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Form 8-K BOYD GAMING CORP For: Aug 03

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August 3, 2016 4:13 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): August 3, 2016
____________________________________________________________________ 


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 August 3, 2016, Boyd Gaming Corporation issued a press release announcing its financial results for the second quarter ended June 30, 2016 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 August 3, 2016









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:
August 3, 2016
Boyd Gaming Corporation
 
 
 
 
By:
/s/ Anthony D. McDuffie
 
 
Anthony D. McDuffie
 
 
Vice President and Chief Accounting Officer
 
 
 




EXHIBIT INDEX

Exhibit Number
 
Description
 
 
 
99.1
 
Press Release, dated August 3, 2016





Exhibit 99.1



Financial Contact:                                
Josh Hirsberg                                    
(702) 792-7234                                    
[email protected]                            

Media Contact:
David Strow
(702) 792-7386


BOYD GAMING REPORTS SECOND-QUARTER 2016 RESULTS

Second-Quarter 2016 Highlights
•
Company Expanding in High-Growth Las Vegas Market with Aliante, Cannery
•
Sale of Borgata Interest Completed, Accelerating Deleveraging Efforts
•
Las Vegas Locals Revenue, Adjusted EBITDA Grow for 5th Consecutive Quarter

LAS VEGAS - AUGUST 3, 2016 - Boyd Gaming Corporation (NYSE: BYD) today reported financial results for the second quarter ended June 30, 2016.

Boyd Gaming reported second-quarter 2016 net revenues of $544.9 million, compared to $559.9 million in the year-ago quarter. On a GAAP basis, and including discontinued operations, the Company reported net income of $30.0 million, or $0.26 per share, for the second quarter of 2016, compared to a net loss of $6.4 million, or $0.06 per share, for the year-ago period. Income from continuing operations, net of tax, for the second quarter was $11.3 million, or $0.10 per share, compared to a net loss of $12.4 million, or $0.11 per share, in the prior-year second quarter. Prior-year results were impacted by pretax losses on the early extinguishments of debt of $31.0 million. During the second quarter of 2016, the Company announced an agreement to sell its 50% equity interest in the parent company of Borgata Hotel Casino & Spa. As a result of this agreement, the Company's share of Borgata’s net income is reflected as discontinued operations in the accompanying consolidated financial statements.

Total Adjusted EBITDA(1) was $137.9 million, compared to $140.6 million in the second quarter of 2015. Adjusted Earnings(1) for the second quarter 2016 were $18.1 million, or $0.16 per share, compared to

1


Adjusted Earnings of $20.9 million, or $0.19 per share, for the same period in 2015. Adjusted EBITDA and Adjusted Earnings exclude discontinued operations.

Keith Smith, President and Chief Executive Officer of Boyd Gaming, said: “The second quarter of 2016 was a significant time for our Company, as we executed several transactions that will strengthen our financial foundation and position us for continued growth.  With the acquisitions of Aliante and the Cannery properties, we will be expanding our presence in the high-growth Las Vegas locals market. And we unlocked the significant value in our Borgata joint venture, allowing us to further accelerate our deleveraging efforts.”

Smith continued, “In terms of our operational performance, results across our business segments were varied.  In Las Vegas, strong performances in our Locals operations in April and June were tempered by a tough year-over-year comparison in May, while our Downtown Las Vegas operations continued to deliver a high level of performance. In the Midwest and South segment, our performance improved modestly from trends earlier in the year, while the Peninsula segment performed below our expectations, largely due to a weaker than expected gaming market in Kansas. We continue to make significant progress in the execution of our growth strategy, and are optimistic about the future.”

(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, second-quarter 2016 net revenues were $154.9 million, an increase of 1.2% from $153.0 million in the year-ago quarter. Second-quarter 2016 Adjusted EBITDA was $43.2 million, up 2.4% from $42.2 million in the second quarter of 2015.

The segment achieved its fifth consecutive quarter of revenue growth, Adjusted EBITDA growth and margin improvements. Additionally, the Company’s amenity investment initiative continued to drive growth in non-gaming revenue during the quarter. Solid operating performances in April and June were partially offset by challenging year-over-year comparisons in May. In May 2015, one-time citywide events drove unusually strong visitation to the Las Vegas market.



2


Downtown Las Vegas
In the Downtown Las Vegas segment, net revenues were $59.2 million in the second quarter of 2016, up 1.3% from $58.4 million in the year-ago period. Adjusted EBITDA increased 15.9% to $14.3 million, compared to $12.3 million in the second quarter of 2015.

The Downtown Las Vegas segment delivered its sixth straight quarter of revenue and double-digit Adjusted EBITDA gains, driven by growth in Hawaiian business and further increases in visitation to the downtown area. Results also benefitted from continued operational efficiencies, as operating margins improved by 300 basis points during the quarter.

Midwest and South; Peninsula
In the Midwest and South segment, net revenues were $207.8 million, compared to $217.8 million in the second quarter of 2015, while Adjusted EBITDA was $50.1 million versus $51.8 million in the year-ago period. The Peninsula segment reported net revenues of $122.9 million, compared to $130.6 million in the second quarter of 2015, and Adjusted EBITDA of $44.7 million versus $49.2 million in the year-ago period.

In the Midwest and South, five of the segment’s seven properties achieved Adjusted EBITDA above prior-year levels, and overall operating margins improved. Results reflect declines at IP and Par-A-Dice, as both properties continued to contend with new competition in their markets. Overall, the segment's Adjusted EBITDA performance reflected a slight improvement over first-quarter trends.

Peninsula segment results were largely impacted by revenue and Adjusted EBITDA declines at the Kansas Star, due to general softness in visitation across the state’s gaming market. Additionally, results at Evangeline Downs and Amelia Belle reflect continued economic weakness in south-central Louisiana.

Borgata
Borgata reported second quarter 2016 net revenues of $203.3 million, up from $191.2 million in revenues in the year-ago period. Adjusted EBITDA was $60.8 million, compared to $44.5 million in the year-ago period.

Year-over-year growth was primarily driven by higher slot volumes, normalized table game hold compared to the year-ago quarter, and a $5 million recovery from the Casino Reinvestment Development Authority, related to certain capital improvement projects.


3


The Company’s share of Borgata’s net income is reported as discontinued operations, and was $18.7 million for the second quarter of 2016, compared to $6.0 million in the year-ago period.

Balance Sheet Statistics
As of June 30, 2016, Boyd Gaming had cash on hand of $628.3 million, including $23.6 million related to Peninsula. Total debt was $3.71 billion, of which $960.5 million was related to Peninsula.

Borgata’s cash and debt balances are not included in the Company’s balance sheet. Borgata had cash on hand of $31.3 million and total debt of $603.0 million at June 30, 2016.

Full Year 2016 Guidance
Following Boyd Gaming’s divestiture of its 50% equity interest in Borgata, the Company is excluding Borgata’s results from its guidance for the full year 2016.

Boyd Gaming projects wholly-owned Adjusted EBITDA of $535 million to $555 million for the full year 2016, which includes anticipated fourth-quarter contributions from Aliante and the Cannery properties. Excluding these pending acquisitions, the Company projects wholly-owned Adjusted EBITDA of $535 million to $545 million for the full year 2016.

Conference Call Information
Boyd Gaming will host its conference call to discuss second-quarter 2016 results and provide an update on its pending acquisitions today, August 3, at 5:00 p.m. Eastern. The conference call number is (888) 317-6003, passcode 5148733. 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: https://www.webcaster4.com/Webcast/Page/964/16471

Following the call’s completion, a replay will be available by dialing (877) 344-7529 today, August 3, beginning at 7:00 p.m. Eastern and continuing through Wednesday, August 10, at 11:59 p.m. Eastern. The passcode for the replay will be 10090638. The replay will also be available on the Internet at www.boydgaming.com.


4


BOYD GAMING CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
 
Three Months Ended
 
Six Months Ended
 
June 30,
 
June 30,
(In thousands, except per share data)
2016
 
2015
 
2016
 
2015
Revenues
 
 
 
 
 
 
 
Gaming
$
452,928

 
$
468,580

 
$
915,479

 
$
933,337

Food and beverage
75,898

 
77,909

 
152,698

 
154,205

Room
43,365

 
42,332

 
85,240

 
81,685

Other
29,693

 
30,642

 
61,159

 
60,327

Gross revenues
601,884

 
619,463

 
1,214,576

 
1,229,554

Less promotional allowances
57,010

 
59,596

 
117,324

 
119,109

Net revenues
544,874

 
559,867

 
1,097,252

 
1,110,445

Operating costs and expenses
 
 
 
 
 
 
 
Gaming
217,768

 
224,686

 
441,293

 
451,383

Food and beverage
42,116

 
42,913

 
83,919

 
84,480

Room
11,293

 
10,682

 
21,792

 
20,729

Other
18,827

 
19,744

 
38,159

 
39,390

Selling, general and administrative
79,002

 
81,013

 
160,853

 
162,702

Maintenance and utilities
25,009

 
26,616

 
48,857

 
51,935

Depreciation and amortization
48,250

 
51,964

 
95,903

 
103,906

Corporate expense
16,099

 
17,352

 
34,006

 
37,004

Project development, preopening and writedowns
5,897

 
1,749

 
7,738

 
2,704

Impairments of assets
—

 
—

 
1,440

 
1,065

Other operating items, net
123

 
54

 
552

 
170

Total operating costs and expenses
464,384

 
476,773

 
934,512

 
955,468

Operating income
80,490

 
83,094

 
162,740

 
154,977

Other expense (income)
 
 
 
 
 
 
 
Interest income
(959
)
 
(465
)
 
(1,456
)
 
(936
)
Interest expense, net of amounts capitalized
61,887

 
57,131

 
114,952

 
114,066

Loss on early extinguishments of debt
419

 
30,962

 
846

 
31,470

Other, net
65

 
1,270

 
142

 
1,888

Total other expense, net
61,412

 
88,898

 
114,484

 
146,488

Income (loss) from continuing operations before income taxes
19,078

 
(5,804
)
 
48,256

 
8,489

Income taxes benefit (provision)
(7,771
)
 
(6,586
)
 
(15,389
)
 
9,625

Income (loss) from continuing operations, net of tax
11,307


(12,390
)

32,867


18,114

Income from discontinued operations, net of tax
18,715

 
5,965

 
30,345

 
10,564

Net income (loss)
$
30,022


$
(6,425
)

$
63,212


$
28,678

 
 
 
 
 
 
 
 
Basic net income (loss) per common share
 
 
 
 
 
 
 
Continuing operations
$
0.10

 
$
(0.11
)
 
$
0.29

 
$
0.17

Discontinued operations
0.16

 
0.05

 
0.27

 
0.09

Basic net income (loss) per common share
$
0.26


$
(0.06
)

$
0.56


$
0.26

Weighted average basic shares outstanding
114,328

 
112,232

 
114,218

 
111,841

 
 
 
 
 
 
 
 
Diluted net income (loss) per common share
 
 
 
 
 
 
 
Continuing operations
$
0.10

 
$
(0.11
)
 
$
0.29

 
$
0.16

Discontinued operations
0.16

 
0.05

 
0.26

 
0.09

Diluted net income (loss) per common share
$
0.26


$
(0.06
)

$
0.55


$
0.25

Weighted average diluted shares outstanding
115,077

 
112,232

 
114,974

 
112,694



5


BOYD GAMING CORPORATION
SUPPLEMENTAL INFORMATION
Reconciliation of Adjusted EBITDA to Net Income (Loss)
(Unaudited)
 
Three Months Ended
 
Six Months Ended
 
June 30,
 
June 30,
(In thousands)
2016
 
2015
 
2016
 
2015
Net Revenues by Reportable Segment
 
 
 
 
 
 
 
Las Vegas Locals
$
154,936

 
$
153,032

 
$
313,334

 
$
303,332

Downtown Las Vegas
59,212

 
58,434

 
117,817

 
115,038

Midwest and South
207,837

 
217,777

 
417,022

 
435,542

Peninsula
122,889

 
130,624

 
249,079

 
256,533

Net revenues
$
544,874

 
$
559,867

 
$
1,097,252

 
$
1,110,445

 
 
 
 
 
 
 
 
Adjusted EBITDA by Reportable Segment
 
 
 
 
 
 
 
Las Vegas Locals
$
43,173

 
$
42,175

 
$
87,444

 
$
81,052

Downtown Las Vegas
14,263

 
12,307

 
26,944

 
22,984

Midwest and South
50,056

 
51,777

 
98,869

 
102,761

Peninsula
44,691

 
49,164

 
91,803

 
95,527

Property Adjusted EBITDA
152,183

 
155,423

 
305,060

 
302,324

Corporate expense (a)
(14,286
)
 
(14,777
)
 
(29,471
)
 
(31,419
)
Adjusted EBITDA
137,897

 
140,646

 
275,589

 
270,905

 
 
 
 
 
 
 
 
Other operating costs and expenses
 
 
 
 
 
 
 
Deferred rent
817

 
859

 
1,633

 
1,716

Depreciation and amortization
48,250

 
51,964

 
95,903

 
103,906

Share-based compensation expense
2,320

 
2,926

 
5,583

 
6,367

Project development, preopening and writedowns
5,897

 
1,749

 
7,738

 
2,704

Impairments of assets
—

 
—

 
1,440

 
1,065

Other operating items, net
123

 
54

 
552

 
170

Total other operating costs and expenses
57,407

 
57,552

 
112,849

 
115,928

Operating income
80,490

 
83,094

 
162,740

 
154,977

Other expense (income)
 
 
 
 
 
 
 
Interest income
(959
)
 
(465
)
 
(1,456
)
 
(936
)
Interest expense, net of amounts capitalized
61,887

 
57,131

 
114,952

 
114,066

Loss on early extinguishments of debt
419

 
30,962

 
846

 
31,470

Other, net
65

 
1,270

 
142

 
1,888

Total other expense, net
61,412

 
88,898

 
114,484

 
146,488

Income (loss) before income taxes
19,078

 
(5,804
)
 
48,256

 
8,489

Income taxes benefit (provision)
(7,771
)
 
(6,586
)
 
(15,389
)
 
9,625

Income (loss) from continuing operations, net of tax
11,307


(12,390
)

32,867


18,114

Income from discontinued operations, net of tax
18,715

 
5,965

 
30,345

 
10,564

Net income (loss)
$
30,022


$
(6,425
)

$
63,212


$
28,678


6


BOYD GAMING CORPORATION
SUPPLEMENTAL INFORMATION
Reconciliation of Adjusted EBITDA to Net Income (Loss)
(Unaudited)
(Continued)

_______________________________________________
(a) Reconciliation of corporate expense:
 
Three Months Ended
 
Six Months Ended
 
June 30,
 
June 30,
(In thousands)
2016
 
2015
 
2016
 
2015
Corporate expense as reported on Consolidated Statements of Operations
$
16,099

 
$
17,352

 
$
34,006

 
$
37,004

Corporate share-based compensation expense
(1,813
)
 
(2,575
)
 
(4,535
)
 
(5,585
)
Corporate expense as reported on the above table
$
14,286

 
$
14,777

 
$
29,471

 
$
31,419



7


BOYD GAMING CORPORATION
SUPPLEMENTAL INFORMATION
Reconciliation of Net Income (Loss) to Adjusted Earnings (Loss) and Net Income (Loss) Per Share to
Adjusted Earnings Per Share
(Unaudited)
 
Three Months Ended
 
Six Months Ended
 
June 30,
 
June 30,
(In thousands, except per share data)
2016
 
2015
 
2016
 
2015
Net income (loss)
$
30,022

 
$
(6,425
)
 
$
63,212

 
$
28,678

Less: income from discontinued operations, net of tax
(18,715
)
 
(5,965
)
 
(30,345
)
 
(10,564
)
Adjusted net income (loss)
11,307


(12,390
)

32,867


18,114

Pretax adjustments:
 
 
 
 
 
 
 
Project development, preopening and writedowns
5,897

 
1,749

 
7,738

 
2,704

Impairments of assets
—

 
—

 
1,440

 
1,065

Other operating items, net
123

 
54

 
552

 
170

Loss on early extinguishments of debt
419

 
30,962

 
846

 
31,470

Other, net
65

 
1,270

 
142

 
1,888

Total adjustments
6,504

 
34,035

 
10,718

 
37,297

 
 
 
 
 
 
 
 
Income tax effect for above adjustments
294

 
(785
)
 
30

 
(1,789
)
Impact of tax audit settlements on provision
—

 
—

 
—

 
(22,606
)
Adjusted earnings
$
18,105

 
$
20,860

 
$
43,615

 
$
31,016

 
 
 
 
 
 
 
 
Net income (loss) per share
$
0.26

 
$
(0.06
)
 
$
0.55

 
$
0.25

Less: income from discontinued operations per share
(0.16
)
 
(0.05
)
 
(0.26
)
 
(0.09
)
Adjusted net income (loss) per share
0.10

 
(0.11
)
 
0.29

 
0.16

Pretax adjustments:
 
 
 
 
 
 
 
Project development, preopening and writedowns
0.05

 
0.02

 
0.07

 
0.02

Impairments of assets
—

 
—

 
0.01

 
0.01

Other operating items, net
—

 
—

 
—

 
—

Loss on early extinguishments of debt
—

 
0.28

 
—

 
0.29

Other, net
0.01

 
0.01

 
—

 
0.02

Total adjustments
0.06

 
0.31

 
0.09

 
0.34

 
 
 
 
 
 
 
 
Income tax effect for above adjustments
—

 
(0.01
)
 
—

 
(0.02
)
Impact of tax audit settlements on provision
—

 
—

 
—

 
(0.20
)
Adjusted earnings per share
$
0.16

 
$
0.19

 
$
0.38

 
$
0.28

 
 
 
 
 
 
 
 
Weighted average shares outstanding
115,077

 
113,021

 
114,974

 
112,694



8


BOYD GAMING CORPORATION
SUPPLEMENTAL INFORMATION
Condensed Consolidating Statements of Operations
Three Months Ended June 30, 2016
(Unaudited)
 
 
 
 
 
 
 
 
 
Boyd Gaming
(In thousands, except per share data)
Excluding
Peninsula
Segment
 
Peninsula
Segment
 
Eliminations
 

Consolidated
Revenues
 
 
 
 
 
 
 
Gaming
$
338,772

 
$
114,156

 
$
—

 
$
452,928

Food and beverage
66,981

 
8,917

 
—

 
75,898

Room
43,365

 
—

 
—

 
43,365

Other
29,960

 
4,425

 
(4,692
)
 
29,693

Gross revenues
479,078

 
127,498

 
(4,692
)
 
601,884

Less promotional allowances
52,400

 
4,610

 
—

 
57,010

Net revenues
426,678

 
122,888

 
(4,692
)
 
544,874

Operating costs and expenses
 
 
 
 
 
 
 
Gaming
164,063

 
53,705

 
—

 
217,768

Food and beverage
35,943

 
6,173

 
—

 
42,116

Room
11,293

 
—

 
—

 
11,293

Other
16,197

 
7,322

 
(4,692
)
 
18,827

Selling, general and administrative
66,510

 
12,492

 
—

 
79,002

Maintenance and utilities
21,813

 
3,196

 
—

 
25,009

Depreciation and amortization
34,570

 
13,680

 
—

 
48,250

Corporate expense
15,709

 
390

 
—

 
16,099

Project development, preopening and writedowns
5,744

 
153

 
—

 
5,897

Impairments of assets
—

 
—

 
—

 
—

Other operating items, net
71

 
52

 
—

 
123

Total operating costs and expenses
371,913

 
97,163

 
(4,692
)
 
464,384

Operating income
54,765

 
25,725

 
—

 
80,490

Other expense (income)
 
 
 
 
 
 
 
Interest income
(500
)
 
(459
)
 
—

 
(959
)
Interest expense, net of amounts capitalized
44,392

 
17,495

 
—

 
61,887

Loss on early extinguishments of debt
—

 
419

 
—

 
419

Other, net
(18
)
 
83

 
—

 
65

Total other expense, net
43,874

 
17,538

 
—

 
61,412

Income before income taxes
10,891

 
8,187

 
—

 
19,078

Income taxes provision
(2,166
)
 
(5,605
)
 
—

 
(7,771
)
Income (loss) from continuing operations, net of tax
8,725


2,582


—


11,307

Income from discontinued operations, net of tax
18,715

 
—

 
—

 
18,715

Net income
$
27,440


$
2,582


$
—


$
30,022

 
 
 
 
 
 
 
 
Basic net income per common share
 
 
 
 
 
 
 
Continuing operations
 
 
 
 
 
 
$
0.10

Discontinued operations
 
 
 
 
 
 
0.16

Basic net income per common share
 
 
 
 
 
 
$
0.26

Weighted average basic shares outstanding
 
 
 
 
 
 
114,328

 
 
 
 
 
 
 
 
Diluted net income per common share
 
 
 
 
 
 
 
Continuing operations
 
 
 
 
 
 
$
0.10

Discontinued operations
 
 
 
 
 
 
0.16

Diluted net income per common share
 
 
 
 
 
 
$
0.26

Weighted average diluted shares outstanding
 
 
 
 
 
 
115,077



9


BOYD GAMING CORPORATION
SUPPLEMENTAL INFORMATION
Condensed Consolidating Statements of Operations
Three Months Ended June 30, 2015
(Unaudited)
 
 
 
 
 
 
 
 
 
Boyd Gaming
(In thousands, except per share data)
Excluding
Peninsula
Segment
 
Peninsula Segment
 
Eliminations
 

Consolidated
Revenues
 
 
 
 
 
 
 
Gaming
$
347,647

 
$
120,933

 
$
—

 
$
468,580

Food and beverage
68,195

 
9,714

 
—

 
77,909

Room
42,332

 
—

 
—

 
42,332

Other
30,755

 
4,940

 
(5,053
)
 
30,642

Gross revenues
488,929

 
135,587

 
(5,053
)
 
619,463

Less promotional allowances
54,631

 
4,965

 
—

 
59,596

Net revenues
434,298

 
130,622

 
(5,053
)
 
559,867

Operating costs and expenses
 
 
 
 
 
 
 
Gaming
168,830

 
55,856

 
—

 
224,686

Food and beverage
36,556

 
6,357

 
—

 
42,913

Room
10,682

 
—

 
—

 
10,682

Other
16,759

 
8,038

 
(5,053
)
 
19,744

Selling, general and administrative
68,023

 
12,990

 
—

 
81,013

Maintenance and utilities
23,345

 
3,271

 
—

 
26,616

Depreciation and amortization
34,863

 
17,101

 
—

 
51,964

Corporate expense
17,005

 
347

 
—

 
17,352

Project development, preopening and writedowns
1,226

 
523

 
—

 
1,749

Impairments of assets
—

 
—

 
—

 
—

Other operating items, net
(1
)
 
55

 
—

 
54

Total operating costs and expenses
377,288

 
104,538

 
(5,053
)
 
476,773

Operating income
57,010

 
26,084

 
—

 
83,094

Other expense (income)
 
 
 
 
 
 
 
Interest income
—

 
(465
)
 
—

 
(465
)
Interest expense, net of amounts capitalized
38,706

 
18,425

 
 
 
57,131

Loss on early extinguishments of debt
30,008

 
954

 
—

 
30,962

Other, net
1,245

 
25

 
—

 
1,270

Total other expense, net
69,959

 
18,939

 
—

 
88,898

Income before income taxes
(12,949
)
 
7,145

 
—

 
(5,804
)
Income taxes provision
(2,088
)
 
(4,498
)
 
—

 
(6,586
)
Income (loss) from continuing operations, net of tax
(15,037
)

2,647


—


(12,390
)
Income from discontinued operations, net of tax
5,965

 
—

 
—

 
5,965

Net income (loss)
$
(9,072
)

$
2,647


$
—


$
(6,425
)
 
 
 
 
 
 
 
 
Basic net income (loss) per common share
 
 
 
 
 
 
 
Continuing operations
 
 
 
 
 
 
$
(0.11
)
Discontinued operations
 
 
 
 
 
 
0.05

Basic net loss per common share
 
 
 
 
 
 
$
(0.06
)
Weighted average basic shares outstanding
 
 
 
 
 
 
112,232

 
 
 
 
 
 
 
 
Diluted net income (loss) per common share
 
 
 
 
 
 
 
Continuing operations
 
 
 
 
 
 
$
(0.11
)
Discontinued operations
 
 
 
 
 
 
0.05

Diluted net per common share
 
 
 
 
 
 
$
(0.06
)
Weighted average diluted shares outstanding
 
 
 
 
 
 
112,232



10


BOYD GAMING CORPORATION
SUPPLEMENTAL INFORMATION
Condensed Consolidating Statements of Operations
Six Months Ended June 30, 2016
(Unaudited)
 
 
 
 
 
 
 
 
 
Boyd Gaming
(In thousands, except per share data)
Excluding
Peninsula
Segment
 
Peninsula
Segment
 
Eliminations
 
Consolidated
Revenues
 
 
 
 
 
 
 
Gaming
$
684,078

 
$
231,401

 
$
—

 
$
915,479

Food and beverage
134,256

 
18,442

 
—

 
152,698

Room
85,240

 
—

 
—

 
85,240

Other
61,940

 
8,789

 
(9,570
)
 
61,159

Gross revenues
965,514

 
258,632

 
(9,570
)
 
1,214,576

Less promotional allowances
107,771

 
9,553

 
—

 
117,324

Net revenues
857,743

 
249,079

 
(9,570
)
 
1,097,252

Operating costs and expenses
 
 
 
 
 
 
 
Gaming
333,785

 
107,508

 
—

 
441,293

Food and beverage
71,376

 
12,543

 
—

 
83,919

Room
21,792

 
—

 
—

 
21,792

Other
33,259

 
14,470

 
(9,570
)
 
38,159

Selling, general and administrative
134,814

 
26,039

 
—

 
160,853

Maintenance and utilities
42,571

 
6,286

 
—

 
48,857

Depreciation and amortization
68,640

 
27,263

 
—

 
95,903

Corporate expense
33,207

 
799

 
—

 
34,006

Project development, preopening and writedowns
7,434

 
304

 
—

 
7,738

Impairments of assets
1,440

 
—

 
—

 
1,440

Other operating items, net
500

 
52

 
—

 
552

Total operating costs and expenses
748,818

 
195,264

 
(9,570
)
 
934,512

Operating income
108,925

 
53,815

 
—

 
162,740

Other expense (income)
 
 
 
 
 
 
 
Interest income
(535
)
 
(921
)
 
—

 
(1,456
)
Interest expense, net of amounts capitalized
79,647

 
35,305

 
—

 
114,952

Loss on early extinguishments of debt
—

 
846

 
—

 
846

Other, net
(33
)
 
175

 
—

 
142

Total other expense, net
79,079

 
35,405

 
—

 
114,484

Income before income taxes
29,846

 
18,410

 
—

 
48,256

Income taxes provision
(4,180
)
 
(11,209
)
 
—

 
(15,389
)
Income from continuing operations, net of tax
25,666


7,201


—


32,867

Income from discontinued operations, net of tax
30,345

 
—

 
—

 
30,345

Net income
$
56,011


$
7,201


$
—


$
63,212

 
 
 
 
 
 
 
 
Basic net income per common share
 
 
 
 
 
 
 
Continuing operations
 
 
 
 
 
 
$
0.29

Discontinued operations
 
 
 
 
 
 
0.27

Basic net income per common share
 
 
 
 
 
 
$
0.56

Weighted average basic shares outstanding
 
 
 
 
 
 
114,218

 
 
 
 
 
 
 
 
Diluted net income per common share
 
 
 
 
 
 


Continuing operations
 
 
 
 
 
 
$
0.29

Discontinued operations
 
 
 
 
 
 
0.26

Diluted net income per common share
 
 
 
 
 
 
$
0.55

Weighted average diluted shares outstanding
 
 
 
 
 
 
114,974





11


BOYD GAMING CORPORATION
SUPPLEMENTAL INFORMATION
Condensed Consolidating Statements of Operations
Six Months Ended June 30, 2015
(Unaudited)
 
 
 
 
 
 
 
 
 
Boyd Gaming
(In thousands, except per share data)
Excluding
Peninsula
Segment
 
Peninsula Segment
 
Eliminations
 

Consolidated
Revenues
 
 
 
 
 
 
 
Gaming
$
695,361

 
$
237,976

 
$
—

 
$
933,337

Food and beverage
134,512

 
19,693

 
—

 
154,205

Room
81,685

 
—

 
—

 
81,685

Other
61,363

 
8,845

 
(9,881
)
 
60,327

Gross revenues
972,921

 
266,514

 
(9,881
)
 
1,229,554

Less promotional allowances
109,126

 
9,983

 
—

 
119,109

Net revenues
863,795

 
256,531

 
(9,881
)
 
1,110,445

Operating costs and expenses
 
 
 
 
 
 
 
Gaming
341,246

 
110,137

 
—

 
451,383

Food and beverage
71,754

 
12,726

 
—

 
84,480

Room
20,729

 
—

 
—

 
20,729

Other
34,023

 
15,248

 
(9,881
)
 
39,390

Selling, general and administrative
136,456

 
26,246

 
—

 
162,702

Maintenance and utilities
45,406

 
6,529

 
—

 
51,935

Depreciation and amortization
69,817

 
34,089

 
—

 
103,906

Corporate expense
36,252

 
752

 
—

 
37,004

Project development, preopening and writedowns
2,051

 
653

 
—

 
2,704

Impairments of assets
1,065

 
—

 
—

 
1,065

Other operating items, net
70

 
100

 
—

 
170

Total operating costs and expenses
758,869

 
206,480

 
(9,881
)
 
955,468

Operating income
104,926

 
50,051

 
—

 
154,977

Other expense (income)
 
 
 
 
 
 
 
Interest income
(4
)
 
(932
)
 
—

 
(936
)
Interest expense, net of amounts capitalized
76,971

 
37,095

 
 
 
114,066

Loss on early extinguishments of debt
30,008

 
1,462

 
—

 
31,470

Other, net
1,702

 
186

 
—

 
1,888

Total other expense, net
108,677

 
37,811

 
—

 
146,488

Income before income taxes
(3,751
)
 
12,240

 
—

 
8,489

Income taxes benefit (provision)
18,622

 
(8,997
)
 
—

 
9,625

Income from continuing operations, net of tax
14,871


3,243


—


18,114

Income from discontinued operations, net of tax
10,564

 
—

 
—

 
10,564

Net income
$
25,435


$
3,243


$
—


$
28,678

 
 
 
 
 
 
 
 
Basic net income per common share
 
 
 
 
 
 
 
Continuing operations
 
 
 
 
 
 
$
0.17

Discontinued operations
 
 
 
 
 
 
0.09

Basic net income per common share
 
 
 
 
 
 
$
0.26

Weighted average basic shares outstanding
 
 
 
 
 
 
111,841

 
 
 
 
 
 
 
 
Diluted net income per common share
 
 
 
 
 
 
 
Continuing operations
 
 
 
 
 
 
$
0.16

Discontinued operations
 
 
 
 
 
 
0.09

Diluted net income per common share
 
 
 
 
 
 
$
0.25

Weighted average diluted shares outstanding
 
 
 
 
 
 
112,694



12


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

 
Three Months Ended
 
Six Months Ended
 
June 30,
 
June 30,
(In thousands)
2016
 
2015
 
2016
 
2015
Revenues
 
 
 
 
 
 
 
Gaming
$
180,987

 
$
170,277

 
$
355,000

 
$
335,405

Food and beverage
38,002

 
36,392

 
71,760

 
70,860

Room
31,050

 
30,349

 
59,678

 
57,953

Other
10,138

 
10,397

 
19,265

 
18,907

Gross revenues
260,177

 
247,415

 
505,703

 
483,125

Less promotional allowances
56,830

 
56,252

 
112,063

 
109,373

Net revenues
203,347

 
191,163

 
393,640

 
373,752

Operating costs and expenses
 
 
 
 
 
 
 
Gaming
67,233

 
67,057

 
135,026

 
133,976

Food and beverage
19,135

 
19,147

 
35,919

 
36,834

Room
3,671

 
3,799

 
6,940

 
7,059

Other
8,768

 
9,590

 
16,091

 
16,344

Selling, general and administrative
28,804

 
32,523

 
64,226

 
66,676

Maintenance and utilities
14,973

 
14,520

 
29,340

 
30,511

Depreciation and amortization
14,638

 
14,791

 
28,987

 
29,590

Preopening expenses
242

 
—

 
313

 
—

Other operating items, net
(7,269
)
 
(441
)
 
(14,027
)
 
(765
)
Total operating costs and expenses
150,195

 
160,986

 
302,815

 
320,225

Operating income
53,152

 
30,177

 
90,825

 
53,527

Other expense
 
 
 
 
 
 
 
Interest expense, net of amounts capitalized
11,125

 
16,307

 
22,880

 
32,964

Loss on early extinguishments of debt
903

 
543

 
1,228

 
1,035

Total other expense
12,028

 
16,850

 
24,108

 
33,999

Income before state income taxes
41,124

 
13,327

 
66,717

 
19,528

State income tax benefit (expense)
(3,736
)
 
(1,374
)
 
(6,068
)
 
453

Net income
$
37,388

 
$
11,953

 
$
60,649

 
$
19,981

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Reconciliation of Adjusted EBITDA to Operating Income
 
 
 
 
 
Three Months Ended
 
Six Months Ended
 
June 30,
 
June 30,
(In thousands)
2016
 
2015
 
2016
 
2015
Adjusted EBITDA
$
60,763

 
$
44,527

 
$
106,098

 
$
82,352

Less:
 
 
 
 
 
 
 
Depreciation and amortization
14,638

 
14,791

 
28,987

 
29,590

Preopening expenses
242

 
—

 
313

 
—

Other operating items, net
(7,269
)
 
(441
)
 
(14,027
)
 
(765
)
Operating income
$
53,152

 
$
30,177

 
$
90,825

 
$
53,527




13


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 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, share-based compensation expense, project development, preopening and write-down expenses, impairments of assets, loss on early extinguishments of debt and other operating items, net.

Adjusted Earnings and Adjusted EPS

Adjusted Earnings is net income (loss) before project development, preopening and write-down expenses, impairments of assets, certain adjustments to property tax accruals, other items, net, gain or loss on early extinguishments of debt, other non-recurring adjustments, net, the impact on Boyd’s income tax provision of tax audit settlements, and income from discontinued operations, net of tax. 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.

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 pending acquisitions, continued growth, strengthening the Company’s

14


financial foundation, long-term growth trends throughout southern Nevada, optimism for long-term prospects for the business, the high-growth locals market, progress on the Company’s strategic growth plan, and all of the statements under the heading “Full-Year 2016 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: failure of the Company’s pending acquisitions to close, or to close when anticipated; 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, 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 21 gaming entertainment properties located in Nevada, Illinois, Indiana, Iowa, Kansas, Louisiana and Mississippi. Boyd Gaming press releases are available at www.prnewswire.com. Additional news and information on Boyd Gaming can be found at www.boydgaming.com.






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