facility. The interest rate on the Bank Credit Facility is based upon either the agent bank's quoted base rate or the London InterBank Offering Rate ("LIBOR") rate, plus an applicable margin that is determined by the level of a predefined financial leverage ratio. The blended interest rate under the Bank Credit Facility at December 31, 2000 was 8.8%. 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 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.
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 is in compliance with the Bank Credit Facility covenants at December 31, 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.
EXPANSION AND OTHER PROJECTS
During 2000, the Company substantially completed an expansion and renovation project at Sam's Town Las Vegas. The project included, among other things, an 18 screen state-of-the-art movie theatre complex, childcare facilities, an arcade, additional casino space, an 11,200 square foot multi-purpose events center for concerts, meetings and a night club, a new 650 seat buffet, a parking garage, and a reconfigured and remodeled porte cochere and valet parking area to improve access to the property. As of December 31, 2000, the Company had incurred $84 million in cumulative costs associated with the Sam's Town Las Vegas expansion and
renovation. In addition, in January 2001, the Company terminated its agreement to purchase approximately 18 acres of land in western Las Vegas, Nevada.
Outside Nevada, the Company's primary focus is the development of an Atlantic City casino resort. The Company, through its subsidiary Boyd Atlantic City, Inc. ("BAC") and Mirage Resorts Incorporated ("Mirage"), through its subsidiary MAC, Corp. ("MAC"), entered into a certain joint venture agreement ("The Joint Venture Agreement") and formed a joint venture (the "Joint Venture") for the purpose of developing and owning a casino hotel entertainment facility in the Marina District of Atlantic City, New Jersey. The Joint Venture originated on May 29, 1996. In May 2000, Mirage was acquired by MGM Grand, Inc. which subsequently changed its name to MGM MIRAGE ("MGM").
On December 13, 2000, (a) MAC contributed certain real property as well as certain tangible and intangible personal property to the Joint Venture, and (b) BAC contributed $90 million in cash to the Joint Venture. BAC and MAC each received a credit to its capital account in the amount of $90 million upon making the foregoing contributions.
Following the foregoing contributions, on December 13, 2000, the Joint Venture was merged with and into Marina District Development Company, LLC ("MDDC, LLC"). MDDC, LLC is the surviving entity of such merger. The sole member of MDDC, LLC is Marina District Development Holding Co., LLC ("Holding Co."). BAC and MAC each have a 50% interest in Holding Co. Pursuant to terms of a certain Contribution and Adoption Agreement made effective December 13, 2000, the members adopted the Joint Venture Agreement as the Operating Agreement of Holding Co. (the "Operating Agreement").
The Operating Agreement provides for the development and ownership of a casino/hotel complex to be comprised of at least 2,000 rooms, a casino and related amenities to be known as The Borgata (the "Project"). The Project will be constructed on property adjacent to and connected to MGM's planned wholly-owned resort. The Operating Agreement contemplates a total cost of $1.035 billion for the Project. Certain project costs exceeding the $1.035 billion budget would be funded by the Company without any proportionate increase in the ownership of the Project by the Company. The Operating Agreement provides for BAC and MAC to make equity contributions aggregating $207 million each and further contemplates $621 million in non-recourse financing for the Project. On December 13, 2000, MDDC, LLC entered into a $630 million credit agreement. Except for a completion guaranty, by which the Company has agreed to guaranty performance of certain obligations to MDDC, LLC, the credit agreement is non-recourse to the Company and MGM. Pursuant to the terms of the Operating Agreement, certain project costs exceeding $1.035 billion are permitted to be added to the amount of Project financing. There can be no assurances that the Project can be designed and developed for $1.035 billion. Funding of the Company's remaining capital contributions to the Project 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 Project 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 marketing strategy in a new market. If the Project does not become operational within the time frame and budget currently contemplated or does not compete successfully in its new market, it could have a material adverse effect on the Company's business, financial condition and results of operations. As of December 31, 2000, the Company has contributed or advanced total funds of $107 million to the Project. Construction recently began on the Project and its expected completion date is during the summer of 2003.
In 2000, the Company substantially completed a 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 was substantially completed by December 31, 2000. As of December 31, 2000, the Company had incurred $21 million in cumulative costs associated with the 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. For the year ended December 31, 2000, the Company had incurred $10.9 million in costs associated with the CIS project, $9.5 million of which was capitalized. The Company had incurred $23 million in cumulative costs to date through December 31, 2000, $21 million of which was capitalized. The Company expects to spend approximately $10 million during 2001 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 and would also be required for other future expansion projects. There are no assurances that The Borgata or the CIS project 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.
RECENTLY ISSUED ACCOUNTING STANDARDS
See Note 1 to Notes to Consolidated Financial Statements for a complete discussion of recently issued accounting standards and their expected impact on the Company's consolidated financial statements.
ITEM 7A.
ITEM 7A. 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 LIBOR rate. However, the amount of outstanding borrowings is expected to fluctuate and may be reduced from time to time. At December 31, 2000, the Company did not utilize any hedging instruments.
The Company's Joint Venture to develop and own a casino hotel entertainment facility in the Marina District of Atlantic City, New Jersey entered into a credit agreement to borrow up to $630 million. Except for a completion guaranty, the credit agreement is non-recourse to the Company. The credit agreement requires the Joint Venture to enter into interest rate protection agreements. As of December 31, 2000, the Joint Venture had not entered into any interest rate protection agreements.
ITEM 8.
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
The response to this item is submitted as a separate section of this Form 10-K. See Item 14.
PART III
ITEM 10.
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
Information regarding directors of the Company is set forth under the caption "Proposal No. 1 -- Election of Directors" and "Executive Compensation and Other Information -- Section 16(a) Beneficial Ownership Reporting Compliance" in the Company's definitive Proxy Statement to be filed in connection with its 2001 Annual Meeting of Stockholders and is incorporated herein by reference. Information regarding non-director executive officers of the Company is set forth in Item 4A of Part I of this Report on Form 10-K.
ITEM 11.
ITEM 11. EXECUTIVE COMPENSATION
The information required by this item is set forth under the caption "Executive Compensation and Other Information" and "Proposal No. 1 -- Election of Directors -- Compensation of Directors" in the Company's definitive Proxy Statement to be filed in connection with its 2001 Annual Meeting of Stockholders and is incorporated herein by reference.
ITEM 12.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The information required by this item is set forth under the caption "Stock Ownership of Certain Beneficial Owners and Management" in the Company's definitive Proxy Statement to be filed in connection with its 2001 Annual Meeting of Stockholders and is incorporated herein by reference.
ITEM 13.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
The information required by this item is set forth under the captions "Executive Compensation and Other Information -- Certain Relationships and Related Transactions" and "-- Compensation Committee Interlocks and Insider Participation" in the Company's definitive Proxy Statement to be filed in connection with its 2001 Annual Meeting of Stockholders and is incorporated herein by reference.
PART IV
ITEM 14.
ITEM 14. EXHIBITS, FINANCIAL STATEMENTS AND REPORTS ON FORM 8-K
BOYD GAMING CORPORATION AND SUBSIDIARIES
INDEX TO CONSOLIDATED FINANCIAL STATEMENTS
INDEPENDENT AUDITORS' REPORT
To the Board of Directors and Stockholders of Boyd Gaming Corporation and Subsidiaries:
We have audited the accompanying consolidated balance sheets of Boyd Gaming Corporation and Subsidiaries (the "Company") as of December 31, 2000 and 1999, and the related consolidated statements of operations, changes in stockholders' equity and cash flows for each of the three years in the period ended December 31, 2000. These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on these financial statements based on our audits.
We conducted our audits in accordance with auditing standards generally accepted in the United States of America. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.
In our opinion, such consolidated financial statements present fairly, in all material respects, the financial position of Boyd Gaming Corporation and Subsidiaries at December 31, 2000 and 1999, and the results of their operations and their cash flows for each of the three years in the period ended December 31, 2000, in conformity with accounting principles generally accepted in the United States of America.
DELOITTE & TOUCHE LLP
Las Vegas, Nevada February 14, 2001
BOYD GAMING CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS (IN THOUSANDS, EXCEPT SHARE DATA)
The accompanying notes are an integral part of these consolidated financial statements.
BOYD GAMING CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS (IN THOUSANDS, EXCEPT PER SHARE DATA)
The accompanying notes are an integral part of these consolidated financial statements.
BOYD GAMING CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY FOR THE THREE YEARS IN THE PERIOD ENDED DECEMBER 31, 2000 (IN THOUSANDS, EXCEPT SHARE DATA)
The accompanying notes are an integral part of these consolidated financial statements.
BOYD GAMING CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS (IN THOUSANDS)
The accompanying notes are an integral part of these consolidated financial statements.
BOYD GAMING CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Principles of Consolidation
The accompanying consolidated financial statements include the accounts of Boyd Gaming Corporation and its wholly-owned subsidiaries, collectively referred to herein as the "Company." The Company owns and operates 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 terminated on January 31, 2000 (see Note 3). All material intercompany accounts and transactions have been eliminated.
Cash and Cash Equivalents
Cash and cash equivalents include highly liquid investments with an original maturity of three months or less. These investments are stated at cost which approximates fair value.
Inventories
Inventories are stated at the lower of cost or market. Cost is determined using the first-in, first-out and retail inventory methods.
Property and Equipment
Property and equipment are stated at cost. Depreciation and amortization are computed using the straight-line method over the estimated useful lives of the assets. Costs of major improvements are capitalized, while costs of normal repairs and maintenance are charged to expense as incurred. Gains or losses on disposal of assets are recognized as incurred.
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 years ended December 31, 2000 and 1999 was $6.3 million and $1.8 million, respectively. There were no such interest costs capitalized during the year ended December 31, 1998.
Intangible Assets
The excess of total acquisition costs over the fair market value of net assets acquired is amortized using the straight-line method over forty years. Management periodically assesses the recoverability of intangible assets by comparing its carrying value to the undiscounted cash flows expected to be generated by the acquired operation during the anticipated period of benefit.
Debt Issuance Costs
Debt issuance costs incurred in connection with the issuance of long-term debt are capitalized and amortized to interest expense over the terms of the related debt agreements.
Revenue and Promotional Allowances
Casino revenue represents the net win from gaming activities, which is the difference between gaming wins and losses. Revenues include the estimated retail value of rooms, food and beverage, and other goods and services provided to customers on a complimentary basis. Such amounts are then deducted as promotional allowances. The estimated cost of providing these promotional allowances is charged to the casino department in the following amounts:
YEAR ENDED DECEMBER 31, --------------------------- 2000 1999 1998 ------- ------- ------- (IN THOUSANDS) Room ............................. $12,672 $11,101 $12,190 Food and beverage................. 73,284 70,822 71,663 Other ............................ 7,430 7,217 5,123 ------- ------- ------- Total ............................ $93,386 $89,140 $88,976 ======= ======= =======
Preopening Expenses
In accordance with Statement of Position 98-5, "Reporting on the Costs of Start-Up Activities," the Company expenses certain costs of start-up activities as incurred. During the year ended December 31, 2000, the Company expensed $4.9 million in preopening costs, including $1.5 million relating to the Company's share of preopening expenses in The Borgata, the Company's Atlantic City joint venture (see Note 7) and $1.5 million relating to the Company's unsuccessful efforts to assist in the development and operation of a Rhode Island Indian casino with the Narragansett Indian Tribe. During the year ended December 31, 1999, the Company expensed $1.5 million in preopening costs that related primarily to the Company's share of preopening expense in The Borgata. The initial application of this statement in January 1999 required the Company to expense certain previously capitalized items as a cumulative effect of a change in accounting principle. As such, the Company reported a charge of $1.7 million, net of tax, to the consolidated statement of operations during the three month period ended March 31, 1999 as the cumulative effect of the change in accounting principle.
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 of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Significant estimates 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.
Reclassifications
Certain prior period amounts in the consolidated financial statements have been reclassified to conform to the December 31, 2000 presentation. These reclassifications had no effect on the Company's net income.
Recently Issued Accounting Standards
The Financial Accounting Standards Board issued Statement of Financial Accounting Standards ("SFAS") No. 133 , "Accounting for Derivative Instruments and Hedging Activities" and SFAS No. 138, "Accounting for Certain Derivative Instruments and Certain Hedging Activities (an amendment of SFAS 133)." These statements establish accounting and reporting standards for derivative instruments for fiscal years beginning after June 15, 2000. At December 31, 2000, the Company did not have any significant derivative instruments or hedging activities, and therefore, management believes that the initial application of these statements will not have a material impact on the Company's consolidated financial statements.
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 adopted SAB 101 during the fourth quarter of 2000 and the adoption did not affect the Company's consolidated financial statements for the year ended December 31, 2000.
NOTE 2. ACQUISITIONS
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 aggregated earnings before interest, taxes, depreciation and amortization and certain other qualified expenses exceeds a specified amount. Blue Chip Casino opened in August 1997. The Company's pro forma consolidated results of operations, as if the acquisition had occurred on January 1, 1998, are as follows:
YEAR ENDED DECEMBER 31, ----------------------- 1999 1998 ---------- ----------
Pro forma (in thousands, except per share data): Net revenues ................................ $1,131,781 $1,122,853 Income before cumulative effect ............. $ 60,656 $ 42,994 Net income .................................. $ 55,635 $ 42,994
Basic and diluted net income per common share: Income before cumulative effect ............. $ 0.98 $ 0.70 Net income .................................. $ 0.90 $ 0.70
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 and the Company recorded a one-time payment of $72 million. The agreement with the Tribe terminated the Company's original management contract 17 months prior to the contract's scheduled maturity date. The one-time payment accelerated the utilization of the Company's tax credits and net operating losses carried forward from prior years.
NOTE 4. RESTRUCTURING CHARGE
On June 30, 1998, the Company recorded a $5.9 million restructuring charge in connection with its announcement to cease operations at Sam's Town Kansas City. Termination benefits of approximately $3 million for substantially all of the property's 646 employees were paid and included as part of the restructuring charge. Other costs to exit the Kansas City gaming market of approximately $3 million were included in the restructuring charge and principally represent the recognition of liabilities for various long-term commitments which the Company intends to honor. The Company paid approximately $0.1 million related to the long-term commitments during each of the years ended December 31, 2000 and 1999. At December 31, 2000, the $0.1 million current portion and the $0.3 million non-current portion of the remaining restructuring charge liabilities are included in "Interest and other" and "Deferred income taxes and other liabilities," respectively, on the accompanying consolidated balance sheet.
During July 1998, the Company closed Sam's Town Kansas City and sold substantially all of its tangible assets for $12.5 million, which approximated net book value for those assets. In connection with the sale, the Company generated a tax loss of approximately $100 million. At December 31, 2000, the federal income tax benefit associated with this loss has been realized.
NOTE 5. ACCOUNTS RECEIVABLE
Accounts receivable consists of the following:
DECEMBER 31, ----------------- 2000 1999 ------- ------- (IN THOUSANDS)
Casino .................................. $12,883 $11,186 Hotel ................................... 2,935 2,594 Other ................................... 4,733 8,444 ------- ------- Total ................................... 20,551 22,224 Less allowance for doubtful accounts .... 6,291 4,639 ------- ------- Accounts receivable, net ................ $14,260 $17,585 ======= =======
NOTE 6. PROPERTY AND EQUIPMENT
Property and equipment consists of the following:
ESTIMATED DECEMBER 31, LIFE ----------------------- (YEARS) 2000 1999 --------- ---------- ---------- (IN THOUSANDS)
Land..................................... -- $ 162,664 $ 161,443 Buildings and leasehold improvements..... 3-40 778,745 691,165 Furniture and equipment.................. 3-10 428,387 383,094 Riverboats and barges.................... 12-40 100,818 101,211 Construction in progress................. -- 37,500 46,838 ---------- ---------- Total.................................... 1,508,114 1,383,751 Less accumulated depreciation and amortization........................... 548,148 482,737 ---------- ---------- Property and equipment, net.............. $ 959,966 $ 901,014 ========== ==========
NOTE 7. INVESTMENT IN JOINT VENTURE AND OTHER UNCONSOLIDATED SUBSIDIARIES
The Company, through Boyd Atlantic City, Inc. ("BAC") and Mirage Resorts Incorporated, through its subsidiary's MAC, Corp. ("MAC"), entered into a certain joint venture agreement ("The Joint Venture Agreement") and formed a joint venture (the "Joint Venture") for the purpose of developing and owning a casino hotel entertainment facility in the Marina District of Atlantic City, New Jersey. The Joint Venture originated on May 29, 1996. In May 2000, Mirage was acquired by MGM Grand, Inc. which subsequently changed its name to MGM MIRAGE ("MGM").
On December 13, 2000, (a) MAC contributed certain real property as well as certain tangible and intangible personal property to the Joint Venture, and (b) BAC contributed $90 million in cash to the Joint Venture. BAC and MAC each received a credit to its capital account in the amount of $90 million upon making the foregoing contributions.
Following the foregoing contributions, on December 13, 2000, the Joint Venture was merged with and into Marina District Development Company, LLC ("MDDC, LLC"). MDDC, LLC is the surviving entity of such merger. The sole member of MDDC, LLC is Marina District Development Holding Co., LLC ("Holding Co."). BAC and MAC each have a 50% interest in Holding Co. Pursuant to terms of a certain Contribution and Adoption Agreement made effective December 13, 2000, the members adopted the Joint Venture Agreement as the Operating Agreement of Holding Co. (the "Operating Agreement").
The Operating Agreement provides for the development and ownership of a casino/hotel complex to be comprised of at least 2,000 rooms, a casino and related amenities to be known as The Borgata (the "Project"). The Project will be constructed on property adjacent to and connected to MGM's planned wholly-owned resort. The Operating Agreement contemplates a total cost of $1.035 billion for the Project. Certain project costs exceeding the $1.035 billion budget would be funded by the Company without any proportionate increase in the ownership of the Project by the Company. The Operating Agreement provides for BAC and MAC to make equity contributions aggregating $207 million each and further contemplates $621 million in non-recourse financing for the Project. On December 13, 2000, MDDC, LLC entered into a $630 million credit agreement. Except for a completion guaranty, by which the Company has agreed to guaranty performance of certain obligations to MDDC, LLC, the credit agreement is non-recourse to the Company and MGM. Pursuant to the terms of the Operating Agreement, certain project costs exceeding $1.035 billion are permitted to be added to the amount of Project financing. At December 31, 2000 and 1999, the Company's net equity method investment in and advances to The Borgata was $104 million and $4.2 million, respectively.
The Company has a one-third investment in Tunica Golf Course, L.L.C. (d.b.a. River Bend Links) located in Tunica, Mississippi which had its grand opening in April 1999. The Company accounts for its share of the golf course's net income or loss under the equity method of accounting. At December 31, 2000 and 1999, the Company's net investment in and advances to the golf course was $1.7 million and $2.3 million, respectively.
NOTE 8. INTANGIBLE ASSETS
Intangible assets consists of the following:
NOTE 9. LONG-TERM DEBT
Long-term debt consists of the following:
Effective July 28, 2000, the Company amended its bank credit facility ("Bank Credit Facility") primarily to allow for an increase in its investment in The Borgata for an aggregate investment of $225 million and to reduce and modify the Company's capital raising requirement for The Borgata. At December 31, 2000, the Bank Credit Facility consisted of a $500 million revolver component (the "Revolver") and two term loan components with original principal balances of $100 million each ("Term Loan B" and "Term Loan C"). The Revolver, Term Loan B and Term Loan C all 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. Term Loan B will be repaid in increments of $0.25 million per quarter which began on September 30, 1999 and will continue through March 31, 2003. Term Loan C will be repaid in increments of $0.25 million per quarter which began on December 31, 2000 and will continue through March 31, 2003. As of December 31, 2000, the Company had unused availability of $136.1 million under the Bank Credit Facility. The interest rate on the Bank Credit Facility is based upon either the agent bank's quoted base rate or the LIBOR rate, plus an applicable margin that is determined by the level of a predefined financial leverage ratio. The blended interest rate under the Bank Credit Facility at December 31, 2000 was 8.8%. 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 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.
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.
On October 4, 1996, the Company issued $200 million of 9.25% Senior Notes (the "9.25% Notes") due October 1, 2003. The 9.25% Notes require semi-annual interest payments in April and October of each year through October 2003, at which time the entire principal balance becomes due and payable. The 9.25% Notes contain certain restrictive covenants regarding, among other things, incurrence of debt, sales of assets, mergers and consolidations and limitations on restricted payments (as defined in the indenture relating to the 9.25% Notes). In addition, the 9.25% Notes are guaranteed by a majority of the Company's significant subsidiaries that existed at the time the 9.25% Notes were issued. The guaranties are full, unconditional, and joint and several. (See Note 16 for a presentation of 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).
On July 22, 1997, the Company issued $250 million principal amount of 9.50% Senior Subordinated Notes (the "9.50% Notes") due July 2007. The 9.50% Notes require semi-annual interest payments in January and July of each year through July 2007, at which time the entire principal balance becomes due and payable. The 9.50% Notes contain certain restrictive covenants regarding, among other things, incurrence of debt, sales of assets, mergers and consolidations and limitations on restricted payments (as defined in the indenture relating to the 9.50% Notes). The 9.50% Notes may be redeemed at the Company's option anytime after July 15, 2002 at redemption prices ranging from 104.75% in 2002 to 100% in 2005 and thereafter.
The estimated fair value of the Company's long-term debt at December 31, 2000 was approximately $983 million, versus its book value of $1.0 billion. At December 31, 1999, the estimated fair value of the Company's long-term debt was approximately $976 million, versus its book value of $984 million. The estimated fair value amounts were based on quoted market prices on or about December 31, 2000 and 1999 for the Company's debt securities that are traded. For the debt securities that are not traded, fair value was based on estimated discounted cash flows using current rates offered to the Company for debt securities having the same remaining maturities.
Interest rates on the Company's other long-term debt are approximately 7.0%. Management believes the Company is in compliance with all covenants contained in its long-term debt agreements at December 31, 2000.
The scheduled maturities of long-term debt for the years ending December 31 are as follows:
(IN THOUSANDS)
2001 .................... $ 2,485 2002 .................... 2,455 2003 .................... 758,637 2004 .................... 522 2005 .................... 560 Thereafter .............. 254,639 ---------- Total ............... $1,019,298 ==========
NOTE 10. COMMITMENTS AND CONTINGENCIES
Future minimum lease payments required under noncancelable operating leases (principally for land) as of December 31, 2000 are as follows:
(IN THOUSANDS)
2001 .................... $ 5,865 2002 .................... 3,748 2003 .................... 2,296 2004 .................... 1,890 2005 .................... 1,889 Thereafter .............. 68,026 ------- Total ............... $83,714 =======
Rent expense for the years ended December 31, 2000, 1999 and 1998 was $5.3 million, $4.4 million and $3.2 million, respectively, and is included in selling, general and administrative expenses on the consolidated statements of operations.
The Company is required to pay, to the City of Kenner, Louisiana, a boarding fee of $2.50 for each passenger boarding the Company's Treasure Chest riverboat casino during the year. The future minimum payment due in 2001 to the City of Kenner, based upon a portion of actual passenger counts from the prior year, is approximately $4.0 million.
The Company is subject to various claims and litigation in the normal course of business. In the opinion of management, all pending legal matters are either adequately covered by insurance or, if not insured, will not have a material adverse impact on the Company's consolidated financial statements.
NOTE 11. EMPLOYEE BENEFIT PLANS
The Company contributes to multi-employer pension plans under various union agreements. Contributions, based on wages paid to covered employees, totaled approximately $2.0 million, $2.3 million and $2.4 million for the years ended December 31, 2000, 1999 and 1998, respectively. The Company's share of the unfunded liability related to multi-employer plans, if any, is not determinable.
The Company has retirement savings plans under Section 401(k) of the Internal Revenue Code covering its non-union employees. The plans allow employees to defer up to the lesser of the Internal Revenue Code prescribed maximum amount or 15% of their income on a pre-tax basis through contributions to the plans. The Company expensed voluntary contributions of $4.4 million, $2.8 million and $2.8 million for the years ended December 31, 2000, 1999 and 1998, respectively, to the Company's 401(k) profit-sharing plans and trusts.
NOTE 12. INCOME TAXES
A summary of the provision for income taxes is as follows:
YEAR ENDED DECEMBER 31, ------------------------------ 2000 1999 1998 ------- -------- -------- (IN THOUSANDS)
Current Federal ............ $13,579 $ 5,845 $ (7,021) State .............. 2,053 1,740 1,465 ------- -------- -------- 15,632 7,585 (5,556) ------- -------- -------- Deferred Federal ............ 20,820 18,697 25,532 State .............. 2,840 1,313 1,315 ------- -------- -------- 23,660 20,010 26,847 ------- -------- -------- Total .............. $39,292 $ 27,595 $ 21,291 ======= ======== ========
The following table provides a reconciliation between the federal statutory rate and the effective income tax rate from continuing operations where both are expressed as a percentage of income.
DECEMBER 31, ------------------------ 2000 1999 1998 ---- ---- ----
Tax provision at statutory rate ... 35.0% 35.0% 35.0% Increase resulting from: State income tax, net of federal benefit ....................... 3.1 2.9 3.6 Company provided benefits ....... 0.2 0.3 1.9 Other, net ...................... 0.2 2.6 2.2 ---- ---- ---- Total ................... 38.5% 40.8% 42.7% ==== ==== ====
The tax items comprising the Company's net deferred tax liability are as follows:
At December 31, 1999, the Company had approximately $8.0 million of federal tax net operating loss carryforwards which were fully utilized during the year ended December 31, 2000. Additionally, the Company has tax credit carryforwards that can be utilized to offset its future regular federal income tax liability. At December 31, 2000 and 1999, the Company had approximately $7.2 million and $9.4 million, respectively, of federal alternative minimum tax credit carryforwards which may be carried forward indefinitely. At December 31, 1999, the Company had approximately $3.2 million of general business credit carryforwards that were fully utilized during the year ended December 31, 2000.
The Internal Revenue Service has completed examinations of the Company's federal consolidated income tax returns through the fiscal year ended June 30, 1992. The Company is currently under examination for fiscal years ended June 30, 1993 and 1994. The Internal Revenue Service has proposed adjustments in connection with the examination of the 1993 and 1994 returns but no final determinations have been made. The Mississippi State Tax Commission is examining the Mississippi income tax returns for the years ended December 31, 1997 through 1999. In the opinion of management, any tax liability arising from these examinations will not have a material adverse impact on the Company's consolidated financial statements.
NOTE 13. STOCKHOLDERS' EQUITY AND STOCK INCENTIVE PLANS
Employee Stock Purchase Plan
Under the terms of the Company's Employee Stock Purchase Plan (the "Plan"), eligible employees had been able to purchase the Company's common stock, semi-annually, through payroll deductions, at 85% of the market price either on the purchase date or the offering date, whichever price is lower. The Company canceled the Plan on July 1, 1999.
Stock Options
As of December 31, 2000, the Company had in effect various stock option plans. Stock options awarded under these plans are granted primarily to employees and directors of the Company. The maximum number of shares of common stock available for issuance under these plans is approximately 9.6 million shares.
Options granted under the plans generally become exercisable ratably over a three or four year period from the date of grant. Options granted under the plans have an exercise price equal to the market price of the Company's common stock on the date of grant and expire no later than ten years after the date of grant.
Summarized information for the stock options plans is as follows:
The following table summarizes the information about stock options outstanding at December 31, 2000:
The Company accounts for employee stock options in accordance with Accounting Principle Board Opinion No. 25. The following table discloses the Company's pro forma net income and net income per share assuming compensation cost for employee stock options had been recognized under SFAS No. 123, "Accounting for Stock-Based Compensation." In addition, the table includes the excess of the compensation cost under SFAS No. 123 over the cost recognized related to the Employee Stock Purchase Plan. The table also discloses the weighted-average assumptions used in estimating the fair value of each option grant on the date of grant using the Black-Scholes option pricing model and the estimated weighted-average fair value of the options granted. The model assumes no expected future dividend payments on the Company's common stock for the options granted since July 1, 1995.
YEAR ENDED DECEMBER 31, ----------------------------- 2000 1999 1998 ------- ------- ------- (IN THOUSANDS, EXCEPT PER SHARE DATA)
Income before cumulative effect As reported ............................ $62,765 $40,039 $28,600 Pro forma .............................. 61,321 38,768 26,694 Net income As reported ............................ $62,765 $38,301 $28,600 Pro forma .............................. 61,321 37,030 26,694 Basic and diluted income per share before cumulative effect As reported ............................ $ 1.01 $ 0.65 $ 0.46 Pro forma - basic ...................... 0.99 0.62 0.43 Pro forma - diluted .................... 0.98 0.62 0.43 Basic and diluted net income per share As reported ............................ $ 1.01 $ 0.62 $ 0.46 Pro forma - basic ...................... 0.99 0.60 0.43 Pro forma - diluted .................... 0.98 0.59 0.43 Weighted-average assumptions Expected stock price volatility ........ 57.58% 64.56% 57.16% Risk-free interest rate ................ 5.39% 6.65% 5.02% Expected option lives (years) .......... 3.90 2.82 3.39 Estimated fair value of options granted $ 2.18 $ 2.55 $ 1.83
Because the accounting method prescribed by SFAS No. 123 is not applicable to options granted prior to July 1, 1995, the compensation cost reflected in the pro forma amounts shown above may not be representative of that to be expected in future years.
NOTE 14. SEGMENT INFORMATION
The Company's management reviews the results of operations, certain assets, and additions to property and equipment based on 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.
DECEMBER 31, ----------------------- 2000 1999 ---------- ---------- Assets(2) Stardust ....................... $ 162,096 $ 173,727 Sam's Town Las Vegas ........... 220,594 159,152 Eldorado and Jokers Wild ....... 17,201 18,249 Downtown Properties ............ 154,026 162,007 Sam's Town Tunica .............. 161,060 146,221 Par-A-Dice ..................... 153,701 158,410 Treasure Chest ................. 111,806 113,799 Blue Chip ...................... 263,881 268,617 ---------- ---------- Total properties' assets...... 1,244,365 1,200,182 Corporate Entities ............... 60,905 55,491 ---------- ---------- Total assets ................. $1,305,270 $1,255,673 ========== ==========
YEAR ENDED DECEMBER 31, ---------------------------- 2000 1999 1998 -------- ------- ------- Additions to Property and Equipment Stardust .......................... $ 3,566 $25,960 $14,705 Sam's Town Las Vegas .............. 75,191 27,740 14,331 Eldorado and Jokers Wild .......... 1,190 2,461 1,745 Downtown Properties ............... 8,317 11,917 7,683 Sam's Town Tunica ................. 24,673 7,578 5,903 Sam's Town Kansas City ............ -- -- 53 Par-A-Dice ........................ 2,840 2,346 4,686 Treasure Chest .................... 5,307 3,090 1,016 Blue Chip ......................... 8,762 4,820 -- -------- ------- ------- Total properties' additions...... 129,846 85,912 50,122 Corporate Entities .................. 9,435 10,976 20,726 -------- ------- ------- Total additions to property and equipment ................. $139,281 $96,888 $70,848 ======== ======= =======
- ----------------- (1) EBITDA is earnings before interest, taxes, depreciation, amortization, preopening expense and restructuring charge. 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.
(2) Assets represent property and equipment and intangible assets, net of accumulated depreciation and amortization.
NOTE 15. EARNINGS PER SHARE
A reconciliation of income and shares outstanding for basic and diluted earnings per share is as follows:
YEAR ENDED DECEMBER 31, --------------------------- 2000 1999 1998 ------- ------- ------- (IN THOUSANDS, EXCEPT PER SHARE DATA)
Income before cumulative effect ................ $62,765 $40,039 $28,600 ======= ======= =======
Weighted average common stock outstanding ...... 62,232 62,124 61,749 Dilutive effect of stock options outstanding.... 46 169 101 ------- ------- ------- Weighted average common and potential shares.... outstanding .................................. 62,278 62,293 61,850 ======= ======= =======
Basic and diluted earnings per share ........... $ 1.01 $ 0.65 $ 0.46 ======= ======= =======
Options to purchase approximately 5.3 million, 4.8 million and 5.7 million, shares of common stock, respectively, at December 31, 2000, 1999 and 1998 at prices of $5.56 -- $17.00, $5.56 -- $17.00 and $5.56 -- $17.00, respectively, were outstanding during the period but not included in the computation of diluted earnings per share because their exercise price was in excess of the average market price of the common stock for the period presented.
NOTE 16. GUARANTOR INFORMATION
The Company's 9.25% Notes (see Note 9) are guaranteed by a majority of the Company's wholly-owned existing significant subsidiaries. These guaranties are full, unconditional, and joint and several. 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 and for the years ended December 31, 2000 and 1999 and for the year ended December 31, 1998.
CONDENSED CONSOLIDATING BALANCE SHEET INFORMATION AS OF DECEMBER 31, 2000
CONDENSED CONSOLIDATING BALANCE SHEET INFORMATION AS OF DECEMBER 31, 1999
- ------------------------
Elimination Entries
(1) To eliminate intercompany payables and receivables.
(2) To eliminate investment in subsidiaries and subsidiaries' equity.
CONDENSED CONSOLIDATING STATEMENT OF OPERATIONS INFORMATION FOR THE YEAR ENDED DECEMBER 31, 2000
- ------------------------
Elimination Entries
(1) To eliminate intercompany revenue and expense.
CONDENSED CONSOLIDATING STATEMENT OF OPERATIONS INFORMATION FOR THE YEAR ENDED DECEMBER 31, 1999
- ------------------------
Elimination Entries
(1) To eliminate intercompany revenue and expense.
CONDENSED CONSOLIDATING STATEMENT OF OPERATIONS INFORMATION FOR THE YEAR ENDED DECEMBER 31, 1998
- ------------------------
Elimination Entries
(1) To eliminate intercompany revenue and expense.
CONDENSED CONSOLIDATING STATEMENT OF CASH FLOW INFORMATION FOR THE YEAR ENDED DECEMBER 31, 2000
CONDENSED CONSOLIDATING STATEMENT OF CASH FLOW INFORMATION FOR THE YEAR ENDED DECEMBER 31, 1999
CONDENSED CONSOLIDATING STATEMENT OF CASH FLOW INFORMATION FOR THE YEAR ENDED DECEMBER 31, 1998
SELECTED QUARTERLY FINANCIAL INFORMATION (UNAUDITED)
(C) EXHIBITS.
EXHIBIT NUMBER DOCUMENT -------- -------- 3.1(7) Restated Articles of Incorporation.
3.2(10) Restated Bylaws.
3.3(14) Certificate of Amendment of Articles of Incorporation
4.1(8) Registration Agreement, dated July 17, 1997, among the Company, Salomon Brothers Inc., UBS Securities LLC and CIBC Wood Gundy Securities Corp.
4.2(9) Form of Indenture relating to $200,000,000 aggregate principal amount of 9.25% Senior Subordinated Notes due 2003, including the Form of Note.
4.3(8) Form of Indenture relating to 9.50% Senior Subordinated Notes due 2007, dated as of July 22, 1997, between the Company and State Street Bank and Trust Company, including the Form of Note.
4.4(8) First Supplemental Indenture, among the Company, as Issuer, certain subsidiaries of the Company, as Guarantors, and the Bank of New York, as Trustee, dated as of December 31, 1996.
10.1(1) Ninety-Nine Year Lease dated June 30, 1954, by and among Fremont Hotel, Inc., and Charles L. Ronnow and J.L. Ronnow, and Alice Elizabeth Ronnow.
10.2(1) Lease Agreement dated October 31, 1963, by and between Fremont Hotel, Inc. and Cora Edit Garehime.
10.3(1) Lease Agreement dated December 31, 1963, by and among Fremont Hotel, Inc., Bank of Nevada and Leon H. Rockwell, Jr.
10.4(1) Lease Agreement dated June 7, 1971, by and among Anthony Antonacci, Margaret Fay Simon and Bank of Nevada, as Co-Trustees under Peter Albert Simon's Last Will and Testament, and related Assignment of Lease dated February 25, 1985 to Sam-Will, Inc. and Fremont Hotel, Inc.
10.5(4) Lease Agreement dated July 25, 1973, by and between CH&C and William Peccole, as Trustee of the Peter Peccole 1970 Trust.
10.6(1) Lease Agreement dated July 1, 1974, by and among Fremont Hotel, Inc. and Bank of Nevada, Leon H. Rockwell, Jr. and Margorie Rockwell Riley.
10.7(1) Ground Lease Agreement dated July 5, 1978, by and between CH&C, and Irene Elizabeth Carey, as Trustee of the Carey Survivor's Trust U/A October 18, 1972 and Irene Elizabeth Carey, as Trustee of the Carey Family Trust U/A October 18, 1972.
10.8(1) Ninety-Nine Year Lease dated December 1, 1978 by and between Matthew Paratore, and George W. Morgan and LaRue Morgan, and related Lease Assignment dated November 10, 1987 to Sam-Will, Inc., d/b/a/ Fremont Hotel and Casino.
10.9(1) Implemented Proposal dated June 15, 1992, by and between Stardust Hotel and Casino and the Back-End Teamsters Local Union No. 995.
10.10(1) Implemented Proposal dated June 15, 1992, by and between Fremont Hotel and Casino and the Back-End Teamsters Local Union No. 995.
10.11(2) Casino Management Agreement dated August 30, 1993, by and between Treasure Chest Casino, L.L.C. and Boyd Kenner, Inc.
10.12(4) Amended and Restated Operating Agreement dated August 5, 1994, by and between Treasure Chest Casino, L.L.C. and Boyd Kenner, Inc.
10.13(4) Development Agreement dated June 6, 1994, by and among the Company, Boyd Kansas City, Inc. and Port Authority of Kansas City, Missouri.
10.14(2) Form of Indemnification Agreement.
10.15(2)* 1993 Flexible Stock Incentive Plan and related agreements.
10.16(2)* 1993 Directors Non-Qualified Stock Option Plan and related agreements.
10.17(11)* 1993 Employee Stock Purchase Plan and related agreement.
10.18(1) 401(k) Profit Sharing Plan and Trust.
EXHIBIT NUMBER DOCUMENT -------- -------- 10.19(5) Joint Venture Agreement of Stardust A.C., dated as of May 29, 1996, by and between MAC, Corp., a New Jersey Corporation, which is a wholly-owned subsidiary of Mirage Resorts Incorporated, a Nevada Corporation, and Grand K, Inc., a Nevada Corporation, which is a wholly-owned subsidiary of the Company. (Certain portions of this exhibit have been omitted and filed separately with the Securities and Exchange Commission pursuant to a request for confidential treatment for this Agreement.)
10.20(3) Amended and Restated Joint Venture Agreement of Stardust A.C.
10.21(6) Property Purchase Agreement dated as of August 9, 1996, by and between Steamboat Station Company, a Nevada general partnership, and Boyd Reno, Inc., a Nevada corporation and wholly-owned subsidiary of the Company.
10.22(12) Unit Purchase Agreement among the Company, Boyd Indiana, Inc., Blue Chip Casino, Inc., Blue Chip Casino, LLC, and certain individuals, dated as of June 27, 1999.
10.23(12) First Amended and Restated Credit Agreement, dated as of June 30, 1999 among the Company as the Borrower, Certain Commercial Lending Institutions, as the Lenders, Canadian Imperial Bank of Commerce, as L/C Issuer and Administrative Agent, Wells Fargo Bank N.A., as Swingline Lender and Syndication Agent, and Bank of America National Trust and Savings Association, as Documentation Agent.
10.24(13) Termination and Transition Agreement among the Company and the Mississippi Band of Choctaw Indians, dated as of October 20, 1999.
10.25(14) 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.
10.26(14)* 2000 Executive Management Incentive Plan
10.27(14) Certificate of Amendment of Articles of Incorporation
10.28(14)* 1996 Stock Incentive Plan (as amended on May 25, 2000)
10.29(15) Second Amended and Restated Joint Venture Agreement with Marina District Development Company dated as of August 31, 2000
10.30 Contribution and Adoption Agreement by and among Marina District Development Holding Co., LLC, MAC, Corp. and Boyd Atlantic City, Inc. effective as of December 13, 2000.
10.31 Guaranty of Performance and Completion dated December 13, 2000.
21.1 Subsidiaries of Registrant.
23.1 Consent of Deloitte & Touche LLP.
24(16) Power of Attorney.
- ------------------ * Management contracts or compensatory plans or arrangements.
(1) Incorporated by reference to the Registration Statement on Form S-1, File No. 33-51672, of California Hotel and Casino and California Hotel Finance Corporation, which became effective on November 18, 1992.
(2) Incorporated by reference to the Company's Statement on Form S-1, File No. 33-64006, which became effective on October 15, 1993.
(3) Incorporated by reference to the Company's Current Report on Form 8-K dated July 14, 1998.
(4) Incorporated by reference to the Company's Annual Report on Form 10-K for the year ended June 30, 1995.
(5) Incorporated by reference to the Company's Current Report on Form 8-K dated June 7, 1996.
(6) Incorporated by reference to the Company's Exhibit 2.1 of Current Report on Form 8-K dated August 16, 1996.
(7) Incorporated by reference to Exhibit 3.1 of the Company's Quarterly Report on Form 10-Q for the quarter ended December 31, 1996.
(8) Incorporated by reference to the Company's Annual Report on Form 10-K for the year ended June 30, 1997.
(9) Incorporated by reference to the Company's Registration Statement on Form S-3, File No. 333-0555.
(10) Incorporated by reference to Exhibit 3.2 of the Company's Quarterly Report on Form 10-Q for the quarter ended March 31, 1999.
(11) Incorporated by reference to the Registration Statement on Form S-8, File No. 333-79895, dated June 3, 1999.
(12) Incorporated by reference to the Company's Quarterly Report on Form 10-Q for the quarter ended June 30, 1999.
(13) Incorporated by reference to the Company's Quarterly Report on Form 10-Q for the quarter ended September 30, 1999.
(14) Incorporated by reference to the Company's Quarterly Report on Form 10-Q for the quarter ended June 30, 2000.
(15) Incorporated by reference to the Company's Quarterly Report on Form 10-Q for the quarter ended September 30, 2000.
(16) Refer to page 73 in the Company's Annual Report on Form 10-K for the year ended December 31, 2000.
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) 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 March 13, 2001.
BOYD GAMING CORPORATION
By: /s/ JEFFREY G. SANTORO ------------------------------------ Jeffrey G. Santoro Vice President & Controller (Principal Accounting Officer)
POWER OF ATTORNEY
KNOW ALL PERSONS BY THESE PRESENTS, that each person whose signature appears below constitutes and appoints William S. Boyd, Ellis Landau, and Jeffrey G. Santoro, and each of them, his of her attorneys-in-fact, each with the power of substitution, for him or her in any and all capacities, to sign any amendments to this Report on Form 10-K and to file the same, with exhibits thereto and other documents in connection therewith, with the Securities and Exchange Commission, hereby ratifying and confirming all that each of said attorneys-in-fact, or his substitute or substitutes, may do or cause to be done by virtue hereof.
Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the date indicated.
(C) EXHIBITS.
EXHIBIT NUMBER DOCUMENT -------- -------- 3.1(7) Restated Articles of Incorporation.
3.2(10) Restated Bylaws.
3.3(14) Certificate of Amendment of Articles of Incorporation
4.1(8) Registration Agreement, dated July 17, 1997, among the Company, Salomon Brothers Inc., UBS Securities LLC and CIBC Wood Gundy Securities Corp.
4.2(9) Form of Indenture relating to $200,000,000 aggregate principal amount of 9.25% Senior Subordinated Notes due 2003, including the Form of Note.
4.3(8) Form of Indenture relating to 9.50% Senior Subordinated Notes due 2007, dated as of July 22, 1997, between the Company and State Street Bank and Trust Company, including the Form of Note.
4.4(8) First Supplemental Indenture, among the Company, as Issuer, certain subsidiaries of the Company, as Guarantors, and the Bank of New York, as Trustee, dated as of December 31, 1996.
10.1(1) Ninety-Nine Year Lease dated June 30, 1954, by and among Fremont Hotel, Inc., and Charles L. Ronnow and J.L. Ronnow, and Alice Elizabeth Ronnow.
10.2(1) Lease Agreement dated October 31, 1963, by and between Fremont Hotel, Inc. and Cora Edit Garehime.
10.3(1) Lease Agreement dated December 31, 1963, by and among Fremont Hotel, Inc., Bank of Nevada and Leon H. Rockwell, Jr.
10.4(1) Lease Agreement dated June 7, 1971, by and among Anthony Antonacci, Margaret Fay Simon and Bank of Nevada, as Co-Trustees under Peter Albert Simon's Last Will and Testament, and related Assignment of Lease dated February 25, 1985 to Sam-Will, Inc. and Fremont Hotel, Inc.
10.5(4) Lease Agreement dated July 25, 1973, by and between CH&C and William Peccole, as Trustee of the Peter Peccole 1970 Trust.
10.6(1) Lease Agreement dated July 1, 1974, by and among Fremont Hotel, Inc. and Bank of Nevada, Leon H. Rockwell, Jr. and Margorie Rockwell Riley.
10.7(1) Ground Lease Agreement dated July 5, 1978, by and between CH&C, and Irene Elizabeth Carey, as Trustee of the Carey Survivor's Trust U/A October 18, 1972 and Irene Elizabeth Carey, as Trustee of the Carey Family Trust U/A October 18, 1972.
10.8(1) Ninety-Nine Year Lease dated December 1, 1978 by and between Matthew Paratore, and George W. Morgan and LaRue Morgan, and related Lease Assignment dated November 10, 1987 to Sam-Will, Inc., d/b/a/ Fremont Hotel and Casino.
10.9(1) Implemented Proposal dated June 15, 1992, by and between Stardust Hotel and Casino and the Back-End Teamsters Local Union No. 995.
10.10(1) Implemented Proposal dated June 15, 1992, by and between Fremont Hotel and Casino and the Back-End Teamsters Local Union No. 995.
10.11(2) Casino Management Agreement dated August 30, 1993, by and between Treasure Chest Casino, L.L.C. and Boyd Kenner, Inc.
10.12(4) Amended and Restated Operating Agreement dated August 5, 1994, by and between Treasure Chest Casino, L.L.C. and Boyd Kenner, Inc.
10.13(4) Development Agreement dated June 6, 1994, by and among the Company, Boyd Kansas City, Inc. and Port Authority of Kansas City, Missouri.
10.14(2) Form of Indemnification Agreement.
10.15(2)* 1993 Flexible Stock Incentive Plan and related agreements.
10.16(2)* 1993 Directors Non-Qualified Stock Option Plan and related agreements.
10.17(11)* 1993 Employee Stock Purchase Plan and related agreement.
10.18(1) 401(k) Profit Sharing Plan and Trust.
EXHIBIT NUMBER DOCUMENT -------- -------- 10.19(5) Joint Venture Agreement of Stardust A.C., dated as of May 29, 1996, by and between MAC, Corp., a New Jersey Corporation, which is a wholly-owned subsidiary of Mirage Resorts Incorporated, a Nevada Corporation, and Grand K, Inc., a Nevada Corporation, which is a wholly-owned subsidiary of the Company. (Certain portions of this exhibit have been omitted and filed separately with the Securities and Exchange Commission pursuant to a request for confidential treatment for this Agreement.)
10.20(3) Amended and Restated Joint Venture Agreement of Stardust A.C.
10.21(6) Property Purchase Agreement dated as of August 9, 1996, by and between Steamboat Station Company, a Nevada general partnership, and Boyd Reno, Inc., a Nevada corporation and wholly-owned subsidiary of the Company.
10.22(12) Unit Purchase Agreement among the Company, Boyd Indiana, Inc., Blue Chip Casino, Inc., Blue Chip Casino, LLC, and certain individuals, dated as of June 27, 1999.
10.23(12) First Amended and Restated Credit Agreement, dated as of June 30, 1999 among the Company as the Borrower, Certain Commercial Lending Institutions, as the Lenders, Canadian Imperial Bank of Commerce, as L/C Issuer and Administrative Agent, Wells Fargo Bank N.A., as Swingline Lender and Syndication Agent, and Bank of America National Trust and Savings Association, as Documentation Agent.
10.24(13) Termination and Transition Agreement among the Company and the Mississippi Band of Choctaw Indians, dated as of October 20, 1999.
10.25(14) 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.
10.26(14)* 2000 Executive Management Incentive Plan
10.27(14) Certificate of Amendment of Articles of Incorporation
10.28(14)* 1996 Stock Incentive Plan (as amended on May 25, 2000)
10.29(15) Second Amended and Restated Joint Venture Agreement with Marina District Development Company dated as of August 31, 2000
10.30 Contribution and Adoption Agreement by and among Marina District Development Holding Co., LLC, MAC, Corp. and Boyd Atlantic City, Inc. effective as of December 13, 2000.
10.31 Guaranty of Performance and Completion dated December 13, 2000.
21.1 Subsidiaries of Registrant.
23.1 Consent of Deloitte & Touche LLP.
24(16) Power of Attorney.
- ------------------ * Management contracts or compensatory plans or arrangements.
(1) Incorporated by reference to the Registration Statement on Form S-1, File No. 33-51672, of California Hotel and Casino and California Hotel Finance Corporation, which became effective on November 18, 1992.
(2) Incorporated by reference to the Company's Statement on Form S-1, File No. 33-64006, which became effective on October 15, 1993.
(3) Incorporated by reference to the Company's Current Report on Form 8-K dated July 14, 1998.
(4) Incorporated by reference to the Company's Annual Report on Form 10-K for the year ended June 30, 1995.
(5) Incorporated by reference to the Company's Current Report on Form 8-K dated June 7, 1996.
(6) Incorporated by reference to the Company's Exhibit 2.1 of Current Report on Form 8-K dated August 16, 1996.
(7) Incorporated by reference to Exhibit 3.1 of the Company's Quarterly Report on Form 10-Q for the quarter ended December 31, 1996.
(8) Incorporated by reference to the Company's Annual Report on Form 10-K for the year ended June 30, 1997.
(9) Incorporated by reference to the Company's Registration Statement on Form S-3, File No. 333-0555.
(10) Incorporated by reference to Exhibit 3.2 of the Company's Quarterly Report on Form 10-Q for the quarter ended March 31, 1999.
(11) Incorporated by reference to the Registration Statement on Form S-8, File No. 333-79895, dated June 3, 1999.
(12) Incorporated by reference to the Company's Quarterly Report on Form 10-Q for the quarter ended June 30, 1999.
(13) Incorporated by reference to the Company's Quarterly Report on Form 10-Q for the quarter ended September 30, 1999.
(14) Incorporated by reference to the Company's Quarterly Report on Form 10-Q for the quarter ended June 30, 2000.
(15) Incorporated by reference to the Company's Quarterly Report on Form 10-Q for the quarter ended September 30, 2000.
(16) Refer to page 73 in the Company's Annual Report on Form 10-K for the year ended December 31, 2000.