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Isle of Capri Casinos Reports Income Down

BILOXI, Mississippi – (PRESS RELEASE) -- Isle of Capri Casinos, Inc. (Nasdaq: ISLE) today reported financial results for the fiscal quarter ended October 24, 2004. For the second fiscal quarter, we reported net income of $0.5 million or $0.01 per diluted common share compared to net income of $10.7 million or $0.35 per diluted common share for the same quarter last year. During the quarter ended October 24, 2004, net revenues remained comparable to the same fiscal period in 2004 at $269.7 million, and Adjusted EBITDA (1) was $49.0 million, compared to $57.9 million for the same period in fiscal 2004.

For the first six months of fiscal 2005, we reported net income of $11.1 million, or $0.36 per diluted share. This compares to net income for the same period in fiscal 2004 of $24.3 million, or $0.79 per diluted share. Net revenues for the six months ended October 24, 2004, were $550.6 million, down from $555.4 million for the comparable period in the previous year. Adjusted EBITDA (1) in the six-month period was $109.5 million, a decrease of $16.1 million, or 13%, from the prior year six-month period Adjusted EBITDA (1) of $125.6 million.

Bernard Goldstein, Isle of Capri Casinos, Inc.'s chairman and chief executive officer, said, "Although the second quarter did not meet our expectations, the majority of Isle properties continue to perform steadily. Growth and development can be difficult in the short-term; however, we expect to see improving results as we move into fiscal 2006."

Operational Review

In Mississippi, our four operations contributed 22% of our net revenues. The Isle-Vicksburg and the Isle-Natchez experienced modest increases in net revenues and Adjusted EBITDA (1) despite aggressive competition in the Vicksburg market. The Isle-Biloxi experienced a decline in net revenues and Adjusted EBITDA (1) primarily due to construction disruptions as we continue our $79.0 million parking and hotel expansion. We expect to complete these additions in the spring of 2005. The property also faced disturbances in business due to severe hurricane activity, affecting not only Biloxi, but also the surrounding markets from which the casino draws customers. The Isle-Lula showed a decline in margins due to an increasingly competitive environment.

In Louisiana, our two properties contributed 25% of our net revenues. Both the Isle-Bossier City and the Isle-Lake Charles have produced increases in net revenues and Adjusted EBITDA (1). The Isle-Bossier City's new 265-room hotel and amenities addition, and the refurbishment and expansion of the Isle- Lake Charles' Grand Palais, have increased these properties' ability to compete within their markets.

In Missouri, our two properties contributed 15% of our net revenues. Net revenues and Adjusted EBITDA (1) in both Kansas City and Boonville increased. The Isle-Kansas City's operating performance benefited from its gaming floor expansion despite a major new competitor's product and aggressive marketing by nearby properties. The Isle-Boonville continues to perform well. We are in the planning stages of the construction of an approximately $15.0 million hotel and event center to further enhance the profitability of this property.

In Iowa, our three casinos contributed 20% of our net revenues. Our two casinos in the Quad Cities produced an increase in net revenues, but at less than expected levels due to reduced patronage from the outer markets, particularly Chicagoland. In Marquette, net revenues and Adjusted EBITDA (1) declined. Marquette faced increased competition from a Native American casino that was open for the entire second quarter of fiscal 2005. Additionally, Adjusted EBITDA (1) has decreased in part due to a 2% increase in the Iowa gaming tax rates, which became effective July 1, 2004.

In Colorado, our three casino operations contributed 13% of our net revenues. Construction continues to cause considerable disruption, particularly to parking for the Colorado Central Station-Black Hawk and to the street entrances to both Black Hawk casinos. The initial and most disruptive phase of the $94.0 million expansion is expected to be completed by spring of 2005.

The recent tropical storms have caused considerable destruction in the Bahamas. While the Isle-Our Lucaya casino escaped significant damage, our partner hotels, the Westin and the Sheraton were forced to close for major repairs. We in turn closed the casino for much of the quarter. The casino is currently opened on a limited weekend schedule and is expected to return to full-time operations mid-December 2004, when the Our Lucaya Beach and Golf resort is expected to be fully reopened. Second quarter Adjusted EBITDA (1) does not include the anticipated business interruption and other insurance recoveries related to losses in the quarter, which will be recorded when received.

New development expense increased significantly due to efforts related to election campaigns in Florida and Iowa, as well as continued investment in the United Kingdom. Corporate and other expense decreased over the comparable fiscal quarter and six months due to the inclusion in the prior year of a $2.0 million charge related to the accrual of additional loss contingencies for litigation matters.

Timothy Hinkley, Isle of Capri Casinos, Inc.'s president and chief operating officer, said, "It was a challenging quarter. We experienced construction and weather-related disruptions along with some softness in Mississippi; construction disruptions in Colorado; and increased overhead for international and domestic development. However, our properties in Missouri, Louisiana and Iowa continue with solid performance." Hinkley continued, "As we look to the future, we realize the continued value that lies within reinvestment. Our focus is two-fold: We are concentrated on selected development opportunities -- both domestically and within the UK.

And we are committed to the improvement of our existing core properties, by enriching the Isle-branded experience and customer loyalty programs through initiatives such as our slot enhancement program."

Highlights

-We are currently active with expansion opportunities within the U.S. and abroad.

-On November 2, 2004, the passage of Amendment Four, a Florida statewide referendum that will allow Miami-Dade County and Broward County voters a local option to introduce slot machines at pari-mutuel facilities in those counties, provides a significant opportunity for us. It is expected that a bill setting the rules and regulations for the gaming activity will be introduced into the Florida legislature in the spring of 2005. We own Pompano Park Harness Track in Pompano Beach, Florida, located in Broward County. We also have the exclusive right to negotiate to purchase the Miami Jai Alai facility owned by Florida Gaming, Inc.

-In the UK, construction on our project in Coventry progresses at the football arena. The new UK gaming legislation is continuing to move forward in the British Parliament.

-We announced in October that we will replace the casino at our Biloxi, Miss. property with a new state-of-the-art casino facility. The approximately $90.0 million new casino, which is in addition to the $79.0 million parking and hotel expansion, is expected to be opened by December 2005, and will feature significantly expanded gaming space, new night clubs and restaurants and other amenities. We plan to construct the barge offsite and then move it into place during a two-week period between Thanksgiving and Christmas of 2005.

-We have increased targeted expansion capital expenditures as a means to enhance our current properties and ensure the properties maintain a competitive position in their markets. We are also enhancing our branded experience as it relates to our gaming, food and beverage and hotel products.

-Our properties in Biloxi, Lula, Vicksburg, Bossier City and Black Hawk are targeted under our slot enhancement program. These six properties will experience product upgrades to operate more competitively within their markets. The slot enhancement program includes increasing our ticket-in / ticket-out slot product to a minimum of 80% of installed games at these properties and the installation of the IGT Advantage slot system. This system will allow for greater interaction directly at the game by our customers. Players will also have the ability to receive and download rewards at the machine.

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