<PAGE>   1
                UNITED STATES SECURITIES AND EXCHANGE COMMISSION

                             WASHINGTON, D.C. 20549

                                    FORM 10-K

         (MARK ONE)

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

                     For the fiscal year ended June 30, 1997

                                       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: 33-51672

                           CALIFORNIA HOTEL AND CASINO
             (Exact name of Registrant as specified in its charter)

                NEVADA                                  88-0121743
   (State or other jurisdiction of                   (I.R.S. Employer
    incorporation or organization)                  Identification No.)

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

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

           SECURITIES REGISTERED PURSUANT TO SECTION 12(b) OF THE ACT:
                                      None

           SECURITIES REGISTERED PURSUANT TO SECTION 12(g) OF THE ACT:
                                      None

         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 than the 
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days. YES  X   NO    .
                                              ---     ---
         Indicate by check mark if disclosure of delinquent filers pursuant to
Item 405 of Regulation S-K is not contained herein, and will not be contained to
the best of registrant's knowledge, in definitive proxy or information
statements incorporated by reference in Part III of this Form 10-K or any
amendment to this Form 10-K. [   ]

         As of September 26, 1997, none of the voting stock was held by
non-affiliates of the Registrant. 

         As of September 26, 1997, the registrant had outstanding 1,000 shares
of Common Stock. 
<PAGE>   2
                          CALIFORNIA HOTEL AND CASINO
             (A WHOLLY-OWNED SUBSIDIARY OF BOYD GAMING CORPORATION)
                  
                        1997 ANNUAL REPORT ON FORM 10-K
                  
                               TABLE OF CONTENTS
                  

                                   PART I

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                                                                                       Page No.
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<S>        <C>                                                                            <C>
Item 1.    Business . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .    1
Item 2.    Properties . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .   13
Item 3.    Legal Proceedings  . . . . . . . . . . . . . . . . . . . . . . . . . . . . .   13
Item 4.    Submission of Matters to a Vote of Security-Holders  . . . . . . . . . . . .   13

                                           PART II

Item 5.    Market for Registrant's Common Equity and Related Stockholder Matters  . . .   14
Item 6.    Selected Consolidated Financial Data . . . . . . . . . . . . . . . . . . . .   14
Item 7.    Management's Discussion and Analysis of Financial Condition and
           Results of Operations  . . . . . . . . . . . . . . . . . . . . . . . . . . .   15
Item 7A.   Quantitative and Qualitative Disclosure about Market Risk  . . . . . . . . .   22
Item 8.    Financial Statements and Supplementary Data  . . . . . . . . . . . . . . . .   22
Item 9.    Changes in and Disagreements with Accountants on Accounting and
           Financial Disclosure . . . . . . . . . . . . . . . . . . . . . . . . . . . .   22

                                           PART III

Item 10.   Directors and Executive Officers of the Registrant . . . . . . . . . . . . .   22
Item 11.   Executive Compensation . . . . . . . . . . . . . . . . . . . . . . . . . . .   24
Item 12.   Security Ownership of Certain Beneficial Owners and Management . . . . . . .   26
Item 13.   Certain Relationships and Related Transactions . . . . . . . . . . . . . . .   26

                                           PART IV

Item 14.   Exhibits, Financial Statement Schedules, and Reports on Form 8-K  . . . . .    26

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<PAGE>   3
                                     PART I

ITEM 1.  BUSINESS

GENERAL
                  
         California Hotel and Casino (the "Company") is a gaming company with
operations in the State of Nevada and is the only casino operator with
properties in each of the three principal Las Vegas gaming markets: the Las
Vegas Strip; the Boulder Strip in eastern Las Vegas; and downtown Las Vegas. The
Company owns and operates seven properties in Las Vegas: the Stardust Resort and
Casino (the "Stardust") located on the Las Vegas Strip; Sam's Town Hotel and the
Gambling Hall ("Sam's Town Las Vegas"), the Eldorado Casino (the "Eldorado") and
Jokers Wild Casino ("Jokers Wild") located on or near the Boulder Strip; and the
California Hotel and Casino (the "California"), the Fremont Hotel and Casino
(the "Fremont") and Main Street Station Hotel, Casino and Brewery ("Main Street
Station") located in downtown Las Vegas. In total, the Company currently owns
and operates an aggregate of 340,000 square feet of casino space containing
9,147 slot machines and 240 table games. As such, the Company derives the
majority of its gross revenues from its casino operations, which produced over
60% of gross revenues during the last three fiscal years. Food and beverage
revenue and rooms revenue, which produced approximately 20% and 10%,
respectively, of gross revenues during the last three fiscal years, represent
the Company's other revenue sources which produced more than 10% of gross
revenues during this time frame. See "Properties" and " Business -- Properties."

         The Company is a wholly-owned subsidiary of Boyd Gaming Corporation
("Boyd Gaming"), a multi-jurisdictional gaming company which owns or operates
twelve casino entertainment facilities. The Company directly owns and operates
Sam's Town Las Vegas and the California and owns and operates the Stardust, the
Fremont, the Eldorado, Jokers Wild and Main Street Station through wholly-owned
subsidiaries. Unless the context otherwise requires, the "Company" refers to
California Hotel and Casino and its subsidiaries. The Company was incorporated
in Nevada in 1973. The executive offices of the Company are located at 2950
South Industrial Road, Las Vegas, Nevada 89109, and its telephone number is
(702) 792-7200.

OPERATING STRATEGY

         The Company believes that the following key elements have contributed
to the success of the Company in the past and are central to its future success.

         Value-Oriented Casino Entertainment Experience

         The Company is committed to providing a high-quality casino
entertainment experience to its primarily middle-income customers at an
affordable price in order to develop customer loyalty. The Company delivers
value to its customers through providing service in an inviting and entertaining
environment. The Company delivers additional value to its customers through
moderately-priced casino entertainment, hotel, restaurant and live entertainment
offerings and regularly reinvests in its existing facilities in an effort to
maintain the quality and competitiveness of its properties.

         Lively, Friendly Atmosphere

         Each of the Company's facilities is clean and modern and offers
friendly service in an informal and lively atmosphere. The Company's employee
training programs are designed to motivate employees to provide the type of
friendly and attentive service which the Company seeks to provide at its
facilities. The Company has an extensive customer feedback system, ranging from
guest comment cards in its restaurants and hotel rooms, to other consumer
surveys and research. In addition to providing a measure of customer

                                       -1-
<PAGE>   4
service, comment cards and consumer research allow the Company to obtain
valuable customer feedback and marketing information for its database.

         Emphasis on Slot Play

         The Company emphasizes slot machine wagering, the most consistently
profitable segment of the casino entertainment business. Technological advances
in slot product have resulted in sophisticated interactive games which offer
customers greater variety, more generous payoffs and increased periods of play
for their casino entertainment dollar. The Company continually invests in
upgrading its machines to reflect advances in technology and the development of
proprietary slot games and related equipment at all of its facilities in order
to further enhance the slot customer's experience.

         Comprehensive Marketing and Promotion

         The Company actively promotes its casino entertainment offerings, its
hotels, destination restaurants and live entertainment using a variety of
promotional advertising media including outdoor advertising and print and
broadcast media. The Company develops and maintains an extensive customer
database. The database is expanded daily, adding new casino customers by
obtaining their mailing addresses and other marketing information. To encourage
repeat visitation, the Company employs a direct mail program targeting its
database customers with a variety of product offerings, including incentives to
visit the Company's facilities frequently. During fiscal 1997, the Company
distributed over 9 million pieces of mail to its database customers. The Company
also provides complimentary rooms, food and other services to valued customers,
but maintains limits on such items consistent with its focus on middle-income
patrons.

PROPERTIES

         The Company currently owns and operates seven properties in Las Vegas,
Nevada: the Stardust; Sam's Town Las Vegas; the Eldorado; Jokers Wild; the
California; the Fremont; and Main Street Station.

         The Stardust

         The Stardust, situated on 52 acres of land owned and nine acres of land
leased by the Company on the Las Vegas Strip, is a casino hotel complex with
approximately 87,000 square feet of casino space, a conference center containing
approximately 35,000 square feet of meeting space and a 900-seat showroom. The
casino offers nearly 2,000 slot machines and 79 table games, including tables
featuring "21," craps, roulette, baccarat, mini-baccarat, pai gow, Caribbean
stud and poker, as well as keno. The Stardust features "Enter the Night," a
production show that includes computerized lighting, lasers and digital surround
sound. The Stardust also has one of the largest and best known race and sports
books in the United States and is the home of the Stardust line, a racing and
sports line service that is quoted throughout the United States and abroad. The
Stardust features more than 2,300 guest rooms, 1,500 in its 32-story hotel
tower. The Stardust complex, which is distinguished by dramatic building
lighting, has seven restaurants, a shopping arcade, two swimming pools and
parking spaces for approximately 2,900 cars.

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         The Stardust caters primarily to adult Las Vegas visitors seeking the
classic Las Vegas gaming experience. Using its extensive database, the property
promotes customer loyalty and generates repeat customer business by
communicating with its customers regarding special events, new product offerings
and special incentive promotions at the property. The Company uses a network of
tour operators and wholesalers to reach customers who prefer packaged trips and
print and broadcast media to attract the independent traveler. The Company
attracts proven slot and table game players through direct mail promotions for
tournaments, events and a variety of special offers. With its conference center,
the Stardust also attracts meeting and banquet business. In addition, the
Stardust draws a significant number of walk-in customers. Patrons of the
Stardust come primarily from the western United States, including Southern
California and Arizona, and the Midwest.

         The Company is analyzing various alternatives to utilize the 61-acre
Stardust site, including additional hotel rooms and amenities to more
effectively compete with the new generation of Las Vegas properties.

         Boulder Strip Properties

         Sam's Town Las Vegas is situated on 56 acres of land owned and 7 acres
of land leased by the Company on the Boulder Strip, approximately six miles east
of the Las Vegas Strip. Sam's Town features an approximately 118,000-square foot
casino, a 56-lane bowling center and the 25,000-square foot Western Emporium
retail store. The gaming facilities now include 2,840 gaming machines and 54
table games, including tables featuring blackjack, craps, roulette, pai gow,
poker and Caribbean stud, as well as keno, a race and sports book, and bingo.
The property has 650 guest rooms, 16 restaurants, 500 spaces for recreational
vehicles and approximately 3,200 parking spaces, including two parking garages
which together can accommodate up to 2,000 cars. The resort features a
25,000-square foot atrium which contains extensive foliage and trees, streams,
bridges, and a large waterfall with a laser light show. Adjacent to the atrium
there are several restaurants and a large sports bar. Other features of the
property include an outdoor recreation area, as well as banquet and meeting
facilities. 
 
         Sam's Town Las Vegas has a western theme and features an informal,
friendly atmosphere that appeals to both local residents and visitors. Gaming
and bowling tournaments, paycheck sweepstakes, costume contests and holiday
parties create a social center that attracts many Las Vegas residents. The
property is a major sponsor of the Ladies Professional Bowling Tour and hosts
many bowling events which are televised throughout the United States and attract
participants from around the world. Additionally, the Company attracts local
market patrons, many of whom are repeat customers, by offering excellent
price/value relationships in its food and beverage operations, and by slot
marketing programs that include generous slot payouts. The popularity of Sam's
Town Las Vegas among local residents allows it to benefit from the rapid
development of the Las Vegas metropolitan area, which has been one of the
fastest growing communities in the United States over the last decade. However,
competition from the recently opened Sunset Station property may have a negative
impact on the future performance of Sam's Town Las Vegas. In that regard, the
Company has developed a master plan for Sam's Town Las Vegas calling for, among
other things, a second hotel tower. Although the Company has not yet made any
decision regarding a future Sam's Town Las Vegas expansion, it is currently
exploring the feasibility of such a project.
 
         The Eldorado is situated on four acres of land owned by the Company in
downtown Henderson, Nevada, which is southeast of Las Vegas. The casino has over
16,000 square feet of gaming space featuring approximately 600 slot machines and
11 table games, including tables featuring "21," craps, roulette and pai gow, as
well as keno, bingo and a sports book. The facility also offers three
restaurants and a parking garage for up to 500 cars. The principal customers at
the Eldorado are Henderson residents.
 
         Jokers Wild is situated on 13 acres of land owned by the Company on the
Boulder Strip. The property offers over 22,500 square feet of casino space with
over 640 slot machines and 11 table games, including tables featuring "21,"
craps, roulette, pai gow, Caribbean stud and poker, as well as keno and a sports
book. The facility also offers a buffet restaurant, a coffee shop, an
entertainment lounge, a video arcade and approximately 800 parking spaces.
Jokers Wild serves both local residents and visitors to the Las Vegas area
traveling on the Boulder Highway.

                                       -3-
<PAGE>   6
         Downtown Properties
 
         The California is situated on 13.9 acres of land owned and 1.6 acres of
land leased by the Company in downtown Las Vegas. The California was the
Company's first property and has over 36,000 square feet of gaming space, 781
guest rooms, five restaurants, approximately 5,000 square feet of meeting space,
more than 800 parking spaces, including a parking garage for up to 425 cars, and
an approximately 95-space recreational vehicle park, the only such facility in
the downtown area. The casino offers approximately 1,150 slot machines and 36
table games, including tables featuring "21," craps, roulette, pai gow and
Caribbean stud, as well as keno and a sports book.
 
         The Fremont is situated on 1.4 acres of land owned and 0.9 acres of
land leased by the Company on the principal thoroughfare in downtown Las Vegas.
The property offers 32,000 square feet of casino space including approximately
1,100 slot machines, and 27 table games, including tables featuring "21," craps,
roulette, pai gow, poker and Caribbean stud, as well as keno and a race and
sports book. The hotel has 452 guest rooms and five restaurants, including the
Second Street Grill, an upscale contemporary restaurant, and the Paradise
Buffet, which features tropical-themed surroundings. The property also has
approximately 8,200 square feet of meeting space and a parking garage for up to
350 cars.
 
         Main Street Station was acquired by the Company in December 1993 and
was used to augment the rooms base for the California and Fremont prior to its
opening as a full service hotel casino in November 1996. Main Street Station is
situated on 15 acres of land owned by the Company in downtown Las Vegas and was
renovated and expanded prior to its November 1996 opening. The property includes
a 28,500-square foot, newly-equipped casino with 22 table games and
approximately 865 slot machines. The property also includes 406 renovated hotel
rooms and expanded and renovated food facilities, including a 500-seat buffet, a
130-seat specialty restaurant, a 100-seat cafe, a 200-seat brew pub and oyster
bar and expanded parking to include 2,000 spaces.
          
         The Company coordinates marketing efforts and support functions and has
standardized operating procedures and systems among its three Downtown
Properties with the goal of enhancing revenues and reducing expenses. This
effort includes a consolidated database and marketing program for all Downtown
Properties. The Company believes these efforts will significantly reduce costs
and provide it with a competitive advantage.
 
         While many casinos in downtown Las Vegas compete with other downtown
properties and properties on the Las Vegas Strip for the same customers, the
Company has developed a distinctive niche for its Downtown Properties by
focusing primarily on customers from Hawaii. The Company's marketing strategy
for the Downtown Properties focuses on gaming enthusiasts from Hawaii and tour
and travel agents from Hawaii with whom the Company has cultivated relationships
since it opened the California in 1975. Through the Company's Hawaiian travel
agency, Vacations Hawaii, the Company currently operates six DC-10 charter
flights from Honolulu to Las Vegas each week, helping to ensure stable,
reasonably priced air seats. This, as well as the Company's strong, informal
relationships with other Hawaiian travel agencies, its affordably priced,
all-inclusive packages and its Hawaiian promotions have allowed the California
and the Fremont to capture a significant share of the Hawaiian tourist trade in
Las Vegas. For more than a decade the Downtown Properties have been the leading
Las Vegas destination for visitors from Hawaii. The Company attributes this
success to the amenities and atmosphere at the Downtown Properties, which are
designed to appeal specifically to visitors from Hawaii, and to its marketing
strategy featuring significant promotions in Hawaii and a bi-monthly newsletter
circulated to over 84,000 households, primarily in Hawaii. For the fiscal year
ended June 30, 1997, patrons from Hawaii comprised approximately 70% of the room
nights at the California, 56% of the room nights at the Fremont and 79% of the
room nights at Main Street Station.
 
         The Company, together with other downtown casino operators and the City
of Las Vegas, developed the downtown attraction known as the Fremont Street
Experience. The attraction features a semi-circular space frame nine stories
above the street, stretching along four city blocks against which a sound and
light spectacle is displayed. As part of the project, vehicular traffic on
portions of Fremont Street has been eliminated, asphalt replaced by a patterned
streetscape and special events brought to the downtown area to entertain
visitors.

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The Company believes that, since its opening in December 1995, the Fremont
Street Experience has significantly enhanced the experience of visiting downtown
Las Vegas and has attracted additional customers to the downtown area. While the
downtown area has experienced increased traffic flow as a result of the Fremont
Street Experience, the increased traffic flow has not translated into increased
gaming revenue for the Company's Downtown Properties. In addition, the entity
which operates the Fremont Street Experience (Fremont Street Experience, Limited
Liability Company or "FSE") experienced significant levels of operating
loss and cash deficiency during its first full year of operation. Management
expects this trend to continue and, therefore, does not expect to recover its
investment in this entity. For these reasons, the Company recorded a $5.3
million impairment loss in fiscal 1997 to write-off its entire investment in
FSE. See Note 2 of Notes to Consolidated Financial Statements.
 


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<PAGE>   8

INVESTMENT CONSIDERATIONS

        This Annual Report on Form 10-K contains forward-looking statements
within the meaning of Section 27A of the Securities Act of 1933, as amended.
Discussions containing such forward-looking statements may be found in the
material set forth under "Business" and "Management's Discussion and Analysis
of Financial Condition and Results of Operations," as well as in the Annual
Report generally. Also, documents subsequently filed by the Company with the
Securities and Exchange Commission may contain forward-looking statements.
Actual results could differ materially from those projected in the
forward-looking statements as a result of the investment conditions set forth
below and the matters set forth in the Annual Report generally. The Company
cautions the reader, however, that this list of factors may not be exhaustive,
particularly with respect to future filings.

COMPETITION
         
         The gaming industry is highly competitive. Gaming activities include:
traditional land-based casinos; riverboat and dockside gaming; casino gaming on
Indian land; state-sponsored lotteries; video poker in restaurants, bars and
hotels; pari-mutuel betting on horse racing, dog racing and jai-alai; sports
bookmaking; and card rooms. The casinos owned and being developed by the Company
compete and will in the future compete with all these forms of gaming and with
any new forms of gaming that may be legalized in existing and additional
jurisdictions, as well as with other types of entertainment. In addition,
further expansion of gaming into other jurisdictions could adversely affect the
Company's business by diverting its customers to competitors in such
jurisdictions. In particular, the expansion of casino gaming in or near any
geographic area from which the Company attracts or expects to attract a
significant number of its customers could have a material adverse effect on the
Company's business, financial condition and results of operations. The Company
believes that successful gaming facilities compete based on the following
factors: location; attractions; quality of gaming facilities, gaming experience
and entertainment; quality of food, beverage and atmosphere; and price. Although
the Company believes it competes favorably with respect to these factors in most
of its markets, some of its competitors have significantly greater financial and
other resources than the Company.

         The Company's properties compete primarily with other casino hotels on
the Las Vegas Strip, the Boulder Strip and in downtown Las Vegas. Currently,
there are approximately 25 major gaming properties located on or near the Las
Vegas Strip, 13 located in the downtown area and several located in other areas
of Las Vegas. Las Vegas gaming square footage and room capacity are continuing
to increase. A number of marquee properties have opened in the last several
years, and several others are currently under construction or planned for the
Las Vegas Strip, including the 3,000-room Paris Casino-Resort and the 3,000-room
Bellagio. Additionally, several properties have recently announced or begun
significant expansion and renovation projects, including MGM Grand Hotel/Casino,
Harrah's-Las Vegas and the Sahara Hotel and Casino. Each of the foregoing
facilities has or may have a theme and attractions which have drawn or may draw
significant numbers of visitors. Moreover, most of 


                                      -6-
<PAGE>   9

these facilities attract or may attract primarily middle-income patrons, who are
the focus of the Company's marketing strategy. Also, competition from the
recently opened Sunset Station property may have a negative impact on the future
performance of Sam's Town Las Vegas. Although the Company believes that these
additional facilities will draw more visitors to Las Vegas, these properties
also may divert potential gaming activity from the Company. Future additions,
expansions and enhancements to existing properties and construction of new
properties by the Company's competitors could divert additional gaming activity
from the Company's facilities. There can be no assurance that the Company will
compete successfully in the Las Vegas market in the future.

         ADDITIONAL FINANCING REQUIREMENTS

         The Company intends to finance its current and future expansion
projects primarily with cash flow from operations and borrowings under the
Company's and Boyd Gaming's five-year $500 million reducing revolving bank
credit facility (the "Bank Credit Facility"). If the Company is unable to
finance such projects through cash flow from operations and borrowings under the
Bank Credit Facility, it will have to adopt one or more alternatives, such as
reducing or delaying planned expansion and capital expenditures, selling assets,
restructuring debt or obtaining additional equity or debt financing. No
assurance can be given that the aforementioned sources of funds will be
sufficient to finance the Company's expansion or that other financing will be
available on acceptable terms, in a timely manner or at all. In addition, the
Company's 11% Senior Subordinated Notes due 2002 (the "11% Notes") and the Bank
Credit Facility contain certain restrictions on the ability of the Company to
incur additional indebtedness. If the Company is unable to secure additional
financing, it could be forced to limit or suspend expansion, development and
acquisition projects, which may adversely effect the Company's business,
financial condition and results of operations. See "--Management's Discussion
and Analysis of Financial Condition and Results of Operations--Liquidity and
Capital Resources."

         LEVERAGE AND DEBT SERVICE

         At June 30, 1997, the Company had total long-term debt of approximately
$380 million. Debt service requirements on the Bank Credit Facility consist of
interest expense on outstanding indebtedness. Beginning in December 1998, the
total principal amount available under the Bank Credit Facility will be reduced
by $25 million and reduced by an additional $50 million at the end of each
six-month period thereafter until maturity in June 2001. In July 1997, the
availability under the Bank Credit Facility was reduced by approximately $193
million in connection with Boyd Gaming's issuance of $250 million aggregate
principal amount of 9.50% Senior Subordinated Notes Due 2007 (the "9.50% Boyd
Notes"). Availability under the Bank Credit Facility will be subsequently
increased if and to the extent the Company purchases or redeems the 11% Notes.
No assurance can be given that any such purchase or redemption will be
consummated. Debt service requirements on the 11% Notes issued by a financing
subsidiary of the Company consist of semi-annual interest payments and repayment
of the $185 million principal amount on December 1, 2002. The Company's ability
to service its debt will be dependent on its future performance, which will be
affected by prevailing economic conditions and financial, business and other
factors, certain of which are beyond the Company's control. Accordingly, no
assurance can be given that the Company will maintain a level of operating cash
flow that will permit it to service its obligations. If the Company is unable to
generate sufficient cash flow or is unable to refinance or extend outstanding
borrowings, it will have to adopt one or more alternatives, such as reducing or
delaying planned expansion and capital expenditures, selling assets,
restructuring debt or obtaining additional debt financing. There can be no
assurance that any of these financing strategies could be effected on
satisfactory terms, if at all. In addition, Nevada law contains restrictions on
the ability of companies engaged in the gaming business to undertake certain
financing transactions. Such restrictions may prevent the Company from obtaining
necessary capital. See "--Additional Financing Requirements," "--Governmental
Regulation," and "Management's Discussion and Analysis of Financial Condition
and Results of Operations--Liquidity and Capital Resources."


                                      -7-
<PAGE>   10
GOVERNMENTAL REGULATION

         The Company is subject to a variety of gaming and other regulations. If
additional gaming regulations are adopted, such regulations could impose
restrictions or costs that could have a material adverse effect on the Company.
From time to time, various proposals have been introduced in the Nevada
legislature that, if enacted, could adversely affect the tax, regulatory,
operational or other aspects of the gaming industry and the Company. No
assurance can be given that such legislation will not be enacted. The federal
government has also previously considered a federal tax on casino revenues and
may consider such a tax in the future. In addition, gaming companies are
currently subject to significant state and local taxes and fees in addition to
normal corporate income taxes, and such taxes and fees are subject to increase
at any time. Any material increase in these taxes or fees could adversely affect
the Company.

         The ownership and operation of casino gaming facilities in Nevada are
subject to: (i) the Nevada Gaming Control Act and the regulations promulgated
thereunder (collectively, the "Nevada Act"); and (ii) various local regulation.
The Company's gaming operations are subject to the licensing and regulatory
control of the Nevada Gaming Commission (the "Nevada Commission"), the Nevada
State Gaming Control Board (the "Nevada Board"), and the Clark County Liquor and
Gaming Licensing Board (the "Clark County Board"). The Nevada Commission, the
Nevada Board, and the Clark County Board are collectively referred to herein as
the "Nevada Gaming Authorities."

         The laws, regulations and supervisory procedures of the Nevada Gaming
Authorities are based upon declarations of public policy which are concerned
with, among other things: (i) the prevention of unsavory or unsuitable persons
from having a direct or indirect involvement with gaming at any time or in any
capacity; (ii) the establishment and maintenance of responsible accounting
practices and procedures; (iii) the maintenance of effective controls over the
financial practice of licensees, including the establishment of minimum
procedures for internal fiscal affairs and the safeguarding of assets and
revenues, providing reliable record keeping and requiring the filing of periodic
reports with the Nevada Gaming Authorities; (iv) the prevention of cheating and
fraudulent practices; and (v) the provision of a source of state and local
revenues though taxation and licensing fees. Changes in such laws, regulations
and procedures could have an adverse effect on the Company's gaming operations.

         Corporations that operate casinos in Nevada are required to be licensed
by the Nevada Gaming Authorities. A gaming license requires the periodic payment
of fees and taxes and is not transferable. Boyd Gaming is registered by the
Nevada Commission as a publicly-traded corporation (a "Registered Corporation")
and as such, it is required periodically to submit detailed financial and
operating reports to the Nevada Commission and furnish any other information
which the Nevada Commission may require. Boyd Gaming has been found suitable by
the Nevada Commission to own the stock of the Company. The Company is licensed
by the Nevada Commission to operate non-restricted gaming activities at the
California and Sam's Town Las Vegas and is additionally registered as a holding
corporation and approved by the Nevada Gaming Authorities to own the stock of
Mare Bear, Inc. ("Mare Bear"), the operator of the Stardust; Sam Will, Inc.
("Sam Will"), the operator of the Fremont; and Eldorado, Inc., the operator of
the Eldorado and Joker's Wild. No person may become a stockholder of, or receive
any percentage of profits from, the Company or its subsidiaries without first
obtaining licenses and approvals from the Nevada Gaming Authorities. Boyd
Gaming, the Company, Mare Bear, Sam Will and Eldorado, Inc. have obtained from
the Nevada Gaming Authorities the various registrations, approvals, permits and
licenses required in order to engage in gaming activities in Nevada.

         The Nevada Gaming Authorities may investigate any individual who has a
material relationship to, or material involvement with, the Company or any of
its licensed subsidiaries in order to determine whether such individual is
suitable or should be licensed as a business associate of a gaming licensee.
Officers, directors and certain key employees of the Company and its licensed
subsidiaries must file applications 


                                      -8-
<PAGE>   11

with the Nevada Gaming Authorities and may be required to be licensed or found
suitable by the Nevada Gaming Authorities. Officers, directors and key employees
of the Company who are actively and directly involved in gaming activities of
the Company or its licensed subsidiaries may be required to be licensed or found
suitable by the Nevada Gaming Authorities. The Nevada Gaming Authorities may
deny an application for licensing for any cause which they deem reasonable. A
finding of suitability is comparable to licensing, and both require submission
of detailed personal and financial information followed by a thorough
investigation. The applicant for licensing or a finding of suitability must pay
all the costs of the investigation. Changes in licensed positions must be
reported to the Nevada Gaming Authorities and in addition to their authority to
deny an application for a finding of suitability or licensure, the Nevada Gaming
Authorities have jurisdiction to disapprove a change in a corporate position.

         If the Nevada Gaming Authorities were to find an officer, director or
key employee unsuitable for licensing or unsuitable to continue having a
relationship with the Company or any of its licensed subsidiaries, the
companies involved would have to sever all relationships with such person. In
addition, the Nevada Commission may require the Company or any of its
licensed subsidiaries to terminate the employment of any person who refuses to
file appropriate applications. Determinations of suitability or of questions
pertaining to licensing are not subject to judicial review in Nevada.

         The Company and its licensed subsidiaries are required to submit
detailed financial and operating reports to the Nevada Commission. Substantially
all material loans, leases, sales of securities and similar financing
transactions by the Company and its subsidiaries must be reported to, or
approved by, the Nevada Commission.

         If it were determined that the Nevada Act was violated by the Company
or any of its licensed subsidiaries, the gaming licenses they hold could be
limited, conditioned, suspended or revoked, subject to compliance with certain
statutory and regulatory procedures. In addition, the Company, the subsidiary
involved, the Company, and the persons involved could be subject to substantial
fines for each separate violation of the Nevada Act at the discretion of the
Nevada Commission. Further, a supervisor could be appointed by the Nevada
Commission to operate the Company's gaming properties and, under certain
circumstances, earnings generated during the supervisor's appointment (except
for reasonable rental value of the Company's gaming properties) could be
forfeited to the State of Nevada. Limitation, conditioning or suspension of any
gaming license or the appointment of a supervisor could (and revocation of any
gaming license would) materially adversely affect the Company's gaming
operations.

         Any beneficial holder of the Company's voting securities, regardless of
the number of shares owned, may be required to file an application, be
investigated, and have his suitability as a beneficial holder of the Company's
voting securities determined if the Nevada Commission has reason to believe that
such ownership would otherwise be inconsistent with the declared policies of the
state of Nevada. The applicant must pay all costs of investigation incurred by
the Nevada Gaming Authorities in conducting any such investigation.

         The Nevada Act requires any person who acquires more than 5% of the
Company's voting securities to report the acquisition to the Nevada Commission.
The Nevada Act requires that beneficial owners of more than 10% of the Company's
voting securities apply to the Nevada Commission for a finding of suitability
within thirty days after the Chairman of the Nevada Board mails the written
notice requiring such filing. Under certain circumstances, an "institutional
investor," as defined in the Nevada Act, which 


                                      -9-
<PAGE>   12

acquires more than 10%, but not more than 15%, of the Company's voting
securities may apply to the Nevada Commission for a waiver of such finding of
suitability if such institutional investor holds the voting securities for
investment purposes only. An institutional investor shall not be deemed to hold
voting securities for investment purposes unless the voting securities were
acquired and are held in the ordinary course of business as an institutional
investor and not for the purpose of causing, directly or indirectly, the
election of a majority of the members of the board of directors of the Company,
any change in the Company's corporate charter, bylaws, management, policies or
operations of the Company, or any of its gaming affiliates, or any other action
which the Nevada Commission finds to be inconsistent with holding the Company's
voting securities for investment purposes only. Activities which are not deemed
to be inconsistent with holding voting securities for investment purposes
include only: (i) voting on all matters voted on by stockholders; (ii) making
financial and other inquiries of management of the type normally made by
securities analysts for informational purposes and not to cause a change in its
management, policies or operations; and (iii) such other activities as the
Nevada Commission may determine to be consistent with such investment intent. If
the beneficial holder of voting securities who must be found suitable is a
corporation, partnership or trust, it must submit detailed business and
financial information including a list of beneficial owners. The applicant is
required to pay all costs of investigation.

         Any person who fails or refuses to apply for a finding of suitability
or a license within thirty days after being ordered to do so by the Nevada
Commission or the Chairman of the Nevada Board, may be found unsuitable. The
same restrictions apply to a record owner if the record owner, after request,
fails to identify the beneficial owner. Any stockholder found unsuitable and who
holds, directly or indirectly, any beneficial ownership of the common stock of a
Registered Corporation beyond such period of time as may be prescribed by the
Nevada Commission may be guilty of a criminal offense. The Company is subject to
disciplinary action if, after it receives notice that a person is unsuitable to
be a stockholder or to have any other relationship with the Company or any
of its licensed subsidiaries, the Company (i) pays that person any dividend or
interest upon voting securities of the Company, (ii) allows that person to
exercise, directly or indirectly, any voting right conferred through securities
held by that person, (iii) pays remuneration in any form to that person for
services rendered or otherwise, or (iv) fails to pursue all lawful efforts to
require such unsuitable person to relinquish his voting securities for cash at
fair market value. Additionally, the Clark County Board has taken the position
that it has the authority to approve all persons owning or controlling the stock
of any corporation controlling a gaming license.

         The Nevada Commission may, in its discretion, require the holder of any
debt security of a Registered Corporation to file applications, be investigated
and be found suitable to own the debt security of a Registered Corporation. If
the Nevada Commission determines that a person is unsuitable to own such
security, then pursuant to the Nevada Act, the Registered Corporation can be
sanctioned, including the loss of its approvals, if without the prior approval
of the Nevada Commission, it: (i) pays to the unsuitable person any dividend,
interest, or any distribution whatsoever; (ii) recognizes any voting right by
such unsuitable person in connection with such securities; (iii) pays the
unsuitable person remuneration in any form; or (iv) makes any payment to the
unsuitable person by way of principal, redemption, conversion, exchange,
liquidation, or similar transaction.

         The Company is required to maintain a current stock ledger in Nevada
which may be examined by the Nevada Gaming Authorities at any time. If any
securities are held in trust by an agent or by a nominee, the record holder may
be required to disclose the identity of the beneficial owner to the Nevada
Gaming Authorities. A failure to make such disclosure may be grounds for finding
the record holder unsuitable. 

                                      -10-
<PAGE>   13

The Company is also required to render maximum assistance in determining the
identity of the beneficial owner. The Nevada Commission has the power to require
the Company's securities to bear a legend indicating that the securities are
subject to the Nevada Act. However, to date, the Nevada Commission has not
imposed such a requirement on the Company.

         The Company may not make a public offering of its securities without
the prior approval of the Nevada Commission if the securities or the proceeds
therefrom are intended to be used to construct, acquire or finance gaming
facilities in Nevada, or to retire or extend obligations incurred for such
purposes. Such approval, if given, does not constitute a finding, recommendation
or approval by the Nevada Gaming Authorities as to the accuracy or adequacy of
the prospectus or the investment merits of the securities. Any representation to
the contrary is unlawful. On September 20, 1996, the Nevada Commission granted
the Company prior approval to make public offerings for a period of one year,
subject to certain conditions ("Shelf Approval"). However, the Shelf Approval
may be rescinded for good cause without prior notice upon the issuance of an
interlocutory stop order by the Chairman of the Nevada Board. This offering is
made pursuant to the Shelf Approval. The Shelf Approval does not constitute a
finding, recommendation or approval by the Nevada Commission or the Nevada Board
as to the accuracy or adequacy of the prospectus or the investment merits of the
securities offered. Any representation to the contrary is unlawful.

         Changes in control of the Company through merger, consolidation, stock
or asset acquisitions, management or consulting agreements, or any act or
conduct by a person whereby he obtains control, may not occur without the prior
approval of the Nevada Commission. Entities seeking to acquire control of a
Registered Corporation must satisfy the Nevada Gaming Authorities in a variety
of stringent standards prior to assuming control of such Registered Corporation.
The Nevada Commission may also require controlling stockholders, officers,
directors and other persons having a material relationship or involvement with
the entity proposing to acquire control, to be investigated and licensed as part
of the approval process relating to the transaction.

         The Nevada legislature has declared that some corporate acquisitions
opposed by management, repurchase of voting securities and corporate defense
tactics affecting Nevada gaming licensees, and Registered Corporations that are
affiliated with those licensees, may be injurious to stable and productive
corporate gaming. The Nevada Commission has established a regulatory scheme to
ameliorate the potentially adverse effects of these business practices upon
Nevada's gaming industry and to further Nevada's policy to: (i) assure the
financial stability of corporate gaming operators and their affiliates; (ii)
preserve the beneficial aspects of conducting business in the corporate form;
and (iii) promote a neutral environment for the orderly governance of corporate
affairs. Approvals are, in certain circumstances, required from the Nevada
Commission before the Company can make exceptional repurchases of voting
securities above the current market price thereof and before a corporate
acquisition opposed by management can be consummated. The Nevada Act also
requires prior approval of a plan of recapitalization proposed by the Company's
Board of Directors in response to a tender offer made directly to the Registered
Corporation's stockholders for the purposes of acquiring control of the
Registered Corporation.

         License fees and taxes, computed in various ways depending on the type
of gaming or activity involved, are payable to the State of Nevada, Clark County
and the City of Las Vegas. Depending upon the particular fee or tax involved,
these fees and taxes are payable either monthly, quarterly or annually and are


                                      -11-
<PAGE>   14

based upon any of: (i) a percentage of the gross revenues received; (ii) the
number of gaming devices operated; or (iii) the number of table games operated.
A casino entertainment tax is also paid by casino operations where entertainment
is furnished in connection with the selling of food or refreshments.

         Any person who is licensed, required to be licensed, registered,
required to be registered, or is under common control with such persons
(collectively "Licensees"), and who proposes to become involved in a gaming
venture outside of Nevada is required to deposit with the Nevada Board, and
thereafter maintain, a revolving fund in the amount of $10,000 to pay the
expenses of investigation of the Nevada Board of their participation in such
foreign gaming. The revolving fund is subject to increase or decrease in the
discretion of the Nevada Commission. Thereafter, Licensees are required to
comply with certain reporting requirements imposed by the Nevada Act. Licensees
are also subject to disciplinary action by the Nevada Commission if they
knowingly violate any laws of the foreign jurisdiction pertaining to the foreign
gaming operation, fail to conduct the foreign gaming operation in accordance
with the standards of honesty and integrity required of Nevada gaming
operations, engage in activities that are harmful to the State of Nevada or its
ability to collect gaming taxes and fees, or employ a person in the foreign
operation who has been denied a license or finding of suitability in Nevada on
the ground of personal unsuitability.

         The sale of food or alcoholic beverages at the Company's Nevada casinos
is subject to licensing, control and regulation by the applicable local
authorities. All licenses are revocable and are not transferable. The agencies
involved have full power to limit, condition, suspend or revoke any such
license, and any such disciplinary action could (and revocation would) have a
material adverse effect upon the operations of the affected casino or casinos.

         ENVIRONMENTAL RISKS

         The Company is subject to certain federal, state and local
environmental, safety and health laws, regulations and ordinances that apply to
non-gaming businesses generally, such as the Clean Air Act, Clean Water Act,
Occupational Safety and Health Act, Resource Conservation and Recovery Act and
the Comprehensive Environmental Response, Compensation, and Liability Act. The
Company has not made, and does not anticipate making, material expenditures with
respect to such environmental, safety and health laws, regulations and
ordinances. However, the coverage and attendant compliance costs associated with
such laws, regulations and ordinances may result in future additional costs to
the Company's operations.  Any significant environmental liability or compliance
costs could have a material adverse effect on the Company's business, financial
condition and results of operations.

         RELIANCE ON CERTAIN MARKETS

         The California, Fremont and Main Street Station derive a substantial
portion of their customers from the Hawaiian market. In fiscal 1997, patrons
from Hawaii comprised approximately 70% of the room nights at the California,
over 56% at the Fremont and over 79% at Main Street Station. An increase in fuel
costs or transportation prices, a decrease in airplane seat availability or a
deterioration of relations with tour and travel agents, as they affect travel
between the Hawaiian market and the Company's facilities, could materially
adversely affect the Company's business, financial condition and results of
operations. The Company's properties also draw a substantial number of customers
from certain other specific geographic areas, including Southern California,
Arizona, Las Vegas and the Midwest. Adverse economic conditions in any of these
markets, or the failure of the Company's facilities to continue to attract
customers from these geographic market as a result of increased competition 


                                      -12-
<PAGE>   15
in those markets could have a material adverse effect on the Company's business,
financial condition and results of operations.

EMPLOYEES
         
         At June 30, 1997, the Company employed approximately 8,400 persons:
approximately 2,600 at the Stardust; 2,400 at Sam's Town Las Vegas; 300 at the
Eldorado; 340 at Joker's Wild; 1,000 at the California; 975 at the Fremont; and
775 at Main Street Station. On such date, the Company had collective bargaining
relationships with 11 unions covering approximately 2,600 employees,
substantially all of whom are employed at the Stardust and the Fremont. Several
collective bargaining agreements are currently in effect; other agreements have
expired and are in various stages of negotiation. Employees covered by expired
agreements have continued to work during the negotiations, in some cases under
the terms of the expired agreements and in others under modifications thereof.

ITEM 2.  PROPERTIES

         The following table sets forth certain information regarding the
properties owned or operated by the Company as of June 30, 1997.
 
<TABLE>
<CAPTION>

                                            YEAR BUILT    CASINO SPACE     SLOT     TABLE  HOTEL                   LAND
                                            OR ACQUIRED    (SQ. FT.)     MACHINES   GAMES  ROOMS    RESTAURANTS   (ACRES)
                                            -----------   ------------   --------   -----  -----    -----------   -------
<S>                                         <C>           <C>            <C>        <C>    <C>      <C>           <C>
LAS VEGAS STRIP
Stardust Resort and Casino................      1985          87,000       1,961      79   2,320          7          61
 
DOWNTOWN LAS VEGAS
California Hotel and Casino...............      1975          36,000       1,151      36     781          5          16
Fremont Hotel and Casino..................      1985          32,000       1,088      27     452          5           2
Main Street Station Hotel, Casino and
  Brewery.................................      1993          28,500         865      22     406          4          15
 
BOULDER STRIP
Sam's Town Las Vegas......................      1979         118,000       2,841      54     650         16          63
Eldorado Casino...........................      1993          16,000         600      11      --          3           4
Jokers Wild Casino........................      1993          22,500         641      11      --          2          13
                                                             -------      ------     ---   -----         --         ---
        Total.............................                   340,000       9,147     240   4,609         42         174
                                                             =======      ======     ===   =====         ==         ===
</TABLE>

ITEM 3.  LEGAL PROCEEDINGS

         The Company and its subsidiaries are parties to various legal
proceedings arising in the ordinary course of business. In the opinion of
management, all pending claims in such matters, if adversely decided, would not
have a material adverse effect on the Company's financial position or results of
operations.

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

         None.

                                      -13-
<PAGE>   16

                                    PART II

ITEM 5.  MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS

         There is currently no established public trading market for the
Company's Common Stock. Boyd Gaming is the sole stockholder of the Company.

ITEM 6.  SELECTED CONSOLIDATED FINANCIAL DATA

         The selected consolidated financial data presented below as of June 30,
1997 and 1996 and for the fiscal years ended June 30, 1997, 1996 and 1995, have
been derived from the audited consolidated financial statements contained
elsewhere in this Form 10-K. The selected consolidated financial data presented
below as of June 30, 1995 and as of and for the fiscal years ended June 30, 1994
and 1993 have been derived from audited consolidated financial statements of the
Company not contained herein. Operating results for the fiscal years shown below
are not necessarily indicative of the results that may be expected for future
fiscal years.

<TABLE>
<CAPTION>
                                                                        FOR THE YEAR ENDED JUNE 30,
                                                           ----------------------------------------------------
                                                             1997       1996       1995       1994       1993   
                                                           --------   --------   --------   --------   --------
                                                                              (IN THOUSANDS)
<S>                                                        <C>        <C>        <C>        <C>        <C>
INCOME STATEMENT DATA
Net revenues............................................   $523,799   $523,430   $496,831   $458,712   $431,174
Operating expenses(a)...................................    489,241    463,846    439,969    399,778    367,740 
                                                           --------   --------   --------   --------   --------
Operating income........................................     34,558     59,584     56,862     58,934     63,434 
Interest expense, net of amounts capitalized............    (33,622)   (33,820)   (38,492)   (30,354)   (33,672)
Interest income.........................................        127         --         40        199      1,449 
Gain on investment......................................         --         --         --         --      1,062 
                                                           --------   --------   --------   --------   --------
Income before provision for income taxes, cumulative
  effect of a change in accounting principle and
  extraordinary item....................................      1,063     25,764     18,410     28,779     32,273 
Provision for income taxes..............................        487     10,675      8,780     10,778     11,469 
                                                           --------   --------   --------   --------   --------
Income before cumulative effect of a change in 
  accounting principle and extraordinary item...........        576     15,089      9,630     18,001     20,804 
Cumulative effect of a change in accounting for income
  taxes.................................................         --         --         --      2,035         -- 
                                                           --------   --------   --------   --------   --------
Net income before extraordinary item....................        576     15,089      9,630     20,036     20,804 
Extraordinary item, net of tax benefit..................         --        842         --         --      7,397 
                                                           --------   --------   --------   --------   --------
Net income..............................................   $    576   $ 14,247   $  9,630   $ 20,036   $ 13,407 
                                                           ========   ========   ========   ========   ========
</TABLE>

<TABLE>
<CAPTION>
                                                                                 JUNE 30,
                                                           ----------------------------------------------------
                                                             1997       1996       1995       1994       1993  
                                                           --------   --------   --------   --------   --------
                                                                              (IN THOUSANDS)
<S>                                                        <C>        <C>        <C>        <C>        <C>
BALANCE SHEET DATA
Total assets............................................   $590,136   $577,520   $578,882   $585,996   $496,167
Long-term debt, net of current maturities...............    378,456    364,415    369,382    375,637    361,927
Stockholder's equity....................................    130,426    129,850    104,353     94,723     72,553
</TABLE>

---------
(a) Includes $5,325 of impairment loss during the fiscal year ended June 30, 
    1997. See Note 2 to Notes to Consolidated Financial Statements.


                                      -14-
<PAGE>   17
ITEM 7.     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 the Jokers Wild
and "Downtown Properties" consists of the California, the Fremont, and Main
Street Station (opened November 1996). Net revenues displayed in this table and
discussed in this section are net of promotional allowances; as such, references
to rooms revenue and food and beverage revenue do not agree to the amounts on
the Consolidated Statements of Income. Operating income from properties for the
purpose of this table exclude corporate expense, including related depreciation
and amortization, and preopening expense.

<TABLE>
<CAPTION>
                                                    YEAR ENDED JUNE 30,
                                         -------------------------------------------
                                           1997             1996             1995
                                         --------         --------         --------
                                                       (In thousands)
<S>                                       <C>              <C>              <C>
Net revenues
  Stardust  . . . . . . . . . . . .      $180,387         $194,513         $193,563
  Boulder Strip Properties  . . . .       193,004          189,315          168,036
  Downtown Properties . . . . . . .       150,408          139,602          135,232
                                         --------         --------         -------- 
       Total properties . . . . . .      $523,799         $523,430         $496,831
                                         ========         ========         ========
Operating income
  Stardust  . . . . . . . . . . . .      $ 19,086         $ 30,748         $ 30,688
  Boulder Strip Properties  . . . .        26,766           23,904           15,551
  Downtown Properties . . . . . . .        10,390(a)        18,444           22,561
                                         --------         --------         --------  
       Total properties . . . . . .      $ 56,242         $ 73,096         $ 68,800
                                         ========         ========         ========
</TABLE>
--------
(a)  Before preopening expense.

FISCAL 1997 COMPARED TO FISCAL 1996

Revenues 
--------

         Consolidated net revenues remained relatively flat during fiscal 1997
compared to fiscal 1996. Company-wide casino revenue decreased 1.2%, while food
and beverage revenue increased 5.7% and rooms revenue increased 1.1%. Net
revenues were enhanced by the opening of Main Street Station in November 1996,
and offset by declines in net revenues experienced principally at the Stardust
(7.3%), the California (13.1%) and the Fremont (5.7%). These declines in net
revenues are attributable, in each case, to increased competition. In addition,
the California was adversely impacted by construction disruption during the
first quarter of fiscal 1997.

Operating Income
----------------

         Consolidated operating income was $34.6 million during fiscal 1997
compared to $59.6 million in fiscal 1996. Consolidated operating income in
fiscal 1997 was impacted by $3.5 million in preopening expense related to the
November 1996 opening of Main Street Station and $5.3 million in impairment loss
related to the Company's investment in FSE. Operating income before preopening
expense and impairment loss declined 27.2% due to declines experienced at the
Stardust and Downtown Properties, partially offset by an increase in operating
income at the Boulder Strip Properties.


                                      -15-
<PAGE>   18
Stardust
--------

         Net revenues at the Stardust declined by 7.3% during fiscal 1997
compared to fiscal 1996. The majority of the decline is attributable to a 8.5%
reduction in casino revenues, as a result of a decline in slot wagering and a
lower win percentage in the sports book partially offset by increased wagering.
Revenues from rooms, food and beverage also declined by approximately 6.2%
during the fiscal year due to a decline in the number of occupied rooms and food
covers. Operating income declined by 37.9% to $19.1 million in fiscal 1997
compared to fiscal 1996, and operating income margin declined from 15.8% in
fiscal 1996 to 10.6% in fiscal 1997. These declines in operating income and
operating income margin are primarily the result of the decline in revenues.

Boulder Strip Properties
------------------------

         Net revenues at the Boulder Strip Properties increased 1.9% during
fiscal 1997 compared to fiscal 1996. The increase is primarily attributable to a
2.2% increase in casino revenue as a result of increased wagering volume in
table games and slots at Sam's Town Las Vegas. Rooms revenues and food and
beverage revenue increased 11.0% and 2.2%, respectively, over the prior fiscal
year's levels. The increase in rooms revenue is primarily attributable to a
24.3% increase in average daily room rates at Sam's Town Las Vegas. Operating
income margin at the Boulder Strip Properties increased from 12.6% in fiscal
1996 to 13.9% in fiscal 1997, due to the increase in net revenues as well as
improved operating margins in the rooms and food and beverage departments at
Sam's Town Las Vegas.

DOWNTOWN PROPERTIES
-------------------

         Net revenues at the Downtown Properties increased 7.7% during fiscal
1997 compared to fiscal 1996. The increase is attributable to the November 1996
opening of Main Street Station which was partially offset by declines in net
revenues at the California and Fremont of 13.1% and 5.7%, respectively. These
two properties have been affected by the opening of Main Street Station, which
has initially attracted patrons from their customer bases. In addition, each
component of the California's net revenues was adversely impacted by a rooms
remodel project which reduced its room availability by approximately 15% during
the first fiscal quarter of 1997. Aggregate operating income for the Downtown
Properties declined by 43.7% during fiscal 1997 to $10.4 million, and aggregate
operating income margin for the Downtown Properties decreased from 13.2% in
fiscal 1996 to 6.9% in fiscal 1997. These declines are a result of the reduction
in net revenues at the California and Fremont. In addition, Main Street Station
posted a $1.9 million operating loss before preopening expense since its opening
in November 1996.

         Vacations Hawaii, an affiliate of the Company, was acquired by Boyd
Gaming in October 1995 and operates as a travel agency for the benefit of the
Downtown Properties. Hawaiian customers comprise a majority of the available
room nights at the Downtown Properties. See "Business -- Properties."

OTHER EXPENSES
--------------

         Depreciation and amortization expense was $44.4 million in both fiscal
1997 and fiscal 1996 as increases in fixed assets primarily related to the
opening of Main Street Station in November 1996 were offset by the increase in
the level of fully depreciated assets at the Company's older properties.

         Corporate expenses remained relatively constant at $11.6 million in
fiscal 1997 compared to $11.7 million in fiscal 1996.

         During fiscal 1997, the Company recorded a preopening charge of $3.5
million upon the opening of Main Street Station in November 1996. There were no
such charges in fiscal 1996.



                                      -16-
<PAGE>   19

IMPAIRMENT LOSS
---------------

         The Company recorded a $5.3 million impairment loss related to its
17.4% ownership interest in FSE during fiscal 1997. This impairment loss is
principally due to the significant levels of operating loss and operating cash
deficiency reported in May 1997 by FSE relating to its first full year of
operation. Management expects this trend to continue and, therefore, does not
expect to recover its investment in this entity.

OTHER INCOME (EXPENSE)
----------------------

         Other income and expense is primarily comprised of interest expense,
net of amounts capitalized. Interest expense decreased slightly during fiscal
1997 to $33.6 million from $33.8 million in fiscal 1996 as slightly lower
average interest rates offset slightly higher levels of average debt
outstanding.

PROVISION FOR INCOME TAXES
--------------------------

         The Company's effective tax rate was 46% and 41%, respectively, for
the fiscal years ended June 30, 1997 and 1996. The fluctuation in the rates is
primarily attributable to the level of certain non-deductible Company provided
benefits relative to the decline in pre-tax income in fiscal 1997 compared to
fiscal 1996.

EXTRAORDINARY ITEM
------------------

         The Company recorded an extraordinary loss of $.8 million, net of tax,
during fiscal 1996 related to the write-off of unamortized bank loan fees in
connection with the completion of the Company's current Bank Credit Facility in
June 1996.

NET INCOME (LOSS)
-----------------

         As a result of the foregoing factors, the Company reported net income
of $0.6 million for fiscal 1997 compared to net income of $14.2 million in
fiscal 1996.



FISCAL 1996 COMPARED TO FISCAL 1995
-----------------------------------

REVENUES
--------

         Consolidated net revenues increased 5.4% for fiscal 1996 compared to
fiscal 1995. The increase in net revenues for fiscal 1996 resulted primarily
from increased revenues at Sam's Town Las Vegas of 14.9%. Revenue growth on a
consolidated basis in fiscal 1996 was achieved in all major revenue categories,
with casino revenue increasing 5.5%, room revenue increasing 2.6%, food and
beverage revenue increasing 6.0% compared to fiscal 1995. Slot revenue, which
continued to account for more than 70% of casino revenue, increased 8.2% in
fiscal 1996 compared to fiscal 1995. The increase in slot revenue was primarily
attributable to a 24% increase in slot revenue at Sam's Town Las Vegas. Table
games revenue, the only other significant component of casino revenue, decreased
3.6% in fiscal 1996 compared to fiscal 1995. Company-wide room revenue increased
2.6% in fiscal 1996 compared to fiscal 1995 as a result of a 2.1% increase in
occupied rooms and a 6.4% increase in the average daily room rate. The increase
in occupied rooms was attributable to the opening of the California rooms
expansion (146 rooms opened in December 1994). The rooms expansion project was
open for the entire fiscal 1996 but was only open for


                                      -17-
<PAGE>   20
the last six months of fiscal 1995. Occupancy statistics did not include rooms
at Main Street Station which the Company used until the November 1996 opening of
Main Street Station to augment the rooms base at the California and the Fremont.
The Main Street Station property was purchased in December 1993 as a closed
casino hotel facility. In November 1996, the Company completed a major
renovation of the facility and opened Main Street Station for business.

OPERATING INCOME
----------------

         Consolidated operating income increased 4.8% for fiscal 1996 compared
to fiscal 1995 while consolidated operating income margins remained at 11.4%.
This increase in operating income and operating income margins was primarily
attributable to increases at Sam's Town Las Vegas of 83% and 4.3 percentage
points, respectively, offset by declines at the Downtown Properties of 18.2% and
3.5 percentage points, respectively.

STARDUST
--------

         Net revenues at the Stardust increased 0.5% for fiscal 1996 as compared
to the prior fiscal year. Casino and food and beverage revenues declined 0.5%
and 1.6%, respectively, while rooms revenue increased 3.4% and showroom revenue
increased 9.3% for fiscal 1996 as compared to fiscal 1995. Slot revenue declined
1.3% in fiscal 1996 with a 2.3% increase in wagering offset by lower net
winnings. Table games revenue declined 4.1% for fiscal 1996 as compared to
fiscal 1995 as a result of an increase of 4.3% in wagering offset by lower net
winnings. Other casino revenues increased 11.9% for fiscal 1996 primarily as a
result of a 28% increase in revenue in the sports book. Rooms revenue at the
Stardust increased 3.4% for fiscal 1996 compared to fiscal 1995 with a 1.3%
decline in occupied rooms offset by a 7.9% increase in average daily room rate.
The Stardust posted an occupancy rate of 96% in fiscal 1996 versus 97% in the
prior fiscal year. Operating income increased slightly in fiscal 1996 compared
to fiscal 1995 and operating income margin was 15.8% compared to 15.9%,
respectively, for fiscal 1996 versus fiscal 1995. The slight decline in
operating income margin was primarily the result of higher advertising and
promotional expenses not fully offset by increased operating income and
operating income margin in the rooms department.

BOULDER STRIP PROPERTIES
------------------------

         Net revenues for the Boulder Strip Properties increased 12.7% for
fiscal 1996 versus fiscal 1995 primarily as a result of increased revenues at
Sam's Town Las Vegas. Sam's Town Las Vegas revenue increased 14.9% for fiscal
1996 while revenues increased 6.8% at Jokers Wild and declined slightly at the
Eldorado. Casino revenues at the Boulder Strip Properties increased 16.7% for
fiscal 1996 versus fiscal 1995, while rooms revenue increased 4.7% and food and
beverage revenue increased 4.8%. Operating income at the Boulder Strip
Properties increased 54% for fiscal 1996 compared to fiscal 1995 while operating
income margin increased 3.3 percentage points to 12.6% for fiscal 1996. Sam's
Town Las Vegas posted increases in operating income and operating income margin
of 83% and 4.3 percentage points, respectively, for the 1996 fiscal year.
Operating income margins increased 2.5 percentage points at the Eldorado and
declined 2.3 percentage points at Jokers Wild for fiscal 1996 versus fiscal
1995. The increase in operating income margin at the Eldorado was a result of
increased casino revenue while the decline in operating income margin at Jokers
Wild was primarily a result of increased expenses in the food and beverage
department for fiscal 1996 versus fiscal 1995. Management believes that the
significant increases in revenues, operating income and operating income margin
at Sam's Town Las Vegas for fiscal 1996 versus fiscal 1995 were primarily
attributable to the implementation of successful marketing programs creating
increased customer awareness and visitation.

DOWNTOWN PROPERTIES
-------------------

         Net revenues at the Downtown Properties increased 3.2% for fiscal 1996
compared to fiscal 1995. Net revenues at the California increased 1.4% while net
revenues at the Fremont increased 5.2%. Casino revenues at the Downtown
Properties were up slightly while food and beverage revenue increased 20% and

                                      -18-
<PAGE>   21
rooms revenue declined slightly. Operating income and operating income margins
at the Downtown Properties declined 18.2% and 3.5 percentage points,
respectively in fiscal 1996 as compared to fiscal 1995. Operating income at the
California declined 20% while operating income margin at the California declined
3.7 percentage points for fiscal 1996. The decline in operating income and
operating income margin at the California was primarily the result of increased
operating costs in the rooms and food and beverage departments and increased
advertising and promotional costs. Operating income and operating income margin
at the Fremont declined 15.6% and 3.1 percentage points, respectively for fiscal
1996 compared to fiscal 1995 primarily as a result of increased advertising and
promotional costs. Construction of the Fremont Street Experience project, which
was completed and opened to the public in December 1995, negatively impacted the
Downtown Properties for the majority of the first and second fiscal quarter.

OTHER EXPENSES
--------------

         Interest expense, net of amounts capitalized, decreased $4.7 million or
12.1% for fiscal 1996 compared to fiscal 1995 primarily as a result of more
capitalized interest related to projects under development and lower net
borrowings. Depreciation and amortization expense for fiscal 1996 decreased $1.5
million or 3.3% compared to fiscal 1995.

PROVISION FOR TAXES
-------------------

         The Company's tax rate for fiscal 1996 was 41% compared to 48% in
fiscal 1995. The Company's 1995 tax rate was affected by the increase in certain
non-deductible Company provided benefits.

EXTRAORDINARY ITEM
------------------

         The Company recorded an extraordinary loss, net of tax, of $.8 million
in fiscal 1996. This extraordinary loss resulted from the write-off of
unamortized bank loan fees in connection with its recent bank refinancing which
was completed on June 19, 1996.

NET INCOME
----------

         As a result of these factors, net income before extraordinary item
increased $6.0 million and net income increased $5.1 million for fiscal 1996
compared to fiscal 1995.

LIQUIDITY AND CAPITAL RESOURCES

Cash Flow and Working Capital
        
         The Company's policy is to use operating cash flow in combination with
debt financing to fund renovations of its properties and expansion of its
business. During fiscal 1997, the Company completed an expansion and renovation
of Main Street Station for approximately $48 million expended over the course of
fiscal 1997 and 1996.


                                      -19-
<PAGE>   22
         During fiscal 1997, the Company's generated operating cash flows of
$34.8 million compared to $66.5 million in fiscal 1996 and $39.6 million in
fiscal 1995. Operating cash flows in fiscal 1997 were impacted by increased
levels of competition as well as construction disruption at the California. As
of June 30, 1997 and 1996, the Company had balances of cash and cash equivalents
of approximately $30.1 million and $28.4 million, respectively, and working
capital deficits of $5.8 million and $6.7 million, respectively. The Company has
historically operated with negative working capital in order to minimize
borrowings (and related interest costs) under its Bank Credit Facility. The
working capital deficits are funded through cash generated from operations as
well as borrowings under the Bank Credit Facility.

Capital Expenditures

        During fiscal 1997, net cash used in investing activities was $47.3
million versus $41.2 million in fiscal 1996 and $37.6 million in fiscal 1995.
The Company is committed to continually maintaining and enhancing its existing
facilities, most notably by upgrading and remodeling its casinos, hotel rooms,
restaurants and public space and by providing the latest slot machines for its
customers. The Company's capital expenditures for these purposes were
approximately $17.5 million, $25.4 million and $22.6 million during the years
ended June 30, 1997, 1996 and 1995. Capital expenditures related to the
expansion and renovation of Main Street Station were $33.6 million and $14.1
million during the years ended June 30, 1997 and 1996, respectively. In
addition, the Fremont is currently undergoing a rooms remodel project which is
expected to cost approximately $5 million and be completed by the end of
calendar 1997.

Debt Facilities

        Much of the funding for the Company's renovation and expansion projects
comes from debt financings, as well as cash flows from existing operations.
During fiscal 1997, cash flows from financing activities totalled $14.1 million,
primarily as a result of net borrowings under the Company's and Boyd Gaming's
Bank Credit Facility, which originated in June 1996 and matures in June 2001. At
June 30, 1997, the Company's outstanding borrowings under the Bank Credit
Facility were $190 million. The Company's and Boyd Gaming's unused availability
under the Bank Credit Facility at June 30, 1997 was $149 million; however, the
unused availability was subsequently reduced by approximately $193 million in
July 1997 in connection with Boyd Gaming's issuance of $250 million principal
amount of 9.50% Senior Subordinated Notes. Availability will be subsequently
increased if, and to the extent, the Company purchases or redeems its $185
million principal amount of 11% Senior Subordinated Notes (the "11% Notes").
Interest on the Bank Credit Facility is based upon the agent bank's quoted
reference rate or London Interbank Offered Rate, at the discretion of the
Company. The rate under the Bank Credit Facility at June 30, 1997 was 8.1%.

        The Company, through its wholly-owned subsidiary, California Hotel
Finance Company, has $185 million principal amount of 11% Senior Subordinated
Notes due December 2002. The 11% Notes contain certain covenants, including but
not limited to limitations on restricted payments (as defined in the indenture
related to the 11% Notes). As a result of these restrictions, at June 30, 1997
the Company had a portion of its retained earnings and net assets, in the
amounts of $31.9 million and $87.1 million, respectively, that were not
available for distribution as dividends to its parent, Boyd Gaming.

        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.

                                      -20-

<PAGE>   23
New Expansion Projects

        The Company, as part of its ongoing strategic planning process, has
recently completed a review of its current growth opportunities. Based on this
review, the Company expects to be focusing its growth efforts on the Stardust.
The Company is analyzing various alternatives to utilize the 61-acre Stardust
site, including additional hotel rooms and other amenities to more effectively
compete with the new generation of Las Vegas properties.

         Substantial funds would be required for the expansion project discussed
above. There can be no assurance the above mentioned project will go forward or
ultimately become operational. The source of funds required to meet the
Company's working capital needs (including maintenance capital expenditures) and
those required to complete the above-mentioned project is expected to be cash
flow from operations and availability under the Company's Bank Credit Facility.
Based on current plans, the Company does not anticipate obtaining new borrowings
in excess of amounts available under the Bank Credit Facility in the next 12
months. Thereafter, the Company may require additional funds to support its
working capital requirements or for other purposes and may seek to raise such
additional funds through public or private debt financings or from 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. See "Investment Considerations -- Leverage and Debt Service," "--
Expansion," and "-- Additional Financing Requirements."
        
         The Company continues to pursue and investigate additional expansion
opportunities. Such expansion will be affected and determined by several key
factors, including identification of additional suitable investment
opportunities and availability of acceptable financing. Additional projects
will require the Company to make substantial investments, which the Company
intends to fund through cash flow from operations and availability under the
Bank Credit Facility. To the extent such sources of funds are not sufficient,
the Company may also seek to raise such additional funds through public or
private debt financings or from 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.

Recently Issued Accounting Standards

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


                                      -21-

<PAGE>   24
ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURE ABOUT MARKET RISK

         Not required of the Company at this time.

ITEM 8.  FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

         The response to this item is submitted as a separate section of this
Form 10-K. See Item 14.

ITEM 9.  CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
         FINANCIAL DISCLOSURE

         None.

ITEM 10.  DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT

         The following table sets forth the directors and executive officers of
the Company as of August 31, 1997.

<TABLE>
<CAPTION>

NAME                  AGE   POSITION                                          
----                  ---   --------                                          
<S>                   <C>   <C>
William S. Boyd       65    President and Director                            
                                                                              
Donald D. Snyder      50    Senior Vice President and Director

Robert L. Boughner    44    Senior Vice President and Director
                                                                              
Ellis Landau          53    Senior Vice President, Chief                   
                            Financial Officer and Treasurer                   
                                                                              
James W. Hippler      50    Senior Vice President - Administration            
                                                                              
Keith E. Smith        37    Vice President and Controller              
                                                                              
Charles E. Huff       52    Vice President, Secretary and General Counsel
</TABLE>


                                      -22-
<PAGE>   25
         William S. Boyd, a co-founder of the Company, has served as a director
and President of the Company since its inception in 1973 and Chairman of the
Board of Directors and Chief Executive Officer from January 1988. Prior to
joining the Company, Mr. Boyd practiced law in Las Vegas for 15 years. Between
1970 and 1974 he also was Secretary and Treasurer and a member of the Board of
Directors of the Union Plaza Hotel and Casino. Mr. Boyd is active in numerous
business and civic organizations in Las Vegas.

         Donald D. Snyder has been Senior Vice President and director of the
Company since January 1997. From July 1996 to January 1997, Mr. Snyder served as
Boyd Gaming Corporation's Executive Vice President -- Administration. From 1993
to the present, Mr. Snyder served as Chairman, President and Chief Executive
Officer of the Fremont Street Experience, Limited Liability Company, the
developer and operator of the Fremont Street Experience in Downtown Las Vegas.
From 1992 to 1993, he was President of Strategic Associates, Inc., a consulting
firm. From 1987 through 1991, he served as Chairman of the Board and Chief
Executive Officer of First Interstate Bank of Nevada.

         Robert L. Boughner has been Executive Vice President and Chief
Operating Officer of Boyd Gaming Corporation since April 1990. From 1985 until
April 1990, he served as Senior Vice President of CH&C and prior to that time he
held various management positions in the Company. Mr. Boughner is active in
civic and industry affairs, and serves on the Board of Directors of the Las
Vegas Convention and Visitors Authority, the Nevada Hotel and Motel Association
and the Nevada Restaurant Association.

         Ellis Landau has been Senior Vice President Chief Financial Officer and
Treasurer of the Company since August 1990. From April 1990 through
July 1990, he served as a consultant to the Company. Prior to joining the
Company, Mr. Landau held various management positions with Ramada, Inc., a
gaming and hospitality company whose gaming operations were transferred to Aztar
Corporation, including Vice President and Treasurer of that company from 1978 to
February 1990. 

         James W. Hippler has been Senior Vice President-Administration of the
Company since April 1990. From 1980 to 1990, Mr. Hippler held various positions
with CH&C, including Director of Risk Management, Director of Internal Audit and
Director of Human Resources.

         Keith E. Smith has served as Vice President and Controller from June
1993 to January 1997 and, from September 1990 to June 1993 he served as
Corporate Controller of the Company. From May 1989 to September 1990, Mr. Smith
was Vice President-Finance of the Dunes Hotel, Casino and Country Club in Las
Vegas. From 1982 to May 1989, he was employed by Ramada, Inc., a gaming and
hospitality company, in a variety of positions, including Controller of the
Tropicana Resort and Casino in Las Vegas. 

         Charles E. Huff has been Vice President, Secretary and General Counsel
of Boyd Gaming Corporation since its inception. He has served as Vice President
and General Counsel of CH&C since July 1986 and Secretary since January 1988.
Prior to joining CH&C, Mr. Huff practiced law in Las Vegas for 13 years. 


                                      -23-
<PAGE>   26
         Directors of the Company are elected annually to serve for one year and
until their successors are duly elected and qualified. Officers serve at the
discretion of the Board of Directors.

         Each director of the Company is also a director of Boyd Gaming. Each
director who is not an employee of Boyd Gaming or the Company currently receives
an annual fee of $25,000, meeting fees of $1,000 per board meeting attended and
$500 per committee meeting attended and related expenses for services as a
director of both Boyd Gaming and the Company. Employee and non-employee
directors participate in the Directors' Medical Reimbursement Plan, which covers
medical expenses incurred by directors and their spouses that are not covered by
other medical plans. During fiscal 1997, Mr. Boyd received $4,439 as
reimbursement under this Plan, and Messrs. Snyder and Boughner each received
less than $250 in reimbursements under this Plan. Boyd Gaming pays the
directors fees and provides the benefits described above.

ITEM 11.  EXECUTIVE COMPENSATION

         The Company is a wholly-owned subsidiary of Boyd Gaming. The following
table sets forth the cash compensation earned for services performed for Boyd
Gaming and the Company during the three fiscal years in the period ended June
30, 1997 by the Company's Chief Executive Officer and each of the other four
most highly compensated executive officers of the Company. The Compensation and
Stock Option Committee of Boyd Gaming has been responsible for recommending cash
and other non-stock plan compensation for the named executive officers and the
Board of Directors of the Company and Boyd Gaming, as well as for administration
of Boyd Gaming's stock plans. 


                           SUMMARY COMPENSATION TABLE

<TABLE>
<CAPTION>
                                                                              LONG TERM                                  
                                                                             COMPENSATION                                
                                               ANNUAL COMPENSATION(2)           AWARDS                                   
                                          --------------------------------   -------------                               
                                                                              SECURITIES       ALL OTHER                      
                                          FISCAL                              UNDERLYING      COMPENSATION                    
           NAME AND POSITION(1)            YEAR      SALARY($)    BONUS($)     OPTIONS           ($)(3)                       
           --------------------           ------     ---------    --------   ------------     ------------                    
<S>                                        <C>       <C>          <C>          <C>             <C>                            
                                                                                                                         
William S. Boyd........................    1997     $1,000,000    $     --     $200,000          $5,601                         
Chairman and Chief Executive Officer       1996      1,000,000          --           --           7,865                  
                                           1995      1,000,000     574,137      140,000           5,706                         
                                                                                                                         
Robert L. Boughner.....................    1997        525,000       7,875       50,000           5,601                         
Executive Vice President                   1996        500,000      30,000           --           4,250                         
and Chief Operating Officer                1995        400,000     115,680       40,000           5,706                         
                                                                                                                                
Ellis Landau...........................    1997        367,500       5,513       35,000           5,340                         
Executive Vice President, Chief            1996        350,000      21,000           --           5,592                  
Financial Officer and Treasurer            1995        300,000      86,760       30,000           5,445                         
                                                                                                                         
Donald D. Snyder(4)....................    1997        350,000       3,750       50,000           2,340                  
President                                  1996             --          --           --              --                  
                                           1995             --          --           --              --                  
                                                                                                                         
James W. Hippler(5)....................    1997        210,000       3,150       41,334           5,340                  
Senior Vice President                      1996        200,000      12,000           --           5,592                  
Administration                             1995        175,000      33,740        6,500           5,445                  
                                                                                                                  
</TABLE>


                                      -24-
<PAGE>   27
-------------

(1)      Positions indicated are those currently held with Boyd Gaming.
         
(2)      The incremental cost to the Company of providing perquisites and other
         personal benefits during the last three years did not exceed, as to any
         executive officer, the lesser of $50,000 or 10% of the total salary and
         bonus paid to such executive officer for any such year and,
         accordingly, is omitted from the table.

(3)      Amounts represent Boyd Gaming's Profit Sharing and 401(k) Plan
         contributions and payment of term life insurance premiums. In fiscal
         1997, Boyd Gaming's Profit Sharing and 401(k) Plan contributions were
         $3,000, $3,000, $3,000 and $3,000 for Messrs. Boyd, Boughner, Landau
         and Hippler, respectively. In fiscal 1997, life insurance premium
         payments by the Company for Messrs. Boyd, Boughner, Landau, Snyder and
         Hippler were $2,601, $2,601, $2,340, $2,340 and $2,340, respectively.

(4)      Mr. Snyder has been an officer of the Company since July 1996.

(5)      16,334 shares represent options previously awarded and repriced in 
         1997.

                     OPTION/SAR GRANTS IN LAST FISCAL YEAR

<TABLE>
<CAPTION>
                                                       OPTIONS/SAR GRANTS IN LAST FISCAL YEAR
                               -----------------------------------------------------------------------------------------
                                                   Individual Grants                              Potential Realizable 
                               -----------------------------------------------------------       Value At Assumed Annual
                               Number of       % of Total                                         Rates of Stock Price 
                               Securities     Options/SARs                                          Appreciation for          
                               Underlying      Granted to       Exercise or                          Option Term(2)
                              Options/SARs    Employees in      Base Price      Expiration       -----------------------
Name                           Granted(#)    Fiscal Year(1)      ($/Share)         Date            5%($)        10%($)
----                          ------------   --------------     -----------     ----------       --------    -----------
<S>                           <C>            <C>                <C>             <C>              <C>           <C>
William S. Boyd                  50,000           1.78%           $11.50          8/28/06        $361,614     $  916,402
                                150,000           5.31%           $8.375         12/20/06        $790,049     $2,002,139
Robert L. Boughner               50,000           1.78%           $8.375         12/20/06        $263,350     $  667,380
Ellis Landau                     35,000           1.24%           $8.375         12/20/06        $184,345     $  467,166
Donald D. Snyder                 50,000           1.78%           $8.375         12/20/06        $263,350     $  667,380
James W. Hippler(3)              25,000           0.89%           $8.375         12/20/06        $131,675     $  333,690
                                 12,000           0.43%           $5.75          10/14/03        $ 25,138     $   67,591
                                  4,334           0.15%           $5.75           4/21/05        $ 11,692     $   27,916     
</TABLE>

--------------- 

(1)   Based on an aggregate of 2,823,671 options granted to directors, employees
      and consultants of the Company and its affiliates in the fiscal year ended
      June 30, 1997. The total number of options granted during such fiscal year
      included 1,277,971 that represent options granted in previous years that
      were repriced June 2, 1997. Repriced options will fully vest and become
      exercisable on December 31, 1998. All other options generally vest and 
      become exercisable ratably over a three or four year period from the 
      date of grant.

(2)   The potential realizable value is calculated based on the term of the
      option at its time of grant (10 years). It is calculated by assuming that
      the stock price appreciates at the indicated amount rate compounded
      annually for the entire term of the option and that the option is
      exercised and sold in the last day of its term for the appreciated stock
      price. No gain to the option holder is possible unless the stock price
      increases over the option term.

(3)   The grants of options representing 12,000 and 4,334 shares represent
      options granted in prior years and repriced in 1997. Pursuant to the terms
      of the repricing, one repriced option was granted for every two options
      originally priced at $17.00 and two repriced options were granted for
      every three options originally priced at $13.625. All repriced options
      will fully vest and become exercisable on December 31, 1998.

              AGGREGATED OPTION/SAR EXERCISES IN LAST FISCAL YEAR
                         AND YEAR-END OPTION/SAR VALUES

<TABLE>
<CAPTION>
                                                                          NUMBER OF                                  
                                                                          SECURITIES             VALUE OF            
                                                                          UNDERLYING           UNEXERCISED           
                                                                         UNEXERCISED           IN-THE-MONEY          
                                                                          OPTIONS AT            OPTIONS AT           
                                    SHARES                            FISCAL YEAR-END(#)    FISCAL YEAR-END($)         
                                 ACQUIRED ON           VALUE             EXERCISABLE/          EXERCISABLE/          
    NAME                         EXERCISE(#)          REALIZED          UNEXERCISABLE        UNEXERCISABLE(1)        
    ----                         -----------          --------        -----------------      ----------------                 
<S>                               <C>                 <C>              <C>                     <C>                   
William S. Boyd                       0                  0             618,334/246,666              $0/$0           
Robert L. Boughner                    0                  0              176,667/63,333              $0/$0           
Ellis Landau                          0                  0              140,000/45,000              $0/$0           
Donald D. Snyder                      0                  0               15,000/80,000              $0/$0           
James W. Hippler                      0                  0                    0/41,334              $0/$0           
</TABLE>

----------------------

(1)      Value realized is based on estimated fair market value of Boyd Gaming
         Common Stock on the date of exercise less the exercise price.

(2)      Value is based on the closing price of Boyd Gaming Common Stock on the
         New York Stock Exchange on June 30, 1997 ($5.75) less the exercise
         price.

                                      -25-
<PAGE>   28
COMPENSATION AND STOCK OPTION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION

         Perry B. Whitt, a former member of the Compensation and Stock Option
Committee of Boyd Gaming is a former executive officer of the Company.


ITEM 12.  SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

         All of the outstanding shares of stock of the Company are owned by Boyd
Gaming Corporation.


ITEM 13.  CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

         None.


                                     PART IV

ITEM 14.  EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K

         (a)  1.  Financial Statements. The following financial statements
                  are for the years ended June 30, 1997, 1996 and 1995 are
                  filed as part of this report:

<TABLE>
<CAPTION>

                                                                                  Page
                                                                                  ----
                  <S>                                                            <C>
                  Independent Auditors' Report ................................    F-2

                  Consolidated Balance Sheets at June 30, 1997 and 1996 .......    F-3
        
                  Consolidated Statements of Income for Years Ended
                  June 30, 1997, 1996 and 1995 ................................    F-4

                  Consolidated Statements of Changes in Stockholder's
                  Equity for the Years Ended June 30, 1997, 1996 and 1995 .....    F-5

                  Consolidated Statements of Cash Flows for the Years
                  Ended June 30, 1997, 1996 and 1995 ..........................    F-6

                  Notes to Consolidated Financial Statements ..................    F-7
</TABLE>

              2.  Financial Statement Schedules. None.

              3.  Exhibits. Refer to (c) below.

         (b)  Reports on Form 8-K. None.

         (c)  Exhibits. Reference is made to the Index to Exhibits
              immediately preceding the exhibits hereto.



                                      -26-
<PAGE>   29
                  CALIFORNIA HOTEL AND CASINO AND SUBSIDIARIES

                   INDEX TO CONSOLIDATED FINANCIAL STATEMENTS



                                                                        Page
                                                                        ----
        Independent Auditors' Report.................................    F-2

        Consolidated Balance Sheets..................................    F-3

        Consolidated Statements of Income............................    F-4

        Consolidated Statements of Changes in Stockholder's Equity...    F-5

        Consolidated Statements of Cash Flows........................    F-6

        Notes to Consolidated Financial Statements...................    F-7


                                      F-1
<PAGE>   30
                          INDEPENDENT AUDITORS' REPORT

California Hotel and Casino and Subsidiaries
(a wholly-owned subsidiary of Boyd Gaming Corporation)

         We have audited the accompanying consolidated balance sheets of
California Hotel and Casino and Subsidiaries (a wholly-owned subsidiary of Boyd
Gaming Corporation) (the "Company") as of June 30, 1997 and 1996, and the
related consolidated statements of income, changes in stockholder's equity, and
cash flows for each of the three years in the period ended June 30, 1997. These
financial statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on the financial statements based on our
audits.

         We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.

         In our opinion, such consolidated financial statements present fairly,
in all material respects, the financial position of California Hotel and Casino
and Subsidiaries at June 30, 1997 and 1996 and the results of their operations
and their cash flows for each of the three years in the period ended June 30,
1997 in conformity with generally accepted accounting principles.


DELOITTE & TOUCHE LLP

Las Vegas, Nevada
August 20, 1997


                                       F-2
<PAGE>   31
                                    California Hotel and Casino and Subsidiaries
                          (a wholly-owned subsidiary of Boyd Gaming Corporation)

CONSOLIDATED BALANCE SHEETS         

<TABLE>
<CAPTION>
                                                                     June 30,      
                                                               ------------------- 
(In thousands, except share data)                                1997       1996   
---------------------------------                              --------   -------- 
<S>                                                            <C>        <C>      
ASSETS                                                                             
                                                                                   
Current assets                                                                     
  Cash and cash equivalents                                    $ 30,050   $ 28,444 
  Accounts receivable, net                                        7,290      7,414 
  Inventories                                                     7,395      5,822 
  Prepaid expenses and other                                     11,767     10,772 
                                                               --------   -------- 
    Total current assets                                         56,502     52,452 
                                                                                   
Property and equipment, net                                     498,265    490,675 
Other assets and deferred charges                                25,471     24,139 
Goodwill, net                                                     9,898     10,254 
                                                               --------   -------- 
    Total assets                                               $590,136   $577,520 
                                                               ========   ======== 
                                                                                   
LIABILITIES AND STOCKHOLDER'S EQUITY                                               
                                                                                   
Current liabilities                                                                
  Current maturities of long-term debt                         $  1,554   $  1,455 
  Accounts payable                                               19,419     18,703 
  Accrued liabilities                                                              
    Payroll and related                                          17,384     18,728 
    Interest and other                                           20,565     19,174 
  Income taxes payable                                            3,392      1,047 
                                                               --------   -------- 
    Total current liabilities                                    62,314     59,107 
                                                                                   
Long-term debt, net of current maturities                       378,456    363,915 
                                                                                   
Long-term debt, due to related party                                 --        500 
                                                                                   
Deferred income taxes                                            18,940     24,148 
                                                                                   
Commitments and contingencies                                                      
                                                                                   
Stockholder's equity                                                               
  Preferred stock, $100 par value, 200,000 shares authorized         --         -- 
  Common Stock, no par value; 2,500 shares authorized                              
    1,000 shares issued                                          22,328     22,328 
  Additional paid-in capital                                     32,856     32,856 
  Retained earnings                                              75,242     74,666 
                                                               --------   -------- 
    Total stockholder's equity                                  130,426    129,850 
                                                               --------   -------- 
    Total liabilities and stockholder's equity                 $590,136   $577,520 
                                                               ========   ======== 
</TABLE>

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


                                      F-3
<PAGE>   32
                                    California Hotel and Casino and Subsidiaries
                          (a wholly-owned subsidiary of Boyd Gaming Corporation)

CONSOLIDATED STATEMENTS OF INCOME

<TABLE>
<CAPTION>

(In thousands)                                        For the years ended June 30,      
--------------                                      --------------------------------    
                                                      1997        1996        1995                    
                                                    ---------   --------    --------                  
<S>                                                 <C>         <C>         <C>                       
Revenues                                                                                              
  Casino                                            $366,574    $370,841    $351,348                  
  Food and beverage                                  123,070     116,133     108,381                  
  Rooms                                               62,399      60,811      56,335                  
  Other                                               34,522      34,975      32,803                  
                                                    --------    --------    --------                  
Gross revenues                                       586,565     582,760     548,867                  
Less promotional allowances                           62,766      59,330      52,036                  
                                                    --------    --------    --------                  
     Net revenues                                    523,799     523,430     496,831                  
                                                    --------    --------    --------                  
Costs and expenses                                                                                    
                                                                                                      
  Casino                                             195,659     186,470     174,038                  
  Food and beverage                                   88,135      83,958      81,637                  
  Rooms                                               21,214      23,043      22,465                  
  Other                                               24,587      23,956      22,176                  
  Selling, general and administrative                 69,804      65,381      59,631                  
  Maintenance and utilities                           25,072      24,915      23,964                  
  Depreciation and amortization                       44,398      44,413      45,931                  
  Corporate expense                                   11,566      11,710      10,127                  
  Preopening expense                                   3,481          --          --                  
  Impairment loss                                      5,325          --          --                  
                                                    --------    --------     -------                  
     Total                                           489,241     463,846     439,969                  
                                                    --------    --------     -------                  
Operating income                                      34,558      59,584      56,862                  
                                                    --------    --------     -------                  
Other income (expense)                                                                                
  Interest income                                        127         ---          40                  
  Interest expense, net of amounts capitalized       (33,622)    (33,820)    (38,492)                 
                                                    --------    --------    --------                  
     Total                                           (33,495)    (33,820)    (38,452)                 
                                                    --------    --------    --------                  
Income before provision for income taxes and                                                          
  extraordinary item                                   1,063      25,764      18,410                  
Provision for income taxes                               487      10,675       8,780                  
                                                    --------    --------    --------                  
Income before extraordinary item                         576      15,089       9,630                  
Extraordinary item, net of tax benefit of $520            --         842         ---                  
                                                    --------    --------    --------                  
Net income                                          $    576    $ 14,247    $  9,630                  
                                                    ========    ========    ========                  
</TABLE>


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


                                       F-4
<PAGE>   33
                                    California Hotel and Casino and Subsidiaries
                          (a wholly-owned subsidiary of Boyd Gaming Corporation)

CONSOLIDATED STATEMENTS OF
CHANGES IN STOCKHOLDER'S EQUITY
For the years ended June 30, 1997, 1996 and 1995
                                                                 
<TABLE>
<CAPTION>

                                                  Common Stock             Additional                        Total    
(In thousands,                             ----------------------------     Paid-In       Retained        Stockholder's
except share data)                          Shares           Amount         Capital       Earnings           Equity   
-----------------------------------------------------------------------------------------------------------------------
<S>                                          <C>             <C>           <C>             <C>              <C>        
BALANCES, JULY 1, 1994                       1,000           $22,328       $ 9,606        $ 62,789          $ 94,723   
                                                                                                   
Net income                                                                                   9,630             9,630    
-----------------------------------------------------------------------------------------------------------------------
BALANCES, JUNE 30, 1995                      1,000            22,328         9,606          72,419           104,353 
                                                                                                   
Contributed capital from parent                                             23,250                            23,250   
                                                                                                   
Dividends                                                                                  (12,000)          (12,000) 
                                                                                                   
Net income                                                                                  14,247            14,247   
-----------------------------------------------------------------------------------------------------------------------
BALANCES, June 30, 1996                      1,000            22,328        32,856          74,666           129,850 
                                                                                                   
Net income                                                                                     576               576
-----------------------------------------------------------------------------------------------------------------------
BALANCES, June 30, 1997                      1,000           $22,328       $32,856        $ 75,242          $130,426    
=======================================================================================================================

</TABLE>
                                                                            
The accompanying notes are an integral part of these consolidated financial 
statements.


                                      F-5
<PAGE>   34
                                    California Hotel and Casino and Subsidiaries
                          (a wholly-owned subsidiary of Boyd Gaming Corporation)

CONSOLIDATED STATEMENTS OF CASH FLOWS

<TABLE>
<CAPTION>
                                                        For the years ended June 30,
                                                    ------------------------------------        
(In thousands)                                        1997          1996          1995                            
--------------                                      --------     ---------     ---------                          
<S>                                                 <C>          <C>           <C>                               
CASH FLOWS FROM OPERATING ACTIVITIES                                                                              
Net income......................................    $    576     $  14,247     $   9,630                          
Adjustments to reconcile net income to net cash                                                                   
  provided by operating activities:                                                                               
    Depreciation and amortization...............      44,398        44,413        45,931                         
    Impairment loss ............................       5,325            --            --                         
    Loss on early retirement of debt ...........          --         1,362            --                         
    Deferred income taxes.......................      (5,208)        4,081            --                         
    Other.......................................         --           (236)         (114)                         
    Changes in assets and liabilities:                                                                            
      (Increase) decrease in accounts                                                                             
        receivable, net.........................         124          (539)        1,822                          
      (Increase) decrease in inventories........      (1,573)         (335)          295                          
      (Increase) decrease in prepaid expenses...        (995)         (387)        1,766                          
      (Increase) decrease in other assets.......      (7,232)        3,184        (7,589)                         
      Increase (decrease) in other current                                                                        
        liabilities.............................      (2,951)        3,326       (15,008)                         
      Increase (decrease) in income taxes                                                                         
        payable.................................       2,345        (2,606)        2,885                          
                                                    --------     ---------     ---------                          
Net cash provided by operating activities.......      34,809        66,510        39,618                          
                                                    --------     ---------     ---------
                                                                                                                  
CASH FLOWS FROM INVESTING ACTIVITIES                                                                              
    Acquisition of property, equipment                                                                            
      and other assets..........................     (47,343)      (41,181)      (37,636)                         
                                                    --------     ---------     ---------
CASH FLOWS FROM FINANCING ACTIVITIES                                                                              
    Proceeds from issuance of long-term debt....          --       146,750         7,850                          
    Payments on long-term debt..................      (1,994)     (166,683)      (22,027)                         
    Net borrowings under credit agreements......      16,134       (10,000)       13,000                          
    Capital contribution from parent............          --        23,250            --                          
    Dividends paid..............................          --       (12,000)           --                          
                                                    --------     ---------      --------                          
Net cash provided by (used in) financing                                                                          
  activities....................................      14,140       (18,683)       (1,177)                         
                                                    --------     ---------      --------                          
Net increase in cash and cash equivalents.......       1,606         6,646           805                          
Cash and cash equivalents, beginning of year....      28,444        21,798        20,993                          
                                                    --------     ---------      --------                          
Cash and cash equivalents, end of year..........    $ 30,050     $  28,444      $ 21,798                          
                                                    ========     =========      ========                          
                                                                                                                  
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION                                                                  
  Cash paid for interest, net of amounts                                                                          
    capitalized.................................    $ 32,289     $  37,826      $ 37,662                          
  Cash paid for income taxes....................       2,175         7,300         3,250                          
                                                    ========     =========      ========                          
                                                                                                                  
SUPPLEMENTAL SCHEDULE OF NON-CASH INVESTING AND                                                                   
  FINANCING ACTIVITIES                                                                                            
  Property additions acquired on contracts                                                                        
    and trade payables which were accrued,                                                                        
    but not yet paid............................    $  6,854     $   3,140      $  4,867                          
                                                    ========     =========      ========                          
</TABLE>

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


                                      F-6
<PAGE>   35
                                    California Hotel and Casino and Subsidiaries
                          (a wholly-owned subsidiary of Boyd Gaming Corporation)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS   
                        
NOTE 1. - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Principles of Consolidation

The accompanying consolidated financial statements include the accounts of
California Hotel and Casino and its wholly-owned subsidiaries, collectively
referred to herein as the "Company". The Company owns and operates seven casino
entertainment facilities in Las Vegas, Nevada. All material intercompany
accounts and transactions have been eliminated. The Company is a wholly-owned
subsidiary of Boyd Gaming Corporation.

Cash and Cash Equivalents

Cash and cash equivalents include highly liquid investments with an original
maturity of three months or less. These investments are stated at cost which
approximates fair value.

Inventories

Inventories are stated at lower of cost or market. Cost is determined using the
first-in, first-out and retail inventory methods.

Property and Equipment

Property and equipment are stated at cost. Depreciation and amortization are
computed using the straight-line method over the estimated useful lives of the
assets. Costs of major improvements are capitalized, while costs of normal
repairs and maintenance are charged to expense as incurred. Gains or losses on
disposal of assets are recognized as incurred.

Capitalized Interest

Interest costs associated with major projects are capitalized. When no debt is 
incurred specifically for a project, interest is capitalized on amounts
expended on 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 fiscal years ended June 30, 1997, 1996 and 1995
was $1.4 million, $2.0 million and $0.3 million, respectively.

Goodwill

The excess of total acquisition costs over the fair value of assets acquired is
amortized using the straight-line method over forty years. Management
periodically assesses the recoverability of goodwill and other intangible
assets by comparing its carrying value to the discounted cash flows expected to
be generated by the acquired operation during the anticipated period of
benefit. As of June 30, 1997 and 1996, accumulated amortization was $4.4
million and $4.0 million, respectively.

                                       F-7
<PAGE>   36
Revenues and Promotional Allowances

Casino revenues represent the net win from gaming activities, which is the
difference between gaming wins and losses. Revenues include the retail value of
room, food, beverage and other goods and services provided to customers on a
complimentary basis. Such amounts are then deducted as promotional allowances.
The estimated cost of providing these promotional allowances is charged to the
casino department in the following amounts:

<TABLE>
<CAPTION>

                                  Years ended June 30,
                            --------------------------------
(In thousands)               1997         1996        1995                  
--------------              -------      -------     -------                
<S>                         <C>          <C>         <C>                        
Rooms                       $10,174      $ 9,482     $ 8,408
Food and Beverage            45,150       44,469      40,358
Other                         1,355        1,593       1,087
                            -------      -------     -------
Total                       $56,679      $55,544     $49,853
                            =======      =======     =======
</TABLE>

Preopening Expenses

Expenses incurred prior to the opening of new facilities are capitalized and
charged to expense upon commencement of operations. During the year ended June
30, 1997, the Company expensed $3.5 million upon the opening of Main Street
Station. There were no preopening expenses recorded during the years ended
June 30, 1996 and 1995.

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 and disclosure of
contingent 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 in assessing the recoverability of long-lived assets.
Actual results could differ from those estimates.

Reclassifications

Certain amounts in the 1996 and 1995 consolidated financial statements have
been reclassified to conform to the 1997 presentation. These reclassifications
had no effect on the Company's net income. 

Change in Fiscal Year

Effective September 1997, the Company changed its fiscal year from a June 30
year end to a December 31, year end.












                                      F-8
<PAGE>   37
Recently Issued Accounting Standards

The Financial Accounting Standards Board ("FASB") issued Statement of Financial
Accounting Standards ("SFAS") No. 129, "Disclosure of Information about Capital
Structure," which is effective for fiscal years ending after December 15, 1997.
This Statement establishes standards for disclosing information about an
entity's capital structure. Management intends to comply with the disclosure
requirements of this statement in the stub period ending December 31, 1997.

The FASB issued SFAS No. 130, "Reporting Comprehensive Income," which is
effective for fiscal years beginning after December 15, 1997. This statement
requires businesses to disclose comprehensive income and its components in
their financial statements. Management intends to comply with the disclosure
requirements of this statement in the year ending December 31, 1998.

The FASB issued SFAS No. 131, "Disclosures about Segments of an Enterprise and
Related Information," which is effective for fiscal years beginning after
December 15, 1997. This statement redefines how operating segments are
determined and requires qualitative disclosure of certain financial and
descriptive information about a company's operating segments. The Company will
adopt SFAS No. 131 in the year ending December 31, 1998. Management has not yet
completed its analysis of which operating segments it will report to comply
with SFAS No. 131.

-------------------------------------------------------------------------------
NOTE 2. - IMPAIRMENT LOSS

During the year ended June 30, 1997, the Company recorded a $5.3 million
impairment loss related to its 17.4% ownership interest in the Fremont Street
Experience, Limited Liability Company ("FSE"). This impairment loss is
principally due to the significant levels of operating loss and operating cash
deficiency reported in May 1997 by FSE relating to its first full year of
operation. Management expects this trend to continue and, therefore, does not
expect to recover its investment in this entity.

-------------------------------------------------------------------------------
NOTE 3. - ACCOUNTS RECEIVABLE

Components of accounts receivable at June 30 are as follows:

<TABLE>
<CAPTION>

(In thousands)                                    1997             1996
--------------                                   ------           ------
<S>                                              <C>              <C>    
Casino                                           $5,145           $4,834
Hotel                                             2,731            2,988
Other                                             1,427            1,151
                                                 ------           ------
Total                                             9,303            8,973
Less allowance for doubtful accounts              2,013            1,559
                                                 ------           ------
Total                                            $7,290           $7,414
                                                 ======           ======
</TABLE>
-------------------------------------------------------------------------------

NOTE 4. - PROPERTY AND EQUIPMENT

Property and equipment consist of the following at June 30:

<TABLE>
<CAPTION>

(In thousands)                                      1997          1996                
--------------                                    --------      --------              
<S>                                               <C>           <C>                     
Land                                              $101,431      $101,934         
Buildings and leasehold improvements               464,411       423,099         
Furniture and equipment                            275,243       259,583         
Construction in progress                             1,937        16,938         
                                                  --------      --------              
Total                                              843,022       801,554         
Less accumulated depreciation and amortization     344,757       310,879         
                                                  --------      --------              
Property and equipment, net                       $498,265      $490,675         
                                                  ========      ========              
</TABLE>

                                       F-9
<PAGE>   38
------------------------------------------------------------------------------
NOTE 5. - LONG-TERM DEBT

Long-term debt at June 30 consists of the following:

<TABLE>
<CAPTION>

(In thousands)                                    1997              1996
--------------                                  --------         ---------
<S>                                             <C>               <C>     
Bank Credit Facility                            $190,134          $174,000
11% Senior Subordinated Notes                    185,000           185,000
Other                                              4,876             6,870
                                                --------          --------
Total long-term debt                             380,010           365,870
Less current maturities                            1,554             1,455
                                                --------          --------
Total                                           $378,456          $364,415
                                                ========          ========
</TABLE>

The Company and its parent, Boyd Gaming Corporation, have a $500 million
five-year reducing, revolving bank credit facility which matures in June 2001
(the "Bank Credit Facility"). Total availability under the Bank Credit Facility
will be reduced by $25 million at the end of two and one-half years and reduced
by an additional $50 million at the end of each six-month period thereafter
until maturity. As of June 30, 1997, the Company and its parent had unused
availability of $149 million under the Bank Credit Facility. Interest on the
Bank Credit Facility is based upon the agent bank's quoted reference rate or
London Interbank Offered Rate, at the discretion of the Company. The interest
rate under the Bank Credit Facility at June 30, 1997 was 8.1%. The Company and
its parent incur a commitment fee on the unused portion of the Bank Credit
Facility which ranges from 0.375% to 0.50% per annum, depending upon the level
of a certain predefined ratio. The Bank Credit Facility is collateralized by the
real and personal property comprising eight casino properties owned by the
Company and its parent and by related security agreements with assignment of
rents. The Bank Credit Facility contains certain financial covenants,
limitations on the incurrence of debt and limitations on the incurrence of
capital expenditures and investments, all as defined in the Bank Credit
Facility. In connection with the closure of the Bank Credit Facility in June
1996, the Company recorded a $0.8 million extraordinary loss (net of $.5 million
tax benefit) related to the write-off of unamortized fees. In July 1997, in
connection with Boyd Gaming's issuance of $250 million principal amount of
Senior Subordinated Notes, availability under the Bank Credit Facility was
reduced by approximately $193 million. Availability will subsequently increase
if and to the extent the Company purchases or redeems the 11% Senior
Subordinated Notes.


                                      F-10
<PAGE>   39
The Company, through its wholly-owned subsidiary California Hotel Finance
Company, has $185 million principal amount of 11% Senior Subordinated Notes (the
"11% Notes") due December 2002. The 11% Notes are unconditionally guaranteed on
a senior subordinated and unsecured basis by the Company. The guarantee is
subordinated to all existing and future senior debt (as defined in the indenture
related to the 11% Notes) of the Company (approximately $145.0 million at June
30, 1997) and is effectively subordinated to all existing and future senior
indebtedness and other liabilities (including trade payables) of the
subsidiaries of the Company (approximately $17.5 million at June 30, 1997). The
Company is not in default and there are no payment blockages with respect to the
11% Notes. The net proceeds were used to refinance certain indebtedness of the
Company and provide for working capital needs and expansion of the Company's
operations. The 11% Notes require semi-annual interest payments on June 1 and
December 1 of each year until December 1, 2002, at which time the principal
balance is due and payable. The 11% Notes may be redeemed at the Company's
option any time after December 1, 1997 at redemption prices ranging from
104.125% in 1997 to 100% in 1999. The 11% Notes contain certain covenants
regarding incurrence of debt, sales and disposition of assets, mergers or
consolidations and limitations on restricted payments (as defined in the
indenture relating to the 11% Notes). As a result of these restrictions, at June
30, 1997 the Company had a portion of its retained earnings and its net assets
in the amounts of $31.9 million and $87.1 million, respectively, that were not
available for distribution as dividends to Boyd Gaming.

The estimated fair value of the Company's long-term debt at June 30, 1997 was
approximately $390 million, versus its book value of $380 million. At June 30,
1996 the estimated fair value of the Company's long-term debt was approximately
$374 million, versus its book value of $366 million. The estimated fair value
amounts were based on the quoted market price of the Company's debt security
that is traded. For the debt securities that are not traded, fair value was
based on estimated discounted cash flows using current rates offered to the
Company for debt securities having the same remaining maturities.

Interest rates on the Company's other long-term debt range from 7.3% to 16.8%.
Management believes the Company and its subsidiaries are in compliance with all
covenants contained in its long-term agreements at June 30, 1997.

                                      F-11
<PAGE>   40
The scheduled maturities of long-term debt for the years ending June 30 are as
follows:

<TABLE>
<CAPTION>

(In thousands)
--------------                                             
<S>                                           <C>            
1998                                          $  1,554
1999                                             1,615
2000                                             1,155
2001                                           190,436
2002                                               250
Thereafter                                     185,000
                                              --------
Total                                         $380,010
                                              ========
</TABLE>
-------------------------------------------------------------------------------
NOTE 6. - COMMITMENTS AND CONTINGENCIES

Future minimum lease payments required under noncancelable operating leases 
(principally for land) as of June 30, 1997 are as follows:

<TABLE>
<CAPTION>

(In thousands)
--------------       
<S>                                           <C>   
1998                                          $ 2,060
1999                                            2,010
2000                                            1,996
2001                                            2,008
2002                                            2,056
Thereafter                                     85,518
                                              -------
Total                                         $95,648
                                              =======
</TABLE>

Rent expense for the years ended June 30, 1997, 1996 and 1995 was $1.8 million,
$2.7 million and $2.6 million, respectively and is included in selling, general
and administrative expenses on the consolidated statements of income.

The Company is subject to various claims and litigation in the normal course of
business. In the opinion of management, all pending legal matters are either
adequately covered by insurance or, if not insured, will not have a material
effect on the Company's consolidated financial statements.

------------------------------------------------------------------------------
NOTE 7. - EMPLOYEE BENEFIT PLANS

The Company contributes to multi-employer pension plans under various union
agreements. Contributions, based on wages paid to covered employees, totaled
approximately $2.2 million, $2.2 million and $2.0 million in 1997, 1996 and
1995, respectively. The Company's share of the unfunded liability related to
multi-employer plans, if any, is not determinable.

The Company participates in Boyd Gaming Corporation's retirement savings plan
under Section 401(k) of the Internal Revenue Code covering its non-union
employees. The plan allows employees to defer up to the lesser of the Internal
Revenue Code prescribed maximum amount or 15% of their income on a pre-tax basis
through contributions to the plan. On January 1, 1996, the Company combined its
profit sharing plan into the 401(k) plan. The Company expensed its portion of
voluntary contributions of $1.5 million, $1.2 million and $.7 million in 1997,
1996 and 1995, respectively, to the Company's 401(k) profit sharing plan and
trust.

                                      F-12
<PAGE>   41
-------------------------------------------------------------------------------
NOTE 8. - INCOME TAXES

A summary of the provision for income taxes for the years ended June 30 is as
follows:

Provision for Income Taxes:

<TABLE>
<CAPTION>

(In thousands)                           1997          1996         1995  
--------------                          -------       ------       ------ 
<S>                                      <C>         <C>          <C>     
Current                                 $ 2,877      $ 7,677        $6,752
Deferred                                 (2,390)       2,998         2,028
                                        -------      -------       -------
                                        $   487      $10,675       $ 8,780
                                        =======      =======       =======
</TABLE>

The following table provides a reconciliation between the federal statutory rate
and the effective income tax rate at June 30 where both are expressed as a
percentage of income:

<TABLE>
<CAPTION>
                                           1997         1996         1995 
                                          ------       ------       ------
<S>                                       <C>          <C>          <C>         
Tax provision at statutory rate            35.0%        35.0%        35.0%
Increase/(decrease) resulting from:                                             
Company provided benefits                  11.6          4.3          8.8
Other, net                                 (0.8)         2.1          3.9
                                          -----        -----        -----       
                                           45.8%        41.4%        47.7%
                                          =====        =====        =====       
</TABLE>

The tax items comprising the Company's net deferred tax liability as of June 30
are as follows:

<TABLE>
<CAPTION>

(In thousands)                                            1997      1996      1995                                 
--------------                                           -------   -------   -------                               
<S>                                                      <C>       <C>       <C>                            
Deferred tax liabilities:                                                                                          
  Difference between book and tax basis of property      $26,056   $27,053   $25,856                        
  Reserve differential for gaming activities               1,280     1,882       903                        
  Difference between book and tax basis of                                                                  
    amortizable assets                                       922       995     1,115                        
  Other                                                      815       194       134                        
                                                         -------   -------   -------                                       
    Gross deferred tax liability                          29,073    30,124    28,008                        
                                                         -------   -------   -------                                       
Deferred tax assets:                                                                                                       
  Alternative minimum tax credit carryforward              7,448     4,474     6,826                        
  Preopening expense amortized for tax purposes            1,076        --        --    
  Provision for doubtful accounts                            917       759       752                        
  Other                                                      692       743       363                        
                                                         -------   -------   -------                                       
    Gross deferred tax asset                              10,133     5,976     7,941                        
                                                         -------   -------   -------                                       
Net deferred tax liability                               $18,940   $24,148   $20,067                        
                                                         =======   =======   =======                                       
</TABLE>

The Company, as a wholly-owned subsidiary of Boyd Gaming Corporation, is
included in Boyd Gaming Corporation's consolidated tax return. Boyd Gaming
Corporation allocates income tax expense or benefit to the Company as if the
Company was filing separate tax returns.

-------------------------------------------------------------------------------

                                      F-13
                                        
<PAGE>   42
                                   SIGNATURES

         Pursuant to the requirements of Section 13 or 15(d) of the Securities
and Exchange Act of 1934, the Registrant has duly caused this report to be
signed on its behalf by the undersigned, thereunto duly authorized, on September
26, 1997.


                                            CALIFORNIA HOTEL AND CASINO


                                            By   /s/ KEITH SMITH
                                               -----------------------------
                                               Keith Smith
                                               Vice President and Controller



                                      II-1
<PAGE>   43
                                POWER OF ATTORNEY

         KNOW ALL PERSONS BY THESE PRESENTS, that each person whose signature
appears below constitutes and appoints William S. Boyd, Ellis Landau and Keith
Smith and each of them, his attorneys-in-fact, each with the power of
substitution, for him in any and all capacities, to sign any amendments to this
Report on Form 10-K and to file the same, with exhibits thereto and other
documents in connection therewith, with the Securities and Exchange Commission,
hereby ratifying and confirming all that each of said attorneys-in-fact, or his
substitute or substitutes, may do or cause to be done by virtue hereof.

         Pursuant to the requirements of the Securities Exchange Act of 1934,
this report has been signed below by the following persons on behalf of the
registrant and in the capacities and on the date indicated.

<TABLE>
<CAPTION>

        Signature                         Title                           Date
---------------------------     ---------------------------        ------------------
<S>                             <C>                                <C> 
/s/ WILLIAM S. BOYD             President and Director             September 26, 1997
----------------------------    (Principal Executive Officer)
    William S. Boyd

/s/ ELLIS LANDAU                Senior Vice President, Chief       September 26, 1997
----------------------------    Financial Officer and Treasurer
    Ellis Landau                (Principal Financial Officer)  
                                
/s/ KEITH SMITH                 Vice President and Controller      September 26, 1997
----------------------------    (Principal Accounting Officer) 
    Keith Smith                     

/s/ DONALD D. SNYDER            Senior Vice President and          September 26, 1997
----------------------------    Director
    Donald D. Snyder

/s/ ROBERT L. BOUGHNER          Senior Vice President and          September 26, 1997
----------------------------    Director                           
    Robert L. Boughner
</TABLE>

                                      II-2
<PAGE>   44
                                INDEX TO EXHIBITS

<TABLE>
<CAPTION>
                                                                                    SEQUENTIALLY
EXHIBIT                                                                               NUMBERED
NUMBER                                        DOCUMENT                                  PAGE
---------------      ------------------------------------------------------------  ------------
<S>                  <C>                                                            <C>
 2.1 (2)             Agreement and Plan of Reorganization dated as of June 25,
                     1993, by and between Eldorado, Inc., Boyd Gaming
                     Corporation, the Company and certain stockholders and
                     noteholders of Eldorado.

 3.1 (1)             Articles of Incorporation of the Company.

 3.2 (1)             Bylaws of the Company.

 4.1 (1)             Form of Indenture relating to $185,000,000 aggregate
                     principal amount of 11% Senior Subordinated Notes due 2002
                     of California Hotel Finance Corporation ("Finance"),
                     including the Form of Note.

10.1 (2)             First Amended and Restated Credit Agreement dated as of
                     September 2, 1993, among the Company, Certain Commercial
                     Lending Institutions, CIBC Inc., First Interstate Bank of
                     Nevada and Bank of America and related Exhibits.

10.2 (2)             Loan Agreement dated March 2, 1989, by and between First
                     Interstate Bank of Nevada and Eldorado, Inc., including
                     related Promissory Note, and related Revision Agreement
                     dated October 31, 1989, between First Interstate Bank of
                     Nevada, N.A. and Eldorado, Inc.

10.3 (1)             Ninety-Nine Year Lease dated June 30, 1954, between
                     Fremont Hotel, Inc., and Charles L. Ronnow, C.L. Ronnow
                     and J.L. Ronnow, and Alice Elizabeth Ronnow.

10.4 (1)             Lease Agreement dated October 31, 1963, between Fremont
                     Hotel, Inc., and Cora Edith Garehime.

10.5 (1)             Lease Agreement dated December 31, 1963, between Fremont
                     Hotel, Inc., Bank of Nevada and Leon H. Rockwell, Jr.

10.6 (1)             Lease Agreement dated June 7, 1971, between Anthony
                     Antonacci, Margaret Fay Simon and Bank of Nevada, as Co-
                     Trustees under Peter Albert Simon's Last Will and Testament,
                     and related Assignment of Lease dated February 25, 1985 to
                     Sam-Will, Inc. and Fremont Hotel, Inc.

10.7 (1)             Lease Agreement dated July 25, 1873, between CH&C and
                     William Peccole, as Trustee of the Peter Peccole 1970 Trust.

10.8 (1)             Lease Agreement dated July 1, 1974, between Fremont Hotel,
                     Inc., and Bank of Nevada, Leon H. Rockwell, Jr. and Margorie
                     Rockwell Riley.

10.9 (1)             Ground Lease Agreement dated July 5, 1978, between the
                     Company and Irene Elizabeth Carey, as Trustee of the Carey
                     Survivor's Trust U/A October 18, 1972 and Irene Elizabeth
                     Carey, as Trustee of the Carey Family Trust U/A October 18,
                     1972.
</TABLE>
<PAGE>   45
<TABLE>
<CAPTION>
                                                                                      SEQUENTIALLY
EXHIBIT                                                                                 NUMBERED
NUMBER                                        DOCUMENT                                    PAGE
---------            ------------------------------------------------------------     ------------
<S>                  <C>                                                              <C>
10.10 (1)            Ninety-Nine Year Lease dated December 1, 1978, between
                     Matthew Paratore, and George W. Morgan and LaRue Morgan, 
                     and related Lease Assignment dated November 10, 1987 to 
                     Sam-Will, Inc., d/b/a Fremont Hotel and Casino.

10.11 (3)            Collective Bargaining Agreement effective as of January 17,
                     1994, between Sam-Will, Inc., d/b/a Fremont Hotel and
                     Casino and the International Union of Operating Engineers,
                     Local No. 501, AFL-CIO (slot technician unit).

10.12 (2)            Labor Agreement dated as of January 13, 1993, between Mare-Bear,
                     Inc., d/b/a Stardust Hotel & Casino, and the International
                     Union of Operating Engineers, Local No. 501, AFL-CIO.

10.13 (2)            Labor Agreement dated as of January 13, 1993, between Sam-Will, 
                     Inc., d/b/a Fremont Hotel and Casino, and the International 
                     Union of Operating Engineers, Local No. 501, AFL-CIO.

10.14 (2)            Labor Agreement dated January 13, 1993, between the Company 
                     and the International Union of Operating Engineers, Local 
                     No. 501; AFL-CIO.

10.15 (1)            Agreement dated as of May 1, 1991, between Mare-Bear, Inc.,
                     d/b/a Stardust Hotel and Casino, and the Local Joint Executive
                     Board of Las Vegas for and on behalf of the Culinary Workers
                     Union, Local No. 226 and Bartenders Union, Local No. 165.

10.16 (1)            Agreement dated May 1, 1991, between Sam-Will, Inc., d/b/a
                     Fremont Hotel and Casino, and the Local Joint Executive
                     Board of Las Vegas for and on behalf of the Culinary Workers
                     Union, Local No. 226 and Bartenders Union, Local No. 165.

10.17 (2)            Collective Bargaining Agreement dated September 12, 1991,
                     between Eldorado Casino and the Local Joint Executive Board
                     of Las Vegas for and on behalf of Culinary Workers Union,
                     Local No. 226 and Bartenders Union, Local 165.

10.18 (1)            Collective Bargaining Agreement dated March 14, 1991, between 
                     Mare-Bear, Inc., d/b/a Stardust Hotel and Casino, and the 
                     Musicians Union of Las Vegas, Local No. 369, American
                     Federation of Musicians, AFL-CIO.

10.19 (1)            Labor Agreement dated May 1, 1991, between Mare-Bear, Inc., 
                     d/b/a Stardust Hotel & Casino, and the International
                     Alliance of Theatrical Stage Employees and Moving Picture
                     Machine Operators of the United States and Canada, Local
                     720, Las Vegas, Nevada.
</TABLE>
<PAGE>   46
<TABLE>
<CAPTION>
                                                                                      SEQUENTIALLY
EXHIBIT                                                                                 NUMBERED
NUMBER                                        DOCUMENT                                    PAGE
---------            ------------------------------------------------------------     ------------
<S>                  <C>                                                               <C>
10.20 (1)            Labor Agreement dated May 1, 1991, between Mare-Bear, Inc., 
                     d/b/a Stardust Hotel & Casino, and the International
                     Alliance of Theatrical Stage Employees and Moving Picture
                     Machine Operators of the United States and Canada, Local
                     720, Las Vegas, Nevada. (Theatrical Wardrobe Employees).

10.21 (1)            Labor Agreement dated June 14, 1983, between Stardust Hotel
                     and Casino and the International Brotherhood of Painters and
                     Allied Trades, Local Union No. 159, AFL-CIO.

10.22 (1)            Labor Agreement dated June 1, 1983, between Stardust Hotel
                     and Casino and the United Brotherhood of Carpenters and
                     Joiners of America, Local Union No. 1780, Las Vegas, Nevada.

10.23 (1)            Labor Agreement dated August 1, 1983, between Stardust 
                     Hotel and the International Brotherhood of Electrical 
                     Workers, Local Union No. 357, AFL-CIO.

10.24 (1)            Implemented Proposal dated June 15, 1992, between Stardust
                     Hotel and Casino and the Back-End Teamsters Local Union
                     No. 995.

10.25 (1)            Implemented Proposal dated June 15, 1992, between Fremont
                     Hotel and Casino and the Back-End Teamsters Local Union
                     No. 995.

10.26 (3)            Promissory Note dated December 30, 1991, from Eldorado, Inc., 
                     to Samuel A. Boyd in the principal sum of $600,000.

10.27 (3)            Building Contract dated July 15, 1993, between Marnell
                     Corrao Associates, Inc. and Sam's Town Hotel and Gambling
                     Hall for Sam's Town Addition Phase V.

10.28 (4)            Credit Agreement dated as of June 19, 1996, by and among 
                     Boyd Gaming and Registrant on the borrowers, certain
                     commercial lending instructions as the lenders, Canadian
                     Imperial Bank of Commerce as the Agent, Bank of America              
                     National Trust and Savings Association and Wells Fargo Bank
                     N.A. as co-managing Agents and Bankers Trust Company,
                     Credit Lyonnais and Societe Generale as co-Agents.

10.29 (5)            First Amendment to Credit Agreement, dated as of March 28,
                     1997, among Boyd Gaming and Registrant, and Wells Fargo
                     Bank, N.A., as Swingline Lender, Canadian Imperial Bank of
                     Commerce as letter of credit issuer, Bank of America N.T. &         
                     S.A. and Wells Fargo Bank, N.A. as co-managing agents,              
                     Bankers Trust Company, Credit Lyonnais Los Angeles Branch
                     and Societe Generale as co-agents, and Canadian Imperial
                     Bank of Commerce as administrative agent and collateral
                     agent.

10.31 (6)            Second Amendment to Credit Agreement, dated as of June 11,
                     1997, among the Registrant and California Hotel and
                     Casino, and Wells Fargo Bank, N.A., as Swingline Lender.
                     Canadian Imperial Bank of Commerce, as letter of credit
                     issuer, Bank of America National Trust and Savings                  
                     Association and Wells Fargo Bank, N.A., as co-managing
                     agents, Bankers Trust Company, Credit Lyonnais Los Angeles
                     Branch and Societe Generale as co-agents, and Canadian
                     Imperial Bank of Commerce as administrative agent and
                     collateral agent.
</TABLE>
<PAGE>   47
<TABLE>
<CAPTION>
                                                                                      SEQUENTIALLY
EXHIBIT                                                                                 NUMBERED
NUMBER                                         DOCUMENT                                   PAGE
---------            ------------------------------------------------------------     ------------
<S>                  <C>                                                               <C>
10.32 (6)            Third Amendment to Credit Agreement, dated as of June 24,
                     1997, among the Registrant and California Hotel and Casino,
                     and Wells Fargo Bank, N.A., as Swingline Lender, Canadian
                     Imperial Bank of Commerce, as letter of credit issuer, Bank
                     of America National Trust and Savings Association and Wells           13
                     Fargo Bank, N.A., as co-managing agents, Bankers Trust
                     Company, Credit Lyonnais, Los Angeles Branch and Societe
                     Generale as co-agents, and Canadian Imperial Bank of
                     Commerce as administrative agent and collateral agent.

10.33 (6)            Form of Indenture relating to $200,000,000 aggregate
                     principal amount of 9.25% Senior Notes due 2003 of Boyd               13
                     Gaming, including the form of note.

10.34 (6)            First Supplemental Indenture, among Boyd Gaming, as Issuer,
                     Registrant and certain subsidiaries of Boyd Gaming, as                13
                     guarantors, and the Bank of New York, as Trustee, dated as
                     of December 31, 1996.

21.1                 Subsidiaries of the Registrant.

24.1                 Powers of Attorney.  Reference is made to Page II-2.

27                   Financial Data Schedule.
</TABLE>

----------------- 

(1)   Incorporated by reference to the Company's Registration Statement on Form
      S-1, File No. 33-51672, which became effective on November 18, 1992.

(2)   Incorporated by reference to the Registration Statement on Form S-1, File
      No. 33-64006, of Boyd Gaming Corporation, which became effective on 
      October 15, 1993. 

(3)   Incorporated by reference to the Company's Annual Report on Form 10-K for
      the fiscal year ended June 30, 1995. 

(4)   Incorporated by reference to Exhibit 10.1 of Boyd Gaming's Current 
      Report on Form 8-K dated June 19, 1996.

(5)   Incorporated by reference to Exhibit 10.59 of Registrant's Quarterly
      Report on Form 10-Q for the quarter ended March 31, 1997.

(6)   Incorporated by reference to Exhibits 4.4, 4.5, 10.53 and 10.54 of Boyd
      Gaming's Annual Report on Form 10-K for the year ended June 30, 1997.