Riviera narrows losses in fourth quarter

By Liz Benston (contact)

Tuesday, Feb. 15, 2005 | 10:55 a.m.

Shares of Riviera Holdings Corp., which owns the Riviera hotel and casino in Las Vegas, rose more than $6 per share in early trading today as the company narrowed losses and approved a three-for-one stock split.

The company said losses narrowed significantly in the fourth quarter of 2004 as it squeezed a higher profit out of its casinos in Las Vegas and Colorado.

But higher expenses, coupled with interest payments on debt, pushed the company in the red for the fourth quarter and all of last year.

The company reported a net loss of $1.5 million or 39 cents per share compared with a loss of $6.7 million or $1.93 per share in the fourth quarter of 2003.

Riviera executives said the stock split, payable on March 11, will improve liquidity for investors and will increase the company's outstanding stock to about 11.9 million shares.

In Las Vegas, revenue at the Riviera resort rose 3 percent to $1.1 million from the fourth quarter of 2003.

"The Las Vegas market continues to show elasticity and ability to grow," Riviera Las Vegas President Robert Vannucci said in a statement. "We are anticipating an increase in demand created by the opening of the new Wynn property, the Las Vegas centennial celebrations and our own 50th anniversary celebration in April."

Revenue outpaced operating expenses at the Las Vegas property, he said.

Gambling revenue rose 2 percent in the fourth quarter compared with a year ago and entertainment revenue rose 6 percent. Cash room revenue rose 5 percent. Revenue per room rose $3.73 per day to $57.60 and the hotel's occupancy rate rose 2.9 percentage points to 89.4 percent.

Without disclosing any potential development deals, Vannucci said the Riviera -- which has long been viewed as a redevelopment project or acquisition target -- will benefit in the short term as casinos and luxury condominium towers are built at the north end of the Strip as planned. The Riviera sits on 26 acres of land worth "well in excess" of its $21 million book value, he said.

Company revenue, including promotional expenses, rose 5 percent to $47.5 million in the fourth quarter. Expenses across the company rose 7 percent in the fourth quarter to $42.3 million.

Interest expense fell 2 percent to $6.7 million in the fourth quarter but still put the company in the red.

For the year 2004, the company reported a net loss of $2.1 million, or 59 cents per share compared with a net loss of $14.5 million, or $4.16 per share in 2003.

Revenue rose 6 percent to $201.4 million for the year.

Earnings before interest, taxes, depreciation and amortization, as well as development costs to build a Missouri casino that were written off last year, rose 27 percent to $40 million. That earnings figure hit a company record, officials said.