v2.4.0.6

Consolidation of Certain Interests | 12 Months Ended
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Dec. 31, 2012
Organization, Consolidation and Presentation of Financial Statements [Abstract] |
Consolidation of Certain Interests | CONSOLIDATION OF CERTAIN INTERESTS Controlling Interest Borgata Hotel Casino and Spa Overview The Company and MGM Resorts International ("MGM") each originally held a 50% interest in Marina District Development Holding Co., LLC (“Holding Company”). The Holding Company owns all the equity interests in Marina District Development Company, LLC, d.b.a. Borgata Hotel Casino and Spa. In February 2010, we entered into an agreement with MGM to amend the operating agreement to, among other things, facilitate the transfer of MGM's interest in the Holding Company ("MGM Interest") to a divestiture trust (“Divestiture Trust”) established for the purpose of selling the MGM Interest to a third party. The proposed sale of the MGM Interest through the Divestiture Trust was a part of a then-proposed settlement agreement between MGM and the New Jersey Department of Gaming Enforcement (the “NJDGE”). Pursuant to the terms of the amended operating agreement, in connection with the refinancing of the Borgata bank credit facility on August 6, 2010, the Holding Company made a $135.4 million one-time distribution to us, of which $30.8 million was a priority distribution equal to the excess prior capital contributions made by us. On March 17, 2010, MGM announced that its settlement agreement with the NJDGE had been approved by the New Jersey Casino Control Commission ("NJCCC"). Under the terms of the settlement agreement, MGM agreed to transfer the MGM Interest into the Divestiture Trust and further agreed to sell such interest within a 30-month period. During the first 18 months of such period, MGM has the power to direct the trustee to sell the MGM Interest, subject to the approval of the NJCCC. If the sale has not occurred by such time, the trustee will be solely responsible for the sale of the MGM Interest. The MGM Interest was transferred to the Divestiture Trust on March 24, 2010. MGM has subsequently announced that it has entered into an amendment with respect to its settlement agreement with the NJDGE, as approved by the NJCCC. The amendment provides that the mandated sale of the MGM Interest be increased by an additional 18 months to a total of 48 months. During the first 36 months (or until March 24, 2013), MGM has the right to direct the Divestiture Trust to sell the MGM Interest. If a sale is not concluded by that time, the Divestiture Trust will be responsible for selling MGM's Interest during the following 12-month period. Effective Change in Control In connection with the amendments to the operating agreements MGM relinquished all of its specific participating rights under the operating agreement, and we retained all authority to manage the day-to-day operations of Borgata. MGM's relinquishment of its participating rights effectively provided us with direct control of Borgata. Accordingly, on March 24, 2010, we effectively obtained control of Borgata. This resulting change in control required acquisition method of accounting in accordance with the authoritative accounting guidance for business combinations. Acquisition Method of Accounting The application of the acquisition method of accounting guidance had the following effects on our consolidated financial statements: (i) our previously held equity interest was measured at a provisional fair value at the date control was obtained; (ii) we recognized and measured the identifiable assets and liabilities in accordance with promulgated valuation recognition and measurement provisions; and (iii) we recorded the noncontrolling interest held in trust for the economic benefit of MGM as a separate component of our stockholders' equity. The provisional fair value measurements and estimates of these items were estimated as of the date we effectively obtained control. Bargain Purchase Gain The fair valuation resulted in the recording of a bargain purchase gain, due to the excess fair value of Borgata over the historical basis of our equity interest in Borgata. Recorded in other operating items, net on the consolidated statement of operations, this gain was recorded as a cumulative adjustment during the year ended December 31, 2011. The gain was computed as follows:
| Bargain Purchase Gain
| (In thousands)
Fair value of controlling equity interest | $ | 397,931 |
Carrying value of equity investment in Borgata | 397,622 |
Bargain purchase gain | $ | 309 |
The fair value of our controlling interest included a $72.4 million control premium, which was reflected in the fair value of the enterprise, and included in the calculation of the bargain purchase gain. A control premium of 10% was applied to the enterprise value members' equity, excluding interest bearing debt, to calculate an indicated value of equity on a controlling basis. While the value of control is somewhat below prevailing market rates, we believe the control premium reflects the value of our influence, mitigated by only a 50% interest and return. Consolidated Statement of Operations We have not applied the measurement period adjustments retrospectively to the consolidated statement of operations for the year ended December 31, 2010, because the impact on such, as retrospectively adjusted to the statements as reported was not material. Had the measurement period adjustments been retrospectively adjusted, the results of operations would have reflected the following impact as if the adjustments had been recorded on the date of effective control for the year ended December 31, 2010.
|  | Year Ended
|  | December 31, 2010
|  | (In thousands)
Maintenance and utilities |  | $ | 141 |
Depreciation and amortization |  | 2,221 |
Other operating items, net |  | (61 | )
Total operating costs and expenses |  | 2,301 |
Interest expense |  | 3,458 |
Total other expense, net |  | 3,458 |
Income (loss) before income taxes |  | $ | (1,157 | )
Results of Borgata (for the period from March 24, 2010 through December 31, 2010) reflected on a fully consolidated basis The results of Borgata, as included in the accompanying consolidated statements of operations from the date we effectively obtained control, March 24, 2010 through December 31, 2010, are comprised of the following. These results do not reflect the retrospective impact from the measurement period adjustments discussed above, as such amounts were not material to the year ended December 31, 2010.
| March 24, through
| December 31, 2010
| (In thousands)
Statement of Operations |
Revenues |
Gaming | $ | 506,073 |
Food and beverage | 116,534 |
Room | 91,045 |
Other | 33,752 |
Gross revenues | 747,404 |
Less promotional allowances | 167,264 |
Net revenues | 580,140 |
Costs and expenses |
Gaming | 203,962 |
Food and beverage | 55,989 |
Room | 11,806 |
Other | 27,209 |
Selling, general and administrative | 94,983 |
Maintenance and utilities | 49,913 |
Depreciation and amortization | 52,886 |
Other operating items, net | (8 | )
Total costs and expenses | 496,740 |
Operating income | 83,400 |
Other expense |
Interest expense | 45,139 |
Total other expense, net | 45,139 |
Income before provision for state income taxes | 38,261 |
Provision for state income taxes | (4,067 | )
Net income | $ | 34,194 |
Supplemental Pro Forma Information Pro Forma Consolidated Statement of Operations for the year ended December 31, 2010 (unaudited) The following supplemental pro forma information presents the financial results as if the effective control of Borgata had occurred as of the beginning of the earliest period presented herein, or on January 1, 2010. This supplemental pro forma information has been prepared for comparative purposes and does not purport to be indicative of what the actual results for the year ended December 31, 2010 would have been had the consolidation of Borgata been completed as of the earlier date, nor are they indicative of any future results.
| Year Ended December 31, 2010
|  |  |  |  |  |  | Boyd Gaming
| Boyd Gaming |  | Borgata Stub |  |  |  | Corporation
| Corporation |  | Period |  | Adjustments |  | Pro Forma
Revenues |  |  |  |  |  |  |
Gaming | $ | 1,812,487 |  |  | $ | 137,831 |  |  | $ | — |  |  | $ | 1,950,318 |
Food and beverage | 347,588 |  |  | 31,218 |  |  | — |  |  | 378,806 |
Room | 211,046 |  |  | 24,154 |  |  | — |  |  | 235,200 |
Other | 123,603 |  |  | 9,179 |  |  | — |  |  | 132,782 |
Gross revenues | 2,494,724 |  |  | 202,382 |  |  | — |  |  | 2,697,106 |
Less promotional allowances | 353,825 |  |  | 44,093 |  |  | — |  |  | 397,918 |
Net revenues | 2,140,899 |  |  | 158,289 |  |  | — |  |  | 2,299,188 |
Costs and expenses |  |  |  |  |  |  |
Gaming | 859,818 |  |  | 59,861 |  |  | — |  |  | 919,679 |
Food and beverage | 180,840 |  |  | 13,500 |  |  | — |  |  | 194,340 |
Room | 49,323 |  |  | 2,185 |  |  | — |  |  | 51,508 |
Other | 99,458 |  |  | 7,127 |  |  | — |  |  | 106,585 |
Selling, general and administrative | 369,217 |  |  | 28,981 |  |  | — |  |  | 398,198 |
Maintenance and utilities | 140,722 |  |  | 13,522 |  |  | — |  |  | 154,244 |
Depreciation and amortization | 199,275 |  |  | 16,754 |  |  | — |  |  | 216,029 |
Corporate expense | 48,861 |  |  | — |  |  | — |  |  | 48,861 |
Preopening expenses | 7,459 |  |  | — |  |  | — |  |  | 7,459 |
Impairments and other operating items | 736 |  |  | — |  |  | — |  |  | 736 |
Other operating items, net | 3,977 |  |  | 68 |  |  | — |  |  | 4,045 |
Total costs and expenses | 1,959,686 |  |  | 141,998 |  |  | — |  |  | 2,101,684 |
Operating income from Borgata | 8,146 |  |  | — |  |  | (8,146 | ) |  | — |
Operating income | 189,359 |  |  | 16,291 |  |  | (8,146 | ) |  | 197,504 |
Other expense (income) |  |  |  |  |  |  |
Interest income | (5 | ) |  | — |  |  | — |  |  | (5 | )
Interest expense, net of amounts capitalized | 180,558 |  |  | 5,060 |  |  | — |  |  | 185,618 |
Other income | (9,520 | ) |  | — |  |  | — |  |  | (9,520 | )
Gain on early retirements of debt | (2,758 | ) |  | — |  |  | — |  |  | (2,758 | )
Gain on controlling interest in Borgata | (2,535 | ) |  | — |  |  | — |  |  | (2,535 | )
Other non-operating expenses from Borgata, net | 3,133 |  |  | — |  |  | (3,133 | ) |  | — |
Total other expense, net | 168,873 |  |  | 5,060 |  |  | (3,133 | ) |  | 170,800 |
Income (loss) before income taxes | 20,486 |  |  | 11,231 |  |  | (5,013 | ) |  | 26,704 |
Income taxes | (8,236 | ) |  | (1,206 | ) |  | — |  |  | (9,442 | )
Net income (loss) | 12,250 |  |  | 10,025 |  |  | (5,013 | ) |  | 17,262 |
Net income attributable to noncontrolling interests | (1,940 | ) |  | — |  |  | (5,012 | ) |  | (6,952 | )
Net income attributable to Boyd Gaming Corporation | $ | 10,310 |  |  | $ | 10,025 |  |  | $ | (10,025 | ) |  | $ | 10,310 |
The pro forma adjustments reflect the differences resulting from the conversion of the equity method of accounting to a fully consolidated presentation. Borgata Distributions Borgata's bank credit facility allows for certain limited distributions to be made to its joint venture partners. Excluding the $135.4 million one-time distribution we received from Borgata in connection with their debt refinancing, as discussed above, our distributions from Borgata were $20.8 million for the year ended December 31, 2010. Variable Interest LVE Energy Partners, LLC LVE is a joint venture between Marina Energy LLC and DCO ECH Energy, LLC. Through our wholly-owned subsidiary, Echelon Resorts, we had entered into an Energy Sales Agreement ("ESA") with LVE to design, build, own (other than the underlying real property which is leased from Echelon Resorts) and operate a central energy center and related distribution system for our planned Echelon resort development and to provide chilled and hot water, electricity and emergency electricity generation to Echelon and potentially other joint venture entities associated with the Echelon development project or other third parties. Current accounting guidance requires us to consolidate LVE for financial statement purposes, as we determined that we are the primary beneficiary of the executory contract, the ESA, giving rise to the variable interest. As discussed in Note 5, Assets Held for Development, and Note 24, Subsequent Events, on March 1, 2013, we entered into a definitive agreement to sell the Echelon site for $350 million in cash. In connection with this transaction, on March 4, 2013, we exercised an option to acquire the central energy center assets from LVE for $187.0 million and immediately sold these assets to the buyer of Echelon. The ESA agreement was terminated. As a result, we will cease consolidation of LVE as of March 4, 2013. The effects of the consolidation of LVE on our financial position as of December 31, 2012 and 2011, and its impact on our results of operations for the years ended December 31, 2012, 2011 and 2010 are reconciled by respective line items to amounts as reported in our consolidated balance sheets and consolidated statements of operations are presented below. The impact on our consolidated balance sheets as of December 31, 2012 and December 31, 2011 was as follows:
| December 31, 2012
|  |  |  |  |  |  | Boyd Gaming
| Boyd Gaming |  |  |  |  |  | Corporation
| Corporation |  | LVE, LLC |  | Eliminations |  | (as consolidated)
| (In thousands)
ASSETS |  |  |  |  |  |  |
Current assets | $ | 354,140 |  |  | $ | 1,453 |  |  | $ | — |  |  | $ | 355,593 |
Property and equipment, net | 3,624,988 |  |  | — |  |  | — |  |  | 3,624,988 |
Assets held for development | 168,251 |  |  | 163,519 |  |  | — |  |  | 331,770 |
Debt financing costs, net | 83,020 |  |  | 2,448 |  |  | — |  |  | 85,468 |
Restricted investments | — |  |  | 21,382 |  |  | — |  |  | 21,382 |
Other assets | 98,425 |  |  | — |  |  | — |  |  | 98,425 |
Intangible assets, net | 1,119,638 |  |  | — |  |  | — |  |  | 1,119,638 |
Goodwill, net | 694,929 |  |  | — |  |  | — |  |  | 694,929 |
Total Assets | $ | 6,143,391 |  |  | $ | 188,802 |  |  | $ | — |  |  | $ | 6,332,193 |
LIABILITIES |  |  |  |  |  |  |
Current maturities of long-term debt | $ | 61,570 |  |  | $ | — |  |  | $ | — |  |  | $ | 61,570 |
Accounts payable | 91,046 |  |  | 164 |  |  | — |  |  | 91,210 |
Accrued and other liabilities | 356,056 |  |  | 8,486 |  |  | — |  |  | 364,542 |
Income taxes payable | 8,129 |  |  | — |  |  | — |  |  | 8,129 |
Current non-recourse obligations of variable interest entity | — |  |  | 225,113 |  |  | — |  |  | 225,113 |
Long-term debt, net of current maturities | 4,827,853 |  |  | — |  |  | — |  |  | 4,827,853 |
Deferred income taxes | 139,943 |  |  | — |  |  | — |  |  | 139,943 |
Long-term tax and other liabilities | 146,706 |  |  | — |  |  | — |  |  | 146,706 |
STOCKHOLDERS' EQUITY |  |  |  |  |  |  |
Common stock | 869 |  |  | — |  |  | — |  |  | 869 |
Additional paid-in capital | 655,694 |  |  | — |  |  | — |  |  | 655,694 |
Retained earnings, including accumulated other comprehensive income (loss) | (352,772 | ) |  | — |  |  | — |  |  | (352,772 | )
Noncontrolling interest | 208,297 |  |  | (44,961 | ) |  | — |  |  | 163,336 |
Total Liabilities and Stockholders' Equity | $ | 6,143,391 |  |  | $ | 188,802 |  |  | $ | — |  |  | $ | 6,332,193 |
| December 31, 2011
|  |  |  |  |  |  | Boyd Gaming
| Boyd Gaming |  |  |  |  |  | Corporation
| Corporation |  | LVE, LLC |  | Eliminations |  | (as consolidated)
| (In thousands)
ASSETS |  |  |  |  |  |  |
Current assets | $ | 340,762 |  |  | $ | 2,132 |  |  | $ | — |  |  | $ | 342,894 |
Property and equipment, net | 3,542,108 |  |  | — |  |  | — |  |  | 3,542,108 |
Assets held for development | 926,013 |  |  | 163,806 |  |  | — |  |  | 1,089,819 |
Debt financing costs, net | 29,544 |  |  | 2,555 |  |  | — |  |  | 32,099 |
Restricted investments | — |  |  | 21,367 |  |  | — |  |  | 21,367 |
Other assets | 67,173 |  |  | — |  |  | — |  |  | 67,173 |
Intangible assets, net | 574,018 |  |  | — |  |  | — |  |  | 574,018 |
Goodwill, net | 213,576 |  |  | — |  |  | — |  |  | 213,576 |
Total Assets | $ | 5,693,194 |  |  | $ | 189,860 |  |  | $ | — |  |  | $ | 5,883,054 |
LIABILITIES |  |  |  |  |  |  |
Current maturities of long-term debt | $ | 43,230 |  |  | $ | — |  |  | $ | — |  |  | $ | 43,230 |
Accounts payable | 97,727 |  |  | 288 |  |  | — |  |  | 98,015 |
Accrued and other liabilities | 294,578 |  |  | 881 |  |  | — |  |  | 295,459 |
Income taxes payable | 5,630 |  |  | — |  |  | — |  |  | 5,630 |
Current non-recourse obligations of variable interest entity | — |  |  | 29,686 |  |  | — |  |  | 29,686 |
Long-term debt, net of current maturities | 3,347,226 |  |  | — |  |  | — |  |  | 3,347,226 |
Deferred income taxes | 379,958 |  |  | — |  |  | — |  |  | 379,958 |
Long-term tax and other liabilities | 101,747 |  |  | 15,044 |  |  | — |  |  | 116,791 |
Long-term non-recourse obligations of variable interest entity | — |  |  | 192,980 |  |  | — |  |  | 192,980 |
STOCKHOLDERS' EQUITY |  |  |  |  |  |  |
Common stock | 863 |  |  | — |  |  | — |  |  | 863 |
Additional paid-in capital | 644,174 |  |  | — |  |  | — |  |  | 644,174 |
Retained earnings | 557,055 |  |  | — |  |  | — |  |  | 557,055 |
Noncontrolling interest | 221,006 |  |  | (49,019 | ) |  | — |  |  | 171,987 |
Total Liabilities and Stockholders' Equity | $ | 5,693,194 |  |  | $ | 189,860 |  |  | $ | — |  |  | $ | 5,883,054 |
The summarized impact on our consolidated statement of operations for the years ended December 31, 2012, 2011 and 2010 was as follows:
| Year Ended December 31, 2012
|  |  |  |  |  |  | Boyd Gaming
| Boyd Gaming |  |  |  |  |  | Corporation
| Corporation |  | LVE, LLC |  | Eliminations |  | (as consolidated)
| (In thousands)
REVENUES |  |  |  |  |  |  |
Other revenue | $ | 145,460 |  |  | $ | 10,896 |  |  | $ | (10,896 | ) |  | $ | 145,460 |
COSTS AND EXPENSES |  |  |  |  |  |  |
Selling, general and administrative | $ | 452,872 |  |  | $ | 54 |  |  | $ | — |  |  | $ | 452,926 |
Preopening expenses | 22,437 |  |  | — |  |  | (10,896 | ) |  | 11,541 |
Operating income | $ | (865,717 | ) |  | $ | 10,842 |  |  | $ | — |  |  | $ | (854,875 | )
Other expense |  |  |  |  |  |  |
Interest expense, net of amounts capitalized | $ | 277,681 |  |  | $ | 12,323 |  |  | $ | — |  |  | $ | 290,004 |
Income (loss) before income taxes | $ | (1,142,366 | ) |  | $ | (1,481 | ) |  | $ | — |  |  | $ | (1,143,847 | )
Income taxes | 220,772 |  |  | — |  |  | — |  |  | 220,772 |
Net income (loss) | (921,594 | ) |  | (1,481 | ) |  | — |  |  | (923,075 | )
Net (income) loss attributable to noncontrolling interest | 12,729 |  |  | — |  |  | 1,481 |  |  | 14,210 |
Net income (loss) attributable to Boyd Gaming Corporation | $ | (908,865 | ) |  | $ | (1,481 | ) |  | $ | 1,481 |  |  | $ | (908,865 | )
| Year Ended December 31, 2011
|  |  |  |  |  |  | Boyd Gaming
| Boyd Gaming |  |  |  |  |  | Corporation
| Corporation |  | LVE, LLC |  | Eliminations |  | (as consolidated)
| (In thousands)
REVENUES |  |  |  |  |  |  |
Other revenue | $ | 135,176 |  |  | $ | 10,858 |  |  | $ | (10,858 | ) |  | $ | 135,176 |
COSTS AND EXPENSES |  |  |  |  |  |  |
Selling, general and administrative | $ | 394,991 |  |  | $ | — |  |  | $ | — |  |  | $ | 394,991 |
Maintenance and utilities | 153,512 |  |  | — |  |  | — |  |  | 153,512 |
Preopening expenses | 17,492 |  |  | — |  |  | (10,858 | ) |  | 6,634 |
Operating income | $ | 222,246 |  |  | $ | 10,858 |  |  | $ | — |  |  | $ | 233,104 |
Other expense |  |  |  |  |  |  |
Interest expense, net of amounts capitalized | $ | 233,978 |  |  | $ | 16,753 |  |  | $ | — |  |  | $ | 250,731 |
Income (loss) before income taxes | $ | (383 | ) |  | $ | (5,895 | ) |  | $ | — |  |  | $ | (6,278 | )
Income taxes | (1,721 | ) |  | — |  |  | — |  |  | (1,721 | )
Net loss | (2,104 | ) |  | (5,895 | ) |  | — |  |  | (7,999 | )
Net (income) loss attributable to noncontrolling interest | (1,750 | ) |  | — |  |  | 5,895 |  |  | 4,145 |
Net income (loss) attributable to Boyd Gaming Corporation | $ | (3,854 | ) |  | $ | (5,895 | ) |  | $ | 5,895 |  |  | $ | (3,854 | )
| Year Ended December 31, 2010
|  |  |  |  |  |  | Boyd Gaming
| Boyd Gaming |  |  |  |  |  | Corporation
| Corporation |  | LVE, LLC |  | Eliminations |  | (as consolidated)
| (In thousands)
REVENUES |  |  |  |  |  |  |
Other revenue | $ | 123,603 |  |  | $ | — |  |  | $ | — |  |  | $ | 123,603 |
COSTS AND EXPENSES |  |  |  |  |  |  |
Selling, general and administrative | $ | 369,217 |  |  | $ | — |  |  | $ | — |  |  | $ | 369,217 |
Maintenance and utilities | 140,722 |  |  | — |  |  | — |  |  | 140,722 |
Preopening expenses | 8,405 |  |  | — |  |  | (946 | ) |  | 7,459 |
Operating income | $ | 188,413 |  |  | $ | — |  |  | $ | 946 |  |  | $ | 189,359 |
Other expense |  |  |  |  |  |  |
Interest expenses, net of amounts capitalized | $ | 164,454 |  |  | $ | 16,104 |  |  | $ | — |  |  | $ | 180,558 |
Income (loss) before income taxes | $ | 35,644 |  |  | $ | (16,104 | ) |  | $ | 946 |  |  | $ | 20,486 |
Income taxes | (8,236 | ) |  | — |  |  | — |  |  | (8,236 | )
Net income (loss) | 27,408 |  |  | (16,104 | ) |  | 946 |  |  | 12,250 |
Net (income) loss attributable to noncontrolling interest | (17,098 | ) |  | — |  |  | 15,158 |  |  | (1,940 | )
Net income (loss) attributable to Boyd Gaming Corporation | $ | 10,310 |  |  | $ | (16,104 | ) |  | $ | 16,104 |  |  | $ | 10,310 |

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