UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
____________________________________________________
FORM
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(Mark One)
| | QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the quarterly period ended
OR
| | 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:
___________________________________________________
BOYD GAMING CORPORATION
(Exact name of registrant as specified in its charter)
____________________________________________________
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| (State or other jurisdiction of incorporation or organization) | (I.R.S. Employer Identification No.) |
(Address of principal executive offices) (Zip Code)
(
(Registrant's telephone number, including area code)
____________________________________________________
Securities registered pursuant to Section 12(b) of the Act:
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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.
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted 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 such files).
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company or an emerging growth company. See the definitions of "large accelerated filer," "accelerated filer", "smaller reporting company" and "emerging growth company" in Rule 12b-2 of the Exchange Act.
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If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes
Indicate the number of shares outstanding of each of the issuer's classes of common stock, as of the latest practicable date.
The number of shares outstanding of the registrant’s common stock as of May 2, 2022 was
QUARTERLY REPORT ON FORM 10-Q
FOR THE PERIOD ENDED MARCH 31, 2022
TABLE OF CONTENTS
Item 1. Financial Statements (Unaudited)
BOYD GAMING CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS (Unaudited)
| March 31, | December 31, | |||||||
| (In thousands, except share data) | 2022 | 2021 | ||||||
| ASSETS | ||||||||
| Current assets | ||||||||
| Cash and cash equivalents | $ | $ | ||||||
| Restricted cash | ||||||||
| Accounts receivable, net | ||||||||
| Inventories | ||||||||
| Prepaid expenses and other current assets | ||||||||
| Total current assets | ||||||||
| Property and equipment, net | ||||||||
| Operating lease right-of-use assets | ||||||||
| Other assets, net | ||||||||
| Intangible assets, net | ||||||||
| Goodwill, net | ||||||||
| Total assets | $ | $ | ||||||
| LIABILITIES AND STOCKHOLDERS' EQUITY | ||||||||
| Current liabilities | ||||||||
| Accounts payable | $ | $ | ||||||
| Current maturities of long-term debt | ||||||||
| Accrued liabilities | ||||||||
| Income tax payable | ||||||||
| Total current liabilities | ||||||||
| Long-term debt, net of current maturities and debt issuance costs | ||||||||
| Operating lease liabilities, net of current portion | ||||||||
| Deferred income taxes | ||||||||
| Other liabilities | ||||||||
| Commitments and contingencies (Notes 5 and 6) | ||||||||
| Stockholders' equity | ||||||||
| Preferred stock, $ par value, shares authorized | ||||||||
| Common stock, $ par value, shares authorized; and shares outstanding | ||||||||
| Additional paid-in capital | ||||||||
| Retained earnings | ||||||||
| Accumulated other comprehensive income (loss) | ( | ) | ( | ) | ||||
| Total stockholders' equity | ||||||||
| Total liabilities and stockholders' equity | $ | $ | ||||||
The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.
BOYD GAMING CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited)
| Three Months Ended |
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| March 31, |
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| (In thousands, except per share data) |
2022 |
2021 |
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| Revenues |
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| Gaming |
$ | $ | ||||||
| Food & beverage |
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| Room |
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| Other |
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| Total revenues |
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| Operating costs and expenses |
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| Gaming |
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| Food & beverage |
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| Room |
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| Other |
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| Selling, general and administrative |
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| Master lease rent expense |
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| Maintenance and utilities |
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| Depreciation and amortization |
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| Corporate expense |
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| Project development, preopening and writedowns |
( |
) | ||||||
| Other operating items, net |
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| Total operating costs and expenses |
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| Operating income |
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| Other expense (income) |
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| Interest income |
( |
) | ( |
) | ||||
| Interest expense, net of amounts capitalized |
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| Loss on early extinguishments and modifications of debt |
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| Other, net |
( |
) | ||||||
| Total other expense, net |
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| Income before income taxes |
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| Income tax provision |
( |
) | ( |
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| Net income |
$ | $ | ||||||
| Basic net income per common share |
$ | $ | ||||||
| Weighted average basic shares outstanding |
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| Diluted net income per common share |
$ | $ | ||||||
| Weighted average diluted shares outstanding |
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The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.
BOYD GAMING CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (Unaudited)
| Three Months Ended |
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| March 31, |
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| (In thousands) |
2022 |
2021 |
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| Net income |
$ | $ | ||||||
| Other comprehensive income (loss), net of tax: |
||||||||
| Fair value adjustments to available-for-sale securities |
( |
) | ( |
) | ||||
| Comprehensive income |
$ | $ | ||||||
The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.
BOYD GAMING CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY (Unaudited)
| Accumulated Other | ||||||||||||||||||||||||
| Common Stock | Additional | Retained | Comprehensive | |||||||||||||||||||||
| (In thousands, except share data) | Shares | Amount | Paid-in Capital | Earnings | Income (Loss) | Total | ||||||||||||||||||
| Balances, January 1, 2022 | $ | $ | $ | $ | ( | ) | $ | |||||||||||||||||
| Net income | — | |||||||||||||||||||||||
| Comprehensive loss, net of tax | — | ( | ) | ( | ) | |||||||||||||||||||
| Release of restricted stock units, net of tax | ( | ) | ( | ) | ||||||||||||||||||||
| Release of performance stock units, net of tax | ( | ) | ( | ) | ||||||||||||||||||||
| Shares repurchased and retired | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||||||||||
| Dividends declared ($ per share) | — | ( | ) | ( | ) | |||||||||||||||||||
| Share-based compensation costs | — | |||||||||||||||||||||||
| Balances, March 31, 2022 | $ | $ | $ | $ | ( | ) | $ | |||||||||||||||||
| Accumulated Other | ||||||||||||||||||||||||
| Common Stock | Additional | Retained | Comprehensive | |||||||||||||||||||||
| (In thousands, except share data) | Shares | Amount | Paid-in Capital | Earnings | Income (Loss) | Total | ||||||||||||||||||
| Balances, January 1, 2021 | $ | $ | $ | $ | $ | |||||||||||||||||||
| Net income | — | |||||||||||||||||||||||
| Comprehensive loss, net of tax | — | ( | ) | ( | ) | |||||||||||||||||||
| Stock options exercised | ||||||||||||||||||||||||
| Release of restricted stock units, net of tax | ( | ) | ( | ) | ||||||||||||||||||||
| Release of performance stock units, net of tax | ( | ) | ( | ) | ||||||||||||||||||||
| Share-based compensation costs | — | |||||||||||||||||||||||
| Balances, March 31, 2021 | $ | $ | $ | $ | ( | ) | $ | |||||||||||||||||
The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.
BOYD GAMING CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited)
| Three Months Ended |
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| March 31, |
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| (In thousands) |
2022 |
2021 |
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| Cash Flows from Operating Activities |
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| Net income |
$ | $ | ||||||
| Adjustments to reconcile net income to net cash provided by operating activities: |
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| Depreciation and amortization |
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| Amortization of debt financing costs and discounts on debt |
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| Non-cash operating lease expense |
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| Share-based compensation expense |
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| Deferred income taxes |
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| Gain on sale of assets |
( |
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| Loss on early extinguishments and modifications of debt |
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| Other operating activities |
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| Changes in operating assets and liabilities: |
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| Accounts receivable, net |
( |
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| Inventories |
( |
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| Prepaid expenses and other current assets |
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| Income taxes payable, net |
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| Other assets, net |
( |
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| Accounts payable and accrued liabilities |
( |
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| Operating lease liabilities |
( |
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| Other liabilities |
( |
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| Net cash provided by operating activities |
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| Cash Flows from Investing Activities |
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| Capital expenditures |
( |
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| Insurance proceeds received from hurricane losses |
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| Proceeds received from disposition of assets |
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| Other investing activities |
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| Net cash (used in) provided by investing activities |
( |
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| Cash Flows from Financing Activities |
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| Borrowings under bank credit facility |
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| Payments under bank credit facility |
( |
) | ( |
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| Debt financing costs |
( |
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| Share-based compensation activities |
( |
) | ( |
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| Shares repurchased and retired |
( |
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| Other financing activities |
( |
) | ( |
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| Net cash used in financing activities |
( |
) | ( |
) | ||||
| Change in cash, cash equivalents and restricted cash |
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| Cash, cash equivalents and restricted cash, beginning of period |
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| Cash, cash equivalents and restricted cash, end of period |
$ | $ | ||||||
| Supplemental Disclosure of Cash Flow Information |
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| Cash paid for interest, net of amounts capitalized |
$ | $ | ||||||
| Cash paid for (received from) income taxes |
( |
) | ||||||
| Supplemental Schedule of Non-cash Investing and Financing Activities |
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| Payables incurred for capital expenditures |
$ | $ | ||||||
| Dividends declared not yet paid |
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| Operating lease right-of-use asset and liability remeasurements |
( |
) | ||||||
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 (Unaudited)
as of March 31, 2022 and December 31, 2021 and for the three months ended March 31, 2022 and 2021
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NOTE 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Organization
Boyd Gaming Corporation (and together with its subsidiaries, the "Company", "Boyd", "Boyd Gaming", "we" or "us") was incorporated in the state of Nevada in 1988 and has been operating since 1975. The Company's common stock is traded on the New York Stock Exchange under the symbol "BYD".
We are a geographically diversified operator of 28 wholly owned gaming entertainment properties. Headquartered in Las Vegas, we have gaming operations in Nevada, Illinois, Indiana, Iowa, Kansas, Louisiana, Mississippi, Missouri, Ohio and Pennsylvania.
Impact of the COVID-19 Pandemic
In mid- March 2020, all of our gaming facilities were closed in compliance with orders issued by state officials as precautionary measures intended to slow the spread of the COVID-19 virus. As of March 31, 2022,
The closures of our properties in 2020 had a material impact on our business, and the COVID-19 pandemic, the associated impacts on customer behavior and the requirements of health and safety protocols may further impact our business in the future. The severity and duration of such potential business impacts cannot currently be estimated and the ultimate impact of the COVID-19 pandemic on our operations is unknown and will depend on future developments, which are highly uncertain and cannot be predicted with confidence, including the duration of the COVID-19 outbreak, potential resurgences or new variants of the virus, the logistics of distribution, level of participation and overall efficacy of vaccine programs, change in consumer behavior and demand and the related impact on economic activity, and any additional preventative and protective actions that governments, or the Company, may direct, which may result in additional business disruptions, reduced customer traffic and reduced operations. Any resulting financial impact cannot be reasonably estimated at this time.
We currently anticipate funding our operations over the next 12 months with the cash being generated by our operations, supplemented, if necessary, by the cash we currently have available and the borrowing capacity available under our Revolving Credit Facility. We assessed the recoverability of our assets as of the end of first quarter and no impairment charges were required. If our expectations regarding projected revenues and cash flows related to our assets are not achieved, we may be subject to impairment charges in the future, which could have a material adverse impact on our consolidated financial statements.
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 of America ("GAAP"). These condensed consolidated financial statements should be read in conjunction with the audited consolidated financial statements and notes for the year ended December 31, 2021, as filed with the U.S. Securities and Exchange Commission ("SEC") on February 28, 2022.
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 the Company and its subsidiaries. Investments in unconsolidated affiliates, which are 50% or less owned and do not meet the controlling financial interest consolidation criteria of the authoritative accounting guidance for voting interest or variable interest entities, are accounted for under the equity method. All significant intercompany accounts and transactions have been eliminated in consolidation.
BOYD GAMING CORPORATION AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) — (Continued)
as of March 31, 2022 and December 31, 2021 and for the three months ended March 31, 2022 and 2021______________________________________________________________________________________________________
Cash and Cash Equivalents
Cash and cash equivalents include highly liquid investments, which include cash on hand and in banks, interest-bearing deposits and money market funds with maturities of three months or less at their date of purchase. The instruments are not restricted as to withdrawal or use and are on deposit with high credit quality financial institutions. Although these balances may at times exceed the federal insured deposit limit, we believe such risk is mitigated by the quality of the institution holding such deposit. The carrying values of these instruments approximate their fair values as such balances are generally available on demand.
Restricted Cash
Restricted cash consists primarily of advance payments related to: (i) amounts restricted by regulation for gaming and racing purposes; and (ii) future bookings with our Hawaiian travel agency. These restricted cash balances are invested in highly liquid instruments with a maturity of 90 days or less. These restricted cash balances are held by high credit quality financial institutions. The carrying value of these instruments approximates their fair value due to their short maturities.
The following table provides a reconciliation of cash, cash equivalents and restricted cash balances reported within the condensed consolidated balance sheets to the total balance shown in the condensed consolidated statements of cash flows.
| March 31, | December 31, | March 31, | December 31, | |||||||||||||
| (In thousands) | 2022 | 2021 | 2021 | 2020 | ||||||||||||
| Cash and cash equivalents | $ | $ | $ | $ | ||||||||||||
| Restricted cash | ||||||||||||||||
| Total cash, cash equivalents and restricted cash | $ | $ | $ | $ | ||||||||||||
Leases
Management determines if a contract is or contains a lease at inception or modification of a contract. A contract is or contains a lease if the contract conveys the right to control the use of an identified asset for a period in exchange for consideration. Control over the use of the identified asset means the lessee has both (a) the right to obtain substantially all of the economic benefits from the use of the asset and (b) the right to direct the use of the asset. Operating lease liabilities are recognized based on the present value of the remaining lease payments, discounted using the discount rate for the lease at the commencement date. For our operating leases for which the rate implicit in the lease is not readily determinable, we generally use an incremental borrowing rate based on information available at the commencement date to determine the present value of future lease payments. Operating right-of-use ("ROU") assets and finance lease assets are recognized based on the amount of the initial measurement of the lease liability. Lease expense is recognized on a straight-line basis over the lease term. Our lease terms may include options to extend or terminate the lease when it is reasonably certain that we will exercise that option. Lease and non-lease components are accounted for separately.
Revenue Recognition
The Company’s revenue contracts with customers consist of gaming wagers, hotel room sales, food & beverage offerings and other amenity transactions. The transaction price for a gaming wagering contract is the difference between gaming wins and losses, not the total amount wagered. Cash discounts, commissions and other cash incentives to customers related to gaming play are recorded as a reduction of gaming revenues. The transaction price for hotel, food & beverage and other contracts is the net amount collected from the customer for such goods and services. Hotel, food & beverage and other services have been determined to be separate, stand-alone performance obligations and the transaction price for such contracts is recorded as revenue as the good or service is transferred to the customer over their stay at the hotel, when the delivery is made for the food & beverage or when the service is provided for other amenity transactions.
Gaming wager contracts involve two performance obligations for those customers earning points under the Company’s player loyalty programs and a single performance obligation for customers who do not participate in the programs. The Company applies a practical expedient by accounting for its gaming contracts on a portfolio basis as such wagers have similar characteristics and the Company reasonably expects the effects on the financial statements of applying the revenue recognition guidance to the portfolio to not differ materially from that which would result if applying the guidance to an individual wagering contract. For purposes of allocating the transaction price in a wagering contract between the wagering performance obligation and the obligation associated with the loyalty points earned, the Company allocates an amount to the loyalty point contract liability based on the stand-alone selling price of the points earned, which is determined by the value of a point that can be redeemed for a hotel room stay, food & beverage or other amenities. Sales and usage-based taxes are excluded from revenues. An amount is allocated to the gaming wager performance obligation using the residual approach as the stand-alone price for wagers is highly variable and no set established price exists for such wagers. The allocated revenue for gaming wagers, excluding race and sports wagers, is recognized when the wagers occur as all such wagers settle immediately. The allocated revenue for race and sports wagers is recognized when the specific event or game occurs. The loyalty point contract liability amount is deferred and recognized as revenue when the customer redeems the points for a hotel room stay, food & beverage or other amenities and such goods or services are delivered to the customer. See Note 4, Accrued Liabilities, for the balance outstanding related to player loyalty programs.
BOYD GAMING CORPORATION AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) — (Continued)
as of March 31, 2022 and December 31, 2021 and for the three months ended March 31, 2022 and 2021
______________________________________________________________________________________________________
The Company collects advanced deposits from hotel customers for future reservations representing obligations of the Company until the hotel room stay is provided to the customer. See Note 4, Accrued Liabilities, for the balance outstanding related to advance deposits.
The Company's outstanding chip liability represents the amounts owed in exchange for gaming chips held by a customer. Outstanding chips are expected to be recognized as revenue or redeemed for cash within one year of being purchased. See Note 4, Accrued Liabilities, for the balance outstanding related to the chip liability.
The retail value of hotel accommodations, food & beverage, and other services furnished to guests without charge is recorded as departmental revenues. Gaming revenues are net of incentives earned in our player loyalty programs such as cash and the estimated retail value of goods and services (such as complimentary rooms and food & beverage). We reward customers, through the use of player loyalty programs, with points based on amounts wagered that can be redeemed for a specified period of time for complimentary slot play, food & beverage, and to a lesser extent for other goods or services, depending upon the property.
The estimated retail value related to goods and services provided to customers without charge or upon redemption of points under our player loyalty programs, included in departmental revenues, and therefore reducing our gaming revenues, are as follows:
| Three Months Ended | ||||||||
| March 31, | ||||||||
| (In thousands) | 2022 | 2021 | ||||||
| Food & beverage | $ | $ | ||||||
| Room | ||||||||
| Other | ||||||||
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. In addition, we are responsible for the payment of gaming taxes owed for the online gaming activities conducted by third party operators under certain collaborative arrangements. We are reimbursed for these taxes by the third-party operators. We report the gaming taxes paid as other expense and the reimbursements we receive as other revenues. These taxes totaled approximately $
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. 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. Use of the term "more likely than not" indicates the likelihood of occurrence is greater than 50%. Accordingly, the need to establish valuation allowances for deferred tax assets is continually assessed 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 profitability and taxable income, the duration of statutory carryforward periods, our experience with the utilization of operating loss and tax credit carryforwards before expiration and tax planning strategies. In making such judgments, significant weight is given to evidence that can be objectively verified.
Other Long-Term Tax Liabilities
The Company's income tax returns are subject to examination by the Internal Revenue Service 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.
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 is 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.
Collaborative Arrangements
We hold a five percent equity ownership in and have a strategic partnership with FanDuel Group ("FanDuel"), one of the nation's leaders in online sports-betting, to pursue sports-betting opportunities, both at our properties and online, across the country. Subject to state law and regulatory approvals, we have established a presence in the retail gaming, online gaming and sports wagering industry by leveraging FanDuel's technology and related services. We have also entered into agreements with other companies for the operation of online gaming offerings under market-access agreements. We operate retail gaming, and in some states online gaming, in Illinois, Indiana, Iowa, Louisiana, Mississippi and Pennsylvania under either the FanDuel brand or one of our other market access partners. The activities related to these collaborative arrangements are recorded in other revenue and other expense on the condensed consolidated statements of operations.
BOYD GAMING CORPORATION AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) — (Continued)
as of March 31, 2022 and December 31, 2021 and for the three months ended March 31, 2022 and 2021
______________________________________________________________________________________________________
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. Actual results could differ from these estimates.
Recently Adopted Accounting Pronouncements
ASU 2021-05, Leases, Topic 842 ("Update 2021-05")
In July 2021, the Financial Accounting Standards Board ("FASB") issued Update 2021-05 to clarify guidance for lessors with lease contracts that have variable lease payments that do not depend on a reference index or rate and would have resulted in the recognition of a selling loss at lease commencement if classified as sales-type or direct financing. Update 2021-05 is effective for fiscal years beginning after December 15, 2021, and interim periods within those fiscal years. The Company adopted Update 2021-05 during first quarter 2022 and the impact of the adoption to its condensed consolidated financial statements was not material.
Recently Issued Accounting Pronouncements
A variety of proposed or otherwise potential accounting standards are currently being studied 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.
NOTE 2. PROPERTY AND EQUIPMENT, NET
Property and equipment, net consists of the following:
| March 31, | December 31, | |||||||
| (In thousands) | 2022 | 2021 | ||||||
| Land | $ | $ | ||||||
| Buildings and improvements | ||||||||
| Furniture and equipment | ||||||||
| Riverboats and barges | ||||||||
| Construction in progress | ||||||||
| Total property and equipment | ||||||||
| Less accumulated depreciation | ( | ) | ( | ) | ||||
| Property and equipment, net | $ | $ | ||||||
Depreciation expense is as follows:
| Three Months Ended | ||||||||
| March 31, | ||||||||
| (In thousands) | 2022 | 2021 | ||||||
| Depreciation expense | $ | $ | ||||||
BOYD GAMING CORPORATION AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) — (Continued)
as of March 31, 2022 and December 31, 2021 and for the three months ended March 31, 2022 and 2021
______________________________________________________________________________________________________
NOTE 3. GOODWILL AND INTANGIBLE ASSETS, NET
Intangible assets, net consist of the following:
| March 31, 2022 | |||||||||||||||||||
| Weighted | Gross | Accumulated | |||||||||||||||||
| Useful Life | Carrying | Accumulated | Impairment | Intangible | |||||||||||||||
| (In thousands) | Remaining (in years) | Value | Amortization | Losses | Assets, Net | ||||||||||||||
| Amortizing intangibles | |||||||||||||||||||
| Customer relationships | $ | $ | ( | ) | $ | $ | |||||||||||||
| Host agreements | ( | ) | |||||||||||||||||
| Development agreement | — | ||||||||||||||||||
| ( | ) | ||||||||||||||||||
| Indefinite lived intangible assets | |||||||||||||||||||
| Trademarks | Indefinite | ( | ) | ||||||||||||||||
| Gaming license rights | Indefinite | ( | ) | ( | ) | ||||||||||||||
| ( | ) | ( | ) | ||||||||||||||||
| Balances, March 31, 2022 | $ | $ | ( | ) | $ | ( | ) | $ | |||||||||||
| December 31, 2021 | |||||||||||||||||||
| Weighted | Gross | Accumulated | |||||||||||||||||
| Useful Life | Carrying | Accumulated | Impairment | Intangible | |||||||||||||||
| (In thousands) | Remaining (in years) | Value | Amortization | Losses | Assets, Net | ||||||||||||||
| Amortizing intangibles | |||||||||||||||||||
| Customer relationships | $ | $ | ( | ) | $ | $ | |||||||||||||
| Host agreements | ( | ) | |||||||||||||||||
| Development agreement | — | ||||||||||||||||||
| ( | ) | ||||||||||||||||||
| Indefinite lived intangible assets | |||||||||||||||||||
| Trademarks | Indefinite | ( | ) | ||||||||||||||||
| Gaming license rights | Indefinite | ( | ) | ( | ) | ||||||||||||||
| ( | ) | ( | ) | ||||||||||||||||
| Balances, December 31, 2021 | $ | $ | ( | ) | $ | ( | ) | $ | |||||||||||
Goodwill, net consists of the following:
| Gross | Accumulated | |||||||||||||||
| Carrying | Accumulated | Impairment | Goodwill, | |||||||||||||
| (In thousands) | Value | Amortization | Losses | Net | ||||||||||||
| Goodwill, net by Reportable Segment | ||||||||||||||||
| Las Vegas Locals | $ | $ | $ | ( | ) | $ | ||||||||||
| Downtown Las Vegas | ( | ) | ||||||||||||||
| Midwest & South | ( | ) | ||||||||||||||
| Balances, March 31, 2022 | $ | $ | ( | ) | $ | ( | ) | $ | ||||||||
The following table sets forth the changes in our goodwill, net, during the three months ended March 31, 2022.
| (In thousands) | Goodwill, Net | |||
| Balance, January 1, 2022 | $ | |||
| Additions | ||||
| Impairments | ||||
| Balance, March 31, 2022 | $ | |||
BOYD GAMING CORPORATION AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) — (Continued)
as of March 31, 2022 and December 31, 2021 and for the three months ended March 31, 2022 and 2021
______________________________________________________________________________________________________
NOTE 4. ACCRUED LIABILITIES
Accrued liabilities consist of the following:
| March 31, |
December 31, |
|||||||
| (In thousands) |
2022 |
2021 |
||||||
| Payroll and related expenses |
$ | $ | ||||||
| Interest |
||||||||
| Gaming |
||||||||
| Player loyalty program |
||||||||
| Advance deposits |
||||||||
| Outstanding chip |
||||||||
| Dividend payable |
||||||||
| Operating lease |
||||||||
| Other accrued |
||||||||
| Total accrued liabilities |
$ | $ | ||||||
NOTE 5. LONG-TERM DEBT
Long-term debt, net of current maturities and debt issuance costs, consists of the following:
| March 31, 2022 | ||||||||||||||||||||
| Interest | Unamortized | |||||||||||||||||||
| Rates at | Origination | |||||||||||||||||||
| March 31, | Outstanding | Unamortized | Fees and | Long-Term | ||||||||||||||||
| (In thousands) | 2022 | Principal | Discount | Costs | Debt, Net | |||||||||||||||
| Bank credit facility | % | $ | $ | $ | ( | ) | $ | |||||||||||||
| 4.750% senior notes due 2027 | % | ( | ) | |||||||||||||||||
| 8.625% senior notes due 2025 | % | ( | ) | |||||||||||||||||
| 4.750% senior notes due 2031 | % | ( | ) | |||||||||||||||||
| Other | % | |||||||||||||||||||
| Total long-term debt | ( | ) | ||||||||||||||||||
| Less current maturities | ||||||||||||||||||||
| Long-term debt, net | $ | $ | $ | ( | ) | $ | ||||||||||||||
| December 31, 2021 | |||||||||||||||||||
| Interest | Unamortized | ||||||||||||||||||
| Rates at | Origination | ||||||||||||||||||
| December 31, | Outstanding | Unamortized | Fees and | Long-Term | |||||||||||||||
| (In thousands) | 2021 | Principal | Discount | Costs | Debt, Net | ||||||||||||||
| Bank credit facility | % | $ | $ | ( | ) | $ | ( | ) | $ | ||||||||||
| 4.750% senior notes due 2027 | % | ( | ) | ||||||||||||||||
| 8.625% senior notes due 2025 | % | ( | ) | ||||||||||||||||
| 4.750% senior notes due 2031 | % | ( | ) | ||||||||||||||||
| Other | % | ||||||||||||||||||
| Total long-term debt | ( | ) | ( | ) | |||||||||||||||
| Less current maturities | |||||||||||||||||||
| Long-term debt, net | $ | $ | ( | ) | $ | ( | ) | $ | |||||||||||
Bank Credit Facility
Credit Agreement
On March 2, 2022 (the "Closing Date"), the Company entered into a credit agreement (the "Credit Agreement") among the Company, certain direct and indirect subsidiaries of the Company as guarantors (the "Guarantors"), Bank of America, N.A., as administrative agent, collateral agent and letter of credit issuer, Wells Fargo Bank, National Association, as swingline lender, and certain other financial institutions party thereto as lenders. The Credit Agreement replaced the Third Amended and Restated Credit Agreement, dated as of August 14, 2013 (the "Prior Credit Agreement"), among the Company, certain direct and indirect subsidiaries of the Company as guarantors, Bank of America, N.A., as administrative agent and letter of credit issuer, Wells Fargo Bank, National Association, as swingline lender, and certain other financial institutions party thereto as lenders.
BOYD GAMING CORPORATION AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) — (Continued)
as of March 31, 2022 and December 31, 2021 and for the three months ended March 31, 2022 and 2021
______________________________________________________________________________________________________
The Credit Agreement provides for (i) a $
The outstanding principal amounts under the Credit Facility and Prior Credit Agreement are comprised of the following:
| March 31, | December 31, | |||||||
| (In thousands) | 2022 | 2021 | ||||||
| Revolving Credit Facility | $ | $ | ||||||
| Term A Loan | ||||||||
| Prior Term A Loan | ||||||||
| Prior Refinancing Term B Loan | ||||||||
| Swing Loan | ||||||||
| Total outstanding principal amounts under the bank credit facility | $ | $ | ||||||
With a total revolving credit commitment of $
Interest and Fees
The interest rate on the outstanding balance of the Revolving Credit Facility and the Term A Loan is based upon, at the Company’s option, either: (i) a rate based on the Secured Overnight Financing Rate ("SOFR") administered by the Federal Reserve Bank of New York or (ii) the base rate, in each case, plus an applicable margin. Such applicable margin is a percentage per annum determined in accordance with a specified pricing grid based on the Consolidated Total Net Leverage Ratio and ranges from
Optional and Mandatory Prepayments
Pursuant to the terms of the Credit Agreement (i) the loans under the Term A Loan will amortize in an annual amount equal to
Amounts outstanding under the Credit Agreement may be prepaid without premium or penalty, and the unutilized portion of the commitments may be terminated without penalty, subject to certain conditions.
Subject to certain exceptions, the Company may be required to repay the amounts outstanding under the Credit Agreement in connection with certain asset sales and issuances of certain additional non-permitted or refinancing indebtedness.
Guarantees and Collateral
The Company’s obligations under the Credit Facility, subject to certain exceptions, are guaranteed by certain of the Company’s subsidiaries and are secured by the capital stock of certain subsidiaries. In addition, subject to certain exceptions, the Company and each of the guarantors granted the administrative agent first priority liens and security interests on substantially all of their real and personal property (other than gaming licenses and subject to certain other exceptions) as additional security for the performance of the secured obligations under the Credit Facility.
The Credit Agreement includes an accordion feature which permits the incurrence of one or more new tranches of revolving credit commitments or term loans and increases to the Revolving Credit Facility and Term A Loan in an aggregate amount up to the sum of (i) $
Financial and Other Covenants
The Credit Agreement contains certain financial and other covenants, including, without limitation, various covenants (i) requiring the maintenance of a minimum consolidated interest coverage ratio on a quarterly basis of
The maximum permitted Consolidated Total Net Leverage Ratio is calculated as Consolidated Net Indebtedness to twelve-month trailing Consolidated EBITDA, as defined by the Credit Agreement. The maximum Consolidated Total Net Leverage Ratio for the fiscal quarter ending June 30, 2022 through the fiscal quarter ending June 30, 2023 must be no higher than
BOYD GAMING CORPORATION AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) — (Continued)
as of March 31, 2022 and December 31, 2021 and for the three months ended March 31, 2022 and 2021
______________________________________________________________________________________________________
Early Extinguishment and Modification of Debt
In accordance with authoritative accounting guidance for debt extinguishments and debt modifications, we accounted for the retirement of the Prior Term A Loan and the Prior Refinancing Term B Loan as extinguishments of debt, resulting in the write-off of unamortized deferred finance charges totaling $
Covenant Compliance
As of March 31, 2022, we believe that we were in compliance with the covenants of our debt instruments.
NOTE 6. COMMITMENTS AND CONTINGENCIES
On March 28, 2022, we announced that we had entered into a definitive agreement to acquire Pala Interactive, LLC ("Pala Interactive") and its subsidiaries, including its Canadian subsidiary Pala Canada Interactive Inc. ("Pala Canada"), for total cash consideration of $
NOTE 7. STOCKHOLDERS' EQUITY AND STOCK INCENTIVE PLANS
Dividends
The dividends declared by the Board of Directors and reflected in the periods presented are:
| Declaration date | Record date | Payment date | Amount per share | |||||
| February 3, 2022 | | | $ | |||||
Share-Based Compensation
We account for share-based awards exchanged for employee services in accordance with the authoritative accounting guidance for share-based payments. Under the guidance, share-based compensation expense is measured at the grant date, based on the estimated fair value of the award, and is recognized as expense, net of estimated forfeitures, over the employee's requisite service period.
The following table provides classification detail of the total costs related to our share-based employee compensation plans reported in our condensed consolidated statements of operations.
| Three Months Ended | ||||||||
| March 31, | ||||||||
| (In thousands) | 2022 | 2021 | ||||||
| Gaming | $ | $ | ||||||
| Food & beverage | ||||||||
| Room | ||||||||
| Selling, general and administrative | ||||||||
| Corporate expense | ||||||||
| Total share-based compensation expense | $ | $ | ||||||
BOYD GAMING CORPORATION AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) — (Continued)
as of March 31, 2022 and December 31, 2021 and for the three months ended March 31, 2022 and 2021
______________________________________________________________________________________________________
Performance Shares
Our stock incentive plan provides for the issuance of Performance Share Units ("PSU") grants which may be earned, in whole or in part, upon passage of time and the attainment of performance criteria. We periodically review our estimates of performance against the defined criteria to assess the expected payout of each outstanding PSU grant and adjust our stock compensation expense accordingly.
The PSU grants awarded in fourth quarter 2018 and 2017 fully vested during first quarter 2022 and 2021, respectively. Common shares were issued based on the determination by the Compensation Committee of the Board of Directors of our actual achievement of net revenue growth, Earnings Before Interest, Taxes, Depreciation and Amortization ("EBITDA") growth and customer service scores for the three-year performance period of each grant. As provided under the provisions of our stock incentive plan, certain of the participants elected to surrender a portion of the shares to be received to pay the withholding and other payroll taxes payable on the compensation resulting from the vesting of the PSUs.
The PSU grant awarded in November 2018 resulted in a total of
The PSU grant awarded in November 2017 resulted in a total of
Unamortized Stock Compensation Expense and Recognition Period
As of March 31, 2022, there was approximately $
NOTE 8. FAIR VALUE MEASUREMENTS
We have adopted the authoritative accounting guidance for fair value measurements, which does not determine or affect the circumstances under which fair value measurements are used, but defines fair value, expands disclosure requirements around fair value and specifies a hierarchy of valuation techniques based on whether the inputs to those valuation techniques are observable or unobservable. Observable inputs reflect market data obtained from independent sources, while unobservable inputs reflect the Company's market assumptions.
These inputs create the following fair value hierarchy:
Level 1: Quoted prices for identical instruments in active markets.
Level 2: Quoted prices for similar instruments in active markets; quoted prices for identical or similar instruments in markets that are not active; and model-derived valuations in which all significant inputs and significant value drivers are observable in active markets.
Level 3: Valuations derived from valuation techniques in which one or more significant inputs or significant value drivers are unobservable.
As required by the guidance for fair value measurements, financial assets and liabilities are classified in their entirety based on the lowest level of input that is significant to the fair value measurement. Thus, assets and liabilities categorized as Level 3 may be measured at fair value using inputs that are observable (Levels 1 and 2) and unobservable (Level 3). Management's assessment of the significance of a particular input to the fair value measurement requires judgment and may affect the valuation of assets and liabilities and their placement within the fair value hierarchy levels.
Balances Measured at Fair Value
The following tables show the fair values of certain of our financial instruments:
| March 31, 2022 | ||||||||||||||||
| (In thousands) | Balance | Level 1 | Level 2 | Level 3 | ||||||||||||
| Assets | ||||||||||||||||
| Cash and cash equivalents | $ | $ | $ | $ | ||||||||||||
| Restricted cash | ||||||||||||||||
| Investment available for sale | ||||||||||||||||
| December 31, 2021 | ||||||||||||||||
| (In thousands) | Balance | Level 1 | Level 2 | Level 3 | ||||||||||||
| Assets | ||||||||||||||||
| Cash and cash equivalents | $ | $ | $ | $ | ||||||||||||
| Restricted cash | ||||||||||||||||
| Investment available for sale | ||||||||||||||||
| Liability | ||||||||||||||||
| Contingent payments | $ | $ | $ | $ | ||||||||||||
Cash and Cash Equivalents and Restricted Cash
The fair values of our cash and cash equivalents and restricted cash, classified in the fair value hierarchy as Level 1, are based on statements received from our banks at March 31, 2022 and December 31, 2021.
BOYD GAMING CORPORATION AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) — (Continued)
as of March 31, 2022 and December 31, 2021 and for the three months ended March 31, 2022 and 2021
______________________________________________________________________________________________________
Investment Available for Sale
We have an investment in a single municipal bond issuance of $
Contingent Payments
In connection with the development of the Kansas Star Casino ("Kansas Star"), Kansas Star agreed to pay a former casino project promoter
The following tables summarize the changes in fair value of the Company's Level 3 assets and liabilities:
| Three Months Ended | ||||||||||||||||
| March 31, 2022 | March 31, 2021 | |||||||||||||||
| Asset | Liability | Asset | Liability | |||||||||||||
| (In thousands) | Investment Available for Sale | Contingent Payments | Investment Available for Sale | Contingent Payments | ||||||||||||
| Balance at beginning of reporting period | $ | $ | ( | ) | $ | $ | ( | ) | ||||||||
| Total gains (losses) (realized or unrealized): | ||||||||||||||||
| Included in interest income (expense) | ( | ) | ||||||||||||||
| Included in other comprehensive income (loss) | ( | ) | ( | ) | ||||||||||||
| Included in other items, net | ||||||||||||||||
| Purchases, sales, issuances and settlements: | ||||||||||||||||
| Settlements | ||||||||||||||||
| Balance at end of reporting period | $ | $ | $ | $ | ( | ) | ||||||||||
We are exposed to valuation risk on our Level 3 financial instruments. We estimate our risk exposure using a sensitivity analysis of potential changes in the significant unobservable inputs of our fair value measurements. Our Level 3 financial instruments are most susceptible to valuation risk caused by changes in the discount rate. If the discount rate in our fair value measurements increased or decreased by 100 basis points, the change would not cause the value of our fair value measurements to change significantly.
BOYD GAMING CORPORATION AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) — (Continued)
as of March 31, 2022 and December 31, 2021 and for the three months ended March 31, 2022 and 2021
______________________________________________________________________________________________________
Balances Disclosed at Fair Value
The following tables provide the fair value measurement information about our obligation under assessment agreements and other financial instruments:
| March 31, 2022 | |||||||||||||
| Outstanding | Carrying | Estimated | Fair Value | ||||||||||
| (In thousands) | Face Amount | Value | Fair Value | Hierarchy | |||||||||
| Liabilities | |||||||||||||
| Obligation under assessment arrangements | $ | $ | $ | Level 3 | |||||||||
| December 31, 2021 | |||||||||||||
| Outstanding | Carrying | ||||||||||||