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Boyd Gaming Corp. Reports Operating Results (10-Q)
Posted by: gurufocus (IP Logged)
Date: November 6, 2009 04:57PM
Boyd Gaming Corp. (BYD) filed Quarterly Report for the period ended 2009-09-30.
Highlight of Business Operations:
As of September 30, 2009, we have incurred approximately $925 million in capitalized costs related to the Echelon project, including land. As part of our wind-down procedures related to the project, we expect to incur approximately $6 million of capitalized costs, principally related to the offsite fabrication of escalators, curtain wall and a skylight. In addition, we expect recurring project costs, consisting primarily of security, property taxes, rent and insurance, of approximately $15 million per annum that will be charged to preopening or other expense as incurred during the projects suspension period. These capitalized costs and recurring project costs are in addition to other contingencies with respect to our various material commitments.
During the nine months ended September 30, 2008, asset write-downs and other charges primarily consist of an $84.0 million noncash impairment charge principally related to the write-off of Dania Jai-Alais intangible license right, following our decision to indefinitely postpone redevelopment plans to operate slot machines at the facility. Additionally, a $6.3 million noncash charge related to the abandonment of certain leasehold improvements was recorded during this period.
Dania Jai-Alia. In March 2007, we acquired Dania Jai-Alai and approximately 47 acres of related land located in Dania Beach, Florida. Dania Jai-Alai is one of four pari-mutuel facilities in Broward County approved under Florida law to operate 2,000 Class III slot machines. In March 2007, we paid approximately $81 million to close this transaction, and agreed to pay, in March 2010 or earlier, a contingent payment of an additional $75 million to the seller, plus interest accrued at the prime rate (the contingent payment), if certain legal conditions were satisfied. In January 2009, we amended the purchase agreement to settle the contingent payment prior to the satisfaction of the legal conditions. The principal terms of the amendment are as follows.
In conjunction with this amendment, we recorded the remaining $28.4 million of the $75 million contingent liability as an additional cost of the acquisition (goodwill) during the nine months ended September 30, 2009. During the nine months ended September 30, 2009, we tested the goodwill for recoverability, which resulted in a noncash impairment charge of $28.4 million.
Operating income increased 2.5% to $46.9 from $45.8 for the three months ended September 30, 2009 and 2008, respectively, and 39.2% to $130.3 from $93.6 for the nine months ended September 30, 2009 and 2008, respectively, largely reflecting incrementally higher Adjusted EBITDA margins, offset by the impact of lower revenues and write-downs and other charges.
Private Capital of Private Capital Management.
Stocks Discussed: BYD,