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Dynamic quotes 
OFFON

BOYD GAMING CORPORATION

(BYD)
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BOYD GAMING CORP Management's Discussion and Analysis of Financial Condition and Results of Operations (form 10-Q)

10/28/2021 | 04:13pm EST

Executive Overview


Boyd Gaming Corporation (and together with its subsidiaries, the "Company,"
"Boyd," "Boyd Gaming," "we" or "us") was incorporated in the state of Nevada in
1988 and has been operating since 1975. The Company's common stock is traded on
the New York Stock Exchange under the symbol "BYD."



In mid-March 2020, all of our gaming facilities were closed in compliance with
orders issued by state officials as precautionary measures intended to slow the
spread of the COVID-19 virus. As of September 30, 2021, and as reflected in the
table below, 27 of our 28 gaming facilities are open and operating. One of our
properties in Las 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.



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We are a geographically diversified operator of 28 gaming entertainment
properties. Headquartered in Las Vegas, Nevada, we have 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 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 6/4/2020 Main Street Station Casino, Las Vegas, Nevada Brewery and Hotel

                                                     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 5/27/2020 Delta Downs Racetrack Casino & Vinton, Louisiana Hotel

                                                                 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 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.



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 also includes our online sportsbook and
gaming business, including those developed in partnership with FanDuel 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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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 ended September
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") in June 2021 offset by the issuance of the $900
million aggregate principal amount of 4.750% Senior Notes due 2031 ("4.750%
Notes due 2031") in June 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 ended September
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 in June 2021 and an increase in the income tax
provision of $151.4 million due to the Company's improved operational
performance.



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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
ended September 30, 2021 and 2020, respectively, and 81% and 82% for the nine
months ended September 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
ended September 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 ended
September 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 capacit y. 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 ended
September 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 ded September 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 ended
September 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 ended September 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 ended September 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 ended
September 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.



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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
ended September 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 ended
September 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 ended September 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
ended September 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 ended September 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 early September 2021.

Adjusted EBITDAR increased by $14.7 million and $29.9 million during the three
and nine months ended September 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.



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Midwest & South

Total revenues increased by $106.0 million during the three months
ended September 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 ended
September 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 ended September 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 ended September 30, 2021 and 2020,
respectively, and 10.9% and 16.9% during the nine months ended September 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 in October 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 ended
September 30, 2021 and 2020, respectively, and 3.1% and 4.9% during the nine
months ended September 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 ended September 30, 2021 and 2020,
respectively, and 3.8% and 5.7% during the nine months ended September 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 ended September 30, 2021 and 2020,
respectively, and 8.0% and 13.3% during the nine months ended September 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 ended September 30, 2021 and 2020, respectively,
and 3.5% and 3.8% during the nine months ended September 30, 2021 and 2020,
respectively.



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 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 ended September 30, 2021, the Company
incurred $8.5 million in write-off expenses related to certain projects.



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Impairment of Assets

We had no impairments of assets for the nine months ended September 30, 2021.
Impairment of assets for the nine months ended September 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 ended
September 30, 2021, $10.7 million of other operating items, net, related to
non-recurring employee bonus payments. During the nine months ended September
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 ended September 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
ended September 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 in June 2021; offset by (iii) the
issuance of the 4.750% Notes due 2031 in June 2021.



Interest expense, net of capitalized interest and interest income, for the nine
months ended September 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 ended September 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 in June 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 in June 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.



                                       28

--------------------------------------------------------------------------------

Table of Contents

LIQUIDITY AND CAPITAL RESOURCES

Financial Position


At September 30, 2021 and December 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 at September
30, 2021 and December 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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