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Chris Jones

Boyd Profits Down

23 April 2004

LAS VEGAS -- Despite strong performances from its East Coast rookie ace and a pair of reliable Las Vegas veterans, profits at Boyd Gaming Corp. slipped during this year's first quarter, company officials said Thursday.

The Las Vegas-based gaming operator reported $13.5 million in quarterly net income, or 20 cents per share, during the three-month period ended March 31. That total was down 18 percent from the same period a year ago, when quarterly net income was $16.4 million, or 25 cents per share.

Companywide revenue improved to $330 million, up 2.5 percent from $321.8 million a year ago, while adjusted cash flow climbed to $80.7 million from $71.9 million in last year's first quarter.

Boyd Gaming's adjusted first-quarter earnings per share totaled 29 cents, unchanged from the same quarter last year.

The company's best news came from Atlantic City, where its new $1 billion Borgata megaresort has exceeded expectations since opening July 3.

Thanks in part to bustling casino play and an unusually high 83 percent hotel occupancy rate along a seasonally chilly New Jersey shore, Borgata reported quarterly net revenue of $146 million. The property's cash flow, defined as earnings before interest, taxes, depreciation and amortization, was $40.1 million, the best in the Atlantic City market, Ellis Landau, Boyd Gaming executive vice president and chief financial officer, said in a Thursday conference call.

"If you're an Atlantic City operator, winters are supposed to be a time you wish your casino was someplace else," Landau said. "But not Borgata. I've said that the Boardwalk may be seasonal, the beach may be seasonal, but having fun is not seasonal and Borgata results showed it."

Borgata Chief Executive Officer Bob Boughner said the company plans to expand Borgata, including building a larger spa; five restaurants; two bars; a 100-table poker room; 700 slots; 20 new table games; and added meeting space.

Boyd Gaming owns 50 percent of the Borgata with partner Las Vegas-based gaming giant MGM Mirage.

Returns were also positive in Southern Nevada, where Sam's Town, a 25-year-old locals casino in east Las Vegas, also reported its best-ever quarterly cash flow.

The Western-themed resort's $12.4 million cash flow total was up 17.4 percent from the then-record $10.6 million it reported a year ago. Sam's Town's revenue total was also up 8.4 percent to $38.7 million.

On the Strip, Boyd Gaming's nearly 46-year-old Stardust reported a 14.9 percent cash flow increase at $5.5 million. Net revenue was also up, this time by 7.8 percent, at $38.7 million.

Landau said last year's Nevada gaming tax increase cost Boyd Gaming about $1 million during the quarter.

Those properties' gains were offset by higher gaming taxes imposed by the state of Illinois. Boyd Gaming's East Peoria-based Par-A-Dice resort saw its quarterly cash flow dip by $3.3 million to $8.2 million, a decline the company traced primarily to Illinois' 2003 gaming tax increase.

Illinois Gov. Rod Blagojevich in June raised his state's taxes on adjusted gross receipts exceeding $250 million to 70 percent from 50 percent effective July 1, 2003.

Snyder also said Boyd Gaming's pending acquisition of Harrah's Shreveport (La.) hotel-casino, soon to be Sam's Town Shreveport, as well as the company's planned merger with Las Vegas-based Coast Casinos, will diversify the company's U.S. holdings and allow it to better compete in both the Las Vegas locals market and on the Strip.

"We feel very good about how this company is positioned for the future," Boyd Gaming President Don Snyder said.

Boyd Gaming shares closed Thursday at $24.80, down 27 cents or 1.08 percent.