BOYD GAMING CORP - FORM 8-K - EX-99.1 - PRESS RELEASE

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8-K - FORM 8-K - BOYD GAMING CORP	d8k.htm

Exhibit 99.1

BOYD GAMING REPORTS SECOND-QUARTER RESULTS

–Wholly-Owned Operations Post 13% Adjusted EBITDA Growth–

–Midwest and South Region Leads Company with 19% EBITDA Gain–

LAS VEGAS – JULY 27, 2011 – Boyd Gaming Corporation (NYSE: BYD) today reported financial results for the second quarter ended June 30, 2011.

Net revenues were $574.4 million for the second quarter 2011, a decrease of less than 1% from the same quarter in 2010. Total Adjusted EBITDA⁽¹⁾ was $118.4 million for the quarter, up 4.3% from $113.5 million in the prior year.

Our wholly-owned business reported second-quarter 2011 net revenues of $391.6 million, essentially flat with the year-ago period. Net revenues were impacted by the closure of Sam’s Town Tunica for 25 days in May due to flooding along the Mississippi River. Wholly-owned Adjusted EBITDA increased 13.1%, or $9.2 million, to $79.8 million. Borgata, our 50% joint venture, reported second-quarter 2011 net revenues of $182.8 million, down 2.2% from the second quarter of 2010, while Adjusted EBITDA at the property decreased 10.0% to $38.7 million.

For the second quarter 2011, the Company reported a net loss of $3.0 million, or $0.03 per share, compared to net income of $3.4 million, or $0.04 per share, in the same period last year.

Adjusted Earnings⁽¹⁾ for the second quarter 2011 were $0.8 million, or $0.01 per share, compared to earnings of $4.2 million, or $0.05 per share, for the same period in 2010. Certain pre-tax items included in Adjusted Earnings for the second quarter 2011 resulted in a net increase of $6.4 million ($3.8 million, net of tax and noncontrolling interest, or $0.04 per share). By comparison, pre-tax items included in Adjusted Earnings for the second quarter 2010 resulted in a net increase in income of $1.3 million ($0.8 million, net of tax, or $0.01 per share) during the second quarter of 2010. Pre-tax items included in adjusted earnings are listed in a table at the end of this press release.

Commenting on the quarter, Keith Smith, President and Chief Executive Officer of Boyd Gaming, said, “Our results for the second quarter reflect continued positive momentum in our business. The improvements during the quarter were broad-based, as all three operating regions posted year-over-year EBITDA gains, and operating margins in our wholly-owned business rose by 240 basis points. We were especially pleased with the continued strong performance of our Midwest and South properties, which reported a 19% EBITDA gain for the region’s third consecutive quarter of growth.”

(1)

See footnotes at the end of the release for additional information relative to non-GAAP financial measures.

Year-To-Date Results

For the six months ended June 30, 2011, we reported net revenues of $1.14 billion, essentially flat with the six months ended June 30, 2010. Total Adjusted EBITDA was $230.2 million during the period, up slightly from the prior year. ⁽²⁾

During the six-month period 2011, our wholly-owned operations posted net revenues of $787.5 million, essentially flat with the year-ago period; however, wholly-owned Adjusted EBITDA increased 7.4%, or $11.0 million, to $159.8 million. Borgata reported net revenues of $351.8 million during the six months ended June 30, 2011, a decline of 2.8%, while property Adjusted EBITDA fell 13.1% to $70.3 million.

We reported a net loss for the six months ended June 30, 2011 of $6.5 million, or $0.07 per share. By comparison, we reported net income of $11.8 million, or $0.14 per share, for the six months ended June 30, 2010.

Adjusted Earnings for the six months ended June 30, 2011 reflect a loss of $0.5 million, or break-even on a per-share basis, compared to earnings of $13.1 million, or $0.15 per share, during the comparable period in 2010.

(2)

See financial schedules at the end of this release for reconciliations relative to the pro forma effect of the consolidation of Borgata as if such consolidation had occurred as of the beginning of the period presented_.

Key Operations Review

Las Vegas Locals

In our Las Vegas Locals segment, second-quarter 2011 net revenues were $151.8 million, down slightly from the second quarter of 2010. Second-quarter 2011 property Adjusted EBITDA was $38.6 million, up 4.8% from the $36.8 million reported in the same quarter of 2010. Results reflect stable business volumes and effective cost-control measures, as our EBITDA margin rose 140 basis points over the prior-year period.

Downtown

Our Downtown Las Vegas properties generated net revenues of $56.6 million for the second quarter 2011, up 2.5% from $55.2 million in the second quarter 2010. Property Adjusted EBITDA was $9.4 million, a slight increase from the same quarter last year. Net revenue growth in our downtown operations was almost entirely offset by significantly higher fuel costs at our Hawaiian charter service.

Midwest and South

In our Midwest and South region, net revenues were $181.8 million, essentially flat from the year-ago quarter. Property Adjusted EBITDA rose 18.8% to $42.3 million, compared to $35.6 million in the second quarter 2010. Operating results were impacted by the flood-related closure of Sam’s Town Tunica for 25 days in May; however all five other properties in the region reported EBITDA growth in the quarter. EBITDA margin for the region improved by 370 basis points. We saw particularly strong growth at Treasure Chest, Delta Downs and Par-A-Dice.

Borgata

Borgata’s net revenues for the second quarter 2011 were $182.8 million, down 2.2% from $186.9 million in the second quarter 2010, while property Adjusted EBITDA declined 10.0% to $38.7 million, compared to $43.0 million in the comparable period in 2010. Borgata continued to outperform the market despite heightened regional competition, boosting its market share by 80 basis points. The property also posted increases in non-gaming revenue, primarily from

improved hotel ADRs and occupancy. These gains, however, were offset by increased promotional expense.

IP Acquisition Update

The Company is in the final stages of due diligence related to its acquisition of the IP Casino Resort Spa in Biloxi, Mississippi, and expects to complete the process by August 4. Assuming this process is completed satisfactorily, we will pay a $10 million non-refundable deposit to the sellers on this date. We expect to close this transaction early in the fourth quarter.

Conference Call Information

We will host our second-quarter 2011 conference call today, July 27, at 12:00 p.m. Eastern. The conference call number is (888) 679-8040 and the passcode is 61477833. Please call up to 15 minutes in advance to ensure you are connected prior to the start of the call.

The conference call will also be available live on the Internet at www.boydgaming.com, www.streetevents.com, or:

http://phx.corporate-ir.net/phoenix.zhtml?p=irol-eventDetails&c=95703&eventID=4160601

Following the call’s completion, a replay will be available by dialing (888) 286-8010 today, July 27, beginning at 3:00 p.m. Eastern and continuing through Wednesday, August 3. The passcode for the replay is 72194911. The replay will also be available on the Internet at www.boydgaming.com.

The results of Borgata for the period from April 1, 2011 through June 30, 2011 and from April 1, 2010 and June 30, 2010 are included in our condensed consolidated statements of operations for the three months ended June 30, 2011 and 2010, respectively; and its results for the period from January 1, 2011 through June 30, 2011 and from March 24, 2010 through June 30, 2010 are included in our condensed consolidated statements of operations for the six months ended June 30, 2011 and 2010, respectively. The results of LVE are consolidated in our condensed consolidated statements of operations for the three and six months ended June 30, 2011.


	Three Months Ended June 30,						Six Months Ended June 30,
	2011			2010			2011			2010
	(In thousands, except per share data)						(In thousands, except per share data)
Revenues
Gaming	$	486,557		$	490,132		$	968,492		$	840,537
Food and beverage		94,585			94,020			186,662			154,002
Room		60,459			58,671			117,050			90,105
Other		33,276			33,813			66,307			57,635

Gross revenues		674,877			676,636			1,338,511			1,142,279
Less promotional allowances		100,474			98,190			199,162			148,698

Net revenues		574,403			578,446			1,139,349			993,581

Costs and expenses
Gaming		223,173			229,755			449,782			397,860
Food and beverage		50,080			49,149			97,648			81,791
Room		13,514			13,056			26,335			23,106
Other		27,335			27,006			53,574			46,244
Selling, general and administrative		96,783			99,666			192,571			169,944
Maintenance and utilities		36,773			37,970			74,188			62,109
Depreciation and amortization		48,488			55,408			99,072			95,454
Corporate expense		12,264			13,526			25,544			25,615
Preopening expenses		1,741			1,243			3,572			2,306
Write-downs and other items, net		2,262			1,991			6,969			3,592

Total costs and expenses		512,413			528,770			1,029,255			908,021

Operating income from Borgata		—			—			—			8,146

Operating income		61,990			49,676			110,094			93,706


Other expense (income)
Interest income		(20	)		—			(25	)		(4	)
Interest expense, net of amounts capitalized		66,694			34,650			123,985			63,657
Fair value adjustment of derivative instruments		48			—			265			—
(Gain) loss on early retirements of debt, net		—			(1,912	)		20			(3,949	)
Other non-operating expenses from Borgata, net		—			—			—			3,133

Total other expense, net		66,722			32,738			124,245			62,837

Income (loss) before income taxes		(4,732	)		16,938			(14,151	)		30,869
Income taxes		(911	)		(4,912	)		2,197			(9,161	)

Net income (loss)		(5,643	)		12,026			(11,954	)		21,708
Noncontrolling interest		2,692			(8,644	)		5,482			(9,891	)

Net income (loss) attributable to Boyd Gaming Corporation	$	(2,951	)	$	3,382		$	(6,472	)	$	11,817

Basic net income (loss) per common share	$	(0.03	)	$	0.04		$	(0.07	)	$	0.14

Weighted average basic shares outstanding		87,204			86,511			87,181			86,471

Diluted net income (loss) per common share	$	(0.03	)	$	0.04		$	(0.07	)	$	0.14

Weighted average diluted shares outstanding		87,204			86,942			87,181			86,743

The results of Borgata and LVE for the period from April 1, 2011 through June 30, 2011 are included in our condensed consolidated statement of operations for the three months ended June 30, 2011. The following presents the consolidation of these entities into the Boyd Gaming Corporation condensed consolidated GAAP statement of operations for such period. The wholly-owned column reflects the equity method of accounting for Borgata. The consolidating columns are presented for purposes of additional disclosure and as a reconciliation to the current GAAP presentation of Boyd Gaming Corporation.


	Three Months Ended June 30, 2011
	Boyd Gaming Wholly-Owned			Borgata			Borgata Eliminations			Boyd/Borgata Subtotal			LVE (Variable Interest Entity)			LVE Eliminations			Boyd Gaming Consolidated
	(In thousands, except per share data)
Revenues
Gaming	$	324,419		$	162,138		$	—		$	486,557		$	—		$	—		$	486,557
Food and beverage		57,527			37,058			—			94,585			—			—			94,585
Room		30,642			29,817			—			60,459			—			—			60,459
Other		22,680			10,596			—			33,276			2,769			(2,769	)		33,276

Gross revenues		435,268			239,609			—			674,877			2,769			(2,769	)		674,877
Less promotional allowances		43,621			56,853			—			100,474			—			—			100,474

Net revenues		391,647			182,756			—			574,403			2,769			(2,769	)		574,403

Costs and expenses
Gaming		157,724			65,449			—			223,173			—			—			223,173
Food and beverage		32,049			18,031			—			50,080			—			—			50,080
Room		9,761			3,753			—			13,514			—			—			13,514
Other		18,553			8,782			—			27,335			—			—			27,335
Selling, general and administrative		64,084			32,699			—			96,783			—			—			96,783
Maintenance and utilities		21,353			15,386			—			36,739			34			—			36,773
Depreciation and amortization		31,940			16,548			—			48,488			—			—			48,488
Corporate expense		12,264			—			—			12,264			—			—			12,264
Preopening expenses		4,418			92			—			4,510			—			(2,769	)		1,741
Write-downs and other items, net		1,513			749			—			2,262			—			—			2,262

Total costs and expenses		353,659			161,489			—			515,148			34			(2,769	)		512,413

Operating income from Borgata		10,634			—			(10,634	)		—			—			—			—

Operating income		48,622			21,267			(10,634	)		59,255			2,735			—			61,990

Other expense (income)
Interest income		(20	)		—			—			(20	)		—			—			(20	)
Interest expense, net of amounts capitalized		40,059			21,328			—			61,387			5,307			—			66,694
Fair value adjustment of derivative instruments		48			—			—			48			—			—			48
(Gain) loss on early retirements of debt, net		—			—			—			—			—			—			—
Other non-operating expenses from Borgata, net		10,754			—			(10,754	)		—			—			—			—

Total other expense, net		50,841			21,328			(10,754	)		61,415			5,307			—			66,722

Income (loss) before income taxes		(2,219	)		(61	)		120			(2,160	)		(2,572	)		—			(4,732	)
Income taxes		(732	)		(179	)		—			(911	)		—			—			(911	)

Net income (loss)		(2,951	)		(240	)		120			(3,071	)		(2,572	)		—			(5,643	)
Noncontrolling interest		—			—			120			120			955			1,617			2,692

Net income (loss) attributable to Boyd Gaming Corporation	$	(2,951	)	$	(240	)	$	240		$	(2,951	)	$	(1,617	)	$	1,617		$	(2,951	)

Basic net loss per common share	$	(0.03	)																$	(0.03	)

Weighted average basic shares outstanding		87,204																		87,204

Diluted net loss per common share	$	(0.03	)																$	(0.03	)

Weighted average diluted shares outstanding		87,204																		87,204

The following table sets forth the impact of the consolidation of Borgata during the three months ended June 30, 2010. For purposes of this presentation, and consistent with GAAP, Borgata has been consolidated for the period from April 1, 2010 through June 30, 2010. The wholly-owned column reflects the equity method accounting for Borgata. The consolidating columns are presented for purposes of additional disclosure and as a reconciliation to the current GAAP presentation of Boyd Gaming Corporation.


	Three Months Ended June 30, 2010
	Boyd Gaming Corp									Boyd Gaming Corp
	Wholly-Owned			Borgata			Eliminations			Consolidated
	(In thousands, except per share data)
Revenues
Gaming	$	325,602		$	164,530		$	—		$	490,132
Food and beverage		58,026			35,994			—			94,020
Room		30,967			27,704			—			58,671
Other		23,117			10,696			—			33,813

Gross revenues		437,712			238,924			—			676,636
Less promotional allowances		46,158			52,032			—			98,190

Net revenues		391,554			186,892			—			578,446

Costs and expenses
Gaming		162,807			66,948			—			229,755
Food and beverage		31,726			17,423			—			49,149
Room		9,597			3,459			—			13,056
Other		18,391			8,615			—			27,006
Selling, general and administrative		67,825			31,841			—			99,666
Maintenance and utilities		22,324			15,646			—			37,970
Depreciation and amortization		37,172			18,236			—			55,408
Corporate expense		13,526			—			—			13,526
Preopening expenses		1,243			—			—			1,243
Write-downs and other items, net		1,979			12			—			1,991

Total costs and expenses		366,590			162,180			—			528,770

Operating income from Borgata		12,356			—			(12,356	)		—

Operating income		37,320			24,712			(12,356	)		49,676

Other expense (income)
Interest income		—			—			—			—
Interest expense, net of amounts capitalized		29,062			5,588			—			34,650
Gain on early retirements of debt, net		(1,912	)		—			—			(1,912	)
Other non-operating expenses from Borgata, net		3,713			—			(3,713	)		—

Total other expense, net		30,863			5,588			(3,713	)		32,738

Income before income taxes		6,457			19,124			(8,643	)		16,938
Income taxes		(3,075	)		(1,837	)		—			(4,912	)

Net income		3,382			17,287			(8,643	)		12,026
Noncontrolling interest		—			—			(8,644	)		(8,644	)

Net income attributable to Boyd Gaming Corporation	$	3,382		$	17,287		$	(17,287	)	$	3,382

Basic net income per common share	$	0.04								$	0.04

Weighted average basic shares outstanding		86,511									86,511

Diluted net income per common share	$	0.04								$	0.04

Weighted average diluted shares outstanding		86,942									86,942

The results of Borgata and LVE for the period from January 1, 2011 through June 30, 2011 are included in our condensed consolidated statement of operations for the six months ended June 30, 2011. The following presents the consolidation of these entities into the Boyd Gaming Corporation condensed consolidated GAAP statement of operations for such period. The wholly-owned column reflects the equity method of accounting for Borgata. The consolidating columns are presented for purposes of additional disclosure and as a reconciliation to the current GAAP presentation of Boyd Gaming Corporation.


	Six Months Ended June 30, 2011
	Boyd Gaming Wholly-Owned			Borgata			Borgata Eliminations			Boyd/Borgata Subtotal			LVE (Variable Interest Entity)			LVE Eliminations			Boyd Gaming Consolidated
	(In thousands, except per share data)
Revenues
Gaming	$	654,498		$	313,994		$	—		$	968,492		$	—		$	—		$	968,492
Food and beverage		115,139			71,523			—			186,662			—			—			186,662
Room		60,942			56,108			—			117,050			—			—			117,050
Other		46,407			19,900			—			66,307			5,410			(5,410	)		66,307

Gross revenues		876,986			461,525			—			1,338,511			5,410			(5,410	)		1,338,511
Less promotional allowances		89,483			109,679			—			199,162			—			—			199,162

Net revenues		787,503			351,846			—			1,139,349			5,410			(5,410	)		1,139,349

Costs and expenses
Gaming		319,357			130,425			—			449,782			—			—			449,782
Food and beverage		63,692			33,956			—			97,648			—			—			97,648
Room		19,445			6,890			—			26,335			—			—			26,335
Other		37,720			15,854			—			53,574			—			—			53,574
Selling, general and administrative		129,025			63,546			—			192,571			—			—			192,571
Maintenance and utilities		42,420			30,837			—			73,257			931			—			74,188
Depreciation and amortization		63,658			35,414			—			99,072			—			—			99,072
Corporate expense		25,544			—			—			25,544			—			—			25,544
Preopening expenses		8,890			92			—			8,982			—			(5,410	)		3,572
Write-downs and other items, net		1,204			5,765			—			6,969			—			—			6,969

Total costs and expenses		710,955			322,779			—			1,033,734			931			(5,410	)		1,029,255

Operating income from Borgata		14,534			—			(14,534	)		—			—			—			—

Operating income		91,082			29,067			(14,534	)		105,615			4,479			—			110,094

Other expense (income)
Interest income		(25	)		—			—			(25	)		—			—			(25	)
Interest expense, net of amounts capitalized		79,940			38,611			—			118,551			5,434			—			123,985
Fair value adjustment of derivative instruments		265			—			—			265			—			—			265
(Gain) loss on early retirements of debt, net		20			—			—			20			—			—			20
Other non-operating expenses from Borgata, net		19,060			—			(19,060	)		—			—			—			—

Total other expense, net		99,260			38,611			(19,060	)		118,811			5,434			—			124,245

Income (loss) before income taxes		(8,178	)		(9,544	)		4,526			(13,196	)		(955	)		—			(14,151	)
Income taxes		1,706			491			—			2,197			—			—			2,197

Net income (loss)		(6,472	)		(9,053	)		4,526			(10,999	)		(955	)		—			(11,954	)
Noncontrolling interest		—			—			4,527			4,527			955			—			5,482

Net income (loss) attributable to Boyd Gaming Corporation	$	(6,472	)	$	(9,053	)	$	9,053		$	(6,472	)	$	—		$	—		$	(6,472	)

Basic net loss per common share	$	(0.07	)																$	(0.07	)

Weighted average basic shares outstanding		87,181																		87,181

Diluted net loss per common share	$	(0.07	)																$	(0.07	)

Weighted average diluted shares outstanding		87,181																		87,181

The following table sets forth the impact of the consolidation of Borgata during the six months ended June 30, 2010. For purposes of this presentation, and consistent with GAAP, Borgata has been consolidated for the period from March 24, 2010 through June 30, 2010. The wholly-owned column reflects the equity method accounting for Borgata. The consolidating columns are presented for purposes of additional disclosure and as a reconciliation to the current GAAP presentation of Boyd Gaming Corporation.


	Six Months Ended June 30, 2010
	Boyd Gaming Corp Wholly-Owned			Borgata			Eliminations			Boyd Gaming Corp Consolidated
	(In thousands, except per share data)
Revenues
Gaming	$	660,062		$	180,475		$	—		$	840,537
Food and beverage		114,862			39,140			—			154,002
Room		60,153			29,952			—			90,105
Other		46,275			11,360			—			57,635

Gross revenues		881,352			260,927			—			1,142,279
Less promotional allowances		91,439			57,259			—			148,698

Net revenues		789,913			203,668			—			993,581

Costs and expenses
Gaming		326,787			71,073			—			397,860
Food and beverage		61,898			19,893			—			81,791
Room		18,882			4,224			—			23,106
Other		37,051			9,193			—			46,244
Selling, general and administrative		136,644			33,300			—			169,944
Maintenance and utilities		43,987			18,122			—			62,109
Depreciation and amortization		75,593			19,861			—			95,454
Corporate expense		25,615			—			—			25,615
Preopening expenses		2,306			—			—			2,306
Write-downs and other items, net		3,580			12			—			3,592

Total costs and expenses		732,343			175,678			—			908,021

Operating income from Borgata		22,141			—			(13,995	)		8,146

Operating income		79,711			27,990			(13,995	)		93,706

Other expense (income)
Interest income		(4	)		—			—			(4	)
Interest expense, net of amounts capitalized		57,585			6,072			—			63,657
Gain on early retirements of debt, net		(3,949	)		—			—			(3,949	)
Other non-operating expenses from Borgata, net		7,238			—			(4,105	)		3,133

Total other expense, net		60,870			6,072			(4,105	)		62,837

Income before income taxes		18,841			21,918			(9,890	)		30,869
Income taxes		(7,024	)		(2,137	)		—			(9,161	)

Net income		11,817			19,781			(9,890	)		21,708
Noncontrolling interest		—			—			(9,891	)		(9,891	)

Net income attributable to Boyd Gaming Corporation	$	11,817		$	19,781		$	(19,781	)	$	11,817

Basic net income per common share	$	0.14								$	0.14

Weighted average basic shares outstanding		86,471									86,471

Diluted net income per common share	$	0.14								$	0.14

Weighted average diluted shares outstanding		86,743									86,743

The following supplemental pro forma information presents the financial results as if the effective control of Borgata had occurred on January 1, 2010 (rather than on March 24, 2010) for the six months ended June 30, 2010. The wholly-owned column reflects the equity method of accounting for Borgata. This supplemental pro forma information has been prepared for comparative purposes and does not purport to be indicative of what the actual results would have been had the consolidation of Borgata been completed as of the earlier dates, nor are they indicative of any future results.


	Six Months Ended June 30, 2010
	Boyd Gaming Corp Wholly-Owned			Borgata			Eliminations			Boyd Gaming Corp Pro Forma
	(In thousands, except per share data)
Revenues
Gaming	$	660,062		$	318,306		$	—		$	978,368
Food and beverage		114,862			70,357			—			185,219
Room		60,153			54,106			—			114,259
Other		46,275			20,539			—			66,814

Gross revenues		881,352			463,308			—			1,344,660
Less promotional allowances		91,439			101,350			—			192,789

Net revenues		789,913			361,958			—			1,151,871

Costs and expenses
Gaming		326,787			130,934			—			457,721
Food and beverage		61,898			33,393			—			95,291
Room		18,882			6,409			—			25,291
Other		37,051			16,320			—			53,371
Selling, general and administrative		136,644			62,281			—			198,925
Maintenance and utilities		43,987			31,644			—			75,631
Depreciation and amortization		75,593			36,615			—			112,208
Corporate expense		25,615			—			—			25,615
Preopening expenses		2,306			—			—			2,306
Write-downs and other items, net		3,580			80			—			3,660

Total costs and expenses		732,343			317,676			—			1,050,019

Operating income from Borgata		22,141			—			(22,141	)		—

Operating income		79,711			44,282			(22,141	)		101,852

Other expense (income)
Interest income		(4	)		—			—			(4	)
Interest expense, net of amounts capitalized		57,585			11,132			—			68,717
Gain on early retirements of debt		(3,949	)		—			—			(3,949	)
Other non-operating expenses from Borgata, net		7,238			—			(7,238	)		—

Total other expense, net		60,870			11,132			(7,238	)		64,764

Income before income taxes		18,841			33,150			(14,903	)		37,088
Income taxes		(7,024	)		(3,344	)		—			(10,368	)

Net income		11,817			29,806			(14,903	)		26,720
Noncontrolling interest		—			—			(14,903	)		(14,903	)

Net income attributable to Boyd Gaming Corporation	$	11,817		$	29,806		$	(29,806	)	$	11,817

Basic net income per common share	$	0.14								$	0.14

Weighted average basic shares outstanding		86,471									86,471

Diluted net income per common share	$	0.14								$	0.14

Weighted average diluted shares outstanding		86,743									86,743

The following table reconciles adjusted earnings (loss) to net income (loss) as reported in accordance with GAAP.


	Three Months Ended						Six Months Ended
	June 30,						June 30,
	2011			2010			2011			2010
	(In thousands, except per share data)						(In thousands, except per share data)
Net income (loss) attributable to Boyd Gaming Corporation	$	(2,951	)	$	3,382		$	(6,472	)	$	11,817
*Adjustments related to Boyd Gaming:*
Preopening expenses, excluding impact of LVE		4,418			1,243			8,890			2,306
Adjustments to property tax accruals, net		(772	)		—			(3,538	)		—
Write-downs and other items, net		—			1,979			(309	)		3,580
Change in fair value of derivative instruments		48			—			265			—
(Gain) loss on early retirements of debt, net		—			(1,912	)		20			(3,949	)
Acquisition related expenses		370			—			370			—
Tunica flood expenses, net of recoveries		1,143			—			1,143			—

*Adjustments related to Borgata:*
Preopening expenses		92			—			92
Write-downs and other items, net		749			12			5,765			12
Valuation adjustments related to consolidation, net		367			—			(327	)		—
Our share of Borgata’s write-downs and other items, net		—			—			—			34

Total adjustments	$	6,415		$	1,322		$	12,371		$	1,983

Income tax effect for above adjustments	$	(2,093	)	$	(468	)	$	(3,745	)	$	(702	)
Impact on noncontrolling interest, net		(604	)		(6	)		(2,599	)		(6	)

Adjusted earnings (loss)	$	767		$	4,230		$	(445	)	$	13,092

Adjusted earnings (loss) per share (Adjusted EPS)	$	0.01		$	0.05		$	0.00		$	0.15

Weighted average shares outstanding		87,542	(i)		86,942			87,181			86,743

(i)

Reflects weighted average diluted shares outstanding, although GAAP presentation does not consider the effect of common stock equivalents, as such were antidilutive to the net loss, as reported. However, as the GAAP-basis net loss has been adjusted to net adjusted earnings, the dilutive effect is considered above.

The following table illustrates the impact of the above adjustments on earnings per share.


	Three Months Ended						Six Months Ended
	June 30,						June 30,
	2011			2010			2011			2010
Net income (loss) attributable to Boyd Gaming Corporation	$	(0.03	)	$	0.04		$	(0.07	)	$	0.14
*Adjustments related to Boyd Gaming:*
Preopening expenses, excluding impact of LVE		0.05			0.01			0.10			0.03
Adjustments to property tax accruals, net		(0.01	)		—			(0.04	)		—
Write-downs and other items, net		—			0.02			—			0.04
Change in fair value of derivative instruments		—			—			—			—
(Gain) loss on early retirements of debt, net		—			(0.02	)		—			(0.05	)
Acquisition related expenses		0.01			—			—			—
Tunica flood expenses, net of recoveries		0.01			—			0.01			—

*Adjustments related to Borgata:*
Preopening expenses		—			—			—			—
Write-downs and other items, net		0.01			—			0.07			—
Valuation adjustments related to consolidation, net		—			—			—			—
Our share of Borgata’s write-downs and other items, net		—			—			—			—

Total adjustments	$	0.07		$	0.01		$	0.14		$	0.02

Income tax effect for above adjustments		(0.02	)		—			(0.04	)		(0.01	)
Impact on noncontrolling interest		(0.01	)		—			(0.03	)		—

Adjusted earnings (loss) per share	$	0.01		$	0.05		$	0.00		$	0.15

The following table presents Net Revenues and Adjusted EBITDA by operating segment and reconciles Adjusted EBITDA to net income (loss) attributable to Boyd Gaming Corporation on our condensed consolidated statements of operations for the three and six months ended June 30, 2011 and 2010. Note that the results from Dania Jai-Alai are classified as part of total other operating costs and expenses and are not included in Adjusted EBITDA. Additionally, the results for the three and six months ended June 30, 2011, as reported in the table below, reflect the consolidation of Borgata for the entire period and the results for the three and six months ended June 30, 2010 reflect the consolidation of Borgata for the period from March 24, 2010 through June 30, 2010.


	Three Months Ended						Six Months Ended
	June 30,						June 30,
	2011			2010			2011			2010
	(In thousands)						(In thousands)
Net Revenues
Las Vegas Locals	$	151,836		$	153,078		$	306,355		$	309,650
Downtown Las Vegas		56,585			55,183			112,251			109,190
Midwest and South		181,751			181,719			365,881			367,526
Atlantic City		182,756			186,892			351,846			203,668

Reportable Segment Net revenues		572,928			576,872			1,136,333			990,034
Other		1,475			1,574			3,016			3,547

Net revenues	$	574,403		$	578,446		$	1,139,349		$	993,581

Adjusted EBITDA
Las Vegas Locals	$	38,570		$	36,810		$	78,213		$	77,223
Downtown Las Vegas		9,366			9,310			18,370			17,682
Midwest and South		42,276			35,590			83,487			74,869

Wholly-owned property Adjusted EBITDA		90,212			81,710			180,070			169,774
Corporate expense		(10,457	)		(11,171	)		(20,256	)		(20,921	)

Wholly-owned Adjusted EBITDA		79,755			70,539			159,814			148,853
Atlantic City		38,657			42,960			70,339			47,863
Our share of Borgata's operating income before net amortization, preopening and other items		—			—			—			8,180

Adjusted EBITDA	$	118,412		$	113,499		$	230,153		$	204,896

Other operating costs and expenses
Deferred rent		1,032			1,067			2,068			2,135
Depreciation and amortization		48,488			55,408			99,072			95,454
Preopening expenses		1,741			1,243			3,572			2,306
Our share of Borgata's write-downs and other items, net		—			—			—			34
Share-based compensation expense		2,140			2,872			5,953			5,728
Write-downs and other items, net		2,262			1,991			6,969			3,592
Other		759			1,242			2,425			1,941

Total other operating costs and expenses		56,422			63,823			120,059			111,190

Operating income		61,990			49,676			110,094			93,706

Other non-operating items
Interest expense, net		66,674			34,650			123,960			63,653
Fair value adjustment of derivative instruments		48			—			265			—
(Gain) loss on early retirements of debt, net		—			(1,912	)		20			(3,949	)
Our share of Borgata's non-operating expenses, net		—			—			—			3,133

Total other non-operating costs and expenses, net		66,722			32,738			124,245			62,837

Income (loss) before income taxes		(4,732	)		16,938			(14,151	)		30,869
Income taxes		(911	)		(4,912	)		2,197			(9,161	)

Net income (loss)		(5,643	)		12,026			(11,954	)		21,708
Noncontrolling interest		2,692			(8,644	)		5,482			(9,891	)

Net income (loss) attributable to Boyd Gaming Corporation	$	(2,951	)	$	3,382		$	(6,472	)	$	11,817

The following supplemental pro forma information presents the financial results as if the effective control of Borgata had occurred on January 1, 2010, (rather than on March 24, 2010) for the six months ended June 30, 2010. The Boyd Gaming Consolidated column presents results, as consolidated, reflecting the results of Borgata from March 24, 2010 through June 30, 2010. This supplemental pro forma information has been prepared for comparative purposes and does not purport to be indicative of what the actual results would have been had the consolidation of Borgata been completed as of the earlier dates, nor are they indicative of any future results.


	Six Months Ended June 30, 2010
	Boyd Gaming Corp Consolidated			Borgata Stub			Adjustments			Boyd Gaming Corp Pro Forma
	(In thousands)
Net Revenues
Las Vegas Locals	$	309,650		$	—		$	—		$	309,650
Downtown Las Vegas		109,190			—			—			109,190
Midwest and South		367,526			—			—			367,526
Atlantic City		203,668			158,289			—			361,957

Reportable Segment Net revenues		990,034			158,289			—			1,148,323
Other		3,547			—			—			3,547

Net revenues	$	993,581		$	158,289		$	—		$	1,151,870

Adjusted EBITDA
Las Vegas Locals	$	77,223		$	—		$	—		$	77,223
Downtown Las Vegas		17,682			—			—			17,682
Midwest and South		74,869			—			—			74,869

Wholly-owned property Adjusted EBITDA		169,774			—			—			169,774
Corporate expense		(20,921	)		—			—			(20,921	)

Wholly-owned Adjusted EBITDA		148,853			—			—			148,853
Atlantic City		47,863			33,113			—			80,976
Our share of Borgata’s operating income before net amortization, preopening and other items		8,180			—			(8,180	)		—

Adjusted EBITDA	$	204,896		$	33,113		$	(8,180	)	$	229,829

Other operating costs and expenses
Deferred rent		2,135			—			—			2,135
Depreciation and amortization		95,454			16,754			—			112,208
Preopening expenses		2,306			—			—			2,306
Our share of Borgata’s write-downs and other items, net		34			—			(34	)		—
Share-based compensation expense		5,728			—			—			5,728
Write-downs and other items, net		3,592			68			—			3,660
Other		1,941			—			—			1,941

Total other operating costs and expenses		111,190			16,822			(34	)		127,978

Operating income		93,706			16,291			(8,146	)		101,851

Other non-operating items
Interest expense, net		63,653			5,060			—			68,713
Gain on early retirements of debt		(3,949	)		—			—			(3,949	)
Our share of Borgata’s non-operating expenses, net		3,133			—			(3,133	)		—

Total other non-operating costs and expenses, net		62,837			5,060			(3,133	)		64,764

Income before income taxes		30,869			11,231			(5,013	)		37,087
Income taxes		(9,161	)		(1,206	)		—			(10,367	)

Net income		21,708			10,025			(5,013	)		26,720
Noncontrolling interest		(9,891	)		—			(5,012	)		(14,903	)

Net income attributable to Boyd Gaming Corporation	$	11,817		$	10,025		$	(10,025	)	$	11,817

The following table reconciles the presentation of corporate expense on our condensed consolidated statements of operations to the presentation on the accompanying table.


	Three Months Ended						Six Months Ended
	June 30,						June 30,
	2011			2010			2011			2010
	(In thousands)
Corporate expense as reported on our consolidated statements of operations	$	12,264		$	13,526		$	25,544		$	25,615
Corporate share-based compensation expense		(1,807	)		(2,355	)		(5,288	)		(4,694	)

Corporate expense as reported on the accompanying table	$	10,457		$	11,171		$	20,256		$	20,921

The following table reconciles the presentation of our share of Borgata’s operating income on our consolidated statements of operations to the presentation of our share of Borgata’s results on the accompanying table.


	Three Months Ended				Six Months Ended
	June 30,				June 30,
	2011		2010		2011		2010
	(In thousands)
Operating income from Borgata, as reported on our consolidated statements of operations	$	—	$	—	$	—	$	8,146
Our share of write-downs and other items, net		—		—		—		34

Our share of Borgata’s operating income before net amortization, preopening and other items as reported on the accompanying table	$	—	$	—	$	—	$	8,180

The following table presents Borgata's condensed consolidated statements of operations.


	Three Months Ended						Six Months Ended
	June 30,						June 30,
	2011			2010			2011			2010
	(In thousands)						(In thousands)
Revenues
Gaming	$	162,138		$	164,530		$	313,994		$	318,306
Food and beverage		37,058			35,994			71,523			70,357
Room		29,817			27,704			56,108			54,106
Other		10,596			10,696			19,900			20,539

Gross revenues		239,609			238,924			461,525			463,308
Less promotional allowances		56,853			52,032			109,679			101,350

Net revenues		182,756			186,892			351,846			361,958
Costs and expenses
Gaming		65,449			66,948			130,425			130,934
Food and beverage		18,031			17,423			33,956			33,393
Room		3,753			3,459			6,890			6,409
Other		8,782			8,615			15,854			16,320
Selling, general and administrative		32,699			31,841			63,546			62,281
Maintenance and utilities		15,386			15,646			30,837			31,644
Depreciation and amortization		16,548			18,236			35,414			36,615
Preopening expense		92			—			92			—
Write-downs and other items, net		749			12			5,765			80

Total costs and expenses		161,489			162,180			322,779			317,676

Operating income		21,267			24,712			29,067			44,282

Other expense
Interest expense, net of amounts capitalized		21,328			5,588			38,611			11,132

Income (loss) before state income taxes		(61	)		19,124			(9,544	)		33,150
Income taxes		(179	)		(1,837	)		491			(3,344	)

Net income (loss)	$	(240	)	$	17,287		$	(9,053	)	$	29,806

Footnotes and Safe Harbor Statements

Non-GAAP Financial Measures

Regulation G, “Conditions for Use of Non-GAAP Financial Measures,” prescribes the conditions for use of non-GAAP financial information in public disclosures. We believe that our presentations of the following non-GAAP financial measures are important supplemental measures of operating performance to investors: earnings before interest, taxes, depreciation and amortization (EBITDA), Adjusted EBITDA, Adjusted Earnings, Adjusted Earnings Per Share (Adjusted EPS) and certain line items which intentionally exclude the effects of the consolidation of Borgata and/or LVE and/or both. The following discussion defines these terms and why we believe they are useful measures of our performance.

In the accompanying release, and the Company’s periodic reports filed with the Securities and Exchange Commission, Dania Jai-Alai’s results are included as part of total other operating costs and expenses. In addition, as of the same date, we reclassified the reporting of corporate expense to exclude it from our subtotal for Reportable Segment Adjusted EBITDA and include it as part of total other operating costs and expenses. Furthermore, in the Company’s periodic reports, corporate expense is presented to include its portion of share-based compensation expense.

EBITDA and Adjusted EBITDA

EBITDA is a commonly used measure of performance in our industry which we believe, when considered with measures calculated in accordance with GAAP, gives investors a more complete understanding of operating results before the impact of investing and financing transactions and income taxes and facilitates comparisons between us and our competitors. Management has historically adjusted EBITDA when evaluating operating performance because we believe that the inclusion or exclusion of certain recurring and non-recurring items is necessary to provide the most accurate measure of our core operating results and as a means to evaluate period-to-period results. We have chosen to provide this information to investors to enable them to perform more meaningful comparisons of past, present and future operating results and as a means to evaluate the results of core on- going operations. We do not reflect such items when calculating EBITDA; however, we adjust for these items and refer to this measure as Adjusted EBITDA. We have historically reported this measure to our investors and believe that the continued inclusion of Adjusted EBITDA provides consistency in our financial reporting. We use Adjusted EBITDA in this press release because we believe it is useful to investors in allowing greater transparency related to a significant measure used by management in its financial and operational decision-making. Adjusted EBITDA is among the more significant factors in management’s internal evaluation of total company and individual property performance and in the evaluation of incentive compensation related to property management. Management also uses Adjusted EBITDA as a measure in determining the value of acquisitions and dispositions. Adjusted EBITDA is also widely used by management in the annual budget process. Externally, we believe these measures continue to be used by investors in their assessment of our operating performance and the valuation of our company. Adjusted EBITDA reflects EBITDA adjusted for deferred rent, preopening expenses, share-based compensation expense, write-downs and other charges, net, increase in value of derivative instruments, gain on early retirements of debt, other non-operating expenses, and our share of Borgata’s non-operating expenses, preopening expenses and other items and write-downs, net. In addition, Adjusted EBITDA includes corporate expense. A reconciliation of Adjusted EBITDA to net income (loss), based upon GAAP, is included in the financial schedules accompanying this release.

Adjusted Earnings and Adjusted EPS

Adjusted Earnings is net income (loss) before preopening expenses, adjustments to prior-year property taxes, increase in value of derivative instruments, write-downs and other charges, net, gain on early retirements of debt, acquisition-related expenses, expenses related to a property closure due to flooding, other non-operating expenses, valuation adjustments related to the consolidation of Borgata, and our share of Borgata’s preopening expenses and other items and write-downs, net. Adjusted Earnings and Adjusted EPS are presented solely as supplemental disclosures because management believes that they are widely used measures of performance in the gaming industry. A reconciliation of net loss based upon GAAP to Adjusted Earnings and Adjusted EPS are included in the financial schedules accompanying this release.

Pro Forma Effect of Consolidation of Borgata and LVE

The effective change in control of Borgata was triggered at the end of the first quarter 2010; the consolidation of our variable interest in LVE was initially reported during the year ended December 31, 2010, but not in any specific quarter therein. For purposes of comparability throughout this release, certain results reported on a consolidated basis are presented by respective entity or on a Boyd wholly-owned historical basis. Additionally, for further purposes of comparability, certain year to date amounts have been presented on a pro forma basis, as if the consolidation of Borgata had occurred as of the beginning of the period presented (i.e. January 1, for the six months ended June 30, 2010, as applicable).

Limitations on the Use of Non-GAAP Measures

The use of EBITDA, Adjusted EBITDA, Adjusted Earnings, Adjusted EPS and certain other non-GAAP financial measures has certain limitations. Our presentation of EBITDA, Adjusted EBITDA, Adjusted Earnings, Adjusted EPS or certain other non-GAAP financial measures may be different from the presentation used by other companies and therefore comparability may be limited. Depreciation and amortization expense, interest expense, income taxes and other items have been and will be incurred and are not reflected in the presentation of EBITDA or Adjusted EBITDA. Each of these items should also be considered in the overall evaluation of our results. Additionally, EBITDA and Adjusted EBITDA do not consider capital expenditures and other investing activities and should not be considered as a measure of our liquidity. We compensate for these limitations by providing the relevant disclosure of our depreciation and amortization, interest and income taxes, capital expenditures and other items both in our reconciliations to the GAAP financial measures and in our consolidated financial statements, all of which should be considered when evaluating our performance.

EBITDA, Adjusted EBITDA, Adjusted Earnings, Adjusted EPS and certain other non-GAAP financial measures are used in addition to and in conjunction with results presented in accordance with GAAP. EBITDA, Adjusted EBITDA, Adjusted Earnings, Adjusted EPS and certain other non-GAAP financial measures should not be considered as an alternative to net income, operating income, or any other operating performance measure prescribed by GAAP, nor should these measures be relied upon to the exclusion of GAAP financial measures. EBITDA, Adjusted EBITDA, Adjusted Earnings, Adjusted EPS and certain other non-GAAP financial measures reflect additional ways of viewing our operations that we believe, when viewed with our GAAP results and the reconciliations to the corresponding GAAP financial measures, provide a more complete understanding of factors and trends affecting our business than could be obtained absent this disclosure. Management strongly encourages investors to review our financial information in its entirety and not to rely on a single financial measure.

Forward Looking Statements and Company Information

This press release contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. Such statements contain words such as “may,” “will,” “might,” “expect,” “believe,” “anticipate,” “could,” “would,” “estimate,” “continue,” “pursue,” or the negative thereof or comparable terminology, and may include (without limitation) information regarding the Company’s expectations, goals or intentions regarding the economic recovery, continued positive momentum and strong performance in the Company’s business and certain of its properties, and the anticipated timing for the closing of the Company’s pending acquisition of the IP Casino Resort Spa. Forward-looking statements involve certain risks and uncertainties, and actual results may differ materially from those discussed in any such statement. These risks and uncertainties include, but are not limited to: fluctuations in our operating results; recovery of our properties in various markets; the state of the economy and its effect on consumer spending and our results of operations; the satisfaction of various closing conditions to our pending acquisition of the IP Casino Resort Spa; the timing for the economic recovery, its effect on our business and the local economies where our properties are located; consumer reaction to fluctuations in the stock market and economic factors; 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 effects of events adversely impacting the economy or the regions from which we draw a significant percentage of our customers; competition; litigation; financial community and rating agency perceptions of the Company; changes in laws and regulations, including increased taxes; the availability and price of energy, weather, regulation, economic, credit and capital market conditions; and the effects of war, terrorist or similar activity. Additional factors that could cause actual results to differ are discussed under the heading “Risk Factors” and in other sections of the Company’s Quarterly Report on Form 10-Q for the quarter ended March 31, 2011, filed with the SEC, and in the Company’s other current and periodic reports filed from time to time with the SEC. All forward-looking statements in this press release are made as of the date hereof, based on information available to the Company as of the date hereof, and the Company assumes no obligation to update any forward-looking statement.

About Boyd Gaming

Headquartered in Las Vegas, Boyd Gaming Corporation (NYSE: BYD) is a leading diversified owner and operator of 16 gaming entertainment properties located in Nevada, New Jersey, Mississippi, Illinois, Indiana, and Louisiana. Boyd Gaming press releases are available at www.prnewswire.com. Additional news and information on Boyd Gaming can be found at www.boydgaming.com.

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