ACQUISITIONS

Ameristar Casino Hotel Kansas City; Ameristar Casino Resort Spa St. Charles; Belterra Casino Resort; Belterra Park

On October 15, 2018, we completed the acquisition of Ameristar Casino Kansas City, LLC ("Ameristar Kansas City"), the owner and operator of Ameristar Casino Hotel Kansas City; Ameristar Casino St. Charles, LLC ("Ameristar St. Charles"), the owner and operator of Ameristar Casino Resort Spa St. Charles; Belterra Resort Indiana LLC ("Belterra Resort"), the owner and operator of Belterra Casino Resort located in Florence, Indiana; and PNK (Ohio) LLC ("Belterra Park"), the owner and operator of Belterra Park, located in Cincinnati, Ohio (collectively, the "Pinnacle Properties"), pursuant to a Membership Interest Purchase Agreement (as amended, the "Pinnacle Purchase Agreement"), dated as of December 17, 2017, as amended as of January 29, 2018 ("Amendment No. 1") and October 15, 2018 ("Amendment No. 2"), in each case by and among Boyd Gaming, Boyd TCIV, LLC, a wholly owned subsidiary of Boyd Gaming ("Boyd TCIV"), Penn National Gaming, Inc. ("Penn"), and, solely following the execution and delivery of a joinder to the Pinnacle Purchase Agreement, Pinnacle Entertainment, Inc. ("Pinnacle Entertainment") and its wholly owned subsidiary, Pinnacle MLS, LLC (collectively with Pinnacle Entertainment, "Pinnacle").

Pursuant to the Pinnacle Purchase Agreement, Boyd Gaming acquired from Pinnacle all of the issued and outstanding membership interests of the Acquired Companies as well as certain other assets (and assumed certain other liabilities) of Pinnacle related to the Acquired Companies (collectively, the "Pinnacle Acquisition"). Each of the Acquired Companies is now a wholly owned subsidiary of Boyd Gaming. The acquired companies are aggregated into our Midwest & South segment (See Note 12, Segment Information). The net purchase price was $568.3 million, subject to adjustments based on final working capital, cash and indebtedness of the combined properties at closing and transaction expenses.

Pursuant to the Pinnacle Purchase Agreement, Boyd TCIV entered into a Master Lease, dated October 15, 2018 (the "Master Lease"), with Gold Merger Sub, LLC ("Gold Merger Sub"), as landlord, and Boyd TCIV, as tenant, pursuant to which the landlord agreed to lease to Boyd TCIV the real estate associated with Ameristar Kansas City, Ameristar St. Charles, Belterra Resort and Ogle Haus, LLC, a wholly owned subsidiary of Belterra Resort ("Ogle Haus"), commencing on October 15, 2018 and ending on April 30, 2026 as the initial term, with options for renewal.

The Pinnacle Acquisition occurred substantially concurrently with the acquisition of Pinnacle Entertainment by Penn pursuant to the Merger Agreement, dated December 17, 2017, by and among Pinnacle Entertainment, Penn and Franchise Merger Sub, Inc., a wholly owned subsidiary of Penn.

Concurrently with the Pinnacle Acquisition, Boyd (Ohio) PropCo, LLC, a wholly owned subsidiary of Boyd TCIV ("Boyd PropCo"), acquired the real estate associated with Belterra Park in Cincinnati, Ohio (the "Belterra Park Real Property Sale") utilizing mortgage financing from a subsidiary of Gaming and Leisure Properties, Inc. ("GLPI"), pursuant to a purchase agreement, dated December 17, 2017 ("Belterra Park Purchase Agreement"), by and among Penn, Gold Merger Sub, a wholly owned subsidiary of GLPI, Belterra Park and Pinnacle Entertainment, and a Novation and Amendment Agreement, dated October 15, 2018 (the "Novation Agreement"), by and among Penn, Gold Merger Sub, Boyd PropCo, Belterra Park and Pinnacle Entertainment. Pursuant to the Novation Agreement, Gold Merger Sub, the original purchaser under the Belterra Park Purchase Agreement, assigned, transferred and conveyed to Boyd PropCo and Boyd PropCo accepted Gold Merger Sub’s rights, title and interest in the Belterra Park Purchase Agreement.

Consideration Transferred

The fair value of the consideration transferred on the date of the Pinnacle Purchase Agreement included the purchase price of the net assets transferred. The total gross cash consideration was $607.3 million.

Status of Purchase Price Allocation

The Company is following the acquisition method of accounting per FASB Accounting Standards Codification Topic 805 ("ASC 805") guidance. For purposes of these condensed consolidated financial statements, we have allocated the purchase price to the assets acquired and the liabilities assumed based on preliminary estimates of fair value as determined by management with the assistance from third-party specialists. The excess of the purchase price over the preliminary estimated fair value of the assets acquired and liabilities assumed has been recorded as goodwill. The Company has recognized the assets acquired and liabilities assumed in the acquisition based on fair value estimates as of the date of the Pinnacle Acquisition. The determination of the fair values of the acquired assets and assumed liabilities (and the related determination of estimated lives of depreciable tangible and identifiable intangible assets) is currently in process. This determination requires significant judgment. As such, management has not completed its valuation analysis and calculations in sufficient detail necessary to finalize the determination of the fair value of the assets acquired and liabilities assumed, along with the related allocations of goodwill and intangible assets. The final fair value determinations are expected to be completed during third quarter 2019. The final fair value determinations may be significantly different than those reflected in the condensed consolidated financial statements at March 31, 2019.

The following table summarizes the preliminary allocation of the purchase price:



	Preliminary Purchase Price Allocation
(In thousands)	As of December 31, 2018			Adjustments			As of March 31, 2019
Current assets	$	64,604		$	—		$	64,604
Property and equipment	167,000			(400		)	166,600
Other assets	(28		)	—			(28		)
Intangible assets	415,400			(16,700		)	398,700
Total acquired assets	646,976			(17,100		)	629,876

Current liabilities	54,585			—			54,585
Other liabilities	57,832			—			57,832
Total liabilities assumed	112,417			—			112,417
Net identifiable assets acquired	534,559			(17,100		)	517,459
Goodwill	72,740			17,100			89,840
Net assets acquired	$	607,299		$	—		$	607,299

The following table summarizes the preliminary values assigned to acquired property and equipment and estimated useful lives:



(In thousands)	Useful Lives	As Recorded
Land		$	7,350
Buildings and improvements	15 - 40 years	89,150
Furniture and equipment	2 - 10 years	65,200
Construction in progress		4,900
Property and equipment acquired		$	166,600

The following table summarizes the acquired intangible assets and weighted average useful lives of definite-lived intangible assets.



(In thousands)	Useful Lives	As Recorded
Customer relationship	4 years	$	41,200
Trademark	Indefinite	43,000
Gaming license right	Indefinite	314,500
Total intangible assets acquired		$	398,700

The goodwill recognized is the excess of the purchase price over the preliminary values assigned to the assets acquired and liabilities assumed. All of the goodwill was assigned to the Midwest & South reportable segment. All of the goodwill is expected to be deductible for income tax purposes.

The Company recognized $1.0 million and $0.5 million of acquisition related costs that were expensed for the three months ended March 31, 2019 and 2018, respectively. These costs are included in the consolidated statements of operations in the line item entitled "Project development, preopening and writedowns".

Condensed Consolidated Statement of Operations for the three months ended March 31, 2019

The following supplemental information presents the financial results of the Pinnacle Properties included in the Company's condensed consolidated statement of operations for the for the three months ended March 31, 2019:



	Three Months Ended
(In thousands)	March 31, 2019
Total revenues	$	160,558
Net income	$	12,656

Valley Forge Convention Center Partners

On September 17, 2018, we completed the acquisition of Valley Forge Convention Center Partners, L.P., the owner and operator of Valley Forge Casino Resort ("Valley Forge"), pursuant to an Agreement and Plan of Merger (as amended, the "Valley Forge Merger Agreement"), dated as of December 20, 2017, as amended as of September 17, 2018, in each case by and among Boyd, Boyd TCV, LP, a Pennsylvania limited partnership and a wholly owned subsidiary of Boyd (“Boyd TCV”), Valley Forge, and VFCCP SR LLC, a Pennsylvania limited liability company, solely in its capacity as the representative of Valley Forge’s limited partners.

Pursuant to the Valley Forge Merger Agreement, Boyd TCV merged with and into Valley Forge (the "Valley Forge Merger"), with Valley Forge surviving the merger. Valley Forge is now a wholly owned subsidiary of Boyd. Valley Forge is a modern casino and hotel in King of Prussia, Pennsylvania that offers premium accommodations, gaming, dining, entertainment and retail services, and is aggregated into our Midwest & South segment (See Note 12, Segment Information). The net purchase price was $266.6 million.

Consideration Transferred

The fair value of the consideration transferred on the date of the Valley Forge Merger included the purchase price of the net assets transferred. The total gross consideration was $291.4 million.

Status of Purchase Price Allocation

The Company is following the acquisition method of accounting per ASC 805 guidance. For purposes of these condensed consolidated financial statements, we have allocated the purchase price to the assets acquired and the liabilities assumed based on preliminary estimates of fair value as determined by management based on its judgment. The excess of the purchase price over the preliminary estimated fair value of the assets acquired and liabilities assumed has been recorded as goodwill. The Company has recognized the assets acquired and liabilities assumed in the acquisition based on fair value estimates as of the date of the Valley Forge Merger. The determination of the fair values of the acquired assets and assumed liabilities (and the related determination of estimated lives of depreciable tangible and identifiable intangible assets) is currently in process. This determination requires significant judgment. As such, management has not completed its valuation analysis and calculations in sufficient detail necessary to finalize the determination of the fair value of the assets acquired and liabilities assumed, along with the related allocations of goodwill and intangible assets. The final fair value determinations are expected to be completed during second quarter 2019. The final fair value determinations may be significantly different than those reflected in the condensed consolidated financial statements at March 31, 2019.

The following table summarizes the preliminary allocation of the purchase price:



	Preliminary Purchase Price Allocation
(In thousands)	As of December 31, 2018		Adjustments			As of March 31, 2019
Current assets	$	29,909	$	—		$	29,909
Property and equipment	56,500		—			56,500
Other assets	483		2,702			3,185
Intangible assets	148,600		(12,000		)	136,600
Total acquired assets	235,492		(9,298		)	226,194

Current liabilities	12,968		—			12,968
Other liabilities	606		—			606
Total liabilities assumed	13,574		—			13,574
Net identifiable assets acquired	221,918		(9,298		)	212,620
Goodwill	69,446		9,298			78,744
Net assets acquired	$	291,364	$	—		$	291,364

The following table summarizes the preliminary values assigned to acquired property and equipment and estimated useful lives:



(In thousands)	Useful Lives	As Recorded
Land		$	15,200
Buildings and improvements	15 - 40 years	32,900
Furniture and equipment	2 - 6 years	7,971
Construction in progress		429
Property and equipment acquired		$	56,500

The following table summarizes the acquired intangible assets and weighted average useful lives of definite-lived intangible assets.



(In thousands)	Useful Lives	As Recorded
Customer relationship	5 years	$	16,100
Trademark	Indefinite	12,500
Gaming license right	Indefinite	108,000
Total intangible assets acquired		$	136,600

The Company recognized $0.3 million and $0.4 million of acquisition related costs that were expensed for the three months ended March 31, 2019 and 2018, respectively. These costs are included in the condensed consolidated statements of operations in the line item entitled "Project development, preopening and writedowns".

Condensed Consolidated Statement of Operations for the three months ended March 31, 2019

The following supplemental information presents the financial results of Valley Forge included in the Company's condensed consolidated statement of operations for the three months ended March 31, 2019:



	Three Months Ended
(In thousands)	March 31, 2019
Total revenues	$	41,191
Net income	$	6,828

Lattner Entertainment Group Illinois

On June 1, 2018, we completed the acquisition of Lattner Entertainment Group Illinois, LLC ("Lattner"), a distributed gaming operator headquartered in Ottawa, Illinois, pursuant to an Agreement and Plan of Merger (the "Lattner Merger Agreement") dated as of May 1, 2018, by and among Boyd, Boyd TCVI Acquisition, LLC, a wholly owned subsidiary of Boyd ("Boyd TCVI"), Lattner, and Lattner Capital, LLC, solely in its capacity as the representative of the equity holders of Lattner.

Pursuant to the Lattner Merger Agreement, Boyd TCVI merged with and into Lattner (the "Lattner Merger"), with Lattner surviving the Lattner Merger and becoming a wholly owned subsidiary of Boyd. Lattner operates nearly 1,000 gaming units in approximately 220 locations across the state of Illinois and is aggregated into our Midwest & South segment (See Note 12, Segment Information). The net purchase price was $100.0 million.

Consideration Transferred

The fair value of the consideration transferred on the date of the Lattner Merger included the purchase price of the net assets transferred. The total gross consideration was $110.5 million.

Status of Purchase Price Allocation

The Company is following the acquisition method of accounting per ASC 805 guidance. For purposes of these condensed consolidated financial statements, we have allocated the purchase price to the assets acquired and the liabilities assumed based on preliminary estimates of fair value as determined by management based on its judgment. The excess of the purchase price over the preliminary estimated fair value of the assets acquired and liabilities assumed has been recorded as goodwill. The Company has recognized the assets acquired and liabilities assumed in the acquisition based on fair value estimates as of the date of the Lattner Merger. The determination of the fair values of the acquired assets and assumed liabilities (and the related determination of estimated lives of depreciable tangible and identifiable intangible assets) is currently in process. This determination requires significant judgment. As such, management has not completed its valuation analysis and calculations in sufficient detail necessary to finalize the determination of the fair value of the assets acquired and liabilities assumed, along with the related allocations of goodwill and intangible assets. The final fair value determinations are expected to be completed during second quarter 2019. The final fair value determinations may be significantly different than those reflected in the condensed consolidated financial statements at March 31, 2019.

The following table summarizes the preliminary allocation of the purchase price:



	Preliminary Purchase Price Allocation
(In thousands)	As of December 31, 2018		Adjustments		As of March 31, 2019
Current assets	$	10,638	$	—	$	10,638
Property and equipment	9,307		—		9,307
Other assets	1,963		—		1,963
Intangible assets	58,000		—		58,000
Total acquired assets	79,908		—		79,908

Current liabilities	1,062		—		1,062
Total liabilities assumed	1,062		—		1,062
Net identifiable assets acquired	78,846		—		78,846
Goodwill	31,692		—		31,692
Net assets acquired	$	110,538	$	—	$	110,538

The following table summarizes the preliminary values assigned to acquired property and equipment and estimated useful lives:



(In thousands)	Useful Lives	As Recorded
Buildings and improvements	10 - 45 years	$	66
Furniture and equipment	3 - 7 years	9,241
Property and equipment acquired		$	9,307

The following table summarizes the acquired intangible asset and weighted average useful lives of the definite-lived intangible asset.



(In thousands)	Useful Lives	As Recorded
Host agreements	15 years	$	58,000
Total intangible assets acquired		$	58,000

The Company recognized $0.2 million of acquisition related costs that were expensed for the three months ended March 31, 2019. There were no acquisition related costs expensed for the three months ended March 31, 2018. These costs are included in the condensed consolidated statements of operations in the line item entitled "Project development, preopening and writedowns".

We have not provided the amount of revenue and earnings included in our consolidated financial results from the Lattner acquisition for the period subsequent to its acquisition as such amounts are not material three months ended March 31, 2019.

Supplemental Unaudited Pro Forma Information

The following table presents pro forma results of the Company, as though Lattner, Valley Forge and the Pinnacle Properties (the "Acquired Companies") had been acquired as of January 1, 2018. The pro forma results do not necessarily represent the results that may occur in the future. The pro forma amounts include the historical operating results of the Company, Lattner, Valley Forge and the Pinnacle Properties, prior to the acquisition, with adjustments directly attributable to the acquisitions.



	Three Months Ended March 31, 2018
(In thousands)	Boyd Gaming Corporate (As Reported)		Acquired Companies		Boyd Gaming Corporate (Pro Forma)
Total revenues	$	606,118	$	209,716	$	815,834
Net income from continuing operations, net of tax	$	41,399	$	3,446	$	44,845
Basic net income per share	$	0.36			$	0.39
Diluted net income per share	$	0.36			$	0.39

Pro Forma and Other Adjustments

The unaudited pro forma results, as presented above, include adjustments to record: (i) rent expense under the Master Lease; (ii) the net incremental depreciation expense for the adjustment of property and equipment to fair value and the allocation of a portion of the purchase price to amortizing intangible assets; (iii) the increase in interest expense incurred on the incremental borrowings incurred by Boyd to fund the acquisition, including the Belterra Park Mortgage; (iv) the estimated tax effect of the pro forma adjustments and on the historical taxable income of the Acquired Companies; and (v) miscellaneous adjustments as a result of the preliminary purchase price allocation on the amortization of certain assets and liabilities.