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Isle of Capri Casinos reports results

ST. LOUIS, Missouri -- (PRESS RELEASE) -- Isle of Capri Casinos, Inc. (Nasdaq: ISLE) today provided additional comments and information on its financial results for the fourth fiscal quarter and fiscal year ended April 29, 2007, which were reported in its Form 10-K filing on July 30, 2007. The Company reported a 17.3% decrease in net revenues from continuing operations to $255.6 million for the fourth quarter compared to net revenues from continuing operations of $309.1 million for the same quarter in fiscal 2006. Loss from continuing operations was $13.1 million or ($0.43) per common share, during the fourth quarter of fiscal 2007 compared to income of $10.5 million or $0.33 per diluted common share for the fourth quarter of fiscal 2006. Adjusted EBITDA(1) from continuing operations for the fourth quarter of fiscal 2007 decreased 22.9% to $57.3 million compared to Adjusted EBITDA(1) from continuing operations of $74.3 million for the same quarter in fiscal 2006. The fourth quarter ended April 29, 2007 included thirteen weeks of operating results compared to the fourth quarter ended April 30, 2006, which included fourteen weeks of operating results. This accounts for approximately 7.5% of the year over year decrease in revenues and Adjusted EBITDA(1). Other factors contributing to the year over year declines include increased competition in several of the Company's markets, most significantly Biloxi, Mississippi and severe weather in several markets in the first period of the fourth quarter of fiscal 2007.

For the twelve months ended April 29, 2007, the Company reported a 1.4% increase in net revenues from continuing operations to $1.0 billion, compared to $987.4 million for the comparable period in the prior year. For the twelve months of fiscal 2007, the Company reported a loss from continuing operations of $21.3 million, or ($0.70) per common share, compared to income of $8.6 million, or $0.28 per diluted common share for the same period in fiscal 2006. Adjusted EBITDA(1) from continuing operations in the twelve-month period reported a 4.5% decrease to $194.6 million, compared to $203.7 million for the comparable twelve-month period in fiscal 2006. During the twelve months ended April 29, 2007, the Company recognized a pretax gain of $23.2 million related to the sale of its Isle-Bossier City and Isle-Vicksburg properties. This gain on sale is included in income from discontinued operations and the impact on net income per diluted common share was $0.45 for the twelve-months ended April 29, 2007 with the remaining $0.10 coming from the normal operating results of the two properties.

Isle-Bossier City, Isle-Vicksburg and Colorado Grande-Cripple Creek are reflected as discontinued operations for all periods presented. Accordingly, the operating results for these properties are not included in the net revenue, income from continuing operations and Adjusted EBITDA(1) results discussed above. The sale of Isle-Bossier City and Isle-Vicksburg closed on July 31, 2006.

"Fiscal 2007 was a transitional year for the company, as we prepared for the opening of three properties under our new brand 'the isle®,' in addition to opening a new hotel and acquiring a new property. The response from our guests has been very positive, and we look forward to growing our database and elevating the gaming experience for our customers. In addition, we implemented new technology initiatives that will help us operate and market more efficiently, and introduced additional programs across the Company to improve margins," said Bernard Goldstein, president and chief executive officer.

Highlights and Updates

The following items occurred in the fourth quarter of fiscal 2007:

-- The Company revealed its newest brand, "the isle," when its casino property in Pompano Beach, Florida opened on April 14.

-- In April the Company reached an agreement with government officials and its landlord to continue the operation of its casino at Our Lucaya in Freeport, Grand Bahama.

-- Construction began on the final phase of the project to return the Isle of Capri Biloxi Casino Resort to pre-Katrina planned levels. The project includes a land-based casino with approximately 2,100 slot machines, 50 table games, a new poker room, rebuilding the Company's signature steakhouse, Farraddays'®, as well as an expanded tropical-themed buffet and the reinstatement of the property's convention and entertainment space. The more than $180 million construction project will largely be funded by insurance proceeds associated with Hurricane Katrina.

The following items occurred subsequent to the end of fiscal 2007 on April 29:

-- On May 3, the Florida legislature passed a bill to permit ATMs on the premises at Broward County pari-mutuel facilities, although not on the casino floor, increase operating hours including 18 hours per day on weekdays and 24 hours per day on the weekends, allow progressive machines, and increase the number of slot machines from 1,500 to 2,000. The bill went into effect on July 4.

-- The Company opened its $45 million, 258-room Hotel in Bettendorf, Iowa on May 21.

-- The agreement to purchase Casino Aztar in Caruthersville, Missouri for approximately $45 million was finalized on June 10.

-- "the isle" casino and hotel at Waterloo in Iowa opened on June 30 with a 35,000 square foot single level casino land-based casino, two restaurants and approximately 200-room hotel. Farraddays', the Company's signature steakhouse, a nightclub, spa and pool will open later this fiscal year.

--The Company opened its "the isle" casino at Coventry located at the RICOH(TM) Arena in the United Kingdom on July 6. The project, authorized under the Gaming Act of 1968, includes 70 electronic gaming machines, over 40 table games including poker, as well as the Company's signature steakhouse, Farraddays', a Tradewinds Marketplace, and three bars including Lady G's, an entertainment venue and "Club 87" a sports bar. A private dining club will open later this fiscal year.

-- The Company entered into a $1.35 billion senior secured credit facility, replacing the prior $700 million senior secured credit facility. Additionally, the Company has called its $200 million 9% subordinated notes at a call price of 104.5%. This will be funded through a delayed draw term loan under the new senior credit facility.

-- The Company filed its Form 10-Q/A for the 2007 fiscal third quarter on July 25 and its Form 10-K for the fiscal fourth quarter and year ended April 29, 2007 on July 30 to complete its previously announced restatements.

-- Effective July 30 Virginia McDowell became the Company's new President and Chief Operating Officer. Additionally, the Company announced that it had added James B. Perry as a new member of its Board of Directors.

"Our search for a new president and chief operating officer has come to a close and we are pleased to welcome Virginia McDowell to the Isle of Capri family. We believe that we have selected the ideal candidate as Virginia brings just the right mix of gaming expertise and leadership capabilities to her new role. Everyone has eagerly welcomed Virginia to the Isle of Capri family," Mr. Goldstein noted.

Operational Review of the Company's Continuing Operations for the Fourth Quarter of Fiscal 2007 Compared to the Fourth Quarter of Fiscal 2006

Operating results for the fourth quarter of fiscal 2007 include one less week of operating results as compared to the fourth quarter of fiscal 2006. Also the operating results for the fourth quarter of fiscal 2007 include some significant additional expenses, as compared to the fourth quarter of fiscal 2006. These include an increase of approximately $4.5 million in property insurance expense over the prior year's fourth quarter, for a twelve-month total increase of approximately $18.0 million over the prior fiscal year, which was allocated across all operating properties. The Company also recorded approximately $1.6 million of stock compensation expense in the fourth quarter of fiscal 2007 related to the adoption of FASB Statement No. 123 (revised 2004) "Share-Based Payment" (SFAS 123®), for a twelve-month total increase of approximately $7.2 million over the prior fiscal year. The stock compensation expense is allocated across all properties, but is primarily reflected in the Corporate expense line item. Pre-opening costs increased $10.4 million compared to the fourth quarter of fiscal 2006 primarily due to costs related to our casino developments in Pompano Beach, Florida; Waterloo, Iowa and Coventry, England.

In Mississippi, the Company's three continuing operations contributed 24.3% of net revenues. Isle-Biloxi's net revenues and Adjusted EBITDA(1) decreased significantly from abnormally high prior year operating results due to increased competition in the market as competitors have re-opened after closures caused by Hurricane Katrina and while the Isle-Biloxi remains negatively impacted by the destruction of the Biloxi/Ocean Springs bridge, which is the primary thoroughfare for travelers from Florida to east Biloxi where Isle-Biloxi is located. Two lanes of the Biloxi/Ocean Springs bridge are scheduled to re-open in November and the complete new bridge with six lanes is scheduled to re-open in June 2008. Isle-Natchez continues to experience decreases in both net revenues and Adjusted EBITDA(1) primarily resulting from the re-opening of casinos along the Gulf Coast. Isle-Lula's net revenues and Adjusted EBITDA(1) decreased slightly due to increased competition impacting certain of the property's outlying feeder markets and disruption due to renovations of the casino floor.

In Louisiana, Isle-Lake Charles contributed 16.8% of net revenues. Isle-Lake Charles experienced a decrease in net revenues and Adjusted EBITDA(1) due to increased competition in the market as competitors have fully re-opened following closures caused by Hurricane Rita and post hurricane normalization of population levels in the property's feeder markets.

In Missouri, the Company's two properties contributed 17.2% of net revenues. The Company's Missouri operations were impacted by severe winter weather in the first period of the fourth quarter. Isle-Kansas City's net revenues and Adjusted EBITDA(1) were down due to increased competition related to the completion of competitors' expansion projects in the market. Isle- Boonville's net revenues and Adjusted EBITDA(1) increased due to the opening of the Company's new hotel and an increase in marketing efforts.

In Iowa, the Company's three casinos contributed 17.7% of net revenues. Combined, the Company's three Iowa properties, the Isle-Bettendorf, Rhythm City-Davenport, and Isle-Marquette showed a decrease in both net revenues and Adjusted EBITDA(1) due to increased competition in certain of our feeder markets in which we operate, including new and expanded gaming product by several of our competitors, as well as severe winter weather in the first period of the fourth quarter.

In Colorado, the Company's two Black Hawk casino operations contributed 15.7% of net revenues. The Black Hawk properties experienced a decrease in net revenues and Adjusted EBITDA(1) as compared to the prior year period primarily due to severe weather in the first period of the quarter and disruption at the Colorado Central Station gaming floor as it was redesigned for wider aisles and the implementation of 100% ticketing capabilities on slots.

In International operations, Isle-Our Lucaya recorded a reversal of approximately $9.4 million in certain prior year expenses related to the Company's agreement with the Bahamian government and the Company's landlord to keep the casino open. Additionally, the Company reversed its $2.2 million lease termination fee paid in the first quarter of fiscal 2007, which has now been recorded as pre-paid rent.

Corporate and other includes the Company's corporate office operations, new development costs and the operating results of Pompano Park. The decrease in corporate and other compared to the fourth quarter of fiscal 2006 is primarily due to a $6.2 million decrease in new development costs primarily due to costs incurred in the prior year fiscal quarter related to the pursuit of gaming licenses in Pittsburgh, Pennsylvania and Singapore. In December 2006, the Company was notified that it was not awarded either gaming license. The operating results of Pompano Park reflected a $3.6 million decrease in Adjusted EBITDA(1), which relates primarily to construction disruption, increased property insurance premiums and increased repairs and maintenance costs incurred on the existing track facility prior to the opening of the Isle-Pompano casino facility. The Isle Pompano was only opened for the last two weeks of the fourth quarter of fiscal 2007. Also, the increase in corporate and other expenses includes approximately $2.0 million in costs incurred related to the completion of the restatement of the Company's historical financial statements. These increased costs are partially offset by lower bonus, franchise taxes and other legal costs.

The Company recorded a $7.8 million valuation charge during the fourth quarter of fiscal 2007 related to the Isle-Lula, based on lower projected cash flows going forward. Comparatively, the Company recorded a $13.4 million valuation charge in the fourth quarter of fiscal 2006 related to its Blue Chip, plc operations in the United Kingdom and the Isle-Our Lucaya.

Operating results from the Colorado Grande-Cripple Creek, Isle-Vicksburg and Isle-Bossier City have been classified as discontinued operations for all periods presented and thus are not included in the Operational Review discussed above.

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