Isle of Capri Casinos, Inc. Announces Fiscal 2011 First Quarter Results

- Company Completes Acquisition of Rainbow Casino in Vicksburg, Mississippi

- Retail Revenue Increases at Nine Properties; Database Customer Spend Per Visit Stable; Modest Decline in Database Customer Visits Due to Economic Weakness

Aug 31, 2010, 08:30 ET from Isle of Capri Casinos, Inc.

ST. LOUIS, Aug. 31 /PRNewswire-FirstCall/ -- Isle of Capri Casinos, Inc. (Nasdaq: ISLE) (the "Company") today reported financial results for the first quarter of fiscal year 2011, the three-month period ended July 25, 2010, and other Company-related news.

In making the announcement, James B. Perry, the Company's chairman and chief executive officer, said, "I believe we achieved solid performance by taking steps to maintain profitability in the midst of poor economic conditions that impacted regional gaming markets across the country during the quarter. We remain committed to improving our margins as a result of our operational accomplishments and are finding opportunities to attract new retail customers through our branding and service programs.  Further, we continue to focus on de-leveraging our balance sheet.

"We believe we are poised to capitalize on our progress when this economic cycle turns and are continually searching for prudent investment opportunities.  We are currently engaged in competitive bid processes for projects in Cape Girardeau, Missouri, and at the Nemacolin Woodlands Resort in Fayette County, Pennsylvania.  Both of these licenses should be awarded by the end of the year, and we are actively exploring opportunities in other jurisdictions to increase and diversify cash flows."

Consolidated Results

The following table outlines the Company's financial results (dollars in millions, except per share data, unaudited):

Three Months Ended

July 25,

July 26,

2010

2009

Net revenues

$          251.9

$          257.9

Income (loss) from continuing operations

(2.7)

1.1

Net income (loss)

(2.7)

0.9

Income (loss) per share from continuing operations

(0.08)

0.03

Net income (loss) per share

(0.08)

0.03

During the first quarter of fiscal year 2011:

  • Net revenues decreased 2.3% to $251.9 million; primarily attributable to decreased gaming and hotel revenues;
  • Consolidated EBITDA decreased 11.4% to $43.2 million, largely as a result of decreased gaming revenues and increased corporate and development costs associated with the Company's acquisition of the Rainbow Casino and attempted equity offering;
  • Property-level EBITDA decreased 5.4% to  $55.4 million; and
  • Property-level EBITDA margins were 22.0% compared to 22.7% in the first quarter of fiscal year 2010.

Discussing the operating results, Virginia McDowell, the Company's president and chief operating officer, remarked, "We have again demonstrated the agility of our business by increasing retail play, managing costs and maintaining our average customer spend and visitation.  We did experience a modest decline in our overall number of database customers, as residents in our markets have continued to feel the squeeze of the economic contraction and the unemployment and housing pictures have not improved.  We are confident that our branding and marketing programs have been successful in influencing customers across the portfolio during the quarter, which stands to have a positive impact on profitability upon economic recovery."

The Company welcomed Rainbow Casino in Vicksburg, Mississippi, to the property portfolio during the quarter.  McDowell commented, "We are excited by the enthusiasm of the team there, and believe we can make improvement through the implementation of our operational, marketing and technology platforms."

The Company noted that property-level operating margins have largely remained stable as initiatives continue to adjust cost-structure to business volume, although performance was impacted specifically by properties in Iowa and Colorado. In particular, properties in the Iowa Quad Cities market have continually been negatively impacted by road construction projects which have hindered access to our properties, and Black Hawk continued to experience difficulty in the retail segment.  Regulatory changes and efforts by management in Florida have led to a dramatic improvement at the Company's Pompano property, and Lula continues to improve its performance by consistently improving operations.

Dale R. Black, the Company's senior vice president and chief financial officer, commented, "While consumer confidence appeared to be gaining traction early in the quarter, leading indicators including the Consumer Confidence Index showed a steep decline through the critical summer months of June and July.  We obviously cannot control the national economy, we were successful in managing costs through this period, and continue to remain focused on keeping our balance sheet strong to wade through this economic cycle and capitalize on opportunities for growth."

Corporate Expenses, Capital Structure, and Capital Expenditures

Corporate and development expenses were $12.5 million for quarter compared to $9.9 million in fiscal 2010.  During the quarter the company incurred approximately $1.1 million in expenses related to its attempted equity offering and an additional $1.1 million in acquisition related costs regarding the Rainbow acquisition. Non-cash stock compensation was $1.7 million during the quarter, compared to $1.1 million for the first quarter of fiscal 2010.  

The Company had $63.5 million in cash and cash equivalents and total debt of $1.3 billion at the end of the quarter.

Interest expense for the quarter was $23.8 million, an increase of approximately $5.4 million compared to the prior fiscal year, primarily as a result of increased borrowing costs associated with the recent amendment to the Company's credit facility.  

Due to the ineffectiveness of the Company's interest rate swaps as a result of the amendment to our credit facility, we recorded other expense of $1.5 million during the first quarter of fiscal 2011.  The Company expects other expense of approximately $2 million associated with the anticipated change in fair value to be recorded during the remainder of fiscal 2011.

Capital expenditures during the quarter totaled $13 million, consisting almost entirely of maintenance capital expenditures.  The Company expects capital expenditures for the remainder of the fiscal year to be approximately $35 million.  

Conference Call Information

Isle of Capri Casinos, Inc. will host a conference call on Tuesday, August 31, 2010 at 10:00 am Central Time during which management will discuss the financial and other matters addressed in this press release.  The conference call can be accessed by interested parties via webcast through the investor relations page of the Company's website, www.islecorp.com, or, for domestic callers, by dialing (888) 469-0509.  International callers can access the conference call by dialing (630) 395-0133.  The conference call reference number is 8572561. The conference call will be recorded and available for review starting at noon central on Tuesday, August 31, 2010, until midnight central on Monday, September 6, 2010, by dialing (866) 479-2464; International: (203) 369-1538 and access number 875962.

ISLE OF CAPRI CASINOS, INC.

CONSOLIDATED STATEMENTS OF OPERATIONS

(In thousands, except share and per share amounts)

(Unaudited)

Three Months Ended

July 25,

July 26,

2010

2009

Revenues:

Casino

$      259,162

$      262,263

Rooms

10,881

12,261

Pari-mutuel, food, beverage and other

34,091

34,295

Gross revenues

304,134

308,819

Less promotional allowances

(52,213)

(50,905)

Net revenues

251,921

257,914

Operating expenses:

Casino

39,609

39,265

Gaming taxes

64,406

66,304

Rooms

2,769

3,057

Pari-mutuel, food, beverage and other

11,168

10,842

Marine and facilities

14,609

15,646

Marketing and administrative

63,620

64,088

Corporate and development

12,521

9,945

Depreciation and amortization

22,933

28,828

Total operating expenses

231,635

237,975

Operating income

20,286

19,939

Interest expense

(23,795)

(18,347)

Interest income

474

368

Other expense

(1,487)

-

Income (loss) from continuing operations before income taxes

(4,522)

1,960

Income tax benefit (provision)

1,867

(905)

Income (loss) from continuing operations

(2,655)

1,055

Income (loss) from discontinued operations,

  including loss on sale, net of income taxes

-

(150)

Net income (loss)

$        (2,655)

$             905

Income (loss) per common share-basic and dilutive:

Income (loss) from continuing operations

$          (0.08)

$            0.03

Income (loss) from discontinued operations,

       including loss on sale, net of income taxes

-

-

Net income (loss)

$          (0.08)

$            0.03

Weighted average basic shares

32,447,904

31,779,100

Weighted average diluted shares

32,447,904

31,885,101

ISLE OF CAPRI CASINOS, INC.

CONSOLIDATED BALANCE SHEETS

(In thousands, except share and per share amounts)

July 25,

April 25,

2010

2010

ASSETS

(unaudited)

Current assets:

Cash and cash equivalents

$          63,516

$          68,069

Marketable securities

23,664

22,926

Accounts receivable, net

9,478

8,879

Income taxes receivable

7,318

8,109

Deferred income taxes

16,826

16,826

Prepaid expenses and other assets

33,785

25,095

Total current assets

154,587

149,904

Property and equipment, net

1,129,683

1,098,942

Other assets:

Goodwill

345,303

313,136

Other intangible assets, net

85,834

79,675

Deferred financing costs, net

9,533

10,354

Restricted cash

12,730

2,774

Prepaid deposits and other

17,795

20,055

Total assets

$     1,755,465

$     1,674,840

LIABILITIES AND STOCKHOLDERS' EQUITY

Current liabilities:

Current maturities of long-term debt

$            8,762

$            8,754

Accounts payable

30,212

24,072

Accrued liabilities:

Payroll and related

43,149

45,863

Property and other taxes

21,870

20,253

Interest

17,713

14,779

Progressive jackpots and slot club awards

14,788

14,144

Other

33,007

29,290

Total current liabilities

169,501

157,155

Long-term debt, less current maturities

1,258,302

1,192,135

Deferred income taxes

28,763

29,193

Other accrued liabilities

40,006

38,972

Other long-term liabilities

17,120

17,166

Stockholders' equity:

Preferred stock, $.01 par value; 2,000,000 shares authorized; none issued

-

-

Common stock, $.01 par value; 45,000,000 shares authorized; shares issued:

36,783,871 at July 25, 2010 and 36,771,730 at April 25, 2010

368

367

Class B common stock, $.01 par value; 3,000,000 shares authorized; none issued

-

-

Additional paid-in capital

203,323

201,464

Retained earnings

95,900

98,555

Accumulated other comprehensive (loss) income

(5,711)

(8,060)

293,880

292,326

Treasury stock, 4,326,242 shares at July 25, 2010 and April 25, 2010

(52,107)

(52,107)

Total stockholders' equity

241,773

240,219

Total liabilities and stockholders' equity

$     1,755,465

$     1,674,840

Isle of Capri Casinos, Inc.

Supplemental Data - Net Revenues

(unaudited, in thousands)

Three Months Ended

July 25,

July 26,

2010

2009

Mississippi

Biloxi

$    18,639

$    20,420

Natchez

8,070

8,573

Lula

17,318

17,728

Vicksburg(2)

3,968

Mississippi Total

47,995

46,721

Louisiana

Lake Charles

34,184

37,614

Missouri

Kansas City

19,040

19,485

Boonville

20,068

20,072

Caruthersville

8,391

8,332

Missouri Total

47,499

47,889

Iowa

Bettendorf

19,741

21,166

Davenport

11,348

12,453

Marquette

7,109

7,477

Waterloo

20,934

19,876

Iowa Total

59,132

60,972

Colorado

Black Hawk

30,044

33,790

Florida

Pompano

32,720

30,798

Property Net Revenues before Other

251,574

257,784

Other

347

130

Net Revenues from Continuing Operations

$  251,921

$  257,914

Isle of Capri Casinos, Inc.

Supplemental Data - EBITDA (1)

(unaudited, in thousands)

Three Months Ended

July 25,

July 26,

2010

2009

Mississippi

Biloxi

$            1,846

$            2,385

Natchez

2,451

2,733

Lula

5,199

4,655

Vicksburg(2)

1,273

Mississippi Total

10,769

9,773

Louisiana

Lake Charles

6,799

7,582

Missouri

Kansas City

3,999

4,452

Boonville

6,892

6,776

Caruthersville

1,789

1,753

Missouri Total

12,680

12,981

Iowa

Bettendorf

4,465

5,982

Davenport

2,793

3,614

Marquette

1,490

1,772

Waterloo

6,041

5,848

Iowa Total

14,789

17,216

Colorado

Black Hawk

7,103

8,566

Florida

Pompano

3,253

2,463

Property EBITDA Before

    Corporate and Other Items

55,393

58,581

Corporate and Other

(12,174)

(9,814)

EBITDA from Continuing Operations

$          43,219

$          48,767

Isle of Capri Casinos, Inc.

Supplemental Data - Reconciliation of Operating Income to EBITDA (1)

(unaudited, in thousands)

Three Months Ended July 25, 2010

Three Months Ended July 26, 2009

Depreciation

Depreciation

Operating

and

Operating

and

Income

Amortization

EBITDA

Income

Amortization

EBITDA

Mississippi

Biloxi

$       (1,248)

$               3,094

$      1,846

$       (1,268)

$               3,653

$      2,385

Natchez

2,101

350

2,451

2,137

596

2,733

Lula

3,346

1,853

5,199

2,441

2,214

4,655

Vicksburg(2)

631

642

1,273

Mississippi Total

4,830

5,939

10,769

3,310

6,463

9,773

Louisiana

Lake Charles

4,415

2,384

6,799

4,843

2,739

7,582

Missouri

Kansas City

3,136

863

3,999

3,355

1,097

4,452

Boonville

5,834

1,058

6,892

5,592

1,184

6,776

Caruthersville

922

867

1,789

838

915

1,753

Missouri Total

9,892

2,788

12,680

9,785

3,196

12,981

Iowa

Bettendorf

2,435

2,030

4,465

3,635

2,347

5,982

Davenport

2,226

567

2,793

2,658

956

3,614

Marquette

1,065

425

1,490

1,073

699

1,772

Waterloo

3,585

2,456

6,041

2,899

2,949

5,848

Iowa Total

9,311

5,478

14,789

10,265

6,951

17,216

Colorado

Black Hawk

3,855

3,248

7,103

4,694

3,872

8,566

Florida

Pompano

890

2,363

3,253

(1,807)

4,270

2,463

Total Property Before

   Corporate and Other Items

33,193

22,200

55,393

31,090

27,491

58,581

Corporate and Other

(12,907)

733

(12,174)

(11,151)

1,337

(9,814)

Total From Continuing Operations

$       20,286

$             22,933

$    43,219

$       19,939

$             28,828

$    48,767

1.  EBITDA is "earnings before interest and other non-operating income (expense), income taxes, and depreciation and amortization." "Property EBITDA" is EBITDA before Corporate and development expenses and minority interest.  EBITDA is presented solely as a supplemental disclosure because management believes that it is 1) a widely used measure of operating performance in the gaming industry, 2) used as a component of calculating required leverage and minimum interest coverage ratios under our Senior Credit Facility and 3) a principal basis of valuing gaming companies. Management uses EBITDA and Property EBITDA as the primary measure of the Company's operating properties' performance, and they are important components in evaluating the performance of management and other operating personnel in the determination of certain components of employee compensation.  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 an alternative to any other measure determined in accordance with U.S. generally accepted accounting principles (GAAP).  The Company has significant uses of cash flows, including capital expenditures, interest payments, taxes and debt principal repayments, which are not reflected in EBITDA.  Also, other gaming companies that report EBITDA information may calculate EBITDA in a different manner than the Company.  A reconciliation of EBITDA and Property EBITDA to operating income is included in the financial schedules accompanying this release. A reconciliation of EBITDA to the Company's net income (loss) is shown below (in thousands).

Three Months Ended

July 25,

July 26,

2010

2009

EBITDA

$      43,219

$      48,767

Add/(deduct):

Depreciation and amortization

(22,933)

(28,828)

Interest expense:

 Interest expense, net

(23,321)

(17,979)

 Other expense

(1,487)

-

Income tax benefit (provision)

1,867

(905)

Income (loss) from discontinued operations,

 including loss on sale, net of income taxes

-

(150)

Net income (loss)

$      (2,655)

$           905

Certain of our debt agreements use "Adjusted EBITDA" as a financial measure for the calculation of financial debt covenants. Adjusted EBITDA differs from EBITDA as Adjusted EBITDA includes add back of items such as gain on early extinguishment of debt, pre-opening expenses, certain write-offs and valuation expenses, and non-cash stock compensation expense. Reference can be made to the definition of Adjusted EBITDA in the applicable debt agreements on file as Exhibits to our filings with the Securities and Exchange Commission.  

2.   Rainbow Casino in Vicksburg, Mississippi was acquired on June      8, 2010 and we have included the results of Rainbow in our consolidated financial statements subsequent to acquisition.

About Isle of Capri Casinos, Inc.

Isle of Capri Casinos, Inc., founded in 1992, is dedicated to providing its customers with an exceptional gaming and entertainment experience at each of its 15 casino properties. The Company owns and operates casinos domestically in Biloxi, Lula, Natchez and Vicksburg, Mississippi; Lake Charles, Louisiana; Bettendorf, Davenport, Marquette and Waterloo, Iowa; Boonville, Caruthersville and Kansas City, Missouri, two casinos in Black Hawk, Colorado, and a casino and harness track in Pompano Beach, Florida. More information is available at the Company's website, www.islecorp.com.

Forward-Looking Statements

This press release may be deemed to contain forward-looking statements, which are subject to change. These forward-looking statements may be significantly impacted, either positively or negatively by various factors, including without limitation, licensing, and other regulatory approvals, financing sources, development and construction activities, costs and delays, weather, permits, competition and business conditions in the gaming industry. The forward-looking statements are subject to numerous risks and uncertainties that could cause actual results to differ materially from those expressed in or implied by the statements herein.

Additional information concerning potential factors that could affect the Company's financial condition, results of operations and expansion projects, is included in the filings of the Company with the Securities and Exchange Commission, including, but not limited to, its Form 10-K/A for the most recently ended fiscal year.

CONTACTS:

Isle of Capri Casinos, Inc.,

    Dale Black, Chief Financial Officer-314.813.9327

    Jill Haynes, Senior Director of Corporate Communication-314.813.9368

SOURCE Isle of Capri Casinos, Inc.



RELATED LINKS

http://www.islecorp.com