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Boyd Gaming: Second Quarter Results Beat Expectations

-- The Company recorded the second highest quarterly EBITDA in its history. For the quarter, EBITDA (earnings before interest, taxes, depreciation, amortization and preopening expenses) after corporate expense was $57.6 million, exceeding last year's second quarter EBITDA of $53.8 million by 7.0%. Second quarter EBITDA also exceeded first quarter 2001 EBITDA of $55.2 million by 4.3%.

-- Seven of the Company's eight operating units exceeded prior year quarterly EBITDA results. Only the Stardust trailed the prior year and that decline was caused by a large spike in its cost of utilities in this year's second quarter versus the prior year.

-- Sam's Town Las Vegas exceeded prior year results in the quarter for the first time since the first quarter last year and exceeded first quarter 2001 EBITDA by $1.0 million.

-- Sam's Town Tunica exceeded both the prior year's comparable quarter EBITDA and this year's first quarter EBITDA by $1.0 million each.

-- Second quarter earnings per share exceeded analyst expectations and exceeded the comparable quarter in the prior year for the first time since the first quarter of 2000.

-- The Company increased its debt by $102 million in the quarter. During the quarter the Company acquired Delta Downs Racetrack in Louisiana, investing $127 million as of June 30, 2001. Therefore (exclusive of the Delta Downs acquisition and subsequent expenditures), the Company applied $25 million to debt reduction in the quarter, following the $13 million of debt reduction in the first quarter of 2001.

On a consolidated basis, revenues for the quarter were $281 million versus $265 million in the second quarter last year, an increase of 6.2%. EBITDA from the Company's property operations in the quarter was $62.2 million, and EBITDA for the

Company after corporate expense was $57.6 million. In the second quarter last year, property EBITDA was $58.6 million and EBITDA after corporate expense was $53.8 million.

For the six months ended June 30, 2001, the Company's revenues were $562 million compared to $541 million last year before the one-time Silver Star termination payment. Year-to-date fully diluted earnings per share before preopening expenses were $.24 in the first half of 2001 versus $.35 in the first half last year before the Silver Star payment. Last year's figure included the final month of the Silver Star management fee, which accounted for $.04 per share of that total.

The eight operating units reported second quarter results as follows:

-- The Stardust reported revenue of $37.6 million in the quarter versus $37.1 million last year, and EBITDA of $3.7 million in the quarter compared to $4.0 million last year. The property experienced utility costs in the quarter that were $0.7 million above the prior year.

-- Sam's Town Las Vegas recorded revenue of $36.4 million in the quarter versus $32.8 million in the prior year, an increase of 11.3%. Second quarter EBITDA was $6.2 million versus $5.4 million last year. The off-Strip gaming market continues to be very competitive, and the Company continues to market aggressively in the areas of advertising, promotions and entertainment in order to increase revenues and EBITDA.

-- The Eldorado and Jokers Wild reported combined revenues of $9.0 million and combined EBITDA of $1.7 million in the second quarter, compared to combined revenues of $8.4 million and combined EBITDA of $1.5 million in the second quarter last year.

-- The Downtown Las Vegas Properties, including the results of the Company's Hawaiian travel agency, recorded revenues of $58.0 million in the quarter versus $57.5 million reported in the prior year. EBITDA was $11.52 million in the quarter versus $11.51 million last year, and set a record as the highest quarterly EBITDA ever for that unit. The Downtown unit has achieved EBITDA in excess of $10 million in six of the last seven quarters.

-- Sam's Town Tunica posted second quarter revenue of $28.8 million, 23% above the $23.4 million reported last year. EBITDA was $2.0 million in the quarter compared to $1.0 million last year. The Company is continuing to aggressively market and promote the property to regain market share, and the strong revenue gains in the quarter demonstrate the positive results from that effort.

-- Par-A-Dice reported revenue of $35.0 million in the quarter versus $33.0 million last year, an increase of 6.0%. EBITDA in the quarter was $13.4 million, the highest quarterly EBITDA ever reported for the property. Last year the property's second quarter EBITDA was $12.1 million.

-- Treasure Chest recorded revenue in the quarter of $29.0 million, up 10.5% from the $26.3 million reported last year. EBITDA in the quarter was $4.2 million versus $4.2 million last year. Dockside operations began at Treasure Chest on April 1, 2001. The property's increase in revenue in the quarter was offset by increased marketing and promotion expenses and by higher gaming taxes that accompanied the authorization for dockside gaming.

-- Blue Chip reported revenue of $46.7 million versus $46.5 million last year and EBITDA of $19.5 million versus $18.9 million last year. The property's quarterly EBITDA has exceeded $18 million in five of the six full quarters that the Company has owned that property.

William S. Boyd, Chairman and Chief Executive Officer of Boyd Gaming, commenting on operating trends, said, ``We are very pleased to report increased cash flow and earnings over both last year and the immediately preceding quarter. It was most gratifying to have seven of our eight units report year- over-year quarterly gains, especially the two Sam's Town properties that are continuing to recover from last year's disappointing results.

"In addition to the solid base of earnings produced by our existing properties, we expect Delta Downs, where we are planning to open a casino in the fourth quarter, to be accretive to our earnings per share once it achieves a steady-state earnings level. If we are successful in our Delta Downs roll-out and in maintaining the performance at our current properties, we should be able to grow our quarterly earnings per share above current levels.''

The Company provided a progress report on both Delta Downs, acquired during the second quarter, and on the construction of The Borgata, its joint venture development in Atlantic City. Work is underway for the renovation, expansion and equipping of Delta Downs, and applications have been filed with gaming authorities for the finding of suitability for the operation of slot machines at the racetrack.

The Company expects its investment in Delta Downs, above the acquisition price, to be approximately $35 million and expects to open the casino in early October 2001, subject to obtaining appropriate regulatory approvals. Regarding The Borgata, work is progressing on the lower floors of the high-rise, and work on the structural steel for the low-rise is progressing as scheduled. Construction of the parking structure is expected to begin in the fall. The project remains on schedule for a Summer 2003 opening. With a substantial project contingency available, the Company remains confident that The Borgata will be developed within its announced budget.

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