WebFilings | EDGAR view
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
____________________________________________________
FORM 10-Q
 ____________________________________________________
(Mark One)
x
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended September 30, 2010
OR
o
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from              to              
Commission file number: 1-12882
____________________________________________________
BOYD GAMING CORPORATION
(Exact name of registrant as specified in its charter)
 ____________________________________________________
Nevada
 
88-0242733
(State or other jurisdiction of
incorporation or organization)
 
(I.R.S. Employer
Identification No.)
3883 Howard Hughes Parkway, Ninth Floor, Las Vegas, NV 89169
(Address of principal executive offices) (Zip Code)
(702) 792-7200
(Registrant’s telephone number, including area code)
 ____________________________________________________
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.    Yes  x    No  o
Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).    Yes  o    No  o
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.
 
Large accelerated filer
 
o
  
Accelerated filer
 
x
 
 
 
 
 
 
 
Non-accelerated filer
 
o (Do not check if a smaller reporting company)
  
Smaller reporting company
 
o
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).    Yes  o    No  x
Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date.
 
 
Class
  
Outstanding as of October 25, 2010
 
 
Common stock, $0.01 par value
  
 86,234,141 shares
 
Table of Contents 

BOYD GAMING CORPORATION
QUARTERLY REPORT ON FORM 10-Q
FOR THE PERIOD ENDED SEPTEMBER 30, 2010
TABLE OF CONTENTS
 
 
 
Page
No.
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Table of Contents 

PART I. Financial Information
 
Item 1.     Financial Statements
The accompanying unaudited condensed consolidated financial statements of Boyd Gaming Corporation and its subsidiaries have been prepared in accordance with the instructions to Form 10-Q and Article 10 of Regulation S-X and, therefore, do not include all information and footnote disclosures necessary for complete financial statements prepared in conformity with accounting principles generally accepted in the United States (“GAAP”).
The results for the interim periods indicated are unaudited, but reflect all adjustments (consisting of normal recurring adjustments) that management considers necessary for a fair presentation of financial position, results of operations and cash flows. Results of operations and cash flows for interim periods are not necessarily indicative of the results that would be achieved during a full year of operations or in future periods.
These unaudited condensed consolidated financial statements should be read in conjunction with the audited consolidated financial statements and notes thereto included in our Annual Report on Form 10-K for the year ended December 31, 2009 and our unaudited condensed consolidated financial statements and notes thereto included in our subsequent Quarterly Reports on Form 10-Q. The condensed consolidated balance sheet as of December 31, 2009, as presented herein, has been derived from our audited financial statements presented in our Annual Report on Form 10-K.
 

3
Table of Contents 

BOYD GAMING CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(Unaudited and in thousands, except share and per share data)
 
 
September 30,
2010
 
December 31,
2009
ASSETS
 
 
 
Current assets
 
 
 
Cash and cash equivalents
$
92,675
 
 
$
93,202
 
Restricted cash
20,902
 
 
16,168
 
Accounts receivable, net
44,416
 
 
18,584
 
Inventories
15,071
 
 
11,392
 
Prepaid expenses and other current assets
41,506
 
 
24,818
 
Income taxes receivable
5,246
 
 
20,807
 
Deferred income taxes
9,807
 
 
7,766
 
Total current assets
229,623
 
 
192,737
 
Property and equipment, net
3,503,414
 
 
2,233,563
 
Assets held for development
924,460
 
 
925,614
 
Investments in and advances to unconsolidated subsidiaries, net
4,848
 
 
394,220
 
Other assets, net
112,150
 
 
78,121
 
Intangible assets, net
422,126
 
 
422,126
 
Goodwill, net
213,576
 
 
213,576
 
Total assets
$
5,410,197
 
 
$
4,459,957
 
LIABILITIES AND STOCKHOLDERS’ EQUITY
 
 
 
Current liabilities
 
 
 
Current maturities of long-term debt
$
680
 
 
$
652
 
Accounts payable
52,408
 
 
39,127
 
Construction payables
3,872
 
 
34,128
 
Note payable
—
 
 
46,875
 
Accrued liabilities
269,464
 
 
174,577
 
Total current liabilities
326,424
 
 
295,359
 
Long-term debt, net of current maturities
3,175,058
 
 
2,576,911
 
Deferred income taxes
368,462
 
 
335,159
 
Other long-term tax liabilities
44,467
 
 
32,703
 
Other liabilities
70,362
 
 
63,456
 
Commitments and contingencies (Note 7)
 
 
 
Stockholders’ equity
 
 
 
Preferred stock, $0.01 par value, 5,000,000 shares authorized
—
 
 
—
 
Common stock, $0.01 par value, 200,000,000 shares authorized; 86,230,640 and 86,130,454 shares outstanding
862
 
 
861
 
Additional paid-in capital
631,759
 
 
623,035
 
Retained earnings
568,007
 
 
550,599
 
Accumulated other comprehensive loss, net
(11,284
)
 
(18,126
)
Total Boyd Gaming Corporation stockholders’ equity
1,189,344
 
 
1,156,369
 
Noncontrolling interest
236,080
 
 
—
 
Total stockholders’ equity
1,425,424
 
 
1,156,369
 
Total liabilities and stockholders’ equity
$
5,410,197
 
 
$
4,459,957
 
The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.

4
Table of Contents 

BOYD GAMING CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited and in thousands, except per share data)
 
 
Three Months Ended September 30,
 
Nine Months Ended September 30,
 
2010
 
2009
 
2010
 
2009
REVENUES
 
 
 
 
 
 
 
Operating revenues:
 
 
 
 
 
 
 
Gaming
$
503,746
 
 
$
332,054
 
 
$
1,344,283
 
 
$
1,051,714
 
Food and beverage
101,164
 
 
55,695
 
 
255,166
 
 
173,424
 
Room
64,142
 
 
30,062
 
 
154,247
 
 
93,251
 
Other
33,960
 
 
24,722
 
 
91,595
 
 
76,143
 
Gross revenues
703,012
 
 
442,533
 
 
1,845,291
 
 
1,394,532
 
Less promotional allowances
107,634
 
 
44,290
 
 
256,332
 
 
138,494
 
Net revenues
595,378
 
 
398,243
 
 
1,588,959
 
 
1,256,038
 
COST AND EXPENSES
 
 
 
 
 
 
 
Operating costs and expenses:
 
 
 
 
 
 
 
Gaming
237,601
 
 
161,690
 
 
635,461
 
 
502,029
 
Food and beverage
50,690
 
 
31,026
 
 
132,481
 
 
94,524
 
Room
13,661
 
 
10,186
 
 
36,767
 
 
30,212
 
Other
28,089
 
 
19,863
 
 
74,333
 
 
58,730
 
Selling, general and administrative
100,697
 
 
70,901
 
 
270,641
 
 
217,492
 
Maintenance and utilities
42,661
 
 
24,753
 
 
104,770
 
 
70,111
 
Depreciation and amortization
52,451
 
 
40,578
 
 
147,905
 
 
125,324
 
Corporate expense
11,021
 
 
11,356
 
 
36,636
 
 
35,077
 
Preopening expenses
2,684
 
 
4,880
 
 
4,990
 
 
14,773
 
Write-downs and other charges, net
1,340
 
 
14,287
 
 
4,932
 
 
41,415
 
Total operating costs and expenses
540,895
 
 
389,520
 
 
1,448,916
 
 
1,189,687
 
Operating income from Borgata
—
 
 
38,189
 
 
8,146
 
 
63,921
 
Operating income
54,483
 
 
46,912
 
 
148,189
 
 
130,272
 
Other expense (income):
 
 
 
 
 
 
 
Interest income
—
 
 
(1
)
 
(4
)
 
(5
)
Interest expense, net of amounts capitalized
45,781
 
 
32,300
 
 
109,438
 
 
113,806
 
Gain on early retirements of debt
—
 
 
(3,604
)
 
(3,949
)
 
(12,061
)
Gain on equity distribution
(2,535
)
 
—
 
 
(2,535
)
 
—
 
Other income
(10,000
)
 
—
 
 
(10,000
)
 
—
 
Other non-operating expenses
—
 
 
30
 
 
—
 
 
30
 
Other non-operating expenses from Borgata, net
—
 
 
7,204
 
 
3,133
 
 
16,230
 
Total other expense, net
33,246
 
 
35,929
 
 
96,083
 
 
118,000
 
Income before income taxes
21,237
 
 
10,983
 
 
52,106
 
 
12,272
 
Income taxes
(6,371
)
 
(4,668
)
 
(15,532
)
 
(7,007
)
Net income
14,866
 
 
6,315
 
 
36,574
 
 
5,265
 
Net income attributable to noncontrolling interest
(9,275
)
 
—
 
 
(19,166
)
 
—
 
Net income attributable to Boyd Gaming Corporation
$
5,591
 
 
$
6,315
 
 
$
17,408
 
 
$
5,265
 
Basic net income per common share:
$
0.06
 
 
$
0.07
 
 
$
0.20
 
 
$
0.06
 
Weighted average basic shares outstanding
86,582
 
 
86,264
 
 
86,508
 
 
86,481
 
Diluted net income per common share:
$
0.06
 
 
$
0.07
 
 
$
0.20
 
 
$
0.06
 
Weighted average diluted shares outstanding
86,684
 
 
86,436
 
 
86,724
 
 
86,550
 
The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.

5
Table of Contents 

BOYD GAMING CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN STOCKHOLDERS’ EQUITY
Nine Months Ended September 30, 2010
(Unaudited and in thousands, except share data)
 
 
Boyd Gaming Corporation Stockholders’ Equity
 
 
 
 
 
 
 
 
 
 
 
 
 
Accumulated
 
 
 
 
 
 
 
 
 
Additional
 
 
 
Other
 
 
 
Total
 
Common Stock
 
Paid-in
 
Retained
 
Comprehensive
 
Noncontrolling
 
Stockholders'
 
Shares
 
Amount
 
Capital
 
Earnings
 
Loss, Net
 
Interest
 
Equity
Balances, January 1, 2010
86,130,454
 
 
$
861
 
 
$
623,035
 
 
$
550,599
 
 
$
(18,126
)
 
$
—
 
 
$
1,156,369
 
Net income attributable to Boyd
 
 
 
 
 
 
 
 
 
 
 
 
 
Gaming Corporation
—
 
 
—
 
 
—
 
 
17,408
 
 
—
 
 
—
 
 
17,408
 
Derivative instruments fair value
 
 
 
 
 
 
 
 
 
 
 
 
 
   adjustment, net of taxes of $3,756
—
 
 
—
 
 
—
 
 
—
 
 
6,842
 
 
—
 
 
6,842
 
Stock options exercised
100,186
 
 
1
 
 
622
 
 
—
 
 
—
 
 
—
 
 
623
 
Tax effect from share-based
 
 
 
 
 
 
 
 
 
 
 
 
 
compensation arrangements
—
 
 
—
 
 
(22
)
 
—
 
 
—
 
 
—
 
 
(22
)
Share-based compensation costs
—
 
 
—
 
 
8,124
 
 
—
 
 
—
 
 
—
 
 
8,124
 
Noncontrolling interest in Borgata
—
 
 
—
 
 
—
 
 
—
 
 
—
 
 
236,080
 
 
236,080
 
Balances, September 30, 2010
86,230,640
 
 
$
862
 
 
$
631,759
 
 
$
568,007
 
 
$
(11,284
)
 
$
236,080
 
 
$
1,425,424
 
The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.
 

6
Table of Contents 

BOYD GAMING CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited and in thousands)
 
 
Nine Months Ended September 30,
 
2010
 
2009
Cash Flows from Operating Activities
 
 
 
Net income
$
36,574
 
 
$
5,265
 
Adjustments to reconcile net income to net cash provided by operating activities:
 
 
 
Depreciation and amortization
147,905
 
 
125,324
 
Amortization of debt issuance costs
6,149
 
 
3,300
 
Amortization of discounts on senior secured notes
484
 
 
—
 
Share-based compensation expense
8,124
 
 
11,349
 
Deferred income taxes
14,814
 
 
3,403
 
Operating and non-operating income from Borgata
(5,013
)
 
(47,691
)
Distributions of earnings received from Borgata
1,910
 
 
15,777
 
Gain on equity distribution
(2,535
)
 
—
 
Noncash asset write-downs
—
 
 
42,341
 
Gain on early retirements of debt
(3,949
)
 
(12,061
)
Other operating activities
1,983
 
 
(3,969
)
Changes in operating assets and liabilities:
 
 
 
Restricted cash
(4,734
)
 
(6,767
)
Accounts receivable, net
1,382
 
 
2,689
 
Inventories
439
 
 
1,715
 
Prepaid expenses and other current assets
(7,250
)
 
1,708
 
Income taxes receivable
9,961
 
 
3,434
 
Other assets, net
236
 
 
4,250
 
Accounts payable and accrued liabilities
30,697
 
 
2,167
 
Other long-term tax liabilities
1,519
 
 
3,235
 
Other liabilities
2,265
 
 
3,628
 
Net cash provided by operating activities
240,961
 
 
159,097
 
Cash Flows from Investing Activities
 
 
 
Capital expenditures
(64,069
)
 
(143,938
)
Net cash effect upon change in controlling interest of Borgata
26,025
 
 
—
 
Investments in and advances to unconsolidated subsidiaries, net
(1,021
)
 
(126
)
Net additional cash paid for Dania Jai-Alai
—
 
 
(9,375
)
Other investing activities
290
 
 
1,842
 
Net cash used in investing activities
(38,775
)
 
(151,597
)
Cash Flows from Financing Activities
 
 
 
Payments on retirements of long-term debt
(28,861
)
 
(61,941
)
Borrowings under bank credit facility
525,700
 
 
507,635
 
Payments under bank credit facility
(714,800
)
 
(435,250
)
Borrowings under Borgata bank credit facility
369,773
 
 
—
 
Payments under Borgata bank credit facility
(954,962
)
 
—
 
Proceeds from issuance of Borgata senior secured notes
773,176
 
 
—
 
Payments under note payable
(46,875
)
 
(18,750
)
Repurchase and retirement of common stock
—
 
 
(7,950
)
Distributions to noncontrolling interest in Borgata
(120,176
)
 
—
 
Other financing activities
(5,688
)
 
(335
)
Net cash used in financing activities
(202,713
)
 
(16,591
)
Decrease in cash and cash equivalents
(527
)
 
(9,091
)
Cash and cash equivalents, beginning of period
93,202
 
 
98,152
 
Cash and cash equivalents, end of period
$
92,675
 
 
$
89,061
 

7
Table of Contents 

BOYD GAMING CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS — (Continued)
(Unaudited and in thousands)
 
 
Nine Months Ended September 30,
 
2010
 
2009
Supplemental Disclosure of Cash Flow Information
 
 
 
Cash paid for interest, net of amounts capitalized
$
97,366
 
 
$
108,714
 
Cash received for income taxes, net of income taxes paid
(9,143
)
 
(1,819
)
Supplemental Schedule of Noncash Investing and Financing Activities
 
 
 
Payables incurred for capital expenditures
$
4,409
 
 
$
38,890
 
Increase (decrease) in fair value of derivative instruments
11,777
 
 
(1,235
)
Extinguishment of previous Borgata credit facility with advance from new Borgata credit facility
73,010
 
 
—
 
Changes in Assets and Liabilities Due to Change in Control of Borgata
 
 
 
Accounts receivable, net
$
29,099
 
 
$
—
 
Inventories
4,118
 
 
—
 
Prepaid expenses and other current assets
9,437
 
 
—
 
Deferred income taxes
1,290
 
 
—
 
Property and equipment, net
1,352,321
 
 
—
 
Investments in and advances to unconsolidated subsidiaries, net
5,135
 
 
—
 
Other assets, net
34,964
 
 
—
 
Provisional value of assets
$
1,436,364
 
 
$
—
 
Current maturities of long-term debt
$
632,289
 
 
$
—
 
Accounts payable
6,822
 
 
—
 
Income taxes payable
5,699
 
 
—
 
Accrued liabilities
71,949
 
 
—
 
Deferred income taxes
13,982
 
 
—
 
Other long-term tax liabilities
10,242
 
 
—
 
Other liabilities
16,418
 
 
—
 
Provisional value of liabilities
$
757,401
 
 
$
—
 
Acquisition of Dania Jai-Alai
 
 
 
Fair value of noncash assets acquired
$
—
 
 
$
28,352
 
Additional cash paid
—
 
 
(9,375
)
Termination of contingent liability
—
 
 
46,648
 
Note payable issued
—
 
 
(65,625
)
Liabilities assumed
$
—
 
 
$
—
 
The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.
 

8
Table of Contents 

BOYD GAMING CORPORATION AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
 
Note 1. Summary of Significant Accounting Policies
Organization
Boyd Gaming Corporation (and together with its subsidiaries, the "Company", "we" or "us") was incorporated in the state of Nevada in 1988 and has been operating since 1973. The Company’s common stock is traded on the New York Stock Exchange under the symbol “BYD”.
We are a diversified operator of 15 wholly-owned gaming entertainment properties and one 50% controlling interest in a limited liability company that operates Borgata Hotel Casino & Spa (“Borgata”) in Atlantic City, New Jersey. Headquartered in Las Vegas, we have gaming operations in Nevada, Illinois, Louisiana, Mississippi, Indiana and New Jersey, which we aggregate in order to present four Reportable Segments: (i) Las Vegas Locals, (ii) Downtown Las Vegas, (iii) Midwest and South, and (iv) Atlantic City.
On March 24, 2010, as a result of the amendment to our operating agreement with MGM Resorts International (the successor in interest to MGM MIRAGE) (“MGM”) (our original 50% partner in Borgata), which provided, among other things, for the termination of MGM’s participating rights in the operations of Borgata, we effectively obtained control of Borgata. The amendment to the operating agreement was related to MGM’s divestiture of its interest pursuant to a regulatory settlement, as discussed further in Note 4, Investments in and Advances to Unconsolidated Subsidiaries, Net . This resulting change in control required acquisition method accounting in accordance with the authoritative accounting guidance for business combinations. As a result, we measured our previously held equity interest at a provisional fair value as of March 24, 2010, the date of effective control. As discussed further in Note 4, Investments in and Advances to Unconsolidated Subsidiaries, Net, no remeasurement amounts have been identified and recorded through September 30, 2010. The financial position of Borgata is consolidated in our condensed consolidated balance sheet as of September 30, 2010; its results of operations for the period from July 1 through September 30, 2010 are included in our condensed consolidated statement of operations for the three months ended September 30, 2010; and its results of operations for the period from March 24 through September 30, 2010 are included in our condensed consolidated statements of operations and cash flows for the nine months ended September 30, 2010. Prior period amounts were not restated or recasted as a result of this change; however, detailed proforma financial information is presented in Note 4, Investments in and Advances to Unconsolidated Subsidiaries, Net for the three and nine months ended September 30, 2009. We also recorded the noncontrolling interest held in trust for the benefit of MGM as a separate component of our stockholders’ equity.
We own and operate Dania Jai-Alai, which is a pari-mutuel jai-alai facility with approximately 47 acres of related land located in Dania Beach, Florida, a travel agency in Hawaii, and a captive insurance company, also in Hawaii, that underwrites travel-related insurance.
Additionally, we own 85 acres on the Las Vegas Strip, where our multibillion dollar Echelon development project ("Echelon") is located. On August 1, 2008, due to the difficult environment in the capital markets, as well as weak economic conditions, we announced the delay of Echelon. At such time, we did not anticipate the long-term effects of the current economic downturn, evidenced by lower occupancy rates, declining room rates and reduced consumer spending across the country, but particularly in the Las Vegas geographical area; nor did we predict that the incremental supply becoming available on the Las Vegas Strip would face such depressed demand levels, thereby elongating the time for absorption of this additional supply into the market. As we do not yet believe that a significant level of economic recovery has occurred along the Las Vegas Strip, we still do not expect to resume construction of Echelon for three to five years. We also believe financing for a development project like Echelon continues to be unavailable.
Basis of Presentation
As permitted by the rules and regulations of the Securities and Exchange Commission (“SEC”), certain information and footnote disclosures normally included in financial statements prepared in accordance with GAAP have been condensed or omitted, although we believe that the disclosures made herein are adequate to make the information reliable in these condensed consolidated financial statements. These condensed consolidated financial statements should be read in conjunction with our audited consolidated financial statements and notes thereto included in our Annual Report on Form 10-K for the year ended December 31, 2009 and our unaudited condensed consolidated financial statements and notes thereto included in our subsequent Quarterly Reports on Form 10-Q. In our opinion, the accompanying unaudited condensed consolidated financial statements contain all adjustments necessary to present fairly our financial position as of September 30, 2010 , the results of our operations for the three and nine months ended September 30, 2010 and 2009, and our cash flows for the nine months ended September 30, 2010 and 2009. Our operating results for the three and nine months ended September 30, 2010 and 2009 and our cash flows for the nine months ended September 30, 2010 and 2009 are not necessarily indicative of the results that would be achieved during a full year of operations or in future

9
Table of Contents
BOYD GAMING CORPORATION AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS – (Continued)
(Unaudited)

periods.
Principles of Consolidation
The accompanying condensed consolidated financial statements include the accounts of Boyd Gaming Corporation and its subsidiaries. In addition, as discussed above, the financial position of Borgata is consolidated in our condensed consolidated balance sheet as of September 30, 2010, its results of operations for the period from July 1 through September 30, 2010 are included in our condensed consolidated statement of operations for the three months ended September 30, 2010, and its results of operations for the period from March 24 through September 30, 2010 are included in our condensed consolidated statements of operations and cash flows for the nine months ended September 30, 2010. All material intercompany accounts and transactions have been eliminated.
Investments in unconsolidated affiliates, which are less than 50% owned and do not meet the consolidation criteria of the authoritative accounting guidance for controlled or variable interest entities, are accounted for under the equity method. See Note 4, Investments in and Advances to Unconsolidated Subsidiaries, Net.
Reclassification
Certain prior period amounts presented in our condensed consolidated financial statements have been reclassified to conform to the current presentation. These reclassifications had no effect on our retained earnings or net income as previously reported. These reclassifications impacted the condensed consolidated balance sheet at December 31, 2009, and were specifically related to the reclassification of certain of our assets in order to exclude them from property and equipment, net and to present them separately in assets held for development. See Note 3, Assets Held for Development.
Use of Estimates
The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting periods. Significant estimates incorporated into our condensed consolidated financial statements include the estimated allowance for doubtful accounts receivable, estimated useful lives for depreciable and amortizable assets, recoverability of assets held for development, measurement of our controlling interest in Borgata, fair values of acquired assets and liabilities, estimated cash flows in assessing the recoverability of long-lived assets, assumptions relative to the valuation of goodwill and intangible assets, estimated valuation allowance for deferred tax assets, certain tax liabilities, self-insured liability reserves, slot bonus point programs, share-based payment valuation assumptions, fair values of assets and liabilities measured at fair value, fair values of assets and liabilities disclosed at fair value, fair values of derivative instruments, contingencies and litigation, claims and assessments. Actual results could differ from these estimates.
Property and Equipment, Net
Property and equipment are stated at cost. Depreciation is computed using the straight-line method over the estimated useful lives of the assets or, for leasehold improvements, over the shorter of the asset’s useful life or term of the lease. Gains or losses on disposals of assets are recognized as incurred using the specific identification method. Costs of major improvements are capitalized, while costs of normal repairs and maintenance are charged to expense as incurred.
Assets Held for Development
The costs incurred relative to projects under development are carried at cost. Development costs clearly associated with the acquisition, development, and construction of a project are capitalized as a cost of that project, during the periods in which activities necessary to get the property ready for its intended use are in progress. Certain pre-acquisition costs, not qualifying for capitalization, are charged to preopening or other operating expense as incurred.
Interest costs associated with major construction projects are capitalized as part of the cost of the constructed assets. When no debt is incurred specifically for a project, interest is capitalized on amounts expended for the project using our weighted-average cost of borrowing. Capitalization of interest ceases when the project (or discernible portions of the project) is substantially complete. If substantially all of the construction activities of a project are suspended, capitalization of interest will cease until such activities are resumed. We amortize capitalized interest over the estimated useful life of the related assets.
Investments In and Advances to Unconsolidated Subsidiaries, Net

10
Table of Contents
BOYD GAMING CORPORATION AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS – (Continued)
(Unaudited)

Investments in unconsolidated subsidiaries are accounted for under the equity method. Under the equity method, carrying value is adjusted for our share of the investees’ earnings and losses, as well as capital contributions to and distributions from these entities.
As discussed above, due to our controlling interest in Borgata, we measured our previously held equity interest at a provisional fair value as of March 24, 2010, the date of effective control. Additionally, the financial position of Borgata is consolidated in our condensed consolidated balance sheet as of September 30, 2010, its results of operations for the period from July 1 through September 30, 2010 are included in our condensed consolidated statement of operations for the three months ended September 30, 2010, and its results of operations for the period from March 24 through September 30, 2010 are included in our condensed consolidated statements of operations and cash flows for the nine months ended September 30, 2010. For the period from January 1, 2010 through March 23, 2010, included in our results during the nine months ended September 30, 2010, and during the three and nine months ended September 30, 2009, the results of Borgata's operations were recognized under the equity method.
We evaluate our investments in unconsolidated subsidiaries for impairment when events or changes in circumstances indicate that the carrying value of such investment may have experienced an other-than-temporary decline in value. If such conditions exist, we compare the estimated fair value of the investment to its carrying value to determine if an impairment is indicated and determine whether such impairment is other-than-temporary based on our assessment of all relevant factors. Estimated fair value is determined using a discounted cash flow analysis based on estimated future results of the investee.
 
Intangible Assets
Intangible assets include gaming license rights and trademarks. These assets, considered indefinite-lived intangible assets, are not subject to amortization, but instead are subject to an annual impairment test, performed in the second quarter of each year, and between annual test dates in certain circumstances. If the fair value of an indefinite-lived intangible asset is less than its carrying amount, an impairment loss is recognized equal to the difference.
License rights are tested for impairment using a discounted cash flow approach, and trademarks are tested for impairment using the relief-from-royalty method.
The results of our annual scheduled impairment test of indefinite-lived intangible assets performed during 2010 did not require us to record an impairment charge; however, if our estimates of projected cash flows related to these assets are not achieved, or if any other significant assumptions are changed, we may be subject to an interim impairment test prior to our next annual scheduled impairment test. As a result of such test, we may be subject to a future impairment charge, which could have a material adverse impact on our consolidated financial statements.
The gross amount of intangible assets recorded at September 30, 2010 and December 31, 2009 was $1,010.0 million, which has been reduced by aggregate impairment losses of $187.9 million and accumulated amortization of $400.0 million at each date. Our customer lists were fully amortized by June 2009 and, accordingly, only indefinite-lived intangible assets remain at September 30, 2010. Amortization expense was $0.04 million for the nine months ended September 30, 2009.
As discussed in Note 4, Investments in and Advances to Unconsolidated Subsidiaries, Net, no remeasurement amounts have been identified and recorded through September 30, 2010 in connection with the provisional fair values of the assets and liabilities we recognized in connection with our consolidation of Borgata. Accordingly, our intangible assets and amortization expense recorded do not include amortization expense on the provisional values of any amortizable intangible assets in connection with our consolidation of Borgata, pending finalization of the fair value allocation.
Goodwill
Goodwill represents the excess of purchase price over fair market value of net assets acquired in business combinations. Goodwill is not subject to amortization, but it is subject to an annual impairment test, which we perform in the second quarter of each year and between annual test dates in certain circumstances.
Goodwill for relevant reporting units is tested for impairment using a weighted discounted cash flow analysis and an earnings multiple valuation technique based on the estimated future results of our reporting units discounted using our weighted-average cost of capital and market indicators of terminal year capitalization rates. The implied fair value of a reporting unit’s goodwill is compared to the carrying value of that goodwill. The implied fair value of goodwill is determined by allocating the fair value of the reporting unit to its assets and liabilities and the amount remaining, if any, is the implied fair value of goodwill. If the implied fair value of the goodwill is less than its carrying value, then it must be written down to its implied fair value.
The results of our annual scheduled impairment test of goodwill performed during 2010 did not require us to record an impairment

11
Table of Contents
BOYD GAMING CORPORATION AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS – (Continued)
(Unaudited)

charge; however, if our estimates of projected cash flows related to goodwill are not achieved, or if any other significant assumptions are changed, we may be subject to an interim impairment test prior to our next annual scheduled impairment test. As a result of such test, we may be subject to a future impairment charge, which could have a material adverse impact on our consolidated financial statements.
The gross amount of goodwill recorded at September 30, 2010 and December 31, 2009 was $429.7 million, which has been reduced by aggregate impairment losses of $216.2 million at each of those dates.
Noncontrolling Interest
Noncontrolling interest is the portion of the ownership in Borgata not attributable, directly or indirectly, to Boyd, and is reported as a separate component of our stockholders’ equity in our consolidated financial statements. Our consolidated net income is reported at amounts that include the amounts attributable to both us and the noncontrolling interest. At September 30, 2010, we recorded a noncontrolling interest of $236.1 million associated with the portion of ownership in Borgata that is not attributable to Boyd. Borgata distributed $120.2 million to its noncontrolling interest during the nine months ended September 30, 2010.
Preopening Expenses
Certain costs of start-up activities are expensed as incurred and classified as preopening expenses in our condensed consolidated statements of operations. During the three months ended September 30, 2010 and 2009, we expensed $2.7 million and $4.9 million, respectively, in preopening costs that related primarily to our Echelon development project. Such costs consisted of security, storage, property taxes and insurance. During the nine months ended September 30, 2010 and 2009, we expensed $5.0 million and $14.8 million, respectively, in preopening costs that related primarily to our Echelon development project in both periods and our hotel at Blue Chip in 2009.
Recently Issued Accounting Pronouncements
Accruals for Casino Jackpot Liabilities - In April 2010, the Financial Accounting Standards Board issued authoritative accounting guidance for companies that generate revenue from gaming activities that involve base jackpots, which requires companies to accrue for a liability at the time the company has the obligation to pay the jackpot and record such obligation as a reduction of gaming revenue accordingly. The guidance is effective for interim and annual reporting periods beginning on or after December 15, 2010. Base jackpots are currently not accrued for by the Company until it has the obligation to pay such jackpots. As such, the application of this guidance will not have a material effect on the Company’s financial condition, results of operations or cash flows.
A variety of proposed or otherwise potential accounting standards are currently under study by standard-setting organizations and certain regulatory agencies. Because of the tentative and preliminary nature of such proposed standards, we have not yet determined the effect, if any, that the implementation of such proposed standards would have on our consolidated financial statements.
Subsequent Events
We have evaluated all events or transactions that occurred after September 30, 2010. During this period, the Company had the following subsequent events, the effects of which did not require adjustment to the Company’s financial position or results of operations as of and for the three and nine months ended September 30, 2010.
De-Designation of Interest Rate Swap Agreements
At September 30, 2010, we were a party to certain floating-to-fixed interest rate swap agreements with an aggregate notional amount of $500 million, whereby we received payments based upon the three-month LIBOR and made payments based upon a stipulated fixed rate. On October 1, 2010, as discussed further in Note 9, Other Comprehensive Income and Derivative Instruments, we de-designated all of our interest rate swap agreements as cash flow hedges and suspended hedge accounting, in contemplation of the refinancing of our borrowings under our bank credit facility.
Notice Received from MGM Regarding Potential Sale of Borgata
On October 12, 2010, we received a notice from MGM that MGM had received an offer to sell its 50% interest (the “MGM Interest”) in Borgata. MGM reported that, based upon Borgata's September 30, 2010 debt balances, the offer it received equates to slightly in excess of $250 million for the MGM Interest. On October 25, 2010, we announced our decision to not exercise our

12
Table of Contents
BOYD GAMING CORPORATION AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS – (Continued)
(Unaudited)

right of first refusal with respect to the offer.
Potential Amendment to Bank Credit Facility
We intend to amend and restate our bank credit facility on the following expected terms.
We intend to amend and restate our bank credit facility by entering into a Second Amended and Restated Credit Agreement by and among Boyd Gaming Corporation, Bank of America, N.A., as administrative agent and letter of credit issuer, and certain financial institutions as agents, managers and lenders (“amended bank credit facility”). We currently expect that our amended bank credit facility, if executed, will provide for credit facilities in the aggregate principal amount of approximately $1.5 billion (excluding any non-extending amounts) and up to $2.3 billion (including non-extending amounts). The amended bank credit facility is expected to include a covenant that requires that we maintain a senior leverage ratio of not more than 4.50 to 1.00 through March 31, 2012 (which ratio is expected to remain in effect, but reduced, during the remaining term of the amended bank credit facility). Based on our Consolidated EBITDA (as defined in our bank credit facility) for the twelve months ended September 30, 2010, such covenant would limit our borrowings under the amended bank credit facility to approximately $1.5 billion. In addition to the collateral security held by the administrative agent under our bank credit facility, we anticipate that, subject to certain exceptions, Boyd Gaming Corporation and each of its “significant subsidiaries” (as determined under the amended bank credit facility) will grant the administrative agent first priority liens and security interests on substantially all of their real and personal property (excluding gaming licenses) as additional security for the performance of the secured obligations under our amended bank credit facility.
As of October 26, 2010, we have received non-binding commitments for extensions of commitments aggregating $1.3 billion pursuant to the amended bank credit facility from lenders under our existing bank credit facility that currently hold revolving commitments aggregating $2.2 billion, subject to final documentation and other customary conditions.
We anticipate that the term loans and extended revolving facility will mature five years from the date of the amendment. Furthermore, we anticipate that the term loans will amortize in an annual amount equal to 5% of the original principal amount thereof, commencing March 31, 2011 and payable on a quarterly basis.
We anticipate that the interest rate per annum applicable to revolving loans under the amended bank credit facility will be based upon, at our option, the LIBOR rate or a “base rate”, plus an applicable margin in either case.
We expect our amended bank credit facility to contain certain financial and other covenants, including, without limitation, various covenants (i) requiring the maintenance of a minimum consolidated interest coverage ratio; (ii) establishing a maximum permitted consolidated total leverage ratio; (iii) establishing a maximum permitted secured leverage ratio; (iv) imposing limitations on our incurrence of indebtedness; (v) imposing limitations on transfers, sales and other dispositions; and (vi) imposing restrictions on investments, dividends and certain other payments.
While we anticipate that the timing for entry into our amended bank credit facility will be prior to the end of the fourth quarter of 2010 (or as soon thereafter as all necessary regulatory approvals have been received), there is no assurance that this timing will be met or that the amended bank credit facility will be entered into at all.
Offering of High Yield Debt and Tender Offer
On October 26, 2010, we announced that we are offering $500 million aggregate principal amount of 8-year senior notes in a private placement transaction, subject to market, regulatory and certain other conditions. The senior notes will be fully and unconditionally guaranteed by certain of our current and future domestic restricted subsidiaries. Subject to the satisfaction of certain conditions, we intend to use a portion of the net proceeds from the offering to finance a tender offer and related consent solicitation, which was also announced on October 26, 2010, for any and all of our outstanding 7.75% senior subordinated notes due 2012. Assuming all of the 7.75% senior subordinated notes due 2012 are tendered and purchased, we estimate that we could pay up to $159.4 million in connection with the tender offer. We intend to apply the balance of the net proceeds from the offering to repay a portion of the outstanding revolving balance on our bank credit facility and to potentially refinance other existing indebtedness, and may also use a portion of the net proceeds for general corporate purposes. The consummation of the tender offer for our 7.75% senior subordinated notes due 2012 is subject to the consummation of the offering of the senior notes, among the satisfaction of other conditions. We can provide no assurances that the bond offering or the tender offer will be consummated. The foregoing discussion regarding the senior notes offering shall neither constitute an offer to sell or the solicitation of an offer to buy the senior notes. In addition, the foregoing discussion regarding the tender offer and consent solicitation shall neither constitute

13
Table of Contents
BOYD GAMING CORPORATION AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS – (Continued)
(Unaudited)

an offer to sell or purchase, or a solicitation of an offer to sell or purchase, or the solicitation of tenders or consents with respect to, the 7.75% senior subordinated notes due 2012.
Note 2. Property and Equipment, Net
Property and equipment, net consists of the following.
 
 
Estimated
Life (Years)
 
September 30,
2010
 
December 31,
2009
 
 
 
(In thousands)
Land
—
 
 
$
560,368
 
 
$
473,067
 
Buildings and improvements
10-40
 
3,406,514
 
 
1,980,086
 
Furniture and equipment
3-10
 
1,130,039
 
 
863,854
 
Riverboats and barges
10-40
 
167,424
 
 
167,427
 
Other
—
 
 
23,590
 
 
10,025
 
Total property and equipment
 
 
5,287,935
 
 
3,494,459
 
Less accumulated depreciation
 
 
1,784,521
 
 
1,260,896
 
Property and equipment, net
 
 
$
3,503,414
 
 
$
2,233,563
 
Depreciation expense for the three months ended September 30, 2010 and 2009 was $52.5 million and $40.6 million, respectively, and was $147.9 million and $125.3 million for the nine months ended September 30, 2010 and 2009, respectively.
Other assets presented in the table above primarily relates to property and equipment-related costs capitalized in conjunction with major improvements and that have not yet been placed into service, and such costs are not currently being depreciated.
 
Note 3. Assets Held for Development
Assets held for development, which is comprised of assets associated with our Echelon development project, consists of the following.
 
September 30, 2010
 
December 31, 2009
 
(In thousands)
Land
$
213,649
 
 
$
213,649
 
Construction and development costs
501,554
 
 
501,527
 
Project management and other costs
115,712
 
 
117,033
 
Professional and design fees
93,545
 
 
93,405
 
Total assets held for development
$
924,460
 
 
$
925,614
 
As of September 30, 2010, the capitalized costs related to the Echelon project included land and construction in progress. The construction and development costs consist primarily of site preparation work, underground utility installation and infrastructure and common area development. Professional and design fees include architectural design, development and permitting fees, inspections, consulting and legal fees. We expect to additionally incur approximately $5 million to $6.5 million of capitalized costs annually, principally related to the offsite fabrication of escalators, curtain wall and a skylight.
In addition, we expect annual recurring project costs, consisting of security, storage, property taxes, rent and insurance, of approximately $7 million to $10 million that will be charged to preopening or other expense as incurred during the project’s suspension period. As referenced in Note 7, Commitments and Contingencies, these capitalized costs and recurring project costs are in addition to other contingencies with respect to our various commitments, including commitments and contingencies with respect to our Energy Services Agreement ("ESA") entered into between Echelon and Las Vegas Energy, LLC ("LVE").
We evaluate our investment in assets held for development in accordance with the authoritative accounting guidance on impairment or disposal of long lived assets. For a long-lived asset to be held and used, such as these assets under development, we review the asset for impairment whenever events or changes in circumstances indicate that the carrying amount may not be recoverable. We then compare the estimated undiscounted future cash flows of the asset to the carrying value of the asset. The asset is not impaired if the undiscounted future cash flows exceed its carrying value. If the carrying value exceeds the undiscounted future cash flows,

14
Table of Contents
BOYD GAMING CORPORATION AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS – (Continued)
(Unaudited)

then an impairment charge is recorded, typically measured using a discounted cash flow model, which is based on the estimated future results of the relevant reporting unit discounted using our weighted-average cost of capital and market indicators of terminal year free cash flow multiples. For these assets under development, future cash flows include remaining construction costs.
The suspension of development on the Echelon project implied that the carrying amounts of the assets related to the development may not be recoverable; therefore, at the time, we performed an impairment test of these assets, which occurred during the three months ended September 30, 2009. This impairment test was comprised of a future undiscounted cash flow analysis, and contemplated several viable alternative plans for the future development of Echelon.
One such scenario includes the outright sale of the project as is, which is primarily based upon land value. We considered the land value by analyzing recent sales transactions of sites with similar characteristics such as location, zoning, access, and visibility, to establish a general understanding of the potential comparable sales. The recoverability under this option represented any excess sales price, net of estimated selling costs, from the land over the carrying value of the assets, including land, held for development.
Another scenario is the full development of the project, as designed, at a later date. The cash inflows related to this option represent the revenue projections for the individual components associated with each planned construction element (casino, hotel, food and beverage, retail, convention and other), based upon the estimated respective dates of completion and particular graduated absorption rates. These projections are offset by outflows for incurred and estimated costs to complete the development. For costs already incurred, and to compensate for potential losses due to the delay, we adjusted for (i) physical deterioration; (ii) functional obsolescence; and (iii) economic obsolescence. Physical deterioration is impairment to the condition of the asset brought about by “wear and tear,” disintegration, and/or the action of the elements. Functional obsolescence is the impairment in the efficiency of the asset brought about by such factors as inadequacy or change in technology that affect the asset. Economic obsolescence is the impairment in the desirability of the asset arising from external economic forces, building code enhancements or changes in supply and demand relationships. For estimated costs to complete, we applied selected construction expense growth rates to our present cost analysis. In addition to these hard and soft construction costs, we estimated outflows for preservation costs that are intended and required to maintain the development site and the existing structures as well as development materials for future use. These net outflows were incrementally added to our estimated operating and ongoing maintenance costs, to establish the undiscounted net cash flow of the project.
Our final scenario is a scaled-down version of the full project, whereby only certain components would be developed. This cash flow projection considered the inflows and outflows discussed above, with relevant curtailment for revenue from, and costs related to, the amenities not completed.
Because no specific strategic plan can be determined with certainty at this time, the analysis considered the net cash flows related to each alternative, weighted against its projected likelihood. The outcome of this evaluation resulted in the determination that there was no impairment of the assets held for development, as the estimated weighted net undiscounted cash flows from the project exceed the current carrying value of the assets held for development. As we further explore the viability of alternatives for the project, we will continue to monitor these assets for recoverability.
 
Note 4. Investments in and Advances to Unconsolidated Subsidiaries, Net
Investments in and advances to unconsolidated subsidiaries, net consist of the following:
 
 
September 30,
2010
 
December 31,
2009
 
(In thousands)
Net investment in and advances to Borgata (50%)
$
—
 
 
$
394,220
 
Net investment in and advances to Atlantic City Express Service, LLC (33.3%)
4,848
 
 
—
 
Investments in and advances to unconsolidated subsidiaries, net
$
4,848
 
 
$
394,220
 
Borgata Hotel Casino and Spa
We and 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.
By letter of July 27, 2009 (the “Letter”), the New Jersey Department of Gaming Enforcement (the “NJDGE”) made a formal

15
Table of Contents
BOYD GAMING CORPORATION AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS – (Continued)
(Unaudited)

request to the NJCCC that the NJCCC reopen the gaming license held by Borgata. In June 2005, the NJCCC had renewed Borgata’s gaming license for a five-year term. The Letter indicated that the NJDGE’s reopening request was for the exclusive purpose of examining the qualifications of MGM, in light of the issues raised by the Special Report of the NJDGE to the NJCCC on its investigation of MGM’s joint venture in Macau, Special Administrative Region, People’s Republic of China. The Letter noted that the NJDGE had found that neither we nor the Holding Company had any involvement with MGM’s development activities in Macau and also expressed the NJDGE’s confidence that the NJCCC could thoroughly examine the issues raised in the Special Report as to MGM’s qualifications without negatively affecting the casino license, the operation of Borgata or us.
The NJCCC informed us that, pursuant to Section 88(a) of the New Jersey Casino Control Act (the “Casino Control Act”), the MDDC gaming license was reopened on July 27, 2009, the date of the Letter. This was a procedural step required by the Casino Control Act that does not represent a finding as to the issues raised by the NJDGE.
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 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 NJDGE. Pursuant to the terms of the 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. As discussed below, we recorded a $2.5 million gain in connection with the receipt of this distribution, which is reported in gain on equity distribution on the condensed consolidated statements of operations for the three and nine months ended September 30, 2010. Concurrently with this distribution, the Divestiture Trust paid $10 million to us, which is recorded in other income on the condensed consolidated statements of operations for the three and nine months ended September 30, 2010. Upon the sale of the MGM Interest, we will receive an additional payment from the Divestiture Trust in an amount (if any) equal to the excess of 3% of the proceeds from the sale over $10 million.
On March 17, 2010, MGM announced that its settlement agreement with the NJDGE had been approved by the 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.
Pursuant to certain of the amended terms of the operating agreement, we have a right of first refusal to purchase the MGM Interest from the Divestiture Trust on the same terms as any proposed third-party buyer. As discussed above, on October 12, 2010, we received a notice from MGM that MGM had received an offer to sell the MGM Interest. On October 25, 2010, we announced our decision to not exercise our right of first refusal with respect to the offer.
In addition, 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. This resulting change in control required acquisition method accounting in accordance with the authoritative accounting guidance for business combinations. The application of this accounting guidance had the following effects on our condensed consolidated financial statements during the three months ended March 31, 2010: (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 approximated their historical carrying values as of the date we effectively obtained control, and through September 30, 2010. We have provisionally recorded these fair values using an earnings valuation multiple model. No remeasurement amounts have been identified and recorded through September 30, 2010; however, we will continue to refine our valuation modeling as information regarding the tangible and intangible assets and liabilities is obtained, which may result in a possible change to these provisional fair value measurements and estimates in future periods.
The following table summarizes the estimated fair values of the assets and liabilities, provisionally, as of the date we obtained control. We will retrospectively adjust these amounts to reflect refined valuation information in future periods when available.
 

16
Table of Contents
BOYD GAMING CORPORATION AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS – (Continued)
(Unaudited)

Condensed Balance Sheet
March 24, 2010
 
(In thousands)
ASSETS
 
Cash
$
26,025
 
Current assets
43,944
 
Property and equipment, net
1,352,321
 
Other assets, net
40,099
 
Provisional value of assets
$
1,462,389
 
LIABILITIES
 
Current maturities of long-term debt
$
632,289
 
Other current liabilities
84,470
 
Deferred income taxes
13,982
 
Other liabilities
26,660
 
Provisional value of liabilities
$
757,401
 
 
The results of Borgata have been included in the accompanying condensed consolidated statements of operations from the date we effectively obtained control, March 24, 2010, through September 30, 2010 (specifically, for the period from July 1 through September 30, 2010 for the three months ended September 30, 2010, and from March 24 through September 30, 2010 for the nine months ended September 30, 2010), and are comprised of the following:
 

17
Table of Contents
BOYD GAMING CORPORATION AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS – (Continued)
(Unaudited)

Condensed Statements of Operations
Three Months Ended September 30, 2010
 
Nine Months Ended September 30, 2010
 
(In thousands)
REVENUES
 
 
 
Operating revenues:
 
 
 
Gaming
$
176,839
 
 
$
357,314
 
Food and beverage
43,232
 
 
82,372
 
Room
34,090
 
 
64,042
 
Other
12,687
 
 
24,047
 
Gross revenues
266,848
 
 
527,775
 
Less promotional allowances
59,161
 
 
116,420
 
Net revenues
207,687
 
 
411,355
 
COSTS AND EXPENSES
 
 
 
Operating costs and expenses:
 
 
 
Gaming
70,576
 
 
141,649
 
Food and beverage
19,700
 
 
39,593
 
Room
4,369
 
 
8,593
 
Other
10,335
 
 
19,528
 
Selling, general and administrative
31,173
 
 
64,473
 
Maintenance and utilities
17,215
 
 
35,337
 
Depreciation and amortization
16,452
 
 
36,313
 
Write-downs and other charges, net
(4
)
 
8
 
Total operating costs and expenses
169,816
 
 
345,494
 
Operating income
37,871
 
 
65,861
 
Other expense:
 
 
 
Interest expense
17,275
 
 
23,347
 
Total other expense
17,275
 
 
23,347
 
Income before income taxes
20,596
 
 
42,514
 
Income taxes
(2,046
)
 
(4,183
)
Net income
$
18,550
 
 
$
38,331
 
 
The following supplemental pro forma information presents the financial results as if the effective control of Borgata had occurred on January 1, 2010 for the nine months ended September 30, 2010 and on January 1, 2009 for the three and nine months ended September 30, 2009. This supplemental pro forma information has been prepared for comparative purposes and does not purport to be indicative of what the actual results would have been had the consolidation of Borgata been completed as of the earlier dates, nor are they indicative of any future results.
 

18
Table of Contents
BOYD GAMING CORPORATION AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS – (Continued)
(Unaudited)

 
Condensed Consolidated Statement of Operations
Nine Months Ended September 30, 2010
 
Boyd Gaming Corp
As Presented Here in
 
MDDC LLC
1/1/10 to 3/23/10
 
Adjustments
 
Boyd Gaming Corp
Pro Forma
 
(In thousands, except per share data)
REVENUES
 
 
 
 
 
 
 
Gaming revenue
$
1,344,283
 
 
$
137,831
 
 
$
—
 
 
$
1,482,114
 
Nongaming revenue
501,008
 
 
64,551
 
 
—
 
 
565,559
 
Gross revenues
1,845,291
 
 
202,382
 
 
—
 
 
2,047,673
 
Less promotional allowances
256,332
 
 
44,093
 
 
—
 
 
300,425
 
Net revenues
1,588,959
 
 
158,289
 
 
—
 
 
1,747,248
 
COSTS AND EXPENSES
 
 
 
 
 
 
 
Operating expenses
1,254,453
 
 
125,176
 
 
—
 
 
1,379,629
 
Depreciation and amortization
147,905
 
 
16,754
 
 
—
 
 
164,659
 
Corporate expense
36,636
 
 
—
 
 
—
 
 
36,636
 
Preopening expenses
4,990
 
 
—
 
 
—
 
 
4,990
 
Write-downs and other charges, net
4,932
 
 
68
 
 
—
 
 
5,000
 
Total costs and expenses
1,448,916
 
 
141,998
 
 
—
 
 
1,590,914
 
Operating income from Borgata
8,146
 
 
—
 
 
(8,146
)
 
—
 
Operating income
148,189
 
 
16,291
 
 
(8,146
)
 
156,334
 
Other expense (income):
 
 
 
 
 
 
 
Interest income
(4
)
 
 
 
—
 
 
(4
)
Interest expense, net
109,438
 
 
5,060
 
 
—
 
 
114,498
 
Gain on early retirements of debt
(3,949
)
 
—
 
 
—
 
 
(3,949
)
Gain on equity distribution
(2,535
)
 
—
 
 
—
 
 
(2,535
)
Other income
(10,000
)
 
—
 
 
—
 
 
(10,000
)
Other non-operating expenses from Borgata, net
3,133
 
 
—
 
 
(3,133
)
 
—
 
Total other expense, net
96,083
 
 
5,060
 
 
(3,133
)
 
98,010
 
Income before income taxes
52,106
 
 
11,231
 
 
(5,013
)
 
58,324
 
Income taxes
(15,532
)
 
(1,206
)
 
—
 
 
(16,738
)
Net income
36,574
 
 
10,025
 
 
(5,013
)
 
41,586
 
Net income attributable to noncontrolling interest
(19,166
)
 
—
 
 
(5,012
)
 
(24,178
)
Net income attributable to Boyd Gaming Corporation
$
17,408
 
 
$
10,025
 
 
$
(10,025
)
 
$
17,408
 
Basic net income per common share:
$
0.20
 
 
 
 
 
 
$
0.20
 
Weighted average basic shares outstanding
86,508
 
 
 
 
 
 
86,508
 
Diluted net income per common share:
$
0.20
 
 
 
 
 
 
$
0.20
 
Weighted average diluted shares outstanding
86,724
 
 
 
 
 
 
86,724
 
The pro forma adjustments reflect the differences resulting from the conversion of the equity method of accounting to a fully consolidated presentation. There were no significant intercompany transactions affecting the statements of operations between the Boyd entities and Borgata which would require elimination during the three and nine months ended September 30, 2010.
 

19
Table of Contents
BOYD GAMING CORPORATION AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS – (Continued)
(Unaudited)

 
Condensed Consolidated Statement of Operations
Three Months Ended September 30, 2009
 
Boyd Gaming Corp
As Presented Herein
 
MDDC LLC
 
Adjustments
 
Boyd Gaming Corp
Pro Forma
 
(In thousands, except per share data)
REVENUES
 
 
 
 
 
 
 
Gaming revenue
$
332,054
 
 
$
195,355
 
 
$
—
 
 
$
527,409
 
Nongaming revenue
110,479
 
 
89,411
 
 
—
 
 
199,890
 
Gross revenues
442,533
 
 
284,766
 
 
—
 
 
727,299
 
Less promotional allowances
44,290
 
 
62,169
 
 
—
 
 
106,459
 
Net revenues
398,243
 
 
222,597
 
 
—
 
 
620,840
 
COSTS AND EXPENSES
 
 
 
 
 
 
 
Operating expenses
318,419
 
 
155,038
 
 
—
 
 
473,457
 
Depreciation and amortization
40,578
 
 
19,208
 
 
325
 
 
60,111
 
Corporate expense
11,356
 
 
—
 
 
—
 
 
11,356
 
Preopening expenses
4,880
 
 
—
 
 
—
 
 
4,880
 
Write-downs and other charges, net
14,287
 
 
(28,677
)
 
—
 
 
(14,390
)
Total costs and expenses
389,520
 
 
145,569
 
 
325
 
 
535,414
 
Operating income from Borgata
38,189
 
 
—
 
 
(38,189
)
 
—
 
Operating income
46,912
 
 
77,028
 
 
(38,514
)
 
85,426
 
Other expense (income):
 
 
 
 
 
 
 
Interest expense, net
32,299
 
 
6,423
 
 
—
 
 
38,722
 
Gain on early retirements of debt
(3,604
)
 
—
 
 
—
 
 
(3,604
)
Other non-operating expenses
30
 
 
—
 
 
—
 
 
30
 
Other non-operating expenses from Borgata, net
7,204
 
 
—
 
 
(7,204
)
 
—
 
Total other expense, net
35,929
 
 
6,423
 
 
(7,204
)
 
35,148
 
Income before income taxes
10,983
 
 
70,605
 
 
(31,310
)
 
50,278
 
Income taxes
(4,668
)
 
(7,986
)
 
—
 
 
(12,654
)
Net income
6,315
 
 
62,619
 
 
(31,310
)
 
37,624
 
Net income attributable to noncontrolling interest
—
 
 
—
 
 
(31,309
)
 
(31,309
)
Net income attributable to Boyd Gaming Corporation
$
6,315
 
 
$
62,619
 
 
$
(62,619
)
 
$
6,315
 
Basic net income per common share:
$
0.07
 
 
 
 
 
 
$
0.07
 
Weighted average basic shares outstanding
86,264
 
 
 
 
 
 
86,264
 
Diluted net income per common share:
$
0.07
 
 
 
 
 
 
$
0.07
 
Weighted average diluted shares outstanding
86,436
 
 
 
 
 
 
86,436
 
 

20
Table of Contents
BOYD GAMING CORPORATION AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS – (Continued)
(Unaudited)

 
Condensed Consolidated Statement of Operations
Nine Months Ended September 30, 2009
 
Boyd Gaming Corp
As  Presented Herein
 
MDDC LLC
 
Adjustments
 
Boyd Gaming Corp
Pro Forma
 
(In thousands, except per share data)
REVENUES
 
 
 
 
 
 
 
Gaming revenue
$
1,051,714
 
 
$
538,041
 
 
$
—
 
 
$
1,589,755
 
Nongaming revenue
342,818
 
 
230,665
 
 
—
 
 
573,483
 
Gross revenues
1,394,532
 
 
768,706
 
 
—
 
 
2,163,238
 
Less promotional allowances
138,494
 
 
166,706
 
 
—
 
 
305,200
 
Net revenues
1,256,038
 
 
602,000
 
 
—
 
 
1,858,038
 
COSTS AND EXPENSES
 
 
 
 
 
 
 
Operating expenses
973,098
 
 
440,789
 
 
—
 
 
1,413,887
 
Depreciation and amortization
125,324
 
 
59,339
 
 
973
 
 
185,636
 
Corporate expense
35,077
 
 
—
 
 
—
 
 
35,077
 
Preopening expenses
14,773
 
 
699
 
 
—
 
 
15,472
 
Write-downs and other charges, net
41,415
 
 
(28,616
)
 
—
 
 
12,799
 
Total costs and expenses
1,189,687
 
 
472,211
 
 
973
 
 
1,662,871
 
Operating income from Borgata
63,921
 
 
—
 
 
(63,921
)
 
—
 
Operating income
130,272
 
 
129,789
 
 
(64,894
)
 
195,167
 
Other expense (income):
 
 
 
 
 
 
 
Interest expense, net
113,801
 
 
21,881
 
 
—
 
 
135,682
 
Gain on early retirements of debt
(12,061
)
 
—
 
 
—
 
 
(12,061
)
Other non-operating expenses
30
 
 
—
 
 
—
 
 
30
 
Other non-operating expenses from Borgata, net
16,230
 
 
—
 
 
(16,230
)
 
—
 
Total other expense, net
118,000
 
 
21,881
 
 
(16,230
)
 
123,651
 
Income before income taxes
12,272
 
 
107,908
 
 
(48,664
)
 
71,516
 
Income taxes
(7,007
)
 
(10,579
)
 
—
 
 
(17,586
)
Net income
5,265
 
 
97,329
 
 
(48,664
)
 
53,930
 
Net income attributable to noncontrolling interest
—
 
 
—
 
 
(48,665
)
 
(48,665
)
Net income attributable to Boyd Gaming Corporation
$
5,265
 
 
$
97,329
 
 
$
(97,329
)
 
$
5,265
 
Basic net income per common share
$
0.06
 
 
 
 
 
 
$
0.06
 
Weighted average basic shares outstanding
86,481
 
 
 
 
 
 
86,481
 
Diluted net income per common share
$
0.06
 
 
 
 
 
 
$
0.06
 
Weighted average diluted shares outstanding
86,550
 
 
 
 
 
 
86,550
 
In addition to the pro forma adjustments reflecting the differences resulting from the conversion of the equity method of accounting to a fully consolidated presentation, there is a $0.3 million and $0.6 million adjustment during the three and nine months ended September 30, 2009, respectively, representing the amortization of our additional investment in Borgata. Historically, we reduced this amount from our operating income from Borgata. There were no significant transactions affecting the statements of operations requiring elimination between the Boyd entities and Borgata during the three and nine months ended September 30, 2009.
Summarized unaudited financial information from the condensed consolidated statements of operations of Borgata is as follows:
 

21
Table of Contents
BOYD GAMING CORPORATION AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS – (Continued)
(Unaudited)

Condensed Statements of Operations
Three Months Ended September 30,
 
Nine Months Ended September 30,
 
2010
 
2009
 
2010
 
2009
 
(In thousands)
Gaming revenue
$
176,839
 
 
$
195,355
 
 
$
495,145
 
 
$
538,041
 
Nongaming revenue
90,009
 
 
89,411
 
 
235,011
 
 
230,665
 
Gross revenues
266,848
 
 
284,766
 
 
730,156
 
 
768,706
 
Less promotional allowances
59,161
 
 
62,169
 
 
160,511
 
 
166,706
 
Net revenues
207,687
 
 
222,597
 
 
569,645
 
 
602,000
 
Operating expenses
153,368
 
 
155,038
 
 
434,349
 
 
440,789
 
Depreciation and amortization
16,452
 
 
19,208
 
 
53,067
 
 
59,339
 
Preopening expenses
—
 
 
—
 
 
—
 
 
699
 
Write-downs and other items, net
(4
)
 
(28,677
)
 
76
 
 
(28,616
)
Operating income
37,871
 
 
77,028
 
 
82,153
 
 
129,789
 
Interest expense, net
(17,275
)
 
(6,423
)
 
(28,407
)
 
(21,881
)
State income taxes
(2,046
)
 
(7,986
)
 
(5,389
)
 
(10,579
)
Net income
$
18,550
 
 
$
62,619
 
 
$
48,357
 
 
$
97,329
 
Our share of Borgata’s results is included in our accompanying condensed consolidated statements of operations for the following periods:
 
 
Three Months Ended September 30,
 
Nine Months Ended September 30,
 
2010
 
2009
 
2010
 
2009
 
(In thousands)
Our share of Borgata’s operating income
$
—
 
 
$
38,514
 
 
$
8,146
 
 
$
64,894
 
Net amortization expense related to our investment in Borgata
—
 
 
(325
)
 
—
 
 
(973
)
Operating income from Borgata, as reported on our condensed consolidated financial statements (1)
$
—
 
 
$
38,189
 
 
$
8,146
 
 
$
63,921
 
Other non-operating expenses from Borgata, as reported on our condensed consolidated financial statements
$
—
 
 
$
7,204
 
 
$
3,133
 
 
$
16,230
 
____________________
(1)    
Our share of Borgata’s operating income for the nine months ended September 30, 2010 is reported as less than 50% of Borgata’s operating income in the table above due to our consolidation of Borgata effective March 24, 2010.
Our historical net investment in Borgata differs from our share of the underlying equity in Borgata. In 2004, pursuant to an agreement with MGM related to the funding of Borgata’s original project costs, we made an excess capital contribution to Borgata of approximately $31 million. We were ratably amortizing $15.4 million (50% of the excess contribution, which corresponds to our ownership percentage of Borgata) over 40 years. As discussed above, of the $135.4 million distribution we received from the Holding Company on August 6, 2010, $30.8 million was a priority distribution equal to the excess capital contribution. During the three and nine months ended September 30, 2010, we recorded a $2.5 million gain in connection with the receipt of this distribution, which gain was equal to the basis difference on our equity contribution during the period in which such was outstanding. Such gain is reported in gain on equity distribution on the condensed consolidated statements of operations for the three and nine months ended September 30, 2010.
Also, during Borgata’s initial development, construction and preopening phases, we capitalized the interest on our investment and are ratably amortizing our capitalized interest over 40 years.
We recorded $0.2 million and $0.9 million of amortization related to the excess contribution and capitalized interest during the three and nine months ended September 30, 2010, respectively, and such amounts were reclassified to depreciation and amortization upon our consolidation of Borgata.
Atlantic City Express Service, LLC
In 2006, Borgata entered into an agreement with two other Atlantic City casinos to form Atlantic City Express Service, LLC (“ACES”). With each member having a 33.3% interest, this New Jersey limited liability company was formed for the purpose of

22
Table of Contents
BOYD GAMING CORPORATION AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS – (Continued)
(Unaudited)

contracting with New Jersey Transit to operate express rail service between Manhattan and Atlantic City. Each member has guaranteed, jointly and severally, liability for all terms, covenants and conditions of the ACES agreement with New Jersey Transit consisting primarily of the necessary operating and capital expenses of ACES. The responsibilities of the managing member will rotate annually among the members. Borgata’s investment in ACES was $4.8 million at September 30, 2010.
 
Note 5. Accrued Liabilities
Accrued liabilities consist of the following:
 
 
September 30,
2010
 
December 31,
2009
 
(In thousands)
Gaming liabilities
$
68,766
 
 
$
50,009
 
Payroll and related expenses
76,083
 
 
54,620
 
Accrued expenses and other liabilities
98,734
 
 
55,425
 
Interest
25,881
 
 
14,523
 
Total accrued liabilities
$
269,464
 
 
$
174,577
 
 
Note 6. Long-Term Debt, Net of Current Maturities
Long-term debt, net of current maturities consists of the following:
 
 
September 30,
2010
 
December 31,
2009
 
(In thousands)
Bank credit facility
$
1,727,800
 
 
$
1,916,900
 
7.75% Senior Subordinated Notes due 2012
158,832
 
 
158,832
 
6.75% Senior Subordinated Notes due 2014
215,668
 
 
248,668
 
7.125% Senior Subordinated Notes due 2016
240,750
 
 
240,750
 
Borgata bank credit facility
47,100
 
 
—
 
Borgata 9.50% Senior Secured Notes due 2015
400,000
 
 
—
 
Unamortized discount on Borgata 9.50% Senior Secured Notes due 2015
(4,131
)
 
—
 
Unamortized deferred lender fees on Borgata 9.50 Senior Secured Notes due 2015
(9,700
)
 
—
 
Borgata 9.875% Senior Secured Notes due 2018
400,000
 
 
—
 
Unamortized discount on Borgata 9.875% Senior Secured Notes due 2018
(2,706
)
 
—
 
Unamortized deferred lender fees on Borgata 9.875% Senior Secured Notes due 2018
(9,803
)
 
—
 
Other
11,928
 
 
12,413
 
Total long-term debt
3,175,738
 
 
2,577,563
 
Less current maturities of long-term debt
680
 
 
652
 
Long-term debt, net of current maturities
$
3,175,058
 
 
$
2,576,911
 
Bank Credit Facility
We entered into a bank credit facility on May 24, 2007 and subsequently amended such facility on December 21, 2009. Our bank credit facility currently consists of a $3 billion revolving credit facility that matures on May 24, 2012. The interest rate on the bank credit facility is based, at our option, upon either the London Interbank Offered Rate (“LIBOR”) or the “base rate,” plus, in each case, an applicable margin. The applicable margin is a percentage per annum (which ranges from 0.625% to 1.625% if we elect to use LIBOR, and 0.0% to 0.375% if we elect to use the base rate) determined in accordance with a specified pricing grid based upon our predefined total leverage ratio. In addition, we incur commitment fees on the unused portion of the bank credit facility that range from 0.200% to 0.350% per annum. The bank credit facility is guaranteed by our material subsidiaries and is secured by the capital stock of those subsidiaries. We are currently evaluating the refinancing of our borrowings under the revolving credit facility.
The blended interest rates for outstanding borrowings under our bank credit facility at each September 30, 2010 and December 31, 2009 were 1.9%. At September 30, 2010, approximately $1.7 billion was outstanding under our revolving credit facility, with

23
Table of Contents
BOYD GAMING CORPORATION AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS – (Continued)
(Unaudited)

$17.0 million allocated to support various letters of credit, leaving remaining contractual availability of approximately $1.3 billion.
The bank credit facility contains certain financial and other covenants, including: (i) requiring the maintenance of a minimum interest coverage ratio of 2.00 to 1.00 (discussed below); (ii) establishing a maximum total leverage ratio (discussed below); (iii) imposing limitations on the incurrence of indebtedness and liens; (iv) imposing limitations on transfers, sales and other dispositions; and (v) imposing restrictions on investments, dividends and certain other payments.
The minimum Interest Coverage Ratio (as defined in our bank credit facility) is calculated as (a) twelve-month trailing Consolidated EBITDA (as defined in our bank credit facility) to (b) consolidated interest expense (as also defined in our bank credit facility).
The maximum permitted Total Leverage Ratio (as defined in our bank credit facility) is calculated as Consolidated Funded Indebtedness to twelve-month trailing Consolidated EBITDA (all capitalized terms are defined in the bank credit facility). The following table provides our maximum Total Leverage Ratio during the remaining term of the bank credit facility:
 
For the Trailing Four Quarters Ending
Maximum Total
Leverage Ratio
September 30, 2010
7.25 to 1.00
December 31, 2010
7.25 to 1.00
March 31, 2011
7.00 to 1.00
June 30, 2011
6.75 to 1.00
September 30, 2011
6.50 to 1.00
December 31, 2011
6.00 to 1.00
March 31, 2012
5.50 to 1.00
We believe that we were in compliance with the bank credit facility covenants, including the Interest Coverage Ratio and Total Leverage Ratio, which, at September 30, 2010, were 2.87 to 1.00 and 6.89 to 1.00, respectively. At September 30, 2010, assuming our current level of Consolidated Funded Indebtedness remains constant, we estimate that a 5.0% or greater decline in our twelve-month trailing Consolidated EBITDA, as compared to September 30, 2010, would cause us to exceed our maximum Total Leverage Ratio covenant for that period. However, in the event that we project our Consolidated EBITDA may decline by 5.0% or more, we could implement certain actions in an effort to minimize the possibility of a breach of the Total Leverage Ratio covenant. These actions may include, among others, reducing payroll, benefits and certain other operating costs, deferring or eliminating certain maintenance, expansion or other capital expenditures, reducing our outstanding indebtedness through repurchases or redemption, and/or increasing cash by selling assets or issuing equity.
As discussed in Note 1, Summary of Significant Accounting Policies - Subsequent Events - Potential Amendment to Bank Credit Facility, we intend to amend the bank credit facility to provide, among other things, for the extension of its maturity five years from the date of the amendment, and we anticipate that the aggregate commitments under it will be reduced from $3 billion to approximately $1.5 billion (excluding any non-extending amounts).
Senior Subordinated Notes
7.75% Senior Subordinated Notes due December 2012. 
On December 30, 2002, we issued $300 million principal amount of 7.75% senior subordinated notes due December 2012. The notes require semi-annual interest payments on June 15 and December 15 of each year, through December 2012, at which time the entire principal balance becomes due and payable. The notes contain certain restrictive covenants regarding, among other things, incurrence of debt, sales of assets, mergers and consolidations, and limitations on restricted payments (as defined in the indenture governing the notes). We believe that we are in compliance with these covenants at September 30, 2010. Effective December 15, 2007, we may redeem all or a portion of the notes at redemption prices (expressed as percentages of the principal amount) ranging from 103.875% in 2007 to 100% in 2010 and thereafter, plus accrued and unpaid interest.
As discussed in Note 1, Summary of Significant Accounting Policies - Subsequent Events - Offering of High Yield Debt and Tender Offer, on October 26, 2010, we announced that we are offering $500 million aggregate principal amount of 8-year senior notes in a private placement transaction, subject to market, regulatory and certain other conditions. Subject to the satisfaction of certain conditions, we intend to use a portion of the net proceeds from the offering to finance a tender offer and related consent solicitation, which was also announced on October 26, 2010, for any and all of our outstanding 7.75% senior subordinated notes due 2012. Assuming all of the 7.75% senior subordinated notes due 2012 are tendered and purchased, we estimate that we could pay up to $159.4 million in connection with the tender offer. The consummation of the tender offer for our 7.75% senior subordinated notes

24
Table of Contents
BOYD GAMING CORPORATION AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS – (Continued)
(Unaudited)

due 2012 is subject to the consummation of the offering of the senior notes, among the satisfaction of other conditions. We can provide no assurances that the bond offering or the tender offer will be consummated. The foregoing discussion regarding the senior notes offering shall neither constitute an offer to sell or the solicitation of an offer to buy the senior notes. In addition, the foregoing discussion regarding the tender offer and consent solicitation shall neither constitute an offer to sell or purchase, or a solicitation of an offer to sell or purchase, or the solicitation of tenders or consents with respect to, the 7.75% senior subordinated notes due 2012.
6.75% Senior Subordinated Notes due April 2014. 
On April 15, 2004, we issued, through a private placement, $350 million principal amount of 6.75% senior subordinated notes due April 2014. In July 2004, all, except for $50,000 in aggregate principal amount of these notes, were exchanged for substantially similar notes that were registered with the SEC. The notes require semi-annual interest payments on April 15 and October 15 of each year, through April 2014, at which time the entire principal balance becomes due and payable. The notes contain certain restrictive covenants regarding, among other things, incurrence of debt, sales of assets, mergers and consolidations, and limitations on restricted payments (as defined in the indenture governing the notes). We believe that we are in compliance with these covenants at September 30, 2010. Effective April 15, 2009, we may redeem all or a portion of the notes at redemption prices (expressed as percentages of the principal amount) ranging from 103.375% in 2009 to 100% in 2012 and thereafter, plus accrued and unpaid interest.
7.125% Senior Subordinated Notes due February 2016.
On January 30, 2006, we issued $250 million principal amount of 7.125% senior subordinated notes due February 2016. The notes require semi-annual interest payments on February 1 and August 1 of each year, through February 2016, at which time the entire principal balance becomes due and payable. The notes contain certain restrictive covenants regarding, among other things, incurrence of debt, sales of assets, mergers and consolidations, and limitations on restricted payments (as defined in the indenture governing the notes). We believe that we are in compliance with these covenants at September 30, 2010. At any time subsequent to February 1, 2009 and prior to February 1, 2011, we may redeem the notes, in whole or in part, pursuant to a “make-whole” call as provided in the indenture governing the notes, plus accrued and unpaid interest. On or after February 1, 2011, we may redeem all or a portion of the notes at redemption prices (expressed as percentages of the principal amount) ranging from 103.563% in 2011 to 100% in 2014 and thereafter, plus accrued and unpaid interest.
During the three months ended September 30, 2010, we did not purchase and retire any principal amount of our senior subordinated notes. During the three months ended September 30, 2009, we purchased and retired $29.6 million principal amount of our senior subordinated notes. The total purchase price of the notes was $25.8 million, resulting in a gain of $3.6 million, net of associated deferred financing fees, which is recorded on our condensed consolidated statement of operations for the respective period. The transactions were funded by availability under our bank credit facility.
During the nine months ended September 30, 2010 and 2009, we purchased and retired $33.0 million and $74.3 million, respectively, principal amount of our senior subordinated notes. The total purchase price of the notes was $28.9 million and $61.9 million, respectively, resulting in a gain of $3.9 million and $12.1 million, respectively, net of associated deferred financing fees, which is recorded on our condensed consolidated statement of operations for the respective periods. The transactions were funded by availability under our bank credit facility.
Borgata Bank Credit Facility
On August 6, 2010, Marina District Finance Company, Inc. (the “MDFC”) announced that it had closed a $950 million debt financing, consisting of the establishment of a $150.0 million new payment priority secured revolving credit facility (the "Borgata bank credit facility") and the issuance of $800 million of aggregate principal amount of notes. MDFC is a wholly-owned subsidiary of Marina District Development Company, LLC (“MDDC”), which develops and owns Borgata, and which is the guarantor of both the Borgata bank credit facility and the notes. The proceeds from the financing were used to (i) pay fees and expenses related to the financing; (ii) repay the former credit facility; and (iii) make a one-time distribution to Borgata's joint venture owners.
In connection with closing of the Borgata bank credit facility and the notes, the former credit facility, which provided up to $730 million in aggregate availability and was scheduled to mature in January 2011, was terminated. The outstanding balance, including all principal and accrued interest amounts of $604.4 million were repaid in full. As a result of the termination, during the three months ended September 30, 2010, Borgata wrote-off approximately $2.0 million of unamortized debt issuance costs associated with the former credit facility.
The Borgata bank credit facility provides for a $150.0 million senior secured revolving credit facility and matures in August 2014.

25
Table of Contents
BOYD GAMING CORPORATION AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS – (Continued)
(Unaudited)

The Borgata bank credit facility is guaranteed on a senior secured basis by MDDC and any future subsidiaries of MDDC and is secured by a first priority lien on substantially all of the assets of the Company, MDDC and any future subsidiaries of MDDC, subject to certain exceptions. The obligations under the Borgata bank credit facility will have priority in payment to payment of the notes.
Neither Boyd Gaming nor any of its wholly-owned subsidiaries is a guarantor of Borgata's new bank credit facility.
Outstanding borrowings under the Borgata bank credit facility accrue interest at a rate based upon either: (i) the highest of (a) the agent bank's quoted prime rate, (b) the one-month Eurodollar rate plus 1.00%, and (c) the daily federal funds rate plus 1.50%, and in any event not less than 1.50% (such highest rate, the “base rate”), or (ii) the Eurodollar rate, plus with respect to each of clause (i) and (ii) an applicable margin as provided in the Borgata bank credit facility. In addition, a commitment fee is incurred on the unused portion of the Borgata bank credit facility ranging from 0.50% per annum to 1.00% per annum.
At September 30, 2010, the outstanding balance under the Borgata bank credit facility was $47.1 million, leaving availability of $102.9 million. The blended interest rate on the outstanding borrowings at September 30, 2010 was 4.5%.
The Borgata bank credit facility contains certain financial and other covenants, including, without limitation, (i) establishing a minimum consolidated EBITDA (as defined in the Borgata bank credit facility) of $150 million over each trailing twelve-month period ending on the last day of each calendar quarter; (ii) establishing a minimum liquidity (as defined in the Borgata bank credit facility) of $30 million as of the end of each calendar quarter; (iii) imposing limitations on MDFC's ability to incur additional debt; and (iv) imposing restrictions on Borgata's ability to pay dividends and make other distributions, make certain restricted payments, create liens, enter into transactions with affiliates, merge or consolidate, and engage in unrelated business activities. We believe that MDFC was in compliance with the Borgata bank credit facility covenants, including minimum consolidated EBITDA and minimum liquidity, which, at September 30, 2010, were $171.7 million and $103.0 million, respectively.
Borgata Senior Secured Notes
9.5% Senior Secured Notes Due 2015
On August 6, 2010, MDFC issued, through a private placement, $400 million principal amount of 9.5% senior secured notes due 2015, at an issue price of 98.943%, resulting in a discount at issuance of $4.1 million. The notes require semi-annual interest payments on April 15 and October 15, commencing April 15, 2011. The notes are guaranteed on a senior secured basis by MDDC and any future restricted subsidiaries of MDDC. The notes contains covenants that, among other things, limit MDFC's ability and the ability of MDDC to (i) incur additional indebtedness or liens; (ii) pay dividends or make distributions; (iii) make certain investments; (iv) sell or merge with other companies; and (v) enter into certain types of transactions. MDFC believes that it is in compliance with these covenants at September 30, 2010. Among other rights of redemption, on or after October 15, 2013, MDFC shall have the option to redeem the 2015 Notes, in whole or in part, at the prices (expressed as percentages of principal amount) set forth below plus accrued and unpaid interest, to the applicable redemption date, at redemption prices (expressed as percentages of the principal amount) ranging from 104.75% beginning in 2013 to 102.375% in 2014.
9.875% Senior Secured Notes Due 2018
On August 6, 2010, MDFC issued, through a private placement, $400 million principal amount of 9.875% senior secured notes due 2018, at an issue price of 99.315%, resulting in an original issue discount of $2.7 million. The notes require semi-annual interest payments on February 15 and August 15, commencing February 15, 2011. The notes are guaranteed on a senior secured basis by MDDC and any future restricted subsidiaries of MDDC. The notes contains covenants that, among other things, limit MDFC's ability and the ability of MDDC to (i) incur additional indebtedness or liens; (ii) pay dividends or make distributions; (iii) make certain investments; (iv) sell or merge with other companies; and (v) enter into certain types of transactions. MDFC believes that it is in compliance with these covenants at September 30, 2010. Among other rights of redemption, on or after August 15, 2013, MDFC shall have the option to redeem the 2018 Notes, in whole or in part, at the prices (expressed as percentages of principal amount) set forth below plus accrued and unpaid interest, to the applicable redemption date, at redemption prices (expressed as percentages of the principal amount) ranging from 104.938% beginning in 2014, to 102.469% in 2015 100% in 2016 and thereafter.
The original issue discount has been recorded as an offset to the principal amount of these notes and is being accreted to interest expense over the term of the notes using the effective interest method. At September 30, 2010, the effective interest rate on the 9.50% notes due 2015 notes was 10.2% and on the 9.875% notes due 2018 was 10.3%.
In connection with the private placement of the notes, MDFC entered into a registration rights agreement with the initial purchasers

26
Table of Contents
BOYD GAMING CORPORATION AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS – (Continued)
(Unaudited)

in which it agreed to file a registration statement with the SEC to permit the holders to exchange or resell the notes. MDFC must use reasonable best efforts to have the registration statement declared effective within 310 days after the issuance of the notes and consummate the exchange offer within 365 days after the issuance of the notes, subject to certain suspension and other rights set forth in the registration rights agreement. In the event that the registration statement is not filed or declared effective or the exchange offer is not consummated within these deadlines, the agreement provides that additional interest will accrue on the principal amount of the notes at a rate of 0.25% per annum during the 90-day period immediately following any of these events and will increase by 0.25% per annum at the end of each subsequent 90-day period, but in no event will the penalty rate exceed 1.00% per annum. There are no other alternative settlement methods and, other than the 1.00% per annum maximum penalty rate, the agreement contains no limit on the maximum potential amount of consideration that could be transferred in the event MDFC does not meet the registration statement filing requirements. MDFC currently intends to file a registration statement, have it declared effective and consummate any exchange offer within these time periods. Accordingly, MDFC does not believe that payment of additional interest under the registration payment arrangement is probable and, therefore, no related liability has been recorded in the condensed consolidated financial statements.
The scheduled maturities of long-term debt, as revised for the refinancing and new issuances of notes, as discussed above, are as follows (in thousands):
For the Twelve Months Ending September 30,
 
Boyd Gaming Corporation
 
Borgata
 
Total
2011
 
$
680
 
 
$
—
 
 
$
680
 
2012
 
1,886,632
 
 
—
 
 
1,886,632
 
2013
 
11,248
 
 
—
 
 
11,248
 
2014
 
215,668
 
 
47,100
 
 
262,768
 
2015
 
—
 
 
—
 
 
—
 
Thereafter
 
240,750
 
 
773,660
 
 
1,014,410
 
          Total long-term debt
 
$
2,354,978
 
 
$
820,760
 
 
$
3,175,738
 
 
Note 7. Commitments and Contingencies
Commitments
There have been no material changes to our commitments described under Part II. Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations in our Annual Report on Form 10-K for the year ended December 31, 2009 filed with the SEC on March 5, 2010, except as discussed below, which are primarily related to Borgata and Echelon.
Echelon
Energy Services Agreement - In April 2007, we entered into an ESA with LVE. LVE will design, construct, own (other than the underlying real property which is leased from Echelon), and operate a central energy center and energy distribution system to provide electricity, emergency electricity generation, and chilled and hot water to Echelon and potentially other joint venture entities associated with the Echelon development project or other third parties. The term of the ESA is 25 years, beginning when Echelon commences commercial operations. Assuming the central energy center is completed and functions as planned, we will pay a monthly service fee, which is comprised of a fixed capacity charge, an escalating operations and maintenance charge, and an energy charge . The aggregate of our monthly fixed capacity charge portion of the service fee will be $23.4 million per annum, (the “Annual Fixed Capacity Charge”). The Annual Fixed Capacity Charge, which will be payable for a 25-year period, was to commence in November 2010. However, commencing December 1, 2010, until Echelon commences commercial operations, Echelon, under the terms of the ESA will become obligated to pay an annual interest during construction fee and an annual operations and maintenance fee (collectively, the “Annual Fee”). While the ESA does not provide a clear basis for calculating the actual amount of the Annual Fee, the Annual Fee could be up to approximately $18 million; however, based on our current estimates, we expect the Annual Fee to be substantially less, and we do not believe we are obligated to make a cash payment of the Annual Fee for approximately the next 12 months. Echelon and LVE are in the process of determining the specific amount of the Annual Fee, and the timing for the commencement of such payments. We can provide no assurances on the actual amount or the specific timing for payment of the Annual Fee.

27
Table of Contents
BOYD GAMING CORPORATION AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS – (Continued)
(Unaudited)

Borgata
Leases
We estimate that Borgata’s future minimum lease payments required under noncancelable operating leases (principally for land) are $6.8 million for the year ended December 31, 2010.
Utility Contract
In 2005, Borgata amended its executory contracts with a wholly-owned subsidiary of a local utility company, extending the end of the terms to 20 years from the opening of its rooms expansion. The utility company provides Borgata with electricity and thermal energy (hot water and chilled water). Obligations under the thermal energy executory contract contain both fixed fees and variable fees based upon usage rates. The fixed fee components under the thermal energy executory contract are currently estimated at approximately $11.4 million per annum. Borgata also committed to purchase a certain portion of its electricity demand at essentially a fixed rate, which is estimated at approximately $1.7 million per annum. Electricity demand in excess of the commitment is subject to market rates based on Borgata’s tariff class.
Investment Alternative Tax
The New Jersey Casino Control Act provides, among other things, for an assessment of licensees equal to 1.25% of their gross gaming revenues in lieu of an investment alternative tax equal to 2.5% of gross gaming revenues. Generally, Borgata may satisfy this investment obligation by investing in qualified eligible direct investments, by making qualified contributions or by depositing funds with the New Jersey Casino Reinvestment Development Authority (“CRDA”). Funds deposited with the CRDA may be used to purchase bonds designated by the CRDA or, under certain circumstances, may be donated to the CRDA in exchange for credits against future CRDA investment obligations. CRDA bonds have terms up to fifty years and bear interest at below market rates.
Borgata’s CRDA obligations for the nine months ended September 30, 2010 and 2009 were $6.2 million and $6.8 million, respectively, of which valuation provisions of $3.6 million and $3.9 million, respectively, were recorded due to the respective underlying agreements.
Purse Enhancement Agreement
In August 2008, Borgata and the ten other casinos in the Atlantic City market (collectively, the “Casinos”) entered into a Purse Enhancement Agreement (the “Agreement”) with the New Jersey Sports & Exposition Authority (the “NJSEA”) and the Casino Reinvestment Development Authority in the interest of further deferring or preventing the proliferation of competitive gaming at New Jersey racing tracks through December 31, 2011. In addition to the continued prohibition of casino gaming in New Jersey outside of Atlantic City, legislation was enacted to provide for the deduction of certain promotional gaming credits from the calculation of the tax on casino gross revenue.
Under the terms of the Agreement, the Casinos are required to make scheduled payments to the NJSEA totaling $90 million to be used for certain authorized purposes (the “Authorized Uses”) as defined by the Agreement. In the event any of the $90 million is not used by NJSEA for the Authorized Uses by January 1, 2012, the unused funds shall be returned by NJSEA to the Casinos pro rata based upon the share each casino contributed. For each year, each casino’s share of the scheduled payments will equate to a percentage representing its gross gaming revenue for the prior calendar year compared to the gross gaming revenues for that period for all Casinos. Each casino, solely and individually, shall be responsible for its respective share of the scheduled amounts due. In the event that any casino shall fail to make its payment as required, the remaining Casinos shall have the right, but not the obligation, to cure a payment delinquency. As a result, Borgata expenses its pro rata share of the $90 million, estimated to be approximately $14.9 million based on its actual and forecasted market share of gross gaming revenue, on a straight-line basis over the applicable term of the Agreement. Borgata recorded expense of $1.2 million during each of the three months ended September 30, 2010 and 2009, respectively, and recorded expense of $3.9 million and $3.6 million during the nine months ended September 30, 2010 and 2009, respectively.
Contingencies
Copeland
Alvin C. Copeland, the sole shareholder (deceased) of an unsuccessful applicant for a riverboat license at the location of our Treasure Chest Casino (“Treasure Chest”), has made several attempts to have the Treasure Chest license revoked and awarded to his company. In 1999 and 2000, Copeland unsuccessfully opposed the renewal of the Treasure Chest license and has brought two

28
Table of Contents
BOYD GAMING CORPORATION AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS – (Continued)
(Unaudited)

separate legal actions against Treasure Chest. In November 1993, Copeland objected to the relocation of Treasure Chest from the Mississippi River to its current site on Lake Pontchartrain. The predecessor to the Louisiana Gaming Control Board allowed the relocation over Copeland’s objection. Copeland then filed an appeal of the agency’s decision with the Nineteenth Judicial District Court. Through a number of amendments to the appeal, Copeland unsuccessfully attempted to transform the appeal into a direct action suit and sought the revocation of the Treasure Chest license. Treasure Chest intervened in the matter in order to protect its interests. The appeal/suit, as it related to Treasure Chest, was dismissed by the District Court and that dismissal was upheld on appeal by the First Circuit Court of Appeal. Additionally, in 1999, Copeland filed a direct action against Treasure Chest and certain other parties seeking the revocation of Treasure Chest’s license, an award of the license to him, and monetary damages. The suit was dismissed by the trial court, citing that Copeland failed to state a claim on which relief could be granted. The dismissal was appealed by Copeland to the Louisiana First Circuit Court of Appeal. On June 21, 2002, the First Circuit Court of Appeal reversed the trial court’s decision and remanded the matter to the trial court. On January 14, 2003, we filed a motion to dismiss the matter and that motion was partially denied. The Court of Appeal refused to reverse the denial of the motion to dismiss. In May 2004, we filed additional motions to dismiss on other grounds. There was no activity regarding this matter during 2005 and 2006, and the case was set to be dismissed by the court for failure to prosecute by the plaintiffs in mid-May 2007; however on May 1, 2007, the plaintiff filed a motion to set a hearing date related to the motions to dismiss. The hearing was scheduled for September 10, 2007, at which time all parties agreed to postpone the hearing indefinitely. The hearing has not yet been rescheduled. Mr. Copeland has since passed away and his son, the executor of his estate, has petitioned the court to be substituted as plaintiff in the case. On June 9, 2009, the plaintiff filed to have the exceptions set for hearing. The parties decided to submit the exceptions to the court on the previously filed briefs. The court issued a ruling on August 9, 2010 denying the exceptions. Copeland's counsel desires to move the litigation forward and co-defendant Robert J. Guidry has filed a third party demand seeking that the United States Attorney's Office enforce Mr. Guidry's plea agreement and end the suit. We currently are vigorously defending the lawsuit. If this matter ultimately results in the Treasure Chest license being revoked, it could have a significant adverse effect on our business, financial condition and results of operations.
Nevada Use Tax Refund Claims
On March 27, 2008, the Nevada Supreme Court issued a decision in Sparks Nugget, Inc. vs. The State of Nevada Department of Taxation (the “Department”), holding that food purchased for subsequent use in the provision of complimentary and/or employee meals was exempt from use tax. On April 14, 2008, the Department filed a Petition for Rehearing (the “Petition”) on the decision. Additionally, on the same date the Nevada Legislature filed an Amicus Curiae brief in support of the Department’s position. The Nevada Supreme Court denied the Department’s Petition on July 17, 2008. We paid use tax, over the period November 2000 through May 2008, on food purchased for subsequent use in complimentary and employee meals at our Nevada casino properties and estimate the refund to be in the range of $16.9 million to $19.2 million, including interest. In late 2009, the Department audited our refund claim and subsequently issued a $12.3 million sales tax assessment, plus interest of $7.5 million. The Department continues to deny our refund claim and issued the assessment based on their position that the complimentary and employee meals at issue are now subject to sales tax. We do not believe the Department’s arguments have any merit and intend to file a motion to dismiss the assessment on both a procedural and technical basis. We attended a hearing before the Nevada Administrative Law Judge in September 2010, pursuant to which we and the Department presented testimony and conducted cross-examination of the witnesses in connection with the matter. All post-hearing briefs are required to be filed by December 31, 2010 and we expect the judge to issue a decision during the first quarter of 2011. Due to uncertainty surrounding the judge’s decision, we will not record any gain until the tax refund is realized. For periods subsequent to May 2008, although we have received an assessment from the Department, we have not accrued a liability for sales tax on complimentary and employee meals at our Nevada casino properties, as it is not probable, based on both procedural issues and the technical merits of the Department’s arguments, that we will owe this tax.
Blue Chip Property Taxes
In May 2007, Blue Chip received a valuation notice indicating an unanticipated increase of nearly 400% to its assessed property value as of January 1, 2006. At that time, we estimated that the increase in assessed property value could result in a property tax assessment ranging between $4 million and $11 million for the eighteen-month period ended June 30, 2007. We recorded an additional charge of $3.2 million during the three months ended June 30, 2007 to increase our property tax liability to $5.8 million at June 30, 2007 as we believed that was the most likely amount to be assessed within the range. We subsequently received a property tax bill related to our 2006 tax assessment for $6.2 million in December 2007. As we have appealed the assessment, Indiana statutes allow for a minimum required payment of $1.9 million, which was paid against the $6.2 million assessment in January 2008. In February 2009, we received a notice of revaluation, which reduced the property’s assessed value by $100 million and the tax assessment by approximately $2.2 million per year. We have subsequently paid the minimum required payment of $1.9 million against 2007 and 2008 provisional bills and, in July 2010, paid $0.9 million on the first provisional bill for 2009, all

29
Table of Contents
BOYD GAMING CORPORATION AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS – (Continued)
(Unaudited)

of which were based on the 2006 valuation notice. We have not received valuation notices for years 2007 through 2010. We believe the assessment for the fifty seven-month period ended September 30, 2010 could result in a property tax assessment ranging between $13.7 million and $28.6 million. We have accrued, net of the payments discussed above, approximately $20.0 million of property tax liability as of September 30, 2010, based on what we believe to be the most likely assessment within our range, once all appeals have been exhausted; however, we can provide no assurances that the estimated amount will approximate the actual amount. The final 2006 assessment, post appeals, as well as the March 1, 2007 through 2010 assessment notices, which have not been received as of September 30, 2010, could result in further adjustment to our estimated property tax liability at Blue Chip.
Legal Matters
We are also parties to various legal proceedings arising in the ordinary course of business. We believe that, except for the Copeland matter discussed above, all pending claims, if adversely decided, would not have a material adverse effect on our business, financial position or results of operations.
 
Note 8. Stockholders’ Equity and Stock Incentive Plans
Share Repurchase Program
Subject to applicable corporate securities laws, repurchases under our stock repurchase program may be made at such times and in such amounts as we deem appropriate. We are subject to certain limitations regarding the repurchase of common stock, such as restricted payment limitations related to our outstanding notes and our bank credit facility. Purchases under our stock repurchase program can be discontinued at any time that we feel additional purchases are not warranted. We intend to fund the repurchases under the stock repurchase program with existing cash resources and availability under our bank credit facility.
In July 2008, our Board of Directors authorized an amendment to our existing share repurchase program to increase the amount of common stock available to be repurchased to $100 million. We are not obligated to purchase any shares under our stock repurchase program.
During the nine months ended September 30, 2010, we did not repurchase any shares of our common stock. During the nine months ended September 30, 2009, we repurchased and retired 1.7 million shares of our common stock at an average price of $4.61 per share. We are currently authorized to repurchase up to an additional $92.1 million in shares of our common stock under the share repurchase program.
We have in the past, and may in the future, acquire our debt or equity securities, through open market purchases, privately negotiated transactions, tender offers, exchange offers, redemptions or otherwise, upon such terms and at such prices as we may determine from time to time.
Dividends
Dividends are declared at our Board of Director’s discretion. We are subject to certain limitations regarding payment of dividends, such as restricted payment limitations related to our outstanding notes and our bank credit facility. In July 2008, our Board of Directors suspended the quarterly dividend for the current and future periods; therefore, we did not declare a dividend during the nine months ended September 30, 2010 or 2009.
Share-Based Compensation
We account for share-based awards exchanged for employee services in accordance with the authoritative accounting guidance for share-based payments. Under the guidance, share-based compensation expense is measured at the grant date, based on the estimated fair value of the award, and is recognized as expense, net of estimated forfeitures, over the employee’s requisite service period.
The following table provides classification detail of the total costs related to our share-based employee compensation plans reported in our condensed consolidated statements of operations.
 

30
Table of Contents
BOYD GAMING CORPORATION AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS – (Continued)
(Unaudited)

 
Three Months Ended September 30,
 
Nine Months Ended September 30,
 
2010
 
2009
 
2010
 
2009
 
(In thousands)
Gaming
$
57
 
 
$
30
 
 
$
205
 
 
$
91
 
Food and beverage
10
 
 
3
 
 
38
 
 
9
 
Room
5
 
 
1
 
 
18
 
 
3
 
Selling, general and administrative
447
 
 
653
 
 
1,292
 
 
1,957
 
Corporate expense
1,877
 
 
2,199
 
 
6,571
 
 
7,724
 
Preopening expenses
—
 
 
521
 
 
—
 
 
1,565
 
Total share-based compensation expense
$
2,396
 
 
$
3,407
 
 
$
8,124
 
 
$
11,349
 
 
Note 9. Other Comprehensive Income and Derivative Instruments
Total comprehensive income consisted of the following (in thousands):
 
 
Three Months Ended September 30,
 
Nine Months Ended September 30,
 
2010
 
2009
 
2010
 
2009
Net income
$
14,866
 
 
$
6,315
 
 
$
36,574
 
 
$
5,265
 
Derivative instruments market adjustment, net of tax
2,432
 
 
(1,478
)
 
6,842
 
 
(174
)
Comprehensive income
$
17,298
 
 
$
4,837
 
 
$
43,416