Isle of Capri boosts financial flexibility, allows for future spending

By Jennifer Lanning Drey

Portland, Ore., June 10 - Isle of Capri Casinos, Inc. boosted its financial flexibility in fiscal 2009, allowing the company to consider capital projects and acquisitions once visibility into the direction of the economy improves, Dale Black, chief financial officer of Isle of Capri, said Wednesday during the company's earnings call for the fourth quarter of fiscal 2009.

Isle of Capri ended the fiscal year with $96.7 million of cash and cash equivalents and $1.3 billion in total debt at April 26.

During fiscal 2009, the company improved its financial flexibility by completing a $142.7 million cash tender offer for its debt and settling its remaining insurance claims related to Hurricane Katrina for $95 million.

The company also said it has stabilized margins and profitability by increasing cash flow at domestic locations.

Isle of Capri's improved financial position provides greater ability to consider strategic investments, but Isle of Capri will only invest in projects it believes will further improve the balance sheet and increase cash flow.

The company plans to limit capital spending to $40 million of maintenance-related expenditures in 2009 but has another $60 million of potential projects cued up for the next few years, some of which could begin being considered in the second half of fiscal 2010, Black said.

Acquisition opportunities

Isle of Capri also believes there will be opportunities for it to acquire properties anywhere from the Alleghany Mountains to the Rocky Mountains in the next few years, Black said.

"If we can position ourselves to be the logical acquirer of some of these assets, in certain circumstances, because of the availability of capital we have through our revolver, it absolutely can help strengthen the company," Black said.

The CFO also said the company wouldn't rule out any avenue for potentially improving its capital structure, including issuing additional equity.

The company's goal is to be under 5-times leverage within the next two years, according to its earnings release.

Earnings improve

Isle of Capri posted fourth-quarter net income of $14.6 million, compared to a net loss of $51.3 million in the prior-year quarter. Net revenue decreased slightly to $287.2 million in the fourth quarter, compared to $292.6 million in the fiscal 2008 period.

Adjusted for one-time items, EBITDA was $57.9 million for the fourth quarter, compared to $54.1 million in the same period of 2008.

The company has seen signs of improvement since the start of the calendar year but will continue to employ a cautious approach to the business as a result of continued economic uncertainty.

Isle of Capri, based in Biloxi, Miss., develops, owns and operates casinos.

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