Riviera Holdings Corporation
2901 Las Vegas Boulevard South
Las Vegas, NV 89109
Investor Relations: (800) 362-1460
TRADED: AMEX - RIV
www.theriviera.com
FOR FURTHER INFORMATION:
AT THE COMPANY: INVESTOR RELATIONS CONTACT:
Duane Krohn, Treasurer and CFO Betsy Truax, Skorpus Consulting
(702) 794-9527 Voice (208) 241-3704 Voice
(702) 794-9442 Fax (208) 232-5317 Fax
Email: dkrohn@theriviera.com Email: BetsyT@cableone.net
FOR IMMEDIATE RELEASE:
RIVIERA REPORTS RESULTS FOR FOURTH QUARTER 2005
LAS VEGAS, NV - March 8, 2006 -- Riviera Holdings Corporation (AMEX:
RIV) today reported financial results for the fourth quarter ended December 31,
2005. Net revenues for the quarter were $46.2 million, down $1.3 million or 2.8
percent from the fourth quarter of 2004. Income from operations was $2.7
million, down $2.5 million or 48.1 percent from the fourth quarter of 2004.
Adjusted EBITDA (1) was $8.2 million, down $722,000 or 8.1 percent from the
fourth quarter of 2004. Adjusted EBITDA consists of earnings before interest,
income taxes, depreciation, amortization, equity compensation, asset
impairments, Sarbanes-Oxley Act expenses and mergers, acquisitions and
development costs, as shown in the reconciliation to net income in the tables of
this release (See Notes 1 and 2 to the Financial Summary Table). The net loss
for the quarter was $3.9 million, or $0.32 per share, compared with a net loss
of $1.5 million, or $0.13 per share, in the fourth quarter of 2004.
Net revenues for the year ended December 31, 2005 were $202.2 million,
up $877,000 or 0.4 percent from 2004. Income from operations was $22.4 million
in 2005, down $2.6 million or 10.3 percent from 2004. Adjusted EBITDA (1) was
$40 million in 2005 and 2004. The net loss for 2005 was $4 million, or $0.34 per
share, compared with a net loss of $2.1 million, or $0.20 per share, in 2004.
The net loss for 2005 was impacted by costs totaling approximately $3.6 million
or $0.30 per share, including Sarbanes-Oxley Act expenses of $1.2 million,
equity-based compensation of $1.6 million and asset impairments of $777,000.
Fourth Quarter 2005 Highlights
* Riviera Las Vegas RevPar (Revenue Per Available Room) increased $5 to $63
* Riviera Black Hawk EBITDA was up $576,000 or 14.6 percent
* The Company has $21 million in cash plus a $30.0 million revolver after
making its $11.9 million bond interest payment on December 15
Riviera Las Vegas
Robert Vannucci, President of Riviera Las Vegas, said, "Fourth quarter
2005 net revenues of 33.7 million were down $677,000 or 2.0 percent. EBITDA of
$4.5 million was down $1.3 million or 22.0 percent. Total room revenues were up
$925,000 or 9 percent. ADR for the quarter increased by $7.92 or 12.3 percent to
$72.38; REV/PAR increased by 9.1 percent or $5.24 to $62.84. The increase in
room revenues was offset by lower profits in gaming and increased employee
benefit costs. Entertainment competition from new and existing shows at Strip
properties resulted in a 30 percent decline in tickets sold to our shows in the
quarter. This 47,000 reduction in show patrons also impacted our gaming
revenues.
"For the year, Riviera Las Vegas' net revenues increased by
approximately $2.7 million, or 1.9 percent, from $148.0 million in 2004 to
$150.7 million in 2005 primarily due to increased average daily rate for our
rooms. Room revenues increased $5.1 million, as the average room rate increased
$7.03 or 10.8 percent from $64.81 to $71.84 and hotel occupancy remained
constant at 92.6 percent. Revenue per available room (Rev Par) increased $6.52
from $59.99 to $66.51 or 10.9 percent. The increase was due to a 15.0 percent
increase in convention room revenue, which made up 42.9 percent of total room
revenue. Revenues at the gaming tables increased $1.2 million due to an increase
in hold percentage as customers continue to play new games, which generally have
a higher hold percentage. Slot revenues increased slightly, however after
deducting cash rebates and free play, net slot revenues were down $2.2 million
or 5.1 percent. Our show attendance was down 25 percent or 163,000 patrons
during 2005, which also impacted gaming revenues.
"EBITDA decreased $369,000 or 1.4 percent from $27.2 million in 2004 to
$26.8 million in 2005 primarily due to higher slot marketing costs in 2005 and
higher payroll costs in other departments under union contracts."
Riviera Black Hawk
Ron Johnson, President of Riviera Black Hawk, said, "Fourth quarter
2005 net revenue of $12.5 million was down $633,000 or 4.8 percent from the
fourth quarter of 2004. EBITDA for the quarter of $4.5 million was up $576,000
or 14.5 percent from last year's fourth quarter. The current quarterly EBITDA of
$4.5 million is a record for any fourth quarter in the history of our Black Hawk
casino, and the second highest EBITDA ever recorded by our property. EBITDA
margin of 36.4 percent was up 6.2 percentage points from the same period last
year.
"We were able to establish record levels of profitability in the
quarter by continuing to focus our marketing dollars on our premier players,
which helps us to avoid chasing revenues, and by effectively controlling
variable expenses.
"Net revenues for 2005 were $51.5 million, down $1.9 million or 3.5
percent from last year. EBITDA for 2005 was $17.3 million, up $398,000 or 2.4
percent, a record for any year in the history of our Black Hawk property. EBITDA
margin for 2005 was a record 33.5 percent or 1.9 percentage points higher than
in 2004.
"We look forward to the opening of the extension of Main Street,
currently scheduled for completion in the second quarter of 2006. The extension
will provide easier access to Main Street from Highway 119 and make our parking
garage the first and most convenient parking opportunity for patrons entering
the Black Hawk market by way of Highway 119."
Consolidated Operations
William L. Westerman, Chief Executive Officer and Chairman of the
Board, said, "In 2005, we maintained our adjusted EBITDA at the record levels
achieved in 2004 even though both properties experienced difficult quarters
during the year.
"In Black Hawk, revenues declined as a result of the primary access
road into Black Hawk being closed during the three summer months. Regardless,
results from our Black Hawk casino for both the quarter and the year were
outstanding.
"In Las Vegas, hotel room and gaming revenues were up during the year.
Our Las Vegas property continues to do very well in attracting convention
business. However, we are making significant revisions to our marketing strategy
in an effort to improve the return on our marketing dollars in Las Vegas.
"Despite holding adjusted EBITDA at record levels, operating income
fell by $2.5 million in 2005 versus 2004. Most disturbing was the $1.2 million
that we spent to comply with Sarbanes-Oxley Act requirements, primarily because
we became an accelerated filer. It is unfortunate that these new regulations
come at such a high cost to relatively small public companies, such as the
Riviera. Sarbanes-Oxley Act compliance reduced our operating income by
approximately 5 percent in 2005. We hope Congress will address this issue and
bring the costs associated with these new regulations down to a more reasonable
level. Operating income was also reduced by a $1.6 million non-cash charge for
equity-based compensation.
"With the reopening of the Main Street extension in Black Hawk and more
cost-effective marketing in Las Vegas, our focus for 2006 is the continued
improvement in operations and bottom-line results at both of our properties."
CEO Stock Transactions
On December 22, 2005, Mr. William L. Westerman, Chief Executive
Officer, entered into an agreement with a group of buyers for the sale of 1.0
million of his shares of Riviera stock at $15.00 per share and the possibility
of the sale of his remaining approximately 1.1 million shares at that same
price. On January 8, 2006, the sale of the 1.0 million shares was consummated,
which resulted in those shares becoming "restricted securities" under Rule 144
of the Securities and Exchange Commission. In connection with that agreement, it
was publicly reported in Schedule 13D filed with the Securities and Exchange
Commission that the buyers intended to commence negotiations with Riviera to
acquire the Company at a price of not less than $15.00 per share. On March 2,
2006, discussions between the Special Committee of Riviera's Board of Directors
and the buyers of Mr. Westerman's shares, concerning the possible acquisition of
Riviera, terminated because the buyers and the Special Committee did not reach
agreement on the acquisition price.
From time to time, the Riviera may consider opportunities for
developing its Las Vegas property, refinancing, joint ventures, mergers, and
realizing the value of its stock through other means if and when they arise and
the Company's Board of Directors considers them to be in the best interests of
its shareholders.
Conference Call Information
In conjunction with the release of fourth quarter 2005 financial
results, Riviera will broadcast a conference call at 2 p.m. Eastern Standard
Time on Wednesday, March 8, 2006. Investors can listen to the call via the
Internet at http://phx.corporate-ir.net/playerlink.zhtml?c=96408&s=wm&e=1214177
or www.theriviera.com or by dialing (888) 889-5602. The conference call
rebroadcast is available at (877) 519-4471, code 7082252.
Forward -Looking Statements
The forward-looking statements in this news release, which reflect our
best judgment based on factors currently known to us, involve significant risks
and uncertainties including expansion and modernization objectives and
timetables, hotel and casino market conditions, financing requirements, interest
rates, regulatory requirements and other risks and uncertainties detailed from
time to time in filings with the Securities and Exchange Commission. Our actual
results may differ materially from what is expressed or implied in our
forward-looking statements. We do not plan to update our forward-looking
statements even though our situation or plans may change in the future, unless
applicable law requires us to do so.
About Riviera Holdings
Riviera Holdings Corporation owns and operates the Riviera Hotel and Casino
on the Las Vegas Strip and the Riviera Black Hawk Casino in Black Hawk,
Colorado. Riviera's stock is listed on the American Stock Exchange ("AMEX")
under the symbol RIV.
- Tables Follow -
Riviera Holdings Corporation
Financial Summary
Three Months Ended December 31 Twelve Months Ended December 31
------------------------------ -------------------------------
($ in 000s except 2005 2004 Var %Var 2005 2004 Var %Var
per share amounts) ---- ---- --- ---- ---- ---- --- ----
Net Revenues:
Riviera Las Vegas $33,697 $34,374 $ (677) -2.0% $150,688 $147,949 $2,739 1.9%
Riviera Black Hawk 12,472 13,105 (633) -4.8% 51,539 53,401 (1,862) -3.5%
---------------------------- ------------------------------
Total Net Revenues 46,169 47,479 (1,310) -2.8% 202,227 201,350 877 0.4%
Operating Income:
Riviera Las Vegas 2,513 3,836 (1,323) -34.5% 19,065 19,271 (206) -1.1%
Riviera Black Hawk 2,981 2,424 557 23.0% 10,941 10,919 22 0.2%
Mergers, Acquisitions
and Development Costs, net (311) (183) (128) 69.9% 65 (1,193) 1,258 -105.4%
Sarbanes Oxley Expenses (591) 0 (591) (1,233) 0 (1,233)
Equity-based Compensation (421) 0 (421) (1,627) 0 (1,627)
Asset Impairments (579) 0 (579) (777) 0 (777)
Corporate Expenses (887) (865) (22) -2.5% (4,045) (4,038) (7) -0.2%
---------------------------- ------------------------------
Total Operating Income 2,705 5,212 (2,507) -48.1% 22,389 24,959 (2,570) -10.3%
Adjusted EBITDA (1):
Riviera Las Vegas 4,530 5,806 (1,276) -22.0% 26,789 27,158 (369) -1.4%
Riviera Black Hawk 4,534 3,958 576 14.6% 17,282 16,884 398 2.4%
Corporate Expenses (887) (865) (22) -2.5% (4,045) (4,038) (7) -0.2%
---------------------------- ------------------------------
Total EBITDA 8,177 8,899 (722) -8.1% 40,026 40,004 22 0.1%
Adjusted EBITDA Margins (2):
Riviera Las Vegas 13.4% 16.9% -3.4% 17.8% 18.4% -0.6%
Riviera Black Hawk 36.4% 30.2% 6.2% 33.5% 31.6% 1.9%
Consolidated 17.7% 18.7% -1.0% 19.8% 19.9% -0.1%
$
Net income (loss) $(3,861) (1,467) $(2,394) $(3,999) $(2,086) $ (1,913)
EARNINGS PER SHARE DATA (3):
Weighted average basic and
diluted shares
outstanding 11,914 11,295 619 5.5% 11,833 10,671 1,162 10.9%
Basic and diluted earnings
per share $(0.32) $(0.13) $(0.19) $(0.34) $(0.20) $(0.14)
(1) Adjusted EBITDA consists of earnings before interest, income taxes,
depreciation, amortization, equity-based compensation, asset
impairment, Sarbanes-Oxley expenses and mergers, acquisitions and
development costs, net, as shown in the reconciliation to net income
(loss) in the tables of this release. In 2004, we entered into
confidential discussions regarding a potential sale of our company.
Discussions with one potential buyer, which commenced in 2004, ended in
2006, and we retained a $1 million fee paid to us by that party. Such
amount is reflected in mergers, acquisitions and developments costs,
net. Adjusted EBITDA is presented solely as a supplemental disclosure
because we believe that it is 1) a widely used measure of operating
performance in the gaming industry, and 2) a principal basis for
valuation of gaming companies by certain investors. We use
property-level EBITDA (earnings before interest, income taxes,
depreciation, amortization and corporate expense) as the primary
measure of the Company's business segment properties' performance,
including the evaluation of operating personnel. Adjusted EBITDA should
not be construed as an alternative to operating income, as an indicator
of our operating performance as an alternative to cash flows from
operating activities as a measure of liquidity, or as any other measure
determined in accordance with generally accepted accounting principles.
We have significant uses of cash flows, including capital expenditures,
interest payments and debt principal repayments, which are not
reflected in Adjusted EBITDA. Also, other gaming companies that report
EBITDA or Adjusted EBITDA information may calculate it in a different
manner than we do. A reconciliation of Adjusted EBITDA to net income
(loss) is included in the financial schedules accompanying this
release.
(2) Adjusted EBITDA margins represent Adjusted EBITDA divided by Net Revenues
(3) These amounts have been adjusted to reflect our three-for-one common stock
split on March 11, 2005.
Riviera Holdings Corporation
Reconciliation of Net Income to Adjusted M&A,
EBITDA: Develop-
Equity-
Net Interest Asset Sarbanes- based ment and Manag-
Oxley
Income Income & Operating Depr- Impair- Act Comp- Project ement Adjusted
(Loss) (Expense) Income eciation ment Expenses ensation Costs,Net Fee EBITDA
------- --------- ------- -------- ----- ------ ----------------- ------ ------
Fourth Quarter 2005:
Riviera Las Vegas $2,532 $ 19 $2,513 $2,479 (462) $4,530
Riviera Black Hawk 597 (1,917) 2,514 1,091 467 462 4,534
Corporate (6,990) (4,668) (2,322) - 112 591 421 311 - (887)
------- ------- ------- ---- ---- ---- ---- ---- -- -----
$(3,861) $(6,566) $2,705 $3,570 $579 $591 $421 $311 $ - $8,177
Fourth Quarter 2004:
Riviera Las Vegas $3,809 (27) 3,836 2,481 (511) 5,806
Riviera Black Hawk 467 (1,957) 2,424 1,023 511 3,958
Corporate (5,743) (4,695) (1,048) - - - - 183 - (865)
------- ------- ------- ------- -- -- -- ---- ---- -----
$(1,467) $(6,679) 5,212 $3,504 $- $- $- 183 $- $8,899
Twelve Months Ended December 31, 2005:
Riviera Las Vegas $19,097 $ 32 $19,065 $9,712 (1,988) $26,789
Riviera Black Hawk 2,764 (7,710) 10,474 4,353 467 1,988 17,282
Corporate (25,860) (18,710) (7,150) - 310 1,233 1,627 (65) - (4,045)
-------- -------- ------- ------ ---- ------ ------ ---- ------ -------
$(3,999)$(26,388) $22,389 $ 14,065 $777 $1,233 $1,627 (65) $- $40,026
Twelve Months Ended December 31, 2004:
Riviera Las Vegas $19,055 $(216) $19,271 $9,839 $(1,952) $27,158
Riviera Black Hawk 2,988 (7,931) 10,919 4,013 1,952 16,884
Corporate (24,129 (18,898) (5,231) - - - - 1,193 - (4,038)
-------- -------- ------- -- -- -- -- ------ -- --------
$(2,086) $(27,045) $24,959 $13,852 $- $- $- $1,193 $- $40,004
Balance Sheet Summary
($ in 000's) Dec 31, Dec 31,
2005 2004
-------------------------
Cash and short term investments $20,571 $18,886
Total current assets 30,797 28,932
Property and equipment, net 171,130 177,115
------- -------
Total assets 211,769 217,536
Total current liabilities 25,305 27,599
Long-term debt, net of current
portion 214,607 215,026
Total shareholders' (deficiency)
equity (31,269) (29,292)
RIVIERA HOLDINGS CORPORATION
CONSOLIDATED STATEMENTS OF OPERATIONS
Three months ended Twelve months ended
(In Thousands, Except December 31 December 31
Per Share Amounts)
2005 2004 2005 2004
---- ---- ---- ----
REVENUES:
Casino $25,375 $26,284 $108,130 $110,461
Rooms 11,954 11,036 52,021 46,925
Food and beverage 7,487 7,669 34,132 34,123
Entertainment 3,789 5,041 17,371 20,767
Other 1,808 2,106 8,312 8,243
------- ------- ------- ------
Total revenues 50,413 52,136 219,966 220,519
Less promotional allowances 4,244 4,657 17,739 19,169
------- ------- -------- ------
Net revenues 46,169 47,479 202,227 201,350
-------- -------- --------- -------
COSTS AND EXPENSES:
Direct costs and expenses of
operating departments:
Casino 13,416 13,644 56,092 54,530
Rooms 6,323 6,365 27,133 25,987
Food and beverage 5,657 5,546 24,645 23,675
Entertainment 2,724 3,464 13,214 14,066
Other 639 642 2,906 2,836
Other operating expenses:
General and administrative
Equity-based compensation 421 1,627
Other general and
dministrative 9,233 8,919 38,211 40,252
Mergers, acquisitions and
development costs, net 311 183 (65) 1,193
Sarbanes-Oxley Act 591 1,233
Asset impairment 579 777
Depreciation and amortization 3,570 3,504 14,065 13,852
------- ------- -------- ------
Total costs and expenses 43,464 42,267 179,838 176,391
-------- -------- -------- -------
INCOME FROM OPERATIONS 2,705 5,212 22,389 24,959
------- ------- -------- ------
OTHER (EXPENSE) INCOME:
Interest expense (6,644) (6,697) (26,608) (27,079)
Interest income 78 18 220 34
---- ---- ----- ----
Total other expense (6,566) (6,679) (26,388) (27,045)
-------- -------- -------- --------
NET LOSS $(3,861) $(1,467) $(3,999) $(2,086)
======== ======== ======== =======
EARNINGS PER SHARE DATA--
Loss per share,
basic and diluted $(0.32) $(0.13) $(0.34) $(0.20)
======= ======= ======= ======
Weighted-average common and
common equivalent shares 11,914 11,295 11,833 10,671
======== ======== ======== ======
###