As filed with the Securities and Exchange Commission on December 28, 1999.
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SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
-------------------------
Schedule 13E-4
ISSUER TENDER OFFER STATEMENT
(PURSUANT TO SECTION 13(e)(1) OF THE SECURITIES EXCHANGE ACT OF 1934)
-------------------------
RIVIERA HOLDINGS CORPORATION
(Name of Issuer)
RIVIERA HOLDINGS CORPORATION
(Name of Person(s) Filing Statement)
Common Stock, par value $.001 per share
(Title of Class of Securities)
769 627 100
(CUSIP Number of Class of Securities)
William L. Westerman
2901 Las Vegas Boulevard South
Las Vegas, Nevada 89109
(702) 734-5110
(Name, Address and Telephone Number of Person Authorized
to Receive Notices and Communications on Behalf of the
Person(s) Filing Statement)
Copy to:
Fredric J. Klink, Esq.
Dechert Price & Rhoads
30 Rockefeller Plaza
New York, New York 10112
(212) 698-3500
-------------------------
December 28, 1999
(Date Tender Offer First Published, Sent or Given to Security Holders)
-------------------------
CALCULATION OF FILING FEE
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Transaction Valuation* Amount of Filing Fee**
- --------------------------------------------------------------------------------
$3,750,000 $750
================================================================================
* For the purpose of calculating the filing fee only, this amount is based on
the purchase of 500,000 shares of Common Stock, par value $.001 per share,
of Riviera Holdings Corporation at $7.50 per share.
** The amount of the filing fee equals 1/50th of one percent (1%) of the value
of the securities to be acquired.
[ ] Check box if any part of the fee is offset as provided by Rule 0-11(a)(2)
and identify the filing with which the offsetting fee was previously paid.
Identify the previous filing by registration statement number, or the form
or schedule and the date of its filing.
Amount Previously Paid: Not applicable. Filing party: Not applicable.
Form or Registration No.: Not applicable. Date Filed: Not applicable.
================================================================================
<PAGE>
This Issuer Tender Offer Statement on Schedule 13E-4 (this "Schedule
13E-4") relates to the offer by Riviera Holdings Corporation, a Nevada
corporation (the "Company" or the "Issuer"), to purchase up to 500,000 shares
(or such lesser number of shares as are properly tendered) of its common stock,
par value $.001 per share, at a price of $7.50 per share, net to the seller in
cash, without interest thereon, upon the terms and subject to the conditions set
forth in the Offer to Purchase, dated December 28, 1999 (the "Offer to
Purchase") and in the related letter of transmittal ("Letter of Transmittal")
(which, as amended, supplemented or otherwise modified from time to time,
together constitute the "Offer"), and is intended to satisfy the reporting
requirements of Section 13(e) of the Securities and Exchange Act of 1934, as
amended. Copies of the Offer to Purchase, and the related Letter of Transmittal
are filed with this Schedule 13E-4 as Exhibits (a)(1) and (a)(2) hereto,
respectively.
ITEM 1. SECURITY AND ISSUER.
(a) The name of the issuer is Riviera Holdings Corporation, a Nevada
corporation, and the address of its principal executive office is 2901 Las Vegas
Boulevard South, Las Vegas, Nevada 89109.
(b) The title of the securities which are the subject of the Offer is
the Company's Common Stock, par value $.001 per share ("Common Stock"), and the
Offer is for up to 500,000 shares of Common Stock (the "Shares") (or such lesser
number of Shares as are properly tendered) at a price of $7.50 per Share, net to
the seller in cash, without interest thereon, subject to the conditions set
forth in the Offer. The Offer is being made to all holders of Shares, including
officers, directors and affiliates of the Company. The Company has been advised
that none of its directors or executive officers intends to tender any Shares
pursuant to the Offer. The information set forth in the Offer to Purchase under
"Introduction," "The Tender Offer -- Number of Shares; Proration" and "The
Tender Offer -- Interests of Directors and Officers and Principal Shareholders;
Transactions and Arrangements Concerning Shares" is incorporated herein by
reference.
(c) The information set forth in the Offer to Purchase under
"Introduction" and "The Tender Offer -- Price Range of Shares; Dividends" is
incorporated herein by reference.
(d) Not applicable. This statement is being filed by the Issuer.
ITEM 2. SOURCE AND AMOUNT OF FUNDS OR OTHER CONSIDERATION.
(a) The information set forth in the Offer to Purchase under
"Introduction" and "The Tender Offer -- Source and Amount of Funds" is
incorporated herein by reference.
(b) Not applicable.
ITEM 3. PURPOSE OF THE TENDER OFFER AND PLANS OR PROPOSALS OF THE ISSUER OR
AFFILIATE.
(a) - (d) and (f) - (g) The information set forth in the Offer to
Purchase under "Introduction" and "The Tender Offer -- Purpose of the Offer;
Certain Effects of the Offer; Plans of the Company After the Offer" is
incorporated herein by reference.
(e) The information set forth in the Offer to Purchase under "The
Tender Offer -- Price Range of Shares; Dividends" and "The Tender Offer --
Source and Amount of Funds" is incorporated herein by reference.
(h) - (j) The information set forth in the Offer to Purchase under "The
Tender Offer -- Effects of the Offer on the Market for the Shares; Registration
Under the Exchange Act" is incorporated herein by reference.
<PAGE>
ITEM 4. INTEREST IN SECURITIES OF THE ISSUER.
The information set forth in the Offer to Purchase under "The Tender
Offer -- Number of Shares; Proration" and "The Tender Offer -- Interests of
Directors and Officers and Principal Shareholders; Transactions and Arrangements
Concerning Shares" is incorporated herein by reference.
ITEM 5. CONTRACTS, ARRANGEMENTS, UNDERSTANDINGS OR RELATIONSHIPS WITH RESPECT
TO THE ISSUER'S SECURITIES.
The information set forth in the Offer to Purchase under "The Tender
Offer -- Interests of Directors and Officers and Principal Shareholders;
Transactions and Arrangements Concerning Shares" is incorporated herein by
reference.
ITEM 6. PERSONS RETAINED, EMPLOYED OR TO BE COMPENSATED.
The information set forth in the Offer to Purchase under "The Tender
Offer -- Fees and Expenses" is incorporated herein by reference.
ITEM 7. FINANCIAL INFORMATION.
(a) The information set forth in the Offer to Purchase under "The
Tender Offer -- Certain Information Concerning the Company" is incorporated
herein by reference. In addition, the information set forth (i) in Item 8 of the
Company's Annual Report on Form 10-K/A for the year ended December 31, 1998,
filed as Exhibit (g)(1) hereto and (ii) in Item 1 of the Company's Quarterly
Report on Form 10-Q for the period ended September 30, 1999, filed as Exhibit
(g)(2) hereto, is incorporated herein by reference.
(b) The information set forth in the Offer to Purchase under "The
Tender Offer -- Certain Information Concerning the Company" is incorporated
herein by reference.
ITEM 8. ADDITIONAL INFORMATION.
(a) Not applicable.
(b) The information set forth in the Offer to Purchase under "The
Tender Offer -- Certain Legal Matters; Regulatory Approvals" is incorporated
herein by reference.
(c) The information set forth in the Offer to Purchase under "The
Tender Offer -- Effects of the Offer on the Market for Shares; Registration
Under the Exchange Act" is incorporated herein by reference.
(d) Not applicable.
(e) The information set forth in the entire Offer to Purchase and the
related Letter of Transmittal is incorporated herein by reference.
ITEM 9. MATERIAL TO BE FILED AS EXHIBITS.
(a)(1) Form of the Offer to Purchase, dated December 28, 1999.
(a)(2) Form of the Letter of Transmittal.
(a)(3) Form of the Notice of Guaranteed Delivery.
2
<PAGE>
(a)(4) Form of the Letter to Brokers, Dealers, Commercial Banks,
Trust Companies and Other Nominees.
(a)(5) Form of the Letter to Clients for use by Brokers, Dealers,
Commercial Banks, Trust Companies and Other Nominees.
(a)(6) Form of Letter to stockholders from William L. Westerman,
Chairman of the Board of Directors and Chief Executive Officer of the Company,
dated December 28, 1999.
(a)(7) Form of the Guidelines for Certification of Taxpayer
Identification Number on Substitute Form W-9.
(a)(8) Form of Summary Advertisement.
(a)(9) Press Release, dated December 28, 1999.
(b) Not applicable.
(c) Not applicable.
(d) Not applicable.
(e) Not applicable.
(f) Not applicable.
(g)(1) Item 8 of the Company's Annual Report on Form 10-K/A for the
fiscal year ended December 31, 1998.
(g)(2) Item 1 of the Company's Quarterly Report on Form 10-Q for the
quarterly period ended September 30, 1999.
3
<PAGE>
SIGNATURE
After due inquiry and to the best of my knowledge and belief, I certify
that the information set forth in this statement is true, complete and correct.
Dated: December 28, 1999 RIVIERA HOLDINGS CORPORATION
By:/s/William L. Westerman
-----------------------------------
Name: William L. Westerman
Title: Chairman of the Board of
Directors and Chief
Executive Officer
4
<PAGE>
EXHIBIT INDEX
EXHIBIT
NUMBER DESCRIPTION
- ------- -----------
(a)(1) Form of the Offer to Purchase, dated December 28, 1999.
(a)(2) Form of the Letter of Transmittal.
(a)(3) Form of the Notice of Guaranteed Delivery.
(a)(4) Form of the Letter to Brokers, Dealers, Commercial Banks,
Trust Companies and Other Nominees.
(a)(5) Form of the Letter to Clients for use by Brokers,
Dealers, Commercial Banks, Trust Companies and Other
Nominees.
(a)(6) Form of Letter to stockholders from William L. Westerman,
Chairman of the Board of Directors and Chief
Executive Officer of the Company, dated December 28,
1999.
(a)(7) Form of the Guidelines for Certification of Taxpayer
Identification Number on Substitute Form W-9.
(a)(8) Form of Summary Advertisement.
(a)(9) Press Release, dated December 28, 1999.
(b) Not applicable.
(c) Not applicable.
(d) Not applicable.
(e) Not applicable.
(f) Not applicable.
(g)(1) Item 8 of the Company's Annual Report on Form 10-K/A for
the fiscal year ended December 31, 1998.
(g)(2) Item 1 of the Company's Quarterly Report on Form
10-Q for the quarterly period ended September 30, 1999.
Riviera Holdings Corporation
Offer To Purchase For Cash Up To
500,000 Shares of Its Common Stock, $.001 Par Value Per Share,
At a Purchase Price of $7.50 Net Per Share
- --------------------------------------------------------------------------------
| THE OFFER, PRORATION PERIOD AND WITHDRAWAL RIGHTS EXPIRE AT |
| 12:00 MIDNIGHT, NEW YORK CITY TIME, ON FEBRUARY 2, 2000, |
| UNLESS THE OFFER IS EXTENDED. |
- --------------------------------------------------------------------------------
Riviera Holdings Corporation, a Nevada corporation (the "Company"),
hereby invites its stockholders to tender shares (the "Shares") of its common
stock, par value $.001 per share (the "Common Stock"), to the Company at the
price of $7.50 per share (the "Purchase Price"), net to the seller in cash,
without interest thereon, upon the terms and subject to the conditions set forth
herein and in the related Letter of Transmittal (which, as amended or
supplemented from time to time, together constitute the "Offer"). All Shares
properly tendered and not properly withdrawn will be purchased at the Purchase
Price, upon the terms and subject to the conditions of the Offer, including the
proration provisions. All Shares acquired in the Offer will be acquired at the
Purchase Price. The Company reserves the right, in its sole discretion, to
purchase more than 500,000 Shares pursuant to the Offer, although it has no
current intention to do so. Shares tendered and not purchased because of
proration will be returned. The Offer is being made to all holders of Shares,
including directors and executive officers of the Company. The Company has been
advised that none of its directors and executive officers intends to tender any
Shares pursuant to the Offer. See "The Tender Offer -- Number of Shares;
Proration."
The Offer is not conditioned on any minimum number of Shares being
tendered. The Offer is, however, subject to certain other conditions. See "The
Tender Offer -- Certain Conditions of the Offer."
The Shares are listed and traded on the American Stock Exchange
("AMEX") under the symbol "RIV." On December 27, 1999, the last full trading day
on the AMEX prior to the announcement of the Offer, the closing per Share sales
price as reported on the AMEX was $5.19. See "The Tender Offer -- Price Range of
Shares; Dividends."
Stockholders are urged to obtain current market quotations for the
Shares. The Board of Directors of the Company has approved the Offer. However,
neither the Company nor its Board of Directors makes any recommendation to
stockholders as to whether to tender or refrain from tendering their Shares.
Each stockholder must make the decision whether to tender such stockholder's
Shares and, if so, how many Shares to tender. The Company has been advised that
none of its directors or executive officers intends to tender any Shares
pursuant to the Offer.
This transaction has not been approved or disapproved by the Securities
and Exchange Commission nor has the Securities and Exchange Commission passed
upon the fairness or merits of such transaction or the accuracy or adequacy of
the information contained in this document. Any representation to the contrary
is unlawful.
<PAGE>
IMPORTANT
Any stockholder wishing to tender all or any part of such stockholder's
Shares should either (a) complete and sign a Letter of Transmittal (or a
manually signed facsimile thereof) in accordance with the instructions in the
Letter of Transmittal and mail or deliver such Letter of Transmittal, together
with any required signature guarantee, and any other required documents to
American Stock Transfer & Trust Company (the "Depositary"), and mail or deliver
the certificates for such Shares to the Depositary (together with any other
documents required by the Letter of Transmittal) or tender such Shares pursuant
to the procedure for book-entry transfer set forth in "The Tender Offer --
Procedures for Tendering Shares" or (b) request a broker, dealer, commercial
bank, trust company or other nominee to effect the transaction for such
stockholder. Holders of Shares registered in the name of a broker, dealer,
commercial bank, trust company or other nominee must contact such broker,
dealer, commercial bank, trust company or other nominee if they desire to tender
their Shares. Any stockholder who desires to tender Shares and whose
certificates for such Shares are not immediately available or cannot be
delivered to the Depositary or who cannot comply with the procedure for
book-entry transfer or whose other required documents cannot be delivered to the
Depositary, in any case, by the expiration of the Offer must tender such Shares
pursuant to the guaranteed delivery procedure set forth in "The Tender Offer --
Procedures for Tendering Shares."
To properly tender shares, stockholders must validly complete the
Letter of Transmittal.
Questions and requests for assistance or for additional copies of
this Offer to Purchase, the Letter of Transmittal or the Notice of Guaranteed
Delivery may be directed to the Information Agent at the address and telephone
number set forth on the back cover of this Offer to Purchase.
The Company has not authorized any person to make any recommendation on
behalf of the Company as to whether stockholders should tender or refrain from
tendering Shares pursuant to the Offer. The Company has not authorized any
person to give any information or to make any representation in connection with
the Offer other than those contained herein or in the related Letter of
Transmittal. If given or made, any such recommendation or any such information
or representation must not be relied upon as having been authorized by the
Company.
The date of this Offer to Purchase is December 28, 1999.
<PAGE>
TABLE OF CONTENTS
SECTION PAGE SECTION PAGE
INTRODUCTION.....................1 11. Interest of Directors
THE TENDER OFFER................ 3 and Officers and
1. Number of Shares; Principal Stockholder;
Proration.............. 3 Transactions and
2. Purpose of the Offer; Arrangements Concerning
Certain Effects of Shares...........................23
the Offer; Plans of 12. Benficial Ownership of
the Company After Shares...........................23
the Offer...............5 13. Effects of the Offer
3. Position of the On the Market for
Company's Board; Shares; Registration
Fairness of the Offer.. 7 Under the Exchange Act...........25
4. Procedures For 14. Certain Legal Matters;
Tendering Shares.......10 Regulatory Approvals.............26
5. Withdrawal Rights......14 15. Certain United States
6. Purchase of Shares Federal Income Tax
and Payment of Consequences.....................26
Purchase Price.........15 16. Extension of the
7. Certain Conditions Offer; Termination;
of the Offer...........16 Amendment........................27
8. Price Range of Shares; 17. Fees and Expenses................28
Dividends..............17 18. Miscellaneous....................29
9. Source and Amount
of Funds...............18
10. Certain Information
Concerning the
Company................18
SPECIAL CAUTIONARY NOTICE REGARDING FORWARD-LOOKING STATEMENTS. Certain
sections of this Offer to Purchase and certain documents referenced herein
include forward-looking statements. These forward-looking statements generally
relate to the Company's plans and objectives for future operations and are based
upon management's reasonable estimates of future results or trends. In this
Offer to Purchase and certain documents referenced herein, the words
"anticipates," "believes," "estimates," "expects," "plans," "intends" and
similar expressions, as they relate to the Company or the Company's management,
are intended to identify forward-looking statements. Forward-looking statements
are subject to a number of risks and uncertainties, certain of which are beyond
the Company's control. Actual results could differ materially from those
anticipated as a result of numerous factors, including among other things: local
and regional economic and business conditions; changes or developments in laws,
regulations or taxes; actions taken or omitted to be taken by third parties,
including the Company's customers, suppliers, competitors and stockholders, as
well as legislative, regulatory, judicial and other governmental authorities;
competition; the loss of any licenses or permits or the Company's failure to
renew gaming or liquor licenses on a timely basis; delays in opening the casino
in Black Hawk, Colorado due to casualty, weather or mechanical failure, or labor
disputes or work stoppages; changes in business strategy, capital improvements
or development plans; and availability of additional capital to support capital
improvements and development. The Company does not undertake any obligation to
publicly update or revise any forward-looking statements, whether as a result of
new information, future events or otherwise. Because of risks and uncertainties,
the forward-looking events and circumstances discussed in this Offer to Purchase
and any documents referenced herein might not occur.
<PAGE>
To the Holders of Common Stock
of Riviera Holdings Corporation:
INTRODUCTION
Riviera Holdings Corporation, a Nevada corporation (the "Company"),
invites its stockholders to tender shares (the "Shares") of its Common Stock,
par value $.001 per share (the "Common Stock"), to the Company at the price of
$7.50 per Share (the "Purchase Price"), net to the seller in cash, without
interest thereon, upon the terms and subject to the conditions set forth herein
and in the related letter of transmittal (the "Letter of Transmittal") (which
terms and conditions, as amended, supplemented or otherwise modified from time
to time, constitute the "Offer"). All Shares properly tendered and not properly
withdrawn will be purchased at the Purchase Price upon the terms and subject to
the conditions of the Offer, including the proration provisions. The Company
reserves the right, in its sole discretion, to purchase more than 500,000 Shares
pursuant to the Offer. The Offer is being made to all holders of Shares,
including directors and executive officers of the Company. The Company has been
advised that none of its directors or executive officers intends to tender any
Shares pursuant to the Offer. See "The Tender Offer -- Number of Shares;
Proration."
The Offer is not conditioned on any minimum number of Shares being
tendered. The Offer is, however, subject to certain other conditions. See "The
Tender Offer -- Certain Conditions to the Offer."
The Board of Directors of the Company has approved the Offer. However,
neither the Company nor its Board of Directors makes any recommendation to
stockholders as to whether to tender or refrain from tendering their Shares.
Each stockholder must make the decision whether to tender Shares and, if so, how
many Shares to tender. The Company has been advised that none of its directors
or executive officers intends to tender any Shares pursuant to the Offer.
Upon the terms and subject to the conditions of the Offer, if at the
expiration date of the Offer more than 500,000 Shares (or such greater number of
Shares as the Company may elect to purchase) are properly tendered and not
properly withdrawn, the Company will purchase Shares first from all the Odd Lot
Holders (as defined in "The Tender Offer -- Number of Shares; Proration") who
properly tender all of their Shares and then on a pro rata basis from all other
stockholders who properly tender Shares at the Purchase Price (and do not
properly withdraw them prior to the expiration of the Offer). See "The Tender
Offer -- Number of Shares; Proration."
The Purchase Price will be paid net to the tendering stockholder in
cash, without interest thereon, for all Shares purchased. Tendering stockholders
who hold Shares in their own name and who tender their Shares directly to the
American Stock Transfer & Trust Company (the "Depositary") will not be obligated
to pay brokerage commissions, solicitation fees or, subject to Instruction 2 of
the Letter of Transmittal, stock transfer taxes on the purchase of Shares by the
Company pursuant to the Offer. Stockholders holding Shares through brokers or
banks are urged to consult the brokers or banks to determine whether transaction
costs are applicable if stockholders tender Shares through the brokers or banks
and not directly to the Depositary. However, any tendering stockholder or other
payee who fails to complete, sign and return to the Depositary the Substitute
Form W-9 that is included as part of the Letter of Transmittal may be subject to
required United States Federal Income Tax Backup Withholding of 31% of the gross
proceeds payable to the tendering stockholder or other payee pursuant to the
Offer. See "The Tender Offer -- Procedures for Tendering Shares." The Company
will pay all fees and expenses of the Depositary and MacKenzie Partners, Inc.
(the "Information Agent") incurred in connection with the Offer. See "The Tender
Offer -- Fees and Expenses."
The Board of Directors has determined that an offer to repurchase
Shares directly from the Company's stockholders pursuant to this Offer would be
in the best interests of the Company and its stockholders. The Board of
Directors believes that the purchase of Shares at this time is consistent with
the Company's long term corporate goal of seeking to increase stockholder value.
In addition, the Offer will provide the Company's stockholders an opportunity to
sell a portion of their Shares which may not
<PAGE>
be available to stockholders based upon the current market conditions applicable
to trading in the Company's Shares. See "The Tender Offer -- Purpose of the
Offer; Certain Effects of the Offer; Plans of the Company After the Offer."
The Offer provides stockholders who are considering a sale of all or a
portion of their Shares with the opportunity, subject to the terms and
conditions of the Offer, to sell those Shares for cash without the usual
transaction costs associated with open market sales, if tendered by the
registered owner directly to the Depositary. In addition, the Offer gives
stockholders the opportunity to sell at a price greater than market prices
prevailing prior to the announcement of the Offer. The Offer also allows
stockholders to sell only a portion of their Shares while retaining a continuing
equity interest in the Company. Stockholders who determine not to accept the
Offer will realize a proportionate increase in their relative equity interest in
the Company, and thus the Company's future earnings and assets, subject to the
Company's right to issue additional Shares and other equity securities in the
future. In determining whether to tender Shares pursuant to the Offer,
stockholders should consider the possibility that they may be able to sell their
Shares in the future on the AMEX or otherwise, including in connection with a
sale of the Company, at a net price higher than the Purchase Price. See "The
Tender Offer -- Purpose of the Offer; Certain Effects of the Offer; Plans of the
Company After the Offer." The Company can give no assurance, however, as to the
price at which a stockholder may be able to sell non-tendered Shares in the
future or whether a sale of the Company may occur in the future.
As of December 15, 1999, the Company had 4,523,021 issued and
outstanding Shares, 583,755 Shares held in treasury and had reserved 633,000
Shares for issuance upon exercise of outstanding stock options under the
Company's stock option plans. The 500,000 Shares that the Company is offering to
purchase pursuant to the Offer represent approximately 11% of the Company's
Shares outstanding on December 15, 1999 (approximately 10% assuming exercise of
outstanding exercisable options). The Shares are listed and traded on the AMEX
under the symbol "RIV." On December 27, 1999, the last full trading day on the
AMEX prior to the announcement of the Offer, the closing per Share sales price
as reported on the AMEX was $5.19. Stockholders are urged to obtain current
market quotations for the Shares. See "The Tender Offer -- Price Range of
Shares; Dividends."
2
<PAGE>
THE TENDER OFFER
1. Number of Shares; Proration.
Upon the terms and subject to the conditions of the Offer (including,
if the Offer is extended or amended, the terms and conditions of such extension
or amendment), the Company will purchase 500,000 Shares or such lesser number of
Shares as are properly tendered (and not properly withdrawn as described in "The
Tender Offer -- Withdrawal Rights") prior to the Expiration Date at $7.50 per
Share (the "Purchase Price"), net to the seller in cash, without interest
thereon. The term "Expiration Date" means 12:00 midnight, New York City time, on
February 2, 2000 unless and until the Company, in its sole discretion, shall
have extended the period during which the Offer is open, in which event the term
"Expiration Date" shall mean the latest time and date at which the Offer, as so
extended by the Company, shall expire. See "The Tender Offer -- Number of
Shares; Proration." See "The Tender Offer -- Extension of the Offer;
Termination; Amendment" for a description of the Company's right to extend,
delay, terminate or amend the Offer.
The Company reserves the right to purchase more than 500,000 Shares
pursuant to the Offer. In accordance with applicable regulations of the
Securities and Exchange Commission ("SEC"), the Company may purchase pursuant to
the Offer an additional number of Shares, not to exceed 2% of the outstanding
Shares, without amending or extending the Offer. See "The Tender Offer --
Certain Conditions of the Offer." In the event of an over-subscription of the
Offer as described below, Shares tendered prior to the Expiration Date will be
subject to proration, except for Odd Lots (as defined below). The proration
period also expires on the Expiration Date. If (i) (x) the Company increases or
decreases the Purchase Price to be paid for the Shares, (y) the Company
increases the number of Shares being sought in the Offer and such increase in
the number of Shares being sought exceeds 2% of the outstanding Shares, or (z)
the Company decreases the number of Shares being sought, and (ii) the Offer is
scheduled to expire at any time earlier than the expiration of a period ending
on the tenth business day from, and including, the date that notice of such
increase or decrease is first published, sent or given in the manner specified
in "The Tender Offer -- Extension of the Offer; Termination; Amendment," the
Offer will be extended until the expiration of such period of ten business days.
The Offer is not conditioned on the tender of any minimum number of
Shares, but is subject to certain other conditions. See "The Tender Offer --
Certain Conditions of the Offer."
All Shares properly tendered pursuant to the Offer and not properly
withdrawn will be purchased at the Purchase Price, upon the terms and subject to
the conditions of the Offer, including the proration provisions. All Shares
tendered and not purchased pursuant to the Offer, including Shares not purchased
because of proration, will be returned to the tendering stockholders at the
Company's expense as promptly as practicable following the Expiration Date.
If the number of Shares properly tendered and not properly withdrawn
prior to the Expiration Date is less than or equal to 500,000 Shares (or such
greater number of Shares as the Company may elect to purchase pursuant to the
Offer), the Company will, upon the terms and subject to the conditions of the
Offer, purchase all Shares so tendered at the Purchase Price.
Priority of Purchases. Upon the terms and subject to the conditions of
the Offer, if more than 500,000 Shares (or such greater number of Shares as the
Company may elect to purchase) have been properly tendered and not withdrawn
prior to the Expiration Date, the Company will purchase properly tendered Shares
on the basis set forth below:
(a) First, all Shares properly tendered and not withdrawn prior to the
Expiration Date by any Odd Lot Holder (as defined below) who:
(i) Tenders all Shares beneficially owned by such Odd Lot
Holder (tenders of less than all Shares owned by such shareholder will not
qualify for this preference); and
3
<PAGE>
(ii) Completes the box captioned "Odd Lots" on the Letter of
Transmittal and if applicable, on the Notice of Guaranteed Delivery; and
(b) Second, after purchase of all of the foregoing Shares, all other
Shares properly tendered and not withdrawn prior to the Expiration Date, on a
pro rata basis (with appropriate adjustments to avoid purchases of fractional
Shares) as described below.
Odd Lots. For purposes of the Offer, the term "Odd Lots" means all
Shares properly tendered prior to the Expiration Date and not properly withdrawn
by any person who owned beneficially or of record as of the close of business on
December 28, 1999 and who continues to own beneficially or of record as of the
Expiration Date, an aggregate of fewer than 100 Shares and so certified in the
appropriate place on the Letter of Transmittal (an "Odd Lot Holder") and, if
applicable, on the Notice of Guaranteed Delivery. In order to qualify for this
preference, an Odd Lot Holder must tender all Shares owned by the Odd Lot Holder
in accordance with the procedures described in Instruction 8 of the Letter of
Transmittal and under "The Tender Offer -- Procedures for Tendering Shares." As
set forth above, Odd Lots will be accepted for payment before proration, if any,
of the purchase of other tendered Shares. This preference is not available to
partial tenders or to beneficial or record holders of an aggregate of 100 or
more Shares, even if these holders have separate accounts or certificates
representing fewer than 100 Shares. By accepting the Offer, an Odd Lot Holder
who holds Shares in its name and tenders its Shares directly to the Depositary
would not only avoid the payment of brokerage commissions, but also would avoid
any applicable odd lot discount in a sale of the holder's Shares. Any
stockholder wishing to tender all of such stockholder's Shares pursuant to this
Section should complete the section entitled "Odd Lots" in the Letter of
Transmittal and, if applicable, in the Notice of Guaranteed Delivery.
The Company also reserves the right, but will not be obligated, to
purchase all Shares duly tendered by any stockholder who tenders any Shares
beneficially owned and who, as a result of proration, would then beneficially
own an aggregate of fewer than 100 Shares. If the Company exercises this right,
it will increase the number of Shares that it is offering to purchase in the
Offer by the number of Shares purchased through the exercise of such right.
Proration of Purchases. Upon the terms and subject to the conditions of
the Offer, if more than 500,000 Shares (or such greater number of Shares as the
Company may elect to purchase) have been properly tendered and not properly
withdrawn prior to the Expiration Date, the Company will purchase properly
tendered Shares on a prorated basis (with appropriate adjustments to avoid
purchases of fractional shares) as described below. In the event that proration
of tendered Shares is required, the Company will determine the proration factor
as soon as practicable following the Expiration Date. Proration for each
stockholder tendering Shares shall be based on the ratio of the number of Shares
properly tendered and not properly withdrawn by such stockholder to the total
number of Shares properly tendered and not properly withdrawn by all
stockholders. Because of the difficulty in determining the number of Shares
properly tendered (including Shares tendered by guaranteed delivery procedures,
as described in "The Tender Offer -- Procedures for Tendering Shares") and not
properly withdrawn the Company does not expect that it will be able to announce
the final proration factor or commence payment for any Shares purchased pursuant
to the Offer until approximately five business days after the Expiration Date.
The preliminary results of any proration will be announced by press release as
promptly as practicable after the Expiration Date. Stockholders may obtain
preliminary proration information from the Company and may be able to obtain
such information from their brokers.
As described in "The Tender Offer -- Certain United States Federal
Income Tax Consequences," the number of Shares that the Company will purchase
from a stockholder pursuant to the Offer may affect the United States federal
income tax consequences to the stockholder of the purchase and, therefore, may
be relevant to a stockholder's decision whether or not to tender Shares. The
Letter of Transmittal affords each tendering stockholder the opportunity to
designate the order of priority in which Shares tendered are to be purchased in
the event of proration.
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This Offer to Purchase and the related Letter of Transmittal will be
mailed to stockholders who were record holders of Shares as of December 28,
1999 and will be furnished to brokers, banks and similar persons whose names, or
the names of whose nominees, appear on the Company's stockholder list or, if
applicable, who are listed as participants in a clearing agency's security
position listing for subsequent transmittal to beneficial owners of Shares.
2. Purpose of the Offer; Certain Effects of the Offer; Plans of the
Company After the Offer
Purpose of the Offer. On September 21, 1998, the Company's Board of
Directors authorized a stock repurchase program. Such authorization was based
upon the determination of the Board of Directors that Company repurchases of
Shares would provide a liquidity opportunity for those stockholders wishing to
dispose of their Shares and enhance stockholder value for the remaining
stockholders, and that such repurchases would be in the best interests of the
Company and its stockholders. Due in part to the relatively thin public trading
market for the Common Stock, the Company repurchased only 39,100 Shares through
purchases on the AMEX at an average price of $4.84 per Share during the
four-month period such stock repurchase program was in effect. See "--Position
of the Company's Board; Fairness of the Offer" for a description of other recent
purchases of Common Stock by the Company from Allen E. Paulson and Sun America,
Inc.
The public trading market for the Shares has recently been
characterized by low prices and low trading volume. As a result, there is a
limited market for the Shares and low trading volumes make it difficult for
stockholders to sell a substantial number of Shares at prevailing market prices.
The Company is making the Offer to provide stockholders who wish to sell their
Shares the opportunity to do so at a premium over recent market prices. After
considering the results of the repurchase program and the Company's
alternatives, the Board of Directors has determined that an offer to repurchase
Shares directly from the Company's stockholders pursuant to the Offer would be
in the best interests of the Company and its stockholders, and authorized the
Offer. The Board of Directors of the Company has determined that the Company's
financial condition and outlook and current market conditions make this an
attractive time to repurchase a portion of the outstanding Shares. In the view
of the Board of Directors, the Offer represents an opportunity for the Company
to purchase Shares that it would be otherwise unable to purchase in the open
market due to the limited trading volume in the public market for the Shares.
The Board of Directors also believes that the purchase of Shares at this time is
consistent with the Company's long-term corporate goal of seeking to increase
shareholder value. In addition, the Board of Directors believes that the
Company's purchase of Shares pursuant to the Offer represents an attractive
long-term investment that will benefit the Company and the stockholders who
elect not to tender their Shares pursuant to the Offer.
The Offer will enable stockholders, if they so desire, to sell a
portion of their Shares while retaining a continuing equity interest in the
Company. The Offer may provide stockholders who are considering a sale of all or
a portion of their Shares the opportunity to sell those Shares for cash without
the usual transaction costs associated with open-market sales. The purchase of
Shares in the Offer will reduce the number of stockholders of record of the
Company.
For stockholders who do not tender, there is no assurance that the
price of the Shares will not trade below the price currently being offered by
the Company pursuant to the Offer. For stockholders who do tender, the trading
price of Shares may increase as a result of the Offer or an unexpected offer
and/or acquisition by a third party.
The Board of Directors of the Company has approved the Offer. However,
neither the Company nor its Board of Directors makes any recommendation to any
stockholder as to whether to tender or refrain from tendering any or all of such
stockholder's Shares and has not authorized any person to make any such
recommendation. Stockholders are urged to evaluate carefully all information
contained in this Offer to Purchase and accompanying documents, consult their
own
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investment and tax advisors and make their own decisions whether to tender
Shares and, if so, how many Shares to tender. The Company has been advised that
none of its directors or executive officers intends to tender any shares
pursuant to the Offer.
Shares the Company acquires pursuant to the Offer will be held in the
Company's treasury and will be available for the Company to issue without
further stockholder action (except as required by applicable law or the rules of
the AMEX or any other securities exchange on which the shares may be listed).
Such Shares could be issued for such purposes as, among others, the acquisition
of other businesses or the raising of additional capital. The Company has no
concrete current plans for the issuance of Shares repurchased pursuant to the
Offer but has considered the issuance of Shares if the market price of the
Shares were to increase substantially above $7.50 per Share.
Certain Effects Of The Offer; Plans Of The Company After The Offer
Impact on Tendering Stockholders. Stockholders who sell Shares to the
Company in response to the Offer will receive the Purchase Price in cash,
without interest thereon. The sale of Shares in response to the Offer will have
federal income tax consequences to the selling stockholders and may have tax
consequences under applicable state, local and other tax laws. See "The Tender
Offer -- Certain United States Federal Income Tax Consequences."
Impact on Non-Tendering Stockholders. The purchase of Shares as a
result of the Offer will decrease the Company's stockholders' equity per Share
because the Purchase Price will be greater than the Company's stockholders'
equity per Share of $6.10 at September 30, 1999. Stockholders who determine not
to accept the Offer will realize a proportionate increase in their relative
equity interest in the Company, and thus in the Company's future earnings and
assets, subject to the Company's right to issue additional Shares and other
equity securities in the future. However, the tendering of Shares pursuant to
the Offer will reduce the number of Shares that could otherwise be traded
publicly and could materially and adversely affect the liquidity and market
value of the remaining Shares held by the public.
The Company has never declared nor paid any cash dividends on its
Common Stock and does not anticipate paying cash dividends in respect of its
Common Stock in the foreseeable future. Any payment of cash dividends in the
future will be at the discretion of the Company's Board of Directors and will
depend upon, among other things, its earnings (if any), financial condition,
cash flows, capital requirements and other relevant considerations, including
applicable contractual restrictions and governmental regulations with respect to
the payment of dividends. The Company does not anticipate any change to the
current dividend policy. See "The Tender Offer -- Price Range of Shares;
Dividends."
Impact on the Company. The Company expects to expend approximately
$3.84 million in connection with the Offer, including all fees and expenses
applicable to the Offer. As a result, upon the completion of the Offer, the
Company expects that it will have less cash and investments available for
working capital and for other uses, including for any possible acquisitions by
the Company. However, the Company believes that after the Offer is completed,
the Company will have more than $40.0 million on hand and sufficient cash flow
and access to other sources of capital in order to fund its working capital
needs and provide for all presently foreseeable capital expenditure
requirements. The funds required to complete the Offer and pay related expenses
will be provided from the Company's existing cash resources. See "The Tender
Offer -- Source and Amount of Funds."
Plans for the Company After the Offer. Following the Offer, the
business and operations of the Company will be continued by the Company
substantially as they are currently being conducted by the Company's current
management, except that if the market price for the Shares were to substantially
increase, the Company may sell a substantial number of Shares and acquire
diversified gaming assets.
Except as disclosed in this Offer to Purchase, the Company currently
has no plans or proposals that relate to or would result in:
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(a) the acquisition by any person of additional securities of the
Company or the disposition of securities of the Company;
(b) an extraordinary corporate transaction, such as a merger,
reorganization or liquidation, involving the Company or any of its
subsidiaries;
(c) a sale or transfer of a material amount of assets of the
Company or any of its subsidiaries;
(d) any change in the present Board of Directors or management of
the Company;
(e) any material change in the present dividend rate or policy, or
indebtedness or capitalization of the Company;
(f) any other material change in the Company's corporate structure
or business;
(g) any change in the Company's Certificate of Incorporation or
By-Laws or other actions which may impede the acquisition of control of the
Company by any person;
(h) a class of equity security of the Company being delisted from
a national securities exchange or ceasing to be authorized for quotation in
an inter-dealer quotation system of a registered national securities
association;
(i) a class of equity security of the Company becoming eligible
for termination of registration pursuant to Section 12(g)(4) of the
Exchange Act; or
(j) the suspension of the Company's obligation to file reports
pursuant to Section 15(d) of the Exchange Act.
The Board of Directors has in the past considered and evaluated a
possible sale of all or a significant part of the Company's business. See "The
Tender Offer -- Position of the Company's Board; Fairness of the Offer."
Although the Company has no present plan to pursue such a sale at this time,
there can be no assurance that the Company will not consider such a sale, or
consummate any transaction involving a significant part of its business,
following the consummation of the Offer.
Following completion of the Offer, the Company may repurchase
additional Shares in the open market, in privately negotiated transactions or
otherwise. Any such purchases may be on the same terms or on terms which are
more or less favorable to stockholders than the terms of the Offer. Rule 13e-4
under the Exchange Act prohibits the Company and its affiliates from purchasing
any Shares, other than pursuant to the Offer, until at least ten business days
after the Expiration Date. Any possible future purchases by the Company will
depend on many factors, including the market price of the Shares, the results of
the Offer, the Company's business and financial position and general economic
and market conditions.
3. Position of the Company's Board; Fairness of the Offer
Position of the Company's Board of Directors. On December 23, 1999, the
Board of Directors of the Company, by unanimous vote of all directors
participating and voting, approved the Offer. However, the Board of Directors
does not make any recommendation to stockholders as to whether to tender or
refrain from tendering their Shares. Each stockholder must make the decision
whether to tender such stockholder's Shares and, if so, how many Shares to
tender. The Offer is being made to all holders of Shares, including directors
and executive officers of the Company. However, the Company has been advised
that none of its directors or executive officers intends to tender any Shares
pursuant to the Offer.
Fairness of the Offer. In connection with its evaluation of the Offer,
the Board of Directors of the Company considered, among others, the factors
described below. Stockholders of the Company are urged to consider the following
factors, as well as other information appearing in this Offer to Purchase, in
determining whether to tender their Shares. In addition, stockholders should
consider their particular
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<PAGE>
financial circumstances, investment objectives and tax situation. See "The
Tender Offer -- Certain United States Federal Income Tax Consequences" for a
discussion of federal tax consequences.
o Current Market Prices. On December 27, 1999, the last trading day
prior to the announcement of the Offer, the closing sales price of the
Shares was $5.19. On December 13, 1999, two weeks prior to the
announcement of the Offer, the closing sales price was $5.50. In
evaluating the Offer, the Board of Directors carefully considered, in
relation to current market prices, the $7.50 net per Share cash
consideration to be paid to the stockholders in the Offer, which
represents a premium of approximately 44.5% per Share over the closing
sales price on December 27, 1999, and a premium of approximately 36.4%
per Share over the closing sales price two weeks preceding such date.
o Historical Market Prices. Since the year ended December 31, 1998, the
highest closing sales price of the Shares was $6.63. Since the year
ended December 31, 1997, the highest closing sales price of the Shares
was $15.06. In addition to considering the historical market prices of
the Shares, the Board of Directors carefully considered the trading
activity of the Shares, including the fact that the average daily
trading volume of the Shares for the past two years has been
approximately 6,000 Shares per day.
o Other Offers. On September 15, 1997, the Company entered into a merger
agreement with certain entities controlled by Allen E. Paulson.
Pursuant to the merger agreement, a company controlled by Paulson was
to have acquired 100% of the Company's Common Stock for $15 per Share,
plus an interest factor. In March 1998, the Company was notified by
Paulson that the merger agreement was void and unenforceable, or
alternatively, of his intention to terminate the merger agreement. The
Company disputed the factual and legal assertions of Paulson and
vigorously pursued its rights against Paulson. On July 1, 1999, the
Company, Paulson and certain of their respective affiliates entered
into a settlement agreement, settling their disputes and terminating
the merger agreement. On October 8, 1999, the Federal District Court
for the Central District of California approved a bar order as part of
a settlement of the lawsuit brought by Paulson against the Company.
The lawsuit remains pending against the other defendants. In
evaluating the Offer, the Board of Directors carefully considered the
fact that Paulson offered $15 per Share in September 1997.
o Purchase Price Paid in Previous Purchases. Pursuant to the terms of
the settlement agreement discussed above under "Other Offers" among
the Company, Paulson and their respective affiliates, on October 8,
1999, the Company purchased 463,655 Shares from Paulson at $7.50 per
Share. As part of such settlement, the holders of the Company's
Contingent Value Rights received $2.46 per Right, or an aggregate of
approximately $4,350,200. In addition, on October 20, 1999, the
Company purchased 81,000 Shares from Sun America, Inc. at $7.50 per
Share. The purpose of such purchase was to reduce Sun America's
ownership of the Company below 15% of the Company's outstanding stock
in order to facilitate the licensing by the Colorado Gaming Commission
of the Company's subsidiary, Riviera Black Hawk, Inc. See "Growth
Opportunities" below. In evaluating the Offer, the Board of Directors
carefully considered the price of $7.50 per Share paid by the Company
for its Common Stock in recent transactions.
o Growth Opportunities. In evaluating the Offer, the Board of Directors
also carefully considered the Company's growth opportunities. The
Company's growth strategy includes maximizing the potential of the
Company's prime Las Vegas Boulevard frontage and capitalizing on the
proven strength of its management team by leveraging its talents
across
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multiple properties. To achieve this goal, the Company is pursuing the
following opportunities:
o The Black Hawk Project. The Company's indirect wholly-owned
subsidiary, Riviera Black Hawk, Inc., is constructing a casino in
Black Hawk, Colorado. This property will be the third largest
casino with entertainment and parking facilities in Black Hawk,
Colorado, approximately 40 miles west of Denver. It will be one
of the first three casinos encountered when traveling from Denver
to the Black Hawk/Central City market. The casino will feature
approximately 1,000 slot machines and 12 gaming tables. A variety
of other amenities will be offered, which are designed to
differentiate this casino, including on-site parking for
approximately 520 vehicles, a casual dining restaurant with
seating for approximately 250 people and two themed bars, and an
entertainment center with seating for up to 600 people. The
casino is expected to open in January 2000.
o Convention Center. In October 1999, the Company completed
construction to expand its convention center from 100,000 square
feet to 160,000 square feet. The new expanded facilities, which
opened on February 12, 1999, include new, state-of-the-art
convention, meeting and banquet facilities, teleconferencing and
satellite uplink capability, and 66,000 square feet of additional
parking. The new facilities connect to the existing convention
facility and the main hotel buildings to form one integrated
structure. The new expanded facilities should help the Company
maintain and enhance its core conventioneer customer base,
attract new customers and generate significant advance room
bookings.
o Future Expansions. The Company is exploring the possible
development of an approximately 60,000 square-foot domed shopping
center and entertainment complex to be constructed directly over
the casino which would contain stores and entertainment. The exit
from the complex would be by an escalator which would deliver
patrons to the casino. The Company is also exploring a number of
options for the development of its existing 26-acre site. These
options include a joint venture for the development of a
time-share condominium tower or an additional hotel tower and
parking garage. The Company believes that additional rooms
adjacent to the Las Vegas Convention Center would be particularly
attractive to business customers and would provide a base for
additional casino customers.
o Casino / Hotel Management Contracts. In order to capitalize on
management's expertise and reputation as successful operators of
casino properties, the Company formed Riviera Gaming Management,
Inc. for the primary purpose of obtaining casino management
contracts in Nevada and other jurisdictions. Riviera Gaming
provides services such as assisting new venue licensee applicants
in designing and planning their gaming operations and managing
the start-up of new gaming operations. The Company believes that
management contracts provide high margin income with limited
additional overhead and little or no capital expenditure
requirements. The Company is continually evaluating opportunities
to manage other casinos/hotels and is currently in discussions
relating to an Indian casino in California. The Company's
objective is to obtain the right to a substantial equity position
in projects it would manage as part of the compensation for its
services.
o Pennsylvania. On September 30, 1999, the Company applied to the
Pennsylvania State Horse Racing Commission for a license to
conduct thoroughbred horse racing and pari-mutuel wagering in
Erie, Pennsylvania. The Pennsylvania State Horse Racing
Commission is in the preliminary stages of reviewing the
application.
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The Board of Directors of the Company evaluated the factors listed
above in light of its knowledge of the business, financial condition and
prospects of the Company. Based primarily on the current market prices of the
Shares and recent purchases of Shares from Paulson and Sun America at $7.50 per
Share, the Board of Directors believes that the Offer is fair to the
stockholders of the Company. However, it is quite possible that the other
factors listed above would indicate that the longer term value of the Company's
Common Stock is greater than $7.50. Considering such other factors, the Board of
Directors believes that the current market value of the Shares of $5.19 at
December 27, 1999 is significantly undervalued. However, the Board of Directors
makes no prediction as to the future trading prices of the Shares, nor can it be
assured that the long-term outlook for the Company will be positive.
Stockholders should note that none of the Company's directors or executive
officers intends to tender any Shares pursuant to the Offer. In light of the
number and variety of factors that the Board of Directors considered in
connection with its evaluation of the Offer, the Board of Directors did not find
it practicable to assign relative weights to the factors listed above, and,
accordingly, the Board of Directors did not do so.
Stockholders contemplating whether to tender their Shares should
consider that the Company has not retained any financial advisor or investment
banking firm to assist the Company in determining the price and terms of the
Offer or whether the Offer is adequate to tendering stockholders. The Company
also has not requested any report, opinion or appraisal relating to the fairness
of the Purchase Price. No unaffiliated representative has been retained to act
solely on behalf of the unaffiliated stockholders for the purposes of
negotiating the terms of the Offer. The Offer does not require the approval of a
majority of unaffiliated stockholders. All directors of the Company, including
those who are not employees of the Company, have approved the Offer.
4. Procedures For Tendering Shares.
Proper Tender of Shares. For Shares to be tendered properly pursuant to
the Offer, (a) the certificates for such Shares (or confirmation of receipt of
such Shares pursuant to the procedure for book-entry transfer set forth below),
together with a properly completed and duly executed Letter of Transmittal (or a
manually signed facsimile thereof), including any required signature guarantees,
and any other documents required by the Letter of Transmittal, must be received
prior to 12:00 midnight, New York City time, on the Expiration Date by the
Depositary at its address set forth on the back cover of this Offer to Purchase,
or (b) the tendering stockholder must comply with the guaranteed delivery
procedure set forth below.
Odd Lot Holders who tender all such Shares must complete the section
entitled "Odd Lots" on the Letter of Transmittal and, if applicable, on the
Notice of Guaranteed Delivery, to qualify for the preferential treatment
available to Odd Lot Holders as set forth in "The Tender Offer -- Number of
Shares; Proration -- Odd Lots."
Stockholders who hold Shares through brokers or banks are urged to
consult the brokers or banks to determine whether transaction costs are
applicable if stockholders tender Shares through the brokers or banks and not
directly to the Depositary.
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Signature Guarantees and Method of Delivery. No signature guarantee is
required: (i) if the Letter of Transmittal is signed by the registered holder of
the Shares (which term, for purposes of this Section 4, shall include any
participant in The Depository Trust Company (the "Book-Entry Transfer Facility")
whose name appears on a security position listing as the owner of the Shares)
tendered therewith and such holder has not completed either the box entitled
"Special Delivery Instructions" or the box entitled "Special Payment
Instructions" on the Letter of Transmittal; or (ii) if Shares are tendered for
the account of a bank, broker, dealer, credit union, savings association or
other entity which is a member in good standing of the Securities Transfer
Agents Medallion Program or a bank, broker, dealer, credit union, savings
association or other entity which is an "eligible guarantor institution," as
such term is defined in Rule 17Ad-15 under the Securities Exchange Act of 1934,
as amended (each of the foregoing constituting an "Eligible Institution"). See
Instruction 1 of the Letter of Transmittal. If a certificate for Shares is
registered in the name of a person other than the person executing a Letter of
Transmittal, or if payment is to be made, or Shares not purchased or tendered
are to be issued, to a person other than the registered holder, then the
certificate must be endorsed or accompanied by an appropriate stock power, in
either case, signed exactly as the name of the registered holder appears on the
certificate, with the signature guaranteed by an Eligible Institution.
In all cases, payment for Shares tendered and accepted for payment
pursuant to the Offer will be made only after timely receipt by the Depositary
of certificates for such Shares (or a timely confirmation of the book-entry
transfer of the Shares into the Depositary's account at the Book-Entry Transfer
Facility as described above), a properly completed and duly executed Letter of
Transmittal (or a manually signed facsimile thereof) and any other documents
required by the Letter of Transmittal. The method of delivery of all documents,
including certificates for Shares, the Letter of Transmittal and any other
required documents, is at the election and risk of the tendering stockholder. If
delivery is by mail, then registered mail with return receipt requested,
properly insured, is recommended.
Book-Entry Delivery. The Depositary will establish an account with
respect to the Shares for purposes of the Offer at the Book-Entry Transfer
Facility within two business days after the date of this Offer to Purchase, and
any financial institution that is a participant in the Book-Entry Transfer
Facility's system may make book-entry delivery of the Shares by causing the
Book-Entry Transfer Facility to transfer Shares into the Depositary's account in
accordance with the Book-Entry Transfer Facility's procedures for transfer.
Although delivery of Shares may be effected through a book-entry transfer into
the Depositary's account at the Book-Entry Transfer Facility, either (i) a
properly completed and duly executed Letter of Transmittal (or a manually signed
facsimile thereof) with any required signature guarantees or an Agent's Message
or, in the case of a tender through the Book-Entry Transfer Facility's Automated
Tender Offer Program ("ATOP"), the specific acknowledgement in each case
together with any other required documents must, in any case, be transmitted to
and received by the Depositary at its address set forth on the back cover of
this Offer to Purchase prior to the Expiration Date, or (ii) the guaranteed
delivery procedure described below must be followed. The confirmation of a
book-entry transfer of shares into the Depositary's account at the Book-Entry
Transfer Facility as described above is referred to herein as a "Book Entry
Confirmation." Delivery of the Letter of Transmittal and any other required
documents to the Book-Entry Transfer Facility does not constitute delivery to
the Depositary and will not constitute a valid tender.
The term "Agent's Message" means a message, transmitted by the Book-Entry
Transfer Facility to, and received by, the Depositary and forming a part of a
Book-Entry Confirmation, which states that the Book-Entry Transfer Facility has
received an express acknowledgment from the participant in the Book-Entry
Transfer Facility tendering the Shares that such participant has received and
agrees to be bound by the terms of the Letter of Transmittal and that the
purchaser may enforce such agreement against the participant.
United States Federal Income Tax Backup Withholding. Under the United
States federal income tax backup withholding rules, unless an exemption applies
under the applicable law and regulations, 31%
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of the gross proceeds payable to a stockholder or other payee pursuant to the
Offer must be withheld and remitted to the United States Internal Revenue
Service ("IRS"), unless the stockholder or other payee provides its taxpayer
identification number (employer identification number or social security number)
to the Depositary (as payer) and makes certain other certifications to the
Depositary. Therefore, each tendering stockholder should complete and sign the
Substitute Form W-9 included as part of the Letter of Transmittal so as to
provide the information and certification necessary to avoid backup withholding.
If the Depositary is not provided with the correct taxpayer identification
number, the United States Holder (as defined in "The Tender Offer -- Certain
United States Federal Income Tax Considerations") also may be subject to a
penalty imposed by the IRS. If withholding based on the presumption that the
payment will be characterized as a dividend for federal income tax purposes and
results in an overpayment of taxes, a refund may be obtained. Certain "exempt
recipients" (including, among others, all corporations and certain Non-United
States Holders (as defined in "The Tender Offer -- Certain United States Federal
Income Tax Considerations")) are not subject to these backup withholding and
information reporting requirements. In order for a Non-United States Holder to
qualify as an exempt recipient, that stockholder must submit an IRS Form W-8 or
a Substitute Form W-8, signed under penalties of perjury, attesting to that
stockholder's exempt status. Such statements can be obtained from the
Depositary. See Instruction 13 of the Letter of Transmittal.
To prevent United States Federal Income Tax Backup Withholding equal to
31% of the gross payments made to stockholders for Shares purchased pursuant to
the Offer, each stockholder who does not otherwise establish an exemption from
such backup withholding must provide the Depositary with the stockholder's
correct taxpayer identification number and provide certain other information by
completing the Substitute Form W-9 included as part of the Letter of
Transmittal.
Withholding For Non-United States Holders. Even if a Non-United States
Holder has provided the required certification to avoid backup withholding, the
Depositary will withhold United States federal income taxes equal to 30% of the
gross payments payable to a Non-United States Holder or his agent unless the
Depositary determines that a reduced rate of withholding is available pursuant
to a tax treaty or that an exemption from withholding is applicable because the
gross proceeds are effectively connected with the conduct of a trade or business
within the United States. In order to obtain a reduced rate of withholding
pursuant to a tax treaty, a Non-United States Holder must deliver to the
Depositary before the payment a properly completed and executed IRS Form 1001.
In order to obtain an exemption from withholding on the grounds that the gross
proceeds paid pursuant to the Offer are effectively connected with the conduct
of a trade or business within the United States, a Non-United States Holder must
deliver to the Depositary a properly completed and executed IRS Form 4224. The
Depositary will determine a stockholder's status as a Non-United States Holder
and eligibility for a reduced rate of, or exemption from, withholding based on
the presumption that the payment will be characterized as a dividend for federal
income tax purposes and by reference to any outstanding certificates or
statements concerning eligibility for a reduced rate of, or exemption from,
withholding (e.g., IRS Form 1001 or IRS Form 4224) unless facts and
circumstances indicate that such reliance is not warranted. A Non-United States
Holder may be eligible to obtain a refund of all or a portion of any tax
withheld if such Non-United States Holder meets those tests described in "The
Tender Offer -- Certain United States Federal Income Tax Considerations" that
would characterize the exchange as a sale (as opposed to a dividend) or is
otherwise able to establish that no tax or a reduced amount of tax is due.
Non-United States holders are urged to consult their own tax advisors
regarding the application of United States Federal Income Tax Withholding,
including eligibility for a withholding tax reduction or exemption, and the
refund procedure.
Guaranteed Delivery. If a stockholder desires to tender Shares pursuant
to the Offer and the stockholder's Share certificates are not immediately
available or cannot be delivered to the Depositary prior to the Expiration Date
(or the procedure for book-entry transfer cannot be completed on a timely basis)
or if time will not permit all required documents to reach the Depositary prior
to the Expiration
12
<PAGE>
Date, such Shares may nevertheless be tendered, provided that all of the
following conditions are satisfied:
(a) the tender is made by or through an Eligible Institution;
(b) the Depositary receives by hand, mail, overnight courier,
telegram or facsimile transmission, on or prior to the Expiration Date, a
properly completed and duly executed Notice of Guaranteed Delivery
substantially in the form the Company has provided with this Offer to
Purchase, including (where required) a signature guarantee by an Eligible
Institution in the form set forth in such Notice of Guaranteed Delivery;
and
(c) the certificates for all tendered Shares, in proper form for
transfer (or confirmation of book-entry transfer of such Shares into the
Depositary's account at the Book-Entry Transfer Facility), together with a
properly completed and duly executed Letter of Transmittal (or a manually
signed facsimile thereof) and any required signature guarantees or other
documents required by the Letter of Transmittal, are received by the
Depositary within three AMEX trading days after the date of receipt by the
Depositary of the Notice of Guaranteed Delivery.
Return of Tendered Shares. If any tendered Shares are not purchased, or
if less than all Shares evidenced by a stockholder's certificates are tendered,
certificates for unpurchased Shares will be returned as promptly as practicable
after the expiration or termination of the Offer or, in the case of Shares
tendered by book-entry transfer at the Book-Entry Transfer Facility, the Shares
will be credited to the appropriate account maintained by the tendering
stockholder at the Book-Entry Transfer Facility, in each case without expense to
the stockholder.
Company Stock Option Plans. The Company is not offering, as part of the
Offer, to purchase any options outstanding under any of the Company's stock
option plans and tenders of options will not be accepted. Holders of options who
wish to participate in the Offer may either (i) comply with the procedure for
guaranteed delivery set forth above without having to exercise their options
until after the results of the Offer are known (provided, however, that an
option holder will not be required to make the requisite tender through an
Eligible Institution and may personally execute and deliver the Notice of
Guaranteed Delivery) or (ii) exercise their options and purchase Shares of the
Company's Common Stock and then tender the Shares pursuant to the Offer,
provided that, in the case of either (i) or (ii), any exercise of an option and
tender of Shares is in accordance with the terms of the stock option plans and
the options. In no event are any options to be delivered to the Depositary in
connection with a tender of Shares hereunder. An exercise of an option cannot be
revoked even if Shares received upon the exercise and tendered in the Offer are
not purchased in the Offer for any reason.
Determination of Validity; Rejection of Shares; Waiver of Defects; No
Obligation to Give Notice of Defects. All questions as to the number of Shares
to be accepted, the price to be paid for Shares to be accepted and the validity,
form, eligibility (including time of receipt) and acceptance for payment of any
tender of Shares will be determined by the Company, in its sole discretion, and
its determination shall be final and binding on all parties. The Company
reserves the absolute right to reject any or all tenders of any Shares that it
determines are not in proper form or the acceptance for payment of or payment
for which may, in the opinion of the Company's counsel, be unlawful. The Company
also reserves the absolute right to waive any of the conditions of the Offer or
any defect or irregularity in any tender with respect to any particular Shares
or any particular stockholder and the Company's interpretation of the terms of
the Offer will be final and binding on all parties. No tender of Shares will be
deemed to have been properly made until all defects or irregularities have been
cured by the tendering stockholder or waived by the Company. None of the
Company, the Depositary, the Information Agent or any other person shall be
obligated to give notice of any defects or irregularities in tenders, nor shall
any of them incur any liability for failure to give any notice.
13
<PAGE>
Tendering Stockholder's Representation and Warranty; Company's
Acceptance Constitutes an Agreement. A tender of Shares pursuant to any of the
procedures described above will constitute the tendering stockholder's
acceptance of the terms and conditions of the Offer, as well as the tendering
stockholder's representation and warranty to the Company that (a) the
stockholder has a net long position in the Shares or equivalent securities at
least equal to the Shares tendered within the meaning of Rule 14e-4 promulgated
by the SEC under the Exchange Act and (b) the tender of Shares complies with
Rule 14e-4. It is a violation of Rule 14e-4 for a person, directly or
indirectly, to tender Shares for that person's own account unless, at the time
of tender and at the end of the proration period or period during which Shares
are accepted by lot (including any extensions thereof), the person so tendering
(i) has a net long term position equal to or greater than the amount of (x)
Shares tendered or (y) other securities convertible into or exchangeable or
exercisable for the Shares tendered and will acquire the Shares for tender by
conversion, exchange or exercise and (ii) will deliver or cause to be delivered
the Shares in accordance with the terms of the Offer. Rule 14e-4 provides a
similar restriction applicable to the tender or guarantee of a tender on behalf
of another person.
The Company's acceptance for payment of Shares tendered pursuant to the
Offer will constitute a binding agreement between the tendering stockholder and
the Company upon and subject to the terms and conditions of the Offer.
Certificates for Shares, together with a properly completed Letter of
Transmittal and any other documents required by the Letter of Transmittal, must
be delivered to the Depositary and not to the Company. Any such documents
delivered to the Company will not be forwarded to the Depositary and therefore
will not be deemed to be properly tendered.
5. Withdrawal Rights.
Except as otherwise provided in this Section 5, tenders of Shares
pursuant to the Offer are irrevocable. Shares tendered pursuant to the Offer may
be withdrawn at any time prior to the Expiration Date and, unless theretofore
accepted for payment by the Company pursuant to the Offer, may also be withdrawn
at any time after 12:00 midnight, New York City time, on February 2, 2000, or
such later time as may apply if the Offer is extended.
For a withdrawal to be effective, a notice of withdrawal must be in
written, telegraphic, telex or facsimile transmission form and must be received
in a timely manner by the Depositary at its address set forth on the back cover
of this Offer to Purchase. Any such notice of withdrawal must specify the name
of the tendering stockholder, the number of Shares to be withdrawn and the name
of the registered holder of such Shares. If the certificates for Shares to be
withdrawn have been delivered or otherwise identified to the Depositary, then,
prior to the release of such certificates, the tendering stockholder must also
submit the serial numbers shown on the particular certificates for Shares to be
withdrawn and the signature(s) on the notice of withdrawal must be guaranteed by
an Eligible Institution (except in the case of Shares tendered for the account
of an Eligible Institution). If Shares have been tendered pursuant to the
procedure for book-entry transfer set forth in "The Tender Offer -- Procedures
for Tendering Shares," the notice of withdrawal also must specify the name and
the number of the account at the Book-Entry Transfer Facility to be credited
with the withdrawn Shares and must otherwise comply with such Book-Entry
Transfer Facility's procedures. All questions as to the form and validity
(including the time of receipt) of any notice of withdrawal will be determined
by the Company, in its sole discretion, which determination shall be final and
binding. None of the Company, the Depositary, the Information Agent or any other
person shall be obligated to give notice of any defects or irregularities in any
notice of withdrawal nor shall any of them incur liability for failure to give
any notice.
Withdrawals may not be rescinded and any Shares properly withdrawn will
thereafter be deemed not properly tendered for purposes of the Offer unless the
withdrawn Shares are properly re-tendered
14
<PAGE>
prior to the Expiration Date by following one of the procedures described in
"The Tender Offer -- Procedures for Tendering Shares."
If the Company extends the Offer, is delayed in its purchase of Shares
or is unable to purchase Shares pursuant to the Offer for any reason, then,
without prejudice to the Company's rights under the Offer, the Depositary may,
subject to applicable law, retain tendered Shares on behalf of the Company, and
such Shares may not be withdrawn except to the extent tendering stockholders are
entitled to withdrawal rights as described in this Section 5.
6. Purchase of Shares and Payment of Purchase Price.
Upon the terms and subject to the conditions of the Offer, as promptly
as practicable following the Expiration Date, the Company will accept for
payment and pay for (and thereby purchase) Shares properly tendered and not
properly withdrawn prior to the Expiration Date. For purposes of the Offer, the
Company will be deemed to have accepted for payment (and therefore purchased)
Shares that are properly tendered and not properly withdrawn (subject to the
proration provisions of the Offer) only when, as and if it gives oral or written
notice to the Depositary of its acceptance of the Shares for payment pursuant to
the Offer.
The Company will pay for Shares purchased pursuant to the Offer by
depositing the aggregate Purchase Price therefor with the Depositary, which will
act as agent for tendering stockholders for the purpose of receiving payment
from the Company and transmitting payment to the tendering stockholders.
In the event of proration, the Company will determine the proration
factor and pay for those tendered Shares accepted for payment as soon as
practicable after the Expiration Date; however, the Company does not expect to
be able to announce the final results of any proration and commence payment for
Shares purchased until approximately five business days after the Expiration
Date. Certificates for all Shares tendered and not purchased, including Shares
not purchased due to proration, will be returned (or, in the case of Shares
tendered by book-entry transfer, will be credited to the account maintained with
the Book-Entry Transfer Facility by the participant therein who so delivered the
Shares) to the tendering stockholder at the Company's expense as promptly as
practicable after the Expiration Date or termination of the Offer without
expense to the tendering stockholders. Under no circumstances will interest on
the Purchase Price be paid by the Company by reason of any delay in making
payment. In addition, if certain events occur, the Company may not be obligated
to purchase Shares pursuant to the Offer. See "The Tender Offer -- Certain
Conditions of the Offer."
The Company will pay all stock transfer taxes, if any, payable on the
transfer to it of Shares purchased pursuant to the Offer. If, however, payment
of the Purchase Price is to be made to, or (in the circumstances permitted by
the Offer) if unpurchased Shares are to be registered in the name of any person
other than the registered holder, or if tendered certificates are registered in
the name of any person other than the person signing the Letter of Transmittal,
the amount of all stock transfer taxes, if any (whether imposed on the
registered holder or the other person), payable on account of the transfer to
the person will be deducted from the Purchase Price unless satisfactory evidence
of the payment of the stock transfer taxes, or exemption therefrom, is
submitted. See Instruction 6 of the Letter of Transmittal.
Any tendering stockholder or other payee who fails to complete fully,
sign and return to the Depositary the Substitute Form W-9 included with the
Letter of Transmittal may be subject to required Federal Income Tax Backup
Withholding of 31% of the gross proceeds paid to the stockholder or other payee
pursuant to the Offer. See "The Tender Offer -- Procedures for Tendering
Shares." Also see "The Tender Offer -- Procedures for Tendering Shares"
regarding United States Federal Income Tax consequences for Non-United States
holders.
15
<PAGE>
7. Certain Conditions of the Offer.
Notwithstanding any other provision of the Offer, the Company will not
be required to accept for payment, purchase or pay for any Shares tendered, and
may terminate or amend the Offer or may postpone the acceptance for payment of,
or the purchase of and the payment for Shares tendered, subject to Rule 13e-4(f)
under the Exchange Act, if at any time on or after December 28, 1999 and prior
to the Expiration Date any of the following events shall have occurred (or shall
have been determined by the Company to have occurred) that, in the Company's
reasonable judgment and regardless of the circumstances giving rise thereto
(including any action or omission to act by the Company), makes it inadvisable
to proceed with the Offer or with acceptance for payment:
(a) there shall have been threatened, instituted or pending any
action or proceeding by any government or governmental, regulatory or
administrative agency, authority or tribunal or any other person, domestic
or foreign, before any court, authority, agency or tribunal that directly
or indirectly (i) challenges the making of the Offer, the acquisition of
some or all of the Shares pursuant to the Offer or otherwise relates in any
manner to the Offer, or (ii) in the Company's reasonable judgment, could
materially and adversely affect the business, condition (financial or
other), income, operations or prospects of the Company and its
subsidiaries, taken as a whole, or otherwise materially impair in any way
the contemplated future conduct of the business of the Company or any of
its subsidiaries or materially impair the contemplated benefits of the
Offer to the Company;
(b) there shall have been any action threatened, pending or taken,
or approval withheld, or any statute, rule, regulation, judgment, order or
injunction threatened, proposed, sought, promulgated, enacted, entered,
amended, enforced or deemed to be applicable to the Offer or the Company or
any of its subsidiaries, by any court or any authority, agency or tribunal
that, in the Company's reasonable judgment, would or might directly or
indirectly (i) make the acceptance for payment of, or payment for, some or
all of the Shares illegal or otherwise restrict or prohibit consummation of
the Offer, (ii) delay or restrict the ability of the Company, or render the
Company unable, to accept for payment or pay for some or all of the Shares,
(iii) materially impair the contemplated benefits of the Offer to the
Company or (iv) materially and adversely affect the business, condition
(financial or other), income, operations or prospects of the Company and
its subsidiaries, taken as a whole, or otherwise materially impair in any
way the contemplated future conduct of the business of the Company or any
of its subsidiaries;
(c) there shall have occurred (i) any general suspension of
trading in, or limitation on prices for, securities on any national
securities exchange or in the over-the-counter market, (ii) the declaration
of a banking moratorium or any suspension of payments in respect of banks
in the United States, (iii) the commencement of a war, armed hostilities or
other international or national calamity directly or indirectly involving
the United States, (iv) any limitation (whether or not mandatory) by any
governmental, regulatory or administrative agency or authority on, or any
event that, in the Company's reasonable judgment, might affect, the
extension of credit by banks or other lending institutions in the United
States, (v) any significant decrease in the market price of the Shares or
any change in the general political, market, economic or financial
conditions in the United States or abroad that could, in the reasonable
judgment of the Company, have a material adverse effect on the Company's
business, operations or prospects or the trading in the Shares, (vi) in the
case of any of the foregoing existing at the time of the commencement of
the Offer, a material acceleration or worsening thereof or (vii) any
decline in either the Dow Jones Industrial Average or the Standard and
Poor's Index of 500 Industrial Companies by an amount in excess of 10%
measured from the close of business on December 27, 1999;
(d) a tender or exchange offer for any or all of the Shares (other
than the Offer), or any merger, business combination or other similar
transaction with or involving the Company or any subsidiary, shall have
been proposed, announced or made by any person;
16
<PAGE>
(e)(i) any entity, "group" (as that term is used in Section
13(d)(3) of the Exchange Act) or person shall have acquired or proposed to
acquire beneficial ownership of more than 5% of the outstanding Shares
(other than any such person, entity or group who has filed a Schedule 13D
or Schedule 13G with the SEC on or before December 27, 1999), (ii) any such
entity, group or person who has filed a Schedule 13D or Schedule 13G with
the SEC on or before the Expiration Date shall have acquired or proposed to
acquire beneficial ownership of an additional 2% or more of the outstanding
Shares or (iii) any person, entity or group shall have filed a Notification
and Report Form under the Hart-Scott-Rodino Antitrust Improvements Act of
1976, as amended, or made a public announcement reflecting an intent to
acquire the Company or any of its subsidiaries or any of their respective
assets or securities other than in connection with a transaction authorized
by the Board of Directors of the Company;
(f) any change or changes shall have occurred in the business,
financial condition, assets, income, operations, prospects or stock
ownership of the Company or its subsidiaries that, in the Company's
reasonable judgment, is or may be material to the Company or its
subsidiaries; or
(g) the Company determines that the consummation of the Offer and
the purchase of the Shares may cause the Shares to be delisted from the
AMEX or to be eligible for deregistration under the Exchange Act.
The foregoing conditions are for the sole benefit of the Company and
may be asserted by the Company regardless of the circumstances (including any
action or omission by the Company) giving rise to any such condition, and may be
waived by the Company, in whole or in part, at any time and from time to time in
its sole discretion. The Company's failure at any time to exercise any of the
foregoing rights shall not be deemed a waiver of any such right and each such
right shall be deemed an ongoing right which may be asserted at any time and
from time to time. Any determination by the Company concerning the events
described above will be final and binding.
8. Price Range of Shares; Dividends.
The Shares are listed and traded on the AMEX under the ticker symbol
"RIV." The following table sets forth, for the fiscal quarters indicated, the
high and low closing sales prices per Share reported on the AMEX compiled from
published financial sources:
High Low
--------------------- ---------------------
Fiscal Year 1997
----------------
3rd quarter $ 14.63 $ 12.13
4th quarter $ 14.81 $ 12.75
Fiscal Year 1998
----------------
1st quarter $ 15.06 $ 10.75
2nd quarter $ 10.81 $ 6.13
3rd quarter $ 8.13 $ 5.75
4th quarter $ 5.81 $ 3.94
Fiscal Year 1999
----------------
1st quarter $ 6.63 $ 4.19
2nd quarter $ 5.75 $ 4.13
3rd quarter $ 6.00 $ 4.06
On December 27, 1999, the last full trading day on the AMEX before the
announcement of the Offer, the closing per Share sales price as reported on the
AMEX was $5.19. As of December 27, 1999,
17
<PAGE>
based upon information available to it, the Company believes that there were
approximately 197 stockholders of record, which does not include approximately
643 shareholders that hold shares through brokerage houses. Stockholders are
urged to obtain current market quotations for the Shares.
The Company has never paid any cash dividends on its Common Stock and
does not currently expect to pay any cash dividends on its Common Stock for the
foreseeable future. The Company's ability to pay dividends is primarily
dependent upon receipt of dividends and distributions from its wholly-owned
subsidiary, Riviera Operating Corporation. In addition, the indenture for the
Company's 10% First Mortgage Notes due 2004 restricts the Company's ability to
pay dividends on its Common Stock. The Company intends to retain future earnings
to finance its operations and to fund the growth of the business. Any payment of
future dividends will be at the discretion of the Board of Directors and will
depend upon, among other things, the Company's earnings, financial condition,
capital requirements, level of indebtedness, contractual restrictions with
respect to the payments of dividends and other factors that the Board of
Directors deems relevant.
9. Source and Amount of Funds.
Assuming the Company purchases 500,000 Shares pursuant to the Offer at
the Purchase Price, the Company expects the maximum aggregate cost, including
all fees and expenses applicable to the Offer, to be approximately $3.84
million. The Company expects to fund the purchase of Shares pursuant to the
Offer and the payment of related fees and expenses from its existing cash
resources.
10. Certain Information Concerning the Company.
General. The Company, through its wholly-owned subsidiary, Riviera
Operating Corporation, a Nevada corporation, owns and operates the Riviera Hotel
& Casino (the "Riviera") located on Las Vegas Boulevard (the "Strip") in Las
Vegas, Nevada. Opened in 1955, the Riviera has developed a long-standing
reputation for delivering high quality, traditional Las Vegas-style gaming,
entertainment and other amenities. The Riviera is situated on a 26-acre site
located across the Strip from Circus Circus and across Paradise Road from the
Las Vegas Hilton and the Las Vegas Convention Center. The property features
approximately 2,100 hotel rooms, including 169 suites, 115,000 square feet of
casino space, one of the largest convention, meeting and banquet facilities in
Las Vegas, four full-service restaurants, a large buffet, four showrooms, an
entertainment lounge, 43 food and retail concessions and approximately 2,900
parking spaces. The casino contains approximately 1,500 slot machines, 46 gaming
tables, a keno lounge and a 200-seat race and sports book. The Riviera offers
one of the most extensive entertainment programs in Las Vegas, including the
award winning show, Splash(R).
The Company, through its wholly-owned subsidiary, Rivera Black Hawk,
Inc., is currently constructing a limited-stakes casino in Black Hawk, Colorado.
This property will be the third largest casino with entertainment and parking
facilities in Black Hawk, Colorado, approximately 40 miles west of Denver. The
casino will feature approximately 1,000 slot machines and 12 gaming tables. A
variety of other amenities will be offered, including on-site parking for
approximately 520 vehicles, a casual dining restaurant with seating for
approximately 250 people and two themed bars, and an entertainment center with
seating for up to 600 people. The Company believes the casino will begin
operations in Janaury 2000.
The Company's principal executive office is located at 2901 Las Vegas
Boulevard South, Las Vegas, Nevada 89109.
See "The Tender Offer -- Position of the Company's Board; Fairness of
the Offer" for a discussion relating to the Company's growth opportunities.
18
<PAGE>
Selected Historical Financial Information. The table below sets forth
summary historical consolidated financial information of the Company. Historical
financial information as of and for each of the years ended December 31, 1998
and December 31, 1997 was derived from and should be read in conjunction with
the audited consolidated financial statements contained in the Company's Annual
Report on Form 10-K/A for the year ended December 31, 1998, and historical
unaudited financial information as of and for each of the nine month periods
ended September 30, 1999 and September 30, 1998 was derived from and should be
read in conjunction with the unaudited consolidated financial statements
contained in the Company's Quarterly Report on Form 10-Q for the quarter ended
September 30, 1999, each of which is incorporated herein by reference. The
unaudited financial statements have been prepared by the Company on a basis
consistent with the audited financial statements, including all normal recurring
adjustments necessary for a fair presentation of the information set forth
therein. Operating results for the nine months ended September 30, 1999 are not
necessarily indicative of the result that will be achieved for future periods,
including the entire year ending December 31, 1999. The information should be
read in conjunction with and is qualified in its entirety by reference to such
financial statements and the related notes thereto. More comprehensive financial
information is included in such reports, and the financial information that
follows is qualified in its entirety by reference to such reports, as such
reports may be amended from time to time. Copies of these reports may be
obtained as set forth below under the caption "Additional Information."
19
<PAGE>
SELECTED HISTORICAL FINANCIAL INFORMATION
(in thousands except per share data and ratios)
<TABLE>
<CAPTION>
Nine Months Ended Fiscal Year Ended
------------------------------------- ------------------------------------
September 30, September 30, December 31, December 31,
1999 1998 1998 1997
------------------- ---------------- ---------------- ------------------
<S> <C> <C> <C> <C>
Income Statement Data:
Net Revenues $119,851 $120,833 $159,955 $153,793
Total Costs and Expenses 111,273 108,095 143,576 134,915
Income from Operations 8,578 12,738 16,379 18,878
Other Income (Expense) (13,962) (14,312) (17,963) (15,481)
Income (Loss) Before Taxes
and Extraordinary Item (5,384) (1,574) (1,584) 3,397
Provision (Benefit) for Income Taxes (2,566) (515) (533) 1,309
Income (Loss) Before
Extraordinary Item (2,818) (1,059) (1,051) 2,088
Net Income (Loss) (2,818) (4,065) (4,057) 2,088
Earnings (Loss) Per Share
Before Extraordinary Item:
Basic (.56) (.21) (.21) .42
Diluted (.56) (.21) (.21) .40
Loss Per Share From
Extraordinary Item:
Basic - (.60) (.60) -
Diluted - (.60) (.60) -
Earnings (Loss) Per Share:
Basic (.56) (.81) (.81) .42
Diluted (.56) (.81) (.81) .40
Ratio of Earnings to
Fixed Charges .51 .66 .68 1.00
------------------------------------- ------------------------------------
As of As of
------------------------------------- ------------------------------------
September 30, September 30, December 31, December 31,
1999 1998 1998 1997
------------------- ---------------- ---------------- ------------------
Balance Sheet Data:
Cash and Cash Equivalents $ 39,213 $ 52,078 $ 48,883 $ 65,151
Total Assets 291,755 238,117 244,909 347,866
Long-term Debt, Net of Current Portion 222,638 173,772 174,506 173,436
Stockholders' Equity 30,655 33,661 33,503 37,777
Book Value Per Share (5) 6.10 6.59 6.65 7.70
</TABLE>
20
<PAGE>
Selected Unaudited Pro Forma Financial Information. The following
selected unaudited pro forma financial information sets forth historical
information as adjusted to give effect to the purchase of 500,000 Shares
pursuant to the Offer at the Purchase Price. Expenses directly related to the
Offer are estimated to be $85,000 and are reflected in the pro forma financial
information set forth below. The pro forma adjustments assume that the
transaction occurred, for purposes of the statement of income, as of the first
day of the period presented, and for purposes of the balance sheet, as of the
balance sheet date. The assumptions on which the pro forma financial information
is based are further described in the Notes to Selected Pro Forma Unaudited
Financial Information. Each period presented should be treated as a stand-alone
period. The pro forma information of the Company is unaudited and does not
purport to be indicative of the results that would have been attained had the
purchase of the Shares pursuant to the Offer been completed at the dates
indicated or the results that may be obtained in the future.
Selected Unaudited Pro Forma Financial Information
(in thousands, except per share data and ratios)
<TABLE>
<CAPTION>
Nine Months Ended Fiscal Year Ended
(unaudited) ---------------------------------
---------------------------------------
Pro Forma(1)(2) Pro Forma (1)(2)
--------------- ----------------
September 30, $7.50 December 31, $7.50
1999 Per Share 1998 Per Share
------------------- ---------------- ---------------- ----------------
<S> <C> <C> <C> <C>
Income Statement Data:
Net Revenues $119,851 $119,851 $159,955 $159,955
Total Costs and Expenses 111,273 111,273 143,576 143,576
Income from Operations 8,578 8,578 16,379 16,379
Other Income (Expense) (13,962) (13,962) (17,963) (17,963)
Income (Loss) Before Taxes
and Extraordinary Item (5,384) (5,610) (1,584) (1,857)
Provision (Benefit) for Income
Taxes (2,566) (2,674) (533) (625)
Income (Loss) Before
Extraordinary Item (2,818) (2,936) (1,051) (1,232)
Net Income (Loss) (2,818) (2,936) (4,057) (4,238)
Earnings (Loss) Per Share
Before Extraordinary Item:
Basic (.56) (.64) (.21) (.27)
Diluted (.56) (.64) (.21) (.27)
Loss Per Share From
Extraordinary Item:
Basic - - (.60) (.67)
Diluted - - (.60) (.67)
Earnings (Loss) Per Share:
Basic (.56) (.64) (.81) (.93)
Diluted (.56) (.64) (.81) (.93)
Weighted-average Common
Shares Outstanding 5,068,698 4,568,698 5,037,000 4,537,000
Weighted-average Common and
Common Equivalent Shares 5,068,698 4,568,698 5,037,000 4,537,000
Ratio of Earnings to
Fixed Charge (3) .51 .50 .68 .67
</TABLE>
21
<PAGE>
<TABLE>
<CAPTION>
As of As of
--------------------------------------- ---------------------------------
Pro Forma(1)(2) Pro Forma (1)(2)
--------------- ----------------
September 30, $7.50 December 31, $7.50
1999 Per Share 1998 Per Share
------------------- ---------------- ---------------- ----------------
<S> <C> <C> <C> <C>
Balance Sheet Data:
Cash and Cash Equivalents $ 39,213 $ 35,378 $ 48,883 $ 45,048
Total Assets 291,755 287,920 244,909 241,074
Long-Term Debt, Net of Current Portion 222,638 222,638 174,506 174,506
Stockholders' Equity (4) 30,655 26,815 33,503 29,663
Book Value Per Share (5) 6.10 5.92 6.65 6.54
</TABLE>
Notes to Selected Unaudited Pro Forma Financial Information
The following assumptions were used in determining the pro forma
financial information:
(1) The information assumes that the Company's existing cash resources were
used to purchase Shares pursuant to the Offer and loss before taxes and
extraordinary item was increased by $141,000 for the nine-month period
ended September 30, 1999 and $188,000 for the 12-month period ended
December 31, 1998 to reflect loss of interest earnings on such cash
resources.
(2) The information assumes 500,000 Shares are purchased at the Purchase Price,
which was assumed to have occurred at the beginning of the periods
presented for income statement purposes and as of the balance sheet date
for balance sheet purposes. There can be no assurance that the Company will
purchase 500,000 Shares in the Offer.
(3) The ratios of net earnings to fixed charges were computed by dividing net
earnings before fixed charges and income taxes by fixed charges. Fixed
charges consist of interest and debt expenses, including amortization of
debt discount, debt offering costs, interest expense on capitalized leases
and capitalized interest.
(4) Expenses directly related to the Offer were assumed to be $85,000 and are
included in the purchase price for the Shares. The pro forma book value per
share amounts for both periods were adjusted for the 500,000 share
repurchase at an approximate cost of $3.84 million, including transaction
fees.
(5) Book value per share was calculated by dividing total stockholders' equity
by the number of shares outstanding.
Additional Information. The Company is subject to the informational
filing requirements of the Exchange Act and, in accordance therewith, is
obligated to file reports and other information with the SEC relating to its
business, financial condition and other matters. Information, as of particular
dates, concerning the Company's directors and officers, their remuneration,
options granted to them, the principal holders of the Company's securities and
any material interest of such persons in transactions with the Company is
required to be disclosed in proxy statements distributed to the Company's
stockholders and filed with the SEC. Such reports, proxy statements and other
information can be inspected and copied at the public reference facilities
maintained by the SEC at 450 Fifth Street, N.W., Room 2120, Washington, D.C.
20549; at its regional offices located at 500 West Madison Street, Suite 1400,
Chicago, Illinois 60661 and 7 World Trade Center, New York, New York 10048.
Copies of such
22
<PAGE>
material may also be obtained by mail, upon payment of the SEC's customary
charges, from the Public Reference Section of the SEC at Judiciary Plaza, 450
Fifth Street, N.W., Washington, D.C. 20549. The SEC also maintains a web site on
the Internet at http://www.sec.gov that contains reports, proxy and information
statements and other information regarding registrants that file electronically
with the SEC. Such reports, proxy statements and other information concerning
the Company also can be inspected at the offices of the AMEX, 86 Trinity Place,
New York, New York 10006.
11. Interest of Directors and Officers and Principal Stockholders;
Transactions and Arrangements Concerning Shares.
In considering the Offer and the fairness of the consideration to be
received in the Offer, stockholders should be aware that certain officers and
directors of the Company have interests in the Offer that are described below
and which may present them with certain actual or potential conflicts of
interest.
As of December 15, 1999, the Company had 4,523,021 issued and
outstanding Shares, 583,755 Shares held in treasury and had reserved 633,000
Shares for issuance upon exercise of outstanding options. The 500,000 Shares
that the Company is offering to purchase represents approximately 11% of the
Shares outstanding on December 15, 1999 (approximately 10% assuming exercise of
outstanding exercisable options).
As of December 15, 1999, the Company's directors and executive officers
as a group (11 persons) beneficially owned an aggregate of 808,413 Shares
representing approximately 16.3% of the outstanding Shares, assuming the
exercise by such persons of their options exercisable within 60 days of such
date. The Company has been advised that none of its directors or executive
officers intends to tender any Shares pursuant to the Offer. If the Company
purchases 500,000 Shares pursuant to the Offer, then after the purchase of
Shares pursuant to the Offer, the Company's executive officers and directors as
a group would own beneficially approximately 18.2% of the outstanding Shares
immediately after the Offer, assuming the exercise by such persons of their
options exercisable within 60 days of such date.
Based on the Company's records and on information provided to the
Company by its directors, executive officers and subsidiaries, neither the
Company, nor any associate or subsidiary of the Company nor, to the best of the
Company's knowledge, any of the directors or executive officers of the Company
or any of its subsidiaries, nor any associates or subsidiaries of any of the
foregoing, has effected any transactions involving the Shares during the 40
business days prior to the date hereof.
Except as otherwise described herein, neither the Company nor, to the
best of the Company's knowledge, any of its affiliates, directors or executive
officers, is a party to any contract, arrangement, understanding or relationship
with any other person relating, directly or indirectly, to the Offer with
respect to any securities of the Company, including, but not limited to, any
contract, arrangement, understanding or relationship concerning the transfer or
the voting of any such securities, joint ventures, loan or option arrangements,
puts or calls, guaranties of loans, guaranties against loss or the giving or
withholding of proxies, consents or authorizations.
12. Beneficial Ownership of Shares.
The table below sets forth information regarding the beneficial
ownership of the Common Stock of the Company as of December 15, 1999, by (1)
each person who, to the Company's knowledge, beneficially owns more than 5% of
such Common Stock, (2) each director and executive officer of the Company and
(3) all directors and executive officers of the Company and its subsidiary,
Riviera Operating Corporation, as a group. Each person listed below has sole
voting and investment power for the Shares set forth opposite that person's name
unless otherwise indicated.
23
<PAGE>
Shares Beneficially Owned
Name Number Percentage
- ---- ------ ----------
William L. Westerman(1)(2)....................... 584,200 12.1%
Ronald P. Johnson(1)(3).......................... 49,500 1.1
Duane R. Krohn(1)(4)............................. 41,800 *
Robert Vannucci(1)(5)............................ 28,668 *
Jerome P. Grippe(1)(6)........................... 26,418 *
Robert R. Barengo(1)(7).......................... 9,380 *
Richard L. Barovick(1)(8)........................ 10,400 *
James N. Land, Jr.(1)(9)......................... 1,900 *
Keyport Life Insurance Co.(10)................... 857,160 19.0
SunAmerica Life Insurance Company(11)............ 675,920 14.9
Morgens Entities:(12)
Betje Partners................................. 29,360 *
Morgens Waterfall Income Partners.............. 43,920 *
Phoenix Partners, L.P.......................... 79,440 1.8
Restart Partners, L.P.......................... 177,997 3.9
Restart Partners II, L.P....................... 374,374 8.3
Restart Partners III, L.P...................... 298,600 6.6
Endowment Restart LLC.......................... 261,109 5.8
--------- ------
Total Morgens Entities...................... 1,264,800 28.0
James D. Bennett(13)............................. 531,265 11.7
All executive officers and directors as a group
(11 persons)(2)(3)(4)(5)(6)(7).............. 808,413 16.3
- ----------
* Less than 1%.
(1) The address for each director and officer is c/o Riviera Holdings
Corporation, 2901 Las Vegas Boulevard South, Las Vegas, Nevada 89109.
(2) Includes 320,000 shares which may be acquired within 60 days of December
15, 1999, upon the exercise of outstanding options.
(3) Includes 14,500 shares which may be acquired within 60 days of December 15,
1999, upon the exercise of outstanding options.
(4) Includes 14,500 shares which may be acquired within 60 days of December 15,
1999, upon the exercise of outstanding options.
(5) Includes 14,500 shares which may be acquired within 60 days of December 15,
1999, upon the exercise of outstanding options.
(6) Includes 12,250 shares which may be acquired within 60 days of December 15,
1999, upon the exercise of outstanding options.
(7) Includes 2,400 shares which may be acquired within 60 days of December 15,
1999, upon the exercise of outstanding options.
(8) Includes 400 shares which may be acquired within 60 days of December 15,
1999, upon the exercise of outstanding options.
24
<PAGE>
(9) Includes 400 shares which may be acquired within 60 days of December 15,
1999, upon the exercise of outstanding options.
(10) The address for Keyport Life Insurance Company is 125 High Street, Boston,
Massachusetts 02110. Stein Roe, an affiliate of Keyport, is Keyport's
investment advisor, and, as such, has the power and authority to direct the
disposition of the securities, and accordingly, could be deemed to be a
"beneficial" owner within the meaning of Rule 13d-3 of the Exchange Act.
Stein Roe, however, disclaims actual beneficial ownership of such
securities.
(11) The address for SunAmerica Life Insurance Company is One Sun America
Center, Century City, California 90067.
(12) The address of Morgens Waterfall is 10 East 50th Street, New York, New York
10022. Morgens Waterfall or its principals are either investment advisors
to, or trustees or general partners of, the seven entities listed in the
above table that are the owners of Common Stock of the Company. Morgens
Waterfall or its principals have the power and authority to direct the
disposition of these securities and, accordingly, could be deemed to be
"beneficial" owners within the meaning of Rule 13d-3 of the Exchange Act.
Each of Morgens Waterfall, its principals and these seven entities,
however, disclaims beneficial ownership with respect to any securities not
actually beneficially owned by it.
(13) Includes (a) 323,003 shares held by Restructuring Capital Associates, L.P.
and Bennett Restructuring Fund, L.P. and (b) 161,262 shares held by Bennett
Offshore Restructuring Fund, Inc. The address for Mr. Bennett is c/o
Restructuring Capital Associates, L.P., 450 Park Avenue, New York, New
York 10022.
13. Effects of the Offer on the Market for Shares; Registration Under the
Exchange Act.
The Company's purchase of Shares pursuant to the Offer will reduce the
number of Shares that might otherwise be traded publicly and may reduce the
number of stockholders, which could adversely affect the liquidity and market
value of the remaining Shares held by the public. If consummated, the Offer
would also result in a change in the capitalization of the Company. The Shares
are currently listed for trading on the AMEX.
The Shares are currently "margin securities" under the rules of the
Board of Governors of the Federal Reserve System (the "Federal Reserve Board").
Among other things, this has the effect of allowing brokers to extend credit on
the collateral of such Shares. The Company believes that, following the purchase
of Shares pursuant to the Offer, the Shares will continue to be "margin
securities" for purposes of the Federal Reserve Board's margin regulations. In
the event that the Shares would no longer constitute "margin securities," the
Shares could no longer be used as collateral for margin loans made by brokers.
The Shares are currently registered under the Exchange Act, which
requires, among other things, that the Company furnish certain information to
its stockholders and to the SEC and comply with the SEC's proxy rules in
connection with meetings of the Company's stockholders. Registration of the
Shares under the Exchange Act could be terminated upon application by the
Company to the SEC if the Shares are not listed on a national securities
exchange and there are fewer than 300 holders of record of the Shares. The
Company does not intend to terminate registration of the Shares under the
Exchange Act after the completion of the Offer.
25
<PAGE>
14. Certain Legal Matters; Regulatory Approvals.
The Company is not aware of any license or regulatory permit that
appears to be material to the Company's business that might be adversely
affected by the Company's acquisition of Shares as contemplated herein or of any
approval or other action by any government or governmental, administrative or
regulatory authority or agency, domestic or foreign, that would be required for
the acquisition or ownership of Shares by the Company as contemplated herein.
Should any such approval or other action be required, the Company presently
contemplates that such approval or other action will be sought. The Company is
unable to predict whether it will be required to delay the acceptance for
payment of or payment for Shares tendered pursuant to the Offering pending the
outcome of any such matter. There can be no assurance that any such approval or
other action, if needed, would be obtained or would be obtained without
substantial conditions or that the failure to obtain any such approval or other
action might not result in adverse consequences to the Company's business. The
Company's obligations under the Offer to accept for payment and pay for Shares
is subject to certain conditions. See "The Tender Offer -- Certain Conditions of
the Offer."
15. Certain United States Federal Income Tax Consequences.
The following summary describes the principal United States federal
income tax consequences to United States Holders (as defined below) of an
exchange of Shares pursuant to the Offer. Those stockholders who do not
participate in the exchange should not incur any United States federal income
tax liability from the exchange. This summary is based upon the Internal Revenue
Code of 1986, as amended to the date hereof (the "Code"), existing United States
Treasury Regulations promulgated thereunder, published rulings, administrative
pronouncements and judicial decisions, changes to which could affect the tax
consequences described herein (possibly on a retroactive basis).
This summary addresses only Shares held as capital assets. It does not
address all of the tax consequences that may be relevant to particular
stockholders in light of their personal circumstances, or to certain types of
stockholders (such as certain financial institutions, dealers or traders in
securities or commodities, insurance companies, tax-exempt organizations or
persons who hold Shares as a position in a "straddle" or as part of a "hedging"
or "conversion" transaction or that have a functional currency other than the
United States dollar). This summary may not be applicable with respect to Shares
acquired as compensation (including Shares acquired upon the exercise of stock
options or which were or are subject to forfeiture restrictions). This summary
also does not address the state, local or foreign tax consequences of
participating in the Offer. Each holder of Shares should consult such holder's
tax advisor as to the particular consequences to such holder of participation in
the Offer.
A "United States Holder" is a holder of Shares that for United States
federal income tax purposes is (i) a citizen or resident of the United States,
(ii) a corporation or partnership created or organized in or under the laws of
the United States or any State or division thereof (including the District of
Columbia), (iii) an estate the income of which is subject to United States
federal income taxation regardless of its source or (iv) a trust (a) the
administration over which a United States court can exercise primary supervision
and (b) all of the substantial decisions of which one or more United States
persons have the authority to control and certain other trusts considered United
States Holders for federal income tax purposes. A "Non-United States Holder" is
a holder of Shares other than a United States Holder.
A United States Holder participating in the exchange will be treated either
as having sold Shares or as having received a distribution from the Company that
may be taxable as a dividend. In that regard, under Section 302 of the Code, a
United States Holder whose Shares are exchanged pursuant to the Offer will be
treated as having sold Shares if the exchange (i) results in a "complete
termination" of all of such holder's equity interest in the Company, (ii) is a
"substantially disproportionate" redemption with respect to such holder or (iii)
is "not essentially equivalent to a dividend" with respect to such holder. In
applying
26
<PAGE>
each of the Section 302 tests, a United States Holder will be treated as owning
Shares actually or constructively owned by certain related individuals and
entities.
The receipt of cash by a stockholder will result in a "complete
termination" of the stockholder's interest if either (1) all of the stock of the
Company that is actually and constructively owned by the stockholder is
transferred pursuant to the Offer or (2) all of the stock of the Company
actually owned by the stockholder is sold pursuant to the Offer and the
stockholder is eligible to waive, and effectively waives, the attribution of
stock of the Company constructively owned by the stockholder in accordance with
the procedures described in the Code. An exchange of Shares will be
"substantially disproportionate" with respect to a United States Holder if the
percentage of the then outstanding Shares actually and constructively owned by
such holder immediately after the exchange of Shares (treating Shares exchanged
pursuant to the Offer as no longer outstanding) pursuant to the Offer is less
than 80% of the percentage of the Shares actually and constructively owned by
such holder immediately before the exchange (treating Shares exchanged pursuant
to the Offer as outstanding). A United States Holder will satisfy the "not
essentially equivalent to a dividend" test if the reduction in such holder's
proportionate interest in the Company constitutes a "meaningful reduction" given
such holder's particular facts and circumstances. The IRS has concluded in a
published ruling that even a minor reduction in the percentage interest of a
stockholder whose relative stock interest in a publicly held corporation is
minimal and who exercises no control over corporate affairs constitutes such a
"meaningful reduction."
If a United States Holder is treated as having sold Shares, such holder
will recognize capital gain or loss equal to the difference between the amount
of cash received and such holder's adjusted tax basis in the Shares sold to the
Company. In the case of an individual United States Holder, the maximum marginal
United States federal income tax rate applicable to net capital gain on Shares
held for more than one year is 20%.
If a United States Holder who participates in the Offer is not treated
as having sold Shares, such holder will be treated as receiving a dividend to
the extent of such holder's ratable share of the Company's earnings and profits.
Such a dividend will be includible in the United States Holder's gross income as
ordinary income without reduction for the adjusted tax basis of the Shares
exchanged. In such event, the United States Holder's adjusted tax basis in its
Shares exchanged in the Offer generally will be added to such holder's adjusted
tax basis in the remaining Shares. A dividend received by a corporate United
States Holder may be (i) eligible for a dividends-received deduction (subject to
applicable limitations) and (ii) subject to the "extraordinary dividend"
provisions of the Code. To the extent, if any, that the cash received by a
United States Holder exceeds the Company's earnings and profits, it will be
treated first as a tax-free return of such United States Holder's tax basis in
the Shares and thereafter as capital gain.
See "The Tender Offer -- Procedures for Tendering Shares" with respect
to the application of United States federal income tax withholding to payments
made to Non-United States Holders and the backup withholding tax requirements.
The tax discussion set forth above is included for general information
only. Each stockholder is urged to consult such holder's own tax advisor to
determine the particular tax consequences to such holder of the Offer, including
the applicability and effect of state, local and foreign tax laws.
16. Extension of the Offer; Termination; Amendment.
The Company expressly reserves the right, in its sole discretion, at
any time and from time to time, and regardless of whether or not any of the
events set forth in "The Tender Offer -- Certain Conditions of the Offer" shall
have occurred or shall be deemed by the Company to have occurred, to extend the
period of time during which the Offer is open and thereby delay acceptance for
payment of, and payment for, any Shares by giving oral or written notice of such
extension to the Depositary and
27
<PAGE>
making a public announcement thereof. The Company also expressly reserves the
right, in its sole discretion, to terminate the Offer and not accept for payment
or pay for any Shares not theretofore accepted for payment or paid for or,
subject to applicable law, to postpone payment for Shares upon the occurrence of
any of the conditions specified in "The Tender Offer -- Certain Conditions of
the Offer" by giving oral or written notice of such termination or postponement
to the Depositary and making a public announcement thereof. The Company's
reservation of the right to delay payment for Shares which it has accepted for
payment is limited by Rule 13e-4(f)(5) promulgated under the Exchange Act, which
requires that the Company must pay the consideration offered or return the
Shares tendered promptly after termination or withdrawal of a tender offer.
Subject to compliance with applicable law, the Company further reserves the
right, in its sole discretion, and regardless of whether any of the events set
forth in "The Tender Offer -- Certain Conditions of the Offer" shall have
occurred or shall be deemed by the Company to have occurred, to amend the Offer
in any respect (including, without limitation, by decreasing or increasing the
consideration offered in the Offer to holders of Shares or by decreasing or
increasing the number of Shares being sought in the Offer). Amendments to the
Offer may be made at any time and from time to time effected by public
announcement thereof, such announcement, in the case of an extension, to be
issued no later than 9:00 a.m., New York City time, on the next business day
after the last previously scheduled or announced Expiration Date. Any public
announcement made pursuant to the Offer will be disseminated promptly to
stockholders in a manner reasonably designed to inform stockholders of such
change. Without limiting the manner in which the Company may choose to make a
public announcement, except as required by applicable law, the Company shall
have no obligation to publish, advertise or otherwise communicate any such
public announcement other than by making a release to the Dow Jones News
Service.
If the Company materially changes the terms of the Offer or the
information concerning the Offer, or if it waives a material condition of the
Offer, the Company will extend the Offer to the extent required by Rules
13e-4(d)(2), 13e-4(e)(2) and 13e-4(f) promulgated under the Exchange Act. If (i)
the Company increases or decreases the price to be paid for Shares, or increases
or decreases the number of Shares being sought in the Offer and, in the event of
an increase in the number of Shares being sought, such increase exceeds 2% of
the outstanding Shares, and (ii) the Offer is scheduled to expire at any time
earlier than the expiration of a period ending on the tenth business day from,
and including, the date that such notice of an increase or decrease is first
published, sent or given in the manner specified in this Section 16, the Offer
will be extended until the expiration of such period of ten business days. For
the purposes of the Offer, a "business day" means any day other than a Saturday,
Sunday or Federal holiday and consists of the time period from 12:01 am through
12:00 midnight, New York City time.
17. Fees and Expenses.
The Company has retained MacKenzie Partners, Inc. to act as Information
Agent and American Stock Transfer & Trust Company to act as Depositary in
connection with the Offer. The Information Agent may contact holders of Shares
by mail, telephone, telegraph and personal interviews and may request brokers,
dealers and other nominee stockholders to forward materials relating to the
Offer to beneficial owners. The Information Agent and the Depositary will each
receive reasonable and customary compensation for their respective services,
will be reimbursed by the Company for certain reasonable out-of-pocket expenses
and will be indemnified against certain liabilities in connection with the
Offer, including certain liabilities under the federal securities laws.
No fees or commissions (other than fees to the Information Agent as
described above) will be payable by the Company to brokers, dealers or other
persons for soliciting tenders of Shares pursuant to the Offer. Stockholders
holding Shares through brokers or banks are urged to consult the brokers or
banks to determine whether transaction costs are applicable if stockholders
tender Shares through such brokers or banks and not directly to the Depositary.
The Company, however, upon request, will reimburse brokers, dealers and
commercial banks for customary mailing and handling expenses incurred
28
<PAGE>
by them in forwarding this Offer to Purchase and related materials to the
beneficial owners of Shares held by them as a nominee or in a fiduciary
capacity. No broker, dealer, commercial bank or trust company has been
authorized to act as the agent of the Company, the Depositary or the Information
Agent for purposes of the Offer. The Company will pay or cause to be paid all
stock transfer taxes, if any, on its purchase of Shares except as otherwise
provided in Instruction 6 in the Letter of Transmittal.
18. Miscellaneous.
The Company is not aware of any jurisdiction where the making of the
Offer is not in compliance with applicable law. If the Company becomes aware of
any jurisdiction where the making of the Offer or the acceptance of Shares
pursuant thereto is not in compliance with any valid applicable law, the Company
will make a good faith effort to comply with the applicable law. If, after such
good faith effort, the Company cannot comply with the applicable law, the Offer
will not be made to (nor will tenders be accepted from or on behalf of) the
holders of Shares in such jurisdiction. In any jurisdiction in which the
securities, blue sky or other laws require the Offer to be made by a licensed
broker or dealer, the Offer shall be deemed to be made on the Company's behalf
by one or more registered brokers or dealers licensed under the laws of the
jurisdiction.
Pursuant to the Exchange Act, the Company has filed a Schedule 13E-4
which contains additional information with respect to the Offer. Such Schedule
13E-4, including the exhibits and any amendments thereto, may be examined, and
copies may be obtained, at the same places and in the same manner as is set
forth in "The Tender Offer -- Certain Information Concerning the Company --
Available Information."
29
<PAGE>
No person has been authorized to give any information or make any
representation on behalf of the Company in connection with the Offer other than
those contained in this Offer to Purchase or in the related Letter of
Transmittal. If given or made, such information or representation must not be
relied upon as having been authorized by the Company.
RIVIERA HOLDINGS CORPORATION
December 28, 1999
30
<PAGE>
Manually signed facsimile copies of the Letter of Transmittal will be
accepted. The Letter of Transmittal and certificates for Shares and any other
required documents should be sent or delivered by each stockholder or such
stockholder's broker, dealer, commercial bank, trust company or nominee to the
Depositary at one of its addresses set forth below.
The Depositary for the Offer is:
AMERICAN STOCK TRANSFER & TRUST COMPANY
<TABLE>
<S> <C> <C>
By Hand Delivery: By Overnight Delivery: By Mail:
40 Wall Street 40 Wall Street 40 Wall Street
46th Floor 46th Floor New York, New York 10005
New York, New York 10005 New York, New York 10005
Facsimile Transmission:
(for Eligible Institutions only)
(718) 234-5001
</TABLE>
Confirm Receipt of Facsimile by Telephone:
(718) 921-8200
Any questions or requests for assistance or additional copies of the
Offer to Purchase, the Letter of Transmittal or the Notice of Guaranteed
Delivery may be directed to the Information Agent at the telephone number and
address set forth below. Stockholders may also contact their broker, dealer,
commercial bank, trust company or nominee for assistance concerning the Offer.
To confirm delivery of Shares, stockholders are directed to contact the
Depositary.
The Information Agent for the Offer is:
MACKENZIE PARTNERS, INC.
156 Fifth Avenue
New York, NY 10010
(212) 929-5500 (call collect)
or call toll free 1 (800) 322-2885
31
LETTER OF TRANSMITTAL
To Tender Shares of Common Stock
of
RIVIERA HOLDINGS CORPORATION
at $7.50 Net Per Share
Pursuant to the Offer to Purchase dated December 28, 1999
- --------------------------------------------------------------------------------
THE OFFER, PRORATION PERIOD AND WITHDRAWAL RIGHTS EXPIRE AT 12:00 MIDNIGHT,
NEW YORK CITY TIME, ON WEDNESDAY, FEBRUARY 2, 2000, UNLESS THE OFFER IS
EXTENDED.
- --------------------------------------------------------------------------------
The Depositary for the Offer is:
AMERICAN STOCK TRANSFER & TRUST COMPANY
<TABLE>
<S> <C> <C>
By Hand Delivery: By Overnight Delivery: By Mail:
40 Wall Street 40 Wall Street 40 Wall Street
46th Floor 46th Floor 46th Floor
New York, New York 10005 New York, New York 10005 New York, New York 10005
</TABLE>
Facsimile Transmission:
(for Eligible Institutions only)
(718) 234-5001
Confirm Receipt of Facsimile by Telephone:
(718) 921-8200
----------------
THIS LETTER OF TRANSMITTAL, INCLUDING THE ACCOMPANYING INSTRUCTIONS, SHOULD
BE READ CAREFULLY BEFORE THIS LETTER OF TRANSMITTAL IS COMPLETED.
- --------------------------------------------------------------------------------
DESCRIPTION OF SHARES TENDERED
<TABLE>
<CAPTION>
Name(s) and Address(es) of
Total Number of Shares Registered Holder(s) (Please fill
Evidenced by Share Number of Shares in, if blank, exactly as name(s)
Certificate Number(s)* Certificate(s) Tendered** appear(s) on Share certificate(s))
<S> <C> <C> <C>
- ---------------------- ---------------------- ---------------- ----------------------------------
- ---------------------- ---------------------- ---------------- ----------------------------------
- ---------------------- ---------------------- ---------------- ----------------------------------
- ---------------------- ---------------------- ---------------- ----------------------------------
- ---------------------- ---------------------- ---------------- ----------------------------------
- ---------------------- ---------------------- ---------------- ----------------------------------
- ---------------------- ---------------------- ---------------- ----------------------------------
- ---------------------- ---------------------- ---------------- ----------------------------------
Total Shares ---------------------- ---------------- ----------------------------------
</TABLE>
<PAGE>
- --------------------------------------------------------------------------------
***Indicate in this box the order (by certificate number) in which Shares are to
be purchased in the event of proration. Attach additional signed list if
necessary. See Instruction 7.
1st: ________ 2nd: ________ 3rd: ________ 4th: ________ 5th:________
- --------------------------------------------------------------------------------
- ---------------------
* DOES NOT need to be completed by stockholders tendering Shares by
book-entry transfer.
** Unless otherwise indicated, it will be assumed that all Shares evidenced by
each certificate delivered to the Depositary are being tendered hereby. See
Instruction 4.
*** If you do not designate an order, in the event less than all Shares
tendered are purchased due to proration, Shares will be selected for
purchase by the Depositary.
<PAGE>
DELIVERY OF THIS LETTER OF TRANSMITTAL TO AN ADDRESS OTHER THAN AS SET
FORTH ABOVE OR TRANSMISSION OF INSTRUCTIONS VIA FACSIMILE TRANSMISSION OTHER
THAN AS SET FORTH ABOVE WILL NOT CONSTITUTE A VALID DELIVERY. DELIVERIES TO THE
COMPANY WILL NOT BE FORWARDED TO THE DEPOSITARY AND THEREFORE WILL NOT
CONSTITUTE VALID DELIVERY. DELIVERIES TO THE BOOK-ENTRY TRANSFER FACILITY WILL
NOT CONSTITUTE VALID DELIVERY TO THE DEPOSITARY.
This Letter of Transmittal is to be completed only if (a) certificates
representing Shares (as defined below) are to be forwarded herewith, or (b) a
tender of Shares is to be made concurrently by book-entry transfer to the
account maintained by the Depositary at The Depository Trust Company
(hereinafter referred to as the "Book-Entry Transfer Facility") pursuant to the
book-entry transfer procedure described in the Offer to Purchase (as defined
below) under "The Tender Offer -- Procedures for Tendering Shares." Stockholders
who desire to tender Shares pursuant to the Offer (as defined below), but whose
Share certificates are not immediately available or who cannot deliver such
certificates and all other documents required by this Letter of Transmittal to
the Depositary on or prior to the Expiration Date (as defined in the Offer to
Purchase), or who cannot comply with the procedure for book-entry transfer on a
timely basis, may nevertheless tender their Shares pursuant to the guaranteed
delivery procedure described in the Offer to Purchase under "The Tender Offer --
Procedures for Tendering Shares." See Instruction 2.
[ ] CHECK HERE IF ANY CERTIFICATE REPRESENTING SHARES TENDERED HEREBY HAS BEEN
LOST, STOLEN, DESTROYED OR MUTILATED. SEE INSTRUCTION 14.
[ ] CHECK HERE IF TENDERED SHARES ARE BEING DELIVERED BY BOOK-ENTRY TRANSFER
TO AN ACCOUNT MAINTAINED BY THE DEPOSITARY AT THE BOOK-ENTRY TRANSFER
FACILITY AND COMPLETE THE FOLLOWING:
Name of Tendering Institution:
Account Number:
Transaction Code Number:
[ ] CHECK HERE IF SHARES ARE BEING TENDERED PURSUANT TO A NOTICE OF
GUARANTEED DELIVERY PREVIOUSLY SENT TO THE DEPOSITARY AND COMPLETE THE
FOLLOWING:
Name(s) of Registered Holder(s):
Date of Execution of Notice of Guaranteed Delivery:
Name of Institution that Guaranteed Delivery:
Window Ticket Number (if any):
ODD LOTS (LESS THAN 100 SHARES)
(SEE INSTRUCTION 8)
To be completed ONLY if the Shares are being tendered by or on behalf of a
person owning beneficially or of record as of the close of business on December
28, 1999 and who continues to own beneficially or of record as of the
Expiration Date, an aggregate of fewer than 100 Shares. The undersigned either
(check one box):
[ ] was the beneficial or record owner of, as of the close of business on
December 28, 1999, and continues to own beneficially or of record as of
the Expiration Date, an aggregate of fewer than 100 Shares, all of which
are being tendered; or
[ ] is a broker dealer, commercial bank, trust company, or other nominee that
(a) is tendering for the beneficial owner(s) thereof, Shares with respect
to which it is the record holder and (b) believes, based upon
representations made to it by such beneficial owner(s), that each such
person was the beneficial or record owner of, as of the close of business
on December 28, 1999, and continues to own beneficially or of record as
of the Expiration Date, an aggregate of fewer than 100 Shares and is
tendering all of such Shares.
<PAGE>
NOTE: SIGNATURES MUST BE PROVIDED BELOW.
PLEASE READ THE ACCOMPANYING INSTRUCTIONS CAREFULLY.
To American Stock Transfer & Trust Company:
The undersigned hereby tenders to Riviera Holdings Corporation, a Nevada
corporation (the "Company"), the above-described shares of the Company's Common
Stock, par value $.001 per share (the "Shares"), at the price per Share of
$7.50, net to the seller in cash, without interest thereon, upon the terms and
subject to the conditions set forth in the Offer to Purchase, dated December 28,
1999 (the "Offer to Purchase"), receipt of which is hereby acknowledged, and in
this Letter of Transmittal (which, as amended, supplemented or otherwise
modified from time to time, together constitute the "Offer").
Subject to, and effective upon, acceptance for payment of the Shares
tendered hereby in accordance with the terms and subject to the conditions of
the Offer (including, if the Offer is extended or amended, the terms and
conditions of such extension or amendment), the undersigned hereby sells,
assigns and transfers to, or upon the order of, the Company all right, title and
interest in and to all Shares tendered hereby and orders the registration of all
such Shares if tendered by book-entry transfer and hereby irrevocably
constitutes and appoints the Depositary as the true and lawful agent and
attorney-in-fact of the undersigned with respect to such Shares (with full
knowledge that the Depositary also acts as the agent of the Company), with full
power of substitution (such power of attorney being deemed to be an irrevocable
power coupled with an interest), to: (a) deliver certificate(s) representing
such Shares or transfer ownership of such Shares on the account books maintained
by the Book-Entry Transfer Facility, together, in either such case, with all
accompanying evidences of transfer and authenticity, to or upon the order of the
Company upon receipt by the Depositary, as the undersigned's agent, of the
Purchase Price (as defined below) with respect to such Shares; (b) present
certificates for such Shares for cancellation and transfer on the Company's
books; and (c) receive all benefits and otherwise exercise all rights of
beneficial ownership of such Shares, subject to the next paragraph, all in
accordance with the terms and subject to the conditions of the Offer.
The undersigned hereby covenants, represents and warrants to the Company
that:
(a) the undersigned has full power and authority to tender, sell,
assign and transfer the Shares tendered hereby and that when and to the
extent the same are accepted for payment by the Company, the Company will
acquire good, marketable and unencumbered title thereto, free and clear of
all security interests, liens, restrictions, charges, encumbrances,
conditional sales agreements or other obligations relating to the sale or
transfer of such Shares, and not subject to any adverse claims;
(b) the undersigned understands that tenders of Shares pursuant to
any one of the procedures described in the Offer to Purchase under "The
Tender Offer -- Procedures for Tendering Shares" and in the instructions
hereto will constitute the undersigned's acceptance of the terms and
conditions of the Offer, including the undersigned's representation and
warranty that (i) the undersigned has a net long position in the Shares or
equivalent securities at least equal to the Shares tendered within the
meaning of Rule 14e-4 under the Securities Exchange Act of 1934, as amended
("Rule 14e-4"), and (ii) such tender of Shares complies with Rule 14e-4;
(c) the undersigned will, upon request, execute and deliver any
additional documents deemed by the Depositary or the Company to be
necessary or desirable to complete the sale, assignment and transfer of the
Shares tendered hereby; and
(d) the undersigned has read, understands and agrees to all of the
terms of the Offer.
The undersigned understands that tenders of Shares pursuant to any one of
the procedures described in the Offer to Purchase under "The Tender Offer --
Procedures for Tendering Shares" and in the instructions hereto will constitute
a binding agreement between the undersigned and the Company upon the terms and
subject to the conditions of the Offer. The undersigned acknowledges that no
interest will be paid on the Purchase Price for tendered Shares regardless of
any extension of the Offer or any delay in making such payment.
All authority herein conferred or agreed to be conferred shall survive the
death or incapacity of the undersigned, and any obligation of the undersigned
hereunder shall be binding upon the heirs, personal representatives, executors,
<PAGE>
administrators, successors, assigns, trustees in bankruptcy and legal
representatives of the undersigned. Except as stated in the Offer to Purchase,
this tender is irrevocable.
The name(s) and address(es) of the registered holder(s) should be printed,
if they are not already printed above, exactly as they appear on the
certificates representing Shares tendered hereby. The certificate numbers, the
number of Shares represented by such certificates and the number of Shares that
the undersigned wishes to tender, should be set forth in the appropriate boxes
above.
The undersigned recognizes that, under certain circumstances set forth in
the Offer to Purchase, the Company may terminate or amend the Offer or may
postpone the acceptance for payment of, or the payment for, Shares tendered or
may accept for payment fewer than all of the Shares tendered hereby. In any such
event, the undersigned understands that certificate(s) for any Shares not
tendered or not purchased will be returned to the undersigned at the address
indicated above, unless otherwise indicated under the box entitled "Special
Payment Instructions" or the box entitled "Special Delivery Instructions" below.
The undersigned understands that acceptance of Shares by the Company for
payment will constitute a binding agreement between the undersigned and the
Company upon the terms and subject to the conditions of the Offer.
The check for the aggregate net Purchase Price for such of the Shares
tendered hereby as are purchased will be issued to the order of the undersigned
and mailed to the address indicated above, unless otherwise indicated under the
box entitled "Special Payment Instructions" or the box entitled "Special
Delivery Instructions" below. The undersigned acknowledges that the Company has
no obligation, pursuant to the "Special Payment Instructions," to transfer any
Shares from the name of its registered holder(s) thereof, or to order the
registration or transfer of any Shares tendered by book-entry transfer, if the
Company does not purchase any of such Shares.
<PAGE>
SPECIAL PAYMENT INSTRUCTIONS
(SEE INSTRUCTIONS 1, 5, 6 AND 9.)
To be completed ONLY if certificate(s) for Shares not tendered or not purchased
and/or any check for the Purchase Price are to be issued in the name of someone
other than the undersigned, or if Shares tendered hereby and delivered by
book-entry transfer which are not purchased are to be returned by credit to an
account at the Book-Entry Transfer Facility other than that designated above.
Issue: [ ] Check [ ] Share Certificate(s) to:
- --------------------------------------------------------------------------------
(Print Name)
Address:
- --------------------------------------------------------------------------------
(Zip Code)
- --------------------------------------------------------------------------------
(Taxpayer Identification or Social Security Number)
(See Substitute Form W-9 on reverse side)
[ ] Credit Shares delivered by book-entry transfer and not purchased to the
account set forth below:
Account Number:
- --------------------------------------------------------------------------------
SPECIAL DELIVERY INSTRUCTIONS
(SEE INSTRUCTIONS 1, 5, 6 AND 9.)
To be completed ONLY if certificate(s) for Shares not tendered or not purchased
and/or any check for the Purchase Price are to be mailed or sent to someone
other than the undersigned, or to the undersigned at an address other than that
designated above.
Issue: [ ] Check [ ] Share Certificate(s) to:
Name:
- --------------------------------------------------------------------------------
(Print Name)
Address:
- --------------------------------------------------------------------------------
(Zip Code)
- --------------------------------------------------------------------------------
(Taxpayer Identification or Social Security Number)
(See Substitute Form W-9 on reverse side)
<PAGE>
- --------------------------------------------------------------------------------
IMPORTANT
STOCKHOLDERS SIGN HERE
(PLEASE COMPLETE AND RETURN THE ATTACHED SUBSTITUTE FORM W-9)
- --------------------------------------------------------------------------------
Signature(s) of Owner(s)
- --------------------------------------------------------------------------------
Dated:
- --------------------------------------------------------------------------------
Name(s):
- --------------------------------------------------------------------------------
(Please Print)
Capacity (full title):
- --------------------------------------------------------------------------------
Address:
- --------------------------------------------------------------------------------
(INCLUDE ZIP CODE)
Area Code and Telephone Number:
- --------------------------------------------------------------------------------
Taxpayer Identification or Social Security Number:
- --------------------------------------------------------------------------------
(Must be signed by the registered holder(s) exactly as such holder(s)' name(s)
appear(s) on certificate(s) for Shares or on a security position listing or by
person(s) authorized to become the registered holder(s) thereof by certificates
and documents transmitted with this Letter of Transmittal. If signature is by a
trustee, executor, administrator, guardian, attorney-in-fact, officer of a
corporation or any other person acting in a fiduciary or representative
capacity, please set forth full title and see Instruction 5.)
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
GUARANTEE OF SIGNATURE(S)
(SEE INSTRUCTIONS 1 AND 5.)
Authorized Signature:
- --------------------------------------------------------------------------------
Name:
- --------------------------------------------------------------------------------
(Please Print)
Title:
- --------------------------------------------------------------------------------
Name of Firm:
- --------------------------------------------------------------------------------
Address:
- --------------------------------------------------------------------------------
(INCLUDE ZIP CODE)
Area Code and Telephone Number:
- --------------------------------------------------------------------------------
Dated:
- --------------------------------------------------------------------------------
<PAGE>
INSTRUCTIONS
FORMING PART OF THE TERMS AND CONDITIONS OF THE OFFER
1. Guarantee of Signatures. No signature guarantee on the Letter of
Transmittal is required if either:
(a) this Letter of Transmittal is signed by the registered holder of the
Shares (which, for purposes hereof, includes any participant in the Book-Entry
Transfer Facility whose name appears on a security position listing as the owner
of such Shares) tendered hereby exactly as the name of such registered holder
appears on the certificate(s) for such Shares tendered with this Letter of
Transmittal and payment and delivery are to be made directly to such owner
unless such owner has completed either the box entitled "Special Payment
Instructions" or "Special Delivery Instructions" above; or
(b) such Shares are tendered for the account of a bank, broker, dealer,
credit union, savings association or other entity which is a member in good
standing of the Securities Transfer Agents Medallion Program or a bank, broker,
dealer, credit union, savings association or other entity which is an "eligible
guarantor institution," as such term is defined in Rule 17Ad-15 under the
Securities Exchange Act of 1934, as amended (each of the foregoing constituting
an "Eligible Institution").
In all other cases, an Eligible Institution must guarantee all signatures
on this Letter of Transmittal. See Instruction 5.
2. Delivery of Letter of Transmittal and Certificates; Guaranteed Delivery
Procedures. This Letter of Transmittal is to be completed only if certificates
for Shares are delivered with it to the Depositary (or such certificates will be
delivered pursuant to a Notice of Guaranteed Delivery previously sent to the
Depositary) or if a tender for Shares is being made concurrently pursuant to the
procedure for tender by book-entry transfer set forth in the Offer to Purchase
under "The Tender Offer -- Procedures for Tendering Shares," provided, however,
that if no Letter of Transmittal is delivered a confirmation of such delivery of
Shares is received by the Depositary, including an Agent's Message or pursuant
to the Book Entry Facility's Automated Tender Offer Program ("ATOP").
Certificates for all physically tendered Shares or confirmation of a book-entry
transfer into the Depositary's account at the Book-Entry Transfer Facility of
Shares tendered electronically, together in the case of physically tendered
shares with a properly completed and duly executed Letter of Transmittal (or
manually signed facsimile hereof), and any other documents required by this
Letter of Transmittal, should be mailed or delivered to the Depositary at the
appropriate address set forth herein and must be delivered to the Depositary on
or before the Expiration Date. DELIVERY OF DOCUMENTS TO THE BOOK-ENTRY TRANSFER
FACILITY IN ACCORDANCE WITH SUCH BOOK-ENTRY TRANSFER FACILITY'S PROCEDURES
WITHOUT DELIVERY OF AN AGENT'S MESSAGE OR PURSUANT TO ATOP DOES NOT CONSTITUTE
DELIVERY TO THE DEPOSITARY.
The term "Agent's Message" means a message, transmitted by the Book-Entry
Transfer Facility to, and received by, the Depositary and forming a part of a
Book-Entry confirmation, which states that the Book-Entry Transfer Facility has
received an express acknowledgment from the participant in the Book-Entry
Transfer Facility tendering the Shares that such participant has received and
agrees to be bound by the terms of the Letter of Transmittal and that the
purchaser may enforce such agreement against the participant.
Stockholders whose certificates are not immediately available or who cannot
deliver certificates for their Shares and all other required documents to the
Depositary before the Expiration Date, or whose Shares cannot be delivered on a
timely basis pursuant to the procedures for book-entry transfer, must, in any
such case, tender their Shares by or through any Eligible Institution by
properly completing and duly executing and delivering a Notice of Guaranteed
Delivery (or facsimile thereof) and by otherwise complying with the guaranteed
delivery procedure set forth in the Offer to Purchase under "The Tender Offer --
Procedures for Tendering Shares." Pursuant to such procedure, certificates for
all physically tendered Shares or book-entry confirmations, as the case may be,
as well as a properly completed and duly executed Letter of Transmittal (or
manually signed facsimile hereof) and all other documents required by this
Letter of Transmittal, must be received by the Depositary within three (3)
American Stock Exchange trading days after receipt by the Depositary of such
Notice of Guaranteed Delivery, all as provided in the Offer to Purchase under
"The Tender Offer -- Procedures for Tendering Shares."
<PAGE>
The Notice of Guaranteed Delivery may be delivered by hand or transmitted
by telegram, facsimile transmission or mail to the Depositary and must include a
signature guarantee by an Eligible Institution in the form set forth therein.
For Shares to be tendered validly pursuant to the guaranteed delivery procedure,
the Depositary must receive the Notice of Guaranteed Delivery on or before the
Expiration Date.
THE METHOD OF DELIVERY OF ALL DOCUMENTS, INCLUDING CERTIFICATES FOR SHARES,
IS AT THE OPTION AND RISK OF THE TENDERING STOCKHOLDER. IF DELIVERY IS BY MAIL,
REGISTERED MAIL WITH RETURN RECEIPT REQUESTED, PROPERLY INSURED, IS RECOMMENDED.
IN ALL CASES, SUFFICIENT TIME SHOULD BE ALLOWED TO ENSURE TIMELY DELIVERY.
The Company will not accept any alternative, conditional or contingent
tenders, nor will it purchase any fractional Shares, except as expressly
provided in the Offer to Purchase. All tendering stockholders, by execution of
this Letter of Transmittal (or a facsimile hereof), waive any right to receive
any notice of the acceptance of their tender.
3. Inadequate Space. If the space provided in the box entitled "Description
of Shares Tendered" above is inadequate, the certificate numbers and/or the
number of Shares should be listed on a separate signed schedule and attached to
this Letter of Transmittal.
4. Partial Tenders and Unpurchased Shares. (Not applicable to stockholders
who tender by book-entry transfer.) If fewer than all of the Shares evidenced by
any certificate are to be tendered, fill in the number of Shares that are to be
tendered in the column entitled "Number of Shares Tendered" in the box entitled
"Description of Shares Tendered" above. In such case, if any tendered Shares are
purchased, a new certificate for the remainder of the Shares (including any
Shares not purchased) evidenced by the old certificate(s) will be issued and
sent to the registered holder(s) thereof, unless otherwise specified in either
the box entitled "Special Payment Instructions" or the box entitled "Special
Delivery Instructions" in this Letter of Transmittal, as soon as practicable
after the Expiration Date. Unless otherwise indicated, all Shares represented by
the certificate(s) set forth above and delivered to the Depositary will be
deemed to have been tendered.
5. Signatures on Letter Of Transmittal; Stock Powers and Endorsements.
(a) If this Letter of Transmittal is signed by the registered holder(s) of
the Shares tendered hereby, the signature(s) must correspond exactly with the
name(s) as written on the face of the certificate(s) without any change
whatsoever.
(b) If the Shares tendered hereby are registered in the names of two or
more joint holders, each such holder must sign this Letter of Transmittal.
(c) If any tendered Shares are registered in different names on several
certificates, it will be necessary to complete, sign and submit as many separate
Letters of Transmittal (or facsimiles hereof) as there are different
registrations of certificates.
(d) When this Letter of Transmittal is signed by the registered holder(s)
of the Shares tendered hereby, no endorsement(s) of certificate(s) representing
such Shares or separate stock power(s) are required unless payment is to be made
or the certificate(s) for Shares not tendered or not purchased are to be issued
to a person other than the registered holder(s) thereof. SIGNATURE(S) ON SUCH
CERTIFICATE(S) MUST BE GUARANTEED BY AN ELIGIBLE INSTITUTION. If this Letter of
Transmittal is signed by a person other than the registered holder(s) of the
certificate(s) listed, or if payment is to be made or certificate(s) for Shares
not tendered or not purchased are to be issued to a person other than the
registered holder(s) thereof, such certificate(s) must be endorsed or
accompanied by appropriate stock power(s), in either case signed exactly as the
name(s) of the registered holder(s) appears on the certificate(s), and the
signature(s) on such certificate(s) or stock power(s) must be guaranteed by an
Eligible Institution. See Instruction 1.
(e) If this Letter of Transmittal or any certificate(s) or stock power(s)
are signed by a trustee, executor, administrator, guardian, attorney-in- fact,
officer of a corporation or any other person acting in a fiduciary or
<PAGE>
representative capacity, such person should so indicate when signing this Letter
of Transmittal and must submit proper evidence satisfactory to the Company of
their authority so to act.
6. Stock Transfer Taxes. Except as provided in this Instruction 6, no stock
transfer tax stamps or funds to cover such stamps need accompany this Letter of
Transmittal. The Company will pay any stock transfer taxes payable on the
transfer to it of Shares purchased pursuant to the Offer. If, however, either
(a) payment of the Purchase Price for Shares tendered hereby and accepted for
purchase is to be made to any person other than the registered holder(s); or (b)
Shares not tendered or not accepted for purchase are to be registered in the
name(s) of any person(s) other than the registered holder(s); or (c)
certificate(s) representing tendered Shares are registered in the name(s) of any
person(s) other than the person(s) signing this Letter of Transmittal, then the
Depositary will deduct from such Purchase Price the amount of any stock transfer
taxes (whether imposed on the registered holder(s), such other person(s) or
otherwise) payable on account of the transfer to such person, unless
satisfactory evidence of the payment of such taxes or any exemption therefrom is
submitted.
7. Order of Purchase in Event of Proration. As described in the Offer to
Purchase under "The Tender Offer -- Number of Shares; Proration," stockholders
may designate the order in which their Shares are to be purchased in the event
of proration. The order of purchase may have an effect on the federal income tax
treatment of the Purchase Price for the Shares purchased. See the information
set forth in the Offer to Purchase under "The Tender Offer --Number of Shares;
Proration" and "The Tender Offer--Certain United States Federal Income Tax
Consequences."
8. Odd Lots. As described in the Offer to Purchase under "The Tender Offer
- -- Number of Shares; Proration," if the Company is to purchase fewer than all
Shares tendered before the Expiration Date and not withdrawn, the Shares
purchased first will consist of all Shares properly tendered by any shareholder
who owned beneficially or of record, as of the close of business on December
28, 1999 and as of the Expiration Date, an aggregate of fewer than 100 Shares,
and who tenders all of such holder's Shares (an "Odd Lot Holder"). This
preference will not be available unless the box captioned "Odd Lots" is
completed.
9. Special Payment and Delivery Instructions. If certificate(s) for Shares
not tendered or not purchased and/or check(s) are to be issued in the name of a
person other than the signer of this Letter of Transmittal or if such
certificates and/or checks are to be sent to someone other than the person
signing this Letter of Transmittal or to the signer at a different address, the
box entitled "Special Payment Instructions" and/or the box entitled "Special
Delivery Instructions" on this Letter of Transmittal should be completed as
applicable and signatures must be guaranteed as described in Instruction 1.
10. Irregularities. All questions as to the number of Shares to be
accepted, the price to be paid therefor and the validity, form, eligibility
(including time of receipt) and acceptance for payment of any tender of Shares
will be determined by the Company in its sole discretion, which determination
shall be final and binding on all parties. The Company reserves the absolute
right to reject any or all tenders of Shares it determines not to be in proper
form or the acceptance of which or payment for which may, in the opinion of the
Company's counsel, be unlawful. The Company also reserves the absolute right to
waive any of the conditions of the Offer or any defect or irregularity in any
tender with respect to any particular Shares or any particular stockholder, and
the Company's interpretation of the terms of the Offer (including these
Instructions) will be final and binding on all parties. No tender of Shares will
be deemed to be properly made until all defects and irregularities have been
cured by the tendering stockholder or waived by the Company. Unless waived, any
defects or irregularities in connection with tenders must be cured within such
time as the Company shall determine. None of the Company, the Depositary, the
Information Agent (as defined in the Offer to Purchase) or any other person is
or will be obligated to give notice of any defects or irregularities in tenders
and none of them will incur any liability for failure to give any such notice.
11. Questions and Requests for Assistance and Additional Copies. Questions
and requests for assistance may be directed to, or additional copies of the
Offer to Purchase, this Letter of Transmittal, the Notice of Guaranteed Delivery
and other related materials may be obtained from, the Information Agent at its
address and telephone numbers set forth on the back cover of the Offer to
Purchase or from brokers, dealers, commercial banks or trust companies.
12. Tax Identification Number and Backup Withholding. Federal income tax
law generally requires that a stockholder whose tendered Shares are accepted for
purchase, or such stockholder's assignee (in either case, the
<PAGE>
"Payee"), provide the Depositary with such Payee's correct Taxpayer
Identification Number ("TIN"), which, in the case of a Payee who is an
individual, is such Payee's social security number. If the Depositary is not
provided with the correct TIN or an adequate basis for an exemption, such Payee
may be subject to a $50 penalty imposed by the Internal Revenue Service and
backup withholding in an amount equal to 31% of the gross proceeds received
pursuant to the Offer. If withholding results in an overpayment of taxes, a
refund may be obtained.
To prevent backup withholding, each Payee must provide such Payee's correct
TIN by completing the Substitute Form W-9 set forth herein, certifying that the
TIN provided is correct (or that such Payee is awaiting a TIN) and that (i) the
Payee is exempt from backup withholding, (ii) the Payee has not been notified by
the Internal Revenue Service that such Payee is subject to backup withholding as
a result of a failure to report all interest or dividends, or (iii) the Internal
Revenue Service has notified the Payee that such Payee is no longer subject to
backup withholding.
If the Payee does not have a TIN, such Payee should (i) consult the
enclosed Guidelines for Certification of Taxpayer Identification Number on
Substitute Form W-9 for instructions on applying for a TIN, (ii) write "Applied
For" in the space provided in Part 1 of the Substitute Form W-9, and (iii) sign
and date the Substitute Form W-9 and the Certificate of Awaiting Taxpayer
Identification Number set forth herein. The Depository may reserve up to 31% of
payments made to the Payee to satisfy potential backup withholding, and if the
Payee does not provide such Payee's TIN to the Depositary within sixty (60)
days, backup withholding will be made on payments to the Payee. Note that
writing "Applied For" on the Substitute Form W-9 means that the Payee has
already applied for a TIN or that such Payee intends to apply for one in the
near future.
If Shares are held in more than one name or are not in the name of the
actual owner, consult the W-9 Guidelines for information on which TIN to report.
Exempt Payees (including, among others, all corporations and certain
foreign individuals) are not subject to backup withholding and reporting
requirements. To prevent possible erroneous backup withholding, an exempt Payee
should write "Exempt" in Part 2 of Substitute Form W-9. See the enclosed
Guidelines for Certification of Taxpayer Identification Number on Substitute
Form W-9 for additional instructions. In order for a nonresident alien or
foreign entity to qualify as exempt, such person must submit a completed Form
W-8 Certificate of Foreign Status, signed under penalty of perjury attesting to
such exempt status. Such form may be obtained from the Depositary.
13. Withholding On Non-United States Holder. Even if a Non-United States
Holder (as defined below) has provided the required certification to avoid
backup withholding, the Depositary will withhold United States federal income
taxes equal to 30% of the gross payments payable to a Non-United States Holder
or such holder's agent unless the Depositary determines that a reduced rate of
withholding is available pursuant to a tax treaty or that an exemption from
withholding is applicable because such gross proceeds are effectively connected
with the conduct of a trade or business within the United States. For this
purpose, a "Non-United States Holder" is any stockholder that for United States
federal income tax purposes is not (i) a citizen or resident of the United
States, (ii) a corporation or partnership created or organized in or under the
laws of the United States or any State or division thereof (including the
District of Columbia), (iii) an estate the income of which is subject to United
States federal income taxation regardless of the source of such income, or (iv)
a trust (a) the administration over which a United States court can exercise
primary supervision and (b) all of the substantial decisions of which one or
more United States persons have the authority to control. Notwithstanding the
foregoing, to the extent provided in United States Treasury Regulations, certain
trusts in existence on August 20, 1996, and treated as United States persons
prior to such date, that elect to continue to be treated as United States
persons also will not be Non-United States Holders. In order to obtain a reduced
rate of withholding pursuant to a tax treaty, a Non-United States Holder must
deliver to the Depositary before the payment a properly completed and executed
IRS Form 1001. In order to obtain an exemption from withholding on the grounds
that the gross proceeds paid pursuant to the Offer are effectively connected
with the conduct of a trade or business within the United States, a Non-United
States Holder must deliver to the Depositary a properly completed and executed
IRS Form 4224. The Depositary will determine a stockholder's status as a
Non-United States Holder and eligibility for a reduced rate of, or an exemption
from, withholding based on the presumption that the payment will be
characterized as a dividend for federal income tax purposes and by reference to
outstanding certificates or statements concerning eligibility for a reduced rate
of, or exemption from, withholding (e.g., IRS Form 1001 or IRS Form 4224) unless
facts and circumstances indicate that such reliance is not warranted. A
Non-United States Holder may be eligible to obtain a refund of all or a portion
of any tax withheld if such
<PAGE>
Non-United States Holder meets those tests described in the Offer to Purchase
under "The Tender Offer--Certain United States Federal Income Tax Consequences"
that would characterize the exchange as a sale (as opposed to a dividend) or is
otherwise able to establish that no tax or a reduced amount of tax is due.
NON-UNITED STATES HOLDERS ARE URGED TO CONSULT THEIR OWN TAX ADVISORS
REGARDING THE APPLICATION OF UNITED STATES FEDERAL INCOME TAX WITHHOLDING,
INCLUDING ELIGIBILITY FOR A WITHHOLDING TAX REDUCTION OR EXEMPTION, AND THE
REFUND PROCEDURE.
14. Lost, Stolen, Destroyed or Mutilated Certificates. If any
certificate(s) representing Shares has been lost, stolen, destroyed or
mutilated, the stockholder should promptly notify the Depositary by checking the
box set forth above and indicating the number of Shares so lost, stolen,
destroyed or mutilated. Such stockholder will then be instructed by the
Depositary as to the steps that must be taken in order to replace the
certificate. This Letter of Transmittal and related documents cannot be
processed until the procedures for replacing lost, stolen, destroyed or
mutilated certificates have been followed. Stockholders may contact the
Depositary at (800) 647-4273 (toll free) to expedite such process.
THIS LETTER OF TRANSMITTAL, PROPERLY COMPLETED AND DULY EXECUTED (OR
MANUALLY SIGNED FACSIMILE HEREOF), TOGETHER WITH CERTIFICATES REPRESENTING
SHARES BEING TENDERED OR CONFIRMATION OF BOOK-ENTRY TRANSFER AND ALL OTHER
REQUIRED DOCUMENTS, OR A NOTICE OF GUARANTEED DELIVERY, MUST BE RECEIVED PRIOR
TO 12:00 MIDNIGHT, NEW YORK CITY TIME, ON THE EXPIRATION DATE. STOCKHOLDERS ARE
ENCOURAGED TO RETURN A COMPLETED SUBSTITUTE FORM W-9 WITH THIS LETTER OF
TRANSMITTAL.
<PAGE>
PAYER: AMERICAN STOCK TRANSFER & TRUST COMPANY
SUBSTITUTE PART 1--Taxpayer Identification TIN:
FORM W-9 Number--for all accounts, enter Social Security Number
taxpayer identification number in or Employer
the box at right and certify by Identification Number
signing and dating below. If awaiting TIN, write
"Applied For")
Department of the Note: If the account is in more
Treasury, Internal than one name, see the chart in
Revenue Service the enclosed Guidelines to
determine which number to give
the payer.
PAYER'S REQUEST
FOR TAXPAYER
IDENTIFICATION
NUMBER ("TIN")
PART 2 - for payees exempt from
backup withholding, please write
"EXEMPT" here (see the enclosed
Guidelines):
PART 3--Certification--UNDER PENALTIES OF PERJURY, I CERTIFY THAT (1) The number
shown on this form is my correct Taxpayer Identification Number (or I am waiting
for a number to be issued to me), (2) I am not subject to backup withholding
because: (a) I am exempt from backup withholding, or (b) I have not been
notified by the Internal Revenue Service (the "IRS") that I am subject to backup
withholding as a result of a failure to report all interest or dividends or (c)
the IRS has notified me that I am no longer subject to backup withholding.
Certification Instructions--You must cross out item (2) above if you have been
notified by the IRS that you are currently subject to backup withholding because
of underreporting interest or dividends on your tax return and you have not been
notified by the IRS that you are no longer subject to backup withholding. (Also
see instructions in the enclosed Guidelines.)
SIGNATURE: ____________________
DATE: ________________
- --------------------------------------------------------------------------------
NOTE: FAILURE TO COMPLETE AND RETURN THIS FORM MAY RESULT IN BACKUP
WITHHOLDING OF 31% OF ANY PAYMENTS MADE TO YOU PURSUANT TO THE OFFER.
PLEASE REVIEW THE ENCLOSED GUIDELINES FOR CERTIFICATION OF TAXPAYER
IDENTIFICATION NUMBER ON SUBSTITUTE FORM W-9 FOR ADDITIONAL DETAILS.
YOU MUST COMPLETE THE FOLLOWING CERTIFICATE IF YOU ARE AWAITING (OR
WILL SOON APPLY FOR) A TAXPAYER IDENTIFICATION NUMBER.
- --------------------------------------------------------------------------------
CERTIFICATE OF AWAITING TAXPAYER IDENTIFICATION NUMBER
I certify under penalties of perjury that a taxpayer identification number has
not been issued to me, and that I mailed or delivered an application to receive
a taxpayer identification number to the appropriate Internal Revenue Service
Center or Social Security Administration Office (or I intend to mail or deliver
an application in the near future). I understand that, notwithstanding the
information I provided in Part III of the Substitute Form W-9 above (and the
fact that I have completed this Certificate of Awaiting Taxpayer Identification
Number), the Depository may reserve up to 31% of payments made to me to satisfy
potential withholding and if I do not provide a taxpayer identification number
to the Depositary within sixty (60) days, the Depositary is required to withhold
31% of all cash payments made to me.
SIGNATURE: _________________________
DATE: __________________
<PAGE>
The Information Agent for the Offer is:
MacKenzie Partners, Inc.
156 Fifth Avenue
New York, NY 10010
(212) 929-5500 (call collect)
or call toll free 1 (800) 322-2885
RIVIERA HOLDINGS CORPORATION
NOTICE OF GUARANTEED DELIVERY
FOR
TENDER OF SHARES OF COMMON STOCK
This Notice of Guaranteed Delivery, or one substantially in the form
hereof, must be used to accept the Offer (as defined below) if certificates
evidencing shares of Common Stock, par value $.001 per share (the "Shares"), of
Riviera Holdings Corporation, a Nevada corporation (the "Company"), are not
immediately available, or if the procedure for book-entry transfer set forth in
the Offer to Purchase, dated December 28, 1999 (the "Offer to Purchase") and the
related Letter of Transmittal (which, as amended, supplemented or otherwise
modified from time to time, together constitute the "Offer") cannot be completed
on a timely basis or time will not permit all required documents, including a
properly completed and duly executed Letter of Transmittal (or a manually signed
facsimile thereof), to reach the Depositary prior to the Expiration Date (as
defined in the Offer to Purchase).
This Notice of Guaranteed Delivery, properly completed and duly executed,
may be delivered by hand, mail or facsimile transmission to the Depositary. See
the information set forth in the Offer to Purchase under "The Tender Offer --
Procedure for Tendering Shares."
The Depositary for the Offer is:
AMERICAN STOCK TRANSFER & TRUST COMPANY
By Hand Delivery: By Overnight Delivery: By Mail:
40 Wall Street 40 Wall Street 40 Wall Street
46th Floor 46th Floor 46th Floor
New York, New York 10005 New York, New York 10005 New York, New York 10005
Facsimile Transmission:
(for Eligible Institutions only)
(718) 234-5001
Confirm Receipt of Facsimile by Telephone:
(718) 921-8200
------------------------------
DELIVERY OF THIS NOTICE OF GUARANTEED DELIVERY TO AN ADDRESS OTHER THAN AS
SET FORTH ABOVE OR TRANSMISSION OF INSTRUCTIONS VIA FACSIMILE TRANSMISSION OTHER
THAN AS SET FORTH ABOVE WILL NOT CONSTITUTE A VALID DELIVERY. DELIVERIES TO THE
COMPANY WILL NOT BE FORWARDED TO THE DEPOSITARY AND THEREFORE WILL NOT
CONSTITUTE VALID DELIVERY. DELIVERIES TO THE BOOK-ENTRY TRANSFER FACILITY WILL
NOT CONSTITUTE VALID DELIVERY TO THE DEPOSITARY.
This Notice of Guaranteed Delivery form is not to be used to guarantee
signatures. If a signature on the Letter of Transmittal is required to be
guaranteed by an Eligible Institution (as defined in the Offer to Purchase)
under the instructions thereto, such signature guarantee must appear in the
applicable space provided in the signature box on the Letter of Transmittal.
<PAGE>
Ladies and Gentlemen:
The undersigned hereby tenders to the Company upon the terms and subject to
the conditions set forth in the Offer to Purchase and the related Letter of
Transmittal, receipt of which is hereby acknowledged, the number of Shares
specified below pursuant to the guaranteed delivery procedure set forth in the
Offer to Purchase under "The Tender Offer -- Procedures for Tendering Shares."
Name(s) of
Record Holder(s):
PLEASE TYPE OR PRINT
- -------------------------------------------------------------------
- -------------------------------------------------------------------
Number of Shares:--------------------------------------------------
Certificate Nos.
(if available):
- -------------------------------------------------------------------
- -------------------------------------------------------------------
Address:
- -------------------------------------------------------------------
ZIP CODE
Area Code and
Telephone Number:
- -------------------------------------------------------------------
Check box if Shares will be tendered by book-entry transfer (including through
DTC's ATOP):
[ ] The Depository Trust Company
Account Number:
- -------------------------------------------------------------------
Dated:
- -------------------------------------------------------------------
Signature(s)
- -------------------------------------------------------------------
2
<PAGE>
ODD LOTS (LESS THAN 100 SHARES)
To be completed ONLY if the Shares are being tendered by or on behalf of a
person owning beneficially or of record, as of the close of business on December
28, 1999 and who continues to own beneficially or of record as of the
Expiration Date, an aggregate of fewer than 100 Shares. The undersigned either
(check one box):
[ ] was the beneficial or record owner of, as of the close of business on
December 28, 1999, and continues to own beneficially or of record as of
the Expiration Date, an aggregate of fewer than 100 Shares, all of which
are being tendered; or
[ ] is a broker dealer, commercial bank, trust company, or other nominee that
(a) is tendering for the beneficial owner(s) thereof, Shares with respect
to which it is the record holder and (b) believes, based upon
representations made to it by such beneficial owner(s), that each such
person was the beneficial or record owner of, as of the close of business
on December 28, 1999, and continues to own beneficially or of record as
of the Expiration Date, an aggregate of fewer than 100 Shares and is
tendering all of such Shares.
GUARANTEE
(NOT TO BE USED FOR A SIGNATURE GUARANTEE)
THE UNDERSIGNED, A BANK, BROKER, DEALER, CREDIT UNION, SAVINGS ASSOCIATION
OR OTHER ENTITY WHICH IS A MEMBER IN GOOD STANDING OF THE SECURITIES TRANSFER
AGENTS MEDALLION PROGRAM OR A BANK, BROKER, DEALER, CREDIT UNION, SAVINGS
ASSOCIATION OR OTHER ENTITY WHICH IS AN "ELIGIBLE GUARANTOR INSTITUTION," AS
SUCH TERM IS DEFINED IN RULE 17AD-15 UNDER THE SECURITIES EXCHANGE ACT OF 1934,
AS AMENDED (EACH OF THE FOREGOING CONSTITUTING AN "ELIGIBLE INSTITUTION"),
GUARANTEES THE DELIVERY TO THE DEPOSITARY OF THE SHARES TENDERED HEREBY, IN
PROPER FORM FOR TRANSFER, OR A CONFIRMATION THAT THE SHARES TENDERED HEREBY HAVE
BEEN DELIVERED PURSUANT TO THE PROCEDURE FOR BOOK-ENTRY TRANSFER SET FORTH IN
THE OFFER TO PURCHASE INTO THE DEPOSITARY'S ACCOUNT AT THE BOOK-ENTRY TRANSFER
FACILITY, TOGETHER WITH A PROPERLY COMPLETED AND DULY EXECUTED LETTER OF
TRANSMITTAL (OR A MANUALLY SIGNED FACSIMILE THEREOF) AND ANY OTHER REQUIRED
DOCUMENTS, ALL WITHIN THREE (3) AMERICAN STOCK EXCHANGE TRADING DAYS OF THE DATE
HEREOF.
The Eligible Institution that completes this form must communicate the
guarantee to the Depositary and must deliver the Letter of Transmittal and
certificates representing Shares to the Depositary within the time period set
forth herein. Failure to do so could result in a financial loss to such Eligible
Institution.
Name of Firm:
- -------------------------------------------------------------------
Address:
- -------------------------------------------------------------------
ZIP CODE
Area Code and
Telephone No.:
- -------------------------------------------------------------------
-------------------------------------------------
AUTHORIZED SIGNATURE
Name:
PLEASE PRINT
Title:
Date:
3
<PAGE>
NOTE: DO NOT SEND SHARE CERTIFICATES WITH THIS NOTICE OF GUARANTEED DELIVERY.
CERTIFICATES FOR SHARES SHOULD BE SENT WITH THE LETTER OF TRANSMITTAL.
4
LOGO
RIVIERA HOLDINGS CORPORATION
OFFER TO PURCHASE FOR CASH UP TO
500,000 SHARES OF ITS COMMON STOCK
AT A PURCHASE PRICE OF $7.50 NET PER SHARE
THE OFFER, PRORATION PERIOD AND WITHDRAWAL RIGHTS EXPIRE AT 12:00 MIDNIGHT, NEW
YORK CITY TIME, ON WEDNESDAY, FEBRUARY 2, 2000, UNLESS THE OFFER IS EXTENDED.
December 28, 1999
To Brokers, Dealers, Commercial Banks,
Trust Companies and Other Nominees:
Riviera Holdings Corporation, a Nevada corporation (the "Company"), has
commenced an offer to purchase for cash up to 500,000 shares (or such lesser
number of shares as are properly tendered and not withdrawn) of its Common
Stock, par value $.001 per share (the "Shares"), at the price of $7.50 per
Share, net to the seller in cash, without interest thereon (the "Purchase
Price"), upon the terms and subject to the conditions set forth in the Offer to
Purchase and in the related letter of transmittal (the "Letter of Transmittal")
(which, as amended, supplemented or otherwise modified from time to time,
together constitute the "Offer").
THE OFFER IS NOT CONDITIONED ON ANY MINIMUM NUMBER OF SHARES BEING
TENDERED. THE OFFER IS, HOWEVER, SUBJECT TO CERTAIN OTHER CONDITIONS.
Upon the terms and subject to the conditions of the Offer, if at the
expiration date of the Offer, more than 500,000 Shares (or such greater number
of Shares as the Company may elect to purchase) are properly tendered and not
properly withdrawn, the Company will buy Shares first from all Odd Lot Holders
(as defined in the Offer to Purchase) who properly tendered all of their Shares
and then on a pro rata basis from all other stockholders who properly tender
Shares at the Purchase Price (and do not properly withdraw them prior to the
expiration date of the Offer).
For your information and for forwarding to those of your clients for whom
you hold Shares registered in your name or in the name of your nominee, we are
enclosing the following documents:
1. The Offer to Purchase, dated December 28, 1999;
2. The Letter of Transmittal for your use and for the information of
your clients (together with the accompanying Substitute Form W-9).
Facsimile copies of the Letter of Transmittal (with manual signatures) may
be used to tender Shares;
3. A letter to the stockholders of the Company, dated December 28,
1999, from William L. Westerman, Chairman of the Board and Chief Executive
Officer of the Company;
4. The Notice of Guaranteed Delivery to be used to accept the Offer
and tender Shares pursuant to the Offer if none of the procedures for
tendering Shares set forth in the Offer to Purchase can be completed on a
timely basis;
5. A printed form of letter which may be sent to your clients for
whose accounts you hold Shares registered in your name or in the name of
your nominee, with an instruction form provided for obtaining such clients'
instructions with regard to the Offer;
6. Guidelines of the Internal Revenue Service for Certification of
Taxpayer Identification Number on Substitute Form W-9; and
7. A return envelope addressed to American Stock Transfer & Trust
Company, Depositary for the Offer (the "Depositary").
<PAGE>
YOUR PROMPT ACTION IS REQUESTED. WE URGE YOU TO CONTACT YOUR CLIENTS AS
PROMPTLY AS POSSIBLE. PLEASE NOTE THAT THE OFFER, PRORATION PERIOD AND
WITHDRAWAL RIGHTS WILL EXPIRE AT 12:00 MIDNIGHT, NEW YORK CITY TIME, ON
WEDNESDAY, FEBRUARY 2, 2000, UNLESS THE OFFER IS EXTENDED.
In order to take advantage of the Offer, a duly executed and properly
completed Letter of Transmittal (or a manually signed facsimile thereof)
including any required signature guarantees and any other required documents
should be sent to the Depositary together with either certificate(s)
representing tendered Shares or timely confirmation of their book-entry
transfer, in accordance with the instructions set forth in the Offer to Purchase
and the related Letter of Transmittal.
Holders of Shares whose certificate(s) for such Shares are not immediately
available or who cannot deliver such certificate(s) and all other required
documents to the Depositary, or complete the procedures for book-entry transfer,
prior to the Expiration Date must tender their Shares according to the procedure
for guaranteed delivery set forth in the Offer to Purchase under "The Tender
Offer -- Procedures for Tendering Shares."
No fees or commissions will be payable by the Company nor any officer,
director, stockholder, agent or other representative of the Company to any
broker, dealer or other person for soliciting tenders of Shares pursuant to the
Offer (other than fees paid to MacKenzie Partners, Inc., as Information Agent,
as described in the Offer to Purchase). The Company will, however, upon request,
reimburse you for customary mailing and handling expenses incurred by you in
forwarding any of the enclosed materials to your clients whose Shares are held
by you as a nominee or in a fiduciary capacity. The Company will pay or cause to
be paid any stock transfer taxes applicable to its purchase of Shares, except as
otherwise provided in the Letter of Transmittal.
Any inquiries you may have with respect to the Offer should be addressed to
MacKenzie Partners, Inc., as Information Agent, 156 Fifth Avenue, New York, NY
10010, at (212) 929-5500 or toll free at 1 (800) 322-2885. Requests for
additional copies of the enclosed materials may be directed to the Information
Agent at its address and telephone numbers set forth above.
Very truly yours,
RIVIERA HOLDINGS CORPORATION
NOTHING CONTAINED HEREIN OR IN THE ENCLOSED DOCUMENTS SHALL CONSTITUTE YOU
OR ANY OTHER PERSON AS AN AGENT OF THE COMPANY, THE INFORMATION AGENT OR THE
DEPOSITARY OR ANY AFFILIATE OF ANY OF THE FOREGOING, OR AUTHORIZE YOU OR ANY
OTHER PERSON TO USE ANY DOCUMENT OR MAKE ANY STATEMENT ON BEHALF OF ANY OF THEM
IN CONNECTION WITH THE OFFER OTHER THAN THE DOCUMENTS ENCLOSED HEREWITH AND THE
STATEMENTS CONTAINED THEREIN.
2
RIVIERA HOLDINGS CORPORATION
OFFER TO PURCHASE FOR CASH UP TO
500,000 SHARES OF ITS COMMON STOCK
AT A PURCHASE PRICE OF $7.50 NET PER SHARE
THE OFFER, PRORATION PERIOD AND WITHDRAWAL RIGHTS EXPIRE AT 12:00 MIDNIGHT, NEW
YORK CITY TIME, ON WEDNESDAY, FEBRUARY 2, 2000, UNLESS THE OFFER IS EXTENDED.
December 28, 1999
To Our Clients:
Enclosed for your consideration are the Offer to Purchase, dated December
28, 1999 (the "Offer to Purchase") and the related Letter of Transmittal (which,
as amended, supplemented or otherwise modified from time to time, together
constitute the "Offer") in connection with the offer by Riviera Holdings
Corporation, a Nevada corporation (the "Company"), to purchase up to 500,000
shares (or such lesser number of shares as are properly tendered) of its Common
Stock, par value $.001 per share (the "Shares"), at a price of $7.50 per Share,
net to the seller in cash, without interest thereon (the "Purchase Price"), upon
the terms and subject to the conditions of the Offer.
Upon the terms and subject to the conditions of the Offer, if at the
expiration date of the Offer, more than 500,000 Shares (or such greater number
of Shares as the Company may elect to purchase) are properly tendered and not
properly withdrawn, the Company will buy Shares first from all Odd Lot Holders
(as defined in the Offer to Purchase) who properly tendered all of their shares
and then on a pro rata basis from stockholders who properly tender Shares at the
Purchase Price (and do not properly withdraw such Shares prior to the expiration
date of the Offer).
A TENDER OF YOUR SHARES CAN BE MADE ONLY BY US AS THE HOLDER OF RECORD
THEREOF AND PURSUANT TO YOUR INSTRUCTIONS. THE LETTER OF TRANSMITTAL IS
FURNISHED TO YOU FOR YOUR INFORMATION ONLY AND CANNOT BE USED BY YOU TO TENDER
YOUR SHARES HELD BY US FOR YOUR ACCOUNT.
Accordingly, we request instructions as to whether you wish to tender any
or all of the Shares held by us for your account, upon the terms and subject to
the conditions of the Offer.
Please note the following:
1. Shares may be tendered at $7.50 per Share, as indicated in the
attached Instruction Form, net to the seller in cash, without interest
thereon.
2. The priority in which Shares shall be purchased in the event of
proration may be designated.
3. The Offer is not conditioned on any minimum number of Shares being
tendered. The Offer is, however, subject to certain other conditions set
forth in the Offer to Purchase.
4. The Offer, proration period and withdrawal rights will expire at
12:00 Midnight, New York City time, on Wednesday, February 2, 2000, unless
the Offer is extended (the "Expiration Date").
5. The Offer is for 500,000 Shares, constituting approximately 11%
of the Shares outstanding as of December 15, 1999.
6. The Board of Directors of the Company has approved the Offer.
However, neither the Company nor its Board of Directors makes any
recommendation to stockholders as to whether to tender or refrain from
tendering their Shares. Each stockholder must make the decision whether to
tender such stockholder's Shares and, if so, how many Shares to tender.
<PAGE>
7. Tendering stockholders will not be obligated to pay any brokerage
fees or commissions or solicitation fees to the Depositary (as defined in
the Offer to Purchase), Information Agent (as defined in the Offer to
Purchase) or the Company or, except as set forth in the Letter of
Transmittal, stock transfer taxes on the transfer of Shares pursuant to the
Offer. However, federal income tax backup withholding at a rate of 31% may
be required, unless an exemption is provided or unless the required tax
payer identification information is provided. See Instruction 12 of the
Letter of Transmittal.
8. If you held beneficially or of record, as of the close of business
on December 28, 1999 and continue to hold as of the Expiration Date, an
aggregate of fewer than 100 Shares, and you instruct us to tender on your
behalf all such Shares before the Expiration Date and check the box
captioned "Odd Lots" in the attached Instruction form, the Company, upon
the terms and subject to the conditions of the Offer, will accept all such
Shares for purchase before proration, if any, of the purchase of other
Shares properly tendered.
If you wish to have us tender any or all of your Shares, please so instruct
us by completing, executing, detaching and returning to us the attached
Instruction Form. An envelope to return your Instruction Form to us is enclosed.
If you authorize us to tender your Shares, all such Shares will be tendered
unless otherwise indicated on the attached Instruction Form.
PLEASE FORWARD YOUR INSTRUCTION FORM TO US AS SOON AS POSSIBLE TO ALLOW US
AMPLE TIME TO TENDER YOUR SHARES ON YOUR BEHALF PRIOR TO THE EXPIRATION OF THE
OFFER.
As described in the Offer to Purchase, if more than 500,000 Shares (or such
greater number of Shares as the Company may elect to purchase) have been
properly tendered and not properly withdrawn prior to the Expiration Date, the
Company will purchase tendered Shares properly tendered and not properly
withdrawn prior to the Expiration Date, first from all Odd Lot Holders who
tendered all of their Shares (as defined in the Offer to Purchase) and then on a
pro rata basis (with appropriate adjustments to avoid purchases of fractional
Shares) from all other stockholders as described in the Offer to Purchase.
The Offer is being made solely pursuant to the Offer to Purchase and the
related Letter of Transmittal. The Offer is not being made to, nor will tenders
be accepted from or on behalf of, holders of Shares residing in any jurisdiction
in which the making of the Offer or acceptance thereof would not be in
compliance with the securities laws of such jurisdiction.
2
<PAGE>
INSTRUCTION FORM
INSTRUCTIONS FOR TENDER OF SHARES OF RIVIERA HOLDINGS CORPORATION
The undersigned acknowledge(s) receipt of your letter and the enclosed
Offer to Purchase, dated December 28, 1999 (the "Offer to Purchase") and the
related Letter of Transmittal (which, as amended or supplemented from time to
time, together constitute the "Offer") in connection with the offer by Riviera
Holdings Corporation, a Nevada corporation (the "Company"), to purchase up to
500,000 shares (or such lesser number of shares as are properly tendered) of its
Common Stock, par value $.001 per share (the "Shares"), at the price of $7.50
per Share, net to the seller in cash, without interest thereon, upon the terms
and subject to the conditions of the Offer.
This will instruct you to tender to the Company, on (our) (my) behalf, the
number of Shares indicated below (or if no number is indicated below, all
Shares) which are beneficially owned by (us) (me) and registered in your name,
upon the terms and subject to the conditions of Offer.
NUMBER OF SHARES TO BE TENDERED: SHARES*
- -------------------------
* Unless otherwise indicated, it will be assumed that all Shares held by us
for your account are to be tendered.
THE METHOD OF DELIVERY OF THIS DOCUMENT IS AT THE OPTION AND RISK OF THE
TENDERING STOCKHOLDER. IF DELIVERY IS BY MAIL, REGISTERED MAIL WITH RETURN
RECEIPT REQUESTED, PROPERLY INSURED, IS RECOMMENDED. IN ALL CASES, SUFFICIENT
TIME SHOULD BE ALLOWED TO ASSURE DELIVERY.
ODD LOTS
[ ] By checking this box the undersigned represents that the undersigned owned
beneficially or of record as of the close of business on December 28, 1999
and continues to own beneficially or of record as of the Expiration
Date, an aggregate of fewer than 100 Shares and is tendering all of such
Shares.
Dated: ________________, 2000
SIGN HERE:
- --------------------------------------------------------------------------------
Signature(s)
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Print Name(s)
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Address(es)
- --------------------------------------------------------------------------------
Area Code and Telephone Number
- --------------------------------------------------------------------------------
Taxpayer Identification or Social Security Number
3
RIVIERA HOLDINGS CORPORATION
2901 Las Vegas Boulevard South
Las Vegas, NV 89109
December 28, 1999
To Our Stockholders:
Riviera Holdings Corporation (the "Company") is offering to purchase up to
500,000 shares of its common stock, $.001 par value per share (the "Shares"),
from existing stockholders at the purchase price of $7.50 per Share (the
"Offer").
On December 27, 1999, the last day the Shares were traded prior to the
announcement of the Offer, the last reported sales price per Share for the
Company's common stock on the AMEX was $5.19. Any stockholder whose Shares are
properly tendered directly to American Stock Transfer & Trust Company, the
Depositary for the Offer, and purchased by the Company pursuant to the Offer
will receive the net purchase price in cash, without interest, and will not
incur the usual transaction costs associated with open market sales.
The terms and conditions of the offer are explained in detail in the
enclosed Offer to Purchase and the related Letter of Transmittal. We encourage
you to read these materials carefully before making any decision with respect to
the Offer. The instructions on how to tender Shares are also explained in detail
in the accompanying materials.
Neither the Company nor the Board of Directors of the Company makes any
recommendation to stockholders as to whether to tender or refrain from tendering
their Shares. Each stockholder must make the decision whether to tender such
stockholder's Shares and, if so, how many Shares to tender. The Company has been
advised that none of its directors or executive officers intend to tender any
Shares pursuant to the Offer.
The Offer will expire at 12:00 Midnight, New York City time, on February 2,
2000, unless extended by the Company. If you have any questions regarding the
Offer or need assistance in tendering your Shares, please contact MacKenzie
Partners, Inc., the Information Agent for the Offer, at (212) 929-5500 or toll
free at 1 (800) 322-2885.
Sincerely,
William L. Westerman
Chairman of the Board of Directors
and Chief Executive Officer
GUIDELINES FOR CERTIFICATION OF TAXPAYER IDENTIFICATION
NUMBER ON SUBSTITUTE FORM W-9
GUIDELINES FOR DETERMINING THE PROPER IDENTIFICATION NUMBER TO GIVE THE
PAYER.--Social Security numbers have nine digits separated by two hyphens: i.e.,
000-00-0000. Employer identification numbers have nine digits separated by only
one hyphen: i.e., 00-0000000. The table below will help determine the number to
give the payer.
GIVE THE SOCIAL
FOR THIS TYPE OF ACCOUNT: SECURITY NUMBER OF:
- ------------------------- -------------------
1. An individual's account The individual
2. Two or more individuals (joint The actual owner of the account
account) or, if combined funds, any one of
the individuals(1)
3. Husband and wife (joint account) The actual owner of the account
or, if joint funds, either
person(1)
4. Custodian account of a minor The minor(2)
(Uniform Gift to Minors Act)
5. Adult and minor (joint account) The adult or, if the minor is the
only contributor, the minor(1)
6. Account in the name of guardian or The ward, minor, or incompetent
committee for a designated ward, person(3)
minor, or incompetent person
7. a. The usual revocable savings trust The grantor-trustee(1)
account (grantor is also trustee)
b. So-called trust account that is not a The actual owner(1)
legal or valid trust under State law
8. Sole proprietorship account The owner(4)
GIVE THE EMPLOYER
FOR THIS TYPE OF ACCOUNT: IDENTIFICATION NUMBER OF:
- ------------------------- -------------------------
9. A valid trust, estate, or pension trust The legal entity (Do not
furnish the identification number
of the personal representative or
trustee unless the legal entity
itself is not designated in the
account title)(5)
10. Corporate account The organization
11. Religious, charitable, or The corporation
educational organization account
12. Partnership account The partnership
13. Association, club or other The organization
tax-exempt organization
14. A broker or registered nominee The broker or nominee
15. Account with the Department of The public entity
Agriculture in the name of a
public entity (such as a State
or local government, school
district, or prison) that receives
agricultural program payments
<PAGE>
- --------------------------
(1) List first and circle the name of the person whose number you furnish.
(2) Circle the minor's name and furnish the minor's social security number.
(3) Circle the ward's, minor's or incompetent person's name and furnish such
person's social security number.
(4) Show the name of the owner.
(5) List first and circle the name of the legal trust, estate, or pension trust.
NOTE: If no name is circled when there is more than one name, the number will
be considered to be that of the first name listed.
2
<PAGE>
GUIDELINES FOR CERTIFICATION OF TAXPAYER IDENTIFICATION
NUMBER ON SUBSTITUTE FORM W-9
PAGE 2
OBTAINING A NUMBER
If you do not have a taxpayer identification number or you do not know your
number, obtain Form SS-5, Application for a Social Security Number Card, or Form
SS-4, Application for Employer Identification Number, at the local office of the
Social Security Administration or the Internal Revenue Service and apply for a
number.
PAYEES EXEMPT FROM BACKUP WITHHOLDING
Payees specifically exempted from backup withholding on ALL payments including
the following:
- -- A corporation.
- -- A financial institution.
- -- An organization exempt from tax under section 501(a) of the Internal
Revenue Code of 1986, as amended (the "Code"), or an individual retirement
plan.
- -- The United States or any agency or instrumentality thereof.
- -- A State, the District of Columbia, a possession of the United States, or
any subdivision or instrumentality thereof.
- -- A foreign government, a political subdivision of a foreign government, or
any agency or instrumentality thereof.
- -- An international organization or any agency or instrumentality thereof.
- -- A registered dealer in securities or commodities registered in the U.S. or a
possession of the U.S.
- -- A real estate investment trust. A common trust fund operated by a bank under
section 584(a) of the Code.
- -- An exempt charitable remainder trust, or a non-exempt trust described in
section 4947(a)(1) of the Code.
- -- An entity registered at all times under the Investment Company Act of 1940.
- -- A foreign central bank of issue.
Payments of dividends and patronage dividends not generally subject to
backup withholding include the following:
- -- Payments to nonresident aliens subject to withholding under section 1441 of
the Code.
- -- Payments to partnerships not engaged in a trade or business in the United
States and which have at least one nonresident partner.
- -- Payments of patronage dividends where the amount renewed is not paid in
money.
- -- Payments made by certain foreign organizations.
- -- Payments made to a nominee.
Payments of interest not generally subject to backup withholding include the
following:
- -- Payments of interest on obligations issued by individuals.
3
<PAGE>
NOTE:You may be subject to backup withholding if this interest is $600 or more
and is paid in the course of the payer's trade or business and you have not
provided your correct taxpayer identification number to the payer.
- -- Payments of tax-exempt interest (including exempt-interest dividends under
section 852 of the Code).
- -- Payments described in section 6049(b)(5) of the Code to non-resident aliens.
- -- Payments on tax free covenant bonds under section 1451 of the Code.
- -- Payments made by certain foreign organizations. Payments made to a nominee.
EXEMPT PAYEES DESCRIBED ABOVE MUST STILL COMPLETE THE SUBSTITUTE FORM W-9
ENCLOSED HEREWITH TO AVOID POSSIBLE ERRONEOUS BACKUP WITHHOLDING. FILE
SUBSTITUTE FORM W-9 WITH THE PAYER, REMEMBERING TO CERTIFY YOUR TAXPAYER
IDENTIFICATION NUMBER ON PART III OF THE FORM, WRITE "EXEMPT" ON THE FACE OF THE
FORM AND SIGN AND DATE THE FORM AND RETURN IT TO THE PAYER.
Payments that are not subject to information reporting are also not subject
to backup withholding. For details, see sections 6041, 6041A(a), 6042, 6044,
6045, 6049, 6050A, and 6050N of the Code and their regulations.
PRIVACY ACT NOTICE.--Section 6109 requires most recipients of dividends,
interest, or other payments to give taxpayer identification numbers to payers
who must report the payments to IRS. The IRS uses the numbers for identification
purposes and to help verify the accuracy of your tax return. Payers must be
given the numbers whether or not recipients are required to file a tax return.
Payers must generally withhold 31% of taxable interest, dividends, and certain
other payments to a payee who does not furnish a taxpayer identification number
to a payer. Certain penalties may also apply.
PENALTIES
(1) PENALTY FOR FAILURE TO FURNISH TAXPAYER IDENTIFICATION NUMBER.--If you fail
to furnish your taxpayer identification number to a payer, you are subject to a
penalty of $50 for each such failure unless your failure is due to reasonable
cause and not to willful neglect.
(2) CIVIL PENALTY FOR FALSE INFORMATION WITH RESPECT TO WITHHOLDING.--If you
make a false statement with no reasonable basis which results in no imposition
of backup withholding, you are subject to a penalty of $500.
(3) CRIMINAL PENALTY FOR FALSIFYING INFORMATION--Falsifying certifications or
affirmations may subject you to criminal penalties including fines and/or
imprisonment.
FOR ADDITIONAL INFORMATION CONTACT YOUR TAX CONSULTANT OR THE INTERNAL REVENUE
SERVICE.
4
This announcement is neither an offer to purchase nor a solicitation of an offer
to sell Shares. The Offer is made solely by the Offer to Purchase, dated
December 28, 1999 and the related Letter of Transmittal, and any amendments or
supplements thereto, which are being mailed to all holders of Shares. The
Company is not aware of any jurisdiction where the making of the Offer is not in
compliance with applicable law. If the Company becomes aware of any jurisdiction
where the making of the Offer or the acceptance of Shares pursuant thereto is
not in compliance with applicable law, the Company will make a good faith effort
to comply with the applicable law. If, after such good faith effort, the Company
cannot comply with the applicable law, the Offer will not be made to (nor will
tenders be accepted from or on behalf of) the holders of Shares in such
jurisdiction. In any jurisdiction where the securities, blue sky or other laws
require the Offer to be made by a licensed broker or dealer, the Offer shall be
deemed to be made on behalf of the Company by one or more registered brokers or
dealers licensed under the laws of such jurisdiction.
NOTICE OF OFFER TO PURCHASE FOR CASH
BY
RIVIERA HOLDINGS CORPORATION
UP TO 500,000 SHARES OF ITS COMMON STOCK
AT A PURCHASE PRICE OF $7.50 PER SHARE IN CASH
Riviera Holdings Corporation, a Nevada corporation (the "Company"), invites
its stockholders to tender up to 500,000 shares of its Common Stock, par value
$.001 per share (the "Shares"), to the Company at $7.50 per Share, net to the
seller in cash, without interest thereon (the "Purchase Price"), upon the terms
and subject to the conditions set forth in the Offer to Purchase, dated December
28, 1999 and in the related Letter of Transmittal (which, as amended,
supplemented or otherwise modified from time to time, together constitute the
"Offer").
THE OFFER, PRORATION PERIOD AND WITHDRAWAL RIGHTS EXPIRE AT 12:00
MIDNIGHT, NEW YORK CITY TIME, ON WEDNESDAY, FEBRUARY 2, 2000 UNLESS THE
OFFER IS EXTENDED.
THE OFFER IS NOT CONDITIONED ON ANY MINIMUM NUMBER OF SHARES BEING
TENDERED. THE OFFER IS, HOWEVER, SUBJECT TO CERTAIN OTHER CONDITIONS SET FORTH
IN THE OFFER TO PURCHASE.
THE BOARD OF DIRECTORS OF THE COMPANY HAS APPROVED THE OFFER. HOWEVER,
NEITHER THE COMPANY NOR ITS BOARD OF DIRECTORS MAKES ANY RECOMMENDATION TO
STOCKHOLDERS AS TO WHETHER TO TENDER OR REFRAIN FROM TENDERING THEIR SHARES.
EACH STOCKHOLDER MUST MAKE THE DECISION WHETHER TO TENDER SUCH STOCKHOLDER'S
SHARES AND, IF SO, HOW MANY SHARES TO TENDER. THE COMPANY HAS BEEN ADVISED THAT
NONE OF ITS DIRECTORS OR EXECUTIVE OFFICERS INTENDS TO TENDER SHARES PURSUANT TO
THE OFFER.
The Company will pay the Purchase Price for all Shares properly tendered
prior to the Expiration Date (as defined below) and not properly withdrawn, upon
the terms and subject to the conditions of the Offer, including the odd lot and
proration provisions. UNDER NO CIRCUMSTANCES WILL INTEREST BE PAID ON THE
PURCHASE PRICE FOR THE SHARES, REGARDLESS OF ANY DELAY IN MAKING SUCH PAYMENT.
The term "Expiration Date" means 12:00 Midnight, New York City time, on
Wednesday, February 2, 2000, unless and until the Company, in its sole
discretion, shall have extended the period of time during which the Offer will
remain open, in which event the term "Expiration Date" shall refer to the latest
time and date at which the Offer, as so extended by the Company, shall expire.
The Company reserves the right, in its sole discretion, to purchase more than
500,000 Shares pursuant to the Offer. For purposes of the Offer, the Company
will be deemed to have accepted for payment (and therefore purchased) Shares
properly tendered and not properly withdrawn (subject to the proration
provisions of the Offer) only when, as and if the Company gives oral or written
notice to American Stock Transfer & Trust Company (the "Depositary") of its
acceptance of such Shares for payment pursuant to the Offer. Payment for Shares
tendered and
<PAGE>
accepted for payment pursuant to the Offer will be made only after timely
receipt by the Depositary of certificates for such Shares (or a timely
confirmation of a book-entry transfer of such Shares into the Depositary's
account at the Book-Entry Transfer Facility (as defined in the Offer to
Purchase)), a properly completed and duly executed Letter of Transmittal (or a
manually signed facsimile thereof) and any other documents required by the
Letter of Transmittal.
The Board of Directors determined that an offer to repurchase Shares
directly from the Company's stockholders pursuant to this Offer would be in the
best interests of the Company and its stockholders. The Board of Directors
believes that the purchase of Shares at this time is consistent with the
Company's long term corporate goal of seeking to increase stockholder value. In
addition, the Offer will provide the Company's stockholders an opportunity to
sell a portion of their Shares which may not be available to shareholders based
upon the current trading market conditions of the Shares.
Upon the terms and subject to the conditions of the Offer, if at the
Expiration Date more than 500,000 Shares (or such greater number of Shares as
the Company may elect to purchase) are properly tendered and not properly
withdrawn, the Company will buy Shares first from all Odd Lot Holders (as
defined in the Offer to Purchase) who properly tendered all of their Shares and
then on a pro rata basis from all other stockholders who properly tender Shares
(and do not properly withdraw them prior to the expiration of the Offer). The
Company expressly reserves the right, in its sole discretion, at any time and
from time to time, and regardless of whether or not any of the events set forth
in the Offer to Purchase under "The Tender Offer -- Certain Conditions of the
Offer" shall have occurred or shall be deemed by the Company to have occurred,
to extend the period of time during which the Offer is open and thereby delay
acceptance for payment of, and payment for, any Shares by giving oral or written
notice of such extension to the Depositary and making a public announcement
thereof. During any such extension, all Shares previously tendered and not
properly withdrawn will remain subject to the Offer and to the rights of a
tendering stockholder to withdraw such stockholder's Shares.
Tenders of Shares pursuant to the Offer are irrevocable except that such
Shares may be withdrawn at any time prior to the Expiration Date and, unless
theretofore accepted for payment by the Company pursuant to the Offer, may also
be withdrawn at any time after 12:00 Midnight, New York City time, on Wednesday,
February 2, 2000. For such withdrawal to be effective, a written, telegraphic,
telex or facsimile transmission notice of withdrawal must be timely received by
the Depositary at its address set forth on the back cover of the Offer to
Purchase. Any such notice of withdrawal must specify the name of the tendering
stockholder, the number of Shares to be withdrawn and the name of the registered
holder of such Shares. If the certificates for Shares to be withdrawn have been
delivered or otherwise identified to the Depositary, then, prior to the release
of such certificates, the serial numbers shown on such certificates must be
submitted to the Depositary and the signature(s) on the notice of withdrawal
must be guaranteed by an Eligible Institution (as defined in the Offer to
Purchase), unless such Shares have been tendered for the account of an Eligible
Institution. If Shares have been tendered pursuant to the procedure for
book-entry transfer set forth in the Offer to Purchase, any notice of withdrawal
also must specify the name and the number of the account at the Book-Entry
Transfer Facility to be credited with the withdrawn Shares and must otherwise
comply with such Book-Entry Transfer Facility's procedures. All questions as to
the form and validity (including the time of receipt) of any notice of
withdrawal will be determined by the Company, in its sole discretion, whose
determination will be final and binding. None of the Company, the Depositary,
the Information Agent or any other person will be under any duty to give
2
<PAGE>
notification of any defects or irregularities in any tender or notice of
withdrawal or incur any liability for failure to give any such notification.
The information required to be disclosed by Rule 13e-4(d)(1) under the
Securities Exchange Act of 1934, as amended, is contained in the Offer to
Purchase and is incorporated herein by reference.
The Offer to Purchase and the related Letter of Transmittal are being
mailed to record holders of Shares whose names appear on the Company's
stockholder list and will be furnished to brokers, dealers, commercial banks,
trust companies and similar persons whose names, or the names of whose nominees,
appear on the stockholder list or, if applicable, who are listed as participants
in a clearing agency's security position listing for subsequent transmittal to
beneficial owners of Shares.
THE OFFER TO PURCHASE AND THE RELATED LETTER OF TRANSMITTAL CONTAIN
IMPORTANT INFORMATION WHICH SHOULD BE READ CAREFULLY BEFORE ANY DECISION WITH
RESPECT TO THE OFFER IS MADE.
Questions and requests for assistance or for copies of the Offer to
Purchase and the related Letter of Transmittal, and other Offer materials, may
be directed to the Information Agent as set forth below, and copies will be
furnished promptly at the Company's expense. No fees or commissions will be paid
to brokers, dealers or other persons (other than the Information Agent) for
soliciting tenders of Shares pursuant to the Offer.
The Information Agent for the Offer is:
MacKenzie Partners, Inc.
156 Fifth Avenue
New York, NY 10010
(212) 929-5500 (call collect)
or call toll free 1 (800) 322-2885
3
NEWS | Riviera Holdings Corporation
BULLETIN | 2901 Las Vegas Boulevard South
| Las Vegas, NV 89109
From: | Investor Relations: (800) 362-1460
FRB | Fax: (702) 794-9442
| Hotel: (702) 734-5110
| TRADED: AMEX - RIV
- --------------------------------------------------------------------------------
The Financial Relations Board, Inc.
FOR FURTHER INFORMATION:
AT THE COMPANY: AT FINANCIAL RELATIONS BOARD:
Duane Krohn, Secretary, Treasurer and CFO Don Markley, Virginia Turner (media)
(702) 794-9527 (415) 986-1591
Email: [email protected]
INFORMATION AGENTS for the TENDER OFFER:
MacKenzie Partners
(800) 322-2885 or (212) 929-5500
FOR IMMEDIATE RELEASE
RIVIERA ANNOUNCES $7.50 PER SHARE CASH SELF-TENDER OFFER
FOR UP TO 500,000 SHARES
LAS VEGAS, NV-Tuesday, December 28, 1999 - Riviera Holdings Corporation (AMEX:
RIV) announced today that its Board of Directors has approved and authorized
Riviera to make a cash tender offer of $7.50 per share, for 500,000 shares of
its common stock, which represents approximately 11% of its currently
outstanding common stock, subject to the terms and conditions set forth in the
Offer to Purchase Shares of Riviera which will be mailed to current
shareholders.
If more than 500,000 shares of common stock are properly tendered pursuant to
the Offer to Purchase and Letter of Transmittal, Riviera will buy shares first
from holders of less than 100 shares and then accept shares on a pro rata basis.
Riviera may purchase more than 500,000 shares of common stock pursuant to the
tender offer.
Riviera believes that its purchase of shares is an attractive long-term
investment for Riviera and non-tendering stockholders. Riviera is making the
offer to provide stockholders who wish to sell their shares the opportunity to
do so for cash at a premium over recent market prices. The public trading market
for the Shares has recently been characterized by low prices and low trading
volume. As a result, there is a limited market for the Shares and low trading
volumes make it difficult for stockholders to sell a substantial number of
Shares at prevailing market prices.
-more-
<PAGE>
Riviera Announces $7.50 Per Share Cash Self-Tender Offer
Page 2
The Board of Directors of Riviera has approved the tender offer and makes no
recommendation to stockholders as to whether to tender or refrain from tendering
their shares. Each stockholder must make the decision whether to tender shares
and, if so, how many shares to tender. Riviera has been advised that none of its
directors or executive officers intend to tender any shares pursuant to the
tender offer price.
On December 27, 1999, the last trading day prior to the announcement of the
tender offer, the Amex closing market price for Riviera stock was $5.19 per
share.
Stockholders may obtain further information by calling MacKenzie Partners, the
Information Agents for the tender offer, at 800-322-2885 or 212-929-5500, or by
calling Riviera directly and asking for Duane Krohn, Secretary, Treasurer and
CFO at 702-794-9527.
This press release is for informational purposes only and is not intended to
serve as a solicitation to buy securities. Any solicitation to buy securities is
made only pursuant to the Offer to Purchase and the Letter of Transmittal.
About Riviera Holdings
Riviera Holdings Corporation owns and operates the Riviera Hotel & Casino on the
Las Vegas Strip and has developed a casino in Black Hawk, Colorado, which is
expected to open in the near future and is expected to make a significant
contribution to Riviera's cash flow. Riviera Holdings Corporation is traded on
the American Stock Exchange under the symbol RIV.
# # #
For more information on Riviera via fax at no cost,
please call (800) PRO-INFO (201-432-6555 outside the U.S.), code RIV.
Item 8. Financial Statements and Supplementary Data
Financial Statements for the Years Ended
December 31, 1998, 1997 and 1996 and
Independent Auditors' Report
RIVIERA HOLDINGS CORPORATION
TABLE OF CONTENTS
Page
INDEPENDENT AUDITORS' REPORT 28
CONSOLIDATED FINANCIAL STATEMENTS:
Balance Sheets as of December 31, 1998 and 1997 29
Statements of Operations for the Years
Ended December 31, 1998, 1997 and 1996 30
Statements of Stockholders' Equity for Years
Ended December 31, 1998, 1997 and 1996 32
Consolidated Statements of Cash Flows for Years
Ended December 31, 1998, 1997 and 1996 33
Notes to Consolidated Financial Statements 35
<PAGE>
INDEPENDENT AUDITORS' REPORT
Riviera Holdings Corporation
Las Vegas, Nevada
We have audited the accompanying consolidated balance sheets of Riviera Holdings
Corporation and subsidiaries (the "Company") as of December 31, 1998 and 1997,
and the related consolidated statements of operations, stockholders' equity, and
cash flows for each of the three years in the period ended December 31, 1998.
These financial statements are the responsibility of the Company's management.
Our responsibility is to express an opinion on these financial statements based
on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audits to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, such consolidated financial statements present fairly, in all
material respects, the financial position of the Company as of December 31, 1998
and 1997, and the results of its operations and its cash flows for each of the
three years in the period ended December 31, 1998, in conformity with generally
accepted accounting principles.
/s/ Deloitte & Touche LLP
Las Vegas, Nevada
February 19, 1999, except for Note 18, as to
which the date is October 18, 1999
<PAGE>
<TABLE>
<CAPTION>
RIVIERA HOLDINGS CORPORATION
CONSOLIDATED BALANCE SHEETS
DECEMBER 31, 1998 AND 1997
(In thousands, except share amounts)
- -----------------------------------------------------------------------------------------------------------------------
ASSETS 1998 1997
CURRENT ASSETS:
<S> <C> <C>
Cash and cash equivalents $ 48,883 $ 65,151
Accounts receivable, net 5,389 4,938
Inventories 2,727 3,509
Prepaid expenses and other assets 4,028 4,554
------------- -------------
Total current assets 61,027 78,152
U.S. TREASURY BILLS HELD TO RETIRE $100 MILLION NOTES 106,596
PROPERTY AND EQUIPMENT, Net 175,622 153,611
OTHER ASSETS, Net 8,260 9,507
------------- -------------
TOTAL $ 244,909 $ 347,866
============= =============
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Current portion of long-term debt $ 363 $ 364
Accounts payable 11,865 10,890
Accrued interest, other 6,563 6,570
Accrued expenses 10,053 8,795
------------- -------------
Total current liabilities 28,844 26,619
------------- -------------
DEFERRED INCOME TAX LIABILITY, Net 3,123 5,958
------------- -------------
$100 MILLION NOTES TO BE RETIRED BY THE U.S. TREASURY BILLS 100,000
------------- -------------
OTHER LONG-TERM LIABILITIES 4,933 4,076
------------- -------------
LONG-TERM DEBT, Net of current portion 174,506 173,436
------------- -------------
COMMITMENTS AND CONTINGENCIES (Note 12)
STOCKHOLDERS" EQUITY:
Common stock ($.001 par value; 20,000,000 shares authorized; 5,073,376 and
4,903,680 shares at December 31, 1998 and 1997, respectively,
issued and outstanding 5 5
Additional paid-in capital 13,457 13,711
Treasury stock (34,300 shares at December 31, 1998) (167)
Notes receivable from employee stockholders (3) (207)
Retained earnings 20,211 24,268
------------- -------------
Total stockholders" equity 33,503 37,777
------------- -------------
TOTAL $ 244,909 $ 347,866
============= =============
</TABLE>
See notes to consolidated financial statements.
<PAGE>
<TABLE>
<CAPTION>
RIVIERA HOLDINGS CORPORATION
CONSOLIDATED STATEMENTS OF OPERATIONS YEARS ENDED DECEMBER 31, 1998, 1997 AND
1996 (In thousands, except per share and share amounts)
- ---------------------------------------------------------------------------------------------------------------------------
1998 1997 1996
REVENUES:
<S> <C> <C> <C>
Casino $ 77,676 $ 71,624 $ 80,384
Rooms 39,607 41,812 42,246
Food and beverage 23,940 21,603 22,641
Entertainment 21,543 20,895 21,778
Other 11,155 10,556 9,987
-------------- ------------- -------------
Total 173,921 166,490 177,036
Less promotional allowances 13,966 12,697 12,627
-------------- ------------- -------------
Net revenues 159,955 153,793 164,409
-------------- ------------- -------------
COSTS AND EXPENSES:
Direct costs and expenses of operating departments:
Casino 45,293 40,620 45,699
Rooms 20,859 21,235 22,344
Food and beverage 17,539 16,118 16,223
Entertainment 16,861 17,235 17,956
Other 3,308 3,011 2,916
Other operating expenses:
General and administrative 27,028 26,211 27,778
Corporate expenses, severance pay 551
Depreciation and amortization 12,137 10,485 8,212
-------------- ------------- -------------
Total costs and expenses 143,576 134,915 141,128
-------------- ------------- -------------
INCOME FROM OPERATIONS 16,379 18,878 23,281
-------------- ------------- -------------
OTHER INCOME (EXPENSE):
Interest expense on $100 million notes (4,642) (11,067) (11,063)
Interest income on Treasury Bills held to retire $100 million notes 2,334 2,267
Interest expense, other (19,545) (7,908) (1,022)
Interest income, other 2,440 1,926 1,167
Interest capitalized 2,679 771
Other, net (1,229) (1,470) 505
-------------- ------------- -------------
Total other expense (17,963) (15,481) (10,413)
-------------- ------------- -------------
INCOME (LOSS) BEFORE PROVISION (BENEFIT) FOR TAXES AND
EXTRAORDINARY ITEM (1,584) 3,397 12,868
PROVISION (BENEFIT) FOR INCOME TAXES (533) 1,309 4,428
-------------- ------------- -------------
INCOME (LOSS) BEFORE EXTRAORDINARY ITEM (1,051) 2,088 8,440
EXTRAORDINARY ITEM (net of income tax of $1.6 million) (3,006)
-------------- ------------- -------------
NET INCOME (LOSS) $ (4,057) $ 2,088 $ 8,440
============== ============= =============
</TABLE>
See notes to consolidated financial statements (Continued)
<PAGE>
<TABLE>
<CAPTION>
RIVIERA HOLDINGS CORPORATION
CONSOLIDATED STATEMENTS OF OPERATIONS YEARS ENDED DECEMBER 31, 1998, 1997 AND
1996 (In thousands, except per share and share amounts)
- --------------------------------------------------------------------------------------------------------------------------
1998 1997 1996
EARNINGS PER SHARE DATA:
Earnings (loss) per share before extraordinary item:
<S> <C> <C> <C>
Basic $ (0.21) $ 0.42 $ 1.73
============== ============= ==============
Diluted $ (0.21) $ 0.40 $ 1.63
============== ============= ==============
Earnings (loss) per share for extraordinary item:
Basic $ (0.60) $ - $ -
============== ============= ==============
Diluted $ (0.60) $ - $ -
============== ============= ==============
Earnings (loss) per share:
Basic $ (0.81) $ 0.42 $ 1.73
============== ============= ==============
Diluted $ (0.81) $ 0.40 $ 1.63
============== ============= ==============
Weighted-average common shares outstanding 5,037 4,913 4,880
============== ============= ==============
Weighted-average common and common equivalent shares 5,037 5,214 5,169
============== ============= ==============
</TABLE>
See notes to consolidated financial statements.
(Concluded)
<PAGE>
<TABLE>
<CAPTION>
RIVIERA HOLDINGS CORPORATION
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY YEARS ENDED DECEMBER 31, 1998,
1997 AND 1996 (In thousands, except share amounts)
- -----------------------------------------------------------------------------------------------------------------------
Notes
Receivable
Additional from
Shares Common Paid-In Retained Treasury Employee
Outstanding Stock Capital Earnings Stock Shareholders Total
BALANCES,
<S> <C> <C> <C> <C> <C> <C> <C>
JANUARY 1, 1996 4,800,000 $ 5 $ 12,537 $ 13,740 $ 26,282
Stock issued under employee
stock purchase plan 137,000 1,543 $ (1,383) 160
Collections of stockholders"
receivables 332 332
Refunds on employee
stock purchases (17,600) (198) 198
Director compensation plan 3,103 37 37
Net income 8,440 8,440
---------- ------ ----------- ----------- ---------- -----------
BALANCES,
DECEMBER 31, 1996 4,922,503 5 13,919 22,180 (853) 35,251
Stock issued under employee
stock purchase plan 6,200 71 (71)
Collections of stockholders'
receivables 425 425
Refunds on employee
stock purchases (25,900) (292) 292
Director compensation plan 877 13 13
Net income 2,088 2,088
---------- ------ ----------- ----------- ---------- -----------
BALANCES,
DECEMBER 31, 1997 4,903,680 5 13,711 24,268 (207) 37,777
Stock issued under executive
option plan 269,096 480 480
Collections and refunds of
stockholders' receivables, net (530) (530)
Purchase of treasury stock (34,300) $ (167) (167)
Refunds on employee stock
purchases (65,100) (734) 734
Net loss (4,057) (4,057)
---------- ------ ----------- ----------- --------- ---------- -----------
BALANCES,
DECEMBER 31, 1998 5,073,376 $ 5 $ 13,457 $ 20,211 $ (167) $ (3) $ 33,503
========== ====== =========== =========== ========= ========== ===========
</TABLE>
See notes to consolidated financial statements
<PAGE>
<TABLE>
<CAPTION>
RIVIERA HOLDINGS CORPORATION
CONSOLIDATED STATEMENTS OF CASH FLOWS
YEARS ENDED DECEMBER 31, 1998, 1997 AND 1996 (In thousands)
- -----------------------------------------------------------------------------------------------------------------------
1998 1997 1996
CASH FLOWS FROM OPERATING ACTIVITIES:
<S> <C> <C> <C>
Net income (Loss) $ (4,057) $ 2,088 $ 8,440
Adjustments to reconcile net income (loss) to net cash provided by
operating activities:
Depreciation and amortization 12,137 10,485 8,212
Provision for bad debts 782 (16) 524
Provision for gaming discounts (76) (84) 232
Gain on disposition of long-term debt, net (505)
Extraordinary item, call premium to retire $100 million notes 4,624
Interest income on U.S. Treasury Bills to retire $100 million notes (2,334)
Interest expense, $100 million notes 4,642 11,067 12,085
Interest paid on $100 million notes (4,614) (11,420) (12,072)
Interest expense, other 19,545 7,874
Interest paid, other (17,688)
Interest capitalized on construction projects (2,679) (771)
Changes in operating assets and liabilities:
Increase in U.S. Treasury Bills purchased to retire $100 million notes (2,267)
(Increase) decrease in accounts receivable, net (1,157) 276 (1,535)
Decrease (increase) in inventories 782 (470) (853)
Decrease (increase) in prepaid expenses and other assets 526 (1,862) (90)
(Decrease) increase in accounts payable (774) 2,167 166
Increase (decrease) in accrued expenses 1,258 (726) 104
Increase (decrease) in current income taxes payable (413) 362
(Decrease) increase in deferred income taxes payable (2,835) 1,332 1,603
Decrease in slot annuities payable (153) 253 578
Increase in non-qualified pension plan obligation to CEO upon retire 600 755 1,039
------------- --------------- -------------
Net cash provided by operating activities 8,529 18,268 18,290
CASH FLOWS FROM INVESTING ACTIVITIES:
Capital expenditures for property and equipment, other (21,432) (19,752) (14,923)
Capital expenditures - Black Hawk, Colorado (9,842) (17,353)
Interest capitalized on construction projects 2,679 771
Increase in other assets - Black Hawk, Colorado (27) (100)
(Increase) decrease in other assets (208) (6,346) 1,906
------------ ---------------- -------------
Net cash used in investing activities (28,830) (42,780) (13,017)
------------ ---------------- -------------
</TABLE>
See notes to consolidated financial statements.
(Continued)
<PAGE>
<TABLE>
<CAPTION>
RIVIERA HOLDINGS CORPORATION
CONSOLIDATED STATEMENTS OF CASH FLOWS
YEARS ENDED DECEMBER 31, 1998, 1997 AND 1996 (In thousands)
- -----------------------------------------------------------------------------------------------------------------------
1998 1997 1996
CASH FLOWS FROM FINANCING ACTIVITIES:
<S> <C> <C> <C>
Proceeds from long-term borrowings $ 172,848 $ 209
U.S. Treasury Bills sold (purchased) to retire $100 million notes $ 108,930 (104,329)
Payments to retire $100 million notes with call premium (104,313)
Payments on long-term borrowings (364) (5,041) (2,226)
Purchase of treasury stock (167)
Proceeds from issuance of stock to employees and directors 13 197
Net collections, cancellations employee stock purchase plan and exercise of employee
stock options (50) 425 332
------------- ------------- -----------
Net cash provided by (used in) financing activities 4,036 63,916 (1,488)
------------- ------------- -----------
(DECREASE) INCREASE IN CASH AND CASH EQUIVALENTS (16,268) 39,404 3,785
CASH AND CASH EQUIVALENTS, BEGINNING OF YEAR 65,151 25,747 21,962
------------- ------------- -----------
CASH AND CASH EQUIVALENTS, END OF YEAR $ 48,883 $ 65,151 $ 25,747
============= ============= ===========
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION -
Income taxes paid $ - $ 1,860 $ 2,463
============= ============= ===========
SUPPLEMENTAL DISCLOSURE OF NONCASH FINANCING ACTIVITIES:
Stock issued to employees for notes receivable $ - $ 7 $ 1,383
============= ============= ===========
Noncash reductions of long-term debt $ - $ 845
============= ===========
Property acquired with debt and accounts payable $ 2,874
=============
</TABLE>
See notes to consolidated financial statements.
(Concluded)
<PAGE>
RIVIERA HOLDINGS CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
YEARS ENDED DECEMBER 31, 1998, 1997 AND 1996
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Basis of Presentation - Riviera Holdings Corporation and its wholly owned
subsidiary, Riviera Operating Corporation ("ROC"), (together, the "Company"),
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.
All significant subsidiaries are consolidated and inter company transactions
eliminated in this presentation.
Nature of Operations - The primary line of business of the Company is the
operation of the Riviera Hotel and Casino (the "Riviera") on the Strip in Las
Vegas, Nevada. The Company, through its gaming management subsidiary, also
manages the Four Queens Hotel and Casino (owned by Elsinore Corporation) in
downtown Las Vegas (see Note 13). Currently, the Company is developing a casino
in Black Hawk, Colorado, through Riviera Black Hawk, Inc., ("RBH") a wholly
owned subsidiary of ROC. Riviera Gaming Management of Colorado, Inc. is a wholly
owned subsidiary of RGM, and will manage the casino when completed.
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, recording casino and other revenues, and granting credit comply, in
all material respects, with the applicable regulations.
Principles of Consolidation - The consolidated financial statements include the
accounts of the Company, its wholly owned subsidiaries, ROC and RGM, and their
related subsidiary entities. All material intercompany accounts and transactions
have been eliminated.
Cash and Cash Equivalents - All highly liquid investments securities with a
maturity of three months or less when acquired are considered to be cash
equivalents. The Company accounts for investment securities in accordance with
Statement of Financial Accounting Standards ("SFAS") No. 115, "Accounting for
Certain Investments in Debt and Equity Securities."
The Company's investment securities, along with certain cash and cash
equivalents that are not deemed securities under SFAS No. 115, are carried on
the consolidated balance sheets in the cash and cash equivalents category. SFAS
No. 115 addresses the accounting and reporting for investments in equity
securities that have readily determinable fair values and for all investments in
debt securities, and requires such securities to be classified as either held to
maturity, trading, or available for sale.
Management determines the appropriate classification of its investment
securities at the time of purchase and reevaluates such determination at each
balance sheet date. Held-to-maturity securities are required to be carried at
amortized cost. At December 31, 1998 and 1997, securities classified as held to
maturity comprised debt securities issued by the U.S. Treasury and other U.S.
government corporations and agencies, and repurchase agreements, with an
amortized cost of $35,781,000 and $50,534,000, respectively, maturing in three
months or less.
Inventories - Inventories consist primarily of food, beverage, gift shop, and
promotional inventories; and are stated at the lower of cost (determined on a
first-in, first-out basis) or market.
Property and Equipment - Property and equipment are stated at cost, and
capitalized lease assets are stated at the present value of future minimum lease
payments at the date of lease inception. Interest incurred during construction
<PAGE>
of new facilities or major additions to facilities is capitalized and amortized
over the life of the asset. Depreciation is computed by the straight-line method
over the shorter of the estimated useful lives or lease terms, if applicable, of
the related assets, which range from 5 for certain gaming equipment to 40 years
for buildings. The costs of normal maintenance and repairs are charged to
expense as incurred. Gains or losses on disposals are recognized as incurred.
The Company periodically assesses the recoverability of property, plant and
equipment and evaluates such assets for impairment whenever events or
circumstances indicate that carrying amount of an asset may not be recoverable.
Asset impairment is determined to exist if estimated future cash flows,
undiscounted and without interest charges, are less than the carrying amount.
Other Assets - Other assets include bond offering costs and commissions, which
are amortized over the life of the debt, and are included in interest expense.
Restricted Cash for Periodic Slot Payments - At December 31, 1998 and 1997, the
Company had interest-bearing deposits with a commercial bank in the amount of
$55,000 and $208,000, respectively, which are restricted as to use. These
amounts represent deposits required by the State of Nevada Gaming Control Board
to fund periodic slot payments due customers through the year 2000 and are
included in other noncurrent assets.
Stock-Based Compensation - The effect of stock options in the income statement
is reported in accordance with Accounting Principles Board Statement No. 25,
"Accounting for Stock Issued to Employees." The Company has adopted the
disclosures-only provision of SFAS No. 123, "Accounting for Stock-Based
Compensation." Accordingly, no compensation cost has been recognized for
unissued stock options in the stock option plan (see Note 15).
Fair Value Disclosure as of December 31, 1998 and 1997:
Cash and Cash Equivalents, Accounts Receivable, Restricted Cash for Periodic
Slot Payments, Accounts Payable, and Accrued Liabilities - The carrying
value of these items is a reasonable estimate of their fair value.
Long-Term Debt - The fair value of the Company's long-term debt (including
the $100 million Notes to be retired by the U.S. Treasury Bills) is
estimated based on the quoted market prices for the same or similar issues
or on the current rates offered to the Company for debt of the same
remaining maturities. Based on the borrowing rates currently available to
the Company for debt with similar terms and average maturities, the
estimated fair value of long-term debt is approximately $158,774,000 and
$276,638,000 in 1998 and 1997, respectively.
Revenue Recognition
Casino Revenue - The Company recognizes, as gross revenue, the net win
from gaming activities, which is the difference between gaming wins and
losses.
Room Revenue, Food and Beverage Revenue, Entertainment Revenue and Other
Revenue - The Company recognizes room, food and beverage, entertainment and
other revenue at the time that goods or services are provided.
Promotional Allowances - Promotional allowances consist primarily of
accommodations, entertainment, and food and beverage services furnished without
charge to customers. The retail value of such services is included in the
respective revenue classifications and is then deducted as promotional
allowances.
The estimated costs of providing promotional allowances are classified as costs
of the casino operating department through interdepartmental allocations. These
allocations for the years ended December 31, 1998, 1997 and 1996, are as follows
(amounts in thousands):
1998 1997 1996
Food and beverage $ 6,271 $ 5,759 $ 6,364
Rooms 1,698 1,442 1,209
Entertainment 1,518 903 922
--------- ----------- -----------
Total costs allocated to casino $ 9,487 $ 8,104 $ 8,495
========= =========== ===========
Federal Income Taxes - The Company and its subsidiaries file a consolidated
federal tax return. The Company accounts for income taxes in accordance with
SFAS No. 109, "Accounting for Income Taxes." SFAS No. 109 requires
<PAGE>
recognition of deferred tax assets and liabilities for the expected future tax
consequences of events that have been included in the financial statements or
tax returns. Deferred income taxes reflect the net tax effects of (i) temporary
differences between the carrying amounts of assets and liabilities for financial
reporting purposes and the amounts used for income tax purposes; and (ii)
operating loss and tax credit carryforwards.
Estimates and Assumptions - The preparation of 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, 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. Significant estimates used by the Company include
estimated useful lives for depreciable and amortizable assets, certain accrued
liabilities, and the estimated allowance for receivables. Actual results may
differ from estimates.
Reclassifications - Certain reclassifications have been made to the 1997 and
1996 financial statements to conform to the current year presentation. These
reclassifications had no effect on the Company's net income.
Recently Adopted Accounting Standards - The Financial Accounting Standards Board
("FASB") issued SFAS No. 130, "Reporting Comprehensive Income," which is
effective for fiscal years beginning after December 15, 1997. This statement
required businesses to disclose comprehensive income and its components in their
financial statements.
The Company has no items of comprehensive income.
The FASB issued SFAS No. 131, "Segment Reporting," which is effective for fiscal
years ending after December 31, 1997. This statement requires companies to
identify and disclose certain information regarding segments based upon the
operating decisions of certain of the Company's management. The Company believes
that it has complied with the requirements of this SFAS.
Recently Issued Accounting Standards - The FASB issued SFAS No. 133, "Accounting
for Derivatives," which is effective for fiscal years beginning after June 15,
1999. This statement defines derivatives and requires qualitative disclosure of
certain financial and descriptive information about a company's derivatives. The
Company will adopt SFAS No. 133 in the year ending December 31, 2000. Management
has not finalized its analysis of this SFAS or the impact on the Company.
The American Institute of Certified Public Accountants' Accounting Standards
Executive Committee issued Statement of Position No. 98-5, "Reporting on the
Costs of Start-Up Activities." This standard provides guidance on the financial
reporting for start-up costs and organization costs. This standard requires
costs of start-up activities and organization costs to be expensed as incurred,
and is effective for fiscal years beginning after December 15, 1998, although
earlier application is encouraged.
Management is evaluating the impact that this standard could have on the
Company's future consolidated financial statements.
2. ACCOUNTS RECEIVABLE
Accounts receivable consist of the following at December 31 (in thousands):
1998 1997
Casino $ 3,492 $ 2,211
Hotel 3,211 3,115
Other 158
--------- ---------
Total 6,703 5,484
Allowance for bad debts and discounts (1,314) (546)
Ending balance $ 5,389 $ 4,938
========= =========
<PAGE>
Changes in the casino and hotel allowance for bad debts and discounts for the
years ended December 31, 1998, 1997 and 1996, consist of the following (in
thousands):
1998 1997 1996
Beginning balance $ 546 $ 646 $ 741
Write-offs (391) (438) (912)
Recoveries 81 49 61
Provision for bad debts 1,154 372 524
Provision for gaming discounts (76) (83) 232
---------- ---------- ----------
Ending balance $ 1,314 $ 546 $ 646
========== ========== ==========
3. PREPAID EXPENSES AND OTHER ASSETS
Prepaid expenses and other assets consist of the following at December 31 (in
thousands):
1998 1997
Prepaid gaming taxes $ 1,209 $ 1,286
Prepaid federal income taxes 1,092 1,190
Prepaid insurance 431 263
Other prepaid expenses 1,296 1,815
--------- ---------
Total $ 4,028 $ 4,554
========= =========
4. PROPERTY AND EQUIPMENT
Property and equipment consist of the following at December 31 (in thousands):
1998 1997
Land and improvements $ 37,638 $ 36,751
Buildings and improvements 80,381 80,322
Equipment, furniture, and fixtures 71,238 67,793
Construction in progress 32,083 2,326
------------ ------------
Total property and equipment 221,340 187,192
Accumulated depreciation (45,718) (33,581)
------------ ------------
Net property and equipment $ 175,622 $ 153,611
============ ============
In 1998 and 1997, approximately $2,679,000 and $771,000, respectively, in
interest costs were capitalized on construction projects. Substantially all of
the Company's property and equipment is pledged as collateral to secure debt
(see Note 8). Repairs and maintenance that do not significantly improve the life
of fixed assets are expensed as incurred. Costs for significant improvements
that extend the expected life of fixed assets more than one year are capitalized
and depreciated over the remaining extended life using a straight line method of
depreciation.
<PAGE>
5. OTHER ASSETS
Other assets consist of the following at December 31 (in thousands):
1998 1997
Deposits $ 163 $ 725
Bond offering costs and commissions, net 6,366 7,327
Other 1,676 1,247
Restricted cash for periodic slot payments 55 208
---------- ----------
Total $ 8,260 $ 9,507
========== ==========
6. ACCOUNTS PAYABLE AND ACCRUED EXPENSES
Accounts payable consist of the following at December 31 (in thousands):
1998 1997
Outstanding chip and token liability $ 495 $ 681
Casino account deposits 1,055 203
Miscellaneous gaming 589 716
Total liabilities related to gaming activities 2,139 1,600
Accounts payable to vendors 6,516 7,944
Hotel deposits 1,119 969
Construction payables 1,749
Other 342 377
----------- ------------
Total $ 11,865 $ 10,890
=========== ============
Accrued expenses consist of the following at December 31 (in thousands):
1998 1997
Payroll, related payroll taxes, and employee benefits $ 5,919 $ 5,593
Incentive, retention, and profit sharing plans 2,797 1,982
Other 1,337 1,220
----------- ---------
Total $ 10,053 $ 8,795
=========== =========
7. OTHER LONG-TERM LIABILITIES
Other long-term liabilities consist of the following at December 31 (in
thousands):
<TABLE>
<CAPTION>
1998 1997
Periodic slot payments due to customers through 2000, pre-funded by
<S> <C> <C>
restricted cash (see Note 1) $ 55 $ 208
Nonqualified pension plan obligation to the CEO of the Company, payable
in 20 quarterly installments upon expiration of his employment contract,
plus accrued interest 4,878 3,868
----------- -----------
Total other long-term liabilities $ 4,933 $ 4,076
=========== ===========
</TABLE>
<PAGE>
8. LONG-TERM DEBT
Long-term debt consists of the following at December 31 (in thousands):
<TABLE>
<CAPTION>
1998 1997
10% First Mortgage Notes maturing on August 15, 2004, bearing interest payable
semi-annually on February 15 and August 15 of each year, redeemable beginning
August 1, 2001, at 105%; 2002 at 102.5%; and 2003 and thereafter at 100%.
These notes are collateralized by the land and physical structures comprising
the
<S> <C> <C>
Riviera Hotel and Casino $ 173,271 $ 172,963
5%Special Improvement District Bonds - issued by the City of Black Hawk, Black
Hawk, Colorado, in the amount of $2,940,000 in July 1998. Bond proceeds will
be used to finance certain road improvements and other infrastructure projects
that will benefit the Riviera Black Hawk property and the Isle of Capri, an
adjacent casino. As of December 31, 1998, approximately $1,370,000 had been
expended. Riviera Black Hawk is responsible to repay 50%
of the obligation 687
Capitalized lease obligations (see Note 11) 473 741
5.6% note payable to computer manufacturer in monthly installments of $8,835,
including interest through August 2003, for a computer
system and related peripherals 438
8.5% unsecured, promissory notes in the original principal amount of
$441,262, payable monthly and maturing December 31, 1998 96
----------- -----------
Total long-term debt 174,869 173,800
Current maturities by terms of debt (363) (364)
----------- -----------
Total $ 174,506 $ 173,436
=========== ===========
</TABLE>
Maturities of long-term debt for the year ending December 31, 1998 are as
follows (in thousands):
1999 $ 363
2000 419
2001 230
2002 235
2003 214
2004 173,271
Thereafter 137
---------------
Total $ 174,869
===============
During the fourth quarter of 1996 the Company restructured and retired certain
of its long-term debt resulting in recognition of other income, net, of
$505,000.
Other income (expense) for the year ended December 31, 1997, includes $850,000
of costs for a canceled secondary offering.
In February 1997, the Company entered into a $15.0 million, five-year reducing
revolving line of credit (the "Credit Facility"). The Credit Facility bears
interest at prime plus 0.5% or LIBOR plus 2.9%. The Company has not utilized
this line of credit. The Credit Facility was modified as a result of the 10%
First Mortgage Notes and the proposed Paulson Merger (see Note 12). The
modifications included an increase in the allowable funded debt-to-EBITDA ratio
to 4.75 to one. The Company is not currently meeting this requirement and,
therefore, cannot draw down on the Credit Facility at this time. The Credit
Facility is callable upon a change in control other than the Merger.
On August 13, 1997, the Company issued 10% First Mortgage Notes (the "10%
Notes") with a principal amount of $175 million dollars. The 10% Notes were
issued at a discount in the amount of $2.2 million. The discount is being
accreted over the life of the note on a straight-line basis. The 10% Note
Indenture contains certain covenants that limit the ability of the Company and
its restricted subsidiaries, subject to certain exceptions, to: (i) incur
additional indebtedness; (ii) pay dividends or other distributions, repurchase
capital stock or other equity interests or subordinated indebtedness; (iii)
enter into certain transactions with affiliates; (iv) create certain liens; sell
certain assets; and (v) enter into certain mergers and consolidations. A portion
of the proceeds from the 10% Notes totaling $4.5 million was paid to a bank to
retire certain long-term debt. As described in Note 9, a portion of the proceeds
was invested in U.S. Treasury Notes to pay the 11% $100 Million Notes. The
Company has registered under the Securities Act of 1933, as amended, securities
identical to the 10% Notes. On January 8, 1998, the Company completed an
exchange offer for such registered securities for the 10% Notes effective
January 1, 1998.
The 10% Notes are unconditionally guaranteed by all existing and future
restricted subsidiaries of the Company, which will not initially include Riviera
Black Hawk, Inc. ("RBH"). RBH will become collateral for the 10% First Mortgage
Notes if certain consolidated operating ratios are met. As of December 31, 1998,
RBH had no operations. At December 31, 1998, RBH only had assets of
approximately $27.1 million, which represents the cost of the land for the Black
Hawk Casino project and construction in progress. Therefore, the Company has not
included separate financial information for the guarantors as of December 31,
1998. The Company intends to disclose such additional information in the future
as the subsidiary develops.
The Company has credit facilities totaling $1,100,000 for letters of credit
issued periodically to foreign vendors for purchases of merchandise. The letters
require payment upon presentation of a valid voucher.
9. $100 MILLION NOTES RETIRED BY THE U.S. TREASURY BILLS
On August 13, 1997, the Company used part of the proceeds from the 10% Notes to
purchase United States Government Securities (the "Securities") at a cost of
$109.8 million, which was deposited into an irrevocable trust. These Securities,
together with interest that was earned by the Securities, was used to pay the
principal, interest from August 13, 1997 to June 1, 1998, and call premium of
$4,313,000 due on the 11% $100 Million Notes on June 1, 1998, which was the
earliest date the 11% $100 Million Notes could be redeemed. Interest earned from
the Securities is included in Interest income on Treasury Bills held to retire
$100 million notes. The interest expenses from the 10% Notes and from the 11%
$100 Million Notes are reported separately on the consolidated statements of
income. As a part of the funding for the retirement of these notes,
substantially all the covenants (other than payment of principal and interest)
were released. The call premium of $4.3 million and unamortized deferred
financing costs totaling $300,000 were recorded net of the 35% income tax effect
of $1.6 million, resulting in an extraordinary loss of $3.0 million.
10. FEDERAL INCOME TAXES
SFAS No. 109 requires the Company to compute deferred income taxes based upon
the difference between the financial statement and tax basis of assets and
liabilities using enacted tax rates in effect in the years in which the
differences are expected to reverse.
<PAGE>
The effective income tax rates on income attributable to continuing operations
differ from the statutory federal income tax rates for the year ended December
31, 1998, 1997, and 1996, as follows (in thousands):
<TABLE>
<CAPTION>
1998 1997 1996
Amount Rate Amount Rate Amount Rate
Taxes (benefit) at federal
<S> <C> <C> <C> <C> <C> <C>
statutory rate $ (2,164) (35.0)% $ 1,189 35.0 % $ 4,504 35.0 %
Other 21 0.3 % 120 3.5 % (76) (1.0)%
----------- ------- ----------- -------- ----------- ------
Provision (benefit) for
income taxes $ (2,143) (34.7)% $ 1,309 38.5 % $ 4,428 34.0 %
=========== ======= =========== ======== =========== ======
</TABLE>
<TABLE>
<CAPTION>
Comparative analysis of the provision (benefit) for income taxes is as follows:
1998 1997 1996
---- ---- ----
<S> <C> <C> <C>
Current 691 (23) 5,831
Deferred (2,835) 1,332 (1,603)
------- ------ -------
Total $(2,143) $1,309 $4,428
======== ======= =======
</TABLE>
The tax effects of the items comprising the Company's net deferred tax liability
consist of the following at December 31 (in thousands):
1998 1997
Deferred tax liabilities:
Basis in long-term debt obligations $ 150
Reserve differential for hospitality and gaming activities $ 1,208 1,214
Difference between book and tax depreciable property 6,299 6,955
Other 928 867
--------- ---------
Total 8,435 9,186
--------- ---------
Deferred tax assets:
Reserves not currently deductible 2,899 1,845
Bad debt reserves 460 191
AMT and other credits 1,953 1,192
--------- ---------
Total 5,312 3,228
--------- ---------
Net deferred tax liability $ 3,123 $ 5,958
========= =========
The Company has $1,953,000 of alternative minimum tax credit available to offset
future income tax liabilities. The credit has no expiration date.
<PAGE>
11. LEASING ACTIVITIES
The Company leases certain equipment under capital leases. These agreements have
been capitalized at the present value of the future minimum lease payments at
lease inception and are included with property and equipment. Management
estimates the fair market value of the property and equipment, subject to the
leases, approximates the net present value of the leases. The leased property
and equipment consist primarily of signs and air conditioning equipment.
The following is a schedule by year of the minimum rental payments due under
capital leases, as of December 31, 1998 (in thousands).
1999 $ 462
2000 232
----------
Total minimum lease payments 694
Taxes, maintenance, and insurance (177)
Interest portion of payments (44)
----------
Present value of net minimum lease payments $ 473
==========
Rental expense for the years ended December 31, 1998, 1997 and 1996, was
approximately $287,000, $275,000 and $334,000, respectively.
In addition, the Company leases retail space (primarily to retail shops and fast
food vendors) to third parties under terms of noncancelable operating leases
that expire in various years through 2003. Rental income, which is included in
other income, for the years ended December 31, 1998, 1997, and 1996, was
approximately $1,615,000, $1,555,000, and $1,573,000, respectively.
At December 31, 1998, the Company had future minimum annual rental income due
under noncancelable operating leases as follows (in thousands):
1999 $ 1,183
2000 647
2001 428
2002 276
2003 150
-----------
Total $ 2,684
===========
12. COMMITMENTS AND CONTINGENCIES
The Company is party to several routine lawsuits, both as plaintiff and
defendant, arising from 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, results of operations, or
cash flows of the Company.
Allen Paulson Merger/Litigation - In March 1998, the Company was notified by
Allen E. Paulson ("Paulson") that he was terminating the Merger Agreement
entered into in September of 1997, whereby a company controlled by Paulson would
acquire 100% of the Company's stock for $15 per share, plus an interest factor.
Approximately $5.8 million is being held in escrow for the holders of 1,770,000
Riviera Contingent Value Rights ("CVRs"). The CVRs entitle their holders to
share only in the proceeds of the funds currently in escrow. Excluded from
participating in the CVRs are Morgens Waterfall, SunAmerica, Keyport Life, and
Paulson, and their affiliates and associates, who own an aggregate 3,355,000
Riviera shares.
The Company (and three major stockholders of the Company and other defendants
involved in the terminated merger) is involved in litigation with Paulson
relating to the Merger Agreement and related issues. The Company is paying the
expenses of such litigation, but will not share in any recovery of the escrow
funds. There can be no assurance that Riviera will be successful in collecting
all or any part of the funds currently held in the escrow account.
Other income (expense) for the year ended December 31, 1998 and 1997, includes
$1,231,000 and $400,000, respectively, in costs relating to the Allen Paulson
merger/litigation. These specific legal expenses were incurred for the
collection of funds due to shareholders in connection with the terminated merger
agreement (Contingent Value Rights) and as such have been excluded from income
from operations.
Black Hawk Project - The Company is constructing a casino in Black Hawk,
Colorado, on a site that was purchased for $15.1 million in August 1997. As of
December 31, 1998, the Company had expended approximately $27.1 million on the
project. The Company entered into a contract for a gross maximum price of $27.5
million for the construction of the casino. The Company estimated the cost of
the project at $65 million. The Company believes that it has, or can raise,
sufficient funds to complete the project.
Employees and Labor Relations - As of December 31, 1998 the Riviera had
approximately 2,100 full-time equivalent employees and had collective bargaining
contracts with nine unions covering approximately 1,200 of such employees
including food and beverage employees, rooms department employees, carpenters,
engineers, stage hands, musicians, electricians, painters and teamsters. The
Company's agreements with the Southern Nevada Culinary and Bartenders Union and
Stage Hands Union, which cover the majority of the Company's unionized
employees, were renegotiated in 1998 and expire in the year 2002. Collective
Bargaining Agreements with the Operating Engineers, Electricians and Musicians
will expire in 1999, while the Agreements with the Carpenters and Painters will
expire in 2000. A new Agreement was negotiated with the Teamsters and expires in
2003. Although unions have been active in Las Vegas, management considers its
employee relations to be satisfactory. There can be no assurance, however, that
new agreements will be reached without union action or will be on terms
satisfactory to the Company.
13. MANAGEMENT AGREEMENTS
From August 1996 until February 1997, RGM was operating the Four Queens in
downtown Las Vegas under an interim management agreement for a fee of $83,333
per month. A long-term management agreement (the "Management Agreement") with
Elsinore Corporation ("Elsinore"), the owner of the Four Queens, went into
effect on February 28, 1997, the effective date of the Chapter 11 plan of
reorganization of Elsinore. The Company believes that the terms of the
Management Agreement are no less favorable to the Company than if the Company
had negotiated with an independent party.
The term of the Management Agreement is approximately 40 months, subject to
earlier termination or extension. Either party may terminate the Agreement if
cumulative earnings before interest, taxes, depreciation, and amortization
("EBITDA") for the first two fiscal years are less than $12.8 million. The Four
Queens EBITDA for the 24 months ending February 28, 1999 will approximate $10.7
million. Management and the Board of Directors of Elsinore have agreed to
continue the agreement for its original term provided, however, that it could be
terminated by either party on six month's notice. RGM is paid a minimum annual
management fee of $1.0 million, payable in equal monthly installments. In
addition, RGM is entitled to a fee of 25% of the amount by which the Four Queens
EBITDA exceeds $8 million in any fiscal year. Based upon current historical and
projected EBITDA, it is unlikely that the $8 million threshold will be met. RGM
has received warrants to purchase 1,125,000 shares of common stock of Elsinore,
exercisable during the term or extended term of the Management Agreement at an
exercise price of $1 per share. In consideration of Four Queens' failure to meet
the $12.8 million EBITDA threshold for the first two years of the agreement,
RGME and Elsinore are negotiating a revised termination bonus.
Either party can terminate the Management Agreement if (i) substantially all the
Four Queens' assets are sold; (ii) the Four Queens is merged; or (iii) a
majority of the Four Queens' or Elsinore's shares are sold. Upon such
termination RGM will receive a $2.0 million termination bonus minus any amount
realized or realizable upon exercise of the warrants.
RGM has entered into a management agreement, in principle with Riviera Black
Hawk, Inc. wherein RGM will receive management fees for operating Riviera Black
Hawk, Inc. for a percentage of revenues and EBITDA.
14. EMPLOYMENT AGREEMENTS AND EMPLOYEE BENEFIT PLANS
The Company has an employment agreement with Mr. Westerman, Chairman of the
Board and Chief Executive Officer of the Company. This agreement includes an
annual base salary, an incentive bonus based upon the extent of adjusted
operating earnings, contributions to a Non-Qualified Pension Plan, and
contributions to a Profit Sharing and 401(k) Plan. While employed by the
company, contributions to the pension plan are in amounts equal to Mr.
Westerman's salary each year plus interest on accrued amounts of a rate equal to
the current effective interest rate of the Company (10.6% at December 31, 1998).
In addition, the Company has termination fee agreements with each of the
Directors, Executive Officers, and Significant Employees pursuant to which each
of such employees will be entitled to receive one year's salary and health
insurance benefits if their employment with the Company is terminated within one
year of a change of control of the Company and without cause, or the involuntary
termination of Mr. Westerman.
On March 20, 1998, Mr. Westerman exercised a clause in the Agreement that
requires the Company to establish a trust for the money in his retirement fund
as permitted in his employment agreement following shareholder approval of a
"change in control." The approval by the shareholders of the merger on February
5, 1998, constituted a change of control (see Note 12). The Company has entered
into an agreement with Mr. Westerman to permit funding the trust amount at his
option.
The Company has an incentive compensation plan, covering employees of the
Company who, in the opinion of the Chairman of the Board, either serve in key
executive, administrative, professional, or technical capacities with the
Company or other employees who also have made a significant contribution to the
successful and profitable operation of the Company. The amount of the bonus is
based on operating earnings before depreciation, amortization, interest expense,
provision for income taxes, extraordinary losses and gains, any provisions or
payments made pursuant to the Plan, and any provisions or payments made pursuant
to the incentive compensation of the Chairman and Chief Executive Officer.
During the years ended December 31, 1998, 1997 and 1996, the Company recorded
accrued bonuses of $1,593,475, $920,000 and $2,588,000, respectively, based upon
the above incentive compensation plan and the incentive compensation plan
established for the Chairman of the Board under his employment agreement.
The Company contributes to multi-employer pension plans under various union
agreements to which the Company is a party. Contributions, based on wages paid
to covered employees, were approximately $1,657,605, $1,604,199 and $1,650,000
for the years ended December 31, 1998, 1997, and 1996. These contributions were
for approximately 1,400 employees, including food and beverage employees, room
department employees, carpenters, engineers, stage hands, electricians,
painters, and teamsters. The Company's share of any unfunded liability related
to multi-employer plans, if any, is not determinable.
The Company sponsors a Profit Sharing and 401(k) Plan that incurred
administrative expenses of approximately $36,000, $44,000 and $34,000 for the
years ended 1998, 1997, and 1996, respectively.
The profit sharing component of the Profit Sharing and 401(k) Plan provides that
the Company will make a contribution equal to one percent of each eligible
employee's annual compensation if a prescribed annual operating earnings target
is attained and an additional 1/10th of one percent thereof for each $200,000 by
which operating earnings is exceeded, up to a maximum of three percent thereof.
The Company may elect not to contribute to the Profit Sharing and 401(k) Plan if
it notifies its employees by the first day of January of the Profit Sharing and
401(k) Plan year. An employee will become vested in the Company's contributions
based on the employee's years of service. An employee will receive a year of
vesting service for each plan year in which the employee completed 1,000 hours
of service. Vesting credit will be allocated in 20% increments for each year of
service commencing with the attainment of two years of service. An employee will
be fully vested following the completion of six years of service.
The 401(k) component of the Profit Sharing and 401(k) Plan provides that each
eligible employee may contribute up to 15% of such employee's annual
compensation, and that the Company will contribute 1% of each employee's annual
compensation for each 4% of compensation contributed by the employee, up to a
maximum of 2%. All non-union employees of the Company are eligible to
participate in the Profit Sharing and 401(k) Plan after 12 consecutive months of
service with the Company.
As a result of the scheduled opening of several new Las Vegas Strip properties
in 1998, 1999, and 2000, an estimated 38,000 jobs must be filled, including
5,000 supervisory positions. Because of the Riviera's performance and
reputation, its employees are prime candidates to fill these positions. In the
third quarter of 1998, management instituted an employee retention plan (the
"Plan"), which covers approximately 90 executive, supervisory, and technical
support positions, and includes a combination of employment contracts, stay put
agreements, bonus arrangements, and salary adjustments.
The period costs associated with the Plan are being accrued as additional
payroll costs and included approximately $287,000 in 1998. The total cost of the
Plan is estimated to be approximately $2.0 million over the period July 1, 1998,
through June 30, 2001.
15. STOCK OPTION PLANS
At a meeting held on July 27, 1993, the Company's Board of Directors adopted a
stock option plan providing for the issuance of both nonqualified and incentive
stock options (as defined in the Internal Revenue Code). This stock option plan
was ratified by the Company's stockholders at the April 26, 1994, annual
meeting. The number of shares available for purchase under the Stock Option Plan
as adopted was 120,000 (as adjusted pursuant to antidilution provisions). The
stockholders approved a four-for-one stock split, increasing the number of
shares of Common Stock available for purchase under the Stock Option Plan to
480,000. Options were granted for 228,000 shares for 1993; 132,000 shares for
1994; none for 1995; and 110,000 for 1996. No options were exercised in 1996, or
1997. On November 21, 1996, the Company amended the Stock Option Plan, which was
approved at the annual meeting held on May 8, 1997, to increase the number of
shares available under the Stock Option Plan from 480,000 shares to 1,000,000
shares and granted options to purchase 300,000 additional shares to Mr.
Westerman. During 1998, 95,000 options were issued for 1997 to executives
excluding Mr. Westerman. Also during 1998, 284,000 options were exercised by
executives. In connection with the resignation of a board member and an
employee, the Company paid approximately $258,000 (included in non-recurring
corporate expenses) on 54,000 options for the difference between the weighted
average option price of $2.22 compared to the weighted average, market price of
$7.00 on the dates of exercise. On January 21, 1999, 95,000 options were issued
for 1998 to executives excluding Mr. Westerman. Options vest 25% on the date of
grant and 25% each subsequent year. The term of an option can in no event be
exercisable more than 10 years (five years in the case of an incentive option
granted to a shareholder owning more than 10% of the Common Stock), or such
shorter period, if any, as may be necessary to comply with the requirements of
state securities laws, from the date such option is granted.
On March 5, 1996, the Board of Directors adopted an employee stock purchase plan
(the "Stock Purchase Plan"), which was approved by the stockholders on May 10,
1996. A total of 300,000 shares of common stock (subject to adjustment for
capital changes) in the aggregate may be granted under the stock purchase plan.
The Stock Purchase Plan is administered by the compensation committee. The
purchase price per share of stock shall be 85% of per share market value of the
common stock on the purchase date. Employees may require the Company to
repurchase the stock prior to fulfillment upon termination or the request of the
employee. Refunds represent the return of payroll deductions to employees for
persons exiting the Plan. On May 31, 1996, approximately 560 union and non-union
employees participated in the 1996 employee stock purchase plan. Under the plan,
137,000 shares were issued to employees at $11.26 (85% of market price at May
10, 1996), for $160,000 cash and the balance in notes receivable of $1,383,000,
which are payable over two years via payroll deduction. During 1997, 25,900
shares were returned through the plan as the result of refunds to the employees.
During 1997, 6,200 shares were issued at $11.47 for notes receivable of $71,145.
During 1998, 65,100 shares of stock were returned to the Plan due to employee
refunds.
On May 10, 1996, the stockholders approved a Nonqualified Stock Option Plan for
Non-Employee Directors (the "Nonqualified Stock Option Plan") and a Stock
Compensation Plan for Directors serving on the Compensation Committee (the
"Stock Compensation Plan"). The total number of shares available for purchase
under each plan is 50,000. Pursuant to the Nonqualified Stock Option Plan,
directors were granted options to purchase 10,000 shares at exercise prices of
$13.25 and $13.50, which represented fair market value in 1996. As of December
31, 1997, 3,980 shares were issued pursuant to the Stock Compensation Plan at
$12.08 per share. In May and August of 1998, an additional 2,000 options were
issued at the market price on the respective dates of issuance, of $9.00 and
$7.50 per share. As a result of the departure of board members, 6,000 non-vested
options were extinguished.
The activity of the two stock option plans (1994 Incentive Stock Option Plan and
1996 Non-Employee Director Stock Compensation Plan) is as follows:
<TABLE>
<CAPTION>
Per Share
Exercise Price
1994 Incentive Stock Option Plan
<S> <C> <C>
Outstanding at January 1, 1996 360,000 $2.08 to $2.50
Grants 410,000 $13.63
Exercised
Canceled
-------------
Outstanding at December 31, 1996 770,000 $2.08 to $13.63
Grants
Exercised
Canceled
-------------
Outstanding at December 31, 1997 770,000 $2.08 to $13.63
Grants 95,000 $7.00
Exercised (284,000) $7.00
Purchased from option holder by Company (54,000) $7.00
Canceled (7,000) $7.00
-------------
Outstanding at December 31, 1998 520,000
1996 Non-Employee Director Stock Compensation Plan
Outstanding at January 1, 1996
Grants 4,000 $13.25
Exercised
Canceled
-------------
Outstanding at December 31, 1996 4,000 $13.25
Grants 6,000 $13.50
Exercised
Canceled
-------------
Outstanding at December 31, 1997 10,000 $13.25 to $13.50
Automatic grant to directors 8,000 $7.50 to $9.00
Exercised
Canceled (10,000) $9.00 to $13.50
-------------
Outstanding at December 31, 1998 8,000 $9.00 to $13.50
</TABLE>
No compensation cost has been recognized for unexercised options remaining in
the stock option plan. Had compensation cost for the Company's stock option plan
been determined based on the fair value at the date of grant for awards
consistent with the provisions of SFAS No. 123, the Company's net income and pro
forma net income common share and common share equivalent would have been
decreased to the pro forma amounts indicated below at December 31 (in thousands,
except per share amounts).
<TABLE>
1998 1997 1996
<S> <C> <C> <C>
Net income (loss) - as reported $ (4,057) $ 2,088 $ 8,440
Net income (loss) - pro forma $ (4,548) $ 2,058 $ 8,380
Basic income (loss) per common share - as reported $ (1) $ 0 $ 2
Basic earnings (loss) per common share - pro forma $ (1) $ 0 $ 2
Diluted earnings (loss) per common and common
share equivalent - as reported $ (1) $ 0 $ 2
Diluted earnings (loss) per common and common share
equivalent - pro forma $ (1) $ 0 $ 2
</TABLE>
The fair value of each option grant is estimated on the date of grant using the
Black-Scholes option pricing model with the following weighted-average
assumptions used for grants in 1998, 1997 and 1996, respectively: dividend yield
of 0% for all years; expected volatility of 62%, 72% and 77%; risk-free interest
rates of 5.46%, 6.50% and 5.70%; and expected lives of five years for all years.
The weighted fair value of options granted in 1998, 1997 and 1996 was $7.21,
$6.81 and $3.08, respectively.
Due to the fact that the Company's stock option programs vest over many years
and additional awards are made each year, the above pro forma numbers are not
indicative of the financial impact had the disclosure provisions of SFAS No. 123
been applicable to all years of previous option grants. The above numbers do not
include the effect of options granted prior to 1995.
16. EARNINGS PER SHARE
For the year ended December 31, 1997, the Company adopted SFAS No. 128,
"Earnings per Share." This statement established standards for computing and
presenting earnings per share ("EPS") and required restatement of all prior-
period EPS data presented. Basic EPS is computed by dividing net income by the
weighted-average number of common shares outstanding for the period. Diluted EPS
is computed by dividing net income by the weighted number of common and common
equivalent shares outstanding for the period. Options to purchase common stock,
whose exercise price was greater than the average market price for the period,
have been excluded from the computation of diluted EPS. Such antidilutive
options outstanding for the 12 months ended December 31, 1998, 1997 and 1996,
were 531,000, 410,000 and 414,000, respectively.
<PAGE>
A reconciliation of income and shares for basic and diluted EPS is as follows
(amounts in thousands, except per share amounts):
<TABLE>
<CAPTION>
Year Ended 1998
-----------------------------------------------
Income Shares Per-Share
(Numerator) (Denominator) Amount
Basic EPS -
<S> <C> <C> <C>
Loss available to common stockholders $ (4,057) 5,037 $ (0.81)
============
Effect of dilutive securities -
Options ---------- -------
Diluted EPS -
Loss available to common stockholders plus
assumed conversions $ (4,057) 5,037 $ (0.81)
============= ============= ===========
Year Ended 1997
-----------------------------------------------
Income Shares Per-Share
(Numerator) (Denominator) Amount
Basic EPS -
Income available to common stockholders $ 2,088 4,913 $ 0.42
===========
Effect of dilutive securities -
Options 301
---------- -------
Diluted EPS -
Income available to common stockholders plus
assumed conversions $ 2,088 5,214 $ 0.40
============== ============= ===========
Year Ended 1996
-----------------------------------------------
Income Shares Per-Share
(Numerator) (Denominator) Amount
Basic EPS -
Income available to common stockholders $ 8,440 4,880 $ 1.73
===========
Effect of dilutive securities -
Options 289
---------- --------
Diluted EPS -
Income available to common stockholders plus
assumed conversions $ 8,440 5,169 $ 1.63
============== ============= ===========
</TABLE>
On November 16, 1995, the stockholders of the Company approved an amendment to
the Company's Amended and Restated Articles of Incorporation to increase the
authorized shares of common stock from 5,000,000 to 20,000,000 and a
four-for-one stock split. Accordingly, per share information, average number of
shares outstanding, and number of shares outstanding in the accompanying
consolidated financial statements have been adjusted for the stock split as of
the earliest date presented (January 1, 1996).
17. SEGMENT DISCLOSURES
The Company provides Las Vegas-style gaming, amenities and entertainment. The
Company's four reportable segments are based upon the type of service provided:
Casino, rooms, food and beverage, and entertainment. The casino segment provides
customers with gaming activities through traditional table games and slot
machines. The rooms segment provides hotel services. The food and beverage
segment provides restaurant and drink services through a variety of themed
restaurants and bars. The entertainment segment provides customers with a
variety of live Las Vegas-style shows, reviews, and concerts. All other segment
activity consists of rent income, retail store income, telephone, and other
activity. The Company evaluates each segment's performance based on segment
operating profit. The accounting policies of the operating segments are the same
as those described in the summary of significant accounting policies.
<TABLE>
<CAPTION>
Food and
1998 Casino Rooms Beverage Entertainment All Other Total
<S> <C> <C> <C> <C> <C> <C>
Revenues from external customers $ 77,676 $ 36,626 $ 17,635 $ 19,764 $ 8,254 $ 159,955
Intersegment revenues 2,981 6,305 1,779 2,901 13,966
Segment profit 32,382 15,767 96 2,903 4,946 56,094
1997
Revenues from external customers 71,624 39,153 15,916 19,855 7,244 153,792
Intersegment revenues 2,659 5,687 1,040 3,312 12,698
Segment profit 31,004 17,918 (202) 2,620 4,233 55,573
1996
Revenues from external customers 80,384 40,078 16,262 20,714 6,970 164,408
Intersegment revenues 2,168 6,379 1,064 3,017 12,628
Segment profit 34,685 17,734 39 2,758 4,054 59,270
</TABLE>
Reconciliation of segment profit to consolidated net income before taxes and
extraordinary items:
<TABLE>
<CAPTION>
1998 1997 1996
<S> <C> <C> <C>
Segment profit $ 56,094 $ 55,573 $ 59,270
Other operating expenses 39,715 36,695 35,989
Other expense 17,963 15,481 10,413
---------- ---------- ----------
Net income (loss) before provision (benefit)
for taxes and extraordinary items $ (1,584) $ 3,397 $ 12,868
========== ========== ==========
</TABLE>
The Company does not market to residents of Las Vegas. Significantly all
revenues are derived from patrons visiting the Company from other parts of the
United States and other countries. Revenues from a foreign country or region may
exceed 10% of all reported segment revenues; however, the Company cannot
identify such information based upon the nature of gaming operations.
18. SUBSEQUENT EVENTS
On June 3, 1999, the registrant's wholly-owned subsidiary, Riviera Black Hawk,
Inc., closed a private placement of $45 million 13% First Mortgage Notes due
2005. The proceeds will be used for Riviera Black Hawk's casino project.
The Company entered into a Settlement Agreement, dated as of July 1, 1999 (the
"Settlement Agreement"), by and among Allen E. Paulson ("Paulson"), R&E Gaming
Corp. ("Gaming"), Riviera Acquisition Sub, Inc. ("RAS"), Elsinore Acquisition
Sub, Inc. ("EAS"), and Carlo Corporation ("Carlo," and collectively with
Paulson, Gaming, EAS and RAS, the "Paulson Plaintiffs"), and the Company
("RHC").
On Friday, October 8, 1999, the Federal District Court for the Central District
of California approved a bar order as part of a settlement of the lawsuit
brought by Allen Paulson against the Company. Pursuant to the terms of the
Settlement Agreement, the Company purchased 463,655 shares from Mr. Paulson for
$7.50 per share. By a letter dated October 13, 1999, the Company's Chairman
advised holders of Contingent Value Rights ("CVR's") that they would receive
from an escrow established by Mr. Paulson in connection with the aborted
Paulson-Riviera merger $2.46 for each CVR. On Friday, October 8, 1999, there
were 1,770,000 CVR's outstanding.
On October 18, 1999, the Company purchased 81,000 of its shares from Sun
America, Inc. at $7.50 per share. This transaction reduced Sun America's
ownership of the Company below 15% of the Company's outstanding stock to
facilitate the licensing by the Colorado Gaming Commission of the Company's
subsidiary, Riviera Black Hawk, Inc. After giving effect to such share
repurchases, the Company had 4,523,021 shares of common stock outstanding.
In a letter dated September 1, 1999, Elsinore Corporation and Four Queens, Inc.
(the "Companies") terminated a Management Agreement, dated as of February 28,
1996, by and among the Companies and Riviera Gaming Management Corp.-Elsinore
("Manager"), effective 120 days from the date of such letter (December 30,
1999). In a letter, dated September 3, 1999, William L. Westerman, acting on
behalf of the Manager (1) accepted the termination but pointed out that it would
have no effect on the rights of the Manager and its affiliates to continue to
receive the management fee and to receive other monies from the Companies for
services performed or goods supplied prior to December 30, 1999 by the Manager
and its affiliates, (2) noted that Mr. Dual Cooper had been appointed General
Manager of the Companies and requested that the Companies confirm (which they
did by executing such September 3rd letter) that the Manager is no longer
responsible for management of the Four Queens and that its role until December
30, 1999 will be limited to (i) providing such consulting services on the same
basis as at present and (iii) using its best efforts to separate the computer
systems in an orderly fashion but that the Manager will assume no responsibility
for the effectiveness thereof and (3) indicated that the Companies were to
exculpate and indemnify the Manager from any responsibility for operation of the
Four Queens from and after September 3, 1999 (which they did by executing such
September 3rd letter).
The Financial Accounting Standards Board recently issued FAS No. 137, 'Deferral
of FAS 133 Accounting for Derivatives' which delays the implementation of that
pronouncement to June 15, 2000. The Company has not determined what effect, if
any, that FAS 133 may have on its results of operations.
Item 1. Consolidated Financial Statements
Independent Accountants' Report
Condensed Consolidated Balance Sheets at September 30, 1999 (Unaudited)
and December 31, 1998
Condensed Consolidated Statements of Operations (Unaudited) for the Three
Months and Nine Months ended September 30, 1999 and 1998
Condensed Consolidated Statements of Cash Flows (Unaudited) for the
Three Months and Nine Months ended September 30, 1999 and 1998
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 September
30, 1999, and the related condensed consolidated statements of operations and of
cash flows for the three months and nine months ended September 30, 1999 and
1998. 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, 1998, 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 19, 1999, 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, 1998, is fairly stated, in all material respects, in relation
to the consolidated balance sheet from which it has been derived.
DELOITTE & TOUCHE LLP
November 1, 1999
Las Vegas, Nevada
<PAGE>
<TABLE>
<CAPTION>
RIVIERA HOLDINGS CORPORATION
CONDENSED CONSOLIDATED BALANCE SHEETS
(In Thousands, except share amounts)
September 30, December 31,
1999 1998
(Unaudited)
---------------- -----------------
ASSETS
CURRENT ASSETS:
<S> <C> <C>
Cash and cash equivalents $39,213 $48,883
Cash and cash equivalents - restricted 18,255
Short term investments 5,201
Short term investments - restricted 10,251
Accounts receivable, net 5,524 5,390
Inventories 2,601 2,726
Prepaid expenses and other assets 4,023 4,028
---------------- -----------------
Total current assets 85,068 61,027
PROPERTY AND EQUIPMENT, NET 196,321 175,622
OTHER ASSETS, NET 10,363 7,797
RESTRICTED CASH 3 463
---------------- -----------------
TOTAL ASSETS $291,755 $244,909
================ =================
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES:
Current portion of long-term debt $1,024 $363
Accounts payable 14,748 11,865
Accrued interest 4,107 6,563
Accrued expenses - other 11,561 10,053
---------------- -----------------
Total current liabilities 31,440 28,844
---------------- -----------------
Deferred income taxes 1,540 3,123
---------------- -----------------
Other long-term liabilities 5,482 4,933
---------------- -----------------
LONG-TERM DEBT, NET OF CURRENT PORTION 222,638 174,506
---------------- -----------------
COMMITMENTS AND CONTINGENCIES
SHAREHOLDERS' EQUITY:
Common stock ($.001 par value; 20,000,000 shares authorized; 5,067,676 issued
and outstanding at September 30, 1999
and 5,073,376 at December 31, 1998) 5 5
Additional paid-in capital 13,446 13,457
Treasury stock (39,100 shares at September 30, 1999, and
34,300 shares at December 31, 1998) (189) (167)
Notes receivable from Employee Shareholders (3)
Retained earnings 17,393 20,211
---------------- -----------------
Total shareholders' equity 30,655 33,503
---------------- -----------------
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $291,755 $244,909
================ =================
</TABLE>
See notes to condensed consolidated financial statements
<PAGE>
<TABLE>
<CAPTION>
RIVIERA HOLDINGS CORPORATION
CONSOLIDATED STATEMENTS OF OPERATIONS
FOR THE THREE MONTHS AND NINE MONTHS ENDED SEPTEMBER 30, 1999 AND 1998
(Unaudited)
(In Thousands, Except Per Share Amounts) Three Months Ended Nine Months Ended
September 30, September 30,
---------------------------------------------------------------
1999 1998 1999 1998
REVENUES:
<S> <C> <C> <C> <C>
Casino $18,654 $19,681 $56,934 $59,160
Rooms 8,726 8,948 28,926 29,295
Food and beverage 6,253 5,999 19,289 18,152
Entertainment 5,561 5,666 16,629 16,439
Other 2,777 2,695 8,558 8,387
-------------- -------------- -------------- --------------
41,971 42,989 130,336 131,433
Less promotional allowances 3,067 3,512 10,485 10,600
-------------- -------------- -------------- --------------
Net revenues 38,904 39,477 119,851 120,833
-------------- -------------- -------------- --------------
COSTS AND EXPENSES:
Direct costs and expenses of operating departments:
Casino 10,523 11,675 33,218 33,998
Rooms 5,473 5,182 16,335 15,611
Food and beverage 4,761 4,478 13,721 13,161
Entertainment 4,353 4,248 12,733 12,698
Other 863 836 2,501 2,494
Other operating expenses:
General and administrative 7,897 7,455 22,242 20,545
Preopening expenses-Black Hawk, Colorado casino project 46 119
Corporate expense, severance pay 551 551
Depreciation and amortization 3,550 3,047 10,404 9,037
-------------- -------------- -------------- --------------
Total costs and expenses 37,466 37,472 111,273 108,095
-------------- -------------- -------------- --------------
INCOME FROM OPERATIONS 1,438 2,005 8,578 12,738
-------------- -------------- -------------- --------------
OTHER INCOME (EXPENSE)
Interest expense on $100 million notes (4,642)
Interest on Treasury Bills held to retire $100 million notes 2,334
Interest expense, other (6,546) (4,857) (16,788) (14,655)
Interest income, other 899 590 1,598 1,942
Interest capitalized 1,261 764 3,032 1,767
Other, net (primarily Paulson litigation and settlement costs) (1,524) (567) (1,804) (1,058)
-------------- -------------- -------------- --------------
Total other income (expense) (5,910) (4,070) (13,962) (14,312)
-------------- -------------- -------------- --------------
INCOME (LOSS) BEFORE PROVISION (BENEFIT)
FOR INCOME TAXES (4,472) (2,065) (5,384) (1,574)
PROVISION (BENEFIT) FOR INCOME TAXES (2,300) (686) (2,566) (515)
-------------- -------------- -------------- --------------
INCOME (LOSS) BEFORE EXTRAORDINARY ITEM (2,172) (1,379) (2,818) (1,059)
EXTRAORDINARY ITEM, NET OF INCOME TAX OF $1.6 MILLION (3,006)
-------------- -------------- -------------- --------------
NET INCOME (LOSS) ($2,172) ($1,379) ($2,818) ($4,065)
============== ============== ============== ==============
Earnings (loss) per share before extraordinary item:
Basic $ (0.43) $ (0.27) $ (0.56) $ (0.21)
Diluted $ (0.43) $ (0.27) $ (0.56) $ (0.21)
Earnings (loss) per share for extraordinary item:
Basic $ (0.60)
Diluted $ (0.60)
Earnings (loss) per share:
Basic $ (0.43) $ (0.27) $ (0.56) $ (0.81)
Diluted $ (0.43) $ (0.27) $ (0.56) $ (0.81)
Weighted average common shares outstanding 5,067,676 5,107,976 5,068,698 5,016,201
Weighted average common&common equivalent shares 5,067,676 5,107,976 5,068,698 5,016,201
</TABLE>
See notes to condensed consolidated financial statements
<PAGE>
<TABLE>
<CAPTION>
RIVIERA HOLDINGS CORPORATION AND SUBSIDIARY
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
Three Months Ended Nine Months Ended
September 30, September 30,
1999 1998 1999 1998
----------- ---------- ---------- ----------
CASH FLOWS FROM OPERATING ACTIVITIES:
<S> <C> <C> <C> <C>
Net Income (loss) ($2,172) ($1,379) ($2,818) ($4,065)
Adjustments to reconcile net income(loss) to net cash (used in) and
provided by operating activities:
Gain on sale of equipment (55) (55)
Depreciation and amortization 3,550 3,047 10,404 9,038
Extraordinary item, call premium to defease $100M Bonds 4,624
Interest income on Tbills to defease $100M Bonds (2,334)
Interest expense, $100M Bonds 4,642
Interest paid, $100M Bonds (4,614)
Interest expense, other 6,545 4,857 16,787 14,655
Interest paid, other (8,836) (8,770) (17,627) (17,671)
Capitalized interest on construction projects (1,261) (764) (3,032) (1,767)
Other expense, net (primarily Paulson litigation and settlement) 1,566 1,118 1,919 1,609
Changes in operating assets and liabilities:
Decrease (increase) in accounts receivable, net (1,726) (1,125) (134) 211
Decrease (increase) in inventories (112) 412 124 729
Decrease (increase) in prepaid expenses
and other assets (644) (7) 5 (335)
Increase (decrease) in accounts payable (4,893) 441 (3,834) (1,564)
Increase (decrease) in accrued liabilities 1,440 (247) (42) (84)
Increase (decrease) in current income taxes payable 1,118
Increase (decrease) in deferred income taxes (1,317) (802) (1,583) (2,753)
Increase in non-qualified pension plan obligation
to CEO upon retirement 274 251 602 736
----------- ---------- ---------- ----------
Net cash (used in) provided by operating activities (7,641) (1,849) 716 1,058
----------- ---------- ---------- ----------
CASH FLOWS FROM INVESTING ACTIVITIES:
Capital expenditures for property and equipment, Las Vegas, Nevada (2,373) (7,236) (9,017) (14,868)
Capital expenditures - Black Hawk, Colorado project (9,381) (2,838) (22,205) (6,179)
Property acquired with accounts payable - primarily Black Hawk, Co. 5,231 5,558
Capitalized Interest on construction projects 1,261 764 3,032 1,767
Purchase of short term investments (230) (1) (15,452) (33)
Decrease (increase) Black Hawk, Colorado restricted funds 8,023 (18,255)
Sale of equipment 174 174
Decrease (increase) in other assets 212 185 (2,754) 220
----------- ---------- ---------- ----------
Net cash provided by (used in) investing activities 2,917 (9,126) (58,919) (19,093)
----------- ---------- ---------- ----------
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from US Tbills invested to defease $100M Bonds 108,930
Payments to defease $100M Bonds with call premium (104,313)
Proceeds from long-term borrowings 2,515 458 48,780 458
Payments on long-term borrowings (74) (94) (217) (270)
Purchase of treasury stock (22)
Net collections, cancellations employee stock purchase plan
and exercise of employee stock options (2) (7) (52)
----------- ---------- ---------- ----------
Net cash provided by financing activities 2,441 362 48,534 4,753
----------- ---------- ---------- ----------
INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS ($2,283) ($10,613) ($9,670) ($13,282)
CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD $41,496 $62,691 $48,883 $65,360
----------- ---------- ---------- ----------
CASH AND CASH EQUIVALENTS, END OF PERIOD $39,213 $52,078 $39,213 $52,078
=========== ========== ========== ==========
</TABLE>
See notes to condensed consolidated financial statements
<PAGE>
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 1996, RGM incorporated in the State of Nevada as
a wholly owned subsidiary of ROC. In March 1997 Riviera Gaming Management of
Colorado was incorporated in the State of Colorado, and in August 1997 Riviera
Black Hawk, Inc. was incorporated in the State of Colorado for the purpose of
developing a casino in Black Hawk, Colorado.
Nature of Operations
The primary line of business of the Company is the operation of the Riviera
Hotel & Casino on the "Strip" in Las Vegas, Nevada, including the operation of a
hotel/casino with restaurants and related facilities. The Company is developing
a casino in Black Hawk, Colorado. Additionally, the Company manages the Four
Queens Hotel/Casino in downtown Las Vegas, Nevada. On September 1, 1999, the
Company received notice from Elsinore Corporation that its management contract
would be cancelled effective December 30, 1999.
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, its
wholly owned subsidiary ROC and various indirect wholly owned subsidiaries. All
material intercompany accounts and transactions have been eliminated.
The financial information at September 30, 1999 and for the three months and
nine months ended September 30, 1999 and 1998 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 nine months ended
September 30, 1999 and 1998, 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, 1998, included in the Company's Annual Report on Form 10-K/A.
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 /casino. 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.
Morgens, Waterfall, Vintiadis & Company, Inc. ("Morgens Waterfall") filed a
Complaint against the issuer and its directors (the "Defendants") on September
30, 1999, in the Eighth Judicial District Court, Clark County, Nevada, Case No.
A408793 ("Nevada State Court"). Morgens Waterfall also filed an Application for
Temporary Restraining Order and Motion for Preliminary Injunction ("TRO")
seeking to restrain the issuer from pursuing its Motion for Entry of Settlement
Bar Order and Final Judgment, in a litigation in the United States District
Court for the Central District of California (Western Division), Case No.
98-2644 ABC (AIJx) (the "Paulson Plaintiffs Litigation"). The issuer filed a
Notice of Removal to United States District Court for the District of Nevada, on
October 1, 1999.
Morgens Waterfall did not pursue its application for a TRO in the Nevada Federal
Court. Instead it sought an order in the California Federal Court staying the
issuer's motion. This effort to obtain a stay failed, and the issuer's Motion
for Entry of Settlement Bar Order and Final Judgment was granted and a
Settlement Bar Order was entered by the California District Court in the Paulson
Plaintiffs Litigation on October 28, 1999.
On November 1, 1999, Morgens, Waterfall, Vintiadis & Company, Inc. made a motion
to remand its lawsuit to the Nevada State Court. The Defendants intend to oppose
such motion.
According to the memorandum filed by Morgens Waterfall in connection with its
motion to remand, the Morgens Waterfall complaint alleges "1) direct
shareholders' claims against the issuer and its directors for breaches of
fiduciary duty, based upon their entering into a discriminatory Settlement
Agreement and Bar Order which disadvantages Morgens Waterfall and other minority
shareholders for the benefit of certain other shareholders, including director
shareholders, and 2) a derivative shareholder's claim against the issuer which
seeks to enjoin the corporation from acting in a manner that discriminates
between and among its shareholders and is wasteful of corporate assets."
The Defendants believe the Morgens Waterfall complaint is without merit and
intend to seek summary judgment at the earliest possible moment.
Copies of the Morgens Waterfall complaint are filed as an exhibit to this Form
10Q.
(See also Note 4 - Paulson Merger, Contingent Value Rights and Related
Litigation).
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, 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. Significant estimates used by the Company include
estimated useful lives for depreciable and amortizable assets, certain accrued
liabilities and the estimated allowance for receivables. Actual results may
differ from estimates.
Cash and cash equivalents and short term investments - restricted
Amounts related to the Riviera Black Hawk casino project in Black Hawk, Colorado
are restricted in use to that project or for the related 13% First Mortgage
Notes interest payments.
Earnings Per Share
Basic per share amounts are computed by dividing net income (loss) by average
shares outstanding during the period. Diluted net income per share amounts are
computed by dividing net income by average shares outstanding plus the dilutive
effect of common share equivalents. However, the effect of stock options
outstanding is not included in diluted net loss per share calculations. Since
the Company incurred a net loss from continuing operations during the three
month and nine month periods ended September 30, 1999 and 1998, diluted per
share calculations are based upon average shares outstanding during this period.
Recently Issued Accounting Standards
The Financial Accounting Standards Board recently issued FAS No. 137, `Deferral
of FAS 133 Accounting for Derivatives' which delays the implementation of that
pronouncement to June 15, 2000. The Company has not determined what effect, if
any, that FAS 133 may have on its results of operations
Reclassifications
Certain amounts in the prior periods have been reclassified to conform to the
current period presentation.
2. DEBT
On August 13, 1997, the Company issued 10% First Mortgage Notes ("the 10%
Notes") with a principal amount of $175 million. The Notes were issued at a
discount in the amount of $2.2 million. The discount is being amortized over the
life of the 10% Notes on a straight-line basis. On August 13, 1997, under a
contractual defeasance, the Company used part of these proceeds to purchase
United States Government Treasury bills ("the Securities") at a cost of $109.8
million which were deposited into an irrevocable trust. The proceeds from these
securities, together with interest that was earned by the Securities was used to
pay the principal, interest and call premium due on the 11% First Mortgage Notes
("the 11% Notes" or "$100 million notes") on September 1, 1998, the earliest
date the 11% Notes could be redeemed. Interest earned from the Securities is
included in "Interest income on Treasury Bills held to retire $100 million
notes." The interest expense from the 10% Notes is included in "Interest
expense, other", and from the 11% Notes is included in "Interest expense on $100
million notes".
The $100 million notes, which were contractually defeased in August 1997, were
redeemed on June 1, 1998. The call premium of $4.3 million and unamortized
deferred financing costs totaling $300,000 were recorded net of the 35% income
tax effect of $1.6 million resulting in an extraordinary loss of $3.0 million.
On June 3, 1999, Riviera Black Hawk, Inc. ("RBH"), a wholly owned subsidiary,
closed a $45 million private placement of 13% First Mortgage Notes. The net
proceeds of the placement will be used to fund the completion of RBH's casino
project in Black Hawk, Colorado. The Company has not guaranteed the $45 million
RBH Notes, but has agreed to a "Capital Completion Commitment" of up to $10
million and a "Keep Well" of $5 million per year (or an aggregate limited to $10
million) for the first 3 years of RBH operations to cover if (i) the $5.85
million interest on such Notes is not paid by RBH and (ii) the amount by which
RBH cash flow is less than $7.5 million per year.
In April 1999, the Company entered into a $3.0 million capital lease line for 60
months at approximately 8.3% of which $1.2 million was used to date for general
equipment purchases.
In July 1999, the Company entered into a $3.5 million equipment financing
arrangement for 60 months at approximately 9.1%.
3. COMMITMENTS
RBH is constructing a casino in Black Hawk, Colorado on a site which was
purchased for $15 million in August 1997. As of September 30, 1999 the Company
had made $20.0 million in cash contributions to RBH (excluding capitalized
interest).
In October 1999, the Company's 100% owned subsidiary, Riviera Black Hawk, Inc.
committed to a $11.1 million capital lease line for 60 months at approximately
10.6% for gaming equipment , furniture and fixtures at the Black Hawk, Colorado
casino. Management believes that these financial arrangements along with the $45
million First Mortgage Notes will be sufficient to construct and open the
casino.
As a result of the scheduled opening of several new Las Vegas Strip properties
in 1999 and 2000, an estimated 38,000 jobs must be filled, including
approximately 5,000 supervisory positions. Because of the Company's performance
and reputation, its employees are prime candidates to fill these positions. In
the third quarter of 1998 management instituted an employee retention plan ("the
Plan") which covers approximately 85 executive, supervisory and technical
support positions and includes a combination of employment contracts, stay put
agreements, bonus arrangements and salary adjustments. The period costs
associated with the Plan are being accrued as additional payroll costs and
included approximately $150,000 in the third quarter of 1999 and $450,000 year
to date. The total cost of the Plan is estimated to be approximately $2.0
million over the period July 1, 1998 through June 30, 2001.
4. PAULSON MERGER, CONTINGENT VALUE RIGHTS AND RELATED LITIGATION
Riviera Holdings was a defendant in an action commenced on April 9, 1998, by
Allen Paulson, R&E Gaming Corp. and other Paulson-controlled entities
(collectively, "Paulson") in the United States District Court for the Central
District of California. The other defendants in the action include Jefferies &
Company, Inc. (the initial Purchaser of the notes), as well as Morgens,
Waterfall, Vintiadis & Company, Inc., Keyport Life Insurance Company, Sun
America Life Insurance Company and others. Paulson's claims arise from a merger
agreement between Riviera Holdings and Paulson which was terminated in the first
half of 1998.
The Company entered into a Settlement Agreement, dated as of July 1, 1999 (the
"Settlement Agreement"), by and among Allen E. Paulson ("Paulson"), R&E Gaming
Corp. ("Gaming"), Riviera Acquisition Sub, Inc. ("RAS"), Elsinore Acquisition
Sub, Inc. ("EAS"), and Carlo Corporation ("Carlo," and collectively with
Paulson, Gaming, EAS, and RAS, the "Paulson Plaintiffs"), and the Company
("RHC").
On October 8, 1999, the Federal District Court for the Central District of
California approved a bar order as part of a settlement of the lawsuit brought
by Allen Paulson against the Company. Pursuant to the terms of the Settlement
Agreement, the Company purchased 463,655 shares from Mr. Paulson for $7.50 per
share. By a letter dated October 13, 1999, the Company's Chairman advised
holders of Contingent Value Rights ("CVR's") that they would receive from an
escrow established by Mr. Paulson in connection with the aborted Paulson-Riviera
merger $2.46 for each CVR. On Friday, October 8, 1999, there were 1,770,000
CVR's outstanding. The Company accrued $1,159,000 for settlement costs as of
September 30, 1999, representing the spread between the $7.50 paid to Mr.
Paulson for his shares and the $5.00 marker price at July 1, 1999, when the
agreement was reached.
5. SUBSEQUENT EVENTS
On October 14, 1999, the Company agreed to purchase 81,000 of its shares from
Sun America, Inc. at $7.50 per share. On October 20, 1999, the Company completed
this transaction which reduced Sun America's ownership of the Company below 15%
of the Company's outstanding stock to facilitate the licensing by the Colorado
Gaming Commission of the Company's subsidiary, Riviera Black Hawk, Inc. After
giving effect to such share repurchases in addition to the Paulson repurchase,
the Company had 4,523,021 shares of common stock outstanding.
<PAGE>
5. SEGMENT DISCLOSURES
The Company provides Las Vegas-style gaming, amenities and entertainment. The
Company's four reportable segments are based upon the type of service provided:
Casino, rooms, food and beverage, and entertainment. The casino segment provides
customers with gaming activities through traditional table games and slot
machines. The rooms segment provides hotel services. The food and beverage
segment provides restaurant and drink services through a variety of themed
restaurants and bars. The entertainment segment provides customers with a
variety of live Las Vegas-style shows, reviews and concerts. All other segment
activity consists of rent income, retail store income, telephone and other
activity. Intersegment revenues consist of revenues generated through
complimentary sales to customers by the casino segment. The Company evaluates
each segment's performance based on segment operating profit. The accounting
policies of the operating segments are the same as those described in the
summary of significant accounting policies
<TABLE>
<CAPTION>
Food and Entertain-
Three Months ended September 30, 1999 Casino Rooms Beverage ment All Other Total
<S> <C> <C> <C> <C> <C> <C>
Revenues from external customers $18,654 $7,888 $4,708 $4,877 $2,777 $38,904
Intersegment revenues 838 1,545 684 3,067
Segment profit (loss) 8,131 2,415 (53) 524 1,914 12,931
Three Months ended September 30, 1998
Revenues from external customers $19,681 $7,931 $4,230 $4,940 $2,695 $39,477
Intersegment revenues 1,017 1,769 726 3,512
Segment profit (loss) 8,006 2,749 (248) 693 1,859 13,059
Nine Months ended September 30, 1999
Revenues from external customers 56,934 26,053 13,798 14,508 8,558 $119,851
Intersegment revenues 2,873 5,491 2,121 10,485
Segment profit (loss) 23,716 9,718 77 1,775 6,057 41,343
Nine Months ended September 30, 1998
Revenues from external customers $59,160 $26,229 $12,731 $14,326 $8,387 $120,833
Intersegment revenues 3,066 5,421 2,113 10,600
Segment profit (loss) 25,162 10,618 (430) 1,628 5,893 42,871
</TABLE>
Reconciliation of segment profit to consolidated net income before taxes and
extraordinary items:
<TABLE>
<CAPTION>
Three Months Ended Nine Months Ended
1999 1998 1999 1998
<S> <C> <C> <C> <C>
Segment profit 12,931 13,059 $41,343 $42,871
Other operating expenses 11,493 11,053 32,765 30,133
Other expense 5,910 4,070 13,962 14,312
Net income (loss) before provision (benefit) for taxes and
extraordinary items ($4,472) ($2,065) ($5,384) ($1,574)
======== ======== ======== ========
</TABLE>
The Company does not market to residents of Las Vegas. Significantly all
revenues are derived from patrons visiting the Company from other parts of the
United States and other countries. Revenues from a foreign country or region may
exceed 10% of all reported segment revenues; however, the Company cannot
identify such information based upon the nature of gaming operations.
