LAS VEGAS, Nevada -- Boyd Gaming Corporation
(NYSE:BYD) today reported financial results for the fourth quarter and full
year ended December 31, 2006.
Recent Highlights
* Company's Las Vegas Locals segment achieves significant improvement in
fourth quarter 2006 operating results, with three of our four major
Locals properties nearly matching fourth quarter 2005 net revenues and
Adjusted EBITDA(1) levels.
* In the Company's Central Region, Blue Chip posts approximately 20%
increases in both net revenues and Adjusted EBITDA for the fourth
quarter 2006.
* For the fourth quarter and full year 2006, Downtown Las Vegas
properties match previous year's record performances.
* Company finalizes scope for Echelon Place development, with
construction set to begin in the second quarter 2007.
* Company announces timeline of its branding initiative, which is set to
rollout in the second half of this year.
(1) See footnotes at the end of the release for additional information
relative to non-GAAP financial measures.
Fourth Quarter ResultsWe reported fourth quarter 2006 income from continuing operations of
$55.6 million, or $0.63 per share, compared with $25.8 million, or $0.28 per
share, in the same period 2005. Including discontinued operations from
Barbary Coast and South Coast, we reported net income for the fourth quarter
2006 of $56.3 million, or $0.64 per share, compared to net income of
$22.9 million, or $0.25 per share, reported in the same period 2005. The
fourth quarter 2006 results include a $3.6 million pre-tax loss, classified as
part of discontinued operations, recorded upon the disposition of South Coast,
which is in addition to the previously estimated pre-tax impairment charge of
$65.0 million reported in the third quarter 2006. Additionally, on January 1,
2006, we adopted Statement of Financial Accounting Standards (SFAS) No. 123R,
Share-Based Payment, resulting in $3.6 million of non-cash compensation
expense in the current quarter, or $0.03 per share net of taxes; there was no
such expense recorded for the same period last year. Per share earnings
discussed throughout this release are reported on a diluted basis.
Adjusted Earnings(1) from continuing operations for the fourth quarter
2006 were $39.9 million, or $0.45 per share, as compared to $65.7 million, or
$0.72 per share, for the same period in 2005. Had we expensed stock options
in the fourth quarter last year, pro forma Adjusted EPS(1) would have been
$0.67 in that period. During the fourth quarter 2006, certain pre-tax
adjustments increased income from continuing operations by $23.5 million
($15.7 million, net of tax, or $0.18 per share) and included the following:
* $29.9 million credit for write-downs and other charges, net, that
consist mainly of a $36.1 million gain from our insurance claim
settlement related to hurricane damages at Delta Downs and a
$6.5 million charge for closure costs at Stardust.
* $1.6 million charge for accelerated depreciation at Stardust.
* $4.8 million for other charges, primarily consisting of preopening
expenses.
By comparison, the fourth quarter 2005 included pre-tax adjustments that
reduced income from continuing operations by $60.8 million ($39.9 million, net
of tax, or $0.44 per share).
Net revenues were $520.8 million for the fourth quarter 2006, a decrease
of 4.2% from the same quarter in 2005. Total Adjusted EBITDA was
$146.3 million in the fourth quarter 2006, as compared to $176.5 million for
the same period last year.
Keith Smith, President and Chief Operating Officer of Boyd Gaming,
commented, "In the Las Vegas Locals business, we saw significant improvement
in the fourth quarter financial performance, as we nearly matched the results
from last year's comparable quarter. Downtown was again impressive, equaling
the previous year's record performance. Our Central Region business was
steady, taking into account continued normalization of the Treasure Chest
operation, while Blue Chip posted strong results with gains in both net
revenues and Adjusted EBITDA."
(1) See footnotes at the end of the release for additional information
relative to non-GAAP financial measures.
Year End ResultsIncome from continuing operations for the year ended December 31, 2006 was
$161.3 million, or $1.80 per share, as compared to $164.4 million, or $1.82
per share for the year ended December 31, 2005. Net income, which includes
the results from discontinued operations, was $116.8 million, or $1.30 per
share, for the 2006 year-end compared to $144.6 million, or $1.60 per share,
for 2005, which included a $16.4 million net-of-tax charge, or $0.18 per
share, for the cumulative effect of a change in accounting principle. The
2006 year-end results include a $68.6 million pre-tax loss, classified as part
of discontinued operations, related to the disposition of South Coast which
was sold on October 25. Pursuant to the adoption of SFAS No. 123R,
Share-Based Payment, on January 1, 2006, we have recorded $20.8 million of
share-based compensation expense in the 2006 calendar year, or $0.15 per
share; there was no such expense recorded for the previous year.
Adjusted Earnings from continuing operations for the year ended
December 31, 2006 were $196.4 million, or $2.19 per share, as compared to
$221.4 million, or $2.45 per share for the year-end 2005. Had we expensed
stock options in the prior year, pro forma Adjusted EPS would have been
$2.30 per share in 2005.
Net revenues were $2.2 billion for the year ended December 31, 2006,
slightly higher than 2005. Total Adjusted EBITDA was $652.3 million for the
year and included a $6.7 million charge for a retroactive gaming tax
assessment at our Par-A-Dice property in Illinois. By comparison, total
Adjusted EBITDA for 2005 was $655.0 million.
Key Operations Review
In our Las Vegas Locals segment, fourth quarter net revenues were
$217.7 million versus $221.6 million for the fourth quarter 2005, a 1.8%
decrease. Fourth quarter 2006 Adjusted EBITDA was $70.4 million compared to
$73.8 million in the same quarter 2005, a 4.5% decrease. Our Locals business
showed significantly improved results over our last reporting period, in which
the third quarter 2006 net revenues and Adjusted EBITDA declined 6.9% and
21.0%, respectively, versus the comparable 2005 quarter.
In our Central Region, we recorded $222.9 million in net revenues for the
fourth quarter 2006, compared to $212.2 million for the same period in 2005.
Adjusted EBITDA for the period was $50.7 million versus $66.9 million for the
fourth quarter 2005. The Adjusted EBITDA decline is primarily attributable to
Treasure Chest, where operating levels continue to normalize as additional
capacity re-opens in the Gulf Coast region. In Indiana, Blue Chip's
performance was once again strong, as the property recorded 20% increases in
both net revenues and Adjusted EBITDA for the fourth quarter 2006 over the
same period in the previous year.
Our Downtown Las Vegas properties continued to report strong results,
generating net revenues of $69.1 million and Adjusted EBITDA of $17.1 million
for the fourth quarter 2006, both of which were nearly equal to the record
performance reported in the comparable 2005 period.
In Atlantic City, Borgata's gaming revenue continued to lead the market in
the fourth quarter 2006 and posted numerous casino-related operating records
for that gaming market, including record levels in table game drop and slot
coin-in, as well as poker and race book revenue. However, Borgata's gaming
revenue for the quarter decreased 1.5% compared to the fourth quarter 2005.
Non-gaming revenue increased by 17.7% for the fourth quarter 2006 over the
same period in the previous year, largely fueled by Borgata's public space
expansion, which added significant non-gaming amenities. Net income for
Borgata declined by 28.6% for the quarter, and Adjusted EBITDA was $53.2
million, compared to $62.6 million for the same quarter in 2005. The fourth
quarter declines were chiefly attributable to a lower table games hold
percentage, as well as higher fixed costs related to its public space
expansion that was completed in June 2006.
Development Update
We have numerous development initiatives underway all providing a healthy
growth pipeline for the Company.
In Atlantic City, Borgata is adding The Water Club, an 800-room boutique
hotel, directly connected to the property. The project is on-budget and
construction of the 43-story tower is expected to top-off in May 2007. We are
anticipating the opening of The Water Club in early 2008.
Our recently announced Blue Chip expansion is in the design phase and we
plan to begin construction next month. The $130 million project will include
300 guest rooms, a spa and fitness center, additional meeting and event space,
new dining and nightlife experiences, and a new entrance and porte cochere.
The project is scheduled to open in late 2008.
In Florida, we recently received our slot license for our pending
acquisition of Dania Jai Alai. We have also modified our agreement to
purchase this operation. Under the revised agreement, the Company will pay
$77.5 million at closing for the facility and its related land, and will be
required to pay an additional $75 million in March 2010 (or earlier), if
certain conditions are satisfied. We expect to close the transaction next
month, and we plan to begin construction later this year with a grand opening
of the casino operation around the end of 2008.
Bill Boyd, Chairman and Chief Executive Officer, commented, "Each of these
development projects, including our opportunities in the Las Vegas Locals
market, is a key element to our growth pipeline, and we believe that these
projects provide sound opportunities for future growth. The Water Club will
add much needed room capacity to our highly successful Borgata operation,
allowing it to more fully leverage the amenities added in its most recent
expansion. In Michigan City, Indiana, where we have successfully elevated the
Blue Chip brand with last year's expansion, our new project will help us take
this property to the next level. In Dania Beach, Florida, we are excited
about introducing our brand of casino entertainment into that area, allowing
us to further expand our market reach. And finally, as we prepare to break
ground on Echelon Place, we are excited to begin development of this
extraordinary opportunity, which will dramatically redefine our Company in the
future."
Echelon Place
With respect to our Las Vegas Strip development, we are readying to
commence construction of Echelon Place in the second quarter 2007, with a
planned third quarter 2010 opening. We recently completed the schematic
design phase of the project. We have increased the budget for the wholly-
owned components of Echelon Place to $3.3 billion, principally as a result of
additional scope, larger guest rooms and suites, and increased estimated
construction costs. We continue to perform design and development work on the
two joint-venture elements, which include the Delano Las Vegas and the
Mondrian Las Vegas, and a retail promenade.
Echelon Place will include a total of approximately 5,000 rooms in five
unique hotels, each offering a distinct luxury experience tailored for the
principal markets they will serve. With seven vehicular arrival points
strategically located around the property, Echelon Place will be among the
easiest large scale developments to access and move through, minimizing the
waiting and walking challenges typically associated with projects of this
magnitude. Our final design plans now account for the added scope, larger
guest rooms, and a more complete understanding of the costs associated with
the construction phase. Other Echelon Place amenities include:
* Casino space: 140,000 square feet
* Entertainment venues: 4,000-seat and 1,500-seat theaters, operated
by AEG Live
* Retail promenade: 300,000 square feet
* Meeting and Convention space: 750,000 square feet
* Parking: approximately 9,000 spaces
Echelon Place will also include approximately 30 dining, nightlife and
beverage venues in addition to an approximately 4.5 acre multi-level pool and
recreation deck.
We have appointed the major project architects, designers and consultants
and have directed their work through the schematic design phase, making
substantial progress in design development. Lawrence Lee Associates is
designing the Echelon resort hotel. Lee previously designed the guest rooms
and suites at Borgata in Atlantic City. Two other internationally recognized
interior design firms, Jeffrey Beers International and Hirsch Bedner
Associates, are designing the as yet unnamed all-suite hotel and Shangri-La
hotel. We are also working with Dougall Design Associates on the meeting and
casino space elements.
On the finalized scope for Echelon, Bill Boyd added, "With Echelon, we are
creating a multi-faceted destination that will offer a variety of dynamic and
compelling experiences within close proximity to one another. With tremendous
critical mass, innovative design, industry leading partnerships and
extraordinary access and visibility, Echelon will help define the next
generation of luxury in Las Vegas."
We are expecting to receive final regulatory approval on our land exchange
involving the Barbary Coast on February 22, clearing the way for the closing
of the transaction on February 27. The additional 24 acres will bring our
total holdings to 87 contiguous acres in the center of the emerging north
corridor of the Las Vegas Strip. The additional land allowed us to modify the
site layout of Echelon Place. These modifications increased the overall size
of the project to 65 acres, improved both pedestrian and vehicular access, and
enhanced the views from each of the Echelon Place guest rooms and suites.
Within our 87-acre Las Vegas Strip site, we have two additional parcels of
six and 16 acres that could allow for the addition of another distinct hotel,
additional retail, dining, meeting and casino space. All of the site roadways
and principal infrastructure are included in the initial Echelon development,
minimizing disruption when future projects are constructed.
Boyd Gaming Branding Initiative
Last October, we announced a new branding initiative that will position
our individual properties as part of a larger network, creating additional
synergies and further leveraging Boyd Gaming's highly regarded blend of gaming
excitement and personal service. The main goals of the branding initiative
strategy are to increase customer loyalty, drive more cross property
visitations, and grow our database through new acquisitions.
We continue to make good progress in developing a comprehensive plan
focused on catering to our high value targeted customer segment in each of our
specific regions. In Las Vegas, we will bring our four major locals
properties under one program. We will take a similar approach in the Central
Region, while also adding programs to promote visitation to our Las Vegas
properties. Our three Downtown Las Vegas properties currently operate with a
one-card system. Once our Las Vegas and Central Region programs are in place,
we will be positioned to bring all of our properties under a single players
club system. We anticipate rolling out our new branding initiative in a
phased approach beginning in the second half of this year.
Key Financial Statistics
The following is additional information as of and for the three months
ended December 31, 2006:
* December 31 debt balance: $2.14 billion
* December 31 cash: $169.4 million
* Dividends paid in the quarter: $11.7 million
* Maintenance capital expenditures during the quarter: $39.3 million
* Expansion capital expenditures during the quarter: $34.5 million
* Cash distribution to the Company from Borgata in the quarter:
$22.6 million
* December 31 debt balance at Borgata: $554.6 million
Conference Call InformationWe will host our fourth quarter 2006 conference call today, Tuesday,
February 20 at 12:00 p.m. Eastern. The conference call number is 866.383.7998
and the passcode is 89485172. Please call up to 15 minutes in advance to
ensure you are connected prior to the call's initiation. The conference call
will also be available live on the Internet at www.boydgaming.com .
Following the call's completion, a replay will be available by dialing
888.286.8010 on Tuesday, February 20, beginning two hours after the completion
of the call and continuing through Tuesday, February 27. The passcode for the
replay will be 56953809. The replay will also be available on the Internet at
www.boydgaming.com .
The following table presents Net Revenues and Adjusted EBITDA by operating
segment and reconciles Total Adjusted EBITDA to Income from continuing
operations before cumulative effect of a change in accounting principle
for the three months and year ended December 31, 2006 and 2005:
($ in thousands, Three Months Ended Year Ended
except footnotes) December 31, December 31,
2006 2005 2006 2005
Net Revenues
Las Vegas Locals $217,672 $221,580 $846,409 $874,689
Stardust 11,216 40,908 117,558 158,573
Downtown Las Vegas (a) 69,086 69,255 256,781 261,359
Central Region 222,862 212,189 971,886 866,464
Net revenues $520,836 $543,932 $2,192,634 $2,161,085
Adjusted EBITDA
Las Vegas Locals $70,437 $73,776 $273,797 $299,913
Stardust 1,342 6,867 15,403 24,651
Downtown Las Vegas 17,115 17,211 53,573 52,295
Central Region (b) 50,668 66,933 257,570 224,816
Wholly-owned property
Adjusted EBITDA 139,562 164,787 600,343 601,675
Corporate expense (e) (11,393) (11,575) (39,981) (44,101)
Wholly-owned Adjusted
EBITDA 128,169 153,212 560,362 557,574
Our share of Borgata's
operating income before
net amortization,
preopening and other
expenses (f) 18,132 23,303 91,963 97,392
Total Adjusted
EBITDA (g) 146,301 176,515 652,325 654,966
Other operating costs and
expenses
Deferred rent 1,157 1,236 4,630 4,936
Depreciation and
amortization (h) 43,949 44,195 189,837 171,958
Preopening expenses (c) 4,294 2,829 20,623 7,690
Our share of Borgata's
preopening expenses 269 -- 3,260 --
Our share of Borgata's
loss on asset disposals 151 47 1,209 80
Share-based compensation
expense (c) 3,273 -- 19,278 --
Write-downs and other
charges, net (29,892) 57,971 8,838 64,615
Total other operating
costs and expenses 23,201 106,278 247,675 249,279
Operating income 123,100 70,237 404,650 405,687
Other non-operating costs
and expenses
Interest expense, net (d) 36,914 31,699 145,433 126,088
Decrease in value of
derivative instruments 46 -- 1,801 --
Loss on early retirement
of debt -- -- -- 17,529
Our share of Borgata's
non-operating expenses,
net 3,100 2,802 10,577 11,718
Total other
non-operating costs
and expenses 40,060 34,501 157,811 155,335
Income from continuing
operations before provision
for income taxes and
cumulative effect of a
change in accounting
principle 83,040 35,736 246,839 250,352
Provision for income taxes (27,403) (9,973) (85,491) (85,984)
Income from continuing
operations before cumulative
effect of a change in
accounting principle $55,637 $25,763 $161,348 $164,368
(a) Includes revenues related to Vacations Hawaii and other travel agency
related entities of $13.1 million and $14.0 million for the three
months ended December 31, 2006 and 2005, respectively, and
$50.1 million and $54.5 million for the year ended December 31, 2006
and 2005, respectively
(b) Includes the $6.7 million retroactive gaming tax assessment at
Par-A-Dice recorded in the year ended December 31, 2006.
(c) We adopted Statement of Financial Accounting Standards No. 123R,
Share-Based Payment, on January 1, 2006 and recorded $3.6 million and
$20.6 million of share-based compensation expense related to
continuing operations during the three months and year ended
December 31, 2006, respectively. Of these amounts, $0.3 million and
$1.3 million are included in preopening expenses on our condensed
consolidated statement of operations for the three months and year
ended December 31, 2006, respectively.
(d) Net of interest income and amounts capitalized.
(e) The following table reconciles the presentation of corporate expense
on our accompanying condensed consolidated statements of operations to
the presentation on the table above:
Three Months
Ended Year Ended
December 31, December 31,
(In thousands) 2006 2006
Corporate expense as reported on our
condensed consolidated statements
of operations $13,461 $54,229
Corporate share-based compensation expense (2,068) (14,248)
Corporate expense as reported on the
table above $11,393 $39,981
(f) The following table reconciles the presentation of our share of
Borgata's operating income on our condensed consolidated statements
of operations to the presentation of our share of Borgata's results
on the accompanying table (in thousands):
Three Months Ended Year Ended
December 31, December 31,
2006 2005 2006 2005
Operating income from
Borgata, as reported
on our condensed
consolidated statements
of operations $17,387 $22,931 $86,196 $96,014
Add back:
Net amortization expense
related to our investment
in Borgata 325 325 1,298 1,298
Our share of preopening
expenses 269 -- 3,260 --
Our share of loss on asset
disposals 151 47 1,209 80
Our share of Borgata's
operating income before net
amortization, preopening
and other expenses $18,132 $23,303 $91,963 $97,392
(g) The following table reconciles Total Adjusted EBITDA to EBITDA and
Income from continuing operations before cumulative effect of a
change in accounting principle (in thousands):
Three Months Ended Year Ended
December 31, December 31,
2006 2005 2006 2005
Total Adjusted EBITDA $146,301 $176,515 $652,325 $654,966
Deferred rent 1,157 1,236 4,630 4,936
Preopening expenses 4,294 2,829 20,623 7,690
Our share of Borgata's
preopening expenses 269 -- 3,260 --
Our share of Borgata's
loss on asset disposals 151 47 1,209 80
Share-based compensation
expense 3,273 -- 19,278 --
Decrease in value of
derivative instruments 46 -- 1,801 --
Loss on early retirement
of debt -- -- -- 17,529
Our share of Borgata's
non-operating expenses,
net 3,100 2,802 10,577 11,718
Write-downs and other
charges, net (29,892) 57,971 8,838 64,615
EBITDA 163,903 111,630 582,109 548,398
Depreciation and
amortization 43,949 44,195 189,837 171,958
Interest expense, net 36,914 31,699 145,433 126,088
Provision for income taxes 27,403 9,973 85,491 85,984
Income from continuing
operations before cumulative
effect of a change in
accounting principle $55,637 $25,763 $161,348 $164,368
(h) The following table reconciles the presentation of depreciation and
amortization on our accompanying condensed consolidated statements of
operations to the presentation on the accompanying table:
Three Months Ended Year Ended
December 31, December 31,
(In thousands) 2006 2005 2006 2005
Depreciation and amortization
as reported on our condensed
consolidated statements of
operations $43,624 $43,870 $188,539 $170,660
Net amortization expense
related to our investment
in Borgata 325 325 1,298 1,298
Depreciation and amortization
as reported on the
accompanying table $43,949 $44,195 $189,837 $171,958
For a reconciliation of Adjusted EBITDA to EBITDA and Income from
continuing operations before cumulative effect of a change in accounting
principle for the three months ended September 30, 2006 and 2005, please
refer to our earnings release, included as Exhibit 99.1 to our Form 8-K,
furnished to the SEC on October 25, 2006.
BOYD GAMING CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited) Three Months Ended Year Ended
(In thousands, except December 31, December 31,
per share data) 2006 2005 2006 2005
Revenues
Gaming $429,472 $443,177 $1,811,716 $1,772,053
Food and beverage 72,553 78,058 304,864 311,119
Room 38,937 41,867 172,781 172,617
Other 38,065 38,311 145,560 146,140
Gross revenues 579,027 601,413 2,434,921 2,401,929
Less promotional allowances 58,191 57,481 242,287 240,844
Net revenues 520,836 543,932 2,192,634 2,161,085
Costs and expenses
Gaming 198,906 189,180 836,675 783,863
Food and beverage 44,846 49,481 187,908 193,961
Room 12,395 12,626 55,052 51,012
Other 28,843 31,445 110,106 128,028
Selling, general and
administrative 75,281 75,080 311,551 313,410
Maintenance and utilities 23,365 22,569 100,659 94,072
Depreciation and
amortization 43,624 43,870 188,539 170,660
Corporate expense 13,461 11,575 54,229 44,101
Preopening expenses 4,294 2,829 20,623 7,690
Write-downs and other
charges, net (29,892) 57,971 8,838 64,615
Total costs and
expenses 415,123 496,626 1,874,180 1,851,412
Operating income from
Borgata 17,387 22,931 86,196 96,014
Operating income 123,100 70,237 404,650 405,687
Other income (expense)
Interest income 4 38 112 224
Interest expense, net
of amounts capitalized (36,918) (31,737) (145,545) (126,312)
Decrease in value of
derivative instruments (46) -- (1,801) --
Loss on early retirement
of debt -- -- -- (17,529)
Other non-operating
expenses from Borgata,
net (3,100) (2,802) (10,577) (11,718)
Total (40,060) (34,501) (157,811) (155,335)
Income from continuing
operations before provision
for income taxes and
cumulative effect of a
change in accounting
principle 83,040 35,736 246,839 250,352
Provision for income taxes (27,403) (9,973) (85,491) (85,984)
Income from continuing
operations before
cumulative effect of a
change in accounting
principle 55,637 25,763 161,348 164,368
Discontinued operations:
Income (loss) from
discontinued operations
(including a loss on
disposition of $3,606,
$0, $68,606 and $0) 1,002 (4,390) (69,219) (5,253)
(Provision for) benefit
from income taxes (331) 1,571 24,649 1,934
Net income (loss) from
discontinued operations 671 (2,819) (44,570) (3,319)
Income before cumulative
effect of a change in
accounting principle 56,308 22,944 116,778 161,049
Cumulative effect of a change
in accounting for intangible
assets, net of taxes of $8,984 -- -- -- (16,439)
Net income $56,308 $22,944 $116,778 $144,610
Basic Net Income (Loss)
Per Common Share
Income from continuing
operations before
cumulative effect of a
change in accounting
principle $0.64 $0.29 $1.83 $1.86
Net income (loss) from
discontinued operations 0.01 (0.03) (0.51) (0.04)
Cumulative effect of a
change in accounting
for intangible assets,
net of taxes -- -- -- (0.19)
Net income $0.65 $0.26 $1.32 $1.63
Average Basic Shares
Outstanding 86,837 89,249 88,380 88,528
Diluted Net Income (Loss)
Per Common Share
Income from continuing
operations before
cumulative effect of a
change in accounting
principle $0.63 $0.28 $1.80 $1.82
Net income (loss) from
discontinued operations 0.01 (0.03) (0.50) (0.04)
Cumulative effect of a
change in accounting
for intangible assets,
net of taxes -- -- -- (0.18)
Net income $0.64 $0.25 $1.30 $1.60
Average Diluted Shares
Outstanding 87,844 90,975 89,593 90,507
The following table reconciles net income based upon generally accepted
accounting principles to adjusted earnings and adjusted earnings per
share.
(In thousands, except Three Months Ended Year Ended
per share data) December 31, December 31,
2006 2005 2006 2005
Income from continuing
operations before
cumulative effect of a
change in accounting
principle $55,637 $25,763 $161,348 $164,368
Adjustments:
Preopening expenses 4,294 2,829 20,623 7,690
Our share of Borgata's
preopening expenses 269 -- 3,260 --
Our share of Borgata's
loss on asset disposals 151 47 1,209 80
Accelerated depreciation
for Stardust and
related assets 1,639 -- 11,231 --
Decrease in value of
derivative instruments 46 -- 1,801 --
Par-A-Dice retroactive
gamimg tax assessment -- -- 6,672 --
Loss on early retirement
of debt -- -- -- 17,529
Write-downs and other
charges, net (29,892) 57,971 8,838 64,615
Income tax effect for
above adjustments 7,753 (19,451) (18,576) (31,402)
Retention tax credits
related to hurricanes -- (1,451) -- (1,451)
Adjusted earnings $39,897 $65,708 $196,406 $221,429
Adjusted earnings per
diluted share
(Adjusted EPS) $0.45 $0.72 $2.19 $2.45
Weighted average diluted
shares outstanding 87,844 90,975 89,593 90,507
The following table reconciles adjusted earnings to pro forma adjusted
earnings, had the company expensed stock options during the prior year.
Three Months
Ended Year Ended
(In thousands, except December 31, December 31,
per share data) 2005 2005
Adjusted earnings as reported above $65,708 $221,429
Share-based compensation expense, net of tax (4,311) (13,378)
Pro forma adjusted earnings $61,397 $208,051
Pro forma adjusted earnings per diluted share
(Pro forma Adjusted EPS) $0.67 $2.30
Weighted average diluted shares outstanding 90,975 90,507
The following table reports Borgata financial results.
Three Months Ended Year Ended
December 31, December 31,
(In thousands) 2006 2005 2006 2005
Gaming revenue $172,554 $175,209 $735,145 $696,965
Non-gaming revenue 72,152 61,308 273,879 247,740
Gross revenues 244,706 236,517 1,009,024 944,705
Less promotional
allowances 45,866 42,578 195,759 180,722
Net revenues 198,840 193,939 813,265 763,983
Expenses 145,680 131,336 566,252 512,249
Depreciation and
amortization 16,895 15,998 63,088 56,951
Preopening expenses 538 -- 6,519 --
Loss on asset disposals 303 94 2,418 160
Operating income 35,424 46,511 174,988 194,623
Interest and other
expenses, net (7,599) (5,861) (23,271) (24,738)
Benefit from income taxes 1,397 259 2,116 1,303
Subtotal (6,202) (5,602) (21,155) (23,435)
Net income $29,222 $40,909 $153,833 $171,188
The following table reconciles our share of Borgata's financial results to
the amounts reported on our condensed consolidated statements of
operations.
Three Months Ended Year Ended
December 31, December 31,
(In thousands) 2006 2005 2006 2005
Our share of Borgata's
operating income $17,712 $23,256 $87,494 $97,312
Net amortization expense
related to our investment
in Borgata (325) (325) (1,298) (1,298)
Operating income from Borgata,
as reported on our condensed
consolidated statements of
operations $17,387 $22,931 $86,196 $96,014
Other non-operating net
expenses from Borgata, as
reported on our condensed
consolidated statements
of operations $(3,100) $(2,802) $(10,577) $(11,718)
The following table reconciles operating income to Adjusted EBITDA for
Borgata.
Three Months Ended Year Ended
December 31, December 31,
(In thousands) 2006 2005 2006 2005
Operating income $35,424 $46,511 $174,988 $194,623
Depreciation and
amortization 16,895 15,998 63,088 56,951
Preopening expenses 538 -- 6,519 --
Loss on asset disposals 303 94 2,418 160
Adjusted EBITDA $53,160 $62,603 $247,013 $251,734
The following table reconciles Adjusted EBITDA to EBITDA and Net Income
for Borgata.
Three Months Ended Year Ended
December 31, December 31,
(In thousands) 2006 2005 2006 2005
Adjusted EBITDA $53,160 $62,603 $247,013 $251,734
Preopening expenses 538 -- 6,519 --
Loss on asset disposals 303 94 2,418 160
EBITDA 52,319 62,509 238,076 251,574
Depreciation and
amortization 16,895 15,998 63,088 56,951
Interest and other
expenses, net 7,599 5,861 23,271 24,738
Income taxes (1,397) (259) (2,116) (1,303)
Net income $29,222 $40,909 $153,833 $171,188
