Isle of Capri Casinos, Inc. Announces Fiscal 2014 Fourth Quarter And Year Results

17 Jun, 2014, 08:30 ET from Isle of Capri Casinos, Inc.

SAINT LOUIS, June 17, 2014 /PRNewswire/ -- Isle of Capri Casinos, Inc. (NASDAQ: ISLE) (the "Company") today reported financial results for the fourth quarter and fiscal year ended April 27, 2014.

Consolidated Financial Results

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

Three Months Ended

Twelve Months Ended

April 27,

April 28,

April 27,

April 28,

2014

2013

2014

2013

Net revenues

$    260.8

$    257.4

$    954.6

$    923.4

Consolidated Adjusted EBITDA (1)

57.2

56.7

173.4

176.0

Loss from continuing operations

(139.7)

(47.3)

(129.7)

(52.5)

Income (loss) from discontinued operations

(1.8)

1.9

2.0

4.9

Net loss

(141.5)

(45.4)

(127.7)

(47.6)

Diluted loss per share from continuing operations

(3.51)

(1.20)

(3.26)

(1.33)

Diluted income (loss)  per share from discontinued operations

(0.04)

0.05

0.05

0.12

Diluted loss per share

(3.55)

(1.15)

(3.21)

(1.21)

Adjusted income (loss) per share (2)

0.34

0.19

(0.06)

0.23

(1)

For a further description of Consolidated Adjusted EBITDA, refer to the reconciliation tables following the narrative and the definition of Adjusted EBITDA in footnote (1) of this release.

(2)

For a reconciliation of the GAAP basis per share amounts to adjusted income (loss) per share, refer to the reconciliation table labeled "Reconciliation of GAAP Income (Loss) from Continuing Operations to Adjusted Income (Loss) and GAAP Income (Loss) Per Share from Continuing Operations to Adjusted Income (Loss) Per Share."

Commenting on the results of the quarter Virginia McDowell, the Company's president and chief executive officer said "Our continued focus on operating efficiencies allowed us to increase revenues and Adjusted EBITDA in a tough operating environment. We improved Adjusted EBITDA and margins on a same store basis (i.e. excluding Nemacolin), despite an overall decline in net revenues.  We were able to partially offset the impact of the continued challenging operating environment through refined marketing programs and focused cost discipline.   In particular, in Cape Girardeau, these efforts led to a $1.6 million increase in Adjusted EBITDA despite a $1.7 million decrease in net revenue.  Also, in Pompano where net revenue increased $2.2 million, Adjusted EBITDA increased $1.7 million, resulting in flow through of 77% of incremental net revenue.

"Weakness in both visitation and win per visit impacted revenue from customers who spend less than $100 per visit.  However, visitation and revenues from our top customers has remained relatively constant.  In the current environment, we remain disciplined in our marketing and promotional activities.

"We benefited from the impact of our cost savings initiatives as same store operating expenses decreased by over $3 million for the quarter, while our corporate costs were flat despite a $1.6 million increase in our insurance costs, caused by very favorable insurance experience in the prior year quarter.  These initiatives are now producing a run rate of $12 million in annualized savings."

Financial Highlights

Net revenue for the quarter increased $3.4 million to $260.8 million and consolidated Adjusted EBITDA increased from $56.7 million to $57.2 million.  Adjusted income per share was $0.34 during the quarter, compared to $0.19 in the prior year.  GAAP basis diluted income (loss) per share from continuing operations for the fiscal 2014 quarter was ($3.51) compared to ($1.20) for the fourth quarter of the prior year, including non-cash valuation charges assessed during both periods. 

The following items impacted earnings from continuing operations during the fourth quarters of fiscal 2014 and 2013:

  • The Company recorded non-cash impairment charges of $162.1 million in fiscal 2014 and $50.1 million in fiscal 2013.
  • Interest expense decreased from $25.0 million in the fourth quarter of fiscal 2013 to $21.6 million in the fourth quarter of fiscal 2014 due to lower revolving credit borrowings in the current year quarter, due to the application of the approximately $48.7 million in net proceeds from the sale of our Davenport facility. Additionally the fiscal 2013 quarter included $2.2 million of financing related costs.
  • The Company incurred $1.4 million in preopening costs associated with Nemacolin in the fourth quarter of fiscal 2013.

Operating Results

Black Hawk – Adjusted EBITDA decreased by $0.3 million to $7.5 million due to decreased net revenues of $1.0 million.  Operating margins remained relatively stable at the property.  Decreased revenues were largely attributable to an increased promotional market environment and the extended winter weather, but were partially offset by our targeted marketing efforts during the period.

Pompano – Net revenues increased 4.8% to $48.6 million, Adjusted EBITDA increased 17.6% to $11.6 million, and operating margins increased 258 basis points to 23.8%.   This growth was largely attributable to increased slot play, as well as slightly higher food and beverage revenues.

Iowa – Net revenues decreased 5.5% to $48.3 million and Adjusted EBITDA decreased 8.7% to $14.0 million. Net revenues in Iowa were negatively impacted during the quarter by the extended winter weather where, on average, our properties experienced 10 -12 more days with severe weather conditions than in the fourth quarter of fiscal 2013. 

Lake Charles – Net revenues increased 6.6% to $35.0 million, and Adjusted EBITDA increased 14.1% to $6.8 million, leading to an increase in operating margins of 128 basis points.  A combination of more effective database marketing, improved hotel yielding, as well as stable operating costs drove the improvement.

Mississippi – Net revenues decreased 7.6% to $28.7 million and Adjusted EBITDA decreased $1.9 million to $5.9 million. Our properties in Mississippi continue to be impacted by competitive pressures in their respective markets which were further compounded by unusual winter weather conditions.

Missouri – Net revenues decreased 3.6% to $62.3 million, while Adjusted EBITDA increased by 13.6% to $18.3 million, leading to an increase in operating margins of 445 basis points to 29.4%.  In Cape Girardeau, more focused marketing efforts and continued alignment of costs with business volumes produced an adjusted EBITDA increase of $1.6 million while net revenue decreased $1.7 million. We are continuing to develop and refine our marketing programs in this relatively new market.  In Kansas City, operating margins, net revenues and Adjusted EBITDA grew, as a result of marketing improvements and cost savings initiatives.

Pennsylvania – Net revenues were $7.5 million and Adjusted EBITDA was ($0.8) million.   We remain focused on growing our customer database while continuing to align our operating structure with the business volumes.   The winter months are seasonally the slowest and we believe we are better positioned now to capitalize on the high-season periods at this five-star resort in Western Pennsylvania.

Corporate Expenses

Corporate and development expenses were $7.1 million for the quarter, consistent with prior year, despite a $1.6 million increase in insurance related costs.

Non-cash stock compensation expense was $0.8 million for the quarter compared to $0.9 million in the fourth quarter of fiscal 2013. For the fiscal year, non-cash stock compensation expense was $4.2 million, compared to $4.8 million in fiscal 2013.

Capital Structure, Capital Expenditures and Updated Guidance

As of April 27, 2014, the Company had:

  • $69.8 million in cash and cash equivalents, excluding $9.8 million in restricted cash and investments;
  • $1.1 billion in total debt; and
  • $184 million in net line of credit availability.

Fourth quarter capital expenditures were $5.2 million.  For the year our total capital expenditures were approximately $38.1 million, including $18.1 million related to the completion of our Nemacolin facility.

The Company provided guidance for the following specific non-operating items for fiscal year 2015:

  • Depreciation and amortization expense is expected to be approximately $80 million to $82 million.
  • Interest expense is expected to be approximately $83 million to $85 million.
  • The Company expects cash income taxes pertaining to FY 2015 operations to be less than $1 million, primarily representing state income taxes.
  • Corporate and development expenses for FY 2015 are expected to be approximately $30 million, including approximately $4 million in non-cash stock compensation expense.
  • Maintenance capital expenditures for FY 2015 are expected to be approximately $47 million to $50 million.

Development

The Provence, Philadelphia, Pennsylvania – We continue to await the decision from the Pennsylvania Gaming Control Board (the "PGCB") regarding the awarding of the final license in Philadelphia where we would operate the proposed $700 million casino entertainment complex, dubbed The Provence, if the project is selected for licensure by the PGCB.  As proposed the 1.25 million square foot project is expected to include a 125-room hotel, a casino featuring approximately 3,300 electronic gaming machines and 150 table games, as well as a wide variety of non-gaming entertainment amenities.  At this time, of the PGCB has not communicated the timetable with respect to a forthcoming decision.

Conference Call Information

Isle of Capri Casinos, Inc. will host a conference call on Tuesday, June 17, 2014 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 877-870-4263.  International callers can access the conference call by dialing 412-317-0790.  The conference call will be recorded and available for review starting at 11:59 pm central on Tuesday, June 17, 2014, until 11:59 pm central on Tuesday, June 24, 2014, by dialing 877-344-7529; International: 412-317-0088 and access number 10047860.

About Isle of Capri Casinos, Inc.

Isle of Capri Casinos, Inc. is a leading regional gaming and entertainment company dedicated to providing guests with exceptional experience at each of the casino properties that it owns and operates, primarily under the Isle and Lady Luck brands.  The Company currently owns and operates 15 gaming and entertainment facilities in Mississippi, Louisiana, Iowa, Missouri, Colorado, Pennsylvania and 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 for the most recently ended fiscal year.

Contacts

Isle of Capri Casinos, Inc.,                Dale Black, Chief Financial Officer-314.813.9327                Jill Alexander, Senior Director of Corporate Communication-314.813.9368                www.islecorp.com

 

 

ISLE OF CAPRI CASINOS, INC. 

CONSOLIDATED STATEMENTS OF OPERATIONS

(In thousands, except share and per share amounts)

(Unaudited)

Three Months Ended

Twelve Months Ended

April 27,

April 28,

April 27,

April 28,

2014

2013

2014

2013

Revenues:

   Casino

$      271,070

$      270,559

$   1,004,255

$      967,142

   Rooms

7,889

8,063

32,449

31,851

   Food, beverage, pari-mutuel and other

36,182

36,265

135,305

128,319

   Gross revenues

315,141

314,887

1,172,009

1,127,312

   Less promotional allowances

(54,365)

(57,493)

(217,409)

(203,907)

   Net revenues

260,776

257,394

954,600

923,405

Operating expenses:

   Casino

39,605

40,266

158,019

150,075

   Gaming taxes

69,231

68,050

254,685

241,038

   Rooms

1,802

1,720

7,023

6,654

   Food, beverage, pari-mutuel and other

12,392

11,891

44,116

41,289

   Marine and facilities

14,655

14,348

57,624

54,509

   Marketing and administrative

59,680

58,257

234,690

226,397

   Corporate and development

7,141

7,196

28,455

33,953

   Valuation charges

162,100

50,100

162,100

50,100

   Litigation accrual reversals

-

-

(9,330)

-

   Preopening expense

-

1,446

3,898

5,765

   Depreciation and amortization

20,390

19,762

80,885

71,164

   Total operating expenses

386,996

273,036

1,022,165

880,944

Operating income (loss)

(126,220)

(15,642)

(67,565)

42,461

Interest expense

(21,584)

(25,032)

(81,342)

(89,446)

Interest income

89

96

349

502

Derivative income

-

216

398

748

Loss from continuing operations before    income taxes

(147,715)

(40,362)

(148,160)

(45,735)

   Income tax benefit (provision)

7,995

(6,898)

18,494

(6,732)

Loss from continuing operations 

(139,720)

(47,260)

(129,666)

(52,467)

Income (loss) from discontinued operations, net of income taxes

(1,798)

1,869

1,980

4,898

Net loss

$    (141,518)

$      (45,391)

$    (127,686)

$      (47,569)

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

Loss from continuing operations

$          (3.51)

$          (1.20)

$          (3.26)

$          (1.33)

Income (loss) from discontinued operations, net of income taxes 

(0.04)

0.05

0.05

0.12

Net loss

$          (3.55)

$          (1.15)

$          (3.21)

$          (1.21)

Weighted average basic shares

39,829,177

39,518,406

39,731,766

39,340,325

Weighted average diluted shares

39,829,177

39,518,406

39,731,766

39,340,325

 

 

ISLE OF CAPRI CASINOS, INC. 

CONSOLIDATED BALANCE SHEETS 

(In thousands, except share and per share amounts) 

April 27,

April 28,

2014

2013

ASSETS

(unaudited)

Current assets:

   Cash and cash equivalents

$        69,830

$        68,469

   Marketable securities

27,289

25,520

   Accounts receivable, net

12,615

11,077

   Income taxes receivable

73

4,789

   Deferred income taxes

4,106

1,573

   Prepaid expenses and other assets

18,526

20,872

   Total current assets

132,439

132,300

Property and equipment, net

955,604

1,034,026

Other assets:

   Goodwill

108,970

280,803

   Other intangible assets, net

54,911

60,748

   Deferred financing costs, net

23,439

27,230

   Restricted cash and investments

9,807

11,417

   Prepaid deposits and other

4,904

7,075

   Total assets

$   1,290,074

$   1,553,599

LIABILITIES AND STOCKHOLDERS' EQUITY

Current liabilities:

   Current maturities of long-term debt

$             230

$             415

   Accounts payable 

20,869

34,533

   Accrued liabilities:

   Payroll and related

34,700

35,093

   Property and other taxes

20,360

21,340

   Interest

16,920

18,502

   Progressive jackpots and slot club awards

16,306

16,579

   Other

18,478

29,337

   Total current liabilities

127,863

155,799

Long-term debt, less current maturities

1,066,071

1,156,469

Deferred income taxes

35,870

43,104

Other accrued liabilities

18,495

33,303

Other long-term liabilities

22,391

22,514

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: 42,066,148 at April 27, 2014 and  at April 28, 2013

421

421

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

-

   Additional paid-in capital

247,819

246,214

   Retained earnings (deficit)

(201,913)

(74,227)

   Accumulated other comprehensive (loss) income

-

(247)

46,327

-

172,161

   Treasury stock, 2,236,971 shares at April 27, 2014 and 2,470,128 shares at April 28, 2013

(26,943)

(29,751)

   Total stockholders' equity

19,384

-

142,410

   Total liabilities and stockholders' equity

$   1,290,074

$   1,553,599

 

 

Isle of Capri Casinos, Inc.

Supplemental Data - Net Revenues

(unaudited, in thousands)

Three Months Ended

Twelve Months Ended

April 27,

April 28,

April 27,

April 28,

2014

2013

2014

2013

Colorado

Black Hawk

$         30,242

$         31,233

$       121,313

$         122,135

Florida

Pompano

48,631

46,393

164,777

154,629

Iowa

Bettendorf

19,257

20,642

73,695

78,083

Marquette

5,928

6,889

25,014

27,605

Waterloo

23,090

23,547

85,361

86,654

Iowa Total

48,275

51,078

184,070

192,342

Louisiana

Lake Charles

35,044

32,884

129,899

125,575

Mississippi

Lula

14,785

15,454

50,489

55,444

Natchez

5,404

6,286

20,190

25,378

Vicksburg

8,501

9,296

29,947

29,918

Mississippi Total

28,690

31,036

100,626

110,740

Missouri

Boonville

19,463

20,055

74,531

78,624

Cape Girardeau

15,016

16,671

54,833

32,782

Caruthersville

8,231

8,356

29,879

32,282

Kansas City

19,541

19,493

70,385

73,538

Missouri Total

62,251

64,575

229,628

217,226

Pennsylvania

Nemacolin

7,473

-

23,575

-

Property Net Revenues before Other

260,606

257,199

953,888

922,647

Other

170

195

712

758

Net Revenues from Continuing Operations

$       260,776

$       257,394

$       954,600

$         923,405

 

 

Isle of Capri Casinos, Inc.

Reconciliation of Operating Income (Loss) to Adjusted EBITDA

(unaudited, in thousands)

Three Months Ended April 27, 2014

Operating Income (Loss)

Depreciation and Amortization

Stock-Based Compensation

Valuation charges, Preopening and Other

Adjusted EBITDA

Black Hawk, Colorado

$             4,936

$                  2,552

$                      8

$                           -

$          7,496

Pompano, Florida

9,833

1,726

6

-

11,565

Bettendorf

(56,212)

1,448

3

60,000

5,239

Marquette

738

452

1

-

1,191

Waterloo

6,367

1,183

4

-

7,554

Iowa Total

(49,107)

3,083

8

60,000

13,984

Lake Charles, Louisiana

(20,366)

2,919

4

24,238

6,795

Lula

(33,693)

1,279

3

36,000

3,589

Natchez

(10,865)

299

4

10,509

(53)

Vicksburg

(3,531)

903

4

5,000

2,376

Mississippi Total

(48,089)

2,481

11

51,509

5,912

Boonville

6,403

977

6

-

7,386

Cape Girardeau

379

2,822

1

-

3,202

Caruthersville

1,250

693

4

-

1,947

Kansas City

4,822

941

4

-

5,767

Missouri Total

12,854

5,433

15

-

18,302

Nemacolin, Pennsylvania

(28,767)

1,655

1

26,353

(758)

Total Operating Properties

(118,706)

19,849

53

162,100

63,296

Corporate and Other

(7,514)

541

827

-

(6,146)

Total

$        (126,220)

$                20,390

$                  880

$                  162,100

$        57,150

Three Months Ended April 28, 2013

Operating Income (Loss)

Depreciation and Amortization

Stock-Based Compensation

Valuation charges, Preopening and Other

Adjusted EBITDA

Black Hawk, Colorado

$             5,443

$                  2,303

$                    11

$                           -

$          7,757

Pompano, Florida

7,981

1,846

7

-

9,834

Bettendorf

4,211

1,737

3

-

5,951

Marquette

978

556

3

-

1,537

Waterloo

6,627

1,194

6

-

7,827

Iowa Total

11,816

3,487

12

-

15,315

Lake Charles, Louisiana

2,893

3,057

6

-

5,956

Lula

(31,001)

1,318

6

34,100

4,423

Natchez

(15,836)

353

5

16,000

522

Vicksburg

1,490

1,324

5

-

2,819

Mississippi Total

(45,347)

2,995

16

50,100

7,764

Boonville

6,251

896

5

-

7,152

Cape Girardeau

(1,177)

2,810

4

-

1,637

Caruthersville

1,276

840

5

-

2,121

Kansas City

4,208

992

4

-

5,204

Missouri Total

10,558

5,538

18

-

16,114

Nemacolin, Pennsylvania

(1,446)

-

-

1,446

-

Total Operating Properties

(8,102)

19,226

70

51,546

62,740

Corporate and Other

(7,540)

536

938

-

(6,066)

Total

$          (15,642)

$                19,762

$               1,008

$                    51,546

$        56,674

 

 

Isle of Capri Casinos, Inc.

Reconciliation of Operating Income (Loss) to Adjusted EBITDA

(unaudited, in thousands)

Twelve Months Ended April 27, 2014

Operating Income (Loss)

Depreciation and Amortization

Stock-Based Compensation

Valuation charges, Preopening and Other

Adjusted EBITDA

Black Hawk, Colorado

$             20,067

$                  9,593

$                     35

$                           -

$       29,695

Pompano, Florida

25,116

7,109

25

-

32,250

Bettendorf

(47,873)

6,381

13

60,000

18,521

Marquette

3,472

1,875

6

-

5,353

Waterloo

21,074

4,791

18

-

25,883

Iowa Total

(23,327)

13,047

37

60,000

49,757

Lake Charles, Louisiana

(15,350)

11,738

17

24,238

20,643

Lula

(33,285)

5,225

14

36,000

7,954

Natchez

(12,865)

1,306

17

10,509

(1,033)

Vicksburg

(3,282)

3,698

17

5,000

5,433

Mississippi Total

(49,432)

10,229

48

51,509

12,354

Boonville

22,583

4,074

24

-

26,681

Cape Girardeau

(2,359)

11,183

6

-

8,830

Caruthersville

2,232

2,960

18

-

5,210

Kansas City

13,022

3,802

16

-

16,840

Missouri Total

35,478

22,019

64

-

57,561

Nemacolin, Pennsylvania

(39,993)

5,440

3

30,251

(4,299)

Total Operating Properties

(47,441)

79,175

229

165,998

197,961

Corporate and Other

(20,124)

1,710

4,170

(10,349)

(24,593)

Total

$           (67,565)

$                80,885

$                4,399

$                 155,649

$     173,368

Twelve Months Ended April 28, 2013

Operating Income (Loss)

Depreciation and Amortization

Stock-Based Compensation

Valuation charges, Preopening and Other

Adjusted EBITDA

Black Hawk, Colorado

$             20,109

$                  8,837

$                     43

$                           -

$       28,989

Pompano, Florida

19,396

7,252

28

-

26,676

Bettendorf

13,995

6,948

16

-

20,959

Marquette

3,718

1,901

15

-

5,634

Waterloo

21,544

5,026

22

-

26,592

Iowa Total

39,257

13,875

53

-

53,185

Lake Charles, Louisiana

9,270

10,070

20

-

19,360

Lula

(29,815)

6,098

21

34,100

10,404

Natchez

(14,667)

1,539

19

16,000

2,891

Vicksburg

1,184

4,664

19

-

5,867

Mississippi Total

(43,298)

12,301

59

50,100

19,162

Boonville

24,004

3,545

22

-

27,571

Cape Girardeau

(5,135)

5,572

10

4,050

4,497

Caruthersville

2,832

3,361

21

-

6,214

Kansas City

13,275

4,012

14

-

17,301

Missouri Total

34,976

16,490

67

4,050

55,583

Nemacolin, Pennsylvania

(1,715)

-

-

1,715

-

Total Operating Properties

77,995

68,825

270

55,865

202,955

Corporate and Other

(35,534)

2,339

4,788

1,478

(26,929)

Total

$             42,461

$                71,164

$                5,058

$                   57,343

$     176,026

 

 

Isle of Capri Casinos, Inc.

Reconciliation of Loss From Continuing Operations to Adjusted EBITDA

(unaudited, in thousands)

Three Months Ended

Twelve Months Ended

April 27,

April 28,

April 27,

April 28,

2014

2013

2014

2013

Loss from continuing operations

$    (139,720)

$    (47,260)

$    (129,666)

$     (52,467)

Income tax provision (benefit)

(7,995)

6,898

(18,494)

6,732

Derivative income

-

(216)

(398)

(748)

Interest income

(89)

(96)

(349)

(502)

Interest expense

21,584

25,032

81,342

89,446

Depreciation and amortization

20,390

19,762

80,885

71,164

Stock-based compensation

880

1,008

4,399

5,058

Valuation charges

162,100

50,100

162,100

50,100

Litigation accrual reversal

-

-

(9,330)

-

Preopening expense

-

1,446

3,898

5,765

Gain on sale of airplane

-

-

(1,019)

-

Financing related

-

-

-

1,478

Adjusted EBITDA

$        57,150

$      56,674

$      173,368

$     176,026

 

 

Isle of Capri Casinos, Inc.

Reconciliations of GAAP Income (Loss) From Continuing Operations to Adjusted Income (Loss) and GAAP Income (Loss) From Continuing Operations Per Share to Adjusted Income (Loss) Per Share

(unaudited, in thousands)

Three Months Ended

Twelve Months Ended

April 27,

April 28,

April 27,

April 28,

2014

2013

2014

2013

GAAP loss from continuing operations

$  (139,720)

$    (47,260)

$  (129,666)

$    (52,467)

Valuation charges (4)

162,100

50,100

162,100

50,100

Tax valuation allowance (reversal)

(1,813)

758

(13,806)

758

Uncertain tax benefit reversal

(6,884)

-

(6,884)

-

Litigation accrual reversals (3)

-

-

(16,953)

-

Preopening expense

-

1,446

3,898

5,765

Gain on sale of corporate aircraft

-

-

(1,019)

-

Financing related (5)

-

2,236

-

4,742

Adjusted income (loss)  (2)

$     13,683

$       7,280

$      (2,330)

$       8,898

GAAP loss from continuing operations per share

$        (3.51)

$        (1.20)

$        (3.26)

$        (1.33)

Valuation charges (4)

4.07

1.27

4.08

1.27

Tax valuation allowance (reversal)

(0.05)

0.02

(0.35)

0.02

Uncertain tax benefit reversal

(0.17)

-

(0.17)

-

Litigation accrual reversals (3)

-

-

(0.43)

-

Preopening expense

-

0.04

0.10

0.15

Gain on sale of corporate aircraft

-

-

(0.03)

-

Financing related (5)

-

0.06

-

0.12

Adjusted income (loss) per share

$         0.34

$         0.19

$        (0.06)

$         0.23

1.

Adjusted EBITDA is "earnings before interest and other non-operating income (expense), income taxes, stock-based compensation, valuation charges, preopening expense, litigation accrual reversals, financing related expenses and depreciation and amortization." Adjusted 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 Adjusted 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.  Adjusted 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 Adjusted EBITDA.  Also, other gaming companies that report Adjusted EBITDA information may calculate Adjusted EBITDA in a different manner than the Company.  A reconciliation of Adjusted EBITDA to income (loss) from continuing operations is included in the financial schedules accompanying this release.

Certain of our debt agreements use a similar calculation of "Adjusted EBITDA" as a financial measure for the calculation of financial debt covenants and includes add back of items such as gain on early extinguishment of debt, pre-opening expenses, certain write-offs and valuation charges, 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.

Adjusted income (loss) is presented solely as a supplemental disclosure as this is one method management reviews and utilizes to analyze the performance of its core operating business.  For many of the same reasons mentioned above related to Adjusted EBITDA, management believes Adjusted income (loss) and Adjusted income (loss) per share are useful analytic tools as they enable management to track the performance of its core casino operating business separate and apart from factors that do not impact decisions affecting its operating casino properties, such as valuation charges, litigation accrual reversals or preopening expenses.  Management believes Adjusted income (loss) and Adjusted income (loss) per share are useful to investors since these adjustments provide a measure of financial performance that more closely resembles widely used measures of performance and valuation in the gaming industry.  Adjusted income (loss) and adjusted income (loss) per share do not include tax valuation allowance reversals, valuation charges, litigation accrual reversals, preopening expenses, certain asset sale gains, certain financing related expenses, and income or loss from discontinued operations.

3.

Litigation accrual reversals for the twelve months ended April 27, 2014, includes a $9.3 million reduction to operating expenses and a $7.6 million reduction of interest expense.

4.

Valuation charges in the fourth quarter and fiscal 2014 consist of goodwill impairment charges of $60.0 million at our Bettendorf property, $24.2 million at our Lake Charles property, $36.0 million at our Lula property, $8.6 million at our Natchez property and $5.0 million at our Vicksburg property.  In addition, during the fourth quarter of fiscal 2014, we also recorded impairment charges related to property, plant and equipment, net of $14.2 million and $1.9 million at our Nemacolin and Natchez properties, respectively, and $12.2 million related to intangible assets at our Nemacolin property.  Valuation charges in the fourth quarter and fiscal 2013 consist of goodwill impairment charges of $34.1 million at our Lula property and $16.0 million at our Natchez property.

5.

Fiscal 2013 financing charges relate to non-capitalizable fees of $1.5 million associated with the tender offer of our 7% Senior Subordinated Notes during fiscal 2013, recorded in Corporate and development expenses, and the non-cash write off of deferred financing costs of $2.2 million and $3.3 million during the fourth quarter and fiscal 2013, respectively, related to debt refinancing and recorded in interest expense.

SOURCE Isle of Capri Casinos, Inc.



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