Boyd Gaming Reports Third Quarter Results

LAS VEGAS, Oct. 25 /PRNewswire-FirstCall/ -- Boyd Gaming Corporation (NYSE: BYD) today reported financial results for the third quarter ended September 30, 2010.  

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

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

For the quarter, we reported net income of $5.6 million, or $0.06 per share, compared to net income of $6.3 million, or $0.07 per share, in the same period last year.  Certain pre-tax items resulted in a net decrease in income of $7.5 million ($4.2 million, net of tax, or $0.04 per share) during the third quarter 2010.  By comparison, the third quarter 2009 included certain pre-tax items that had a net effect of increasing net income by $1.3 million ($1.7 million, net of tax, or $0.02 per share).  Pre-tax items in the third quarter 2010 and 2009 are listed in a table at the end of this press release.

Adjusted Earnings(1) for the third quarter 2010 were $1.4 million, or $0.02 per share, compared to $8.0 million, or $0.09 per share, for the same period in 2009.  

Net revenues were $595.4 million for the third quarter 2010, compared to $620.8 million(2) during the same quarter in 2009, a decrease of 4.1%.  Total Adjusted EBITDA was $115.4 million for the quarter, a decrease of 18.2% from $141.0 million(2) in the prior year.

Commenting on the quarter, Keith Smith, President and Chief Executive Officer of Boyd Gaming, said, "We saw both stabilization and improvement in our business, as we reported the smallest declines in revenues and EBITDA since the third quarter of 2009.  We are encouraged by our results so far in October, and expect fourth-quarter comparisons will be the best of the year.  As conditions improve, we remain focused on deleveraging our balance sheet and controlling costs, ensuring we will be well-positioned to capitalize on the opportunities presented by a recovering economy."

(1)

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

 

(2)

See financial schedules at the end of this release for reconciliations relative to the pro forma effect of the consolidation of Borgata as if such consolidation had occurred as of the beginning of the period presented.

 
   

 

Year-To-Date Results

We reported net income for the nine months ended September 30, 2010 of $17.4 million, or $0.20 per share. By comparison, we reported net income of $5.3 million, or $0.06 per share for the nine months ended September 30, 2009.  

Adjusted Earnings for the nine months ended September 30, 2010 were $14.5 million, or $0.17 per share, compared to $31.4 million, or $0.36 per share for the nine-month period in 2009.

Net revenues as reported were $1.59 billion and $1.26 billion for the nine months ended September 30, 2010 and September 30, 2009, respectively. Total Adjusted EBITDA was $320.3 million for the current nine-month period, as compared to $314.2 million in the prior-year period. The periods ended September 30, 2010 reflect the consolidation of Borgata, effective March 24, 2010. Given the proforma effect of the consolidation of Borgata, as of the beginning of the nine-month periods ended September 30, 2010 and 2009, net revenues were $1.75 billion and $1.86 billion, respectively, and Adjusted EBITDA on a comparable basis was $345.2 million and $424.5 million for those periods, respectively.

Key Operations Review

Las Vegas Locals

In our Las Vegas Locals segment, third quarter 2010 net revenues were $145.6 million versus $150.7 million for the third quarter of 2009.  Third quarter 2010 Adjusted EBITDA was $26.1 million, versus $31.4 million in the same quarter of 2009.  As expected, we saw trends similar to the second quarter, as consumers remained cautious with discretionary spending.  However, in actual dollars, the Adjusted EBITDA decline matches the smallest quarterly gap in the last two years.  Although spend-per-visit was lower, visitation to our Las Vegas Locals properties remained strong.

Downtown

Our Downtown Las Vegas properties generated net revenues of $51.9 million for the third quarter 2010, compared to $54.9 million in the third quarter 2009. Adjusted EBITDA was $5.7 million, down from $8.7 million in the third quarter 2009.  Results reflect lower spend-per-visit, combined with lower ticket prices and increased fuel costs associated with our Hawaiian charter business. There is evidence of a strengthening recovery in Hawaii's tourism economy, which bodes well for our Hawaiian visitation.

Midwest and South

In our Midwest and South region, we recorded $188.7 million in net revenues for the third quarter 2010, compared to $190.9 million for the same period in 2009.  Adjusted EBITDA for the current period was $38.4 million, a decrease of 9.9% from the $42.6 million reported in the third quarter of 2009.  The region delivered the best revenue and EBITDA comparisons so far this year, as our Louisiana properties made considerable progress toward closing the gap on their strong 2009 results.  In addition, we maintained or increased market share at all six properties in the region.

Borgata

Borgata's net revenues for the third quarter 2010 were $207.7 million, versus $222.6 million in the third quarter 2009.  Adjusted EBITDA was $54.3 million, down 19.7% from $67.6 million in the comparable period in 2009.  Slot win was nearly flat during the quarter, compared to a 9% decline overall in the market, and hotel occupancy rose slightly year-over-year.  However, these positive trends were offset by unusually lucky play by table game customers during the quarter, which decreased our hold percentage to below historical levels.

Key Financial Statistics

The following is additional information as of September 30, 2010:

  • Cash, excluding Borgata: $77.0 million
  • Cash at Borgata: $15.6 million
  • Debt, excluding Borgata: $2.35 billion (including $1.73 billion outstanding under Boyd Gaming's bank credit facility)
  • Debt at Borgata: $820.8 million (including $47.1 million outstanding under Borgata's bank credit facility)

 

Conference Call Information

 

We will host our third quarter 2010 conference call today, October 25, at 1:00 p.m. Eastern.  The conference call number is 888.680.0869 and the passcode is 50084553.  Please call up to 15 minutes in advance to ensure you are connected prior to the start of the call.  

The conference call will also be available live on the Internet at www.boydgaming.com, www.streetevents.com, or:

http://phx.corporate-ir.net/playerlink.zhtml?c=95703&s=wm&e=3452210

Following the call's completion, a replay will be available by dialing 888.286.8010 today, October 25, beginning at 4:00 p.m. Eastern and continuing through Monday, November 1.  The passcode for the replay will be 50979831.  The replay will also be available on the Internet at www.boydgaming.com.

   

The results of Borgata for the period from July 1, 2010 through September 30, 2010 are included in our condensed consolidated statement of operations for the three months ended September 30, 2010, and its results for the period from March 24, 2010 through September 30, 2010 are included in our condensed consolidated statement of operations for the nine months ended September 30, 2010.

 
 

 
 

Three Months Ended

 

Nine Months Ended

 
 

September 30,

 

September 30,

 
 

2010

 

2009

 

2010

 

2009

 

Revenues

(In thousands, except per share data)

 

   Gaming

$ 503,746

 

$ 332,054

 

$ 1,344,283

 

$ 1,051,714

 

   Food and beverage

101,164

 

55,695

 

255,166

 

173,424

 

   Room

64,142

 

30,062

 

154,247

 

93,251

 

   Other

33,960

 

24,722

 

91,595

 

76,143

 

Gross revenues

703,012

 

442,533

 

1,845,291

 

1,394,532

 

Less promotional allowances

107,634

 

44,290

 

256,332

 

138,494

 

       Net revenues

595,378

 

398,243

 

1,588,959

 

1,256,038

 
                 

Costs and expenses

               

   Gaming

237,601

 

161,690

 

635,461

 

502,029

 

   Food and beverage

50,690

 

31,026

 

132,481

 

94,524

 

   Room

13,661

 

10,186

 

36,767

 

30,212

 

   Other

28,089

 

19,863

 

74,333

 

58,730

 

   Selling, general and administrative

100,697

 

70,901

 

270,641

 

217,492

 

   Maintenance and utilities

42,661

 

24,753

 

104,770

 

70,111

 

   Depreciation and amortization

52,451

 

40,578

 

147,905

 

125,324

 

   Corporate expense

11,021

 

11,356

 

36,636

 

35,077

 

   Preopening expenses

2,684

 

4,880

 

4,990

 

14,773

 

   Write-downs and other charges, net

1,340

 

14,287

 

4,932

 

41,415

 

       Total costs and expenses

540,895

 

389,520

 

1,448,916

 

1,189,687

 
                 

Operating income from Borgata

-

 

38,189

 

8,146

 

63,921

 

Operating income

54,483

 

46,912

 

148,189

 

130,272

 
                 

Other expense (income)

               

   Interest income

-

 

(1)

 

(4)

 

(5)

 

   Interest expense, net of amounts capitalized

45,781

 

32,300

 

109,438

 

113,806

 

   Gain on early retirements of debt

-

 

(3,604)

 

(3,949)

 

(12,061)

 

   Other income

(10,000)

 

-

 

(10,000)

 

-

 

   Gain on equity distribution

(2,535)

 

-

 

(2,535)

 

-

 

   Other non-operating expenses

-

 

30

 

-

 

30

 

   Other non-operating expenses from Borgata, net

-

 

7,204

 

3,133

 

16,230

 

       Total other expense, net

33,246

 

35,929

 

96,083

 

118,000

 
                 

Income before income taxes

21,237

 

10,983

 

52,106

 

12,272

 

Income taxes

(6,371)

 

(4,668)

 

(15,532)

 

(7,007)

 

Net income

14,866

 

6,315

 

36,574

 

5,265

 

Noncontrolling interest

(9,275)

 

-

 

(19,166)

 

-

 

Net income attributable to Boyd Gaming Corporation

$     5,591

 

$     6,315

 

$      17,408

 

$        5,265

 
                 

Basic net income per common share

$       0.06

 

$       0.07

 

$          0.20

 

$          0.06

 
                 

Weighted average basic shares outstanding

86,582

 

86,264

 

86,508

 

86,481

 
                 

Diluted net income per common share

$       0.06

 

$       0.07

 

$          0.20

 

$          0.06

 
                 

Weighted average diluted shares outstanding

86,684

 

86,436

 

86,724

 

86,550

 
               

 
   

The following table sets forth the consolidation of Borgata from a basis comparable to the historical reporting by Boyd Gaming Corporation. For purposes of this presentation, and consistent with GAAP, Borgata has been consolidated for the entire period presented, or for the period from July 1, 2010 through September 30, 2010. The historical column reflects the equity method accounting for Borgata. The consolidating columns are presented for purposes of additional disclosure and as a reconciliation to the current GAAP presentation of Boyd Gaming Corporation.

 
 

 
     

Three Months Ended September 30, 2010

 
     

Boyd Gaming Corp

         

Boyd Gaming Corp

 
     

Historical

 

MDDC LLC

 

Adjustments

 

Consolidated

 
     

(In thousands, except per share data)

 

Revenues

                 

   Gaming

 

$          326,907

 

$         176,839

 

$                   -

 

$        503,746

 

   Food and beverage

 

57,932

 

43,232

 

-

 

101,164

 

   Room

 

30,052

 

34,090

 

-

 

64,142

 

   Other

 

21,273

 

12,687

 

-

 

33,960

 

Gross revenues

 

436,164

 

266,849

 

-

 

703,012

 

Less promotional allowances

 

48,473

 

59,161

 

-

 

107,634

 

       Net revenues

 

387,691

 

207,688

 

-

 

595,378

 
                     

Costs and expenses

                 

   Gaming

 

167,025

 

70,576

 

-

 

237,601

 

   Food and beverage

 

30,990

 

19,700

 

-

 

50,690

 

   Room

 

9,292

 

4,369

 

-

 

13,661

 

   Other

 

17,754

 

10,335

 

-

 

28,089

 

   Selling, general and administrative

 

69,524

 

31,173

 

-

 

100,697

 

   Maintenance and utilities

 

25,446

 

17,215

 

-

 

42,661

 

   Depreciation and amortization

 

35,999

 

16,452

 

-

 

52,451

 

   Corporate expense

 

11,021

 

-

 

-

 

11,021

 

   Preopening expenses

 

2,684

 

-

 

-

 

2,684

 

   Write-downs and other charges, net

 

1,344

 

(4)

 

-

 

1,340

 

       Total costs and expenses

 

371,079

 

169,816

 

-

 

540,895

 
                     

Operating income from Borgata

 

18,942

 

-

 

(18,942)

 

-

 

Operating income

 

35,554

 

37,871

 

(18,942)

 

54,483

 
                     

Other expense (income)

                 

   Interest income

 

-

 

-

 

-

 

-

 

   Interest expense, net of amounts capitalized

 

28,506

 

17,275

 

-

 

45,781

 

   Gain on early retirements of debt

 

-

 

-

 

-

 

-

 

   Other income

 

(10,000)

 

-

 

-

 

(10,000)

 

   Gain on equity distribution

 

(2,535)

 

-

 

-

 

(2,535)

 

   Other non-operating expenses from Borgata, net

 

9,667

 

-

 

(9,667)

 

-

 

       Total other expense, net

 

25,638

 

17,275

 

(9,667)

 

33,246

 
                     

Income before income taxes

 

9,916

 

20,596

 

(9,275)

 

21,237

 

Income taxes

 

(4,325)

 

(2,046)

 

-

 

(6,371)

 

Net income

 

5,591

 

18,550

 

(9,275)

 

14,866

 

Noncontrolling interest

 

-

 

-

 

(9,275)

 

(9,275)

 

Net income attributable to Boyd Gaming Corporation

 

$              5,591

 

$           18,550

 

$        (18,550)

 

$            5,591

 
                     

Basic net income per common share

 

$                0.06

         

$              0.06

 
                     

Weighted average basic shares outstanding

 

86,582

         

86,582

 
                     

Diluted net income per common share

 

$                0.06

         

$              0.06

 
                     

Weighted average diluted shares outstanding

 

86,684

         

86,684

 
                   

 
   

The following supplemental pro forma information presents the financial results as if the effective control of Borgata had occurred on July 1, 2009 for the three months ended September 30, 2009, to provide a basis of comparability to the three months ended September 30, 2010. This supplemental pro forma information has been prepared for comparative purposes and does not purport to be indicative of what the actual results would have been had the consolidation of Borgata been completed as of the earlier dates, nor are they indicative of any future results.

 
 

 
     

Three Months Ended September 30, 2009

 
     

Boyd Gaming Corp

         

Boyd Gaming Corp

 
     

Historical

 

MDDC LLC

 

Adjustments

 

Pro Forma

 
     

(In thousands, except per share data)

 

Revenues

                 

   Gaming

 

$          332,054

 

$  195,355

 

$                   -

 

$          527,409

 

   Food and beverage

 

55,695

 

42,630

 

-

 

98,325

 

   Room

 

30,062

 

33,892

 

-

 

63,954

 

   Other

 

24,722

 

12,889

 

-

 

37,611

 

Gross revenues

 

442,533

 

284,766

 

-

 

727,299

 

Less promotional allowances

 

44,290

 

62,169

 

-

 

106,459

 

       Net revenues

 

398,243

 

222,597

 

-

 

620,840

 
                     

Costs and expenses

                 

   Gaming

 

161,690

 

74,726

 

-

 

236,416

 

   Food and beverage

 

31,026

 

18,745

 

-

 

49,771

 

   Room

 

10,186

 

3,736

 

-

 

13,922

 

   Other

 

19,863

 

10,505

 

-

 

30,368

 

   Selling, general and administrative

 

70,901

 

31,620

 

-

 

102,521

 

   Maintenance and utilities

 

24,753

 

15,706

 

-

 

40,459

 

   Depreciation and amortization

 

40,578

 

19,208

 

325

 

60,111

 

   Corporate expense

 

11,356

 

-

 

-

 

11,356

 

   Preopening expenses

 

4,880

 

-

 

-

 

4,880

 

   Write-downs and other charges, net

 

14,287

 

(28,677)

 

-

 

(14,390)

 

       Total costs and expenses

 

389,520

 

145,569

 

325

 

535,414

 
                     

Operating income from Borgata

 

38,189

 

-

 

(38,189)

 

-

 

Operating income

 

46,912

 

77,028

 

(38,514)

 

85,426

 
                     

Other expense (income)

                 

   Interest income

 

(1)

         

(1)

 

   Interest expense, net of amounts capitalized

 

32,300

 

6,423

 

-

 

38,723

 

   Gain on early retirements of debt

 

(3,604)

 

-

 

-

 

(3,604)

 

   Other non-operating expenses

 

30

 

-

 

-

 

30

 

   Other non-operating expenses from Borgata, net

 

7,204

 

-

 

(7,204)

 

-

 

       Total other expense, net

 

35,929

 

6,423

 

(7,204)

 

35,148

 
                     

Income before income taxes

 

10,983

 

70,605

 

(31,310)

 

50,278

 

Income taxes

 

(4,668)

 

(7,986)

 

-

 

(12,654)

 

Net income

 

6,315

 

62,619

 

(31,310)

 

37,624

 

Noncontrolling interest

 

-

 

-

 

(31,309)

 

(31,309)

 

Net income attributable to Boyd Gaming Corporation

 

$              6,315

 

$    62,619

 

$        (62,619)

 

$              6,315

 
                     

Basic net income per common share

 

$                0.07

         

$                0.07

 
                     

Weighted average basic shares outstanding

 

86,264

         

86,264

 
                     

Diluted net income per common share

 

$                0.07

         

$                0.07

 
                     

Weighted average diluted shares outstanding

 

86,436

         

86,436

 
                   

 
   

The following table sets forth the consolidation of Borgata from a basis comparable to the historical reporting by Boyd Gaming Corporation. For purposes of this presentation, and consistent with GAAP, Borgata has been consolidated for the period from March 24, 2010 through September 30, 2010. The historical column reflects the equity method accounting for Borgata. The consolidating columns are presented for purposes of additional disclosure and as a reconciliation to the current GAAP presentation of Boyd Gaming Corporation.

 
 

 
     

Nine Months Ended September 30, 2010

 
     

Boyd Gaming Corp

 

MDDC LLC

     

Boyd Gaming Corp

 
     

Historical

 

3/24/2010 to 9/30/2010

 

Adjustments

 

Consolidated

 
     

(In thousands, except per share data)

 

Revenues

                 

   Gaming

 

$           986,969

 

$          357,314

 

$              -

 

$        1,344,283

 

   Food and beverage

 

172,794

 

82,372

 

-

 

255,166

 

   Room

 

90,205

 

64,042

 

-

 

154,247

 

   Other

 

67,548

 

24,047

 

-

 

91,595

 

Gross revenues

 

1,317,516

 

527,775

 

-

 

1,845,291

 

Less promotional allowances

 

139,912

 

116,420

 

-

 

256,332

 

       Net revenues

 

1,177,604

 

411,355

 

-

 

1,588,959

 
                     

Costs and expenses

                 

   Gaming

 

493,812

 

141,649

 

-

 

635,461

 

   Food and beverage

 

92,888

 

39,593

 

-

 

132,481

 

   Room

 

28,174

 

8,593

 

-

 

36,767

 

   Other

 

54,805

 

19,528

 

-

 

74,333

 

   Selling, general and administrative

 

206,168

 

64,473

 

-

 

270,641

 

   Maintenance and utilities

 

69,433

 

35,337

 

-

 

104,770

 

   Depreciation and amortization

 

111,592

 

36,313

 

-

 

147,905

 

   Corporate expense

 

36,636

 

-

 

-

 

36,636

 

   Preopening expenses

 

4,990

 

-

 

-

 

4,990

 

   Write-downs and other charges, net

 

4,924

 

8

 

-

 

4,932

 

       Total costs and expenses

 

1,103,422

 

345,494

 

-

 

1,448,916

 
                     

Operating income from Borgata

 

41,083

 

-

 

(32,937)

 

8,146

 

Operating income

 

115,265

 

65,861

 

(32,937)

 

148,189

 
                     

Other expense (income)

                 

   Interest income

 

(4)

 

-

 

-

 

(4)

 

   Interest expense, net of amounts capitalized

 

86,091

 

23,347

 

-

 

109,438

 

   Gain on early retirements of debt

 

(3,949)

 

-

 

-

 

(3,949)

 

   Other income

 

(10,000)

         

(10,000)

 

   Gain on equity distribution

 

(2,535)

         

(2,535)

 

   Other non-operating expenses from Borgata, net

 

16,905

 

-

 

(13,772)

 

3,133

 

       Total other expense, net

 

86,508

 

23,347

 

(13,772)

 

96,083

 
                     

Income before income taxes

 

28,757

 

42,514

 

(19,165)

 

52,106

 

Income taxes

 

(11,349)

 

(4,183)

 

-

 

(15,532)

 

Net income

 

17,408

 

38,331

 

(19,165)

 

36,574

 

Noncontrolling interest

 

-

 

-

 

(19,166)

 

(19,166)

 

Net income attributable to Boyd Gaming Corporation

 

$             17,408

 

$            38,331

 

$   (38,331)

 

$             17,408

 
                     

Basic net income per common share

 

$                 0.20

         

$                 0.20

 
                     

Weighted average basic shares outstanding

 

86,508

         

86,508

 
                     

Diluted net income per common share

 

$                 0.20

         

$                 0.20

 
                     

Weighted average diluted shares outstanding

 

86,724

         

86,724

 
                   

 
   

The following supplemental pro forma information presents the financial results as if the effective control of Borgata had occurred on July 1, 2009 for the nine months ended September 30, 2009, to provide a basis of comparability to the nine months ended September 30, 2010. This supplemental pro forma information has been prepared for comparative purposes and does not purport to be indicative of what the actual results would have been had the consolidation of Borgata been completed as of the earlier dates, nor are they indicative of any future results.

 
 

 
     

Nine Months Ended September 30, 2009

 
     

Boyd Gaming Corp

         

Boyd Gaming Corp

 
     

Historical

 

MDDC LLC

 

Adjustments

 

Pro Forma

 
     

(In thousands, except share and per share data)

 

Revenues

                 

   Gaming

 

$    1,051,714

 

$ 538,041

 

$                -

 

$       1,589,755

 

   Food and beverage

 

173,424

 

111,113

 

-

 

284,537

 

   Room

 

93,251

 

87,056

 

-

 

180,307

 

   Other

 

76,143

 

32,496

 

-

 

108,639

 

Gross revenues

 

1,394,532

 

768,706

 

-

 

2,163,238

 

Less promotional allowances

 

138,494

 

166,706

 

-

 

305,200

 

       Net revenues

 

1,256,038

 

602,000

 

-

 

1,858,038

 
                     

Costs and expenses

                 

   Gaming

 

502,029

 

215,268

 

-

 

717,297

 

   Food and beverage

 

94,524

 

48,822

 

-

 

143,346

 

   Room

 

30,212

 

8,998

 

-

 

39,210

 

   Other

 

58,730

 

26,585

 

-

 

85,315

 

   Selling, general and administrative

 

217,492

 

96,250

 

-

 

313,742

 

   Maintenance and utilities

 

70,111

 

44,866

 

-

 

114,977

 

   Depreciation and amortization

 

125,324

 

59,339

 

973

 

185,636

 

   Corporate expense

 

35,077

 

-

 

-

 

35,077

 

   Preopening expenses

 

14,773

 

699

 

-

 

15,472

 

   Write-downs and other charges, net

 

41,415

 

(28,616)

 

-

 

12,799

 

       Total costs and expenses

 

1,189,687

 

472,211

 

973

 

1,662,871

 
                     

Operating income from Borgata

 

63,921

 

-

 

(63,921)

 

-

 

Operating income

 

130,272

 

129,789

 

(64,894)

 

195,167

 
                     

Other expense (income)

                 

   Interest income

 

(5)

 

-

 

-

 

(5)

 

   Interest expense, net of amounts capitalized

 

113,806

 

21,881

 

-

 

135,687

 

   Gain on early retirements of debt

 

(12,061)

 

-

 

-

 

(12,061)

 

   Other non-operating expenses

 

30

 

-

 

-

 

30

 

   Other non-operating expenses from Borgata, net

 

16,230

 

-

 

(16,230)

 

-

 

       Total other expense, net

 

118,000

 

21,881

 

(16,230)

 

123,651

 
                     

Income before income taxes

 

12,272

 

107,908

 

(48,664)

 

71,516

 

Income taxes

 

(7,007)

 

(10,579)

 

-

 

(17,586)

 

Net income

 

5,265

 

97,329

 

(48,664)

 

53,930

 

Noncontrolling interest

 

-

 

-

 

(48,665)

 

(48,665)

 

Net income attributable to Boyd Gaming Corporation

 

$           5,265

 

$   97,329

 

$     (97,329)

 

$              5,265

 
                     

Basic net income per common share

 

$             0.06

         

$                0.06

 
                     

Weighted average basic shares outstanding

 

86,481

         

86,481

 
                     

Diluted net income per common share

 

$             0.06

         

$                0.06

 
                     

Weighted average diluted shares outstanding

 

86,550

         

86,550

 
                   

 
   

The following table reconciles the net income in accordance with GAAP to adjusted earnings and adjusted earnings per share.

 
                     
                     
   

Three Months Ended

   

Nine Months Ended

 
   

September 30,

   

September 30,

 
   

2010

 

2009

   

2010

 

2009

 
   

(In thousands, except per share data)

 

Net income attributable to Boyd Gaming Corporation

 

$           5,591

 

$           6,315

   

$         17,408

 

$           5,265

 

  Adjustments related to Boyd Gaming:

                   

     Preopening expenses

 

2,684

 

4,880

   

4,990

 

14,773

 

     Gain on early retirements of debt

 

-

 

(3,604)

   

(3,949)

 

(12,061)

 

     Other income

 

(10,000)

 

-

   

(10,000)

 

-

 

     Gain on equity distribution

 

(2,535)

 

-

   

(2,535)

 

-

 

     Write-downs and other charges, net

 

1,344

 

14,287

   

4,924

 

41,415

 

     Other non-operating expenses

 

-

 

30

   

-

 

30

 

     Prior period interest expense related to the finalization

                   

     of our purchase price for Dania Jai-Alai

 

-

 

-

   

-

 

8,883

 
                     

   Adjustments related to Borgata:

                   

     Our share of Borgata's preopening expenses

 

-

 

-

   

-

 

349

 

     Our share of Borgata's write-downs and other items, net

 

-

 

(14,339)

   

34

 

(14,308)

 

     Accelerated amortization of deferred loan fees

 

2,012

       

2,012

     

     Write-downs and other charges, net

 

(4)

       

8

     

           Impact on noncontrolling interest

 

(1,004)

       

(1,010)

     
                     

     Income tax effect for above adjustments

 

3,322

 

424

   

2,620

 

(12,922)

 

        Adjusted earnings

 

$           1,410

 

$           7,993

   

$         14,502

 

$         31,424

 
                     

     Adjusted earnings per diluted share (Adjusted EPS)

 

$             0.02

 

$             0.09

   

$             0.17

 

$             0.36

 
                     

     Weighted average diluted shares outstanding

 

86,684

 

86,436

   

86,724

 

86,550

 
                   

 
       

The following table illustrates the impact of the above adjustments on earnings per share.  

     
                   
   

Three Months Ended

 

Nine Months Ended

 
   

September 30,

 

September 30,

 
   

2010

 

2009

 

2010

 

2009

 
       

Diluted net income per share

 

$         0.06

 

$         0.07

 

$       0.20

 

$         0.06

 

  Adjustments related to Boyd Gaming:

                 

     Preopening expenses

 

0.03

 

0.06

 

0.06

 

0.17

 

     Gain on early retirements of debt

 

-

 

(0.04)

 

(0.05)

 

(0.14)

 

     Other income

 

(0.12)

 

-

 

(0.12)

 

-

 

     Gain on equity distribution

 

(0.03)

 

-

 

(0.03)

 

-

 

     Write-downs and other charges, net

 

0.02

 

0.17

 

0.06

 

0.48

 

     Other non-operating expenses

 

-

 

0.00

 

-

 

0.00

 

     Prior period interest expense related to the finalization

                 

     of our purchase price for Dania Jai-Alai

 

-

 

-

 

-

 

0.10

 
                   

  Adjustments related to Borgata:

                 

     Our share of Borgata's preopening expenses

 

-

 

-

 

-

 

0.00

 

     Our share of Borgata's write-downs and other items, net

 

-

 

(0.17)

 

0.00

 

(0.17)

 

     Accelerated amortization of deferred loan fees

 

0.02

 

-

 

0.02

 

-

 

     Write-downs and other charges, net

 

(0.00)

 

-

 

0.00

 

-

 

           Impact on noncontrolling interest

 

(0.01)

 

-

 

(0.01)

 

-

 
                   

     Income tax effect for above adjustments

 

0.04

 

0.00

 

0.03

 

(0.15)

 

         Adjusted earnings per share

 

$         0.02

 

$         0.09

 

$       0.17

 

$         0.36

 
                 

 
   

The following table presents Net Revenues and Adjusted EBITDA by operating segment and reconciles Adjusted EBITDA to net income attributable to Boyd Gaming Corporation on our condensed consolidated statements of operations for the three and nine months ended September 30, 2010 and 2009. Note that the results from Dania Jai-Alai are classified as part of total other operating costs and expenses and are not included in Adjusted EBITDA. Additionally, the results for the three months ended September 30, 2010, as reported in the table below, reflect the consolidation of Borgata for the entire period and the results for the nine months ended September 30, 2010 reflect the consolidation of Borgata for the period from March 24, 2010 through September 30, 2010. The three and nine month periods ended September 30, 2009 are reported on a historical basis.

 
 

 
   

Three Months Ended

 

Nine Months Ended

 
   

September 30,

 

September 30,

 
   

2010

 

2009

 

2010

 

2009

 

Net Revenues

 

(In thousands)

 

   Las Vegas Locals

 

$ 145,593

 

$ 150,749

 

$    455,243

 

$    486,975

 

   Downtown Las Vegas

 

51,898

 

54,857

 

161,088

 

171,100

 

   Midwest and South

 

188,695

 

190,864

 

556,221

 

592,085

 

   Atlantic City

 

207,687

 

-

 

411,355

 

-

 

           Reportable Segment Net revenues

 

593,873

 

396,470

 

1,583,907

 

1,250,160

 

   Other

 

1,505

 

1,773

 

5,052

 

5,878

 

           Net revenues

 

$ 595,378

 

$ 398,243

 

$ 1,588,959

 

$ 1,256,038

 
                   

Adjusted EBITDA

                 

   Las Vegas Locals

 

$   26,116

 

$   31,363

 

$    103,339

 

$    120,600

 

   Downtown Las Vegas

 

5,679

 

8,701

 

23,361

 

33,855

 

   Midwest and South

 

38,407

 

42,567

 

113,276

 

136,165

 

       Wholly-owned property Adjusted EBITDA

 

70,202

 

82,631

 

239,976

 

290,620

 

        Corporate expense

 

(9,144)

 

(9,157)

 

(30,065)

 

(27,353)

 

        Wholly-owned Adjusted EBITDA

 

61,058

 

73,474

 

209,911

 

263,267

 

   Atlantic City

 

54,319

 

-

 

102,182

 

-

 

       Our share of Borgata's operating income before net

                 

         amortization, preopening and other items

 

-

 

24,175

 

8,180

 

50,935

 

           Adjusted EBITDA

 

$ 115,377

 

$   97,649

 

$    320,273

 

$    314,202

 
                   

Other operating costs and expenses

                 

   Deferred rent

 

1,069

 

1,090

 

3,204

 

3,266

 

   Depreciation and amortization

 

52,451

 

40,903

 

147,905

 

126,297

 

   Preopening expenses

 

2,684

 

4,880

 

4,990

 

14,773

 

   Our share of Borgata's preopening expenses

 

-

 

-

 

-

 

349

 

   Our share of Borgata's write-downs and other items, net

 

-

 

(14,339)

 

34

 

(14,308)

 

   Share-based compensation expense

 

2,396

 

2,886

 

8,124

 

9,784

 

   Write-downs and other charges, net

 

1,340

 

14,287

 

4,932

 

41,415

 

   Other

 

954

 

1,030

 

2,895

 

2,354

 

           Total other operating costs and expenses

 

60,894

 

50,737

 

172,084

 

183,930

 

Operating income

 

54,483

 

46,912

 

148,189

 

130,272

 

Other non-operating items

                 

   Interest expense, net

 

45,781

 

32,299

 

109,434

 

113,801

 

   Gain on early retirements of debt

 

-

 

(3,604)

 

(3,949)

 

(12,061)

 

   Other income

 

(10,000)

 

-

 

(10,000)

 

-

 

   Gain on equity distribution

 

(2,535)

 

-

 

(2,535)

 

-

 

   Other non-operating expenses

 

-

 

30

 

-

 

30

 

   Our share of Borgata's non-operating expenses, net

 

-

 

7,204

 

3,133

 

16,230

 

           Total other non-operating costs and expenses, net

 

33,246

 

35,929

 

96,083

 

118,000

 

Income before income taxes

 

21,237

 

10,983

 

52,106

 

12,272

 

Income taxes

 

(6,371)

 

(4,668)

 

(15,532)

 

(7,007)

 

Net income

 

14,866

 

6,315

 

36,474

 

5,265

 

Noncontrolling interest

 

(9,275)

 

-

 

(19,166)

 

-

 

Net income attributable to Boyd Gaming Corporation

 

$     5,591

 

$     6,315

 

$      17,408

 

$        5,265

 
                 

 
   

The following table sets forth the consolidation of Borgata from a basis comparable to the historical reporting by Boyd Gaming Corporation. For purposes of this presentation, and consistent with GAAP, Borgata has been consolidated for the entire period presented, or for the period from July 1, 2010 through September 30, 2010. The historical column reflects the equity method accounting for Borgata. The consolidating columns are presented for purposes of additional disclosure and as a reconciliation to the current GAAP presentation of Boyd Gaming Corporation.

 
 

 
   

Three Months Ended September 30, 2010

 
   

Boyd Gaming Corp

 

MDDC LLC

     

Boyd Gaming Corp

 
   

Historical

 

7/1/2010 to 9/30/2010

 

Adjustments

 

Consolidated

 
   

(In thousands)

 

Net Revenues

                 

   Las Vegas Locals

 

$        145,593

 

$                   -

 

$            -

 

$      145,593

 

   Downtown Las Vegas

 

51,898

 

-

 

-

 

51,898

 

   Midwest and South

 

188,695

 

-

 

-

 

188,695

 

   Atlantic City

 

-

 

207,687

 

-

 

207,687

 

           Reportable Segment Net revenues

 

386,186

 

207,687

 

-

 

593,873

 

   Other

 

1,505

 

-

 

-

 

1,505

 

           Net revenues

 

$        387,691

 

$       207,687

 

$            -

 

$      595,378

 
                   

Adjusted EBITDA

                 

   Las Vegas Locals

 

$          26,116

 

$                   -

 

$            -

 

$        26,116

 

   Downtown Las Vegas

 

5,679

 

-

 

-

 

5,679

 

   Midwest and South

 

38,407

 

-

 

-

 

38,407

 

       Wholly-owned property Adjusted EBITDA

 

70,202

 

-

 

-

 

70,202

 

        Corporate expense

 

(9,144)

 

-

 

-

 

(9,144)

 

        Wholly-owned Adjusted EBITDA

 

61,058

 

-

 

-

 

61,058

 

   Atlantic City

 

-

 

54,319

 

-

 

54,319

 

       Our share of Borgata's operating income before net

                 

         amortization, preopening and other items

 

18,942

 

-

 

(18,942)

 

-

 

           Adjusted EBITDA

 

$          80,000

 

$         54,319

 

$ (18,942)

 

$      115,377

 
                   

Other operating costs and expenses

                 

   Deferred rent

 

1,069

 

-

 

-

 

1,069

 

   Depreciation and amortization

 

35,999

 

16,452

 

-

 

52,451

 

   Preopening expenses

 

2,684

 

-

 

-

 

2,684

 

   Share-based compensation expense

 

2,396

 

-

 

-

 

2,396

 

   Write-downs and other charges, net

 

1,344

 

(4)

 

-

 

1,340

 

   Other

 

954

 

-

 

-

 

954

 

           Total other operating costs and expenses

 

44,446

 

16,448

 

-

 

60,894

 

Operating income

 

35,554

 

37,871

 

(18,942)

 

54,483

 
                   

Other non-operating items

                 

   Interest expense, net

 

28,506

 

17,275

 

-

 

45,781

 

   Gain on early retirements of debt

 

-

 

-

     

-

 

   Other income

 

(10,000)

         

(10,000)

 

   Gain on equity distribution

 

(2,535)

         

(2,535)

 

   Our share of Borgata's non-operating expenses, net

 

9,667

 

-

 

(9,667)

 

-

 

           Total other non-operating costs and expenses, net

 

25,638

 

17,275

 

(9,667)

 

33,246

 
                   

Income before income taxes

 

9,916

 

20,596

 

(9,275)

 

21,237

 

Income taxes

 

(4,325)

 

(2,046)

 

-

 

(6,371)

 

Net income

 

5,591

 

18,550

 

(9,275)

 

14,866

 

Noncontrolling interest

 

-

 

-

 

(9,275)

 

(9,275)

 

Net income attributable to Boyd Gaming Corporation

 

$            5,591

 

$         18,550

 

$ (18,550)

 

$          5,591

 
                 

 
   

The following supplemental pro forma information presents the financial results as if the effective control of Borgata had occurred on July 1, 2009. This supplemental pro forma information has been prepared for comparative purposes and does not purport to be indicative of what the actual results would have been had the consolidation of Borgata been completed as of the earlier dates, nor are they indicative of any future results.

 
 

 
   

Three Months Ended September 30, 2009

 
   

Boyd Gaming Corp

 

MDDC LLC

     

Boyd Gaming Corp

 
   

Historical

 

7/1/2009 to 9/30/2009

 

Adjustments

 

Pro Forma

 
   

(In thousands)

 

Net Revenues

                 

   Las Vegas Locals

 

$           150,749

 

$                         -

 

$             -

 

$          150,749

 

   Downtown Las Vegas

 

54,857

 

-

 

-

 

54,857

 

   Midwest and South

 

190,864

 

-

 

-

 

190,864

 

   Atlantic City

 

-

 

222,597

 

-

 

222,597

 

           Reportable Segment Net revenues

 

396,470

 

222,597

 

-

 

619,067

 

   Other

 

1,773

 

-

 

-

 

1,773

 

           Net revenues

 

$           398,243

 

$             222,597

 

$             -

 

$          620,840

 
                   

Adjusted EBITDA

                 

   Las Vegas Locals

 

$             31,363

 

$                         -

 

$             -

 

$            31,363

 

   Downtown Las Vegas

 

8,701

 

-

 

-

 

8,701

 

   Midwest and South

 

42,567

 

-

 

-

 

42,567

 

       Wholly-owned property Adjusted EBITDA

 

82,631

 

-

 

-

 

82,631

 

        Corporate expense

 

(9,157)

 

-

 

-

 

(9,157)

 

        Wholly-owned Adjusted EBITDA

 

73,474

 

-

 

-

 

73,474

 

   Atlantic City

 

-

 

67,559

 

-

 

67,559

 

       Our share of Borgata's operating income before net

             

-

 

         amortization, preopening and other items

 

24,175

 

-

 

(24,175)

 

-

 

           Adjusted EBITDA

 

$             97,649

 

$               67,559

 

$  (24,175)

 

$          141,033

 
                   

Other operating costs and expenses

     

-

 

-

     

   Deferred rent

 

1,090

 

-

 

-

 

1,090

 

   Depreciation and amortization

 

40,903

 

19,208

 

-

 

60,111

 

   Preopening expenses

 

4,880

 

-

 

-

 

4,880

 

   Our share of Borgata's preopening expenses

 

-

 

-

 

-

 

-

 

   Our share of Borgata's write-downs and other items, net

 

(14,339)

 

-

 

14,339

 

-

 

   Share-based compensation expense

 

2,886

 

-

 

-

 

2,886

 

   Write-downs and other charges, net

 

14,287

 

(28,677)

 

-

 

(14,390)

 

   Other

 

1,030

 

-

 

-

 

1,030

 

           Total other operating costs and expenses

 

50,737

 

(9,469)

 

14,339

 

55,607

 

Operating income

 

46,912

 

77,028

 

(38,514)

 

85,426

 
                   

Other non-operating items

                 

   Interest expense, net

 

32,299

 

6,423

 

-

 

38,722

 

   Gain on early retirements of debt

 

(3,604)

 

-

 

-

 

(3,604)

 

   Other non-operating expenses

 

30

 

-

 

-

 

30

 

   Our share of Borgata's non-operating expenses, net

 

7,204

 

-

 

(7,204)

 

-

 

           Total other non-operating costs and expenses, net

 

35,929

 

6,423

 

(7,204)

 

35,148

 
                   

Income before income taxes

 

10,983

 

70,605

 

(31,310)

 

50,278

 

Income taxes

 

(4,668)

 

(7,986)

 

-

 

(12,654)

 

Net income

 

6,315

 

62,619

 

(31,310)

 

37,624

 

Noncontrolling interest

 

-

 

-

 

(31,309)

 

(31,309)

 

Net income attributable to Boyd Gaming Corporation

 

$               6,315

 

$               62,619

 

$  (62,619)

 

$              6,315

 
                 

 
   

The following supplemental pro forma information presents the financial results as if the effective control of Borgata had occurred on January 1, 2010, for the nine months ended September 30, 2010. This supplemental pro forma information has been prepared for comparative purposes and does not purport to be indicative of what the actual results would have been had the consolidation of Borgata been completed as of the earlier dates, nor are they indicative of any future results.

 
 

 
   

Nine Months Ended September 30, 2010

 
   

Boyd Gaming Corp

 

MDDC LLC

     

Boyd Gaming Corp

 
   

Consolidated

 

1/1/2010 to 3/23/2010

 

Adjustments

 

Pro Forma

 
   

(In thousands)

 

Net Revenues

                 

   Las Vegas Locals

 

$        455,243

 

$                  -

 

$                -

 

$         455,243

 

   Downtown Las Vegas

 

161,088

 

-

 

-

 

161,088

 

   Midwest and South

 

556,221

 

-

 

-

 

556,221

 

   Atlantic City

 

411,355

 

158,290

 

-

 

569,645

 

           Reportable Segment Net revenues

 

1,583,907

 

158,290

 

-

 

1,742,197

 

   Other

 

5,052

 

-

 

-

 

5,052

 

           Net revenues

 

$     1,588,959

 

$      158,290

 

$                -

 

$      1,747,249

 
                   

Adjusted EBITDA

                 

   Las Vegas Locals

 

$        103,339

 

$                  -

 

$                -

 

$         103,339

 

   Downtown Las Vegas

 

23,361

 

-

 

-

 

23,361

 

   Midwest and South

 

113,276

 

-

 

-

 

113,276

 

       Wholly-owned property Adjusted EBITDA

 

239,976

 

-

 

-

 

239,976

 

        Corporate expense

 

(30,065)

 

-

 

-

 

(30,065)

 

        Wholly-owned Adjusted EBITDA

 

209,911

 

-

 

-

 

209,911

 

   Atlantic City

 

102,182

 

33,113

 

-

 

135,295

 

       Our share of Borgata's operating income before net

             

-

 

         amortization, preopening and other items

 

8,180

 

-

 

(8,180)

 

-

 

           Adjusted EBITDA

 

$        320,273

 

$        33,113

 

$       (8,180)

 

$         345,206

 
                   

Other operating costs and expenses

     

-

 

-

     

   Deferred rent

 

3,204

 

-

 

-

 

3,204

 

   Depreciation and amortization

 

147,905

 

16,754

 

-

 

164,659

 

   Preopening expenses

 

4,990

 

-

 

-

 

4,990

 

   Our share of Borgata's preopening expenses

 

-

 

-

 

-

 

-

 

   Our share of Borgata's write-downs and other items, net

 

34

 

-

 

(34)

 

-

 

   Share-based compensation expense

 

8,124

 

-

 

-

 

8,124

 

   Write-downs and other charges, net

 

4,932

 

68

 

-

 

5,000

 

   Other

 

2,895

 

-

 

-

 

2,895

 

           Total other operating costs and expenses

 

172,084

 

16,822

 

(34)

 

188,872

 

Operating income

 

148,189

 

16,291

 

(8,146)

 

156,334

 
                   

Other non-operating items

                 

   Interest expense, net

 

109,434

 

5,060

 

-

 

114,494

 

   Gain on early retirements of debt

 

(3,949)

 

-

 

-

 

(3,949)

 

   Other income

 

(10,000)

         

(10,000)

 

   Gain on equity distribution

 

(2,535)

         

(2,535)

 

   Our share of Borgata's non-operating expenses, net

 

3,133

 

-

 

(3,133)

 

-

 

           Total other non-operating costs and expenses, net

 

96,083

 

5,060

 

(3,133)

 

98,010

 
                   

Income before income taxes

 

52,106

 

11,231

 

(5,013)

 

58,324

 

Income taxes

 

(15,532)

 

(1,206)

 

-

 

(16,738)

 

Net income

 

36,574

 

10,025

 

(5,013)

 

41,586

 

Noncontrolling interest

 

(19,166)

 

-

 

(5,012)

 

(24,178)

 

Net income attributable to Boyd Gaming Corporation

 

$          17,408

 

$        10,025

 

$     (10,025)

 

$           17,408

 
                 

 
   

The following supplemental pro forma information presents the financial results as if the effective control of Borgata had occurred on July 1, 2009, for the nine months ended September 30, 2009. This supplemental pro forma information has been prepared for comparative purposes and does not purport to be indicative of what the actual results would have been had the consolidation of Borgata been completed as of the earlier dates, nor are they indicative of any future results.

 
 

 
   

Nine Months Ended September 30, 2009

 
   

Boyd Gaming Corp

 

MDDC LLC

     

Boyd Gaming Corp

 
   

Historical

 

1/1/2009 to 9/30/2009

 

Adjustments

 

Pro Forma

 
   

(In thousands)

 

Net Revenues

                 

   Las Vegas Locals

 

$             486,975

 

$                         -

 

$               -

 

$             486,975

 

   Downtown Las Vegas

 

171,100

 

-

 

-

 

171,100

 

   Midwest and South

 

592,085

 

-

 

-

 

592,085

 

   Atlantic City

 

-

 

602,000

 

-

 

602,000

 

           Reportable Segment Net revenues

 

1,250,160

 

602,000

 

-

 

1,852,160

 

   Other

 

5,878

 

-

 

-

 

5,878

 

           Net revenues

 

$          1,256,038

 

$             602,000

 

$               -

 

$          1,858,038

 
                   

Adjusted EBITDA

                 

   Las Vegas Locals

 

$             120,600

 

$                         -

 

$               -

 

$             120,600

 

   Downtown Las Vegas

 

33,855

 

-

 

-

 

33,855

 

   Midwest and South

 

136,165

 

-

 

-

 

136,165

 

       Wholly-owned property Adjusted EBITDA

 

290,620

 

-

 

-

 

290,620

 

        Corporate expense

 

(27,353)

 

-

 

-

 

(27,353)

 

        Wholly-owned Adjusted EBITDA

 

263,267

 

-

 

-

 

263,267

 

   Atlantic City

 

-

 

161,211

 

-

 

161,211

 

       Our share of Borgata's operating income before net

             

-

 

         amortization, preopening and other items

 

50,935

 

-

 

(50,935)

 

-

 

           Adjusted EBITDA

 

$             314,202

 

$             161,211

 

$    (50,935)

 

$             424,478

 
                   

Other operating costs and expenses

     

-

 

-

     

   Deferred rent

 

3,266

 

-

 

-

 

3,266

 

   Depreciation and amortization

 

126,297

 

59,339

 

-

 

185,636

 

   Preopening expenses

 

14,773

 

699

 

-

 

15,472

 

   Our share of Borgata's preopening expenses

 

349

 

-

 

(349)

 

-

 

   Our share of Borgata's write-downs and other items, net

 

(14,308)

 

-

 

14,308

 

-

 

   Share-based compensation expense

 

9,784

 

-

 

-

 

9,784

 

   Write-downs and other charges, net

 

41,415

 

(28,616)

 

-

 

12,799

 

   Other

 

2,354

 

-

 

-

 

2,354

 

           Total other operating costs and expenses

 

183,930

 

31,422

 

13,959

 

229,311

 

Operating income

 

130,272

 

129,789

 

(64,894)

 

195,167

 
                   

Other non-operating items

                 

   Interest expense, net

 

113,801

 

21,881

 

-

 

135,682

 

   Gain on early retirements of debt

 

(12,061)

 

-

 

-

 

(12,061)

 

   Other non-operating expenses

 

30

 

-

 

-

 

30

 

   Our share of Borgata's non-operating expenses, net

 

16,230

 

-

 

(16,230)

 

-

 

           Total other non-operating costs and expenses, net

 

118,000

 

21,881

 

(16,230)

 

123,651

 

Income before income taxes

 

12,272

 

107,908

 

(48,664)

 

71,516

 

Income taxes

 

(7,007)

 

(10,579)

 

-

 

(17,586)

 

Net income (loss)

 

5,265

 

97,329

 

(48,664)

 

53,930

 

Noncontrolling interest

 

-

 

-

 

(48,665)

 

(48,665)

 

Net income (loss) attributable to Boyd Gaming Corporation

 

$                 5,265

 

$               97,329

 

$    (97,329)

 

$                 5,265

 
                 

 
   

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,

 
   

2010

 

2009

 

2010

 

2009

 
   

(In thousands)

 

Corporate expense as reported on our condensed

                 

  consolidated statements of operations

 

$         11,021

 

$         11,356

 

$         36,636

 

$         35,077

 

Corporate share-based compensation expense

 

(1,877)

 

(2,199)

 

(6,571)

 

(7,724)

 

Corporate expense as reported on the accompanying table

 

$           9,144

 

$           9,157

 

$         30,065

 

$         27,353

 
                   
                   
                 

 
                   

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,

 
   

2010

 

2009

 

2010

 

2009

 
   

(In thousands)

 

Operating income from Borgata, as reported on our

                 

    condensed consolidated statements of operations

 

$                   -

 

$         38,189

 

$           8,146

 

$         63,921

 

Add back:

                 

   Net amortization expense related to our

                 

       investment in Borgata

 

-

 

325

 

-

 

973

 

   Our share of preopening expenses

 

-

 

-

 

-

 

349

 

   Our share of write-downs and other items, net

 

-

 

(14,339)

 

34

 

(14,308)

 

Our share of Borgata's operating income before net

                 

   amortization, preopening and other items

                 

   as reported on the accompanying table

 

$                   -

 

$         24,175

 

$           8,180

 

$         50,935

 
                   
                   
                 

 

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,

 
   

2010

 

2009

 

2010

 

2009

 
   

(In thousands)

 

Depreciation and amortization as reported on our

     

  condensed consolidated statements of operations

 

$         52,451

 

$         40,578

 

$       147,905

 

$       125,324

 

Net amortization expense related to our investment in Borgata

 

-

 

325

 

-

 

973

 

Depreciation and amortization as reported on

                 

  the accompanying table

 

$         52,451

 

$         40,903

 

$       147,905

 

$       126,297

 
                 

 
   

The following table presents Borgata's condensed consolidated statements of operations.

 
                   
   

Three Months Ended

 

Nine Months Ended

 
   

September 30,

 

September 30,

 
   

2010

 

2009

 

2010

 

2009

 
   

(In thousands)

 

Revenues

                 

   Gaming

 

$       176,839

 

$     195,355

 

$       495,145

 

$      538,041

 

   Food and beverage

 

43,232

 

42,630

 

113,589

 

111,113

 

   Room

 

34,090

 

33,892

 

88,196

 

87,056

 

   Other

 

12,687

 

12,889

 

33,226

 

32,496

 

Gross revenues

 

266,848

 

284,766

 

730,156

 

768,706

 

Less promotional allowances

 

59,161

 

62,169

 

160,511

 

166,706

 

       Net revenues

 

207,687

 

222,597

 

569,645

 

602,000

 
                   

Costs and expenses

                 

   Gaming

 

70,576

 

74,726

 

201,510

 

215,268

 

   Food and beverage

 

19,700

 

18,745

 

53,093

 

48,822

 

   Room

 

4,369

 

3,736

 

10,778

 

8,998

 

   Other

 

10,335

 

10,505

 

26,655

 

26,585

 

   Selling, general and administrative

 

31,173

 

31,620

 

93,454

 

96,250

 

   Maintenance and utilities

 

17,215

 

15,706

 

48,859

 

44,866

 

   Depreciation and amortization

 

16,452

 

19,208

 

53,067

 

59,339

 

   Preopening expenses

 

-

 

-

 

-

 

699

 

   Write-downs and other charges, net

 

(4)

 

(28,677)

 

76

 

(28,616)

 

       Total costs and expenses

 

169,816

 

145,569

 

487,492

 

472,211

 
                   

Operating income

 

37,871

 

77,028

 

82,153

 

129,789

 
                   

Other expense (income)

                 

   Interest expense, net of amounts capitalized

 

17,275

 

6,423

 

28,407

 

21,881

 

Income before state income taxes

 

20,596

 

70,605

 

53,746

 

107,908

 

State income taxes

 

(2,046)

 

(7,986)

 

(5,389)

 

(10,579)

 

Net income

 

$         18,550

 

$       62,619

 

$         48,357

 

$        97,329

 
                 

 
   

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

 
                   
   

Three Months Ended

 

Nine Months Ended

 
   

September 30,

 

September 30,

 
   

2010

 

2009

 

2010

 

2009

 
   

(In thousands)

 

Operating income

 

$         37,871

 

$         77,028

 

$       82,153

 

$       129,789

 

   Depreciation and amortization

 

16,452

 

19,208

 

53,067

 

59,339

 

   Preopening expenses

 

-

 

-

 

-

 

699

 

   Write-downs and other items, net

 

(4)

 

(28,677)

 

76

 

(28,616)

 

Adjusted EBITDA

 

$         54,319

 

$         67,559

 

$     135,296

 

$       161,211

 
                 

 

Footnotes and Safe Harbor Statements

Non-GAAP Financial Measures

Regulation G, "Conditions for Use of Non-GAAP Financial Measures," prescribes the conditions for use of non-GAAP financial information in public disclosures. We believe that our presentations of the following non-GAAP financial measures are important supplemental measures of operating performance to investors: earnings before interest, taxes, depreciation and amortization (EBITDA), Adjusted EBITDA, Adjusted Earnings, Adjusted Earnings Per Share (Adjusted EPS) and net revenues (excluding the 8 days of consolidation for Borgata). The following discussion defines these terms and why we believe they are useful measures of our performance.

In the accompanying release, and the Company's periodic reports filed with the Securities and Exchange Commission, Dania Jai-Alai's results are included as part of total other operating costs and expenses. In addition, as of the same date, we reclassified the reporting of corporate expense to exclude it from our subtotal for Reportable Segment Adjusted EBITDA and include it as part of total other operating costs and expenses. Furthermore, in the Company's periodic reports, corporate expense is presented to include its portion of share-based compensation expense.

EBITDA and Adjusted EBITDA

EBITDA is a commonly used measure of performance in our industry which we believe, when considered with measures calculated in accordance with GAAP, gives investors a more complete understanding of operating results before the impact of investing and financing transactions and income taxes and facilitates comparisons between us and our competitors. Management has historically adjusted EBITDA when evaluating operating performance because we believe that the inclusion or exclusion of certain recurring and non-recurring items is necessary to provide the most accurate measure of our core operating results and as a means to evaluate period-to-period results. We have chosen to provide this information to investors to enable them to perform more meaningful comparisons of past, present and future operating results and as a means to evaluate the results of core on- going operations. We do not reflect such items when calculating EBITDA; however, we adjust for these items and refer to this measure as Adjusted EBITDA. We have historically reported this measure to our investors and believe that the continued inclusion of Adjusted EBITDA provides consistency in our financial reporting. We use Adjusted EBITDA in this press release because we believe it is useful to investors in allowing greater transparency related to a significant measure used by management in its financial and operational decision-making. Adjusted EBITDA is among the more significant factors in management's internal evaluation of total company and individual property performance and in the evaluation of incentive compensation related to property management. Management also uses Adjusted EBITDA as a measure in determining the value of acquisitions and dispositions. Adjusted EBITDA is also widely used by management in the annual budget process. Externally, we believe these measures continue to be used by investors in their assessment of our operating performance and the valuation of our company. Adjusted EBITDA reflects EBITDA adjusted for deferred rent, preopening expenses, share-based compensation expense, write-downs and other charges, net, increase in value of derivative instruments, gain on early retirements of debt, other non-operating expenses, and our share of Borgata's non-operating expenses, preopening expenses and other items and write-downs, net. In addition, Adjusted EBITDA includes corporate expense. A reconciliation of Adjusted EBITDA to net income (loss), based upon GAAP, is included in the financial schedules accompanying this release.

Adjusted Earnings and Adjusted EPS

Adjusted Earnings is net income (loss) before preopening expenses, 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.

Pro Forma Effect of Consolidation of Borgata

The effective change in control of Borgata was triggered at the end of the first quarter 2010. For purposes of comparability throughout this release, when such results are reported on a consolidated basis, the results of the prior year are retroactively recast to present such results on a consolidated basis, comparable to the current period. Additionally, for further purposes of comparability, certain year to date amounts have been presented on a pro forma basis, as if the consolidation of Borgata had occurred as of the beginning of the period presented (i.e. January 1, for the nine months ended September 30, 2010, or September 30, 2009, as applicable).

Limitations on the Use of Non-GAAP Measures

The use of EBITDA, Adjusted EBITDA, Adjusted Earnings, Adjusted EPS and certain other non-GAAP financial measures has certain limitations. Our presentation of EBITDA, Adjusted EBITDA, Adjusted Earnings, Adjusted EPS or certain other non-GAAP financial measures may be different from the presentation used by other companies and therefore comparability may be limited. Depreciation and amortization expense, interest expense, income taxes and other items have been and will be incurred and are not reflected in the presentation of EBITDA or Adjusted EBITDA. Each of these items should also be considered in the overall evaluation of our results. Additionally, EBITDA and Adjusted EBITDA do not consider capital expenditures and other investing activities and should not be considered as a measure of our liquidity. We compensate for these limitations by providing the relevant disclosure of our depreciation and amortization, interest and income taxes, capital expenditures and other items both in our reconciliations to the GAAP financial measures and in our consolidated financial statements, all of which should be considered when evaluating our performance.

EBITDA, Adjusted EBITDA, Adjusted Earnings, Adjusted EPS and certain other non-GAAP financial measures are used in addition to and in conjunction with results presented in accordance with GAAP. EBITDA, Adjusted EBITDA, Adjusted Earnings, Adjusted EPS and certain other non-GAAP financial measures should not be considered as an alternative to net income, operating income, or any other operating performance measure prescribed by GAAP, nor should these measures be relied upon to the exclusion of GAAP financial measures. EBITDA, Adjusted EBITDA, Adjusted Earnings, Adjusted EPS and certain other non-GAAP financial measures reflect additional ways of viewing our operations that we believe, when viewed with our GAAP results and the reconciliations to the corresponding GAAP financial measures, provide a more complete understanding of factors and trends affecting our business than could be obtained absent this disclosure. Management strongly encourages investors to review our financial information in its entirety and not to rely on a single financial measure.

Forward Looking Statements and Company Information

This press release contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. Such statements contain words such as "may," "will," "might," "expect," "believe," "anticipate," "could," "would," "estimate," "continue," "pursue," or the negative thereof or comparable terminology, and may include (without limitation) information regarding the Company's expectations, goals or intentions regarding the future, including, but not limited to, statements regarding current results in October, that we expect fourth quarter comparisons to be the best quarterly comparisons of the year, that we will be well positioned to capitalize on opportunities presented by a recovering economy, and that there is evidence of a strengthening recovery in Hawaii's tourism industry and that it will bode well for the Company's Hawaiian visitation.  Forward-looking statements involve certain risks and uncertainties, and actual results may differ materially from those discussed in any such statement. These risks and uncertainties include, but are not limited to: fluctuations in our operating results; recovery of our properties in various markets; the state of the economy and its effect on consumer spending and our results of operations; consumer reaction to fluctuations in the stock market and economic factors; the fact that our expansion, development and renovation projects (including enhancements to improve property performance) are subject to many risks inherent in expansion, development or construction of a new or existing project; the effects of events adversely impacting the economy or the regions from which we draw a significant percentage of our customers; competition; litigation; financial community and rating agency perceptions of the Company; changes in laws and regulations, including increased taxes; the availability and price of energy, weather, regulation, economic, credit and capital market conditions; and the effects of war, terrorist or similar activity. Additional factors that could cause actual results to differ are discussed under the heading "Risk Factors" and in other sections of the Company's Quarterly Report on Form 10-Q for the quarter ended June 30, 2010, 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