BYD 10Q 6.30.2013
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
____________________________________________________
FORM 10-Q
____________________________________________________
(Mark One)
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x | QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the quarterly period ended June 30, 2013
OR
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o | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the transition period from to
Commission file number: 1-12882
____________________________________________________
BOYD GAMING CORPORATION
(Exact name of registrant as specified in its charter)
____________________________________________________
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Nevada | | 88-0242733 |
(State or other jurisdiction of incorporation or organization) | | (I.R.S. Employer Identification No.) |
3883 Howard Hughes Parkway, Ninth Floor, Las Vegas, NV 89169
(Address of principal executive offices) (Zip Code)
(702) 792-7200
(Registrant’s telephone number, including area code)
____________________________________________________
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes x No o
Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes x No o
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.
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Large accelerated filer | | o | | Accelerated filer | | x |
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Non-accelerated filer | | o (Do not check if a smaller reporting company) | | Smaller reporting company | | o |
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes o No x
Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date.
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| Class | | Outstanding as of August 7, 2013 | |
| Common stock, $0.01 par value | | 107,766,479 | |
BOYD GAMING CORPORATION
QUARTERLY REPORT ON FORM 10-Q
FOR THE PERIODS ENDED JUNE 30, 2013
TABLE OF CONTENTS
PART I. Financial Information
Item 1. Financial Statements (Unaudited)
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BOYD GAMING CORPORATION AND SUBSIDIARIES CONDENSED CONSOLIDATED BALANCE SHEETS as of June 30, 2013 and December 31, 2012 _____________________________________________________________________________________________________ |
(In thousands, except share data) | June 30, | | December 31, |
(Unaudited) | 2013 | | 2012 |
ASSETS | | | |
Current assets | | | |
Cash and cash equivalents | $ | 182,612 |
| | $ | 192,545 |
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Restricted cash | 23,576 |
| | 22,900 |
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Accounts receivable, net | 59,426 |
| | 61,753 |
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Inventories | 19,567 |
| | 18,539 |
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Prepaid expenses and other current assets | 48,451 |
| | 48,673 |
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Income taxes receivable | 1,643 |
| | 2,875 |
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Deferred income taxes and other current tax assets | 7,796 |
| | 7,623 |
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Current assets of discontinued operations | — |
| | 685 |
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Total current assets | 343,071 |
| | 355,593 |
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| | | |
Property and equipment, net | 3,550,178 |
| | 3,587,314 |
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Assets held for development | — |
| | 331,770 |
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Debt financing costs, net | 82,451 |
| | 85,468 |
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Restricted investments held by variable interest entity | — |
| | 21,382 |
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Other assets, net | 82,954 |
| | 98,415 |
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Intangible assets, net | 1,095,494 |
| | 1,119,638 |
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Goodwill, net | 694,929 |
| | 694,929 |
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Assets of discontinued operations | — |
| | 37,684 |
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Total assets | $ | 5,849,077 |
| | $ | 6,332,193 |
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BOYD GAMING CORPORATION AND SUBSIDIARIES CONDENSED CONSOLIDATED BALANCE SHEETS as of June 30, 2013 and December 31, 2012 _____________________________________________________________________________________________________ |
(In thousands, except share data) | June 30, | | December 31, |
(Unaudited) | 2013 | | 2012 |
LIABILITIES AND STOCKHOLDERS’ EQUITY | | | |
Current liabilities | | | |
Current maturities of long-term debt | $ | 50,759 |
| | $ | 61,570 |
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Accounts payable | 102,063 |
| | 91,156 |
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Accrued liabilities | 370,776 |
| | 363,732 |
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Deferred income taxes and income taxes payable | — |
| | 8,129 |
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Current deferred tax liability | 7,433 |
| | — |
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Current maturities of non-recourse obligations of variable interest entity | — |
| | 225,113 |
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Current liabilities of discontinued operations | — |
| | 864 |
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Total current liabilities | 531,031 |
| | 750,564 |
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Long-term debt, net of current maturities | 4,519,481 |
| | 4,827,853 |
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Deferred income taxes | 150,754 |
| | 139,943 |
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Other long-term tax liabilities | 26,260 |
| | 43,457 |
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Other liabilities | 95,493 |
| | 103,249 |
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Commitments and contingencies (Note 10) |
| |
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Stockholders’ equity | | | |
Preferred stock, $0.01 par value, 5,000,000 shares authorized | — |
| | — |
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Common stock, $0.01 par value, 200,000,000 shares authorized; 88,767,611 and 86,871,977 shares outstanding | 888 |
| | 869 |
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Additional paid-in capital | 675,454 |
| | 655,694 |
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Accumulated deficit | (347,467 | ) | | (351,810 | ) |
Accumulated other comprehensive loss | (846 | ) | | (962 | ) |
Total Boyd Gaming Corporation stockholders’ equity | 328,029 |
| | 303,791 |
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Noncontrolling interest | 198,029 |
| | 163,336 |
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Total stockholders’ equity | 526,058 |
| | 467,127 |
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Total liabilities and stockholders’ equity | $ | 5,849,077 |
| | $ | 6,332,193 |
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The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.
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BOYD GAMING CORPORATION AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS for the three and six months ended June 30, 2013 and 2012 _____________________________________________________________________________________________________ |
| Three Months Ended | | Six Months Ended |
(In thousands, except per share data) | June 30, | | June 30, |
(Unaudited) | 2013 | | 2012 | | 2013 | | 2012 |
REVENUES | | | | | | | |
Operating revenues: | | | | | | | |
Gaming | $ | 627,926 |
| | $ | 514,018 |
| | $ | 1,260,485 |
| | $ | 1,048,554 |
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Food and beverage | 112,804 |
| | 105,187 |
| | 224,578 |
| | 211,218 |
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Room | 67,154 |
| | 69,628 |
| | 131,009 |
| | 135,625 |
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Other | 41,898 |
| | 35,784 |
| | 81,209 |
| | 71,505 |
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Gross revenues | 849,782 |
| | 724,617 |
| | 1,697,281 |
| | 1,466,902 |
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Less promotional allowances | 111,034 |
| | 110,547 |
| | 222,949 |
| | 221,163 |
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Net revenues | 738,748 |
| | 614,070 |
| | 1,474,332 |
| | 1,245,739 |
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COST AND EXPENSES | | | | | | | |
Operating costs and expenses: | | | | | | | |
Gaming | 287,801 |
| | 239,170 |
| | 585,063 |
| | 486,942 |
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Food and beverage | 64,242 |
| | 60,250 |
| | 124,295 |
| | 114,209 |
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Room | 15,955 |
| | 15,931 |
| | 29,055 |
| | 30,066 |
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Other | 31,199 |
| | 26,680 |
| | 59,373 |
| | 52,696 |
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Selling, general and administrative | 127,000 |
| | 109,671 |
| | 251,028 |
| | 218,318 |
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Maintenance and utilities | 41,042 |
| | 39,387 |
| | 80,251 |
| | 77,995 |
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Depreciation and amortization | 70,318 |
| | 50,661 |
| | 140,356 |
| | 100,635 |
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Corporate expense | 15,148 |
| | 13,009 |
| | 30,504 |
| | 25,880 |
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Preopening expense | 789 |
| | 2,210 |
| | 3,154 |
| | 3,870 |
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Impairments of assets | 5,032 |
| | — |
| | 5,032 |
| | — |
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Asset transactions costs | 614 |
| | 6,242 |
| | 3,627 |
| | 6,272 |
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Other operating charges and credits, net | 229 |
| | (8,438 | ) | | 1,795 |
| | (8,221 | ) |
Total operating costs and expenses | 659,369 |
| | 554,773 |
| | 1,313,533 |
| | 1,108,662 |
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Operating income | 79,379 |
| | 59,297 |
| | 160,799 |
| | 137,077 |
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Other expense (income): | | | | | | | |
Interest income | (570 | ) | | (408 | ) | | (1,226 | ) | | (412 | ) |
Interest expense, net | 88,126 |
| | 64,788 |
| | 183,808 |
| | 128,616 |
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Other, net | 2,419 |
| | — |
| | 1,901 |
| | — |
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Total other expense, net | 89,975 |
| | 64,380 |
| | 184,483 |
| | 128,204 |
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Income (loss) from continuing operations before income taxes | (10,596 | ) | | (5,083 | ) | | (23,684 | ) | | 8,873 |
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Income taxes benefit (expense) | 4,102 |
| | 5,080 |
| | 6,526 |
| | (1,623 | ) |
Income (loss) from continuing operations, net of tax | (6,494 | ) | | (3 | ) | | (17,158 | ) | | 7,250 |
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Income (loss) from discontinued operations, net of tax | 11,753 |
| | (688 | ) | | 10,790 |
| | (1,466 | ) |
Net income (loss) | 5,259 |
| | (691 | ) | | (6,368 | ) | | 5,784 |
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Net loss attributable to noncontrolling interest | 6,368 |
| | 1,668 |
| | 10,711 |
| | 1,045 |
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Net income (loss) attributable to Boyd Gaming Corporation | $ | 11,627 |
| | $ | 977 |
| | $ | 4,343 |
| | $ | 6,829 |
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BOYD GAMING CORPORATION AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS for the three and six months ended June 30, 2013 and 2012 _____________________________________________________________________________________________________ |
| Three Months Ended | | Six Months Ended |
(In thousands, except per share data) | June 30, | | June 30, |
(Unaudited) | 2013 | | 2012 | | 2013 | | 2012 |
Basic net income (loss) per common share: | | | | | | | |
Continuing operations | $ | — |
| | $ | 0.02 |
| | $ | (0.07 | ) | | $ | 0.09 |
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Discontinued operations | 0.13 |
| | (0.01 | ) | | 0.12 |
| | (0.01 | ) |
Basic net income (loss) per common share | $ | 0.13 |
| | $ | 0.01 |
| | $ | 0.05 |
| | $ | 0.08 |
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Weighted average basic shares outstanding | 89,230 |
| | 87,588 |
| | 88,606 |
| | 87,559 |
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| | | | | | | |
Diluted net income (loss) per common share: | | | | | | | |
Continuing operations | $ | — |
| | $ | 0.02 |
| | $ | (0.07 | ) | | $ | 0.09 |
|
Discontinued operations | 0.13 |
| | (0.01 | ) | | 0.12 |
| | (0.01 | ) |
Diluted net income (loss) per common share | $ | 0.13 |
| | $ | 0.01 |
| | $ | 0.05 |
| | $ | 0.08 |
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Weighted average diluted shares outstanding | 90,265 |
| | 87,829 |
| | 89,447 |
| | 87,978 |
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The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.
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BOYD GAMING CORPORATION AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS) for the three and six months ended June 30, 2013 and 2012 _____________________________________________________________________________________________________ |
| Three Months Ended | | Six Months Ended |
(In thousands) | June 30, | | June 30, |
(Unaudited) | 2013 | | 2012 | | 2013 | | 2012 |
Net income (loss) | $ | 5,259 |
| | $ | (691 | ) | | $ | (6,368 | ) | | $ | 5,784 |
|
Other comprehensive income, net of tax: | | | | | | | |
Fair value of derivative instruments, net | — |
| | 27 |
| | — |
| | 2,467 |
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Fair value of adjustments to available-for-sale securities, net of tax of $0 | (179 | ) | | — |
| | 116 |
| | — |
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Comprehensive income (loss) | 5,080 |
| | (664 | ) | | (6,252 | ) | | 8,251 |
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Less: other comprehensive income attributable to noncontrolling interest | — |
| | 27 |
| | — |
| | 2,467 |
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Less: net loss attributable to noncontrolling interest | (6,368 | ) | | (1,668 | ) | | (10,711 | ) | | (1,045 | ) |
Comprehensive income attributable to Boyd Gaming Corporation | $ | 11,448 |
| | $ | 977 |
| | $ | 4,459 |
| | $ | 6,829 |
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The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.
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BOYD GAMING CORPORATION AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN STOCKHOLDERS’ EQUITY for the six months ended June 30, 2013 _____________________________________________________________________________________________________ |
| Boyd Gaming Corporation Stockholders’ Equity | | | | |
| Common Stock | | Additional Paid-in Capital | | Accumulated Deficit | | Accumulated Other Comprehensive Income (Loss), Net | | Noncontrolling Interest | | Total |
| | | | | |
(In thousands, except share data) | | | | | |
(Unaudited) | Shares | | Amount | | | | | |
Balances, January 1, 2013 | 86,871,977 |
| | $ | 869 |
| | $ | 655,694 |
| | $ | (351,810 | ) | | $ | (962 | ) | | $ | 163,336 |
| | $ | 467,127 |
|
Net income (loss) | — |
| | — |
| | — |
| | 4,343 |
| | — |
| | (10,711 | ) | | (6,368 | ) |
Unrealized gain on investment available for sale | — |
| | — |
| | — |
| | — |
| | 116 |
| | — |
| | 116 |
|
Stock options exercised | 1,765,037 |
| | 18 |
| | 13,127 |
| | — |
| | — |
| | — |
| | 13,145 |
|
RSU released/settled | 130,597 |
| | 1 |
| | (351 | ) | | — |
| | — |
| | — |
| | (350 | ) |
Share-based compensation costs | — |
| | — |
| | 6,984 |
| | — |
| | — |
| | — |
| | 6,984 |
|
Deconsolidation of LVE | — |
| | — |
| | — |
| | — |
| | — |
| | 45,404 |
| | 45,404 |
|
Balances, June 30, 2013 | 88,767,611 |
| | $ | 888 |
| | $ | 675,454 |
| | $ | (347,467 | ) | | $ | (846 | ) | | $ | 198,029 |
| | $ | 526,058 |
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The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.
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BOYD GAMING CORPORATION AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS for the six months ended June 30, 2013 and 2012 _____________________________________________________________________________________________________ |
| Six Months Ended |
(In thousands) | June 30, |
(Unaudited) | 2013 | | 2012 |
Cash Flows from Operating Activities | | | |
Net income (loss) | $ | (6,368 | ) | | $ | 5,784 |
|
Adjustments to reconcile net income (loss) to net cash provided by operating activities: | | | |
Loss (Gain) on discontinued operations, net of tax | (10,790 | ) | | 1,466 |
|
Depreciation and amortization | 140,356 |
| | 100,635 |
|
Amortization of debt financing costs | 11,425 |
| | 6,256 |
|
Amortization of discounts on debt | 9,156 |
| | 1,811 |
|
Loss on early retirements of debt | 2,372 |
| | — |
|
Share-based compensation expense | 6,984 |
| | 5,953 |
|
Deferred income taxes | 4,732 |
| | 10,064 |
|
Noncash asset write-downs | 5,089 |
| | 15 |
|
Gain on insurance settlement | — |
| | (6,323 | ) |
Gain on insurance subrogation settlement | — |
| | (2,203 | ) |
Other operating activities | 1,535 |
| | 4,548 |
|
Changes in operating assets and liabilities: | | | |
Restricted cash | (675 | ) | | (1,417 | ) |
Accounts receivable, net | 23 |
| | 5,131 |
|
Inventories | (1,030 | ) | | (1,087 | ) |
Prepaid expenses and other current assets | 249 |
| | (4,618 | ) |
Current other tax asset | (17 | ) | | — |
|
Income taxes receivable | 577 |
| | (51 | ) |
Other long-term tax assets | — |
| | 1,168 |
|
Other assets, net | 3,818 |
| | (989 | ) |
Accounts payable and accrued liabilities | 14,970 |
| | 3,847 |
|
Income taxes payable | — |
| | 267 |
|
Other long-term tax liabilities | (19,939 | ) | | (18,786 | ) |
Other liabilities | 3,303 |
| | (1,673 | ) |
Net cash provided by operating activities | 165,770 |
| | 109,798 |
|
Cash Flows from Investing Activities | | | |
Capital expenditures | (58,456 | ) | | (70,063 | ) |
Proceeds from sale of Echelon, net | 343,750 |
| | — |
|
Cash paid for exercise of LVE option | (187,000 | ) | | — |
|
Other investing activities | 214 |
| | 2,334 |
|
Net cash provided by (used in) investing activities | 98,508 |
| | (67,729 | ) |
Cash Flows from Financing Activities | | | |
Borrowings under Boyd Gaming bank credit facility | 490,400 |
| | 488,500 |
|
Payments under Boyd Gaming bank credit facility | (557,250 | ) | | (672,450 | ) |
Borrowings under Peninsula bank credit facility | 161,100 |
| | — |
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Payments under Peninsula bank credit facility | (182,725 | ) | | — |
|
Borrowings under Borgata bank credit facility | 200,000 |
| | 354,500 |
|
Payments under Borgata bank credit facility | (215,600 | ) | | (370,500 | ) |
Proceeds from issuance of senior notes | — |
| | 350,000 |
|
Debt financing costs, net | (11,333 | ) | | (10,246 | ) |
Proceeds from issuance of non-recourse debt by variable interest entity | — |
| | 1,935 |
|
Proceeds from stock options exercised | 13,145 |
| | 117 |
|
Restricted stock units released, net | (350 | ) | | — |
|
Payments on notes payable | (10,816 | ) | | — |
|
Payments on early retirements of debt | (215,668 | ) | | — |
|
Payments on non-recourse debt of variable interest entity | — |
| | (501 | ) |
Other financing activities | (4 | ) | | (360 | ) |
Net cash (used in) provided by financing activities | (329,101 | ) | | 140,995 |
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BOYD GAMING CORPORATION AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS for the six months ended June 30, 2013 and 2012 _____________________________________________________________________________________________________ |
| Six Months Ended |
(In thousands) | June 30, |
(Unaudited) | 2013 | | 2012 |
| | | |
Cash Flows from Discontinued Operations | | | |
Cash flows from operating activities | (2,144 | ) | | (1,025 | ) |
Cash flows from investing activities | 56,751 |
| | (340 | ) |
Cash flows from financing activities | — |
| | — |
|
Net cash provided by (used in) discontinued operations | 54,607 |
| | (1,365 | ) |
Change in cash and cash equivalents | (10,216 | ) | | 181,699 |
|
Cash and cash equivalents, beginning of period | 192,545 |
| | 178,091 |
|
Change in cash classified as discontinued operations | 283 |
| | (1,077 | ) |
Cash and cash equivalents, end of period | $ | 182,612 |
| | $ | 358,713 |
|
| | | |
Supplemental Disclosure of Cash Flow Information | | | |
Cash paid for interest | $ | 164,551 |
| | $ | 115,177 |
|
Cash received for income taxes, net | (2,136 | ) | | (1 | ) |
Supplemental Schedule of Noncash Investing and Financing Activities | | | |
Payables incurred for capital expenditures | $ | 12,600 |
| | $ | 13,194 |
|
| | | |
Assets and Liabilities Deconsolidated of Variable Interest Entity | | | |
Current assets | $ | 184,013 |
| | $ | — |
|
Long-term assets | 2,429 |
| | — |
|
Total assets deconsolidated | $ | 186,442 |
| | $ | — |
|
| | | |
Current liabilities | $ | 48,366 |
| | $ | — |
|
Noncontrolling interests | (48,924 | ) | | — |
|
Total liabilities and noncontrolling interests deconsolidated | $ | (558 | ) | | $ | — |
|
The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.
BOYD GAMING CORPORATION AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
as of June 30, 2013 and December 31, 2012 and for the three and six months ended June 30, 2013 and 2012
______________________________________________________________________________________________________
NOTE 1. ORGANIZATION AND BASIS OF PRESENTATION
Organization
Boyd Gaming Corporation (and together with its subsidiaries, the “Company,” "Boyd Gaming," “we” or “us”) was incorporated in the state of Nevada in 1988 and has been operating since 1973. The Company's common stock is traded on the New York Stock Exchange under the symbol “BYD”.
We are a diversified operator of 21 wholly owned gaming entertainment properties and one controlling interest in a limited liability company. Headquartered in Las Vegas, Nevada, we have gaming operations in Nevada, Illinois, Indiana, Iowa, Kansas, Louisiana, Mississippi, and New Jersey.
Basis of Presentation
The accompanying unaudited condensed consolidated financial statements of the Company have been prepared in accordance with the instructions to the Quarterly Report on Form 10-Q and Article 10 of Regulation S-X and, therefore, do not include all information and footnote disclosures necessary for complete financial statements in conformity with accounting principles generally accepted in the United States (“GAAP”).
The results for the periods indicated are unaudited, but reflect all adjustments (consisting only of normal recurring adjustments) that management considers necessary for a fair presentation of financial position, results of operations and cash flows. Results of operations and cash flows for the interim periods presented herein are not necessarily indicative of the results that would be achieved during a full year of operations or in future periods.
The accompanying condensed consolidated financial statements include the accounts of Boyd Gaming and its subsidiaries. Investments in unconsolidated affiliates, which are less than 50% owned and do not meet the consolidation criteria of the authoritative accounting guidance for voting interest, controlling interest or variable interest entities, are accounted for under the equity method. All significant intercompany accounts and transactions have been eliminated in consolidation.
These condensed consolidated financial statements should be read in conjunction with the audited consolidated financial statements and notes thereto included in our Annual Report on Form 10-K for the year ended December 31, 2012, as filed with the SEC on March 18, 2013.
Revisions and Reclassifications
The financial information for the three and six months ended June 30, 2012 is derived from our condensed consolidated financial statements and footnotes included in the Quarterly Report on Form 10-Q for the quarter ended June 30, 2012 and has been revised to reflect the results of operations and cash flows of our Dania Jai-Alai property as discontinued operations. See Note 3, Acquisitions and Dispositions, for further discussion.
Certain prior period amounts presented in our condensed consolidated financial statements have been reclassified to conform to the current presentation. These reclassifications related to other assets of discontinued operations that were previously accumulated in property and equipment, current assets, and current liabilities for the year ended December 31, 2012. This reclassification had no effect on our total assets as previously reported in our condensed consolidated balance sheet. In addition, asset transactions costs that were previously accumulated in other operating charges were disaggregated in our condensed consolidated statements of operations for the three and six months ended June 30, 2013 and 2012, respectively. This reclassification had no effect on our retained earnings or net income (loss) as previously reported.
NOTE 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Revenue Recognition
Gaming revenue represents the net win from gaming activities, which is the aggregate difference between gaming wins and losses. The majority of our gaming revenue is counted in the form of cash and chips and therefore is not subject to any significant or complex estimation procedures. Cash discounts, commissions and other cash incentives to customers related to gaming play are recorded as a reduction of gross gaming revenues. Race revenue recognition criteria are met at the time the results of the event are official. Room revenue recognition criteria are met at the time of occupancy. Food and beverage revenue recognition criteria are met at the time of service.
BOYD GAMING CORPORATION AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
as of June 30, 2013 and December 31, 2012 and for the three and six months ended June 30, 2013 and 2012
______________________________________________________________________________________________________
Asset Transactions Costs
Asset transactions costs are comprised of certain costs incurred related to the activities associated with various acquisition opportunities and other business development activities, as well as, transaction costs incurred to dispose of assets, including, but not limited to, the sale of Echelon.
Promotional Allowances
The retail value of accommodations, food and beverage, and other services furnished to guests without charge is included in gross revenues and then deducted as a promotional allowance. Promotional allowances also include incentives such as cash, goods and services (such as complimentary rooms, food and beverages) earned in our slot bonus point program. We reward customers, through the use of bonus programs, with points based on amounts wagered that can be redeemed for a specified period of time, principally for cash play, and to a lesser extent for goods or services, depending upon the property. We record the estimated retail value of these goods and services as revenue and then deduct them as a promotional allowance.
The amounts included in promotional allowances for the three and six months ended June 30, 2013 and 2012 are as follows:
|
| | | | | | | | | | | | | | | |
| Three Months Ended | | Six Months Ended |
| June 30, | | June 30, |
| 2013 | | 2012 | | 2013 | | 2012 |
(In thousands) | | | | | | | |
Rooms | $ | 35,321 |
| | $ | 35,991 |
| | $ | 70,441 |
| | $ | 70,673 |
|
Food and beverage | 49,875 |
| | 46,815 |
| | 100,653 |
| | 95,103 |
|
Other | 25,838 |
| | 27,741 |
| | 51,855 |
| | 55,387 |
|
Total promotional allowances | $ | 111,034 |
| | $ | 110,547 |
| | $ | 222,949 |
| | $ | 221,163 |
|
The estimated costs of providing such promotional allowances for the three and six months ended June 30, 2013 and 2012 are as follows:
|
| | | | | | | | | | | | | | | |
| Three Months Ended | | Six Months Ended |
| June 30, | | June 30, |
| 2013 | | 2012 | | 2013 | | 2012 |
(In thousands) | | | | | | | |
Rooms | $ | 14,432 |
| | $ | 15,352 |
| | $ | 29,143 |
| | $ | 29,099 |
|
Food and beverage | 44,123 |
| | 45,279 |
| | 89,182 |
| | 85,507 |
|
Other | 5,404 |
| | 6,462 |
| | 10,559 |
| | 11,886 |
|
Total cost of promotional allowances | $ | 63,959 |
| | $ | 67,093 |
| | $ | 128,884 |
| | $ | 126,492 |
|
Gaming Taxes
We are subject to taxes based on gross gaming revenues in the jurisdictions in which we operate. These gaming taxes are assessed based on our gaming revenues and are recorded as a gaming expense in the condensed consolidated statements of operations. These taxes totaled approximately $101.8 million and $67.8 million for the three months ended June 30, 2013 and 2012, respectively, and $204.1 million and $139.1 million for the six months ended June 30, 2013 and 2012, respectively.
CRDA Investments
Pursuant to the New Jersey Casino Control Act ("Casino Control Act"), we are assessed as a casino licensee 1.25% of our gross gaming revenues to fund qualified investments. This assessment is made in lieu of an investment alternative tax equal to 2.5% of gross gaming revenues. Once our funds are deposited with the New Jersey Casino Reinvestment Development Authority ("CRDA"), qualified investments may be satisfied by: (i) purchase of bonds issued by the CRDA at below market rates of interest; (ii) direct investment in CRDA approved projects; or (iii) donation of funds to projects as determined by the CRDA. According to the Casino Control Act, funds on deposit with the CRDA are invested by the CRDA and the resulting income is shared two-thirds to the casino licensee and one-third to the CRDA. Further, the Casino Control Act requires that CRDA bonds be issued at statutory rates established at two-thirds of market value.
BOYD GAMING CORPORATION AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
as of June 30, 2013 and December 31, 2012 and for the three and six months ended June 30, 2013 and 2012
______________________________________________________________________________________________________
We are required to make quarterly deposits with the CRDA to satisfy our investment obligations. At the date the obligation arises, we record charges to expense (i) pursuant to the respective underlying agreements for obligations with identified qualified investments and (ii) by applying a one-third valuation reserve to our obligations that are available to fund qualified investment to reflect the anticipated below market return on investment. The one-third valuation reserve is adjusted accordingly when a qualified investment is identified. Our deposits with the CRDA, net of valuation reserves held by Borgata, were $25.1 million and $28.5 million as of June 30, 2013 and December 31, 2012, respectively, and are included in other assets, net, on our condensed consolidated balance sheets.
On May 8, 2013, we entered into an agreement with the CRDA that included a 50% donation and a 50% refund of $45.1 million of our available deposits. As a result, the carrying values of our CRDA-related accounts at June 30, 2013 were reviewed and adjusted to their net realizable values resulting in a charge of $5.0 million, which is included in impairments of assets on our condensed consolidated statements of operations. On July 17, 2013, the CRDA disbursed $45.1 million from our funds on deposit with the CRDA of which we received a $22.5 million refund.
Income Taxes
Income taxes are recorded under the asset and liability method, whereby deferred tax assets and liabilities are recognized based on the future tax consequences attributable to temporary differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases, and attributable to operating loss and tax credit carryforwards. We reduce the carrying amounts of deferred tax assets by a valuation allowance, if based on the available evidence it is more likely than not that such assets will not be realized. Accordingly, the need to establish valuation allowances for deferred tax assets is assessed periodically based on a more-likely-than-not realization threshold. This assessment considers, among other matters, the nature, frequency and severity of current and cumulative losses, forecasts of future profitability, the duration of statutory carryforward periods, our experience with the utilization of operating loss and tax credit carryforwards before expiration, and tax planning alternatives.
For the three months and six months ended June 30, 2013, in accordance with GAAP, we have computed our provision for income taxes by applying the actual effective tax rate, under the discrete method, to year-to-date income. Our current rate is impacted by adjustments that are largely independent of our operating results before taxes. Such adjustments relate primarily to the accrual of non-cash tax expense in connection with the tax amortization of indefinite-lived intangible assets that are not available to offset existing deferred tax assets. The deferred tax liabilities created by the tax amortization of these intangibles cannot be used to offset corresponding increases in the net operating loss deferred tax assets in determining our valuation allowance. As such, we believe this method provides the most reliable estimate of year-to-date income tax expense.
Other Long Term Tax Liabilities
The Company's income tax returns are subject to examination by the Internal Revenue Service (“IRS”) and other tax authorities in the locations where it operates. The Company assesses potentially unfavorable outcomes of such examinations based on accounting standards for uncertain income taxes, which prescribe a minimum recognition threshold a tax position is required to meet before being recognized in the financial statements.
Uncertain tax position accounting standards apply to all tax positions related to income taxes. These accounting standards utilize a two-step approach for evaluating tax positions. Recognition occurs when the Company concludes that a tax position, based on its technical merits, is more likely than not to be sustained upon examination. Measurement is only addressed if the position is deemed to be more likely than not to be sustained. The tax benefit is measured as the largest amount of benefit that is more likely than not to be realized upon settlement. Use of the term “more likely than not” indicates the likelihood of occurrence is greater than 50%.
Tax positions, failing to qualify for initial recognition, are recognized in the first subsequent interim period that they meet the “more likely than not” standard. If it is subsequently determined that a previously recognized tax position no longer meets the “more likely than not” standard, it is required that the tax position be derecognized. Accounting standards for uncertain tax positions specifically prohibit the use of a valuation allowance as a substitute for derecognition of tax positions. As applicable, the Company will recognize accrued penalties and interest related to unrecognized tax benefits in the provision for income taxes.
Unrecognized tax benefits at June 30, 2013 and December 31, 2012 are $22.2 million and $38.4 million, respectively. Included in the $22.2 million balance of unrecognized tax benefits at June 30, 2013, are $20.0 million of benefits that, if recognized, would impact the effective tax rate. We recognize accrued interest related to unrecognized tax benefits in our income tax provision. We
BOYD GAMING CORPORATION AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
as of June 30, 2013 and December 31, 2012 and for the three and six months ended June 30, 2013 and 2012
______________________________________________________________________________________________________
have accrued $9.4 million and $12.4 million of interest and penalties in our condensed consolidated balance sheet as of June 30, 2013 and December 31, 2012, respectively.
In 2013, we reached agreement on certain proposed adjustments in connection with our IRS examination for tax years ended 2005 through 2009. As a result of the agreed adjustments, we reduced our unrecognized tax benefits by $16.7 million, of which $0.9 million impacted our effective tax rate. Such agreements also resulted in a reduction to the interest accrued on our unrecognized tax benefits and a corresponding benefit to our tax provision of $3.8 million. During 2012, we reached an agreement with the Appeals Division in our IRS examination for tax years ended 2001 through 2004. We reduced our federal unrecognized tax benefits, primarily related to the settlement, by approximately $20.8 million on a net basis, of which $0.1 million impacted our effective tax rate. Additionally, we reduced the interest accrued on our federal unrecognized tax benefits by approximately $4.9 million and recorded a $3.2 million benefit to our tax provision.
We are in various stages of the examination and appeals process in connection with many of our audits and it is difficult to determine when these examinations will be closed; however, it is reasonably possible over the next twelve-month period, that we may experience a decrease in our unrecognized tax benefits, as of June 30, 2013, of up to $10.1 million. Approximately $8.0 million of the total reduction would impact our effective tax rate.
Earnings per Share
Basic earnings per share is computed by dividing net income applicable to Boyd Gaming Corporation's stockholders by the weighted-average number of common shares outstanding during the period. Diluted earnings per share reflects the additional dilution for all potentially-dilutive securities, such as stock options.
The weighted average number of common and common equivalent shares used in the calculations of basic and diluted earnings per share calculations for the three and six months ended June 30, 2013 and 2012, consisted of the following amounts:
|
| | | | | | | | | | | |
| Three Months Ended | | Six Months Ended |
| June 30, | | June 30, |
| 2013 | | 2012 | | 2013 | | 2012 |
(In thousands) | | | | | | | |
Weighted average shares outstanding: | | | | | | | |
Basic | 89,230 |
| | 87,588 |
| | 88,606 |
| | 87,559 |
|
Potential dilutive effect | 1,035 |
| | 241 |
| | 841 |
| | 419 |
|
Diluted | 90,265 |
| | 87,829 |
| | 89,447 |
| | 87,978 |
|
Anti-dilutive options totaling 5.8 million and 6.0 million for the three and six months ended June 30, 2013, respectively, and totaling 9.4 million and 8.1 million for the three and six months ended June 30, 2012, respectively, have been excluded from the computation of diluted earnings per share due to the exercise prices for these shares being in excess of the weighted-average market price of the Company's common stock during these periods.
Use of Estimates
The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Significant estimates incorporated into our condensed consolidated financial statements include the estimated allowance for doubtful accounts receivable, the estimated useful lives for depreciable and amortizable assets, recoverability of assets held for development, measurement of the fair value of our controlling interest and the noncontrolling interest in Borgata, fair valuations of acquired assets and assumed liabilities, estimated cash flows in assessing the recoverability of long-lived assets and assumptions relative to the valuation and impairment of goodwill and intangible assets, estimated valuation allowances for deferred tax assets, accruals for slot bonus point programs, estimates of certain tax liabilities and uncertain tax positions, determination of self-insured liability reserves, computation of share-based payment valuation assumptions, estimates of fair values of assets and liabilities measured at fair value, estimates of fair values of assets and liabilities disclosed at fair value, fair values of derivative instruments and assessments of contingencies and litigation and claims. Actual results could differ from these estimates.
BOYD GAMING CORPORATION AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
as of June 30, 2013 and December 31, 2012 and for the three and six months ended June 30, 2013 and 2012
______________________________________________________________________________________________________
Recently Issued Accounting Pronouncements
A variety of proposed or otherwise potential accounting standards are currently under study by standard-setting organizations and certain regulatory agencies. Because of the tentative and preliminary nature of such proposed standards, we have not yet determined the effect, if any, that the implementation of such proposed standards would have on our consolidated financial statements.
Accounting Standards Update 2013-02 Comprehensive Income (Topic 220) Reporting of Amounts Reclassified Out of Accumulated Other Comprehensive Income ("Update 2013-02")
In February 2013, the Financial Accounting Standards Board ("FASB") issued Update 2013-02 which is an amendment to Topic 220-10 of the Accounting Standards Codification ("ASC").
The objective of Update 2013-02 is to amend ASC 220-10 to require entities to provide information about amounts reclassified out of other comprehensive income by component. The Company is required to present, either on the face of the financial statements or in the notes, the amounts reclassified from other comprehensive income to the respective line items in the condensed consolidated statements of comprehensive income (loss).
Update 2013-02 is effective for interim and annual periods beginning after December 15, 2012. In February 2013, the Company adopted Update 2013-02. Update 2013-02 did not have a material impact on our consolidated financial statements.
NOTE 3. ACQUISITIONS AND DIVESTITURES
Acquisition of Peninsula Gaming
Overview
On November 20, 2012, we completed the acquisition of Peninsula Gaming pursuant to an Agreement and Plan of Merger (the "Merger Agreement") entered into on May 16, 2012. Accordingly, the acquired assets and liabilities of Peninsula Gaming are included in our condensed consolidated balance sheets as of June 30, 2013 and December 31, 2012 and the results of its operations and cash flows are reported in our condensed consolidated statements of operations and cash flows for the three and six months ended June 30, 2013.
Status of Purchase Price Allocation
The Company has recognized the assets acquired and liabilities assumed in the Merger based on preliminary fair value estimates as of the date of the Merger. The determination of the fair values of the acquired assets and assumed liabilities (and the related determination of estimated lives of depreciable tangible and identifiable intangible assets) requires significant judgment. As such, management has not completed its valuation analysis and calculations in sufficient detail necessary to arrive at the final estimates of the fair value of the assets acquired and liabilities assumed, along with the related allocations of goodwill and intangible assets. The fair values of certain tangible assets, intangible assets, the note payable to seller, certain contingent liabilities and residual goodwill are the most significant areas not yet finalized and therefore are subject to change. The final fair value determinations are expected to be completed no later than the third quarter of 2013. The final fair value determinations may be significantly different than those reflected in the condensed consolidated balance sheets at June 30, 2013 and December 31, 2012.
Supplemental Unaudited Pro Forma Information
The following table presents pro forma results of the Company, as though Peninsula Gaming had been acquired as of January 1, 2012. The pro forma results do not necessarily represent the results that may occur in the future. The pro forma amounts include the historical operating results of the Company and Peninsula Gaming prior to the acquisition, with adjustments directly attributable to the acquisition.
|
| | | | | | | | | | | |
| Three Months Ended June 30, 2012 |
| Boyd Gaming Corporation (As Reported) | | Peninsula Gaming | | Boyd Gaming Corporation (Pro Forma) |
(In thousands) | | | | | |
Condensed Statements of Operations | | | | | |
Net revenues | $ | 614,070 |
| | $ | 132,957 |
| | $ | 747,027 |
|
Net income (loss) attributable to Boyd Gaming Corporation | $ | 977 |
| | $ | 457 |
| | $ | 1,434 |
|
Basic and diluted earnings per share | $ | 0.01 |
| | | | $ | 0.02 |
|
BOYD GAMING CORPORATION AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
as of June 30, 2013 and December 31, 2012 and for the three and six months ended June 30, 2013 and 2012
______________________________________________________________________________________________________
|
| | | | | | | | | | | |
| Six Months Ended June 30, 2012 |
| Boyd Gaming Corporation (As Reported) | | Peninsula Gaming | | Boyd Gaming Corporation (Pro Forma) |
(In thousands) | | | | | |
Condensed Statements of Operations | | | | | |
Net revenues | $ | 1,245,739 |
| | $ | 267,616 |
| | $ | 1,513,355 |
|
Net income (loss) attributable to Boyd Gaming Corporation | $ | 6,829 |
| | $ | 4,156 |
| | $ | 10,985 |
|
Basic earnings per share | $ | 0.08 |
| | | | $ | 0.13 |
|
Diluted earnings per share | $ | 0.08 |
| | | | $ | 0.12 |
|
Disposition of Echelon
On March 1, 2013, we entered into a definitive agreement to sell the Echelon site for $350 million in cash. The sale agreement included the 87-acre land parcel, as well as site improvements. The transaction was completed on March 4, 2013, and we realized approximately $157.0 million in net proceeds from the sale after consideration of direct transaction costs and after payment of a portion of the proceeds to a third party to fulfill our obligations to LVE Energy Partners, LLC (see Note 5, Deconsolidation of LVE Energy Partners, LLC.)
Discontinued Operations - Disposition of Dania Jai-Alai
On May 22, 2013, we consummated the sale of certain assets and liabilities of the Dania pari-mutuel facility ("Dania Jai-Alia"), with approximately 47 acres of related land located in Dania Beach, Broward County, Florida, for a sales price of $65.5 million. The sale was pursuant to an asset agreement (the "New Dania Agreement") that we entered into with Dania Entertainment Center, LLC ("Dania Entertainment"). As part of the New Dania Agreement, the $5 million non-refundable deposit and $2 million fees paid to us in 2011 by Dania Entertainment were applied to the sales price, and we received $58.5 million in cash and recorded a pre-tax gain of $18.9 million. We have presented the results of Dania Jai-Alai Business as discontinued operations for all periods presented in these condensed consolidated financial statements.
There were no assets and liabilities of the discontinued operation as of June 30, 2013, and the assets and liabilities of the discontinued operation as of December 31, 2012 were as follows:
|
| | | | |
| | December 31, |
| | 2012 |
(In thousands) | | |
Assets | | |
Cash and cash equivalents | | $ | 283 |
|
Other current assets | | 402 |
|
Current assets of discontinued operations | | $ | 685 |
|
| | |
Property and equipment, net | | $ | 37,674 |
|
Other assets | | 10 |
|
Noncurrent assets of discontinued operations | | $ | 37,684 |
|
| | |
Liabilities | | |
Accounts payable and accrued expenses | | $ | 864 |
|
Liabilities of discontinued operations | | $ | 864 |
|
| | |
BOYD GAMING CORPORATION AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
as of June 30, 2013 and December 31, 2012 and for the three and six months ended June 30, 2013 and 2012
______________________________________________________________________________________________________
Net revenues, pre-tax income (loss) from operations, and income (loss), net of income taxes presented as discontinued operations are as follows:
|
| | | | | | | | | | | | | | | |
| Three Months Ended | | Six Months Ended |
| June 30, | | June 30, |
| 2013 | | 2012 | | 2013 | | 2012 |
(In thousands) | |
Operations | | | | | | | |
Net revenues | $ | 740 |
| | $ | 1,152 |
| | $ | 2,140 |
| | $ | 2,566 |
|
| | | | | | | |
Loss from discontinued operations before income taxes | $ | (1,237 | ) | | $ | (1,058 | ) | | $ | (2,200 | ) | | $ | (2,256 | ) |
Income tax benefit | 776 |
| | 370 |
| | 776 |
| | 790 |
|
Loss from discontinued operations, net of tax | $ | (461 | ) | | $ | (688 | ) | | $ | (1,424 | ) | | $ | (1,466 | ) |
| | | | | | | |
Disposal | | | | | | | |
Gain on disposal before income taxes | $ | 18,873 |
| | $ | — |
| | $ | 18,873 |
| | $ | — |
|
Income tax expense | (6,659 | ) | | — |
| | (6,659 | ) | | — |
|
Gain on disposal, net of tax | $ | 12,214 |
| | $ | — |
| | $ | 12,214 |
| | $ | — |
|
| | | | | | | |
Income (loss) from discontinued operations, net of tax | $ | 11,753 |
| | $ | (688 | ) | | $ | 10,790 |
| | $ | (1,466 | ) |
| | | | | | | |
NOTE 4. BORGATA HOTEL CASINO AND SPA
The Company and MGM Resorts International ("MGM") each originally held a 50% interest in Marina District Development Holding Co., LLC (“Holding Company”). Holding Company owns all the equity interests in Marina District Development Company, LLC, d.b.a. Borgata Hotel Casino and Spa. We are the managing member of Holding Company, and we are responsible for the day-to-day operations of Borgata, including the improvement of the facility and business. As a result, we consolidate the Borgata into our financial statements.
On March 24, 2010, MGM transferred its interest in Holding Company ("MGM Interest") to a divestiture trust (“Divestiture Trust”) established for the purpose of selling the MGM Interest to a third party as a part of a settlement agreement between MGM and the New Jersey Department of Gaming Enforcement (the “NJDGE”).
On February 20, 2013, MGM announced that it had entered into an amendment with the NJDGE, effective February 13, 2013, pursuant to which MGM was allowed to reapply to the New Jersey Casino Control Commission for licensure in New Jersey with the March 24, 2013 deadline to sell the MGM Interest deferred pending the outcome of the licensure process.
NOTE 5. DECONSOLIDATION OF LVE ENERGY PARTNERS, LLC
In connection with the disposition of Echelon on March 4, 2013 (see Note 3, Acquisitions and Divestitures), we exercised an option to acquire the central energy center assets from LVE Energy Partners, LLC (“LVE”), a joint venture between Marina Energy LLC and DCO ECH Energy, LLC, for $187 million. We immediately sold these assets to the buyer of Echelon, and our agreements with LVE were terminated.
Prior to these transactions, we had determined that we were the primary beneficiary of the contract with LVE, which required us to consolidate LVE for financial statement purposes. As a result of the March 4, 2013 transactions, we ceased consolidation of LVE as of that date.
BOYD GAMING CORPORATION AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
as of June 30, 2013 and December 31, 2012 and for the three and six months ended June 30, 2013 and 2012
______________________________________________________________________________________________________
The effects of the consolidation of LVE on our financial position as of December 31, 2012, and its impact on our results of operations for the six months ended June 30, 2013 and for the three and six months ended June 30, 2012 are reconciled by respective line items to amounts as reported in our condensed consolidated balance sheets and condensed consolidated statements of operations
as follows:
|
| | | | | | | | | | | | | | | |
| December 31, 2012 |
| | | | | | | |
| | | | | | | Boyd Gaming |
| Boyd Gaming | | | | | | Corporation |
| Corporation | | LVE, LLC | | Eliminations | | (as consolidated) |
(In thousands) | |
ASSETS | | | | | | | |
Current assets | $ | 354,140 |
| | $ | 1,453 |
| | $ | — |
| | $ | 355,593 |
|
Property and equipment, net | 3,587,314 |
| | — |
| | — |
| | 3,587,314 |
|
Assets held for development | 168,251 |
| | 163,519 |
| | — |
| | 331,770 |
|
Debt financing costs, net | 83,020 |
| | 2,448 |
| | — |
| | 85,468 |
|
Restricted investments | — |
| | 21,382 |
| | — |
| | 21,382 |
|
Other assets | 98,415 |
| | — |
| | — |
| | 98,415 |
|
Intangible assets, net | 1,119,638 |
| | — |
| | — |
| | 1,119,638 |
|
Goodwill, net | 694,929 |
| | — |
| | — |
| | 694,929 |
|
Assets of discontinued operation | 37,684 |
| | — |
| | — |
| | 37,684 |
|
Total Assets | $ | 6,143,391 |
| | $ | 188,802 |
| | $ | — |
| | $ | 6,332,193 |
|
| | | | | | | |
LIABILITIES | | | | | | | |
Current maturities of long-term debt | $ | 61,570 |
| | $ | — |
| | $ | — |
| | $ | 61,570 |
|
Accounts payable | 90,992 |
| | 164 |
| | — |
| | 91,156 |
|
Accrued and other liabilities | 355,246 |
| | 8,486 |
| | — |
| | 363,732 |
|
Income taxes payable | 8,129 |
| | — |
| | — |
| | 8,129 |
|
Non-recourse obligations of variable interest entity | — |
| | 225,113 |
| | — |
| | 225,113 |
|
Long-term debt, net of current maturities | 4,827,853 |
| | — |
| | — |
| | 4,827,853 |
|
Deferred income taxes | 139,943 |
| | — |
| | — |
| | 139,943 |
|
Long-term tax and other liabilities | 146,706 |
| | — |
| | — |
| | 146,706 |
|
Liabilities of discontinued operation | 864 |
| | — |
| | — |
| | 864 |
|
| | | | | | | |
STOCKHOLDERS' EQUITY | | | | | | | |
Common stock | 869 |
| | — |
| | — |
| | 869 |
|
Additional paid-in capital | 655,694 |
| | — |
| | — |
| | 655,694 |
|
Retained earnings | (351,810 | ) | | — |
| | — |
| | (351,810 | ) |
Accumulated other comprehensive income (loss) | (962 | ) | | — |
| | — |
| | (962 | ) |
Noncontrolling interest | 208,297 |
| | (44,961 | ) | | — |
| | 163,336 |
|
Total Liabilities and Stockholders' Equity | $ | 6,143,391 |
| | $ | 188,802 |
| | $ | — |
| | $ | 6,332,193 |
|
BOYD GAMING CORPORATION AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
as of June 30, 2013 and December 31, 2012 and for the three and six months ended June 30, 2013 and 2012
______________________________________________________________________________________________________
|
| | | | | | | | | | | | | | | |
| Three Months Ended June 30, 2012 |
| | | | | | | |
| | | | | | | Boyd Gaming |
| Boyd Gaming | | | | | | Corporation |
| Corporation | | LVE, LLC | | Eliminations | | (as consolidated) |
(In thousands) | |
REVENUES | | | | | | | |
Other revenue | $ | 35,784 |
| | $ | 2,724 |
| | $ | (2,724 | ) | | $ | 35,784 |
|
| | | | | | | |
COSTS AND EXPENSES | | | | | | | |
Selling, general and administrative | $ | 109,665 |
| | $ | 6 |
| | $ | — |
| | $ | 109,671 |
|
Preopening expenses | $ | 4,934 |
| | $ | — |
| | $ | (2,724 | ) | | $ | 2,210 |
|
| | | | | | | |
Operating income | $ | 56,579 |
| | $ | 2,718 |
| | $ | — |
| | $ | 59,297 |
|
| | | | | | | |
Other expense | | | | | | | |
Interest expense, net | $ | 62,139 |
| | $ | 2,649 |
| | $ | — |
| | $ | 64,788 |
|
| | | | | | | |
Income (loss) from continuing operations before income taxes | $ | (5,152 | ) | | $ | 69 |
| | $ | — |
| | $ | (5,083 | ) |
Income taxes | 5,080 |
| | — |
| | — |
| | 5,080 |
|
Income (loss) from continuing operations, net of tax | (72 | ) | | 69 |
| | — |
| | (3 | ) |
Income (loss) from discontinued operations, net of tax | (688 | ) | | — |
| | — |
| | (688 | ) |
Net income (loss) | (760 | ) | | 69 |
| | — |
| | (691 | ) |
Net (income) loss attributable to noncontrolling interest | 1,737 |
| | — |
| | (69 | ) | | 1,668 |
|
Net income (loss) attributable to Boyd Gaming Corporation | $ | 977 |
| | $ | 69 |
| | $ | (69 | ) | | $ | 977 |
|
BOYD GAMING CORPORATION AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
as of June 30, 2013 and December 31, 2012 and for the three and six months ended June 30, 2013 and 2012
______________________________________________________________________________________________________
|
| | | | | | | | | | | | | | | |
| Six Months Ended June 30, 2013 |
| | | | | | | Boyd Gaming |
| Boyd Gaming | | | | | | Corporation |
| Corporation | | LVE, LLC | | Eliminations | | (as consolidated) |
(In thousands) | |
REVENUES | | | | | | | |
Other revenue | $ | 81,209 |
| | $ | 1,933 |
| | $ | (1,933 | ) | | $ | 81,209 |
|
| | | | | | | |
COSTS AND EXPENSES | | | | | | | |
Selling, general and administrative | $ | 251,028 |
| | $ | — |
| | $ | — |
| | $ | 251,028 |
|
Preopening expenses | $ | 5,087 |
| | $ | — |
| | $ | (1,933 | ) | | $ | 3,154 |
|
| | | | | | | |
Operating income | $ | 158,866 |
| | $ | 1,933 |
| | $ | — |
| | $ | 160,799 |
|
| | | | | | | |
Other expense | | | | | | | |
Interest expense, net | $ | 181,432 |
| | $ | 2,376 |
| | $ | — |
| | $ | 183,808 |
|
| | | | | | | |
Income (loss) from continuing operations before income taxes | $ | (23,241 | ) | | $ | (443 | ) | | $ | — |
| | $ | (23,684 | ) |
Income taxes | 6,526 |
| | — |
| | — |
| | 6,526 |
|
Income (loss) from continuing operations, net of tax | (16,715 | ) | | (443 | ) | | — |
| | (17,158 | ) |
Income (loss) from discontinued operations, net of tax | 10,790 |
| | — |
| | — |
| | 10,790 |
|
Net income (loss) | (5,925 | ) | | (443 | ) | | — |
| | (6,368 | ) |
Net (income) loss attributable to noncontrolling interest | 10,268 |
| | — |
| | 443 |
| | 10,711 |
|
Net income (loss) attributable to Boyd Gaming Corporation | $ | 4,343 |
| | $ | (443 | ) | | $ | 443 |
| | $ | 4,343 |
|
BOYD GAMING CORPORATION AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
as of June 30, 2013 and December 31, 2012 and for the three and six months ended June 30, 2013 and 2012
______________________________________________________________________________________________________
|
| | | | | | | | | | | | | | | |
| Six Months Ended June 30, 2012 |
| | | | | | | Boyd Gaming |
| Boyd Gaming | | | | | | Corporation |
| Corporation | | LVE, LLC | | Eliminations | | (as consolidated) |
(In thousands) | |
REVENUES | | | | | | | |
Other revenue | $ | 71,505 |
| | $ | 5,448 |
| | $ | (5,448 | ) | | $ | 71,505 |
|
| | | | | | | |
COSTS AND EXPENSES | | | | | | | |
Selling, general and administrative | $ | 218,309 |
| | $ | 9 |
| | $ | — |
| | $ | 218,318 |
|
Maintenance and utilities | $ | 77,995 |
| | $ | — |
| | $ | — |
| | $ | 77,995 |
|
Preopening expenses | $ | 9,318 |
| | $ | — |
| | $ | (5,448 | ) | | $ | 3,870 |
|
| | | | | | | |
Operating income | $ | 131,638 |
| | $ | 5,439 |
| | $ | — |
| | $ | 137,077 |
|
| | | | | | | |
Other expense | | | | | | | |
Interest expense, net | $ | 122,574 |
| | $ | 6,042 |
| | $ | — |
| | $ | 128,616 |
|
| | | | | | | |
Income (loss) from continuing operations before income taxes | $ | 9,476 |
| | $ | (603 | ) | | $ | — |
| | $ | 8,873 |
|
Income taxes | (1,623 | ) | | — |
| | — |
| | (1,623 | ) |
Income (loss) from continuing operations, net of tax | 7,853 |
| | (603 | ) | | — |
| | 7,250 |
|
Income (loss) from discontinued operations, net of tax | (1,466 | ) | | — |
| | — |
| | (1,466 | ) |
Net income (loss) | 6,387 |
| | (603 | ) | | — |
| | 5,784 |
|
Net (income) loss attributable to noncontrolling interest | 442 |
| | — |
| | 603 |
| | 1,045 |
|
Net income (loss) attributable to Boyd Gaming Corporation | $ | 6,829 |
| | $ | (603 | ) | | $ | 603 |
| | $ | 6,829 |
|
The reduction in other revenue and preopening expenses reflects the elimination of the Periodic Fee paid by Boyd Gaming to LVE. Such fee was recognized as revenue by LVE, but eliminated in consolidation completely, thereby having no impact on our consolidated other revenues. Although this Periodic Fee is eliminated in consolidation, it was actually paid to LVE directly on a monthly basis through March 4, 2013, the date we completed the Echelon transaction.
BOYD GAMING CORPORATION AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
as of June 30, 2013 and December 31, 2012 and for the three and six months ended June 30, 2013 and 2012
______________________________________________________________________________________________________
NOTE 6. PROPERTY AND EQUIPMENT, NET
Property and equipment, net consists of the following:
|
| | | | | | | |
| | | |
| June 30, | | December 31, |
(In thousands) | 2013 | | 2012 |
Land | $ | 340,778 |
| | $ | 341,174 |
|
Buildings and improvements | 3,836,072 |
| | 3,826,880 |
|
Furniture and equipment | 1,310,744 |
| | 1,305,216 |
|
Riverboats and barges | 188,780 |
| | 187,620 |
|
Construction in progress | 64,977 |
| | 27,397 |
|
Other | 23,002 |
| | 23,013 |
|
Total property and equipment | 5,764,353 |
| | 5,711,300 |
|
Less accumulated depreciation | 2,214,175 |
| | 2,123,986 |
|
Property and equipment, net | $ | 3,550,178 |
| | $ | 3,587,314 |
|
Other property and equipment presented in the table above relates to the net realizable value of construction materials inventory that was previously included in assets held for development at December 31, 2012, and that was not disposed of with the sale of the Echelon project. Such assets are not in service and are not currently being depreciated.
On May 22, 2013, we completed the sale of certain assets and liabilities of Dania Jai-Alai in Dania Beach, Broward County, Florida, to Dania Entertainment. The property and equipment table above excludes the assets related to these discontinued operations.
Depreciation expense for the three months ended June 30, 2013 and 2012 was $58.5 million and $49.5 million, respectively. Depreciation expense for the six months ended June 30, 2013 and 2012 was $116.7 million and $98.4 million, respectively.
NOTE 7. INTANGIBLE ASSETS
Intangible assets consist of the following:
|
| | | | | | | | | | | | | | | | | |
| June 30, 2013 |
| Weighted | | Gross | | | | Cumulative | | |
| Average Life | | Carrying | | Cumulative | | Impairment | | Intangible |
| Remaining | | Value | | Amortization | | Losses | | Assets, Net |
(In thousands) | | | |
Amortizing intangibles: | | | | | | | | | |
Customer relationships | 4.0 years | | $ | 154,000 |
| | $ | (45,880 | ) | | $ | — |
| | $ | 108,120 |
|
Non-competition agreement | 0.4 years | | 3,200 |
| | (1,955 | ) | | — |
| | 1,245 |
|
Favorable lease rates | 34.9 years | | 45,370 |
| | (9,390 | ) | | — |
| | 35,980 |
|
Development agreement | — | | 21,373 |
| | — |
| | — |
| | 21,373 |
|
| | | 223,943 |
| | (57,225 | ) | | — |
| | 166,718 |
|
| | | | | | | | | |
Indefinite lived intangible assets: | | | | | | | | | |
Trademarks and other | Indefinite | | 192,381 |
| | — |
| | (5,000 | ) | | 187,381 |
|
Gaming license rights | Indefinite | | 955,355 |
| | (33,960 | ) | | (180,000 | ) | | 741,395 |
|
| | | 1,147,736 |
| | (33,960 | ) | | (185,000 | ) | | 928,776 |
|
Balance, June 30, 2013 | | | $ | 1,371,679 |
| | $ | (91,185 | ) | | $ | (185,000 | ) | | $ | 1,095,494 |
|
BOYD GAMING CORPORATION AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
as of June 30, 2013 and December 31, 2012 and for the three and six months ended June 30, 2013 and 2012
______________________________________________________________________________________________________
|
| | | | | | | | | | | | | | | | | |
| December 31, 2012 |
| Weighted | | Gross | | | | Cumulative | | |
| Average Life | | Carrying | | Cumulative | | Impairment | | Intangible |
| Remaining | | Value | | Amortization | | Losses | | Assets, Net |
(In thousands) | | | |
Amortizing intangibles: | | | | | | | | | |
Customer relationships | 4.5 years | | $ | 154,000 |
| | $ | (23,059 | ) | | $ | — |
| | $ | 130,941 |
|
Non-competition agreement | 0.9 years | | 3,200 |
| | (354 | |