- Company Delays Construction of Echelon -
- Board Authorizes $100 Million Share Repurchase Program -
- Company Exceeds Analyst Consensus Estimates -
LAS VEGAS, Aug. 1 /PRNewswire-FirstCall/ -- Boyd Gaming Corporation
(NYSE: BYD) today reported financial results for the second quarter ended June
30, 2008.
(Logo: http://www.newscom.com/cgi-bin/prnh/20030219/BOYDLOGO)
Key Highlights
-- We have decided to delay construction of our Echelon project on the Las
Vegas Strip due to the difficult environment surrounding today's
capital markets and the challenging economic conditions that currently
exist. We expect to resume construction when credit market conditions
and the overall outlook for the economy improve.
-- Our Board of Directors has authorized an amendment to our existing
share repurchase program to increase the amount of common stock
available to be repurchased to $100 million. The Board also suspended
our quarterly dividend program, which they believed was not adequately
valued in our share price at recent trading levels.
Key Operating Highlights
-- Las Vegas Locals segment records second quarter 2008 net revenues and
Adjusted EBITDA(1) declines of 6.3% and 6.6%, respectively, as economic
conditions continue to impact consumer spending; despite these
declines, Adjusted EBITDA margins were consistent with the year ago
quarter.
-- Midwest and South records 15.0% decline in net revenues and 17.4%
decline in Adjusted EBITDA for the second quarter 2008; as in previous
quarters, the decline was principally attributable to Blue Chip, as an
increased competitive environment, weak economic conditions, and
significant construction disruption continue to impact the property.
-- Borgata's second quarter 2008 net revenues were essentially the same as
prior year results, while Adjusted EBITDA declined 17.1%, primarily due
to higher overall operating costs, and higher-than-anticipated
operating expenses from the recently opened Water Club.
(1) See footnotes at the end of the release for additional information
relative to non-GAAP financial measures.
Echelon Update
Due to the difficult environment in today's capital markets, as well as
weak economic conditions, we have decided to delay our Echelon project on the
Las Vegas Strip. Our present expectation is to resume construction in three
to four quarters, assuming credit market conditions and the economic outlook
improves.
We are in discussions with Morgans Hotel Group and General Growth
Properties (GGP) to modify our existing agreements, as both joint venture
parties remain interested in Echelon. The delay will allow our joint ventures
with Morgans and GGP the opportunity to secure financing under more favorable
conditions at a later date. It also provides additional time for our joint
venture with GGP, the High Street retail promenade, to take advantage of an
improved leasing environment, once economic conditions moderate.
From the beginning, we strategically designed Echelon to be developed in a
single phase, and this schedule adjustment allows us to preserve the holistic
integrity of the project. By delaying, we will be able to better manage the
timing of the construction of the wholly-owned aspects of Echelon and ensure
that they do not outpace the construction of the joint venture components.
This delay will also give us time to focus on restoring momentum in our core
business, and for consumers in general, to regain their footing and
confidence.
Keith Smith, President and Chief Executive Officer of Boyd Gaming,
commenting on the decision to delay Echelon: 'The current economic climate is
unprecedented in recent years. While we remain enthusiastic about the
long-term prospects for the Las Vegas market and Echelon, this is the right
decision for our Company at this time. This decision is not a reflection of
the merits of the project, nor the accomplishments of our professional
development team, but rather the challenges we, and many other businesses,
face in today's uncertain business climate.
'We remain fully committed to Echelon, and convinced that it will produce
long-term, sustainable growth for our Company in the years to come. We look
forward to resuming construction as soon as we are able to do so.'
As of the June 30, 2008, we have incurred approximately $500 million of
capitalized costs related to the overall project.
Stock Repurchase and Dividend
Our Board of Directors has authorized an amendment to our existing share
repurchase program to increase the amount of common stock available to be
repurchased to $100 million, allowing us to focus on maximizing shareholder
value through the repurchase program. Accordingly, repurchases may be made
from time to time in the open market or in privately negotiated transactions,
depending on market conditions.
In a related decision, the Board also suspended the quarterly dividend for
the time being, as they believe the market assigned little value to our
dividend program.
Second Quarter Results
We reported second quarter 2008 income from continuing operations of $21.7
million, or $0.25 per share, compared to income from continuing operations of
$22.9 million, or $0.26 per share, in the same period 2007.
Including discontinued operations, we reported net income for the second
quarter 2007 of $22.1 million, or $0.25 per share. There were no such
discontinued operations reported in the second quarter 2008. Per share
earnings discussed throughout this release are reported on a diluted basis.
Adjusted Earnings(1) from continuing operations for the second quarter
2008 were $26.4 million, or $0.30 per share, compared to $39.9 million, or
$0.45 per share, for the same period in 2007. During the second quarter 2008,
certain pre-tax adjustments consisting principally of preopening expenses,
largely associated with Echelon and The Water Club, reduced income from
continuing operations by $7.6 million ($4.8 million, net of tax, or $0.05 per
share).
By comparison, the second quarter 2007 included certain pre-tax
adjustments that had a net effect of reducing income from continuing
operations by $26.3 million ($17.0 million, net of tax, or $0.19 per share).
Net revenues were $460.8 million for the second quarter 2008, compared to
$511.4 million for the same quarter in 2007, a decrease of 9.9%. Total
Adjusted EBITDA was $119.6 million in the second quarter 2008, compared to
$143.7 million for the same period 2007. These declines were chiefly due to a
continuing difficult economic climate impacting consumer spending, as well as
the addition of a new competitor near our Blue Chip operation.
Keith Smith commented on the results, 'During the second quarter, we
continued to see the same economic factors at work that were present in the
first quarter. Consumers across the nation are faced with rising food and
fuel costs, and the housing slump continues to impact consumer confidence.
Despite these economic headwinds, our business is still producing significant
operating cash flows, and our results are generally in line with our
expectations for the quarter. We remain confident in our ability to manage
through these difficult economic times and believe we will be prepared to
capitalize on growth opportunities when conditions normalize.'
(1) See footnotes at the end of the release for additional information
relative to non-GAAP financial measures.
Year-To-Date Results
We reported a loss from continuing operations for the six months ended
June 30, 2008 of $10.9 million, or $0.12 per share, which includes an $84.0
million pre-tax impairment charge, principally related to the write-off of the
Dania Jai-Alai intangible license right. By comparison, we reported income
from continuing operations of $58.0 million, or $0.66 per share for the six
months ended June 30, 2007. Including discontinued operations, we reported
net income for the six months ended June 30, 2007 of $240.0 million, or $2.71
per share. Net income for the 2007 period includes a $285 million gain on the
disposition of the Barbary Coast. There were no such discontinued operations
reported during the 2008 period.
Adjusted Earnings from continuing operations for the six months ended June
30, 2008 were $63.4 million, or $0.72 per share, as compared to $83.9 million,
or $0.95 per share for the six-month period in 2007.
Net revenues were $931.9 million and $1.0 billion for the six months ended
June 30, 2008 and 2007, respectively. Total Adjusted EBITDA was $247.3
million for the current six-month period. By comparison, total Adjusted
EBITDA for the 2007 period was $299.1 million (or $302.3 million, excluding a
$3.2 million estimated retroactive property tax charge for an unanticipated
increase in assessed property value at Blue Chip).
Key Operations Review
In our Las Vegas Locals segment, second quarter 2008 net revenues were
$197.9 million versus $211.2 million for the second quarter 2007. Second
quarter 2008 Adjusted EBITDA was $62.4 million, a 6.6% decrease from the $66.8
million in the same quarter 2007. The decreases reflect the varied economic
factors weighing on consumers in the Las Vegas Valley during this difficult
period, including continued declines in the local housing market and rising
unemployment.
Our Downtown Las Vegas properties generated net revenues of $63.0 million
and Adjusted EBITDA of $10.3 million for the second quarter 2008, versus $65.0
million and $13.2 million, respectively, for the second quarter 2007. The
$2.8 million decrease in Adjusted EBITDA was attributable to higher fuel
costs, which adversely affected leisure travel from our Hawaiian feeder
markets.
In our Midwest and South region, we recorded $199.9 million in net
revenues for the second quarter 2008, compared to $235.2 million for the same
period in 2007. Adjusted EBITDA for the current period was $45.3 million,
versus $54.9 million in the second quarter 2007; the decline in net revenues
and Adjusted EBITDA were principally attributable to Blue Chip, which was
impacted by increased competition, weak economic conditions and construction
disruption.
Borgata's operating income for the second quarter 2008 was $22.3 million,
versus $36.1 million for the second quarter 2007. Net revenues for Borgata
were $205.1 million for the second quarter 2008, essentially flat compared to
the $202.1 million recorded in the same quarter in 2007. Adjusted EBITDA was
$45.2 million, compared to $54.5 million for the second quarter 2007. The
decline was primarily due to higher operating expense for Borgata and
higher-than-anticipated operating expense from The Water Club, which we expect
to continue through the opening phase. Additionally, the overall Atlantic
City market was impacted by increased competition from slot operations in
Pennsylvania and slowing economic conditions.
Paul Chakmak, Executive Vice President and Chief Operating Officer, said,
'Our veteran management team has been through difficult times before and is
drawing on that experience to guide us through this challenging period. We
continue to aggressively refine our operations, exploring new and innovative
ways to run our businesses and control costs without compromising the
integrity of our entertainment offering.'
The rollout of our nationwide, consolidated players club program continued
to progress during the quarter, as we successfully launched our 'B Connected'
program throughout the Midwest and South region. The six properties in this
region are now linked to our Las Vegas Locals properties through this players
program. We plan to complete the rollout later in the third quarter 2008,
when we link our three Downtown Las Vegas properties into the system. Once
complete, players will be able to use their cards at Boyd Gaming properties
throughout Nevada, Illinois, Indiana, Louisiana and Mississippi.
Key Financial Statistics
The following is additional information as of and for the three months
ended June 30, 2008:
-- June 30 debt balance: $2.5 billion
-- June 30 cash: $148.7 million
-- Dividends paid in the quarter: $13.2 million
-- Maintenance capital expenditures during the quarter: $22.9 million
-- Expansion capital expenditures during the quarter: $222.5 million
-- Capitalized interest during the quarter: $7.9 million
-- Cash distribution to the Company from Borgata in the quarter: $4.9
million
-- June 30 debt balance at Borgata: $746.4 million
Conference Call Information
We will host our second quarter 2008 conference call today (Friday,
August 1) at 12:00 p.m. Eastern. The conference call number is 888.680.0892
and the passcode is 64641695. 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
http://www.boydgaming.com or
http://phx.corporate-ir.net/phoenix.zhtml?p=irol-
eventDetails&c=95703&eventID=1889969
Participants may pre-register for the call at
https://www.theconferencingservice.com/prereg/key.process?key=PLTRCBWFU
Pre-registrants will be issued a pin number to use when dialing into the live
call, which will provide quick access to the conference by skipping the
operator sequence upon connection.
Following the call's completion, a replay will be available by dialing
888.286.8010 today (Friday, August 1) beginning two hours after the completion
of the call and continuing through Friday, August 8. The passcode for the
replay will be 12738264. The replay will also be available on the Internet at
http://www.boydgaming.com .
The following table presents Net Revenues and Adjusted EBITDA by operating
segment and reconciles Adjusted EBITDA to income (loss) from continuing
operations for the three and six months ended June 30, 2008 and 2007. Note
that in future filings of the Company's periodic reports filed with the
Securities and Exchange Commission, the results from Dania Jai-Alai and
corporate expense will be classified as part of total other operating costs
and expenses and not included in adjusted EBITDA for our reportable segments.
Three Months Ended Six Months Ended
June 30, June 30,
2008 2007 2008 2007
Net Revenues (In thousands)
Las Vegas Locals $197,896 $211,233 $404,390 $429,921
Downtown Las Vegas (a) 62,970 64,984 123,899 128,817
Midwest and South 199,898 235,174 403,593 469,683
Net revenues $460,764 $511,391 $931,882 $1,028,421
Adjusted EBITDA
Las Vegas Locals $62,427 $66,844 $129,082 $141,423
Downtown Las Vegas 10,324 13,156 20,493 27,037
Midwest and South 45,337 54,917 90,936 112,198
Wholly-owned property
Adjusted EBITDA 118,088 134,917 240,511 280,658
Corporate expense (c) (11,685) (9,995) (25,431) (22,188)
Wholly-owned Adjusted
EBITDA 106,403 124,922 215,080 258,470
Our share of Borgata's operating
income before net amortization,
preopening and other items (d) 13,244 18,778 32,249 40,650
Adjusted EBITDA (e) 119,647 143,700 247,329 299,120
Other operating costs and expenses
Deferred rent 1,096 1,130 2,230 2,260
Depreciation and amortization(f) 42,900 42,262 86,394 83,198
Preopening expenses 5,207 6,062 10,786 10,512
Our share of Borgata's
preopening expenses 2,101 539 2,509 1,009
Our share of Borgata's
write-downs and other
charges, net 9 201 79 167
Share-based compensation expense 3,066 4,366 6,035 8,550
Write-downs and other charges 1,174 1,972 91,487 10,980
Total other operating costs
and expenses 55,553 56,532 199,520 116,676
Operating income 64,094 87,168 47,809 182,444
Other non-operating items
Interest expense, net (b) 27,157 33,687 57,410 70,235
Decrease (increase) in value of
derivative instruments 17 (2,601) (425) (2,525)
Loss (gain) on early retirements
of debt (863) 16,945 (1,813) 16,945
Our share of Borgata's
non-operating expenses, net 3,130 3,574 7,735 7,375
Total other non-operating
costs and expenses, net 29,441 51,605 62,907 92,030
Income (loss) from continuing
operations before income taxes 34,653 35,563 (15,098) 90,414
Benefit from (provision for)
income taxes (12,995) (12,622) 4,169 (32,368)
Income (loss) from
continuing operations $21,658 $22,941 $(10,929) $58,046
(a) Includes revenues related to Vacations Hawaii and other travel agency
related entities of $12.4 million and $22.4 million for the three and
six months ended June 30, 2008, respectively, and $11.7 million and
$22.5 million for the three and six months ended June 30, 2007,
respectively.
(b) Net of interest income and amounts capitalized.
(c) The following table reconciles the presentation of corporate expense
on our condensed consolidated statements of operations to the
presentation on the accompanying table.
Three Months Ended Six Months Ended
June 30, June 30,
2008 2007 2008 2007
(In thousands)
Corporate expense as reported on our
condensed consolidated statements of
operations $14,010 $13,544 $29,783 $28,815
Corporate share-based compensation
expense (2,325) (3,549) (4,352) (6,627)
Corporate expense as reported on
the accompanying table $11,685 $9,995 $25,431 $22,188
(d) 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.
Three Months Ended Six Months Ended
June 30, June 30,
2008 2007 2008 2007
(In thousands)
Operating income from Borgata, as
reported on our condensed
consolidated statements of operations $10,809 $17,713 $29,012 $38,825
Add back:
Net amortization expense related to
our investment in Borgata 325 325 649 649
Our share of preopening expenses 2,101 539 2,509 1,009
Our share of write-downs and other
charges, net 9 201 79 167
Our share of Borgata's operating income
before net amortization, preopening
and other items $13,244 $18,778 $32,249 $40,650
(e) The following table reconciles Adjusted EBITDA to EBITDA and income
(loss) from continuing operations.
Three Months Ended Six Months Ended
June 30, June 30,
2008 2007 2008 2007
(In thousands)
Adjusted EBITDA $119,647 $143,700 $247,329 $299,120
Deferred rent 1,096 1,130 2,230 2,260
Preopening expenses 5,207 6,062 10,786 10,512
Our share of Borgata's preopening
expenses 2,101 539 2,509 1,009
Our share of Borgata's write-downs
and other charges, net 9 201 79 167
Share-based compensation expense 3,066 4,366 6,035 8,550
Write-downs and other charges 1,174 1,972 91,487 10,980
Decrease (increase) in value
of derivative instruments 17 (2,601) (425) (2,525)
Loss (gain) on early retirements
of debt (863) 16,945 (1,813) 16,945
Our share of Borgata's
non-operating expenses, net 3,130 3,574 7,735 7,375
EBITDA 104,710 111,512 128,706 243,847
Depreciation and amortization 42,900 42,262 86,394 83,198
Interest expense, net 27,157 33,687 57,410 70,235
Provision for (benefit from)
income taxes 12,995 12,622 (4,169) 32,368
Income (loss) from continuing
operations $21,658 $22,941 $(10,929) $58,046
(f) The following table reconciles the presentation of depreciation and
amortization on our condensed consolidated statements of operations to
the presentation on the accompanying table.
Three Months Ended Six Months Ended
June 30, June 30,
2008 2007 2008 2007
(In thousands)
Depreciation and amortization as
reported on our condensed
consolidated statements of operations $42,575 $41,937 $85,745 $82,549
Net amortization expense related to our
investment in Borgata 325 325 649 649
Depreciation and amortization as
reported on the accompanying table $42,900 $42,262 $86,394 $83,198
BOYD GAMING CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
Three Months Ended Six Months Ended
June 30, June 30,
2008 2007 2008 2007
(In thousands, except per share data)
Revenues
Gaming $381,058 $425,671 $774,024 $857,602
Food and beverage 64,884 68,955 131,810 137,261
Room 36,516 39,156 74,871 79,128
Other 31,392 33,083 61,056 65,967
Gross revenues 513,850 566,865 1,041,761 1,139,958
Less promotional allowances 53,086 55,474 109,879 111,537
Net revenues 460,764 511,391 931,882 1,028,421
Costs and expenses
Gaming 172,347 195,624 349,382 393,247
Food and beverage 36,578 41,260 75,856 82,497
Room 11,179 11,990 22,603 23,362
Other 24,485 25,092 46,575 48,461
Selling, general and
administrative 76,049 80,705 153,956 157,951
Maintenance and utilities 23,875 23,750 46,912 46,428
Depreciation and amortization 42,575 41,937 85,745 82,549
Corporate expense 14,010 13,544 29,783 28,815
Preopening expenses 5,207 6,062 10,786 10,512
Write-downs and other charges 1,174 1,972 91,487 10,980
Total costs and expenses 407,479 441,936 913,085 884,802
Operating income from Borgata 10,809 17,713 29,012 38,825
Operating income 64,094 87,168 47,809 182,444
Other expense (income)
Interest income (5) (110) (13) (110)
Interest expense, net of
amounts capitalized 27,162 33,797 57,423 70,345
Decrease (increase) in value of
derivative instruments 17 (2,601) (425) (2,525)
Loss (gain) on early
retirements of debt (863) 16,945 (1,813) 16,945
Other non-operating
expenses from Borgata, net 3,130 3,574 7,735 7,375
Total other expense, net 29,441 51,605 62,907 92,030
Income (loss) from continuing
operations before income taxes 34,653 35,563 (15,098) 90,414
Benefit from (provision for)
income taxes (12,995) (12,622) 4,169 (32,368)
Income (loss) from continuing
operations 21,658 22,941 (10,929) 58,046
Discontinued operations:
Income (loss) from discontinued
operations (including a gain
on disposition of $285,033
during the six months ended
June 30, 2007) - (1,284) - 281,672
Benefit from (provision for)
income taxes - 455 - (99,740)
Net income (loss) from
discontinued operations - (829) - 181,932
Net income (loss) $21,658 $22,112 $(10,929) $239,978
Basic net income (loss) per
common share:
Income (loss) from
continuing operations $0.25 $0.26 $(0.12) $0.66
Net income (loss) from
discontinued operations - (0.01) - 2.09
Net income (loss) $0.25 $0.25 $(0.12) $2.75
Weighted average basic shares
outstanding 87,854 87,497 87,831 87,369
Diluted net income (loss)
per common share:
Income (loss) from
continuing operations $0.25 $0.26 $(0.12) $0.66
Net income (loss) from
discontinued operations - (0.01) - 2.05
Net income (loss) $0.25 $0.25 $(0.12) $2.71
Weighted average diluted shares
outstanding 88,119 88,714 87,831 88,588
The following table reconciles income (loss) from continuing operations
based upon United States generally accepted accounting principles to adjusted
earnings and adjusted earnings per share.
Three Months Ended Six Months Ended
June 30, June 30,
2008 2007 2008 2007
(In thousands, except per share data)
Income (loss) from continuing
operations $21,658 $22,941 $(10,929) $58,046
Adjustments:
Preopening expenses 5,207 6,062 10,786 10,512
Our share of Borgata's preopening
expenses 2,101 539 2,509 1,009
Our share of Borgata's write-downs
and other charges, net 9 201 79 167
Decrease (increase) in value of
derivative instruments 17 (2,601) (425) (2,525)
Loss (gain) on early retirements
of debt (863) 16,945 (1,813) 16,945
Write-downs and other charges 1,174 1,972 91,487 10,980
Blue Chip retroactive property
tax adjustment - 3,163 - 3,163
Income tax effect for above
adjustments (2,867) (9,328) (28,334) (14,410)
Adjusted earnings $26,436 $39,894 $63,360 $83,887
Adjusted earnings per diluted share
(Adjusted EPS) $0.30 $0.45 $0.72 $0.95
Weighted average diluted shares
outstanding 88,119 88,714 87,831 88,588
The following table reports Borgata's financial results.
Three Months Ended Six Months Ended
June 30, June 30,
2008 2007 2008 2007
(In thousands)
Gaming revenue $178,522 $177,966 $357,158 $365,235
Non-gaming revenue 74,286 71,686 142,392 138,423
Gross revenues 252,808 249,652 499,550 503,658
Less promotional allowances 47,747 47,553 92,465 97,829
Net revenues 205,061 202,099 407,085 405,829
Expenses 159,891 147,636 306,449 290,797
Depreciation and amortization 18,685 16,906 36,140 33,732
Preopening expenses 4,201 1,077 5,017 2,018
Write-downs and other charges, net 17 403 157 334
Operating income 22,267 36,077 59,322 78,948
Interest expense, net (5,730) (7,823) (12,187) (15,516)
Benefit from (provision for)
state income taxes (530) 676 (3,284) 766
Total non-operating expenses (6,260) (7,147) (15,471) (14,750)
Net income $16,007 $28,930 $43,851 $64,198
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 Six Months Ended
June 30, June 30,
2008 2007 2008 2007
(In thousands)
Our share of Borgata's operating
income $11,134 $18,038 $29,661 $39,474
Net amortization expense related to
our investment in Borgata (325) (325) (649) (649)
Operating income from Borgata, as
reported on our condensed consolidated
statements of operations $10,809 $17,713 $29,012 $38,825
Other non-operating net expenses from
Borgata, as reported on our condensed
consolidated statements of operations $3,130 $3,574 $7,735 $7,375
The following table reconciles operating income to Adjusted EBITDA for
Borgata.
Three Months Ended Six Months Ended
June 30, June 30,
2008 2007 2008 2007
(In thousands)
Operating income $22,267 $36,077 $59,322 $78,948
Depreciation and amortization 18,685 16,906 36,140 33,732
Preopening expenses 4,201 1,077 5,017 2,018
Write-downs and other charges, net 17 403 157 334
Adjusted EBITDA $45,170 $54,463 $100,636 $115,032
The following table reconciles Adjusted EBITDA to EBITDA and Net income
for Borgata.
Three Months Ended Six Months Ended
June 30, June 30,
2008 2007 2008 2007
(In thousands)
Adjusted EBITDA $45,170 $54,463 $100,636 $115,032
Preopening expenses 4,201 1,077 5,017 2,018
Write-downs and other charges, net 17 403 157 334
EBITDA 40,952 52,983 95,462 112,680
Depreciation and amortization 18,685 16,906 36,140 33,732
Interest expense, net 5,730 7,823 12,187 15,516
Provision for (benefit from)
state income taxes 530 (676) 3,284 (766)
Net income $16,007 $28,930 $43,851 $64,198
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.
Note that while the Company will continue to include the results of Dania
Jai-Alai and corporate expense in Adjusted EBITDA for purposes of its earnings
releases, in future filings of the Company's periodic reports with the
Securities and Exchange Commission, the results of Dania Jai-Alai and
corporate expense will not be included in the Company's adjusted EBITDA for
its reportable segments. Effective April 1, 2008, the Company reclassified
the reporting of its Midwest and South segment to exclude the results of Dania
Jai-Alai, since it does not share similar economic characteristics with our
other Midwest and South operations. In the Company's future periodic reports,
Dania Jai-Alai's results will be included as part of total other operating
costs and expenses. In addition, as of the same date, we reclassified the
reporting of corporate expense to exclude it from our subtotal for reportable
segments' adjusted EBITDA and include it as part of total other operating
costs and expenses. Furthermore, in the Company's future periodic reports,
corporate expense will be presented to include its portion of share-based
compensation expense.
EBITDA and Adjusted EBITDA
EBITDA is a commonly used measure of performance in our industry which we
believe, when considered with measures calculated in accordance with United
States Generally Accepted Accounting Principles (GAAP), gives investors a more
complete understanding of operating results before the impact of investing and
financing transactions and income taxes and facilitates comparisons between us
and our competitors. Management has historically adjusted EBITDA when
evaluating operating performance because we believe that the inclusion or
exclusion of certain recurring and non-recurring items is necessary to provide
the most accurate measure of our core operating results and as a means to
evaluate period-to-period results. We have chosen to provide this information
to investors to enable them to perform more meaningful comparisons of past,
present and future operating results and as a means to evaluate the results of
core on-going operations. We do not reflect such items when calculating
EBITDA; however, we adjust for these items and refer to this measure as
Adjusted EBITDA. We have historically reported this measure to our investors
and believe that the continued inclusion of Adjusted EBITDA provides
consistency in our financial reporting. We use Adjusted EBITDA in this press
release because we believe it is useful to investors in allowing greater
transparency related to a significant measure used by management in its
financial and operational decision-making. Adjusted EBITDA is among the more
significant factors in management's internal evaluation of total company and
individual property performance and in the evaluation of incentive
compensation related to property management. Management also uses Adjusted
EBITDA as a measure in determining the value of acquisitions and dispositions.
Adjusted EBITDA is also widely used by management in the annual budget
process. Externally, we believe these measures continue to be used by
investors in their assessment of our operating performance and the valuation
of our company. Adjusted EBITDA reflects EBITDA adjusted for deferred rent,
preopening expenses, share-based compensation expense, write-downs and other
charges, change in value of derivative instruments, gain/loss on early
retirements of debt, and our share of Borgata's non-operating expenses,
preopening expenses and write-downs and other charges, net. In addition,
Adjusted EBITDA includes the results of Dania Jai-Alai and corporate expense.
A reconciliation of Adjusted EBITDA to EBITDA and income (loss) from
continuing operations, based upon GAAP, is included in the financial schedules
accompanying this release.
Adjusted Earnings and Adjusted EPS
Adjusted Earnings is income (loss) from continuing operations before
preopening expenses, change in value of derivative instruments, write-downs
and other charges, Blue Chip retroactive property tax adjustment, gain/loss on
early retirements of debt, and our share of Borgata's preopening expenses and
write-downs and other charges, 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 income (loss) from continuing operations 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 and Adjusted EPS has
certain limitations. Our presentation of EBITDA, Adjusted EBITDA, Adjusted
Earnings and Adjusted EPS 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 and Adjusted EPS are used in
addition to and in conjunction with results presented in accordance with GAAP.
EBITDA, Adjusted EBITDA, Adjusted Earnings and Adjusted EPS 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 and Adjusted EPS 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 the
future, including, but not limited to, statements regarding the Company's
strategy, expenses, revenue, earnings, cash flow, Adjusted EBITDA, Adjusted
Earnings or Earnings Per Share. In addition, forward-looking statements
include statements regarding the effects of competition and construction
disruption on Blue Chip's operating results, the slowing economy, challenging
capital markets and reduced consumer spending, statements regarding the delay
of construction at Echelon, the timing for recommencing construction at
Echelon, the ability of the Company's joint ventures to secure financing on
more favorable terms, whether the capital markets, the economy or the leasing
market will improve, that the Company's joint venture participants remain
interested in Echelon and the decision to delay construction at Echelon, the
long-term prospects for the Las Vegas market and Echelon, that Echelon will
produce long-term sustainable growth for the Company in the years to come, the
Company's increased share repurchase program and whether shares will be
repurchased, and at what price shares will be repurchased, and whether this
will affect shareholder value, if, or when, the Company will declare a
quarterly dividend in the future, that the Company continues to refine its
operations, that it is exploring new and innovative ways to run the business
and control costs, and the timing to complete the rollout of the Company's
consolidated player's club. Forward- looking statements involve certain risks
and uncertainties, and actual results may differ materially from those
discussed in any such statement. In particular, the Company can provide no
assurances regarding the timing or effects of the Company's delay of
construction at Echelon and when, or if, construction will be recommenced, the
effect that such delay will have on the Company's business, operations or
financial condition, the effect that such delay will have on the Company's
joint venture participants, and whether such participants (or other Echelon
project participants) will terminate their agreements or arrangements with the
Company, or whether any such participants will require any additional fees or
terms that may be unfavorable to the Company, whether the Company will be able
to reach agreement on any modified terms with its joint venture participants,
that Borgata's or Blue Chip's position, performance or demand will change, and
the timing, cost, progress or anticipated amenities and features for the Blue
Chip expansion project. Additional factors that could cause actual results to
differ materially are the following: competition, litigation, financial
community and rating agency perceptions of the Company, changes in laws and
regulations, including increased taxes, the availability and price of energy,
weather, regulation, economic, credit and capital market conditions (and the
ability of the Company's joint venture participants to secure favorable
financing, if at all) and the effects of war, terrorist or similar activity.
In addition, the Company's development and expansion projects are subject to
the many risks inherent in the expansion or renovation of an existing
enterprise or construction of a new enterprise, including poor performance or
non-performance by any of the joint venture partners or other third parties on
whom the Company is relying, unanticipated design, construction, regulatory,
environmental and operating problems and lack of demand for the Company's
projects, as well as unanticipated delays and cost increases, shortages of
materials, shortages of skilled labor or work stoppages, unforeseen
construction scheduling, engineering, environmental, permitting, construction
or geological problems, weather interference, floods, fires or other casualty
losses. In addition, the Company's anticipated costs and construction periods
for projects are based upon budgets, conceptual design documents and
construction schedule estimates prepared by the Company in consultation with
its architects and contractors. Many of these costs are estimated at inception
of the project and can change over time as the project is built to completion.
The cost of any project may vary significantly from initial budget
expectations, and the Company may have a limited amount of capital resources
to fund cost overruns. If the Company cannot finance cost overruns on a timely
basis, the completion of one or more projects may be delayed until adequate
funding is available. The Company cannot assure that any project will be
completed, if at all, on time or within established budgets, or that any
project will result in increased earnings to the Company. Significant delays,
cost overruns, or failures of the Company's projects to achieve market
acceptance could have a material adverse effect on the Company's business,
financial condition and results of operations. Furthermore, the Company's
projects may not help it compete with new or increased competition in its
markets. Additional factors that could cause actual results to differ are
discussed under the heading 'Risk Factors' and in other sections of the
Company's filings with the SEC, 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.
Share Repurchase Program
The Company is not obligated to purchase any shares under its stock
repurchase program. Subject to applicable corporate securities laws,
repurchases under its stock repurchase program may be made at such times and
in such amounts as the Company deems appropriate. Purchases under its stock
repurchase program can be discontinued at any time the Company feels
additional purchases are not warranted. The Company intends on funding the
repurchases under its stock repurchase program with existing cash resources
and availability under its credit facility.
About Boyd Gaming
Headquartered in Las Vegas, Boyd Gaming Corporation (NYSE: BYD) is a
leading diversified owner and operator of 16 gaming entertainment properties
located in Nevada, New Jersey, Mississippi, Illinois, Indiana, and Louisiana.
Boyd Gaming press releases are available at http://www.prnewswire.com.
Additional news and information on Boyd Gaming can be found at
http://www.boydgaming.com .
SOURCE Boyd Gaming Corporation
