Document
 
 
 
 
 
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 June 30, 2017
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
___________________________________________________

image0a03a01a02a13.jpg
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  x    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
 
x
 
Accelerated filer
 
o
 
 
 
 
 
 
 
Non-accelerated filer
 
o (Do not check if a smaller reporting company)
 
Smaller reporting company
 
o
 
 
 
 
 
 
 
 
 
 
 
Emerging growth company
 
o
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. 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 July 31, 2017
 
 
Common stock, $0.01 par value
 
112,787,225
 




BOYD GAMING CORPORATION
QUARTERLY REPORT ON FORM 10-Q
FOR THE PERIOD ENDED JUNE 30, 2017
TABLE OF CONTENTS
 
 
 
Page
No.
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 





PART I. Financial Information

Item 1.        Financial Statements (Unaudited)

BOYD GAMING CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS (Unaudited)
 
June 30,
 
December 31,
(In thousands, except share data)
2017
 
2016
ASSETS
 
 
 
Current assets
 
 
 
Cash and cash equivalents
$
162,963

 
$
193,862

Restricted cash
21,640

 
16,488

Accounts receivable, net
29,962

 
30,371

Inventories
19,124

 
18,568

Prepaid expenses and other current assets
45,472

 
46,214

Income taxes receivable
582

 
2,444

Total current assets
279,743

 
307,947

Property and equipment, net
2,567,597

 
2,605,169

Other assets, net
80,400

 
49,205

Intangible assets, net
850,547

 
881,954

Goodwill, net
890,236

 
826,476

Total assets
$
4,668,523

 
$
4,670,751

LIABILITIES AND STOCKHOLDERS' EQUITY
 
 
 
Current liabilities
 
 
 
Current maturities of long-term debt
$
23,987

 
$
30,336

Accounts payable
79,999

 
84,086

Accrued liabilities
247,372

 
251,082

Total current liabilities
351,358

 
365,504

Long-term debt, net of current maturities and debt issuance costs
3,115,851

 
3,199,119

Deferred income taxes
111,918

 
83,980

Other long-term tax liabilities
3,373

 
3,307

Other liabilities
61,706

 
84,715

Commitments and contingencies (Notes 3, 8 and 9)

 

Stockholders' equity
 
 
 
Preferred stock, $0.01 par value, 5,000,000 shares authorized
—

 
—

Common stock, $0.01 par value, 200,000,000 shares authorized; 112,931,072 and 112,896,377 shares outstanding
1,129

 
1,129

Additional paid-in capital
948,384

 
953,440

Retained earnings (accumulated deficit)
74,313

 
(19,878
)
Accumulated other comprehensive income (loss)
491

 
(615
)
Total Boyd Gaming Corporation stockholders' equity
1,024,317

 
934,076

Noncontrolling interest
—

 
50

Total stockholders' equity
1,024,317

 
934,126

Total liabilities and stockholders' equity
$
4,668,523

 
$
4,670,751


The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.


3



BOYD GAMING CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited)
 
Three Months Ended
 
Six Months Ended
 
June 30,
 
June 30,
(In thousands, except per share data)
2017
 
2016
 
2017
 
2016
Revenues
 
 
 
 
 
 
 
Gaming
$
495,056

 
$
452,928

 
$
995,055

 
$
915,479

Food and beverage
88,342

 
75,898

 
175,785

 
152,698

Room
48,270

 
43,365

 
95,596

 
85,240

Other
32,915

 
29,693

 
66,953

 
61,159

Gross revenues
664,583

 
601,884

 
1,333,389

 
1,214,576

Less promotional allowances
64,715

 
57,010

 
128,179

 
117,324

Net revenues
599,868

 
544,874

 
1,205,210

 
1,097,252

Operating costs and expenses
 
 
 
 
 
 
 
Gaming
229,912

 
217,768

 
461,543

 
441,293

Food and beverage
49,533

 
42,116

 
99,051

 
83,919

Room
13,469

 
11,293

 
26,583

 
21,792

Other
19,631

 
18,827

 
39,610

 
38,159

Selling, general and administrative
93,037

 
79,002

 
184,650

 
160,853

Maintenance and utilities
25,864

 
25,009

 
52,263

 
48,857

Depreciation and amortization
52,563

 
48,250

 
106,527

 
95,903

Corporate expense
23,251

 
16,099

 
44,049

 
34,006

Project development, preopening and writedowns
2,784

 
5,897

 
5,756

 
7,738

Impairments of assets
—

 
—

 
—

 
1,440

Other operating items, net
463

 
123

 
949

 
552

Total operating costs and expenses
510,507

 
464,384

 
1,020,981

 
934,512

Operating income
89,361

 
80,490

 
184,229

 
162,740

Other expense (income)
 
 
 
 
 
 
 
Interest income
(455
)
 
(959
)
 
(915
)
 
(1,456
)
Interest expense, net of amounts capitalized
42,728

 
61,887

 
86,402

 
114,952

Loss on early extinguishments and modifications of debt
378

 
419

 
534

 
846

Other, net
559

 
65

 
670

 
142

Total other expense, net
43,210

 
61,412

 
86,691

 
114,484

Income from continuing operations before income taxes
46,151

 
19,078

 
97,538

 
48,256

Income tax provision
(18,590
)
 
(7,771
)
 
(34,863
)
 
(15,389
)
Income from continuing operations, net of tax
27,561

 
11,307

 
62,675

 
32,867

Income from discontinued operations, net of tax
21,017

 
18,715

 
21,392

 
30,345

Net income
$
48,578

 
$
30,022

 
$
84,067

 
$
63,212

 
 
 
 
 
 
 
 
Basic net income per common share
 
 
 
 
 
 
 
Continuing operations
$
0.24

 
$
0.10

 
$
0.54

 
$
0.29

Discontinued operations
0.18

 
0.16

 
0.19

 
0.27

Basic net income per common share
$
0.42

 
$
0.26

 
$
0.73

 
$
0.56

Weighted average basic shares outstanding
115,225

 
114,328

 
115,247

 
114,218

 
 
 
 
 
 
 
 
Diluted net income per common share
 
 
 
 
 
 
 
Continuing operations
$
0.24

 
$
0.10

 
$
0.54

 
$
0.29

Discontinued operations
0.18

 
0.16

 
0.19

 
0.26

Diluted net income per common share
$
0.42

 
$
0.26

 
$
0.73

 
$
0.55

Weighted average diluted shares outstanding
115,923

 
115,077

 
115,911

 
114,974

 
 
 
 
 
 
 
 
Dividends declared per common share
$
0.05

 
$
—

 
$
0.05

 
$
—


The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.

4



BOYD GAMING CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (Unaudited)

 
Three Months Ended
 
Six Months Ended
 
June 30,
 
June 30,
(In thousands)
2017
 
2016
 
2017
 
2016
Net income
$
48,578

 
$
30,022

 
$
84,067

 
$
63,212

Other comprehensive income (loss), net of tax:
 
 
 
 
 
 
 
Fair value adjustments to available-for-sale securities, net of tax
535

 
(185
)
 
1,106

 
337

Comprehensive income attributable to Boyd Gaming Corporation
$
49,113

 
$
29,837

 
$
85,173

 
$
63,549


The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.

5



BOYD GAMING CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY (Unaudited)

 
Boyd Gaming Corporation Stockholders' Equity
 
 
 
 
 
Common Stock
 
Additional
Paid-in
Capital
 
Retained Earnings (Accumulated
Deficit)
 
Accumulated
Other
Comprehensive
Income (Loss), Net
 
Noncontrolling
Interest
 
Total
 
 
 
 
 
 
 
 
 
 
 
 
(In thousands, except share data)
Shares
 
Amount
 
 
 
 
 
Balances, January 1, 2017
112,896,377

 
$
1,129

 
$
953,440

 
$
(19,878
)
 
$
(615
)
 
$
50

 
$
934,126

Cumulative effect of change in accounting principle, adoption of Update 2016-09
—

 
—

 
—

 
15,777

 
—

 
—

 
15,777

Net income
—

 
—

 
—

 
84,067

 
—

 
—

 
84,067

Comprehensive income attributable to Boyd, net of tax
—

 
—

 
—

 
—

 
1,106

 
—

 
1,106

Stock options exercised
151,683

 
1

 
1,226

 
—

 
—

 
—

 
1,227

Release of restricted stock units, net of tax
150,945

 
1

 
(2,233
)
 
—

 
—

 
—

 
(2,232
)
Release of performance stock units, net of tax
173,653

 
2

 
(1,793
)
 
—

 
—

 
—

 
(1,791
)
Shares repurchased and retired
(441,586
)
 
(4
)
 
(11,086
)
 
—

 
—

 
—

 
(11,090
)
Cash dividends declared
—

 
—

 
—

 
(5,653
)
 
—

 
—

 
(5,653
)
Share-based compensation costs
—

 
—

 
8,830

 
—

 
—

 
—

 
8,830

Other
—

 
—

 
—

 
—

 
—

 
(50
)
 
(50
)
Balances, June 30, 2017
112,931,072

 
$
1,129

 
$
948,384

 
$
74,313

 
$
491

 
$
—

 
$
1,024,317

 
 
 
 
 
 
 
 
 
 
 
 
 
 
Balances, January 1, 2016
111,614,420

 
$
1,117

 
$
945,041

 
$
(437,881
)
 
$
(316
)
 
$
50

 
$
508,011

Net income
—

 
—

 
—

 
63,212

 
—

 
—

 
63,212

Comprehensive income attributable to Boyd
—

 
—

 
—

 
—

 
337

 
—

 
337

Stock options exercised
241,546

 
2

 
1,437

 
—

 
—

 
—

 
1,439

Release of restricted stock units, net of tax
255,000

 
2

 
(678
)
 
—

 
—

 
—

 
(676
)
Release of performance stock units, net of tax
159,027

 
2

 
(869
)
 
—

 
—

 
—

 
(867
)
Share-based compensation costs
—

 
—

 
5,583

 
—

 
—

 
—

 
5,583

Balances, June 30, 2016
112,269,993

 
$
1,123

 
$
950,514

 
$
(374,669
)
 
$
21

 
$
50

 
$
577,039


The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.


6
BOYD GAMING CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited)


 
Six Months Ended
 
June 30,
(In thousands)
2017
 
2016
Cash Flows from Operating Activities
 
 
 
Net income
$
84,067

 
$
63,212

Adjustments to reconcile net income to net cash provided by operating activities:
 
 
 
Income from discontinued operations, net of tax
(21,392
)
 
(30,345
)
Depreciation and amortization
106,527

 
95,903

Amortization of debt financing costs and discounts on debt
4,412

 
9,077

Share-based compensation expense
8,830

 
5,583

Deferred income taxes
32,647

 
13,282

Non-cash impairment of assets
—

 
1,440

Loss on early extinguishments and modifications of debt
534

 
846

Other operating activities
(456
)
 
858

Changes in operating assets and liabilities:
 
 
 
Restricted cash
(5,152
)
 
(1,690
)
Accounts receivable, net
539

 
(1,297
)
Inventories
(555
)
 
99

Prepaid expenses and other current assets
777

 
(5,859
)
Income taxes receivable
1,862

 
(235
)
Other assets, net
(1,642
)
 
(691
)
Accounts payable and accrued liabilities
(15,621
)
 
7,334

Other long-term tax liabilities
66

 
127

Other liabilities
(209
)
 
2,617

Net cash provided by operating activities
195,234

 
160,261

Cash Flows from Investing Activities
 
 
 
Capital expenditures
(118,751
)
 
(72,447
)
Advances pursuant to development agreement
(35,108
)
 
—

Other investing activities
492

 
704

Net cash used in investing activities
(153,367
)
 
(71,743
)
Cash Flows from Financing Activities
 
 
 
Borrowings under Boyd Gaming bank credit facility
535,900

 
223,900

Payments under Boyd Gaming bank credit facility
(628,037
)
 
(530,350
)
Borrowings under Peninsula bank credit facility
—

 
165,000

Payments under Peninsula bank credit facility
—

 
(217,225
)
Proceeds from issuance of senior notes
—

 
750,000

Debt financing costs, net
(2,381
)
 
(12,936
)
Share-based compensation activities, net
(2,796
)
 
(104
)
Shares repurchased and retired
(11,090
)
 
—

Other financing activities
(95
)
 
—

Net cash provided by (used in) financing activities
(108,499
)
 
378,285

Cash Flows from Discontinued Operations
 
 
 
Cash flows from operating activities
(514
)
 
2,654

Cash flows from investing activities
36,247

 
—

Cash flows from financing activities
—

 
—

Net cash provided by discontinued operations
35,733

 
2,654

Change in cash and cash equivalents
(30,899
)
 
469,457

Cash and cash equivalents, beginning of period
193,862

 
158,821

Cash and cash equivalents, end of period
$
162,963

 
$
628,278

Supplemental Disclosure of Cash Flow Information
 
 
 
Cash paid for interest, net of amounts capitalized
$
94,600

 
$
92,940

Cash paid for income taxes, net of refunds
4,252

 
2,198

Supplemental Schedule of Noncash Investing and Financing Activities
 
 
 
Payables incurred for capital expenditures
$
7,729

 
$
7,140


The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.

7



BOYD GAMING CORPORATION AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
as of June 30, 2017 and December 31, 2016 and for the three and six months ended June 30, 2017 and 2016
______________________________________________________________________________________________________
NOTE 1.    ORGANIZATION AND BASIS OF PRESENTATION
Organization
Boyd Gaming Corporation (and together with its subsidiaries, the "Company," "Boyd Gaming," "we" or "us") was incorporated in the state of Nevada in 1988 and has been operating since 1975. The Company's common stock is traded on the New York Stock Exchange under the symbol "BYD."

We are a diversified operator of 24 wholly owned gaming entertainment properties. Headquartered in Las Vegas, we have gaming operations in Nevada, Illinois, Indiana, Iowa, Kansas, Louisiana and Mississippi.

Basis of Presentation
The accompanying unaudited condensed consolidated financial statements of the Company have been prepared in accordance with the instructions to the Quarterly Report on 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 in conformity with accounting principles generally accepted in the United States of America ("GAAP"). These 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, 2016, as filed with the U.S. Securities and Exchange Commission ("SEC") on February 23, 2017.

The results for the periods indicated are unaudited, but reflect all adjustments (consisting only 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 the interim periods presented herein are not necessarily indicative of the results that would be achieved during a full year of operations or in future periods.

The accompanying condensed consolidated financial statements include the accounts of Boyd Gaming and its wholly owned subsidiaries. Investments in unconsolidated affiliates, which do not meet the consolidation criteria of the authoritative accounting guidance for voting interest, controlling interest or variable interest entities, are accounted for under the equity method. All significant intercompany accounts and transactions have been eliminated in consolidation. On May 31, 2016, we announced that we had entered into an Equity Purchase Agreement (the "Purchase Agreement") to sell our 50% equity interest in Marina District Development Holding Company, LLC ("MDDHC"), the parent company of Borgata Hotel Casino & Spa ("Borgata"), to MGM Resorts International ("MGM"), and the transaction closed on August 1, 2016. (See Note 3, Acquisitions and Divestitures.) We account for our investment in Borgata applying the equity method and report its results as discontinued operations for all periods presented in these condensed consolidated financial statements.

NOTE 2.    SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Cash and Cash Equivalents
Cash and cash equivalents include highly liquid investments, which include cash on hand and in banks, interest-bearing deposits and money market funds with maturities of three months or less at their date of purchase. The instruments are not restricted as to withdrawal or use and are on deposit with high credit quality financial institutions. Although these balances may at times exceed the federal insured deposit limit, we believe such risk is mitigated by the quality of the institution holding such deposit. The carrying values of these instruments approximate their fair values as such balances are generally available on demand.

Promotional Allowances
The retail value of accommodations, food and beverage, and other services furnished to guests without charge is included in gross revenues and then deducted as a promotional allowance. Promotional allowances also include incentives earned in our slot bonus program such as cash and the estimated retail value of goods and services (such as complimentary rooms and food and beverages). We reward customers, through the use of bonus programs, with points based on amounts wagered that can be redeemed for a specified period of time for complimentary slot play, food and beverage, and to a lesser extent for other goods or services, depending upon the property.

8
BOYD GAMING CORPORATION AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
as of June 30, 2017 and December 31, 2016 and for the three and six months ended June 30, 2017 and 2016
______________________________________________________________________________________________________


The amounts included in promotional allowances are as follows:
 
Three Months Ended
 
Six Months Ended
 
June 30,
 
June 30,
(In thousands)
2017
 
2016
 
2017
 
2016
Rooms
$
18,879

 
$
18,294

 
$
37,356

 
$
37,239

Food and beverage
42,087

 
35,660

 
84,154

 
73,112

Other
3,749

 
3,056

 
6,669

 
6,973

Total promotional allowances
$
64,715

 
$
57,010

 
$
128,179

 
$
117,324


The estimated costs of providing such promotional allowances are as follows:
 
Three Months Ended
 
Six Months Ended
 
June 30,
 
June 30,
(In thousands)
2017
 
2016
 
2017
 
2016
Rooms
$
8,128

 
$
7,921

 
$
16,487

 
$
16,490

Food and beverage
37,266

 
30,842

 
74,888

 
64,113

Other
2,648

 
3,000

 
6,456

 
5,981

Total estimated cost of promotional allowances
$
48,042

 
$
41,763

 
$
97,831

 
$
86,584


Gaming Taxes
We are subject to taxes based on gross gaming revenues in the jurisdictions in which we operate. These gaming taxes are assessed based on our gaming revenues and are recorded as a gaming expense in the condensed consolidated statements of operations. These taxes totaled approximately $83.8 million and $81.5 million for the three months ended June 30, 2017 and 2016, respectively, and $167.0 million and $164.1 million for the six months ended June 30, 2017 and 2016, respectively.

Income Taxes
Income taxes are recorded under the asset and liability method, whereby deferred tax assets and liabilities are recognized based on the future tax consequences attributable to temporary differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases. We reduce the carrying amounts of deferred tax assets by a valuation allowance, if based on all evidence, it is more likely than not that such assets will not be realized. Use of the term "more likely than not" indicates the likelihood of occurrence is greater than 50%. Accordingly, the need to establish valuation allowances for deferred tax assets is continually assessed based on a more-likely-than-not realization threshold. This assessment considers, among other matters, the nature, frequency and severity of current and cumulative losses, forecasts of profitability, the duration of statutory carryforward periods, our experience with the utilization of operating loss and tax credit carryforwards before expiration and tax planning strategies. In making such judgments, significant weight is given to evidence that can be objectively verified.

For the six months ended June 30, 2017, we computed our provision by applying the annual effective tax rate method. For the six months ended June 30, 2016, we computed our provision for income taxes by applying the actual effective tax rate, under the discrete method, to year-to-date income. The discrete method was used to calculate our income tax provision as the annual effective tax rate was not considered a reliable estimate of year-to-date income tax expense.

Other Long Term Tax Liabilities
The Company's income tax returns are subject to examination by the Internal Revenue Service ("IRS") and other tax authorities in the locations where it operates. The Company assesses potentially unfavorable outcomes of such examinations based on accounting standards for uncertain income taxes, which prescribe a minimum recognition threshold a tax position is required to meet before being recognized in the financial statements.

Uncertain tax position accounting standards apply to all tax positions related to income taxes. These accounting standards utilize a two-step approach for evaluating tax positions. Recognition occurs when the Company concludes that a tax position, based on its technical merits, is more likely than not to be sustained upon examination. Measurement is only addressed if the position is

9
BOYD GAMING CORPORATION AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
as of June 30, 2017 and December 31, 2016 and for the three and six months ended June 30, 2017 and 2016
______________________________________________________________________________________________________

deemed to be more likely than not to be sustained. The tax benefit is measured as the largest amount of benefit that is more likely than not to be realized upon settlement.

Tax positions failing to qualify for initial recognition are recognized in the first subsequent interim period that they meet the "more likely than not" standard. If it is subsequently determined that a previously recognized tax position no longer meets the "more likely than not" standard, it is required that the tax position is derecognized. Accounting standards for uncertain tax positions specifically prohibit the use of a valuation allowance as a substitute for derecognition of tax positions. As applicable, the Company will recognize accrued penalties and interest related to unrecognized tax benefits in the provision for income taxes. Accrued interest and penalties are included in other long-term tax liabilities on the balance sheet.

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 period. Actual results could differ from these estimates.

Change in Accounting Principle
In first quarter 2017, the Company adopted Accounting Standards Update 2016-09, Compensation - Stock Compensation ("Update 2016-09") which simplified several aspects of the accounting for share-based payment transactions, including the income tax consequences, classification of awards as either equity or liabilities and classification on the statement of cash flows. Update 2016-09 requires excess tax benefits and deficiencies to be recorded in income tax expense instead of equity. The cumulative effect of this change in accounting principle is to record the benefit of previously unrecognized excess tax deductions as an increase in retained earnings of $15.8 million on the condensed consolidated statement of changes in stockholders' equity for the six months ended June 30, 2017.

Recently Issued Accounting Pronouncements
Accounting Standards Update 2017-9, Compensation-Stock Compensation ("Update 2017-09")
In May 2017, the Financial Accounting Standards Board ("FASB") issued Update 2017-09, which amends the scope of modification accounting for share-based payment arrangements. An entity should account for the effects of a modification unless the fair value, vesting conditions, and classification of the awards are the same immediately before and after the modification. The standard is effective for the financial statements issued for annual periods and interim periods within those annual periods, beginning after December 15, 2017, and early adoption is permitted. The Company adopted Update 2017-09 during second quarter 2017. The early adoption did not have a material impact on our condensed consolidated financial statements.

Accounting Standards Update 2017-04, Intangibles-Goodwill and Other ("Update 2017-04")
In January 2017, the FASB issued Update 2017-04, which addresses goodwill impairment testing. Instead of determining goodwill impairment by calculating the implied fair value of goodwill, an entity should perform goodwill impairment test by comparing the fair value of a reporting unit with its carrying amount. The standard is effective for financial statements issued for annual periods and interim periods within those annual periods, beginning after December 15, 2019, and early adoption is permitted. The Company adopted Update 2017-04 effective January 1, 2017. The early adoption did not have an impact on our condensed consolidated financial statements.


10
BOYD GAMING CORPORATION AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
as of June 30, 2017 and December 31, 2016 and for the three and six months ended June 30, 2017 and 2016
______________________________________________________________________________________________________

Accounting Standards Update 2014-09, Revenue from Contracts with Customers ("Update 2014-09"); Accounting Standards Update 2015-14, Revenue from Contracts with Customers - Deferral of the Effective Date ("Update 2015-14" ); Accounting Standards Update 2016-08, Revenue from Contracts with Customers - Principal versus Agent Considerations (Reporting Revenue Gross versus Net) ("Update 2016-08"); Accounting Standards Update 2016-10, Revenue from Contracts with Customers - Identifying Performance Obligations and Licensing ("Update 2016-10"); Accounting Standards Update 2016-11, Revenue Recognition (Topic 605) and Derivatives and Hedging (Topic 815) - Rescission of SEC Guidance Because of Accounting Standards Updates 2014-09 and 2014-16 Pursuant to Staff Announcements at the March 3, 2016 EITF Meeting ("Update 2016-11"); and Accounting Standards Update 2016-12, Revenue from Contracts with Customers - Narrow-Scope Improvements and Practical Expedients ("Update 2016-12"); (collectively, the “Revenue Standard”)
The Revenue Standard prescribes a new, single comprehensive model for entities to use in accounting for revenue arising from contracts with customers and supersedes most current revenue recognition guidance, including industry-specific guidance. Interpretations of the Revenue Standard are on-going and could have a significant impact on our implementation. Currently, we expect that the historical presentation which reflects revenues gross for goods and services provided to our customers as an inducement to play with us, with an offsetting reduction for promotional allowances to derive net revenues, will no longer be allowed. Instead, revenues will be allocated among our departmental classifications based on the relative standalone selling prices of the goods and services provided to the customer. We currently anticipate that this methodology will result in a reduction of our reported gaming revenues by an amount equivalent to our reported promotional allowance revenues. We also expect the accounting for our frequent player programs to be impacted, with possible changes to the timing and/or classification of certain transactions within revenues and between revenues and operating expenses. 

The Revenue Standard is effective for our Company on January 1, 2018, and must be adopted by applying either a full retrospective approach for all periods presented in the period of adoption or a modified retrospective approach with the cumulative effect of initially applying the guidance recognized at the date of initial application. We currently anticipate adopting the Revenue Standard by applying the full retrospective approach.

We are continuing to update our assessment of the effects of the Revenue Standard on our condensed consolidated financial statements, including the planned method of adoption and the quantification of the effects of the new guidance, and we will disclose those effects when known.

A variety of proposed or otherwise potential accounting standards are currently being studied 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 condensed consolidated financial statements.

NOTE 3.    ACQUISITIONS AND DIVESTITURES
Aliante Casino + Hotel + Spa
On September 27, 2016, Boyd Gaming completed the acquisition of ALST Casino Holdco LLC, the holding company of Aliante Casino + Hotel + Spa ("Aliante"). Pursuant to the merger agreement, Merger Sub merged (the "Merger") with and into ALST, with ALST surviving the Merger. ALST and Aliante are now wholly-owned subsidiaries of Boyd Gaming. Accordingly, the acquired assets and liabilities of Aliante are included in our condensed consolidated balance sheets as of June 30, 2017 and December 31, 2016 and the results of its operations in our condensed consolidated statements of operations for the three and six months ended June 30, 2017. Aliante's cash flows are reported in our condensed consolidated statements of cash flows for the six months ended June 30, 2017. Aliante is an upscale, resort-style casino and hotel situated in North Las Vegas and offering premium accommodations, gaming, dining, entertainment and retail, and is aggregated into our Las Vegas Locals segment (See Note 11, Segment Information).

Acquisition Method of Accounting
The Company followed the acquisition method of accounting according to the guidance of FASB Accounting Standards Codification Topic 805 ("ASC 805"). In accordance with ASC 805, the Company allocated the purchase price to the tangible and intangible assets acquired and liabilities assumed based on their fair values, which were determined primarily by management with assistance from third-party appraisals. The excess of the purchase price over those fair values was recorded as goodwill. The purchase price allocation below represents Aliante’s opening balance sheet on September 27, 2016, which was initially reported in our Form 10−K for the year ended December 31, 2016. During the measurement period, which concluded on June 30, 2017, opening balance sheet adjustments were made to finalize the preliminary fair value estimates, resulting in a $2.6 million reduction in other assets, prima

11
BOYD GAMING CORPORATION AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
as of June 30, 2017 and December 31, 2016 and for the three and six months ended June 30, 2017 and 2016
______________________________________________________________________________________________________

rily related to base stock, a $0.8 million reduction in property and equipment and a $0.4 million increase in assumed liabilities, with a corresponding net increase to goodwill of $3.8 million. The measurement period adjustment and the related tax impact were immaterial to our condensed consolidated financial statements.

The following table presents the components and allocation of the purchase price, including the measurement period adjustments:
(In thousands)
 
Preliminary Purchase Price Allocation
 
Adjustments
 
Final Purchase Price Allocation
Current assets
 
$
31,886

 
$
—

 
$
31,886

Property and equipment
 
226,309

 
(760
)
 
225,549

Intangible and other assets
 
20,791

 
(2,643
)
 
18,148

Total acquired assets
 
278,986

 
(3,403
)
 
275,583

 
 
 
 
 
 
 
Current liabilities
 
5,693

 
515

 
6,208

Other liabilities
 
636

 
(83
)
 
553

          Total liabilities assumed
 
6,329

 
432

 
6,761

Net identifiable assets acquired
 
272,657

 
(3,835
)
 
268,822

Goodwill
 
126,489

 
3,835

 
130,324

Net assets acquired
 
$
399,146

 
$
—

 
$
399,146


Cannery Casino Hotel and Nevada Palace, LLC
On December 20, 2016 (the "Acquisition Date"), Boyd Gaming completed the acquisitions of Cannery, the owner and operator of Cannery Casino Hotel, and Eastside Cannery, the owner and operator of Eastside Cannery Casino and Hotel, pursuant to a Membership Interest Purchase Agreement (the “Purchase Agreement”) dated as of April 25, 2016, as amended on October 28, 2016, by and among Boyd, Cannery Casino Resorts, LLC (“Seller”), Cannery and Eastside Cannery.

Pursuant to the terms of the Purchase Agreement, Boyd acquired from Seller all of the issued and outstanding membership interests of Cannery and Eastside Cannery (the “Acquisitions”). With the closing of the Acquisitions, each of Cannery and Eastside Cannery became wholly-owned subsidiaries of Boyd. Accordingly, the acquired assets and liabilities of Cannery and Eastside Cannery are included in our condensed consolidated balance sheets as of June 30, 2017 and December 31, 2016 and the results of their operations in our condensed consolidated statements of operations for the three and six months ended June 30, 2017. The Cannery and Eastside Cannery's cash flows are reported in our condensed consolidated statements of cash flows for the six months ended June 30, 2017. The Cannery and Eastside Cannery are modern casinos and hotels in the Las Vegas Valley that offer premium accommodations, gaming, dining, entertainment and retail, and are aggregated into our Las Vegas Locals segment (See Note 11, Segment Information).

The fair value of the consideration transferred to Seller on the Acquisition Date was $238.6 million. In addition, the Purchase Agreement provided for a working capital adjustment to the purchase consideration. This adjustment was calculated during the second quarter and paid subsequent to the end of the quarter, resulting in an additional $1.2 million being paid to Seller.

Status of Purchase Price Allocation
The Company is following the acquisition method of accounting per ASC 805 guidance. For purposes of these financial statements, we have allocated the purchase price to the assets acquired and the liabilities assumed based on preliminary estimates of fair value as determined by management based on its judgment with assistance from preliminary third party appraisals. The excess of the purchase price over the net book value of the assets acquired and liabilities assumed has been recorded as goodwill. The Company will recognize the assets acquired and liabilities assumed in the Acquisitions based on fair value estimates as of the date of the Acquisitions. The finalization of the determination of the fair values of the acquired assets and assumed liabilities (and the related determination of estimated lives of depreciable tangible and identifiable intangible assets) is currently in process. This determination requires significant judgment. As such, management has not completed its valuation analysis and calculations in sufficient detail necessary to finalize the determination of the fair value of the assets acquired and liabilities assumed, along with the related allocations of goodwill and intangible assets. The final fair value determinations are expected to be completed no later than third quarter of 2017 and those determinations may be significantly different than those reflected in the condensed consolidated financial statements at June 30, 2017 and December 31, 2016.

12
BOYD GAMING CORPORATION AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
as of June 30, 2017 and December 31, 2016 and for the three and six months ended June 30, 2017 and 2016
______________________________________________________________________________________________________


The following table summarizes the components of the preliminary provisional purchase price allocations at December 31, 2016 and June 30, 2017:
 
 
Provisional Purchase Price Allocation
(In thousands)
 
as of December 31, 2016
 
Adjustments
 
as of June 30, 2017
Current assets
 
$
29,929

 
$
—

 
$
29,929

Property and equipment
 
181,757

 
(58,630
)
 
123,127

Intangible and other assets
 
16,330

 
(880
)
 
15,450

Total acquired assets
 
228,016

 
(59,510
)
 
168,506

 
 
 
 
 
 
 
Current liabilities
 
15,850

 
—

 
15,850

          Total liabilities assumed
 
15,850

 
—

 
15,850

Net identifiable assets acquired
 
212,166

 
(59,510
)
 
152,656

Goodwill
 
26,401

 
60,664

 
87,065

Net assets acquired
 
$
238,567

 
$
1,154

 
$
239,721


Investment in and Divestiture of Borgata
On August 1, 2016, Boyd Gaming completed the sale of its 50% equity interest in MDDHC, the parent company of Borgata in Atlantic City, New Jersey, to MGM pursuant to the Purchase Agreement entered into on May 31, 2016, as amended on July 19, 2016, by and among Boyd, Boyd Atlantic City, Inc., a wholly-owned subsidiary of Boyd and MGM.

Prior to the sale of our equity interest, the Company and MGM each held a 50% interest in MDDHC, which owns all the equity interests in Borgata. Until the closing of the sale, we were the managing member of MDDHC, and we were responsible for the day-to-day operations of Borgata.

Pursuant to the Purchase Agreement, MGM acquired from Boyd Gaming 49% of its 50% membership interest in MDDHC and, immediately thereafter, MDDHC redeemed Boyd Gaming’s remaining 1% membership interest in MDDHC (collectively, the "Transaction"). Following the Transaction, MDDHC became a wholly-owned subsidiary of MGM.

In consideration for the Transaction, MGM paid Boyd Gaming $900 million. The initial net cash proceeds were approximately $589 million, net of certain expenses and adjustments on the closing date, including outstanding indebtedness, cash and working capital. These initial proceeds did not include our 50% share of any future property tax settlement benefits, from the time period during which we held a 50% ownership in MDDHC, to which Boyd Gaming retained the right to receive upon payment. On February 15, 2017, Borgata entered into a settlement agreement with Atlantic City, the terms of which provided for $72 million to be paid to Borgata to resolve the remaining property tax issues. Borgata received full payment, and we received our share of the proceeds, in June 2017. For the three and six months ended June 30, 2017, we recognized $35.6 million and $36.2 million, respectively, in income for the cash we received for our share of property tax benefits realized by Borgata subsequent to the closing of the sale. These payments, net of tax of $14.6 million and $14.8 million for the three and six months ended June 30, 2017, respectively, are included in discontinued operations in the condensed consolidated financial statements.


13
BOYD GAMING CORPORATION AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
as of June 30, 2017 and December 31, 2016 and for the three and six months ended June 30, 2017 and 2016
______________________________________________________________________________________________________

Summarized income statement information for Borgata is as follows:
(In thousands)
Three Months Ended June 30, 2016
 
Six Months Ended June 30, 2016
Net revenues
$
203,347

 
$
393,640

Operating expenses
150,195

 
302,815

Operating income
53,152

 
90,825

Non-operating expenses
15,764

 
30,176

Net income
$
37,388

 
$
60,649


NOTE 4.    PROPERTY AND EQUIPMENT, NET
Property and equipment, net consists of the following:
 
June 30,
 
December 31,
(In thousands)
2017
 
2016
Land
$
295,072

 
$
251,316

Buildings and improvements
2,901,809

 
2,915,664

Furniture and equipment
1,291,605

 
1,243,724

Riverboats and barges
239,302

 
239,264

Construction in progress
55,140

 
86,226

Other
726

 
726

Total property and equipment
4,783,654

 
4,736,920

Less accumulated depreciation
2,216,057

 
2,131,751

Property and equipment, net
$
2,567,597

 
$
2,605,169


Other property and equipment presented in the table above relates to the estimated net realizable value of construction materials inventory that was not disposed of with the 2013 sale of the Echelon development project. Such assets are not in service and are not currently being depreciated. Depreciation expense is as follows:
 
Three Months Ended
 
Six Months Ended
 
June 30,
 
June 30,
(In thousands)
2017
 
2016
 
2017
 
2016
Depreciation expense
$
47,771

 
$
44,266

 
$
97,165

 
$
87,821


NOTE 5.    INTANGIBLE ASSETS
Intangible assets consist of the following:
 
June 30, 2017
 
Weighted
 
Gross
 
 
 
Cumulative
 
 
 
Average Life
 
Carrying
 
Cumulative
 
Impairment
 
Intangible
(In thousands)
Remaining
 
Value
 
Amortization
 
Losses
 
Assets, Net
Amortizing intangibles
 
 
 
 
 
 
 
 
 
Customer relationships
0.6 years
 
$
145,700

 
$
(132,284
)
 
$
—

 
$
13,416

Favorable lease rates
38.5 years
 
11,730

 
(2,960
)
 
—

 
8,770

Development agreement
—
 
21,373

 
—

 
—

 
21,373

 
 
 
178,803

 
(135,244
)
 
—

 
43,559

 
 
 
 
 
 
 
 
 
 
Indefinite lived intangible assets
 
 
 
 
 
 
 
 
 
Trademarks
Indefinite
 
151,887

 
—

 
(4,300
)
 
147,587

Gaming license rights
Indefinite
 
873,335

 
(33,960
)
 
(179,974
)
 
659,401

 
 
 
1,025,222

 
(33,960
)
 
(184,274
)
 
806,988

Balance, June 30, 2017
 
 
$
1,204,025

 
$
(169,204
)
 
$
(184,274
)
 
$
850,547



14
BOYD GAMING CORPORATION AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
as of June 30, 2017 and December 31, 2016 and for the three and six months ended June 30, 2017 and 2016
______________________________________________________________________________________________________

 
December 31, 2016
 
Weighted
 
Gross
 
 
 
Cumulative
 
 
 
Average Life
 
Carrying
 
Cumulative
 
Impairment
 
Intangible
(In thousands)
Remaining
 
Value
 
Amortization
 
Losses
 
Assets, Net
Amortizing intangibles
 
 
 
 
 
 
 
 
 
Customer relationships
1.1 years
 
$
144,780

 
$
(125,318
)
 
$
—

 
$
19,462

Favorable lease rates
31.4 years
 
45,370

 
(13,039
)
 
—

 
32,331

Development agreement
—
 
21,373

 
—

 
—

 
21,373

 
 
 
211,523

 
(138,357
)
 
—

 
73,166

 
 
 
 
 
 
 
 
 
 
Indefinite lived intangible assets
 
 
 
 
 
 
 
 
 
Trademarks
Indefinite
 
153,687

 
—

 
(4,300
)
 
149,387

Gaming license rights
Indefinite
 
873,335

 
(33,960
)
 
(179,974
)
 
659,401

 
 
 
1,027,022

 
(33,960
)
 
(184,274
)
 
808,788

Balance, December 31, 2016
 
 
$
1,238,545

 
$
(172,317
)
 
$
(184,274
)
 
$
881,954


In March 2017, The Orleans Hotel and Casino exercised an option in its lease agreement to terminate the existing lease and purchase the land subject to the lease, therefore combining the remaining unamortized favorable lease rate asset into the cost of the land asset.

NOTE 6.    ACCRUED LIABILITIES
Accrued liabilities consist of the following:
 
June 30,
 
December 31,
(In thousands)
2017
 
2016
Payroll and related expenses
$
64,437

 
$
68,102

Interest
19,431

 
33,407

Gaming liabilities
42,086

 
41,942

Player loyalty program liabilities
18,390

 
19,076

Dividend payable
5,653

 
—

Other accrued liabilities
97,375

 
88,555

Total accrued liabilities
$
247,372

 
$
251,082


NOTE 7.    LONG-TERM DEBT
Long-term debt, net of current maturities and debt issuance costs, consists of the following:
 
 
 
June 30, 2017
 
 
 
 
 
 
 
Unamortized
 
 
 
Interest
 
 
 
 
 
Origination
 
 
 
Rates at
 
Outstanding
 
Unamortized
 
Fees and
 
Long-Term
(In thousands)
June 30, 2017
 
Principal
 
Discount
 
Costs
 
Debt, Net
Bank credit facility
3.49
%
 
$
1,690,401

 
$
(1,719
)
 
$
(27,528
)
 
$
1,661,154

6.875% senior notes due 2023
6.88
%
 
750,000

 
—

 
(11,530
)
 
738,470

6.375% senior notes due 2026
6.38
%
 
750,000

 
—

 
(10,332
)
 
739,668

Other
5.80
%
 
546

 
—

 
—

 
546

Total long-term debt
 
 
3,190,947

 
(1,719
)
 
(49,390
)
 
3,139,838

Less current maturities
 
 
23,987

 
—

 
—

 
23,987


 
 
$
3,166,960

 
$
(1,719
)
 
$
(49,390
)
 
$
3,115,851



15
BOYD GAMING CORPORATION AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
as of June 30, 2017 and December 31, 2016 and for the three and six months ended June 30, 2017 and 2016
______________________________________________________________________________________________________

 
 
 
December 31, 2016
 
 
 
 
 
 
 
Unamortized
 
 
 
Interest
 
 
 
 
 
Origination
 
 
 
Rates at
 
Outstanding
 
Unamortized
 
Fees and
 
Long-Term
(In thousands)
Dec. 31, 2016
 
Principal
 
Discount
 
Costs
 
Debt, Net
Bank credit facility
3.44
%
 
$
1,782,538

 
$
(1,888
)
 
$
(28,503
)
 
$
1,752,147

6.875% senior notes due 2023
6.88
%
 
750,000

 
—

 
(11,209
)
 
738,791

6.375% senior notes due 2026
6.38
%
 
750,000

 
—

 
(12,074
)
 
737,926

Other
5.80
%
 
591

 
—

 
—

 
591

Total long-term debt
 
 
3,283,129

 
(1,888
)
 
(51,786
)
 
3,229,455

Less current maturities
 
 
30,336

 
—

 
—

 
30,336

 
 
 
$
3,252,793

 
$
(1,888
)
 
$
(51,786
)
 
$
3,199,119


Credit Facility
On March 29, 2017, the Company, as borrower, entered into Amendment No. 2 and Refinancing Amendment (the "Refinancing Amendment") with the lenders party thereto, and Bank of America, N.A. ("Bank of America"), as administrative agent. The Refinancing Amendment modifies the Third Amended and Restated Credit Agreement (as amended prior to the execution of the Refinancing Amendment, the "Existing Credit Agreement"), dated as of August 14, 2013, among the Company, certain financial institutions, and Bank of America, as administrative agent. The Refinancing Amendment modified the Existing Credit Agreement and is referred to as the "Amended Credit Agreement" (together referred to as the "Credit Facility").

The Amended Credit Agreement provides for (i) commitments to make Term B Loans in an amount equal to $1,264.5 million (the "Refinancing Term B Loans"), with the proceeds used to refinance in full the Company’s Term B-1 Loans and Term B-2 Loans outstanding under the Existing Credit Agreement and (ii) certain other amendments to the Existing Credit Agreement.

Interest and Fees
The interest rate on the outstanding balance of the Refinancing Term B Loans under the Amended Credit Agreement is based upon, at the Company’s option, either: (i) the Eurodollar rate or (ii) the base rate, in each case, plus an applicable margin. Such applicable margin is a percentage per annum determined in accordance with the Company’s secured leverage ratio and ranges from 2.25% to 2.50% (if using the Eurodollar rate) and from 1.25% to 1.50% (if using the base rate).

Optional and Mandatory Prepayments
The Company shall make repayments of the Refinancing Term B Loans on or before the last business day of each fiscal quarter of the Company commencing with the first full fiscal quarter of the Company after the Refinancing Effective Date in an amount equal to (x) 0.25% of the aggregate principal amount of the Refinancing Term B Loans plus (y) 0.25% of the aggregate principal amount of any increased Refinancing Term B Loan, as defined in the Existing Credit Agreement. The Company shall repay the outstanding principal amount of all Refinancing Term B Loans on the maturity date for the Refinancing Term B Loans, which shall be September 15, 2023.

Amounts outstanding under the Refinancing Amendment may be prepaid without premium or penalty, and the commitments may be terminated without penalty, subject to certain exceptions, including a 1.00% prepayment premium for any full or partial prepayment of the Refinancing Term B Loans effected prior to the six-month anniversary of the Refinancing Effective Date that results in a lower interest rate.

16
BOYD GAMING CORPORATION AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
as of June 30, 2017 and December 31, 2016 and for the three and six months ended June 30, 2017 and 2016
______________________________________________________________________________________________________


The outstanding principal amounts under the Credit Facility are comprised of the following:
 
June 30,
 
December 31,
(In thousands)
2017
 
2016
Revolving Credit Facility
$
145,000

 
$
245,000

Term A Loan
216,562

 
222,188

Refinancing Term B Loans
1,256,339

 
—

Term B-1 Loan
—

 
271,750

Term B-2 Loan
—

 
997,500

Swing Loan
72,500

 
46,100

Total outstanding principal amounts under the Credit Facility
$
1,690,401

 
$
1,782,538


At June 30, 2017, approximately $1.7 billion was outstanding under the Credit Facility and $12.5 million was allocated to support various letters of credit, leaving remaining contractual availability of $545.0 million.

Covenant Compliance
As of June 30, 2017, we believe that we were in compliance with the financial and other covenants of our debt instruments.

On March 7, 2017, Aliante, Cannery and Eastside Cannery became guarantors of the 6.875% senior notes due May 2023 ("6.875% Notes"), the 6.375% senior notes due April 2026 ("6.375% Notes" and, together with the 6.875% Notes, the "Senior Notes") and the Credit Agreement.

NOTE 8.    COMMITMENTS AND CONTINGENCIES
Commitments
There have been no material changes to our commitments described under Note 9, Commitments and Contingencies, in our Annual Report on Form 10-K for the year ended December 31, 2016 filed with the SEC on February 23, 2017.

Contingencies
Legal Matters
We are parties to various legal proceedings arising in the ordinary course of business. In our opinion, all pending legal matters are either adequately covered by insurance, or, if not insured, will not have a material adverse impact on our financial position, results of operations or cash flows.

NOTE 9.    STOCKHOLDERS' EQUITY AND STOCK INCENTIVE PLANS
Share Repurchase Program
On May 2, 2017, the Company announced that its Board of Directors had reaffirmed the Company’s existing share repurchase program, which as of June 30, 2017, had $81 million remaining. The Company intends to make purchases of its common stock from time to time under this program 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.

The following table provides information regarding share repurchases during the referenced periods.(1) 
(In thousands, except per share data)
 
For the Three and Six Months Ended June 30, 2017
Shares repurchased (2)
 
442

Total cost, including brokerage fees
 
$
11,090

Average repurchase price per share (3)
 
$
25.11

(1) Shares repurchased reflect repurchases settled during the three and six months ended June 30, 2017. These amounts exclude repurchases traded but not yet settled on or before June 30, 2017.
(2) All shares repurchased have been retired and constitute authorized but unissued shares.
(3) Figures in the table may not recalculate exactly due to rounding. Average repurchase price per share is calculated based on unrounded numbers.

17
BOYD GAMING CORPORATION AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
as of June 30, 2017 and December 31, 2016 and for the three and six months ended June 30, 2017 and 2016
______________________________________________________________________________________________________


Dividends
On May 2, 2017, the Company announced that its Board of Directors had authorized the reinstatement of the Company’s cash dividend program and declared a quarterly dividend of $0.05 per share, to be paid July 15, 2017, to shareholders of record as of June 15, 2017. This dividend was paid after the end of the second quarter of 2017.

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.
 
Three Months Ended
 
Six Months Ended
 
June 30,
 
June 30,
(In thousands)
2017
 
2016
 
2017
 
2016
Gaming
$
111

 
$
80

 
$
181

 
$
165

Food and beverage
22

 
15

 
35

 
31

Room
10

 
7

 
16

 
15

Selling, general and administrative
561

 
405

 
919

 
837

Corporate expense
5,043

 
1,813

 
7,679

 
4,535

Total share-based compensation expense
$
5,747

 
$
2,320

 
$
8,830

 
$
5,583


Performance Shares
Our stock incentive plan provides for the issuance of Performance Share Unit ("PSU") grants which may be earned, in whole or in part, upon passage of time and the attainment of performance criteria. We periodically review our estimates of performance against the defined criteria to assess the expected payout of each outstanding PSU grant and adjust our stock compensation expense accordingly,
The PSU grants awarded in fourth quarter 2013 and 2012 vested during first quarter 2017 and 2016, respectively. Common shares were issued based on the determination by the Compensation Committee of the Board of Directors of our actual achievement of net revenue growth, Earnings Before Interest, Taxes, Depreciation and Amortization ("EBITDA") growth and customer service scores for the three-year performance period of each grant. As provided under the provisions of our stock incentive plan, certain of the participants elected to surrender a portion of the shares to be received to pay the withholding and other payroll taxes payable on the compensation resulting from the vesting of the PSUs.
The PSU grant awarded in November 2013 resulted in a total of 268,429 shares being issued during first quarter 2017, representing approximately 0.80 shares per PSU. Of the 268,429 shares issued, a total of 94,776 were surrendered by the participants for payroll taxes, resulting in a net issuance of 173,653 shares due to the vesting of the 2013 grant. The actual achievement level under the award metrics equaled the estimated performance as of year-end 2016; therefore, the vesting of the PSUs did not impact compensation costs in our 2017 condensed consolidated statement of operations.

The PSU grant awarded in December 2012 resulted in a total of 213,365 shares being issued during first quarter 2016, representing approximately 0.59 shares per PSU. Of the 213,365 shares issued, a total of 54,338 were surrendered by the participants for payroll taxes, resulting in a net issuance of 159,027 shares due to the vesting of the 2012 grant. The actual achievement level under the award metrics equaled the estimated performance as of year-end 2015; therefore, the vesting of the PSUs did not impact compensation costs in our 2016 condensed consolidated statement of operations.

NOTE 10.     FAIR VALUE MEASUREMENTS
The authoritative accounting guidance for fair value measurements specifies a hierarchy of valuation techniques based on whether the inputs to those valuation techniques are observable or unobservable. Observable inputs reflect market data obtained from independent sources, while unobservable inputs reflect the Company's market assumptions. These inputs create the following fair value hierarchy:

18
BOYD GAMING CORPORATION AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
as of June 30, 2017 and December 31, 2016 and for the three and six months ended June 30, 2017 and 2016
______________________________________________________________________________________________________


Level 1: Quoted prices for identical instruments in active markets.

Level 2: Quoted prices for similar instruments in active markets; quoted prices for identical or similar instruments in markets that are not active; and model-derived valuations in which all significant inputs and significant value drivers are observable in active markets.

Level 3: Valuations derived from valuation techniques in which one or more significant inputs or significant value drivers are unobservable.

Financial assets and liabilities are classified in their entirety based on the lowest level of input that is significant to the fair value measurement. Thus, assets and liabilities categorized as Level 3 may be measured at fair value using inputs that are observable (Levels 1 and 2) and unobservable (Level 3). Management's assessment of the significance of a particular input to the fair value measurement requires judgment and may affect the valuation of assets and liabilities and their placement within the fair value hierarchy levels.

Balances Measured at Fair Value
The following tables show the fair values of certain of our financial instruments:
 
June 30, 2017
(In thousands)
Balance
 
Level 1
 
Level 2
 
Level 3
Assets
 
 
 
 
 
 
 
Cash and cash equivalents
$
162,963

 
$
162,963

 
$
—

 
$
—

Restricted cash
21,640

 
21,640

 
—

 
—

Investment available for sale
17,456

 
—

 
—

 
17,456

 
 
 
 
 
 
 
 
Liabilities
 
 
 
 
 
 
 
Contingent payments
$
3,204

 
$
—

 
$
—

 
$
3,204


 
December 31, 2016
(In thousands)
Balance
 
Level 1
 
Level 2
 
Level 3
Assets
 
 
 
 
 
 
 
Cash and cash equivalents
$
193,862

 
$
193,862

 
$
—

 
$
—

Restricted cash
16,488

 
16,488

 
—

 
—

Investment available for sale
17,259

 
—

 
—

 
17,259

 
 
 
 
 
 
 
 
Liabilities
 
 
 
 
 
 
 
Contingent payments
$
3,038

 
$
—

 
$
—

 
$
3,038


Cash and Cash Equivalents and Restricted Cash
The fair value of our cash and cash equivalents and restricted cash, classified in the fair value hierarchy as Level 1, are based on statements received from our banks at June 30, 2017 and December 31, 2016.

Investment Available for Sale
We have an investment in a single municipal bond issuance of $20.5 million aggregate principal amount of 7.5% Urban Renewal Tax Increment Revenue Bonds, Taxable Series 2007 with a maturity date of June 1, 2037 that is classified as available for sale. We are the only holder of this instrument and there is no quoted market price for this instrument. As such, the fair value of this investment is classified as Level 3 in the fair value hierarchy. The fair value of the instrument is estimated using a discounted cash flows approach and the significant unobservable input used in the valuation at June 30, 2017 and December 31, 2016 is a discount rate of 9.8% and 10.3%, respectively. Unrealized gains and losses on this instrument resulting from changes in the fair value of the instrument are not charged to earnings, but rather are recorded as other comprehensive income (loss) in the stockholders' equity section of the condensed consolidated balance sheets. At June 30, 2017 and December 31, 2016, $0.5 million and $0.4 million,

19
BOYD GAMING CORPORATION AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
as of June 30, 2017 and December 31, 2016 and for the three and six months ended June 30, 2017 and 2016
______________________________________________________________________________________________________

respectively, of the carrying value of the investment available for sale is included as a current asset in prepaid expenses and other current assets, and at June 30, 2017 and December 31, 2016, $17.0 million and $16.8 million, respectively, is included in other assets on the condensed consolidated balance sheets. The discount associated with this investment of $3.0 million and $3.1 million, respectively, at June 30, 2017 and December 31, 2016 is netted with the investment balance and is being accreted over the life of the investment using the effective interest method. The accretion of such discount is included in interest income on the condensed consolidated statements of operations.

Contingent Payments
In connection with the development of the Kansas Star Casino ("Kansas Star"), Kansas Star agreed to pay a former casino project promoter 1% of Kansas Star's EBITDA each month for a period of ten years commencing on December 20, 2011. The liability is recorded at the estimated fair value of the contingent payments using a discounted cash flows approach and the significant unobservable input used in the valuation at June 30, 2017 and December 31, 2016, is a discount rate of 9.0% and 18.5%, respectively. At June 30, 2017 and December 31, 2016, there was a current liability of $0.8 million and $0.9 million, respectively, related to this agreement, which is recorded in accrued liabilities on the respective condensed consolidated balance sheets, and long-term obligation at June 30, 2017 and December 31, 2016, of $2.4 million and $2.2 million, respectively, which is included in other liabilities on the respective condensed consolidated balance sheets.

The following tables summarize the changes in fair value of the Company's Level 3 assets and liabilities:
 
Three Months Ended
 
June 30, 2017
 
June 30, 2016
 
Assets
 
Liability
 
Assets
 
Liability
(In thousands)
Investment
Available for
Sale
 
Contingent
Payments
 
Investment
Available for
Sale
 
Contingent
Payments
Balance at beginning of reporting period
$
17,865

 
$
(3,348
)
 
$
18,394

 
$
(3,560
)
Total gains (losses) (realized or unrealized):
 
 
 
 
 
 
 
Included in interest income (expense)
34

 
(73
)
 
33

 
(150
)
Included in other comprehensive income (loss)
(3
)
 
—

 
(185
)
 
—

Included in other items, net
—

 
(7
)
 
—

 
—

Purchases, sales, issuances and settlements:
 
 
 
 
 
 
 
Settlements
(440
)
 
224

 
(410
)
 
222

Balance at end of reporting period
$
17,456

 
$
(3,204
)
 
$
17,832

 
$
(3,488
)

 
Six Months Ended
 
June 30, 2017
 
June 30, 2016
 
Assets
 
Liability
 
Assets
 
Liability
(In thousands)
Investment
Available for
Sale
 
Contingent
Payments
 
Investment
Available for
Sale
 
Contingent
Payments
Balance at beginning of reporting period
$
17,259

 
$
(3,038
)
 
$
17,839

 
$
(3,632
)
Total gains (losses) (realized or unrealized):
 
 
 
 
 
 
 
Included in interest income (expense)
69

 
(202
)
 
66

 
(305
)
Included in other comprehensive income
568

 
—

 
337

 
—

Included in other items, net
—

 
(398
)
 
—

 
—

Purchases, sales, issuances and settlements:

 

 
 
 


Settlements
(440
)
 
434

 
(410
)
 
449

Balance at end of reporting period
$
17,456

 
$
(3,204
)
 
$
17,832

 
$
(3,488
)

20
BOYD GAMING CORPORATION AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
as of June 30, 2017 and December 31, 2016 and for the three and six months ended June 30, 2017 and 2016
______________________________________________________________________________________________________


Balances Disclosed at Fair Value
The following tables provide the fair value measurement information about our obligation under minimum assessment agreements and other financial instruments:
 
June 30, 2017
(In thousands)
Outstanding Face Amount
 
Carrying Value
 
Estimated Fair Value
 
Fair Value Hierarchy
Liabilities
 
 
 
 
 
 
 
Obligation under assessment arrangements
$
32,603

 
$
26,140

 
$
27,280

 
Level 3

 
December 31, 2016
(In thousands)
Outstanding Face Amount
 
Carrying Value
 
Estimated Fair Value
 
Fair Value Hierarchy
Liabilities
 
 
 
 
 
 
 
Obligation under assessment arrangements
$
33,456

 
$
26,660

 
$
27,054

 
Level 3
Other financial instruments
100

 
97

 
97

 
Level 3

The following tables provide the fair value measurement information about our long-term debt:
 
June 30, 2017
(In thousands)
Outstanding Face Amount
 
Carrying Value
 
Estimated Fair Value
 
Fair Value Hierarchy
Credit Facility
$
1,690,401

 
$
1,661,154

 
$
1,693,271

 
Level 2
6.875% senior notes due 2023
750,000

 
738,470

 
802,500

 
Level 1
6.375% senior notes due 2026
750,000

 
739,668

 
810,938

 
Level 1
Other
546

 
546

 
546

 
Level 3
Total debt
$
3,190,947

 
$
3,139,838

 
$
3,307,255

 
 

 
December 31, 2016
(In thousands)
Outstanding Face Amount
 
Carrying Value
 
Estimated Fair Value
 
Fair Value Hierarchy
Credit Facility
$
1,782,538

 
$
1,752,147

 
$
1,791,853

 
Level 2
6.875% senior notes due 2023
750,000

 
738,791

 
806,250

 
Level 1
6.375% senior notes due 2026
750,000

 
737,926

 
804,375

 
Level 1
Other
591

 
591

 
591

 
Level 3
Total debt
$
3,283,129

 
$
3,229,455

 
$
3,403,069