Boyd Gaming
BYD
#2679
Rank
โ‚น573.41 B
Marketcap
โ‚น7,596
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Change (1 year)

Boyd Gaming - 10-Q quarterly report FY


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1
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D. C. 20549

FORM 10-Q

(Mark One)
[ X ] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934

For the period ended June 30, 1999

OR

[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR
15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from __________ to __________
Commission file number 1-12168

BOYD GAMING CORPORATION
(Exact name of registrant as specified in its charter)

NEVADA 88-0242733
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)

2950 SOUTH INDUSTRIAL ROAD
LAS VEGAS, NEVADA
89109
(Address of principal executive offices)
(Zip Code)

(702) 792-7200
(Registrant's telephone number, including area code)

Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to filing requirements
for the past 90 days.

Yes [X] No [ ]

Shares outstanding of each of the Registrant's classes of common stock as of
July 30, 1999:

Class Outstanding
----- -----------
Common stock, $.01 par value 62,215,232
2

BOYD GAMING CORPORATION

QUARTERLY REPORT ON FORM 10-Q
FOR THE PERIOD ENDED JUNE 30, 1999

TABLE OF CONTENTS


PART I. FINANCIAL INFORMATION

<TABLE>
<CAPTION>
Page No.
--------
<S> <C>
Item 1. Unaudited Condensed Consolidated Financial Statements

Condensed Consolidated Balance Sheets at June 30, 1999
and December 31, 1998 3

Condensed Consolidated Statements of Operations for the
three and six month periods ended June 30, 1999 and 1998 4

Condensed Consolidated Statement of Changes in Stockholders'
Equity for the six month period ended June 30, 1999 5

Condensed Consolidated Statements of Cash Flows for the six
month periods ended June 30, 1999 and 1998 6

Notes to Condensed Consolidated Financial Statements 7

Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations 18

Item 3. Quantitative and Qualitative Disclosure about Market Risk 27

PART II. OTHER INFORMATION

Item 4. Submission of Matters to a Vote of Security Holders 27

Item 6. Exhibits and Reports on Form 8-K 28

Signature Page 29
</TABLE>



-2-
3
PART I. FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

BOYD GAMING CORPORATION AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS

<TABLE>
<CAPTION>
(UNAUDITED) JUNE 30, DECEMBER 31,
(IN THOUSANDS, EXCEPT SHARE DATA) 1999 1998
- -----------------------------------------------------------------------------------------------------
<S> <C> <C>
ASSETS

Current assets
Cash and cash equivalents $ 71,829 $ 75,937
Accounts receivable, net 17,922 21,988
Inventories 7,846 9,567
Prepaid expenses and other 15,023 17,333
Income taxes receivable 8,571 11,065
Deferred income taxes 2,782 5,855
---------- ----------
Total current assets 123,973 141,745

Property and equipment, net 764,289 763,207
Other assets and deferred charges 38,957 38,690
Goodwill and other intangible assets, net 199,899 202,614
---------- ----------

Total assets $1,127,118 $1,146,256
========== ==========

LIABILITIES AND STOCKHOLDERS' EQUITY

Current liabilities
Current maturities of long-term debt $ 1,444 $ 1,961
Accounts payable 30,268 32,065
Accrued liabilities
Payroll and related 25,724 29,465
Interest and other 54,371 54,162
---------- ----------
Total current liabilities 111,807 117,653

Long-term debt, net of current maturities 733,180 774,890

Deferred income taxes and other 34,960 26,407

Commitments and contingencies

Stockholders' equity
Preferred stock, $.01 par value; 5,000,000 shares authorized -- --
Common stock, $.01 par value; 200,000,000 shares authorized;
62,207,315 and 62,027,514 shares outstanding 622 620
Additional paid-in capital 141,872 140,616
Retained earnings 104,677 86,070
---------- ----------
Total stockholders' equity 247,171 227,306
---------- ----------
Total liabilities and stockholders' equity $1,127,118 $1,146,256
========== ==========
</TABLE>

The accompanying notes are an integral part of these
condensed consolidated financial statements.



-3-
4

BOYD GAMING CORPORATION AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS


<TABLE>
<CAPTION>
THREE MONTHS ENDED SIX MONTHS ENDED
(UNAUDITED) JUNE 30, JUNE 30,
------------------------ ------------------------
(IN THOUSANDS, EXCEPT PER SHARE DATA) 1999 1998 1999 1998
- ------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Revenues
Casino $ 178,222 $ 181,673 $ 357,755 $ 367,537
Food and beverage 39,977 40,246 80,945 82,508
Room 17,470 18,364 36,774 36,878
Other 18,746 17,474 36,091 35,741
Management fee 10,031 9,563 20,844 20,359
--------- --------- --------- ---------
Gross revenues 264,446 267,320 532,409 543,023
Less promotional allowances 22,510 21,835 47,215 47,496
--------- --------- --------- ---------
Net revenues 241,936 245,485 485,194 495,527
--------- --------- --------- ---------

Costs and expenses
Casino 89,067 91,567 179,365 186,975
Food and beverage 26,193 27,272 52,026 53,409
Room 5,941 6,708 12,183 12,482
Other 17,103 16,377 32,504 32,276
Selling, general and administrative 35,239 37,212 70,277 75,795
Maintenance and utilities 9,891 10,618 19,545 20,113
Depreciation and amortization 18,534 18,387 37,266 36,998
Corporate expense 6,587 5,686 12,689 10,586
Preopening expense 315 -- 854 --
Restructuring charge -- 5,925 -- 5,925
--------- --------- --------- ---------
Total 208,870 219,752 416,709 434,559
--------- --------- --------- ---------

Operating income 33,066 25,733 68,485 60,968
--------- --------- --------- ---------

Other income (expense)
Interest income 46 93 103 206
Interest expense, net of amounts capitalized (16,662) (18,747) (33,793) (38,019)
--------- --------- --------- ---------
Total (16,616) (18,654) (33,690) (37,813)
--------- --------- --------- ---------

Income before provision for income taxes and cumulative
effect of a change in accounting principle 16,450 7,079 34,795 23,155

Provision for income taxes 6,745 3,045 14,450 9,797
--------- --------- --------- ---------

Income before cumulative effect of a change in
accounting principle 9,705 4,034 20,345 13,358

Cumulative effect of a change in accounting for
start-up activities, net of tax benefit of $936 -- -- 1,738 --
--------- --------- --------- ---------

Net income $ 9,705 $ 4,034 $ 18,607 $ 13,358
========= ========= ========= =========

BASIC AND DILUTED NET INCOME PER COMMON SHARE
Income before cumulative effect of a change in
accounting principle $ 0.16 $ 0.07 $ 0.33 $ 0.22

Cumulative effect of a change in accounting for
start-up activities, net of tax -- -- (0.03) --
--------- --------- --------- ---------

Net income $ 0.16 $ 0.07 $ 0.30 $ 0.22
========= ========= ========= =========

Average basic shares outstanding 62,029 61,671 62,029 61,670
Average diluted shares outstanding 62,143 61,817 62,085 61,870
========= ========= ========= =========
</TABLE>

The accompanying notes are an integral part of these
condensed consolidated financial statements.



-4-
5

BOYD GAMING CORPORATION AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY
FOR THE SIX MONTH PERIOD ENDED JUNE 30, 1999
(UNAUDITED)

(IN THOUSANDS, EXCEPT SHARE DATA)
- --------------------------------------------------------------------------------


<TABLE>
<CAPTION>
COMMON STOCK ADDITIONAL TOTAL
---------------------------- PAID-IN RETAINED STOCKHOLDERS'
SHARES AMOUNT CAPITAL EARNINGS EQUITY
---------------------------- ------------------------------------------------
<S> <C> <C> <C> <C> <C>
Balances, January 1, 1999 62,027,514 $ 620 $ 140,616 $ 86,070 $ 227,306


Net income -- -- -- 18,607 18,607


Stock issued in connection with employee
stock purchase plan 179,801 2 1,256 -- 1,258
---------- ---------- ---------- ---------- ----------


Balances, June 30, 1999 62,207,315 $ 622 $ 141,872 $ 104,677 $ 247,171
========== ========== ========== ========== ==========
</TABLE>


The accompanying notes are an integral part of these
condensed consolidated financial statements.



-5-
6

BOYD GAMING CORPORATION AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS


<TABLE>
<CAPTION>
SIX MONTHS ENDED
(UNAUDITED) JUNE 30,
-------------------------
(IN THOUSANDS) 1999 1998
- ----------------------------------------------------------------------- -------------------------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES
Net income $ 18,607 $ 13,358
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation and amortization 37,266 36,998
Cumulative effect of a change in accounting for start-up activities 2,674 --
Deferred income taxes 11,238 3,797
Restructuring charge -- 5,925
Changes in assets and liabilities:
Accounts receivable, net 4,066 1,514
Inventories 1,721 182
Prepaid expenses and other (364) (1,693)
Income taxes receivable 2,494 1,668
Other assets (1,077) (2,231)
Other current liabilities (1,896) 7,534
Other liabilities 388 --
-------- --------
Net cash provided by operating activities 75,117 67,052
-------- --------


CASH FLOWS FROM INVESTING ACTIVITIES-
Acquisition of property, equipment and other assets (38,068) (22,440)
-------- --------


CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from issuance of common stock 1,070 762
Net payments under bank credit facility (41,250) (45,000)
Payments on long-term debt (977) (1,994)
-------- --------
Net cash used in financing activities (41,157) (46,232)
-------- --------

Net decrease in cash and cash equivalents (4,108) (1,620)

Cash and cash equivalents, beginning of period 75,937 78,277
-------- --------

Cash and cash equivalents, end of period $ 71,829 $ 76,657
======== ========

SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION
Cash paid for interest, net of amounts capitalized $ 35,172 $ 37,235
======== ========
Cash paid for income taxes $ 3,882 $ 4,946
======== ========
</TABLE>



The accompanying notes are an integral part of these
condensed consolidated financial statements.


-6-
7

BOYD GAMING CORPORATION AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
- --------------------------------------------------------------------------------


NOTE 1. - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Principles of Consolidation

The accompanying condensed consolidated financial statements include the
accounts of Boyd Gaming Corporation and its wholly-owned subsidiaries,
collectively referred to herein as the "Company". At June 30, 1999, the Company
owned and operated ten casino entertainment facilities located in Las Vegas,
Nevada, Tunica, Mississippi, East Peoria, Illinois, and Kenner, Louisiana as
well as a travel agency located in Honolulu, Hawaii. In addition, the Company
manages a casino entertainment facility in Philadelphia, Mississippi, for which
it has a seven year management contract that expires in June 2001. All material
intercompany accounts and transactions have been eliminated.

Basis of Presentation

In the opinion of management, the accompanying unaudited condensed consolidated
financial statements contain all adjustments, consisting only of normal
recurring adjustments, necessary to present fairly the results of its operations
and cash flows for the three and six month periods ended June 30, 1999 and 1998.
It is suggested that this report be read in conjunction with the Company's
audited consolidated financial statements included in the Annual Report on Form
10-K for the year ended December 31, 1998. The operating results for the three
and six month periods ended June 30, 1999 and 1998 and cash flows for the six
month period ended June 30, 1999 and 1998 are not necessarily indicative of the
results that will be achieved for the full year or for future periods.

Use of Estimates

The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions that
affect the reported amounts of assets and liabilities at the date of the
financial statements and the reported amounts of revenues and expenses during
the reporting period. Significant estimates used by the Company include the
estimated useful lives for depreciable and amortizable assets, the estimated
allowance for doubtful accounts receivable, the estimated valuation allowance
for deferred tax assets, and estimated cash flows used in assessing the
recoverability of long-lived assets. Actual results could differ from those
estimates.

Capitalized Interest

Interest costs associated with major construction projects are capitalized. When
no debt is incurred specifically for a project, interest is capitalized on
amounts expended for the project using the Company's weighted average cost of
borrowing. Capitalization of interest ceases when the project is substantially
complete. Capitalized interest during the three and six month periods ended June
30, 1999 was $0.3 million and $0.4 million, respectively. There were no such
interest costs capitalized during the three and six month periods ended June 30,
1998.



-7-
8

BOYD GAMING CORPORATION AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
- --------------------------------------------------------------------------------


Preopening Expenses

The American Institute of Certified Public Accountants issued Statement of
Position 98-5, "Reporting on the Costs of Start-Up Activities," which is
effective for fiscal years beginning after December 15, 1998. The statement
requires businesses to expense certain costs of start-up activities as incurred.
During the three and six month periods ended June 30, 1999, the Company expensed
$0.3 million and $0.9 million, respectively, in preopening costs that related
primarily to the Company's share of preopening expense in the Atlantic City
Joint Venture. The initial application of this statement in January 1999
required the Company to expense certain previously capitalized items as a
cumulative effect of a change in accounting principle. As such, the Company
reported a charge of $1.7 million, net of tax, to the consolidated statement of
operations during the three month period ended March 31, 1999 as the cumulative
effect of the change in accounting principle.

Recently Issued Accounting Standards

The Financial Accounting Standards Board issued Statement of Financial
Accounting Standards No. 133, "Accounting of Derivative Instruments and Hedging
Activities." This statement establishes accounting and reporting standards for
derivative instruments for fiscal years beginning after June 15, 2000. Based
upon the expiration date of the Company's current interest rate swap agreement,
management believes that the initial adoption of this statement will not have a
material impact on the consolidated financial statements.

NOTE 2. - NET INCOME PER COMMON SHARE

The Company has adopted Statement of Financial Accounting Standards No. 128,
"Earnings per Share" that requires the presentation of basic and diluted net
income per share. Basic per share amounts are computed by dividing net income by
the average shares outstanding during the period. Diluted per share amounts are
computed by dividing net income by average shares outstanding plus the dilutive
effect of common share equivalents. Diluted net income per share during the
three and six month periods ended June 30, 1999 and 1998 is determined
considering the dilutive effect of outstanding stock options. The effect of
stock options outstanding to purchase approximately 4.5 million and 4.6 million
shares, respectively, was not included in the diluted calculations during the
three and six month periods ended June 30, 1999 and 2.7 million shares was not
included in the dilution calculations during the three and six month periods
ended June 30, 1998 since the exercise price of such options was greater than
the average price of the Company's common shares during the periods.

NOTE 3. - DEBT

On July 21, 1999, the Company replaced its existing bank credit facility with a
new $600 million bank credit facility (the "New Bank Credit Facility"). The New
Bank Credit Facility consists of a $500 million revolver component (the
"Revolver") and a $100 million term loan component (the "Term Loan"), both of
which mature in June 2003. Availability under the Revolver will be reduced by
$15.6 million on December 31, 2001 and at the end of each quarter thereafter
until March 31, 2003. The Term Loan will be repaid in increments of $0.25
million per quarter beginning on September 30, 1999 through March 31, 2003. The
interest rate on the New Bank Credit Facility is based upon either the agent
bank's quoted base rate or the Eurodollar rate, plus an applicable margin that
is determined by the level of a predefined financial leverage ratio. In
addition, the Company incurs a commitment fee on the unused portion of the
Revolver which ranges from 0.375% to 0.50% per annum. The New Bank Credit
Facility is secured by the real and personal property



-8-
9

BOYD GAMING CORPORATION AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
- --------------------------------------------------------------------------------

of the Company and its subsidiaries, including ten casino properties. The
obligations of the Company under the New Bank Credit Facility are guaranteed by
certain significant subsidiaries of the Company.

The New Bank Credit Facility contains certain financial and other covenants
including, without limitation, various covenants (i) requiring the maintenance
of a minimum net worth, (ii) requiring the maintenance of a minimum interest
coverage ratio, (iii) establishing a maximum permitted total leverage ratio and
senior secured leverage ratio, (iv) imposing limitations on the incurrence of
additional indebtedness, (v) imposing limitations on the maximum permitted
expansion capital expenditures during the term of the New Bank Credit Facility,
(vi) imposing limits on the maximum permitted maintenance capital expenditures
during each year of the term of the New Bank Credit Facility, and (vii) imposing
restrictions on investments and certain other payments. Management believes the
Company and its subsidiaries are in compliance with the New Bank Credit Facility
covenants.

NOTE 4. - ACQUISITION

On June 27, 1999, the Company entered into a definitive agreement to acquire the
Blue Chip Casino, a riverboat casino in Michigan City, Indiana for $255 million
in cash. In addition, the Company will acquire a hotel and parking facility,
currently under construction and attached to the existing casino complex, for
$18.6 million. The transaction is currently expected to close in the fourth
quarter of 1999 and is conditioned upon, among other things, approval by the
Indiana Gaming Commission. The Company plans to fund the acquisition from
borrowings under the New Bank Credit Facility.

NOTE 5. - SEGMENT INFORMATION

The Company's management reviews the results of operations based on four
distinct geographic gaming market segments: the Stardust Resort and Casino on
the Las Vegas Strip, Boulder Strip Properties, Downtown Properties and Central
Region Properties. As used herein, "Boulder Strip Properties" consist of Sam's
Town Hotel and Gambling Hall, the Eldorado Casino, and Jokers Wild Casino;
"Downtown Properties" consist of the California Hotel and Casino, the Fremont
Hotel and Casino, Main Street Station Casino, Brewery and Hotel and Vacations
Hawaii; "Central Region Properties" consist of Sam's Town Hotel and Gambling
Hall located in Tunica, Mississippi, Sam's Town Kansas City (through July 15,
1998), Par-A-Dice Hotel and Casino, Treasure Chest Casino, and management fee
income from Silver Star Resort and Casino.



-9-
10

BOYD GAMING CORPORATION AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
- --------------------------------------------------------------------------------


<TABLE>
<CAPTION>
THREE MONTHS ENDED SIX MONTHS ENDED
JUNE 30, JUNE 30,
--------------------- ---------------------
(IN THOUSANDS) 1999 1998 1999 1998
-------- -------- -------- --------
<S> <C> <C> <C> <C>
Casino Revenue
Stardust $ 23,038 $ 26,635 $ 50,570 $ 53,590
Boulder Strip Properties 38,033 35,302 75,632 71,565
Downtown Properties 32,830 32,301 66,182 64,318
-------- -------- -------- --------
Nevada Region 93,901 94,238 192,384 189,473
Central Region 84,321 87,435 165,371 178,064
-------- -------- -------- --------
Total Casino Revenue $178,222 $181,673 $357,755 $367,537
======== ======== ======== ========

EBITDA (1)
Stardust $ 4,015 $ 7,059 $ 10,229 $ 13,569
Boulder Strip Properties 10,001 9,845 20,150 20,538
Downtown Properties 9,584 7,309 18,930 13,130
-------- -------- -------- --------
Nevada Region 23,600 24,213 49,309 47,237
Central Region 34,902 31,518 69,985 67,240
-------- -------- -------- --------
Property EBITDA 58,502 55,731 119,294 114,477
-------- -------- -------- --------

Other Costs and Expenses
Corporate expense 6,587 5,686 12,689 10,586
Depreciation and amortization 18,534 18,387 37,266 36,998
Preopening expense 315 -- 854 --
Restructuring charge -- 5,925 -- 5,925
Other expense, net 16,616 18,654 33,690 37,813
-------- -------- -------- --------
Total Other Costs and Expenses 42,052 48,652 84,499 91,322
-------- -------- -------- --------
Income before provision for income taxes
and cumulative effect of a change in
accounting principle 16,450 7,079 34,795 23,155
Provision for taxes 6,745 3,045 14,450 9,797
-------- -------- -------- --------
Income before cumulative effect of a change
in accounting principle 9,705 4,034 20,345 13,358
Cumulative effect of a change in accounting
for start-up activities, net -- -- 1,738 --
-------- -------- -------- --------
Net Income $ 9,705 $ 4,034 $ 18,607 $ 13,358
======== ======== ======== ========
</TABLE>

(1) EBITDA is earnings before interest, taxes, depreciation and amortization
expense, preopening expense and restructuring charge. The Company believes that
EBITDA is a useful financial measurement for assessing the operating
performance of its properties. EBITDA does not represent net income or cash
flows from operating, investing and financing activities as defined by
generally accepted accounting principles.



-10-
11

BOYD GAMING CORPORATION AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
- --------------------------------------------------------------------------------


NOTE 6. - GUARANTOR INFORMATION

The Company's $200 million of 9.25% Senior Notes (the "9.25% Notes") are
guaranteed by a majority of the Company's wholly-owned significant subsidiaries.
These guaranties are full, unconditional, and joint and several. The Company has
significant subsidiaries that do not guarantee the 9.25% Notes. As such, the
following consolidating schedules present separate condensed consolidating
financial statement information on a combined basis for the parent only, as well
as the Company's guarantor subsidiaries and non-guarantor subsidiaries, as of
June 30, 1999 and December 31, 1998 and for the three and six month periods
ended June 30, 1999 and 1998.



-11-
12

BOYD GAMING CORPORATION AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
- --------------------------------------------------------------------------------


CONDENSED CONSOLIDATING BALANCE SHEET INFORMATION AS OF JUNE 30, 1999

<TABLE>
<CAPTION>
COMBINED
COMBINED NON- ELIMINATION
(IN THOUSANDS) PARENT GUARANTORS GUARANTORS ENTRIES CONSOLIDATED
- ---------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
ASSETS
Current assets $ 17,479 $ 82,573 $ 25,537 $ (1,616){1} $ 123,973
Property and equipment, net 38,488 686,456 39,345 -- 764,289
Other assets and deferred charges 899,342 (467,690) 165,171 (557,866){1}{2} 38,957
Goodwill and other intangible assets, net -- 117,736 82,163 -- 199,899
---------- ---------- ---------- ---------- ----------
Total assets $ 955,309 $ 419,075 $ 312,216 $ (559,482) $1,127,118
========== ========== ========== ========== ==========

LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities $ 27,838 $ 63,825 $ 21,781 $ (1,637){1} $ 111,807
Long-term debt, net of current maturities 664,858 68,289 33 -- 733,180
Deferred income taxes and other 15,438 19,414 108 -- 34,960
Stockholders' equity 247,175 267,547 290,294 (557,845){2} 247,171
---------- ---------- ---------- ---------- ----------
Total liabilities and stockholders' equity $ 955,309 $ 419,075 $ 312,216 $ (559,482) $1,127,118
========== ========== ========== ========== ==========
</TABLE>

Elimination Entries

{1} - To eliminate intercompany payables and receivables.

{2} - To eliminate investment in subsidiaries and subsidiaries' equity.


CONDENSED CONSOLIDATING BALANCE SHEET INFORMATION AS OF DECEMBER 31, 1998


<TABLE>
<CAPTION>
COMBINED
COMBINED NON- ELIMINATION
(IN THOUSANDS) PARENT GUARANTORS GUARANTORS ENTRIES CONSOLIDATED
- ----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
ASSETS
Current assets $ 23,193 $ 97,564 $ 22,533 $ (1,545){1} $ 141,745
Property and equipment, net 36,490 687,740 38,977 -- 763,207
Other assets and deferred charges 919,264 (515,630) 153,170 (518,114){1}{2} 38,690
Goodwill and other intangible assets, net -- 119,365 83,249 -- 202,614
---------- ---------- ---------- ---------- ----------
Total assets $ 978,947 $ 389,039 $ 297,929 $ (519,659) $1,146,256
========== ========== ========== ========== ==========

LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities $ 35,301 $ 69,217 $ 15,575 $ (2,440){1} $ 117,653
Long-term debt, net of current maturities 706,373 68,484 33 -- 774,890
Deferred income taxes and other 9,984 16,382 41 -- 26,407
Stockholders' equity 227,289 234,956 282,280 (517,219){2} 227,306
---------- ---------- ---------- ---------- ----------
Total liabilities and stockholders' equity $ 978,947 $ 389,039 $ 297,929 $ (519,659) $1,146,256
========== ========== ========== ========== ==========
</TABLE>

Elimination Entries

{1} - To eliminate intercompany payables and receivables.

{2} - To eliminate investment in subsidiaries and subsidiaries' equity.



-12-
13

BOYD GAMING CORPORATION AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
- --------------------------------------------------------------------------------

<TABLE>
<CAPTION>
COMBINED
COMBINED NON- ELIMINATION
(IN THOUSANDS) PARENT GUARANTORS GUARANTORS ENTRIES CONSOLIDATED
- ----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Revenues
Casino $ -- $ 146,519 $ 31,703 $ -- $ 178,222
Food and beverage -- 37,259 2,718 -- 39,977
Room -- 17,470 -- -- 17,470
Other 2,846 8,298 11,147 (3,545){1} 18,746
Management fee 34,726 11,910 5,238 (41,843){1} 10,031
--------- --------- --------- --------- ---------
Gross revenues 37,572 221,456 50,806 (45,388) 264,446
Less promotional allowances -- 20,583 1,927 -- 22,510
--------- --------- --------- --------- ---------
Net revenues 37,572 200,873 48,879 (45,388) 241,936
--------- --------- --------- --------- ---------

Costs and expenses
Casino -- 77,745 11,322 -- 89,067
Food and beverage -- 23,510 2,683 -- 26,193
Room -- 5,941 -- -- 5,941
Other -- 17,938 11,601 (12,436){1} 17,103
Selling, general and administrative -- 27,925 7,314 -- 35,239
Maintenance and utilities -- 8,470 1,421 -- 9,891
Depreciation and amortization 471 15,820 2,243 -- 18,534
Corporate expense 9,629 66 437 (3,545){1} 6,587
Preopening expense 18 -- 297 -- 315
--------- --------- --------- --------- ---------
Total 10,118 177,415 37,318 (15,981) 208,870
--------- --------- --------- --------- ---------

Operating income 27,454 23,458 11,561 (29,407) 33,066

Other income (expense), net (15,427) (1,462) 273 -- (16,616)
--------- --------- --------- --------- ---------

Income before provision for income taxes 12,027 21,996 11,834 (29,407) 16,450
Provision for income taxes 2,322 4,423 -- -- 6,745
--------- --------- --------- --------- ---------
Net income $ 9,705 $ 17,573 $ 11,834 $ (29,407) $ 9,705
========= ========= ========= ========= =========
</TABLE>


Elimination Entries

{1} - To eliminate intercompany revenue and expense as well as equity income.



-13-
14

BOYD GAMING CORPORATION AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
- --------------------------------------------------------------------------------


CONDENSED CONSOLIDATING STATEMENT OF OPERATIONS INFORMATION FOR THE THREE MONTH
PERIOD ENDED JUNE 30, 1998

<TABLE>
<CAPTION>
COMBINED
COMBINED NON- ELIMINATION
(IN THOUSANDS) PARENT GUARANTORS GUARANTORS ENTRIES CONSOLIDATED
- --------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Revenues
Casino $ -- $ 151,410 $ 30,263 $ -- $ 181,673
Food and beverage -- 37,790 2,456 -- 40,246
Room -- 18,364 -- -- 18,364
Other -- 9,425 8,333 (284){1} 17,474
Management fee 29,203 11,381 5,279 (36,300){1} 9,563
--------- --------- --------- --------- ---------
Gross revenues 29,203 228,370 46,331 (36,584) 267,320
Less promotional allowances -- 20,067 1,768 -- 21,835
--------- --------- --------- --------- ---------
Net revenues 29,203 208,303 44,563 (36,584) 245,485
--------- --------- --------- --------- ---------

Costs and expenses
Casino -- 80,340 11,227 -- 91,567
Food and beverage -- 24,739 2,533 -- 27,272
Room -- 6,708 -- -- 6,708
Other -- 18,396 10,272 (12,291){1} 16,377
Selling, general and administrative -- 31,366 5,846 -- 37,212
Maintenance and utilities -- 9,684 934 -- 10,618
Depreciation and amortization 119 16,004 2,264 -- 18,387
Corporate expense 5,503 -- 183 -- 5,686
Restructuring charge -- 5,925 -- -- 5,925
--------- --------- --------- --------- ---------
Total 5,622 193,162 33,259 (12,291) 219,752
--------- --------- --------- --------- ---------
Operating income 23,581 15,141 11,304 (24,293) 25,733

Other income (expense), net (17,431) (1,572) 349 -- (18,654)
--------- --------- --------- --------- ---------

Income before provision (benefit) for income
taxes 6,150 13,569 11,653 (24,293) 7,079
Provision (benefit) for income taxes (453) 3,498 -- -- 3,045
--------- --------- --------- --------- ---------
Net income $ 6,603 $ 10,071 $ 11,653 $ (24,293) $ 4,034
========= ========= ========= ========= =========
</TABLE>

Elimination Entries

{1} - To eliminate intercompany revenue and expense as well as equity income.



-14-
15

BOYD GAMING CORPORATION AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
- --------------------------------------------------------------------------------


CONDENSED CONSOLIDATING STATEMENT OF OPERATIONS INFORMATION FOR THE SIX MONTH
PERIOD ENDED JUNE 30, 1999

<TABLE>
<CAPTION>
COMBINED
COMBINED NON- ELIMINATION
(IN THOUSANDS) PARENT GUARANTORS GUARANTORS ENTRIES CONSOLIDATED
- ----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Revenues
Casino $ -- $ 295,185 $ 62,570 $ -- $ 357,755
Food and beverage -- 75,737 5,208 -- 80,945
Room -- 36,774 -- -- 36,774
Other 5,692 17,091 20,396 (7,088){1} 36,091
Management fee 71,685 24,561 10,350 (85,752){1} 20,844
--------- --------- --------- --------- ---------
Gross revenues 77,377 449,348 98,524 (92,840) 532,409
Less promotional allowances -- 43,451 3,764 -- 47,215
--------- --------- --------- --------- ---------
Net revenues 77,377 405,897 94,760 (92,840) 485,194
--------- --------- --------- --------- ---------

Costs and expenses
Casino -- 156,434 22,931 -- 179,365
Food and beverage -- 46,832 5,194 -- 52,026
Room -- 12,183 -- -- 12,183
Other -- 36,256 21,701 (25,453){1} 32,504
Selling, general and administrative -- 56,429 13,848 -- 70,277
Maintenance and utilities -- 16,573 2,972 -- 19,545
Depreciation and amortization 917 31,877 4,472 -- 37,266
Corporate expense 18,850 95 832 (7,088){1} 12,689
Preopening expense 63 -- 791 -- 854
--------- --------- --------- --------- ---------
Total 19,830 356,679 72,741 (32,541) 416,709
--------- --------- --------- --------- ---------

Operating income 57,547 49,218 22,019 (60,299) 68,485

Other income (expense), net (31,243) (3,002) 555 -- (33,690)
--------- --------- --------- --------- ---------

Income before provision for income taxes 26,304 46,216 22,574 (60,299) 34,795

Provision for income taxes 5,959 8,491 -- -- 14,450
--------- --------- --------- --------- ---------

Income before cumulative effect 20,345 37,725 22,574 (60,299) 20,345

Cumulative effect, net 1,738 -- -- -- 1,738
--------- --------- --------- --------- ---------

Net income $ 18,607 $ 37,725 $ 22,574 $ (60,299) $ 18,607
========= ========= ========= ========= =========
</TABLE>

Elimination Entries

{1} - To eliminate intercompany revenue and expense as well as equity income.



-15-
16

BOYD GAMING CORPORATION AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
- --------------------------------------------------------------------------------


CONDENSED CONSOLIDATING STATEMENT OF OPERATIONS INFORMATION FOR THE SIX MONTH
PERIOD ENDED JUNE 30, 1998


<TABLE>
<CAPTION>
COMBINED
COMBINED NON- ELIMINATION
(IN THOUSANDS) PARENT GUARANTORS GUARANTORS ENTRIES CONSOLIDATED
- ----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Revenues
Casino $ -- $ 306,512 $ 61,025 $ -- $ 367,537
Food and beverage -- 77,726 4,782 -- 82,508
Room -- 36,878 -- -- 36,878
Other -- 19,670 16,850 (779){1} 35,741
Management fee 58,872 24,090 10,656 (73,259){1} 20,359
--------- --------- --------- --------- ---------
Gross revenues 58,872 464,876 93,313 (74,038) 543,023
Less promotional allowances -- 44,083 3,413 -- 47,496
--------- --------- --------- --------- ---------
Net revenues 58,872 420,793 89,900 (74,038) 495,527
--------- --------- --------- --------- ---------

Costs and expenses
Casino -- 164,480 22,495 -- 186,975
Food and beverage -- 48,387 5,022 -- 53,409
Room -- 12,482 -- -- 12,482
Other -- 38,659 19,732 (26,115){1} 32,276
Selling, general and administrative -- 63,537 12,258 -- 75,795
Maintenance and utilities -- 17,818 2,295 -- 20,113
Depreciation and amortization 197 32,329 4,472 -- 36,998
Corporate expense 9,519 373 694 -- 10,586
Restructuring charge -- 5,925 -- -- 5,925
--------- --------- --------- --------- ---------
Total 9,716 383,990 66,968 (26,115) 434,559
--------- --------- --------- --------- ---------

Operating income 49,156 36,803 22,932 (47,923) 60,968

Other income (expense), net (34,937) (3,225) 349 -- (37,813)
--------- --------- --------- --------- ---------

Income before provision for income taxes 14,219 33,578 23,281 (47,923) 23,155
Provision for income taxes 560 9,237 -- -- 9,797
--------- --------- --------- --------- ---------
Net income $ 13,659 $ 24,341 $ 23,281 $ (47,923) $ 13,358
========= ========= ========= ========= =========
</TABLE>

Elimination Entries

{1} - To eliminate intercompany revenue and expense as well as equity income.



-16-
17

BOYD GAMING CORPORATION AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
- --------------------------------------------------------------------------------


CONDENSED CONSOLIDATING STATEMENT OF CASH FLOWS INFORMATION FOR THE SIX MONTH
PERIOD ENDED JUNE 30, 1999

<TABLE>
<CAPTION>
COMBINED
COMBINED NON-
(IN THOUSANDS) PARENT GUARANTORS GUARANTORS CONSOLIDATED
- --------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Cash flows provided by operating activities $ 37,928 $ 25,803 $ 11,386 $ 75,117
-------- -------- -------- --------

Cash flows from investing activities -
Acquisition of property, equipment and other assets (2,916) (31,323) (3,829) (38,068)
-------- -------- -------- --------

Cash flows from financing activities
Net payments under bank credit facility (41,250) -- -- (41,250)
Receipt (payment) of dividends 7,670 (3,304) (4,366) --
Other 293 (200) -- 93
-------- -------- -------- --------
Net cash used in financing activities (33,287) (3,504) (4,366) (41,157)
-------- -------- -------- --------

Net increase (decrease) in cash and cash equivalents 1,725 (9,024) 3,191 (4,108)

Cash and cash equivalents, beginning of period 1,054 55,492 19,391 75,937
-------- -------- -------- --------

Cash and cash equivalents, end of period $ 2,779 $ 46,468 $ 22,582 $ 71,829
======== ======== ======== ========
</TABLE>


CONDENSED CONSOLIDATING STATEMENT OF CASH FLOWS INFORMATION FOR THE SIX MONTH
PERIOD ENDED JUNE 30, 1998

<TABLE>
<CAPTION>
COMBINED
COMBINED NON-
(IN THOUSANDS) PARENT GUARANTORS GUARANTORS CONSOLIDATED
- -------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Cash flows provided by operating activities $ 37,128 $ 324 $ 29,600 $ 67,052
-------- -------- -------- --------

Cash flows from investing activities -
Acquisition of property equipment and other assets (1,384) (19,896) (1,160) (22,440)
-------- -------- -------- --------

Cash flows from financing activities
Net payments under bank credit facility (45,000) -- -- (45,000)
Receipt (payment) of dividends 11,437 9,850 (21,287) --
Other (741) (396) (95) (1,232)
-------- -------- -------- --------
Net cash provided by (used in) financing activities (34,304) 9,454 (21,382) (46,232)
-------- -------- -------- --------

Net increase (decrease) in cash and cash equivalents 1,440 (10,118) 7,058 (1,620)

Cash and cash equivalents, beginning of period 2,832 58,317 17,128 78,277
-------- -------- -------- --------

Cash and cash equivalents, end of period $ 4,272 $ 48,199 $ 24,186 $ 76,657
======== ======== ======== ========
</TABLE>



-17-
18

ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS

RESULTS OF OPERATIONS

The following table sets forth, for the periods indicated, certain operating
data for the Company's properties. As used herein, "Boulder Strip Properties"
consist of Sam's Town Las Vegas, the Eldorado and Jokers Wild; "Downtown
Properties" consist of the California, the Fremont, Main Street Station and
Vacations Hawaii, the Company's wholly-owned travel agency which operates for
the benefit of the Downtown casino properties; and "Central Region Properties"
consist of Sam's Town Tunica, Sam's Town Kansas City (through July 15, 1998),
Par-A-Dice, Treasure Chest Casino, and management fee income from Silver Star
Resort and Casino. Net revenues displayed in this table and discussed in this
section are net of promotional allowances; as such, references to room revenue
and food and beverage revenue do not agree to the amounts on the Condensed
Consolidated Statements of Operations. Operating income from properties for the
purposes of this table excludes corporate expense, including related
depreciation and amortization, preopening expense, and restructuring charge.


<TABLE>
<CAPTION>
Three Months Ended Six Months Ended
June 30, June 30,
------------------------ ------------------------
(In thousands) 1999 1998 1999 1998
- -------------- -------- -------- -------- --------
<S> <C> <C> <C> <C>
Net revenues
Stardust $ 35,831 $ 41,102 $ 77,121 $ 82,435
Boulder Strip Properties 47,968 46,247 96,547 94,304
Downtown Properties (a) 55,610 52,691 109,603 103,520
-------- -------- -------- --------
Nevada Region 139,409 140,040 283,271 280,259
Central Region 102,527 105,445 201,923 215,268
-------- -------- -------- --------
Total properties $241,936 $245,485 $485,194 $495,527
======== ======== ======== ========
Operating income
Stardust $ 1,073 $ 4,175 $ 4,368 $ 7,426
Boulder Strip Properties 6,280 6,200 12,670 13,307
Downtown Properties 5,649 3,429 11,146 5,501
-------- -------- -------- --------
Nevada Region 13,002 13,804 28,184 26,234
Central Region 27,710 23,886 55,318 51,973
-------- -------- -------- --------
Total properties $ 40,712 $ 37,690 $ 83,502 $ 78,207
======== ======== ======== ========
</TABLE>

(a) Includes revenues related to Vacations Hawaii, a Honolulu travel agency,
of $10,401 and $7,787, respectively, for the quarters ended June 30, 1999
and 1998, and revenues of $18,873 and $15,544, respectively, for the six
month period ended June 30, 1999 and 1998.



-18-
19

REVENUES

Consolidated net revenues decreased 1.4% during the quarter ended June 30, 1999
compared to the quarter ended June 30, 1998. Company-wide casino revenue
decreased 1.9%, food and beverage revenue decreased 2.8%, and room revenue
decreased 7.7%. Net revenues from the Stardust, Boulder Strip and Downtown
Properties (the "Nevada Region") decreased slightly (0.5%) during the quarter
ended June 30, 1999 compared to the quarter ended June 30, 1998. Net revenues at
the Downtown Properties and Boulder Strip properties increased 5.5% and 3.7%,
respectively, while net revenues at the Stardust decreased 12.8%. The decline in
revenues at the Stardust is primarily due to an increase in competition on the
Las Vegas Strip, construction disruption related to a renovation project that is
expected to be completed by the end of 1999, and the temporary closure,
beginning in April 1999, of approximately 550 motor inn rooms. Net revenues in
the Central Region decreased 2.8% during the quarter ended June 30, 1999
compared to the quarter ended June 30, 1998, primarily as a result of the
closure of the Sam's Town Kansas City property in July 1998.

Consolidated net revenues decreased 2.1% during the six month period ended June
30, 1999 compared to the same period in the prior year. Company-wide casino
revenue decreased 2.7%, food and beverage revenue decreased 1.9% and room
revenue remained virtually unchanged. Net revenues from the Nevada Region
increased 1.1% during the six month period ended June 30, 1999 compared to the
six month period ended June 30, 1998 due to a 5.9% increase at the Downtown
Properties and a 2.4% increase at the Boulder Strip Properties, partially offset
by a 6.4% decline at the Stardust. Net revenues in the Central Region declined
6.2% during the six month period ended June 30, 1999 compared to the same period
in the prior year. The decrease is primarily a result of the closure of the
Sam's Town Kansas City property in July 1998.

OPERATING INCOME

Consolidated operating income before preopening expense and a restructuring
charge increased by 5.4% to $33 million during the quarter ended June 30, 1999
from $32 million during the quarter ended June 30, 1998. Operating income in the
Nevada Region decreased 5.8% as the result of a $3.1 million decline experienced
at the Stardust due to a 12.8% reduction in revenues. The Stardust decline was
partially offset by a $2.2 million increase at the Downtown Properties
principally due to more efficient operations. In the Central Region, operating
income increased 16.0% due primarily to the reduction in operating loss from the
Sam's Town Kansas City property which was closed in July 1998.

For the six month period ended June 30, 1999, consolidated operating income
before preopening expense and a restructuring charge increased 3.7% to $69
million compared to $67 million in the same period from the prior year.
Operating income in the Nevada Region increased 7.4% due primarily to the
operating efficiencies experienced at the Downtown Properties, partially offset
by a decline at the Stardust. In the Central Region, operating income increased
6.4% due primarily to the reduction in operating loss from the Sam's Town Kansas
City property which was closed in July 1998.

STARDUST

For the quarter ended June 30, 1999, net revenues at the Stardust decreased
12.8% compared to the quarter ended June 30, 1998 due to an increase in
competition on the Las Vegas Strip, construction disruption related to a
renovation project that is expected to be completed by the end of 1999, and the
temporary closure, beginning in April 1999, of approximately 550 motor inn
rooms. Casino revenue declined 13.5% due to a decrease in slot and table game
wagering. Room revenue declined 15.8% during the quarter ended June 30, 1999
compared to the quarter ended June 30, 1998 resulting from a decline in the
number of available rooms by 33% due to the closure of motor inn rooms and the
renovation of guest rooms in both hotel towers. Operating income at the Stardust
declined by 74% to $1.1 million during the quarter ended June 30, 1999 compared
to the same period in the prior year also as a result of the decline in
revenues.



-19-
20
For the six month period ended June 30, 1999, net revenues at the Stardust
declined 6.4% versus the comparable period in the prior year. Casino revenue
declined 5.6% due to a decrease in slot and table game wagering. Room revenue
declined 5.3% as the number of available rooms declined 21% as a result of the
closure of the motor inn rooms and the renovation project. Operating income
declined 41% to $4.4 million during the six month period ended June 30, 1999
compared to $7.4 million during the same period in the prior year also as a
result of the decline in revenues.

BOULDER STRIP PROPERTIES

Net revenues at the Boulder Strip Properties increased 3.7% during the quarter
ended June 30, 1999 compared to the quarter ended June 30, 1998. The increase is
attributable to a 7.7% increase in casino revenue due to an increase in table
game and slot wagering volume, offset by a decline in non-gaming revenues.
Operating income at the Boulder Strip Properties remained virtually unchanged
during the quarter ended June 30, 1999 as compared to the same period in the
prior year.

During the six month period ended June 30, 1999, net revenues at the Boulder
Strip Properties increased 2.4% compared to the same period in the prior year.
The increase is attributable to a 5.7% increase in casino revenue due to an
increase in table game and slot wagering volume, partially offset by a decline
in non-gaming revenues. Operating income at the Boulder Strip Properties
declined 4.8% during the six month period ended June 30, 1999 and operating
income margin declined from 14.1% for the six month period ended June 30, 1998
to 13.1% for the six month period ended June 30, 1999. The declines in operating
income and operating income margin are primarily attributable to an increase in
marketing expenses.

DOWNTOWN PROPERTIES

Net revenues at the Downtown Properties increased 5.5% during the quarter ended
June 30, 1999 compared to the quarter ended June 30, 1998 due primarily to an
increase in revenues at the Company's Honolulu travel agency, Vacations Hawaii.
Casino revenue increased 1.6% due to an increase in table game and slot wagering
volume, while non-gaming revenues at the Downtown casino properties declined
slightly. Operating income at the Downtown Properties increased 65% to $5.6
million during the quarter ended June 30, 1999 due to operating income gains
experienced at the Fremont and the California, as well as a reduction in
operating loss experienced at Main Street Station. Operating income margin
increased to 10.2% during the quarter ended June 30, 1999 from 6.5% during the
comparable quarter in the prior year. The increase in operating income and
operating income margin is primarily attributable to the increase in net
revenues coupled with cost reductions in marketing and other expenses at each of
the Downtown casino properties.

Net revenues at the Downtown Properties increased 5.9% during the six month
period ended June 30, 1999 compared to the same period in the prior year. Casino
revenue increased 2.9% due primarily to increased slot wagering volumes at the
California and Main Street Station. Non-gaming revenues at the Downtown
Properties increased 10.8% during the six month period ended June 30, 1999
versus the comparable prior year period due primarily to an increase in revenues
at Vacations Hawaii as well as an increase in food and beverage and room
revenue. Operating income at the Downtown Properties increased $5.6 million or
103% during the six month period ended June 30, 1999 compared to the same period
in the prior year. Operating income margin increased to 10.2% during the six
month period ended June 30, 1999 versus 5.3% in the comparable prior year
period. The increase in operating income and operating income margin is
primarily attributable to the increase in net revenues as well as cost
reductions in marketing and other expenses at each of the Downtown Properties.

CENTRAL REGION

Net revenues in the Central Region declined 2.8% during the quarter ended June
30, 1999 compared to the quarter ended June 30, 1998. The decline in net
revenues was due to the closure of Sam's Town Kansas City in July 1998,
partially offset by increases in net revenues at all other Central Region
Properties. Net revenues



-20-
21

at Par-A-Dice increased 11.2% for the quarter ended June 30, 1999 compared to
the same period in the prior year due primarily to an increase in casino
revenue. In addition, Par-A-Dice began dockside operations on June 26, 1999 as a
result of a new gaming law allowing once-cruising riverboats to remain dockside,
which allows patrons to come and go as they please. Management expects this
change should result in enhanced revenues at Par-A-Dice over the levels that
would have prevailed without the change. Net revenues at Treasure Chest
increased 5.1% due primarily to an increase in slot wagering coupled with an
increase in slot win percentage. At Sam's Town Tunica, net revenues increased
2.1% due primarily to an increase in slot win percentage. Management fee revenue
from Silver Star increased 2.1% for the quarter ended June 30, 1999 compared to
the quarter ended June 30, 1998. Operating income in the Central Region
increased 16.0% due to gains experienced by the closure of the Sam's Town Kansas
City property as well as an increase in net revenues at all of the other Central
Region Properties.

Net revenues in the Central Region declined 6.2% during the six month period
ended June 30, 1999 compared to the same period in the prior year. The majority
of the decrease is attributable to the closure of the Sam's Town Kansas City
property in July 1998, partially offset by an increase in net revenues at
Par-A-Dice (6.7%), Treasure Chest (2.7%) and management fee revenue from Silver
Star (2.4%). Operating income in the Central Region increased to $55 million
during the six month period ended June 30, 1999 from $52 million during the
comparable period in the prior year due to the closure of the Sam's Town Kansas
City property as well as the increase in net revenues at all other Central
Region Properties.

OTHER INCOME (EXPENSE)

Other income and expense is primarily comprised of interest expense. Interest
expense decreased by $2.1 million during the quarter ended June 30, 1999 and
decreased $4.2 million during the six month period ended June 30, 1999 compared
to the corresponding periods in the prior year. The decrease is attributable to
lower debt levels combined with a decline in interest rates on floating rate
debt. In addition, the Company capitalized $0.3 million and $0.4 million,
respectively, in interest costs during the quarter ended June 30, 1999 and the
six month period ended June 30, 1999. There were no such interest costs
capitalized during the quarter or six month periods ended June 30, 1998.

CUMULATIVE EFFECT OF A CHANGE IN ACCOUNTING FOR START-UP ACTIVITIES

The Company reported a charge of $1.7 million, net of $0.9 million in tax
benefits, as the cumulative effect of a change in accounting for start-up
activities. The American Institute of Certified Public Accountants issued
Statement of Position 98-5, "Reporting on the Costs of Start-Up Activities" that
required the Company to expense certain previously capitalized costs of start-up
activities as a cumulative effect of a change in accounting principle.

NET INCOME

As a result of these factors, the Company reported net income of $9.7 million
and $4.0 million, respectively, during the quarters ended June 30, 1999 and 1998
and $18.6 million and $13.4 million, respectively, during the six month periods
ended June 30, 1999 and June 30, 1998.

LIQUIDITY AND CAPITAL RESOURCES

CASH FLOW FROM OPERATING ACTIVITIES AND WORKING CAPITAL

The Company's policy is to use operating cash flow in combination with debt
financing to fund renovations and expansion of its business.



-21-
22

During the six month period ended June 30, 1999, the Company generated operating
cash flows of $75 million compared to $67 million during the same period in the
prior year. The increase in operating cash flows is primarily attributable to
the Company's enhanced earnings, as well as the realization of a portion of the
tax benefits related to the sale of certain assets at the Sam's Town Kansas City
property. (See further discussion regarding the tax benefits in the following
paragraph). As of June 30, 1999 and 1998, the Company had balances of cash and
cash equivalents of $72 million and $77 million, respectively, and working
capital of $12.2 million and $0.6 million, respectively. The Company has
historically operated with minimal levels of working capital in order to
minimize borrowings and interest costs under the Company's bank credit facility.

In connection with the July 1998 sale of certain tangible assets of Sam's Town
Kansas City for $12.5 million, the Company has been and will be able to realize
the benefit of approximately $35 million in deferred tax assets. The realization
of these deferred tax assets, which began in the quarter ended September 30,
1998 will continue to benefit operating cash flow in 1999 by generating tax
refunds and reducing the amount of future federal tax payments on the Company's
taxable income. At June 30, 1999, the Company had $8.6 million in tax refunds
receivable and $2.8 million in current deferred tax assets.

CASH FLOWS FROM INVESTING ACTIVITIES

The Company is committed to continually maintaining and enhancing its existing
facilities, most notably by upgrading and remodeling its casinos, hotel rooms,
restaurants, and other public spaces and by providing the latest slot machines
for its customers. The Company's capital expenditures primarily related to these
purposes were approximately $38 million and $22 million, respectively, during
the six month periods ended June 30, 1999 and 1998. See "Expansion and Other
Projects" for a further discussion on current and planned investing activities.

CASH FLOW FROM FINANCING ACTIVITIES

Much of the funding for the Company's renovation and expansion projects comes
from debt financing, as well as cash flows from existing operations. The Company
paid down outstanding debt with its free cash flow generated from operations,
which resulted in cash flows used for financing activities of $41 million during
the six month period ended June 30, 1999 compared to $46 million during the six
month period ended June 30, 1998. At June 30, 1999, outstanding borrowings and
unused availability under the bank credit facility were $276 million and $149
million, respectively. Interest under the bank credit facility is based upon the
agent bank's quoted reference rate or the London Interbank Offered Rate
("LIBOR"), at the discretion of the Company. The blended rate on outstanding
borrowings under the bank credit facility during the quarter ended June 30, 1999
was 7.2%.

On July 21, 1999, the Company replaced its existing bank credit facility with a
new $600 million bank credit facility (the "New Bank Credit Facility"). The New
Bank Credit Facility consists of a $500 million revolver component (the
"Revolver") and a $100 million term loan component (the "Term Loan"), both of
which mature in June 2003. Availability under the Revolver will be reduced by
$15.6 million on December 31, 2001 and at the end of each quarter thereafter
until March 31, 2003. The Term Loan will be repaid in increments of $0.25
million per quarter beginning on September 30, 1999 through March 31, 2003. The
interest rate on the New Bank Credit Facility is based upon either the agent
bank's quoted base rate or the Eurodollar rate, plus an applicable margin that
is determined by the level of a predefined financial leverage ratio. In
addition, the Company incurs a commitment fee on the unused portion of the
Revolver which ranges from 0.375% to 0.50% per annum. The New Bank Credit
Facility is secured by the real and personal property of the Company and its
subsidiaries, including ten casino properties. The obligations of the Company
under the New Bank Credit Facility are guaranteed by certain subsidiaries of
the Company.

The New Bank Credit Facility contains certain financial and other covenants,
including, without limitation, various covenants (i) requiring the maintenance
of a minimum net worth, (ii) requiring the maintenance of a



-22-
23
minimum interest coverage ratio, (iii) establishing a maximum permitted total
leverage ratio and senior secured leverage ratio, (iv) imposing limitations on
the incurrence of additional indebtedness, (v) imposing limitations on the
maximum permitted expansion capital expenditures during the term of the New Bank
Credit Facility, (vi) imposing limits on the maximum permitted maintenance
capital expenditures during each year of the term of the New Bank Credit
Facility, and (vii) imposing restrictions on investments and certain other
payments. Management believes the Company and its subsidiaries are in compliance
with the New Bank Credit Facility covenants.

The Company's $200 million principal amount of Senior Notes (the "9.25% Notes")
and $250 million principal amount of Senior Subordinated Notes (the "9.50%
Notes") contain limitations on, among other things, (a) the ability of the
Company and its Restricted Subsidiaries (as defined in the Indenture Agreements)
to incur additional indebtedness, (b) the payment of dividends and other
distributions with respect to the capital stock of the Company and its
Restricted Subsidiaries and the purchase, redemption or retirement of capital
stock of the Company and its Restricted Subsidiaries, (c) the making of certain
investments, (d) asset sales, (e) the incurrence of liens, (f) transactions with
affiliates, (g) payment restrictions affecting restricted subsidiaries and (h)
certain consolidations, mergers and transfers of assets. Management believes the
Company and its subsidiaries are in compliance with the covenants related to the
9.25% and 9.50% Notes at June 30, 1999.

The Company's ability to service its debt will be dependent on its future
performance, which will be affected by, among other things, prevailing economic
conditions and financial, business and other factors, certain of which are
beyond the Company's control.

EXPANSION AND OTHER PROJECTS

The Company, as part of its ongoing strategic planning process, is currently
establishing its priorities for the future. In Nevada, the Company is exploring
opportunities for the development of new properties in the Las Vegas local
market. In addition, the Company has recently initiated an $80 million expansion
and renovation project at Sam's Town Las Vegas. The project includes, among
other things, an 18 screen state-of-the-art movie theatre, additional casino
space for 500 slot machines, an 11,200 square foot events center, a new 550 seat
buffet, and a reconfigured and remodeled porte cochere and valet
parking area to improve access to the property. As of June 30, 1999, the
Company has incurred $0.8 million in costs associated with the Sam's Town Las
Vegas expansion and renovation. This project currently is expected to be
completed by December 31, 2000.

The Company has postponed plans to develop a new property on the Stardust's
61-acre site until the impact of the opening of several new resorts on the Las
Vegas Strip has been determined. Instead, the Company has initiated a $25
million renovation of the Stardust which includes guest rooms, public space and
exterior enhancements intended to make the property more competitive with other
Strip resorts. In connection with the renovation project, the Stardust
temporarily removed from service, beginning in April 1999, all of its
approximately 550 motor inn rooms. The Company is evaluating the impact of the
motor inn closure on the Stardust's operations. Based upon the results of the
evaluation, the Company will either refurbish or demolish the Stardust motor inn
rooms. As of June 30, 1999, the Company had incurred $11.0 million in costs
associated with the Stardust renovation, $9.5 million of which was incurred
during the six month period ended June 30, 1999. This project is expected to be
substantially complete by the end of 1999.

The Company, through a wholly-owned subsidiary, is a party to a Joint Venture
Agreement (the "Agreement") with Mirage Resorts, Incorporated, through a
wholly-owned subsidiary ("Mirage"), to jointly develop and own The Borgata, a
casino hotel entertainment facility in Atlantic City, New Jersey. The Agreement
contemplates a hotel of at least 1,200 rooms and a casino and related amenities
adjacent and connected to Mirage's planned wholly-owned resort. The Agreement
provides for each party to make an equity contribution of $150 million. The
Company will contribute $90 million



-23-
24

when Mirage contributes the land to the venture, which is expected in the first
half of 2000. The Agreement further provides for the venture to arrange $450
million in non-recourse financing for the project. There can be no assurances
that the Borgata can be designed and developed for $750 million. Funding of the
Company's joint venture capital contributions is expected to be derived from
cash flow from operations, availability under the Company's New Bank Credit
Facility and additional debt offerings. The Borgata will be subject to the many
risks inherent in the establishment of a new business enterprise, including
potential unanticipated design, construction, regulatory, environmental and
operating problems, increased project costs, timing delays, lack of adequate
financing and the significant risks commonly associated with implementing a
marketing strategy in a new market. Once construction begins, if the Borgata
does not become operational within the time frame and budget currently
contemplated or does not compete successfully in its new market, it could have a
material adverse effect on the Company's business, financial condition and
results of operations. The Company has begun work on the planning stages of this
development which is expected to open in 2002. As of June 30, 1999, the Company
has contributed or advanced funds of $5.2 million to the Borgata.

On June 27, 1999, the Company entered into a definitive agreement to acquire the
Blue Chip Casino, a riverboat casino in Michigan City, Indiana for $255 million
in cash. In addition, the Company will acquire a hotel and parking facility,
currently under construction and attached to the existing casino complex, for
$18.6 million. The transaction is currently expected to close in the fourth
quarter of 1999 and is conditioned upon, among other things, approval by the
Indiana Gaming Commission. The Company plans to fund the acquisition from
borrowings under the New Bank Credit Facility.

The Company began a Customer Information System ("CIS") project that will
standardize the Company's customer tracking systems. The purpose of the CIS
project is to link all points of customer contact to enable the Company to
better monitor customer activity in order to enhance and direct marketing
efforts. The Company expects to spend $14 million in 1999 on the CIS project. As
of June 30, 1999, the Company had incurred $3.4 million in costs associated with
the CIS project, substantially all of which was capitalized. The Company has
never undertaken a CIS project of this magnitude and may experience difficulties
in the integration and implementation of this project. In addition, given the
inherent difficulties of a project of this magnitude and the resources required,
the timing and costs involved could differ materially from those anticipated by
the Company. There can be no assurance that the CIS project will be completed
successfully, on schedule or within budget.

Substantial funds are required for The Borgata and the Blue Chip Casino
acquisition, as well as the other projects discussed above and would also be
required for other future expansion projects. There are no assurances that any
of the above mentioned projects will go forward or ultimately become
operational. The source of funds required to meet the Company's working capital
needs (including maintenance capital expenditures) is expected to be cash flow
from operations and availability under the Company's New Bank Credit Facility.
The source of funds for the Company's expansion projects may come from cash flow
from operations and availability under the Company's New Bank Credit Facility,
additional debt or equity offerings, joint venture partners or other sources. No
assurance can be given that additional financing will be available or that, if
available, such financing will be obtainable on terms favorable to the Company
or its stockholders.

YEAR 2000 PROJECT

The Year 2000 issue is the result of computer programs being written using two
digits rather than four to define the applicable year. Any programs that have
time-sensitive software may recognize a date using "00" as the year 1900 rather
than the year 2000. This could result in a major system failure or
miscalculations.

The Company is currently engaged in a five-phase process of evaluating and
resolving the problems that might be associated with its internal operating
systems and the Year 2000 issue. The five phases are as follows:



-24-
25

1. Evaluation and development of remediation plans for traditional
information technology ("IT") systems;

2. Evaluation and development of remediation plans for non-IT
systems;

3. Implementation and testing of remediation plans;

4. Evaluation of vendor compliance with Year 2000 issues; and

5. Preparation of contingency plans.

The first phase of the process is the evaluation and development of remediation
plans for IT systems which was completed in the fourth quarter of 1998. In this
phase, the Company evaluated which IT systems are Year 2000 compliant and made
plans to bring identified non-compliant systems into compliance.

The second phase of the process, expected to be completed by the third quarter
of 1999, is the evaluation and development of remediation plans for non-IT
systems. Currently, non-IT systems are still under evaluation. The Company does
not expect the impact of the Year 2000 to be material for its non-IT systems.
The Company may discover Year 2000 issues in the course of its evaluation
processes in phases one or two, or issues may not be detected, that would have a
material adverse effect on the business, financial condition and results of
operations of the Company.

Phase three of the process involves the implementation of remediation plans for
IT and non-IT systems that were identified in phase one and two as
non-compliant. This process is expected to be completed by the end of the third
quarter of 1999 and will involve either the replacement of the Company's
existing systems with systems that are Year 2000 compliant or the remedial
review and replacement of the software code with code that does not use the two
digit year code. As part of this phase, the Company intends to perform date
sensitive testing including testing on systems that vendors have certified to be
Year 2000 compliant, to ensure that the modifications developed adequately
resolve the Year 2000 issue. While the Company believes the testing program
should provide additional evidence of its ability to operate in the Year 2000,
the Company may discover Year 2000 issues in the course of its testing process,
or issues may not be detected, that would have a material adverse effect on the
business, financial condition and results of operations of the Company.

Phase four, expected to be completed by the end of the third quarter of 1999,
involves evaluating Year 2000 compliance for those vendors who provide the
Company with goods and services critical to the servicing of our guests, mainly
in the non-gaming portions of our business. While no individual vendor supplies
the Company with a significant portion of the goods or services used in the
non-gaming operations, the Company may discover Year 2000 issues in the course
of evaluation of its vendors, or issues may not be detected, that would have a
material adverse effect on the business, financial condition and results of
operations of the Company.



-25-
26

The final phase of the process, expected to be completed during the third
quarter of 1999, will involve the development of a contingency plan in the event
any non-compliant critical systems remain by January 1, 2000. As part of this
phase, the Company will attempt to quantify the impact, if any, of the failure
to complete any necessary corrective action. The Company currently believes that
the majority of the equipment and processes used by the Company have adequate
manual backup procedures that would allow the Company to continue to operate a
significant portion of the business in the event the conversion project is not
completed on schedule (or the systems of other companies on which the Company
may rely are not timely converted). However, in most of the Central Region
gaming jurisdictions, electronic monitoring of operations is required. Waivers
for manual processes may be obtained from these gaming jurisdictions; however,
there can be no assurance that a material portion of the gaming business at
those properties would not be affected until the time at which a waiver is
granted or if this waiver will be granted at all. If the Company is able to
obtain timely waivers for the Central Region properties, the remaining primary
risks associated with the Year 2000 may be an effect on the timing of the
reporting of certain operating results to management and may include an adverse
effect on business volumes if the Year 2000 problems could not be timely
corrected. Although the Company cannot currently estimate the magnitude of such
impact, if systems material to the Company's operations have not been made Year
2000 compliant upon completion of this phase, the Year 2000 issue could have a
material adverse impact on the Company's business, financial condition and
results of operation.

The Company currently estimates approximately $8 million in costs directly
associated with the project that is expected to be funded from cash flow from
operations and availability under the Company's New Bank Credit Facility. This
current estimate includes approximately $3 million in operating expenses related
to the remediation efforts, including training. At June 30, 1999, the Company
had incurred approximately $5.6 million in costs directly related to the Year
2000 project, $4.4 million of which were capitalized as they related to
replacement of systems that were not Year 2000 compliant.

Given the inherent risks for a project of this magnitude and the resources
required, the timing and costs involved could differ materially from those
anticipated by the Company. There can be no assurance that the Year 2000 project
will be completed on schedule or within budget.

RECENTLY ISSUED ACCOUNTING STANDARDS

See Note 1 to Notes to Condensed Consolidated Financial Statements for a
complete discussion of recently issued accounting standards and their expected
impact on the Company's consolidated financial statements.

PRIVATE SECURITIES LITIGATION REFORM ACT

Certain information included in this Form 10-Q and other materials filed or to
be filed by the Company with the Securities and Exchange Commission (as well as
information included in oral statements or other written statements made or to
be made by the Company) contains statements that are forward looking, such as
statements relating to the Company's Year 2000 project, plans for future
expansion and other business development activities as well as capital spending,
financing sources, anticipated timing of completion of projects under
development, and the effects of regulation (including gaming and tax regulation)
and competition. These statements may be identified by the utilization of words
such as "believes", "expects", "anticipates", "intends", "plans" and similiar
expressions. Forward looking statements involve important risks and
uncertainties that could significantly affect anticipated results in the future,
and accordingly, actual results may differ materially from those expressed in
any forward looking statements made by or on behalf of the Company. These risks
and uncertainties include, but are not limited to, those related to
construction, expansion and development activities, economic conditions, changes
in tax laws, changes in laws or regulations affecting gaming licenses, changes
in competition, and factors affecting leverage and debt service including
sensitivity to fluctuation in interest rates, risks related to the Year 2000
project and other factors described from time to time in the Company's reports
filed with the Securities and Exchange Commission, including the Company's



-26-
27

Annual Report on Form 10-K for the year ended December 31, 1998. Any forward
looking statements are made pursuant to the Private Securities Litigation Reform
Act of 1995 and, as such, speak only as of the date made.

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURE ABOUT MARKET RISK

The Company is exposed to market risk from changes in interest rates. To reduce
such risks, the Company selectively uses financial instruments for its floating
rate debt. On December 31, 1997, the Company entered into an interest rate swap
agreement for a notional amount of $100 million. The agreement calls for the
Company to swap its variable LIBOR rate (5.33% at June 30, 1999) for a fixed
LIBOR rate of 5.54%. The variable LIBOR rate readjusts each quarter and the
agreement is cancelable should the LIBOR rate exceed 5.99%. The swap agreement
terminates in December 2000. The fair value of the swap liability at June 30,
1999 is approximately $0.3 million based on the present value of future cash
outflows expected from the Company based on the LIBOR rate at June 30, 1999.

PART II. OTHER INFORMATION

ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

The Company's Annual Meeting was held May 20, 1999. The stockholders
re-elected William R. Boyd, Michael O. Maffie, Warren L. Nelson and
Donald D. Snyder to three year terms, ending on the date of the
Company's Annual Meeting in 2002. The following persons remain directors
of the Company: William S. Boyd, Robert L. Boughner, Marianne Boyd
Johnson, Perry B. Whitt, Philip J. Dion, Maj. Gen. Billy G. McCoy, Ret.
USAF, and William G. Yates. The number of shares voting as to the
election of each nominee, the ratification of the appointment of
Deloitte & Touche LLP to serve as independent auditors for the year
ending December 31, 1999 and the ratification of an amendment to the
1993 Directors' Non-Qualified Stock Option Plan to provide options
exercisable for up to an aggregate of 100,000 shares of the Company's
common stock is set forth below:


<TABLE>
<CAPTION>
Votes
-----------------------------
Election of Class I Directors For Withheld
----------------------------- ----------- --------
<S> <C> <C>
William R. Boyd 54,677,523 353,191
Michael O. Maffie 54,679,425 351,289
Warren L. Nelson 54,680,710 350,004
Donald D. Snyder 54,675,335 355,379
</TABLE>

The Stockholders ratified the selection of Deloitte & Touche LLP as
independent auditors for the Company for the year ending December 31,
1999 with voting as follows: [54,856,665] for; [140,984] against;
[33,069] non-votes.

The Stockholders ratified the amendment to the 1993 Directors'
Non-Qualified Stock Option Plan with voting as follows: [52,847,131]
for; [2,054,050] against; [129,533] non-votes.



-27-
28

ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K

(a) Exhibits.

<TABLE>
<S> <C>
4 (1) Amended 1993 Directors' Non-Qualified Stock Option Plan.

10.29 Unit Purchase Agreement among the Company, Boyd Indiana,
Inc., Blue Chip Casino, Inc., Blue Chip Casino, LLC, and
certain individuals, dated as of June 27, 1999.

10.30 First Amended and Restated Credit Agreement, dated as of
June 30, 1999 among the Company as the Borrower, Certain
Commercial Lending Institutions, as the Lenders, Canadian
Imperial Bank of Commerce, as L/C Issuer and
Administrative Agent, Wells Fargo Bank N.A., as Swingling
Lender and Syndication Agent, and Bank of America
National Trust and Savings Association, as Documentation
Agent.

27. Financial Data Schedule
</TABLE>

(b) Reports on Form 8-K.

(i) The Company filed a current report on Form 8-K dated July
13, 1999 related to a definitive agreement to acquire
100% of the equity interests in Blue Chip Casino, LLC.



- ----------

(1) Incorporated by reference to the Registration Statement on Form S-8, File
No. 333-79895, dated June 3, 1999.



-28-
29
SIGNATURES


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



BOYD GAMING CORPORATION
(Registrant)



Date: August 13, 1999 By /s/ Ellis Landau
------------------------------------
Ellis Landau,
Executive Vice President,
Chief Financial Officer, and
Treasurer (Principal Financial Officer)



-29-
30

EXHIBIT INDEX



<TABLE>
<CAPTION>
Exhibit
Number Description
------- ------------
<S> <C>
4 (1) Amended 1993 Directors' Non-Qualified Stock Option Plan.

10.29 Unit Purchase Agreement among the Company, Boyd Indiana,
Inc., Blue Chip Casino, Inc., Blue Chip Casino, LLC, and
certain individuals, dated as of June 27, 1999.

10.30 First Amended and Restated Credit Agreement, dated as of
June 30, 1999 among the Company as the Borrower, Certain
Commercial Lending Institutions, as the Lenders, Canadian
Imperial Bank of Commerce, as L/C Issuer and
Administrative Agent, Wells Fargo Bank N.A., as Swingling
Lender and Syndication Agent, and Bank of America
National Trust and Savings Association, as Documentation
Agent.

27. Financial Data Schedule
</TABLE>

(1) Incorporated by reference to the Registration Statement on Form S-8, File
No. 333-79895, dated June 3, 1999.