UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
(Mark One)
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the quarterly period ended July 30, 2000
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the transition period from ______________________ to ______________________
Commission File Number 0-20538
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ISLE OF CAPRI CASINOS, INC.
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(Exact name of registrant as specified in its charter)
Delaware 41-1659606
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(State or other jurisdiction (I.R.S. Employer
of incorporation or organization) Identification Number)
1641 Popps Ferry Road, Biloxi, Mississippi 39532
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(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (228) 396-7000
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days. Yes x No
--
As of September 8, 2000, the Company had a total of 30,478,801 shares of Common
Stock outstanding.
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PART I
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ITEM 1. FINANCIAL STATEMENTS
CONSOLIDATED BALANCE SHEETS, JULY 30, 2000 (UNAUDITED)
AND APRIL 30, 2000. . . . . . . . . . . . . . . . . . . . . 1
CONSOLIDATED STATEMENTS OF OPERATIONS FOR THE THREE
MONTHS ENDED JULY 30, 2000 AND JULY 25, 1999 (UNAUDITED). . 2
CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY FOR THE
THREE MONTHS ENDED JULY 30, 2000 (UNAUDITED). . . . . . . . 3
CONSOLIDATED STATEMENTS OF CASH FLOWS FOR THE THREE MONTHS
ENDED JULY 30, 2000 AND JULY 25, 1999 (UNAUDITED) . . . . . 4
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS. . . . 6
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS . . . . . . . . . . . . . . . . . 19
PART II. OTHER INFORMATION
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ITEM 1. LEGAL PROCEEDINGS. . . . . . . . . . . . . . . . . . . . . . . . . 23
ITEM 2. CHANGES IN SECURITIES AND USE OF PROCEEDS. . . . . . . . . . . . . 24
ITEM 3. DEFAULTS UPON SENIOR SECURITIES. . . . . . . . . . . . . . . . . . 24
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS. . . . . . . . 24
ITEM 5. OTHER INFORMATION. . . . . . . . . . . . . . . . . . . . . . . . . 24
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K . . . . . . . . . . . . . . . . . 24
SIGNATURES. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
EXHIBIT LIST. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
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ISLE OF CAPRI CASINOS, INC.
CONSOLIDATED BALANCE SHEETS
(IN THOUSANDS, EXCEPT PER SHARE DATA)
ASSETS July 30, April 30,
------ 2000 2000
------------ ----------
(Unaudited)
Current assets:
Cash and cash equivalents . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 139,393 $ 167,972
Short term investments. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33,169 39,044
Accounts receivable:
Related party. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . - 307
Other. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7,883 6,343
Deferred income taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15,167 15,167
Prepaid expenses and other assets . . . . . . . . . . . . . . . . . . . . . . . 10,020 9,500
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Total current assets. . . . . . . . . . . . . . . . . . . . . . . . . 205,632 238,333
Property and equipment - net.. . . . . . . . . . . . . . . . . . . . . . . . . . . . 752,924 699,246
Other assets:
Investment in and advances to joint ventures. . . . . . . . . . . . . . . . . . 2,012 1,914
Property held for development or sale . . . . . . . . . . . . . . . . . . . . . 3,782 3,782
Licenses and other intangible assets, net of accumulated amortization of
$13,164 and $11,896, respectively. . . . . . . . . . . . . . . . . . . . . 89,832 91,100
Goodwill, net of accumulated amortization of
$13,728 and $11,721, respectively. . . . . . . . . . . . . . . . . . . . . 243,593 228,530
Berthing, concession, and leasehold rights, net of accumulated amortization of
$2,540 and $2,462, respectively. . . . . . . . . . . . . . . . . . . . . . 3,728 3,806
Deferred financing costs, net of accumulated amortization of $5,230 and
$4,145, respectively.. . . . . . . . . . . . . . . . . . . . . . . . . . . 24,537 25,466
Restricted cash . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6,412 5,556
Prepaid deposits and other. . . . . . . . . . . . . . . . . . . . . . . . . . . 6,705 7,781
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Total assets. . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 1,339,157 $1,305,514
============ ==========
LIABILITIES AND STOCKHOLDERS' EQUITY
------------------------------------
Current liabilities:
Current maturities of long-term debt. . . . . . . . . . . . . . . . . . . . . . $ 16,970 $ 17,400
Accounts payable:
Trade . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21,246 24,407
Related party.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . - 95
Accrued liabilities:
Interest. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22,841 10,010
Payroll and related.. . . . . . . . . . . . . . . . . . . . . . . . . . . 39,478 39,338
Property and other taxes. . . . . . . . . . . . . . . . . . . . . . . . . 16,371 16,096
Income tax payable. . . . . . . . . . . . . . . . . . . . . . . . . . . . 17,043 10,661
Progressive jackpots and slot club awards.. . . . . . . . . . . . . . . . 10,060 9,033
Other.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 46,381 34,996
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Total current liabilities.. . . . . . . . . . . . . . . . . . . . . . 190,390 162,036
Long-term debt, less current maturities. . . . . . . . . . . . . . . . . . . . . . . 940,710 945,501
Deferred income taxes. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23,358 25,763
Other accrued liabilities. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8,851 8,851
Minority interest. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9,246 7,843
Stockholders' equity:
Preferred stock, $.01 par value; 2,050 shares authorized; none issued.. . . . . - -
Common stock, $.01 par value; 45,000 shares authorized; shares issued and
outstanding: 30,465 at July 30, 2000 and 30,369 at April 30, 2000. . . . . 305 304
Class B common stock, $.01 par value; 3,000 shares authorized; none
issued . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . - -
Additional paid-in capital . . . . . . . . . . . . . . . . . . . . . . . . 126,084 125,572
Retained earnings. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40,213 29,644
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Total stockholders' equity. . . . . . . . . . . . . . . . . . . . . . 166,602 155,520
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Total liabilities and stockholders' equity. . . . . . . . . . . . . . $ 1,339,157 $1,305,514
============ ==========
</TABLE>
See notes to consolidated financial statements
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ISLE OF CAPRI CASINOS, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
(UNAUDITED)
(IN THOUSANDS, EXCEPT PER SHARE DATA)
Three Months Ended
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July 30, July 25,
2000 1999
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Revenue:
Casino. . . . . . . . . . . . . . . . . . . . . . . $ 230,335 $ 128,334
Rooms . . . . . . . . . . . . . . . . . . . . . . . 4,790 2,607
Pari-mutuel commissions and fees. . . . . . . . . . 4,921 4,733
Food, beverage and other. . . . . . . . . . . . . . 11,416 6,533
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Total revenue. . . . . . . . . . . . . . . . . 251,462 142,207
Operating Expenses:
Casino. . . . . . . . . . . . . . . . . . . . . . . 44,349 22,956
Gaming taxes. . . . . . . . . . . . . . . . . . . . 45,313 25,896
Rooms . . . . . . . . . . . . . . . . . . . . . . . 2,252 1,117
Pari-mutuel . . . . . . . . . . . . . . . . . . . . 3,601 3,627
Food, beverage and other. . . . . . . . . . . . . . 7,090 4,078
Marine and facilities . . . . . . . . . . . . . . . 14,494 8,963
Marketing and administrative. . . . . . . . . . . . 76,719 42,305
Preopening expenses . . . . . . . . . . . . . . . . - 3,420
Depreciation and amortization . . . . . . . . . . . 15,221 8,856
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Total operating expenses . . . . . . . . . . . 209,039 121,218
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Operating income. . . . . . . . . . . . . . . . . . 42,423 20,989
Interest expense. . . . . . . . . . . . . . . . . . (23,432) (12,110)
Interest income . . . . . . . . . . . . . . . . . . 2,440 708
Gain on disposal. . . . . . . . . . . . . . . . . . - 3,106
Minority interest.. . . . . . . . . . . . . . . . . (1,404) (490)
Equity in income of unconsolidated joint ventures.. - 52
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Income before income taxes. . . . . . . . . . . . . 20,027 12,255
Income tax provision. . . . . . . . . . . . . . . . 9,458 5,727
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Net income. . . . . . . . . . . . . . . . . . . . . $ 10,569 $ 6,528
========== ==========
Net income per common share - basic.. . . . . . . . $ 0.35 $ 0.28
Net income per common share - assuming dilution . . $ 0.33 $ 0.26
Weighted average basic shares . . . . . . . . . . . 30,433 23,583
Weighted average diluted shares . . . . . . . . . . 32,326 24,661
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See notes to consolidated financial statements
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ISLE OF CAPRI CASINOS, INC.
CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY
(UNAUDITED)
(IN THOUSANDS)
Shares of Additional Total
Common Common Paid-in Retained Stockholders'
Stock Stock Capital Earnings Equity
--------- ------- ----------- --------- --------------
Balance, April 30, 2000 . . . . . . . . . . . . 30,369 $ 304 $ 125,572 $ 29,644 $ 155,520
Exercise of stock options and warrants . . 96 1 512 - 513
Net income . . . . . . . . . . . . . . . . - - - 10,569 10,569
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Balance, July 30, 2000. . . . . . . . . . . . . 30,465 $ 305 $ 126,084 $ 40,213 $ 166,602
========= ======= =========== ========= ==============
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See notes to consolidated financial statements
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ISLE OF CAPRI CASINOS, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
(IN THOUSANDS)
Three Months Ended
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July 30, July 25,
2000 1999
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OPERATING ACTIVITIES:
Net income . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 10,569 $ 6,528
Adjustments to reconcile net income to net cash provided by
operating activities:
Depreciation and amortization . . . . . . . . . . . . . . . 15,221 8,856
Deferred income taxes . . . . . . . . . . . . . . . . . . . - 4,985
Amortization of bond discount and deferred financing costs. 1,086 431
Gain on disposal of assets. . . . . . . . . . . . . . . . . - (3,111)
Equity in (income) loss of unconsolidated joint ventures. . - 52
Minority interest . . . . . . . . . . . . . . . . . . . . . 1,404 490
Changes in current assets and liabilities:
Accounts receivable. . . . . . . . . . . . . . . . . . (1,233) 1,239
Income tax receivable. . . . . . . . . . . . . . . . . - 497
Prepaid expenses and other assets. . . . . . . . . . . 108 (488)
Accounts payable and accrued liabilities.. . . . . . . 11,520 7,272
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Net cash provided by operating activities. . . . . . . . . . . . 38,675 26,751
INVESTING ACTIVITIES:
Purchase of property and equipment.. . . . . . . . . . . . . . . (28,623) (18,520)
Net cash paid for acquisitions . . . . . . . . . . . . . . . . . (39,799) -
Sale of short-term investments.. . . . . . . . . . . . . . . . . 5,875 -
Proceeds from disposals of property and equipment. . . . . . . . 37 4,543
Investments in and advances to joint ventures. . . . . . . . . . (98) (158)
Restricted cash. . . . . . . . . . . . . . . . . . . . . . . . . (857) 1,544
Deposits and other . . . . . . . . . . . . . . . . . . . . . . . 1,076 61
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Net cash used in investing activities. . . . . . . . . . . . . . (62,389) (12,530)
FINANCING ACTIVITIES:
Principal payments on debt and cash paid to retire debt. . . . . (5,221) (1,713)
Deferred financing costs . . . . . . . . . . . . . . . . . . . . (157) -
Proceeds from exercise of stock options and warrants . . . . . . 513 48
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Net cash used in financing activities. . . . . . . . . . . . . . (4,865) (1,665)
Net increase (decrease) in cash and cash equivalents . . . . . . (28,579) 12,556
Cash and cash equivalents at beginning of period . . . . . . . . 167,972 85,117
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Cash and cash equivalents at end of period . . . . . . . . . . . $ 139,393 $ 97,673
========== ==========
</TABLE>
See notes to consolidated financial statements
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ISLE OF CAPRI CASINOS, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS (CONTINUED)
(UNAUDITED)
(IN THOUSANDS)
Three Months Ended
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July 30, July 25,
2000 1999
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SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
Cash payments (receipts) for:
Interest . . . . . . . . . . . . . . . . . . . . . . $ 24,304 $ 1,641
Income taxes - net of refunds. . . . . . . . . . . . 3,076 (157)
SUPPLEMENTAL SCHEDULE OF NONCASH INVESTING AND FINANCING
ACTIVITIES:
Notes Payable and Debt issued for:
Property and equipment.. . . . . . . . . . . . . . . - 2,564
Other:
Construction costs funded through accounts payable . 4,055 -
Acquisitions of businesses:
Fair value of assets acquired. . . . . . . . . . . . 51,894 -
Less fair value of liabilities assumed . . . . . . . (12,095) -
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Net cash payment . . . . . . . . . . . . . . . . . . 39,799 -
========== ==========
</TABLE>
See notes to consolidated financial statements
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ISLE OF CAPRI CASINOS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Basis of Presentation
Isle of Capri Casinos, Inc. (the "Company" or "Isle of Capri"), was
incorporated as a Delaware corporation on February 14, 1990. The Company,
through its subsidiaries, is engaged in the business of developing, owning and
operating riverboat, dockside and land-based casinos and related facilities.
The Company has licenses to conduct and currently conducts gaming operations in
Biloxi, Vicksburg, Tunica, Natchez and Lula, Mississippi, in Bossier City and
Lake Charles, Louisiana, in Bettendorf and Marquette, Iowa, in Kansas City,
Missouri and in Black Hawk, Colorado through its subsidiaries. The Company is
also undertaking development projects in Boonville and St. Louis, Missouri.
The accompanying unaudited consolidated financial statements have been
prepared in accordance with generally accepted accounting principles for interim
financial information and with the instructions to Form 10-Q and Article 10 of
Regulation S-X. Accordingly, they do not include all of the information and
footnotes required by generally accepted accounting principles for complete
financial statements. In the opinion of management, all adjustments, consisting
of normal recurring adjustments considered necessary for a fair presentation
have been included. Operating results for the three month period ended July 30,
2000 are not necessarily indicative of the results that may be expected for the
fiscal year ending April 29, 2001. For further information, refer to the
consolidated financial statements and footnotes thereto included in the
Company's annual report on Form 10-K for the fiscal year ended April 30, 2000.
The consolidated financial statements of the Company include the accounts
of Isle of Capri Casinos, Inc. and its subsidiaries. All material intercompany
balances and transactions have been eliminated in consolidation.
The preparation of financial statements in conformity with generally
accepted accounting principles necessarily requires management to make estimates
and assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the financial
statements as well as revenues and expenses during the reporting period. Actual
amounts when ultimately realized could differ from those estimates.
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ISLE OF CAPRI CASINOS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
Earnings per Common Share
The following table sets forth the computation of basic and diluted earnings per
share:
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Three Months Ended
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July 30, July 25,
2000 1999
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(Unaudited)
(In thousands, except per share data)
Numerator:
Net income . . . . . . . . . . . . . . . . . . . . $ 10,569 $ 6,528
Numerator for basic earnings per share - income
available to common stockholders. . . . . . . $ 10,569 $ 6,528
Effect of diluted securities.. . . . . . . . . . . - -
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Numerator for diluted earnings per share-
income available to common stockholders after
assumed conversions. . . . . . . . . . . $ 10,569 $ 6,528
========= ========
Denominator:
Denominator for basic earnings per share -
weighted - average shares . . . . . . . . . . 30,433 23,583
Effect of dilutive securities
Employee stock options and warrants . . . . . 1,893 1,078
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Dilutive potential common shares.. . . . . . . . . 1,893 1,078
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Denominator for diluted earnings per share -
adjusted weighted - average shares and
assumed conversions. . . . . . . . . . . 32,327 24,661
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BASIC EARNINGS PER SHARE.. . . . . . . . . . . . . $ 0.35 $ 0.28
========= ========
DILUTED EARNINGS PER SHARE.. . . . . . . . . . . . $ 0.33 $ 0.26
========= ========
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2. PROPERTY AND EQUIPMENT
Property and equipment is recorded at cost. Depreciation is computed using
the straight-line method over the following estimated useful lives:
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Slot machines. . . . . . . . . . . 3
Furniture, fixtures, and equipment 5-10
Leasehold improvements . . . . . . 10-39.5
Riverboats and floating pavilions. 25
Buildings and improvements . . . . 39.5
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ISLE OF CAPRI CASINOS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
3. OTHER ASSETS
Licenses and other intangible assets
Licenses and other intangible assets principally represent the license
value attributed to the Louisiana gaming licenses acquired through the Company's
acquisition of St. Charles Gaming Company, Inc. ("SCGC"), Grand Palais
Riverboat, Inc. ("GPRI") and Louisiana Riverboat Gaming Partnership ("LRGP") and
the value of the Lady Luck Gaming Corporation ("Lady Luck") trademarks, player
database and workforce acquired in the acquisition of Lady Luck Gaming
Corporation. These assets are being amortized over a twenty-five-year period
using the straight-line method.
Goodwill
Goodwill reflects the excess purchase price the Company paid in acquiring
the net identifiable tangible and intangible assets of SCGC, GPRI, LRGP, Lady
Luck and subsidiaries, BRDC, Inc., IOC Boonville, Inc. f/k/a Davis Gaming
Boonville, Inc. ("Isle-Boonville") and IOC-Kansas City, Inc. f/k/a Kansas City
Flamingo Hilton ("Isle-Kansas City"). Goodwill is being amortized over a
twenty-five-year period using the straight-line method.
Restricted cash
Restricted cash consists primarily of a certificate of deposit in the
amount of $1.5 million for the Greek Lawsuit (see footnote 9 for further
details), deposit of $1.1 million held in trust to secure the letter of credit
for Isle-Black Hawk (see footnote 8 for further details), gaming deposits
totaling $1.1 million, construction escrow related to our Boonville, MO
development of $1.0 million, workers' compensation in the amount of $0.3 million
and various other deposits totaling $1.3 million.
4. SHORT-TERM INVESTMENTS
Short-term investments consist primarily of short-term commercial paper and
certificates of deposits. The carrying amount of short-term investments
approximates fair value because of the short maturity of these instruments.
5. ISLE OF CAPRI BLACK HAWK L.L.C.
On April 25, 1997, a wholly-owned subsidiary of the Company, Casino America
of Colorado, Inc. formed Isle of Capri Black Hawk L.L.C. ("Isle-Black Hawk"), a
limited liability company, with Blackhawk Gold, Ltd., a wholly-owned subsidiary
of Nevada Gold & Casinos, Inc. Isle-Black Hawk owns a casino in Black Hawk,
Colorado, which opened on December 30, 1998. In August 2000, Isle-Black Hawk
completed the construction of a hotel containing 237 rooms at the site of the
Isle-Black Hawk. The Company has a 57% ownership interest in Isle-Black Hawk.
Isle of Capri assisted Isle of Capri Black Hawk L.L.C. by financing the
development of its hotel with loans of $5.75 million.
6. CAPRI CRUISES, L.L.C.
On April 20, 1998, the Company signed an agreement with Commodore Holdings
Limited, parent company of Commodore Cruise Line, to create a joint venture
named Capri Cruises to operate cruise ships in strategic markets. Cruise
operations began in early June 1998. As of July 30, 2000, the Company had
invested $3.0 million into this 50/50 unconsolidated joint venture, which is
operating one cruise ship from the Port of New Orleans.
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ISLE OF CAPRI CASINOS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
7. MERGERS AND ACQUISITIONS
Isle of Capri - Tunica
In March 1999 the Company acquired the original Harrah's casino facility
located in Tunica County, Mississippi for $9.5 million. The Company invested an
additional $24.0 million to equip, renovate and open this facility as an Isle of
Capri casino. The Company opened the Isle-Tunica on July 26, 1999 with
approximately 875 slot machines, 15 table games and its two trademark
restaurants. The Company is investing approximately $44.0 million more to
construct an on-site hotel with 227 rooms and two live entertainment theaters
with combined seating for 1,800 people. Construction of the hotel and theaters
is currently underway and is expected to be completed in November 2000.
Lady Luck Gaming Corporation/Gemini, Inc.
On March 2, 2000 the Company acquired Lady Luck in a merger transaction
pursuant to which Lady Luck became a wholly-owned subsidiary of the Company.
Lady Luck's common stockholders received cash in the amount of $12.00 per share
for an aggregate share consideration of approximately $59 million. Lady Luck
operated dockside riverboat casinos and hotels in Lula and Natchez, Mississippi;
owned a 50% interest in the Lady Luck Casino and Hotel in Bettendorf, Iowa; and
on October 29, 1999, acquired the Miss Marquette Casino in Marquette, Iowa for
$41.7 million. In November 1999, the Company made a secured loan of
approximately $21.0 million to Lady Luck in order to assist Lady Luck in
consummating its acquisition of the Miss Marquette. On March 2, 2000, the
Company also completed the acquisition of certain intellectual property from
entities owned by Lady Luck's former chairman for $31.0 million
contemporaneously with the merger. The Company expects to complete the
acquisition of the Lady Luck Casino and Hotel in Las Vegas in September 2000,
subject to the satisfaction of certain closing conditions. The acquisition
price for the Las Vegas facility is $14.5 million.
BRDC, Inc.
On March 2, 2000 the Company merged with BRDC which owned a 50% interest in
Lady Luck's Bettendorf, Iowa facility that was not owned by Lady Luck and
related real estate in exchange for 6.3 million shares of the Company's common
stock, subject to post-closing adjustment in certain circumstances totaling
$153,000. BRDC was owned by members of the family of Bernard Goldstein, the
Company's Chairman and Chief Executive Officer, including Robert Goldstein, a
member of the Company's board of directors.
Davis Gaming Boonville, Inc.
On May 3, 2000, the Company acquired IOC-Boonville, which has preliminary
approval to develop a gaming facility in Boonville, Missouri. Isle of Capri
intends to develop a casino project in Boonville with a total expected
investment of approximately $75.0 million which includes the purchase price paid
of $11.5 million. Isle of Capri has begun construction on this project and
intends to fund this development through its Amended and Restated Senior Credit
Facility. The Company expects to complete the project in the fall of 2001.
Flamingo Hilton Riverboat Casino, L.P.
On June 6, 2000, Isle of Capri acquired certain assets of the Flamingo
Hilton Riverboat Casinos in Kansas City, Missouri from Flamingo Hilton
Riverboat, L.P., a subsidiary of Hilton Hotels Corporation for $33.5 million
cash less certain assumed liabilities. Isle of Capri anticipates investing up
to an additional $15.0 million in this project, primarily to re-theme the
casino into an Isle of Capri Casino. Isle of Capri funded the acquisition and
intends to fund the re-theming through its Amended and Restated Senior Credit
Facility.
<PAGE>
ISLE OF CAPRI CASINOS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
7. MERGERS AND ACQUISITIONS (CONTINUED)
President Casinos, Inc. - Davenport
On July 18, 2000, the Company signed an agreement to purchase the assets
comprising the President Casino and Hotel in Davenport, Iowa from a subsidiary
of President Casinos, Inc. for $58.2 million. The closing of the transaction is
subject to a number of conditions including the receipt of necessary approvals
including regulatory approval and approval of the City of Davenport and the
Riverfront Development Authority, the non-profit organization which holds the
gaming license for the Davenport facility.
Jefferson County, Missouri
On July 26, 2000, the Company announced that the Missouri Gaming Commission
selected its Jefferson County, Missouri project for development. The project
will primarily serve the South St. Louis metropolitan area. The project is
expected to include a 35,000-square-foot casino, the Isle's standard
signature restaurants, a 200-room hotel and an entertainment complex. The
Company expects to begin construction in 2001 and to complete the project
eighteen to twenty-four months thereafter. Isle of Capri expects to invest
approximately $105 million in the project. A town located near the site of the
Company's proposed development has indicated that it intends to annex the
Company's site in order to prevent development of the project. The Company
intends to vigorously oppose these efforts; however, development of the project
could be delayed.
The statements of operations reflect results of operations of these
acquisitions as of the acquisition date.
8. LONG-TERM DEBT
<TABLE>
<CAPTION>
<S> <C> <C>
July 30, April 30,
2000 2000
---------- ----------
Long-term debt consists of the following: (In thousands)
8 3/4 % senior subordinated notes (described below) . . . . . . . . . . . . . . . . $ 390,000 $ 390,000
Variable rate term loan (9.93% at July 30, 2000), due in quarterly installments
ranging from $833,333 to $4,166,667, excluding interest, through April 2004. . . 471,563 475,000
12 1/2 % note payable, due in monthly installments of $125,000, including
interest, beginning October 1997 through October 2005. . . . . . . . . . . . . . 5,622 5,818
8 % note payable, due in monthly installments of $66,667, including interest,
through July 2002. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,417 1,587
8 % note payable, due in monthly installments of $11,365, including interest,
through December 2015. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,203 1,213
11% note payable, issued by Isle of Capri Black Hawk L.L.C., due March 2001;
non-recourse to Isle of Capri Casinos, Inc . . . . . . . . . . . . . . . . . . . 566 768
13% First Mortgage Notes, issued by Isle of Capri Black Hawk L.L.C., due
August 2004; non-recourse to Isle of Capri Casinos, Inc. . . . . . . . . . . . . 75,000 75,000
Variable rate TIF Bonds due to City of Bettendorf, due in quarterly installments
of various amounts, not including interest; Tax Incremental Financing Payable -
Interest of approximately 6.7% payments made through incremental property
taxes to the City until paid in full, maturity no later than 2011. . . . . . . . 7,184 7,184
Other.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5,125 6,331
---------- ----------
957,680 962,901
Less: current maturities. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16,970 17,400
---------- ----------
Long-term debt. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 940,710 $ 945,501
========== ==========
</TABLE>
<PAGE>
ISLE OF CAPRI CASINOS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
8. LONG-TERM DEBT (CONTINUED)
On April 23, 1999, the Company issued $390,000,000 of 8 3/4 % Senior
Subordinated Notes due 2009 (the "Senior Subordinated Notes"). The Senior
Subordinated Notes are guaranteed by all of the Company's significant
subsidiaries, excluding the subsidiaries that own and operate the Isle-Black
Hawk. Interest on the Senior Subordinated Notes is payable semi-annually on
each April 15 and October 15 through maturity. The Senior Subordinated Notes
are redeemable, in whole or in part, at the Company's option at any time on or
after April 15, 2004 at the redemption prices (expressed as percentages of
principal amount) set forth below plus accrued and unpaid interest to the
applicable redemption date, if redeemed during the 12-month period beginning on
April 15 of the years indicated below:
<TABLE>
<CAPTION>
<S> <C>
Year Percentage
---- ----------
2004.. . . . . . . . 104.375%
2005.. . . . . . . . 102.917%
2006.. . . . . . . . 101.458%
2007 and thereafter. 100.000%
</TABLE>
The Company issued the Senior Subordinated Notes under an indenture between
the Company, the subsidiary guarantors and a trustee. The indenture, among other
things, restricts the ability of the Company and its restricted subsidiaries to
borrow money, make restricted payments, use assets as security in other
transactions, enter into transactions with affiliates, or pay dividends on or
repurchase its stock or its restricted subsidiaries' stock. The Company is also
restricted in its ability to issue and sell capital stock of its subsidiaries
and in its ability to sell assets in excess of specified amounts or merge with
or into other companies.
A substantial part of the proceeds from the Senior Subordinated Notes was
used to prepay long-term debt, including all of the $315,000,000 of 12 1/2 %
Senior Secured Notes due 2003. The proceeds were also used to pay prepayment
premiums, accrued interest and other transaction fees and costs.
On March 2, 2000 Isle of Capri amended and restated its Senior Credit
Facility in connection with the acquisition of Lady Luck and BRDC, as well as to
provide financing for the acquisitions of the Flamingo Hilton Riverboat Casino
in Kansas City, Missouri and of IOC-Boonville and the construction of a facility
at that location. The previous $175.0 million Senior Credit Facility was
expanded under the amended and restated agreement to a $600.0 million Senior
Credit Facility, including a $125.0 million revolver, which was undrawn as of
July 30, 2000. On March 2, 2000, $475.0 million in term loans were funded under
the Company's Amended and Restated Senior Credit Facility in connection with the
acquisition of Lady Luck and BRDC. A portion of the initial $475.0 million
funding was also used to repay outstanding amounts under the existing credit
facility and to fund the redemption of Lady Luck notes and preferred stock.
The Amended and Restated Senior Credit Facility is secured by liens on
substantially all of the Company's assets and guaranteed by all of its
significant restricted subsidiaries, excluding Casino America of Colorado, Inc.,
Isle-Black Hawk, and their subsidiaries. Isle of Capri must repay all amounts
borrowed under its Amended and Restated Senior Credit Facility by March 2007.
Isle of Capri is required to make quarterly principal payments on the $475.0
million term loan portion of its Senior Credit Facility which began in March
2000. Such payments are initially $3.4 million per quarter and will increase by
$1.25 million per quarter in July of each year that the term loan is
outstanding. In addition, Isle of Capri will be required to make substantial
quarterly interest payments on the outstanding balance of its Amended and
Restated Senior Credit Facility and interest payments of $17.1 million
semi-annually on its 8 3/4 % Senior Subordinated Notes.
<PAGE>
ISLE OF CAPRI CASINOS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
8. LONG-TERM DEBT (CONTINUED)
On August 20, 1997, Isle-Black Hawk issued $75 million of 13% First
Mortgage Notes due 2004 with Contingent Interest, which is non-recourse debt to
the Company. Interest on the First Mortgage Notes is payable semi-annually on
February 28 and August 31 of each year, commencing February 28, 1998.
Additionally, contingent interest is payable on the First Mortgage Notes on each
interest payment date, in an aggregate principal amount of 5% of the
Consolidated Cash Flow (as defined in the Indenture governing the First Mortgage
Notes). In February 2000, Isle-Black Hawk made its first contingent interest
payment totaling $1.0 million as required by the Isle-Black Hawk's First
Mortgage Notes. The amount of contingent interest expense recorded for the
three months ended July 30, 2000 and July 25, 1999 was $310,000 and $218,000,
respectively.
The First Mortgage Notes are redeemable at the option of Isle-Black Hawk,
in whole or in part, at any time on or after August 1, 2001 at the redemption
prices (expressed as percentages of principal amount) set forth below plus
accrued and unpaid interest to the redemption date, if redeemed during the
12-month period beginning on August 31 of the years indicated below:
<TABLE>
<CAPTION>
<S> <C>
Year Percentage
---- ----------
2001.. . . . . . . . 106.500%
2002.. . . . . . . . 103.200%
2003.. . . . . . . . 100.000%
2004 and thereafter. 100.000%
</TABLE>
On June 5, 2000, the Isle-Black Hawk offered to purchase for cash up to
$1,246,000 principal amount of their 13% First Mortgage Notes dues 2004 at a
price of $1,010 per $1,000 principal amount, plus interest accrued up to, but
not including, the Payment Date in accordance with the terms of its indenture.
No Notes were tendered for purchase. Isle-Black Hawk is required to make an
offer based upon excess cash flow every year during the term of the bonds.
Isle of Capri has $4.5 million available in bank lines of credit other than
the Senior Credit Facility. As of July 30, 2000, Isle of Capri had no
outstanding balances under these lines of credit.
Isle-Black Hawk obtained a letter of credit as a requirement to obtain a
building permit from the City of Black Hawk. The letter of credit, totaling
$2.1 million, can be drawn upon by the City if for any reason Isle-Black Hawk
fails to complete the hotel project; certain public improvements are not
completed; or for repair and maintenance on the public improvements within one
year after completion. The letter of credit is secured by a deposit held in
trust of $1.1 million, which was funded by Isle of Capri, and the balance is
secured by Isle of Capri's open line of credit with the bank.
As part of the City of Bettendorf Development Agreement dated June 17,
1997, the City issued $9,500,000 in tax incremental financing bonds ("TIF
Bonds"), $7,500,000 of which was used by Isle-Bettendorf to construct an
overpass, parking garage, related site improvements and pay for disruption
damages caused by construction of the overpass. To enable financing of the
City's obligations, Isle-Bettendorf will pay incremental property taxes on the
developed property assessed at a valuation of not less than $32,000,000 until
the TIF Bonds mature which will be no later that 2011. Additionally, the TIF
Bonds will also be repaid from the incremental taxes on the developed property
within the defined "TIF District" which includes Isle-Bettendorf and over 100
other tax paying entities. As the TIF District will repay the TIF Bonds,
Isle-Bettendorf may not be required to fully repay the $7,500,000. In the event
that the taxes generated by the project and other qualifying developments in
the redevelopment district do not fund the repayment of the total TIF Bonds
prior to their scheduled maturity, Isle-Bettendorf will pay the City $0.25 per
person for each person entering the boat until the remaining balance has been
repaid.
Substantially all of Isle of Capri's assets are pledged as collateral for
long-term debt under the Amended and Restated Senior Credit Facility. At July
30, 2000, Isle of Capri was in compliance with all debt covenants.
<PAGE>
ISLE OF CAPRI CASINOS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
9. CONTINGENCIES
One of the Company's subsidiaries has been named, along with numerous
manufacturers, distributors and gaming operators, including many of the
country's largest gaming operators, in a consolidated class action lawsuit
pending in Las Vegas, Nevada. These gaming industry defendants are alleged to
have violated the Racketeer Influenced and Corrupt Organizations Act by engaging
in a course of fraudulent and misleading conduct intended to induce people to
play their gaming machines based upon a false belief concerning how those gaming
machines actually operate and the extent to which there is actually an
opportunity to win on any given play. The suit seeks unspecified compensatory
and punitive damages. A motion for certification of the class is currently
pending before the court and no discovery as to the merits of the alleged claims
has begun. The Company is unable at this time to determine what effect, if any,
the suit would have on its financial position or results of operations.
However, the gaming industry defendants are committed to defend vigorously all
claims asserted in the consolidated action.
In May 1998, the Company was named as a defendant in an action brought by
several persons who had a contractual right to acquire property in Cripple
Creek, Colorado which they sold to one of the Company's subsidiaries in 1995.
The plaintiffs allege that the Company breached its purported agreement to
construct a casino facility on the property by the end of 1995. In December
1998, the Company's motion to dismiss the complaint was granted by the United
States District Court in Denver, Colorado. The plaintiffs have appealed this
decision to the Tenth Circuit Court of Appeals. The Company intends to
vigorously defend all claims and allegations in the action.
In August 1997, a lawsuit was filed which seeks to nullify a contract to
which Louisiana Riverboat Gaming Partnership is a party. Pursuant to the
contract, Louisiana Riverboat Gaming Partnership pays a fixed amount plus a
percentage of revenue to various local governmental entities, including the City
of Bossier and the Bossier Parish School Board, in lieu of payment of a
per-passenger boarding fee. Summary judgment in favor of Louisiana Riverboat
Gaming Partnership was granted on June 4, 1998. That judgment was not appealed
and is now final. On June 11, 1998, a similar suit was filed and judgment was
rendered in the Company's favor on September 16, 1999 by the lower court. The
case has been reversed on appeal and remanded to the lower court for further
proceedings. The Company intends to vigorously defend this suit.
Lady Luck has been named as a defendant in a purported shareholder class
action lawsuit filed alleging violations by Lady Luck of the Securities Act of
1933, as amended (the "Securities Act") and the Securities Exchange Act of 1934,
as amended (the "Exchange Act"), for alleged material misrepresentations and
omissions in connection with Lady Luck's 1993 prospectus and initial public
offering of Common Stock. The complaint seeks, among other things, injunctive
relief, rescission and unspecified compensatory damages. While the outcome
of this matter cannot presently be determined, the Company intends to
vigorously defend the claims asserted in this action.
Lady Luck and particular joint venture partners are defendants in a lawsuit
brought by the country of Greece and its Minister of Tourism before the Greek
Multi-Member Court of First Instance. The action alleges that the defendants
failed to make specified payments in connection with the gaming license bid
process for Patras, Greece. The payments the Company is alleged to have been
required to make aggregate approximately 2.1 billion drachma (which was
approximately $5.8 million as of July 30, 2000 based on published exchange
rates). Although it is difficult to determine the damages being sought from the
lawsuit, the action may seek damages up to that aggregate amount plus interest.
The case is still in its preliminary stage and its outcome cannot be predicted
with any degree of certainty; however, the Company intends to vigorously defend
the claims asserted in this action.
The Company is currently involved in an arbitration proceeding concerning
the amount of payments owed to a party which had an interest in property owned
by the Company located in Lula, Mississippi. The claimant is seeking payments
based upon gross revenue from the Company's Lula, Mississippi facility. The
Company disputes this claim and believes that its responsibility is limited to
payments which are fixed in amount. The Company intends to vigorously defend
the claim asserted in this proceeding.
<PAGE>
ISLE OF CAPRI CASINOS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
9. CONTINGENCIES (CONTINUED)
The Company is engaged in various other litigation matters and has a number
of unresolved claims. Although the ultimate liability of this litigation and
these claims cannot be determined at this time, the Company believes that they
will not have a material adverse effect on the Company's consolidated financial
position or results of operations.
The Company is subject to certain federal, state and local environmental
protection, health and safety laws, regulations and ordinances that apply to
businesses generally, and is subject to cleanup requirements at certain of its
facilities as a result thereof. The Company has not made, and does not
anticipate making, material expenditures or incurring delays with respect to
environmental remediation or protection. However, in part because the Company's
present and future development sites have, in some cases, been used as
manufacturing facilities or other facilities that generate materials that are
required to be remediated under environmental laws and regulations, there can be
no guarantee that additional pre-existing conditions will not be discovered and
that the Company will not experience material liabilities or delays.
10. PREOPENING EXPENSES
Preopening expenses of $3.4 million represent salaries, benefits,
training, marketing and other costs incurred in connection with the opening of
the Isle-Tunica on July 26, 1999.
<PAGE>
ISLE OF CAPRI CASINOS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
11. CONSOLIDATING CONDENSED FINANCIAL INFORMATION
Certain of the Company's subsidiaries have fully and unconditionally
guaranteed the payment of all obligations under the Company's $390 million
8 3/4 % Senior Subordinated Notes due 2009. The following table presents the
consolidating condensed financial information of Isle of Capri Casinos, Inc., as
the parent company, its guarantor subsidiaries and its non-guarantor
subsidiaries as of and for the three months ended July 30, 2000 and July 25,
1999 and balance sheet as of April 30, 2000.
ISLE OF CAPRI CASINOS, INC.
CONSOLIDATING CONDENSED GUARANTOR, NONGUARANTOR AND PARENT COMPANY
FINANCIAL INFORMATION
AS OF JULY 30, 2000 (UNAUDITED) AND APRIL 30, 2000 AND FOR
THE THREE MONTHS ENDED JULY 30, 2000 AND JULY 25, 1999
(UNAUDITED)
(IN THOUSANDS)
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C>
(b)
Isle of Capri (a) Non-Wholly
Casinos, Inc. Wholly Owned Consolidating
Guarantor Owned Non- and Isle of Capri
(Parent Guarantor Guarantor Eliminating Casinos, Inc.
Obligor) Subsidiaries Subsidiaries Entries Consolidated
--------------- -------------- -------------- --------------- --------------
As of July 30, 2000, (Unaudited)
Balance Sheet
-------------------------------------------
Current assets. . . . . . . . . . . . . . . $ 77,564 $ 117,260 $ 10,808 $ - $ 205,632
Intercompany receivables. . . . . . . . . . 600,645 225,244 12 (825,901) -
Investments in subsidiaries . . . . . . . . 420,681 50 - (418,719) 2,012
Property and equipment, net . . . . . . . . 5,024 643,806 104,094 - 752,924
Other assets. . . . . . . . . . . . . . . . 44,365 330,767 3,457 - 378,589
--------------- -------------- -------------- --------------- --------------
Total assets. . . . . . . . . . . . . . . . $ 1,148,279 $ 1,317,127 $ 118,371 $ (1,244,620) $ 1,339,157
=============== ============== ============== =============== ==============
Current liabilities . . . . . . . . . . . . $ 60,946 $ 112,679 $ 16,765 $ - $ 190,390
Intercompany payable. . . . . . . . . . . . 23,788 795,158 6,952 (825,898) -
Long-term debt, less current maturities . . 851,522 14,188 75,000 - 940,710
Deferred income taxes . . . . . . . . . . . (14,801) 38,159 - - 23,358
Other accrued liabilities . . . . . . . . . - 8,851 - - 8,851
Minority interest . . . . . . . . . . . . . - - - 9,246 9,246
Stockholders' equity. . . . . . . . . . . . 226,824 348,092 19,654 (427,968) 166,602
--------------- -------------- -------------- --------------- --------------
Total liabilities and stockholders' equity. $ 1,148,279 $ 1,317,127 $ 118,371 $ (1,244,620) $ 1,339,157
=============== ============== ============== =============== ==============
</TABLE>
<PAGE>
ISLE OF CAPRI CASINOS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
11. CONSOLIDATING CONDENSED FINANCIAL INFORMATION (CONTINUED)
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C>
(b)
Isle of Capri (a) Non-Wholly
Casinos, Inc. Wholly Owned Consolidating
Guarantor Owned Non- and Isle of Capri
(Parent Guarantor Guarantor Eliminating Casinos, Inc.
Obligor) Subsidiaries Subsidiaries Entries Consolidated
--------------- -------------- -------------- --------------- --------------
For the three months ended July 30, 2000
(Unaudited)
Statement of Operations
-----------------------------------------
Revenue:
Casino . . . . . . . . . . . . . . . $ - $ 205,879 $ 24,456 $ - $ 230,335
Rooms, food, beverage and other. . . 35 19,870 1,222 - 21,127
--------------- -------------- -------------- --------------- ---------------
Total revenue . . . . . . . . . . . . . . 35 225,749 25,678 - 251,462
Operating expenses:
Casino . . . . . . . . . . . . . . . - 40,778 3,571 - 44,349
Gaming taxes . . . . . . . . . . . . - 40,509 4,804 - 45,313
Rooms, food, beverage and other. . . (1,002) 94,028 11,130 - 104,156
Depreciation and amortization. . . . 495 14,152 574 - 15,221
--------------- -------------- -------------- --------------- ---------------
Total operating expenses. . . . . . . . . (507) 189,467 20,079 - 209,039
--------------- -------------- -------------- --------------- ---------------
Operating income. . . . . . . . . . . . . 542 36,282 5,599 - 42,423
Gain on sale of assets. . . . . . . . . . - - - - -
Interest expense, net . . . . . . . . . . 1,196 (19,851) (2,337) - (20,992)
Minority interest . . . . . . . . . . . . - - - (1,404) (1,404)
Equity in income (loss) of
unconsolidated joint venture . . . . 18,292 14,100 - (32,392) -
--------------- -------------- -------------- --------------- ---------------
Income (loss) before income taxes . . . . 20,030 30,531 3,262 (33,796) 20,027
Income tax provision. . . . . . . . . . . 9,458 - - - 9,458
--------------- -------------- -------------- --------------- ---------------
Net income (loss) . . . . . . . . . . . . $ 10,572 $ 30,531 $ 3,262 $ (33,796) $ 10,569
=============== ============== ============== =============== ===============
Statement of Cash Flows
-----------------------------------------
Net cash provided by (used in)
operating activities . . . . . . . . $ 11,890 $ 42,407 $ 8,003 $ (23,625) $ 38,675
Net cash provided by (used in)
investing activities . . . . . . . . (56,286) (25,050) (4,678) 23,625 (62,389)
Net cash used in financing activities . . (3,093) (1,570) (202) - (4,865)
--------------- -------------- -------------- --------------- ---------------
Net increase (decrease) in cash and
cash equivalents . . . . . . . . . . (47,489) 15,787 3,123 - (28,579)
Cash and cash equivalents at
beginning of the period. . . . . . . 78,945 82,514 6,513 - 167,972
--------------- -------------- -------------- --------------- ---------------
Cash and cash equivalents at
end of the period. . . . . . . . . . $ 31,456 $ 98,301 $ 9,636 $ - $ 139,393
=============== ============== ============== =============== ===============
</TABLE>
<PAGE>
ISLE OF CAPRI CASINOS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
11. CONSOLIDATING CONDENSED FINANCIAL INFORMATION (CONTINUED)
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C>
(b)
Isle of Capri (a) Non-Wholly
Casinos, Inc. Wholly Owned Consolidating
Guarantor Owned Non- and Isle of Capri
(Parent Guarantor Guarantor Eliminating Casinos, Inc.
Obligor) Subsidiaries Subsidiaries Entries Consolidated
--------------- -------------- -------------- --------------- --------------
As of April 30, 2000
Balance Sheet
-------------------------------------------
Current assets. . . . . . . . . . . . . . . $ 130,939 $ 99,785 $ 7,609 $ - $ 238,333
Intercompany receivables. . . . . . . . . . 584,189 238,811 4 (823,004) -
Investments in subsidiaries . . . . . . . . 371,070 - - (369,156) 1,914
Property and equipment, net . . . . . . . . 5,229 595,306 98,711 - 699,246
Other assets. . . . . . . . . . . . . . . . 46,724 315,729 3,568 - 366,021
--------------- -------------- -------------- --------------- ---------------
Total assets. . . . . . . . . . . . . . . . $ 1,138,151 $ 1,249,631 $ 109,892 $ (1,192,160) $ 1,305,514
=============== ============== ============== =============== ===============
Current liabilities . . . . . . . . . . . . $ 44,474 $ 103,698 $ 13,769 $ - $ 161,941
Intercompany payable. . . . . . . . . . . . 23,904 794,475 4,731 (823,015) 95
Long-term debt, less current maturities . . 854,973 15,528 75,000 - 945,501
Deferred income taxes . . . . . . . . . . . (14,801) 40,564 - - 25,763
Other accrued liabilities . . . . . . . . . - 8,851 - - 8,851
Minority interest . . . . . . . . . . . . . - - - 7,843 7,843
Stockholders' equity. . . . . . . . . . . . 229,601 286,515 16,392 (376,988) 155,520
--------------- -------------- -------------- --------------- ---------------
Total liabilities and stockholders' equity. $ 1,138,151 $ 1,249,631 $ 109,892 $ (1,192,160) $ 1,305,514
=============== ============== ============== =============== ===============
For the three months ended July 25, 1999
(Unaudited)
Statement of Operations
-------------------------------------------
Revenue:
Casino . . . . . . . . . . . . . . . . $ - $ 109,300 $ 19,034 $ - $ 128,334
Rooms, food, beverage and other. . . . 69 12,609 1,195 - 13,873
--------------- -------------- -------------- --------------- ---------------
Total revenue . . . . . . . . . . . . . . . 69 121,909 20,229 - 142,207
Operating expenses:
Casino . . . . . . . . . . . . . . . . - 20,169 2,787 - 22,956
Gaming taxes . . . . . . . . . . . . . - 22,085 3,811 - 25,896
Rooms, food, beverage and other. . . . 1,452 52,691 9,367 - 63,510
Depreciation and amortization. . . . . 230 8,118 508 - 8,856
--------------- -------------- -------------- --------------- ---------------
Total operating expenses. . . . . . . . . . 1,682 103,063 16,473 - 121,218
--------------- -------------- -------------- --------------- ---------------
Operating income (loss) . . . . . . . . . . (1,613) 18,846 3,756 - 20,989
Gain on disposal. . . . . . . . . . . . . . 3,106 - - - 3,106
Interest expense, net . . . . . . . . . . . (211) (8,576) (2,615) - (11,402)
Minority interest - - - (490) (490)
Equity in income (loss) of
unconsolidated joint venture . . . . . 10,974 7,932 - (18,854) 52
--------------- -------------- -------------- --------------- ---------------
Income (loss) before income taxes . . . . . 12,256 18,202 1,141 (19,344) 12,255
Income tax provision. . . . . . . . . . . . 5,727 - - - 5,727
--------------- -------------- -------------- --------------- ---------------
Net income (loss) . . . . . . . . . . . . . $ 6,529 $ 18,202 $ 1,141 $ (19,344) $ 6,528
=============== ============== ============== =============== ===============
</TABLE>
<PAGE>
ISLE OF CAPRI CASINOS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
11. CONSOLIDATING CONDENSED FINANCIAL INFORMATION (CONTINUED)
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C>
(b)
Isle of Capri (a) Non-Wholly
Casinos, Inc. Wholly Owned Consolidating
Guarantor Owned Non- and Isle of Capri
(Parent Guarantor Guarantor Eliminating Casinos, Inc.
Obligor) Subsidiaries Subsidiaries Entries Consolidated
--------------- -------------- -------------- --------------- --------------
For the three months ended July 25, 1999
(Unaudited)
Statement of Cash Flows
-----------------------------------------
Net cash provided by (used in)
operating activities . . . . . . . . $ 10,516 $ 21,829 $ 5,280 $ (10,874) $ 26,751
Net cash provided by (used in)
investing activities . . . . . . . . (6,902) (16,035) (467) 10,874 (12,530)
Net cash used in
financing activities . . . . . . . . (812) (672) (181) - (1,665)
--------------- -------------- -------------- --------------- ---------------
Net increase in cash and
cash equivalents . . . . . . . . . . 2,802 5,122 4,632 - 12,556
Cash and cash equivalents at
beginning of the period. . . . . . . 35,826 38,374 10,917 - 85,117
--------------- -------------- -------------- --------------- ---------------
Cash and cash equivalents at
end of the period. . . . . . . . . . $ 38,628 $ 43,496 $ 15,549 $ - $ 97,673
=============== ============== ============== =============== ===============
</TABLE>
(a) Certain of the Company's wholly-owned subsidiaries were guarantors on
the 8 3/4 % Senior Subordinated Notes, including the following: Isle-Biloxi,
Isle-Vicksburg, Isle-Tunica, Isle-Bossier City, Isle-Lake Charles and PPI, Inc.
Isle-Natchez, Isle-Lula, Isle-Bettendorf, Isle-Marquette became guarantors as
of March 2, 2000, the date of the acquisition. Isle-Boonville, became a
guarantor as of May 3, 2000, the date of the acquisition. Isle-Kansas City
became a guarantor as of June 6, 2000, the date of the acquisition.
(b) The following non-wholly-owned subsidiaries were not guarantors on the
8 3/4 % Senior Subordinated Notes: Isle of Capri Black Hawk L.L.C. and Isle of
Capri Black Hawk Capital Corp.
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS.
You should read the following discussion together with the financial
statements, including the related notes, the other financial information in this
report.
The following discussion includes "forward-looking statements" within the
meaning of Section 27A of the Securities Act of 1933, as amended, and Section
21E of the Securities Exchange Act of 1934, as amended. In particular,
statements concerning the effects of increased competition in the Company's
markets, the effects of regulatory and legislative matters, the Company's plans
to make capital investments at its facilities, including, without limitation,
considerations to obtain approvals for a new project in the St. Louis
metropolitan area, development of a casino as the Isle-Boonville in Boonville,
Missouri, and development of hotels at the Isle-Lake Charles and the
Isle-Tunica, and the expansion of non-gaming amenities at all facilities,
including the conversion of the recently acquired Lady Luck Gaming facilities,
the Kansas City Flamingo Hilton Casino, and the President - Davenport, Iowa
into Isle of Capri Casinos are forward looking statements. Although the Company
believes that the expectations are reasonable, there can be no assurance that
such expectations are reasonable or that they will be correct. Actual results
may vary materially from those expected. Important factors that could cause
actual results to differ with respect to the Company's planned capital
expenditures principally include a lack of available capital resources,
construction and development risks such as shortages of materials or labor, and
unforeseen delays resulting from a failure to obtain necessary approvals.
GENERAL
Isle of Capri's results of operations for the three fiscal months ended
July 30, 2000 reflect the consolidated operations of all of Isle of Capri's
subsidiaries, including the Isle-Biloxi, the Isle-Vicksburg, the Isle-Bossier
City, the Isle-Lake Charles, the Isle-Black Hawk, the Isle-Tunica, the
Isle-Natchez, the Isle-Lula, the Isle-Bettendorf, and the Isle-Marquette.
Results also include the Isle-Kansas City subsequent to its purchase on June 6,
2000.
Isle of Capri's results of operations for the three fiscal months ended
July 25, 1999 reflect the consolidated operations of all of Isle of Capri's
subsidiaries owned at that time, including the Isle-Lake Charles, the
Isle-Bossier City, the Isle-Biloxi, the Isle-Vicksburg and the Isle-Black Hawk.
The Kansas City Flamingo Hilton Casino property was purchased on June 6, 2000,
the Lady Luck properties, Natchez, Lula, Bettendorf, and Marquette, were
purchased along with other related assets on March 2, 2000, and Isle of
Capri-Tunica commenced operations on July 26, 1999 and are not included in the
consolidated results for the three fiscal months ended July 25, 1999.
Isle of Capri believes that its historical results of operations may not
be indicative of its future results of operations because of the substantial
present and expected future increase in competition for gaming customers in each
of Isle of Capri's markets, as new casinos open and existing casinos add to or
enhance their facilities.
Isle of Capri also believes that its operating results are affected by
seasonality. Seasonality has historically caused the operating results for Isle
of Capri's first and fourth fiscal quarters ending in July and April,
respectively, to be notably better than the operating results for the second and
third fiscal quarters ending October and January, respectively.
RESULTS OF OPERATIONS
Three Fiscal Months Ended July 30, 2000 Compared to Three Fiscal Months Ended
July 25, 1999.
Total revenue for the quarter ended July 30, 2000 was $251.5 million, which
included $230.3 million of casino revenue, $4.8 million of rooms revenue, $4.9
million of pari-mutuel commissions and $11.4 million of food, beverage and other
revenue. This compares to total revenue for the prior year quarter ended July
25, 1999 of $142.2 million, which included $128.3 million of casino revenue,
$2.6 million of rooms revenue, $4.7 million of pari-mutuel commissions and $6.5
million of food, beverage and other revenue. Casino revenue increased $102.0
million or 79.5% primarily as a result of a full quarter of operations of the
former Lady Luck properties (which were acquired on March 2, 2000), the
inclusion of approximately two months of operating results from the acquisition
of Kansas City Flamingo Hilton, the improved results from Isle-Bossier City due
to the hotel opening in June of 1999, a full quarter of operations for
Isle-Tunica (which opened July 26, 1999) and the improvements at Isle-Black Hawk
and Isle-Lake Charles. Room revenue increased $2.2 million or 83.7% due to a
full quarter of operations of the former Lady Luck properties (which were
acquired on March 2, 2000) and the Isle-Bossier City's hotel opening in June of
1999. Food, beverage and other revenue increased by $4.9 million or 74.7% as
a result of a full quarter of operations of the former Lady Luck properties
(which were acquired on March 2, 2000), the inclusion of approximately two
months of operating results from the acquisition of Isle-Kansas City, the
Isle-Bossier City's hotel opening in June of 1999 and a full quarter of
operations for Isle-Tunica (which opened July 26, 1999). Revenue does not
reflect the retail value of any complimentaries.
<PAGE>
Casino operating expenses for the quarter ended July 30, 2000 totaled
$44.3 million, or 19.3% of casino revenue, versus $23.0 million, or 18.0%
of casino revenue, for the quarter ended July 25, 1999. These expenses are
primarily comprised of salaries, wages and benefits and other operating
expenses of the casinos. The increase in casino operating expenses is
attributable to the additional properties as well as improved casino revenue
at the original five Isle of Capri properties.
Operating expenses for the quarter ended July 30, 2000 also included room
expenses of $2.3 million or 47.1% of room revenue from the hotels at the
Isle-Lake Charles, Isle-Bossier City, Isle-Biloxi, Isle-Vicksburg, Isle-Natchez,
Isle-Lula, Isle-Bettendorf and Isle-Marquette as compared to $1.1 million or
42.1% of room revenue for the quarter ended July 25, 1999 from the hotels at the
Isle-Lake Charles, Isle-Bossier City, Isle-Biloxi, and the Isle-Vicksburg. Room
expenses increased primarily as a result of the expansion of the number of
hotels owned by the Isle. The increase in rooms expense as a percentage of
rooms revenue is due to costs associated with opening the new 237-room hotel at
Isle-Black Hawk hotel, as well as the acquisition of hotels with higher expense
margins. These expenses directly relate to the cost of providing hotel rooms.
Other costs of the hotels are shared with the casinos and are presented in their
respective expense categories.
State and local gaming taxes paid in Louisiana, Mississippi, Colorado, Iowa
and Missouri totaled $45.3 million for the quarter ended July 30, 2000, compared
to $25.9 million for the quarter ended July 25, 1999, which is consistent with
each state's gaming tax rate for the applicable fiscal quarters.
Food, beverage and other expenses totaled $7.1 million for the quarter
ended July 30, 2000, compared to $4.1 million for the quarter ended July 25,
1999. These expenses consist primarily of the cost of goods sold, salaries,
wages and benefits and operating expenses of these departments. These expenses
have increased as a result of the expansion in the number of properties operated
by the Isle and continued expansion of the original Isle facilities. Food and
beverage and other operating expenses as a percentage of food, beverage and
other revenues decreased from 62.4% for the quarter ending July 25, 1999 to
62.1% for the quarter ended July 30, 2000.
Marine and facilities expenses totaled $14.5 million for the quarter ended
July 30, 2000, versus $9.0 million for the quarter ended July 25, 1999. These
expenses include salaries, wages and benefits, operating expenses of the marine
crews, insurance, housekeeping and general maintenance of the riverboats and
floating pavilions. These expenses have increased as a result of the expansion
in the number of properties operated by the Isle and the maturity of Isle of
Capri's vessels and facilities.
Marketing and administrative expenses totaled $76.7 million, or 30.5% of
total revenue, for the quarter ended July 30, 2000, versus $42.3 million, or
29.7% of total revenue, for the quarter ended July 25, 1999. Marketing expenses
include salaries, wages and benefits of the marketing and sales departments, as
well as promotions, advertising, special events and entertainment.
Administrative expenses include administration and human resource department
expenses, rent, new development activities, professional fees and property
taxes. Marketing and administrative expenses have increased as a result of the
expansion in the number of properties operated by the Isle and continued
expansion of Isle facilities.
Pre-opening expenses of $3.4 million for the quarter ended July 25, 1999
represent salaries, benefits, training, marketing and other non-capitalizable
costs, which were expensed in connection with the Isle-Tunica, which opened on
July 26, 1999.
<PAGE>
Isle of Capri's results of operations for the quarter ended July 25, 1999
included a gain on disposal of $3.1 million related to the sale of an option to
purchase 135 acres of land adjacent to the Pompano Park, Inc. facility.
Depreciation and amortization expense was $15.2 million for the quarter
ended July 30, 2000 and $8.9 million for the quarter ended July 25, 1999. These
expenses relate to property and equipment, berthing and concession rights and
the amortization of intangible assets. The increase in depreciation and
amortization expense is consistent with the increase in fixed assets placed into
service or acquired.
Interest expense was $23.4 million for the quarter ended July 30, 2000,
net of capitalized interest of $1.3 million versus $12.1 million for the
quarter ended July 25, 1999, net of capitalized interest of $0.9 million.
Interest expense primarily relates to indebtedness incurred in connection with
the acquisition of property, equipment, leasehold improvements and berthing and
concession rights. Additionally, interest expense of $2.4 million, net of
capitalized interest of $0.7 million related to Isle-Black Hawk is included in
the quarter ended July 30, 2000. This compares to interest expense of $2.7
million, net of capitalized interest of $0.2 million, for the quarter ended
July 25, 1999.
Isle of Capri's effective tax rate was 47.2% prior to extraordinary items
for the quarter ended July 30, 2000 and 46.7% for the quarter ended July 25,
1999, and includes the effects of non-deductible goodwill amortization for
income tax purposes.
LIQUIDITY AND CAPITAL RESOURCES
At July 30, 2000, Isle of Capri had cash and cash equivalents of $139.4
million and short term investments of $33.2 million, compared to $168.0 million
in cash and cash equivalents and $39.0 million in short-term investments at
April 30, 2000. The decrease in cash is primarily the net result of cash inflow
from operations and cash outflow for the acquisitions of Isle-Kansas City and
Isle-Boonville, the building of hotels at Isle-Black Hawk, Isle-Lake Charles and
Isle-Tunica and the conversion of the former Lady Luck properties into Isle
Style properties. During the quarter ended July 30, 2000, Isle of Capri's
operating activities provided $38.9 million of cash, compared to $26.8 million
of cash provided by operating activities in the quarter ended July 25, 1999.
On May 3, 2000, Isle of Capri acquired IOC-Boonville, which has preliminary
approval to develop a gaming facility in Boonville, Missouri. Isle of Capri
intends to develop a casino project in Boonville with a total expected
investment of approximately $75.0 million which includes the total purchase
price paid of $11.5 million. Isle of Capri has begun construction on this
project and intends to fund this development through its Amended and Restated
Senior Credit Facility. The Company expects to complete the project in the fall
of 2001.
Additionally, on June 6, 2000, Isle of Capri acquired certain assets of the
Flamingo Hilton Riverboat Casino in Kansas City, Missouri from Flamingo Hilton
Riverboat, L.P., a subsidiary of Hilton Hotels Corporation for $33.5 million
cash less certain assumed liabilities. Isle of Capri anticipates investing up
to an additional $15.0 million in this project, primarily to re-theme the casino
into an Isle of Capri Casino. Isle of Capri funded the acquisition and intends
to fund the re-theming through its Amended and Restated Senior Credit Facility.
Isle of Capri anticipates that a significant portion of its principal
near-term capital requirements will relate to the expansion of the Isle-Tunica
and the Isle-Lake Charles. Isle of Capri plans to invest approximately $44.5
million to construct an on-site hotel at the Isle-Tunica with approximately 227
rooms and two live entertainment theaters with combined seating for
approximately 1,800 people. The hotel and theaters are scheduled to be
completed in November 2000. Isle of Capri is also constructing an on-site
250-room deluxe hotel at the Isle-Lake Charles, with an estimated cost of
approximately $33.0 million and a completion date in the fall of 2000.
Additionally, in August 2000 the Isle-Black Hawk completed construction of a
hotel containing approximately 237 rooms at the Isle-Black Hawk for
approximately $29.0 million. Isle of Capri assisted Isle of Capri Black Hawk,
LLC by financing the development of its hotel with loans of $5.75 million.
The Missouri Gaming Commission has selected the Isle of Capri's Jefferson
County, Missouri project for development. This project will primarily serve the
South St. Louis metropolitan area. Isle expects to begin construction in 2001
and to complete the project eighteen to twenty-four months thereafter. Isle of
Capri expects to invest approximately $105 million in the project. A town
located near the site of the Company's proposed development has indicated that
it intends to annex the Isle of Capri's site in order to prevent development of
the project. Isle of Capri intends to vigorously oppose these efforts; however,
development of the project could be delayed.
<PAGE>
Isle of Capri expects to complete the acquisition of the Las Vegas casino
and hotel in September 2000 subject to the satisfaction of certain closing
conditions. The acquisition price for the Las Vegas facility is $14.5 million.
A joint venture in which Isle of Capri owns 45% has applied to the
Louisiana Gaming Commission for the issuance of a gaming license in Morgan City,
Louisiana. A decision is expected from the Louisiana Gaming Commission during
the first quarter of 2001.
On July 18, 2000, the Company signed an agreement to purchase the assets
comprising the President casino and hotel in Davenport, Iowa from a subsidiary
of President Casinos, Inc., for $58.2 million. The closing of the transaction
is subject to a number of conditions including the receipt of necessary
approvals including regulatory approval and approval of the City of Davenport
and the Riverfront Development Authority, the non-profit organization which
holds the gaming license for the Davenport facility.
All of Isle of Capri's development plans are subject to obtaining permits,
licenses and approvals from appropriate regulatory and other agencies and, in
certain circumstances, negotiating acceptable leases. In addition, many of the
plans are preliminary, subject to continuing refinement or otherwise subject to
change.
In addition to the estimated $35.0 million investment to convert the Lady
Luck casinos into Isle of Capri casinos, Isle of Capri anticipates that capital
improvements approximating $6.0 million will be made during fiscal 2001 to
maintain its existing facilities and remain competitive in its markets. Isle of
Capri expects that available cash and cash from future operations, as well as
borrowings under its Senior Credit Facility, will be sufficient to fund future
expansion, planned capital expenditures, service debt and meet working capital
requirements. There is no assurance that Isle of Capri will have the capital
resources to make all of the expenditures described above or that planned
capital investments will be sufficient to allow Isle of Capri to remain
competitive in its existing markets. In addition, the indenture restricts,
among other things, Isle of Capri's ability to borrow money, create liens, make
restricted payments and sell assets.
Isle of Capri's Amended and Restated Senior Credit Facility, among other
things, restricts Isle of Capri's ability to borrow money, make capital
expenditures, use assets as security in other transactions, make restricted
payments or restricted investments, incur contingent obligations, sell assets
and enter into leases and transactions with affiliates. In addition, the Amended
and Restated Senior Credit Facility requires Isle of Capri to meet certain
financial ratios and tests, including: a minimum consolidated net worth test,
a maximum consolidated total leverage test, a maximum consolidated senior
leverage test, and a minimum consolidated fixed charge coverage test.
Isle of Capri must repay all amounts borrowed under its Amended and
Restated Senior Credit Facility by March 2007. Isle of Capri is required to
make quarterly principal payments on the $475.0 million term loan portion of its
Amended and Restated Senior Credit Facility which began in March 2000. Such
payments are initially $3.4 million per quarter and will increase by $1.25
million per quarter in July of each year that the term loan is outstanding. In
addition, Isle of Capri will be required to make substantial quarterly interest
payments on the outstanding balance of its Amended and Restated Senior Credit
Facility and interest payments of $17.1 million semi-annually on its Senior
Subordinated Notes.
Isle of Capri is highly leveraged and may be unable to obtain additional
debt or equity financing on acceptable terms. As a result, limitations on Isle
of Capri's capital resources could delay or cause Isle of Capri to abandon
certain plans for capital improvements at its existing properties and
development of new properties. Isle of Capri will continue to evaluate its
planned capital expenditures at each of its existing locations in light of the
operating performance of the facilities at such locations.
<PAGE>
PART II - OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS.
One of our subsidiaries has been named, along with numerous manufacturers,
distributors and gaming operators, including many of the country's largest
gaming operators, in a consolidated class action lawsuit pending in Las Vegas,
Nevada. These gaming industry defendants are alleged to have violated the
Racketeer Influenced and Corrupt Organizations Act by engaging in a course of
fraudulent and misleading conduct intended to induce people to play their gaming
machines based upon a false belief concerning how those gaming machines actually
operate and the extent to which there is actually an opportunity to win on any
given play. The suit seeks unspecified compensatory and punitive damages. A
motion for certification of the class is currently pending before the court and
no discovery as to the merits of the alleged claims has begun. We are unable at
this time to determine what effect, if any, the suit would have on our financial
position or results of operations. However, the gaming industry defendants are
committed to defend vigorously all claims asserted in the consolidated action.
In May 1998, we were named as a defendant in an action brought by several
persons who had a contractual right to acquire property in Cripple Creek,
Colorado which they sold to one of our subsidiaries in 1995. The plaintiffs
allege that we breached our purported agreement to construct a casino facility
on the property by the end of 1995. In December 1998, our motion to dismiss the
complaint was granted by the United States District Court in Denver, Colorado.
The plaintiffs have appealed this decision to the Tenth Circuit Court of
Appeals. We intend to vigorously defend all claims and allegations in the
action.
In August 1997, a lawsuit was filed which seeks to nullify a contract to
which Louisiana Riverboat Gaming Partnership is a party. Pursuant to the
contract, Louisiana Riverboat Gaming Partnership pays a fixed amount plus a
percentage of revenue to various local governmental entities, including the City
of Bossier and the Bossier Parish School Board, in lieu of payment of a
per-passenger boarding fee. Summary judgment in favor of Louisiana Riverboat
Gaming Partnership was granted on June 4, 1998. That judgment was not appealed
and is now final. On June 11, 1998, a similar suit was filed and judgment was
rendered in our favor on September 16, 1999 by the lower court. The case has
been reversed on appeal and remanded to the lower court for further proceedings.
We intend to vigorously defend this suit.
Lady Luck has been named as a defendant in a purported shareholder class
action lawsuit alleging violations by Lady Luck of the Securities Act of 1933,
as amended (the "Securities Act") and the Securities Exchange Act of 1934, as
amended (the "Exchange Act"), for alleged material misrepresentations and
omissions in connection with Lady Luck's 1993 prospectus and initial public
offering of Common Stock. The complaint seeks, among other things, injunctive
relief, rescission and unspecified compensatory damages. While the outcome of
this matter cannot presently be determined, we intend to vigorously defend the
claims asserted in this action.
Lady Luck and particular joint venture partners are defendants in a lawsuit
brought by the country of Greece and its Minister of Tourism before the Greek
Multi-Member Court of First Instance. The action alleges that the defendants
failed to make specified payments in connection with the gaming license bid
process for Patras, Greece. The payments the Company is alleged to have been
required to make aggregate approximately 2.1 billion drachma (which was
approximately $5.8 million as of July 30, 2000 based on published exchange
rates). Although it is difficult to determine the damages being sought from the
lawsuit, the action may seek damages up to that aggregate amount plus interest.
The case is still in its preliminary stage and its outcome cannot be predicted
with any degree of certainty. However, we intend to vigorously defend the
claims asserted in this action.
Isle of Capri is currently involved in an arbitration proceeding concerning
the amount of payments owed to a party which had an interest in property owned
by the company located in Lula, Mississippi. The claimant is seeking payments
based upon gross revenue from our Lula, Mississippi facility. We dispute this
claim and believe that our responsibility is limited to payments which are fixed
in amount. We intend to vigorously defend the claim asserted in this
proceeding.
We are engaged in various other litigation matters and have a number of
unresolved claims. Although the ultimate liability of this litigation and these
claims cannot be determined at this time, we believe that they will not have a
material adverse effect on our consolidated financial position or results of
operations.
<PAGE>
ITEM 2. CHANGES IN SECURITIES.
None.
ITEM 3. DEFAULTS UPON SENIOR SECURITIES.
None.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.
None.
ITEM 5. OTHER INFORMATION.
None.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K.
<TABLE>
<CAPTION>
<S> <C> <C> <C>
(a) Documents Filed as Part of this Report.
---------------------------------------
1. Exhibits.
---------
A list of the exhibits included as part of this Form 10-Q is set forth
in the Exhibit Index that immediately precede such exhibits, which is
incorporated herein by reference.
2. Reports on Form 8-K.
--------------------
During the quarter ended July 30, 2000, the Company filed the following
reports on Form 8-K:
Current Report on Form 8-K filed on June 15, 2000, regarding Item 5 which
announced the Company's earnings for the fourth quarter and fiscal year
ended April 30, 2000.
</TABLE>
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
ISLE OF CAPRI CASINOS, INC.
Dated: September 13, 2000 /s/ Rexford A. Yeisley
--------------------------
Rexford A. Yeisley, Chief Financial Officer
(Principal Financial and Accounting Officer)
<PAGE>
INDEX TO EXHIBITS
EXHIBIT
NUMBER EXHIBIT
------ -------
27 Financial Data Schedule.
