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

Dec 02, 2015, 08:30 ET from Isle of Capri Casinos, Inc.

ST. LOUIS, Dec. 2, 2015 /PRNewswire/ -- Isle of Capri Casinos, Inc. (NASDAQ: ISLE) (the "Company") today reported financial results for the second quarter of fiscal year 2016 ended October 25, 2015 and other Company-related news.

Fiscal 2016 Second Quarter Highlights

  • Adjusted EBITDA increased 9.3% to $48.4 million year over year.
  • Adjusted EBITDA margin increased to 20.5%, up 159 bps year over year.
  • Adjusted earnings per share from continuing operations of $0.19 versus $0.05 in the prior year quarter.

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 25,

October 26,

October 25,

October 26,

2015

2014

2015

2014

Net revenues

$         236.3

$         234.5

$         483.2

$         471.4

Consolidated Adjusted EBITDA (1)

48.4

44.3

99.5

88.4

Income (loss) from continuing operations

7.8

(0.1)

16.3

(1.8)

Income (loss) from discontinued operations

3.6

(1.0)

(1.7)

(1.5)

Net income (loss)

11.5

(1.0)

14.6

(3.3)

Diluted income (loss) per share from continuing operations

0.19

(0.00)

0.39

(0.05)

Diluted income (loss) per share from discontinued operations

0.09

(0.03)

(0.04)

(0.03)

Diluted net income (loss) per share

0.28

(0.03)

0.35

(0.08)

Adjusted income per share (2)

0.19

0.05

0.46

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.

(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 grew Adjusted EBITDA for the seventh consecutive quarter with 11 of 14 properties reporting Adjusted EBITDA increases. This quarter marks an important achievement in our continuing efforts to optimize our marketing reinvestment.  As we continue to target our marketing dollars toward more profitable customers, we strategically reduced promotional allowances nearly 10% during the quarter, which also resulted in a slight reduction in our gross revenues.  Nonetheless, in combination with prudent expense management, we grew Adjusted EBITDA by 9.3%, resulting in flow through of more than 200% and a 160-basis-point increase in operating margins. 

"We continue to use our free cash flow to invest in our properties and deleverage our balance sheet.  We are renovating hotel rooms and food and beverage outlets, upgrading our technology platforms and introducing new products to our casino floors.  At the same time, we reduced our debt balance by $30 million during the quarter.  Our balance sheet is now in the best shape it has been in over a decade."  

Financial Highlights

Net revenues for the current quarter were $236.3 million compared to $234.5 million in the prior year quarter, up 0.8%.  Consolidated Adjusted EBITDA was $48.4 million for the quarter compared to $44.3 million in the prior year quarter, up 9.3%. Adjusted EBITDA margin increased to 20.5% from 18.9%.  Interest expense was $17.0 million relative to $21.1 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.

Operating results in the prior year's quarter were impacted by $3.0 million in expenses related to a voter referendum in Colorado and a favorable property tax settlement related to our Waterloo property of $1.2 million.

On October 19, 2015, we closed our gaming operations in Natchez, Mississippi and completed the previously announced sale of our hotel and certain non-gaming assets to Casino Holding Investment Partners, LLC, the parent company of Magnolia Bluffs Casino in Natchez.  During the quarter, we recorded a gain of $6.4 million on the sale of these assets, which was partially offset by severance and operating losses incurred during the quarter.  The gain and operating results of Natchez are reflected in discontinued operations for all periods presented.

On a GAAP basis, diluted income per share from continuing operations was $0.19 compared to a diluted loss per share from continuing operations of ($0.00) in the prior year's quarter. Net income per share was $0.28 for the quarter, relative to a net loss of ($0.03) per share in the prior year quarter.  Adjusted income per share from continuing operations was $0.19 for the quarter compared to adjusted net income per share from continuing operations of $0.05 in the prior year. 

Operating Results

(All comparisons are to the prior year quarter)

Black Hawk – Net revenues increased $0.9 million, or 2.6%, to $33.6 million and Adjusted EBITDA increased $1.0 million to $9.9 million, at our two casinos in Black Hawk.  Black Hawk benefited from more effective marketing spend during the quarter. 

Pompano – Net revenues increased 4.9%, to $38.5 million, and Adjusted EBITDA increased 17.0%, to $7.3 million at Pompano Park.  The property benefited from continued improved customer reinvestment and favorable market trends.

Iowa – Net revenues for our Iowa properties increased $0.1 million to $47.0 million, while Adjusted EBITDA decreased $0.2 million to $13.1 million. Net revenues and Adjusted EBITDA were essentially flat at our Waterloo and Marquette properties.  Our Bettendorf property continues to be impacted by on-going construction disruption related to the build-out of our land-based casino as well as ongoing construction related to the I-74 bridge near the property.

Lake Charles – Net revenues decreased $2.2 million, to $28.9 million, or 7.1%, while Adjusted EBITDA decreased $1.0 million to $3.5 million, or 21.7%.  Results continue to be impacted by the opening of a new competitor in the market in December of 2014.

Mississippi – Net revenues for Lula and Vicksburg were flat at $19.1 million.  Adjusted EBITDA increased 30.9%, to $3.9 million from $3.0 million.  In Lula, we improved Adjusted EBITDA 35.0%, to $2.6 million, and improved operating margins nearly 600 bps through lower operating costs.  Vicksburg's Adjusted EBITDA increased 23.0%, to $1.3 million from $1.0 millionVicksburg's operating margins increased over 320 bps as a result of targeted customer reinvestment and reduced operating costs.

Missouri – Net revenues for our Missouri properties increased $0.7 million to $59.6 million, or 1.2%, and Adjusted EBITDA increased $1.6 million to $16.0 million, or 11.4%.  Adjusted EBITDA and operating margins increased at each of our four Missouri properties during the quarter. In Caruthersville, we improved Adjusted EBITDA and operating margins by 37.4% and 530 bps, respectively, primarily as a result of recent capital improvements to the property that included new parking and slots.  Cape Girardeau's Adjusted EBITDA increased 34.6% through reductions in cost of sales and other operating and marketing costs.  Cape Girardeau's results also include the negative impact of approximately $0.1 million of legal fees associated with a lawsuit related to the original construction at the property that was settled subsequent to the end of the quarter.   Boonville and Kansas City's Adjusted EBITDA increased 3.1% and 1.5%, respectively.  We are currently renovating the hotel at Boonville and during the quarter there were over 4,000 fewer room nights available, or approximately one-third of the hotel, which impacted results. 

Pennsylvania – Net revenues were $9.6 million, up 6.6%, and Adjusted EBITDA increased $0.4 million from prior year's quarter to slightly positive EBITDA.  We continue to grow the database, fine tune the operating cost structure and optimize reinvestment levels. 

Corporate Expenses

Corporate and development expenses were $7.0 million for the quarter compared to $6.7 million in the second quarter of fiscal 2015, primarily related to an increase in non-cash stock compensation expense, offset by the timing of our long-term incentive award, which occurred in the first quarter of the current fiscal year versus the second quarter of the prior fiscal year.

Non-cash stock compensation expense was $1.6 million for the quarter compared to $1.1 million in the second quarter of fiscal 2015.  Excluding stock compensation expenses, corporate and development expenses declined 4.0%.

Capital Structure and Capital Expenditures

As of October 25, 2015, the Company had:

  • $60.2 million in cash and cash equivalents, excluding $9.8 million in restricted cash and investments;
  • $958.6 million in total debt; and
  • $190 million in net line of credit availability.

Capital expenditures were $33.2 million in the six months ended October 25, 2015, including $28.8 million of maintenance and gaming equipment purchases as well as spending related to the hotel renovations in Bettendorf and Boonville.  We have spent $4.4 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 $6.6 million.

Consistent with previous guidance, the Company continues to expect total capital expenditures for fiscal 2016 of approximately $100 million to $105 million, inclusive of approximately $45 million to $50 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 Wednesday, December 2, 2015 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 Wednesday, December 2, 2015, until 11:59 pm central on Wednesday, December 16, 2015, by dialing 877-344-7529; International: 412-317-0088 and access number 10076477.

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.

CONTACTS:

Isle of Capri Casinos, Inc.,

Eric Hausler, Chief Financial Officer-314.813.9205

Jill Alexander, Senior Director of Corporate Communication-314.813.9368

http://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 25,

October 26,

October 25,

October 26,

2015

2014

2015

2014

Revenues:

Casino

$     249,061

$     250,138

$     509,114

$     499,679

Rooms

7,775

8,176

15,890

16,207

Food, beverage, pari-mutuel and other

31,455

33,747

64,444

67,213

  Gross revenues

288,291

292,061

589,448

583,099

 Less promotional allowances

(52,030)

(57,603)

(106,263)

(111,745)

 Net revenues

236,261

234,458

483,185

471,354

Operating expenses:

Casino

37,963

39,087

76,676

78,089

Gaming taxes

63,430

63,286

129,789

126,576

Rooms

1,883

1,794

3,766

3,641

Food, beverage, pari-mutuel and other

11,097

11,120

23,219

22,967

Marine and facilities

13,916

13,923

28,022

28,070

Marketing and administrative

54,253

57,199

110,653

114,905

Corporate and development

6,986

6,735

14,629

15,883

Depreciation and amortization

21,106

19,339

41,157

38,748

   Total operating expenses

210,634

212,483

427,911

428,879

Operating income

25,627

21,975

55,274

42,475

Interest expense

(17,004)

(21,114)

(34,445)

(42,443)

Interest income

80

92

159

179

Loss on early extinguishment of debt

-

-

(2,966)

-

Income from continuing operations before income taxes

8,703

953

18,022

211

Income tax provision

(892)

(1,024)

(1,743)

(2,007)

Income (loss) from continuing operations 

7,811

(71)

16,279

(1,796)

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

3,639

(950)

(1,685)

(1,542)

Net income (loss)

$       11,450

$        (1,021)

$       14,594

$       (3,338)

Income (loss) per common share-basic:

Income (loss) from continuing operations

$           0.19

$             0.00

$           0.40

$         (0.05)

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

0.09

(0.03)

(0.04)

(0.03)

Net income (loss)

$           0.28

$          (0.03)

$           0.36

$         (0.08)

Income (loss) per common share-dilutive:

Income (loss) from continuing operations

$           0.19

$             0.00

$           0.39

$         (0.05)

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

0.09

(0.03)

(0.04)

(0.03)

Net income (loss) 

$           0.28

$          (0.03)

$           0.35

$         (0.08)

Weighted average basic shares

40,697,797

39,932,856

40,639,301

39,880,379

Weighted average diluted shares

41,426,375

39,932,856

41,341,575

39,880,379

 

ISLE OF CAPRI CASINOS, INC. 

CONSOLIDATED BALANCE SHEETS 

(In thousands, except share and per share amounts) 

(Unaudited)

October 25,

April 26,

2015

2015

ASSETS

Current assets:

Cash and cash equivalents

$       60,227

$      66,437

Marketable securities

19,607

19,517

Accounts receivable, net

10,893

11,171

Inventory

6,426

6,509

Deferred income taxes

6,669

4,626

Prepaid expenses and other assets

15,190

11,274

Assets held for sale

-

138

Total current assets

119,012

119,672

Property and equipment, net

899,576

902,226

Other assets:

Goodwill

108,970

108,970

Other intangible assets, net

53,654

54,073

Deferred financing costs, net

16,829

19,075

Restricted cash and investments

9,767

9,193

Prepaid deposits and other

5,327

4,743

Long-term assets held for sale

-

9,810

Total assets

$  1,213,135

$ 1,227,762

LIABILITIES AND STOCKHOLDERS' EQUITY

Current liabilities:

Current maturities of long-term debt

$              76

$           170

Accounts payable 

25,899

19,690

Accrued liabilities:

Payroll and related

36,303

43,371

Property and other taxes

24,513

20,456

Income taxes payable

42

125

Interest

14,819

15,350

Progressive jackpots and slot club awards

15,439

16,123

Other

22,890

18,326

Total current liabilities

139,981

133,611

Long-term debt, less current maturities

958,478

992,712

Deferred income taxes

41,073

37,334

Other accrued liabilities

17,898

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 October 25, 2015 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

242,718

241,899

Retained earnings (deficit)

(184,478)

(199,072)

58,661

-

43,248

Treasury stock, 1,337,522 shares at October 25, 2015 and 1,568,875 shares at April 26, 2015

(16,868)

(19,786)

Total stockholders' equity

41,793

-

23,462

Total liabilities and stockholders' equity

$  1,213,135

$ 1,227,762

 

Isle of Capri Casinos, Inc.

Supplemental Data - Net Revenues

(unaudited, in thousands)

Three Months Ended

Six Months Ended

October 25,

October 26,

October 25,

October 26,

2015

2014

2015

2014

Colorado

Black Hawk

$       33,598

$       32,738

$       68,004

$       64,419

Florida

Pompano

38,526

36,733

80,424

74,457

Iowa

Bettendorf

18,478

18,273

36,470

37,807

Marquette

6,939

6,950

13,810

13,437

Waterloo

21,558

21,649

43,601

42,901

Iowa Total

46,975

46,872

93,881

94,145

Louisiana

Lake Charles

28,868

31,075

60,693

63,611

Mississippi

Lula

12,167

12,335

25,114

25,010

Vicksburg

6,913

6,803

14,500

14,245

Mississippi Total

19,080

19,138

39,614

39,255

Missouri

Boonville

18,865

19,075

39,203

38,265

Cape Girardeau

15,028

14,809

29,509

29,169

Caruthersville

8,194

7,583

16,616

15,066

Kansas City

17,485

17,395

35,764

35,224

Missouri Total

59,572

58,862

121,092

117,724

Pennsylvania

Nemacolin

9,625

9,033

19,441

17,690

Property Net Revenues before Other

236,244

234,451

483,149

471,301

Other

17

7

36

53

Net Revenues from Continuing Operations

$     236,261

$     234,458

$     483,185

$     471,354

 

Isle of Capri Casinos, Inc.

Reconciliation of Operating Income (Loss) to Adjusted EBITDA

(unaudited, in thousands)

Three Months Ended October 25, 2015

Operating Income (Loss)

Depreciation and Amortization

Stock-Based Compensation

Other

Adjusted EBITDA

Black Hawk, Colorado

$           7,765

$                  2,162

$                  14

$       -

$   9,941

Pompano, Florida

4,713

2,558

14

-

7,285

Bettendorf, Iowa

2,125

2,690

7

-

4,822

Marquette, Iowa

1,298

377

6

-

1,681

Waterloo, Iowa

5,331

1,302

6

-

6,639

Iowa Total

8,754

4,369

19

-

13,142

Lake Charles, Louisiana

678

2,806

7

-

3,491

Lula, Mississippi

1,339

1,294

4

-

2,637

Vicksburg, Mississippi

385

884

7

-

1,276

Mississippi Total

1,724

2,178

11

-

3,913

Boonville, Missouri

5,779

1,058

13

-

6,850

Cape Girardeau, Missouri

263

2,905

5

-

3,173

Caruthersville, Missouri

1,412

614

5

-

2,031

Kansas City, Missouri

2,963

954

6

-

3,923

Missouri Total

10,417

5,531

29

-

15,977

Nemacolin, Pennsylvania

(1,022)

1,068

1

47

Total Operating Properties

33,029

20,672

95

-

53,796

Corporate and Other

(7,402)

434

1,602

-

(5,366)

Total

$         25,627

$                21,106

$             1,697

$       -

$ 48,430

Three Months Ended October 26, 2014

Operating Income (Loss)

Depreciation and Amortization

Stock-Based Compensation

Other

Adjusted EBITDA

Black Hawk, Colorado

$           3,629

$                  2,307

$                    7

$ 3,044

$   8,987

Pompano, Florida

4,489

1,732

7

-

6,228

Bettendorf, Iowa

3,524

1,436

6

-

4,966

Marquette, Iowa

1,261

402

4

-

1,667

Waterloo, Iowa

6,594

1,289

5

(1,225)

6,663

Iowa Total

11,379

3,127

15

(1,225)

13,296

Lake Charles, Louisiana

1,705

2,745

6

-

4,456

Lula, Mississippi

673

1,276

4

-

1,953

Vicksburg, Mississippi

140

893

4

-

1,037

Mississippi Total

813

2,169

8

-

2,990

Boonville, Missouri

5,658

987

2

-

6,647

Cape Girardeau, Missouri

(458)

2,812

4

-

2,358

Caruthersville, Missouri

846

629

3

-

1,478

Kansas City, Missouri

2,897

960

7

-

3,864

Missouri Total

8,943

5,388

16

-

14,347

Nemacolin, Pennsylvania

(1,744)

1,362

3

(379)

Total Operating Properties

29,214

18,830

62

1,819

49,925

Corporate and Other

(7,239)

509

1,128

-

(5,602)

Total

$         21,975

$                19,339

$             1,190

$ 1,819

$ 44,323

 

Isle of Capri Casinos, Inc.

Reconciliation of Operating Income (Loss) to Adjusted EBITDA

(unaudited, in thousands)

Six Months Ended October 25, 2015

Operating Income (Loss)

Depreciation and Amortization

Stock-Based Compensation

Other

Adjusted EBITDA

Black Hawk, Colorado

$         16,236

$                  4,401

$                  28

$       -

$ 20,665

Pompano, Florida

10,555

4,457

28

-

15,040

Bettendorf, Iowa

4,298

4,955

17

-

9,270

Marquette, Iowa

2,538

738

12

-

3,288

Waterloo, Iowa

10,741

2,613

14

-

13,368

Iowa Total

17,577

8,306

43

-

25,926

Lake Charles, Louisiana

2,450

5,586

16

-

8,052

Lula, Mississippi

3,120

2,564

10

-

5,694

Vicksburg, Mississippi

1,373

1,776

14

-

3,163

Mississippi Total

4,493

4,340

24

-

8,857

Boonville, Missouri

12,408

2,087

25

-

14,520

Cape Girardeau, Missouri

42

5,786

12

-

5,840

Caruthersville, Missouri

2,968

1,226

11

-

4,205

Kansas City, Missouri

6,192

1,945

15

-

8,152

Missouri Total

21,610

11,044

63

-

32,717

Nemacolin, Pennsylvania

(2,163)

2,132

30

-

(1)

Total Operating Properties

70,758

40,266

232

-

111,256

Corporate and Other

(15,484)

891

2,826

-

(11,767)

Total

$         55,274

$                41,157

$             3,058

$       -

$ 99,489

Six Months Ended October 26, 2014

Operating Income (Loss)

Depreciation and Amortization

Stock-Based Compensation

Other

Adjusted EBITDA

Black Hawk, Colorado

$           8,139

$                  4,650

$                  15

$ 4,057

$ 16,861

Pompano, Florida

9,328

3,474

13

-

12,815

Bettendorf, Iowa

7,540

2,888

10

-

10,438

Marquette, Iowa

2,159

858

5

-

3,022

Waterloo, Iowa

11,942

2,475

9

(1,225)

13,201

Iowa Total

21,641

6,221

24

(1,225)

26,661

Lake Charles, Louisiana

4,050

5,575

10

-

9,635

Lula, Mississippi

1,599

2,563

7

-

4,169

Vicksburg, Mississippi

230

1,785

8

-

2,023

Mississippi Total

1,829

4,348

15

-

6,192

Boonville, Missouri

11,436

1,975

8

-

13,419

Cape Girardeau, Missouri

(937)

5,602

5

-

4,670

Caruthersville, Missouri

1,506

1,297

7

-

2,810

Kansas City, Missouri

5,809

1,909

11

-

7,729

Missouri Total

17,814

10,783

31

-

28,628

Nemacolin, Pennsylvania

(3,517)

2,719

4

-

(794)

Total Operating Properties

59,284

37,770

112

2,832

99,998

Corporate and Other

(16,809)

978

1,957

2,259

(11,615)

Total

$         42,475

$                38,748

$             2,069

$ 5,091

$ 88,383

 

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 25,

October 26,

October 25,

October 26,

2015

2014

2015

2014

Income (loss) from continuing operations

$         7,811

$            (71)

$       16,279

$     (1,796)

Income tax provision

892

1,024

1,743

2,007

Loss on extinguishment of debt

-

-

2,966

-

Interest income

(80)

(92)

(159)

(179)

Interest expense

17,004

21,114

34,445

42,443

Depreciation and amortization

21,106

19,339

41,157

38,748

Stock-based compensation

1,697

1,190

3,058

2,069

Colorado referendum expense (3)

-

3,044

-

4,057

Property tax settlement (3)

-

(1,225)

-

(1,225)

Severance expense (3)

-

-

-

2,259

Adjusted EBITDA (1)

$       48,430

$       44,323

$       99,489

$     88,383

 

Isle of Capri Casinos, Inc.

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

(unaudited, in thousands)

Three Months Ended

Six Months Ended

October 25,

October 26,

October 25,

October 26,

2015

2014

2015

2014

GAAP income (loss) from continuing operations

$         7,811

$            (71)

$       16,279

$       (1,796)

Loss on early extinguishment of debt

-

-

2,966

-

Colorado referendum expense (3)

-

3,044

-

4,057

Property tax settlement (3)

-

(1,225)

-

(1,225)

Severance expense (3)

-

-

-

2,259

Adjusted income (loss)  (2)

$         7,811

$         1,748

$       19,245

$         3,295

GAAP income (loss) from continuing operations per share

$           0.19

$        (0.00)

$           0.39

$         (0.05)

Loss on early extinguishment of debt

-

-

0.07

-

Colorado referendum expense (3)

-

0.08

-

0.10

Property tax settlement (3)

-

(0.03)

-

(0.03)

Severance expense (3)

-

-

-

0.06

Adjusted income (loss) per share (2)

$           0.19

$           0.05

$           0.46

$           0.08

 

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 and legal settlements, valuation charges, certain asset sale gains 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, certain property tax and legal settlements, valuation charges, certain asset sale gains and preopening expenses.  Management believes Adjusted income (loss) and Adjusted income (loss) per share are useful to investors since these adjustments provide a measure of financial performance that more closely resembles widely used measures of performance and valuation in the gaming industry.  Adjusted income (loss) and adjusted income (loss) per share do not include the gain (loss) on early extinguishment of debt, certain severance expenses, certain expenses related to the Colorado gaming referendum, certain property tax and legal settlements, valuation charges, certain asset sale gains and preopening expenses.

3.

The Company incurred $3.0 million and $4.1 million of expense during the three months and six months ended October 26, 2014, respectively, 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 three and six months ended October 26, 2014.  The Company recorded $2.3 million of severance expense during the six months ended October 26, 2014, related to restructuring at the corporate office.

 

SOURCE Isle of Capri Casinos, Inc.



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