Isle of Capri Casinos Announces Fiscal 2010 Third Quarter Results
| 24 February 2010 |    |
In making the announcement, James B. Perry, the Company's chairman and chief executive officer, said, "The ongoing pressure the macroeconomic environment is placing on our markets has negatively impacted our revenues. Overall, as we are bumping along the bottom of this economic cycle, we continue to generate free cash flow while managing with a solid operating plan and an eye towards increased future profitability.
"The recent amendment to our credit facility provides us greater financial flexibility to manage our business as we continue to focus on improving our balance sheet. Additionally, we continue to lay the foundation for growth upon an economic recovery. Further, we are optimistic about the future as we continue our commitment to gaming management, and are aggressively pursuing opportunities for such incremental revenue in Pennsylvania, as well as other growth opportunities across the United States."
Consolidated Results
The following table outlines the Company's financial results (dollars in millions, except per share amounts, unaudited):
Three Months Ended Nine Months Ended ----------------- ----------------- January 24, January 25, January 24, January 25, 2010 2009 2010 2009 ---- ---- ---- ---- Net revenues, excluding hurricane insurance recoveries $227.0 $241.8 $730.7 $763.1 Net revenues 227.0 301.8 730.7 823.1 EBITDA(1) 29.5 131.8 120.5 222.6 Income (loss) from continuing operations (11.4) 48.3 (8.0) 35.7 Net income (loss) (10.6) 46.1 (8.2) 29.0 Income (loss) per share from continuing operations (0.35) 1.52 (0.25) 1.14 Net income (loss) per share (0.33) 1.45 (0.25) 0.93Significant items impacting EBITDA during the three and nine months ended January 24, 2010 and January 25, 2009 are as follows:
Three Months Ended Nine Months Ended ----------------- ----------------- January 24, January 25, January 24, January 25, 2010 2009 2010 2009 ---- ---- ---- ---- Expense recoveries - Pittsburgh development cost(2) $- $- $6.8 $- Portland development expense(2) - - - (6.0) Marquette hotel demolition(3) - - (0.5) - Caruthersville property tax settlement(4) - - 0.9 - Hurricane Katrina settlement(5) - 92.2 - 92.2 --- ---- --- ---- $- $92.2 $7.2 $86.2 === ===== ==== =====Third Quarter Highlights
During the quarter, net revenues were $227.0 million, a decrease of 6.1% compared to the third quarter of FY 2009. Excluding the impact of the items listed in the table above, EBITDA from continuing operations for the third quarter of FY 2010 was $29.5 million, compared to $39.6 million for the third quarter of FY 2009 and property EBITDA decreased $8.6 million from the prior year to $40.0 million.
Excluding the impact of the items reflected in the table above, EBITDA from continuing operations for the first nine months of FY 2010 was $113.3 million, compared to $136.4 million for the same period of FY 2009. Property EBITDA decreased $22.9 million from the prior year to $145.7 million.
Virginia McDowell, the Company's president and chief operating officer, said, "During the quarter, while our average spend per visit declined, our successful marketing efforts produced an increase in the average number of visits per rated patron and led to a significant number of new customers to our database with whom we are building strong relationships.
"While we were able to decrease property operating expenses by approximately $4 million during the quarter, and while we continue to trim expenses wherever possible, we remain resolute that we will not cut costs to the point where they begin to negatively impact the customer experience and erode the important progress we have made. To support this conclusion, we are continuing to receive increasing positive feedback as our customer satisfaction and courtesy scores steadily increase.
"Average year-end unemployment in the areas in which we operate has risen from 7.0% to 9.2%, contributing to the decline in revenues. Through innovation and discipline in a tough market, though, we maintained our margins in many locations while we are also addressing specific instances where improvement must be made. Across the portfolio, we are committed to continued improvement in our operations to best position our properties in an increasingly competitive marketplace."
Corporate and Other Expenses
Corporate and other expenses increased $1.6 million to $10.5 million during the quarter compared to prior year, primarily due to increased insurance costs. For the three months ended January 24, 2010, non-cash stock compensation expense increased $0.6 million to $1.8 million, when compared to prior year. For the nine months ended January 24, 2010, non-cash stock compensation expense decreased $0.5 million to $5.4 million, when compared to prior year.
Interest expense for the quarter was $17.5 million, a decline of approximately $6.9 million compared to the prior fiscal year, primarily as a result of lower debt levels. We continue to expect interest expense for FY 2010 to be approximately $75 million to $80 million, including the impact of the recent amendment to our Credit Facility.
As a result of the amendment to the Credit Facility, we expect to incur a charge of approximately $2.2 million in the fourth quarter of FY 2010 related to fees and the write-off of certain unamortized deferred financing costs, of which approximately $0.3 million is non-cash. Based on current debt levels, the Company expects interest expense to increase by approximately $15 million to $18 million annually, as a result of the amendment to the Credit Facility.
Capital Structure and Capital Expenditures
As of January 24, 2010, the Company had $72.5 million in cash and cash equivalents and total debt of $1.2 billion. Capital expenditures for the nine months ended January 24, 2010 totaled $21.6 million, which included approximately $18.3 million of maintenance capital expenditures. The Company expects maintenance capital expenditures for the rest of the fiscal year to be approximately $10 million.
Conference Call Information
Isle of Capri Casinos, Inc. will host a conference call on Tuesday, February 23, 2010 at 10 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 Tuesday, February 23, 2010, until midnight on Tuesday, March 2, 2010, by dialing (866) 397-1426 for domestic callers or (203) 369-0533 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 amounts) (unaudited) Three Months Ended Nine Months Ended ------------------ ----------------- January 24, January 25, January 24, January 25, 2010 2009 2010 2009 ---- ---- ---- ---- Revenues: Casino $229,520 $246,717 $742,957 $769,931 Rooms 8,424 9,216 32,488 35,696 Pari-mutuel, food, beverage and other 31,240 32,240 98,821 101,147 Hurricane insurance recoveries - 60,000 - 60,000 --- ------ --- ------ Gross revenues 269,184 348,173 874,266 966,774 Less promotional allowances (42,199) (46,354) (143,525) (143,628) ------- ------- -------- -------- Net revenues 226,985 301,819 730,741 823,146 Operating expenses: Casino 36,472 37,382 115,474 112,370 Gaming taxes 60,529 63,335 191,056 196,839 Rooms 2,192 2,624 7,939 9,206 Pari-mutuel, food, beverage and other 10,717 12,011 33,126 37,903 Marine and facilities 14,392 15,319 46,148 48,202 Marketing and administrative 62,082 62,457 189,849 189,633 Corporate and development 11,127 9,039 33,412 32,570 Hurricane insurance recoveries - (32,179) - (32,179) Expense recoveries and other charges - - (6,762) 6,000 Depreciation and amortization 26,798 29,847 84,062 92,339 ------ ------ ------ ------ Total operating expenses 224,309 199,835 694,304 692,883 ------- ------- ------- ------- Operating income 2,676 101,984 36,437 130,263 Interest expense (17,452) (24,400) (53,682) (72,522) Interest income 454 725 1,218 1,620 --- --- ----- ----- Income (loss) from continuing operations before income taxes (14,322) 78,309 (16,027) 59,361 Income tax benefit (provision) 2,922 (30,044) 8,056 (23,682) ----- ------- ----- ------- Income (loss) from continuing operations (11,400) 48,265 (7,971) 35,679 Income (loss) from discontinued operations, including loss on sale, net of income taxes 775 (2,152) (187) (6,692) --- ------ ---- ------ Net income (loss) $(10,625) $46,113 $(8,158) $28,987 ======== ======= ======= ======= Income (loss) per common share-basic and dilutive: Income (loss) from continuing operations $(0.35) $1.52 $(0.25) $1.14 Income (loss) from discontinued operations, including loss on sale, net of income taxes 0.02 (0.07) - (0.21) ---- ----- --- ----- Net income (loss) $(0.33) $1.45 $(0.25) $0.93 ====== ===== ====== ===== Weighted average basic shares 32,438,809 31,765,365 32,179,233 31,240,008 Weighted average diluted shares 32,438,809 31,765,365 32,179,233 31,248,402 ISLE OF CAPRI CASINOS, INC. CONSOLIDATED BALANCE SHEETS (In thousands, except per share amounts) January 24, April 26, 2010 2009 ---- ---- ASSETS (unaudited) ------ Current assets: Cash and cash equivalents $72,536 $96,654 Marketable securities 20,050 17,548 Accounts receivable, net 8,462 11,935 Income taxes receivable 5,141 7,744 Deferred income taxes 13,233 16,295 Prepaid expenses and other assets 29,772 23,234 Assets held for sale - 4,183 --- ----- Total current assets 149,194 177,593 Property and equipment, net 1,117,227 1,177,540 Other assets: Goodwill 313,136 313,136 Other intangible assets, net 80,653 83,588 Deferred financing costs, net 7,579 9,314 Restricted cash 2,774 2,774 Prepaid deposits and other 22,605 18,717 ------ ------ Total assets $1,693,168 $1,782,662 ========== ========== LIABILITIES AND STOCKHOLDERS' EQUITY ------------------------------------ Current liabilities: Current maturities of long-term debt $8,750 $9,688 Accounts payable 24,643 16,246 Accrued liabilities: Interest 22,208 9,280 Payroll and related 41,600 47,209 Property and other taxes 21,015 31,487 Other 43,708 52,195 Liabilities related to assets held for sale - 1,888 --- ----- Total current liabilities 161,924 167,993 Long-term debt, less current maturities 1,223,277 1,291,384 Deferred income taxes 20,232 24,970 Other accrued liabilities 38,729 52,575 Other long-term liabilities 17,486 17,314 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: 36,768,397 at January 24, 2010 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 199,862 193,827 Retained earnings 93,670 101,828 Accumulated other comprehensive (loss) income (10,273) (15,191) ------- ------- 283,627 280,825 Treasury stock, 4,326,242 shares at January 24, 2010 and 4,340,436 shares at April 26, 2009 (52,107) (52,399) ------- ------- Total stockholders' equity 231,520 228,426 ------- ------- Total liabilities and stockholders' equity $1,693,168 $1,782,662 ========== ========== 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, 2010 2009 2010 2009 ---- ---- ---- ---- Mississippi Biloxi(5) $15,152 $18,278 $53,183 $61,733 Natchez 7,147 8,797 23,506 25,894 Lula 15,276 16,312 48,824 50,659 ------ ------ ------ ------ Mississippi Total 37,575 43,387 125,513 138,286 ------ ------ ------- ------- Louisiana Lake Charles 31,795 38,003 103,652 112,105 ------ ------ ------- ------- Missouri Kansas City 17,215 17,492 55,801 53,063 Boonville 17,557 18,151 57,475 56,996 Caruthersville 7,470 7,282 23,727 22,428 ----- ----- ------ ------ Missouri Total 42,242 42,925 137,003 132,487 ------ ------ ------- ------- Iowa Bettendorf 17,480 19,414 59,153 68,695 Davenport 11,011 11,520 35,330 35,462 Marquette 5,476 5,837 20,431 22,651 Waterloo 18,818 18,814 58,918 58,680 ------ ------ ------ ------ Iowa Total 52,785 55,585 173,832 185,488 ------ ------ ------- ------- Colorado Black Hawk 27,343 28,054 95,728 92,667 ------ ------ ------ ------ Florida Pompano 34,623 33,752 93,990 101,772 ------ ------ ------ ------- Property Net Revenues before Other 226,363 241,706 729,718 762,805 Insurance Recoveries - Biloxi(5) - 60,000 60,000 Other 622 113 1,023 341 --- --- ----- --- Net Revenues from Continuing Operations $226,985 $301,819 $730,741 $823,146 ======== ======== ======== ======== Isle of Capri Casinos, Inc. Supplemental Data - EBITDA (1) (unaudited, in thousands) Three Months Ended Nine Months Ended ------------------ ----------------- January 24, January 25, January 24, January 25, 2010 2009 2010 2009 ---- ---- ---- ---- Mississippi Biloxi(5) $(614) $734 $3,278 $6,980 Natchez 1,882 3,103 7,009 8,810 Lula 3,968 4,164 12,255 13,790 ----- ----- ------ ------ Mississippi Total 5,236 8,001 22,542 29,580 ----- ----- ------ ------ Louisiana Lake Charles 4,521 8,662 16,357 24,816 ----- ----- ------ ------ Missouri Kansas City 3,260 3,234 11,860 9,511 Boonville 5,497 5,577 18,798 17,920 Caruthersville 1,475 1,202 4,368 4,151 ----- ----- ----- ----- Missouri Total 10,232 10,013 35,026 31,582 ------ ------ ------ ------ Iowa Bettendorf 4,233 5,227 15,501 22,741 Davenport 2,800 3,096 9,487 10,605 Marquette 549 470 3,718 5,157 Waterloo 4,742 4,424 16,100 16,146 ----- ----- ------ ------ Iowa Total 12,324 13,217 44,806 54,649 ------ ------ ------ ------ Colorado Black Hawk 5,236 6,421 22,829 23,748 ----- ----- ------ ------ Florida Pompano 2,429 2,266 4,106 4,273 ----- ----- ----- ----- Property EBITDA Before Corporate and Other Items 39,978 48,580 145,666 168,648 Corporate and Other (10,504) (8,928) (32,388) (32,225) ------ ----- ------ ------ EBITDA Before Other Items 29,474 39,652 113,278 136,423 Other Items: Expense Recoveries and Other (2) - - 6,762 (6,000) Marquette Hotel Demolition(3) - - (475) - Caruthersville Property Tax Settlement(4) - - 934 - Insurance Recoveries - Biloxi(5) - 92,179 - 92,179 --- ------ --- ------ EBITDA from Continuing Operations $29,474 $131,831 $120,499 $222,602 ======= ======== ======== ======== Isle of Capri Casinos, Inc. Supplemental Data - Reconciliation of Operating Income to EBITDA (1) (unaudited, in thousands) Three Months Ended Three Months Ended January 24, 2010 January 25, 2009 ------------------------------ ----------------------------- Depreciation Depreciation Operating and Operating and Income Amortization EBITDA Income Amortization EBITDA ------ ------------ ------ ------ ------------ ------ Mississippi Biloxi(5) $(4,034) $3,420 $(614) $(3,363) $4,097 $734 Natchez 1,468 414 1,882 2,412 691 3,103 Lula 1,996 1,972 3,968 2,132 2,032 4,164 ----- ----- ----- ----- ----- ----- Mississippi Total (570) 5,806 5,236 1,181 6,820 8,001 --- ----- ----- ----- ----- ----- Louisiana Lake Charles 2,047 2,474 4,521 5,584 3,078 8,662 Missouri Kansas City 2,337 923 3,260 2,063 1,171 3,234 Boonville 4,398 1,099 5,497 4,365 1,212 5,577 Caruthersville 578 897 1,475 28 1,174 1,202 --- --- ----- --- ----- ----- Missouri Total 7,313 2,919 10,232 6,456 3,557 10,013 ----- ----- ----- ----- ----- ------ Iowa Bettendorf 2,081 2,152 4,233 2,981 2,246 5,227 Davenport 2,096 704 2,800 2,060 1,036 3,096 Marquette (61) 610 549 (150) 620 470 Waterloo 1,797 2,945 4,742 1,501 2,923 4,424 ----- ----- ----- ----- ----- ----- Iowa Total 5,913 6,411 12,324 6,392 6,825 13,217 ----- ----- ----- ----- ----- ------ Colorado Black Hawk 1,585 3,651 5,236 2,539 3,882 6,421 ----- ----- ----- ----- ----- ----- Florida Pompano (1,914) 4,343 2,429 (1,961) 4,227 2,266 ----- ----- ----- ----- ----- ----- Total Property Before Corporate and Other Items 14,374 25,604 39,978 20,191 28,389 48,580 Corporate and Other (11,698) 1,194 (10,504) (10,386) 1,458 (8,928) ------ ----- ------ ------ ----- ----- Total Before Other Items 2,676 26,798 29,474 9,805 29,847 39,652 Other Items: Insurance Recoveries - Biloxi(5) - 92,179 92,179 --- --- --- ------ --- ------ Total From Continuing Operations $2,676 $26,798 $29,474 $101,984 $29,847 $131,831 ====== ======= ======= ======== ======= ======== Isle of Capri Casinos, Inc. Supplemental Data - Reconciliation of Operating Income to EBITDA (1) (unaudited, in thousands) Nine Months Ended Nine Months Ended January 24, 2010 January 25, 2009 ------------------------------ ----------------------------- Depreciation Depreciation Operating and Operating and Income Amortization EBITDA Income Amortization EBITDA ------ ------------ ------ ------ ------------ ------ Mississippi Biloxi(5) $(7,281) $10,559 $3,278 $(6,094) $13,074 $6,980 Natchez 5,561 1,448 7,009 6,430 2,380 8,810 Lula 6,051 6,204 12,255 7,384 6,406 13,790 ----- ----- ------ ----- ----- ------ Mississippi Total 4,331 18,211 22,542 7,720 21,860 29,580 ----- ----- ----- ----- ------ ------ Louisiana Lake Charles 8,548 7,809 16,357 15,293 9,523 24,816 ----- ----- ------ ------ ----- ------ Missouri Kansas City 8,861 2,999 11,860 5,920 3,591 9,511 Boonville 15,386 3,412 18,798 14,279 3,641 17,920 Caruthersville 1,727 2,641 4,368 658 3,493 4,151 ----- ----- ----- --- ----- ----- Missouri Total 25,974 9,052 35,026 20,857 10,725 31,582 ------ ----- ------ ------ ------ ------ Iowa Bettendorf 8,793 6,708 15,501 15,948 6,793 22,741 Davenport 6,988 2,499 9,487 7,383 3,222 10,605 Marquette 1,815 1,903 3,718 3,162 1,995 5,157 Waterloo 7,237 8,863 16,100 7,506 8,640 16,146 ----- ----- ------ ----- ----- ------ Iowa Total 24,833 19,973 44,806 33,999 20,650 54,649 ------ ------ ------ ------ ------ ------ Colorado Black Hawk 11,544 11,285 22,829 10,891 12,857 23,748 ------ ------ ------ ------ ------ ------ Florida Pompano (8,884) 12,990 4,106 (8,332) 12,605 4,273 ----- ------ ----- ----- ------ ----- Total Property Before Corporate and Other Items 66,346 79,320 145,666 80,428 88,220 168,648 Corporate and Other (36,172) 3,784 (32,388) (36,344) 4,119 (32,225) ------ ----- ------ ------ ----- ------ Total Before Other Items 30,174 83,104 113,278 44,084 92,339 136,423 Other 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 - - - Insurance Recoveries - Biloxi(5) 92,179 - 92,179 --- --- --- ------ --- ------ Total From Continuing Operations $36,437 $84,062 $120,499 $130,263 $92,339 $222,602 ======= ======= ======== ======== ======= ======== 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 alter
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