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Boyd Gaming Reports Third-Quarter Results

November 1, 2012

LAS VEGAS, Nov. 1, 2012 /PRNewswire/ — Boyd Gaming Corporation (NYSE: BYD) today reported financial results for the third quarter ended September 30, 2012.

(Logo: http://photos.prnewswire.com/prnh/20030219/BOYDLOGO)

Net revenues were $613.3 million for the third quarter 2012, an increase of 3.9% from $590.2 million during the same quarter in 2011. Total Adjusted EBITDA((1)) for the quarter was $103.6 million, compared to $122.0 million in the prior year. Results for the third quarter 2012 include the operations of the IP Casino Resort Spa, acquired by the Company on October 4, 2011.

Boyd Gaming’s wholly-owned business, including the IP, reported third-quarter 2012 net revenues of $426.2 million, up 9.8% from the year-ago period. Wholly-owned Adjusted EBITDA for the quarter was $70.3 million, compared to $71.8 million in the year-ago period. The Adjusted EBITDA comparison was adversely impacted by business disruptions from Hurricane Isaac and a favorable property tax adjustment in the year-ago quarter. Borgata, the Company’s 50% joint venture, reported third-quarter 2012 net revenues of $187.1 million, compared to $202.0 million in the third quarter of 2011. Adjusted EBITDA at the property was $33.4 million, compared to $50.3 million in the year-ago quarter. Both revenue and Adjusted EBITDA were impacted by lower table game hold percentage and volume.

For the third quarter 2012, the Company reported a net loss of $15.8 million, or $0.18 per share, compared to net income of $3.1 million, or $0.04 per share, in the same period last year. Net results reflect lower operating income and increased interest expense, including interest related to the Peninsula Gaming acquisition financing.

Adjusted Earnings((1)) for the third quarter 2012 reflect a loss of $9.4 million, or $0.11 per share, compared to income of $4.6 million, or $0.05 per share, for the same period in 2011. Certain pre-tax items included in Adjusted Earnings for the third quarter of 2012 resulted in a net increase of $7.1 million ($6.3 million, net of tax and noncontrolling interest, or $0.07 per share). By comparison, pre-tax items included in Adjusted Earnings for the third quarter 2011 resulted in a net increase of $2.4 million ($1.5 million, net of tax and noncontrolling interest, or $0.01 per share). Pre-tax items included in Adjusted Earnings are listed in a table at the end of this press release.

“We are encouraged by continued strength in our Midwest and South region, which recorded its eighth consecutive quarter of EBITDA growth,” said Keith Smith, President and Chief Executive Officer of Boyd Gaming. “With the acquisition of Peninsula Gaming, more than two-thirds of our wholly-owned EBITDA will be generated by our Midwest and South properties, further expanding our operations in the strongest segment of the domestic gaming industry. Moving forward, our focus will be on generating sustainable long-term growth, continuing to manage our operations efficiently and strengthening our balance sheet.”

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

Year-To-Date Results

For the nine months ended September 30, 2012, we reported net revenues of $1.86 billion, an increase of 7.6% compared to the nine months ended September 30, 2011. Total Adjusted EBITDA was $351.2 million during the period, even with the prior year.

During the nine-month period in 2012, our wholly-owned operations posted net revenues of $1.32 billion, up 12.5% from the year-ago period, while wholly-owned Adjusted EBITDA increased 7.2% to $248.3 million. Borgata reported net revenues of $538.7 million, compared to $553.9 million in the year-ago period, while Adjusted EBITDA was $103.0 million, compared to $120.6 million in the third quarter of 2011.

We reported a net loss of $9.0 million for the nine months ended September 30, 2012, or $0.10 per share. By comparison, we reported a net loss of $3.4 million, or $0.04 per share, for the nine months ended September 30, 2011.

Adjusted Earnings for the nine months ended September 30, 2012 were $2.5 million, or $0.03 per share, compared to $4.0 million, or $0.05 per share, during the comparable period in 2011.

Operations Review

Las Vegas Locals

In the Las Vegas Locals segment, third-quarter 2012 net revenues were $138.8 million, compared to $145.9 million in the year-ago period. Third-quarter 2012 Adjusted EBITDA was $24.3 million, compared to $30.8 million in the third quarter of 2011. To improve our performance in the Locals market, we are implementing measures to grow business volumes from casual players, including a significant expansion of our low-denomination slot product.

Downtown

The Company’s Downtown Las Vegas business generated net revenues of $53.5 million for the third quarter 2012, up slightly from the third quarter 2011. Adjusted EBITDA was $6.4 million, an increase of 5.8% from the year-ago quarter. Growth was driven primarily by effective marketing campaigns aimed at our Hawaiian customer base. Additionally, we saw improved revenue and profitability at our Hawaiian charter service, as changes in our weekly flight schedule allowed us to grow revenue-per-seat by about 12%.

Midwest and South

In the Midwest and South region, net revenues were $233.0 million, up 24.0% from the year-ago quarter, while Adjusted EBITDA rose 9.4%, or $4.2 million, to $48.7 million. Regional results were impacted by Hurricane Isaac, which forced the closure of the IP and Treasure Chest in late August, and disrupted business throughout the Gulf Coast region through mid-September. In addition, results reflect a favorable property tax adjustment in the year-ago quarter.

The IP contributed $49.1 million in net revenues and $9.6 million in EBITDA to regional results during the quarter. Net revenues at the property were even with the third quarter 2011 as compared to the property’s historical results, while EBITDA rose 35.4%. Improved operating efficiencies and the introduction of our B Connected player loyalty program drove significant EBITDA growth at the IP.

Borgata

Borgata reported third-quarter 2012 net revenues of $187.1 million, compared to $202.0 million in the third quarter of 2011. Adjusted EBITDA at the property was $33.4 million, compared to $50.3 million in the year-ago quarter. The declines were primarily the result of lower table game hold percentage and volume. We remain encouraged by strength in other segments of the business, as slot and hotel revenue increased year-over-year.

Peninsula Gaming Acquisition

The Company continues to make progress toward completing the acquisition of Peninsula Gaming, LLC. The transaction, announced on May 16, will add five properties to Boyd Gaming’s portfolio: the Kansas Star Casino, Hotel and Event Center in Mulvane, Kansas; Diamond Jo Casino in Dubuque, Iowa; Diamond Jo Casino in Worth County, Iowa; Evangeline Downs Racetrack and Casino in Opelousas, Louisiana; and Amelia Belle Casino in Amelia, Louisiana.

“We look forward to successfully completing this transformative transaction, which will strengthen our balance sheet and further diversify our operations,” Keith Smith said. “We have already secured regulatory approvals from Iowa and Louisiana, and Kansas regulators are scheduled to consider the transaction the week of November 12. Subject to regulatory approvals, we expect to complete the acquisition of Peninsula Gaming in the fourth quarter.”

Conference Call Information

Boyd Gaming will host its third-quarter 2012 conference call today, November 1, at 12:00 p.m. Eastern, on which the Company will provide guidance for the fourth quarter 2012. The conference call number is (866) 652-5200. 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=90411

Following the call’s completion, a replay will be available by dialing (877) 344-7529 today, November 1, beginning at 2:00 p.m. Eastern and continuing through Friday, November 9, at 9 a.m. Eastern. The conference number for the replay will be 10020383. The replay will also be available on the Internet at www.boydgaming.com.

Footnotes and Safe Harbor Statements

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, Adjusted Earnings Per Share (Adjusted EPS) and certain line items which intentionally exclude the effects of the consolidation of Borgata and/or LVE and/or both. The following discussion defines these terms and why we believe they are useful measures of our performance.

In the accompanying release, and the Company’s periodic reports filed with the Securities and Exchange Commission, Dania Jai-Alai’s results are included as part of total other operating costs and expenses. In addition, as of the same date, we reclassified the reporting of corporate expense to exclude it from our subtotal for Reportable Segment Adjusted EBITDA and include it as part of total other operating costs and expenses. Furthermore, in the Company’s periodic reports, corporate expense is presented to include its portion of share-based compensation expense.

EBITDA and Adjusted EBITDA

EBITDA is a commonly used measure of performance in our industry which we believe, when considered with measures calculated in accordance with GAAP, gives investors a more complete understanding of 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 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 do not reflect such items when calculating EBITDA; however, we adjust for these items and refer to this measure as Adjusted EBITDA. 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 management in its 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 determining the value of acquisitions and dispositions. Adjusted EBITDA is also widely 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, write-downs and other charges, net, increase in value of derivative instruments, gain on early retirements of debt, other non-operating expenses, and our share of Borgata’s non-operating expenses, preopening expenses and other items and write-downs, net. In addition, Adjusted EBITDA includes corporate expense. A reconciliation of Adjusted EBITDA to net income (loss), based upon GAAP, is included in the financial schedules accompanying this release.

Adjusted Earnings and Adjusted EPS

Adjusted Earnings is net income (loss) before preopening expenses, adjustments to prior-year property taxes, increase in value of derivative instruments, write-downs and other charges, net, gain on early retirements of debt, acquisition-related expenses, expenses related to a property closure due to flooding, other non-operating expenses, valuation adjustments related to the consolidation of Borgata, and our share of Borgata’s preopening expenses and other items and write-downs, net. 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. A reconciliation of net loss based upon GAAP to Adjusted Earnings and Adjusted EPS are included in the financial schedules accompanying this release.

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 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 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 anticipated acquisition of Peninsula Gaming, the timing for completion of such acquisition and the anticipated benefits from such transaction, including strengthen the Company’s balance sheet and diversifying its operations; the anticipated benefits from new development arrangements with Wilton Rancheria and SSE, the expectation that legislation and other regulations will pass permitting these developments, and the timing for the approvals for such developments; the continued strength in the Company’s Midwest and South region and that upon the closing of the acquisition of Peninsula Gaming, more than two-thirds of the Company’s wholly-owned EBITDA will be generated by properties in regional markets; that these regional markets represent the strongest segment of the domestic gaming industry; that the Company will focus on generating sustainable long-term growth, continuing to manage our operations efficiently and strengthening our balance sheet in the future; the roll out of new slot games and expanding product offerings; that the locals marked has shown sustained growth; the expected benefits from introducing B Connected to the IP; that marketing costs will be refined and synergies will be realized at the IP; the impact of new competition on Borgata; and that the Company believes that it will be able to drive significant efficiencies and generate additional revenue through cross-marketing opportunities. 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 satisfaction to the various conditions to the Company’s pending acquisition of Peninsula Gaming, and whether such conditions will be satisfied when expected, if at all; the availability of financing for such acquisition on terms that are acceptable to the Company, if at all; the receipt of legislative, and other state, federal and local approvals for the pending acquisition and the Company’s development projects in Florida and other jurisdictions; 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 17 gaming entertainment properties located in Nevada, New Jersey, Mississippi, Illinois, Indiana, and Louisiana. Boyd Gaming press releases are available at www.prnewswire.com. Additional news and information on Boyd Gaming can be found at www.boydgaming.com.

    The results of IP are included in our condensed consolidated statements of operations for the three and nine months ended September 30, 2012.

                                               Three Months Ended                         Nine Months Ended
                                                 September 30,                              September 30,
                                                 -------------                              -------------
                                                                   2012                                       2011                                      2012        2011
                                                                   ----                                       ----                                      ----        ----
                                           (in thousands, except per share data)
    Revenues
        Gaming                                                 $516,991                                   $500,824                                $1,567,792  $1,469,316
        Food and beverage                                       106,722                                     99,221                                   318,123     285,883
        Room                                                     69,964                                     64,831                                   205,589     181,881
        Other                                                    38,958                                     34,105                                   110,615     100,412
                                                                 ------                                     ------                                   -------     -------
    Gross revenues                                              732,635                                    698,981                                 2,202,119   2,037,492
        Less promotional
         allowances                                             119,356                                    108,766                                   340,535     307,928
            Net revenues                                        613,279                                    590,215                                 1,861,584   1,729,564
                                                                -------                                    -------                                 ---------   ---------

    Costs and expenses
        Gaming                                                  253,196                                    230,675                                   742,404     680,457
        Food and beverage                                        55,014                                     50,868                                   169,451     148,516
        Room                                                     13,605                                     13,586                                    43,671      39,921
        Other                                                    29,960                                     28,617                                    82,712      82,191
        Selling, general
         and administrative                                     113,148                                     96,301                                   333,319     288,872
        Maintenance and
         utilities                                               38,114                                     40,925                                   116,447     115,113
        Depreciation and
         amortization                                            50,409                                     46,034                                   151,125     145,106
        Corporate expense                                        10,317                                     11,025                                    36,197      36,569
        Preopening expense                                        1,618                                      1,720                                     5,488       5,292
        Other operating
         items, net                                                (450)                                     2,300                                    (2,399)      9,269
                                                                   ----                                      -----                                    ------       -----
            Total costs and
             expenses                                           564,931                                    522,051                                 1,678,415   1,551,306
    Operating income                                             48,348                                     68,164                                   183,169     178,258
                                                                 ------                                     ------                                   -------     -------

    Other expense
     (income)
        Interest income                                            (272)                                       (15)                                     (684)        (40)
        Interest expense,
         net of amounts
         capitalized                                             74,115                                     60,083                                   202,731     184,068
        Fair value
         adjustment of
         derivative
         instruments                                                  -                                          -                                         -         265
        Gain on early
         retirements of
         debt, net                                                    -                                        (54)                                        -         (34)
        Other income                                                  -                                     (1,000)                                        -      (1,000)
            Total other
             expense, net                                        73,843                                     59,014                                   202,047     183,259
                                                                 ------                                     ------                                   -------     -------

    Income (loss)
     before income
     taxes                                                      (25,495)                                     9,150                                   (18,878)     (5,001)
    Income taxes                                                  8,413                                     (2,170)                                    7,580          28
                                                                  -----                                     ------                                     -----         ---
    Net income (loss)                                           (17,082)                                     6,980                                   (11,298)     (4,973)
    Net loss
     attributable to
     noncontrolling
     interest                                                     1,286                                     (3,871)                                    2,331       1,610
    Net income (loss)
     attributable to
     Boyd Gaming
     Corporation                                               $(15,796)                                    $3,109                                   $(8,967)    $(3,363)
                                                               ========                                     ======                                   =======     =======

    Basic net income
     (loss) per common
     share                                                       $(0.18)                                     $0.04                                    $(0.10)     $(0.04)
                                                                 ======                                      =====                                    ======      ======

    Weighted average
     basic shares
     outstanding                                                 87,643                                     87,256                                    87,587      87,206
                                                                 ======                                     ======                                    ======

    Diluted net income
     (loss) per common
     share                                                       $(0.18)                                     $0.04                                    $(0.10)     $(0.04)
                                                                 ======                                      =====                                    ======      ======

    Weighted average
     diluted shares
     outstanding                                                 87,643                                     87,432                                    87,587      87,206
                                                                 ======                                     ======                                    ======      ======

    The following table sets forth the impact of the consolidation of Borgata and LVE during the three months ended September 30, 2012. The wholly-owned column reflects the equity method of accounting for Borgata.  The consolidating columns are presented for purposes of additional disclosure and as a reconciliation to the
     current GAAP presentation of Boyd Gaming Corporation.

                                                                                Three Months Ended September 30, 2012
                                                                                -------------------------------------
                                                                  Boyd Gaming                                                                                  Borgata                                     Boyd/Borgata                                 LVE (Variable                                     LVE                       Boyd Gaming
                                                                 Wholly-Owned                                      Borgata                                  Eliminations                                     Subtotal                                  Interest Entity)                              Eliminations                   Consolidated
                                                                 ------------                                      -------                                  ------------                                     --------                                  ---------------                               ------------                   ------------
                                                                                (in thousands, except per share data)
    Revenues
             Gaming                                                              $354,631                                   $162,360                          $                  -                                       $516,991                         $                 -                           $                -                       $516,991
             Food and beverage                                                     66,488                                     40,234                                             -                                        106,722                                           -                                            -                        106,722
             Room                                                                  35,744                                     34,220                                             -                                         69,964                                           -                                            -                         69,964
             Other                                                                 26,149                                     12,809                                             -                                         38,958                                       2,724                                       (2,724)                        38,958
                                                                                    -----
    Gross revenues                                                                483,012                                    249,623                                             -                                        732,635                                       2,724                                       (2,724)                       732,635
           Less promotional allowances                                             56,824                                     62,532                                             -                                        119,356                                           -                                            -                        119,356
                 Net revenues                                                     426,188                                    187,091                                             -                                        613,279                                       2,724                                       (2,724)                       613,279
                                                                                  -------

    Costs and expenses
             Gaming                                                               185,604                                     67,592                                             -                                        253,196                                           -                                            -                        253,196
             Food and beverage                                                     35,270                                     19,744                                             -                                         55,014                                           -                                            -                         55,014
             Room                                                                   9,615                                      3,990                                             -                                         13,605                                           -                                            -                         13,605
             Other                                                                 18,930                                     11,030                                             -                                         29,960                                           -                                            -                         29,960
              Selling, general and
              administrative                                                       77,674                                     35,470                                             -                                        113,144                                           4                                            -                        113,148
             Maintenance and utilities                                             22,200                                     15,914                                             -                                         38,114                                           -                                            -                         38,114
             Depreciation and amortization                                         34,101                                     16,308                                             -                                         50,409                                           -                                            -                         50,409
             Corporate expense                                                     10,317                                          -                                             -                                         10,317                                           -                                            -                         10,317
             Preopening expense                                                     4,342                                          -                                             -                                          4,342                                           -                                       (2,724)                         1,618
             Other operating items, net                                             1,174                                     (1,624)                                            -                                           (450)                                          -                                            -                           (450)
                                                                                    -----
                  Total costs and expenses                                        399,227                                    168,424                                             -                                        567,651                                           4                                       (2,724)                       564,931

    Operating loss from Borgata                                                    (9,333)                                         -                                         9,333                                              -                                           -                                            -                              -
                                                                                   ------                                        ---                                         -----                                            ---                                         ---                                          ---                            ---

    Operating income                                                               36,294                                     18,667                                        (9,333)                                        45,628                                       2,720                                            -                         48,348
                                                                                   ------                                     ------                                        ------                                         ------                                       -----                                          ---                         ------

    Other expense (income)
             Interest income                                                         (272)                                         -                                             -                                           (272)                                          -                                            -                           (272)
              Interest expense, net of amounts
              capitalized                                                          50,379                                     20,755                                             -                                         71,134                                       2,981                                            -                         74,115
              Other non-operating expenses from
              Borgata, net                                                         10,359                                                                                  (10,359)                                             -                                           -                                            -                              -
                  Total other expense, net                                         60,466                                     20,755                                       (10,359)                                        70,862                                       2,981                                            -                         73,843
                                                                                   ------

    Income  (loss) before
     income taxes                                                                 (24,172)                                    (2,088)                                        1,026                                        (25,234)                                       (261)                                           -                        (25,495)
    Income taxes                                                                    8,376                                         37                                             -                                          8,413                                           -                                            -                          8,413
                                                                                    -----                                        ---                                           ---                                          -----                                         ---                                          ---                          -----

    Net income (loss)                                                             (15,796)                                    (2,051)                                        1,026                                        (16,821)                                       (261)                                           -                        (17,082)
    Net loss attributable to
     noncontrolling interest                                                            -                                          -                                         1,025                                          1,025                                         261                                            -                          1,286
                                                                                      ---                                        ---                                         -----                                          -----                                         ---                                          ---                          -----

    Net loss attributable to
     Boyd Gaming Corp                                                            $(15,796)                                   $(2,051)                                       $2,051                                       $(15,796)                        $                 -                           $                -                       $(15,796)
                                                                                 ========                                    =======                                        ======                                       ========                         ===================                           ==================                       ========

    Basic net loss per common
     share                                                                         $(0.18)                                                                                                                                                                                                                                                         $(0.18)
                                                                                   ======                                                                                                                                                                                                                                                          ======

    Weighted average basic
     shares outstanding                                                            87,643                                                                                                                                                                                                                                                          87,643
                                                                                   ======                                                                                                                                                                                                                                                          ======

    Diluted net loss per common
     share                                                                         $(0.18)                                                                                                                                                                                                                                                         $(0.18)
                                                                                   ======                                                                                                                                                                                                                                                          ======

    Weighted average diluted
     shares outstanding                                                            87,643                                                                                                                                                                                                                                                          87,643
                                                                                   ======                                                                                                                                                                                                                                                          ======

    The following table sets forth the impact of the consolidation of Borgata and LVE during the three months ended September 30, 2011.  The wholly-owned column reflects the equity method of accounting for Borgata. The consolidating columns are presented for purposes of additional disclosure and as a reconciliation to the current GAAP
     presentation of Boyd Gaming Corporation.

                                                                                          Three Months Ended September 30, 2011
                                                                                         -------------------------------------
                                                                          Boyd Gaming                                                                                      Borgata                                      Boyd/Borgata                                   LVE (Variable                                       LVE                    Boyd Gaming
                                                                         Wholly-Owned                                      Borgata                                      Eliminations                                      Subtotal                                    Interest Entity)                                Eliminations               Consolidated
                                                                         ------------                                      -------                                      ------------                                      --------                                    ---------------                                 ------------               ------------
                                                                                          (in thousands, except per share data)
    Revenues
             Gaming                                                                     $324,086                                       $176,738                               $               -                                         $500,824                         $                  -                              $                -                 $500,824
             Food and beverage                                                            57,884                                         41,337                                               -                                           99,221                                            -                                               -                   99,221
             Room                                                                         31,762                                         33,069                                               -                                           64,831                                            -                                               -                   64,831
             Other                                                                        22,116                                         11,989                                               -                                           34,105                                        2,724                                          (2,724)                  34,105

    Gross revenues                                                                       435,848                                        263,133                                               -                                          698,981                                        2,724                                          (2,724)                 698,981
          Less promotional allowances                                                     47,651                                         61,115                                               -                                          108,766                                            -                                               -                  108,766
                  Net revenues                                                           388,197                                        202,018                                               -                                          590,215                                        2,724                                          (2,724)                 590,215

    Costs and expenses
             Gaming                                                                      161,732                                         68,943                                               -                                          230,675                                            -                                               -                  230,675
             Food and beverage                                                            31,409                                         19,459                                               -                                           50,868                                            -                                               -                   50,868
             Room                                                                          9,480                                          4,106                                               -                                           13,586                                            -                                               -                   13,586
             Other                                                                        18,550                                         10,067                                               -                                           28,617                                            -                                               -                   28,617
              Selling, general and
              administrative                                                              63,442                                         32,859                                               -                                           96,301                                            -                                               -                   96,301
             Maintenance and utilities                                                    24,250                                         16,656                                               -                                           40,906                                           19                                               -                   40,925
             Depreciation and amortization                                                30,871                                         15,163                                               -                                           46,034                                            -                                               -                   46,034
             Corporate expense                                                            11,025                                              -                                               -                                           11,025                                            -                                               -                   11,025
             Preopening expense                                                            4,444                                              -                                               -                                            4,444                                            -                                          (2,724)                   1,720
             Other operating items, net                                                    2,306                                             (6)                                              -                                            2,300                                            -                                               -                    2,300

                  Total costs and expenses                                               357,509                                        167,247                                               -                                          524,756                                           19                                          (2,724)                 522,051

    Operating income from
     Borgata                                                                              17,385                                              -                                         (17,385)                                               -                                            -                                               -                        -

    Operating income                                                                      48,073                                         34,771                                         (17,385)                                          65,459                                        2,705                                               -                   68,164
                                                                                          ------                                         ------                                         -------                                           ------                                        -----                                             ---                   ------

    Other expense (income)
             Interest income                                                                 (15)                                             -                                               -                                              (15)                                           -                                               -                      (15)
              Interest expense, net of amounts
              capitalized                                                                 34,086                                         20,995                                               -                                           55,081                                        5,002                                               -                   60,083
              Fair value adjustment of
              derivative instruments                                                           -                                              -                                               -                                                -                                            -                                               -                        -
              Gain on early retirements of debt,
              net                                                                              -                                            (54)                                              -                                              (54)                                           -                                               -                      (54)
             Other income                                                                 (1,000)                                             -                                               -                                           (1,000)                                           -                                               -                   (1,000)
              Other non-operating expenses from
              Borgata, net                                                                11,215                                              -                                         (11,215)                                               -                                            -                                               -                        -

                  Total other expense, net                                                44,286                                         20,941                                         (11,215)                                          54,012                                        5,002                                               -                   59,014

    Income (loss) before income
     taxes                                                                                 3,787                                         13,830                                          (6,170)                                          11,447                                       (2,297)                                              -                    9,150
    Income taxes                                                                            (678)                                        (1,492)                                              -                                           (2,170)                                           -                                               -                   (2,170)
                                                                                            ----                                         ------                                             ---                                           ------                                          ---                                             ---                   ------

    Net income (loss)                                                                      3,109                                         12,338                                          (6,170)                                           9,277                                       (2,297)                                              -                    6,980
    Net income attributable to
     noncontrolling interest                                                                   -                                              -                                          (6,168)                                          (6,168)                                       2,297                                               -                   (3,871)
                                                                                             ---                                            ---                                          ------                                           ------                                        -----                                             ---                   ------

    Net income attributable to
     Boyd Gaming Corp                                                                     $3,109                                        $12,338                                        $(12,338)                                          $3,109                         $                  -                              $                -                   $3,109
                                                                                          ======                                        =======                                        ========                                           ======                         ====================                              ==================                   ======

    Basic net income per common
     share                                                                                 $0.04                                                                                                                                                                                                                                                                 $0.04
                                                                                           =====                                                                                                                                                                                                                                                                 =====

    Weighted average basic
     shares outstanding                                                                   87,256                                                                                                                                                                                                                                                                87,256
                                                                                          ======                                                                                                                                                                                                                                                                ======

    Diluted net income per
     common share                                                                          $0.04                                                                                                                                                                                                                                                                 $0.04
                                                                                           =====                                                                                                                                                                                                                                                                 =====

    Weighted average diluted
     shares outstanding                                                                   87,432                                                                                                                                                                                                                                                                87,432
                                                                                          ======                                                                                                                                                                                                                                                                ======

    The following table sets forth the impact of the consolidation of Borgata and LVE during the nine months ended September 30, 2012. The wholly-owned column reflects the equity method of accounting for Borgata. The consolidating columns are presented for purposes of additional disclosure and as a reconciliation to the current GAAP
     presentation of Boyd Gaming Corporation.

                                                                                           Nine Months Ended September 30, 2012
                                                                                           ------------------------------------
                                                                          Boyd Gaming                                                                                     Borgata                                    Boyd/Borgata                                  LVE (Variable                                     LVE                       Boyd Gaming
                                                                         Wholly-Owned                                       Borgata                                    Eliminations                                    Subtotal                                  Interest Entity)                               Eliminations                   Consolidated
                                                                         ------------                                       -------                                    ------------                                    --------                                   ---------------                               ------------                   ------------
                                                                                          (in thousands, except per share data)
    Revenues
             Gaming                                                                   $1,097,507                                       $470,285                           $                -                                     $1,567,792                         $                  -                           $                -                      $1,567,792
             Food and beverage                                                           205,773                                        112,350                                            -                                        318,123                                            -                                            -                         318,123
             Room                                                                        114,541                                         91,048                                            -                                        205,589                                            -                                            -                         205,589
             Other                                                                        79,068                                         31,547                                            -                                        110,615                                        8,172                                       (8,172)                        110,615

    Gross revenues                                                                     1,496,889                                        705,230                                            -                                      2,202,119                                        8,172                                       (8,172)                      2,202,119
          Less promotional allowances                                                    173,962                                        166,573                                            -                                        340,535                                            -                                            -                         340,535
                  Net revenues                                                         1,322,927                                        538,657                                            -                                      1,861,584                                        8,172                                       (8,172)                      1,861,584

    Costs and expenses
             Gaming                                                                      547,179                                        195,225                                            -                                        742,404                                            -                                            -                         742,404
             Food and beverage                                                           112,918                                         56,533                                            -                                        169,451                                            -                                            -                         169,451
             Room                                                                         32,727                                         10,944                                            -                                         43,671                                            -                                            -                          43,671
             Other                                                                        57,367                                         25,345                                            -                                         82,712                                            -                                            -                          82,712
              Selling, general and
              administrative                                                             230,307                                        102,999                                            -                                        333,306                                           13                                            -                         333,319
             Maintenance and utilities                                                    71,803                                         44,644                                            -                                        116,447                                            -                                            -                         116,447
             Depreciation and amortization                                               103,673                                         47,452                                            -                                        151,125                                            -                                            -                         151,125
             Corporate expense                                                            36,197                                              -                                            -                                         36,197                                            -                                            -                          36,197
             Preopening expense                                                           13,420                                            240                                            -                                         13,660                                            -                                       (8,172)                          5,488
             Other operating items, net                                                    1,413                                         (3,812)                                           -                                         (2,399)                                           -                                            -                          (2,399)

                  Total costs and expenses                                             1,207,004                                        479,570                                            -                                      1,686,574                                           13                                       (8,172)                      1,678,415

    Operating loss from Borgata                                                          (29,543)                                             -                                       29,543                                              -                                            -                                            -                               -
                                                                                         -------                                            ---                                       ------                                            ---                                          ---                                          ---                             ---

    Operating income                                                                     145,466                                         59,087                                      (29,543)                                       175,010                                        8,159                                            -                         183,169
                                                                                         -------                                         ------                                      -------                                        -------                                        -----                                          ---                         -------

    Other expense (income)
             Interest income                                                                (684)                                             -                                            -                                           (684)                                           -                                            -                            (684)
              Interest expense, net of amounts
              capitalized                                                                131,823                                         61,885                                            -                                        193,708                                        9,023                                            -                         202,731
              Other non-operating expenses from
              Borgata, net                                                                31,010                                              -                                      (31,010)                                             -                                            -                                            -                               -
                  Total other expense, net                                               162,149                                         61,885                                      (31,010)                                       193,024                                        9,023                                            -                         202,047

    Income  (loss) before
     income taxes                                                                        (16,683)                                        (2,798)                                       1,467                                        (18,014)                                        (864)                                           -                         (18,878)
    Income taxes                                                                           7,716                                           (136)                                           -                                          7,580                                            -                                            -                           7,580
                                                                                           -----                                           ----                                          ---                                          -----                                          ---                                          ---                           -----

    Net income (loss)                                                                     (8,967)                                        (2,934)                                       1,467                                        (10,434)                                        (864)                                           -                         (11,298)
    Net loss attributable to
     noncontrolling interest                                                                   -                                              -                                        1,467                                          1,467                                          864                                            -                           2,331
                                                                                             ---                                            ---                                        -----                                          -----                                          ---                                          ---                           -----

    Net loss attributable to
     Boyd Gaming Corp                                                                    $(8,967)                                       $(2,934)                                      $2,934                                        $(8,967)                        $                  -                           $                -                         $(8,967)
                                                                                         =======                                        =======                                       ======                                        =======                         ====================                           ==================                         =======

    Basic net loss per common
     share                                                                                $(0.10)                                                                                                                                                                                                                                                              $(0.10)
                                                                                          ======                                                                                                                                                                                                                                                               ======

    Weighted average basic
     shares outstanding                                                                   87,587                                                                                                                                                                                                                                                               87,587
                                                                                          ======                                                                                                                                                                                                                                                               ======

    Diluted net loss per common
     share                                                                                $(0.10)                                                                                                                                                                                                                                                              $(0.10)
                                                                                          ======                                                                                                                                                                                                                                                               ======

    Weighted average diluted
     shares outstanding                                                                   87,587                                                                                                                                                                                                                                                               87,587
                                                                                          ======                                                                                                                                                                                                                                                               ======

    The following table sets forth the impact of the consolidation of Borgata and LVE during the nine months ended September 30, 2011. The wholly-owned column reflects the equity method of accounting for Borgata. The consolidating columns are presented for purposes of additional disclosure and as a reconciliation to the current GAAP
     presentation of Boyd Gaming Corporation.

                                                                                          Nine Months Ended September 30, 2011
                                                                                          ------------------------------------
                                                                         Boyd Gaming                                                                                      Borgata                                     Boyd/Borgata                                   LVE (Variable                                       LVE                   Boyd Gaming
                                                                         Wholly-Owned                                      Borgata                                     Eliminations                                     Subtotal                                    Interest Entity)                                Eliminations               Consolidated
                                                                         ------------                                      -------                                     ------------                                     --------                                    ---------------                                 ------------               ------------
                                                                                          (in thousands, except per share data)
    Revenues
             Gaming                                                                     $978,584                                       $490,732                            $                 -                                     $1,469,316                            $                  -                           $                -                  $1,469,316
             Food and beverage                                                           173,023                                        112,860                                              -                                        285,883                                               -                                            -                     285,883
             Room                                                                         92,704                                         89,177                                              -                                        181,881                                               -                                            -                     181,881
             Other                                                                        68,523                                         31,889                                              -                                        100,412                                           8,134                                       (8,134)                    100,412

    Gross revenues                                                                     1,312,834                                        724,658                                              -                                      2,037,492                                           8,134                                       (8,134)                  2,037,492
          Less promotional allowances                                                    137,134                                        170,794                                              -                                        307,928                                               -                                            -                     307,928
                  Net revenues                                                         1,175,700                                        553,864                                              -                                      1,729,564                                           8,134                                       (8,134)                  1,729,564

    Costs and expenses
             Gaming                                                                      481,089                                        199,368                                              -                                        680,457                                               -                                            -                     680,457
             Food and beverage                                                            95,101                                         53,415                                              -                                        148,516                                               -                                            -                     148,516
             Room                                                                         28,925                                         10,996                                              -                                         39,921                                               -                                            -                      39,921
             Other                                                                        56,270                                         25,921                                              -                                         82,191                                               -                                            -                      82,191
              Selling, general and
              administrative                                                             192,467                                         96,405                                              -                                        288,872                                               -                                            -                     288,872
             Maintenance and utilities                                                    66,670                                         47,493                                              -                                        114,163                                             950                                            -                     115,113
             Depreciation and amortization                                                94,529                                         50,577                                              -                                        145,106                                               -                                            -                     145,106
             Corporate expense                                                            36,569                                              -                                              -                                         36,569                                               -                                            -                      36,569
             Preopening expense                                                           13,334                                             92                                              -                                         13,426                                               -                                       (8,134)                      5,292
             Other operating items, net                                                    3,510                                          5,759                                              -                                          9,269                                               -                                            -                       9,269

                  Total costs and expenses                                             1,068,464                                        490,026                                              -                                      1,558,490                                             950                                       (8,134)                  1,551,306

    Operating income from
     Borgata                                                                              31,919                                              -                                        (31,919)                                             -                                               -                                            -                           -
                                                                                          ------                                            ---                                        -------                                            ---                                             ---                                          ---                         ---

    Operating income                                                                     139,155                                         63,838                                        (31,919)                                       171,074                                           7,184                                            -                     178,258
                                                                                         -------                                         ------                                        -------                                        -------                                           -----                                          ---                     -------

    Other expense (income)
             Interest income                                                                 (40)                                             -                                              -                                            (40)                                              -                                            -                         (40)
              Interest expense, net of amounts
              capitalized                                                                114,026                                         59,606                                              -                                        173,632                                          10,436                                            -                     184,068
              Fair value adjustment of
              derivative instruments                                                         265                                              -                                              -                                            265                                               -                                            -                         265
              Gain on early retirements of debt,
              net                                                                             20                                            (54)                                             -                                            (34)                                              -                                            -                         (34)
             Other income                                                                 (1,000)                                             -                                              -                                         (1,000)                                              -                                            -                      (1,000)
              Other non-operating expenses from
              Borgata, net                                                                30,275                                              -                                        (30,275)                                             -                                               -                                            -                           -
                  Total other expense, net                                               143,546                                         59,552                                        (30,275)                                       172,823                                          10,436                                            -                     183,259

    Income (loss) before income
     taxes                                                                                (4,391)                                         4,286                                         (1,644)                                        (1,749)                                         (3,252)                                           -                      (5,001)
    Income taxes                                                                           1,028                                         (1,001)                                             -                                             28                                               -                                            -                          28
                                                                                           -----                                         ------                                            ---                                            ---                                             ---                                          ---                         ---

    Net income (loss)                                                                    $(3,363)                                        $3,285                                        $(1,644)                                       $(1,722)                                        $(3,252)                          $                -                     $(4,973)
    Net (income) loss
     attributable to
     noncontrolling interest                                                                   -                                              -                                         (1,641)                                        (1,641)                                          3,252                                            -                       1,610
                                                                                             ---                                            ---                                         ------                                         ------                                           -----                                          ---                       -----

    Net loss attributable to
     Boyd Gaming Corp                                                                    $(3,363)                                        $3,285                                        $(3,285)                                       $(3,363)                           $                  -                           $                -                     $(3,363)
                                                                                         =======                                         ======                                        =======                                        =======                            ====================                           ==================                     =======

    Basic net loss per common
     share                                                                                $(0.04)                                                                                                                                                                                                                                                               $(0.04)
                                                                                          ======                                                                                                                                                                                                                                                                ======

    Weighted average basic
     shares outstanding                                                                   87,206                                                                                                                                                                                                                                                                87,206
                                                                                          ======                                                                                                                                                                                                                                                                ======

    Diluted net loss per common
     share                                                                                $(0.04)                                                                                                                                                                                                                                                               $(0.04)
                                                                                          ======                                                                                                                                                                                                                                                                ======

    Weighted average diluted
     shares outstanding                                                                   87,206                                                                                                                                                                                                                                                                87,206
                                                                                          ======                                                                                                                                                                                                                                                                ======

    The following tables reconcile Adjusted earnings (loss) and Adjusted earnings (loss) per share to Net income (loss) attributable to Boyd Gaming Corporation and
     Net income (loss) per share, respectively, as reported in accordance with GAAP. The weighted average shares outstanding represent the shares used in the
     diluted net income per share computations, except to the extent such common share equivalents are anti-dilutive. Also, during periods in which our adjusted
     earnings result in a loss, our basic shares outstanding are used in the computation of Adjusted loss per share, as any common share equivalents would be anti-
     dilutive.

                                            Three Months Ended                   Nine Months Ended
                                              September 30,                        September 30,
                                              -------------                        -------------
                                                 2012                 2011                  2012                  2011
                                                 ----                 ----                  ----                  ----
                                                (in thousands, except per share data)
    Net income (loss)
     attributable to
     Boyd Gaming
     Corporation                             $(15,796)              $3,109               $(8,967)              $(3,363)
                                             --------               ------               -------               -------
       Adjustments related
        to Boyd Gaming:
    Preopening expense,
     excluding impact of
     LVE                                        4,342                4,444                13,420                13,334
    Acquisition related
     expenses                                     645                1,874                 6,917                 2,244
    Gain on insurance
     settlement, net of
     flood expense                                  -                    -                (6,091)                    -
    Miscellaneous non-
     recurring
     adjustments, net                             528                  406                   586                 1,240
    Adjustments to
     property tax
     accruals, net                               (658)              (3,926)               (1,255)               (7,464)
    Change in fair value
     of derivative
     instruments                                    -                    -                     -                   265
    Other income                                    -               (1,000)                    -                (1,000)
    Interest on
     acquisition
     financing                                  3,614                    -                 3,614                     -
    Loss on early
     retirements of
     debt, net                                      -                    -                     -                    20
        Adjustments related
         to Borgata:
    Other operating
     items, net                                (1,623)                  20                (3,811)                5,785
    Preopening expense                              -                    -                   240                    92
    Gain on early
     retirements of debt                            -                  (54)                    -                   (54)
    Other valuation
     adjustments related
     to consolidation,
     net                                          286                  649                   432                   322
                                                  ---                  ---                   ---                   ---
              Total adjustments                 7,134                2,413                14,052                14,784

          Income tax effect
           for above
           adjustments                         (1,454)                (587)               (4,170)               (4,332)
          Impact on
           noncontrolling
           interest, net                          669                 (308)                1,570                (3,073)
              Adjusted earnings
               (loss)                         $(9,447)              $4,627                $2,485                $4,016
                                              =======               ======                ======                ======

          Adjusted earnings
           (loss) per share                    $(0.11)               $0.05                 $0.03                 $0.05
                                               ======                =====                 =====                 =====

          Weighted average
           shares outstanding                  87,643               87,432                87,587                87,591
                                               ======               ======                ======                ======

    Net income (loss)
     per share                                 $(0.18)               $0.04                $(0.10)               $(0.04)
                                               ------                -----                ------                ------
       Adjustments related
        to Boyd Gaming:
    Preopening expense,
     excluding impact of
     LVE                                         0.05                 0.05                  0.15                  0.15
    Acquisition related
     expenses                                    0.01                 0.02                  0.08                  0.03
    Gain on insurance
     settlement, net of
     flood expense                                  -                    -                 (0.07)                    -
    Miscellaneous non-
     recurring
     adjustments, net                            0.01                    -                  0.01                  0.01
    Adjustments to
     property tax
     accruals, net                              (0.01)               (0.05)                (0.01)                (0.09)
    Other income
    Change in fair value
     of derivative
     instruments                                    -                    -                     -                     -
    Other income                                    -                (0.01)                    -                 (0.01)
    Interest on
     acquisition
     financing                                   0.04                    -                  0.04                     -
    Loss on early
     retirements of
     debt, net                                      -                    -                     -                     -
        Adjustments related
         to Borgata:
    Other operating
     items, net                                 (0.02)                   -                 (0.04)                 0.08
    Preopening expense                              -                    -                     -                     -
    Other valuation
     adjustments related
     to consolidation,
     net                                            -                 0.01                     -                     -
                                                  ---                 ----                   ---                   ---
              Total adjustments                  0.08                 0.02                  0.16                  0.17
          Income tax effect
           for above
           adjustments                          (0.02)               (0.01)                (0.05)                (0.05)
          Impact on
           noncontrolling
           interest, net                         0.01                    -                  0.02                 (0.03)
              Adjusted earnings
               (loss) per share                $(0.11)               $0.05                 $0.03                 $0.05
                                               ======                =====                 =====                 =====

    The following table presents Net Revenues and Adjusted EBITDA by operating segment and reconciles Adjusted EBITDA to Net income (loss) attributable to Boyd Gaming Corporation on
     our condensed consolidated statements of operations for the three  and nine months ended September 30, 2012 and 2011.  Note that the results from Dania Jai-Alai are classified
     as part of total other operating costs and expenses and are not included in Adjusted EBITDA.

                                           Three Months Ended                            Nine Months Ended
                                              September 30,                                September 30,
                                              -------------                                -------------
                                                 2012                   2011                     2012                     2011
                                                 ----                   ----                     ----                     ----
                                                                     (In thousands)
    Net Revenues
        Las Vegas Locals                     $138,787               $145,915                 $442,563                 $452,270
        Downtown Las Vegas                     53,547                 53,327                  166,494                  165,578
        Midwest and South
         (1)                                  232,965                187,906                  710,415                  553,787
        Atlantic City                         187,091                202,018                  538,657                  553,864
                                              -------                -------                  -------                  -------
                Reportable Segment
                 Net revenues                 612,390                589,166                1,858,129                1,725,499
        Other                                     889                  1,049                    3,455                    4,065
                Net revenues                 $613,279               $590,215               $1,861,584               $1,729,564
                                             --------               --------               ----------               ----------

    Adjusted EBITDA
        Las Vegas Locals                      $24,271                $30,793                  $97,292                 $109,006
        Downtown Las Vegas                      6,356                  6,005                   22,897                   24,375
        Midwest and South
         (1)                                   48,708                 44,524                  157,841                  128,011
                                               ------                 ------                  -------                  -------
            Wholly-owned
             Property Adjusted
             EBITDA                            79,335                 81,322                  278,030                  261,392
             Corporate expense                 (9,082)                (9,570)                 (29,756)                 (29,826)
                                               ------                 ------                  -------                  -------
             Wholly-owned
              Adjusted EBITDA                  70,253                 71,752                  248,274                  231,566
        Atlantic City                          33,350                 50,287                  102,966                  120,626
                Adjusted EBITDA              $103,603               $122,039                 $351,240                 $352,192
                                             --------               --------                 --------                 --------

    Unallocated costs and expenses
        Deferred rent                            $996                 $1,034                   $2,988                   $3,102
        Depreciation and
         amortization                          50,409                 46,034                  151,125                  145,106
        Preopening expenses                     1,618                  1,720                    5,488                    5,292
        Share-based
         compensation
         expense                                1,607                  1,787                    7,560                    7,740
        Other operating
         items, net                              (450)                 2,300                   (2,399)                   9,269
        Other                                   1,075                  1,000                    3,309                    3,425
                Total unallocated
                 costs and expenses            55,255                 53,875                  168,071                  173,934
                                               ------                 ------                  -------                  -------
    Operating income                           48,348                 68,164                  183,169                  178,258
                                               ------                 ------                  -------                  -------
    Other expense
        Interest expense,
         net                                   73,843                 60,068                  202,047                  184,028
        Fair value
         adjustment of
         derivative
         instruments                                -                      -                        -                      265
        Gain on early
         retirements of
         debt, net                                  -                    (54)                       -                      (34)
     Other income                                   -                 (1,000)                       -                   (1,000)
                Total other
                 expense, net                  73,843                 59,014                  202,047                  183,259
                                               ------                 ------                  -------                  -------
    Income (loss)
     before income
     taxes                                    (25,495)                 9,150                  (18,878)                  (5,001)
    Income taxes                                8,413                 (2,170)                   7,580                       28
                                                -----                 ------                    -----                      ---
    Net income (loss)                         (17,082)                 6,980                  (11,298)                  (4,973)
    Net (income) loss
     attributable to
     noncontrolling
     interest                                   1,286                 (3,871)                   2,331                    1,610
    Net income (loss)
     attributable to
     Boyd Gaming
     Corporation                             $(15,796)                $3,109                  $(8,967)                 $(3,363)
                                             ========                 ======                  =======                  =======

    (1) During the three and nine months ended September 30, 2012, IP provided $ 49.1 million and $ 145.4 million in Net Revenues and $ 9.6 million and $ 33.7 million in Wholly-owned
     Property Adjusted EBITDA, respectively.

    The following table reconciles the presentation of corporate expense on our condensed consolidated statements of operations to the presentation on
     the previous table.

                                            Three Months Ended                 Nine Months Ended
                                              September 30,                      September 30,
                                              -------------                      -------------
                                                2012                 2011                 2012                 2011
                                                ----                 ----                 ----                 ----
                                                              (in thousands)
    Corporate expense as
     reported on our
     consolidated
     statements of
     operations                              $10,317              $11,025              $36,197              $36,569
    Corporate share-
     based compensation
     expense                                  (1,235)              (1,455)              (6,441)              (6,743)
    Corporate expense as
     reported on the
     previous table                           $9,082               $9,570              $29,756              $29,826
                                              ======               ======              =======              =======

    The following table presents Borgata's condensed consolidated statements of operations for the three and nine months ended September 30, 2012 and 2011, as
     reflected in our condensed consolidated statements presented herein. These results present the impact  of certain valuation adjustments made upon
     consolidation; however, these adjustments were not pushed down to Borgata and are therefore not reflected in Borgata's stand alone financial statements.

                                          Three Months Ended                    Nine Months Ended
                                             September 30,                        September 30,
                                             -------------                        -------------
                                               2012                  2011                  2012                  2011
                                               ----                  ----                  ----                  ----
                                                              (in thousands)
    Revenues
        Gaming                             $162,360              $176,738              $470,285              $490,732
        Food and beverage                    40,234                41,337               112,350               112,860
        Room                                 34,220                33,069                91,048                89,177
        Other                                12,809                11,989                31,547                31,889
                                             ------                ------                ------                ------
    Gross revenues                          249,623               263,133               705,230               724,658
        Less promotional
         allowances                          62,532                61,115               166,573               170,794
            Net revenues                    187,091               202,018               538,657               553,864
                                            -------               -------               -------               -------

    Costs and expenses
        Gaming                               67,592                68,943               195,225               199,368
        Food and beverage                    19,744                19,459                56,533                53,415
        Room                                  3,990                 4,106                10,944                10,996
        Other                                11,030                10,067                25,345                25,921
        Selling, general
         and administrative                  35,470                32,859               102,999                96,405
        Maintenance and
         utilities                           15,914                16,656                44,644                47,493
        Depreciation and
         amortization                        16,308                15,163                47,452                50,577
        Preopening expense                        -                     -                   240                    92
        Other operating
         items, net                          (1,624)                   (6)               (3,812)                5,759
            Total costs and
             expenses                       168,424               167,247               479,570               490,026
                                            -------               -------               -------               -------
    Operating income                         18,667                34,771                59,087                63,838
                                             ------                ------                ------                ------

    Other expense
     (income)
        Interest expense,
         net of amounts
         capitalized                         20,755                20,995                61,885                59,606
     Gain on early
      retirements of
      debt                                        -                   (54)                    -                   (54)
            Total other
             expense, net                    20,755                20,941                61,885                59,552
                                             ------                ------                ------                ------
    Income (loss)
     before income
     taxes                                   (2,088)               13,830                (2,798)                4,286
    Income taxes                                 37                (1,492)                 (136)               (1,001)
    Net income (loss)                       $(2,051)              $12,338               $(2,934)               $3,285
                                            =======               =======               =======                ======

SOURCE Boyd Gaming Corporation


Source: PR Newswire