Project development, preopening and writedowns
represent:represents: (i) certain costs incurred and recoveries realized related to the activities associated with various acquisition opportunities, strategic initiatives, dispositions and other business development activities in the ordinary course of business; (ii) certain costs of start-up activities that are expensed as incurred in our ongoing efforts to develop gaming activities in new jurisdictions and expenses related to other new business development activities that do not qualify as capital costs;
and (iii) asset
write-downs.write-downs; and (iv) realized gains arising from asset dispositions. Such costs are generally nonrecurring in nature and vary from period to period as the volume of underlying activities fluctuate.
DuringDuring the threesix months ended
SeptemberJune 30,
2021,2022, the Company incurred $8.5benefitted from a $12.8 million in write-off expenses related to certain projects.27
Impairment of Assets
We had no impairments of assets for the nine months ended September 30, 2021. Impairment of assets for the nine months ended September 30, 2020, include non-cash impairment charges of $8.0 million for trademarks and $22.6 million for goodwill in our Las Vegas Locals segment and non-cash impairment charges of $8.9 million for trademarks, $42.2 million for gaming license rights and $89.4 million for goodwill in our Midwest & South segment.
Other Operating Items, net
Other operating items, net, is generally comprised of miscellaneous non-recurring operating charges, including direct costs associated with the Property Closures, including severance payments to separated employees, natural disasters and severe weather impact, including hurricane and flood expenses, and subsequent recoveries of such costs, as applicable. During the ninethree and six months ended SeptemberJune 30, 2021, $10.7 million of other operating items, net, related to non-recurring employee bonus payments. During the nine months ended September 30, 2020, $22.0 million of other operating items, net, related to incremental, non-recurring costs associated with the Property Closures.
Other Expenses
Interest Expense, net
The following table summarizes information with respect to our interest expense on outstanding indebtedness:
| | | Three Months Ended | | Nine Months Ended | | | Three Months Ended | | Six Months Ended | |
| | | September 30, | | | September 30, | | | June 30, | | | June 30, | |
(In millions) | | 2021 | | | 2020 | | | 2021 | | | 2020 | | | 2022 | | | 2021 | | | 2022 | | | 2021 | |
Interest Expense, net | | $ | 44.7 | | | $ | 61.9 | | | $ | 156.8 | | | $ | 172.0 | | |
Interest Expense, Net of Capitalized Interest and Interest Income | | | $ | 36.0 | | | $ | 54.7 | | | $ | 73.2 | | | $ | 112.1 | |
Average Long-Term Debt Balance (1) | | 3,378.5 | | | 4,436.0 | | | 3,704.0 | | | 4,332.0 | | | 3,032.7 | | | 3,791.5 | | | 3,052.5 | | | 3,866.8 | |
Weighted Average Interest Rates | | 4.8 | % | | 5.0 | % | | 5.2 | % | | 4.8 | % | | 4.3 | % | | 5.3 | % | | 4.2 | % | | 5.3 | % |
(1) Average debt balance calculation does not include the related discounts or deferred finance charges.
Interest expense, net of capitalized interest and interest income, for the three months ended SeptemberJune 30, 2021, 2022,decreased $17.2$18.7 million, or 27.8%
34.2%, from the prior year comparable period. Theperiod as a result of a $758.8 million decline is attributable to a decrease in the weighted average long-term debt balance of $1.1 billion along withand a decline100 basis point decrease in the weighted average interest rate, percentage point of 0.2 forwhich is driven by the three months ended September 30, 2021. The decline in the average long-term debt balance is primarily attributable to the following: (i) full repayment of the outstanding balance on the Revolving Credit Facility in third quarter 2020; (ii) retirements of the 6.375% Senior Notes and the 6.000% Senior Notes in June 2021;2021, the retirement of $300.0 million aggregate principal amount of our 8.625% Senior Notes in November 2021 and the remaining $300.0 million outstanding balance of our 8.625% Senior Notes in June 2022, offset by (iii) the issuance of the 4.750% Senior Notes due 2031 in June 2021.
Interest expense, net of capitalized interest and interest income, for the ninesix months ended SeptemberJune 30, 20212022, decreased $15.2$38.8 million, or 8.8%34.7%, as compared tofrom the prior year comparable period. The decreasedecline is attributable to a decrease$814.3 million decline in the weighted average long-term debt balance of $628.0 million offset by an increaseand a 110 basis point decrease in the weighted average interest rate, percentage point of 0.4 forwhich is driven by thenine months ended September 30, 2021. The decline in the average long-term debt balance is primarily attributable to the following: (i) full repayment of the outstanding balance on the Revolving Credit Facility in third quarter 2020; (ii) retirements of the 6.375% Senior Notes and the 6.000% Senior Notes in June 2021; (iii) repayment2021, the retirement of $98.7$300.0 million onaggregate principal amount of our 8.625% Senior Notes in November 2021 and the Term A Loan, (iv) the extinguishmentremaining $300.0 million outstanding balance of $57.7 million of other debt;our 8.625% Senior Notes in June 2022, offset by (v) the issuance of the 4.750% Senior Notes due 2031 in June 2021.
Loss on Early Extinguishments and Modifications of Debt
The components of the loss on early extinguishments and modifications of debt are as follows:
| | | Three Months Ended | | | Nine Months Ended | |
| | | September 30, | | | September 30, | |
(In millions) | | 2021 | | | 2020 | | | 2021 | | | 2020 | |
6.375% Senior Notes premium and consent fees | | $ | — | | | $ | — | | | $ | 23.9 | | | $ | — | |
6.375% Senior Notes deferred finance charges | | | — | | | | — | | | | 6.4 | | | | — | |
6.000% Senior Notes premium and consent fees | | | — | | | | — | | | | 28.0 | | | | — | |
6.000% Senior Notes deferred finance charges | | | — | | | | — | | | | 7.2 | | | | — | |
Boyd Gaming Credit Facility deferred financing charges | | | — | | | | 0.4 | | | | — | | | | 1.0 | |
Total loss on early extinguishments and modifications of debt | | $ | — | | | $ | 0.4 | | | $ | 65.5 | | | $ | 1.0 | |
| | | Three Months Ended | | | Six Months Ended | |
| | | June 30, | | | June 30, | |
(In millions) | | 2022 | | | 2021 | | | 2022 | | | 2021 | |
6.375% Senior Notes premium fees paid | | $ | — | | | $ | 23.9 | | | $ | — | | | $ | 23.9 | |
6.375% Senior Notes deferred finance charges written off | | | — | | | | 6.4 | | | | — | | | | 6.4 | |
6.000% Senior Notes premium fees paid | | | — | | | | 28.0 | | | | — | | | | 28.0 | |
6.000% Senior Notes deferred finance charges written off | | | — | | | | 7.2 | | | | — | | | | 7.2 | |
8.625% Senior Notes premium fees paid | | | 12.9 | | | | — | | | | 12.9 | | | | — | |
8.625% Senior Notes deferred finance charges written off | | | 3.6 | | | | — | | | | 3.6 | | | | — | |
Prior Credit Facility deferred finance charges written off | | | — | | | | — | | | | 3.3 | | | | — | |
Total loss on early extinguishments and modifications of debt | | $ | 16.5 | | | $ | 65.5 | | | $ | 19.8 | | | $ | 65.5 | |
Income Taxes
The effective tax rates during the ninesix months ended SeptemberJune 30, 2022 and 2021 were 22.5% and 2020 were 22.8% and 17.7%23.0%, respectively. Our tax ratesrate for the ninesix months ended SeptemberJune 30, 2022 and 2021 and 2020 were unfavorably impacted by state taxes and certain nondeductible expenses which were partially offset by the inclusion of excess tax benefits related to equity compensation as a component of the provision for income taxes. As of Additionally,December 31, 2021, the effective tax rate for the nine months ended September 30, 2020 was favorably impacted by the settlement of a state audit offset by the creation of a valuation allowance applied to certain state deferred tax assets, including stateCompany exhausted its federal net operating loss carryforwards.
As a result of and response to the COVID-19 pandemic, the U.S. government enacted Coronavirus Aid, Relief, and Economic Security Act ("CARES Act") and it was signed into law on March 27, 2020. Includedcarryforwards which results in higher cash taxes in the CARES Act are provisions relating to payroll tax creditscurrent and deferrals, net operating loss carryback periods, interest expense deductions, alternative minimum tax credits and technical corrections to tax depreciation methods for qualified improvement property. Our financial results for the nine months ended September 30, 2021 and 2020, include the payroll tax credits we received under the CARES Act, partially offsetting the expenses incurred during these periods for compensation and benefits provided to qualifying employees.prospective periods.
LIQUIDITY AND CAPITAL RESOURCES
Financial Position
We generally operate with minimal or negative levels of working capital in order to minimize borrowings and related interest costs. At SeptemberJune 30, 20212022 and December 31, 2020,2021, we had balances of cash and cash equivalents of $570.9$250.2 million and $519.2$344.6 million, respectively. In addition, we held restricted cash balances of $17.4$13.8 million and $15.8$12.6 million at SeptemberJune 30, 20212022 and December 31, 2020,2021, respectively. Our working capital deficit at June 30, 2022 and December 31, 2021 was $116.8 million and $49.2 million, respectively.
We believe that current cash balances together with the available borrowing capacity under our Revolving Credit Facility and cash flows from operating activities will be sufficient to meet our liquidity and capital resource needs for the next twelve months, including our projected operating requirements, and maintenance capital expenditures.expenditures and our announced definitive agreement to acquire Pala Interactive LLC ("Pala Interactive") and its subsidiaries, including its Canadian subsidiary Pala Canada Interactive Inc. See "Indebtedness", below, for further detail regarding the bank credit facility.Credit Facility.
The Company may also seek to secure additional working capital, repay respective current debt maturities, or fund respective development projects, in whole or in part, through incremental bank financing and additional debt or equity offerings, to the extent such offerings are allowed under our debt agreements.
Cash Flows Summary
| | | Nine Months Ended | | | Six Months Ended | |
| | | September 30, | | | June 30, | |
(In millions) | | 2021 | | | 2020 | | | 2022 | | | 2021 | |
Net cash provided by operating activities | | $ | 777.7 | | | $ | 124.0 | | | $ | 456.2 | | | $ | 499.3 | |
| | | |
Cash flows from investing activities | | | | | | | | | | | | |
Capital expenditures | | (139.2 | ) | | (105.1 | ) | | (98.7 | ) | | (96.3 | ) |
Insurance proceeds received for hurricane losses | | 44.5 | | — | | | — | | 40.2 | |
Cash paid for acquisitions, net of cash received | | — | | (11.2 | ) | |
Proceeds from disposition of assets | | | 21.4 | | — | |
Other investing activities | | | 5.5 | | | | — | | | | — | | | | 6.7 | |
Net cash used in investing activities | | | (89.2 | ) | | | (116.3 | ) | | | (77.3 | ) | | | (49.4 | ) |
| | | |
Cash flows from financing activities | | | | | | | | | | | | |
Net payments under bank credit facility | | (18.2 | ) | | (316.3 | ) | |
Net borrowings (payments) under credit facilities | | | 181.1 | | | (11.5 | ) |
Proceeds from issuance of senior notes | | 900.0 | | 600.0 | | | — | | 900.0 | |
Debt issuance costs | | (14.6 | ) | | (17.1 | ) | |
Retirements of senior notes | | (1,450.0 | ) | | — | | | (300.0 | ) | | (1,450.0 | ) |
Premium and consent fees | | (51.9 | ) | | — | | |
Premium fees | | | (12.9 | ) | | (51.9 | ) |
Debt financing costs | | | (13.7 | ) | | (14.6 | ) |
Share-based compensation activities | | | (9.0 | ) | | 0.3 | |
Shares repurchased and retired | | | (299.8 | ) | | — | |
Dividends paid | | — | | | (7.8 | ) | | (16.5 | ) | | — | |
Shares repurchased and retired | | — | | | (11.1 | ) | |
Other financing activities | | | (0.5 | ) | | | (4.8 | ) | | | (1.2 | ) | | | (1.4 | ) |
Net cash provided by (used in) financing activities | | | (635.2 | ) | | | 242.9 | | |
Increase in cash, cash equivalents and restricted cash | | $ | 53.3 | | | $ | 250.6 | | |
Net cash used in financing activities | | | | (472.0 | ) | | | (629.1 | ) |
Decrease in cash, cash equivalents and restricted cash | | | $ | (93.1 | ) | | $ | (179.2 | ) |
Cash Flows from Operating Activities
During the ninesix months ended SeptemberJune 30, 20212022 and 2020,2021, we generated operating cash flow of $777.7$456.2 million and $124.0$499.3 million, respectively. Generally, operating cash flows increaseddecreased during 20212022 as compared to the prior year period due to the negative impact of the Property Closures on prior year cash flows, increased cash flows in the current year due to the strategic shift of the Company's operating model and timing of working capital spending.spend.
Cash Flows from Investing Activities
Our industry is capital intensive and we use cash flows for acquisitions, facility expansions, investments in future development or business opportunities and maintenance capital expenditures.
During the ninesix months ended SeptemberJune 30, 2022, we incurred net cash outflows for investing activities of $77.3 million comprised of capital expenditures of $98.7 million, primarily related to furniture and equipment purchases and building projects at various properties, offset by $21.4 million in proceeds from disposition of assets. During the six months ended June 30, 2021, we incurred net cash outflows for investing activities of $89.2$49.4 million comprised of capital expenditure spendingexpenditures of $139.2$96.3 million, primarily related to building improvements at Delta Downs as a result of Hurricane Laura damage, which was offset by $44.5$40.2 million of insurance recovery proceeds and $6.7 million of reimbursed expense associated with the Wilton Rancheria project.During the nine months ended September 30, 2020, we incurred net cash outflows for investing activities of $116.3 million, related to the purchase of real estate and information technology purchases for new software.
Cash Flows from Financing Activities
We rely upon our financing cash flows to provide funding for investment opportunities, repayments of obligations and ongoing operations.
The net cash outflows from financing activities during the six months ended June 30, 2022, primarily reflect share repurchases, the retirement of the 8.625% Senior Notes, payment of the associated premium fees related to the retirement of the 8.625% Senior Notes, debt financing costs related to the Credit Agreement and dividends paid, offset by an increase in the nineoutstanding principal under the Credit Facility (see "Indebtedness"). The net cash outflows from financing activities in the six months ended SeptemberJune 30, 2021, primarily reflect the retirements of the 6.375% Senior Notes and the 6.000% Senior Notes, payment of the associated premium and consent fees related to the retirements, the quarterly payments on our Term Loans and debt issuance costs. Thecosts for the 4.750% Senior Notes due 2031 offset by inflows for the six months ended June 30, 2021 reflectfrom the issuance of the 4.750% Senior Notes due 2031. The net cash inflows from financing activities in the nine months ended September 30, 2020, reflect primarily the senior note issuance to preserve liquidity during the Property Closure period. The outflows in 2020 reflect the use of cash flow to paydown our Revolving Credit Facility, pay debt financing costs, repurchase outstanding common stock under our share repurchase program and pay cash dividends to our shareholders.
Indebtedness
The outstanding principal balances of long-term debt, before unamortized discounts and fees, and the changes in those balances are as follows:
(In millions) | | September 30, 2021 | | | December 31, 2020 | | | Increase / (Decrease) | | | June 30, 2022 | | | December 31, 2021 | | | Increase / (Decrease) | |
Bank credit facility | | $ | 878.0 | | | $ | 896.2 | | | $ | (18.2 | ) | |
6.375% senior notes due 2026 | | — | | | 750.0 | | | (750.0 | ) | |
6.000% senior notes due 2026 | | — | | | 700.0 | | | (700.0 | ) | |
Credit Facility | | | $ | 1,049.0 | | | $ | — | | | $ | 1,049.0 | |
Prior Credit Facility | | | — | | 867.9 | | (867.9 | ) |
4.750% senior notes due 2027 | | 1,000.0 | | | 1,000.0 | | | — | | | 1,000.0 | | | 1,000.0 | | | — | |
8.625% senior notes due 2025 | | 600.0 | | 600.0 | | — | | | — | | 300.0 | | (300.0 | ) |
4.750% senior notes due 2031 | | 900.0 | | — | | 900.0 | | | 900.0 | | 900.0 | | — | |
Other | | | 1.4 | | | | 3.6 | | | | (2.2 | ) | | | 0.8 | | | | 1.5 | | | | (0.7 | ) |
Total long-term debt | | 3,379.4 | | | 3,949.8 | | | (570.4 | ) | | 2,949.8 | | 3,069.4 | | (119.6 | ) |
Less current maturities | | | 41.9 | | | | 30.7 | | | | 11.2 | | | | 44.3 | | | | 41.7 | | | | 2.6 | |
Long-term debt, net of current maturities | | $ | 3,337.5 | | | $ | 3,919.1 | | | $ | (581.6 | ) | | $ | 2,905.5 | | $ | 3,027.7 | | $ | (122.2 | ) |
Credit Facility
Credit Agreement
On March 2, 2022 (the "Closing Date"), the Company entered into a credit agreement (the "Credit Agreement") among the Company, certain direct and indirect subsidiaries of the Company as guarantors (the "Guarantors"), Bank of America, N.A., as administrative agent, collateral agent and letter of credit issuer, Wells Fargo Bank, National Association, as swingline lender, and certain other financial institutions party thereto as lenders. The Credit Agreement replaced the Third Amended and Restated Credit Agreement, dated as of August 14, 2013 (the "Prior Credit Facility"), among the Company, certain direct and indirect subsidiaries of the Company as guarantors, Bank of America, N.A., as administrative agent and letter of credit issuer, Wells Fargo Bank, National Association, as swingline lender, and certain other financial institutions party thereto as lenders.
The Credit Agreement provides for (i) a $1,450.0 million senior secured revolving credit facility (the "Revolving Credit Facility") and (ii) an $880.0 million senior secured term A loan (the "Term A Loan," collectively with the Revolving Credit Facility, the "Credit Facility"). The Revolving Credit Facility and the Term A Loan mature on the fifth anniversary of the Closing Date (or earlier upon the occurrence or non-occurrence of certain events). The Term A Loan was fully funded on the Closing Date. Proceeds from the Credit Agreement were used to refinance all outstanding obligations under the Prior Credit Facility, including a senior secured term loan A facility (the "Prior Term A Loan") and senior secured term loan B facility (the "Prior Refinancing Term B Loan", and collectively with the Prior Term A Loan, the "Prior Term Loans"), and to fund transaction costs in connection with the Credit Agreement. For additional information, refer to Note 5, Long-Term Debt in the notes to our condensed consolidated financial statements included herein.
Amounts Outstanding
The outstanding principal amounts under the bank credit facilityCredit Facility and Prior Credit Facility are comprised of the following:
| | | September 30, | | December 31, | | | June 30, | | December 31, | |
(In millions) | | 2021 | | | 2020 | | | 2022 | | | 2021 | |
Revolving Credit Facility | | $ | — | | | $ | — | | | $ | 135.0 | | | $ | — | |
Term A Loan | | 125.1 | | | 133.8 | | | 869.0 | | | — | |
Refinancing Term B Loans | | 752.9 | | | 762.4 | | |
Prior Term A Loan | | | — | | 118.2 | |
Prior Refinancing Term B Loan | | | — | | | 749.7 | |
Swing Loan | | | — | | | | — | | | | 45.0 | | | | — | |
Total outstanding principal amounts under the bank credit facility | | $ | 878.0 | | | $ | 896.2 | | |
Total outstanding principal amounts | | | $ | 1,049.0 | | | $ | 867.9 | |
With a total revolving credit commitment of $1,033.7$1,450.0 million available under the bank credit facility, noCredit Facility, $135.0 million and $45.0 million in borrowings outstanding on the Revolving Credit Facility and the Swing Loan, respectively, and $11.9$14.2 million allocated to support various letters of credit, there is a remaining contractual availability of $1,021.8$1,255.8 million as of SeptemberJune 30, 2021.2022.
The blended interest rate for outstanding borrowings under the bank credit facilityCredit Facility was 2.3%3.0% at SeptemberJune 30, 20212022 and 2.5%2.3% at December 31, 2020.2021.
Redemption of8.625%Senior Notes dueJune 2025
On June 1, 2022, we redeemed all outstanding 8.625% Senior Notes due June 2025 at a redemption price of 104.313% plus accrued and unpaid interest to the redemption date. The redemption, including the redemption premium, accrued and unpaid interest, fees, expenses and commissions related to this redemption, was funded through a combination of cash on hand and borrowings under our Revolving Credit Facility.
Debt Service Requirements
Debt service requirements for Term A Loan include amortization in an annual amount equal to 5.00% of the original principal amount thereof, commencing June 30, 2022, payable on a quarterly basis. Additionally, under the Credit Facility we have monthly Term A Loan interest payment obligations and quarterly unused line interest payments. Debt service requirements under our current outstanding senior notes consist of semi-annual interest payments (based upon a fixed annual interest rates ranging fromrate of 4.750% to 8.625%) and principal repayments of our 8.625%4.750% Senior Notes due in June 2025, our 4.750% Notes due in December 2027 and our 4.750% Senior Notes due in June 2031.
Covenant Compliance
As of SeptemberJune 30, 2021, we believe that2022, we were in compliance with the covenants contained inof our debt instruments.
The indentures governing the senior notes contain provisions that allow for the incurrence of additional indebtedness, if after giving effect to such incurrence, the fixed charge coverage ratio (as defined in the respective indentures, essentially a ratio of our consolidated EBITDA to fixed charges, including interest) for the trailing four quarter period on a pro forma basis would be at least 2.0 to 1.0. Should this provision prohibit the incurrence of additional debt, we may still borrow under our existing bank credit facility,Credit Facility to the extent that borrowing capacity remains under that agreement, as well as from other funding sources as provided under our debt agreements.
Guarantor Financial Information
In connection with the issuance of our 6.375%4.750% Senior Notes due 2027, our 6.000%8.625% Senior Notes and our 4.750% senior notes due December 2027 ("4.750% Notes due 2027"), our 8.625% senior notes due June 2025 ("8.625% Notes") and our 4.750%Senior Notes due 2031 (collectively, the "Guaranteed Notes"), certain of the Company's wholly owned subsidiaries (the "Guarantors") provide guarantees of those indentures. These Guaranteed Notes are fully and unconditionally guaranteed, on a joint and several basis, by certain of our current and future domestic restricted subsidiaries, all of which are 100% owned by us. With the exception of one subsidiary, the guarantors of the 6.375% Notes are the same as for our 6.000% Notes, both 4.750% Notes and 8.625% Notes (collectively, the "Other Notes"). On June 9, 2021,1, 2022, the 6.375%8.625% Senior Notes and 6.000% Notes were fully redeemed.
Summarized combined balance sheet information for the parent company and the Guarantors areis as follows:
| | | September 30, | | December 31, | | | June 30, | | December 31, | |
(In millions) | | 2021 | | 2020 | | | 2022 | | 2021 | |
Current assets | | $ | 698.1 | | | $ | 637.2 | | | $ | 393.6 | | | $ | 487.7 | |
Noncurrent assets | | 9,997.0 | | | 9,508.2 | | | 10,441.7 | | | 10,158.4 | |
Current liabilities | | 534.1 | | | 494.3 | | | 510.4 | | | 538.1 | |
Noncurrent liabilities | | 4,412.8 | | | 4,908.1 | | | 3,996.4 | | | 4,138.4 | |
Summarized combined results of operations for the parent company and the Guarantors areis as follows:
| | | Nine Months Ended | | | Six Months Ended | |
(In millions) | | September 30, 2021 | | | June 30, 2022 | |
Revenues | | $ | 2,513.0 | | | $ | 1,788.4 | |
Operating income | | 1,300.2 | | | 902.3 | |
Income before income taxes | | 1,075.6 | | | 805.8 | |
Net income | | 970.5 | | | 715.6 | |
Share Repurchase Programs
Subject to applicable corporate securities laws, repurchases under our stockshare repurchase program may be made at such times and in such amounts as we deem appropriate. We are subject to certain limitations regarding the repurchase of common stock, such as restricted payment limitations related to our outstanding senior notes and bank credit facility. Credit Facility. Purchases under our share repurchase program can be discontinued at any time that we feel additional purchases are not warranted. We intend to fund the repurchases under the share repurchase program with existing cash resources and availability under our Credit Facility.
On December 12, 2018,October 21, 2021, our Board of Directors authorized a share repurchase program of $100 million. During the nine months ended September 30, 2020, we repurchased 0.7$300.0 million shares of our common stock. There were no share repurchases during the nine months ended September 30, 2021. We are currently authorized to repurchase up to an additional $61.4 million in shares of our common stock under this share repurchase program.(the "Share Repurchase Program"). On October 21, 2021,June 1, 2022, our Board of Directors authorized an additional share repurchase program of $300.0 million. Undera $500.0 million increase to the stock repurchase programs, the Company may repurchase shares of its common stock from time to time on the open market or in privately negotiated transactions. Repurchases of common stock may also be made under Rule 10b5-1 plans, which would permit common stock to be repurchased when the Company might otherwise be precluded from doing so under insider trading laws. The timing, volume and nature of share repurchases will be at the sole discretion of management, dependent on market conditions, applicable securities laws and other factors, and may be suspended or discontinued at any time.Share Repurchase Program. We are not obligated to purchaserepurchase any shares under our stock repurchase programs,this program, and purchases under our stock repurchase programsthe Share Repurchase Program can be discontinued at any time at our sole discretion. We repurchased 3.0 million and 5.1 million shares during the three and six months ended June 30, 2022, respectively. There were no share repurchases during the three and six months ended June 30, 2021 as we had suspended all share repurchases in March 2020 in order to preserve liquidity due to the Property Closures.impact of the COVID-19 pandemic on our business. As of June 30, 2022, we are authorized to repurchase up to an additional $480.8 million in shares of our common stock.
We have in the past, and may in the future, acquire our debt or equity securities, through open market purchases, privately negotiated transactions, tender offers, exchange offers, redemptions or otherwise, upon such terms and at such prices as we may determine.
Quarterly Dividend Program
On February 3, 2022, the Company announced that its Board of Directors had authorized the reinstatement of the Company's cash dividend program.
The dividends declared by the Board of Directors under this program and reflected in the periods presented are:
Declaration date | | Record date | | Payment date | | Amount per share | |
December 17, 2019 | | December 27, 2019 | | January 15, 2020 | | $ | 0.07 | |
On March 25, 2020, the Company announced that the cash dividend program has been suspended to help mitigate the financial impact of the COVID-19 pandemic.
Declaration date | | Record date | | Payment date | | Amount per share | |
February 3, 2022 | | March 15, 2022 | | April 15, 2022 | | $ | 0.15 | |
June 1, 2022 | | June 30, 2022 | | July 15, 2022 | | | 0.15 | |
Other Items Affecting Liquidity
We anticipate funding our capital requirements, including the acquisition of Pala Interactive, using cash on hand, cash being generated by our open properties and availability under our Revolving Credit Facility, to the extent borrowing capacity exists after we meet our working capital needs for the next twelve months. Any additional financing that is needed may not be available to us or, if available, may not be on terms favorable to us. The outcome of the specific matters discussed herein, including our commitments and contingencies, may also affect our liquidity.
Commitments
Pending Acquisitions
On March 28, 2022, we announced that we had entered into a definitive agreement to acquire Pala Interactive, LLC ("Pala Interactive") and its subsidiaries, including its Canadian subsidiary Pala Canada Interactive Inc. ("Pala Canada"), for total cash consideration of $170.0 million. Pala Interactive is an innovative online gaming technology company that provides proprietary solutions on both a business-to-business (B2B) and business-to-consumer (B2C) basis in regulated markets across the United States and Canada. The transaction is expected to close around the end of the year, subject to the satisfaction of customary closing conditions and the receipt of all required regulatory approvals. We intend to finance the transaction through cash flow from operations and availability under our Revolving Credit Facility.
Capital Spending and Development
We currently estimate that our annual cash capital requirements to perform on-goingongoing refurbishment and maintenance at our properties ranges from betweis approximately $215 million to $235 millien $190 million and $210 million.on. We fund our capital expenditures through cash on hand, our bank credit facilityCredit Facility and operating cash flows.
In addition to the capital spending discussed above, we continue to pursue other potential development projects that may require us to invest significant amounts of capital.capital, including beginning construction on a land-based facility at Treasure Chest which will replace our existing riverboat, and expansion of the Fremont's casino space and dining options. Both of these projects are in addition to our maintenance capital spending, and we expect to spend an additional $50 million to $65 million this year.
We also continue to work with the Wilton Rancheria to develop and manage Sky River Casino, a gaming entertainment complex to be located about 15 miles southeast of Sacramento, California. Wilton Rancheria has secured third-party financing to fund construction, which began in first quarter 2021. Sky River Casino is expected to open in fourththe third quarter 2022.of this year.
Other Opportunities
We regularly investigate and pursue additional expansion opportunities in markets where casino gaming is currently permitted. We also pursue expansion opportunities in jurisdictions where casino gaming is not currently permitted in order to be prepared to develop projects upon approval of casino gaming. Such expansions will be affected and determined by several key factors, which may include the following:
| | • | the outcome of gaming license selection processes; |
| | • | the approval of gaming in jurisdictions where we have been active but where casino gaming is not currently permitted; |
| | • | identification of additional suitable investment opportunities in current gaming jurisdictions; and |
| | • | availability of acceptable financing. |
Additional projects may require us to make substantial investments or may cause us to incur substantial costs related to the investigation and pursuit of such opportunities, which investments and costs we may fund through cash flow from operations or availability under our bank credit facility.Credit Facility. To the extent such sources of funds are not sufficient, we may also seek to raise such additional funds through public or private equity or debt financings or from other sources to the extent such financing is available.
Contingencies
Legal Matters
We are parties to various legal proceedings arising in the ordinary course of business. We believe that all pending claims, if adversely decided, would not have a material adverse effect on our business, financial position or results of operations.
Off Balance Sheet Arrangements
There have been no material changes to our off balance sheet arrangements as defined in Item 303(a)(4)(ii) and described under Part II. Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations in our Annual Report on Form 10-K for the year ended December 31, 2020,2021, as filed with the SEC on March 1, 2021.February 28, 2022.
Critical Accounting Policies
There have been no material changes to our critical accounting policies described under Part II. Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations in our Annual Report on Form 10-K for the period ended December 31, 2020,2021, as filed with the SEC on March 1, 2021.February 28, 2022.
Recently Issued Accounting Pronouncements
For information with respect to recent accounting pronouncements and the impact of these pronouncements on our condensed consolidated financial statements, see Note 1, Summary of Significant Accounting Policies - Recently Issued Accounting Pronouncements, in the notes to the condensed consolidated financial statements (unaudited).
Important Information Regarding Forward-Looking Statements
This Quarterly Report on Form 10-Q contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended (the "Securities Act"), and Section 21E of the Securities Exchange Act of 1934, as amended (the "Exchange Act"). Such statements contain words such as "may," "will," "might," "expect," "believe," "anticipate," "could," "would," "estimate," "pursue," "target," "project," "intend," "plan," "seek," "should," "assume," and "continue," or the negative thereof or comparable terminology. Forward-looking statements involve certain risks and uncertainties, and actual results may differ materially from those discussed in any such statement. Factors that could cause actual results to differ materially from such forward-looking statements include:
| | • | our expectations with respect to the recent global pandemic of COVID-19 (as defined herein), caused by a novel strain of the coronavirus, and the response thereto; |
| • | the factors that contribute to our ongoing success and our ability to be successful in the future; |
| • | impacts caused by the COVID-19 pandemic or any other public health emergencies we may encounter; |
| | • | our business model, areas of focus and strategy for driving business results; |
| | • | competition, including expansion of gaming into additional markets including internet gaming, the impact of competition on our operations, our ability to respond to such competition, and our expectations regarding continued competition in the markets in which we compete; |
| | • | the general effect, and expectation, of the national and global economy on our business, as well as the economies where each of our properties are located; |
| | • | indebtedness, including Boyd Gaming’s ability to refinance or pay amounts outstanding under its credit agreement and Boyd Gaming’s unsecured notes, when they become due and our compliance with related covenants, and our expectation that we will need to refinance all or a portion of our respective indebtedness at or before maturity; |
| | • | our expectation regarding the trends that will affect the gaming industry over the next few years and the impact of these trends on growth of the gaming industry, future development opportunities and merger and acquisition activity in general; |
| | • | our intention to pursue expansion opportunities, including acquisitions, that are a good fit for our business, deliver a solid return for stockholders, and are available at the right price; |
| | • | that our credit agreement and our cash flows from operating activities will be sufficient to meet our respective projected operating and maintenance capital expenditures for the next twelve months; |
| •
| Adjusted EBITDAR and its usefulness as a measure of operating performance or valuation; |
| •
| our ability to utilize our net operating loss carryforwards and certain other tax attributes; |
| | • | our belief that all pending litigation claims, if adversely decided, will not have a material adverse effect on our business, financial position or results of operations; |
| | • | that margin improvements will remain a driver of profit growth for us going-forward;going forward; |
| | • | regulations, including anticipated taxes, tax credits or tax refunds expected, and the ability to receive and maintain necessary approvals for our projects; |
| | • | our expectations regarding the expansion of sports betting and online wagering; |
| | • | our asset impairment analyses and our intangible asset and goodwill impairment tests; |
| | • | the likelihood of interruptions to our rights in the land we lease under long-term leases for certain of our hotelhotels and casinos; |
| | • | that estimates and assumptions made in the preparation of financial statements in conformity with U.S. Generally Accepted Accounting Principles may differ from actual results; and |
| | • | our estimates as to the effect of any changes in our Consolidated EBITDA on our ability to remain in compliance with certain covenants in the credit agreement. |
Additional factors that could cause actual results to differ are discussed in Part I. Item 1A. Risk Factors of our Annual Report on Form 10-K for the period ended December 31, 2020,2021, and in other current and periodic reports filed from time to time with the SEC. All forward-looking statements in this document are made as of the date hereof, based on information available to us as of the date hereof, and we assume no obligation to update any forward-looking statement.
Item 3. Quantitative and Qualitative Disclosures 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. We do not hold any market risk sensitive instruments for trading purposes. Our primary exposure to market risk is interest rate risk, specifically long-term U.S. treasury rates and the applicable spreads in the high-yield investment market, short-term and long-term LIBOR rates, and short-term EurodollarSOFR rates, and their potential impact on our long-term debt. From March 2022 through July 2022, the Federal Reserve has increased the federal funds rate by 225 basis points. These recent increases in the federal funds rate may impact the interest paid on our variable-rate borrowings both now and in the future. We attempt to limit our exposure to interest rate risk by managing the mix of our long-term fixed-rate borrowings and short-term borrowings under our bank credit facility.Credit Facility. We do not currently utilize derivative financial instruments for trading or speculative purposes.
As of SeptemberJune 30, 2021,2022, our long-term variable-rate borrowings represented approximately 26.0%35.6% of total long-term debt. Based on SeptemberJune 30, 20212022 debt levels, a 100 basis point change in the interest rate would cause our annual interest costs on variable-rate borrowings to change by approximately $8.8$10.5 million. We believe there have been no other material changes in our exposure to market risks as disclosed in our Annual Report on Form 10-K for the year ended December 31, 2021, as filed with the SEC on February 28, 2022.
See also "Liquidity and Capital Resources" above.
Item 4. Controls and Procedures
As of the end of the period covered by this Quarterly Report on Form 10-Q (the "Report"), we carried out an evaluation, under the supervision and with the participation of our Chief Executive Officer and Chief Financial Officer, of the effectiveness of the design and operation of our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended (the "Exchange Act")). Our disclosure controls and procedures are designed to ensure that information required to be disclosed in our reports that we file or submit under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the SEC's rules and forms. Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information we are required to disclose in reports we file or submit under the Exchange Act is accumulated and communicated to our management, including our principal executive and principal financial officers, or persons performing similar functions, as appropriate, to allow timely decisions regarding required disclosure. Based on the evaluation of the effectiveness of the design and operation of our disclosure controls and procedures, our Chief Executive Officer and Chief Financial Officer concluded that our disclosure controls and procedures were effective as of the end of the period covered by this Report.
There has been no change in our internal control over financial reporting (as defined in Rules 13a-15(f) and 15d-15(f) of the Exchange Act) that occurred during our most recent fiscal quarter that has materially affected or is reasonably likely to materially affect our internal control over financial reporting.
PART II. Other Information
Item 1. Legal Proceedings
We are parties to various legal proceedings arising in the ordinary course of business. We believe that all pending claims, if adversely decided, would not have a material adverse effect on our business, financial position, results of operations or cash flows.
Item 1A. Risk Factors
There were no material changes from the risk factors previously disclosed in Part I. Item 1A. Risk Factors in our Annual Report on Form 10-K for the year ended December 31, 2020.2021, as filed with the SEC on February 28, 2022.
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
The following table discloses share repurchases that we have made pursuant to our share repurchase program during the three months ended June 30, 2022.
Period | | Total Number of Shares Purchased (1) | | | Average Price Paid Per Share | | | Total Number of Shares Purchased as Part of a Publicly Announced Plan | | | Approximate Dollar Value That May Yet Be Purchased Under the Plan | |
April 1, 2022 through April 30, 2022 | | | — | | | $ | — | | | | — | | | $ | 148,816,087 | |
May 1, 2022 through May 31, 2022 | | | 1,957,184 | | | | 55.73 | | | | 1,957,184 | | | | 39,738,448 | |
June 1, 2022 through June 30, 2022 | | | 1,060,847 | | | | 55.53 | | | | 1,060,847 | | | | 480,832,551 | |
Total | | | 3,018,031 | | | $ | 55.66 | | | | 3,018,031 | | | $ | 480,832,551 | |
(1) All shares repurchased are covered by our share repurchase program as approved by our Board of Directors (the "Share Repurchase Program"). The Board of Directors approved $300.0 million for our Share Repurchase Program on October 21, 2021 and an additional $500.0 million on June 1, 2022, for a total authorization of $800.0 million. The Share Repurchase Program has no expiration date.
Exhibit Number | | Document of Exhibit | | Method of Filing |
| 2.1 | | Purchase Agreement and Plan of Merger, dated as of March 28, 2022, by and among Boyd Interactive, Boyd Phoenix Acquisition, LLC, Boyd Phoenix Canada Inc., Pala Interactive, Pala Canada Holdings, LLC and Shareholder Representative Services LLC as representative of the holders of the membership interests of Pala Interactive. | | Incorporated by reference to Exhibit 2.1 of the Registrant's Quarterly Report on Form 10-Q, filed with the SEC on May 6, 2022 |
| | | | |
| 22 | | List of Guarantor Subsidiaries of Boyd Gaming Corporation. | | Incorporated by reference to Exhibit 10.122 of the Registrant's QuarterlyAnnual Report on Form 10-Q10-K for the year ended December 31, 2021, filed July 29, 2021.with the SEC on February 28, 2022 |
| | | | | |
31.1 | | Certification of the Chief Executive Officer of the Registrant pursuant to Exchange Act rule 13a-14(a). | | Filed electronically herewith |
| | | | |
31.2 | | Certification of the Chief Financial Officer of the Registrant pursuant to Exchange Act rule 13a-14(a). | | Filed electronically herewith |
| | | | |
32.1 | | Certification of the Chief Executive Officer of the Registrant pursuant to Exchange Act Rule 13a-14(b) and 18 U.S.C. § 1350. | | Filed electronically herewith |
| | | | |
32.2 | | Certification of the Chief Financial Officer of the Registrant pursuant to Exchange Act Rule 13a-14(b) and 18 U.S.C. § 1350. | | Filed electronically herewith |
| | | | |
101 | | The following materials from the Company's Quarterly Report on Form 10-Q for the quarter ended SeptemberJune 30, 2021,2022, formatted in iXBRL (Inline eXtensible Business Reporting Language): (i) Condensed Consolidated Balance Sheets as of SeptemberJune 30, 20212022 and December 31, 2020,2021, (ii) Condensed Consolidated Statements of Operations for the three and ninesix months ended SeptemberJune 30, 2022 and 2021, (iii) Condensed Consolidated Statements of Comprehensive Income for the three and 2020, (iii)six months ended June 30, 2022 and 2021, (iv) Condensed Consolidated Statements of Changes in Stockholders' Equity for each of the quarters within the ninesix months ended SeptemberJune 30, 2022 and 2021, and 2020, iv)(v) Condensed Consolidated Statements of Cash Flows for the ninesix months ended SeptemberJune 30, 20212022 and 2020,2021, and (vi) Notes to Condensed Consolidated Financial Statements. | | Filed electronically herewith |
| | | | | |
| 104 | | Inline XBRL for cover page of the Company's Quarterly Report on Form 10-Q, included in the Exhibit 101 Inline XBRL Document Set. | | Filed electronically herewith |
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 October 28, 2021August 4, 2022.
| | BOYD GAMING CORPORATION |
| | |
| By: | /s/ Anthony D. McDuffieLori M. Nelson |
| | Anthony D. McDuffieLori M. Nelson
|
| | Senior Vice President Financial Operations and Reporting (Authorized Signatory and Interim Chief Accounting OfficerOfficer) |
