LAS VEGAS, July 30 /PRNewswire-FirstCall/ -- Riviera Holdings Corporation (AMEX:RIV) today reported financial results for the second quarter of 2002. Net revenues for the quarter were $49.9 million, down 9.1 percent from net revenues of $54.8 million in the second quarter of 2001. Income from operations for the quarter was $5.7 million, down $571,000 from the second quarter of 2001. EBITDA (Earnings Before Interest, income Taxes, Depreciation, Amortization and other income and expense, net) for the quarter was $10.2 million, down 3.8 percent from EBITDA of $10.6 million in the second quarter of 2001. The net loss was ($1.1 million) or ($0.32) cents per share compared with a net loss of ($70,000) or ($0.02) cents per share in the second quarter of 2001.
For the first six months of 2002, net revenues were $96.4 million, down 10.0 percent from net revenues of $107.0 million in the first half of 2001. Income from operations for the first half of 2002 was $9.4 million, down $2.3 million from the first half of 2001. EBITDA for the first half of 2002 was $18.3 million, down 9.5 percent from EBITDA of $20.3 million in the first half of 2001. The net loss was ($3.9 million) or ($1.14) per share compared with a net loss of ($728,000) or ($0.20) cents per share in the first half of 2001.
Second Quarter 2002 Highlights
-- Global refinancing by issuance of $215 million in 11 percent Senior
Secured Notes due June 2010
-- Established $30 million revolver for liquidity and funding of new
venues
-- Riviera Black Hawk contributed $3.7 million in EBITDA, an increase of
$930,000 or 33.0 percent from the second quarter of 2001
-- Riviera Las Vegas EBITDA decreased $1.3 million or 17.2 percent to
$6.4 million due to the continued economic impact of September 11 and
the stock market
-- Riviera Las Vegas occupancy was above 95.8 percent, ADR (Average Daily
Rate) decreased $5.32 to $56.70
Riviera Las Vegas
Bob Vannucci, President of Riviera Las Vegas, said, Second quarter net revenues were $37.2 million for Riviera Las Vegas, down $5.6 million or 13.1 percent from the second quarter of last year. For the quarter, the average daily rate decreased $5.32 to $56.70 and occupancy decreased 2.7 points to 95.8 percent. While hotel occupancy is close to prior year levels, ADR remained 8.6 percent below the comparable period last year. Slot machine coin-in or volume decreased 4.8 percent for the quarter while slot win decreased 7.7 percent. For the quarter, our margins were 17.2 percent compared to 18.1 percent in the same quarter of 2001. We continue to be aggressive with our marketing expenditures to increase demand and we expect to grow our customer incentive programs throughout the rest of the year and into 2003.
While our Las Vegas operations continue to be pressured by the economy and competitor actions, they have improved each quarter since September 11, 2001. Our fourth quarter 2001 EBITDA was down 54.6 percent compared to same period prior year. First quarter 2002 EBITDA was down 26.9 percent versus prior year, while second quarter 2002 EBITDA was down 17.2 percent. Hotel occupancy, compared to the prior year, was down 8.4 points to 87.9 percent in the first quarter, but improved to 95.8 percent in the second quarter, which is down only 2.7 points from the second quarter or 2001. Slot coin in the first quarter of 2002 was down 13.8 percent compared to same quarter in the prior year, while second quarter coin-in was down only 4.8 percent versus same period last year.
Our marketing efforts to boost gaming activities have resulted in increased visitations from our loyal slot customer base. Additionally, marketing efforts targeting customers in the western United States have helped to stabilize our occupancy. Call volumes, booking patterns and occupancy, which were normalizing, started to soften late in the quarter. Competitive pressures from high-end properties continue to depress room rates. Citywide convention attendance and room bookings continue to lag behind prior years. However, we have replaced much of that business with lower rated in-house conventions, increased business from tour operators and loyal gaming customers, said Mr. Vannucci.
Riviera Black Hawk
Second quarter 2002 net revenues for Riviera Black Hawk were $12.6 million, an increase of $637,000 or 5.3 percent over second quarter 2001 revenues. Second quarter EBITDA was $3.75 million, up $930,000 or 33.0 percent higher than last year's second quarter. EBITDA margin for the second quarter increased to 29.7 percent.
Ron Johnson, President of Riviera Black Hawk, said, Our record quarter represents a great accomplishment for our entire team in Black Hawk. They have done a remarkable job in a very competitive environment, guided by a focused management team. We continue to offer a variety of player incentives, gaming products, food offerings and entertainment options that we have been able to successfully coordinate into an effective marketing plan that has had a positive impact on profitability.
It is also encouraging to note that gaming revenues in the Black Hawk market grew by a healthy 12.5 percent in the second quarter of 2002 compared to the second quarter of 2001. The market continues to grow at an impressive rate because casinos such as ours are constantly introducing a greater variety of entertainment options to help expand the customer base, said Mr. Johnson.
Consolidated Operations and New Venues
William L. Westerman, Chairman of the Board and CEO, said, We believe that the refinancing of our debt is a major step in strengthening our capital structure and allowing us to go forward with projects in Missouri and New Mexico. The business world's challenges during the last few months validate our decision to refinance at this time. The new debt structure, including the $30 million revolver, allows us flexibility and should reduce our overall cash interest expense. We can now operate more efficiently with the credit facility in place, allowing us to draw the funds when necessary.
We are encouraged by the fact that the decline in EBITDA from the prior year's quarter decreased from 16 percent in the first quarter of 2002 to 4 percent in the second quarter of 2002. In Las Vegas, occupancy is returning to normal levels, although midweek room rates and occupancy are still showing some softness. Black Hawk's continued successful EBITDA margins and return on investment motivate us to accelerate our diversification efforts.
Our diversification efforts are in full swing with the recent endorsement by Jefferson County, Missouri for a casino/hotel development project located approximately 22 miles south of downtown St. Louis. We are in the process of filing a formal application with the Missouri Gaming Commission and have executed contracts for the studies required to be included in the application. However, we have been informed that the site selection process will not begin until late summer or early fall. Assuming we get approval from the state regulators, construction work should start in early 2003, with a completion date in late 2004 or early 2005.
This has been a difficult six months for our Las Vegas property and we expect the remainder of 2002 and even 2003 to be challenging for all Las Vegas operators. However, the trend is going in the right direction as we are seeing slow, yet steady improvement in the Las Vegas market, said Mr. Westerman.
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