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Nov. 07, 2008
Copyright © Las Vegas Review-Journal

Riviera parent closes wallet

Company cuts capital spending for a year, puts off renovations for LV hotel

By ARNOLD M. KNIGHTLY
REVIEW-JOURNAL

Planned room renovations at the Riviera, above, will wait as its parent company, Riviera Holdings Corp., copes with the economic downturn.
Photo by Duane Prokop.

Riviera Holdings Corp. has cut nearly all capital expenditures for next year and suspended room renovations at its Strip property to help the company weather the general economic crisis, executives said Thursday during the company's third-quarter earnings call.

Chairman and Chief Executive Officer William Westerman told management that unless the expenditure is needed to keep from having to "shut the doors ... don't waste your time asking for it."


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    • Westerman said that despite the tough economic times, the company is well positioned with its banks.

    Riviera Holdings now has a $225 million bank loan at just under 7.5 percent interest, which doesn't mature until June 2014, and a $20 million revolving credit line.

    "We're going to do everything to make sure we do not have to go hat-in-hands to the banks to refinance our credits," Westerman said. "We're used to surviving. We've survived 53 years and we have a healthy cash position and we have a very excellent financial package of loans."

    The suspension of room renovations at the 2,075-room Riviera will save the company $4.3 million, according to the company.

    The decision comes after four of the five hotel towers at the property were renovated at a two-year cost of $18.7 million. The company also opened a $11 million sports book in February.

    The economy has forced the company to do what other gaming companies have done -- cut jobs and expenses as third-quarter revenues and cash flow plunged.

    Westerman said no bonuses or employee stock ownership plan payments will be made this year. Management salaries have not been cut, but management positions at the Strip property and the casino in Black Hawk, Colo., have been reduced.

    "While it has been unfortunate to let go so many of our team members, I believe we are employing the correct strategy to maximize income and cash from operations during these challenging times," Westerman said. He did not say how many people were cut.

    Company revenues dropped 23.2 percent to $40.2 million for the third quarter ended Sept. 30, down from $52.4 million for the same period last year.

    Quarterly company cash flow, defined as earnings before interest, taxes, depreciation and amortization, dropped 57.8 percent, to $4.3 million from $10.3 million.

    The company was able to trim its loss in the third quarter, however, despite sharp declines, due to the absence of a $12.9 million loss incurred last year tied to a debt retirement.

    Riviera Holdings posted a net loss of $3.5 million, or 28 cents per share, for the quarter, compared with a net loss of $18.3 million, or $1.48 per share, a year earlier.

    Riviera Holdings posted net income of $826,000 for the first nine months of the year, reversing a $12.1 million loss posted during the same time in 2007.

    Cash flow for the first nine months decreased 34.7 percent to $23.5 million from $36.1 million. Revenues for the first nine month's fell 15.4 percent to $133.8 million from $158.1 million in 2007.

    Revenues at the Strip property declined 20.3 percent for the quarter and 13.2 percent for the first nine months of the year.

    Property cash flow fell 52.2 percent for the quarter and are down 31.4 percent for the year.

    Riviera Holdings shares fell 30 cents, or 7.89 percent, Thursday to close at $3.50, on the American Stock Exchange.

    Contact reporter Arnold M. Knightly at aknightly@reviewjournal.com or 702-477-3893.

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    TFW wrote on November 14, 2008 04:04 AM: The Upper Management did not receive pay cuts of any sort ~ instead they laid off workers. And people just don't understand how/why this economy is so screwed up.

    The ones running the businesses need a true reality check. Right now in Las Vegas as we near the 23rd month of having the highest foreclosure rate ~ the casinos are continuing to pay the ceo's/cfo's, etc. millions upon millions each year and have no problem sending thousands to the unemployment line.

    Yep, Bush screwed up alot of things, but not all of this blatant greediness can be blamed on him.


    chris wrote on November 07, 2008 03:36 PM: GOD BLESS AMERICA


    casinocon wrote on November 07, 2008 11:31 AM: Riviera has it all wrong. If they won't try to compete (they are such a dump they neeed to do something), and they layoff employees -- then they need to go under. I never played or stayed there anyways, and I sure as hell won't set foot in a joint like that now. If the American Idol dude who has been trying to buy out the company still has any money he needs to make his move.


    Nikki wrote on November 07, 2008 10:38 AM: Larry,

    You sound like a bright guy, so I hope you will be able to give me some useful information to help me understand this issue;

    1. How did we get in this mess?

    2. How come we lost 1.2 million jobs this year and had the closure of many retail businnesses, like Mervyns, Linen-n-Things, etc?

    3. If Obama won't help things, how come Bush isn't creating jobs?

    4. How come Bush isn't stopping all these economic problems?


    Econ Joe wrote on November 07, 2008 10:23 AM: "The suspension of room renovations at the 2,075-room Riviera will save the company $4.3 million, according to the company."

    Only $4.3 million to renovate? That would be money well spent. You can't attract the tourist to come stay at the Riv right now, because everyone knows its a dump. Renovating the rooms would at least give them a fighting chance. I hope the Riv goes bankrupt - that place sucks anyways.


    Lynda S wrote on November 07, 2008 10:13 AM: Larry,

    You make me laugh! The people who can't find jobs and resorting to government hand outs are here, now, today!

    Ford, General Motors, Chrysler, JP Morgan, Wells Fargo, Bank of America, Citigroup, Morgan Stanley, Goldman Sachs and how many banks?

    lookatthefedhandouts

    "In the 2000 election, the Bush campaign labeled contributors who managed to bundle $100,000 or more in campaign donations as “pioneers.” Fifty-two financial firm executives raised enough money to become Bush pioneers.

    In 2004, the Bush campaign reinstated the “pioneer” fundraising moniker, but added a new status for bigger contributors. Those who could bundle $200,000 or more in contributions won the appellation of “ranger.” Fifty-three financial executives were pioneers. An additional 45 surpassed them, raising enough money to become rangers."

    bushseekswallstreetcampaignmoney


    Dr Phil wrote on November 07, 2008 09:48 AM: G-sffeokuylru_n and Larry;

    It is under republican president Bush that these events have been occuring. I'm surprised your conservative eyes have been lying to you!

    Please tell us all how McCain could save the economy of the United States.

    I think gravity would occur regardless of the occupnat in the White House.

    I'm listening.


    Joel Rossetti wrote on November 07, 2008 06:38 AM: Vegas Vic in 2012


    Larry wrote on November 07, 2008 06:38 AM: The funny thing is that the same people who voted in B.O. (Minorities, Elegies, The New Youth Voters) will not find jobs and resort to the Government hand out and crime. Not to worry, I'm sure the prison system will be able to handle the increase (should have learned the ABC's from your Liberal instructor instead of his politics).


    Vegas Vic wrote on November 07, 2008 05:18 AM: Just ANOTHER example of what government (local, state and federal) needs to do during this recession. Private businesses cut monetary outlay and people are laid off. Government, on the other hand, talks about raising taxes to shore up the sagging revenue stream. Increasing the cost to the customers doesn't work as businesses well know. The government DOESN'T know and instead of ridding itself of excess personnel, it increases personnel (under the guise of creating a committee to research ways to cut costs) and then states that it needs higher tax revenue to support an over-bloated infrastructure.


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