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

- Company selected to develop Cape Girardeau, Missouri casino

- Property EBITDA increases by 11.3%, including new Vicksburg property

- Same-Store EBITDA and EBITDA margins increase at 11 of 14 properties

- Marketing, cost-containment lead to favorable financial results while net revenue remains flat

Dec 02, 2010, 08:00 ET from Isle of Capri Casinos, Inc.

ST. LOUIS, Dec. 2, 2010 /PRNewswire-FirstCall/ -- Isle of Capri Casinos, Inc. (Nasdaq: ISLE) (the "Company") today reported financial results for the second quarter of fiscal year 2011, the three and six month period ended October 24, 2010, and other Company-related news.  

In making the announcement, James B. Perry, the Company's chairman and chief executive officer, said, "Clearly, our operational efforts are working.  Despite continued uncertainty in the national economy that has led to generally stagnant revenues in regional and local gaming markets, we have been able to increase our EBITDA through more efficient marketing and streamlined operations.

"Additionally, we are excited that our efforts to pursue prudent development opportunities have delivered positive results.  Yesterday, the Missouri Gaming Commission announced that our proposal, Isle Casino Cape Girardeau, has been selected for prioritization for the 13th and final gaming license in the state. We thank the Commission for their confidence in our proposals, and are excited about this decision and look forward to commencing development on our Isle Casino in Cape Girardeau, which we anticipate opening by the end of 2012.

"In Pennsylvania, the Gaming Board has indicated that it will announce its selection for the final resort casino license at its scheduled meeting on either December 16 or in early January.  We are confident that we have submitted a proposal together with Nemacolin Woodlands Resort that will provide maximum benefits to the Commonwealth in terms of both tourism impact and new tax revenue.  We are hopeful that we will be the successful applicant in that competitive application process."

Consolidated Results

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

Three Months Ended

Six Months Ended

October 24,

October 25,

October 24,

October 25,

2010

2009

2010

2009

Net revenues

$          246.7

$          246.1

$          498.6

$          504.0

EBITDA(1)

42.5

42.3

85.7

91.0

Income (loss) from continuing operations

(1.8)

2.4

(4.5)

3.4

Net income (loss)

(1.0)

1.6

(3.7)

2.5

Income (loss) per share from continuing

 operations

(0.06)

0.07

(0.14)

0.11

Net income (loss) per share

(0.03)

0.05

(0.11)

0.08

Significant items impacting EBITDA during the three and six months ended October 24, 2010 and October 25, 2009 are as follows:

Three Months Ended

Six Months Ended

October 24,

October 25,

October 24,

October 25,

2010

2009

2010

2009

Expense recoveries - Pittsburgh development cost(3)

$                -

$              6.8

$                -

$              6.8

Marquette hotel demolition(4)

-

(0.5)

-

(0.5)

Caruthersville property tax settlement(5)

-

0.9

-

0.9

$                -

$              7.2

$                -

$              7.2

Compared to the second quarter of fiscal 2010, before consideration of the items in the above table during the second quarter of fiscal year 2011:

  • Property-level EBITDA increased 11.3% from $47.1 million to  $52.4 million, including the contribution of $2.1 million from our newly acquired Vicksburg property;
  • Consolidated EBITDA increased 21.3% to $42.5 million,

Discussing the operating results, Virginia McDowell, the Company's president and chief operating officer, remarked, "We have posted improved operating results on a year-over-year basis because of a solid operating plan and the continued dedication of our team to providing value for our shareholders.  First and foremost, I want to thank all of our team members for staying focused and improving our business as we bump along the bottom of this economic cycle.

“Revenues in our markets were generally flat during the quarter, according to reported results.  We are pleased to have achieved modestly increased results in Iowa, Missouri and Mississippi.  Management initiatives in Lake Charles to control costs and cut out unprofitable marketing efforts led to an increase in earnings despite decreased net revenues.  In Florida, we were able to take advantage of the gaming tax rates and modify our marketing efforts to achieve significant year over year improvement.

"In Black Hawk, we had a significant decrease in EBITDA due to a major competitive expansion in the market, which recently had its one year anniversary.  Our midweek revenues and hotel occupancy were impacted the most significantly.  We continue to refine our marketing programs and cost savings initiatives, and believe these changes will lead to more positive results in the coming periods.

"Including our recently acquired Vicksburg property, our operating costs decreased by $1.0 million, or 0.8%.  Excluding Vicksburg, we decreased our same-store operating cost structure by $5.3 million, or 4.0%, during the quarter.  Overall, we remain dedicated to keeping our costs tight and marketing to our most profitable customers until the economy improves."

Dale R. Black, the Company's senior vice president and chief financial officer, commented, "While we have recently seen positive signs in certain economic indicators and hope this positive news will continue, we believe that discretionary consumer spending could continue to lag these trends.  In the meantime, we will remain focused on executing our operating plan that proved successful during the second quarter, and look forward to increasing profitability upon growth in discretionary spending reaching the gaming and entertainment sectors."

Corporate Expenses, Capital Structure, and Capital Expenditures

Corporate and development expenses were $10.9 million for the quarter compared to $12.3 million in the second quarter of fiscal 2010.  Non-cash stock compensation was $2.4 million during the quarter, compared to $2.6 million for the second quarter of fiscal 2010.  

The Company had $64.1 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 $23.4 million, an increase of approximately $5.5 million compared to the prior fiscal year, primarily as a result of increased borrowing costs and increased borrowings related to the acquisition of Rainbow Casino in Vicksburg.

Capital expenditures during the quarter totaled $13 million, consisting almost entirely of maintenance capital expenditures.  The Company expects maintenance capital expenditures for the remainder of the fiscal year to be approximately $22 million and expenditures related to Cape Girardeau to be approximately $10 million.  

Conference Call Information

Isle of Capri Casinos, Inc. will host a conference call on Thursday, December 2, 2010 at 8:30 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.

The conference call will also be available by telephone, for domestic callers, by dialing 877-917-8929.  International callers can access the conference call by dialing 517-308-9020.  The conference call reference number is 5980634. The conference call will be recorded and available for review starting at noon central on Thursday, December 2, 2010, until midnight central on Wednesday, December 8, 2010, by dialing 800-337-6538; International: 203-369-3798 and access number 4423.

ISLE OF CAPRI CASINOS, INC.

CONSOLIDATED STATEMENTS OF OPERATIONS

(In thousands, except share and per share amounts)

(unaudited)

Three Months Ended

Six Months Ended

October 24,

October 25,

October 24,

October 25,

2010

2009

2010

2009

Revenues:

Casino

$      254,640

$      251,173

$      513,802

$      513,436

Rooms

10,643

11,803

21,524

24,064

Pari-mutuel, food, beverage and other

33,997

33,286

68,088

67,581

Gross revenues

299,280

296,262

603,414

605,081

Less promotional allowances

(52,629)

(50,207)

(104,842)

(101,112)

Net revenues

246,651

246,055

498,572

503,969

Operating expenses:

Casino

39,979

39,651

79,588

78,916

Gaming taxes

60,214

64,223

124,620

130,527

Rooms

2,725

2,824

5,494

5,881

Pari-mutuel, food, beverage and other

11,123

11,243

22,291

22,085

Marine and facilities

15,347

16,110

29,956

31,756

Marketing and administrative

63,808

64,167

127,428

128,255

Corporate and development

10,940

12,340

23,461

22,285

Expense recoveries and other charges

-

(6,762)

-

(6,762)

Depreciation and amortization

22,179

28,437

45,112

57,265

Total operating expenses

226,315

232,233

457,950

470,208

Operating income

20,336

13,822

40,622

33,761

Interest expense

(23,410)

(17,883)

(47,205)

(36,230)

Interest income

467

395

941

763

Derivative income (expense)

(743)

-

(2,230)

-

Loss from continuing operations before

 income taxes

(3,350)

(3,666)

(7,872)

(1,706)

Income tax benefit

1,537

6,039

3,404

5,134

Income (loss) from continuing operations

(1,813)

2,373

(4,468)

3,428

Income (loss) from discontinued operations,

  net of income taxes

794

(811)

794

(961)

Net income (loss)

$        (1,019)

$          1,562

$        (3,674)

$          2,467

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

Income (loss) from continuing operations

$          (0.06)

$            0.07

$          (0.14)

$            0.11

Income (loss) from discontinued operations,

 net of income taxes

0.03

(0.02)

0.03

(0.03)

Net income (loss)

$          (0.03)

$            0.05

$          (0.11)

$            0.08

Weighted average basic shares

32,783,726

32,319,789

32,615,815

32,049,444

Weighted average diluted shares

32,783,726

32,511,462

32,615,815

32,251,102

ISLE OF CAPRI CASINOS, INC.

CONSOLIDATED BALANCE SHEETS

(In thousands, except share and per share amounts)

October 24,

April 25,

2010

2010

ASSETS

(unaudited)

Current assets:

Cash and cash equivalents

$          64,133

$          68,069

Marketable securities

23,014

22,926

Accounts receivable, net

7,766

8,879

Income taxes receivable

8,850

8,109

Deferred income taxes

16,826

16,826

Prepaid expenses and other assets

30,749

25,095

Total current assets

151,338

149,904

Property and equipment, net

1,122,523

1,098,942

Other assets:

Goodwill

345,303

313,136

Other intangible assets, net

84,631

79,675

Deferred financing costs, net

8,712

10,354

Restricted cash

12,806

2,774

Prepaid deposits and other

16,826

20,055

Total assets

$     1,742,139

$     1,674,840

LIABILITIES AND STOCKHOLDERS' EQUITY

Current liabilities:

Current maturities of long-term debt

$            8,766

$            8,754

Accounts payable

24,495

24,072

Accrued liabilities:

Payroll and related

43,939

45,863

Property and other taxes

25,508

20,253

Interest

8,113

14,779

Progressive jackpots and slot club awards

15,286

14,144

Other

33,980

29,290

Total current liabilities

160,087

157,155

Long-term debt, less current maturities

1,251,158

1,192,135

Deferred income taxes

28,291

29,193

Other accrued liabilities

40,431

38,972

Other long-term liabilities

16,833

17,166

Stockholders' equity:

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

-

-

Common stock, $.01 par value; 60,000,000 shares authorized; shares issued:

36,781,374 at October 24, 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

200,117

201,464

Retained earnings

94,881

98,555

Accumulated other comprehensive (loss) income

(3,736)

(8,060)

291,630

292,326

Treasury stock, 3,843,358 shares at October 24, 2010 and 4,326,242 shares at

April 25, 2010

(46,291)

(52,107)

Total stockholders' equity

245,339

240,219

Total liabilities and stockholders' equity

$     1,742,139

$     1,674,840

Isle of Capri Casinos, Inc.

Supplemental Data - Net Revenues

(unaudited, in thousands)

Three Months Ended

Six Months Ended

October 24,

October 25,

October 24,

October 25,

2010

2009

2010

2009

Mississippi

Biloxi

$    17,268

$    17,824

$       35,907

$    38,244

Natchez

7,299

7,786

15,369

16,359

Lula

15,948

15,820

33,266

33,548

Vicksburg(2)

7,231

11,199

Mississippi Total

47,746

41,430

95,741

88,151

Louisiana

Lake Charles

31,770

34,243

65,954

71,857

Missouri

Kansas City

19,110

19,101

38,150

38,586

Boonville

20,142

19,846

40,210

39,918

Caruthersville

8,248

7,925

16,639

16,257

Missouri Total

47,500

46,872

94,999

94,761

Iowa

Bettendorf

20,307

20,507

40,048

41,673

Davenport

11,069

11,866

22,417

24,319

Marquette

7,589

7,478

14,698

14,955

Waterloo

20,054

20,224

40,988

40,100

Iowa Total

59,019

60,075

118,151

121,047

Colorado

Black Hawk

29,893

34,595

59,937

68,385

Florida

Pompano

29,713

28,569

62,433

59,367

Property Net Revenues before Other

245,641

245,784

497,215

503,568

Other

1,010

271

1,357

401

Net Revenues from Continuing Operations

$  246,651

$  246,055

$     498,572

$  503,969

Isle of Capri Casinos, Inc.

Supplemental Data - EBITDA (1)

(unaudited, in thousands)

Three Months Ended

Six Months Ended

October 24,

October 25,

October 24,

October 25,

2010

2009

2010

2009

Mississippi

Biloxi

$            1,586

$            1,507

$            3,432

$            3,892

Natchez

2,024

2,394

4,475

5,127

Lula

4,305

3,632

9,504

8,287

Vicksburg(2)

2,077

3,350

Mississippi Total

9,992

7,533

20,761

17,306

Louisiana

Lake Charles

4,800

4,254

11,599

11,836

Missouri

Kansas City

4,238

4,148

8,237

8,600

Boonville

6,657

6,525

13,549

13,301

Caruthersville

1,286

1,140

3,075

2,893

Missouri Total

12,181

11,813

24,861

24,794

Iowa

Bettendorf

5,586

5,286

10,051

11,268

Davenport

2,527

3,073

5,320

6,687

Marquette

1,767

1,397

3,257

3,169

Waterloo

5,797

5,510

11,838

11,358

Iowa Total

15,677

15,266

30,466

32,482

Colorado

Black Hawk

5,794

9,028

12,897

17,594

Florida

Pompano

4,001

(786)

7,254

1,677

Property EBITDA Before

    Corporate and Other Items

52,445

47,108

107,838

105,689

Corporate and Other

(9,930)

(12,070)

(22,104)

(21,884)

EBITDA Before Other Items

42,515

35,038

85,734

83,805

Other Items:

Expense Recoveries and Other(3)

-

6,762

-

6,762

Marquette Hotel Demolition(4)

-

(475)

-

(475)

Caruthersville Property Tax Settlement(5)

-

934

-

934

EBITDA from Continuing Operations

$          42,515

$          42,259

$          85,734

$          91,026

Isle of Capri Casinos, Inc.

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

(unaudited, in thousands)

Three Months Ended October 24, 2010

Three Months Ended October 25, 2009

Depreciation

Depreciation

Operating

and

Operating

and

Income

Amortization

EBITDA

Income

Amortization

EBITDA

Mississippi

Biloxi

$     (1,412)

$            2,998

$      1,586

$       (1,979)

$            3,486

$       1,507

Natchez

1,656

368

2,024

1,956

438

2,394

Lula

2,469

1,836

4,305

1,614

2,018

3,632

Vicksburg(2)

827

1,250

2,077

Mississippi Total

3,540

6,452

9,992

1,591

5,942

7,533

Louisiana

Lake Charles

2,456

2,344

4,800

1,658

2,596

4,254

Missouri

Kansas City

3,345

893

4,238

3,169

979

4,148

Boonville

5,544

1,113

6,657

5,396

1,129

6,525

Caruthersville

427

859

1,286

311

829

1,140

Missouri Total

9,316

2,865

12,181

8,876

2,937

11,813

Iowa

Bettendorf

3,603

1,983

5,586

3,077

2,209

5,286

Davenport

1,961

566

2,527

2,234

839

3,073

Marquette

1,378

389

1,767

803

594

1,397

Waterloo

4,387

1,410

5,797

2,541

2,969

5,510

Iowa Total

11,329

4,348

15,677

8,655

6,611

15,266

Colorado

Black Hawk

2,578

3,216

5,794

5,265

3,763

9,028

Florida

Pompano

1,642

2,359

4,001

(5,163)

4,377

(786)

Total Property Before

   Corporate and Other Items

30,861

21,584

52,445

20,882

26,226

47,108

Corporate and Other

(10,525)

595

(9,930)

(13,323)

1,253

(12,070)

Total Before Other Items

20,336

22,179

42,515

7,559

27,479

35,038

Other Items:

Expense Recoveries and Other(3)

-

-

-

6,762

-

6,762

Marquette Hotel Demolition(4)

-

-

-

(1,433)

958

(475)

Caruthersville Property Tax Settlement(5)

-

-

-

934

-

934

Total From Continuing Operations

$    20,336

$          22,179

$    42,515

$       13,822

$          28,437

$     42,259

Isle of Capri Casinos, Inc.

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

(unaudited, in thousands)

Six Months Ended October 24, 2010

Six Months Ended October 25, 2009

Depreciation

Depreciation

Operating

and

Operating

and

Income

Amortization

EBITDA

Income

Amortization

EBITDA

Mississippi

Biloxi

$     (2,660)

$            6,092

$      3,432

$       (3,247)

$            7,139

$       3,892

Natchez

3,757

718

4,475

4,093

1,034

5,127

Lula

5,815

3,689

9,504

4,055

4,232

8,287

Vicksburg(2)

1,458

1,892

3,350

Mississippi Total

8,370

12,391

20,761

4,901

12,405

17,306

Louisiana

Lake Charles

6,871

4,728

11,599

6,501

5,335

11,836

Missouri

Kansas City

6,481

1,756

8,237

6,524

2,076

8,600

Boonville

11,378

2,171

13,549

10,988

2,313

13,301

Caruthersville

1,349

1,726

3,075

1,149

1,744

2,893

Missouri Total

19,208

5,653

24,861

18,661

6,133

24,794

Iowa

Bettendorf

6,038

4,013

10,051

6,712

4,556

11,268

Davenport

4,187

1,133

5,320

4,892

1,795

6,687

Marquette

2,443

814

3,257

1,876

1,293

3,169

Waterloo

7,972

3,866

11,838

5,440

5,918

11,358

Iowa Total

20,640

9,826

30,466

18,920

13,562

32,482

Colorado

Black Hawk

6,433

6,464

12,897

9,960

7,634

17,594

Florida

Pompano

2,532

4,722

7,254

(6,970)

8,647

1,677

Total Property Before

   Corporate and Other Items

64,054

43,784

107,838

51,973

53,716

105,689

Corporate and Other

(23,432)

1,328

(22,104)

(24,475)

2,591

(21,884)

Total Before Other Items

40,622

45,112

85,734

27,498

56,307

83,805

Other Items:

Expense Recoveries and Other(3)

-

-

-

6,762

-

6,762

Marquette Hotel Demolition(4)

-

-

-

(1,433)

958

(475)

Caruthersville Property Tax Settlement(5)

-

-

-

934

-

934

Total From Continuing Operations

$    40,622

$          45,112

$    85,734

$       33,761

$          57,265

$     91,026

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

Six Months Ended

October 24,

October 25,

October 24,

October 25,

2010

2009

2010

2009

EBITDA

$      42,515

$      42,259

$      85,734

$      91,026

Add/(deduct):

Depreciation and amortization

(22,179)

(28,437)

(45,112)

(57,265)

Interest expense, net

(22,943)

(17,488)

(46,264)

(35,467)

Derivative income (expense)

(743)

-

(2,230)

-

Income tax benefit

1,537

6,039

3,404

5,134

Income (loss) from discontinued operations,

 net of income taxes

794

(811)

794

(961)

Net income (loss)

$      (1,019)

$        1,562

$      (3,674)

$        2,467

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.

3.

Expense recoveries and other of $(6.8) million for the three and six months ended October 25, 2009 reflect income from the recording of a receivable for reimbursement of Pittsburgh development costs.

4.

During October, 2009 we demolished the hotel at our casino in Marquette, Iowa. As a result, our operating income for the three and six months ended October 25, 2009 includes $0.5 million in demolition costs and $1.0 million in acceleration of remaining depreciation.

5.

Caruthersville includes the favorable impact of $0.9 million from the settlement of a property tax appeal during both the three and six months ended October 25, 2009.

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