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Boyd Gaming reports results

 
    Recent Highlights
    -- Las Vegas Locals segment posts strong second quarter 2007 operating
       results, with increases in net revenues and Adjusted EBITDA(1) over the
       2006 period.
    -- Midwest and South sector reflects normalization at Treasure Chest,
       where net revenues and Adjusted EBITDA stabilized at similar levels for
       the third consecutive quarter.  Results in the sector were boosted by
       growth in Adjusted EBITDA at Sam's Town Tunica, Par-A-Dice and Sam's
       Town Shreveport.
    -- Downtown Las Vegas segment registers another solid quarterly
       performance in the second quarter 2007.
    -- Company begins construction of its Echelon development on June 19 and
       finalizes design and development plans for the Mondrian and Delano
       hotels at Echelon.
    -- Company declares quarterly dividend of $0.15 per share payable
       September 4, 2007 to shareholders of record as of the close of business
       on August 17, 2007.


    (1) See footnotes at the end of the release for additional information
        relative to non-GAAP financial measures.

Second Quarter Results

We reported second quarter 2007 income from continuing operations of $22.9 million, or $0.26 per share, compared with $12.4 million, or $0.14 per share, in the same period 2006. Including discontinued operations, we reported net income for the second quarter 2007 of $22.1 million, or $0.25 per share, compared to net income of $10.2 million, or $0.11 per share, reported in the same period 2006. Per share earnings discussed throughout this release are reported on a diluted basis.

Adjusted Earnings(1) from continuing operations for the second quarter 2007 were $39.9 million, or $0.45 per share, compared to $44.5 million, or $0.49 per share, for the same period in 2006. During the second quarter 2007, 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) were as follows:

    -- $16.9 million loss on early retirements of our 8.75% senior
       subordinated notes and our former bank credit facility.
    -- $6.6 million for preopening expenses primarily associated with our
       Echelon development.
    -- $5.3 million for other charges, including a $3.2 million estimated
       property tax charge retroactive to January 1, 2006 at Blue Chip.
       During the quarter, Blue Chip received a notice indicating an
       unanticipated increase of nearly 400% to its assessed property value.
    -- $2.6 million credit for the increase in value of our derivative
       instruments.

By comparison, the second quarter 2006 included certain pre-tax adjustments that reduced income from continuing operations by $49.8 million ($32.2 million, net of tax, or $0.35 per share) to $12.4 million.

Net revenues were $511.4 million for the second quarter 2007, a decrease of 7.3% from the same quarter in 2006. Total Adjusted EBITDA was $143.7 million in the second quarter 2007 (or $146.9 million, excluding a $3.2 million estimated retroactive property tax charge for an unanticipated increase in assessed property value at Blue Chip). Total Adjusted EBITDA was $153.6 million for the same period 2006 (or $160.3 million, excluding a $6.7 million charge for a retroactive gaming tax assessment at our Par-A-Dice property). The decreases were chiefly due to the closure of the Stardust, normalization of operating results at Treasure Chest, and increased competition in the Atlantic City region.

Keith Smith, President and Chief Operating Officer of Boyd Gaming, commented, "We are encouraged by the resilience of our Las Vegas Locals business, which grew despite a significant year-over-year increase in capacity. The Midwest and South continues to reflect normalization of our Treasure Chest operation; this was the third consecutive quarter at similar Adjusted EBITDA levels for Treasure Chest, and importantly, well ahead of pre- hurricane levels. At Blue Chip, we remain focused on the opening of an additional competitor in that market, and are optimistic about our long-term competitive position, especially with the addition of our new hotel late next year."

    (1) See footnotes at the end of the release for additional information
        relative to non-GAAP financial measures.

Key Operations Review

In our Las Vegas Locals segment, second quarter 2007 net revenues were $211.2 million versus $205.1 million for the second quarter 2006. Second quarter 2007 Adjusted EBITDA was $66.8 million compared to $65.2 million in the same quarter 2006.

In our Midwest and South sector, we recorded $235.2 million in net revenues for the second quarter 2007, compared to $245.9 million for the same period in 2006. Adjusted EBITDA for the period was $54.9 million (or $58.1 million, excluding a $3.2 million estimated retroactive property tax charge for an unanticipated increase in assessed property value at Blue Chip). By comparison, Adjusted EBITDA for the second quarter 2006 was $58.6 million (or $65.3 million, excluding a $6.7 million charge for a retroactive gaming tax assessment at our Par-A-Dice property).

Our Downtown Las Vegas properties continued their solid performance, generating net revenues of $65.0 million and Adjusted EBITDA of $13.2 million for the second quarter 2007, versus $65.1 million and $12.9 million, respectively, for the second quarter 2006.

In Atlantic City, Borgata's gaming revenue rose 3.0% over last year's second quarter, as the property continued to lead the market. Borgata's market share also increased during the quarter, growing from 13.3% a year ago to 14.6% in the 2007 quarter. Non-gaming revenue increased by 11.5% over the same period in the previous year, largely due to Borgata's public space expansion, which added significant non-gaming amenities. However, net income for Borgata was $28.9 million for the second quarter 2007, compared to $34.8 million in the same period last year. Adjusted EBITDA was $54.5 million, compared to $57.6 million for the second quarter 2006. These second quarter declines were mainly attributable to expanded regional competition, as well as higher fixed costs related to Borgata's public space expansion.

Year-To-Date Results

Income from continuing operations for the six months ended June 30, 2007 was $58.0 million, or $0.66 per share, as compared to $77.6 million, or $0.85 per share for the six months ended June 30, 2006. Net income, which includes the results from discontinued operations, was $240.0 million, or $2.71 per share, for the 2007 year-to-date period compared to $73.4 million, or $0.81 per share, for the six-month period ended June 30, 2006. Net income for the 2007 period includes a $285 million gain on the disposition of the Barbary Coast.

Adjusted Earnings from continuing operations for the six months ended June 30, 2007 were $83.9 million, or $0.95 per share, as compared to $116.6 million, or $1.28 per share for the six-month period in 2006.

Net revenues were $1.0 billion and $1.1 billion for the six months ended June 30, 2007 and 2006, respectively. Total Adjusted EBITDA was $299.1 million for the current six-month period (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). By comparison, Total Adjusted EBITDA for the 2006 period was $356.1 million (or $362.8 million, excluding a $6.7 million charge for a retroactive gaming tax assessment at our Par-A-Dice property).

    Development Update

    Development continues to progress with each of our key growth initiatives:

    -- In Atlantic City, Borgata is adding The Water Club, an 800-room
       boutique hotel directly connected to the property.  The 43-story tower
       was topped off on July 20.  The $400 million project remains on budget
       and on time to open early next year.
    -- Construction is well underway in Michigan City, Indiana, on a $130
       million expansion of Blue Chip that will add 300 new guest rooms, a spa
       and fitness center, additional meeting and event space, new dining and
       nightlife experiences, and a new entrance porte cochere.  The project
       is scheduled to open in late 2008.
    -- In South Florida, we continue to work on our plans for the addition of
       a casino and other amenities at Dania Jai-Alai.  Once we have finalized
       our design plans, we intend to announce a more definitive project scope
       and timeline.  We remain optimistic about the long-term potential of a
       gaming entertainment center at Dania Jai-Alai and are taking additional
       time to ensure we design a facility that offers an appropriate mix of
       entertainment amenities for this market.
    -- In June, we began construction of our Echelon development on the Las
       Vegas Strip.  We also announced the design and development plans for
       the Mondrian and Delano hotels at Echelon.  Echelon is expected to open
       in the third quarter 2010.

Bill Boyd, Chairman and Chief Executive Officer, said, "Our development projects will transform our Company, providing us with substantial growth opportunities well into the future. With Echelon, our Company will once again become a major player on the Las Vegas Strip, as we redefine the Las Vegas luxury resort experience. In Atlantic City, The Water Club will take Borgata to a new level of sophistication, reaching new visitors and adding a new dimension to our brand proposition. At Blue Chip, last year's casino expansion demonstrated our ability to leverage our brand in more distant markets than ever before, an opportunity we plan to seize with the addition of more amenities and upscale hotel rooms."

Boyd Gaming Branding Initiative

We continue to make progress on our company-wide branding initiative that will position our individual properties as part of a larger network, creating additional synergies and further leveraging Boyd Gaming's highly-regarded blend of gaming excitement and personal service. Our goal is to reward and build customer loyalty, drive cross-property visitation, and offer the ability to seamlessly earn and redeem rewards at any Boyd property.

As part of this initiative, we are developing three regional "One Card" player reward programs that will unify the existing player cards used by our properties. Each of the regional programs will be connected to a national system, while being tailored to the varying dynamics of the individual markets in which we operate, providing our properties with the flexibility to adapt to regional and local market conditions.

Implementation of our branding initiatives remains on schedule for a phased rollout beginning in the fourth quarter of this year.

Dividend

Our Board of Directors declared a quarterly dividend of $0.15 per share, payable September 4, 2007 to shareholders of record as of the close of business on August 17, 2007.

Key Financial Statistics

The following is additional information as of and for the three months ended June 30, 2007:

    -- June 30 debt balance: $2.21 billion
    -- June 30 cash: $159.4 million
    -- Dividends paid in the quarter: $13.1 million
    -- Maintenance capital expenditures during the quarter: $23.8 million
    -- Expansion capital expenditures during the quarter: $41.7 million
    -- Capitalized interest during the quarter: $4.6 million
    -- Cash distribution to the Company from Borgata in the quarter: $17.6
       million
    -- June 30 debt balance at Borgata: $626.1 million

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