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Boyd Gaming Reports Record Q3 Results

LAS VEGAS – (PRESS RELEASE) -- Boyd Gaming Corporation (NYSE: BYD) today reported its financial results for the third quarter 2004. The Company reported record adjusted earnings(1) of $.38 per share for the third quarter, an increase of 153% over adjusted earnings of $.15 per share reported in the third quarter last year. Adjusted earnings for the current quarter exclude gains on sales of certain assets of $9.1 million, preopening and merger and acquisition expenses of $1.2 million, and a non-cash loss on early retirement of debt of $4.3 million. Adjusted earnings for the third quarter last year exclude preopening expenses related to Borgata of $3.5 million. This quarter's results include the operations of the four properties of Coast Casinos, which the Company acquired on July 1, 2004, and Sam's Town Shreveport, which the Company acquired in May 2004. Per share amounts are reported on a diluted basis.

The Company reported record EBITDA for the third quarter that was more than double the EBITDA reported for the third quarter last year. EBITDA in the third quarter was $133 million, 109% above the $63.7 million reported in the comparable quarter last year. This increase was principally attributable to the inclusion of the acquired properties mentioned above and to a large increase in earnings from Borgata versus the prior year. Same-store EBITDA increased 30% in the quarter versus the prior year. The year-over-year quarterly EBITDA gains were broad-based, as all of the Company's operating segments that reported in both years reported increased quarterly EBITDA for the third quarter. And Coast Casinos reported EBITDA that was 21% above prior year results when Coast operated as an independent company. Further in this release, the Company presents the composition of its segments.

Revenues for the third quarter were $522 million, a 68% increase over the $311 million reported in the third quarter last year. On a same-store basis, revenues in the third quarter increased 3.6%, with all same-store segments posting revenue gains. Net income in the third quarter was $35.5 million, or $.40 per share, versus $7.7 million, or $.12 per share, in the third quarter last year. In this year's third quarter, the Company's weighted average diluted shares were 22.3 million greater than last year's shares, due principally to shares issued in connection with the Coast Casinos merger.

William S. Boyd, Chairman and Chief Executive Officer of Boyd Gaming, said, "I am extremely proud and pleased with the strong results we are reporting today. Our operating teams, so ably led by Keith Smith, Michael Gaughan and Bob Boughner, have really produced great results for our Company. Looking at properties that we have operated in both this year's and last year's third quarters, only two, Delta Downs with construction disruption and the California with a rooms remodel, had comparatively down quarters -- every other property exceeded prior year EBITDA results in the quarter. Coast is not only growing revenues and earnings at an excellent rate, it is turning out to be a great fit with our Company as well. Borgata's performance in its 'start-up' quarters has been exceptional, exceeding almost everybody's expectations. In fact, it appears its EBITDA in its first calendar year of operations could approach $200 million. And we are planning yet another expansion at Borgata beyond what we reported to you in our last earnings release."

In footnote (1), you will find a discussion of how and why the Company uses adjusted earnings, adjusted earnings per share, EBITDA (non-GAAP measures of earnings as defined in footnote (1)) and EBITDA margin, performance measurements widely used in the gaming industry. As used in this release, EBITDA for a particular operating segment (adjusted EBITDA) is before corporate expense. Further in this release you will also find tables that reconcile certain non-GAAP measurements to GAAP financial information.

Nine-month Results

Revenues for the first nine months of 2004 were $1.194 billion, an increase of 26% over the $945 million reported in the first nine months of 2003. The increase was primarily attributable to the addition of Coast Casinos and Sam's Town Shreveport, neither of which were owned by the Company during 2003. EBITDA for the first nine months was $299 million versus $199 million (before a $3.5 million one-time retroactive gaming tax imposed by the State of Indiana) reported in the same period last year. The increase was also principally attributable to the addition of Coast Casinos and Sam's Town Shreveport and by a large increase in the Company's EBITDA from Borgata, which operated for three months during the first nine months of 2003. Adjusted earnings for the first nine months were $.95 per share versus $.65 per share for the comparable period in 2003. Net income for the first nine months of 2004 was $64.5 million, or $.87 per share, versus $28.6 million, or $.43 per share, in the first nine months of 2003. In addition to the earnings adjustments described in the first paragraph of this report (some of which amounts may be different in the nine month period versus the third quarter), net income for the first nine months of 2004 includes, and adjusted earnings for that period exclude, a $5.7 million charge to the Company's income tax provision associated with an adverse tax ruling in Indiana that related primarily to prior periods.

Borgata

The Company also reported third quarter results for Borgata Hotel Casino and Spa, the Company's joint venture property in Atlantic City. As an unconsolidated joint venture, Borgata's results appear in only two lines of the Company's consolidated statements of operations; therefore, more detailed financial information is presented in tables later in this release.

In the third quarter, Borgata reported record results in all major categories and significant increases over the third quarter 2003, its first quarter of operations (Borgata opened July 3, 2003). Borgata reported gaming revenue in the quarter of $169 million, a 24% increase over the third quarter 2003, and non-gaming revenue of $65.1 million, a 35% increase over the prior year. Net revenue in the quarter was $186 million, a 24% increase over the prior year. Borgata's EBITDA in the third quarter was $63.1 million, more than double the $30.5 million reported in the third quarter last year, when there were unusually high expenses relating to the opening and introduction of the property. In the third quarter, Borgata reported an EBITDA margin of 33.9% versus 20.4% reported in the third quarter last year. As was the case in both the first and second quarters of this year, Borgata's EBITDA in the third quarter was the highest of any property in Atlantic City.

For the third quarter, Borgata reported the highest table game win in the Atlantic City market by a wide margin. Table game win per unit per day in the quarter was $4,198, which beat the second place property by $525 and was 47% above the $2,860 average win per table per day in Atlantic City in the third quarter. In slot win per unit per day, Borgata reported the highest result in the Atlantic City market at $349, $25 above the second place property and 36% above the average Atlantic City slot machine, which won $257 per day in the third quarter. In fact, the recent quarterly slot win per unit rankings for Atlantic City properties show Borgata lengthening its lead in slots. Hotel occupancy in the quarter was virtually 100% and the average daily room rate was $131. The property reported strong results in non-gaming revenue in both absolute amounts, at an average of $708,000 per day, and as a percentage of total gross revenue, at 28% for the quarter.

Bob Boughner, Chief Executive Officer of Borgata, said, "When we opened last year, we strived, at some considerable expense, to attract people to the property and serve them well so they would return. Well, they're coming back, and through careful and deliberate analysis of our patron database, we are serving them more and more efficiently. Our significant market share premiums and growing margins are the result of the efforts of our very talented and high performing associates. The property is demonstrating strong operations and results across the board, and we are looking forward to expanding Borgata to meet the existing and growing demand for our brand of hospitality."

Borgata Expansion

The Company made further announcements concerning its expansion plans for Borgata. The Borgata expansion reported in the last earnings release (July 28, 2004) remains on track and is now referred to as Phase I. The Company today announced that it is in the planning stage for a Phase II Borgata expansion to begin during Phase I construction and scheduled for completion in mid-2007. The centerpiece of the Phase II expansion is a new hotel tower, containing approximately 800 guest rooms, suites and resort condominiums. The hotel will be built on a portion of the existing surface parking lot, near the existing porte cochere. In addition to the hotel, which will have an arrival and identity separate from the existing Borgata hotel tower, the expansion will include a new spa, two new swimming pools (inside and outside) and additional meeting rooms. Access to existing Borgata facilities and Phase I expansion amenities is intended to be seamless and convenient. The Phase II expansion, which also includes a new parking garage, remains subject to various approvals. The Company expects to finance the expansion from Borgata's cash flow and from Borgata's recently refinanced credit facility, which is capable of being expanded.

Wholly-owned Properties

Beginning with this release, the Company will report results from its wholly-owned properties in five segments (the Company reported its sixth segment, Borgata, earlier in this release):

1. Boulder Strip will group the Company's Las Vegas locals properties, other than Coast Casinos

2. Coast Casinos will group all properties acquired in the Coast merger, principally Las Vegas locals properties and including the Barbary Coast on the Las Vegas Strip

3. Stardust, the Company's property on the Las Vegas Strip

4. Downtown will group the Company's three Las Vegas downtown properties and the Honolulu travel agency and air charter operations that serve them

5. Central Region will group the Company's five riverboats and one slots-at-track "racino" that operate in Indiana, Illinois, Mississippi, and Louisiana

For a listing of the specific properties in each category, see the introduction to the results tables that follow the footnotes that appear after the text of this report.

Boulder Strip

The Boulder Strip properties reported a 9.1% increase in revenues and a 33% increase in EBITDA in the third quarter versus the third quarter 2003. The increase was principally fueled by increased slot revenue. The EBITDA margins improved 4.2 percentage points to 23.1% in the third quarter this year versus last year. This year's EBITDA results were the best ever for a third quarter, typically a slow quarter for those properties.

Coast Casinos

The merger of Coast Casinos into the Company was completed on July 1, 2004, providing a full quarter of operating results in the Company's third quarter financial statements. In the third quarter, Coast revenues were $162 million, EBITDA was $45.0 million and EBITDA margin was 27.8%. These numbers compare very favorably to last year's third quarter results, when Coast was an independent company. This quarter's revenues represent a 9.4% increase over the third quarter of 2003, third quarter EBITDA was up 21% over last year's third quarter, and EBITDA margin was up 2.6 percentage points. For the last twelve months ended September 30, 2004, Coast's revenues were $642 million and its EBITDA was $187 million.

The Company announced that The Orleans guest-rooms expansion opened ahead of schedule in October. The 460-room addition, long part of The Orleans master plan, brings the property's room count to 1,885. In addition, the Company reported that construction of South Coast is continuing on schedule and that, due to increased costs for certain construction materials, the expected final cost of the project, including amounts expended by Coast prior to the merger, is now approximately $500 million.

Stardust

The Stardust experienced a strong turnaround in the third quarter versus the prior year. The property's revenue was $35.8 million, an increase of 10.7% over the $32.4 million reported in last year's third quarter. The property reported EBITDA of $3.1 million in the quarter, versus an EBITDA loss of $0.6 million in the comparable quarter last year. Casino and room revenue increased, while marketing related expenses declined in the quarter versus last year.

Downtown Las Vegas

Revenues at the three Downtown properties increased 3.3% in the third quarter versus the third quarter 2003, despite a rooms remodel at the California, which resulted in the property having 4,800 fewer occupied rooms in the quarter versus last year's third quarter. Significantly higher fuel costs in the air charter operations mostly offset a positive EBITDA comparison at the properties and the segment reported EBITDA that was only slightly above the EBITDA reported in last year's third quarter.

Central Region

The six Central Region properties reported a 22% increase in revenues and a 15.5% increase in EBITDA in the third quarter versus the comparable quarter in 2003, principally due to the inclusion of Sam's Town Shreveport, which the Company acquired in May 2004. On a same-store basis, for the same periods, revenue increased 1.2% and EBITDA increased 3.1% with four of the five properties each experiencing gains in both revenue and EBITDA. Only Delta Downs experienced a decline in both revenue and EBITDA due to construction disruption associated with its casino remodel and reconfiguration. That project is now complete, and the work on the hotel is continuing, with an opening expected in the first quarter 2005.

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