2014

Isle Of Capri Casinos, Inc. Announces Fiscal 2014 Second Quarter Results

ST. LOUIS, Dec. 3, 2013 /PRNewswire/ -- Isle of Capri Casinos, Inc. (NASDAQ: ISLE) (the "Company") today reported financial results for the second quarter of fiscal year 2014 ended October 27, 2013 and other Company-related news.

Consolidated Financial 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 27,


October 28,


October 27,


October 28,


2013


2012


2013


2012

Net revenues

$         241.6


$         223.2


$         489.3


$         459.0

Consolidated Adjusted EBITDA (1)

39.6


38.7


82.9


83.7









Income (loss) from continuing operations

8.0


(4.3)


3.2


0.4

Loss from discontinued operations

-


(2.3)


-


(0.4)

Net income (loss)

8.0


(6.6)


3.2


-

Diluted income (loss) per share from continuing operations

0.20


(0.11)


0.08


0.01

Diluted loss per share from discontinued operations

-


(0.06)


-


(0.01)

Diluted income (loss) per share

0.20


(0.17)


0.08


-


(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.

Diluted income (loss) per share from continuing operations for the quarter was $0.20 compared to ($0.11) for the second quarter last year. Net income for the current year quarter was impacted by a favorable judicial ruling on litigation in Greece, in which the Company reversed a $14.7 million litigation accrual, of which $7.3 million reduced operating expenses and $7.4 million reduced interest expense.  The results for the prior year quarter were impacted by $2.7 million in preopening costs associated with the Cape Girardeau casino which opened on October 30, 2012, and $2.5 million in refinancing costs.  Excluding these items, diluted earnings per share from continuing operations for the fiscal 2014 quarter would have been a loss of ($0.17) compared to break even ($0.00) for the prior year quarter.

Virginia McDowell, the Company's president and chief executive officer, commented,

"As a company, we continue to make operating improvements and enhancements across the portfolio, but we also continue to struggle with the effects of the uncertain economy.

"During the fiscal quarter, we experienced a modest, $2.1 million decline in same store revenue, and Adjusted EBITDA at these same properties declined $1.2 million, largely as a result of increased competition in Natchez and events we could not have predicted, including the substantial flooding in Colorado and the Federal government shutdown. However, we increased EBITDA at six properties and margins increased at eight properties, including significant performance improvements at our properties in Pompano, Vicksburg and Lake Charles.

"While the uncertain consumer economy continues to be a drag on our results, we continue to focus on maximizing the profitability of our portfolio and enhancing shareholder value.  To that end, we have recently undertaken a top-to-bottom review of our business practices and are implementing bold changes to the way we view and operate our business.  We have begun a wide-ranging initiative across our entire company to delete duplication, streamline decision making and aggressively pursue additional cost savings.  These initiatives have contributed approximately $2.5 million to our results so far this year and when fully implemented we expect the annualized run rate will be at least $10 million.

"Furthermore, we are committed to improving profitability at our newest facilities in Cape Girardeau and Nemacolin.  Both markets continue to ramp slower than we originally anticipated and we expect it will take a couple more years to fully penetrate the markets.  However, we are taking every possible step to make the properties successful in the short term. We recently introduced a new general manager in Cape Girardeau and will continue to modify our cost structure in Nemacolin."

Operating Results

Black Hawk – Net revenues and Adjusted EBITDA each decreased approximately $0.7 million to $30.0 million and $6.9 million, respectively, at our two casinos in Black Hawk, primarily as a result of the widespread flooding in Colorado during the period and construction disruption due to exterior refurbishments at Lady Luck Black Hawk and road construction.

Pompano – Net revenues increased 8.0% to $36.4 million, and Adjusted EBITDA increased 12.8%, to $5.5 million at Pompano Park.  These results were driven primarily by increased marketing promotions that led to a $5.1 million increase in gross slot win during the period, partially offset by additional marketing expenses.

Iowa – Net revenues decreased $1.5 million to $56.9 million, and Adjusted EBITDA was essentially flat at $15.4 million at our properties in Iowa.  Our properties in Marquette and Waterloo were able to offset declines in net revenue through cost containment efforts.  In the Quad Cities, we were hampered by the government shutdown and adjusted EBITDA decreased $0.2 million.

Lake Charles – Net revenues increased 5.0% to $31.2 million, and Adjusted EBITDA increased 6.9% to $4.5 million.  The Lake Charles property continues to improve comparative results due to the benefits from facility enhancements, database marketing initiatives, promotional events and advertising campaigns. During the prior year quarter, results were impacted by construction disruption associated with renovations to the primary hotel tower.

Missouri – Net revenues increased $10.1 million to $56.1 million, and Adjusted EBITDA increased $0.5 million to $12.8 million at our properties in Missouri, collectively.  Cape Girardeau contributed $13.0 million in net revenues and $1.6 million of Adjusted EBITDA in the fiscal 2014 quarter.  Results at our three other properties in the state were negatively impacted by growing unemployment, the impact of the government shutdown in middle Missouri and competitive pressures in the Kansas City market, resulting in a decrease in net revenues and Adjusted EBITDA of $2.9 million and $1.1 million respectively. 

Mississippi – Net revenues grew $1.1 million to $7.0 million and Adjusted EBITDA grew $0.4 million at our newly renovated Vicksburg facility, as market share grew 410 basis points to 17.1% in the quarter.  In Lula cost savings efforts led to increased Adjusted EBITDA despite a $1.2 million decrease in net revenue.  In Natchez, the impact of a new competitor continues to hamper operating results leading to a decrease in net revenues and Adjusted EBITDA of $1.2 million and $0.9 million, respectively.  Collectively, net revenues decreased 5.2% to $23.4 million, and Adjusted EBITDA decreased 12.3% to $1.5 million at our properties in Mississippi. 

Pennsylvania – Net revenues were $7.4 million, and Adjusted EBITDA was ($1.3) million.  This is the first year of operation for Lady Luck Casino at Nemacolin Woodlands Resort, and the first full fiscal quarter of operation. We continue to fine tune our marketing to both local customers and resort guests and to aggressively manage our cost structure.

Corporate Expenses

Corporate and development expenses were $7.4 million for the quarter, a decrease of $3.4 million compared to the prior year.  Included in the results for fiscal 2013 are $1.5 million in refinancing related costs and $1.0 million in increased legal costs.  The remainder of the decrease is attributable to cost containment initiatives at the corporate office.

Non-cash stock compensation expense was $1.4 million for the quarter compared to $1.5 million in the second quarter of fiscal 2013.

Corporate and development expenses for FY2014 are expected to be approximately $30 million, including approximately $5 million for non-cash stock based compensation expense, a decrease of $4 million from previous guidance primarily a result of cost containment initiatives and a $1.0 million gain on the sale of the corporate aircraft in the first quarter.

Development

Sale of Rhythm City Casino Davenport – In June 2013 we entered into an agreement with Scott County Casino LLC, led by Dan Kehl, providing it with an option to purchase Rhythm City for $51 million subject to certain terms and conditions.  On November 24, 2013 the City Council of Davenport approved the terms of a development agreement with Scott County Casino, LLC.  Mr. Kehl has informed us that Scott County Casino, LLC intends to execute the option agreement to purchase the property. Upon receipt of the notice to exercise and other documentation we expect to enter into a definitive purchase agreement with Scott County Casino, LLC.

The Provence, Philadelphia, Pennsylvania – On February 1, 2013, we entered into an agreement with Tower Entertainment, LLC, to operate the proposed $700 million casino entertainment complex, dubbed The Provence, in Philadelphia, if selected for licensure by the Pennsylvania Gaming Control Board.  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, including at least eight restaurants, many smaller bars and eateries, 60,000 square feet of retail space, a concert hall and several entertainment clubs. The Pennsylvania Gaming Control Board has announced that suitability hearings before the Board have been scheduled for January 28 – 30th of 2014.

Capital Structure and Capital Expenditures

As of October 27, 2013, the Company had:

  • $70.0 million in cash and cash equivalents, excluding $9.8 million in restricted cash and investments;
  • $1.2 billion in total debt; and
  • $104 million in net line of credit availability.

Second quarter capital expenditures were $8.4 million, bringing total capital expenditures to $38.2 million for the six months, of which $25.2 million related to Nemacolin. 

The Company expects to incur approximately $20 million to $22 million in capital expenditures for the balance of fiscal 2014 bringing estimated total capital expenditures for fiscal 2014 to approximately $58 million to $60 million, including the $25.2 million related to Nemacolin construction.

Conference Call Information

Isle of Capri Casinos, Inc. will host a conference call on Tuesday, December 3, 2013 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 866-652-5200.  International callers can access the conference call by dialing 412-317-6060.  The conference call will be recorded and available for review starting at 11:59 pm central on Tuesday, December 3, 2013, until midnight central on Tuesday, December 10, 2013, by dialing 877-344-7529; International: 412-317-0088 and access number 10037247.

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 16 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


Six Months Ended




October 27,


October 28,


October 27,


October 28,




2013


2012


2013


2012


Revenues:










Casino


$    257,928


$    234,648


$    520,070


$    484,917


Rooms


8,713


8,328


17,628


16,958


Food, beverage, pari-mutuel and other


33,728


30,437


68,944


63,243


Gross revenues


300,369


273,413


606,642


565,118


Less promotional allowances


(58,789)


(50,206)


(117,333)


(106,088)


Net revenues


241,580


223,207


489,309


459,030


Operating expenses:










Casino


41,267


36,802


83,010


75,298


Gaming taxes


65,722


58,619


131,698


120,247


Rooms


1,880


1,781


3,789


3,554


Food, beverage, pari-mutuel and other


10,590


9,217


21,659


19,321


Marine and facilities


14,802


13,888


29,850


27,588


Marketing and administrative


61,844


56,464


123,950


114,420


Corporate and development


7,386


10,777


14,084


19,250


Litigation accrual reversal


(7,351)


-


(7,351)




Preopening expense


-


2,654


3,898


3,341


Depreciation and amortization


21,102


16,850


41,497


33,672


Total operating expenses


217,242


207,052


446,084


416,691


Operating income


24,338


16,155


43,225


42,339












Interest expense


(15,194)


(21,985)


(37,852)


(42,416)


Interest income


84


131


174


306


Derivative income


168


176


398


310


Income (loss) from continuing operations before 










income taxes


9,396


(5,523)


5,945


539


Income tax (provision) benefit


(1,359)


1,182


(2,770)


(136)


Income (loss) from continuing operations 


8,037


(4,341)


3,175


403


Loss from discontinued operations, net of income taxes

-


(2,312)


-


(395)


Net income (loss)


$        8,037


$      (6,653)


$        3,175


$               8












Income (loss) per common share-basic:










Income (loss) from continuing operations


$            0.20


$        (0.11)


$          0.08


$          0.01


Income from discontinued operations, 










net of income taxes 


-


(0.06)


-


(0.01)


Net income (loss)


$          0.20


$        (0.17)


$          0.08


$              -












Income (loss) per common share-dilutive:










Income (loss) from continuing operations


$          0.20


$        (0.11)


$          0.08


$          0.01


Income from discontinued operations, 










net of income taxes 


-


(0.06)


-


(0.01)


Net income (loss)


$          0.20


$        (0.17)


$          0.08


$              -












Weighted average basic shares


39,686,217


39,336,134


39,634,573


39,177,208


Weighted average diluted shares


39,731,192


39,336,134


39,682,644


39,192,075


ISLE OF CAPRI CASINOS, INC. 

CONSOLIDATED BALANCE SHEETS 

(In thousands, except share and per share amounts) 






October 27,


April 28,


2013


2013

ASSETS

(unaudited)



Current assets:




Cash and cash equivalents

$          69,958


$          68,469

Marketable securities

25,120


25,520

Accounts receivable, net

9,870


11,077

Income taxes receivable

4,343


4,789

Deferred income taxes

2,096


1,573

Prepaid expenses and other assets

25,726


20,872

Total current assets

137,113


132,300

Property and equipment, net

1,017,472


1,034,026

Other assets:




Goodwill

280,803


280,803

Other intangible assets, net

67,690


60,748

Deferred financing costs, net

25,680


27,230

Restricted cash and investments

9,782


11,417

Prepaid deposits and other

5,087


7,075

Total assets

$     1,543,627


$     1,553,599





LIABILITIES AND STOCKHOLDERS' EQUITY




Current liabilities:




Current maturities of long-term debt

$               433


$               415

Accounts payable 

19,078


34,533

Accrued liabilities:




Payroll and related

35,696


35,093

Property and other taxes

25,627


21,340

Interest

17,073


18,502

Progressive jackpots and slot club awards

16,267


16,579

Other

30,996


29,337

Total current liabilities

145,170


155,799

Long-term debt, less current maturities

1,162,264


1,156,469

Deferred income taxes

45,967


43,104

Other accrued liabilities

19,324


33,303

Other long-term liabilities

22,433


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 October 27, 2013 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

246,522


246,214

Retained earnings (deficit)

(71,052)


(74,227)

Accumulated other comprehensive (loss) income

-


(247)


175,891

-

172,161

Treasury stock, 2,276,760 shares at October 27, 2013 and 2,470,128 shares 




at April 28, 2013

(27,422)


(29,751)

Total stockholders' equity

148,469

-

142,410

Total liabilities and stockholders' equity

$     1,543,627


$     1,553,599

 

Isle of Capri Casinos, Inc.

Supplemental Data - Net Revenues

(unaudited, in thousands)














Three Months Ended


Six Months Ended




October 27,


October 28,


October 27,


October 28,




2013


2012


2013


2012

Colorado










Black Hawk


$      30,023


$      30,670


$        62,707


$        62,023











Florida










Pompano


36,400


33,691


73,786


68,376











Iowa










Bettendorf


18,965


19,694


38,430


39,549


Davenport


9,959


10,390


19,675


21,036


Marquette


6,911


7,332


14,023


14,713


Waterloo


21,040


20,925


41,982


42,337


Iowa Total


56,875


58,341


114,110


117,635











Louisiana










Lake Charles


31,244


29,749


64,910


63,327











Mississippi










Lula


11,523


12,772


24,102


27,403


Natchez


4,795


5,962


10,122


12,963


Vicksburg


7,035


5,897


14,814


13,455


Mississippi Total


23,353


24,631


49,038


53,821











Missouri










Boonville


18,891


19,798


37,620


40,186


Cape Girardeau


13,049


-


26,858


-


Caruthersville


7,199


8,144


14,886


16,777


Kansas City


16,936


18,012


35,007


36,532


Missouri Total


56,075


45,954


114,371


93,495











Pennsylvania










Nemacolin


7,429


-


10,022


-











Property Net Revenues before Other


241,399


223,036


488,944


458,677

Other


181


171


365


353

Net Revenues from Continuing Operations

$    241,580


$    223,207


$      489,309

#

$      459,030

 

Isle of Capri Casinos, Inc.

Reconciliation of Operating Income (Loss) to Adjusted EBITDA

(unaudited, in thousands)




Three Months Ended October 27, 2013




Operating Income (Loss)


Depreciation and Amortization


Stock-Based Compensation


Preopening and Other


Adjusted EBITDA

Black Hawk, Colorado


$                4,532


$                     2,356


$                       8


$                  -


$        6,896












Pompano, Florida


3,727


1,788


6


-


5,521













Bettendorf, Iowa


3,276


1,679


3


-


4,958

Davenport, Iowa


1,727


580


4


-


2,311

Marquette, Iowa


1,242


487


1


-


1,730

Waterloo, Iowa


5,230


1,202


4


-


6,436

   Iowa Total


11,475


3,948


12


-


15,435













Lake Charles, Louisiana


1,460


3,003


4


-


4,467













Lula, Mississippi


(186)


1,322


3


-


1,139

Natchez, Mississippi


(736)


342


4


-


(390)

Vicksburg, Mississippi


(110)


891


4


-


785

   Mississippi Total


(1,032)


2,555


11


-


1,534













Boonville, Missouri


5,762


911


6


-


6,679

Cape Girardeau, Missouri


(1,225)


2,788


1


-


1,564

Caruthersville, Missouri


325


742


4


-


1,071

Kansas City, Missouri


2,560


961


4


-


3,525

   Missouri Total


7,422


5,402


15


-


12,839













Nemacolin, Pennsylvania


(3,013)


1,670


1




(1,342)

Total Operating Properties


24,571


20,722


57


-


45,350

Corporate and Other


(233)


380


1,446


(7,351)


(5,758)

Total


$              24,338


$                   21,102


$                1,503


$           (7,351)


$      39,592
















Three Months Ended October 28, 2012




Operating Income (Loss)


Depreciation and Amortization


Stock-Based Compensation


Preopening and Other


Adjusted EBITDA

Black Hawk, Colorado


$                5,435


$                     2,210


$                     14


$                  -


$        7,659













Pompano, Florida


3,083


1,803


8


-


4,894













Bettendorf, Iowa


3,578


1,770


4


-


5,352

Davenport, Iowa


1,566


546


6


-


2,118

Marquette, Iowa


1,172


445


5


-


1,622

Waterloo, Iowa


5,218


1,165


6


-


6,389

   Iowa Total


11,534


3,926


21


-


15,481













Lake Charles, Louisiana


1,867


2,310


2


-


4,179













Lula, Mississippi


(803)


1,702


6


-


905

Natchez, Mississippi


118


359


5


-


482

Vicksburg, Mississippi


(860)


1,218


5


-


363

   Mississippi Total


(1,545)


3,279


16


-


1,750













Boonville, Missouri


5,918


886


6


-


6,810

Cape Girardeau, Missouri


(2,654)


-


-


2,654


-

Caruthersville, Missouri


593


835


5


-


1,433

Kansas City, Missouri


3,152


980


4


-


4,136

   Missouri Total

7,009


2,701


15


2,654


12,379













Nemacolin, Pennsylvania


-


-


-


-


-

Total Operating Properties


27,383


16,229


76


2,654


46,342

Corporate and Other


(11,228)


621


1,501


1,478


(7,628)

Total


$              16,155


$                   16,850


$                1,577


$            4,132


$      38,714

Isle of Capri Casinos, Inc.

Reconciliation of Operating Income (Loss) to Adjusted EBITDA

(unaudited, in thousands)




Six Months Ended October 27, 2013




Operating Income (Loss)


Depreciation and Amortization


Stock-Based Compensation


Preopening and Other


Adjusted EBITDA

Black Hawk, Colorado


$              10,616


$                     4,675


$                     19


$                  -


$      15,310













Pompano, Florida


7,894


3,634


13


-


11,541













Bettendorf, Iowa


6,489


3,378


7


-


9,874

Davenport, Iowa


2,517


1,173


9


-


3,699

Marquette, Iowa


2,462


965


4


-


3,431

Waterloo, Iowa


9,858


2,422


10


-


12,290

   Iowa Total


21,326


7,938


30


-


29,294













Lake Charles, Louisiana


4,194


5,880


9


-


10,083













Lula, Mississippi


176


2,648


8


-


2,832

Natchez, Mississippi


(1,335)


693


9


-


(633)

Vicksburg, Mississippi


270


1,896


9


-


2,175

   Mississippi Total


(889)


5,237


26


-


4,374













Boonville, Missouri


10,987


2,063


12


-


13,062

Cape Girardeau, Missouri


(1,910)


5,575


4


-


3,669

Caruthersville, Missouri


782


1,547


10


-


2,339

Kansas City, Missouri


5,400


1,937


8


-


7,345

   Missouri Total


15,259


11,122


34


-


26,415













Nemacolin, Pennsylvania


(8,024)


2,227


1


3,898


(1,898)

Total Operating Properties


50,376


40,713


132


3,898


95,119

Corporate and Other


(7,151)


784


2,505


(8,370)


(12,232)

Total


$              43,225


$                   41,497


$                2,637


$           (4,472)


$      82,887
















Six Months Ended October 28, 2012




Operating Income (Loss)


Depreciation and Amortization


Stock-Based Compensation


Preopening and Other


Adjusted EBITDA

Black Hawk, Colorado


$              10,843


$                     4,358


$                     24


$                  -


$       15,225













Pompano, Florida


5,820


3,577


14


-


9,411













Bettendorf, Iowa


7,108


3,483


9


-


10,600

Davenport, Iowa


3,167


1,074


11


-


4,252

Marquette, Iowa


2,431


876


10


-


3,317

Waterloo, Iowa


10,132


2,657


11


-


12,800

   Iowa Total


22,838


8,090


41


-


30,969













Lake Charles, Louisiana


5,230


4,422


6


-


9,658













Lula, Mississippi


304


3,425


11


-


3,740

Natchez, Mississippi


961


827


10


-


1,798

Vicksburg, Mississippi


(265)


2,262


9


-


2,006

   Mississippi Total


1,000


6,514


30


-


7,544













Boonville, Missouri


12,412


1,753


11


-


14,176

Cape Girardeau, Missouri


(3,341)


-


-


3,341


-

Caruthersville, Missouri


1,416


1,691


10


-


3,117

Kansas City, Missouri


6,267


2,019


6


-


8,292

   Missouri Total


16,754


5,463


27


3,341


25,585













Nemacolin, Pennsylvania


-


-


-


-


-

Total Operating Properties


62,485


32,424


142


3,341


98,392

Corporate and Other


(20,146)


1,248


2,753


1,478


(14,667)

Total


$              42,339


$                   33,672


$                2,895


$            4,819


$      83,725

 

Isle of Capri Casinos, Inc.

Reconciliation of Income (Loss) From Continuing Operations to Adjusted EBITDA

(unaudited, in thousands)














Three Months Ended


Six Months Ended




October 27,


October 28,


October 27,


October 28,




2013


2012


2013


2012

Income (loss) from continuing operations


$        8,037


$     (4,341)


$        3,175


$          403


Income tax provision (benefit)


1,359


(1,182)


2,770


136


Derivative income


(168)


(176)


(398)


(310)


Interest income


(84)


(131)


(174)


(306)


Interest expense


15,194


21,985


37,852


42,416


Depreciation and amortization


21,102


16,850


41,497


33,672


Stock-based compensation


1,503


1,577


2,637


2,895


Litigation accrual reversal


(7,351)


-


(7,351)


-


Preopening expense


-


2,654


3,898


3,341


Gain on sale of airplane


-


-


(1,019)


-


Financing related


-


1,478


-


1,478

Adjusted EBITDA


$      39,592


$     38,714


$      82,887


$     83,725

 


1.

Adjusted EBITDA is "earnings before interest and other non-operating income (expense), income taxes, stock-based compensation, preopening expense 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 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. 

SOURCE Isle of Capri Casinos, Inc.



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