Riviera Reports Fourth Quarter 2001 Results

LAS VEGAS, Feb. 12 /PRNewswire-FirstCall/ -- Riviera Holdings Corporation (Amex: RIV) today reported financial results for the fourth quarter of 2001. Net revenues for the quarter were $44.0 million, down from net revenues of $49.5 million in the fourth quarter of 2000. Income from operations for the quarter was $2.2 million down $1.3 million from the fourth quarter of 2000. EBITDA (Earnings Before Interest, Income Taxes, Depreciation, Amortization, pre-opening expenses, and other income and expense, net) for the quarter was $6.5 million down $1.6 million from the fourth quarter of 2000. The net loss was ($3.2) million or ($0.92) per share compared to a net loss of ($2.0) million or ($0.53) per share in the fourth quarter of 2000. For the year ended December 31, 2001, net revenues were $202.0 million, comparable to net revenues of $201.5 million in 2000. Income from operations for the year ended December 31, 2001 was $17.0 million compared to $16.9 million for 2000. Income from operations at Riviera Black Hawk for 2001 was $9 million and exceeded Riviera Las Vegas by $1.0 million. EBITDA for the year ended December 31, 2001 was $34.2 million, down $1.7 million or 4.8 percent compared to EBITDA of $35.9 million for 2000. The net loss increased from ($4.2) million or ($1.05) per share in 2000 to ($6.4) million or ($1.79) per share in the year ended December 31, 2001. Riviera Holdings Corporation had cash and short-term investments of $46.6 million, working capital of $21.3 million and shareholders' equity of $9.0 million at December 31, 2001. Fourth Quarter 2001 Highlights -- Riviera Black Hawk contributed $3.7 million in EBITDA, an increase of $1.8 million from the fourth quarter of 2000 -- The September 11 terrorist attacks, the slowing of the national economy and rising marketing costs resulted in a $3.4 million decrease in Riviera Las Vegas EBITDA -- Riviera Las Vegas occupancy decreased from 91.6 percent in the fourth quarter of 2000 to 78.4 percent in the fourth quarter of 2001 -- Riviera Las Vegas ADR (Average Daily Rate) increased $1.11 to $64.00 during the fourth quarter -- Cash and short-term investments totaled $46.6 million at December 31, 2001 -- Management explores other gaming venues to further expand revenue base Riviera Las Vegas Bob Vannucci, President of Riviera Las Vegas, said, Net revenues in Las Vegas were down $8.5 million or 21.4 percent for the quarter across all departments. For the quarter, the average daily rate increased $1.11 to $64.00, however, occupancy decreased 13.2 percent to 78.4 percent. Slot machine coin-in or volume decreased 17 percent for the quarter and win decreased a corresponding 15.5 percent. Our margins in Las Vegas were pressured by the slow down in the economy even before the September 11 terrorist attack. We are spending more marketing dollars to increase demand and we believe we will have to continue to focus on our incentive programs through the rest of the year and into 2003. The booking window for most of our business segments is 60 to 120 days out. As a result, the period after September 11 resulted in significantly lower bookings for November and December 2001. Our customers arrive primarily by air, as our southern California base is less than 15 percent of our occupancy. Our primary focus before September 11 was on customers living in the eastern United States. We increased our gaming marketing expenditures to protect and to continue to grow our loyal slot customer base. We increased our room marketing efforts to concentrate on customers in the western United States, and we believe these efforts will be successful beginning in February 2002, based on the pace of advance bookings. Call volumes, booking patterns and occupancy began to normalize in mid January. We had an excellent Super Bowl and expect occupancy increases for February and March. Although we see recovery on the weekends, the midweek occupancy rates vary significantly from day to day primarily due to competitive pressures, said Mr. Vannucci. Riviera Black Hawk Ron Johnson, President of Riviera Black Hawk, said, Fourth quarter 2001 revenues for Riviera Black Hawk were $12.6 million, $3.0 million higher than fourth quarter 2000 revenues. Since Riviera Black Hawk serves primarily a local market, the terrorist attacks of September 11 did not significantly affect our quarterly performance. Fourth quarter EBITDA was a record $3.7 million, up $1.8 million from last year's fourth quarter. EBITDA margin for the fourth quarter was 29.4 percent. Our share of the Black Hawk slot market has been increasing steadily from 9.7 percent for the 11 months the casino was open in 2000, to 11.4 percent for the 12 months of 2001. Gains in market share have also contributed to improvements in operating margins. EBITDA margins increased from 18.7 percent for the 11 months in 2000 to 25.9 percent in the 12 months ending December 31, 2001. Black Hawk Casino by Hyatt opened in December 2001 helping to increase the Black Hawk market gaming revenue by 17.2 percent over December 2000. The December increase was the largest monthly increase in 2001 over the previous year. Gaming revenue in December, historically one of the slowest months of the year, was the fifth highest in the Black Hawk market history. Riviera Black Hawk gaming revenue continued to grow in December 2001, up 11.9 percent over December 2000. We continue to refine our marketing efforts. We are attempting to strike a balance between player incentives, gaming product, food offerings and entertainment as our primary marketing programs. We are particularly impressed with the popularity of our remodeled buffet and the impact it is having on casino traffic and play, said Mr. Johnson. William L. Westerman, Chairman of the Board and CEO, said, The importance of diversifying our earnings base through our investment in Black Hawk was substantiated by 2001's results. Before the events of September 11th, the increase in Black Hawk's EBITDA was offsetting declines in Las Vegas attributable to the stagnant economy and competitive pressures. Black Hawk's increase in EBITDA of almost 100 percent ameliorated Las Vegas' precipitous drop in the fourth quarter. We continue to explore projects that would further diversify our holdings. We recently filed a proposal with Jefferson County, Missouri, seeking their endorsement for a casino/hotel development project to be located approximately 22 miles south of downtown St. Louis. If we gain the support of the Jefferson County Commission, we will file a formal application with the Missouri Gaming Commission. State gaming regulators have indicated, however, that the site selection process would not begin again until late summer or early fall of 2002. I personally want to commend Bob Vannucci and the Las Vegas team for their cost-cutting efforts in Las Vegas, which minimized the effect of the slump in revenues, especially in our most profitable departments. I regret that it was necessary to reduce our staff in response to the decline in business and look forward to bringing our laid off employees back to full time status, said Mr. Westerman. Safe Harbor Statement: The forward-looking statements included in this news release, which reflect management's best judgment based on factors currently known, involve risks and uncertainties including expansion timetables, hotel and casino market conditions and other risks detailed from time to time in the Company's SEC reports, including the Report on Form 10-K for December 31, 2000. Actual results may differ. 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 is traded on the American Stock Exchange under the symbol RIV.