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Form 8-K BOYD GAMING CORP For: Apr 30

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April 30, 2015 4:15 PM EDT

 
 
 
 
 
 

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
____________________________________________________________________ 
FORM 8-K
____________________________________________________________________ 
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Date of Report (date of earliest event reported): April 30, 2015
____________________________________________________________________ 


Boyd Gaming Corporation
(Exact Name of Registrant as Specified in its Charter)
____________________________________________________________________ 
Nevada
 
001-12882
 
88-0242733
(State or Other Jurisdiction of Incorporation)
 
(Commission File Number)
 
(I.R.S. Employer Identification Number)

3883 Howard Hughes Parkway, Ninth Floor
Las Vegas, Nevada 89169
(Address of Principal Executive Offices, Including Zip Code)

(702) 792-7200
(Registrant’s Telephone Number, Including Area Code)


(Former Name or Former Address, if Changed Since Last Report)
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
o
Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
o
Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
o
Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
o
Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))
 
 
 
 
 




Item 2.02.    Results of Operations and Financial Condition.

On April 30, 2015, Boyd Gaming Corporationissued a press release announcing its financial results for the first quarter ended March 31, 2015 and other financial information. A copy of the press release is furnished hereto as Exhibit 99.1 and incorporated herein by reference.

Item 9.01.    Financial Statements and Exhibits.

(d) Exhibits

Exhibit Number
 
Description
 
 
 
99.1
 
Press Release, dated April 30, 2015









SIGNATURE

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

Date: April 30, 2015
 
 
Boyd Gaming Corporation
 
 
 
 
 
 
 
/s/ Anthony D. McDuffie
 
 
 
Anthony D. McDuffie
 
 
 
Vice President and Chief Accounting Officer
 
 
 
 





EXHIBIT INDEX

Exhibit Number
 
Description
 
 
 
99.1
 
Press Release, dated April 30, 2015





Exhibit 99.1


Financial Contact:
Josh Hirsberg
(702) 792-7234

Media Contact:
David Strow
(702) 792-7386


BOYD GAMING REPORTS FIRST-QUARTER 2015 RESULTS

First-Quarter 2015 Highlights
•
Broad-based EBITDA Growth Driven by Higher Revenues, Operating Efficiencies
•
Ten of 12 Regional Properties Generate Revenue, EBITDA Growth
•
Companywide Operating Margins Improve for Fourth Consecutive Quarter

LAS VEGAS - APRIL 30, 2015 - Boyd Gaming Corporation (NYSE: BYD) today reported financial results for the first quarter ended March 31, 2015.

Boyd Gaming reported first-quarter 2015 net revenues of $550.6 million, an increase of 1.8% compared to pro forma net revenues of $541.1 million for the same quarter in 2014. Total Adjusted EBITDA(1) was $149.2 million, up 11.1% from the comparable pro forma amount of $134.2 million for the year-ago period. Effective September 30, 2014, the Company deconsolidated Borgata and is accounting for its 50% investment in Borgata by applying the equity method for periods subsequent to that date. The prior-year pro forma amounts reflect the results for Borgata on a comparable equity method basis.

Keith Smith, President and Chief Executive Officer of Boyd Gaming, said: “In the first quarter, we delivered broad-based EBITDA growth and margin improvement, driven by higher revenues and more efficient operations. We continued to make progress enhancing non-gaming amenities across our portfolio, allowing us to further capitalize on growing customer demand in this area. We also continued to use free cash flow to further reduce debt during the quarter. The execution of our Company's strategic plan is clearly improving our growth and profit potential, and increasing long-term shareholder value.”



1



Adjusted Earnings(1) for the first quarter 2015 were $14.2 million, or $0.13 per share, compared to a loss of $4.1 million, or $0.04 per share, for the same period in 2014. The calculations of Adjusted Earnings, Adjusted Earnings per share, and pro forma results reflecting Borgata on a comparable basis for all periods are presented in tables at the end of this press release.

On a GAAP basis, the Company reported net income of $35.1 million, or $0.31 per share, for the first quarter 2015, compared to a net loss of $6.2 million, or $0.06 per share, for the year-ago period. The income tax provision for the first quarter 2015 was favorably impacted by the settlement of the Company’s 2005 through 2009 IRS appeal, which resulted in a $23.2 million reduction to the Company’s first quarter 2015 income tax provision. The impact of the settlement is not included in Adjusted Earnings or Adjusted Earnings per share.

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

Key Operations Review
Las Vegas Locals
In the Las Vegas Locals segment, first-quarter 2015 net revenues were $150.3 million, compared to $151.4 million in the year-ago period. First-quarter 2015 Adjusted EBITDA was $38.9 million, versus $40.0 million in the first quarter of 2014. Declines in revenue and EBITDA were the result of significant business disruption caused by an extensive roadway project adjacent to the Suncoast, as well as lower sports book hold related to the Super Bowl. These items were partially offset by growth in non-gaming revenues, which increased for the seventh consecutive quarter.

Downtown Las Vegas
In the Downtown Las Vegas segment, net revenues were $56.6 million in the first quarter of 2015, up 1.6% from $55.7 million in the year-ago period. Adjusted EBITDA increased 14.5% to $10.7 million, compared to $9.3 million in the first quarter of 2014. Results reflect increased gaming revenues from Hawaiian customers, continued growth in pedestrian traffic in downtown Las Vegas, and lower fuel costs at the Company’s Hawaiian charter service.

Midwest and South; Peninsula
In the Midwest and South segment, net revenues were $217.8 million, an increase of 2.9% from $211.6 million in the first quarter of 2014. Adjusted EBITDA increased 15.6% to $51.0 million, compared to $44.1 million in the year-ago period.

2



The Peninsula segment reported net revenues of $125.9 million, up 3.0% from $122.3 million in the first quarter of 2014. Adjusted EBITDA grew 3.6% to $46.4 million, compared to $44.8 million in the year-ago period.

Positive results were driven by broad-based revenue growth and improved operating margins. Ten of the 12 properties in the segments generated revenue and EBITDA growth in the quarter, led by particularly strong performances at Kansas Star, IP, Blue Chip and Treasure Chest. Delta Downs achieved EBITDA levels similar to last year’s record performance due to strong visitation from its core customers, despite the introduction of significant new capacity in the market.

Borgata
Borgata reported first quarter 2015 net revenues of $182.6 million, an increase of 9.2% from $167.3 million in revenues reported in the year-ago period. Adjusted EBITDA at Borgata was $37.8 million, nearly doubling from $20.5 million in the year-ago period.

Due to its deconsolidation, the Company now applies the equity method of accounting to its investment in Borgata. The Company’s share of Borgata’s Adjusted EBITDA was $18.9 million for the first quarter of 2015 as compared to pro forma Adjusted EBITDA of $10.2 million for the prior-year period.

Borgata generated a 7.4% increase in gaming revenue during the quarter, with growth in both slot and table game win. Non-gaming revenue grew broadly as well; the property generated an additional 14,000 hotel room nights during the first quarter, and food and beverage revenues increased 11%. EBITDA benefitted from revenue growth, strong flow-through, and lower property taxes.

Additionally, Borgata’s online operations generated a profit for the third consecutive quarter, generating $1.1 million in EBITDA during the first quarter of 2015, compared to a loss of $3.2 million in the year-ago quarter.

Balance Sheet Statistics
As of March 31, 2015, Boyd Gaming had cash on hand of $130.8 million, including $27.7 million related to Peninsula. Total debt was $3.42 billion, of which $1.08 billion was related to Peninsula. As a result of the deconsolidation, Borgata's cash and debt balances are no longer included in the Company's balance sheet. Borgata had cash on hand of $28.5 million and total debt of $733.1 million at March 31, 2015.


3


Full Year 2015 Guidance
Based on first-quarter 2015 results, Boyd Gaming is raising its previously provided guidance for the full year 2015. The Company now projects total Adjusted EBITDA, including Peninsula and 50% of Borgata’s Adjusted EBITDA, of $542 million to $567 million.

Conference Call Information
Boyd Gaming will host its conference call to discuss first-quarter 2015 results today, April 30, at 5:00 p.m. Eastern. The conference call number is (888) 317-6003, passcode 3858748. Please call up to 15 minutes in advance to ensure you are connected prior to the start of the call.

The conference call will also be available live on the Internet at www.boydgaming.com, or: http://www.videonewswire.com/event.asp?id=102187

Following the call’s completion, a replay will be available by dialing (877) 344-7529 today, April 30, beginning at 7:00 p.m. Eastern and continuing through Friday, May 8, at 11:59 p.m. Eastern. The conference number for the replay will be 10064626. The replay will also be available on the Internet at www.boydgaming.com.


4


BOYD GAMING CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (a)
(Unaudited)
 
Three Months Ended
 
March 31,
(In thousands, except per share data)
2015
 
2014
Revenues
 
 
 
Gaming
$
464,757

 
$
608,757

Food and beverage
76,296

 
106,643

Room
39,353

 
64,380

Other
29,685

 
38,960

Gross revenues
610,091

 
818,740

Less promotional allowances
59,513

 
110,391

Net revenues
550,578

 
708,349

Operating costs and expenses
 
 
 
Gaming
226,697

 
285,174

Food and beverage
41,567

 
57,269

Room
10,047

 
13,170

Other
19,646

 
27,792

Selling, general and administrative
81,689

 
124,679

Maintenance and utilities
25,319

 
43,264

Depreciation and amortization
51,942

 
66,179

Corporate expense
19,652

 
19,920

Preopening expenses
505

 
784

Impairments of assets
1,065

 
1,633

Asset transactions costs
450

 
155

Other operating items, net
116

 
(186
)
Total operating costs and expenses
478,695

 
639,833

Boyd's share of Borgata's operating income (a)
11,675

 
—

Operating income
83,558

 
68,516

Other expense (income)
 
 
 
Interest income
(471
)
 
(476
)
Interest expense, net of amounts capitalized
56,935

 
75,503

Loss on early extinguishments of debt
508

 
154

Other, net
618

 
(288
)
Boyd's share of Borgata's non-operating items, net (a)
7,661

 
—

Total other expense, net
65,251

 
74,893

Income (loss) before income taxes
18,307

 
(6,377
)
Income taxes benefit (provision)
16,796

 
(4,848
)
Net income (loss)
35,103

 
(11,225
)
Net loss attributable to noncontrolling interest (a)
—

 
5,043

Net income (loss) attributable to Boyd Gaming Corporation
$
35,103

 
$
(6,182
)
 
 
 
 
Basic net income (loss) per common share
$
0.31

 
$
(0.06
)
Weighted average basic shares outstanding
111,446

 
109,753

 
 
 
 
Diluted net income (loss) per common share
$
0.31

 
$
(0.06
)
Weighted average diluted shares outstanding
112,358

 
109,753

_______________________________________________

(a) Due to the deconsolidation of Borgata on September 30, 2014, the Company has accounted for its 50% investment in Borgata by applying the equity method for the three months ended March 31, 2015. For the three months ended March 31, 2014, Boyd Gaming consolidated the financial results of Borgata. Please see the unaudited pro forma financial results also presented in this release for a comparison of Boyd Gaming’s financial results reflecting Borgata on the equity method for all periods presented.

5


BOYD GAMING CORPORATION
SUPPLEMENTAL INFORMATION
Reconciliation of Adjusted EBITDA to Operating Income (a)
(Unaudited)
 
Three Months Ended
 
March 31,
(In thousands)
2015
 
2014
Net Revenues by Reportable Segment
 
 
 
Las Vegas Locals
$
150,302

 
$
151,443

Downtown Las Vegas
56,603

 
55,733

Midwest and South
217,764

 
211,636

Peninsula
125,909

 
122,273

Borgata (b)
—

 
167,264

Net revenues
$
550,578

 
$
708,349

 
 
 
 
Adjusted EBITDA by Reportable Segment
 
 
 
Las Vegas Locals
$
38,877

 
$
40,007

Downtown Las Vegas
10,677

 
9,327

Midwest and South
50,984

 
44,098

Peninsula
46,363

 
44,761

Wholly owned property Adjusted EBITDA
146,901

 
138,193

Corporate expense (c)
(16,642
)
 
(14,171
)
Wholly owned Adjusted EBITDA
130,259

 
124,022

Borgata (b)
18,913

 
20,446

Adjusted EBITDA
149,172

 
144,468

 
 
 
 
Other operating costs and expenses
 
 
 
Deferred rent
857

 
906

Depreciation and amortization
51,942

 
66,179

Preopening expenses
505

 
784

Share-based compensation expense
3,441

 
6,481

Impairments of assets
1,065

 
1,633

Asset transactions costs
450

 
155

Other operating items, net
116

 
(186
)
Boyd's share of Borgata's other operating costs and expenses
7,238

 
—

Total other operating costs and expenses
65,614

 
75,952

Operating income
83,558

 
68,516

Other expense (income)
 
 
 
Interest expense, net of amounts capitalized
56,464

 
75,027

Loss on early extinguishments of debt
508

 
154

Other, net
618

 
(288
)
Boyd's share of Borgata's non-operating items, net
7,661

 
—

Total other expense, net
65,251

 
74,893

Income (loss) before income taxes
18,307

 
(6,377
)
Income taxes benefit (provision)
16,796

 
(4,848
)
Net income (loss)
35,103

 
(11,225
)
Net loss attributable to noncontrolling interest
—

 
5,043

Net income (loss) attributable to Boyd Gaming Corporation
$
35,103

 
$
(6,182
)
_______________________________________________

6


BOYD GAMING CORPORATION
SUPPLEMENTAL INFORMATION
Reconciliation of Adjusted EBITDA to Operating Income (a)
(Unaudited)
(Continued)

(a) See note (a) on Condensed Consolidated Statements of Operations.

(b) The following table reflects the financial results of Borgata as reported by Boyd Gaming in its financial statements under the respective method of accounting for the indicated period. For the three months ended March 31, 2015, Boyd Gaming accounted for its 50% investment in Borgata by applying the equity method. For the three months ended March 31, 2014, Boyd Gaming consolidated the financial results of the Borgata.
 
Three Months Ended
 
March 31,
(In thousands)
2015
 
2014
Revenues reported for Borgata
 
 
 
Consolidated
$
—

 
$
167,264

Equity Method
—

 
—

Total
$
—

 
$
167,264

 
 
 
 
Adjusted EBITDA reported for Borgata
 
 
 
Consolidated
$
—

 
$
20,446

Equity Method
18,913

 
—

Total
$
18,913

 
$
20,446



(c) Reconciliation of corporate expense:
 
Three Months Ended
 
March 31,
(In thousands)
2015
 
2014
Corporate expense as reported on Consolidated Statements of Operations
$
19,652

 
$
19,920

Corporate share-based compensation expense
(3,010
)
 
(5,749
)
Corporate expense as reported on the above table
$
16,642

 
$
14,171


7


BOYD GAMING CORPORATION
SUPPLEMENTAL INFORMATION
Reconciliation of Net Income (Loss) to Adjusted Earnings (Loss) and Net Income (Loss) Per Share to
Adjusted Earnings (Loss) Per Share (a)
(Unaudited)
 
Three Months Ended
 
March 31,
(In thousands, except per share data)
2015
 
2014
Net income (loss) attributable to Boyd Gaming Corporation
$
35,103

 
$
(6,182
)
Pretax adjustments related to Boyd Gaming:
 
 
 
Preopening expenses
505

 
751

Loss on early extinguishments of debt
508

 
154

Impairments of assets
1,065

 
1,633

Asset transactions costs
450

 
157

Other operating items, net
116

 
216

Other, net
618

 
(375
)
 
 
 
 
Pretax adjustments related to Borgata (b):
 
 
 
Preopening expenses
—

 
33

Loss on early extinguishments of debt
246

 
—

Valuation adjustments related to consolidation, net
—

 
(634
)
Asset transactions costs
—

 
(2
)
Other operating items, net
(162
)
 
(402
)
Total adjustments
3,346

 
1,531

 
 
 
 
Income tax effect for above adjustments
(1,004
)
 
45

Impact of tax audit settlement on provision
(23,196
)
 
—

Impact on noncontrolling interest, net
—

 
504

Adjusted earnings (loss)
$
14,249

 
$
(4,102
)
 
 
 
 
Net income (loss) per share attributable to Boyd Gaming Corporation
$
0.31

 
$
(0.06
)
Pretax adjustments related to Boyd Gaming:
 
 
 
Preopening expenses
0.01

 
0.01

Loss on early extinguishments of debt
0.01

 
—

Impairments of assets
0.01

 
0.01

Asset transactions costs
—

 
—

Other operating items, net
—

 
—

Other, net
0.01

 
—

 
 
 
 
Pretax adjustments related to Borgata (b):
 
 
 
Preopening expenses
—

 
—

Loss on early extinguishments of debt
—

 
—

Valuation adjustments related to consolidation, net
—

 
(0.01
)
Asset transactions costs
—

 
—

Other operating items, net
—

 
—

Total adjustments
0.04

 
0.01

 
 
 
 
Income tax effect for above adjustments
(0.01
)
 
—

Impact of tax audit settlement on provision
(0.21
)
 
—

Impact on noncontrolling interest, net
—

 
0.01

Adjusted earnings (loss) per share
$
0.13

 
$
(0.04
)
 
 
 
 
Weighted average shares outstanding
112,358

 
109,753

_______________________________________________

(a) See note (a) on Condensed Consolidated Statements of Operations.
(b) For periods after the September 30, 2014, date of Borgata's deconsolidation, the calculation includes Boyd's share of the adjusting items. Prior to this date, the calculation includes 100% of the adjusting items for Borgata.


8


BOYD GAMING CORPORATION
SUPPLEMENTAL INFORMATION
Condensed Consolidating Statements of Operations
Three Months Ended March 31, 2015 (a)
(Unaudited)
 
 
 
 
 
 
 
 
 
 
 
Boyd Gaming Wholly Owned
 
(In thousands, except per share data)
 
Excluding
Peninsula
Segment
 
Peninsula
Segment
 
Eliminations
 
Boyd Gaming
Consolidated
Revenues
 
 
 
 
 
 
 
 
Gaming
 
$
347,714

 
$
117,043

 
$
—

 
$
464,757

Food and beverage
 
66,317

 
9,979

 
—

 
76,296

Room
 
39,353

 
—

 
—

 
39,353

Other
 
30,608

 
3,905

 
(4,828
)
 
29,685

Gross revenues
 
483,992

 
130,927

 
(4,828
)
 
610,091

Less promotional allowances
 
54,495

 
5,018

 
—

 
59,513

Net revenues
 
429,497

 
125,909

 
(4,828
)
 
550,578

 
 
 
 
 
 
 
 
 
Operating costs and expenses
 
 
 
 
 
 
 
 
Gaming
 
172,417

 
54,280

 
—

 
226,697

Food and beverage
 
35,198

 
6,369

 
—

 
41,567

Room
 
10,047

 
—

 
—

 
10,047

Other
 
17,264

 
7,210

 
(4,828
)
 
19,646

Selling, general and administrative
 
68,433

 
13,256

 
—

 
81,689

Maintenance and utilities
 
22,060

 
3,259

 
—

 
25,319

Depreciation and amortization
 
34,954

 
16,988

 
—

 
51,942

Corporate expense
 
19,247

 
405

 
—

 
19,652

Preopening expenses
 
505

 
—

 
—

 
505

Impairments of assets
 
1,065

 
—

 
—

 
1,065

Asset transactions costs
 
322

 
128

 
—

 
450

Other operating items, net
 
70

 
46

 
—

 
116

Total costs and expenses
 
381,582

 
101,941

 
(4,828
)
 
478,695

 
 
 
 
 
 
 
 
 
Boyd's share of Borgata's operating income
 
11,675

 
—

 
—

 
11,675

 
 
 
 
 
 
 
 
 
Operating income
 
59,590

 
23,968

 
—

 
83,558

 
 
 
 
 
 
 
 
 
Other expense (income)
 
 
 
 
 
 
 
 
Interest income
 
(4
)
 
(467
)
 
—

 
(471
)
Interest expense, net of amounts capitalized
 
38,265

 
18,670

 
—

 
56,935

Loss on early extinguishments of debt
 
—

 
508

 
—

 
508

Other, net
 
457

 
161

 
—

 
618

Boyd's share of Borgata's non-operating expenses, net
 
7,661

 
—

 
—

 
7,661

Total other expense, net
 
46,379

 
18,872

 
—

 
65,251

Income before income taxes
 
13,211

 
5,096

 
—

 
18,307

Income taxes benefit (provision)
 
21,294

 
(4,498
)
 
—

 
16,796

Net income
 
34,505

 
598

 
—

 
35,103

Net loss attributable to noncontrolling interest
 
—

 
—

 
—

 
—

Net income attributable to Boyd Gaming Corporation
 
$
34,505

 
$
598

 
$
—

 
$
35,103

 
 
 
 
 
 
 
 
 
Basic net income per common share
 
 
 
 
 
 
 
$
0.31

Weighted average basic shares outstanding
 
 
 
 
 
 
 
111,446

 
 
 
 
 
 
 
 
 
Diluted net income per common share
 
 
 
 
 
 
 
$
0.31

Weighted average diluted shares outstanding
 
 
 
 
 
 
 
112,358

_______________________________________________

(a) See note (a) on Condensed Consolidated Statements of Operations.

9


BOYD GAMING CORPORATION
SUPPLEMENTAL INFORMATION
Condensed Consolidating Statements of Operations
Three Months Ended March 31, 2014 (a)
(Unaudited)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Boyd Gaming Wholly Owned
 
 
 
 
 
 
(In thousands, except per share data)
 
Excluding
Peninsula
Segment
 
Peninsula Segment
 
Eliminations
 
Total
 
Borgata (b)
 
Eliminations
 
Boyd Gaming
Consolidated
Revenues
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Gaming
 
$
341,204

 
$
113,867

 
$
—

 
$
455,071

 
$
153,686

 
$
—

 
$
608,757

Food and beverage
 
66,141

 
9,448

 
—

 
75,589

 
31,054

 
—

 
106,643

Room
 
38,811

 
—

 
—

 
38,811

 
25,569

 
—

 
64,380

Other
 
31,172

 
3,898

 
(4,681
)
 
30,389

 
8,571

 
—

 
38,960

Gross revenues
 
477,328

 
127,213

 
(4,681
)
 
599,860

 
218,880

 
—

 
818,740

Less promotional allowances
 
53,835

 
4,940

 
—

 
58,775

 
51,616

 
—

 
110,391

Net revenues
 
423,493

 
122,273

 
(4,681
)
 
541,085

 
167,264

 
—

 
708,349

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Operating costs and expenses
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Gaming
 
168,499

 
53,211

 
—

 
221,710

 
63,464

 
—

 
285,174

Food and beverage
 
35,488

 
6,086

 
—

 
41,574

 
15,695

 
—

 
57,269

Room
 
10,386

 
—

 
—

 
10,386

 
2,784

 
—

 
13,170

Other
 
18,661

 
7,313

 
(4,681
)
 
21,293

 
6,499

 
—

 
27,792

Selling, general and administrative
 
70,904

 
12,373

 
—

 
83,277

 
41,402

 
—

 
124,679

Maintenance and utilities
 
23,081

 
3,210

 
—

 
26,291

 
16,973

 
—

 
43,264

Depreciation and amortization
 
33,854

 
18,464

 
—

 
52,318

 
13,861

 
—

 
66,179

Corporate expense
 
19,497

 
423

 
—

 
19,920

 
—

 
—

 
19,920

Preopening expenses
 
566

 
185

 
—

 
751

 
33

 
—

 
784

Impairments of assets
 
1,633

 
—

 
—

 
1,633

 
—

 
—

 
1,633

Asset transactions costs
 
139

 
18

 
—

 
157

 
(2
)
 
—

 
155

Other operating items, net
 
150

 
66

 
—

 
216

 
(402
)
 
—

 
(186
)
Total costs and expenses
 
382,858

 
101,349

 
(4,681
)
 
479,526

 
160,307

 
—

 
639,833

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Boyd's share of Borgata's operating income
 
3,478

 
—

 
—

 
3,478

 
—

 
(3,478
)
 
—

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Operating income
 
44,113

 
20,924

 
—

 
65,037

 
6,957

 
(3,478
)
 
68,516

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Other expense (income)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Interest income
 
(4
)
 
(472
)
 
—

 
(476
)
 
—

 
—

 
(476
)
Interest expense, net of amounts capitalized
 
38,495

 
19,318

 
 
 
57,813

 
17,690

 
—

 
75,503

Loss on early extinguishments of debt
 
—

 
154

 
—

 
154

 
—

 
—

 
154

Other, net
 
(391
)
 
103

 
—

 
(288
)
 
—

 
—

 
(288
)
Boyd's share of Borgata's non-operating expenses, net
 
8,521

 
—

 
—

 
8,521

 
—

 
(8,521
)
 
—

Total other expense, net
 
46,621

 
19,103

 
—

 
65,724

 
17,690

 
(8,521
)
 
74,893

Income (loss) before income taxes
 
(2,508
)
 
1,821

 
—

 
(687
)
 
(10,733
)
 
5,043

 
(6,377
)
Income taxes benefit (provision)
 
(1,701
)
 
(3,794
)
 
—

 
(5,495
)
 
647

 
—

 
(4,848
)
Net income (loss)
 
(4,209
)
 
(1,973
)
 
—

 
(6,182
)
 
(10,086
)
 
5,043

 
(11,225
)
Net loss attributable to noncontrolling interest
 
—

 
—

 
—

 
—

 
—

 
5,043

 
5,043

Net income (loss) attributable to Boyd Gaming Corporation
 
$
(4,209
)
 
$
(1,973
)
 
$
—

 
$
(6,182
)
 
$
(10,086
)
 
$
10,086

 
$
(6,182
)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Basic net loss per common share
 
 
 
 
 
 
 
$
(0.06
)
 
 
 
 
 
$
(0.06
)
Weighted average basic shares outstanding
 
 
 
 
 
 
 
109,753

 
 
 
 
 
109,753

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Diluted net loss per common share
 
 
 
 
 
 
 
$
(0.06
)
 
 
 
 
 
$
(0.06
)
Weighted average diluted shares outstanding
 
 
 
 
 
 
 
109,753

 
 
 
 
 
109,753

_______________________________________________

(a) See note (a) on Condensed Consolidated Statements of Operations.

(b) Borgata's financial results include the impact of certain valuation adjustments made upon consolidation. These valuation adjustments are not pushed down to Borgata and are therefore not reflected in Borgata's standalone financial statements.

10


MARINA DISTRICT DEVELOPMENT COMPANY, LLC
dba BORGATA HOTEL CASINO AND SPA
CONSOLIDATED STATEMENTS OF OPERATIONS (a)
(Unaudited)

 
Three Months Ended
 
March 31,
(In thousands)
2015
 
2014
Revenues
 
 
 
Gaming
$
165,128

 
$
153,686

Food and beverage
34,468

 
31,054

Room
27,604

 
25,569

Other
8,510

 
8,571

Gross revenues
235,710

 
218,880

Less promotional allowances
53,121

 
51,616

Net revenues
182,589

 
167,264

Operating costs and expenses
 
 
 
Gaming
66,919

 
63,464

Food and beverage
17,687

 
15,695

Room
3,260

 
2,784

Other
6,754

 
6,499

Selling, general and administrative
34,153

 
41,402

Maintenance and utilities
15,991

 
16,927

Depreciation and amortization
14,799

 
14,542

Preopening expenses
—

 
33

Other operating items, net
(324
)
 
(404
)
Total operating costs and expenses
159,239

 
160,942

Operating income
23,350

 
6,322

Other expense
 
 
 
Interest expense, net of amounts capitalized
16,657

 
17,690

Loss on early extinguishments of debt
492

 
—

Total other expense
17,149

 
17,690

Income (loss) before state income taxes
6,201

 
(11,368
)
State income tax benefit
1,827

 
704

Net income (loss)
$
8,028

 
$
(10,664
)
 
 
 
 
 
 
 
 
Reconciliation of Adjusted EBITDA to Operating Income (Loss)
 
 
 
Three Months Ended
 
March 31,
(In thousands)
2015
 
2014
Adjusted EBITDA
$
37,825

 
$
20,493

Less:
 
 
 
Depreciation and amortization
14,799

 
14,542

Preopening expenses
—

 
33

Other operating items, net
(324
)
 
(404
)
Operating income (loss)
$
23,350

 
$
6,322

_______________________________________________

(a) These financial statements present the financial results reported by Borgata on a standalone basis and do not include consolidation adjustments recorded by Boyd Gaming during the period that Boyd Gaming consolidated Borgata.



11


Boyd Gaming Corporation
Unaudited Supplemental Pro Forma Information

Boyd Gaming Corporation (“Boyd Gaming”) and MGM Resorts International ("MGM") each originally held a 50% interest in Marina District Development Holding Co., LLC ("Holding Company"). Holding Company owns all the equity interests in Marina District Development Company, LLC, d.b.a. Borgata Hotel Casino and Spa ("Borgata"). Boyd Gaming is the managing member of Holding Company and is responsible for the day-to-day operations of Borgata.

In February 2010, Boyd Gaming entered into an agreement with MGM to amend the operating agreement to, among other things, facilitate the transfer of MGM's interest in Holding Company ("MGM Interest") to a divestiture trust (the "Divestiture Trust") established for the purpose of selling the MGM Interest to a third party. The proposed sale of the MGM Interest through the Divestiture Trust was part of a then-proposed settlement agreement between MGM and the New Jersey Department of Gaming Enforcement (the "NJDGE").

On March 17, 2010, MGM announced that its settlement agreement with the NJDGE had been approved by the New Jersey Casino Control Commission ("NJCCC"). MGM transferred the MGM Interest into the Divestiture Trust on March 24, 2010, and Boyd Gaming determined that it had control, as defined in the relevant accounting literature, of Holding Company and commenced consolidating the business as of that date.  Subsequent to a Joint Petition of MGM, Boyd Gaming and Holding Company, on February 13, 2013, the NJCCC approved amendments to the settlement agreement which permitted MGM to file an application for a statement of compliance, which, if approved, would permit MGM to reacquire its interest in Holding Company.

The NJCCC approved MGM’s application for licensure on September 10, 2014. On September 30, 2014, the Divestiture Trust was dissolved and MGM reacquired its Borgata ownership interest and its substantive participation rights in the management of Borgata. As a result, Boyd Gaming deconsolidated Borgata as of the close of business on September 30, 2014, and is accounting for its investment in Borgata applying the equity method for periods subsequent to the deconsolidation.

The following unaudited supplemental information presents Boyd Gaming's financial results for three months ended March 31, 2015 and pro forma financial results for the three months ended March 31, 2014. The prior year unaudited pro forma financial statements give effect to:

•
the deconsolidation by Boyd Gaming of Holding Company, and
•
the recording by Boyd Gaming using the equity method of accounting for its 50% share of the operating results of Holding Company for the periods presented,

and assumes that these transactions occurred as of January 1, 2014.

The unaudited supplemental pro forma information has been prepared based upon currently available information and assumptions that are deemed appropriate by Boyd Gaming’s management. The pro forma information is for informational purposes only and is not intended to be indicative of Boyd Gaming's actual results that would have been reported had the transactions occurred on the date indicated, nor does the information represent a forecast of Boyd Gaming's financial results for any future period.


12


BOYD GAMING CORPORATION
SUPPLEMENTAL PRO FORMA INFORMATION
Pro Forma Condensed Consolidated Statements of Operations
(Unaudited)
 
Three Months Ended
 
March 31,
(In thousands, except per share data)
2015
 
2014
Revenues
 
 
 
Gaming
$
464,757

 
$
455,071

Food and beverage
76,296

 
75,589

Room
39,353

 
38,811

Other
29,685

 
30,389

Gross revenues
610,091

 
599,860

Less promotional allowances
59,513

 
58,775

Net revenues
550,578

 
541,085

Operating costs and expenses
 
 
 
Gaming
226,697

 
221,710

Food and beverage
41,567

 
41,574

Room
10,047

 
10,386

Other
19,646

 
21,293

Selling, general and administrative
81,689

 
83,277

Maintenance and utilities
25,319

 
26,291

Depreciation and amortization
51,942

 
52,318

Corporate expense
19,652

 
19,920

Preopening expenses
505

 
751

Impairments of assets
1,065

 
1,633

Asset transactions costs
450

 
157

Other operating items, net
116

 
216

Total operating costs and expenses
478,695

 
479,526

Boyd's share of Borgata's operating income
11,675

 
3,478

Operating income
83,558

 
65,037

Other expense (income)
 
 
 
Interest income
(471
)
 
(476
)
Interest expense, net of amounts capitalized
56,935

 
57,813

Loss on early extinguishments of debt
508

 
154

Other, net
618

 
(288
)
Boyd's share of Borgata's non-operating items, net
7,661

 
8,521

Total other expense, net
65,251

 
65,724

Income (loss) before income taxes
18,307

 
(687
)
Income taxes benefit (provision)
16,796

 
(5,495
)
Net income (loss)
35,103

 
(6,182
)
Net (income) loss attributable to noncontrolling interest
—

 
—

Net income (loss) attributable to Boyd Gaming Corporation
$
35,103

 
$
(6,182
)
 
 
 
 
Basic net income (loss) per common share
$
0.31

 
$
(0.06
)
Weighted average basic shares outstanding
111,446

 
109,753

 
 
 
 
Diluted net income (loss) per common share
$
0.31

 
$
(0.06
)
Weighted average diluted shares outstanding
112,358

 
109,753



13


BOYD GAMING CORPORATION
SUPPLEMENTAL PRO FORMA INFORMATION
Reconciliation of Pro Forma Adjusted EBITDA to Pro Forma Operating Income (Loss)
(Unaudited)
 
Three Months Ended
 
March 31,
(In thousands)
2015
 
2014
Net Revenues by Reportable Segment
 
 
 
Las Vegas Locals
$
150,302

 
$
151,443

Downtown Las Vegas
56,603

 
55,733

Midwest and South
217,764

 
211,636

Peninsula
125,909

 
122,273

Net revenues
$
550,578

 
$
541,085

 
 
 
 
Adjusted EBITDA by Reportable Segment
 
 
 
Las Vegas Locals
$
38,877

 
$
40,007

Downtown Las Vegas
10,677

 
9,327

Midwest and South
50,984

 
44,098

Peninsula
46,363

 
44,761

Wholly owned property Adjusted EBITDA
146,901

 
138,193

Corporate expense
(16,642
)
 
(14,171
)
Wholly owned Adjusted EBITDA
130,259

 
124,022

Boyd's share of Borgata's Adjusted EBITDA
18,913

 
10,223

Adjusted EBITDA
149,172

 
134,245

 
 
 
 
Other operating costs and expenses
 
 
 
Deferred rent
857

 
906

Depreciation and amortization
51,942

 
52,318

Preopening expenses
505

 
751

Share-based compensation expense
3,441

 
6,481

Impairments of assets
1,065

 
1,633

Asset transactions costs
450

 
157

Other operating items, net
116

 
216

Boyd's share of Borgata's operating costs and expenses
7,238

 
6,745

Total other operating costs and expenses
65,614

 
69,207

Operating income
83,558

 
65,038

Other expense (income)
 
 
 
Interest expense, net of amounts capitalized
56,464

 
57,337

Loss on early extinguishments of debt
508

 
154

Other, net
618

 
(288
)
Boyd's share of Borgata's non-operating items, net
7,661

 
8,521

Total other expense, net
65,251

 
65,724

Income (loss) before income taxes
18,307

 
(686
)
Income taxes benefit (provision)
16,796

 
(5,496
)
Net income (loss)
35,103

 
(6,182
)
Net loss attributable to noncontrolling interest
—

 
—

Net income (loss) attributable to Boyd Gaming Corporation
$
35,103

 
$
(6,182
)


14


Non-GAAP Financial Measures

Regulation G, "Conditions for Use of Non-GAAP Financial Measures," prescribes the conditions for use of non-GAAP financial information in public disclosures. We believe that our presentations of the following non-GAAP financial measures are important supplemental measures of operating performance to investors: earnings before interest, taxes, depreciation and amortization (EBITDA), Adjusted EBITDA, Adjusted Earnings and Adjusted Earnings Per Share (Adjusted EPS). The following discussion defines these terms and why we believe they are useful measures of our performance. We do not provide a reconciliation of forward-looking non-GAAP financial measures to the corresponding forward-looking GAAP measure due to our inability to project special charges and certain expenses.

EBITDA and Adjusted EBITDA

EBITDA is a commonly used measure of performance in our industry that we believe, when considered with measures calculated in accordance with accounting principles generally accepted in the United States (“GAAP”), provides our investors a more complete understanding of our operating results before the impact of investing and financing transactions and income taxes and facilitates comparisons between us and our competitors. Management has historically adjusted EBITDA when evaluating operating performance because we believe that the inclusion or exclusion of certain recurring and non-recurring items is necessary to provide the most accurate measure of our core operating results and as a means to evaluate period-to-period results. We refer to this measure as Adjusted EBITDA. We have chosen to provide this information to investors to enable them to perform more meaningful comparisons of past, present and future operating results and as a means to evaluate the results of core on-going operations. We have historically reported this measure to our investors and believe that the continued inclusion of Adjusted EBITDA provides consistency in our financial reporting. We use Adjusted EBITDA in this press release because we believe it is useful to investors in allowing greater transparency related to a significant measure used by our management in their financial and operational decision-making. Adjusted EBITDA is among the more significant factors in management's internal evaluation of total company and individual property performance and in the evaluation of incentive compensation related to property management. Management also uses Adjusted EBITDA as a measure in the evaluation of potential acquisitions and dispositions. Adjusted EBITDA is also used by management in the annual budget process. Externally, we believe these measures continue to be used by investors in their assessment of our operating performance and the valuation of our company. Adjusted EBITDA reflects EBITDA adjusted for deferred rent, preopening expenses, share-based compensation expense, impairments of assets, asset transactions costs, loss on early extinguishments of debt and other operating charges, net, and Borgata's non-operating expenses, preopening expenses and other items and write-downs, net. For periods prior to the September 30, 2014, deconsolidation of Borgata, the calculation of Adjusted EBITDA includes 100% of the adjusting items for Borgata. For periods after the date of deconsolidation, the calculation includes Boyd’s share of the adjusting items. Pro forma EBITDA and pro forma Adjusted EBITDA reflect Borgata on the equity method for all periods presented. Both EBITDA and Adjusted EBITDA include corporate expense.

Adjusted Earnings and Adjusted EPS

Adjusted Earnings is net income (loss) before preopening expenses, asset transactions costs, net gains on insurance settlements, impairments of assets, certain adjustments to property tax accruals, write-downs and other charges, net, accelerated amortization of deferred loan fees, gain or loss on early retirements of debt, other non-recurring adjustments, net, valuation adjustments related to the consolidation of Borgata, the impact on Boyd’s income tax provision of tax audit settlements, and Borgata's preopening expenses and other items and write-downs, net. For periods prior to the September 30, 2014, deconsolidation of Borgata, the calculation of Adjusted Earnings includes 100% of the adjusting items for Borgata. For periods after the date of deconsolidation, the calculation includes Boyd’s share of the adjusting items. Adjusted Earnings and Adjusted EPS are presented solely as supplemental disclosures because management believes that they are widely used measures of performance in the gaming industry.

Limitations on the Use of Non-GAAP Measures

The use of EBITDA, Adjusted EBITDA, Adjusted Earnings, Adjusted EPS and certain other non-GAAP financial measures has certain limitations. Our presentation of EBITDA, Adjusted EBITDA, Adjusted Earnings, Adjusted EPS or certain other non-GAAP financial measures may be different from the presentation used by other companies and therefore comparability may be limited. Depreciation and amortization expense, interest expense, income taxes and other items have been and will be incurred and are not reflected in the presentation of EBITDA or Adjusted EBITDA. Each of these items should also be considered in the overall evaluation of our results. Additionally, EBITDA and Adjusted EBITDA do not consider capital expenditures and other investing activities and should not be considered as a measure of our liquidity. We compensate for these limitations by providing the relevant disclosure of our depreciation and amortization, interest and income taxes, capital expenditures and other items both in our reconciliations to the historical GAAP financial measures and in our consolidated financial statements, all of which should be considered when evaluating our performance.

EBITDA, Adjusted EBITDA, Adjusted Earnings, Adjusted EPS and certain other non-GAAP financial measures are used in addition to and in conjunction with results presented in accordance with GAAP. EBITDA, Adjusted EBITDA, Adjusted Earnings, Adjusted EPS and certain other non-GAAP financial measures should not be considered as an alternative to net income, operating income, or any other operating performance measure prescribed by GAAP, nor should these measures be relied upon to the exclusion of GAAP financial measures. EBITDA, Adjusted EBITDA, Adjusted Earnings, Adjusted EPS and certain other non-GAAP financial measures reflect additional ways of viewing our operations that we believe, when viewed with our GAAP results and the reconciliations to the corresponding historical GAAP financial measures, provide a more complete understanding of factors and trends affecting our business than could be obtained absent this disclosure. Management strongly encourages investors to review our financial information in its entirety and not to rely on a single financial measure.


15


Forward-looking Statements and Company Information

This press release contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. Such statements contain words such as “may,” “will,” “might,” “expect,” “believe,” “anticipate,” “could,” “would,” “estimate,” “continue,” “pursue,” or the negative thereof or comparable terminology, and may include (without limitation) information regarding the Company's expectations, goals or intentions regarding future performance. In addition, forward-looking statements in this press release include statements regarding: the Company’s continued enhancement of non-gaming amenities, strategic initiatives, customer demand growth, improved growth and profit potential, as well as increasing long-term shareholder value, and all of the statements under the heading “Full-Year 2015 Guidance.” Forward-looking statements involve certain risks and uncertainties, and actual results may differ materially from those discussed in any such statement. These risks and uncertainties include, but are not limited to: fluctuations in the Company's operating results; recovery of its properties in various markets; the state of the economy and its effect on consumer spending and the Company's results of operations; the timing for economic recovery, its effect on the Company's business and the local economies where the Company's properties are located; the receipt of legislative, and other state, federal and local approvals for the Company's development projects; whether online gaming will become legalized in various states, the Company's ability to operate online gaming profitably, or otherwise; consumer reaction to fluctuations in the stock market and economic factors; the fact that the Company's expansion, development and renovation projects (including enhancements to improve property performance) are subject to many risks inherent in expansion, development or construction of a new or existing project; the effects of events adversely impacting the economy or the regions from which the Company draws a significant percentage of its customers; competition; litigation; financial community and rating agency perceptions of the Company and its subsidiaries; changes in laws and regulations, including increased taxes; the availability and price of energy, weather, regulation, economic, credit and capital market conditions; and the effects of war, terrorist or similar activity. Additional factors that could cause actual results to differ are discussed under the heading “Risk Factors” and in other sections of the Company's Annual Report on Form 10-K, its Quarterly Reports on Form 10-Q, and in the Company's other current and periodic reports filed from time to time with the SEC. All forward-looking statements in this press release are made as of the date hereof, based on information available to the Company as of the date hereof, and the Company assumes no obligation to update any forward-looking statement.

About Boyd Gaming

Headquartered in Las Vegas, Boyd Gaming Corporation (NYSE: BYD) is a leading diversified owner and operator of 22 gaming entertainment properties located in Nevada, Illinois, Indiana, Iowa, Kansas, Louisiana, Mississippi and New Jersey. Boyd Gaming press releases are available at www.prnewswire.com. Additional news and information on Boyd Gaming can be found at www.boydgaming.com.






16

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