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

03 Dec, 2013, 08:30 ET from Isle of Capri Casinos, Inc.

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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http://www.islecorp.com