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Arnold M. Knightly

Riviera parent slims loss

5 March 2007

LAS VEGAS, Nevada -- The 51-year-old Riviera on the Strip turned in a strong performance and helped Riviera Holdings Corp. narrow its fourth-quarter loss, officials said Friday.

The company posted a net loss of $1.6 million, or 13 cents per share, for the quarter ended Dec. 31, narrowing a loss of $3.8 million, or 32 cents per share, a year earlier.

Revenue rose 0.6 percent to $46.5 million from $46.2 million.

The Riviera on the Strip, capitalizing on the closing of the Stardust in November, increased its net income 52 percent to $3.8 million in the fourth quarter ended Dec. 31 up from $2.5 million in 2005.

The Riviera was not able to obtain the Stardust's customer data for marketing from Boyd Gaming Corp. when the property closed in November as it had from the owners of the Westward Ho a year earlier. But many customers came to the property on their own.

"We picked up a lot of customers during the closure of the Stardust that came over and signed up in our clubs," said Riviera Las Vegas Chief Operating Officer Robert Vannucci during a Friday conference call with investors.

He added that the room demand has also increased since the closing of those two properties.

The Riviera also increased its year-to-year net income performance to $21.1 million from $19.1 million a year earlier.

For the year, Riviera Holdings had a net loss of $335,000, or 3 cents per share, compared with a net loss of $4 million, or 34 cents per share, a year earlier.

Twelve-month revenue fell 0.7 percent to $200.9 million from $202.3 million.

Company Chief Financial Officer Mark Lefever said that the decrease was primarily due to the Riviera starting to lease the property gift shops to an outside party. Before February 2006, the company had owned and operated the shops.

The company also closed the show "Splash" in October which had been a mainstay at the property since opening in 1985. The showroom is now under construction for a new show that is scheduled to open in the spring.

Riviera Holdings faced two separate buyout bids, one in September for $17 per share and the other in December for $21 per share, for the Strip property that sits on 26 acres. Both deals collapsed.

"I am especially pleased with our results because of all the disruptions management faced during the year," said Riviera Holdings Chief Executive Officer William Westerman during the conference call. "Despite all these interruptions and disruptions to our process, the fact we were able to achieve these excellent results is a credit to our team."

The local resort fourth-quarter's net revenue increased 1.6 percent to $34.2 million from $33.7 million a year earlier.

Fourth-quarter property cash flow for the Riviera, defined as earnings before interest, taxes, depreciation and amortization, increased 22.4 percent to $5.5 million from $4.5 million a year earlier. Full-year property cash flow rose 4.8 percent $28.1 million from $26.7 million.

Casino revenues for the company increased 3 percent to $26.2 million for the quarter and 3 percent to $111.4 million for the year. Room revenues increased 14 percent for the quarter and 9 percent for the year.

However, food and beverage showed slight 1 percent decreases both quarterly and year-to-year.

Riviera Holdings shares rose 31 cents, or 1.61 percent, Friday to close at $19.51 on the New York Stock Exchange.