Boyd Gaming Reports Fourth-Quarter, Full-Year Results

-Fourth Consecutive Quarter of Wholly-Owned EBITDA Growth-

-All Four Business Units Post Revenue Gains-

Feb 21, 2012, 07:00 ET from Boyd Gaming Corporation

LAS VEGAS, Feb. 21, 2012 /PRNewswire/ -- Boyd Gaming Corporation (NYSE: BYD) today reported financial results for the fourth quarter and full year ended December 31, 2011.

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

Net revenues were $606.7 million for the fourth quarter 2011, an increase of 9.9% from $551.9 million during the same quarter in 2010.  Total Adjusted EBITDA(1) rose 14.3% to $114.3 million, compared to $100.0 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 fourth-quarter 2011 net revenues of $428.9 million, up 12.3% from the year-ago period.  Wholly-owned Adjusted EBITDA rose 15.9% to $76.4 million.  Borgata, the Company's 50% joint venture, reported fourth-quarter 2011 net revenues of $176.4 million, up 4.5% from the fourth quarter of 2010, while Adjusted EBITDA at the property increased 11.0% to $37.9 million.  

For the fourth quarter 2011, the Company reported a net loss of $0.5 million, or $0.01 per share, compared to a net loss of $7.1 million, or $0.08 per share, in the same period last year.  

Adjusted Earnings(1) for the fourth quarter 2011 were a loss of $2.9 million, or $0.03 per share, compared to a loss of $3.9 million, or $0.05 per share, for the same period in 2010.  Certain pre-tax items included in Adjusted Earnings for the fourth quarter 2011 resulted in a net decrease of less than $0.1 million ($2.4 million, net of tax and noncontrolling interest, or $0.02 per share).  By comparison, pre-tax items included in Adjusted Earnings for the fourth quarter 2010 resulted in a net increase in income of $4.9 million ($3.2 million, net of tax and noncontrolling interest, or $0.03 per share). Pre-tax items included in adjusted earnings are listed in a table at the end of this press release.

Commenting on the quarter, Keith Smith, President and Chief Executive Officer of Boyd Gaming, said, "We continued to produce consistent growth across the business in the fourth quarter. Our focus on profitable revenue growth and creating efficiencies allowed us to produce gains in EBITDA every quarter in 2011 and, for the first time in several years, we reported revenue increases in each of our business segments during the quarter.  As economic conditions strengthen in our core markets, we are confident that our strategy of keeping a tight rein on costs, generating profitable new revenues and diversifying our sources of cash flow will deliver bottom-line results."  

(1)

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

Full-Year 2011 Results

For the year ended December 31, 2011, Boyd Gaming reported net revenues of $2.34 billion, an increase of 1.6% from the year ended December 31, 2010.  Total Adjusted EBITDA was $466.1 million during the period, an increase of 4.7% from the year 2010. (2)  Full-year 2011 results include the operations of the IP, acquired by the Company on October 4, 2011.  

During the full-year 2011, the Company's wholly-owned operations posted net revenues of $1.60 billion, up 3.0% from the year-ago period, while wholly-owned Adjusted EBITDA rose 11.7% to $308.0 million.  Borgata reported net revenues of $730.3 million during the year ended December 31, 2011, a decline of 1.1%, while property Adjusted EBITDA was down 6.7% to $158.1 million.

The Company reported a net loss for the year ended December 31, 2011 of $3.9 million, or $0.04 per share.  By comparison, we reported net income of $10.3 million, or $0.12 per share, for the year ended December 31, 2010.

Adjusted Earnings for the Company for the year ended December 31, 2011 were $1.1 million, or $0.01 per share, compared to earnings of $10.6 million, or $0.12 per share, during the full-year 2010.

(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.

Key Operations Review

Las Vegas Locals

In the Las Vegas Locals segment, fourth-quarter 2011 net revenues were $152.7 million, up slightly from the fourth quarter of 2010.  Fourth-quarter 2011 Adjusted EBITDA increased 8.0% to $36.8 million, marking the region's third consecutive quarter of positive EBITDA comparisons.  All four major properties in the region posted year-over-year EBITDA growth, as we improved operating margins by 170 basis points despite a heightened promotional environment.

For the full year 2011, Adjusted EBITDA for the Las Vegas Locals region increased $8.4 million, or 6.1%, to $145.8 million, while net revenues were essentially flat at $605.0 million. More productive marketing initiatives and effective cost-control measures helped drive full-year EBITDA growth.

Downtown

The Company's Downtown Las Vegas properties generated net revenues of $58.7 million for the fourth quarter 2011, up 2.7% from $57.1 million in the fourth quarter 2010. Adjusted EBITDA was $10.8 million, flat with the same quarter last year.  EBITDA at the three Downtown properties rose 7.2% during the fourth quarter; however, this strong performance was offset by significantly higher fuel expense associated with the Company's Hawaiian charter service.  

During the year ended December 31, 2011, Adjusted EBITDA rose 2.9% to $35.2 million, and net revenues increased 2.8% to $224.3 million. At the property operating level, EBITDA at the three Downtown properties increased $4.1 million, or 9.7%, to $47.6 million. Full-year results benefitted from increased visitation and play by our Hawaiian customer segment, offset almost entirely by higher fuel expense.

Midwest and South

In the Midwest and South region, net revenues were $217.6 million, up 26.1% from the year-ago quarter, while Adjusted EBITDA rose 28.5% to $39.1 million. Regional results reflect the acquisition of the IP, as well as strong operating performances at Blue Chip and Delta Downs.  The IP contributed $44.6 million in net revenues and $8.4 million in EBITDA to regional results following our acquisition of the property on October 4.

For the full year 2011, Adjusted EBITDA in the Midwest and South region increased 16.3% to $167.1 million, while revenues rose 5.8% to $771.4 million. Full-year results reflect strong operating performances and margin improvements at a majority of our properties, as well as the addition of the IP to regional operations.

Borgata

Borgata's net revenues for the fourth quarter 2011 were $176.4 million, up 4.5% from the fourth quarter 2010, while Adjusted EBITDA rose 11.0% to $37.9 million in the same period.  The EBITDA growth was driven by a 7% increase in gross gaming revenue, as well as a 110 basis point improvement in operating margins.  Borgata continued to lead the market, achieving an all-time record market share of 21.2% in the fourth quarter.

For the full year, Borgata's net revenues fell 1.1% to $730.3 million, while Adjusted EBITDA declined 6.7% to $158.1 million.  Full-year results were impacted by heightened competition in the region, as well as the three-day hurricane-related closure of the property over a weekend in late August.

Commenting on Company operations, Paul Chakmak, Executive Vice President and Chief Operating Officer of Boyd Gaming, said, "Our strategy of maintaining efficiencies and pursuing profitable revenue growth is succeeding, as shown by our full-year results.  We remain focused on developing new ways to enhance the guest experience, and will take an important step in that direction early in the second quarter when we launch an enhanced version of B Connected Online, our award-winning player loyalty website."

Conference Call Information

Boyd Gaming will host its fourth-quarter 2011 conference call today, February 21, at 12:00 p.m. Eastern, on which the Company will provide guidance for the first quarter 2012.  The conference call number is (866) 524-3160.  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=84986

Following the call's completion, a replay will be available by dialing (877) 344-7529 today, February 21, beginning at 2:00 p.m. Eastern and continuing through Tuesday, February 28 at 9 a.m. Eastern.  The conference number for the replay will be 10009798.  The replay will also be available on the Internet at www.boydgaming.com.

The results of Borgata for the period from October 1 through December 31 are included in our condensed consolidated statements of operations for the three months ended December 31, 2011 and 2010, respectively; and its results for the period from January 1, 2011 through December 31, 2011 and from March 24, 2010 through December 31, 2010 are included in the condensed consolidated statements of operations for the years ended December 31, 2011 and 2010, respectively. The results of LVE are consolidated in our condensed consolidated statements of operations for the three months and years ended December 31, 2011 and 2010. The previously reported results for the three months and year ended December 31, 2010 have been revised to reflect the correction of an immaterial error related to the consolidation of LVE. These revisions had no effect on net income, as previously reported in these periods.

Three Months Ended

Year Ended

December 31,

December 31,

2011

2010

2011

2010

(In thousands, except per share data)

Revenues

   Gaming

$   517,328

$   468,204

$    1,986,644

$    1,812,487

   Food and beverage

102,265

92,422

388,148

347,588

   Room

64,328

56,799

246,209

211,046

   Other

34,764

32,008

135,176

123,603

Gross revenues

718,685

649,433

2,756,177

2,494,724

      Less promotional allowances

112,011

97,493

419,939

353,825

          Net revenues

606,674

551,940

2,336,238

2,140,899

Costs and expenses

   Gaming

243,994

224,357

924,451

859,818

   Food and beverage

51,649

48,359

200,165

180,840

   Room

16,190

12,556

56,111

49,323

   Other

26,716

25,125

108,907

99,458

   Selling, general and administrative

106,119

98,576

394,991

369,217

   Maintenance and utilities

38,399

35,952

153,512

140,722

   Depreciation and amortization

50,237

51,370

195,343

199,275

   Corporate expense

12,393

12,225

48,962

48,861

   Preopening expenses

1,342

2,469

6,634

7,459

   Other operating charges, net

4,789

(219)

14,058

4,713

          Total costs and expenses

551,828

510,770

2,103,134

1,959,686

Operating income from Borgata

-

-

-

8,146

Operating income

54,846

41,170

233,104

189,359

Other expense (income)

   Interest income

(6)

(1)

(46)

(5)

   Interest expense, net of amounts capitalized

66,663

71,120

250,731

180,558

   Fair value adjustment of derivative instruments

-

480

265

480

    (Gain) loss on early retirements of debt, net

48

1,191

14

(2,758)

   Gain on equity distribution

-

-

-

(2,535)

   Other income

(10,582)

-

(11,582)

(10,000)

   Other non-operating expenses from Borgata, net

-

-

-

3,133

          Total other expense, net

56,123

72,790

239,382

168,873

Income (loss) before income taxes

(1,277)

(31,620)

(6,278)

20,486

Income taxes

(1,749)

7,296

(1,721)

(8,236)

Net income (loss)

(3,026)

(24,324)

(7,999)

12,250

Noncontrolling interest

2,535

17,226

4,145

(1,940)

Net income (loss) attributable to Boyd Gaming Corporation

$         (491)

$      (7,098)

$         (3,854)

$         10,310

Basic net income (loss) per common share

$        (0.01)

$        (0.08)

$           (0.04)

$             0.12

Weighted average basic shares outstanding

87,732

86,877

87,339

86,601

Diluted net income (loss) per common share

$        (0.01)

$        (0.08)

$           (0.04)

$             0.12

Weighted average diluted shares outstanding

87,732

86,877

87,339

86,831

The following table sets forth the impact of the consolidation of Borgata and LVE during the three months ended December 31, 2011. For the purposes of this presentation, and consistent with GAAP, Borgata and LVE have both been consolidated for the entire period. 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 December 31, 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

$        359,618

$   157,710

$               -

$       517,328

$       -

$               -

$       517,328

   Food and beverage

67,042

35,223

-

102,265

-

-

102,265

   Room

36,968

27,360

-

64,328

-

-

64,328

   Other

25,195

9,569

-

34,764

2,724

(2,724)

34,764

Gross revenues

488,823

229,862

-

718,685

2,724

(2,724)

718,685

     Less promotional allowances

58,559

53,452

-

112,011

-

-

112,011

         Net revenues

430,264

176,410

-

606,674

2,724

(2,724)

606,674

Costs and expenses

   Gaming

179,491

64,503

-

243,994

-

-

243,994

   Food and beverage

33,706

17,943

-

51,649

-

-

51,649

   Room

12,651

3,539

-

16,190

-

-

16,190

   Other

19,360

7,356

-

26,716

-

-

26,716

   Selling, general and administrative

75,582

30,537

-

106,119

-

-

106,119

   Maintenance and utilities

24,677

14,672

-

39,349

(950)

-

38,399

   Depreciation and amortization

35,377

14,860

-

50,237

-

-

50,237

   Corporate expense

12,393

-

-

12,393

-

-

12,393

   Preopening expenses

3,929

137

-

4,066

-

(2,724)

1,342

   Other operating charges, net

4,150

639

-

4,789

-

-

4,789

         Total costs and expenses

401,316

154,186

-

555,502

(950)

(2,724)

551,828

Operating income from Borgata

11,112

-

(11,112)

-

-

-

-

Operating income

40,060

22,224

(11,112)

51,172

3,674

-

54,846

Other expense (income)

   Interest income

(6)

-

-

(6)

-

-

(6)

   Interest expense, net of amounts capitalized

38,638

21,708

-

60,346

6,317

-

66,663

   Fair value adjustment of derivative instruments

-

-

-

-

-

-

-

   Loss on early retirements of debt, net

-

48

-

48

-

-

48

   Other income

(10,582)

-

-

(10,582)

-

-

(10,582)

   Gain on equity distribution

-

-

-

-

-

-

-

   Other non-operating expenses from Borgata, net

11,004

-

(11,004)

-

-

-

-

         Total other expense, net

39,054

21,756

(11,004)

49,806

6,317

-

56,123

Income (loss) before income taxes

1,006

468

(108)

1,366

(2,643)

-

(1,277)

Income taxes

(1,497)

(252)

-

(1,749)

-

-

(1,749)

Net income (loss)

(491)

216

(108)

(383)

(2,643)

-

(3,026)

Noncontrolling interest

-

-

(108)

(108)

2,643

-

2,535

Net income (loss) attributable to Boyd Gaming Corporation

$             (491)

$          216

$          (216)

$            (491)

$        -

$               -

$            (491)

Basic net income (loss) per common share

$            (0.01)

$           (0.01)

Weighted average basic shares outstanding

87,732

87,732

Diluted net income (loss) per common share

$            (0.01)

$           (0.01)

Weighted average diluted shares outstanding

87,732

87,732

The following table sets forth the impact of the consolidation of Borgata and LVE during the three months ended December 31, 2010. For the purposes of this presentation, and consistent with GAAP, Borgata and LVE have both been consolidated for the entire period. 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. The previously reported results for the three months ended December 31, 2010 have been revised to reflect the correction of an immaterial error related to the consolidation of LVE. These revisions had no effect on net income, as previously reported in this period.

Three Months Ended December 31, 2010

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

$          319,445

$       148,759

$               -

$          468,204

$      -

$                -

$          468,204

   Food and beverage

58,260

34,162

-

92,422

-

-

92,422

   Room

29,795

27,003

-

56,799

-

-

56,799

   Other

22,303

9,705

-

32,008

-

-

32,008

Gross revenues

429,803

219,629

-

649,433

-

-

649,433

   Less promotional allowances

46,648

50,845

-

97,493

-

-

97,493

        Net revenues

383,155

168,784

-

551,940

-

-

551,940

Costs and expenses

   Gaming

162,044

62,313

-

224,357

-

-

224,357

   Food and beverage

31,963

16,396

-

48,359

-

-

48,359

   Room

9,342

3,214

-

12,556

-

-

12,556

   Other

17,446

7,679

-

25,125

-

-

25,125

   Selling, general and administrative

68,066

30,510

-

98,576

-

-

98,576

   Maintenance and utilities

21,376

14,576

-

35,952

-

-

35,952

   Depreciation and amortization

34,798

16,572

-

51,370

-

-

51,370

   Corporate expense

12,225

-

-

12,225

-

-

12,225

   Preopening expenses

3,415

-

-

3,415

(946)

-

2,469

   Other operating charges, net

(204)

(15)

-

(219)

-

-

(219)

        Total costs and expenses

360,471

151,245

-

511,716

(946)

-

510,770

Operating income from Borgata

8,769

-

(8,769)

-

-

Operating income

31,453

17,539

(8,769)

40,224

946

-

41,170

Other expense (income)

   Interest income

(1)

-

-

(1)

-

-

(1)

   Interest expense, net of amounts capitalized

33,225

21,791

-

55,016

16,104

-

71,120

   Fair value adjustment of derivative instruments

480

-

-

480

-

-

480

   Loss on early retirements of debt, net

1,191

-

-

1,191

-

-

1,191

   Other income

-

-

-

-

-

-

-

   Gain on equity distribution

-

-

-

-

-

-

-

   Other non-operating expenses from Borgata, net

10,837

-

(10,837)

-

-

-

-

        Total other expense, net

45,732

21,791

(10,837)

56,686

16,104

-

72,790

Income (loss) before income taxes

(14,279)

(4,251)

2,068

(16,462)

(15,158)

-

(31,620)

Income taxes

7,181

115

-

7,296

-

-

7,296

Net income (loss)

(7,098)

(4,136)

2,068

(9,166)

(15,158)

-

(24,324)

Noncontrolling interest

-

-

2,068

2,068

15,158

-

17,226

Net income (loss) attributable to Boyd Gaming Corporation

$         (7,098)

$      (4,136)

$         4,136

$         (7,098)

$      -

$                -

$         (7,098)

Basic net income (loss) per common share

$              (0.08)

$              (0.08)

Weighted average basic shares outstanding

86,877

86,877

Diluted net income (loss) per common share

$              (0.08)

$              (0.08)

Weighted average diluted shares outstanding

86,877

86,877

The following table sets forth the impact of the consolidation of Borgata and LVE during the year ended December 31, 2011. For the purposes of this presentation, and consistent with GAAP, Borgata and LVE have both been consolidated for the period from January 1, 2011 through December 31, 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.

Year Ended December 31, 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

$     1,338,202

$   648,442

$               -

$    1,986,644

$       -

$               -

$    1,986,644

   Food and beverage

240,065

148,083

-

388,148

-

-

388,148

   Room

129,672

116,537

-

246,209

-

-

246,209

   Other

93,718

41,458

-

135,176

10,858

(10,858)

135,176

Gross revenues

1,801,657

954,520

-

2,756,177

10,858

(10,858)

2,756,177

Less promotional allowances

195,693

224,246

-

419,939

-

-

419,939

        Net revenues

1,605,964

730,274

-

2,336,238

10,858

(10,858)

2,336,238

Costs and expenses

   Gaming

660,580

263,871

-

924,451

-

-

924,451

   Food and beverage

128,807

71,358

-

200,165

-

-

200,165

   Room

41,576

14,535

-

56,111

-

-

56,111

   Other

75,630

33,277

-

108,907

-

-

108,907

   Selling, general and administrative

268,049

126,942

-

394,991

-

-

394,991

   Maintenance and utilities

91,347

62,165

-

153,512

-

-

153,512

   Depreciation and amortization

129,906

65,437

-

195,343

-

-

195,343

   Corporate expense

48,962

-

-

48,962

-

-

48,962

   Preopening expenses

17,263

229

-

17,492

-

(10,858)

6,634

   Other operating charges, net

7,660

6,398

-

14,058

-

-

14,058

        Total costs and expenses

1,469,780

644,212

-

2,113,992

-

(10,858)

2,103,134

Operating income from Borgata

43,031

(43,031)

-

-

-

-

Operating income

179,215

86,062

(43,031)

222,246

10,858

-

233,104

Other expense (income)

   Interest income

(46)

-

-

(46)

-

-

-

(46)

   Interest expense, net of amounts capitalized

152,664

81,314

-

233,978

16,753

-

250,731

   Fair value adjustment of derivative instruments

265

-

-

265

-

-

265

    (Gain) loss on early retirements of debt, net

20

(6)

-

14

-

-

14

   Other income

(11,582)

-

-

(11,582)

-

-

(11,582)

   Gain on equity distribution

-

-

-

-

-

-

   Other non-operating expenses from Borgata, net

41,280

-

(41,280)

-

-

-

-

        Total other expense, net

182,601

81,308

(41,280)

222,629

16,753

-

239,382

Income (loss) before income taxes

(3,386)

4,754

(1,751)

(383)

(5,895)

-

(6,278)

Income taxes

(468)

(1,253)

-

(1,721)

-

-

(1,721)

Net income (loss)

(3,854)

3,501

(1,751)

(2,104)

(5,895)

-

(7,999)

Noncontrolling interest

-

-

(1,750)

(1,750)

5,895

-

4,145

Net income (loss) attributable to Boyd Gaming Corporation

$          (3,854)

$       3,501

$       (3,501)

$         (3,854)

$       -

$               -

$         (3,854)

Basic net income (loss) per common share

$            (0.04)

$           (0.04)

Weighted average basic shares outstanding

87,339

87,339

Diluted net income (loss) per common share

$            (0.04)

$           (0.04)

Weighted average diluted shares outstanding

87,339

87,339

The following table sets forth the impact of the consolidation of Borgata and LVE during the year ended December 31, 2010. For the purposes of this presentation, and consistent with GAAP, Borgata has been consolidated for the period from March 24, 2010 through December 31, 2010, and LVE has been consolidated for the period from January 1, 2010 through December 31, 2010. 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. The previously reported results for the year ended December 31, 2010 have been revised to reflect the correction of an immaterial error related to the consolidation of LVE. These revisions had no effect on net income, as previously reported in this period.

Year Ended December 31, 2010

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

$       1,306,414

$    506,073

$               -

$    1,812,487

$         -

$               -

$         1,812,487

   Food and beverage

231,054

116,534

-

347,588

-

-

347,588

   Room

120,000

91,045

-

211,046

-

-

211,046

   Other

89,851

33,752

-

123,603

-

-

123,603

Gross revenues

1,747,319

747,404

-

2,494,724

-

-

2,494,724

Less promotional allowances

186,561

167,264

-

353,825

353,825

        Net revenues

1,560,758

580,140

-

2,140,899

-

-

2,140,899

Costs and expenses

   Gaming

655,856

203,962

-

859,818

-

-

859,818

   Food and beverage

124,851

55,989

-

180,840

-

-

180,840

   Room

37,517

11,806

-

49,323

-

-

49,323

   Other

72,249

27,209

-

99,458

-

-

99,458

   Selling, general and administrative

274,234

94,983

-

369,217

-

-

369,217

   Maintenance and utilities

90,809

49,913

-

140,722

-

-

140,722

   Depreciation and amortization

146,389

52,886

-

199,275

-

-

199,275

   Corporate expense

48,861

-

-

48,861

-

-

48,861

   Preopening expenses

8,405

-

-

8,405

(946)

-

7,459

   Other operating charges, net

4,721

(8)

-

4,713

-

-

4,713

        Total costs and expenses

1,463,892

496,740

-

1,960,632

(946)

-

1,959,686

Operating income from Borgata

49,846

-

(41,700)

8,146

-

-

8,146

Operating income

146,712

83,400

(41,700)

188,413

946

-

189,359

Other expense (income)

   Interest income

(5)

-

-

(5)

-

-

(5)

   Interest expense, net of amounts capitalized

119,316

45,138

-

164,454

16,104

-

180,558

   Fair value adjustment of derivative instruments

480

-

-

480

-

-

480

   Gain on early retirements of debt, net

(2,758)

-

-

(2,758)

-

-

(2,758)

   Other income

(10,000)

-

-

(10,000)

-

-

(10,000)

   Gain on equity distribution

(2,535)

-

-

(2,535)

-

-

(2,535)

   Other non-operating expenses from Borgata, net

27,736

-

(24,603)

3,133

-

-

3,133

        Total other expense, net

132,234

45,138

(24,603)

152,769

16,104

-

168,873

Income (loss) before income taxes

14,478

38,263

(17,097)

35,644

(15,158)

-

20,486

Income taxes

(4,168)

(4,068)

-

(8,236)

-

-

(8,236)

Net income (loss)

10,310

34,195

(17,097)

27,408

(15,158)

-

12,250

Noncontrolling interest

-

-

(17,098)

(17,098)

15,158

-

(1,940)

Net income (loss) attributable to Boyd Gaming Corporation

$            10,310

$       34,195

$     (34,195)

$         10,310

$          -

$                -

$            10,310

Basic net income (loss) per common share

$                0.12

$                0.12

Weighted average basic shares outstanding

86,601

86,601

Diluted net income (loss) per common share

$                0.12

$                0.12

Weighted average diluted shares outstanding

86,831

86,831

The following supplemental pro forma information presents pro forma consolidated financial results as if the effective control of Borgata had occurred on January 1, 2010 (rather than March 24, 2010). The Boyd Gaming Corp column reflects the full consolidation of LVE and presents Borgata using the equity method of accounting. 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. The previously reported results for the year ended December 31, 2010 have been revised to reflect the correction of an immaterial error related to the consolidation of LVE. These revisions had no effect on net income, as previously reported in this period.

Year Ended December 31, 2010

Boyd Gaming Corp

Boyd Gaming Corp

Borgata

Eliminations 

Pro Forma

(In thousands, except per share data)

Revenues

   Gaming

$              1,306,414

$     643,904

$                 -

$               1,950,318

   Food and beverage

231,054

147,751

-

378,805

   Room

120,000

115,199

-

235,199

   Other

89,851

42,931

-

132,782

Gross revenues

1,747,319

949,785

-

2,697,104

Less promotional allowances

186,561

211,356

-

397,917

        Net revenues

1,560,758

738,429

-

2,299,187

Costs and expenses

   Gaming

655,856

263,823

-

919,679

   Food and beverage

124,851

69,489

-

194,340

   Room

37,517

13,992

-

51,509

   Other

72,249

34,334

-

106,583

   Selling, general and administrative

274,234

123,963

-

398,197

   Maintenance and utilities

90,809

63,435

-

154,244

   Depreciation and amortization

146,389

69,640

-

216,029

   Corporate expense

48,861

-

-

48,861

   Preopening expenses

7,459

-

-

7,459

   Other operating charges, net

4,721

60

-

4,781

        Total costs and expenses

1,462,946

638,736

-

2,101,682

Operating income from Borgata

49,846

-

(49,846)

-

Operating income

147,658

99,693

(49,846)

197,505

Other expense (income)

   Interest income

(5)

-

-

(5)

   Interest expense, net of amounts capitalized

135,420

50,199

-

185,619

   Fair value adjustment of derivative instruments

480

-

-

480

   Gain on early retirements of debt, net

(2,758)

-

-

(2,758)

   Other income

(10,000)

-

-

(10,000)

   Gain on equity distribution

(2,535)

-

-

(2,535)

   Other non-operating expenses from Borgata, net

27,736

-

(27,736)

-

        Total other expense, net

148,338

50,199

(27,736)

170,801

Income (loss) before income taxes

(680)

49,494

(22,110)

26,704

Income taxes

(4,168)

(5,273)

-

(9,441)

Net income (loss)

(4,848)

44,221

(22,110)

17,263

Noncontrolling interest

15,158

-

(22,111)

(6,953)

Net income (loss) attributable to Boyd Gaming Corporation

$                   10,310

$      44,221

$       (44,221)

$                   10,310

Basic net income (loss) per common share

$                       0.12

$                       0.12

Weighted average basic shares outstanding

86,601

86,601

Diluted net income (loss) per common share

$                       0.12

$                       0.12

Weighted average diluted shares outstanding

86,831

86,831

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

Year Ended

December 31,

December 31,

2011

2010

2011

2010

(In thousands, except per share data)

Net income (loss) attributable to Boyd Gaming Corporation

$      (491)

$   (7,098)

$   (3,854)

$   10,310

   Adjustments related to Boyd Gaming:

        Preopening expenses, excluding impact of LVE

3,929

3,415

17,264

8,405

        Adjustments to property tax accruals, net

-

-

(7,464)

-

        Other operating charges, net

4,176

(203)

7,660

4,721

        Accelerated amortization of deferred loan fees

376

-

376

-

        Change in fair value of derivative instruments

-

480

265

480

        (Gain) loss on early retirements of debt, net

-

1,191

20

(2,758)

        Other income

(10,582)

-

(11,582)

(10,000)

        Gain on equity distribution

-

-

-

(2,535)

   Adjustments related to Borgata:

        Preopening expenses

137

-

228

-

        Other operating charges, net

790

(16)

6,575

(8)

        Accelerated amortization of deferred loan fees

1,029

-

1,029

2,012

        Valuation adjustments related to consolidation, net

67

-

389

-

        (Gain) loss on early retirements of debt

48

-

(6)

-

        Our share of Borgata's other operating charges, net

-

-

-

34

              Total adjustments

(30)

4,867

14,754

351

        Income tax effect for above adjustments

$   (1,316)

$   (1,721)

$   (5,648)

$        899

        Impact on noncontrolling interest, net

(1,035)

8

(4,108)

(1,002)

              Adjusted earnings (loss)

$   (2,872)

$   (3,944)

$     1,144

$   10,558

        Adjusted earnings (loss) per share (Adjusted EPS)

$     (0.03)

$     (0.05)

$       0.01

$       0.12

        Weighted average shares outstanding

87,732

86,877

87,594

86,831

Net income (loss) per share 

$     (0.01)

$     (0.08)

$     (0.04)

$       0.12

   Adjustments related to Boyd Gaming:

        Preopening expenses, excluding impact of LVE

$       0.05

$       0.04

$       0.20

$       0.10

        Adjustments to property tax accruals, net

-

-

(0.09)

-

        Other operating charges, net

0.06

-

0.09

0.05

        Accelerated amortization of deferred loan fees

-

-

-

-

        Change in fair value of derivative instruments

-

-

-

0.01

        (Gain) loss on early retirements of debt, net

-

0.01

-

(0.03)

        Other income

(0.12)

-

(0.13)

(0.12)

        Gain on equity distribution

-

-

-

(0.03)

   Adjustments related to Borgata:

        Preopening expenses

-

-

-

-

        Other operating charges, net

0.01

-

0.08

-

        Accelerated amortization of deferred loan fees

0.01

-

0.01

0.02

        Valuation adjustments related to consolidation, net

-

-

-

-

        (Gain) on early retirements of debt

-

-

-

-

        Our share of Borgata's other operating charges, net

-

-

-

-

              Total adjustments

0.01

0.05

0.16

0.00

        Income tax effect for above adjustments

(0.02)

(0.02)

(0.06)

0.01

        Impact on noncontrolling interest, net

(0.01)

-

(0.05)

(0.01)

              Adjusted earnings (loss)

$     (0.03)

$     (0.05)

$       0.01

$       0.12

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 months and years ended December 31, 2011 and 2010. 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 December 31, 2011 and 2010 and for the year ended December 31, 2011, as reported in the table below, reflect the consolidation of Borgata and LVE for the entire period. The results for the year ended December 31, 2010 reflect the consolidation of Borgata for the period from March 24, 2010 through December 31, 2010. The previously reported results for the three months and year ended December 31, 2010 have been revised to reflect the correction of an immaterial error related to the consolidation of LVE. These revisions had no effect on net income, as previously reported in these periods.

Three Months Ended

Year Ended

December 31,

December 31,

2011

2010

2011

2010

(In thousands)

Net Revenues

   Las Vegas Locals

$   152,696

$   152,123

$       604,965

$       607,366

   Downtown Las Vegas

58,671

57,133

224,250

218,221

   Midwest and South (1)

217,567

172,546

771,355

728,767

   Atlantic City

176,410

168,786

730,274

580,140

         Reportable Segment Net revenues

605,344

550,588

2,330,844

2,134,494

   Other

1,329

1,352

5,394

6,405

         Net revenues

$   606,673

$   551,940

$    2,336,238

$    2,140,899

Adjusted EBITDA

   Las Vegas Locals

$     36,842

$     34,125

$       145,848

$       137,464

   Downtown Las Vegas

10,839

10,866

35,214

34,227

   Midwest and South (1)

39,090

30,423

167,101

143,699

        Wholly-owned property Adjusted EBITDA

86,771

75,414

348,163

315,390

        Corporate expense

(10,363)

(9,500)

(40,189)

(39,565)

        Wholly-owned Adjusted EBITDA

76,408

65,914

307,974

275,825

   Atlantic City

37,860

34,096

158,126

136,278

        Our share of Borgata's operating income before net

           amortization, preopening and other items

-

-

-

8,180

                Adjusted EBITDA

$   114,268

$   100,010

$       466,100

$       420,283

Other operating costs and expenses

   Deferred rent

1,034

1,067

4,136

4,271

   Depreciation and amortization

50,237

51,370

195,343

199,275

   Preopening expenses

1,342

2,469

6,634

7,459

   Share-based compensation expense

2,257

3,200

9,997

11,324

   Other operating charges, net

4,789

(219)

14,058

4,713

   Other

(237)

953

2,828

3,882

                Total other operating costs and expenses

59,422

58,840

232,996

230,924

Operating income

54,846

41,170

233,104

189,359

Other non-operating items

   Interest expense, net

66,657

71,119

250,685

180,553

   Fair value adjustment of derivative instruments

-

480

265

480

    (Gain) loss on early retirements of debt, net

48

1,191

14

(2,758)

   Other income

(10,582)

-

(11,582)

(10,000)

   Gain on equity distribution

-

-

-

(2,535)

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

-

-

-

3,133

                Total other non-operating costs and expenses, net

56,123

72,790

239,382

168,873

Income (loss) before income taxes

(1,277)

(31,620)

(6,278)

20,486

Income taxes

(1,749)

7,296

(1,721)

(8,236)

Net income (loss)

(3,026)

(24,324)

(7,999)

12,250

Noncontrolling interest

2,535

17,226

4,145

(1,940)

Net income (loss) attributable to Boyd Gaming Corporation                      

$         (491)

$      (7,098)

$         (3,854)

$         10,310

(1)

IP provided $44.6 million in net revenues and $8.4 million in Adjusted EBITDA, which is reported in the three months and year ended December 31, 2011.

The following supplemental pro forma information presents pro forma consolidated financial results as if the effective control of Borgata had occurred on January 1, 2010 (rather than March 24, 2010). The Boyd Gaming Corp column reflects the full consolidation of LVE and presents Borgata using the equity method of accounting. 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. The previously reported results for the year ended December 31, 2010 have been revised to reflect the correction of an immaterial error related to the consolidation of LVE. These revisions had no effect on net income, as previously reported in this period.

Year Ended December 31, 2010

Boyd Gaming

Borgata

Boyd Gaming Corp

Corp

Stub

Adjustments

Pro Forma

(In thousands)

Net Revenues

   Las Vegas Locals

$                 607,366

$              -

$                 -

$                 607,366

   Downtown Las Vegas

218,221

-

-

218,221

   Midwest and South