Boyd Gaming Reports Fourth Quarter, Year-End Results

LAS VEGAS, March 2 /PRNewswire-FirstCall/ -- Boyd Gaming Corporation (NYSE: BYD) today reported financial results for the fourth quarter and full year ended December 31, 2009.  

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

For the quarter, we reported a net loss of $1.0 million, or $0.01 per share, compared to a net loss of $220.8 million, or $2.51 per share, in the same period last year.  Adjusted Earnings(1) for the fourth quarter 2009 were $0.2 million, or less than $0.01 per share, compared to $11.4 million, or $0.13 per share, for the same period in 2008.  

Certain pre-tax items resulted in a net increase in Adjusted Earnings of $2.0 million ($1.2 million, net of tax, or $0.01 per share) during the fourth 2009, including preopening expenses related to Echelon and the write-off of deferred loan fees, offset by gains on retirement of debt.  By comparison, the fourth quarter 2008 included certain pre-tax adjustments that had a net effect of increasing Adjusted Earnings by $271.8 million ($232.2 million, net of tax, or $2.64 per share), primarily related to non-cash impairment charges related to the writedown of goodwill and intangible assets of certain business units acquired in previous years.

Net revenues were $384.9 million for the fourth quarter 2009, compared to $422.6 million for the same quarter in 2008, a decrease of 8.9%.  Total Adjusted EBITDA was $74.0 million for the quarter, a decrease of 21.4% from $94.1 million in the prior year.

Keith Smith, President and Chief Executive Officer of Boyd Gaming, commented on the quarter, "The stabilizing trends we've noted previously continued during the fourth quarter, and we were especially encouraged by our Las Vegas Locals business, which showed sequential improvement from the third quarter.  Visitation to the city continues to grow, reflecting the popularity of Las Vegas as a destination. As the economic recovery accelerates, consumer spending will increase, providing us the opportunity to capitalize on our more efficient business model."

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

Full-Year 2009 Results

We reported net income for the year ended December 31, 2009 of $4.2 million, or $0.05 per share. By comparison, we reported a net loss of $223.0 million, or $2.54 per share, for the year ended December 31, 2008.  Adjusted Earnings for the year ended December 31, 2009 were $31.6 million, or $0.37 per share, compared to $81.4 million, or $0.93 per share, for the full year 2008.

Net revenues were $1.64 billion and $1.78 billion for the years ended December 31, 2009 and 2008, respectively.  Total Adjusted EBITDA was $385.9 million for the year 2009, compared to $442.6 million in the prior year.

Key Operations Review

Las Vegas Locals

In our Las Vegas Locals segment, fourth-quarter 2009 net revenues were $155.0 million versus $176.8 million for the fourth quarter 2008.  Fourth-quarter 2009 Adjusted EBITDA was $34.7 million, a 20.7% decrease from the $43.8 million in the same quarter 2008.  We saw stable visitation at our properties in the Las Vegas Valley, but continued to be impacted by depressed consumer discretionary spending.

Downtown

Our Downtown Las Vegas region reported net revenues of $58.0 million, compared to $60.8 million in the prior year quarter.  Adjusted EBITDA for the fourth quarter was $12.2 million, a 7.7% decrease from the $13.3 million reported in the fourth quarter 2008.  Stronger operating results at our three downtown properties were offset by lower pricing and higher fuel costs associated with our Hawaiian charter service.

Midwest and South

In our Midwest and South region, we recorded $171.9 million in net revenues for the fourth quarter 2009, compared to $185.1 million for the same quarter in 2008.  Adjusted EBITDA for the current period was $28.1 million, a decrease of 22.7% from the $36.3 million reported in the same period of 2008.  In Indiana, Blue Chip reported solid year-over-year growth, which was offset by previously anticipated weakness at our southern Louisiana properties.

Borgata

Net revenues for Borgata were $175.4 million for the fourth quarter 2009, compared to $183.5 million recorded in the same quarter in 2008.  Operating income for the fourth quarter 2009 was $17.1 million, up from $16.5 million in the prior year quarter.  Adjusted EBITDA was $36.4 million, essentially flat with the $36.7 million recorded in the fourth quarter 2008.  Borgata was able to maintain Adjusted EBITDA at prior-year levels despite the impact of severe winter weather in December.

Key Financial Statistics

The following is additional information as of and for the three months ended December 31, 2009:

  • Debt balance: $2.58 billion
  • Cash: $93.2 million
  • Capital expenditures: $15.5 million
  • Debt balance at Borgata: $679.6 million
  • Distribution from Borgata to partners: $89 million

 

Conference Call Information

 

We will host our fourth quarter 2009 conference call today, March 2, at 12:00 p.m. Eastern.  The conference call number is 888.713.4218 and the passcode is 87895430.  Please call up to 15 minutes in advance to ensure you are connected prior to the start of the call.  

The conference call will also be available live on the Internet at www.boydgaming.com or http://phx.corporate-ir.net/phoenix.zhtml?p=irol-eventDetails&c=95703&eventID=2745655

Following the call's completion, a replay will be available by dialing 888.286.8010 today, March 2, beginning two hours after the completion of the call and continuing through Tuesday, March 9.  The passcode for the replay will be 87359864.  The replay will also be available on the Internet at www.boydgaming.com .

    
     
    BOYD GAMING CORPORATION AND SUBSIDIARIES
    CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS                          
                                                                             
                                                                          
                                    Three Months Ended         Year Ended 
                                       December 31,           December 31, 
                                     ---------------        ---------------- 
                                     2009       2008        2009        2008 
                                     ----       ----        ----        ---- 
    Revenues                                     (In thousands)               
      Gaming                       $320,377   $351,664  $1,372,091 $1,477,476 
      Food and beverage              55,950     60,277     229,374    251,854 
      Room                           29,054     32,715     122,305    140,651 
      Other                          24,253     28,497     100,396    117,574 
                                     ------     ------     -------    ------- 
    Gross revenues                  429,634    473,153   1,824,166  1,987,555 
    Less promotional                                                          
     allowances                      44,686     50,523     183,180    206,588 
                                     ------     ------     -------    ------- 
            Net revenues            384,948    422,630   1,640,986  1,780,967 
                                    -------    -------   ---------  --------- 
                                                                              
    Costs and expenses                                                        
      Gaming                        162,710    172,420     664,739    690,847 
      Food and beverage              31,306     33,084     125,830    144,092 
      Room                            9,443     10,257      39,655     43,851 
      Other                          19,110     20,221      77,840     89,222 
      Selling, general                                                        
       and administrative            67,445     72,311     284,937    299,662 
      Maintenance and                                                         
       utilities                     22,185     23,232      92,296     95,963 
      Depreciation and                                                        
       amortization                  39,103     41,679     164,427    168,997 
      Corporate expense              12,540     10,009      47,617     52,332 
      Preopening expenses             3,025      3,501      17,798     20,265 
      Write-downs and                                                         
       other charges, net               365    290,819      41,780    385,521 
                                        ---    -------      ------    ------- 
          Total costs and                                                     
           expenses                 367,232    677,533   1,556,919  1,990,752 
                                    -------    -------   ---------  --------- 
                                                                              
    Operating income                                                          
     from Borgata                     8,205      7,915      72,126     56,356 
                                      -----      -----      ------     ------ 
    Operating                                                                 
     income (loss)                   25,921   (246,988)    156,193   (153,429)
                                     ------   --------     -------   -------- 
                                                                              
    Other expense                                                             
     (income)                                                                 
      Interest income                    (1)        (1)         (6)    (1,070)
      Interest                                                                
       expense, net of                                                        
       amounts                                                                
       capitalized                   33,024     25,323     146,830    110,146 
      Increase in                                                             
       value of                                                               
       derivative                                                             
       instruments                        -          -           -       (425)
      Gain on early                                                           
       retirements of debt           (3,223)   (26,124)    (15,284)   (28,553)
      Other non-                                                              
       operating expenses                 3          -          33          - 
      Other non-                                                              
       operating                                                              
       expenses from                                                          
       Borgata, net                   3,073      3,120      19,303     16,009 
                                      -----      -----      ------     ------ 
            Total other                                                       
             expense, net            32,876      2,318     150,876     96,107 
                                     ------      -----     -------     ------ 
                                                                              
    Income (loss) before                                                      
     income taxes                    (6,955)  (249,306)      5,317   (249,536)
    Benefit from (provision                                      
     for) income taxes                5,931     28,532      (1,076)    26,531 
                                      -----     ------      ------     ------ 
    Net income (loss)               $(1,024) $(220,774)     $4,241   (223,005)
                                    =======  =========      ======  ========= 
                                                                              
    Basic net income                                                          
     (loss) per common share         $(0.01)    $(2.51)      $0.05     $(2.54)
                                     ======     ======       =====     ====== 
                                                                              
    Weighted average basic                                       
     shares outstanding              86,276     87,882      86,429     87,854 
                                     ======     ======      ======     ====== 
                                                                              
    Diluted net income (loss)                                    
     per common share                $(0.01)    $(2.51)      $0.05    $(2.54)
                                     ======     ======       =====     ====== 
                                                                              
    Weighted average                                                          
     diluted shares                                                           
     outstanding                     86,276     87,882      86,517     87,854 
                                     ======     ======      ======     ====== 
                                                                              
    Dividends declared                                                        
     per common share                    $-         $-          $-      $0.30 
                                        ===        ===         ===      ===== 
    
    The following table reconciles the net income (loss) based upon United 
    States generally accepted accounting principles to adjusted earnings and 
    adjusted earnings per share.                             
                                                             
                                                             
                                                             
                                   Three Months Ended          Year Ended    
                                       December 31,           December 31,   
                                     ---------------        ---------------- 
                                     2009       2008        2009        2008 
                                     ----       ----        ----        ---- 
                                                   (In thousands)            
    Net income (loss)              $(1,024) $(220,774)     $4,241   $(223,005)
      Adjustments:                                                           
        Preopening expenses          3,025      3,501      17,798      20,265 
        Our share of                                                         
         Borgata's                                                           
         preopening                                                          
         expenses                        -       (141)        349       2,785 
        Our share of                                                         
         Borgata's other                                                     
         items and write-                                                    
         downs, net                      5          5     (14,303)         81 
        Write-downs and                                                      
         other charges, net            365    290,819      41,780     385,521 
        Increase in                                                       
         value of                                                         
         derivative                                                       
         instruments                     -          -           -        (425)
        Gain on early                                                     
         retirements of debt        (3,223)   (26,124)    (15,284)    (28,553)
        Other non-                                                        
         operating expenses              3          -          33           - 
        Prior period                                                      
         interest expense                                                 
         related to the                                                   
         finalization of                                                  
         our purchase price                                               
         for Dania Jai-Alai              -          -       8,883           - 
        Accelerated                                                    
         interest                                                      
         expense                                                       
         related to our                                                
         bank credit                                                   
         facility amendment          1,813          -       1,813           - 
        Income tax                                                        
         effect for                                                       
         above adjustments            (758)   (39,616)    (13,680)    (78,981)
        Certain one-time                                                  
         permanent tax                                                    
         adjustments                     -      3,745           -       3,745 
                                       ---      -----         ---       ----- 
    Adjusted earnings                 $206    $11,415     $31,630     $81,433 
                                      ====    =======     =======     ======= 
                                                                          
    Adjusted earnings                                                     
     per diluted share                                                    
     (Adjusted EPS)                  $0.00      $0.13       $0.37       $0.93 
                                     =====      =====       =====       ===== 
                                                                          
    Weighted average                                                      
     diluted shares                                                       
     outstanding                    86,276     87,882      86,517      87,854 
                                    ======     ======      ======      ====== 
                                                                          
    
    
    The following table illustrates the impact of the above adjustments on 
    earnings per share. 
    
    
    
                                    Three Months Ended        Year Ended     
                                       December 31,           December 31,    
                                     ---------------        ---------------- 
                                     2009       2008        2009        2008 
                                     ----       ----        ----        ---- 
    Diluted net                                                              
     income (loss)                                                           
     per common share               $(0.01)    $(2.51)      $0.05      $(2.54)
      Adjustments:                                                           
        Preopening expenses           0.04       0.04        0.21        0.23
        Our share of                                                         
         Borgata's                                                           
         preopening                                                          
         expenses                        -          -           -        0.03
        Our share of                                                         
         Borgata's other                                                     
         items and write-                                                    
         downs, net                      -          -       (0.16)          -
        Write-downs and                                                      
         other charges, net              -       3.31        0.48        4.39
        Increase in                                                          
         value of                                                            
         derivative                                                          
         instruments                     -          -           -           -
        Gain on early                                                        
         retirements of debt         (0.04)     (0.30)      (0.17)      (0.32)
        Other non-                                                          
         operating expenses              -          -           -           -
        Prior period                                                         
         interest expense                                                    
         related to the                                                      
         finalization of                                                     
         our purchase price                                                  
         for Dania Jai-Alai              -          -        0.10           -
        Accelerated                                                       
         interest                                                         
         expense                                                          
         related to our                                                   
         bank credit                                                       
         facility amendment           0.02          -        0.02           -
        Income tax                                                        
         effect for                                                          
         above                                                               
         adjustments                 (0.01)     (0.45)      (0.16)      (0.90)
        Certain one-time                                                     
         permanent tax                                                       
         adjustments                     -       0.04           -        0.04
                                       ---       ----         ---        ----
    Adjusted earnings                                                        
     per diluted share                                                       
     (Adjusted EPS)                  $0.00      $0.13       $0.37       $0.93
                                     =====      =====       =====       =====
                                                                             
    
                                
    The following table presents Net Revenues and Adjusted EBITDA by operating
    segment and reconciles Adjusted EBITDA to net income (loss) for the three
    months and year ended December 31, 2009 and 2008.  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         Year Ended     
                                       December 31,           December 31,    
                                     ---------------        ---------------   
                                     2009       2008        2009       2008 
                                     ----       ----        ----       ---- 
                                                 (In thousands)               
    Net Revenues                                                            
      Las Vegas Locals            $154,966   $176,819    $641,941    $763,002
      Downtown Las Vegas (a)        58,049     60,755     229,149     240,232
      Midwest and South            171,933    185,056     769,896     777,733
                                   -------    -------     -------     -------
              Net Revenues        $384,948   $422,630  $1,640,986  $1,780,967
                                  ========   ========  ==========  ==========
                                                                             
    Adjusted EBITDA                                                          
      Las Vegas Locals             $34,736    $43,828    $155,336    $218,591 
      Downtown Las Vegas            12,247     13,264      46,102      40,657 
      Midwest and South             28,081     36,327     161,892     166,366 
                                    ------     ------     -------     ------- 
          Wholly-owned                                                       
           property Adjusted                                                 
           EBITDA                   75,064     93,419     363,330     425,614 
          Corporate expense (c)     (9,581)    (7,391)    (36,934)    (43,494)
                                    ------     ------     -------     ------- 
              Wholly-owned                                                   
               Adjusted EBITDA      65,483     86,028     326,396     382,120 
      Our share of                                                           
       Borgata's                                                             
       operating income                                                      
       before net                                                            
       amortization,                                                         
       preopening and                                                        
       other items (d)               8,535      8,104      59,470      60,520
                                     -----      -----      ------      ------
            Adjusted EBITDA (e)     74,018     94,132     385,866     442,640
                                    ------     ------     -------     -------
                                                                             
    Other operating                                                          
     costs and expenses                                                      
      Deferred rent                  1,088      1,115       4,354       4,460 
      Depreciation and                                                       
       amortization (f)             39,428     42,004     165,725     170,295 
      Preopening expenses            3,025      3,501      17,798      20,265 
      Our share of                                                           
       Borgata's                                                           
       preopening                                                          
       expenses                          -       (141)        349       2,785 
      Our share of                                                         
       Borgata's other                                                   
       items and write-                                                  
       downs, net                        5          5     (14,303)         81 
      Share-based                                                         
       compensation expense          4,186      3,817      13,970      12,662 
      Write-downs and                                                     
       other charges, net              365    290,819      41,780     385,521 
                                       ---    -------      ------     ------- 
          Total other operating                                           
           costs and expenses       48,097    341,120     229,673     596,069 
                                    ------    -------     -------     ------- 
    Operating income (loss)         25,921   (246,988)    156,193    (153,429)
                                    ------   --------     -------    -------- 
                                                                          
    Other non-operating items                                                 
      Interest                                                            
       expense, net (b)             33,023     25,322     146,824     109,076 
      Increase in value of                                                    
       derivative instruments            -          -           -        (425)
      Gain on early                                                      
       retirements of debt          (3,223)   (26,124)    (15,284)    (28,553)
      Other non-operating expenses       3          -          33           - 
      Our share of Borgata's other                                            
       non-operating expenses, net   3,073      3,120      19,303      16,009 
                                     -----      -----      ------      ------ 
          Total other non-                                            
           operating costs and                                        
           expenses                 32,876      2,318     150,876      96,107 
                                    ------      -----     -------      ------ 
                                                                      
    Income (loss) before                                              
     income taxes                   (6,955)  (249,306)      5,317    (249,536)
    Benefit from (provision                                           
     for) income taxes               5,931     28,532      (1,076)     26,531 
                                     -----     ------      ------      ------ 
    Net income (loss)              $(1,024) $(220,774)     $4,241   $(223,005)
                                   =======  =========      ======   ========= 
                                                                      
                                                                      
    (a) Includes revenues related to Vacations Hawaii and other travel agency
        related entities of $8.2 million and $32.3 million for the three 
        months and year ended December 31, 2009, respectively, and $10.5 
        million and $42.7 million for the three months and year ended December
        31, 2008, respectively.
    
    (b) Net of interest income and amounts capitalized.  Interest expense for 
        the year ended December 31, 2009, includes $8.9 million of prior 
        period interest expense (from the March 1, 2007 date of acquisition to
        December 31, 2008) related to the January 2009 amendment to the 
        purchase agreement resulting in the finalization of our purchase price
        for Dania Jai-Alai, as well as $1.8 million in accelerated interest 
        expense related to our bank credit facility amendment.
    
    (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         Year Ended    
                                        December 31,           December 31,  
                                      ---------------        --------------- 
                                      2009       2008        2009       2008 
                                      ----       ----        ----       ---- 
                                                  (In thousands)     
    Corporate expense as                                                 
     reported on our consolidated 
     statements of operations       $12,540    $10,009     $47,617    $52,332 
    Corporate share-based       
     compensation expense            (2,959)    (2,618)    (10,683)    (8,838)
                                     ------     ------     -------     ------ 
    Corporate expense                                                    
     as reported on the                                                  
     accompanying table              $9,581     $7,391     $36,934    $43,494 
                                     ======     ======     =======    ======= 
                                                                         
    (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         Year Ended  
                                        December 31,           December 31, 
                                      ---------------        ----------------
                                      2009       2008        2009        2008
                                      ----       ----        ----        ----
                                                   (In thousands)        
    Operating income from Borgata as 
     reported on our consolidated   
     statements of operations        $8,205     $7,915     $72,126     $56,356
    Add back:                                                                 
      Net amortization                                                        
       expense related to                                                     
       our investment in                                                      
       Borgata                          325        325       1,298       1,298
      Our share of                                                            
       Borgata's                                                              
       preopening                                                             
       expenses                           -       (141)        349       2,785
      Our share of                                                            
       Borgata's other                                                        
       items and write-                                                       
       downs, net                         5          5     (14,303)         81
                                        ---        ---     -------         ---
    Our share of                                                              
     Borgata's operating income                   
     before net amortization,                     
     preopening and other items                            
     as reported on the                                                       
     accompanying table              $8,535     $8,104     $59,470     $60,520
                                     ======     ======     =======     =======
    
     (e) The following table reconciles Adjusted EBITDA to EBITDA and net
         income (loss).
         
         
         
                                     Three Months Ended         Year Ended    
                                        December 31,           December 31,   
                                      ---------------        ---------------- 
                                      2009       2008        2009        2008 
                                      ----       ----        ----        ---- 
                                                  (In thousands)               
    Adjusted EBITDA                 $74,018    $94,132    $385,866   $442,640 
      Deferred rent                   1,088      1,115       4,354      4,460 
      Preopening expenses             3,025      3,501      17,798     20,265 
      Our share of Borgata's 
       preopening expenses                -       (141)        349      2,785
      Our share of                                                           
       Borgata's other                                                       
       items and write-                                                      
       downs, net                         5          5     (14,303)        81
      Share-based compensation                                               
       expense                        4,186      3,817      13,970     12,662 
      Write-downs and                                                        
       other charges, net               365    290,819      41,780    385,521 
      Increase in value of                                                   
       derivative instruments             -          -           -       (425)
      Gain on early                                                          
       retirements of debt           (3,223)   (26,124)    (15,284)   (28,553)
      Other non-operating expenses        3          -          33          - 
      Our share of Borgata's                                                 
       other non-operating                                                   
       expenses, net                  3,073      3,120      19,303     16,009 
                                      -----      -----      ------     ------ 
    EBITDA                           65,496   (181,980)    317,866     29,835 
                                     ------   --------     -------     ------ 
      Depreciation and                                                      
       amortization                  39,428     42,004     165,725    170,295 
      Interest expense, net          33,023     25,322     146,824    109,076 
      Benefit from (provision                                               
       for) income taxes             (5,931)   (28,532)      1,076    (26,531)
                                     ------    -------       -----     ------ 
    Income (loss) from                                                      
     continuing operations          $(1,024) $(220,774)     $4,241  $(223,005)
                                    =======  =========      ======   ======== 
    
    (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        Year Ended      
                                       December 31,           December 31,    
                                     ---------------        ---------------- 
                                     2009       2008        2009        2008 
                                     ----       ----        ----        ---- 
                                                  (In thousands)             
    Depreciation and                                                        
     amortization as reported on                                            
     our consolidated statements 
     of operations                  $39,103    $41,679    $164,427    $168,997
    Net amortization expense 
     related to our investment in                                           
     Borgata                            325        325       1,298       1,298
                                        ---        ---       -----       -----
    Depreciation and amortization                                           
     as reported on the                                                     
     accompanying table             $39,428    $42,004    $165,725    $170,295
                                    =======    =======    ========    ========
                                                                            
                                                                            
    
    The following table reports Borgata's financial results.
    
                                                                             
                                   Three Months Ended         Year Ended     
                                       December 31,           December 31,   
                                     ---------------        ---------------- 
                                     2009       2008        2009        2008 
                                     ----       ----        ----        ---- 
                                                   (In thousands)           
    
    Gaming revenue                 $153,387   $169,796    $691,428   $734,306 
    Non-gaming revenue               68,508     72,722     299,173    310,157 
                                     ------     ------     -------    ------- 
    Gross revenues                  221,895    242,518     990,601  1,044,463 
    Less promotional allowances      46,487     59,035     213,193    213,974 
                                     ------     ------     -------    ------- 
        Net revenues                175,408    183,483     777,408    830,489 
                                    -------    -------     -------    ------- 
    Expenses                        138,960    146,765     579,749    633,353 
    Depreciation and                                                      
     amortization                    19,380     20,511      78,719     76,096 
    Preopening expenses                   -       (282)        699      5,570 
    Write-downs and other                                                 
     items, net                          10          9     (28,606)       162 
                                        ---        ---     -------        --- 
    Operating income                 17,058     16,480     146,847    115,308 
                                     ------     ------     -------    ------- 
    Interest expense, net            (5,787)    (8,171)    (27,668)   (29,049)
    State income tax                                                      
     (provision) benefit               (359)     1,930     (10,938)    (2,970)
                                       ----      -----     -------     ------ 
        Total non-operating                                           
         expenses                    (6,146)    (6,241)    (38,606)   (32,019)
                                     ------     ------     -------    ------- 
    Net income                      $10,912    $10,239    $108,241    $83,289 
                                    =======    =======    ========    ======= 
    
    
    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        Year Ended   
                                        December 31,          December 31,  
                                      ---------------        -------------- 
                                      2009       2008        2009      2008 
                                      ----       ----        ----      ---- 
                                                   (In thousands)           
    Our share of Borgata's 
     operating income                $8,530     $8,240     $73,424    $57,654
    Net amortization                                                         
     expense related to                                                      
     our investment in                                                       
     Borgata                           (325)      (325)     (1,298)    (1,298)
                                       ----       ----      ------     ------
    Operating income from                                                    
     Borgata, as reported on                                                 
     our consolidated                                                        
     financial statements            $8,205     $7,915     $72,126    $56,356
                                     ======     ======     =======    =======
                                                                             
    Other non-operating                                                      
     expenses from                                                           
     Borgata, as reported on                                                 
     our consolidated                                                        
     financial statements            $3,073     $3,120     $19,303    $16,009
                                     ======     ======     =======    =======
                                                                             
                                                                             
                                                                             
    The following table reconciles operating income to Adjusted EBITDA for 
    Borgata.
                                                                             
                                     Three Months Ended       Year Ended     
                                        December 31,          December 31,   
                                      ---------------       ---------------- 
                                      2009       2008       2009        2008 
                                      ----       ----       ----        ---- 
                                                  (In thousands)              
    Operating income                $17,058    $16,480    $146,847    $115,308
      Depreciation and                                                        
       amortization                  19,380     20,511      78,719      76,096
      Preopening expenses                 -       (282)        699       5,570
      Write-downs and other                                                   
       items, net                        10          9     (28,606)        162
                                        ---        ---     -------         ---
    Adjusted EBITDA                 $36,448    $36,718    $197,659    $197,136
                                    =======    =======    ========    ========
                                                                              
    
    
    The following table reconciles Adjusted EBITDA to EBITDA and net income 
    for Borgata.
                                                                              
                                     Three Months Ended        Year Ended     
                                        December 31,           December 31,   
                                      ---------------        ---------------- 
                                      2009       2008        2009        2008 
                                      ----       ----        ----        ---- 
                                                  (In thousands)              
    Adjusted EBITDA                 $36,448    $36,718    $197,659    $197,136
      Preopening expenses                 -       (282)        699       5,570
      Other items                                                             
       and write-downs, net              10          9     (28,606)        162
                                        ---        ---     -------         ---
    EBITDA                           36,438     36,991     225,566     191,404
                                     ------     ------     -------     -------
      Depreciation and                                                        
       amortization                  19,380     20,511      78,719      76,096
      Interest                                                                
       expense, net                   5,787      8,171      27,668      29,049
      State income tax                                                        
       (provision) benefit              359     (1,930)     10,938       2,970
                                        ---     ------      ------       -----
    Net income                      $10,912    $10,239    $108,241     $83,289
                                    =======    =======    ========     =======
    

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, 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 the results of Dania Jai-Alai and corporate expense.  A reconciliation of Adjusted EBITDA to EBITDA and 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, increase in value of derivative instruments, write-downs and other charges, net, gain on early retirements of debt, prior period interest expense related to the finalization of our purchase price for Dania Jai-Alai, accelerated interest expense related to our bank credit facility amendment, certain one-time permanent tax readjustments, other non-operating expenses, 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.  

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 that Las Vegas continues to be an extremely popular destination, the viability of the Las Vegas market, and statements regarding current economic conditions, that customer spending will increase, industry growth and related opportunities, the Company's resources and strategy, and future outlook. 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, the timing for resuming construction on Echelon, if at all, the future plans for Echelon and the site for Echelon and whether the Company will be able to remain well positioned to manage through the current economic cycle. Further risks include the timing or effects of the Company's delay of construction at Echelon and when, or if, construction will be recommenced, or the effect that such delay will have on the Company's business, operations or financial condition. 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 projects are subject to the many risks inherent in the 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 Quarterly Report on Form 10-Q for the quarter ended September 30, 2009, 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