DECONSOLIDATION OF LVE ENERGY PARTNERS, LLC

In connection with the disposition of Echelon on March 4, 2013 (see Note 3, Acquisitions and Divestitures), we exercised an option to acquire the central energy center assets from LVE Energy Partners, LLC (“LVE”), a joint venture between Marina Energy LLC and DCO ECH Energy, LLC, for $187 million. We immediately sold these assets to the buyer of Echelon, and our agreements with LVE were terminated.

Prior to these transactions, we had determined that we were the primary beneficiary of the contract with LVE, which required us to consolidate LVE for financial statement purposes. As a result of the March 4, 2013 transactions, we ceased consolidation of LVE as of that date.

The effects of the consolidation of LVE on our financial position as of December 31, 2012, and its impact on our results of operations for the nine months ended September 30, 2013 and for the three and nine months ended September 30, 2012 are reconciled by respective line items to amounts as reported in our condensed consolidated balance sheets and condensed consolidated statements of operations as follows:



	December 31, 2012

									Boyd Gaming
	Boyd Gaming								Corporation
	Corporation			LVE, LLC			Eliminations		(as consolidated)
(In thousands)
ASSETS
Current assets	$	354,140		$	1,453		$	—	$	355,593
Property and equipment, net	3,587,314			—			—		3,587,314
Assets held for development	168,251			163,519			—		331,770
Debt financing costs, net	83,020			2,448			—		85,468
Restricted investments	—			21,382			—		21,382
Other assets	98,415			—			—		98,415
Intangible assets, net	1,119,638			—			—		1,119,638
Goodwill, net	694,929			—			—		694,929
Assets of discontinued operation	37,684			—			—		37,684
Total Assets	$	6,143,391		$	188,802		$	—	$	6,332,193

LIABILITIES
Current maturities of long-term debt	$	61,570		$	—		$	—	$	61,570
Accounts payable	90,992			164			—		91,156
Accrued and other liabilities	355,246			8,486			—		363,732
Income taxes payable	8,129			—			—		8,129
Non-recourse obligations of variable interest entity	—			225,113			—		225,113
Long-term debt, net of current maturities	4,827,853			—			—		4,827,853
Deferred income taxes	139,943			—			—		139,943
Long-term tax and other liabilities	146,706			—			—		146,706
Liabilities of discontinued operation	864			—			—		864

STOCKHOLDERS' EQUITY
Common stock	869			—			—		869
Additional paid-in capital	655,694			—			—		655,694
Retained earnings	(351,810		)	—			—		(351,810		)
Accumulated other comprehensive income (loss)	(962		)	—			—		(962		)
Noncontrolling interest	208,297			(44,961		)	—		163,336
Total Liabilities and Stockholders' Equity	$	6,143,391		$	188,802		$	—	$	6,332,193



	Three Months Ended September 30, 2012

										Boyd Gaming
	Boyd Gaming									Corporation
	Corporation			LVE, LLC			Eliminations			(as consolidated)
(In thousands)
REVENUES
Other revenue	$	38,911		$	2,724		$	(2,724	)	$	38,911

COSTS AND EXPENSES
Selling, general and administrative	$	112,389		$	4		$	—		$	112,393
Preopening expenses	$	4,342		$	—		$	(2,724	)	$	1,618

Operating income	$	46,667		$	2,720		$	—		$	49,387

Other expense
Interest expense, net	$	71,134		$	2,981		$	—		$	74,115

Loss from continuing operations before income taxes	$	(24,195	)	$	(261	)	$	—		$	(24,456	)
Income taxes	8,050			—			—			8,050
Loss from continuing operations, net of tax	(16,145		)	(261		)	—			(16,406		)
Loss from discontinued operations, net of tax	(676		)	—			—			(676		)
Net loss	(16,821		)	(261		)	—			(17,082		)
Net income attributable to noncontrolling interest	1,025			—			261			1,286
Net income (loss) attributable to Boyd Gaming Corporation	$	(15,796	)	$	(261	)	$	261		$	(15,796	)



	Nine Months Ended September 30, 2013
										Boyd Gaming
	Boyd Gaming									Corporation
	Corporation			LVE, LLC			Eliminations			(as consolidated)
(In thousands)
REVENUES
Other revenue	$	125,017		$	1,933		$	(1,933	)	$	125,017

COSTS AND EXPENSES
Selling, general and administrative	$	373,865		$	—		$	—		$	373,865
Preopening expenses	$	6,762		$	—		$	(1,933	)	$	4,829

Operating income	$	237,188		$	1,933		$	—		$	239,121

Other expense
Interest expense, net	$	264,577		$	2,376		$	—		$	266,953

Loss from continuing operations before income taxes	$	(54,788	)	$	(443	)	$	—		$	(55,231	)
Income taxes	3,478			—			—			3,478
Loss from continuing operations, net of tax	(51,310		)	(443		)	—			(51,753		)
Income from discontinued operations, net of tax	10,790			—			—			10,790
Net loss	(40,520		)	(443		)	—			(40,963		)
Net income attributable to noncontrolling interest	7,596			—			443			8,039
Net income (loss) attributable to Boyd Gaming Corporation	$	(32,924	)	$	(443	)	$	443		$	(32,924	)



	Nine Months Ended September 30, 2012
										Boyd Gaming
	Boyd Gaming									Corporation
	Corporation			LVE, LLC			Eliminations			(as consolidated)
(In thousands)
REVENUES
Other revenue	$	110,416		$	8,172		$	(8,172	)	$	110,416

COSTS AND EXPENSES
Selling, general and administrative	$	330,698		$	13		$	—		$	330,711
Maintenance and utilities	$	115,924		$	—		$	—		$	115,924
Preopening expenses	$	13,660		$	—		$	(8,172	)	$	5,488

Operating income	$	178,305		$	8,159		$	—		$	186,464

Other expense
Interest expense, net	$	193,708		$	9,023		$	—		$	202,731

Loss from continuing operations before income taxes	$	(14,719	)	$	(864	)	$	—		$	(15,583	)
Income taxes	6,427			—			—			6,427
Loss from continuing operations, net of tax	(8,292		)	(864		)	—			(9,156		)
Loss from discontinued operations, net of tax	(2,142		)	—			—			(2,142		)
Net loss	(10,434		)	(864		)	—			(11,298		)
Net income attributable to noncontrolling interest	1,467			—			864			2,331
Net income (loss) attributable to Boyd Gaming Corporation	$	(8,967	)	$	(864	)	$	864		$	(8,967	)

The reduction in other revenue and preopening expenses reflects the elimination of the Periodic Fee paid by Boyd Gaming to LVE. Such fee was recognized as revenue by LVE, but eliminated in consolidation completely, thereby having no impact on our consolidated other revenues. Although this Periodic Fee is eliminated in consolidation, it was actually paid to LVE directly on a monthly basis through March 4, 2013, the date we completed the Echelon transaction.