ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
The following consolidated financial statements are included in this report:
|
|
|
|
|
Report of Independent Registered Public Accounting Firm on Internal Control Over Financial Reporting
|
|
|
44
|
|
Report of Independent Registered Public Accounting Firm on Consolidated Financial Statements
|
|
|
45
|
|
Consolidated Balance SheetsApril 28, 2013 and April 29, 2012
|
|
|
46
|
|
Fiscal Years Ended April 28, 2013, April 29, 2012 and April 24, 2011
|
|
|
|
|
Consolidated Statements of Operations
|
|
|
47
|
|
Consolidated Statements of Comprehensive Income (Loss)
|
|
|
48
|
|
Consolidated Statements of Stockholders' Equity
|
|
|
49
|
|
Consolidated Statements of Cash Flows
|
|
|
50
|
|
Notes to Consolidated Financial Statements
|
|
|
51
|
|
Schedule IIValuation and Qualifying AccountsFiscal Years Ended April 28, 2013,
April 29, 2012 and April 24, 2011
|
|
|
87
|
|
43
Table of Contents
Report of Independent Registered Public Accounting Firm
The
Board of Directors and Stockholders
Isle of Capri Casinos, Inc.
We
have audited Isle of Capri Casinos, Inc.'s internal control over financial reporting as of April 28, 2013, based on criteria established in Internal
ControlIntegrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (the COSO criteria). Isle of Capri Casinos, Inc.'s management is
responsible for maintaining effective internal control over financial reporting and for its assessment of the effectiveness of internal control over financial reporting included in the accompanying
Management's Report on Internal Control over Financial Reporting. Our responsibility is to express an opinion on the company's internal control over financial reporting based on our audit.
We
conducted our audit in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether effective internal control over financial reporting was maintained in all material respects. Our audit included obtaining an understanding of internal control
over financial reporting, assessing the risk that a material weakness exists, testing and evaluating the design and operating effectiveness of internal control based on the assessed risk, and
performing such other procedures as we considered necessary in the circumstances. We believe that our audit provides a reasonable basis for our opinion.
A
company's internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of
financial statements for external purposes in accordance with generally accepted accounting principles. A company's internal control over financial reporting includes those policies and procedures
that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide
reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and
expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (3) provide reasonable assurance regarding prevention or timely
detection of unauthorized acquisition, use or disposition of the company's assets that could have a material effect on the financial statements.
Because
of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future
periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.
In
our opinion, Isle of Capri Casinos, Inc. maintained, in all material respects, effective internal control over financial reporting as of April 28, 2013, based on the
COSO criteria.
We
also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States), the consolidated balance sheets of Isle of Capri
Casinos, Inc. as of April 28, 2013 and April 29, 2012, and the related consolidated statements of operations, comprehensive income (loss), stockholders' equity, and cash flows for
the fiscal years ended April 28, 2013, April 29, 2012, and April 24, 2011, and our report dated July 2, 2013, expressed an unqualified opinion thereon.
/s/
Ernst & Young LLP
St. Louis,
Missouri
July 2, 2013
44
Table of Contents
Report of Independent Registered Public Accounting Firm
The
Board of Directors and Stockholders
Isle of Capri Casinos, Inc.
We
have audited the accompanying consolidated balance sheets of Isle of Capri Casinos, Inc. (the Company) as of April 28, 2013 and April 29, 2012, and the related
consolidated statements of operations, comprehensive income (loss), stockholders' equity, and cash flows for the fiscal years ended April 28, 2013, April 29, 2012, and April 24,
2011. Our audits also included the financial statement schedule listed in the Index at Item 15(a). These financial statements and schedule are the responsibility of the Company's management.
Our responsibility is to express an opinion on these financial statements and schedule based on our audits.
We
conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in
the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement
presentation. We believe that our audits provide a reasonable basis for our opinion.
In
our opinion, the financial statements referred to above present fairly, in all material respects, the consolidated financial position of Isle of Capri Casinos, Inc. at
April 28, 2013 and April 29, 2012, and the consolidated results of its operations and its cash flows for the years ended April 28, 2013, April 29,
2012, and April 24, 2011, in conformity with U.S. generally accepted accounting principles. Also, in our opinion, the related financial statement schedule, when considered in relation to the
basic consolidated financial statements taken as a whole, presents fairly, in all material respects, the information set forth therein.
We
also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States), Isle of Capri Casinos, Inc.'s internal control over
financial reporting as of April 28, 2013, based on the criteria established in
Internal ControlIntegrated Framework
issued by the
Committee of Sponsoring Organizations of the Treadway Commission, and our report dated July 2, 2013, expressed an unqualified opinion thereon.
/s/
Ernst & Young LLP
St. Louis,
Missouri
July 2, 2013
45
Table of Contents
ISLE OF CAPRI CASINOS, INC.
CONSOLIDATED BALANCE SHEETS
(In thousands, except share and per share amounts)
|
|
|
|
|
|
|
|
|
|
April 28,
2013
|
|
April 29,
2012
|
|
ASSETS
|
|
|
|
|
|
|
|
Current assets:
|
|
|
|
|
|
|
|
Cash and cash equivalents
|
|
$
|
68,469
|
|
$
|
94,461
|
|
Marketable securities
|
|
|
25,520
|
|
|
24,943
|
|
Accounts receivable, net of allowance for doubtful accounts of $2,086 and $2,502, respectively
|
|
|
11,077
|
|
|
6,941
|
|
Insurance receivable
|
|
|
|
|
|
7,497
|
|
Income taxes receivable
|
|
|
4,789
|
|
|
2,161
|
|
Deferred income taxes
|
|
|
1,573
|
|
|
627
|
|
Prepaid expenses and other assets
|
|
|
20,872
|
|
|
18,950
|
|
Assets held for sale
|
|
|
|
|
|
46,703
|
|
|
|
|
|
|
|
Total current assets
|
|
|
132,300
|
|
|
202,283
|
|
Property and equipment, net
|
|
|
1,034,026
|
|
|
950,014
|
|
Other assets:
|
|
|
|
|
|
|
|
Goodwill
|
|
|
280,803
|
|
|
330,903
|
|
Other intangible assets, net
|
|
|
60,748
|
|
|
56,586
|
|
Deferred financing costs, net
|
|
|
27,230
|
|
|
13,205
|
|
Restricted cash and investments
|
|
|
11,417
|
|
|
12,551
|
|
Prepaid deposits and other
|
|
|
7,075
|
|
|
9,428
|
|
|
|
|
|
|
|
Total assets
|
|
$
|
1,553,599
|
|
$
|
1,574,970
|
|
|
|
|
|
|
|
LIABILITIES AND STOCKHOLDERS' EQUITY
|
|
|
|
|
|
|
|
Current liabilities:
|
|
|
|
|
|
|
|
Current maturities of long-term debt
|
|
$
|
415
|
|
$
|
5,393
|
|
Accounts payable
|
|
|
34,533
|
|
|
23,536
|
|
Accrued liabilities:
|
|
|
|
|
|
|
|
Payroll and related
|
|
|
35,093
|
|
|
38,566
|
|
Property and other taxes
|
|
|
21,340
|
|
|
19,522
|
|
Interest
|
|
|
18,502
|
|
|
9,296
|
|
Progressive jackpots and slot club awards
|
|
|
16,579
|
|
|
14,892
|
|
Liabilities related to assets held for sale
|
|
|
|
|
|
4,362
|
|
Other
|
|
|
29,337
|
|
|
40,549
|
|
|
|
|
|
|
|
Total current liabilities
|
|
|
155,799
|
|
|
156,116
|
|
Long-term debt, less current maturities
|
|
|
1,156,469
|
|
|
1,149,038
|
|
Deferred income taxes
|
|
|
43,104
|
|
|
36,057
|
|
Other accrued liabilities
|
|
|
33,303
|
|
|
33,583
|
|
Other long-term liabilities
|
|
|
22,514
|
|
|
16,556
|
|
Stockholders' equity:
|
|
|
|
|
|
|
|
Preferred stock, $.01 par value; 2,000,000 shares authorized; none issued
|
|
|
|
|
|
|
|
Common stock, $.01 par value; 60,000,000 shares authorized; shares issued: 42,066,148 at April 28, 2013 and April 29, 2012
|
|
|
421
|
|
|
421
|
|
Class B common stock, $.01 par value; 3,000,000 shares authorized; none issued
|
|
|
|
|
|
|
|
Additional paid-in capital
|
|
|
246,214
|
|
|
247,855
|
|
Retained earnings (deficit)
|
|
|
(74,227
|
)
|
|
(26,658
|
)
|
Accumulated other comprehensive income (loss)
|
|
|
(247
|
)
|
|
(855
|
)
|
|
|
|
|
|
|
|
|
|
172,161
|
|
|
220,763
|
|
Treasury stock, 2,470,128 shares at April 28, 2013 and 3,083,867 shares at April 29, 2012
|
|
|
(29,751
|
)
|
|
(37,143
|
)
|
|
|
|
|
|
|
Total stockholders' equity
|
|
|
142,410
|
|
|
183,620
|
|
|
|
|
|
|
|
Total liabilities and stockholders' equity
|
|
$
|
1,553,599
|
|
$
|
1,574,970
|
|
|
|
|
|
|
|
See accompanying notes to consolidated financial statements.
46
Table of Contents
ISLE OF CAPRI CASINOS, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except share and per share amounts)
|
|
|
|
|
|
|
|
|
|
|
|
|
Fiscal Year Ended
|
|
|
|
April 28,
2013
|
|
April 29,
2012
|
|
April 24,
2011
|
|
Revenues:
|
|
|
|
|
|
|
|
|
|
|
Casino
|
|
$
|
1,016,005
|
|
$
|
1,006,523
|
|
$
|
968,423
|
|
Rooms
|
|
|
31,851
|
|
|
32,438
|
|
|
32,144
|
|
Food, beverage, pari-mutuel and other
|
|
|
133,377
|
|
|
128,560
|
|
|
121,955
|
|
Insurance recoveries
|
|
|
|
|
|
9,637
|
|
|
|
|
|
|
|
|
|
|
|
|
Gross revenues
|
|
|
1,181,233
|
|
|
1,177,158
|
|
|
1,122,522
|
|
Less promotional allowances
|
|
|
(216,034
|
)
|
|
(199,787
|
)
|
|
(185,861
|
)
|
|
|
|
|
|
|
|
|
Net revenues
|
|
|
965,199
|
|
|
977,371
|
|
|
936,661
|
|
Operating expenses:
|
|
|
|
|
|
|
|
|
|
|
Casino
|
|
|
156,179
|
|
|
153,743
|
|
|
142,642
|
|
Gaming taxes
|
|
|
255,105
|
|
|
251,780
|
|
|
242,949
|
|
Rooms
|
|
|
6,686
|
|
|
7,027
|
|
|
7,290
|
|
Food, beverage, pari-mutuel and other
|
|
|
42,472
|
|
|
41,281
|
|
|
40,559
|
|
Marine and facilities
|
|
|
56,421
|
|
|
57,225
|
|
|
55,211
|
|
Marketing and administrative
|
|
|
236,146
|
|
|
234,470
|
|
|
225,757
|
|
Corporate and development
|
|
|
33,953
|
|
|
40,248
|
|
|
42,709
|
|
Valuation charges
|
|
|
50,100
|
|
|
30,549
|
|
|
|
|
Preopening expense
|
|
|
5,765
|
|
|
615
|
|
|
|
|
Depreciation and amortization
|
|
|
73,419
|
|
|
76,050
|
|
|
77,613
|
|
|
|
|
|
|
|
|
|
Total operating expenses
|
|
|
916,246
|
|
|
892,988
|
|
|
834,730
|
|
|
|
|
|
|
|
|
|
Operating income
|
|
|
48,953
|
|
|
84,383
|
|
|
101,931
|
|
Interest expense
|
|
|
(89,461
|
)
|
|
(87,905
|
)
|
|
(91,935
|
)
|
Interest income
|
|
|
502
|
|
|
819
|
|
|
1,903
|
|
Derivative income (expense)
|
|
|
748
|
|
|
439
|
|
|
(1,214
|
)
|
|
|
|
|
|
|
|
|
Income (loss) from continuing operations before income taxes
|
|
|
(39,258
|
)
|
|
(2,264
|
)
|
|
10,685
|
|
Income tax provision
|
|
|
(6,732
|
)
|
|
(15,119
|
)
|
|
(6,950
|
)
|
|
|
|
|
|
|
|
|
Income (loss) from continuing operations
|
|
|
(45,990
|
)
|
|
(17,383
|
)
|
|
3,735
|
|
Income (loss) from discontinued operations, including loss on sale, net of income tax benefit of $0, $2,026 and $5,328 for the fiscal years ended 2013,
2012 and 2011, respectively
|
|
|
(1,579
|
)
|
|
(112,370
|
)
|
|
805
|
|
|
|
|
|
|
|
|
|
Net income (loss) attributable to common stockholders
|
|
$
|
(47,569
|
)
|
$
|
(129,753
|
)
|
$
|
4,540
|
|
|
|
|
|
|
|
|
|
Earnings (loss) per common share attributable to common stockholdersbasic:
|
|
|
|
|
|
|
|
|
|
|
Income (loss) from continuing operations
|
|
$
|
(1.17
|
)
|
$
|
(0.45
|
)
|
$
|
0.11
|
|
Income (loss) from discontinued operations including gain on sale, net of income taxes
|
|
|
(0.04
|
)
|
|
(2.90
|
)
|
|
0.02
|
|
|
|
|
|
|
|
|
|
Net income (loss) attributable common stockholders
|
|
$
|
(1.21
|
)
|
$
|
(3.35
|
)
|
$
|
0.13
|
|
|
|
|
|
|
|
|
|
Earnings (loss) per common share attributable to common stockholdersdiluted
|
|
|
|
|
|
|
|
|
|
|
Income (loss) from continuing operations
|
|
$
|
(1.17
|
)
|
$
|
(0.45
|
)
|
$
|
0.11
|
|
Income (loss) from discontinued operations including gain on sale, net of income taxes
|
|
|
(0.04
|
)
|
|
(2.90
|
)
|
|
0.02
|
|
|
|
|
|
|
|
|
|
Net income (loss) attributable common stockholders
|
|
$
|
(1.21
|
)
|
$
|
(3.35
|
)
|
$
|
0.13
|
|
|
|
|
|
|
|
|
|
Weighted average basic shares
|
|
|
39,340,325
|
|
|
38,753,098
|
|
|
34,066,159
|
|
Weighted average diluted shares
|
|
|
39,340,325
|
|
|
38,753,098
|
|
|
34,174,717
|
|
See accompanying notes to consolidated financial statements.
47
Table of Contents
ISLE OF CAPRI CASINOS, INC.
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)
(In thousands)
|
|
|
|
|
|
|
|
|
|
|
|
|
Fiscal Year Ended
|
|
|
|
April 28,
2013
|
|
April 29,
2012
|
|
April 24,
2011
|
|
Net income (loss)
|
|
$
|
(47,569
|
)
|
$
|
(129,753
|
)
|
$
|
4,540
|
|
Other comprehensive income, net of tax:
|
|
|
|
|
|
|
|
|
|
|
Deferred hedge adjustment, net of income tax provision of $357, $789 and $3,408 for 2013, 2012 and 2011, respectively
|
|
|
594
|
|
|
1,312
|
|
|
5,724
|
|
Unrealized gain (loss) on interest rate cap contracts, net of income tax provision (benefit) of $8, $41 and ($19) for 2013, 2012 and 2011,
respectively
|
|
|
14
|
|
|
68
|
|
|
(32
|
)
|
Foreign currency translation adjustments
|
|
|
|
|
|
|
|
|
133
|
|
|
|
|
|
|
|
|
|
Other comprehensive income
|
|
|
608
|
|
|
1,380
|
|
|
5,825
|
|
|
|
|
|
|
|
|
|
Comprehensive income (loss)
|
|
$
|
(46,961
|
)
|
$
|
(128,373
|
)
|
$
|
10,365
|
|
|
|
|
|
|
|
|
|
See accompanying notes to the consolidated financial statements.
48
Table of Contents
ISLE OF CAPRI CASINOS, INC.
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
(In thousands, except share amounts)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Shares of
Common
Stock
|
|
Common
Stock
|
|
Additional
Paid-in
Capital
|
|
Retained
Earnings
(Deficit)
|
|
Accum. Other
Comprehensive
Income (Loss)
|
|
Treasury
Stock
|
|
Total
Stockholders'
Equity
|
|
Balance, April 25, 2010
|
|
|
36,771,730
|
|
$
|
367
|
|
$
|
201,464
|
|
$
|
98,555
|
|
$
|
(8,060
|
)
|
$
|
(52,107
|
)
|
$
|
240,219
|
|
Net income
|
|
|
|
|
|
|
|
|
|
|
|
4,540
|
|
|
|
|
|
|
|
|
4,540
|
|
Other comprehensive income (loss), net of tax
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
5,825
|
|
|
|
|
|
5,825
|
|
Common stock offering
|
|
|
5,300,000
|
|
|
53
|
|
|
51,174
|
|
|
|
|
|
|
|
|
|
|
|
51,227
|
|
Exercise of stock options
|
|
|
1,500
|
|
|
|
|
|
(2
|
)
|
|
|
|
|
|
|
|
25
|
|
|
23
|
|
Issuance of deferred bonus shares
|
|
|
11,641
|
|
|
1
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1
|
|
Forfeitures and other
|
|
|
(21,302
|
)
|
|
|
|
|
(402
|
)
|
|
|
|
|
|
|
|
|
|
|
(402
|
)
|
Issuance of restricted stock
|
|
|
|
|
|
|
|
|
(5,816
|
)
|
|
|
|
|
|
|
|
5,816
|
|
|
|
|
Stock compensation expense
|
|
|
|
|
|
|
|
|
7,595
|
|
|
|
|
|
|
|
|
|
|
|
7,595
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance, April 24, 2011
|
|
|
42,063,569
|
|
|
421
|
|
|
254,013
|
|
|
103,095
|
|
|
(2,235
|
)
|
|
(46,266
|
)
|
|
309,028
|
|
Net loss
|
|
|
|
|
|
|
|
|
|
|
|
(129,753
|
)
|
|
|
|
|
|
|
|
(129,753
|
)
|
Other comprehensive income (loss), net of tax
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1,380
|
|
|
|
|
|
1,380
|
|
Exercise of stock options
|
|
|
2,000
|
|
|
|
|
|
13
|
|
|
|
|
|
|
|
|
|
|
|
13
|
|
Issuance of restricted stock
|
|
|
579
|
|
|
|
|
|
(9,123
|
)
|
|
|
|
|
|
|
|
9,123
|
|
|
|
|
Reduction of tax benefit from vested and exercised stock based compensation
|
|
|
|
|
|
|
|
|
(4,758
|
)
|
|
|
|
|
|
|
|
|
|
|
(4,758
|
)
|
Stock compensation expense
|
|
|
|
|
|
|
|
|
7,710
|
|
|
|
|
|
|
|
|
|
|
|
7,710
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance, April 29, 2012
|
|
|
42,066,148
|
|
|
421
|
|
|
247,855
|
|
|
(26,658
|
)
|
|
(855
|
)
|
|
(37,143
|
)
|
|
183,620
|
|
Net loss
|
|
|
|
|
|
|
|
|
|
|
|
(47,569
|
)
|
|
|
|
|
|
|
|
(47,569
|
)
|
Other comprehensive income (loss), net of tax
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
608
|
|
|
|
|
|
608
|
|
Exercise of stock options
|
|
|
|
|
|
|
|
|
(536
|
)
|
|
|
|
|
|
|
|
1,204
|
|
|
668
|
|
Issuance of restricted stock
|
|
|
|
|
|
|
|
|
(6,188
|
)
|
|
|
|
|
|
|
|
6,188
|
|
|
|
|
Reduction of tax benefit from vested and exercised stock based compensation
|
|
|
|
|
|
|
|
|
(10
|
)
|
|
|
|
|
|
|
|
|
|
|
(10
|
)
|
Stock compensation expense
|
|
|
|
|
|
|
|
|
5,093
|
|
|
|
|
|
|
|
|
|
|
|
5,093
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance, April 28, 2013
|
|
|
42,066,148
|
|
$
|
421
|
|
$
|
246,214
|
|
$
|
(74,227
|
)
|
$
|
(247
|
)
|
$
|
(29,751
|
)
|
$
|
142,410
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
See accompanying notes to consolidated financial statements.
49
Table of Contents
ISLE OF CAPRI CASINOS, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
|
|
|
|
|
|
|
|
|
|
|
|
|
Fiscal Year Ended
|
|
|
|
April 28,
2013
|
|
April 29,
2012
|
|
April 24,
2011
|
|
Operating activities:
|
|
|
|
|
|
|
|
|
|
|
Net income (loss)
|
|
$
|
(47,569
|
)
|
$
|
(129,753
|
)
|
$
|
4,540
|
|
Adjustments to reconcile net income (loss) to net cash provided by operating activities:
|
|
|
|
|
|
|
|
|
|
|
Depreciation and amortization
|
|
|
73,419
|
|
|
83,526
|
|
|
89,040
|
|
Amortization and write-off of deferred financing costs
|
|
|
7,461
|
|
|
6,072
|
|
|
6,266
|
|
Amortization of debt discount
|
|
|
220
|
|
|
211
|
|
|
23
|
|
Valuation charges
|
|
|
51,600
|
|
|
143,113
|
|
|
|
|
Deferred income taxes
|
|
|
5,728
|
|
|
11,176
|
|
|
2,508
|
|
Stock compensation expense
|
|
|
5,093
|
|
|
7,710
|
|
|
7,595
|
|
(Gain) loss on derivative instruments
|
|
|
(748
|
)
|
|
(439
|
)
|
|
1,214
|
|
Loss (gain) on disposal of assets
|
|
|
32
|
|
|
95
|
|
|
(296
|
)
|
Changes in operating assets and liabilities:
|
|
|
|
|
|
|
|
|
|
|
(Purchases) sales of trading securities
|
|
|
(578
|
)
|
|
(2,769
|
)
|
|
753
|
|
Accounts receivable
|
|
|
(3,567
|
)
|
|
2,012
|
|
|
(460
|
)
|
Income taxes receivable
|
|
|
(2,628
|
)
|
|
1,705
|
|
|
4,243
|
|
Insurance receivable
|
|
|
7,497
|
|
|
(7,263
|
)
|
|
(234
|
)
|
Prepaid expenses and other assets
|
|
|
(109
|
)
|
|
8,468
|
|
|
7,426
|
|
Accounts payable and accrued liabilities
|
|
|
20,191
|
|
|
(5,805
|
)
|
|
1,066
|
|
|
|
|
|
|
|
|
|
Net cash provided by operating activities
|
|
|
116,042
|
|
|
118,059
|
|
|
123,684
|
|
|
|
|
|
|
|
|
|
Investing activities:
|
|
|
|
|
|
|
|
|
|
|
Purchase of property and equipment
|
|
|
(153,192
|
)
|
|
(75,177
|
)
|
|
(58,600
|
)
|
Proceeds from divestitures
|
|
|
33,200
|
|
|
14,784
|
|
|
|
|
Payments towards gaming license
|
|
|
(5,000
|
)
|
|
|
|
|
|
|
Net cash paid for acquisitions
|
|
|
|
|
|
|
|
|
(76,167
|
)
|
Restricted cash and investments
|
|
|
1,543
|
|
|
344
|
|
|
(9,870
|
)
|
|
|
|
|
|
|
|
|
Net cash used in investing activities
|
|
|
(123,449
|
)
|
|
(60,049
|
)
|
|
(144,637
|
)
|
|
|
|
|
|
|
|
|
Financing activities:
|
|
|
|
|
|
|
|
|
|
|
Proceeds from long-term debt borrowings
|
|
|
700,000
|
|
|
|
|
|
297,792
|
|
Net borrowings (repayments) on line of credit
|
|
|
154,900
|
|
|
(33,000
|
)
|
|
11,500
|
|
Principal repayments on long-term debt
|
|
|
(852,667
|
)
|
|
(5,374
|
)
|
|
(317,609
|
)
|
Payment of deferred financing costs
|
|
|
(21,486
|
)
|
|
(366
|
)
|
|
(14,823
|
)
|
Proceeds from exercise of stock optionsa and issuance of common stock
|
|
|
668
|
|
|
13
|
|
|
51,250
|
|
|
|
|
|
|
|
|
|
Net cash (used in) provided by financing activities
|
|
|
(18,585
|
)
|
|
(38,727
|
)
|
|
28,110
|
|
|
|
|
|
|
|
|
|
Effect of foreign currency exchange rates on cash
|
|
|
|
|
|
|
|
|
(48
|
)
|
|
|
|
|
|
|
|
|
Net increase (decrease) in cash and cash equivalents
|
|
|
(25,992
|
)
|
|
19,283
|
|
|
7,109
|
|
Cash and cash equivalents at beginning of year
|
|
|
94,461
|
|
|
75,178
|
|
|
68,069
|
|
|
|
|
|
|
|
|
|
Cash and cash equivalents at end of year
|
|
$
|
68,469
|
|
$
|
94,461
|
|
$
|
75,178
|
|
|
|
|
|
|
|
|
|
See accompanying notes to consolidated financial statements.
50
Table of Contents
ISLE OF CAPRI CASINOS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(amounts in thousands, except share and per share amounts)
1. Organization
Organization
Isle of Capri Casinos, Inc., a Delaware corporation, was incorporated in February 1990. Except where otherwise noted, the words
"we," "us," "our" and similar terms, as well as "Company," refer to Isle of Capri Casinos, Inc. and all of its subsidiaries. We are a leading developer, owner and operator of branded gaming
facilities and related lodging and entertainment facilities in markets throughout the United States. Our wholly owned subsidiaries own and operate fourteen casino gaming facilities in the United
States located in Black Hawk, Colorado; Lake Charles, Louisiana; Lula, Natchez and Vicksburg, Mississippi; Kansas City, Boonville, Cape Girardeau and Caruthersville, Missouri; Bettendorf, Davenport,
Marquette and Waterloo, Iowa; and Pompano Beach, Florida. We completed construction of our new gaming facility at the Nemacolin Woodlands Resort in western Pennsylvania which opened July 1,
2013.
2. Summary of Significant Accounting Policies
Basis of Presentation
The consolidated financial statements include the accounts of the Company and its subsidiaries. All significant intercompany
balances and transactions have been eliminated. We view each property as an operating segment and all operating segments have been aggregated into one reporting segment.
Discontinued
operations include our Biloxi, Mississippi property sold in November 2012 and our former casinos in Dudley and Wolverhampton, England sold in November 2009. Prior to the
sale, assets and liabilities related to our Biloxi operations were classified as assets held for sale and liabilities related to assets held for sale in our consolidated balance sheet as of
April 29, 2012.
Fiscal Year-End
Our fiscal year ends on the last Sunday in April. Periodically, this system necessitates a 53-week year.
Fiscal year 2013 is a 52-week year, which commenced on April 30, 2012, fiscal year 2012 was a 53-week year, which commenced on April 25, 2011, with the fourth
quarter having 14 weeks, and fiscal year 2011 was a 52-week year, which commenced on April 26, 2010. Fiscal 2014 will be a 52-week year.
Use of Estimates
The preparation of financial statements in conformity with accounting principles generally accepted in the United States requires
management to make estimates and assumptions that affect the amounts reported in the financial statements and accompanying notes. Actual results could differ from those estimates.
Cash and Cash Equivalents
We consider all highly liquid investments purchased with an original maturity of three months or less as cash equivalents.
Cash also includes the minimum operating cash balances required by state regulatory bodies, which totaled $25,256 and $24,778 at April 28, 2013 and April 29, 2012, respectively.
Marketable Securities
Marketable securities consist primarily of trading securities held by our captive insurance subsidiary. The trading securities
are primarily debt and equity securities that are purchased with the intention to resell in the near term. The trading securities are carried at fair value with changes in fair value recognized in
current period income in the accompanying statements of operations.
Inventories
Inventories are stated at the lower of weighted average cost or market value.
51
Table of Contents
ISLE OF CAPRI CASINOS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
(amounts in thousands, except share and per share amounts)
2. Summary of Significant Accounting Policies (Continued)
Property and Equipment
Property and equipment are stated at cost or if purchased through a business acquisition, the value determined under purchase
accounting. We capitalize the cost of purchased property and equipment and capitalize the cost of improvements to property and equipment that increases the value or extends the useful lives of the
assets. Costs of normal repairs and maintenance are charged to expense as incurred.
Depreciation
is computed using the straight-line method over the following estimated useful lives of the assets:
|
|
|
|
|
|
Years
|
|
Slot machines, software and computers
|
|
3 - 5
|
|
Furniture, fixtures and equipment
|
|
5 - 10
|
|
Leasehold improvements
|
|
Lesser of life of lease or estimated useful life
|
|
Buildings and improvements
|
|
7 - 39.5
|
|
Certain
property currently leased in Bettendorf, Iowa and at the Nemacolin Woodlands Resort in Pennsylvania is accounted for in accordance with Accounting Standards Codification ("ASC")
Topic 840, Leases ("ASC 840").
We
periodically evaluate the carrying value of long-lived assets to be held and used in accordance with ASC Topic 360, Property, Plant and Equipment ("ASC 360") which
requires impairment losses to be recorded on long-lived assets used in operations when indicators of impairment are present and the undiscounted cash flows estimated to be generated by
those assets are less than the assets' carrying amounts. In that event, a loss is recognized based on the amount by which the carrying amount exceeds the estimated fair market value of the
long-lived assets.
Capitalized Interest
The interest cost associated with major development and construction projects is capitalized and included in the cost of the
project. When no debt is incurred specifically for a project, interest is capitalized on amounts expended on the project using the weighted-average cost of our borrowings. Capitalization of interest
ceases when the project is substantially complete or development activity is suspended. Capitalized interest was $2,647, $1,105, and $125 for fiscal years 2013, 2012 and 2011, respectively.
Restricted Cash and Investments
We classify cash and investments which are either statutorily or contractually restricted as to its withdrawal or
usage as restricted cash short-term, included in prepaid expenses and other assets, or restricted cash and investments long-term based on the duration of the underlying
restriction. Restricted cash primarily includes amounts related to state tax bonds and other gaming-related bonds, and amounts held in escrow related to leases. Restricted investments relate to
trading securities pledged as insurance reserves by our captive insurance company.
Goodwill and Other Intangible Assets
Goodwill represents the excess of cost over the net identifiable tangible and intangible assets of acquired
businesses and is stated at cost, net of impairments, if any. Other intangible assets include values attributable to acquired gaming licenses, customer lists, and trademarks. ASC Topic 350,
IntangiblesGoodwill and Other ("ASC 350") requires these assets be reviewed for impairment at least annually or on an interim basis if indicators of
52
Table of Contents
ISLE OF CAPRI CASINOS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
(amounts in thousands, except share and per share amounts)
2. Summary of Significant Accounting Policies (Continued)
impairment
exist. We perform our annual impairment test during our fourth quarter. If necessary, goodwill for relevant reporting units is tested for impairment using; 1) a discounted cash flow
analysis based on forecasted future results discounted at the weighted average cost of capital and, 2) by using a market approach based upon public trading and recent transaction valuation
multiples for similar companies. For intangible assets with indefinite lives not subject to amortization, we review, at least annually, the continued use of an indefinite useful life. If these
intangible assets are determined to have a finite useful life, they are amortized over their estimated remaining useful lives.
Deferred Financing Costs
The costs of issuing long-term debt are capitalized and amortized using the effective interest method over the
term of the related debt.
Self-Insurance
We are self-funded up to a maximum amount per claim for employee-related health care benefits, workers'
compensation and general liabilities. Claims in excess of this maximum are fully insured through stop-loss insurance policies. We accrue for workers' compensation and general liabilities
on a discounted basis based on claims filed and estimates of claims incurred but not reported. The estimates have been discounted at
0.8% and 1.1% at April 28, 2013 and April 29, 2012, respectively, or a discount of $593 and $949, respectively. We utilize independent consultants to assist management in its
determination of estimated insurance liabilities. As of April 28, 2013 and April 29, 2012, we have accrued $28,609 and $33,514, respectively, for employee-related health care, workers'
compensation and general liability claims. Accruals for employee health care and workers compensation are included in accrued liabilitiespayroll and accruals for general liabilities are
included in accrued liabilitiesother in the accompanying consolidated balance sheets. While the total cost of claims incurred depends on future developments, in management's opinion,
recorded reserves are adequate to cover future claims payments.
Derivative Instruments and Hedging Activities
ASC Topic 815, Derivatives and Hedging ("ASC 815") requires we recognize all of our derivative
instruments as either assets or liabilities in the consolidated balance sheet at fair value and disclose certain qualitative and quantitative information. We utilize derivative financial instruments
to manage interest rate risk associated with a portion of our variable rate borrowings. Derivative financial instruments are intended to reduce our exposure to interest rate volatility. At
April 28, 2013, we have one interest rate swap contract which is accounted for as an ineffective hedge.
Revenue Recognition
In accordance with gaming industry practice, we recognize casino revenues as the net win from gaming activities. Casino revenues
are net of accruals for anticipated payouts of progressive slot jackpots and certain table games wherein incremental jackpot amounts owed are accrued for games in which certain wagers add to the
jackpot total. Revenues from rooms, food, beverage, entertainment and the gift shop are recognized at the time the related service or sale is performed or realized.
Promotional Allowances
The retail value of rooms, food and beverage and other services furnished to guests without charge or at a discount is included
in gross revenues and then deducted as promotional allowances to arrive at net revenues included in the accompanying consolidated statements of operations. We also record the redemption of coupons and
points for cash as promotional
53
Table of Contents
ISLE OF CAPRI CASINOS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
(amounts in thousands, except share and per share amounts)
2. Summary of Significant Accounting Policies (Continued)
allowances.
The estimated cost of providing such complimentary services from continuing operations are included in casino expense in the accompanying consolidated statements of operations as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
Fiscal Year Ended
|
|
|
|
April 28,
2013
|
|
April 29,
2012
|
|
April 24,
2011
|
|
Rooms
|
|
$
|
8,979
|
|
$
|
8,603
|
|
$
|
8,043
|
|
Food and beverage
|
|
|
63,314
|
|
|
60,252
|
|
|
52,905
|
|
Other
|
|
|
653
|
|
|
987
|
|
|
991
|
|
|
|
|
|
|
|
|
|
Total cost of complimentary services
|
|
$
|
72,946
|
|
$
|
69,842
|
|
$
|
61,939
|
|
|
|
|
|
|
|
|
|
Players Club Awards
We provide patrons with rewards based on the amounts wagered on
casino games. A liability has been established based on the estimated value of these outstanding rewards, considering the age of the points and prior redemption history.
Advertising
Advertising costs are expensed the first time the related advertisement appears. Total advertising costs from continuing operations were
$33,808, $33,207, and $32,033 in fiscal years 2013, 2012 and 2011, respectively.
Operating Leases
We recognize rent expense for each lease on the straight line basis, aggregating all future minimum rent payments including any
predetermined fixed escalations of the minimum rentals. Our liabilities include the aggregate difference between rent expense recorded on the straight-line basis and amounts paid under the
leases.
Development Costs
We pursue development opportunities for new gaming facilities in an ongoing effort to expand our business. In accordance with ASC
Topic 720, Other Expenses ("ASC 720), costs related to projects in the development stage are recorded as a development expense, except for those costs capitalized in accordance with the guidance of
ASC 720. Previously capitalized development costs are expensed when the development is deemed less than probable. Total development costs expensed from continuing operations were recorded in the
consolidated statements of operations in corporate and development expenses.
Pre-Opening Costs
We expense pre-opening costs as incurred. Pre-opening costs include payroll, outside services,
advertising, insurance, utilities, travel and various other expenses related to new operations prior to opening.
Income Taxes
We account for income taxes in accordance ASC Topic 740, Income Taxes ("ASC 740"). ASC 740 requires the recognition of deferred
income tax liabilities, and deferred income tax assets, net of valuation allowances related to net operating loss carry forwards and certain temporary differences. Recognizable future tax benefits are
subject to a valuation allowance, unless such tax benefits are determined to be more likely than not realizable. We recognize accrued interest and penalties related to unrecognized tax benefits in
income tax expense.
Earnings (Loss) Per Common Share
In accordance with the guidance of ASC 260, Earnings Per Share ("ASC 260"), basic earnings (loss) per share ("EPS")
is computed by dividing net income (loss)
54
Table of Contents
ISLE OF CAPRI CASINOS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
(amounts in thousands, except share and per share amounts)
2. Summary of Significant Accounting Policies (Continued)
applicable
to common stock by the weighted average common shares outstanding during the period. Diluted EPS reflects the additional dilution related to all potentially dilutive securities such as
stock options. Any potentially dilutive securities with an exercise price in excess of the average market price of our common stock during the periods presented are not considered when calculating
diluted earnings per share calculations as they would be anti-dilutive.
Stock Compensation
Our stock based compensation is accounted for in accordance with ASC Topic 718, CompensationStock Compensation ("ASC
718"). Stock compensation cost is measured at the grant date, based on the estimated fair value of the award and is recognized as expense on a straight-line basis over the requisite
service period for each separately vesting portion of the award as if the award was, in-substance, multiple awards.
Allowance for Doubtful Accounts
We reserve for receivables that may not be collected. Methodologies for estimating the allowance for doubtful accounts
range from specific reserves to various percentages applied to aged receivables. Historical collection rates are considered, as are customer relationships, in determining specific reserves.
Fair Value Measurements
We follow the guidance of ASC Topic 820, Fair Value Measurements and Disclosures ("ASC 820") for our financial assets and
liabilities including marketable securities, restricted cash and investments and derivative instruments. ASC 820 provides a framework for measuring the fair value of financial assets and liabilities.
A description of the valuation methodologies used to measure fair value, key inputs, and significant assumptions follows:
Marketable securities
The estimated fair values of our marketable securities are determined on
an individual asset basis based upon quoted prices of identical assets available in active markets, quoted prices of identical assets in inactive markets, or quoted prices for similar assets in active
and inactive markets, and represent the amounts we would expect to receive if we sold these marketable securities.
Restricted cash and investments
The estimated fair values of our restricted cash and investments are based upon quoted prices available in active
markets and represent the amounts
we would expect to receive if we sold these restricted cash and investments.
Derivative instruments
The estimated fair value of our derivative instruments is based on market prices obtained from dealer quotes, which are based on
interest yield
curves. Such quotes represent the estimated amounts we would receive or pay to terminate the contracts.
Recently Adopted Accounting Standards
In June 2011, the FASB issued Update No. 2011-05, "Comprehensive Income (Topic 220):
Presentation of Comprehensive Income," which allows for the presentation of total comprehensive income, the components of net income, and the components of other comprehensive income either in a
single continuous statement of comprehensive income or in two separate but consecutive statements. In addition, the guidance eliminates the option of presenting the components of other comprehensive
income as part of the statement of changes in stockholders' equity. During fiscal 2013, we adopted this standard, which impacted where we disclose the components of other comprehensive income in our
consolidated financial statements.
55
Table of Contents
ISLE OF CAPRI CASINOS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
(amounts in thousands, except share and per share amounts)
2. Summary of Significant Accounting Policies (Continued)
In
July 2012, the FASB issued Update No. 2012-02, "IntangiblesGoodwill and Other (Topic 350): Testing Indefinite-Lived Intangible Assets for Impairment,"
which amends ASC 350 "IntangiblesGoodwill and Other." This update permits entities to make a qualitative assessment to determine whether the existence of events and circumstances
indicates that it is more likely than not that an indefinite-lived intangible asset is impaired. The outcome of this qualitative assessment is used as a basis for determining whether it is necessary
to determine the fair value of the indefinite-lived intangible asset and perform the quantitative impairment test by comparing the fair value with the carrying amount of the asset. This update is
effective for annual and interim impairment tests performed for fiscal years beginning after September 15, 2012, with early adoption permitted. During fiscal 2013, we adopted this standard,
which did not materially impact our consolidated financial statements.
3. Discontinued Operations
Discontinued operations includes our casino in Biloxi, Mississippi, sold in November 2012, and our former casinos in Dudley and Wolverhampton, England ("Blue Chip") sold in November
2009.
The
results of our discontinued operations are summarized as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
Discontinued Operatons
Fiscal Year Ended
|
|
|
|
April 28,
2013
|
|
April 29,
2012
|
|
April 24,
2011
|
|
Net revenues
|
|
$
|
36,107
|
|
$
|
67,454
|
|
$
|
68,334
|
|
Valuation charges
|
|
|
(1,500
|
)
|
|
(112,564
|
)
|
|
|
|
Pretax (loss) income from discontinued operations
|
|
|
(1,579
|
)
|
|
(114,396
|
)
|
|
(4,523
|
)
|
Income tax benefit from discontinued operations
|
|
|
|
|
|
2,026
|
|
|
5,328
|
|
Income (loss) from discontinued operations
|
|
|
(1,579
|
)
|
|
(112,370
|
)
|
|
805
|
|
We
completed the sale of our Biloxi, Mississippi casino operations in November 2012. The balance sheet items related to Biloxi were classified as held for sale at April 29, 2012
and the results of operations are presented as discontinued operations for all periods presented. During fiscal 2012, we entered into a definitive purchase agreement to sell our Biloxi casino
operations. As a result, we recorded a non-cash pretax valuation charge of $112,564 to reduce the carrying value of Biloxi's net assets held for sale to the expected net realizable value
upon completion of the sale
transaction. The income tax benefit of $2,026 recorded in discontinued operations for fiscal 2012 is net of a valuation allowance of $41,029. During fiscal 2013, we recorded a $1,500 valuation
allowance reflecting a credit against the purchase price to satisfy our obligation to repair the property after Hurricane Isaac, as required by the purchase agreement.
56
Table of Contents
ISLE OF CAPRI CASINOS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
(amounts in thousands, except share and per share amounts)
3. Discontinued Operations (Continued)
The
assets held for sale and liabilities related to assets held for sale are as follows:
|
|
|
|
|
|
|
April 29,
2012
|
|
Current assets:
|
|
|
|
|
Accounts receivable, net
|
|
$
|
414
|
|
Prepaid expenses and other assets
|
|
|
1,289
|
|
|
|
|
|
Total current assets
|
|
|
1,703
|
|
Property and equipment, net
|
|
|
45,000
|
|
|
|
|
|
Total assets
|
|
|
46,703
|
|
|
|
|
|
Current liabilities
|
|
|
|
|
Accounts payable
|
|
|
1,626
|
|
Other accrued liabilities
|
|
|
2,736
|
|
|
|
|
|
Total current liabilities
|
|
|
4,362
|
|
|
|
|
|
Net assets
|
|
$
|
42,341
|
|
|
|
|
|
During
fiscal 2011, we recognized an after-tax gain of $2,658 including certain tax benefits upon completion of the Blue Chip administration process. We also recognized a tax
benefit of $794 in discontinued operations representing the resolution of previously unrecognized tax positions related to Blue Chip following the completion of certain federal tax reviews.
Interest
income of $2, $5, and $13 for fiscal years 2013, 2012, and 2011, respectively, has been allocated to discontinued operations. No interest expense was allocated to our
discontinued operations as no third-party debt was assumed by the purchaser.
4. Property and Equipment, Net
Property and equipment, net consists of the following:
|
|
|
|
|
|
|
|
|
|
April 28,
2013
|
|
April 29,
2012
|
|
Property and equipment:
|
|
|
|
|
|
|
|
Land and land improvements
|
|
$
|
197,896
|
|
$
|
177,524
|
|
Leasehold improvements
|
|
|
145,708
|
|
|
146,095
|
|
Buildings and improvements
|
|
|
709,133
|
|
|
632,137
|
|
Riverboats and floating pavilions
|
|
|
124,485
|
|
|
123,933
|
|
Furniture, fixtures and equipment
|
|
|
535,132
|
|
|
495,469
|
|
Construction in progress
|
|
|
46,413
|
|
|
68,000
|
|
|
|
|
|
|
|
Total property and equipment
|
|
|
1,758,767
|
|
|
1,643,158
|
|
Less accumulated depreciation and amortization
|
|
|
(724,741
|
)
|
|
(693,144
|
)
|
|
|
|
|
|
|
Property and equipment, net
|
|
$
|
1,034,026
|
|
$
|
950,014
|
|
|
|
|
|
|
|
57
Table of Contents
ISLE OF CAPRI CASINOS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
(amounts in thousands, except share and per share amounts)
4. Property and Equipment, Net (Continued)
We
recorded depreciation expense of $72,581, $72,213, and $72,892 for our continuing operations for the fiscal years ended 2013, 2012, and 2011, respectively.
5. Goodwill and Other Intangible Assets
A roll forward of goodwill is as follows:
|
|
|
|
|
Balance, April 24, 2011
|
|
$
|
345,303
|
|
Impairment charge
|
|
|
(14,400
|
)
|
|
|
|
|
Balance, April 29, 2012
|
|
|
330,903
|
|
Impairment charge
|
|
|
(50,100
|
)
|
|
|
|
|
Balance, April 28, 2013
|
|
$
|
280,803
|
|
|
|
|
|
Goodwill
includes accumulated impairment losses of $79,301.
Other
intangible assets consist of the following:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
April 28, 2013
|
|
April 29, 2012
|
|
|
|
Gross
Carrying
Amount
|
|
Accumulated
Amortization
|
|
Net
Carrying
Amount
|
|
Gross
Carrying
Amount
|
|
Accumulated
Amortization
|
|
Net
Carrying
Amount
|
|
Indefinite-lived assets
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gaming licenses
|
|
$
|
44,342
|
|
$
|
|
|
$
|
44,342
|
|
$
|
44,342
|
|
$
|
|
|
$
|
44,342
|
|
Trademarks
|
|
|
7,149
|
|
|
|
|
|
7,149
|
|
|
7,149
|
|
|
|
|
|
7,149
|
|
Intangible assetssubject to amortization
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Customer lists
|
|
|
15,393
|
|
|
(15,393
|
)
|
|
|
|
|
15,393
|
|
|
(15,393
|
)
|
|
|
|
Gaming licenses
|
|
|
5,000
|
|
|
|
|
|
5,000
|
|
|
|
|
|
|
|
|
|
|
Trade name
|
|
|
544
|
|
|
(544
|
)
|
|
|
|
|
544
|
|
|
(544
|
)
|
|
|
|
Customer relationships
|
|
|
6,700
|
|
|
(2,443
|
)
|
|
4,257
|
|
|
6,700
|
|
|
(1,605
|
)
|
|
5,095
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
$
|
79,128
|
|
$
|
(18,380
|
)
|
$
|
60,748
|
|
$
|
74,128
|
|
$
|
(17,542
|
)
|
$
|
56,586
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Our
indefinite-lived intangible assets consist primarily of gaming licenses and trademarks for which it is reasonably assured that we will continue to renew indefinitely. Our
finite-lived assets consist of customer lists amortized over 2 to 4 years, a trade name amortized over 1.5 years, and customer relationships amortized over 8 years. The weighted
average remaining life of our customer relationships
is approximately 5.1 years. During 2013 we expended $5,000 for a slot license related to our gaming operations at the Nemacolin Woodlands Resort. Subsequent to year-end, we expended
an additional $7,500 for a table license for our Nemacolin gaming operations. Upon commencement of gaming operations at Nemacolin on July 1, 2013, we began amortizing these licenses over
30 years, which is the term of our Nemacolin management agreement including all extensions.
We
recorded amortization expense of $838, $3,837, and $4,721 for our intangible assets subject to amortization related to our continuing operations for the fiscal years ended 2013, 2012,
and 2011, respectively.
58
Table of Contents
ISLE OF CAPRI CASINOS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
(amounts in thousands, except share and per share amounts)
5. Goodwill and Other Intangible Assets (Continued)
Future
amortization expense of our amortizable intangible assets, including the $12,500 in gaming licenses for Nemacolin, is as follows:
|
|
|
|
|
2014
|
|
$
|
1,185
|
|
2015
|
|
|
1,254
|
|
2016
|
|
|
1,254
|
|
2017
|
|
|
1,254
|
|
2018
|
|
|
1,254
|
|
Thereafter
|
|
|
10,556
|
|
|
|
|
|
Total
|
|
$
|
16,757
|
|
|
|
|
|
6. Long-Term Debt
Long-term debt consists of the following:
|
|
|
|
|
|
|
|
|
|
April 28,
2013
|
|
April 29,
2012
|
|
Senior Secured Credit Facility:
|
|
|
|
|
|
|
|
Revolving line of credit, expires April 19, 2018, interest payable at least quarterly at either LIBOR and/or prime plus a margin
|
|
$
|
154,900
|
|
$
|
|
|
Variable rate term loans, mature November 1, 2013, principal and interest payments due quarterly at either LIBOR and/or prime plus a
margin
|
|
|
|
|
|
495,000
|
|
5.875% Senior Notes, interest payable semi-annually March 15 and September 15
|
|
|
350,000
|
|
|
|
|
7.75% Senior Notes, interest payable semi-annually March 15 and September 15, net of discount
|
|
|
298,246
|
|
|
298,026
|
|
8.875% Senior Subordinated Notes, interest payable semi-annually June 15 and December 15
|
|
|
350,000
|
|
|
|
|
7% Senior Subordinated Notes, interest payable semi-annually March 1 and September 1
|
|
|
|
|
|
357,275
|
|
Other
|
|
|
3,738
|
|
|
4,130
|
|
|
|
|
|
|
|
|
|
|
1,156,884
|
|
|
1,154,431
|
|
Less current maturities
|
|
|
415
|
|
|
5,393
|
|
|
|
|
|
|
|
Long-term debt
|
|
$
|
1,156,469
|
|
$
|
1,149,038
|
|
|
|
|
|
|
|
Senior Secured Credit Facility, as amended and restated
Our Credit Facility as amended and restated ("Credit Facility") consists of a $300,000
revolving line of credit. The Credit Facility is secured on a first priority basis by substantially all of our assets and guaranteed by substantially all of our significant subsidiaries. During Fiscal
2013 and on July 2, 2013, we entered into agreements amending our Credit Facility to 1) extend the maturity date to April 19, 2018 and fully repay and cancel our outstanding term
loan of $490,000 with proceeds from our 5.875% Senior Notes issuance and borrowings under the revolving line of our Credit Facility; 2) give us more flexibility to incur additional
indebtedness, in certain circumstances; 3) increase our flexibility to incur asset sales; 4) allow for the annualization of EBITDA during the first year of operations on new build
projects; and 5) modify our maximum allowed leverage and minimum interest coverage ratio covenants.
59
Table of Contents
ISLE OF CAPRI CASINOS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
(amounts in thousands, except share and per share amounts)
6. Long-Term Debt (Continued)
Our net revolving line of credit availability at April 28, 2013, as limited by our maximum consolidated total leverage ratio, was approximately $90,000, after consideration of
$55,000 in outstanding surety bonds and letters of credit. We have an annual commitment fee related to the unused portion of the Credit Facility of up to 0.5% which is included in interest expense in
the accompanying consolidated statements of operations. The weighted average effective interest rates of the Credit Facility for fiscal years 2013 and 2012 were 5.21% and 5.46%, respectively.
The
Credit Facility includes a number of affirmative and negative covenants. Additionally, we must comply with certain financial covenants including maintenance of a total leverage
ratio, senior secured leverage ratio and minimum interest coverage ratio. The Credit Facility also restricts our ability to make certain investments or distributions. We were in compliance with the
covenants as of April 28, 2013.
We
accounted for our fiscal 2013 amendments in accordance with ASC 470-50, Debt Modifications and Extinguishments. We incurred non-cash charges, included in the
statement of operations for the year ended April 28, 2013, of $2,236 related to the write-off of certain unamortized deferred financing costs. In addition, we capitalized new
deferred financing costs of $6,288.
In
connection with a previous amendment, we incurred expenses, included in the statement of operations for the year ended April 24, 2011, of approximately $6,155 related to fees
and the write-off of certain unamortized deferred financing costs, of which approximately $3,167 was non-cash, and capitalized deferred financing costs of $9,477.
5.875% Senior Notes
In March 2013 we issued $350,000 of 5.875% Senior Notes due
2021 ("5.875% Senior Notes"). The net proceeds from the issuance were used to repay term loans under our Credit Facility. The 5.875% Senior Notes are guaranteed, on a joint and several basis, by
substantially all of our significant subsidiaries and certain other subsidiaries as described in Note 20. All of the guarantor subsidiaries are wholly owned by us. The 5.875% Senior Notes are
general unsecured obligations and rank junior to all of our senior secured indebtedness and senior to our senior subordinated indebtedness. The 5.875% Senior Notes are redeemable, in whole or in part,
at our option at any time on or after June 15, 2016, with call premiums as defined in the indenture governing the 5.875% Senior Notes. We received net proceeds of $343,400 for this issuance
after deducting underwriting fees. As a result of the issuance, we capitalized deferred financing costs of $7,060 in fiscal 2013.
As
required by the terms of a registration rights agreement related to the 5.875% Senior Notes, we filed a registration statement for an exchange offer of these 5.875% Senior Notes with
the Securities and Exchange Commission on March 22, 2013, which was declared effective on April 30, 2013. In June 2013, pursuant to the exchange offer declared effective on
April 30, 2013, we exchanged all of the unregistered 5.875% Senior Notes for identical new 5.875% Senior Notes registered under the Securities Act of 1933, as amended.
7.75% Senior Notes
On March 7, 2011, we issued $300,000 of 7.75% Senior Notes due 2019 at a price of 99.264% ("7.75% Senior Notes"). The net
proceeds from the issuance were used to repay term loans under our Credit Facility. The 7.75% Senior Notes are guaranteed, on a joint and several basis, by substantially all of our significant
subsidiaries and certain other subsidiaries as described in Note 20.
60
Table of Contents
ISLE OF CAPRI CASINOS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
(amounts in thousands, except share and per share amounts)
6. Long-Term Debt (Continued)
All
of the guarantor subsidiaries are wholly owned by us. The 7.75% Senior Notes are general unsecured obligations and rank junior to all of our senior secured indebtedness and senior to our senior
subordinated indebtedness. The 7.75% Senior Notes are redeemable, in whole or in part, at our option at any time on or after March 15, 2015, with call premiums as defined in the indenture
governing the 7.75% Senior Notes. As a result of the issuance, we capitalized deferred financing costs of $5,346 in fiscal 2011 and $275 in fiscal 2012.
The
indentures governing the 5.875% and 7.75% Senior Notes limit, among other things, our ability and our restricted subsidiaries ability to borrow money, make restricted payments, use
assets as security in other transactions, enter into transactions with affiliates, pay dividends, or repurchase stock. The indentures also limit our ability to issue and sell capital stock of
subsidiaries, sell assets in excess of specified amounts or merge with or into other companies.
8.875% Senior Subordinated Notes
On August 7, 2012, we completed the issuance and sale of $350,000 of 8.875% Senior
Subordinated Notes due 2020 ("8.875% Senior Subordinated Notes"). We received net proceeds of $343,000 for this issuance after deducting underwriting fees. We repurchased and retired all of our
$357,275, 7% Senior Subordinated Notes with proceeds from the issuance of the 8.875% Senior Subordinated Notes and cash on hand.
As
a result of the issuance and retirement, we incurred expenses related to the write-off of deferred financing costs, issuance costs and other related fees of approximately
$2,500, including $1,000 in non-cash charges, and capitalized deferred financing costs of $8,137 in fiscal 2013.
The
8.875% Senior Subordinated Notes are guaranteed, on a joint and several basis, by substantially all of our significant subsidiaries and certain other subsidiaries as described in
Note 20. All of the guarantor subsidiaries are wholly owned by us. The 8.875% Senior Subordinated Notes are general unsecured obligations and rank junior to all of our senior indebtedness. The
8.875% Senior Subordinated Notes are redeemable, in whole or in part, at our option at any time on or after June 15, 2016, with call premiums as defined in the indenture governing the 8.875%
Senior Subordinated Notes.
The
indenture governing the 8.875% Senior Subordinated Notes limits, among other things, our ability and our restricted subsidiaries ability to borrow money, make restricted payments,
use assets as security in other transactions, enter into transactions with affiliates, pay dividends, or repurchase stock. The indenture also limits our ability to issue and sell capital stock of
subsidiaries, sell assets in excess of specified amounts or merge with or into other companies.
61
Table of Contents
ISLE OF CAPRI CASINOS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
(amounts in thousands, except share and per share amounts)
6. Long-Term Debt (Continued)
Future Principal Payments of Long-term Debt
The aggregate principal payments due on long-term debt as of April 28, 2013
over the next five years and thereafter, are as follows:
|
|
|
|
|
Fiscal Years Ending:
|
|
|
|
|
2014
|
|
$
|
414
|
|
2015
|
|
|
440
|
|
2016
|
|
|
170
|
|
2017
|
|
|
112
|
|
2018
|
|
|
155,016
|
|
Thereafter
|
|
|
1,002,486
|
|
|
|
|
|
|
|
|
1,158,638
|
|
Unamortized debt discount
|
|
|
(1,754
|
)
|
|
|
|
|
|
|
$
|
1,156,884
|
|
|
|
|
|
7. Other Long-Term Obligations
Nemacolin Woodlands Resort
We entered into agreements to construct and manage a casino at the Nemacolin Woodland Resort ("Resort") in Pennsylvania.
Under terms of the agreements, the Resort has provided land, land improvements and a building for development into a casino property. The Company was deemed, for accounting purposes only, to be the
owner of these assets provided by the Resort during the construction period. As of April 28, 2013, we have recorded $6,100 as an asset of property, plant and equipment and a liability of other
long-term obligations under ASC 840 related to the agreement.
Quad-Cities Waterfront Convention Center
We entered into agreements with the City of Bettendorf, Iowa under which the City constructed a
convention center which opened in January 2009, adjacent to our hotel. We lease, manage, and provide financial and operating support for the convention center. The Company was deemed, for accounting
purposes only, to be the owner of the convention center during the construction period. Upon completion of the convention center we were precluded from accounting for the transaction as a sale and
leaseback due to our continuing involvement. Therefore, we are accounting for the transaction using the direct financing method. As of April 28, 2013, we have recorded in other
long-term obligations $16,414 related to our liability under ASC 840 related to the convention center. Under the terms of our agreements for the convention center, we have guaranteed
certain obligations related to $13,815 of notes issued by the City of Bettendorf, Iowa for the convention center.
The
other long term obligations will be reflected in our consolidated balance sheets until completion of the applicable management or lease agreement terms, at which time the related
fixed assets, net of accumulated depreciation, will be removed from our consolidated financial statements and the net remaining obligation over the net carrying value of the associated fixed asset
will be recognized as a gain (loss) on sale of the facility.
62
Table of Contents
ISLE OF CAPRI CASINOS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
(amounts in thousands, except share and per share amounts)
7. Other Long-Term Obligations (Continued)
Future
minimum payments due under other long-term obligations, including interest, as of April 28, 2013 as follows:
|
|
|
|
|
Fiscal Years Ending:
|
|
|
|
|
2014
|
|
$
|
1,140
|
|
2015
|
|
|
1,729
|
|
2016
|
|
|
1,767
|
|
2017
|
|
|
1,767
|
|
2018
|
|
|
1,433
|
|
Thereafter
|
|
|
12,570
|
|
|
|
|
|
Total minimum payments
|
|
$
|
20,406
|
|
|
|
|
|
8. Valuation Charges
We recorded pretax valuation charges and expense recoveries from continuing operations as follows:
Fiscal 2013
Impairment charges of $16,000 and $34,100 related to goodwill was recorded at our Natchez and Lula, Mississippi properties, respectively,
as a result of our annual impairment test required under ASC 350. The fair values used in our determination of the impairment charges considered discounted cash flows and market based valuation
multiple methods. The Natchez goodwill impairment was a result of an expected decrease in future cash flows resulting from competition in the market during fiscal 2013 and the unfavorable economic
conditions in the area. The Lula goodwill impairment was the result of an expected decrease in future cash flows as a result of the continued realignment of the gaming market and unfavorable economic
conditions.
Fiscal 2012
An impairment charge of $14,400 related to goodwill was recorded at our Lula, Mississippi property as a result of our annual impairment
test required under ASC 350. The fair value used in our determination of the impairment charge considered discounted cash flow and market based valuation multiple methods. The impairment was a result
of an expected decrease in future cash flows resulting from the prolonged recession and from realignment of market share following flooding during fiscal 2012.
In
connection with the sale of Grand Palais Riverboat, Inc., including its gaming license, a riverboat gaming vessel and certain other equipment, we recorded a valuation charge of
$16,149 to reduce the carrying value of the net assets sold to the net proceeds realized upon sale during fiscal year 2012. This gaming license and riverboat were used as a portion of our Lake
Charles, Louisiana gaming operations. We continue to operate a casino riverboat operation in Lake Charles.
63
Table of Contents
ISLE OF CAPRI CASINOS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
(amounts in thousands, except share and per share amounts)
9. Flooding
Flooding along the Mississippi River caused five of our properties to close for portions of fiscal 2012. A summary of the closure dates and subsequent reopening is as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
Closing Date
|
|
Reopening Date
|
|
Number Days
Closed
|
|
Davenport, Iowa
|
|
|
April 15, 2011
|
|
|
May 1, 2011
|
|
|
15
|
(A)
|
Caruthersville, Missouri
|
|
|
May 1, 2011
|
|
|
May 13, 2011
|
|
|
12
|
|
Lula, Mississippi
|
|
|
May 3, 2011
|
|
|
June 3, 2011
|
|
|
31
|
|
|
|
|
|
|
|
September 2, 2011
|
|
|
91
|
(B)
|
Natchez, Mississippi
|
|
|
May 7, 2011
|
|
|
June 17, 2011
|
|
|
41
|
|
Vicksburg, Mississippi
|
|
|
May 11, 2011
|
|
|
May 27, 2011
|
|
|
16
|
|
-
(A)
-
Six
days of closure in the first quarter of fiscal 2012 and nine days of closure in the fourth quarter of fiscal 2011.
-
(B)
-
The
second casino barge reopened on September 2, 2011 after flood damage was remediated.
During
fiscal 2012 we settled all of our insurance claims with our insurance carrier and recognized $9,637 of revenue, included in insurance recoveries in the consolidated statement of
operations, as reimbursement under our business interruption insurance policies. We collected the insurance receivable recorded at April 29, 2012 during fiscal 2013.
10. Acquisition
Acquisition of Rainbow Casino
On June 8, 2010 we completed the acquisition of Rainbow Casino-Vicksburg Partnership, L.P. ("Rainbow")
located in Vicksburg, Mississippi.
Net
revenue and income (loss) from continuing operations for fiscal 2011 related to Rainbow were $27,935 and ($1,724), respectively.
The
pro forma results of operations, as if the acquisition of Rainbow had occurred on the first day of fiscal 2011 is as follows:
|
|
|
|
|
|
|
Fiscal Year Ended
|
|
|
|
April 24, 2011
|
|
Pro forma
|
|
|
|
|
Net revenues
|
|
$
|
940,689
|
|
Income from continuing operations before income taxes
|
|
|
10,981
|
|
Net income from continuing operations
|
|
|
3,820
|
|
Basic earnings per share from continuing operations
|
|
|
0.11
|
|
Diluted earnings per share from continuing operations
|
|
|
0.11
|
|
64
Table of Contents
ISLE OF CAPRI CASINOS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
(amounts in thousands, except share and per share amounts)
11. Income Taxes
Income tax (benefit) provision from continuing operations consists of the following:
|
|
|
|
|
|
|
|
|
|
|
|
|
Fiscal Year Ended
|
|
|
|
April 28,
2013
|
|
April 29,
2012
|
|
April 24,
2011
|
|
Current:
|
|
|
|
|
|
|
|
|
|
|
Federal
|
|
$
|
|
|
$
|
(415
|
)
|
$
|
(725
|
)
|
State
|
|
|
1,005
|
|
|
2,333
|
|
|
(483
|
)
|
|
|
|
|
|
|
|
|
|
|
|
1,005
|
|
|
1,918
|
|
|
(1,208
|
)
|
Deferred:
|
|
|
|
|
|
|
|
|
|
|
Federal
|
|
|
3,888
|
|
|
15,628
|
|
|
4,818
|
|
State
|
|
|
1,839
|
|
|
(2,427
|
)
|
|
3,340
|
|
|
|
|
|
|
|
|
|
|
|
|
5,727
|
|
|
13,201
|
|
|
8,158
|
|
|
|
|
|
|
|
|
|
Income tax (benefit) provision
|
|
$
|
6,732
|
|
$
|
15,119
|
|
$
|
6,950
|
|
|
|
|
|
|
|
|
|
A
reconciliation of income taxes from continuing operations at the statutory corporate federal tax rate of 35% to the income tax (benefit) provision reported in the accompanying
consolidated statements of operations is as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
Fiscal Year Ended
|
|
|
|
April 28,
2013
|
|
April 29,
2012
|
|
April 24,
2011
|
|
Statutory tax (benefit) provision
|
|
$
|
(13,740
|
)
|
$
|
(792
|
)
|
$
|
3,740
|
|
Effects of:
|
|
|
|
|
|
|
|
|
|
|
State taxes, net of valuation allowance
|
|
|
733
|
|
|
(731
|
)
|
|
2,303
|
|
Reduction of unrecognized tax benefits
|
|
|
|
|
|
(270
|
)
|
|
|
|
Other
|
|
|
|
|
|
|
|
|
|
|
Lobbying
|
|
|
754
|
|
|
595
|
|
|
745
|
|
Employment tax credits
|
|
|
(681
|
)
|
|
(1,095
|
)
|
|
(588
|
)
|
Fines & Penalties
|
|
|
205
|
|
|
58
|
|
|
81
|
|
Meals & Entertainment
|
|
|
73
|
|
|
64
|
|
|
74
|
|
Various permanent differences
|
|
|
62
|
|
|
(8
|
)
|
|
28
|
|
Interest
|
|
|
161
|
|
|
(286
|
)
|
|
423
|
|
Bahamas stock loss
|
|
|
|
|
|
(727
|
)
|
|
|
|
Debt basis differential
|
|
|
|
|
|
4,529
|
|
|
|
|
Goodwill impairment
|
|
|
17,535
|
|
|
5,040
|
|
|
|
|
Valuation allowance
|
|
|
1,450
|
|
|
8,742
|
|
|
|
|
Other
|
|
|
180
|
|
|
|
|
|
144
|
|
|
|
|
|
|
|
|
|
Income tax (benefit) provision
|
|
$
|
6,732
|
|
$
|
15,119
|
|
$
|
6,950
|
|
|
|
|
|
|
|
|
|
65
Table of Contents
ISLE OF CAPRI CASINOS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
(amounts in thousands, except share and per share amounts)
11. Income Taxes (Continued)
Significant
components of our domestic net deferred income tax asset (liability) are as follows:
|
|
|
|
|
|
|
|
|
|
Fiscal Year Ended
|
|
|
|
April 28,
2013
|
|
April 29,
2012
|
|
Deferred tax liabilities:
|
|
|
|
|
|
|
|
Property and equipment
|
|
$
|
(50,835
|
)
|
$
|
(51,713
|
)
|
Goodwill and intangibles
|
|
|
(33,622
|
)
|
|
(26,740
|
)
|
Gain on early extinguishment of debt
|
|
|
(22,131
|
)
|
|
(21,641
|
)
|
Other
|
|
|
(1,161
|
)
|
|
(2,859
|
)
|
|
|
|
|
|
|
Total deferred tax liabilities
|
|
|
(107,749
|
)
|
|
(102,953
|
)
|
|
|
|
|
|
|
Deferred tax assets:
|
|
|
|
|
|
|
|
Net operating losses
|
|
|
80,370
|
|
|
36,244
|
|
Asset impairment
|
|
|
|
|
|
42,262
|
|
Employment tax credits
|
|
|
20,318
|
|
|
19,171
|
|
Accrued expenses
|
|
|
6,871
|
|
|
6,952
|
|
Alternative minimum tax credit
|
|
|
1,338
|
|
|
1,338
|
|
Other
|
|
|
13,750
|
|
|
15,771
|
|
|
|
|
|
|
|
Total deferred tax assets
|
|
|
122,647
|
|
|
121,738
|
|
Valuation allowance on deferred tax assets
|
|
|
(56,429
|
)
|
|
(54,215
|
)
|
|
|
|
|
|
|
Net deferred tax asset
|
|
|
66,218
|
|
|
67,523
|
|
|
|
|
|
|
|
Net deferred tax asset/(liability)
|
|
$
|
(41,531
|
)
|
$
|
(35,430
|
)
|
|
|
|
|
|
|
Deferred
income tax assets represent amounts available to reduce income taxes payable on taxable income in future years. Such assets arise because of temporary differences between the
financial reporting and tax bases of assets and liabilities, as well as from net operating loss and tax credit carryforwards. During fiscal year April 28, 2013, we evaluated the realizability
of our deferred tax assets and performed an analysis of all available evidence, both positive and negative, consistent with the provisions of ASC 740-10-30-17. The
three-year cumulative loss is a significant piece of negative evidence and while it is primarily the result of the fiscal year April 28, 2013 sale of the Isle Casino Hotel in
Biloxi, Mississippi assets and not an indication of continuing operations, we are required to give objective historical evidence significantly more weight than subjective evidence, such as forecasts
of future income. Accordingly, in the fiscal 2012 fourth quarter, the Company recorded a $49,519 valuation allowance on its deferred tax assets. During fiscal year April, 28, 2013, an additional
valuation allowance of $2,214
was recorded. This allowance does not preclude us from utilizing the deferred tax assets in the future, nor does it reflect a change in our long-term outlook.
66
Table of Contents
ISLE OF CAPRI CASINOS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
(amounts in thousands, except share and per share amounts)
11. Income Taxes (Continued)
A
reconciliation of the beginning and ending amounts of valuation allowance is as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
Federal
|
|
State
|
|
Total
|
|
Balance, April 24, 2011
|
|
$
|
|
|
$
|
4,696
|
|
$
|
4,696
|
|
Provision, April 29, 2012
|
|
|
46,805
|
|
|
2,714
|
|
|
49,519
|
|
|
|
|
|
|
|
|
|
Balance, April 29, 2012
|
|
$
|
46,805
|
|
$
|
7,410
|
|
$
|
54,215
|
|
Current year (reduction) provision
|
|
|
(4,114
|
)
|
|
6,328
|
|
|
2,214
|
|
|
|
|
|
|
|
|
|
Balance, April 28, 2013
|
|
$
|
42,691
|
|
$
|
13,738
|
|
$
|
56,429
|
|
|
|
|
|
|
|
|
|
We
have determined that it is more likely than not that we will not be able to utilize $42,691 of the federal deferred tax assets and $13,738 of the state deferred tax
assets and have established valuation allowances accordingly. We allocated the income tax provision and valuation allowance between continuing operations and discontinued operations consistent with
the provisions of ASC 740.
At
April 28, 2013, we have federal net operating loss carryforwards of $176,157 for income tax purposes, with expiration dates from fiscal 2025 to 2033. Approximately $53,165 of
these net operating losses are attributable to IC Holdings Colorado, Inc. and its wholly-owned subsidiary CCSC/Blackhawk, Inc. ("IC Holdings, Inc. & Sub") and can
only be used to offset income earned by these entities. The remaining federal net operating losses are subject to limitations under the internal revenue code and underlying
treasury regulations, which may limit the amount ultimately utilized. We also have various state income tax net operating loss carryforwards totaling $291,010 with expiration dates from fiscal 2022 to
2033.This includes both consolidated and separate company net operating loss carryforwards. If or when recognized, the tax benefits relating to any reversal of the valuation allowance on deferred tax
assets as of April 28, 2013 will be accounted for as a reduction of income tax expense. We also have a federal general business and AMT credit carryforwards of $21,656 for income tax purposes,
with expiration dates from fiscal 2022 to 2033. Deferred income taxes related to NOL carryforwards have been classified as noncurrent to reflect the expected utilization of the carryforwards.
We
account for unrecognized tax benefits in accordance with ASC 740. A reconciliation of the beginning and ending amounts of unrecognized tax benefits as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
April 28,
2013
|
|
April 29,
2012
|
|
April 24,
2011
|
|
Beginning Balance
|
|
$
|
4,072
|
|
$
|
11,491
|
|
$
|
12,126
|
|
Gross increasestax positions in current period
|
|
|
|
|
|
|
|
|
|
|
Gross increasestax positions in prior periods
|
|
|
|
|
|
|
|
|
144
|
|
Gross decreasestax positions in prior periods
|
|
|
|
|
|
|
|
|
(779
|
)
|
Settlements
|
|
|
|
|
|
|
|
|
|
|
Lapse of statute of limitations
|
|
|
|
|
|
(7,419
|
)
|
|
|
|
|
|
|
|
|
|
|
|
Ending Balance
|
|
$
|
4,072
|
|
$
|
4,072
|
|
$
|
11,491
|
|
|
|
|
|
|
|
|
|
Included
in the balance of unrecognized tax benefits at April 28, 2013and April 29, 2012 are $2,647 of tax benefits that, if recognized, would affect the
effective tax rate. There are no tax benefits in the balance of unrecognized tax benefits at April 28, 2013 that, if recognized, would result in adjustments to deferred taxes.
67
Table of Contents
ISLE OF CAPRI CASINOS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
(amounts in thousands, except share and per share amounts)
11. Income Taxes (Continued)
We recognize accrued interest and penalties related to unrecognized tax benefits in income tax expense. Related to the unrecognized tax benefits noted above, we recorded interest expense
of $303, $310 and $460 in fiscal 2013, fiscal 2012 and fiscal 2011 respectively, related to prior periods. We accrued no penalties during the fiscal year ended 2013. In total, as of April 28,
2013 and April 29, 2012, we have recognized a liability of $2,363 and $2,060 respectively, for interest and no amount for penalties.
We
believe that an increase in unrecognized tax benefits related to federal and state exposures in the coming year, though possible, cannot be reasonably estimated and will not be
significant. In addition, we believe that it is reasonably possible that an amount between $0 and $2,647 of our currently remaining unrecognized tax positions may be recognized by the end of the
fiscal year ending April 27, 2014. These amounts relate to positions taken on Mississippi income tax returns for the fiscal years ending April 2002 through April 2008. The Mississippi
Department of Revenue has completed its examination of the income tax returns for these years and has issued its assessment. We have appealed the assessment and the court ruled in our favor at the
motion for summary judgment hearing held during the fiscal year ended April 28, 2013. The Mississippi Department of Revenue has appealed this ruling. We expect to resolve this issue during the
next twelve months.
On
April 30, 2011, the Federal statute of limitation for the fiscal years ending April 30, 2006 and April 29, 2007 lapsed. Consequently, we recognized approximately
$6,704 of Federal and $475 of state tax benefits and interest income of $404 related to prior periods during the fiscal year ended April 29, 2012.
We
file income tax returns in the U.S. Federal jurisdiction and various state jurisdictions. Our unrecognized state tax benefits are related to state tax returns open from tax years 2004
through 2013 depending on each state's statute of limitations.
68
Table of Contents
ISLE OF CAPRI CASINOS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
(amounts in thousands, except share and per share amounts)
12. Earnings Per Share
The following table sets forth the computation of basic and diluted earnings (loss) per share (in thousands, except share and per share amounts):
|
|
|
|
|
|
|
|
|
|
|
|
|
Fiscal Year Ended
|
|
|
|
April 28,
2013
|
|
April 29,
2012
|
|
April 24,
2011
|
|
Numerator:
|
|
|
|
|
|
|
|
|
|
|
Income (loss) applicable to common shares:
|
|
|
|
|
|
|
|
|
|
|
Income (loss) from continuing operations attributable to common stockholders
|
|
$
|
(45,990
|
)
|
$
|
(17,383
|
)
|
$
|
3,735
|
|
Income (loss) from discontinued operations
|
|
|
(1,579
|
)
|
|
(112,370
|
)
|
|
805
|
|
|
|
|
|
|
|
|
|
Net income (loss) attributable to the common stockholders
|
|
$
|
(47,569
|
)
|
$
|
(129,753
|
)
|
$
|
4,540
|
|
|
|
|
|
|
|
|
|
Denominator:
|
|
|
|
|
|
|
|
|
|
|
Denominator for basic earnings (loss) per shareweighted average shares
|
|
|
39,340,325
|
|
|
38,753,098
|
|
|
34,066,159
|
|
Effect of dilutive securities
|
|
|
|
|
|
|
|
|
|
|
Employee stock options
|
|
|
|
|
|
|
|
|
108,558
|
|
|
|
|
|
|
|
|
|
Denominator for diluted earnings (loss) per shareadjusted weighted average shares and assumed conversions
|
|
|
39,340,325
|
|
|
38,753,098
|
|
|
34,174,717
|
|
|
|
|
|
|
|
|
|
Basic earnings (loss) per share attributable to common stockholders
|
|
|
|
|
|
|
|
|
|
|
Income (loss) from continuing operations
|
|
$
|
(1.17
|
)
|
$
|
(0.45
|
)
|
$
|
0.11
|
|
Income (loss) from discontinued operations
|
|
|
(0.04
|
)
|
|
(2.90
|
)
|
|
0.02
|
|
|
|
|
|
|
|
|
|
Net income (loss) attributable to common stockholders
|
|
$
|
(1.21
|
)
|
$
|
(3.35
|
)
|
$
|
0.13
|
|
|
|
|
|
|
|
|
|
Diluted earnings (loss) per share attributable to common stockholders
|
|
|
|
|
|
|
|
|
|
|
Income (loss) from continuing operations
|
|
$
|
(1.17
|
)
|
$
|
(0.45
|
)
|
$
|
0.11
|
|
Income (loss) from discontinued operations
|
|
|
(0.04
|
)
|
|
(2.90
|
)
|
|
0.02
|
|
|
|
|
|
|
|
|
|
Net income (loss) attributable to common stockholders
|
|
$
|
(1.21
|
)
|
$
|
(3.35
|
)
|
$
|
0.13
|
|
|
|
|
|
|
|
|
|
During
January 2011, we completed the sale of 5,300,000 shares of common stock generating net proceeds of $51,227. Proceeds from our equity offering were used to repay
long-term debt.
Due
to the loss from continuing operations, stock options representing 25,367 shares, which are potentially dilutive and 904,660 shares, which were anti-dilutive, were
excluded from the calculation of common shares for diluted earnings per share for fiscal 2013. Due to the loss from continuing operations, stock options representing 21,845 shares, which are
potentially dilutive and 1,161,710 shares, which were anti-dilutive, were excluded from the calculation of common shares for diluted earnings per share for fiscal 2012. Stock options
representing 469,710 shares, which were anti-dilutive, were excluded from the calculation of common shares for diluted earnings per share for fiscal 2011. As the minimum market performance
conditions related to our restricted stock units have not been achieved as of
69
Table of Contents
ISLE OF CAPRI CASINOS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
(amounts in thousands, except share and per share amounts)
12. Earnings Per Share (Continued)
April 28,
2013, 1,714,286 units have been excluded from the calculation of diluted earnings per share for fiscal 2013.
13. Stock Based Compensation
Under our amended and restated Long Term Incentive Plan, we have issued restricted stock units, restricted stock and stock options.
Restricted Stock Units
During fiscal 2013 we granted restricted stock units ("RSUs") containing market performance conditions which will determine the
ultimate amount of RSUs, if any, to be awarded up to 1,714,286 units. Any RSUs earned will vest 50% on April 26, 2015 and 50% on April 24, 2016. The fair value of these RSUs is
determined utilizing a lattice pricing model which
considers a range of assumptions including volatility and risk-free interest rates. The aggregate compensation cost related to these RSUs is $4,932 to be recognized over the vesting
periods. Our current estimate of forfeitures is 0% and as of April 28, 2013, our unrecognized compensation cost for these RSUs is $3,817.
Restricted Stock
We issue shares of restricted common stock to employees and directors under our Long Term Incentive Plan. Restricted stock awarded to
employees primarily vests one-third on each anniversary of the grant date and for directors' vests one-half on the grant date and one-half on the first anniversary
of the grant date. Our aggregate estimate of forfeitures for restricted stock for employees and directors is 10% and 0%, respectively.
Stock Options
We have issued incentive stock options and nonqualified stock options which have a maximum term of 10 years and are, generally,
exercisable in yearly installments of 20% commencing one year after the date of grant. There were no stock options granted in fiscal 2013, 2012 or 2011.
Stock Compensation Expense
Total stock compensation expense from continuing operations in the accompanying consolidated statements of operations was
$5,079, $7,642, and $7,442 for the fiscal years 2013, 2012, and 2011, respectively. We recognize compensation expense for these awards on a straight-line basis over the requisite service
period for each separately vesting portion of the award.
70
Table of Contents
ISLE OF CAPRI CASINOS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
(amounts in thousands, except share and per share amounts)
13. Stock Based Compensation (Continued)
Activity Under Our Share Based Plans
A summary of restricted stock and option activity for fiscal 2013 is presented below:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Restricted
Stock
|
|
Weighted
Average
Grant-Date
Fair Value
|
|
Options
|
|
Weighted
Average
Exercise
Price
|
|
Outstanding at April 29, 2012
|
|
|
890,525
|
|
$
|
8.99
|
|
|
1,271,710
|
|
$
|
11.33
|
|
Granted
|
|
|
541,712
|
|
|
6.18
|
|
|
|
|
|
|
|
Exercised
|
|
|
|
|
|
|
|
|
(100,000
|
)
|
|
6.69
|
|
Vested
|
|
|
(599,566
|
)
|
|
8.79
|
|
|
|
|
|
|
|
Forfeited and expired
|
|
|
(27,973
|
)
|
|
6.83
|
|
|
(157,050
|
)
|
|
18.30
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Outstanding at April 28, 2013
|
|
|
804,698
|
|
$
|
7.32
|
|
|
1,014,660
|
|
$
|
10.71
|
|
|
|
|
|
|
|
|
|
|
|
|
|
As of April 28, 2013:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Outstanding exercisable options
|
|
|
n/a
|
|
|
|
|
|
952,660
|
|
$
|
10.83
|
|
Weighted average remaining contractual term
|
|
|
0.9 years
|
|
|
|
|
|
4.5
|
|
|
|
|
Aggregate intrinsic value:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Outstanding exercisable
|
|
|
n/a
|
|
|
|
|
$
|
213
|
|
|
|
|
Outstanding
|
|
$
|
5,669
|
|
|
|
|
$
|
267
|
|
|
|
|
Nonvested:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Unrecognized compensation cost
|
|
$
|
1,934
|
|
|
|
|
$
|
59
|
|
|
|
|
Weighted average remaining vesting period
|
|
|
0.9 years
|
|
|
|
|
|
1.0 years
|
|
|
|
|
Additional
information relating to our share based plans is as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
April 28,
2013
|
|
April 29,
2012
|
|
April 24,
2011
|
|
Restricted Stock:
|
|
|
|
|
|
|
|
|
|
|
Fair value of restricted stock vested during the year
|
|
$
|
5,272
|
|
$
|
7,317
|
|
$
|
4,457
|
|
Stock Options:
|
|
|
|
|
|
|
|
|
|
|
Intrinsic value of stock options exercised
|
|
|
41
|
|
|
5
|
|
|
11
|
|
Proceeds from stock option exercises
|
|
|
668
|
|
|
13
|
|
|
23
|
|
We
have 822,271, shares available for future issuance under our equity compensation plan as of April 28, 2013, assuming the maximum number of RSUs is awarded upon vesting. Upon
issuance of restricted shares or exercise of stock options, shares may be issued from available treasury or common shares.
Tax effect of Stock Based Compensation
Upon the exercise of certain stock options, vested restricted stock and vested RSUs, the tax benefit
(provision) related to stock compensation, subject to certain limitations, is recognized as an addition to or deduction from additional paid in capital. During fiscal year 2013, we reduced our
additional paid in capital by $10, reflecting a tax
provision related to the impact of restricted stock vesting. At April 28, 2013, we have deferred $1,433 of tax benefits associated with stock exercises and restricted stock vesting due to our
net operating loss position.
71
Table of Contents
ISLE OF CAPRI CASINOS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
(amounts in thousands, except share and per share amounts)
13. Stock Based Compensation (Continued)
Stock Repurchase
Our Board of Directors has approved a stock repurchase program, as amended, allowing up to 6,000,000 shares of our common stock to be
repurchased. As of April 28, 2013, we have repurchased 4,895,792 shares of common stock, and retired 553,800 shares of common stock under this stock repurchase program. No shares were
repurchased in fiscal years 2013, 2012 or 2011.
14. Deferred Compensation Plans
2005 Deferred Compensation Plan
Our 2005 Deferred Compensation Plan (the "Plan"), as amended and restated, is an unfunded deferred compensation
arrangement for the benefit of key management officers and employees of the Company and its subsidiaries. The terms of the Plan include the ability of the participants to defer, on a
pre-tax basis, salary, and bonus payments in excess of the amount permitted under IRS Code Section 401(k). The terms also allow for a discretionary annual matching contribution by
the Company. The Plan allows for the aggregation and investment of deferred amounts in notional investment alternatives, including units representing shares of our common stock. The liability related
to the Plan as of April 28, 2013 and April 29, 2012 was $3,545 and $2,796, respectively, and is included in long-term other accrued liabilities in the
consolidated balance sheets. Expense from continuing operations for our contributions related to the Plan was $100, $69 and $53 in fiscal years 2013, 2012 and 2011, respectively.
15. Supplemental Disclosure of Cash Flow Information
For the fiscal years 2013, 2012 and 2011 we made cash payments for interest, net of capitalized interest of $76,235, $83,004, and $84,506, respectively. We made income tax payments, net
of refunds, of $3,293 and $1,547 for fiscal years 2013 and 2012, respectively, and collected an income tax refund, net of payments, of $5,599 for fiscal year 2011.
For
fiscal 2013, 2012 and 2011, the change in accrued purchase of property and equipment in accounts payable decreased by $2,667 and increased by $8,315 and $1,642, respectively.
For
fiscal 2013, 2012 and 2011, we capitalized interest of $2,647, $1,105 and $125, respectively, primarily related to construction of our casino in Cape Girardeau, Missouri.
16. Employee Benefit Plan
401(k) Plan
We have a 401(k) plan covering substantially all of our employees who have completed 90 days of service. Expense for our
contributions for continuing operations related to the 401(k) plan was $1,495, $1,485, and $1,242 in fiscal years 2013, 2012, and 2011, respectively. Our contribution is based on a percentage of
employee contributions and may include an additional discretionary amount.
17. Interest Rate Derivatives
We have an interest rate derivative agreement in order to manage market risk on variable rate loans outstanding. We have an interest rate swap agreement with an aggregate notional value
of $50,000 with a maturity date in September 2013. Previously we had additionally entered into interest rate cap contracts, which matured prior to April 28, 2013.
72
Table of Contents
ISLE OF CAPRI CASINOS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
(amounts in thousands, except share and per share amounts)
17. Interest Rate Derivatives (Continued)
The
fair values of derivatives included in our consolidated balance sheet are as follows:
|
|
|
|
|
|
|
|
|
|
Type of Derivative Instrument
|
|
Balance Sheet Location
|
|
April 28,
2013
|
|
April 29,
2012
|
|
Interest rate swap contracts
|
|
Accrued interest
|
|
|
794
|
|
|
|
|
Interest rate swap contracts
|
|
Other long-term liabilities
|
|
|
|
|
|
2,493
|
|
The
interest rate cap agreements met the criteria for hedge accounting for cash flow hedges. As a result, there was no impact on our consolidated statement of operations from changes in
fair value of the interest rate cap agreements. The loss recorded in accumulated other comprehensive income (loss) for our interest rate cap contracts was recorded net of deferred income tax benefits
of $8 as of April 29, 2012. The change in unrealized gain (loss) on our derivatives qualifying for hedge accounting was $14 and $68 for fiscal years 2013 and 2012, respectively.
Our
interest rate swaps no longer meet the criteria for hedge effectiveness, and therefore changes in the fair value of the swaps subsequent to the date of ineffectiveness in February
2010, are recorded in derivative income in the consolidated statements of operations. The cumulative loss recorded in other comprehensive income (loss) through the date of ineffectiveness is being
amortized into derivative expense over the remaining term of the individual interest rate swap agreements or when the underlying transaction is no longer expected to occur. As of April 28,
2013, the weighted average fixed LIBOR interest rate of our interest rate swap agreements was 3.995%.
The
loss recorded in accumulated other comprehensive income (loss) of our interest rate swap contracts is recorded net of deferred income tax benefits of $149 and $506, as of
April 28, 2013 and April 29, 2012, respectively.
Derivative
income (expense) related to the change in fair value of interest rate swap contracts is as follows:
|
|
|
|
|
|
|
|
|
|
Fiscal Year Ended
|
|
|
|
April 28,
2013
|
|
April 29,
2012
|
|
Derivative income (expense)
|
|
$
|
1,699
|
|
$
|
2,540
|
|
Derivative
income (expense) realized associated with the amortization of cumulative loss recorded in other comprehensive income (loss) for the interest rate swaps through the date of
ineffectiveness is as follows:
|
|
|
|
|
|
|
|
|
|
Fiscal Year Ended
|
|
|
|
April 28,
2013
|
|
April 29,
2012
|
|
Accumulated OCI amortization
|
|
$
|
594
|
|
$
|
1,312
|
|
Change in deferred taxes
|
|
|
357
|
|
|
789
|
|
Derivative income (expense)
|
|
|
(951
|
)
|
|
(2,101
|
)
|
The
amount of accumulated other comprehensive income (loss) related to the interest rate swap contract maturing within the next twelve months was $247, net of tax of $149, as of
April 28, 2013.
73
Table of Contents
ISLE OF CAPRI CASINOS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
(amounts in thousands, except share and per share amounts)
18. Fair Value
The fair value of our interest swap and cap contracts are recorded using Level 3 inputs at the present value of all expected future cash flows based on the LIBOR-based yield curve
as of the date of the valuation.
The
following table presents the changes in Level 3 assets and liabilities measured at fair value on a recurring basis for the fiscal years ended April 28, 2013 and
April 29, 2012:
|
|
|
|
|
|
|
|
|
|
Fiscal Year Ended
|
|
Interest Rate Derivatives
|
|
April 28,
2013
|
|
April 29,
2012
|
|
Beginning balance
|
|
$
|
(2,493
|
)
|
$
|
(5,004
|
)
|
Realized gain
|
|
|
1,699
|
|
|
2,540
|
|
Unrealized (loss) gain
|
|
|
|
|
|
(29
|
)
|
|
|
|
|
|
|
Ending balance
|
|
$
|
(794
|
)
|
$
|
(2,493
|
)
|
|
|
|
|
|
|
Financial Instruments
The estimated carrying amounts and fair values of our other financial instruments are as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
April 28, 2013
|
|
April 29, 2012
|
|
|
|
Carrying
Amount
|
|
Fair Value
|
|
Carrying
Amount
|
|
Fair Value
|
|
Financial assets:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash and cash equivalents
|
|
$
|
68,469
|
|
$
|
68,469
|
|
$
|
94,461
|
|
$
|
94,461
|
|
Marketable securities
|
|
|
25,520
|
|
|
25,520
|
|
|
24,943
|
|
|
24,943
|
|
Accounts receivable
|
|
|
11,077
|
|
|
11,077
|
|
|
6,941
|
|
|
6,941
|
|
Restricted cash and investments
|
|
|
11,417
|
|
|
11,417
|
|
|
12,551
|
|
|
12,551
|
|
Notes receivable
|
|
|
56
|
|
|
56
|
|
|
1,293
|
|
|
1,293
|
|
Financial liabilities:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Revolving line of credit
|
|
$
|
154,900
|
|
$
|
151,802
|
|
$
|
|
|
$
|
|
|
Variable rate term loans
|
|
|
|
|
|
|
|
|
495,000
|
|
|
498,713
|
|
7.75% Senior notes
|
|
|
298,246
|
|
|
327,698
|
|
|
298,026
|
|
|
308,829
|
|
5.875% Senior notes
|
|
|
350,000
|
|
|
357,000
|
|
|
|
|
|
|
|
8.875% Senior subordinated notes
|
|
|
350,000
|
|
|
381,535
|
|
|
|
|
|
|
|
7% Senior subordinated notes
|
|
|
|
|
|
|
|
|
357,275
|
|
|
358,168
|
|
Other long-term debt
|
|
|
3,738
|
|
|
3,738
|
|
|
4,130
|
|
|
4,130
|
|
Other long-term obligations
|
|
|
22,514
|
|
|
22,514
|
|
|
16,556
|
|
|
16,556
|
|
The
following methods and assumptions were used to estimate the fair value of each class of financial instruments for which it is practicable to estimate that value:
Cash
and cash equivalents, accounts receivable and notes receivable are carried at cost, which approximates fair value due to their short-term maturities.
Marketable
securities include investments of $9,256 based upon Level 1 inputs obtained from quoted prices available in active markets and investments of $16,164 based upon
Level 2 inputs obtained from quoted prices of identical assets in inactive markets or quoted prices for similar
74
Table of Contents
ISLE OF CAPRI CASINOS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
(amounts in thousands, except share and per share amounts)
18. Fair Value (Continued)
assets
in active and inactive markets. There were no transfers between Level 1 and Level 2 inputs during the year.
Restricted
cash and investments are based upon Level 1 inputs obtained from quoted prices available in active markets and represent the amounts we would expect to receive if we
sold these assets.
The
fair value of our long-term debt or other long-term obligations is estimated based on the quoted market price of the underlying debt issue (Level 1
input) or, when a quoted market price is not available, the discounted cash flow of future payments utilizing current rates available to us for debt of similar remaining maturities (Level 3
inputs). Debt obligations with a short remaining maturity have a carrying amount that approximates fair value.
19. Accumulated Other Comprehensive Income (Loss)
A detail of accumulated other comprehensive income (loss) is as follows:
|
|
|
|
|
|
|
|
|
|
April 28,
2013
|
|
April 29,
2012
|
|
Interest rate cap contracts
|
|
$
|
|
|
$
|
(14
|
)
|
Interest rate swap contracts
|
|
|
(247
|
)
|
|
(841
|
)
|
|
|
|
|
|
|
|
|
$
|
(247
|
)
|
$
|
(855
|
)
|
|
|
|
|
|
|
The
amount of change in the gain (loss) recognized in accumulated other comprehensive income (loss) related to derivative instruments is as follows:
|
|
|
|
|
|
|
|
|
|
Fiscal Year Ended
|
|
Type of Derivative Instrument
|
|
April 28,
2013
|
|
April 29,
2012
|
|
Interest rate cap contracts
|
|
$
|
14
|
|
$
|
68
|
|
Interest rate swap contracts
|
|
|
594
|
|
|
1,312
|
|
|
|
|
|
|
|
|
|
$
|
608
|
|
$
|
1,380
|
|
|
|
|
|
|
|
20. Consolidating Condensed Financial Information
Certain of our wholly owned subsidiaries have fully and unconditionally guaranteed on a joint and several basis, the payment of all obligations under our 7.75% Senior Notes, 5.875%
Senior Notes, and 8.875% Senior Subordinated Notes.
The
following wholly owned subsidiaries of the Company are guarantors, on a joint and several basis, under the 7.75% Senior Notes, 5.875% Senior Notes and 8.875% Senior Subordinated
Notes: Black Hawk Holdings, L.L.C.; CCSC/Blackhawk, Inc.; IC Holdings Colorado, Inc.; IOC-Black Hawk Distribution Company, L.L.C.; IOC-Boonville, Inc.; IOC-Caruthersville, L.L.C.;
IOC-Kansas City, Inc.; IOC-Lula, Inc.; IOC-Natchez, Inc.; IOC-PA, L.L.C.; IOC-Black Hawk County, Inc.; IOC-Davenport, Inc.;
IOC Holdings, L.L.C.; IOC-Vicksburg, Inc.; IOC-Vicksburg, LLC; Rainbow Casino-Vicksburg Partnership, L.P.; IOC Cape Girardeau, LLC; Isle of Capri Bettendorf, L.C; Isle of
Capri Black Hawk, L.L.C.; Isle of Capri Marquette, Inc.; PPI, Inc.; and St. Charles Gaming Company, Inc. Each of the subsidiaries' guarantees is joint and several with the
guarantees of the other subsidiaries.
75
Table of Contents
ISLE OF CAPRI CASINOS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
(amounts in thousands, except share and per share amounts)
20. Consolidating Condensed Financial Information (Continued)
Consolidating condensed balance sheets as of April 28, 2013 and April 29, 2012 are as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
As of April 28, 2013
|
|
Balance Sheet
|
|
Isle of Capri
Casinos, Inc.
(Parent Obligor)
|
|
Guarantor
Subsidiaries
|
|
Non-
Guarantor
Subsidiaries
|
|
Consolidating
and Eliminating
Entries
|
|
Isle of Capri
Casinos, Inc.
Consolidated
|
|
Current assets
|
|
$
|
19,176
|
|
$
|
84,163
|
|
$
|
29,010
|
|
$
|
(49
|
)
|
$
|
132,300
|
|
Intercompany receivables
|
|
|
626,444
|
|
|
(156,427
|
)
|
|
14,909
|
|
|
(484,926
|
)
|
|
|
|
Investments in subsidiaries
|
|
|
643,257
|
|
|
(29,794
|
)
|
|
|
|
|
(613,463
|
)
|
|
|
|
Property and equipment, net
|
|
|
7,831
|
|
|
1,014,067
|
|
|
12,128
|
|
|
|
|
|
1,034,026
|
|
Other assets
|
|
|
50,958
|
|
|
324,168
|
|
|
17,587
|
|
|
(5,440
|
)
|
|
387,273
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total assets
|
|
$
|
1,347,666
|
|
$
|
1,236,177
|
|
$
|
73,634
|
|
$
|
(1,103,878
|
)
|
$
|
1,553,599
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Current liabilities
|
|
$
|
43,139
|
|
$
|
88,223
|
|
$
|
24,486
|
|
$
|
(49
|
)
|
$
|
155,799
|
|
Intercompany payables
|
|
|
|
|
|
484,926
|
|
|
|
|
|
(484,926
|
)
|
|
|
|
Long-term debt, less current maturities
|
|
|
1,155,939
|
|
|
210
|
|
|
320
|
|
|
|
|
|
1,156,469
|
|
Other accrued liabilities
|
|
|
6,178
|
|
|
82,660
|
|
|
15,523
|
|
|
(5,440
|
)
|
|
98,921
|
|
Stockholders' equity
|
|
|
142,410
|
|
|
580,158
|
|
|
33,305
|
|
|
(613,463
|
)
|
|
142,410
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total liabilities and stockholders' equity
|
|
$
|
1,347,666
|
|
$
|
1,236,177
|
|
$
|
73,634
|
|
$
|
(1,103,878
|
)
|
$
|
1,553,599
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
As of April 29, 2012
|
|
Balance Sheet
|
|
Isle of Capri
Casinos, Inc.
(Parent Obligor)
|
|
Guarantor
Subsidiaries
|
|
Non-
Guarantor
Subsidiaries
|
|
Consolidating
and Eliminating
Entries
|
|
Isle of Capri
Casinos, Inc.
Consolidated
|
|
Current assets
|
|
$
|
52,533
|
|
$
|
120,711
|
|
$
|
29,323
|
|
$
|
(284
|
)
|
$
|
202,283
|
|
Intercompany receivables
|
|
|
673,850
|
|
|
(228,619
|
)
|
|
794
|
|
|
(446,025
|
)
|
|
|
|
Investments in subsidiaries
|
|
|
644,423
|
|
|
(29,794
|
)
|
|
|
|
|
(614,629
|
)
|
|
|
|
Property and equipment, net
|
|
|
9,194
|
|
|
909,727
|
|
|
31,093
|
|
|
|
|
|
950,014
|
|
Other assets
|
|
|
(5,524
|
)
|
|
384,498
|
|
|
17,180
|
|
|
26,519
|
|
|
422,673
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total assets
|
|
$
|
1,374,476
|
|
$
|
1,156,523
|
|
$
|
78,390
|
|
$
|
(1,034,419
|
)
|
$
|
1,574,970
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Current liabilities
|
|
$
|
37,510
|
|
$
|
89,711
|
|
$
|
29,191
|
|
$
|
(296
|
)
|
$
|
156,116
|
|
Intercompany payables
|
|
|
|
|
|
446,025
|
|
|
|
|
|
(446,025
|
)
|
|
|
|
Long-term debt, less current maturities
|
|
|
1,145,301
|
|
|
3,264
|
|
|
473
|
|
|
|
|
|
1,149,038
|
|
Other accrued liabilities
|
|
|
8,045
|
|
|
34,726
|
|
|
16,894
|
|
|
26,531
|
|
|
86,196
|
|
Stockholders' equity
|
|
|
183,620
|
|
|
582,797
|
|
|
31,832
|
|
|
(614,629
|
)
|
|
183,620
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total liabilities and stockholders' equity
|
|
$
|
1,374,476
|
|
$
|
1,156,523
|
|
$
|
78,390
|
|
$
|
(1,034,419
|
)
|
$
|
1,574,970
|
|
|
|
|
|
|
|
|
|
|
|
|
|
76
Table of Contents
ISLE OF CAPRI CASINOS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
(amounts in thousands, except share and per share amounts)
20. Consolidating Condensed Financial Information (Continued)
Consolidating
condensed statements of operations for the fiscal years ended April 28, 2013, April 29, 2012 and April 24, 2011 are as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
For the Fiscal Year Ended April 28, 2013
|
|
Statement of Operations
|
|
Isle of Capri
Casinos, Inc.
(Parent Obligor)
|
|
Guarantor
Subsidiaries
|
|
Non-
Guarantor
Subsidiaries
|
|
Consolidating
and Eliminating
Entries
|
|
Isle of Capri
Casinos, Inc.
Consolidated
|
|
Revenues:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Casino
|
|
$
|
|
|
$
|
1,016,005
|
|
$
|
|
|
$
|
|
|
$
|
1,016,005
|
|
Rooms, food, beverage, pari-mutuel and other
|
|
|
735
|
|
|
164,470
|
|
|
8,978
|
|
|
(8,955
|
)
|
|
165,228
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gross revenues
|
|
|
735
|
|
|
1,180,475
|
|
|
8,978
|
|
|
(8,955
|
)
|
|
1,181,233
|
|
Less promotional allowances
|
|
|
|
|
|
(216,034
|
)
|
|
|
|
|
|
|
|
(216,034
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
Net revenues
|
|
|
735
|
|
|
964,441
|
|
|
8,978
|
|
|
(8,955
|
)
|
|
965,199
|
|
Operating expenses:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Casino
|
|
|
|
|
|
156,179
|
|
|
|
|
|
|
|
|
156,179
|
|
Gaming taxes
|
|
|
|
|
|
255,105
|
|
|
|
|
|
|
|
|
255,105
|
|
Rooms, food, beverage, pari-mutuel and other
|
|
|
37,768
|
|
|
347,561
|
|
|
5,069
|
|
|
(8,955
|
)
|
|
381,443
|
|
Valuation allowance
|
|
|
|
|
|
50,100
|
|
|
|
|
|
|
|
|
50,100
|
|
Management fee expense (revenue)
|
|
|
(34,068
|
)
|
|
34,068
|
|
|
|
|
|
|
|
|
|
|
Depreciation and amortization
|
|
|
2,020
|
|
|
71,080
|
|
|
319
|
|
|
|
|
|
73,419
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total operating expenses
|
|
|
5,720
|
|
|
914,093
|
|
|
5,388
|
|
|
(8,955
|
)
|
|
916,246
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating income (loss)
|
|
|
(4,985
|
)
|
|
50,348
|
|
|
3,590
|
|
|
|
|
|
48,953
|
|
Interest expense, net
|
|
|
(51,811
|
)
|
|
(36,089
|
)
|
|
(1,059
|
)
|
|
|
|
|
(88,959
|
)
|
Gain on extinguishment of debt
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Derivative income
|
|
|
748
|
|
|
|
|
|
|
|
|
|
|
|
748
|
|
Equity in income (loss) of subsidiaries
|
|
|
(9,918
|
)
|
|
|
|
|
|
|
|
9,918
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income (loss) from continuing operations before income taxes and noncontolling interest
|
|
|
(65,966
|
)
|
|
14,259
|
|
|
2,531
|
|
|
9,918
|
|
|
(39,258
|
)
|
Income tax (provision) benefit
|
|
|
19,976
|
|
|
(25,649
|
)
|
|
(1,059
|
)
|
|
|
|
|
(6,732
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
Income (loss) from continuining operations
|
|
|
(45,990
|
)
|
|
(11,390
|
)
|
|
1,472
|
|
|
9,918
|
|
|
(45,990
|
)
|
Income (loss) of discontinued operations
|
|
|
(1,579
|
)
|
|
(2,502
|
)
|
|
|
|
|
2,502
|
|
|
(1,579
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income (loss)
|
|
$
|
(47,569
|
)
|
$
|
(13,892
|
)
|
$
|
1,472
|
|
$
|
12,420
|
|
$
|
(47,569
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
77
Table of Contents
ISLE OF CAPRI CASINOS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
(amounts in thousands, except share and per share amounts)
20. Consolidating Condensed Financial Information (Continued)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
For the Fiscal Year Ended April 29, 2012
|
|
Statement of Operations
|
|
Isle of Capri
Casinos, Inc.
(Parent Obligor)
|
|
Guarantor
Subsidiaries
|
|
Non-
Guarantor
Subsidiaries
|
|
Consolidating
and Eliminating
Entries
|
|
Isle of Capri
Casinos, Inc.
Consolidated
|
|
Revenues:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Casino
|
|
$
|
|
|
$
|
1,006,523
|
|
$
|
|
|
$
|
|
|
$
|
1,006,523
|
|
Rooms, food, beverage, pari-mutuel and other
|
|
|
1,088
|
|
|
169,192
|
|
|
9,645
|
|
|
(9,290
|
)
|
|
170,635
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gross revenues
|
|
|
1,088
|
|
|
1,175,715
|
|
|
9,645
|
|
|
(9,290
|
)
|
|
1,177,158
|
|
Less promotional allowances
|
|
|
|
|
|
(199,787
|
)
|
|
|
|
|
|
|
|
(199,787
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
Net revenues
|
|
|
1,088
|
|
|
975,928
|
|
|
9,645
|
|
|
(9,290
|
)
|
|
977,371
|
|
Operating expenses:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Casino
|
|
|
|
|
|
153,743
|
|
|
|
|
|
|
|
|
153,743
|
|
Gaming taxes
|
|
|
|
|
|
251,780
|
|
|
|
|
|
|
|
|
251,780
|
|
Rooms, food, beverage, pari-mutuel and other
|
|
|
41,502
|
|
|
340,980
|
|
|
7,674
|
|
|
(9,290
|
)
|
|
380,866
|
|
Valuation allowance
|
|
|
|
|
|
30,549
|
|
|
|
|
|
|
|
|
30,549
|
|
Management fee expense (revenue)
|
|
|
(34,751
|
)
|
|
34,751
|
|
|
|
|
|
|
|
|
|
|
Depreciation and amortization
|
|
|
1,960
|
|
|
73,538
|
|
|
552
|
|
|
|
|
|
76,050
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total operating expenses
|
|
|
8,711
|
|
|
885,341
|
|
|
8,226
|
|
|
(9,290
|
)
|
|
892,988
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating income (loss)
|
|
|
(7,623
|
)
|
|
90,587
|
|
|
1,419
|
|
|
|
|
|
84,383
|
|
Interest expense, net
|
|
|
(28,385
|
)
|
|
(58,006
|
)
|
|
(695
|
)
|
|
|
|
|
(87,086
|
)
|
Gain on extinguishment of debt
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Derivative income
|
|
|
439
|
|
|
|
|
|
|
|
|
|
|
|
439
|
|
Equity in income (loss) of subsidiaries
|
|
|
54,462
|
|
|
|
|
|
|
|
|
(54,462
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income (loss) from continuing operations before income taxes and noncontolling interest
|
|
|
18,893
|
|
|
32,581
|
|
|
724
|
|
|
(54,462
|
)
|
|
(2,264
|
)
|
Income tax (provision) benefit
|
|
|
(36,276
|
)
|
|
21,419
|
|
|
(262
|
)
|
|
|
|
|
(15,119
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
Income (loss) from continuining operations
|
|
|
(17,383
|
)
|
|
54,000
|
|
|
462
|
|
|
(54,462
|
)
|
|
(17,383
|
)
|
Income (loss) of discontinued operations
|
|
|
(112,370
|
)
|
|
(114,125
|
)
|
|
|
|
|
114,125
|
|
|
(112,370
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income (loss)
|
|
$
|
(129,753
|
)
|
$
|
(60,125
|
)
|
$
|
462
|
|
$
|
59,663
|
|
$
|
(129,753
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
78
Table of Contents
ISLE OF CAPRI CASINOS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
(amounts in thousands, except share and per share amounts)
20. Consolidating Condensed Financial Information (Continued)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
For the Fiscal Year Ended April 24, 2011
|
|
Statement of Operations
|
|
Isle of Capri
Casinos, Inc.
(Parent Obligor)
|
|
Guarantor
Subsidiaries
|
|
Non-
Guarantor
Subsidiaries
|
|
Consolidating
and Eliminating
Entries
|
|
Isle of Capri
Casinos, Inc.
Consolidated
|
|
Revenues:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Casino
|
|
$
|
|
|
$
|
968,423
|
|
$
|
|
|
$
|
|
|
$
|
968,423
|
|
Rooms, food, beverage, pari-mutuel and other
|
|
|
1,670
|
|
|
152,331
|
|
|
9,626
|
|
|
(9,528
|
)
|
|
154,099
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gross revenues
|
|
|
1,670
|
|
|
1,120,754
|
|
|
9,626
|
|
|
(9,528
|
)
|
|
1,122,522
|
|
Less promotional allowances
|
|
|
|
|
|
(185,861
|
)
|
|
|
|
|
|
|
|
(185,861
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
Net revenues
|
|
|
1,670
|
|
|
934,893
|
|
|
9,626
|
|
|
(9,528
|
)
|
|
936,661
|
|
Operating expenses:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Casino
|
|
|
|
|
|
142,642
|
|
|
|
|
|
|
|
|
142,642
|
|
Gaming taxes
|
|
|
|
|
|
242,949
|
|
|
|
|
|
|
|
|
242,949
|
|
Rooms, food, beverage, pari-mutuel and other
|
|
|
42,837
|
|
|
329,999
|
|
|
8,218
|
|
|
(9,528
|
)
|
|
371,526
|
|
Management fee expense (revenue)
|
|
|
(33,259
|
)
|
|
33,259
|
|
|
|
|
|
|
|
|
|
|
Depreciation and amortization
|
|
|
1,955
|
|
|
75,086
|
|
|
572
|
|
|
|
|
|
77,613
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total operating expenses
|
|
|
11,533
|
|
|
823,935
|
|
|
8,790
|
|
|
(9,528
|
)
|
|
834,730
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating income (loss)
|
|
|
(9,863
|
)
|
|
110,958
|
|
|
836
|
|
|
|
|
|
101,931
|
|
Interest expense, net
|
|
|
(29,634
|
)
|
|
(61,046
|
)
|
|
648
|
|
|
|
|
|
(90,032
|
)
|
Gain on extinguishment of debt
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Derivative income (expense)
|
|
|
(1,214
|
)
|
|
|
|
|
|
|
|
|
|
|
(1,214
|
)
|
Equity in income (loss) of subsidiaries
|
|
|
36,389
|
|
|
23
|
|
|
|
|
|
(36,412
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income (loss) from continuing operations before income taxes and noncontolling interest
|
|
|
(4,322
|
)
|
|
49,935
|
|
|
1,484
|
|
|
(36,412
|
)
|
|
10,685
|
|
Income tax (provision) benefit
|
|
|
8,057
|
|
|
(13,171
|
)
|
|
(1,836
|
)
|
|
|
|
|
(6,950
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
Income (loss) from continuining operations
|
|
|
3,735
|
|
|
36,764
|
|
|
(352
|
)
|
|
(36,412
|
)
|
|
3,735
|
|
Income (loss) of discontinued operations
|
|
|
805
|
|
|
(4,827
|
)
|
|
1,475
|
|
|
3,352
|
|
|
805
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income (loss)
|
|
$
|
4,540
|
|
$
|
31,937
|
|
$
|
1,123
|
|
$
|
(33,060
|
)
|
$
|
4,540
|
|
|
|
|
|
|
|
|
|
|
|
|
|
79
Table of Contents
ISLE OF CAPRI CASINOS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
(amounts in thousands, except share and per share amounts)
20. Consolidating Condensed Financial Information (Continued)
Consolidating condensed statements of cash flows for the fiscal years ended April 28, 2013, April 29, 2012 and April 24, 2011 are as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
For the Fiscal Year Ended April 28, 2013
|
|
Statement of Cash Flows
|
|
Isle of Capri
Casinos, Inc.
(Parent Obligor)
|
|
Guarantor
Subsidiaries
|
|
Non-
Guarantor
Subsidiaries
|
|
Consolidating
and Eliminating
Entries
|
|
Isle of Capri
Casinos, Inc.
Consolidated
|
|
Net cash provided by (used in) operating activities
|
|
$
|
(48,218
|
)
|
$
|
168,576
|
|
$
|
(4,316
|
)
|
$
|
|
|
$
|
116,042
|
|
Net cash provided by (used in) investing activities
|
|
|
33,974
|
|
|
(123,245
|
)
|
|
(106
|
)
|
|
(34,072
|
)
|
|
(123,449
|
)
|
Net cash provided by (used in) financing activities
|
|
|
(18,207
|
)
|
|
(38,906
|
)
|
|
4,456
|
|
|
34,072
|
|
|
(18,585
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
Net increase (decrease) in cash and cash equivalents
|
|
|
(32,451
|
)
|
|
6,425
|
|
|
34
|
|
|
|
|
|
(25,992
|
)
|
Cash and cash equivalents at beginning of the period
|
|
|
39,365
|
|
|
50,749
|
|
|
4,347
|
|
|
|
|
|
94,461
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash and cash equivalents at end of the period
|
|
$
|
6,914
|
|
$
|
57,174
|
|
$
|
4,381
|
|
$
|
|
|
$
|
68,469
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
For the Fiscal Year Ended April 29, 2012
|
|
Statement of Cash Flows
|
|
Isle of Capri
Casinos, Inc.
(Parent Obligor)
|
|
Guarantor
Subsidiaries
|
|
Non-
Guarantor
Subsidiaries
|
|
Consolidating
and Eliminating
Entries
|
|
Isle of Capri
Casinos, Inc.
Consolidated
|
|
Net cash provided by (used in) operating activities
|
|
$
|
12,960
|
|
$
|
101,801
|
|
$
|
3,298
|
|
$
|
|
|
$
|
118,059
|
|
Net cash provided by (used in) investing activities
|
|
|
60,806
|
|
|
(57,955
|
)
|
|
(1,036
|
)
|
|
(61,864
|
)
|
|
(60,049
|
)
|
Net cash provided by (used in) financing activities
|
|
|
(38,353
|
)
|
|
(55,202
|
)
|
|
(7,036
|
)
|
|
61,864
|
|
|
(38,727
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
Net increase (decrease) in cash and cash equivalents
|
|
|
35,413
|
|
|
(11,356
|
)
|
|
(4,774
|
)
|
|
|
|
|
19,283
|
|
Cash and cash equivalents at beginning of the period
|
|
|
3,952
|
|
|
62,105
|
|
|
9,121
|
|
|
|
|
|
75,178
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash and cash equivalents at end of the period
|
|
$
|
39,365
|
|
$
|
50,749
|
|
$
|
4,347
|
|
$
|
|
|
$
|
94,461
|
|
|
|
|
|
|
|
|
|
|
|
|
|
80
Table of Contents
ISLE OF CAPRI CASINOS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
(amounts in thousands, except share and per share amounts)
20. Consolidating Condensed Financial Information (Continued)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
For the Fiscal Year Ended April 24, 2011
|
|
Statement of Cash Flows
|
|
Isle of Capri
Casinos, Inc.
(Parent Obligor)
|
|
Guarantor
Subsidiaries
|
|
Non-
Guarantor
Subsidiaries
|
|
Consolidating
and Eliminating
Entries
|
|
Isle of Capri
Casinos, Inc.
Consolidated
|
|
Net cash provided by (used in) operating activities
|
|
$
|
(1,527
|
)
|
$
|
119,078
|
|
$
|
6,133
|
|
$
|
|
|
$
|
123,684
|
|
Net cash provided by (used in) investing activities
|
|
|
(29,490
|
)
|
|
(129,743
|
)
|
|
(10,160
|
)
|
|
24,756
|
|
|
(144,637
|
)
|
Net cash provided by (used in) financing activities
|
|
|
28,463
|
|
|
25,776
|
|
|
(1,373
|
)
|
|
(24,756
|
)
|
|
28,110
|
|
Effect of foreign currency exchange rates on cash and cash equivalents
|
|
|
|
|
|
|
|
|
(48
|
)
|
|
|
|
|
(48
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
Net increase (decrease) in cash and cash equivalents
|
|
|
(2,554
|
)
|
|
15,111
|
|
|
(5,448
|
)
|
|
|
|
|
7,109
|
|
Cash and cash equivalents at beginning of the period
|
|
|
6,506
|
|
|
46,994
|
|
|
14,569
|
|
|
|
|
|
68,069
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash and cash equivalents at end of the period
|
|
$
|
3,952
|
|
$
|
62,105
|
|
$
|
9,121
|
|
$
|
|
|
$
|
75,178
|
|
|
|
|
|
|
|
|
|
|
|
|
|
81
Table of Contents
ISLE OF CAPRI CASINOS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
(amounts in thousands, except share and per share amounts)
21. Selected Quarterly Financial Information (unaudited)
Our selected quarterly financial information has included reclassifications for amounts shown in our previously filed reports on Forms 10-Q to reflect the discontinued
operations presentation for our Biloxi, Mississippi property.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Fiscal Quarters Ended
|
|
|
|
July 29,
2012
|
|
October 28,
2012
|
|
January 27,
2013
|
|
April 28,
2013
|
|
Net revenues
|
|
$
|
235,823
|
|
$
|
223,207
|
|
$
|
238,095
|
|
$
|
268,074
|
|
Operating income
|
|
|
26,184
|
|
|
16,155
|
|
|
20,383
|
|
|
(13,769
|
)
|
Income (loss) from continuing operations
|
|
|
4,744
|
|
|
(4,341
|
)
|
|
(1,002
|
)
|
|
(45,391
|
)
|
Income (loss) from discontinued operations, net of income taxes
|
|
|
1,917
|
|
|
(2,312
|
)
|
|
(1,184
|
)
|
|
|
|
Net income (loss)
|
|
|
6,661
|
|
|
(6,653
|
)
|
|
(2,186
|
)
|
|
(45,391
|
)
|
Earnings (loss) per common share basic:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income (loss) from continuing operations
|
|
$
|
0.12
|
|
$
|
(0.11
|
)
|
$
|
(0.03
|
)
|
$
|
(1.15
|
)
|
Income (loss) from discontinued operations, net of income taxes
|
|
|
0.05
|
|
|
(0.06
|
)
|
|
(0.03
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income (loss)
|
|
$
|
0.17
|
|
$
|
(0.17
|
)
|
$
|
(0.06
|
)
|
$
|
(1.15
|
)
|
|
|
|
|
|
|
|
|
|
|
Earnings (loss) per common share diluted:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income (loss) from continuing operations
|
|
$
|
0.12
|
|
$
|
(0.11
|
)
|
$
|
(0.03
|
)
|
$
|
(1.15
|
)
|
Income (loss) from discontinued operations, net of income taxes
|
|
|
0.05
|
|
|
(0.06
|
)
|
|
(0.03
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income (loss)
|
|
$
|
0.17
|
|
$
|
(0.17
|
)
|
$
|
(0.06
|
)
|
$
|
(1.15
|
)
|
|
|
|
|
|
|
|
|
|
|
Weighted average basic shares
|
|
|
39,018,281
|
|
|
39,336,134
|
|
|
39,488,480
|
|
|
39,518,406
|
|
Weighted average dilutive shares
|
|
|
39,035,280
|
|
|
39,336,134
|
|
|
39,488,480
|
|
|
39,518,406
|
|
82
Table of Contents
ISLE OF CAPRI CASINOS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
(amounts in thousands, except share and per share amounts)
21. Selected Quarterly Financial Information (unaudited) (Continued)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Fiscal Quarters Ended
|
|
|
|
July 24,
2011
|
|
October 23,
2011
|
|
January 22,
2012
|
|
April 29,
2012
|
|
Net revenues
|
|
$
|
227,604
|
|
$
|
231,426
|
|
$
|
227,320
|
|
$
|
291,020
|
|
Operating income
|
|
|
17,693
|
|
|
19,773
|
|
|
20,813
|
|
|
26,104
|
|
Income (loss) from continuing operations
|
|
|
(2,559
|
)
|
|
(1,030
|
)
|
|
(316
|
)
|
|
(13,478
|
)
|
Income (loss) from discontinued operations, net of income taxes
|
|
|
236
|
|
|
(427
|
)
|
|
(866
|
)
|
|
(111,313
|
)
|
Net income (loss)
|
|
|
(2,323
|
)
|
|
(1,457
|
)
|
|
(1,182
|
)
|
|
(124,791
|
)
|
Earnings (loss) per common share basic:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income (loss) from continuing operations
|
|
$
|
(0.07
|
)
|
$
|
(0.03
|
)
|
$
|
(0.01
|
)
|
$
|
(0.35
|
)
|
Income (loss) from discontinued operations, net of income taxes
|
|
|
0.01
|
|
|
(0.01
|
)
|
|
(0.02
|
)
|
|
(2.85
|
)
|
|
|
|
|
|
|
|
|
|
|
Net income (loss)
|
|
$
|
(0.06
|
)
|
$
|
(0.04
|
)
|
$
|
(0.03
|
)
|
$
|
(3.20
|
)
|
|
|
|
|
|
|
|
|
|
|
Earnings (loss) per common share diluted:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income (loss) from continuing operations
|
|
$
|
(0.07
|
)
|
$
|
(0.03
|
)
|
$
|
(0.01
|
)
|
$
|
(0.35
|
)
|
Income (loss) from discontinued operations, net of income taxes
|
|
|
0.01
|
|
|
(0.01
|
)
|
|
(0.02
|
)
|
|
(2.85
|
)
|
|
|
|
|
|
|
|
|
|
|
Net income (loss)
|
|
$
|
(0.06
|
)
|
$
|
(0.04
|
)
|
$
|
(0.03
|
)
|
$
|
(3.20
|
)
|
|
|
|
|
|
|
|
|
|
|
Weighted average basic shares
|
|
|
38,277,150
|
|
|
38,753,049
|
|
|
38,982,281
|
|
|
38,982,281
|
|
Weighted average dilutive shares
|
|
|
38,277,150
|
|
|
38,753,049
|
|
|
38,982,281
|
|
|
38,982,281
|
|
A
summary of certain revenues and expenses from our continuing operations impacting our quarterly financial results is as follows:
-
(1)
-
During
the fourth quarter of fiscal 2013, we recorded goodwill impairment charges of $16,000 related to our Natchez property and $34,100 related to our Lula
property.
-
(2)
-
The
fourth quarter of fiscal 2013 contained thirteen weeks as compared to the fourth quarter of fiscal 2012 which contained fourteen weeks.
-
(3)
-
During
the fourth quarter of fiscal 2012, we recorded a goodwill impairment charge of $14,400 related to our Lula property and a valuation charge of $16,149
at our Lake Charles property associated with the sale of Grand Palais Riverboat, Inc.
-
(4)
-
During
the first and second quarters of fiscal 2012, five of our properties were temporarily closed for flooding along the Mississippi River.
83
Table of Contents
ISLE OF CAPRI CASINOS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
(amounts in thousands, except share and per share amounts)
22. Commitments and Contingencies
Operating Leases
The Company leases real estate and various equipment under operating lease agreements. Future minimum payments over the lease term of
non-cancelable operating leases with initial terms of one year or more consisted of the following at April 28, 2013:
|
|
|
|
|
Fiscal Years Ending:
|
|
|
|
2014
|
|
$
|
12,820
|
|
2015
|
|
|
11,798
|
|
2016
|
|
|
11,710
|
|
2017
|
|
|
11,609
|
|
2018
|
|
|
11,467
|
|
Therafter
|
|
|
235,825
|
|
|
|
|
|
Total minimum lease payments
|
|
$
|
295,229
|
|
|
|
|
|
Rent
expense related to continuing operations was $28,385, $28,557, and $27,411 in fiscal years 2013, 2012, and 2011, respectively. Such amounts include contingent rentals of $3,315,
$3,655, and $4,129 in fiscal years 2013, 2012 and 2011, respectively. Contingent rent is based upon casino revenues or other metrics as defined in our lease agreements. Certain of our leases are
subject to renewals and may contain escalation clauses.
Development Projects
The Pennsylvania Gaming Control Board ("PGCB") has selected the Nemacolin Woodlands Resort in Pennsylvania to be awarded a
Category 3 resort gaming license. We have a development and management agreement with the Nemacolin Woodlands Resort and completed the construction in June 2013. Our casino opened
July 1, 2013 and the total cost of the project was approximately $60,000, including licensing fees. As of April 28, 2013, we have expended approximately $29,700.
On
February 1, 2013, we signed an agreement with Tower Investments, Inc. to manage The Provence, the resort and casino on North Broad Street, Philadelphia, proposed by
Tower Entertainment, LLC (the "Tower JV"), if the project is selected by the PGCB. The Tower JV is one of six applicants for the final gaming license in Philadelphia. As part of our agreement with the
Tower JV, we loaned $25,000 to the Tower JV in the form of a stand-by letter of credit issued for the purpose of securing the Pennsylvania gaming license fee relating to the project. The
$25,000 letter of credit can only be drawn upon if the Tower JV is awarded the license. If the Tower JV is selected, we have the option to either 1) be repaid from the proceeds of permanent
financing, or 2) convert the $25,000 loan into a minority investment in the Tower JV.
Legal and Regulatory Proceedings
We and our wholly-owned subsidiary, Riverboat Corporation of MississippiVicksburg, are defendants in a
lawsuit filed in the Circuit Court of Adams County, Mississippi by Silver Land, Inc., alleging breach of contract in connection with our 2006 sale of casino operations in Vicksburg,
Mississippi, to a third party. In January 2011, the court ruled in favor of Silver Land and in September 2011 the court awarded damages of approximately $2,000, which we accrued. We filed a notice of
appeal in November 2011 and oral arguments were held in January 2013. In June 2013, the court of appeals reversed the trial court and ruled in our favor. Silver Land may request a rehearing and
thereafter may appeal to the state supreme court. While the ultimate outcome of this
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22. Commitments and Contingencies (Continued)
matter
is still in doubt and cannot be predicted with any degree of certainty, we intend to put forth a vigorous and appropriate defense of the favorable June 2013 ruling of the court of appeals if
Silver Land continues to pursue its claim.
We
have been named as a defendant in a complaint filed in the Circuit Court for Broward County, Florida. The complaint alleges we sent unsolicited fax advertisements in violation of the
Telephone Consumer Protection Act of 1991, as amended by the Junk Fax Prevention Act of 2005 (the "TCPA"), and seeks to certify a class action. The complaint seeks statutory damages for alleged
negligent and willful violations of the TCPA, attorneys' fees, costs and injunction relief. In April 2013, we entered into a settlement agreement with the plaintiff and on May 22, 2013, the
Court issued an order granting preliminary approval of the settlement. The settlement is subject to further consideration by the Court at the final settlement hearing, which is expected to occur in
late calendar 2013. While the ultimate outcome is unknown, we have accrued $1,000 as our current estimate of the most probable outcome of this matter.
Our
wholly owned subsidiary, Lady Luck Gaming Corporation, and several joint venture partners have been defendants in the Greek Civil Courts and the Greek Administrative Courts in
similar lawsuits brought by the country of Greece. The actions allege that the defendants failed to make specified
payments in connection with the gaming license bid process for Patras, Greece. Although it is difficult to determine the damages being sought from the lawsuits, the action may seek damages up to that
aggregate amount plus interest from the date of the action.
In
the Civil Court lawsuit, the Civil Court of First Instance ruled in our favor and dismissed the lawsuit in 2001. Greece appealed to the Civil Appeal Court and, in 2003, the Court
rejected the appeal. Greece then appealed to the Civil Supreme Court and, in 2007, the Supreme Court ruled that the matter was not properly before the Civil Courts and should be before the
Administrative Court.
In
the Administrative Court lawsuit, the Administrative Court of First Instance rejected the lawsuit stating that it was not competent to hear the matter. Greece then appealed to the
Administrative Appeal Court, which court rejected the appeal in 2003. Greece then appealed to the Supreme Administrative Court, which remanded the matter back to the Administrative Appeal Court for a
hearing on the merits. The re-hearing took place in 2006, and in 2008 the Administrative Appeal Court rejected Greece's appeal on procedural grounds. On December 22, 2008 and
January 23, 2009, Greece appealed the ruling to the Supreme Administrative Court. A hearing was held during November 2012.
The
outcome of this matter is still in doubt and cannot be predicted with any degree of certainty. We intend to continue a vigorous and appropriate defense to the claims asserted in this
matter. Through April 28, 2013 we have accrued an estimated liability, including interest, of $14,075. Our accrual is based upon management's estimate of the original claim by the plaintiffs
for lost payments. We continue to accrue interest on the asserted claim. We are unable to estimate a total possible loss as information as to possible additional claims, if any, have not been asserted
or quantified by the plaintiffs at this time.
In
October 2012, we opened our new casino in Cape Girardeau, Missouri. A subcontractor has filed a mechanics' lien against our property resulting from a dispute between the subcontractor
and our general contractor for the construction project. We demanded that the general contractor cause the lien to be bonded against or satisfied, however the general contractor has refused to do so
and asserted that
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22. Commitments and Contingencies (Continued)
a
portion of the subcontractor's claim results from additional work directly requested by us. The general contractor is attempting to resolve the subcontractor's claim. While we are not a direct party
in the dispute, in the event that we incur any costs in connection with this matter, we do not believe that any such costs would be material, and if incurred, would be capitalized as additional
construction costs.
We
are subject to certain federal, state and local environmental protection, health and safety laws, regulations and ordinances that apply to businesses generally, and are subject to
cleanup requirements at certain of our facilities as a result thereof. We have not made, and do not anticipate making material expenditures, nor do we anticipate incurring delays with respect to
environmental remediation or protection. However, in part because our 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 we will
not experience material liabilities or delays.
We
are subject to various contingencies and litigation matters and have a number of unresolved claims. Although the ultimate liability of these contingencies, this litigation and these
claims cannot be determined at this time, we believe they will not have a material adverse effect on our consolidated financial position, results of operations or cash flows.
Subsequent event
On June 17, 2013, we entered into an option agreement for a third party to purchase from us substantially all of the assets
and assume certain liabilities related to our Rhythm City Casino located in Davenport, Iowa, for approximately $51,000, subject to a working capital adjustment and certain other purchase price
adjustments. Subject to satisfying certain conditions, the third party may exercise the option at any time through September 15, 2013 and may extend the exercise period to October 15,
2013. If the option is exercised, the completion of the transaction will be subject to the third party obtaining applicable gaming licenses and approvals and other customary closing conditions.
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