2014

Boyd Gaming Reports Second-Quarter Results - Acquisition of Peninsula Gaming on Track to Close in Fourth Quarter -

- Company Announces New Development Agreements in California and Florida -

LAS VEGAS, July 24, 2012 /PRNewswire/ -- Boyd Gaming Corporation (NYSE: BYD) today reported financial results for the second quarter ended June 30, 2012.  

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

Net revenues were $615.2 million for the second quarter 2012, an increase of 7.1% from $574.4 million during the same quarter in 2011.  Total Adjusted EBITDA(1)  for the quarter declined 3.9% to $113.8 million, compared to $118.4 million in the prior year.  These results include the operations of the IP Casino Resort Spa, acquired by the Company on October 4, 2011.

Boyd Gaming's wholly-owned business, including the IP, reported second-quarter 2012 net revenues of $438.7 million, up 12.4% from the year-ago period.  Wholly-owned Adjusted EBITDA for the quarter rose 4.2% to $83.1 million, up from $79.8 million in the year-ago period.  Revenue growth was driven by results in our Midwest and South region, while a weaker performance in Nevada negatively impacted EBITDA. Borgata, the Company's 50% joint venture, reported second-quarter 2012 net revenues of $175.4 million, down $7.4 million from the second quarter of 2011, while Adjusted EBITDA at the property decreased $8.0 million to $30.7 million

For the second quarter 2012, the Company reported net income of $1.0 million, or $0.01 per share, compared to a net loss of $3.0 million, or $0.03 per share, in the same period last year. 

Adjusted Earnings(1) for the second quarter 2012 were $3.5 million, or $0.04 per share, compared to $0.8 million, or $0.01 per share, for the same period in 2011.  Certain pre-tax items included in Adjusted Earnings for the second quarter of 2012 resulted in a net increase of $2.9 million ($2.5 million, net of tax and noncontrolling interest, or $0.03 per share).  By comparison, pre-tax items included in Adjusted Earnings for the second quarter 2011 resulted in a net increase of $6.4 million ($3.7 million, net of tax and noncontrolling interest, or $0.04 per share). Pre-tax items included in Adjusted Earnings are listed in a table at the end of this press release.

"During the second half of the quarter, business trends began to weaken, and that clearly contributed to softness in our results," said Keith Smith, President and Chief Executive Officer of Boyd Gaming.  "We remain encouraged by results at our Midwest and South properties, where we maintained or grew share in each of our markets.   This bodes well for our acquisition of Peninsula Gaming, which is on track to be completed in the fourth quarter."  

(1)

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

Year-To-Date Results

For the six months ended June 30, 2012, we reported net revenues of $1.25 billion, an increase of 9.6% compared to the six months ended June 30, 2011.  Total Adjusted EBITDA was $247.6 million during the period, up 7.6% from the prior year.

During the six-month period 2012, our wholly-owned operations posted net revenues of $896.7 million, up 13.9% from the year-ago period, while wholly-owned Adjusted EBITDA increased 11.4% to $178.0 million.  Borgata reported net revenues of $351.6 million and Adjusted EBITDA of $69.6 million during the six months ended June 30, 2012, both essentially flat with the year-ago period.

We reported net income of $6.8 million for the six months ended June 30, 2012, or $0.08 per share.  By comparison, we reported a net loss of $6.5 million, or $0.07 per share, for the six months ended June 30, 2011.

Adjusted Earnings for the six months ended June 30, 2012 were $11.9 million, or $0.14 per share, compared to a loss of $0.4 million, or $0.01 per share, during the comparable period in 2011.

Operations Review

Las Vegas Locals

In the Las Vegas Locals segment, second-quarter 2012 net revenues were $149.0 million, down $2.9 million from the second quarter of 2011.  Second-quarter 2012 Adjusted EBITDA declined $4.0 million to $34.5 million compared to the year-ago period. Visitation and spend-per-visit among our top-tier customers remained strong during the quarter. However, EBITDA was negatively impacted by lower hold in our sports books, higher expenses associated with employee benefit programs across the country, and declines in business volumes from casual gaming customers.

Downtown

The Company's Downtown Las Vegas business generated net revenues of $55.9 million for the second quarter 2012, compared to $56.6 million in the second quarter 2011. Adjusted EBITDA was $8.1 million, a decline of $1.3 million from the year-ago quarter.  Certain changes in our Hawaiian marketing programs aimed at reducing costs had a temporary impact on business volumes, but we expect those effects to reverse themselves in the third quarter.  

Midwest and South

In the Midwest and South region, net revenues were $233.7 million, up 28.6% from the year-ago quarter, while Adjusted EBITDA increased 20.6% to $51.0 millionDelta Downs, Treasure Chest and the IP produced solid results during the quarter.  Blue Chip reported strong results as well, after factoring out a nonrecurring $2.8 million property tax adjustment in the year-ago quarter.  

The IP contributed $47.3 million in net revenues and $11.5 million in EBITDA to regional results during the quarter.  Net revenues at the property declined 9.1% from the second quarter of 2011, while EBITDA rose 23.9%.  Revenue was impacted by more focused marketing programs, while significant improvements in operating margins drove EBITDA gains. We recently introduced our   B Connected player loyalty program at the IP, and expect to start driving additional profitable business to the property in the third quarter.

Borgata

Borgata's net revenues for the second quarter 2012 were $175.4 million, down $7.4 million from the second quarter 2011, while Adjusted EBITDA declined $8.0 million to $30.7 million in the same period.  Results were impacted by higher property taxes, as well as lower volumes due to new competition in Atlantic City.  However, Borgata continued to lead the Atlantic City market by a wide margin, increasing its market share during the quarter, and we expect the property to deliver a strong performance during the summer season.

Peninsula Gaming Acquisition

The Company continues to make progress toward closing the acquisition of Peninsula Gaming, LLC, announced on May 16.  The transaction will add five properties to Boyd Gaming's portfolio: the Kansas Star Casino, Hotel and Event Center in Mulvane, Kansas; Diamond Jo Casino in Dubuque, Iowa; Diamond Jo Casino in Worth County, Iowa; Evangeline Downs Racetrack and Casino in Opelousas, Louisiana; and Amelia Belle Casino in Amelia, Louisiana.

In early June, the Federal Trade Commission granted Boyd Gaming an early termination of the waiting period required under Hart Scott Rodino. Subject to the satisfaction of various closing conditions, Boyd Gaming anticipates this transaction will close in the second half of the fourth quarter of this year.

New Development

Boyd Gaming today announced that it has reached separate development agreements for new projects in Broward County, Florida and Sacramento County, California.

In Florida, Boyd Gaming has entered into an agreement with Sunrise Sports Entertainment, LLP, the operator of the BankAtlantic Center, a major entertainment venue in south Florida and home to the NHL's Florida Panthers. This agreement provides the Company the opportunity to take advantage of the potential of expanded gaming in south Florida at the site of the BankAtlantic Center.

The BankAtlantic Center is the largest indoor arena of its kind in Florida, hosting more than 200 events annually.  It is located directly across from Sawgrass Mills, the sixth-largest shopping mall in the country.

Separately, the Company reached an agreement with Wilton Rancheria, a federally-recognized tribe located about 30 miles southeast of Sacramento, California, to develop and manage a gaming entertainment complex.  The deal is subject to the receipt of all required local, state and federal approvals, a process we believe will take approximately 24 months. 

"While it is early in the process, these two agreements provide exciting long-term growth opportunities for the Company," Keith Smith said.  "The agreement with Sunrise Sports Entertainment positions us to take advantage of a potential development opportunity in an attractive location. The project would be in an ideal location in Broward County, adjacent to two attractions that already draw substantial visitor volumes, with easy access to several major traffic corridors. We are equally excited by our agreement with Wilton Rancheria in California.  We look forward to working with them to develop an exciting gaming complex southeast of Sacramento."

Conference Call Information

Boyd Gaming will host its second-quarter 2012 conference call today, July 24, at 12:00 p.m. Eastern, on which the Company will provide guidance for the third quarter 2012.  The conference call number is (877) 270-2148.  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://www.videonewswire.com/event.asp?id=88544

Following the call's completion, a replay will be available by dialing (877) 344-7529 today, July 24, beginning at 2:00 p.m. Eastern and continuing through Tuesday, July 31, at 9 a.m. Eastern.  The conference number for the replay will be 10016763.  The replay will also be available on the Internet at www.boydgaming.com.

Footnotes and Safe Harbor Statements

Non-GAAP Financial Measures

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

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

EBITDA and Adjusted EBITDA

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

Adjusted Earnings and Adjusted EPS

Adjusted Earnings is net income (loss) before preopening expenses, adjustments to prior-year property taxes, increase in value of derivative instruments, write-downs and other charges, net, gain on early retirements of debt, acquisition-related expenses, expenses related to a property closure due to flooding, other non-operating expenses, valuation adjustments related to the consolidation of Borgata, and our share of Borgata's preopening expenses and other items and write-downs, net. Adjusted Earnings and Adjusted EPS are presented solely as supplemental disclosures because management believes that they are widely used measures of performance in the gaming industry. A reconciliation of net loss based upon GAAP to Adjusted Earnings and Adjusted EPS are included in the financial schedules accompanying this release.

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 future performance.  In addition, forward-looking statements in this press release include statements regarding: the anticipated acquisition of Peninsula Gaming, the timing for completion of such acquisition and the anticipated benefits from such transaction; the anticipated benefits from new development arrangements with Wilton Rancheria and SSE, the expectation that legislation and other regulations will pass permitting these developments, and the timing for the approvals for such developments; the expected benefits from introducing B Connected to the IP; the expectations regarding Borgata's results for the summer season; the expectation that there will be future outstanding results at IP, that marketing costs will be refined and synergies will be realized; the impact of new competition on Borgata;  and that the Company believes that it will be able to drive significant efficiencies and generate additional revenue through cross-marketing opportunities.  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 the Company's operating results; recovery of its properties in various markets; the state of the economy and its effect on consumer spending and the Company's results of operations; the timing for economic recovery, its effect on the Company's business and the local economies where the Company's properties are located; the satisfaction to the various conditions to our pending acquisition of Peninsula Gaming, and whether such conditions will be satisfied when expected, or at all; the availability of financing for such acquisition on terms that are acceptable to us, if at all; the receipt of legislative, and other state, federal and local approvals for development projects in Florida; consumer reaction to fluctuations in the stock market and economic factors; the fact that the Company's 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 the Company draws a significant percentage of its customers; competition; litigation; financial community and rating agency perceptions of the Company and its subsidiaries; 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 Annual Report on Form 10-K, its Quarterly Reports on Form 10-Q, 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 17 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.

The results of IP are included in our condensed consolidated statements of operations for the three and six months ended June 30, 2012.


Three Months Ended


Six Months Ended


June 30,


June 30,


2012


2011


2012


2011


(In thousands, except per share data)

Revenues








    Gaming

$    515,053


$    486,557


$     1,050,801


$      968,492

    Food and beverage

105,269


94,585


211,401


186,662

    Room

69,628


60,459


135,625


117,050

    Other

35,825


33,276


71,657


66,307

Gross revenues

725,775


674,877


1,469,484


1,338,511

    Less promotional allowances

110,553


100,474


221,179


199,162

        Net revenues

615,222


574,403


1,248,305


1,139,349









Costs and expenses








    Gaming

240,253


223,173


489,208


449,782

    Food and beverage

60,359


50,080


114,437


97,648

    Room

15,931


13,514


30,066


26,335

    Other

26,691


27,335


52,752


53,574

    Selling, general and administrative

110,454


96,783


220,171


192,571

    Maintenance and utilities

39,570


36,773


78,333


74,188

    Depreciation and amortization

50,702


48,488


100,716


99,072

    Corporate expense

13,009


12,264


25,880


25,544

    Preopening expenses

2,210


1,741


3,870


3,572

    Other operating items, net

(2,196)


2,262


(1,949)


6,969

        Total costs and expenses

556,983


512,413


1,113,484


1,029,255

Operating income

58,239


61,990


134,821


110,094









Other expense (income)








    Interest income

(408)


(20)


(412)


(25)

    Interest expense, net of amounts

    capitalized

64,788


66,694


128,616


123,985

    Fair value adjustment of

    derivative instruments

-


48


-


265

    Loss on early retirements of

    debt, net

-


-


-


20

        Total other expense, net

64,380


66,722


128,204


124,245









Income (loss) before income taxes

(6,141)


(4,732)


6,617


(14,151)

Income taxes

5,450


(911)


(833)


2,197

Net income (loss)

(691)


(5,643)


5,784


(11,954)

Net loss attributable to noncontrolling interest

1,668


2,692


1,045


5,482

Net income (loss) attributable to

Boyd Gaming Corporation

$           977


$       (2,951)


$            6,829


$        (6,472)









Basic net income (loss) per common share

$          0.01


$         (0.03)


$              0.08


$          (0.07)









Weighted average basic shares outstanding

87,588


87,204


87,559


87,181









Diluted net income (loss) per common share

$          0.01


$         (0.03)


$              0.08


$          (0.07)









Weighted average diluted shares outstanding

87,829


87,204


87,978


87,181

The following table sets forth the impact of the consolidation of Borgata and LVE during the three months ended June 30, 2012. The wholly-owned column reflects the equity method of accounting for Borgata. The consolidating columns are presented for purposes of additional disclosure and as a reconciliation to the current GAAP presentation of Boyd Gaming Corporation.


Three Months Ended June 30, 2012


Boyd Gaming  Wholly-Owned


Borgata


Borgata Eliminations


Boyd/Borgata Subtotal


LVE (Variable Interest Entity)


LVE Eliminations


Boyd Gaming Consolidated


(In thousands, except per share data)

Revenues














    Gaming

$     362,581


$      152,472


$         -


$      515,053


$           -


$           -


$      515,053

    Food and beverage

69,399


35,870


-


105,269


-


-


105,269

    Room

39,957


29,671


-


69,628


-


-


69,628

    Other

25,665


10,160


-


35,825


2,724


(2,724)


35,825

Gross revenues

497,602


228,173


-


725,775


2,724


(2,724)


725,775

    Less promotional allowances

57,796


52,757


-


110,553


-


-


110,553

        Net revenues

439,806


175,416


-


615,222


2,724


(2,724)


615,222















Costs and expenses














    Gaming

175,668


64,585


-


240,253


-


-


240,253

    Food and beverage

41,411


18,948


-


60,359


-


-


60,359

    Room

12,179


3,752


-


15,931


-


-


15,931

    Other

18,707


7,984


-


26,691


-


-


26,691

    Selling, general and administrative

75,458


34,990


-


110,448


6


-


110,454

    Maintenance and utilities

25,147


14,423


-


39,570


-


-


39,570

    Depreciation and amortization

34,688


16,014


-


50,702


-


-


50,702

    Corporate expense

13,009


-


-


13,009


-


-


13,009

    Preopening expenses

4,826


108


-


4,934


-


(2,724)


2,210

    Other operating items, net

(36)


(2,160)


-


(2,196)


-


-


(2,196)

        Total costs and expenses

401,057


158,644


-


559,701


6


(2,724)


556,983















Operating income from Borgata

8,386


-


(8,386)


-


-


-


-

Operating income

47,135


16,772


(8,386)


55,521


2,718


-


58,239















Other expense (income)














    Interest income

(408)


-


-


(408)


-


-


(408)

    Interest expense, net of amounts

    capitalized

41,491


20,648


-


62,139


2,649


-


64,788

    Other non-operating expenses

    from Borgata, net

10,121


-


(10,121)


-


-


-


-

        Total other expense, net

51,204


20,648


(10,121)


61,731


2,649


-


64,380















Income (loss) before income taxes

(4,069)


(3,876)


1,735


(6,210)


69


-


(6,141)

Income taxes

5,046


404


-


5,450


-


-


5,450















Net income (loss)

977


(3,472)


1,735


(760)


69


-


(691)

Net loss attributable to noncontrolling interest

-


-


1,737


1,737


-


(69)


1,668

Net income attributable to Boyd Gaming Corporation

$           977


$        (3,472)


$     3,472


$            977


$          69


$          (69)


$            977















Basic net income per common share

$          0.01












$           0.01

Weighted average basic shares outstanding

87,588












87,588

Diluted net income per common share

$          0.01












$           0.01

Weighted average diluted shares outstanding

87,829












87,829

The following table sets forth the impact of the consolidation of Borgata and LVE during the three months ended June 30, 2011. The wholly-owned column reflects the equity method of accounting for Borgata. The consolidating columns are presented for purposes of additional disclosure and as a reconciliation to the current GAAP presentation of Boyd Gaming Corporation.


Three Months Ended June 30, 2011


Boyd Gaming  Wholly-Owned


Borgata


Borgata Eliminations


Boyd/Borgata Subtotal


LVE (Variable Interest Entity)


LVE Eliminations


Boyd Gaming Consolidated


(In thousands, except per share data)















Revenues














    Gaming

$  324,419


$  162,138


$  -


$  486,557


$  -


$  -


$  486,557

    Food and beverage

57,527


37,058


-


94,585


-


-


94,585

    Room

30,642


29,817


-


60,459


-


-


60,459

    Other

22,680


10,596


-


33,276


2,769


(2,769)


33,276

Gross revenues

435,268


239,609


-


674,877


2,769


(2,769)


674,877

    Less promotional allowances

43,621


56,853


-


100,474


-


-


100,474

        Net revenues

391,647


182,756


-


574,403


2,769


(2,769)


574,403















Costs and expenses














    Gaming

157,724


65,449


-


223,173


-


-


223,173

    Food and beverage

32,049


18,031


-


50,080


-


-


50,080

    Room

9,761


3,753


-


13,514


-


-


13,514

    Other

18,553


8,782


-


27,335


-


-


27,335

    Selling, general and administrative

64,084


32,699


-


96,783


-


-


96,783

    Maintenance and utilities

21,353


15,386


-


36,739


34


-


36,773

    Depreciation and amortization

31,940


16,548


-


48,488


-


-


48,488

    Corporate expense

12,264


-


-


12,264


-


-


12,264

    Preopening expenses

4,418


92


-


4,510


-


(2,769)


1,741

    Other operating items, net

1,513


749


-


2,262


-


-


2,262

        Total costs and expenses

353,659


161,489


-


515,148


34


(2,769)


512,413















Operating income from Borgata

10,634


-


(10,634)


-


-


-


-

Operating income

48,622


21,267


(10,634)


59,255


2,735


-


61,990















Other expense (income)














    Interest income

(20)


-


-


(20)


-


-


(20)

    Interest expense, net of amounts capitalized

40,059


21,328


-


61,387


5,307


-


66,694

    Fair value adjustment of derivative instruments

48


-


-


48


-


-


48

    Other non-operating expenses from Borgata, net

10,754


-


(10,754)


-


-


-


-

    Total other expense, net

50,841


21,328


(10,754)


61,415


5,307


-


66,722















Income (loss) before income taxes

(2,219)


(61)


120


(2,160)


(2,572)


-


(4,732)

Income taxes

(732)


(179)


-


(911)


-


-


(911)















Net income (loss)

(2,951)


(240)


120


(3,071)


(2,572)


-


(5,643)

Net loss attributable to noncontrolling interest

-


-


120


120


-


2,572


2,692















Net income (loss) attributable to Boyd Gaming Corporation

$    (2,951)


$  (240)


$  240


$  (2,951)


$  (2,572)


$  2,572


$     (2,951)















Basic net loss per common share

$      (0.03)












$       (0.03)

Weighted average basic shares outstanding

87,204












87,204

Diluted net loss per common share

$      (0.03)












$       (0.03)

Weighted average diluted shares outstanding

87,204












87,204

The following table sets forth the impact of the consolidation of Borgata and LVE during the six months ended June 30, 2012. The wholly-owned column reflects the equity method of accounting for Borgata. The consolidating columns are presented for purposes of additional disclosure and as a reconciliation to the current GAAP presentation of Boyd Gaming Corporation.


Six Months Ended June 30, 2012


Boyd Gaming  Wholly-Owned


Borgata


Borgata Eliminations


Boyd/Borgata Subtotal


LVE (Variable Interest Entity)


LVE Eliminations


Boyd Gaming Consolidated


(In thousands, except per share data)

Revenues














    Gaming

$   742,876


$   307,925


$         -


$  1,050,801


$         -


$         -


$ 1,050,801

    Food and beverage

139,285


72,116


-


211,401


-


-


211,401

    Room

78,797


56,828


-


135,625


-


-


135,625

    Other

52,919


18,738


-


71,657


5,448


(5,448)


71,657

Gross revenues

1,013,877


455,607


-


1,469,484


5,448


(5,448)


1,469,484

    Less promotional allowances

117,138


104,041


-


221,179


-


-


221,179

        Net revenues

896,739


351,566


-


1,248,305


5,448


(5,448)


1,248,305















Costs and expenses














    Gaming

361,575


127,633


-


489,208


-


-


489,208

    Food and beverage

77,648


36,789


-


114,437


-


-


114,437

    Room

23,112


6,954


-


30,066


-


-


30,066

    Other

38,437


14,315


-


52,752


-


-


52,752

    Selling, general and administrative

152,633


67,529


-


220,162


9


-


220,171

    Maintenance and utilities

49,603


28,730


-


78,333


-


-


78,333

    Depreciation and amortization

69,572


31,144


-


100,716


-


-


100,716

    Corporate expense

25,880


-


-


25,880


-


-


25,880

    Preopening expenses

9,078


240


-


9,318


-


(5,448)


3,870

    Other operating items, net

239


(2,188)


-


(1,949)


-


-


(1,949)

        Total costs and expenses

807,777


311,146


-


1,118,923


9


(5,448)


1,113,484















Operating income from Borgata

20,210


-


(20,210)


-


-


-


-

Operating income

109,172


40,420


(20,210)


129,382


5,439


-


134,821















Other expense (income)














    Interest income

(412)


-


-


(412)


-


-


(412)

    Interest expense, net of amounts capitalized

81,444


41,130


-


122,574


6,042


-


128,616

    Other non-operating expenses from Borgata, net

20,651


-


(20,651)


-


-


-


-

        Total other expense, net

101,683


41,130


(20,651)


122,162


6,042


-


128,204















Income (loss) before income taxes

7,489


(710)


441


7,220


(603)


-


6,617

Income taxes

(660)


(173)


-


(833)


-


-


(833)















Net income (loss)

6,829


(883)


441


6,387


(603)


-


5,784

Noncontrolling interest

-


-


442


442


-


603


1,045















Net income (loss) attributable to Boyd Gaming Corporation

$      6,829


$        (883)


$       883


$        6,829


$      (603)


$       603


$       6,829















Basic net income per common share

$        0.08












$         0.08

Weighted average basic shares outstanding

87,559












87,559

Diluted net income per common share

$        0.08












$         0.08

Weighted average diluted shares outstanding

87,978












87,978

The following table sets forth the impact of the consolidation of Borgata and LVE during the six months ended June 30, 2011. The wholly-owned column reflects the equity method of accounting for Borgata. The consolidating columns are presented for purposes of additional disclosure and as a reconciliation to the current GAAP presentation of Boyd Gaming Corporation.


Six Months Ended June 30, 2011


Boyd Gaming  Wholly-Owned


Borgata


Borgata Eliminations


Boyd/Borgata Subtotal


LVE (Variable Interest Entity)


LVE Eliminations


Boyd Gaming Consolidated


(In thousands, except per share data)















Revenues














    Gaming

$    654,498


$    313,994


$    -


$    968,492


$    -


$    -


$    968,492

    Food and beverage

115,139


71,523


-


186,662


-


-


186,662

    Room

60,942


56,108


-


117,050


-


-


117,050

    Other

46,407


19,900


-


66,307


5,410


(5,410)


66,307

Gross revenues

876,986


461,525


-


1,338,511


5,410


(5,410)


1,338,511

    Less promotional allowances

89,483


109,679


-


199,162


-


-


199,162

        Net revenues

787,503


351,846


-


1,139,349


5,410


(5,410)


1,139,349















Costs and expenses














    Gaming

319,357


130,425


-


449,782


-


-


449,782

    Food and beverage

63,692


33,956


-


97,648


-


-


97,648

    Room

19,445


6,890


-


26,335


-


-


26,335

    Other

37,720


15,854


-


53,574


-


-


53,574

    Selling, general and administrative

129,025


63,546


-


192,571


-


-


192,571

    Maintenance and utilities

42,420


30,837


-


73,257


931


-


74,188

    Depreciation and amortization

63,658


35,414


-


99,072


-


-


99,072

    Corporate expense

25,544


-


-


25,544


-


-


25,544

    Preopening expenses

8,890


92


-


8,982


-


(5,410)


3,572

    Other operating items, net

1,204


5,765


-


6,969


-


-


6,969

        Total costs and expenses

710,955


322,779


-


1,033,734


931


(5,410)


1,029,255















Operating income from Borgata

14,534


-


(14,534)


-


-


-


-

Operating income

91,082


29,067


(14,534)


105,615


4,479


-


110,094















Other expense (income)














    Interest income

(25)


-


-


(25)


-


-


(25)

    Interest expense, net of amounts capitalized

79,940


38,611


-


118,551


5,434


-


123,985

    Fair value adjustment of derivative instruments

265


-


-


265


-


-


265

    Loss on early retirements of debt, net

20


-


-


20


-


-


20

    Other non-operating expenses from Borgata, net

19,060


-


(19,060)


-


-


-


-

       Total other expense, net

99,260


38,611


(19,060)


118,811


5,434


-


124,245















Income (loss) before income taxes

(8,178)


(9,544)


4,526


(13,196)


(955)


-


(14,151)

Income taxes

1,706


491


-


2,197


-


-


2,197















Net income (loss)

(6,472)


(9,053)


4,526


(10,999)


(955)


-


(11,954)

Net loss attributable to noncontrolling interest

-


-


4,527


4,527


-


955


5,482

Net income (loss) attributable to Boyd Gaming Corporation

$    (6,472)


$    (9,053)


$    9,053


$    (6,472)


$    (955)


$    955


$    (6,472)















Basic net loss per common share

$      (0.07)












$      (0.07)

Weighted average basic shares outstanding

87,181












87,181

Diluted net loss per common share

$      (0.07)












$      (0.07)

Weighted average diluted shares outstanding

87,181












87,181

The following tables reconcile Adjusted earnings (loss) and Adjusted earnings (loss) per share to Net income (loss) attributable to Boyd Gaming Corporation and Net income (loss) per share, respectively, as reported in accordance with GAAP. The weighted average shares outstanding represent the shares used in the diluted net income per share computations, except to the extent such common share equivalents are anti-dilutive. Also, during periods in which our adjusted earnings result in a loss, our basic shares outstanding are used in the computation of Adjusted loss per share, as any common share equivalents would be anti-dilutive.


Three Months Ended


Six Months Ended


June 30,


June 30,


2012


2011


2012


2011


(In thousands, except per share data)









Net income (loss) attributable to Boyd Gaming Corporation

$        977


$    (2,951)


$      6,829


$    (6,472)

 Adjustments related to Boyd Gaming:








Preopening expense, excluding impact of LVE

4,826


4,418


9,078


8,890

Acquisition related expenses

6,243


370


6,272


370

Gain on insurance settlement, net of flood expense

(6,293)


1,143


(6,091)


1,143

Miscellaneous non-recurring adjustments, net

14


-


58


(309)

Adjustments to property tax accruals, net

-


(772)


(597)


(3,538)

Change in fair value of derivative instruments

-


48


-


265

Loss on early retirements of debt, net

-


-


-


20

 Adjustments related to Borgata:








Other operating items, net

(2,160)


749


(2,188)


5,765

Preopening expense

108


92


240


92

Other valuation adjustments related to consolidation, net

162


367


146


(327)

Total adjustments

2,900


6,415


6,918


12,371









Income tax effect for above adjustments

$    (1,306)


$    (2,093)


$    (2,716)


$    (3,745)

Impact on noncontrolling interest, net

945


(604)


901


(2,599)

        Adjusted earnings (loss)

$     3,516


$        767


$    11,932


$       (445)









    Adjusted earnings (loss) per share

$       0.04


$       0.01


$        0.14


$      (0.01)









    Weighted average shares outstanding

87,829


87,204


87,978


87,181









Net income (loss) per share

$       0.01


$      (0.03)


$        0.08


$      (0.07)

 Adjustments related to Boyd Gaming:








Preopening expense, excluding impact of LVE

$       0.05


$       0.04


$        0.10


$       0.09

Acquisition related expenses

0.07


0.01


0.07


-

Gain on insurance settlement, net of flood expense

(0.07)


0.01


(0.07)


0.01

Miscellaneous non-recurring adjustments, net

-


-


-


-

Adjustments to property tax accruals, net

-


(0.01)


(0.01)


(0.04)

Change in fair value of derivative instruments

-


-


-


-

Loss on early retirements of debt, net

-


-


-


-

 Adjustments related to Borgata:








Other operating items, net

(0.02)


0.01


(0.02)


0.07

Preopening expense

-


-


-


-

Other valuation adjustments related to consolidation, net

-


0.01


-


-

        Total adjustments

0.03


0.07


0.07


0.13









Income tax effect for above adjustments

(0.01)


(0.02)


(0.03)


(0.04)

Impact on noncontrolling interest, net

0.01


(0.01)


0.02


(0.03)

        Adjusted earnings (loss) per share

$       0.04


$       0.01


$        0.14


$      (0.01)

The following table presents Net Revenues and Adjusted EBITDA by operating segment and reconciles Adjusted EBITDA to Net income (loss) attributable to Boyd Gaming Corporation on our condensed consolidated statements of operations for the three and six months ended June 30, 2012 and 2011. 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.


Three Months Ended


Six Months Ended


June 30,


June 30,


2012


2011


2012


2011


(In thousands)









Net Revenues








    Las Vegas Locals

$    148,987


$    151,836


$        303,776


$        306,355

    Downtown Las Vegas

55,939


56,585


112,947


112,251

    Midwest and South (1)

233,728


181,751


477,450


365,881

    Atlantic City

175,416


182,756


351,566


351,846

        Reportable Segment Net revenues

614,070


572,928


1,245,739


1,136,333

    Other

1,152


1,475


2,566


3,016

        Net revenues

$    615,222


$    574,403


$     1,248,305


$     1,139,349









Adjusted EBITDA








    Las Vegas Locals

$      34,535


$      38,570


$          73,021


$          78,213

    Downtown Las Vegas

8,109


9,366


16,541


18,370

    Midwest and South (1)

51,003


42,276


109,133


83,487

        Wholly-owned property Adjusted EBITDA

93,647


90,212


198,695


180,070

        Corporate expense

(10,547)


(10,457)


(20,674)


(20,256)

        Wholly-owned Adjusted EBITDA

83,100


79,755


178,021


159,814

    Atlantic City

30,735


38,657


69,616


70,339

        Our share of Borgata's operating income

        before net amortization, preopening and

        other items

-


-


-


-

            Adjusted EBITDA

$    113,835


$    118,412


$        247,637


$        230,153









Unallocated costs and expenses








    Deferred rent

$           996


$        1,032


$            1,992


$            2,068

    Depreciation and amortization

50,702


48,488


100,716


99,072

    Preopening expenses

2,210


1,741


3,870


3,572

    Share-based compensation expense

2,837


2,140


5,953


5,953

    Other operating items, net

(2,196)


2,262


(1,949)


6,969

    Other

1,047


759


2,234


2,425

        Total unallocated costs and

        expenses

55,596


56,422


112,816


120,059

Operating income

58,239