Last10K.com

Boyd Gaming Corp (BYD) SEC Filing 10-K Annual Report for the fiscal year ending Friday, December 31, 2021

Boyd Gaming Corp

CIK: 906553 Ticker: BYD

Exhibit 99.1

 

 

 

boydgaminglogo.jpg

 

 

 

Financial Contact:

 

Media Contact:

 

Josh Hirsberg

 

David Strow

 

(702) 792-7234

 

(702) 792-7386

 

joshhirsberg@boydgaming.com

 

davidstrow@boydgaming.com

 

BOYD GAMING REPORTS FOURTH-QUARTER, FULL-YEAR 2021 RESULTS

Company Sets Fourth-Quarter, Full-Year Records for Revenues, Adjusted EBITDAR

and Net Income

 

Board Reinstates Quarterly Dividend, Increases Payout to $0.15 Per Share

 

LAS VEGAS - FEBRUARY 3, 2022 -

Boyd Gaming Corporation (NYSE: BYD) today reported financial results for the fourth quarter and full year ended December 31, 2021.

 

Keith Smith, President and Chief Executive Officer of Boyd Gaming, said: “Our Company finished 2021 with record quarterly performances across every segment of our operations.  For the fourth straight quarter, we set new records for Companywide EBITDAR and operating margins. And on a full-year basis, we surpassed our previous EBITDAR record by more than 50%, as we achieved Companywide operating margins of more than 40%. As we begin 2022, we remain focused on executing our proven operating strategy, as well as driving incremental growth through strategic reinvestments in our portfolio and the continued expansion of our online business."

 

Smith continued: "Given the ongoing strength of our business, we are expanding our program to return capital to our shareholders by reinstating our quarterly dividend.  In conjunction with our current share repurchase program, this action reflects our commitment to a balanced approach to creating long-term shareholder value.”

 

Boyd Gaming reported fourth-quarter 2021 revenues of $879.8 million, up 38.4% from $635.9 million in the fourth quarter of 2020. The Company reported net income of $109.8 million, or $0.96 per share, for the fourth quarter of 2021, compared to $83.3 million, or $0.73 per share, for the year-ago period.

 

 

1

The following information was filed by Boyd Gaming Corp (BYD) on Thursday, February 3, 2022 as an 8K 2.02 statement, which is an earnings press release pertaining to results of operations and financial condition. It may be helpful to assess the quality of management by comparing the information in the press release to the information in the accompanying 10-K Annual Report statement of earnings and operation as management may choose to highlight particular information in the press release.
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Table of Contents



UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

 


FORM 10-K

  


 

(Mark One)

   

ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

    

For the fiscal year ended December 31, 2021

OR

  

TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

  

Commission file number: 1-12882

 


 

a1.jpg

  

BOYD GAMING CORPORATION

(Exact name of registrant as specified in its charter)

 


 

Nevada

88-0242733

(State or other jurisdiction of

incorporation or organization)

(I.R.S. Employer

Identification No.)

 

6465 South Rainbow Boulevard, Las Vegas, NV 89118

(Address of principal executive offices) (Zip Code)

 

(702) 792-7200

(Registrant’s telephone number, including area code)

  

Securities registered pursuant to Section 12(b) of the Act:

  

Title of each class

Trading Symbol(s)

Name of each exchange on which registered

Common Stock, par value of $0.01 per share

BYD

New York Stock Exchange

 

Securities registered pursuant to section 12(g) of the Act: None

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes  ☒  No  ☐

 

Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act. Yes  ☐  No  ☒

 

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  ☒  No  ☐

 

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). Yes  ☒  No  ☐

 

 

 

 

 

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.

  

Large accelerated filer

Accelerated filer

Non-accelerated filer

☐ 

Smaller reporting company

 

 

Emerging growth company

 

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 Act.☐

 

Indicate by check mark whether the registrant has filed a report on and attestation to its management’s assessment of the effectiveness of its internal control over financial reporting under Section 404(b) of the Sarbanes-Oxley Act (15 U.S.C. 7262(b)) by the registered public accounting firm that prepared or issued its audit report.

 

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).    Yes      No  ☒

 

As of June 30, 2021, the aggregate market value of the voting common stock held by non-affiliates of the registrant, based on the closing price on the New York Stock Exchange for such date, was approximately $5.0 billion.

 

Indicate the number of shares outstanding of each of the registrant's classes of common stock, as of the latest practicable date.

  

 

Class

 

Outstanding as of February 18, 2022

 

 

Common stock, $0.01 par value

 

110,006,004

 

  

DOCUMENTS INCORPORATED BY REFERENCE

Portions of the definitive Proxy Statement for the registrant's 2022 Annual Meeting of Stockholders to be filed pursuant to Regulation 14A within 120 days after the registrant's fiscal year end of December 31, 2021 are incorporated by reference into Part III of this Form 10-K.

  



  

 

 

BOYD GAMING CORPORATION

ANNUAL REPORT ON FORM 10-K

FOR THE FISCAL YEAR ENDED DECEMBER 31, 2021

TABLE OF CONTENTS

 

 

 

Page No.

 

PART I

 

ITEM 1.

Business

1

 

 

 

ITEM 1A.

Risk Factors

10

 

 

 

ITEM 1B.

Unresolved Staff Comments

16

 

 

 

ITEM 2.

Properties

17

 

 

 

ITEM 3.

Legal Proceedings

17

 

 

 

ITEM 4.

Mine Safety Disclosures

17

 

 

 

 

PART II

 

 

 

 

ITEM 5.

Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities

18

 

 

 

ITEM 6.

Reserved

20

 

 

 

ITEM 7.

Management's Discussion and Analysis of Financial Condition and Results of Operations

20

 

 

 

ITEM 7A.

Quantitative and Qualitative Disclosures About Market Risk

40

 

 

 

ITEM 8.

Financial Statements and Supplementary Data

41

 

 

 

ITEM 9.

Changes in and Disagreements with Accountants on Accounting and Financial Disclosure

87

 

 

 

ITEM 9A.

Controls and Procedures

87

 

 

 

ITEM 9B.

Other Information

89

 

 

 

ITEM 9C. Disclosure Regarding Foreign Jurisdictions that Prevent Inspections 89
     

 

PART III

 

 

 

 

ITEM 10.

Directors, Executive Officers and Corporate Governance

89

 

 

 

ITEM 11.

Executive Compensation

89

 

 

 

ITEM 12.

Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters

89

 

 

 

ITEM 13.

Certain Relationships and Related Transactions, and Director Independence

89

 

 

 

ITEM 14.

Principal Accounting Fees and Services

89

 

 

 

 

PART IV

 

 

 

 

ITEM 15.

Exhibits, Financial Statement Schedules

90

 

 

 

ITEM 16.

Form 10-K Summary

95

 

 

 

 

SIGNATURES

96

 

 

 

PART I

 

ITEM 1.    Business

Overview

Boyd Gaming Corporation (the "Company," the "Registrant," "Boyd Gaming," "we" or "us") is a multi-jurisdictional gaming company that has been in operation since 1975. Headquartered in Las Vegas, we operate 28 wholly owned gaming entertainment properties in Nevada, Illinois, Indiana, Iowa, Kansas, Louisiana, Mississippi, Missouri, Ohio and Pennsylvania. Through our strategic partnership with and as a 5% equity owner of FanDuel Group, the nation’s leading sports-betting and iGaming operator, we are also pursuing sports-betting and online gaming opportunities across the United States. At December 31, 2021, there were 11 FanDuel-branded sportsbooks operating within our properties, and FanDuel operated online sports-betting in partnership with us in three states. In addition, we operate Stardust-branded iGaming casinos in Pennsylvania and New Jersey. In January 2022, we opened FanDuel-branded sportsbooks at two additional properties and FanDuel commenced operations of an online sportsbook in an additional state.

 

We continually work to position our Company for greater success by strengthening our existing operations and growing through acquisitions, capital investments and other strategic initiatives. As our properties reopened following the COVID-19 closures in mid-2020, we implemented a strategic shift in our operating philosophy to increase our focus on building loyalty with core customers and adopted a more efficient approach to doing business. This new operating model is focused on maximizing gaming revenues, streamlining our cost structure, targeting our marketing investments and reducing lower margin offerings, which allows us to flow a higher percentage of our revenues to the bottom line.

 

In addition, we believe the following factors have contributed to our success in the past and are central to our success in the future:

 

 

we have an experienced management team;
     
  our operations are geographically diversified within the United States;
     
 

our Las Vegas Locals properties are well-positioned to capitalize on the attractive Las Vegas locals market; 
     
 

three of our properties are located in the growing downtown Las Vegas market and also market to a unique niche - Hawaiian customers;

     
 

we have used our increased free cash flow to strengthen our balance sheet; and

     
 

we have the ability to expand certain existing properties and to act opportunistically to make strategic acquisitions.

 

Properties

As of December 31, 2021, we own and operate 28 properties offering a total of 1,694,482 square feet of casino space, 31,635 slot machines, 686 table games and 10,751 hotel rooms. We derive the majority of our revenues from our gaming operations, which generated approximately 80% and 81% of our revenues in 2021 and 2020, respectively. Food & beverage revenues, room revenues and other revenues each contributed less than 10% of revenues in each of 2021 and 2020.

 

We view each operating property as an operating segment. For financial reporting purposes, we aggregate our properties into three reportable business segments: (i) Las Vegas Locals; (ii) Downtown Las Vegas; and (iii) Midwest & South.

 

For financial information related to our segments as of and for the three years in the period ended December 31, 2021, see Note 13, Segment Information, to our consolidated financial statements presented in Part II, Item 8.

 

 

The following table sets forth certain information regarding our properties (listed by the Reportable Segment in which each such property is reported) as of and for the year ended December 31, 2021:

 

       

Year

                                               
       

Opened

 

Casino

                                   

Average

 
       

or

 

Space

   

Slot

   

Table

   

Hotel

   

Hotel

   

Daily

 
   

Location

 

Acquired

 

(Sq. ft.)

   

Machines

   

Games

   

Rooms

   

Occupancy

   

Rate

 

Las Vegas Locals

                                                       

Gold Coast Hotel and Casino

 

Las Vegas, NV

 

2004

    88,915       1,538       47       712       44 %   $ 60  

The Orleans Hotel and Casino

 

Las Vegas, NV

 

2004

    136,960       2,006       62       1,885       54 %   $ 66  

Sam's Town Hotel and Gambling Hall

 

Las Vegas, NV

 

1979

    120,681       1,514       20       645       48 %   $ 69  

Suncoast Hotel and Casino

 

Las Vegas, NV

 

2004

    95,898       1,532       21       427       71 %   $ 85  

Eastside Cannery Casino and Hotel

 

Las Vegas, NV

 

2016

    ••    

••

   

••

   

••

   

••

   

••

 

Aliante Casino + Hotel + Spa

 

North Las Vegas, NV

 

2016

    125,000       1,613       24       202       89 %   $ 102  

Cannery Casino Hotel

 

North Las Vegas, NV

 

2016

    86,000       1,337       21       200       83 %   $ 72  

Jokers Wild

 

Henderson, NV

 

1993

    23,698       348             N/A       N/A       N/A  
                                                         

Downtown Las Vegas

                                                       

California Hotel and Casino

 

Las Vegas, NV

 

1975

    35,848       890       19       779       59 %   $ 56  

Fremont Hotel & Casino

 

Las Vegas, NV

 

1985

    30,244       835       21       447       35 %   $ 56  

Main Street Station Hotel and Casino

 

Las Vegas, NV

 

1993

    26,918       707       8       406       47 %   $ 61  
                                                         

Midwest & South

                                                       

Par-A-Dice Casino

East Peoria, IL

 

1996

    26,116       544       18       202       53 %   $ 80  

Belterra Casino Resort

Florence, IN

 

2018

    54,758       970       25       662       44 %   $ 87  

Blue Chip Casino Hotel Spa

Michigan City, IN

 

1999

    65,000       1,488       30       486       46 %   $ 94  

Diamond Jo Casino

Dubuque, IA

 

2012

    41,408       753       18       N/A       N/A       N/A  

Diamond Jo Worth

Northwood, IA

 

2012

    34,820       833       23       N/A       N/A       N/A  

Kansas Star Casino

 

Mulvane, KS

 

2012

    70,010       1,583       42       N/A       N/A       N/A  

Amelia Belle Casino

 

Amelia, LA

 

2012

    27,484       801       11       N/A       N/A       N/A  

Delta Downs Racetrack Hotel & Casino

Vinton, LA

 

2001

    15,000       1,560             370       73 %   $ 80  

Evangeline Downs Racetrack & Casino

Opelousas, LA

 

2012

    39,208       1,239             N/A       N/A       N/A  

Sam's Town Shreveport

 

Shreveport, LA

 

2004

    29,285       815       18       514       75 %   $ 82  

Treasure Chest Casino

Kenner, LA

 

1997

    23,668       893       25       N/A       N/A       N/A  

IP Casino Resort Spa

Biloxi, MS

 

2011

    81,700       1,241       48       1,088       47 %   $ 86  

Sam's Town Hotel and Gambling Hall Tunica

Tunica, MS

 

1994

    53,000       706       9       700       47 %   $ 63  

Ameristar Casino * Hotel Kansas City

 

Kansas City, MO

 

2018

    140,000       1,839       63       184       81 %   $ 84  

Ameristar Casino * Resort * Spa St. Charles

 

St. Charles, MO

 

2018

    130,000       2,009       63       397       52 %   $ 98  

Belterra Park

 

Cincinnati, OH

 

2018

    56,863       1,191             N/A       N/A       N/A  

Valley Forge Casino Resort

King of Prussia, PA

 

2018

    36,000       850       50       445       44 %   $ 111  

Total

    1,694,482       31,635       686       10,751                  

N/A = Not Applicable

 

● These properties feature FanDuel-branded sportsbooks. In addition, Amelia Belle Casino and Sam's Town Shreveport opened FanDuel-branded sportsbooks in January 2022.

● ● The Eastside Cannery Casino and Hotel remains closed due to local market conditions.

 

We also own and operate a travel agency and a captive insurance company that underwrites travel-related insurance, each located in Hawaii. Financial results for these operations are included in our Downtown Las Vegas segment, as our Downtown Las Vegas properties focus marketing efforts on gaming customers from Hawaii. In addition, the financial results for our Illinois distributed gaming operator are included in the Midwest & South segment. As of December 31, 2021, our distributed gaming operator currently operates approximately 1,000 gaming units in approximately 200 locations across the state of Illinois.

 

In December 2020, we sold Eldorado Casino, which was part of our Las Vegas Locals segment. See Note 1, Summary of Significant Accounting Policies, to our consolidated financial statements presented in Part II, Item 8 for further discussion of this transaction.

 

 

Las Vegas Locals Properties

Our Las Vegas Locals segment consists of eight casinos that primarily serve the resident population of the Las Vegas metropolitan area. Las Vegas has historically been characterized by a vibrant economy and strong demographics that include a large population of retirees and other active gaming customers. In recent years, the Las Vegas economy has strengthened, as reflected in the positive trends in employment, construction activity and visitation. Our Las Vegas Locals segment competes directly with other locals casinos and gaming companies, some of which operate larger casinos and offer different promotions than ours.

 

Gold Coast Hotel and Casino

Gold Coast Hotel and Casino ("Gold Coast") is located on Flamingo Road, approximately one mile west of the Las Vegas Strip and one-quarter mile west of Interstate 15, the major highway linking Las Vegas and southern California. Its location offers easy access from the entire Las Vegas valley. The primary target market for Gold Coast consists of local customers who actively gamble. Gold Coast's amenities include 712 hotel rooms and suites along with meeting facilities, multiple restaurant options and a 70-lane bowling center.

 

The Orleans Hotel and Casino

The Orleans Hotel and Casino ("The Orleans") is located on Tropicana Avenue, a short distance from the Las Vegas Strip. The target markets for The Orleans are local residents and visitors to the Las Vegas area. The Orleans provides a New Orleans French Quarter-themed environment. Amenities at The Orleans include 1,885 hotel rooms, a variety of restaurants and bars, a spa and fitness center, 18 stadium-seating movie theaters, a 52-lane bowling center, banquet and meeting space, and a special events arena that seats up to 9,500 patrons.

 

Sam's Town Hotel and Gambling Hall

Sam's Town Hotel and Gambling Hall ("Sam's Town Las Vegas") is located on the Boulder Strip, approximately six miles east of the Las Vegas Strip, and features a contemporary western theme. Its informal, friendly atmosphere appeals to both local residents and out-of-town visitors alike. Amenities at Sam's Town Las Vegas include 645 hotel rooms, a variety of restaurants and bars, 18 stadium-seating movie theaters, and a 56-lane bowling center.

 

Suncoast Hotel and Casino

Suncoast Hotel and Casino ("Suncoast") is located in Peccole Ranch, a master-planned community adjacent to Summerlin, and is readily accessible from most major points in Las Vegas, including downtown and the Las Vegas Strip. The primary target market for Suncoast consists of local customers who gamble frequently. Suncoast features 427 hotel rooms, multiple restaurant options, 25,000 square feet of banquet and meeting facilities, 16 stadium-seating movie theaters, a showroom, and a 64-lane bowling center. 

 

Eastside Cannery Casino and Hotel

Eastside Cannery Casino and Hotel ("Eastside Cannery") has been closed to the public since March 18, 2020 and has not yet re-opened due to the current levels of market demand and our cost containment efforts. Eastside Cannery is located directly south of Sam's Town Las Vegas at the intersection of Boulder Highway and Harmon Avenue in Las Vegas. Its location offers easy access for both the Las Vegas and Henderson valleys. At the time of its closure in March 2020, Eastside Cannery offered 63,879 square feet of casino space with 881 slots and eight table games, 306 hotel rooms, one restaurant and four bars, 20,000 square feet of meeting and ballroom space, and a 250-seat entertainment lounge. 

 

Aliante Casino + Hotel + Spa

Aliante Casino + Hotel + Spa ("Aliante") is located in North Las Vegas adjacent to an 18-hole championship golf course and has convenient access to major freeways connecting it to points throughout Las Vegas. The primary target market for Aliante consists of local customers who gamble frequently. Aliante features a full-service Scottsdale-modern, desert-inspired casino and resort, which includes 202 hotel rooms, multiple restaurant options, a 16-screen movie theater complex, a 587-seat showroom, a spa, and a resort style pool with cabanas. 

 

Cannery Casino Hotel

Cannery Casino Hotel ("Cannery") is located in the northeastern part of the Las Vegas Valley and has convenient access to major freeways connecting it to points throughout Las Vegas. The primary target market for Cannery consists of local customers who gamble frequently. The Cannery has a 200-room hotel, three restaurants and three bars, a 30,000 square foot entertainment venue and a 16-screen movie theater.

 

Jokers Wild 

Located in Henderson, the Jokers Wild is approximately 14 miles from the Las Vegas Strip and includes slots, a sports book and dining options. The principal customers of this property are Henderson residents.

 

 

Downtown Las Vegas Properties

Our three Downtown Las Vegas properties directly compete with nine other casinos that operate in downtown Las Vegas. As such, we have developed a distinct niche for our downtown properties by focusing on customers from Hawaii. Our downtown properties focus their marketing on gaming enthusiasts from Hawaii and tour and travel agents in Hawaii with whom we have cultivated relationships since we opened our California Hotel and Casino (the "Cal") in 1975. We have strong, informal relationships with Hawaiian travel agencies and offer affordable all-inclusive packages. These relationships, combined with our Hawaiian promotions, have allowed the Cal, Fremont Hotel & Casino ("Fremont") and Main Street Hotel and Casino ("Main Street Station") to capture a significant share of the Hawaiian tourist trade in Las Vegas. During the year ended December 31, 2021, patrons from Hawaii comprised approximately 62% of the occupied room nights at the Cal, 35% of the occupied room nights at Fremont, and 56% of the occupied room nights at Main Street Station.

 

California Hotel and Casino

The Cal's amenities include 779 hotel rooms, multiple dining options, a sports book, and meeting space. The Cal and Main Street Station are connected by an indoor pedestrian bridge.

 

Fremont Hotel & Casino

Fremont is adjacent to the principal pedestrian thoroughfare in downtown Las Vegas, known as the Fremont Street Experience. The property's amenities include 447 hotel rooms, two restaurants, a race and sports book, and meeting space. A project is underway to renovate and upgrade the Fremont. The $50 million project will upgrade Fremont's food & beverage offerings and expand and enhance the casino floor. The project is expected to be completed in early 2023.

 

Main Street Station Hotel and Casino

Main Street Station's amenities include 406 hotel rooms and two restaurants, one of which includes a brewery. In addition, Main Street Station features a 96-space recreational vehicle park, the only such facility in the downtown area. Main Street Station was closed to the public on March 18, 2020 due to the COVID-19 pandemic and remained closed until re-opening on September 8, 2021.

 

Midwest & South Properties

Our Midwest & South properties consist of four land-based casinos, six dockside riverboat casinos, three racinos and four barge-based casinos that operate in nine states in the midwest and southern United States. Generally, these states allow casino gaming on a limited basis through the issuance of a limited number of gaming licenses. Each of our Midwest & South properties primarily serve customers within a 100-mile radius and compete directly with other casino facilities operating in their respective immediate and surrounding market areas, as well as with gaming operations in surrounding jurisdictions. Online sportsbooks are operated under the respective property gaming license of certain of our Midwest & South properties pursuant to collaborative arrangements with FanDuel or one of our other market access partners.

 

Par-A-Dice Casino

Par-A-Dice Casino ("Par-A-Dice") is a dockside riverboat casino located on the Illinois River in East Peoria, Illinois that features a 202-room hotel. Located adjacent to the Par-A-Dice riverboat is a land-based pavilion, which includes three restaurants and a gift shop. A FanDuel branded sportsbook opened at Par-A-Dice in August 2020. Par-A-Dice is strategically located near Interstate 74, a major east-west interstate highway, and it is the only casino gaming facility located within an approximately 90-mile radius of Peoria, Illinois. After Par-A-Dice's initial re-opening on July 1, 2020, the property was temporarily closed on November 20, 2020 and subsequently re-opened on January 16, 2021.

 

Belterra Casino Resort

Belterra Casino Resort ("Belterra Resort") is a dockside riverboat casino featuring 662 hotel rooms located in Florence, Indiana, approximately 50 minutes from downtown Cincinnati, Ohio, 70 minutes from Louisville, Kentucky, and 90 minutes from Lexington, Kentucky. Belterra Resort is also approximately two and one-half hours from Indianapolis, Indiana. The real estate utilized by Belterra Resort is subject to a Master Lease with Gaming and Leisure Properties, Inc. ("GLPI"). A FanDuel branded sportsbook opened at Belterra Resort in September 2019. Ogle Haus Inn, a 54-room boutique hotel that we lease from GLPI, is operated by us and located near Belterra Resort.

 

Blue Chip Casino Hotel Spa

Blue Chip Casino Hotel Spa ("Blue Chip") is a dockside riverboat casino located in Michigan City, Indiana, which is 40 miles west of South Bend, Indiana and 60 miles east of Chicago, Illinois. The property competes primarily with six casinos in northern Indiana and southern Michigan and, to a lesser extent, with casinos in the Chicago area and racinos located near Indianapolis. The property features 486 guest rooms, a spa and fitness center, dining and nightlife venues, and meeting and event space, including a land-based pavilion. A FanDuel branded sportsbook opened at Blue Chip in September 2019.

 

Diamond Jo Casino

Diamond Jo Casino ("Diamond Jo Dubuque") is a land-based casino located in the Port of Dubuque, a waterfront development on the Mississippi River in downtown Dubuque, Iowa. Diamond Jo Dubuque is a two-story property that includes a bowling center and two banquet rooms. A FanDuel branded sportsbook opened at Diamond Jo Dubuque in September 2019. The property also features several dining outlets, as well as three full-service bars and the Mississippi Moon Bar, a live music venue.  

 

 

Diamond Jo Worth

Diamond Jo Worth is a land-based casino situated on a 46-acre site in Northwood, Iowa, which is located in north-central Iowa, near the Minnesota border and approximately 30 miles north of Mason City. The casino has an event center and several dining options. A FanDuel branded sportsbook opened at Diamond Jo Worth in September 2019. There is a 102-room Country Inn & Suites hotel attached to the casino and a 60-room Holiday Inn Express hotel adjacent to the casino, both of which are owned and operated by third parties.

 

Kansas Star Casino

Kansas Star Casino ("Kansas Star") serves as Lottery Gaming Facility Manager for the South Central Gaming Zone on behalf of the Kansas Lottery pursuant to a Lottery Gaming Facility Management Contract with the State of Kansas (the "Kansas Management Contract"). The land-based casino is located in Mulvane, Kansas, approximately 20 miles south of Wichita, Kansas and has multiple dining venues and casino bars. Kansas Star also has an arena that provides a venue for concerts, trade shows and equestrian events. In addition, the property has an event center for conventions, banquets and other events and an equestrian pavilion that includes a practice arena and covered stalls. There is a 300-room Hampton Inn & Suites hotel adjacent to the casino that is operated by a third party. Under the terms of the agreement, Kansas Star has the option to purchase the hotel. 

 

Amelia Belle Casino

The Amelia Belle Casino ("Amelia Belle") is located in south-central Louisiana and is a three-level riverboat with gaming located on the first two decks as well as a café on the first deck. The property's third deck includes a banquet room. A FanDuel branded sportsbook opened at Amelia Belle in January 2022.

 

Delta Downs Racetrack Hotel & Casino

Delta Downs Racetrack Hotel & Casino ("Delta Downs") is a land-based racino located in Vinton, Louisiana and conducts horse races on a seasonal basis and operates year-round simulcast facilities for customers to wager on races held at other tracks. In addition, Delta Downs offers slot play and a 370-room hotel. Delta Downs is approximately 25 miles closer to Houston than the next closest gaming properties, located in Lake Charles, Louisiana, and is conveniently located near a travel route taken by customers traveling between Houston, Beaumont and other parts of southeastern Texas to Lake Charles, Louisiana. A FanDuel branded sportsbook opened at Delta Downs in December 2021.

 

Evangeline Downs Racetrack & Casino

Evangeline Downs Racetrack & Casino ("Evangeline Downs") is a land-based racino located in Louisiana. The racino currently includes a casino with a convention center and multiple food venues and bars. The racino includes a one-mile dirt track, a 7/8-mile turf track and stables for 1,008 horses. The Clubhouse, together with the grandstand and patio area, provides seating capacity for up to 4,295 patrons. In the Clubhouse, Silk's Fine Dining offers a varied menu and the grandstand area contains a concession stand and bar. There is also a 117-room hotel adjacent to the racino, which is operated by a third party. A FanDuel branded sportsbook opened at Evangeline Downs in December 2021.

 

Evangeline Downs operates three Off Track Betting ("OTB") locations in Henderson, Eunice and St. Martinville, Louisiana. Each OTB offers simulcast pari-mutuel wagering and video poker. Under Louisiana's racing and off-track betting laws, we have a right of prior approval with respect to any applicant seeking a permit to operate an OTB within a 55-mile radius of the Evangeline Downs racetrack, which effectively gives us the exclusive right, at our option, to operate additional OTBs within such a radius, provided that such OTB is not also within a 55-mile radius of another horse racetrack. 

 

Sam's Town Shreveport

Sam's Town Shreveport is a dockside riverboat casino located along the Red River in Shreveport, Louisiana. Amenities at the property include 514 hotel rooms, three restaurants, a live entertainment venue, and convention and meeting space. Feeder markets include east Texas (including Dallas), Texarkana, Arkansas, and surrounding Louisiana cities, including Bossier City, Minden, Ruston and Monroe. A FanDuel branded sportsbook opened at Sam's Town Shreveport in January 2022.

 

Treasure Chest Casino

Treasure Chest Casino ("Treasure Chest") is a dockside riverboat casino located on Lake Pontchartrain in the western suburbs of New Orleans, Louisiana. The property is designed as a classic 18th century Victorian style paddlewheel riverboat, with a total capacity for 1,925 people. The entertainment complex located adjacent to the riverboat houses two restaurants. Located approximately five miles from the New Orleans International Airport, Treasure Chest primarily serves residents of suburban New Orleans. A FanDuel branded sportsbook opened at Treasure Chest in December 2021.

 

We will soon begin work on a $95 million project to construct a new land-based casino facility to replace the existing riverboat casino. The single-level facility will feature a 47,000-square-foot casino, several new restaurants and bars, nearly 10,000 square feet of convention and meeting space, a FanDuel-branded sports book, and ample parking directly adjacent to the casino entrance. The project is expected to be completed in late 2023.

 

IP Casino Resort Spa

IP Casino Resort Spa ("IP") is a barge-based casino overlooking the scenic back bay of Biloxi and, as a recipient of a AAA Four Diamond Award, is one of the premier resorts on the Mississippi Gulf Coast. The property features more than 1,000 hotel rooms and suites, more than 65,000 square feet of convention and meeting space, a spa and salon, a 1,383-seat theater offering regular headline entertainment, eight lounges and bars, and six restaurants, including a steak and seafood restaurant and an upscale Asian restaurant. During 2018, IP opened a sportsbook that is powered by FanDuel. 

 

 

Sam's Town Hotel and Gambling Hall Tunica

Sam's Town Hotel and Gambling Hall Tunica ("Sam's Town Tunica") is a barge-based casino located in Tunica County, Mississippi. The property has extensive amenities, including 700 hotel rooms, a sports book, an entertainment lounge, three dining venues, two escape rooms, an arcade, a residential vehicle park, and a 1,600-seat River Palace Arena. During 2018, Sam's Town Tunica opened a sportsbook that is powered by FanDuel.

 

Ameristar Casino * Hotel Kansas City

Ameristar Casino * Hotel Kansas City ("Ameristar Kansas City") is a barge-based casino located 10 miles from downtown Kansas City, Missouri. The property competes primarily with five casinos in the Kansas City area and bordering eastern Kansas market. The property features 184 guest rooms, seven restaurants, a 1,200-seat concert venue, and an 18-theater cinema. The real estate utilized by Ameristar Kansas City is subject to a Master Lease with GLPI.

 

Ameristar Casino * Resort * Spa St. Charles

Ameristar Casino * Resort * Spa St. Charles ("Ameristar St. Charles") is a barge-based casino located in St. Charles at the Missouri River, strategically situated to attract guests from the St. Charles and the greater St. Louis areas, as well as tourists from outside the region. The property, which is in close proximity to the St. Charles convention facility, is located on approximately 52 acres along the western bank of the Missouri River. The property features a AAA Four Diamond full-service luxury suite hotel with 397 well-appointed rooms, an indoor-outdoor pool, seven dining venues; twelve bars, an entertainment venue, a full-service luxury day spa, two TopGolf Swing Suites and a 20,000-square-foot conference center. The real estate utilized by Ameristar St. Charles is subject to a Master Lease with GLPI.

 

Belterra Park

Belterra Park is a land-based racino located in Cincinnati, Ohio, situated on approximately 160 acres of land, 40 of which are undeveloped. The property is a gaming and entertainment center offering live racing, pari-mutuel wagering, video lottery terminal gaming, six restaurants, a VIP lounge, pari-mutuel wagering, and racing facilities with live thoroughbred racing on both dirt and the only grass track in Ohio. The real estate utilized by Belterra Park is subject to a Master Lease with GLPI.

 

Valley Forge Casino Resort

Valley Forge Casino Resort ("Valley Forge") is a land-based casino hotel located in King of Prussia, Pennsylvania. The property features approximately 36,000 square feet of gaming floor, 100,000 square feet of meeting, conference and banquet facilities and two luxury hotel towers. The Valley Tower has 295 recently remodeled rooms while the Casino Tower offers over 150 completely renovated rooms in the heart of the action. A FanDuel branded sportsbook opened at Valley Forge in March 2019. The property also presents multiple dining options, live entertainment and an exciting nightlife scene. After Valley Forge's initial re-opening on June 26, 2020, the property was temporarily closed on December 12, 2020 and subsequently re-opened on January 4, 2021.

 

Competition

Our properties generally operate in highly competitive environments. We compete against other gaming companies as well as other hospitality, entertainment and leisure companies. We face significant competition in each of the jurisdictions in which we operate. Such competition may intensify in some of these jurisdictions if new gaming operations open in these markets or existing competitors expand their operations. Our properties compete directly with other gaming properties in each state in which we operate, as well as in adjacent states. We also compete for customers with other casino operators in other markets, including Native American casinos, and other forms of gaming, such as lotteries and internet gaming. In some instances, particularly with Native American casinos, our competitors pay substantially lower taxes or no taxes at all. We believe that increased legalized gaming in other states, particularly in areas close to our existing gaming properties and the development or expansion of Native American gaming in or near the states in which we operate, could create additional competition for us and could adversely affect our operations or future development projects.

 

Strategic Initiatives

BoydPay Digital Wallet

In February 2021, the Company and Aristocrat Technologies announced the launch of "BoydPay," our new digital wallet product. Through BoydPay, our customers will have the ability to create a cashless digital wallet that can be conveniently linked to third-party funding sources driven by Sightline Payments. 

 

During its initial phase, the BoydPay digital wallet is linked to a player's B Connected card and used to play or cash out on slot titles, also in partnership with Aristocrat. Pending regulatory approvals, we anticipate deploying this product at all of our casino properties nationwide.

 

During future phases, and pending regulatory approval, we will utilize Aristocrat technology to link the BoydPay wallet to our B Connected Mobile app, creating a contactless experience that will allow customers to use their smartphones to play and cash out on casino games and pay for amenities throughout the property.

 

 

 

Other Development Opportunities

Development and Management Agreements with Wilton Rancheria

We have separate development and management agreements with Wilton Rancheria, a federally-recognized Native American tribe, to develop and manage a gaming entertainment complex, located southeast of Sacramento, California. With all the necessary approvals in place and financing obtained, construction of Wilton's Sky River Casino began in first quarter 2021, and it is expected to open in fourth quarter 2022. 

 

Frequent Player Loyalty Programs

B Connected 

We have established a nationwide branding initiative and loyalty program. Our players use their "B Connected" cards to earn and redeem points at nearly all of our properties. The program has five player tiers - Ruby, Sapphire, Emerald, Onyx and Titanium. The "B Connected" club, among other benefits, rewards players for their loyalty and allows players to qualify for promotions and earn rewards toward slot, video poker, or table games play.

 

Benefits for our loyal customers include annual cruises, vacations, and gifts of luxury jewelry and electronics. The B Connected program is currently available at all properties except for Eastside Cannery and Jokers Wild.

 

Other Promotional Activities

We provide other promotional offers and discounts targeted towards new customers, frequent customers, inactive customers, customers of various levels of play, and prospective customers who have not yet visited our properties, and mid-week and other promotional activities that seek to generate visits to our properties during slower periods. Complementaries are usually in the form of monetary discounts, and other rewards generally can only be redeemed at our restaurants, retail and spa facilities.

 

Government Regulation

We are subject to extensive regulation under laws, rules and supervisory procedures primarily in the jurisdictions where our facilities are located or docked. The states in which we operate empower their regulators to investigate participation by licensees in gaming outside their jurisdiction and may require access to periodic reports respecting those gaming activities. Violations of laws in one jurisdiction could result in disciplinary action in other jurisdictions. A detailed description of the governmental gaming regulations to which we are subject is filed as Exhibit 99.1 and is herein incorporated by reference.

 

If additional gaming regulations are adopted in a jurisdiction in which we operate, such regulations could impose restrictions or costs that could have a significant adverse effect on us. From time to time, various proposals have been introduced in the legislatures of some of the jurisdictions in which we have existing or planned operations that, if enacted, could adversely affect the tax, regulatory, operational or other aspects of the gaming industry and us. We do not know whether or not such legislation will be enacted. The federal government has also previously considered a federal tax on casino revenues and the elimination of betting on National Collegiate Athletic Association events. With the recent expansion of sports wagering in various state jurisdictions, the federal government may elect to enact legislation taxing and regulating sports wagering, or alternatively may elect to prohibit such wagering. In addition, gaming companies are currently subject to significant state and local taxes and fees in addition to normal federal and state corporate income taxes, and such taxes and fees are subject to increase at any time. Any material increase in these taxes or fees could adversely affect us.

 

 

7

 

Human Capital and Labor Relations

As of December 31, 2021, we have 15,114 Team Members, including 14,406 Team Members at our properties and 708 Team Members in our corporate function. We operate in ten states, and we have collective bargaining agreements with three unions covering 1,058 employees.

 

Our Team Members are the most important contributors to our business. For our business to operate successfully, to execute on our long-term strategy, and to continue to grow, we depend upon having Team Members with the necessary talent and skills to support our property operations and corporate function. 

 

Our access to talent is impacted by local factors in each of our communities, including employment levels, and demand for and availability of specialized skills. In the near term, we expect hiring pressures to be a challenge for our business, however we are confident that we will be able to maintain our workforce and add Team Members with the specialized skills and experience necessary to sustain and grow our business.

 

We strive to attract individuals who are people-focused and share the values of our culture, which we refer to as "Boyd Style." Our Culture includes valuing relationships, exceeding expectations, working smart, and exhibiting our commitment to integrity in everything we do. These values are expected and reinforced at all levels of our organization. We believe this fosters dignity and respect between our Team Members and creates a positive working environment, reinforces the customer experience, and promotes long-term stakeholder value.

 

We have programs dedicated to selecting new talent and enhancing the skills of our Team Members, including recruiting relationships with numerous industry associations, government agencies and colleges. We provide competitive wages and benefits to attract and retain the talent necessary for the successful operation of our business. Our benefits include healthcare and retirement benefits, holiday and paid time off, and tuition assistance. Additionally, the Company paid out over $10 million in team member appreciation bonuses in 2021 and recently announced a pathway to $15 per hour for all non-tipped, non-represented positions over the next 18 months.

 

We believe our business is differentiated from our competitors due to our commitment to customer service and delivering a customer experience that fosters long-term loyalty. As such, our business depends on the capability and friendliness of each of our Team Members in order to provide outstanding customer service to each of our guests. Every Team Member at Boyd Gaming is required to complete the Company’s guest service training program. The program is strongly linked to our culture and values and gives Team Members the tools and training to create outstanding customer service experiences for our guests. Additionally, all Boyd Gaming leaders are required to attend leadership training. The program provides our leaders with the tools and training to effectively communicate and coach their team to success.

 

We are committed to the diversity, equity and inclusion of our workforce. Currently, 51% of our workforce are women and 52% are minority Team Members. As a Company, we work hard to promote and increase the diversity of our workforce. Our goal is to attract, retain and grow individuals that reflect the diversity of the communities where we do business, to develop policies and practices that help our Team Members realize their potential, and to create goodwill with our Team Members and customers. Additionally, through our most recent annual Team Member Opinion Survey, 87% of Team Members reported high levels of satisfaction in regard to being treated with respect regardless of race, ethnicity, gender, age or any other aspect of team member identity.

 

The Company has adopted a Code of Business Conduct that promotes ethical behavior and encourages Team Members to talk to supervisors, managers, or other appropriate personnel when in doubt about the best course of action. Furthermore, we also maintain a confidential Team Member hotline operated by an independent firm for anonymously reporting suspected wrongdoing.

 

Boyd Gaming strives to provide all Team Members a work environment free of discrimination and harassment. All supervisors and management staff are required to attend annual harassment awareness training and are responsible for ensuring that all Team Members comply with this policy and that appropriate action is taken if harassment occurs in the workplace.

 

We seek feedback from our Team Members through an annual Team Member Opinion Survey to measure the performance of our culture and to improve our work environment for Team Members. The annual survey regularly achieves over 80% participation. In our most recent survey, 78% of Team Members reported high levels of job satisfaction. Additionally, we have formal, annual goal setting and performance review processes to drive engagement, performance and retention. Our commitments to Team Member engagement are evidenced by our high average tenure of 9.5 years.

 

 

Corporate Information

We were incorporated in Nevada in June 1988. Our principal executive offices are located at 6465 South Rainbow Boulevard, Las Vegas, NV 89118, and our main telephone number is (702) 792-7200. Our website is www.boydgaming.com. Information on our website is not incorporated by reference herein.

 

Available Information

We file annual, quarterly, current and special reports, proxy statements and other information with the Securities and Exchange Commission (the "SEC"). In addition, the SEC maintains an Internet site, at http://www.sec.gov, containing reports, proxy and information statements, and other information regarding issuers that file electronically with the SEC. Copies of our SEC filings are available on the SEC’s website. You also may read and copy reports and other information filed by us at the office of the New York Stock Exchange, Inc., 20 Broad Street, New York, New York 10005. A copy of this Annual Report on Form 10-K will be provided to a stockholder, with exhibits, without charge upon written request to Boyd Gaming Corporation, 6465 South Rainbow Boulevard, Las Vegas, NV 89118, (702) 792-7200, Attn: David Strow, Vice President, Corporate Communications.

 

We make our Annual Reports on Form 10-K, our Quarterly Reports on Form 10-Q, our Current Reports on Form 8-K, and all amendments to these reports, available free of charge on our corporate website as soon as reasonably practicable after such reports are filed with, or furnished to, the SEC. In addition, our Environmental, Social & Governance Report, Code of Business Conduct and Ethics, Corporate Governance Guidelines, and charters of the Audit Committee, Compensation Committee, and the Corporate Governance and Nominating Committee are available on our website. We will provide reasonable quantities of electronic or paper copies of filings free of charge upon request. In addition, we will provide a copy of the above referenced charters to stockholders upon request.

 

Important Information Regarding Forward-Looking Statements

This Annual Report on Form 10-K contains forward-looking statements within the meaning of Section 27A of the Securities Act, and Section 21E of the Securities Exchange Act of 1934, as amended (the "Exchange Act"). Such statements contain words such as "may," "will," "might," "expect," "believe," "anticipate," "could," "would," "estimate," "pursue," "target," "project," "intend," "plan," "seek," "should," "assume," and "continue," as well as variations of such words and similar expressions referring to the future. Forward-looking statements in this Annual Report on Form 10-K may include, but are not limited to, statements regarding the factors listed below. The following factors, along with the Risk Factors included in Part II, Item 1A of this Form 10-K, could affect future results and cause those results to differ materially from those expressed in the forward-looking statements:

 

 

the factors that contribute to our ongoing success and our ability to be successful in the future;
  impacts caused by the COVID-19 pandemic or any other public health emergencies we may encounter;
 

our business model, areas of focus and strategy for driving business results;
  competition, including expansion of gaming into additional markets including internet gaming, the impact of competition on our operations, our ability to respond to such competition, and our expectations regarding continued competition in the markets in which we compete;
  the general effect, and expectation, of the national and global economy on our business, as well as the economies where each of our properties are located;
  indebtedness, including Boyd Gaming’s ability to refinance or pay amounts outstanding under its credit agreement and Boyd Gaming’s unsecured notes, when they become due and our compliance with related covenants, and our expectation that we will need to refinance all or a portion of our respective indebtedness at or before maturity;
  our expectation regarding the trends that will affect the gaming industry over the next few years and the impact of these trends on growth of the gaming industry, future development opportunities and merger and acquisition activity in general;
  our intention to pursue expansion opportunities, including acquisitions, that are a good fit for our business, deliver a solid return for stockholders, and are available at the right price;
  that our credit agreement and our cash flows from operating activities will be sufficient to meet our respective projected operating and maintenance capital expenditures for the next twelve months;
  our belief that all pending litigation claims, if adversely decided, will not have a material adverse effect on our business, financial position or results of operations;
  that margin improvements will remain a driver of profit growth for us going forward;
  regulations, including anticipated taxes, tax credits or tax refunds expected, and the ability to receive and maintain necessary approvals for our projects;
  our expectations regarding the expansion of sports betting and online wagering;
  our asset impairment analyses and our intangible asset and goodwill impairment tests;
  the likelihood of interruptions to our rights in the land we lease under long-term leases for certain of our hotel and casinos;
  that estimates and assumptions made in the preparation of financial statements in conformity with U.S. Generally Accepted Accounting Principles may differ from actual results; and
  our estimates as to the effect of any changes in our Consolidated EBITDA on our ability to remain in compliance with certain covenants in the credit agreement.

 

All forward-looking statements should be evaluated with the understanding of their inherent uncertainty. All forward-looking statements in this Form 10-K (including any document incorporated by reference) are made only as of the date of the document in which they are contained, based on information available to us as of the date of that document, and we caution you not to place undue reliance on forward-looking statements in light of the risks and uncertainties associated with them. Forward-looking statements are necessarily estimates reflecting the best judgment of our senior management and involve a number of risks and uncertainties, some of which may be beyond our control, which could cause actual results to differ materially from those suggested by the forward-looking statements. If any of those risks and uncertainties were to materialize, actual results could differ materially from those discussed in any such forward-looking statement. Among the factors that could cause actual results to differ materially from those discussed in forward-looking statements are those discussed under the heading "Risk Factors" and in this Annual Report on Form 10-K and in our other current and periodic reports filed from time to time with the SEC. 

 

All subsequent written and oral forward-looking statements attributable to us or persons acting on our behalf are expressly qualified in their entirety by our cautionary statements. Except as required by law, we undertake no obligation to update any forward-looking statements, whether as a result of new information, future events or otherwise.

 

 

ITEM 1A.    Risk Factors

In addition to the other information contained in this report on Form 10-K, the following Risk Factors should be considered carefully in evaluating our business.

 

If any of the following risks actually occur, our business, financial condition and results of operations could be materially and adversely affected. If this were to happen, the value of our securities, including our common stock and senior notes, could decline significantly, and investors could lose all or part of their investment.

 

This report is qualified in its entirety by these risk factors.

 

Risks Related to our Business

The COVID-19 pandemic, the public response to it and related economic consequences have had and will likely continue to have an adverse effect on our business, operations, financial condition and results.

As a result of the COVID-19 global pandemic and related measures to prevent its spread, all of our gaming facilities were closed in mid-March 2020 in response to orders from public officials and government regulations. As of December 31, 2021, 27 of our 28 casino properties are re-opened and operating, while one property in Las Vegas remains closed as a result of business demand and cost containment measures. We cannot predict whether we will be required to temporarily close some or all of our properties in the future. Our business, operations, financial condition and results have been, and could again be, negatively affected as a result of the COVID-19 pandemic.

 

Our properties are subject to various health and safety measures instituted in response to the COVID-19 pandemic, including substantial limitations on occupancy. We cannot predict how long current health and safety protocols will be necessary. Decisions by public officials in this regard will depend on many factors beyond our control and that remain uncertain in light of ongoing developments related to the pandemic, including development of preventative or treatment protocols.

 

We have been required to reduce or eliminate the offering of certain amenities and otherwise limit the availability of certain offerings to align with public health and safety recommendations and customer preferences as a result of the COVID-19 pandemic, such as deactivating a substantial number of gaming devices to maintain social distancing and limiting restaurant seating, as well as substantially limiting the number of customers we are permitted to admit at any time. Such measures necessarily impact business volume and may impact customer behavior and business demand, and the duration of such potential impact is unknown at this time. Our business, operations, financial condition and results may be materially, negatively affected to the extent demand for our casinos and customer preference and behavior is altered as a result of the COVID-19 pandemic. We cannot predict the extent to which the global pandemic and public response may negatively affect business operating results in the future.

 

Uncertainties related to the magnitude, duration, and persistent effects of the COVID-19 pandemic may significantly adversely affect our business and results of operations. These uncertainties include, among other things: the duration and impact of the resurgence in COVID-19 cases in the locations where our properties are located; the emergence, contagiousness, and threat of new and different strains of virus; the availability, acceptance, and effectiveness of vaccines; additional closures or other actions as mandated or otherwise made necessary by governmental authorities, including employee vaccine mandates; disruptions in the supply chain and logistics constraints; and an increasingly competitive labor market due to a sustained labor shortage or increased turnover caused by the COVID-19 pandemic.

 

The foregoing has also impacted our workforce, suppliers, contractors and other partners. We cannot predict the extent to which the above factors will cause our costs to increase or may lead to business failures or our inability to provide services or products for our partners.

 

Our business is particularly sensitive to reductions in discretionary consumer spending as a result of downturns in the economy.

Consumer demand for entertainment and other amenities at casino hotel properties, such as ours, are particularly sensitive to downturns in the economy and the corresponding impact on discretionary spending on leisure activities. Changes in discretionary consumer spending or consumer preferences brought about by factors such as perceived or actual general economic conditions, effects of declines in consumer confidence in the economy, including any future housing, employment and credit crisis, the impact of high energy and food costs, the increased cost of travel, the potential for bank failures, an ongoing pandemic, decreased disposable consumer income and wealth, or fears of war and future acts of terrorism could further reduce customer demand for the amenities that we offer, thus imposing practical limits on pricing and negatively impacting our results of operations and financial condition.

 

 

In 2008, we experienced a profound reduction in consumer demand as a result of the economic recession in the U.S. economy, and we are now experiencing the impacts of COVID-19, which are significantly impacting customer visitations and business revenue. Consumer spending habits changed significantly due to the recession in 2008, and we expect that consumer behavior as a result of the COVID-19 pandemic may be similarly altered for an extended period of time. We cannot say when, if ever, or to what extent, customer behavior in our various markets will fully revert to prior trends. Because our business model relies on consumer expenditures on entertainment, luxury and other discretionary items, an ongoing economic downturn, including the impact of COVID-19, may be expected to materially adversely affect our operating results and financial condition.

 

Intense competition exists in the gaming industry, and we expect competition to continue to intensify.

The gaming industry is highly competitive for both customers and employees, including those at the management level. We compete with numerous casinos and hotel casinos of varying quality and size in market areas where our properties are located. We also compete with other non-gaming resorts and vacation destinations, and with various other casino and entertainment businesses, including online gaming websites, and could compete with any new forms of gaming that may be legalized in the future. For example, there has been recent expansion of sports betting in various states with legislation allowing for sports betting in casinos and/or online. Expansion of traditional and online gaming in other jurisdictions could create further competition for us. The casino entertainment business is characterized by competitors that vary considerably in their size, quality and type of facilities, number of operations, brand identities, marketing and growth strategies, financial strength and capabilities, amenities, management talent and geographic diversity. In most markets, we compete directly with other casino facilities operating in the immediate and surrounding market areas. In some markets, we face competition from nearby markets in addition to direct competition within our market areas. Furthermore, competition from online platforms continues to increase.

 

With fewer new markets opening for development, competition in existing markets has intensified in recent years. We and our competitors have invested in expanding existing facilities, developing new facilities, and acquiring established facilities in existing markets. This expansion of existing casino entertainment properties, the increase in the number of properties and the aggressive marketing strategies of many of our competitors have increased competition in many markets in which we compete, and this intense competition can be expected to continue. Additionally, competition may intensify if our competitors commit additional resources to aggressive pricing and promotional activities in order to attract customers.

 

Also, our business may be adversely impacted by the additional gaming and room capacity in states where we operate or intend to operate. Several states are also considering enabling the development and operation of casinos or casino-like operations in their jurisdictions.

 

We also compete with legalized gaming from casinos located on Native American tribal lands. Expansion of Native American gaming in areas located near our properties, or in areas in or near those from which we draw our customers, could have an adverse effect on our operating results.

 

In addition, we also compete to some extent with other forms of gaming on both a local and national level, including state-sponsored lotteries, charitable gaming, video gaming terminals at bars, restaurants, taverns and truck stops, on-and off-track wagering, and other forms of entertainment, including motion pictures, sporting events and other recreational activities. It is possible that these secondary competitors could reduce the number of visitors to our facilities or the amount they are willing to wager, which could have a material adverse effect on our ability to generate revenue or maintain our profitability and cash flows.

 

 

If our competitors operate more successfully than we do, if they attract customers away from us as a result of aggressive pricing and promotion, if they are more successful than us in attracting and retaining employees, if their properties are enhanced or expanded, if they operate in jurisdictions that give them operating advantages due to differences or changes in gaming regulations or taxes, or if additional hotels and casinos are established in and around the locations in which we conduct business, we may lose market share or the ability to attract or retain employees. In particular, the expansion of casino gaming in or near any geographic area from which we attract or expect to attract a significant number of our customers could have a significant adverse effect on our business, financial condition and results of operations.

 

In addition, increased competition may require us to make substantial capital expenditures to maintain and enhance the competitive positions of our properties, including updating slot machines to reflect changing technology, refurbishing public service areas periodically, replacing obsolete equipment on an ongoing basis and making other expenditures to increase the attractiveness and add to the appeal of our facilities. Because we are highly leveraged, after satisfying our obligations under our outstanding indebtedness, there can be no assurance that we will have sufficient funds to undertake these expenditures or that we will be able to obtain sufficient financing to fund such expenditures. If we are unable to make such expenditures, our competitive position could be materially adversely affected.

 

We may incur impairments to goodwill, indefinite-lived intangible assets, or long-lived assets.

In accordance with the authoritative accounting guidance for goodwill and other intangible assets, we test our goodwill and indefinite-lived intangible assets for impairment annually or if a triggering event occurs. We perform our annual impairment testing for goodwill and indefinite-lived intangible assets as of October 1. Impairment charges of $8.2 million were recorded as a result of our 2021 impairment tests. Impairment charges of $3.6 million were recorded as a result of our annual 2020 impairment test and $171.1 million were recorded as a result of our first quarter 2020 impairment review. No impairment charges were recorded as a result of the 2019 test.

 

If our estimates of projected cash flows related to our assets are not achieved, we may be subject to future impairment charges, which could have a material adverse impact on our consolidated financial statements.

 

Failure to maintain the integrity of our information technology systems, protect our internal information, or comply with applicable privacy and data security regulations could adversely affect us.

We rely extensively on our computer systems to process customer transactions, manage customer data, manage employee data and communicate with third-party vendors and other third parties, and we may also access the internet to use our computer systems. Our operations require that we collect and store customer data, including credit card numbers and other personal information, for various business purposes, including marketing and promotional purposes. We also collect and store personal information about our employees. Breaches of our security measures or information technology systems or the accidental loss, inadvertent disclosure or unapproved dissemination of proprietary information or sensitive personal information or confidential data about us, or our customers, or our employees, including the potential loss or disclosure of such information as a result of hacking or other cyber-attack, computer virus, fraudulent use by customers, employees or employees of third party vendors, trickery or other forms of deception or unauthorized use, or due to system failure, could expose us, our customers, our employees or other individuals affected to a risk of loss or misuse of this information, result in litigation and potential liability for us, damage our casino or brand names and reputations or otherwise harm our business. We rely on proprietary and commercially available systems, software, tools and monitoring to provide security for processing, transmission and storage of customer information, such as payment card, employee information and other confidential or proprietary information. Our data security measures are reviewed and evaluated regularly, however, they might not protect us against increasingly sophisticated and aggressive threats. The cost and operational consequences of implementing further data security measures could be significant.

 

Additionally, the collection of customer and employee personal information imposes various privacy compliance related obligations on our business and increases the risks associated with a breach or failure of the integrity of our information technology systems. The collection and use of personal data are governed by privacy laws and regulations enacted by the various states, the federal government of the United States, and various foreign jurisdictions. Privacy laws and regulations continue to evolve and on occasion may be inconsistent between jurisdictions. California has enacted a privacy law, known as the California Consumer Privacy Act of 2018 (the "CCPA"), which provides to California consumers certain access, deletion and opt-out rights related to their personal information, imposes civil penalties for violations and affords, in certain cases, a private right of action for data breaches. Compliance with the CCPA may require us to incur significant costs and expenses. Similar laws have been passed or proposed in other states and at the federal level, reflecting a trend toward more stringent privacy legislation in the United States. In addition to fines and penalties that may be imposed for failure to comply with state law, some states provide for private rights of action to customers for misuse of or unauthorized access to personal information.

 

Compliance with these changing and increasingly burdensome and sometimes conflicting privacy laws and regulations may increase our operating costs and/or adversely impact our ability to market our products, properties and services to our customers. In addition, non-compliance with applicable privacy laws and regulations by us (or in some circumstances non-compliance by third-party service providers engaged by us) may also result in damage to our reputation, result in vulnerabilities that could be exploited to breach our systems and/or subject us to fines, payment of damages, lawsuits or restrictions on our use or transfer of personal information.

 

While we maintain cyber insurance coverage to protect against these risks to the Company, such insurance is unlikely to fully mitigate the impact of any information breach.

 

 

Risks Related to the Regulation of our Industry

We are subject to extensive governmental regulation, as well as federal, state and local laws affecting business in general, which may harm our business.

Our ownership, management and operation of gaming facilities are subject to extensive laws, regulations and ordinances, which are administered by various federal, state and local government entities and agencies. We are subject to regulations that apply specifically to the gaming industry and horse racetracks and casinos, including regulation with respect to gambling, live racing, and approval standards applicable to our directors, officers, key employees, joint venture partners and certain shareholders, in addition to regulations applicable to businesses generally, including regulation with respect to alcoholic beverages, smoking, currency transactions, taxation, zoning and building codes, anti-money laundering laws and regulations and marketing and advertising. A more detailed description of the governmental gaming regulations to which we are subject is filed as Exhibit 99.1 herewith. If significant additional or differing gaming regulations are adopted in a jurisdiction in which we operate, such regulations could impose restrictions or costs that could have a significant adverse effect on us. From time to time, various proposals are introduced in the legislatures of some of the jurisdictions in which we have existing or planned operations that, if enacted, could adversely affect the tax, regulatory, operational or other aspects of the gaming industry and our company.

 

To date, we have obtained all governmental licenses, findings of suitability, registrations, permits and approvals necessary for the operation of our properties. However, we can give no assurance that any additional licenses, permits and approvals that may be required will be given or that existing ones will be renewed or will not be revoked. Renewal is subject to, among other things, continued satisfaction of suitability requirements. Any failure to renew or maintain our licenses or to receive new licenses when necessary could have a material adverse effect on us.

 

We are subject to extensive taxation policies, which may harm our business.

From time-to-time, federal, state, and local legislators and officials have proposed changes in tax laws, or in the administration of such laws, affecting the gaming industry. For example, the federal government has considered a federal tax on casino revenues. In addition, worsening economic conditions could intensify the efforts of state and local governments to raise revenues through increases in gaming taxes, property taxes and/or by authorizing additional gaming properties each subject to payment of a new license fee. It is not possible to determine with certainty the likelihood of changes in such laws or in the administration of such laws. Such changes, if adopted, could have a material adverse effect on our financial condition, results of operations, and cash flows. 

 

In addition, gaming companies are often subject to significant revenue-based taxes and fees, in addition to normal federal, state and local corporate income taxes, and such taxes and fees are subject to increase at any time and such increases may be retroactive to prior years.

 

If there is any material increase in state and local taxes and fees, our business, financial condition and results of operations could be adversely affected.

 

Risks Related to our Properties

We own real property and are subject to extensive environmental regulation, which creates uncertainty regarding future environmental expenditures and liabilities, and could affect our ability to develop, sell or rent our property or to borrow money using such property as collateral.

We are subject to various federal, state and local environmental laws, ordinances and regulations, including those governing discharges into air and water, the generation, handling and disposal of petroleum products, hazardous substances and wastes, and the health and safety of our employees. For example, our horse racing operations are subject to oversight by the Environmental Protection Agency ("EPA"), which includes regulations governing concentrated animal feeding operations and the related processing of animal wastewater. Permits may be required in order for us to conduct business on our properties and these permits are subject to renewal, modification and, potentially, revocation.

 

In addition, under environmental laws, ordinances and regulations, a current or previous owner or operator of property may be liable for the costs of investigation and removal or remediation of some kinds of hazardous substances or petroleum products on, under, or in its property, without regard to whether the owner or operator knew of, or caused, the presence of the contaminants, and regardless of whether the practices that resulted in the contamination were legal at the time they occurred. Additionally, as an owner or operator, we could also be held responsible to a government entity or third parties for property damage, personal injury and investigation and cleanup costs incurred by them in connection with any contamination. The costs of investigation, remediation or removal of those substances may be substantial, and the presence of those substances, or the failure to remediate a property properly, may impair our ability to use our property.

 

The presence of, or failure to remediate properly, such substances may adversely affect the ability to sell or rent the property or to borrow funds using the property as collateral. Additionally, the owner of a site may be subject to claims by third parties based on damages and costs resulting from environmental contamination emanating from a site.

 

 

Future developments regarding environmental matters could lead to material costs of environmental compliance for us and such costs could have a material adverse effect on our business and financial condition, operating results and cash flows.

 

We own facilities that are located in areas that experience extreme weather conditions.

Extreme weather conditions may interrupt our operations, damage our properties and reduce the number of customers who visit our facilities in the affected areas.

 

For example, certain of the properties we operate have been forced to close for extended periods due to floods and hurricanes. 

 

In addition, certain of our properties are located in areas that have been identified by the director of the Federal Emergency Management Agency ("FEMA") as a special flood hazard area. Furthermore, our properties in Illinois, Indiana, Iowa, Kansas, Louisiana, Missouri, Ohio and Pennsylvania are at risk of experiencing snowstorms, tornadoes and flooding.

 

In the past, snowstorms and other adverse weather conditions have interrupted our operations, damaged our properties and reduced the number of customers who visit our facilities in an affected area. If there is a prolonged disruption at any of our properties due to natural disasters or other catastrophic weather events, our business results of operations and financial condition could be materially adversely affected.

 

While we maintain insurance coverage that may cover certain of the costs and loss of revenue that we incur as a result of some extreme weather conditions, our coverage is subject to deductibles and limits on maximum benefits. There can be no assurance that we will be able to fully collect, if at all, on any claims resulting from extreme weather conditions. If any of our properties are damaged or if their operations are disrupted as a result of extreme weather in the future, or if extreme weather adversely impacts general economic or other conditions in the areas in which our properties are located or from which they draw their patrons, our business, financial condition and results of operations could be materially adversely affected.

 

We draw a significant percentage of our customers from certain geographic regions. Events adversely impacting the economy of these regions, including public health outbreaks and man-made or natural disasters, may adversely impact our business.

The California, Fremont and Main Street Station draw a substantial portion of their customers from the Hawaiian market, with such customers historically comprising more than half of the room nights sold at each property. Decreases in discretionary consumer spending, as well as an increase in fuel costs or transportation prices, a decrease in airplane seat availability, or a deterioration of relations with tour and travel agents, particularly as they affect travel between the Hawaiian market and our facilities, could adversely affect our business, financial condition and results of operations. Recently, this portion of our business has been substantially disrupted as a result of COVID-19, including as a result of travel restrictions and quarantine requirements in Hawaii.

 

Our Las Vegas properties also draw a substantial number of customers from certain other specific geographic areas, including the Southern California, Arizona and Las Vegas local markets. Due to our significant concentration of properties in Nevada, any man-made or natural disasters in or around Nevada, or the areas from which we draw customers to our Las Vegas properties, could have a significant adverse effect on our business, financial condition and results of operations. In addition, our Las Vegas business has been materially impacted as a result of the COVID-19 pandemic and a reduction in visitation from customers in these geographic areas. Each of our properties located outside of Nevada depends primarily on visitors from their respective surrounding regions and is subject to comparable risk.

 

The strength and profitability of our business depends on consumer demand for hotel casino resorts in general and for the type of amenities our properties offer. Changes in consumer preferences or discretionary consumer spending could harm our business. Terrorist activities in the United States and elsewhere, military conflicts, outbreaks of infectious disease and pandemics, adverse weather conditions and natural disasters, among other things, have had negative impacts on travel and leisure expenditures. In addition, other factors affecting travel and discretionary consumer spending, including general economic conditions, disposable consumer income, fears of further economic decline and reduced consumer confidence in the economy, may negatively impact our business. We cannot predict the extent to which similar events and conditions may continue to affect us in the future. An extended period of reduced discretionary spending and/or disruptions or declines in tourism could significantly harm our business, results of operations and financial condition.

 

Our facilities, including our riverboats and dockside facilities, are subject to risks relating to mechanical failure and regulatory compliance.

Generally, all of our facilities are subject to the risk that operations could be halted for a temporary or extended period of time, as the result of casualty, forces of nature, mechanical failure, or extended or extraordinary maintenance, among other causes. 

 

We currently conduct our Treasure Chest, Par-A-Dice, Blue Chip, Sam's Town Shreveport, Amelia Belle and Belterra Resort gaming operations on riverboats. Each of our riverboats must comply with the United States Coast Guard ("USCG") requirements as to boat design, on-board facilities, equipment, personnel and safety. Each riverboat must hold a Certificate of Inspection for stabilization and flotation, and may also be subject to local zoning codes. The USCG requirements establish design standards, set limits on the operation of the vessels and require individual licensing of all personnel involved with the operation of the vessels. Loss of a vessel's Certificate of Inspection would preclude its use as a casino.

 

 

 

Some of our hotels and casinos are located on leased property. If we default on one or more leases, the applicable lessors could terminate the affected leases and we could lose possession of the affected hotel and/or casino.

We lease certain parcels of land on which our hotels and gaming facilities are located. As a ground lessee, we have the right to use the leased land; however, we do not retain fee ownership in the underlying land. Accordingly, with respect to the leased land, we will have no interest in the land or improvements thereon at the expiration of the ground leases. Moreover, since we do not completely control the land underlying the property, a landowner could take certain actions to disrupt our rights in the land leased under the long-term leases. While such interruption is unlikely, such events are beyond our control. If the entity owning any leased land chose to disrupt our use either permanently or for a significant period of time, then the value of our assets could be impaired and our business, financial condition and results of operations could be adversely affected. If we were to default on any one or more of these leases, the applicable lessors could terminate the affected leases and we could lose possession of the affected land and any improvements on the land, including the hotels and casinos. This could have a significant adverse effect on our business, financial condition and results of operations.

 

Risks Related to our Indebtedness

We have a significant amount of indebtedness.

We and our subsidiaries had approximately $3.0 billion of long-term debt on a consolidated basis as of December 31, 2021 (of which approximately $0.9 billion was outstanding under the Credit Facility) and which includes approximately $41.7 million of current maturities of long-term debt and excludes approximately $14.2 million in aggregate outstanding letters of credit. In addition, an aggregate amount of approximately $1,019.5 million was available for borrowing under the Revolving Credit Facility as of December 31, 2021.

 

If we pursue, or continue to pursue, any expansion, development, investment or renovation projects requiring capital beyond our available borrowing capacity, we expect that our long-term debt will substantially increase in connection with related capital expenditures. This indebtedness could have important consequences, including: difficulty in satisfying our obligations under our current indebtedness; increasing our vulnerability to general adverse economic and industry conditions; requiring us to dedicate a substantial portion of our cash flows from operations to payments on our indebtedness, which would reduce the availability of our cash flows to fund working capital, capital expenditures, expansion efforts and other general corporate purposes; limiting our flexibility in planning for, or reacting to, changes in our business and the industry in which we operate; placing us at a disadvantage compared to our competitors that have less debt; and limiting, along with the financial and other restrictive covenants in our indebtedness, among other things, our ability to borrow additional funds.

 

Our debt instruments contain, and any future debt instruments likely will contain, a number of restrictive covenants that impose significant operating and financial restrictions on us, including restrictions on our ability to, among other things: incur additional debt, including providing guarantees or credit support; incur liens securing indebtedness or other obligations; make certain investments; dispose of assets; make certain acquisitions; pay dividends or make distributions and make other restricted payments; enter into sale and leaseback transactions; engage in any new businesses; and enter into transactions with our stockholders and our affiliates.

 

In addition, our Credit Facility contains certain financial covenants, including, without limitation, various covenants: (i) requiring the maintenance of a minimum consolidated interest coverage ratio of 1.75 to 1.00; (ii) establishing a maximum permitted consolidated total leverage ratio; and (iii) establishing a maximum permitted secured leverage ratio.

 

Failure to comply with these covenants could result in an event of default, which, if not cured or waived, could have a significant adverse effect on our business, results of operations and financial condition.

 

Note 6, Long-Term Debt, included in the notes to our audited consolidated financial statements presented in Part II, Item 8, contains further disclosure regarding our current outstanding debt.

 

To service our indebtedness, we will require a significant amount of cash. Our ability to generate cash depends on many factors beyond our control.

Our ability to make payments on and to refinance our indebtedness and to fund planned capital expenditures and expansion efforts will depend upon our ability to generate cash in the future. This, to a certain extent, is subject to general economic, financial, competitive, legislative, regulatory and other factors that are beyond our control.

 

It is unlikely that our business will generate sufficient cash flows from operations, or that future borrowings will be available to us under the Credit Facility in amounts sufficient to enable us to retire our current indebtedness as such indebtedness matures and to fund our other liquidity needs. We believe that we will need to refinance all or a portion of our current indebtedness, at or before maturity, and cannot provide assurances that we will be able to refinance any of our current indebtedness, including amounts borrowed under the Credit Facility on commercially reasonable terms, or at all. We may have to adopt one or more alternatives, such as reducing or delaying planned expenses and capital expenditures, selling assets, restructuring debt, or obtaining additional equity or debt financing or joint venture partners. These financing strategies may not be effected on satisfactory terms, if at all. In addition, certain states’ laws contain restrictions on the ability of companies engaged in the gaming business to undertake certain financing transactions. Such restrictions may prevent us from obtaining the necessary capital to meet our current indebtedness repayment obligations.

 

Current and future economic, capital and credit market conditions could adversely affect our ability to service our substantial indebtedness and significant financial commitments or make planned expenditures.

Our ability to make payments on our substantial indebtedness and other significant financial commitments, including the rent payments under our leases, and to fund planned or committed capital expenditures and other investments depends on our ability to generate cash flow, borrow under the Credit Facility or incur new indebtedness. The COVID-19 pandemic has caused deterioration in regional, national and international economic conditions and is a contributing factor to capital market volatility. Furthermore, the Federal Reserve is expected to raise interest rates in the near term, which would increase our cost of capital and impact our results of operations. Our ability to timely refinance and replace our indebtedness, on attractive terms or at all, will be significantly influenced by the economic and capital market conditions at the time of such refinancing. If we are unable to refinance our indebtedness on a timely basis or if attractive financing terms are not available to us, we might be forced to seek alternate forms of financing, dispose of certain assets or minimize capital expenditures and other investments. There is no assurance that any of these alternatives would be available to us, if at all, on satisfactory terms.

 

 

We and our subsidiaries may still be able to incur substantially more debt, which could further exacerbate the risks described above.

We and our subsidiaries may be able to incur substantial additional indebtedness in the future. The terms of the indentures governing our senior notes do not fully prohibit us or our subsidiaries from doing so. Borrowings under the Credit Facility are effectively senior to our senior notes and the guarantees of our subsidiary guarantors to the extent of the value of the collateral securing such borrowings. If new debt is added to our, or our subsidiaries', current debt levels, the related risks that we or they now face could intensify.

 

We are required to pay a substantial amount of rent pursuant to our Master Lease agreements with GLPI, which impacts free cash flow and could limit our ability to invest in our operations or seek additional development or strategic opportunities.

We lease the real estate of Ameristar Kansas City, Ameristar St. Charles, Belterra Casino Resort and Belterra Park (each an "OpCo," and collectively the "OpCos") from Gaming and Leisure Properties, Inc. ("GLPI"), pursuant to two triple net REIT Master Leases (the "Master Leases"). Current annual rent under the Master Leases is $104.7 million, with rental increases over time. The Master Leases also include substantial additional obligations that may require future uses of free cash flow, including obligations to maintain and repair the properties, including minimum annual capital investment requirements, and provides that we have assumed the risk of loss with respect to any casualty or condemnation event, including the obligation to repair or rebuild the facility.

 

These obligations, which could significantly impact free cash flow, could in the future adversely impact our ability to invest in our operations or seek additional development or strategic opportunities. For example, our obligations under the Leases may:

 

 

limit our ability to prepay or repay our long-term debt and to obtain additional indebtedness;

 

limit our ability to fund working capital, capital expenditures and other general corporate purposes; and

  limit our ability to respond to changes in our business and the industry in which we operate, including pursuing new markets and additional lines of business, development opportunities, acquisitions and other strategic investments that we would otherwise pursue.

 

Any of the above listed factors could have a material adverse effect on our business, financial condition and results of operations.

 

The Master Leases include additional provisions that restrict our ability to freely operate and could have an adverse effect on our business and financial condition, including the following:

 

 

Escalations in Rent - We are obligated to pay base rent under the Master Leases, and base rent is composed of building base rent and land base rent. Every year of a Master Lease's term, building base rent is subject to an annual escalation of up to 2% and we may be required to pay the escalated building base rent regardless of our revenues, profit or general financial condition.

 

Variable Rent - We are obligated to pay percentage rent under the Master Leases, which is re-calculated every two years. Such percentage rent shall equal 4% of the change between (i) the average net revenues for the trailing two-year period and (ii) 50% of the trailing 12 months net revenues as of the month ending immediately prior to the execution of the Master Leases. We may be required to pay an increase in percentage rent based on increases in net revenues without a corresponding increase in our profits.

 

Pooled Lease - One of our Master Leases is a pooled lease arrangement, which prohibits us from divesting any individual OpCo without GLPI’s prior consent. Any divestiture of all of the OpCos also requires GLPI’s prior consent, except for limited circumstances where the purchaser meets various financial and gaming operations experience requirements. These limitations on transfer could adversely impact our ability to manage our business.

 

Guaranties - One of our Master Lease Agreements is guaranteed by certain subsidiaries of the tenant (the "Lease Guarantors"). A default under any of such Master Lease guaranties that is not cured within the applicable grace period will constitute an event of default under the Master Lease.

 

Effect of End of Term or Not Renewing the Master Leases - If we do not renew the Master Leases at the stipulated renewals or we do not enter into new master leases at the end of the applicable terms, we will be required to sell the business of the relevant tenant. If we cannot agree upon acceptable terms of sale with a qualified successor tenant, GLPI will select a successor tenant to purchase our business through a competitive auction. If this occurs, we will be required to transfer our business to the highest bidder at the auction, subject to regulatory approvals.

 

Risks Related to our Equity Ownership

Certain of our stockholders own large interests in our capital stock and may significantly influence our affairs.

William S. Boyd, our Co-Executive Chair of the Board of Directors, together with his immediate family, beneficially owned approximately 26% of the Company's outstanding shares of common stock as of December 31, 2021. As such, the Boyd family has the ability to significantly influence our affairs, including electing the members of our Board of Directors and, except as otherwise provided by law, approving or disapproving other matters submitted to a vote of our stockholders, including a merger, consolidation, or sale of assets.

 

ITEM 1B.    Unresolved Staff Comments

None

 

 

ITEM 2.    Properties

Information relating to the location and general characteristics of our properties is provided in Part I, Item 1, Business - Properties, and is incorporated herein by reference.

 

As of December 31, 2021, some of our properties utilized leased property in their operations.

 

The real estate utilized by four of our properties are subject to Master Lease agreements with Gaming and Leisure Properties, Inc. The properties under the Master Lease agreements are:

 

 

Ameristar Kansas City, including approximately 250 acres of leased land and building.

     
 

Ameristar St. Charles, including approximately 240 acres of leased land and building.

     
 

Belterra Resort, including approximately 315 acres of leased land and building.

     
  Belterra Park, including approximately 160 acres of leased land and building.

 

In addition, all or a portion of the sites for the following properties are leased:

 

 

Suncoast, located on 49 acres of leased land.

     
 

Eastside Cannery, located on 30 acres of leased land.

     
 

California, located on 13.9 acres of owned land and 1.6 acres of leased land.

     
 

Fremont, located on 1.4 acres of owned land and 0.9 acres of leased land.

     
 

IP, located on 24 acres of owned land and 3.9 acres of leased land.

     
 

Treasure Chest, located on 14 acres of leased land.

     
 

Sam's Town Shreveport, located on 18 acres of leased land.

     
 

Diamond Jo Dubuque, located on 7 acres of owned land and leases approximately 2.0 acres of parking surfaces.

     
 

Evangeline Downs, which leases the facilities that comprise the Henderson, Eunice and St. Martinville OTBs.

 

ITEM 3.    Legal Proceedings

See Item 8 of Part II, "Financial Statements and Supplementary Data - Note 8, Commitments and Contingencies - Legal Matters."

 

ITEM 4.    Mine Safety Disclosures

Not applicable

 

 

 

PART II

 

ITEM 5.

Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities

Our common stock is listed on the New York Stock Exchange ("NYSE") under the symbol "BYD." On February 18, 2022, the closing sales price of our common stock on the NYSE was $68.41 per share. On that date, we had approximately 541 holders of record of our common stock and our directors and executive officers owned approximately 26% of the outstanding shares. There are no other classes of common equity outstanding.

 

Share Repurchase Program

On December 12, 2018, our Board of Directors authorized a share repurchase program of $100 million (the "2018 Plan"). On March 16, 2020, the Company suspended share repurchases under the program in order to preserve liquidity due to the COVID-19 pandemic. On October 21, 2021, our Board of Directors authorized an additional share repurchase program of $300 million (the "2021 Plan"). There were 1.3 million shares repurchased during the year ended December 31, 2021. As of December 31, 2021, $280.6 million of repurchase authorization remained available under the 2021 Plan. The 2018 Plan has been fully depleted.

 

The following table discloses share repurchases that we have made pursuant to our share repurchase program during the three months ended December 31, 2021.

 

Period

 

Total Number of Shares Purchased

   

Average Price Paid Per Share

   

Total Number of Shares Purchased as Part of a Publicly Announced Plan

   

Approximate Dollar Value That May Yet Be Purchased Under the Plan

 

October 1, 2021 through October 31, 2021

        $           $ 361,387,399  

November 1, 2021 through November 30, 2021

    551,140       62.64       551,140       326,863,403  

December 1, 2021 through December 31, 2021

    758,807       60.96       758,807       280,605,375  

Totals

    1,309,947               1,309,947     $ 280,605,375  

 

We are not obligated to repurchase any shares under the program. Subject to applicable corporate securities laws, repurchases under this program may be made at such times and in such amounts as we deem appropriate. Repurchases are funded with existing cash resources and availability under the Credit Facility. We are subject to certain limitations regarding the repurchase of common stock, such as restricted payment limitations contained in our Credit Facility and the indentures for our outstanding notes.

 

We may acquire our debt or equity securities through open market purchases, privately negotiated transactions, tender offers, exchange offers, redemptions or otherwise, upon such terms and at such prices as we may determine.

 

Our Definitive Proxy Statement to be filed in connection with our 2022 Annual Meeting of Stockholders, incorporated herein by reference, contains information concerning securities authorized for issuance under equity compensation plans within the captions Ownership of Certain Beneficial Owners and Management and Equity Compensation Plan Information.

 

18

 

 

Stock Performance Graph

The graph below compares the five-year cumulative total return on our common stock to the cumulative total return of the Standard & Poor's MidCap 400 Index ("S&P 400") and to the Dow Jones U.S. Gambling Index ("Dow Jones GI"). The performance graph assumes that $100 was invested on December 31, 2016 in each of the Company's common stock, the S&P 400 and Dow Jones GI, and that all dividends were reinvested. The stock price performance shown in this graph is neither necessarily indicative of, nor intended to suggest, future stock price performance.

 

byd2021.jpg
 
   

Indexed Returns

 
   

Boyd Gaming Corp.

 

S&P 400

 

Dow Jones GI

 

December 2017

    174.70     116.24     140.14  

December 2018

    104.40     103.36     97.24  

December 2019

    151.92     130.44     143.49  

December 2020

    217.78     148.26     128.65  

December 2021

    332.71     184.96     112.16  

 

The performance graph should not be deemed filed or incorporated by reference into any other of our filings under the Securities Act of 1933 or the Exchange Act of 1934, unless we specifically incorporate the performance graph by reference therein.

 

 

ITEM 6.    Reserved

 

ITEM 7.    Management's Discussion and Analysis of Financial Condition and Results of Operations

The following discussion should be read in conjunction with our consolidated financial statements and the related notes thereto and other financial information included in this Annual Report on Form 10-K. For the year ended December 31, 2019, and changes from the year ended December 31, 2019 to the year ended December 31, 2020, management’s discussion and analysis pertaining to our financial condition, changes in our financial condition, and the results of our operations have been omitted from this MD&A and may be found in Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations as included in our Annual Report on Form 10-K for the year ended December 31, 2020. In addition to the historical information, certain statements in this discussion are forward-looking statements based on current expectations that involve risks and uncertainties. Actual results and the timing of certain events may differ significantly from those projected in such forward-looking statements.

 

Our primary areas of focus are: (i) ensuring our existing operations are managed as efficiently as possible and remain positioned for growth; (ii) improving our capital structure and strengthening our balance sheet, including paying down debt, increasing cash flow, improving operations and diversifying our asset base; and (iii) successfully pursuing our growth strategy, which is built on identifying development opportunities and acquiring assets that are a good strategic fit and provide an appropriate return to our shareholders.

 

As a result of the COVID-19 global pandemic, all of our gaming facilities were closed in mid-March 2020 in compliance with orders issued by state officials as precautionary measures intended to slow the spread of the COVID-19 virus. The properties were allowed to re-open on the dates indicated in the table in the Executive Overview below, subject to various health and safety measures, including occupancy limitations. While allowed to re-open, one of our properties in Las Vegas has remained closed to the public due to the current levels of the demand in the market and our cost containment efforts. No date has been set for re-opening this property.

 

We cannot predict whether we will be required to temporarily close some or all of our re-opened casinos in the future. Further, we cannot currently predict the ongoing impact of the pandemic on consumer demand and the negative effects on our workforce, suppliers, contractors and other partners. In responding to these circumstances, the safety and well-being of our team members and customers are our utmost priority. We have developed and implemented a broad range of safety protocols at our properties to ensure the health and safety of our team members and our customers.

 

The closures in 2020 of our properties 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 are expected to continue to have a material impact on our business. The severity and duration of such 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, new information which may emerge concerning the severity of the COVID-19 pandemic, its impact on the economy and consumer behavior and demand, 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 but is anticipated to have a material adverse impact on our business, financial condition and results of operations.

 

After the property re-openings in 2020, we implemented a strategic shift in our operating philosophy to increase our focus on building loyalty with core customers and adopted a more efficient approach to doing business. This new operating model is focused on maximizing gaming revenues, streamlining our cost structure, targeting our marketing investments and reducing lower margin offerings, which allows us to flow a higher percentage of our revenues to the bottom line.

 

Environmental, Social and Governance

We believe that our focus on environmental, social and governance ("ESG") issues are consistent with our values and an integral part of our success as a Company. Since our Company’s founding more than 45 years ago, we have followed a philosophy built upon sharing our success with others, treating every stakeholder of our Company with respect and integrity, and making sure that our home communities are better places because we are a part of them. Decades ago, we made this commitment a defined part of our Company’s mission statement, pledging it was our mission to provide opportunities for all while we support and enhance our communities.

 

We have committed ourselves to a comprehensive effort to help protect the environment and meaningfully reduce our consumption of natural resources across our nationwide operations. Through these efforts, we strive to find ways to reduce our carbon footprint, lower water stress on our communities and reduce the amount of waste sent to the landfills, helping ensure the health of our shared environment for future generations.

 

We know that our long-term success is intertwined with healthy and vibrant communities. We invest in our communities accordingly, contributing millions of dollars each year to thousands of non-profit organizations across the United States. When crises like pandemics or natural disasters strike our communities, we support our neighbors and team members in need.

 

We strive to be an employer of choice, creating a workplace environment that embraces diversity and inclusion, where team members of every background have the ability to realize their full potential and build a rewarding career with us. The Company has a Chief Diversity Officer who oversees the Boyd Gaming Diversity Council, as well as 17 property-level diversity committees across seven states. These committees are tasked with promoting diversity and inclusion across our workplaces nationwide, as well as the successful execution of our Company’s diversity goals.

 

We are committed to promoting responsible gaming throughout our operations, and to helping provide assistance to those who experience harm from gambling.  We provide financial support to problem gambling and responsible gaming organizations across the country; require all employees to participate in annual responsible gaming awareness training; and post prominent signage throughout our properties providing problem gambling helpline information.

 

To fulfill our commitment to our shareholders to operate with the highest level of integrity and respect, we follow a robust set of corporate governance policies and procedures and have assembled an experienced Board of Directors that shares our commitment.

 

20

 

 

EXECUTIVE OVERVIEW

Boyd Gaming Corporation (the "Company," "Boyd Gaming," "we" or "us") is a multi-jurisdictional gaming company that has been in operation since 1975.

 

As of December 31, 2021, we operate 28 wholly owned gaming entertainment properties. Headquartered in Las Vegas, Nevada, we have geographically diversified gaming operations in Nevada, Illinois, Indiana, Iowa, Kansas, Louisiana, Mississippi, Missouri, Ohio and Pennsylvania. We view each operating property as an operating segment. For financial reporting purposes, we aggregate our wholly owned properties into the following three reportable segments:

 

 

     

Closure Date

 

Re-open Date

Las Vegas Locals

         

Gold Coast Hotel and Casino

 

Las Vegas, Nevada

3/18/2020

 

6/4/2020

The Orleans Hotel and Casino

 

Las Vegas, Nevada

3/18/2020

 

6/4/2020

Sam's Town Hotel and Gambling Hall

 

Las Vegas, Nevada

3/18/2020

 

6/4/2020

Suncoast Hotel and Casino

 

Las Vegas, Nevada

3/18/2020

 

6/4/2020

Eastside Cannery Casino and Hotel

 

Las Vegas, Nevada

3/18/2020

 

TBD

Aliante Casino + Hotel + Spa

 

North Las Vegas, Nevada

3/18/2020

 

6/4/2020

Cannery Casino Hotel

 

North Las Vegas, Nevada

3/18/2020

 

6/4/2020

Jokers Wild

 

Henderson, Nevada

3/18/2020

 

6/4/2020

Downtown Las Vegas

         

California Hotel and Casino

 

Las Vegas, Nevada

3/18/2020

 

6/4/2020

Fremont Hotel & Casino

 

Las Vegas, Nevada

3/18/2020

 

6/4/2020

Main Street Station Hotel and Casino   Las Vegas, Nevada 3/18/2020   9/8/2021

Midwest & South

         

Par-A-Dice Casino

 

East Peoria, Illinois

3/16/2020

 

7/1/2020*

Belterra Casino Resort

 

Florence, Indiana

3/16/2020

 

6/15/2020

Blue Chip Casino Hotel Spa

 

Michigan City, Indiana

3/16/2020

 

6/15/2020

Diamond Jo Casino

 

Dubuque, Iowa

3/17/2020

 

6/1/2020

Diamond Jo Worth

 

Northwood, Iowa

3/17/2020

 

6/1/2020

Kansas Star Casino

 

Mulvane, Kansas

3/18/2020

 

5/23/2020

Amelia Belle Casino

 

Amelia, Louisiana

3/17/2020

 

5/27/2020

Delta Downs Racetrack Hotel & Casino

 

Vinton, Louisiana

3/17/2020

 

5/20/2020

Evangeline Downs Racetrack & Casino

 

Opelousas, Louisiana

3/17/2020

 

5/20/2020

Sam's Town Shreveport

 

Shreveport, Louisiana

3/17/2020

 

5/27/2020

Treasure Chest Casino

 

Kenner, Louisiana

3/17/2020

 

5/20/2020

IP Casino Resort Spa

 

Biloxi, Mississippi

3/17/2020

 

5/21/2020

Sam's Town Hotel and Gambling Hall Tunica

 

Tunica, Mississippi

3/17/2020

 

5/21/2020

Ameristar Casino * Hotel Kansas City

 

Kansas City, Missouri

3/17/2020

 

6/1/2020

Ameristar Casino * Resort * Spa St. Charles

 

St. Charles, Missouri

3/17/2020

 

6/1/2020

Belterra Park

 

Cincinnati, Ohio

3/14/2020

 

6/19/2020

Valley Forge Casino Resort

 

King of Prussia, Pennsylvania

3/13/2020

 

6/26/2020**

 

*Par-A-Dice was temporarily closed on November 20, 2020 and subsequently re-opened on January 16, 2021.

**Valley Forge was temporarily closed on December 12, 2020 and subsequently re-opened on January 4, 2021.

 

We also own and operate a travel agency and a captive insurance company that underwrites travel-related insurance, each located in Hawaii. Financial results for these operations are included in our Downtown Las Vegas segment, as our Downtown Las Vegas properties focus their marketing efforts on gaming customers from Hawaii.

 

Results for Lattner Entertainment Group Illinois, LLC ("Lattner"), our Illinois distributed gaming operator, are included in our Midwest & South segment. Lattner's operations were suspended on March 16, 2020, resumed on July 1, 2020, temporarily closed on November 20, 2020 and subsequently re-opened on January 16, 2021. The Midwest & South segment results also include our online sportsbook and gaming businesses, including those developed in partnership with FanDuel Group and other market access agreements.

 

Most of our gaming entertainment properties also include hotel, dining, retail and other amenities. Our main business emphasis is on slot revenues, which are highly dependent upon the number of visits and spending levels of customers at our properties.

 

 

Our properties have historically generated significant operating cash flow, with the majority of our revenue being cash-based. While we do provide casino credit, subject to certain gaming regulations and jurisdictions, most of our customers wager with cash and pay for non-gaming services with cash or by credit card.

 

Our industry is capital-intensive and we rely heavily on the ability of our properties to generate operating cash flow in order to fund maintenance capital expenditures, fund acquisitions, provide excess cash for future development, repay debt financing and associated interest costs, repurchase our debt or equity securities, and pay income taxes and dividends.

 

Our Strategy

Our overriding strategy is to increase stakeholder value by pursuing strategic initiatives that improve and grow our business.

 

Strengthening our Balance Sheet

We are committed to finding opportunities to strengthen our balance sheet through diversifying and increasing our cash flows. We intend to take a balanced approach to our cash flows, with a current emphasis on debt repayment followed by investing in our business and returning capital to shareholders.

 

Operating Efficiently

We are committed to operating more efficiently. As we re-opened our properties and adjusted our operations to address the impacts of the COVID-19 pandemic, the efficiencies of our refined business model positioned us to flow a substantial portion of the revenue directly to the bottom line.

 

Evaluating Acquisition Opportunities

Our evaluations of potential investments and growth opportunities are strategic, deliberate, and disciplined. Our goal is to identify and pursue opportunities that grow our business and deliver a solid return for shareholders, and are available at the right price. These investments can take the form of expanding and enhancing offerings and amenities at existing properties, development of new properties, or acquisitions. Currently, the Company is primarily focused on enhancements to its existing properties.

 

Maintaining our Brand

The ability of our employees to deliver great customer service helps distinguish our Company and our brands from our competitors. Our employees are an important reason that our customers continue to choose our properties over the competition across the country. In addition, we have established a nationwide branding initiative and loyalty program. Our players use their "B Connected" cards to earn and redeem points at nearly all of our properties. The "B Connected" club, among other benefits, rewards players for their loyalty by entitling them to qualify for promotions and earn rewards toward gaming and nongaming activities.

 

Our Key Performance Indicators

We use several key performance measures to evaluate the operations of our properties. These key performance measures include the following:

 

 

Gaming revenue measures: slot handle, which means the dollar amount wagered in slot machines, and table game drop, which means the total amount of cash deposited in table games drop boxes, plus the sum of markers issued at all table games, are measures of volume and/or market share. Slot win and table game hold, which mean the difference between customer wagers and customer winnings on slot machines and table games, respectively, represent the amount of wagers retained by us and recorded as gaming revenues. Slot win percentage and table game hold percentage, which are not fully controllable by us, represent the relationship between slot handle to slot win and table game drop to table game hold, respectively.

     
 

Food & beverage revenue measures: average guest check, which means the average amount spent per customer visit and is a measure of volume and product offerings; number of guests served ("food covers"), which is an indicator of volume; and the cost per guest served, which is a measure of operating margin.

     
 

Room revenue measures: hotel occupancy rate, which measures the utilization of our available rooms; and average daily rate ("ADR"), which is a price measure.

 

 

RESULTS OF OPERATIONS

Overview

 

   

Year Ended December 31,

 

(In millions)

 

2021

   

2020

 

Total revenues

  $ 3,369.8     $ 2,178.5  

Operating income

    900.1       14.3  

Net income (loss)

    463.8       (134.7 )

 

Total Revenues

Total revenues increased $1,191.3 million, or 54.7%, for 2021 as compared to 2020 due primarily to the COVID-19 property closures that began in mid-March 2020 and extended through most of second quarter 2020 (the "Property Closures") and increased revenues from our online gaming initiatives.

 

Operating Income 

In 2021, our operating income increased $885.8 million as compared to 2020 primarily due to the impact of the Property Closures on our prior year financial results, including an intangible asset impairment charge of $174.7 million in 2020. After the property re-openings, the Company implemented a strategic shift in its operating model to focus on maximizing gaming revenues, streamlining our cost structure, targeting our marketing investments and reducing lower margin offerings, allowing us to flow a higher percentage of our revenues to the bottom line.

 

Net Income (Loss)

For the year ended December 31, 2021, net income was $463.8 million, compared with net loss of $134.7 million for the corresponding period of the prior year. This increase was primarily attributable to the $885.8 million increase in operating income, as discussed above. The increase is offset by (i) a $93.4 million increase in loss on early extinguishments and modifications of debt due to the retirement of the $750 million aggregate principal amount of 6.375% Senior Notes due 2026 ("6.375% Notes") in June 2021, the retirement of the $700 million aggregate principal amount of 6.000% Senior Notes due 2026 ("6.000% Notes") in June 2021 and the retirement of $300 million aggregate principal amount of our 8.625% Senior Notes due 2025 ("8.625% Notes") in November 2021, and (ii) an increase to the income tax provision of $176.4 million due to the Company's improved operational performance.

 

 

Operating Revenues

We derive the majority of our revenues from our gaming operations, which generated approximately 80% and 81% of our revenues for 2021 and 2020, respectively. Food & beverage revenues, room revenues and other revenues separately contributed less than 10% of revenues during each year. 

 

   

Year Ended December 31,

 

(In millions)

 

2021

   

2020

 

REVENUES

               

Gaming

  $ 2,705.5     $ 1,775.3  

Food & beverage

    230.0       178.9  

Room

    154.2       105.0  

Other

    280.1       119.3  

Total revenues

  $ 3,369.8     $ 2,178.5  
                 

COSTS AND EXPENSES

               

Gaming

  $ 999.5     $ 734.3  

Food & beverage

    192.3       182.7  

Room

    57.6       53.2  

Other

    183.0       67.0  

Total costs and expenses

  $ 1,432.4     $ 1,037.2  
                 

MARGINS

               

Gaming

    63.1 %     58.6 %

Food & beverage

    16.4 %     (2.1 )%

Room

    62.6 %     49.3 %

Other

    34.7 %     43.8 %

 

Gaming

Gaming revenues are comprised primarily of the net win from our slot machine operations and to a lesser extent from table games win. The $930.2 million, or 52.4%, increase in gaming revenues during 2021 as compared to the prior year, was primarily due to the impact of the Property Closures on the prior year results. Gaming margins were enhanced by effectively yielding the casino floor while maintaining a focus on costs under our revised operating model.

 

Food & Beverage

Food & beverage revenues increased $51.2 million, or 28.6%, during 2021 as compared to prior year. Due to the Property Closures in the prior year, food & beverage venues were only open for nine and a half months on average during the year ended December 31, 2020. Overall food & beverage margins increased from the prior year, as we effectively maximized the contributions realized from the outlets as reflected by an increase in average check of 11.5%, while cost per cover declined by 11.2%.

 

Room

Room revenues increased $49.2 million, or 46.9%, in 2021 compared to 2020 due primarily to the lifting of operating restrictions and increase in visitation from prior year. Overall room margins increased to 62.6% in the current year from 49.3% in the prior year, due primarily to a 15.7% decrease in cost per room along with a 14.2% increase in average daily rate.

 

 

Other

Other revenues relate to patronage visits at the amenities at our properties, including entertainment and nightclub revenues, retail sales, theater tickets and other venues, and revenue share payments received from our on-line gaming partners. Other revenues increased by $160.8 million, or 134.8%, during 2021 as compared to the prior year, primarily due to increased online gaming revenues, including the revenues from reimbursements of gaming taxes paid on behalf of our online partners. These increases were partially offset by the limited entertainment offerings after property re-openings. Corresponding year-over-year increases in other expense reflect primarily the gaming taxes paid on behalf of our online partners.

 

Revenues and Adjusted EBITDAR by Reportable Segment

We determine each of our properties' profitability based upon Adjusted Earnings Before Interest, Taxes, Depreciation, Amortization and Rent expense related to master leases ("Adjusted EBITDAR"), which represents earnings before interest expense, income taxes, depreciation and amortization, deferred rent, master lease rent expense, share-based compensation expense, project development, preopening and writedowns expenses, impairments of assets and other operating items, net, as applicable. Reportable Segment Adjusted EBITDAR is the aggregate sum of the Adjusted EBITDAR for each of the properties comprising our Las Vegas Locals, Downtown Las Vegas and Midwest & South segments. Results for Downtown Las Vegas include the results of our travel agency and captive insurance company in Hawaii. The results for our Illinois distributed gaming operator and our online gaming initiatives are included in our Midwest & South segment. Corporate expense represents unallocated payroll, professional fees, aircraft expenses and various other expenses not directly related to our casino and hotel operations. Furthermore, for purposes of this presentation, corporate expense excludes its portion of share-based compensation expense.

 

EBITDAR is a commonly used measure of performance in our industry that we believe, when considered with measures calculated in accordance with generally accepted accounting principles ("GAAP"), provides our investors a more complete understanding of our operating results before the impact of investing and financing transactions and income taxes and facilities comparisons between us and our competitors. Management has historically adjusted EBITDAR when evaluating operating performance because we believe that the inclusion or exclusion of certain recurring and non-recurring items is necessary to provide a full understanding of our core operating results and as a means to evaluate period-to-period results.

 

The following table presents our total revenues and Adjusted EBITDAR by Reportable Segment:

 

   

Year Ended December 31,

 

(In millions)

 

2021

   

2020

 

Total revenues

               

Las Vegas Locals

  $ 886.1     $ 562.0  

Downtown Las Vegas

    155.8       94.5  

Midwest & South

    2,327.9       1,522.0  

Total revenues

  $ 3,369.8     $ 2,178.5  
                 

Adjusted EBITDAR (1)

               

Las Vegas Locals

  $ 473.2     $ 198.7  

Downtown Las Vegas

    51.3       1.1  

Midwest & South

    927.0       480.5  

Corporate expense

    (85.5 )     (70.4 )

Adjusted EBITDAR

  $ 1,366.0     $ 609.9  

 

(1) Refer to Note 13, Segment Information, in the notes to the consolidated financial statements for a reconciliation of Adjusted EBITDAR to operating income, as reported in accordance with GAAP in our accompanying consolidated statements of operations.

 

Las Vegas Locals

Total revenues increased $324.1 million, or 57.7%, during 2021 as compared to the prior year, reflecting revenue increases in all departmental categories. Gaming revenue was the driving factor, increasing by $265.3 million, followed by an increase in room revenue of $26.1 million, other revenue of $17.4 million and food & beverage revenue of $15.2 million from the prior year period. The increase in these departmental categories is primarily due to the Property Closures in second quarter 2020.

 

Adjusted EBITDAR increased $274.4 million, or 138.1%, during 2021 as compared to the prior year, primarily due to a strategic shift in the Company's operating model when operations resumed following the Property Closures.

 

Downtown Las Vegas

Total revenues increased $61.3 million, or 64.9%, during 2021 as compared to the prior year. Gaming revenues increased by $47.1 million, followed by increases in food & beverage revenue of $9.5 million and room revenue of $5.7 million, as compared to prior year. The increase in these departmental categories is primarily due to the Property Closures in second quarter 2020 along with the reopening of Main Street Station Hotel and Casino in September 2021. 

 

Adjusted EBITDAR increased $50.2 million during 2021 as compared to the prior year, primarily due to a strategic shift in the Company's operating model when operations resumed following the Property Closures.

 

 

Midwest & South

Total revenues increased $806.0 million, or 53.0%, in 2021 as compared to 2020, reflecting revenue increases in all departmental categories. Gaming revenue was the driving factor, increasing by $617.8 million, followed by an increase in other revenue of $144.3 million, food & beverage revenue of $26.5 million and room revenue of $17.4 million, from the prior year period. The increase in these departmental categories is due to the Property Closures in second quarter 2020. In addition, increases in other revenue are attributable to our online gaming initiatives.

 

Adjusted EBITDAR increased $446.5 million, or 92.9%, in 2021 as compared to 2020, primarily due to a strategic shift in the Company's operating model when operations resumed following the Property Closures and contributions from our online gaming initiatives.

 

Other Operating Costs and Expenses

The following operating costs and expenses, as presented in our consolidated statements of operations, are further discussed below:

 

   

Year Ended December 31,

 

(In millions)

 

2021

   

2020

 

Selling, general and administrative

  $ 366.2     $ 350.4  

Master lease rent expense

    104.7       101.9  

Maintenance and utilities

    126.1       115.1  

Depreciation and amortization

    267.8       281.0  

Corporate expense

    117.7       76.1  

Project development, preopening and writedowns

    31.8       (0.7 )

Impairment of assets

    8.2       174.7  

Other operating items, net

    14.8       28.6  

 

Selling, General and Administrative

Selling, general and administrative expenses include marketing, technology, compliance and risk, surveillance and security. These costs, as a percentage of total revenues, were 10.9% and 16.1% for 2021 and 2020, respectively. In 2020, selling, general and administrative expenses, as a percentage of total revenues, were higher due to the significant reduction in revenues as a result of the Property Closures along with the continued fixed costs incurred during the closure period. In addition, as operations resumed after the Property Closures, the Company changed its operating model and has continued to focus on disciplined and targeted marketing spend. 

 

Master Lease Rent Expense

Master lease rent expense represents rent expense incurred by those properties subject to a master lease agreement with a real estate investment trust. Master lease rent expense, as a percentage of total revenues, was 3.1% and 4.7% for 2021 and 2020, respectively. The higher master lease rent expense, as a percentage of total revenues, in 2020 is due to the significant reduction in revenue as a result of the Property Closures.

 

Maintenance and Utilities

Maintenance and utilities expenses, as a percentage of total revenues, were 3.7% and 5.3% for 2021 and 2020, respectively. In 2020, maintenance and utilities expenses, as a percentage of total revenues, were higher due to the significant reduction in revenues as a result of the Property Closures.

 

Depreciation and Amortization

Depreciation and amortization expense, as a percentage of total revenues, was 7.9% and 12.9% for 2021 and 2020, respectively. The decline in 2021 from 2020, is primarily driven by a $6.7 million decrease in intangible asset amortization as our customer relationships intangible assets are amortized using an accelerated method. The dollar amount of property and equipment depreciation expense remained consistent from period to period therefore the remaining percentage decrease is attributable to the revenue growth.

 

Corporate Expense

Corporate expense represents unallocated payroll, professional fees, rent and various other administrative expenses that are not directly related to our casino and/or hotel operations, in addition to the corporate portion of share-based compensation expense. Corporate expense represented 3.5% of total revenues for both 2021 and 2020. The dollar amount of corporate expense increased in 2021 as compared to the prior year primarily due to higher share-based compensation expense. Such expenses were lower in 2020 due to the impact of the COVID-19 pandemic on estimated achievement levels related to performance share grants.

 

Project Development, Preopening and Writedowns

Project development, preopening and writedowns represent: (i) certain costs incurred and recoveries realized related to the activities associated with various acquisition opportunities, strategic initiatives, dispositions and other business development activities in the ordinary course of business; (ii) certain costs of start-up activities that are expensed as incurred; and (iii) asset write-downs. Such costs are generally non-recurring in nature and vary from period to period as the volume of underlying activities fluctuates. The project development, preopening and writedowns expense in 2021 primarily relates to the following: (i) $15.0 million termination fee paid to exit an agreement; (ii) $8.5 million write-off of certain abandoned capital projects; (iii) $1.7 million of development costs related to Wilton Rancheria; and (iv) $2.1 million of preopening expenses. The project development, preopening and writedowns expense in 2020 reflects the net gain realized on the sale of the Eldorado Casino in December 2020, less Wilton Rancheria development costs of $6.2 million and the write off of a non-operating asset for $3.9 million. 

 

Impairment of Assets

Impairment of assets in 2021 includes non-cash impairment charges of $2.4 million for trademarks and $5.8 million for operating right-of-use assets in our Las Vegas Locals segment.

 

Impairment of assets in 2020 includes non-cash impairment charges of $10.5 million for trademarks and $22.6 million for goodwill in our Las Vegas Locals segment and non-cash impairment charges of $10.0 million for trademarks, $42.2 million for gaming license rights and $89.4 million for goodwill in our Midwest & South segment.

 

 

Other Operating Items, Net

Other operating items, net, is generally comprised of miscellaneous non-recurring operating charges, including direct costs, such as severance payments to separated employees, associated with the Property Closures, expenses arising from natural disasters and severe weather, including hurricane and flood expenses, and subsequent recoveries of such costs, as applicable. During 2021, $10.7 million of other operating items, net, related to non-recurring employee bonus payments and $2.8 million related to non-recurring costs associated with the hurricanes that impacted our Louisiana and Mississippi properties. During 2020, other operating items, net, included $23.1 million of incremental, non-recurring costs associated with the Property Closures and $5.4 million related to non-recurring costs associated with the hurricanes that impacted our Louisiana and Mississippi properties. 

 

Other Expense (Income)

Interest Expense, net

 

   

Year Ended December 31,

 

(In millions)

 

2021

   

2020

 

Interest Expense, net

  $ 197.6     $ 228.6  

Average Long-Term Debt Balance (1)

    3,582.6       4,236.0  

Loss on Early Extinguishments and Modifications of Debt

    95.2       1.8  

Weighted Average Interest Rates

    5.0 %     4.9 %
                 

Mix of Debt at Year End

               

Fixed rate debt

    71.7 %     77.3 %

Variable rate debt

    28.3 %     22.7 %

(1) Average debt balance calculation does not include the related discounts or deferred finance charges.

 

Interest expense, net of capitalized interest and interest income, decreased $31.0 million, or 13.5%, from 2020 to 2021 primarily due to a decrease in the average long-term debt balance of $653.4 million, which is driven by the following: (i) full repayment of the outstanding balance on the Revolving Credit Facility in third quarter 2020; (ii) retirements of the 6.375% Notes and the 6.000% Notes in June 2021 and a partial redemption of the 8.625% Notes in November 2021; (iii) $90.0 million repayment on the Term A Loan in October 2020, offset by (iv) the issuance of the $900 million aggregate principal amount of 4.750% Senior notes due 2031 ("4.750% Notes due 2031") in June 2021 and (v) issuance of the 8.625% Notes in May 2020.

 

Loss on Early Extinguishments and Modifications of Debt

The components of the loss on early extinguishments and modifications of debt are as follows:

 

   

Year Ended December 31,

 

(In millions)

 

2021

   

2020

 

6.375% Senior Notes premium and consent fees paid

  $ 23.9     $  

6.375% Senior Notes deferred finance charges written off

    6.4        

6.000% Senior Notes premium and consent fees paid

    28.0        

6.000% Senior Notes deferred finance charges written off

    7.2        

8.625% Senior Notes premium and consent fees paid

    25.9        

8.625% Senior Notes deferred finance charges written off

    3.7        

Boyd Gaming Credit Facility debt modification fees paid

    0.1       1.0  

Amendment No. 3 and 4 debt modification fees paid

          0.8  

Total loss on early extinguishments and modifications of debt

  $ 95.2     $ 1.8  

 

Income Taxes

The effective tax rate on income from continuing operations during 2021 and 2020 was 23.2% and 21.2%, respectively. Our effective tax rate for 2021 and 2020 was unfavorably impacted by certain nondeductible expenses, including non-deductible compensation and employee benefits which were partially offset by the inclusion of excess tax benefits, related to equity compensation, as a component of the provision for income taxes. Our effective tax rate for 2021 was unfavorably impacted by state taxes. Our effective tax rate for 2020 was favorably impacted by state audit settlements. 

 

LIQUIDITY AND CAPITAL RESOURCES

Financial Position

We generally operate with minimal or negative levels of working capital in order to minimize borrowings and related interest costs. Our cash and cash equivalents balances were $344.6 million and $519.2 million at December 31, 2021 and 2020, respectively. In addition, we held restricted cash balances of $12.6 million and $15.8 million at December 31, 2021 and 2020, respectively. Our working capital deficit at December 31, 2021 was $49.2 million and our working capital surplus at December 31, 2020 was $126.3 million. 

 

 

 

We believe that current cash balances together with the available borrowing capacity under our Revolving Credit Facility and cash flows from operating activities will be sufficient to meet our liquidity and capital resource needs for the next twelve months, including our projected operating requirements and maintenance capital expenditures. See "Indebtedness", below, for further detail regarding funds available through our bank credit facility.

 

The Company may also seek to secure additional working capital, repay respective current debt maturities, or fund respective development projects, in whole or in part, through incremental bank financing and additional debt or equity offerings, to the extent such offerings are allowed under our debt agreements. 

 

Cash Flows Summary

 

   

Year Ended December 31,

 

(In millions)

 

2021

   

2020

 

Net cash provided by operating activities

  $ 1,010.4     $ 289.0  
                 

Cash flows from investing activities

               

Capital expenditures

    (199.5 )     (175.0 )

Cash paid for acquisitions, net of cash received

          (11.2 )

Insurance proceeds received from hurricane losses

    63.2        

Proceeds received from disposition of assets

          15.1  

Other investing activities

    6.7        

Net cash used in investing activities

    (129.6 )     (171.1 )
                 

Cash flows from financing activities

               

Net borrowings (payments) under bank credit facility

    (28.3 )     (409.4 )

Proceeds from issuance of senior notes

    900.0       600.0  

Retirement of senior notes

    (1,750.0 )      

Premium and consent fees

    (77.7 )      

Debt financing costs, net

    (14.5 )     (17.4 )

Shares repurchased and retired

    (80.8 )     (11.1 )

Dividends paid

          (7.8 )

Share-based compensation activities, net

    (5.7 )     (5.4 )

Other financing activities

    (1.7 )     (2.2 )

Net cash provided by (used in) financing activities

    (1,058.7 )     146.7  

Increase (decrease) in cash, cash equivalents and restricted cash

  $ (177.9 )   $ 264.6  

 

Cash Flows from Operating Activities

During 2021 and 2020, we generated net operating cash flow of $1.0 billion and $289.0 million, respectively. Generally, operating cash flows increased $721.4 million during 2021 compared to 2020 due to negative impact of the Property Closures on the prior year cash flows, increased cash flow in the current year due to the strategic shift of the Company's operating model and timing of working capital spend.

 

Cash Flows from Investing Activities

Our industry is capital intensive and we use cash flows for acquisitions, facility expansions, investments in future development or business opportunities and maintenance capital expenditures.

 

During 2021, we incurred net cash outflows for investing activities of $129.6 million comprised of capital expenditure spending of $199.5 million, primarily related to building improvements at Delta Downs as a result of Hurricane Laura damage, which was offset by $63.2 million of insurance recovery proceeds and $6.7 million of reimbursed expense associated with the Wilton Rancheria project.

 

During 2020, we incurred net cash outflows for investing activities of $171.1 million. Our cash outflows for investing activities include capital expenditures of $175.0 million which primarily relate to the purchase of real estate and property and equipment, including information technology purchases for new software and $11.2 million for acquisition-related costs. The proceeds received from the disposition of assets include the proceeds from the sale of Eldorado.

 

Cash Flows from Financing Activities

We rely upon our financing cash flows to provide funding for investment opportunities, repayments of obligations and ongoing operations.

 

In 2021, our net cash outflows from financing activities totaled $1.1 billion. In 2020, our net cash inflows for financing activities totaled $146.7 million.

 

The net cash outflows for financing activities in 2021 reflect primarily the full retirement of the 6.375% Notes and the 6.000% Notes, the partial retirement of the 8.625% Notes, the payment of associated premium and consent fees related to the retirements, the quarterly payments on our Term Loans, the repurchasing of outstanding common stock under our share repurchase program and the payment of debt issuance costs. The inflows for 2021 reflect the issuance of the 4.750% Notes due 2031.

 

The net cash inflows for financing activities in 2020 reflect primarily the proceeds received for the issuance of our 8.625% Notes, which were used for general corporate purposes, including working capital and to pay fees and expenses related to the offering. The outflows in 2020 reflect the use of excess cash to reduce our outstanding debt, repurchase outstanding common stock under our share repurchase program and pay cash dividends to our shareholders. 

 

 

 

Indebtedness

The outstanding principal balances of long-term debt, before unamortized discounts and fees, and the changes in those balances, are as follows:

 

   

December 31,

   

December 31,

   

Increase /

 

(In millions)

 

2021

   

2020

   

(Decrease)

 

Bank credit facility

  $ 867.9     $ 896.2     $ (28.3 )

6.375% senior notes due 2026

          750.0       (750.0 )

6.000% senior notes due 2026

          700.0       (700.0 )

4.750% senior notes due 2027

    1,000.0       1,000.0        

8.625% senior notes due 2025

    300.0       600.0       (300.0 )

4.750% senior notes due 2031

    900.0             900.0  

Other

    1.5       3.6       (2.1 )

Total long-term debt

    3,069.4       3,949.8       (880.4 )

Less current maturities

    41.7       30.7       11.0  

Long-term debt, net of current maturities

  $ 3,027.7     $ 3,919.1     $ (891.4 )

 

The amount of current maturities includes certain non-extending balances scheduled to be repaid within the next twelve months under the bank credit facilities.

 

Bank Credit Facility

Credit Agreement

The outstanding principal amounts under the Credit Facility are comprised of the following:

 

   

December 31,

   

December 31,

 

(In millions)

 

2021

   

2020

 

Revolving Credit Facility

  $     $  

Term A Loan

    118.2       133.8  

Refinancing Term B Loans

    749.7       762.4  

Swing Loan

           

Total outstanding principal amounts under the bank credit facility

  $ 867.9     $ 896.2  

 

With a total revolving credit commitment of $1,033.7 million available under the bank credit facility and no borrowings on the Revolving Credit Facility and the Swing Loan at December 31, 2021, the remaining contractual availability was $1,019.5 million after consideration of $14.2 million allocated to support various letters of credit.

 

The Company is party to a Third Amended and Restated Credit Agreement, dated as of August 14, 2013 (as amended, amended and restated, supplemented or otherwise modified from time to time, the "Boyd Credit Agreement"), governing its senior secured revolving credit facility (the "Revolving Credit Facility"), senior secured term loan A facility (the "Term A Loan") and senior secured term loan B facility (the "Refinancing Term B Loan," and collectively with the Revolving Credit Facility and the Term A Loan, the "Credit Facility"). The Boyd Credit Agreement includes, for the benefit of the Revolving Credit Facility and the Term A Loan, certain financial covenants, including a maximum total net leverage ratio covenant, a maximum secured net leverage ratio covenant and a minimum interest coverage ratio covenant (collectively, the "Financial Covenants").

 

 

On August 6, 2020, the Company entered into an Amendment No. 4 to the Boyd Credit Agreement ("Amendment No. 4"), by and among the Company, certain direct and indirect subsidiary guarantors of the Company, the administrative agent and lenders party thereto. Amendment No. 4 modifies the existing Boyd Credit Agreement and provides for (i) certain amendments to the covenants and other provisions of the existing Boyd Credit Agreement as described in the amendment, (ii) an extension of the maturity dates of the Company’s existing Revolving Credit Facility and Term A Loan and (iii) a replacement of non-consenting lenders with the Replacement Lender and consenting lenders and a reallocation of a portion of the Term A Loan to commitments under the Revolving Credit Facility. Upon effectiveness of Amendment No. 4, (i) the Term A Loan will have quarterly amortization payments equal to 5% per annum, increasing to 10% per annum for the fiscal quarters ended June 30, 2021 and September 30, 2021 and 20% per annum for the fiscal quarters ended December 31, 2021 and thereafter and (ii) both facilities will mature on September 15, 2023, provided that if the maturity date of the Company’s existing Refinancing Term B Loans is not extended, then such facilities will mature 91 days before the maturity date of the Refinancing Term B Loans. The existing Revolving Credit Facility and Term A Loan will remain "Covenant Facilities" under the Boyd Credit Agreement and will be subject to minimum interest coverage ratio, maximum total leverage ratio and secured leverage ratio financial covenants as set forth in the Boyd Credit Agreement. Amendment No. 4 became effective on October 8, 2020.

 

On May 25, 2021, the Company entered into an Amendment No. 5 to the Boyd Credit Agreement (the "Amendment No. 5") among the Company, certain direct and indirect subsidiary guarantors of the Company, Bank of America, N.A., as administrative agent, and certain other financial institutions party thereto as lenders. Amendment No. 5 modifies the Boyd Credit Agreement to remove certain of the limitations imposed between March 31, 2020 and June 30, 2021 (the "Covenant Relief Period") by a prior amendment on (i) the Company’s ability to refinance debt previously incurred under the ratio debt basket and (ii) the Company’s ability to repay junior secured or unsecured indebtedness, such that, during the Covenant Relief Period, subject to certain limitations, including the achievement of a total net leverage ratio of 5.50 to 1.00 on a pro forma basis, the absence of events of default, pro forma compliance with financial covenants (to the extent applicable during the covenant relief period), the use of no more than $200 million of proceeds of borrowings under the revolving credit facility under the Boyd Credit Agreement for such purpose and no use of any cash or cash equivalents held in casino cages for such purpose, the Company may repay junior secured or unsecured indebtedness with cash on hand and borrowings under such revolving credit facility.

 

Pursuant to the terms of the Credit Facility (i) the loans under the Term A Loan amortize in an annual amount equal to 5.00% of the original principal amount thereof, commencing December 31, 2020, payable on a quarterly basis, increasing to 10.00% per year for the fiscal quarter ended June 30, 2021 and September 30, 2021 and 20.00% per year for the fiscal quarter ended December 31, 2021 and thereafter, (ii) the loans under the Refinancing Term B Loans amortize in an annual amount equal to 1.00% of the original principal amount thereof, commencing June 30, 2017, payable on a quarterly basis, and (iii) beginning with the fiscal year ending December 31, 2016, the Company is required to use a portion of its annual Excess Cash Flow, as defined in the Boyd Credit Agreement, to prepay loans outstanding under the Credit Facility.

 

The Revolving Credit Facility, the Term A Loan and Refinancing Term B Loans mature on September 15, 2023 (or earlier upon occurrence or non-occurrence of certain events). 

 

The interest rate on the outstanding balance from time to time of the Revolving Credit Facility and the Term A Loan is based upon, at the Company’s option, either: (i) the Eurodollar rate 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 total leverage ratio and ranges from 1.75% to 2.75% (if using the Eurodollar rate) and from 0.75% to 1.75% (if using the base rate). A fee of a percentage per annum (which ranges from 0.25% to 0.50% determined in accordance with a specified pricing grid based on the total leverage ratio) will be payable on the unused portions of the Revolving Credit Facility.

 

The interest rate on the outstanding balance of the Refinancing Term B Loans under the Amended Credit Agreement is based upon, at the Company’s option, either: (i) the Eurodollar rate or (ii) the base rate, in each case, plus an applicable margin. Such applicable margin is a percentage per annum determined in accordance with the Company’s secured leverage ratio and ranges from 2.25% to 2.50% (if using the Eurodollar rate) and from 1.25% to 1.50% (if using the base rate).

 

The "base rate" under the Boyd Credit Agreement remains the highest of (x) Bank of America’s publicly-announced prime rate, (y) the federal funds rate plus 0.50%, or (z) the Eurodollar rate for a one-month period plus 1.00%.

 

The blended interest rate for outstanding borrowings under for the Credit Facility was 2.3% at December 31, 2021 and 2.5% at December 31, 2020.

 

Amounts outstanding under the Credit Facility may be prepaid without premium or penalty, and the commitments may be terminated without penalty, subject to certain exceptions.

 

Subject to certain exceptions, the Company may be required to repay the amounts outstanding under the Credit Facility in connection with certain asset sales and issuances of certain additional secured indebtedness.

 

The Credit Facility contains certain financial and other covenants, including, without limitation, various covenants: (i) requiring the maintenance of a minimum consolidated interest coverage ratio 1.75 to 1.00; (ii) establishing a maximum permitted consolidated total leverage ratio; (iii) establishing a maximum permitted secured leverage ratio; (iv) imposing limitations on the incurrence of indebtedness; (v) imposing limitations on transfers, sales and other dispositions; and (vi) imposing restrictions on investments, dividends and certain other payments.

 

 

 

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 will grant 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 Facility includes an accordion feature which permits an increase in the Revolving Credit Facility and the issuance and increase of senior secured term loans in an amount up to (i) $550.0 million, plus (ii) certain voluntary permanent reductions of the Revolving Credit Facility and certain voluntary prepayments of the senior secured term loans, plus (iii) certain reductions in the outstanding principal amounts under the term loans or the Revolving Credit Facility, plus (iv) any additional amount if, after giving effect thereto, the First Lien Leverage Ratio (as defined in the Boyd Credit Agreement) would not exceed  4.25 to  1.00 on a pro forma basis, less (v) any Incremental Equivalent Debt (as defined in the Boyd Credit Agreement), in each case, subject to the satisfaction of certain conditions. 

 

Senior Notes

We currently have three issuances of senior notes (the “Senior Notes”) that are outstanding as described below.

 

4.750% Senior Notes due June 2031

On June 8, 2021, we issued $900 million aggregate principal amount of 4.750% senior notes due June 2031 (the "4.750% Notes due 2031"). The 4.750% Notes due 2031 require semi-annual interest payments on March 15 and September 15 of each year, commencing on September 15, 2021. The 4.750% Notes due 2031 will mature on June 15, 2031 and are fully and unconditionally guaranteed, on a joint and several basis, by certain of our current and future domestic restricted subsidiaries, all of which are 100% owned by us. The net proceeds from the 4.750% Notes due 2031 and cash on hand were used to finance the redemption of our outstanding 6.375% senior notes due April 2026 ("6.375% Notes") and 6.000% senior notes due August 2026 ("6.000% Notes").

 

In conjunction with the issuance of the 4.750% Notes due 2031, we incurred approximately $14.0 million in debt financing costs that have been deferred and are being amortized over the term of the 4.750% Notes due 2031 using the effective interest method.

 

At any time prior to June 15, 2026, we may redeem the 4.750% Notes due 2031, in whole or in part, at a redemption price equal to 100% of the principal amount thereof, plus accrued and unpaid interest and Additional Interest, if any, up to, but excluding, the applicable redemption date, plus a make whole premium. In addition, at any time prior to June 15, 2024, we may redeem up to 40% of the aggregate principal amount of the 4.750% Notes due 2031 at a redemption price (expressed as percentages of the principal amount) equal to 104.750%, plus accrued and unpaid interest and Additional Interest.

 

8.625% Senior Notes due June 2025

On May 21, 2020, we issued $600 million aggregate principal amount of 8.625% senior notes due June 2025 (the "8.625% Notes"). The 8.625% Notes require semi-annual interest payments on June 1 and December 1 of each year, commencing on December 1, 2020. The 8.625% Notes will mature on June 1, 2025 and are fully and unconditionally guaranteed, on a joint and several basis, by certain of our current and future domestic restricted subsidiaries, all of which are 100% owned by us. The net proceeds from the 8.625% Notes were used for general corporate purposes, including working capital and to pay fees and expenses related to the offering.

 

In conjunction with the issuance of the 8.625% Notes, we incurred approximately $12.0 million in debt financing costs that have been deferred and are being amortized over the term of the 8.625% Notes using the effective interest method.

 

At any time prior to June 1, 2022, we may redeem the 8.625% Notes, in whole or in part, at a redemption price equal to 100% of the principal amount thereof, plus accrued and unpaid interest and Additional Interest, if any, up to, but excluding, the applicable redemption date, plus a make whole premium. After June 1, 2022, we may redeem all or a portion of the 8.625% Notes at redemption prices (expressed as percentages of the principal amount) ranging from 104.313% in 2022 to 100% in 2024 and thereafter, plus accrued and unpaid interest and Additional Interest.

 

On November 5, 2021 the Company issued a notice of partial redemption (the "Notice of Partial Redemption") pursuant to the indenture, dated as of May 21, 2020 (the "8.625% Indenture"), among the Company, the guarantors named therein and Wilmington Trust, National Association, as trustee, governing its 8.625% Notes. The Company redeemed $300 million of its outstanding 8.625% Notes on November 15, 2021 using cash on hand at a redemption price that was calculated pursuant to the formula set forth in the 8.625% Indenture governing the Notes.

 

4.750% Senior Notes due December 2027

On December 3, 2019, we issued $1.0 billion aggregate principal amount of 4.750% senior notes due December 2027 (the "4.750% Notes"). The 4.750% Notes require semi-annual interest payments on June 1 and December 1 of each year, commencing on June 1, 2020. The 4.750% Notes will mature on December 1, 2027 and are fully and unconditionally guaranteed, on a joint and several basis, by certain of our current and future domestic restricted subsidiaries, all of which are 100% owned by us. The net proceeds from the 4.750% Notes were used to finance the redemption of all of its outstanding 6.875% senior notes due 2023 and prepay a portion of our Refinancing Term B Loans.

 

In conjunction with the issuance of the 4.750% Notes, we incurred approximately $15.7 million in debt financing costs that have been deferred and are being amortized over the term of the 4.750% Notes using the effective interest method.

 

At any time prior to December 1, 2022, we may redeem the 4.750% Notes, in whole or in part, at a redemption price equal to 100% of the principal amount thereof, plus accrued and unpaid interest and Additional Interest, if any, up to, but excluding, the applicable redemption date, plus a make whole premium. After December 1, 2022, we may redeem all or a portion of the 4.750% Notes at redemption prices (expressed as percentages of the principal amount) ranging from 102.375% in 2022 to 100% in 2024 and thereafter, plus accrued and unpaid interest and Additional Interest.

 

 

 

In connection with the private placement of the 4.750% Notes, we entered into a registration rights agreement with the initial purchasers in which we agreed to file a registration statement with the SEC to permit the holders to exchange or resell the 4.750% Notes. We filed the required registration statement and commenced the exchange offer in July 2020. The exchange offer was completed on August 20, 2020 and our obligations under the registration agreement have been fulfilled.

 

Redemption of  6.000% Senior Notes due August 2026

On June 9, 2021, we redeemed all of our 6.000% Notes at a redemption price of 103.993% plus accrued and unpaid interest to the redemption date. The redemption was funded through the issuance of the 4.750% Notes due 2031 and cash on hand. The Company used operating cash to pay the redemption premium, accrued and unpaid interest, fees, expenses and commissions related to this redemption.

 

Redemption of 6.375% Senior Notes due April 2026

On June 9, 2021, we redeemed all of our 6.375% Notes at a redemption price of 103.188% plus accrued and unpaid interest to the redemption date. The redemption was funded through the issuance of the 4.750% Notes due 2031. The Company used operating cash to pay the redemption premium, accrued and unpaid interest, fees, expenses and commissions related to this redemption.

 

Senior Notes Restrictive Covenants

Each of the Senior Notes contains certain restrictive covenants that, subject to exceptions and qualifications, among other things, limit our ability and the ability of our restricted subsidiaries (as defined in the base and supplemental indentures governing the respective notes to incur additional indebtedness or liens, pay dividends or make distributions or repurchase our capital stock, make certain investments, and sell or merge with other companies. In addition, upon the occurrence of a change of control (as defined in the respective indenture), we will be required, unless certain conditions are met, to offer to repurchase the Senior Notes at a price equal to  101% of the principal amount of the Senior Notes, plus accrued and unpaid interest and Additional Interest (as defined in the respective indenture), if any, to, but not including, the date of purchase. If we sell assets, we will be required under certain circumstances to offer to purchase the Senior Notes.

 

Other Notes

On October 15, 2018, Boyd (Ohio) PropCo, LLC ("Boyd PropCo"), a subsidiary of Boyd, acquired the real estate associated with Belterra Park in Cincinnati, Ohio, utilizing mortgage financing from Gold Merger Sub, a wholly owned subsidiary of Gaming and Leisure Properties, Inc. ("GLPI"). The total mortgage payable to Gold Merger Sub was $57.7 million. 

 

On May 6, 2020, we entered into an agreement with Gold Merger Sub for its acquisition of Boyd PropCo (the "Merger"), with the Merger consummated and the transaction closed at the time of the execution of the merger agreement. That agreement provided that Gold Merger Sub would acquire Boyd PropCo via the Merger, which would be treated for income tax purposes as a taxable asset acquisition consisting of the exchange of the real estate by us in satisfaction of the mortgage executed in connection with GLPI’s initial financing of our acquisition of the real estate in October 2018. 

 

Prior to the Merger, PNK (Ohio), LLC ("BP OpCo"), which owns the business operations of Belterra Park, leased the real estate from Boyd PropCo pursuant to a master lease that is the same in all material respects as the Master Lease between Boyd TCIV, LLC and Gold Merger Sub (the "BP Master Lease" and "GLP Master Lease," respectively). Rent paid under the BP Ma