Boyd Gaming Reports Q4 2000 Results

16 February 2001

Prior year fourth quarter results included earnings of $12.2 million, or $.12 per share, from the Silver Star management contract which terminated in January 2000, and the current quarter results include a full quarter of operations from Blue Chip Casino which was acquired by the Company in November 1999.

Other than the loss of management fee income from Silver Star, Sam's Town Tunica and Sam's Town Las Vegas were the primary contributors to the negative quarterly year-over-year comparisons. Sam's Town Tunica, which completed its renovation project at the end of the quarter, was hampered throughout the quarter from construction disruption, a continuing highly competitive Tunica market, and ice storms in December.

Sam's Town Las Vegas completed its major renovation and expansion project in late November, but the property generated lower than expected revenues in the quarter and experienced higher operating expenses, primarily related to launching its expanded facilities. In addition, poor weather affected results in the quarter at the Company's two highest producing properties: Par-A-Dice and Blue Chip.

On the positive side, the downtown Las Vegas properties reported their second highest quarterly operating cash flow ever in the fourth quarter, and the Stardust posted a 10.7% increase in operating cash flow in the fourth quarter versus the same period in 1999.

Revenues for the fourth quarter were $261 million, about even with revenues of $262 million reported in the fourth quarter last year. Operating cash flow from the Company's properties totaled $42.5 million in the quarter, versus $61.8 million in the comparable period in 1999. The Company recorded preopening expenses in the quarter of $1.8 million versus $0.3 million in the fourth quarter last year. Reflecting these preopening charges, the loss for this year's fourth quarter was $.07 per share, versus earnings of $.15 per share in the fourth quarter last year.

For the year ended December 31, 2000, the Company reported revenues of $1.08 billion, before a one-time payment received in connection with the termination of the Silver Star management agreement, representing a 9.7% increase over the $987 million of revenues reported in 1999. Operating cash flow from the Company's properties, before the one-time payment, was $225 million for the year, a 5.4% decline from the $238 million reported last year. Earnings for the full year 2000, before the one-time payment and preopening expenses, were $.36 per share compared to $.66 per share in 1999.

Commenting on the quarterly results, William S. Boyd, Chairman and Chief Executive Officer of Boyd Gaming, said ``I am clearly disappointed with the fourth quarter results. Setting aside the uncontrollable factor of the weather, our poor results in the quarter were primarily isolated to the two Sam's Town properties.

While both operate in competitive markets, both are excellent properties, particularly after the capital improvements that were recently completed. We are extremely committed and working diligently to improve results at the two Sam's Town properties, but expect that it will take several quarters to achieve desired earnings levels. In that regard, we expect earnings per share in the first quarter of 2001 to be in single digits.''

Quarterly Property Highlights

In Nevada, the Stardust reported a 6.5% increase in the number of occupied rooms and a 3.5 point increase in its hotel occupancy rate in the quarter versus the fourth quarter of last year. In addition, the Stardust recorded its third consecutive quarter of higher year-over-year operating cash flow. The three downtown properties as a group reported record quarterly revenues in the fourth quarter. The downtown Las Vegas properties reported a 95% hotel occupancy rate in the quarter, as their business from their Hawaiian customers remained strong. Sam's Town Las Vegas reported lower revenue and operating cash flow in the fourth quarter versus the comparable quarter in the prior year. The property's hotel occupancy rate in the quarter was 88%, down six percentage points from the fourth quarter last year. The Company is revamping and enhancing its marketing programs in order to grow revenues at that property. In the Central Region, Sam's Town Tunica reported an occupancy rate of 73% in the quarter, down seven percentage points from the prior year. The Company is aggressively marketing all aspects of the property to build revenues following the disruptive construction period. Treasure Chest reported a 6.6% revenue decline in the quarter compared to the prior year, as competition from the land-based casino in New Orleans continued to affect results.

However, the property is showing positive revenue comparisons in the first six weeks of 2001, with gaming revenues up 7% from the same period in 2000 reflecting more aggressive marketing programs. Both Par-A-Dice and Blue Chip were affected by severe winter weather that enveloped the upper Midwest in December. With better weather in the first few weeks of 2001, operations at both properties have returned to normal levels.

In mid December the Company funded a $90 million equity contribution to The Borgata, the Company's joint venture casino-hotel development with MGM MIRAGE in Atlantic City. Construction, still in the early stages, is progressing well, with completion scheduled for the summer of 2003.