-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, SjCd4z2rIf8Ak8WUE1l5ResUfsvBCJ58jFy+5ox/GBjU3nEEWve9R5OidMFu62qs BWuhlS82YpJU0Hs1OWdYxQ== 0000906553-08-000008.txt : 20081028 0000906553-08-000008.hdr.sgml : 20081028 20081028093546 ACCESSION NUMBER: 0000906553-08-000008 CONFORMED SUBMISSION TYPE: 8-K PUBLIC DOCUMENT COUNT: 4 CONFORMED PERIOD OF REPORT: 20081028 ITEM INFORMATION: Results of Operations and Financial Condition ITEM INFORMATION: Financial Statements and Exhibits FILED AS OF DATE: 20081028 DATE AS OF CHANGE: 20081028 FILER: COMPANY DATA: COMPANY CONFORMED NAME: BOYD GAMING CORP CENTRAL INDEX KEY: 0000906553 STANDARD INDUSTRIAL CLASSIFICATION: SERVICES-MISCELLANEOUS AMUSEMENT & RECREATION [7990] IRS NUMBER: 880242733 STATE OF INCORPORATION: NV FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 8-K SEC ACT: 1934 Act SEC FILE NUMBER: 001-12882 FILM NUMBER: 081143662 BUSINESS ADDRESS: STREET 1: 3883 HOWARD HUGHES PARKWAY STREET 2: NINTH FLOOR CITY: LAS VEGAS STATE: NV ZIP: 89169 BUSINESS PHONE: 7027927200 MAIL ADDRESS: STREET 1: 3883 HOWARD HUGHES PARKWAY STREET 2: NINTH FLOOR CITY: LAS VEGAS STATE: NV ZIP: 89169 FORMER COMPANY: FORMER CONFORMED NAME: BOYD GROUP DATE OF NAME CHANGE: 19941130 8-K 1 body8k.htm 8-K October 28, 2008 8K DOC


UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549



FORM 8-K


CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

Date of Report (Date of earliest event reported): October 28, 2008

Boyd Gaming Corporation
(Exact name of registrant as specified in its charter)

Nevada
1-12882
88-0242733
 (State of other jurisdiction of incorporation)
 (Commission File Number)
(I.R.S. Employer Identification Number)

3883 Howard Hughes Parkway, Ninth Floor
Las Vegas, Nevada    89169

(Address of principal executive offices including zip code)

(702) 792-7200
(Registrant's telephone number, including area code)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

o  Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

o  Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

o  Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

o  Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))



Item 2.02    Results of Operations and Financial Condition.

On October 28, 2008, Boyd Gaming Corporation (the "Company") issued a press release announcing its financial results for the three and nine months ended September 30, 2008 and other financial information. A copy of the press release is furnished hereto as Exhibit 99.1 and incorporated herein by reference.

Item 9.01    Financial Statements and Exhibits.

(d) Exhibits.
 99.1

Press Release dated October 28, 2008*

__________

*Pursuant to Item 2.02 of Form 8-K, Exhibit 99.1 shall not be deemed "filed" for purposes of Section 18 of the Securities Act of 1934, nor shall it be deemed incorporated by reference in any filing under the Securities Act of 1933, except as shall be expressly set forth by specific reference in such filing.








SIGNATURE

     Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

Date: October 28, 2008

Boyd Gaming Corporation

  /s/ Josh Hirsberg
Josh Hirsberg
Senior Vice President, Chief Financial Officer and Treasurer








EXHIBIT INDEX

Exhibit

Description

 99.1

Press Release dated October 28, 2008      Also provided in PDF format as a courtesy.








EX-99.1 3 exh99-1.htm PRESS RELEASE October 28, 2008 8K Exhibit 99.1

BOYD GAMING REPORTS THIRD QUARTER RESULTS

LAS VEGAS - OCTOBER 28, 2008 - Boyd Gaming Corporation (NYSE: BYD) today reported financial results for the third quarter ended September 30, 2008.

For the quarter, we reported income from continuing operations of $8.7 million, or $0.10 per share, compared to $31.9 million, or $0.36 per share, in the same period last year. Our results were impacted by a continued deterioration in overall consumer spending, the addition of new competitors near Blue Chip, storm-related closures of Delta Downs and Treasure Chest, and disruption in the Louisiana and Mississippi markets from the Gulf Coast hurricanes.

Adjusted Earnings(1) from continuing operations for the third quarter 2008 were $14.0 million, or $0.16 per share, compared to $38.4 million, or $0.43 per share, for the same period in 2007. During the third quarter 2008, certain pre-tax adjustments, such as preopening expenses and write downs and other charges, reduced income from continuing operations by $9.0 million ($5.3 million, net of tax, or $0.06 per share). By comparison, the third quarter 2007 included certain pre-tax adjustments that had a net effect of reducing income from continuing operations by $10.1 million ($6.5 million, net of tax, or $0.07 per share). Adjusted Earnings for the third quarter 2008 were also adversely impacted by the closures of Treasure Chest and Delta Downs due to the Gulf Coast hurricanes, and reflect a full quarter of capitalized interest related to Echelon.

Net revenues were $426.5 million for the third quarter 2008, compared to $490.1 million for the same quarter in 2007, a decrease of 13.0%. Total Adjusted EBITDA was $101.2 million for the quarter, compared to $144.0 million in the prior year.


Keith Smith, President and Chief Executive Officer of Boyd Gaming, commented on the results, "The dynamics we've been dealing with for the last year continued during the quarter, as our nation's economic downturn accelerated and consumers across the country continued to face new challenges. Fortunately, people are still visiting our casinos, although they are more cautious with their discretionary spending. These are tough economic times, but our balance sheet remains strong, and we continue to produce significant cash flow. We are well-positioned to weather the current economic environment, and we will continue to look for innovative ways to adjust to challenges as they arise."

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

Year-To-Date Results

We reported a loss from continuing operations for the nine months ended September 30, 2008 of $2.2 million, or $0.03 per share, which includes an $84.0 million pre-tax impairment charge, principally related to the write-off of the Dania Jai-Alai intangible license right. By comparison, we reported income from continuing operations of $89.9 million, or $1.01 per share for the nine months ended September 30, 2007. Including discontinued operations, we reported net income for the nine months ended September 30, 2007 of $271.8 million, or $3.07 per share. Net income for the 2007 period includes a $285 million gain on the disposition of the Barbary Coast. There were no such discontinued operations reported during the 2008 period.

Adjusted Earnings from continuing operations for the nine months ended September 30, 2008 were $70.0 million, or $0.80 per share, as compared to $122.3 million, or $1.38 per share for the nine-month period in 2007.

Net revenues were $1.4 billion and $1.5 billion for the nine months ended September 30, 2008 and 2007, respectively. Total Adjusted EBITDA was $348.5 million for the current nine-month period. By comparison, total Adjusted EBITDA for the 2007 period was $443.2 million (or $446.3 million, excluding a $3.2 million estimated retroactive property tax charge for an unanticipated increase in assessed property value at Blue Chip).

2


Key Operations Review

Las Vegas Locals

In our Las Vegas Locals segment, third quarter 2008 net revenues were $181.8 million versus $203.8 million for the third quarter 2007. Third quarter 2008 Adjusted EBITDA was $45.7 million, a 25.5% decrease from the $61.3 million in the same quarter 2007. The decreases reflect lower citywide room rates and the varied economic factors weighing on consumers in the Las Vegas Valley during this difficult period, including continued declines in the local housing market and rising unemployment.

Downtown

Our Downtown Las Vegas properties generated net revenues of $55.6 million and Adjusted EBITDA of $6.9 million for the third quarter 2008, versus $59.3 million and $10.3 million, respectively, for the third quarter 2007. Contributing to the $3.4 million decrease in Adjusted EBITDA were declining economic conditions, as well as a significant reduction in commercial airline seat capacity from Hawaii, which adversely affected leisure travel from this primary feeder market.

Midwest and South

In our Midwest and South region, we recorded $189.1 million in net revenues for the third quarter 2008, compared to $226.9 million for the same period in 2007. Adjusted EBITDA for the current period was $39.1 million, versus $56.4 million in the third quarter 2007. Numerous factors were behind the region's decline, including increased competition and construction disruption at Blue Chip, the storm-related closures of Delta Downs and Treasure Chest, and disruption in the Louisiana and Mississippi markets from the Gulf Coast hurricanes.

The hurricanes adversely and directly impacted two of our three Louisiana operations. Treasure Chest closed Saturday, August 30, for eight days over Labor Day weekend, as the New Orleans area was under mandatory evacuation orders during Hurricane Gustav. Hurricane Ike resulted in a two-day closure starting September 12 at Treasure Chest. At Delta Downs, Gustav forced us to close for six days -- Saturday, August 30 to Thursday, September 4 -- and Hurricane Ike led to a second

3


closure from September 11 to September 17. The hurricane closures totaled 10 days for Treasure Chest and 13 days for Delta Downs, including two full weekends at both properties.

Borgata

Borgata's operating income for the third quarter 2008 was $39.5 million, versus $54.5 million for the third quarter 2007. Net revenues for Borgata were $239.9 million for the third quarter 2008, up slightly compared to the $230.1 million recorded in the same quarter in 2007, due to the addition of The Water Club during the quarter. Adjusted EBITDA was $59.8 million, compared to $72.6 million for the third quarter 2007. The decline was primarily due to poor economic conditions, increased competition from slot operations in Pennsylvania, the addition of new hotel capacity in the Atlantic City market, and higher operating expenses related to the launch of The Water Club.

Paul Chakmak, Executive Vice President and Chief Operating Officer, said, "Like all consumer-driven businesses, we are feeling the impact of the current economic downturn. Although customers have become more selective with their discretionary spending, we believe we've made our product more competitive than ever over the last year. Throughout the Las Vegas region, we've undertaken a campaign to refresh our restaurant offerings and bring in nationally recognized brands. In Atlantic City, The Water Club at Borgata has set a new standard in that market. And at Blue Chip, we will open our new hotel product on January 22 (2009) allowing us to draw customers from more distant markets than before."

Key Financial Statistics

The following is additional information as of and for the three months ended September 30, 2008:

  • September 30 debt balance: $2.6 billion
  • September 30 cash: $123.6 million
  • Maintenance capital expenditures during the quarter: $21.4 million
  • Expansion capital expenditures during the quarter: $177.6 million

— Echelon: $141.3 million
— Blue Chip: $27.0 million
— Other: $9.3 million

  • Capitalized interest during the quarter: $10.8 million

4


  • September 30 debt balance at Borgata: $702.9 million

Conference Call Information

We will host our third quarter 2008 conference call today (Tuesday, October 28) at 12:00 p.m. Eastern. The conference call number is 888.713.4215 and the passcode is 97547527. 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://phx.corporate-ir.net/phoenix.zhtml?p=irol-eventDetails&c=95703&eventID=1983995

Participants may pre-register for the call at https://www.theconferencingservice.com/prereg/key.process?key=PGD9PNM8N

Pre-registrants will be issued a pin number to use when dialing into the live call, which will provide quick access to the conference by skipping the operator sequence upon connection.

Following the call's completion, a replay will be available by dialing 888.286.8010 beginning two hours after the completion of today's call and continuing through Tuesday, November 4. The passcode for the replay will be 45049663. The replay will also be available on the Internet at www.boydgaming.com ..

5


The following table presents Net Revenues and Adjusted EBITDA by operating segment and reconciles Adjusted EBITDA to income (loss) from continuing operations for the three and nine months ended September 30, 2008 and 2007. Note that in the Company's periodic reports filed with the Securities and Exchange Commission, the results from Dania Jai-Alai and corporate expense are classified as part of total other operating costs and expenses and are not included in Reportable Segment Adjusted EBITDA.

      Three Months Ended     Nine Months Ended
      September 30,
    September 30,
      2008
    2007
    2008
    2007
Net Revenues     (In thousands)
     Las Vegas Locals     $ 181,793      $ 203,849      $ 586,183      $ 633,770 
     Downtown Las Vegas (a)     55,578      59,329      179,477      188,146 
     Midwest and South     189,084 
    226,877 
    592,677 
    696,560 
          Net revenues     $ 426,455 
    $ 490,055 
    $ 1,358,337 
    $ 1,518,476 
Adjusted EBITDA                        
     Las Vegas Locals     $ 45,681      $ 61,313      $ 174,763      $ 202,736 
     Downtown Las Vegas     6,900      10,336      27,393      37,373 
     Midwest and South      39,103 
    56,432 
    130,039 
    168,630 
          Wholly-owned property Adjusted EBITDA     91,684      128,081      332,195      408,739 
     Corporate expense (c)     (10,672)
    (11,671)
    (36,103)
    (33,859)
          Wholly-owned Adjusted EBITDA     81,012      116,410      296,092      374,880 
     Our share of Borgata's operating income before net                         
       amortization, preopening and other items (d)     20,167 
    27,620 
    52,416 
    68,270 
          Adjusted EBITDA (e)     101,179 
    144,030 
    348,508 
    443,150 
Other operating costs and expenses                        
     Deferred rent     1,115      1,130      3,345      3,390 
     Depreciation and amortization (f)     41,897      41,764      128,291      124,962 
     Preopening expenses      5,978      5,107      16,764      15,619 
     Our share of Borgata's preopening expenses     417      240      2,926      1,249 
     Our share of Borgata's write-downs and other charges, net     (3)     117      76      284 
     Share-based compensation expense      2,810      3,509      8,845      12,059 
     Write-downs and other charges     3,215 
    1,112 
    94,702 
    12,092 
          Total other operating costs and expenses     55,429 
    52,979 
    254,949 
    169,655 
          Operating income     45,750 
    91,051 
    93,559 
    273,495 
Other non-operating items                        
     Interest expense, net (b)     26,344      34,490      83,754      104,725 
     Decrease (increase) in value of derivative instruments         3,532      (425)     1,007 
     Loss (gain) on early retirements of debt     (616)         (2,429)     16,945 
     Our share of Borgata's non-operating expenses, net     5,154 
    3,402 
    12,889 
    10,777 
          Total other non-operating costs and expenses, net     30,882 
    41,424 
    93,789 
    133,454 
                         
Income (loss) from continuing operations before income taxes      14,868      49,627      (230)     140,041 
Provision for income taxes     (6,170)
    (17,742)
    (2,001)
    (50,110)
                         
          Income (loss) from continuing operations      $ 8,698 
    $ 31,885 
    $ (2,231)
    $ 89,931 

(a)

Includes revenues related to Vacations Hawaii and other travel agency related entities of $9.9 million and $32.3 million for the three and nine months ended September 30, 2008, respectively, and $9.8 million and $32.2 million for the three and nine months ended September 30, 2007, respectively.

(b)

Net of interest income and amounts capitalized.

6


(c)

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     Nine Months Ended
      September 30,
    September 30,
      2008
    2007
    2008
    2007
      (In thousands)
Corporate expense as reported on our condensed                         
     consolidated statements of operations     $ 12,540      $ 14,371      $ 42,323      $ 43,186 
Corporate share-based compensation expense     (1,868)
    (2,700)
    (6,220)
    (9,327)
Corporate expense as reported on the accompanying table      $ 10,672 
    $ 11,671 
    $ 36,103 
    $ 33,859 

(d)

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

      Three Months Ended     Nine Months Ended
      September 30,
    September 30,
      2008
    2007
    2008
    2007
      (In thousands)
Operating income from Borgata, as reported on our                        
     condensed consolidated statements of operations     $ 19,429      $ 26,939      $ 48,441      $ 65,764 
Add back:                        
     Net amortization expense related to our                         
     investment in Borgata     324      324      973      973 
     Our share of preopening expenses     417      240      2,926      1,249 
     Our share of write-downs and other charges, net     (3)
    117 
    76 
    284 
Our share of Borgata's operating income before net                        
     amortization, preopening and other items     $ 20,167 
    $ 27,620 
    $ 52,416 
    $ 68,270 

7


(e)

The following table reconciles Adjusted EBITDA to EBITDA and income (loss) from continuing operations.

      Three Months Ended     Nine Months Ended
      September 30,
    September 30,
      2008
    2007
    2008
    2007
      (In thousands)
Adjusted EBITDA     $ 101,179      $ 144,030      $ 348,508      $ 443,150 
     Deferred rent     1,115      1,130      3,345      3,390 
     Preopening expenses     5,978      5,107      16,764      15,619 
     Our share of Borgata's preopening expenses     417      240      2,926      1,249 
     Our share of Borgata's write-downs and other charges, net     (3)     117      76      284 
     Share-based compensation expense     2,810      3,509      8,845      12,059 
     Write-downs and other charges     3,215      1,112      94,702      12,092 
     Decrease (increase) in value of derivative instruments         3,532      (425)     1,007 
     Loss (gain) on early retirements of debt     (616)         (2,429)     16,945 
     Our share of Borgata's non-operating expenses, net     5,154 
    3,402 
    12,889 
    10,777 
EBITDA     83,109 
    125,881 
    211,815 
    369,728 
     Depreciation and amortization     41,897      41,764      128,291      124,962 
     Interest expense, net     26,344      34,490      83,754      104,725 
     Provision for income taxes     6,170 
    17,742 
    2,001 
    50,110 
                         
          Income (loss) from continuing operations      $ 8,698 
    $ 31,885 
    $ (2,231)
    $ 89,931 

(f)

The following table reconciles the presentation of depreciation and amortization on our condensed consolidated statements of operations to the presentation on the accompanying table.

      Three Months Ended     Nine Months Ended
      September 30,
    September 30,
      2008
    2007
    2008
    2007
      (In thousands)
Depreciation and amortization as reported on our          
     condensed consolidated statements of operations     $ 41,573      $ 41,440      $ 127,318      $ 123,989 
Net amortization expense related to our investment in Borgata     324 
    324 
    973 
    973 
Depreciation and amortization as reported on                        
     the accompanying table     $ 41,897 
    $ 41,764 
    $ 128,291 
    $ 124,962 

8


BOYD GAMING CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(Unaudited)     Three Months Ended     Nine Months Ended
      September 30,
    September 30,
      2008
    2007
    2008
    2007
      (In thousands, except per share data)
Revenues                        
     Gaming     $ 351,788      $ 413,523      $ 1,125,812      $ 1,271,125 
     Food and beverage     59,767      68,277      191,577      205,538 
     Room     33,065      37,529      107,936      116,657 
     Other     28,021 
    29,155 
    89,077 
    95,122 
Gross revenues     472,641      548,484      1,514,402      1,688,442 
Less promotional allowances     46,186 
    58,429 
    156,065 
    169,966 
          Net revenues     426,455 
    490,055 
    1,358,337 
    1,518,476 
                         
Costs and expenses                        
     Gaming     169,045      182,777      518,427      576,024 
     Food and beverage     35,152      40,013      111,008      122,510 
     Room     10,991      11,775      33,594      35,137 
     Other     22,426      22,093      69,001      70,554 
     Selling, general and administrative     73,395      81,164      227,351      239,115 
     Maintenance and utilities     25,819      26,091      72,731      72,519 
     Depreciation and amortization     41,573      41,440      127,318      123,989 
     Corporate expense     12,540      14,371      42,323      43,186 
     Preopening expenses     5,978      5,107      16,764      15,619 
     Write-downs and other charges     3,215 
    1,112 
    94,702 
    12,092 
          Total costs and expenses     400,134 
    425,943 
    1,313,219 
    1,310,745 
                         
Operating income from Borgata     19,429 
    26,939 
    48,441 
    65,764 
          Operating income     45,750 
    91,051 
    93,559 
    273,495 
                         
Other expense (income)                         
     Interest income     (1,056)         (1,069)     (110)
     Interest expense, net of amounts capitalized     27,400      34,490      84,823      104,835 
     Decrease (increase) in value of derivative instruments         3,532      (425)     1,007 
     Loss (gain) on early retirements of debt     (616)         (2,429)     16,945 
     Other non-operating expenses from Borgata, net     5,154 
    3,402 
    12,889 
    10,777 
          Total other expense, net     30,882 
    41,424 
    93,789 
    133,454 
                         
Income (loss) from continuing operations before income taxes     14,868      49,627      (230)     140,041 
Provision for income taxes     (6,170)
    (17,742)
    (2,001)
    (50,110)
          Income (loss) from continuing operations       8,698 
    31,885 
    (2,231)
    89,931 
                         
Discontinued operations:                        
     Income (loss) from discontinued operations (including a                        
          gain on disposition of $285,033 during the                        
          nine months ended September 30, 2007)         (88)         281,584 
     Benefit from (provision for) income taxes    
    31 
   
    (99,709)
          Net income (loss) from discontinued operations    
    (57)
   
    181,875 
Net income (loss)     $ 8,698 
    $ 31,828 
    $ (2,231)
    $ 271,806 
                         
Basic net income (loss) per common share:                        
     Income (loss) from continuing operations     $ 0.10      $ 0.36      $ (0.03)     $ 1.03 
     Net income (loss) from discontinued operations     -  
    (0.00)
    -  
    2.08 
     Net income (loss)     $ 0.10 
    $ 0.36 
    $ (0.03)
    $ 3.11 
                         
Weighted average basic shares outstanding     87,872 
    87,739 
    87,845 
    87,494 
                         
Diluted net income (loss) per common share:                        
     Income (loss) from continuing operations     $ 0.10      $ 0.36      $ (0.03)     $ 1.01 
     Net income (loss) from discontinued operations     -  
    (0.00)
    -  
    2.06 
Net income (loss)     $ 0.10 
    $ 0.36 
    $ (0.03)
    $ 3.07 
                         
Weighted average diluted shares outstanding     87,923 
    88,885 
    87,845 
    88,639 

9


The following table reconciles income (loss) from continuing operations based upon United States generally accepted accounting principles to adjusted earnings and adjusted earnings per share.

      Three Months Ended     Nine Months Ended
      September 30,
    September 30,
      2008
    2007
    2008
    2007
      (In thousands, except per share data)
Income (loss) from continuing operations      $ 8,698      $ 31,885      $ (2,231)     $ 89,931 
     Adjustments:                        
          Preopening expenses     5,978      5,107      16,764      15,619 
          Our share of Borgata's preopening expenses     417      240      2,926      1,249 
          Our share of Borgata's write-downs and other charges, net     (3)     117      76      284 
          Decrease (increase) in value of derivative instruments         3,532      (425)     1,007 
          Loss (gain) on early retirements of debt     (616)         (2,429)     16,945 
          Write-downs and other charges     3,215      1,112      94,702      12,092 
          Blue Chip retroactive property tax adjustment                 3,163 
          Income tax effect for above adjustments     (3,731)
    (3,614)
    (39,365)
    (18,018)
Adjusted earnings     $ 13,958 
    $ 38,379 
    $ 70,018 
    $ 122,272 
                         
Adjusted earnings per diluted share (Adjusted EPS)     $ 0.16 
    $ 0.43 
    $ 0.80 
    $ 1.38 
                         
Weighted average diluted shares outstanding     87,923 
    88,885 
    87,845 
    88,639 

The following table reports Borgata's financial results.

      Three Months Ended     Nine Months Ended
      September 30,
    September 30,
      2008
    2007
    2008
    2007
      (In thousands)
Gaming revenue     $ 207,352      $ 203,885      $ 564,510      $ 569,120 
Non-gaming revenue     95,043 
    79,376 
    237,435 
    217,799 
     Gross revenues     302,395      283,261      801,945      786,919 
Less promotional allowances     62,474 
    53,173 
    154,939 
    151,002 
     Net revenues     239,921      230,088      647,006      635,917 
Expenses     180,139      157,500      486,588      448,297 
Depreciation and amortization     19,445      17,348      55,585      51,080 
Preopening expenses     835      480      5,852      2,498 
Write-downs and other charges, net     (4)
    234 
    153 
    568 
     Operating income     39,506 
    54,526 
    98,828 
    133,474 
                         
Interest expense, net     (8,691)     (7,908)     (20,878)     (23,424)
Benefit from (provision for) state income taxes     (1,616)
    1,104 
    (4,900)
    1,870 
     Total non-operating expenses     (10,307)
    (6,804)
    (25,778)
    (21,554)
Net income     $ 29,199 
    $ 47,722 
    $ 73,050 
    $ 111,920 

10


The following table reconciles our share of Borgata's financial results to the amounts reported on our condensed consolidated statements of operations.

      Three Months Ended     Nine Months Ended
      September 30,
    September 30,
      2008
    2007
    2008
    2007
      (In thousands)
Our share of Borgata's operating income     $ 19,753      $ 27,263      $ 49,414      $ 66,737 
Net amortization expense related to our investment in Borgata     (324)
    (324)
    (973)
    (973)
Operating income from Borgata, as reported on our                        
     condensed consolidated statements of operations     $ 19,429 
    $ 26,939 
    $ 48,441 
    $ 65,764 
                         
Other non-operating net expenses from Borgata, as reported                        
     on our condensed consolidated statements of operations     $ 5,154 
    $ 3,402 
    $ 12,889 
    $ 10,777 

The following table reconciles operating income to Adjusted EBITDA for Borgata.

      Three Months Ended     Nine Months Ended
      September 30,
    September 30,
      2008
    2007
    2008
    2007
      (In thousands)
Operating income     $ 39,506      $ 54,526      $ 98,828      $ 133,474 
     Depreciation and amortization     19,445      17,348      55,585      51,080 
     Preopening expenses     835      480      5,852      2,498 
     Write-downs and other charges, net     (4)
    234 
    153 
    568 
Adjusted EBITDA     $ 59,782 
    $ 72,588 
    $ 160,418 
    $ 187,620 

The following table reconciles Adjusted EBITDA to EBITDA and Net income for Borgata.

      Three Months Ended     Nine Months Ended
      September 30,
    September 30,
      2008
    2007
    2008
    2007
      (In thousands)
Adjusted EBITDA     $ 59,782      $ 72,588      $ 160,418      $ 187,620 
     Preopening expenses     835      480      5,852      2,498 
     Write-downs and other charges, net     (4)
    234 
    153 
    568 
EBITDA     58,951 
    71,874 
    154,413 
    184,554 
     Depreciation and amortization     19,445      17,348      55,585      51,080 
     Interest expense, net     8,691      7,908      20,878      23,424 
     Provision for (benefit from) state income taxes     1,616 
    (1,104)
    4,900 
    (1,870)
Net income     $ 29,199 
    $ 47,722 
    $ 73,050 
    $ 111,920 

 

 

11


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 and Adjusted Earnings Per Share (Adjusted EPS). The following discussion defines these terms and why we believe they are useful measures of our performance.

Note that while the Company will continue to include the results of Dania Jai-Alai and corporate expense in Adjusted EBITDA for purposes of its earnings releases, in filings of the Company's periodic reports with the Securities and Exchange Commission, the results of Dania Jai-Alai and corporate expense are not included in the Company's Reportable Segment Adjusted EBITDA. Effective April 1, 2008, the Company reclassified the reporting of its Midwest and South segment to exclude the results of Dania Jai-Alai, since it does not share similar economic characteristics with our other Midwest and South operations. In the Company's periodic reports, 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 United States Generally Accepted Accounting Principles (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, change in value of derivative instruments, gain/loss on early retirements of debt, and our share of Borgata's non-operating expenses, preopening expenses and write-downs and other charges, net. In addition, Adjusted EBITDA includes the results of Dania Jai-Alai and corporate expense. A reconciliation of Adjusted EBITDA to EBITDA and income (loss) from continuing operations, based upon GAAP, is included in the financial schedules accompanying this release.

Adjusted Earnings and Adjusted EPS

Adjusted Earnings is income (loss) from continuing operations before preopening expenses, change in value of derivative instruments, write-downs and other charges, Blue Chip retroactive property tax adjustment, gain/loss on early retirements of debt, and our share of Borgata's preopening expenses and write-downs and other charges, 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 income (loss) from continuing operations based upon GAAP to Adjusted Earnings and Adjusted EPS are included in the financial schedules accompanying this release.

Limitations on the Use of Non-GAAP Measures 

The use of EBITDA, Adjusted EBITDA, Adjusted Earnings and Adjusted EPS has certain limitations. Our presentation of EBITDA, Adjusted EBITDA, Adjusted Earnings and Adjusted EPS 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.

12


EBITDA, Adjusted EBITDA, Adjusted Earnings and Adjusted EPS are used in addition to and in conjunction with results presented in accordance with GAAP. EBITDA, Adjusted EBITDA, Adjusted Earnings and Adjusted EPS 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 and Adjusted EPS 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 future, including, but not limited to, statements regarding the Company's strategy, expenses, revenue, earnings, cash flow, Adjusted EBITDA, Adjusted Earnings or Earnings Per Share.  In addition, forward-looking statements include statements regarding the effects of competition and construction disruption on Blue Chip's operating results, the slowing economy, the impact of the economic downturn on the Company's various properties and the regions in which they operate, deterioration in consumer spending, strength of the Company's balance sheet and the Company's continuing ability to produce significant cash flow, that the Company is well positioned to weather the current economic environment, that the Company's product offerings are more competitive, that the Company is able to draw customers from distant markets, and that patrons will choose the Company's properties over other gaming properties.  Forward-looking statements also include statements regarding the Company's expectation as to amenities and the date when the new hotel at Blue Chip will open.  Forward- looking statements involve certain risks and uncertainties, and actual results may differ materially from those discussed in any such statement. In particular, the Company can provide no assurances when or if the economy will improve, whether the Company will be able to remain well positioned to weather the current economic environment and whether the Company will be able to remain competitive and attract patrons to its properties.  Further risks include the timing or effects of the Company's delay of construction at Echelon and when, or if, construction will be recommenced, the effect that such delay will have on the Company's business, operations or financial condition, the effect that such delay will have on the Company's joint venture participants, and whether such participants (or other Echelon project participants) will terminate their agreements or arrangements with the Company, or whether any such participants will require any additional fees or terms that may be unfavorable to the Company, whether the Company will be able to reach agreement on any modified terms with its joint venture participants, that Borgata's or Blue Chip's position, performance or demand will change, and the timing, cost, progress or anticipated amenities and features for the Blue Chip expansion project. Additional factors that could cause actual results to differ materially are the following: 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 ability of the Company's joint venture participants to secure favorable financing, if at all) and the effects of war, terrorist or similar activity. In addition, the Company's development and expansion projects are subject to the many risks inherent in the expansion or renovation of an existing enterprise or construction of a new enterprise, including poor performance or non-performance by any of the joint venture partners or other third parties on whom the Company is relying, unanticipated design, construction, regulatory, environmental and operating problems and lack of demand for the Company's projects, as well as unanticipated delays and cost increases, shortages of materials, shortages of skilled labor or work stoppages, unforeseen construction scheduling, engineering, environmental, permitting, construction or geological problems, weather interference, floods, fires or other casualty losses. In addition, the Company's anticipated costs and construction periods for projects are based upon budgets, conceptual design documents and construction schedule estimates prepared by the Company in consultation with its architects and contractors. Many of these costs are estimated at inception of the project and can change over time as the project is built to completion. The cost of any project may vary significantly from initial budget expectations, and the Company may have a limited amount of capital resources to fund cost overruns. If the Company cannot finance cost overruns on a timely basis, the completion of one or more projects may be delayed until adequate funding is available. The Company cannot assure that any project will be completed, if at all, on time or within established budgets, or that any project will result in increased earnings to the Company. Significant delays, cost overruns, or failures of the

13


Company's projects to achieve market acceptance could have a material adverse effect on the Company's business, financial condition and results of operations. Furthermore, the Company's projects may not help it compete with new or increased competition in its markets. Additional factors that could cause actual results to differ are discussed under the heading "Risk Factors" and in other sections of the Company's filings 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.

###

14


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