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 THIRD QUARTER 2008
LAS VEGAS, NV - November 6, 2008 -- Riviera Holdings Corporation (AMEX:
RIV) today reported financial results for the three-month and nine-month periods
ended September 30, 2008.
Third Quarter 2008
Net revenues for the third quarter of 2008 were $40.2 million, a decrease
of $12.2 million, or 23 percent, from $52.4 million for the comparable period in
the prior year. Net revenues decreased due to a 20 percent net revenue reduction
at Riviera Las Vegas and a 31 percent net revenue reduction at Riviera Black
Hawk. Income from operations for the third quarter of 2008 was $0.2 million, a
decrease of $6.5 million, or 97 percent, from $6.7 million for the comparable
period in the prior year. Income from operations decreased as a result of a 95
percent operating income reduction at Riviera Las Vegas and a 66 percent
operating income reduction at Riviera Black Hawk. Decreases in Riviera Las Vegas
and Riviera Black Hawk net revenues and operating results are described in
detail below. Income from operations for the third quarter of 2008 included $1.0
million in corporate payroll and related expenses, $0.2 million in equity
compensations costs and $0.1 million in mergers, acquisitions and development
costs. These corporate costs and expenses were slightly less than the same
quarter last year.
Adjusted EBITDA(1) for the third quarter of 2008 was $4.4 million, a
decrease of $5.9 million, or 58 percent, from $10.3 million for the comparable
period in the prior year. Adjusted EBITDA consists of earnings before interest,
income taxes, depreciation, amortization, equity-based compensation, asset
impairment, loss on extinguishments of debt, the effects of the accounting for
our interest rate swap agreement and mergers, acquisitions and development
costs, net, as described within footnote (1) to the financial summary table
below. Adjusted EBITDA(1) was 11 percent and 20 percent of net revenues for the
three months ended September 30, 2008 and 2007, respectively.
Net loss for the third quarter of 2008 was $3.5 million, or $0.28 per
share, an increase of $14.8 million, compared to a net loss of $18.3 million, or
$1.48 per share, for the same period in the prior year. Net loss for the third
quarter ended September 30, 2007 included a $12.9 million loss on retirement of
the Company's 11 percent Notes. Net losses for the third quarters ended
September 30, 2008 and September 30, 2007 included a $0.6 million unrealized
gain on derivatives and a $7.5 million unrealized loss on derivatives,
respectively. The unrealized gain and loss on derivatives had no effect on cash
or cash equivalents, and are the result of changes in the valuation of the
interest rate swap derivative. Currently, the Company's interest rate swap
derivative is valued at $11.7 million and is reflected as a long term liability.
Generally, the balance reflects the cost of terminating the underlying interest
rate swap agreement at September 30, 2008. Additionally, net losses for the
third quarters ended September 30, 2008 and September 30, 2007 included $4.3
million and $4.6 million in interest expense, net of interest income,
respectively.
William L. Westerman, Chief Executive Officer, said, "This quarter was more
challenging than the preceding quarter as business conditions continued to
deteriorate. As a result of strong competitive pressure and weak customer
demand, we lowered our Las Vegas hotel room rates in order to increase hotel
occupancy and overall property revenues. Consequently, our Las Vegas hotel
occupancy was relatively strong, and our casino and other revenues stabilized.
However, the lower Las Vegas hotel rates and overall casino revenue decrease at
both properties impacted our profit margins despite significant cost cutting. At
our Black Hawk Property, slot revenues and income from operations suffered as
macroeconomic conditions continued to negatively affect our customers'
willingness to visit and game at the property. Overall, while I am disappointed
with the significant downturn in our business, I feel strongly that our team is
proactively addressing the key issues of preserving capital and maximizing
operating results."
Nine Months Ended September 30, 2008
Net revenues for the nine months ended September 30, 2008 were $133.8
million, a decrease of $24.3 million, or 15 percent, from $158.1 million for the
comparable period in the prior year. Net revenues decreased due to a 13 percent
net revenue reduction at Riviera Las Vegas and a 21 percent net revenue
reduction at Riviera Black Hawk. Income from operations for the nine months
ended September 30, 2008 was $11.9 million, a decrease of $13.2 million, or 52
percent, from $25.1 million for the comparable period in the prior year. Income
from operations decreased as a result of a 48 percent operating income reduction
at Riviera Las Vegas and a 45 percent operating income reduction at Riviera
Black Hawk. Decreases in Riviera Las Vegas and Riviera Black Hawk net revenues
and operating results are described in detail below. Included in income from
operations for the nine-month period of 2008 was $2.9 million in corporate
payroll and related expenses, $0.6 million in equity-based compensation costs
and $0.1 in mergers, acquisitions and development costs. These corporate costs
and expenses were slightly less than the same period last year.
Adjusted EBITDA(1) was $23.5 million, a decrease of $12.6 million, or 35
percent, from $36.1 million for the comparable period in the prior year.
Adjusted EBITDA(1) was 18 percent and 23 percent of net revenues for the nine
months ended September 30, 2008 and 2007, respectively.
Net income for the nine months ended September 30, 2008 was $0.8 million,
or $0.07 per share on a fully diluted basis, an increase of $12.9 million, from
a net loss of $12.1 million, or $0.98 per share, for the comparable period in
the prior year. Net loss for the nine months ended September 30, 2007 included a
$12.9 million loss on the retirement of the Company's 11 percent Notes. Net
income for the nine months ended September 30, 2008 included a $1.6 million
unrealized gain on derivatives and $12.7 million in interest expense and net
loss for the nine months ended September 30, 2007 included a $6.6 million
unrealized loss on derivatives and $17.7 million in interest expense, net of
interest income. The unrealized gains and losses on derivatives have no effect
on cash or cash equivalents, and are the result of changes in the valuations of
the Company's interest rate swap derivative. 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 in June 2007.
"In response to these tough economic conditions, we have aggressively cut
labor and other operating costs and streamlined operations. These changes have
helped us retain profits and capital. While it has been unfortunate to let go of
so many of our faithful team members, I believe that we are employing the right
strategy to maximize income and cash from operations. In response to our
reduction in EBITDA(1), we have suspended our room renovation project after
completing four of the five towers and spending $18.7 million on the project.
Once economic conditions improve and we have built up our cash reserve, we plan
to complete the remainder of the project for a cost of approximately $4.3
million. We expect fourth quarter EBITDA to be down year-over-year by a similar
amount as our third quarter and for EBITDA to trend down year-over-year for the
first half of next year, albeit by a smaller percentage. We also expect our cash
balances to generally reflect corresponding downward trends. Currently, we have
$2.5 million drawn on our Revolving Credit Facility. Based on our estimates, we
have no intentions of drawing additional funds against our Revolving Credit
Facility. I want to point out that there is no assurance that these estimates
will prove to be accurate, although we believe them to be so at the present
time. In the event, however, that the Company's EBITDA or cash balances decline
more than expected in the future period described, it could have a material
adverse effect on the Company," commented Mr. Westerman.
Riviera Las Vegas
Net revenues for the three months ended September 30, 2008 were $30.2
million, a decrease of $7.7 million, or 20 percent, from $37.9 million for the
comparable period in the prior year. Income from operations for the three months
ended September 30, 2008 was $0.2 million, a decrease of $4.4 million, or 95
percent, from $4.6 million for the comparable period in the prior year. EBITDA
for the three months ended September 30, 2008 was $2.9 million, a decrease of
$3.2 million, or 52 percent, from $6.1 million for the comparable period in the
prior year.
Net revenues for the nine months ended September 30, 2008 were $101.2
million, a decrease of $15.4 million, or 13 percent, from $116.6 million for the
comparable period in the prior year. Income from operations for the nine months
ended September 30, 2008 was $10.0 million, a decrease of $9.3 million, or 48
percent, from $19.3 million for the comparable period in the prior year. EBITDA
for the nine months ended September 30, 2008 was $16.6 million, a decrease of
$7.5 million, or 31 percent, from $24.1 million for the comparable period in the
prior year.
Casino revenues for the three months ended September 30, 2008 decreased
$3.1 million, or 21 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. In comparison to the same quarter last year,
slot machine win per unit per day decreased $18.66, or 15 percent, to $107.88.
Net room division revenues decreased $2.7 million, or 18 percent, compared to
the same quarter in the prior year. The decrease in net room division revenue
was primarily due to a 13 percent decrease in occupied hotel room nights and a 5
percent decrease in average hotel room rental rates. Hotel occupancy was 87
percent compared to 94 percent for the same quarter last year. Average daily
room rental rate was $75.17 compared to $79.13 for the same period in the prior
year. The decrease in average daily room rate was primarily due to a 25 percent
reduction in average leisure segment room rental rates. Revenue per available
hotel room decreased $8.84, or 12 percent, to $65.44 from $74.28 for the same
quarter last year.
Casino revenues for the nine months ended September 30, 2008 decreased $8.3
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 the weak economy and reduced hotel occupancy. In comparison to the same nine
months last year, slot machine win per unit per day decreased $17.49, or 13
percent, to $117.86. Net room division revenues decreased $4.7 million, or 10
percent, compared to the same nine months in the prior year. The decrease in net
room division revenue was primarily due to a 25 percent decrease in leisure
segment occupied hotel room nights. Hotel occupancy was 84 percent compared to
94 percent for the same nine months last year. Average daily room rental rate
was $88.29 compared to $83.13 for the same nine months in the prior year. The
increase in average daily room rate was primarily due to a 9 percent increase in
convention segment room rental rates. Revenue per available hotel room decreased
$3.73, or 5 percent, to $74.51 from $78.24 for the same nine months last year.
"This quarter was challenging and we focused most of our efforts on
reducing operating costs and increasing leisure segment hotel occupancy. We made
significant cost cuts in every area. Moreover, our sales efforts were successful
in increasing hotel occupancy, however, at a reduced average daily room rate.
While leisure segment customer demand continues to suffer, I am happy to report
that our convention business continues to perform well. Furthermore, casino
revenues stabilized during the quarter. Overall, it has been a difficult
quarter, however, I believe that we are focused on the right areas in order to
optimize operating profits," commented Robert Vannucci, Chief Operating Officer
of Riviera Las Vegas.
Riviera Black Hawk
Net revenues for the three months ended September 30, 2008 were $10.0
million, a decrease of $4.4 million, or 31 percent, from $14.4 million for the
comparable period in the prior year. Income from operations for the three months
ended September 30, 2008 was 1.2 million, a decrease of $2.5 million, or 66
percent, from $3.7 million for the comparable period in the prior year. EBITDA
for the three months ended September 30, 2008 was $2.5 million, a decrease of
$2.9 million, or 55 percent, from $5.4 million for the comparable period in the
prior year.
Net revenues for the nine months ended September 30, 2008 were $32.6
million, a decrease of $8.9 million, or 21 percent, from $41.5 million for the
comparable period in the prior year. Income from operations for the nine months
ended September 30, 2008 was $5.6 million, a decrease of $4.6 million, or 45
percent, from $10.2 million for the comparable period in the prior year. EBITDA
for the nine months ended September 30, 2008 was $9.9 million, a decrease of
$5.2 million, or 35 percent, from $15.1 million for the comparable period in the
prior year.
"It was a very difficult quarter within the Black Hawk market as the
negative factors that influenced the last quarter persist including the effects
of the Colorado Smoking Ban, which went into effect January 1, 2008. Our revenue
decline correlated with the worsening economy as fewer customers visited the
property and those who did, wagered less. Our slot machine revenues, which
comprise approximately 95 percent of our total revenues, decreased 31 percent,
from the third quarter in the prior year. To mitigate revenue losses, our
property management team has aggressively reduced labor and other operating
costs," said Mr. Westerman.
Conference Call Information
In conjunction with the release of the third quarter 2008 financial
results, Riviera Holdings Corporation will broadcast a conference call at 2 p.m.
Eastern Daylight Time today, Thursday, November 6, 2008. Investors can listen to
the call via the Internet at www.rivierahotel.com or by dialing (866) 293-8971.
The conference call rebroadcast will be available at (888) 203-1112, code
4855586.
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 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 Three Months Ended September 30 Nine Months Ended September 30
except per share amounts) 2008 2007 Var %Var 2008 2007 Var %Var
Net Revenues:
Riviera Las Vegas $30,231 $37,940 $(7,709) -20.3% $101,206 $ 116,597 $(15,391) -13.2%
Riviera Black Hawk 9,977 14,440 (4,463) -30.9% 32,579 41,475 (8,896) -21.4%
----------------------------- ----------------------------
Total Net Revenues 40,208 52,380 (12,172) -23.2% 133,785 158,072 (24,287) -15.4%
Income From Operations:
Riviera Las Vegas 229 4,572 (4,343) -95.0% 9,983 19,277 (9,294) -48.2%
Riviera Black Hawk 1,241 3,695 (2,454) -66.4% 5,580 10,204 (4,624) -45.3%
Mergers, Acquisitions
and Development Costs, net (59) (160) 101 63.1% (104) (448) 344 76.8%
Equity-Based Compensation (188) (206) 18 8.7% (620) (759) 139 18.3%
Corporate Expenses (1,028) (1,237) 209 16.9% (2,900) (3,210) 310 9.7%
----------------------------- ----------------------------
Total Income From Operations: 195 6,664 (6,469) -97.1% 11,939 25,064 (13,125) -52.4%
Adjusted EBITDA (1):
Riviera Las Vegas 2,931 6,131 (3,200) -52.2% 16,551 24,143 (7,592) -31.4%
Riviera Black Hawk 2,458 5,440 (2,982) -54.8% 9,891 15,132 (5,241) -34.6%
Corporate Expenses (1,028) (1,237) 209 16.9% (2,900) (3,210) 310 9.7%
----------------------------- ----------------------------
Total Adjusted EBITDA 4,361 10,334 (5,973) -57.8% 23,542 36,065 (12,523) 34.7%
Adjusted EBITDA Margins (2):
Riviera Las Vegas 9.7% 16.2% -6.5% 16.4% 20.7% -4.3%
Riviera Black Hawk 24.6% 37.7% -13.1% 30.4% 36.5% -6.1%
Consolidated 10.8% 19.7% -8.9% 17.6% 22.8% -5.2%
Net income (loss) $ (3,464) $(18,254) $14,790 $ 826 $(12,118) $12,944
EARNINGS PER SHARE DATA:
Weighted average basic
shares outstanding 12,412 12,326 86 12,387 12,303 84
Basic earnings
(loss) per share $(0.28) $(1.48) $1.20 $0.07 $(0.98) $1.05
Weighted average diluted
shares outstanding 12,412 12,326 86 12,547 12,303 244
Diluted earnings
(loss) per share $(0.28) $(1.48) $1.20 $0.07 $(0.98) $1.05
(1) Adjusted EBITDA consists of earnings before interest, income taxes,
depreciation, amortization, equity-based compensation, asset impairment loss on
extinguishments of debt, 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 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 to Adjusted EBITDA
(Amounts in thousands) Mergers
Net Other Operating Equity Acquisitions,
Income Income Income Depre- Based Development Management Adjusted
(Loss) (Expense) (Loss) ciation Comp & Costs Fee EBITDA
Third Quarter 2008:
Riviera Las Vegas $ 238 $ 9 $ 229 $2,832 - - $ (130) $ 2,931
Riviera Black Hawk (73) (1,314) 1,241 1,087 - - 130 2,458
Corporate (3,629) (2,354) (1,275) - 188 59 - (1,028)
------- --------- ------- ------ ----- ------- -------- ---------
$(3,464) $(3,659) $ 195 $3,919 $ 188 $ 59 $ - $4,361
Third Quarter 2007:
Riviera Las Vegas $4,628 $ 56 $ 4,572 $2,331 - - $ (772) $ 6,131
Riviera Black Hawk 1,996 (1,699) 3,695 973 - - 772 5,440
Corporate (24,878) (23,275) (1,603) - 206 160 - (1,237)
------- --------- ------- ------ ----- ------- -------- ---------
$(18,254) $(24,918) $6,664 $3,304 $ 206 $ 160 $ - $10,334
Nine Months Ended
September 30, 2008:
Riviera Las Vegas $10,020 $ 37 $ 9,983 $7,656 - - $ (1,088) $16,551
Riviera Black Hawk 1,644 (3,936) 5,580 3,223 - - 1,088 9,891
Corporate (10,838) (7,214) (3,624) - 620 104 - (2,900)
------- --------- ------- ------ ----- ------- -------- ---------
$ 826 $(11,113) $11,939 $10,879 $620 $ 104 $ - $23,542
Nine Months Ended
September 30, 2007:
Riviera Las Vegas $19,422 $ 145 $19,277 $6,872 - - $(2,006) $24,143
Riviera Black Hawk 4,693 (5,511) 10,204 2,922 - - 2,006 15,132
Corporate (36,233) (31,816) (4,417) - 759 448 - (3,210)
------- --------- ------- ------ ----- ------- -------- ---------
$(12,118)$(37,182) $25,064 $9,794 $759 $ 448 $ - $36,065
Balance Sheet Summary
Sept 30, Dec 31,
2008 2007
-------------------
Cash and short term investments $23,304 $31,591
Total current assets 29,827 40,211
Property and equipment, net 183,283 172,865
Total assets 218,266 218,462
Long-term debt, net of current
portion 225,320 225,288
Total current liabilities 27,285 26,665
Total shareholders' deficiency (46,279) (47,826)
RIVIERA HOLDINGS CORPORATION AND SUBSIDIARY
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(Amounts in thousands, Three Months Ended Nine Months Ended
except per share amounts) September 30 September 30
2008 2007 2008 2007
------------------ ---------------------
Revenues:
Casino $21,516 $28,935 $71,062 $87,941
Rooms 12,138 14,812 41,561 46,276
Food and beverage 6,939 7,976 22,487 24,937
Entertainment 3,549 4,102 10,182 9,959
Other 1,657 1,684 5,136 5,041
------------------ ---------------------
Total Revenues 45,799 57,509 150,428 174,154
------------------ ---------------------
Less-promotional allowances (5,591) (5,129) (16,643) (16,082)
------------------ ---------------------
Net revenues 40,208 52,380 133,785 158,072
------------------ ---------------------
COSTS AND EXPENSES:
Direct costs and expenses of
operating departments:
Casino 11,494 13,849 36,333 42,460
Rooms 6,377 7,520 19,645 21,619
Food and beverage 5,007 6,129 16,349 18,608
Entertainment 2,023 2,684 6,384 6,353
Other 315 368 971 1,043
Other operating expenses:
General and administrative 10,631 11,496 30,561 31,924
Mergers, Acquisitions and
Development Costs 59 160 104 448
Share-Based Compensation 188 206 620 759
Depreciation and amortization 3,919 3,304 10,879 9,794
------------------ ---------------------
Total costs and expenses 40,013 45,716 121,846 133,008
------------------ ---------------------
INCOME FROM OPERATIONS 195 6,664 11,939 25,064
------------------ ---------------------
OTHER INCOME EXPENSE:
Interest expense, net (4,274) (4,569) (12,730) (17,660)
Loss on Retirement of Debt - (12,878) - (12,878)
Gain/(Loss) on Derivatives 615 (7,471) 1,617 (6,644)
------------------ ---------------------
Total other expense (3,659) (24,918) (11,113) (37,182)
------------------ ---------------------
NET INCOME (LOSS): $(3,464) $(18,254) $826 $(12,118)
================== =====================
INCOME (LOSS) PER SHARE DATA:
Shares used in calculating net
income (loss) per common share:
Basic 12,412 12,326 12,387 12,303
Diluted 12,412 12,326 12,547 12,303
Net Income (Loss) per common share:
Basic $(0.28) $(1.48) $0.07 $(0.98)
Diluted $(0.28) $(1.48) $0.07 $(0.98)