Isle of Capri Casinos Announces Fiscal 2010 Second Quarter Results

02 December 2009

ST. LOUIS, Dec. 1 /PRNewswire-FirstCall/ -- Isle of Capri Casinos, Inc. (Nasdaq: ISLE) (the "Company") today reported financial results for the second quarter of the Company's 2010 fiscal year ended October 25, 2009.

In making the announcement, James B. Perry, the Company's chairman and chief executive officer, said, "In an environment plagued with low consumer confidence, our ongoing improvement initiatives are proving successful. We began an aggressive effort to realign our cost structure two years ago, and have since become more efficient while improving the customer experience according to our metrics.

"While we will continue to save where it makes sense, it is important to reaffirm our commitment to the long-term success of our business. We carefully evaluate making major changes to the customer experience which could negatively impact our business for years to come. Additionally, we completed the sale of a majority of our Blue Chip operating casino assets this week, completed our exit from the property in Grand Bahama last week, and expect to liquidate our remaining United Kingdom net assets before the end of our current fiscal year. We remain focused on exploring new domestic management and development opportunities.

"Overall, I am proud of the focus of our team as we continue to work our way through the most challenging economic environment I have seen during my career. Our business is smarter and stronger today, and we are actively engaged in identifying growth opportunities for the future."

Consolidated 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,                          2009         2008         2009         2008Net revenues             $247.4       $249.6       $507.3       $527.0EBITDA(1)                  41.3         36.7         89.7         89.7Income (loss) from continuing operations      1.8        (10.7)         2.6        (13.3)Net income (loss)           1.6        (13.5)         2.5        (17.1)Income (loss) per share from continuing operations                0.06        (0.34)        0.08        (0.43)Net income (loss) per share                 0.05        (0.43)        0.08        (0.55)

Significant items impacting EBITDA during the three and six months ended October 25, 2009 and October 26, 2008 are as follows:

                          Three Months Ended         Six Months Ended                        October 25,  October 26,  October 25,  October 26,                           2009         2008         2009         2008Expense recoveries - Pittsburgh development cost(2)                   $6.8           $-         $6.8           $-Portland development expense(2)                   -            -            -         (6.0)Marquette hotel demolition(3)             (0.5)           -         (0.5)           -Caruthersville property tax settlement(4)          0.9            -          0.9            -                           $7.2           $-         $7.2        $(6.0)

Second Quarter Highlights

During the quarter, net revenues decreased by 0.9% to $247.4 million compared to the second quarter of FY 2009. EBITDA from continuing operations for the second quarter of FY 2010 was $41.3 million, compared to $36.7 million for the second quarter of FY 2009.

Before consideration of the items reflected in the table above, EBITDA from continuing operations for the second quarter of FY 2010 was $34.1 million, compared to $36.7 million for the second quarter of FY 2009. Property EBITDA decreased $3.7 million from the prior year to $46.1 million.

Before consideration of the items reflected in the table above, EBITDA from continuing operations for the six months ended October 25, 2009 was $82.4 million, compared to $95.7 million for six months ended October 26, 2008. Property EBITDA decreased $14.7 million from the prior year to $104.3 million.

Virginia McDowell, the Company's president and chief operating officer, said, "We view this not only as a period of economic difficulty, but also as a period of opportunity. We are employing different strategies in each market to best position our operations for long-term financial success, and as a result, we have increased market share, EBITDA or operating margins in at least one-half of our properties since last year. Importantly, as we continue to position our business for greater financial success upon changes in consumer spending, we have increased our rated visitation at nine of our eleven properties outside of Missouri, where recent regulatory changes have made this difficult to track in the immediate term. We are introducing new customers to our improved products and service, but the challenge remains average customer spending.

"Now realizing the majority of the financial benefits of our aggressive cost containment measures compared to prior year, we are continuously implementing changes to our back-of-house operating strategies and customer experience amenities designed to drive incremental revenue and impact future earnings.

"Our properties in Missouri performed well due to both operational and regulatory changes, in particular the rebranding of our Caruthersville property to a Lady Luck and new initiatives in Kansas City that have increased earnings. In Colorado, we have benefited from recent regulatory reforms and are optimistic that we can improve our performance. Overall the reforms have been a win for all parties in both states, as we have increased our revenues, the associated tax base for the governments has grown and customers are receiving a better experience. Additionally, through cost savings and marketing initiatives we were able to maintain relative stability at our properties in Mississippi despite a large decrease in overall market revenue.

"While we performed well overall, the competitive landscape in three markets presented difficulties during the quarter that we continue to address. In Iowa, the introduction or expansion of several new facilities has had a significant negative impact on our revenues and earnings, and we are exploring new strategies to improve our market share there as the trial period for the newer facilities fades. In Lake Charles, we are making changes at the property that will allow us to compete more effectively in a highly promotional market. Finally, in Florida, we remain committed to working with the government to end the days of having to operate on an extraordinarily uneven playing field, which is currently destroying earnings for tax-paying commercial operators and potentially putting thousands of good jobs at stake."

Corporate and Other Expenses

Corporate and other expenses decreased $1.1 million to $13.3 million for the three months ended October 25, 2009 compared to prior year. Non-cash stock compensation expense decreased $0.2 million and $1.1 million in the three and six months ended October 25, 2009, respectively, to $2.6 million and $3.7 million, when compared to prior year.

Interest expense for the quarter was $17.9 million, a decline of approximately $6.3 million compared to the prior fiscal year, primarily as a result of lower debt levels.

Income tax benefit for the three and six months ended October 25, 2009 includes the favorable impact of $4.7 million from the settlement of state tax matters.

Capital Structure and Capital Expenditures

As of October 25, 2009, the Company had $76.1 million in cash and cash equivalents and total debt of $1.2 billion. Capital expenditures for the six months ended October 25, 2009 totaled $15.3 million, which included approximately $13 million of maintenance capital expenditures. We expect maintenance capital expenditures for the rest of the fiscal year to be approximately $25 million.

Conference Call Information

Isle of Capri Casinos, Inc. will host a conference call on Tuesday, December 1, 2009 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 (877) 917-8929. International callers can access the conference call by dialing (517) 308-9020. The conference call access code is 9056848. This conference call will be recorded and available for review starting at noon on December 1, 2009, until December 8, 2009, by dialing (866) 459-3540 for domestic callers or (203) 369-1329 for International callers. The access code will be 875962.

                      ISLE OF CAPRI CASINOS, INC.                 CONSOLIDATED STATEMENTS OF OPERATIONS            (In thousands, except share and per share data)                              (unaudited)                        Three Months Ended         Six Months Ended                      October 25,  October 26,  October 25,  October 26,                         2009         2008         2009         2008Revenues:  Casino               $252,192     $251,828     $516,148    $528,614  Rooms                  11,803       12,774       24,064      26,480  Pari-mutuel, food,   beverage and other    33,786       32,981       68,656      69,528    Gross revenues      297,781      297,583      608,868     624,622      Less promotional       allowances       (50,415)     (48,005)    (101,560)    (97,649)        Net revenues    247,366      249,578      507,308     526,973Operating expenses:  Casino                 40,289       37,791       80,283      76,332  Gaming taxes           64,509       63,318      130,937     133,976  Rooms                   2,766        3,193        5,747       6,582  Pari-mutuel, food,   beverage and other    11,569       12,473       22,727      26,134  Marine and facilities  16,417       17,027       32,371      33,497  Marketing and   administrative        64,947       65,872      130,064     131,226  Corporate and   development           12,340       13,201       22,285      23,531  Expense recoveries   and other charges     (6,762)           -       (6,762)      6,000  Depreciation and   amortization          28,437       30,935       57,266      62,501    Total operating     expenses           234,512      243,810      474,918     499,779Operating income         12,854        5,768       32,390      27,194  Interest expense      (17,883)     (24,225)     (36,230)    (48,122)  Interest income           400          450          769         896Loss from continuing operations before income taxes            (4,629)     (18,007)      (3,071)    (20,032)  Income tax benefit      6,411        7,337        5,644       6,722Income (loss) from continuing operations    1,782      (10,670)       2,573     (13,310)Loss from discontinued operations, net of income taxes              (220)      (2,830)        (106)     (3,816)Net income (loss)        $1,562     $(13,500)      $2,467    $(17,126)Income (loss) per common share-basic and dilutive:  Income (loss) from   continuing operations  $0.06       $(0.34)       $0.08      $(0.43)  Loss from discontinued   operations, net of   income taxes           (0.01)       (0.09)           -       (0.12)  Net income (loss)       $0.05       $(0.43)       $0.08      $(0.55)Weighted average basic shares              32,319,789   31,171,903   32,049,444  31,019,289Weighted average diluted shares      32,511,462   31,171,903   32,251,102  31,019,289

                        ISLE OF CAPRI CASINOS, INC.                        CONSOLIDATED BALANCE SHEETS                     (In thousands, except per share amounts)                                          October 25,        April 26,                                             2009              2009                             ASSETS       (unaudited)Current assets:  Cash and cash equivalents                 $76,056          $96,654  Marketable securities                      18,624           17,548  Accounts receivable, net                    9,189           11,935  Income taxes receivable                     2,312            7,744  Deferred income taxes                      16,295           16,295  Prepaid expenses and other assets          32,908           23,234  Assets held for sale                        4,525            4,183    Total current assets                    159,909          177,593Property and equipment, net               1,137,534        1,177,540Other assets:  Goodwill                                  313,136          313,136  Other intangible assets, net               81,631           83,588  Deferred financing costs, net               8,150            9,314  Restricted cash                             2,774            2,774  Prepaid deposits and other                 23,219           18,717    Total assets                         $1,726,353       $1,782,662                LIABILITIES AND STOCKHOLDERS' EQUITYCurrent liabilities:  Current maturities of long-term debt       $9,806           $9,688  Accounts payable                           20,307           16,246Accrued liabilities:  Interest                                   14,934            9,280  Payroll and related                        43,712           47,209  Property and other taxes                   36,914           31,487  Other                                      44,411           52,195  Liabilities related to assets held for   sale                                       2,177            1,888    Total current liabilities               172,261          167,993Long-term debt, less current maturities   1,228,918        1,291,384Deferred income taxes                        27,043           24,970Other accrued liabilities                    42,255           52,575Other long-term liabilities                  17,242           17,314Stockholders' 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:        36,753,733 at October 25, 2009         and 36,111,089 at April 26, 2009       368              361    Class B common stock, $.01 par value;     3,000,000 shares authorized; none     issued                                       -                -    Additional paid-in capital              197,876          193,827    Retained earnings                       104,295          101,828    Accumulated other comprehensive (loss)     income                                 (11,798)         (15,191)                                            290,741          280,825Treasury stock, 4,326,242 shares at October 25, 2009 and 4,340,436 shares at April 26, 2009                             (52,107)         (52,399)    Total stockholders' equity              238,634          228,426    Total liabilities and stockholders'     equity                              $1,726,353       $1,782,662

                       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,                         2009         2008         2009         2008Mississippi  Biloxi                $17,717      $19,112      $38,031     $43,455  Natchez                 7,786        8,511       16,359      17,096  Lula                   15,820       15,945       33,548      34,346  Mississippi Total      41,323       43,568       87,938      94,897Louisiana  Lake Charles           34,243       32,928       71,857      74,102Missouri  Kansas City            19,101       17,360       38,586      35,571  Boonville              19,846       18,610       39,918      38,845  Caruthersville          7,925        7,331       16,257      15,146  Missouri Total         46,872       43,301       94,761      89,562Iowa  Bettendorf             20,507       23,154       41,673      49,281  Davenport              11,866       13,357       24,319      23,942  Marquette               7,478        8,327       14,955      16,814  Waterloo               20,224       20,267       40,100      39,866  Iowa Total             60,075       65,105      121,047     129,903Colorado  Black Hawk             34,595       31,423       68,385      64,612Florida  Pompano                28,569       31,117       59,367      68,020International  Our Lucaya              1,418        2,072        3,552       5,645Property Net Revenues before Other           247,095      249,514      506,907     526,741Other                       271           64          401         232Net Revenues from Continuing Operations $247,366     $249,578     $507,308    $526,973

                        Isle of Capri Casinos, Inc.                       Supplemental Data - EBITDA (1)                         (unaudited, in thousands)                         Three Months Ended         Six Months Ended                       October 25,  October 26,  October 25,  October 26,                          2009         2008         2009         2008Mississippi  Biloxi                 $1,507       $1,333       $3,892      $6,245  Natchez                 2,394        2,729        5,127       5,707  Lula                    3,632        3,526        8,287       9,626  Mississippi Total       7,533        7,588       17,306      21,578Louisiana  Lake Charles            4,254        5,467       11,836      16,154Missouri  Kansas City             4,148        2,658        8,600       6,277  Boonville               6,525        5,995       13,301      12,343  Caruthersville          1,140        1,246        2,893       2,949  Missouri Total         11,813        9,899       24,794      21,569Iowa  Bettendorf              5,286        7,945       11,268      17,514  Davenport               3,073        4,309        6,687       7,509  Marquette               1,397        2,267        3,169       4,687  Waterloo                5,510        5,589       11,358      11,722  Iowa Total             15,266       20,110       32,482      41,432Colorado  Black Hawk              9,028        7,919       17,593      17,327Florida  Pompano                  (786)        (224)       1,677       2,006International  Our Lucaya               (968)        (918)      (1,369)     (1,074)Property EBITDA Before Corporate and Other Items                   46,140       49,841      104,319     118,992Corporate and Other     (12,070)     (13,138)     (21,884)    (23,297)EBITDA Before Other Items                   34,070       36,703       82,435      95,695Other Items:  Expense Recoveries   and Other (2)          6,762            -        6,762      (6,000)  Marquette Hotel   Demolition(3)           (475)           -         (475)          -  Caruthersville Property   Tax Settlement(4)        934            -          934           -EBITDA from Continuing Operations             $41,291      $36,703      $89,656     $89,695

                            Isle of Capri Casinos, Inc.      Supplemental Data - Reconciliation of Operating Income to EBITDA (1)                            (unaudited, in thousands)                     Three Months Ended            Three Months Ended                      October 25, 2009              October 26, 2008                         Depreciation                 Depreciation                Operating     and           Operating     and                  Income Amortization EBITDA  Income  Amortization  EBITDAMississippi  Biloxi         $(1,979)  $3,486    $1,507 $(3,093)   $4,426     $1,333  Natchez          1,956      438     2,394    1,925      804      2,729  Lula             1,614    2,018     3,632    1,404    2,122      3,526  Mississippi    Total          1,591    5,942     7,533      236    7,352      7,588Louisiana  Lake Charles     1,658    2,596     4,254    2,320    3,147      5,467Missouri  Kansas City      3,169      979     4,148    1,503    1,155      2,658  Boonville        5,396    1,129     6,525    4,776    1,219      5,995  Caruthersville     311      829     1,140       58    1,188      1,246  Missouri Total   8,876    2,937    11,813    6,337    3,562      9,899Iowa  Bettendorf       3,077    2,209     5,286    5,698    2,247      7,945  Davenport        2,234      839     3,073    3,249    1,060      4,309  Marquette          803      594     1,397    1,583      684      2,267  Waterloo         2,541    2,969     5,510    2,686    2,903      5,589  Iowa Total       8,655    6,611    15,266   13,216    6,894     20,110Colorado  Black Hawk       5,265    3,763     9,028    3,432    4,487      7,919Florida  Pompano         (5,163)   4,377      (786)  (4,395)   4,171       (224)International  Our Lucaya        (968)       -      (968)    (922)       4       (918)Total Property Before Corporate and Other Items            19,914   26,226    46,140   20,224   29,617     49,841Corporate and Other           (13,323)   1,253   (12,070) (14,456)   1,318    (13,138)Total Before Other Items       6,591   27,479    34,070    5,768   30,935     36,703Other Items:  Expense   Recoveries   and Other(2)    6,762        -     6,762        -        -          -  Marquette   Hotel   Demolition(3)  (1,433)     958      (475)       -        -          -  Caruthersville   Property   Tax   Settlement(4)     934        -       934        -        -          -Total From Continuing Operations      $12,854  $28,437   $41,291   $5,768  $30,935    $36,703

                         Isle of Capri Casinos, Inc.   Supplemental Data - Reconciliation of Operating Income to EBITDA (1)                         (unaudited, in thousands)                      Six Months Ended              Six Months Ended                      October 25, 2009              October 26, 2008                         Depreciation                 Depreciation                Operating     and           Operating     and                  Income Amortization EBITDA  Income  Amortization  EBITDAMississippi  Biloxi         $(3,247)  $7,139   $3,892 $(2,731)   $8,976     $6,245  Natchez          4,093    1,034    5,127    4,018    1,689      5,707  Lula             4,055    4,232    8,287    5,252    4,374      9,626  Mississippi   Total           4,901   12,405   17,306    6,539   15,039     21,578Louisiana  Lake Charles     6,501    5,335   11,836    9,709    6,445     16,154Missouri  Kansas City      6,524    2,076    8,600    3,858    2,419      6,277  Boonville       10,988    2,313   13,301    9,914    2,429     12,343  Caruthersville   1,149    1,744    2,893      630    2,319      2,949  Missouri Total  18,661    6,133   24,794   14,402    7,167     21,569Iowa  Bettendorf       6,712    4,556   11,268   12,967    4,547     17,514  Davenport        4,892    1,795    6,687    5,322    2,187      7,509  Marquette        1,876    1,293    3,169    3,311    1,376      4,687  Waterloo         5,440    5,918   11,358    6,004    5,718     11,722  Iowa Total      18,920   13,562   32,482   27,604   13,828     41,432Colorado  Black Hawk       9,959    7,634   17,593    8,352    8,975     17,327Florida  Pompano         (6,970)   8,647    1,677   (6,371)   8,377      2,006International  Our Lucaya      (1,371)       2   (1,369)  (1,083)       9     (1,074)Total Property Before Corporate and Other Items  50,601   53,718  104,319   59,152   59,840    118,992Corporate and Other           (24,474)   2,590  (21,884) (25,958)   2,661    (23,297)Total Before Other Items      26,127   56,308   82,435   33,194   62,501     95,695Other Items:  Expense   Recoveries   and Other (2)   6,762        -    6,762   (6,000)       -     (6,000)  Marquette Hotel   Demolition   (3)           (1,433)      958    (475)        -        -          -  Caruthersville   Property Tax   Settlement (4)    934        -      934        -        -          -Total From Continuing Operations      $32,390  $57,266  $89,656  $27,194  $62,501    $89,695

1. EBITDA is "earnings before interest and other non-operating income (expense), income taxes, and depreciation and amortization." EBITDA is presented after consideration of minority interest. "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         Six Months Ended                       October 25,  October 26,  October 25,  October 26,                          2009         2008         2009         2008EBITDA                  $41,291      $36,703      $89,656    $89,695  Add/(deduct):  Depreciation and   amortization         (28,437)     (30,935)     (57,266)   (62,501)  Interest expense:   Interest expense,   net                  (17,483)     (23,775)     (35,461)   (47,226)  Income tax (provision)   benefit                6,411        7,337        5,644      6,722  Income (loss) from   discontinued   operations, net   of income taxes         (220)      (2,830)        (106)    (3,816)Net income (loss)        $1,562    $(13,500)       $2,467   $(17,126)

      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 stock      compensation expense. Reference can be made to the definition of      Adjusted EBITDA in the applicable debt agreements on file as      Exhibits to our filing with the Securities and Exchange Commission.2.    Expense recoveries and other of $(6.8) million for the three and      six months ended October 25, 2009 reflect income from the recording      of a receivable for reimbursement of Pittsburgh development costs.      Expense recoveries and other of $6.0 million for the six months      ended October 26, 2008 reflect a charge representing the      cancellation of our rights to acquire land including a $1.0 million      termination fee, related to the potential development of a casino      project in the Portland, Oregon area.3.    During October, 2010 we decided to demolish the hotel at our      Marquette. As a result of this decision, our operating income for      the three and six months ended October 25, 2009 includes $0.5      million in demolition costs and $1.0 million in acceleration of      remaining depreciation.4.    Caruthersville includes the favorable impact of $0.9 million from      the settlement of a property tax appeal during both the three and      six months ended October 25, 2009.

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 14 casino properties. The Company owns and operates casinos domestically in Biloxi, Lula and Natchez, 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 Statement

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 Haynes, Senior Director of Corporate Communication-314.813.9368

NOTE: Other Isle of Capri Casinos, Inc. press releases and a corporate profile are available at http://www.prnewswire.com. Isle of Capri Casinos, Inc.'s home page is http://www.islecorp.com.

Available Topic Expert(s): For information on the listed expert(s), click appropriate link.

James Perry

https://profnet.prnewswire.com/Subscriber/ExpertProfile.aspx?ei=74947

Virginia McDowell

https://profnet.prnewswire.com/Subscriber/ExpertProfile.aspx?ei=72331

SOURCE Isle of Capri Casinos, Inc.