Boyd Gaming Reports Third Quarter Results
PRNewswire-FirstCall
LAS VEGAS
(NYSE:BYD)

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

(Logo: http://www.newscom.com/cgi-bin/prnh/20030219/BOYDLOGO)

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).

  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 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:

  o September 30 debt balance: $2.6 billion
  o September 30 cash: $123.6 million
  o Maintenance capital expenditures during the quarter: $21.4 million
  o 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
      -- 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 http://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 http://www.boydgaming.com/ .

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.
  (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



  (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



  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

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

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



  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.

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 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 http://www.prnewswire.com/. Additional news and information on Boyd Gaming can be found at http://www.boydgaming.com/ .

Photo: NewsCom: http://www.newscom.com/cgi-bin/prnh/20030219/BOYDLOGO
AP Archive: http://photoarchive.ap.org/
PRN Photo Desk, photodesk@prnewswire.com

SOURCE: Boyd Gaming Corporation

CONTACT: Financial, Josh Hirsberg, +1-702-792-7234,
joshhirsberg@boydgaming.com, or Media, Rob Stillwell, +1-702-792-7353,
robstillwell@boydgaming.com, both of Boyd Gaming Corporation

Web site: http://www.boydgaming.com/