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

- Company Completes Acquisition of Rainbow Casino in Vicksburg, Mississippi

- Retail Revenue Increases at Nine Properties; Database Customer Spend Per Visit Stable; Modest Decline in Database Customer Visits Due to Economic Weakness

Aug 31, 2010, 08:30 ET from Isle of Capri Casinos, Inc.

ST. LOUIS, Aug. 31 /PRNewswire-FirstCall/ -- Isle of Capri Casinos, Inc. (Nasdaq: ISLE) (the "Company") today reported financial results for the first quarter of fiscal year 2011, the three-month period ended July 25, 2010, and other Company-related news.

In making the announcement, James B. Perry, the Company's chairman and chief executive officer, said, "I believe we achieved solid performance by taking steps to maintain profitability in the midst of poor economic conditions that impacted regional gaming markets across the country during the quarter. We remain committed to improving our margins as a result of our operational accomplishments and are finding opportunities to attract new retail customers through our branding and service programs.  Further, we continue to focus on de-leveraging our balance sheet.

"We believe we are poised to capitalize on our progress when this economic cycle turns and are continually searching for prudent investment opportunities.  We are currently engaged in competitive bid processes for projects in Cape Girardeau, Missouri, and at the Nemacolin Woodlands Resort in Fayette County, Pennsylvania.  Both of these licenses should be awarded by the end of the year, and we are actively exploring opportunities in other jurisdictions to increase and diversify cash flows."

Consolidated Results

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


Three Months Ended


July 25,


July 26,


2010


2009

Net revenues

$          251.9


$          257.9

Income (loss) from continuing operations

(2.7)


1.1

Net income (loss)

(2.7)


0.9

Income (loss) per share from continuing operations

(0.08)


0.03

Net income (loss) per share

(0.08)


0.03



During the first quarter of fiscal year 2011:

  • Net revenues decreased 2.3% to $251.9 million; primarily attributable to decreased gaming and hotel revenues;
  • Consolidated EBITDA decreased 11.4% to $43.2 million, largely as a result of decreased gaming revenues and increased corporate and development costs associated with the Company's acquisition of the Rainbow Casino and attempted equity offering;
  • Property-level EBITDA decreased 5.4% to  $55.4 million; and
  • Property-level EBITDA margins were 22.0% compared to 22.7% in the first quarter of fiscal year 2010.

Discussing the operating results, Virginia McDowell, the Company's president and chief operating officer, remarked, "We have again demonstrated the agility of our business by increasing retail play, managing costs and maintaining our average customer spend and visitation.  We did experience a modest decline in our overall number of database customers, as residents in our markets have continued to feel the squeeze of the economic contraction and the unemployment and housing pictures have not improved.  We are confident that our branding and marketing programs have been successful in influencing customers across the portfolio during the quarter, which stands to have a positive impact on profitability upon economic recovery."

The Company welcomed Rainbow Casino in Vicksburg, Mississippi, to the property portfolio during the quarter.  McDowell commented, "We are excited by the enthusiasm of the team there, and believe we can make improvement through the implementation of our operational, marketing and technology platforms."

The Company noted that property-level operating margins have largely remained stable as initiatives continue to adjust cost-structure to business volume, although performance was impacted specifically by properties in Iowa and Colorado. In particular, properties in the Iowa Quad Cities market have continually been negatively impacted by road construction projects which have hindered access to our properties, and Black Hawk continued to experience difficulty in the retail segment.  Regulatory changes and efforts by management in Florida have led to a dramatic improvement at the Company's Pompano property, and Lula continues to improve its performance by consistently improving operations.

Dale R. Black, the Company's senior vice president and chief financial officer, commented, "While consumer confidence appeared to be gaining traction early in the quarter, leading indicators including the Consumer Confidence Index showed a steep decline through the critical summer months of June and July.  We obviously cannot control the national economy, we were successful in managing costs through this period, and continue to remain focused on keeping our balance sheet strong to wade through this economic cycle and capitalize on opportunities for growth."

Corporate Expenses, Capital Structure, and Capital Expenditures

Corporate and development expenses were $12.5 million for quarter compared to $9.9 million in fiscal 2010.  During the quarter the company incurred approximately $1.1 million in expenses related to its attempted equity offering and an additional $1.1 million in acquisition related costs regarding the Rainbow acquisition. Non-cash stock compensation was $1.7 million during the quarter, compared to $1.1 million for the first quarter of fiscal 2010.  

The Company had $63.5 million in cash and cash equivalents and total debt of $1.3 billion at the end of the quarter.

Interest expense for the quarter was $23.8 million, an increase of approximately $5.4 million compared to the prior fiscal year, primarily as a result of increased borrowing costs associated with the recent amendment to the Company's credit facility.  

Due to the ineffectiveness of the Company's interest rate swaps as a result of the amendment to our credit facility, we recorded other expense of $1.5 million during the first quarter of fiscal 2011.  The Company expects other expense of approximately $2 million associated with the anticipated change in fair value to be recorded during the remainder of fiscal 2011.

Capital expenditures during the quarter totaled $13 million, consisting almost entirely of maintenance capital expenditures.  The Company expects capital expenditures for the remainder of the fiscal year to be approximately $35 million.  

Conference Call Information

Isle of Capri Casinos, Inc. will host a conference call on Tuesday, August 31, 2010 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) 469-0509.  International callers can access the conference call by dialing (630) 395-0133.  The conference call reference number is 8572561. The conference call will be recorded and available for review starting at noon central on Tuesday, August 31, 2010, until midnight central on Monday, September 6, 2010, by dialing (866) 479-2464; International: (203) 369-1538 and access number 875962.

ISLE OF CAPRI CASINOS, INC.

CONSOLIDATED STATEMENTS OF OPERATIONS

(In thousands, except share and per share amounts)

(Unaudited)






Three Months Ended



July 25,


July 26,



2010


2009

Revenues:





Casino


$      259,162


$      262,263

Rooms


10,881


12,261

Pari-mutuel, food, beverage and other


34,091


34,295

Gross revenues


304,134


308,819

Less promotional allowances


(52,213)


(50,905)

Net revenues


251,921


257,914

Operating expenses:





Casino


39,609


39,265

Gaming taxes


64,406


66,304

Rooms


2,769


3,057

Pari-mutuel, food, beverage and other


11,168


10,842

Marine and facilities


14,609


15,646

Marketing and administrative


63,620


64,088

Corporate and development


12,521


9,945

Depreciation and amortization


22,933


28,828

Total operating expenses


231,635


237,975

Operating income


20,286


19,939

Interest expense


(23,795)


(18,347)

Interest income


474


368

Other expense


(1,487)


-






Income (loss) from continuing operations before income taxes


(4,522)


1,960

Income tax benefit (provision)


1,867


(905)

Income (loss) from continuing operations


(2,655)


1,055

Income (loss) from discontinued operations,





  including loss on sale, net of income taxes


-


(150)

Net income (loss)


$        (2,655)


$             905






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





Income (loss) from continuing operations


$          (0.08)


$            0.03

Income (loss) from discontinued operations,





       including loss on sale, net of income taxes


-


-

Net income (loss)


$          (0.08)


$            0.03






Weighted average basic shares


32,447,904


31,779,100

Weighted average diluted shares


32,447,904


31,885,101








ISLE OF CAPRI CASINOS, INC.

CONSOLIDATED BALANCE SHEETS

(In thousands, except share and per share amounts)






July 25,


April 25,


2010


2010

ASSETS

(unaudited)



Current assets:




Cash and cash equivalents

$          63,516


$          68,069

Marketable securities

23,664


22,926

Accounts receivable, net

9,478


8,879

Income taxes receivable

7,318


8,109

Deferred income taxes

16,826


16,826

Prepaid expenses and other assets

33,785


25,095

Total current assets

154,587


149,904

Property and equipment, net

1,129,683


1,098,942

Other assets:




Goodwill

345,303


313,136

Other intangible assets, net

85,834


79,675

Deferred financing costs, net

9,533


10,354

Restricted cash

12,730


2,774

Prepaid deposits and other

17,795


20,055

Total assets

$     1,755,465


$     1,674,840





LIABILITIES AND STOCKHOLDERS' EQUITY




Current liabilities:




Current maturities of long-term debt

$            8,762


$            8,754

Accounts payable

30,212


24,072

Accrued liabilities:




Payroll and related

43,149


45,863

Property and other taxes

21,870


20,253

Interest

17,713


14,779

Progressive jackpots and slot club awards

14,788


14,144

Other

33,007


29,290

Total current liabilities

169,501


157,155

Long-term debt, less current maturities

1,258,302


1,192,135

Deferred income taxes

28,763


29,193

Other accrued liabilities

40,006


38,972

Other long-term liabilities

17,120


17,166

Stockholders' equity:




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

-


-

Common stock, $.01 par value; 45,000,000 shares authorized; shares issued:




36,783,871 at July 25, 2010 and 36,771,730 at April 25, 2010

368


367

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

-


-

Additional paid-in capital

203,323


201,464

Retained earnings

95,900


98,555

Accumulated other comprehensive (loss) income

(5,711)


(8,060)


293,880


292,326

Treasury stock, 4,326,242 shares at July 25, 2010 and April 25, 2010

(52,107)


(52,107)

Total stockholders' equity

241,773


240,219

Total liabilities and stockholders' equity

$     1,755,465


$     1,674,840
















Isle of Capri Casinos, Inc.

Supplemental Data - Net Revenues

(unaudited, in thousands)










Three Months Ended




July 25,


July 26,




2010


2009

Mississippi






Biloxi


$    18,639


$    20,420


Natchez


8,070


8,573


Lula


17,318


17,728


Vicksburg(2)


3,968




Mississippi Total


47,995


46,721







Louisiana






Lake Charles


34,184


37,614







Missouri






Kansas City


19,040


19,485


Boonville


20,068


20,072


Caruthersville


8,391


8,332


Missouri Total


47,499


47,889







Iowa






Bettendorf


19,741


21,166


Davenport


11,348


12,453


Marquette


7,109


7,477


Waterloo


20,934


19,876


Iowa Total


59,132


60,972







Colorado






Black Hawk


30,044


33,790







Florida






Pompano


32,720


30,798













Property Net Revenues before Other


251,574


257,784







Other


347


130







Net Revenues from Continuing Operations


$  251,921


$  257,914



























Isle of Capri Casinos, Inc.

Supplemental Data - EBITDA (1)

(unaudited, in thousands)










Three Months Ended




July 25,


July 26,




2010


2009

Mississippi






Biloxi


$            1,846


$            2,385


Natchez


2,451


2,733


Lula


5,199


4,655


Vicksburg(2)


1,273




Mississippi Total


10,769


9,773







Louisiana






Lake Charles


6,799


7,582







Missouri






Kansas City


3,999


4,452


Boonville


6,892


6,776


Caruthersville


1,789


1,753


Missouri Total


12,680


12,981







Iowa






Bettendorf


4,465


5,982


Davenport


2,793


3,614


Marquette


1,490


1,772


Waterloo


6,041


5,848


Iowa Total


14,789


17,216







Colorado






Black Hawk


7,103


8,566







Florida






Pompano


3,253


2,463













Property EBITDA Before





    Corporate and Other Items


55,393


58,581

Corporate and Other


(12,174)


(9,814)







EBITDA from Continuing Operations


$          43,219


$          48,767















Isle of Capri Casinos, Inc.

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

(unaudited, in thousands)


















Three Months Ended July 25, 2010


Three Months Ended July 26, 2009






Depreciation






Depreciation






Operating


and




Operating


and






Income


Amortization


EBITDA


Income


Amortization


EBITDA

Mississippi














Biloxi


$       (1,248)


$               3,094


$      1,846


$       (1,268)


$               3,653


$      2,385


Natchez


2,101


350


2,451


2,137


596


2,733


Lula


3,346


1,853


5,199


2,441


2,214


4,655


Vicksburg(2)


631


642


1,273








Mississippi Total


4,830


5,939


10,769


3,310


6,463


9,773















Louisiana














Lake Charles


4,415


2,384


6,799


4,843


2,739


7,582















Missouri














Kansas City


3,136


863


3,999


3,355


1,097


4,452


Boonville


5,834


1,058


6,892


5,592


1,184


6,776


Caruthersville


922


867


1,789


838


915


1,753


Missouri Total


9,892


2,788


12,680


9,785


3,196


12,981















Iowa














Bettendorf


2,435


2,030


4,465


3,635


2,347


5,982


Davenport


2,226


567


2,793


2,658


956


3,614


Marquette


1,065


425


1,490


1,073


699


1,772


Waterloo


3,585


2,456


6,041


2,899


2,949


5,848


Iowa Total


9,311


5,478


14,789


10,265


6,951


17,216















Colorado














Black Hawk


3,855


3,248


7,103


4,694


3,872


8,566















Florida














Pompano


890


2,363


3,253


(1,807)


4,270


2,463





























Total Property Before













   Corporate and Other Items


33,193


22,200


55,393


31,090


27,491


58,581

Corporate and Other


(12,907)


733


(12,174)


(11,151)


1,337


(9,814)















Total From Continuing Operations


$       20,286


$             22,933


$    43,219


$       19,939


$             28,828


$    48,767

















1.  EBITDA is "earnings before interest and other non-operating income (expense), income taxes, and depreciation and amortization." "Property EBITDA" is EBITDA before Corporate and development expenses and minority interest.  EBITDA is presented solely as a supplemental disclosure because management believes that it is 1) a widely used measure of operating performance in the gaming industry, 2) used as a component of calculating required leverage and minimum interest coverage ratios under our Senior Credit Facility and 3) a principal basis of valuing gaming companies. Management uses EBITDA and Property EBITDA as the primary measure of the Company's operating properties' performance, and they are important components in evaluating the performance of management and other operating personnel in the determination of certain components of employee compensation.  EBITDA should not be construed as an alternative to operating income as an indicator of the Company's operating performance, as an alternative to cash flows from operating activities as a measure of liquidity or as an alternative to any other measure determined in accordance with U.S. generally accepted accounting principles (GAAP).  The Company has significant uses of cash flows, including capital expenditures, interest payments, taxes and debt principal repayments, which are not reflected in EBITDA.  Also, other gaming companies that report EBITDA information may calculate EBITDA in a different manner than the Company.  A reconciliation of EBITDA and Property EBITDA to operating income is included in the financial schedules accompanying this release. A reconciliation of EBITDA to the Company's net income (loss) is shown below (in thousands).







Three Months Ended


July 25,


July 26,


2010


2009

EBITDA

$      43,219


$      48,767

Add/(deduct):




Depreciation and amortization

(22,933)


(28,828)

Interest expense:




 Interest expense, net

(23,321)


(17,979)

 Other expense

(1,487)


-

Income tax benefit (provision)

1,867


(905)

Income (loss) from discontinued operations,




 including loss on sale, net of income taxes

-


(150)

Net income (loss)

$      (2,655)


$           905







Certain of our debt agreements use "Adjusted EBITDA" as a financial measure for the calculation of financial debt covenants. Adjusted EBITDA differs from EBITDA as Adjusted EBITDA includes add back of items such as gain on early extinguishment of debt, pre-opening expenses, certain write-offs and valuation expenses, and non-cash stock compensation expense. Reference can be made to the definition of Adjusted EBITDA in the applicable debt agreements on file as Exhibits to our filings with the Securities and Exchange Commission.  



2.   Rainbow Casino in Vicksburg, Mississippi was acquired on June      8, 2010 and we have included the results of Rainbow in our consolidated financial statements subsequent to acquisition.








About Isle of Capri Casinos, Inc.

Isle of Capri Casinos, Inc., founded in 1992, is dedicated to providing its customers with an exceptional gaming and entertainment experience at each of its 15 casino properties. The Company owns and operates casinos domestically in Biloxi, Lula, Natchez and Vicksburg, Mississippi; Lake Charles, Louisiana; Bettendorf, Davenport, Marquette and Waterloo, Iowa; Boonville, Caruthersville and Kansas City, Missouri, two casinos in Black Hawk, Colorado, and a casino and harness track in Pompano Beach, Florida. More information is available at the Company's website, www.islecorp.com.

Forward-Looking Statements

This press release may be deemed to contain forward-looking statements, which are subject to change. These forward-looking statements may be significantly impacted, either positively or negatively by various factors, including without limitation, licensing, and other regulatory approvals, financing sources, development and construction activities, costs and delays, weather, permits, competition and business conditions in the gaming industry. The forward-looking statements are subject to numerous risks and uncertainties that could cause actual results to differ materially from those expressed in or implied by the statements herein.

Additional information concerning potential factors that could affect the Company's financial condition, results of operations and expansion projects, is included in the filings of the Company with the Securities and Exchange Commission, including, but not limited to, its Form 10-K/A for the most recently ended fiscal year.

CONTACTS:

Isle of Capri Casinos, Inc.,

    Dale Black, Chief Financial Officer-314.813.9327

    Jill Haynes, Senior Director of Corporate Communication-314.813.9368



SOURCE Isle of Capri Casinos, Inc.



RELATED LINKS

http://www.islecorp.com