SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
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(Mark One)
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QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the quarterly period ended
OR
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TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the transition period from
toCommission file number: 1-12882
BOYD GAMING CORPORATION
(Exact name of registrant as specified in its charter)
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Nevada | 88-0242733 | |
(State or other jurisdiction of incorporation or organization) | (I.R.S. Employer Identification No.) | |
6465 South Rainbow Boulevard, Las Vegas, NV 89169
(Address of principal executive offices) (Zip Code)
(702) 792-7200
(Registrant's telephone number, including area code)
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Securities registered pursuant to Section 12(b) of the Act:
Title of each class | Trading Symbol(s) | Name of each exchange on which registered | ||||
Common stock, $0.01 par value | BYD | New York Stock Exchange |
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
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
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company or an emerging growth company. See the definitions of "large accelerated filer,"filer", "accelerated filer", "non-accelerated filer", "smaller reporting company" and "smaller reporting"emerging growth company" in Rule 12b-2 of the Exchange Act.
Large accelerated filer | ☒ | Accelerated filer | ☐ | |||
Non-accelerated filer | ☐ | Smaller reporting company | ☐ | |||
Emerging growth company | ☐ |
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.
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes
Indicate the number of shares outstanding of each of the issuer's classes of common stock, as of the latest practicable date.
The number of shares outstanding of the registrant’s common stock as of July 31, 2023 was 100,012,042.
QUARTERLY REPORT ON FORM 10-Q FOR THE PERIOD ENDED TABLE OF CONTENTS Page No. 7 8 34 35 36 36 37 38BOYD GAMING CORPORATIONSEPTEMBERJUNE 30 2017, 2023PageNo. 23 36 Other Information 36
CONDENSED CONSOLIDATED BALANCE SHEETS (Unaudited) June 30, December 31, (In thousands, except share data) 2023 2022 ASSETS Current assets Cash and cash equivalents Restricted cash Accounts receivable, net Inventories Prepaid expenses and other current assets Income taxes receivable Total current assets Property and equipment, net Operating lease right-of-use assets Other assets, net Intangible assets, net Goodwill, net Total assets LIABILITIES AND STOCKHOLDERS' EQUITY Current liabilities Accounts payable Current maturities of long-term debt Accrued liabilities Total current liabilities Long-term debt, net of current maturities and debt issuance costs Operating lease liabilities, net of current portion Deferred income taxes Other liabilities Commitments and contingencies (Notes 6 and 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; 100,012,042 and 102,816,110 shares outstanding Additional paid-in capital Retained earnings Accumulated other comprehensive loss Total stockholders' equity Total liabilities and stockholders' equity The accompanying notes are an integral part of these unaudited condensed consolidated financial statements. CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited) Three Months Ended Six Months Ended June 30, June 30, (In thousands, except per share data) 2023 2022 2023 2022 Revenues Gaming Food & beverage Room Online Management fee Other Total revenues Operating costs and expenses Gaming Food & beverage Room Online Other Selling, general and administrative Master lease rent expense Maintenance and utilities Depreciation and amortization Corporate expense Project development, preopening and writedowns Impairment of assets Other operating items, net Total operating costs and expenses Operating income Other expense (income) Interest income Interest expense, net of amounts capitalized Loss on early extinguishments and modifications of debt Other, net Total other expense, net Income before income taxes Income tax provision Net income Basic net income per common share Weighted average basic shares outstanding Diluted net income per common share Weighted average diluted shares outstanding The accompanying notes are an integral part of these unaudited condensed consolidated financial statements. CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (Unaudited) Three Months Ended Six Months Ended June 30, June 30, (In thousands) 2023 2022 2023 2022 Net income Other comprehensive income (loss), net of tax: Fair value adjustments to available-for-sale securities Foreign currency translation adjustments Comprehensive income The accompanying notes are an integral part of these unaudited condensed consolidated financial statements. CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY (Unaudited) Accumulated Other Common Stock Additional Retained Comprehensive (In thousands, except share data) Shares Amount Paid-in Capital Earnings Loss Total Balances, January 1, 2023 Net income Comprehensive income, net of tax Foreign currency translation adjustments Stock options exercised Release of restricted stock units, net of tax Release of performance stock units, net of tax Shares repurchased and retired Dividends declared ($0.16 per share) Share-based compensation costs Balances, March 31, 2023 Net income Comprehensive income, net of tax Foreign currency translation adjustments Release of restricted stock units, net of tax Shares repurchased and retired Dividends declared ($0.16 per share) Share-based compensation costs Balances, June 30, 2023 Accumulated Other Common Stock Additional Retained Comprehensive (In thousands, except share data) Shares Amount Paid-in Capital Earnings Loss Total Balances, January 1, 2022 Net income Comprehensive loss, net of tax Release of restricted stock units, net of tax Release of performance stock units, net of tax Shares repurchased and retired Dividends declared ($0.15 per share) Share-based compensation costs Balances, March 31, 2022 Net income Comprehensive loss, net of tax Stock options exercised Release of restricted stock units, net of tax Release of performance stock units, net of tax Shares repurchased and retired Dividends declared ($0.15 per share) Share-based compensation costs Balances, June 30, 2022 The accompanying notes are an integral part of these unaudited condensed consolidated financial statements. CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited) Six Months Ended June 30, (In thousands) 2023 2022 Cash Flows from Operating Activities Net income Adjustments to reconcile net income to net cash provided by operating activities: Depreciation and amortization Amortization of debt financing costs and discounts on debt Non-cash operating lease expense Non-cash expected credit loss (income) on note receivable Share-based compensation expense Deferred income taxes Non-cash impairment of assets Gain on sale of assets Loss on early extinguishments and modifications of debt Other operating activities Changes in operating assets and liabilities: Accounts receivable, net Inventories Prepaid expenses and other current assets Income taxes (receivable) payable, net Other assets, net Accounts payable and accrued liabilities Operating lease liabilities Other liabilities Net cash provided by operating activities Cash Flows from Investing Activities Capital expenditures Payments received on note receivable Proceeds received from disposition of assets Other investing activities Net cash used in investing activities Cash Flows from Financing Activities Borrowings under credit facilities Payments under credit facilities Retirements of senior notes Premium fees Debt financing costs Share-based compensation activities Shares repurchased and retired Dividends paid Other financing activities Net cash used in financing activities Effect of foreign currency exchange rates on cash, cash equivalents and restricted cash Change in cash, cash equivalents and restricted cash Cash, cash equivalents and restricted cash, beginning of period Cash, cash equivalents and restricted cash, end of period Supplemental Disclosure of Cash Flow Information Cash paid for interest, net of amounts capitalized Cash received for interest Cash paid for income taxes Supplemental Schedule of Non-cash Investing and Financing Activities Payables incurred for capital expenditures Dividends declared not yet paid Expected credit loss (income) on note receivable Operating lease right-of-use asset and liability remeasurements The accompanying notes are an integral part of these unaudited condensed consolidated financial statements. NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS as of Organization Boyd Gaming Corporation (and together with its subsidiaries, the We are a geographically diversified operator of 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 The results for the periods indicated are unaudited but reflect all adjustments, The accompanying condensed consolidated financial statements include the accounts of Recasted Condensed Consolidated Statements of Operations (Unaudited) In first quarter 2023, the Company separated out online revenue and management fee revenue from other revenue. This change was a result of increased contributions to the Company in these two areas and related update to our reportable segments discussed in Note 10,Segment Information. Revenue for the three and six months ended June 30, 2022 has been recast to conform to this presentation. The disaggregation of online revenue and management fee revenue from other revenue did not impact the Company's total revenues, net income or earnings per share as previously reported for the three and six months ended June 30, 2022. Additionally, during the first quarter 2023, the Company evaluated its reportable segments and changed them to the following four reportable segments: (i) Las Vegas Locals; (ii) Downtown Las Vegas; (iii) Midwest & South; and (iv) Online. To reconcile to the condensed consolidated information, the Company has aggregated nonreportable operating segments into 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. Restricted Cash Restricted cash consists primarily of advance payments related to: (i) amounts restricted by regulation for gaming and racing purposes; (ii) amounts restricted by regulation for the value in players' online casino gaming accounts; and (iii) future bookings with our Hawaiian travel agency. These restricted cash balances are invested in highly liquid instruments with a maturity of 90 days or less. These restricted cash balances are held by high credit quality financial institutions. The carrying values of these instruments approximate their fair values due to their short maturities. The following table provides a reconciliation of cash, cash equivalents and restricted cash balances reported within the condensed consolidated balance sheets to the total balance shown in the condensed consolidated statements of cash flows. June 30, December 31, June 30, December 31, (In thousands) 2023 2022 2022 2021 Cash and cash equivalents Restricted cash Total cash, cash equivalents and restricted cash BOYD GAMING CORPORATION AND SUBSIDIARIES NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) — (Continued) as of June 30, 2023 and December 31, 2022 and for the three and six months ended June 30, 2023 and 2022 Leases Management determines if a contract is or contains a lease at inception or modification of a contract. A contract is or contains a lease if the contract conveys the right to control the use of an identified asset for a period in exchange for consideration. Control over the use of the identified asset means the lessee has both (a) the right to obtain substantially all of the economic benefits from the use of the asset and (b) the right to direct the use of the asset. Operating lease liabilities are recognized based on the present value of the remaining lease payments, discounted using the discount rate for the lease at the commencement date. Our lease terms may include options to extend or terminate the lease when it is reasonably certain that we will exercise that option. For our operating leases for which the rate implicit in the lease is not readily determinable, we generally use an incremental borrowing rate based on information available at the commencement date to determine the present value of future lease payments. The incremental borrowing rate is determined based on the weighted average incremental borrowing rate at the lease commencement or modification date that is commensurate with the rate of interest in a similar economic environment that we would have to pay to borrow an amount equal to our future lease payments on a collateralized basis over a similar term, including reasonably certain options to extend or terminate. The determination of the incremental borrowing rate could materially impact our lease liabilities. Operating right-of-use ("ROU") assets and finance lease assets are generally recognized based on the amount of the initial measurement of the lease liability. Lease expense is recognized on a straight-line basis over the lease term. Lease and non-lease components are accounted for separately. Revenue Recognition The Company’s revenue contracts with customers consist of gaming wagers (including both those made at our casino properties and online B2C wagers), hotel room sales, food & beverage offerings and other amenity transactions. See Collaborative Arrangements below for further discussion of revenues earned under our online collaborative arrangements. The transaction price for a gaming wagering contract is the difference between gaming wins and losses, not the total amount wagered. Cash discounts, commissions and other cash incentives to customers related to gaming play are recorded as a reduction of gaming revenues. The transaction price for hotel, food & beverage and other contracts is the net amount collected from the customer for such goods and services. Hotel, food & beverage and other services have been determined to be separate, stand-alone performance obligations and the transaction price for such contracts is recorded as revenue as the good or service is transferred to the customer over their stay at the hotel, when the delivery is made for the food & beverage or when the service is provided for other amenity transactions. We have established player loyalty programs to encourage repeat business from frequent and active slot machine customers and other patrons. Members earn points based on gaming activity and such points can be redeemed for complimentary slot play, food & beverage, hotel rooms and other free goods and services. Gaming wager contracts involve two performance obligations for those customers earning points under the Company’s player loyalty programs and a single performance obligation for customers who do not participate in the programs. The Company applies a practical expedient by accounting for its gaming contracts on a portfolio basis as such wagers have similar characteristics and the Company reasonably expects the effects on the financial statements of applying the revenue recognition guidance to the portfolio to not differ materially from that which would result if applying the guidance to an individual wagering contract. For purposes of allocating the transaction price in a wagering contract between the wagering performance obligation and the obligation associated with the loyalty points earned, the Company allocates an amount to the player loyalty contract liability based on the stand-alone selling price of the points earned, which is determined by the value of a point that can be redeemed for a hotel room stay, food & beverage or other amenities. Sales and usage-based taxes are excluded from revenues. An amount is allocated to the gaming wager performance obligation using the residual approach as the stand-alone price for wagers is highly variable and no set established price exists for such wagers. The allocated revenue for gaming wagers, excluding race and sports wagers, is recognized when the wagers occur as all such wagers settle immediately. The allocated revenue for race and sports wagers is recognized when the specific event or game occurs. The player loyalty contract liability amount is deferred and recognized as revenue when the customer redeems the points for a hotel room stay, food & beverage or other amenities and such goods or services are delivered to the customer. See Note 5,Accrued Liabilities, for the balance outstanding related to player loyalty programs. The Company collects advance deposits from hotel customers for future hotel reservations and other future events such as banquets and ticketed events. These advance deposits represent obligations of the Company until the hotel room stay is provided to the customer or the banquet or ticketed event occurs. See Note 5,Accrued Liabilities, for the balance outstanding related to advance deposits. The Company's outstanding chip liability represents the amounts owed in exchange for gaming chips held by a customer. Outstanding chips are expected to be recognized as revenue or redeemed for cash within one year of being purchased. See Note 5,Accrued Liabilities, for the balance related to outstanding chips. The retail value of hotel accommodations, food Three Months Ended Six Months Ended June 30, June 30, (In thousands) 2023 2022 2023 2022 Food & beverage Room Other BOYD GAMING CORPORATION AND SUBSIDIARIES NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) — (Continued) as of Gaming Taxes We are subject to taxes based on gross gaming revenues in the jurisdictions in which we operate. These gaming taxes are 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 In performing our Other Long-Term Tax Liabilities The Company's income tax returns are subject to examination by the Internal Revenue Service Uncertain tax position accounting standards apply to all tax positions related to income taxes. These accounting standards utilize a 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 condensed consolidated balance sheets. Collaborative Arrangements We hold a five percent equity ownership in and have a strategic partnership with FanDuel Group ("FanDuel"), the nation's leading sports-betting operator, to pursue sports-betting opportunities across the country, both at our properties and online. Subject to state law and regulatory approvals, we have established a presence in the sports wagering industry, both at our properties and online, by leveraging FanDuel's technology and related services. We offer online sports wagering under the FanDuel brand or under market access agreements with other companies in Illinois, Indiana, Iowa, Kansas, Louisiana, Ohio and Pennsylvania. We also operate sportsbooks under the FanDuel brand at one of our Downtown Las Vegas properties, our properties in Mississippi and all of the properties in the states noted above where we offer online sports wagering. In addition, we offer online casino gaming in Pennsylvania through our partnership with FanDuel. Under our online collaborative arrangements, we receive a revenue share from the third-party operator based on actual wagering wins and losses. The activities related to these collaborative arrangements are recorded in online revenue and online expense on the condensed consolidated statements of operations. The activities related to sportsbooks at our properties are recorded in gaming revenue and gaming expense. Under certain of our collaborative arrangements, we are the primary obligor and are responsible for paying gaming taxes and other license payments owed as the gaming licensee for the related online gaming activities. We are reimbursed for these taxes and other payments by the third-party operators. We report these gaming taxes and other expenses paid as online expense and the reimbursements we receive as online revenues. These taxes and other payments totaled approximately $63.3 million and $48.0 million for the three months ended June 30, 2023 and 2022, respectively, and $159.3 million and $89.9 million for the six months ended June 30, 2023 and 2022, respectively. Currency Translation The Company translates the financial statements of its foreign subsidiary that are not denominated in U.S. dollars. Balance sheet accounts are translated at the exchange rate in effect at each balance sheet date. Income statement accounts are translated at the average rate of exchange prevailing during the period. If a material income statement event occurs, the transaction would be translated at the exchange rate in effect on the date of occurrence. Translation adjustments resulting from this process are recorded in other comprehensive income (loss). Gains or losses from foreign currency transaction remeasurements are recorded as other non-operating income (expense). BOYD GAMING CORPORATION AND SUBSIDIARIES NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) — (Continued) as of June 30, 2023 and December 31, 2022 and for the three and six months ended June 30, 2023 and 2022 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. Recently Issued Accounting Pronouncements NOTE Pala Interactive On Pala Interactive is an innovative online gaming technology company that provides proprietary solutions on both a B2B and Consideration Transferred The fair value of Status of Purchase Price Allocation The Company followed the acquisition method of accounting The following table summarizes the purchase price allocation (In thousands) As Recorded Current assets Property and equipment Other assets Intangible assets Total acquired assets Current liabilities Other liabilities Total liabilities assumed Net identifiable assets acquired Goodwill Net assets acquired BOYD GAMING CORPORATION AND SUBSIDIARIES NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) — (Continued) as of The following table summarizes the Useful Lives (In thousands) (in years) As Recorded Buildings and improvements Furniture and equipment Property and equipment acquired The following table summarizes the values assigned to acquired intangible assets and weighted average useful lives of definite-lived intangible assets: Useful Lives (In thousands) (in years) As Recorded Developed technology B2B relationships B2C relationships Total intangible assets acquired The goodwill recognized is the excess of the purchase price The Company expensed acquisition related costs of less than $0.1 million and The revenue and earnings from the Merger are not material for the period subsequent to acquisition through December 31, Property and equipment, net consists of the following: June 30, December 31, (In thousands) 2023 2022 Land Buildings and improvements Furniture and equipment Riverboats and barges Construction in progress Total property and equipment Less accumulated depreciation Property and equipment, net Depreciation expense is as follows: Three Months Ended Six Months Ended June 30, June 30, (In thousands) 2023 2022 2023 2022 Depreciation expense BOYD GAMING CORPORATION AND SUBSIDIARIES NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) — (Continued) as of Intangible assets, net consist of the following: June 30, 2023 Weighted Useful Life Gross Accumulated Effect of Foreign Remaining Carrying Accumulated Impairment Currency Intangible (In thousands) (in years) Value Amortization Losses Exchange Assets, Net Amortizing intangibles Customer relationships Host agreements Development agreement Developed technology B2B relationships B2C relationships Indefinite lived intangible assets Trademarks Indefinite Gaming license rights Indefinite Balances, June 30, 2023 December 31, 2022 Weighted Useful Life Gross Accumulated Effect of Foreign Remaining Carrying Accumulated Impairment Currency Intangible (In thousands) (in years) Value Amortization Losses Exchange Assets, Net Amortizing intangibles Customer relationships Host agreements Development agreement Developed technology B2B relationships B2C relationships Indefinite lived intangible assets Trademarks Indefinite Gaming license rights Indefinite Balances, December 31, 2022 The following table presents the future amortization expense for our amortizing intangible assets as of June 30, 2023: (In thousands) Customer Relationships Host Agreements Development Agreement Developed Technology B2B Relationships B2C Relationships Total For the year ending December 31, 2023 (excluding six months ended June 30, 2023) 2024 2025 2026 2027 Thereafter Total future amortization BOYD GAMING CORPORATION AND SUBSIDIARIES NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) — (Continued) as of Goodwill consists of the following: Effect of Gross Accumulated Foreign Carrying Accumulated Impairment Currency Goodwill, (In thousands) Value Amortization Losses Exchange Net Goodwill, net by Segment Las Vegas Locals Downtown Las Vegas Midwest & South Online Managed & Other Balances, June 30, 2023 December 31, 2022 Effect of Gross Accumulated Foreign Carrying Accumulated Impairment Currency Goodwill, (In thousands) Value Amortization Losses Exchange Net Goodwill, net by Segment Las Vegas Locals Downtown Las Vegas Midwest & South Online Managed & Other Balances, December 31, 2022 Goodwill as of December 31, 2022 has been recast to reflect changes made in first quarter 2023 to the Company's segments. Goodwill in total as of December 31, 2022 did not change. See additional discussion in Note 10,Segment Information. During the six months ended June 30, 2023, we recorded goodwill impairment charges of $4.5 million related to Managed & Other, our aggregated other nonreportable operating segments category. These noncash impairment charges are recorded in impairment of assets on the condensed consolidated statements of operations. NOTE 5. ACCRUED LIABILITIES Accrued liabilities consist of the following: June 30, December 31, (In thousands) 2023 2022 Payroll and related Interest Gaming Player loyalty programs Advance deposits Outstanding chips Dividends payable Operating leases Other Total accrued liabilities BOYD GAMING CORPORATION AND SUBSIDIARIES NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) — (Continued) as of June 30, 2023 and December 31, Long-term debt, net of current maturities and debt issuance costs, consists of the following: June 30, 2023 Interest Unamortized Rates at Origination June 30, Outstanding Unamortized Fees and Long-Term (In thousands) 2023 Principal Discount Costs Debt, Net Credit facility 4.750% senior notes due 2027 4.750% senior notes due 2031 Other Total long-term debt Less current maturities Long-term debt, net December 31, 2022 Interest Unamortized December 31, Outstanding Unamortized Fees and Long-Term (In thousands) 2022 Principal Discount Costs Debt, Net Credit facility 4.750% senior notes due 2027 4.750% senior notes due 2031 Other Total long-term debt Less current maturities Long-term debt, net The outstanding principal amounts under the Credit Facility are comprised of the following: June 30, December 31, (In thousands) 2023 2022 Revolving credit facility Term A loan Swing loan Total outstanding principal amounts With a total revolving credit commitment of $1,450.0 million available under the Credit Facility, $200.0 million and Early Extinguishments and Modifications of Debt During the three and six months ended June 30, 2022, the Company incurred $16.5 million in loss on early extinguishments and modifications of debt due to the redemption of $300.0 million of our 8.625% senior notes due 2025 ("8.625% Senior Notes"), which was accounted for as a debt extinguishment. The $16.5 million incurred is comprised of $12.9 million related to premium fees paid and $3.6 million related to the write-off of unamortized deferred finance charges. In addition, during the six months ended June 30, 2022, the Company incurred $3.3 million in loss on early extinguishments and modifications of debt as a result of entering into a new credit agreement (the "Credit Facility") that replaced the then existing credit agreement. The $3.3 million incurred related to the write-off of unamortized deferred finance charges associated with the portion accounted for as a debt extinguishment. Covenant Compliance As of BOYD GAMING CORPORATION AND SUBSIDIARIES NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) — (Continued) as of NOTE Three Months Ended Six Months Ended June 30, June 30, 2023 2022 2023 2022 (4) Amounts in the table may not recalculate exactly due to rounding. Average repurchase price per share is calculated based on unrounded Dividends The dividends declared by the Board of Directors Declaration date Record date Payment date Amount per share February 3, 2022 March 15, 2022 April 15, 2022 June 1, 2022 June 30, 2022 July 15, 2022 December 8, 2022 December 19, 2022 January 15, 2023 February 14, 2023 March 15, 2023 April 15, 2023 May 4, 2023 June 15, 2023 July 15, 2023 BOYD GAMING CORPORATION AND SUBSIDIARIES NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) — (Continued) as of June 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) 2023 2022 2023 2022 Gaming Food & beverage Room Selling, general and administrative Corporate expense Total share-based compensation expense Performance Shares Our stock incentive plan provides for the issuance of Performance Share The PSU grants awarded in fourth quarter The PSU grant awarded in The PSU grant awarded in Unamortized Stock Compensation Expense and Recognition Period As of June 30, 2023, there was approximately $15.5 million, $5.6 million and $1.7 million of total unrecognized share-based compensation costs related to unvested restricted stock units ("RSUs"), PSUs and career shares, respectively. As of June 30, 2023, the unrecognized share-based compensation costs related to our RSUs, PSUs and career shares are expected to be recognized over approximately 2.2 years, 2.2 years and 3.6 years, respectively. NOTE We have adopted the authoritative accounting guidance for fair value measurements, which does not determine or affect the circumstances under which fair value measurements are used, but defines fair value, expands disclosure requirements around fair value and 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: Level 1 Level 2 Level 3 As required by the guidance for fair value measurements, 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 3may be measured at fair value using inputs that are observable BOYD GAMING CORPORATION AND SUBSIDIARIES NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) — (Continued) as of June 30, 2023 and December 31, 2022 and for the three and six months ended June 30, 2023 and 2022 Balances Measured at Fair Value The following tables show the fair values of certain of our financial instruments: June 30, 2023 (In thousands) Balance Level 1 Level 2 Level 3 Assets Cash and cash equivalents Restricted cash Investment available for sale December 31, 2022 (In thousands) Balance Level 1 Level 2 Level 3 Assets Cash and cash equivalents Restricted cash Investment available for sale Cash and Cash Equivalents and Restricted Cash The fair Investment Available for Sale We have an investment in a single municipal bond issuance of The following Three Months Ended Six Months Ended June 30, June 30, (In thousands) 2023 2022 2023 2022 Balance at beginning of reporting period Total gains (losses) (realized or unrealized): Included in interest income Included in other comprehensive income (loss) Purchases, sales, issuances and settlements: Settlements Balance at end of reporting period BOYD GAMING CORPORATION AND SUBSIDIARIES NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) — (Continued) as of June 30, 2023 and December 31, 2022 and for the three and six months ended June 30, 2023 and 2022 We are exposed to valuation risk on our Level 3 financial instruments. We estimate our risk exposure using a sensitivity analysis of potential changes in the significant unobservable inputs of our fair value measurements. Our Level 3 financial instruments are most susceptible to valuation risk caused by changes in the discount rate. If the discount rate in our fair value measurements increased or decreased by 100 basis points, the change would not cause the value of our fair value measurements to change significantly. The fair value of indefinite-lived intangible assets, Balances Disclosed at Fair Value The following tables provide the fair value measurement information about our note receivable and obligation under June 30, 2023 Fair Value Face Amount Value Fair Value Hierarchy Asset Note receivable Level 3 Level 3 December 31, 2022 Fair Value (In thousands) Face Amount Value Fair Value Hierarchy Asset Note receivable Level 3 Liabilities Obligation under assessment arrangements Level 3 The following tables provide the fair value measurement information about our long-term debt: June 30, 2023 Fair Value (In thousands) Face Amount Value Fair Value Hierarchy Credit facility Level 2 4.750% senior notes due 2027 Level 1 4.750% senior notes due 2031 Level 1 Other Level 3 Total debt December 31, 2022 Fair Value (In thousands) Face Amount Value Fair Value Hierarchy Credit facility Level 2 4.750% senior notes due 2027 Level 1 4.750% senior notes due 2031 Level 1 Other Level 3 Total debt The estimated fair values of our note receivable and our obligation under assessment arrangements are based on a discounted cash flow approach after giving consideration to the changes in market rates of interest, creditworthiness of both parties and credit spread. The estimated fair value of our Credit Facility is based on a relative value analysis performed on or about Other than the retirement of the 8.625% Senior Notes (Level 1) during the six months ended June 30, 2022, that was funded through a combination of cash on hand and borrowings under the Credit Facility (Level 2), there were no transfers between Level 1, Level 2 and Level 3 measurements during the BOYD GAMING CORPORATION AND SUBSIDIARIES NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) — (Continued) as of During the first quarter of Las Vegas Locals Gold Coast Hotel and Casino Las Vegas, Nevada The Orleans Hotel and Casino Las Vegas, Nevada Sam's Town Hotel and Gambling Hall Las Vegas, Nevada Suncoast Hotel and Casino Las Vegas, Nevada EastsideCannery Casino and Hotel(1) Las Vegas, Nevada Aliante Casino + Hotel + Spa North Las Vegas, Nevada Cannery Casino Hotel North Las Vegas, Nevada Jokers Wild Henderson, Nevada Downtown Las Vegas California Hotel and Casino Las Vegas, Nevada Fremont Hotel Las Vegas, Nevada Main Street Station Las Vegas, Nevada Midwest Par-A-Dice East Peoria, Illinois Belterra Casino Resort (2) Florence, Indiana Blue Chip Casino Hotel Michigan City, Indiana Diamond Jo Dubuque, Iowa Diamond Jo Worth Northwood, Iowa Kansas Star Casino Mulvane, Kansas Amelia Belle Casino Amelia, Louisiana Delta Downs Racetrack Vinton, Louisiana Evangeline Downs Racetrack Opelousas, Louisiana Sam's Town Shreveport, Louisiana Treasure Chest Casino Kenner, Louisiana IP Casino Resort Spa Biloxi, Mississippi Sam's Town Hotel and Gambling Hall Tunica Tunica, Mississippi Ameristar Casino * Hotel Kansas City (2) Kansas City, Missouri Ameristar Casino * Resort * Spa St. Charles (2) St. Charles, Missouri Belterra Park (2) Cincinnati, Ohio Valley Forge Casino Resort King of Prussia, Pennsylvania (1) Due to the current levels of demand in the market, Eastside Cannery remains closed since it was closed on March 18, 2020, in compliance with orders issued by state officials as precautionary measures intended to slow the spread of the COVID-19 virus. (2) Property is subject to a master lease agreement with a real estate investment trust. Results of Operations - Total Reportable Segment We evaluate BOYD GAMING CORPORATION AND SUBSIDIARIES NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) — (Continued) as of June 30, 2023 and EBITDAR is a commonly used measure of performance in our industry that we believe, when considered with measures calculated in accordance with GAAP, facilitates comparisons between us and our competitors and provides our investors a more complete understanding of our operating results before the impact of investing The following tables set forth, for the periods indicated, departmental revenues for our Reportable Segments and our Managed & Other category to reconcile to total revenues: Three Months Ended June 30, 2023 Food & Management Gaming Beverage Room Online Fee Other Total (In thousands) Revenue Revenue Revenue Revenue Revenue Revenue Revenue Revenues Las Vegas Locals Downtown Las Vegas Midwest & South Online Managed & Other Total Revenues Three Months Ended June 30, 2022 (1) Food & Management Gaming Beverage Room Online Fee Other Total (In thousands) Revenue Revenue Revenue Revenue Revenue Revenue Revenue Revenues Las Vegas Locals Downtown Las Vegas Midwest & South Online Managed & Other Total Revenues Six Months Ended June 30, 2023 Food & Management Gaming Beverage Room Online Fee Other Total (In thousands) Revenue Revenue Revenue Revenue Revenue Revenue Revenue Revenues Las Vegas Locals Downtown Las Vegas Midwest & South Online Managed & Other Total Revenues Six Months Ended June 30, 2022 (1) Food & Management Gaming Beverage Room Online Fee Other Total (In thousands) Revenue Revenue Revenue Revenue Revenue Revenue Revenue Revenues Las Vegas Locals Downtown Las Vegas Midwest & South Online Managed & Other Total Revenues (1) Revenues for the three and six months ended June 30, 2022 have been recast to reflect the breakout of online revenue and management fee revenue from other revenue and the segment changes made during first quarter 2023. BOYD GAMING CORPORATION AND SUBSIDIARIES NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) — (Continued) as of June 30, 2023 and December 31, 2022 and for the three and six months ended June 30, 2023 and 2022 The following table reconciles, for the periods indicated, our Reportable Segments and our Managed & Other category Adjusted EBITDAR to net income, as reported in our accompanying condensed consolidated statements of operations with Adjusted EBITDAR for the three and six months ended June 30, 2022 recast to reflect the segment changes made during first quarter 2023: Three Months Ended Six Months Ended June 30, June 30, (In thousands) 2023 a2022 (1) 2023 a2022 (1) Adjusted EBITDAR Las Vegas Locals Downtown Las Vegas Midwest & South Online Managed & Other Corporate expense Adjusted EBITDAR Other operating costs and expenses Deferred rent Master lease rent expense Depreciation and amortization Share-based compensation expense Project development, preopening and writedowns Impairment of assets Other operating items, net Total other operating costs and expenses Operating income Other expense (income) Interest income Interest expense, net of amounts capitalized Loss on early extinguishments and modifications of debt Other, net Total other expense, net Income before income taxes Income tax provision Net income (1) Adjusted EBITDAR for the three and six months ended June 30, 2022 has been recast to reflect the segment changes made during first quarter 2023. For purposes of this presentation, corporate expense excludes its portion of share-based compensation expense. Corporate expense represents unallocated payroll, professional fees, rent, aircraft expenses and various other expenses that are not directly related to our casino, hotel and online operations. Total Reportable Segment Assets The Company's assets by Reportable Segment and Managed & Other category consisted of the following amounts with assets as of December 31, 2022 recast to reflect the segment changes made during first quarter 2023: June 30, December 31, (In thousands) 2023 2022 Assets Las Vegas Locals Downtown Las Vegas Midwest & South Online Managed & Other Corporate Total Assets NOTE 11. SUBSEQUENT EVENTS We have evaluated all events or transactions that occurred after June 30, 2023. During this period, up to the filing date, we did not identify any subsequent events, the effects of which would require disclosure or adjustment to our financial position or results of operations. Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations Executive Overview Boyd Gaming Corporation (and together with its subsidiaries, the "Company", "Boyd", "Boyd Gaming", "we" or "us") was incorporated in the state of Nevada in 1988 and has been operating since 1975. The Company's common stock is traded on the New York Stock Exchange under the symbol "BYD". We are a geographically diversified operator of 28 gaming entertainment properties. Headquartered in Las Vegas, Nevada, we have gaming operations in Nevada, Illinois, Indiana, Iowa, Kansas, Louisiana, Mississippi, Missouri, Ohio and Pennsylvania. In addition, we own and operate Boyd Interactive, a business-to-business ("B2B") and business-to-consumer ("B2C") online casino gaming business. We also manage the Sky River Casino located in California under a management agreement with Wilton Rancheria. During the first quarter of 2023, the Company evaluated its reportable segments and changed them from three reportable segments consisting of: (i) Las Vegas Locals; (ii) Downtown Las Vegas; and (iii) Midwest & South, to the following four reportable segments: (i) Las Vegas Locals; (ii) Downtown Las Vegas; (iii) Midwest & South; and (iv) Online, (collectively "Reportable Segments"). This change reflects the growth of the Company beyond its traditional wholly owned gaming entertainment properties and the increasing importance to the Company of other growth sources. The Online segment includes the operating results of our online gaming operations through collaborative arrangements with third parties throughout the United States and the operations from our recent acquisition of Pala Interactive and Pala Canada (individually and collectively rebranded, "Boyd Interactive") on November 1, 2022, and operating results were previously included with the Midwest & South segment. To reconcile Reportable Segments information to the condensed consolidated information, the Company has aggregated nonreportable operating segments into a Managed & Other category. The Managed & Other category includes management fees earned under our management contract with Wilton Rancheria for the management of Sky River Casino in northern California and the operating results of Lattner Entertainment Group Illinois, LLC, our Illinois distributed gaming operator ("Lattner"). These nonreportable operating segments were previously aggregated with our Midwest & South segment. The table below lists the Reportable Segment classification of each of our gaming entertainment properties that were aggregated based on their similar economic characteristics, types of customers, types of services and products provided, the regulatory environments in which they operate and their management and reporting structure. Las Vegas Locals Gold Coast Hotel and Casino Las Vegas, Nevada The Orleans Hotel and Casino Las Vegas, Nevada Sam's Town Hotel and Gambling Hall Las Vegas, Nevada Suncoast Hotel and Casino Las Vegas, Nevada Eastside Cannery Casino and Hotel (1) Las Vegas, Nevada Aliante Casino + Hotel + Spa North Las Vegas, Nevada Cannery Casino Hotel North Las Vegas, Nevada Jokers Wild Henderson, Nevada Downtown Las Vegas California Hotel and Casino Las Vegas, Nevada Fremont Hotel & Casino Las Vegas, Nevada Main Street Station Hotel and Casino Las Vegas, Nevada Midwest & South Par-A-Dice Casino East Peoria, Illinois Belterra Casino Resort (2) Florence, Indiana Blue Chip Casino Hotel Spa Michigan City, Indiana Diamond Jo Casino Dubuque, Iowa Diamond Jo Worth Northwood, Iowa Kansas Star Casino Mulvane, Kansas Amelia Belle Casino Amelia, Louisiana Delta Downs Racetrack Hotel & Casino Vinton, Louisiana Evangeline Downs Racetrack & Casino Opelousas, Louisiana Sam's Town Shreveport Shreveport, Louisiana Treasure Chest Casino Kenner, Louisiana IP Casino Resort Spa Biloxi, Mississippi Sam's Town Hotel and Gambling Hall Tunica Tunica, Mississippi Ameristar Casino * Hotel Kansas City (2) Kansas City, Missouri Ameristar Casino * Resort * Spa St. Charles (2) St. Charles, Missouri Belterra Park (2) Cincinnati, Ohio Valley Forge Casino Resort King of Prussia, Pennsylvania (1) Due to the current levels of demand in the market, Eastside Cannery remains closed since it was closed on March 18, 2020, in compliance with orders issued by state officials as precautionary measures intended to slow the spread of the COVID-19 virus. (2) Property is subject to a master lease agreement with a real estate investment trust. We also own a travel agency and a captive insurance company that underwrites travel-related insurance, each located in Hawaii. As our Downtown Las Vegas properties cater to the Hawaiian market, financial results for these operations are included in our Downtown Las Vegas segment. Most of our gaming entertainment properties also include hotel, dining, sportsbook, retail and other amenities. Our main business emphasis is on slot revenues, which are highly dependent upon the number of visits and spending levels of customers at our properties. Our properties have historically generated significant operating cash flow, with the majority of our revenue being cash-based. While we do provide casino credit and the ability to transfer digital funds from the players' cashless wallet "BoydPay", subject to certain gaming regulations and jurisdictions, most of our customers wager with cash and pay for non-gaming services with cash or by credit card. Our industry is capital intensive, and we rely heavily on the ability of our properties to generate operating cash flow to fund maintenance capital expenditures, fund acquisitions, provide excess cash for future development, repay debt financing and associated interest costs, repurchase our debt or equity securities, and pay income taxes and dividends. Our Strategy Our strategy is to increase shareholder value by pursuing strategic initiatives that improve and grow our business. Growing Revenues and Operating Efficiently We are committed to growing revenues and building loyalty among core customers through targeted marketing investments and a focus on maximizing gaming revenues while operating as efficiently as possible. Balance Sheet Strength We are committed to maintaining the strength of our balance sheet and finding opportunities to diversify and increase our cash flow. We intend to take a balanced approach to our cash flows, with a current emphasis on investing in our business and returning capital to shareholders. Commitment to ESG We fulfill our commitment to ESG through four core pillars: Environment, People, Communities and Corporate Governance. We are committed to the well-being of our communities and future generations through reducing our carbon footprint and economic contributions, strive to be an employer of choice where every team member is treated with dignity and respect, and conduct business with the highest level of integrity. Evaluating Acquisition Opportunities Our evaluations of potential investments and growth opportunities are strategic, deliberate, and disciplined. Our goal is to identify and pursue opportunities that grow our business, are available at the right price and deliver a solid return for shareholders. These investments can take the form of expanding and enhancing offerings and amenities at existing properties, development of new properties, expanding and enhancing online sports wagering and online casino offerings as they are legalized in and around the states we operate today, and asset acquisitions. Maintaining Our Brand The ability of our team members to deliver great customer service helps distinguish our Company and our brands from our competitors. Our team members are an important reason that our customers continue to choose our properties over the competition across the country. In addition, we have established nationwide branding and a loyalty program. Our players use their "Boyd Rewards" cards to earn and redeem points at nearly all of our properties. The "Boyd Rewards" club, among other benefits, rewards players for their loyalty by entitling them to qualify for promotions, earn rewards toward gaming and nongaming activities and receive benefits such as vacations and luxury gifts. Our Key Performance Indicators We use several key performance measures to evaluate the operations of our properties. These key performance measures include the following: • Gaming revenue measures: slot handle, which means the dollar amount wagered in slot machines, and table game drop, which means the total amount of cash, including digital funds transferred from the players' cashless wallet "BoydPay", deposited in table games drop boxes, plus the sum of markers issued at all table games, are measures of volume and/or market share. Slot win and table game hold, which mean the difference between customer wagers and customer winnings on slot machines and table games, respectively, represent the amount of wagers retained by us and recorded as gaming revenues. Slot win percentage and table game hold percentage, which are not fully controllable by us, represent the relationship between slot handle to slot win and table game drop to table game hold, respectively. • Food & beverage revenue measures: average guest check, which means the average amount spent per customer visit and is a measure of volume and product offerings; number of guests served ("food covers"), which is an indicator of volume; and the cost per guest served, which is a measure of operating margin. • Room revenue measures: hotel occupancy rate, which measures the utilization of our available rooms; and average daily rate ("ADR"), which is a price measure; and the cost per room, which is a measure of operating margin. RESULTS OF OPERATIONS Overview Three Months Ended Six Months Ended June 30, June 30, (In millions) 2023 2022 2023 2022 Total revenues Operating income Net income Total Revenues Total revenues for the three months ended June 30, 2023increased by $22.5 million, or 2.5%, compared to the prior year comparable period, primarily due to an increase in our online revenue of $28.2 million, including an increase of $15.3 million over the prior year comparable period of revenues from reimbursements of gaming taxes and other expenses paid on behalf of our online partners. Total revenues for the six months ended June 30, 2023, increased $125.7 million, or 7.2%, as compared to the prior year comparable period primarily due to an increase in our online revenue of $96.0 million, including an increase of $69.3 million over the prior year comparable period of revenues from reimbursements of gaming taxes and other expenses paid on behalf of our online partners. Online revenues increased year over year due primarily to: (i) the launch of online gaming in Ohio in January 2023; (ii) the increase in revenues from reimbursements of gaming taxes and other expenses, as discussed above; (iii) organic growth in Pennsylvania as the online market continues to mature; and (iv) the acquisition on November 1, 2022, of Pala Interactive, LLC, our online gaming technology company that provides proprietary solutions on both a B2B and B2C basis. Other than our online operations in Pennsylvania, there was not any revenue associated with these new markets and business for the three and six months ended June 30, 2022. Additionally, during the three and six months ended June 30, 2023, we earned $17.4 million and $37.5 million, respectively, in management fees related to our management agreement with Wilton Rancheria. As Sky River Casino opened on August 15, 2022, there was not any revenue associated with this management agreement for the three and six months ended June 30, 2022. Offsetting the increase in online revenue and Sky River Casino management fee income, is a decline of $24.2 million and $27.8 million in gaming revenue for the three and six months ended June 30, 2023, respectively, as compared to prior year comparable periods. The decline in gaming revenue is primarily due to softness in retail play throughout all three of our gaming entertainment property segments as the retail player is generally more sensitive to changes in the economy. In addition, we had a strong prior year comparable period particularly in Las Vegas as Las Vegas benefited from the lifting of mask mandates and COVID restrictions for the first full quarter since the COVID closures in 2020. Operating Income Operating income remained consistent for the three months ended June 30, 2023, compared to the prior year comparable period. While revenues grew by $22.5 million during the three months ended June 30, 2023, $15.3 million of the revenue growth is due to reimbursements of gaming taxes and other expenses paid on behalf of our online partners that results in zero operating income as an equal amount of the reimbursement is also recorded as expense. Operating income increased $32.8 million, or 6.6%, for the six months ended June 30, 2023, compared to the prior year comparable period, primarily due to a 7.2% growth in revenues, including the $37.5 million in management fees, as discussed above. Operating income was also favorably impacted by a $20.1 million reduction of the allowance on a note receivable with Wilton Rancheria ("Wilton Note") during first quarter 2023 for development advances over the last 10 years as we evaluated the current expected credit losses after an amendment to Wilton's third-party construction loan in March 2023 that allowed for payments to us to begin in March 2023. Operating income was unfavorably impacted by a $4.5 million increase in impairment of assets related to a goodwill impairment in our Managed & Other category during first quarter 2023. The operating income net increase over the prior year comparable period, was offset by a $12.8 million gain on disposition of assets that favorably impacted operating income for the six months ended June 30, 2022 and did not reoccur during the six months ended June 30, 2023. Three Months Ended Six Months Ended June 30, June 30, (In millions) 2023 2022 2023 2022 REVENUES Gaming Food & beverage Room Online Management fee Other Total revenues DEPARTMENTAL OPERATING EXPENSES Gaming Food & beverage Room Online Other Total departmental operating expenses MARGINS Gaming Food & beverage Room Online Other Gaming Gaming revenues are comprised primarily of the net win from our slot machine operations and to a lesser extent from table games win. The decrease in gaming revenues of $24.2 million, or 3.5%, during the three months ended June 30, 2023, compared to the prior year comparable period, was primarily due to declines in slot handle of 5.1%, slot win of 3.7%, table game drop of 7.1% and table game hold of 5.9%. While core customer play was in line with the prior year, which was the strongest core customer performance in our history, softness in our retail customer, which is more sensitive to changes in the economy, drove gaming revenue declines year over year. In addition, the second quarter of 2022 was particularly strong as Las Vegas benefited from the lifting of mask mandates and COVID restrictions for the first full quarter since the COVID closures in 2020. The decrease in gaming revenues of $27.8 million, or 2.1%, during the six months ended June 30, 2023, compared to the prior year comparable period, was primarily due to declines in slot handle of 3.0%, slot win of 2.0%, table game drop of 5.6% and table game hold of 6.3%. The decline in gaming revenue is primarily due to softness in the retail customer, as discussed above. Food & Beverage Food & beverage revenues remained consistent during the three months ended June 30, 2023, compared to the prior year comparable period, however food and beverage margins declined from 18.2% to 16.8% for the three months ended June 30, 2023, primarily due to an increase in cost per guest served of 6.4%. Food & beverage revenues increased $7.9 million, or 5.9%, during the six months ended June 30, 2023, compared to the prior year comparable period, primarily due to an increase in average guest check of 5.4%. Food & beverage margins remained consistent for the six months ended June 30, 2023, due to an increase in cost per guest served of 5.9% that offsets the increase in average guest check. Room revenues remained consistent during the three months ended June 30, 2023, compared to the prior year comparable period, however room margins declined from 65.3% to 62.7% for the three months ended June 30, 2023, primarily due to an increase in cost per room of 10.5%. Room revenues increased $7.5 million, or 8.1%, during the three months ended June 30, 2023, compared to the prior year comparable period, primarily due to an increase in average daily rate of 3.2%. Room margins remained consistent for the six months ended June 30, 2023, due to an increase in cost per room of 4.9% that offsets the increase in average daily rate. Online Online revenues increased $28.2 million and $96.0 million during the three and six months ended June 30, 2023, compared to the prior year comparable period, primarily driven by the launch of online gaming in Ohio, growth in Pennsylvania and the acquisition of Pala Interactive in the fourth quarter of 2022, all as discussed above. Online revenues include reimbursements of gaming taxes and other expenses paid on behalf of our online partners which represented $15.3 million and $69.3 million of the increase for the three and six months ended June 30, 2023, respectively, from the prior year comparable periods. Management fee Management fee revenue during the three and six months ended June 30, 2023 of $17.4 million and $37.5 million, respectively, relates to our management agreement with Wilton Rancheria to manage the Sky River Casino in northern California. As the Sky River Casino opened on August 15, 2022, there were not any management fees earned under this agreement for the three and six months ended June 30, 2022. Other Other revenues relate to patronage visits at the other amenities at our properties, including entertainment and nightclub revenues, retail sales, theater tickets and other venues. Other revenues increased $1.1 million, or 3.4%, and $4.7 million, or 7.3%, during the three and six months ended June 30, 2023, as compared to the corresponding periods of the prior year. The increase is driven primarily by the Las Vegas Locals and Downtown Las Vegas segments as tourism and convention business has grown over the prior year comparable periods with the lifting of mask mandates and COVID restrictions in February 2022 in Las Vegas. Revenues and Adjusted EBITDAR by Reportable Segment We determine each property's profitability based on Adjusted Earnings Before Interest, Taxes, Depreciation, Amortization and Rent ("Adjusted EBITDAR"), which represents earnings before interest expense, income taxes, depreciation and amortization, deferred rent, master lease rent expense, other operating items, net, share-based compensation expense, project development, preopening and writedown expenses, impairments of assets, loss on early extinguishments and modifications of debt and other items, net, as applicable. Reportable Segment Adjusted EBITDAR is the aggregate sum of the Adjusted EBITDAR for each of the gaming entertainment properties comprising our Las Vegas Locals, Downtown Las Vegas and Midwest & South segments and our Online segment. Results for Downtown Las Vegas include the results of our travel agency and captive insurance company in Hawaii. Results for our nonreportable operating segments, including Lattner and our Sky River Casino management fees are aggregated in the Managed & Other category. Corporate expense represents unallocated payroll, professional fees, rent, aircraft expenses and various other expenses that are not directly related to our casino, hotel and online operations. Furthermore, for purposes of this presentation, corporate expense excludes its portion of share-based compensation expense. EBITDAR is a commonly used measure of performance in our industry that we believe, when considered with measures calculated in accordance with accounting principles generally accepted in the United States of America ("GAAP"), facilitates comparisons between us and our competitors and provides our investors a more complete understanding of our operating results before the impact of investing transactions, financing transactions and income taxes. Management has historically adjusted EBITDAR when evaluating operating performance because we believe that the exclusion of certain recurring and non-recurring items is necessary to provide a full understanding of our core operating results and as a means to evaluate period-to-period results. The following table presents Three Months Ended Six Months Ended June 30, June 30, (In millions) 2023 2022 2023 2022 Total revenues Las Vegas Locals Downtown Las Vegas Midwest & South Online Managed & Other Total revenues Adjusted EBITDAR (1) Las Vegas Locals Downtown Las Vegas Midwest & South Online Managed & Other Corporate expense Adjusted EBITDAR (1) Refer to Note Las Vegas Locals Total revenues decreased by $5.5 million, or Total revenues increased by $7.2 million, or 1.5%, during the six months ended June 30, 2023, as compared to the prior year comparable period, reflecting revenue increases in all departmental categories, except gaming revenue. Room revenue was the primary driver of the growth, increasing $6.1 million due to an increase in hotel occupancy rate of 3.1% and average daily rate of 5.1% over the prior year comparable period. Food & beverage revenue increased by $1.8 million as average guest check increased 6.6% over the prior year comparable period. Other revenue increased $1.4 million, which was primarily driven by increased entertainment over the prior year comparable period with the lifting of COVID restrictions in February 2022. These revenue increases were offset by a decline in gaming revenue of $2.2 million primarily due to a 10.2% decrease in table game hold and a 10.0% decrease in table game drop over the prior year comparable period. Overall, the Las Vegas Locals segment benefited from increased visitation to Las Vegas. Midwest & South Total revenues decreased by $16.1 million, or 3.0%, during the three months ended June 30, 2023, as compared to the corresponding period of the prior year, due primarily to a $17.4 million decline in gaming revenue. The decrease in gaming revenue was attributable to declines in table game hold of 3.6%, table game drop of 4.2%, slot handle of 4.7% and slot win of 3.6% over the prior year comparable period. The gaming revenue decline is driven by continued softness in Louisiana and Mississippi as well as softness in the retail customer throughout our markets. Total revenues decreased by $21.0 million, or 2.0%, during the six months ended June 30, 2023, as compared to the corresponding period of the prior year, due primarily to a $27.9 million decline in gaming revenue. The decrease in gaming revenue was attributable to declines in table game hold of 5.3%, table game drop of 2.8%, slot handle of 3.0% and slot win of 2.4% over the prior year comparable period. The gaming revenue decline is driven primarily by our properties in Louisiana and Mississippi and softness in those overall markets, particularly in the first quarter with trends improving sequentially from the first to second quarter, as well as overall softness in the retail customer throughout the segment. Offsetting the gaming revenue decline, was an increase in food & beverage revenue of $5.7 million, which was driven by a 4.3% increase in average guest check. Adjusted EBITDAR decreased by $17.0 million, or 7.8%, and$30.5 million, or 7.1%, during the three and six months ended June 30, 2023, respectively, as compared to the corresponding prior year periods, due primarily to the gaming revenue declines, as discussed above. Online Online revenues increased $28.2 million and $96.0 million, during the three and six months ended June 30, 2023, respectively, compared to the prior year comparable period, primarily driven by the launch of online gaming in Ohio, growth in Pennsylvania and the acquisition of Pala Interactive in the fourth quarter of 2022, all as discussed above. Online revenues include reimbursements of gaming taxes and other expenses paid on behalf of our online partners which represented $15.3 million and $69.3 million of the increase for the three and six months ended June 30, 2023, respectively, from the prior year comparable periods. Adjusted EBITDAR increased by $5.7 million and $17.5 million, during the three and six months ended June 30, 2023, respectively, as compared to the corresponding period of the prior year, Other Operating Costs and Expenses The following costs and expenses, as presented in our condensed consolidated statements of operations, are further discussed below: Three Months Ended Six Months Ended June 30, June 30, (In millions) 2023 2022 2023 2022 Selling, general and administrative Master lease rent expense Maintenance and utilities Depreciation and amortization Corporate expense Project development, preopening and writedowns Impairment of assets Other operating items, net During the Other operating items, net, is generally comprised of miscellaneous non-recurring operating charges, including Other Expenses Interest Expense, net The following table summarizes information with respect to our interest expense on outstanding indebtedness: Three Months Ended Six Months Ended June 30, June 30, (In millions) 2023 2022 2023 2022 Interest Expense, Net of Capitalized Interest and Interest Income Average Long-Term Debt Balance (1) Weighted Average Interest Rates (1) Interest expense, net of capitalized interest and interest income, for the three months ended June 30, 2023, increased $4.0 million, or 11.2%, from the prior year comparable period primarily due to a $6.2 million interest expense increase driven by a 110-basis point increase in the weighted average interest rate offset by a $66.7 million decline in the weighted average debt balance. The increase in interest expense is offset by a $2.2 million interest income increase driven by interest earned on the Wilton Note during the three months ended June 30, 2023. Interest expense, net of capitalized interest and interest income, for the Loss on Early Extinguishments and Modifications of Debt During the three and Income Taxes The effective tax rates LIQUIDITY AND CAPITAL RESOURCES Financial Position We generally operate with minimal or negative levels of working capital in order to minimize borrowings and related interest costs. At We believe that current cash balances together with the available borrowing capacity under The Company Cash Flows Summary Six Months Ended June 30, (In millions) 2023 2022 Net cash provided by operating activities Cash flows from investing activities Capital expenditures Payments received on note receivable Proceeds received from disposition of assets Other investing activities Net cash used in investing activities Cash flows from financing activities Net borrowings (payments) under credit facilities Retirements of senior notes Premium fees Debt financing costs Share-based compensation activities Shares repurchased and retired Dividends paid Other financing activities Net cash used in financing activities Decrease in cash, cash equivalents and restricted cash Cash Flows from Operating Activities During the Cash Flows from Investing Activities Our industry is capital intensive and we use cash flows for acquisitions, facility expansions, investments in future development or business opportunities and maintenance capital expenditures. During the We rely The net cash outflows Indebtedness The outstanding principal balances of long-term debt, before unamortized discounts and fees, and the changes in those balances are as follows: (In millions) June 30, 2023 December 31, 2022 Decrease Credit facility 4.750% senior notes due 2027 4.750% senior notes due 2031 Other Total long-term debt Less current maturities Long-term debt, net of current maturities Amounts Outstanding The outstanding principal amounts under the Credit Facility are comprised of the following: June 30, December 31, (In millions) 2023 2022 Revolving credit facility Term A loan Swing loan Total outstanding principal amounts With a total revolving credit commitment of $1,450.0 million available under the Credit Facility, $200.0 million and The blended interest rate for outstanding borrowings under the Credit Facility was Debt Service Requirements Debt service requirements for the Term A Loan include amortization in an annual amount equal to 5.00% of the original principal amount thereof, payable on a quarterly basis. Additionally, under the Credit Facility we have monthly to quarterly interest payment obligations, depending on the rates we lock in, for the Term A Loan, unused line interest payments and any outstanding borrowings under the Revolving Credit Facility, including the Swing Loan. Debt service requirements under our current outstanding senior notes consist of semi-annual interest payments (based upon a fixed annual interest Covenant Compliance As of The indentures governing the senior notes contain provisions that allow for the incurrence of additional indebtedness, if after giving effect to such incurrence, the fixed charge coverage ratio (as defined in the respective indentures, Guarantor Financial Information In connection with the issuance of our 4.750% Senior Notes due 2027 and our 4.750% Senior Notes due 2031 (collectively, the "Guaranteed Notes" or "Senior Notes"), certain of the Company's wholly owned subsidiaries (the "Guarantors") provide guarantees of those indentures. These Guaranteed Notes are fully and unconditionally guaranteed, on a joint and several basis, by certain of our current and future domestic restricted subsidiaries, all of which are 100% owned by us. Summarized combined balance sheet information for the parent company and the Guarantors is as follows: June 30, December 31, (In millions) 2023 2022 Current assets Noncurrent assets Current liabilities Noncurrent liabilities Summarized combined results of operations for the parent company and the Guarantors is as follows: Six Months Ended (In millions) June 30, 2023 Revenues Operating income Income before income taxes Net income Share Repurchase Subject to applicable corporate securities laws, repurchases under our On October 21, 2021, our Board of Directors authorized 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. Quarterly Dividend Program On The dividends declared by the Board of Directors under this program Declaration date Record date Payment date Amount per share February 3, 2022 March 15, 2022 April 15, 2022 June 1, 2022 June 30, 2022 July 15, 2022 December 8, 2022 December 19, 2022 January 15, 2023 February 14, 2023 March 15, 2023 April 15, 2023 May 4, 2023 June 15, 2023 July 15, 2023 Other Items Affecting Liquidity We anticipate funding our capital requirements using cash on hand, cash Commitments Capital Spending and Development We currently estimate that our annual cash capital requirements to perform In addition to the maintenance capital spending discussed above, we continue to pursue other potential development projects that may require us to invest significant amounts of Other Opportunities We regularly investigate and pursue additional expansion opportunities in markets where casino gaming is currently permitted. We also pursue expansion opportunities in jurisdictions where casino and online gaming is not currently permitted in order to be prepared to develop projects upon approval of casino or online gaming. Such expansions will be affected and determined by several key factors, which may include the following: • the outcome of gaming license selection processes; • the approval of gaming in jurisdictions where we have been active but where casino or online gaming is not currently permitted; • identification of additional suitable investment opportunities in current gaming jurisdictions; and • availability of acceptable financing. Additional projects may require us to make substantial investments or may cause us to incur substantial costs related to the investigation and pursuit of such opportunities, which Contingencies Legal Matters We are parties to various legal proceedings arising in the ordinary course of business. We believe that all pending claims, if adversely decided, would not have a material effect on our business, financial position, results of operations or cash flows. Off Balance Sheet Arrangements There have been no material changes to our off balance sheet arrangements Critical Accounting There have been no material changes Recently Issued Accounting Pronouncements For information with respect to recent accounting pronouncements and the impact of these pronouncements on our condensed consolidated financial statements, see Note Important Information Regarding Forward-Looking Statements This Quarterly Report on Form 10-Q contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended (the "Securities Act"), and Section 21E of the Securities Exchange Act of 1934, as amended (the "Exchange Act"). Such statements contain words such as "may," "will," "might," "expect," "believe," "anticipate," "could," "would," "estimate," "pursue," "target," "project," "intend," "plan," "seek," "should," "assume," and "continue," or the negative thereof or comparable terminology. Forward-looking statements involve certain risks and uncertainties, and actual results may differ materially from those discussed in any such statement. Factors that could cause actual results to differ materially from such forward-looking statements include: • • our expectation regarding the trends that will affect the gaming industry over the next few years and the impact of these trends on growth of the gaming industry, future development opportunities and merger and acquisition activity in general; • our intention to pursue expansion opportunities, including acquisitions, that are a good fit for our business, deliver a solid return for stockholders, and are available at the right price; • that our credit agreement and our cash flows from operating activities will be sufficient to meet our respective projected operating and maintenance capital expenditures for the next twelve months; • • • • • our asset impairment analyses and our intangible asset and goodwill impairment tests; • the likelihood of interruptions to our rights in the land we lease under long-term leases for certain of our hotels and casinos; • • Additional factors that could cause actual results to differ are discussed in Part I. Item 1A. Market risk is the risk of loss arising from adverse changes in market rates and prices, such as interest rates, foreign currency exchange rates and commodity prices. We do not hold any market risk sensitive instruments for trading purposes. Our primary exposure to market risk is interest rate risk, specifically long-term U.S. treasury rates and the applicable spreads in the high-yield investment market, short-term and long-term As of See also "Liquidity and Capital Resources" above. As of the end of the period covered by this Quarterly Report on Form 10-Q (the "Report"), we carried out an evaluation, under the supervision and with the participation of our Chief Executive Officer and Chief Financial Officer, of the effectiveness of the design and operation of our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended (the "Exchange Act")). Our disclosure controls and procedures are designed to ensure that information required to be disclosed in our reports that we file or submit under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the SEC's rules and forms. Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information we are required to disclose in reports we file or submit under the Exchange Act is accumulated and communicated to our management, including our principal executive and principal financial officers, or persons performing similar functions, as appropriate, to allow timely decisions regarding required disclosure. Based on the evaluation of the effectiveness of the design and operation of our disclosure controls and procedures, our Chief Executive Officer and Chief Financial Officer concluded that our disclosure controls and procedures were effective as of the end of the period covered by this Report. There has been no change in our internal control over financial reporting (as defined in Rules 13a-15(f) and 15d-15(f) of the Exchange Act) that occurred during our most recent fiscal quarter that has materially affected or is reasonably likely to materially affect our internal control over financial reporting. We are parties to various legal proceedings arising in the ordinary course of business. We believe that all pending claims, if adversely decided, would not have a material adverse effect on our business, financial position, There were no material changes from the risk factors previously disclosed in Part The following table discloses share repurchases that we have made pursuant to our share repurchase program during the three months ended Period Total Number of Shares Purchased (1) Average Price Paid Per Share Total Number of Shares Purchased as Part of a Publicly Announced Plan Approximate Dollar Value That May Yet Be Purchased Under the Plan April 1, 2023 through April 30, 2023 May 1, 2023 through May 31, 2023 June 1, 2023 through June 30, 2023 Total (1) All shares repurchased are covered by our share repurchase program as approved by our Board of Directors None of the Company’s Exhibits Exhibit Number Document of Exhibit Method of Filing 31.1 Filed electronically herewith 31.2 Filed electronically herewith 32.1 Furnished electronically herewith 32.2 Furnished electronically herewith 101 The following materials from the Company's Quarterly Report on Form 10-Q for the quarter ended June 30, 2023, formatted in iXBRL (Inline eXtensible Business Reporting Language): (i) Condensed Consolidated Balance Sheets as of June 30, 2023 and December 31, 2022, (ii) Condensed Consolidated Statements of Operations for the three and six months ended June 30, 2023 and 2022, (iii) Condensed Consolidated Statements of Comprehensive Income for the three and six months ended June 30, 2023 and 2022, (iv) Condensed Consolidated Statements of Changes in Stockholders' Equity for each of the quarters within the six months ended June 30, 2023 and 2022, (v) Condensed Consolidated Statements of Cash Flows for the six months ended June 30, 2023 and 2022, and (vi) Notes to Condensed Consolidated Financial Statements. Filed electronically herewith Inline XBRL for cover page of the Company's Quarterly Report on Form 10-Q, Pursuant to the requirements of Section 13 or 15(d) of the Securities and Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized, on BOYD GAMING CORPORATION By: /s/ Lori M. Nelson Lori M. Nelson Senior Vice President Financial Operations and Reporting andPART I. Financial InformationItem 1. Financial Statements (Unaudited)BOYD GAMING CORPORATION AND SUBSIDIARIES $ 260,787 $ 283,472 11,615 11,593 104,333 109,053 21,408 22,173 52,079 49,379 8,824 2,558 459,046 478,228 2,451,856 2,394,236 810,300 830,345 133,172 147,439 1,420,692 1,427,135 1,029,415 1,033,744 $ 6,304,481 $ 6,311,127 $ 96,883 $ 129,946 44,275 44,275 405,408 411,913 546,566 586,134 2,899,691 3,005,134 735,345 758,440 308,654 318,609 65,416 52,185 — — 1,000 1,028 102,723 305,152 1,645,682 1,285,827 (596 ) (1,382 ) 1,748,809 1,590,625 $ 6,304,481 $ 6,311,127 September 30, December 31, (In thousands, except share data) 2017 2016 ASSETS Current assets Cash and cash equivalents $ 158,832 $ 193,862 Restricted cash 26,705 16,488 Accounts receivable, net 33,536 30,371 Inventories 17,816 18,568 Prepaid expenses and other current assets 45,673 46,214 Income taxes receivable 225 2,444 Total current assets 282,787 307,947 Property and equipment, net 2,556,116 2,605,169 Other assets, net 81,626 49,205 Intangible assets, net 846,616 881,954 Goodwill, net 888,224 826,476 Total assets $ 4,655,369 $ 4,670,751 LIABILITIES AND STOCKHOLDERS' EQUITY Current liabilities Current maturities of long-term debt $ 23,981 $ 30,336 Accounts payable 80,131 84,086 Accrued liabilities 283,112 251,082 Total current liabilities 387,224 365,504 Long-term debt, net of current maturities and debt issuance costs 3,045,586 3,199,119 Deferred income taxes 123,176 83,980 Other long-term tax liabilities 3,408 3,307 Other liabilities 61,865 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; 112,590,429 and 112,896,377 shares outstanding 1,126 1,129 Additional paid-in capital 941,142 953,440 Retained earnings (accumulated deficit) 91,656 (19,878 ) Accumulated other comprehensive income (loss) 186 (615 ) Total Boyd Gaming Corporation stockholders' equity 1,034,110 934,076 Noncontrolling interest — 50 Total stockholders' equity 1,034,110 934,126 Total liabilities and stockholders' equity $ 4,655,369 $ 4,670,751 BOYD GAMING CORPORATION AND SUBSIDIARIES $ 660,729 $ 684,925 $ 1,325,037 $ 1,352,879 70,366 70,299 141,950 134,042 49,761 49,904 99,826 92,313 85,002 56,774 207,865 111,850 17,446 — 37,476 — 33,646 32,548 68,762 64,109 916,950 894,450 1,880,916 1,755,193 249,999 254,500 499,794 504,542 58,622 57,456 117,951 111,390 18,580 17,285 35,700 33,275 71,393 48,899 173,398 94,888 11,003 11,678 22,570 22,614 99,070 95,662 199,389 187,709 27,099 26,654 53,927 52,960 37,591 34,517 73,617 67,407 62,220 66,757 123,780 129,235 31,705 34,872 60,360 63,876 5,201 912 (13,673 ) (9,117 ) — — 4,537 — 438 188 658 286 672,921 649,380 1,352,008 1,259,065 244,029 245,070 528,908 496,128 (2,715 ) (483 ) (20,860 ) (903 ) 42,715 36,466 86,581 74,124 — 16,509 — 19,809 522 3,750 626 3,497 40,522 56,242 66,347 96,527 203,507 188,828 462,561 399,601 (11,053 ) (42,065 ) (70,376 ) (89,910 ) $ 192,454 $ 146,763 $ 392,185 $ 309,691 $ 1.89 $ 1.33 $ 3.81 $ 2.79 102,025 110,118 102,818 111,151 $ 1.89 $ 1.33 $ 3.81 $ 2.78 102,071 110,259 102,867 111,303 Three Months Ended Nine Months Ended September 30, September 30, (In thousands, except per share data)2017 2016 2017 2016 Revenues Gaming $ 487,372 $ 443,568 $ 1,482,427 $ 1,359,047 Food and beverage 85,640 74,257 261,425 226,955 Room 48,073 42,985 143,669 128,225 Other 31,639 29,579 98,592 90,738 Gross revenues 652,724 590,389 1,986,113 1,804,965 Less promotional allowances 65,059 58,488 193,238 175,812 Net revenues 587,665 531,901 1,792,875 1,629,153 Operating costs and expenses Gaming 229,667 217,103 691,210 658,396 Food and beverage 47,487 40,745 146,538 124,664 Room 13,475 11,247 40,058 33,039 Other 18,566 18,660 58,176 56,819 Selling, general and administrative 91,288 80,833 275,938 241,686 Maintenance and utilities 30,244 27,854 82,507 76,711 Depreciation and amortization 55,201 47,928 161,728 143,831 Corporate expense 19,339 15,877 63,388 49,883 Project development, preopening and writedowns 2,975 3,735 8,731 11,473 Impairments of assets — — — 1,440 Other operating items, net 758 3 1,707 555 Total operating costs and expenses 509,000 463,985 1,529,981 1,398,497 Operating income 78,665 67,916 262,894 230,656 Other expense (income) Interest income (452 ) (1,050 ) (1,367 ) (2,506 ) Interest expense, net of amounts capitalized 43,309 55,203 129,711 170,155 Loss on early extinguishments and modifications of debt 319 41,518 853 42,364 Other, net (139 ) 1 531 143 Total other expense, net 43,037 95,672 129,728 210,156 Income (loss) from continuing operations before income taxes 35,628 (27,756 ) 133,166 20,500 Income tax (provision) benefit (12,652 ) 189,620 (47,515 ) 174,231 Income from continuing operations, net of tax 22,976 161,864 85,651 194,731 Income from discontinued operations, net of tax — 180,707 21,392 211,052 Net income $ 22,976 $ 342,571 $ 107,043 $ 405,783 Basic net income per common share Continuing operations $ 0.20 $ 1.41 $ 0.74 $ 1.70 Discontinued operations — 1.58 0.19 1.85 Basic net income per common share $ 0.20 $ 2.99 $ 0.93 $ 3.55 Weighted average basic shares outstanding 114,836 114,567 115,108 114,335 Diluted net income per common share Continuing operations $ 0.20 $ 1.40 $ 0.74 $ 1.69 Discontinued operations — 1.57 0.18 1.84 Diluted net income per common share $ 0.20 $ 2.97 $ 0.92 $ 3.53 Weighted average diluted shares outstanding 115,501 115,202 115,768 115,051 Dividends declared per common share $ 0.05 $ — $ 0.10 $ — BOYD GAMING CORPORATION AND SUBSIDIARIES $ 192,454 $ 146,763 $ 392,185 $ 309,691 112 (619 ) 586 (803 ) 196 — 200 — $ 192,762 $ 146,144 $ 392,971 $ 308,888 Three Months Ended Nine Months Ended September 30, September 30, (In thousands) 2017 2016 2017 2016 Net income $ 22,976 $ 342,571 $ 107,043 $ 405,783 Other comprehensive (loss) income, net of tax: Fair value adjustments to available-for-sale securities, net of tax (305 ) 417 801 754 Comprehensive income attributable to Boyd Gaming Corporation $ 22,671 $ 342,988 $ 107,844 $ 406,537 BOYD GAMING CORPORATION AND SUBSIDIARIES 102,816,110 $ 1,028 $ 305,152 $ 1,285,827 $ (1,382 ) $ 1,590,625 — — — 199,731 — 199,731 — — — — 474 474 — — — — 4 4 32,000 — 315 — — 315 45,942 1 (1,926 ) — — (1,925 ) 318,878 3 (12,777 ) — — (12,774 ) (1,726,308 ) (17 ) (106,994 ) — — (107,011 ) — — — (16,289 ) — (16,289 ) — — 7,819 — — 7,819 101,486,622 1,015 191,589 1,469,269 (904 ) 1,660,969 — — — 192,454 — 192,454 — — — — 112 112 — — — — 196 196 17,871 — (63 ) — — (63 ) (1,492,451 ) (15 ) (101,001 ) — — (101,016 ) — — — (16,041 ) — (16,041 ) — — 12,198 — — 12,198 100,012,042 $ 1,000 $ 102,723 $ 1,645,682 $ (596 ) $ 1,748,809 111,303,140 $ 1,113 $ 827,725 $ 710,088 $ (180 ) $ 1,538,746 — — — 162,928 — 162,928 — — — — (184 ) (184 ) 115,686 1 (2,720 ) — — (2,719 ) 294,344 3 (8,113 ) — — (8,110 ) (2,096,660 ) (21 ) (131,768 ) — — (131,789 ) — — — (16,480 ) — (16,480 ) — — 8,734 — — 8,734 109,616,510 1,096 693,858 856,536 (364 ) 1,551,126 — — — 146,763 — 146,763 — — — — (619 ) (619 ) 101,675 1 1,804 — — 1,805 140,899 1 (2 ) — — (1 ) 307 — (8 ) — — (8 ) (3,018,031 ) (30 ) (167,954 ) — — (167,984 ) — — — (16,026 ) — (16,026 ) — — 14,099 — — 14,099 106,841,360 $ 1,068 $ 541,797 $ 987,273 $ (983 ) $ 1,529,155 Boyd Gaming Corporation Stockholders' Equity Common Stock AdditionalPaid-inCapital Retained Earnings (AccumulatedDeficit) AccumulatedOtherComprehensiveIncome (Loss), Net NoncontrollingInterest 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 — — — 107,043 — — 107,043 Comprehensive income attributable to Boyd, net of tax — — — — 801 — 801 Stock options exercised 233,964 2 2,021 — — — 2,023 Release of restricted stock units, net of tax 156,750 1 (2,226 ) — — — (2,225 ) Release of performance stock units, net of tax 173,653 2 (1,793 ) — — — (1,791 ) Shares repurchased and retired (870,315 ) (8 ) (22,152 ) — — — (22,160 ) Cash dividends declared — — — (11,286 ) — — (11,286 ) Share-based compensation costs — — 11,212 — — — 11,212 Other — — 640 — — (50 ) 590 Balances, September 30, 2017 112,590,429 $ 1,126 $ 941,142 $ 91,656 $ 186 $ — $ 1,034,110 Balances, January 1, 2016 111,614,420 $ 1,117 $ 945,041 $ (437,881 ) $ (316 ) $ 50 $ 508,011 Net income — — — 405,783 — — 405,783 Comprehensive income attributable to Boyd — — — — 754 — 754 Stock options exercised 449,065 4 2,909 — — — 2,913 Release of restricted stock units, net of tax 261,235 2 (695 ) — — — (693 ) Release of performance stock units, net of tax 159,027 2 (869 ) — — — (867 ) Share-based compensation costs — — 7,125 — — — 7,125 Balances, September 30, 2016 112,483,747 $ 1,125 $ 953,511 $ (32,098 ) $ 438 $ 50 $ 923,026 BOYD GAMING CORPORATION AND SUBSIDIARIES $ 392,185 $ 309,691 123,780 129,235 3,944 4,258 40,256 28,736 (34,371 ) — 20,017 22,833 (10,015 ) 18,798 4,537 — — (12,800 ) — 19,809 205 (99 ) 4,739 2,724 765 (1,001 ) (2,220 ) 496 (6,266 ) (5,369 ) 223 3,649 (38,185 ) (40,098 ) (40,256 ) (28,736 ) 3,937 4,086 463,275 456,212 (171,386 ) (98,699 ) 49,720 — — 21,350 (2,255 ) — (123,921 ) (77,349 ) 753,200 1,207,000 (862,500 ) (1,025,897 ) — (300,000 ) — (12,939 ) — (13,680 ) (14,447 ) (9,033 ) (206,356 ) (299,773 ) (31,764 ) (16,480 ) (87 ) (1,170 ) (361,954 ) (471,972 ) (63 ) — (22,663 ) (93,109 ) 295,065 357,128 $ 272,402 $ 264,019 $ 84,121 $ 70,697 8,513 — 86,208 76,128 $ 7,693 $ 3,987 16,041 16,026 (34,371 ) — — (11,224 ) Nine Months Ended September 30, (In thousands) 2017 2016 Cash Flows from Operating Activities Net income $ 107,043 $ 405,783 Adjustments to reconcile net income to net cash provided by operating activities: Income from discontinued operations, net of tax (21,392 ) (211,052 ) Depreciation and amortization 161,728 143,831 Amortization of debt financing costs and discounts on debt 6,957 12,654 Share-based compensation expense 11,212 7,125 Deferred income taxes 43,266 (177,106 ) Non-cash impairment of assets — 1,440 Loss on early extinguishments and modifications of debt 853 42,364 Other operating activities (2,106 ) 1,200 Changes in operating assets and liabilities: Restricted cash (10,217 ) (4,262 ) Accounts receivable, net (3,056 ) 2,045 Inventories 753 733 Prepaid expenses and other current assets (2,845 ) (2,919 ) Income taxes receivable 2,219 212 Other assets, net 3,626 (759 ) Accounts payable and accrued liabilities 25,512 32,731 Other long-term tax liabilities 101 190 Other liabilities (482 ) 2,696 Net cash provided by operating activities 323,172 256,906 Cash Flows from Investing Activities Capital expenditures (161,252 ) (117,330 ) Cash paid for acquisition, net of cash received (1,153 ) (372,322 ) Advances pursuant to development agreement (35,108 ) — Other investing activities 492 2,719 Net cash used in investing activities (197,021 ) (486,933 ) Cash Flows from Financing Activities Borrowings under Boyd Gaming bank credit facility 463,300 1,622,075 Payments under Boyd Gaming bank credit facility (628,211 ) (1,290,800 ) Borrowings under Peninsula bank credit facility — 237,000 Payments under Peninsula bank credit facility — (899,750 ) Proceeds from issuance of senior notes — 750,000 Retirements of senior notes — (700,000 ) Debt financing costs, net (2,700 ) (40,718 ) Premium and consent fees paid — (15,750 ) Share-based compensation activities, net (1,993 ) 1,353 Shares repurchased and retired (22,160 ) — Dividends paid (5,653 ) — Other financing activities 503 — Net cash used in financing activities (196,914 ) (336,590 ) Cash Flows from Discontinued Operations Cash flows from operating activities (514 ) (26,596 ) Cash flows from investing activities 36,247 594,080 Cash flows from financing activities — — Net cash provided by discontinued operations 35,733 567,484 Change in cash and cash equivalents (35,030 ) 867 Cash and cash equivalents, beginning of period 193,862 158,821 Cash and cash equivalents, end of period $ 158,832 $ 159,688 Supplemental Disclosure of Cash Flow Information Cash paid for interest, net of amounts capitalized $ 109,634 $ 147,001 Cash paid for income taxes, net of refunds 5,252 31,698 Supplemental Schedule of Non-cash Investing and Financing Activities Payables incurred for capital expenditures $ 3,709 $ 4,208 BOYD GAMING CORPORATION AND SUBSIDIARIES (Unaudited)SeptemberJune 30, 20172023 and December 31, 20162022 and for the three and ninesix months ended SeptemberJune 30, 20172023 and 2016NOTE 1. ORGANIZATION AND BASIS SUMMARY OF PRESENTATIONSIGNIFICANT ACCOUNTING POLICIES"Company,""Company", "Boyd", "Boyd Gaming,"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.""BYD".2428 wholly owned gaming entertainment properties. Headquartered in Las Vegas, Nevada, we have gaming operations in Nevada, Illinois, Indiana, Iowa, Kansas, Louisiana, Mississippi, Missouri, Ohio and Mississippi.Pennsylvania. In addition, we own and operate Boyd Interactive, a business-to-business ("B2B") and business-to-consumer ("B2C") online casino gaming business. We also manage the Sky River Casino located in California under a management agreement with Wilton Rancheria.10-Q10-Q and Article 10 of Regulation S-XS-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, 2016,2022, as filed with the U.S. Securities and Exchange Commission ("SEC") on February 23, 2017.24, 2023.(consistingconsisting only of normal recurring adjustments)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.Boyd Gamingthe Company and its wholly owned subsidiaries. Investments in unconsolidated affiliates, which are 50% or less owned and do not meet the controlling financial interest 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 enteredan Equity Purchase Agreement (the "Purchase Agreement") to sell our 50% equity interest in Marina District Development Holdinga Managed & Other category. These changes reflect the growth of the Company LLC ("MDDHC"), the parent company of Borgata Hotel Casino & Spa ("Borgata"), to MGM Resorts International ("MGM"),beyond its traditional wholly owned gaming entertainment properties and the transaction closed on August 1, 2016. (See Note 3, Acquisitionsincreasing importance to the Company of other growth sources. Segment information for the three 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.six months ended June 30, 2022 has been recast to conform to this presentation. See Note 3, Acquisitions and Divestitures10,Segment Information, for a discussion of our acquisitions of Aliante, Cannery and Eastside Cannery, which were completed during the year ended December 31, 2016. We have not disclosed the pro forma impact of these acquisitions to our results of operations, as the pro forma impact was deemed immaterial.NOTE 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIESadditional information. $ 260,787 $ 283,472 $ 250,195 $ 344,557 11,615 11,593 13,824 12,571 $ 272,402 $ 295,065 $ 264,019 $ 357,128 8Promotional Allowancesand& beverage, and other services furnished to guests without charge is included in grossrecorded as departmental revenues. Gaming revenues and then deducted as a promotional allowance. Promotional allowances also includeare net of incentives earned in our slot bonus programplayer loyalty programs such as cash and the estimated retail value of goods and services (such as complimentary rooms and food & beverage). The estimated retail values related to goods and beverages). We rewardservices provided to customers through the usewithout charge or upon redemption of bonuspoints under our player loyalty programs with points based on amounts wagered that can be redeemed for a specified periodincluded in departmental revenues, and therefore reducing our gaming revenues, are as follows: $ 29,336 $ 29,330 $ 57,595 $ 56,908 15,346 16,706 30,494 31,789 2,061 2,334 3,937 4,347 92022SeptemberJune 30, 20172023 and December 31, 20162022 and for the three and ninesix months ended SeptemberJune 30, 20172023 and 2016The amounts included in promotional allowances are as follows: Three Months Ended Nine Months Ended September 30, September 30, (In thousands) 2017 2016 2017 2016 Rooms $ 19,394 $ 18,778 $ 56,750 $ 56,017 Food and beverage 41,768 36,528 125,922 109,640 Other 3,897 3,182 10,566 10,155 Total promotional allowances $ 65,059 $ 58,488 $ 193,238 $ 175,812 The estimated costs of providing such promotional allowances are as follows: Three Months Ended Nine Months Ended September 30, September 30, (In thousands) 2017 2016 2017 2016 Rooms $ 8,508 $ 8,307 $ 24,995 $ 24,797 Food and beverage 37,651 32,611 112,539 96,724 Other 3,371 3,041 9,827 9,021 Total estimated cost of promotional allowances $ 49,530 $ 43,959 $ 147,361 $ 130,542 recorded as aassessed based on our gaming expenserevenues and are recorded in the condensed consolidated statements of operations as a gaming expense for gaming entertainment properties and online expense for Boyd Interactive operations. TheseGaming taxes recorded as gaming expense totaled approximately $81.5$129.7 million and $79.7$135.1 million for the three months ended SeptemberJune 30, 2017 2023 and 2016,2022, respectively, and $248.5were $259.8 million and $243.8$266.9 million for the ninesix months ended SeptemberJune 30, 2017 2023 and 2016,2022, respectively. Gaming taxes recorded as online expense, excluding taxes paid under collaborative arrangements (see Collaborative Arrangements below for further discussion), totaled $1.2 million and $1.8 million for the three and six months ended June 30, 2023, respectively. There was not any gaming tax recorded as online expense for the three and six months ended June 30, 2022.allthe available 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-notmore-likely-than-not realization threshold. This assessment considers, among other matters, the nature, frequency and severity of current and cumulative losses, forecasts of profitability and taxable income, 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.The effective tax rates on income from continuing operations during the nine months ended September 30, 2017 and 2016 were 35.7% and (849.9%), respectively. Our provision for the nine months ended September 30, 2017 was favorably impacted by the inclusion of excess tax benefits, related to equity compensation, as a component of the provision for income taxes, the recognition of unrecognized tax benefits due to statute expirations and the reversal of related accrued interest. These benefits were offset by state taxes resulting in an effective tax rate greater than the federal statutory rate.thirdsecond quarter 2016 valuation allowance analysis, we determined that the positive evidence in favor of releasing thea portion of our valuation allowance particularly evidence that was objectively verifiable,for certain state jurisdictions, outweighed the negative evidence. We utilizedutilize a rolling twelve quarters of pretaxpre-tax income adjusted for permanent book to tax differences as a measure of cumulative results in recent years. We transitioned from a cumulative loss position to a cumulative income position over the rolling twelve quarters ended SeptemberJune 30, 2016. 2023. Other evidence considered in the analysis included, but was not limited to, a trend reflective of improvement in recent earnings, forecasts of profitability and taxable income and the reversal of existing temporary differences. The change in these conditions during the three months ended September June 30, 20162023 provided positive evidence that supported the release of the valuation allowance against a significant portion of our state deferred tax assets. As such, we concluded that it was more likely than not that the benefit from our deferred tax assets would be realized, andrealized. As a result, during the second quarter, we released $190.4$35.9 million of valuation allowanceBOYD GAMING CORPORATION AND SUBSIDIARIESNOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)as of September 30, 2017 and December 31, 2016 and for the three and nine months ended September 30, 2017 and 2016on our federal and unitary state income tax net operating loss carryforwards and other deferred tax assets during the third quarter of 2016.assets. ("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.two-steptwo-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 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.10Change in Accounting PrincipleIn 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 nine months ended September 30, 2017.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.BOYD GAMING CORPORATION AND SUBSIDIARIESNOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)as of September 30, 2017 and December 31, 2016 and for the three and nine months ended September 30, 2017 and 2016Accounting 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.3. ACQUISITIONS AND DIVESTITURESAliante Casino + Hotel + Spa2. ACQUISITIONSeptember 27, 2016,November 1, 2022, Boyd Interactive Gaming Inc. ("Boyd Interactive Inc."), a wholly owned subsidiary of the Company, completed its previously announced acquisition of Pala Interactive, LLC ("Pala Interactive") and its subsidiaries, including its Canadian subsidiary Pala Interactive Canada Inc. ("Pala Canada"), pursuant to a Purchase Agreement and Plan of Merger (the "Merger Agreement"), entered into on March 28, 2022, by and among Boyd Interactive Inc., Boyd Phoenix Acquisition, LLC ("Merger Sub"), a wholly owned subsidiary of Boyd Interactive Inc., Boyd Phoenix Canada Inc., a wholly owned subsidiary of Boyd Gaming, completedPala Interactive, Pala Canada Holdings, LLC and Shareholder Representative Services LLC as representative of the acquisitionholders of ALST Casino Holdco LLC, the holding companymembership interests of Aliante Casino + Hotel + Spa ("Aliante").Pala Interactive. Pursuant to the merger agreement,Merger Agreement, Merger Sub merged (the "Merger") with and into ALST,Pala Interactive (the "Merger"), with ALSTPala Interactive surviving the Merger. ALSTPala Interactive is now a wholly owned subsidiary of Boyd Interactive Inc.AlianteB2C basis in regulated markets across the United States and Canada. We view this acquisition as an important step forward in our online growth strategy as it provides us with the talent and technology to begin building our regional online casino business. While online casinos are now wholly owned subsidiaries of Boyd Gaming. Accordingly,limited to just a few states, over the long term, we believe there is growth and additional profit potential for our Company from online gaming. By owning and operating an online gaming business, we are able to leverage our nationwide portfolio and extensive customer database to grow in the online casino space. The acquired assets and liabilities of Aliante are included in our condensed consolidated balance sheets as of September 30, 2017 and December 31, 2016 and the results of its operations in our condensed consolidated statements of operations for the three and nine months ended September 30, 2017. Aliante's cash flows are reported in our condensed consolidated statements of cash flows for the nine months ended September 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, andcompany is aggregated into our Las Vegas LocalsOnline segment (See Note 11, Acquisition MethodAccountingthe consideration transferred on the date of the Merger included the purchase price of the net assets transferred. The total gross cash consideration was $175.2 million (with $7.3 million of cash acquired, for total cash paid for acquisitions, net of cash received of $167.9 million).accordingpursuant 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, primarily related to base stock, a $0.8 million reduction in property and equipment and a $0.4 million increase in assumed liabilities,BOYD GAMING CORPORATION AND SUBSIDIARIESNOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)as of September 30, 2017 and December 31, 2016 and for the three and nine months ended September 30, 2017 and 2016with 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, LLCOn 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 September 30, 2017 and December 31, 2016 and the results of their operations in our condensed consolidated statements of operations for the three and nine months ended September 30, 2017. The Cannery and Eastside Cannery's cash flows are reported in our condensed consolidated statements of cash flows for the nine months ended September 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 second quarter 2017 and paid during the third quarter, resulting in an additional $1.2 million being paid to Seller.Acquisition Method of Accounting2022:The Company followed the acquisition method of accounting per ASC 805 guidance. For purposes of these condensed consolidated financial statements, we have allocated the purchase price to the assets acquired and the liabilities assumed based on their fair values as determined by management based on its judgment with the assistance from third-party appraisals.third-party specialists. The excess of the purchase price over the net bookfair value of the assets acquired and liabilities assumed has been recorded as goodwill. The Company has recognized the assets acquired and liabilities assumed in the acquisition based on fair value estimates as of the date of the Merger. In second quarter 2023, the Company finalized its determination of the fair value of the intangible assets acquired, along with the related allocation of goodwill. There was no change in the fair value of the intangible assets acquired or the related allocation of goodwill from the preliminary values included in the consolidated financial statements at December 31, 2022, to the final fair value determination included in the condensed consolidated financial statements at June 30, 2023. below represents the opening balance sheet on December 20, 2016, which was initially reported in our Form 10-K for the year ended as of June 30, 2023 and December 31, 2016. During the measurement period, which concluded on September 30, 2017, opening balance sheet adjustments were made to finalize the preliminary fair value estimates, resulting in a $62.5 million reduction in acquired assets, primarily related to a $56.7 million reduction in property and equipment, and a $5.0 million reduction in assumed liabilities with a corresponding increase to goodwill of $58.7 million. The property and equipment adjustment resulted in a depreciation expense reduction of $1.9 million for the nine months ended September 30, 2017. The measurement period adjustment and the related tax impact were immaterial to our condensed consolidated financial statements. $ 10,456 445 740 77,000 88,641 4,462 3,007 7,469 81,172 94,037 $ 175,209 112022SeptemberJune 30, 20172023 and December 31, 20162022 and for the three and ninesix months ended SeptemberJune 30, 20172023 and 2016componentsvalues assigned to acquired property and allocationequipment and estimated useful lives: 5 $ 22 2 - 5 423 $ 445 10 $ 36,000 7 - 10 28,000 12 13,000 $ 77,000 includingover the measurement period adjustments:(In thousands) Preliminary Purchase Price Allocation Adjustments Final Purchase Price Allocation Current assets $ 29,929 $ (8,345 ) $ 21,584 Property and equipment 181,757 (56,675 ) 125,082 Other long-term assets — 3,419 3,419 Intangible and other assets 16,330 (880 ) 15,450 Total acquired assets 228,016 (62,481 ) 165,535 Current liabilities 15,850 (4,984 ) 10,866 Total liabilities assumed 15,850 (4,984 ) 10,866 Net identifiable assets acquired 212,166 (57,497 ) 154,669 Goodwill 26,401 58,651 85,052 Net assets acquired $ 238,567 $ 1,154 $ 239,721 Investment in and Divestiture of BorgataOn 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 pursuantvalues assigned to the Purchase Agreement entered into on May 31, 2016, as amended on July 19, 2016, byassets acquired and among Boyd, Boyd Atlantic City, Inc., a wholly owned subsidiaryliabilities assumed. All of Boyd, and MGM.Prior the goodwill was assigned to reporting units included in 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 closingOnline reportable segment. All of the sale, we were the managing member of MDDHC, and we were responsible for the day-to-day operations of Borgata.Pursuantgoodwill, except $7.8 million allocated 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 related to 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 millionPala Canada, is expected to be paid to Borgata to resolve the remaining propertydeductible for income tax issues. Borgata received full payment,purposes.we received our share of the proceeds, in June 2017. For the nine months ended September 30, 2017, we recognized $36.2 million in income for the cash we received for our share of property tax benefits realized by Borgata after the closing of the sale. These payments, net of tax of $14.8$0.5 million for the ninethree months ended SeptemberJune 30, 2017,2023 and 2022, respectively, and $0.1 million and $2.3 million for the six months ended June 30, 2023 and 2022, respectively. These costs are included in discontinued operations inproject development, preopening and writedowns on the condensed consolidated financial statements.BOYD GAMING CORPORATION AND SUBSIDIARIESNOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)asstatements of September 30, 2017operations.20162022. The pro-forma revenue and forearnings from the three and nine months ended September 30, 2017 and 2016Merger assuming all impacts as if it had been completed on January 1, 2022 are not material through December 31, 2022.Summarized income statement information for Borgata is as follows:(In thousands) Period from July 1 to July 31, 2016 Period from January 1 to July 31, 2016 Net revenues $ 91,870 $ 485,510 Operating expenses 63,997 366,812 Operating income 27,873 118,698 Non-operating expenses 6,104 36,280 Net income $ 21,769 $ 82,418 NOTE 4.3. PROPERTY AND EQUIPMENT, NET September 30, December 31, (In thousands) 2017 2016 Land $ 295,133 $ 251,316 Buildings and improvements 2,920,922 2,915,664 Furniture and equipment 1,299,943 1,243,724 Riverboats and barges 239,591 239,264 Construction in progress 59,809 86,226 Other 725 726 Total property and equipment 4,816,123 4,736,920 Less accumulated depreciation 2,260,007 2,131,751 Property and equipment, net $ 2,556,116 $ 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. $ 333,899 $ 334,368 3,195,184 3,172,676 1,794,152 1,707,212 241,966 241,898 137,981 87,612 5,703,182 5,543,766 (3,251,326 ) (3,149,530 ) $ 2,451,856 $ 2,394,236 $ 58,066 $ 64,953 $ 115,465 $ 125,628 12 Three Months Ended Nine Months Ended September 30, September 30, (In thousands) 2017 2016 2017 2016 Depreciation expense $ 51,109 $ 44,010 $ 148,274 $ 131,832 SeptemberJune 30, 20172023 and December 31, 20162022 and for the three and ninesix months ended SeptemberJune 30, 20172023 and 20162022NOTE 5.4. GOODWILL AND INTANGIBLE ASSETS, NET 0.6 $ 35,050 $ (34,540 ) $ — $ — $ 510 9.9 58,000 (19,656 ) — — 38,344 6.1 21,373 (2,671 ) — — 18,702 9.3 38,081 (2,469 ) — 228 35,840 6.6 28,000 (2,609 ) — 55 25,446 11.3 13,000 (722 ) — — 12,278 193,504 (62,667 ) — 283 131,120 204,000 — (36,375 ) — 167,625 1,378,081 (33,960 ) (222,174 ) — 1,121,947 1,582,081 (33,960 ) (258,549 ) — 1,289,572 $ 1,775,585 $ (96,627 ) $ (258,549 ) $ 283 $ 1,420,692 0.6 $ 63,050 $ (62,070 ) $ — $ — $ 980 10.4 58,000 (17,722 ) — — 40,278 6.6 21,373 (1,145 ) — — 20,228 9.8 36,445 (600 ) — 53 35,898 7.0 28,000 (652 ) — 12 27,360 11.8 13,000 (181 ) — — 12,819 219,868 (82,370 ) — 65 137,563 204,000 — (36,375 ) — 167,625 1,378,081 (33,960 ) (222,174 ) — 1,121,947 1,582,081 (33,960 ) (258,549 ) — 1,289,572 $ 1,801,949 $ (116,330 ) $ (258,549 ) $ 65 $ 1,427,135 $ 470 $ 1,933 $ 1,527 $ 2,319 $ 2,000 $ 542 $ 8,791 40 3,867 3,053 3,986 3,914 1,083 15,943 — 3,867 3,053 3,986 3,914 1,083 15,903 — 3,867 3,053 3,986 3,914 1,083 15,903 — 3,867 3,053 3,985 3,914 1,083 15,902 — 20,943 4,963 17,578 7,790 7,404 58,678 $ 510 $ 38,344 $ 18,702 $ 35,840 $ 25,446 $ 12,278 $ 131,120 13 September 30, 2017 Weighted Gross Cumulative Average Life Carrying Cumulative Impairment Intangible (In thousands) Remaining Value Amortization Losses Assets, Net Amortizing intangibles Customer relationships 0.4 years $ 145,700 $ (136,158 ) $ — $ 9,542 Favorable lease rates 38.3 years 11,730 (3,017 ) — 8,713 Development agreement — 21,373 — — 21,373 178,803 (139,175 ) — 39,628 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, September 30, 2017 $ 1,204,025 $ (173,135 ) $ (184,274 ) $ 846,616 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.SeptemberJune 30, 20172023 and December 31, 2022 and for the three and six months ended June 30, 2023 and 2022 June 30, 2023 $ 593,567 $ — $ (188,079 ) $ — $ 405,488 6,997 (6,134 ) — — 863 636,269 — (107,470 ) — 528,799 94,037 — — 228 94,265 30,529 — (30,529 ) — — $ 1,361,399 $ (6,134 ) $ (326,078 ) $ 228 $ 1,029,415 $ 593,567 $ — $ (188,079 ) $ — $ 405,488 6,997 (6,134 ) — — 863 636,269 — (107,470 ) — 528,799 94,037 — — 20 94,057 30,529 — (25,992 ) — 4,537 $ 1,361,399 $ (6,134 ) $ (321,541 ) $ 20 $ 1,033,744 $ 64,686 $ 73,619 17,480 17,864 74,338 77,638 24,104 25,852 17,056 20,792 7,712 7,704 16,041 15,476 92,929 88,776 91,062 84,192 $ 405,408 $ 411,913 20162022 and for the three and ninesix months ended SeptemberJune 30, 20172023 and 20162022NOTE 6. ACCRUED LIABILITIESAccrued liabilities consist of the following: September 30, December 31, (In thousands) 2017 2016 Payroll and related expenses $ 67,216 $ 68,102 Interest 44,484 33,407 Gaming liabilities 54,161 41,942 Player loyalty program liabilities 18,542 19,076 Dividend payable 5,633 — Other accrued liabilities 93,076 88,555 Total accrued liabilities $ 283,112 $ 251,082 NOTE 7. LONG-TERM DEBT September 30, 2017 Unamortized Interest Origination Rates at Outstanding Unamortized Fees and Long-Term (In thousands) Sept. 30, 2017 Principal Discount Costs Debt, Net Bank credit facility 3.52 % 1,617,628 (1,613 ) (25,856 ) 1,590,159 6.875% senior notes due 2023 6.88 % 750,000 — (11,201 ) 738,799 6.375% senior notes due 2026 6.38 % 750,000 — (9,894 ) 740,106 Other 5.80 % 503 — — 503 Total long-term debt 3,118,131 (1,613 ) (46,951 ) 3,069,567 Less current maturities 23,981 — — 23,981 Long-term debt, net $ 3,094,150 $ (1,613 ) $ (46,951 ) $ 3,045,586 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 Long-term debt, net $ 3,252,793 $ (1,888 ) $ (51,786 ) $ 3,199,119 Credit FacilityOn 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").BOYD GAMING CORPORATION AND SUBSIDIARIESNOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)as of September 30, 2017 and December 31, 2016 and for the three and nine months ended September 30, 2017 and 2016The 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 FeesThe 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 PrepaymentsThe 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. 6.652 % $ 1,078,500 $ — $ (15,572 ) $ 1,062,928 4.750 % 1,000,000 — (8,766 ) 991,234 4.750 % 900,000 — (10,785 ) 889,215 5.208 % 589 — — 589 2,979,089 — (35,123 ) 2,943,966 44,275 — — 44,275 $ 2,934,814 $ — $ (35,123 ) $ 2,899,691 Rates at Origination 6.166 % $ 1,187,800 $ — $ (17,865 ) $ 1,169,935 4.750 % 1,000,000 — (9,740 ) 990,260 4.750 % 900,000 — (11,460 ) 888,540 5.208 % 674 — — 674 3,088,474 — (39,065 ) 3,049,409 44,275 — — 44,275 $ 3,044,199 $ — $ (39,065 ) $ 3,005,134 September 30, December 31, (In thousands) 2017 2016 Revolving Credit Facility $ 135,000 $ 245,000 Term A Loan 213,750 222,188 Refinancing Term B Loans 1,233,178 — Term B-1 Loan — 271,750 Term B-2 Loan — 997,500 Swing Loan 35,700 46,100 Total outstanding principal amounts under the Credit Facility $ 1,617,628 $ 1,782,538 At September 30, 2017, approximately $1.6 billion was outstanding $ 200,000 $ 285,000 825,000 847,000 53,500 55,800 $ 1,078,500 $ 1,187,800 $12.9$53.5 million wasin borrowings outstanding on the Revolving Credit Facility and the Swing Loan, respectively, and $13.8 million allocated to support various letters of credit, leavingthere was a remaining contractual availability under the Credit Facility of $591.4 million.$1,182.7 million as of June 30, 2023. SeptemberJune 30, 2017, we believe that2023, 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.Loss on Early Extinguishments and Modifications of DebtWe incurred charges of $0.3 million and $0.9 million during the three and nine months ended September 30, 2017, respectively, due to costs incurred related to the Refinancing Amendment and for debt financing costs written off reflecting the ratable reduction in borrowing capacity due to optional prepayments of the Refinancing Term B Loans of $20.0 million for the three months ended September 30, 2017 and $25.0 million for the nine months ended September 30, 2017. We incurred charges of $41.5 million and $42.4 million during the three and nine months ended September 30, 2016, respectively, related to the modification of the Credit Facility, redemption of our 9.00% senior notes due 2018 and Peninsula Gaming's 8.375% senior notes due 2018, and the extinguishment of the Peninsula Gaming bank credit facility.15SeptemberJune 30, 20172023 and December 31, 20162022 and for the three and ninesix months ended SeptemberJune 30, 20172023 and 20162022NOTE 8.7. COMMITMENTS AND CONTINGENCIESWilton Rancheria AgreementsCommitmentsIn 2012, the Company entered into a development agreement and a management agreement with Wilton Rancheria. The development agreement obligated us to fund certain pre-development costs to assist Wilton Rancheria in its development and oversight of the gaming facility construction. The pre-development costs financed by us are to be repaid under the terms of a note receivable with Wilton Rancheria bearing interest at 12.5% with payment timing and the payment amount subject to an excess cash flow waterfall payment prioritization and maintenance of a certain leverage ratio, among other restrictions under Wilton Rancheria’s third-party credit agreement that provided funding for the construction project. Given the significant barriers of the project, a majority of the advances made during the 10-year period were historically reserved in full when advanced. The Sky River Casino opened on August 15, 2022 and after generating cash flows from operations, we updated our evaluation of expected losses on the note receivable which resulted in a partial release of the allowance during fourth quarter 2022. The Wilton Rancheria amended their third-party credit agreement in March 2023 and such amendment effectively allowed Sky River Casino to begin making previously disallowed distributions, under the excess cash flow waterfall. Given the amendment in the first quarter, the Company updated its evaluation of its expected losses on the note receivable. As the amendment allowed for quarterly payments to begin and given the sustained operating strength of the recently opened property, the Company concluded it expects to receive all payments due under the note receivable. As such, the Company removed the remaining allowance on the note receivable in first quarter 2023, which represented a reserve on both the development advances and interest on the note. The allowance reduction is thus allocated accordingly and $20.1 million is recorded in project development, preopening and writedowns and $14.3 million in interest income, both reflected in the condensed consolidated statement of operations for the six months ended June 30, 2023. The Company has received $49.7 million in principal payments and $8.5 million in interest due under the note receivable during the six months ended June 30, 2023 and as of June 30, 2023, the principal and interest outstanding on the note receivable total $66.3 million. Separately, the management agreement provides for us to manage the gaming facility upon opening for a period of seven years and receive a monthly management fee for our services based on monthly performance of the gaming facility. The management fee of $17.4 million and $37.5 million for our management services for the three and six months ended June 30, 2023, respectively, is paid monthly and recorded in management fee revenue on the condensed consolidated statement of operations.ThereCommitmentsAs of June 30, 2023, other than the changes related to agreements with Wilton Rancheria as discussed above, there have been no material changes to our commitments described under Note 9,Commitments and Contingencies, in our Annual Report on Form 10-K10-K for the year ended December 31, 20162022, as filed with the SEC on February 23, 2017.24, 2023.ContingenciesLegal MattersWe are parties to various legal proceedings arising in the ordinary course of business. In our opinion,We believe that all pending legal matters are either adequately covered by insurance, or,claims, if adversely decided, would not insured, will not have a material adverse impacteffect on our business, financial position, results of operations or cash flows.9.8. STOCKHOLDERS' EQUITY AND STOCK INCENTIVE PLANSShare Repurchase ProgramOn May 2, 2017, the Company announced that itsOctober 21, 2021, our Board of Directors had reaffirmed the Company’s existingauthorized a share repurchase program which as of September$300.0 million (the "Share Repurchase Program"). In addition, our Board of Directors authorized increases to the Share Repurchase Program of $500.0 million on June 1, 2022, and $500.0 million on May 4, 2023. As of June 30, 2017, had $69.92023, $532.6 million remaining. Theremains available under the Share Repurchase Program. Under the Share Repurchase Program, the Company intends to make purchasesmay repurchase shares of its common stock from time to time on the open market or in privately negotiated transactions. We are not obligated to repurchase any shares under this program through openprogram. Repurchases of common stock may also be made under Rule 10b5- 1 plans, which would permit common stock to be repurchased when the Company might otherwise be precluded from doing so under insider trading laws. The timing, volume and nature of share repurchases will be at the sole discretion of management, dependent on market purchases, privately negotiated transactions, tender offers, exchange offers, redemptionsconditions, applicable securities laws and other factors, and may be suspended or otherwise, upon such terms anddiscontinued at such prices as we may determine.any time.The following table provides information regarding share repurchases during the referenced periods.periods (1)(1). (In thousands, except per share data) For the Three Months Ended September 30, 2017 For the Nine Months Ended September 30, 2017 Shares repurchased (2)429 870 1,492 3,018 3,219 5,115 Total cost, including brokerage fees (3)$ 11,070 $ 22,160 $ 100,028 $ 167,984 $ 206,356 $ 299,773 Average repurchase price per share (3)(4)$ 25.82 $ 25.46 $ 67.02 $ 55.66 $ 64.11 $ 58.61 (1)(1) ninesix months ended SeptemberJune 30, 2017.2023 and 2022. These amounts exclude repurchases, if any, traded but not yet settled on or before SeptemberJune 30, 2017.2023 and 2022, respectively.(2)(2) (3)(3)Figures Costs exclude 1% excise tax on corporate stock buybacks that was enacted under the Inflation Reduction Act of 2022 and became effective January 1, 2023.numbers.DividendsOn May 2, 2017,numbers and excludes the Company announced that its1% excise tax.had authorizedand reflected in the reinstatementperiods presented are: $ 0.15 0.15 0.15 0.16 0.16 1615, 2017. This dividend was paid in30, 2023 and December 31, 2022 and for the third quarter of 2017.On September 6, 2017, the Company declared a quarterly dividend of $0.05 per share, to be paid October 15, 2017, to shareholders of record as of September 18, 2017. This dividend was paid after the end of the third quarter of 2017.three and six months ended June 30, 2023 and 2022BOYD GAMING CORPORATION AND SUBSIDIARIESNOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)as of September 30, 2017 and December 31, 2016 and for the three and nine months ended September 30, 2017 and 2016 Three Months Ended Nine Months Ended September 30, September 30, (In thousands) 2017 2016 2017 2016 Gaming $ 82 $ 86 $ 263 $ 251 Food and beverage 15 17 50 48 Room 8 8 24 23 Selling, general and administrative 418 437 1,337 1,274 Corporate expense 1,859 994 9,538 5,529 Total share-based compensation expense $ 2,382 $ 1,542 $ 11,212 $ 7,125 $ 307 $ 292 $ 528 $ 521 59 56 101 100 28 26 48 47 1,563 1,487 2,683 2,651 10,241 12,239 16,657 19,514 $ 12,198 $ 14,100 $ 20,017 $ 22,833 UnitUnits ("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.20132019 and 20122018 fully vested during first quarter 20172023 and 2016,2022, respectively. Common shares under the 2019 and 2018 grants were issued based on the determination by the Compensation Committee of the Board of Directors of our actual achievement of net revenue growth and Earnings Before Interest, Taxes, Depreciation and Amortization and Rent under master leases ("EBITDA"EBITDAR") growth and customer service scores for the three-yearthree-year performance period of eachthe 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.November 2013 December 2019 resulted in a total of 268,429519,782 shares being issued during first quarter 2017,2023, representing approximately 0.802.00 shares per PSU. Of the 268,429519,782 shares issued, a total of 94,776200,904 were surrendered by the participants for payroll taxes, resulting in a net issuance of 173,653318,878 shares due to the vesting of the 20132019 grant. The actual achievement level under the award metrics equaled the estimated performance as of the year-end 2016;2022; therefore, the vesting of the PSUs did not impact compensation costs in our 20172023 condensed consolidated statement of operations.December 2012 November 2018 resulted in a total of 213,365408,609 shares being issued during first quarter 2016,2022, representing approximately 0.591.58 shares per PSU. Of the 213,365408,609 shares issued, a total of 54,338114,265 were surrendered by the participants for payroll taxes, resulting in a net issuance of 159,027294,344 shares due to the vesting of the 20122018 grant. The actual achievement level under the award metrics equaled the estimated performance as of the year-end 2015;2021; therefore, the vesting of the PSUs did not impact compensation costs in our 20162022 condensed consolidated statement of operations.10.9. FAIR VALUE MEASUREMENTSTheFinancialBOYD GAMING CORPORATION AND SUBSIDIARIESNOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)as of September 30, 2017 (Levels 1 and December 31, 2016 and for the three and nine months ended September 30, 2017 and 2016(Levels 1 and 2)2) and unobservable (Level 3)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.17 September 30, 2017 (In thousands) Balance Level 1 Level 2 Level 3 Assets Cash and cash equivalents $ 158,832 $ 158,832 $ — $ — Restricted cash 26,705 26,705 — — Investment available for sale 17,823 — — 17,823 Liabilities Contingent payments $ 3,019 $ — $ — $ 3,019 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 $ 260,787 $ 260,787 $ — $ — 11,615 11,615 — — 13,215 — — 13,215 $ 283,472 $ 283,472 $ — $ — 11,593 11,593 — — 13,670 — — 13,670 valuevalues 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 Septemberas of June 30, 20172023 and December 31, 2016.2022.$20.5$17.1 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. sale with a maturity date of June 1, 2037. 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 estimate of the fair value of such investment was determined using a combination of current market rates and estimates of market conditions for instruments with similar terms, maturities and degrees of risk and a discounted cash flows analysis as of June 30, 2023 and December 31, 2022. The fair value of the instrument is estimated using a discounted cash flows approach and the significant unobservable input used in the valuation at SeptemberJune 30, 20172023 and December 31, 20162022 is a discount rate of 9.9%12.3% and 10.3%12.4%, 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.sheets and in the condensed consolidated statement of other comprehensive income (loss). At Septemberboth June 30, 20172023 and December 31, 2016, $0.52022, $0.7 million and $0.4 million, 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 SeptemberJune 30, 20172023 and December 31, 2016, $17.32022, $12.5 million and $16.8$13.0 million, respectively, is included in other assets, net on the condensed consolidated balance sheets. The discount associated with this investment of $3.0$2.1 million and $3.1$2.2 million respectively, at Septemberas of June 30, 20172023 and December 31, 20162022, respectively, 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.BOYD GAMING CORPORATION AND SUBSIDIARIESNOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)as of September 30, 2017 and December 31, 2016 and for the three and nine months ended September 30, 2017 and 2016Contingent PaymentsIn 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 September 30, 2017 and December 31, 2016, is a discount rate of 9.1% and 18.5%, respectively. At September 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 September 30, 2017 and December 31, 2016, of $2.2 million, which is included in other liabilities on the respective condensed consolidated balance sheets.tables summarizetable summarizes the changes in fair value of the Company's Level 3 investment available for sale asset: $ 14,348 $ 15,612 $ 13,670 $ 15,822 44 42 87 84 (497 ) (903 ) 138 (1,155 ) (680 ) (635 ) (680 ) (635 ) $ 13,215 $ 14,116 $ 13,215 $ 14,116 18and liabilities: Three Months Ended September 30, 2017 September 30, 2016 Assets Liability Assets Liability (In thousands) InvestmentAvailable forSale ContingentPayments InvestmentAvailable forSale ContingentPaymentsBalance at beginning of reporting period $ 17,456 $ (3,204 ) $ 17,832 $ (3,488 ) Total gains (losses) (realized or unrealized): Included in interest income (expense) 34 (69 ) 30 (147 ) Included in other comprehensive income (loss) 333 — 417 — Included in other items, net — 64 — — Purchases, sales, issuances and settlements: Settlements — 190 — 200 Balance at end of reporting period $ 17,823 $ (3,019 ) $ 18,279 $ (3,435 ) Nine Months Ended September 30, 2017 September 30, 2016 Assets Liability Assets Liability (In thousands) InvestmentAvailable forSale ContingentPayments InvestmentAvailable forSale ContingentPaymentsBalance at beginning of reporting period $ 17,259 $ (3,038 ) $ 17,839 $ (3,632 ) Total gains (losses) (realized or unrealized): Included in interest income (expense) 103 (270 ) 96 (452 ) Included in other comprehensive income 901 — 754 — Included in other items, net — (334 ) — — Purchases, sales, issuances and settlements: Settlements (440 ) 623 (410 ) 649 Balance at end of reporting period $ 17,823 $ (3,019 ) $ 18,279 $ (3,435 ) classified in the fair value hierarchy as Level 3, is utilized in performing the Company's impairment analyses.minimum assessment agreements and other financial instruments: September 30, 2017 (In thousands) Outstanding Face Amount Carrying Value Estimated Fair Value Fair Value Hierarchy Liabilities Obligation under assessment arrangements $ 32,112 $ 25,815 $ 26,911 Level 3 BOYD GAMING CORPORATION AND SUBSIDIARIESNOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)agreements:as of September 30, 2017 and December 31, 2016 and for the three and nine months ended September 30, 2017 and 2016 December 31, 2016 Outstanding Carrying Estimated (In thousands) Outstanding Face Amount Carrying Value Estimated Fair Value Fair Value Hierarchy $ 66,335 $ 66,335 $ 65,893 Liabilities Obligation under assessment arrangements $ 33,456 $ 26,660 $ 27,054 Level 3 21,261 18,546 24,739 Other financial instruments 100 97 97 Level 3 Outstanding Carrying Estimated $ 118,162 $ 83,791 $ 82,338 22,293 19,304 25,738 September 30, 2017 (In thousands) Outstanding Face Amount Carrying Value Estimated Fair Value Fair Value Hierarchy Credit Facility $ 1,617,628 $ 1,590,159 $ 1,621,985 Level 2 6.875% senior notes due 2023 750,000 738,799 803,438 Level 1 6.375% senior notes due 2026 750,000 740,106 815,625 Level 1 Other 503 503 503 Level 3 Total debt $ 3,118,131 $ 3,069,567 $ 3,241,551 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 Outstanding Carrying Estimated $ 1,078,500 $ 1,062,928 $ 1,072,313 1,000,000 991,234 945,000 900,000 889,215 802,125 589 589 589 $ 2,979,089 $ 2,943,966 $ 2,820,027 Outstanding Carrying Estimated $ 1,187,800 $ 1,169,935 $ 1,183,565 1,000,000 990,260 928,750 900,000 888,540 784,125 674 674 674 $ 3,088,474 $ 3,049,409 $ 2,897,114 SeptemberJune 30, 20172023 and December 31, 2016.2022. The estimated fair values of our Senior Notessenior notes are based on quoted market prices as of SeptemberJune 30, 20172023 and December 31, 2016.2022. The other debt is a fixed-rate debt thatconsisting of finance leases with various maturity dates from 2024 to 2025. The other debt is payable in 32 semi-annual installments, beginning in 2008. It is not traded and does not have an observable market input; therefore, we have estimated its fair value to be equal to the carrying value.Therevalue for these obligations.ninesix months ended SeptemberJune 30, 2017 or 2016.2023 and 2022.SeptemberJune 30, 20172023 and December 31, 20162022 and for the three and ninesix months ended SeptemberJune 30, 20172023 and 20162022NOTE 11.10. SEGMENT INFORMATIONWe aggregate certainour properties in order to present 2023, the Company evaluated its reportable segments and changed them from three Reportable Segments: reportable segments consisting of: (i) Las Vegas Locals; (ii) Downtown Las Vegas; and (iii) Midwest & South, to the following four reportable segments: (i) Las Vegas Locals; (ii) Downtown Las Vegas; (iii) Midwest & South; and South.(iv) Online, (collectively "Reportable Segments"). This change reflects the growth of the Company beyond its traditional wholly owned gaming entertainment properties and the increasing importance to the Company of other growth sources. The Online segment includes the operating results of our online gaming operations through collaborative arrangements with third parties throughout the United States and the operations from our recent acquisition of Pala Interactive and Pala Canada (individually and collectively rebranded, "Boyd Interactive") on November 1, 2022, and operating results were previously included with the Midwest & South segment. To reconcile Reportable Segments information to the condensed consolidated information, the Company has aggregated nonreportable operating segments into a Managed & Other category. The Managed & Other category includes management fees earned under our management contract with Wilton Rancheria for the management of Sky River Casino in northern California and the operating results of Lattner Entertainment Group Illinois, LLC, our Illinois distributed gaming operator. These nonreportable operating segments were previously aggregated with our Midwest & South segment. The table below lists the Reportable Segment classification of each of our properties.gaming entertainment properties that were aggregated based on their similar economic characteristics, types of customers, types of services and products provided, the regulatory environments in which they operate and their management and reporting structure. Eldorado CasinoJokers Wild CasinoHenderson, Nevada and& CasinoCasino, BreweryHotel and HotelCasinoand& South Hotel Casino& SpaDubuqueCasinoCasinoHotel & HotelCasinoand& CasinoHotel and CasinoShreveportNet Revenues and Adjusted EBITDAEBITDAReach of our property's profitability based upon Propertyon Adjusted EBITDA, which represents each property's earnings before interest expense, income taxes, depreciation and amortization, deferred rent, share-based compensation expense, project development, preopening and writedowns expenses, impairments of assets, other operating items, net, and gain or loss on early retirements of debt, as applicable. Total Reportable Segment Adjusted EBITDA is the aggregate sum of the Property Adjusted EBITDA for each of the properties included in our Las Vegas Locals, Downtown Las Vegas, and Midwest and South segments. Results for Downtown Las Vegas include the results of our Hawaii-based travel agency and captive insurance company.BOYD GAMING CORPORATION AND SUBSIDIARIESNOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)as of September 30, 2017 and December 31, 2016 and for the three and nine months ended September 30, 2017 and 2016The following table sets forth, for the periods indicated, certain operating data for our Reportable Segments, and reconciles Total Reportable Segment Adjusted EBITDA to operating income, as reported in our accompanying condensed consolidated statements of operations: Three Months Ended Nine Months Ended September 30, September 30, (In thousands) 2017 2016 2017 2016 Net Revenues Las Vegas Locals $ 207,291 $ 148,879 $ 641,288 $ 462,213 Downtown Las Vegas 58,832 56,606 179,137 174,423 Midwest and South 321,542 326,416 972,450 992,517 Total Reportable Segment Net Revenues $ 587,665 $ 531,901 $ 1,792,875 $ 1,629,153 Adjusted EBITDA Las Vegas Locals $ 56,109 $ 36,173 $ 185,462 $ 123,617 Downtown Las Vegas 11,536 10,018 37,757 36,962 Midwest and South 90,106 90,633 277,880 281,305 Total Reportable Segment Adjusted EBITDA 157,751 136,824 501,099 441,884 Corporate expense (17,480 ) (14,884 ) (53,850 ) (44,355 ) Adjusted EBITDA 140,271 121,940 447,249 397,529 Other operating costs and expenses Deferred rent 290 816 977 2,449 Depreciation and amortization 55,201 47,928 161,728 143,831 Share-based compensation expense 2,382 1,542 11,212 7,125 Project development, preopening and writedowns 2,975 3,735 8,731 11,473 Impairments of assets — — — 1,440 Other operating items, net 758 3 1,707 555 Total other operating costs and expenses 61,606 54,024 184,355 166,873 Operating income $ 78,665 $ 67,916 $ 262,894 $ 230,656 For purposes of this presentation, corporate expense excludes its portion of share-based compensation expense. Corporate expense represents unallocated payroll, professional fees, aircraft expenses and various other expenses not directly related to our casino and hotel operations.Total Reportable Segment AssetsThe Company's assets by Reportable Segment consisted of the following amounts: September 30, December 31, (In thousands) 2017 2016 Assets Las Vegas Locals $ 1,790,476 $ 1,785,858 Downtown Las Vegas 170,172 157,319 Midwest and South 2,493,905 2,556,307 Total Reportable Segment Assets 4,454,553 4,499,484 Corporate 200,816 171,267 Total Assets $ 4,655,369 $ 4,670,751 BOYD GAMING CORPORATION AND SUBSIDIARIESNOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)as of September 30, 2017 and December 31, 2016 and for the three and nine months ended September 30, 2017 and 2016NOTE 12. CONDENSED CONSOLIDATING FINANCIAL INFORMATIONSeparate condensed consolidating financial information for our subsidiary guarantors and non-guarantors of our 6.875% Notes and our 6.375% Notes is presented below. Each of these notes is fully and unconditionally guaranteed, on a joint and several basis, by certain of our current and future domestic restricted subsidiaries, all of which are 100% owned by us. The non-guarantors primarily represent special purpose entities, tax holding companies, our less significant operating subsidiaries and our less than wholly owned subsidiaries.On March 7, 2017, Aliante, Cannery and Eastside Cannery became guarantors of the 6.875% Notes, the 6.375% Notes and the Credit Facility.The tables below present the condensed consolidating balance sheets as of September 30, 2017 and December 31, 2016, the condensed consolidating statements of operations for the three and nine months ended September 30, 2017 and 2016, and the condensed consolidating statements of cash flows for the nine months ended September 30, 2017 and 2016. We have reclassified certain prior year amounts in the current year presentation to reflect the designation of the additional Restricted Subsidiaries listed above as subsidiary guarantors.Condensed Consolidating Balance Sheets September 30, 2017 Non- Non- Guarantor Guarantor Subsidiaries Subsidiaries Guarantor (100% (Not 100% (In thousands) Parent Subsidiaries Owned) Owned) Eliminations Consolidated Assets Cash and cash equivalents $ (41 ) $ 155,898 $ 2,975 $ — $ — $ 158,832 Other current assets 77,853 34,533 12,563 — (994 ) 123,955 Property and equipment, net 71,678 2,456,577 27,861 — — 2,556,116 Investments in subsidiaries 4,779,506 — 3,385 — (4,782,891 ) — Intercompany receivable — 1,852,237 — — (1,852,237 ) — Other assets, net 14,224 29,030 38,372 — — 81,626 Intangible assets, net — 822,557 24,059 — — 846,616 Goodwill, net — 887,442 782 — — 888,224 Total assets $ 4,943,220 $ 6,238,274 $ 109,997 $ — $ (6,636,122 ) $ 4,655,369 Liabilities and Stockholders' Equity Current maturities of long-term debt $ 23,894 $ 87 $ — $ — $ — $ 23,981 Other current liabilities 127,641 208,632 27,201 — (231 ) 363,243 Accumulated losses of subsidiaries in excess of investment — 32,066 — — (32,066 ) — Intercompany payable 817,198 — 1,035,525 — (1,852,723 ) — Long-term debt, net of current maturities and debt issuance costs 3,045,168 418 — — — 3,045,586 Other long-term liabilities (104,791 ) 314,965 (21,725 ) — — 188,449 Total stockholders' equity (deficit) 1,034,110 5,682,106 (931,004 ) — (4,751,102 ) 1,034,110 Total liabilities and stockholders' equity $ 4,943,220 $ 6,238,274 $ 109,997 $ — $ (6,636,122 ) $ 4,655,369 BOYD GAMING CORPORATION AND SUBSIDIARIESNOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)as of September 30, 2017 and December 31, 2016 and for the three and nine months ended September 30, 2017 and 2016Condensed Consolidating Balance Sheets - continued December 31, 2016 Non- Non- Guarantor Guarantor Subsidiaries Subsidiaries Guarantor (100% (Not 100% (In thousands) Parent Subsidiaries Owned) Owned) Eliminations Consolidated Assets Cash and cash equivalents $ 1,212 $ 189,364 $ 3,286 $ — $ — $ 193,862 Other current assets 78,915 26,715 8,908 — (453 ) 114,085 Property and equipment, net 73,180 2,503,127 28,862 — — 2,605,169 Investments in subsidiaries 4,505,897 139,465 — — (4,645,362 ) — Intercompany receivable — 1,491,017 — — (1,491,017 ) — Other assets, net 13,598 31,899 3,708 — — 49,205 Intangible assets, net — 857,894 24,060 — — 881,954 Goodwill, net — 825,694 782 — — 826,476 Total assets $ 4,672,802 $ 6,065,175 $ 69,606 $ — $ (6,136,832 ) $ 4,670,751 Liabilities and Stockholders' Equity Current maturities of long-term debt $ 30,250 $ 86 $ — $ — $ — $ 30,336 Other current liabilities 93,762 196,391 46,444 — (1,429 ) 335,168 Accumulated losses of subsidiaries in excess of investment — — 8,257 — (8,257 ) — Intercompany payable 521,002 — 968,811 254 (1,490,067 ) — Long-term debt, net of current maturities and debt issuance costs 3,198,613 506 — — — 3,199,119 Other long-term liabilities (104,901 ) 298,624 (21,721 ) — — 172,002 Boyd Gaming Corporation stockholders' equity (deficit) 934,076 5,569,568 (932,185 ) (254 ) (4,637,129 ) 934,076 Noncontrolling interest — — — — 50 50 Total stockholders' equity (deficit) 934,076 5,569,568 (932,185 ) (254 ) (4,637,079 ) 934,126 Total liabilities and stockholders' equity $ 4,672,802 $ 6,065,175 $ 69,606 $ — $ (6,136,832 ) $ 4,670,751 BOYD GAMING CORPORATION AND SUBSIDIARIESNOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)as of September 30, 2017 and December 31, 2016 and for the three and nine months ended September 30, 2017 and 2016Condensed Consolidating Statements of Operations Three Months Ended September 30, 2017 Non- Non- Guarantor Guarantor Subsidiaries Subsidiaries Guarantor (100% (Not 100% (In thousands) Parent Subsidiaries Owned) Owned) Eliminations Consolidated Net revenues $ 17,827 $ 580,932 $ 11,552 $ — $ (22,646 ) $ 587,665 Operating costs and expenses Operating — 298,306 10,889 — — 309,195 Selling, general and administrative — 89,438 1,850 — — 91,288 Maintenance and utilities — 29,839 405 — — 30,244 Depreciation and amortization 3,218 50,935 1,048 — — 55,201 Corporate expense 18,757 274 308 — — 19,339 Project development, preopening and writedowns 1,252 646 1,077 — — 2,975 Other operating items, net 127 631 — — — 758 Intercompany expenses 301 22,345 — — (22,646 ) — Total operating costs and expenses 23,655 492,414 15,577 — (22,646 ) 509,000 Equity in earnings (losses) of subsidiaries 55,529 (559 ) — — (54,970 ) — Operating income (loss) 49,701 87,959 (4,025 ) — (54,970 ) 78,665 Other expense (income) Interest expense, net 42,544 306 7 — — 42,857 Loss on early extinguishments of debt 319 — — — — 319 Other, net 18 (139 ) (18 ) — — (139 ) Total other expense, net 42,881 167 (11 ) — — 43,037 Income (loss) before income taxes 6,820 87,792 (4,014 ) — (54,970 ) 35,628 Income taxes benefit (provision) 16,156 (30,087 ) 1,279 — — (12,652 ) Net income (loss) $ 22,976 $ 57,705 $ (2,735 ) $ — $ (54,970 ) $ 22,976 Comprehensive income (loss) $ 22,671 $ 57,400 $ (2,735 ) $ — $ (54,665 ) $ 22,671 BOYD GAMING CORPORATION AND SUBSIDIARIESNOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)as of September 30, 2017 and December 31, 2016 and for the three and nine months ended September 30, 2017 and 2016Condensed Consolidating Statements of Operations - continued Three Months Ended September 30, 2016 Non- Non- Guarantor Guarantor Subsidiaries Subsidiaries Guarantor (100% (Not 100% (In thousands) Parent Subsidiaries Owned) Owned) Eliminations Consolidated Net revenues $ 29,708 $ 524,944 $ 12,212 $ — $ (34,963 ) $ 531,901 Operating costs and expenses Operating 300 276,484 10,971 — — 287,755 Selling, general and administrative 12,491 66,717 1,623 — 2 80,833 Maintenance and utilities — 27,463 391 — — 27,854 Depreciation and amortization 2,355 44,595 978 — — 47,928 Corporate expense 14,247 471 1,159 — — 15,877 Project development, preopening and writedowns 7,213 (5,646 ) 2,168 — — 3,735 Other operating items, net — 3 — — — 3 Intercompany expenses 301 34,299 365 — (34,965 ) — Total operating costs and expenses 36,907 444,386 17,655 — (34,963 ) 463,985 Equity in earnings (losses) of subsidiaries 230,669 (607 ) — — (230,062 ) — Operating income (loss) 223,470 79,951 (5,443 ) — (230,062 ) 67,916 Other expense (income) Interest expense, net 41,778 12,369 6 — — 54,153 Loss on early extinguishments of debt 28,356 13,162 — — — 41,518 Other, net — 20 (19 ) — — 1 Total other expense, net 70,134 25,551 (13 ) — — 95,672 Income (loss) from continuing operations before income taxes 153,336 54,400 (5,430 ) — (230,062 ) (27,756 ) Income taxes benefit 189,235 363 22 — — 189,620 Income (loss) from continuing operations, net of tax 342,571 54,763 (5,408 ) — (230,062 ) 161,864 Income from discontinued operations, net of tax — 180,707 — — — 180,707 Net income (loss) $ 342,571 $ 235,470 $ (5,408 ) $ — $ (230,062 ) $ 342,571 Comprehensive income (loss) $ 342,988 $ 235,887 $ (5,408 ) $ — $ (230,479 ) $ 342,988 BOYD GAMING CORPORATION AND SUBSIDIARIESNOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)as of September 30, 2017 and December 31, 2016 and for the three and nine months ended September 30, 2017 and 2016Condensed Consolidating Statements of Operations - continued Nine Months Ended September 30, 2017 Non- Non- Guarantor Guarantor Subsidiaries Subsidiaries Guarantor (100% (Not 100% (In thousands) Parent Subsidiaries Owned) Owned) Eliminations Consolidated Net revenues $ 55,027 $ 1,771,644 $ 35,870 $ — $ (69,666 ) $ 1,792,875 Operating costs and expenses Operating — 903,434 32,548 — — 935,982 Selling, general and administrative 23 270,168 5,770 — (23 ) 275,938 Maintenance and utilities — 81,451 1,056 — — 82,507 Depreciation and amortization 8,744 149,905 3,079 — — 161,728 Corporate expense 61,128 1,012 1,248 — — 63,388 Project development, preopening and writedowns 3,979 2,227 2,525 — — 8,731 Other operating items, net 352 1,355 — — — 1,707 Intercompany expenses 903 68,740 — — (69,643 ) — Total operating costs and expenses 75,129 1,478,292 46,226 — (69,666 ) 1,529,981 Equity in earnings (losses) of subsidiaries 207,414 (857 ) — — (206,557 ) — Operating income (loss) 187,312 292,495 (10,356 ) — (206,557 ) 262,894 Other expense (income) Interest expense, net 127,344 981 19 — — 128,344 Loss on early extinguishments and modifications of debt 853 — — — — 853 Other, net 538 45 (52 ) — — 531 Total other expense, net 128,735 1,026 (33 ) — — 129,728 Income (loss) from continuing operations before income taxes 58,577 291,469 (10,323 ) — (206,557 ) 133,166 Income taxes benefit (provision) 48,466 (99,325 ) 3,344 — — (47,515 ) Income (loss) from continuing operations, net of tax 107,043 192,144 (6,979 ) — (206,557 ) 85,651 Income from discontinued operations, net of tax — 21,392 — — — 21,392 Net income (loss) $ 107,043 $ 213,536 $ (6,979 ) $ — $ (206,557 ) $ 107,043 Comprehensive income (loss) $ 107,844 $ 214,337 $ (6,979 ) $ — $ (207,358 ) $ 107,844 BOYD GAMING CORPORATION AND SUBSIDIARIESNOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)as of September 30, 2017 and December 31, 2016 and for the three and nine months ended September 30, 2017 and 2016Condensed Consolidating Statements of Operations - continued Nine Months Ended September 30, 2016 Non- Non- Guarantor Guarantor Subsidiaries Subsidiaries Guarantor (100% (Not 100% (In thousands) Parent Subsidiaries Owned) Owned) Eliminations Consolidated Net revenues $ 91,901 $ 1,608,759 $ 36,606 $ — $ (108,113 ) $ 1,629,153 Operating costs and expenses Operating 1,200 839,405 32,313 — — 872,918 Selling, general and administrative 37,203 199,534 4,945 — 4 241,686 Maintenance and utilities — 75,675 1,036 — — 76,711 Depreciation and amortization 6,375 134,485 2,971 — — 143,831 Corporate expense 45,121 1,380 3,382 — — 49,883 Project development, preopening and writedowns 11,205 (4,382 ) 4,650 — — 11,473 Impairments of assets 1,440 — — — — 1,440 Other operating items, net 106 449 — — — 555 Intercompany expenses 903 106,119 1,095 — (108,117 ) — Total operating costs and expenses 103,553 1,352,665 50,392 — (108,113 ) 1,398,497 Equity in earnings (losses) of subsidiaries 372,953 (1,375 ) — — (371,578 ) — Operating income (loss) 361,301 254,719 (13,786 ) — (371,578 ) 230,656 Other expense (income) Interest expense, net 116,245 51,386 18 — — 167,649 Loss on early extinguishments of debt 28,356 14,008 — — — 42,364 Other, net 1 196 (54 ) — — 143 Total other expense, net 144,602 65,590 (36 ) — — 210,156 Income (loss) from continuing operations before income taxes 216,699 189,129 (13,750 ) — (371,578 ) 20,500 Income taxes benefit (provision) 189,084 (14,845 ) (8 ) — — 174,231 Income (loss) from continuing operations, net of tax 405,783 174,284 (13,758 ) — (371,578 ) 194,731 Income from discontinued operations, net of tax — 211,052 — — — 211,052 Net income (loss) $ 405,783 $ 385,336 $ (13,758 ) $ — $ (371,578 ) $ 405,783 Comprehensive income (loss) $ 406,537 $ 386,090 $ (13,758 ) $ — $ (372,332 ) $ 406,537 BOYD GAMING CORPORATION AND SUBSIDIARIESNOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)as of September 30, 2017 and December 31, 2016 and for the three and nine months ended September 30, 2017 and 2016Condensed Consolidating Statements of Cash Flows Nine Months Ended September 30, 2017 Non- Non- Guarantor Guarantor Subsidiaries Subsidiaries Guarantor (100% (Not 100% (In thousands) Parent Subsidiaries Owned) Owned) Eliminations Consolidated Cash flows from operating activities Net cash from operating activities $ (39,365 ) $ 370,417 $ (9,570 ) $ 254 $ 1,436 $ 323,172 Cash flows from investing activities Capital expenditures (82,241 ) (78,801 ) (210 ) — — (161,252 ) Cash paid for acquisition, net of cash received (1,153 ) — — — — (1,153 ) Net activity with affiliates — (361,220 ) — — 361,220 — Advances pursuant to development agreement — — (35,108 ) — — (35,108 ) Other investing activities — 492 — — — 492 Net cash from investing activities (83,394 ) (439,529 ) (35,318 ) — 361,220 (197,021 ) Cash flows from financing activities Borrowings under bank credit facility 463,300 — — — — 463,300 Payments under bank credit facility (628,211 ) — — — — (628,211 ) Debt financing costs, net (2,700 ) — — — — (2,700 ) Net activity with affiliates 318,333 — 44,577 (254 ) (362,656 ) — Share-based compensation activities, net (1,993 ) — — — — (1,993 ) Shares repurchased and retired (22,160 ) — — — — (22,160 ) Dividends paid (5,653 ) — — — — (5,653 ) Other financing activities 590 (87 ) — — — 503 Net cash from financing activities 121,506 (87 ) 44,577 (254 ) (362,656 ) (196,914 ) Cash flows from discontinued operations Cash flows from operating activities — (514 ) — — — (514 ) Cash flows from investing activities — 36,247 — — — 36,247 Cash flows from financing activities — — — — — — Net cash from discontinued operations — 35,733 — — — 35,733 Net change in cash and cash equivalents (1,253 ) (33,466 ) (311 ) — — (35,030 ) Cash and cash equivalents, beginning of period 1,212 189,364 3,286 — — 193,862 Cash and cash equivalents, end of period $ (41 ) $ 155,898 $ 2,975 $ — $ — $ 158,832 BOYD GAMING CORPORATION AND SUBSIDIARIESNOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)as of September 30, 2017 and December 31, 2016 and for the three and nine months ended September 30, 2017 and 2016Condensed Consolidating Statements of Cash Flows - continued Nine Months Ended September 30, 2016 Non- Non- Guarantor Guarantor Subsidiaries Subsidiaries Guarantor (100% (Not 100% (In thousands) Parent Subsidiaries Owned) Owned) Eliminations Consolidated Cash flows from operating activities Net cash from operating activities $ (87,625 ) $ 319,428 $ 16,353 $ — $ 8,750 $ 256,906 Cash flows from investing activities Capital expenditures (29,012 ) (87,679 ) (639 ) — — (117,330 ) Cash paid for acquisition, net of cash received (372,322 ) — — — — (372,322 ) Net activity with affiliates — 212,344 — — (212,344 ) — Other investing activities — 704 2,015 — — 2,719 Net cash from investing activities (401,334 ) 125,369 1,376 — (212,344 ) (486,933 ) Cash flows from financing activities Borrowings under bank credit facility 1,622,075 237,000 — — — 1,859,075 Payments under bank credit facility (1,290,800 ) (899,750 ) — — — (2,190,550 ) Proceeds from issuance of senior notes 750,000 — — — — 750,000 Retirements of senior notes (350,000 ) (350,000 ) — — — (700,000 ) Debt financing costs, net (40,718 ) — — — — (40,718 ) Premium and consent fees paid (15,750 ) — — — — (15,750 ) Net activity with affiliates (185,498 ) — (17,875 ) (221 ) 203,594 — Share-based compensation activities, net 1,353 — — — — 1,353 Net cash from financing activities 490,662 (1,012,750 ) (17,875 ) (221 ) 203,594 (336,590 ) Cash flows from discontinued operations Cash flows from operating activities — (26,596 ) — — — (26,596 ) Cash flows from investing activities — 594,080 — — — 594,080 Cash flows from financing activities — — — — — — Net cash from discontinued operations — 567,484 — — — 567,484 Net change in cash and cash equivalents 1,703 (469 ) (146 ) (221 ) — 867 Cash and cash equivalents, beginning of period 2 156,116 2,482 221 — 158,821 Cash and cash equivalents, end of period $ 1,705 $ 155,647 $ 2,336 $ — $ — $ 159,688 NOTE 13. SUBSEQUENT EVENTSWe have evaluated all events or transactions that occurred after September 30, 2017. During this period, up to the filing date, we did not identify any additional subsequent events, other than the payment of a cash dividend disclosed in Note 9, Stockholders’ Equity and Stock Incentive Plans, the effects of which would require disclosure or adjustment to our financial position or results of operations.Item 2. Management's Discussion and Analysis of Financial Condition and Results of OperationsExecutive OverviewBoyd 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, Nevada, we have gaming operations in Nevada, Illinois, Indiana, Iowa, Kansas, Louisiana and Mississippi. We view each operating property as an operating segment. For financial reporting purposes, we aggregate our wholly owned properties into the following three reportable segments:Las Vegas LocalsGold Coast Hotel and CasinoLas Vegas, NevadaThe Orleans Hotel and CasinoLas Vegas, NevadaSam's Town Hotel and Gambling HallLas Vegas, NevadaSuncoast Hotel and CasinoLas Vegas, NevadaEastside Cannery Casino and HotelLas Vegas, NevadaAliante Casino + Hotel + SpaNorth Las Vegas, NevadaCannery Casino HotelNorth Las Vegas, NevadaEldorado CasinoHenderson, NevadaJokers Wild CasinoHenderson, NevadaDowntown Las VegasCalifornia Hotel and CasinoLas Vegas, NevadaFremont Hotel and CasinoLas Vegas, NevadaMain Street Station Casino, Brewery and HotelLas Vegas, NevadaMidwest and SouthPar-A-Dice Hotel CasinoEast Peoria, IllinoisBlue Chip Casino, Hotel & SpaMichigan City, IndianaDiamond Jo DubuqueDubuque, IowaDiamond Jo WorthNorthwood, IowaKansas Star CasinoMulvane, KansasAmelia Belle CasinoAmelia, LouisianaDelta Downs Racetrack Casino & HotelVinton, LouisianaEvangeline Downs Racetrack and CasinoOpelousas, LouisianaSam's Town Hotel and CasinoShreveport, LouisianaTreasure Chest CasinoKenner, LouisianaIP Casino Resort SpaBiloxi, MississippiSam's Town Hotel and Gambling HallTunica, MississippiWe also own and operate a travel agency and a captive insurance company that underwrites travel-related insurance, each located in Hawaii. Financial results for these operations are included in our Downtown Las Vegas segment, as our Downtown Las Vegas properties concentrate their marketing efforts on gaming customers from Hawaii.Most of our gaming entertainment properties also include hotel, dining, retail and other amenities. Our main business emphasis is on slot revenues, which are highly dependent upon the number and spending levels of customers at our properties.Our properties have historically generated significant operating cash flow, with the majority of our revenue being cash-based. While we do provide casino credit, subject to certain gaming regulations and jurisdictions, most of our customers wager with cash and pay for non-gaming services with cash or by credit card.Our industry is capital intensive, and we rely heavily on the ability of our properties to generate operating cash flow in order to fund maintenance capital expenditures, fund acquisitions, provide excess cash for future development, repay debt financing and associated interest costs, repurchase our debt or equity securities, pay income taxes and pay dividends.Our StrategyOur overriding strategy is to increase shareholder value by pursuing strategic initiatives that improve and grow our business.Strengthening Our Balance SheetWe are committed to finding opportunities to strengthen our balance sheet through diversifying and increasing cash flow to reduce our debt.Operating EfficientlyWe are committed to operating more efficiently and endeavor to prevent unneeded expense in our business. As we continue to experience revenue growth in both our gaming and non-gaming operations, the efficiencies of our business model position us to flow a substantial portion of the revenue growth directly to the bottom line.Evaluating Acquisition OpportunitiesOur evaluations of potential transactions and acquisitions are strategic, deliberate, and disciplined. Our goal is to identify and pursue opportunities that are a good fit for our business, deliver a solid return for shareholders, and are available at the right price.Maintaining Our BrandThe ability of our employees to deliver great customer service helps distinguish our Company and our brands from our competitors. Our employees are an important reason that our customers continue to choose our properties over the competition across the country.Our Key Performance IndicatorsWe use several key performance measures to evaluate the operations of our properties. These key performance measures include the following:Gaming revenue measures: slot handle, which means the dollar amount wagered in slot machines, and table game drop, which means the total amount of cash deposited in table games drop boxes, plus the sum of markers issued at all table games, are measures of volume and/or market share. Slot win and table game hold, which mean the difference between customer wagers and customer winnings on slot machines and table games, respectively, represent the amount of wagers retained by us and recorded as gaming revenues. Slot win percentage and table game hold percentage, which are not fully controllable by us, represent the relationship between slot handle to slot win and table game drop to table game hold, respectively.Food and beverage revenue measures: average guest check, which means the average amount spent per customer visit and is a measure of volume and product offerings; number of guests served ("food covers") is an indicator of volume; and the cost per guest served is a measure of operating margin.Room revenue measures: hotel occupancy rate, which measures the utilization of our available rooms; and average daily rate ("ADR"), which is a price measure.RESULTS OF OPERATIONSOverview Three Months Ended Nine Months Ended September 30, September 30, (In millions) 2017 2016 2017 2016 Net revenues $ 587.7 $ 531.9 $ 1,792.9 $ 1,629.2 Operating income 78.7 67.9 262.9 230.7 Income from continuing operations, net of tax 23.0 161.9 85.7 194.7 Income from discontinued operations, net of tax — 180.7 21.4 211.1 Net income 23.0 342.6 107.0 405.8 Net RevenuesNet revenues increased $55.8 million, or 10.5%, for the three months ended September 30, 2017, compared to the prior year period due primarily to the acquisitions of Aliante and the Cannery Properties (the "Acquisitions") in September and December 2016, respectively. In addition, net revenues related to the Las Vegas Locals segment, excluding the Acquisitions, increased by $4.7 million from the prior year comparable period. These increases are offset by decreases in net revenues in the Midwest and South segment. Hurricane Harvey impacted business volumes for several weeks beginning in late August at Delta Downs and to a lesser extent at several of our other Louisiana and Mississippi properties. In addition, Evangeline Downs experienced declines in revenue due to localized economic weakness in its market.Net revenues increased $163.7 million, or 10.0%, for the nine months ended September 30, 2017, compared to the prior year period due primarily to the Acquisitions. In addition, net revenues related to the Las Vegas Locals, excluding the Acquisitions, and the Downtown Las Vegas segments increased by $8.7 million and $4.7 million, respectively, from the prior year comparable period. These increases are offset by decreases in net revenues in the Midwest and South segment, primarily at Evangeline Downs and Amelia Belle.Operating IncomeOperating income increases of $10.7 million, or 15.8%, during the three months ended September 30, 2017, compared to the corresponding period of the prior year, reflect the impact of the Acquisitions, as well as the impact of our continuing cost control and operational efficiencies efforts. Operating margins in gaming, food and beverage, rooms and other changed slightly and are discussed in detail below.The $32.2 million, or 14.0%, increase in operating income during the nine months ended September 30, 2017, compared to the corresponding period of the prior year reflects the impact of the Acquisitions, as well as the impact of our continuing cost control efforts. Operating margins in gaming, food and beverage, rooms and other all changed slightly and are discussed in detail below. Corporate expense increased $13.5 million over the comparable prior year period due to costs related to creation of back-of-house support functions as part of the implementation of our business improvement initiatives. Project development, preopening and writedowns declined by $2.7 million as compared to the prior year period due primarily to the Acquisitions that occurred in the prior period, with no similar transactions in the current period.Income from Continuing Operations, net of taxIncome from continuing operations, net of tax for the three months ended September 30, 2017 was $23.0 million, as compared to $161.9 million in the comparable prior year period, resulting in a decrease of $138.9 million. This decrease is attributable to a $202.3 million change in the income tax provision primarily due to the release of a valuation allowance on our federal and unitary state income tax net operating loss carryforwards and deferred tax assets in the prior year. Partially offsetting this benefit, is a $41.2 million decline in loss on early extinguishments of debt compared to the prior year period due to the modification of the Boyd Gaming Credit Facility, redemption of our 9.0% senior notes due 2018 and Peninsula Gaming's 8.375% senior notes due 2018, and the extinguishment of the Peninsula Gaming bank credit facility. In addition, operating income increased $10.7 million from the prior year comparable period for those factors mentioned above and interest expense, net of amounts capitalized, declined by $11.9 million due to a decrease in average outstanding borrowings of $28.8 million, along with a decline in the weighted average interest rate of 0.6%.Income from continuing operations, net of tax for the nine months ended September 30, 2017 was $85.7 million, as compared to $194.7 million in the comparable prior year period, a decrease of $109.1 million. The decrease is due to a $221.7 million change in the income tax provision. As discussed above, there was an income tax benefit of $190.4 million in the prior year related to the release of a valuation allowance on our federal and unitary state income tax net operating loss carryforwards and other deferred tax assets. Partially offsetting the benefit, is a $41.5 million decrease in loss on early extinguishments and modifications of debt as compared to the prior year. In addition, operating income increased $32.2 million from the prior year for those factors mentioned above and interest expense, net of amounts capitalized, declined by $40.4 million due to a decline in average outstanding borrowings of $191.2 million, along with a decline in the weighted average interest rate of 1.0%.Income from Discontinued Operations, net of taxIncome from discontinued operations, net of tax, reflects the results of our equity method investment in Borgata, which we sold in August 2016. The results for the nine months ended September 30, 2017 include property tax recovery proceeds of $36.2 million related to the final settlement of Borgata's property tax disputes with Atlantic City. The corresponding period of the prior year, includes the $181.7 million after-tax gain on the sale of our equity interest, a $4.3 million property tax refund received after the sale, and our share of the operations of Borgata through the date of sale.Net IncomeNet income for the three months ended September 30, 2017 was $23.0 million, compared with net income of $342.6 million for the corresponding period of the prior year. The $319.6 million change is primarily due to the $138.9 million decrease in income from continuing operations, net of tax (as discussed above) along with a $180.7 million decrease in income from discontinued operations from the prior year comparable period.Net income for the nine months ended September 30, 2017 was $107.0 million, compared with net income of $405.8 million for the corresponding period of the prior year. The $298.7 million change is primarily due to the $109.1 million decrease in income from continuing operations, net of tax (as discussed above) along with a $189.7 million decrease in income from discontinued operations from the prior year comparable period.Operating RevenuesWe derive the majority of our gross revenues from our gaming operations, which produced approximately 75% of gross revenues for each of the three and nine month periods ended September 30, 2017 and 2016. Food and beverage gross revenues represent our next most significant revenue source, generating approximately 13% of gross revenues for each of the three and nine month periods ended September 30, 2017 and 2016. Room revenues and other revenues separately contributed less than 10% of gross revenues during these periods. Three Months Ended Nine Months Ended September 30, September 30, (In millions) 2017 2016 2017 2016 REVENUES Gaming $ 487.4 $ 443.6 $ 1,482.4 $ 1,359.0 Food and beverage 85.6 74.3 261.4 227.0 Room 48.1 43.0 143.7 128.2 Other 31.6 29.5 98.6 90.8 Gross revenues 652.7 590.4 1,986.1 1,805.0 Less promotional allowances 65.0 58.5 193.2 175.8 Net revenues $ 587.7 $ 531.9 $ 1,792.9 $ 1,629.2 COSTS AND EXPENSES Gaming $ 229.7 $ 217.1 $ 691.2 $ 658.4 Food and beverage 47.5 40.7 146.5 124.7 Room 13.5 11.2 40.1 33.0 Other 18.6 18.7 58.2 56.8 Total costs and expenses $ 309.3 $ 287.7 $ 936.0 $ 872.9 MARGINS Gaming 52.9 % 51.1 % 53.4 % 51.6 % Food and beverage 44.5 % 45.1 % 44.0 % 45.0 % Room 71.9 % 74.0 % 72.1 % 74.2 % Other 41.1 % 36.9 % 41.0 % 37.4 % GamingGaming revenues are comprised primarily of the net win from our slot machine operations and table games. The $43.8 million, or 9.9%, increase in gaming revenues during the three months ended September 30, 2017, as compared to the corresponding period of the prior year, was primarily due to the addition of the Acquisitions to the Las Vegas Locals segment. Partially offsetting this increase, is a decrease in gaming revenues in the Midwest and South segment. The Midwest and South segment experienced a 1.0% decrease in slot handle and a 0.8% decrease in table game drop.The $123.4 million, or 9.1%, increase in gaming revenues during the nine months ended September 30, 2017, as compared to the corresponding period of the prior year, was primarily due to the addition of the Acquisitions to the Las Vegas Locals segment. Partially offsetting this increase, is a decrease in gaming revenues in the Midwest and South segment. The Midwest and South segment experienced a 2.2% decrease in slot handle and a 3.3% decrease in table game drop.Food and BeverageFood and beverage revenues increased $11.4 million, or 15.3%, during the three months ended September 30, 2017, as compared to the corresponding period of the prior year. The increase in food and beverage revenues was primarily due to the addition of the Acquisitions. Food covers increased 34.0% and average check increased 16.0% in the Las Vegas Locals segment. Partially offsetting this increase is a decrease of $1.5 million in food and beverage revenues in the Midwest and South segment, primarily due to a decrease in average check of 3.5% and food covers of 4.4%. Food and beverage expenses increased by $6.7 million, or 16.5%, during the three months ended September 30, 2017, as compared to the corresponding period of the prior year, primarily due to the addition of the Acquisitions.Food and beverage revenues increased $34.5 million, or 15.2%, during the nine months ended September 30, 2017, as compared to the corresponding period of the prior year. The increase in food and beverage revenues was primarily due to the addition of the Acquisitions. Food covers increased 30.8% and average check increased 16.2% in the Las Vegas Locals segment. Partially offsetting this increase is a decrease of $3.5 million in food and beverage revenues in the Midwest and South segment, primarily due to a decrease in food covers of 5.3%. Food and beverage expenses increased by $21.9 million, or 17.5%, during the nine months ended September 30, 2017, as compared to the corresponding period of the prior year, primarily due to the addition of the Acquisitions.RoomRoom revenues increased by $5.1 million, or 11.8%, during the three months ended September 30, 2017, as compared to the corresponding period of the prior year due primarily to the addition of the Acquisitions in the Las Vegas Locals segment. The average daily rate increased 11.7% while hotel occupancy decreased 3.7% for the Las Vegas Locals segment. Room expenses increased by $2.2 million, or 19.8%, during the three months ended September 30, 2017, as compared to the corresponding period of the prior year, due primarily to the addition of the Acquisitions.Room revenues increased by $15.4 million, or 12.0%, during the nine months ended September 30, 2017, as compared to the corresponding period of the prior year due primarily to the addition of the Acquisitions in the Las Vegas Locals segment. The average daily rate increased 11.9% while hotel occupancy decreased 1.4% for the Las Vegas Locals segment. Room expenses increased by $7.0 million, or 21.2%, during the nine months ended September 30, 2017, as compared to the corresponding period of the prior year, primarily due to the addition of the Acquisitions.OtherOther revenues relate to patronage visits at the amenities at our properties, including entertainment and nightclub revenues, retail sales, theater tickets and other venues. Other revenues increased $2.1 million, or 7.0% and $7.9 million, or 8.7% during the three and nine months ended September 30, 2017, respectively, as compared to the prior year due primarily to the Acquisitions, which accounted for an increase to other revenue in the Las Vegas Locals segment.Revenues and Adjusted EBITDA by Reportable SegmentWe determine each of our properties' profitability based upon Adjusted Earnings Before Interest, Taxes, Depreciation and Amortization ("EBITDA"),EBITDAR, which represents earnings before interest expense, income taxes, depreciation and amortization, deferred rent, share-based compensation expense, project development, preopening and writedownswritedown expenses, impairments of assets, and other operating items, net, gain or loss on early extinguishments and modifications of debt, other items, net and master lease rent expense, as applicable. Total Reportable Segment Adjusted EBITDAEBITDAR is the aggregate sum of the Adjusted EBITDAEBITDAR for each of the properties comprisingincluded in our Las Vegas Locals, Downtown Las Vegas and Midwest and& South segments before net amortization, preopening and other items.Adjusted EBITDAR related to the online operations in our Online segment. Results for Downtown Las Vegas include the results of our Hawaii-based travel agency and captive insurance company in Hawaii. Corporate expense represents unallocated payroll, professional fees, aircraft expensesas our Downtown Las Vegas properties cater to the Hawaiian market. 20various other expenses not directly related to our casinoDecember 31, 2022 and hotel operations. Furthermore, corporate expense excludes its portion of share-based compensation expense.EBITDAfor the three and six months ended June 30, 2023 and 2022andtransactions, financing transactions and income taxes and facilitates comparisons between us and our competitors.taxes. Management has historically adjusted EBITDAEBITDAR when evaluating operating performance because we believe that the inclusion or exclusion of certain recurring and non-recurring items is necessary to provide a full understanding of our core operating results and as a means to evaluate period-to-period results. $ 171,986 $ 22,219 $ 23,295 $ — $ — $ 13,440 $ 230,940 34,432 10,142 5,636 — — 2,781 52,991 443,440 38,005 20,830 — — 16,571 518,846 — — — 85,002 — — 85,002 10,871 — — — 17,446 854 29,171 $ 660,729 $ 70,366 $ 49,761 $ 85,002 $ 17,446 $ 33,646 $ 916,950 $ 176,875 $ 22,800 $ 22,889 $ — $ — $ 13,897 $ 236,461 34,934 10,573 6,204 — — 2,188 53,899 460,879 36,926 20,811 — — 16,321 534,937 — — — 56,774 — — 56,774 12,237 — — — — 142 12,379 $ 684,925 $ 70,299 $ 49,904 $ 56,774 $ — $ 32,548 $ 894,450 $ 348,307 $ 44,982 $ 48,676 $ — $ — $ 29,245 $ 471,210 70,849 20,639 12,485 — — 5,575 109,548 883,525 76,329 38,665 — — 32,500 1,031,019 — — — 207,865 — — 207,865 22,356 — — — 37,476 1,442 61,274 $ 1,325,037 $ 141,950 $ 99,826 $ 207,865 $ 37,476 $ 68,762 $ 1,880,916 $ 350,465 $ 43,137 $ 42,546 $ — $ — $ 27,875 $ 464,023 67,377 20,282 11,600 — — 4,124 103,383 911,393 70,623 38,167 — — 31,815 1,051,998 — — — 111,850 — — 111,850 23,644 — — — — 295 23,939 $ 1,352,879 $ 134,042 $ 92,313 $ 111,850 $ — $ 64,109 $ 1,755,193 21 $ 118,395 $ 125,334 $ 244,555 $ 244,029 19,652 22,123 42,019 40,512 201,833 218,859 400,517 431,059 13,400 7,678 34,023 16,566 19,546 2,512 41,097 4,905 (21,464 ) (22,633 ) (43,703 ) (44,362 ) 351,362 353,873 718,508 692,709 177 192 354 384 27,099 26,654 53,927 52,960 62,220 66,757 123,780 129,235 12,198 14,100 20,017 22,833 5,201 912 (13,673 ) (9,117 ) — — 4,537 — 438 188 658 286 107,333 108,803 189,600 196,581 244,029 245,070 528,908 496,128 (2,715 ) (483 ) (20,860 ) (903 ) 42,715 36,466 86,581 74,124 — 16,509 — 19,809 522 3,750 626 3,497 40,522 56,242 66,347 96,527 203,507 188,828 462,561 399,601 (11,053 ) (42,065 ) (70,376 ) (89,910 ) $ 192,454 $ 146,763 $ 392,185 $ 309,691 $ 1,604,868 $ 1,613,553 278,520 265,876 3,741,120 3,745,476 234,073 226,800 191,818 207,962 254,082 251,460 $ 6,304,481 $ 6,311,127 $ 917.0 $ 894.5 $ 1,880.9 $ 1,755.2 244.0 245.1 528.9 496.1 192.5 146.8 392.2 309.7 Net IncomeNet income increased $45.7 million for the three months ended June 30, 2023 , compared to the prior year comparable period, primarily due to: (i) a decrease in income tax provision of $31.0 million due primarily to the release of state tax valuation allowances of $35.9 million; (ii) a decrease of $16.5 million in loss on early extinguishments and modifications of debt due to the retirement of the remaining $300.0 million aggregate principal amount of 8.625% Senior Notes due 2025 ("8.625% Senior Notes") during the three months ended June 30, 2022; and (iii) an increase in interest income of $2.2 million due to interest earned on the Wilton Note during the three months ended June 30, 2023 . Net income was unfavorably impacted by a $6.2 million increase in interest expense, which was primarily driven by a 110-basis point increase in the weighted average interest rate over the prior year comparable period.
Net income increased $82.5 million for the six months ended June 30, 2023 , compared to the prior year comparable period, primarily due to: (i) the $32.8 million increase in operating income, as discussed above; (ii) an increase in interest income of $20.0 million due to an adjustment to the expected loss for interest on the Wilton Note and interest earned on the Wilton Note during the six months ended June 30, 2023 ; (iii) a decrease of $19.8 million in loss on early extinguishments and modifications of debt due to the retirement of the remaining $300.0 million 8.625% Senior Notes and the retirement of term loans under a former credit agreement d uring the six months ended June 30, 2022; and (iv) a decrease in the income tax provision of $19.5 million which was driven by the release of state tax valuation allowances of $35.9 million offset by taxes on the Company's increased operational performance. Net income was unfavorably impacted by a $12.5 million increase in interest expense, which was primarily driven by a 120-basis point increase in the weighted average interest rate over the prior year comparable period.Operating RevenuesWe derive the majority of our revenues from our gaming operations, which produced approximately 72% and 77% of revenues for the three months ended June 30, 2023 and 2022, respectively, and 70% and 77% of revenues for the six months ended June 30, 2023 and 2022, respectively. Online revenues, including reimbursements received from our third-party operators for gaming taxes and other expenses we pay under collaborative arrangements, represent our next most significant revenue source, generating 9% and 6% of revenues for the three months ended June 30, 2023 and 2022 , respectively, and 11% and 6% of revenues for the six months ended June 30, 2023 and 2022, respectively . Food & beverage revenues, room revenues, management fee revenues and other revenues separately contributed 8% or less of revenues during these periods. $ 660.7 $ 684.9 $ 1,325.0 $ 1,352.9 70.4 70.3 141.9 134.0 49.8 49.9 99.8 92.3 85.0 56.8 207.9 111.9 17.4 — 37.5 — 33.7 32.6 68.8 64.1 $ 917.0 $ 894.5 $ 1,880.9 $ 1,755.2 $ 250.0 $ 254.5 $ 499.8 $ 504.5 58.6 57.5 118.0 111.4 18.6 17.3 35.7 33.3 71.4 48.9 173.4 94.9 11.0 11.7 22.6 22.6 $ 409.6 $ 389.9 $ 849.5 $ 766.7 62.2 % 62.8 % 62.3 % 62.7 % 16.8 % 18.2 % 16.8 % 16.9 % 62.7 % 65.3 % 64.2 % 63.9 % 16.0 % 13.9 % 16.6 % 15.2 % 67.4 % 64.1 % 67.2 % 64.7 % Roomour nettotal revenues and Adjusted EBITDAEBITDAR by our Reportable Segment: Three Months Ended Nine Months Ended September 30, September 30, (In millions) 2017 2016 2017 2016 Net revenues Las Vegas Locals $ 207.3 $ 148.9 $ 641.3 $ 462.2 Downtown Las Vegas 58.8 56.6 179.1 174.4 Midwest and South 321.6 326.4 972.5 992.6 Net revenues $ 587.7 $ 531.9 $ 1,792.9 $ 1,629.2 Adjusted EBITDA (1) Las Vegas Locals $ 56.1 $ 36.2 $ 185.5 $ 123.6 Downtown Las Vegas 11.6 10.0 37.7 37.0 Midwest and South 90.1 90.6 277.9 281.3 Total Reportable Segment Adjusted EBITDA 157.8 136.8 501.1 441.9 Corporate expense (17.5 ) (14.9 ) (53.9 ) (44.4 ) Adjusted EBITDA $ 140.3 $ 121.9 $ 447.2 $ 397.5 Segments and our Managed & Other category to reconcile to total revenues and total Adjusted EBITDAR: $ 230.9 $ 236.5 $ 471.2 $ 464.0 53.0 53.9 109.5 103.4 518.9 534.9 1,031.0 1,052.0 85.0 56.8 207.9 111.9 29.2 12.4 61.3 23.9 $ 917.0 $ 894.5 $ 1,880.9 $ 1,755.2 $ 118.4 $ 125.3 $ 244.6 $ 244.0 19.7 22.1 42.0 40.5 201.8 218.9 400.5 431.0 13.4 7.7 34.0 16.6 19.6 2.5 41.1 4.9 (21.5 ) (22.6 ) (43.7 ) (44.3 ) $ 351.4 $ 353.9 $ 718.5 $ 692.7 11, Total Reportable Segment Adjusted EBITDAEBITDAR to operatingnet income, as reported in accordance with GAAP in our accompanying condensed consolidated statements of operations.Net revenues increased $58.439.2%, and $179.1 million or 38.7%2.3%, during the three and nine months ended SeptemberJune 30, 2017,2023, as compared to the prior year comparable period, due primarily to a $4.9 million decline in gaming revenue. The decrease in gaming revenue was attributable to declines in table game hold of 12.0%, table game drop of 11.2%, slot handle of 6.0% and slot win of 3.8% over the prior year comparable period. While core guest counts grew slightly year over year, softness in play from out-of-town gaming customers and retail customers drove declines in the current year quarter. In addition, the second quarter of 2022 was particularly strong as Las Vegas benefited from the lifting of mask mandates and COVID restrictions for the first full quarter since the COVID closures in 2020.Adjusted EBITDAR decreased by $6.9 million, or 5.5%, during the three months ended June 30, 2023 , as compared to the prior year comparable period, primarily due to the revenue decline discussed above.Adjusted EBITDAR remained consistent during the six months ended June 30, 2023, as compared to the prior year comparable period. Despite the revenue growth during the six months ended June 30, 2023, adjusted EBITDAR declined primarily due to a change in revenue mix from the most profitable revenue stream to other lower margin non-gaming amenities.Downtown Las VegasTotal revenues decreased slightly by $0.9 million, or 1.7% , during the three months ended June 30, 2023 , as compared to the prior year comparable period. Total revenues increased $6.2 million, or 6.0% , during the six months ended June 30, 2023 , as compared to the corresponding prior year period, reflecting revenue increases in all departmental categories. During the six months ended June 30, 2023, the hotel occupancy rate increased 120 basis points with 80 basis points of the increase related to our Hawaiian customers. I ncreased visitation to downtown Las Vegas drove a 7.6% increase in room revenue. Total revenues for the six months ended June 30, 2023 , particularly during the first quarter of 2023, were also impacted by Fremont's new food hall, expanded slot offering and FanDuel sportsbook, which debuted in December 2022. After the debut of these new amenities in December 2022, we began work on a renovation of the Fremont's gaming floor and accelerated this renovation and related disruption during the second quarter of 2023 and the slower summer season. This renovation, along with a Main Street hotel remodel that resulted in only 20% of Main Street's rooms being available during the quarter, drove the declines during the three months ended June 30, 2023.Adjusted EBITDAR decreased by $2.5 million, or 11.2%, during the three months ended June 30, 2023 , as compared to the prior year comparable period, primarily due to the revenue decline and construction disruption, as discussed above.Adjusted EBITDAR increased $1.5 million, or 3.7%, during the six months ended June 30, 2023, as compared to the prior year comparable period, due primarily to revenue growth from the Hawaiian customer, increased visitation to the downtown area and our recent investments at Fremont, as discussed above.primarily due to the addition of the Acquisitions.Adjusted EBITDA increased by $19.9 million or 55.1%, and $61.8 million or 50.0%, for the three and nine months ended September 30, 2017, respectively, over the comparable prior year period due primarily to the additionincrease in revenue, excluding reimbursements of the Acquisitionsgaming taxes paid on behalf of our online partners.Managed & OtherTotal reven ues increased by $16.8 million and our on-going cost control efforts.Downtown Las VegasNet revenues increased $2.2$37.3 million, or 3.9%, and $4.7 million or 2.7%, duringduring the three and ninesix months ended SeptemberJune 30, 2017,2023, respectively, as compared to the corresponding period of the prior year, reflecting revenue increasesdue primarily to $17.4 million and $37.5 million in all departmental categories. We continue to tailor our marketing programs in the Downtown segment to cater to our Hawaiian market. Our Hawaiian market represented approximately 51% and 47%Sky River Casino management fees during the three and six months ended SeptemberJune 30, 2017 and 2016,2023, respectively and 51% for each of the nine months ended September 30, 2017 and 2016, of our occupied rooms in this segment..Adjusted EBITDAEBITDAR increased by $1.5$17.0 million or 15.2%, and $0.8$36.2 million, or 2.2%, duringduring the three and ninesix months ended SeptemberJune 30, 2017,2023 , respectively, over the comparable prior year period due in part to the early completion of the 300-room hotel renovation at the California property in August 2017.Midwest and SouthNet revenues decreased 1.5% during the three months ended September 30, 2017, as compared to the corresponding period of the prior year, due primarily due to a gaming revenue decrease resulting from a 1.0% decrease$17.4 million and $37.5 million in slot handle and a 0.8% decrease in table game drop. Due to the decline in gaming revenue, there was a corresponding decrease in promotional allowances of $2.2 million. The results for the segment were impacted by Evangeline Downs experiencing localized economic weakness. In addition, weather related to Hurricane Harvey and heightened promotional activity in the Lake Charles market impacted Delta Downs, offsetting revenue gains realized from the additional hotel rooms that opened in late fourth quarter 2016.Net revenues decreased 2.0%Sky River Casino management fees during the ninethree and six months ended SeptemberJune 30, 2017, as compared to the corresponding period of the prior year, primarily due to a gaming revenue decrease resulting from a 2.2% decrease in slot handle and a 3.3% decrease in table game drop. Due to the decline in gaming revenue, there was a corresponding decrease in promotional allowances of $6.0 million. The results for the segment were impacted by Evangeline Downs which is experiencing localized economic weakness. These declines were partially offset by room revenue growth of $2.2 million at Delta Downs due to the opening of the new hotel tower and newly renovated rooms. The average daily rate increased by 21.1% over the prior year.The segment reported a 0.6% and 1.2% decrease in Adjusted EBITDA for the three and nine months ended September 30, 2017,2023, respectively as compared to the corresponding prior year period, due to the decrease in revenues offset by our cost control efforts.. $ 99.1 $ 95.7 $ 199.4 $ 187.7 27.1 26.7 53.9 53.0 37.6 34.5 73.6 67.4 62.2 66.8 123.8 129.2 31.7 34.9 60.4 63.9 5.2 0.9 (13.7 ) (9.1 ) — — 4.5 — 0.4 0.2 0.7 0.3 Three Months Ended Nine Months Ended September 30, September 30, (In millions) 2017 2016 2017 2016 Selling, general and administrative $ 91.3 $ 80.8 $ 275.9 $ 241.7 Maintenance and utilities 30.2 27.9 82.5 76.7 Depreciation and amortization 55.2 47.9 161.7 143.8 Corporate expense 19.3 15.9 63.4 49.9 Project development, preopening and writedowns 3.0 3.7 8.7 11.5 Impairments of assets — — — 1.4 Other operating items, net 0.8 — 1.7 0.6 Selling, General and AdministrativeSelling, general and administrative expenses were consistent, as a percentage of gross revenues, and were 14.0%10.8% and 13.7%10.7% during the three months ended SeptemberJune 30, 20172023 and 2016,2022, respectively, and 13.9%10.6% and 13.4%10.7% during the ninesix months ended SeptemberJune 30, 2017,2023 and 2022, respectively. We continue to focus on our disciplined operating model and targeted marketing spend,approach.Master Lease Rent ExpenseMaster lease rent expense represents rent expense incurred by four of our properties which are subject to two master lease agreements with a real estate investment trust. Master lease rent expense remained generally flat period over period at $27.1 million and our ongoing cost containment efforts.$26.7 million during the three months ended June 30, 2023 and 2022, respectively, and $53.9 million and $53.0 million during the six months ended June 30, 2023 and 2022, respectively. Maintenance and UtilitiesMaintenance and utilities expenses, as a percentage of gross revenues, were relativelyremained consistent at 4.6%at 4.1% and 4.7%3.9% during the three months ended SeptemberJune 30, 20172023 and 2016,2022, respectively, and 4.2%3.9% and 3.8% during each of the ninesix months ended SeptemberJune 30, 20172023 and 2016.2022, respectively. Depreciation and AmortizationDepreciation and amortization expenses, as a percentage of gross revenues,revenu es, were 8.5%6.8% and 8.1%7.5% during the three months ended SeptemberJune 30, 20172023 and 2016, respectively. Depreciation2022, respectively, and amortization expense increased $7.3 million for6.6% and 7.4% during the threesix months ended SeptemberJune 30, 2017, compared to the respective prior year period.Depreciation2023 and amortization expenses,2022, respectively. The decline as a percentage of gross revenues were 8.1% and 8.0% during the nine months ended September 30, 2017 and 2016, respectively. Depreciation and amortization expense increased $17.9 million for the nine months ended September 30, 2017, compared to the respective prior year period.The overall increase in the periods presented iswas primarily due to an increase in revenue during both the Acquisitions withthree and six months ended June 30, 2023 from the remaining increase driven by additional depreciation for our recent capital expenditures.online segment and from management fees, both of which have limited fixed assets.Corporate ExpenseCorporate expense represents unallocated payroll, professional fees, rent, aircraft expenses and various other administrative expenses that are not directly related to our casino, and/or hotel and online operations, in addition to the corporate portion of share-based compensation expense. Corporate expense was generally consistent and represented 3.0%3.5% and 2.7%3.9% of gross revenues during the three months ended SeptemberJune 30, 20172023 and 2016,2022, respectively, and 3.2% and 2.8%3.6% of gross revenues during the ninesix months ended SeptemberJune 30, 20172023 and 2016,2022, respectively. Elevated corporate expenses, as comparedContributing to the prior year, include increased costs related to creationslight decline, as a percentage of consolidated back-of-house support functions as part ofrevenues, is management fee revenue during the implementation of the Company’s business improvement initiatives.three and six months ended June 30, 2023.Project Development, Preopening and WritedownsProject development, preopening and writedowns represent: (i) certain costs incurred and recoveries realized related to the activities associated with various acquisition opportunities, strategic initiatives, dispositions and other business development activities in the ordinary course of business; (ii) certain costs of start-up activities that are expensed as incurred in our ongoing efforts to develop gaming activities in new jurisdictions and expenses related to other new business development activities that do not qualify as capital costs; and (iii) asset write-downs. The decreaseswritedowns; and (iv) realized gains arising from asset dispositions. Such costs are generally nonrecurring in suchnature and vary from period to period as the volume of underlying activities fluctuates. During the three months ended June 30, 2023, the Company incurred $4.1 million related to preopening costs. During the six months ended June 30, 2023, the Company benefited from a $20.1 million reduction of the allowance on the Wilton Note for development advances over the last 10 years offset by preopening costs inof $5.0 million. During the current year periods as compared tosix months ended June 30, 2022, the prior year periods are due primarily to the Acquisitions that occurred in the prior periods, with no similar transactions in the current periods.Impairments of AssetsImpairmentsCompany benefited from a $12.8 million gain on disposition of assets foroffset by Pala Interactive acquisition-related costs of $2.3 million.Impairment of Assetsninesix months ended SeptemberJune 30, 2016, included non-cash2023, as a result of our first quarter impairment chargesreview, the Company recorded an impairment charge of $4.5 million for goodwill related to non-operating assets.our Managed & Other category.Other Operating Items, netdirect and non-reimbursable costs associated withseverance payments to separated employees, natural disasters and severe weather impact, including hurricane and flood expenses, and subsequent recoveries of such costs, as applicable. Three Months Ended Nine Months Ended September 30, September 30, (In millions) 2017 2016 2017 2016 Interest Expense, net $ 42.9 $ 54.2 $ 128.3 $ 167.6 Average Long-Term Debt Balance(1)3,165.3 3,194.2 3,234.7 3,425.9 Weighted Average Interest Rates 5.0 % 5.6 % 4.3 % 5.3 % $ 40.0 $ 36.0 $ 65.7 $ 73.2 2,966.0 3,032.7 3,000.6 3,052.5 5.4 % 4.3 % 5.4 % 4.2 % three and ninesix months ended SeptemberJune 30, 2017,2023, decreased $11.3$7.5 million, or 20.9%10.2%, and $39.3 million or 23.4%, respectively, as compared tofrom the prior year comparable period primarily due to the redemptions of our 9.0% senior notes and the Peninsula 8.375% senior notes, the payoffa $20.0 million interest income increase driven by a reduction of the Peninsula bank credit facility,allowance for the refinancing ofexpected loss for interest on the Boyd Gaming Credit FacilityWilton Note and interest earned on such note during the six months ended June 30, 2023. The increase in September 2016 and the refinancing of Term B Loans in March 2017. These transactions led tointerest income is offset by a reduction in the average long-term debt balance of $28.8$12.5 million andinterest expense increase driven by a reduction120-basis point increase in the weighted average interest rate from 5.6% to 5.0% for the three months ended September 30, 2017. For the nine months ended September 30, 2017, the average long-term debt balance decreased $191.2offset by a $51.9 million anddecline in the weighted average interest rate was reduced by 1.0% as a resultdebt balance. 29We incurred charges of $0.3 million and $0.9 million duringninesix months ended SeptemberJune 30, 2017, respectively, due to costs2022, the Company incurred related to the Refinancing Amendment and for debt financing costs written off, which represents the ratable reduction$16.5 million in borrowing capacity due to optional prepayments of the Refinancing Term B Loans of $20.0 million for the three months ended September 30, 2017 and $25.0 million for the nine months ended September 30, 2017. We incurred charges of $41.5 million and $42.4 million during the three and nine months ended September 30, 2016, respectively, related to the modification of the Boyd Gaming Credit Facility, redemption of our 9.0% senior notes due 2018 and Peninsula Gaming's 8.375% senior notes due 2018, and the extinguishment of the Peninsula Gaming bank credit facility.The components of the loss on early extinguishments and modifications of debt aredue to the redemption of $300.0 million of our 8.625% Senior Notes, of which $12.9 million related to premium fees paid and $3.6 million related to the write-off of unamortized deferred finance charges. In addition, during the six months ended June 30, 2022, the Company incurred $3.3 million in loss on early extinguishments and modifications of debt as follows: Three Months Ended Nine Months Ended September 30, September 30, (In millions) 2017 2016 2017 2016 9.00% Senior Notes premium and consent fees $ — $ 15.7 $ — $ 15.8 9.00% Senior Notes deferred finance charges — 6.0 — 6.0 8.375% Senior Notes deferred finance charges — 4.5 — 4.5 Refinancing Amendment — — 0.6 — Boyd Gaming Credit Facility deferred finance charges 0.3 6.6 0.3 6.6 Peninsula bank credit facility deferred finance charges — 8.7 — 9.5 Total loss on early extinguishments and modifications of debt $ 0.3 $ 41.5 $ 0.9 $ 42.4 a result of entering into a new credit agreement (the "Credit Facility") that replaced the then existing credit agreement. The $3.3 million incurred related to the write-off of unamortized deferred finance charges associated with the portion accounted for as a debt extinguishment.on income from continuing operations during the ninesix months ended SeptemberJune 30, 20172023 and 20162022 were 35.7%15.2% and (849.9%)22.5%, respectively.respectively. Our tax rate for the six months ended June 30, 2023, was favorably impacted by a $35.9 million release of state valuation allowances, the inclusion of excess tax benefits which were partially offset by the unfavorable impact of state taxes and certain nondeductible expenses, as a component of the provision for income taxes. Our tax rate for the ninesix months ended SeptemberJune 30, 20172022, was favorablyunfavorably impacted by state taxes and certain nondeductible expenses which were partially offset by the inclusion of excess tax benefits, related to equity compensation, as a component of the provision for income taxes, the recognitionof unrecognized tax benefits due to statute expirations and the reversal of related accrued interest. These benefits were offset by state taxes resulting in an effective tax rate greater than the federal statutory rate.During the nine months ended September 30, 2016, our effective tax rate was favorably impacted by the release of a valuation allowance on our federal and unitary state net operating loss carryforwards and other deferred tax assets. In performing our third quarter 2016 valuation allowance analysis, we determined that the positive evidence in favor of releasing the valuation allowance, particularly evidence that was objectively verifiable, outweighed the negative evidence. We utilized a rolling twelve quarters of pretax income adjusted for permanent book to tax differences as a measure of cumulative results in recent years. We transitioned from a cumulative loss position to a cumulative income position over the rolling twelve quarters ended September 30, 2016. Other evidence considered in the analysis included, but was not limited to, a trend reflective of improvement in recent earnings, forecasts of profitability and taxable income and the reversal of existing temporary differences. The change in these conditions during the three months ended September 30, 2016 provided positive evidence that supported the release of the valuation allowance against a significant portion of our deferred tax assets. As such, we concluded that it was more likely than not that the benefit from these deferred tax assets would be realized, and we released $190.4 million of valuation allowance on our federal and unitary state income tax net operating loss carryforwards and other deferred tax assets during the third quarter of 2016.taxes.SeptemberJune 30, 20172023 and December 31, 2016,2022, we had balances of cash and cash equivalents of $158.8$260.8 million and $193.9$283.5 million, respectively. Despite such amountsIn addition, we held restricted cash balances of cash, we had working capital deficits of $104.4 million and $57.6$11.6 million at such respective dates.both June 30, 2023 and December 31, 2022. Our Credit Facility generally provides all necessary funds for the day-to-day operations, interestworking capital deficit at June 30, 2023 and tax payments, as well as capital expenditures. On a daily basis, we evaluate our cash positionDecember 31, 2022, was $87.5 million and adjust the balance under our bank credit facility as necessary, by either borrowing or paying down debt with excess cash. We also plan the timing and the amounts of capital expenditures. $107.9 million, respectively.the bank credit facility, subject to restrictive covenants,our Revolving Credit Facility (as defined in "Indebtedness" below) and cash flows from operating activities will be sufficient to meet our liquidity and capital resource needs for the next twelve months, including our projected operating requirements and maintenance capital expenditures for at least the next twelve months. The source of funds available to us for repayment of debt or to fund development projects is derived primarily from cash flows from operations and availability under our bank credit facility, to the extent availability exists after we meet working capital needs, and subject to restrictive covenants.expenditures. See "credit facility.Credit Facility.couldmay also seek to secure additional working capital, repay respective current debt maturities, or fund respective development projects, in whole or in part, through incremental bank financing and additional debt or equity offerings.offerings, to the extent such offerings are allowed under our debt agreements. Nine Months Ended September 30, (In millions) 2017 2016 Net cash provided by operating activities $ 323.2 $ 256.9 Cash flows from investing activities Capital expenditures (161.2 ) (117.3 ) Cash paid for acquisition, net of cash received (1.2 ) (372.3 ) Advances pursuant to development agreement (35.1 ) — Other investing activities 0.5 2.7 Net cash used in investing activities (197.0 ) (486.9 ) Cash flows from financing activities Net payments under Boyd Gaming bank credit facility (164.9 ) 331.3 Net payments under Peninsula bank credit facility — (662.8 ) Retirements of senior notes — (700.0 ) Proceeds from issuance of senior notes — 750.0 Dividends paid (5.7 ) — Shares repurchased and retired (22.2 ) — Other financing activities (4.1 ) (55.1 ) Net cash used in financing activities (196.9 ) (336.6 ) Net cash provided by discontinued operations 35.7 567.5 Increase (decrease) in cash and cash equivalents $ (35.0 ) $ 0.9 $ 463.3 $ 456.2 (171.4 ) (98.7 ) 49.7 — — 21.4 (2.3 ) — (124.0 ) (77.3 ) (109.3 ) 181.1 — (300.0 ) — (12.9 ) — (13.7 ) (14.4 ) (9.0 ) (206.4 ) (299.8 ) (31.8 ) (16.5 ) (0.1 ) (1.2 ) (362.0 ) (472.0 ) $ (22.7 ) $ (93.1 ) ninesix months ended SeptemberJune 30, 20172023 and 2016,2022, we generated net operating cash flow of $323.2$463.3 million and $256.9$456.2 million, respectively. Generally, operating cash flows increased during 20172023 as compared to the prior year period due to $8.5 million received related to interest earned on the flow through effect of higher revenues, including the impact of Acquisitions, and the timing of working capital spending.Wilton Note.ninesix months ended SeptemberJune 30, 2017 and 2016,2023, we incurred net cash outflows for investing activities of $197.0$124.0 million comprised of capital expenditures of $171.4 million, primarily related to our Treasure Chest land-based casino project, Fremont food hall, slot floor expansion and $486.9renovation, various guest room remodels, IT equipment and building projects at various properties offset by $49.7 million respectively. The decrease in outflows as comparedpayments received related to the prior year period is due to the acquisition of Aliante, which closedoutstanding principal on September 27, 2016. In January 2017, we paid $35.1 million for the acquisition of land that is the intended site of the Wilton Rancheria casino, pursuantNote. During the six months ended June 30, 2022, we incurred net cash outflows for investing activities of $77.3 million comprised of capital expenditures of $98.7 million, primarily related to our development agreement with the Wilton Rancheria Tribe.furniture and equipment purchases and building projects at various properties, offset by $21.4 million in proceeds from disposition of assets.uponon our financing cash flows to provide funding for investment opportunities, repayments of obligations and ongoing operations.forfrom financing activities during the six months ended June 30, 2023, primarily reflect share repurchases, payments on the outstanding principal under our Credit Facility, share-based compensation and dividends paid. The net cash outflows from financing activities in the ninesix months ended SeptemberJune 30, 2017,2022, primarily reflect primarilyshare repurchases, the useretirement of excess cashthe 8.625% Senior Notes, payment of the associated premium fees related to reduce our outstandingthe retirement of the 8.625% Senior Notes, debt repurchase outstanding common stock under our share repurchase programfinancing costs related to the new Credit Agreement and pay cash dividends to our shareholders. The net cash outflowspaid, offset by an increase in the nine months ended September 30, 2016 reflect primarilyoutstanding principal under the redemption of our 9.00% senior notes due 2018 and Peninsula Gaming's 8.375% senior notes due 2018, and extinguishment of the Peninsula Gaming bank credit facility during the period, using the net cash proceeds from the sale of our equity interest in Borgata, and cash flow from the Refinancing Amendment.Cash Flows from Discontinued OperationsThe decrease in cash flows provided by discontinued operations for the nine months ended September 30, 2017, compared to the corresponding period of the prior year, is due to $589 million of cash proceeds received from the sale of our 50% equity interest in the parent company of Borgata to MGM in August 2016.Credit Facility (see "Indebtedness").(In millions) September 30,
2017 December 31,
2016 Decrease Boyd Gaming Debt Bank credit facility $ 1,617.6 $ 1,782.5 $ (164.9 ) 6.875% senior notes due 2023 750.0 750.0 — 6.375% senior notes due 2026 750.0 750.0 — Other 0.5 0.6 (0.1 ) Total long-term debt 3,118.1 3,283.1 (165.0 ) Less current maturities 23.9 30.3 (6.4 ) Long-term debt, net of current maturities $ 3,094.2 $ 3,252.8 $ (158.6 ) The amount of current maturities includes certain non-extending balances scheduled to be repaid within the next twelve months under the bank credit facilities.Boyd Gaming DebtCredit Facility - Refinancing AmendmentOn 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 FeesThe 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 PrepaymentsThe 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. $ 1,078.5 $ 1,187.8 $ (109.3 ) 1,000.0 1,000.0 — 900.0 900.0 — 0.6 0.7 (0.1 ) 2,979.1 3,088.5 (109.4 ) 44.3 44.3 — $ 2,934.8 $ 3,044.2 $ (109.4 ) September 30, December 31, (In millions) 2017 2016 Revolving Credit Facility $ 135.0 $ 245.0 Term A Loan 213.7 222.2 Refinancing Term B Loans 1,233.2 — Term B-1 Loan — 271.8 Term B-2 Loan — 997.5 Swing Loan 35.7 46.0 Total outstanding principal amounts under the Credit Facility $ 1,617.6 $ 1,782.5 At September 30, 2017, approximately $1.6 billion was outstanding $ 200.0 $ 285.0 825.0 847.0 53.5 55.8 $ 1,078.5 $ 1,187.8 $12.9$53.5 million wasin borrowings outstanding on the Revolving Credit Facility and the Swing Loan, respectively, and $13.8 million allocated to support various letters of credit, leavingthere is a remaining contractual availability under the Credit Facility of $591.4 million.$1,182.7 million as of June 30, 2023. 3.5%6.7% at SeptemberJune 30, 20172023 and 3.4%6.2% at December 31, 2016.2022.rates ranging from 6.375% to 6.875%rate of 4.750%) and principal repayments of our 6.875% senior notes$1.0 billion aggregate principal amount of 4.750% Senior Notes due May 2023,2027 ("4.750% Senior Notes due 2027") and our 6.375% senior notes$0.9 billion aggregate principal amount of 4.750% Senior Notes due April 2026.2031 ("4.750% Senior Notes due 2031").SeptemberJune 30, 2017, we believe that2023, we were in compliance with the financial and other covenants of our debt instruments.essentiallywhich is a ratio of our consolidated EBITDA to fixed charges, including interest) for the trailing four quarter period on a pro forma basis would be at least 2.0 to 1.0. Should this provision prohibit the incurrence of additional debt, we may still borrow under our existing credit facility,Credit Facility to the extent that borrowing capacity remains under that agreement, as well as from other funding sources as provided under our debt agreements.31 $ 415.6 $ 443.7 9,211.4 8,767.9 491.1 534.2 4,017.3 4,136.8 $ 1,859.5 930.6 844.2 789.6 ProgramProgramsstockshare 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 notesSenior Notes and our Credit Facility. Purchases under our stockshare repurchase program can be discontinued at any time at our sole discretion.that we feel additional purchases are not warranted. We intend to fund the repurchases under the stock repurchase program with existing cash resources, cash generated from operations and availability under our Credit Facility. In July 2008,an amendment to our existinga share repurchase program to increase the amount of common stock available to be repurchased to $100 million. The$300.0 million (the "Share Repurchase Program"). In addition, our Board of Directors reaffirmed this program inauthorized increases to the Share Repurchase Program of $500.0 million on June 1, 2022, and $500.0 million on May 2017. We are not obligated to purchase any shares under our stock repurchase program. During the nine months ended September4, 2023. As of June 30, 2017,2023, we repurchased 0.9 million shares of our common stock. There were no common stock repurchases for the nine months ended September 30, 2016. We are currently authorized to repurchase up to an additional $69.9$532.6 million in shares of our common stock under the shareShare Repurchase Program. We are not obligated to repurchase program.any shares under this program, and purchases under the Share Repurchase Program can be discontinued at any time at our sole discretion. We repurchased 1.5 million and 3.0 million shares during the three months ended June 30, 2023 and 2022, respectively, and 3.2 million and 5.1 million shares during the six months ended June 30, 2023 and 2022, respectively. May 2, 2017,February 3, 2022, the Company announced that its Board of Directors had authorized the reinstatement of the Company’sCompany'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 in third quarter of 2017.On September 6, 2017, the Company declared a quarterly dividend of $0.05 per share, to be paid October 15, 2017, to shareholders of record as of September 18, 2017. This dividend was paid after the end of the third quarter of 2017.are: $ 0.15 0.15 0.15 0.16 0.16 flowsbeing generated from our operations and availability under our Revolving Credit Facility, to the extent availabilityborrowing capacity exists after we meet our working capital needs for the next twelve months. Any additional financing that is needed may not be available to us or, if available, may not be on terms favorable to us. The outcome of the specific matters discussed herein, including our commitments and contingencies, may also affect our liquidity.on-goingongoing refurbishment and maintenance at our properties is approximately $240 million to maintain$260 million. We fund our quality standards ranges from between $140 millioncapital expenditures through cash on hand, our Credit Facility and $160 million.operating cash flows.32capital. We continue to work withcapital, including construction of a land-based facility at Treasure Chest which will replace our existing riverboat and renovating the Wilton Rancheria Tribe (the "Tribe"), a federally-recognized Native American tribe located about 30 miles southeast of Sacramento, California, to develop and manage a gaming entertainment complex. In January 2017, we fundedFremont slot floor, the acquisition of land that is the intended sitelast phase of the Wilton Rancheria casino for $35.1 million and, in February 2017, the land was placed into trust by the U.S. BureauFremont project. Both of Indian Affairs for the benefit of the Tribe. In September 2017, the California State Legislature unanimously approved, and the Governor of California executed, a tribal-state gaming compact with the tribe allowing the development of the casino. With the compact now in place, wethese projects are in the process of finalizing project designaddition to our maintenance capital spending, and preparation andwe expect to begin construction mid-2018, with a construction timeline of 18spend $100 million during 2023 related to 24 months.In March 2017, The Orleans Hotel and Casino exercised an option in its lease agreement to purchase the land subject to the lease for $43.0 million and terminated the lease.Including the items above, total capital spending for 2017 is expected to range between $235 million and $255 million. We fund our capital expenditures through our credit facility and operating cash flows.ContingenciesLegal MattersWe are parties to various legal proceedings arising in the ordinary course of business. We believe thatall pending claims, if adversely decided, would not have a material adverse effect on our business, financial position or results of operations.these projects.the outcome of gaming license selection processes;the approval of gaming in jurisdictions where we have been active but where casino gaming is not currently permitted;identification of additional suitable investment opportunities in current gaming jurisdictions; andavailability of acceptable financing. investments and costs we may fund through cash flow from operations or availability under our Credit Facility. To the extent such sources of funds are not sufficient, we may also seek to raise such additional funds through public or private equity or debt financings or from other sources.sources to the extent such financing is available.as defined in Item 303(a)(4)(ii) and described under Part II. Item 7. 20162022, as filed with the SEC on February 23, 2017.24, 2023.PoliciesEstimates other than the adoption of ASU 2017-04, to our critical accounting policies described under Part II. Item 7. periodyear ended December 31, 2016,2022, as filed with the SEC on February 23, 2017.24, 2023.2, • the general effect, and expectation, of the national and global economy on our business, including but not limited to interest rates and inflationary pressures, as well as the economies where each of our properties are located; • the factors that contribute to our ongoing success and our ability to be successful in the future; • impacts caused by the COVID-19 pandemic or any other public health emergencies we may encounter; • our business model, areas of focus and strategy for driving business results; • competition, including expansion of gaming into additional markets including online gaming, the impact of competition on our operations, our ability to respond to such competition, and our expectations regarding continued competition in the markets in which we compete; • our ability to maintain the integrity of our information technology systems and to protect our internal information; indebtedness, including our ability to refinance or pay amounts outstanding under our credit agreement and our unsecured notes, when they become due and our compliance with related covenants, and our expectation that we will need to refinance all or a portion of our respective indebtedness at or before maturity; 33The effectsThe risk that our acquisitions and other expansion opportunities divert management’s attention or incur substantial costs, or that we are otherwise unable to develop, profitably manage or successfully integrate the businesses we acquire.The fact that our expansion, development and renovation projects (including enhancements to improve property performance) are subject to many risks inherent in expansion, development or construction of a new or existing project.The risk that any of our projects may not be completed, if at all, on time or within established budgets, or that any project will result in increased earnings to us.The risk that significant delays, cost overruns, or failures of any of our projects to achieve market acceptance could have a material adverse effect on our business, financial condition and results of operations.The risk that new gaming licenses or jurisdictions become available (or offer different gaming regulations or taxes) that results in increased competition to us.The risk that negative industry or economic trends, reduced estimates of future cash flows, disruptions to our business, slower growth rates or lack of growth in our business, may result in significant write-downs or impairments in future periods.The risk that regulatory authorities may revoke, suspend, condition or limit our gaming or other licenses, impose substantial fines and take other adverse actions against any of our casino operations.The risk that we may be unable to refinance our respective outstanding indebtedness as it comes due, or that if we do refinance, the terms are not favorable to us.The effects of the extensive governmental gaming regulation and taxation policies that we are subject to, as well as any changes in laws and regulations, including increased taxes and imposition of smoking bans, which could harm our business.The effects of federal, state and local laws affecting our business such as the regulation of smoking, the regulation of directors, officers, key employees and partners and regulations affecting business in general.The effects of extreme weather conditions or natural disasters on our facilities and the geographic areas from which we draw our customers, and our ability to recover insurance proceeds (if any).The effects of events adversely impacting the economy or the regions from which we draw a significant percentage of our customers, including the effects of the recent economic recession, war, terrorist or similar activity or disasters in, at, or around our properties.The risk that we fail to adapt our business and amenities to changing customer preferences.Financial community and rating agency perceptions of us, and the effect of economic, credit and capital market conditions on the economy and the gaming and hotel industry.The effect of the expansion of legalized gaming in the regions in which we operate.The risk of failing to maintain the integrity of our information technology infrastructure and our business and customer data.Our estimated effective income tax rates, estimated tax benefits, and merits of our tax positions.Our ability to utilize our net operating loss carryforwards and certain other tax attributes.The risks relating to owning our equity, including price and volume fluctuations of the stock market that may harm the market price of our common stock and the potential of certain of our stockholders owning large interest in our capital stock to significantly influence our affairs.Other statements regarding our future operations, financial condition and prospects, and business strategies.our belief that all pending litigation claims, if adversely decided, will not have a material effect on our business, financial position, results of operations or cash flows; our estimates and expectations regarding anticipated taxes, tax credits or tax refunds; our compliance with government regulations, including our ability to receive and maintain necessary approvals for our projects; our expectations regarding the expansion of sports betting and online wagering; that estimates and assumptions made in the preparation of financial statements in conformity with U.S. Generally Accepted Accounting Principles may differ from actual results; and our estimates as to the effect of any changes in our Consolidated EBITDA on our ability to remain in compliance with certain covenants in the credit agreement. periodyear ended December 31, 2016,2022, and in other current and periodic reports filed from time to time with the SEC. All forward-looking statements in this document are made as of the date hereof, based on information available to us as of the date hereof, and we assume no obligation to update any forward-looking statement.Item 3. Quantitative and Qualitative Disclosures about Market RiskLIBOR rates, and short-term EurodollarSOFR rates, and their potential impact on our long-term debt. We attemptare exposed to limita lesser extent to foreign currency exchange risk for funds held in our Canadian operating and restricted cash accounts. While there is risk of fluctuations in the foreign exchange rate between the Canadian dollar and US dollar, our exposure to interest rate risk by managingis limited given the mixsize of our long-term fixed-rate borrowingsCanadian operations and short-term borrowings under our Credit Facility.the minimal amount of cash held in Canadian bank accounts. A weakening or strengthening of the US dollar to the Canadian dollar by 2x the current conversion rate, would not cause the value of the funds held in the Canadian operating and restricted cash accounts to change significantly. We do not currently utilize derivative financial instruments for trading or speculative purposes.SeptemberJune 30, 2017,2023, our long-term variable-rate borrowings represented approximately 51.9%approximately 36.2% of totaltotal long-term debt. Based on SeptemberJune 30, 20172023 debt levels, a 100 basis point change in the Eurodollar rate or the baseinterest rate would cause our annual interest costs on variable-rate borrowings to change by approximately $16.2$10.8 million. We believe there have been no other material changes in our exposure to market risks as disclosed in our Annual Report on Form 10-K for the year ended December 31, 2022, as filed with the SEC on February 24, 2023.PART II. Other InformationItem 1. Legal Proceedingsor results of operations.Item 1A. Risk FactorsI,I. Item 1A "Risk Factors"1A. Risk Factors in our Annual Report on Form 10-K for the year ended December 31, 2016.Item 2.2. Unregistered Sales of Equity Securities and Use of ProceedsSeptemberJune 30, 2017. For additional information, see below under Share Repurchase Program.Period Total Number of Shares Purchased Average Price Paid Per Share Total Number of Shares Purchased as Part of a Publicly Announced Plan Approximate Dollar Value That May Yet Be Purchased Under the Plan July 1, 2017 through July 31, 2017 153,652 $ 25.36 153,652 $ 77,063,563 August 1, 2017 through August 31, 2017 137,173 26.04 137,173 73,491,702 September 1, 2017 through September 30, 2017 137,904 26.12 137,904 69,889,449 Totals 428,729 428,729 $ 69,889,449 Share Repurchase ProgramOn May 2, 2017, the Company announced that its2023. 433,671 $ 65.35 433,671 $ 104,294,121 539,049 68.04 539,049 567,617,420 519,731 67.36 519,731 532,607,760 1,492,451 $ 67.02 1,492,451 $ 532,607,760 had reaffirmed(the "Share Repurchase Program"). The Board of Directors approved $300.0 million for our Share Repurchase Program on October 21, 2021, and an additional $500.0 million to the Share Repurchase Program on each of June 1, 2022 and May 4, 2023 for a total authorization of $1.3 billion. The Share Repurchase Program has no expiration date.existing share repurchase program, whichdirectors or officers adopted, modified or terminated a Rule 10b5-1 trading arrangement or a non-Rule 10b5-1 trading arrangement during the Company’s fiscal quarter ended June 30, 2023, as of September 30, 2017, had $69.9 million remaining. The share repurchase program does not have an expiration date. We are not obligated to purchase any shares under our stock 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. 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.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.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.are defined under Item 408(a) of Regulation S-K.Item 6.ExhibitsExhibit Number22 DocumentList of ExhibitMethodGuarantor Subsidiaries of Filing2.1 Incorporated by reference to Exhibit 2.122 of the Registrant's QuarterlyAnnual Report on Form 10-Q10-K for the quarteryear ended June 30, 2016.December 31, 2022, filed with the SEC on February 24, 2023 2.2Incorporated by reference to Exhibit 2.2 of the Registrant's Quarterly Report on Form 10-Q for the quarter ended June 30, 2016.2.3Incorporated by reference to Exhibit 2.1 of the Registrant's Current Report on Form 8-K filed with the SEC on June 2, 2016.2.4Incorporated by reference to Exhibit 2.2 of the Registrant's Current Report on Form 8-K filed with the SEC on August 5, 2016.2.5Incorporated by reference to Exhibit 2.2 of the Registrant's Current Report on Form 8-K filed with the SEC on September 27, 2016.31.1 101104 Document Set.The following materials from Boyd Gaming Corporation'sforincluded in the quarter ended September 30, 2017, formatted inExhibit 101 Inline XBRL (eXtensible Business Reporting Language): (i) Condensed Consolidated Balance Sheets as of September 30, 2017 and December 31, 2016, (ii) Condensed Consolidated Statements of Operations for the nine months ended September 30, 2017 and 2016, (iii) Condensed Consolidated Statements of Changes in Stockholders' Equity for the nine months ended September 30, 2017 and 2016, (iv) Condensed Consolidated Statements of Cash Flows for the nine months ended September 30, 2017 and 2016, and (vi) Notes to Condensed Consolidated Financial Statements.Filed electronically herewith Filed electronically herewith37† Exhibits and schedules have been omitted pursuant to Item 601(b)(2)SIGNATURESNovember 7, 2017.August 3, 2023. BOYD GAMING CORPORATIONChief Accounting OfficerBy:/s/ Anthony D. McDuffieAnthony D. McDuffieVice President and Chief Accounting Officer5038