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Asset Acquisitions | 12 Months Ended
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Dec. 31, 2012
Business Combinations [Abstract] |
Asset Acquisitions | ASSET ACQUISITIONS Peninsula Gaming Overview On November 20, 2012, we completed the acquisition of Peninsula Gaming pursuant to an Agreement and Plan of Merger (the "Merger Agreement") entered into on May 16, 2012, by and among the Company, Boyd Acquisition II, LLC, Boyd Acquisition Sub, LLC, Peninsula Gaming Partners, LLC and Peninsula Gaming, under which an indirect wholly owned subsidiary of the Company acquired 100% of the outstanding common shares of Peninsula Gaming, the assets and assumed the liabilities. The acquisition added five properties from three different states including Kansas, Iowa and Louisiana. Peninsula Gaming owns and operates Diamond Jo casino in Dubuque, Iowa, Evangeline Downs Racetrack and Casino, in St. Landry Parish, Louisiana, various off track betting facilities in Louisiana, Diamond Jo casino in Northwood, Iowa, Amelia Belle casino in Amelia, Louisiana, and the Kansas Star Casino, Hotel and Event Center ("Kansas Star") near Wichita, Kansas. Accordingly, the acquired assets and liabilities of Peninsula Gaming are included in our consolidated balance sheet as of December 31, 2012 and the results of its operations and cash flows are reported in our consolidated statements of operations and cash flows from November 20, 2012 through December 31, 2012, respectively, during the year ended December 31, 2012. As a result of this acquisition, the Company will be able to expand its operations to the new geographical areas. The net purchase price, after adjustment for working capital and other items was approximately $1.48 billion. Consideration Transferred The fair value of the consideration transferred on the acquisition date, and as retrospectively adjusted, included the purchase price of the net assets transferred and certain liabilities incurred on behalf of the sellers. Total consideration was comprised of the following:
|  |  | Total Consideration
|  |  | (In thousands)
Cash Paid to Seller |  | $ | 1,353,737 |
HoldCo Note |  | 113,600 |
Contingent consideration - Kansas Star earn out |  | 9,800 |
Gross Consideration |  | $ | 1,477,137 |
The fair value of the Note to Seller and Contingent Consideration were estimated by management with the assistance of an independent third-party valuation firm as of the acquisition date. The amount of the HoldCo Note remains subject to adjustment pursuant to the terms of the Merger Agreement. Contingent Consideration The Company is required to make a contingent payment to the sellers if the EBITDA of certain assets of Kansas Star Casino ("KSC") exceeds $105.0 million. The payout is 7.5 times each dollar in excess of EBITDA greater than $105.0 million in the calendar year 2015. The fair value of the contingent consideration was calculated using an option pricing model, which requires management to forecast EBITDA for 2015, a discount rate based on weighted average cost of capital and volatility of earnings. The fair value of the contingent consideration arrangement at the acquisition date was estimated to be $9.8 million. The actual payout will be determined based on actual EBITDA of KSC for calendar year 2015, and payments are not limited by a maximum value. If the actual EBITDA of KSC is less than the target, the Company is not required to make any additional consideration payout. Status of Purchase Price Allocation The Company has recognized the assets acquired and liabilities assumed in the Merger based on preliminary fair value estimates as of the date of the Merger. The determination of the fair values of the acquired assets and assumed liabilities (and the related determination of estimated lives of depreciable tangible and identifiable intangible assets) requires significant judgment. As such, management has not completed its valuation analysis and calculations in sufficient detail necessary to arrive at the final estimates of the fair value of the assets acquired and liabilities assumed, along with the related allocations of goodwill and intangible assets. The fair values of certain tangible assets, intangible assets, the note payable to seller, certain contingent liabilities and residual goodwill are the most significant areas not yet finalized and therefore are subject to change. The final fair value determinations are expected to be completed no later than the third quarter of 2013. The final fair value determinations may be significantly different than those reflected in the consolidated financial statements at December 31, 2012. Acquisition Method of Accounting The Company followed the acquisition method of accounting per ASC 805 guidance. In accordance with ASC 805, the Company allocated the purchase price to the tangible and intangible assets acquired and liabilities assumed based on their fair values, which were determined primarily by management with assistance from third-party appraisals. The excess of the purchase price over those fair values was recorded as goodwill. The fair values set forth below are preliminary. The following table summarizes the allocation of the purchase price.
|  | As Recorded, at Fair Value
|  | (In thousands)
Current assets |  | $ | 48,610 |
Property and equipment, net |  | 430,093 |
Intangible assets |  | 577,501 |
Other assets |  | 49,339 |
Total acquired assets |  | 1,105,543 |
Current liabilities |  | 67,396 |
Other liabilities |  | 42,363 |
Total liabilities assumed |  | 109,759 |
Net identifiable assets acquired |  | 995,784 |
Goodwill |  | 481,353 |
Net assets acquired |  | $ | 1,477,137 |
The following table summarizes the acquired property and equipment and weighted average useful lives.
| Useful Lives |  | As Recorded, at Fair Value
|  |  | (In thousands)
Land |  |  | $ | 39,240 |
Buildings and improvements | 3 through 40 years |  | 283,391 |
Furniture and equipment | 1 through 12 years |  | 88,069 |
Riverboat | 5 through 40 years |  | 19,393 |
Total property and equipment acquired |  |  | $ | 430,093 |
The following table summarizes the acquired intangible assets and weighted average useful lives of definite-lived intangible assets.
| Useful Lives |  | As Recorded, at Fair Value
|  |  | (In thousands)
Customer relationships | 4.9 years |  | $ | 136,300 |
Non-compete agreement | 0.9 years |  | 3,200 |
Trademark | Indefinite |  | 50,800 |
Gaming license rights | Indefinite |  | 387,201 |
Total intangible assets acquired |  |  | $ | 577,501 |
The goodwill recognized is attributable primarily to expected synergies and the assembled workforce of Peninsula Gaming. All of the $481.3 million of goodwill was assigned to the Peninsula Gaming reportable segment. All of the goodwill is expected to be deductible for income tax purposes. As of December 31, 2012, there were no changes in the recognized amounts of goodwill resulting from the acquisition of Peninsula Gaming. The Company recognized $18.7 million of acquisition related costs that were expensed in the current period. These costs are included in the consolidated statements of operations in the line item entitled “Other operating items, net”. Consolidated Statement of Operations for the period from November 20, 2012 through December 31, 2012 The following supplemental information presents the financial results of Peninsula Gaming included in the Company's consolidated statement of operations for the year ended December 31, 2012.
|  | Period from
|  | November 20 to
|  | December 31, 2012
|  | (In thousands)
Consolidated Statement of Operations |
Net revenues |  | $ | 56,925 |
Net loss |  | $ | (5,225 | )
IP Casino Resort Spa Overview On October 4, 2011, we completed the acquisition of IP Casino Resort Spa ("IP") in Biloxi, Mississippi pursuant to an Agreement for Purchase and Sale, under which the seller agreed to sell and transfer, and the Company agreed to purchase and assume, certain assets and liabilities, respectively, related to the IP, on an as-is basis. The net purchase price, after adjustment for working capital and other items, was approximately $280.6 million. The business combination resulted in the recording of a bargain purchase gain of approximately $4.6 million, due to the excess fair value of net identifiable assets over the total consideration. The bargain purchase gain was reported in other income in our consolidated statement of operations during the year ended December 31, 2011. Consideration Transferred The fair value of the consideration transferred on the acquisition date, and included the purchase price of the net assets transferred and certain liabilities incurred on behalf of the sellers. Total consideration was comprised of the following:
|  | Total Consideration
|  | (In thousands)
Purchase price |  | $ | 287,000 |
Liabilities assumed on behalf of the seller |  | 1,881 |
Working capital adjustments |  | (8,252 | )
Total consideration |  | $ | 280,629 |
In addition to this total consideration, the Company is in the process of performing certain capital improvement projects with respect to the property at an estimated cost of $44 million. Pursuant to the terms of the agreement, to the extent that the costs of the capital improvements exceed the original cost estimate, the Company will be solely responsible for the additional costs; however, to the extent that costs are less than the original cost estimate, the Company is obligated to pay the seller an amount equal to one-half of the difference between the actual costs and the original estimated costs. The Company has not recorded any contingent consideration as a result; however, as it is presently likely that these capital improvements will require the entire $44 million spend. During the year ended December 31, 2012, the Company has incurred $28.0 million in capital improvement expenditures related to these projects. Cumulative total project expenditures were $29.5 million through December 31, 2012. Acquisition Method of Accounting The Company followed the acquisition method of accounting per ASC 805 guidance. In accordance with ASC 805, the Company allocated the purchase price to the tangible and intangible assets acquired and liabilities assumed based on their fair values, which were determined primarily by management with assistance from third-party appraisals. The excess of the purchase price over those fair values was recorded as goodwill. The fair values set forth below are preliminary. The following table summarizes the allocation of the purchase price. The Company recognized $4.8 million of acquisition related costs that were expensed during the year ended December 31, 2011. These costs are included in the consolidated income statement in the line item entitled “Other operating items, net”. Consolidated Balance Sheet Impact The following table summarizes the recognized fair values of the assets acquired and liabilities assumed as of October 4, 2011.
|  | As Recorded, at Fair Value
|  | (In thousands)
Assets |  |
Cash and cash equivalents |  | $ | 2,173 |
Accounts receivable, net |  | 1,230 |
Inventories |  | 1,579 |
Prepaid expenses and other current assets |  | 6,638 |
Total current assets |  | 11,620 |
Property and equipment, net |  | 264,703 |
Intangible assets |  | 28,600 |
Total acquired assets |  | 304,923 |
Liabilities |  |
Accounts payable |  | 3,018 |
Accrued liabilities |  | 14,182 |
Total current liabilities |  | 17,200 |
Other liabilities |  | 2,512 |
Total liabilities assumed |  | 19,712 |
Net identifiable assets |  | $ | 285,211 |
The fair value of the current assets acquired and current liabilities assumed was presumed to be historical acquired value, based on the relatively short term nature of these assets and liabilities. The $1.2 million of acquired accounts receivable was net of a $2.1 million reserve, reducing the gross amount of $3.3 million to an amount reflecting the expected cash flows from such outstanding balances. Bargain Purchase Gain The business combination resulted in the recording of a bargain purchase gain, due to the excess fair value of net identifiable assets over the total consideration. The gain was computed as follows:
|  | Bargain
|  | Purchase Gain
|  | (In thousands)
Fair value of net identifiable assets |  | $ | 285,211 |
Total consideration |  | 280,629 |
Bargain purchase gain |  | $ | 4,582 |
The bargain purchase gain was reported in other income in our consolidated statement of operations during the year ended December 31, 2011. Consolidated Statements of Operations for the period from October 4, 2011 through December 31, 2011 The following supplemental information presents the financial results of IP included in the Company's consolidated statement of operations for the year ended December 31, 2011.
|  | Period from
|  | October 4 to
|  | December 31, 2011
|  | (In thousands)
Consolidated Statement of Operations |
Net revenues |  | $ | 44,627 |
Net income |  | $ | 3,203 |
Supplemental Unaudited Pro Forma Information The following table presents pro forma results of the Company, as though Peninsula Gaming had been acquired as of January 1, 2011. The pro forma results do not necessarily represent the results that may occur in the future. The pro forma amounts include the historical operating results of the Company and Peninsula Gaming prior to the acquisition, with adjustments directly attributable to the acquisition.
|  | Year Ended December 31, 2012
|  | Boyd Gaming |  |  |  | Boyd Gaming
|  | Corporation |  | Peninsula Gaming |  | Corporation
|  | (As Reported) |  |  |  | (Pro Forma)
|  | (In thousands)
Net revenues |  | $ | 2,487,426 |  |  | $ | 465,188 |  |  | $ | 2,952,614 |
Net loss attributable to Boyd Gaming Corporation |  | $ | (908,865 | ) |  | $ | (43,210 | ) |  | $ | (952,075 | )
Basic and diluted net loss per share |  | $ | (10.37 | ) |  |  |  | $ | (10.86 | )
The following table presents pro forma results of the Company, as though IP and Peninsula had been acquired as of the beginning of the earliest period presented, January 1, 2011. The pro forma results do not necessarily represent the results that may occur in the future. The pro forma amounts include the historical operating results of the Company, Peninsula Gaming and IP combined prior to the acquisition, with adjustments directly attributable to the acquisition.
|  | Year Ended December 31, 2011
|  | Boyd Gaming |  |  |  | Boyd Gaming
|  | Corporation |  | Combined |  | Corporation
|  | (As Reported) |  | (Historical) |  | (Pro Forma)
|  | (In thousands)
Net revenues |  | $ | 2,336,238 |  |  | $ | 457,934 |  |  | $ | 2,794,172 |
Net loss attributable to Boyd Gaming Corporation |  | $ | (3,854 | ) |  | $ | (17,063 | ) |  | $ | (20,917 | )
Basic and diluted net loss per share |  | $ | (0.04 | ) |  |  |  | $ | (0.24 | )
Pro Forma and Other Adjustments The unaudited pro forma results, as presented above, include adjustments to record: (i) the net incremental depreciation expense for the adjustment of property and equipment to fair value and the allocation of a portion of the purchase price to amortizing intangible assets; (ii) the elimination of the historical management fee paid by Peninsula Gaming to an affiliate; (iii) the increase in interest expense incurred on the incremental borrowings incurred by Boyd to fund the acquisition; (iv) the estimated tax effect of the pro forma adjustments and on the historical taxable income of Peninsula Gaming; and (v) miscellaneous adjustments as a result of the preliminary purchase price allocation on the amortization of certain assets and liabilities. Other Acquisitions Development Agreement In September 2011, the Company acquired the membership interests of a limited liability company (the "LLC") for a purchase price of $24.5 million. The primary asset of the LLC was a previously executed development agreement (the "Development Agreement") with a Native American tribe (the "Tribe"). The purchase price was allocated primarily to an intangible asset associated with the Company's rights under the agreement to assist the Tribe in the development and management of a gaming facility on the Tribes land. In July 2012, the Company and the Tribe amended and replaced the agreement with a new development agreement and a management agreement (the "Agreements"). The Agreements obligate us to fund certain pre-development costs, which are estimated to be approximately $1 million to $2 million annually, for the next several years and to assist the Tribe in its development and oversight of the gaming facility construction. Upon opening, we will manage the gaming facility. The pre-development costs funded by us are reimbursable to us with future cash flows from the operations of the gaming facility under terms of a note receivable from the Tribe. The Agreements provide that the Company will receive future revenue for its services to the Tribe contingent upon successful development of the gaming facility and based on future net revenues at the gaming facility. Development is in the preliminary stages and no time schedule has been established as to when the Tribe will be able to formalize plans and begin construction.

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- Definition The entire disclosure for a business combination (or series of individually immaterial business combinations) completed during the period, including background, timing, and recognized assets and liabilities. The disclosure may include leverage buyout transactions (as applicable). + References Reference 1: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 805 -SubTopic 10 -Section 50 -Paragraph 2 -URI http://asc.fasb.org/extlink&oid=7659399&loc=d3e1392-128463 Reference 2: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 805 -SubTopic 20 -Section 50 -Paragraph 1 -URI http://asc.fasb.org/extlink&oid=6910749&loc=d3e4845-128472 Reference 3: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 805 -SubTopic 20 -Section 50 -Paragraph 3 -URI http://asc.fasb.org/extlink&oid=6910749&loc=d3e4926-128472 Reference 4: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 805 -SubTopic 10 -Section 50 -Paragraph 4 -URI http://asc.fasb.org/extlink&oid=7659399&loc=d3e1490-128463 Reference 5: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 805 -SubTopic 30 -Section 50 -Paragraph 1 -URI http://asc.fasb.org/extlink&oid=7488404&loc=d3e6927-128479 Reference 6: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 805 -SubTopic 30 -Section 50 -Paragraph 4 -URI http://asc.fasb.org/extlink&oid=7488404&loc=d3e7008-128479 Reference 7: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 805 -SubTopic 30 -Section 50 -Paragraph 3 -URI http://asc.fasb.org/extlink&oid=7488404&loc=d3e7000-128479 Reference 8: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 805 -SubTopic 10 -Section 50 -Paragraph 7 -URI http://asc.fasb.org/extlink&oid=7659399&loc=d3e1524-128463 Reference 9: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 805 -SubTopic 10 -Section 50 -Paragraph 1 -URI http://asc.fasb.org/extlink&oid=7659399&loc=d3e1383-128463 Reference 10: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 805 -SubTopic 10 -Section 50 -Paragraph 3 -URI http://asc.fasb.org/extlink&oid=7659399&loc=d3e1486-128463 Reference 11: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 805 -SubTopic 10 -Section 50 -Paragraph 6 -URI http://asc.fasb.org/extlink&oid=7659399&loc=d3e1500-128463 Reference 12: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Statement of Financial Accounting Standard (FAS) -Number 141R -Paragraph 67-73 -LegacyDoc This reference is SUPERSEDED by the Accounting Standards Codification effective for interim and annual periods ending after September 15, 2009. This reference is included to help users transition from the previous accounting hierarchy and will be removed from future versions of this taxonomy. Reference 13: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 805 -SubTopic 20 -Section 50 -Paragraph 4 -URI http://asc.fasb.org/extlink&oid=6910749&loc=d3e4934-128472 Reference 14: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Statement of Financial Accounting Standard (FAS) -Number 141R -Paragraph F4 -Subparagraph e -Appendix F Reference 15: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 805 -SubTopic 10 -Section 50 -Paragraph 5 -URI http://asc.fasb.org/extlink&oid=7659399&loc=d3e1497-128463 Reference 16: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 805 -SubTopic 20 -Section 50 -Paragraph 2 -URI http://asc.fasb.org/extlink&oid=6910749&loc=d3e4922-128472 Reference 17: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Emerging Issues Task Force (EITF) -Number 88-16 -LegacyDoc This reference is SUPERSEDED by the Accounting Standards Codification effective for interim and annual periods ending after September 15, 2009. 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