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Boyd Gaming Reports Record Q1 Results

Significant highlights include:

-- The Company reported record EBITDA (a non-GAAP measure of earnings before interest, taxes, depreciation, amortization, preopening expenses and the one-time charge) from its property operations (before corporate expense) of $77.6 million in the first quarter versus $61.8 million in last year's first quarter, an increase of 25%.

On a same-store basis, property EBITDA was up 18.4% over the comparable quarter last year (Delta Downs, acquired in May 2001, was not owned by the Company in the first quarter last year). EBITDA after corporate expense in the quarter was a record $71.5 million, an increase of $16.4 million, or 30%, over the $55.2 million reported in the first quarter last year. On a same-store basis, EBITDA after corporate expense rose 22% in the first quarter over last year.

-- Seven of the Company's eight operating units that operated in both quarters reported increases in EBITDA in the first quarter this year versus the comparable quarter last year. The two largest percentage gainers were the Company's two Sam's Town properties -- Las Vegas and Tunica -- that demonstrated significantly more efficient operations this year versus last year when they were heavily promoting their newly completed expansion and renovations.

Further, the Company's two highest earning properties -- Blue Chip and Par-A-Dice -- both reported record quarters, and its Downtown Las Vegas properties reported their second best quarter ever.

-- The Company reported significantly improved EBITDA margins in the first quarter of 2002 versus the prior year's first quarter. While last year's first quarter EBITDA margin (after corporate expense) was 19.7%, this year's margin was 24.2% for properties operating in both quarters, an increase of 4.5 percentage points.

-- Delta Downs reported EBITDA of $4.4 million, representing $.02 accretion in earnings per share (before preopening expenses). These results were achieved in approximately half a quarter of slot operations.

-- The record-breaking earnings far exceeded the consensus expectations held by Wall Street before the Company's preannouncement in late March 2002.

On a consolidated basis, net revenues in the first quarter 2002 were a record $303 million versus $280 million last year. The Company reported $6.3 million, or $.06 per share, of preopening expenses in the first quarter, principally related to Delta Downs and The Borgata in Atlantic City, versus $0.4 million in the first quarter last year, primarily related to The Borgata. In the first quarter this year, the Company ceased amortizing its intangible assets, which in last year's first quarter accounted for $2.5 million of expense, or $.02 per share.

Finally, the Company, pursuant to the initial adoption of Statement of Financial Accounting Standards No. 142, reported a write-down in the first quarter of all of the remaining goodwill on the books of the Stardust, a property the Company acquired in 1985. The write-down amounted to $8.2 million or $.13 per share. This write-down represented only 1.8% of the Company's intangible asset balances at December 31, 2001. Net income for the first quarter 2002 was $7.8 million, or $.12 per share, versus $6.1 million, or $.10 per share, in the first quarter 2001.

The Company's nine operating units reported first quarter results as follows:

-- The Stardust reported revenue of $35.6 million in the quarter versus $38.9 million last year and EBITDA in the quarter of $4.5 million compared to $5.0 million last year. While revenue declined 8.5%, the property's EBITDA margin of approximately 13% remained essentially even with last year, attributable to the Company's continuing cost containment efforts at the property.

-- Sam's Town Las Vegas reported quarterly revenue of $33.0 million versus $38.0 million last year. Despite this decline, the Company reported a 56% increase in EBITDA to $8.1 million versus the $5.2 million reported in last year's first quarter. The property's EBITDA margin increased to 24.5% in this year's first quarter versus 13.7% last year, an improvement of 10.8 percentage points. Significant reductions in marketing and payroll costs accounted for much of the gain.

-- The Eldorado and Jokers Wild reported combined revenues of $9.2 million and combined EBITDA of $2.0 million in the first quarter, compared to combined revenues of $9.1 million and combined EBITDA of $1.9 million in the first quarter last year.

-- The Downtown Las Vegas properties, including the results of the Company's Hawaiian travel agency, reported first quarter revenues of $58.4 million versus $56.3 million in the prior year. EBITDA for the quarter was $11.8 million, an increase of 16.0% over the $10.2 million reported last year, and the EBITDA margin rose 2.2 percentage points from 18.0% to 20.2%. In the first quarter, the unit's revenues set a record, while its EBITDA and margin were second only to the fourth quarter 2001. The properties, while increasing revenue, reduced marketing and payroll costs in the quarter versus the prior year.

-- Sam's Town Tunica reported revenue in the quarter of $26.2 million versus $27.7 million in the prior year. EBITDA was $3.8 million in the quarter compared to $1.0 million last year, as the EBITDA margin improved from 3.6% to 14.3%. The property reported large reductions in both marketing and payroll costs.

-- Par-A-Dice reported record first quarter revenue of $36.9 million, a 5.7% increase over the $35.0 million reported in the first quarter last year. First quarter EBITDA also was a record, $14.2 million versus $13.1 million last year. The property's EBITDA margin increased one percentage point to 38.4%.

-- Treasure Chest reported revenue in the first quarter of $28.0 million versus $29.4 million in last year's first quarter. The property reported a 2.0 percentage point increase in its EBITDA margin to 22.8%, primarily by lowering marketing and payroll expenses. EBITDA for the first quarter was $6.4 million versus $6.1 million in the first quarter last year, its highest quarterly EBITDA since Harrah's opened its major land-based casino in New Orleans in October 1999.

-- Blue Chip reported record revenue of $50.6 million in the first quarter, an increase of 9.5% over the $46.2 million reported in the first quarter last year. The property reported record quarterly EBITDA of $22.5 million versus $19.4 million last year. The property's EBITDA margin was 44.4% in the quarter, an increase of 2.4 percentage points over the first quarter in the prior year.

-- Delta Downs, which began casino operations on February 13, 2002, reported revenue of $24.9 million and EBITDA of $4.4 million. While horse racing operated the entire quarter, the casino only operated for approximately half of the quarter. As expected, both slot revenue and operating expenses, particularly marketing and payroll, were unusually high in the initial opening period. As business normalizes, the Company expects that slot revenue per day for the rest of the year will be less than in the first quarter 2002, but operating margins are expected to improve above those in the first quarter.

William S. Boyd, Chairman and Chief Executive Officer of Boyd Gaming, commented, ``I am extremely pleased that we achieved such strong operating results in the first quarter and that the strength was so broad-based. Some of the reasons for the better than expected performance were good weather in the Midwest and low interest rates. However, much of the credit should be given to our managers' successes in attracting and serving our customers more efficiently, which is reflected in solid overall margin improvement. In an environment of little growth in industry supply, an improving economy and our efficient operations, I remain confident that we can continue our solid year- over-year earnings growth for the rest of 2002.''

The Company's debt on March 31, 2002 was $1.155 billion, representing an increase of $8.9 million in the quarter. Mr. Boyd further commented, ``This increase was relatively small in view of the expenditures required to complete and open Delta Downs, the $37 million investment into the Borgata project and the reductions of certain accrued liabilities that normally occur in the first quarter.'' The Company's investment in The Borgata is now complete, except for $25 million scheduled for the middle of next year.

Consequently, the Company expects to make meaningful debt reductions for the remainder of the year. On April 8, 2002, the Company issued, in a private placement, $250 million of 83/4% senior subordinated notes due 2012 and used the proceeds to reduce its bank debt. The Company expects to refinance its current bank credit facility with its bank group shortly, and in so doing, will provide liquidity for the refunding of its $200 million senior notes, which are due in October 2003.

Regarding The Borgata, the Company's joint venture development at Renaissance Pointe in Atlantic City, construction work continues to progress smoothly on all aspects of the project. The project remains on-schedule for a summer 2003 opening, and the Company remains confident that The Borgata will be developed within its announced budget. Mr. Boyd commented, ``I am encouraged that the Atlantic City market remains healthy and vibrant, and I am confident that The Borgata will be well received by customers when it opens next year.''

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