Riviera Holdings Corporation
2901 Las Vegas Boulevard South
Las Vegas NV 89109
Investor Relations: (800) 362-1460
TRADED: AMEX - RIV
www.rivierahotel.com
FOR FURTHER INFORMATION
AT THE COMPANY INVESTOR RELATIONS
Phil Simons, Treasurer and CFO Betsy Truax, Skorpus Consulting
(702) 794-9527 Voice (208) 241-3704 Voice
(702) 794-9442 Fax (208) 232-5317 Fax
Email: psimons@theriviera.com Email: betsytruax_hartman@msn.com
FOR IMMEDIATE RELEASE
RIVIERA REPORTS RESULTS FOR SECOND QUARTER 2008
LAS VEGAS, NV - August 7, 2008 -- Riviera Holdings Corporation (AMEX:
RIV) today reported financial results for the three and six-month periods ended
June 30, 2008.
Second Quarter 2008
Net revenues for the second quarter of 2008 were $45.6 million, a
decrease of $8.1 million, or 15 percent, from $53.7 million for the comparable
period in the prior year. Income from operations for the second quarter of 2008
was $5.0 million, a decrease of $4.4 million, or 47 percent, from $9.4 million
for the comparable period in the prior year. Income from operations for the
second quarter of 2008 included $927,000 in corporate payroll and related
expenses compared to $1.0 million in the comparable period in the prior year,
$249,000 in equity compensation costs compared to $354,000 in the comparable
period in the prior year and $22,000 in mergers and acquisitions and development
costs compared to $238,000 in the comparable period in the prior year.
Adjusted EBITDA (1) for the second quarter of 2008 was $8.9 million, a
decrease of $4.4 million, or 33 percent, from $13.3 million for the comparable
period in the prior year. Adjusted EBITDA (1) consists of earnings before
interest, income taxes, depreciation, amortization, equity-based compensation,
asset impairments, and mergers, acquisitions and development costs, as described
within footnote 1 to the financial summary table below. Adjusted EBITDA (1) was
19 percent and 25 percent of total revenues for the three months ended June 30,
2008 and June 30, 2007, respectively.
Net income for the second quarter of 2008 was $10.1 million, or $0.80
per share on a fully diluted basis, an increase of $6.5 million, from $3.6
million, or $0.28 per share on a fully diluted basis, for the comparable period
in the prior year. Net income included $4.3 million and $6.7 million in interest
expense, net of interest income, for the second quarters ending June 30, 2008
and June 30, 2007, respectively. The decrease in interest expense, net of
interest income, was due primarily to more favorable interest rate terms
associated with our new credit agreement, executed June 2007. Net income also
included $9.3 million and $0.8 million in gain on our interest rate swap
derivative for the second quarters ending June 30, 2008 and June 30, 2007,
respectively. The gain on our interest rate swap derivative had no effect on
cash or cash equivalents and is the result of a change in the cost of
terminating our interest rate swap derivative agreement. The cost of terminating
the agreement, which is reflected as a long-term liability on our financial
statements and fluctuates with changes in interest rates, was approximately
$12.3 million as of June 30, 2008.
William L. Westerman, the Chief Executive Officer of Riviera Holdings
Corporation, said, "It was a challenging quarter as management continued to
focus on optimizing profits during these difficult economic times. It was the
perfect storm with deteriorated economic conditions, high fuel prices, the
effects of a Colorado smoking ban, and the impact of neighboring construction
projects in Las Vegas. Most of our revenue loss was attributable to less play on
our slot machines at both properties. There are few direct costs required to
operate our slot machines; therefore, management was forced to reduce other
costs and expenses in order to offset declines in slot machine revenue. I am
proud that our team was able to quickly adapt to the changing business
conditions and preserve income from operations, while continuing to deliver
exceptional customer service."
Six Months Ended June 30, 2008
Net revenues for the six months ended June 30, 2008 were $93.6 million,
a decrease of $12.1 million, or 12 percent, from $105.7 million a year ago.
Income from operations for the six months ended June 30, 2008 was $11.8 million,
a decrease of $6.6 million, or 36 percent, from $18.4 million for the comparable
period in the prior year. Included in income from operations for the first six
months of 2008 was $1.9 million in corporate payroll and related expense
compared to $2.0 million a year ago, $432,000 in equity-based compensation costs
compared to $553,000 a year ago and $45,000 in mergers, acquisitions and
development costs compared to $288,000 a year ago.
Adjusted EBITDA (1) was $19.2 million, a decrease of $6.5 million, or
25 percent, from $25.7 million for the comparable period in 2007. Adjusted
EBITDA (1) was 21 percent and 24 percent of total revenues for the six months
ended June 30, 2008 and June 30, 2007, respectively.
Net income for the six months ended June 30, 2008 was $4.3 million, or
$0.34 per share on a fully diluted basis, a decrease of $1.8 million, from $6.1
million, or $0.49 per share on a fully diluted basis, for the comparable period
in 2007. Net income included $8.5 million and $13.1 million in interest expense,
net of interest income, for the six months ending June 30, 2008 and June 30
2007, respectively. The decrease in interest expense, net of interest income,
was due primarily to more favorable interest rate terms associated with our new
credit agreement, executed June 2007. Net income also included $1.0 million and
$0.8 million in gain on our interest rate swap derivative for the six months
ending June 30, 2008 and June 30, 2007, respectively. The gain on our interest
rate swap derivative had no effect on cash or cash equivalents and is the result
of a change in the cost of terminating our interest rate swap derivative
agreement.
"While it has been a difficult first half of 2008, the financing we
secured in 2007 enabled us to reduce interest costs by $5.5 million for the six
months ended June 30, 2008. We have reinvested these savings into our room
renovation project at our Las Vegas property, which is proceeding on schedule. I
anticipate that our new room product will give us a competitive edge and deliver
excellent return on investment. In addition, during the first six-month period
of 2008, we have streamlined our operating costs and structure, and have added
key management team members. I strongly believe that we are poised to weather
the current economic conditions and capitalize on any future opportunities,"
commented Mr. Westerman.
Riviera Las Vegas
Net revenues for the three months ended June 30, 2008 were $34.5
million, a decrease of $5.7 million, or 14 percent, from $40.2 million for the
comparable period in the prior year. Income from operations for the three months
ended June 30, 2008 was $4.2 million, a decrease of $3.6 million, or 46 percent,
from $7.8 million for the comparable period in the prior year. Adjusted EBITDA
(1) for the three months ended June 30, 2008 was $6.2 million, a decrease of
$3.2 million, or 34 percent, from $9.4 million for the comparable period in the
prior year.
Net revenues for the six months ended June 30, 2008 were $71.0 million,
a decrease of $7.7 million, or 10 percent, from $78.7 million for the comparable
period in the prior year. Income from operations for the six months ended June
30, 2008 was $9.8 million, a decrease of $4.9 million, or 34 percent, from $14.7
million for the comparable period in the prior year. Adjusted EBITDA (1) for the
six months ended June 30, 2008 was $13.6 million, a decrease of $4.4 million, or
24 percent, from $18.0 million for the comparable period in the prior year.
Casino revenues for the three months ended June 30, 2008 decreased $3.0
million, or 17 percent, from the comparable period in the prior year. The
decrease in casino revenues was primarily due to lower slot revenues as a result
of reduced hotel occupancy and the weakened economy's impact on discretionary
spending and consumer sentiment. Net room division revenues for the three months
ended June 30, 2008 decreased $1.6 million, or 11 percent, from the comparable
period in the prior year. The decrease in net room division revenue was due to a
33 percent decrease in leisure segment occupied room nights as a result of less
travel due to higher fuel prices and the weak economy. Occupancy for the three
months ended June 30, 2008 was 83 percent compared to 94 percent for the
comparable period in the prior year. During the second quarter, on average,
approximately 10 percent of the hotel rooms were out of order due to
construction related to our room renovation project. Occupancy, based on total
hotel rooms, was 77 percent for the three months ended June 30, 2008. Average
daily room rate for the three months ended June 30, 2008 was $90.53 compared to
$80.75 for the comparable period in the prior year. The increase in average
daily room rate was primarily due to higher contracted convention business room
rates and increases in our leisure segment room rates.
Casino revenues for the six months ended June 30, 2008 decreased $5.2
million, or 16 percent, from the comparable period in the prior year. The
decrease in casino revenues was primarily due to lower slot revenues as a result
of reduced hotel occupancy and the weakened economy's impact on discretionary
spending and consumer sentiment. Net room division revenues for the six months
ended June 30, 2008 decreased $2.0 million, or 7 percent, from the comparable
period in the prior year. The decrease in net room division revenue was
primarily due to a 31 percent decrease in leisure segment occupied room nights
due to reduced travel primarily as a result of higher fuel prices and the weak
economy. Occupancy for the six months ended June 30, 2008 was 83 percent
compared to 94 percent for the comparable period in the prior year. During the
second quarter, on average, approximately 5 percent of the hotel rooms were out
of order due to construction related to our room renovation project. Occupancy,
based on total hotel rooms, was 77 percent for the six months ended June 30,
2008. Average daily room rate for the six months ended June 30, 2008 was $95.17
compared to $85.15 for the comparable period in the prior year.
"This has been a challenging quarter within the Las Vegas market. The
substantial increase in fuel prices and general pessimism toward the economy has
negatively impacted our business. Our rooms and gaming divisions have suffered
with lower occupancy levels and less gaming revenues per occupied room.
Moreover, casino "walk-in" customer visitations have been negatively impacted as
a result of encumbered access due to neighboring construction projects. Within
our rooms division, leisure segment customer demand has softened significantly;
however, convention business remains relatively strong. We have reduced leisure
segment room rates to combat weakened demand and are optimistic that our room
renovation project, which is nearing completion, will enable us to continue
repositioning the brand and growing revenue per occupied room. To offset the
significant decrease in revenues, we have aggressively cut operating costs in an
effort to maintain our operating profit margins," commented Robert Vannucci,
Chief Operating Officer of Riviera Las Vegas.
Riviera Black Hawk
Net revenues for the three months ended June 30, 2008 were $11.1
million, a decrease of $2.4 million, or 18 percent, from $13.5 million for the
comparable period in the prior year. Income from operations for the three months
ended June 30, 2008 was $2.0 million, a decrease of $1.2 million, or 38 percent,
from $3.3 million for the comparable period in the prior year. Adjusted EBITDA
(1) for the three months ended June 30, 2008 was $3.5 million, a decrease of
$1.3 million, or 28 percent, from $4.9 million for the comparable period in the
prior year.
Net revenues for the six months ended June 30, 2008 were $22.6 million,
a decrease of $4.4 million, or 16 percent, from $27.0 million for the comparable
period in the prior year. Income from operations for the six months ended June
30, 2008 was $4.3 million, a decrease of $2.2 million, or 33 percent, from $6.5
million for the comparable period in the prior year. Adjusted EBITDA (1) for the
six months ended June 30, 2008 was $7.4 million, a decrease of $2.3 million, or
23 percent, from $9.7 million for the comparable period in the prior year.
"The Black Hawk market has suffered with the implementation of the
smoking ban combined with the significant fuel price increase and slumping
economic climate. Consequently, our slot machine revenue, which comprises
approximately 95 percent of our total revenues, decreased $2.3 million, or 18
percent, and $4.2 million, or 16 percent, for the three and six months ended
June 30, 2008, respectively. To offset revenue losses, our property management
team has aggressively controlled expenses. I believe these efforts will enable
us to benefit from resurgence in customer demand," said Mr. Westerman.
Conference Call Information
In conjunction with the release of the second quarter 2008 financial
results, Riviera Holdings Corporation will broadcast a conference call at 2 p.m.
Eastern Daylight Time today, Thursday, August 7, 2008. Investors can listen to
the call via the Internet at www.rivierahotel.com or by dialing (888) 801-6497.
The conference call rebroadcast will be available at (888) 203-1112, code
6326543.
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 the hotel and casino market conditions, refinancing
opportunities and interest rates, increases in energy costs, general economic
and political conditions, financing requirements, expansion and modernization
objectives and timetables, regulatory requirements and other risks and
uncertainties detailed from time to time in our 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 Corporation
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 Holding Corporation's stock is listed on the American Stock
Exchange under the symbol RIV.
- Tables Follow -
Riviera Holdings Corporation
Financial Summary
(Amounts in thousands except per share amounts)
Three Months Ended June 30 Six Months Ended June 30
-------------------------- ------------------------
2008 2007 Var %Var 2008 2007 Var %Var
---- ---- --- ---- ---- ---- --- ----
Net Revenues:
Riviera Las Vegas $34,525 $40,185 $(5,660) -14.1% $70,975 $ 78,657 $(7,682) -9.8%
Riviera Black Hawk 11,090 13,480 (2,390) -17.7% 22,602 27,035 (4,433) -16.4%
-------------------------- ------------------------------
Total Net Revenues 45,615 53,665 (8,050) -15.0% 93,577 105,692 (12,115) -11.5%
Operating Income:
Riviera Las Vegas 4,215 7,795 (3,580) -45.9% 9,754 14,705 (4,951) -33.7%
Riviera Black Hawk 2,027 3,253 (1,226) -37.7% 4,339 6,509 (2,170) -33.3%
Mergers, Acquisitions and
Development Costs, net (22) (238) 216 -90.8% (45) (288) 243 -84.4%
Equity-Based Compensation (249) (354) 105 -29.7% (432) (553) 121 -21.9%
Corporate Expenses (927) (1,017) 90 8.8% (1,872) (1,973) 101 5.1%
--------------------------- ------------------------------
Total Operating Income 5,044 9,439 (4,395) -46.6% 11,744 18,400 (6,656) -36.2%
Adjusted EBITDA (1):
Riviera Las Vegas 6,249 9,405 (3,156) -33.6% 13,620 18,012 (4,392) -24.4%
Riviera Black Hawk 3,530 4,877 (1,347) -27.6% 7,433 9,692 (2,259) -23.3%
Corporate Expenses (927) (1,017) 90 8.8% (1,872) (1,973) 101 5.1%
-------------------------- ----------------------------
Total Adjusted EBITDA 8,852 13,265 (4,413) -33.3% 19,181 25,731 (6,550) -25.5%
Adjusted EBITDA Margins (2):
Riviera Las Vegas 18.1% 23.4% -5.3% 19.2% 22.9% -3.7%
Riviera Black Hawk 31.8% 36.2% -4.3% 32.9% 35.8% -3.0%
Consolidated 19.4% 24.7% -5.3% 20.5% 24.3% -3.8%
Net income $10,073 $3,574 $6,499 $4,290 $6,136 $(1,846)
EARNINGS PER SHARE DATA:
Weighted average basic
shares outstanding 12,408 12,322 86 12,375 12,291 84
Basic earnings per share $0.81 $0.29 $0.52 $0.35 $0.50 $(0.15)
Weighted average diluted
shares outstanding 12,570 12,605 (35) 12,551 12,557 (6)
Diluted earnings per share $0.80 $0.28 $0.52 $0.34 $0.49 $(.015)
(1) Adjusted EBITDA consists of earnings before interest, income taxes,
depreciation, amortization, equity-based compensation, the effects of
the accounting for our interest rate swap agreement, and mergers,
acquisitions and development costs, net, as shown in the reconciliation
with net income (loss) in the tables below in this release. 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 our business segment properties'
performance, including the evaluation of our 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 may calculate it
in a different manner than we do. A reconciliation of net income (loss)
to Adjusted EBITDA is included in the tables below in this release.
(2) Adjusted EBITDA margins represent Adjusted EBITDA divided by Net
Revenues.
Riviera Holdings Corporation and Subsidiaries
Reconciliation of Net Income (Loss) to
Adjusted EBITDA Mergers
(Amounts in thousands) Net Other Operating Equity Acquisitions,
Income Income Gain on Income Depre- Based Development Management Adjusted
(Loss) (Expense) Derivatives (Loss) ciation Comp & Costs Fee EBITDA
Second Quarter 2008:
Riviera Las Vegas $4,226 $ 11 $ - $ 4,215 $2,472 - - $ (438) $ 6,249
Riviera Black Hawk 712 (1,315) - 2,027 1,065 - - 438 3,530
Corporate 5,135 (2,976) 9,309 (1,198) - 249 22 - (927)
------- -------- ------------ ------- ------ ---------- --------- -------- ---------
$10,073 $(4,280) $ 9,309 $ 5,044 $3,537 $ 249 $ 22 $ - $ 8,852
Second Quarter 2007:
Riviera Las Vegas $7,850 $ 55 - $ 7,795 $2,273 - - $ (663) $ 9,405
Riviera Black Hawk 1,339 (1,914) - 3,253 961 - - 663 4,877
Corporate (5,615) (4,833) 827 (1,609) - 354 238 - (1,017)
------- -------- ------------ ------- ------ ---------- --------- -------- ---------
$ 3,574 $(6,692) 827 $ 9,439 $3,234 $ 354 $ 238 $ - $13,265
Six Months Ended
June 30, 2008:
Riviera Las Vegas $9,782 $ 28 - $ 9,754 $4,824 - - $ (958) $13,620
Riviera Black Hawk 1,717 (2,622) - 4,339 2,136 - - 958 7,433
Corporate (7,209) (5,862) 1,002 (2,349) - 432 45 - (1,872)
------- -------- ------------ ------- ------ ---------- --------- -------- ---------
$4,290 $(8,456) $1,002 $11,744 $6,960 $432 $45 $ - $19,181
Six Months Ended
June 30, 2007:
Riviera Las Vegas $ 14,794 $ 89 - 14,705 $4,541 - - $ (1,234) $18,012
Riviera Black Hawk 2,697 (3,812) - 6,509 1,949 - - 1,234 9,692
Corporate (11,355) (9,368) 827 (2,814) - 553 288 - (1,973)
------- -------- ------------ ------- ------ ---------- --------- -------- ---------
$6,136 $(13,091) $827 $18,400 $6,490 $553 $288 $ - $25,731
Balance Sheet Summary
June 30, Dec 31,
2008 2007
----------------------
Cash and short term investments $23,289 $28,820
Restricted cash 2,772 2,772
Total current assets 33,432 40,211
Property and equipment, net 178,627 172,865
Total assets 217,260 218,462
Total current liabilities 22,096 26,666
Long-term debt, net of current
portion 225,358 225,287
Total shareholders' deficiency (43,004) (47,826)
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(Amounts in thousands, except per share amounts) Three Months Ended Six Months Ended
June 30 June 30
2008 2007 2008 2007
-------------------- ---------------------
Revenues:
Casino $25,580 $30,887 $49,546 $59,006
Rooms 13,553 15,150 29,423 31,464
Food and beverage 7,503 8,773 15,548 16,961
Entertainment 3,256 3,451 6,633 5,857
Other 1,603 1,645 3,479 3,357
-------------------- ---------------------
Total 51,495 59,906 104,629 116,645
Less promotional allowances 5,880 6,241 11,052 10,953
------------------------------------------
Net revenues 45,615 53,665 93,577 105,692
-------------------- ---------------------
COSTS AND EXPENSES:
Direct costs and expenses of operating
departments:
Casino 12,418 14,359 24,839 28,611
Rooms 6,404 7,048 13,268 14,099
Food and beverage 5,516 6,338 11,342 12,479
Entertainment 2,078 2,043 4,361 3,669
Other 328 338 656 675
Other operating expenses:
General and administrative 10,019 10,274 19,930 20,428
Mergers, Acquisitions and Development
Costs, net 22 238 45 288
Equity-Based Compensation 249 354 432 553
Depreciation and amortization 3,537 3,234 6,960 6,490
-------------------- ---------------------
Total costs and expenses 40,571 44,226 81,833 87,292
-------------------- ---------------------
INCOME FROM OPERATIONS 5,044 9,439 11,744 18,400
-------------------- ---------------------
OTHER EXPENSE:
Interest expense, Net (4,371) (7,606) (8,696) (14,174)
Interest Income 91 914 240 1,083
Gain on Derivatives 9,309 827 1,002 827
-------------------- ---------------------
Total other income (expense) 5,029 (5,865) (7,454) (12,264)
-------------------- ---------------------
NET INCOME: $10,073 $3,574 $4,290 $6,136
==================== =====================
EARNINGS PER SHARE DATA:
Shares used in calculating net income
per common share:
Basic 12,408 12,322 12,375 12,291
Diluted 12,570 12,605 12,551 12,557
Net Income per common share:
Basic $ 0.81 $0.29 $0.35 $0.50
Diluted $ 0.80 $0.28 $0.34 $0.49