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Press Release: Isle of Capri Casinos, Inc.
November 19, 2002
BILOXI, MS -- Isle of Capri Casinos, Inc. (Nasdaq: ISLE) yesterday reported financial results for the second quarter
and six-month period ended October 27, 2002. For the second quarter, the company reported net income of $7.9 million
or $0.26 per diluted share. This compares to net income for the prior year's period of $10.4 million, or $0.35
per diluted share.
During the second quarter, Isle of Capri Casinos posted net revenues of $260.1 million, compared to $260.5 million
for the same period in fiscal 2002. Earnings before interest, taxes, depreciation and amortization (EBITDA), as
adjusted for certain items, decreased 9% to $53.7 million, compared to last year's second quarter. EBITDA is considered
a key measure of the company's operating cash flow.
For the first six months of fiscal 2003, Isle of Capri Casinos reported net income of $20.1 million, or $0.66 per
diluted share. This compares to net income for the prior year's period of $16.3 million, or $0.55 per diluted share.
Net revenue for the first six months of fiscal 2003 was $536.8 million, up from $523.4 million for the comparable
period in the previous year. EBITDA, as adjusted for certain items, in the six-month period was $114.6 million,
an increase of $3.7 million, or 3%, over the prior year six-month period EBITDA of $110.9 million.
Summarized below are the financial results for the company on a consolidated basis:
Three Months Ended Six Months Ended
10/27/02 10/28/01 10/27/02 10/28/01
(Unaudited)
(In thousands, except per share data)
Net revenues $260,113 $260,506 $536,776 $523,442
Net income $7,924 $10,435 $20,097 $16,289
Net income per diluted share $0.26 $0.35 $0.66 $0.55
Weighted average diluted
common shares 30,637 29,431 30,680 29,556
EBITDA, as adjusted (1) $53,738 $58,870 $114,630 $110,920
See footnotes on the following pages, for details regarding the above
operating results.
(1) See EBITDA defined in footnote (2) of Comparative Financial
Highlights.
Second Quarter Results
Operating results for the second quarter ended October 27, 2002 reflected the inclusion of operations of the Isle-Boonville
(opened December 2001) offset by a leveling off in visits to the company's properties due to overall economic conditions,
combined with a series of severe weather disruptions, including Hurricane Lily and tropical storms Hannah, Fay
and Isidore, affecting Isle of Capri Louisiana and Mississippi Gulf Coast properties and feeder markets.
The second quarter was marked by a number of significant financial and operating highlights. These were: a further
reduction of the company's debt level; increases in customer play at Isle of Capri Casino properties due to the
company's Island Gold Card and Isle Miles marketing programs; divestiture of the Tunica, Miss. property on October
7, 2002 and Las Vegas on October 30, 2002, three days after the quarter's end; and commencement of construction
of a 265-room hotel at Isle of Capri Casinos' Bossier City, La. property.
Bernard Goldstein, Isle of Capri Casinos, Inc.'s chairman and chief executive officer, said: "The company
made strides in several areas this quarter, despite facing many challenges outside of our control, including increased
competition in some of our markets. One highlight was the beginning of the expansion and improvement plan for some
of our existing properties, demonstrating our disciplined approach to growing our product."
The company reduced its total debt by $14.4 million during the second quarter, which was in line with our expectations.
In the last twelve months ended October 27, 2002, total debt, net of total cash, has been reduced by approximately
$87.0 million. This reduction in debt contributed to the second quarter $2.4 million reduction of interest expense
to prior year. For the last twelve months ended October 27, 2002, the company continued to achieve its goal of
having its ratio debt to EBITDA, as adjusted, at four times and the coverage ratio of EBITDA, as adjusted, to cash
interest at 3.0 times for the company and its restricted subsidiaries.
Island Gold Card members' contribution to revenue increased 9.1% during the quarter, compared to prior year indicating
the increased play from members of the company's players' club, which awards members with bonuses, complimentaries
and other premiums.
In addition, the company's deferred-reward portion of its Island Gold players' club, "Isle Miles," more
than doubled its enrollment during the quarter, with these participants increasing their revenue contributions
for the quarter by 13.5% as compared to the prior year.
The Isle began the implementation of One Team Member at a Time, the company's branded employee mentoring program
designed to reduce turnover and increase customer satisfaction. As well, we completed our Power to Please program
empowering every staff member, from CEO to frontline employee, with the tools to resolve customer concerns immediately.
Completion of the sale of casinos in Tunica in the second quarter and Las Vegas in the third quarter will eliminate
further losses at those properties. The company closed the Tunica casino on September 3, 2002, which was 33 days
prior to the sale; however, the company continued to incur operating expenses up until the sale date.
Construction work for the expansion of the Bossier City, La. hotel and casino began during the second quarter and
will include a hotel tower, with 265 rooms, a Kitt's Kitchen restaurant, a new pool and deck, and a 12,000- square-foot
convention/entertainment center. Completion of the approximately $50 million expansion is expected during the spring
of 2004.
John M. Gallaway, president and chief operating officer said, "The current economy, road construction disruption
and severe weather we experienced in our markets produced results below prior year. However, we were able to continue
our goal of paying down debt while not wavering from our commitment to providing a fun experience for our customers."
Summarized below are the financial results for the company on a consolidated basis, with operating highlights for
some of its gaming facilities:
Isle of Capri Casinos, Inc.
Consolidated Statements of Operations
(Unaudited)
(In thousands, except per share amounts)
Three Months Ended Six Months Ended
October 27, October 28, October 27, October 28,
2002 2001 2002 2001
Revenues:
Casino $257,094 $257,698 $527,179 $515,286
Hotel, pari-mutuel,
food, beverage
& other 53,783 54,851 111,218 114,443
Gross revenue 310,877 312,549 638,397 629,729
Less promotional
allowances 50,764 52,043 101,621 106,287
Net revenues 260,113 260,506 536,776 523,442
Operating and other
expenses:
Properties (1)(2) 201,165 197,090 411,994 403,435
Corporate and new
development 5,210 4,546 10,152 9,087
Preopening (3) -- 1,147 -- 1,537
Gain on disposal (4) -- -- -- (125)
Depreciation and
amortization 18,277 17,143 36,261 34,436
Total operating
and other expenses 224,652 219,926 458,407 448,370
Operating income 35,461 40,580 78,369 75,072
Net interest
expense (5) (20,650) (22,335) (41,690) (46,469)
Minority interest (6) (2,352) (1,991) (4,910) (3,662)
Income before
income taxes 12,459 16,254 31,769 24,941
Income tax expense 4,535 5,819 11,672 8,652
Net income $7,924 $ 10,435 $ 20,097 $ 16,289
Net income per
diluted share $0.26 $0.35 $0.66 $0.55
Weighted average
diluted common shares 30,637 29,431 30,680 29,556
(1) For the quarter ended October 28, 2001, includes $1.25 million for the
Rhythm City-Davenport and $0.25 million for the Isle-Marquette related
to business interruption insurance proceeds as a partial settlement.
(2) For the six months ended October 28, 2001, amount includes
$1.25 million for the Rhythm City-Davenport and $0.50 million for the
Isle-Marquette related to business interruption insurance proceeds as
a partial settlement.
(3) Preopening expenses relate to expenses incurred in preparation for the
opening of the Isle-Boonville on December 6, 2001.
(4) Gain on disposal relates to sale of property held for sale.
(5) Consolidated net interest expense is comprised of the following
components:
Three Months Ended Six Months Ended
October 27, October 28, October 27, October 28,
2002 2001 2002 2001
(In thousands)
Interest expense $ 20,683 $ 23,078 $ 41,804 $ 47,832
Interest income (18) (295) (83) (528)
Capitalized interest (15) (448) (31) (835)
Net interest expense $ 20,650 $ 22,335 $ 41,690 $ 46,469
Included in the consolidated interest is Isle of Capri Black Hawk L.L.C.'s
net interest expense that is comprised of the following:
Three Months Ended Six Months Ended
October 27, October 28, October 27, October 28,
2002 2001 2002 2001
(In thousands)
Interest expense $1,387 $3,059 $2,865 $6,082
Interest income (5) (72) (12) (143)
Net interest expense $1,382 $2,987 $2,853 $5,939
(6) Minority interest represents the portion of Isle of Capri Black Hawk
L.L.C.'s income before income taxes owned by an unrelated third-party.
Isle of Capri Casinos, Inc.
Comparative Financial Highlights by Casino Property
(Unaudited)
(In thousands)
THREE MONTHS ENDED
October 27,
2002
Revenue (1) EBITDA (2) Margin %
BILOXI $19,232 $4,812 25.0%
NATCHEZ 7,776 1,907 24.5%
VICKSBURG 13,598 3,617 26.6%
LULA 22,805 6,501 28.5%
TUNICA (3) 2,105 (2,115) -100.5%
BOSSIER CITY 28,882 6,102 21.1%
LAKE CHARLES 40,645 9,388 23.1%
BLACK HAWK (4) 25,919 9,239 35.6%
BETTENDORF 23,930 7,603 31.8%
DAVENPORT (6) 14,875 2,821 19.0%
MARQUETTE (6) 10,305 2,408 23.4%
KANSAS CITY 22,034 4,044 18.4%
BOONVILLE (8) 15,328 3,518 23.0%
LAS VEGAS 7,843 (303) -3.9%
CORPORATE & OTHER (9)(10) 4,836 (5,804) N/M
TOTAL $260,113 $53,738 20.7%
THREE MONTHS ENDED
October 28,
2001
Revenue (1) EBITDA (2) Margin %
BILOXI $19,861 $5,592 28.2%
NATCHEZ 8,254 1,914 23.2%
VICKSBURG 13,843 4,230 30.6%
LULA 21,640 5,755 26.6%
TUNICA (3) 7,622 (276) -3.6%
BOSSIER CITY 29,064 6,982 24.0%
LAKE CHARLES 48,758 13,208 27.1%
BLACK HAWK (4) 28,212 9,920 35.2%
BETTENDORF 24,070 7,716 32.1%
DAVENPORT (6) 14,951 3,297 22.1%
MARQUETTE (6) 9,496 2,397 25.2%
KANSAS CITY 21,494 3,215 15.0%
BOONVILLE (8) -- -- --
LAS VEGAS 9,112 (751) -8.2%
CORPORATE & OTHER (9)(10) 4,129 (4,329) N/M
TOTAL $260,506 $58,870 22.6%
SIX MONTHS ENDED
October 27,
2002
Revenue (1) EBITDA (2) Margin %
BILOXI $40,838 $9,944 24.3%
NATCHEZ 16,688 4,292 25.7%
VICKSBURG 28,149 7,943 28.2%
LULA 45,389 12,854 28.3%
TUNICA (3) 8,892 (2,310) -26.0%
BOSSIER CITY 60,535 13,581 22.4%
LAKE CHARLES 83,746 20,643 24.6%
BLACK HAWK (4) 52,630 19,045 36.2%
BETTENDORF 47,691 14,650 30.7%
DAVENPORT (5)(7) 29,846 5,648 18.9%
MARQUETTE (5)(7) 20,170 4,827 23.9%
KANSAS CITY 44,748 8,477 18.9%
BOONVILLE (8) 30,433 6,878 22.6%
LAS VEGAS 15,901 (935) -5.9%
CORPORATE & OTHER (9)(10) 11,120 (10,907) N/M
TOTAL $536,776 $114,630 21.4%
SIX MONTHS ENDED
October 28,
2001
Revenue (1) EBITDA (2) Margin %
BILOXI $40,917 $11,018 26.9%
NATCHEZ 17,200 4,675 27.2%
VICKSBURG 29,272 9,636 32.9%
LULA 43,413 9,906 22.8%
TUNICA (3) 15,973 (1,261) -7.9%
BOSSIER CITY 59,846 14,319 23.9%
LAKE CHARLES 95,956 25,830 26.9%
BLACK HAWK (4) 54,927 18,948 34.5%
BETTENDORF 48,920 14,889 30.4%
DAVENPORT (5)(7) 27,132 3,463 12.8%
MARQUETTE (5)(7) 18,526 4,389 23.7%
KANSAS CITY 43,098 5,924 13.7%
BOONVILLE (8) -- -- --
LAS VEGAS 18,288 (1,874) -10.2%
CORPORATE & OTHER (9)(10) 9,974 $(8,942) N/M
TOTAL $523,442 $110,920 21.2%
(1) Revenue is presented net of complimentaries, slot points expense and
cash coupon redemptions.
(2) EBITDA, or "earnings before interest, income taxes, depreciation and
amortization," is a supplemental financial measurement used by Isle of
Capri's management, as well as industry analysts, in the evaluation of
its business. EBITDA has been adjusted for certain items which have
been allocated to Isle of Capri and its subsidiaries based on the
entity giving rise to the adjustment. EBITDA is presented not as an
alternative measure of operating results or cash flow from operations
(as determined in accordance with GAAP), but because it is a widely
accepted financial indicator of a company's ability to incur and
service debt. All companies do not calculate EBITDA in the same
manner. As a result, EBITDA as presented here may not be comparable
to similarly titled measures reported by other companies. A
reconciliation of EBITDA with net income as determined in accordance
with GAAP is shown below.
Three Months Ended Six Months Ended
October 27, October 28, October 27, October 28,
2002 2001 2002 2001
(In thousands)
EBITDA $53,738 $58,870 $114,630 $110,920
(Add)/deduct:
Gain on disposal
of assets -- -- -- (125)
Preopening expenses -- 1,147 -- 1,537
Depreciation and
amortization 18,277 17,143 36,261 34,436
Interest expense 20,668 22,630 41,773 46,997
Interest income (18) (295) (83) (528)
Minority interest 2,352 1,991 4,910 3,662
Income tax expense 4,535 5,819 11,672 8,652
Net income $7,924 $10,435 $20,097 $16,289
(3) Isle-Tunica ceased casino operations on September 3, 2002, which was
33 days prior to the sale of assets to Boyd Casino Strip, LLC on
October 7, 2002.
(4) EBITDA excludes management fees as follows:
Three Months Ended Six Months Ended
October 27, October 28, October 27, October 28,
2002 2001 2002 2001
(In thousands)
Management Fees $1,165 $1,253 $2,352 $2,436
(5) For the six months ended October 28, 2001, the Rhythm City-Davenport
and the Isle-Marquette were closed due to flooding on the Mississippi
River for the first three weeks and the first two days, respectively,
of the period.
(6) EBITDA for the three months ended October 28, 2001, includes
$1.25 million and $0.25 million business interruption insurance
proceeds, a partial settlement, for the Rhythm City-Davenport and the
Isle-Marquette, respectively.
(7) EBITDA for the six months ended October 28, 2001, includes
$1.25 million and $0.50 million business interruption insurance
proceeds, a partial settlement, for the Rhythm City-Davenport and the
Isle-Marquette, respectively.
(8) Isle-Boonville opened December 6, 2001.
(9) N/M = Not meaningful.
(10) Corporate and other EBITDA includes miscellaneous income.
Isle of Capri Casinos, Inc. owns and operates 13 riverboat, dockside and land-based casinos at 12 locations, including
Biloxi, Vicksburg, Lula and Natchez, Mississippi; Bossier City and Lake Charles (two riverboats), Louisiana; Black
Hawk, Colorado; Bettendorf, Davenport and Marquette, Iowa; and Kansas City and Boonville, Missouri. The company
also operates Pompano Park Harness Racing Track in Pompano Beach, Florida. More information on Isle of Capri Casinos'
locations can be found at www.theislecorp.com.
Contact:
Allan B. Solomon, Executive Vice President, 561-995-6660
Rex Yeisley, Chief Financial Officer, 228-396-7052
Lori Hutzler, Director of Corporate Communications, 228-396-7031
This press release contains 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, permits, weather, 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 10-K for the fiscal year ended April 28, 2002 and on Form 10-Q for
the quarter ended July 28, 2002.
Source: Isle of Capri Casinos, Inc.