Exhibit 99.1
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED BALANCE SHEET
AS OF JUNE 30, 2006
(dollars in thousands)
Boyd Gaming South Coast Pro Forma Boyd Gaming
Historical Disposition Adjustments Pro Forma
----------- ----------- ----------- -----------
Cash and cash equivalents $ 169,342 $ (10,655)(a)$ -- $ 158,687
Restricted cash 12,346 -- -- 12,346
Accounts receivable 25,504 (2,573)(a) 150 (d) 23,081
Insurance receivable -- -- -- --
Inventories 14,693 (2,109)(a) -- 12,584
Prepaid expenses and other 45,908 (3,317)(a) 2,378 (d) 44,969
Deferred income taxes 2,601 -- -- 2,601
Income tax receivable 23,015 -- 23,621 (g) 46,636
----------- ----------- ----------- -----------
Total current assets 293,409 (18,654) 26,149 300,904
Property and equipment, net 2,786,620 (551,297)(a) -- 2,235,323
Investment in Borgata, net 384,824 -- -- 384,824
Other assets, net 109,013 (2,216)(a) -- 106,797
Intangible assets, net 506,793 -- -- 506,793
Goodwill, net 404,206 -- -- 404,206
----------- ----------- ----------- -----------
Total assets $ 4,484,865 $ (572,167) $ 26,149 $ 3,938,847
=========== =========== =========== ===========
Current maturities of long-term debt $ 20,985 $ -- $ -- $ 20,985
Accounts payable 80,632 (6,868)(a) 337 (d) 74,101
Construction payables 41,352 (28,102)(a) 46,032 (b) 59,282
Accrued liabilities
Payroll and related 70,084 (4,423)(a) 3,723 (d) 69,384
Interest 22,086 -- -- 22,086
Gaming 60,563 (3,144)(a) 2,063 (d) 59,482
Accrued expenses and other 71,982 (1,963)(a) 635 (d) 70,654
Income taxes payable -- -- -- --
Deferred gain from insurance proceeds 23,121 -- -- 23,121
----------- ----------- ----------- -----------
Total current liabilites 390,805 (44,500) 52,790 399,095
Long-term debt, net of current maturities 2,589,138 -- (400,939)(e) 2,188,199
Deferred income taxes and other liabilities 326,968 -- -- 326,968
Commitments and contingencies
Preferred stock -- -- -- --
Common stock 898 -- (34)(f) 864
Additional paid-in capital 645,535 (536,434)(a) (111,956)(f) 533,579
536,434 (c)
Retained earnings 524,095 8,767 (a) (8,767)(c) 482,716
(41,379)(h)
Accumulated other other comprehensive income, net 7,426 -- -- 7,426
----------- ----------- ----------- -----------
Total stockholders' equity 1,177,954 (527,667) 374,298 1,024,585
----------- ----------- ----------- -----------
Total liabilities and stockholders' equity $ 4,484,865 $ (572,167) $ 26,149 3,938,847
=========== =========== =========== ===========
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
FOR THE SIX MONTHS ENDED JUNE 30, 2006
(dollars in thousands, except per share amounts)
Boyd Gaming South Coast Pro Forma Boyd Gaming
Historical Disposition Adjustments Pro Forma
----------- ----------- ----------- -----------
Revenues
Gaming $ 1,020,995 $ (55,685)(i)$ -- $ 965,310
Food and beverage 182,549 (19,575)(i) -- 162,974
Room 106,523 (12,067)(i) -- 94,456
Other 81,164 (6,619)(i) -- 74,545
----------- ----------- ----------- -----------
Gross revenues 1,391,231 (93,946) -- 1,297,285
Less promotional allowances 133,892 (9,992)(i) -- 123,900
----------- ----------- ----------- -----------
Net revenues 1,257,339 (83,954) -- 1,173,385
----------- ----------- ----------- -----------
Costs and expenses
Gaming 464,946 (24,492)(i) -- 440,454
Food and beverage 118,555 (16,926)(i) -- 101,629
Room 33,921 (4,171)(i) -- 29,750
Other 60,922 (5,128)(i) -- 55,794
Selling, general and administrative 173,560 (11,594)(i) 958 (k) 162,924
Maintenance and utilities 56,310 (5,358)(i) -- 50,952
Depreciation and amortization 113,676 (13,376)(i) -- 100,300
Corporate expense 27,089 -- -- 27,089
Preopening expenses 14,848 (1,754)(i) -- 13,094
Write-downs and other charges, net 32,740 -- -- 32,740
----------- ----------- ----------- -----------
Total costs and expenses 1,096,567 (82,799) 958 1,014,726
----------- ----------- ----------- -----------
Operating income from Borgata 43,400 -- -- 43,400
----------- ----------- ----------- -----------
Operating income 204,172 (1,155) (958) 202,059
----------- ----------- ----------- -----------
Other income (expense)
Interest income 72 -- -- 72
Interest expense, net of amounts capitalized (86,090) -- 13,352 (j) (72,738)
Other non-operating expenses from Borgata, net (4,295) -- -- (4,295)
----------- ----------- ----------- -----------
Total (90,313) -- 13,352 (76,961)
----------- ----------- ----------- -----------
Income before provision for income taxes 113,859 (1,155) 12,394 125,098
Provision for income taxes 40,459 -- 4,051 (l) 44,510
----------- ----------- ----------- -----------
Net income (loss) $ 73,400 $ (1,155) $ 8,343 $ 80,588
=========== =========== =========== ===========
Net income per share
Basic $ 0.82 $ 0.94
----------- -----------
Diluted 0.81 0.92
----------- -----------
Shares used in calculating net income per share
Basic 89,473 (3,448)(m) 86,025
----------- ----------- -----------
Diluted 90,978 (3,448)(m) 87,530
----------- ----------- -----------
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
FOR THE YEAR ENDED DECEMBER 31, 2005
(dollars in thousands, except per share amounts)
Boyd Gaming South Coast Pro Forma Boyd Gaming
Historical Disposition Adjustments Pro Forma
----------- ----------- ----------- -----------
Revenues
Gaming $ 1,817,289 $ (4,852)(i)$ -- $ 1,812,437
Food and beverage 326,566 (1,192)(i) -- 325,374
Room 178,091 (471)(i) -- 177,620
Other 149,057 (326)(i) -- 148,731
----------- ----------- ----------- -----------
Gross revenues 2,471,003 (6,841) -- 2,464,162
Less promotional allowances 247,983 (622)(i) -- 247,361
----------- ----------- ----------- -----------
Net revenues 2,223,020 (6,219) -- 2,216,801
----------- ----------- ----------- -----------
Costs and expenses
Gaming 807,712 (1,559)(i) -- 806,153
Food and beverage 203,901 (1,068)(i) -- 202,833
Room 53,063 (177)(i) -- 52,886
Other 129,342 (248)(i) -- 129,094
Selling, general and administrative 322,226 (668)(i) -- 321,558
Maintenance and utilities 97,063 (233)(i) -- 96,830
Depreciation and amortization 174,939 (596)(i) -- 174,343
Corporate expense 44,101 -- -- 44,101
Impairment loss 56,000 -- -- 56,000
Preopening expenses 18,927 (11,237)(i) -- 7,690
Hurricane and related expenses, net 9,274 -- -- 9,274
----------- ----------- ----------- -----------
Total costs and expenses 1,916,548 (15,786) -- 1,900,762
----------- ----------- ----------- -----------
Operating income from Borgata 96,014 -- -- 96,014
----------- ----------- ----------- -----------
Operating income 402,486 9,567 -- 412,053
----------- ----------- ----------- -----------
Other income (expense)
Interest income 224 -- -- 224
Interest expense, net of amounts capitalized (129,023) -- 67 (j) (128,956)
Loss on early retirement of debt (17,529) -- -- (17,529)
Gain on sale of undeveloped land 659 -- -- 659
Other non-operating expenses from Borgata, net (11,718) -- -- (11,718)
----------- ----------- ----------- -----------
Total (157,387) -- 67 (157,320)
----------- ----------- ----------- -----------
Income before provision for income taxes 245,099 9,567 67 254,733
Provision for income taxes 84,050 -- 3,439 (l) 87,489
----------- ----------- ----------- -----------
Income before cumulative effect of a change in
accounting principle $ 161,049 $ 9,567 $ (3,372) $ 167,244
=========== =========== =========== ===========
Income per share before cumulative effect of a change
in accounting principle
Basic $ 1.82 $ 1.98
----------- -----------
Diluted $ 1.78 $ 1.93
----------- -----------
Shares used in calculating income per share before cumulative
effect of a change in accounting principle
Basic 88,528 (3,448)(m) 84,580
----------- ----------- -----------
Diluted 90,507 (3,448)(m) 86,559
----------- ----------- -----------
NOTES TO THE UNAUDITED PRO FORMA
CONDENSED CONSOLIDATED FINANCIAL INFORMATION
1. Basis of Presentation
The unaudited pro forma condensed consolidated financial statements present Boyd Gaming Corporation's (the "Company") pro forma financial position and results of operations based upon historical financial information after giving effect to the previously announced disposition of the assets constituting the South Coast Hotel and Casino (the "South Coast") to Michael J. Gaughan (the "Buyer") pursuant to the terms of that certain Unit Purchase Agreement, dated July 25, 2006, as amended, between the Company, Coast Hotels and Casinos, Inc., Silverado South Strip, LLC and the Buyer (the "Disposition"), and the related adjustments described in these footnotes. The unaudited pro forma condensed consolidated financial statements are presented as if the Disposition had been completed on June 30, 2006 for purposes of the unaudited condensed consolidated balance sheet information, and on January 1 for each of the periods ended June 30, 2006 and December 31, 2005, respectively, for purposes of the unaudited condensed consolidated statements of operations information.
The unaudited pro forma condensed consolidated financial statements are not necessarily indicative of the consolidated results of operations that the Company would have achieved had the Disposition taken place on January 1 for the periods presented and do not purport to be indicative of the effects that may be expected to occur in the future. The unaudited pro forma condensed consolidated financial statements should be read in conjunction with the Company's historical consolidated financial statements and accompanying notes.
The unaudited pro forma condensed consolidated financial statements of the Company are presented in accordance with Article 11 of Regulation S-X.
2. Pro Forma Disposition
On July 25, 2006, the Company announced its agreement to sell South Coast to the Buyer, and the transaction closed on October 25, 2006. The Buyer used the net proceeds from the public offering of the Buyer's 12,342,504 shares of Company common stock, as well as the cancellation of the note issued by the Company to the Buyer in connection with the Company's repurchase of the Buyer's 3,447,501 shares of Company common stock, to pay the consideration for the South Coast. The actual fair value of the aggregate stock and cash consideration was determined based upon a $32.4844 price per share, net of transaction costs, for 15,790,005 shares of the Company's common stock.
The aggregate consideration received from the Disposition was as follows (in thousands):
Cash consideration received by the Company from the Buyer's
public offering of his 12,342,504 shares of Company
common stock, net of transaction costs $ 400,939
Fair value of the 3,447,501 shares of Company common stock --
repurchased from the Buyer, net of transaction costs 111,990
---------
Aggregate value of stock and cash consideration $ 512,929
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3. Pro Forma Adjustments
The pro forma adjustments included in the unaudited pro forma condensed consolidated financial statements are as follows:
(a) To eliminate all of the historical assets, liabilities and equity of South Coast.
(b) To reflect the Company's obligation for the remaining estimated construction costs to complete South Coast.
(c) To restore the historical equity of South Coast in order to calculate the loss from the Disposition.
(d) To reflect those items of working capital that will be retained by the Company after the Disposition.
(e) To reflect the net cash consideration received in connection with the Disposition that was used to reduce debt.
(f) To reflect the fair value of the 3.4 million shares of Company common stock repurchased by the Company from the Buyer and retired in connection with the disposition.
(g) To reflect the estimated increase in income taxes receivable due to the estimated loss from the Disposition.
(h) To reflect the estimated loss recognized from the Disposition, net of taxes.
(i) To eliminate all of the historical revenues and expenses of South Coast.
(j) To reflect the elimination of interest expense as a result of the reduction of debt with cash proceeds from the Disposition and the allocation of interest expense to South Coast. The allocation of interest expense to South Coast is based on the ratio of: (i) the net assets of South Coast less the debt repaid as a result of the Disposition to (ii) the total consolidated net assets and pro forma debt of the Company.
(k) To reflect the amount of corporate allocated expense that will not be eliminated upon disposal of South Coast.
(l) To reflect the effective tax rate for continuing operations on pro forma pre-tax income.
(m) To reflect the number of shares repurchased by the Company from the Buyer and retired in connection with the Disposition.