Boyd Gaming reports results

27 February 2008

LAS VEGAS, Nevada -- (PRESS RELEASE) -- Boyd Gaming Corporation (NYSE:BYD) today reported financial results for the fourth quarter and year ended December 31, 2007.

    

     Recent Highlights

     *    Las Vegas Locals region net revenues decline 1.5%; however, Adjusted
          EBITDA(1) increases 3.3%, the third consecutive year-over-year
          quarterly increase.
     *    Midwest and South region records 11.4% decline in net revenues and a
          13.2% decrease in Adjusted EBITDA for the fourth quarter 2007 versus
          the same quarter 2006; Blue Chip is materially impacted by increased
          competitive environment and, to a lesser extent, construction
          disruption and adverse weather; conversely, four of our other five
          Midwest and South casino properties record fourth quarter 2007
          increases in Adjusted EBITDA.
     *    Downtown Las Vegas net revenues decline $2.2 million, or 3.2%, for
          the fourth quarter 2007 versus the same period last year; Adjusted
          EBITDA declines $2.4 million, or 13.8%, from a near-record level in
          the same period 2006.
     *    Borgata outperforms market in the face of new competition from
          Philadelphia-area casinos and prepares for addition of The Water
          Club in June; both net revenues and Adjusted EBITDA for the quarter
          increase over the same period in 2006.
     *    Successful phase-one launch of nationwide players club program;
          initial phase includes our four primary Las Vegas Locals casinos and
          unifies them under a new Club Coast program; the Midwest and South
          rollout is scheduled to begin in April 2008.
     *    Construction on our Echelon development continues to advance as
          foundation work is nearly complete for our wholly-owned hotels,
          which include Hotel Echelon, The Enclave, and Shangri-La Las Vegas;
          we expect to begin erecting steel in the second quarter.  We are
          also in the midst of identifying the many restaurant and nightlife
          venues that will be a part of the Echelon experience.

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


Fourth Quarter Results

We reported fourth quarter 2007 income from continuing operations of $31.0 million, or $0.35 per share, compared with $55.6 million, or $0.63 per share, in the same period 2006. Including discontinued operations, we reported net income for the fourth quarter 2007 of $31.2 million, or $0.35 per share, compared to net income of $56.3 million, or $0.64 per share, reported in the same period 2006. Per share earnings discussed throughout this release are reported on a diluted basis.

Adjusted Earnings(1) from continuing operations for the fourth quarter 2007 were $34.9 million, or $0.39 per share, compared to $39.9 million, or $0.45 per share, for the same period in 2006. During the fourth quarter 2007, certain adjustments reduced income from continuing operations by $6.6 million ($3.9 million, net of tax, or $0.04 per share), the majority of which are preopening expenses.

By comparison, the fourth quarter 2006 included certain pre-tax adjustments that increased income from continuing operations by $23.5 million ($15.7 million, net of tax, or $0.18 per share).

Net revenues were $478.6 million for the fourth quarter 2007, compared to $520.8 million for the same quarter in 2006, a decrease of 8.1%. Total Adjusted EBITDA was $134.6 million in the fourth quarter 2007, compared to $146.3 million for the same period 2006. These declines were chiefly due to Blue Chip's quarterly performance, which was materially impacted by a new competitor, a situation that was also aggravated by construction disruption and inclement weather.

Paul Chakmak, Executive Vice President and Chief Operating Officer of Boyd Gaming, commented, "In the Las Vegas Locals market, we were able to increase Adjusted EBITDA and improve margins by more than 150 basis points versus the prior year in spite of challenging economic conditions. And with the exception of an increasingly competitive environment at Blue Chip, we were encouraged by the performances elsewhere in the Midwest and South, where four of our other five casino properties recorded improved Adjusted EBITDA from the same quarter a year ago."

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

Key Operations Review

In our Las Vegas Locals segment, fourth quarter 2007 net revenues were $214.4 million versus $217.7 million for the fourth quarter 2006. Fourth quarter 2007 Adjusted EBITDA was $72.8 million, a 3.3% increase over $70.4 million in the same quarter 2006.

Our Downtown Las Vegas properties generated net revenues of $66.9 million and Adjusted EBITDA of $14.8 million for the fourth quarter 2007, versus $69.1 million and $17.1 million, respectively, for the fourth quarter 2006.

In our Midwest and South region, we recorded $197.3 million in net revenues for the fourth quarter 2007, compared to $222.9 million for the same period in 2006; more than 90% of the decline in net revenues in this region was attributable to Blue Chip. Adjusted EBITDA for the period was $44.0 million. By comparison, Adjusted EBITDA for the fourth quarter 2006 was $50.7 million.

In Atlantic City, Borgata's operating income for the fourth quarter 2007 was $35.4 million, essentially the same as the fourth quarter 2006. Net income for Borgata was $29.4 million for the fourth quarter 2007, compared to $29.2 million in the same period last year, and Adjusted EBITDA was $53.9 million, compared to $53.2 million for the fourth quarter 2006. Net revenue for Borgata was $202.7 million for the fourth quarter 2007, an increase of 2.0% over the same quarter in 2006.

The effects of competition and the economy were also evident in Atlantic City, where, excluding Borgata, fourth-quarter gaming revenue for the market was down 10.6% from prior year results. These declines are mainly attributed to the new slot parlors in Pennsylvania. Despite the fourth-quarter decline for the total market, Borgata grew gaming revenue by 3.7% and increased market share from 14.1% to 16.0% over the prior year. Borgata maintained its top spot in the Atlantic City market for the 2007 fourth quarter, leading in virtually all key gaming related areas.

Full Year Results

Income from continuing operations for the year ended December 31, 2007 was $120.9 million, or $1.36 per share, compared to $161.3 million, or $1.80 per share for the year ended December 31, 2006. Net income, which includes results from discontinued operations, was $303.0 million, or $3.42 per share, for the full year 2007 compared to $116.8 million, or $1.30 per share, for the year ended December 31, 2006. Net income for 2007 includes a $285 million pre-tax gain on the disposition of the Barbary Coast; net income for 2006 included a $65 million pre-tax impairment charge related to the disposition of South Coast.

Adjusted Earnings from continuing operations for the year ended December 31, 2007 were $157.3 million, or $1.78 per share, as compared to $196.4 million, or $2.19 per share for the full year 2006.

Net revenues were $2.0 billion and $2.2 billion for the years ended December 31, 2007 and 2006, respectively. Total Adjusted EBITDA was $577.8 million for the full year 2007, compared to $652.3 million total Adjusted EBITDA for 2006.


    Development Update
    Development continues to progress on our key growth initiatives:

     *    In Atlantic City, Borgata is in the final stages of construction of
          The Water Club, readying for a June 2008 opening.  The Water Club is
          an 800-room boutique hotel directly connected to Borgata and will be
          the first of its kind in Atlantic City.  The $400 million expansion
          will also include five swimming pools, a spa in the sky, additional
          meeting and retail space and a separate porte cochere and front
          desk.

     *    Our $130 million expansion of Blue Chip in Michigan City, Indiana
          remains on schedule for a December 2008 opening.  This development
          project will add a dramatic 22-story hotel tower that is expected to
          top out in April 2008, and will include 300 new upscale guest rooms,
          a spa and fitness center, additional meeting and event space, new
          dining and nightlife experiences, and a new porte cochere.

     *    Construction on our Echelon development continues to advance as
          foundation work is nearly complete for our wholly-owned hotels,
          which include Hotel Echelon, The Enclave, and Shangri-La Las Vegas;
          we expect to begin erecting steel in the second quarter 2008.  Work
          on the Delano and Mondrian is also scheduled to begin in the second
          quarter 2008.   Echelon is scheduled to open in the third quarter
          2010.

Keith Smith, Boyd Gaming President and Chief Executive Officer, said, "We are excited about what The Water Club and Blue Chip hotel developments will mean to our businesses in those markets. Importantly, both projects remain on schedule and on budget. The new additions will elevate each of the respective brands, as we face increasingly competitive landscapes in both markets. On the Las Vegas Strip, construction of Echelon continues to advance as expected. The project remains on track, and we're excited to see that project begin to take its place on the ever-changing Las Vegas skyline."

Boyd Gaming Branding Initiative

We successfully launched the first phase of our nationwide, consolidated players club program on January 14. Effective last month, our four primary Las Vegas Locals casinos (Sam's Town, Suncoast, The Orleans, and Gold Coast) were unified under a new Club Coast players card program.

For the first time, Club Coast members are rewarded for their play based on a tiered-card system. Guests qualify for one of three tiers (Ruby, Sapphire and Emerald), each offering an increasingly attractive series of services and benefits. The program also allows guests the opportunity to earn and redeem points at any Club Coast property with a single card, enhancing reward options for our players.

The introduction of our new players program in Las Vegas is the first stage of the nationwide rollout. We plan to connect the Club Coast card to our players clubs at our Downtown Las Vegas properties and in our Midwest and South region. Once the program is completed, players will be able to use their cards at Boyd Gaming properties in Nevada, Illinois, Indiana, Louisiana and Mississippi.

The next phase will rollout in our Midwest and South Region and is expected to be completed in the second quarter 2008.

Commenting on the launch, Chakmak said, "Our goal is to build and reward customer loyalty, drive cross-property visitation and offer the ability to seamlessly earn and redeem rewards at our properties across the country."

Key Financial Statistics

The following is additional information as of and for the three months ended December 31, 2007:

     *    December 31 debt balance: $2.27 billion
     *    December 31 cash: $165.7 million
     *    Dividends paid in the quarter: $13.2 million
     *    Maintenance capital expenditures during the quarter: $39.5 million
     *    Expansion capital expenditures during the quarter: $84.6 million
     *    Capitalized interest during the quarter: $6.4 million
     *    Cash distribution to the Company from Borgata in the quarter:
          $23.9 million
     *    December 31 debt balance at Borgata: $722.7 million

Conference Call Information

We will host our fourth quarter 2007 conference call today (Wednesday, February 27) at 12:00 p.m. EST. The conference call number is 888.680.0890 and the passcode is 99385796. Please call up to 15 minutes in advance to ensure you are connected prior to the start of the call.


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