BOYD GAMING CORPORATION Executive Overview
Boyd Gaming Corporation (and together with its subsidiaries, the "Company," "Boyd ," "Boyd Gaming ," "we" or "us") was incorporated in the state ofNevada in 1988 and has been operating since 1975. The Company's common stock is traded on theNew York Stock Exchange under the symbol "BYD." Inmid-March 2020 , all of our gaming facilities were closed in compliance with orders issued by state officials as precautionary measures intended to slow the spread of the COVID-19 virus. As ofSeptember 30, 2021 , and as reflected in the table below, 27 of our 28 gaming facilities are open and operating. One of our properties inLas Vegas remains closed to the public due to the current levels of the demand in the market. 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 open 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 is 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, its associated impacts on customer behavior and the requirements of health and safety protocols may further impact our business. The severity and duration of such potential business impacts cannot currently be estimated and the ultimate impact of the COVID-19 pandemic on our operations is unknown and will depend on future developments, which are highly uncertain and cannot be predicted with confidence, including the duration of the COVID-19 outbreak, potential resurgences or new variants of the virus, the logistics of distribution, level of participation and overall efficacy of vaccine programs, changes in consumer behavior and demand and the related impact on economic activity, and any additional preventative and protective actions that governments, or the Company, may direct, which may result in additional business disruptions, reduced customer traffic and reduced operations. Any resulting financial impact cannot be reasonably estimated at this time. 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. We currently anticipate funding our operations over the next 12 months with the cash generated from our operations, supplemented, as necessary, by the cash we currently have available and the borrowing capacity available under our Revolving Credit Facility. 22
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Table of Contents
We are a geographically diversified operator of 28 gaming entertainment properties. Headquartered inLas Vegas, Nevada , we have gaming operations inNevada ,Illinois ,Indiana ,Iowa ,Kansas ,Louisiana ,Mississippi ,Missouri ,Ohio andPennsylvania . We view each operating property as an operating segment. For financial reporting purposes, we aggregate our 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 Casino 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 and Casino Las Vegas, Nevada
3/18/2020 9/8/2021
Midwest & South
Par-A-Dice Hotel 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 Dubuque 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 5/20/2020
Evangeline Downs Racetrack and Opelousas, Louisiana
Casino 3/17/2020 5/20/2020
Sam's Town Hotel and Casino 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, Mississippi 3/17/2020 5/21/2020
Ameristar Casino Hotel Kansas City Kansas City, Missouri 3/17/2020 6/1/2020
Ameristar Casino Report Spa St. St. Charles, Missouri
Charles 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
**
We also own and operate a travel agency and a captive insurance company that underwrites travel-related insurance, each located inHawaii . Financial results for these operations are included in ourDowntown Las Vegas segment. Results forLattner Entertainment Group Illinois, LLC ("Lattner"), ourIllinois distributed gaming operator, are included in our Midwest & South segment. Lattner's operations were suspended onMarch 16, 2020 , resumed onJuly 1, 2020 , temporarily closed onNovember 20, 2020 and subsequently re-opened onJanuary 16, 2021 . The Midwest & South segment also includes our online sportsbook and gaming business, including those developed in partnership withFanDuel Group . 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, pay income taxes, and to repurchase our equity securities and pay dividends to return capital to our shareholders. Our Strategy
Our strategy is to increase shareholder 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 cash flow to reduce our debt.
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Table of Contents 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 transactions and acquisitions are strategic, deliberate, and disciplined. Our goal is to identify and pursue opportunities that are a good fit for our business, deliver a solid return for shareholders, and are available at the right price.
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.
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
Three Months Ended Nine Months Ended
September 30, September 30,
(In millions) 2021 2020 2021 2020
Total revenues $ 843.1 $ 652.2 $ 2,490.0 $ 1,542.6
Operating income (loss) 223.1 127.1 683.2 (97.0 )
Net income (loss) 138.2 38.1 354.1 (218.0 )
Total Revenues
Total revenues increased $190.8 million and $947.3 million during the three and
nine months ended September 30, 2021 , respectively, as compared to the prior
year comparable periods, due primarily to the impact of 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 (Loss)
Operating income (loss) increased $96.1 million for the three months
ended September 30, 2021 , compared to the prior year comparable period,
primarily due to the impact of the Property Closures on the financial results
for the prior year period. Operating income (loss) increased $780.3 million for
the nine months ended September 30, 2021 , compared to the prior year comparable
period, primarily due to the impact of the Property Closures on our financial
results, including a $171.1 million intangible asset impairment charge in first
quarter 2020. These results reflect the impact of the strategic shift in our
operating model following property re-openings.
Net Income (Loss)
Net income (loss) increased$100.1 million for the three months endedSeptember 30, 2021 , compared to the prior year comparable period. The increase is attributable to the operating income increase of$96.1 million , as discussed above. In addition, income before income taxes increased due to a$17.2 million decrease in interest expense as a result of a$1.1 billion decline in the weighted average debt balance. This reduction is due to the retirements of the$750 million aggregate principal amount of 6.375% Senior Notes due 2026 ("6.375% Notes") and the$700 million aggregate principal amount of 6.000% Senior Notes due 2026 ("6.000% Notes") inJune 2021 offset by the issuance of the$900 million aggregate principal amount of 4.750% Senior Notes due 2031 ("4.750% Notes due 2031") inJune 2021 . These increases are offset by a reduction in other income of$5.1 million and an increase in the income tax provision of$8.5 million due to the Company's improved operational performance. Net income (loss) increased$572.1 million for the nine months endedSeptember 30, 2021 , compared to the prior year comparable period. The increase is attributable to the operating income increase of$780.3 million , as discussed above. This increase is offset by a$64.5 million increase in loss on early extinguishments and modifications of debt due to the retirements of the 6.375% Notes and the 6.000% Notes inJune 2021 and an increase in the income tax provision of$151.4 million due to the Company's improved operational performance. 24
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Table of Contents Operating Revenues We derive the majority of our revenues from our gaming operations, which produced approximately 80% and 87% of revenues for the three months endedSeptember 30, 2021 and 2020, respectively, and 81% and 82% for the nine months endedSeptember 30, 2021 and 2020, respectively. Food & beverage revenues, room revenues and other revenues separately contributed less than 10% of revenues during these periods. The shift in percentage contributions of revenues from the non-gaming departments to gaming in these periods versus our historical averages reflects the impact of operating restrictions as properties re-opened following the Property Closures, which limited our offerings of non-gaming amenities, compounded by the strategic shift in our operating model as properties re-opened, which focused on maximizing gaming revenues. Three Months Ended Nine Months Ended September 30, September 30, (In millions) 2021 2020 2021 2020 REVENUES Gaming$ 674.2 $ 566.0 $ 2,019.6 $ 1,260.8 Food & beverage 61.1 38.8 162.6 139.3 Room 44.3 26.9 109.4 80.6 Other 63.5 20.5 198.4 61.9 Total revenues$ 843.1 $ 652.2 $ 2,490.0 $ 1,542.6 COSTS AND EXPENSES Gaming$ 249.7 $ 215.0 $ 741.2 $ 530.4 Food & beverage 50.7 38.7 136.4 145.3 Room 15.1 12.9 41.4 41.0 Other 41.6 5.8 128.0 29.4 Total costs and expenses$ 357.1 $ 272.4 $ 1,047.0 $ 746.1 MARGINS Gaming 63.0 % 62.0 % 63.3 % 57.9 % Food & beverage 17.0 % 0.3 % 16.1 % -4.3 % Room 65.9 % 52.0 % 62.2 % 49.1 % Other 34.5 % 71.7 % 35.5 % 52.5 % 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 increase in gaming revenues of$108.3 million and$758.8 million during the three and nine months endedSeptember 30, 2021 , respectively, as compared to the corresponding period of the prior year, was due primarily to the impact of the Property Closures on the prior year period. 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$22.3 million during the three months endedSeptember 30, 2021 , compared to the prior year comparable period , primarily due to the impact of the Property Closures. In the prior year, food & beverage venues were re-opened however still had restrictions on capacity. Overall food & beverage margins increased from the prior year comparable period, as we effectively maximized the contributions realized from these outlets as reflected by an increase in average check of 7.4% while cost per cover decreased 13.0% due to our focus on costs under our revised operating model. Food & beverage revenues increased$23.3 million during the nine months endedSeptember 30, 2021 , compared to the prior year period. Due to the Property Closures i n the prior year, food & beverage venues were open for six and a half months on average during the nine months en dedSeptember 30, 2020 . For those food & beverage venues that re-opened, there are still capacity restrictions that have impacted the financial performance for the nine months endedSeptember 30, 2021 as covers remained flat period over period. Overall food & beverage margins increased from the prior year comparable period, as we effectively maximized the contributions realized from these outlets as reflected by an increase in average check of 11.2% while cost per cover decreased 13.8%.
Room
Room revenues increased$17.4 million during the three months endedSeptember 30, 2021 , as compared to the prior year comparable period, primarily due to the lifting of operating restrictions and increased visitation from the prior year comparable period. Overall room margins increased to 65.9% from 52.0% in the prior year comparable period, due primarily to a decrease in cost per room of 15.2% reflecting the impact of the new operating model, along with an increase in average daily rate of 18.2%. Room revenues increased$28.8 million during the nine months endedSeptember 30, 2021 , as compared to the corresponding period of the prior year, due primarily to the lifting of operating restrictions and increased visitation from the prior year comparable period. Overall room margins increased to 62.2% from 49.1% in the prior year comparable period, due primarily to a decrease in cost per room of 17.9% reflecting the impact of the new operating model, along with an increase in average daily rate of 10.6%.
Other
Other revenues relate to our online gaming initiatives and patronage visits at the amenities at our properties, including entertainment and nightclub revenues, retail sales, theater tickets and other venues. Other revenues increased$42.8 million and$136.4 million during the three and nine months endedSeptember 30, 2021 , respectively, as compared to the corresponding period of the prior year, due primarily 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 period-over-period increases in other expenses reflect primarily the gaming taxes paid on behalf of our online partners. 25
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Table of Contents
Revenues and Adjusted EBITDAR by Reportable Segment
We determine each of our property's 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 . 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, 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 accounting
principles generally accepted in the United States of America ("GAAP"), provides
our investors a more complete understanding of our operating results before the
impact of investing and financing transactions and income taxes and facilitates
comparisons between us and our competitors. Management has historically adjusted
EBITDAR when evaluating operating performance because we believe that
the 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:
Three Months Ended Nine Months Ended
September 30, September 30,
(In millions) 2021 2020 2021 2020
Total revenues
Las Vegas Locals $ 231.3 $ 171.1 $ 649.8 $ 400.5
Downtown Las Vegas 42.1 17.5 102.4 76.3
Midwest & South 569.7 463.6 1,737.8 1,065.8
Total revenues $ 843.1 $ 652.2 $ 2,490.0 $ 1,542.6
Adjusted EBITDAR (1)
Las Vegas Locals $ 125.4 $ 78.9 $ 349.6 $ 128.5
Downtown Las Vegas 13.2 (1.5 ) 31.1 1.2
Midwest & South 222.1 182.5 700.2 321.0
Corporate expense (20.0 ) (21.0 ) (62.2 ) (51.3 )
Adjusted EBITDAR $ 340.7 $ 238.9 $ 1,018.7 $ 399.4 (1) Refer to Note 9, Segment Information, in the notes to the condensed consolidated financial statements (unaudited) for a reconciliation of Adjusted EBITDAR to operating income, as reported in accordance with GAAP in our accompanying condensed consolidated statements of operations.
Las Vegas Locals
Total revenues increased by$60.2 million during the three months endedSeptember 30, 2021 , as compared to the corresponding period of the prior year, reflecting revenue increases in all departmental categories. Gaming revenues increased$38.3 million primarily due to an increase in slot handle of 23.3% from the prior year comparable period. Room revenues increased$9.3 million due to an increase in average daily rate of 37.9% from the prior year comparable period. Food & beverage revenues increased$7.9 million due to an increase in average check of 13.6% from the prior year comparable period. Other revenues increased$4.7 million as entertainment venues began to re-open. Total revenues increased by$249.3 million during the nine months endedSeptember 30, 2021 , as compared to the corresponding period of the prior year, reflecting revenue increases in all departmental categories, primarily due to the Property Closures in 2020. Gaming revenue was the driving factor, increasing by$217.9 million primarily due to a 60.0% increase in slot handle from the prior year comparable period. Room revenues increased$14.1 million due to an increase in average daily rate of 11.1% from the prior year comparable period. Other revenues increased$11.4 million as entertainment venues began to re-open. Food & beverage revenues increased$5.9 million due to an increase in average check of 14.5% from the prior year comparable period. Adjusted EBITDAR increased by$46.5 million and$221.1 million during the three and nine months endedSeptember 30, 2021 , respectively, as compared to the corresponding period of the prior year, due primarily to a strategic shift in the Company's operating model when operations resumed following the Property Closures.Downtown Las Vegas Total revenues increased by$24.6 million during the three months endedSeptember 30, 2021 , as compared to the corresponding period of the prior year, reflecting revenue increases in all departmental categories. Total revenues increased by$26.0 million during the nine months endedSeptember 30, 2021 , as compared to the corresponding period of the prior year, reflecting revenue increases in all departmental categories, except other revenues. Given that our Downtown properties cater to the Hawaiian market, an increase in Hawaiian visitation occurred in the third quarter driving the overall departmental revenue increases along with one of our downtown properties re-opening in earlySeptember 2021 . Adjusted EBITDAR increased by$14.7 million and$29.9 million during the three and nine months endedSeptember 30, 2021 , respectively, as compared to the corresponding periods of the prior year, due primarily to a strategic shift in the Company's operating model when operations resumed following the Property Closures. 26
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Table of Contents Midwest & South Total revenues increased by$106.0 million during the three months endedSeptember 30, 2021 , as compared to the corresponding period of the prior year, reflecting revenue increases in all departmental categories. Gaming revenues increased$54.5 million primarily due to an increase in slot handle of 16.9% from the prior year comparable period. Other revenues increased$36.0 million as a result of our online gaming initiatives. Food & beverage revenues increased$10.1 million due to an increase in average check of 1.1% along with an increase in covers of 34.0% from the prior year comparable period. Room revenues increased$5.5 million due to an increase in average daily rate of 12.4% from the prior year comparable period. Total revenues increased by$672.1 million during the nine months endedSeptember 30, 2021 , as compared to the corresponding period of the prior year, reflecting revenue increases in all departmental categories. Gaming revenue was the driving factor, increasing by$516.4 million , followed by an increase in other revenue of$127.0 million , food & beverage revenue of$15.3 million and room revenue of$13.3 million , from the prior year comparable period. The increase in these departmental categories is primarily due to the Property Closures in first and second quarter 2020. In addition, increases in other revenue are attributable to our online gaming initiatives. Adjusted EBITDAR increased by$39.6 million and$379.2 million during the three and nine months endedSeptember 30, 2021 , respectively, as compared to the corresponding periods of the prior year, due primarily 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 costs and expenses, as presented in our condensed consolidated statements of operations, are further discussed below:
Three Months Ended Nine Months Ended
September 30, September 30,
(In millions) 2021 2020 2021 2020
Selling, general and administrative $ 91.2 $ 87.0 $ 271.6 $ 260.7
Master lease rent expense 26.3 25.9 78.4 76.0
Maintenance and utilities 35.9 33.8 95.3 88.6
Depreciation and amortization 67.6 69.3 199.3 205.5
Corporate expense 28.3 19.6 86.3 58.5
Project development, preopening and
writedowns 10.6 2.2 13.5 9.6
Impairment of assets - - - 171.1
Other operating items, net 3.0 14.9 15.3 23.6
Selling, General and Administrative
Selling, general and administrative expenses, as a percentage of revenues, were 10.8% and 13.3% during the three months endedSeptember 30, 2021 and 2020, respectively, and 10.9% and 16.9% during the nine months endedSeptember 30, 2021 and 2020, respectively. In the prior year, selling, general and administrative expenses, as a percentage of revenues were higher due to the significant reduction in revenue 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 that we acquired inOctober 2018 which are subject to two master lease agreements with a real estate investment trust. Master lease rent expense, as a percentage of revenues, was 3.1% and 4.0% during the three months endedSeptember 30, 2021 and 2020, respectively, and 3.1% and 4.9% during the nine months endedSeptember 30, 2021 and 2020, respectively. In the prior year, master lease rent expense, as a percentage of revenues was higher 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 revenues, were 4.3% and 5.2% during the three months endedSeptember 30, 2021 and 2020, respectively, and 3.8% and 5.7% during the nine months endedSeptember 30, 2021 and 2020, respectively. In the prior year, maintenance and utilities expenses, as a percentage of revenues, were higher due to the significant reduction in revenue as a result of the Property Closures.
Depreciation and Amortization
Depreciation and amortization expenses, as a percentage of revenues, were 8.0% and 10.6% during the three months endedSeptember 30, 2021 and 2020, respectively, and 8.0% and 13.3% during the nine months endedSeptember 30, 2021 and 2020, respectively. The decline from prior year comparable period is primarily driven by a$5.0 million decrease in intangible asset amortization as our customer relationships are amortized using an accelerated method. The dollar amount of depreciation expense remained consistent period over period therefore the remaining percentage decrease is attributable to revenue growth.
Corporate Expense
Corporate expense represents unallocated payroll, professional fees, rent and various other administrative expenses that are not directly related to our property operations, in addition to the corporate portion of share-based compensation expense. Corporate expense represented 3.4% and 3.0% of revenues during the three months endedSeptember 30, 2021 and 2020, respectively, and 3.5% and 3.8% during the nine months endedSeptember 30, 2021 and 2020, respectively.
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 in our ongoing efforts to develop gaming activities in new jurisdictions and expenses related to other new business development activities that do not qualify as capital costs; and (iii) asset write-downs. Such costs are generally nonrecurring in nature and vary from period to period as the volume of underlying activities fluctuate. During the three months endedSeptember 30, 2021 , the Company incurred$8.5 million in write-off expenses related to certain projects. 27
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Table of Contents Impairment of Assets We had no impairments of assets for the nine months endedSeptember 30, 2021 . Impairment of assets for the nine months endedSeptember 30, 2020 , include non-cash impairment charges of$8.0 million for trademarks and$22.6 million for goodwill in our Las Vegas Locals segment and non-cash impairment charges of$8.9 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 associated with the Property Closures, including severance payments to separated employees, natural disasters and severe weather, including hurricane and flood expenses, and subsequent recoveries of such costs, as applicable. During the nine months endedSeptember 30, 2021 ,$10.7 million of other operating items, net, related to non-recurring employee bonus payments. During the nine months endedSeptember 30, 2020 ,$22.0 million of other operating items, net, related to incremental, non-recurring costs associated with the Property Closures. Other Expenses Interest Expense, net The following table summarizes information with respect to our interest expense on outstanding indebtedness: Three Months Ended Nine Months Ended September 30, September 30, (In millions) 2021 2020 2021 2020 Interest Expense, net$ 44.7 $ 61.9 $ 156.8 $ 172.0 Average Long-Term Debt Balance (1) 3,378.5 4,436.0 3,704.0
4,332.0
Weighted Average Interest Rates 4.8 % 5.0 % 5.2
% 4.8 %
(1) Average debt balance calculation does not include the related discounts or deferred finance charges.
Interest expense, net of capitalized interest and interest income, for the three months endedSeptember 30, 2021 , decreased$17.2 million , or 27.8%, from the prior year comparable period. The decline is attributable to a decrease in the average long-term debt balance of$1.1 billion along with a decline in the weighted average interest rate percentage point of 0.2 for the three months endedSeptember 30, 2021 . The decline in the average long-term debt balance is primarily attributable to 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 inJune 2021 ; offset by (iii) the issuance of the 4.750% Notes due 2031 inJune 2021 . Interest expense, net of capitalized interest and interest income, for the nine months endedSeptember 30, 2021 , decreased$15.2 million , or 8.8%, as compared to the prior year comparable period. The decrease is attributable to a decrease in the average long-term debt balance of$628.0 million offset by an increase in the weighted average interest rate percentage point of 0.4 for the nine months endedSeptember 30, 2021 . The decline in the average long-term debt balance is primarily attributable to 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 inJune 2021 ; (iii) repayment of$98.7 million on the Term A Loan, (iv) the extinguishment of$57.7 million of other debt; offset by (v) the issuance of the 4.750% Notes due 2031 inJune 2021 .
Loss on Early Extinguishments and Modifications of Debt
The components of the loss on early extinguishments and modifications of debt,
are as follows:
Three Months Ended Nine Months Ended
September 30, September 30,
(In millions) 2021 2020 2021 2020
6.375% Senior Notes premium and consent
fees $ - $ - $ 23.9 $ -
6.375% Senior Notes deferred finance
charges - - 6.4 -
6.000% Senior Notes premium and consent
fees - - 28.0 -
6.000% Senior Notes deferred finance
charges - - 7.2 -
Boyd Gaming Credit Facility deferred
financing charges - 0.4 - 1.0
Total loss on early extinguishments and
modifications of debt $ - $ 0.4 $ 65.5 $ 1.0
Income Taxes
The effective tax rates during the nine months ended September 30, 2021 and
2020 were 22.8% and 17.7%, respectively. Our tax rates for the nine months ended
September 30, 2021 and 2020 were unfavorably impacted by state taxes and certain
nondeductible expenses which were partially offset by the inclusion of excess
tax benefits, related to equity compensation, as a component of the provision
for income taxes. Additionally, the effective tax rate for the nine months ended
September 30, 2020 was favorably impacted by the settlement of a state audit
offset by the creation of a valuation allowance applied to certain state
deferred tax assets, including state net operating loss carryforwards.
As a result of and response to the COVID-19 pandemic, the U.S. government
enacted Coronavirus Aid, Relief, and Economic Security Act ("CARES Act") and it
was signed into law on March 27, 2020 . Included in the CARES Act are provisions
relating to payroll tax credits and deferrals, net operating loss carryback
periods, interest expense deductions, alternative minimum tax credits and
technical corrections to tax depreciation methods for qualified improvement
property. Our financial results for the nine months ended September 30, 2021 and
2020, include the payroll tax credits we received under the CARES Act, partially
offsetting the expenses incurred during these periods for compensation and
benefits provided to qualifying employees.
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Table of Contents
LIQUIDITY AND CAPITAL RESOURCES
Financial Position
AtSeptember 30, 2021 andDecember 31, 2020 , we had balances of cash and cash equivalents of$570.9 million and$519.2 million , respectively. In addition, we held restricted cash balances of$17.4 million and$15.8 million atSeptember 30, 2021 andDecember 31, 2020 , respectively. 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 the bank credit facility.
The Company may 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.
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