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 /PRNewswire/ -- Boyd Gaming Corporation (NYSE: BYD) today reported financial results for the second quarter ended June 30, 2011.  

(Logo:  http://photos.prnewswire.com/prnh/20030219/BOYDLOGO)

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

 

Six Months Ended

 
 

June 30,

 

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

         

Boyd Gaming Corp

 
     

Wholly-Owned

 

Borgata

 

Eliminations

 

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

         

Boyd Gaming Corp

 
     

Wholly-Owned

 

Borgata

 

Eliminations

 

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

 

Borgata

     

Boyd Gaming Corp

 
   

Consolidated

 

Stub

 

Adjustments

 

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.

SOURCE Boyd Gaming Corporation