Back to GetFilings.com



SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549


FORM 10-Q

Mark One
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934

For the quarterly period ended March 31, 2003
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934

For the transition period from_________ to_________

Commission file number 000-21430

Riviera Holdings Corporation
(Exact name of Registrant as specified in its charter)

Nevada 88-0296885
(State or other jurisdiction of (IRS Employer Identification No.)
incorporation or organization)

2901 Las Vegas Boulevard South, Las Vegas, Nevada 89109
(Address of principal executive offices) (Zip Code)


Registrant's telephone number,
including area code (702) 794-9527

Indicate by check mark whether the Registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days. Yes X No


APPLICABLE ONLY TO REGISTRANTS INVOLVED IN BANKRUPTCY
PROCEEDINGS DURING THE LAST FIVE YEARS

Indicate by check mark whether the Registrant has filed all documentation
and reports required to be filed by Section 12, 13, or 15(d) of the Securities
Exchange Act of 1934 subsequent to the distribution of securities under a plan
confirmed by a court. Yes____ No____

APPLICABLE ONLY TO CORPORATE REGISTRANTS

Indicate the number of shares outstanding of each of the Registrant's
classes of common stock, as of the latest practicable date.

As of May 2, 2003, there were 3,606,155 shares of Common Stock, $.001 par value
per share, outstanding.




RIVIERA HOLDINGS CORPORATION

INDEX

Page
PART I. FINANCIAL INFORMATION

Item 1. Consolidated Financial Statements

Independent Accountants' Report 2

Condensed Consolidated Balance Sheets (Unaudited) at March 31, 2003
and December 31, 2002 3

Condensed Consolidated Statements of Operations (Unaudited) for the
Three months ended March 31, 2003 and 2002 4

Condensed Consolidated Statements of Cash Flows (Unaudited) for the
Three months ended March 31, 2003 and 2002 5

Notes to Condensed Consolidated Financial Statements (Unaudited) 6

Item 2. Management's Discussion and Analysis of Financial Condition
and Results of Operations 13

Item 3. Quantitative and Qualitative Disclosures about Market Risk 20

Item 4. Controls and Procedures 21

PART II. OTHER INFORMATION

Item 1. Legal Proceedings 21

Item 6. Exhibits and Reports on Form 8-K 22

Signature Page 23

Certifications 24

Exhibits 26


1



PART I. FINANCIAL INFORMATION

Item 1. Consolidated Financial Statements





INDEPENDENT ACCOUNTANTS' REPORT


To the Board of Directors
Riviera Holdings Corporation

We have reviewed the accompanying condensed consolidated balance sheet of
Riviera Holdings Corporation (the "Company") and subsidiaries as of March 31,
2003, and the related condensed consolidated statements of operations and of
cash flows for the three months ended March 31, 2003 and 2002. These financial
statements are the responsibility of the Company's management.

We conducted our reviews, 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 auditing standards generally accepted in the United States of
America, 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 accounting principles generally accepted in the United States of
America.

We have previously audited, in accordance with auditing standards generally
accepted in the United States of America, the consolidated balance sheet of
Riviera Holdings Corporation as of December 31, 2002, 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 14,
2003, 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, 2002, is fairly stated,
in all material respects, in relation to the consolidated balance sheet from
which it has been derived.



DELOITTE & TOUCHE LLP

April 22, 2003
Las Vegas, Nevada






2





RIVIERA HOLDINGS CORPORATION
CONDENSED CONSOLIDATED BALANCE SHEETS (unaudited)
(In Thousands, except share amounts) March 31, December 31,
- ------------------------------------------------------------------------------
2003 2002
ASSETS
CURRENT ASSETS:

Cash and cash equivalents $25,192 $20,220
Accounts receivable, net 4,154 4,010
Inventories 1,640 1,824
Prepaid expenses and other assets 3,933 3,968
----------- -----------
Total current assets 34,919 30,022

PROPERTY AND EQUIPMENT, Net 184,724 188,233

OTHER ASSETS, Net 14,533 14,677

DEFERRED INCOME TAXES, Net 2,964 2,964
----------- -----------
TOTAL $237,140 $235,896
=========== ===========

LIABILITIES AND STOCKHOLDERS' DEFICIENCY
CURRENT LIABILITIES:
Current portion of long-term debt $3,485 $3,430
Accounts payable 7,632 8,338
Accrued interest 6,963 1,065
Accrued expenses 14,370 15,576
----------- -----------
Total current liabilities 32,450 28,409
----------- -----------

OTHER LONG-TERM LIABILITIES 6,571 6,465
----------- -----------

LONG-TERM DEBT, Net of current portion 215,880 216,694
----------- -----------

COMMITMENTS AND CONTINGENCIES

STOCKHOLDERS' DEFICIENCY:
Common stock ($.001 par value; 20,000,000 shares
authorized; 5,141,208 and 5,135,773 issued at
March 31, 2003 and December 31, 2002, respectively) 5 5
Additional paid-in capital 13,715 13,638
Treasury stock (1,687,947 shares and 1,686,244 shares
at March 31, 2003 and December 31, 2002,
respectively) (11,320) (11,313)

Accumulated Deficit (20,161) (18,002)
----------- -----------
Total stockholders' deficiency (17,761) (15,672)
----------- -----------
TOTAL $237,140 $235,896
=========== ===========
See notes to condensed consolidated financial statements


3



RIVIERA HOLDINGS CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (unaudited)
FOR THE THREE MONTHS ENDED MARCH 31, 2003 AND 2002 Three Months Ended
(In thousands, except per share amounts) March 31,
- -------------------------------------------------------------------------------
REVENUES: 2003 2002

Casino $26,377 $26,063
Rooms 11,225 10,719
Food and beverage 8,013 7,859
Entertainment 4,399 4,208
Other 1,951 2,051
----------- ---------
Total revenues 51,965 50,900
Less promotional allowances 4,474 4,402
----------- ---------
Net revenues 47,491 46,498
----------- ---------

COSTS AND EXPENSES:
Direct costs and expenses of operating departments:
Casino 14,070 14,372
Rooms 5,853 5,454
Food and beverage 5,304 5,090
Entertainment 2,956 2,787
Other 649 680
Other operating expenses:
General and administrative 9,720 9,934
Depreciation and amortization 4,223 4,494
----------- ---------
Total costs and expenses 42,775 42,811
----------- ---------
INCOME FROM OPERATIONS 4,716 3,687
----------- ---------

OTHER (EXPENSE) INCOME:
Interest expense (6,881) (6,688)
Interest income 13 179
Other, net (7) (12)
----------- ---------
Total other expense (6,875) (6,521)
----------- ---------
(LOSS) BEFORE PROVISION (BENEFIT) FOR INCOME TAXES (2,159) (2,834)
PROVISION (BENEFIT) FOR INCOME TAXES 0 0
----------- ---------
NET (LOSS) ($2,159) ($2,834)
=========== =========
(LOSS) PER SHARE DATA:
(Loss) per share:
Basic $ (0.62) $ (0.82)
----------- ---------
Diluted $ (0.62) $ (0.82)
----------- ---------
Weighted-average common shares outstanding 3,468 3,437
----------- ---------
Weighted-average common and common equivalent shares 3,468 3,437
----------- ---------


See notes to condensed consolidated financial statements


4



RIVIERA HOLDINGS CORPORATION AND SUBSIDIARY
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited)
THREE MONTHS ENDED MARCH 31, 2002 AND 2003 Three Months Ended
(in thousands) March 31,
2003 2002
--------- --------
CASH FLOWS FROM OPERATING ACTIVITIES:

Net Income (loss) ($2,159) ($2,834)
Adjustments to reconcile net income(loss) to net
cash (used in) and provided by operating activities:
Depreciation and amortization 4,223 4,494
Provision for bad debts 80 (367)
Interest expense 6,881 6,688
Interest paid (311) (9,038)
Changes in operating assets and liabilities:
Decrease (increase) in accounts receivable (225) 34
Decrease (increase) in inventories 184 456
Decrease (increase) in prepaid expenses
and other assets 36 (206)
Increase (decrease) in accounts payable (705) (145)
Increase (decrease) in accrued liabilities (1,206) (792)
Increase in deferred compensation plan obligation 8
Increase in non-qualified pension plan obligation
to CEO upon retirement (125) (125)
--------- --------
Net cash provided by (used in) operating activities 6,681 (1,835)
--------- --------

CASH FLOWS FROM INVESTING ACTIVITIES:
Capital expenditures for property and equipment,
Las Vegas, Nevada (439) (931)
Capital expenditures - Black Hawk, Colorado (276) (459)
Decrease (increase) in other assets (203) (1,115)
--------- --------
Net cash provided by (used in) investing activities (918) (2,505)
--------- --------

CASH FLOWS FROM FINANCING ACTIVITIES:
Payments on long-term borrowings (861) (797)
Purchase of treasury stock for the deferred
compensation plan (7) 0
Increase in paid-in capital 52 0
Issuance of restricted stock 25 75
--------- --------
Net cash (used in) provided by financing activities (791) (722)
--------- --------
INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS 4,972 (5,062)
CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD 20,220 46,606
--------- --------
CASH AND CASH EQUIVALENTS, END OF PERIOD $25,192 $41,544
========= ========

SUPPLEMENTAL DISCLOSURE OF NONCASH FINANCING ACTIVITIES:
Property acquired with debt and accounts payable $13 $299

See notes to condensed consolidated financial statements



5




NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)


1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Basis of Presentation

Riviera Holdings Corporation ("RHC") 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 August 1995, Riviera Gaming Management, Inc. ("RGM") incorporated in the
State of Nevada and is a wholly owned subsidiary of RHC for the purpose of
obtaining management contracts in Nevada and other jurisdictions. In March 1997,
Riviera Gaming Management of Colorado was incorporated in the State of Colorado,
and in August 1997, Riviera Black Hawk, Inc. ("RBH") was incorporated in the
State of Colorado for the purpose of developing a casino in Black Hawk, Colorado
which opened February 4, 2000.

On March 15, 2002, Riviera Gaming Management of New Mexico, Inc. ("RGM New
Mexico") was incorporated in the State of New Mexico. On June 5, 2002, Riviera
Gaming Management of Missouri, Inc. ("RGM Missouri") was incorporated in the
State of Missouri.

Nature of Operations

The Company owns and operates the Riviera Hotel & Casino ("Riviera Las Vegas")
on the Strip in Las Vegas, Nevada and its casino in Black Hawk, Colorado
("Riviera Black Hawk"). Riviera Black Hawk is owned by Riviera Black Hawk, Inc.
("RBH"), a wholly owned subsidiary of RHC. Riviera Gaming Management of
Colorado, Inc. is a wholly owned subsidiary of RGM, and manages the casino.

Casino operations are subject to extensive regulation in the states of Nevada
and Colorado and various 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, and
its wholly owned subsidiaries. All material intercompany accounts and
transactions have been eliminated.

The financial information at March 31, 2003 and for the three months ended March
31, 2003 and 2002 is unaudited. However, such information reflects all
adjustments (consisting solely of normal and 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.


6


The results of operations for the three months ended March 31, 2003 and 2002 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, 2002, included in the Company's Annual Report on Form 10-K.

Earnings Per Share

Basic per share amounts are computed by dividing net income by weighted average
shares outstanding during the period. Diluted net income (loss) per share
amounts are computed by dividing net income by weighted average shares
outstanding plus the dilutive effect of common share equivalents. The effect of
options outstanding was not included in diluted calculations for the three
months ended March 31, 2003 and 2002 since the Company incurred net losses in
those periods. The number of potentially dilutive options was 6,000 for the
three months ended March 31, 2003 and 117,000 for the three months ended March
31, 2002.

Income Taxes

The cash flow projections used by the Company in the application of SFAS 109 for
the realization of deferred tax assets indicate that a valuation allowance
should be recorded on the tax benefits earned by the Company in 2003 and 2002.
The estimates used are based upon recent operating results and budgets for
future operating results. These estimates are made using assumptions about the
economic, social and regulatory environments in which we operate. These
estimates could be impacted by numerous unforeseen events including changes to
regulations affecting how the Company operates the business, changes in the
labor market or economic downturns in the areas where the Company operates.

Estimates and Assumptions

The preparation of condensed consolidated financial statements in conformity
with accounting principles generally accepted in the United States of America
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, cash flow projections for testing asset impairment, certain accrued
liabilities and the estimated allowance for receivables. Actual results may
differ from estimates.

Stock-Based Compensation

As of March 31, 2003, the Company has two stock-based employee compensation
plans. The effect of stock options in the income statement is reported in
accordance with Accounting Principles Board ("APB") Opinion No. 25, Accounting
for Stock Issued to Employees, and related interpretations. The Company has
adopted the disclosure-only provisions 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, as all options granted had
an exercise price equal to the market value of the underlying common stock on
the date of grant.


7





No compensation cost has been recognized for unexercised options remaining in
the stock option plans. Had compensation cost for the Company's stock option
plans been determined based on the fair value at the date of grant for awards
consistent with the provisions of SFAS No. 123 (using an intrinsic value
method), the Company's net loss and pro forma net loss per common share and
common share equivalent would have been increased to the pro forma amounts
indicated below at March 31 (in thousands, except per share amounts):



2003 2002


Net loss as reported $ (2,159) $ (2,834)
Deduct: Total stock-based employee compensation
expense determined under fair value-based methods
for awards net of related tax effects (60) (74)
-------- ----------
Net loss pro forma $ (2,219) $ (2,908)
======== ==========
Basic loss per common share as reported $ (0.62) $ (0.82)
Basic loss per common share pro forma $ (0.64) $ (0.85)
Diluted loss per common and common
share equivalent as reported $ (0.62) $ (0.82)
Diluted loss per common and common share
equivalent pro forma $ (0.64) $ (0.85)



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 2003 and 2002 respectively: dividend yield of 0%
for both years; expected volatility for both years of 52%; risk-free interest
rates for both years of 4.49%; and expected lives of 10 years for all years. The
weighted fair value of options granted in 2003 and 2002 was $0 and $4.96,
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.

Recently Adopted Accounting Pronouncements

In June 2001, the Financial Accounting Standards Board ("FASB") issued Statement
of Financial Accounting Standard No. 143, Accounting for Asset Retirement
Obligations. ("SFAS No. 143"). SFAS No. 143 addresses financial accounting and
reporting for obligations associated with the retirement of tangible long-lived
assets and the associated asset retirement costs. SFAS No. 143 applies to all
entities. It applies to legal obligations associated with the retirement of
long-lived assets that result from the acquisition, construction, development
and (or) the normal operation of a long-lived asset, except for certain
obligations of lessees. SFAS No. 143 is effective for financial statements
issued for fiscal years beginning after June 15, 2002. The Company adopted SFAS
No. 143 and it had no effect on its financial position or results of operations.

In June 2002, the FASB issued Statement of Financial Accounting Standard No.
146, Accounting for Costs Associated with Exit or Disposal Activities ("SFAS No.
146"). SFAS No.146 addresses financial accounting and reporting for costs
associated with exit or disposal activities and nullifies Emerging Issues Task
Force Issue No. 94-3, Liability Recognition for Certain Employee Termination
Benefits and Other Costs to Exit an Activity (including Certain Costs Incurred
in a Restructuring). SFAS No. 146 requires that a liability for a cost
associated with an exit or disposal activity be recognized when the liability is
incurred. A fundamental conclusion reached by the FASB in this statement is that


8


an entity's commitment to a plan, by itself, does not create a present
obligation to others that meets the definition of a liability. SFAS No. 146 also
establishes that fair value is the objective for initial measurement of the
liability. The provisions of this statement are effective for exit or disposal
activities that are initiated after December 31, 2002, with early application
encouraged. The Company adopted SFAS No. 146 and it had no effect on its
financial position or results of operations.

2. OTHER ASSETS

Other assets at March 31, 2003 include deferred loan fees of approximately $10.5
million associated with the refinancing of the Company's debt. Other assets also
include capitalized site development, financing and licensing costs associated
with the RGM Missouri proposed venture of approximately $1.3 million and the RGM
New Mexico proposed venture of approximately $1.2 million.

3. LONG TERM DEBT AND COMMITMENTS

On June 26, 2002, the Company issued 11% Senior Secured Notes with a principal
amount of $215 million, substantially all of which were later exchanged for
Securities Act of 1933-registered Notes of the Company with substantially the
same terms (collectively, the "11% Notes"). The 11% Notes were issued at a
discount in the amount of $3.2 million. The discount is being amortized over the
life of the 11% Notes. The Company incurred fees of approximately $9.3 million
with the issuance of the 11% Notes which are included in other assets at March
31, 2003 and are being amortized to interest expense over the life of the
indebtedness.

Effective July 26, 2002 the Company entered into a $30 million, five year
revolving credit arrangement with a financial institution. Terms of the
arrangement include interest at prime plus .75 percent or a LIBOR derived rate.
There were no advances outstanding on this revolver at March 31, 2003. The
Company incurred loan fees of approximately $1.5 million which are being
expensed over the life of the agreement.

4. LEGAL PROCEEDINGS

Brian Placzek, on behalf of himself and all others similarly situated v. Riviera
- --------------------------------------------------------------------------------
Holdings Corporation, William L. Westerman, Robert R. Barengo, Jeffrey A. Silver
- --------------------------------------------------------------------------------
and Paul A. Harvey; filed in District Court, Clark County, Nevada No.A466204).
- --------------------------------------------------------------------------------
This is a class action complaint. The named Plaintiff in this action is a
shareholder of the Company. The Defendants are the Company and four directors as
individual Defendants. On April 15, 2003, the Plaintiff, commenced this action
in Nevada state court which was served on the Company on April 28, 2003, where
it seeks an order which would require the individual Defendants to, among other
things, cooperate with any individual who makes a bona fide offer to acquire the
Company, take steps that are calculated to result in a buy-out or takeover of
the Company at the highest price, comply with their fiduciary duties, and
reimburse the Plaintiff's class for damages, costs and disbursements related to
the lawsuit.

The Plaintiff seeks to have all public shareholders of the Company's common
stock, excluding Defendants, certified as a class for purposes of a class action
suit and seeks to be the representative of the class.


9


The Plaintiff asserts, among other things, that the Defendants violated their
fiduciary duties because they did not take affirmative steps in furtherance of
an offer by a third party to purchase all of the Company's outstanding common
stock at a premium price which was contingent upon, among other things, a
waiver of the call provisions by the holders of the Company's bond
indebtedness. The Company believes the Plaintiff's claims are without merit and
intends to vigorously defend against them.

The Company is a party to several routine lawsuits, either as plaintiff or as
defendant, arising from the normal operations of a hotel/casino. The Company
does not believe that the outcome of such litigation, in the aggregate, will
have a material adverse effect on its financial position or results of its
operations.

5. STOCK REPURCHASES

There were 1,703 shares of treasury stock purchased by the Deferred Compensation
Plan Trustee at $4.27 for the three months ended March 31, 2003 and no shares
were purchased for the three months ended March 31, 2002.

6. ISSUANCE OF RESTRICTED STOCK

There were 5,435 shares of restricted stock issued at an average price of $4.60
under the Restricted Stock Plan for executive compensation for the three months
ended March 31, 2003.

7. GUARANTOR INFORMATION

The 11.0% Notes and the $30 million line of credit are guaranteed by all of the
Company's restricted subsidiaries. These guaranties are full, unconditional, and
joint and several. RGM Missouri and RGM New Mexico are unrestricted subsidiaries
of RHC and are not guarantors of the 11% notes. Each of these entities are in
the development stage and have no operating results. Their assets totaled $2.5
million dollars (RGM Missouri $1.3 million and RGM New Mexico $1.2), which
assets were created through advances from RHC.


















10



8. SEGMENT DISCLOSURES

The Company determines its segments based upon review process of the chief
decision maker who reviews by geographic gaming market segments: Riviera Las
Vegas and Riviera Black Hawk. The key indicator reviewed by the chief decision
maker is EBITDA as defined below. All intersegment revenues have been
eliminated.



Three Months Three Months
Ended Ended
March 31, March 31,
(In thousands) 2003 2002

Net revenues:

Riviera Las Vegas $35,735 $34,709
Riviera Black Hawk 11,756 11,789
------------ ------------
Total net revenues $47,491 $46,498
============ ============

Income (loss) from operations:
Riviera Las Vegas $4,257 $3,322
Riviera Black Hawk 1,570 1,428
Corporate Expenses (1,111) (1,063)
------------ ------------
Total income from operations $4,716 $3,687
============ ============

EBITDA (1):
Riviera Las Vegas $7,025 $6,298
Riviera Black Hawk 3,025 2,946
Corporate Expenses (1,111) (1,063)
------------ ------------
Total EBITDA $8,939 $8,181
============ ============

EBITDA margin (2):
Riviera Las Vegas 19.7% 18.1%
Riviera Black Hawk 25.7% 25.0%
------------ ------------
Total EBITDA 18.8% 17.6%
============ ============


(1)EBITDA consists of earnings before interest, income taxes, depreciation,
amortization. EBITDA is presented solely as a supplemental disclosure because
management believes that it is 1) a widely used meausre of operating performance
in the gaming industry, and 2) a principal basis for valuation of gaming
companies by certain analysts and investors. Management uses property-level
EBITDA (EBITDA before corporate expense) as the primary measure of the Company's
business segment properties' performance, including the evaluation of operating
personnel. EBITDA should not be construed as an alternative to operating income,
as an indicator of the Company's operating performance, as an alternative to
cash flows from operating activities, as a measure of liquidity, or as any other
measure determined in accordance with generally accepted accounting principles.
The Company has significant uses of cash flows, including capital expenditures,
interest payments and debt principal repayments, which are not reflected in
EBITDA. Also, other companies that report EBITDA information may calculate
EBITDA in a different manner than the Company. A reconciliation of EBITDA to
operating income is included in the following financial schedules.

(2) EBITDA margin is EBITDA as a percent of net revenues.

11





Riviera Holdings Corporation
Reconciliation of Operating Income (Loss) to EBITDA:
($ In 000's)
Operating Management
Income/(Loss) Depreciation Fee EBITDA
First Quarter 2003:

Riviera Las Vegas $ 4,257 $ 3,114 $ (346) $ 7,025
Riviera Black Hawk 1,570 1,109 346 3,025
Corporate (1,111) - - (1,111)
------- ----- ---- ------
$ 4,716 $ 4,223 - $ 8,939
======= ====== ======
First Quarter 2002:
Riviera Las Vegas $ 3,322 $ 3,335 $ (359) $ 6,298
Riviera Black Hawk 1,428 1,159 359 2,946
Corporate (1,063) - - (1,063)
------- ----- ----- -------
$ 3,687 $ 4,494 $ - $ 8,181
======= ====== =======





March 31, December 31,
2003 2002
Assets (3): (in thousands)

Riviera Las Vegas $ 121,065 $ 123,740
Riviera Black Hawk 63,659 64,493

----------- ---------
Total assets $ 184,724 $ 188,233
=========== =========

(3)Assets represent property and equipment, net of accumulated depreciation
and amortization.


RIVIERA LAS VEGAS REVENUES

The primary marketing effort of the Riviera Las Vegas is not aimed toward
residents of Las Vegas, Nevada. Significantly all revenues derived from patrons
visiting the Riviera Las Vegas are from other parts of the United States and
other countries. Revenues for Riviera Las Vegas from a foreign country or region
may exceed 10 percent of all reported segment revenues; however, the Riviera Las
Vegas cannot identify such information, based upon the nature of gaming
operations.

RIVIERA BLACK HAWK REVENUES

The casino in Black Hawk, Colorado, primarily serves the residents of
metropolitan Denver, Colorado. As such, management believes that significantly
all revenues are derived from within 250 miles of that Geographic area.

12



Item 2. Management's Discussion and Analysis of Financial Condition and Results
of Operations

Three Months Ended March 31, 2003 Compared to Three Months Ended March 31, 2002

The following table sets forth, for the periods indicated, certain operating
data for the Riviera Las Vegas and Riviera Black Hawk. Income from Operations
includes intercompany management fees.



First Quarter
Incr/ % Incr/
(In Thousands) 2003 2002 (Decr) (Decr)

Net revenues:

Riviera Las Vegas $35,735 $34,709 $1,026 3.0%
Riviera Black Hawk 11,756 11,789 (33) -0.3%
------ ------ -----
Total Net Revenues $47,491 $46,498 $993 2.1%
====== ====== ====
Income (Loss) from Operations
Riviera Las Vegas $4,257 $3,322 $935 28.2%
Riviera Black Hawk 1,570 1,428 142 9.9%
Property Income from Operations 5,827 4,750 1,077 22.7%
Corporate Expenses (1,111) (1,063) (48) -4.5%
------ ------ ----
Total Income from Operations $4,716 $3,687 $1,029 27.9%
====== ====== =====
Operating Margins
Riviera Las Vegas 11.9% 9.6% 2.3%
Riviera Black Hawk 13.4% 12.1% 1.3%
Consolidated 9.9% 7.9% 2.0%


Riviera Las Vegas

Revenues

Net revenues increased by approximately $1.0 million, or 3.0%, from
$34.7 million in 2002 to $35.7 million in 2003 due primarily to increased
casino, hotel, food and beverage revenues.

Casino revenues increased by approximately $403,000, or 2.7%, from
$14.8 million during 2002 to $15.3 million during 2003 due to a 3.6% increase in
slot machine revenue.

Room revenue increased $506,000, or 4.7%, from $10.7 million in 2002 to
$11.2 million in 2003 due to an increase in leisure room nights. Hotel occupancy
increased to 92%, up from last year's 87.9% and average daily room rate
decreased $0.48 from $62.32 in 2002 to $61.84 in 2003. Rev Par (revenue per
available room), however, increased 3.9% or $2.16 to $56.92. Leisure room nights
were up 11.8%, while convention room nights were down 7.4% due primarily to slow
room bookings from a January 2003 convention and from a large increase in
Internet bookings. Convention attendees appear to be using the Internet to book
rooms versus booking through the convention block. Short term incoming call
volumes, slightly lower than prior year, were offset by a substantial increase
in Internet room bookings which were up 73% or 28,000 room nights over 2002.



13


The market continues to see growth in small meetings and conventions. The new
convention space at the Las Vegas and Mandalay Bay Convention Centers are
attracting additional multi-property conventions. The Riviera's convention and
flexible meeting space and our proximity to the Las Vegas Convention Center
position us to capitalize on the recent growth in small meetings and conventions
in the Las Vegas area. The change in our occupancy mix has stimulated increases
in entertainment and food and beverage revenues.

Entertainment revenues increased by approximately $219,000, or 5.3%,
from $4.2 million during 2002 to $4.4 million during 2003 due primarily to an
increase in our Le Bistro Theater revenues. Food and beverage revenues increased
$339,000, or 5.5%, from $6.2 million in 2002 to $6.5 in 2003 due primarily
to our occupancy mix discussed above.

Other revenues decreased by approximately $108,000, or 5.5%, from $1.9
million during 2002 to $1.8 million during 2003 due primarily to decreased gift
shop and telephone revenues. Promotional allowances increased by approximately
$333,000, or 10.6%, from $3.1 million during 2002 to $3.5 million during 2003
primarily due to increases in comps related to higher casino activity.

Costs and Expenses

Rooms departmental costs and expenses increased by 7.3% in the quarter,
as occupancy increased, requiring more variable labor costs, without significant
change in room rate. In addition, wage scale increases under the new union
contracts contributed to the increased costs.

Entertainment departmental costs and expenses increased 5.0% in the
quarter and margins remained relatively constant at 33 %.

Income from Operations

Income from operations in Las Vegas increased $935,000, or 28.2%, from
$3.3 million in 2002 to $4.3 million in 2003 due to the 3.0% increase in net
revenues as explained above.

Riviera Black Hawk

Revenues

Net revenues were approximately $11.8 million in 2002 and 2003. Food and
beverage revenues were approximately $1.5 million in 2003, of which $1.0 million
was complimentary (promotional allowance). Our performance was accomplished in
spite of disruptive winter weather in the Black Hawk area during February and
March of 2003. One winter storm in March of 2003 forced the closure of our
casino for three days. The Denver area economy also continued to show weakness
during the quarter. These negative factors resulted in a $9.0 million or 6.8%
reduction in first quarter gaming revenues for the Black Hawk market from $131.6
million in 2002 to $122.6 in 2003. We continue to monitor market conditions and
have made several adjustments to our marketing programs to insure that we stay
competitive.

Income from Operations

Income from operations in Black Hawk, Colorado increased $142,000, or
9.9%, from $1.4 million in 2002 to $1.6 million in 2003 due to decreased general
and administrative costs.



14


Consolidated Operations

Other Income (Expense)

Interest expense increased $193,000 due to costs associated
with the $30 million credit facility and increased amortization of loan fees.
Interest expense on the $215 million 11% Senior Secured Notes issued by the
Company (the "11% Notes") of $5.9 million plus related amortization of loan fees
and other financing costs totaled approximately $6.3 million in 2003. Interest
expense on equipment and other financing totaled approximately $581,000 for the
quarter.

Interest income decreased $166,000 from $179,000 in 2002 to $13,000 in
2003 as a result of the lower cash balances available for investment and
decreasing rates. Corporate expenses remained relatively unchanged between the
first quarters of 2003 and 2002.

Net Income (Loss)

Net loss decreased $675,000 or 23.8% from a net loss of $2.8
million in 2002 to a net loss of $2.1 million in 2003 due primarily to increased
operating income which was partially offset by increased net interest costs.

Liquidity and Capital Resources

At March 31, 2003, the Company had cash and cash equivalents of $25.2 million.
The cash and cash equivalents increased $5.0 million during the first three
months of 2003 compared to the first three months of 2002, as a result of $6.7
million of cash provided by operations, $920,000 of cash outflow for investing
activities and $790,000 outflow for financing activities. Cash balances include
amounts that could be required to fund the Chief Executive Officer's pension
obligation in a rabbi trust with 5 days notice. (See Note 7 to the 2002 annual
financial statements, Other Long-Term Liabilities included in Form 10K as filed
with the SEC.) Effective April 1, 2003, the Company will begin paying Mr.
Westerman $250,000 per quarter from his pension plan. In exchange for these
payments, Mr. Westerman has agreed to continue his forbearance of his right to
receive full transfer of his pension fund balance to the rabbi trust. This does
not limit his ability to give the five-day notice at any time. Although there is
no current intention to require this funding, under certain circumstances the
Company might have to disburse approximately $5.9 million for this purpose in a
short period.

Management believes that cash flow from operations, combined with the $25.2
million cash and cash equivalents and the $30 million revolving credit facility,
will be sufficient to cover the Company's debt service and enable investment in
budgeted capital expenditures for 2003 for both the Las Vegas and Black Hawk
properties and provide initial investments in the potential Missouri and New
Mexico projects.

Cash flow from operations may not to be sufficient to pay 100% of the principal
of the 11% Notes at maturity on June 15, 2010. Accordingly, our ability to repay
the 11% Notes at maturity may be dependent upon our ability to refinance them.
There can be no assurance that we will be able to refinance the principal amount
of the 11% Notes at maturity.


15


The 11% Notes provide that, in certain circumstances, the Company and its
subsidiaries must offer to repurchase the 11% Notes upon the occurrence of a
change of control or certain other events. In the event of such mandatory
redemption or repurchase prior to maturity, the Company and its subsidiary would
be unable to pay the principal amount of the 11% Notes without a refinancing.

At any time prior to June 15, 2005, the Company may on any one or more occasions
redeem up to 35% of the aggregate principal amount of notes issued under the
indenture at a redemption price of 111% of the principal amount, plus accrued
and unpaid interest and liquidated damages, if any, to the redemption date, with
the net cash proceeds of one or more public equity offerings; provided that:

(1) at least 65% of the aggregate principal amount of notes issued under
the indenture remains outstanding immediately after the occurrence of such
redemption (excluding notes held by the Company and its subsidiaries); and

(2) the redemption occurs within 45 days of the date of the closing of
such public equity offering.

Except pursuant to the preceding paragraph, the notes are not redeemable at the
Companys option prior to June 15, 2006.

On or after June 15, 2006, the Company may redeem all or part of the notes upon
not less than 30 nor more than 60 days notice, at the redemption prices
(expressed as percentages of principal amount) set forth below plus accrued and
unpaid interest and liquidated damages, if any, on the notes redeemed, to the
applicable redemption date, if redeemed during the twelve-month period beginning
on June 15 of the years indicated below:




Year Percentage

2006 105.500%
2007 103.667%
2008 101.833%
2009 and thereafter 100.000%



The 11% Notes contain certain covenants, which 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 or
sell certain assets; and (v) enter into certain mergers and consolidations. As a
result of these restrictions, the ability of the Company and its subsidiaries to
incur additional indebtedness to fund operations or to make capital expenditures
is limited. In the event that cash flow from operations is insufficient to cover
cash requirements, the Company and its subsidiaries would be required to curtail
or defer certain capital expenditure programs under these circumstances, which
could have an adverse effect on operations.

At March 31, 2003, the Company believes that it is in compliance with the
covenants of the 11% Notes and the $30 million revolving credit facility.


16


Recently Adopted Accounting Pronouncements

In June 2001, the Financial Accounting Standards Board ("FASB") issued SFAS
No. 143, Accounting for Asset Retirement Obligations ("SFAS No. 143"). SFAS No.
143 addresses financial accounting and reporting for obligations associated with
the retirement of tangible long-lived assets and the associated asset retirement
costs. SFAS No. 143 applies to all entities. It applies to legal obligations
associated with the retirement of long-lived assets that result from the
acquisition, construction, development and (or) the normal operation of a
long-lived asset, except for certain obligations of lessees. SFAS No. 143 is
effective for financial statements issued for fiscal years beginning after June
15, 2002. The Company adopted SFAS No. 143 and it had no effect on its financial
position or results of operations.

In June 2002, the FASB issued Statement of Financial Accounting Standard
No. 146, Accounting for Costs Associated with Exit or Disposal Activities ("SFAS
No. 146"). SFAS No.146 addresses financial accounting and reporting for costs
associated with exit or disposal activities and nullifies Emerging Issues Task
Force Issue No. 94-3, Liability Recognition for Certain Employee Termination
Benefits and Other Costs to Exit an Activity (including Certain Costs Incurred
in a Restructuring). SFAS No. 146 requires that a liability for a cost
associated with an exit or disposal activity be recognized when the liability is
incurred. A fundamental conclusion reached by the FASB in this statement is that
an entity's commitment to a plan, by itself, does not create a present
obligation to others that meets the definition of a liability. SFAS No. 146 also
establishes that fair value is the objective for initial measurement of the
liability. The provisions of this statement are effective for exit or disposal
activities that are initiated after December 31, 2002, with early application
encouraged. The Company adopted SFAS No. 146 and it had no effect on its
financial position or results of operations.

Critical Accounting Policies

A description of our critical accounting policies and estimates can be found in
Item 7 of our 2002 Form 10-K. For a more extensive discussion of our accounting
policies, see Note 1, Summary of Significant Accounting Policies, in the Notes
to the Consolidated Financial Statements in our 2002 Form 10-K filed on March
17, 2003.

Contractual Obligations

A description of our contractual obligations can be found in Item 7 of our 2002
Form 10-K. For a more extensive discussion of our accounting policies, see Notes
1, 8, 9, and 11 in the Notes to the Consolidated Financial Statements in our
2002 Form 10-K filed on March 17, 2003.

Forward Looking Statements

This report includes "forward-looking statements" within the meaning of Section
21E of the Securities Exchange Act of 1934, as amended. Statements in this
report regarding future events or conditions, including statements regarding
industry prospects and the Company's expected financial position, business and
financing plans, are forward-looking statements. Although the Company believes
that the expectations reflected in such forward-looking statements are
reasonable, it can give no assurance that such expectations will prove to have
been correct. Important factors that could cause actual results to differ
materially from the Company's expectations are disclosed in this report as well
as the Company's most recent annual report on Form 10-K, and include the
Company's substantial leverage, the risks associated with the expansion of the
Company's business, as well as factors that affect the gaming industry
generally. Readers are cautioned not to place undue reliance on these
forward-looking statements, which speak only as of their dates. The Company
undertakes no obligations to publicly update or revise any forward-looking
statements, whether as a result of new information, future events or otherwise.


17


Specific factors that might cause actual results to differ from our expectations
or might cause us to modify our plans or objectives include, but are not limited
to:

o the availability and adequacy of our cash flow to meet our
requirements, including payment of amounts due under our
indebtedness;

o economic, competitive, demographic, business and other
conditions in our local and regional markets;

o changes or developments in laws, regulations or taxes in the
gaming industry;

o actions taken or omitted to be taken by third parties,
including our customers, suppliers, competitors and members as
well as legislative, regulatory, judicial and other
governmental authorities;

o competition in the gaming industry, including the availability
and success of alternative gaming venues and other
entertainment attractions;

o a decline in the public acceptance of gaming;

o changes in personnel or compensation, including federal
minimum wage requirements;

o our failure to obtain, delays in obtaining, or the loss of
any, licenses, permits or approvals, including gaming and
liquor licenses, or the limitation, conditioning, suspension
or revocation of any such licenses, permits or approvals, or
our failure to obtain an unconditional renewal of any such
licenses, permits or approvals on a timely basis;

o the loss of any of our casino facilities due to terrorist
acts, casualty, weather, mechanical failure or any extended or
extraordinary maintenance or inspection that may be required;

o other adverse conditions, such as adverse economic conditions,
changes in general customer confidence or spending, increased
transportation costs, travel concerns or weather-related
factors, that may adversely affect the economy in general
and/or the casino industry in particular;

o our substantial indebtedness, debt service requirements and
liquidity constraints;

18


o risks related to our 11% Notes and to high-yield securities and
gaming securities generally;

o changes in our business strategy, capital improvements or
development plans;

o the need for additional capital to support capital
improvements and development; and

o factors relating to the current state of world affairs and any
further acts of terrorism or any other destabilizing events in
the United States or elsewhere.






19



ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURE ABOUT MARKET RISK

Market risks relating to our operations result primarily from changes in
interest rates. We invest our cash and cash equivalents in U.S. Treasury Bills
with maturities of 30 days or less. Such investments are generally not affected
by changes in interest rates.

As of March 31, 2003, we had $219.4 million in borrowings. The borrowings
include $215 million in 11% Notes maturing in 2010, and capital leases maturing
at various dates through 2005. Interest under the 11% Notes is based on a fixed
rate of 11%. The equipment loans and capital leases have interest rates ranging
from 5.2% to 13.5%. The borrowings also include $863,000 in a special
improvement district bond offering with the City of Black Hawk. The Company's
share of the debt on the SID bonds of $1.2 million when the project is complete,
is payable over ten years beginning in 2000. The SID bonds bear interest at
5.5%.



Average Interest Rate

(Amounts in Fair Value
thousands) 2003 2004 2005 2006 2007 Thereafter Total at 3/31/03

Long Term Debt Including
Current Portion

Equipment loans and

capital leases Las Vegas $ 966 $ 1,019 $ 11 $ 1,996 $ 1,996
Average interest rate 7.8% 7.8% 8.4%


11% Senior Secured Notes $212,084 $ 212,084 $204,250
Average interest rate 11.6%

Capital leases
Black Hawk, Colorado $ 1,552 $ 2,263 $ 658 $ 4,473 $ 4,473
Average interest rate 10.8% 10.8% 10.8%

Special Improvement
District Bonds Black
Hawk, Colorado $ 52 $ 109 $ 116 $124 $ 129 $ 282 $ 812 $ 812
Average interest rate 5.5% 5.5% 5.5% 5.5% 5.5% 5.5%

Total all long-term debt $ 219,365



20



Item 4. Controls and Procedures

(a) Evaluation of Disclosure Controls and Procedures. The Company's Chief
Executive Officer and Chief Financial Officer have evaluated the effectiveness
of the Company's disclosure controls and procedures (as such term is defined in
Rules 13a-14(c) and 15d-14(c) under the Securities Exchange Act of 1934, as
amended (the "Exchange Act")) as of a date within 90 days prior to the filing
date of this quarterly report (the "Evaluation Date"). Based on such evaluation,
such officers have concluded that, as of the Evaluation Date, the Company's
disclosure controls and procedures are effective in alerting them on a timely
basis to material information relating to the Company (including its
consolidated subsidiaries) required to be included in the Company's periodic
filings under the Exchange Act.

(b) Changes in Internal Controls. Since the Evaluation Date, there have not
been any significant changes in the Company's internal controls or in other
factors that could significantly affect such controls.


Part II. OTHER INFORMATION

Item 1. Legal Proceedings

4. LEGAL PROCEEDINGS

On April 15, 2003, a class action complaint was filed in the Clark County,
Nevada District Court (Case No.A466204) which was served on the Company on April
28, 2003, by Brian Placzek, on behalf of himself and all others similarly
situated, against the Company and Company directors William L. Westerman, Robert
R. Barengo, Jeffrey A. Silver, and Paul A. Harvey. The named Plaintiff in this
action is a shareholder of the Company. The Plaintiff, seeks an order which
would require the individual Defendants to take the following actions, among
others: cooperate with any individual who makes a bona fide offer to acquire the
Company, take steps that are calculated to result in a buy-out or takeover of
the Company at the highest price, comply with their fiduciary duties, and
reimburse the Plaintiff's class for damages, costs and disbursements related to
the lawsuit.

The named Plaintiff seeks to have all public shareholders of the Company's
common stock, excluding Defendants, certified as a class for purposes of a class
action suit and seeks to be the representative of the class.

The named Plaintiff asserts, among other things, that the Defendants violated
their fiduciary duties because they did not take affirmative steps in
furtherance of an offer by a third party to purchase all of the Company's
outstanding common stock at a premium price, which was contingent upon a waiver
of the call provisions by the holders of the Company's bond indebtedness.

We believe the Plaintiff's claims are without merit and intends to vigorously
defend against them.

The Company is a party to several routine lawsuits, either as plaintiff or as
defendant, arising from the normal operations of a hotel/casino. The Company
does not believe that the outcome of such litigation, in the aggregate, will
have a material adverse effect on its financial position or results of its
operations.



21


Item 6. Exhibits and Reports on Form 8-K.

(a) See list of exhibits on page 26.

(b) During the first quarter of 2003, the Company filed reports on Form
8-K on January 22, and February 12, 2003. Each Form 8-K reported Item Nos. 5 and
7 which, in the February 12, 2003 filing, included summary financial information
for the Company's fourth quarter 2002.




















22
























Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.


RIVIERA HOLDINGS CORPORATION


By: /s/ William L. Westerman
William L. Westerman
Chairman of the Board and
Chief Executive Officer

By: /s/ Duane Krohn
Duane Krohn
Treasurer and
Chief Financial Officer


Date: May 5, 2003













23




CERTIFICATIONS

I, William L. Westerman, the Chief Executive Officer of Riviera Holdings
Corporation, certify that:

1. I have reviewed this quarterly report on Form 10-Q of Riviera Holdings
Corporation;

2. Based on my knowledge, this quarterly report does not contain any untrue
statement of a material fact or omit to state a material fact necessary to make
the statements made, in light of the circumstances under which such statements
were made, not misleading with respect to the period covered by this quarterly
report;

3. Based on my knowledge, the financial statements, and other financial
information included in this quarterly report, fairly present in all material
respects the financial condition, results of operations and cash flows of the
registrant as of, and for, the periods presented in this quarterly report;

4. The registrant's other certifying officers and I are responsible for
establishing and maintaining disclosure controls and procedures (as defined in
Exchange Act Rules 13a-14 and 15d-14) for the registrant and we have:

a) designed such disclosure controls and procedures to ensure that material
information relating to the registrant, including its consolidated
subsidiaries, is made known to us by others within those entities,
particularly during the period in which this quarterly report is being
prepared;
b) evaluated the effectiveness of the registrant's disclosure controls and
procedures as of a date within 90 days prior to the filing date of this
quarterly report (the "Evaluation Date"); and
c) presented in this quarterly report our conclusions about the effectiveness
of the disclosure controls and procedures based on our evaluation as of
the Evaluation Date;

5. The registrant's other certifying officers and I have disclosed, based on our
most recent evaluation, to the registrant's auditors and the audit committee of
registrant's board of directors (or persons performing the equivalent function):

a) all significant deficiencies in the design or operation of internal
controls which could adversely affect the registrant's ability to record,
process, summarize and report financial data and have identified for the
registrant's auditors any material weaknesses in internal controls; and
b) any fraud, whether or not material, that involves management or other
employees who have a significant role in the registrant's internal
controls; and

6. The registrant's other certifying officers and I have indicated in this
quarterly report whether or not there were significant changes in internal
controls or in other factors that could significantly affect internal controls
subsequent to the date of our most recent evaluation, including any corrective
actions with regard to significant deficiencies and material weaknesses.

Date: May 5, 2003
William L. Westerman
William L. Westerman
Chairman of the Board and
Chief Executive Officer


24


I, Duane Krohn, the Chief Financial Officer of Riviera Holdings Corporation,
certify that:

1. I have reviewed this quarterly report on Form 10-Q of Riviera Holdings
Corporation;

2. Based on my knowledge, this quarterly report does not contain any untrue
statement of a material fact or omit to state a material fact necessary to make
the statements made, in light of the circumstances under which such statements
were made, not misleading with respect to the period covered by this quarterly
report;

3. Based on my knowledge, the financial statements, and other financial
information included in this quarterly report, fairly present in all material
respects the financial condition, results of operations and cash flows of the
registrant as of, and for, the periods presented in this quarterly report;

4. The registrant's other certifying officers and I are responsible for
establishing and maintaining disclosure controls and procedures (as defined in
Exchange Act Rules 13a-14 and 15d-14) for the registrant and we have:

a) designed such disclosure controls and procedures to ensure that
material information relating to the registrant, including its
consolidated subsidiaries, is made known to us by others within those
entities, particularly during the period in which this quarterly report
is being prepared;
b) evaluated the effectiveness of the registrant's disclosure controls and
procedures as of a date within 90 days prior to the filing date of this
quarterly report (the "Evaluation Date"); and
c) presented in this quarterly report our conclusions about the
effectiveness of the disclosure controls and procedures based on our
evaluation as of the Evaluation Date;

5. The registrant's other certifying officers and I have disclosed, based on our
most recent evaluation, to the registrant's auditors and the audit committee of
registrant's board of directors (or persons performing the equivalent function):

a) all significant deficiencies in the design or operation of internal
controls which could adversely affect the registrant's ability to
record, process, summarize and report financial data and have
identified for the registrant's auditors any material weaknesses in
internal controls; and
b) any fraud, whether or not material, that involves management or other
employees who have a significant role in the registrant's internal
controls; and

6. The registrant's other certifying officers and I have indicated in this
quarterly report whether or not there were significant changes in internal
controls or in other factors that could significantly affect internal controls
subsequent to the date of our most recent evaluation, including any corrective
actions with regard to significant deficiencies and material weaknesses.

Date: May 5, 2003
Duane Krohn
Duane Krohn
Treasurer and
Chief Financial Officer



25





Exhibits



Exhibits:



10.1 Third Amendment to Employment Agreement between the Company and
Robert Vannucci effective March 3, 2003. (see Exhibit 10.45 to Form
10-K filed with the Commission on March 17, 2003, Commission File
No. 000-21430)

99.1 Certification of Chief Executive Officer

99.2 Certification of Chief Financial Officer




26