Isle of Capri Casinos, Inc. Fourth Quarter and Full Year Results

BILOXI, Mississippi -- Isle of Capri Casinos, Inc. (Nasdaq: ISLE) today reported financial results for the fourth quarter and fiscal year ended April 30, 2006. For the fourth quarter, the Company reported
  a 19.3% increase in net revenues to $306.5 million compared to net revenues of $257.0 million for the same quarter in fiscal 2005. Net income for the fourth quarter of fiscal 2006 increased 338% to $15.1 million or $0.48 per diluted common share, compared to $3.5 million or $0.11 per diluted common share for the fourth quarter of fiscal 2005. Included in net income for the quarter ended April 30, 2006, are pre-tax valuation charges of $13.3 million related to the Company's international operations. These charges resulted in a reduction to net income per diluted share of $0.38. Adjusted EBITDA(1) for the fourth quarter of fiscal 2006 increased 42.4% to $78.0 million compared to Adjusted EBITDA(1) of $54.8 million for the same quarter in fiscal 2005.

For the fiscal year 2006, the Company reported a 4.3% increase in net revenues to $988.0 million compared to net revenues of $947.6 million in fiscal 2005. For the fiscal year 2006, the Company reported a 5.5% increase in net income to $19.0 million or $0.61 per diluted common share compared to $18.0 million or $0.58 per diluted common share for the fiscal year 2005. Adjusted EBITDA(1) for fiscal year 2006 increased 9.6% to $207.3 million compared to Adjusted EBITDA(1) of $189.2 million in fiscal 2005.

For fiscal 2006 and fiscal 2005, the Isle-Bossier City, Isle-Vicksburg and Colorado Grande-Cripple Creek are reflected as discontinued operations. Accordingly, the operating results for these properties are not included in the net revenue and Adjusted EBITDA(1) results discussed above. The Company previously announced on February 14, 2006, it entered into an agreement to sell the assets of its properties in Bossier City and Vicksburg. For the fourth quarter of fiscal 2006, Isle-Bossier City and Isle-Vicksburg had combined net revenues of $48.6 million compared to combined net revenues of $42.7 million for the same quarter in fiscal 2005. For the fiscal year 2006 Isle-Bossier City and Isle-Vicksburg had combined net revenues of $166.4 million compared to $164.0 million in fiscal year 2005. The Company expects this sale to close in the second quarter of fiscal 2007, subject to regulatory and other customary closing conditions. Assuming this transaction closes, the Company expects to record a pre-tax gain on the sale of between $14 million and $18 million. The Colorado Grande property was sold effective April 24, 2005. Earnings per diluted common share for continuing operations for the fourth quarters ended April 30, 2006 and April 24, 2005 was $0.26 and $0.17, respectively. Earnings per diluted common share for continuing operations for the years ended April 30, 2006 and April 24, 2005 was $0.25 and $0.48, respectively.

In addition, in April 2006, the Company's Board of Directors approved a plan to exit its Our Lucaya operations. Effective June 1, 2006, the Company notified its landlord of the Company's decision to terminate its lease and intent to cease operations by June 1, 2007. Isle-Our Lucaya had net revenues of $7.4 million and $9.4 million for the fourth fiscal quarters ended April 30, 2006 and April 24, 2005, respectively, and had net revenues of $25.3 million and $23.3 million for the fiscal years ended April 30, 2006 and April 24, 2005, respectively. The Company will continue to report the results of its Our Lucaya property as continuing operations until a probable sale of this facility is reached or operations are ceased, at which time these results will be reported as discontinued operations.

"I am pleased that our performance produced comparative quarter-to-quarter growth. This accomplishment, at the end of one of the most challenging years in our Company's history, shows that our business model continues to perform at a high level. We believe our portfolio diversity and our pipeline of development opportunities puts Isle of Capri in an excellent position for continued growth," Bernard Goldstein, chairman and chief executive officer, said.

    Highlights and Updates

    * The Company is proceeding with construction of a $140 million
      development project at Pompano Park in Florida. The project includes
      1,500 slot machines, 30 poker tables and four restaurants, as well as
      new horse racing amenities including a sports bar and wagering area
      overlooking the track. The Company expects to open the racino early in
      calendar year 2007.
    * In late May 2006, Isle-Biloxi completed the renovation of its existing
      atrium adding additional gaming space, bringing the casino resort to
      approximately 1,600 gaming positions, opening a new multi-story entry
      feature and bar, and connecting the parking garage with the atrium by a
      covered walkway. The remaining 100 damaged hotel rooms became fully
      operational, bringing the hotel back to full capacity with 728 rooms
      including 200 whirlpool suites.
    * On June 15, 2006, the Company announced that it received site and
      development approval from the Mississippi Gaming Commission in
      connection with its previously announced casino resort in west Harrison
      County, Mississippi, which is approximately 20 miles from the
      Mississippi/Louisiana state border along Interstate 10.  Preliminary
      plans call for the estimated $250-300 million project to include a
      single level gaming facility with over 2,000 gaming positions, a 500-
      room hotel, five restaurants and a complement of additional resort
      amenities.  The project remains in the preliminary planning stages, and
      is subject to certain significant conditions, including but not limited
      to the receipt of all necessary licenses, approvals and permits.
    * In early June 2006, the Company opened its new 140-room hotel, including
      20 suites, and an 800-seat entertainment venue at Isle-Boonville in
      Missouri.
    * The Company continues to deploy the IGT Advantage(TM) Casino System to
      replace the existing slot management systems at its properties in
      Missouri and Iowa. After implementation, these properties will feature
      the NexGen(TM) Interactive Display, supporting loyalty-building
      Bonusing(TM) tools, which will allow the Company to enhance its uniquely
      branded marketing programs.
    * Construction is underway at the Isle-Waterloo in Iowa with completion
      expected in the late spring of 2007. The Company plans to spend
      approximately $134 million constructing a single-level casino with
      approximately 1,300 gaming positions, three of its signature
      restaurants, a 200-room hotel and 1,000 parking spaces.
    * The Company continues to construct a new 250-room hotel at the Isle-
      Bettendorf.  Included in the project is additional parking, a signature
      restaurant, and expansion of the existing buffet. The cost of the
      project is expected to be approximately $45 million, with the new hotel
      scheduled to open in the summer of 2007.
    * The Company is moving forward with the relocation of its corporate
      headquarters to the St. Louis County municipality of Creve Coeur and
      expects to complete the transition by mid-summer 2006. The Company will
      maintain a regional office in Biloxi, Mississippi. The anticipated cost
      of this move is approximately $10 million, most of which will be
      recorded in fiscal 2007.
    * At Isle-Our Lucaya, in conjunction with the termination of its lease,
      the Company paid a $2.2 million fee to its landlord, which will be
      expensed in the first quarter of fiscal 2007.  Based on projected cash
      flows and government regulations, we have recorded an impairment charge
      of approximately $2.4 million and have accrued $1.2 million for
      severance payments in the fourth quarter of fiscal 2006.

"We have and will continue to refine our product mix and invigorate the Isle brand, providing our customers the amenities and experiences that they prefer. Our focus on developing our core properties, implementing technological advances, and improved service initiatives continues to produce improved financial results," Tim Hinkley, president and chief operating officer, said.

Operational Review of the Company's Continuing Operations for the Fourth Quarter Fiscal 2006 Compared to the Fourth Quarter Fiscal 2005

In Mississippi, the Company's three continuing operations contributed 29.8% of net revenues. Isle-Biloxi's net revenues were up from the prior year period principally because of the new and upgraded land based casino and the limited competition in the Biloxi market. Adjusted EBITDA(1) at the property was up significantly over the same quarter in fiscal 2005 also due to reduced competition in the market. Isle-Natchez experienced increases in both net revenues and Adjusted EBITDA(1) primarily resulting from continuing effects of population shifts into its market area. Isle-Lula's net revenues increased due to improved marketing programs. Adjusted EBITDA(1) also increased due to more efficient management of expenses.

In Louisiana, the Isle-Lake Charles contributed 16.1% of net revenues. Isle-Lake Charles experienced an increase in net revenues and Adjusted EBITDA(1), compared to the prior year period, due to growth in the overall market and the closure of a competitor in the market.

In Missouri, the Company's two properties contributed 14.8% of net revenues. Isle-Kansas City's net revenues were down due to a decreased gaming patron count caused by the completion of competitors' expansion projects in the market. Isle-Boonville's net revenues and Adjusted EBITDA(1) increased due to an increase in marketing efforts.

In Iowa, the Company's three casinos contributed 18.2% of net revenues. Combined, the Company's two Quad-City properties showed a slight increase in both net revenues and Adjusted EBITDA(1). Isle-Marquette showed a slight decrease in both net revenues and Adjusted EBITDA(1) due to increased competition in the surrounding market.

In Colorado, the Company's two Black Hawk casino operations contributed 15.0% of net revenues. The increase in both net revenues and Adjusted EBITDA(1) were due to the completion of our expansion projects.

Our international operations account for a small percentage of our overall revenues. Isle-Our Lucaya experienced a decrease in Adjusted EBITDA(1) primarily due to the recording of $2.0 million of business interruption proceeds in the fourth quarter of fiscal 2005.

New development expenses increased compared to the fourth quarter of fiscal 2005 primarily related to costs incurred relating to pursuit of the stand alone slot parlor license in Pittsburgh.

The increase in Corporate expenses is primarily related to a $2.3 million gain recorded in the prior year resulting from the sale of a land option. Additionally, the current year fourth quarter includes costs of $0.8 million related to the corporate office relocation.

The Company recorded $3.6 million in valuation and severance charges in the fourth quarter of fiscal 2006 related to its Our Lucaya property, resulting from its decision to sell or close the casino by June of 2007. As a result of adverse market conditions on the expected future cash flows of the Blue Chip operations, the Company recorded a valuation charge of $9.6 million related to its Blue Chip properties. At this time, the Company is unable to record a tax benefit related to the valuation charge on its Blue Chip properties.

The Company's fiscal year ends on the last Sunday in April. This fiscal year system creates more comparability of the Company's quarterly operations, by generally having an equal number of weeks (13) and weekend days (26) in each quarter. Periodically, this system necessitates a 53-week year. The fiscal year ended April 30, 2006 was a 53-week year. The extra week was included in the fourth fiscal quarter.

Operating results from the Isle-Vicksburg and Isle-Bossier City have been recorded as Discontinued Operations and thus are not included in the Operational Review discussed above.

1.  EBITDA is "earnings before interest, income taxes, depreciation and
        amortization."  Isle of Capri calculates Adjusted EBITDA at its
        properties by adding preopening expense, management fees, other
        charges and non-cash items to EBITDA.  Adjusted EBITDA is presented
        solely as a supplemental disclosure because management believes that
        it is 1) a widely used measure of operating performance in the gaming
        industry and 2) a principal basis of valuing gaming companies.
        Management uses property level Adjusted EBITDA (Adjusted EBITDA before
        corporate expense) as the primary measure of the Company's operating
        properties' performance, including the evaluation of operating
        personnel.  Adjusted EBITDA should not be construed as an alternative
        to operating income as an indicator of the Company's operating
        performance, as an alternative to cash flows from operating activities
        as a measure of liquidity or as an alternative to any other measure
        determined in accordance with U.S. generally accepted accounting
        principles (GAAP).  The Company has significant uses of cash flows,
        including capital expenditures, interest payments, taxes and debt
        principal repayments, which are not reflected in Adjusted EBITDA.
        Also, other gaming companies that report Adjusted EBITDA information
        may calculate Adjusted EBITDA in a different manner than the Company.
        Adjusted EBITDA Margin is calculated by dividing Adjusted EBITDA by
        net revenues.  Fiscal 2006 and 2005 results have been reclassified to
        reflect the Colorado Grande-Cripple Creek, Isle-Bossier City and Isle-
        Vicksburg as discontinued operations.  Reconciliations of operating
        income to Adjusted EBITDA and operating income as a percentage of net
        revenues are included in the financial schedules accompanying this
        release.  A reconciliation of Adjusted EBITDA with the Company's net
        income is shown below.