SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
Mark One
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended March 31,
-------------------
1997
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from to
Commission file number 000-21430
Riviera Holdings Corporation
(Exact name of Registrant as specified in its charter)
Nevada 88-0296885
(State or other jurisdiction of (IRS Employer
incorporation or organization) Identification No.)
2901 Las Vegas Boulevard South, Las Vegas, Nevada 89109
(Address of principal executive offices) (Zip Code)
Registrant's telephone number,
including area code (702) 794-9527
Indicate by check mark whether the Registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days. Yes X No
APPLICABLE ONLY TO REGISTRANTS INVOLVED IN BANKRUPTCY
PROCEEDINGS DURING THE LAST FIVE YEARS
Indicate by check mark whether the Registrant has filed all
documentation and reports required to be
filed by Section 12, 13, or 15(d) of the Securities Exchange Act of 1934
subsequent to the distribution of
securities under a plan confirmed by a court. Yes X No
APPLICABLE ONLY TO CORPORATE REGISTRANTS
Indicate the number of shares outstanding of each of the Registrant's
classes of common stock, as of the latest practicable date.
As of March 31, 1997 there were 4,916,280 shares of Common Stock, $.001
par value per share, outstanding.
<PAGE>
1
RIVIERA HOLDINGS CORPORATION
INDEX
Page
PART I. FINANCIAL INFORMATION
Item 1. Consolidated Financial Statements
Independent Accountants' Report 2
Condensed Consolidated Balance Sheets at March 31, 1997 (Unaudited) and 3
December 31, 1996
Condensed Consolidated Statements of Operations (Unaudited) for the
Three Months ended March 31, 1997 and 1996 4
Condensed Consolidated Statements of Cash Flows (Unaudited) for the
Three Months ended March 31, 1997 and 1996 5
Notes to Condensed Consolidated Financial Statements (Unaudited) 6
Item 2. Management's Discussion and Analysis of Financial Condition
and Results of Operations 9
<PAGE>
INDEPENDENT ACCOUNTANTS' REPORT
To the Board of Directors
Riviera Holdings Corporation
We have reviewed the accompanying condensed consolidated balance sheet of
Riviera Holdings Corporation (the "Company") and subsidiaries as of March 31,
1997, and the related condensed consolidated statements of operations and of
cash flows for the periods ending March 31,1997 and 1996. These financial
statements are the responsibility of the Company's management.
We conducted our review in accordance with standards established by the American
Institute of Certified Public Accountants. A review of interim financial
information consists principally of applying analytical procedures to financial
data and of making inquiries of persons responsible for financial and accounting
matters. It is substantially less in scope than an audit conducted in accordance
with generally accepted auditing standards, the objective of which is the
expression of an opinion regarding the financial statements taken as a whole.
Accordingly, we do not express such an opinion.
Based on our review, we are not aware of any material modifications that should
be made to such condensed consolidated financial statements for them to be in
conformity with generally accepted accounting principles.
We have previously audited, in accordance with generally accepted auditing
standards, the consolidated balance sheet of Riviera Holdings Corporation as of
December 31, 1996, and the related consolidated statements of operations,
shareholders' equity, and cash flows for the year then ended (not presented
herein); and in our report dated February 28, 1997, we expressed an unqualified
opinion on those consolidated financial statements. In our opinion, the
information set forth in the accompanying condensed consolidated balance sheet
as of December 31, 1996, is fairly stated, in all material respects, in relation
to the consolidated balance sheet from which it has been derived.
DELOITTE & TOUCHE LLP
Las Vegas, Nevada
April 18, 1997
<PAGE>
<TABLE>
RIVIERA HOLDINGS CORPORATION
CONSOLIDATED BALANCE SHEETS
December 31, 1996 and March 31, 1997
(in thousands, except share data)
- -----------------------------------------------------------------------------------------------------------------------
<CAPTION>
December 31, March 31,
ASSETS 1996 1997
CURRENT ASSETS:
<S> <C> <C>
Cash and cash equivalents $25,747 $29,028
Accounts receivable, net 5,113 4,319
Inventories 3,039 2,815
Prepaid expenses and other assets 2,692 2,514
--------------- --------------
Total current assets 36,591 38,676
--------------- --------------
PROPERTY AND EQUIPMENT, NET 127,760 129,569
--------------- --------------
OTHER ASSETS 2,853 2,575
--------------- --------------
RESTRICTED CASH FOR PERIODIC
SLOT PAYMENTS 461 461
--------------- --------------
TOTAL ASSETS $167,665 $171,281
=============== ==============
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES:
Current portion of long-term debt $1,550 $1,497
Accounts payable 8,530 8,112
Current income taxes payable 413 481
Accrued expenses 9,757 12,015
--------------- --------------
Total current liabilities 20,250 22,105
--------------- --------------
DEFERRED INCOME TAXES 4,626 4,888
--------------- --------------
LONG-TERM DEBT, NET OF
CURRENT PORTION 107,538 107,915
--------------- --------------
COMMITMENTS AND CONTINGENCIES
SHAREHOLDERS' EQUITY:
Common stock ($.001 par value; 20,000,000 shares authorized; 4,940,980 shares
issued and outstanding at December 31, 1996 and 4,916,280 issued and
outstanding at March 31, 1997) 5 5
Additional paid-in capital 13,919 13,852
Notes receivable from Employee Shareholders (853) (643)
Retained earnings 22,180 23,159
--------------- --------------
Total shareholders' equity 35,251 36,373
--------------- --------------
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $167,665 $171,281
=============== ==============
<FN>
See notes to condensed consolidated financial statements
</FN>
</TABLE>
<PAGE>
<TABLE>
RIVIERA HOLDINGS CORPORATION
CONSOLIDATED STATEMENTS OF OPERATIONS
FOR THE THREE MONTHS ENDED MARCH 31, 1996 AND 1997
(in thousands)
- ----------------------------------------------------------------------------------------------------------------------------
1996 1997
----- ----
REVENUES:
<S> <C> <C>
Casino $20,165 $18,802
Rooms 11,257 10,494
Food and beverage 5,828 5,460
Entertainment 5,755 5,432
Other 2,354 2,570
---------------- -----------------
45,359 42,758
---------------- -----------------
Less promotional allowances 3,636 3,279
---------------- -----------------
Net revenues 41,723 39,478
---------------- -----------------
COSTS AND EXPENSES:
Direct costs and expenses of operating departments:
Casino 12,407 11,203
Rooms 4,667 4,616
Food and beverage 3,922 3,988
Entertainment 3,979 3,778
Other 715 673
Other operating expenses:
Selling, general and administrative 7,603 7,714
Depreciation and amortization 1,888 2,432
---------------- -----------------
Total costs and expenses 35,180 34,405
---------------- -----------------
INCOME FROM OPERATIONS 6,543 5,073
---------------- -----------------
OTHER INCOME (EXPENSE)
Interest expense (3,061) (3,013)
Interest income 277 296
Write off of secondary offering costs (850)
---------------- -----------------
Total other income (expense) (2,784) (3,567)
---------------- -----------------
INCOME BEFORE PROVISION FOR INCOME TAXES 3,759 1,507
---------------- -----------------
INCOME TAXES 1,286 527
---------------- -----------------
NET INCOME $2,473 $979
================ =================
WEIGHTED AVERAGE COMMON AND COMMON
EQUIVALENT SHARES OUTSTANDING 5,048 5,220
================ =================
NET INCOME PER COMMON AND COMMON
EQUIVALENT SHARE-PRIMARY AND FULLY DILUTED $ $
0.49 0.19
================ =================
<FN>
See notes to condensed consolidated financial statements
</FN>
</TABLE>
<PAGE>
<TABLE>
RIVIERA HOLDINGS CORPORATION
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE THREE MONTHS ENDED MARCH 31, 1996 AND 1997
(in thousands)
- --------------------------------------------------------------------------------------------------------------------
1996 1997
---- ----
CASH FLOWS FROM OPERATING ACTIVITIES:
<S> <C> <C>
Net Income $ 2,473 $979
Adjustments to reconcile net income to net cash provided by operating
activities:
Depreciation and amortization
1,888 2,432
Provision for bad debts
143 154
Provision for gaming discounts
14 2
Write off of secondary offering costs
850
Interest expense
3,061 3,013
Interest paid
(141) (23)
Changes in operating assets and liabilities:
Decrease (increase) in accounts receivable
(50) 638
Decrease (increase) in inventories
(478) 224
Decrease (increase) in prepaid expenses and other assets
105 178
Decrease (increase) in restricted cash for slot periodic payments
Increase (decrease) in accounts payable
(1,180) (419)
Increase (decrease) in accrued expenses
(122) (731)
Increase (decrease) in current income taxes payable
696 68
Increase (decrease) in deferred income taxes
540 262
Increase in non-qualified pension plan obligation to CEO
upon retirement
106 405
-------------- ---------------
Net cash provided by operating activities
7,055 8,032
--------------- ---------------
CASH FLOWS FROM INVESTING ACTIVITIES:
Capital expenditures for property and equipment
(2,235) (4,241)
Decrease (increase) in other assets
1,647 (572)
------ -----
Net cash used in investing activities
(588) (4,813)
----- -------
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from long-term borrowings
49
Payments on long-term borrowings
(591) (81)
Net proceeds from issuance of stock to employees
143
--------------- ---------------
Net cash provided by (used in) financing activities
(542) 62
--------------- ---------------
INCREASE IN CASH AND CASH EQUIVALENTS
5,925 3,281
CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD 21,962 25,747
-------------- -------------
CASH AND CASH EQUIVALENTS, END OF PERIOD $27,887 $29,028
============ ===========
SUPPLEMENTAL DISCLOSURE OF CASH FLOW
INFORMATION - Income taxes paid $50 $200
--- ----
<FN>
See notes to condensed consolidated financial statements
</FN>
</TABLE>
<PAGE>
RIVIERA HOLDINGS CORPORATION AND SUBSIDIARY
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Basis of Presentation
Riviera Holdings Corporation (the "Company") and its wholly-owned subsidiary
Riviera Operating Corporation ("ROC") were incorporated on January 27, 1993, in
order to acquire all assets and liabilities of Riviera, Inc. Casino-Hotel
Division on June 30, 1993, pursuant to a plan of reorganization.
In July 1994, management established a new division, Riviera Gaming Management,
Inc. ("RGM") for the purpose of obtaining management contracts in Nevada and
other jurisdictions. In August 1995, RGM incorporated in the state of Nevada as
a wholly owned subsidiary of ROC.
Nature of Operation
The primary line of business of the Company is the operation of the Riviera
Hotel & Casino on the "Strip" in Las Vegas, Nevada. The Company is engaged in a
single industry segment, the operation of a hotel/casino with restaurants and
related facilities. The Company also manages the Four Queens Hotel/Casino in
downtown Las Vegas.
Casino operations are subject to extensive regulation in the State of Nevada by
the Gaming Control Board and various other state and local regulatory agencies.
Management believes that the Company's procedures for supervising casino
operations, for recording casino and other revenues and for granting credit
comply, in all material respects, with the applicable regulations.
Principles of Consolidation - The consolidated financial statements include the
accounts of the Company and its wholly owned subsidiaries ROC and RGM. All
material intercompany accounts and transactions have been eliminated.
The financial information at March 31, 1997 and for the three months ended March
31, 1997 and 1996 is unaudited. However, such information reflects all
adjustments (consisting solely of normal recurring adjustments) that are, in the
opinion of management, necessary for a fair presentation of the financial
position, results of operations, and cash flows for the interim periods. The
results of operations for the three months ended March 31, 1997 and 1996, are
not necessarily indicative of the results that will be achieved for the entire
year.
These financial statements should be read in conjunction with the audited
consolidated financial statements and notes thereto for the year ended December
31, 1996, included in the Company's Annual Report on Form 10-K.
Legal Proceedings
The company is a party to several routine lawsuits both as plaintiff and as
defendant arising from the normal operations of a hotel. Management does not
believe that the outcome of such litigation, in the aggregate, will have a
material adverse effect on the financial position or results of operations of
the Company or ROC.
Estimates and Assumptions
The preparation of condensed consolidated financial statements in conformity
with generally accepted accounting principles requires management to make
estimates and assumptions that affect the reported amounts of assets and
liabilities and disclosure of contingent assets and liabilities at the date of
the financial statements and the reported amounts of revenues and expenses
during the reporting period. Actual results may differ from estimates.
Earnings Per Share
Earnings per common and common equivalent share and earnings per common shares
are computed using the weighted average number of shares outstanding adjusted
for the incremental shares attributed to outstanding options to purchase common
stock. Fully diluted earnings per share amounts are substantially the same as
primary per share amounts for the periods presented.
Secondary Offering Costs
The Company has withdrawn its secondary offering due to market conditions and,
as a result, has charged costs totaling $850,000 to earnings for the quarter
ended March 31, 1997.
Subsequent Event
On April 11, 1997, the Company was notified that an affiliated group of its
shareholders, had filed a Schedule 13D with the Securities and Exchange
Commission disclosing that such group which own about 26% Company's common stock
have offered to grant a one year option to Mr. Allen Paulson to purchase their
RHC stock at a price of $15 per share, subject to adjustment. Based on
preliminary discussions with Mr. Paulson, management understands that Mr.
Paulson is reviewing the offer, but his willingness to become involved with the
Company will depend upon, among other things, his discussions with the Company's
board of directors. The Company has had and plans to hold further discussions
with Mr. Paulson with respect to these matters. Management believes that if Mr.
Paulson chooses to become involved with the Company, it will be on a cooperative
basis and in the best interests of the Company , all of its shareholders, its
management and its employees. There can be no assurance that any such
discussions will result in any transaction involving the Company and Mr.
Paulson.
Recently Issued Accounting Standards
The Financial Accounting Standards Board ("FASB") recently issued SFAS No. 128
"Earnings per Share". This statement establishes standards for computing and
presenting earnings per share and is effective for financial statements issued
for periods ending after December 15, 1997. Earlier application of this
statement is not permitted and upon adoption requires restatement (as
applicable) of all prior-period earnings per share data presented. Management
has not determined the effect of this statement on earnings per share as
presented.
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
The following tables set forth certain operating information for the Company for
the three months ended March 31, 1997 and 1996. Revenues and promotional
allowances are shown as a percentage of net revenues. Departmental costs are
shown as a percentage of departmental revenues. All other percentages are based
on net revenues.
Three Months
Ended March 31,
1997 1996
Income Statement Data:
Revenues:
Casino 47.6% 48.3%
Rooms 26.6 27.0
Food and beverage 13.8 14.0
Entertainment 13.8 13.8
Other 6.5 5.6
Less promotional allowances (8.3) (8.7)
----- -----
Net revenues 100.0 100.0%
----- ------
Costs and Expenses:
Casino 59.6 61.5
Rooms 44.0 41.5
Food and beverage 73.0 67.3
Entertainment 69.6 69.1
Other 26.2 30.4
Selling, general and administrative 19.5 18.2
Depreciation and amortization 6.2 4.5
--- ---
Total costs and expenses 87.1 84.3
---- ----
Income from operations 12.9 15.7
Interest expense, net (6.8) (6.7)
----- -----
Write off of secondary offering costs (2.2)
Income before provision for taxes 3.9 9.0
Provision for income taxes 1.3 3.1
--- ---
Net income 2.6% 5.9%
==== ====
<PAGE>
Three Months Ended March 31, 1997 Compared to Three Months Ended March 31, 1996
- -------------------------------------------------------------------------------
Revenues
Net revenues decreased by approximately $2.2 million, or 5.4%, from $41.7
million in 1996 to $39.5 million in 1997. Casino revenues decreased by
approximately $1.4 million, or 6.8%, from $20.2 million in 1997 to $18.8 million
in 1997 due to a general softness in the gaming market in Las Vegas. Slot
revenues decreased approximately $600,000 primarily in the $1.00 denomination
due to competition from casinos on the north end of the Las Vegas Strip.
Although the table games win percentage increased 2.8%, drop was down
approximately $6.8 million or 20% which resulted in a decrease in revenues of
approximately $300,000. Race book revenues decreased approximately $300,000 due
to the elimination of rebates (to selected high volume customers) under revised
agreements with the Nevada Pari Mutuel Association.
Room revenues decreased by approximately $800,000, or 6.8%, from $11.3 million
in 1996 to $10.5 million in 1997 as a result of a decrease in hotel occupancy
from 98.8% to 97.2% (based on available rooms) and a decrease in average room
rate of $2.15, or 3.5%. The decrease in room rate was due to primarily to a
15.7% decrease in convention room nights associated with three 1996 conventions
which did not come to Las Vegas in 1997 and one major convention which was held
in the first quarter of 1996 and is scheduled for the second quarter of 1997. In
addition, management believes that 3,000 of the room base increase in late 1996
and early 1997(Circus Circus and Luxor) was not prebooked. This caused a
flooding of the market of low rate rooms and the Company's competitors adjusted
their room rates downwards in an attempt to compete for occupancy. Management
believes that the rooms referred to above have now been assimilated into the
Circus Circus, Inc. reservation flow and the rates will move upward again as a
result.
Food and beverage revenues decreased approximately $400,000, or 6.9%, from $5.8
million in 1996 to $5.4 million in 1997 due to reduced complimentary beverage in
the casino and lower food covers in the restaurants.
Entertainment revenues decreased by approximately $300,000, or 5.6%, from $5.7
million in 1996 to $5.4 million in 1997 due to an 11.3% decrease in covers in
the Splash production show. The Splash show is being revitalized to more closely
appeal to the Company's customer who is primarily age 45 to 65.
Other revenues increased by approximately $200,000, or 9.2%, from $2.4 million
in 1996 to $2.6 million in 1997 due to the management fees for operating the
Four Queens Hotel/Casino in downtown Las Vegas beginning in August 1996.
Promotional allowances decreased by approximately $400,000, or 9.8%, from $3.6
million in 1996 to $3.2 million in 1997 due to lower food and beverage
complimentaries associated with casino and slot marketing programs.
Direct Costs and Expenses of Operating Departments
Total direct costs and expenses of operating departments decreased by
approximately $1.4 million, or 5.6%, from $25.7 million in 1996 to $24.3 million
in 1997. Casino expenses decreased by approximately $1.2 million, or 9.7%, from
$12.4 million in 1997 to $11.2 million in 1997 due to a corresponding decrease
in casino revenues. Casino expenses as a percent of casino revenues decreased
from 61.5% to 59.6%, primarily due to a 15.2% decrease in marketing expenses in
1997 while revenues decreased 6.8%. Management is reviewing the competition and
may increase marketing expenditures somewhat to drive additional revenues.
However, the Company does not intend to significantly discount its gaming
product or substantially increase its complimentaries.
Room departmental costs were mostly flat for 1997 compared to 1996, however,
room costs as a percentage of room revenues increased from 41.5% in 1996 to
44.0% in 1997 as room revenues decreased (primarily ADR driven) while room costs
remained relatively constant.
Food and beverage costs were also relatively flat for 1997 compared to 1996,
however, food and beverage costs as a percentage of revenues increased from
67.3% in 1996 to 73.0% in 1997 because the costs charged to the casino
department for complimentaries decreased substantially.
Entertainment costs decreased by approximately $200,000, or 5.0%, from $4.0
million in 1996 to $3.8 million in 1997, due primarily to fewer concerts and
special events in 1997. Entertainment expenses as a percentage of entertainment
revenues remained relatively constant in 1996 and 1997.
Other expenses as a percentage of revenues decrease from 30.4% to 26.2%
because of the limited costs associated with management fee revenues from the
RGM contract.
Other Operating Expenses
Selling, general and administrative expenses increased by approximately
$100,000, or 1.5%, from $7.6 million in 1996 to $7.7 million in 1997 due to
increased maintenance and repair expenses. As a percentage of total net
revenues, general and administrative expenses increased from 18.2% in 1996 to
19.5% in 1997 as a result of the spreading of fixed costs over a smaller revenue
base in 1997. Depreciation and amortization increased by approximately $500,000,
or 28.8%, from $1.9 million in 1996 to $2.4 million in 1997and from 4.5% to 6.2%
of net revenues due to the significant capital expenditures in the 12 months
ended March 31, 1997.
Other Income (Expense)
Interest expense and interest income remained relatively constant in both
quarters. During the first quarter of 1997 the Company filed an updated
registration statement with the Securities and Exchange Commission for a
secondary offering of 1.75 million shares by the Company and 1.25 million shares
by existing shareholders. The Company has withdrawn its offering due to market
conditions and, as a result, wrote off costs totaling $850,000 for the quarter
ended March 31, 1997
Net Income
As a result of the factors discussed above, net income decreased by
approximately $1.5 million, or 60.4%, from $2.5 million in 1996 to $1.0 million
in 1997. The effective income tax rate was 34.2% for 1996 and 35.0% in 1997.
EBITDA
EBITDA decreased by approximately $900,000, or 11.0%, from $8.4 million in 1996
to $7.5 million in 1997. During the same periods, EBITDA margin decreased from
20.2% to 19.0% of net revenues. This was due primarily to the decrease in the
margin in the rooms department due to lower ADR.
Liquidity and Capital Resources
The Company had cash and cash equivalents of $29.0 million at March 31, 1997,
which was an increase of $3.3 million from the balances at December 31, 1996.
Significant debt service on the First Mortgage Notes and other debt issued
pursuant to the Plan is paid in June and December and should be considered in
evaluating cash increases in the first and third quarters.
For the quarter ended March 31, 1997, the Company's net cash provided by
operating activities was $8.0 million compared to $7.1 million in the first
quarter of 1996. EBITDA for first quarters of 1996 and 1995 was $8.4 million and
$7.5 million, respectively. For the year ended December 31, 1996, the Company's
net cash provided by operating activities was $18.3 million compared to $16.7
million for 1995. EBITDA for 1996 and 1995 was $31.5 million and $27.8 million,
respectively, which was adequate to cover the Company's debt service and capital
expenditures. Management believes that sufficient cash flow will be available to
cover the Company's debt service and enable investment in budgeted capital
expenditures for the next 12 months.
Scheduled interest payments on the First Mortgage Notes and other indebtedness
are $11.6 million in 1997 declining to $11.0 million in 2002. Cash flow from
operations is not expected to be sufficient to pay 100% of the principal of the
First Mortgage Notes at maturity in 2002. Accordingly, the ability of the
Company to repay the First Mortgage Notes at maturity will be dependent upon its
ability to refinance the First Mortgage Notes. There can be no assurance that
the Company will be able to refinance the principal amount of the First Mortgage
Notes at maturity. The First Mortgage Notes are not redeemable at the option of
the Company until June 1, 1998, and thereafter are redeemable at premiums
beginning at 104.3125% and declining each subsequent year to par in 2001.
The Note Indenture provides for mandatory redemption by the Company upon the
order of the Nevada Gaming Authorities. The Note Indenture also provides that,
in certain circumstances, the Company must offer to repurchase the First
Mortgage Notes upon the occurrence of a change of control or certain other
events. In the event of such mandatory redemption or repurchase prior to
maturity, the Company would be unable to pay the principal amount of the First
Mortgage Notes without a refinancing.
The Note Indenture imposes certain financial covenants and restrictions on the
Company and ROC, including a minimum consolidated net worth requirement and
limitations on the payment of dividends, the incurrence of debt and granting of
liens, capital expenditures and mergers and sales of assets. As a result of
these restrictions, the ability of the Company and ROC to incur additional
indebtedness to fund operations or to make capital expenditures is limited. In
the event that cash flow from operations is insufficient to cover cash
requirements, the Company and ROC may not be able to obtain additional funds.
The Company and ROC would be required to curtail or defer certain of their
capital expenditure programs under these circumstances, which could have an
adverse effect on the Company's operations.
Effective September 8, 1995, the Note Indenture was amended to permit the
Company's management team to utilize its expertise in turning around troubled
gaming properties which are either in, or on the verge of, bankruptcy and
managing casinos in "new venues."
In February 1997, the Company entered into a $15.0 million, five year reducing
revolving line of credit collateralized by equipment (the "Credit Facility").
The revolving line of credit bears interest at prime plus 0.5% or LIBOR plus
2.9%. The Company has not utilized this line of credit.
Management considers it important to the competitive position of the Riviera
that expenditures be made to upgrade the property. Capital expenditures totaled
approximately $8.9 million in 1994, $7.8 million in 1995 and $14.9 million in
1996. Management has budgeted approximately $14.6 million for capital
expenditures in 1997. The Company expects to finance such capital expenditures
from cash flow and the Credit Facility.
Forward Looking Statements
The Private Securities Litigation Reform Act of 1995 provides a "safe harbor"
for certain forward-looking statements. Certain matters discussed in this filing
could be characterized as forward-looking statements such as statements relating
to plans for future expansion, as well as other capital spending, financing
sources and effects of regulation and competition. Such forward-looking
statements involve important risks and uncertainties that could cause actual
results to differ materially from those expressed in such forward-looking
statements.
<PAGE>
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.
RIVIERA HOLDINGS CORPORATION
By: /s/ William L. Westerman
William L. Westerman
Chairman of the Board and
Chief Executive Officer
By:/s/ Duane Krohn
Duane Krohn
Treasurer and
Chief Financial Officer
Date: April 29, 1997
<PAGE>
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-END> MAR-31-1997
<CASH> 29,028,000
<SECURITIES> 0
<RECEIVABLES> 5,092,000
<ALLOWANCES> (773,000)
<INVENTORY> 2,815,000
<CURRENT-ASSETS> 38,676,000
<PP&E> 155,097,000
<DEPRECIATION> (25,528,000)
<TOTAL-ASSETS> 171,281,000
<CURRENT-LIABILITIES> 22,105,000
<BONDS> 100,000,000
0
0
<COMMON> 4,916
<OTHER-SE> 0
<TOTAL-LIABILITY-AND-EQUITY> 171,281,000
<SALES> 42,758,000
<TOTAL-REVENUES> 39,478,000
<CGS> 0
<TOTAL-COSTS> 34,405,000
<OTHER-EXPENSES> 850,000
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 2,717,000
<INCOME-PRETAX> 1,507,000
<INCOME-TAX> 527,000
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 979,000
<EPS-PRIMARY> 0.19
<EPS-DILUTED> 0.19
</TABLE>
