Boyd Gaming Reports Fourth-Quarter, Full-Year Results

21 February 2012

LAS VEGAS, Feb. 21, 2012 /PRNewswire/ -- Boyd Gaming Corporation (NYSE: BYD) today reported financial results for the fourth quarter and full year ended December 31, 2011.

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Net revenues were $606.7 million for the fourth quarter 2011, an increase of 9.9% from $551.9 million during the same quarter in 2010. Total Adjusted EBITDA(1) rose 14.3% to $114.3 million, compared to $100.0 million in the prior year. These results include the operations of the IP Casino Resort Spa, acquired by the Company on October 4, 2011.

Boyd Gaming's wholly-owned business, including the IP, reported fourth-quarter 2011 net revenues of $428.9 million, up 12.3% from the year-ago period. Wholly-owned Adjusted EBITDA rose 15.9% to $76.4 million. Borgata, the Company's 50% joint venture, reported fourth-quarter 2011 net revenues of $176.4 million, up 4.5% from the fourth quarter of 2010, while Adjusted EBITDA at the property increased 11.0% to $37.9 million.

For the fourth quarter 2011, the Company reported a net loss of $0.5 million, or $0.01 per share, compared to a net loss of $7.1 million, or $0.08 per share, in the same period last year.

Adjusted Earnings(1) for the fourth quarter 2011 were a loss of $2.9 million, or $0.03 per share, compared to a loss of $3.9 million, or $0.05 per share, for the same period in 2010. Certain pre-tax items included in Adjusted Earnings for the fourth quarter 2011 resulted in a net decrease of less than $0.1 million ($2.4 million, net of tax and noncontrolling interest, or $0.02 per share). By comparison, pre-tax items included in Adjusted Earnings for the fourth quarter 2010 resulted in a net increase in income of $4.9 million ($3.2 million, net of tax and noncontrolling interest, or $0.03 per share). 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, "We continued to produce consistent growth across the business in the fourth quarter. Our focus on profitable revenue growth and creating efficiencies allowed us to produce gains in EBITDA every quarter in 2011 and, for the first time in several years, we reported revenue increases in each of our business segments during the quarter. As economic conditions strengthen in our core markets, we are confident that our strategy of keeping a tight rein on costs, generating profitable new revenues and diversifying our sources of cash flow will deliver bottom-line results."

          See footnotes at the end of the release for additional information     (1) relative to non-GAAP financial measures.

Full-Year 2011 Results

For the year ended December 31, 2011, Boyd Gaming reported net revenues of $2.34 billion, an increase of 1.6% from the year ended December 31, 2010. Total Adjusted EBITDA was $466.1 million during the period, an increase of 4.7% from the year 2010. (2) Full-year 2011 results include the operations of the IP, acquired by the Company on October 4, 2011.

During the full-year 2011, the Company's wholly-owned operations posted net revenues of $1.60 billion, up 3.0% from the year-ago period, while wholly-owned Adjusted EBITDA rose 11.7% to $308.0 million. Borgata reported net revenues of $730.3 million during the year ended December 31, 2011, a decline of 1.1%, while property Adjusted EBITDA was down 6.7% to $158.1 million.

The Company reported a net loss for the year ended December 31, 2011 of $3.9 million, or $0.04 per share. By comparison, we reported net income of $10.3 million, or $0.12 per share, for the year ended December 31, 2010.

Adjusted Earnings for the Company for the year ended December 31, 2011 were $1.1 million, or $0.01 per share, compared to earnings of $10.6 million, or $0.12 per share, during the full-year 2010.

                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     (2)       as of the beginning of the period presented.

Key Operations Review

Las Vegas Locals

In the Las Vegas Locals segment, fourth-quarter 2011 net revenues were $152.7 million, up slightly from the fourth quarter of 2010. Fourth-quarter 2011 Adjusted EBITDA increased 8.0% to $36.8 million, marking the region's third consecutive quarter of positive EBITDA comparisons. All four major properties in the region posted year-over-year EBITDA growth, as we improved operating margins by 170 basis points despite a heightened promotional environment.

For the full year 2011, Adjusted EBITDA for the Las Vegas Locals region increased $8.4 million, or 6.1%, to $145.8 million, while net revenues were essentially flat at $605.0 million. More productive marketing initiatives and effective cost-control measures helped drive full-year EBITDA growth.

Downtown

The Company's Downtown Las Vegas properties generated net revenues of $58.7 million for the fourth quarter 2011, up 2.7% from $57.1 million in the fourth quarter 2010. Adjusted EBITDA was $10.8 million, flat with the same quarter last year. EBITDA at the three Downtown properties rose 7.2% during the fourth quarter; however, this strong performance was offset by significantly higher fuel expense associated with the Company's Hawaiian charter service.

During the year ended December 31, 2011, Adjusted EBITDA rose 2.9% to $35.2 million, and net revenues increased 2.8% to $224.3 million. At the property operating level, EBITDA at the three Downtown properties increased $4.1 million, or 9.7%, to $47.6 million.Full-year results benefitted from increased visitation and play by our Hawaiian customer segment, offset almost entirely by higher fuel expense.

Midwest and South

In the Midwest and South region, net revenues were $217.6 million, up 26.1% from the year-ago quarter, while Adjusted EBITDA rose 28.5% to $39.1 million. Regional results reflect the acquisition of the IP, as well as strong operating performances at Blue Chip and Delta Downs. The IP contributed $44.6 million in net revenues and $8.4 million in EBITDA to regional results following our acquisition of the property on October 4.

For the full year 2011, Adjusted EBITDA in the Midwest and South region increased 16.3% to $167.1 million, while revenues rose 5.8% to $771.4 million. Full-year results reflect strong operating performances and margin improvements at a majority of our properties, as well as the addition of the IP to regional operations.

Borgata

Borgata's net revenues for the fourth quarter 2011 were $176.4 million, up 4.5% from the fourth quarter 2010, while Adjusted EBITDA rose 11.0% to $37.9 million in the same period. The EBITDA growth was driven by a 7% increase in gross gaming revenue, as well as a 110 basis point improvement in operating margins. Borgata continued to lead the market, achieving an all-time record market share of 21.2% in the fourth quarter.

For the full year, Borgata's net revenues fell 1.1% to $730.3 million, while Adjusted EBITDA declined 6.7% to $158.1 million. Full-year results were impacted by heightened competition in the region, as well as the three-day hurricane-related closure of the property over a weekend in late August.

Commenting on Company operations, Paul Chakmak, Executive Vice President and Chief Operating Officer of Boyd Gaming, said, "Our strategy of maintaining efficiencies and pursuing profitable revenue growth is succeeding, as shown by our full-year results. We remain focused on developing new ways to enhance the guest experience, and will take an important step in that direction early in the second quarter when we launch an enhanced version of B Connected Online, our award-winning player loyalty website."

Conference Call Information

Boyd Gaming will host its fourth-quarter 2011 conference call today, February 21, at 12:00 p.m. Eastern, on which the Company will provide guidance for the first quarter 2012. The conference call number is (866) 524-3160. 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, or: http://www.videonewswire.com/event.asp?id=84986

Following the call's completion, a replay will be available by dialing (877) 344-7529 today, February 21, beginning at 2:00 p.m. Eastern and continuing through Tuesday, February 28 at 9 a.m. Eastern. The conference number for the replay will be 10009798. The replay will also be available on the Internet at www.boydgaming.com.

The results of Borgata for the period from October 1 through December 31 are included in our condensed consolidated statements of operations for the three months ended December 31, 2011 and 2010, respectively; and its results for the period from January 1, 2011 through December 31, 2011 and from March 24, 2010 through December 31, 2010 are included in the condensed consolidated statements of operations for the years ended December 31, 2011 and 2010, respectively. The results of LVE are consolidated in our condensed consolidated statements of operations for the three months and years ended December 31, 2011 and 2010. The previously reported results for the three months and year ended December 31, 2010 have been revised to reflect the correction of an immaterial error related to the consolidation of LVE. These revisions had no effect on net income, as previously reported in these periods.

                                      Three Months                                        Ended                    Year Ended                                    December 31,                December 31,                                    ------------                ------------                                    2011      2010            2011        2010                                    ----      ----            ----        ----                                      (In thousands, except per share data)     Revenues         Gaming                 $517,328  $468,204      $1,986,644  $1,812,487         Food and          beverage               102,265    92,422         388,148     347,588         Room                     64,328    56,799         246,209     211,046         Other                    34,764    32,008         135,176     123,603                                  ------    ------         -------     -------     Gross      revenues                   718,685   649,433       2,756,177   2,494,724            Less             promotional             allowances          112,011    97,493         419,939     353,825                                 -------    ------         -------     -------                Net                 revenues        606,674   551,940       2,336,238   2,140,899                                 -------   -------       ---------   ---------      Costs and      expenses         Gaming                  243,994   224,357         924,451     859,818         Food and          beverage                51,649    48,359         200,165     180,840         Room                     16,190    12,556          56,111      49,323         Other                    26,716    25,125         108,907      99,458         Selling,          general          and          administrative         106,119    98,576         394,991     369,217         Maintenance          and          utilities               38,399    35,952         153,512     140,722          Depreciation          and          amortization            50,237    51,370         195,343     199,275         Corporate          expense                 12,393    12,225          48,962      48,861         Preopening          expenses                 1,342     2,469           6,634       7,459         Other          operating          charges,          net                      4,789      (219)         14,058       4,713                                   -----      ----          ------       -----                Total costs                 and                 expenses        551,828   510,770       2,103,134   1,959,686      Operating      income      from      Borgata                          -         -               -       8,146     Operating      income                      54,846    41,170         233,104     189,359                                  ------    ------         -------     -------      Other      expense      (income)         Interest          income                      (6)       (1)            (46)         (5)         Interest          expense,          net of          amounts          capitalized             66,663    71,120      250,731     180,558         Fair value          adjustment          of          derivative          instruments                  -       480          265         480          (Gain) loss           on early           retirements           of debt,           net                        48     1,191           14      (2,758)         Gain on          equity          distribution                 -         -               -      (2,535)         Other          income                (10,582)         -         (11,582)    (10,000)         Other non-          operating          expenses          from          Borgata,          net                          -         -            -       3,133                Total other                 expense,                 net              56,123    72,790         239,382     168,873                                  ------    ------         -------     -------      Income      (loss)      before      income      taxes                       (1,277) (31,620)       (6,278)     20,486     Income      taxes                       (1,749)    7,296          (1,721)     (8,236)                                  ------     -----          ------      ------     Net income      (loss)                      (3,026) (24,324)          (7,999)     12,250                                  ------   -------          ------      ------      Noncontrolling      interest                     2,535    17,226           4,145      (1,940)                                   -----    ------           -----      ------     Net income      (loss)      attributable      to Boyd      Gaming      Corporation                  $(491)  $(7,098)     $(3,854)    $10,310                                   =====   =======         =======     =======      Basic net      income      (loss) per      common      share                       $(0.01)   $(0.08)      $(0.04)      $0.12                                  ======    ======          ======       =====      Weighted      average      basic      shares      outstanding                 87,732    86,877       87,339      86,601                                  ======    ======          ======      ======      Diluted net      income      (loss) per      common      share                       $(0.01)   $(0.08)      $(0.04)      $0.12                                  ======    ======          ======       =====      Weighted      average      diluted      shares      outstanding                 87,732    86,877       87,339      86,831                                  ======    ======          ======      ======

The following table sets forth the impact of the consolidation of Borgata and LVE during the three months ended December 31, 2011. For the purposes of this presentation, and consistent with GAAP, Borgata and LVE have both been consolidated for the entire 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 December 31, 2011                                                                 ------------------------------------                                                                                                     LVE                                         Boyd Gaming                                Boyd/         (Variable                                           Wholly-               Borgata           Borgata        Interest         LVE       Boyd Gaming                                            Owned     Borgata Eliminations        Subtotal         Entity)   Eliminations    Consolidated                                        ------------  ------- -------------       --------       ----------  -------------  ------------                                                                (In thousands, except per share data)      Revenues         Gaming                             $359,618  $157,710           $-        $517,328              $-             $-       $517,328         Food and beverage                    67,042    35,223            -         102,265               -              -        102,265         Room                                 36,968    27,360            -          64,328               -              -         64,328         Other                                25,195     9,569            -          34,764           2,724         (2,724)        34,764                                              ------     -----          ---          ------           -----         ------         ------     Gross revenues                          488,823   229,862            -         718,685           2,724         (2,724)       718,685           Less promotional allowances        58,559    53,452            -         112,011               -              -        112,011                                              ------    ------          ---         -------             ---            ---        -------               Net revenues                  430,264   176,410            -         606,674           2,724         (2,724)       606,674                                             -------   -------          ---         -------           -----         ------        -------      Costs and expenses         Gaming                              179,491    64,503            -         243,994               -              -        243,994         Food and beverage                    33,706    17,943            -          51,649               -              -         51,649         Room                                 12,651     3,539            -          16,190               -              -         16,190         Other                                19,360     7,356            -          26,716               -              -         26,716         Selling, general and          administrative                      75,582    30,537            -         106,119               -              -        106,119         Maintenance and utilities            24,677    14,672            -          39,349            (950)             -         38,399         Depreciation and amortization        35,377    14,860            -          50,237               -              -         50,237         Corporate expense                    12,393         -            -          12,393               -              -         12,393         Preopening expenses                   3,929       137            -           4,066               -         (2,724)         1,342         Other operating charges, net          4,150       639            -           4,789               -              -          4,789                                               -----       ---          ---           -----             ---            ---          -----               Total costs and expenses      401,316   154,186            -         555,502            (950)        (2,724)       551,828      Operating income from Borgata            11,112         -      (11,112)              -               -              -              -      Operating income                         40,060    22,224      (11,112)         51,172           3,674              -         54,846                                              ------    ------      -------          ------           -----            ---         ------      Other expense (income)         Interest income                          (6)        -            -              (6)              -              -             (6)         Interest expense, net of          amounts capitalized                 38,638    21,708            -          60,346           6,317              -         66,663         Fair value adjustment of          derivative instruments                   -         -            -               -               -              -              -         Loss on early retirements of          debt, net                                -        48            -              48               -              -             48         Other income                        (10,582)        -            -         (10,582)              -              -        (10,582)         Gain on equity distribution               -         -            -               -               -              -              -         Other non-operating expenses          from Borgata, net                   11,004         -      (11,004)              -               -              -              -               Total other expense, net       39,054    21,756      (11,004)         49,806           6,317              -         56,123                                              ------    ------      -------          ------           -----            ---         ------      Income (loss) before income      taxes                                    1,006       468         (108)          1,366          (2,643)             -         (1,277)     Income taxes                             (1,497)     (252)           -          (1,749)              -              -         (1,749)                                              ------      ----          ---          ------             ---            ---         ------      Net income (loss)                          (491)      216         (108)           (383)         (2,643)             -         (3,026)     Noncontrolling interest                       -         -         (108)           (108)          2,643              -          2,535                                                 ---       ---         ----            ----           -----            ---          -----      Net income (loss) attributable      to Boyd Gaming Corporation               $(491)     $216        $(216)          $(491)             $-             $-          $(491)                                               =====      ====        =====           =====             ===            ===          =====      Basic net income (loss) per      common share                            $(0.01)                                                                              $(0.01)                                              ======                                                                               ======      Weighted average basic shares      outstanding                             87,732                                                                               87,732                                              ======                                                                               ======      Diluted net income (loss) per      common share                            $(0.01)                                                                              $(0.01)                                              ======                                                                               ======      Weighted average diluted shares      outstanding                             87,732                                                                               87,732                                              ======                                                                               ======

The following table sets forth the impact of the consolidation of Borgata and LVE during the three months ended December 31, 2010. For the purposes of this presentation, and consistent with GAAP, Borgata and LVE have both been consolidated for the entire 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. The previously reported results for the three months ended December 31, 2010 have been revised to reflect the correction of an immaterial error related to the consolidation of LVE. These revisions had no effect on net income, as previously reported in this period.

                                                            Three Months Ended December 31, 2010                                                           ------------------------------------                                         Boyd                                                   LVE                                       Gaming                                 Boyd/         (Variable                      Boyd                                       Wholly-             Borgata           Borgata         Interest         LVE         Gaming                                        Owned   Borgata Eliminations        Subtotal         Entity)    Eliminations  Consolidated                                       -------  ------- -------------       --------        ----------  ------------- -------------                                                           (In thousands, except per share data)      Revenues         Gaming                        $319,445  $148,759          $-        $468,204               $-             $-      $468,204         Food and beverage               58,260    34,162           -          92,422                -              -        92,422         Room                            29,795    27,003           -          56,799                -              -        56,799         Other                           22,303     9,705           -          32,008                -              -        32,008                                         ------     -----         ---          ------              ---            ---        ------     Gross revenues                     429,803   219,629           -         649,433                -              -       649,433         Less promotional          allowances                     46,648    50,845           -          97,493                -              -        97,493                                         ------    ------         ---          ------              ---            ---        ------              Net revenues              383,155   168,784           -         551,940                -              -       551,940                                        -------   -------         ---         -------              ---            ---       -------      Costs and expenses         Gaming                         162,044    62,313           -         224,357                -              -       224,357         Food and beverage               31,963    16,396           -          48,359                -              -        48,359         Room                             9,342     3,214           -          12,556                -              -        12,556         Other                           17,446     7,679           -          25,125                -              -        25,125         Selling, general and          administrative                 68,066    30,510           -          98,576                -              -        98,576         Maintenance and utilities       21,376    14,576           -          35,952                -              -        35,952         Depreciation and          amortization                   34,798    16,572           -          51,370                -              -        51,370         Corporate expense               12,225         -           -          12,225                -              -        12,225         Preopening expenses              3,415         -           -           3,415             (946)             -         2,469         Other operating charges,          net                              (204)      (15)          -            (219)               -              -          (219)                                           ----       ---         ---            ----              ---            ---          ----              Total costs and expenses  360,471   151,245           -         511,716             (946)             -       510,770      Operating income from      Borgata                             8,769         -      (8,769)              -                                             -      Operating income                    31,453    17,539      (8,769)         40,224              946              -        41,170                                         ------    ------      ------          ------              ---            ---        ------      Other expense (income)         Interest income                     (1)        -           -              (1)               -              -            (1)         Interest expense, net of          amounts capitalized            33,225    21,791           -          55,016           16,104              -        71,120         Fair value adjustment of          derivative instruments            480         -           -             480                -              -           480         Loss on early retirements          of debt, net                    1,191         -           -           1,191                -              -         1,191         Other income                         -         -           -               -                -              -             -         Gain on equity          distribution                        -         -           -               -                -              -             -         Other non-operating          expenses from Borgata,          net                            10,837         -     (10,837)              -                -              -             -              Total other expense, net   45,732    21,791     (10,837)         56,686           16,104              -        72,790                                         ------    ------     -------          ------           ------            ---        ------      Income (loss) before      income taxes                      (14,279)   (4,251)      2,068         (16,462)         (15,158)             -       (31,620)     Income taxes                         7,181       115           -           7,296                -              -         7,296                                          -----       ---         ---           -----              ---            ---         -----      Net income (loss)                   (7,098)   (4,136)      2,068          (9,166)         (15,158)             -       (24,324)     Noncontrolling interest                  -         -       2,068           2,068           15,158              -        17,226                                            ---       ---       -----           -----           ------            ---        ------      Net income (loss)      attributable to Boyd      Gaming Corporation                $(7,098)  $(4,136)     $4,136         $(7,098)              $-             $-       $(7,098)                                        =======   =======      ======         =======              ===            ===       =======      Basic net income (loss)      per common share                   $(0.08)                                                                             $(0.08)                                         ======                                                                              ======      Weighted average basic      shares outstanding                 86,877                                                                              86,877                                         ======                                                                              ======      Diluted net income (loss)      per common share                   $(0.08)