Boyd Gaming Reports Second-Quarter Results

? Las Vegas Locals Segment Posts 12% EBITDA Gain ?

30 Jul, 2013, 07:00 ET from Boyd Gaming Corporation

LAS VEGAS, July 30, 2013 /PRNewswire/ -- Boyd Gaming Corporation (NYSE: BYD) today reported financial results for the second quarter ended June 30, 2013.  

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

Boyd Gaming reported net revenues of $738.7 million, an increase of 20.3% from $614.1 million during the same quarter in 2012.  Total Adjusted EBITDA(1)  grew 40.7% to $160.2 million, compared to $113.8 million in the year-ago quarter.  Results reflect the addition of the operations of Peninsula Gaming, LLC, which was acquired by the Company on November 20, 2012.

Boyd Gaming's wholly-owned business reported second-quarter 2013 net revenues of $565.9 million, up 29.0% from $438.7 million in the second quarter of 2012.  Wholly-owned Adjusted EBITDA was $132.3 million, an increase of 59.3% from $83.1 million in the second quarter of 2012.  Borgata, the Company's 50% joint venture, reported second-quarter 2013 net revenues of $172.9 million, compared to $175.4 million in the year-ago period, while Adjusted EBITDA was $27.8 million, down from $30.7 million in the second quarter of 2012. 

Adjusted Earnings(1) for the second quarter 2013 reflect a loss of $0.1 million, breakeven on a per-share basis, compared to income of $4.2 million, or $0.05 per share, for the same period in 2012.   The calculations of Adjusted Earnings and Adjusted Earnings per share are presented in a table at the end of this press release.

During the second quarter of 2013, the Company completed the sale of Dania Jai-Alai, realizing a pretax gain of $18.9 million.  As a result of the sale, both the gain and the historical operating results of the Dania business are now presented as discontinued operations.  For the second quarter of 2013, the discontinued operations reported income, net of tax, of $11.8 million, as compared to an after-tax loss of $0.7 million in the second quarter of 2012.

On a GAAP basis, and including the discontinued operations, the Company reported net income of $11.6 million, or $0.13 per share, for the second quarter 2013, compared to net income of $1.0 million, or $0.01 per share, for the year-ago period.

"We are making significant progress toward our strategic goals of strengthening our balance sheet and positioning ourselves for continued growth," said Keith Smith, President and Chief Executive Officer of Boyd Gaming. "Operating efficiencies and effective marketing programs drove solid growth across our Las Vegas properties.  And Borgata posted year-over-year gains as well, after factoring out the impact of a tax charge.  Our Company is moving in the right direction, and I am optimistic about the outlook for our business."

(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, 2013, Boyd Gaming reported net revenues of $1.47 billion, an increase of 18.3% from the $1.25 billion in net revenues reported in the year-ago period.  Total Adjusted EBITDA was $323.7 million, up 30.7% from $247.6 million in the prior year.

During the six months ended June 30, 2013, the Company's wholly-owned operations generated net revenues of $1.14 billion, up 27.0% from $894.2 million in the year-ago period, while wholly-owned Adjusted EBITDA increased 50.2% to $267.4 million, compared to $178.0 million in the comparable period 2012.  Borgata reported net revenues of $338.5 million and Adjusted EBITDA of $56.3 million during the six-month period ended June 30, 2013, compared to $351.6 million in revenues and $69.6 million in Adjusted EBITDA in the year-ago period.

Adjusted Earnings for the six months ended June 30, 2013, were $1.3 million, or $0.01 per share, compared to $13.2 million, or $0.15 per share, during the six months ended June 30, 2012.

The discontinued operations reported income, net of tax, of $10.8 million for the six months ended June 30, 2013, as compared to an after-tax loss of $1.5 million in the first six months of 2012.

On a GAAP basis, and including the discontinued operations, the Company reported net income of $4.3 million, or $0.05 per share.  By comparison, Boyd Gaming reported net income of $6.8 million, or $0.08 per share, for the six months ended June 30, 2012.

Key Operations Review

Las Vegas Locals

In the Las Vegas Locals segment, second-quarter 2013 net revenues were $149.7 million, up slightly from $149.0 million in the second quarter of 2012.  Second-quarter 2013 Adjusted EBITDA rose 12.1% to $38.7 million, compared to $34.5 million in the year-ago period, as EBITDA grew for the second consecutive quarter.  EBITDA margins improved by nearly 270 basis points due to refinements in our operations.  We also continued to benefit from new slot marketing initiatives, which drove increased gaming revenue in the Locals segment.

Downtown

The Downtown Las Vegas region reported net revenues of $56.1 million for the second quarter of 2013, a slight increase from $55.9 million in the year-ago period. Adjusted EBITDA grew 14.7% to $9.3 million, compared to $8.1 million in the second quarter of 2012.  Results reflect improved business volumes driven by increased visitor traffic along Fremont Street, as well as new marketing programs directed to Hawaiian customers.  We also posted an improved operating performance at our charter service.

Midwest and South; Peninsula

In the Midwest and South segment, net revenues were $224.3 million, compared to $233.7 million in the second quarter of 2012.  Adjusted EBITDA was $48.6 million versus $51.0 million in the year-ago period. 

During the second quarter 2013, the Peninsula segment contributed net revenues of $135.8 million, and Adjusted EBITDA of $48.3 million

Revenues were affected by increased competition throughout the region, particularly at our Gulf Coast properties; however, we were able to mitigate the impact to EBITDA through increased efficiencies in our operations.  Despite the impact of severe weather, Kansas Star achieved significant revenue growth during the quarter, driven by new non-gaming amenities.

Borgata

Borgata, the Company's 50% joint venture, reported second-quarter 2013 net revenues of $172.9 million, compared to $175.4 million in the year-ago period. Adjusted EBITDA was $27.8 million, down from $30.7 million in the second quarter of 2012.  The decline in EBITDA was attributable to a $4.3 million property tax charge for the first six months of 2013 that was recorded in the second quarter.  Absent this charge, Borgata would have generated EBITDA of $32.1 million ‒ up 4.5% over the prior year ‒ due to greater efficiencies throughout the business, including more effective marketing programs.

Conference Call Information

Boyd Gaming will host its second-quarter 2013 conference call today, July 30, at 12:00 p.m. Eastern, on which the Company will provide guidance for the third quarter 2013.  The conference call number is (888) 317-6003, passcode 6502739.  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=95174

Following the call's completion, a replay will be available by dialing (877) 344-7529 today, July 30, beginning at 2:00 p.m. Eastern and continuing through Tuesday, August 6, at 9 a.m. Eastern.  The conference number for the replay will be 10031889.  The replay will also be available on the Internet at www.boydgaming.com.

BOYD GAMING CORPORATION

Condensed Consolidated Statements of Operations

(Unaudited)

Three Months Ended

Six Months Ended

June 30,

June 30,

(In thousands, except per share data)

2013

2012

2013

2012

Revenues

Gaming

$     627,926

$   514,018

$ 1,260,485

$ 1,048,554

Food and beverage

112,804

105,187

224,578

211,218

Room

67,154

69,628

131,009

135,625

Other

41,898

35,784

81,209

71,505

Gross revenues

849,782

724,617

1,697,281

1,466,902

Less promotional allowances

111,034

110,547

222,949

221,163

    Net revenues

738,748

614,070

1,474,332

1,245,739

Costs and expenses

Gaming

287,801

239,170

585,063

486,942

Food and beverage

64,242

60,250

124,295

114,209

Room

15,955

15,931

29,055

30,066

Other

31,199

26,680

59,373

52,696

Selling, general and administrative

127,000

109,671

251,028

218,318

Maintenance and utilities

41,042

39,387

80,251

77,995

Depreciation and amortization

70,318

50,661

140,356

100,635

Corporate expense

15,148

13,009

30,504

25,880

Preopening expenses

789

2,210

3,154

3,870

Impairments of assets

5,032

5,032

Asset transactions costs

614

6,242

3,627

6,272

Other operating charges and credits, net

229

(8,438)

1,795

(8,221)

    Total costs and expenses

659,369

554,773

1,313,533

1,108,662

Operating income

79,379

59,297

160,799

137,077

Other expense (income)

Interest income

(570)

(408)

(1,226)

(412)

Interest expense, net of amounts capitalized

88,126

64,788

183,808

128,616

Other, net

2,419

1,901

    Total other expense, net

89,975

64,380

184,483

128,204

Income (loss) from continuing operations before income taxes

(10,596)

(5,083)

(23,684)

8,873

Income taxes

4,102

5,080

6,526

(1,623)

Income (loss) from continuing operations, net of tax

(6,494)

(3)

(17,158)

7,250

Income (loss) from discontinued operations, net of tax

11,753

(688)

10,790

(1,466)

Net income (loss)

5,259

(691)

(6,368)

5,784

Net loss attributable to noncontrolling interest

6,368

1,668

10,711

1,045

Net income attributable to Boyd Gaming Corporation

$       11,627

$          977

$        4,343

$        6,829

Basic net income (loss) per common share

Continuing operations

$              —

$         0.02

$        (0.07)

$          0.09

Discontinued operations

0.13

(0.01)

0.12

(0.01)

    Basic net income per common share

$           0.13

$         0.01

$          0.05

$          0.08

Weighted average basic shares outstanding

89,230

87,588

88,606

87,559

Diluted net income (loss) per common share

Continuing operations

$              —

$         0.02

$        (0.07)

$          0.09

Discontinued operations

0.13

(0.01)

0.12

(0.01)

    Diluted net income per common share

$           0.13

$         0.01

$          0.05

$          0.08

Weighted average diluted shares outstanding

90,265

87,829

89,447

87,978

 

BOYD GAMING CORPORATION

SUPPLEMENTAL INFORMATION

Reconciliation of Adjusted EBITDA to Operating Income (Loss)

(Unaudited)

Three Months Ended

Six Months Ended

June 30,

June 30,

(In thousands)

2013

2012

2013

2012

Net revenues by Reportable Segment

Las Vegas Locals

$  149,690

$  148,987

$    302,517

$    303,776

Downtown Las Vegas

56,128

55,939

110,211

112,947

Midwest and South

224,273

233,728

453,390

477,450

Peninsula (1)

135,780

269,693

Atlantic City

172,877

175,416

338,521

351,566

    Net revenues

$  738,748

$  614,070

$ 1,474,332

$ 1,245,739

Adjusted EBITDA by Reportable Segment

Las Vegas Locals

$    38,723

$    34,535

$      77,928

$      73,021

Downtown Las Vegas

9,297

8,109

16,408

16,541

Midwest and South

48,625

51,003

98,307

109,133

Peninsula (1)

48,323

99,035

    Wholly owned property Adjusted EBITDA

144,968

93,647

291,678

198,695

Corporate expense (2)

(12,628)

(10,547)

(24,266)

(20,674)

    Wholly owned Adjusted EBITDA

132,340

83,100

267,412

178,021

Atlantic City

27,847

30,735

56,252

69,616

    Adjusted EBITDA

160,187

113,835

323,664

247,637

Other operating costs and expenses

Deferred rent

958

996

1,915

1,992

Depreciation and amortization

70,318

50,661

140,356

100,635

Preopening expenses

789

2,210

3,154

3,870

Share-based compensation expense

2,894

2,837

6,985

5,953

Impairments of assets

5,032

5,032

Asset transactions costs

614

6,242

3,627

6,272

Other operating charges and credits, net

203

(8,408)

1,796

(8,162)

    Total other operating costs and expenses

80,808

54,538

162,865

110,560

Operating income

79,379

59,297

160,799

137,077

Other non-operating items

Interest expense, net

87,556

64,380

182,582

128,204

Other, net

2,419

1,901

    Total other non-operating items, net

89,975

64,380

184,483

128,204

Income (loss) from continuing operations before income taxes

(10,596)

(5,083)

(23,684)

8,873

Income taxes

4,102

5,080

6,526

(1,623)

Income (loss) from continuing operations, net of tax

(6,494)

(3)

(17,158)

7,250

Income (loss) from discontinued operations, net of tax

11,753

(688)

10,790

(1,466)

Net income (loss)

5,259

(691)

(6,368)

5,784

Net income (loss) attributable to noncontrolling interest

6,368

1,668

10,711

1,045

Net income (loss) attributable to Boyd Gaming Corporation

$    11,627

$         977

$        4,343

$        6,829

_____________________________________________________

(1) Peninsula Gaming was acquired on November 20, 2012.

(2) Reconciliation of corporate expense:

Three Months Ended

 Six Months Ended 

June 30,

June 30,

2013

2012

2013

2012

Corporate expense as reported on Condensed Consolidated    Statements of Operations

$    15,148

$    13,009

$      30,504

$      25,880

Corporate share-based compensation expense

(2,520)

(2,462)

(6,238)

(5,206)

Corporate expense as reported on the above table

$    12,628

$    10,547

$      24,266

$      20,674

BOYD GAMING CORPORATION

SUPPLEMENTAL INFORMATION

Reconciliation of Net Income (Loss) to Adjusted Earnings (Loss) and

Net Income (Loss) Per Share to Adjusted Earnings (Loss) Per Share

(Unaudited)

Three Months Ended

Six Months Ended

June 30,

June 30,

(In thousands, except per share data)

2013

2012

2013

2012

Net income attributable to Boyd Gaming Corporation

$  11,627

$       977

$    4,343

$    6,829

Less: (income) loss from discontinued operations, net of tax (1)

(11,753)

688

(10,790)

1,466

Adjusted net income (loss) attributable to Boyd Gaming Corporation

(126)

1,665

(6,447)

8,295

Pretax adjustments related to Boyd Gaming:

  Preopening expenses, excluding impact of LVE

735

4,826

5,033

9,078

  Debt modification fees

1,976

1,976

  Accelerated debt fee amortization

396

396

  Asset transactions costs

544

6,256

3,223

6,330

  Adjustments to property tax accruals, net

(597)

  Other operating charges and credits, net

229

(6,294)

1,795

(6,091)

  Other non-operating expense (income)

(817)

Pretax adjustments related to Borgata:

  Preopening expenses

54

108

54

240

  Valuation adjustments related to consolidation, net

(243)

125

(502)

(19)

  Impairments of assets

5,032

5,032

  Asset transactions costs

70

(14)

404

(58)

  Other non-operating expense (income)

(2,144)

(2,130)

      Total adjustments

8,793

2,863

16,594

6,753

Income tax effect for above adjustments

(6,337)

(1,306)

(6,368)

(2,716)

Impact on noncontrolling interest, net

(2,458)

945

(2,496)

901

Adjusted earnings (loss)

$      (128)

$    4,167

$    1,283

$  13,233

Net income (loss) per share attributable to Boyd Gaming Corporation

$      0.13

$      0.01

$      0.05

$      0.08

Less: (income) loss from discontinued operations, net of tax (1)

(0.13)

0.01

(0.12)

0.01

Adjusted net income (loss) per share attributable to Boyd Gaming Corporation

0.02

(0.07)

0.09

Pretax adjustments related to Boyd Gaming:

  Preopening expenses, excluding impact of LVE

0.01

0.05

0.06

0.10

  Debt modification fees

0.02

0.02

  Accelerated debt fee amortization

  Asset transactions costs

0.01

0.07

0.04

0.07

  Adjustments to property tax accruals, net

(0.01)

  Other operating charges and credits, net

(0.07)

0.02

(0.07)

  Other non-operating expense (income)

(0.01)

Pretax adjustments related to Borgata:

  Preopening expenses

  Valuation adjustments related to consolidation, net

(0.01)

  Impairments of assets

0.06

0.06

  Asset transactions costs

  Other non-operating expense (income)

(0.02)

(0.02)

      Total adjustments

0.10

0.03

0.18

0.07

Income tax effect for above adjustments

(0.07)

(0.01)

(0.07)

(0.03)

Impact on noncontrolling interest, net

(0.03)

0.01

(0.03)

0.02

Adjusted earnings (loss) per share

$         —

$      0.05

$      0.01

$      0.15

Weighted average shares outstanding

89,230

87,829

89,447

87,978

_______________________________________________________________

(1) Results from all periods are adjusted to exclude the financial results of Dania Jai-Alai, which was sold during the second quarter of 2013.

BOYD GAMING CORPORATION

SUPPLEMENTAL INFORMATION

Condensed Consolidating Statement of Operations

Three Months Ended June 30, 2013

(Unaudited)

Boyd Gaming Wholly Owned

(In thousands, except per share data)

Excluding Peninsula Segment

Peninsula Segment

Eliminations

Total

Borgata (1)

Eliminations

Boyd Gaming Consolidated

Revenues

Gaming

$     351,927

$     126,617

$               —

$     478,544

$     149,382

$               —

$      627,926

Food and beverage

67,606

10,075

77,681

35,123

112,804

Room

38,679

38,679

28,475

67,154

Other

31,584

4,570

(5,106)

31,048

10,850

41,898

Gross revenues

489,796

141,262

(5,106)

625,952

223,830

849,782

Less promotional allowances

54,600

5,481

60,081

50,953

111,034

    Net revenues

435,196

135,781

(5,106)

565,871

172,877

738,748

Costs and expenses

Gaming

172,811

59,798

232,609

55,192

287,801

Food and beverage

36,369

6,814

43,183

21,059

64,242

Room

10,749

10,749

5,206

15,955

Other

18,457

8,350

(5,106)

21,701

9,498

31,199

Selling, general and administrative 

73,016

14,362

87,378

39,622

127,000

Maintenance and utilities

23,348

3,241

26,589

14,453

41,042

Depreciation and amortization

32,547

22,268

54,815

15,503

70,318

Corporate expense

14,367

781

15,148

15,148

Preopening expenses

644

91

735

54

789

Impairments of assets

5,032

5,032

Asset transactions costs

491

53

544

70

614

Other, net

94

135

229

229

    Total costs and expenses

382,893

115,893

(5,106)

493,680

165,689

659,369

Operating income from Borgata

3,594

3,594

(3,594)

Operating income (loss)

55,897

19,888

75,785

7,188

(3,594)

79,379

Other expense (income)

Interest income

(17)

(553)

(570)

(570)

Interest expense, net of amounts capitalized

46,469

20,813

67,282

20,844

88,126

Other income (expense)

(421)

2,840

2,419

2,419

Other non-operating expenses from

   Borgata, net

9,961

9,961

(9,961)

         Total other expense, net

55,992

23,100

79,092

20,844

(9,961)

89,975

Income (loss) from continuing

  operations before income taxes

(95)

(3,212)

(3,307)

(13,656)

6,367

(10,596)

Income taxes

5,381

(2,200)

3,181

921

4,102

Income (loss) from continuing operations,

  net of tax

5,286

(5,412)

(126)

(12,735)

6,367

(6,494)

Income (loss) from discontinued

  operations, net of tax

11,753

11,753

11,753

Net income (loss)

17,039

(5,412)

11,627

(12,735)

6,367

5,259

Net (income) loss attributable to

  noncontrolling interest

6,368

6,368

Net income (loss) attributable to Boyd

  Gaming Corporation

$       17,039

$       (5,412)

$               —

$       11,627

$     (12,735)

$        12,735

$        11,627

Basic net income per common share

Continuing operations

$              —

$               —

Discontinued operations

0.13

0.13

    Basic net income (loss) per common share

$           0.13

$            0.13

Weighted average basic shares outstanding 

89,230

89,230

Diluted net income per common share

Continuing operations

$              —

$               —

Discontinued operations

0.13

0.13

    Diluted net income (loss) per common share

$           0.13

$            0.13

Weighted average diluted shares outstanding

90,265

90,265

____________________________________________________

(1)

Borgata's financial results include the impact of certain valuation adjustments made upon consolidation.  These valuation adjustments are not pushed down to Borgata and are therefore not reflected in Borgata's standalone financial statements.

 

BOYD GAMING CORPORATION

SUPPLEMENTAL INFORMATION

Condensed Consolidating Statement of Operations

Three Months Ended June 30, 2012

(Unaudited)

(In thousands, except per share data)

Boyd Gaming Wholly Owned

Borgata (1)

LVE (Variable Interest Entity)

Eliminations

Boyd Gaming

Consolidated

Revenues

Gaming

$     361,546

$   152,472

$            —

$                —

$        514,018

Food and beverage

69,317

35,870

105,187

Room

39,957

29,671

69,628

Other

25,624

10,160

2,724

(2,724)

35,784

Gross revenues

496,444

228,173

2,724

(2,724)

724,617

Less promotional allowances

57,788

52,759

110,547

    Net revenues

438,656

175,414

2,724

(2,724)

614,070

Costs and expenses

Gaming

174,585

64,585

239,170

Food and beverage

41,302

18,948

60,250

Room

12,180

3,751

15,931

Other

18,696

7,984

26,680

Selling, general and administrative

74,675

34,989

7

109,671

Maintenance and utilities

24,965

14,422

39,387

Depreciation and amortization

34,647

16,014

50,661

Corporate expense

13,009

13,009

Preopening expenses

4,826

108

(2,724)

2,210

Assets transactions costs

6,256

(14)

6,242

Other, net

(6,294)

(2,144)

(8,438)

    Total costs and expenses

398,847

158,643

7

(2,724)

554,773

Operating income from Borgata

8,386

(8,386)

Operating income (loss)

48,195

16,771

2,717

(8,386)

59,297

Other expense (income)

Interest income

(408)

(408)

Interest expense, net of amounts capitalized

41,491

20,649

2,648

64,788

Other non-operating expenses from Borgata, net

10,121

(10,121)

    Total other expense, net

51,204

20,649

2,648

(10,121)

64,380

Income (loss) from continuing operations before income taxes

(3,009)

(3,878)

69

1,735

(5,083)

Income taxes

4,674

406

5,080

Net income (loss) from continuing operations, net of tax

1,665

(3,472)

69

1,735

(3)

Net loss from discontinued operations, net of tax

(688)

(688)

Net income (loss)

977

(3,472)

69

1,735

(691)

Net income (loss) attributable to noncontrolling interest

(69)

1,737

1,668

Net income (loss) attributable to Boyd Gaming Corporation

$            977

$     (3,472)

$            —

$           3,472

$               977

Basic net income (loss) per common share

Continuing operations

$           0.02

$              0.02

Discontinued operations

(0.01)

(0.01)

    Basic net income (loss) per common share

$           0.01

$              0.01

Weighted average basic shares outstanding

87,588

87,588

Diluted net income (loss) per common share

Continuing operations

$           0.02

$              0.02

Discontinued operations

(0.01)

(0.01)

    Diluted net income (loss) per common share

$           0.01

$              0.01

Weighted average diluted shares outstanding

87,829

87,829

__________________________________________

(1)

Borgata's financial results include the impact of certain valuation adjustments made upon consolidation.  These valuation adjustments are not pushed down to Borgata and are therefore not reflected in Borgata's standalone financial statements.

BOYD GAMING CORPORATION

SUPPLEMENTAL INFORMATION

Condensed Consolidating Statement of Operations

Six Months Ended June 30, 2013

(Unaudited)

Boyd Gaming Wholly Owned

(In thousands, except per share data)

Excluding Peninsula Segment

Peninsula Segment

Eliminations

Total

Borgata (1)

LVE (Variable Interest Entity) (2)

Eliminations

Boyd Gaming Consolidated

Revenues

Gaming

$     712,896

$     252,527

$              —

$     965,423

$     295,062

$              —

$              —

$   1,260,485

 

Food and beverage

135,754

19,766

155,520

69,058

224,578

Room

75,860

75,860

55,149

131,009

Other

63,179

8,266

(10,277)

61,168

20,041

1,933

(1,933)

81,209

Gross revenues

987,689

280,559

(10,277)

1,257,971

439,310

1,933

(1,933)

1,697,281

Less promotional allowances

111,294

10,866

122,160

100,789

222,949

Net revenues

876,395

269,693

(10,277)

1,135,811

338,521

1,933

(1,933)

1,474,332

Costs and expenses

Gaming

352,168

116,557

468,725

116,338

585,063

 

Food and beverage

72,394

13,514

85,908

38,387

124,295

Room

20,852

20,852

8,203

29,055

Other

37,662

15,813

(10,277)

43,198

16,175

59,373

 

Selling, general and administrative

147,899

28,732

176,631

74,397

251,028

 

Maintenance and utilities

45,162

6,320

51,482

28,769

80,251

 

Depreciation and amortization

65,280

43,965

109,245

31,111

140,356

 

Corporate expense

28,637

1,867

30,504

30,504

 

Preopening expenses

4,942

91

5,033

54

(1,933)

3,154

 

Impairments of assets

5,032

5,032

 

Asset transactions costs

3,060

163

3,223

404

3,627

Other, net

1,662

133

1,795

1,795

Total costs and expenses

779,718

227,155

(10,277)

996,596

318,870

(1,933)

1,313,533

Operating income from Borgata

9,825

9,825

(9,825)

Operating income (loss)

106,502

42,538

149,040

19,651

1,933

(9,825)

160,799

Other expense (income)

Interest income

(144)

(1,082)

(1,226)

(1,226)

 

Interest expense, net of amounts capitalized

 

96,614

43,199

139,813

41,618

2,377

183,808

Other income (expense)

(420)

2,321

1,901

1,901

 

Other non-operating expenses from Borgata, net

20,092

20,092

(20,092)

Total other expense, net

116,142

44,438

160,580

41,618

2,377

(20,092)

184,483

Income (loss) from continuing operations before income taxes

(9,640)

(1,900)

(11,540)

(21,967)

(444)

10,267

(23,684)

Income taxes

11,984

(6,891)

5,093

1,433

6,526

 

Income (loss) from continuing operations, net of tax

2,344

(8,791)

(6,447)

(20,534)

(444)

10,267

(17,158)

 

Income (loss) from discontinued operations, net of tax

10,790

10,790

10,790

Net income (loss)

13,134

(8,791)

4,343

(20,534)

(444)

10,267

(6,368)

Net (income) loss attributable to noncontrolling interest

444

10,267

10,711

 

Net income (loss) attributable to Boyd Gaming Corporation

$       13,134

$       (8,791)

$              —

$         4,343

$     (20,534)

$              —

$       20,534

$          4,343

Basic net income (loss) per common share

 

Continuing operations

$         (0.07)

$          (0.07)

 

Discontinued operations

0.12

0.12

    

Basic net income (loss) per common share

$           0.05

$            0.05

Weighted average basic  shares outstanding

88,606

88,606

Diluted net income (loss) per common share

 

Continuing operations

$         (0.07)

$          (0.07)

 

Discontinued operations

0.12

0.12

   

Diluted net income (loss) per common share

$           0.05

$            0.05

 

Weighted average diluted  shares outstanding

89,447

89,447

____________________________________________________

(1)

Borgata's financial results include the impact of certain valuation adjustments made upon consolidation.  These valuation adjustments are not pushed down to Borgata and are therefore not reflected in Borgata's standalone financial statements.

(2)

Boyd Gaming's contractual agreements with LVE were terminated on March 4, 2013, in connection with the sale of the Echelon development site.  As a result, Boyd Gaming ceased consolidation of LVE as of that date.  The financial results presented for LVE include only that portion of the period that the variable interest entity was consolidated by Boyd Gaming.

BOYD GAMING CORPORATION

SUPPLEMENTAL INFORMATION

Condensed Consolidating Statement of Operations

Six Months Ended June 30, 2012

(Unaudited)

(In thousands, except per share data)

Boyd Gaming Wholly Owned

Borgata (1)

LVE (Variable Interest Entity)

Eliminations

Boyd Gaming Consolidated

Revenues

Gaming

$   740,629

$   307,925

$            —

$              —

$   1,048,554

Food and beverage

139,102

72,116

211,218

Room

78,797

56,828

135,625

Other

52,767

18,738

5,448

(5,448)

71,505

Gross revenues

1,011,295

455,607

5,448

(5,448)

1,466,902

Less promotional allowances

117,121

104,042

221,163

    Net revenues

894,174

351,565

5,448

(5,448)

1,245,739

Costs and expenses

Gaming

359,309

127,633

486,942

Food and beverage

77,420

36,789

114,209

Room

23,112

6,954

30,066

Other

38,381

14,315

52,696

Selling, general and administrative

150,779

67,529

10

218,318

Maintenance and utilities

49,266

28,729

77,995

Depreciation and amortization

69,491

31,144

100,635

Corporate expense

25,880

25,880

Preopening expenses

9,078

240

(5,448)

3,870

Assets transactions costs

6,330

(58)

6,272

Other, net

(6,091)

(2,130)

(8,221)

    Total costs and expenses

802,955

311,145

10

(5,448)

1,108,662

Operating income from Borgata

20,210

(20,210)

Operating income (loss)

111,429

40,420

5,438

(20,210)

137,077

Other expense (income)

Interest income

(412)

(412)

Interest expense, net of amounts capitalized

81,444

41,131

6,041

128,616

Other non-operating expenses from Borgata, net

20,651

(20,651)

    Total other expense, net

101,683

41,131

6,041

(20,651)

128,204

Income (loss) from continuing operations before income taxes

9,746

(711)

(603)

441

8,873

Income taxes

(1,451)

(172)

(1,623)

Income (loss) from continuing operations, net of tax

8,295

(883)

(603)

441

7,250

Loss from discontinued operations, net of tax

(1,466)

(1,466)

Net income (loss)

6,829

(883)

(603)

441

5,784

Net income (loss) attributable to noncontrolling interest

603

442

1,045

Net income (loss) attributable to Boyd Gaming Corporation

$       6,829

$        (883)

$            —

$            883

$          6,829

Basic net income (loss) per common share

Continuing operations

$         0.09

$            0.09

Discontinued operations

(0.01)

(0.01)

    Basic net income (loss) per common share

$         0.08

$            0.08

Weighted average basic shares outstanding

87,559

87,559

Diluted net income (loss) per common share

Continuing operations

$         0.09

$            0.09

Discontinued operations

(0.01)

(0.01)

    Diluted net income (loss) per common share

$         0.08

$            0.08

Weighted average diluted shares outstanding

87,978

87,978

__________________________________________

(1)

Borgata's financial results include the impact of certain valuation adjustments made upon consolidation.  These valuation adjustments are not pushed down to Borgata and are therefore not reflected in Borgata's standalone financial statements.

BOYD GAMING CORPORATION

SUPPLEMENTAL INFORMATION

Condensed Consolidated Statements of Operations of Peninsula Segment (1)

Successor and Predecessor Periods Comprising the Three and Six Month Periods Ended June 30, 2013 and 2012

(Unaudited)

Successor

Predecessor (2)

Successor

Predecessor (2)

Three Months

Three Months

Six Months

Six Months

Ended 

Ended

Ended 

Ended

(In thousands)

June 30, 2013

June 30, 2012

June 30, 2013

June 30, 2012

Revenues

Gaming

$                 126,617

$                 125,341

$                 252,527

$                  252,890

Food and beverage

10,075

8,519

19,766

16,998

Other

4,570

4,197

8,266

7,763

Gross revenues

141,262

138,057

280,559

277,651

Less promotional allowances

5,482

5,100

10,866

10,035

    Net revenues

135,780

132,957

269,693

267,616

Costs and expenses

Gaming

59,798

57,516

116,557

113,908

Food and beverage

6,813

5,409

13,514

10,599

Other

3,244

2,988

5,536

5,264

Selling, general and administrative

14,362

12,256

28,732

24,611

Maintenance and utilities

3,241

2,772

6,320

5,264

Depreciation and amortization

22,268

10,334

43,965

20,774

Corporate expense

781

2,487

1,867

5,346

Affiliate management fee

5,107

2,348

10,277

4,761

Preopening expenses

91

3

91

3

Asset transactions costs

53

(18)

161

(37)

Other operating items

135

2,173

135

2,173

    Total costs and expenses

115,893

98,268

227,155

192,666

Operating income (loss)

19,887

34,689

42,538

74,950

Other expense (income)

Interest income

(553)

(566)

(1,082)

(1,127)

Interest expense, net of amounts capitalized

20,813

17,988

43,199

36,399

Loss from equity affiliates

47

16

345

44

Other non-operating income

2,793

1,976

    Total other expense, net

23,100

17,438

44,438

35,316

Income (loss) before income taxes

(3,213)

17,251

(1,900)

39,634

Income taxes (3)

(2,200)

(6,891)

Net income (loss)

$ (5,413)

$ 17,251

$ (8,791)

$ 39,634

Adjusted EBITDA, after corporate expense

$                   47,542

$                   49,529

$                   97,167

$                  102,624

________________________________________________

(1)

Peninsula Gaming, LLC ("PGL") was acquired by Boyd Gaming on November 20, 2012.  In accordance with Generally Accepted Accounting Principles ("GAAP"), PGL's post acquisition financial results have been prepared on Boyd Gaming's ("Successor") basis of accounting and reflect adjustments resulting from the application of the acquisition method.  Financial information for the prior year periods have been prepared on PGL's ("Predecessor") basis of accounting.  Consequently, the financial statements for the Successor and Predecessor periods are presented on different bases.

(2)

Certain amounts for the prior year have been reclassified to conform with the Successor presentation.  These reclassifications had no impact on income from operations or net income as previously reported by the Predecessor.

(3)

The Predecessor was structured as a limited liability company and the members were taxed on their proportionate share of its taxable income.  Accordingly, no provision for income taxes was included in the financial statements of the Predecessor.

 

 

Footnotes and Safe Harbor Statements

Non-GAAP Financial Measures

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

EBITDA and Adjusted EBITDA

EBITDA is a commonly used measure of performance in our industry that we believe, when considered with measures calculated in accordance with accounting principles generally accepted in the United States ("GAAP"), provides our investors a more complete understanding of our 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 refer to this measure as Adjusted EBITDA. 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 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 our management in their 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 the evaluation of potential acquisitions and dispositions. Adjusted EBITDA is also 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, impairments of assets and other operating charges, net, 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, asset transactions costs, net gains on insurance settlements, impairments of assets, certain adjustments to property tax accruals, write-downs and other charges, net, accelerated amortization of deferred loan fees, changes in the fair value of derivative instruments, gain or loss on early retirements of debt, other non-recurring adjustments, net, 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 income (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: progress towards the Company's strategic goals of strengthening of the Company's balance sheet and positioning itself for continued growth, and that the Company is moving in the right direction, and optimism about the outlook for the Company's business. Forward looking statements also include statements regarding improvements in the Company's Las Vegas Locals business; the potential for online gaming, the Company's online gaming strategy, the status of online gaming in Nevada and New Jersey, the potential for other states to legalize online gaming and that online gaming provides a compelling opportunity to significantly grow and diversify the Company's business; the effect of the Company's new slot initiatives and related marketing programs; and improving trends in certain of the geographic areas where the Company operates. 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 receipt of legislative, and other state, federal and local approvals for the Company's development projects in Florida, California and other jurisdictions; whether online gaming will become legalized in various states, the Company's ability to operate online gaming profitably, or otherwise; 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 22 gaming entertainment properties located in Nevada, Illinois, Indiana, Iowa, Kansas, Louisiana, Mississippi and New Jersey. 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



RELATED LINKS

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