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Boyd Gaming Results Still Strong

The Company reported earnings, computed in accordance with generally accepted accounting principles (GAAP), of $.06 per share for the fourth quarter 2002, versus $.10 per share reported in the fourth quarter 2001. In addition, the Company reported adjusted earnings to exclude preopening expenses and certain non-recurring items. For the 2002 fourth quarter, adjusted earnings were $.24 per share, versus $.15 per share reported in the fourth quarter 2001. For the full year 2002, the Company reported record adjusted earnings of $1.06 per share, a 121% increase over the adjusted $.48 per share reported in 2001. Full year earnings according to GAAP were $.61 per share, versus $.40 reported in 2001.

The reconciliation between GAAP and adjusted earnings is shown in a table that appears after the financial tables at the end of this press release. EBITDA, as defined in this report, is a non-GAAP measure of earnings before interest, taxes, depreciation, amortization, preopening expenses and non- recurring items. Except where noted, consolidated EBITDA is after corporate expense, and EBITDA reported by property is before corporate expense. Per share amounts are reported on a diluted basis.

Fourth Quarter Results of Operations:

In the fourth quarter 2002, the Company reported its third best adjusted earnings per share and EBITDA ever, exceeded only by the first and second quarters of 2002. The $.24 adjusted earnings per share represents a 60% increase over the adjusted $.15 per share reported in the fourth quarter 2001. Fourth quarter EBITDA was $65.6 million, a 14.9% increase over the $57.1 million reported in the comparable quarter in the prior period. Excluding Delta Downs, which had only minimal operations in 2001 prior to the commencement of slot operations, same-store EBITDA in the quarter increased 4.2%.

Consolidated net revenues in the fourth quarter were $306 million versus $267 million in the fourth quarter 2001, an increase of 14.5%. Excluding Delta Downs, same-store net revenues were up 4.2% in the quarter versus the same quarter in the prior year, with most of these gains attributable to the advent of dockside gaming at Blue Chip in August 2002.

The Company reported preopening expenses in the fourth quarter of $3.6 million, almost all of which related to the Borgata joint venture. In the fourth quarter, the Company called for a January 2003 redemption of all of its outstanding 9.50% senior subordinated notes due 2007, some of which were acquired in the fourth quarter pursuant to a tender offer that was completed in January 2003. In the fourth quarter, the Company recognized an $11.6 million loss on the early retirement of the entire $250 million principal amount of its 9.50% senior subordinated notes comprised of the premium paid on the notes and certain unamortized costs offset by a gain on two interest rate swap agreements related to those notes that were terminated in the fourth quarter. Pursuant to the early adoption of Statement of Financial Accounting Standards No. 145, the Company recorded the loss in the non-operating section of its income statement.

During the fourth quarter the Company decided to sell certain of its assets, including a corporate aircraft. As such, the Company recorded a $3.8 million loss on these assets held for sale as the estimated net sales proceeds are expected to be less than the related asset carrying values. Finally, pursuant to a change in accounting rules, the Company has ceased amortizing its intangible assets, which in the fourth quarter of 2001 accounted for $2.5 million of expense, or $.02 per share.

Full Year Results of Operations

EBITDA for the year was a record $274 million, a 22.6% increase over the $224 million reported in 2001. Excluding Delta Downs, 2002 EBITDA increased 12.2% over the prior year. Significantly, all eight operating units that operated fully in both years reported increased year-over-year EBITDA. Consolidated revenues for the year 2002 were a record $1.23 billion, an increase of 11.5% over the $1.10 billion reported in 2001. Almost all of the increase was attributable to the commencement of slot operations at Delta Downs in February 2002.

William S. Boyd, Chairman and Chief Executive Officer of Boyd Gaming Corporation, said, "I am very proud of our Company's 2002 full year results, not only for being by far the best ever in terms of revenues, EBITDA and adjusted net income, but also for the breadth of our year-over-year gains. Every unit recorded increased EBITDA in tough economic and competitive environments. I am particularly pleased that our Nevada operations, where business conditions were generally difficult in 2002, reported its highest annual EBITDA in six years."

Fourth Quarter Property Results

In the fourth quarter, all nine operating units reported property EBITDA (before corporate expense) of $72.2 million versus $63.0 million in the fourth quarter 2001, an increase of 14.6%. Excluding Delta Downs, property EBITDA (before corporate expense) was up 4.9%. Blue Chip reported fourth quarter EBITDA of $23.3 million versus $19.0 million reported in the fourth quarter 2001. The property's revenue was up 17.1% in the quarter, primarily the result of dockside operations which began in August 2002. The effect of the concurrent increase in the gaming tax will not fully impact Blue Chip's operating results until 2003. Par-A-Dice reported slightly lower revenues in the quarter, the first comparative quarterly revenue decline in two years. Softer revenue combined with higher gaming taxes imposed in July 2002 produced an EBITDA decline from $13.1 million in the fourth quarter 2001 to $11.3 million in the fourth quarter 2002. Sam's Town Tunica, which completed its acquisition of a 225-room adjacent hotel at the beginning of the quarter, reported increased revenues in the quarter.

However, increased promotional spending caused EBITDA to decline from $1.6 million reported in the fourth quarter 2001 to $0.2 million reported in the fourth quarter 2002. Delta Downs' slot machines won $211 per machine per day in the quarter, and the property recorded EBITDA of $5.3 million. Hurricane precautions for several days in October and road construction on Interstate 10 negatively impacted business during the quarter. Plans continue to be developed for a hotel at the property.

In Nevada, the Company's downtown Las Vegas properties, including the results of the Company's Hawaiian travel agency, reported record revenue and EBITDA. The unit's EBITDA in the fourth quarter was $14.1 million, a 12.5% increase over the previous record $12.5 million reported in the fourth quarter 2001. Sam's Town Las Vegas reported fourth quarter EBITDA of $8.1 million, matching the first quarter 2002 as the best quarter in almost three years. The $8.1 million figure compares to $7.2 million reported in the fourth quarter 2001.

Finance and Capital Spending

In December, the Company issued $300 million of senior subordinated notes due 2012 with a coupon of 7.75%. This issue replaced $250 million of 9.50% notes due 2007, resulting in a coupon savings of 1.75% per year and an extended loan term of five additional years. The balance of the net proceeds was used to reduce bank debt. Earlier in 2002, the Company issued $250 million of 8.75% senior subordinated notes to eventually replace a 9.25% senior note issue coming due later in 2003 and also refinanced its bank debt to extend maturities until 2007. "We are very pleased with our debt structure," Mr. Boyd noted. "We have ample unused lines of credit, long maturities and very attractively priced coupons."

Also in December, the Company cancelled $100 million notional amount of interest rate swap agreements that it had entered into earlier in 2002. Upon cancellation, the Company received a $5.2 million payment, representing the market value appreciation of the swap agreements since their inception and unpaid interest.

The Company's debt at the end of the quarter was $1.224 billion. However, by applying on a pro forma basis the funds set aside for the completion of the tender offer and the redemption of the 9.50% notes, the Company's debt at the end of the quarter was $1.124 billion.

Capital spending in the fourth quarter 2002 was approximately $48 million. Approximately $40 million of the expenditures were for the maintenance and improvement of the Company's properties as well as the purchase of a new corporate aircraft, with the balance related to the acquisition of property in Tunica, Mississippi.

In the fourth quarter, the Company's Board of Directors authorized a share repurchase program for up to two million shares. As of December 31, 2002, no shares had been repurchased by the Company.

Borgata

Borgata, the Company's joint venture development at Renaissance Pointe in Atlantic City, remains on schedule for a summer 2003 opening. The Company and its partner, MGM MIRAGE, have agreed to certain scope changes that could increase the total project cost from the original budget of $1.035 billion to $1.0625 billion. Any costs over the original budget that may be incurred, up to a total project cost of $1.0625 billion, would be equally funded by both parties. Any funding of project costs over $1.0625 billion, if required, is the Company's responsibility. The Company currently estimates that, due to the implementation of these scope changes, Borgata's final project cost will be between $1.035 billion and $1.0625 billion.

Mr. Boyd commented, "When we began developing Borgata, our expectations were high, and I am very pleased that they are being met. The building looks great inside and out, and the people we've hired and the planning they're doing have been exceptional. Finally, interest in employment at Borgata has been very strong, with job applications far exceeding our expectations."

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