1
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON JUNE 7, 1996
REGISTRATION NO. 333-
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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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FORM S-3
REGISTRATION STATEMENT
THE SECURITIES ACT OF 1933
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BOYD GAMING CORPORATION
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
NEVADA 88-0242733
(STATE OR OTHER JURISDICTION OF (I.R.S. EMPLOYER
INCORPORATION OR ORGANIZATION) IDENTIFICATION NUMBER)
CALIFORNIA HOTEL AND CASINO
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
NEVADA 88-0121743
(STATE OR OTHER JURISDICTION OF (I.R.S. EMPLOYER
INCORPORATION OR ORGANIZATION) IDENTIFICATION NUMBER)
BOYD TUNICA, INC.
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
MISSISSIPPI 64-0829658
(STATE OR OTHER JURISDICTION OF (I.R.S. EMPLOYER
INCORPORATION OR ORGANIZATION) IDENTIFICATION NUMBER)
BOYD MISSISSIPPI, INC.
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
MISSISSIPPI 93-1104426
(STATE OR OTHER JURISDICTION OF (I.R.S. EMPLOYER
INCORPORATION OR ORGANIZATION) IDENTIFICATION NUMBER)
BOYD KANSAS CITY, INC.
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
MISSOURI 43-1649728
(STATE OR OTHER JURISDICTION OF (I.R.S. EMPLOYER
INCORPORATION OR ORGANIZATION) IDENTIFICATION NUMBER)
BOYD KENNER, INC.
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
LOUISIANA 88-0319489
(STATE OR OTHER JURISDICTION OF (I.R.S. EMPLOYER
INCORPORATION OR ORGANIZATION) IDENTIFICATION NUMBER)
MARE-BEAR, INC.
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
NEVADA 88-0203692
(STATE OR OTHER JURISDICTION OF (I.R.S. EMPLOYER
INCORPORATION OR ORGANIZATION) IDENTIFICATION NUMBER)
SAM-WILL, INC.
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
NEVADA 88-0203673
(STATE OR OTHER JURISDICTION OF (I.R.S. EMPLOYER
INCORPORATION OR ORGANIZATION) IDENTIFICATION NUMBER)
ELDORADO, INC.
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
NEVADA 88-0093922
(STATE OR OTHER JURISDICTION OF (I.R.S. EMPLOYER
INCORPORATION OR ORGANIZATION) IDENTIFICATION NUMBER)
2
MSW, INC.
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
NEVADA 88-0310765
(STATE OR OTHER JURISDICTION OF (I.R.S. EMPLOYER
INCORPORATION OR ORGANIZATION) IDENTIFICATION NUMBER)
2950 SOUTH INDUSTRIAL ROAD
LAS VEGAS NEVADA 89109
(702) 792-7200
(ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER, INCLUDING AREA CODE, OF
REGISTRANT'S PRINCIPAL EXECUTIVE OFFICES)
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ELLIS LANDAU
SENIOR VICE PRESIDENT AND
CHIEF FINANCIAL OFFICER
BOYD GAMING CORPORATION
2950 SOUTH INDUSTRIAL ROAD
LAS VEGAS, NEVADA 89109
(702) 792-7200
(NAME, ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER, INCLUDING AREA CODE,
OF REGISTRANTS' AGENT FOR SERVICE)
COPIES TO:
ROBERT M. MATTSON, JR., ESQ. MARC S. ROSENBERG, ESQ.
MORRISON & FOERSTER LLP CRAVATH, SWAINE & MOORE
19900 MACARTHUR BOULEVARD WORLDWIDE PLAZA
12TH FLOOR 825 EIGHTH AVENUE
IRVINE, CALIFORNIA 92715 NEW YORK, NEW YORK 10019-7475
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APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC: From time
to time after this Registration Statement becomes effective
If the only securities being registered on this form are being offered
pursuant to dividend or interest reinvestment plans, please check the following
box: / /
If any of the securities being registered on this Form are to be offered on
a delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, other than securities offered only in connection with dividend or interest
reinvestment plans, check the following box. / /
If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following box
and list the Securities Act registration statement number of the earlier
effective registration statement for the same offering. / / _______
If this Form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. / / _______
If delivery of this prospectus is expected to be made pursuant to Rule 434,
please check the following box. / /
CALCULATION OF REGISTRATION FEE
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PROPOSED MAXIMUM
PROPOSED MAXIMUM AGGREGATE
TITLE OF EACH CLASS OF AMOUNT TO BE OFFERING PRICE OFFERING AMOUNT OF
SECURITIES TO BE REGISTERED REGISTERED PER UNIT PRICE(1) REGISTRATION FEE
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% Senior Notes................................. $200,000,000 N/A $200,000,000 $68,965.52
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Guarantees of Subsidiaries.......................... N/A N/A N/A (2)
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(1) Estimated solely for the purpose of calculating the registration fee
pursuant to Rule 457(o).
(2) No separate fee payable pursuant to Rule 457(n).
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THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL
FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(A) OF
THE SECURITIES ACT OF 1933 OR UNTIL THE REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID SECTION 8(A),
MAY DETERMINE.
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3
BOYD GAMING CORPORATION
CROSS-REFERENCE SHEET
PURSUANT TO ITEM 501(B) OF REGULATION S-K SHOWING
LOCATION IN PROSPECTUS OF INFORMATION REQUIRED BY ITEMS OF FORM S-3
ITEM NUMBER AND HEADING IN
FORM S-3 REGISTRATION STATEMENT LOCATION IN PROSPECTUS
--------------------------------------------- -------------------------------------------
1. Forepart of this Registration Statement and
Outside Front Cover Page of Prospectus....... Outside Front Cover Page
2. Inside Front and Outside Back Cover Pages of
Prospectus................................... Inside Front and Outside Back Cover Pages
3. Summary Information, Risk Factors and Ratio
of Earnings to Fixed Charges................. Prospectus Summary; Summary Consolidated
Financial Data; Risk Factors
4. Use of Proceeds.............................. Prospectus Summary; Use of Proceeds;
Management's Discussion and Analysis of
Financial Condition and Results of
Operations
5. Determination of Offering Price.............. Outside Front Cover Page; Underwriting
6. Dilution..................................... Not Applicable
7. Selling Security Holders..................... Not Applicable
8. Plan of Distribution......................... Outside Front Cover Page; Underwriting
9. Description of Securities to be Registered... Prospectus Summary; Capitalization;
Description of Indebtedness; Description of
Notes
10. Interests of Named Experts and Counsel....... Legal Matters; Experts
11. Material Changes............................. Pro Forma Consolidated Financial Statements
12. Incorporation of Certain Information By
Reference.................................... Incorporation of Certain Documents By
Reference
13. Disclosure of Commission Position on
Indemnification for Securities Act
Liabilities.................................. Not Applicable
4
Information contained herein is subject to completion or amendment. A
registration statement relating to these securities has been filed with the
Securities
and Exchange Commission. These securities may not be sold nor may offers to
buy be accepted prior to the time the registration statement becomes
effective. This Prospectus shall not constitute an offer to sell or the
solicitation of an offer to buy nor shall there be any sale of these
securities in any
state in which such offer, solicitation or sale would be unlawful prior to
registration or qualification under the securities laws of any such state.
SUBJECT TO COMPLETION
JUNE 7, 1996
PROSPECTUS
$200,000,000 [LOGO]
BOYD GAMING CORPORATION
% SENIOR NOTES DUE 2003
The % Senior Notes Due 2003 (the "Notes") are being offered (the "Offering")
by Boyd Gaming Corporation (the "Company") and will mature on , 2003.
Interest on the Notes will be payable semi-annually on and
of each year commencing , 1996. The Notes will be
redeemable at the option of the Company, in whole or in part, on or after
, 2000, at the redemption prices set forth herein, plus accrued and
unpaid interest, if any, to the date of redemption. See "Description of
Notes -- Optional Redemption." Upon a Change of Control (as defined herein),
and, when the Company has reached Investment Grade Status (as defined herein),
upon a Change of Control and a Ratings Decline (as defined herein), holders of
the Notes may require the Company to purchase all or a portion of the Notes at a
purchase price equal to 101% of the principal amount thereof, plus accrued and
unpaid interest (if any) to the date of purchase. See "Description of
Notes -- Repurchase at the Option of Holders Upon a Change of Control."
Concurrent with the Offering, the Company is offering 4,000,000 shares and
selling stockholders are offering 1,297,201 shares of Common Stock of the
Company to the public (the "Common Stock Offering" and, collectively with the
Offering, the "Offerings"). See "Prospectus Summary -- The
Offering -- Concurrent Offering of Common Stock." Consummation of the Offering
is not contingent upon consummation of the Common Stock Offering, and there can
be no assurance that the Common Stock Offering will be consummated.
The Notes will be senior unsecured obligations of the Company and will rank pari
passu in right of payment to all present and future senior Indebtedness (as
defined herein) of the Company and senior to all current and future subordinated
Indebtedness of the Company. The payment of principal and interest on the Notes
will be unconditionally guaranteed on a senior unsecured basis by certain
existing and future Restricted Subsidiaries (as defined herein) of the Company
(the "Guarantors"). See "Prospectus Summary -- The Offering -- Guaranties,"
"-- Potential Par-A-Dice Guaranties" and "Description of Notes." On a pro forma
basis, giving effect to the Offerings and the Par-A-Dice Acquisition (as defined
herein), the total consolidated Indebtedness of the Company at March 31, 1996
would have been $716 million. At such date, the Company had $335 million of
Indebtedness subordinated to the Notes. See "Use of Proceeds," "Business -- New
Developments -- Par-A-Dice Acquisition" and "Description of Indebtedness." Under
certain circumstances, the Notes could be structurally subordinated to the
obligations of Subsidiaries (as defined herein). See "Risk Factors -- Holding
Company Structure and Ability to Service Debt; Effective Subordination."
The Notes will be represented by one or more Global Securities registered in the
name of the nominee of The Depository Trust Company, which will act as the
depository (the "Depository"). Beneficial interests in the Global Security will
be shown on, and transfers thereof will be effected only through, records
maintained by the Depository and its participants. Except as described herein,
Notes in definitive form will not be issued. See "Description of
Notes -- Book-Entry System."
SEE "RISK FACTORS" ON PAGE 10 FOR A DISCUSSION OF CERTAIN FACTORS THAT SHOULD BE
CONSIDERED BY PROSPECTIVE PURCHASERS OF THE NOTES.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
NONE OF THE NEVADA GAMING COMMISSION, THE NEVADA STATE GAMING CONTROL BOARD, THE
MISSISSIPPI GAMING COMMISSION, THE MISSOURI GAMING COMMISSION, THE LOUISIANA
GAMING CONTROL BOARD OR ANY OTHER GAMING AUTHORITY HAS PASSED UPON THE ADEQUACY
OR ACCURACY OF THIS PROSPECTUS OR THE INVESTMENT MERITS OF THE NOTES OFFERED
HEREBY. ANY REPRESENTATION TO THE CONTRARY IS UNLAWFUL.
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UNDERWRITING PROCEEDS TO
PRICE TO PUBLIC (1) DISCOUNT COMPANY (1)(2)
Per Note......................... % % %
Total............................ $ $ $
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(1) Plus accrued interest, if any, from , 1996 to the date of
delivery.
(2) Before deducting expenses payable by the Company, estimated to be $500,000.
The Notes are offered subject to receipt and acceptance by the Underwriters, to
prior sale and to the Underwriters' right to reject any order in whole or in
part and to withdraw, cancel or modify the offer without notice. It is expected
that delivery of the Notes will be made through the facilities of The Depository
Trust Company, on or about , 1996.
SALOMON BROTHERS INC
GOLDMAN, SACHS & CO.
CIBC WOOD GUNDY
SECURITIES
CORPORATION
BT SECURITIES CORPORATION
The date of this Prospectus is , 1996.
5
[LOGOS]
NEVADA REGION:
STARDUST CALIFORNIA HOTEL FREMONT
SAM'S TOWN ELDORADO JOKERS
LAS VEGAS WILD
MAIN STREET SAM'S TOWN
STATION RENO
expected opening expected opening
end of 1996 spring 1998
CENTRAL REGION:
SAM'S TOWN SAM'S TOWN PAR-A-DICE
TUNICA KANSAS CITY expected acquisition
mid/late 1996
SILVER TREASURE CHEST
STAR CHEST
NEW JERSEY REGION:
STARDUST
ATLANTIC CITY
expected opening
1999
IN CONNECTION WITH THE OFFERING, THE UNDERWRITERS MAY OVER-ALLOT OR EFFECT
TRANSACTIONS WHICH STABILIZE OR MAINTAIN THE MARKET PRICE OF THE SECURITIES
OFFERED HEREBY AT A LEVEL ABOVE THAT WHICH MIGHT OTHERWISE PREVAIL IN THE OPEN
MARKET. SUCH STABILIZING, IF COMMENCED, MAY BE DISCONTINUED AT ANY TIME.
6
[PHOTOS & MAPS]
LAS VEGAS LAS VEGAS MAP
DEPICTING SEVEN PROPERTY
LOCATIONS
STARDUST
HOTEL
ATRIUM AT
SAM'S TOWN
LAS VEGAS
7
[PHOTOS AND MAPS]
THE FREMONT
AND FREMONT STREET
EXPERIENCE
RENO
RENO MAP
DEPICTING
LOCATION OF
SAM'S TOWN
RENO
RENDERING OF
SAM'S TOWN
RENO
8
PROSPECTUS SUMMARY
The following summary is qualified in its entirety by the more detailed
information and financial statements included or incorporated in this
Prospectus. Unless otherwise indicated, or the context otherwise requires, the
term "Company" refers to Boyd Gaming Corporation, a Nevada corporation, and its
subsidiaries. See "Risk Factors" for certain factors a prospective investor
should consider in evaluating the Company before purchasing the Notes offered
hereby.
THE COMPANY
Boyd Gaming Corporation is one of the leading casino entertainment
companies in the United States. The Company is a multi-jurisdictional gaming
company which currently owns or operates ten casino entertainment facilities, is
in the process of constructing its eleventh property, acquiring its twelfth
property and acquiring the land upon which it intends to construct its
thirteenth property. The Company has operated successfully for more than two
decades in the highly competitive Las Vegas market and has entered four new
gaming jurisdictions in the past two years. The Company owns and operates six
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") and the Fremont Hotel and Casino (the
"Fremont") in downtown Las Vegas. The Company also owns or manages four
facilities in new gaming jurisdictions, all opened during 1994 and 1995. The
Company owns and operates Sam's Town Hotel and Gambling Hall, a dockside gaming
and entertainment complex in Tunica County, Mississippi that is currently
undergoing a hotel and parking garage addition ("Sam's Town Tunica") and Sam's
Town Kansas City, a riverboat gaming and entertainment complex in Kansas City,
Missouri. The Company manages and owns a minority interest in the Treasure Chest
Casino (the "Treasure Chest"), a riverboat casino in Kenner, Louisiana, and
manages for the Mississippi Band of Choctaw Indians the Silver Star Hotel and
Casino (the "Silver Star"), a land-based casino in the midst of a major
expansion project, located near Philadelphia, Mississippi. The Company plans to
open Main Street Station Hotel and Casino ("Main Street Station") by the end of
calendar year 1996 in downtown Las Vegas, and recently entered into a definitive
purchase agreement to acquire a riverboat casino in East Peoria, Illinois (the
"Par-A-Dice Acquisition"). The Company is in the process of acquiring land on
which it plans to develop a casino, hotel and entertainment complex in Reno,
Nevada ("Sam's Town Reno"). Following the land acquisition, the Company expects
to commence construction of Sam's Town Reno by the end of calendar year 1996. In
addition, the Company and Mirage Resorts, Inc. ("Mirage") recently announced the
signing of a joint venture agreement to jointly develop and own a casino hotel
entertainment facility in Atlantic City, New Jersey. Assuming the completion of
Main Street Station, completion of the Par-A-Dice Acquisition, development of
Sam's Town Reno and completion of the expansion projects currently underway at
certain of its existing facilities, the Company will own or operate an aggregate
of approximately 618,000 square feet of casino space containing approximately
17,850 slot machines and over 610 table games. See "Prospectus
Summary -- Property Data."
The Company's operating strategy stresses delivering to its primarily
middle-income patrons a high-value, customer-friendly casino entertainment
experience. To execute this strategy, the Company, on an ongoing basis,
reinvests in its properties in order to keep them fresh and competitive,
especially with respect to its slot products, and strives to achieve the highest
level of customer satisfaction in order to build customer loyalty. The Company
also draws upon its long-standing experience in the gaming industry to design
each of its facilities to appeal to a broad range of customers within its
respective markets and employs sophisticated marketing programs and techniques,
including database marketing and consumer research, tailored to accomplish
property-specific and company-wide objectives. The Company has successfully
developed its Sam's Town western theme into a widely-recognized brand name and
has similar plans for the Stardust name. The Company integrates the operations
of its facilities to benefit from economies of scale and to foster collaborative
generation of new ideas, products and strategies between properties.
3
9
The Company's development and expansion strategy is to grow and further
diversify its business through development and acquisition of new facilities and
expansion and improvement of its existing properties. The Company masterplans
its facilities to accommodate additional development and monitors its operations
on an ongoing basis to expand and modify its existing properties as needed to
address changing market dynamics, as demonstrated at Sam's Town Tunica and as
intended at the Stardust and Sam's Town Las Vegas. The Company seeks expansion
opportunities which complement its existing business. To accomplish this, the
Company identifies strategic opportunities in established and new gaming
jurisdictions that include one or more of the following characteristics: (i)
close proximity to large population centers or high volume regional tourist
areas, (ii) an imposed or legislated limited competition environment, and (iii)
no significant overlap with the Company's existing properties.
NEW DEVELOPMENTS
On April 26, 1996, the Company entered into a definitive purchase agreement
to acquire 100% of the capital stock of Par A-Dice Gaming Corporation
("Par-A-Dice Gaming") and 100% of the capital stock of East Peoria Hotel, Inc.
("EPH"), each an Illinois corporation, for an aggregate consideration of
approximately $175 million. The Company expects to use borrowings under its New
Bank Credit Facility (as defined herein) to fund the Par-A-Dice Acquisition. See
"Use of Proceeds." Par-A-Dice Gaming is the owner and operator of the Par-A-Dice
Riverboat Casino in East Peoria, Illinois, and EPH is the general partner of a
limited partnership which is developing a 204-room full-service hotel (the
"Par-A-Dice Hotel") located immediately adjacent to the Par-A-Dice Riverboat
Casino (the Par-A-Dice Riverboat Casino and the Par-A-Dice Hotel are together
referred to herein as the "Par-A-Dice"). The Par-A-Dice is located in East
Peoria, Illinois, approximately 170 miles from Chicago and features a
state-of-the-art riverboat casino with gaming on four levels and non-gaming
amenities, including three restaurants and the Par-A-Dice Hotel which is
scheduled to be completed in the fall of 1996.
The Company has identified a site in Reno, Nevada upon which it plans to
develop Sam's Town Reno, a $92 million casino, hotel and entertainment complex,
featuring the Sam's Town brand name and western theme. Sam's Town Reno is
planned to include a 33,000 square foot casino, a hotel with 211 guest rooms and
suites, five restaurants, an outdoor arena, an events center and various other
amenities. The Company is in the process of acquiring the site and is currently
planning to commence construction of the project by the end of calendar year
1996, with the opening occurring as early as spring 1998.
On May 29, 1996, the Company, through a wholly-owned subsidiary, entered
into a joint venture agreement with a subsidiary of Mirage (the "Mirage Joint
Venture") to jointly develop and own a casino hotel entertainment facility in
Atlantic City, New Jersey (the "Atlantic City Project"). The Atlantic City
Project, which is expected to cost approximately $500 million, is planned to be
one component of a multi-facility casino entertainment development,
master-planned by Mirage for the Marina district of Atlantic City. Pursuant to
the joint venture agreement, the Company will control the development and
operation of the Atlantic City Project. The Atlantic City Project will be
adjacent and connected to Mirage's planned wholly-owned resort. Construction is
anticipated to begin after completion of the environmental remediation of the
property and is expected to take approximately 24 months to complete. The Mirage
Joint Venture will give the Company a presence in Atlantic City, the primary
casino gaming market serving the eastern United States.
In addition to the Par-A-Dice Acquisition and the above-mentioned expansion
and development projects, the Company continues to consider development
opportunities in established and new gaming markets as well as expansion of its
existing facilities. The Company is currently exploring expansion opportunities
at certain of its Las Vegas properties, including further development of its
61-acre Stardust site and its 63-acre Sam's Town Las Vegas site.
The Company was incorporated in Nevada in 1988 to serve as a holding
company for California Hotel and Casino ("CH&C") which was incorporated in 1973.
The executive offices of the Company are located at 2950 South Industrial Road,
Las Vegas, Nevada 89109, and its telephone number is (702) 792-7200.
4
10
PROPERTY DATA
The following table sets forth certain information regarding the Company's
properties. Certain of these properties are in various stages of expansion or
development or in the process of being acquired. There can be no assurance that
such properties will contain the casino square footage, gaming units, hotel
rooms or restaurants as set forth below when and if such expansion, development
or acquisition is completed. See "Risk Factors -- Expansion to Other Locations;
Additional Financing Requirements," "-- Uncertainties of Consummation of the
Par-A-Dice Acquisition and Development of Sam's Town Reno and the Mirage Joint
Venture Project" and "Business -- New Developments."
CASINO
SPACE SLOT TABLE HOTEL LAND
(SQ. FT.) MACHINES GAMES ROOMS RESTAURANTS (ACRES)
--------- -------- ----- ----- ----------- -------
LAS VEGAS STRIP
Stardust Resort and Casino......... 87,000 1,976 76 2,320 7 61
DOWNTOWN LAS VEGAS
California Hotel and Casino........ 36,000 1,130 38 781 5 16
Fremont Hotel and Casino........... 32,000 1,106 31 452 5 2
Main Street Station Hotel and
Casino(a)........................ 28,500 900 25 404 3 15
BOULDER STRIP
Sam's Town Las Vegas............... 118,000 2,763 55 650 12 63
Eldorado Casino.................... 16,000 558 11 -- 3 4
Jokers Wild Casino................. 22,500 647 13 -- 2 13
NORTHERN NEVADA
Sam's Town Reno(b)................. 33,000 1,200 36 211 5 100
CENTRAL REGION
Sam's Town Tunica(c)............... 75,000 1,806 78 858 5 150
Sam's Town Kansas City............. 28,000 1,018 65 -- 5 34
Silver Star Hotel and Casino(d).... 85,000 2,906 89 503 5 20
Treasure Chest Casino.............. 24,000 855 54 -- 4 --
Par-A-Dice(e)...................... 33,000 997 42 204 3 19
--
------- ------ --- ----- ---
Total(f).................. 618,000 17,862 613 6,383 64 497
======= ====== === ===== == ===
- ---------------
(a) The information presented reflects Main Street Station after its completion,
which is expected to be completed by the end of calendar year 1996.
(b) The information presented reflects Sam's Town Reno, after consummation of
the pending land acquisition and completion of the project, which is
expected to be completed as early as spring 1998.
(c) The information presented reflects Sam's Town Tunica after completion of the
expansion, which is expected to be completed by the end of calendar year
1996. Prior to the expansion, Sam's Town Tunica had 508 hotel rooms.
(d) The information presented reflects the Silver Star after completion of the
expansion, which is expected to be completed in early calendar year 1997.
Prior to the expansion, Silver Star had 66,000 square feet of casino space,
1,885 slot machines, 81 table games, 100 hotel rooms and four restaurants.
(e) Pending acquisition. Reflects the Par-A-Dice Hotel after its construction
which is expected to be completed by the end of calendar year 1996.
(f) Includes 504,500 square feet of casino space, 13,744 slot machines, 502
table games, 4,811 hotel rooms, 52 restaurants and 363 acres of land at
existing properties, prior to completion of any expansion projects.
5
11
THE OFFERING
Issuer..................... Boyd Gaming Corporation (the "Company").
Securities Offered......... $200 million principal amount of % Senior
Notes (the "Notes") Due 2003 (the "Offering").
Maturity Date.............. 1, 2003.
Interest................... Interest on the Notes will be payable semi-annually
on each 1 and 1,
commencing 1, 1996.
Guaranties................. The Notes will be guaranteed unconditionally as to
principal, premium, if any, and interest on a
senior unsecured basis (the "Guaranties") by all
material existing, and certain future, Restricted
Subsidiaries of the Company (the "Guarantors").
Potential Par-A-Dice
Guaranties............... Par-A-Dice Gaming and EPH will not be Guarantors on
the date the Notes are issued, but an application
is pending before the Illinois Gaming Board seeking
approval for Par-A-Dice Gaming and EPH to be
Guarantors. If such approval is not obtained prior
to the consummation of the Par-A-Dice Acquisition,
until such time as approval is so obtained, all
liabilities of Par-A-Dice Gaming and EPH (including
Indebtedness and trade payables, which as of March
31, 1996 aggregated $18.2 million) will effectively
be senior to the Notes. While no assurance can be
given that such approval will be obtained, in the
event approval is obtained, Par-A-Dice Gaming and
EPH would become Guarantors and guarantee the Notes
unconditionally as to principal, premium, if any,
and interest on a senior unsecured basis (the
"Par-A-Dice Guaranties").
Ranking.................... The Notes will rank pari passu in right of payment
with all existing and future unsecured senior
Indebtedness of the Company and senior to all
future subordinated Indebtedness of the Company.
The Guaranties will be senior unsecured general
obligations of the Guarantors and will rank pari
passu with all existing and future senior
Indebtedness of the Guarantors and senior to all
future subordinated Indebtedness of the Guarantors.
However, to the extent that any Indebtedness of the
Company or the Guarantors is secured by Liens on
any assets of the Company or the Guarantors, as
will be the case with respect to Indebtedness under
the New Bank Credit Facility (as defined below),
the holders of such Indebtedness will have prior
claim to such assets and will effectively be senior
to the Notes. Under certain circumstances, the
Notes could be structurally subordinated to the
obligations of Subsidiaries (as defined herein).
See "Risk Factors -- Holding Company Structure and
Ability to Service Debt; Effective Subordination."
Optional Redemption........ The Notes will be redeemable at the option of the
Company, in whole or in part, at any time on or
after , 2000 at the redemption prices
set forth herein plus accrued and unpaid interest,
if any, to the date of redemption. See "Description
of Notes -- Optional Redemption."
6
12
Special Redemption......... If any Noteholders are found unsuitable under
applicable Gaming Laws, the Company may, at its
option, redeem such holder's Notes at the lesser of
(i) the Current Market Price of the Notes, (ii) the
price at which the Notes were acquired by such
Noteholders, excluding premium, if any, and without
accrued interest, or (iii) the principal amount of
such Notes without accrued interest, if any.
Change of Control.......... Upon a Change of Control, and, when the Company has
reached Investment Grade Status, upon a Change of
Control and a Ratings Decline, each holder of Notes
will have the right to require the Company to
repurchase all or any part of such holder's Notes
at a repurchase price equal to 101% of the
principal amount thereof, plus accrued and unpaid
interest, if any, through the date of repurchase.
Certain Covenants.......... The Indenture for the Notes contains limitations
on, among other things, (a) the ability of the
Company to Incur additional Indebtedness, (b) the
payment of dividends and other distributions with
respect to the Capital Stock of the Company and the
purchase, redemption or retirement of Capital Stock
of the Company, (c) the making of certain
Investments, (d) the Incurrence of certain Liens,
(e) Assets Sales, (f) the issuance and sale of
Capital Stock of Restricted Subsidiaries, (g)
transactions with Affiliates, (h) payment
restrictions affecting Restricted Subsidiaries, and
(i) certain consolidations, mergers and transfers
of assets. All of these limitations will be subject
to a number of important qualifications. See
"Description of Notes."
Use of Proceeds............ The net proceeds of the Offering (estimated to be
approximately $195 million) will be used to reduce
indebtedness outstanding under the Company's and
CH&C's $500 million reducing revolving bank credit
facility ("New Bank Credit Facility") and increase
the availability thereunder. The Company expects to
use borrowings under the New Bank Credit Facility
to fund the Par-A-Dice Acquisition. See "Use of
Proceeds" and "Description of Indebtedness."
Concurrent Offering of
Common Stock............. Concurrently with the Offering, the Company is
offering 4,000,000 shares, and selling stockholders
are offering 1,297,201 shares, of Common Stock of
the Company (without giving effect to the
underwriters' over-allotment options). In addition,
the Company and certain Selling Stockholders have
granted the underwriters options to purchase up to
730,000 additional shares of Common Stock to cover
over-allotments, if any. Neither the Offering nor
the Common Stock Offering is conditioned on
consummation of the other. The net proceeds to the
Company from the Common Stock Offering will be used
to reduce outstanding indebtedness under its New
Bank Credit Facility and for general corporate
purposes.
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SUMMARY CONSOLIDATED FINANCIAL DATA
The consolidated financial information set forth below has been derived
from the Consolidated Financial Statements of the Company for the respective
periods presented and is qualified in its entirety by, and should be read in
conjunction with, the Consolidated Financial Statements and notes thereto,
"Management's Discussion and Analysis of Financial Condition and Results of
Operations" and the other financial and statistical data included elsewhere or
incorporated in this Prospectus.
NINE MONTHS
ENDED
MARCH 31, FISCAL YEAR ENDED JUNE 30,
------------------- ----------------------------------------------------
1996 1995 1995 1994 1993 1992 1991
-------- -------- -------- -------- -------- -------- --------
(IN THOUSANDS, EXCEPT FOR RATIO)
INCOME STATEMENT DATA
Net revenues................. $581,509 $492,385 $660,340 $468,219 $431,174 $406,804 $349,932
Operating income............. 81,752 80,818 110,570 54,248 62,919 47,395 37,748
Interest expense, net(a)..... 38,335 36,258 46,371 36,093 32,378 37,762 34,545
Income before cumulative
effect of a change in
accounting principle and
extraordinary item......... 26,102 24,295 36,249 10,650 20,134 6,114 752
Income before extraordinary
item....................... 26,102 24,295 36,249 12,685 20,134 6,114 752
Net income................... 26,102 24,295 36,249 12,685 12,737 6,114 752
Ratio of earnings to fixed
charges(b)................. 1.87 1.95 1.98 1.24 1.87 1.24 --
OTHER OPERATING DATA
Depreciation and
amortization............... 45,868 40,953 54,518 42,136 39,450 38,853 31,957
Preopening expense........... 10,004 -- -- 4,605 -- -- --
Capital expenditures......... 59,153 82,150 183,299 326,829 24,485 18,702 104,042
MARCH 31,
1996
--------------
(IN THOUSANDS)
BALANCE SHEET DATA
Total assets.......................................................................... $941,953
Long-term debt (excluding current portion)............................................ 548,034
Stockholders' equity.................................................................. 230,067
- ---------------
(a) Net of interest income and amounts capitalized.
(b) The ratio for fiscal 1991 has been omitted because earnings were not
sufficient to cover fixed charges. The coverage deficiency was $2.1 million
for fiscal 1991. For the purpose of computing the ratio of earnings to fixed
charges, "earnings" consist of income before fixed charges and income taxes,
adjusted to exclude interest capitalized, and "fixed charges" consist of
interest cost and a portion of rental expense deemed to be interest.
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PRO FORMA SUMMARY CONSOLIDATED FINANCIAL DATA
The following pro forma summary consolidated financial information for the
Company reflects the Par-A-Dice Acquisition. The pro forma consolidated income
statement data for the nine months ended March 31, 1996 and for the year ended
June 30, 1995 has been presented as if the Par-A-Dice Acquisition occurred on
July 1, 1994. The pro forma consolidated balance sheet data as of March 31, 1996
has been presented as if the Par-A-Dice Acquisition occurred on March 31, 1996.
The pro forma information set forth below should be read in conjunction with the
consolidated financial statements of the Company, the consolidated financial
statements of Par-A-Dice Gaming and the pro forma consolidated financial
statements (including the notes to such financial statements) included elsewhere
or incorporated in this Prospectus. The operating results for the nine months
ended March 31, 1996 are not necessarily indicative of the results that may be
expected for the full fiscal year.
NINE MONTHS FISCAL YEAR
ENDED ENDED
MARCH 31, 1996 JUNE 30, 1995
--------------------------------------- ---------------------------------------
COMPANY PAR-A-DICE COMPANY COMPANY PAR-A-DICE COMPANY
HISTORICAL HISTORICAL PRO FORMA HISTORICAL HISTORICAL PRO FORMA
---------- ---------- --------- ---------- ---------- ---------
(IN THOUSANDS, EXCEPT FOR RATIO)
INCOME STATEMENT DATA
Net revenues................. $ 581,509 $ 79,909 $661,418 $ 660,340 $100,017 $760,357
Operating income............. 81,752 21,996 101,248 110,570 26,980 134,216
Interest expense, net (a).... 38,335 611 48,051 46,371 979 59,556
Net income................... 26,102 21,074 32,431 36,249 25,493 42,951
OTHER OPERATING DATA
Depreciation and
amortization............... 45,868 3,306 51,674 54,518 4,426 62,278
Preopening expense........... 10,004 -- 10,004 -- -- --
Capital expenditures......... 59,153 11,316 70,469 183,299 2,517 185,816
MARCH 31, 1996
---------------------
ACTUAL PRO FORMA
-------- ----------
(IN THOUSANDS)
BALANCE SHEET DATA
Total assets................................................................... $941,953 $1,128,313
Long-term debt (excluding current portion)..................................... 548,034 728,809
Stockholders' equity........................................................... 230,067 230,067
- ---------------
(a) Net of interest income and amounts capitalized.
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RISK FACTORS
This Prospectus contains forward-looking statements within the meaning of
Section 27A of the Securities Act of 1933, as amended. Discussions containing
such forward-looking statements may be found in the material set forth under
"Prospectus Summary," "Use of Proceeds," "Management's Discussion and Analysis
of Financial Condition and Results of Operations" and "Business," as well as
within the Prospectus generally (including the documents incorporated by
reference therein). Also, documents subsequently filed by the Company with the
Commission may contain forward-looking statements. Actual results could differ
materially from those projected in the forward-looking statements as a result of
the risk factors set forth below and the matters set forth or incorporated by
reference in the Prospectus generally. The Company cautions the reader, however,
that this list of factors may not be exhaustive, particularly with respect to
future filings. Before making a decision to purchase any of the securities
described in this Prospectus, prospective investors should carefully consider
the following factors.
HOLDING COMPANY STRUCTURE AND ABILITY TO SERVICE DEBT; EFFECTIVE SUBORDINATION
The Company is a holding company whose operations are conducted through
subsidiaries. The Company, therefore, will be dependent on the earnings and cash
flow of its subsidiaries to meet its debt obligations, including its obligations
with respect to the Notes. The ability of certain subsidiaries of the Company to
make payments to the Company is governed by the gaming laws of certain
jurisdictions, which place limits on the amount of funds which may be
transferred to the Company and may require prior or subsequent approval for any
such payments. See "Risk Factors -- Governmental Regulation; Environmental
Risk." Accordingly, there can be no assurance that the subsidiaries will be able
to, or will be permitted to, pay to the Company amounts necessary to service the
Notes.
The Guaranties of the Notes may provide a basis for a direct claim against
the Guarantors; however, it is possible that the Guaranties may not be
enforceable. See "Risk Factors -- Fraudulent Transfer Considerations" and
"-- Governmental Regulation; Environmental Risk." If the Guaranties are not
enforceable, the Notes will effectively be subordinated to all indebtedness,
trade payables and other liabilities of the Guarantors. On March 31, 1996, the
Guarantors had aggregate trade payables of $88 million and total consolidated
long-term debt (excluding current portion) of approximately $548 million.
Additionally, the Guarantors have other liabilities, including contingent
liabilities, which may be substantial. Par-A-Dice Gaming and EPH will be
required by the Indenture to guarantee the Notes.
Obligations under the New Bank Credit Facility are secured by liens on
certain assets of the Company. Subject to compliance with certain tests in the
Indenture that limit the aggregate amount of senior indebtedness that may be
incurred by the Company, the Company is entitled to increase the amounts
available for borrowings and outstanding indebtedness under the New Bank Credit
Facility above the initial availability of $ million, up to the aggregate
amount that is so permitted, from time to time, under such tests. In such event,
such additional indebtedness could likely be secured by liens on certain or all
of the Company's and its Subsidiaries' assets at such time. Upon any
distribution of the assets of the Company or the Guarantors upon liquidation,
reorganization or insolvency, the New Bank Credit Facility creditors would be
entitled to payment in full out of the assets securing the New Bank Credit
Facility prior to payment to the Holders of the Notes, and the rights of the
Holders of the Notes are therefore effectively subordinated to the rights of
such creditors. If the New Bank Credit Facility creditors were to foreclose on
the collateral securing the New Bank Credit Facility, it is possible that
insufficient assets would remain after satisfaction of such indebtedness to
satisfy fully the claim of the Holders of the Notes.
LEVERAGE AND DEBT SERVICE
At March 31, 1996, the Company had total consolidated long-term debt
(excluding current portion) of approximately $548 million, including $228
million under its Former Bank Credit Facilities (as defined herein) which the
Company replaced with the New Bank Credit Facility on June , 1996. The New
Bank Credit Facility is a five-year, $500 million reducing revolving credit
facility. Debt service requirements on the New Bank Credit Facility consists of
interest expense on outstanding indebtedness. Beginning in
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December 1998, the total principal amount available under the New Bank Credit
Facility will be reduced by $25 million and reduced by an additional $50 million
at the end of each six-month period thereafter. Debt service requirements on the
11% Notes (as defined herein) issued by a financing subsidiary of CH&C consist
of semi-annual interest payments and repayment of the $185 million principal
amount on December 1, 2002, and debt service requirements under the Company's
10.75% Notes (as defined herein) consist of semi-annual interest payments and
repayment of the $150 million principal amount on September 1, 2003. The Company
expects to fund the Par-A-Dice Acquisition from borrowings under the New Bank
Credit Facility. The Company also will fund its existing $40 million expansion
project for Sam's Town Tunica, the $45 million renovation, expansion and
re-equipping of Main Street Station, the $92 million Sam's Town Reno project and
its subsidiary's capital contributions to the Mirage Joint Venture with
borrowings under the New Bank Credit Facility, proceeds from the Offerings and
other financing to the extent not funded from cash flow from operations. The
Company's ability to service its debt will be dependent on its future
performance, which will be affected by prevailing economic conditions and
financial, business and other factors, certain of which are beyond the Company's
control. Accordingly, no assurance can be given that the Company will maintain a
level of operating cash flow that will permit it to service its obligations. If
the Company is unable to generate sufficient cash flow or is unable to refinance
or extend outstanding amounts, it will have to adopt one or more alternatives,
such as reducing or delaying planned expansion and capital expenditures, selling
assets, restructuring debt or obtaining additional equity capital. There is no
assurance that any of these financing strategies could be effected on
satisfactory terms. In addition, certain states' laws contain restrictions on
the ability of companies engaged in the gaming business to undertake certain
financing transactions. Such restrictions may prevent the Company from obtaining
necessary capital. See "Capitalization," "Management's Discussion and Analysis
of Financial Condition and Results of Operations -- Liquidity and Capital
Resources," "Risk Factors -- Expansion to Other Locations; Additional Financing
Requirements" and "-- Governmental Regulation; Environmental Risks."
UNCERTAINTIES OF CONSUMMATION OF THE PAR-A-DICE ACQUISITION AND DEVELOPMENT OF
SAM'S TOWN RENO AND THE MIRAGE JOINT VENTURE PROJECT
On April 26, 1996, the Company entered into a definitive stock purchase
agreement for the Par-A-Dice Acquisition. The Par-A-Dice Acquisition is subject
to regulatory approvals, including the approval of the Illinois Gaming Board and
the Mississippi Gaming Commission. No assurance can be given that the necessary
approvals will be received. The Company has no prior experience in Illinois, and
no assurance can be given that the Company will be able to compete successfully
in this market. Furthermore, the Par-A-Dice Acquisition is subject to certain
closing conditions, and there can be no assurance that the acquisition will be
completed according to the terms currently contemplated, if at all.
The Company has reached preliminary agreement for the acquisition of a
100-acre parcel of land upon which it plans to build a casino hotel and
entertainment complex in Reno, Nevada. Sam's Town Reno is subject to a number of
contingencies, including, but not limited to, execution of an definitive
acquisition agreement, approval of, and licensing by, the Nevada gaming
authorities, land-use permits, building and zoning permits and liquor licenses.
Accordingly, there can be no assurance that Sam's Town Reno will be completed
according to the terms currently contemplated, if at all.
On May 29, 1996, the Company entered into a joint venture agreement with
Mirage to jointly develop and own a casino hotel entertainment facility in the
Marina district of Atlantic City, New Jersey. The casino hotel project
contemplated by the Mirage Joint Venture is subject to a number of
contingencies, including, but not limited to, approval and funding by government
authorities of highway improvements necessary to accommodate the additional
traffic that would be generated to and from the Marina district, approval of,
and licensing by, the New Jersey gaming authorities, state and local land-use
permits, building and zoning permits, liquor licenses and funding requirements.
Accordingly, there can be no assurance that the Atlantic City Project will be
completed according to the terms currently contemplated, if at all. In addition,
the Company has no prior experience in New Jersey, and no assurance can be given
11
17
that, if the project is completed, the Company will be able to successfully
compete in this market. See "Business -- New Developments."
EXPANSION TO OTHER LOCATIONS; ADDITIONAL FINANCING REQUIREMENTS
The Company is engaged in several projects to expand its operations, and
regularly evaluates development and expansion opportunities. See
"Business -- Properties." Each of these projects will be subject to the many
risks inherent in the establishment of a new business enterprise, including
unanticipated design, construction, regulatory, environmental and operating
problems, and the significant risks commonly associated with implementing a
marketing strategy in new markets. There can be no assurance that any of these
projects will become operational within the time frames and budgets currently
contemplated or at all. Moreover, the Company will incur significant costs and
expenses in connection with its current expansion projects. There can be no
assurance that these expenditures will ultimately result in the establishment of
profitable operations.
Many permits, licenses and approvals necessary for the Company's expansion
projects have not yet been obtained. The scope of the approvals required for
projects of this nature is extensive, including, without limitation, gaming
approvals, state and local land-use permits, building and zoning permits and
liquor licenses. Unexpected changes or concessions required by local, state or
federal regulatory authorities could involve significant additional costs and
delay the scheduled openings of the facilities. There can be no assurance that
the Company will receive the necessary permits, licenses and approvals or that
such permits, licenses and approvals will be obtained within the anticipated
time frame. In addition, although the Company designs its expansion projects for
existing facilities to minimize disruption of business operations, major
expansion projects, such as those currently underway at Sam's Town Tunica and
the Silver Star and those being considered for the Stardust and Sam's Town Las
Vegas, require, from time to time, portions of the casino and parking areas to
be closed and disrupt portions of existing casino or hotel operations to some
extent. Any significant disruption in casino or hotel operations could have a
material adverse effect on the Company's business and results of operations.
The Company intends to finance its current and future expansion projects
primarily with cash flow from operations, borrowings under its New Bank Credit
Facility, proceeds from the Offerings, and vendor and other financing, which may
include additional borrowings to the extent permitted under its existing debt
agreements and funds obtained through public offerings and/or private placements
of equity and debt securities. No assurance can be given that the aforementioned
sources of funds will be sufficient to finance the Company's expansion, or that
other financing will be available on acceptable terms, in a timely manner or at
all. In addition, the 11% Notes, the 10.75% Notes, the New Bank Credit Facility
and the Notes contain certain restrictions on the ability of the Company to
incur additional indebtedness. See "Risk Factors -- Holding Company Structure
and Ability to Service Debt; Effective Subordination," "Management's Discussion
and Analysis of Financial Condition and Results of Operations -- Liquidity and
Capital Resources," "Description of Notes" and "Description of Indebtedness."
COMPETITION
The gaming industry is highly competitive. Gaming activities include:
traditional land-based casinos; riverboat and dockside gaming; casino gaming on
Indian land; state-sponsored lotteries; video poker in restaurants, bars and
hotels; pari-mutuel betting on horse racing, dog racing and jai-alai; sports
bookmaking and card rooms. The casinos owned, managed and being developed by the
Company compete and will in the future compete with all these forms of gaming
and will compete with any new forms of gaming that may be legalized in existing
and additional jurisdictions, as well as with other types of entertainment. The
Company also competes with other gaming companies for opportunities to acquire
legal gaming sites in emerging and established gaming jurisdictions and for the
opportunity to manage casinos on Indian land. Some of the competitors of the
Company have greater financial and other resources than the Company. Such
competition in the gaming industry could adversely affect the Company's ability
to compete for new gaming opportunities. In addition, further expansion of
gaming into new jurisdictions could also adversely affect the Company's business
by diverting its customers to
12
18
competitors in such new jurisdictions. In particular, the expansion of casino
gaming in or near any geographic area from which the Company attracts or expects
to attract a significant number of its customers could have a material adverse
effect on the Company's business. See "Business -- New Developments."
GOVERNMENTAL REGULATION; ENVIRONMENTAL RISKS
The ownership and operation of the Company's gaming facilities and the
Par-A-Dice are subject, and the Atlantic City Project will be subject, to
extensive regulation by state and local regulatory authorities. Nevada,
Mississippi, Missouri, Louisiana, Illinois and New Jersey have each promulgated
detailed regulations governing gaming operations. Regulatory authorities in
these states have broad powers with respect to the licensing of casino
operations, and may revoke, suspend, condition or limit the Company's gaming
licenses, impose substantial fines and take other actions, any one of which
could have a material adverse effect on the Company's business. Directors,
officers and certain key employees of the Company must also be approved by
certain state regulatory authorities. If state regulatory authorities were to
find a person occupying any such position unsuitable, the Company would be
required to sever its relationship with that person. Charles L. Ruthe, President
and a director of the Company, has been on a leave of absence as President and a
director of the Company since September 1995 pending investigation by the
Missouri Gaming Commission of certain matters relating to Mr. Ruthe's
suitability to hold a Missouri gaming license. There can be no assurance that
Mr. Ruthe's application for a Missouri gaming license will be granted. Certain
public issuances of securities and certain other transactions by the Company
also require the approval of certain state regulatory authorities. In addition,
Mississippi gaming authorities must approve any future expansion of the
Company's gaming operations outside of Mississippi.
The Company operates the Silver Star pursuant to a management agreement
with the Mississippi Band of Choctaw Indians. The operation and management of
the Silver Star is subject to the regulating authority of the National Indian
Gaming Commission ("NIGC") and the Choctaw Gaming Commission. Under the Indian
Gaming Regulatory Act of 1988 ("IGRA"), management contracts for Indian gaming
facilities must be approved by the NIGC. In addition, the Company, its
directors, persons with management responsibility, certain owners of the Company
and certain persons with a financial interest in the management agreement as
determined by the NIGC and the Choctaw Gaming Commission must provide background
information and be investigated by the NIGC and the Choctaw Gaming Commission
and be approved in connection with the approval of a management contract by the
NIGC and issuance of a license to the Company to operate a gaming facility by
the Choctaw Gaming Commission. Persons who acquire beneficial ownership of the
Company's securities may be subject to certain reporting and qualification
procedures established by the NIGC and the Choctaw Gaming Commission. Such
limitations could adversely affect the marketability of the Notes or could
affect or prevent certain corporate transactions, including mergers or other
business combinations.
The Company is subject to a variety of regulations in the states in which
it operates. If additional gaming regulations are adopted in a state in which
the Company operates, such regulations could impose restrictions or costs that
could have a material adverse effect on the Company. From time to time, various
proposals are introduced in some of the legislatures of the states in which the
Company has existing or planned operations that, if enacted, would adversely
affect the tax, regulatory, operational or other aspects of the gaming industry
and the Company. No assurance can be given that such legislation will not be
enacted. The federal government has also previously considered a federal tax on
casino revenues and may consider such tax in the future. In addition, gaming
companies are currently subject to significant state and local taxes and fees in
addition to normal federal and state corporate income taxes, and such taxes and
fees are subject to increase at any time. Any material increase in these taxes
or fees could adversely affect the Company.
The Company is subject to certain federal, state and local safety and
health laws, regulations and ordinances that apply to non-gaming businesses
generally, such as the Clean Air Act, Clean Water Act, Occupational Safety and
Health Act, Resource Conservation Recovery Act and the Comprehensive
Environmental Response, Compensation and Liability Act. The Company has not
made, and does not anticipate making, material expenditures with respect to such
environmental laws and regulations.
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However, the coverage and attendant compliance costs associated with such laws,
regulations and ordinances may result in future additional costs to the
Company's operations. For example, in 1990 the U.S. Congress enacted the Oil
Pollution Act to consolidate and rationalize mechanisms under various oil spill
response laws. Pursuant to the Oil Pollution Act, the Department of
Transportation implemented regulations requiring owners and operators of certain
vessels to establish and maintain through the U.S. Coast Guard evidence of
financial responsibility sufficient to meet their potential liability under both
the Oil Pollution Act and the Comprehensive Environmental Response,
Compensation, and Liability Act for discharges of oil or hazardous substances.
This requirement may be satisfied by either proof of adequate insurance
(including self-insurance) or the posting of a surety bond or guaranty.
The riverboats operated by the Company must comply with U.S. Coast Guard
requirements as to boat design, on-board facilities, equipment, personnel and
safety. Each of them must hold a Certificate of Seaworthiness or must be
approved by the American Bureau of Shipping ("ABS") for stabilization and
flotation, and may also be subject to local zoning and building codes. The U.S.
Coast Guard requirements establish design standards, set limits on the operation
of the vessels and require individual licensing of all personnel involved with
the operation of the vessels. Loss of a vessel's Certificate of Seaworthiness or
ABS approval would preclude its use as a floating casino. In addition, U.S.
Coast Guard regulations require a hull inspection at a U.S. Coast Guard-approved
dry docking facility for all cruising riverboats at five-year intervals.
Currently, the closest such facility to Sam's Town Kansas City is located in St.
Louis, Missouri. The travel to and from such docking facility, as well as the
time required for inspections of the Sam's Town Kansas City and Treasure Chest
riverboats, and, if the Par-A-Dice Acquisition is consummated, the Par-A-Dice
riverboat, could be significant. The loss of a dockside casino or riverboat
casino from service for any period of time could adversely affect the Company's
operating results.
MANAGEMENT CONTRACT OF LIMITED DURATION
The management contract for the Silver Star, which is owned by the
Mississippi Band of Choctaw Indians, expires in July 2001. The Company must
submit any renewal of the management contract to the NIGC, which has the right
to review management contracts. There can be no assurance that the current
management contract will be renewed upon expiration or approved by the NIGC upon
any such review. The failure to renew the Company's management contract would
result in the loss of revenues to the Company derived from the Silver Star
management contract which could have an adverse effect on the Company. The NIGC
also has the right to review contracts and has the authority to reduce the term
of a management contract or the management fee or otherwise require modification
of the contract, which could have an adverse effect on the Company.
RELIANCE ON CERTAIN MARKETS
The California and the Fremont derive a substantial portion of their
customers from the Hawaiian market. In fiscal 1995, patrons from Hawaii made up
over 90% of the room nights at the California and over 60% at the Fremont. An
increase in fuel costs or transportation prices, a decrease in airplane seat
availability or a deterioration of relations with tour and travel agents, as
they affect travel between the Hawaii markets and the Company's facilities,
could materially adversely affect the Company's results. The Company's Las Vegas
properties also draw a substantial number of customers from certain other
specific geographic areas, including Southern California, Arizona, Las Vegas and
the Midwest. Sam's Town Tunica draws patrons from northern Mississippi, western
Tennessee (principally Memphis) and Arkansas. The Treasure Chest appeals
primarily to local market patrons and attracts patrons from the western suburbs
of New Orleans. The Silver Star draws customers from central Mississippi,
including the greater Jackson area, and central Alabama, including Birmingham,
Montgomery and Tuscaloosa. Sam's Town Kansas City draws customers from the
greater Kansas City metropolitan area, as well as from other parts of Missouri
and Kansas. The Par-A-Dice draws customers not only from the greater Peoria area
but also from Chicago, Indiana, Iowa and Missouri. Adverse economic conditions
in any of these markets, or the failure of the Company's facilities to continue
to attract customers from these geographic markets as
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20
a result of increased competition in those markets, could have a material
adverse effect on the Company's operating results.
FRAUDULENT TRANSFER CONSIDERATIONS
The obligation of each of the Guarantors of the Notes may be subject to
review under state or federal fraudulent transfer laws. Under such laws, if a
court in a lawsuit by an unpaid creditor or representative of creditors of a
subsidiary, such as a trustee in bankruptcy or such Guarantor as
debtor-in-possession, were to find that at the time such obligation was
incurred, such Guarantor, among other things, (a) did not receive fair
consideration or reasonably equivalent value therefor and (b) either (i) was
insolvent, (ii) was rendered insolvent, (iii) was engaged in a business or
transaction for which its remaining unencumbered assets constituted unreasonably
small capital, or (iv) intended to incur or believed that it would incur debts
beyond its ability to pay such debts as they matured, such court could avoid
such Guarantor's obligation and direct the return of any payments made under the
Guaranty to such Guarantor or to a fund for the benefit of its creditors.
Moreover, regardless of the factors identified in the foregoing clauses (i)
through (iv), such court could avoid such obligation and direct such repayment,
if it found that the obligation was incurred with intent to hinder, delay or
defraud such Guarantor's creditors. In any such event, the holders of the Notes
would have to seek repayment from other Guarantors whose guarantee obligations
had not been avoided.
The measure of insolvency for purposes of the foregoing will vary depending
upon the law of the jurisdiction being applied. Generally, however, an entity
would be considered insolvent if the sum of its debts is greater than all of its
property at a fair valuation or if the present fair salable value of its assets
is less than the amount that will be required to pay its probable liability on
its existing debts as they become absolute and matured.
REGULATORY REDEMPTION
If the ownership of any of the Notes by any person or entity will preclude,
interfere with, threaten or delay the issuance, maintenance, existence or
reinstatement of any gaming or liquor license, permit or approval, or result in
the imposition of burdensome terms or conditions on such license, permit or
approval, as determined by any governmental authority or the Board of Directors
of the Company, such Holder shall be required to dispose of such Notes within a
specified time and, if the Holder of the Notes fail to dispose of them within
such time, the Company shall have the right to redeem the Notes at a price,
without accrued interest, if any, equal to the lowest of the Holder's cost, the
principal amount of such Notes or the average of the current market prices of
such Notes. See "Description of Notes -- Mandatory Disposition or Redemption
Pursuant to Gaming Laws."
LACK OF PUBLIC MARKET
The Notes are a new issue of securities, have no established trading market
and may not be widely distributed. The Underwriters have informed the Company
that they intend to make a market in the Notes as permitted by applicable laws
and regulations; however, the Underwriters are not obligated to do so and may
discontinue such market-making activities at any time without notice to the
holders of the Notes. Accordingly, there can be no assurance that a trading
market for the Notes will develop or be maintained. Moreover, if a market for
the Notes does develop, holders may not be able to resell the Notes for an
extended period of time, if at all. If a trading market develops for the Notes,
future trading prices of such securities will depend on many factors, including,
among other things, prevailing interest rates, the Company's results of
operations and the market for similar securities.
15
21
USE OF PROCEEDS
The net proceeds to the Company from the Offering, after deduction of
selling and offering expenses, are estimated to be approximately $195 million.
The Company intends to use the net proceeds of this Offering to reduce
outstanding indebtedness under its New Bank Credit Facility. If the concurrent
Common Stock Offering is consummated, the net proceeds to the Company from that
offering are estimated to be $62.9 million ($72.4 million if the underwriters'
over-allotment options are exercised in full). The Company intends to use those
net proceeds to reduce outstanding indebtedness under its New Bank Credit
Facility and for general corporate purposes.
Borrowings under the New Bank Credit Facility mature in June 2001 and bear
interest based on the agent bank's reference rate or the London Interbank
Offered Rate, at the Company's discretion. As of June , 1996, the interest
rate for the New Bank Credit Facility was % per annum. The indebtedness
under the New Bank Credit Facility was used to pay outstanding amounts under the
Company's and certain of its subsidiaries' former bank credit facilities
("Former Bank Credit Facilities") and for general corporate purposes. The
Company expects to incur substantial additional borrowings under the New Bank
Credit Facility to fund the Par-A-Dice Acquisition and as necessary on a
periodic basis in connection with the completion of construction at Sam's Town
Tunica, Main Street Station, the Sam's Town Reno, the Company's capital
contributions to the Mirage Joint Venture and for general corporate purposes,
including certain elements of other planned improvements and expansions at the
Company's existing facilities. In addition, the Company may use borrowings under
the New Bank Credit Facility to fund the redemption of the 10.75% Notes which
become redeemable in September 1996. For a description of the New Bank Credit
Facility, see "Management's Discussion and Analysis of Financial Condition and
Results of Operations -- Liquidity and Capital Resources" and "Description of
Indebtedness."
16
22
CAPITALIZATION
The following sets forth (i) the consolidated capitalization of the Company
as of March 31, 1996, (ii) such capitalization as adjusted to give effect to the
Offerings (without giving effect to the exercise of the Underwriters'
over-allotment options) and the New Bank Credit Facility, and (iii) the
capitalization as adjusted and pro forma to reflect the Par-A-Dice Acquisition.
This table should be read in conjunction with the pro forma consolidated
financial statements of the Company and the consolidated financial statements of
the Company and of Par-A-Dice Gaming which are included elsewhere or
incorporated in this Prospectus.
MARCH 31, 1996
----------------------------------------
AS ADJUSTED
FOR THE AS ADJUSTED
OFFERINGS/ AND PRO
NEW BANK FORMA FOR
CREDIT PAR-A-DICE
ACTUAL FACILITY ACQUISITION
-------- ----------- -----------
(IN THOUSANDS)
Cash, cash equivalents and marketable securities...... $ 51,918 $ 78,018 $ 58,637
======== ======== ==========
Long-term debt, including current portion
Notes payable under Former Bank Credit
Facilities(a).................................... $228,250 $ -- $ --
Notes payable under New Bank Credit Facility(b)..... -- -- 155,675
% Notes due 2003.................................. -- 200,000 200,000
11% Senior Subordinated Notes due 2002(c)........... 185,000 185,000 185,000
10.75% Senior Subordinated Notes due 2003(d)........ 150,000 150,000 150,000
Other............................................... 25,441 25,441 25,441
-------- -------- ----------
Total long-term debt........................ 588,691 560,441 716,116
Stockholders' equity.................................. 230,067 292,219 292,219
-------- -------- ----------
Total capitalization........................ $818,758 $ 852,660 $ 1,008,335
======== ======== ==========
- ---------------
(a) Borrowings under the Company's and its subsidiaries' Former Bank Credit
Facilities at March 31, 1996 represented obligations of subsidiaries of the
Company as follows: $144.3 million for CH&C; $54.0 million for Sam's Town
Tunica; and $30.0 million for Sam's Town Kansas City.
(b) Represents borrowings under the New Bank Credit Facility to fund the
Par-A-Dice Acquisition.
(c) The 11% Notes are obligations of California Hotel Finance Corporation, a
wholly-owned special purpose subsidiary of CH&C and are guaranteed on a
senior subordinated basis by CH&C.
(d) The 10.75% Notes are obligations of the Company.
17
23
SELECTED CONSOLIDATED FINANCIAL DATA
The selected consolidated financial data presented below as of and for the
fiscal years ended June 30, 1995 and 1994, and for the fiscal year ended June
30, 1993, have been derived from consolidated financial statements of the
Company audited by Deloitte & Touche LLP and contained elsewhere in this
Prospectus. The selected consolidated financial data presented below as of June
30, 1993, and as of and for the fiscal years ended June 30, 1992 and 1991, have
been derived from audited consolidated financial statements of the Company not
contained herein. The selected consolidated financial data presented below as of
March 31, 1996 and for the nine months ended March 31, 1996 and 1995 have been
derived from unaudited consolidated financial statements of the Company.
Management believes that the unaudited consolidated financial statements include
all adjustments, consisting only of normal recurring adjustments, necessary for
a fair presentation of the results for such periods. Operating results for the
nine months ended March 31, 1996 and the fiscal years shown below are not
necessarily indicative of the results that may be expected for the full fiscal
year.
NINE MONTHS FISCAL YEAR ENDED JUNE 30,
ENDED
MARCH 31,
--------------------------
------------------------------------------------------
1996 1995 1995 1994 1993 1992 1991
-------- -------- -------- -------- -------- -------- --------
(IN THOUSANDS, EXCEPT FOR RATIO DATA)
INCOME STATEMENT DATA
Net revenues.......................... $581,509 $492,385 $660,340 $468,219 $431,174 $406,804 $349,932
Operating expense..................... 499,757 411,567 549,770 413,971 368,255 359,409 312,184
-------- -------- -------- -------- -------- -------- --------
Operating income...................... 81,752 80,818 110,570 54,248 62,919 47,395 37,748
Interest expense(a)................... 38,335 36,258 46,371 36,093 32,378 37,762 34,545
Gain (loss) on investment............. -- -- -- -- 1,062 -- (1,820)
-------- -------- -------- -------- -------- -------- --------
Income before provision for income
taxes, cumulative effect of a change
in accounting principle and
extraordinary item.................. 43,417 44,560 64,199 18,155 31,603 9,633 1,383
Provision for income taxes............ 17,315 20,265 27,950 7,505 11,469 3,519 631
-------- -------- -------- -------- -------- -------- --------
Income before cumulative effect of a
change in accounting principle and
extraordinary item.................. 26,102 24,295 36,249 10,650 20,134 6,114 752
Cumulative effect of a change in
accounting for income taxes......... -- -- -- 2,035 -- -- --
-------- -------- -------- -------- -------- -------- --------
Income before extraordinary item...... 26,102 24,295 36,249 12,685 20,134 6,114 752
Extraordinary item, net of tax........ -- -- -- -- (7,397) -- --
-------- -------- -------- -------- -------- -------- --------
Net income............................ 26,102 24,295 36,249 12,685 12,737 6,114 752
Dividends on preferred stock.......... -- -- -- 467 1,881 1,920 1,929
-------- -------- -------- -------- -------- -------- --------
Net income (loss) applicable to common
stock............................... $ 26,102 $ 24,295 $ 36,249 $ 12,218 $ 10,856 $ 4,194 $ (1,177)
======== ======== ======== ======== ======== ======== ========
Ratio of earnings to fixed
charges(b).......................... 1.87 1.95 1.96 1.24 1.87 1.24 --
OTHER OPERATING DATA
Depreciation and amortization......... $ 45,868 $ 40,953 $ 54,518 $ 42,136 $ 39,450 $ 38,853 $ 31,957
Preopening expense.................... 10,004 -- -- 4,605 -- -- --
Capital expenditures.................. 59,153 82,150 183,299 326,829 24,485 18,702 104,042
NINE MONTHS
ENDED
MARCH 31, FISCAL YEAR ENDED JUNE 30,
----------- ----------------------------------------------------
1996 1995 1994 1993 1992 1991
----------- -------- -------- -------- -------- --------
(IN THOUSANDS)
BALANCE SHEET DATA
Total assets.................................... $ 941,953 $949,513 $836,297 $500,123 $467,133 $514,861
Long-term debt (excluding current portion)...... 548,034 587,957 525,637 364,927 317,106 361,743
Stockholders' equity............................ 230,067 202,613 164,405 72,686 62,668 58,532
- ---------------
(a) Net of interest income and amounts capitalized.
(b) The ratio for fiscal 1991 has been omitted because earnings were not
sufficient to cover fixed charges. The coverage deficiency was $2.13 million
for fiscal 1991. For the purpose of computing the ratio of earnings to fixed
charges, "earnings" consist of income before fixed charges and income taxes,
adjusted to exclude interest capitalized, and "fixed charges" consist of
interest cost and a portion of rental cost deemed to be interest.
18
24
BOYD GAMING CORPORATION
PRO FORMA CONSOLIDATED FINANCIAL STATEMENTS
The accompanying pro forma consolidated financial statements present pro
forma information for the Company and Par-A-Dice Gaming giving effect to the
Par-A-Dice Acquisition. The pro forma consolidated financial statements of the
Company are based on the historical consolidated financial statements of the
Company and Par-A-Dice Gaming as of and for the nine months ended March 31, 1996
and the year ended June 30, 1995.
The accompanying pro forma consolidated income statements for the nine
months ended March 31, 1996 and for the year ended June 30, 1995, have been
presented as if the Par-A-Dice Acquisition occurred on July 1, 1994. The
accompanying pro forma consolidated balance sheet at March 31, 1996 has been
presented as if the Par-A-Dice Acquisition occurred on March 31, 1996.
The pro forma adjustments are based on currently available information and
upon certain assumptions that management of the Company believes are reasonable
under the circumstances.
THESE PRO FORMA CONSOLIDATED FINANCIAL STATEMENTS ARE PROVIDED FOR
INFORMATIONAL PURPOSES ONLY AND ARE NOT NECESSARILY INDICATIVE OF THE RESULTS
THAT WILL BE ACHIEVED FOR FUTURE PERIODS. THESE PRO FORMA CONSOLIDATED FINANCIAL
STATEMENTS DO NOT PURPORT TO REPRESENT WHAT THE COMPANY'S RESULTS OF OPERATIONS
OR FINANCIAL POSITION WOULD ACTUALLY HAVE BEEN IF THE PAR-A-DICE ACQUISITION IN
FACT HAD OCCURRED AT JULY 1, 1994 OR MARCH 31, 1996. THESE PRO FORMA
CONSOLIDATED FINANCIAL STATEMENTS AND THE RELATED NOTES THERETO SHOULD BE READ
IN CONJUNCTION WITH THE COMPANY'S CONSOLIDATED FINANCIAL STATEMENTS AND THE
CONSOLIDATED FINANCIAL STATEMENTS OF PAR-A-DICE GAMING INCLUDED ELSEWHERE OR
INCORPORATED IN THIS PROSPECTUS.
19
25
BOYD GAMING CORPORATION
PRO FORMA CONSOLIDATED BALANCE SHEETS
MARCH 31, 1996
(IN THOUSANDS)
ADJUSTMENTS
COMPANY PAR-A-DICE AND COMPANY
HISTORICAL HISTORICAL ELIMINATIONS PRO FORMA
---------- ---------- ----------- ----------
ASSETS
Current assets
Cash and cash equivalents.............. $ 51,918 $ 6,719 $ 180,775(a)
(3,000)(b)
(17,100)(c)
(160,675)(d) $ 58,637
Accounts receivable, net............... 17,358 384 17,742
Inventories............................ 6,455 266 6,721
Prepaid expenses....................... 17,039 391 17,430
-------- ------- ----------
Total current assets................ 92,770 7,760 100,530
Property, equipment and leasehold
interests, net......................... 782,754 50,077 (e) 832,831
Other assets and deferred charges........ 55,810 1,271 3,000(b)
(1,117)(d) 58,964
Goodwill and intangibles, net............ 10,619 125,369(d) 135,988
-------- ------- -------- ----------
Total assets........................ $ 941,953 $ 59,108 $ 127,252 $1,128,313
======== ======= ======== ==========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities
Current portion of long-term debt...... $ 40,657 $ 2,400 $ (2,400)(c) $ 40,657
Accounts payable....................... 40,066 1,091 41,157
Accrued liabilities....................
Payroll and related................. 21,491 -- 21,491
Interest and other.................. 25,229 3,494 28,723
Income taxes payable................... 3,882 -- 3,882
-------- ------- -------- ----------
Total current liabilities........... 131,325 6,985 (2,400) 135,910
Long-term debt, net of current
maturities............................. 548,034 14,700 180,775(a)
(14,700)(c) 728,809
Deferred income taxes.................... 32,527 -- 32,527
Minority interest........................ -- 1,000 1,000
Commitments..............................
Stockholders' equity
Common stock........................... 571 -- 571
Additional paid-in capital............. 101,436 9,048 (9,048)(d) 101,436
Retained earnings...................... 128,060 27,375 (27,375)(d) 128,060
-------- ------- -------- ----------
Total stockholders' equity.......... 230,067 36,423 (36,423) 230,067
-------- ------- -------- ----------
Total liabilities and stockholders'
equity............................ $ 941,953 $ 59,108 $ 127,252 $1,128,313
======== ======= ======== ==========
The accompanying notes are an integral part of these pro forma consolidated
financial statements.
20
26
BOYD GAMING CORPORATION
PRO FORMA CONSOLIDATED STATEMENTS OF INCOME
NINE MONTHS ENDED MARCH 31, 1996
(IN THOUSANDS, EXCEPT PER SHARE DATA)
ADJUSTMENTS
COMPANY PAR-A-DICE AND COMPANY
HISTORICAL HISTORICAL ELIMINATIONS PRO FORMA
---------- ---------- --------------- ---------
Revenues
Casino............................... $ 413,097 $ 74,012 $ $ 487,109
Food and beverage.................... 105,703 5,861 111,564
Rooms................................ 52,308 -- 52,308
Other................................ 35,300 1,705 37,005
Management fees and joint venture.... 30,893 -- 30,893
-------- ------- -------- --------
Gross revenues......................... 637,301 81,578 718,879
Less promotional allowances............ 55,792 1,669 57,461
-------- ------- -------- --------
Net revenues...................... 581,509 79,909 661,418
-------- ------- -------- --------
Costs and expenses
Casino............................... 203,769 25,319 229,088
Food and beverage.................... 74,337 5,598 79,935
Rooms................................ 17,910 -- 17,910
Other................................ 25,653 1,203 26,856
Selling, general and
administrative.................... 83,179 20,327 103,506
Maintenance and utilities............ 22,620 2,160 24,780
Depreciation and amortization........ 45,868 3,306 (3,306)(f)
5,806(g) 51,674
Corporate expense.................... 16,417 -- 16,417
Preopening expense................... 10,004 -- 10,004
-------- ------- -------- --------
Total............................. 499,757 57,913 2,500 560,170
-------- ------- -------- --------
Operating income....................... 81,752 21,996 (2,500) 101,248
-------- ------- -------- --------
Other income (expense)
Interest income...................... 987 516 (63)(h) 1,440
Interest expense, net of amounts
capitalized....................... (39,322) (1,127) 1,127(i)
(10,169)(j) (49,491)
-------- ------- -------- --------
Total............................. (38,335) (611) (9,105) (48,051)
-------- ------- -------- --------
Income before provision for income
taxes................................ 43,417 21,385 (11,605) 53,197
Provision for income taxes............. 17,315 311 3,140(k) 20,766
-------- ------- -------- --------
Net income............................. $ 26,102 $ 21,074 $ (14,745) $ 32,431
======== ======= ======== ========
The accompanying notes are an integral part of these pro forma consolidated
financial statements.
21
27
BOYD GAMING CORPORATION
PRO FORMA CONSOLIDATED STATEMENTS OF INCOME
FOR THE YEAR ENDED JUNE 30, 1995
(IN THOUSANDS, EXCEPT PER SHARE DATA)
ADJUSTMENTS
COMPANY PAR-A-DICE AND COMPANY
HISTORICAL HISTORICAL ELIMINATIONS PRO FORMA
---------- ---------- ----------- ----------
Revenues
Casino............................... $ 463,179 $ 93,050 $ $ 556,229
Food and beverage.................... 123,527 6,744 130,271
Rooms................................ 62,300 -- 62,300
Other................................ 37,563 2,520 40,083
Management fees and joint venture.... 35,763 -- 35,763
-------- ------- -------- --------
Gross revenues......................... 722,332 102,314 824,646
Less promotional allowances............ 61,992 2,297 64,289
-------- ------- -------- --------
Net revenues......................... 660,340 100,017 760,357
-------- ------- -------- --------
Costs and expenses
Casino............................... 221,844 33,169 255,013
Food and beverage.................... 90,670 5,278 95,948
Rooms................................ 24,578 -- 24,578
Other................................ 25,567 349 25,916
Selling, general and
administrative.................... 79,785 27,094 106,879
Maintenance and utilities............ 28,452 2,721 31,173
Depreciation and amortization........ 54,518 4,426 (4,426)(f)
7,760(g) 62,278
Corporate expense.................... 24,356 -- 24,356
-------- ------- -------- --------
Total............................. 549,770 73,037 3,334 626,141
-------- ------- -------- --------
Operating income....................... 110,570 26,980 (3,334) 134,216
-------- ------- -------- --------
Other income (expense)
Interest income...................... 2,072 457 (84)(h) 2,445
Interest expense, net of amounts
capitalized....................... (48,443) (1,436) 1,436(i)
(13,558)(j) (62,001)
-------- ------- -------- --------
Total............................. (46,371) (979) (12,206) (59,556)
-------- ------- -------- --------
Income before provision for income
taxes................................ 64,199 26,001 (15,540) 74,660
Provision for income taxes............. 27,950 508 3,251(k) 31,709
-------- ------- -------- --------
Net income............................. $ 36,249 $ 25,493 $ (18,791) $ 42,951
======== ======= ======== ========
The accompanying notes are an integral part of these pro forma consolidated
financial statements.
22
28
BOYD GAMING CORPORATION
NOTES TO PRO FORMA CONSOLIDATED FINANCIAL STATEMENTS
(IN THOUSANDS)
The pro forma adjustments contained in the accompanying pro forma
consolidated financial statements reflect:
(a) The proceeds from the draw down of the New Bank Credit Facility to fund the
Par-A-Dice Acquisition.
(b) The payment of $3,000 in fees related to the Par-A-Dice Acquisition.
(c) The retirement of assumed indebtedness of Par-A-Dice Gaming.
(d) The payment of approximately $160,675 to the Par-A-Dice Gaming shareholders,
the transfer of certain assets of $1,117 not associated with the Par-A-Dice
to the Par-A-Dice Gaming shareholders (the "Transferred Assets"), the
elimination of Par-A-Dice Gaming's equity ($9,048 in common stock and
$27,375 in retained earnings) and the allocation of the excess purchase
price over historical value of acquired assets ($125,369) to
intangibles-license rights based on the Company's estimates of the fair
market values of the assets being acquired.
(e) No adjustment to property, equipment and leasehold interests is necessary as
the book value at March 31, 1996 reflects the fair value of the assets to
be acquired in the merger.
(f) The elimination of Par-A-Dice Gaming's historical depreciation and
amortization expense for the year ended June 30, 1995 and for the
nine-months ended March 31, 1996.
(g) Depreciation and amortization expense as follows:
NINE-
AMOUNT LIFE ANNUAL MONTHS
-------- ---- ------ ------
Property, equipment and leasehold
interests.................................. $ 50,077 11 $4,426 $3,306
Other assets................................. 3,000 15 200 150
Intangibles-license rights................... 125,369 40 3,134 2,350
------ ------
Total................................... $7,760 $5,806
====== ======
(h) The elimination of interest income of $63 and $84, respectively, for the
nine months ended March 31, 1996 and the year ended June 30, 1995 related
to the transfer of the Transferred Assets.
(i) The elimination of Par-A-Dice Gaming's historical interest expense for the
year ended June 30, 1995 and for the nine-months ended March 31, 1996.
(j) Interest expense on $180,775 in debt at an assumed interest rate of 7.5%.
(k) An adjustment to the provision for income taxes of $3,140 and $3,251,
respectively, for the nine months ended March 31, 1996 and the year ended
June 30, 1995 in order to result in a 36% combined state and federal
corporate tax rate due to the conversion from Subchapter S status to C
corporate status under the Internal Revenue Code.
23
29
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 Income
Statement Data for the Company's properties. As used herein, "Boulder Strip
Properties" consists of Sam's Town Las Vegas, the Eldorado and the Jokers Wild;
"Downtown Properties" consists of the California and the Fremont; and "Central
Region Properties" consists of Sam's Town Tunica, Sam's Town Kansas City (opened
September 1995), management fee income from the Silver Star, and management fee
and joint venture income from the Treasure Chest (opened September 1994).
NINE MONTHS ENDED
MARCH 31, FISCAL YEAR ENDED JUNE 30,
------------------- ------------------------------
1996 1995 1995 1994 1993
-------- -------- -------- -------- --------
(IN THOUSANDS) (IN THOUSANDS)
INCOME STATEMENT DATA
Net revenues
Stardust......................... $146,336 $147,011 $193,563 $195,899 $191,735
Boulder Strip Properties......... 143,033 125,682 168,036 125,087 108,982
Downtown Properties.............. 103,787 100,977 135,232 137,726 129,961
Central Region Properties........ 185,345 118,715 163,509 9,507 --
-------- -------- -------- -------- --------
Total Properties............ 578,501 492,385 660,340 468,219 430,678
Operating income
Stardust......................... 22,164 22,677 30,688 26,713 28,039
Boulder Strip Properties......... 17,382 10,687 15,551 20,686 24,696
Downtown Properties.............. 13,259 16,305 22,561 23,583 21,810
Central Region Properties........ 58,632 49,650 68,486 2,439 --
Preopening expense............... (10,004) -- -- (4,605) --
-------- -------- -------- -------- --------
Total Properties............ 101,433 99,319 137,286 68,816 74,545
NINE MONTHS ENDED MARCH 31, 1996 COMPARED TO NINE MONTHS ENDED MARCH 31, 1995
Consolidated net revenues increased 18.1% for the nine-month period ended
March 31, 1996 compared to the comparable period in the prior fiscal year. The
Company's Central Region properties accounted for the majority of the increase
in revenues for the first nine months of the current fiscal year with Central
Region revenues increasing 56%. This increase was primarily attributable to the
opening of Sam's Town Kansas City in September 1995 and an increase at Sam's
Town Tunica of 16.1% for the nine months ended March 31, 1996 versus the
comparable period in the prior fiscal year. Management fees and joint venture
income related to the Silver Star and the Treasure Chest also increased 23.7%
for the nine-month period ending March 31, 1996. In the Company's Nevada Region,
which consists of the Stardust, Sam's Town Las Vegas, the Eldorado, Jokers Wild,
the California and the Fremont, revenues increased 5.2% for the nine-month
period ended March 31, 1996 versus the comparable period in the prior fiscal
year. Revenues at the Boulder Strip Properties increased 13.8% for the
nine-month period, while the Stardust revenues declined 0.5%, and revenues at
the Downtown Properties increased 2.8%. Revenue growth on a consolidated basis
was achieved in all major revenue categories of the Company's operations for the
nine-month period ended March 31, 1996, with casino revenue up 18.6%, food and
beverage revenue up 6.5%, and room revenue up 24.4%. Slot revenue, which
currently accounts for more than 70% of casino revenue, increased 23% for the
nine-month period ended March 31, 1996 versus the comparable period in the prior
fiscal year. Table games revenue, the only other significant component of casino
revenue, increased 9.1% for the nine-month period ended March 31, 1996. The
Company's hotel rooms posted an overall occupancy rate of 95% for the nine-month
period ended March 31, 1996. Company-wide, occupied rooms increased 6.9% in the
nine-month period primarily as a result of Sam's
24
30
Town Tunica rooms expansion (300 rooms, opened in December 1994) and the
California rooms expansion (146 rooms, opened in December 1994) both of which
were open for the full nine-month period ending March 31, 1996. In addition, the
Company's average room rate rose 8.7% for the nine-month period ended March 31,
1996, primarily as a result of an increase in the average room rate at the
Stardust of 12.0%. Occupancy statistics do not include Main Street Station
rooms. The Company purchased Main Street Station in December 1993 as a closed
casino hotel facility and has been using its rooms to augment the rooms base at
the California and Fremont. Main Street Station is currently undergoing an
extensive renovation project and the Company expects to open the property in
fiscal 1997 as a complete casino hotel facility.
Consolidated operating income was $81.8 million for the nine-month period
ended March 31, 1996 compared to $80.8 million in the comparable period of the
prior fiscal year. Included in this year's results is a charge of $10.0 million
recorded in the first quarter of the current fiscal year related to the opening
of Sam's Town Kansas City on September 13, 1995. The increase in consolidated
operating income for the nine-month period ended March 31, 1996 was primarily
the result of increased operating income at the Boulder Strip Properties offset
by declines at the Stardust, Downtown Properties and the Central Region.
Operating income in the Central Region includes management fees and joint
venture income related to the Silver Star and Treasure Chest operations. For the
nine-months ended March 31, 1996, consolidated operating income margin was 14.1%
versus 16.4% in the comparable period of the prior fiscal year, primarily as a
result of preopening expenses related to the opening of Sam's Town Kansas City
in September 1995, an operating loss at Sam's Town Kansas City for the
nine-month period and a decline in operating income margins at the Downtown
Properties offsetting operating income margin gains at the Boulder Strip
Properties.
Net revenues at the Stardust declined 0.5% for the first nine months of the
current fiscal year versus the comparable period in the prior fiscal year. Slot
revenue declined 1.5% for the nine months ended March 31, 1996 compared to the
comparable period in the prior fiscal year. Table games revenue for the
nine-month period ended March 31, 1996 was down 6.6% versus the comparable
period in the prior fiscal year as a result of flat wagering and lower net
winnings. Rooms revenue at the Stardust for the nine-months ended March 31, 1996
increased 8.2%. For the nine months ended March 31, 1996, a decline of 2.8% in
occupied rooms was offset by increases in the average room rate of 12.0% versus
the comparable period in the prior fiscal year. Operating income margin for the
nine-month period ended March 31, 1996 was 15.1%, versus 15.4% in the comparable
period in the prior fiscal year. The decline in operating income and operating
income margin for the nine-month period was primarily attributable to decreased
revenues and higher advertising and promotional expenses partially offset by
increased operating income and operating income margins in the rooms department.
Net revenues at the Boulder Strip Properties increased 13.8% for the
nine-month period ended March 31, 1996 compared to the comparable period in the
prior fiscal year. Net revenues at Sam's Town Las Vegas increased 15.5% for the
nine-month period ended March 31, 1996 versus the comparable period in the prior
fiscal year while revenues for the other Boulder Strip Properties increased
slightly for the nine-month period ended March 31, 1996. Casino revenues at the
Boulder Strip Properties increased 17.5% for the nine-month period ended March
31, 1996, while rooms revenue increased 10.3% and food and beverage revenue
increased 7.1%. Operating income margins at the Boulder Strip Properties
increased to 12.2% for the nine-month period ended March 31, 1996 versus 8.5%,
in the comparable period of the prior year. Sam's Town Las Vegas posted an
increase in operating income margin of 4.7 percentage points for the nine-month
period ended March 31, 1996. Operating income margins increased 0.6 percentage
points at the Eldorado and declined 1.5 percentage points at Jokers Wild for the
nine-month period. Declines in operating income margins at the Eldorado and
Jokers Wild are primarily a result of lower net winnings in the casino
department. The significant increases in revenues, operating income and
operating income margins for the nine-month period at Sam's Town Las Vegas are
primarily attributable to the implementation of successful aggressive marketing
programs creating increased customer awareness and visitation.
25
31
Net revenues at the Downtown Properties increased 2.8% for the nine-month
period ended March 31, 1996 versus the comparable period in the prior fiscal
year. Slot revenue increased while table games revenue decreased for the nine
months ended March 31, 1996. Net revenues at the Fremont increased 3.2% for the
nine-month period ended March 31, 1996 versus the comparable period in the prior
fiscal year. Net revenues at the California increased 2.4% for the nine-month
period ended March 31, 1996 versus the comparable period in the prior fiscal
year. Operating income margins at the Downtown Properties were 12.8% for the
nine-month period ended March 31, 1996 versus 16.1% in the comparable period of
the prior year. The Fremont operating income margin was 12.1% for the nine-month
period ended March 31, 1996 versus 15.4%, in the comparable nine-month period in
the prior fiscal year. The decline in operating income margin at the Fremont was
primarily a result of lower net winnings and increased marketing and promotional
costs for the nine-month period ended March 31, 1996. The California had
operating income margin of 13.4%, for the nine-month period ended March 31, 1996
versus 16.9%, in the comparable nine-month period in the prior fiscal year. The
decline in operating income margin at the California was primarily a result of
lower net winnings for the nine-month period ended March 31, 1996. Construction
of the Fremont Street Experience project, which was completed and opened to the
public in December 1995, negatively impacted the Downtown Properties for the
majority of the first and second fiscal quarters. The Fremont Street Experience,
which was open for the entire third fiscal quarter, drew additional visitors to
the downtown area. The Fremont benefited from increased walk-in visitor traffic
due to its proximity to the Fremont Street Experience.
Net revenues in the Central Region increased 56%, for the nine-month period
ended March 31, 1996. The opening of Sam's Town Kansas City on September 13,
1995 accounted for the majority of the increase for the nine-month period. Sam's
Town Tunica revenues increased 16.1%, for the nine-month period ended March 31,
1996 versus the comparable period in the prior fiscal year while management fees
and joint venture income related to the Silver Star and the Treasure Chest
operations increased 23.7%. Since opening, Sam's Town Kansas City has produced a
slight operating loss, net of preopening expense. For the nine-month period
ended March 31, 1996, operating income in the Central Region increased 18.1% to
$58.6 million with Sam's Town Tunica operating income increasing 15.6% and
management fees and joint venture operating income increasing 24%.
Interest expense, net of amounts capitalized, was $39.3 million for the
nine-month period ended March 31, 1996, versus $37.9 million in the comparable
period in the prior fiscal year. The Company incurred increased interest expense
for the nine month period ended March 31, 1996 as a result of increased
borrowings and less capitalized interest related to projects under development
versus the comparable period in the prior year. Depreciation expense increased
$4.9 million for the nine-month period ended March 31, 1996 primarily as a
result of the opening of Sam's Town Kansas City in September 1995, the
California rooms addition and the Sam's Town Tunica rooms addition, both of
which opened in late December 1994.
As a result of these factors, net income increased $1.8 million or 7.4% for
the nine-month period ended March 31, 1996 compared to the same period in the
prior fiscal year.
FISCAL 1995 COMPARED TO FISCAL 1994
Consolidated net revenues increased 41% for fiscal 1995 compared to fiscal
1994. This increase in net revenues in fiscal 1995 resulted from the Company's
current expansion program which included the opening of Sam's Town Tunica in May
1994 and a subsequent rooms expansion project in December 1994, the opening of
the Silver Star in July 1994 and a subsequent casino expansion in December 1994,
the opening of the Treasure Chest in September 1994, the opening of Sam's Town
Las Vegas expansion in July 1994 and the opening of the California Hotel rooms
expansion in December 1994. The Company's Central Region, which consists of
Sam's Town Tunica, the Silver Star and the Treasure Chest, accounted for more
than 80% of the increase in net revenues. Only one of these properties was open
prior to the start of the fiscal year, as Sam's Town Tunica was open for
approximately one month in fiscal 1994. In the Company's Nevada Region, which
consists of the Stardust, Sam's Town Las Vegas, the Eldorado, Jokers Wild, the
California and the Fremont, net revenues increased 8.3% with net revenues at the
Boulder Strip
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Properties increasing 34% and net revenues at the Stardust and Downtown
Properties declining 1.2% and 1.8%, respectively. Net revenues at the Boulder
Strip Properties were enhanced by the opening in July 1994 of the Sam's Town Las
Vegas expansion and by the acquisition of the Eldorado and Jokers Wild in
October 1993. The Company's revenue growth was achieved in all major revenue
categories with casino revenue increasing 36%, room revenue increasing 45%, food
and beverage revenue increasing 18.6% and other revenue increasing 28%.
Management fee and joint venture revenue relating to the operation of the Silver
Star, which opened in July 1994 and the Treasure Chest, which opened in
September 1994, totaled $35.8 million for fiscal 1995. Slot revenue, which
accounted for more than two-thirds of total casino revenue, increased 38% in
fiscal 1995 compared to fiscal 1994. The increase in slot revenue was primarily
attributable to the opening of Sam's Town Tunica in May 1994 and the opening of
the Sam's Town Las Vegas expansion in July 1994. Table games revenue, the only
other significant component of casino revenue, increased 39% also as a result of
the opening of Sam's Town Tunica and the Sam's Town Las Vegas expansion.
Company-wide room revenue increased 45% for fiscal 1995 compared to fiscal 1994
primarily as a result of a 25% increase in occupied rooms and a 12.7% increase
in average daily room rate. The increase in occupied rooms was attributable to
the opening of the Sam's Town Las Vegas expansion in July 1994 (650 rooms), the
opening and subsequent expansion of Sam's Town Tunica (200 rooms opened May 1994
and an additional 308 rooms opened December 1994) and the opening of the
California rooms expansion (146 rooms opened December 1994). The Company's hotel
rooms posted an overall occupancy percentage of 95% in fiscal 1995 compared to
98% in fiscal 1994. Occupancy statistics do not include Main Street Station
rooms which the Company uses to augment the rooms base at the California and the
Fremont. Occupancy rates at the Stardust declined to 97% while Sam's Town Tunica
posted an occupancy rate of 87% for fiscal 1995.
Consolidated operating income increased 104% for fiscal 1995 compared to
fiscal 1994 while consolidated operating income margins increased 5.1 percentage
points to 16.7% for fiscal 1995 compared to 11.6% in fiscal 1994. The increase
in operating income and operating income margins for fiscal 1995 was generated
primarily by the Company's Central Region properties which produced $68.5
million in operating income and posted a 42% operating income margin. In the
Nevada Region, the Stardust operating income margin increased to 15.9% in fiscal
1995 from 13.6% in fiscal 1994 and operating income margins at the Boulder Strip
and Downtown Properties declined to 9.3% and 16.7%, respectively, in fiscal
1995. Higher corporate expense related to the Company's development activities
also impacted consolidated operating income margins. Operating income in the
Central Region includes management fees and joint venture income related to the
Silver Star and the Treasure Chest. Neither of these properties were open in
fiscal 1994.
Net revenues at the Stardust declined 1.2% for fiscal 1995 as compared to
the prior fiscal year. Casino and food and beverage revenues declined 3.8% and
5.1% respectively, while rooms revenue increased 14.4% and showroom revenue
increased 19.9%. Slot revenue declined 1.8% with a 3.5% increase in wagering
offset by lower net winnings. Table games revenue declined 3.8% as a result of a
decline of 2.2% in wagering combined with slightly lower net winnings. Other
casino revenues declined 15.9% for fiscal 1995 with both the sports book and
keno posting declines in wagering, 17.3% and 17.8% respectively, offset by
slightly higher net winnings. The decline in wagering in the sports book was
primarily attributable to the decline in baseball wagering due to the Major
League Baseball strike. Rooms revenue at the Stardust increased 14.4% for fiscal
1995 compared to fiscal 1994 with a 2.6% decline in occupied rooms offset by a
15.7% increase in average daily room rate. The Stardust posted an occupancy rate
of 97% in fiscal 1995 versus 99% in the prior fiscal year. Operating income
margins increased 2.3 percentage points to 15.9% for fiscal 1995 versus 13.6% in
fiscal 1994. The increase in the operating income margin was the result of
increased operating income in the rooms department and showroom department
combined with slight decreases in payroll and overhead expenses.
Net revenues for the Boulder Strip Properties increased 34% for fiscal 1995
versus fiscal 1994 primarily as a result of the opening of the Sam's Town Las
Vegas expansion in July 1994 and also as a result of the acquisition of the
Eldorado and Jokers Wild in October 1993. Sam's Town revenue increased 31% as a
result of the expansion with casino revenue increasing 22%, food and beverage
revenue
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increasing 54% and increased rooms revenue as a result of having a full year of
rooms revenue in fiscal 1995. For most of fiscal 1994 all 200 hotel rooms at
Sam's Town Las Vegas were removed as part of the expansion project. Net revenues
at the Eldorado and Jokers Wild increased 40% and 56%, respectively, primarily
as a result of their acquisition in October 1993. The operating income margin
for the Boulder Strip Properties was 9.3% in fiscal 1995 versus 16.5% in fiscal
1994. The decline in the operating income margin was attributable to a decline
in Sam's Town operating income margin to 7.3% from 15.6% and a decline in
operating income margins at the Eldorado and Jokers Wild to 14.8% and 19.8%,
respectively, from 18.3% and 23.7%, respectively. The decline in operating
income margins at Sam's Town Las Vegas was primarily attributable to the growth
in revenues which did not match the growth in expenses associated with the
expanded property and increased competition, primarily the opening of a new
property on the Boulder Strip. The decline in operating income margins at the
Eldorado and Jokers Wild resulted from increased competition on the Boulder
Strip.
Net revenues at the Downtown Properties decreased 1.8% for fiscal 1995 as
compared to fiscal 1994. Net revenues at the California increased 2.5% in fiscal
1995 with casino revenue increasing 1.5%, rooms revenue increasing 15.9% and
food and beverage revenue declining 4.2%. Net revenues at the California were
enhanced by the opening in December 1994 of a 146-room expansion project. At the
Fremont, net revenues declined 6.1% with casino revenue declining 4.5% and rooms
and food and beverage revenue declining 3.8% and 14.3%, respectively. During the
third and fourth fiscal quarters, the Fremont and to a lesser extent the
California were negatively impacted by the construction of the Fremont Street
Experience. The construction of the Fremont Street Experience, as well as work
on several adjacent streets, impeded the free flow of both vehicular and
pedestrian traffic through downtown Las Vegas. The Company was negatively
impacted by this construction until the Fremont Street Experience opened in
December 1995. Operating income margins at the Downtown Properties were 16.7% in
fiscal 1995 versus 17.1% in fiscal 1994 with operating income margins at the
California of 17.5% in fiscal 1995 versus 18.7% in fiscal 1994 and operating
income margins at the Fremont of 15.7% in fiscal 1995 versus 15.5% in fiscal
1994. The decline in operating income margin at the California was attributable
to increased revenues in lower margin departments and certain inefficiencies
associated with the opening of the new hotel rooms.
The Central Region produced net revenues of $163.5 million for fiscal 1995
versus $9.5 million in fiscal 1994. Sam's Town Tunica, in its first full year of
operation, produced net revenues of $127.7 million while management fee and
joint venture income from the Silver Star and the Treasure Chest totaled $35.8
million. Operating income and the operating income margin for fiscal 1995 was
$68.5 million or 42%. Operating income was $32.7 million at Sam's Town Tunica
while operating income from the Silver Star and the Treasure Chest totaled $35.8
million. The Central Region results include the full revenues and income from
Sam's Town Tunica which opened in May 1994, management fee income from the
Silver Star which opened in July 1994 and management fee and joint venture
income from the Treasure Chest which opened in September 1994. Net revenues,
operating income and operating income margin were enhanced by the opening of a
308-room expansion at Sam's Town Tunica in December 1994 and a casino expansion
at the Silver Star which opened in December 1994.
Interest income for fiscal 1995 was $2.1 million compared to $3.4 million
in fiscal 1994. Interest expense, net of amounts capitalized, increased $9.0
million or 22.7% for fiscal 1995 versus the prior year as a result of increased
borrowings and higher interest rates. Depreciation expense for fiscal 1995
increased 29% primarily as a result of the openings of Sam's Town Tunica and the
Sam's Town Las Vegas expansion.
The Company's tax rate for fiscal 1995 was 44% as compared to 41% for
fiscal 1994. The increase in the Company's tax rate was primarily a result of
the increase in certain non-deductible expenses related to the Company's
development efforts.
As a result of these factors, net income before the cumulative effect of a
change in accounting principle increased $25.6 million or 240% for fiscal 1995
as compared to fiscal 1994. Net income increased $24.0 million or 197% during
fiscal 1995 compared to the prior fiscal year.
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FISCAL 1994 COMPARED TO FISCAL 1993
Consolidated net revenues increased 8.6% for fiscal 1994 compared to fiscal
1993. The Company experienced revenue growth in each of its areas with net
revenues at the Stardust increasing 2.2%, and net revenues at the Boulder Strip
Properties and Downtown Properties increasing 14.8% and 6.0%, respectively.
Revenues at the Boulder Strip Properties were enhanced by the acquisition of the
Eldorado and Jokers Wild in October 1993 in connection with the Company's
initial public offering. Revenues at these properties offset declines at Sam's
Town Las Vegas which occurred as a result of construction disruption related to
the expansion project at that property. The expanded Sam's Town Las Vegas
facility opened in July 1994. Revenues for fiscal 1994 were also enhanced by the
opening in May 1994 of Sam's Town Tunica, located in Tunica County, Mississippi,
which posted revenues of $9.5 million for its first month of operation. Revenue
growth was achieved in both casino and food and beverage operations for fiscal
1994 compared to fiscal 1993, with casino revenue increasing 10.7% and food and
beverage revenue increasing 6.5%. Slot revenue, which accounted for more than
two-thirds of total casino revenue in fiscal 1994, increased 11.7%. The
increased slot revenue was primarily attributable to the acquisition of the
Eldorado and Jokers Wild, the opening of Sam's Town Tunica, and increases at the
Stardust and Downtown Properties. Table games revenue, the only other
significant component of casino revenue, increased 5.8% also as a result of the
acquisition of the Eldorado and Jokers Wild and the opening of Sam's Town
Tunica. The Company's hotel rooms posted an overall occupancy percentage of 98%
for fiscal 1994, up 1.5 percentage points from fiscal 1993, led by the Stardust
which posted a 2.2% increase in occupied rooms over the prior year. Occupancy
percentages do not include Main Street Station rooms which the Company uses to
augment the rooms base at the California and the Fremont. Company-wide rooms
revenue decreased 4.1% during fiscal 1994 due primarily to the absence of rooms
for the majority of the year at Sam's Town Las Vegas, as a result of the
expansion project at that property, and decreased rooms revenue at the Stardust
as a result of a slightly lower average room rate and increased promotional
allowances.
Consolidated operating income margins were 11.6% for fiscal 1994 compared
to 14.6% for fiscal 1993. The decline in operating income margins resulted from
the write-off of $4.6 million in preopening expenses related to Sam's Town
Tunica and the effects of construction disruption at Sam's Town Las Vegas
related to the expansion project at that facility.
Net revenue at the Stardust rose 2.2% for fiscal 1994 as compared to the
prior fiscal year as a result of increases in casino revenue (3.0%), food and
beverage revenue (10.8%) and occupied rooms (2.2%). Slot revenue increased 2.1%
with a 9.8% increase in slot wagering offset by lower net winnings. Slot revenue
increased in the first half of the fiscal year and decreased in the second half
due to the Company's plan, implemented in the second quarter of the fiscal year,
to offer customers a more competitive slot product. The initial impact of this
plan resulted in increased wagering not offsetting lower net winnings. Table
games revenue decreased 1.3% with a decline in wagering of 3.0% offset by
slightly higher net winnings. Other casino revenues increased 26.8%, with keno
and sports book posting 75.0% and 45.8% increases, respectively, based on higher
net winnings. The Stardust achieved an occupancy rate of 99%, up 2.1 percentage
points from the prior fiscal year. Operating income margins were 13.6% for
fiscal 1994 compared to 14.6% in fiscal 1993. The decline in operating income
margin was the result of higher marketing costs associated with the opening of
three new properties on the Las Vegas Strip in fiscal 1994.
Net revenues for the Boulder Strip Properties increased 14.8% for fiscal
1994 versus fiscal 1993 as a result of the acquisition of the Eldorado and
Jokers Wild. Sam's Town Las Vegas revenue decreased 5.6% during fiscal 1994 as a
result of construction disruption related to the expansion project which took
place at the property during fiscal 1994. The expanded Sam's Town Las Vegas
facility opened July 1, 1994. Decreases in rooms revenue, resulting from the
removal of all 200 hotel rooms as part of the expansion project, decreases in
slot revenue (5.1%), table games revenue (5.0%), and food and beverage revenue
(6.6%) all contributed to the revenue decline at Sam's Town Las Vegas. The
operating income margin at the Boulder Strip Properties was 16.5% in fiscal 1994
versus 22.7% in fiscal 1993, with Sam's Town Las Vegas operating income margin
declining to 15.6% in fiscal 1994 from 22.7%
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in the prior fiscal year. Higher operating income margins at the Eldorado and
Jokers Wild during 1994 partially offset the decline at Sam's Town Las Vegas.
The Eldorado and Jokers Wild had operating income margins of 18.3% and 23.6%,
respectively.
Net revenues at the California and the Fremont increased 6.0% for fiscal
1994 versus fiscal 1993. Slot revenues rose 6.3% during fiscal 1994 on an
increase of 4.6% in slot wagering and slightly higher net winnings. Table games
revenue also rose, increasing 3.9% in fiscal 1994 on slightly higher wagering
and net winnings. The Downtown Properties posted significant increases in rooms
revenue in fiscal 1994 (15.9%) as a result of the use of additional rooms at
Main Street Station, located across the street from the California, for the
entire year. Operating income at the Downtown Properties increased 8.1% over the
prior year as a result of the increased revenues and higher operating margins
overall. The Downtown Properties achieved an operating margin of 17.1% overall
for fiscal 1994 versus 16.8% for the prior year.
Interest income rose over the prior year primarily due to excess proceeds
from the Company's senior subordinated note offering in September 1993 and the
proceeds from the Company's initial public offering in October 1993. Interest
expense, net of amounts capitalized, increased 16.5% versus the prior fiscal
year due to increased borrowings. Interest incurred and capitalized during
fiscal 1994 that was related to construction of new properties and major
additions totaled $6.6 million.
During the prior fiscal year, the Company recorded a gain on the sale of an
investment of $1.1 million. Also during the prior fiscal year, the Company
recorded an extraordinary loss (net of tax) of $7.4 million resulting from the
redemption at 106% of the Company's $135 million 12 3/4% senior subordinated
note issue due 1996 and the write-off of certain associated expenses.
The Company adopted Statement of Financial Accounting Standard (SFAS) No.
109, Accounting for Income Taxes, effective July 1, 1993. As a result, the
Company recorded a cumulative effect of a change in an accounting principle of
$2.0 million in fiscal 1994.
As a result of these factors, net income decreased 0.4% during fiscal 1994
as compared to the prior fiscal year. Net income per common share rose to $.23
in fiscal 1994 from $.22 in fiscal 1993 as a reduction in preferred dividends
resulting from the conversion of the outstanding $100 preferred stock offset
slightly lower net income and additional shares outstanding.
LIQUIDITY AND CAPITAL RESOURCES
For the nine months ended March 31, 1996, the Company's net cash provided
by operating activities was $84.8 million compared to $58.3 million in the first
nine months of the prior fiscal year. Net cash provided by operating activities
in the prior fiscal year was negatively impacted by significant reductions in
accounts payable and increases in other assets related to the opening of new
properties and the timing of payments related to the opening of those projects.
As of March 31, 1996, the Company had balances of cash and cash equivalents of
approximately $52.0 million and had approximately $83.0 million of credit
available under bank credit agreements. In June 1996, the Company and its
wholly-owned subsidiary, CH&C, entered into the New Bank Credit Facility, a $500
million five-year reducing revolving credit facility which replaced the
Company's and certain of its subsidiaries' Former Bank Credit Facilities.
Availability under the new facility will be reduced by $25 million at the end of
two-and-a-half years and reduced by an additional $50 million at the end of each
six-month period thereafter until maturity. Interest on the New Bank Credit
Facility is based upon the agent bank's quoted reference rate or the London
Interbank Offered Rate, at the discretion of the Company. The interest rate
under the New Bank Credit Facility at June , 1996 was %. As of the
, 1996 closing of the New Bank Credit Facility, the Company and CH&C
had approximately $270 million in unused availability. The Company intends to
use the proceeds of the Offerings to reduce outstanding indebtedness under the
New Bank Credit Facility.
The Company's principal sources of funds for the year ending June 30, 1995
consisted of cash flows from operating activities of $83.1 million and
borrowings under the Former Bank Credit Facilities. As of June 30, 1995, the
Company had $12.0 million available under the Former Bank Credit Facilities. For
the fiscal year ended June 30, 1994, the Company's principal sources of funds
consisted of proceeds from
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the issuance of long-term debt of $148.5 million, proceeds from the issuance of
Common Stock of $72.4 million and cash flows from operating activities of $75.8
million. For the fiscal year ended June 30, 1993, the Company's principal
sources of funds consisted of cash flows from operating activities of $54.4
million and proceeds from the issuance of long-term debt of $28.9 million, net
of amounts refinanced.
For the nine months ended March 31, 1996, cash used in investing activities
was $81.6 million, primarily related to the completion of Sam's Town Kansas City
(approximately $31.1 million) and the acquisition of property and equipment
($50.5 million). The Company's principal uses of funds for the three years ended
June 30, 1995 consisted of cash used in investing activities, primarily for the
acquisition of property and equipment, and cash used in financing activities,
primarily cash paid to reduce long-term debt. For the year ended June 30, 1995,
cash used in investing activities was $145.5 million, primarily related to the
completion of the Sam's Town Las Vegas expansion and the construction of Sam's
Town Kansas City. For the year ended June 30, 1994, cash used in investing
activities was $310.4 million and was primarily related to the $105 million
expansion project at Sam's Town Las Vegas and the construction of Sam's Town
Tunica. For the year ended June 30, 1993, cash used in investing activities was
$23 million, primarily for the acquisition of property and equipment.
The Company is currently involved in several projects to expand its
operations. On April 26, 1996 the Company entered into a definitive stock
purchase agreement for the Par-A-Dice Acquisition for an aggregate consideration
of approximately $175 million. Closing of the transaction is conditioned upon,
among other things, approval by the Illinois Gaming Board. The Company plans to
fund the Par-A-Dice Acquisition from borrowings under the New Bank Credit
Facility. The Company recently began construction of a $40 million expansion at
Sam's Town Tunica. This project will include a 350-room hotel tower and a
1,000-space parking garage. The Company recently began the renovation and
expansion of Main Street Station. This project, which is expected to cost
approximately $45 million, will include a redesign of the property's public
space, expanded restaurant facilities, a refurbishment of the property's 400
hotel rooms, acquisition of all new gaming equipment and increased parking. The
Company has identified a casino hotel site in Reno, Nevada and is currently in
the process of acquiring the land. Upon acquisition of the land, the Company
plans to develop Sam's Town Reno on the site at a total estimated cost of
approximately $92 million. On May 29, 1996 the Company, through a wholly-owned
subsidiary, executed a Joint Venture Agreement with Mirage for the Mirage Joint
Venture. The Mirage Joint Venture Agreement provides for $100 million in capital
contributions by the Company during the course of the construction of the
Atlantic City Project. In addition, the Company is exploring the possible
expansion of its Stardust and Sam's Town Las Vegas properties; substantial funds
would be required for any such expansion of those properties. The Company has
been selected by the City of Cape Girardeau, Missouri to be the developer and
operator of a riverboat casino facility in downtown Cape Girardeau. There can be
no assurance that any of the above mentioned projects will go forward and
ultimately become operational. The source of funds required to meet the
Company's working capital needs (including maintenance capital expenditures) and
those required to complete the above mentioned projects is expected to be cash
flow from operations, availability under bank credit agreements, new borrowings
to the extent permitted under existing debt agreements, the proceeds of the
Offerings, the issuance of additional equity and vendor and other financing.
There is no assurance that required financing strategies can be effected on
satisfactory terms.
The Company's ability to service its debt will be dependent on its future
performance, which will be affected by prevailing economic conditions and
financial, business and other factors, certain of which are beyond the Company's
control.
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BUSINESS
GENERAL
Boyd Gaming Corporation is one of the leading casino entertainment
companies in the United States. The Company is a multi-jurisdictional gaming
company which currently owns or operates ten casino entertainment facilities, is
in the process of constructing its eleventh property, acquiring its twelfth
property and acquiring land upon which it intends to construct its thirteenth
property. The Company owns and operates six facilities in three distinct markets
in Las Vegas, Nevada: the Stardust on the Las Vegas Strip; Sam's Town Las Vegas,
the Eldorado and Jokers Wild on the Boulder Strip; and the California and the
Fremont in downtown Las Vegas. The Company also owns or manages four facilities
in new gaming jurisdictions, all opened during 1994 and 1995. The Company owns
and operates Sam's Town Tunica, a dockside gaming and entertainment complex in
Tunica County, Mississippi currently undergoing a hotel and parking garage
addition and Sam's Town Kansas City, a riverboat gaming and entertainment
complex in Kansas City, Missouri. The Company manages and owns a minority
interest in the Treasure Chest, a riverboat casino in Kenner, Louisiana, and
manages for the Mississippi Band of Choctaw Indians the Silver Star, a
land-based casino in the midst of a major expansion project, located near
Philadelphia, Mississippi. The Company plans to open Main Street Station in
downtown Las Vegas and commence construction of Sam's Town Reno by the end of
calendar year 1996 following the pending acquisition of the land for the Sam's
Town Reno project. In addition, the Company recently entered into a definitive
purchase agreement to acquire the Par-A-Dice in East Peoria, Illinois and
recently announced the signing of a joint venture agreement with Mirage to
jointly develop and own a casino hotel entertainment facility in Atlantic City,
New Jersey. Assuming completion of Main Street Station, completion of the
Par-A-Dice Acquisition, development of Sam's Town Reno and completion of the
expansion projects currently underway at certain of its existing facilities, the
Company will own or operate an aggregate of approximately 618,000 square feet of
casino space containing approximately 17,850 slot machines and over 610 table
games.
The Company currently conducts substantially all of its business through
five wholly-owned subsidiaries: California Hotel and Casino ("CH&C"); Boyd
Tunica, Inc. ("Boyd Tunica"); Boyd Kenner, Inc. ("Boyd Kenner"); Boyd
Mississippi, Inc. ("Boyd Mississippi"); and Boyd Kansas City, Inc. ("Boyd Kansas
City"). CH&C directly owns and operates Sam's Town Las Vegas and the California
and owns and operates the Stardust, the Fremont and the Eldorado and Jokers
Wild, and owns and will operate Main Street Station, through wholly owned
subsidiaries. Boyd Tunica owns and operates Sam's Town Tunica; Boyd Kenner
operates the Treasure Chest and owns a 15% equity interest in the Treasure
Chest, L.L.C. ("Treasure Chest L.L.C."), the owner of the Treasure Chest; Boyd
Mississippi operates Silver Star; and Boyd Kansas City owns and operates Sam's
Town Kansas City. The Par-A-Dice will be owned and operated by Boyd Illinois, a
wholly-owned subsidiary of the Company, and Sam's Town Reno will be owned and
operated by a wholly-owned subsidiary of the Company or CH&C.
OPERATING STRATEGY
The Company believes that the following key elements have contributed to
the success of the Company in the past and are central to its future success.
High-Value Casino Entertainment Experience
The Company is committed to providing a high-quality casino entertainment
experience to its primarily middle-income customers at an attractive price in
order to develop customer loyalty. The Company delivers value to its customer
through providing high levels of service in an inviting and entertaining
environment. The Company delivers additional value to its customers through
attractively priced casino entertainment, hotel, restaurant and live
entertainment offerings and regularly reinvests in its existing facilities in an
effort to maintain the quality and competitiveness of its properties.
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Fun, Friendly, Fresh Atmosphere
Each of the Company's facilities offers fast, friendly service in an
informal, fun and fresh atmosphere. The Company believes that its innovative
employee training programs and highly accessible management inspire and motivate
its employees to provide friendly, attentive service. The Company has a strong
and responsive customer feedback system, which features guest comment cards in
its restaurants and hotel rooms, and regularly conducts other consumer research.
In addition to providing a measure of customer service, comment cards and
consumer research allow the Company to obtain valuable customer feedback and
marketing information for its database.
Emphasis on Slot Play
The Company emphasizes slot machine wagering, the most consistently
profitable segment of the casino entertainment business. Technological advances
in slot product have resulted in sophisticated interactive games which offer
customers greater variety, higher and more frequent payoffs and longer periods
of play for their casino entertainment dollar. The Company continually invests
in state-of-the-art machines, the development of proprietary slot games and
related equipment at all of its facilities in order to further enhance the slot
customer's experience.
Comprehensive Marketing and Promotion
The Company's marketing strategy focuses on promoting visitation,
identifying customers and rewarding customers based on their gaming potential to
encourage repeat visitation. The Company stimulates visitation by actively
promoting its casino entertainment offerings, its hotels, destination
restaurants and live entertainment using a variety of promotional advertising
media including outdoor advertising and print and broadcast media. The Company
develops and maintains an extensive customer database. The database is expanded
daily, adding new casino customers by obtaining their mailing addresses and
other marketing information. To encourage repeat visitation, the Company employs
a direct mail program targeting its database customers with a variety of product
offerings, including incentives to visit the Company's facilities frequently.
During fiscal 1995, the Company distributed approximately 10 million pieces of
mail to its database customers. The Company also provides complimentary rooms,
food and other services to valued customers, but maintains limits on such items
consistent with its focus on middle-income patrons.
PROPERTIES
The Company currently owns and operates six properties in Las Vegas: the
Stardust; Sam's Town Las Vegas; the Eldorado; Jokers Wild; the California; and
the Fremont. The Company also owns and/or operates four properties outside the
State of Nevada: Sam's Town Tunica, in Tunica County, Mississippi; Silver Star,
in central Mississippi; Treasure Chest in the western suburbs of New Orleans;
and Sam's Town Kansas City in Kansas City, Missouri.
The Stardust
The Stardust, situated on 52 acres of land owned and nine acres of land
leased by the Company on the Las Vegas Strip, is a casino hotel complex with
approximately 87,000 square feet of casino space, a conference center containing
approximately 35,000 square feet of meeting space and a 900-seat showroom. The
casino offers nearly 2,000 slot machines and 76 table games, including tables
featuring "21," craps, roulette, baccarat, mini-baccarat, pai gow, Caribbean
stud and poker, as well as keno. The Stardust features "Enter the Night," a
critically acclaimed production show that includes computerized lighting, lasers
and digital surround sound. The Stardust also has one of the largest and best
known race and sports books in the United States, and is the home of the
Stardust line, a racing and sports line service which is quoted throughout the
United States and abroad. The Stardust features more than 2,300 guest rooms,
1,500 in its 32-story hotel tower. Notwithstanding the increased number of rooms
available in Las Vegas, the Stardust achieved a 97% occupancy rate in fiscal
1995 and a 95% occupancy
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rate for the nine months ended March 31, 1996. The Stardust complex, which is
distinguished by dramatic award-winning building lighting, has seven
restaurants, a shopping arcade, two swimming pools and parking spaces for
approximately 2,900 cars.
The Stardust caters primarily to adult Las Vegas visitors seeking the
classic Las Vegas gaming experience. Using its extensive database, the property
promotes customer loyalty and generates repeat customer business by continually
communicating with its customers regarding special events, new product offerings
and special incentive promotions at the property. The Company uses a network of
tour operators and wholesalers to reach customers who prefer packaged trips and
print and broadcast media to attract the independent traveler. The Company
attracts proven slot and table game players through direct mail promotions for
tournaments, events and a variety of special offers. With its conference center,
the Stardust also attracts meeting and banquet business. In addition, the
Stardust draws a significant number of walk-in customers. Patrons of the
Stardust come primarily from the western United States, including Southern
California and Arizona, and the Midwest.
The Company has developed a master plan for the Stardust, calling for,
among other things, as many as two additional hotel towers, and previously took
steps for a future expansion, including incorporating footings for one of the
two proposed additional towers in the existing facility. In addition, the
Company has determined that the 61-acre Stardust site is capable of
accommodating the development of an entirely new casino entertainment facility
adjacent to the existing Stardust and is exploring the feasibility of such a
project.
Boulder Strip Properties
Sam's Town Las Vegas is situated on 56 acres of land owned and seven acres
of land leased by the Company on the Boulder Strip, approximately six miles east
of the Las Vegas Strip. Following a $105 million expansion completed in July
1994, Sam's Town features an approximately 118,000 square foot casino, a 56-lane
state-of-the-art bowling center and the 25,000 square foot Western Emporium
retail store. The gaming facilities now include nearly 2,800 slot machines and
55 table games, including tables featuring "21," craps, roulette, pai gow, poker
and Caribbean stud, as well as keno, an expanded race and sports book and a
large bingo parlor. The expanded property has 650 guest rooms, 12 restaurants,
approximately 3,200 parking spaces, including two parking garages which together
can accommodate up to 2,000 cars and approximately 500 recreational vehicles.
The expanded Sam's Town facility features a 25,000 square foot atrium enclosing
a Sierra Nevada-style park with extensive foliage and trees, streams, bridges
and water features. Fronting the park are an Italian restaurant, a western
steakhouse and a food court, as well as new retail outlets. Also available at
the property is a 5,400 square foot sports bar featuring interactive activities,
an outdoor recreation complex with a swimming pool and volleyball court and a
conference facility.
Sam's Town Las Vegas has a western theme and features an informal, friendly
atmosphere that appeals to both local residents and visitors. Gaming and bowling
tournaments, paycheck sweepstakes, costume contests, and holiday parties,
together with motivated and well-trained employees, many of whom are familiar to
regular visitors, create a social center that attracts many Las Vegas residents.
The property hosts two of the largest events on the Ladies Professional Bowling
Tour, including the Sam's Town Ladies Professional Bowling Tournament, which
events are televised on ESPN, and a premier amateur bowling tournament which
attracts participants from throughout the world. Additionally, the Company
attracts local market patrons, many of whom are repeat customers, by offering
excellent price/value relationships in its food and beverage operations, and by
aggressive slot marketing programs which include more generous slot payouts. The
popularity of Sam's Town Las Vegas among local residents allows it to benefit
from the rapid development of the Las Vegas community, which has been one of the
fastest growing communities in the United States over the last decade. The
addition of 650 new guest rooms, as well as destination restaurants and other
amenities, as part of the expansion has increased the appeal of Sam's Town Las
Vegas to Las Vegas visitors. Since completion of the expansion, overnight
visitation to the property has substantially increased. The Company has
developed a master plan for Sam's Town Las Vegas calling for, among other
things, a second hotel tower. Although
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the Company has not yet made any decision regarding a future Sam's Town Las
Vegas expansion, it is currently exploring the feasibility of such a project.
The Eldorado is situated on four acres of land owned by the Company in
downtown Henderson, which is southeast of Las Vegas. The casino has over 16,000
square feet of gaming space featuring approximately 560 slot machines and 11
table games, including tables featuring "21," craps, roulette and pai gow, as
well as keno, bingo and a sports book. The facility also offers three
restaurants, a live entertainment lounge and a parking garage for up to 500
cars. The principal customers at the Eldorado are Henderson residents.
Jokers Wild is situated on 13 acres of land owned by the Company on the
Boulder Strip. Following a $5.6 million expansion completed in April 1994, the
property offers over 22,500 square feet of casino space with approximately 650
slot machines and 13 table games, including tables featuring "21," craps,
roulette, pai gow, Caribbean stud and poker, as well as keno and a sports book.
The facility also offers a buffet restaurant, a coffee shop, an entertainment
lounge, a video arcade and approximately 800 parking spaces. Jokers Wild serves
both local residents and visitors to the Las Vegas area traveling on the Boulder
Highway.
Downtown Properties
The California is situated on 13.9 acres of land owned and 1.6 acres of
land leased by the Company in downtown Las Vegas. The California was the
Company's first property and has over 36,000 square feet of gaming space, 781
guest rooms, five restaurants, approximately 5,000 square feet of meeting space,
more than 800 parking spaces, including a parking garage for up to 425 cars, and
an approximately 220-space recreational vehicle park, the only such facility in
the downtown area. The casino offers over 1,100 slot machines and 38 table
games, including tables featuring "21," craps, roulette, mini-baccarat, pai gow
and Caribbean stud, as well as keno and a sports book. In December 1994, the
Company completed a $15 million expansion of the California that added 140 new
guest rooms and six suites, as well as other amenities.
The Fremont is situated on 1.4 acres of land owned and 0.9 acres of land
leased by the Company on the principal thoroughfare in downtown Las Vegas. The
property offers nearly 32,000 square feet of casino space including
approximately 1,100 slot machines, and 31 table games, including tables
featuring "21," craps, roulette, pai gow, poker and Caribbean stud, as well as
keno and a race and sports book. The hotel has 452 guest rooms and five
restaurants including the Second Street Grill, an upscale contemporary
restaurant, and the Paradise Buffet, which features tropical themed
surroundings. The property also has approximately 8,200 square feet of meeting
space and a parking garage for up to 350 cars.
While many casinos in downtown Las Vegas compete with other downtown
properties and properties on the Las Vegas Strip for the same customers, the
Company has developed a distinctive niche for its Downtown Properties focusing
primarily on customers from Hawaii. The Company's marketing strategy for the
Downtown Properties focuses on gaming enthusiasts from Hawaii and tour and
travel agents from Hawaii with whom the Company has cultivated relationships
since it opened the California in 1975. Through the Company's recently acquired
Hawaiian travel agency, the Company operates two DC-10 charter flights from
Honolulu to Las Vegas each week, helping to ensure stable, reasonably priced air
seats. This, as well as the Company's strong, informal relationships with other
Hawaiian travel agencies, its moderately priced, all-inclusive packages and its
Hawaiian promotions have allowed the California and the Fremont to capture a
significant share of the Hawaiian tourist trade in Las Vegas. For more than a
decade the Downtown Properties have been the leading Las Vegas destination for
visitors from Hawaii. The Company attributes this success to the amenities and
atmosphere at the Downtown Properties, which are designed to appeal specifically
to visitors from Hawaii, and to its marketing strategy featuring significant
promotions in Hawaii and a monthly newsletter circulated to over 68,000
households, primarily in Hawaii. In fiscal 1995, patrons from Hawaii comprised
over 90% of the room nights at the California and over 60% of the room nights at
the Fremont.
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In December 1993, the Company acquired for $16.5 million Main Street
Station, a casino/hotel which is not currently in operation located across the
street from the California. The Company has used the facility, where it
previously leased rooms, to provide lodging for additional customers at the
Downtown Properties. The renovation and expansion of Main Street Station is
currently underway, and the Company expects to open the facility as a full
service casino hotel by the end of calendar 1996. The project includes a 28,500
square foot, newly-equipped casino with 25 table games and over 900 slot
machines. The project also includes a complete renovation of the property's
hotel rooms and an expansion and renovation of the property's food facilities to
include a 500-seat buffet, a 130-seat specialty restaurant, a 100-seat cafe, a
200-seat brew pub and oyster bar and expanded parking to include 2,000 spaces.
With the opening of Main Street Station, the Company's third property in
downtown Las Vegas, the Company has begun coordinating marketing efforts,
consolidating support functions and standardizing operating procedures and
systems with the goal of enhancing revenues and reducing expenses. This effort
will include a consolidated database and marketing program for all Downtown
Properties. The Company believes these efforts will provide it with a
competitive advantage.
The Company, together with other downtown casino operators and the City of
Las Vegas, retained a well-known urban design firm to develop a major new
attraction known as the Fremont Street Experience. The attraction was designed
to capitalize on Fremont Street's famous lights and features a semi-circular
space frame nine stories above the street, stretching along four city blocks
against which a sound and light spectacle is displayed. As part of the project,
vehicular traffic on portions of Fremont Street has been eliminated, asphalt
replaced by a patterned streetscape and special events have been brought to the
downtown area to entertain visitors. The Fremont Street Experience cost
approximately $70 million. Of this amount, $22 million was provided by eight
downtown casino operators (including the Company), and the remainder was
provided by local bond issuances. The Company invested approximately $5 million
in the project. The Company believes that, since its opening in December 1995,
the Fremont Street Experience has significantly enhanced the experience of
visiting downtown Las Vegas and has attracted additional customers to the
downtown area. However, no assurance can be given that the Fremont Street
Experience will materially benefit the operating results of the Company's
Downtown Properties.
Central Region Properties
The Company has exported its popular Sam's Town western theme and
atmosphere to the growing Mississippi dockside gaming market by developing Sam's
Town Tunica, which opened on May 25, 1994. Sam's Town Tunica is located in
Tunica County near State Highway 61 approximately 25 miles south of Memphis,
Tennessee. The adult population within a 200-mile radius is over 3 million and
includes the cities of Nashville, Tennessee; Jackson, Mississippi; and Little
Rock, Arkansas. The Company has distinguished itself from other operators in the
area by developing a major casino entertainment complex with extensive amenities
including a 508-room hotel, an entertainment lounge featuring country-western
music, five destination restaurants including Corky's B-B-Q, featuring the food
of that popular Memphis eatery, bars, specialty shops and River Palace Arena, a
1,650 seat entertainment facility featuring country-western entertainers. In
December 1994, an $18 million expansion was completed which included the
addition of 308 guest rooms surrounded by a swimming pool and recreational area.
The complex offers a two-story casino of approximately 75,000 square feet
featuring over 1,800 slot machines and 78 table games, including tables
featuring "21," craps, roulette, poker, Caribbean stud and pai gow, as well as
keno. The design of the facility integrates the water-based and land-based
components of the facility. The Company, seeking to further its strong position
in both the overnight and drive-in markets in Tunica, is currently expanding
Sam's Town Tunica. The $40 million expansion project, which is currently under
construction and expected to be completed by the end of calendar year 1996,
includes a 350-room hotel tower and a 1,000 car parking garage. The new hotel
tower will bring the total room count to 858, and the garage will be the first
enclosed parking structure at a Tunica County casino.
The Company has extended its popular Sam's Town theme to the Kansas City
market with the opening of Sam's Town Kansas City on September 13, 1995. Sam's
Town Kansas City was completed at
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a cost of approximately $145 million, including land, capitalized interest and
pre-opening costs. The facility, which is situated on 34 acres located on the
Missouri River and Interstate 435, features a continuously docked riverboat
housing a 28,000 square foot casino on three decks with over 1,000 slot machines
and 65 table games. The 80,000 square foot land-based facility contains five
food facilities, including a 7,000 square foot sports bar, and ticketing
services, all surrounding a turn-of-the-century Kansas City streetscape. The
facility also features a 1,350-space garage, connected to the main facilities by
an enclosed moving walkway. Including surface parking, the property offers a
total of 2,000 parking spaces. The Kansas City metropolitan area has an adult
population of over one million. The Company's facility is located near the
Interstate 435 entertainment corridor in Kansas City which provides access to
the Worlds of Fun and Oceans of Fun theme parks, the Kansas City Zoo, and the
Kansas City Chiefs' and Kansas City Royals' Stadiums. In connection with the
operation of Sam's Town Kansas City, the Company has entered into an agreement
to pay the City of Kansas City approximately $250,000 per year for a period of
ten years beginning in September 1995. The Company intends to offer 10% of the
capital stock of Boyd Kansas City, the entity that owns and operates Sam's Town
Kansas City, to certain persons or entities located in the Kansas City area. The
price to be paid by such persons or entities will be based on the total cost of
the project.
The Company manages and partly owns the Treasure Chest, a riverboat casino
operation located on Lake Pontchartrain in Kenner, Louisiana, which opened in
September 1994. Located near the New Orleans International Airport, the Treasure
Chest primarily serves patrons from Jefferson Parish, including suburbs on the
west side of New Orleans. The gaming operation features a classic paddle-wheel
riverboat with a total capacity of 2,000 persons, approximately 24,000 square
feet of casino space, over 850 slot machines and 54 table games, including
tables for "21," craps, roulette and poker. Each of the riverboat's three decks
has a different theme, with one featuring a contemporary Las Vegas-style decor,
one offering a nautical environment and one providing a festive Mardi Gras
setting.
The management agreement between the Company and Treasure Chest L.L.C.
provides for an initial five-year term expiring June 1999, extendible at the
Company's option for three additional five-year periods if certain operating
results are achieved. The agreement also provides for a management fee of 10% of
the enterprise's net operating profit before interest, depreciation, income
taxes, amortization, extraordinary items and the management fee. The Company
owns a 15% equity interest in Treasure Chest L.L.C.
Pursuant to an agreement with the Mississippi Band of Choctaw Indians, the
Company operates the Silver Star, the only land-based casino in the State of
Mississippi. The facility, which opened in July 1994, is located on tribal lands
in central Mississippi. The principal markets served by the facility are central
Mississippi and Alabama, with the Birmingham, Montgomery and Tuscaloosa
metropolitan areas located within approximately 200 miles of the site. The
property, a contemporary Las Vegas-style facility emphasizing light, color and
geometric design, includes a 100-room hotel and a casino with approximately
66,000 square feet of gaming space with over 1,880 slot machines and 81 table
games, including tables for "21," craps, roulette, mini baccarat and Caribbean
stud, as well as a lounge suitable for entertainment and dancing, a swimming
pool, four restaurants and more than 1,300 parking spaces. A $10 million casino
expansion project was completed in December 1994, and a 55,000 square foot
conference center was completed in June 1995. In addition, an expansion project,
including 400 additional rooms and suites, a casino expansion, a new restaurant,
an 18-hole golf course and a full-service spa, is currently under construction.
The management agreement for Silver Star provides for a seven-year term
expiring in July 2001 and a management fee of 30% of the enterprise's operating
income before debt service for the first five years and 40% of its operating
income before debt service for the final two years. Under the agreement, the
Company provided $30.5 million in debt financing for the construction and
start-up of the facility, which amount was repaid during fiscal 1995 from the
enterprise's cash flow. The Company has loaned to the tribe an additional $10
million for a casino expansion project which was completed in December 1994.
This loan is being repaid over five years.
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NEW DEVELOPMENTS
Par-A-Dice Acquisition
On April 26, 1996, the Company entered into a definitive purchase agreement
for the Par-A-Dice Acquisition. The Par-A-Dice is a riverboat facility located
along the Illinois River in East Peoria, Illinois, approximately 170 miles from
Chicago. The Par-A-Dice initially commenced operations in November 1991,
operating from a temporary facility in downtown Peoria. In May 1993, the
facility was relocated across the Illinois River to a newly constructed
land-based pavilion, containing two restaurants, a bar, gift shop, ticketing
area and surface parking for 750 cars, located on 19 acres in East Peoria. In
May 1994, the original Par-A-Dice Casino replica paddle-wheel riverboat was
replaced with a new, state-of-the-art, twin hull cruise ship. The new boat
measures 238 feet long and 66 feet wide and since the recent completion of an
expansion in March 1996, features 33,000 square feet of gaming space on four
levels with approximately 1,000 slot machines and 42 table games, as well as
limited food and beverage services. The Par-A-Dice Hotel, which is currently
under construction and scheduled to be completed in the fall of 1996, is a
204-room full-service hotel with extensive food and beverage and banquet and
meeting facilities. The Company believes the hotel will enable the Par-A-Dice to
further develop an overnight customer base for the facility and provides much
needed banquet and meeting capabilities.
The Par-A-Dice is the primary casino entertainment facility serving central
Illinois, and is strategically located within 1/8 of a mile from an exit off of
Interstate 74, a major regional east-west interstate highway. The Par-A-Dice is
the only casino entertainment facility within approximately 100 miles of Peoria.
There are more than 350,000 people living within the Peoria metropolitan area
and over 1.7 million people over the age of 21 within 100 miles of Peoria. The
Par-A-Dice Acquisition is subject to certain closing conditions including the
obtaining of regulatory approvals from the Mississippi Gaming Commission and the
Illinois Gaming Board. See "Risk Factors -- Uncertainties of Consummation of the
Par-A-Dice Acquisition and Development of Sam's Town Reno and the Mirage Joint
Venture Project."
Sam's Town Reno
The Company recently announced its plans for a $92 million casino hotel and
entertainment complex in Reno, Nevada. The Company is in the process of
acquiring by the end of July a 100-acre parcel of land south of Reno and
adjacent to a newly opened freeway interchange. Plans for the Sam's Town Reno
project include a 33,000 square foot casino, featuring over 1,200 slot machines
and 36 table games and a hotel with 211 guest rooms and suites. The project is
also planned to include five destination restaurants, two entertainment lounges,
a 5,000-seat outdoor arena, an approximately 15,000 square foot events arena,
retail shops and two old time movie theaters. The Company has reached
preliminary agreement with the owner of the property to acquire the land and is
in the process of completing that acquisition. Following the land acquisition,
the Company expects to commence construction of Sam's Town Reno by the end of
this calendar year, with the opening occurring as early as spring 1998.
William S. Boyd, Chairman and Chief Executive Officer of the Company, and
Warren L. Nelson, a Director of the Company, each owns a 17.5% partnership
interest in the partnership which owns the land to be acquired. The $6 million
purchase price for the land is based upon an independent third-party appraisal
and the purchase of the land from the partnership has been approved by an
independent committee of the Company's Board of Directors. See "Risk
Factors -- Uncertainties of Consummation of the Par-A-Dice Acquisition and
Development of Sam's Town Reno and the Mirage Joint Venture Project."
Mirage Joint Venture
On May 29, 1996, the Company, through a wholly-owned subsidiary, entered
into a joint venture agreement with a subsidiary of Mirage to jointly develop
and own a casino hotel entertainment facility in Atlantic City, New Jersey. The
Atlantic City Project is planned to be one component of a multi-facility casino
entertainment development, master-planned by Mirage for the Marina district of
Atlantic City. The Atlantic City Project is expected to cost approximately $500
million. The agreement contemplates that the joint venture would fund $300
million of the project cost with non-recourse third-party financing. The
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remaining $200 million is expected to be funded equally by capital contributions
from the partners, including, in the case of Mirage, contribution of the land.
Pursuant to the joint venture agreement, the Company will control the
development and operation of the Atlantic City Project. The Atlantic City
Project will include a hotel of at least 1,000 rooms and will be adjacent and
connected to Mirage's planned wholly-owned resort. Construction is anticipated
to begin after completion of the remediation of the property and to take
approximately 24 months to complete. The Mirage Joint Venture will give the
Company a presence in Atlantic City, the primary casino gaming market serving
the eastern United States. See "Risk Factors -- Uncertainties of Consummation of
the Par-A-Dice Acquisition and Development of Sam's Town Reno and the Mirage
Joint Venture Project."
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MANAGEMENT
DIRECTORS AND EXECUTIVE OFFICERS
The following table sets forth the current directors and executive officers
of Boyd Gaming Corporation:
NAME AGE POSITION
- --------------------------- --- ----------------------------------------------------------
William S. Boyd............ 64 Chairman of the Board of Directors and Chief Executive
Charles L. Ruthe........... 62 President and Director
Robert L. Boughner......... 43 Executive Vice President, Chief Operating Officer and
Director
Ellis Landau............... 52 Senior Vice President, Chief Financial Officer and
Treasurer
Ralph Purnell.............. 61 Senior Vice President-Director of Operations, Nevada
Region
Maunty C. Collins.......... 53 Senior Vice President-Director of Operations, Central
Region
James Hippler.............. 49 Senior Vice President-Administration
Charles E. Huff............ 51 Vice President, Secretary and General Counsel
Keith E. Smith............. 35 Vice President and Controller
Brian Larson............... 39 Vice President-Development and Assistant Secretary
William R. Boyd............ 36 Vice President and Director
Marianne Boyd Johnson...... 37 Assistant Secretary and Director
Perry B. Whitt............. 73 Vice Chairman of the Board of Directors and Director
Kenny C. Guinn............. 59 Director
Warren L. Nelson........... 82 Director
Donald Snyder.............. 48 Director
William S. Boyd is the father of William R. Boyd and Marianne Boyd Johnson.
William S. Boyd has served as a director of the Company since its inception
in June 1988 and as Chairman of the Board of Directors and Chief Executive
Officer since August 1988. A co-founder of CH&C, he has served as a director and
President of CH&C since its inception in 1973, and has also held several other
offices with CH&C. Mr. Boyd has also served as President and a Director of
Eldorado, Inc., which operates the Eldorado Properties. Prior to joining the
Company, Mr. Boyd practiced law in Las Vegas for 15 years. Between 1970 and 1974
he also was Secretary and Treasurer and a member of the Board of Directors of
the Union Plaza Hotel and Casino. Mr. Boyd has been active in numerous business
and civic organizations in Las Vegas.
Charles L. Ruthe has served as a director of the Company since its
inception, President since August 1988 and Chief Operating Officer from August
1988 to April 1990. Mr. Ruthe is currently on a leave of absence from his
positions as President of the Company and as a director pending approval by the
Missouri Gaming Commission of Mr. Ruthe's gaming license application. He has
served as a director of CH&C since its inception and has also held several
offices with CH&C. Mr. Ruthe is active in many Las Vegas business and civic
organizations. Mr. Ruthe is a director of Sierra Health Services, Inc., a
healthcare company. In 1995, Mr. Ruthe was appointed President of Boyd
Development Corporation, a wholly-owned subsidiary of the Company.
Robert L. Boughner has been Executive Vice President and Chief Operating
Officer of the Company since April 1990 and has served as a director since April
1996. From 1985 until April 1990, he served as Senior Vice President of
Administration of CH&C and prior to that time he held various management
positions in the Company. Mr. Boughner is active in civic and industry affairs,
and serves on the Board of Directors of the Las Vegas Convention and Visitors
Authority, the Nevada Hotel and Motel Association and the Nevada Restaurant
Association.
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Ellis Landau has been 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. Prior to joining the Company, Mr.
Landau held various management positions with Ramada, Inc., a gaming and
hospitality company whose gaming operations were transferred to Aztar
Corporation, including Vice President and Treasurer of that company from 1978 to
February 1990.
Ralph Purnell has been Senior Vice President-Director of Operations, Nevada
Region of the Company since its inception. From the inception of the Company
until April 1994, Mr. Purnell served as Senior Vice President-Gaming of the
Company. From 1975 to 1988, Mr. Purnell held various positions with CH&C,
including General Manager of the Stardust and the California. Mr. Purnell serves
on the Board of Directors of the Nevada Resort Association.
Maunty C. Collins has been Senior Vice President-Director of Operations,
Central Region of the Company since June 1993. From December 1991 through June
1993, he served as Assistant General Manager at the Stardust. From 1985 until
December 1991, he was General Manager at Sam's Town Gold River in Laughlin,
Nevada. From 1978 to 1985, Mr. Collins held various positions at properties
owned by the Company.
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.
Charles E. Huff has been Vice President, Secretary and General Counsel of
the Company since its inception. He has served as Vice President and General
Counsel of CH&C since July 1986 and Secretary since January 1988. Prior to
joining CH&C, Mr. Huff practiced law in Las Vegas for 13 years.
Keith E. Smith became Vice President and Controller of the Company in June
1993. From September 1990 to June 1993 he served as Corporate Controller of the
Company. From May 1989 to September 1990, Mr. Smith was Vice President-Finance
of the Dunes Hotel, Casino and Country Club in Las Vegas. From 1982 to May 1989,
he was employed by Ramada, Inc. in a variety of positions, including Controller
of the Tropicana Resort and Casino in Las Vegas.
Brian A. Larson became Vice President-Development of the Company in June
1993 and Assistant Secretary in August 1993. He has also served as Associate
General Counsel of the Company since March 1993. From 1987 through February
1993, Mr. Larson was associated with the law firm of Snell & Wilmer in Phoenix,
Arizona, in which he became a partner on January 1, 1992.
William R. Boyd has been a Vice President of the Company since December
1990 and a director since September 1992. From June 1987 until December 1990, he
was director of operations at the Fremont. From 1978 until 1987, he held various
positions at the California and at Sam's Town Las Vegas.
Marianne Boyd Johnson has been Assistant Secretary of the Company since
September 1989 and a director since September 1990. From 1976 until September
1990, she held a variety of full and part-time sales and marketing positions
with the Company and CH&C.
Perry B. Whitt has served as a director of the Company since its inception
and Vice Chairman of the Board of Directors since August 1988. He has served as
a director of CH&C since its inception, and has also held several offices with
CH&C. Mr. Whitt has over 40 years experience in the gaming industry, much of it
with the Boyd family. He is also President of Utility Shareholders Association
of Nevada and serves on the Board of Directors of BankWest of Nevada.
Kenny C. Guinn has served as a director of the Company since January 1994.
He has served as Chairman of the Board of Southwest Gas Corporation
("Southwest") since May 1993 and Chairman of the Board of PriMerit Bank, a
subsidiary of Southwest ("PriMerit"), since 1987. From 1978 to May 1993, Mr.
Guinn served in various other executive positions for Southwest and PriMerit,
including Chief Executive Officer of Southwest from 1988 to 1993 and Chief
Executive Officer of PriMerit until 1992. He served as Interim President of the
University of Nevada, Las Vegas from May 1994 until May 1995. Mr. Guinn is also
a director of Oasis Residential, Inc. and Del Webb, Inc.
Warren L. Nelson has served as a director of the Company since its
inception and as a director of CH&C since its inception. For the last 28 years,
he has been a co-owner and director of the Club Cal
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Neva, a gaming facility in Reno, Nevada. Mr. Nelson has over 55 years experience
in the gaming industry. He is a Director of International Game Technology, a
slot machine manufacturer.
Donald Snyder has served as a director of the Company since April 1996.
From 1993 to the present, Mr. Snyder has served as Chairman, President and Chief
Executive Officer of the Fremont Street Experience Limited Liability Company,
the developer and operator of the Fremont Street Experience in Downtown Las
Vegas. From 1992 to 1993, he was President of Strategic Associates, Inc., a
consulting firm. From 1987 through 1991, he served as Chairman of the Board and
Chief Executive Officer of First Interstate Bank of Nevada.
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DESCRIPTION OF INDEBTEDNESS
The following summary of the terms of certain outstanding indebtedness of
the Company, certain of its wholly-owned subsidiaries, CH&C, Boyd Tunica and
Boyd Kansas City and California Hotel Finance Corporation, a wholly-owned
finance subsidiary of CH&C, does not purport to be complete and is qualified in
its entirety by reference to the various governing instruments, copies of which
have been filed, or incorporated by reference, as exhibits to the Registration
Statement of which this Prospectus is a part.
Capitalized terms used but not defined herein have the meanings ascribed to
them in the various governing instruments.
10.75% SENIOR SUBORDINATED NOTES
The 10.75% Senior Subordinated Notes (the "10.75% Notes") were issued under
an indenture dated September 3, 1993 (the "10.75% Indenture"), between the
Company and State Street Bank and Trust Company, as Trustee. The aggregate
principal amount of the Company's 10.75% Notes is $150 million. The 10.75% Notes
mature on September 1, 2003 and bear interest at a rate of 10.75% per annum,
payable semi-annually on September 1 and March 1. The 10.75% Notes are subject
to redemption at the Company's option after September 1, 1996 at redemption
prices ranging from 105.00% in 1996 to 100.00% in 1999 and thereafter of their
principal amount, plus accrued interest to the redemption date. In addition,
upon a Change of Control, as defined in the 10.75% Indenture, each Holder of
10.75% Notes has the right to require the Company to repurchase each Holder's
10.75% Notes at a purchase price in cash equal to 101% of the principal amount
thereof.
The 10.75% Indenture contains restrictive covenants which, among other
things, impose significant restrictions on the Company's operations, including
restrictions on the Company's ability to make investments in or loans to
affiliates, to incur additional debt, to create or permit liens on assets or to
sell or dispose of its assets or to merge or consolidate with other entities.
The Company may redeem the 10.75% Notes with borrowings under the New Bank
Credit Facility once the 10.75% Notes become redeemable in September 1996.
11% SENIOR SUBORDINATED NOTES
The 11% Senior Subordinated Notes (the "11% Notes") were issued under an
indenture dated November 15, 1992 (the "11% Indenture"), among California Hotel
Finance Corporation, a wholly-owned subsidiary of CH&C ("CHFC"), CH&C, as
Guarantor, and State Street Bank and Trust Company, as Trustee. The aggregate
outstanding principal amount of the 11% Notes is $185 million. CH&C has
guaranteed the payment of the 11% Notes (the "CH&C Guaranty"). The CH&C Guaranty
ranks junior in right to payment to all Senior Debt of CH&C and pari passu with
all other subordinated debt of CH&C.
The 11% Notes mature on December 1, 2002 and bear interest at a rate of 11%
per annum, payable semiannually on June 1 and December 1. The 11% Notes are
subject to redemption at the option of CHFC after December 1, 1997, at
redemption prices ranging from 104.125% in 1997 to 100% in 1999 and thereafter
of the principal amount outstanding plus accrued interest to the redemption
date. In addition, upon a Change of Control, as defined in the 11% Indenture,
each Holder of 11% Notes has the right to require CHFC to repurchase the
Holder's 11% Notes at a purchase price in cash equal to 101% of the principal
amount thereof.
The 11% Indenture contains restrictive covenants which, among other things,
impose significant restrictions on CH&C's operations, including restrictions on
CH&C's ability to make investments in or loans to affiliates, incur additional
debt, to create or permit liens on assets or to sell or dispose of its assets or
to merge or consolidate with other entities.
Each of CHFC and CH&C will be a "Restricted Subsidiary" under the Indenture
for the Notes. See "Description of Notes."
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RIVERBOAT LOAN
The Credit Agreement dated June 14 ,1995 ("Riverboat Credit Agreement"), by
and among the Company, certain commercial lending institutions and First
Security Bank of Utah, NA, as Trustee, provide for borrowing of $18.5 million,
of which approximately $17.8 million was outstanding on March 31, 1996 (the
"Riverboat Loan"). The proceeds of the Riverboat Loan were used to reimburse the
Company for its costs to construct a riverboat and acquire associated personal
property, and the Company's obligations under the Riverboat Loan are secured by
that riverboat and the personal property contained therein. The Riverboat Loan
is nonrecourse to the Company. The Riverboat Credit Agreement contains
restrictive covenants which, among other things, require the Company and its
subsidiaries to maintain their corporate existence subject to certain permitted
consolidations and mergers.
The Company does not anticipate that the Riverboat Loan will be retired
with proceeds of the New Bank Credit Facility or with proceeds of the Offerings
but that it will remain outstanding after the closing of this Offering.
NEW BANK CREDIT FACILITY
On June , 1996, the Company and CH&C (collectively referred to herein as
the "Borrowers") entered into the New Bank Credit Facility pursuant to which
Canadian Imperial Bank of Commerce ("CIBC") and certain other financial
institutions (collectively, the "Banks") have provided a five-year reducing
revolving credit facility under which the Borrowers are able to borrow, on a
revolving basis, up to $500 million and under which CIBC serves as the agent
(the "Agent"). The available commitment under the New Bank Credit Facility,
which will mature June , 2001, began at $500 million and will be reduced over
the course of the five-year period according to a predetermined schedule
pursuant to which the commitment will be reduced to $475 million
two-and-one-half years from the closing date and will be further reduced by an
additional $50 million at the end of each six-months thereafter until maturity.
The New Bank Credit Facility includes a sublimit for standby letters of credit
in an amount up to $15 million to support various obligations of the Borrowers
and their Subsidiaries. Borrowings under the New Bank Credit Facility bear
interest, at the option of the Borrowers, at a margin above (a) the Eurodollar
Rate (as defined therein) or (b) the highest of the following: (i) the Agent's
reference rate, (ii) the Federal Funds Rate plus 1/2 of 1%, and (iii) the CD
Published Moving Rate plus 1%. The margin above such rates, and the fee on the
unfunded portions of the New Bank Credit Facility, vary based on the Company's
ratio of Funded Debt (as defined therein) to EBITDA (as defined therein) and at
June , 1996 was %
The New Bank Credit Facility initially is guaranteed by Mare-Bear, Inc.,
Sam-Will, Inc., Eldorado Inc., Boyd Tunica, Boyd Mississippi, Boyd Kansas City,
Boyd Kenner, and MSW, Inc. and thereafter must be guaranteed by any other
Significant Subsidiaries (as defined therein) created after the closing of the
New Bank Credit Facility (collectively, the "Guarantors").
The obligations under the New Bank Credit Facility are secured by: (a)
first deeds of trust on (i) the Stardust, (ii) Sam's Town Las Vegas, (iii) the
California, (iv) the Fremont, (v) Sam's Town Tunica and (vi) Sam's Town Kansas
City; (b) first security interest in all furniture, fixtures, accounts,
inventory, equipment (other than leased or financed items) of Borrowers and
Guarantors; (c) a negative pledge on (i) the real and personal property of any
other Significant Subsidiaries excepting permitted liens and (ii) the Silver
Star and Treasure Chest management contracts; and (d) first preferred ship
mortgages on the whole of the Patco 400 Riverboat, moored at Sam's Town Tunica,
and the Judy's Prize Riverboat, moored at Sam's Town Kansas City. The deeds of
trust and security interest also secure the Borrower's obligations under any
hedging arrangements with any Bank.
The New Bank Credit Facility contains certain financial and other
covenants, including, without limitation, various covenants (i) requiring the
maintenance of a minimum Tangible Net Worth (as defined therein) and minimum
Fixed Charge Coverage Ratio (as defined therein), and establishing a maximum
permitted Funded Debt to EBITDA ratio, (ii) imposing limitations on the
incurrence of additional Indebtedness and the creation of Liens (as defined
therein), (iii) imposing limits on the maximum permitted Maintenance Capital
Expenditures (as defined therein), and (iv) imposing restrictions on Investments
(as defined therein), the purchase or redemption of subordinated debt prior to
its stated maturity, dividend distributions, and the redemption or purchase of
capital stock of the Company.
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DESCRIPTION OF NOTES
The Notes will be issued under an indenture to be dated as of ,
1996 (the "Indenture") among the Company, the Guarantors and , as
trustee (the "Trustee"). A copy of the Indenture may be obtained by contacting
the Office of the Secretary at the principal executive offices of the Company,
2950 South Industrial Road, Las Vegas, Nevada 89109, telephone: (702) 792-7200.
The terms of the Notes include those stated in the Indenture and those made
part of the Indenture by reference to the Trust Indenture Act of 1939, as
amended (the "Trust Indenture Act"), as in effect on the date of the Indenture.
The Notes are subject to all such terms, and holders of the Notes (the
"Holders") are referred to the Indenture and the Trust Indenture Act for a
statement of those terms. The statements under this caption relating to the
Notes and the Indenture are summaries and do not purport to be complete. Such
summaries may make use of certain terms defined in the Indenture and are
qualified in their entirety by express reference to the Indenture. For the
purposes of this section "Description of Notes", the term "Company" shall mean
Boyd Gaming Corporation only, and shall not include any of its subsidiaries.
GENERAL
The Notes will mature on , 2003 and will be limited to an
aggregate principal amount of $200 million. The Notes will be issued in fully
registered form only and will be issued in denominations of $1,000 and integral
multiples thereof. The Notes may be presented for registration of transfer and
exchange at the offices of the Registrar, which initially will be the offices of
the Trustee.
PAYMENT TERMS
The Notes will bear interest at a rate of % per annum until maturity,
payable semiannually on and of each year, commencing
1996, to the persons who are registered Holders thereof at the close of
business on the or immediately preceding such interest
payment date.
The Indenture provides that interest on the Notes will be computed on the
basis of a 360-day year of twelve 30-day months. Initially, the Trustee will act
as Paying Agent and Registrar. Principal and interest will be payable initially
at the offices of the Trustee but, at the option of the Company, interest may be
paid by check mailed to Holders at their registered addresses. The Company or
any domestically incorporated Restricted Subsidiary may act as Paying Agent and
Registrar, and the Company may change the Paying Agent or Registrar without
prior notice to Holders.
RANKING
The Indebtedness evidenced by the Notes will be senior unsecured
obligations of the Company, will rank pari passu in right of payment with all
existing and future senior Indebtedness of the Company, will be senior in right
of payment to all future subordinated Indebtedness of the Company and will be
Guaranteed (the "Guaranty") by certain existing Restricted Subsidiaries of the
Company, which contain substantially all of the income-producing properties of
the Company, and any future Subsidiaries to which any Guarantor transfers assets
unless: (x) with respect to each such transfer the transfer is at least as
favorable to such Guarantor as could be obtained in a similar transaction in
arm's-length dealings with a Person who is not an Affiliate of such Guarantor,
and with respect to each transfer (i) involving aggregate payments in excess of
$5 million, the Company delivers to the Trustee an Officers' Certificate
certifying that such transfer was approved by a majority of the disinterested
members of the Board of Directors of the Company as complying with the foregoing
standard and (ii) involving aggregate payments in excess of $10 million, the
Company delivers to the Trustee an opinion letter from an Independent Advisor to
the effect that such transfer is fair, from a financial point of view, to the
Guarantor; and (y) each such transfer is for Property other than securities of
the transferee and its Affiliates. Any Person required by the preceding sentence
to become a Guarantor because of a transfer of assets must be or become a
Restricted Subsidiary at the time of such transfer. The Company will use all
reasonable efforts to cause
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Par-A-Dice and EPH to become Guarantors as described below under "Guaranty by
Par-A-Dice and EPH". All Subsidiaries required to Guarantee the Notes in
accordance with the foregoing are referred to as the "Guarantors". Except in the
case of Par-A-Dice and EPH, and as a result of asset transfers referred to
above, the Indenture does not require future Restricted Subsidiaries to become
Guarantors.
The Notes will be structurally subordinated to all present and future
obligations of the Company's Subsidiaries that are not Guarantors and could be
effectively subordinated to obligations of the Guarantors. See "Guaranties" and
"Risk Factors -- Holding Company Structure and Ability to Service Debt;
Effective Subordination". As of March 31, 1996, after giving effect to the
Offering and the application of the net proceeds thereof, the total Indebtedness
and liabilities (including trade payables and accrued liabilities) of
Subsidiaries reflected on the Company's balance sheet would have been
approximately $ million. Although the Indenture contains limitations on the
amount of additional Indebtedness which the Company and its Restricted
Subsidiaries may Incur, the amounts of such Indebtedness could be substantial
and, in any case, all of such Indebtedness may be Indebtedness of Subsidiaries
(which could be effectively senior in right of payment to the Notes).
GUARANTIES
The obligations of the Company pursuant to the Indenture, including the
repurchase obligation resulting from a Change of Control, will be
unconditionally Guaranteed, jointly and severally, on a senior unsecured basis,
by each of the Guarantors under such Guarantor's Guaranty. Each Guaranty by a
Guarantor will be limited in amount to an amount not to exceed the maximum
amount that can be guaranteed by that Guarantor without rendering the Guaranty,
as it relates to such Guarantor, voidable under applicable law relating to
fraudulent conveyance or fraudulent transfer or similar laws affecting the
rights of creditors generally. As such, a Guaranty could be effectively
subordinated to all other obligations (including guarantees and other contingent
liabilities) of the applicable Guarantor, and, depending on the amount of such
obligations among other factors, a Guarantor's liability on its Guaranty could
be reduced to zero. See "Risk Factors -- Holding Company Structure and Ability
to Service Debt; Effective Subordination".
Each Guarantor will also agree to contribute to any Guarantor or Guarantors
which make payments pursuant to a Guaranty or Guaranties an amount equal to its
proportionate share of such Guaranty payment, based on the net worth of such
Guarantor relative to the aggregate net worth of the Guarantors.
GUARANTY BY PAR-A-DICE AND EPH
The Indenture provides that the Company shall use all reasonable efforts,
and shall cause Par-A-Dice and EPH to use all reasonable efforts, to obtain all
necessary approvals of Gaming Authorities in the State of Illinois for
Par-A-Dice and EPH to execute a supplemental indenture, in the form prescribed
by the Indenture and containing its Guaranty, in favor of the Holders at the
consummation of the Par-A-Dice Acquisition or as soon thereafter as possible.
Regardless of whether such approval is obtained, at all times following
consummation of the Par-A-Dice Acquisition, Par-A-Dice and EPH will be subject
to all of the covenants applicable to a Guarantor under the Indenture.
MANDATORY DISPOSITION OR REDEMPTION PURSUANT TO GAMING LAWS
If a Holder or beneficial owner of a Note is required to be licensed,
qualified or found suitable under applicable Gaming Laws and is not so licensed,
qualified or found suitable, the Holder shall be obliged, at the request of the
Company, to dispose of such Holder's Notes within 30 days after receipt of
notice of failure to be found suitable or such earlier date prescribed by any
Gaming Authority (in which event the Company's obligation to pay any interest
after the receipt of such notice shall be limited as provided in such Gaming
Laws), and thereafter, the Company shall have the right to redeem, on the date
fixed by the Company for the redemption of such Notes, such Holder's Notes at a
redemption price equal to the lowest of (i) the price at which such Holder or
beneficial owner acquired the Notes without accrued interest, if any (unless the
payment of such interest is permitted by the applicable Gaming Authority),
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(ii) the Current Market Price of the Notes on such redemption date and (iii) the
principal amount of such notes without accrued interest, if any (unless the
payment of such interest is permitted by the applicable Gaming Authority). The
Company is not required to pay or reimburse any Holder or beneficial owner of a
Note for the costs of licensure or investigation for such licensure,
qualification or finding of suitability. Any Holder or beneficial owner of a
Note required to be licensed, qualified or found suitable under applicable
Gaming Laws must pay all investigative fees and costs of the Gaming Authorities
in connection with such qualification or application therefor.
OPTIONAL REDEMPTION
The Notes will not be redeemable at the option of the Company prior to
2000. On or after that date, the Notes will be redeemable at the option of the
Company, in whole at any time or in part from time to time, on at least 30 but
not more than 60 days' prior notice, mailed by first-class mail to the Holders'
registered addresses, at the redemption prices (expressed in percentages of
principal amount) specified below plus accrued interest to the redemption date,
if redeemed during the 12-month period beginning of the years
indicated below:
YEAR PERCENTAGE
- ---- ----------
2000 %
2001 %
2002 %
If fewer than all the Notes are to be redeemed, selection of Notes for
redemption will be made by the Trustee, pro rata or by lot or by any other means
the Trustee determines to be fair and appropriate and which complies with
applicable legal requirements.
MANDATORY SINKING FUND
There are no mandatory sinking fund payments for the Notes.
BOOK-ENTRY SYSTEM
The Notes will initially be issued in the form of Global Securities (as
defined in the Indenture) held in book-entry form. Accordingly, The Depository
Trust Company ("DTC") or its nominee will initially be the sole registered
holder of the Notes for all purposes under the Indenture.
Upon the issuance of a Global Security, DTC or its nominee will credit the
accounts of persons holding through it with the respective principal amounts of
the Notes represented by such Global Security purchased by such persons in the
Offering. Such accounts shall be designated by the Underwriters with respect to
Notes placed by the Underwriters for the Company. Ownership of beneficial
interests in a Global Security will be limited to persons that have accounts
with DTC ("participants") or persons that may hold interests through
participants. Ownership of beneficial interests by participants in a Global
Security will be shown on, and the transfer of that ownership interest will be
effected only through, records maintained by DTC for such Global Security.
Ownership of beneficial interest in such Global Security by persons that hold
through participants will be shown on, and the transfer of that ownership
interest within such participant will be effected only through, records
maintained by such participant. The laws of some jurisdictions require that
certain purchasers of securities take physical delivery of such securities in
definitive form. Such limits and such laws may impair the ability to transfer
beneficial interest in a Global Security.
Payment of principal and interest on Notes represented by any such Global
Security will be made to DTC or its nominee, as the case may be, as the sole
registered owner and the sole holder of the Notes represented thereby for all
purposes under the Indenture. None of the Company, the Trustee, any agent of the
Company, or the Underwriters will have any responsibility or liability for any
aspect of DTC's records relating to or payments made on account of beneficial
ownership interests in a Global Security representing any Notes or for
maintaining, supervising, or reviewing any of DTC's records relating to such
beneficial ownership interests.
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The Company has been advised by DTC that upon receipt of any payment of
principal of, or interest on, any Global Security, DTC will immediately credit,
on its book-entry registration and transfer system, the accounts of participants
with payments in amounts proportionate to their respective beneficial interests
in the principal or face amount of such Global Security as shown on the records
of DTC. Payments by participants to owners of beneficial interests in a Global
Security held through such participants will be governed by standing
instructions and customary practices as is now the case with securities held for
customer accounts registered in "street name" and will be the sole
responsibility of such participants.
A Global Security may not be transferred except as a whole by DTC or a
nominee of DTC to a nominee of DTC. A Global Security is exchangeable for
certificated Notes only if (i) DTC notifies the Company that it is unwilling or
unable to continue as a depositary for such Global Security or if at any time
DTC ceases to be a clearing agency registered under the Exchange Act, (ii) the
Company executes and delivers to the Trustee a notice that such Global Security
shall be so transferable, registerable, and exchangeable, and such transfers
shall be registerable or (iii) there shall have occurred and be continuing an
Event of Default or an event which, with the giving of notice or lapse of time
or both, would constitute an Event of Default with respect to the Notes
represented by such Global Security. Any Global Security that is exchangeable
for certificated Notes pursuant to the preceding sentence will be transferred
to, and register and exchanged for, certificated Notes in authorized
denominations and registered in such names as the Depositary holding such Global
Security may direct. Subject to the foregoing, a Global Security is not
exchangeable, except for a Global Security of like denomination to be registered
in the name of the Depositary or its nominee. In the event that a Global
Security becomes exchangeable for certificated Notes, (i) certificated Notes
will be issued only in fully registered form in denominations of $1,000 or
integral multiples thereof, (ii) payment of principal, any repurchase price, and
interest on the certificated Notes will be payable, and the transfer of the
certificated Notes will be registerable, at the office or agency of the Company
maintained for such purposes and (iii) no service charge will be made for any
registration of transfer or exchange of the certificated Notes, although the
Company may require payment of a sum sufficient to cover any tax or governmental
charge imposed in connection therewith.
So long as the Depositary for a Global Security, or its nominee, is the
registered owner of such Global Security, such Depositary or such nominee, as
the case may be, will be considered the sole owner or holder of the Notes
represented by such Global Security for the purposes of receiving payment on the
Notes, receiving notices, and for all other purposes under the Indenture and the
Notes. Beneficial interests in Notes will be evidenced only by, and transfers
thereof will be effected only through, records maintained by the Depositary and
its participants. Cede & Co. has been appointed as the nominee of the
Depositary. Except as provided above, owners of beneficial interests in a Global
Security will not be entitled to and will not be considered the Holders thereof
for any purposes under the Indenture. Accordingly, each person owning a
beneficial interest in a Global Security must rely on the procedures of the
Depositary, and, if such person is not a participant, on the procedures of the
participant through which such person owns its interest, to exercise any rights
of a Holder under the Indenture, including suing for nonpayment of principal or
interest. The Depository has advised the Company in the Indenture that it will
exercise the rights of a Holder thereunder only at the direction of one or more
participants whose accounts have been credited with interests in a Global
Security which have been so directed. As a result, in the event that the Company
requests any action of Holders or that an owner of a beneficial interest in a
Global Security desires to give or take any which a Holder is entitled to give
or take under the Indenture, the Depositary would authorize the participants
holding the relevant beneficial interest to give or take such action and such
participants would authorize beneficial owners owning through such participants
to give or take such action or would otherwise act upon the instructions of
beneficial owners owning through them.
DTC has advised the Company that DTC is a limited-purpose trust company
organized under the Banking Law of the State of New York, a member of the
Federal Reserve System, a "clearing corporation" within the meaning of the New
York Uniform Commercial Code, and a "clearing agency"
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register under the Exchange Act. DTC was created to hold the securities of its
participants and to facilitate the clearance and settlement of securities
transactions among its participants in such securities through electronic
book-entry changes in accounts of the participants, thereby eliminating the need
for physical movement of securities certificates. DTC's participants include
securities brokers and dealers (including the Underwriters), banks, trust
companies, clearing corporations, and certain other organizations some of whom
(and/or their representatives) own DTC. Access to DTC's book-entry system is
also available to others, such as banks, brokers, dealers, and trust companies
that clear through or maintain a custodial relationship with a participant,
either directly or indirectly.
REPURCHASE AT THE OPTION OF HOLDERS UPON A CHANGE OF CONTROL
Upon the occurrence of a Change of Control, each Holder shall have the
right to require the Company to repurchase all or any part (equal to $1,000 or
an integral multiple thereof) of such Holder's Notes pursuant to the offer
described below (the "Change of Control Offer") at a purchase price equal to
101% of the principal amount thereof, plus accrued and unpaid interest, if any,
thereon to the purchase date (the "Change of Control Payment").
Within 30 days following any Change of Control, the Company shall mail a
notice to each Holder stating, among other things: (1) that a Change of Control
has occurred and a Change of Control Offer is being made pursuant to the
covenant entitled "Repurchase at the Option of Holders Upon a Change of Control"
and that all Notes (or portions thereof) timely tendered will be accepted for
payment; (2) the purchase price and the purchase date, which shall be, subject
to any contrary requirements of applicable law, no earlier than 30 days nor
later than 60 days from the date such notice is mailed (the "Change of Control
Payment Date"); (3) that any Note (or portion thereof) accepted for payment (and
for which payment has been duly provided on the Change of Control Payment Date)
pursuant to the Change of Control Offer shall cease to accrue interest after the
Change of Control Payment Date; (4) that any Notes (or portions thereof) not
tendered will continue to accrue interest; (5) a description of the transaction
or transactions constituting the Change of Control; and (6) the procedures that
Holders must follow in order to tender their Notes (or portions thereof) for
payment and the procedures that Holders must follow in order to withdraw an
election to tender Notes (or portions thereof) for payment.
The Company will comply, to the extent applicable, with the requirements of
Rule 14e-1 under the Exchange Act, and any other securities laws and regulations
thereunder to the extent such laws and regulations are applicable in connection
with the purchase of Notes in connection with a Change of Control. To the extent
that the provisions of any securities laws or regulations conflict with the
provisions relating to the Change of Control Offer, the Company will comply with
the applicable securities laws and regulations and will not be deemed to have
breached its obligations described above by virtue thereof.
Except as described above with respect to a Change of Control, the
Indenture does not contain any other provisions that permit the Holders to
require that the Company repurchase or redeem the Notes in the event of a
takeover, recapitalization or similar restructuring.
In the event the Notes have Investment Grade Status at the earlier of the
public announcement of (x) the occurrence of a Change of Control or (y) (if
applicable) the intention of the Company to effect a Change of Control, the
foregoing Change of Control provisions shall not apply unless both a Change of
Control with respect to the Company and a Rating Decline shall occur. If the
Notes have Investment Grade Status at the earlier of the public announcement of
(x) the occurrence of a Change of Control or (y) (if applicable) the intention
of the Company to effect a Change of Control, and the Company effects defeasance
of the Notes under the Indenture prior to the date of a Rating Decline, the
Company will not be obligated to make a repurchase offer as a result of such
Change of Control and Rating Decline.
There can be no assurance that the Company will be able to fund any such
repurchase of the Notes. Certain existing credit agreements contain and any
future credit agreements or other agreements relating to indebtedness of the
Company may contain prohibitions or restrictions on the Company's ability to
effect a Change of Control Payment. In the event a Change of Control occurs at a
time when such prohibitions or restrictions are in effect, the Company could
seek the consent of its lenders to the
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purchase of Notes or could attempt to refinance the borrowings that contain such
prohibition. If the Company does not obtain such a consent or repay such
borrowings, the Company will be effectively prohibited from purchasing Notes. In
such case, the Company's failure to purchase tendered Notes would constitute an
Event of Default under the Indenture.
The definition of Change of Control includes a phrase relating to the sale,
lease, conveyance or transfer of "all or substantially all" of the Company's
assets. Although there is a developing body of case law interpreting the phrase
"substantially all," there is no precise established definition of the phrase
under applicable law. Accordingly, the ability of a Holder to require the
Company to repurchase such Notes as a result of a sale, lease, conveyance or
transfer of less than all of the assets of the Company to another person may be
uncertain.
CERTAIN COVENANTS
Set forth below are certain covenants contained in the Indenture. During
any period of time that (i) the Notes have Investment Grade Status and (ii) no
Default or Event of Default has occurred and is continuing under the Indenture
with respect to the Notes, the Company and its Restricted Subsidiaries will not
be subject to the provisions of the Indenture with respect to the Notes
described below under "-- Limitation on Indebtedness", "-- Limitation on
Restricted Payments" and "-- Limitation on Asset Sales" (collectively, the
"Suspended Covenants"). In the event that the Company and its Restricted
Subsidiaries are not subject to the Suspended Covenants with respect to the
Notes for any period of time as a result of the preceding sentence and,
subsequently, at least two of the three Rating Agencies withdraw their ratings
or assign the Notes a rating below the required Investment Grade Ratings, then
the Company and its Restricted Subsidiaries will thereafter again be subject to
the Suspended Covenants for the benefit of the Notes and compliance with the
Suspended Covenants with respect to Restricted Payments made after the time of
such withdrawal or assignment will be calculated in accordance with the terms of
the covenant described below under "--Limitation on Restricted Payments" as if
such covenant had been in effect during the entire period of time from the Issue
Date with respect to the Notes.
Limitation on Indebtedness. The Company shall not, and shall not permit
any Restricted Subsidiary to, Incur any Indebtedness unless no Event of Default
has occurred and is continuing and unless (after giving effect to (i) the
Incurrence of such Indebtedness as if such Indebtedness was Incurred at the
beginning of the Reference Period and (if applicable) the application of the net
proceeds thereof to repay other Indebtedness as if the application of such
proceeds occurred at the beginning of the Reference Period, (ii) the Incurrence
and retirement of any other Indebtedness since the first day of the Reference
Period as if such Indebtedness was Incurred or retired at the beginning of the
Reference Period and (iii) the acquisition or disposition of any company or
business by the Company or any Restricted Subsidiary since the first day of the
Reference Period including any acquisition or disposition which will be
consummated contemporaneously with the Incurrence of such Indebtedness, as if
such acquisition or disposition occurred at the beginning of the Reference
Period), the Company's Consolidated Fixed Charge Coverage Ratio would not exceed
2.0 to 1.
Notwithstanding the foregoing limitation, the Company may Incur the
following Indebtedness: (i) Indebtedness evidenced by the Notes; (ii)
Indebtedness outstanding on the Issue Date; (iii) so long as no Event of Default
has occurred and is continuing, Indebtedness under the Credit Facility in an
aggregate amount outstanding at any time not to exceed $500 million, as such
amount may be reduced as a result of repayments pursuant to the covenant
"Limitation on Asset Sales; Events of Loss" of Indebtedness outstanding under
the Credit Facility; (iv) Indebtedness of the Company or a Restricted Subsidiary
owing to and held by a Restricted Subsidiary or the Company; provided, however,
that any subsequent issuance or transfer of any Capital Stock or other event
that results in any such Restricted Subsidiary ceasing to be a Restricted
Subsidiary or any subsequent transfer of any such Indebtedness except to the
Company or a Restricted Subsidiary shall be deemed in each case to constitute
the Incurrence of such Indebtedness by the issuer thereof; (v) Indebtedness
under Interest Rate Agreements entered into for the purpose of limiting interest
rate risks, provided that the obligations under such agreements are related to
payment obligations on Indebtedness otherwise permitted by the terms of this
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covenant; (vi) Indebtedness under Currency Exchange Protection Agreements,
provided that such Currency Exchange Protection Agreements were entered into for
the purpose of limiting exchange rate risks in connection with transactions
entered into in the ordinary course of business; (vii) Indebtedness in
connection with one or more standby letters of credit, performance bonds or
completion guarantees issued in the ordinary course of business or pursuant to
selfinsurance obligations and not in connection with the borrowing of money or
the obtaining of advances or credit; (viii) Indebtedness outstanding under
Permitted FF&E Financings which are either (x) Non-Recourse Indebtedness of the
Company and its Restricted Subsidiaries or (y) limited in amount for each Gaming
Facility owned or leased by the Company or any of its Restricted Subsidiaries to
the lesser of (1) the amount of FF&E used in such Gaming Facility and financed
by such Permitted FF&E Financing or (2) $10 million; (ix) so long as no Event of
Default has occurred and is continuing, Indebtedness of the Company not
otherwise permitted to be Incurred pursuant to the provisions of the immediately
preceding paragraph or this paragraph in an aggregate amount Incurred not to
exceed $25 million; or (x) Permitted Refinancing Indebtedness Incurred in
respect of Indebtedness outstanding pursuant to the provisions of the
immediately preceding paragraph or clauses (i), (ii), (iii), (viii) and this
clause (x) of this paragraph.
Limitation on Restricted Payments. The Company shall not make, and shall
not permit any Restricted Subsidiary to make, any Restricted Payment if at the
time of, and after giving effect to, such proposed Restricted Payment, (a) a
Default or an Event of Default shall have occurred and be continuing, (b) the
Company could not Incur at least $1.00 of additional Indebtedness pursuant to
the first paragraph of "-- Limitation on Indebtedness" or (c) the aggregate
amount of such Restricted Payment and all other Restricted Payments made from
and after the date of the Indenture (the amount of any Restricted Payment, if
made other than in cash, to be based upon Fair Market Value) would exceed an
amount equal to the sum of (i) 50% of the Consolidated Net Income accrued during
the period (treated as one accounting period) from the end of the most recent
fiscal quarter ended immediately prior to the date of the Indenture to the end
of the most recent fiscal quarter ended immediately prior to the date of such
Restricted Payment (or, in the case such Consolidated Net Income shall be a
deficit, minus 100% of such deficit); (ii) the aggregate Net Cash Proceeds
received by the Company from the issue or sale of its Capital Stock (other than
Disqualified Stock) subsequent to the end of the most recent fiscal quarter
ended immediately prior to the date of the Indenture (other than an issuance or
sale to a Subsidiary of the Company or an employee stock ownership plan or other
trust established by the Company or any of its Subsidiaries or pursuant to
clauses (iii) or (iv) in the following paragraph); (iii) the amount by which
Indebtedness of the Company or any Guarantor is reduced on the Company's balance
sheet upon the conversion or exchange (other than an issuance or sale to a
Subsidiary of the Company or an employee stock ownership plan or other trust
established by the Company or any of its Subsidiaries) subsequent to the end of
the most recent fiscal quarter ended immediately prior to the date of the
Indenture, of any Indebtedness of the Company or any Guarantor convertible or
exchangeable for Capital Stock (other than Disqualified Stock) of the Company
(less the amount of any cash or other property distributed by the Company or any
Restricted Subsidiary upon such conversion or exchange); (iv) the amount equal
to the net reduction in Investments resulting from (A) payments of dividends,
repayments of loans or advances or other transfers of assets to the Company or
any Guarantor or the satisfaction or reduction (other than by means of payments
by the Company or any Restricted Subsidiary) of obligations of other Persons
which have been Guaranteed by the Company or any Guarantor or (B) the
redesignation of Unrestricted Subsidiaries as Restricted Subsidiaries which
execute Guaranties, in each case such net reduction in Investments being (x)
valued as provided in the definition of "Investment", (y) in an amount not to
exceed the aggregate amount of Investments previously made by the Company or any
Guarantor which were treated as a Restricted Payment, and (z) included in this
clause (iv) only to the extent not included in Consolidated Net Income; (v)
payments of dividends, repayments of loans or advances or other transfers of
assets to the Company or any Guarantor from the Mirage Joint Venture to the
extent such dividends, repayments, advances or other transfers exceed $100
million; and (vi) $75 million.
The provisions of the preceding paragraph shall not prohibit: (i) the
payment of any dividend within 60 days after the date of its declaration if such
dividend could have been paid on the date of its
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declaration in compliance with such provisions; provided that at the time of
payment of such dividend no Default under any provision of the Indenture other
than this covenant shall have occurred and be continuing (or would result
therefrom); (ii) the redemption or repurchase of any Capital Stock or
Indebtedness of the Company (other than any Capital Stock or Indebtedness which
is held or beneficially owned by, or issued by, any member of the Boyd Family,
the Company or any Affiliate of the Company, (A) if the holder or beneficial
owner of such Capital Stock or Indebtedness is required to qualify under the
Gaming Laws and does not so qualify or (B) if necessary in the reasonable, good
faith judgment of the Board of Directors of the Company, as evidenced by a
resolution of the Board, to prevent the loss or secure the reinstatement of any
Gaming License which if lost or not reinstated, as the case may be, would have a
material adverse effect on the business of the Company and its Subsidiaries,
taken as a whole, or would restrict the ability of the Company or any of its
Subsidiaries to conduct business in any gaming jurisdiction; (iii) any purchase,
redemption or other acquisition or retirement of Capital Stock of the Company
made by exchange for, or out of the proceeds of the substantially concurrent
sale of, Capital Stock (other than Disqualified Stock) of the Company; (iv) any
purchase, redemption or other acquisition or retirement of the Indebtedness of
any Person made by exchange for, or out of the proceeds of the substantially
concurrent sale of, Capital Stock (other than Disqualified Stock) of the
Company; (v) any purchase, redemption, defeasance or other acquisition or
retirement for value of Indebtedness from the proceeds of Permitted Refinancing
Indebtedness; (vi) any purchase, redemption or other retirement of the 11% Notes
and the 10.75% Notes; (vii) Investments not to exceed $100 million in the Mirage
Joint Venture; (viii) Investment Guarantees to the extent permitted by the
provisions described under the caption, "-- Limitation on Indebtedness" above
that constitute Permitted Joint Venture Investments and Guarantee (with full
rights of subrogation) Indebtedness Incurred by a Permitted Joint Venture to
acquire or construct Gaming Facilities provided that such Indebtedness (A) is
not expressly subordinated in right of payment or otherwise to any other
Indebtedness of such Permitted Joint Venture and (B) is secured by first
priority security interests in such Gaming Facilities, and (ix) payments
pursuant to Investment Guarantees which were entered into in compliance with
clause (viii) of this paragraph.
The full amount of any Restricted Payments pursuant to clauses (i) and (ii)
of the preceding paragraph (but not pursuant to clauses (iii), (iv), (v), (vi)
and (vii) of the preceding paragraph) shall be included in the calculation of
the aggregate amount of the Restricted Payments referred to in the next
preceding paragraph. With respect to any Investment Guarantee, (x) if at any
time the Company or any Restricted Subsidiary ceases to control the day-to-day
operations of the Permitted Joint Venture the Indebtedness of which is
Guaranteed by the Investment Guarantee, the full amount of such Investment
Guarantee shall thereafter be included in the calculation of the aggregate
amount of Restricted Payments referred to in the next preceding paragraph and
(y) if the Company or a Restricted Subsidiary retains such control, any amount
actually paid pursuant to such Investment Guarantee shall be included in the
calculation of the aggregate amount of Restricted Payments referred to in the
next preceding paragraph.
Limitation on Liens. The Company shall not, and shall not permit any
Guarantor or Par-A-Dice and EPH to, directly or indirectly, Incur or suffer to
exist, any Lien upon any of its Property, whether now owned or hereafter
acquired, or any interest therein or any income or profits therefrom, unless it
has made or will make effective provision whereby the Notes will be secured by
such Lien equally and ratably with (or prior to) all other Indebtedness of the
Company or any Guarantor, Par-A-Dice or EPH secured by such Lien except for: (i)
Permitted Liens; (ii) Liens on assets financed through Permitted FF&E Financings
securing Indebtedness permitted under clause (viii) of "Limitation on
Indebtedness"; (iii) Liens on the Property of the Company or any Guarantor,
Par-A-Dice or EPH existing on the date of the Indenture; (iv) Liens securing
Indebtedness Incurred pursuant to the Credit Facility; (v) Liens in favor of the
Company or a Guarantor; (vi) Liens on the Property of a Person (except for
Par-A-Dice and EPH) at the time such Person becomes a Guarantor; provided,
however, that any such Lien may not extend to any other Property of the Company
or any Guarantor or Boyd Illinois; provided further, however, that any such Lien
was not Incurred in anticipation of or in connection with the transaction or
series of related transactions pursuant to which such Person became a Guarantor;
or (vii) Liens to secure any refinancing, refunding, extension, renewal or
replacement (or successive refinancings, refundings,
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extensions, renewals or replacements) as a whole or in part of any Indebtedness
secured by any Lien referred to in the foregoing clauses (ii), (iii), (vi) and
(vii); provided, however, that (x) such new Lien shall be limited to all or part
of the same Property subject to the original Lien (plus improvements on such
Property) and (y) the Indebtedness secured by such Lien at such time is not
increased to any amount greater than the sum of (A) the outstanding principal
amount or, if greater, committed amount of the Indebtedness described under
clauses (ii), (iii), (vi) or (vii) and (B) an amount necessary to pay any fees
and expenses, including premiums, related to such refinancing, refunding,
extension, renewal or replacement.
Limitation on Dividend and Other Payment Restrictions Affecting Restricted
Subsidiaries. The Company shall not, and shall not permit any Restricted
Subsidiary to, directly or indirectly, create or otherwise cause or suffer to
exist or become effective any encumbrance or restriction on the ability of any
Restricted Subsidiary to (a)(i) pay dividends or make any other distributions to
the Company or any other Restricted Subsidiary (A) on its Capital Stock or (B)
with respect to any other interest or participation in, or measured by, its
profits, or (ii) pay any indebtedness owed to the Company or any other
Restricted Subsidiary or (b) make loans or advances to the Company or any other
Restricted Subsidiary or (c) transfer any of its Property to the Company or any
other Restricted Subsidiary, except for such encumbrances or restrictions
existing under or by reason of (i) agreements in effect on the Issue Date; (ii)
applicable law; (iii) customary nonassignment provisions in leases entered into
in the ordinary course of business and consistent with past practices; (iv)
Permitted Refinancing Indebtedness; provided, however, that the restrictions
contained in the agreements governing such Permitted Refinancing Indebtedness
are no more restrictive than those contained in the agreements governing the
Indebtedness being refinanced; or (v) agreements in existence with respect to a
Restricted Subsidiary at the time it is so designated; provided, however, that
such agreements are not entered into in anticipation or contemplation of such
designation. Nothing contained in this covenant shall prevent the Company or any
Restricted Subsidiary from granting any Lien permitted by the "-- Limitation on
Liens" covenant.
Limitation on Asset Sales; Event of Loss. Other than upon an Event of Loss,
the Company shall not, and shall not permit any Restricted Subsidiary to,
directly or indirectly, consummate any Asset Sale after the Issue Date, where
the Assets subject to such Asset Sale have an aggregate Fair Market Value of $10
million, unless: (i) the Company or such Restricted Subsidiary, as the case may
be, receives consideration at the time of such Asset Sale at least equal to the
Fair Market Value of the Property subject to such Asset Sale; (ii) at least 75%
of such consideration consists of cash or Temporary Cash Investments; provided,
however, that for purposes of this clause (ii), (x) the assumption of
Indebtedness of the Company or a Restricted Subsidiary which is not subordinated
to the Notes or any Guarantee shall be deemed to be Temporary Cash Investments
if the Company, such Restricted Subsidiary, and all other Restricted
Subsidiaries of the Company, to the extent any of the foregoing are liable with
respect to such Indebtedness, are expressly released from all liability for such
Indebtedness by the holder thereof in connection with such Asset Sale, (y) any
securities or notes received by the Company or such Restricted Subsidiary from
such transferee that are converted by the Company or such Restricted Subsidiary
into cash or Temporary Cash Investments within 10 business days of the date of
such Asset Sale shall be deemed to be Temporary Cash Investments and (z) the
Company and its Restricted Subsidiaries may receive consideration in the form of
securities exceeding 25% of the consideration for one or more Asset Sales so
long as the Company and its Restricted Subsidiaries do not hold such securities
having an aggregate Fair Market Value in excess of $50 million at any time
outstanding; (iii) no Default or Event of Default shall have occurred and be
continuing at the time of, or would occur after giving effect, on a pro forma
basis, to, such Asset Sale; and (iv) the Board of Directors of the Company
determines in good faith that such Asset Sale complies with clauses (i) and
(ii).
Upon an Event of Loss incurred by the Company or any of its Restricted
Subsidiaries, the Net Proceeds received from such Event of Loss shall be applied
in the same manner as proceeds from Asset Sales described above and pursuant to
the procedures set forth below.
Within 270 days after the receipt of the Net Proceeds of an Asset Sale or
Event of Loss, an amount equal to 100% of the Net Proceeds from such Asset Sale
or Event of Loss may be applied by the
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Company or a Restricted Subsidiary (A) to permanently repay, redeem or
repurchase Indebtedness of the Company or Indebtedness of any Restricted
Subsidiary or (B) to reinvest in Additional Assets (including by means of an
Investment in Additional Assets by a Restricted Subsidiary with Net Proceeds
received by the Company or another Restricted Subsidiary); provided, however,
that if the Company or any Restricted Subsidiary contractually commits within
such 270-day period to apply such Net Proceeds within 180 days of such
contractual commitment in accordance with the above clauses (A) or (B), and such
Net Proceeds are subsequently applied as contemplated in such contractual
commitment, then the requirement for application of Net Proceeds set forth in
this paragraph shall be considered satisfied.
Any Net Proceeds from an Asset Sale or Event of Loss that are not used in
accordance with the preceding paragraph shall constitute "Excess Proceeds". When
the aggregate amount of Excess Proceeds exceeds $20 million (taking into account
income earned on such Excess Proceeds), the Company shall make an offer to
purchase (the "Prepayment Offer"), on a pro rata basis, from all Holders of the
Notes, an aggregate principal amount of Notes equal to the Excess Proceeds, at a
price in cash at least equal to 100% of the principal amount thereof, plus
accrued and unpaid interest, in accordance with the procedures summarized herein
and set forth in the Indenture. To the extent that any portion of the Excess
Proceeds remains after compliance with the preceding sentence and provided that
all Holders have been given the opportunity to tender the Notes for repurchase
in accordance with the Indenture, the Company or such Restricted Subsidiary may
use such remaining amount for general corporate purposes and the amount of
Excess Proceeds shall be reset to zero. Pending application of Net Proceeds
pursuant to clause (A) and (B) above, such Net Proceeds will be invested in
Temporary Cash Investments.
Within ten Business Days after the amount of Excess Proceeds exceeds $20
million, the Company shall send a written notice, by first-class mail, to the
Holders (the "Prepayment Offer Notice"), accompanied by such information
regarding the Company and its Subsidiaries as the Company in good faith believes
will enable such Holders to make an informed decision with respect to the
Prepayment Offer. The Prepayment Offer Notice will state, among other things,
(a) that the Company is offering to purchase Notes pursuant to the provisions of
the Indenture described herein under "-- Limitation on Asset Sales", (b) that
any Note (or any portion thereof) accepted for payment (and for which payment
has been duly provided on the Purchase Date) pursuant to the Prepayment Offer
shall cease to accrue interest after the Purchase Date, (c) the purchase price
and purchase date, which shall be, subject to any contrary requirements of
applicable law, no less than 30 days nor more than 60 days from the date the
Prepayment Offer Notice is mailed (the "Purchase Date"), (d) the aggregate
principal amount of Notes (or portions thereof) to be purchased and (e) a
description of the procedure which Holders must follow in order to tender their
Notes (or portions thereof) and the procedures that Holders must follow in order
to withdraw an election to tender their Notes (or portions thereof) for payment.
The Company will comply, to the extent applicable, with the requirements of
Rule 14e-1 under the Exchange Act, and any other securities laws and regulations
thereunder to the extent such laws and regulations are applicable in connection
with the purchase of Notes as described above. To the extent that the provisions
of any securities laws or regulations conflict with the provisions relating to
the Prepayment Offer, the Company will comply with the applicable securities
laws and regulations and will not be deemed to have breached its obligations
described above by virtue thereof.
Limitation on Transactions with Affiliates. The Company shall not, and
shall not permit any Restricted Subsidiary to, directly or indirectly, conduct
any business or enter into or suffer to exist any transaction or series of
transactions (including the purchase, sale, transfer, lease or exchange of any
Property, the making of any Investment, the giving of any Guarantee or the
rendering or receiving of any service) with, from or for the benefit of, (1) any
Affiliate, (2) any Related Person or (3) any officer or director of any
Affiliate or a Related Person (an "Affiliate Transaction") unless (i) the terms
of such Affiliate Transaction are (a) in writing, (b) in the best interest of
the Company or such Restricted Subsidiary, as the case may be, and (c) at least
as favorable to the Company or such Restricted Subsidiary, as the case may be,
as those that could be obtained at the time of such Affiliate Transaction in a
similar transaction in arms-length dealings with a Person who is not such an
Affiliate, (ii) with respect to each Affiliate Transaction involving aggregate
payments to either party in excess of $5 million, the
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Company delivers to the Trustee an Officers' Certificate certifying that such
Affiliate Transaction was approved by a majority of the disinterested members of
the Board of Directors of the Company and that such Affiliate Transaction
complies with clause (i), and (iii) with respect to each Affiliate Transaction
involving aggregate payments in excess of $10 million, the Company delivers to
the Trustee an opinion letter from an Independent Advisor to the effect that
such Affiliate Transaction is fair, from a financial point of view.
Notwithstanding the foregoing limitation, the Company may enter into or
suffer to exist the following: (i) any transaction pursuant to any contract in
existence on the Issue Date; (ii) any Restricted Payment permitted to be made
pursuant to "-- Limitation on Restricted Payments"; (iii) any transaction or
series of transactions between the Company and one or more of its Restricted
Subsidiaries or between two or more of its Restricted Subsidiaries; and (iv) the
payment of compensation (including amounts paid pursuant to employee benefit
plans) for the personal services of officers, directors and employees of the
Company or any of its Restricted Subsidiaries, so long as the Board of Directors
of the Company in good faith shall have approved the terms thereof and deemed
the services theretofore or thereafter to be performed for such compensation or
fees to be fair consideration therefor.
Maintenance of Properties and Other Matters. The Company shall, and shall
cause each of its Subsidiaries to, maintain its Properties in good working order
and condition and make all necessary repairs, renewals and replacements;
provided, however, that nothing in this provision shall prevent the Company or
any of its Subsidiaries from discontinuing the operation and maintenance of any
of its Properties, if such discontinuance is, in the judgment of the Company,
both desirable in the conduct of the business of the Company and its
Subsidiaries, taken as a whole, and not disadvantageous in any material respect
to the Holders.
The Company shall, and shall cause each of its Subsidiaries to, insure and
keep insured, with financially sound and reputable insurers, so much of their
respective Properties and in such amounts as is usually and customarily insured
by Persons engaged in a similar business with respect to Properties of a similar
character against loss by fire and the extended coverage perils. None of the
Company or any of its Subsidiaries shall maintain a system of self-insurance in
lieu of or in combination with the foregoing insurance with respect to its
Properties; provided that deductibles under the insurance policy or policies of
the Company and its Subsidiaries shall not be considered to be self-insurance as
long as such deductibles accord with financially sound and approved practices of
Persons owning or operating Properties of a similar character and maintaining
similar insurance coverage.
The Company shall, and shall cause each of its Subsidiaries to, keep proper
books and records of accounts in which full and correct entries will be made of
all its business transactions in accordance with GAAP. The Company shall cause
the books and records of accounts of the Company and its Subsidiaries to be
examined, either on a consolidated or on an individual basis, by one or more
firms of independent public accountants not less frequently than annually. The
Company shall, and shall cause each of its Subsidiaries to, prepare its
financial statements in accordance with GAAP.
The Company shall, and shall cause each of its Subsidiaries to, comply with
all Legal Requirements and to obtain any licenses, permits, franchises or other
authorizations, including Gaming Licenses, from Governmental Authorities
necessary to the ownership or operation of its Properties or to the conduct of
its business.
Notwithstanding the foregoing provisions in this covenant, failure by the
Company or any of its Subsidiaries to comply with such provisions shall not be
deemed to be a breach of such provisions to the extent that such failure would
not have a material adverse effect on the Company and its Subsidiaries, taken as
a whole.
Limitation on Activities of the Company. The Company shall not, and shall
not permit any of its Restricted Subsidiaries to, engage in (through acquisition
or otherwise) any business other than a Related Business.
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Limitation on Status as an Investment Company. The Company shall not, and
shall not permit any of its Subsidiaries to, become an "investment company" (as
that term is defined in the Investment Company Act of 1940), to the extent it is
subject to regulation under the Investment Company Act, except for Subsidiaries
established for the purpose of financing the operating businesses of the Company
and its Subsidiaries.
RELEASE OF GUARANTORS
If all the Capital Stock of a Guarantor is sold by the Company or any
Subsidiary or upon the consolidation or merger of a Guarantor with or into any
other person other than the Company or a Subsidiary where the surviving entity
to such consolidation or merger is not a Subsidiary of the Company, in
circumstances where such sale, consolidation or merger is not prohibited under
the covenant "-- Limitation on Asset Sales", such Guarantor shall be deemed
automatically and unconditionally released and discharged from all obligations
under its Guaranty and the Indenture without any further action required on the
part of the Trustee or any Holder.
MERGER, CONSOLIDATION AND SALE OF ASSETS
Neither the Company nor any Guarantor shall merge or consolidate with or
into any other entity (other than a merger or consolidation of a Guarantor with
or into the Company or another Guarantor, and other than a merger or
consolidation of a Guarantor where the surviving entity is not the Company or a
Subsidiary of the Company) or in one transaction or a series of related
transactions sell, convey, assign, transfer, lease or otherwise dispose of all
or substantially all of its Property unless: (i) the entity formed by or
surviving any such consolidation or merger (if the Company or such Guarantor is
not the surviving entity) or the Person to which such sale, assignment,
transfer, lease or conveyance is made (the "Successor") (a) shall be a
corporation organized and existing under the laws of the United States of
America or a State thereof or the District of Columbia and such corporation
expressly assumes, by supplemental indenture satisfactory to the Trustee,
executed and delivered to the Trustee by such corporation, the due and punctual
payment of the principal, premium, if any, and interest on all the Notes,
according to their tenor, and the due and punctual performance and observance of
all the covenants and conditions of the Indenture to be performed by the Company
or such Guarantor, as the case may be and (b) the Successor shall have all
Gaming Licenses required to operate all Gaming Facilities to be owned by such
Successor; (ii) in the case of a sale, transfer, assignment, lease, conveyance
or other disposition of all or substantially all of the Company's Property or of
such Guarantor's Property, such Property shall have been transferred as an
entirety or virtually as an entirety to one Person; (iii) immediately before and
after giving effect to such transaction or series of transactions on a pro forma
basis, no Default or Event of Default shall have occurred and be continuing;
(iv) immediately after giving effect to such transaction or series of
transactions on a pro forma basis (including, without limitation, any
Indebtedness Incurred or anticipated to be Incurred in connection with such
transaction or series of transactions), the Company or the Successor to the
Company, as the case may be, would be able to Incur at least $1.00 of additional
Indebtedness under the first paragraph of the covenant entitled "-- Limitation
of Indebtedness of the Company"; and (v) immediately after giving effect to such
transaction or series of transactions on a pro forma basis including, without
limitation, any Indebtedness Incurred or anticipated to be Incurred in
connection with such transaction or series of transactions), the Company or the
Successor to the Company shall have a Consolidated Net Worth equal to or greater
than the Consolidated Net Worth of the Company immediately prior to the
transaction or series of transactions.
SEC REPORTS
The Indenture provides that whether or not required by the rules and
regulations of the Commission, so long as any Notes are outstanding, the Company
will file with the Commission and furnish to the Trustee and Holders such annual
reports and such information, documents and other reports as are specified in
Sections 13 and 15(d) of the Exchange Act and the rules and regulations
thereunder and applicable to a U.S. corporation subject to such Sections and the
rules and regulations thereunder, such
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information, documents and other reports to be so filed and provided at the
times specified for the filing of such information, documents and reports under
such Sections and the rules and regulations thereunder.
EVENTS OF DEFAULT
The following events are defined in the Indenture as "Events of Default":
(i) default with respect to payment of interest on any of the Notes when it
becomes due and payable, and the continuance of such default for a period of 30
days; (ii) default with respect to payment of principal or premium, if any, on
any of the Notes when due at maturity, upon acceleration, required purchase or
otherwise; (iii) failure by the Company or any Guarantor to observe, perform or
comply with the covenants and agreements described in "Merger, Consolidation and
Sale of Assets" herein; (iv) failure by the Company or the Guarantors to
observe, perform or comply with any of the other covenants and agreements in the
Indenture and such failure to observe, perform or comply continues for a period
of 30 days after receipt by the Company of a written notice from the Trustee or
Holders of not less than 25% of aggregate principal amount of the Notes than
outstanding; (v) Indebtedness of the Company or any Restricted Subsidiary is not
paid when due within any applicable grace period or is accelerated by the
holders thereof and, in either case, the total amount of such unpaid or
accelerated Indebtedness exceeds $10 million; (vi) the entry by a court of
competent jurisdiction of one or more judgments or orders against the Company or
any Restricted Subsidiary in an uninsured aggregate amount in excess of $10
million and such judgment or order is not discharged, waived, stayed or
satisfied for a period of 60 consecutive days; (vii) certain events of
bankruptcy, insolvency or reorganization affecting the Company or any Restricted
Subsidiary; (viii) any revocation, suspension or loss of any Gaming License
which results in the cessation of business for a period of more than 90
consecutive days of the business of any Gaming Facility owned, leased or
operated directly or indirectly by the Company or any of its Subsidiaries (other
than any voluntary relinquishment of a Gaming License if such relinquishment is,
in the reasonable, good faith judgment of the Board of Directors of the Company,
evidenced by a Board Resolution, both desirable in the conduct of the business
of the Company and its Subsidiaries, taken as a whole, and not disadvantageous
in any material respect to the Holders); and (ix) any Guaranty ceases to be in
full force and effect (other than pursuant to the terms of the Indenture) or is
declared null and void or any Guarantor denies that it has any further liability
under its Guaranty or gives notice to such effect.
The Indenture provides that the Trustee, within 90 days after the
occurrence of any continuing Default or Event of Default that is known to the
Trustee, will give notice to the Holders; provided, however, that, except in the
case of a default in payment of principal of or interest on the Notes, the
Trustee may withhold such notice as long as it is good faith determines that
such withholding is in the interest of the Holders.
The Indenture provides that if an Event of Default with respect to the
Notes (other than an Event of Default resulting from certain events of
bankruptcy, insolvency or reorganization with respect to the Company or a
Guarantor) shall have occurred and be continuing, the Trustee or the registered
holders of not less than 25% in aggregate principal amount of the Notes then
outstanding may accelerate the maturity of all the Notes in which event the
Notes shall become immediately due and payable; provided, however, that after
such acceleration but before a judgment or decree based on acceleration is
obtained by the Trustee, the registered holders of a majority in aggregate
principal amount of the Notes then outstanding, may, under certain
circumstances, rescind and annul such acceleration if all Events of Default,
other than the nonpayment of accelerated principal, have been cured or waived as
provided in the Indenture. In case an Event of Default resulting from certain
events of bankruptcy, insolvency or reorganization with respect to the Company
or a Guarantor shall occur, the Notes shall be due and payable immediately
without any declaration or other act on the part of the Trustee or the Holders.
The Holders of a majority in principal amount of the Notes then outstanding
shall have the right to waive any existing Default with respect to the Notes or
compliance with any provision of the Indenture or the Notes and to direct the
time, method and place of conducting any proceeding for any remedy available to
the Trustee, subject to certain limitations specified in the Indenture.
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No Holder will have any right to institute any proceeding with respect to
the Indenture or for any remedy thereunder, unless: (i) such Holder shall have
previously given to the Trustee written notice of a continuing Event of Default;
(ii) Holders of at least 25% in aggregate principal amount of the Notes then
outstanding shall have made written request and offered reasonable indemnity to
the Trustee to institute such proceeding as a trustee; and (iii) the Trustee
shall not have received from the Holders of a majority in aggregate principal
amount of the Notes then outstanding a direction inconsistent with such request
and shall have failed to institute such proceeding within 60 days. However, such
limitations do not apply to a suit instituted by a Holder for enforcement of
payment of the principal of and premium, if any, or interest on such Note on or
after the respective due dates expressed in such Note.
The Company shall deliver to the Trustee, within 30 days after the
occurrence thereof, written notice in the form of an Officers' Certificate of
any Event of Default, its status and what action the Company is taking or
proposes to take with respect hereto.
AMENDMENTS AND WAIVERS
Subject to certain exceptions, the Indenture, the Notes and the Guaranties
may be amended with the consent of the Holders of a majority in principal amount
of the Notes then outstanding (including consents obtained in connection with a
tender offer or exchange for the Notes) and any past default or compliance with
any provisions may also be waived with the consent of the Holders of a majority
in principal amount of the Notes then outstanding. However, without the consent
of each Holder of an outstanding Note, no amendment may, among other things, (i)
reduce the amount of Notes whose holders must consent to an amendment or waiver,
(ii) reduce the rate of or extend the time for payment of interest on any Note,
(iii) reduce the principal of or extend the Stated Maturity of any Note, (iv)
make any Note payable in money other than that stated in the Note, (v) impair
the right of any Holder to receive payment of principal of and interest on such
Holder's Notes on or after the due dates therefor or to institute suit for the
enforcement of any payment on or with respect to such Holder's Notes, (vi)
subordinate in right of payment, or otherwise subordinate, the Notes to any
other obligation of the Company or any Guarantor or (vii) release any security
interest in favor of the Notes or Guaranties.
Without the consent of any Holder of the Notes, the Company, the Guarantors
and the Trustee may amend the Indenture to cure any ambiguity, omission, defect
or inconsistency, to provide for the assumption by a successor corporation of
the obligations of the Company or any Guarantor under the Indenture, to release
a Guarantor from its Guaranty if such Guarantor is sold in compliance with the
provisions set forth in "Release of Guarantors" above, to provide for
uncertificated Notes in addition to or in place of certificated Notes (provided
that the uncertificated Notes are issued in registered form for purposes of
Section 163(f) of the Internal Revenue Code, or in a manner such that the
uncertificated Notes are described in Section 163(f)(2)(B) of the Internal
Revenue Code), to secure the Notes, to add to the covenants of the Company or
any Guarantor for the benefit of the Holders or to surrender any right or power
conferred upon the Company or any Guarantor, to make any change that does not
adversely affect the rights of any Holder or to comply with any requirement of
the Commission in connection with the qualification of the Indenture under the
Trust Indenture Act.
The consent of the Holders is not necessary under the Indenture to approve
the particular form of any proposed amendment. It is sufficient if such consent
approves the substance of the proposed amendment.
After an amendment under the Indenture becomes effective, the Company is
required to mail to Holders of the Notes a notice briefly describing such
amendment. However, the failure to give such notice to all Holders, or any
defect therein, will not impair or affect the validity of the amendment.
DISCHARGE OF INDENTURE AND DEFEASANCE
When (i) the Company delivers to the Trustee all outstanding Notes (other
than Notes replaced because of mutilation, loss, destruction or wrongful taking)
for cancellation or (ii) all outstanding Notes have become due and payable,
whether at maturity or as a result of the mailing of a notice of redemption
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as described above, and the Company irrevocably deposits with the Trustee funds
sufficient to pay at maturity or upon redemption all outstanding Notes,
including interest thereon, and if in either case the Company pays all other
sums payable hereunder by the Company, then the Indenture shall, subject to
certain surviving provisions, cease to be of further effect. The Trustee shall
acknowledge satisfaction and discharge of the Indenture on demand of the Company
accompanied by an Officers' Certificate and an Opinion of Counsel and at the
cost and expense of the Company.
Subject to conditions to defeasance described below and the survival of
certain provisions, the Company at any time may terminate (i) all its
obligations under the Notes and the Indenture ("legal defeasance option") or
(ii) its obligations under certain restrictive covenants and the related Events
of Default ("covenant defeasance option"). The Company may exercise its legal
defeasance option notwithstanding its prior exercise of its covenant defeasance
option.
If the Company exercises its legal defeasance option, payment of the Notes
may not be accelerated because of an Event of Default. If the Company exercises
its covenant defeasance option, payment of the Notes may not be accelerated
because of an Event of Default specified in clause (ii) of the immediately
preceding paragraph.
The Company may exercise its legal defeasance option or its covenant
defeasance option only if:
(a) the Company irrevocably deposits in trust with the Trustee money
or U.S. Government Obligations for the payment of principal and interest on
the Notes to maturity or redemption, as the case may be; and
(b) certain other conditions, including delivery of certain Opinions
of Counsel, are met.
THE TRUSTEE
[ ] is to be the Trustee under the Indenture and has been
appointed by the Company as Registrar and Paying Agent with regard to the Notes.
The Indenture provides that, except during the continuance of an Event of
Default, the Trustee will perform only such duties as are specifically set forth
in the Indenture. During the existence of an Event of Default, the Trustee will
exercise such rights and powers vested in it under the Indenture and use the
same degree of care and skill in its exercise as a prudent person would exercise
under the circumstances in the conduct of such person's own affairs.
GOVERNING LAW
The Indenture and the Notes will be governed by, and construed in
accordance with, the laws of the State of New York but without giving effect to
applicable principles of conflicts of law to the extent that the application of
the law of another jurisdiction would be required thereby.
TRANSFER AND EXCHANGE
Holders may transfer or exchange their Notes in accordance with the
Indenture. The Registrar under the Indenture may require a holder, among other
things, to furnish appropriate endorsements and transfer documents, and to pay
any taxes and fees required by law or permitted by the Indenture. The Registrar
is not required to transfer or exchange any Note selected for redemption. Also,
the Registrar is not required to transfer or exchange any Note for a period of
15 days before selection of such Note to be redeemed.
The registered holder of a Note may be treated as the owner of it for all
purposes.
CERTAIN DEFINITIONS
Set forth below is a summary of certain of the defined terms used in the
Indenture. Reference is made to the Indenture for the full definition of all
such terms as well as any other capitalized terms used herein for which no
definition is provided.
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"Additional Assets" means (i) any Property (other than cash, cash
equivalents or securities) to be owned by the Company or a Restricted Subsidiary
and used in a Related Business, (ii) the costs of improving, restoring,
replacing or developing any Property owned by the Company or a Restricted
Subsidiary which is used in a Related Business or (iii) Investments in any other
Person engaged primarily in a Related Business (including the acquisition from
third parties of Capital Stock of such Person) as a result of which such other
Person becomes a Restricted Subsidiary in compliance with the procedure for
designation of Restricted Subsidiaries set forth below in the definition of
"Restricted Subsidiary".
"Affiliate" means, with respect to any Person, a Person (i) which directly
or indirectly through one or more intermediaries controls, or is controlled by,
or is under common control with, such Person, (ii) which directly or indirectly
through one or more intermediaries beneficially owns or holds 10% or more of any
class of the Voting Stock of such Person (or a 10% or greater equity interest in
a Person which is not a corporation) or (iii) of which 10% or more of any class
of the Voting Stock (or, in the case of a Person which is not a corporation, 10%
or more of the equity interest) is beneficially owned or held directly or
indirectly through one or more intermediaries by such Person. The term "control"
means the possession, directly or indirectly, of the power to direct or cause
the direction of the management and policies of a Person, whether through the
ownership of voting securities, by contract or otherwise.
"Asset Sale" means the sale, conveyance, transfer, lease or other
disposition, whether in a single transaction or a series of related transactions
(including, without limitation, dispositions pursuant to Sale/Leaseback
Transactions or pursuant to the merger of the Company or any of its Restricted
Subsidiaries with or into any person other than the Company or one of its
Restricted Subsidiaries, but not including any dispositions to the Company or
any of its Restricted Subsidiaries), by the Company or one of its Restricted
Subsidiaries to any Person other than the Company or one of its Restricted
Subsidiaries of (i) any of the Capital Stock or other ownership interests of any
Subsidiary of the Company or (ii) any other Property of the Company or any
Property of its Restricted Subsidiaries, in each case not in the ordinary course
of business of the Company or such Restricted Subsidiary.
"Attributable Indebtedness" means Indebtedness deemed to be Incurred in
respect of a Sale/ Leaseback Transaction and shall be, at the date of
determination, the present value (discounted at the actual rate of interest
implicit in such transaction, compounded annually), of the total obligations of
the lessee for rental payments during the remaining term of the lease included
in such Sale/Leaseback Transaction (including any period for which such lease
has been extended).
"Boyd Family" means William S. Boyd, any direct descendant or spouse of
such person, or any direct descendant of such spouse, and any trust or other
estate in which each person who has a beneficial interest, directly or
indirectly through one or more intermediaries, in Capital Stock of the Company
is one of the foregoing persons.
"Capital Lease Obligations" means Indebtedness represented by obligations
under a lease that is required to be capitalized for financial reporting
purposes in accordance with GAAP and the amount of such Indebtedness shall be
the capitalized amount of such obligations determined in accordance with GAAP.
For purposes of "-- Certain Covenants -- Limitation on Liens", Capital Lease
Obligations shall be deemed secured by a Lien on the property being leased.
"Capital Stock" means, with respect to any Person, any and all shares or
other equivalents (however designated) of corporate stock, partnership interests
or any other participation, right, warrants, options or other interest in the
nature of an equity interest in such Person, but excluding any debt security
convertible or exchangeable into such equity interest.
A "Change of Control" shall be deemed to occur if (i) any "person" or
"group" (within the meaning of Sections 13(d)(3) and 14(d)(2) of the Exchange
Act or any successor provision to either of the foregoing, including any group
acting for the purpose of acquiring, holding or disposing of securities within
the meaning of Rule 13d-5(b)(1) under the Exchange Act), other than the
Permitted Holders and other than a Restricted Subsidiary, becomes the
"beneficial owner" (as defined in Rule 13d-3 under the Exchange Act, except that
a Person shall be deemed to have "beneficial ownership" of all shares that
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any such person has the right to acquire, whether such right is exercisable
immediately or only after the passage of time) of 50% or more of the total
voting power of all classes of the Voting Stock of the Company and/or warrants
or options to acquire such Voting Stock, calculated on a fully diluted basis;
provided that for purposes of this clause (i), the members of the Boyd Family
shall be deemed to beneficially own any Voting Stock of a corporation held by
any other corporation (the "parent corporation") so long as the members of the
Boyd Family beneficially own (as so defined), directly or indirectly through one
or more intermediaries, in the aggregate 50% or more of the total voting power
of the Voting Stock of the parent corporation; (ii) the sale, lease, conveyance
or other transfer of all or substantially all of the Property of the Company
(other than to any Restricted Subsidiary) shall have occurred; (iii) the
stockholders of the Company shall have approved any plan of liquidation or
dissolution of the Company; (iv) the Company consolidates with or merges into
another Person or any Person consolidates with or merges into the Company in any
such event pursuant to a transaction in which the outstanding Voting Stock of
the Company is reclassified into or exchanged for cash, securities or other
property, other than any such transaction where (a) the outstanding Voting Stock
of the Company is reclassified into or exchanged for Voting Stock of the
surviving corporation that is Capital Stock and (b) the holders of the Voting
Stock of the Company immediately prior to such transaction own, directly or
indirectly, not less than a majority of the Voting Stock of the surviving
corporation immediately after such transaction in substantially the same
proportion as before the transaction; or (v) during any period of two
consecutive years, individuals who at the beginning of such period constituted
the Company's Board of Directors (together with any new directors whose election
or appointment by such board or whose nomination for election by the
stockholders of the Company was approved by a vote of either (A) 66 2/3% of the
directors then still in office who were either directors at the beginning of
such period or whose election or nomination for election was previously so
approved or (B) members of the Boyd Family who beneficially own (as defined for
purposes of clause (i) above), directly or indirectly through one or more
intermediaries, in the aggregate 50% or more of the total voting power of the
Voting Stock of the Company) cease for any reason to constitute a majority of
the Company's Board of Directors then in office.
"Consolidated EBITDA" means, for any period, without duplication,
Consolidated Net Income, plus (i) Consolidated Fixed Charges, (ii) provisions
for taxes based on income to the extent such taxes were deducted in determining
Consolidated Net Income, (iii) consolidated depreciation expense, (iv)
consolidated amortization expense, and (v) other noncash items reducing
Consolidated Net Income, minus (vi) other noncash items increasing Consolidated
Net Income, all as determined on a consolidated basis for the Company and its
Restricted Subsidiaries in conformity with GAAP.
"Consolidated Fixed Charge Coverage Ratio" means the ratio of (i)
Consolidated EBITDA during the Reference Period to (ii) the aggregate amount of
Consolidated Fixed Charges during the Reference Period.
"Consolidated Fixed Charges" means, for any period, the total interest
expense of the Company and its consolidated Subsidiaries (other than
Unrestricted Subsidiaries), including (i) the interest component of Capital
Lease Obligations, (ii) one-third of the rental expense attributable to
operating leases, (iii) amortization of Indebtedness discount and commissions,
discounts and other similar fees and charges owed with respect to Indebtedness,
(iv) noncash interest payments, (v) commissions, discounts and other fees and
charges owed with respect to letters of credit and bankers' acceptance
financing, (vi) net costs pursuant to Interest Rate Agreements, (vii) dividends
on all Preferred Stock of Restricted Subsidiaries held by Persons other than the
Company or a Restricted Subsidiary, (viii) interest attributable to the
Indebtedness of any other Person for which the Company or any Restricted
Subsidiary is responsible or liable as obligor, guarantor or otherwise
(including Indebtedness Guaranteed pursuant to Investment Guarantees) and (viii)
any dividend or distribution, whether in cash, property or securities, on
Disqualified Stock of the Company.
"Consolidated Net Income" means for any period, the net income (loss) of
the Company and its Subsidiaries; provided, however, that there shall not be
included in such Consolidated Net Income (i) any net income (loss) of any Person
if such Person is not a Restricted Subsidiary, except that subject to the
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limitations contained in (iv) below, (a) the Company's equity in the net income
of any such Person for such period shall be included in such Consolidated Net
Income up to the aggregate amount of cash actually distributed by such Person
during such period to the Company or a Restricted Subsidiary as a dividend or
other distribution (subject, in the case of a dividend or other distribution to
a Restricted Subsidiary, to the limitations contained in clause (iii) below and
(b) the Company's equity in a net loss of any such Person (other than an
Unrestricted Subsidiary) for such period shall be included in determining such
Consolidated Net Income, (ii) any net income (loss) of any Person acquired by
the Company or a Subsidiary in a pooling of interests transaction for any period
prior to the date of such acquisition, (iii) any net income (loss) of any
Restricted Subsidiary if such Subsidiary is subject to restrictions, directly or
indirectly, on the payment of dividends or the making of distributions by such
Restricted Subsidiary, directly or indirectly, to the Company, except that (a)
subject to the limitations contained in (iv) below, the Company's equity in the
net income of any such Restricted Subsidiary for such period shall be included
in such Consolidated Net Income up to the aggregate amount of cash that could
have been distributed by such Restricted Subsidiary during such period to the
Company or another Restricted Subsidiary as a dividend (subject, in the case of
a dividend to another Restricted Subsidiary, to the limitation contained in this
clause) and (b) the Company's equity in a net loss of any such Restricted
Subsidiary for such period shall be included in determining such Consolidated
Net Income, (iv) any gain or loss realized upon the sale or other disposition of
any Property of the Company or its consolidated Subsidiaries (including pursuant
to any Sale and Leaseback Transaction) which is not sold or otherwise disposed
of in the ordinary course of business and any gain or loss realized upon the
sale or other disposition of any Capital Stock of any Person, (v) any
extraordinary gain or loss and (vi) the cumulative effect of a change in
accounting principles.
"Consolidated Net Worth" means the total of the amounts shown on the
balance sheet of the Company and its Restricted Subsidiaries, determined on a
consolidated basis in accordance with GAAP, as of the end of the most recent
fiscal quarter of the Company ending at least 45 days prior to the taking of any
action for the purpose of which the determination is being made, as (i) the par
or stated value of all outstanding Capital Stock of the Company plus (ii)
paid-in capital or capital surplus relating to such Capital Stock plus (iii) any
retained earnings or earned surplus less (A) any accumulated deficit and (B) any
amounts attributable to Disqualified Stock.
"Credit Facility" means the revolving credit facility, as amended from time
to time, among the Company, certain Subsidiaries and a syndicate of banks, and
any extensions, revisions, refinancings or replacements thereof by an
institutional lender or syndicate of institutional lenders.
"Currency Exchange Protection Agreement" means, in respect of a Person, any
foreign exchange contract, currency swap agreement, currency option or other
similar agreement or arrangement designed to protect such Person against
fluctuations in currency exchange rates.
"Default" means any event which is, or after notice or passage of time or
both would be, an Event of Default.
"Disqualified Stock" of a Person means any Capital Stock of such Person:
(i) that by its terms (or by the terms of any security into which it is
convertible or for which it is exchangeable) or otherwise (a) matures or is
mandatorily redeemable pursuant to a sinking fund obligation or otherwise, (b)
is or may become redeemable or repurchaseable at the option of the holder
thereof, in whole or in part, or (c) is convertible or exchangeable or
exercisable for Indebtedness; and (ii) as to which the maturity, mandatory
redemption, conversion or exchange or redemption at the option of the holder
thereof occurs, or may occur, in the case of each of clauses (i) or (ii) on or
prior to the first anniversary of the Stated Maturity of the Notes; provided,
however, that such Capital Stock of the Company or any of its Subsidiaries shall
not constitute Disqualified Stock if it is redeemable prior to the first
anniversary of the Stated Maturity of the Notes only if: (A) the holder or a
beneficial owner of such Capital Stock is required to qualify under the Gaming
Laws and does not so qualify, or (B) the Board of Directors of the Company
determines in its reasonable, good faith judgment, as evidenced by a Board
Resolution, that as a result of a holder or beneficial owner owning such Capital
Stock, the Company or any of its Subsidiaries has lost or
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may lose any Gaming License, which if lost or not reinstated, as the case may
be, would have a material adverse effect on the business of the Company and its
Subsidiaries, taken as a whole, or would restrict the ability of the Company or
any of its Subsidiaries to conduct business in any gaming jurisdiction.
"EPH" means East Peoria Hotel, Inc., an Illinois corporation.
"Event of Loss" means, with respect to any Property, any (i) loss,
destruction or damage of such Property; or (ii) any condemnation, seizure or
taking, by exercise of the power of eminent domain or otherwise, of such
Property, or confiscation or requisition of the use of such Property.
"Exchange Act" means the Securities Exchange Act of 1934, as amended.
"Fair Market Value" means with respect to any Property, the price which
could be negotiated in an arm'slength free market transaction, for cash, between
a willing seller and a willing buyer, neither of whom is under undue pressure or
compulsion to complete the transaction. Fair Market Value will be determined,
except as otherwise provided, (i) if such property or asset has a Fair Market
Value of less than $5 million, by any Officer of the Company or (ii) if such
property or asset has a Fair Market Value in excess of $5 million, by a majority
of the Board of Directors of the Company and evidenced by a resolution, dated
within 30 days of the relevant transaction, of such Board delivered to the
Trustee.
"GAAP" means generally accepted accounting principles in effect on the date
of the Indenture.
"Gaming Authority" means any of the Nevada Gaming Commission, the Nevada
Gaming Control Board, the Mississippi Gaming Commission, the Mississippi State
Tax Commission, the Missouri Gaming Commission, the National Indian Gaming
Commission, the Bureau of Indian Affairs, the Illinois Gaming Board and any
other agency (including, without limitation, any agency established by a
federally-recognized Indian tribe to regulate gaming on such tribe's
reservation) which has, or may at any time after the date of the Indenture have,
jurisdiction over the gaming activities of the Company or any of its
Subsidiaries or any successor to such authority.
"Gaming Facility" means any gaming establishment and other property or
assets directly ancillary thereto or used in connection therewith, including any
building, restaurant, hotel, theater, parking facilities, retail shops, land,
golf courses and other recreation and entertainment facilities, vessel, barge,
ship and equipment or 100% of the equity interest of a Person the primary
business of which is ownership and operation of any of the foregoing.
"Gaming Laws" means the gaming laws of a jurisdiction or jurisdictions to
which the Company or any of its Subsidiaries is, or may at any time after the
date of the Indenture be, subject.
"Gaming License" means any license, permit, franchise or other
authorization from any Governmental Authority required on the date of the
Indenture or at any time thereafter to own, lease, operate or otherwise conduct
the gaming business of the Company and its Subsidiaries, including all licenses
granted under Gaming Laws and other Legal Requirements.
"Guarantee" means any obligation, contingent or otherwise, of any Person
directly or indirectly guaranteeing any Indebtedness of any other Person and any
obligation, direct or indirect, contingent or otherwise, of such first Person
(i) to purchase or pay (or advance or supply funds for the purchase or payment
of) such Indebtedness of such other Person (whether arising by virtue of
partnership arrangements, or by agreements to keep-well, to purchase assets,
goods, securities or services, to take-or-pay or to maintain financial statement
conditions or otherwise) or (ii) entered into for the purpose of assuring in any
other manner the obligee of such Indebtedness or other obligation of the payment
thereof or to protect such obligee against loss in respect thereof (in whole or
in part); provided, however, that the term "Guarantee" shall not include
endorsements for collection or deposit in the ordinary course of business. The
term "Guarantee" used as a verb has a corresponding meaning.
"Incur" means, with respect to any Indebtedness or other obligation of any
Person, to create, issue, incur (by conversion, exchange or otherwise), extend,
assume, Guarantee or become liable in respect of such Indebtedness or other
obligation or the recording, as required pursuant to GAAP or otherwise, of
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any such Indebtedness or obligation on the consolidated balance sheet of such
Person including by merger or operation of law (and "Incurrence", "Incurred",
"Incurrable" and "Incurring" shall have meanings correlative to the foregoing).
The accretion of principal of a noninterest bearing or other discount security
shall be deemed the Incurrence of Indebtedness.
"Indebtedness" means (without duplication), with respect to any Person, any
indebtedness, secured or unsecured, contingent or otherwise, which is for
borrowed money (whether or not the recourse of the lender is to the whole of the
assets of such Person or only to a portion thereof), or the principal amount of
such indebtedness evidenced by bonds, notes, debentures or similar instruments
or representing the balance deferred and unpaid of the purchase price of any
property (excluding any balances that constitute customer advance payments and
deposits, accounts payable or trade payables, and other accrued liabilities
arising in the ordinary course of business) if and to the extent any of the
foregoing indebtedness would appear as a liability upon a balance sheet of such
Person prepared in accordance with generally accepted accounting principles, and
shall also include, to the extent not otherwise included (i) any Capital Lease
Obligations, (ii) Indebtedness of other Persons secured by a Lien to which the
property or assets owned or held by such Person is subject, whether or not the
obligation or obligations secured thereby shall have been assumed (the amount of
such Indebtedness being deemed to be the lesser of the value of such property or
assets or the amount of the Indebtedness so secured), (iii) Guarantees of
Indebtedness of other Persons, (iv) any Disqualified Stock, (v) any Attributable
Indebtedness, (vi) all obligations of such Person in respect of letters of
credit, bankers' acceptances or other similar instruments or credit transactions
issued for the account of such Person (including reimbursement obligations with
respect thereto), other than obligations with respect to letters of credit
securing obligations (other than obligations described in this definition)
entered into in the ordinary course of business of such Person to the extent
such letters of credit are not drawn upon or, if and to the extent drawn upon,
such drawing is reimbursed no later than the third Business Day following
receipt by such Person of a demand for reimbursement following payment on the
letter of credit, (vii) in the case of the Company, Preferred Stock of its
Restricted Subsidiaries and (viii) obligations pursuant to any Interest Rate
Agreement or Currency Rate Protection Agreement. Notwithstanding the foregoing,
Indebtedness shall not include any interest or accrued interest until due and
payable. For purposes of this definition, the maximum fixed repurchase price of
any Disqualified Stock or Preferred Stock that does not have a fixed repurchase
price shall be calculated in accordance with the terms of such Disqualified
Stock or Preferred Stock as if such Disqualified Stock or Preferred Stock were
repurchased on any date on which Indebtedness shall be required to be determined
pursuant to the Indenture; provided, however, that if such Disqualified Stock or
Preferred Stock is not then permitted to be repurchased, the repurchase price
shall be the book value of such Disqualified Stock or Preferred Stock. The
amount of Indebtedness of any Person at any date shall be the outstanding
balance at such date of all unconditional obligations as described above and the
maximum liability of any other obligations described in clauses (i) through
(viii) above in respect thereof at such date.
"Independent Advisor" means, an investment banking firm of national
standing with non-investment grade debt underwriting experience or any third
party appraiser of national standing; provided, however, that such firm or
appraiser is not an Affiliate of the Company.
"Interest Rate Agreement" means, for any Person, any interest rate swap
agreement, interest rate cap agreement, interest rate collar agreement or other
similar agreement.
"Investment" by any Person means any direct or indirect loan, advance or
other extension of credit or capital contribution (by means of transfers of cash
or other Property to others or payments for Property or services for the account
or use of others, or otherwise) to, or Incurrence of an Investment Guarantee or
a Guarantee of any obligation of, or purchase or acquisition of Capital Stock,
bonds, notes, debentures or other securities or evidence of Indebtedness issued
by, any other Person, including the redesignation by the Board of Directors of
the Company of a Person to be an Unrestricted Subsidiary "Unrestricted
Subsidiary". In determining the amount of any Investment in respect of any
Property other than cash, such Property shall be valued at its Fair Market Value
at the time of such Investment.
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"Investment Grade Rating" means a rating equal to or higher than Baa3 (or
the equivalent) by Moody's (or any successor to the rating agency business
thereof), BBB- (or the equivalent) by S&P (or any successor to the rating agency
business thereof) and BBB- (or the equivalent) by Duff & Phelps Credit Rating
Co. (or any successor to the rating agency business thereof).
"Investment Grade Status" means any time at which the ratings of the Notes
by two of three of Moody's (or any successor to the rating agency business
thereof), S&P (or any successor to the rating agency business thereof) and Duff
& Phelps Credit Rating Co. (or any successor to the rating agency business
thereof) are Investment Grade Ratings; provided, however, that one of such two
must be Moody's or S&P.
"Investment Guarantee" means any Guarantee by the Company or a Restricted
Subsidiary of Indebtedness of a Permitted Joint Venture; provided, such
Guarantee complies with the requirements of clause (viii) of "-- Limitation on
Restricted Payments"; provided, further, that only such Indebtedness of such
Permitted Joint Venture Guaranteed by the Company or a Restricted Subsidiary
that matures by its terms prior to the time (if any) that the ability of the
Company or a Restricted Subsidiary to control the day-to-day operations of such
Permitted Joint Venture (pursuant to a management contract or otherwise) is
scheduled to expire may constitute Indebtedness subject to an Investment
Guarantee.
"Issue Date" means the date on which the Notes are initially issued.
"Legal Requirements" means all laws, statutes and ordinances and all rules,
orders, rulings, regulations, directives, decrees, injunctions and requirements
of all Governmental Authorities, that are now or may hereafter be in existence,
and that may be applicable to the Company or any Subsidiary or Affiliate thereof
or the Trustee (including building codes, zoning and environmental laws,
regulations and ordinances and Gaming Laws), as modified by any variances,
special use permits, waivers, exceptions or other exemptions which may form time
to time be applicable.
"Lien" means with respect to any Property of any Person, any mortgage or
deed of trust, pledge, hypothecation, assignment, deposit arrangement, security
interest, lien, charge, easement (other than any easement not materially
impairing usefulness or marketability), encumbrance, preference, priority, or
other security agreement or preferential arrangement of any kind or nature
whatsoever on or with respect to such Property (including any Capital Lease
Obligation, conditional sale or other title retention agreement having
substantially the same economic effect as any of the foregoing). Any
Sale/Leaseback Transaction shall be deemed to constitute a Lien on the Property
which is the subject of such Sale/Leaseback Transaction securing the
Attributable Indebtedness represented thereby.
"Moody's" means Moody's Investors Service, Inc.
"Net Cash Proceeds" with respect to any issuance or sale of Capital Stock,
means the cash proceeds of such issuance or sale, net of attorney's fees,
accountants' fees, underwriters' or placement agents' fees, discounts or
commissions and brokerage, consultant and other fees actually Incurred in
connection with such issuance or sale and net of taxes paid or payable as a
result thereof.
"Net Proceeds" from any Asset Sale by any Person or its Restricted
Subsidiaries means cash and cash equivalents received in respect of the Property
sold net of (i) all reasonable out-of-pocket expenses of such Person or such
Restricted Subsidiary Incurred in connection with an Asset Sale of such type,
including, without limitation, all legal, title and recording tax expenses,
commissions and fee and expenses Incurred (but excluding any finder's fee or
broker's fee payable to any Affiliate of such Person) and all Federal, state,
provincial, foreign and local taxes arising in connection with such Asset Sale
that are paid or required to be accrued as a liability under GAAP by such Person
or its Restricted Subsidiaries, (ii) all payments made by such Person or its
Restricted Subsidiaries on any Indebtedness which is secured by such Property in
accordance with the terms of any Lien upon or with respect to such Property or
which must, by the terms of such Lien, or in order to obtain a necessary consent
to such Asset Sale or by applicable law, be repaid out of the proceeds from such
Asset Sale and (iii) all contractually required distributions and other payments
made to minority interest holders (but excluding distributions and payments to
Affiliates of such Person) in Restricted Subsidiaries of such Person as a result
of such Asset
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Sale; provided, however, that, in the event that any consideration for an Asset
Sale (which would otherwise constitute Net Proceeds) is required to be held in
escrow pending determination of whether a purchase price adjustment will be
made, such consideration (or any portion thereof) shall become Net Proceeds only
at such time as it is released to such Person or its Restricted Subsidiaries
from escrow; and provided further, however, that any noncash consideration
received in connection with an Asset Sale which is subsequently converted to
cash shall be deemed to be Net Proceeds at and from the time of such conversion.
"Non-Recourse Indebtedness" means Indebtedness of a Person to the extent
that under the terms thereof or pursuant to applicable law (i) no personal
recourse shall be had against such Person for the payment of the principal of or
interest or premium, if any, on such Indebtedness, and (ii) enforcement of
obligations on such Indebtedness is limited only to recourse against interests
in Property purchased with the proceeds of the Incurrence of such Indebtedness
and as to which neither the Company nor any of its Restricted Subsidiaries
provides any credit support or is liable.
"Officer" means the Chief Executive Officer, President, the Treasurer, or
any Executive Vice President or Vice President of the Company.
"Officers' Certificate" means a certificate signed by two Officers at least
one of whom shall be the principal executive officer, principal accounting
officer or principal financial officer of the Company.
"Opinion of Counsel" means a written opinion from legal counsel who is
acceptable to the Trustee. The counsel may be an employee of or counsel to the
Company or the Trustee.
"Par-A-Dice" means Par-A-Dice Gaming Corporation.
"Permitted FF&E Financing" means Indebtedness of the Company or any of its
Restricted Subsidiaries that is Incurred to finance the acquisition or lease
after the date of the Indenture of newly acquired or leased furniture, fixtures
or equipment ("FF&E") used directly in the operation of a Gaming Facility owned
or leased by the Company or its Restricted Subsidiaries and secured by a Lien on
such FF&E in an amount not to exceed 100% of the cost of the FF&E so purchased
or leased.
"Permitted Holders" means the Boyd Family and any group (as such term is
used in Sections 13(d) and 14(d) of the Exchange Act) comprised solely of
members of the Boyd Family.
"Permitted Investment" means an Investment by the Company or any Restricted
Subsidiary in (i) a Restricted Subsidiary or a Person which will, upon the
making of such Investment, become a Restricted Subsidiary; provided, however,
that the primary business of such Restricted Subsidiary is a Related Business;
(ii) another Person if as a result of such Investment such other Person is
merged or consolidated with or into, or transfers or conveys all or
substantially all its assets to, the Company or a Restricted Subsidiary;
provided, however, that such Person's primary business is a Related Business;
(iii) Temporary Cash Investments; (iv) receivables owing to the Company or any
Restricted Subsidiary, if created or acquired in the ordinary course of business
and payable or dischargeable in accordance with customary trade terms; provided,
however, that such trade terms may include such concessionary trade terms as the
Company or any such Restricted Subsidiary deems reasonable under the
circumstances; (v) payroll, travel and similar advances to cover matters that
are expected at the time of such advances ultimately to be treated as expenses
for accounting purposes and that are made in the ordinary course of business;
(vi) loans or advances to employees made in the ordinary course of business
consistent with past practices of the Company or such Restricted Subsidiary, as
the case may be; (vii) stock, obligations or securities received in settlement
of debts created in the ordinary course of business and owing to the Company or
any Restricted Subsidiary or in satisfaction or judgments; and (viii) securities
received pursuant to clause (ii) of the covenant "-- Limitation on Asset Sales;
Events of Loss".
"Permitted Joint Venture" means a Person in which a Permitted Joint Venture
Investment has been made by the Company or any Restricted Subsidiary.
"Permitted Joint Venture Investment" means any Investment in a Person
primarily engaged or preparing to engage in a Related Business if, immediately
after giving effect to such Investment, the
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Company or a Restricted Subsidiary will own at least 50.0% of the shares of
Capital Stock (including at least 50.0% of the total voting power thereof) of
such Person, and will control the day-to-day operations of such Person pursuant
to a management contract or otherwise.
"Permitted Liens" means (i) Liens for taxes, assessments or governmental
charges or levies on the Property of the Company or any Restricted Subsidiary if
the same shall not at the time be delinquent or thereafter can be paid without
penalty, or are being contested in good faith and by appropriate proceedings;
(ii) Liens imposed by law, such as carriers', warehousemen's and mechanics'
Liens and other similar Liens on the Property of the Company or any Restricted
Subsidiary which secure payment of obligations arising in the ordinary course of
business; (iii) Liens on the Property of the Company or any Restricted
Subsidiary in favor of issuers of performance bonds and surety bonds obtained in
the ordinary course of business; (iv) other Liens on the Property of the Company
or any Restricted Subsidiary incidental to the conduct of their respective
businesses or the ownership of their respective Properties which were not
created in connection with the Incurrence of Indebtedness or the obtaining of
advances or credit and which do not in the aggregate materially detract from the
value of their respective Properties or materially impair the use thereof in the
operation of their respective businesses; (v) pledges or deposits by the Company
or any Restricted Subsidiary under workmen's compensation laws, unemployment
insurance laws or similar legislation, or good faith deposits in connection with
bids, tenders, contracts (other than for the payment of Indebtedness) or leases
to which the Company or any Restricted Subsidiary is a party, or deposits to
secure public or statutory obligations of the Company or any Restricted
Subsidiary, or deposits for the payment of rent, in each case Incurred in the
ordinary course of business; (vi) utility easements, building restrictions and
such other encumbrances or charges against real property as are of a nature
generally existing with respect to properties of a similar character and do not
materially detract from the value of such Property; and (vii) Liens securing
obligations to the Trustee pursuant to the compensation and indemnity provisions
of the Indenture.
"Permitted Refinancing Indebtedness" means any renewals, extensions,
substitutions, refinancings or replacements of any Indebtedness, including any
successive extensions, renewals, substitutions, refinancings or replacements
(and including refinancings by the Company of Indebtedness of a Restricted
Subsidiary) so long as (i) the aggregate amount of Indebtedness represented
thereby is not increased by such renewal, extension, substitution, refinancing
or replacement, (ii) the average life and Stated Maturity is not shortened and
(iii) the new Indebtedness shall not be senior in right of payment to the
Indebtedness that is being extended, renewed, substituted, refinanced or
replaced; provided, however, that Permitted Refinancing Indebtedness shall not
include (a) Indebtedness of a Subsidiary that refinances Indebtedness of the
Company or another Subsidiary or (b) Indebtedness of the Company that refinances
the Indebtedness of an Unrestricted Subsidiary.
"Person" means any individual, corporation, company (including limited
liability company), partnership, joint venture, trust, unincorporated
organization or government or any agency or political subdivision thereof.
"Preferred Stock" means any Capital Stock of a Person, however designated,
which entitles the holder thereof to a preference with respect to dividends,
distributions or liquidation proceeds of such Person over the holders of other
Capital Stock issued by such Person.
"Property" means, with respect to any Person, any interest of such Person
in any kind of property or asset, whether real, personal or mixed, or tangible
or intangible, including, without limitation, Capital Stock in any other Person
(but excluding Capital Stock or other securities issued by such first Person).
"Rating Agencies" means S&P, Duff & Phelps Credit Rating Co. and Moody's or
any successor to the respective rating agency businesses thereof.
"Rating Decline" shall have occurred if at any date within 90 calendar days
after the date of public disclosure of the occurrence of a Change of Control
(which period will be extended for so long as the Company's debt ratings are
under publicly announced review for possible downgrading (or without an
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indication of the direction of a possible ratings change) by either Moody's or
S&P or their respective successors) the Notes no longer have Investment Grade
Status.
"Reference Period" means the period of four consecutive fiscal quarters
ending with the last full fiscal quarter immediately preceding the date of a
proposed Incurrence, Restricted Payment or other transaction.
"Related Business" means the business conducted (or proposed to be
conducted) by the Company and its Subsidiaries in connection with any Gaming
Facility and any and all reasonably related businesses necessary for, in
support, furtherance or anticipation of and/or ancillary to or in preparation
for, such business including, without limitation, the development, expansion or
operation of any Gaming Facility (including any land-based, dockside, riverboat
or other type of casino), owned, or to be owned, leased or managed by the
Company or one of its Subsidiaries.
"Related Person" means any legal or beneficial owner of 5% or more of any
class of Capital Stock of the Company or any of its Subsidiaries.
"Restricted Payment" means (i) any dividend or distribution (whether made
in cash, property or securities) declared or paid on or with respect to any
shares of Capital Stock of the Company or to the Company's stockholders except
for such dividends or distributions payable solely in Capital Stock of the
Company (other than Disqualified Stock of the Company); (ii) a payment made by
the Company or any Restricted Subsidiary (other than to the Company or a
Restricted Subsidiary) to purchase, redeem, acquire or retire any Capital Stock
of the Company or Capital Stock of any Affiliate of the Company or any warrants,
rights or options, to directly or indirectly purchase or acquire any such
Capital Stock or any securities exchangeable for or convertible into any such
Capital Stock; (iii) a payment made by the Company or any Restricted Subsidiary
to redeem, repurchase, defease or otherwise acquire or retire for value, prior
to any scheduled maturity, scheduled sinking fund or mandatory redemption
payment (other than the purchase, repurchase, or other acquisition of any
Indebtedness subordinate in right of payment to the Notes purchased in
anticipation of satisfying a sinking fund obligation, principal installment or
final maturity, in each case due within one year of the date of acquisition),
Indebtedness of the Company or any Guarantor which is subordinate (whether
pursuant to its terms or by operation of law) in right of payment to the Notes
or the Guaranties; or (iv) any Investment (other than a Permitted Investment) in
any Person.
"Restricted Subsidiary" means any Subsidiary of the Company that (A) has
not been designated by the Board of Directors of the Company as an Unrestricted
Subsidiary or (B) was an Unrestricted Subsidiary but has been redesignated by
the Board of Directors of the Company as a Restricted Subsidiary, in each case
as provided under the definition of Unrestricted Subsidiary; provided, however,
that no Subsidiary shall become a Restricted Subsidiary unless, immediately
after giving pro forma effect to such designation, the Company would be able to
incur at least $1.00 of additional Indebtedness pursuant to the provisions
described in the first paragraph under "Certain Covenants -- Limitation on
Indebtedness.
"Sale/Leaseback Transaction" means, with respect to any Person, any direct
or indirect arrangement pursuant to which Property is sold or transferred by
such Person or a Restricted Subsidiary of such Person and is thereafter leased
back from the purchaser or transferee thereof by such Person or one of its
Restricted Subsidiaries.
"S&P" shall mean Standard & Poor's Ratings Group.
"Stated Maturity" means, with respect to any security, the date specified
in such security as the fixed date on which a payment of principal of such
security is due and payable, including pursuant to any mandatory redemption
provision (but excluding any provision providing for the repurchase of such
security at the option of the holder thereof upon the happening of any
contingency beyond the control of the issuer unless such contingency has
occurred).
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"Subsidiary" of any Person means any corporation, association, partnership
or other business entity of which more than 50% of the total voting power of
shares of Capital Stock or other interests (including partnership interests)
entitled (without regard to the occurrence of any contingency) to vote in the
election of directors, managers or trustees thereof is at the time owned or
controlled, directly or indirectly, by (i) such Person, (ii) such Person and one
or more Subsidiaries of such Person or (iii) one or more Subsidiaries of such
Person.
"Temporary Cash Investments" means any of the following: (i) Investments in
U.S. Government Obligations maturing within 90 days of the date of acquisition
thereof, (ii) Investments in time deposit accounts, certificates of deposit and
money market deposits maturing within 90 days of the date of acquisition thereof
issued by a bank or trust company which is organized under the laws of the
United States of America or any state thereof having capital, surplus and
undivided profits aggregating in excess of $500,000,000 and whose long-term debt
is rated "A-3" or higher, "A-" or higher or "A-" or higher according to Moody's
Investors Service, Inc., Standard & Poor's Ratings Group or Duff & Phelps Credit
Rating Co. (or such similar equivalent rating by at least one "nationally
recognized statistical rating organization" (as defined in Rule 436 under the
Securities Act)), respectively, (iii) repurchase obligations with a term of not
more than 7 days for underlying securities of the types described in clause (i)
entered into with a bank meeting the qualifications described in clause (ii)
above, and (iv) Investments in commercial paper, maturing not more than 90 days
after the date of acquisition, issued by a corporation (other than the Company
or an Affiliate of the Company) organized and in existence under the laws of the
United States of America with a rating at the time as of which any Investment
therein is made of "P-1" (or higher) according to Moody's Investors Service,
Inc., "A-1" (or higher) according to Standard & Poor's Ratings Group or "A-1"
(or higher) according to Duff & Phelps Credit Rating Co. (or such similar
equivalent rating by at least one "nationally recognized statistical rating
organization" (as defined in Rule 436 under the Securities Act)).
"Unrestricted Subsidiary" means (i) any Subsidiary of the Company which at
the time of determination shall be an Unrestricted Subsidiary (as designated by
the Board of Directors of the Company) and (ii) any Subsidiary of an
Unrestricted Subsidiary. The Board of Directors of the Company may designate any
Subsidiary of the Company (including any newly acquired or newly formed
Subsidiary) to be an Unrestricted Subsidiary (unless such Subsidiary owns any
Capital Stock of or owns or holds any Lien on any Property of the Company or any
other Subsidiary of the Company which is not a Subsidiary of the Subsidiary to
be so designated); provided that either (A) the Subsidiary to be so designated
has total assets of $1,000 or less or (B) such designation is effective
immediately upon such entity becoming a Subsidiary of the Company. Subject to
clause (ii) above, the Board of Directors of the Company may redesignate any
Unrestricted Subsidiary to be a Restricted Subsidiary; provided that immediately
after giving pro forma effect to such redesignation, the Company would be able
to incur at least $1.00 of additional Indebtedness pursuant to the provisions
described in the first paragraph under "Certain Covenants -- Limitation on
Indebtedness of the Company".
Any such designation by the Company's Board of Directors will be evidenced
to the Trustee by filing with the Trustee a copy of the resolution of the Board
of Directors giving effect to such designation and an Officers' Certificate
certifying (i) that such designation complies with the foregoing provisions and
(ii) giving the effective date of such designation, such filing with the Trustee
to occur within 75 days after the end of the fiscal quarter of the Company in
which such designation is made (or, in the case of a designation made during the
last fiscal quarter of the Company's fiscal year, within 120 days after the end
of such fiscal year).
"U.S. Government Obligations" means direct obligations (or certificates
representing an ownership interest in such obligations) of the United States of
America (including any agency or instrumentality thereof) for the payment of
which the full faith and credit of the United States of America is pledged and
which are not callable or redeemable at the issuer's option.
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"Voting Stock" means securities of any class or classes of a Person, the
holders of which are ordinarily, in the absence of contingencies, entitled to
vote for corporate directors (or Persons performing equivalent functions).
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CERTAIN UNITED STATES FEDERAL INCOME TAX CONSIDERATIONS
The following is a summary of the principal U.S. Federal income tax
consequences resulting from the beneficial ownership of Notes by certain
persons. This summary does not purport to consider all the possible U.S. Federal
tax consequences of the purchase, ownership or disposition of the Notes and is
not intended to reflect the particular tax position of any beneficial owner. It
deals only with Notes held as capital assets. Moreover, except as expressly
indicated, it addresses initial purchasers and does not address beneficial
owners that may be subject to special tax rules, such as banks, insurance
companies, dealers in securities or currencies, purchasers that hold Notes as a
hedge against currency risks or as part of a straddle with other investments or
as part of a "synthetic security" or other integrated investment (including a
"conversion transaction") comprised of a Note and one or more other investments,
or purchasers that have a "functional currency" other than the U.S. Dollar.
Except to the extent discussed below under "Non-U.S. Holders," this summary is
not applicable to non-United States persons not subject to U.S. Federal income
tax on their worldwide income. This summary is based upon the U.S. Federal tax
laws and regulations as now in effect and as currently interpreted and does not
take into account possible changes in such tax laws or such interpretations, any
of which may be applied retroactively. It does not include any description of
the tax laws of any state, local or foreign government that may be applicable to
the Notes or holders thereof. PERSONS CONSIDERING THE PURCHASE OF NOTES SHOULD
CONSULT THEIR OWN TAX ADVISORS CONCERNING THE APPLICATION OF THE U.S. FEDERAL
TAX LAWS TO THEIR PARTICULAR SITUATIONS AS WELL AS ANY CONSEQUENCES TO THEM
UNDER THE LAWS OF ANY OTHER TAXING JURISDICTION.
U.S. HOLDERS
In general, interest on a Note will be taxable to a beneficial owner that
is (i) a citizen or resident of the United States, (ii) a corporation created or
organized under the laws of the United States or any State thereof (including
the District of Columbia), or (iii) a person otherwise subject to United States
Federal income taxation on its worldwide income (a "U.S. Holder") as ordinary
income at the time it is received or accrued, depending on the holder's method
of accounting for tax purposes. A U.S. Holder will recognize a gain or loss upon
the sale or other disposition of a Note in an amount equal to the difference
between the amount realized from such disposition and the U.S. Holder's adjusted
tax basis in the Note. Such gain or loss will be a capital gain or loss,
assuming that the holder has held the Note as a capital asset, and will be long
term if the holder has held the Note for more than one year at the time of
disposition.
NON-U.S. HOLDERS
Under present U.S. Federal income and estate tax law and subject to the
discussion of backup withholding below:
(a) payments of principal and interest on the Notes by the Company or
any agent of the Company to any holder of a Note that is not a U.S. Holder
(a "Non-U.S. Holder") will not be subject to U.S. Federal withholding tax,
provided in the case of interest that (i) the Non-U.S. Holder does not
actually or constructively own 10% or more of the total combined voting
power of all classes of stock of the Company entitled to vote, (ii) the
Non-U.S. Holder is not a controlled foreign corporation that is related to
the Company (directly or indirectly) through stock ownership, and (iii)
either (A) the beneficial owner of the Notes certifies to the Company or
its agent, under penalties of perjury, that it is not a "United States
person" (as defined in the Code) and provides its name and address, or (B)
a securities clearing organization, bank or other financial institution
that holds customers' securities in the ordinary course of its trade or
business (a "financial institution") and holds the Notes on behalf of the
beneficial owner certifies to the Company or its agent, under penalties of
perjury, that such statement has been received from the beneficial owner by
it or by a financial institution between it and the beneficial owner and
furnishes the payor with a copy thereof;
(b) any gain realized on the sale, exchange, retirement, redemption or
other disposition of a Note by a Non-U.S. Holder will not be subject to
U.S. Federal income or withholding taxes unless
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(i) such gain is effectively connected with a U.S. trade or business of the
Non-U.S. Holder or (ii) in the case of an individual, such Non-U.S. Holder
is present in the United States for 183 days or more in the taxable year of
the sale, exchange, retirement, redemption or other disposition and either
(A) such individual's "tax home" for United States Federal income tax
purposes is in the United States or (B) the gain is attributable to an
office or other fixed place of business maintained in the United States by
such individual; and
(c) a Note held by an individual who at the time of death is not a
citizen or resident of the United States will not be subject to U.S.
Federal estate tax as a result of such individual's death if, at the time
of such death, the individual did not actually or constructively own 10% or
more of the total combined voting power of all classes of stock of the
Company entitled to vote and the income on the Notes would not have been
effectively connected with the conduct of a trade or business by the
individual in the United States.
If a Non-U.S. Holder is engaged in a trade or business in the United States
and interest on the Note is effectively connected with the conduct of such trade
or business, the Non-U.S. Holder, although exempt from the withholding tax
discussed in the preceding paragraph (provided that such holder properly claims
such exemption by furnishing a properly executed IRS Form 4224 on or before any
payment is due), may be subject to U.S. Federal income tax on such interest in
the same manner as if it were a U.S. Holder.
Recently proposed Treasury regulations (the "Proposed Regulations") would
provide alternative methods for satisfying the certification requirements
described above. The Proposed Regulations also would require, in the case of
Notes held by a foreign partnership, that (x) the certification described in
clause (a)(iii) above be provided by the partners rather than by the foreign
partnership and (y) the partnership provide certain information, including a
United States taxpayer identification number. A look-through rule would apply in
the case of tiered partnerships. The Proposed Regulations are proposed to be
effective for payments made after December 31, 1997. There can be no assurance
that the Proposed Regulations will be adopted or as to the provisions that they
will include if and when adopted in temporary or final form.
INFORMATION REPORTING AND BACKUP WITHHOLDING
For each calendar year in which the Notes are outstanding, the Company is
required to provide the IRS with certain information, including the holder's
name, address and taxpayer identification number, the aggregate amount of
principal and interest paid to that holder during the calendar year and the
amount of tax withheld, if any. This obligation, however, does not apply with
respect to certain U.S. Holders, including corporations, tax-exempt
organizations, qualified pension and profit sharing trusts and individual
retirement accounts.
In the event that a U.S. Holder subject to the reporting requirements
described above fails to supply its correct taxpayer identification number in
the manner required by applicable law or underreports its tax liability, the
Company, its agents or paying agents or a broker may be required to "backup"
withhold a tax equal to 31% of each payment of interest and principal (and
premium, if any) on the Notes. This backup withholding is not an additional tax
and may be credited against the U.S. Holder's U.S. Federal income tax liability,
provided that the required information is furnished to the IRS.
Under current Treasury Regulations, backup withholding and information
reporting will not apply to payments made by the Company or any agent thereof
(in its capacity as such) to a Non-U.S. Holder of a Note if such holder has
provided the required certification that it is not a United States person as set
forth in clause (iii) in the first paragraph under "-- Non-U.S. Holders," or has
otherwise established an exemption (provided that neither the Company nor its
agent has actual knowledge that the holder is a United States person or that the
conditions of any exemption are not in fact satisfied).
Payment of the proceeds from the sale of a Note to or through a foreign
office of a broker will not be subject to information reporting or backup
withholding, except that information reporting may apply to
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such payments if the broker is a United States person, a controlled foreign
corporation for United States tax purposes or a foreign person 50% or more of
whose gross income from all sources for the three-year period ending with the
close of its taxable year preceding the payment was effectively connected with a
U.S. trade or business. Payment of the proceeds from a sale of a Note to or
through the U.S. office of a broker is subject to information reporting and
backup withholding unless the holder or beneficial owner certifies as to its
taxpayer identification number or otherwise establishes an exemption from
information reporting and backup withholding.
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UNDERWRITING
The Underwriters named below have severally agreed, subject to the terms
and conditions of the Underwriting Agreement with the Company, to purchase from
the Company the aggregate principal amount of Notes set forth opposite their
respective names. The Underwriters are committed to purchase all of the Notes if
any are purchased.
PRINCIPAL
AMOUNT OF
UNDERWRITERS NOTES
--------------------------------------------------------------------- ------------
Salomon Brothers Inc ................................................ $
Goldman, Sachs & Co..................................................
CIBC Wood Gundy Securities Corporation...............................
BT Securities Corporation............................................
------------
Total...................................................... $200,000,000
============
In the Underwriting Agreement, the several Underwriters have agreed,
subject to the terms and conditions set forth therein, to purchase all of the
Notes offered hereby if any such Notes are purchased. In the event of a default
by an Underwriter, the Underwriting Agreement provides that, in certain
circumstances the purchase commitments of the nondefaulting Underwriters may be
increased or the Underwriting Agreement may be terminated.
The Underwriters have advised the Company that the Underwriters propose
initially to offer the Notes to the public at the public offering price set
forth on the cover page of this Prospectus and to certain dealers at such
offering price less a concession not in excess of % of the principal amount
of the Notes. The Underwriters may allow and such dealers may reallow a
concession not in excess of % of such principal amount to certain other
dealers. After the initial public offering, the public offering price and such
concessions may be changed.
The Company does not intend to apply for listing of the Notes on any
securities exchange or for quotation of the Notes through the National
Association of Securities Dealers Automated Quotation System. The Underwriters
have indicated that they intend to make a market in the Notes, subject to
applicable laws and regulations. However, the Underwriters are not obligated to
do so and any such market-making may be discontinued at any time at the
Underwriters' sole discretion. No assurance can be given as to the development
of liquidity in any trading market for the Notes. See "Risk Factors -- Lack of
Public Market."
The Underwriting Agreement provides that the Company agrees to indemnify
the Underwriters against certain liabilities, including liabilities under the
Securities Act of 1933, as amended (the "Securities Act"), or contribute to
payments the Underwriters may be required to make in respect thereof.
The Notes are being offered in accordance with the provisions of the
National Association of Securities Dealers, Inc. Rules of Fair Practice, Article
III, Section 44(c), paragraph (8). Certain proceeds of the Offering and the
Common Stock Offering will be used to repay amounts owing under the New Bank
Credit Facility for which Canadian Imperial Bank of Commerce ("CIBC") acts as
agent and as a lender. CIBC, which is an affiliate of CIBC Wood Gundy Securities
Corporation, will receive approximately $
million, or approximately % of the combined net proceeds of the Offering
and the Common Stock Offering (giving effect to the Underwriters over-allotment
option), and $ million, or approximately % of the Offering, in its
capacity as a lender under the New Bank Credit Facility. Salomon Brothers Inc
has agreed to act as a qualified independent underwriter (as defined in the
National Association of Securities Dealers, Inc. Schedules to the By-Laws,
Schedule E) for the Offering, and has agreed to assume the responsibilities of
acting as a qualified independent underwriter in pricing the Offering and in
conducting due diligence.
74
80
LEGAL MATTERS
Certain matters with respect to the Notes and the Guaranties thereon will
be passed upon for the Company by Morrison & Foerster LLP, Irvine, California.
With respect to all matters of Nevada law, Morrison & Foerster will rely on the
opinion of McDonald, Carano, Wilson, McCune, Bergin, Frankovich & Hicks, Reno,
Nevada. Cravath, Swaine & Moore, New York, New York, has acted as counsel for
the Underwriters in connection with the Offering being made hereby.
EXPERTS
The consolidated financial statements of the Company as of June 30, 1995
and 1994 and for each of the three years in the period ended June 30, 1995
included and incorporated in this Prospectus by reference from the Company's
Annual Report on Form 10-K for the year ended June 30, 1995 have been audited by
Deloitte & Touche LLP, independent auditors, as stated in their reports, which
are included and incorporated by reference herein, and have been so included and
incorporated in reliance upon the reports of such firm given upon their
authority as experts in accounting and auditing. The consolidated financial
statements of Par-A-Dice Gaming Corporation as of December 31, 1995 and 1994 and
for each of the three years in the period ended December 31, 1995, included in
Boyd Gaming Corporation's Form 8-K Current Report dated June 7, 1996, have been
incorporated herein by reference in reliance on the reports of Coopers & Lybrand
L.L.P., independent accountants, given on the authority of such firm as experts
in accounting and auditing.
AVAILABLE INFORMATION
The Company is subject to the informational reporting requirements of the
Securities Exchange Act of 1934, as amended (the "Exchange Act"), and in
accordance therewith files reports, proxy statements and other information with
the Securities and Exchange Commission ("Commission"). Reports, proxy
statements, and other information filed by the Company may be inspected and
copied at the public reference facilities maintained by the Commission at 450
Fifth Street, N.W., Washington, D.C. 20549, and at the Commission's Regional
Offices at 75 Park Place, New York, New York 10007 and at the Northwestern
Atrium Center, 500 West Madison Street, Chicago, Illinois 60661. Copies of such
information may be obtained by mail from the Public Reference Section of the
Commission at 450 Fifth Street, N.W., Washington, D.C. 20549, at prescribed
rates. Such reports, proxy statements and other information concerning the
Company can also be inspected at the offices of the New York Stock Exchange, 20
Broad Street, New York, New York 10005, on which the Company's Common Stock is
listed.
The Company has filed a registration statement on Form S-3 (herein,
together with all amendments and exhibits, referred to as the "Registration
Statement") under the Securities Act with respect to the Notes offered hereby.
This Prospectus does not contain all of the information set forth in the
Registration Statement, certain parts of which are omitted in accordance with
the rules and regulations of the Commission. For further information with
respect to the Company and the Notes, reference is made to the Registration
Statement and the exhibits filed as a part thereof. Statements contained herein
concerning any document filed as an exhibit are not necessarily complete and, in
each instance, reference is made to the copy of said document filed as an
exhibit to the Registration Statement or otherwise filed with the Commission.
Each such statement is qualified in its entirety by such reference.
75
81
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The following documents have been filed with the Commission and are
incorporated by reference in this prospectus: (i) the Company's Annual Report on
Form 10-K for the year ended June 30, 1995; (ii) the Company's amended Annual
Report on Form 10-K/A for the year ended June 30, 1995, (iii) the Company's
Quarterly Report on Form 10-Q for the quarter ended September 30, 1995; (iv) the
Company's amended Quarterly Report on Form 10-Q/A for the quarter ended
September 30, 1995; (v) the Company's Quarterly Report on Form 10-Q for the
quarter ended December 31, 1995; (vi) the Company's amended Quarterly Report on
Form 10-Q/A for the quarter ended December 31, 1995; (vii) the Company's
Quarterly Report on Form 10-Q for the quarter ended March 31, 1996; (viii) the
Company's Current Report on Form 8-K, dated May 13, 1996; (ix) the Company's
Current Report on Form 8-K, dated June 7, 1996; (x) the description of the
Common Stock contained in the Company's Registration Statement on Form 8-A
declared effective by the Commission on October 15, 1993; and (xi) all other
documents filed by the Company pursuant to Section 13(a), 13(c), 14 or 15(d) of
the Exchange Act subsequent to the date of this Prospectus and prior to the
termination of the offering of the Notes. Any statement contained in a document
incorporated or deemed to be incorporated by reference herein shall be deemed to
be modified or superseded for purposes of this Prospectus to the extent that a
statement contained herein or in any other subsequently filed document which
also is or is deemed to be incorporated by reference herein modifies or
supersedes such statement. Any such statement so modified or superseded shall
not be deemed, except as so modified or superseded, to constitute a part of this
Prospectus.
The Company will provide without charge to each person to whom a copy of
this Prospectus is delivered, upon the request of such person, a copy of any or
all of the documents which are incorporated by reference herein, other than
exhibits to such documents (unless such exhibits are specifically incorporated
by reference into such documents). Written or telephone requests should be
directed to Boyd Gaming Corporation, 2950 South Industrial Road, Las Vegas,
Nevada 89109, Attention: Investor Relations; telephone (702) 792-7200.
76
82
BOYD GAMING
INDEX TO CONSOLIDATED FINANCIAL STATEMENTS
PAGE
-----
Independent Auditors' Report.......................................................... F-2
Consolidated Financial Statements
Consolidated Balance Sheets......................................................... F-3
Consolidated Statements of Income................................................... F-4
Consolidated Statements of Cash Flows............................................... F-5
Consolidated Statements of Changes in Stockholders' Equity.......................... F-6
Notes to Consolidated Financial Statements............................................ F-7
F-1
83
INDEPENDENT AUDITORS' REPORT
We have audited the accompanying consolidated balance sheets of Boyd Gaming
Corporation and subsidiaries (the "Company") as of June 30, 1995 and 1994, and
the related consolidated statements of income, changes in stockholders' equity
and cash flows for each of the three years in the period ended June 30, 1995.
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 generally accepted auditing
standards. 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 June 30, 1995 and 1994, and the results of their operations and
their cash flows for each of the three years in the period ended June 30, 1995
in conformity with generally accepted accounting principles.
DELOITTE & TOUCHE LLP
Las Vegas, Nevada
August 18, 1995
F-2
84
BOYD GAMING CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(IN THOUSANDS, EXCEPT SHARE DATA)
MARCH 31, JUNE 30,
--------- ---------------------
1996 1995 1994
--------- -------- --------
(UNAUDITED)
ASSETS
Current assets
Cash and cash equivalents............................. $ 51,918 $ 83,169 $ 66,964
Short-term investments................................ -- -- 5,000
Accounts receivable, net.............................. 17,358 16,135 11,274
Inventories........................................... 6,455 6,648 6,468
Prepaid expenses and other............................ 17,039 13,465 15,405
-------- -------- --------
Total current assets............................... 92,770 119,417 105,111
Property, equipment and leasehold interests, net........ 782,754 765,799 656,955
Other assets and deferred charges....................... 55,810 53,686 63,264
Goodwill, net........................................... 10,619 10,611 10,967
-------- -------- --------
Total assets....................................... $ 941,953 $949,513 $836,297
======== ======== ========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities
Current maturities of long-term debt.................. $ 40,657 $ 36,347 $ 21,344
Accounts Payable...................................... 40,066 50,432 72,179
Accrued liabilities
Payroll and related................................ 21,491 21,133 18,789
Interest and other................................. 25,229 20,792 18,448
Income taxes payable.................................. 3,882 596 --
-------- -------- --------
Total current liabilities.......................... 131,325 129,300 130,760
Long-term debt, net of current maturities............... 548,034 587,957 525,637
Deferred income taxes................................... 32,527 29,643 15,495
Commitments
Stockholders' equity
Preferred stock, $.01 par value; 5,000,000 shares
authorized......................................... -- -- --
Common stock, $.01 par value; 200,000,000 shares
authorized; 57,115,365, 56,999,018 and 56,816,895
shares outstanding................................. 571 570 568
Additional paid-in capital............................ 101,436 100,085 98,128
Retained earnings..................................... 128,060 101,958 65,709
-------- -------- --------
Total stockholders' equity......................... 230,067 202,613 164,405
-------- -------- --------
Total liabilities and stockholders' equity......... $ 941,953 $949,513 $836,297
======== ======== ========
The accompanying notes are an integral part of these consolidated financial
statements.
F-3
85
BOYD GAMING CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
(IN THOUSANDS, EXCEPT PER SHARE DATA)
NINE MONTHS ENDED
MARCH 31, FOR THE YEAR ENDED JUNE 30,
--------------------- ---------------------------------
1996 1995 1995 1994 1993
--------- --------- --------- --------- ---------
(UNAUDITED)
Revenues
Casino.................................................... $ 413,097 $ 348,296 $ 463,179 $ 341,473 $ 308,495
Food and beverage......................................... 105,703 92,575 123,527 99,082 91,500
Rooms..................................................... 52,308 45,212 62,300 44,934 44,394
Other..................................................... 35,300 27,881 37,563 28,695 27,352
Management fee and joint venture.......................... 30,893 24,969 35,763 -- --
-------- -------- -------- -------- --------
Gross revenues.............................................. 637,301 538,933 722,332 514,184 471,741
Less promotional allowances................................. 55,792 46,548 61,992 45,965 40,567
-------- -------- -------- -------- --------
Net revenues............................................ 581,509 492,385 660,340 468,219 431,174
-------- -------- -------- -------- --------
Costs and expenses
Casino.................................................... 203,769 166,479 221,844 164,798 145,777
Food and beverage......................................... 74,337 68,064 90,670 74,115 67,236
Rooms..................................................... 17,910 18,093 24,578 19,683 18,881
Other..................................................... 25,653 19,275 25,567 20,633 19,374
Selling, general and administrative....................... 83,179 60,038 79,785 54,441 48,435
Maintenance and utilities................................. 22,620 21,638 28,452 21,057 19,220
Depreciation and amortization............................. 45,868 40,953 54,518 42,136 39,450
Corporate expense......................................... 16,417 17,027 24,356 12,503 9,882
Preopening expense........................................ 10,004 -- -- 4,605 --
-------- -------- -------- -------- --------
Total................................................... 499,757 411,567 549,770 413,971 368,255
-------- -------- -------- -------- --------
Operating income............................................ 81,752 80,818 110,570 54,248 62,919
-------- -------- -------- -------- --------
Other income (expense)
Interest income........................................... 987 1,682 2,072 3,379 1,510
Interest expense, net of amounts capitalized.............. (39,322) (37,940) (48,443) (39,472) (33,888)
Gain on investment........................................ -- -- -- -- 1,062
-------- -------- -------- -------- --------
Total................................................... (38,335) (36,258) (46,371) (36,093) (31,316)
-------- -------- -------- -------- --------
Income before provision for income taxes, cumulative effect
of a change in accounting principle and extraordinary
item...................................................... 43,417 44,560 64,199 18,155 31,603
Provision for income taxes.................................. 17,315 20,265 27,950 7,505 11,469
-------- -------- -------- -------- --------
Income before cumulative effect of a change in accounting
principle and extraordinary item.......................... 26,102 24,295 36,249 10,650 20,134
Cumulative effect of a change in accounting for income
taxes..................................................... -- -- -- 2,035 --
-------- -------- -------- -------- --------
Income before extraordinary item............................ 26,102 24,295 36,249 12,685 20,134
Extraordinary item, net of tax benefit of $3,805............ -- -- -- -- 7,397
-------- -------- -------- -------- --------
Net income.................................................. 26,102 24,295 36,249 12,685 12,737
Dividends on preferred stock................................ -- -- -- 467 1,881
-------- -------- -------- -------- --------
Net income applicable to common stock....................... $ 26,102 $ 24,295 $ 36,249 $ 12,218 $ 10,856
======== ======== ======== ======== ========
Net income per common share
Income before cumulative effect of a change in accounting
principle and extraordinary item........................ $ .46 $ .43 $ 0.64 $ 0.19 $ 0.37
Cumulative effect of a change in accounting for income
taxes................................................... -- -- -- 0.04 --
Extraordinary item........................................ -- -- -- -- (0.15)
-------- -------- -------- -------- --------
Net income.................................................. $ .46 $ .43 $ 0.64 $ 0.23 $ 0.22
======== ======== ======== ======== ========
The accompanying notes are an integral part of these consolidated financial
statements.
F-4
86
BOYD GAMING CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(IN THOUSANDS)
NINE MONTHS ENDED
MARCH 31, FOR THE YEAR ENDED JUNE 30,
-------------------- ---------------------------------
1996 1995 1995 1994 1993
-------- --------- --------- --------- ---------
(UNAUDITED)
CASH FLOWS FROM OPERATING ACTIVITIES
Net income................................................ $ 26,102 $ 24,295 $ 36,249 $ 12,685 $ 12,737
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation and amortization........................... 45,868 40,953 54,518 42,136 39,450
Cumulative effect of a change in accounting for income
taxes................................................. -- -- -- (2,035) --
Extraordinary item...................................... -- -- -- -- 7,397
Gain on sale of investment.............................. -- -- -- -- (1,062)
Deferred income taxes................................... 2,884 8,666 14,148 877 102
Other................................................... (31) (29) 84 (142) (62)
Changes in assets and liabilities:
Increase in accounts receivable, net.................. (1,223) (5,270) (3,089) (4,383) (50)
(Increase) decrease in inventories.................... 193 (22) (180) (1,891) (605)
(Increase) decrease in prepaid expenses............... (3,574) 1,614 1,940 (4,952) (342)
(Increase) decrease in other assets................... (5,547) 6,504 (2,032) (3,995) (3,106)
Increase (decrease) in other current liabilities...... 16,870 (18,390) (19,146) 39,766 (3,771)
Increase (decrease) in income taxes payable........... 3,286 -- 596 (2,291) 3,728
-------- --------- --------- ---------
Net cash provided by operating activities................. 84,828 58,321 83,088 75,775 54,416
-------- --------- --------- ---------
CASH FLOWS FROM INVESTING ACTIVITIES
Acquisition of property, equipment and other assets..... (81,616) (104,172) (181,212) (307,045) (24,926)
Proceeds from loans receivable.......................... -- -- 30,667 -- --
Proceeds from sale of investment........................ -- -- -- -- 1,935
Cash acquired in Eldorado, Inc. acquisition............. -- -- -- 1,622 --
Decrease (increase) in short-term investments........... -- 5,000 5,000 (5,000) --
-------- --------- --------- ---------
Net cash used in investing activities..................... (81,616) (99,172) (145,545) (310,423) (22,991)
-------- --------- --------- ---------
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from issuance of long-term debt................ 1,074 7,850 86,025 148,500 180,375
Payments on long-term debt.............................. (26,687) (16,650) (22,027) (13,862) (160,711)
Net borrowings under credit agreements.................. (10,000) 18,000 13,000 35,000 --
Cash paid to retire bonds............................... -- -- -- -- (9,534)
Dividends paid.......................................... -- -- -- (467) (1,881)
Proceeds from issuance of common stock.................. 1,150 1,132 1,664 72,368 --
Other................................................... -- -- -- -- (838)
-------- --------- --------- ---------
Net cash provided by (used in) financing activities....... (34,463) 10,332 78,662 241,539 7,411
-------- --------- --------- ---------
Net increase (decrease) in cash and cash equivalents...... (31,251) (30,519) 16,205 6,891 38,836
Cash and cash equivalents, beginning of year.............. 83,169 66,964 66,964 60,073 21,237
-------- --------- --------- ---------
Cash and cash equivalents, end of year.................... $ 51,918 $ 36,445 $ 83,169 $ 66,964 $ 60,073
======== ========= ========= =========
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION
Cash paid for interest, net of amounts capitalized...... $ 40,320 $ 38,521 $ 51,405 $ 33,541 $ 25,085
======== ========= ========= =========
Cash paid for income taxes.............................. $ 10,991 $ 12,465 $ 12,607 $ 10,050 $ 7,638
======== ========= ========= =========
SUPPLEMENTAL SCHEDULE OF NON-CASH INVESTING
AND FINANCING ACTIVITIES
Property additions acquired on contracts and trade
payables which were accrued, but not yet paid........... $ 1,646 $ 8,109 $ 24,109 $ 22,022 $ 2,238
======== ========= ========= =========
Deferred bond financing costs incurred.................. $ - $ - $ - $ 1,500 $ 4,625
======== ========= ========= =========
Unamortized bond financing costs written-off............ $ - $ - $ - $ - $ 1,667
======== ========= ========= =========
Tax benefit on extraordinary item....................... $ - $ - $ - $ - $ 3,805
======== ========= ========= =========
Acquisition of Eldorado, Inc.
Assets acquired....................................... $ - $ - $ - $ 21,796 $ -
Liabilities assumed................................... - - - 14,662 -
-------- --------- --------- ---------
Net acquisition....................................... $ - $ - $ - $ 7,134 $ -
======== ========= ========= =========
Conversion of preferred stock to common stock........... $ - $ - $ - $ 17,788 $ -
======== ========= ========= =========
The accompanying notes are an integral part of these consolidated financial
statements.
F-5
87
BOYD GAMING CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY
(IN THOUSANDS, EXCEPT SHARE DATA)
PREFERRED STOCK COMMON STOCK ADDITIONAL TOTAL
--------------------- --------------------- PAID-IN RETAINED TREASURY STOCKHOLDERS'
SHARES AMOUNT SHARES AMOUNT CAPITAL EARNINGS STOCK EQUITY
-------- -------- ---------- ------ --------- --------- ------- -------------
BALANCES, JULY 1,
1992................ 181,870 $ 19,260 48,761,507 $ 513 $ 3,604 $ 42,635 $(3,344) $ 62,668
Net income........... 12,737 12,737
Cash dividends on
preferred stock.... (1,881) (1,881)
Common stock
acquired........... (1,624,753) (1,629) (1,629)
Preferred stock
acquired........... (3,989) (399) (399)
Common stock sold.... 1,273,752 39 1,151 1,190
------- -------- ---------- ----- ------- ------- ------- ---------
BALANCES, JUNE 30,
1993............... 177,881 19,260 48,410,506 513 3,643 53,491 (4,221) 72,686
Net income........... 12,685 12,685
Cash dividends on
preferred stock.... (467) (467)
Conversion of
preferred stock.... (177,881) (19,260) 1,046,358 10 17,778 1,472 --
Purchase of
fractional
shares............. (78) (1) (1)
Stock issued in
connection with
Employee stock
purchase plan...... 36,944 463 463
Stock issued in
connection with
acquisition........ 2,723,165 27 7,107 7,134
Issuance of stock,
net of expenses.... 4,600,000 46 71,859 71,905
Cancellation of
treasury stock..... (28 ) (2,721) 2,749 --
------- -------- ---------- ----- ------- ------- ------- ---------
BALANCES, JUNE 30,
1994............... -- -- 56,816,895 568 98,128 65,709 -- 164,405
Net income........... 36,249 36,249
Stock issued in
connection with
Employee stock
purchase plan...... 182,123 2 1,957 1,959
------- -------- ---------- ----- ------- ------- ------- ---------
BALANCES, JUNE 30,
1995............... -- -- 56,999,018 570 100,085 101,958 -- 202,613
Net income
(unaudited) for
nine months ended
March 31, 1996..... 26,102 26,102
Stock issued in
connection with
Employee stock
purchase plan
(unaudited)........ 116,347 1 1,351 1,352
------- -------- ---------- ----- ------- ------- ------- ---------
BALANCES, MARCH 31,
1996 (UNAUDITED)... -- $ -- 57,115,365 $ 571 $ 101,436 $ 128,060 $ -- $ 230,067
======= ======== ========== ===== ======= ======= ======= =========
The accompanying notes are an integral part of these consolidated financial
statements.
F-6
88
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 six casino
entertainment facilities in Las Vegas, Nevada, one in Tunica, Mississippi and
one in Kansas City, Missouri which is expected to open in September 1995. The
Company manages a casino entertainment facility near Philadelphia, Mississippi
which opened July 1, 1994 and for which it has a seven-year management contract.
The Company is also part owner of and manages a riverboat gaming operation in
Kenner, Louisiana which opened September 1994 for which it has a five-year
management contract with certain renewal options. All material intercompany
accounts and transactions have been eliminated. Certain reclassifications have
been made to prior years' amounts to conform with the current year presentation.
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.
Short-Term Investments.
Short-term investments consist of highly liquid investments with an
original maturity of more than three months. These investments are stated at
cost which approximates market value.
Inventories.
Inventories are stated at 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 including interest incurred during
construction of new facilities and major additions are capitalized; costs of
normal repairs and maintenance are charged to expense as incurred. Gains or
losses on disposals of assets are recognized as incurred.
Fair Value of Financial Instruments.
The carrying value of the Company's cash and cash equivalents, trade
receivables and trade payables approximates fair value because of the short
maturity of those instruments. The Company estimates fair value of its long-term
obligations based on quoted market prices or on the current rates offered to the
Company for debt of the same remaining maturities.
Goodwill.
The excess of total acquisition costs over the fair value of assets
acquired is amortized using the straight-line method over forty years. As of
June 30, 1995 and 1994, accumulated amortization was $3,654,000 and $3,297,000,
respectively.
F-7
89
Revenues.
Casino revenues represent the net win from gaming wins and losses. Revenues
include the retail value of room, food, beverage and other goods and services
provided to customers without charge. Such amounts are then deducted as
promotional allowances. The estimated costs of providing these promotional
allowances is charged to the casino department in the following amounts:
YEAR ENDED JUNE 30
-------------------------------
1995 1994 1993
------- ------- -------
(IN THOUSANDS)
Rooms....................................... $ 8,991 $ 8,308 $ 6,700
Food and beverage........................... 49,674 35,507 29,727
Other....................................... 2,422 1,324 1,128
------- ------- -------
Total....................................... $61,087 $45,139 $37,555
======= ======= =======
Income Taxes.
The Company and its subsidiaries file a consolidated federal tax return.
Effective July 1, 1993, the Company adopted Statement of Financial Accounting
Standard (SFAS) No. 109, "Accounting for Income Taxes." SFAS No. 109 requires
recognition of deferred tax assets and liabilities for the expected future tax
consequences of events that have been included in the financial statements or
tax returns. Deferred income taxes reflect the net tax effects of (i) temporary
differences between the carrying amounts of assets and liabilities for financial
reporting purposes and the amounts used for income tax purposes , and (ii)
operating loss and tax credit carryforwards. Prior to 1994, the Company
accounted for income taxes under APB 11.
Preopening Expenses.
Expenses incurred prior to the opening of new facilities are capitalized as
incurred and charged to expense upon commencement of operations. Preopening
expenses for Sam's Town Kansas City, which is scheduled to open September 13,
1995, are expected to be approximately $10 million.
Net Income Per Common Share.
Net income per common share is based upon the weighted average number of
common stock and common stock equivalents outstanding during the period which
were 56,870,104, 54,297,226 and 48,581,891 for the years ended June 30, 1995,
1994 and 1993, respectively.
Use of Estimates.
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities at the
date of the financial statements and the reported amounts of revenues and
expenses during the reporting period. Actual results could differ from those
estimates.
NOTE 2: RELATED PARTIES
In connection with the closing of the Company's initial public offering in
October 1993, the Company purchased Eldorado, Inc., owner of the Eldorado Casino
and Jokers Wild Casino. The acquisition was accounted for as a purchase at
historical cost. The Company issued 2,723,165 shares of common stock in exchange
for all of the outstanding stock of Eldorado, Inc. and the assumption of debt
and other liabilities. For the year ended June 30, 1994, revenue, net income and
net income per common share on a proforma basis as if Eldorado, Inc. were owned
by the Company for the entire fiscal year were $476,550,000, $12,794,000 and
$.23, respectively. For the year ended June 30, 1993, revenue, net income before
extraordinary item, net income and net income per common share on a proforma
basis as if
F-8
90
Eldorado, Inc. were owned by the Company for the entire fiscal year were
$450,174,000, $22,268,000, $14,871,000 and $.29, respectively. Certain former
stockholders of Eldorado, Inc. are also directors, officers and significant
shareholders of the Company.
NOTE 3: ACCOUNTS RECEIVABLE
Account receivable at June 30 are as follows:
1995 1994
------- -------
(IN THOUSANDS)
Casino................................................. $ 5,661 $ 4,651
Hotel.................................................. 2,415 2,155
Other.................................................. 9,854 6,157
------- -------
Total.................................................. 17,930 12,963
Less allowance for doubtful accounts................... 1,795 1,689
------- -------
Total.................................................. $16,135 $11,274
======= =======
NOTE 4: PROPERTY, EQUIPMENT, AND LEASEHOLD INTEREST
Property, equipment and leasehold interest consist of the following at June
30:
1995 1994
-------- --------
(IN THOUSANDS)
Land................................................. $115,803 $109,583
Buildings and improvements........................... 482,443 374,964
Furniture and equipment.............................. 281,791 251,922
Leasehold improvements............................... 42,878 42,030
Construction in progress............................. 129,190 118,060
-------- --------
Total fixed assets................................... 1,052,105 896,559
Less accumulated depreciation and amortization....... 286,306 239,604
-------- --------
Net fixed assets..................................... $765,799 $656,955
======== ========
Depreciation and amortization are computed using the straight-line method
over the following useful lives:
USEFUL LIVES
-------------
Buildings and improvements.................... 4 to 40 years
Furniture and equipment....................... 3 to 30 years
Leasehold improvements........................ 3 to 40 years
Certain property and equipment is pledged as collateral for long-term debt.
See Notes 5 and 6. Property and equipment at June 30 include assets recorded
under capital leases as follows:
1995 1994
------ ------
(IN THOUSANDS)
Furniture and equipment.................. $1,309 $1,309
Less accumulated amortization............ 1,164 944
------ ------
Net...................................... $ 145 $ 365
====== ======
Interest costs of $7.1 million and $6.6 million were capitalized in 1995
and 1994, respectively, during construction of new properties and major
additions. No interest costs were capitalized during 1993.
F-9
91
NOTE 5: LONG-TERM DEBT
Long-term debt at June 30 consists of the following:
1995 1994
-------- --------
(IN THOUSANDS)
Notes payable under credit agreements................ $281,500 $210,000
11% senior subordinated notes........................ 185,000 185,000
10.75% senior subordinated notes..................... 150,000 150,000
Other................................................ 7,804 1,981
-------- --------
Total long-term debt................................. 624,304 546,981
Less current maturities.............................. 36,347 21,344
-------- --------
Total................................................ $587,957 $525,637
======== ========
The Company, through a wholly-owned subsidiary, Boyd Tunica, Inc., entered
into an agreement with a group of banks whereby the banks made available $60
million pursuant to a loan which matures in August 1998. Principal on the loan
is payable quarterly beginning October 1, 1995 in the amount of $3.0 million per
quarter with the entire unpaid balance due August 1998. Interest rates under the
loan may be based on either the prime rate or London Interbank Offered Rate at
the discretion of the Company. The loan agreement contains certain financial
covenants and limitations on the incurrence of debt. The average interest rate
under the loan at June 30, 1995 was 7.4%.
The Company through its wholly-owned subsidiary, California Hotel and
Casino, has an amended senior credit agreement with a group of commercial
lending institutions. The amended agreement consists of a term loan and a
revolving credit facility. Principal on the term loan is payable quarterly and
ranges from $6.3 million in fiscal 1996 to $7.5 million in fiscal 1998. The
outstanding principal balance under the term loan at June 30, 1995 was $80
million. Total availability under the revolving credit facility reduces to $125
million on June 30, 1996 and to $115 million on June 30, 1997 with any
outstanding principal balance on the revolving credit facility due on June 30,
1998. At June 30, 1995, the Company had unused availability of $12 million under
the revolving credit facility. The amended agreement provides for interest rates
to be based on either the prime rate or the London Interbank Offered Rate at the
discretion of the Company. The average interest rate under the amended agreement
at June 30, 1995 was 8.5%.
The term loan and revolving credit facility are collateralized by the real
and personal property comprising four casino hotel properties owned by the
Company in Nevada and by related security agreements with assignments of rents.
The amended agreement contains certain financial covenants, limitations on
the incurrence of debt and restrictions on dividends.
The Company has $150 million principal amount of 10.75% senior subordinated
notes due September 2003. The notes require semiannual interest payments on
March 1 and September 1 of each year through September 1, 2003, at which time
the principal balance is due and payable. The notes may be redeemed at the
Company's option anytime after September 1, 1996 at redemption prices ranging
from 105% in 1996 to 100% in 1999. The notes contain certain covenants regarding
incurrence of debt, sales and disposition of assets, mergers or consolidations
and limitations on restricted payments (as defined in the indenture relating to
the notes).
The Company, through its wholly-owned subsidiary California Hotel Finance
Corporation, has $185 million principal amount of 11% senior subordinated notes
due December 2002. The net proceeds were used to refinance certain indebtedness
of the Company and provide for working capital needs and expansion of the
Company's operations. The notes require semiannual interest payments on June 1
and December 1 of each year until December 1, 2002, at which time the principal
balance is due and payable. The notes may be redeemed at the Company's option
anytime after December 1, 1997 at redemption prices ranging from 104.125% in
1997 to 100% in 1999. The notes contain certain covenants regarding
F-10
92
incurrence of debt, sales and disposition of assets, mergers or consolidations
and limitations on restricted payments (as defined in the indenture relating to
the notes).
The estimated fair value of the Company's long-term debt at June 30, 1995
was approximately $636 million, versus its book value of $624 million. At June
30, 1994 the estimated fair value of the Company's long-term debt was
approximately $558 million, versus its book value of $547 million.
In connection with the refinancing of $135 million 12.75% senior
subordinated notes in November 1992, the Company recorded a $7.4 million
extraordinary loss (net of income tax benefit of $3.8 million).
Interest rates on the Company's other long-term debt range from 8.1% to
16.8%.
Management believes the Company and its subsidiaries are in compliance with
all covenants contained in its long-term debt agreements at June 30, 1995.
The scheduled maturities of long-term debt for the years ending June 30 are
as follows:
(IN THOUSANDS)
1996........................................ $ 36,347
1997........................................ 48,780
1998........................................ 160,858
1999........................................ 30,949
2000........................................ 11,817
Thereafter.................................. 335,553
Total....................................... $624,304
NOTE 6: LEASES
Future minimum lease payments required under noncancelable leases
(principally for land) and capital leases (principally for equipment) as of June
30, 1995 are as follows:
OPERATING CAPITAL
LEASES LEASES
--------- -------
(IN THOUSANDS)
1996..................................................... $ 2,293 $ 109
1997..................................................... 2,236 29
1998..................................................... 1,900 --
1999..................................................... 1,873 --
2000..................................................... 1,796 --
Thereafter............................................... 70,345 --
-------
Total minimum payments required.......................... $80,443 138
Loan interest............................................ 34
-------
Present value of minimum lease payments.................. $ 104
=======
Rent expense for the years ended June 30, 1995, 1994 and 1993 was
$2,761,000, $2,288,000 and $2,107,000, respectively and is included in selling,
general and administrative expenses.
NOTE 7: 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 $1,999,000, $2,174,000 and $2,157,000 in 1995, 1994 and 1993,
respectively. The Company's share of the unfunded liability related to
multi-employer plans, if any, is not determinable.
F-11
93
The Company expensed voluntary contributions of $1,750,000 in 1995,
$1,500,000 in 1994 and 1993 to the Company's 401(k) profit-sharing plan and
trust.
A summary of the provision for income taxes for the years ended June 30 is
as follows:
PROVISION FOR INCOME TAXES:
1995 1994 1993
------- ------ ------
(IN THOUSANDS)
Current
Federal................................................... $14,165 $6,277 $6,632
State..................................................... 494 352 --
------- ------
14,659 6,629 6,632
Deferred
Federal................................................... 12,786 876 1,032
State..................................................... 505 -- --
------- ------
13,291 876 1,032
------- ------
$27,950 $7,505 $7,664
======= ======
The following table provides a reconciliation between the federal statutory
rate and the effective income tax rate from continuing operations at June 30
where both are expressed as a percentage of income.
1995 1994 1993
---- ---- ----
Tax provision at statutory rate..................... 35.0% 35.0% 34.0%
Increase (decrease) resulting from:
Development expenditures for new jurisdictions.... 3.1 -- --
Company provided benefits......................... 2.7 2.5 2.6
State income tax, net of federal benefit.......... 1.0 1.3 --
Tax preferred investments......................... (0.1) (2.5) --
Statutory rate change............................. -- 3.8 --
Other, net........................................ 1.8 1.2 1.0
----- -----
43.5% 41.3% 37.6%
===== =====
The tax items comprising the Company's net deferred tax liability as of
June 30 are as follows:
1995 1994
-------- --------
(IN THOUSANDS)
Deferred tax liabilities:
Difference between book and tax basis of property.... $33,053 $22,615
Difference between book and tax basis of amortizable
assets............................................. 1,513 --
Reserve differential for gaming activities........... 894 1,116
Other................................................ 1,192 89
-------
36,652 23,820
-------
Deferred tax assets:
Alternative minimum tax credit carryforward.......... 3,944 5,351
Preopening expense amortized for tax purposes........ 1,126 1,612
Provision for doubtful accounts...................... 832 795
Other................................................ 1,107 567
-------
7,009 8,325
-------
Net deferred tax liabilities......................... $29,643 $15,495
=======
F-12
94
The tax effects of timing differences resulting in deferred income taxes at
June 30 were as follows:
1993
--------------
(IN THOUSANDS)
Alternative minimum tax....................... $1,486
Accelerated depreciation...................... (498)
Accrual versus cash adjustments............... 446
Other, net.................................... (402)
------
$1,032
======
The Internal Revenue Service has examined the Company's federal
consolidated income tax returns through the year ended June 30, 1989. The
Company is currently under examination for fiscal years 1990 through 1992.
Management of the Company does not believe any significant adjustments will be
required. The Internal Revenue Service is considering a proposal that would
limit the federal income tax deductibility of the cost of providing
complimentary promotional items to customers. Such a proposal, if adopted, could
have a significant effect on the Company's tax rate.
NOTE 9: CAPITAL STOCK AND STOCK INCENTIVE PLANS
Capital Stock.
Two hundred million shares of common stock with a par value of $.01 per
share are authorized, of which 56,999,018 and 56,816,895 shares were issued at
June 30, 1995 and 1994, respectively, including no treasury shares.
The Company has authorized 5,000,000 shares of $.01 par value preferred
stock of which no shares were issued at June 30, 1995 and 1994.
The Company had 300,000 shares of $100 Preferred Stock with a par value of
$.01 per share and redemption value of $100 per share authorized of which
192,598 were issued at June 30, 1993 including 14,717 treasury shares at June
30, 1993. Upon the closing of the initial public offering, such preferred stock
automatically converted into common stock of the Company.
Stock Options.
In June 1993, shareholders of the Company approved a Flexible Stock
Incentive Plan (the "Flexible Plan") which provides for the granting of
incentive stock options, as determined under the Internal Revenue Code, to
employees of the Company, the granting of non-qualified stock options, stock
bonuses and stock appreciation rights to employees, officers, directors and
consultants of the Company and for the sale of restricted common stock to such
persons. The maximum number of shares of common stock available for issuance
under this plan is 4,000,000 shares. As of June 30, 1995, a total of 3,975,100
non-qualified stock options had been issued and none had been exercised.
Options granted under the plan generally become exercisable as to one-third
of the optioned shares each year after the date of grant. Options granted under
this plan expire no later than ten years after the grant date. Under the plan,
the exercise price of incentive options and non-qualified options granted to
certain executive officers may not be less than the fair market value of the
optioned stock at the date of grant.
In June 1993, shareholders of the Company approved a Directors'
Non-Qualified Stock Option Plan (the 'Director Plan") which provides for the
granting of up to 50,000 common shares. Options granted under the plan become
exercisable as to one-fourth of the optioned shares each year after the date of
the grant. Options granted under the plan expire no later than ten years after
the grant. Under the plan, the exercise price of the options granted may not be
less than the fair market value of the optioned stock at
F-13
95
the date of grant. At June 30, 1995, a total of 17,000 stock options had been
issued and none had been exercised.
NUMBER OF SHARES OPTION PRICES
-------------------- ------------------------------------
FLEXIBLE DIRECTOR FLEXIBLE DIRECTOR
PLAN PLAN PLAN PLAN
---------- -------- ------------------ ----------------
Options outstanding at July 1, 1993... -- -- -- --
Options granted....................... 2,688,000 15,000 $17.000 $17.00 - $18.50
Options canceled...................... 36,800 -- 17.000 --
--------- ------
Options outstanding at June 30,
1994................................ 2,651,200 15,000 $17.000 $17.00 - $18.50
Options granted....................... 1,287,100 2,000 13.625 14.00
Options canceled...................... 38,682 -- 13.625 14.00
--------- ------
Options outstanding at June 30, 1995 3,899,618 17,000 $13.625 - $17.000 $14.00 - $18.50
========= ======
Exercisable options at June 30,
1995................................ 875,610 3,750
At June 30, 1995, there were 100,382 and 33,000 options available for
future grant under the Flexible Plan and Director Plan respectively.
Employee Stock Purchase Plan.
In June 1993, shareholders of the Company approved an Employee Stock
Purchase Plan, which allows employees to purchase the Company's common stock,
through payroll deductions, at a price that shall not be less than 85% of fair
market value on the first or last date of the purchase period. The plan provides
for a maximum of 1,500,000 shares to be issued. During 1995, 182,123 shares were
issued to employees at a price of $9.14. In 1994, 36,944 shares were issued to
employees at a price of $12.54. At June 30, 1995, there were 1,280,933 shares
available for issuance under the plan.
NOTE 10: LEGAL PROCEEDINGS
The Company is a defendant in various pending litigation. In the opinion of
management, all pending claims in such litigation will not, in the aggregate,
have a material adverse effect on the Company.
NOTE 11: INITIAL PUBLIC OFFERING
In October 1993, the Company completed an initial public offering of 4.6
million shares of common stock at a price of $17 per share. In connection with
the closing of the offering, the Company effected a previously declared
11.322241 for 1 split of its common stock. Accordingly, the per share
information, average number of shares outstanding and total shares outstanding
and the accompanying financial statements have been adjusted as if the stock
split occurred as of the earliest period presented. The Company's $100 Preferred
Stock automatically converted into common stock of the Company upon the closing
of the initial public offering. Proceeds from the offering were approximately
$73.1 million.
Upon the closing of the public offering, the Company acquired all of the
outstanding shares of Eldorado, Inc. in exchange for shares of common stock of
the Company and assumption of indebtedness. Holders of certain promissory notes
of Eldorado, Inc. also received shares of common stock of the Company in
exchange for such notes.
NOTE 12: INTERIM INFORMATION (UNAUDITED)
In the opinion of the Company, the accompanying unaudited Consolidated
Financial Statements as of March 31, 1996 and for the nine months ended March
31, 1996 and 1995 contain all adjustments necessary, consisting of only normal
recurring adjustments, to present fairly the results of its operations and cash
flows for the nine months ended March 31, 1996 and 1995. The operating results
and cash flows for the nine months ended March 31, 1996 are not necessarily
indicative of the results that will be achieved for the full fiscal year or
future periods.
F-14
96
Recently Issued Accounting Standards.
The FASB issued SFAS No. 121 "Accounting for the Impairment of Long-Lived
Assets to be Disposed Of" in March 1995. This statement, effective for the
Company's fiscal year beginning July 1, 1996, requires that long-lived assets
and certain identifiable intangibles to be held and used by an entity be
reviewed whenever events or changes in circumstances indicate that the carrying
amount of an asset may not be recoverable. Management believes that adoption of
SFAS No. 121 will not have a significant effect on the financial position or
results of operations of the Company.
The FASB issued SFAS No. 123 "Accounting for Stock-Based Compensation" in
October, 1995. This statement, effective for the Company's fiscal year beginning
July 1, 1996, requires certain disclosures about the impact on results of
operations of the fair value of stock based employee compensation arrangements.
Management intends to continue to account for stock based employee compensation
arrangements in accordance with Accounting Principles Board No. 25 "Accounting
for Stock Issued to Employees" and accordingly believes that adoption of SFAS
No. 123 will not have a significant effect on the financial position or results
of operations of the Company.
Subsequent Events.
On April 26, 1996, the Company entered into a stock purchase agreement to
acquire Par-A-Dice Gaming Corporation, owner and operator of the Par-A-Dice
riverboat casino in East Peoria, Illinois and East Peoria Hotel, Inc., the
general partner of a partnership constructing a 204-room hotel adjacent to the
Par-A-Dice casino. Closing of the transaction is conditioned upon, among other
things, approval of the Illinois Gaming Board. The total purchase price is $175
million and includes the riverboat casino facility, the 204-room hotel and a
vacant potential gaming site in Missouri.
In April 1996, the Company and its wholly-owned subsidiary, California
Hotel and Casino, received a commitment for a new $500 million five-year
Reducing Revolving Credit Facility. This facility will replace the Company's and
its subsidiaries' current bank credit facilities. Availability under the new
facility will reduce semiannually starting in the third year. The Company is
currently negotiating the closing of this transaction which is expected to be
completed in June 1996.
F-15
97
[PHOTOS AND MAPS]
ATLANTIC CITY
ATLANTIC CITY MARINA MAP
CENTRAL ILLINOIS
ILLINOIS MAP
PAR-A-DICE
BOAT
RENDERING
OF
PAR-A-DICE
HOTEL
98
[PHOTOS AND MAPS]
MISSISSIPPI
STATE MAP
DEPICTING TWO SAM'S TOWN
PROPERTY LOCATIONS TUNICA
SILVER STAR
NEW ORLEANS
MAP OF
NEW ORLEANS
99
[PHOTOS AND MAPS]
KANSAS CITY
MAP
OF
KANSAS CITY
SAM'S TOWN
KANSAS CITY
NEW ORLEANS
TREASURE CHEST
100
NO DEALER, SALESPERSON OR ANY OTHER PERSON HAS BEEN AUTHORIZED TO GIVE ANY
INFORMATION OR TO MAKE ANY REPRESENTATIONS OTHER THAN THOSE CONTAINED IN THIS
PROSPECTUS IN CONNECTION WITH THE OFFER MADE BY THIS PROSPECTUS AND, IF GIVEN OR
MADE, SUCH INFORMATION OR REPRESENTATIONS MUST NOT BE RELIED UPON AS HAVING BEEN
AUTHORIZED BY THE COMPANY OR THE UNDERWRITERS. NEITHER THE DELIVERY OF THIS
PROSPECTUS NOR ANY SALE MADE HEREUNDER SHALL, UNDER ANY CIRCUMSTANCES, CREATE
ANY IMPLICATION THAT THERE HAS BEEN NO CHANGE IN THE AFFAIRS OF THE COMPANY
SINCE THE DATES AS OF WHICH INFORMATION IS GIVEN IN THIS PROSPECTUS. THIS
PROSPECTUS DOES NOT CONSTITUTE AN OFFER OR SOLICITATION BY ANYONE IN ANY
JURISDICTION IN WHICH SUCH OFFER OR SOLICITATION IS NOT AUTHORIZED OR IN WHICH
THE PERSON MAKING SUCH OFFER OR SOLICITATION IS NOT QUALIFIED TO DO SO OR TO ANY
PERSON TO WHOM IT IS UNLAWFUL TO MAKE SUCH OFFER OR SOLICITATION.
------------------------
TABLE OF CONTENTS
PAGE
----
Prospectus Summary........................ 3
Risk Factors.............................. 10
Use of Proceeds........................... 16
Capitalization............................ 17
Selected Consolidated Financial Data...... 18
Pro Forma Consolidated Financial
Statements.............................. 19
Management's Discussion and Analysis of
Financial Condition and Results of
Operations.............................. 24
Business.................................. 32
Management................................ 40
Description of Indebtedness............... 43
Description of Notes...................... 45
Certain U.S. Federal Income Tax
Considerations.......................... 71
Underwriting.............................. 74
Legal Matters............................. 75
Experts................................... 75
Available Information..................... 75
Incorporation of Certain Documents by
Reference............................... 76
Index to Consolidated Financial
Statements.............................. F-1
$200,000,000
BOYD GAMING
CORPORATION
% NOTES DUE 2003
[LOGO]
SALOMON BROTHERS INC
GOLDMAN, SACHS & CO.
CIBC WOOD GUNDY
SECURITIES CORPORATION
BT SECURITIES CORPORATION
PROSPECTUS
DATED , 1996
101
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION
Set forth below are the approximate amounts of the fees and expenses
payable by the Company in connection with the offering described in the
Registration Statement; all amounts are estimated except for the SEC
registration fee:
SEC registration fee..................................................... $ 68,965
Printing and engraving expenses.......................................... 75,000
Accounting fees and expenses............................................. 40,000
Legal fees and expenses.................................................. 75,000
Blue sky fees and expenses (including legal fees)........................ 10,000
Transfer agent's and registrar's fees and expenses....................... 25,000
Trustee's fees and expenses.............................................. 5,000
Rating Agency fees....................................................... 150,000
Miscellaneous............................................................ 51,035
----------
Total............................................................... $500,000
==========
ITEM 15. INDEMNIFICATION OF DIRECTORS AND OFFICERS
Under Sections 78.751 and 78.752 of the Nevada Revised Statutes, the
Company has broad powers to indemnify and insure its directors and officers
against liabilities they may incur in their capacities as such.
Article VIII of the Company's Restated Articles of Incorporation and
Article 10 of the Company's Restated Bylaws provide for indemnification of its
directors, officers, employees and other agents to the maximum extent permitted
by law. The Company also has entered into Indemnification Agreements with its
executive officers and directors and provides indemnity insurance pursuant to
which directors and officers are indemnified or insured against liability or
loss under certain circumstances which may include liability, or related loss
under the Securities Act and the Exchange Act.
Under the terms of the Form of Underwriting Agreement, filed as an exhibit
hereto, directors, certain officers and controlling persons of the Company are
entitled to indemnification under certain circumstances including proceedings
under the Securities Act and the Exchange Act.
ITEM 16. EXHIBITS
1 Form of Underwriting Agreement (to be filed by amendment).
3.1 Restated Articles of Incorporation (filed as an Exhibit to Registrant's Registration
Statement on Form S-1, File No. 33-64006, which became effective on October 15,
1993, and incorporated by reference).
3.2 Restated Bylaws.
4 Form of Indenture (to be filed by amendment).
5 Opinion of Morrison & Foerster LLP (to be filed by amendment).
12 Computation of Ratio of Earnings to Fixed Charges.
23.1 Consent of Deloitte & Touche LLP.
23.2 Consent of Morrison & Foerster LLP (to be included in Exhibit 5 to this Registration
Statement).
23.3 Consent of Coopers & Lybrand L.L.P.
24 Powers of Attorney (see Pages S-1 to S-11).
25 Statement of Eligibility of Trustee on Form T-1 (to be filed by amendment).
II-1
102
ITEM 17. UNDERTAKINGS
(a) The undersigned Registrants hereby undertake that, for purposes of
determining any liability under the Securities Act of 1933, each filing of the
Registrants' annual reports pursuant to Section 13(a) or Section 15(d) of the
Securities Exchange Act of 1934 (and, where applicable, each filing of an
employee benefit plan's annual report pursuant to Section 15(d) of the
Securities Exchange Act of 1934) that is incorporated by reference in the
registration statement shall be deemed to be a new registration statement
relating to the securities offered therein, and the offering of such securities
at that time shall be deemed to be the initial bona fide offering thereof.
(b) Insofar as indemnification for liabilities arising under the Securities
Act of 1933 may be permitted to directors, officers and controlling persons of
the registrants pursuant to the foregoing provisions, or otherwise, the
registrants have been advised that in the opinion of the Securities and Exchange
Commission such indemnification is against public policy as expressed in the Act
and is, therefore, unenforceable. In the event that a claim for indemnification
against such liabilities (other than the payment by the registrants of expenses
incurred or paid by a director, officer or controlling person of the registrants
in the successful defense of any action, suit or proceeding) is asserted by such
director, officer or controlling person in connection with the securities being
registered, the Registrants will, unless in the opinion of its counsel the
matter has been settled by controlling precedent, submit to a court of
appropriate jurisdiction the question whether such indemnification by it is
against public policy as expressed in the Act and will be governed by the final
adjudication of such issue.
(c) The undersigned Registrants hereby understand that:
(i) For purposes of determining any liability under the Securities Act
of 1933, the information omitted from the form of prospectus filed as part
of this Registration Statement in reliance upon Rule 430A and contained in
a form of prospectus filed by the Registrants pursuant to Rule 424(b)(1) or
(4) or 497(h) under the Securities Act shall be deemed to be a part of this
Registration Statement as of the time it was declared effective.
(ii) For the purpose of determining any liability under the Securities
Act of 1933, each post-effective amendment that contains a form of
prospectus shall be deemed to be a new registration statement relating to
the securities offered therein, and the offering of such securities at that
time shall be deemed to be the initial bona fide offering thereof.
II-2
103
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, as amended, the
Company certifies that it has reasonable grounds to believe that it meets all of
the requirements for filing on Form S-3 and has duly caused this Registration
Statement to be signed on its behalf by the undersigned, thereunto duly
authorized in the City of Las Vegas, State of Nevada, on June 7, 1996.
BOYD GAMING CORPORATION
By: /s/ WILLIAM S. BOYD
------------------------------------
Title Chief Executive Officer
-----------------------------------
POWER OF ATTORNEY
Each of the undersigned hereby appoints William S. Boyd, Ellis Landau and
Keith Smith, and each of them (with full power in each to act alone), as
attorneys and agents for the undersigned, with full power of substitution for
and in the name, place, and stead of the undersigned, to sign and file with the
Securities and Exchange Commission under the Securities Act of 1933 any and all
amendments and exhibits to this Registration Statement and any and all
applications, instruments, and other documents to be filed with the Securities
and Exchange Commission pertaining to the registration of the securities covered
hereby, with full power and authority to do and perform any and all acts and
things whatsoever requisite or desirable, hereby ratifying and confirming all
that each of said attorneys-in-fact, his substitute or substitutes, may do or
cause to be done by virtue hereof.
Pursuant to the requirements of the Securities Act of 1933, as amended,
this Registration Statement has been signed below by the following persons and
in the capacities indicated on the date indicated.
SIGNATURE TITLE DATE
- -------------------------------------- ---------------------------------------- -------------
/s/ WILLIAM S. BOYD Chairman of the Board of Directors, June 7, 1996
- -------------------------------------- Chief Executive Officer and Director
William S. Boyd (Principal Executive Officer)
/s/ ELLIS LANDAU Senior Vice President, Chief Financial June 7, 1996
- -------------------------------------- Officer and Treasurer (Principal
Ellis Landau Financial Officer)
/s/ KEITH SMITH Vice President and Controller June 7, 1996
- -------------------------------------- (Principal Accounting Officer)
Keith Smith
/s/ ROBERT L. BOUGHNER Director June 7, 1996
- --------------------------------------
Robert L. Boughner
/s/ WILLIAM R. BOYD Director June 7, 1996
- --------------------------------------
William R. Boyd
/s/ KENNY C. GUINN Director June 7, 1996
- --------------------------------------
Kenny C. Guinn
/s/ MARIANNE BOYD JOHNSON Director June 7, 1996
- --------------------------------------
Marianne Boyd Johnson
S-1
104
SIGNATURE TITLE DATE
- -------------------------------------- ---------------------------------------- -------------
/s/ WARREN L. NELSON Director June 7, 1996
- --------------------------------------
Warren L. Nelson
Director June , 1996
- --------------------------------------
Charles L. Ruthe
/s/ DONALD D. SNYDER Director June 7, 1996
- --------------------------------------
Donald D. Snyder
/s/ PERRY B. WHITT Director June 7, 1996
- --------------------------------------
Perry B. Whitt
S-2
105
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, as amended,
California Hotel and Casino certifies that it has reasonable grounds to believe
that it meets all of the requirements for filing on Form S-3 and has duly caused
this Registration Statement to be signed on its behalf by the undersigned,
thereunto duly authorized in the City of Las Vegas, State of Nevada, on June 7,
1996.
CALIFORNIA HOTEL AND CASINO
By: /s/ WILLIAM S. BOYD
------------------------------------
Title President
-----------------------------------
POWER OF ATTORNEY
Each of the undersigned hereby appoints William S. Boyd, Ellis Landau and
Keith Smith, and each of them (with full power in each to act alone), as
attorneys and agents for the undersigned, with full power of substitution for
and in the name, place, and stead of the undersigned, to sign and file with the
Securities and Exchange Commission under the Securities Act of 1933 any and all
amendments and exhibits to this Registration Statement and any and all
applications, instruments, and other documents to be filed with the Securities
and Exchange Commission pertaining to the registration of the securities covered
hereby, with full power and authority to do and perform any and all acts and
things whatsoever requisite or desirable, hereby ratifying and confirming all
that each of said attorneys-in-fact, his substitute or substitutes, may do or
cause to be done by virtue hereof.
Pursuant to the requirements of the Securities Act of 1933, as amended,
this Registration Statement has been signed below by the following persons and
in the capacities indicated on the date indicated.
SIGNATURE TITLE DATE
- -------------------------------------- ---------------------------------------- -------------
/s/ WILLIAM S. BOYD President and Director June 7, 1996
- -------------------------------------- (Principal Executive Officer)
William S. Boyd
/s/ ELLIS LANDAU Senior Vice President, Chief Financial June 7, 1996
- -------------------------------------- Officer and Treasurer (Principal
Ellis Landau Financial Officer)
/s/ KEITH SMITH Vice President and Controller June 7, 1996
- -------------------------------------- (Principal Accounting Officer)
Keith Smith
/s/ ROBERT L. BOUGHNER Director June 7, 1996
- --------------------------------------
Robert L. Boughner
Director June , 1996
- --------------------------------------
Charles L. Ruthe
S-3
106
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, as amended,
Boyd Tunica, Inc. certifies that it has reasonable grounds to believe that it
meets all of the requirements for filing on Form S-3 and has duly caused this
Registration Statement to be signed on its behalf by the undersigned, thereunto
duly authorized in the City of Las Vegas, State of Nevada, on June 7, 1996.
BOYD TUNICA, INC.
By: /s/ WILLIAM S. BOYD
------------------------------------
Title President
-----------------------------------
POWER OF ATTORNEY
Each of the undersigned hereby appoints William S. Boyd, Ellis Landau and
Keith Smith, and each of them (with full power in each to act alone), as
attorneys and agents for the undersigned, with full power of substitution for
and in the name, place, and stead of the undersigned, to sign and file with the
Securities and Exchange Commission under the Securities Act of 1933 any and all
amendments and exhibits to this Registration Statement and any and all
applications, instruments, and other documents to be filed with the Securities
and Exchange Commission pertaining to the registration of the securities covered
hereby, with full power and authority to do and perform any and all acts and
things whatsoever requisite or desirable, hereby ratifying and confirming all
that each of said attorneys-in-fact, his substitute or substitutes, may do or
cause to be done by virtue hereof.
Pursuant to the requirements of the Securities Act of 1933, as amended,
this Registration Statement has been signed below by the following persons and
in the capacities indicated on the date indicated.
SIGNATURE TITLE DATE
- -------------------------------------- ---------------------------------------- -------------
/s/ WILLIAM S. BOYD President and Director June 7, 1996
- -------------------------------------- (Principal Executive Officer)
William S. Boyd
/s/ ELLIS LANDAU Senior Vice President, Chief Financial June 7, 1996
- -------------------------------------- Officer and Treasurer (Principal
Ellis Landau Financial Officer)
/s/ KEITH SMITH Vice President and Controller June 7, 1996
- -------------------------------------- (Principal Accounting Officer)
Keith Smith
/s/ ROBERT L. BOUGHNER Director June 7, 1996
- --------------------------------------
Robert L. Boughner
Director June , 1996
- --------------------------------------
Charles L. Ruthe
S-4
107
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, as amended,
Boyd Mississippi, Inc. certifies that it has reasonable grounds to believe that
it meets all of the requirements for filing on Form S-3 and has duly caused this
Registration Statement to be signed on its behalf by the undersigned, thereunto
duly authorized in the City of Las Vegas, State of Nevada, on June 7, 1996.
BOYD MISSISSIPPI, INC.
By: /s/ WILLIAM S. BOYD
------------------------------------
Title President
-----------------------------------
POWER OF ATTORNEY
Each of the undersigned hereby appoints William S. Boyd, Ellis Landau and
Keith Smith, and each of them (with full power in each to act alone), as
attorneys and agents for the undersigned, with full power of substitution for
and in the name, place, and stead of the undersigned, to sign and file with the
Securities and Exchange Commission under the Securities Act of 1933 any and all
amendments and exhibits to this Registration Statement and any and all
applications, instruments, and other documents to be filed with the Securities
and Exchange Commission pertaining to the registration of the securities covered
hereby, with full power and authority to do and perform any and all acts and
things whatsoever requisite or desirable, hereby ratifying and confirming all
that each of said attorneys-in-fact, his substitute or substitutes, may do or
cause to be done by virtue hereof.
Pursuant to the requirements of the Securities Act of 1933, as amended,
this Registration Statement has been signed below by the following persons and
in the capacities indicated on the date indicated.
SIGNATURE TITLE DATE
- -------------------------------------- ---------------------------------------- -------------
/s/ WILLIAM S. BOYD President and Director June 7, 1996
- -------------------------------------- (Principal Executive Officer)
William S. Boyd
/s/ ELLIS LANDAU Senior Vice President, Chief Financial June 7, 1996
- -------------------------------------- Officer and Treasurer (Principal
Ellis Landau Financial Officer)
/s/ KEITH SMITH Vice President and Controller June 7, 1996
- -------------------------------------- (Principal Accounting Officer)
Keith Smith
/s/ ROBERT L. BOUGHNER Director June 7, 1996
- --------------------------------------
Robert L. Boughner
Director June , 1996
- --------------------------------------
Charles L. Ruthe
S-5
108
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, as amended,
Boyd Kansas City, Inc. certifies that it has reasonable grounds to believe that
it meets all of the requirements for filing on Form S-3 and has duly caused this
Registration Statement to be signed on its behalf by the undersigned, thereunto
duly authorized in the City of Las Vegas, State of Nevada, on June 7, 1996.
BOYD KANSAS CITY, INC.
By: /s/ WILLIAM S. BOYD
------------------------------------
Title President
-----------------------------------
POWER OF ATTORNEY
Each of the undersigned hereby appoints William S. Boyd, Ellis Landau and
Keith Smith, and each of them (with full power in each to act alone), as
attorneys and agents for the undersigned, with full power of substitution for
and in the name, place, and stead of the undersigned, to sign and file with the
Securities and Exchange Commission under the Securities Act of 1933 any and all
amendments and exhibits to this Registration Statement and any and all
applications, instruments, and other documents to be filed with the Securities
and Exchange Commission pertaining to the registration of the securities covered
hereby, with full power and authority to do and perform any and all acts and
things whatsoever requisite or desirable, hereby ratifying and confirming all
that each of said attorneys-in-fact, his substitute or substitutes, may do or
cause to be done by virtue hereof.
Pursuant to the requirements of the Securities Act of 1933, as amended,
this Registration Statement has been signed below by the following persons and
in the capacities indicated on the date indicated.
SIGNATURE TITLE DATE
- --------------------------------------- ---------------------------------------- --------------
/s/ WILLIAM S. BOYD President and Director June 7, 1996
- --------------------------------------- (Principal Executive Officer)
William S. Boyd
/s/ ELLIS LANDAU Senior Vice President, Chief Financial June 7, 1996
- --------------------------------------- Officer and Treasurer (Principal
Ellis Landau Financial Officer)
/s/ KEITH SMITH Vice President and Controller June 7, 1996
- --------------------------------------- (Principal Accounting Officer)
Keith Smith
/s/ ROBERT L. BOUGHNER Director June 7, 1996
- ---------------------------------------
Robert L. Boughner
Director June , 1996
- ---------------------------------------
Norman Powell
S-6
109
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, as amended,
Boyd Kenner, Inc. certifies that it has reasonable grounds to believe that it
meets all of the requirements for filing on Form S-3 and has duly caused this
Registration Statement to be signed on its behalf by the undersigned, thereunto
duly authorized in the City of Las Vegas, State of Nevada, on June 7, 1996.
BOYD KENNER, INC.
By: /s/ WILLIAM S. BOYD
------------------------------------
Title President
-----------------------------------
POWER OF ATTORNEY
Each of the undersigned hereby appoints William S. Boyd, Ellis Landau and
Keith Smith, and each of them (with full power in each to act alone), as
attorneys and agents for the undersigned, with full power of substitution for
and in the name, place, and stead of the undersigned, to sign and file with the
Securities and Exchange Commission under the Securities Act of 1933 any and all
amendments and exhibits to this Registration Statement and any and all
applications, instruments, and other documents to be filed with the Securities
and Exchange Commission pertaining to the registration of the securities covered
hereby, with full power and authority to do and perform any and all acts and
things whatsoever requisite or desirable, hereby ratifying and confirming all
that each of said attorneys-in-fact, his substitute or substitutes, may do or
cause to be done by virtue hereof.
Pursuant to the requirements of the Securities Act of 1933, as amended,
this Registration Statement has been signed below by the following persons and
in the capacities indicated on the date indicated.
SIGNATURE TITLE DATE
- -------------------------------------- ---------------------------------------- -------------
/s/ WILLIAM S. BOYD President and Director June 7, 1996
- -------------------------------------- (Principal Executive Officer)
William S. Boyd
/s/ ELLIS LANDAU Senior Vice President, Chief Financial June 7, 1996
- -------------------------------------- Officer and Treasurer (Principal
Ellis Landau Financial Officer)
/s/ KEITH SMITH Vice President and Controller June 7, 1996
- -------------------------------------- (Principal Accounting Officer)
Keith Smith
/s/ ROBERT L. BOUGHNER Director June 7, 1996
- --------------------------------------
Robert L. Boughner
Director June , 1996
- --------------------------------------
Charles L. Ruthe
S-7
110
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, as amended,
Mare-Bear, Inc. certifies that it has reasonable grounds to believe that it
meets all of the requirements for filing on Form S-3 and has duly caused this
Registration Statement to be signed on its behalf by the undersigned, thereunto
duly authorized in the City of Las Vegas, State of Nevada, on June 7, 1996.
MARE-BEAR, INC.
By: /s/ WILLIAM S. BOYD
------------------------------------
Title President
-----------------------------------
POWER OF ATTORNEY
Each of the undersigned hereby appoints William S. Boyd, Ellis Landau and
Keith Smith, and each of them (with full power in each to act alone), as
attorneys and agents for the undersigned, with full power of substitution for
and in the name, place, and stead of the undersigned, to sign and file with the
Securities and Exchange Commission under the Securities Act of 1933 any and all
amendments and exhibits to this Registration Statement and any and all
applications, instruments, and other documents to be filed with the Securities
and Exchange Commission pertaining to the registration of the securities covered
hereby, with full power and authority to do and perform any and all acts and
things whatsoever requisite or desirable, hereby ratifying and confirming all
that each of said attorneys-in-fact, his substitute or substitutes, may do or
cause to be done by virtue hereof.
Pursuant to the requirements of the Securities Act of 1933, as amended,
this Registration Statement has been signed below by the following persons and
in the capacities indicated on the date indicated.
SIGNATURE TITLE DATE
- -------------------------------------- ---------------------------------------- -------------
/s/ WILLIAM S. BOYD President and Director June 7, 1996
- -------------------------------------- (Principal Executive Officer)
William S. Boyd
/s/ ELLIS LANDAU Senior Vice President, Chief Financial June 7, 1996
- -------------------------------------- Officer and Treasurer (Principal
Ellis Landau Financial Officer)
/s/ KEITH SMITH Vice President and Controller June 7, 1996
- -------------------------------------- (Principal Accounting Officer)
Keith Smith
/s/ ROBERT L. BOUGHNER Director June 7, 1996
- --------------------------------------
Robert L. Boughner
Director June , 1996
- --------------------------------------
Charles L. Ruthe
S-8
111
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, as amended,
Sam-Will, Inc. certifies that it has reasonable grounds to believe that it meets
all of the requirements for filing on Form S-3 and has duly caused this
Registration Statement to be signed on its behalf by the undersigned, thereunto
duly authorized in the City of Las Vegas, State of Nevada, on June 7, 1996.
SAM-WILL, INC.
By: /s/ WILLIAM S. BOYD
------------------------------------
Title President
-----------------------------------
POWER OF ATTORNEY
Each of the undersigned hereby appoints William S. Boyd, Ellis Landau and
Keith Smith, and each of them (with full power in each to act alone), as
attorneys and agents for the undersigned, with full power of substitution for
and in the name, place, and stead of the undersigned, to sign and file with the
Securities and Exchange Commission under the Securities Act of 1933 any and all
amendments and exhibits to this Registration Statement and any and all
applications, instruments, and other documents to be filed with the Securities
and Exchange Commission pertaining to the registration of the securities covered
hereby, with full power and authority to do and perform any and all acts and
things whatsoever requisite or desirable, hereby ratifying and confirming all
that each of said attorneys-in-fact, his substitute or substitutes, may do or
cause to be done by virtue hereof.
Pursuant to the requirements of the Securities Act of 1933, as amended,
this Registration Statement has been signed below by the following persons and
in the capacities indicated on the date indicated.
SIGNATURE TITLE DATE
- -------------------------------------- ---------------------------------------- -------------
/s/ WILLIAM S. BOYD President and Director June 7, 1996
- -------------------------------------- (Principal Executive Officer)
William S. Boyd
/s/ ELLIS LANDAU Senior Vice President, Chief Financial June 7, 1996
- -------------------------------------- Officer and Treasurer (Principal
Ellis Landau Financial Officer)
/s/ KEITH SMITH Vice President and Controller June 7, 1996
- -------------------------------------- (Principal Accounting Officer)
Keith Smith
/s/ ROBERT L. BOUGHNER Director June 7, 1996
- --------------------------------------
Robert L. Boughner
Director June , 1996
- --------------------------------------
Charles L. Ruthe
S-9
112
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, as amended,
Eldorado, Inc. certifies that it has reasonable grounds to believe that it meets
all of the requirements for filing on Form S-3 and has duly caused this
Registration Statement to be signed on its behalf by the undersigned, thereunto
duly authorized in the City of Las Vegas, State of Nevada, on June 7, 1996.
ELDORADO, INC.
By: /s/ WILLIAM S. BOYD
------------------------------------
Title President
-----------------------------------
POWER OF ATTORNEY
Each of the undersigned hereby appoints William S. Boyd, Ellis Landau and
Keith Smith, and each of them (with full power in each to act alone), as
attorneys and agents for the undersigned, with full power of substitution for
and in the name, place, and stead of the undersigned, to sign and file with the
Securities and Exchange Commission under the Securities Act of 1933 any and all
amendments and exhibits to this Registration Statement and any and all
applications, instruments, and other documents to be filed with the Securities
and Exchange Commission pertaining to the registration of the securities covered
hereby, with full power and authority to do and perform any and all acts and
things whatsoever requisite or desirable, hereby ratifying and confirming all
that each of said attorneys-in-fact, his substitute or substitutes, may do or
cause to be done by virtue hereof.
Pursuant to the requirements of the Securities Act of 1933, as amended,
this Registration Statement has been signed below by the following persons and
in the capacities indicated on the date indicated.
SIGNATURE TITLE DATE
- -------------------------------------- ---------------------------------------- -------------
/s/ WILLIAM S. BOYD President and Director June 7, 1996
- -------------------------------------- (Principal Executive Officer)
William S. Boyd
/s/ ELLIS LANDAU Senior Vice President, Chief Financial June 7, 1996
- -------------------------------------- Officer and Treasurer (Principal
Ellis Landau Financial Officer)
/s/ KEITH SMITH Vice President and Controller June 7, 1996
- -------------------------------------- (Principal Accounting Officer)
Keith Smith
/s/ ROBERT L. BOUGHNER Director June 7, 1996
- --------------------------------------
Robert L. Boughner
Director June , 1996
- --------------------------------------
Charles L. Ruthe
S-10
113
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, as amended,
MSW, Inc. certifies that it has reasonable grounds to believe that it meets all
of the requirements for filing on Form S-3 and has duly caused this Registration
Statement to be signed on its behalf by the undersigned, thereunto duly
authorized in the City of Las Vegas, State of Nevada, on June 7, 1996.
MSW, INC.
By: /s/ WILLIAM S. BOYD
------------------------------------
Title President
-----------------------------------
POWER OF ATTORNEY
Each of the undersigned hereby appoints William S. Boyd, Ellis Landau and
Keith Smith, and each of them (with full power in each to act alone), as
attorneys and agents for the undersigned, with full power of substitution for
and in the name, place, and stead of the undersigned, to sign and file with the
Securities and Exchange Commission under the Securities Act of 1933 any and all
amendments and exhibits to this Registration Statement and any and all
applications, instruments, and other documents to be filed with the Securities
and Exchange Commission pertaining to the registration of the securities covered
hereby, with full power and authority to do and perform any and all acts and
things whatsoever requisite or desirable, hereby ratifying and confirming all
that each of said attorneys-in-fact, his substitute or substitutes, may do or
cause to be done by virtue hereof.
Pursuant to the requirements of the Securities Act of 1933, as amended,
this Registration Statement has been signed below by the following persons and
in the capacities indicated on the date indicated.
SIGNATURE TITLE DATE
- ------------------------------------- ---------------------------------------- --------------
/s/ WILLIAM S. BOYD President and Director June 7, 1996
- ------------------------------------- (Principal Executive Officer)
William S. Boyd
/s/ ELLIS LANDAU Senior Vice President, Chief Financial June 7, 1996
- ------------------------------------- Officer and Treasurer (Principal
Ellis Landau Financial Officer)
/s/ KEITH SMITH Vice President and Controller June 7, 1996
- ------------------------------------- (Principal Accounting Officer)
Keith Smith
/s/ ROBERT C. BOUGHNER Director June 7, 1996
- -------------------------------------
Robert C. Boughner
Director June , 1996
- -------------------------------------
Charles L. Ruthe
S-11
114
INDEX TO EXHIBITS
SEQUENTIALLY
EXHIBIT NUMBERED
NUMBER DESCRIPTION PAGES
- ------- ------------------------------------------------------------------------ ------------
1 Form of Underwriting Agreement (to be filed by amendment)...............
3.1 Restated Articles of Incorporation (filed as an Exhibit to Registrant's
Registration Statement on Form S-1, File No. 33-64006, which became
effective on October 15, 1993, and incorporated by reference)...........
3.2 Restated Bylaws.........................................................
4 Form of Indenture (to be filed by amendment)............................
5 Opinion of Morrison & Foerster LLP (to be filed by amendment)...........
12 Computation of Ratio of Earnings to Fixed Charges.......................
23.1 Consent of Deloitte & Touche LLP........................................
23.2 Consent of Morrison & Foerster LLP (to be included in Exhibit 5 to this
Registration Statement).................................................
23.3 Consent of Coopers & Lybrand L.L.P......................................
24 Powers of Attorney (see Pages S-1 to S-11)..............................
25 Statement of Eligibility of Trustee on Form T-1 (to be filed by
amendment)..............................................................