Isle of Capri Casinos, Inc. Announces Fiscal 2016 Third Quarter Results

Feb 23, 2016, 08:30 ET from Isle of Capri Casinos, Inc.

ST. LOUIS, Feb. 23, 2016 /PRNewswire/ -- Isle of Capri Casinos, Inc. (NASDAQ: ISLE) (the "Company") today reported financial results for the third quarter of fiscal year 2016 ended January 24, 2016 and other Company-related news.

Fiscal 2016 Third Quarter Highlights 

  • Three properties set all-time third quarter Adjusted EBITDA records. 
  • Adjusted property EBITDA margin was flat at 22.3% compared to the prior year quarter.
  • Adjusted earnings per share from continuing operations increased to $0.17 compared to $0.15 in the prior year quarter.
  • Maintained Debt to Adjusted EBITDA ratio of 4.5x and have repaid $69.1 million of debt during the last twelve months, including $6.8 million in the most recent quarter.

Consolidated Financial Results

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

Three Months Ended

Nine Months Ended

January 24,

January 25,

January 24,

January 25,

2016

2015

2016

2015

Net revenues

$         230.5

$         236.4

$         713.7

$         707.8

Consolidated Adjusted EBITDA (1)

45.9

47.5

145.4

135.8

Income from continuing operations

7.0

5.9

23.3

4.1

Loss from discontinued operations

(0.4)

(0.5)

(2.1)

(2.0)

Net income

6.6

5.4

21.2

2.1

Diluted income per share from continuing operations

0.17

0.15

0.56

0.10

Diluted (loss) per share from discontinued operations

(0.01)

(0.02)

(0.05)

(0.05)

Diluted net income per share

0.16

0.13

0.51

0.05

Adjusted income per share (2)

0.17

0.15

0.63

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) from Continuing Operations Per Share to Adjusted Income (Loss) Per Share."

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

"We experienced more challenging weather comparisons at several properties and isolated competitive pressure at a few properties during the quarter which impacted results; however, win per visit and retail play increased during the quarter highlighting our underlying business trends remain solid.   

Six properties generated increased Adjusted EBITDA this quarter, including three properties which set an all-time third quarter Adjusted EBITDA record.  Additionally, four properties generated their second highest third quarter Adjusted EBITDA.

We continued our balanced approach to capital deployment—reinvesting into our existing assets to enhance our guest experience, while at the same time reducing our debt balance.  Our balance sheet continues to be in the best shape it has been in over a decade and we have significant financial flexibility."

Financial Highlights

Net revenues for the current quarter were $230.5 million compared to $236.4 million in the prior year quarter, down 2.5%.  We continued to focus on optimizing our reinvestment rates.  Gross revenues declined 3.9%, which was partially a result of a 10% decline in promotional allowances during the quarter. 

Consolidated Adjusted EBITDA was $45.9 million for the quarter compared to $47.5 million in the prior year quarter, down 3.2%.  We experienced a negative $1.7 million change year-over-year in our health and captive company insurance expenses, which affected results.  Consolidated Adjusted EBITDA margins decreased slightly to 19.9% from 20.1%. 

Interest expense was $16.8 million relative to $20.9 million in the prior year quarter, as a result of our lower overall debt balance as well as the benefits of refinancing our 7.75% Senior Notes due 2019, completed early in the first quarter of fiscal 2016.

On a GAAP basis, diluted income per share from continuing operations was $0.17 compared to diluted income per share from continuing operations of $0.15 in the prior year's quarter. Net income per share was $0.16 for the quarter, compared to net income of $0.13 per share in the prior year quarter. 

Operating Results

(All comparisons are to the prior year quarter)

Black Hawk – Net revenues decreased $0.4 million, or 1.3%, to $29.1 million and Adjusted EBITDA decreased $0.2 million to $6.7 million, at our two casinos in Black Hawk.  The properties were unfavorably impacted by the timing of winter weather systems relative to the prior year's quarter.

Pompano – Net revenues decreased $2.4 million, or 5.1%, to $44.1 million, and Adjusted EBITDA decreased 9.0%, to $9.6 million at Pompano Park.  The decline is attributable to fewer snow-bird trips year over year, an increased competitive environment and the closure of our popular Myron's Deli during the quarter for renovations.  Despite the decline, Pompano generated the second highest third quarter Adjusted EBITDA since the property's opening in 2007. 

Iowa – Net revenues for our Iowa properties decreased $0.2 million, to $43.7 million, while Adjusted EBITDA decreased $0.2 million, to $11.6 million. Despite construction disruption from our new land-based facility, revenues increased $0.1 million and Adjusted EBITDA increased $0.1 million at our property in Bettendorf. 

Our properties in Waterloo and Marquette were more impacted by winter weather in the current year.  Waterloo's net revenues decreased $0.1 million, or 0.6%, to $21.3 million and Adjusted EBITDA decreased $0.2 million to $6.5 million.  If not for one-time severance expenses, Adjusted EBITDA at Waterloo would have been slightly higher than the prior year's all-time third quarter record.

Marquette's net revenues decreased $0.1 million, or 2.5%, and Adjusted EBITDA decreased less than $0.1 million to $1.0 million.

Lake Charles – Net revenues decreased $2.4 million, to $28.5 million, or 7.7%, while Adjusted EBITDA decreased $0.7 million, to $3.8 million, or 15.3%.  The decline in EBITDA during the quarter happened entirely during November due primarily to the continued impact of a new competitor in the market, which anniversaried in early December.  The months of December and January combined showed a slight increase in Adjusted EBITDA compared to the same periods in the prior year.

Mississippi – Net revenues for Lula and Vicksburg decreased 4.1%, to $19.1 million while Adjusted EBITDA decreased $0.3 million, to $4.0 million, or 7.8%.  Both Lula and Vicksburg experienced some disruption and incurred some minor costs during the quarter from the near-record flooding on the Mississippi River in early January.

Vicksburg's Adjusted EBITDA increased 42.2%, to $1.8 million; the second highest third quarter Adjusted EBITDA since we purchased the property in June 2010. Vicksburg's operating margins increased over 590 bps as a result of targeted customer reinvestment and reduced operating costs.  

Severe storms on Christmas weekend, including a tornado that disrupted the local area, impacted results in Lula where net revenues decreased $1.3 million, or 10.3%, and Adjusted EBITDA decreased $0.9 million, or 28.8%.  The market in which Lula operates also remains highly competitive. 

Missouri – Net revenues for our Missouri properties increased $0.6 million to $58.2 million and Adjusted EBITDA increased $0.9 million to $16.1 million.  We grew net revenues and set new third quarter Adjusted EBITDA records at our Boonville, Cape Girardeau and Caruthersville properties. 

In Caruthersville, net revenues increased $0.3 million and Adjusted EBITDA improved by 22.3%, to $2.0 million, primarily as a result of strategic marketing spending and recent capital investments we have made to the property. 

Cape Girardeau's Adjusted EBITDA increased $0.6 million, or 18.8%.  The property continues to ramp-up while optimizing its operating and marketing costs. 

Boonville's net revenue and Adjusted EBITDA improved 1.2% and 1.0%, respectively, despite hotel renovations that were completed during the quarter. The property had over 1,500 room nights out of service during the quarter. 

Kansas City reported their second highest third quarter Adjusted EBITDA, although net revenue and Adjusted EBITDA decreased 1.9% and 1.4% compared to the prior year quarter, respectively.  Kansas City experienced some minor disruption from renovations to the casino floor during the quarter.

Pennsylvania – At Nemacolin, net revenues decreased 3.1% to $7.8 million while the Adjusted EBITDA loss improved to $(0.5) million from $(0.6) million.  The property was impacted by winter storm Jonas on the last weekend of the quarter.

Corporate Expenses

Corporate and development expenses were $6.1 million for the quarter compared to $5.9 million in the third quarter of fiscal 2015. Non-cash stock compensation expense was $0.7 million for the quarter compared to $0.6 million in the third quarter of fiscal 2015.  The current year quarter included a favorable forfeiture adjustment of stock compensation expense of $0.5 million.

Capital Structure and Capital Expenditures

As of January 24, 2016, the Company had:

  • $59.8 million in cash and cash equivalents, excluding $9.8 million in restricted cash and investments;
  • $951.7 million in total debt; and
  • $195.2 million in net line of credit availability.

Capital expenditures were $52.7 million in the nine months ended January 24, 2016, including $44.3 million of maintenance and gaming equipment purchases as well as spending related to the hotel renovations in Bettendorf and Boonville.  We have spent $8.4 million to date this fiscal year on the previously announced up to $60 million land-based project at Bettendorf.  For the project-to-date, we have expended $10.6 million.  The project remains on time and on budget. 

The Company expects total capital expenditures for fiscal 2016 of approximately $85 million to $90 million, inclusive of approximately $25 million to $30 million of capital spending this fiscal year related to the land-based casino build out in Bettendorf. 

Conference Call Information

Isle of Capri Casinos, Inc. will host a conference call on Tuesday, February 23, 2016 at 10:00 am central time during which management will discuss the financial and other matters addressed in this press release.  The conference call can be accessed by interested parties via webcast through the investor relations page of the Company's website, www.islecorp.com, or, for domestic callers, by dialing 888-346-3970.  International callers can access the conference call by dialing 412-902-4263.  The conference call will be recorded and available for review starting at 11:59 pm central on Tuesday, February 23, 2016, until 11:59 pm central on Tuesday, March 1, 2016, by dialing 877-344-7529; International: 412-317-0088 and access number 10081089.

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 14 casino properties that it owns or operates, primarily under the Isle and Lady Luck brands.  The Company currently operates gaming and entertainment facilities in Colorado, Florida, Iowa, Louisiana, Mississippi, Missouri, and Pennsylvania. 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.

CONTACT: Isle of Capri Casinos, Inc.,

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

Nine Months Ended

January 24,

January 25,

January 24,

January 25,

2016

2015

2016

2015

Revenues:

Casino

$      242,028

$      251,272

$      751,142

$      750,951

Rooms

6,360

6,711

22,250

22,918

Food, beverage, pari-mutuel and other

31,885

33,661

96,329

100,874

Gross revenues

280,273

291,644

869,721

874,743

Less promotional allowances

(49,733)

(55,240)

(155,996)

(166,985)

Net revenues

230,540

236,404

713,725

707,758

Operating expenses:

Casino

37,460

39,224

114,136

117,313

Gaming taxes

61,671

64,603

191,460

191,179

Rooms

1,455

1,334

5,221

4,975

Food, beverage, pari-mutuel and other

11,977

12,041

35,196

35,008

Marine and facilities

12,901

13,609

40,923

41,679

Marketing and administrative

53,764

52,921

164,417

167,826

Corporate and development

6,141

5,880

20,770

21,763

Depreciation and amortization

20,492

19,247

61,649

57,995

Total operating expenses

205,861

208,859

633,772

637,738

Operating income

24,679

27,545

79,953

70,020

Interest expense

(16,836)

(20,927)

(51,281)

(63,370)

Interest income

76

94

235

273

Loss on early extinguishment of debt

-

-

(2,966)

-

Income from continuing operations before income taxes

7,919

6,712

25,941

6,923

Income tax provision

(904)

(786)

(2,647)

(2,793)

Income from continuing operations 

7,015

5,926

23,294

4,130

Loss from discontinued operations,

net of income taxes

(400)

(503)

(2,085)

(2,045)

Net income 

$          6,615

$          5,423

$        21,209

$          2,085

Income (loss) per common share-basic:

Income from continuing operations

$            0.17

$            0.15

$            0.57

$            0.10

Loss from discontinued operations, 

net of income taxes 

(0.01)

(0.01)

(0.05)

(0.05)

Net income 

$            0.16

$            0.14

$            0.52

$            0.05

Income (loss) per common share-dilutive:

Income from continuing operations

$            0.17

$            0.15

$            0.56

$            0.10

Loss from discontinued operations, net of income taxes 

(0.01)

(0.02)

(0.05)

(0.05)

Net income  

$            0.16

$            0.13

$            0.51

$            0.05

Weighted average basic shares

40,730,065

40,028,776

40,669,556

39,929,845

Weighted average diluted shares

41,444,564

40,336,663

41,417,021

40,062,008

 

ISLE OF CAPRI CASINOS, INC. 

CONSOLIDATED BALANCE SHEETS 

(In thousands, except share and per share amounts) 

(Unaudited)

January 24,

April 26,

2016

2015

ASSETS

Current assets:

Cash and cash equivalents

$          59,799

$          66,437

Marketable securities

19,225

19,517

Accounts receivable, net

10,918

11,171

Inventory

6,461

6,509

Deferred income taxes

6,669

4,626

Prepaid expenses and other assets

15,532

11,274

Assets held for sale

-

138

Total current assets

118,604

119,672

Property and equipment, net

897,329

902,226

Other assets:

Goodwill

108,970

108,970

Other intangible assets, net

53,445

54,073

Deferred financing costs, net

15,768

19,075

Restricted cash and investments

9,769

9,193

Prepaid deposits and other

5,249

4,743

Long-term assets held for sale

-

9,810

Total assets

$     1,209,134

$     1,227,762

LIABILITIES AND STOCKHOLDERS' EQUITY

Current liabilities:

Current maturities of long-term debt

$                 78

$               170

Accounts payable 

30,453

19,690

Accrued liabilities:

Payroll and related

33,282

43,371

Property and other taxes

19,275

20,456

Income taxes payable

67

125

Interest

14,320

15,350

Progressive jackpots and slot club awards

15,353

16,123

Other

22,062

18,326

Total current liabilities

134,890

133,611

Long-term debt, less current maturities

951,646

992,712

Deferred income taxes

41,951

37,334

Other accrued liabilities

17,461

18,432

Other long-term liabilities

13,912

22,211

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 January 24, 2016 and  at April 26, 2015

421

421

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

-

-

Additional paid-in capital

243,353

241,899

Retained earnings (deficit)

(177,863)

(199,072)

65,911

-

43,248

Treasury stock, 1,319,219 shares at January 24, 2016 and 1,568,875 shares at April 26, 2015

(16,637)

(19,786)

Total stockholders' equity

49,274

-

23,462

Total liabilities and stockholders' equity

$     1,209,134

$     1,227,762

 

Isle of Capri Casinos, Inc.

Supplemental Data - Net Revenues

(unaudited, in thousands)

Three Months Ended

Nine Months Ended

January 24,

January 25,

January 24,

January 25,

2016

2015

2016

2015

Colorado

Black Hawk

$      29,138

$      29,523

$        97,142

$        93,942

Florida

Pompano

44,108

46,485

124,532

120,942

Iowa

Bettendorf

16,812

16,754

53,282

54,561

Marquette

5,549

5,689

19,359

19,126

Waterloo

21,313

21,452

64,914

64,353

Iowa Total

43,674

43,895

137,555

138,040

Louisiana

Lake Charles

28,467

30,836

89,160

94,447

Mississippi

Lula

11,688

13,024

36,802

38,034

Vicksburg

7,448

6,930

21,948

21,175

Mississippi Total

19,136

19,954

58,750

59,209

Missouri

Boonville

18,438

18,228

57,641

56,493

Cape Girardeau

14,614

14,267

44,123

43,436

Caruthersville

7,952

7,604

24,568

22,670

Kansas City

17,204

17,536

52,968

52,760

Missouri Total

58,208

57,635

179,300

175,359

Pennsylvania

Nemacolin

7,788

8,038

27,229

25,728

Property Net Revenues before Other

230,519

236,366

713,668

707,667

Other

21

38

57

91

Net Revenues from Continuing Operations

$    230,540

$    236,404

$      713,725

$      707,758

 

Isle of Capri Casinos, Inc.

Reconciliation of Operating Income (Loss) to Adjusted EBITDA

(unaudited, in thousands)

Three Months Ended January 24, 2016

Operating Income (Loss)

Depreciation and Amortization

Stock-Based Compensation

Other

Adjusted EBITDA

Black Hawk, Colorado

$                4,540

$                     2,188

$                     14

$                  -

$        6,742

Pompano, Florida

7,837

1,785

14

-

9,636

Bettendorf, Iowa

1,180

2,902

8

-

4,090

Marquette, Iowa

619

363

6

-

988

Waterloo, Iowa

5,223

1,317

6

-

6,546

Iowa Total

7,022

4,582

20

-

11,624

Lake Charles, Louisiana

943

2,811

6

-

3,760

Lula, Mississippi

824

1,331

3

-

2,158

Vicksburg, Mississippi

895

903

6

-

1,804

Mississippi Total

1,719

2,234

9

-

3,962

Boonville, Missouri

5,347

1,269

13

-

6,629

Cape Girardeau, Missouri

942

2,527

7

-

3,476

Caruthersville, Missouri

1,378

614

6

-

1,998

Kansas City, Missouri

3,069

961

6

-

4,036

Missouri Total

10,736

5,371

32

-

16,139

Nemacolin, Pennsylvania

(1,551)

1,074

-

(477)

Total Operating Properties

31,246

20,045

95

-

51,386

Corporate and Other

(6,567)

447

669

-

(5,451)

Total

$              24,679

$                   20,492

$                   764

$                  -

$      45,935

Three Months Ended January 25, 2015

Operating Income (Loss)

Depreciation and Amortization

Stock-Based Compensation

Other

Adjusted EBITDA

Black Hawk, Colorado

$                4,660

$                     2,257

$                       7

$                  -

$        6,924

Pompano, Florida

8,786

1,793

7

-

10,586

Bettendorf, Iowa

2,573

1,451

7

-

4,031

Marquette, Iowa

685

365

3

-

1,053

Waterloo, Iowa

5,543

1,236

5

-

6,784

Iowa Total

8,801

3,052

15

-

11,868

Lake Charles, Louisiana

1,696

2,740

5

-

4,441

Lula, Mississippi

1,748

1,276

5

-

3,029

Vicksburg, Mississippi

364

901

4

-

1,269

Mississippi Total

2,112

2,177

9

-

4,298

Boonville, Missouri

5,588

971

2

-

6,561

Cape Girardeau, Missouri

94

2,827

4

-

2,925

Caruthersville, Missouri

1,036

595

3

-

1,634

Kansas City, Missouri

3,126

961

8

-

4,095

Missouri Total

9,844

5,354

17

-

15,215

Nemacolin, Pennsylvania

(2,005)

1,366

3

(636)

Total Operating Properties

33,894

18,739

63

-

52,696

Corporate and Other

(6,349)

508

597

-

(5,244)

Total

$              27,545

$                   19,247

$                   660

$                  -

$      47,452

 

Isle of Capri Casinos, Inc.

Reconciliation of Operating Income (Loss) to Adjusted EBITDA

(unaudited, in thousands)

Nine Months Ended January 24, 2016

Operating Income (Loss)

Depreciation and Amortization

Stock-Based Compensation

Other

Adjusted EBITDA

Black Hawk, Colorado

$              20,776

$                     6,589

$                     42

$                  -

$      27,407

Pompano, Florida

18,392

6,242

42

-

24,676

Bettendorf, Iowa

5,478

7,857

25

-

13,360

Marquette, Iowa

3,157

1,101

18

-

4,276

Waterloo, Iowa

15,964

3,930

20

-

19,914

Iowa Total

24,599

12,888

63

-

37,550

Lake Charles, Louisiana

3,393

8,397

22

-

11,812

Lula, Mississippi

3,944

3,895

13

-

7,852

Vicksburg, Mississippi

2,268

2,679

20

-

4,967

Mississippi Total

6,212

6,574

33

-

12,819

Boonville, Missouri

17,755

3,356

38

-

21,149

Cape Girardeau, Missouri

984

8,313

19

-

9,316

Caruthersville, Missouri

4,346

1,840

17

-

6,203

Kansas City, Missouri

9,261

2,906

21

-

12,188

Missouri Total

32,346

16,415

95

-

48,856

Nemacolin, Pennsylvania

(3,714)

3,206

30

-

(478)

Total Operating Properties

102,004

60,311

327

-

162,642

Corporate and Other

(22,051)

1,338

3,495

-

(17,218)

Total

$              79,953

$                   61,649

$                3,822

$                  -

$    145,424

Nine Months Ended January 25, 2015

Operating Income (Loss)

Depreciation and Amortization

Stock-Based Compensation

Other

Adjusted EBITDA

Black Hawk, Colorado

$              12,799

$                     6,907

$                     22

$            4,057

$      23,785

Pompano, Florida

18,114

5,267

20

-

23,401

Bettendorf, Iowa

10,113

4,339

17

-

14,469

Marquette, Iowa

2,844

1,223

8

-

4,075

Waterloo, Iowa

17,485

3,711

14

(1,225)

19,985

Iowa Total

30,442

9,273

39

(1,225)

38,529

Lake Charles, Louisiana

5,746

8,315

15

-

14,076

Lula, Mississippi

3,347

3,839

12

-

7,198

Vicksburg, Mississippi

594

2,686

12

-

3,292

Mississippi Total

3,941

6,525

24

-

10,490

Boonville, Missouri

17,024

2,946

10

-

19,980

Cape Girardeau, Missouri

(843)

8,429

9

-

7,595

Caruthersville, Missouri

2,542

1,892

10

-

4,444

Kansas City, Missouri

8,935

2,870

19

-

11,824

Missouri Total

27,658

16,137

48

-

43,843

Nemacolin, Pennsylvania

(5,522)

4,085

7

-

(1,430)

Total Operating Properties

93,178

56,509

175

2,832

152,694

Corporate and Other

(23,158)

1,486

2,554

2,259

(16,859)

Total

$              70,020

$                   57,995

$                2,729

$            5,091

$    135,835

 

Isle of Capri Casinos, Inc.

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

(unaudited, in thousands)

Three Months Ended

Nine Months Ended

January 24,

January 25,

January 24,

January 25,

2016

2015

2016

2015

Income (loss) from continuing operations

$        7,015

$       5,926

$      23,294

$       4,130

Income tax provision

904

786

2,647

2,793

Loss on extinguishment of debt

-

-

2,966

-

Interest income

(76)

(94)

(235)

(273)

Interest expense

16,836

20,927

51,281

63,370

Depreciation and amortization

20,492

19,247

61,649

57,995

Stock-based compensation

764

660

3,822

2,729

Colorado referendum expense (3)

-

-

-

4,057

Property tax settlement (3)

-

-

-

(1,225)

Severance expense (3)

-

-

-

2,259

Adjusted EBITDA (1)

$      45,935

$     47,452

$    145,424

$   135,835

 

Isle of Capri Casinos, Inc.

Reconciliation of GAAP Income From Continuing Operations to Adjusted Income and GAAP Income From Continuing Operations Per Share to Adjusted Income Per Share

(unaudited, in thousands)

Three Months Ended

Nine Months Ended

January 24,

January 25,

January 24,

January 25,

2016

2015

2016

2015

GAAP income from continuing operations

$      7,015

$      5,926

$    23,294

$      4,130

Loss on early extinguishment of debt

-

-

2,966

-

Colorado referendum expense (3)

-

-

-

4,057

Property tax settlement (3)

-

-

-

(1,225)

Severance expense (3)

-

-

-

2,259

Adjusted income (2)

$      7,015

$      5,926

$    26,260

$      9,221

GAAP income from continuing operations per share

$        0.17

$        0.15

$        0.56

$        0.10

Loss on early extinguishment of debt

-

-

0.07

-

Colorado referendum expense (3)

-

-

-

0.10

Property tax settlement (3)

-

-

-

(0.03)

Severance expense (3)

-

-

-

0.06

Adjusted income per share (2)

$        0.17

$        0.15

$        0.63

$        0.23

1.

 Adjusted EBITDA is "earnings from continuing operations before interest and other non-operating income (expense), income taxes, stock-based compensation, certain severance expenses, certain expenses related to the Colorado gaming referendum, certain property tax settlements 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 it is an important component 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, preopening 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.

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 gain (loss) on early extinguishment of debt, certain severance expenses, certain expenses related to the Colorado gaming referendum and certain property tax settlements.  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 the gain (loss) on early extinguishment of debt, certain severance expenses, certain expenses related to the Colorado gaming referendum and certain property tax.

3.

The Company incurred $4.1 million of expense during the nine months ended January 24, 2015 related to the Colorado gaming expansion referendum. The Company had a favorable property tax settlement related to our Waterloo property of $1.2 million in during the nine months ended January 24, 2015.  The Company recorded $2.3 million of severance expense during the nine months ended January 24, 2015, related to restructuring at the corporate office.

 

SOURCE Isle of Capri Casinos, Inc.



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