Back-taxes charge hurts Boyd first-quarter earnings

Friday, April 23, 2004 | 11:07 a.m.

A back-taxes charge in Indiana offset a healthy performance at Atlantic City's Borgata resort as Las Vegas-based Boyd Gaming Corp. posted a drop in first-quarter earnings on Thursday.

The company, which operates the Stardust, California, Fremont, Main Street Station and Sam's Town among other properties in Southern Nevada, reported net earnings of $13.5 million, or 20 cents a share, compared with $16.4 million, or 25 cents a share, for the same period a year earlier.

Excluding the tax charge and preopening costs of the Borgata a year earlier, the company's earnings per share were unchanged at 29 cents. Earnings were in line with analysts' expectations.

The company reported revenue of $330 million for the quarter compared with $321.9 million for the same period in 2003.

"The performance of Borgata since its opening has exceeded our expectations," said William S. Boyd, chairman and chief executive of Boyd Gaming in a release issued with earnings. "I am very pleased that after only three quarters of operations, Borgata achieved the highest quarterly EBITDA (cash flow) in the Atlantic City market."

Borgata opened last summer to rave reviews and frequently is compared with Las Vegas' top properties. Boyd is a 50 percent partner in the venture with MGM MIRAGE.

Hotel occupancy for the quarter was 83 percent and the company said the average daily room rate was $125 during the quarter.

Boyd stock was at $24.41 in afternoon trading on the New York Stock Exchange today, down 1.6 percent from Thursday's close of $24.80. The stock reached an all-time high of $25.70 on Wednesday.

Boyd officials said that in 2003, the company received a proposed assessment from the Indiana Department of Revenue based on its position that the company's Indiana gaming revenue tax is not deductible for state income tax purposes.

Another company -- Phoenix-based Aztar Corp. -- was in a similar circumstance and learned earlier this month that the Indiana Tax Court ruled against it. While Boyd can appeal its own case, the company reported that if it has to pay back taxes, it would take a charge of $5.7 million, or 9 cents a share, in the first quarter.